Hot Chili Limited · ASX:HCH

Hot Chili — Investor Presentation (March 2016)

49 slides from Hot Chili's investor presentation, Mar 2, 2016

1. Slide 1: Development Blue Print: Productora Copper Project, Chile

   Development Blue Print Productora Copper Project, Chile 2nd March 2016 ACN 130 955 725 ASX:HCH

2. Slide 2: Disclaimer

   Disclaimer View looking west over Productora central pit area This presentation is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Presentation an

3. Slide 3: Building a Long-term Chilean Copper Business

   Building a Long-term Chilean Copper Business  Robust Pre feasibility delivered1 against one of the best located and infrastructure-rich copper projects in Chile  Strong Resource and Reserve foundation with further growth to come  Financially competitive and well positioned amongst peers  CMP cur

4. Slide 4: Corporate Overview

   Corporate Overview Board of Directors Cash at Hand Murray Black Non Exec Chairman Approx. A$3.6 Million (23rd Feb 2016) Pending A$830k subject to CAP Board approval in 7c placement Christian Easterday Managing Director Michael Anderson Non Exec Director Sprott Lending Debt Facility Allan Trench Inde

5. Slide 5: Productora Chile's Next Coastal Copper Mine

   Productora Chile’s Next Coastal Copper Mine Competitive Global Copper Development  Low altitude location with significant infrastructure advantage  Access rights secured to establish key infrastructure  Large-scale porphyry growth potential adds further scale and mine life upside HOT CHILI [March

6. Slide 6: Productora Chile's Next Coastal Copper Mine: Strengthening Asset

   Productora Chile’s Next Coastal Copper Mine Strengthening Asset  Mineral Resource of 1.47Mt contained copper and 0.98Moz gold and growing  Ore Reserve increased to 0.72Mt contained copper and 0.47Moz of gold1  10 year mine life with total production of 0.59Mt copper and 0.21Moz of gold1  First 8

7. Slide 7: Financially Competitive Against Global Peers

   Productora Chile’s Next Coastal Copper Mine Financially Competitive Against Global Peers  Pre-production capital cost of US$725 million1,2  Project revenue of US$4.3 billion (Long term prices of US$3.00/lb Cu, US$1,250/oz Au & US$14/lb Mo)  C1 cash cost of US$1.47/lb paid metal (including Au, Mo

8. Slide 8: Pre-feasibility Study Basis

   Pre-feasibility Study Basis Project management Mineral Resources Mine Studies & Ore Reserves Metallurgy Metallurgy and ore processing Process design Infrastructure (On &  Productora PFS developed in accordance Offsite) with JORC Code (2012 Edition) Operating & Capital Cost Estimate Tailings Storage

9. Slide 9: Ore Reserve Near Doubles

   Ore Reserve Near Doubles  Strip ratio (waste:ore) significantly reduced to 2.7:11,2 562,900t (previously 4.1:1) Oxide  Bulk tonnage open cut mining Trans  2 major sulphide pits (Productora and Alice) 350,000t Trans  5 minor oxide pits (Southern Mantos and Northern Oxides) Fresh 152,000 oz 191,90

10. Slide 10: Ore Reserve Growth On-track

    Ore Reserve Growth On-track Productora Project Ore Reserve Statement, March 2016 1  84% increase in Ore Reserve tonnage2  61% increase in payable copper  26% increase in payable gold  24% increase in payable molybdenum 1Refer to ASX Announcement dated 2nd March 2016 2Comparison between ASX Annou

11. Slide 11: Productora Project Resources Continue to Grow

    Productora Project Resources Continue to Grow  1.13 Mt of “higher grade” contained copper + 0.34 Mt of “low grade” contained copper1 (additional new resource) LG  Productora project now has 1.47 Mt contained copper, 0.98M oz gold, and 45kt of contained molybdenum HG  New combined HG and LG resour

12. Slide 12: Porphyry Resource Growth Commences

    Porphyry Resource Growth Commences  Independently audited resource estimate (AMC Consultants) Alice  Expanded Productora Resource based on 893 RC and DD holes for 245,000m of drilling  First porphyry Resource at Alice based on 31 holes for 9,593m of drilling  Productora - 40 m x 80m drill spacin

13. Slide 13: Productora Resource Revision

    Productora Resource Revision 3 Productora Project Higher Grade Resource, March 2016 Grade Contained Metal Tonnage Cu Au Mo Copper Gold Molybdenum Deposit Classification (Mt) (%) (g/t) (ppm) (tonnes) (ounces) (tonnes) Indicated 166.8 0.50 0.11 151 841,000 572,000 25,000 Productora Inferred 51.9 0.42

14. Slide 14: Project Description

    Project Description  Owner-Operator Management & Contract Mining  Vallenar, Freirina and Huasco township centres nearby to house residential workforce  285 Personnel, and +500 contractors when in operation  Conventional drill & blast, load & haul open pit mining  Sulphide comminution selected p

15. Slide 15: Productora PFS Sulphide Fundamentals

    Productora PFS Sulphide Fundamentals Sulphide Concentrator1 Mining Method Open Pit – 11 years Peak Mining Rates Total 89 Mt/y & Sulphide Ore 21.6 Mt/y Project Construction Years 1 & 2 (2 year construction period) First Production Year 3 Processing Rate2 14.4Mt/y – 10 years Cu Average = 86% Metallurg

16. Slide 16: Productora PFS Oxide Fundamentals

    Productora PFS Oxide Fundamentals Heap Leach1 Mining Method Open Pit – 11 years Peak Mining Rate Total 89 Mt/y & Oxide Ore 6.4 Mt/y Project Construction Years 1 & 2 (2 year construction period) First Production Year 3 Processing Rate2 3.3 Mt/y – 10 years Metallurgical Recovery Cu Average = 54% Avera

17. Slide 17: Robust Mining Approach

    Robust Mining Approach  Conventional open cut mining- well established in Chile  Mining contractor, mining operating cost estimate based on mining contractor quote  Pit designs optimised conservatively (higher energy cost US$9.5c/kwhr, higher diesel cost US$64c/l and including sustaining capital

18. Slide 18: Mine Schedule Profile

    Mine Schedule Profile  Average contract mining cost US$1.80/t moved(excl pre-strip), owner-operator study to be completed prior to Phase 4 DFS kick-off Phase 4  Low strip ratio of 2.7:1 achieved  Cut-off strategy and transport cost modelling completed to optimise early copper production and mater

19. Slide 19: Processing & Metal Production Profile

    Processing & Metal Production Profile  Average throughput of 14.7Mtpa sulphide & 2.8Mtpa oxide over first 8 years  Average annual copper production of 66kt over first 8 years of production (60 kt of Cu in concentrate and 6 kt of Cu cathode)  Peak copper and gold metal production occurs in year 4,

20. Slide 20: Metallurgy & Processing

    Metallurgy & Processing Sulphide Metallurgy (Cu & Au)  Seawater provided Optimal recoveries Rancho Hill  optimum primary grind of P80 = 150μm (Productora) and 180μm (Alice) Cayenne  Rougher + 2 stages of cleaning Alice  25% Cu & 3.5g/t Au average concentrate grade Habanero  High spec concentrat

21. Slide 21: Geometallurgical Modelling

    Geometallurgical Modelling  Metallurgical testwork responses modelled based on geochemical proxies developed for acid consumption and throughput (Bond Acid consumption modelled Work Index) (utilising approximately 158,000 32-element downhole assays) in Oxide ore (kg/t)  In-pit metallurgical respon

22. Slide 22: Infrastructure Advantages

    Infrastructure Advantages  Seawater pipeline only 62km along secured easement corridor. No requirement for fresh ground water use or desalination facility  220Kv single circuit Power transmission line only 25km long and direct to existing Maintencillo sub-station facility  Tailing Storage Facilit

23. Slide 23: Environment & Sustainability

    Environment & Sustainability  Four years of EIA baseline studies completed, covering mine area, pipeline, power line and water intake areas:  21 environmental components included  11,000 ha covered  > 4,500 man-hours Weather station – Productora Project  Four seasonal campaigns for flora and fa

24. Slide 24: Financial Analysis Key Assumptions

    Financial Analysis Key Assumptions Metal Prices Wood Mackenzie Financial Model 2019 2020-2030 Copper (US$/lb) 2.80 3.50 3.00 Molybdenum (US$/lb) 14 14 14 Gold (US$/oz) 1,025 1,000 1,250 Key Assumptions Rate Comments Corporate Tax (FCT) 27% 2020 Chilean Tax Rate Inflation Rate 2.5% Hot Chili Discount

25. Slide 25: Financial Analysis Key Outcomes

    Financial Analysis Key Outcomes Wood Mackenzie PFS Financial Valuation (US$M) Base Case (2020 – 2030) Copper Price Applied (US$/lb) 3.00 3.25 3.50 Project Revenue 4,300 4,600 5,000 Operating Costs 2,400 2,400 2,400 Royalties (CCHEN and Specific Mining Tax) 82 99 120 Sustaining Capital (inc. Producti

26. Slide 26: Financial Valuation Results

    Financial Valuation Results  Figure shows three valuation price cases.  Significant upside exposure to long term price. Refer to ASX Announcement dated 2nd March 2016 Independent Financial Analysis by Amec Foster Wheeler HOT CHILI [March 2016] 26

27. Slide 27: Project Payback

    Project Payback  Schedule is effectively From Production -3.9 steepening cashflow gradient in early years  Measured from start of construction – reduce by 2 years to measure from start of production From Production -6.0 years Refer to ASX Announcement dated 2nd March 2016 Independent Financial Ana

28. Slide 28: Pre-Production Capital Estimate

    Pre-Production Capital Estimate Directs US$ M Bulk Earthworks and Drainage 31 Site Services (cleaning, catering etc) 2 Sulphide Process 200 Oxide Process 68 Molybdenum Process 9 Infrastructure (inc HV Power Line, TSF) 132 Mining 22 Mining - Area 940 - Pre-Strip 68 Indirects US$ M EPCM 78 Owner’s Cos

29. Slide 29: C1 Cost (Pro Rata) Global Benchmark

    C1 Cost (Pro Rata) Global Benchmark C1 $/lb Cu Operating Cost Estimate US$ Units Global Productora Median Open Pit Mining (mining & rehandled) 1.80 /t material moved 0.69 0.48 Sulphide Ore Variable Cost 3.79 /t milled ore Sulphide Sulphide Ore Fixed Cost 17 US$M/a 0.54 Gold RC 5 /oz 0.41 Leaching 2.

30. Slide 30: Cash Costs

    Cash Costs PFS Financial Normal Cost Comments Valuation (US$/lb) C1 Cost /lb paid metal, adjusted to exclude deferred waste 1.47 (Normal) stripping, includes gold and molybdenum credits. /lb produced, adjusted to exclude deferred waste C1 Cost 1.65 stripping, excludes gold and molybdenum credits, (P

31. Slide 31: Sustaining Capital & TC/RC

    Sustaining Capital & TC/RC Sustaining Capital Item US$ M Concentrator 2.6 US$M/y Heap Leach 1.19 US$/t oxide ore Tailings Storage Facility 0.46 US$/t sulphide ore Mining Contractor  Sustaining capital costs considered in ore delineation Metal Contract Term Wood Mackenzie Financial Model 2019 2020-2

32. Slide 32: Global Producer Benchmark

    Global Producer Benchmark  Productora benchmarked against global producer information supplied by Wood Mackenzie, Q4 – 2015  Utilised Pro Rata Costing methodology – better measure of efficiency for copper only (no credits)  Comparison made to: ► Total C1 Cost (Pro Rata) ► Total C1 Cost (Normal) 

33. Slide 33: C1 Cost (Pro Rata) Total Benchmark

    C1 Cost (Pro Rata) Total Benchmark (2015 dollar terms) ~ 2015  Productora C1 cost (pro-rata) cost US165c/lb. (mid 3rd Quartile)  Median C1 cost (pro rata) of Producers is US146c/lb  Pro Rata cost does not include credits Sources: Wood Mackenzie, Q4–2015 Producers; Hot Chili, Productora HOT CHILI

34. Slide 34: C1 Cost (Normal) Benchmark

    C1 Cost (Normal) Benchmark (2015 dollar terms)  Productora C1 Cost (Normal) is US147c/lb (Mid 3rd Quartile)  Median C1 Cost (Normal) of Producers (>80Mlb/y) is US133c/lb.  Normal cost includes credits (Au and Mo) Sources: Wood Mackenzie, Q4–2015 Producers; Hot Chili, Productora; Amec Foster Wheel

35. Slide 35: Global Project Benchmark

    Global Project Benchmark  Productora benchmarked against a selection of peer projects: Hillside (Aust.) Harper Creek (Canada) Red Chris (Canada) Cerro Casale (Chile) Relincho (Chile) Agua Rica (Arg.) El Morro (Chile) Carrapateena (Aust.) Ann Mason (USA) Caspiche (Chile) Frieda River (PNG) Cobre Pan

36. Slide 36: Project Benchmark: Resource Copper Equivalent Grade

    Project Benchmark Resource – Copper Equivalent Grade 3.50% Copper Grade Copper Equivalent Grade Resource - Equ Copper Grade (%) 3.00% 2.50% 3.27% 2.00% 2.50% 0.92% 1.50% 0.73% 0.66% 0.61% 0.60% 0.57% 0.55% 0.45% 0.41% 1.00% 0.39% 0.36% 0.30% 0.25% 0.50% 0.00%  Equivalent grade in the upper half of

37. Slide 37: Project Benchmark: C1 Cost (Normal)

    Project Benchmark C1 Cost (Normal - including credits) 200 185 186 177 181 170 C1 Normal Cost LOM Avg (US$/lb) 180 160 147 150 140 135 136 127 120 100 84 87 80 65 60 47 40 20 15 0  Cash costs positioned against project peer-group . Source: Wood Mackenzie, Q4-2015, Hot Chili (Productora) HOT CHILI [

38. Slide 38: Project Benchmark: Initial Capital Expenditure

    Project Benchmark Initial Capital Expenditure 8 7.4 7 6.6 Initial Capital Expenditure (US$B) 5.9 6 5.1 5 4.4 4 3.5 2.7 2.9 3 2 1.5 1.3 1 0.6 0.7 0.8 0.4 0.4 0  Initial Capital in the lower half of selected project peer-group.  Indicates infrastructure advantage of project. Source: Wood Mackenzie,

39. Slide 39: Project Benchmark: Capital Intensity

    Project Benchmark Capital Intensity 35 (US$ 000's/t Annual Cu Equiv. Production) 30 25 Capital Intensity 20 15 10 5 0  Productora Capital Intensity US$10,000/t of annual copper equivalent production is competitive to project peer-group. Source: Wood Mackenzie, Q4-2015, Hot Chili (Productora) HOT CH

40. Slide 40: Project Benchmark: Copper Price Required for 15% IRR

    Project Benchmark Copper Price Required for 15% Project Pre-tax IRR 500 450 400 Copper Price (USc/lb) 350 300 250 200 150 100 50 0  US$2.86/lb price for Productora in lower half, ‘all equity’ analysis.  Caspiche removed – significant credits require negative copper price. Source: Wood Mackenzie, Q

41. Slide 41: Project Benchmark: Pre-tax IRR

    Project Benchmark Pre-tax IRR 25% Pre-tax Internal Rate of Return (%) 20% 15% 10% 5% 0%  Productora IRR 18% in upper half.  IRR based on LT Cu price of US$3.00/lb, ‘all equity’ analysis. Source: Wood Mackenzie, Q4–2015, Adjusted by Amec Foster Wheeler. HOT CHILI [March 2016] 41

42. Slide 42: Large-scale Copper Porphyry Potential

    Large-scale Copper Porphyry Potential  Signifcant resource growth potential confirmed  Alice reveals a preview to future porphyry resource growth  Four large porphyry targets identified  New porphyry targets identified from cutting-edge IP/MT geophysical survey Productora IP chargeability depth

43. Slide 43: Porphyry Targets Key to Further Scale & Mine Life

    Porphyry Targets Key to Further Scale & Mine Life IP4 Porphyry Northern Alice extension Alice pit oxide pit Corridor IP3 Productora IP1 central pit IP2 Southern N Mantos pit Near-mine IP porphyry targets projected to HOT CHILI [March 2016] 43 Refer to ASX Announcement dated 12th October 2015 surface

44. Slide 44: Porphyry Target IP1

    Porphyry Target IP1  The largest target identified in the IP survey, displays a chargeable halo that is approximately 1km in diameter  Dimensions of the centre of the chargeable halo is approximately 500m in width, 500m in depth extent Refer to ASX Announcement dated 12th October 2015 HOT CHILI [M

45. Slide 45: Porphyry Target IP2

    Porphyry Target IP2  The second largest target identified in the IP survey, lies approximately 1km west of Alice  Very strong chargeable halo surrounding a chargeable low which extends over approximately 500m of strike extent HOT CHILI [March 2016] 45 Refer to ASX Announcement dated 12th October 2

46. Slide 46: Path Forward

    Path Forward  Focus on adding value and de-risking the Productora project  Continued growth of porphyry resources within the development footprint Resource Drilling Modelling Mine Studies & Reserve Drilling & Test work Modelling Metallurgy Drilling & Test work Design CAPEX/OPEX Decision 1st Infras

47. Slide 47: Competent Person's Statement

    Qualifying Statements Competent Person’s Statement Exploration Results Exploration information in this Presentation is based upon work undertaken by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscient

48. Slide 48: Appendix – Cost Definitions

    Appendix – Cost Definitions  Normal Costing in which full costs are allocated to the metal under analysis and net by-product revenue is credited against cash operating costs to give a net cash operating cost (this method is sometimes called by-product credit costing).  Pro-rata Costing in which th

49. Slide 49: Hot Chili Limited

    Hot Chili Limited ACN 130 955 725 ASX: HCH Level 1, 768 Canning Highway, Applecross, Western Australia 6153 P: +61 8 9315 9009 F: +61 8 9315 5004 www.hotchili.net.au

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