Slide 1: Costa Fuego Preliminary Economic Assessment
ASX: HCH Costa Fuego TSXV: HCH OTCQX: HHLKF Preliminary Economic Assessment Size, Growth & Development Optionality at Low Elevation in Chile June 2023 COMPANY PRESENTATION | 1 www.hotchili.com.au
Slide 2: Disclaimer & Forward-Looking Statements
Disclaimer & Forward-Looking Statements Disclaimer This Presentation (the "Presentation") is to be used by the recipient for informational purposes only and does not purport to be complete or contain all of the information that may be material to the current or future business, operations, financial
Slide 3: Costa Fuego Copper-Gold Project, Chile
Costa Fuego Copper-Gold Project, Chile One of the Largest Scale, Lowest Elevation Copper Resources in the World (Not Controlled by a Major Miner) Top 10 Undeveloped PEA - Strong Low Risk – Elevation, Next Growth Phase Copper Resource Economics Infrastructure & Up-Scale Strategy (S&P 2022) & Leverage
Slide 4: Copper: The Critical Commodity
Copper THE Critical Commodity Copper inventories at Fiscal & geopolitical critical levels with deficit uncertainty projected to continue Declining copper production Increasing copper demand grades & lack of major from NET ZERO mandates new discoveries Committed NEW copper Material delays in permitti
Slide 5: US$15 Million Investment Agreement with Osisko Gold Royalties
US$15 Million Investment Agreement with Osisko Gold Royalties • Execution of binding Investment Agreement for US$15 million, subject to Closing1 • 1% Net Smelter Return (NSR) royalty on copper and 3% NSR royalty on gold • Equivalent to a 1.12% CuEq* NSR royalty across payable metals on Costa Fuego •
Slide 6: Corporate Overview
Corporate Capital Structure (14th June 2023) Investors by Type Glencore, 9% Overview ASX/TSXV: HCH Blue Spec, 6% Exchange OTCQX: HHLKF GS Group, 5% Shares Outstanding 119.4 M Insiders, 1% Options & Performance Rights 15.9 M Retail, 56% Institutional North American Cash AU$7.4 M 23% secondary listing
Slide 7: Low Elevation Advantage – Lowers Economic Hurdle
Low Elevation Advantage – Lowers Economic Hurdle Long-term Commitment to Risk-Reduction of Future Development 1 Water Risk Removed Granted maritime concession with land access All water required for operations secured 2 Power Line Risk Removed Secured electrical connection to grid Opportunit
Slide 8: Copper Price Scenarios
Copper Price Project Metric Units Base Lower Upper (US$3.50/lb) (US$3.85/lb) (US$4.20/lb) NPV8% US$M 1,046 1,540 2,029 Pre-Tax Copper Price IRR % 19% 24% 29% NPV8% US$M 733 1,100 1,463 Post-Tax Scenarios IRR % 17% 21% 25% Annual Average Revenue US$M 779 845 911 Annual Average EBITDA US$M 384 445 506
Slide 9: Costa Fuego PEA Highlights
Costa Fuego PEA Highlights Strong financial results using 8% discount rate & long-term US$3.85/lb copper price and US$1,750/oz gold price Post-Tax NPV8% Pre-Tax NPV8% Primary Annual Production Rate (First 14 Years) US$1.10 B US$1.54 B 112 kt CuEq¹ Post-Tax IRR Pre-Tax IRR Equal to 21% 24% 95 kt Cu &
Slide 10: Strong Leverage to Copper Price
Strong Leverage to Copper Price 50% Increase in Long-term Copper Price from US$3.85/lb Near Triples Post-Tax NPV8% and Doubles IRR Sensitivity Analysis Sensitivity to Copper Price (Post-Tax NPV8% - ±40% Sensitivity Ranges) (Post-Tax NPV8% & IRR) 4,500 60% Copper Revenue (Price,Recovery,Grade) 4,046
Slide 11: Capital Intensity
Capital Intensity Peer Benchmark – Capital Intensity & Average Annual Copper Equivalent* Production Sphere size represents projected Life of Mine Average Annual CuEq* Production. Grey spheres contain majority Inferred material in study schedule. * The copper-equivalent (CuEq) annual production rate
Slide 12: Ratio of Post-tax NPV8% / Start-up Capital
Ratio of Post-tax NPV8%/Start-up Capital Peer Benchmark – Normalised at US$3.85/lb Cu Sphere size represents projected life of mine average annual CuEq* production. Grey spheres include projects which are not reported at an 8% Discount Rate (i). The projects Hillside and Caravel were not studied at
Slide 13: World's Largest Undeveloped Copper Mineral Resources
World's Largest Undeveloped Copper Mineral Resources Peer Benchmark – Projects Not Controlled by a Major Mining Company World's Largest Undeveloped Copper Mineral Resources Not Controlled by a Major Mining Company Ranked by Measured and Indicated Copper Equivalent Tonnes, Colour indicates S&P assess
Slide 14: Increasing Market Valuation
Market Valuation of Measured & Indicated Copper Resources Peer Benchmark - Market Capitalisation / Measured & Indicated CuEq* Mineral Resources (US¢/lb) Marimaca 17.13 Market Cap. / lb M&I CuEq Increasing Market Valuation Filo 79.56 US¢/lb Warintza Company Average 8.79 /La Verde 5.27 Los Azules Vizc
Slide 15: Increasing Market Valuation
Market Valuation of Development Study Project NPV Peer Benchmark – Ratio of Market Capitalisation / Post-Tax NPV8% – Normalised at US$3.85/lb Cu PEA Study PFS/DFS Study Ra�o of Market Cap / NPV 8% Increasing Market Valuation Filo Kharmagtai 1.61 0.27 Cascabel Company Average 0.25 0.21 Hillside 0.18
Slide 16: Increasing Elevation
Elevation and Water Permits for Copper Development Projects Peer Benchmark – Elevation above sea level and Water Permits (Maritime or Terrestrial) Water Permit Approved No Water Permit Filo del Sol 4,000 Los Azules Escalones Canariaco Norte 3,000 Eleva�on (masl*) Increasing Elevation Average Elevati
Slide 17: 30,000m Drilling Program Set to Commence
30,000m Drilling Program Set to Commence Next Growth Phase & Up-Scale Strategy Cortadera Porphyry Expansion Targets Costa Fuego Cross section Growth Pipeline Dyke Corridor 500mRL US$3.30/lb Cu pits US$3.90/lb Cu pit 1.3km untested Projected IP Conductivity anomaly untested Long section 2.3km Direct
Slide 18: Environment, Social and Governance Focused
Environment, Social and Governance Focused Over a Decade of Responsible and Respectful Investment 2 Environment 3 Social Energy • Connection to Chilean national • Funding of orphanages in grid at Maitencillo substation Vallenar and Freirina • Able to use up to 100% • Providing sociological and Envir
Slide 19: Project Roadmap
Project Roadmap Developing the Costa Fuego Project into an Operating Asset 2023 2024 2025 2026 Delivery of Preliminary Delivery of Mineral Resource Upgrade Delivery of Definitive Economic Assessment Pre-Feasibility Study (H1 2025) Feasibility Study (Q2 2023) (H2 2024) (H1 2026) Development Study & C
Slide 20: PEA Technical Highlights
PEA Technical Highlights A new copper supplier is coming Low Risk, Near-Term, Meaningful Copper Supply - Over a Decade in the Making COMPANY PRESENTATION | 20 www.hotchili.com.au
Slide 21: Project layout
Costa Fuego Project Hot Chili Tenements, Production Feed, and Plant Locations Project layout Processing Hot Chili Tenements N Facility • Projects located at low elevation (average 740 m) on the Chilean Productora coastal range Open Pits San Antonio • Proposed centralised processing Open Pit faciliti
Slide 22: 2023 PEA Components
2023 PEA Components Low Capital, Fast Payback, Meaningful Copper Production Block Cave Low-Grade Project Project Processing Underground SX-EW Sulphide Stockpile Financing Construction Ramp-Up Development Expansion Leach Processing Begins Begins Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Cor
Slide 23: Production and Revenue Breakdown
Production and Revenue Breakdown Production underpinned by 97% Indicated Resources, 85% of Total Revenue from Copper1 Production Feed1 Units Total LOM Revenue Contribution2 Revenue (US$M) % of Total Highlights Sulphide Concentrator CuEq* Mt % 334 0.52 Copper in Concentrate Copper Cathode 10,342 1,21
Slide 24: Production Feed Sources
Production Feed Sources Schedule Flexibility Lowers Operational Risk Productora 4 Mt 65% of Production Features N Open Pit 50 Mt Feed from Open Pits 33 Mt San Antonio • Combined flotation 155 Mt Cortadera and leaching • PEA pit shells and block cave based Open Pit on copper price of US$3.30/lb Cu Op
Slide 25: Mineral Resource Estimates
Mineral Resource Estimates 82% of Mineral Resource CuEq* Metal Classified as Indicated Productora Costa Fuego Mineral Resource Estimate (March 2022) Grade Contained Metal Tonnes CuEq* Cu Au Ag Mo CuEq* Cu Au Ag Mo Classification 305 kt (Mt) (%) (%) (g/t) (g/t) (ppm) (kt) (kt) (koz) (koz) (kt) Satell
Slide 26: Significant Optionality to Higher Copper Price
Significant Optionality to Higher Copper Price Comparison shown between US$3.30/lb and US$3.90/lb copper price pit shells A Long Section A’ Plan A’ 500mRL 500mRL US$3.30/lb Cu Pit US$3.90/lb Cu Pit A Productora Blocks shown above 0.21% CuEq* N B C Plan C’ Long Section B’ Long Section C’ Resource Est
Slide 27: Robust Resource Estimate – Fit for Purpose
Robust Resource Estimate – Fit for Purpose >97% Production Feed Comprises Indicated Mineral Resource A Long Section A’ Plan A’ 500mRL US$3.30/lb Cu Pit US$3.90/lb Cu Pit A Productora Blocks shown above Open Pit cut-off grade of 0.21% CuEq*. Long section clipping of ±40m. N B Long Section B’ C Long S
Slide 28: Mining Phases
Mining Phases Costa Fuego Open Pits Target Early, High-Grade Feed Costa Fuego Mining Phases N • Initial phases target high-grade, near-surface material at Productora • Cortadera Cuerpo 1 pit is used for waste backfill once complete • Block cave production follows Cuerpo 3 pit at Cortadera Satellites
Slide 29: Mine Production Schedule
Mine Production Schedule Open Pit Mining for First 11 Years De-Risks and Funds Underground Development Productora Final Stage & Cuerpo 3 Commencement Highlights 180 10 Strip Ratio 160 5 Average Open Pit Strip Ratio 1.8 140 0 Pre-Strip • High grade Productora open pit Mined Material (Mt) (OP) phases
Slide 30: Processing – Copper Production Profile
Processing – Copper Production Profile +95 kt Annual Average Copper Production Maintained over 14 years Concentrator Schedule Total Copper Metal Produced Production Feed 25 0.7% 140 0.6% 20 120 0.5% CuEq Grade (%) Tonnes (Mt) 15 0.4% 14-Year Primary Production Rate 95 ktpa 100 10 0.3% Cu Tonnes (kt)
Slide 31: Processing – Copper Equivalent Production Profile
Processing – Copper Equivalent* Production Profile +112 kt Annual Average Copper Equivalent* Production Maintained over 14 years Gold and Silver Metal Produced Total Copper Equivalent* Metal Produced 140 14-Year Primary Production Rate 112 ktpa CuEq* 120 100 Cu Produced (kt) 80 60 40 20 Molybdenum M
Slide 32: Processing Flowsheet
Processing Flowsheet Flotation, Oxide Heap Leach and Low-Grade Sulphide Dump Leach Flotation Circuit Leach Circuit Average Life of Mine Variable Throughput* Cathode Production 21.5 Mtpa 10 ktpa, Expanding to 12 ktpa in Year 8 The PEA is preliminary in nature and includes 3% of production feed from I
Slide 33: Sulphide Concentrator
Sulphide Concentrator Extensive Recovery Testwork Completed, Clean Concentrate1, Variable Throughput Rate Determined Metal Recoveries Testwork Outcomes Copper Recovery Model to Concentrate Average Recovery to Concentrate (%) # Samples Deposit Cu Au Ag Mo Block Cave Alice San Antonio Productora 87 56
Slide 34: Leach Circuit
Leach Circuit Extended and Expanded Copper Cathode Production via Oxide and Sulphide Leaching Oxide Low Grade Sulphide Heap Leach Recovery by Area • Positive amenability testwork on seven bulk-sample Copper % of composites from Productora and Cortadera # Samples # Samples Area Recovery Production (%
Slide 35: Costa Fuego Project Layout
Costa Fuego Project Layout Centralised and Compact Infrastructure Footprint Las Losas Port Maintencillo Power Huasco (CAP) Substation Freirina Vallenar San Antonio Seawater Pipeline (pop. 52,000) Seawater Easement Intake Power Transmission Rope Line Easement Conveyor San Productora Antonio Cortadera
Slide 36: Financial Model Assumptions
Financial Model Assumptions Long-term Copper Price Assumption in Line with 27-Bank Forecast Inputs Discount Rate (i) = 8% Long-term Metal Price Assumptions: Variable Units Price Copper Price US$/lb 3.85 Gold Price US$/oz 1,750 Silver Price US$/oz 21 Molybdenum Price US$/lb 17 Long-term Exchange Rate
Slide 37: Strong Project Economics
Project Metric Units Value Cash Flow Summary US$M Financial Measures Total Revenue 13,523 NPV8% US$M 1,540 Total Operating Cost -6,400 Pre-Tax Cu US$3.85/lb Total Capital Cost -2,720 IRR % 24 Total Taxes -1,118 NPV8% US$M 1,100 Post-Tax Cu US$3.85/lb Total Free Cashflow (Post-Tax) 3,284 IRR % 21 Pay
Slide 38: Undiscounted Cashflows
Undiscounted Cashflows Project Generates US$13.5 Billion Revenue & US$3.3 Billion Free Cashflow 1,800 3,500 3.5-Year Payback Low Grade Sulphide Achieved Leach Commences First Open Pit First Cave 1,300 Production Low Grade 2,500 Production Stockpile Feed Cumula�ve Free Cashflow (US$M) Annual Cashflows
Slide 39: Revenue Profile
Revenue Profile 85% of Production Feed Revenue from Copper 1,400 Revenue Stream Revenue (US$M) % of Total Silver 32 0.2% Molybdenum 799 6% 1,200 Gold 1,132 8% Copper Cathode 1,218 9% Copper in Concentrate 10,342 76% 1,000 Cashflow (US$M) 800 600 400 200 0 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1
Slide 40: Capital Cost Profile
Start-up Capital Cost Profile US$1,046 M Expansion Capital Fully Funded by Cashflow EPCM, US$ 118M Owners Costs, US$ 102M Mining, US$ 33M Capitalised Mining Costa Fuego Cost, US$ 100M TSF, US$ 32M 700 Construction Bulk Earthworks and Commences Drainage, US$ 46M Infrastructure, US$ 182M Site Services
Slide 41: Operating Cost Profile
Operating Cost Profile 72% of Cash Costs Related to Mining and Processing Accelerated Operating Costs Total (US$M) US$/lb Cu Produced Completion of Mining Costs 2,240 0.72 Cortadera Pits 700 Open Pit Cut- Processing Costs 2,404 0.78 Back Phases G&A Costs 203 0.07 600 Selling Costs 1,229 0.40 Royalti
Slide 42: Cost and Production Profile
Cost and Production Profile Competitive Total Cash Cost of US$1.43/lb Copper and/or AISC of US$1.74/lb Copper 160 4.00 140 3.50 120 3.00 14-Year Average Annual Production Rate 112 ktpa CuEq* 100 2.50 CuEq Tonnes (kt) US$/lb Cu 80 2.00 Average AISC - US$1.74/lb Cu 60 1.50 Average Total Cash Cost US$1
Slide 43: Capital Cost Details
Start-up Capex Total US$M Construction Directs Bulk Earthworks and Drainage 46 Site Services 3 Sulphide Process 333 Oxide Process 84 Molybdenum Process 13 Infrastructure (High Voltage Power Line & Water Pipeline) 182 Capital Tailings Storage Facility 32 Mining Indirects 33 Start-up Capex: Cost Engin
Slide 44: Operating Cost Details
Operating Costs Unit Life of Mine Operating Cost Details Total (US$M) Mining Cost Average US$/t mined 2.87 Mining Cost 2,240 Open Pit US$/t mined 2.21 Processing Costs 2,404 Underground US$/t mined 6.55 G&A Costs 203 Processing Costs Selling Costs 1,229 Sulphide Concentrator Cu/Au/Ag Concentrate US$
Slide 45: Appendices
Appendices A new copper supplier is coming COMPANY PRESENTATION | 45 www.hotchili.com.au
Slide 46: Board Members
Board Members Dr Nicole Adshead-Bell Christian Easterday Stephen Quin Independent Chairman Managing Director & Chief Independent Non-Executive Director Executive Officer Roberto de Andraca Adriasola1 Mark Jamieson Non-Executive Director Non-Executive Director (Glencore Nominee) COMPANY PRESENTATION
Slide 47: Management
Management José Ignacio Silva1 Grant King Penelope Beattie Executive Vice President – Chile Chief Operating Officer Company Secretary & Chief Financial Officer Andrea Aravena1 Kirsty Sheerin Geology Manager – Chile Resource Development Manager COMPANY PRESENTATION | 47 1 Chilean National, resides in
Slide 48: Key Consultants & PEA Contributors
Key Consultants & PEA Contributors Dr Steve Garwin Dr John Beeson Chief Technical Advisor Lead Structural Geologist The Costa Fuego PEA was compiled by Wood Australia Pty Ltd, with support from experienced and reputable independent Qualified Persons (QPs) and Key Consultants, based in Chile and Aust
Slide 49: 27-Bank Consensus Forecast
27-Bank Consensus Forecast Copper Price (US$/lb) Provided by National Bank Financial - 2023 Broker 2023 2024 2025 2026 2027 Estimate Estimate Estimate Estimate Estimate Long Term Barclays $3.70 $3.15 $3.25 $3.40 n.a. n.a. Bell Potter $3.64 $4.00 $4.08 n.a. n.a. n.a. BMO $3.57 $3.51 $3.63 $3.97 n.a.
Slide 50: Water Fundamentals for Copper in Chile
Water Fundamentals for Copper in Chile Seawater and Elevation Advantage – Low Cost and Security of Supply Operational expenditures by altitude, 2028 forecast, Water stress Share of copper Fresh water supply and demand Sources of water used in Chilean mining $ per metric ton of payable metal in Chile
Slide 51: New Material Copper Supply
New Material Copper Supply Near-term Copper Supply From Majors Produc�on Timeline of Senior Copper Development Peers 2021 2022 2023 2024 2025 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 0.5 0.5 Stated Informa�on DFS Construc�on Marimaca Ramp-up Mina Justa Stated Timeframe 146 kt/a 1.5 Ass
Slide 52: Concentrate Specification
Copper-Gold-Silver-Molybdenum Copper-Gold-Silver-Molybdenum Concentrate Assays Concentrate Assays Element Unit Value Element Unit Value Concentrate Cu Au % ppm 26 5 Mn Na ppm ppm 98 2,392 Mo ppm 7,411 Ni ppm 82 Specification Ag Co ppm ppm 24 263 P Pb ppm ppm 154 136 Cl ppm 238 S % 32 Al2O3 % 2 Sb pp
Slide 53: Global Resource Peer Group
Mo Company Cu Au Au Ag Ag Mo Mo CuEq CuEq Average Processing Project Reported Level of Report Class Mt Cu% pp Report Source Mt g/t Moz g/t Moz Mt kt % Mt Recovery Study Date m Preliminary Northern Dynasty Pebble MI 6,456 0.40 25.8 0.34 71 1.7 345 240 1.55 1,551 0.72 46.4 Cu=84%, Au=73%, Economic 202
Slide 54: Global Resource Peer Group (continued)
Company Project Ag Mo Average Processing Reported Level of Report Class Mt Cu% Cu Mt Au g/tAu Moz Ag g/t Mo Mt Mo kt CuEq% CuEq Mt Report Source Moz ppm Recovery Study Date Ind Oxide 309 0.32 1.0 0.31 3.1 2.7 27 0.50 1.5 Oxide: Cu=82%, Filo Mining Filo del Sol Inf Oxide 95 0.25 0.2 0.31 1.0 2.2 7 0.
Slide 55: Global Developer and Market Peer Group
Global Developer and Market Peer Group Benchmarking Data Project Units Costa Fuego Hillside Mantos Blancos Caravel Kharmagtai Filo del Sol Escalones Santo Domingo Casino Mantoverde Canariaco Norte Copper World Cascabel Josemaria Vizcachitas Los Azules Caravel Minerals Western Copper Lundin Mining Lo
Slide 56: Global Developer and Market Peer Group
Global Developer and Market Peer Group Resource Benchmarking Data (continued) Canariaco Warintza/La Project Units Costa Fuego Hillside Caravel Kharmagtai Filo Escalones Casino Cascabel Vizcachitas Los Azules Marimaca Antakori Norte Verde Western Rex Caravel Xanadu Filo Mining World Alta Copper Los A
Slide 57: Global Developer and Market Peer Group (continued)
Global Developer and Market Peer Group (continued) Reference Data - Hyperlinks Index Company Project Hyperlink 1 Hot Chili Ltd Costa Fuego https://www.hotchili.net.au/wp-content/uploads/2022/05/NI-43-101-Costa-Fuego-Resources-FINAL.pdf https://static1.squarespace.com/static/5dcb886c7d6813437e9216a8/
Slide 58: Notes to Mineral Resource Disclosure – Costa Fuego
Notes to Mineral Resource Disclosure – Costa Fuego Costa Fuego Copper-Gold Project Mineral Resource Estimate, March 2022 Costa Fuego Open Pit Resource Grade Contained Metal Classification Tonnes CuEq 7 Cu Au Ag Mo Copper Eq Copper Gold Silver Molybdenum 7 (+0.21% CuEq ) (Mt) (%) (%) (g/t) (g/t) (ppm
Slide 59: Qualifying Statements
Qualifying Statements National Instrument 43-101 (Canadian Reporting Standard) Joint Ore Reserves Committee Code (JORC) 2012 (Reporting Standard ASX) This PEA is preliminary in nature, includes inferred resources that are considered too speculative geologically to have the economic The PEA referred
Slide 60: Mr Christian Easterday
Mr Christian Easterday Hot Chili Limited Managing Director ACN 130 955 725 E: admin@hotchili.net.au First Floor, 768 Canning Highway, Applecross, Western Australia 6153 PO Box 1725, Applecross, Harbor Access Western Australia 6953 Investor & Public Relations (Canada) P: +61 8 9315 9009 E: Graham.Far