Hot Chili said that the Costa Fuego copper-gold project in northern Chile will require a start-up capital of $1.05bn, based on the findings of a preliminary economic assessment (PEA).
According to the Australia-based mineral exploration company, the project will have a payback of 3.5 years.
Hot Chili stated that initial phases of open pit mining at the Costa Fuego copper-gold project will fully meet the funding requirement of the development of a bulk underground operation.
The project will have an initial mine life of 16 years with 1.41 million tonnes (Mt) of copper (Cu) and 718,000 ounces of gold (Au) produced for total revenue of around $13.5bn. The total free cash flow post-tax, after operating costs, capital costs, and royalties is expected to be $3.28bn.
As per the PEA, the base-case post-tax net present value (NPV) of the project at an 8% discount rate is $1.1bn while the internal rate of return (IRR) is estimated to be 21%.
Hot Chili intends to release the pre-feasibility study (PFS) of the Costa Fuego copper-gold project by H2 2024. The mineral exploration company said that 80% of workstreams for supporting a PFS are completed, with only minimal study costs left.
The Costa Fuego Copper Project brings together the Cortadera porphyry copper-gold deposit and the Productora copper-gold deposit, which are located 14 km apart in a prime location along the low-altitude coastal range of the Atacama Region.
Hot Chili said that it is currently studying a single, large pit scenario for the Cortadera deposit, which has the potential to significantly extend the mine life and increase the scale of the project. The study is set to take place in the second half of this year.
Hot Chili managing director Christian Easterday said: “The Costa Fuego PEA cements Hot Chili’s position as the largest copper developer listed on the ASX by both resource size and potential scale of copper production.
“Costa Fuego ranks highly amongst global peer projects and stands out as one of the world’s lowest capital intensity, major copper developments.
“The PEA indicates a strong investment case for advancing Costa Fuego to a PFS for what would be a low-cost, low-risk, long-life, large-scale copper project, which is extremely leveraged to both resource growth and copper price appreciation.”
Hot Chili also announced the execution of a binding $15m investment agreement with Osisko Gold Royalties for a 1% net smelter return (NSR) royalty on copper and a 3% NSR royalty on gold across the Costa Fuego copper-gold project.
