Costa Fuego’s PFS Shows US$1.2B NPV as La Verde Drilling Expands Copper-Gold Footprint

A New Chapter for Costa Fuego

Hot Chili Limited has announced a significant breakthrough at its flagship Costa Fuego copper-gold project in Chile with the discovery of the La Verde porphyry. This new find, located just 35 kilometres from the planned Productora processing facility, has delivered wide, near-surface copper-gold intersections that could materially enhance the project’s economics and production profile.

The La Verde discovery has been rapidly delineated through extensive drilling, with over 14,500 metres completed to date. Notable drill results include a 529-metre intersection grading 0.56% copper equivalent, featuring higher-grade cores that confirm the presence of gold-rich, high-grade copper mineralisation at depth. These results underscore the potential for La Verde to become a major growth lever within the Costa Fuego portfolio.

Robust Economics Backed by PFS

Hot Chili’s Preliminary Feasibility Study (PFS) for Costa Fuego presents a compelling financial outlook. The project boasts a post-tax net present value (NPV) of US$1.2 billion at an 8% discount rate and an internal rate of return (IRR) of 19%, underpinned by a 20-year mine life and an annual production rate of 116,000 tonnes of copper equivalent over 14 years. The start-up capital requirement is estimated at US$1.27 billion, with a competitive C1 cash cost of US$1.38 per pound of copper net of by-product credits.

Importantly, the project benefits from a low elevation location averaging 740 metres above sea level, which contributes to lower capital intensity and operating costs compared to many peers in South America. This geographic advantage, combined with access to existing infrastructure and a strategic maritime concession for seawater use, reduces development risks and supports a more sustainable operation.

Strategic Infrastructure and Water Security

Hot Chili has secured critical infrastructure and water rights that further de-risk the Costa Fuego development. The company holds a maritime concession and land access for seawater extraction, essential for processing operations in the arid Huasco Valley. The Huasco Water Project, evaluated in a separate PFS, shows strong financial metrics with a post-tax NPV of US$122 million for seawater supply and nearly US$1 billion for potential desalinated water supply, both with IRRs of 19%.

Additionally, easement corridors for power and water pipelines have been secured, alongside surface rights for mining infrastructure. An executed memorandum of understanding with Puerto Las Losas SA provides a pathway to negotiate port services, further enhancing logistical efficiency. These strategic moves position Hot Chili to streamline permitting and accelerate project timelines.

Market Position and Valuation

Despite a 140% share price increase over the past year, Hot Chili’s market valuation remains discounted relative to its peer group of independent copper developers. Trading at a price-to-net asset value ratio of approximately 0.25, the company offers significant upside potential as it advances towards production. Analysts highlight Hot Chili’s strong leverage to copper prices, with every US$0.10 per pound increase in copper price adding around US$100 million to the project’s NPV.

With copper markets tightening amid supply constraints, Hot Chili’s combination of near-term production scale, low-cost profile, and strategic infrastructure assets makes it a standout in the junior copper development space. The ongoing drill program at La Verde, including pending assay results from deep diamond holes, promises further resource expansion and value creation.

Looking Ahead

Hot Chili’s recent announcements mark a pivotal moment for the Costa Fuego project, blending exploration success with solid project fundamentals and infrastructure readiness. As the company prepares for definitive feasibility studies and continues to unlock the potential of La Verde, investors and industry watchers will be keenly observing assay results and permitting progress that could unlock further value.