Hot Chili banks US$15M as royalty giant backs Chilean copper discovery

Hot Chili’s La Verde copper-gold porphyry discovery, 35 kilometres southeast of the company’s planned Productora central processing hub.

There are few stronger endorsements in mining than when a sophisticated investor writes a cheque for a project before it even has a maiden resource.

That is exactly what has happened for Hot Chili (ASX: HCH) after royalty specialist OR Royalties Inc agreed to stump up another US$15 million (A$21.3 million) in non-dilutive funding by extending its existing royalty agreement to include the company's La Verde copper-gold discovery in Chile.

The latest agreement doubles the total value of Hot Chili's royalty arrangement with OR to US$30 million, following the original US$15 million deal struck in 2023 for its broader Costa Fuego project.

In exchange for the up-front cash, OR will now receive a one per cent net smelter royalty (NSR) on the company’s future copper production and a three per cent NSR on any gold produced from both projects.

Management said the transaction achieves two things at the same time. It funds La Verde’s progress without share dilution and it gives the market a credible third-party data point on the value of an asset that has yet to be formally quantified, as it continues drilling towards its first La Verde resource.

This latest endorsement also carries extra weight because Hot Chili has evolved dramatically since OR first backed the copper-gold junior.

The company’s latest corporate presentation highlights its flagship Costa Fuego deposit as one of the few ASX-listed coastal copper development projects of scale, with 798 million tonnes in the indicated category grading 0.45 per cent copper equivalent, plus a further 203 million tonnes inferred at 0.31 per cent copper equivalent.

A March 2025 pre-feasibility study gave the project a post-tax net present value of US$1.2 billion (A$1.73 billion), a 19 per cent internal rate of return and an average annual production of 116,000 tonnes of copper equivalent across the first 14 years of a proposed 20-year mine life.

However, the presentation’s fresher message is that La Verde, a copper-gold discovery 35 kilometres southeast of Costa Fuego’s planned central processing facility, is now being assessed as a potential source of higher-grade starter feed for the wider development.

Hot Chili says La Verde now has a drill-defined footprint measuring 1000 metres by 800m by 800m and remains open in all directions, with more than 26,000m of combined reverse circulation (RC) and diamond drilling completed and a maiden resource estimate targeted for later in the year.

When OR first invested in Costa Fuego in 2023, they were backing Hot Chili with a published PEA and a 725Mt Indicated resource base. This time, they are committing another US$15 million to a pre-resource deposit, which speaks directly to the scale of what we see at La Verde and the potential impact it has for our future Costa Fuego copper-gold production hub.   Hot Chili Managing Director Christian Easterday

Recent drilling results may explain OR's interest. A June hole at La Verde returned 391.1m grading 0.51 per cent copper equivalent from surface, while an earlier nearby hole delivered 725m at 0.42 per cent copper equivalent, including 62m at 1.03 per cent copper equivalent.

With three rigs on site at La Verde, 24 drill holes still pending and at least six holes expected to test for significant extensions to the deposit’s high-grade core, the company is chasing both scale and grade while keeping the bigger Costa Fuego development case in clear view.

For Hot Chili, the latest presentation reads less like a single-number update and more like a guide on how the pieces are starting to come together.

Costa Fuego already has the scale, La Verde is bringing the next growth chapter into view, and OR Royalties has added a timely vote of confidence.

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