Hot Chili 2025 Annual Report

• Delivered Pre-Feasibility Study for Costa Fuego copper-gold project with maiden ore reserve of 502 million tonnes at 0.37% copper and 0.10 g/t gold, supporting 116,000 tonnes per year copper equivalent production over 14 years with post-tax NPV of US$1.2 billion
• Confirmed significant copper-gold porphyry discovery at La Verde, with mineralisation extending over 1 kilometre in length and up to 750 metres in width from near surface, establishing a third bulk tonnage deposit for potential integration into Costa Fuego
• Advanced Huasco Water Pre-Feasibility Study with post-tax NPV of US$122 million for Stage 1 seawater supply and US$977 million for Stage 2 desalinated water, positioning the company to monetise critical water infrastructure in Chile's Atacama region
• Secured priority status registration from Chilean Ministry of Economy for both Costa Fuego and Huasco Water projects, enabling streamlined permitting and regulatory oversight
• Raised A$14 million to fund strategic partnering process and Phase 2 drilling at La Verde, whilst appointing experienced mining executives to board and management positions

Hot Chili Limited (ASX: HCH | TSXV: HCH | OTCQX: HHLKF) is an Australian-based copper-gold exploration and development company focused on advancing large-scale projects in Chile's prolific coastal copper belt. The company has consolidated an 18,000-hectare landholding in the Huasco region, positioning Costa Fuego as one of only a handful of independently controlled copper developments worldwide capable of producing more than 100,000 tonnes per year of copper equivalent metal in the near term. With a one billion tonne resource base containing 3.4 million tonnes of copper and 3.0 million ounces of gold, Hot Chili is advancing towards a final investment decision for its coastal copper hub, leveraging natural advantages including low elevation settings, existing infrastructure, and established community relationships in the region.

Costa Fuego Pre-Feasibility Study and Maiden Ore Reserve Delivery

Hot Chili achieved a significant milestone in March 2025 with the release of its Costa Fuego Pre-Feasibility Study, following an extensive work programme encompassing detailed mine planning, updated cost estimates, metallurgical testwork, and critical infrastructure planning. The study positions Costa Fuego as a globally meaningful multi-decade project with top-quartile copper production capacity and bottom-quartile capital intensity, requiring US$1.27 billion in start-up capital to deliver a post-tax internal rate of return of 19 per cent.

The PFS confirmed a maiden ore reserve of 502 million tonnes across the Productora, Cortadera, San Antonio, and Alice deposits, representing a 67 per cent conversion rate from indicated mineral resources. This substantial reserve base supports a 20-year mine life with primary production of 95,000 tonnes per year of copper, 48,000 ounces per year of gold, and 2,000 tonnes per year of molybdenum over the first 14 years. The project demonstrates strong economics with life-of-mine free cashflow of US$3.86 billion and a payback period of 4.5 years, whilst maintaining competitive C1 cash costs of US$1.38 per pound of copper net of by-product credits.

Chairman Stuart Mathews noted:

"The project's one billion tonne resource base for 3.4 million tonnes copper and 3.0 million ounces gold, clean concentrate, low elevation setting in the heart of existing infrastructure, underpins one of only a handful of independently controlled copper developments in the world capable of producing more than 100,000 tonnes per year of copper equivalent metal in the near term."

The study's improved accuracy to plus or minus 25 per cent, combined with an open pit strip ratio of 1.5 and advanced permitting status, positions Costa Fuego advantageously compared to other large undeveloped copper projects globally. The company is preparing to submit its Environmental Impact Assessment based on the current PFS-scale definition, marking another critical step towards development.

La Verde Copper-Gold Porphyry Discovery and Exploration Success

The consolidation of the La Verde tenement into Hot Chili's Domeyko landholding marked a strategic breakthrough for the company's exploration strategy, leading to the confirmation of a significant copper-gold porphyry discovery following completion of a 31-hole, 9,630-metre reverse circulation drilling programme. Results confirmed three higher-grade centres defined by multiple near-surface intersections, with wide, shallow mineralisation extending over 1 kilometre in length and up to 750 metres in width, demonstrating substantial resource growth potential for additional higher-grade open pit material.

Located just 35 kilometres south of the planned central processing location for Costa Fuego, La Verde represents the company's third bulk tonnage copper-gold discovery and opens significant opportunities for integration into the project's front-end mine plan. Notable drill intercepts included 308 metres at 0.5 per cent copper and 0.3 grams per tonne gold in hole DKP002, and 389 metres at 0.4 per cent copper and 0.1 grams per tonne gold in hole DKP030, with over half of the drillholes ending in mineralisation, confirming that the discovery remains open laterally and at depth.

The company's systematic regional targeting programme across its 18,000-hectare Domeyko landholding, including extensive ground magnetics surveys comprising 1,755 line kilometres, surface geochemical sampling, and detailed structural mapping, has outlined three additional priority porphyry targets adjacent to La Verde. Two of these targets are concealed under shallow gravel cover, presenting compelling blind exploration opportunities.

Huasco Water Pre-Feasibility Study and Regional Water Supply Opportunity

Hot Chili's subsidiary Huasco Water released a Pre-Feasibility Study in March 2025 outlining a three-staged business case to address water scarcity in Chile's Atacama region, leveraging the company's unique first-mover advantage in maritime water concessions. The study, prepared by independent engineering groups Wood Australia and ILF Ingenieria Chile, presents a robust approach for both Stage 1 seawater supply and Stage 2 desalinated water supply, with a conceptual-level study for Stage 3 expansion, collectively targeting over 4,000 litres per second of identified demand from six undeveloped mining projects without secured water access.

Stage 1 comprises a multi-decade seawater supply of up to 500 litres per second to Costa Fuego, supported by a memorandum of understanding and underpinned by granted maritime water concessions, coastal land access permits, pipeline easements, and grid power connection. This stage delivers a post-tax net present value of US$122 million with a 19 per cent internal rate of return and construction capital of US$151 million. The staged expansion approach enables long-term scalable water supply supporting mining, community, and agricultural needs in the Huasco Valley, with Stage 2 targeting 1,300 litres per second of desalinated water supply (post-tax NPV of US$977 million, construction capital of US$1.4 billion) and Stage 3 envisaging potential expansion to 2,300 litres per second.

Huasco Water's competitive positioning stems from being the only company with permitted access to supply seawater in the Huasco Valley region following a ten-year regulatory approval process, whilst maintaining over a year's advancement on regulatory applications to enable desalinated water supply. The company has completed winter period environmental baseline studies and advanced community engagement through bilingual digital updates and public events, positioning the water business as a key differentiator and important funding option that leverages Hot Chili's water assets and first-mover advantage to enable industrial-scale water supply to the region.

Looking Ahead

Hot Chili has established clear milestones for the period ahead, focusing on completing multiple PFS optimisation workstreams across mining, geotechnical, processing, infrastructure, and environmental analysis. The company is advancing Feasibility Study workstreams to position the project for a financial investment decision, whilst continuing development of Huasco Water including commencement of feasibility studies. Exploration remains a priority with continuation of the company's growth strategy, particularly focused on Phase 2 drilling at La Verde and advancing three additional porphyry targets identified through regional exploration programmes.

The company initiated asset-level strategic partnering processes following completion of both PFS studies, appointing BMO Capital Markets as financial adviser to introduce one or more qualified partners with the financial, technical, and operational capability to assist in funding and delivering both projects. With Costa Fuego and Huasco Water now registered for priority status by Chile's Ministry of Economy, the company benefits from streamlined administrative processes and coordinated oversight aimed at expediting permitting and approvals. The strengthened leadership team, including newly appointed Chairman Stuart Mathews with over 32 years of international mining experience, positions Hot Chili to navigate the final investment phase towards becoming a mid-tier copper-gold producer in a tightening global copper market.

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