Hot Chili - Major Copper-Gold Discovery, Large Scale Appeal

• Hot Chili has consolidated a significant land package on the Chilean coastline with a billion tonne copper resource base
• Recent drilling at the La Verde discovery confirms a potential third major deposit with long intercepts of high-grade copper-gold
• La Verde compares favorably to the company's large Cortadera and Productora deposits and could double the resource base
• Hot Chili is advancing pre-feasibility and infrastructure to become a 150ktpa copper producer with strong gold credits
• Major miner Glencore is an offtake partner and 7.8% shareholder, validating the company's strategic coastal position

Hot Chili has established itself as one of the premier copper developers globally, with a strategic focus on developing large-scale assets along the Chilean coastline. The company has recently announced a significant new discovery at La Verde, marking its third major copper-gold find in the region. This latest development adds to an already impressive portfolio that includes a billion-tonne resource base, positioning Hot Chili for potential entry into the tier-one mining space.

CEO Christian Easterday describes the recent La Verde discovery as "very significant," with drilling intersections revealing substantial mineralisation just 30 kilometers south of the company's existing resource base. The initial results have been impressive, with intersections including 320 meters at 0.3% copper and 0.1 gold, demonstrating both scale and grade potential from near-surface.

Significance of La Verde Discovery

The La Verde discovery is highly significant for Hot Chili, representing a potential step-change in the scale and mine life of its Costa Fuego development. Drill highlights include:

• 320m @ 0.3% Cu, 0.1 g/t Au from surface, including100m @ 0.7% Cu, 0.3 g/t Au
• 8 out of 12 holes so far ending in mineralisation

As Christian Easterday explains:

"300, 200 metre intercepts, a lot of strong gold, a lot of strong copper and what's really impressive is this is from near surface with most of the drill holes ending in mineralisation in the RC drilling that we're undertaking and this deposit, or this major discovery, is open in all directions and particularly at depth"

La Verde looks to be a bulk tonnage porphyry copper-gold system in the same style as Hot Chili's Cortadera discovery to the north. Importantly, the drilling to date has only tested the top 250-300m, with the potential for the mineralisation to extend much deeper, as seen at Cortadera (+1.2 km depth).

With the addition of La Verde, Hot Chili will likely push well beyond its current global resource base of 1 billion tonnes. As Christian notes, "size is everything" in the copper sector. La Verde provides an opportunity for Hot Chili to potentially double its resource base and join the top ranks of global copper developers in terms of scale.

Interview with Managing Director & CEO, Christian Easterday

Geological Insights & Comparisons

The La Verde discovery is shaping up to be a large copper-gold porphyry system, similar to Hot Chili's Cortadera deposit 30km to the north. Key geological insights include:

• Mineralisation sits within a large porphyry "footprint"
• Broad, consistent copper-gold mineralisation from surface
• High-grade zones of 100m @ 0.7% Cu, 0.3 g/t Au within larger envelopes
• Open in all directions, only drilled to ~300m depth so far
• Similarities to Cortadera system which extends +1.2 km deep

Commenting on the geological model, Christian said:

"We see a lot of similarities with our Cortadera copper gold porphyry discovery that we introduced to the company in 2019.  It's underpinned about 70% of our resource base, so these things are big. This has got a very similar footprint to that 700 million ton monster to the north of us."

The occurrence of high-grade, gold-rich zones at La Verde is especially promising. Some of the drill intercepts are running 0.3 g/t gold, up to 3x the grade seen in Hot Chili's other deposits. This provides additional optionality and could enhance project economics. As Christian explains:

"Scale's important, but also having some nice grade to throw in there, an open-pittable grade, that's also important...particularly intersections which are showing twice to three times the gold grades in our existing deposits."

Strategic Planning & Infrastructure Development

Hot Chili has patiently consolidated this coastal land package over 16 years, with an integrated development vision. The company is currently completing pre-feasibility (PFS) studies on a central processing approach for its Costa Fuego project.

The PFS is evaluating a two-stage development, starting at 100ktpa copper production capacity (putting it in the top five global producers outside the majors), with a second expansion stage to lift output to around 150ktpa. Christian outlines the strategy:

"We always envisaged a much larger production hub on the coastline of Chile, taking advantage of our low elevation and all of the infrastructure advantages...We always envisaged something that was around a 150,000 tonne per annum copper project being delivered on this part of the coastline."

In parallel, Hot Chili is advancing key infrastructure to support development, including water and power supply. The company is planning a regional water concept, with the potential to supply not just its own operations but possibly the entire region.

The addition of La Verde fits neatly into this strategic vision. Its proximity, just 30km south of Costa Fuego, and favorable topography (low elevation, situated along the Pan-American Highway), make it amenable to integration into a central processing complex.

Relationship with Glencore & Market Positioning

Hot Chili has a strong relationship with major miner Glencore, which holds a 7.8% stake in the company and has an offtake agreement for 60% of production over the first 8 years. Christian Easterday believes the La Verde discovery will be very well received by Glencore:

"I imagine we're going to have a very happy shareholder this morning. Glencore certainly came into Hot Chili because they also believed in our vision that this part of the coastline was hosting a Glencore sized project, with a 16 year life at the moment but certainly something that they wanted to see grow in scale and mine life and these are the kind of discoveries that do exactly that so very positive for Glencore as a major shareholder"

The Glencore partnership helps validate Hot Chili's asset base and strategic coastal position in Chile. It also highlights the appeal of these large, scalable copper developments to major mining companies.

As Christian explains, there are two markets at play - the current trading environment vs. the longer-term outlook major miners are positioning for:

"We have two markets, we have a market that we're trading at and then we have what the largest mining companies in the world are positioning for, which is the end of the decade, this large supply deficit that is coming and a repositioning of some of the majors out of commodities like iron ore and towards copper"

Funding Strategies & Future Growth

With around $19 million in cash, Hot Chili is well funded to continue advancing Costa Fuego to a development decision while also maintaining exploration momentum. The pre-feasibility studies are fully funded, along with ongoing resource drilling.

Approximately $0 million is allocated to the current 30,000m program at La Verde. While the pace of drilling will be dictated by results, Christian sees the potential to grow La Verde into a meaningful second stage expansion project:

"It's often good to emulate the strategy of the majors and Teck with its Quebrada Blanca 1 and now its scale up to Quebrada Blanca 2 is very much how we're thinking about this. We were just waiting for this day where we could demonstrate that we had the firepower to do that."

Beyond the PFS and follow-up drilling at La Verde, Christian believes Hot Chili has several options to fund future growth, including:

• Additional non-dilutive strategic partnerships
• Concentrate offtake / royalty agreements
• Joint ventures over non-core assets like water rights

He stresses that shareholder value is the key consideration in any funding decision:

"Dilution is always at the centre of our minds and our strategy with the board on how we protect our shareholders for that. So it's great that we've got that optionality, but we've got very strong cash in the bank. We've managed it very well."

Market Trends & Future Projections

The copper market is heading for a major supply deficit later this decade, driven by accelerating demand from renewable energy and electric vehicles and a lack of new mine supply. Christian Easterday sees Hot Chili as ideally positioned to help fill this gap:

"We see a large deficit at the end of this decade. We see very little new supply that is near term, mainly because of the 20 year average timeframes it takes to go from discovery to production. If this was Hot Chili making a discovery right now without a resource base, we would be seeing you in 2045."

With a global resource base already in excess of 1 billion tonnes, and the potential to double that with La Verde, Hot Chili is a stand-out among global copper developers. The company has a unique combination of:

• Scale: One of the largest copper resource bases held by a junior
• Grade: High-grade zones of +0.7% Cu provide optionality
• Gold: Significant gold by-product credits enhance economics
• Location: Low elevation, coastal setting, proximal to infrastructure
• Jurisdiction: Chile is a top global copper producer
• Development Stage: Well advanced, with PFS nearing completion
• Strategic Partner: Glencore investment and offtake agreementBased on peer comparisons, a company with Hot Chili's attributes would normally trade at a significant premium to its current market valuation. As the copper supply deficit bites, and larger miners move to secure scarce development assets.

Next Steps & Future Outlook

Key milestones for Hot Chili over the coming months and quarters include:

• Completion of the Costa Fuego PFS
• Maiden resource estimate for La Verde (targeting a large initial resource)
• Potential for further consolidation of regional targets
• Upgrade to Indicated resources to underpin Definitive Feasibility Study (DFS)
• Ongoing porphyry exploration, including AI-driven targeting

In Christian Easterday's words:

"We're so busy on delivering on our key milestones on those two pre-feasibilities. Then we're going to move into a planning phase and kicking off that bankable and really looking to build the capability of the group so we can deliver on that final phase moving into financing. But what we're going to see is a lot different news flow going forward. We're going to see exciting news flow from the drill bit and also previews and a lot of things coming out of our development studies."

Christian also hints at the potential for Hot Chili to secure more regional assets and push towards the globally significant 2 billion tonne resource level the company has long believed existed along this section of the Chilean coast.

Investment Thesis for Hot Chili

• Strategic land position in world-class Chilean copper belt
• Billion tonne head-start with defined path to 150ktpa production base
• New discovery at La Verde could be a game-changer in terms of scale
• High-grade cores and gold credits provide valuation upside
• Copper price and market likely to re-rate scarce development assets
• Well funded ($19m in cash) with strong financial discipline
• Tier-1 partner in Glencore provides validation and funding options
• Management team with proven track record of economic discovery

In light of recent drilling success at La Verde, Hot Chili's market valuation looks extremely conservative and disconnected from the company's underlying asset base. As the La Verde story unfolds, and the Costa Fuego PFS demonstrates a globally significant new copper development, this valuation gap is likely to close.

Macro Thematic View

Looking at the bigger picture for copper, all signs point to a looming supply crunch. Copper is a critical metal for the global energy transition, with renewable power and electric vehicles creating a step-change in demand. By 2030, under a net-zero scenario, BloombergNEF projects copper demand from these sectors could increase by nearly 600%.

On the supply side, current mines are depleting and there is a lack of new high-quality projects to fill the gap. Much of the lowest-hanging fruit in terms of deposit quality has already been harvested. Grades are declining as miners move to deeper and more complex orebodies. Chile, the world's largest producer, is facing its own challenges around declining grades, rising costs and resource nationalism.

The result is that by the second half of this decade, the world could be facing a copper supply deficit in excess of 6 million tonnes per year. That's equivalent to losing the entire production of Chile. In this environment, advanced assets like Hot Chili's Costa Fuego, with the potential to rapidly scale up to a globally significant 150ktpa copper output, will be worth their weight in gold (or copper).