Australia-based copper miner Hot Chili has secured $15m (A$22.02m) upon the completion of its previously announced deal with Osisko Gold Royalties.
This transaction corresponds to the sale of a 1% net smelter return (NSR) royalty on copper and a 3% NSR royalty on gold at its Costa Fuego copper-gold project in Chile’s Atacama region.
The companies reached the agreement last month, under which Osisko purchased a royalty from Hot Chili’s subsidiaries that own the two deposits.
This royalty consideration will be used for exploration, development and general advancement of the project and the balance can be used for working capital purposes.
The royalty amount is payable monthly and the payments will be based on NSR revenues generated from the project.
With the closure of the deal, Hot Chili has bolstered its current cash position to A$26m.
The company stated that it is now sufficiently funded to proceed with the development.
This includes the launch of a 30,000m drill programme, whose preparations are well-advanced, completion of resource upgrade at the mine later this year, and delivery of a pre-feasibility study in the second half of next year.
Hot Chili managing director Christian Easterday said: “We are very pleased to have closed the investment with Osisko gold royalties enabling the company to advance the project without the dilution of a share issuance.
“Costa Fuego is globally relevant, being one of only a handful of projects with potential to deliver near-term, meaningful, new copper supply into a looming global copper supply shortage.”
The Costa Fuego project is an integration of the Cortadera porphyry copper-gold deposit and the Productora copper-gold deposit. The deposits are located 14km apart at low altitudes in an area rich with infrastructure.
