#Australia #Hot Chili #Costa Fuego #Perth #Huasco Water

Hot Chili Limited's Latest Announcement

Hot Chili Limited (ASX: HCH) has made significant progress by revealing the results of its Pre-Feasibility Study (PFS) for its subsidiary, Huasco Water. The company, which has substantial interests in copper and gold mining in Chile, is focused on the Huasco Valley region and aims to develop a multi-user water supply model. This announcement not only highlights the company's water resource strategy but also symbolizes its growth trajectory in the mining sector.

Overview of Huasco Water

Huasco Water is primarily geared towards leveraging its water assets strategically to support mining activities in the region. The PFS illustrates a phased approach to water supply, with the initial stage aiming to supply seawater to the Costa Fuego Copper-Gold Project. The study has concluded that the project could yield a post-tax net present value (NPV) of approximately $116 million with an internal rate of return (IRR) of 19%. The anticipated startup capital cost for this seawater supply is estimated at $151 million, with a payback period of approximately 4.5 years.

Phased Approach to Water Supply

The PFS outlines a three-phase approach for Huasco Water's potential operations:
1. Stage 1: This phase focuses on supplying 500 L/s of seawater to Costa Fuego over a 20-year agreement. It aims to fulfill water requirements for mining operations as the region's demand for this resource grows.
2. Stage 2: Plans to provide 1,300 L/s of desalinated water, with an expected NPV of around $951 million and a 4-year payback, are also underway. It will require substantial investments for infrastructure development estimated at $1.4 billion.
3. Stage 3: This conceptual phase could see an expansion to 2,300 L/s, potentially reinforcing the area’s water supply with an impressive NPV of $1.27 billion.

The lengthy environmental and regulatory hurdles that have been overcome in securing the necessary permits suggest that Hot Chili has established itself as a leading player in the maritime water supply sector within the Huasco Valley region. The project is already in alignment with broader sustainability goals, aiming to address regional water scarcity issues while enabling robust industrial activity.

Competitive Advantages

Hot Chili Limited has highlighted its competitive advantages following a decade-long regulatory approval process, leading to a maritime concession enabling seawater extraction. The company is now well-positioned to meet the anticipated demands stemming from a rapidly growing mining industry in the region. Furthermore, the strategic partnerships with entities such as Teck Resources and various agricultural groups signify the broader community interest in sustainable water solutions that Huasco Water aims to provide.

The Path Ahead

Christian Easterday, Hot Chili’s Managing Director, has expressed optimism regarding the PFS results and the implications it holds for the company’s future, asserting its attractiveness as a long-term industrial water solution provider. Furthermore, ongoing discussions with potential off-takers signal a favorable outlook for Huasco Water and the Costa Fuego Project.

As the company prepares to outline its operational plans for the upcoming years—including development timelines and expected partnerships—stakeholders and investors eagerly await the next steps in this critical initiative. This development places Hot Chili in a pivotal position not just in the mining sector but also in addressing essential environmental needs, highlighting a forward-thinking approach by harnessing local resources responsibly.

In summary, Hot Chili Limited’s forward planning and strategic execution reflect a promising future, aligning with essential water supply infrastructure that supports miners, businesses, and local communities alike in Chile’s arid regions.