- Capital raising of up to A$35.5 million, including a placement of A$32.5 million to sophisticated and professional investors in two tranches and a A$3 million Securities Purchase Plan (“SPP”).
- Strong support by Hot Chili’s second largest shareholder, Taurus Funds Management, affiliates of Sprott Inc. and Canadian based Lundin Mining Corporation who in aggregate are securing A$17.5 million of the placement.
- Capital raising underpins funding for Hot Chili’s 2013 development plan to advance Productora towards a decision to mine on one of Chile’s fastest emerging new mid-tier coastal copper projects.
- Wide interest in the placement by Australian and international institutions and sophisticated investors, including affiliates of Sprott Inc., and clients of the manager, Bell Potter Securities, as well as DJ Carmichael, Tectonic Advisory Partners (acting through Ecoban Securities Corporation) and Shaw Stockbroking.
- New shares to be issued at A$0.50 cent per share.
- One free attaching option (exercisable at $0.75 and expiring on 30 November 2014) for every two shares subscribed for. Options proposed to be listed following completion of the SPP.
Hot Chili Limited (ASX Code: HCH) is pleased to announce that it has arranged a two tranche placement to raise A$32.5 million at A$0.50 per share as part of a proposed capital raising of up to A$35.5 million.
The placement has seen very strong demand from both Australian and North American participants with Taurus Funds Management Pty Ltd (Taurus), affiliates of Sprott Inc. and Canadian based Lundin Mining Corporation anchoring the capital raising.
Funds from the capital raising will be directed towards the continuation of resource growth drilling and development study activities at the Company’s flagship Productora copper project located in Chile’s coastal range.
Productora is being fast-tracked towards a decision to mine on a large-scale open pit project in cooperation with Hot Chili’s project partner and substantial shareholder Compañía Minera del Pacífico S.A. (CMP- Chile’s largest iron ore miner).
The project is one of the fastest emerging mid-tier copper projects being developed in Chile, with significant infrastructure advantages in the low-altitude coastal range.
Capital Raising Details
Hot Chili is completing a placement to raise up to AUD$32.5 million through the issue of approximately 65 million new shares at AUD$0.50 cent per share to institutional and sophisticated investors, including the Company’s second largest shareholder Taurus Funds Management, affiliates of Sprott Inc. Canadian based Lundin Mining Corporation and sophisticated and professional investor clients of Bell Potter Securities, DJ Carmichael, Tectonic Advisory Partners (acting through Ecoban Securities Corporation) and Shaw Stockbroking.
Participants in the capital raising will also receive one free attaching A$0.75 options expiring on 30 November 2014 , for every two new shares subscribed for. Subject to satisfying ASX spread requirements, application will be made for the options to be listed on the Australian Securities Exchange.
The placement is being undertaken in two tranches. The first tranche, comprising 21 million shares and 10.5 million options to raise $10.5 million, will be completed within the Company’s “15% limit” permitted under the listing rules without shareholder approval and has been fully subscribed for by Taurus and affiliates of Sprott Inc.
The second tranche, comprising up to a maximum of 44 million shares and 22 million options to raise up to A$22 million, has been managed by Bell Potter Securities. Strong interest in the second tranche was received from several Australian and international institutions and fund groups, including affiliates of Sprott Inc., Lundin Mining Corporation and clients of Bell Potter Securities, DJ Carmichael, Tectonic Advisory Partners and Shaw Stockbroking.
Completion of the second tranche of the private placement will be made subject to shareholder approval at the Company’s Annual General Meeting, which is expected to take place on or before 30 November 2012, The Company must also complete final documentation from certain overseas investors as required for regulatory purposes.
The Company is pleased to announce a proposed A$3 million share purchase plan (SPP) offer to its existing shareholders as part of the capital raising. Existing shareholders registered on 15 October 2012 will be offered the opportunity to apply for shares to the value of up to $10,000, with one free attaching option granted for every two shares issued. Offer documentation is proposed to be sent to eligible shareholders in the coming weeks.
Use of Funds- Resource Growth and Development Studies at Productora
Funds from the placement will largely be directed towards the company’s resource growth drilling programme and the continuation of development studies at the flagship Productora copper project in Chile. In addition to the Company’s current cash balance of approximately A$10.8 million, funds will be directed toward achieving the following milestones at Productora during 2012 and 2013.
- Completion of a major resource drilling programme comprising a further 80,000m of reverse circulation (RC) and 15,000m diamond drilling (DD).
- Completion of two major resource up-grades – the first in the December quarter of 2012, and the second expected in the June quarter of 2013.
- Completion of a pre-feasibility study at Productora in the second half of 2013.
- Completion of further key land acquisitions during 2012/2013 to bolster the Company’s copper project centre in the third and fourth regions of Chile’s coastal range.
- Completion of joint infrastructure and iron exploitation agreement for the Productora project with Hot Chili’s major project partner CMP, Chile’s largest iron ore miner.
- Submission of an Environmental Impact Assessment in the first half of 2013 to facilitate environmental and regulatory approval for mining.
- The Company will also direct some funds towards the continuing exploration assessment of its other projects within its Chilean copper project portfolio.
The board of Hot Chili is very pleased with the interest shown in the placement by a number of highly regarded institutions and fund groups both in Australia and overseas. The successful capital raising is a strong vote of confidence in the Company’s growth and development strategy by some of Hot Chili’s largest shareholders and pedigree names in the copper industry.
The capital raising will allow participation by new investors, institutions and fund groups as well as existing shareholders in a stand-out growth opportunity in the Chilean copper industry.
Productora Copper-Gold-Molybdenum Project
The Productora project is Hot Chili’s flagship project in Chile. The project is located 15km south of the township of Vallenar, at low altitude (less than 1,000m) in Chile’s 3rd region. Since drilling commenced in August 2010, the Company has outlined a large-scale, bulk tonnage copper-gold-molybdenum project amenable to open pit mining. In September 2011, the Company defined its first resource estimate from within the central 1.4km extent of the project, reporting a JORC compliant resource of 85.1Mt grading 0.6% copper, 0.1g/t gold and 146ppm molybdenum (0.8% copper equivalent) for 483,000 tonnes of copper, 290,000 ounces of gold, 12,418 tonnes of molybdenum (644,000 tonnes of copper equivalent).
The Company is well advanced with a major second-phase drilling programme aimed at more than tripling the size of the existing resource base and fast-track a decision to mine by late December 2013. The proposed open-pit operation at Productora is ideally located to existing infrastructure including the PanAmerican Highway, rail, power and port (40km distance) as shown on Figure 1.
The Company has successfully completed a scoping study over Productora managed by leading engineering and project development group Ausenco. A pre-feasibility study has commenced into the assessment of a potential 10.9Mtpa, 20 year mine life open pit operation, and the company intends to submit an Environmental Impact Assessment within the first half of 2013.
Hot Chili is aiming to establish a significant resource base at Productora from an identified 280 – 320M tonne target mineralisation at similar grade to that estimated in the first resource announced from the centre of the project. The Productora target mineralisation is summarised in Table 1 below.
The execution of letters of intent for joint infrastructure and an iron option with project partner CMP (Chile’s largest iron ore miner), the completion of project consolidation and recent outstanding drilling results (see Fig 2) have significantly enhanced the economics and “do-ability” of Productora as an emerging high-quality Chilean copper project.