Hot Chili Delivers Next Level of Growth

Highlights

Mineral resources at Hot Chili’s Costa Fuego copper-gold hub in Chile have been materially upgraded with a 67% increase in the total Indicated Resource and a 53% increase in the high grade Indicated Resource:

Total Resource^1,2

Indicated – 725Mt grading 0.47% CuEq for 2.8Mt Cu, 2.6Moz Au, 10.5Moz Ag & 67kt Mo

Inferred – 202Mt grading 0.36% CuEq for 0.6Mt Cu, 0.4Moz Au, Â Â 2.0Moz Ag & 13kt Mo

High Grade Resource^1,2 (Reported +0.6% CuEq cut-off)

Indicated – 156Mt grading 0.79% CuEq for 1.0Mt Cu, 0.85Moz Au, 2.9Moz Ag & 24kt Mo

Inferred – 11Mt grading 0.93% CuEq for 0.1Mt Cu, 0.04Moz Au, 0.3Moz Ag & Â Â 1kt Mo

Resource upgrade cements Costa Fuego’s position as a top-ten copper development project based on S&P 2022 criteria of (active, PFS level or greater and low operating risk) with one of the shortest timeframes to potential first production amongst senior copper development projects globally

Over 80% of Costa Fuego’s global resource estimate is now classified as Indicated (previously 56%), providing a strong platform to deliver a combined Pre-feasibility Study with a large ore reserve in Q3 2022

High grade Indicated resources (+0.6%CuEq) account for one third of contained copper and gold (previously 20%)

Three drill rigs in operation ahead of the planned Pre-Feasibility Study resource upgrade later this year

First assay results from 2022 drilling are expected to be announced shortly

Hot Chili’s Managing Director Christian Easterday said:

“I would like to thank our entire team who have delivered this very strong result on-time and within guidance – elevating Costa Fuego’s position amongst the largest undeveloped copper projects in the world.

The world is hungry for advanced, low-risk, senior copper developments with near-term production potential.  Copper prices are driving higher and new meaningful copper supply is fast becoming a mirage.

Hot Chili is well positioned to deliver into this forecast supply gap and contribute to the decarbonisation super cycle, particularly due to Costa Fuego’s lower economic hurdle resulting from its low elevation location and proximity to existing infrastructure; including abundant grid power with high renewables contributions.

We are fully funded for 18 months and on-track to deliver our next resource upgrade and PFS later this year as we transform Costa Fuego into one of the world’s next material copper mines.”

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.  Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Hot Chili Limited (ASX: HCH) (TSXV:HCH) (OTCQB: HHLKF) (“Hot Chili” or “Company”) is pleased to announce a major resource upgrade for its coastal range, Costa Fuego copper-gold project in Chile.

Costa Fuego comprises the Cortadera, Productora and San Antonio deposits, all of which have updated Mineral Resource Estimates (“MRE” or “resource”) and lie proximal to one another at low-altitude elevations (800m to 1,000m), 600km north of Santiago.

The resource upgrade follows 18 months of material investment, including completion of 52,000 metres of additional resource drilling at Cortadera, purchase of 100% of the Cortadera copper-gold porphyry discovery and execution of an offtake agreement with Glencore for future concentrate production (60% for the first 8 years).

The Cortadera MRE has delivered the majority of resource growth for Costa Fuego.  Cortadera is defined by over 92,000m of drilling and contains an Indicated resource of 471Mt grading 0.46% CuEq (previously 183Mt grading 0.49% CuEq) and an Inferred resource of 108Mt grading 0.35% CuEq (previously 267Mt grading 0.44% CuEq).

Cortadera’s Indicated resource has grown by 134% and is now able to be studied for conversion into ore reserves in the Company’s Pre-Feasibility Study (PFS), forecast for Q3, 2022.

The Productora MRE has been re-estimated following review of the 2016 MRE, completion of underground mine development and exploration drilling in 2021.  The review and subsequent resource re-estimation has resulted in a material increase in Indicated resources reported above 0.5% CuEq. The updated Productora MRE resulted in a large and robust, high grade, open pit deposit for Costa Fuego’s first production.

A maiden San Antonio MRE has also been added to the Costa Fuego Hub. San Antonio was historically exploited by small-scale underground mining of high grade copper.  The maiden resource estimate includes an updated underground drone survey, increasing the spatial confidence of historic mining activities, and 4,922 metres of drilling by Hot Chili in 2018.

The Company is encouraged by the initial Inferred resource of 4.2Mt grading 1.2% CuEq.  The high grade, shallow nature of San Antonio provides an additional open pittable deposit for Costa Fuego’s potential early mine schedule.  Further resource upgrade drilling is planned at San Antonio and the proximal Valentina high grade deposit in the coming months.

Figure 1 Location of Cortadera, Productora and San Antonio in relation to coastal range infrastructure of Hot Chili’s combined Costa Fuego copper-gold project, located 600km north of Santiago in Chile

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.  Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne — Cu_recovery)+(Mo ppm × Mo price per g/t — Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Table 1. Costa Fuego Copper-Gold Project Mineral Resource Estimate, March 2022

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.  Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Cortadera Mineral Resource Upgrade

The Cortadera MRE upgrade follows an additional expansion and infill drilling campaign of 52,000m Diamond (DDD) and Reverse Circulation (RC) drillholes since the maiden resource was released in October 2020. This resulted in a 134% increase in Indicated metal tonnes in comparison to the maiden resource at the same cut-off grade.

The additional drilling also enabled the delineation of high grade copper and gold domains within Cuerpo 3 (Figure 2), resulting in improved grade continuity and metal tonnes above 0.4% CuEq.

Continuity of grade and geology is controlled by the emplacement of the mineralised porphyry intrusions into shallow dipping host stratigraphy. While these porphyry intrusions have a reasonably consistent pipe-like geometry, grade distribution also extends into the host stratigraphy.

Table 2 and Figures 2 and 3 below outline the upgraded Cortadera MRE.

Table 2. Cortadera Deposit Mineral Resource Estimate, March 2022

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.  Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Figure 2.  Oblique Long Section of the Cortadera MRE displaying CuEq grade distribution in relation to drilling coverage

Mineralisation models have been generated using over 92,000m of drilling and an improved understanding of geological controls on mineralisation. Each metal has been independently optimised, resulting in improved continuity of higher and moderate grade copper, gold, silver and molybdenum within each of Cortadera’s three Cuerpos. These models correlate well with higher A + B porphyry vein percentages and other key porphyry datasets.

Extensive test work was completed to determine an optimal estimation approach and ensure the model was representative of the underlying porphyry mineralisation controls. The updated Cortadera MRE utilises a probabilistic estimation approach (Categorical Indicator Kriging (CIK)), within each mineralisation domain. This approach enabled the spatial and chronological aspects of the multiple phases of mineralisation to be better represented, resulting in higher metal tonnes above a 0.5% CuEq cut-off grade.

Figure 3. Plan view at 500m RL displaying the distribution of CuEq grade within the Cortadera MRE

Productora Mineral Resource Update

The Productora MRE was updated following an extensive review of the 2016 resource estimate.  Since 2016, copper prices have increased and underground mine development by lease miners (2020 and 2021) have reported materially higher copper grades than had been previously estimated.

The review of the 2016 MRE suggested the spatial continuity of mineralisation was not being represented sufficiently, with local-scale ductile characteristics in underground mine development not able to be accurately reflected using traditional wireframing and estimation methods. This had resulted in significant mineralised zones being excluded from the earlier resource estimation within the breccia-hosted copper deposit.

Extensive drilling and data collection by Hot Chili at Productora between 2010 and 2017 have allowed a comprehensive review of various mineralisation styles and structural complexities present within the host tourmaline breccia unit.  The review involved all available geological, structural, alteration, assay (33 element ICP-OES analysis), geometallurgical and geotechnical information and determined that probabilistic techniques (CIK) were most suitable for resource estimation.

Using the same dataset as the 2016 MRE, the CIK approach optimised the estimations of copper, gold, molybdenum, cobalt, iron, aluminium, potassium and sulphur at Productora.  Exploration drilling completed in early 2022 on the edges of the Productora resource tested the updated model, with results suggesting the new estimation approach was suitably predictive.

The updated Productora MRE is considered to be more robust than the earlier 2016 MRE and has resulted in an increase in high grade (+0.6% Cu) Indicated material, as well as improved mineralisation spatial continuity.

High grade open pit resources from Productora are a key focus for the combined PFS and are expected to feature prominently in the early mine schedule for Costa Fuego.

Table 3 and Figures 4 and 5 below outline the upgraded Cortadera MRE.

Table 3. Productora Deposit Mineral Resource Estimate, March 2022

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred. Total Resource reported at +0.21% CuEq for open pit.

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Figure 4. Oblique view of the Productora MRE in relation to drill coverage and 2016 PFS pit design

Figure 5. Two Cross-sections across the Productora MRE in relation to drilling and 2016 PFS pit design

Maiden Mineral Resource for San Antonio

Hot Chili is pleased to announce a maiden MRE for the San Antonio copper deposit. Hot Chili completed a drone survey of the shallowly developed historic underground mine in 2021. This enabled increased spatial confidence of the historic mining activities at San Antonio and the ability to complete an initial Inferred resource estimate.

Void models previously established from historical documentation were subsequently updated, including revisions to rotation and grid transformations. The underground survey supported the Company’s geological interpretation of multiple sub parallel lodes at San Antonio.

In 2018, Hot Chili completed 4,922m of first-pass RC drilling at San Antonio, confirming significant extensions to the high grade underground mine.  Hot Chili’s drilling also validated historical underground drilling and channel sampling results.  Importantly, the average grade estimated within the void model shows strong alignment to historical and lease mining production reports.

Copper mineralisation at San Antonio is fault-hosted and dips moderately towards the east within a sequence of volcanic-sedimentary units that were intruded by a series of diorite and andesite dykes. High grade copper is related to chalcopyrite and bornite mineralisation in association with strong epidote alteration.

San Antonio is an important addition to the Costa Fuego resource inventory, representing the first high grade, satellite deposit outside of Cortadera and Productora.  Further drilling is planned to upgrade San Antonio to Indicated classification this year.

Resource drilling is also planned this year at the proximal Valentina high grade underground mine to follow up several significant drilling intersections recorded by Hot Chili in 2018.  Initial results recorded 12m grading 1.5% copper from 28m down-hole depth (including 6m grading 2.7% copper) in drill hole VAP0001 and 8m grading 2.0% copper from 124m down-hole depth (including 2m grading 4.8% copper) in drill hole VAP0003 (see ASX announcement dated 5^th September 2018).

San Antonio and Valentina are an exciting addition and will feature in a planned PFS resource upgrade later this year.  Both deposits are expected to provide high-grade open pit deposit for Costa Fuego’s early mine schedule.

Table 4 and Figures 6 and 7 below outline the maiden San Antonio MRE.

Table 4. San Antonio Deposit Mineral Resource Estimate, March 2022

¹ Reported on a 100% Basis – combining Mineral Resource estimates for the Cortadera, Productora and San Antonio deposits.  Figures are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.  Total Resource reported at +0.21% CuEq for open pit

² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Figure 6. Oblique view of the San Antonio MRE in relation to drilling, underground voids and mine development

Figure 7. Cross Section across the centre of the San Antonio MRE displaying drilling and underground mine development

or visit Hot Chili’s website at www.hotchili.net.au

Qualifying Statements

Competent Person’s Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Competent Person’s Statement- Costa Fuego Mineral Resources

The information in this report that relates to Mineral Resources for Cortadera, Productora and San Antonio which constitute the combined Costa Fuego Project is based on information compiled by Ms Elizabeth Haren, a Competent Person who is a Member and Chartered Professional of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists.  Ms Haren is a full-time employee of Haren Consulting Pty Ltd and an independent consultant to Hot Chili.  Ms Haren has sufficient experience, which is relevant to the style of mineralisation and types of deposits under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’.  Ms Haren consents to the inclusion in the report of the matters based on her information in the form and context in which it appears. For further information on the Costa Fuego Project, refer to the technical report titled “Resource Report for the Costa Fuego Technical Report”, dated December 13, 2021, which is available for review under Hot Chili’s profile at www.sedar.com.

Reporting of Copper Equivalent

Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne).  The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz.  For Cortadera and San Antonio (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%.  For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%.  For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

Forward Looking Statements

This Announcement is provided on the basis that neither the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Announcement and nothing contained in the Announcement is, or may be relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The Announcement contains material which is predictive in nature and may be affected by inaccurate assumptions or by known and unknown risks and uncertainties and may differ materially from results ultimately achieved.

The Announcement contains “forward-looking statements”. All statements other than those of historical facts included in the Announcement are forward-looking statements including estimates of Mineral Resources. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of the Announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. All persons should consider seeking appropriate professional advice in reviewing the Announcement and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the Announcement nor any information contained in the Announcement or subsequently communicated to any person in connection with the Announcement is, or should be taken as, constituting the giving of investment advice to any person

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