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Hot Chili inks landmark MOU with Compañía Minera del Pacífico

Published: 15:30 06 Aug 2014 AEST

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Hot Chili (ASX: HCH) and Chilean resources major Compañía Minera del Pacífico S.A (CMP) have signed a binding MOU for CMP to earn a 17.5% stake in the Productora Copper Project in Chile under a joint infrastructure agreement.

CMP will contribute surface rights, easements and its 35% interest in certain Productora tenements in return for a 17.5% stake in the project.

The CMP assets will save time and reduce costs associated with the infrastructure needed to underpin Productora.

In addition, Hot Chili will grant CMP an Additional Purchase Option under which CMP may acquire a further 32.6% interest in Productora for a minimum of US$80 million following successful completion of a Pre-feasibility study, expected in the first half of 2015.

This option compares with Hot Chili’s current market capitalisation of $70 million at $0.20 per share.

CMP will pay Hot Chili US$1.5 million for the grant of the Additional Purchase Option subject to ratification of the MOU by CMP’s Board and approval by Hot Chili’s shareholders.

Hot Chili also expects issue an update in regard to port access study negotiations for the Las Losas port facility, approximately 40 kilometres west of Productora.

The infrastructure and other operational benefits of being in partnership with CMP will play a key role in helping to bring Productora into production.

It will combine Hot Chili’s copper expertise with the experience and operational strength of CMP, and highlights the significant value being placed on Productora by a mining major.

 

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