SYDNEY, AUSTRALIA: Hot Chili Limited (ASX: HCH) announced the execution of a binding US$15 million Investment Agreement with Osisko Gold Royalties Ltd.
The agreement entails a 1.0% Net Smelter Return (NSR) royalty on copper and a 3% NSR royalty on gold, known as the “Osisko NSR,” across Hot Chili’s Costa Fuego Copper-Gold Project in Chile.
The Investment Agreement, subject to customary conditions, is expected to be completed in the coming weeks, providing Hot Chili with a cash infusion of US$15 million as part of the Royalty Consideration.
This investment from Osisko, a leading royalty-streaming group in North America, signifies a strong endorsement of Hot Chili’s project and will bolster the company’s cash position to approximately A$26 million upon closing.
The funds from the investment will be utilized for the advancement of the Costa Fuego Pre-Feasibility Studies (PFS), resource growth drilling programs, and general project development.
The Osisko NSR, which is equivalent to a 1.12% CuEq NSR royalty across payable metals, holds significant “look-through” value considering the US$15 million investment and Hot Chili’s current market capitalization of US$80 million.
Under the agreement, if a change of control event occurs before the fourth anniversary of the Closing, Hot Chili retains buyback rights, allowing for a reduction in the Osisko NSR to a 0.5% NSR royalty on copper and a 2.5% NSR royalty on gold. Additionally, Osisko holds a Right of First Offer (ROFO) with respect to the sale of any future royalty, stream, or similar interests by Hot Chili.
Hot Chili’s Managing Director, Mr. Christian Easterday, expressed his enthusiasm for the investment agreement, stating, “The investment agreement is yet another strong endorsement and follows extensive due diligence of the Company and its Costa Fuego copper-gold project by Osisko, renowned for their technical rigor and capabilities.” Easterday emphasized that the Osisko investment will significantly strengthen the company’s treasury without diluting shareholders through a sham issuance, while only imposing a minor incremental royalty burden on the Costa Fuego project.
Hot Chili’s Costa Fuego project has received positive results from the Preliminary Economic Assessment (PEA), confirming strong economics. With the Investment Agreement in place, Hot Chili is set to commence a 30,000-meter drilling program following the Closing.
The Investment Agreement with Osisko represents a significant milestone for Hot Chili, providing substantial financial support for the development of the Costa Fuego Copper-Gold Project. The company remains focused on advancing its projects and creating value for its shareholders.
Hot Chili Limited commences trading on US-based OTCQX Market
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