Source: Maurice Jackson 08/23/2021
Maurice Jackson, of Proven and Probable, and Christian Easterday, CEO of Hot Chili Ltd., discuss the announcement of a new strategic partner, Glencore, and the company’s evolution from exploration to now development.
Maurice Jackson: Joining us for a conversation is Christian Easterday, the CEO of Hot Chili Ltd. (HCH:ASX). It’s a pleasure to be speaking with you, sir. Hot Chili Limited is having, simply put, a banner year, as throughout the year it’s been one success after another. Hot Chili has released a string of successful press releases to advance the massive Cortadera Copper-Gold Project. Before we delve into the exciting news you have for current and prospective shareholders, Mr. Easterday, please introduce us to Hot Chili and the opportunity the company presents to the market.
Christian Easterday: Well, it’s been a very exciting time, not just in the copper space, but for Hot Chili, as we really transform ourselves from a corporate exploration company on the coastline of Chile to a full-fledged very significant copper developer. We are now very pleased to be welcoming Glencore International Plc (GLEN:LSE) as our largest shareholder through its participation in our recent $40 million capital raising, which was just announced during the week.
None of this has been possible without the string of successes that we’ve had at a world-class Cortadera porphyry discovery on the coastline, which has allowed us to consolidate a major copper development hub sitting on the Pan-American Highway, right next to a port 600 kilometers north of Santiago, Chile. We are certainly hitting our straps after announcing our maiden resource last year, when I did my last interview with you, Maurice. We now have some three-quarters of a billion tonnes at about half-a-percent copper equivalent in open-pit and underground resource space.
And that Cortadera discovery, which is one of only two major copper discoveries that the world has seen since 2014, is seeing some significant growth in our drilling. We’ve been able to put out some further world-class intercepts as we expand that resource base, and look to take our combined asset to over a billion tons. And hopefully, we’ll be looking to put that out later in the year.
Maurice Jackson: Sounds exciting, sir. You referenced the $40 million funding. Can you go through the details for us on this landmark transaction, along with your new strategic partner, Glencore?
Christian Easterday: We have been very busy in staging the next steps for Hot Chili, as we seek to align ourselves with the rest of the copper porphyry developers in the Americas. Currently, we’re the only major copper porphyry player that is not listed on the TSX and TSX.V. and we’re looking to dual lis, the company in the coming months over on the TSX.V in Canada. So, a very exciting time as we transform the company and look to align to a set of copper developers, which are seeing market capitalizations in the range of $500 million to $1.4 billion, with some of the leaders over there in Canada being , (FLMMF:OTCMKTS), (SLS:TSX), and several resources that they control. Obviously, Hot Chili’s resource base is comparing extremely favorably. (SOLG:AIM)
We see a real value gap that exists with being the only non-TSX/TSX.V player in our peer space. The $40 million capital raise that we’ve just completed was well supported out of Australia and also overseas, with significant support seen from North America. But most importantly, when we put that capital raise together, that was all about our last real key milestone, which is the purchase of Cortadera itself. We had one remaining payment that was due in one year of US$15 million, or roughly AU$20 million. The asset has grown so rapidly, and we were really sitting on a world-class discovery here, so there was significant interest in taking out that final ownership payment, which we’ll be making immediately, once we close this raise in the coming week or two. That’s some color on the reason for the raising outside of the purchase of Cortadera.
The rest of the money is going in to continue our aggressive resource growth drilling program, and also to start stepping out and start testing some very exciting growth potential in what looks like an opportunity to unlock a cluster of high-grade porphyry targets in and around our two key assets at Productora and Cortadera.
Through this raising, as you well said, we’ve now attracted the support of one of the largest mining companies in the world, in Glencore. And, as is being announced, they’re coming in now as a 9.99% shareholder in Hot Chili, which will make them the largest shareholder in Hot Chili. And we’ll be shortly welcoming their support with a board member, coming onto Hot Chili’s board technical steering committee. This will allow us to tap in and utilize the strong capability and experience of Glencore in developing large-scale copper assets in jurisdictions, such as Chile.
I’m looking forward to the new relationship, and our new large shareholder in Glencore. They’ve certainly given the company a significant endorsement of our assets. Effectively, the due diligence by the world has just been completed by one of the largest copper producers in the world—one of the largest mining companies in the world—and a really key aspect of that is where we’re looking forward to negotiating over the coming months, which is an off-take arrangement for the first eight years of our targeted 25- to 30-year mine life, which we’re trying to build out on the coastline. That will be for about 60% of the off-take out of our combined Costa Fuego project. We really look at that as a significant de-risker for the company in terms of actually having a partner there to take a benchmark component on the pricing of our off-take. We view this a strong hedging position: the company is putting in place with the largest global trader of copper concentrates, and now our largest shareholder.
Maurice Jackson: Having Glencore as a strategic partner is a big, big feather in your cap and puts Hot Chili in the driver’s seat — I would say on the autobahn. You’ve really done several things here for shareholders. Just this off-take; it’s something that may be minor when you look at all the successes here, but that off-take agreement as well is just another strategic step. And it just demonstrates the business acumen and the leadership here. And I have to just give you a big kudos, sir.
Switching gears, let’s look at some numbers. Please provide us the capital structure for Hot Chili.
Christian Easterday: Look at the moment. Our pre-capital structure was about 3.1 billion shares. We’ll come over the 4 billion mark after this raise, where we have about 1.1 billion shares that we’ll be issuing to Glencore and to other institutional investors. We’ve also been able to give the shareholders of Hot Chili a slice of the capital rising at $0.032. I suppose that’s sort of something really important from the board, that we wanted all of the shareholders to be able to participate at the same level of investment that Glencore and the institutional investors are coming in at. And that’s certainly seen a very good response day one, day two, day three in the market over here in Australia.
We’ve not just a raising an 11% discount to our closing price pre-capital raising, but we’ve been able to get the stock to have a very positive lift after that announcement. We’re trading at around 40% or 50% higher than the issue price for the raising. We are very pleased to be able to allow all of our shareholders to participate in a share purchase plan.
We now have a firm opportunity to rewrite Hot Chili into the billion-dollar-plus market capitalization space. And we believe that we can do that in short order, particularly with our realignment now, and being able to take Hot Chili into the North American market with a dual listing on the TSX/TSX.V—and to be able to compare ourselves very favorably with some of the names I’ve mentioned, the Oracles, the Filos, the Solarises, which have seen spectacular increases in their share prices in association with the lifting copper price environment.
When you have a copper price environment over $4 per pound, and you have an upper-tier copper asset that is rapidly approaching a tier-one asset, and there’s very few of those available in the world to be able to leverage that value, and you are able to come into a dual listing, and now with Glencore on our register—we believe that we have a significant rewrite ahead of the company. We now have the ability, in the market’s eyes, to be able to execute and transition Hot Chili into a large-scale or major copper producer.
Maurice Jackson: In closing, sir, what would you like to say to shareholders?
Christian Easterday: I’d like to thank all of our shareholders for ensuring that Hot Chili was one of the survivors of the last downturn in copper, to support our vision, to build out a new copper player of substance globally with the project that we’re positioning in the plus-100,000 tonne per annum copper production space. Very few of those are available in a world where there’s very few major copper discoveries being made.
Now our shareholders, undoubtedly, will start to reap the rewards of what has been a 13-year vision by myself and our founders to build out something that you don’t see very often. The last time the Australian stock market had anything in this space was, of course, Equinox Resources. And we all know knew that a real key element in the rewrite of that company from a $400 million company to a $7.2 billion takeover was their ability to be able to transition into production — and most importantly to be able to position Equinox into the North American markets at the right time.
They did that in the last copper cycle, and they were able to extract that significant rewrite in valuation. And we were simply following a very well-worn path that has already been done before.
Maurice Jackson: Last question, sir: What did I forget to ask?
Christian Easterday: I’m sure we’ll have plenty of time for further questions down the road, Maurice. We’ve got some pretty exciting drilling results coming out of our expansion program that we’ll now be able to start getting out to market, now that I’m out of a blackout period following about four or five weeks of no sleep completing the transaction that we’ve just announced.
But most importantly, we’ve got a lot of very exciting news flow in the lead-up to our dual listing on the TSX.V, which is scheduled for around late October, and then shortly to follow that, hopefully a significant upgrade at our Cortadera porphyry discovery.
Maurice Jackson: Mr. Easterday, it’s been an absolute delight to speak with you today. I’m wishing you and Hot Chili the absolute best, sir.
As a reminder, I am a licensed representative to buy and sell precious metals through Miles Franklin Precious Metals Investments, where we have several options to expand your precious metals portfolio, from physical delivery of gold, silver, platinum, palladium, and rhodium, to offshore depositories, and precious metals IRA’s. Give me a call at 855.505.1900 or you may email: [email protected]. Finally, please subscribe to www.provenandprobable.com, where we provide mining insights and bullion sales. Subscription is free.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
1) Maurice Jackson: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Hot Chili Ltd. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Hot Chili Ltd. is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
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Pegasus Resources Expands Its Uranium Assets In Saskatchewan
Pegasus Resources Inc. (TSXV:PEGA) continues to make its presence in the prolific Athabasca Basin uranium camp with the recently announced
The post Pegasus…
( ) continues to make its presence in the prolific Athabasca Basin uranium camp with the recently announced acquisition of three uranium properties at the northwest edge of the Basin. The 54,026 hectare properties comprising 13 mineral claims contain a cumulative total of 535,718 lbs of uranium, and significantly, includes a historic resource estimate of 202,200 tons at 0.119% U308 at an average width of 4.8 metres.
These new properties add to the previously announced Pine Channel uranium property which consists of six mineral claims covering 6,028 hectares and is located at the northern edge of the Athabasca basin, roughly 40 km west of the town of Stony Rapids. The Athabasca Basin in Northern Saskatchewan is host to several of the world’s largest and highest-grade uranium mines, including Cameco’s () McArthur River Mine and Cigar Lake Mine.
The Wollaston Northeast property is located in the 20A zone within the prolific Wollaston Domain, 45 kilometres northeast of the Eagle Point Uranium Mine. The property has at least eight known base metals showings and five previously documented uranium occurrences, and is considered highly prospective for basement hosted uranium mineralization.
Much of the recent renewed interest in uranium in the region is due to recent discoveries within the Wollaston Domain where the Eagle Point deposits are hosted within its basement rocks. In addition to the Eagle Point Mine, the area also hosts the historic Rabbit Lake Mine and Cameco/Orano Key Lake Mine, the world’s largest high-grade uranium mine.
The 12,397 hectare Bentley Lake Uranium Property consisting of three mineral claims, and is located 35 kilometres northeast of the edge of the Athabasca Basin, within a transition zone between the Wollaston and Mudjatic Domains. This trend is host to several major uranium deposits, including Cigar Lake, Roughrider, McArthur River and Midwest. It is located at the transition zone between the Wollaston and Mudjatik geological domains.
The third property is located approximately 40 kilometres northeast of the edge of the Athabasca Basin and within the Charlebois-Higginson Lake Uranium District. The 6,908 hectare Mozzie Lake Uranium Property consists of three mineral claims and has a historical resource estimate of 204,200 tons at 0.119% U308, with an average width of 4.8 metres, and containing 535,718 lbs of uranium. What makes the Mozzie Lake Property particularly compelling, aside from the historical resource estimate that Pegasus’s exploration efforts may be able to increase significantly, are the pegmatite deposits of the Charlebois-Higginson Lake Uranium District.
Since being initially explored from the 1940’s through to the 1960’s, there has been virtually no exploration on the property. Previous work in the region, as well as on the Pinkham Lake property at Mozzie Lake, indicated that the pegmatite deposits may also host mineralization which contains rare-earth-element bearing minerals. Rare earth minerals are in high demand today due to the needs of the various technology, consumer electronics, and electric vehicle manufacturing industries. PEGA plans to examine the property’s rare earth potential as part of its uranium exploration program at Mozzie Lake.
Pegasus will next review the historical data on the properties to determine an exploration strategy and work programs, and will provide shareholders with updates in the near future. The company’s recent announcements of the uranium assets have certainly rekindled interest in PEGA shares, and its market capitalization has increased by almost 50% to $7.98 million in recent weeks, signifying that investors are enthused about the direction management has taken.
PEGA last traded at $0.095 on the TSX Venture exchange.
FULL DISCLOSURE: Pegasus Resources is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Pegasus Resources on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
The post Pegasus Resources Expands Its Uranium Assets In Saskatchewan appeared first on the deep dive.
The Ethical Investor: ESG moves, lessons from the energy crisis and JP Equities’ stock tips
The Ethical Investor is Stockhead’s weekly look at ESG moves on the ASX. This week’s special guest is JP Equity … Read More
The post The Ethical…
The Ethical Investor is Stockhead’s weekly look at ESG moves on the ASX. This week’s special guest is JP Equity Partners’ director and partner, Nic Brownbill.
The world is in the grip of an ongoing global power crisis that has seen energy prices soaring by thousands of percentage points.
From China to Europe and now India, the cost of energy is surging drastically. The price of natural gas has even quadrupled in some parts of the world.
But economists are now warning this might be just the first of many power crunches the world will see as we transition into the new economy.
According to a research paper by CommBank’s analyst Vivek Dhar, there are two main root causes that led to the crisis — a strong demand recovery from the pandemic, and an acute shortage of two key power-producing fuels – natural gas and thermal coal.
As economies reopen, there is a sudden pent up demand from consumers which meant that factories were forced to switch on their production capacity at short notice. This was exacerbated by a colder than usual European autumn, as the continent potentially faces a more-freezing-than-usual winter season.
In China, the crisis mainly stemmed from an undersupply in local production of coals, according to Dhar, adding that coal supply has been hampered in China because of the government’s own environmental protection regulations.
So what can we learn from all this?
Dhar reckons that we are transitioning into the new economy too fast, too soon.
“What the recent energy crisis has shown is that the energy transition needs to be planned carefully,” Dhar wrote.
“This will mean significant investment in renewable generation, batteries, electricity grids and hydrogen.”
But he thinks the roll-out of a decarbonised grid and role of gas need to be clearly defined too.
“Under-investing in gas infrastructure relative to its role in coming years will only serve to make Europe’s energy market more vulnerable to prolonged gas shortages, and increase dependence on Russia.”
Like Europe, China’s decarbonisation ambition will need to be planned as well, Dhar said.
“If coal mines and coal power plants are closed before a renewable replacement is in place, power shortages in China could be an ongoing concern.”
What’s happening in Australia
Australians have chosen climate change as the top ESG priority, according to the latest survey conducted by global ESG consultant, SEC Newgate.
And more than half of the 1,000 Aussies surveyed said they were happy with the direction the government is taking on the environment.
These results should provide food for thought for PM Scott Morrison, who’s currently caught in a political wrangle with the Nationals in setting our 2050 climate goals.
The PM has told Liberal colleagues that he wants to bring a binding 2050 net zero commitment to the COP26 Summit in Glasgow next month, without having to upgrade Australia’s 2030 commitments.
Nationals Leader and also Deputy PM, Barnaby Joyce, said however that he was willing to back the 2050 targets only if funding for regional producers and farmers were made as part of the deal.
Special guest JP Equities’ Nic Brownbill shares his views and ESG stocks
Nic Brownbill, a partner at JP Equity, told Stockhead that decarbonisation is a mega global investment opportunity, one that JP Equity wants to be all in on.
How big is the potential for ESG investing?
“We see the whole decarbonisation theme as the next mega global investment opportunity. An estimated $41 trillion is required to decarbonise the planet. It’s going to be a bigger opportunity than the crypto market, because unlike cryptos, the carbon market is going to be mandated by governments, major asset managers and pension funds.”
Which segment of the ESG market do you see outperforming?
“Some companies will fall short in trying to make their carbon targets, so the balance will need to be met with carbon credits. I think carbon emissions will eventually be metricated, and the carbon offset market is going to be a way for major companies to offset their emissions.”
Would that investment opportunity catch on in Australia?
“I believe the Australian market hasn’t really caught on to the opportunity of this yet. But I think something will really start to emerge from the COP26 conference in November, where you’ll see a sustained mega theme starting to unfold in this country.
“I think we will start to see a complete emergence of Australian companies in the carbon space over the next few months and beyond.”
What are the ASX stocks that JP Equity likes in the carbon credit space?
One ASX stock that we’ve been watching very closely is Fertoz (ASX:FTZ). They’re a leading North American fertiliser manufacturer that produces a unique low-emission rock phosphate product that increases crop yield by 15%.
“Importantly, it can generate significantly lower CO2 emissions in manufacturing compared with other commercial fertilisers.
“This presents a really significant opportunity because agriculture as a sector accounts for 24% of all human generated greenhouse emissions. Fertoz is one of the first movers in the carbon credit market, and since May this year has been issuing carbon offset credit certificates.
“It’s not a matter of if, but when disclosure of carbon emissions will become metricated. And as a result, Fertoz is getting some strong enquiries from other companies looking to offset their footprints by buying carbon credits.”
Any other ASX stocks you like in the ESG space?
“We’re also bullish on Mpower (ASX:MPR). The company is Australia’s leading specialist in renewable energy, battery storage and micro-grid business. It has a focus on five megawatt solar farms, and is in the process of creating an initial portfolio of 20 sites across Australia in the coming years.
“That gives them an aggregate capacity of around 100 megawatts, and an estimated value of more than $150 million. It’s now down to what the team can deliver in some of those projects to build up the portfolio.”
Notable ASX ESG-related news during the week
The energy giant announced that it was targeting a 50% reduction in Scope 1 and 2 emissions by 2030, and a 15% reduction by 2025 from a 2018 baseline of 32.6Mt.
Around $7.5 billion in direct capital expenditure will be spent on decarbonising Rio Tinto’s assets from 2022 to 2030, including $0.5 billion per year from 2022 to 2024.
The company released its Sustainability Report for 2021, outlining its commitment to the United Nations Sustainable Development Goals (UNSDGs).
STA said it’s focused on managing development risks at its Coburn project in WA to safeguard workers and ensure environmental compliance.
The company has appointed global consulting firm Deloitte to ensure a robust ESG program at its Maricunga project in Chile.
Deloitte has been tasked to imbed sustainable protocols in LPI’s lithium extraction operations, and to establish ambitious standards for LPI to become a carbon neutral producer, while keeping high standards on the social aspects.
The company also said it has completed its maiden Sustainability Plan, with strategies aligned to the UNSDGs.
The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
The post The Ethical Investor: ESG moves, lessons from the energy crisis and JP Equities’ stock tips appeared first on Stockhead.
Emerita Sees Continued Success In Spain
Emerita Resources Corp (TSXV:EMO) continues to report excellent results from the Infanta drill program at its Iberia Belt West Project
The post Emerita…
Corp ( ) continues to report excellent results from the Infanta drill program at its Iberia Belt West Project in Spain, which hosts three previously identified high-grade deposits: La Infanta, Romanera and El Cura. These are all open for expansion along strike and at depth.
On October 22, the company announced assays for the first step-out drill hole from the Infanta drill program and also the final in-fill drill holes. The significance of the in-fill program was to verify the historical drill results. They will now enable a proper 3D modelling of the deposit and will also provide additional data to be used for future metallurgical testing.
At Infanta, the step-out was conducted to expand the outer perimeter of the deposit, and the in-fill drilling was intended to confirm historical drill data within Infanta’s known mineralization zone. Step-out drill hole IN018 was drilled 40 metres to the west of the historical limits of the deposit and intersected 8.2 metres with a grade of 2.5% copper, 8.7% lead, 17.3% zinc, 223.5 g/t silver and 0.5 g/t gold. A second step-out hole was drilled 50 metres to the west of hole IN018 and intersected two zones of massive sulfide but assays have not been returned yet.
In-fill drill hole IN014 intersected 5.7 metres of 2.4% copper, 7.3 %lead, 13.4% zinc, 225 g/t silver and 0.6 g/t gold. The ongoing geophysical survey, which was suspended along with other exploration activities for the region’s hunting season, is expected to resume by the end of October.
Emerita plans to have five drill rigs operating by the end of 2021 and will include the Romanera deposit, El Cura, and other targets identified by previous geophysics work. The two drills currently on site will now focus on step-out drilling to increase the size of the deposit.
Emerita also recently provided investors with an update on the legal proceedings for the Aznalcóllar Project and the company is expecting a ruling by the Administrative Court of Andalucia in Emerita’s favour in the near future.
The Aznalcóllar Zinc Project is located in the prolific Iberian Pyrite Belt in the Andalusia region of southern Spain and is considered to be one of the world’s largest and most productive volcanogenic massive sulfide (VMS) structures. It has been mined for over a thousand years and has produced over 2000 million tons of ore.
Aznalcóllar is considered to be one of the world’s top undeveloped zinc deposits, and the project is essentially a world-class pre-production development asset. Here, the main deposit is referred to as Los Frailes, which contains a historical open pit mineral resource. Two other deposits exist on the property as well, which require further development. The Los Frailes mine operated during the 1990s until it closed due to a combination of tailings-related environmental failure and low metal prices.
After the Aznalcóllar site was rehabilitated, the government initiated a public tender process for the rights to the project and it was initially awarded to another major mining company, however Emerita believed that their bid was superior. It subsequently requested an investigation into the tender process for the property and filed a lawsuit in 2015.
In early 2021, the Spanish court concluded that the process was fraught with corruption, fraud and other malfeasance and rescinded the rights that were awarded and criminal charges were sought for the perpetrators and their enablers. In July 2021, a Spanish judge issued additional criminal indictments against the mining company and government officials who participated in undermining the public tender process for the project.
Under Spanish law, if a crime was committed during the tender process, the rights are then awarded to the next best qualified competing bid, which in this case was Emerita. Subsequently, Emerita has been waiting for the Administrative Court to conclude the process to formally award the rights to the Aznalcóllar Project to the company, which brings us to present day.
The company is planning to develop the deposit into an underground mining operation focused on mining the high-grade zones, which are estimated to contain 20 million tonnes at a grade of 6.65% zinc, 3.87% lead, 0.29% copper and 84 ppm silver. As a requirement of the project’s public tender process, Emerita submitted comprehensive. engineering, environmental and water management studies to the government, and now the company is expecting to be given the green light to proceed developing the Aznalcóllar project into an eventual producer.
Emerita is well financed, having completed a $20 million bought deal private placement in July 2021. Emerita has 182.42 million shares outstanding and due to the recent increase in the Company’s share price, a market capitalization now of $556.38 million. Even so, barring any unforeseen negative developments regarding the legal issues,Corp still appears to be potentially undervalued relative to the potential value of the world-class assets it is developing.
Shares ofCorp last traded at $3.05.
FULL DISCLOSURE:is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
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