Hot Chili (ASX:HCH) - Growth Pivot Positions for Copper Price Upside

Interview with Christian Ervin Easterday, Managing Director & CEO of Hot Chili LtdOur previous interview: https://www.cruxinvestor.com/p....osts/hot-chili-hch-a date: 15th September 2023Hot Chili (ASX:HCH) is advancing one of the largest new copper projects globally, with a clear growth strategy to position itself as a major leveraged play on rising copper prices this decade.In a recent interview, CEO Christian Easterday outlined plans to expand the resource base and production profile at the Costa Fuego copper-gold project in Chile. The aim is to boost output from a PEA-stage 95,000 tonnes per annum of copper towards 150,000 tonnes per annum. An active 30,000 metre drill program and M&A strategy underpin this growth pivot.The low elevation, low strip ratio project already boasts competitive economics at baseline copper prices. But most importantly, Hot Chili's scale provides maximum exposure for shareholders as the copper market tightens. The company estimates a $0.50/lb rise in copper adds $3.3 billion in post-tax NPV and could drive the share price up to A$11.Key advantages include fully permitted access to low-cost seawater, rather than scarce freshwater sources. This provides a cost edge over peers and also opens up a potential water utility business for the region. Early stage work is underway to evaluate this opportunity.Additionally, Hot Chili is well advanced on baseline environmental studies required for permitting. The aim is to submit an EIA in 2023 and reach a construction decision in 2026, when copper markets are forecast to be very tight. First production is targeted for 2028-2030.The company is well funded, with A$24 million in cash following a royalty deal with Franco-Nevada. This leaves flexibility for further acquisitions and drill programs to expand resources at Costa Fuego. Conversations are also underway with majors, traders like Glencore, institutional investors, and automakers about strategic partnerships.In summary, Hot Chili offers investors leveraged exposure to copper via one of the few new projects of scale that can reach production before 2030. The large resource base, exploration upside, and advantages around water position it strongly against peers. While further funding will be required, the company has several options to create value, including potential spin-outs of the water rights. As copper markets tighten in the electrification era, Hot Chili's pivot to growth places it amongst the most exciting copper developers globally.
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