2011
ACN 130 955 725
ANNUALREPORT HOT CHILI ANNUAL REPORT 2011
Chairman’s Letter 2
Tenement Schedule and Details 22
Auditor’s Independence Declaration 43
Directors’ Declaration 46
Statement of Changes in Equity 49
Notes to the Financial Statements 51
Projects Overview 4
Review of Operations 6
Corporate Governance Statement 35
Directors’ Report 38
Independent Audit Report to the Members 44
Statement of Comprehensive Income 47
Statement of Financial Position 48
Statement of Cash Flows 50
Shareholder Information Required by the ASX 67
“Hot Chili made its way
to Chile for Tier Two
open pitable copper
projects capable of
achieving relatively
near-term production.”
Directors
Murray E Black (Non Executive Chairman)
Christian E Easterday (Managing Director)
Dr Allan Trench (Independent Non Executive Director)
Company Secretary
John E Sendziuk
Registered Office and Principal
Place of Business
Corner Federal Road and Wilson Street
KALGOORLIE WA 6430
Telephone: +61 8 9021 3033
Facsimile: +61 8 9021 6995
Email:
Web:
ally@hotchili.net.au
www.hotchili.net.au
Perth Office
Unit 25 784 Canning Highway
APPLECROSS WA 6153
Telephone: +61 8 9315 9009
Facsimile: +61 8 9315 5004
Solicitors
Jackson McDonald
140 St George’s Terrace
PERTH WA 6000
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: +61 8 9315 0933
Facsimile: +61 8 9315 2233
Auditors
RSM Bird Cameron Partners
8 St George’s Terrace
PERTH WA 6000
Principal Banker
Westpac Banking Corporation
Hannan Street
KALGOORLIE WA 6430
1
HOT CHILI ANNUAL REPORT 2011
chairman’s
letter
Dear Shareholder,
On behalf of the board of
Hot Chili Limited (Hot Chili or
Company), I am pleased to
present the company’s 2011
annual report, which outlines an
impressive set of achievements
in the company’s short history
since listing on the Australian
Securities Exchange (ASX) in
early May 2010.
Over the past year, Hot Chili has wasted no time
in positioning the company to make the important
transition from explorer to project developer.
Aggressive exploration and resource definition work
programmes at the company’s portfolio of large
multi-commodity copper projects in Chile have
underpinned rapid growth in the value of the company,
allowing Hot Chili to outperform most of its peers
during this past year.
Drilling results from our flagship project Productora
have revealed the presence of a large at-surface
copper-gold-molybdenum deposit. We now look
forward to the release of the company’s first resource
estimate in September 2011 and expect that this
will provide a strong platform for future growth and
establish Hot Chili’s presence within the ranks of
emerging mid-tier multi-commodity copper developers.
The rapid success from our activities this past year has
been due to the efforts and dedication of our talented
board, management and exploration team. Four years
of hard work have gone into the preparation for this
success and we could not have achieved this without
the support of our Chilean partners. We have strived
to develop our company’s cooperative relationships in
Chile and direct the benefits of our investment back
into the local community in which we operate.
Finally I would like to thank the strong and continuing
support from our shareholders. While it has been
quite a journey from our early beginnings, it has been
a journey worth the wait. I look forward to reporting
on our next year of activity in which the company
anticipates achieving even greater milestones.
Murray Edward Black
Non Executive Chairman
2
Copper
Gold
s
e
i
t
i
d
o
m
m
o
C
Molybdenum
3
“ positioning the company to make the important transition from explorer to project developer.” HOT CHILI ANNUAL REPORT 2011
projects
overview
Hot Chili’s projects lie along
Chile’s coastal cordillera, one of
the world’s largest iron-oxide-
copper-gold (IOCG) provinces
hosting several significant
deposits, including Candelaria,
Mantos Blancos, Manto Verde
and El Soldado. All of Hot
Chili’s projects are low altitude
(<1,000m elevation) and are
close to major infrastructure.
The 2011 reporting year involved an intensive period
of exploration and resource work programmes over
each of the company’s multi-commodity copper
projects in Chile. The focus at each project was to
rapidly confirm the work of earlier exploration results
and to assess the potential for each project to host
significant deposits amenable to large open-pit
operations. This work involved extensive mapping,
geochemistry, and airborne surveys. Large drilling
programmes were undertaken over Hot Chili’s two
advanced projects Productora and Los Mantos.
The company is now at an advanced stage of
estimating a first resource at the Productora
copper-gold-molybdenum project that is anticipated
to be released in September 2011. The results of
resource development drilling indicate that a large
initial resource is emerging within the project that
will give the company confidence to commence
economic scoping studies later in 2011.
Hot Chili’s team was expanded during the year to
accommodate for the rapid growth in drilling activities
in Chile. A strong management and operational team
is now in-place to continue this work and capitalise on
the company’s achievements during this past year.
The company has continued to work closely with it’s
Chilean partners, in particular CMP and CODELCO.
Further land additions and some relinquishments
occurred as all projects were further consolidated and
rationalised around known mineralised areas.
In order of focus, the three projects
and their key features are:
Productora
Productora is Hot Chili’s flagship multi-commodity
copper project. The project is at an advanced stage,
with an underground mine (operating under a capped
production arrangement as part of the company’s
purchase option agreement over the central lease at
Productora), significant historical drilling and extensive
supporting geological work already undertaken. Hot
Chili has undertaken intensive resource drilling within
the central 1.4km strike extent of the project, revealing
wide zones of copper, gold and molybdenum hosted
within a breccia intruded fault corridor. Hot Chili
controls over 12.5 kilometres of strike extent across the
main mineralised corridor at Productora.
The identified footprint of the copper-gold-molybdenum
mineralised corridor at Productora is greater than
9.5km in strike length. Extensional drilling has
successfully intersected breccia hosted multi-
commodity mineralisation for over 3.7km of this strike
extent. Drilling confirms that a magnetic anomaly
delineated by an airborne survey completed by the
company in mid 2010 relates to a magnetite zone
along the western margin of the mineralised breccia
corridor. A major drilling programme is now underway
to test the 9.5km mineralised trend, and the first stage
of this programme is to be completed over the coming
year of exploration at Productora.
Approximately 28,000m of reverse circulation (RC)
and 5,500m of diamond drilling was completed at the
project during the past year. A programme comprising
65,000m of RC and 8,000m of diamond is planned to
be undertaken at Productora during the coming year.
This drilling is aimed toward rapid resource growth along
strike, adjacent to and at depth to the anticipated first
resource within central area of Productora.
4
CHILE NORTE
Currently undergoing Drilling
Exploration Programmes.
PRODUCTORA
Currently undergoing
Resource Drilling Programmes.
LOS MANTOS
Currently undergoing Drilling
Exploration Programmes.
RESOURCE TYPE:
Copper
Gold
Molybdenum
Los Mantos
Los Mantos is at an advanced stage with an operating
small-scale mine, and extensive historical underground
and surface development. The Company has
recognised a zoned multi-commodity IOCG system
at the project. Extensive mantos and breccia style
mineralisation is exposed over 2.5km in strike length in
surface development and outcrop.
During the year an 11,500m first-pass RC drilling
programme was undertaken over the project. Drilling
returned multiple zones of shallow, moderate width,
multi-commodity copper intersections across 1.5km
of strike extent.
Chile Norte
Hot Chili is in its second year of a five-year agreement
with CODELCO to earn an interest in a large
contiguous land holding that adjoins the Company’s
own landholding in the project area.
Chile Norte is at an early stage of advancement.
Historical work undertaken to date includes copper
multi-commodity exploration investigations, minor
drilling activity, trenching and surface geochemical
assaying complete. Over 17km strike length of multi-
commodity anomalism has been identified in the area
and further extensions along strike are inferred.
Work undertaken by Hot Chili and the current mining
activities indicate that Los Mantos may potentially
be higher-grade than Productora. The company
is pleased with the results of the first-pass drilling
programme and will be planning to undertake a
second-pass programme in which to potentially
define a second shallow multi-commodity copper
resource in Chile.
Exploration by Hot Chili has included airborne
magnetic and radiometric surveying, ground mapping
and geochemical sampling. Four large target areas
have been prioritised for assessment within the 65km
strike extent of land position at the project. A more
focused phase of surface geochemistry and mapping
is planned to advance the project towards a drill
readiness status in the coming year.
5
La SerenaARGENTINACHILEBOLIVIAPERUIquiqueAntofagastaSantiago HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
The year has seen the company
complete extensive drilling
programmes at both of its
advanced projects Productora
and Los Mantos.
These campaigns were very successful in delineating
large shallow multi-commodity copper mineralisation
at both projects. Drilling results at Productora have far
exceeded the company’s earlier estimates of potential
at the projects, while drilling at Los Mantos confirmed
the potential predicted.
First stage drilling at Productora commenced on
the 17th August 2011, with the use of a single RC
drill rig. First-pass drilling intersected wide zones of
copper-gold and molybdenum in 22 of the first 23 RC
drill holes at Productora, which gave the company
encouragement to increase the size and scope of the
drilling campaign. Continued success with drilling over
the ensuing months saw the drill programme expand
and the company utilised up to six RC drilling rigs, and
five diamond drilling rigs in an effort to expedite the
delineation of a maiden resource for Productora.
Further work at Productora involved an extensive
litho-structural mapping and geochemical rock chip
sampling programme along strike extensions of
the Productora mine area to further enhance the
company’s understanding of the mineralised system
within the area.
Hot Chili completed a major helicopter based
aeromagnetic and radiometric survey over the
Productora project area. These geophysical surveys, in
conjunction with mapping and geochemical sampling
programmes, will be used for further target generation
for the next phase of extensional drilling due to
commence at Productora in September 2011.
Drilling targeted substantial copper-gold shear-hosted and
mantos zones that are currently being exploited from both
surface and underground small-scale development.
The first drilling results confirm Hot Chili’s earlier surface
exploration mapping and geochemical sampling which
indicated a zoned metal distribution between the
northern and southern zones of the deposit.
The northern zone of the deposit hosts a sequence of
moderately east-dipping mantos zones. First drilling
across this zone has successfully returned several
moderate width intersections of copper and gold
at shallow depths. Higher-grade mineralisation is
associated with sediments and breccia zones related
to cross faults locations.
Mineralisation in the southern zone of Los Mantos is
hosted by a series of west-dipping shears. Several
orientations of drilling were utilised owing to the
presence of mineralised cross faults. Many of the
individual drill holes returned multiple intersections,
recording significant multi-commodity copper results
in breccia.
Hot Chili also completed a major helicopter based
aeromagnetic and radiometric survey over the Los
Mantos project area. These geophysical surveys, in
conjunction with mapping and geochemical sampling
programmes, will be used for further target generation
for the next phase of exploration drilling at Los Mantos.
A first pass RC drill programme was undertaken at
Los Mantos during May and June 2011. Significant
intersections were reported in the majority of drill holes
completed on the project, confirming moderate width,
multi-commodity copper mineralisation across 1.5km
of the 2.5km strike extent of mineralisation tested at
the project.
At Chile Norte a large aeromagnetic and radiometric
survey was conducted which identified a series of
anomalies. These anomalies were then investigated by
a helicopter-supported reconnaissance mapping and
sampling survey. Based on the geophysical work and
the follow-up field checking and sampling, four areas of
interest have been prioritised for follow-up work.
6
Productora
“Initial drill results from the
first stage of drilling were
extremely encouraging”
Above: looking north
across resource drilling
platforms at Productora
Productora Project
The Productora project is located in Chile’s low-altitude
coastal range belt, 15km south of the regional mining
centre of Vallenar. Productora is the most advanced
of Hot Chili’s three Chilean projects, containing an
operating underground copper mine and historical
exploration results.
Exploration and Resource Drilling Activities
The company commenced first drilling at Productora in
August 2010 and continued until late June 2011. The
first stage drilling programme was directed towards
several key target areas within the project which were
located primarily within the central and northern areas
of the project. Drilling focussed on a zone of significant
copper and gold workings associated with a large
geophysical induced polarisation (IP) anomaly defined
in earlier work by Teck during the 1990’s.
Initial drill results from the first stage of drilling
were extremely encouraging with the intersection
of numerous wide zones of mineralisation which
warranted the need for the addition of a second RC
drill rig in late 2010 to accelerate drilling activities.
Hot Chili reported significant intersections in 22 of the
first 23 RC drill holes completed within the central area
of Productora. Wide zones of breccia hosted copper,
gold and molybdenum mineralisation have been
recorded over 1.4km strike within the central area,
which was the focus for the company’s preliminary
resource at Productora.
Resource drilling was directed from initial shallow RC
drilling to deeper diamond drilling at the beginning of
April 2011 which was completed by late June 2011.
During this time, Hot Chili utilised up to six RC drill
rigs and five diamond drill rigs on site in an effort to
expedite the delineation of a resource over a 1.4km
strike extent within the central area of the project.
Resource drilling returned several higher-grade
results during the drilling campaign, highlighting
enriched grade within numerous shallow areas
within the deposit.
In addition to the higher-grade drilling results, wide
zones of moderate grade mineralisation were also
intersected. These results highlight the shallow nature
of the deposit and clearly demonstrate that a number
of potentially large tonnage zones are present from
surface particularly within the southern extent of the
central area. Significant intercepts from the drilling are
in the following table.
7
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Productora Project (continued)
Exploration and Resource Drilling Activities (continued)
Table of Selected Significant Intersections at Productora
Hole_ID
Coordinates
Azim.
Dip
Intersection
North
East
From
PRP0014
6821893
323470
PRP0018D 6822595
323545.3
PRP0023
6822230
323550
PRP0027
PRP0049
6822380
323580
Open to end of hole
323420
6821900
PRP0062
6822020
PRP0066D 6822380
6822143
PRP0069
6822460
PRP0077
323420
323500
323436.3
323720
PRP0079
6822550
323600
PRP0081
PRP0082
6822366
323476.4
Open to end of hole
323549.3
6822364
PRP0084
PRP0090
6822366
6821868
323515.7
323326.6
PRP0096
6822224
323525.2
PRP0100
6822065
323448.8
PRP0101
PRP0102
6821869
323486.4
Open to end of hole
323508
6821946
PRP0104
6822365
323601
PRP0109
Open to end of hole
323616
6822311
PRP0111
PRP0112
6822365
6822548
323435
323531
PRP0113
6822504
323615
PRP0115
PRP0117
6821770
6822542
323236
323607
8
90
90
90
90
-60
including
-60
including
-60
including
-60
including
-60
including
-60
90
90
90
90
90
-60
-60
including
-60
including
-60
90
90
90
90
90
90
90
90
90
-60
including
including
-60
-60
including
-60
including
-60
including
-60
-60
including
-60
including
90
90
90
90
90
90
including
-60
including
-60
-60
including
-60
including
-60
-60
including
12
13
103
189
77
97
111
112
108
142
122
98
88
74
105
101
101
121
91
92
181
63
30
57
75
103
0
67
211
92
116
88
88
189
196
62
76
110
132
133
104
108
64
135
145
To
38
24
227
212
103
102
188
133
161
161
208
160
148
141
137
129
112
161
193
100
192
82
92
65
127
114
167
88
250
127
121
144
96
221
210
91
83
174
215
140
128
116
126
164
155
Interval Copper Gold Molyb-
denum
Copper
Eq*
(m)
(% Cu)
(g/t Au) (ppm Mo) (% Cu )
26
11
124
23
26
5
77
21
53
17
86
62
60
67
32
28
11
40
102
8
11
19
62
8
52
11
167
21
39
35
5
56
8
32
14
29
7
64
83
7
24
8
62
29
10
0.73
1.15
0.50
0.90
0.93
2.34
0.60
1.00
0.60
1.00
0.50
0.60
0.50
0.70
1.00
0.70
1.00
0.70
0.70
2.20
1.00
1.20
0.60
1.10
0.70
1.00
0.60
1.30
0.60
0.60
1.70
0.80
2.40
0.80
1.20
0.90
2.20
0.60
0.50
1.10
0.80
1.10
0.50
0.80
1.40
0.1
0.2
0.1
0.2
0.3
0.6
0.1
0.2
0.1
0.1
0.1
0.1
0.1
0.2
0.3
0.1
0.2
0.1
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.2
0.2
0.0
0.1
0.1
0.2
0.2
0.3
0.1
0.3
0.1
0.1
0.2
0.2
0.3
0.1
0.3
0.3
85
110
175
220
232
441
142
196
255
208
146
178
196
141
203
214
278
254
301
195
1107
340
107
115
118
119
180
153
169
366
1760
207
421
316
386
170
322
186
187
329
186
187
133
411
754
0.88
1.35
0.71
1.22
1.30
3.12
0.79
1.30
0.88
1.24
0.69
0.82
0.73
0.95
1.37
0.95
1.37
0.98
1.09
2.50
2.05
1.55
0.76
1.26
0.87
1.17
0.82
1.56
0.88
0.
0.90
3.22
1.04
2.88
1.20
1.72
1.11
2.67
0.82
0.72
1.51
1.09
1.46
0.68
1.34
2.23
Long Section of Productora Central Area - selected drilling results and diamond hole location
“rapid resource
definition...”
Litho-Structural Mapping and
Rock Chip Sampling
Hot Chili’s consultant structural mapping team Jigsaw
Geoscience continued with a detailed litho-structural
mapping campaign over the Productora project during
the year. Reconnaissance mapping and rock chip
sampling at Productora focused on the newly-acquired
Sierra Zapolla area located along the southern strike
extension of the Productora fault system.
The results from the later resource definition RC drilling
confirmed the presence of additional wide vertical zone
of mineralisation along the eastern extent of the deposit
(locally referred to as the eastern breccia) not previously
recognised in earlier first-pass drilling within the
central area. The results also indicated the presence
of additional shallow dipping zones located near-
surface and adjacent to the main mineralised vertical
breccia zone. At present, these new shallow dipping
zones are interpreted to be related to shallow dipping
mantos horizons that lie in close proximity to the main
mineralised vertical breccia zone.
A total of 283 samples were collected during the
year and were assayed using a comprehensive
multi-element suite. Significant copper, gold and
molybdenum results were obtained from this sample
assaying. These results define a number of anomalous
mineralised trends associated with a swarm of
northwest-trending narrow veins that typically show
strike lengths in excess of 200m.
The vein swarm at Sierra Zapolla is developed over an
area of at least 1.5km x 1.5km, and is interpreted to
extend beyond this.
The successful and rapid resource development of
the project has positioned the company to announce
its maiden resource for the Productora project in
September 2011.
Investigations of historical drill sites, trenching and mine
development areas has also provided further confirmation
of the extent and results of historical exploration activities
already undertaken over the project.
Drilling at Productora during the year has seen the
completion of 143 drill holes on the project for total drill
metres of 33,001.92m.
Further mapping is planned to extend coverage along
the remaining strike extent of the main mineralised
corridor at Productora.
9
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Productora Project (continued)
Surface rock-chip copper-gold-molybdenum results at Productora South (Sierra Zapollo)
overlaid on magnetic image
Note: the high-grade nature of preliminary copper and gold results on the southern most extent of Productora’s
9.5km mineralised corridor.
Airborne Survey
During the third quarter of 2010, Hot Chili completed a
major helicopter based aeromagnetic and radiometric
survey over the Productora project area as part of
large-scale survey over all three of its projects in Chile.
The airborne survey comprised a total of 644 line
kilometres over the Productora project. A flight line
spacing of 100m with a flight height of 50m was
chosen in order to maximise resolution of the survey
and enable the direct targeting of drill-sites
at Productora.
Southern Geoscience Consultants were engaged to
facilitate processing and completion of final imagery
and data analysis.
10
Map of Tenement Land Holding displaying aquired land
0
N
2km
a
e
r
A
j
t
c
e
o
r
P
+1140
hectares
Hot Chili (SMEAL)
Aquired 2010 - 2011
Hot Chili (SMEAL 100%)
Project Partner
(SMEAL JV & purchase
options agreements)
Land acquisitions
A series of substantial increases to the land holding at
the Productora project during the year saw an additional
1140 hectares of prospective ground being added to
the project area which has increased the strike length of
the project by 2.5km’s primarily in the southern extent of
the project (Sierra Zapolla area).
All new land concessions secured during the year lie
in extensional areas of the project and have expanded
the prospectivity and potential size of the Productora
target mineralisation.
“expanded the
prospectivity and
potential size of the
Productora target
mineralisation”
11
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Los Mantos
“Significant intersections
were reported in the
majority of drill holes
Los Mantos Project
The Los Mantos project is located in Chile’s low-
altitude coastal range belt, 60km south of the coastal
city of La Serena and 15km west of the large Andacollo
copper-gold mine. The project has seen significant
small-scale historical surface and underground mining
activity but had not been drill tested until Hot Chili’s
drilling campaign which commence in early 2011.
Under the terms of Hot Chili’s five year purchase-option
agreement, the owners of Los Mantos have been
granted a concession to continue their small-scale
surface and underground copper mining activity limited
to a rate of 30,000 tonnes per annum.
First-pass Exploration Drilling Activities
A first-pass RC drilling programme comprising 57 drill
holes for 11,515 metres was completed at Los Mantos
during the second quarter (Q2 2011). Significant
intersections were reported in the majority of drill holes
reported to date over the project, confirming moderate
width, copper multi-commodity mineralisation across
1.5km of the 2.5km strike extent project. To date,
results for the first 21 RC holes have been compiled
and reported to the market.
12
Above: Los Mantos Project -
drilling platform and access
clearing in southern mine area
Results from the drilling have confirmed Hot Chili’s
earlier surface exploration which indicated a zoned
metal distribution between the northern and southern
zones of the deposit.
The northern zone of the deposit hosts a sequence of
moderately east-dipping mantos zones. Drilling across
this zone successfully returned several moderate
width intersections of copper and gold at shallow
depths. Higher grade mineralisation is associated with
sediments and breccia zones related to cross faults
locations. To date drilling intersections in the northern
zone average 8m width (down-hole), 1.2% copper
and 0.1g/t gold. The average cumulative width of
mineralisation in each of the first drill holes directed
towards the northern zone is 14m (down-hole). Higher
grade intercepts from the northern zone include:
down-hole
. 8m grading 2.1% copper and 0.1g/t gold from 56m
. 14m grading 0.9% Copper and 0.1g/t gold from
. 11m grading 1.5% copper and 0.2g/t gold from
72m down-hole
77m down-hole
Los Mantos structural mapping and significant drill intercepts
11m@1.5% Cu
and 0.2g/t Au
11m@0.6% Cu
12m@0.8% Cu Eq*
(0.6% Cu)
8m@1.2% Cu Eq*
(1.0% Cu)
12m@0.7% Cu
13m@0.7% Cu
8m@2.1% Cu
and 0.1g/t Au
4m@2.6% Cu
and 0.2g/t Au
14m@0.9% Cu
and 0.1g/t Au
26m@0.8% Cu Eq*
(0.7% Cu)
4m@2.7% Cu Eq*
(2.5% Cu)
5m@1.4% Cu Eq*
(0.8% Cu)
8m@0.9% Cu Eq*
(0.8% Cu)
Cu and Au Results
Cu Eq* Results
Mineralisation in the southern zone of Los Mantos is
hosted by a series of west-dipping shears. Several
orientations of drilling were utilised owing to the
presence of mineralised cross faults. Many of the
individual drill holes returned multiple intersections,
recording significant multi-commodity results within
breccia. The multi-commodity drilling intersections
individually average 6m width (down-hole), 0.8%
copper, 0.1g/t gold and 118 ppm molybdenum. The
average cumulative width of mineralisation in each of
the first drill holes directed towards the southern zone
is 28m (down-hole). High Grade intercepts from the
southern zone include:
. 26m grading 0.8% copper equivalent* from 56m
. 8m grading 1.2% copper equivalent* from 25m
down-hole
down-hole
“further successful
results may allow the
company to define a
second large-scale
multi-commodity
copper resource”
The company is currently analysing all data from the
successful first-pass drilling campaign at Los Mantos with
an outlook to commencing a second-pass programme at
the project. It is anticipated that further successful results
may allow the company to define a second large-scale
multi-commodity copper resource in Chile.
13
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Los Mantos Project (continued)
First-pass Exploration Drilling Activities (continued)
Significant intercepts from the Southern Zone of Los Mantos Project are tabulated below
Hole_ID
Coordinates
Azim.
Dip
Intersection
North
East
From
MNP0001
6638740
289020
75
-60
MNP0002
6638740
288991
345
-59.6
MNP0003
MNP0004
6638800
6638765
289055
289095
345
360
-59.7
-90
MNP0005
6638711
289016
345
-58.6
MNP0006
6638720
288945
75
-59
MNP0008
6638795
288896
75
-58.5
including
MNP0009
6638760
289070
345
-59.8
MNP0010
6638720
289085
345
-58.1
MNP0012
6639450
288720
75
-59.8
MNP0013
MNP0014
6639430
6639430
288640
288640
MNP0015
6639800
288480
MNP0016
6639567
288531
75
255
-59
-59
including
-59.2
including
-59.2
255
255
MNP0018
MNP0019
6640017
6639830
288526
288555
MNP0020
MNP0023
6639584
6639665
288664
288820
255
255
255
345
-60.9
-73.2
-59.3
-59.9
14
4
18
30
51
73
103
47
75
88
131
49
26
37
13
28
47
63
80
119
154
164
180
196
3
32
46
125
163
199
79
80
182
2
25
160
171
186
21
50
84
115
235
51
72
81
71
75
56
99
8
20
52
46
12
77
To
9
24
33
62
79
115
49
83
92
134
51
28
39
21
31
51
71
85
123
160
168
183
206
9
40
51
131
173
217
105
90
184
13
33
164
173
188
27
52
88
121
240
55
86
86
77
76
64
106
20
33
64
55
20
88
Interval Copper Gold Molyb-
denum
Copper
Eq*
(m)
(% Cu)
(g/t Au)
(ppm Mo) (% Cu )
5
6
3
11
6
12
2
8
4
3
2
2
2
8
3
4
8
5
4
6
4
3
10
6
8
5
6
10
18
26
10
2
11
8
4
2
2
6
2
4
6
5
4
14
5
6
1
8
7
12
13
12
11
8
11
0.33
0.40
0.39
0.33
0.31
0.56
2.95
0.63
2.50
0.56
0.56
2.54
2.03
0.80
0.79
0.50
0.26
0.33
0.94
0.44
0.59
1.42
0.65
0.36
0.66
0.77
0.31
0.50
0.28
0.68
1.22
0.98
0.48
1.01
0.68
0.67
0.71
0.29
1.09
0.99
0.68
0.60
2.63
0.86
1.84
0.81
3.73
2.14
0.36
0.67
0.72
0.42
0.64
0.73
1.51
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.1
0.3
0.0
0.0
0.0
0.2
0.1
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.0
0.0
0.0
0.1
0.1
0.0
0.0
0.1
0.1
0.0
0.0
0.0
0.0
0.1
0.1
0.0
0.0
0.1
0.1
0.1
0.2
0.1
0.3
0.2
0.5
0.1
0.0
0.0
0.0
0.0
0.0
0.1
0.2
33
165
84
138
225
176
472
55
25
87
51
5
204
24
170
65
208
18
9
8
2
8
7
42
56
674
8
10
8
88
146
618
14
224
106
101
67
37
84
220
8
14
6
5
9
72
267
6
5
5
12
16
7
141
3
0.37
0.57
0.47
0.47
0.52
0.75
3.40
0.71
2.72
0.66
0.61
2.57
2.30
0.86
0.99
0.58
0.45
0.37
1.01
0.45
0.60
1.47
0.68
0.40
0.72
1.40
0.37
0.52
0.31
0.80
1.41
1.50
0.50
1.23
0.78
0.79
0.80
0.34
1.17
1.24
0.76
0.65
2.79
0.96
2.02
1.00
4.29
2.18
0.39
0.68
0.73
0.44
0.65
0.94
1.62
Map of Tenement Land Holding displaying aquired land
0
N
500m
a
e
r
A
j
t
c
e
o
r
P
new
acquisition
Hot Chili (SMEAL)
Aquired 2010 - 2011
ACG/SMEAL 100%
Airborne Survey
During the year Hot Chili completed a helicopter based
aeromagnetic and radiometric survey. The airborne
survey comprised a total of 308 line kilometres over the
Los Mantos project. A flight line spacing of 100m with
a flight height of 50m was chosen in order to maximise
resolution of the survey and enable the direct targeting
of drill-sites at Productora and Los Mantos.
The survey represents a significant investment in the
company’s projects and will provide a high resolution
dataset to assist our exploration team in interpreting
the existing iron-oxide-copper-gold (IOCG) systems, as
well as identifying new targets within our land holdings.
The datasets will greatly assist in the company’s
exploration strategy at each of its projects.
Southern Geoscience Consultants were engaged to
facilitate processing and completion of final imagery
and data analysis. The results of this work will be
incorporated into drill targeting and exploration
activities in 2012.
Land Acquisitions
During the period a purchase option agreement with
private central mining lease owners Cruz Riviera Emilia
was executed, this added the Libertad 1-3 lease to the
inventory of Hot Chili. This is a significant deal for Hot Chili
and means that the company now controls a contiguous
land package of 1.5km wide by 2.5km in length.
15
Litho-Structural Mapping and
Rock chip sampling
Results of surface mapping in conjunction with soil and
rock-chip sampling by Hot Chili’s exploration team has
confirmed over 2.5km cumulative strike length of mantos
and vein-hosted copper-gold mineralisation at surface.
Similar to the Productora project, Los Mantos displays
a zoned metal distribution with increasing molybdenum
content at depth. However, unlike the Productora project
where mineralisation is concealed in-part by surface
leaching, mineralisation at Los Mantos is prominent in
outcrop with demonstrated continuity.
HOT CHILI ANNUAL REPORT 2011
review of
operations
Chile Norte
“exploring to locate a
large iron-oxide-copper
gold style target”
Above: looking east
across CODELCO and Hot
Chili’s project position
Chile Norte Project
The Chile Norte project is located in Chile’s low-altitude
coastal range belt, approximately 50km south of the
coastal city of Iquique. Hot Chili has assembled a
substantial landholding in the area and in addition the
company has a formal agreement with CODELCO to
gain access to a large contiguous tenement holding
at Chile Norte. Hot Chili is exploring to locate a large
iron-oxide-copper gold style target within the Chile
Norte project that may be associated with significant
at-surface, uranium evaporite style mineralisation.
Southern Geoscience Consultants (SGC) were
engaged to facilitate processing and completion of
final imagery and data analysis. Southern Geoscience
identified a total of 18 magnetic anomalies and 4
uranium anomalies in the review which warranted
further investigation.
The target review was confined to the limits of
the airborne survey undertaken exclusively over
CODELCO’s land position, where the company has
a 5 year 65% earn-in exploration agreement in place.
The results of this work will be incorporated into drill
targeting and exploration activities in 2011 and 2012.
Airborne Survey
During the year Hot Chili completed a helicopter based
aeromagnetic and radiometric survey. The airborne
survey comprised a total of 1,219 line kilometres over
the Chile Norte project. A flight line spacing of 100m
with a flight height of 50m was chosen in order to
maximise resolution of the survey.
Reconnaissance Field Work
Ten days of helicopter-supported reconnaissance
mapping and sampling was completed by Hot
Chili at the Chile Norte project during May 2011.
Reconnaissance was completed over the priority
targets identified by interrogation of the geophysical
survey within CODELCO’s land position as well as
other priority areas of interest within Hot Chili’s own
large contiguous land holding at Chile Norte.
16
continued Southern Geoscience Magnetic and Uranium Anomalies
Each of these anomalies was assessed on the ground
to determine the causes of each anomaly, and to locate
any associated alteration or mineralisation with the
anomalies. Work completed during this reconnaissance
survey included the following:
anomaly (nominal 80m spacing),
. 260 soil samples collected on lines across each
. Geological observations (lithology, structure,
. Geophysical observations (scintillometer and
. 131 rock chip samples of typical rock types,
magnetic susceptibility readings),
alteration, mineralisation),
interesting alteration and mineralisation.
In addition to these ground surveys a large but
disjointed package of tenements in the south and
southeast of the project area were overflown as far
south as the Rio Loa canyon to provide some idea
of ground access, exposure level and basic geology.
Finally, the Red Hill area (at the far north of the project)
was overflown and geological observations plus
sampling was completed over a series of old workings
associated with a prominent NW-striking fault segment
of the Salar Grande Fault.
17
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Chile Norte Project (continued)
Surface rock-chip results from mapping and sampling activities at Chile Norte during 2011
Reconnaissance Field Work (continued)
Four targets have now been confirmed for follow-up
soil geochemical surveys and additional prospect-
scale mapping. All of these areas are easily accessible
by road from Iquique. The company has completed
planning for a second airborne magnetic and
radiometric survey over its own northern landholding at
Chile Norte. This survey is expected to commence in
September 2011.
18
Surface soil results from mapping and sampling activities at Chile Norte during 2011
“Four targets have
now been confirmed
for follow-up”
19
HOT CHILI ANNUAL REPORT 2011
review of
operations
continued
Map of Tenement Land Holding displaying aquired land
N
0
10m
+1700
hectares
a
e
r
A
j
t
c
e
o
r
P
Hot Chili (SMEAL)
Aquired 2010 - 2011
Hot Chili (SMEAL 100%)
Hot Chili/CODELCO JV
exploration agreement
“substantial increases
to the land holding
at the Chile Norte
project... which
equates to 2km’s of
prospective ground”
Chile Norte Project (continued)
Land acquisitions
A series of substantial increases to the land holding
at the Chile Norte project during the year saw an
additional 1700 hectares which equates to 2km’s of
prospective ground added to the northern extension of
the project through the pegging of leases Murray 35 to
Murray 40.
There were also a number of tenements which were
relinquished due to exploration expiries. The land
which was relinquished was deemed to be of low
prospectivity allowing remaining expenditure to be
directed toward only those tenements with moderate to
high prospectivity.
20
Notes to Review of Operations
* Copper Equivalent Calculation
Copper Equivalent (also Cu Eq*) Calculation represents
the total metal value for each metal, multiplied by
the conversion factor, summed and expressed in
equivalent copper percentage. These results are
exploration results only and no allowance is made
for recovery losses that may occur should mining
eventually result. However it is the company’s opinion
that elements considered here have a reasonable
potential to be recovered as evidenced in similar multi-
commodity natured mines elsewhere in the world.
Copper equivalent conversion factors and long-term
price assumptions used follow:
Copper Equivalent Formula =
Cu % + Mo(ppm) x 0.0008 + Au(ppm) x 0.6832
Price Assumptions -
Cu (US$1.60/lb) to the Cu (US$1.80/lb)
Target Mineralisation
Competent Person’s statement
References to exploration target size and target
mineralisation in this announcement are conceptual
in nature and should not be construed as indicating
the existence of a JORC Code compliant mineral
resource. Target mineralisation is based on
projections of established grade ranges over
appropriate widths and strike lengths having regard
for geological considerations including mineralisation
style, specific gravity and expected mineralisation
continuity as determined by qualified geological
assessment. There is insufficient information to
establish whether further exploration will result in
the determination of a mineral resource within the
meaning of the JORC Code.
Information in this announcement that relates to
exploration results or mineral resources is based on
information compiled by Mr Christian Easterday, a
Director, who is a Member of The Australian Institute of
Geoscientists. Mr Easterday has sufficient experience
which 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 2004 Edition of the Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’ (the JORC Code). Mr Easterday
consents to the inclusion in this announcement of the
statements based on his information in the form and
context in which they appear.
21
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
Productora
“close working relationships
with both government
and private stakeholders...”
Above: looking south across
the newly acquired
Productora South area
Productora Tenement Details
Outside of the Company’s own landholding, Hot
Chili has executed an agreement with several private
parties, government organisations and major miners.
Importantly, these parties together with Hot Chili control
over 85% of the strike extent of defined mineralisation
within this land position including the central mining
lease of Productora which contains an operating
underground copper mine.
Hot Chili recently successfully acquired a further four
concessions along the southern extension to the
Productora project. The new concessions extend the
strike length of the Productora Project by 2.5km, or
20 per cent, providing further up-side to Hot Chili’s
plans to delineate and develop significant copper-gold-
molybdenum resources at the project.
Hot Chili has established close working relationships
with both government and private stakeholders, of
particular note is the major local partnership with CMP
(Chile’s largest iron ore producer).
An underground copper mine is in operation within
the central mining lease of the Productora project.
Under the terms of Hot Chili’s (SMEAL’s) agreement
with the owners of this mining lease (Coyigualles)
agreement the lease mining agreement will be allowed
to continue throughout SMEAL’s five year exploration
purchase option period with extraction limited to 1.3
million tonnes of ore, and mining terminated with a
120 day notice period upon exercise of the option
at any time within the five year exploration period.
The lease mining company will have 6 months from
exercise of the option agreement in which to remove
all equipment.
The details of the tenement holding for the Productora
project are presented in the following table.
22
Productora project tenement details
Licence ID
Holder*
%
Interest
Licence Type
Area
(ha)
Mining
Patents**
2010-2011
US$ (7)-(8)
FRAN 1, 1-60
SMEAL
100%
Mining Claim
FRAN 2, 1-60
SMEAL
100%
Mining Claim
FRAN 3, 1-60
SMEAL
100%
Mining Claim
FRAN 4, 1-60
SMEAL
100%
Mining Claim
FRAN 5, 1-60
SMEAL
100%
Mining Claim
FRAN 6, 1-60
SMEAL
100%
Mining Claim
FRAN 7, 1-60
SMEAL
100%
Mining Claim
FRAN 8, 1-60
SMEAL
100%
Mining Claim
FRAN 9, 1-20
SMEAL
100%
Mining Claim
FRAN 11, 1-40 SMEAL
100%
Mining Claim
300
300
300
300
300
300
300
300
100
200
Exploration and
Expenditure
Commitment-
Payments
None
Expiration
date of the
concession
(dd.mm.yyyy)
None
None
None
None
None
None
None
None
None
FRAN 12, 1-40 SMEAL
100%
Mining Claim
200
1,643.00
None
FRAN 13, 1-40 SMEAL
100%
Mining Claim
200
1,643.00
None
FRAN 14, 1-40 SMEAL
100%
Mining Claim
200
1,643.00
None
FRAN 15, 1-60 SMEAL
100%
Mining Claim
FRAN 16, 1-20 SMEAL
100%
Mining Claim
FRAN 17, 1- 40 SMEAL
100%
Mining Claim
FRAN 18, 1-60 SMEAL
100%
Mining Claim
FRAN 21, 1-60 SMEAL
100%
Mining Claim
300
200
200
300
300
None
None
None
None
None
FRAN 22
SMEAL
100% Mining Application
400
657.00
None
ALGA 7A, 1-32 SMEAL
100% Mining Exploitation
ALGA VI, 5-24
SMEAL
100% Mining Exploitation
MONTOSA 1-4 SMEAL
100% Mining Exploitation
CHICA
SMEAL
100% Mining Exploitation
ESPERANZA
1-5
LEONA
SEGUNDA 1-4
CABRITO,
CABRITO 1-9
SMEAL
100% Mining Exploitation
SMEAL
100% Mining Exploitation
SLM
Cabrito
60% Mining Exploitation
89
66
35
1
11
10
50
731.23
None
542.26
None
95.80
None
8.20
None
90.30
None
82.16
None
410.00
None
GBD
ZAPA 1, 1-10
ZAPA 3, 1-23
GBD
ZAPA 5A, 1-16 GBD
GBD
ZAPA 7, 1-24
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
100
92
80
120
821.60
755.80
657.20
985.90
Total
Exploration
Expenditure
Commitment
of US$500,000
over 5 years
(US$100,000
pa). Exercise
Payment-
US$100,000
Comments
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
SMEAL 100%
Purchase
SMEAL 100%
Purchase
SMEAL 100%
Purchase
SMEAL 100%
Purchase
SMEAL 100%
Purchase
SMEAL 100%
Purchase
SMEAL 100%
Purchase
(pending
acquisition of
40%)
5 Year- 65%
JV Earn-
in option
Agreement
executed
23
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
continued
Productora Tenement Details (continued)
Productora project tenement details (continued)
Licence ID
Holder*
%
Interest
Licence Type
Area
(ha)
Mining
Patents**
2010-2011
US$ (7)-(8)
Exploration and
Expenditure
Commitment-
Payments
Expiration
date of the
concession
(dd.mm.yyyy)
Comments
CMP
CMP
CMP
CUENCA A,
1-51
CUENCA B,
1-28
CUENCA C,
1-51
CMP
CUENCA D
CMP
CUENCA E
CHOAPA 1-10 CMP
CMP
ELQUI 1-14
CMP
LIMARÍ 1-15
CMP
LOA 1-6
CMP
MAIPO 1-10
CMP
TOLTÉN 1-4
CMP
CACHIYUYITO
1, 1-60
CACHIYUYITO
2, 1-60
CACHIYUYITO
3, 1-60
LA
PRODUCTORA
1-16
CMP
CMP
SLM
Produc-
tora
65% Mining Exploitation
255
2,095.00
65% Mining Exploitation
139
1,142.00
65% Mining Exploitation
255
2,095.00
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65% Mining Exploitation
65%
Mining Claim
3
1
50
61
66
30
50
70
300
25.00
8.21
410.00
501.00
542.00
246.00
410.00
575.00
2,465.00
65%
Mining Claim
300
2,465.00
65%
Mining Claim
300
2,465.00
Total
Exploration
Expenditure
Commitment of
US$4,000,000
over 5
years (Yr1-
US$750,000,
Yr2
US$500,000,
Yr3-
US$500,000,
Yr4-
US$1,000,000,
Yr5-
US$1,250,000).
Exercise
Payment (price)
of US$100,000
100% Mining Exploitation
75
614.00
BUENA SU-
ERTE 1-6
PILAR 1-2
SLM
Buena
Suerte
SLM
Pilar
100% Mining Exploitation
30
246.00
100% Mining Exploitation
10
82.00
Total price of
USD 7,750,000.
USD 100,000
paid upon signa-
ture. Payments
of US$100,000
pa for Yr. 1,
2, 3 and 4.
US$7,250,000
Exercise
Payment at the
end of Yr. 5
Total price of
USD 1,000,000.
USD 20,000
paid upon
signature.
Payments of
US$50,000 pa
for Yr. 1, 2, 3
and 4. Exercise
Payment of USD
780,000 at the
end of Yr 5.
5 Year- 65%
JV Earn-
in option
Agreement
executed
5 Year- 100%
Purchase-
option
Agreement
executed
5 Year- 100%
Purchase-
option
Agreement
executed
5 Year- 100%
Purchase-
option
Agreement
executed
28,138.00
Total Expenditure in Exploration
Commitments (5 Yrs)- US$ 4,500,000
Total Exercise Payment Commitments
(or price) US$ 8,950,000
Note: (1) CMP = Compañía Minera del Pacífico; SLM Productora = Sociedad Legal Minera La Productora 1 de la Sierra Coyigualles; SLM
Buena Suerte = Sociedad Legal Minera Buena Suerte 1 de la Sierra Tamarico; SLM Pilar = Sociedad Legal Minera Pilar 1 de la Sierra
Tamarindo; SLM Cabrito = Sociedad Legal Minera Cabrito de la Sierra Zapallo. (2) In accordance with the approximate observed dollar
exchange rate published on August 4th, 2009 (CH$460), by the Central Bank of Chile. (3) This amount is only referential. It is calculated by
taking into account a monetary unit known as UTM, which is established and readjusted on a monthly basis. Hence, it will depend on the
UTM existing in March 2011 (4) Mining Patents represent yearly rent and rate fees for mining rights in Chile. (5) Values may suffer variations
according to the value of the Monthly Tax Unit.
24
Productora project tenement location plan
25
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
continued
Los Mantos
“6 Mining Exploitations
and 4 Exploration
Licences...”
Above: view across the
Los Mantos Project
Los Mantos Tenement Details
The Los Mantos project comprises 10 licences in total,
including 6 Mining Exploitations and 4 Exploration
Licences. The Exploration Licences have been
constituted as a layer of protection and do not add to
the landholding of the project, defined only by the 6
Mining Exploitation Licences. The Mining Exploitation
Licences cover approximately 275 ha.
Hot Chili, through its Chilean subsidiary company
Sociedad Minera El Aguila (SMEAL), has entered into
a five year option agreement for the 100% purchase of
the Los Mantos project. The private purchase-option
agreement with local Chilean landholder and mine
operator Mr. Aldo Cordero Godoy was executed on the
11th of June 2009, with the payment of US$220,000.
The right to purchase 100% of the Aldo Cordero
concession is exercisable at any time within the five
year option period following satisfaction of all remaining
yearly option payments and an exercise payment of
US$2,000,000.
Mr. Aldo Cordero Godoy will receive a 0.5% Gross
Production Royalty on all marketable minerals
produced from the project and a 30,000 tpa mining
concession during the five year option period.
In addition, SMEAL has also entered into a similar
100% purchase option agreement with the owners
of mining concession Libertad 1-3. SMEAL has a
private purchase-option agreement with local Chilean
landholders and mine operator Cruz Riviera Family was
executed on the 24th of June 2011, with the payment
of US$321,000. The right to purchase 100% of the
Libertad is exercisable at any time within the four year
option period following satisfaction of all remaining
yearly option payments which total US$2,086,870
(including the execution payment which has already
been made).
The Cruz Riviera Family will receive a 1.5% Gross
Production Royalty on all marketable minerals
produced from the project and a 20,000 tpa mining
concession during the four year option period.
26
Los Mantos project tenement details
Licence ID
Holder*
%
Interest
Licence
Type
Area
(ha)
Mining
Patents**
2010-2011
US$ (7)-(8)
Expenditure-
Commitment-
Payments
Expiration
date of the
concession
(dd.mm.yyyy)
Comments
ILLAPEL 1
ACG
100%
Exploration
ILLAPEL 2
ACG
100%
Exploration
ILLAPEL 2
ACG
100%
Exploration
ILLAPEL 3
ACG
100%
Exploration
200
200
200
200
329.00
329.00
329.00
329.00
ANTONIO 1-29
ACG
100%
Exploitation
139
1,142.00
14.10.2011
15.10.2011
30.10.2011
30.10.2011
Total of USD
2,470,000. USD
220,000 paid
upon signature;
Payments of
US$50,000 pa at
the end of Yr 1,2,3
and US$100,000
in Yr 4.
Exercise Payment
of US$2,000,000
at the end of Yr 5.
ESPADA 1-12
ACG
100%
Exploitation
ROSITA 1-6
ACG
100%
Exploitation
ACG
100%
Exploitation
36
30
9
295.78
246.48
73.94
ALINDER-
AMIENTO Y
OTRAS
ENSUEÑO
1-11
ACG
100%
Exploitation
50
410.80
LIBERTAD 1-3
SMEAL
100%
Exploitation
11.4
94.00
Total of ~US$
1,747,247. US$
326,087 paid upon
signature, plus 8
instalments every
six months of USD
177,645 (first
coming instalment
on the 24th of
December 2011;
last instalment on
the 24th of
December 2015).
Floor of
Protection
licences
only. 5
Year- 100%
Purchase-
option
Agreement
executed
5 Year-
100%
Purchase-
option
Agreement
executed
4 Year-
100%
Purchase-
option
Agreement
executed
3,579.00
Total Exercise Payment Commitments
(or price) US$4,217,247
Note: (1) SMEAL = Sociedad Minera El Águla Limitada; ACG = Aldo Cordero Godoy. (2) In accordance with an approximate dollar
exchange rate (CH$460). (3) The Libertad 1-3 value is only referential. It is calculated by taking into account a monetary unit known as
UF which is established and readjusted on daily basis. Hence, it will depend on the UF existing at each payment day. (4) Mining Patents
represent yearly rent and rate fees for mining rights in Chile. (5) Values may suffer variations according to the value of the Monthly Tax Unit.
27
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
Los Mantos Tenement Details (continued)
Los Mantos project tenement plan
and details
continued
28
Chile Norte
“131 mining
and exploration
licences over areas
considered to be
highly prospective...”
Above: view across
the Chile Norte Project
Chile Norte Tenement Details
The Company’s tenements comprise 131 mining and
exploration licences over areas considered to be highly
prospective for the definition of a large IOCG deposit.
Of these licenses, 94 have been approved and 37
are in the process of being approved (constituted).
Hot Chili’s exploration licences cover the northern
and southern extensions of a large identified uranium
anomaly in the area.
The Company executed an “Exploration and Promise
to Incorporate” agreement with CODELCO on the 22nd
of October, 2009.
Hot Chili intends to actively pursue future discussions
in relation to gaining further land positions in the area.
29
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
continued
Chile Norte Tenement Details (continued)
Chile Norte project tenement details
Licence ID
Holder*
%
Interest
Licence
Type
Area
(ha)
CHRIS 1
CHRIS 2
CHRIS 3
CHRIS 4
CHRIS 5
CHRIS 6
CHRIS 7
CHRIS 8
CHRIS 9
MURRAY B1
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Mining
Application
MURRAY B2
SMEAL
100% Mining
Application
MURRAY B3
SMEAL
100% Mining
Application
MURRAY B4
SMEAL
100% Mining
Application
MURRAY B5
SMEAL
100% Mining
Application
MURRAY B6
SMEAL
100% Mining
Application
MURRAY B7
SMEAL
100% Mining
Application
MURRAY B8
SMEAL
100% Mining
Application
MURRAY B12
SMEAL
100% Mining
Application
MURRAY B13
SMEAL
100% Mining
Application
MURRAY B14
SMEAL
100% Mining
Application
MURRAY B15
SMEAL
100% Mining
Application
MURRAY B16
SMEAL
100% Mining
Application
MURRAY B17
SMEAL
100% Mining
Application
MURRAY B18
SMEAL
100% Mining
Application
MURRAY B19
SMEAL
100% Mining
Application
MURRAY B20
SMEAL
100% Mining
Application
MURRAY B21
SMEAL
100% Mining
Application
MURRAY B22
SMEAL
100% Mining
Application
MURRAY B23
SMEAL
100% Mining
Application
MURRAY B24
SMEAL
100% Mining
Application
MURRAY B25
SMEAL
100% Mining
Application
300
300
300
300
300
300
300
300
200
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
100
300
200
300
100
Mining
Patents**
2010-2011
US$ (7)-(8)
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
329.00
Exploration and
Expenditure
Commitment-
Payments
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Comments
Expiration
date of the
concession
(dd.mm.yyyy)
23.11.2011
23.11.2011
23.11.2011
23.11.2011
23.11.2011
23.11.2011
23.11.2011
23.11.2011
23.11.2011
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
30
Licence ID
Holder*
%
Interest
Licence
Type
Area
(ha)
MURRAY B26
SMEAL
100% Mining
Application
MURRAY B27
SMEAL
100% Mining
MURRAY 29
MURRAY 30
MURRAY 31
MURRAY 32
MURRAY 33
MURRAY 34
MURRAY 35
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
Application
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Mining
Application
100
100
200
200
300
300
300
100
200
Mining
Patents**
2010-2011
US$ (7)-(8)
Exploration and
Expenditure
Commitment-
Payments
None
None
None
None
None
None
None
None
None
329.00
329.00
493.00
493.00
493.00
165.00
307.60
MURRAY 36
SMEAL
100% Mining
300
461.40
None
Application
MURRAY 37
SMEAL
100% Mining
300
461.40
None
Application
MURRAY 38
SMEAL
100% Mining
300
461.40
None
Application
MURRAY 39
SMEAL
100% Mining
300
461.40
None
Application
MURRAY 40
SMEAL
100% Mining
300
461.40
None
Application
MURRAY 9,
1-60
MURRAY 10,
1-60
MURRAY 11,
1-40
MURRAY 21,
1-60
MURRAY 23,
1-60
MURRAY 25,
1-60
MURRAY 26,
1-60
MURRAY 27,
1-40
MURRAY 28,
1-20
CHRIS 6
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 200
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 300
SMEAL
100% Mining Claim 200
SMEAL
100% Mining Claim 100
SMEAL
100% Mining
Application
300
300
CHRIS 15
SMEAL
100% Mining
CHRIS 14, 1-40 SMEAL
Application
100% Mining Claim 200
CHRIS 15, 1-60 SMEAL
100% Mining Claim 300
CHRIS 17, 1-60 SMEAL
100% Mining Claim 300
CHRIS 19, 1-40 SMEAL
100% Mining Claim 200
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Comments
Expiration
date of the
concession
(dd.mm.yyyy)
Being
processed
Being
processed
27.07.2012 Constituted
27.07.2012 Constituted
27.07.2012 Constituted
27.07.2012 Constituted
27.07.2012 Constituted
27.07.2012 Constituted
Awaiting
constitutive
award
Awaiting
constitutive
award
Awaiting
constitutive
award
Awaiting
constitutive
award
Awaiting
constitutive
award
Awaiting
constitutive
award
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
Being
processed
31
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
continued
Chile Norte Tenement Details (continued)
Chile Norte project tenement details (continued)
Licence ID
Holder*
%
Interest
Licence
Type
Area
(ha)
CHRIS 19, 1-40 SMEAL
100% Mining Claim 200
Mining
Patents**
2010-2011
US$ (7)-(8)
Exploration and
Expenditure
Commitment-
Payments
None
Expiration
date of the
concession
(dd.mm.yyyy)
Comments
Being
processed
Being
processed
CHRIS 22
SMEAL
100% Mining
PAM 1
PAM 2
PAM 3
PAM 5
PAM 6
PAM 8
PAM 9
PAM 10
PAM 11
PAM 12
PAM 13
PAM 14
PAM 15
PAM 16
PAM 17
BRAVO 1
BRAVO 2
BRAVO 3
BRAVO 4
BRAVO 5
BRAVO 8
BRAVO 9
BRAVO 10
BRAVO 11
BRAVO 12
PAM 1
PAM 2
PAM 3
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
SMEAL
Application
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
100% Exploration
300
100
200
300
300
200
300
100
100
100
300
300
300
300
300
100
300
300
300
200
200
200
100
200
300
200
100
200
300
153.80
307.60
461.40
461.40
307.60
461.40
153.80
153.80
153.80
461.40
461.40
461.40
461.40
461.40
153.80
493.00
329.00
493.00
329.00
329.00
329.00
165.00
329.00
493.00
329.00
153.80
307.60
461.40
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
32
29.12.2011
29.12.2011
29.12.2011
29.12.2011
29.12.2011
29.12.2011
29.12.2011
22.10.2011
22.10.2011
22.10.2011
22.10.2011
22.10.2011
22.10.2011
22.10.2011
29.12.2011
02.02.2012
30.09.2011
30.09.2011
27.10.2011
26.10.2011
26.10.2011
23.10.2011
26.10.2011
23.10.2011
26.02.2012
31.08.2011
31.08.2011
31.08.2011
Mining
Patents**
2010-2011
US$ (7)-(8)
400.00
Exploration and
Expenditure
Commitment-
Payments
Expiration
date of the
concession
(dd.mm.yyyy)
Comments
Licence ID
Holder*
%
Interest
Licence
Type
Area
(ha)
AUGITA 4B,
1-40
QUITO B 1
QUITO B 2
QUITO B 3
QUITO B 4
QUITO B 5
QUITO B 6
QUITO B 7
QUITO B 8
QUITO B 9
QUITO B 10
QUITO B 11
QUITO B 12
QUITO B 13
QUITO B 14
QUITO B 15
QUITO B 16
QUITO B 17
QUITO B 18
QUITO B 19
QUITO B 20
QUITO B 21
QUITO B 22
QUITO B 23
QUITO B 24
QUITO B 25
QUITO B 26
QUITOS 35
APIR B 1
APIR B 2
APIR B 3
APIR B 4
CODELCO
65% Mining
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Mining
Application
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Mining
Application
65% Exploration
65% Mining
Application
400
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
300
200
200
300
300
300
300
200
300
300
300
800
1200
600
1200
493.00
329.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
493.00
329.00
329.00
493.00
493.00
493.00
493.00
329.00
493.00
493.00
493.00
800.00
1200.00
600.00
1200.00
APIR B 5
CODELCO
65% Mining
1000
1000.00
Application
APIR B 6
CODELCO
65% Mining
1200
1200.00
APIR B 7
APIR B 8
APIR B 9
APIR B 10
APIR B 11
APIR B 12
APIR B 13
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
Application
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Mining
Application
800
600
600
100
1000
400
1200
800.00
600.00
600.00
100.00
1000.00
400.00
1200.00
APIR B 14
CODELCO
65% Mining
1200
1200.00
APIR B 15
APIR B 16
APIR B 17
APIR B 18
APIR B 19
APIR 20
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
CODELCO
Application
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Exploration
65% Mining
Application
200
600
200
200
200
200
200.00
600.00
200.00
200.00
200.00
200.00
I. Promise of
incorporation value
USD2,000,000. II.
Exploration expenses:
(i) Between October
22nd, 2009, and
October 22nd, 2010
USD150,000; (ii)
Between October
23rd, 2010, and
October 22nd, 2011,
USD300,000; (iii)
Between October
23rd, 2011, and
October 22nd, 2012,
USD300,000; (iv)
Between October
23rd, 2012, and
October 22nd, 2013,
USD500,000; (iv)
Between October
23rd, 2013, and
October 22nd, 2014,
USD750,000
30.05.2013
30.05.2013
30.05.2013
30.05.2013
20.04.2013
20.04.2013
20.04.2013
20.04.2013
20.04.2013
20.04.2013
20.04.2013
05.05.2013
05.05.2013
31.05.2013
26.05.2013
26.05.2013
26.05.2013
30.05.2013
30.05.2013
30.05.2013
30.05.2013
31.05.2013
30.05.2013
31.05.2013
31.05.2013
25.11.2012
20.04.2013
20.04.2013
05.05.2013
05.05.2013
05.05.2013
05.05.2013
05.05.2013
05.05.2013
26.05.2013
26.05.2013
26.05.2013
26.05.2013
26.05.2013
16.03.2012
5 Year- 65%
JV Option
Agreement
executed
36,748.00 Total Exploration Expenditure Commitment
(5 Yrs)- US$2,000,000
Total Exercise Payment Commitment
(or price) US$2,000,000
Note (1) SMEAL = Sociedad Minera El Águla Limitada; CODELCO (CCMLA) = Compañía Contractual Minera Los Andes a subsidiary
of CODELCO. (2) In accordance with the approximate observed dollar exchange rate published on August 4th, 2009 (CH$460), by the
Central Bank of Chile. (3) This amount is only referential. It is calculated by taking into account a monetary unit known as UTM, which is
established and readjusted on a monthly basis. Hence, it will depend on the UTM existing in March 2011. (4) Mining Patents represent
yearly rent and rate fees for mining rights in Chile. (5) Exercise Payment Commitment of US$2,000,000 is due following the completion of a
Bankable Feasibility Study and 30 days after decision to construct has been taken.
33
HOT CHILI ANNUAL REPORT 2011
tenement
schedule
and details
continued
Chile Norte Tenement Details (continued)
Chile Norte project regional structural setting and tenement map
34
corporate
governance
statement
Corporate governance procedures
and policies
The Board
The Board is responsible for the overall corporate governance
of the Company, and it recognises the need for the highest
standards of ethical behaviour and accountability. The Board is
committed to administering its corporate governance structures
to promote integrity and responsible decision making.
Board charter
The Board has adopted a board charter. Under the board
charter, the Board is responsible for the overall operation and
stewardship of the Company and its subsidiaries and, in particular,
is responsible for:
a) setting the strategic direction of the Company, establishing
goals to ensure that these strategic objectives are met and
monitoring the performance of management against these
goals and objectives;
b) ensuring there are adequate resources available to meet the
Company’s objectives;
Conflicts of interest
In accordance with the Corporations Act and the Constitution,
Directors must keep the Board advised, on an ongoing basis,
of any interest that could potentially conflict with those of the
Company. Where the Board believes a significant conflict exists,
the Director concerned will not receive the relevant papers and
will not be present at the Board meeting whilst the matter is
being considered.
Independent professional advice
In fulfilling their duties, each Director dealing with corporate
governance matters may obtain independent professional advice
at the Company’s expense, subject to prior approval of the
Chairman, whose approval will not be unreasonably withheld.
Corporate governance policies
The Board has adopted the corporate governance policies
described below. Copies of the policies are available on the
Company’s website at: www.hotchili.net.au.
As the Company’s activities develop in size, nature and scope,
the implementation of additional corporate governance policies
will be given further consideration.
c) appointing the managing director and company secretary and
Code of conduct
chief financial officer of the Company;
d) evaluating the performance and determining the remuneration
of senior executives, and ensuring that appropriate policies and
procedures are in place for recruitment, training, remuneration
and succession planning;
e) approving and monitoring financial reporting and
capital management;
f) approving and monitoring the progress of business objectives;
g) ensuring that any necessary statutory licences are held and
compliance measures are maintained to ensure compliance
with the law and licences;
h) ensuring that adequate risk management procedures exist and
are being used;
i) ensuring that the Company has appropriate corporate
governance structures in place, including standards of ethical
behaviour and a culture of corporate and social responsibility;
j) ensuring that the Board is and remains appropriately skilled to
meet the changing needs of the Company; and
k) ensuring procedures are in place for ensuring the Company’s
compliance with the law.
The Board believes that the success of the Company has been
and will continue to be enhanced by a strong ethical culture
within the organisation.
The Company has established a corporate code of conduct
(Code) which aims to develop a consistent understanding of, and
approach to, the desired standards of conduct and behaviour
with which the Directors, officers, managers, employees and
consultants of the Company are expected to comply.
The Code sets out the Company’s policies on various matters,
including the following:
a) conflicts;
b) fair dealing;
c) Company assets and property;
d) computer, email and internet use;
e) health, safety and environment;
f) employment practices; and
g) gifts and entertainment.
35
HOT CHILI ANNUAL REPORT 2011
corporate
governance
statement
continued
Corporate governance procedures
and policies (continued)
Code of conduct (continued)
In addition to their obligations under the Corporations Act in
relation to inside information, all Directors, employees and
consultants have a duty of confidentiality to the Company in
relation to confidential information they possess.
The Code also outlines the procedure for reporting any breaches
of the Code and the possible disciplinary action the Company
may take in respect of any breaches.
Directors and senior executives of the Company may not deal
in the Company’s securities without first notifying the Managing
Director and the Company Secretary of the intention to trade. There
is a blackout period of two weeks before the periodic reports are
lodged with the ASX and twenty four hours after the reports are
lodged during which trading is prohibited. The Managing Director
may not deal in the Company’s securities without prior approval of
the Chairman, and notifying the Company Secretary of the intention
to trade. The Company Secretary must be subsequently notified of
any trade that has occurred.
Continuous disclosure policy
Once listed, the Company will be a “disclosing entity” pursuant
to section 111AR of the Corporations Act and, as such, will
need to comply with the continuous disclosure requirements
of Chapter 3 of the ASX Listing Rules and section 674 of the
Corporations Act. Subject to the exceptions contained in the
ASX Listing Rules, the Company will be required to disclose
to ASX any information concerning the Company which is not
generally available and which a reasonable person would expect
to have a material effect on the price or value of the Shares.
The Company is committed to observing its disclosure
obligations under the Corporations Act and its obligations under
the ASX Listing Rules. All relevant information provided to ASX
will be posted on the Company’s website.
The Company has adopted a continuous disclosure policy, the
purpose of which is to:
a) ensure that the Company, as a minimum, complies with its
continuous disclosure obligations under the Corporations Act
and the ASX Listing Rules and, as much as possible, seeks to
achieve and exceed best practice;
b) provide Shareholders and the market with timely, direct and
equal access to information issued by the Company; and
Shareholder communication policy
The Company has adopted a shareholder communication policy
which outlines the processes through which the Company will
endeavour to ensure timely and accurate information is provided
equally to all Shareholders and the broader market.
The Company supports Shareholder participation in general
meetings. Mechanisms for enabling Shareholder participation
will be reviewed regularly to encourage the highest level of
Shareholder participation.
Risk management policy
The Company has established a risk management policy, the
purpose of which is to:
a) provide a framework for identifying, assessing, monitoring and
managing risk;
b) communicate the roles and accountabilities of participants in
the risk management system; and
c) highlight the status of risks to which the Company is exposed,
including any material changes to the Company’s risk profile.
d) The Board is responsible for:
c) promote investor confidence in the integrity of the Company
e) risk management and oversight of internal controls;
and its securities.
Securities dealing policy
The Company has in place a securities dealing policy which sets
out the requirements for all Directors, executives, employees,
contractors, consultants and advisers of the Company dealing in
the Company’s securities.
36
f) establishing procedures which provide assurance that business
risks are identified, consistently assessed and adequately
addressed; and
g) for the overseeing of such procedures.
The Board will review assessments of the effectiveness of risk
management and internal compliance and control on an
annual basis.
Recommendation 2.2 (independent chairman)
The Chairman of the Company, Mr Murray Black, is not
an independent director in accordance with the criteria for
independence as outlined in Recommendation 2.1. However,
given the size and scope of the Company’s operations, the
Board considers that Mr Black has the relevant experience in the
exploration and mining industry and his appointment as Chairman
is in the best interests of the Company and its Shareholders.
Recommendation 2.4 (nomination committee)
There is no nomination committee. The full Board, which
comprises two (2) Non-Executive Directors and one (1)
Executive Director, considers the matters and issues that
would fall to the nomination committee. The Board considers
that, given the current size and scope of the Company’s
operations, no efficiencies or other benefits would be gained
by establishing a separate nomination committee. The Board
intends to reconsider the requirement for, and benefits of, a
separate nomination committee as the Company’s operations
grow and evolve.
Recommendations 4.1, 4.2, 4.3 and 4.4 (audit
committee)
There is no audit committee. The role of the audit committee
is undertaken by the full Board, which comprises two (2)
Non-Executive Directors and one (1) Executive Director. The
Board considers that, given the current size and scope of the
Company’s operations and that only one (1) Director holds
an executive position in the Company, no efficiencies or other
benefits would be gained by establishing a separate audit
committee at present.
As the Company’s operations grow and evolve, the Board
will reconsider the appropriateness of forming a separate
audit committee.
Recommendation 8.1 (remuneration committee)
The Company has not established a separate remuneration
committee and does not have a formal remuneration policy in
place. The role of the remuneration committee is undertaken by
the full Board. The Board considers that, given its current size
and that only one (1) Director holds an executive position in the
Company, no efficiencies or other benefits would be gained by
establishing a separate remuneration committee.
Corporate governance –
exceptions to ASX recommendations
The Company sets out below its “if not why not” report in
relation to those matters of corporate governance where
the Company’s practice departs from the ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations (2nd edition) (Recommendations) to the
extent that they are currently applicable to the Company.
Recommendations 1.2 and 2.5 (process for evaluation)
The Company does not have in place a formal process for
evaluation of the Board, its committees, individual Directors and
key executives.
The small size of the Board and the nature of the Company’s
activities make the establishment of a formal performance
evaluation strategy unnecessary. Performance evaluation is a
discretionary matter for consideration by the entire Board and in
the normal course of events the Board will review performance
of the management, Directors and the Board as a whole.
Recommendation 2.1 (independent directors)
At present, the Board does not comprise a majority of
“independent directors”. There is one Director who satisfies
the criteria for independence as outlined in Recommendation
2.1. Dr Allan Trench holds no shares in the company and is
not involved in the day-to-day management of the company.
However, given the size and scope of the Company’s operations,
the Board considers that it has the relevant experience in the
exploration and mining industry and is appropriately structured
to discharge its duties in a manner that is in the best interests
of the Company and its Shareholders from both a long-term
strategic and operational perspective.
The Board intends to appoint further independent non-executive
directors as suitably qualified candidates are identified, and the
size and scale of the Company’s operations determine.
As the Company’s operations grow and evolve, the Board
will reconsider the appropriateness of forming a separate
remuneration committee.
37
HOT CHILI ANNUAL REPORT 2011
directors’
report
Directors’ Report
Your Directors have pleasure in presenting their report together
with the financial statements for the year ended 30 June 2011
and the auditor’s report thereon.
Directors
The names of the Directors of Hot Chili Limited during the
financial year and to the date of this report are:
Murray E Black
Christian E Easterday
Bernard R Mountford
Dr Allan Trench
(Non Executive Chairman)
(Executive Director)
(Non Executive Director -
Resigned 19 July 2010)
(Non Executive Director -
Appointed 19 July 2010)
Directors have been in office since the start of the financial year
to the date of this report unless otherwise stated.
Directors Information
Murray Edward Black, Non-Executive Chairman
Mr Black has over 36 years’ experience in the mineral
exploration and mining industry and has served as an executive
director and chairman for several listed Australian exploration
and mining companies. He part-owns and manages a
substantial private Australian drilling business, has interests in
several commercial developments and has significant experience
in capital financing.
Christian Ervin Easterday, Managing Director
Mr Easterday is a geologist with over 13 years’ experience in the
mineral exploration and mining industry. He holds an Honours
Degree in Geology from the University of Western Australia, a
Masters degree in Mineral Economics from Curtin University of
Technology and a Masters Degree in Business Administration
from Curtin’s Graduate School of Business. Mr Easterday has
held several senior positions and exploration management
roles with top-tier gold companies including Placer Dome, Hill
50 Gold and Harmony Gold, specialising in structural geology,
resource development and mineral economic valuation. For
the past five years, Mr Easterday has been involved in various
aspects of project negotiation drawing together his commercial,
financial and project valuation skills. This work has involved
negotiations and valuations covering gold, copper, uranium,
iron ore, nickel, and tantalum resource projects in Australia and
overseas. Mr Easterday is a Member of The Australian Institute
of Geoscientists.
38
Bernard R Mountford, Non-Executive Director
(Resigned 19 July 2010)
Mr Bernard R Mountford is a geologist with over 36 years’
experience in the mineral exploration industry and has served as
an executive director for several listed Australian exploration and
mining companies. His background spans a wide spectrum of
commodities, with expertise in gold, uranium and base metals.
Mr Mountford has been the principal consultant for Hawkeye
Resources Pty Ltd, a private geological consultancy, since 1983.
Mr Mountford is a Member of The Australian Institute of Mining
and Metallurgy.
Dr Allan Trench, Non-Executive Director
(Appointed 19 July 2010)
Allan has previously worked with McKinsey & Company as
a management consultant, with Woodside Petroleum in
strategy development and with WMC both as a geophysicist
and exploration manager. He is an Associate Consultant with
international metals and mining advisory firm CRU Group and
has contributed to the development of that company’s uranium
practice, having previously managed the CRU Group global
copper research team.
Allan maintains academic links as an Adjunct Professor to
the Western Australian School of Mines, Curtin University
of Technology.
Dr Allan Trench’s appointment adds considerable experience
and expertise to Hot Chili’s board.
Corporate Information
Hot Chili Ltd is a Company limited by shares and is domiciled
in Australia.
Principal Activities
During the year, the consolidated entity was involved in
mineral exploration.
Results of Operations
The results of the consolidated entity for the year ended 30 June
2011 was a loss of $11,065,643 ( 2010: loss $3,182,794).
Dividends
No dividends were paid or declared since the end of the
previous year. The Directors do not recommend the payment of
a dividend.
Review of Operations
Refer to Operations Report on pages 6 to 21.
Significant Changes in the State of Affairs
There were no significant changes to the state of affairs,
subsequent to the end of the reporting period, other than what
has been reported in other parts of this report.
Matters Subsequent to the End of the Financial Year
Since the end of the financial year, the consolidated entity placed
13,333,334 shares at 60 cents to boost the working capital by
$8,000,000 less costs of $240,000.
The initial resource report for Productora was completed and
announced on 6 September 2011.
At the date of this report there are no other matters or
circumstances which have arisen since 30 June 2011 that has
significantly affected or may significantly affect:
i)
ii)
iii)
the operations of the consolidated entity;
the results of its operations; or
the state of affairs of the consolidated entity subsequent to
30 June 2011.
Likely Developments and Expected Results
of Operations
Further information on the likely developments in the operations
of the consolidated entity and the expected results of operations
have been included in the review of operations.
Security Holding Interests of Directors
Directors
Murray E Black
Ordinary
Shares
Options Over
Ordinary Shares
Direct
Interest
Indirect
Interest
Direct
Interest
Indirect
Interest
-
10,000,000
-
6,750,000
Christian E Easterday
Dr Allan Trench (Appointed 19 July 2010)
200,000
-
10,000,000
-
100,000
-
6,750,000
-
Shares Under Option
Company Secretary - J Sendziuk
There were, 40,590,000 ordinary shares under option at
30 June 2011.
John Sendziuk is a Chartered Accountant. He has been in
practice for 24 years providing corporate secretarial, taxation
and business advice to a diverse group of business clients and
public companies.
Shares Issued on the Exercise of Options
There were 150,000 ordinary shares of Hot Chili Limited issued
during the year ended 30 June 2011 from the exercise of options.
Directors Benefits
Since 30 June 2011, no Director of the consolidated entity has
received or become entitled to receive a benefit (other than
a benefit included in the aggregate amount of emoluments
received or due and receivable by Directors shown in the
financial statements) by reason of a contract made by the
consolidated entity with the Director or with a firm of which he
is a member, or with a company in which he has a substantial
financial interest.
Indemnification and Insurance of Directors and Officers
During the financial year, the consolidated entity maintained an
insurance policy which indemnifies the Directors and Officers of
Hot Chili Limited in respect of any liability incurred in connection
with the performance of their duties as Directors or Officers of
the consolidated entity. The consolidated entity’s insurers have
prohibited disclosure of the amount of the premium payable and
the level of indemnification under the insurance contract.
39
HOT CHILI ANNUAL REPORT 2011
directors’
report
continued
Directors’ Report (continued)
Directors’ Meetings
The number of directors’ meetings attended and number of written resolutions signed by each of the Directors of the Company
during the year were:
Director
Murray E Black
Bernard R Mountford (Resigned 19 July 2010)
Christian E Easterday
Dr Allan Trench (Appointed 19 July 2010)
No. of
Meetings
while in office
No. of
Meetings
attended
14
-
14
14
14
-
14
14
Environmental Issues
Proceedings on Behalf of Company
The consolidated entity’s exploration and mining operations
are subject to environment regulation under the law of Chile.
The consolidated entity holds exploration/mining tenements
in Chile thus is subject to the Mining Acts of that country
each with specific conditions relating to environmental
management. In some jurisdictions Cash Bonds must be
lodged with the relevant Department until conditions are
fulfilled. There are no bonds currently in place in respect of
the consolidated entity’s tenement holdings.
The Directors advise that during the year ended 30 June 2011
no claim has been made by any competent authority that any
environmental issues, condition of license or notice of intent
has been breached, and no claim has been made for increase
of bond.
The Directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities
to report annual greenhouse gas emissions and energy use. For the
measurement period, 1 July 2010 to 30 June 2011, the Directors
have assessed that there are no current reporting requirements but
may be required to do so in the future.
Shares under Option
At the date of this report, there were 40,590,000 unissued
ordinary shares under options.
Options Lapsed During the Year
No options lapsed during the year.
No person has applied for leave of Court to bring proceedings
on behalf of the consolidated entity or intervene in any
proceedings to which the consolidated entity is a party for the
purpose of taking responsibility on behalf of the consolidated
entity for all or any part of those proceedings.
The consolidated entity was not a party to any such proceedings
during the year.
Non-Audit Services
The Board of Directors is satisfied that the provision of non-audit
services during the year is compatible with the general standard
of independence for auditors imposed by the Corporations Act
2001. The directors are satisfied that the services disclosed
below did not compromise the external auditor’s independence
for the following reasons:
. all non-audit services are reviewed and approved by the
directors prior to commencement to ensure they do not
adversely affect the integrity and objectivity of the auditor; and
. the nature of the services provided does not compromise
the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional
Accountants set by the Accounting Professional and Ethical
Standards Board.
Non audit services that have been provided by the entity’s
auditor, RSM Bird Cameron Partners, have been disclosed in
Note 14.
Auditors Independence Declaration
The lead auditor’s independence declaration for the year ended
30 June 2011 has been received and can be found on page 43
of annual report.
40
Remuneration Report (Audited)
The information provided in this remuneration report has been
audited as required by section 308(3C) of the Corporations
Act 2001.
Principles used to determine amount and nature of remuneration
The objective of the consolidated entity’s executive reward
framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The Board ensures
that executive reward satisfies the following key criteria for good
reward governance practises:
. competitiveness and reasonableness
. acceptability to shareholders
. transparency
The current base remuneration for Directors was last reviewed
with effect from 23 March 2010. All director fees are periodically
recommended for approval by shareholders.
The consolidated entity’s policy regarding executives
remuneration is that the executives are paid a commercial salary
and benefits based on the market rate and experience.
Details of Remuneration of Key Management Personnel of the
consolidated entity and Remuneration of Directors
Details of the nature and amount of each element of
remuneration
of each Director of the consolidated entity for the financial year
are as follows:-
2011
Short Term
Post
Employment
Share-based
Payments
Name
Murray E Black
Bernard R Mountford (Resigned 19 July 2010)
Christian E Easterday
Dr Allan Trench (Appointed 19 July 2010)
2010
Name
Murray E Black
Bernard R Mountford (Resigned 19 July 2010)
Christian E Easterday
Dr Allan Trench (Appointed 19 July 2010)
Consulting
Fees
Related
Parties
$
-
-
-
-
-
Consulting
Fees
Related
Parties
$
-
68,551
215,110
-
283,661
Salary
$
-
-
220,000
-
220,000
Short Term
Directors’
Fee
$
65,000
2,043
-
37,957
105,000
Super-
annuation
$
7,800
-
26,400
4,555
38,755
Options
$
-
-
-
-
-
Total
$
72,800
2,043
246,400
42,512
363,755
Post
Employment
Share-based
Payments
Salary
$
-
-
-
-
-
Directors’
Fee
$
14,896
6,667
50,417
-
71,980
Super-
annuation
$
1,787
800
6,050
-
8,637
Options
$
-
-
-
-
-
Total
$
16,683
76,018
271,577
-
364,278
Remuneration of Key Management Personnel
2011
Name
Rodrigo Dias (Manager Chile)
John Sendziuk (Company Secretary)
2010
Name
Rodrigo Dias (Manager Chile Appointed 17 May 2010)
John Sendziuk (Company Secretary Appointed 14 May 2010)
Short Term
Consulting
Fees
$
-
-
-
Salary
$
187,425
7,000
194,425
Post
Employment
Super-
annuation
$
-
28,000
28,000
Share-Based
Payments
Options
$
-
-
-
Total
$
187,425
35,000
222,425
Short Term
Consulting
Fees
$
-
-
-
Salary
$
26,028
5,000
31,028
Post
Employment
Super-
annuation
$
Share-Based
Payments
Options
$
-
600
600
-
-
-
Total
$
26,028
5,600
31,628
41
HOT CHILI ANNUAL REPORT 2011
directors’
report
continued
Remuneration Report (Audited) (continued)
Remuneration of Key Management Personnel
(continued)
There were no termination benefits paid during the year to any
director or key management personnel.
Termination entitlements
There were no key management personnel employed by the
Company during the year for which disclosure of remuneration is
required, apart from the remuneration details disclosed above.
At the date of this report, the Company had no employees that
fulfilled the role of key management personnel, other than those
disclosed above.
Upon termination of the agreement, Mr Easterday will be
entitled to termination benefits in accordance with Part 2D.2
of the Corporations Act. The termination benefits (including
any amount of payment in lieu of notice) must not exceed the
amount equal to one times the executive’s average annual
base salary in the last 3 years’ of service with the Company,
unless the benefit has first been approved by Shareholders in a
general meeting.
Post termination restraints
Mr Easterday is subject to post termination non-competition
restraints up to a maximum of 12 months from the date
of termination.
Other Information
Director and executive remuneration contains no bonus cash or
option components.
No directors have received loans from the consolidated entity.
The share price of the Company has fluctuated with the markets
since the listing on 3 May 2010 at 20 cents. The shares have
reached a high of 85 cents and a low of 17 cents.
Dated this 21st day of September 2011 in accordance with
a resolution of the Directors and signed for on behalf of the
Board by:
Service Contracts
The Company has entered into an executive service agreement
with Mr Christian Easterday, as Managing Director of the Company.
Remuneration
Under the agreement, Mr Easterday will receive an annual
salary of $220,000, plus superannuation at the rate of 12%
and other entitlements. Mr Easterday’s remuneration is subject
to annual review.
Term and termination
Mr Easterday is employed for an initial term of 3 years,
commencing on 5 April 2010 (End Date). At least 6 months’
before the End Date, either party may give notice that the
agreement will terminate on the End Date.
During the initial 3 year term, the Company may terminate
the agreement by providing Mr Easterday with notice of
termination or payment in lieu of notice up to an amount
equivalent to 6 months’ remuneration.
After the initial term, the agreement will continue until either Mr
Easterday terminates by giving the Company 6 months’ notice,
or the Company terminates by giving Mr Easterday 6 months’
notice or payment in lieu of notice up to an amount equivalent
to 6 months’ remuneration.
The Company may terminate the agreement summarily for any
serious incidents of wrongdoing by Mr Easterday.
Christian E Easterday
Managing Director
42
auditor’s
independence
continued
Quality
ISO 9001
43
declaration HOT CHILI ANNUAL REPORT 2011
independent
audit report
Quality
ISO 9001
44
to the members 45
HOT CHILI ANNUAL REPORT 2011
directors’
declaration
The directors of the company declare that:
1.
the financial statements and notes are in accordance with the Corporations Act 2001 and:
a) comply with Australian Accounting Standards, which, as stated in accounting policy Note 1(a) to the financial statements,
constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year
ended on that date;
2.
the Chief Executive Officer and Chief Finance Officer have each declared that:
a) the financial records of the consolidated entity for the financial year have been properly maintained in accordance with section 286
of the Corporations Act 2001;
b) the financial statements and notes for the financial year comply with Australian Accounting Standards; and
c) the financial statements and notes for the financial year give a true and fair view; and
3.
in the directors’ opinion there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Christian E Easterday
Managing Director
Dated this 21st day of September 2011
46
For the year ended 30 June 2011
Interest income
Other income
Depreciation
Consulting fees
Exploration expenses
Corporate fees
Legal and professional
Employee benefits expense
Administration expenses
Accounting fees
Travel costs
Other expenses
Foreign exchange loss
Loss from continuing operations before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Consolidated Entity
2011
2010
Note
$
2
3
104,498
-
104,498
(41,017)
(452,924)
(8,031,965)
(101,602)
(584,036)
(1,204,618)
(258,809)
(34,642)
(134,180)
(144,592)
(181,756)
$
32,434
66,074
98,508
(4,587)
(537,190)
(250,821)
(84,590)
(563,579)
(113,159)
(52,858)
(23,416)
(212,478)
(84,259)
-
(11,065,643)
(1,828,429)
5
-
-
(11,065,643)
(1,828,429)
-
-
Total comprehensive income attributable to members of Hot Chili Limited
(11,065,643)
(1,828,429)
Basic earnings per share (cents)
Diluted earnings per share (cents)
13
13
(8.11)
(8.11)
(2.14)
(2.14)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
47
incomecomprehensive statement of HOT CHILI ANNUAL REPORT 2011
As at 30 June 2011
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-Current Assets
Plant and equipment
Exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Option reserve
Foreign currency translation reserve
Accumulated losses
Total Equity
Consolidated Entity
2011
2010
Note
$
$
6
7
8
9
4,220,660
6,607,586
9,151
-
55,430
173,017
4,229,811
6,836,033
243,984
167,874
2,342,138
1,829,495
2,586,122
1,997,369
6,815,933
8,833,402
10
1,327,701
1,327,701
1,327,701
99,093
99,093
99,093
5,488,232
8,734,309
11
12(b)
12(c)
12(a)
19,239,321
11,419,755
72,308
1,222
72,308
1,222
(13,824,619)
(2,758,976)
5,488,232
8,734,309
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
48
positionfinancialstatement of As at 30 June 2011
Consolidated Entity
Contributed
Equity
Option
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
Equity
$
$
$
$
$
Balance at 1 July 2009
1,682,400
Loss for the year
Total Comprehensive Income for the year
Share options issued
Shares issued
Share issue costs
-
-
-
10,642,105
(904,750)
-
-
-
72,308
-
-
1,222
(930,547)
753,075
-
-
-
-
-
(1,828,429)
(1,828,429)
(1,828,429)
(1,828,429)
-
-
-
72,308
10,642,105
(904,750)
Balance at 30 June 2010
11,419,755
72,308
1,222
(2,758,976)
8,734,309
Balance at 1 July 2010
11,419,755
72,308
1,222
(2,758,976)
8,734,309
Loss for the year
Total Comprehensive Income for the year
Shares issued
Share issue costs
-
-
8,330,017
(510,451)
-
-
-
-
-
-
-
-
(11,065,643)
(11,065,643)
(11,065,643)
(11,065,643)
-
-
8,330,017
(510,451)
Balance at 30 June 2011
19,239,321
72,308
1,222
(13,824,619)
5,488,232
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
49
financialin equitychangesstatement of HOT CHILI ANNUAL REPORT 2011
For the year ended 30 June 2011
Cash Flows From Operating Activities
Payments to suppliers and employees
Interest received
Consolidated Entity
2011
2010
Note
$
$
(9,499,464)
(2,148,759)
104,498
32,434
Net cash (used in) operating activities
16(b)
(9,394,966)
(2,116,325)
Cash Flows From Investing Activities
Payments for plant and equipment
Payments for mineral exploration areas
Net cash (used in) investing activities
Cash Flows From Financing Activities
Proceeds from issue of shares
Share issue costs
Net cash provided by financing activities
Net increase (decrease) in cash held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rates on cash holdings in foreign currencies
(117,127)
(172,461)
(512,643)
(198,763)
(629,770)
(371,224)
8,330,017
9,400,000
(510,451)
(832,440)
7,819,566
8,567,560
(2,205,170)
6,080,011
6,607,586
461,502
(181,756)
66,073
Cash and cash equivalents at the end of the financial year
16(a)
4,220,660
6,607,586
The above Statement of Cash Flows should be read on conjunction with the accompanying notes.
50
flowscashstatement of notes to
the financial
continued
1 Summary of Significant Accounting Policies
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the
financial statements.
a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian equivalents to International
Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board,
Australian Accounting Interpretations and the Corporations Act 2001.
The financial report was authorised for issue on 21 September 2011 by the Board of Directors.
The functional and presentation currency of Hot Chili Limited is Australian Dollars.
Compliance with IFRSs
Australian Accounting Standards include AIFRS. Compliance with AIFRS ensures that the financial statements of Hot Chili
Limited comply with International Financial Reporting Standards (IFRSs).
New Accounting Standards and Interpretations
In the current year, the consolidated entity has adopted all of the new and revised Standards and Interpretations issued by
the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual
reporting period. The adoption of these new and revised Standards and Interpretations has not resulted in a significant or
material change to the consolidated entity’s accounting policies.
At the date of this financial report the following standards, which may impact the entity in the period of initial application, have
been issued but are not yet effective:
Reference
Title
Summary
AASB 9
Financial Instruments
AASB 124 Related Party
Disclosures
Replaces the requirements of AASB 139 for the
classification and measurement of financial assets.
This is the result of the first part of Phase 1 of the
IASB’s project to replace IAS 39.
Revised standard. The definition of a related party
is simplified to clarify its intended meaning and
eliminate inconsistencies from the application of
the definition
The consolidated entity has decided against early adoption of these standards.
Historical cost convention
Application date
(financial years
beginning)
1 January 2013
Expected
Impact
No expected
impact on the
entity
1 January 2011
Disclosure only
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-
for-sale financial assets.
Critical accounting estimates
The preparation of financial statements in conformity of AIFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in note 24.
51
cashstatements HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
1 Summary of Significant Accounting Policies (continued)
b) Principles of consolidation
The consolidated financial statements comprise the financial statements of Hot Chili Ltd and its controlled entities, Sociedad
Minera El Corazon Limitada, Sociedad Minera El Aguila Limitada and Sociedad Minera El Huerto Limitada Control exists where the
consolidated entity has the capacity to dominate the decision-making in relation to the financial and operating policies of another
entity so that the other entity operates with the consolidated entity to achieve the objectives of the consolidated entity. All inter-
company balances and transactions between entities in the consolidated entity, including any unrealised profits and losses have
been eliminated on consolidation.
Non controlling interests in the results and equity of the consolidated entities are shown separately in the consolidated statement
of comprehensive income and consolidated statement of financial position respectively.
Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of comprehensive
income from the date on which control commences. Where control ceases, de-consolidation occurs from that date.
Investments in associates are accounted for in the consolidated financial statements using the equity method. Under this
method, the consolidated entity’s share of the post-acquisition profits or losses of associates is recognised in the consolidated
statement of comprehensive income, and its share of post-acquisition movements in reserves is recognised in consolidated
reserves. The cumulative post-acquisition movements are adjusted against the cost of the investment. Associates are those
entities over which the consolidated entity exercises significant influence, but not control. Investments in subsidiaries are
recognised at cost less impairment losses.
c) Income tax
The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the
profit adjusted for any non-assessable or disallowed items.
Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax
will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled.
Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly
to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Hot Chili Limited and its wholly-owned Chilean subsidiaries have not formed an income tax consolidated group under the Tax
Consolidation Regime.
d) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for major business activities
as follows:
i)
Interest Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
ii) Other Services
Other debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of the month
in which services were provided.
52
statements e) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs
are only carried forward to the extent that they are expected to be recouped through the successful development of the
area or where activities in the area have not yet reached a stage which permits reasonable assessment of the economically
recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against operating results in the year in which the
decision to abandon the area is made.
When production commences the accumulated costs for the relevant area of interest are amortised over the life of the project
area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.
f) Plant and equipment
Plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the
financial period in which they are incurred.
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and
impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be
received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their
present values in determining recoverable amounts.
Depreciation
The depreciable amount of all plant and equipment is depreciated on a diminishing value over their useful lives to the
consolidated entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and Equipment
Depreciation Rate
10-33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve
relating to that asset are transferred to retained earnings.
g) Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid, together with assets ordered before the end of the financial year. The amounts are unsecured and
are usually paid within 30 days of recognition.
h) Equity-based payments
Equity-based compensation benefits can be provided to directors and executives.
The fair value of options granted to directors and executives is recognised as an employee benefit expense with a corresponding
increase in contributed equity. The fair value is measured at grant date and recognised over the period during which the directors
and/or executives becomes unconditionally entitled to the options.
The fair value at grant date is independently determined using an option pricing model that takes into account the exercise price,
the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share
price at grant date and expected price volatility of the underlying share, the expected divided yield and the risk-free interest rate for
the term of the option.
53
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
1 Summary of Significant Accounting Policies (continued)
i) Earnings per share
i) Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the year.
ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
j) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the board of directors.
k) Impairment of assets
Assets that have an indefinite useful like are not subject to amortisation and are tested annually for impairment. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
l) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts.
m) Provisions
Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past events, it is
more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
n) GST
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated as inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
2
Interest Income
Interest income
54
Consolidated Entity
2011
2010
$
104,498
104,498
$
32,434
32,434
statements 3 Other Income
Foreign exchange gain
Consolidated Entity
2011
2010
$
-
-
$
66,074
66,074
4 Segment Information
The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the board
of directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The consolidated entity operates as a single segment which is mineral exploration.
The consolidated entity is domiciled in Australia. All revenue from external parties is generated from Australia only. Segment revenues
are allocated based on the country in which the party is located.
Operating revenues of approximately Nil (2010 - Nil) are derived from a single external party.
All the assets relate to mineral exploration. Segment assets are allocated to segments based on the purpose for which they are used.
5
Income Tax Expense
a) Income tax expense:
Current tax
Deferred tax
Loss before income tax
Prima facie income tax at 30% (2010: 30%)
Tax-effect of amounts not assessable in calculating taxable income:
Tax-effect of amounts not deductible in calculating taxable income
Tax loss not recognised
Income tax expense
b) Tax losses:
-
-
-
-
-
-
(11,065,643)
(1,828,429)
(3,319,693)
(548,529)
-
3,004,370
(315,323)
-
-
254,733
(293,796)
-
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
2,539,841
1,375,824
761,952
412,747
c) The directors estimate that the potential deferred tax asset at 30 June 2011 in respect of tax losses not brought to account is
$761,952 (2010 : $412,747).
In addition, Chilean subsidiaries of Hot Chili Ltd also have tax losses that are a potential deferred tax asset of $985,246 (2010:
$124,510). The companies will be taxed independently in Chile.
d) The benefit for tax losses will only be obtained if:
i) The consolidated entity and the subsidiaries derive income, sufficient to absorb tax losses.
ii) There is no change to legislation to adversely affect the consolidated entity and its subsidiaries in realising the benefit from the
deduction of the losses.
55
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
6 Cash and Cash Equivalents
Cash at bank
7
Trade and Other Receivables
Trade and other receivables
There are no impaired receivables or any provision for impairment against the receivables.
8 Plant and Equipment
Plant and equipment at cost
Less provision for depreciation
Reconciliations:
Plant and equipment
Carrying amount at the beginning of the year
Additions
Depreciation
Carrying amount at the end of the year
9
Exploration and Evaluation Expenditure
Mining tenements at cost
Tenements
Carrying amount at the beginning of the year
Purchase of mineral interests
Exploration costs written off
Consolidated Entity
2011
2010
$
$
4,220,660
4,220,660
6,607,586
6,607,586
9,151
9,151
55,430
55,430
289,588
(45,604)
172,461
(4,587)
243,984
167,874
167,874
117,127
(41,017)
-
172,461
(4,587)
243,984
167,874
2,342,138
1,829,495
2,342,138
1,829,495
1,829,495
388,628
512,643
1,440,867
-
-
Carrying amount at the end of the year
2,342,138
1,829,495
The future realisation of these non-current assets is dependent on further exploration and funding necessary to commercialise the
resources or realisation through sale.
56
statements 10 Trade and Other Payables
Trade payables
Other payables
11 Contributed Equity
Consolidated Entity
2011
2010
$
1,265,704
61,997
1,327,701
$
32,472
66,621
99,093
No. Shares
No. Shares
Consolidated Entity
2011
2010
2011
2010
$
$
a) Share capital
At the beginning of the financial year
124,210,517
80,000,000
11,419,755
1,682,400
Shares issued during the year
Shares cancelled during the year
Less cost of issue
24,833,361
60,210,527
8,330,017
10,642,105
-
-
(16,000,000)
-
(510,451)
(904,750)
At the end of the financial year
149,043,888
124,210,527
19,239,321
11,419,755
b) Terms and Condition of Contributed Equity
Ordinary Shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
c) Movement in Unlisted Options
Balance at beginning of year
Issued during the year
Options exercised during the year
Options lapsed during the year
2011
2010
Options
Options
40,740,000
40,200,000
-
540,000
(150,000)
-
-
-
Balance at end of year
40,590,000
40,740,000
d) Listed Options
There are no listed options over ordinary shares in the company at 30 June 2011 (2010: nil).
e) Capital Risk Management
The consolidated entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so
that they can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may issue new shares, pay dividends or return capital
to shareholders.
Capital is calculated as ‘equity’ as shown in the statement of financial position, and is monitored on the basis of funding
exploration activities.
57
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
12 Reserves and Accumulated Losses
a) Accumulated losses
Accumulated losses at the beginning of the year
Net loss for the year
Accumulated losses at the end of the year
b) Reserves
Options reserve
The options reserve is used to recognise the fair value of options issued.
As at 30 June 2011, no options to which the reserve relates have been exercised.
Balance at the beginning of the year
Movement during the year
Balance at the end of the year
c) Foreign transaction reserve
Balance at the beginning of the year
Additions during the year
Balance at the end of the year
Consolidated Entity
2011
2010
$
$
(2,758,976)
(930,547)
(11,065,643)
(1,828,429)
(13,824,619)
(2,758,976)
72,308
-
72,308
1,222
-
1,222
-
72,308
72,308
1,222
-
1,222
Total Reserves and Accumulated Losses
(13,751,089)
(2,685,446)
13 Loss Per Share
Loss after tax attributable to members of Hot Chili Limited
(11,065,643)
(1,828,429)
Basic loss per share (cents)
Diluted loss per share (cents)
Unexercised options are not dilutive
(8.11)
(8.11)
(2.14)
(2.14)
The weighted average number of ordinary shares on issue used in the calculation of basic loss
per share
136,403,634
85,543,187
Weighted average number of ordinary shares and potential ordinary shares used as the denomina-
tor in calculating diluted loss per share
136,403,634
85,543,187
14 Remuneration of Auditors
Remuneration of the auditor for:
- Auditing and reviewing of financial reports
- Preparation an investigating accountants report for inclusion in the IPO prospectus
33,500
-
33,500
18,000
10,000
28,000
58
statements 15 Key Management Personnel Disclosures
a) Directors
The following persons were Directors of Hot Chili Limited during the financial year and up to the date of this report:
Murray E Black
Bernard R Mountford
Christian E Easterday
Dr Allan Trench
(Non Executive Chairman)
(Non Executive Director) (Resigned 19 July 2010)
(Executive Director)
(Non Executive Director) (Appointed 19 July 2010)
b) Company Secretary
John Sendziuk
c) Country Manager
Rodrigo Diaz Borquez
Details of Remuneration of Key Management Personnel for the year ended 30 June 2011:
Short-term benefits
Post-employment benefits
Share based payment
Consolidated Entity
2011
2010
$
519,425
66,755
-
$
386,669
9,237
-
586,180
395,906
d) Key Management Personnel Interests in the Shares and Options of the Company
Shares
The number of shares in the company held during the financial year, and up 30 June 2011, by each Key Management Personnel
of Hot Chili Limited, including their personally related parties, are set out below. There were no shares granted as compensation
during the year.
2011
Murray E Black
Christian E Easterday
Dr Allan Trench
John Sendziuk
2010
Murray E Black
Christian E Easterday
Bernard R Mountford
Dr Allan Trench
John Sendziuk
Balance at
the start
of the year
10,000,000
10,200,000
-
1,100,000
21,300,000
Balance at
the start
of the year
13,500,000
13,700,000
2,000,000
-
700,000
29,900,000
Granted as
compensation
Other changes
during the year
Granted as
compensation
Other changes
during the year
-
-
-
-
-
-
-
-
-
-
-
Balance at
the end
of the year
10,000,000
10,200,000
-
-
-
-
(100,000)
1,000,000
(100,000)
21,200,000
Balance at
the end
of the year
10,000,000
10,200,000
(3,500,000)
(3,500,000)
(666,667)
1,333,333
-
-
400,000
1,100,000
(7,266,667)
22,633,333
59
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
15 Key Management Personnel Disclosures (continued)
d) Key Management Personnel Interests in the Shares and Options of the Company (continued)
Options
The number of options over ordinary shares in the company held during the financial year, and up to 30 June 2010, by each Key
Management Personnel of Hot Chili Ltd including their personally related parties are set out below:
2011
Balance at
start of
the year
Acquired
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
the end of
the year
Vested and
exercisable at
the end of
the year
Murray E Black
Christian E Easterday
Dr Allan Trench
John Sendziuk
6,750,000
6,850,000
-
350,000
13,950,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,750,000
6,850,000
-
6,750,000
6,850,000
-
350,000
350,000
13,950,000
13,950,000
2010
Balance at
start of
the year
Acquired
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance at
the end of
the year
Murray E Black
Christian E Easterday
6,750,000
6,850,000
Bernard R Mountford
1,000,000
Dr Allan Trench
John Sendziuk
-
350,000
14,950,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vested and
exercisable at
the end of
the year
6,750,000
6,850,000
1,000,000
-
6,750,000
6,850,000
1,000,000
-
350,000
350,000
14,950,000
14,950,000
16 Notes to Statement of Cash Flows
a) Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market
instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is
reconciled to the related items in the statement of financial position as follows:
Cash and short term deposits
60
Consolidated Entity
2011
2010
$
$
4,220,660
6,607,586
4,220,660
6,607,586
statements b) Reconciliation of Net Cash used In Operating Activities to
Operating Loss after Income Tax
Loss for the year
Depreciation
Effect of exchange rates on holdings in foreign currencies
Consolidated Entity
2011
2010
$
$
(11,065,643)
(1,828,429)
41,017
181,756
4,587
(66,074)
Net cash flows from operating activities before change in assets and liabilities
(10,842,870)
(1,889,916)
Change in assets and liabilities during the financial year:
Other current assets
Payables
Net cash outflow from operating activities
219,296
(219,974)
1,228,608
(6,435)
(9,394,966)
(2,116,325)
c) Non cash investing and financing activities
There were no non cash investing and financing activities during the year.
17 Finance Facilities
No credit standby facility arrangement or loan facilities existed at 30 June 2011.
18 Commitments for Expenditure
a) Exploration Commitments
In order to maintain current rights of tenure to exploration and mining tenements, the consolidated entity has the following
discretionary exploration expenditure requirements up until expiry of leases. These obligations are not provided for in the
financial statements and are payable:
Within one year
Later than one year but not later than five years
1,481,156
1,401,313
14,291,323
19,291,403
15,772,479
20,692,716
b) Operating Leases
The consolidated entity leases office premises under an operating lease expiring in three years. The lease has various terms and
renewal rights and commenced on 1 May 2010.
Commitments for minimum lease payments in relation to operating leases are payable
as follows:
Within one year
Later than one year but not later than five years
Later than five years
21,450
-
-
34,943
42,900
-
21,450
77,893
61
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
19 Events Occurring after Reporting Date
Since the end of the financial year, the company placed 13,333,334 shares at 60 cents to boost the working capital by $8,000,000
less costs of $240,000.
Apart from the matter disclosed above, there are other no matters or circumstances that have arisen since 30 June 2011 that
has significantly affected or may significantly affect the operations, the results of those operations, or the state of affairs of the
consolidated entity.
20 Related Parties
There were no related party transactions during the year.
21 Contingent Liabilities
There are no contingent liabilities at reporting date (2010: Nil).
22
Investment in Controlled Entities
Name of Entity
Sociedad Minera El Corazon Limitada
Sociedad Minera El Aguila Limitada
Sociedad Minera El Huerto Limitada
Country of
Incorporation
Class of
Shares
Chile
Chile
Chile
Ordinary
Ordinary
Ordinary
Equity Holding
2011
2010
%
100
100
100
%
100
100
100
23 Financial Risk Management
The consolidated entity’s principal financial instruments comprise receivables, payables cash and short-term deposits. The
consolidated entity manages its exposure to key financial risks in accordance with the consolidated entity’s financial risk
management policy. The objective of the policy is to support the delivery of the consolidated entity’s financial targets while protecting
future financial security.
The main risks arising from the consolidated entity’s financial instruments are interest rate risk, credit risk and liquidity risk. The
consolidated entity uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rates and assessments of market forecasts for interest rates. Ageing analysis of and
monitoring of receivables are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling
cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and agrees policies for
managing each of the risks identified below, including for interest rate risk, credit allowances and cash flow forecast projections.
62
statements Risk Exposures and Responses
a) Interest rate risk exposure
The consolidated entity’s exposure to market interest rates relates primarily to the consolidated entity’s cash balances and short-
term deposits. The consolidated entity constantly analyses its interest rate exposure. Within this analysis consideration is given to
potential renewals of existing positions, alternative financing positions and the mix of fixed and variable interest rates.
The consolidated entity’s cash balance is available at call and is held at a floating interest rate, all creditors and debtors are non
interest bearing and are payable and receivable on commercial terms.
The consolidated entity has considered the sensitivity relating to its exposure to interest rate risk at reporting date. This analysis
considers the effect on current year results and equity which could result in a change in this risk. Management have considered
the potential impact on the profit and equity and considered that it would not be a material amount.
b) Credit risk exposure
Credit risk arises from the financial assets of the consolidated entity, which comprise deposits with banks and trade and other
receivables. The consolidated entity’s exposure to credit risk arises from potential default of the counter party, with the maximum
exposure equal to the carrying amount of these instruments. The carrying amount of financial assets included in the statement of
financial position represents the consolidated entity’s maximum exposure to credit risk in relation to those assets.
The consolidated entity does not hold any credit derivatives to offset its credit exposure.
The consolidated entity trades only with recognised, credit worthy third parties and as such collateral is not requested nor is it the
Company’s policy to securities it trade and other receivables.
Receivable balances are monitored on an ongoing basis with the result that the consolidated entity does not have a significant
exposure to bad debts.
There are no significant concentrations of credit risk within the consolidated entity.
c) Liquidity risk
Liquidity risk arises from the financial liabilities of the consolidated entity and the consolidated entity’s subsequent ability to meet
their obligations to repay their financial liabilities as and when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and, the availability of funding
through the ability to raise further equity or through related party entities. Due to the dynamic nature of the underlying businesses,
the Board aims at maintaining flexibility in funding through management of its cash resources. The consolidated entity has no
financial liabilities at the year-end other than normal trade and other payables incurred in the general course of business.
d) Fair values
The fair values of the consolidated entity’s financial assets and liabilities are summarised in the table below;
2011
Cash and cash
Trade and other receivables
Trade and other payables
2010
Cash and cash
Trade and other receivables
Trade and other payables
Consolidated Entity
Carrying
amount
Fair
value
$
4,220,660
9,151
1,327,701
$
4,220,660
9,151
1,327,701
Carrying
amount
Fair
value
$
6,607,586
55,430
99,093
$
6,607,586
55,430
99,093
63
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
23 Financial Risk Management (continued)
Risk Exposures and Responses (continued)
e) Foreign exchange risk
The consolidated entity has considered the sensitivity relating to its exposure to foreign currency risk at reporting date. This
sensitivity analysis considers the effect on current year results and equity which could result in a change in the USD / AUD rate.
The consolidated entity is exposed to foreign exchange risk through its USD cash holdings at reporting date.
The table below summarises the impact of + / - 10% strengthening / weakening of the AUD against the USD on the consolidated
entities post tax profit for the year and equity. The analysis is based on a 10% strengthening /weakening of the AUD against the
USD at reporting date with all other factors remaining equal.
2011
AUD/USD + 10%
AUD/USD - 10%
2010
AUD/USD + 10%
AUD/USD - 10%
Consolidated Entity
Post tax
profit
$
296,976
(296,976)
Post tax
profit
$
(514,657)
514,657
Equity
$
296,976
(296,976)
Equity
$
(514,657)
514,657
24 Critical Accounting Estimates and Judgements
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Recoverability of exploration expenditure
The directors tests annually whether the exploration and evaluation expenditure incurred in identifiable areas of interest is expected
to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of reserves and further work is expected to be performed. All expenditure that does
not meet these criteria is expensed to the statement of comprehensive income.
64
statements 25 Parent Entity Disclosures
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
2011
2010
$
$
4,158,943
1,397,234
6,618,396
2,173,641
5,556,177
8,792,037
67,945
67,945
69,393
69,393
19,239,321
11,419,755
72,308
72,308
(13,823,397)
(2,769,419)
5,488,232
8,722,644
(11,053,978)
(1,840,094)
-
-
(11,053,978)
(1,840,094)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2011 or 30 June 2010.
Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2011 (30 June 2010 – $Nil), the parent entity did not have any contractual commitments for the acquisition of
property, plant or equipment.
65
HOT CHILI ANNUAL REPORT 2011
notes to
the financial
continued
26 Share Based Payments
The company has not made any share based payments in the current year. Below are details of share based payments made in the
prior year.
a) Options issued
The Company issued options to a consultant as part payment of share issue costs.
Set out below is a summary of options on issue as at 30 June 2011:
Issue date
01/05/2009
10/01/2010
29/04/2010
Expiry
date
29/10/2014
29/10/2014
29/10/2014
Balance
at start
of year
Number
issued
during year
Number
expired
during year
Balance
at end
of year
Number
exercisable
at end of year
200,000
140,000
400,000
-
-
-
-
-
-
200,000
140,000
400,000
200,000
140,000
400,000
Fair value of options issued:
The fair value at issue date was determined using a Black-Scholes option pricing model that takes into account the exercise
price, the share price at issue date and expected price volatility of the underlying share, and the risk free interest rate for the term
of the loan.
The model inputs for options granted during the year ended 30 June 2010 included:
i) options are granted for no consideration.
ii) exercise price - $0.20.
iii)
issue date - 1 May 2009, 10 January 2010, 29 April 2010
iv) expiry date – 29 October 2014.
v) expected price volatility of the Company’s shares: 110%.
vi) risk-free interest rate: 5.36%.
vii) spot price at date of valuation: $0.05, $0.10 and $0.20.
b) Expenses arising from share-based payment transactions
Total transactions arising from share-based payment transactions recognised during the year were as follows:
Expenses related to options issued to consultants
Shares issued for option payment on Chilean mining rights
2011
2010
$
-
-
-
$
72,308
1,242,105
1,314,413
The option payment on Chilean mining rights were issued at the date of listing and consisted of 6,210,525 shares at the listing price
of $0.20.
66
statements shareholder
information
Shareholder Information as at 29 August 2011
a) Spread of Holdings
1
- 1,000
1,001
- 5,000
5,001
- 10,000
10,001 - 100,000
100,001 & Over
b) Spread of Holdings
1
- 1,000
1,001
- 5,000
5,001
- 10,000
10,001 - 100,000
100,001 & Over
c) Substantial Shareholders
Kalgoorlie Auto Service Pty Ltd
Harbour Group (Consolidated)
Port Finance Ltd NV
Panoramic Copper Pty Ltd
Taurus Funds Management (Consolidated)
Fitel Nominees Ltd
d) Directors’ Shareholdings:
Murray E Black
Christian E Easterday
Dr Allan Trench (Appointed 19 July 2010)
Shareholders
Units
56
221
272
707
154
40,157
693,804
2,348,876
28,727,457
130,616,928
1,410
162,427,222
Option Holders
Units
-
-
-
13
27
40
-
-
-
1,100,000
39,440,000
40,540,000
40,000,000
8,161,530
6,210,527
6,666,667
6,666,667
4,471,750
Shares
Held
Directly
Held by
Companies in
which Directors
have a
beneficial
interest
-
10,000,000
200,000
10,200,000
-
67
required by the asx HOT CHILI ANNUAL REPORT 2011
shareholder
information
continued
Shareholder Information as at 29 August 2011 (continued)
e) The names of the twenty largest shareholders as at 29 August 2011, who between them held 56.62% of the issued capital are
listed below:
1 Kalgoorlie Auto Service Pty Ltd
2 Panoramic Copper Pty Ltd
3 Taurus Funds Management Pty Ltd
4 Port Finance Ltd NV
5 Fitel Nominees Ltd
6 Norman Lester Mountford
7 Harbour Seager Rex
8 Graham John Woolford
9 Miro & Helen Cecich
10 Campari Holdings Pty Ltd
11 Ajava Holdings Pty Ltd
12 Harbour Foundation
13 SHL Pty Ltd
14 UBS Wealth Management Australia Nominees
15 BO & EJ Stephens
16 Leilani Investments Pty Ltd
17 Romulus Pty Ltd
18 Miro Cecich
19 Timothy James Carter
20 Gary Dene Gale
Number of
Ordinary Shares
40,000,000
6,666,667
6,290,223
6,210,527
4,471,750
4,000,000
3,931,696
2,577,000
2,533,334
2,077,500
2,000,000
1,916,667
1,750,000
1,486,381
1,140,000
1,030,000
1,020,000
1,000,000
950,000
925,000
91,976,745
%
24.63
4.10
3.87
3.82
2.75
2.46
2.42
1.59
1.56
1.28
1.23
1.18
1.08
0.92
0.70
0.63
0.63
0.62
0.58
0.57
56.62
f) The names of the twenty largest optionholders as at 29 August 2011, who between them held 94.08% of the issued options are
listed below:
1 Kalgoorlie Auto Service Pty Ltd
2 Norman Lester Mountford
3 Ajava Holdings Pty Ltd
4 BO & EJ Stephens
5 Miro Cecich
6 Campari Holdings Pty Ltd
7 DJ Carmichael Pty Ltd
8 Romulus Pty Ltd
9 Jacqueline Tracey Hunter
10 Oakstream Pty Ltd
11 Ian William Dorrington
12 Talltree Holdings Pty Ltd
13 L & TE King Russell
14 Oregonwood Pty Ltd
15 Rowan Radford
16 Alf’s Crew Pty Ltd
17 Mancini Management Pty Ltd
18 James Douglas Coote
19 Hahn Properties Pty Ltd
20 Gary Dene Gale
68
Number of
Options
27,000,000
3,000,000
2,500,000
800,000
500,000
500,000
429,000
350,000
300,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
38,129,000
%
66.60
7.40
6.17
1.97
1.23
1.23
1.06
0.86
0.74
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
94.08
required by the asx “Company remains
focused on successful
exploration and
advancing the projects
toward development.”
69
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