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FUEGO
Timing is everything
ANNUAL REPORT 2022
Productora
Contents
1 Chairman’s Letter
2 Review of Operations
3 Qualifying Statements
4 Corporate Activities
5 Directors’ Report
6 Auditors’ Independence Declaration
7 Auditors’ Report
8 Directors’ Declaration
9 Statement of Comprehensive Income
10 Statement of Financial Position
11 Statement of Changes in Equity
12 Statement of Cash Flows
13 Notes to the Financial Statements
14 Shareholder Information
15 Tenement Schedule
16 Corporate Directory
6
8
29
33
36
53
54
57
58
59
60
61
62
90
91
96
HOT CHILI Annual Report 2022
Valentina
Costa
Fuego
Copper Super-Hub
Cortadera
Significant copper-gold
porphyry discovery
San
Antonio
Cortadera Project
Productora Project
El Fuego Project
(Valentina & San Antonio)
HOT CHILI Annual Report 2022
1
2022 Key
Highlights
OPERATIONAL
Upgraded Mineral Resource Estimate for Costa Fuego
Total Resource1,2
•
•
Indicated - 725Mt grading 0.47% CuEq for 2.8Mt Cu, 2.6Moz Au, 10.5Moz Ag & 67kt Mo
Inferred - 202Mt grading 0.36% CuEq for 0.6Mt Cu, 0.4Moz Au, 2.0Moz Ag & 13kt Mo
High Grade Resource1,2 (Reported +0.6% CuEq)
•
•
Indicated - 156Mt grading 0.79% CuEq for 1.0Mt Cu, 0.85Moz Au, 2.9Moz Ag & 24kt Mo
Inferred - 11Mt grading 0.93% CuEq for 0.1Mt Cu, 0.04Moz Au, 0.3Moz Ag & 1kt Mo
Development Study Drilling Completed
• Stand-out drill intersections from the Development Study drilling programme at
Cortadera include:
CORMET003 - 552m grading 0.6% CuEq3 (0.4% Cu, 0.2g/t Au) from 276m downhole
including 248m grading 0.8% CuEq (0.6% Cu, 0.2g/t Au) from 574m
CORMET004 - 484m grading 0.5% CuEq (0.4% Cu, 0.1g/t Au) from 548m downhole
including 56m grading 1.0% CuEq (0.8% Cu, 0.3g/t Au) from 644m and including
206m grading 0.7% CuEq (0.5% Cu, 0.2g/t Au) from 800m
CORMET005 - 658m grading 0.6% CuEq (0.4% Cu, 0.2g/t Au) from 232m downhole
including 134m grading 0.8% CuEq (0.6% Cu, 0.2g/t Au) from 470m and including
130m grading 0.9% CuEq (0.6% Cu, 0.2g/t Au) from 662m
CORMET006 - 876m4 grading 0.5% CuEq (0.4% Cu, 0.1g/t gold Au) from 246m downhole
including 206m5 grading 0.9% CuEq (0.7% Cu, 0.3g/t Au) from 414m
• Stand-out drill intersections from the metallurgical drilling programme at Productora include:
MET027 -
MET028 -
45m grading 1.2% CuEq (1.0% Cu, 0.2g/t Au) from 280m downhole
including 8m grading 3.6% CuEq* (3.0% Cu, 0.8g/t Au) from 280m
39m6 grading 1.1% CuEq (1.0% Cu, 0.1g/t Au) from 46m downhole
including 12m grading 1.5% CuEq (1.4% Cu, 0.2g/t Au) from 60m
MET026 -
39m 0.9% CuEq (0.7% Cu, 0.2g/t Au) from 141m downhole
MET025 -
39m 0.8% CuEq (0.7% Cu, 0.2g/t Au) from 78m downhole
¹ Reported on a 100% Basis - combining Mineral Resource Estimates for the Cortadera, Productora and San Antonio deposits. Figures are
rounded, reported to appropriate significant figures, and reported in accordance with the JORC Code, CIM and NI 43-101. Metal rounded to
nearest thousand, or if less, to the nearest hundred. Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground.
² Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne ×
Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_
recovery)) / (Cu price 1% per tonne × Cu_recovery).
The Metal Prices applied in the CuEq calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz. Metallurgical
recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching
performance. The recovery and copper equivalent formula is:
Costa Fuego – Weighted recoveries of 83% Cu, 53% Au, 69% Mo and 23% Ag
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm) + 0.0027 x Ag(g/t)
3 Copper Equivalent (CuEq) reported for the drillhole intersections are described in the document in the table of Significant Drill Results Reported
in 2022.
4 Excluding 18m unsampled due to geotechnical test work
5 Excluding 4m unsampled due to geotechnical test work
6 Including 3m unsampled outside of metallurgical test area
2
HOT CHILI Annual Report 2022
Resource Definition Drilling Underway
at San Antonio and Valentina
• Stand-out drill results at San Antonio include:
SAPMET002 - 21m grading 1.6% CuEq (1.6% Cu, 3.2g/t Ag) from 74m downhole
SAPMET003 - 13m grading 1.3% CuEq (1.3% Cu, 3.2g/t Ag) from 133m downhole
including 2m grading 3.7% CuEq (3.5% Cu, 7.6g/t Ag) from 140m
SAP0048 -
7m grading 1.6% CuEq (1.5% Cu, 4.8g/t Ag) from 11m downhole
including 2m grading 4.0% CuEq (3.9% Cu, 12.9g/t Ag) from 12m
•
Importantly, several drill holes recorded higher grades than estimated in the current San Antonio
Inferred resource model.
• Stand out drill results from Valentina include:
VALMET0002 - 12m grading 4.6% CuEq (4.5% Cu & 16.5g/t Ag) from 25m downhole
including 3m grading 12.1% CuEq (11.8% Cu & 52.6g/t Ag) from 29m
VAP0009 -
8m grading 5.9% CuEq (5.7% Cu, 24.1g/t Ag) from 27m downhole
and 2m grading 1.9% CuEq (1.8% Cu, 11g/t Ag) from 46m
VAP0004 -
7m grading 2.0% CuEq (1.9% Cu, 11g/t Ag) from 163m downhole
Regional Exploration Update
• Exploration drilling during the year focussed on targets proximal to the Productora resource and
the 4km long by 2km wide Santiago Z porphyry target, where a first-pass Reverse Circulation drill
programme has commenced.
PFS Expansion and Updated Timeline
• The Costa Fuego Pre-feasibility Study (PFS) is now expected to be complete in Q1 2023
• Drilling operations have been reduced, following completion of the development study drilling, from
three drill rigs to one drill rig.
• The revised timeline ensures the Company is fully funded into late 2023.
3
HOT CHILI Annual Report 2022 2022 Key
Highlights (cont’d)
CORPORATE
Strong Funding, Acquisition of
Cortadera, Glencore Investment
& Offtake Agreement and
New Chairman
• The Company continued to be strongly
supported by shareholders and new investors,
raising $40 million during the reporting period
from a A$5 million Share Purchase Plan and
A$35 million Share Placement.
• This funding allowed the final payment
for the 100% acquisition of Cortadera,
continued growth and development of Costa
Fuego, and the repayment of the CMP option
to remove its right to purchase a further
interest in Productora.
• Glencore, one of the world’s largest natural
resource companies, becomes Hot Chili’s
largest shareholder at 9.99% through its
strategic investment in the $40 million funding
and adds representative Mr Mark Jamieson to
the Board of Hot Chili.
•
In March 2022, Hot Chili Limited and Glencore
completed negotiations and executed an
offtake agreement which covers 60% of
copper concentrate for the first eight years
of future production from the Costa Fuego
copper-gold project.
Trading in North America -
TSX Venture Exchange & US
Based OTCQX
• Hot Chili lodged a final prospectus with
the securities regulatory authorities in the
provinces of Canada, excluding Quebec, in
connection with its initial public offering
(the “Offering”) on the TSX Venture
Exchange (the “TSXV”) on 21 December
2022 and issued Tranche One of the shares
on 23 December 2022 and Tranche 2 of the
shares, following final shareholder approval
at a general meeting, on 31 January 2022,
raising in total C$33.8 million before costs.
The raising was well-supported by North
American and international funds as well as
some of the Company’s largest shareholders,
including Glencore.
• Shares commenced trading on the TSXV
under the trading symbol TSXV:HCH on
4 January 2022 and warrants on 4 March 2022
under the symbol HCH.WT.
• The Company commenced trading on the
OTCQX Best market on 7 April 2022 under the
ticker OTCQX: HHLKF.
Dr Nicole Adshead-Bell joins
the Hot Chili board and is
appointed Chairman
• North American mining executive and capital
markets expert Dr Nicole Adshead-Bell joined
the board as a non-executive director in
January. Dr Adshead-Bell was subsequently
appointed Independent Chairman following
the retirement of founding Chairman
Mr Murray Black in March.
Hot Chili
commenced trading
in North America on
the TSXV and OTCQX
in 2022
4
HOT CHILI Annual Report 2022 HOT CHILI Annual Report 2022
5
1 Chairman’s
Letter
To Our Shareholders,
On behalf of the entire Hot Chili team, our shareholders and stakeholders, I would like to thank our former
Chairman, Murray Black, who retired on 1 March 2022, for his significant contribution since founding the Company
in 2008. Few leaders in our industry have worked as tirelessly as Murray, both in embedding a culture of excellence
in Hot Chili and in his willingness to support the Company financially, becoming the second largest shareholder.
Murray has retired with big shoes to fill.
I joined Hot Chili’s board as chairman earlier this year because I was attracted by Hot Chili’s combination of
commodity exposure, project size and overall quality, favourable location, and fit-for-purpose managerial talent.
Hot Chili’s leadership team, led by Managing Director Christian Easterday in Australia and supported by Country
Manager Jose Silva in Chile, combined with our committed employees and contractors, have demonstrated a
strong drive to build long-term value through the following initiatives:
. Consolidation over the past decade of high-quality copper-gold assets in an accessible region of Chile during a
. Realization that water security in Chile was an exogenous risk ten years ago, then spending seven years
period of volatile commodity prices.
to secure a maritime concession granting seawater extraction rights and materially de-risking the future
development of the Costa Fuego copper-gold hub. This is now an under-appreciated asset of the Company.
. Attracting Glencore, a major copper producer, as a strategic shareholder.
Copper is a critical commodity due to its electrical and chemical properties delivering superior electrical and
thermal conductivity. Copper is inextricably linked to the global commitment to de-carbonization. The red
metal is the building block for all renewable power systems and electric vehicles. A lack of investment in copper
exploration and development, combined with several large copper mines reaching the end of their life, has resulted
in a predicted global copper deficit of 4.7 million tonnes by 20301. CRU Group estimated that the copper industry
needs to spend more than US$100 billion to bridge this supply gap. Data from S&P Global Market Intelligence
shows that porphyry copper head grades have been in decline over the last 18 years, resulting in high capital and
operating costs per pound of new copper capacity. Supply side issues are further constrained by the fact that the
average timeline from any new discovery to production is now 25-30 years1. All of this means that the incentive
price for new copper development and production must move higher over the medium term. Hot Chili is well
positioned to benefit from this price move as it has the resources to contribute to the future supply of a critical
commodity for global decarbonization.
The last year has been dominated by global events that have, and will continue to have, long term social and
economic impacts. These include the COVID-19 pandemic and the ongoing ground war in eastern Europe. We
have also seen the installation of a new Chilean Government and increased risk around what this means for Chile’s
mining industry as the world’s largest producer of copper and second largest producer of lithium. The recent
strong rejection by Chileans to the proposed changes to their constitution indicates the country is in favour of
maintaining Chile’s attractiveness as a leading mining investment destination. This sentiment was reinforced by
President Boric’s “Invest in Chile” plan announced following the recent constitutional defeat.
Despite the challenging macro environment, Hot Chili achieved multiple milestones over the last year, above and
beyond high grade copper drill intervals at Cortadera and Valentina:
. Confirmation of the quality and strategic nature of Hot Chili’s Costa Fuego copper-gold hub with Glencore’s
initial 9.9% investment. Glencore is one of the world’s largest globally diversified natural resource companies
and the third largest copper producer.
. Consolidation of the Cortadera copper-gold discovery for 100% ownership, enabling a more efficient, lower
carbon emissions footprint and cost-effective approach to the integrated development of the Cortadera and
Productora deposits.
. Share consolidation of 50 to 1 to tighten the Company’s share structure in alignment with its Canadian copper
development peer group ahead of secondary listings in Canada and the USA. Canada is a natural stock market
for Hot Chili as 11% of its total mining industry assets (spread over 55 Canadian listed companies) operate in Chile.
1 Information compiled from S&P Global Market Intelligence, Woodmac, CRU Group, Goldman Sachs Research, Altius Minerals Corp. presentation.
6
HOT CHILI Annual Report 2022 . Execution of the Offtake Agreement with Glencore for future copper concentrate production from the Company’s Costa
Fuego copper-gold hub. Importantly this agreement only covers 60% of Costa Fuego’s copper concentrate at commercially
competitive benchmark terms for 8 years from the start of commercial production. Hot Chili retains optionality over the
remainder of its concentrate production.
. Material upgrade and de-risking of the Costa Fuego copper-gold hub resource estimate with the Indicated copper resource
now representing approximately 82% of the total resource estimate. The Costa Fuego copper-gold hub is now one of the
largest copper-gold resources controlled by a junior, with Indicated resources of 2.8 million tonnes (6.2 billion pounds) of
contained copper and 2.6 million ounces of contained gold and Inferred resources of a further 0.6 million tonnes (1.3 billion
pounds) of contained copper and 0.4 million ounces of contained gold. In addition, Costa Fuego also contains by-product
silver and molybdenum.
On behalf of our board of directors and Hot Chili team in Australia and Chile, we appreciate the ongoing support from all our
stakeholders, including the owners of our Company, our shareholders. We will continue to work towards delivering value per
share for our shareholders in the context of where we are in the commodity cycle.
One final note: the biggest challenge the mining industry faces is reputation. Many government regulators and voters do not
grasp that their quality of life is inextricably linked to the products of mining. I am proud of our industry and believe that one of
our key issues has been a lack of willingness by the leaders of our sector to promulgate the positives of our industry (of which
there are many). This is a recommendation to those working in extractive industries to engage with the public and ensure that
our awareness efforts are based on fact and not topical emotion.
Yours sincerely,
Dr Nicole Adshead-Bell
Independent Non-Executive Chairman
Perfectly
positioned in
copper-critical
to global
decarbonisation
HOT CHILI Annual Report 2022
7
2 Review of
Operations
Upgraded Mineral Resource Estimate for Costa Fuego
This year the Company released a major resource upgrade for its Chilean coastal range Costa Fuego copper-gold
project, comprising the Cortadera, Productora and San Antonio deposits. Mineral resources at Costa Fuego have
been materially upgraded with a 67% increase in the total Indicated Resource and a 53% increase in the high grade
Indicated Resource:
Total Resource*
•
•
Indicated - 725Mt grading 0.47% CuEq for 2.8Mt Cu, 2.6Moz Au, 10.5Moz Ag & 67kt Mo
Inferred - 202Mt grading 0.36% CuEq for 0.6Mt Cu, 0.4Moz Au, 2.0Moz Ag & 13kt Mo
High Grade Resource* (Reported +0.6% CuEq)
•
•
Indicated - 156Mt grading 0.79% CuEq for 1.0Mt Cu, 0.85Moz Au, 2.9Moz Ag & 24kt Mo
Inferred - 11Mt grading 0.93% CuEq for 0.1Mt Cu, 0.04Moz Au, 0.3Moz Ag & 1kt Mo
Highlights from the Costa Fuego Mineral Resource Estimate
(MRE) upgrade include:
. The resource upgrade cements Costa Fuego’s position as a top-ten copper development project
(based on S&P 2022 using project criteria of Active, PFS level or greater and low operating risk) with
one of the shortest timeframes to potential first production amongst senior copper development
projects globally
. Over 80% of Costa Fuego’s global resource estimate is now classified as Indicated (previously 56%),
providing a strong platform to deliver a combined Pre-feasibility Study with a large ore reserve
. High grade Indicated resources (+0.6% CuEq) account for one third of contained copper and gold,
improving on the previous amount of 20%.
. The Productora MRE has been re-estimated, increasing high grade Indicated resources reported
above 0.6% CuEq
. A maiden San Antonio MRE has been added to the Costa Fuego Hub
8
HOT CHILI Annual Report 2022
Table 1 Independent JORC Code Costa Fuego Mineral Resource Estimate, March 2022
Costa Fuego OP Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.21% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
576
576
147
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.46
0.37
0.10
0.37
0.46
0.37
0.10
0.37
0.35
0.30
0.05
0.23
91
91
68
2,658,000
2,145,000
1,929,000
6,808,000
2,658,000
2,145,000
1,929,000
6,808,000
520,000
436,000
220,000
1,062,000
52,200
52,200
10,000
Costa Fuego UG Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.30% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
148
148
56
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.51
0.39
0.12
0.78
0.51
0.39
0.12
0.78
102
102
750,000
750,000
0.38
0.30
0.08
0.54
61
211,000
578,000
578,000
170,000
559,000
3,702,000
559,000
3,702,000
139,000
971,000
15,000
15,000
3,400
Costa Fuego Total Resource
Grade
Contained Metal
Classification
Tonnes CuEq* Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
Indicated
M+I Total
Inferred
(Mt)
725
725
202
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.47
0.38
0.11
0.45
0.47
0.38
0.11
0.45
0.36
0.30
0.06
0.31
93
93
66
3,408,000
2,755,000
2,564,000
10,489,000
3,408,000
2,755,000
2,564,000
10,489,000
731,000
605,000
359,000
2,032,000
67,400
67,400
13,400
* Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo
ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne ×
Cu_recovery).
The Metal Prices applied in the CuEq calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz. Metallurgical recovery
averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching performance. The recovery
and copper equivalent formula for each deposit is:
Costa Fuego – Weighted recoveries of 83% Cu, 53% Au, 69% Mo and 23% Ag
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm) + 0.0027 x Ag(g/t)
Reported on a 100% Basis - combining Mineral Resource Estimates for the Cortadera, Productora and San Antonio deposits. Figures are rounded, reported
to appropriate significant figures, and reported in accordance with the JORC Code, CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the
nearest hundred.
Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground.
HOT CHILI Annual Report 2022
9
2 Review of
Operations (cont’d)
The Cortadera Mineral Resource Estimate (MRE) has delivered the majority of resource growth
for Costa Fuego. Cortadera is defined by over 92,000m of drilling and this has delivered a 134%
increase in the Indicated Resource at Cortadera from the 2020 MRE.
Oblique long section of the upgraded Cortadera Mineral Resource Model, March 2022 illustrating
the CuEq grade distribution in relation to drilling coverage
The Productora MRE has been re-estimated, resulting in a material increase in high grade Indicated resources
reported above 0.6% CuEq. High grade open pit resources from Productora are a key focus for the combined PFS
and are expected to feature prominently in the early mine schedule for Costa Fuego.
Oblique view of the Productora MRE in relation to drill coverage and 2016 PFS pit design
10
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 A maiden San Antonio MRE of 4.2Mt grading 1.2% CuEq has also been added to the Costa Fuego Hub. The Company is
encouraged by the initial Inferred resource. The high-grade, shallow nature of San Antonio provides an additional open pit
deposit for Costa Fuego’s potential early mine schedule.
Oblique view of the San Antonio MRE in relation to drilling, underground voids and mine development
Location and infrastructure of the Costa Fuego copper project, located along the Chilean coastal range
600km north of Santiago
11
HOT CHILI Annual Report 2022 2 Review of
Operations (cont’d)
* Refer to ASX Announcement “Hot Chili Delivers Next Level of Growth” (31st March 2022) for JORC Code Table 1 information related to the
Costa Fuego JORC-compliant Mineral Resource Estimate (MRE) by Competent Person Elizabeth Haren, constituting the MREs of Cortadera,
Productora and San Antonio (which combine to form Costa Fuego).
Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne ×
Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_
recovery)) / (Cu price 1% per tonne × Cu_recovery).
The Metal Prices applied in the CuEq calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz. Metallurgical
recovery averages for each deposit consider Indicated + Inferred material and are weighted to combine sulphide flotation and oxide leaching
performance. The recovery and copper equivalent formula for each deposit is:
Cortadera and San Antonio – Weighted recoveries of 82% Cu, 55% Au, 82% Mo and 37% Ag.
Productora –
Costa Fuego –
CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t)
Weighted recoveries of 84% Cu, 47% Au, 47% Mo and 0% Ag (not reported)
CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x Mo(ppm)
Weighted recoveries of 83% Cu, 53% Au, 69% Mo and 23% Ag
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm) + 0.0027 x Ag(g/t)
Reported on a 100% Basis - combining Mineral Resource Estimates for the Cortadera, Productora and San Antonio deposits. Figures are
rounded, reported to appropriate significant figures, and reported in accordance with the JORC Code, CIM and NI 43-101. Metal rounded to
nearest thousand, or if less, to the nearest hundred.
Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground.
Development Study Drilling Completed
In January, Hot Chili commenced a programme of six technical drill holes – CORMET holes - at Cortadera to
collect geotechnical, hydrogeological and metallurgical information. This included packer tests downhole to
assess ground permeability in different domains, plus the collection of samples for laboratory assessment of
rock strength and in situ ground stress.
Following completion of the CORMET holes, four diamond drillholes - MET holes - were also drilled across
the Productora resource (three into the Productora central pit area and one into the Alice satellite pit area) for
metallurgical testwork.
• Stand-out drill results from the CORMET programme include:
CORMET003 - 552m grading 0.6% CuEq (0.4% Cu, 0.2g/t Au) from 276m downhole
including 248m grading 0.8% CuEq (0.6% Cu, 0.2g/t Au) from 574m
CORMET004 - 484m grading 0.5% CuEq (0.4% Cu, 0.1g/t Au) from 548m downhole
including 56m grading 1.0% CuEq (0.8% Cu, 0.3g/t Au) from 644m
and including 206m grading 0.7% CuEq (0.5% Cu, 0.2g/t Au) from 800m
CORMET005 - 658m grading 0.6% CuEq (0.4% Cu, 0.2g/t Au) from 232m downhole
including 134m grading 0.8% CuEq (0.6% Cu, 0.2g/t Au) from 470m
and including 130m grading 0.9% CuEq (0.6% Cu, 0.2g/t Au) from 662m
CORMET006 - 876m grading 0.5% CuEq (0.4% Cu, 0.1g/t gold Au) from 246m downhole
including 206m grading 0.9% CuEq (0.7% Cu, 0.3g/t Au) from 414m
New high grade ore sources provide optionality for Costa Fuego
12
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
All four of these development study drill holes were drilled through Cuerpo 3 and confirm an expansion of the high-grade
core. The CORMET holes are not included in the Mineral Resource Estimate for Cortadera (published in March 2022).
An updated MRE expected in late 2022 will include these CORMET holes to quantify the impact of this expansion.
Results from drill hole CORMET001 also outperformed expectations, with the hole ending in 6m grading 0.6% Cu below the
current interpreted extents of Cuerpo 1.
CORMET006 (579m depth down-hole) – 1.1% copper, 0.6g/t gold, 4.0g/t silver and 81 ppm molybdenum.
Early-stage porphyry, sericite-chlorite-biotite alteration with 5% A-B vein abundance
Location of development study diamond drill holes at Cortadera
13
HOT CHILI Annual Report 2022 2 Review of
Operations (cont’d)
• Stand-out drill results from the MET drilling at Productora include:
MET027 -
MET028 -
45m grading 1.2% CuEq (1.0% Cu, 0.2g/t Au) from 280m downhole
including 8m grading 3.6% CuEq* (3.0% Cu, 0.8g/t Au) from 280m
39m grading 1.1% CuEq (1.0% Cu, 0.1g/t Au) from 46m downhole
including 12m grading 1.5% CuEq (1.4% Cu, 0.2g/t Au) from 60m
MET026 -
39m 0.9% CuEq (0.7% Cu, 0.2g/t Au) from 141m downhole
MET025 -
39m 0.8% CuEq (0.7% Cu, 0.2g/t Au) from 78m downhole
The intersection in MET028 is particularly exciting as it is located near-surface in the higher-grade Alice porphyry
satellite pit.
MET0027 (286.4m depth). Tourmaline breccia host rock at Productora.
5.4% Cu, 1.2g/t Au, 3.5g/t Ag, 594ppm Mo
14 HOT CHILI Annual Report 2022
HOT CHILI Annual Report 2022
Resource Definition Drilling Underway at San Antonio
and Valentina
Following San Antonio’s maiden Inferred resource, reported in March 2022, a further 13 drill holes – including three
diamond drill holes – were completed at San Antonio to upgrade the categorisation of the resource from Inferred to
Indicated, as well as testing for down-plunge mineralisation extensions.
• Stand-out drill results include:
SAPMET002 - 21m grading 1.6% CuEq (1.6% Cu, 3.2g/t Ag) from 74m downhole
SAPMET003 - 13m grading 1.3% CuEq (1.3% Cu, 3.2g/t Ag) from 133m downhole
including 2m grading 3.7% CuEq (3.5% Cu, 7.6g/t Ag) from 140m
SAP0048 -
7m grading 1.6% CuEq (1.5% Cu, 4.8g/t Ag) from 11m downhole
including 2m grading 4.0% CuEq (3.9% Cu, 12.9g/t Ag) from 12m
Importantly, several drill holes recorded higher grades than estimated in the current
San Antonio Inferred resource model.
HOT CHILI Annual Report 2022
15
HOT CHILI Annual Report 2022 2 Review of
Operations (cont’d)
Long section (along the plane of mineralisation) showing significant intersections
from phase 1 RC drilling at San Antonio. Current Resource Model (May 2022)
shown for reference (filtered to show Inferred blocks above 0.2% CuEq*).
Note southern high-grade drill intersections (SAP0048 and SAP0053)
recorded outside resource envelope.
The high-grade Valentina copper mine was also drilled in two phases, with
17 drill holes – 2 of them diamond – completed during the year. Initial
drilling confirmed a strong visual drilling intersection approximately
120m south of the underground mine workings. Mineralisation at
Valentina is now defined over approximately 300m of strike and
is open at depth and along strike. Work is underway to create
detailed geological and mineralisation models to assess the
resource potential of Valentina ahead of a maiden MRE in the
second half of 2022.
Copper soluble analysis has confirmed that mineralisation
at Valentina is principally sulphide (chalcocite,
chalcopyrite, covellite) and amenable to
flotation recovery, thus key to Valentina’s
potential to contribute to early sulphide
cash flow generation.
16
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 • Stand out drill results from Valentina include:
VALMET0002 - 12m grading 4.6% CuEq (4.5% Cu & 16.5g/t Ag) from 25m downhole
including 3m grading 12.1% CuEq (11.8% Cu & 52.6g/t Ag) from 29m
VAP0009 -
8m grading 5.9% CuEq (5.7% Cu, 24.1g/t Ag) from 27m downhole
and 2m grading 1.9% CuEq (1.8% Cu, 11g/t Ag) from 46m
VAP0004 -
7m grading 2.0% CuEq (1.9% Cu, 11g/t Ag) from 163m downhole
Location of drill holes in relation to the Valentina high grade copper deposit. Valentina is open
along strike to the north and to the south underneath a 10 to 15m-deep cover of gravel
Drilling undertaken across San Antonio, and the neighbouring high grade deposit Valentina, have provided
significant encouragement for the addition of two potential high grade, front-end, open pit, ore sources for
Costa Fuego.
17
HOT CHILI Annual Report 2022 Regional Exploration Update
Exploration drilling during the year focussed on targets proximal to the Productora resource and the 4km long
by 2km wide Santiago Z porphyry target. Drilling at Productora comprised fourteen drill holes, with several
intersections requiring future follow-up Diamond Drill (DD) tail extensions. Platform and access clearing across
the Santiago Z exploration target was completed this year and a first-pass RC drill programme has commenced.
Assay results for these drillholes are pending.
The Santiago Z exploration target in the context of the deposits at Cortadera
18 HOT CHILI Annual Report 2022
HOT CHILI Annual Report 2022
2 Review of Operations (cont’d) Regional exploration mapping and soil sampling collected 1,979 surface samples during the year across a portfolio
of six regional targets. The resultant geochemical data is being used to vector drilling and to assist in ranking the
Company’s regional exploration pipeline.
Other key workstreams completed during the year include the acquisition of advanced remote sensing datasets
across the Costa Fuego region, systematic mapping and sampling across the gap zone between Cortadera and
Santiago Z, as well as extensional work to the west of Santiago Z.
RC Drilling at the Productora Central exploration target, April 2022
HOT CHILI Annual Report 2022
19
2 Review of
Operations (cont’d)
PFS Expansion and Updated Timeline
The Costa Fuego Pre-feasibility Study (PFS) is now expected to be complete in Q1 2023 following an expansion
of studies to capture additional metallurgical testwork opportunities across all deposits, and an extension of
preliminary mine planning to allow the incorporation of new resource growth from drilling in 2022.
Highlights from the Costa Fuego PFS for the year include:
competitive, long-term power price environment with indicative quotations.
agreement for Huasco, approximately 50km west of Costa Fuego’s proposed processing plant.
. Completion of the technical drilling at Cortadera
. Completion of additional metallurgical drilling at Productora, San Antonio and Valentina.
. Execution of a Letter of Intent with Puerto Las Losas SA (PLL) to negotiate a port access and port services
. Completion of an initial power supplier consultation process – multiple power providers confirmed highly
. Metallurgical flowsheet optimisation, as well as sulphide and oxide metallurgical testwork programmes
. Preliminary mine scheduling and mine optimisations (open pit and cave extraction) complete to test 15Mtpa
. Re-commencement of Environmental Impact Assessment baseline studies across Costa Fuego with the
. Commencement of Hot Chili’s Environmental, Social and Governance (ESG) framework, leveraging-off the
appointment of leading Chilean environmental consultancy GAC.
and 20Mtpa sulphide concentrator scale options is complete.
underway in Australia.
Company’s strong involvement in local partnerships, social programmes and green credentials.
With development study drilling completed across Costa Fuego the Company has reduced its drilling
operations from three drill rigs (5-shifts of drilling per day) to one drill rig (1-shift of drilling per day) along with
implementing other cost rationalisation initiatives.
The revised timeline ensures the Company is now fully funded into late 2023.
Plan view across the Cortadera discovery area displaying the location of significant historical copper-
gold DD intersections across Cuerpo 1, 2, and 3 tonalitic porphyry intrusive centres. Note the revised
Feb 2022 copper models (represented by modelled copper envelopes, yellow- +0.05% Cu, magenta-
+0.4% Cu and red- +0.6% Cu)
20
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Table 4 Significant Drill Results Reported in 2022
Hole_ID
Coordinates (WGS84)
North
East
RL
Azim Dip
Hole
Depth
Intersection
Interval Copper Gold
Silver Molybdenum Cu Eq
From
To
(m)
(% Cu)
(g/t Au)
(ppm
Ag)
(ppm Mo)
(% Cu
Eq)*
CRP0047D
6813692
336497
1050
227
-60
1149
including
including
CRP0068D
6814344
335030
CRP0091
6814199
335058
CRP0094
6814200
335059
CRP0098
6814226
334956
955
962
962
975
225
27
209
174
-61
-69
-60
-60
679
106
150
282
CRP0134D
6813615
336269
1027
96
-76
1025
including
and including
CRP0132D
6813861
336310
958
170
-76
766
including
CRP0133
335692
6813977
985
150
-60
108
including
CRP0139
335446
6813981
969
115
-61
222
including
CRP0140
335695
6813975
CRP0150
335427
6813982
CRP0151
335540
6813865
985
968
992
25
-54
-75
70
109
169
CRP0148
6813870
335545
993
84
-61
including
or including
CRP0152
6813938
335679
CRP0153
6813959
335619
CRP0154
6813959
335619
CRP0158
6813926
335491
982
977
977
977
180
31
321
200
-60
-60
-60
-60
including
92
132
162
162
252
162
102
168
150
CRP0176
334831
6814172
953
143
-71
252
CRP0177
334735
6814270
CRP0178
334834
6814171
976
953
10
210
-60
-70
294
312
including
CRP0183
334935
6814283
960
257
-74
234
including
and
CRP0184
334814
6814328
957
199
-75
and
and
150
and
CRP0111D
6813884
335905
999
105
-80
1039
and
and
and
and
and
and
282
414
470
576
632
720
720
756
0
0
76
2
40
56
216
502
634
300
540
12
12
0
180
10
34
0
48
0
0
90
10
36
8
4
26
0
0
14
0
0
10
44
192
0
124
412
536
612
774
326
426
492
588
646
938
744
890
22
14
106
12
96
76
826
568
772
766
576
108
54
222
222
62
96
30
118
252
156
122
158
86
114
66
44
44
12
22
12
14
218
24
134
22
14
30
10
56
20
610
66
138
466
36
96
42
222
42
52
62
30
70
252
156
32
148
50
106
62
18
114
114
24
34
72
28
90
56
214
80
150
456
574
670
992
24
20
72
28
80
12
22
80
26
44
38
58
218
0.3
0.3
0.3
0.3
0.4
0.5
0.7
0.6
0.5
0.4
0.3
0.5
0.4
0.7
0.4
0.6
0.6
0.2
0.4
0.2
0.3
0.2
0.4
0.2
0.2
0.3
0.3
0.3
0.4
0.5
0.2
0.3
0.2
0.4
0.6
0.3
0.6
0.3
0.4
0.7
0.4
0.6
0.3
0.2
0.4
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.2
0.2
0.1
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.2
0.1
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.3
0.1
0.1
0.1
0.1
0.1
0.2
0.2
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.0
0.1
0.1
0.1
0.1
0.0
0.0
0.4
0.3
0.4
0.6
0.7
0.8
1.2
1.0
0.9
0.8
0.3
0.9
1.0
1.6
0.7
0.9
1.4
0.4
0.6
0.4
0.5
0.5
0.8
0.4
0.3
0.6
0.5
0.6
0.8
0.9
0.5
0.5
0.4
0.6
1.0
0.6
1.2
0.5
0.8
1.5
0.8
1.1
0.7
0.3
1.2
0.4
0.9
0.6
0.4
40
29
20
23
10
147
74
177
26
6
83
4
17
7
206
159
486
89
169
34
15
7
4
23
23
13
19
4
5
2
10
18
17
11
3
47
8
34
46
17
8
12
28
3
2
27
49
42
36
0.3
0.4
0.3
0.4
0.5
0.6
0.8
0.7
0.5
0.4
0.3
0.5
0.5
0.7
0.5
0.7
0.8
0.3
0.5
0.2
0.3
0.3
0.5
0.3
0.2
0.3
0.3
0.4
0.4
0.6
0.2
0.3
0.2
0.4
0.7
0.3
0.6
0.3
0.4
0.7
0.4
0.6
0.3
0.2
0.4
0.3
0.2
0.2
0.2
21
HOT CHILI Annual Report 2022
2 Review of
Operations (cont’d)
Hole_ID
Coordinates (WGS84)
North
East
RL
Azim Dip
Hole
Depth
Intersection
Interval Copper Gold
Silver Molybdenum Cu Eq
From
To
(m)
(% Cu)
(g/t Au)
(ppm
Ag)
(ppm Mo)
(% Cu
Eq)*
CRP0116D
6814035
335552
980
302
-80
and
CRP0122
6813663
336037
1016
300
CRP0136D
6813389
335926
1097
41
-70
-74
and
CRP0138D
6813204
336322
1092
26
-64
including
and
CRP0144D
6813453
336344
1043
51
-73
717
and
270
982
and
685
and
941
including
and including
or including
and including
CRP0146D
6813367
336126
1066
81
-79
1051
including
or including
CRP0155D
6813620
336273
1028
65
-76
1140
including
and including
CRP0162
6813453
336343
1043
CRP0163
6813455
336337
1043
CRP0164D
6813535
336309
1035
115
262
70
-80
-74
-72
115
262
934
including
CRP0167D
6813336
336528
1081
297
-78
906
including
CRP0170D
335837
6813464
1085
21
-59
840
including
and including
and including
CRP0150D
6813982
335427
968
109
-54
699
including
including
and including
CRP0161D
335586
6813726
1006
21
-59
708
including
and including
CRP0149D
6813791
335636
1009
-58
10
637
254
336
72
360
548
352
368
608
14
382
682
682
854
378
532
540
248
492
596
664
18
150
338
504
540
540
540
562
366
524
732
814
136
144
248
318
430
380
390
434
102
294
280
394
106
428
674
542
462
685
941
590
714
728
872
614
596
552
316
694
638
692
163
324
398
642
592
906
640
604
840
732
792
832
184
158
632
338
476
620
406
480
192
522
26
58
34
68
126
190
94
77
927
208
32
46
18
236
64
12
68
202
42
28
145
174
60
138
52
366
100
42
474
208
60
18
48
14
384
20
46
240
16
46
90
228
0.2
0.2
0.2
0.3
0.4
0.2
0.3
0.3
0.2
0.3
0.8
0.6
0.6
0.3
0.4
0.6
0.4
0.4
0.6
0.5
0.2
0.3
0.3
0.3
0.4
0.2
0.3
0.4
0.3
0.4
0.3
0.5
0.4
0.6
0.3
0.5
0.5
0.3
0.6
0.4
0.3
0.3
0.0
0.0
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.2
0.1
0.0
0.1
0.1
0.1
0.1
0.0
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.3
0.1
0.3
0.1
0.1
0.2
0.1
0.1
0.1
0.6
0.5
0.3
0.5
0.7
0.4
0.5
0.4
0.6
0.5
1.5
1.1
1.9
0.6
0.8
1.4
0.5
0.8
1.2
1.1
0.5
0.6
0.4
0.4
0.4
0.5
0.5
0.5
0.6
0.6
0.8
0.8
0.6
0.9
0.6
0.7
0.9
0.6
1.5
0.7
0.4
0.6
36
77
53
10
126
63
70
103
65
142
287
224
48
90
148
95
69
108
86
126
20
7
127
143
259
99
143
181
176
188
477
174
5
4
21
0
15
46
11
11
3
34
0.2
0.2
0.2
0.4
0.5
0.3
0.3
0.3
0.3
0.4
1.0
0.8
0.6
0.3
0.5
0.7
0.4
0.5
0.7
0.6
0.2
0.3
0.4
0.3
0.5
0.3
0.4
0.5
0.4
0.5
0.5
0.6
0.4
0.7
0.3
0.6
0.5
0.3
0.7
0.4
0.3
0.3
22
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
Hole_ID
Coordinates (WGS84)
North
East
RL
Azim Dip
Hole
Depth
Intersection
Interval Copper Gold
Silver Molybdenum Cu Eq
From
To
(m)
(% Cu)
(g/t Au)
(ppm
Ag)
(ppm Mo)
(% Cu
Eq)*
CRP0180D
6813470
336268
1059
-58
215
727
including
and including
CRP0186
6814053
335610
991
CRP0188
6813475
336454
1044
CORMET006
6813643
335979
1025
-61
-65
80
169
347
-75
100
204
1123
including
CORMET003
336123
6813372
1068
59
-60
1023
including
CORMET001
334736
6814269
976
74
-60
350
including
CORMET005
6813534
336171
1066
352
-69
952
CORMET002
6813867
335534
992
0
-60
370
including
and including
and including
CORMET004
6813819
336428
1094
218
-64
1126
including
and including
or including
PRF001
6821677
323055
837
264.7 -68.87
451
including
and including
and including
PRF003
6821398
322916
825
38.57 -60.24
326
including
including
including
PRF004
6821398
322916
825
270.87 -61.05
321
including
PRF005
6821989
323069
810
88.34 -79.14
504
0.3
0.3
0.6
0.3
0.4
0.9
1.6
0.8
1.1
1.1
0.6
1.4
0.8
0.9
1.1
1.3
1.6
0.6
1.0
1.8
0.9
0.6
1.1
0.7
1.1
130
194
246
26
14
246
414
276
574
86
222
344
232
470
662
690
690
0
24
136
222
548
644
800
878
34
57
116
176
20
24
236
236
290
290
26
37
81
162
270
314
370
210
260
100
62
1122
620
828
822
156
350
350
890
604
792
750
720
370
44
158
272
1032
700
1006
922
180
60
120
180
120
50
290
239
326
302
30
93
91
165
272
320
240
28
14
74
48
858
202
552
248
70
128
6
658
134
130
60
30
370
20
22
50
484
56
206
44
146
3
4
4
100
26
54
3
36
12
4
56
10
3
2
6
0.2
0.3
0.4
0.2
0.2
0.4
0.7
0.4
0.6
0.5
0.2
0.6
0.4
0.6
0.6
0.8
1.1
0.3
0.6
0.8
0.4
0.4
0.8
0.5
0.8
0.1
0.3
0.1
0.1
0.1
0.1
0.1
0.8
0.2
0.4
0.1
0.1
0.3
0.2
0.3
0.2
0.1
0.1
0.1
0.0
0.1
0.1
0.3
0.2
0.2
0.1
0.0
0.0
0.2
0.2
0.2
0.4
0.5
0.1
0.4
0.5
0.1
0.1
0.3
0.2
0.3
0.0
0.3
0.3
0.3
0.1
0.3
0.1
0.5
0.1
0.1
0.9
0.1
0.1
0.2
0.1
0.1
44
51
38
27
5
53
43
89
179
11
14
4
122
181
253
238
165
8
5
4
9
94
48
173
131
4
4
4
3
21
12
4
7
7
11
52
19
28
11
6
7
0.2
0.3
0.4
0.2
0.2
0.4
0.8
0.6
0.8
0.6
0.3
0.6
0.6
0.8
0.9
1.2
1.4
0.4
0.8
1.0
0.4
0.5
1.0
0.7
1.0
0.1
0.4
0.2
0.3
0.1
0.2
0.1
1.1
0.2
0.4
0.5
0.2
0.3
0.3
0.3
0.2
23
HOT CHILI Annual Report 2022
2 Review of
Operations (cont’d)
Hole_ID
Coordinates (WGS84)
North
East
RL
Azim Dip
Hole
Depth
Intersection
Interval Copper Gold
Silver Molybdenum Cu Eq
From
To
(m)
(% Cu)
(g/t Au)
(ppm
Ag)
(ppm Mo)
(% Cu
Eq)*
PRF006
6822161
323154
794
91.58 -59.49
373
including
including
and including
20
22
43
92
30
51
95
124
104
0.1
0.2
0.2
0.3
0.4
0.2
0.4
0.1
0.5
0.7
0.5
0.5
0.5
0.4
0.4
0.7
0.4
0.4
1.2
0.5
1.0
3.0
1.0
1.4
0.5
0.5
0.3
0.5
1.9
1.4
5.7
1.8
0.5
5.3
4.5
11.8
0.9
1.5
0.7
1.4
1.2
0.7
1.9
0.0
0.0
0.1
0.1
0.0
0.1
0.2
0.0
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.2
0.1
0.2
0.8
0.1
0.2
0.0
0.0
0.0
0.2
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.8
6.1
24.1
10.7
0.3
19.7
16.5
52.6
5.6
9.3
3.3
8.2
0.4
0.3
6.7
14
1
36
44
90
10
25
3
92
136
169
117
64
193
33
446
159
228
770
209
225
699
31
37
71
36
175
92
2.8
3.5
1.9
1.0
2.4
2.2
2.2
4.2
0.5
2.0
1.3
0.7
5.0
3.0
1.0
0.1
0.2
0.2
0.3
0.4
0.2
0.4
0.1
0.7
0.8
0.6
0.6
0.6
0.5
0.5
0.9
0.5
0.5
1.5
0.6
1.2
3.6
1.1
1.5
0.6
0.5
0.4
0.7
2.0
1.5
5.9
1.9
0.5
5.4
4.6
12.1
1.0
1.5
0.8
1.5
1.2
0.7
2.0
8
8
3
3
8
2
32
27
39
10
9
10
18
9
39
25
35
6
24
45
8
39
12
10
10
10
27
7
2
8
2
5
10
12
3
2
2
4
3
2
2
2
PRF008
6822349
323033
772
102.83 -58.43
432
including
PRF009
6822608
323120
MET025
6820931
323027
762
884
251.2
-59.5
90
-60
432
280
MET026
6822284
323426
816
90
-60
260
MET027
6821389
323082
858
90
-62
394.6
including
including
MET028
6822576
322851
790
270
-59
250.1
Including
MET025
6820931
323027
VAP0004
6823539
342823
VAP0007
6823597
342870
VAP0009
6823438
342909
VAP0011
6823456
342931
VALMET002
6823435
342914
884
946
942
947
947
952
90
90
90
90
90
90
-60
-60
-75
-60
-60
-60
280
260
48
200
150
70.3
or
Including
VAP0014
6823505
342957
VAP0015
6823551
342932
927
910
285.91 -56.72
104.81 -59.98
150
150
VAP0016
6823431
342920
945
130.31 -57.27
80
344
347
50
50
246
39
78
129
159
246
93
120
141
36
100
122
247
280
280
46
60
105
132
165
39
163
46
27
46
4
27
25
29
46
68
0
24
28
41
45
58
52
278
66
117
139
168
256
111
129
180
61
135
128
271
325
288
85
72
115
142
175
66
170
48
35
48
9
37
37
32
48
70
4
27
30
43
47
24
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
Hole_ID
Coordinates (WGS84)
North
East
RL
Azim Dip
Hole
Depth
VAP0017
6823545
342836
947
270.2 -59.84
220
SAP0042
6819270
342486
1204
89.42 -80.06
SAP0044
6818761
342437.9 1208.18 239.59 -59.88
Including
SAP0047
6818793
342448
1213
199.65 -75.04
SAP0048
6818509
342288
1233
329.3 -58.77
Including
SAP0049
6818601
342317
1235
14.85 -59.57
SAP0053
6818402
342314
1267
347.14 -59.85
SAP0054
6818545
342409
1217
239.37 -59.92
150
170
200
100
120
200
162
179
179
189
196
95
100
147
146
11
12
85
115
12
SAPMET001
6818913
342555
1178
329.66 -59.85
165.2
149
SAPMET002
6818824
342424.2
1210.6 254.9 -60.17
130
SAPMET003
6818628
342432
1192
320.72 -61.05
200
Including
54
74
133
140
175
Intersection
Interval Copper Gold
Silver Molybdenum Cu Eq
From
To
(m)
(% Cu)
(g/t Au)
184
181
191
198
97
104
150
151
18
14
88
119
14
150
60
95
146
142
177
5
2
2
2
2
4
3
5
7
2
3
4
2
1
6
21
13
2
2
1.5
3.2
0.9
1.0
0.8
1.7
1.2
1.0
1.5
3.9
1.3
1.4
0.7
0.8
1.3
1.6
1.3
3.5
2.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.1
0.2
0.0
0.2
0.1
0.1
0.0
0.0
0.0
0.1
0.0
(ppm
Ag)
7.8
16.4
3.7
4.2
2.5
3.9
4.1
2.4
4.8
12.9
3.3
6.4
4.1
0.6
3.9
3.2
3.2
7.6
3.4
(ppm Mo)
(% Cu
Eq)*
0.8
1.0
0.8
1.0
4.8
0.5
0.3
1.4
3.1
7.5
2.0
18.0
0.8
2.8
1.0
1.7
2.2
1.0
0.7
1.5
3.3
0.9
1.0
0.9
1.7
1.2
1.0
1.6
4.0
1.3
1.6
0.8
0.8
1.3
1.6
1.3
3.7
2.0
* Copper Equivalent (CuEq) reported for the drillhole intersections were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_
recovery) + (Mo ppm × Mo price per g/t × Mo_recovery) + (Au ppm × Au price per g/t × Au_recovery) + (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price
1% per tonne × Cu_recovery).
The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and Ag=20 USD/oz. The entirety of the intersection is
assumed as fresh. The recovery and copper equivalent formula for each deposit is:
Cortadera –
Productora –
Recoveries of 83% Cu, 56% Au, 83% Mo and 37% Ag.
CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t)
Recoveries of 84% Cu, 47% Au, 47% Mo and 0% Ag (not reported).
CuEq(%) = Cu(%) + 0.48 x Au(g/t) + 0.00026 x Mo(ppm)
San Antonio and Valentina – Recoveries of 88% Cu, 72% Au, 88% Mo and 69% Ag.
CuEq(%) = Cu(%) + 0.68 x Au(g/t) + 0.00047 x Mo(ppm) + 0.0076 x Ag(g/t).
For Cortadera and Productora, significant intersections are calculated above a nominal cut-off grade of 0.2% Cu. Where appropriate, significant intersections
may contain up to 30m down-hole distance of internal dilution (less than 0.2% Cu). Significant intersections are separated where internal dilution is greater than
30m down-hole distance. The selection of 0.2% Cu for significant intersection cut-off grade is aligned with marginal economic cut-off grade for bulk tonnage
polymetallic copper deposits of similar grade in Chile and elsewhere in the world. Down-hole significant intersection widths are estimated to be at or around
true-widths of mineralisation.
For San Antonio and Valentina, significant intersections are calculated above a nominal cut-off grade of 0.5% Cu, with a minimum estimated true thickness of
1.5m. These parameters are aligned with marginal economic cut-off grades for narrow, high-grade polymetallic copper deposits of similar grade in Chile and
elsewhere in the world. Down-hole significant intersection widths are estimated to be at or around 70 per cent of true-widths of mineralisation.
25
HOT CHILI Annual Report 2022
2 Review of
Operations (cont’d)
Table 5 Details of all Drillholes Completed at Cortadera in 2022
Hole ID
CRP0127D
CRP0131D
CRP0132D
CRP0133
CRP0134D
CRP0135
CRP0136D
CRP0137
CRP0138D
CRP0139
CRP0140
CRP0141
CRP0142
CRP0143
CRP0144D
CRP0145
CRP0147
CRP0148
CRP0150D
CRP0151
CRP0152
CRP0153
CRP0154
CRP0156
CRP0157
CRP0158
CRP0159
CRP0160
CRP0162
CRP0163
CRP0141D
CRP0146D
CRP0149D
CRP0155D
CRP0159D
CRP0161D
CRP0164D
CRP0165
CRP0166D
CRP0167D
CRP0168
CRP0169
North
6813533
6813815
6813861
6813977
6813615
6813389
6813389
6813393
6813204
6813981
6813975
6813882
6813876
6813871
6813453
6813728
6813465
6813870
6813982
6813865
6813938
6813959
6813959
6813323
6813903
6813926
6813903
6814014
6813453
6813453
6813882
6813367
6813791
6813620
6813916
6813726
6813535
6813807
6813810
6813336
6813805
6813467
Coordinates (WGS84)
East
336310
336421
336310
335692
336269
335930
335926
335925
336322
335446
335695
335901
336253
336256
336344
336355
335845
335545
335427
335540
335679
335619
335619
336526
335749
335491
335749
335763
336344
336344
335901
336126
335636
336273
335754
335586
336309
335749
335751
336528
335747
335839
RL
1,035
1,088
1,057
985
1,028
1,097
1,097
1,097
1,092
969
985
999
1,060
1,060
1,043
1,042
1,082
993
968
992
982
977
977
1,086
988
977
988
996
1,043
1,043
999
1066
1009
1028
989
1006
1035
1000
1000
1081
1000
1081
Hole
Depth
637
874
766
108
1,025
282
982
78
685
222
92
78
84
240
941
192
210
252
699
162
162
102
168
132
95
150
78
90
163
324
963
1051
637
1140
497
708
934
181
120
906
156
198
Azimuth
Dip
Prospect
98
250
170
150
96
10
41
4
26
115
25
227
227
221
51
147
35
84
109
169
177
31
321
249
21
199
219
211
115
262
227
81
10
65
219
21
70
198
13
297
276
53
-67
-80
-76
-60
-76
-80
-74
-60
-64
-61
-70
-83
-78
-75
-73
-82
-65
-61
-54
-75
-59
-60
-60
-74
-60
-60
-73
-65
-80
-74
-83
-79
-58
-76
-73
-59
-72
-61
-60
-78
-65
-67
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 2
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 2
Cuerpo 2
Cuerpo 2-3 Gap Zone
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 3
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 3
Cuerpo 3
Cuerpo 2-3 Gap Zone
Cuerpo 3
Cuerpo 2
Cuerpo 3
Cuerpo 2
Cuerpo 2
Cuerpo 3
Cuerpo 2-3 Gap Zone
Cuerpo 2-3 Gap Zone
Cuerpo 3
Cuerpo 2-3 Gap Zone
Cuerpo 3
26
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Hole ID
CRP0170D
CRP0171
CRP0172
CRP0173
CRP0174
CRP0175
CRP0176
CRP0177
CRP0178
CRP0179D
CRP0180D
CRP0181
CRP0182
CRP0183
CRP0184
CRP0185
CRP0186
CRP0187
CRP0188
CRP0189
PRF001
PRF002
PRF003
PRF004
PRF005
PRF006
PRF007
PRF008
PRF009
PRF010
PRF011
PRF012
PRF013
North
6813465
6813772
6813712
6813776
6813705
6813765
6814172
6814270
6814171
6813528
6813470
6814264
6814266
6814286
6814325
6813877
6814053
6813748
6813475
6813521
6821677
6821857
6821398
6821398
6821989
6822161
6822167
6822349
6822600
6821965
6821542
6827790
6827707
CORMET-001
6814264
CORMET-002
6813863
CORMET-003
6813362
CORMET-005
6813534
CORMET-006
6813643
CRD0190
PRF014
PRF015a
6814077
6823077
6823500
Coordinates (WGS84)
East
335840
335815
335889
335822
335886
335818
334831
334735
334834
336051
336268
334729
334740
334929
334819
335408
335610
335464
336454
336552
323055
323065
322916
322916
323069
323154
322987
323033
323120
322394
322597
320780
320415
334738
335533
336128
336171
335979
336148
321177
321202
RL
1082
999
1008
1000
1008
1000
953
976
953
1033
1058
976
976
961
952
982
991
1004
1045
1071
837
809
825
825
810
794
794
772
765
737
783
523
528
970
997
1066
1053
1025
1073
618
620
Hole
Depth
Azimuth
Dip
Prospect
840
106
176
91
134
111
252
294
312
646
727
200
312
234
150
188
100
204
204
264
451
477
326
321
504
373
282
432
432
217
165
300
300
350
370
1023
372
1123
908
312
18
42
296
19
21
201
201
143
10
210
226
215
268
201
257
199
23
169
170
347
181
265
269
39
271
88
92
103
92
251
265
60
180
90
74
0
59
352
80
157
30
240
-65
-85
-59
-60
-59
-60
-71
-60
-70
-61
-58
-59
-60
-74
-75
-74
-61
-65
-65
-80
-70
-71
-60
-61
-79
-59
-58
-59
-59
-59
-60
-60
-60
-60
-60
-60
-69
-75
-78
-60
-60
Cuerpo 3
Cuerpo 2-3 Gap Zone
Cuerpo 2-3 Gap Zone
Cuerpo 2-3 Gap Zone
Cuerpo 2-3 Gap Zone
Cuerpo 2-3 Gap Zone
Cuerpo 1
Cuerpo 1
Cuerpo 1
Cuerpo 3
Cuerpo 3
Cuerpo 1
Cuerpo 1
Cuerpo 1
Cuerpo 1
Cuerpo 2
Cuerpo 2
Cuerpo 2
Cuerpo 3
Cuerpo 3
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Productora Central
Francesca
Francesca
Cuerpo 1
Cuerpo 2
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
La Negrita
La Negrita
27
HOT CHILI Annual Report 2022 2 Review of
Operations (cont’d)
Hole ID
PRF015
PRF016
PRF017
MET025
MET026
MET027
MET028
CRP0191
CRP0192
CRP0193
CRP0194
CRP0195
CRP0196
North
6823501
6823500
6823998
6820931
6822284
6821389
6822576
6814024
6814104
6814021
6813389
6813193
6813068
CORMET-004
6813819
VAP0004
VAP0005
VAP0006
VAP0007
VAP0008
VAP0009
VAP0010
VAP0011
VAP0012
VAP0013
VAP0014
VAP0015
VAP0016
VALMET-001
VALMET-002
SAP0042
SAP0043
SAP0044
SAP0045
SAP0046
SAP0047
SAP0048
SAP0049
SAP0050
6823548
6823584
6823584
6823604
6823491
6823439
6823507
6823462
6823810
6823407
6823505
6823551
6823431
6823543
6823436
6819270
6818902
6818761
6818978
6818628
6818793
6818509
6818601
6819258
SAPMET-001
6818913
SAPMET-002
6818824
SAPMET-003
6818628
28
Coordinates (WGS84)
East
321202
321197
321397
323027
323426
323082
322851
334872
334632
334874
335930
336161
336258
336428
342835
342877
342875
342876
342903
342916
342967
342942
342896
342903
342957
342932
342920
342890
342915
342486
342555
342438
342509
342432
342448
342288
342317
342584
342555
342424
342432
RL
620
620
617
884
816
858
790
939
929
935
1096
1132
1153
1094
947
934
934
934
926
944
932
943
886
945
927
910
945
925
944
1204
1182
1208
1201
1192
1213
1233
1235
1157
1178
1211
1192
Hole
Depth
300
354
400
280
260
394.6
250.1
264
258
296
180
250
360
1126
260
41
250
48
200
200
80
150
200
156
150
150
5
28.7
70.3
150
162
170
85
250
200
100
120
160
165.2
130
200
Azimuth
Dip
Prospect
240
59
62
90
90
90
270
72
80
203
123
250
93
218
90
90
90
91
90
90
88
88
90
120
269
284
131
90
89
89
271
239
360
346
197
330
15
269
330
255
321
-60
-58
-60
-60
-60
-62
-59
-70
-60
-61
-82
-60
-75
-64
-61
-61
-74
-75
-60
-60
-80
-59
-59
-60
-60
-58
-57
-60
-60
-80
-80
-59
-61
-85
-76
-58
-60
-65
-60
-60
-61
La Negrita
La Negrita
La Negrita
Productora
Productora
Productora
Alice
Cuerpo 1
Cuerpo 1
Cuerpo 1
Cuerpo 3
Cuerpo 3
Cuerpo 3
Cuerpo 3
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
Valentina
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
San Antonio
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 3 Qualifying
Statements
JORC Compliant Ore Reserve Statement
Productora Open Pit Probable Ore Reserve Statement – Reported 2nd March 2016
Productora Total Reserve
Grade
Contained Metal
Payable Metal
Ore Type Reserve
Category
Oxide
Transitional
Probable
Tonnage Cu
Au
Mo
Copper
Gold
Molybdenum Copper
Gold
Molybdenum
(Mt)
24.1
20.5
(%)
(g/t)
(ppm)
(tonnes)
(ounces)
(tonnes)
(tonnes)
(ounces)
(tonnes)
0.43
0.08
0.45
0.08
49
92
103,000
59,600
91,300
54,700
1,200
1,900
55,600
-
61,500
24,400
-
800
122.4
0.43
0.09
163
522,500
356,400
20,000
445,800
167,500
10,400
Probable
166.9
0.43 0.09
138
716,800
470,700
23,100
562,900
191,900
11,200
Fresh
Total
Figures in the above table are rounded, reported to two significant figures, and classified in accordance with the Australian JORC Code 2012 guidance on Mineral
Resource and Ore Reserve reporting. Note 2: Price assumptions: Cu price - US$3.00/lb; Au price US$1200/oz; Mo price US$14.00/lb. Note 3: Mill average recovery
for fresh Cu - 89%, Au - 52%, Mo - 53%. Mill average recovery for transitional; Cu 70%, Au - 50%, Mo - 46%. Heap Leach average recovery for oxide; Cu - 54%.
Note 4: Payability factors for metal contained in concentrate: Cu - 96%; Au - 90%; Mo - 98%. Payability factor for Cu cathode - 100%.
JORC Compliant Mineral Resource Statements
Independent JORC Code Compliant Costa Fuego Mineral Resource Estimates, March 2022
Productora – Open Pit Mineral Resource
Productora Total Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.21% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
253
253
90
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.49
0.41
0.08
0.49
0.41
0.08
0.34
0.29
0.03
139
139
75
1,247,000
1,043,000
646,000
1,247,000
1,043,000
646,000
305,000
259,000
91,000
35,100
35,100
6,800
Cortadera – Open Pit and Underground Mineral Resource
Cortadera OP Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.21% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
323
323
53
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.44
0.34
0.12
0.66
0.44
0.34
0.12
0.66
0.32
0.25
0.08
0.46
53
53
62
1,411,000
1,102,000
1,284,000
6,808,000
1,411,000
1,102,000
1,284,000
6,808,000
168,000
132,000
135,000
778,000
17,100
17,100
3,300
Cortadera UG Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.30% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
148
148
56
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.51
0.39
0.12
0.78
0.51
0.39
0.12
0.78
102
102
750,000
750,000
0.38
0.30
0.08
0.54
61
211,000
578,000
578,000
170,000
559,000
3,702,000
559,000
3,702,000
139,000
971,000
15,000
15,000
3,400
Cortadera Total Resource
Grade
Contained Metal
Classification
Tonnes CuEq* Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(Mt)
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
Indicated
M+I Total
Inferred
471
471
108
0.46
0.36
0.12
0.69
0.46
0.36
0.12
0.69
0.35
0.28
0.08
0.50
68
68
62
2,161,000
1,680,000
1,843,000
10,509,000
2,161,000
1,680,000
1,843,000
10,509,000
379,000
301,000
274,000
1,749,000
32,200
32,200
6,700
29
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 3 Qualifying
Statements (cont’d)
San Antonio – Open Pit Mineral Resource
San Antonio Total Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.21% CuEq*)
Inferred
(Mt)
4.2
(%)
1.2
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
1.1
0.01
2.1
1.5
48,100
47,400
2,000
287,400
6
Costa Fuego Combined Open Pit and Underground Mineral Resource
Costa Fuego OP Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.21% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
576
576
147
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.46
0.37
0.10
0.37
0.46
0.37
0.10
0.37
0.35
0.30
0.05
0.23
91
91
68
2,658,000
2,145,000
1,929,000
6,808,000
2,658,000
2,145,000
1,929,000
6,808,000
520,000
436,000
220,000
1,062,000
52,200
52,200
10,000
Costa Fuego UG Resource
Grade
Contained Metal
Classification
Tonnes CuEq Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
(+0.30% CuEq*)
Indicated
M+I Total
Inferred
(Mt)
148
148
56
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.51
0.39
0.12
0.78
0.51
0.39
0.12
0.78
102
102
750,000
750,000
0.38
0.30
0.08
0.54
61
211,000
578,000
578,000
170,000
559,000
3,702,000
559,000
3,702,000
139,000
971,000
15,000
15,000
3,400
Costa Fuego Total Resource
Grade
Contained Metal
Classification
Tonnes CuEq* Cu
Au
Ag
Mo
Copper Eq
Copper
Gold
Silver
Molybdenum
Indicated
M+I Total
Inferred
(Mt)
725
725
202
(%)
(%)
(g/t)
(g/t)
(ppm)
(tonnes)
(tonnes)
(ounces)
(ounces)
(tonnes)
0.47
0.38
0.11
0.45
0.47
0.38
0.11
0.45
0.36
0.30
0.06
0.31
93
93
66
3,408,000
2,755,000
2,564,000
10,489,000
3,408,000
2,755,000
2,564,000
10,489,000
731,000
605,000
359,000
2,032,000
67,400
67,400
13,400
* Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu%
× Cu price 1% per tonne × Cu_recovery) + (Mo ppm × Mo price per g/t × Mo_recovery) + (Au ppm × Au price per
g/t × Au_recovery) + (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne × Cu_recovery).
The Metal Prices applied in the CuEq calculation were: Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb, and
Ag=20 USD/oz. Metallurgical recovery averages for each deposit consider Indicated + Inferred material and are
weighted to combine sulphide flotation and oxide leaching performance. The recovery and copper equivalent
formula for each deposit is:
Cortadera and San Antonio – Weighted recoveries of 82% Cu, 55% Au, 82% Mo and 37% Ag.
CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x Mo(ppm) + 0.0043 x Ag(g/t).
Productora –
Costa Fuego –
Weighted recoveries of 84% Cu, 47% Au, 47% Mo and 0% Ag (not reported)
CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x Mo(ppm).
Weighted recoveries of 83% Cu, 53% Au, 69% Mo and 23% Ag
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x Mo(ppm) + 0.0027 x Ag(g/t).
Reported on a 100% Basis - combining Mineral Resource Estimates for the Cortadera, Productora and San
Antonio deposits. Figures are rounded, reported to appropriate significant figures, and reported in accordance
with the JORC Code, CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.
Total Resource reported at +0.21% CuEq for open pit and +0.30% CuEq for underground.
30
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Competent Person’s Statement
Competent Person’s Statement
- Exploration Results
Exploration information in this Announcement is based
upon work compiled by Mr Christian Easterday, the
Managing Director and a full-time employee of Hot
Chili Limited whom is a Member of the Australasian
Institute of Geoscientists (AIG). Mr Easterday has
sufficient experience that 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 2012 Edition
of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’ (JORC
Code). Mr Easterday consents to the inclusion in the
report of the matters based on their information in the
form and context in which it appears.
Competent Person’s Statement
- Productora Mineral Resources
The information in this report that relates to Mineral
Resources for the Productora Project is based on
information compiled by Elizabeth Haren, a Competent
Person who is a Member and Chartered Professional of
the Australasian Institute of Mining and Metallurgy and
a Member of the Australian Institute of Geoscientists.
Elizabeth Haren is employed as a Director of Haren
Consulting, who was engaged by Hot Chili Limited.
Elizabeth Haren has sufficient experience that is
relevant to the style of mineralisation and type of
deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Elizabeth Haren consents to the
inclusion in the report of the matters based on her
information in the form and context in which it appears.
Competent Person’s Statement
- Productora Ore Reserves
The information in this report that relates to the
2016 Productora Project Ore Reserves is based on
information by Mr Carlos Guzmán, Mr Boris Caro,
Dr Leon Lorenzen and Mr Grant King. Mr Guzmán
is a Fellow of the AusIMM and a Registered Member
of the Chilean Mining Commission (RM – a
‘Recognised Professional Organisation’ within the
meaning of the JORC Code 2012) and a full-time
employee of NCL Ingenieria y Construcción SpA.
Mr Caro is a former employee of Hot Chili Ltd, and
s a Member of the AusIMM and a Registered Member
of the Chilean Mining Commission (RM – a ‘Recognised
Professional Organisation’ within the meaning of
he JORC Code 2012). Dr Lorenzen is a full time
employee of Mintrex Pty Ltd and is a Chartered
Professional Engineer, Fellow of Engineers Australia
and Fellow of the Australasian Institute of Mining and
Metallurgy (AusIMM).
NCL, Mintrex, and Amec Foster Wheeler (now Wood
PLC) were engaged on a fee-for-service basis to
provide independent technical advice and final audit
for the 2016 Productora Project Ore Reserve estimate.
Mr Guzmán, Mr Caro, Dr Lorenzen and Mr King have
sufficient experience that is relevant to the style of
mineralisation and type of deposits under consideration
and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting Exploration Results,
Mineral Resource and Ore Reserves’ (the JORC Code,
2012 edition). Mr Guzmán, Mr Caro, Dr Lorenzen
and Mr King consent to the inclusion in this report of
the matter based on their information in the form and
context in which it appears.
Competent Person’s Statement
- Cortadera Mineral Resources
The information in this report that relates to Mineral
Resources for the Cortadera Project is based on
information compiled by Elizabeth Haren, a Competent
Person who is a Member and Chartered Professional of
the Australasian Institute of Mining and Metallurgy and
a Member of the Australian Institute of Geoscientists.
Elizabeth Haren is employed as a Director of Haren
Consulting, who was engaged by Hot Chili Limited.
Elizabeth Haren has sufficient experience that is
relevant to the style of mineralisation and type of
deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Elizabeth Haren consents to the
inclusion in the report of the matters based on her
information in the form and context in which it appears.
Competent Person’s Statement
- San Antonio Mineral Resources
The information in this report that relates to Mineral
Resources for the San Antonio Project is based on
information compiled by Elizabeth Haren, a Competent
Person who is a Member and Chartered Professional of
the Australasian Institute of Mining and Metallurgy and
a Member of the Australian Institute of Geoscientists.
Elizabeth Haren is employed as a Director of Haren
Consulting, who was engaged by Hot Chili Limited.
Elizabeth Haren has sufficient experience that is
relevant to the style of mineralisation and type of
deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Elizabeth Haren consents to the
inclusion in the report of the matters based on her
information in the form and context in which it appears.
31
HOT CHILI Annual Report 2022 3 Qualifying
Statements (cont’d)
Forward Looking
Statements
This Announcement is provided on the basis that
neither the Company nor its representatives make
any warranty (express or implied) as to the accuracy,
reliability, relevance or completeness of the material
contained in the Announcement and nothing contained
in the Announcement is, or may be relied upon as a
promise, representation or warranty, whether as to
the past or the future. The Company hereby excludes
all warranties that can be excluded by law. The
Announcement contains material which is predictive in
nature and may be affected by inaccurate assumptions
or by known and unknown risks and uncertainties and
may differ materially from results ultimately achieved.
The Announcement contains “forward-looking
statements”. All statements other than those of
historical facts included in the Announcement are
forward-looking statements including estimates
of Mineral Resources. However, forward-looking
statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ
materially from future results expressed, projected or
implied by such forward-looking statements. Such risks
include, but are not limited to, copper, gold and other
metals price volatility, currency fluctuations, increased
production costs and variances in ore grade recovery
rates from those assumed in mining plans, as well
as political and operational risks and governmental
regulation and judicial outcomes. The Company
does not undertake any obligation to release publicly
any revisions to any “forward-looking statement”
to reflect events or circumstances after the date of
the Announcement, or to reflect the occurrence of
unanticipated events, except as may be required under
applicable securities laws. All persons should consider
seeking appropriate professional advice in reviewing the
Announcement and all other information with respect
to the Company and evaluating the business, financial
performance and operations of the Company. Neither
the provision of the Announcement nor any information
contained in the Announcement or subsequently
communicated to any person in connection with the
Announcement is, or should be taken as, constituting
the giving of investment advice to any person.
Competent Person’s Statement
- Costa Fuego Mineral Resources
The information in this report that relates to Mineral
Resources for the Costa Fuego Project is based on
information compiled by Elizabeth Haren, a Competent
Person who is a Member and Chartered Professional of
the Australasian Institute of Mining and Metallurgy and
a Member of the Australian Institute of Geoscientists.
Elizabeth Haren is employed as a Director of Haren
Consulting, who was engaged by Hot Chili Limited.
Elizabeth Haren has sufficient experience that is
relevant to the style of mineralisation and type of
deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Elizabeth Haren consents to the
inclusion in the report of the matters based on her
information in the form and context in which it appears.
Reporting of Copper Equivalent
* Copper Equivalent (CuEq) reported for the resource
were calculated using the following formula: CuEq% =
((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo
ppm × Mo price per g/t × Mo_recovery)+(Au ppm ×
Au price per g/t × Au_recovery)+ (Ag ppm × Ag price
per g/t × Ag_recovery)) / (Cu price 1% per tonne ×
Cu_recovery).
The Metal Prices applied in the CuEq calculation were:
Cu=3.00 USD/lb, Au=1,700 USD/oz, Mo=14 USD/lb,
and Ag=20 USD/oz. Metallurgical recovery averages
for each deposit consider Indicated + Inferred material
and are weighted to combine sulphide flotation and
oxide leaching performance. The recovery and copper
equivalent formula for each deposit is:
Cortadera and San Antonio – Weighted recoveries
of 82% Cu, 55% Au, 82% Mo and 37% Ag.
CuEq(%) = Cu(%) + 0.56 x Au(g/t) + 0.00046 x
Mo(ppm) + 0.0043 x Ag(g/t).
Productora – Weighted recoveries of 84% Cu, 47%
Au, 47% Mo and 0% Ag (not reported).
CuEq(%) = Cu(%) + 0.46 x Au(g/t) + 0.00026 x
Mo(ppm).
Costa Fuego – Weighted recoveries of 83% Cu,
53% Au, 69% Mo and 23% Ag.
CuEq(%) = Cu(%) + 0.52 x Au(g/t) + 0.00039 x
Mo(ppm) + 0.0027 x Ag(g/t).
Reported on a 100% Basis - combining Mineral
Resource Estimates for the Cortadera, Productora and
San Antonio deposits. Figures are rounded, reported
to appropriate significant figures, and reported in
accordance with the JORC Code, CIM and NI 43-101.
Metal rounded to nearest thousand, or if less, to the
nearest hundred.
Total Resource reported at +0.21% CuEq for open pit
and +0.30% CuEq for underground.
32
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 4 Corporate
Activities
The Company is very pleased to have welcomed
Glencore as a strategic investor, achieved its
secondary listing on the TSXV and welcomed
Dr Nicole Adshead-Bell as Independent Chairman.
9.99% shareholding
acquired by Glencore
On 2 August 2021 the Company announced a $14.0M
strategic investment by Glencore to acquire a 9.99% interest
in Hot Chili signaling strong support for the completion of a
feasibility study and development of Costa Fuego.
Glencore had the right to appoint a director to the board of
Hot Chili (see Glencore Nominee joins Hot Chili Board) and the
right to appoint members to a technical steering committee to
advise on operational matters. Furthermore, the companies
announced their intention to enter into an offtake agreement.
This agreement was announced to the market in March 2022.
(Copper Offtake Partnership for Costa Fuego next page).
A$5M SPP and A$35M
private placement
On 6 August 2021, the Company announced its intention to
raise approximately A$40M (before costs) by way of a A$5M
fully underwritten Share Purchase Plan and a A$35M private
placement, which included the 9.99% investment in Hot Chili
by mining major Glencore.
Under the share purchase plan, underwritten by Veritas
Securities, existing shareholders were offered 156,250,000
pre-consolidation new shares at A$0.032 per share. The
offer was twice oversubscribed and the Company applied its
discretion under the offer document to scale back applications.
The A$35M Placement saw the issue of 1,093,750,000
new fully paid ordinary shares in the Company (pre-share
consolidation) @ A$0.032 per share to raise A$35M. This
included the subscription by Glencore for A$13.93M of shares
to acquire a 9.99% stake in Hot Chili. Continued support was
received from Blue Spec (a related party of Murray Black, who
participated in the placement following shareholder approval).
92,500,000 Lead Manager Options (pre-consolidation)
were issued to the lead managers of the placement. The
options had an exercise price of 4.5c per share and expire
30 September 2024.
Funds from the Placement were used to secure the final
acquisition payment of US$15M for a 100% interest in the
Cortadera copper-gold discover in Chile and provide funding
for the Company leading into a resource upgrade and pre-
feasibility study for Costa Fuego.
Finally, 35M Performance Rights (pre-share consolidation)
were issued to new executive employees and lead consultants
under the Company’s employee incentive plan.
Repayment of Option
Fee to CMP
On 31 August 2021, Hot Chili announced that it had met its final
requirement in the process to remove the Compañía Minera del
Pacífico S.A. (CMP’s) Option to purchase an additional interest
in the Company’s Productora copper-gold project in Chile. In
May 2015 CMP had acquired a 20% interest in Productora
in exchange for providing critical infrastructure access rights
as well several lease holdings. In addition, CMP had paid a
US$1.5M reimbursable fee to purchase and additional interest
in Productora. Hot Chili has now repaid the US$1.5M options
and that payment has been accepted by CMP.
Executive Studies
Manager Appointed
On 2 September 2021, the Company confirmed the
appointment of Mr. John Hearne in the role of Executive
Studies Manager, responsible for driving the Costa Fuego Pre-
Feasibility Study and for managing the development group.
Mr. Hearne is a mining engineer with over 35 years’ experience
and significantly strengthens Hot Chili’s executive management
team by adding expertise in managing all facets of mining
projects from early-stage studies through to full scale
operations for both underground and open cut mines.
Glencore Nominee joins
Hot Chili Board
On 3 September 2021 the Company confirmed the appointment
of Glencore’s nominee Mr Mark Jamieson to the Board of
Hot Chili.
Mr Jamieson has 20+ years of technical and project
experience in open pit and underground operations, including
sub level and block cave mines with Newcrest, MMG and
Barrick Gold across Australia, Africa, South East Asia and
South America.
Acquisition of 100%
of Cortadera
On 23 September 2021 the Company announced the early
exercise of the option to acquire a 100% interest in the
Cortadera deposit. This completed the final tranche of a
total US$32M in payments since February 2019 to acquire
Cortadera from SCM Carola.
33
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 4 Corporate
Activities (cont’d)
Change of Share Registry
On 24 September 2021 the Company announced the transfer
of its register to Computershare Investor Services Pty Limited.
Resignation of Director
On 1 October 2021, the Company announced the resignation
of Alternate Director, Melanie Leighton.
Share Consolidation Ahead of
Dual Listing on Canada’s TSXV
A general meeting was held on 15 November 2021 to seek
shareholder approval to undertake consolidation of Shares
on issue on the basis that every fifty (50) shares on issue
be consolidated into one (1) share, with a corresponding
consolidation of all other securities on issue. The consolidation
provided a more effective capital structure of the Company and
a more appropriate share price for a wider range of investors,
particularly institutional investors, as the Company progressed
it application for listing on the TSXV. The motion was carried
with 99.68% of votes for the motion.
C$33.8M TSXV Initial
Public Offering
On 23 December 2021, following the filing of its final
prospectus in support of its application to list on the TSX
Venture Exchange (TSXV) on 21 December, the Company
announced the successful closing of its Canadian initial public
offering (IPO) and the issue of 21,567,286 shares at C$1.55
each. One Warrant receipt for every two new shares was
issued attached to the shares. The warrant receipts converted
into free attaching warrants with an exercise price of C$2.50
and an expiry date of 31 January 2024 on receipt
of shareholder approval on 31 January 2022.
The issue of 232,714 shares and the associated warrants to
Blue Spec Sondajes Chile SpA, a company associated with the
then Chairman Murray Black, were issued following shareholder
approval in a general meeting held on 31 January 2022.
Gross proceeds before costs of C$33.8M to be used to
upgrade the Cortadera Resource, advance the Costa Fuego
PFS and test high priority regional exploration targets.
1,259,789 Compensation options were issued to co-lead
underwriters, IA Capital Markets and Cormark Securities, as
part of the capital raising fees under the Prospectus filed with
the securities regulatory authorities in the provinces of Canada,
excluding Quebec in connection with the IPO on the TSXV.
On 4 January 2022, the TSXV accepted the Company’s
application to list and the shares began trading under the
ticker HCH.
On 3 March 2022, the 10,900,000 warrants issued, were listed
for trading on the TSXV (HCH.WT).
On 5 January 2022 the Company, in accordance with TSXV
policy, announced Harbor Access LLC was appointed as
Investor Relations consultants to the Company, and that
Independent Trading Group had been engaged to provide
market-making services.
Port Services Negotiations
commence
On 21 January 2022, the Company announced it had executed
a letter of intent with Puerto Las Losas SA (PLL) to negotiate a
port access and port services agreement for PLL’s facilities at
Huasco, approximately 50km west of Costa Fuego’s proposed
processing plant.
Under the terms of the Letter of Intent, PLL will finance a
study for port services using the existing Puerto Las Losas
dock for the shipment of copper concentrates and other
materials related to the future construction and operation of
Costa Fuego.
Appointment of New Chairman
On 1 March 2022, the Company announced the retirement of
Mr Murray Black as chairman.
Experienced mining and global capital markets professional,
Dr Nicole Adshead-Bell was appointed as the Company’s
independent, non-executive chairman, following her earlier
election to the Board in January.
Hot Chili and Glencore in
Copper Offtake Partnership
for Costa Fuego
On 3 March 2022 the execution of an offtake agreement for
future copper concentrate was announced. The agreement
covers 60% of copper concentrate from Costa Fuego for
8 years from start of commercial production and is on
arms-length commercially competitive benchmark terms.
This agreement retains optionality around future copper
concentrate marketing as 40% of the first 8 years of
production remaining uncommitted.
Hot Chili Upgrades to
OTCQX Market
On 7 April 2022 Hot Chili Ltd announced that following
acceptance of its application to join the US-based OTCQX®
market, its shares commenced trading under the ticker
OTCQX: HHLKF. By upgrading to the OTCQX from the
OTCQB® Venture Market where it has been trading since
6 May 2021 the Company positioned itself to enhance its
visibility and broaden its access to the extensive market of US
retail, high net worth and institutional investors, following the
TSXV listing earlier in the year.
OTC trading is non-dilutive to existing shareholders, as no
new shares are being issued to enable trading on the OTCQX
and Hot Chili’s shares will continue to trade on the Australian
Securities Exchange under the symbol HCH, and on The TSX
Venture exchange: under the symbol HCH.
34
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Convertible Notes Matured
Quarterly interest on convertible notes was paid to convertible
note holders in the form of shares, pursuant to the terms and
conditions of the convertible notes. The following issues of
shares in lieu of cash took place during the year:
• Provide ongoing support for two orphanages in Freirina
and Vallenar. This support has recently expanded
to includes partnering with a local sociological and
psychological health institution (associated with the
Universidad De Chile) to provide support
services in these areas.
Date
Interest due $
VWAP
Shares
12 July 2021
139,448
$0.03463
4,026,784
8 October 2021
139,617
$0.03808
3,666,369
ESG Framework
We also outline below some of the Company’s goals,
achievements and activity with respect to the formalisaton
of its ESG Framework.
•
Implement an ESG Board Committee chaired by our
chairman to ensure key focus on compliance with
best practise.
• Established an internal work group to report to the ESG
committee. This workgroup has set out a roadmap to
disclosure and has identified a Sustainability Report as
the best way of delivering this disclosure.
• Engaged Digbee ESG – the process of GAP analysis
is complete.
•
In the process of finalising the Company’s ESG policy
which will be published on our Website As part of our
engagement with Digbee, we are documenting the ESG
steps that Hot Chili has taken over the last decade and
documenting our area of strength and weaknesses across
the pillars of Environment, Social and Governance.
• Bring all our workstreams under the ESG committee
together in a published Sustainability Report.
Post Share Consolidation
17 January 2022
139,617
$1.70101
82,043
13 April 2022
121,961
$1.38965
87,904
30 June 2022
105,658
$0.92309
114,455
2,043,668 pre-consolidation shares and 547,751
post-consolidation shares were issued on conversion of
9,695 convertible notes and interest to conversion date during
the year.
On Final Maturity Date of 22 June 2022, the remaining 59,758
convertibles notes issued on 22 June 2017 and 8 September
2017 matured. The deemed price for the conversion of notes
was $0.92309 per share as per the terms and conditions of
the notes. 6,473,671 ordinary fully paid shares were issued to
holders of the convertible notes.
Options over Ordinary Shares
13,378,254 per-consolidation shares and 2,790,232 post
consolidation shares were issued on exercise of the equivalent
number of options during the year at an exercise price of
A$1.25 (A$0.025 pre-consolidation).
Our Role in the Community
Embedded in the Corporate Strategy of the Company is to
ensure its business activities are underpinned by commitment
to safety, environmental sustainability and strong community
and stakeholder partnership.
For the last decade Hot Chili has forged strong community
engagement and support and contributed positively to the
communities in the regions where the Company is based.
The Company has and will continue to:
• Recruit locally, wherever possible, to provide substantial
employment opportunities to the local population near
our mine, and to enhance the skills and knowledge of
the workforce.
• Preferentially procure local goods and services that will
also transform the livelihoods of the local residents.
• Support provided to communities living near our projects
during periods of flood, snow, heavy rain (access, repairs,
distribution of supplies).
• Strict compliance and good dialogue with local health
authorities to support the ongoing responses to the
Covid-19 pandemic in the local communities.
35
HOT CHILI Annual Report 2022 5 Directors’
Report
The Directors have pleasure in presenting their report,
together with the financial statements, for the year ended
30 June 2022 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:
Dr Nicole S Adshead-Bell
Independent Non-Executive Chairman (from 1 March 2022,
appointed Director on 5 January 2022)
Murray E Black
Non-Executive Chairman (retired 1 March 2022)
Christian E Easterday
Managing Director
Dr Allan Trench
Independent Non-Executive Director
Roberto de Andraca Adriasola
Non-Executive Director
George R Nickson
Independent Non-Executive Director
Mark Jamieson
Non-Executive Director (appointed 2 September 2021)
Melanie Leighton
Alternate for M Black (resigned 1 October 2021)
Directors have been in office since the start of the financial
year to the date of this report unless otherwise stated.
Directors’ Information
Dr Nicole Sheri Adshead-Bell
Independent Non-Executive Chairman
Dr Nicole Adshead-Bell is a geologist with a deep
understanding of the mining industry from over 26 years
bridging the gap between the technical, corporate (executive
and non-executive director), institutional investor and
investment banking segments of the business – within an
ESG framework.
Nicole resides in Canada and is currently a non-executive
director of Altius Minerals Corp. (TSX), Bravo Mining Corp.
(TSXV), Dundee Precious Metals Corp. (TSX) and Matador
Mining Ltd (ASX). Her career includes Managing Director and
CEO of ASX-listed Brazilian gold producer Beadell Resources
Ltd (prior to its acquisition by a Canadian mining company;
Director of Mining Research at Sun Valley Gold LLC (SEC
registered precious metals focussed fund); Managing Director,
Investment Banking, Haywood Securities Inc. (Canadian
independent investment dealer) and Mining Analyst covering
copper, zinc and uranium commodities and companies at
Dundee Securities Corp. (former Canadian independent
investment dealer). While at Haywood she
was involved in approximately 20 public transactions
including streaming, mergers, acquisitions and divestures
and raising approximately C$1.8Bn in equity/convertible
debenture financings.
More recently she established Cupel Advisory Corp. to focus
on investments and advisory services in the mining sector.
Over the past 10 years Nicole has held directorships with
several public companies including First Majestic Silver Corp.
(TSX/NYSE), Pretium Resources Inc. (TSX/NYSE, acquired
by Newcrest in 2022) and Dalradian Resources Inc. (TSXV,
acquired by Orion Mine Finance in 2018).
Dr Adshead-Bell has PhD in structural/economic geology from
James Cook University, Townsville, Australia where she also
completed her geology undergraduate and honours degrees.
Murray Edward Black
Non-Executive Chairman (retired 1 March 2022)
Mr Black has over 45 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 20 years’ experience in
the mineral exploration and mining industry and is a founding
director of Hot Chili, having led the Company since its public
listing in 2010. 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 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. Mr Easterday
has extensive experience 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
internationally. Mr Easterday is a Member of The Australian
Institute of Geoscientists. Mr Easterday has not held any
directorships in any public listed company in Australia in the
last three years.
Dr Allan Trench
Independent Non-Executive Director
Dr Trench is a geologist/geophysicist and business
management consultant with over 28 years experience across
a broad range of commodities. His minerals sector experience
spans strategy formulation, exploration, project development
and mining operations. Dr Trench holds degrees in geology,
a doctorate in geophysics, a Masters degree in Mineral
Economics and a Masters degree in Business Administration.
He currently acts or acted as independent director to Pioneer
Resources Ltd, commenced 5 September 2008, Enterprise
Metals Ltd, commenced 3 April 2012 and Emmerson
Resources Ltd, commenced 3 March 2015.
Dr Trench has previously worked with McKinsey & Company
as a management consultant, with Woodside Petroleum in
strategy development and with WMC both as a geophysicist
36
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Mark Jamieson
Non-Executive Director (appointed 2 September 2021)
Mr Jamieson is currently General Manager Resource
Engineering for Glencore’s global copper asset group
leading technical support and governance in geology, mine
engineering and asset optimisation for development projects,
operations and joint ventures.
Mark brings 20+ years of technical and project experience
in open pit and underground operations, including sub level
and block cave mines with Newcrest, MMG and Barrick Gold
across Australia, Africa, South East Asia and South America.
Mark holds a bachelor’s degree with honours in Geotechnical
Engineering from RMIT University, and a Masters of
Engineering Science in Mining Geomechanics from The
University of New South Wales. Mr Jamieson has not held any
directorships in any public listed company in Australia in the
last three years.
Melanie Leighton
Alternate Director for Murray E Black
(resigned 1 October 2021)
Ms Leighton holds a degree in Geology from the University
of Western Australia, is a Member of the Australian Institute
of Geoscientists, and has almost 20 years’ experience within
the mineral exploration industry. She has held project and
senior geologist roles with several Australian listed companies
including Hill 50 Gold, Harmony, and Terra Gold, gaining
practical and management experience within the areas of
exploration, mining and resource development. Ms Leighton
has extensive experience in mineral exploration and resource
development and acts in a project management role for Hot
Chili in regard to resource estimation, land management,
systems development and data integration and stakeholder
relations. Ms Leighton is currently a non-executive director of
Great Boulder Resources Ltd (appointed 6 April 2016).
and exploration manager. He is an Associate Consultant with
international metals and mining advisory firm CRU Group has
contributed to the development of CRU’s uranium practice,
having previously managed the CRU Group global copper
research team.
Dr Trench maintains academic links as a Professor at the
University of Western Australia (UWA) Business School
and also research professor at the Centre for Exploration
Targeting, UWA.
Roberto de Andraca Adriasola
Non-Executive Director
Mr de Andraca Adriasola is an executive with 25 years’
experience in the financial and mining business. He is currently
a Director of CAP S.A - one of the largest iron ore producers
and the largest steel maker in Chile. He also oversaw the
construction of the first desalination plant dedicated 100% to
producing water for mining companies in the north of Chile.
Mr de Andraca Adriasola has international finance experience
with Chase Manhattan Bank, ABN Amro and Citigroup,
working both in Chile and in New York. He holds an MBA from
the Adolfo Ibanez Business School of Chile. He is a director of
Puerto Los Losas, a port in the Atacama Region of Chile.
He was elected to the board of directors of CAP S.A. on
18 April 2017; prior to that date he held the position of Vice
President of Business Development.
George R Nickson
Independent Non-Executive Director
Mr. Nickson has over 36 years of global experience in the
mining industry, including 14 years based in Chile devoted to
copper exploration. His career includes work across a range
of base and precious metals, bulk commodities and energy.
He holds an honours degree in Geological Engineering and a
Masters degree in Business Administration.
Mr Nickson is currently engaged as an independent
consultant to the exploration sector, specializing in business
development, commercial advisory and business evaluations.
Prior to that he spent 16 years with BHP, where he worked
in a variety of senior technical, exploration management
and business development roles while based in Chile, Brazil
and Australia. He is a member of the Australasian Institute
of Mining & Metallurgy and the Prospectors and Developers
Association of Canada. Mr Nickson has not held any
directorships in any public listed company in Australia in the
last three years.
37
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Corporate Information
Hot Chili Limited is a Company limited by shares and is
domiciled in Australia.
Principal Activities
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.
The principal continuing activity of the consolidated entity is
mineral exploration.
Corporate Governance Statement
Results of Operations
The results of the consolidated entity after providing for
income tax and non-controlling interest for the year
ended 30 June 2022 was a loss of $7,146,653 (2021:
loss $9,644,817).
Dividends
No dividends were paid or declared since the end of the
previous year. The Directors do not recommend the payment
of a dividend.
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. It is
committed to administering its corporate governance structures
to promote integrity and responsible decision making.
The Company’s corporate governance structures, policies
and procedures are described in its Corporate Governance
Statement which is available on the Company’s website at
https://www.hotchili.net.au/about-us/corporate-governance-
procedures-policies/
Review of Operations
Refer to Operations Report in Section 2.
Significant Changes in the
State of Affairs
On 4 January 2022, the Company listed its ordinary shares
on the TSX Venture Exchange (“TSXV”), thereby becoming a
dual-listed entity. There were no other significant changes to
the Company’s state of affairs during the year or 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
The impact of the COVID-19 pandemic is ongoing and while
it has not significantly impacted the Group up to 30 June
2022, it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is
continually evolving and is dependent on measures imposed
by the Australian Government and other countries, such as
maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
There were no other significance events occurring after the
balance date that require reporting.
38
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Security Holding Interests of Directors
Reporting Date
Directors
Ordinary
Shares
Options Over
Ordinary Shares
Performance
Rights
Convertible
Notes
Direct
Interest
Indirect
Interest
Direct
Interest
Indirect
Interest
Direct
Interest
Indirect
Interest
Direct
Interest
Indirect
Interest
Dr Nicole S Adshead-Bell
30,000
48,453
Christian E Easterday
438,430
141,254
Dr Allan Trench
-
18,025
Roberto de Andraca Adriasola
130,000
George R Nickson
Mark Jamieson
-
-
-
-
-
-
-
-
-
-
-
-
120,000
-
-
-
-
-
-
-
-
-
-
-
400,002
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Unissued Shares under Option and Performance Rights Vested
There were 14,509,790 unissued ordinary shares under option as at the date of this report. The details of the options are as follows:
Listed Options
Unlisted Options
Expiry Date
No. Shares
Under Option
Exercise
Price
Expiry Date
No. Shares
Under Option
Exercise
Price
31 January 2024
10,900,000 CAD 2.50 (A$2.81)
30 November 2022
500,000
30 September 2024
1,850,001
$5.00
$2.25
28 January 2025
1,259,789 CAD 1.85 (A$2.08)
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the
Company or of any other body corporate or registered scheme.
There were also 1,900,008 performance rights at the date of this report, however, none of the vesting conditions of these
performance rights have been met and therefore none of the performance rights are exercisable at the date of this report.
Shares Issued on the Exercise of Options
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of unlisted options as
follows (there were no amounts unpaid on the shares issued):
Listed Options
Pre Share Consolidation
Post Share Consolidation
No. Shares
Issued on
Exercise
Amount Paid
per Share
No. Shares
Issued on
Exercise
Amount Paid
per Share
During the financial year
13,378,254
$0.025
2,790,232
$1.25
No listed options were exercised during or since the end of the financial year.
39
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Options and Performance Rights Lapsed/ Cancelled During the Year
During or since the end of the financial year, the following unlisted options expired:
Unlisted Options
Date Lapsed
During the financial year
19 December 2021
15 November 2021
20 May 2022
Pre Share Consolidation
Post Share Consolidation
No. Options
Expired
Exercise Price
No. Options
Expired
Exercise Price
-
15,000,000
-
-
$0.10
-
240,000
-
2,691,307
$3.50
-
$1.25
In addition, during or since the end of the financial year, the following performance rights were cancelled upon cessation of
employment:
. 15,000,000 performance rights were cancelled before the 50 to 1 share consolidation approved at General Meeting on
. 100,002 performance rights were cancelled after the 50 to 1 share consolidation.
15 November 2021.
No listed options expired during or since the end of the financial year.
Convertible Notes
There were no convertible notes on issue as at the date of this report, since the maturity of the convertible notes which occurred on
22 June 2022.
During or since the end of the financial year, the Company issued ordinary shares as a result of conversion and maturity of
convertible notes:
During the financial year
Issued on conversion
Issued on maturity
Pre Share Consolidation
Post Share Consolidation
No. Shares
Issued on
Conversion
Deemed Value
of Shares
Issued
No. Shares
Issued on
Conversion
Deemed Value
of Shares
Issued
2,043,668
$92,673
-
-
2,043,668
$92,673
547,451
6,473,671
7,021,122
$1,091,107
$5,975,800
$7,066,907
Quarterly interest payable on the convertible notes was settled by the issue of shares during or since the end of the financial year
as follows:
Pre Share Consolidation
Post Share Consolidation
No. Shares
Issued for
Interest
Deemed Value
of Shares
Issued
No. Shares
Issued for
Interest
Deemed Value
of Shares
Issued
During the financial year
7,693,153
$279,063
284,402
$369,615
Directors Benefits
Since 30 June 2022, 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.
Company Secretary and
Chief Financial Officer
Mr Lloyd Flint was the Company Secretary and Chief
Financial Officer of the Company until his resignation which
was effective on 31 January 2022. Ms Penelope Beattie was
appointed in Mr Flint’s place on 25 January 2022.
Ms Beattie is a Chartered Accountant with 20 years
experience in corporate and financial services globally.
She joined the Hot Chili team in November 2021.
40
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Indemnification and Insurance of
Directors and Officers
Indemnification and Insurance
of Auditor
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.
The consolidated entity has not, during or since the end of the
financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred
by the auditor.
During the financial year, the Company has not paid a
premium in respect of a contract to insure the auditor of the
Company or related entity.
Directors’ Meetings
The number of directors’ meetings attended by each of the Directors of the Company during the year were:
Director
Murray E Black1
Nicole Adshead-Bell2
Christian E Easterday
Dr Allan Trench
Roberto de Andraca Adriasola
George R Nickson
Mark Jamieson3
Melanie Leighton (Alternate for M Black)
1 Meetings attended prior to ceasing to be a director on 1 March 2022.
2 Meetings attended since appointment as director on 5 January 2022.
3 Meetings eligible to attend since appointment 3 September 2021.
Eligible
Meetings while
in office
Eligible
Meetings
attended
Committee
meetings
attended
7
4
8
8
8
8
5
-
7
4
8
8
5
8
5
-
-
1
-
2
2
2
-
-
Environmental Issues
The consolidated entity’s exploration and mining operations
are subject to environment regulation under the law of Chile.
No bonds are necessary in respect of the consolidated
entity’s tenement holdings.
The Directors advise that during the year ended 30 June 2022
no claim has been made by any competent authority that any
environmental issues, condition of license or notice of intent
has been breached.
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 2021 to
30 June 2022, the Directors have assessed that there are no
current reporting requirements but may be required to do so
in the future.
Occupational Health and Safety
Health and safety actions are framed within the “Quality,
Environment, Safety and Occupational Health Integrated
Policy” that states people´s health and safety is safeguarded
within the different fields of our activity. Hot Chili Limited
strictly follows the Chilean safety rules and communicates a
set of key performance indicators to the Chilean Mining Safety
Authority on a monthly basis. Health and safety activities
follow an action plan aimed to prevent and control different
forms of risk at Company operations. The plan covers specific
areas such as the Compliance of Legal and Other Standards,
Risk Assessment and Control, Occupational Health,
Emergency Response, Training, Incidents - Corrective and
Preventive Action, Management of Contractors and Suppliers,
Audit and Management Review.
Hot Chili Limited provides continuous training to enable
employees to perform their work safely and efficiently.
Training focuses on six areas where the risks are more evident
according to the nature of our operations: Safe Driving, Drilling
Platform Operations, Emergency Plans and Protection from
Ultraviolet Radiation, Dust and Noise Emissions.
In terms of safety performance, “Lost Time Incident Frequency
Rate (LTIFR*)” is the main indicator we monitor to make sure
our action plan remains effective and relevant. The LTIFR
during the last 24 months (until 30 June 2022) is 33.
*LTIFR: number of lost time injuries in accounting
period *1,000,000 /total thousands of hours worked in
accounting period
41
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Officers of the Company who are former
partners of RSM Australia Partners
There are no officers of the Company who are former partners
of RSM Australia Partners.
Auditors Independence Declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out
immediately after this directors’ report.
REMUNERATION REPORT (AUDITED)
The information provided in this remuneration report has
been audited.
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 practices:
• competitiveness and reasonableness
• acceptability to shareholders
•
transparency
The aggregate non-executive directors’ remuneration was
set at a maximum of $600,000 at a general meeting of
shareholders prior to the Company’s IPO in 2010.
The current base remuneration for other key management
personnel was last reviewed with effect from October 2021.
The consolidated entity’s policy regarding executive’s
remuneration is that the executives are paid a commercial
salary and benefits based on the market rate and experience.
Auditor
RSM Australia Partners continues in office in accordance with
section 327 of the Corporations Act 2001.
Proceedings on Behalf of Company
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 (including Independence Standards) set by
the Accounting Professional & Ethical Standards Board.
Non-audit services that have been provided by the entity’s
auditor, RSM Australia Partners, have been disclosed in Note 17.
Rounding of amounts
The consolidated entity is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, issued by the Australian Securities and
Investments Commission. Therefore the amounts contained
in this report and in the financial report have been rounded
to the nearest dollar in accordance with that Corporations
Instrument, unless otherwise stated.
42
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Key Management Personnel
The directors and other key management personnel of the consolidated entity during or since the end of the financial year were:
Non-Executive Directors
Position
Dr Nicole S Adshead-Bell (appointed 5 January 2022)
Independent Non-Executive Chairman (from 1 March 2022)
Murray E Black (retired 1 March 2022)
Non-Executive Chairman
Dr Allan Trench
Independent Non-Executive Director
Roberto de Andraca Adriasola
Non-Executive Director
George R Nickson
Independent Non-Executive Director
Mark Jamieson (appointed 3 September 2021)
Non-Executive Director
Executive Director
Christian E Easterday
Position
Managing Director
Other Key Management Personnel
Position
Melanie Leighton (resigned 1 October 2021)
Corporate Projects Manager / Alternate Director
Jose Ignacio Silva
John Hearne
Grant King
Country Manager and Chief Legal Counsel
Executive Studies Manager
Chief Operating Officer
Except as noted, the named persons held their current position for the whole of the financial year and since the end of the
financial year.
43
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Remuneration of Directors and Other Key Management Personnel
2022
Short-Term Benefits
Post-Employment
Benefits
Share-based
Payments
Name
Directors
Dr Nicole S Adshead-Bell1
Murray E Black2
Christian E Easterday
Dr Allan Trench
Roberto de Andraca
Adriasola
George R Nickson
Mark Jamieson3
Other Key
Management
Personnel
Melanie Leighton4
Jose Ignacio Silva
John Hearne
Grant King
Total
Salary and
Cash Fees
Other
Benefits
Superannuation
Performance
Rights5
$
$
$
$
Total
$
Performance
Related
%
22,500
47,333
400,000
42,000
45,990
45,990
-
603,813
-
-
-
-
-
-
-
-
-
4,733
40,000
4,200
-
-
-
-
-
22,500
52,066
-
-
75,607
515,607
14.7
-
-
-
-
46,200
45,990
45,990
-
-
-
-
-
48,933
75,607
728,353
10.4
62,500
245,021
252,083
242,500
802,104
1,405,917
125,000
-
-
-
125,000
125,000
6,250
-
25,208
24,250
55,708
(50,025)
143,725
86,429
331,450
235,115
512,407
86,429
353,179
357,948
1,340,761
104,642
433,555
2,069,114
(34.8)
26.1
45.9
24.5
26.7
21.0
1 Appointed 5 January 2022.
2 To date of retirement 1 March 2022.
3 Appointed 2 September 2021.
4 Resigned 1 October 2021. Ms Leighton was also given a redundancy payment of $125,000 on 30 September 2021 and expenses previously
recognised as part of share-based payments in previous years and related to unvested performance rights was reversed upon her resignation.
5 To date, no performance rights vesting conditions have been met and thus there have been no issues to directors or Key Management personnel.
Valuations disclosed in the tables above are based on accounting estimates using valuation models for each class of performance rights as outlined
in more detail in Note 17.
44
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 2021
Short-Term Benefits
Post-Employment
Benefits
Share-based
Payments
Salary and
Cash Fees
Other
Benefits
Superannuation
Performance
Rights2
$
$
$
$
Total
$
Name
Directors
Murray E Black
Christian E Easterday
Dr Michael Anderson1
Dr Allan Trench
Roberto de Andraca
Adriasola
George R Nickson
Other Key
Management
Personnel
Melanie Leighton
Jose Ignacio Silva
Total
66,267
353,067
9,607
39,200
42,924
42,924
553,989
226,667
235,088
461,755
1,015,744
-
-
-
-
-
-
-
-
-
-
-
Performance
Related
%
-
47.8
-
-
-
-
6,295
33,541
-
3,724
-
-
-
72,562
353,367
739,975
-
-
-
-
9,607
42,924
42,924
42,924
43,560
353,367
950,916
37.2
21,533
215,000
463,200
-
466,737
701,825
21,533
65,093
681,737
1,165,025
1,035,104
2,115,941
46.4
66.5
58.5
48.9
1 To date of resignation 4 November 2020.
2 To date, no performance rights vesting conditions have been met and thus there have been no issues to directors or Key Management personnel.
Valuations disclosed in the tables above are based on accounting estimates using valuation models for each class of performance rights as outlined in
more detail in Note 17.
Key Management Personnel Interests in the Shares, Options, Performance Rights
and Convertible Notes of the Company
Shares
The number of shares in the Company held during the financial year, and up to 30 June 2022, by each Key Management Personnel
of Hot Chili Limited, including their personally related parties, is set out below. There were no shares granted as compensation
during the year.
There is currently no short term incentives program. The long-term incentives (‘LTI’) include long service leave and performance
rights. These LTIs may be granted to eligible employees both to reward employees for performance in the realisation of strategic
outcomes and long term-growth in shareholder wealth and to provide recognition for contribution. The terms of the performance
rights seek to align employees and shareholder interests by:
1. Focusing on the creation of shareholder value and returns;
2. Focusing on the delivery of key strategic goals of the Company;
3. Attract employees with knowledge to support and develop the Company’s ongoing business and activities; and
4. by seeking to retain competent and experienced individuals in key roles.
45
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Balance at
the Start of
the Year
Granted as
Compen-
sation
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-
dation
(50 to 1)
Received on
Exercise of
Options
Other
Changes
during the
Year
Balance at
the End of
the Year
2022
Directors
Dr Nicole S Adshead-Bell
-
Murray E Black
216,044,652
Christian E Easterday
27,082,371
Dr Allan Trench
257,653
Roberto de Andraca
Adriasola
George RNickson
Mark Jamieson
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
John Hearne
Grant King
Total
6,000,000
-
-
249,384,676
180,000
7,350,734
-
578,572
8,109,306
257,493,982
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94,176,6791
(304,016,904)
201,705
(26,738,392)
-
-
-
78,453
78,453
(6,204,427)2
-
34,000
579,684
201,705
(450,170)
337
8,500
18,025
-
-
-
(5,880,000)
-
-
-
-
-
10,000
130,000
-
-
-
-
94,580,089 (337,085,466)
337
(6,073,474)
806,162
(180,000)3
-
201,485
(7,401,174)
100,000
(98,000)
-
(567,000)
121,485
(8,066,174)
-
-
-
-
-
-
-
-
-
-
-
151,045
2,000
11,572
164,617
94,701,574
(345,151,640)
337
(6,073,474)
970,779
1 Consists of 93,750,000 shares acquired by Murray Black through a participation in a placement approved by shareholders, and 426,679 shares
issued in lieu of interest from convertible notes, pre share consolidation.
2 Represents balance held by M Black on retirement. These are no longer required to be disclosed in the balance held by KMP at the end of the
financial year. The balance deducted is net of 232,714 shares acquired by Murray Black through the Company’s Canadian initial public offering,
4,575 shares issued in lieu of interest from convertible notes; bringing Murray Black’s share balance to 6,441,716 before his date of retirement on
1 March 2022.
3 Represents balance held by Melanie Leighton on her date of resignation on 1 October 2021, pre share consolidation.
46
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Balance at
the Start of
the Year
Granted as
Compen-
sation
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-
dation
(50 to 1)
Received on
Exercise of
Options
Other
Changes
during the
Year
Balance at
the End of
the Year
2021
Directors
Murray E Black
153,154,734
Christian E Easterday
27,082,371
Dr Michael Anderson
Dr Allan Trench
Roberto de Andraca
Adriasola
George R Nickson
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
-
257,653
6,000,000
-
186,494,758
180,000
9,350,734
9,530,734
Total
196,025,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,889,918 216,044,652
-
-
-
-
-
27,082,371
-
257,653
6,000,000
-
62,889,918 249,384,676
-
180,000
(2,000,000)
7,350,734
(2,000,000)
7,530,734
60,889,918 256,915,410
Options
Directors and key management personnel holdings of options are as follows:
Balance at
the Start of
the Year
Granted as
Compen-
sation
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-
dation
(50 to 1)
Received on
Exercise of
Options
Other
Changes
during the
Year
Balance at
the End of
the Year
2022
Directors
Murray E Black
-
Christian E Easterday
6,000,000
Dr Allan Trench
16,803
6,016,803
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
Total
3,000,000
3,609,830
6,609,830
12,626,633
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,880,000)
(120,000)
(16,466)
(337)1
(5,896,466)
(120,337)
(3,000,000)2
-
-
-
(3,537,633)
(3,000,000)
(3,537,633)
(72,197)3
(72,197)
(3,000,000)
(9,434,099)
(192,534)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 These options were exercised by Dr Trench shortly before their expiry.
2 Represents balance held by Melanie Leighton on her date of resignation on 1 October 2021, pre share consolidation.
3 Mr Easterday’s and Mr Silva’s options expired on 20 May 2022.
47
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Balance at
the Start of
the Year
Granted as
Compen-
sation
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-
dation
(50 to 1)
Received on
Exercise of
Options
Other
Changes
during the
Year
Balance at
the End of
the Year
2021
Directors
Murray E Black
-
Christian E Easterday
6,000,000
Dr Allan Trench
16,803
6,016,803
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
Total
3,000,000
3,609,830
6,609,830
12,626,633
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
16,803
6,016,803
3,000,000
3,609,830
6,609,830
12,626,633
1 Indicates net change. 16,666,667 free options exerciseable at 2.5c per share attaching to a placement of shares were issued 4 September 2020
pursuant to shareholder approval and exercised on 3 June 2021.
Performance Rights
Directors and key management personnel holdings of performance rights are as follows:
Balance at
the Start of
the Year
Granted as
Compen-
sation
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-dation
(50 to 1)
Other
Changes
during the
Year
Balance at
the End of the
Year
2022
Directors
Christian E Easterday
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
John Hearne
Grant King
20,000,000
20,000,000
15,000,000
15,000,000
-
-
-
-
-
15,000,000 2
15,000,000
-
-
-
(19,599,998)
(19,599,998)
(15,000,000)1
-
-
-
(14,700,000)
(14,700,000)
-
(14,700,000)
-
-
-
-
-
-
-
-
400,002
400,002
-
300,000
300,000
300,000
900,000
1,300,002
Total
65,000,000
15,000,000
(15,000,000)
(63,699,998)
45,000,000
15,000,000
(15,000,000)
(44,100,000)
1 Represents balance held by Melanie Leighton on her date of resignation on 1 October 2021, pre share consolidation.
2 15,000,000 performance rights granted on 2 September 2021 with total fair value of $450,500. These performance rights were not vested during the
financial year and share based payment expense of $235,115 was recognised in FY22.
48
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 Balance at
the Start of
the Year
Granted as
Compen-
sation1
Other
Changes
(pre Share
Consoli-
dation)
Share
Consoli-
dation
(50 to 1)
Other
Changes
during the
Year
Balance at
the End of
the Year
-
-
-
-
-
-
20,000,000
20,000,000
15,000,000
15,000,000
30,000,000
50,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000,000
20,000,000
15,000,000
15,000,000
30,000,000
50,000,000
2021
Directors
Christian E Easterday
Key Management
Personnel
Melanie Leighton
Jose Ignacio Silva
Total
1 Refer to Note 17(a) for details of the issue of performance rights.
Convertible Notes
Directors and key management personnel holdings of convertible notes are as follows:
2022
Directors
Murray E Black
Total
2021
Directors
Murray E Black
Total
Balance at the
Start of the Year
Granted as
Compensation
Issued During
the Year
Other Changes
during the Year
Balance at the
End of the Year
3,834
3,834
-
-
-
-
(3,834)1
(3,834)
-
-
Balance at the
Start of the Year
Granted as
Compensation
Issued During
the Year
Other Changes
during the Year
Balance at the
End of the Year
3,834
3,834
-
-
-
-
-
-
3,834
3,834
1 Represents balance held by Murray Black on his date of retirement on 1 March 2022. In addition, the convertible notes matured on 22 June 2022,
post Mr Black’s retirement.
At the date of this report, the Company had no employees that fulfilled the role of key management personnel, other than those
disclosed above.
49
HOT CHILI Annual Report 2022
5 Directors’
Report (cont’d)
Service Contracts
Mr Christian E Easterday
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 receives an annual salary
of $400,000, plus superannuation at the rate of 10.0% and
other entitlements during the year. Superannuation rates
increased to 10.5% post year-end from 1 July 2022.
Mr Easterday’s remuneration is subject to annual review.
Term and Termination
Mr Easterday was employed for an initial term of 3 years which
commenced on 9 October 2013. During that initial term, the
executive service agreement stipulated that at least 6 months
before the end date of the initial term, either party may give
notice that the agreement will terminate on the end date.
After the initial term, the agreement continues 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 or wrongdoing by Mr Easterday.
Termination Entitlements
Upon termination of the agreement, Mr Easterday will be
entitled to termination benefits in accordance with Part 2D.2 of
the Corporations Act 2001. 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 the Company’s
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.
Mr José Ignacio Silva
The Company, through one of its Chilean subsidiary entities,
Sociedad Minera El Águila SpA, entered into a labour
agreement with Mr José Ignacio Silva, as Country Manager for
Chile and Chief Legal Counsel of the Company. José Ignacio
Silva is a Key Management Personnel.
Remuneration
Under such agreement, Mr. Silva receives an annual salary
of $250,000 before any legal and voluntary reductions.
The superannuation is included in such amount. Mr. Silva’s
remuneration is subject to annual review.
Term and Termination
Mr Silva commenced employment with Sociedad Minera El
Águila SpA on 1 July 2011. Either party may give notice that
the agreement will terminate with 1 months’ notice.
Such agreement will continue until either Mr Silva terminates
by giving the Company 1 months’ notice or the Company
terminates by giving Mr Silva 1 months’ notice or payment
in lieu of notice up to an amount equivalent to 1 months’
remuneration.
The Company may terminate the agreement summarily for any
serious incidents or wrongdoing by Mr Silva.
Termination Entitlements
Upon termination of the agreement, Mr. Silva will be entitled
to termination benefits in accordance with the Chilean Labour
Code, including any amount of payment in lieu of notice, and
a monthly salary per year of work in the Sociedad Minera El
Águila SpA and the Company, unless other benefits have
first been approved by the Company’s shareholders in a
general meeting.
Post Termination Restraints
Mr Silva is not subject to any post termination non-competition
restraints.
Ms Melanie Leighton
The Company entered into an executive service agreement
with Ms Melanie Leighton, as Corporate Projects Manager of
the Company.
Remuneration
Under the agreement, Ms Leighton received an annual salary
of $250,000, plus superannuation at the rate of 10.0% and
other entitlements. Ms Leighton’s remuneration was subject to
annual review.
Term and Termination
Ms Leighton was employed on a permanent part-time basis.
During the year, the Company provided 4 weeks’ notice (in
accordance with the agreement) and offered a redundancy to
Ms Leighton. Ms Leighton resigned as alternate director of the
Company following her redundancy on 1 October 2021.
Termination Entitlements
Ms Leighton was given a $125,000 redundancy payment by
the Company on 30 September 2021, immediately prior to her
resignation day.
Mr John Hearne
The Company entered into an executive services agreement
agreement with Mr John Hearne, as Executive Studies
Manager for Hot Chili Limited. John Hearne is a Key
Management Personnel.
Remuneration
Under the agreement, Mr Hearne receives an annual salary
of $275,000, plus superannuation at the statutory rate of and
other entitlements. Remuneration is subject to annual review.
Under the terms of the contract, 15,000,000 performance
rights (300,000 post-consolidation performance rights) are
granted to the executive pursuant to the incentive plan of
the Company.
Term and Termination
Mr Hearne commenced employment with Hot Chili Limited
on 3 August 2021. Either party may give notice that the
agreement will terminate with 4 weeks’ notice.
Such agreement will continue until either Mr Hearne
terminates by giving the Company 4 weeks’ notice or the
Company terminates by giving Mr Hearne 4 weeks’ notice
or payment in lieu of notice up to an amount equivalent to 4
weeks’ remuneration.
50
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 The Company may terminate the agreement summarily for
any serious incidents or wrongdoing by Mr Hearne.
Post Termination Restraints
Mr Hearne is subject to post termination non-competition
restraints up to a maximum of 6 months.
Mr Grant King
Such agreement will continue until either Mr King terminates
by giving the Company 3 months’ notice or the Company
terminates by giving Mr King 3 months’ notice or payment
in lieu of notice up to an amount equivalent to 3 months’
remuneration.
The Company may terminate the agreement summarily for
any serious incidents or wrongdoing by Mr King.
The Company entered into an executive services agreement
agreement with Mr Grant King, as Chief Operating Officer for
Hot Chili Limited. Grant King is a Key Management Personnel.
Post Termination Restraints
Mr King is subject to post termination non-competition
restraints up to a maximum of 6 months.
Remuneration
Under the agreement, Mr King receives an annual salary of
$250,000, plus superannuation at the statutory rate of and
other entitlements. Remuneration is subject to annual review.
(review from time to time). Under the terms of the contract,
15,000,000 performance rights (300,000 post-consolidation
performance rights) are granted to the executive pursuant to
the incentive plan of the Company.
Term and Termination
Mr King commenced employment with Hot Chili Limited on
7 September 2020. Either party may give notice that the
agreement will terminate with 3 months’ notice.
Key management personnel have no entitlement
to termination payments in the event of removal
for misconduct.
Non-Executive Directors
Each of the Non-Executive Directors have signed letters of appointment. The key features of the respective
appointments are:
Term
Remuneration
Dr Nicole S
Adshead-Bell
Murray E
Black
Dr Allan
Trench
N/A
$3,750 per
month
N/A
$6,508 per
month
inclusive of
superannuation
N/A
$3,850 per
month
inclusive of
superannuation
Roberto de
Andraca
Adriasola
N/A
$3,833 per
month
George R
Nickson
N/A
$3,833 per
month
Mark
Jamieson
N/A
-
Termination Benefits
Nil
Nil
Nil
Nil
Nil
Nil
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2022 are summarised below:
Other income
Expenses
EBITDA
EBIT
Loss after income tax
2022
$
2,520,701
(9,799,457)
(4,780,485)
(4,870,519)
(7,278,756)
2021
$
2020
$
60,465
3,289,606
(9,304,467)
(4,555,219)
7,525,912
7,530,689
680,324
671,646
(9,744,002)
(1,265,613)
2019
$
238,112
(4,470,482)
(2,184,855)
(2,196,264)
(4,232,370)
2018
$
140,513
(4,151,069)
(2,419,012)
(2,431,564)
(4,010,556)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic earnings/(loss) per share
(cents per share)
2022
0.75
(7.49)
20211
1.70
(17.37)
20201
0.85
(3.50)
20191
1.56
20181
1.34
(23.50)
(32.50)
1 Updated to reflect post consolidation share price and basic earnings/(loss) per share amounts.
51
HOT CHILI Annual Report 2022 5 Directors’
Report (cont’d)
Other Transactions with Directors, Other Key Management Personnel and Their
Related Parties
The following transactions occurred with directors, other key management personnel and their related parties during the current
financial year:
Quarterly Interest Paid on Convertible Notes Payable
Quarterly interest accruing on the convertible notes payable to Blue Spec Drilling Pty Ltd of $15,565 pre-retirement of Mr Black
for the year ended 30 June 2022 was settled by the issue of shares and cash as follows:
Pre-Retirement (Settled by Shares)
Pre Share
Consolidation
Post Share
Consolidation
Total Settled
Pre-Retirement
Value of interest settled
No. of shares issued (post consolidation equivalent)2
$7,783
4,0881
$7,782
4,575
$15,565
8,663
1 The number of shares stated here is the post share consolidation equivalent of 204,388 shares which were issued, pre the 50 to 1 share
consolidation, to Blue Spec Drilling Pty Ltd to settle the interest accruing on the convertible notes payable.
2 Stated at the number of total shares, equivalent post share consolidation.
During the year ended 30 June 2021, quarterly interest accruing on the convertible notes payable to Blue Spec Drilling Pty Ltd of
$30,877 was settled by the issue of 15,898 (post share consolidation equivalent of 794,912 shares).
No interest on convertible notes was payable to Blue Spec Drilling Pty Ltd at 30 June 2022. The interest payable at 30 June 2021
of $7,698 was settled by the issue of 4,446 (post share consolidation equivalent of 222,291 shares) on 12 July 2021.
The shares were issued to Blue Spec Drilling Pty Ltd, a company associated with Mr Murray Black, a director (retired 1 March
2022), following shareholder approval.
Maturity of Convertible Notes
On 30 June 2022, the Company issued 415,344 shares on final maturity of the 3,834 convertible notes (with a face value of
$100 each, totalling $383,400) which had been issued to Blue Spec Drilling Pty Ltd on 8 September 2017. The deemed price for
the conversion of the notes was $0.92309 per share as per the terms and conditions of the notes.
The shares were also issued to Blue Spec Drilling Pty Ltd, a company associated with Mr Murray Black, a director, following
shareholder approval. The shares were issued post Mr Black’s retirement on 1 March 2022.
Other Fees and Charges
Blue Spec Sondajes Chile Limitada, a company in which Mr Murray Black is a director, charged a total of $12,948,500 to
the consolidated entity for the period from 1 July 2021 to just prior to Mr Black’s retirement on 1 March 2022 (2021 full year
$10,379,605), for rent and drilling services at Cortadera. Of this amount, $2,466,497 was owing at the date of his retirement (30
June 2021: $3,718,982) and was paid in April 2022.
MRA Consulting Pty Ltd, a company associated with Dr Anderson, a previous director, was paid $9,607 in directors and
consulting fees during the previous financial year. There were no amounts payable as at 30 June 2021. No amounts were paid or
were payable to Dr Anderson or to MRA Consulting Pty Ltd during the current financial year.
Commercial Terms
All transactions were made at commercial terms.
End of Remuneration Report
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Christian E Easterday
Managing Director
30 September 2022
Perth, WA
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HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
6 Auditors’ Independence
Declaration
53
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Hot Chili Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) Any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS Perth, WA AIK KONG TING Dated: 30 September 2022 Partner 7 Auditors’
Report
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
HOT CHILI LIMITED
Opinion
We have audited the financial report of Hot Chili Limited (Company) and its subsidiaries (Group), which comprises
the statement of financial position as at 30 June 2022, the statement of profit or loss and other comprehensive
income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the audit of the financial report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
54
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed this matter
Exploration and Evaluation Expenditure
Refer to Note 10 in the financial statements
The Group has capitalised a significant amount of
exploration and evaluation expenditure, with a
carrying value of $207,436,542 as at 30 June 2022.
We considered this to be a key audit matter due to the
significant management
in
assessing the carrying value in accordance with AASB
6 Exploration for and Evaluation of Mineral Resources,
including:
judgment
involved
• Determination of whether expenditure can be
associated with finding specific mineral resources,
and the basis on which that expenditure is
allocated to an area of interest;
• Assessing whether any indicators of impairment
are present and if so, judgement applied to
determine and quantify any impairment loss; and
• Assessing whether exploration activities have
reached a stage at which the existence of
economically
reserves may be
determined.
recoverable
Our audit procedures included:
• Assessing the Group’s accounting policy for
compliance with Australian Accounting Standards;
• Assessing whether the rights to tenure of those
areas of interest are current;
• Testing that the option agreement payments are
up to date;
• Testing on a sample basis of additions
to
the
supporting documentation and checking
amounts capitalised during
in
compliance with the Group’s accounting policy and
relate to the area of interest;
the year are
• Enquiring with management and reading budgets
and other documentation as evidence that active
and significant operations in, or relation to, the
area of interest will be continued in the future;
• Assessing
and
evaluating management’s
assessment of whether indicators of impairment
existed at the reporting date;
of
the
Board Minutes,
other
• Through discussions with the management and
ASX
reading
relevant
announcements
documentation,
management’s
assessing
determination that exploration activities have not
yet progressed to the stage where the existence or
otherwise of economically recoverable reserves
may be determined; and
and
• Assessing the appropriateness of the disclosures
in the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2022, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
55
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
7 Auditors’
Report (cont’d)
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description
forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Hot Chili Limited, for the year ended 30 June 2022, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2022
AIK KONG TING
Partner
56
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
8 Directors’
Declaration
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2022
and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Director
Christian E Easterday
Managing Director
Dated this 30th day of September 2022
Perth
57
HOT CHILI Annual Report 2022 9 Statement of
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
Statement of Profit or Loss & Other Comprehensive Income
Interest income
Gain on revaluation of derivative liability
Other income
Depreciation
Convertible notes compliance
Corporate fees
Legal and professional
Employee benefits expense
Administration expenses
Accounting fees
Travel costs
Other expenses
Foreign exchange loss
Share based payments
Loss on revaluation of derivative liability
Finance costs
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Total Comprehensive Loss
Loss attributable to:
Non-controlling interests
Owners of Hot Chili Limited
Note
4
5
5
17
5
6
Consolidated Entity
2022
$
3,688
2,425,593
91,420
2,520,701
(90,034)
(48,500)
(338,756)
(872,171)
2021
$
1,065
-
59,400
60,465
(4,777)
(35,000)
(207,820)
(68,366)
(2,698,806)
(1,549,884)
(471,793)
(266,326)
(380,604)
(979,169)
(466,471)
(774,902)
-
(2,411,925)
(7,278,756)
-
(460,143)
(251,891)
(63,031)
(654,494)
(285,248)
(2,234,736)
(1,874,949)
(2,114,128)
(9,744,002)
-
(7,278,756)
(9,744,002)
-
-
(7,278,756)
(9,744,002)
(132,103)
(99,185)
(7,146,653)
(9,644,817)
(7,278,756)
(9,744,002)
Basic earnings per share (cents)
Diluted earnings per share (cents)
18
18
(7.49)
(7.49)
(17.37)
(17.37)
The above Statement of Profit or Loss and Comprehensive Income should be read in conjunction with the accompanying notes.
58
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
10 Statement of
Financial Position
AS AT 30 JUNE 2022
Current Assets
Cash and cash equivalents
Other current assets
Total Current Assets
Non-Current Assets
Plant and equipment
Exploration and evaluation expenditure
Right of Use Asset
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Share based payment reserve
Foreign currency translation reserve
Accumulated losses
Capital and reserves attributable to owners of Hot Chili Limited
Non-controlling interests
Total Equity
Consolidated Entity
Note
2022
$
2021
$
7
8
9
10
11
12
13
14
23,721,808
3,604,625
69,898
133
23,791,706
3,604,758
75,149
61,944
207,436,542
158,329,683
292,274
-
207,803,965
158,391,627
231,595,671
161,996,385
6,376,830
-
-
107,368
67,081
6,375,148
4,999,787
2,729,777
-
-
6,551,279
14,104,712
9,145
263,767
272,912
-
-
-
6,824,191
14,104,712
224,771,480
147,891,673
15
16(b)
16(c)
16(a)
269,189,573
188,314,123
5,517,849
2,774,476
1,222
1,222
(68,785,934)
(62,179,021)
205,922,710
128,910,800
16(d)
18,848,770
18,980,873
224,771,480
147,891,673
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
59
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
11 Statement of
Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated Entity
Contributed
Equity
Share-Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Non-
Controlling
Interest
Total Equity
$
$
$
$
$
$
Balance at 1 July 2020
160,056,118
539,740
1,222
(52,534,204)
19,080,058
127,142,934
Loss for the year
Total Comprehensive
Income for the Year
-
-
Shares issued
Share issue costs
29,873,805
(1,615,800)
-
-
-
-
Share based payments
-
2,234,736
-
-
-
-
-
(9,644,817)
(99,185)
(9,744,002)
(9,644,817)
(99,185)
(9,744,002)
-
-
-
-
-
-
29,873,805
(1,615,800)
2,234,736
Balance at 30 June 2021
188,314,123
2,774,476
1,222
(62,179,021)
18,980,873
147,891,673
Balance at 1 July 2021
188,314,123
2,774,476
1,222
(62,179,021)
18,980,873
147,891,673
Loss for the year
Total Comprehensive
Income for the Year
-
-
-
-
Shares issued
88,444,420
2,508,211
Share issue costs
(7,568,970)
-
Options Expired
Share based payments
-
-
(539,740)
774,902
-
-
-
-
-
-
(7,146,653)
(132,103)
(7,278,756)
(7,146,653)
(132,103)
(7,278,756)
-
-
539,740
-
-
-
-
-
90,952,631
(7,568,970)
-
774,902
Balance at 30 June 2022
269,189,573
5,517,849
1,222
(68,785,934)
18,848,770
224,771,480
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
60
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
12 Statement of
Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Interest Paid
Other receipts
Consolidated Entity
2022
2021
Note
$
$
(6,101,583)
(3,675,454)
3,688
(2,582)
91,420
1,065
-
59,400
Net cash used in operating activities
21(a)
(6,009,057)
(3,614,989)
Cash Flows from Investing Activities
Payments for plant and equipment
Payments for tenements
Payments for exploration and evaluation
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Proceeds from exercise of options
Share issue costs
Repayment of lease liabilities
Net cash provided by financing activities
Net (decrease)/increase in cash held
(42,816)
(23,254,689)
-
-
(25,584,862)
(25,363,479)
(48,882,367)
(25,363,479)
76,813,915
28,018,525
3,822,245
-
(5,060,759)
(1,615,800)
(100,323)
-
75,475,078
26,402,725
20,583,654
(2,575,743)
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rates on cash holdings in foreign currencies
3,604,625
6,307,894
(466,471)
(127,526)
Cash and cash equivalents at the end of the financial year
7
23,721,808
3,604,625
The above Statement of Cash Flows should be read on conjunction with the accompanying notes.
61
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
13 Notes to the Financial
Statements
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
New, Revised or Amending Accounting Standards
and Interpretations Adopted
The consolidated entity has adopted all of the new, revised or
amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that
are mandatory for the current reporting period. Any new,
revised or amending Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted.
(a) Basis of Preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) and the Corporations Act 2001,
as appropriate for for-profit oriented entities. These financial
statements also comply with International Financial Reporting
Standards as issued by the International Accounting
Standards Board (‘IASB’).
The financial report was authorised for issue on
30th September 2022 by the Board of Directors.
The functional and presentation currency of Hot Chili Limited
is Australian Dollars.
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 the
notes to the financial statements.
Historical Cost Convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
available-for-sale financial assets.
(b) Parent Entity Information
In accordance with the Corporations Act 2001, these financial
statements present the results of the consolidated entity
only. Supplementary information about the parent entity is
disclosed in Note 28.
(c) Principles of Consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Hot Chili Limited (‘parent
entity’) as at 30 June 2022 and the results of all subsidiaries
for the year then ended. Hot Chili Limited and its subsidiaries
together are referred to in these financial statements as the
‘consolidated entity’.
Subsidiaries are all those entities over which the consolidated
entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct
the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the
consolidated entity. They are de-consolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
Non-controlling interests in the results and equity of the
consolidated entity is shown separately in the consolidated
statement of profit or loss and other comprehensive
income and the 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 profit and
loss and 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.
(d) 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 balance
sheet 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.
62
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 1.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
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
Australian Tax Consolidation Regime.
(e) 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.
(f) Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
An asset is current when it is expected to be realised or
intended to be sold or consumed in normal operating cycle;
it is held primarily for the purpose of trading; it is expected to
be realised within twelve months after the reporting period;
or the asset is cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for at least
twelve months after the reporting period. All other assets are
classified as non-current.
A liability is current when it is expected to be settled in
normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within twelve months after the
reporting period; or there is no unconditional right to defer
the settlement of the liability for at least twelve months after
the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are always classified as
non-current.
(g) Exploration and Evaluation Expenditure
Exploration and evaluation expenditure in relation to
separate areas of interest for which rights of tenure are
current is carried forward as an asset in the statement of
financial position where it is expected that the expenditure
will be recovered through the successful development and
exploitation of an area of interest, or by its sale; or exploration
activities are continuing in an area and activities have not
reached a stage which permits a reasonable estimate of the
existence or otherwise of economically recoverable reserves.
Where a project or an area of interest has been abandoned,
the expenditure incurred thereon is written off in the year in
which the decision is made.
(h) 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.
63
HOT CHILI Annual Report 2022
13 Notes to the
Financial Statements (cont’d)
1.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
(k) Earnings per Share
i. Basic Earnings per Share
(i) 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.
(j) Share-Based Payments
Equity-based compensation benefits can be provided to
directors and executives.
The cost of equity-settled transactions are measured at fair
value on grant date. Fair value is independently determined
using any of the Hybrid Barrier Up and In Trinomial, Binomial
or Black-Scholes option pricing model that takes into account
the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that
entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative
amount calculated at each reporting date less amounts
already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each
reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into
consideration the terms and conditions on which the award
was granted. The cumulative charge to profit or loss until
settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting
date is the fair value of the award at that date multiplied by
the expired portion of the vesting period.
•
from the end of the vesting period until settlement of the
award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The
ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
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.
(l) 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.
(m) Impairment of Assets
Assets that have an indefinite useful life 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).
(n) 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.
(o) 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.
64
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
(s) Finance Costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in
the period in which they are incurred, including interest on
short-term and long-term borrowings.
(t) Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
(u) Other Receivables
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
(v) Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments
Commission. Therefore, the amounts in this report have
been rounded to the nearest dollar in accordance with that
Corporations Instrument, unless otherwise stated.
(w) Right-of-Use Assets
A right-of-use asset Is recognised at the commencement date
of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included
in the cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the
consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a
right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases
of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
1.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
(p) 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.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
tax authority.
(q) Borrowings
Loans and borrowings are initially recognised at the fair value
of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the
effective interest method.
Where there is an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
The component of the convertible notes that exhibits
characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the
liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried
as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in
the liability due to the passage of time is recognised as a
finance cost. The remainder of the proceeds are allocated
to the conversion option that is recognised and included
in shareholders equity as a convertible note reserve, net of
transaction costs. The carrying amount of the conversion
option is not remeasured in the subsequent years. The
corresponding interest on convertible notes is expensed to
profit or loss.
(r) Derivative Financial Instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The
accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged.
65
HOT CHILI Annual Report 2022
13 Notes to the
Financial Statements (cont’d)
1.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT’D)
(x) Fair Value Measurement
When an asset or liability, financial or non-financial, is measured
at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and
assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-
financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate
in the circumstances and for which sufficient data are available
to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and
transfers between levels are determined based on a
reassessment of the lowest level of input that is significant
to the fair value measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of
an asset or liability from one period to another, an analysis is
undertaken, which includes.
(y) Lease Liabilities
A lease liability is recognised at the commencement date of
a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the
lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the consolidated
entity’s incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise
price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they
are incurred.
Lease liabilities are measured at amortised cost using
the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease
payments arising from a change in an index or a rate used;
residual guarantee; lease term; certainty of a purchase option
and termination penalties. When a lease liability is remeasured,
an adjustment is made to the corresponding right-of use asset,
or to profit or loss if the carrying amount
of the right-of-use asset is fully written down.
(z) Foreign Currency Translation
The financial statements are presented in Australian
dollars, which is Hot Chili Limited’s functional and
presentation currency.
Foreign Currency Transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign Operations
The assets and liabilities of foreign operations are translated
into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are
translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the
transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income
through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.
2. CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions
on historical experience and on other various factors, including
expectations of future events; management believes to be
reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes)
within the next financial year are discussed below.
(a) Exploration and Evaluation Costs
Exploration and evaluation costs have been capitalised on the
basis that the consolidated entity will commence commercial
production in the future, from which time the costs will
be amortised in proportion to the depletion of the mineral
resources. Key judgements are applied in considering costs to
be capitalised which includes determining expenditures directly
related to these activities and allocating overheads between
those that are expensed and capitalised. In addition, costs
are only capitalised that are expected to be recovered either
through successful development or sale of the relevant mining
interest. Factors that could impact the future commercial
production at the mine include the level of reserves and
resources, future technology changes, which could impact the
cost of mining, future legal changes and changes in commodity
prices. To the extent that capitalised costs are determined not
to be recoverable in the future, they will be written off in the
period in which this determination is made.
66
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
2. CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS (CONT’D)
(b) Share-Based Payment Transactions
The consolidated entity measures the cost of equity-settled
transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted.
The fair value is determined by using either the Binomial
or Black-Scholes model taking into account the terms and
conditions upon which the instruments were granted. The
accounting estimates and assumptions relating to equity-
settled share-based payments would have no impact on
the carrying amounts of assets and liabilities within the
next annual reporting period but may impact profit or loss
and equity.
(c) Derivative Financial Instruments
The directors have determined that the convertible notes
are a compound financial Instrument with both a debt
component and derivative financial liability representing the
conversion option. The accounting for the derivative financial
instrument requires management judgements and estimates
in determining the fair value.
(d) Consolidation of Entities
The directors have concluded that the group controls
Sociedad Minera El Aguila SpA (SMEA), even though it holds
less than all the voting rights of this subsidiary. This is because
the group is the largest shareholder with an 80% equity
interest and the ability to appoint 4 of the 5 Directors while the
remaining 20% of shares are held by Compañía Minera del
Pacífico S.A (CMP) with the ability to appoint the remaining
Director. An agreement signed between the group and CMP
requires a quorum to hold a Board meeting and adopt a
resolution to be of at least three Directors with the right to
vote. The accounting treatment of SMEA will be evaluated at
each reporting date subject to any developments between
the shareholders.
(e) Fair Value Measurement Hierarchy
The consolidated entity is required to classify all assets and
liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the
entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is
significant to fair value and therefore which category the
asset or liability is placed in can be subjective.
67
HOT CHILI Annual Report 2022
13 Notes to the
Financial Statements (cont’d)
3. 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.
All the assets relate to mineral exploration. Segment assets are allocated to segments based on the purpose for which they
are used.
2022
Assets
Liabilities
P&L (EBITDA)
Interest
Depreciation
Finance costs
P&L (Loss)
2021
Assets
Liabilities
P&L (EBITDA)
Interest
Depreciation
Finance costs
P&L (Loss)
4.
INTEREST INCOME
Interest income
5. OTHER INCOME
Net gain/(loss) on revaluation of derivative liability
Other
68
Australia
$
Chile
$
Total
$
21,454,201
210,141,470
231,595,671
(636,640)
(6,187,551)
(6,824,191)
(3,590,621)
(1,189,864)
(4,780,485)
3,688
(90,034)
(2,411,925)
(7,278,756)
2,765,959
159,230,426
161,996,385
(8,067,082)
(6,037,630)
(14,104,712)
(6,958,522)
(667,640)
(7,626,162)
1,065
(4,777)
(2,114,128)
(9,744,002)
Consolidated Entity
2022
$
3,688
3,688
2021
$
1,065
1,065
2,425,593
(1,874,949)
91,420
59,400
2,517,013
(1,815,549)
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 6.
INCOME TAX EXPENSE
(a) Reconciliation of Income Tax Expense to Prima Facie Tax Payable
Loss before income tax
Prima facie income tax at 25% (2021: 26%)
Tax-effect of amounts not deductible in calculating taxable income
Tax loss not recognised
Income Tax Expense
(b) Tax Losses:
Consolidated Entity
2022
$
2021
$
(7,278,756)
(1,819,689)
329,435
1,490,254
-
(9,744,002)
(2,533,441)
1,693,598
839,843
-
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 26% (2021: 26%)
33,580,584
8,395,146
26,600,968
6,916,252
As shown above, the directors estimate that the potential deferred tax asset at 30 June 2022 in respect of tax losses not brought
to account is $8,395,146 (2021: $6,916,252).
In addition, Chilean subsidiaries of Hot Chili Limited also have tax losses that are a potential deferred tax asset of $26,862,337
(2021: $26,543,542).
The benefit for tax losses will only be obtained if:
i. The consolidated entity and the subsidiaries derive income, sufficient to absorb tax losses; and
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.
7. CASH AND CASH EQUIVALENTS
Cash at bank
Total cash and cash equivalents
23,721,808
23,721,808
3,604,625
3,604,625
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows as follows:
Cash and cash equivalents
23,721,808
3,604,625
8. OTHER CURRENT ASSETS
Other receivables
VAT receivable
69,765
133
69,898
-
133
133
69
HOT CHILI Annual Report 2022
13 Notes to the
Financial Statements (cont’d)
9. 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
Disposals and scrapped
Depreciation (i)
Foreign exchange
Carrying amount at the end of the year
Consolidated Entity
2022
$
810,615
(735,466)
75,149
61,944
42,816
-
(29,611)
-
75,149
2021
$
767,802
(705,858)
61,944
57,431
-
-
(21,709)
26,222
61,944
(i) Depreciation of $19,288 (2021: $16,932) was capitalised into exploration costs.
10. EXPLORATION AND EVALUATION EXPENDITURE
Carrying amount at the beginning of the year
Consideration given for mineral exploration acquisition
Capitalised mineral exploration and evaluation
158,329,683
131,070,506
23,254,689
25,852,170
14,026,229
13,232,948
Carrying amount at the end of the year (i)
207,436,542
158,329,683
(i) Management have determined that the capitalised expenditure relating to the projects in Chile are still in the exploration
phase and are to be classified as Exploration and Evaluation expenditure. In accordance with AASB 6 Exploration for
and evaluation of Mineral Resources, management have assessed whether there are any indicators of impairment on the
capitalised expenditure as at balance date. In making this assessment management have considered whether sufficient data
exists to conclude that the exploration and evaluation assets are unlikely to be recovered in full from successful development
or sale. This included management engaging an independent consultants to review the key drivers within the Productora
pre-feasibility financial model. Based on this review, management are satisfied that there are no impairment indicators as at
balance date.
The future realisation of these non-current assets is dependent on further exploration and funding necessary to
commercialise the resources or realisation through sale.
11. RIGHT OF USE ASSET
(a) Right of use asset
ROU asset at cost
Accumulated depreciation
Reconciliation of right of use assets
Opening balance
Additions
Amortisation
Closing balance
70
371,985
(79,711)
292,274
-
371,985
(79,711)
292,274
-
-
-
-
-
-
-
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 12. TRADE AND OTHER PAYABLES
Trade payables and accruals
Refundable deposit (option fee) (i)
Consolidated Entity
2022
$
6,376,830
-
6,376,830
2021
$
4,379,936
1,995,212
6,375,148
(i) Sociedad Minera El Águila SpA (SMEA) granted Compañía Minera del Pacífico S.A. (CMP) an option (Additional Purchase Option)
to acquire shares in SMEA such that upon exercise of the option, CMP will be entitled to acquire a further 32.6% interest, taking
its total interest up to 52.6%, by acquiring existing shares from Hot Chili subsidiary, SMECL. In the case where the parties do not
execute the option, Hot Chili shall refund CMP the Option fee. The option fee was repaid during the year.
13. BORROWINGS
Current
Convertible note – debt component1
-
-
4,999,787
4,999,787
1 There are nil convertible notes on issue as at 30 June 2022 (2021: 69,453). On 22 June 2017, the consolidated entity issued
109,175, 8% five-year convertible notes, with a face value of A$100 each and a further 3,834 convertible notes were issued on
8 September 2017 for total proceeds of $11,300,900. During the year, 9,695 (2021: 9,768) convertible notes were converted
to ordinary shares in the capital of the Company on receipt of notices to convert from the noteholder. Interest was paid
quarterly in arrears and at maturity date at a rate of 8% per annum based on the face value. The maturity date of the notes
was 22 June 2022. At this date the remaining 59,758 shares were converted into 6,473,671 ordinary shares per the terms and
conditions of the notes. The conversion rights associated with the convertible notes were:
a) The holder of the notes may convert into ordinary shares of the parent entity at any time prior to maturity at a conversion
price of A$1.6665 per share (A$0.0333 per share pre 50:1 share consolidation of the capital of the Company);
b) The Company can redeem the notes early in cash for the face value plus interest accrued, only after two years since
the issue date provided the VWAP for the shares traded on the ASX for the 20 consecutive trading days preceding the
date on which the notice of redemption is given is not less than 300% of the conversion price of A$1.6665 per shares
(A$0.0333 per share pre -consolidation); and
c) The Convertible note will automatically be converted on the maturity date at the lower of A$1.6665 (A$0.0333 pre-
consolidation) or 95% of the VWAP traded on the ASX for the 10 consecutive trading days preceding the maturity date.
Convertible note debt component - reconciliation
Balance brought forward
Notes and accrued interest converted
Finance charges amortised
Conversion at maturity
At the end of the financial year
4,999,787
(831,644)
1,807,657
(5,975,800)
4,186,801
(642,320)
1,455,306
-
-
4,999,787
71
HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
14. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative Liability - Convertible Note
Consolidated Entity
2022
$
-
-
2021
$
2,729,777
2,729,777
The holders of the convertible notes had the option to convert into ordinary share capital of the Company until maturity. Refer to
Note 13.
Fair value hierarchy
The consolidated entity using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly;
• Level 3: Unobservable inputs for the asset or liability.
The derivative liability is determined to be Level 2 and has been valued using quoted market prices at the end of each reporting
period. This valuation technique maximises the use of observable market data where it is available and relies as little as possible
on entity specific measurements.
Convertible note derivative liability - reconciliation
Balance at beginning of period
Fair value of Exercised Notes
Net Change in fair value during the period
Conversion of Notes at Maturity
At the end of the financial year
15. CONTRIBUTED EQUITY
(a) Share Capital
2,729,777
(400,879)
(755,081)
(1,573,817)
1,445,136
(650,291)
1,934,932
-
-
2,729,777
Consolidated Entity
2022
2021
No. Shares
$
No. Shares
$
At the beginning of the financial year
3,104,169,531
188,314,123
2,335,268,762
160,056,118
Shares issued pre share consolidation
1,250,100,000
40,003,200
643,133,334
26,111,559
Shares issued on capital raising during the period
Shares issued in lieu of convertible note costs
7,693,153
2,043,668
Shares issued on conversion of convertible notes
13,378,254
50 to 1 share consolidation
(4,289,835,156)
279,065
92,673
334,456
-
Shares issued post share consolidation
Shares issued upon TSXV IPO
21,800,000
36,810,715
Shares issued in lieu of convertible note costs
Shares issued on conversion of convertible notes
Shares issued on maturity of convertible notes
Shares issued upon exercise of options
284,402
547,451
6,473,671
2,790,232
369,615
1,091,107
5,975,800
3,487,789
Less: Costs associated with issue of share capital
-
(7,568,970)
20,034,236
29,456,210
76,276,989
622,593
1,232,728
1,906,925
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,615,800)
At the end of the financial year
119,445,206
269,189,573
3,104,169,531
188,314,123
72
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 15. CONTRIBUTED EQUITY (CONT’D)
(b) Terms and Conditions 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) Listed Ordinary Share Purchase Warrants (‘Warrants’) Over Ordinary Share Capital
(i) Reconciliation of Warrants Outstanding
Issue Date
28 Feb 2022
Expiry Date
31 Jan 2024
Balance at the
Start of the Year
Issued During
the Year (1)
Expiry/ Exercise
Balance at the
End of the Year(1)
-
-
10,900,000
10,900,000
-
-
10,900,000
10,900,000
(1) The Warrants are listed on the Canadian TSX Venture Exchange (“TSXV”) and were issued on 28 February 2022 upon the conversion of warrant receipts
of the Company that were issued in connection with the Company’s initial public offering of units
on the TSXV.
All listed warrants were exercisable at year-end.
(d) Unlisted Options Over Ordinary Share Capital
Grant
date
Expiry
date
Balance at
the Start of
the Year (1)
Issued/
(Exercised)
During the
Year (1)
19/12/2018
19/12/2021
12,000,000
12/11/2019
15/11/2021
15,000,000
26/06/2020 20/05/2022
50,000,000
-
-
-
29/06/2020 20/05/2022
237,446,276
(13,378,254)
14/01/2021
30/11/2022
25,000,000
-
15/09/2021
30/09/2024
31/01/2022
28/01/2025
-
-
92,500,000
-
Expired
During the
Year (1)
Consol-
idation
50:1
-
(11,760,000)
(15,000,000)
-
(49,000,000)
Issued/
(Exercised)
During the
Year (2)
Expired
During the
Year (2)
Balance at
the End of
the Year (2)
-
-
-
(240,000)
-
(1,000,000)
-
-
-
-
(219,586,483)
(2,790,232)
(1,691,307)
(24,500,000)
(90,649,999)
-
-
-
1,259,789
-
-
-
500,000
1,850,001
1,259,789
-
-
-
-
-
339,446,276
79,121,746
(15,000,000)
(395,496,482)
(1,530,443)
(2,931,307)
3,609,790
(1) Pre 50:1 share consolidation approved in General Meeting on 15 November 2021.
(2) Post 50:1 share consolidation approved in General Meeting on 15 November 2021.
Weighted average exercise price of options on issue is $2.75 (2021: $1.75). The weighted average remaining contractual life of
options outstanding at the end of the financial year was 1.72 years (2021: 0.89 years).
All unlisted options were exercisable at year-end.
73
HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
15. CONTRIBUTED EQUITY (CONT’D)
(e) Movement in Performance Rights
Balance at beginning of financial year
Issued during the financial year, pre share consolidation
Lapsed during the year, pre share consolidation
50 to 1 share consolidation approved at General Meeting on 15 November 2021
Lapsed during the year, post share consolidation
Balance at End of Financial Year
2022
Rights
2021
Rights
80,000,000
35,000,000
(15,000,000)
(97,999,990)
(100,002)
-
80,000,000
-
-
-
1,900,008
80,000,000
(f) 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. The capital risk management policy remains unchanged
from the 2021 Annual Report.
16. RESERVES, ACCUMULATED LOSSES AND NON-CONTROLLING INTERESTS
(a) Accumulated Losses
Accumulated losses at the beginning of the year
Net loss for the year
Options expired during the year
Accumulated losses at the end of the year
(b) Share-Based Payments Reserve
The share based payment reserve is used to recognise the fair value of options and
performance rights issued.
Balance at the beginning of the year
Issue of options during the year (see Notes (i) and (ii) below)
Vesting of performance rights during the year (see Note (iii) below)
Options expiring during the year
Balance at the end of the year
(c) Foreign currency translation reserve
Balance at the beginning of the year
Balance at the end of the year
(d) Non-controlling interests
Balance at the beginning of the year
Share of loss for the year
Balance at the end of the year
74
Consolidated Entity
2022
$
2021
$
(62,179,021)
(7,146,653)
539,740
(68,785,934)
(52,534,204)
(9,644,817)
-
(62,179,021)
2,774,476
2,508,211
774,902
(539,740)
539,740
197,250
2,037,486
-
5,517,849
2,774,476
1,222
1,222
1,222
1,222
18,980,873
19,080,058
(132,103)
(99,185)
18,848,770
18,980,873
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 17. SHARE-BASED PAYMENTS
Share-Based Payments Recognised in Profit or Loss
Options granted to lead managers for ongoing financial advisory services during the
year (see Note (b)(iii) below)
Vesting of performance rights to employees and key consultants of the Company
during the year (see Note (a) below)
Total Share-Based Payments Expense
Shares issued for interest on convertible notes quarterly
Total Share-Based Payments Recognised in Profit or Loss
Share-Based Payments Recognised Directly in Equity
Shares issued for interest on convertible notes converted
Options granted to capital raising lead managers during the year (see Note (b)(ii) below)
Total Share-Based Payments Recognised in Equity
Consolidated Entity
2021
2022
$
$
-
197,250
774,902
774,902
646,300
1,421,202
12,211
2,508,212
2,520,423
2,037,486
2,234,736
622,593
2,857,329
255,928
-
255,928
Total Share-Based Payment Transactions
3,941,625
3,113,257
Below are details of share-based payments made during the current year and prior financial years.
(a) Performance Rights
$774,902 has been expensed in the period (2021: $2,037,486) in relation to the vesting of performance rights during the year.
Other details of performance rights granted or cancelled during the current and previous financial years are set out below:
(i) Fair Value of Performance Rights Issued During the Year Ended 30 June 2022
During the current year, 35,000,000 performance rights (pre share consolidation) were issued to key consultants of the
Company. The terms and conditions of the performance rights issued were as follows:
Class of
Performance
Rights
Quantity
Granted
2 Sep 2021
(Pre Share
Consolidation)
Quantity
Granted
20 Sep 2021
(Pre Share
Consolidation) Vesting Conditions
Class A
Class B
5,000,000
issued
5,000,000
issued
6,666,666
issued
6,666,666
issued
The price of Shares traded on ASX is greater than $0.06 per Share
for 15 consecutive trading days or more before 31 July 2023.
The price of Shares traded on ASX is greater than $0.08 per Share
for 15 consecutive trading days or more before 31 July 2023.
Class C
5,000,000
issued
6,666,668
issued
The Company announcing to ASX global independently estimated
JORC compliant resources at the Cortadera Project and
surrounding satellite projects, excluding currently reported resources
at Productora, of 750 Mt at 0.5% Cu equivalent or greater (within
0.2% CuEq grade envelope or higher as deemed appropriate in the
independent resource estimate) before 31 July 2023.
The fair values for the Class A and Class B performance rights were determined using the Hybrid Barrier Up and In Trinomial methods
which uses an iterative procedure allowing for specification of points in time, during the time span between the valuation date and the
option or performance right’s expiration date. They take into account the barrier price, exercise price, the share price at value date and
expected price volatility of the underlying share, and the risk-free interest rate for the options or performance rights’ term. The fair value
for the Class C performance rights was determined using the Black Scholes valuation method, which takes into account the price of
the underlying security, the strike price, the time to expiration, the expected volatility of the security, and the risk-free interest rate.
75
HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
17. SHARE-BASED PAYMENTS (CONT’D)
The inputs for the fair value models for the performance rights issued during the year were as follows:
For Performance Rights Granted 2 September 2021
Number (pre Share Consolidation)
Valuation Date
Spot Price
Exercise Price
Barrier Price
Vesting Date
Expiry Date
Expected Future Volatility
Risk Free Rate
Dividend Yield
Valuation
Value
For Performance Rights Granted 20 September 2021
Number (pre Share Consolidation)
Valuation Date
Spot Price
Exercise Price
Barrier Price
Vesting Date
Expiry Date
Expected Future Volatility
Risk Free Rate
Dividend Yield
Valuation
Value
Class A
Class B
Class C
5,000,000
2 Sep 2021
5,000,000
2 Sep 2021
$0.045
Nil
$0.06
31-07-23
31-07-23
100%
0.17%
Nil
$0.03
$0.045
Nil
$0.08
31-07-23
31-07-23
100%
0.17%
Nil
$0.025
5,000,000
2 Sep 2021
$0.045
Nil
Nil
31-07-23
31-07-23
100%
0.17%
Nil
$0.039
$150,000
$125,000
$195,000
6,666,666
20 Sep 2021
6,666,667
20 Sep 2021
$0.039
Nil
$0.06
31-07-23
31-07-23
100%
0.17%
Nil
$0.03
$0.039
Nil
$0.08
31-07-23
31-07-23
100%
0.17%
Nil
$0.025
6,666,667
20 Sep 2021
$0.039
Nil
Nil
31-07-23
31-07-23
100%
0.17%
Nil
$0.039
$200,000
$166,667
$260,000
After the 50 to 1 share consolidation on 15 November 2021, the amount of performance rights and vesting hurdles under the terms
and conditions of the performance rights were updated to reflect the share consolidation, as follows:
Class of
Performance
Rights
Quantity
Granted
2 Sep 2021
(Post Share
Consolidation)
Quantity
Granted
20 Sep 2021
(Post Share
Consolidation) Vesting Conditions
Class A
100,000
133,333
Class B
100,000
133,333
Class C
100,000
133,334
The price of Shares traded on ASX is greater than $3.00 per Share
for 15 consecutive trading days or more before 31 July 2023.
The price of Shares traded on ASX is greater than $4.00 per Share
for 15 consecutive trading days or more before 31 July 2023.
The Company announcing to ASX global independently estimated
JORC compliant resources at the Cortadera Project and
surrounding satellite projects, excluding currently reported resources
at Productora, of 750 Mt at 0.5% Cu equivalent or greater (within
0.2% CuEq grade envelope or higher as deemed appropriate in the
independent resource estimate) before 31 July 2023.
All other terms and conditions were unchanged as part of the share consolidation, and none of these performance rights vested or
were exercised during the year.
76
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
17. SHARE-BASED PAYMENTS (CONT’D)
(i) Performance Rights Lapsed or Cancelled During the Year Ended 30 June 2022
During the current year, 15,000,000 performance rights (pre share consolidation) lapsed upon the resignation of Melanie
Leighton, the Company’s previous alternate director to Mr Murray Black (also a previous director of the Company). 100,002
performance rights (post share consolidation) lapsed upon the resignation of Mr Lloyd Flint (a previous company secretary of the
Company). The amounts previously expensed for Ms Leighton’s and Mr Flint’s performance rights, which did not vest, have been
reversed during the current year.
(ii) Fair Value of Performance Rights Issued During the Year Ended 30 June 2021
During the previous financial year, 80,000,000 performance rights (pre share consolidation) were issued to key consultants of the
Company. The terms and conditions of the performance rights issued were as follows:
Class of
Performance
Rights
Quantity
Granted
12 Aug 2020
(Pre Share
Consolidation)
Quantity
Granted
1 Sep 2020
(Pre Share
Consolidation)
Quantity
Granted
3 Nov 2020
(Pre Share
Consolidation) Vesting Conditions
Class A
Class B
11,666,666
issued
13,333,334
issued
1,666,667
issued
11,666,667
issued
13,333,333
issued
1,666,666
issued
Class C
11,666,667
issued
13,333,333
issued
1,666,667
issued
The price of Shares traded on ASX is greater than
$0.06 per Share for 15 consecutive trading days
or more before 31 July 2023.
The price of Shares traded on ASX is greater than
$0.08 per Share for 15 consecutive trading days
or more before 31 July 2023.
The Company announcing to ASX global
independently estimated JORC compliant
resources at the Cortadera Project and
surrounding satellite projects, excluding currently
reported resources at Productora, of 750 Mt at
0.5% Cu equivalent or greater (within 0.2% CuEq
grade envelope or higher as deemed appropriate
in the independent resource estimate) before
31 July 2023.
The fair values for the Class A and Class B performance rights were determined using the Hybrid Barrier Up and In Trinomial methods
which uses an iterative procedure allowing for specification of points in time, during the time span between the valuation date and the
option or performance right’s expiration date. They take into account the barrier price, exercise price, the share price at value date and
expected price volatility of the underlying share, and the risk-free interest rate for the options or performance rights’ term. The fair value
for the Class C performance rights was determined using the Black Scholes valuation method, which takes into account the price of
the underlying security, the strike price, the time to expiration, the expected volatility of the security, and the risk-free interest rate.
The inputs for the fair value models for the performance rights issued during the previous financial year were as follows:
For Performance Rights Granted 12 August 2020
Number
Valuation Date
Spot Price
Exercise Price
Barrier Price
Vesting Date
Expiry Date
Expected Future Volatility
Risk Free Rate
Dividend Yield
Valuation
Value
Class A
Class B
Class C
11,666,666
12 Aug 2020
11,666,667
12 Aug 2020
$0.029
Nil
$0.06
N/A
$0.029
Nil
$0.08
N/A
11,666,667
12 Aug 2020
$0.029
Nil
Nil
N/A
31 July 23
31 July 23
31 July 23
100%
0.27%
Nil
$0.0226
$263,667
100%
0.27%
Nil
$0.0204
$238,000
100%
0.27%
Nil
$0.0290
$338,333
77
HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
17. SHARE-BASED PAYMENTS (CONT’D)
For Performance Rights Granted 1 September 2020
Number
Valuation Date
Spot Price
Exercise Price
Barrier Price
Vesting Date
Expiry Date
Expected Future Volatility
Risk Free Rate
Dividend Yield
Valuation
Value
For Performance Rights Granted 3 November 2020
Number
Valuation Date
Spot Price
Exercise Price
Barrier Price
Vesting Date
Expiry Date
Expected Future Volatility
Risk Free Rate
Dividend Yield
Valuation
Value
Total Issued
Total Value
Class A
Class B
Class C
13,333,334
1 Sep 2020
13,333,333
1 Sep 2020
$0.046
Nil
$0.06
N/A
$0.046
Nil
$0.08
N/A
13,333,333
1 Sep 2020
$0.046
Nil
Nil
N/A
31 July 23
31 July 23
31 July 23
100%
0.27%
Nil
$0.0406
$541,333
100%
0.27%
Nil
$0.0375
$500,000
1,666,667
3 Nov 2020
1,666,666
3 Nov 2020
$0.051
Nil
$0.06
N/A
$0.051
Nil
$0.08
N/A
100%
0.27%
Nil
$0.0460
$613,333
1,666,667
3 Nov 2020
$0.051
Nil
Nil
N/A
31 July 23
31 July 23
31 July 23
100%
0.11%
Nil
$0.0457
$76,167
26,666,667
$881,167
100%
0.11%
Nil
$0.0423
$70,500
26,666,666
$808,500
100%
0.11%
Nil
$0.051
$85,000
26,666,667
$1,036,666
The fair value of the Class A and Class B performance rights issued during 2021 were expensed during the 2021 year. During the
current year, 15,000,000 performance rights (5,000,000 each of Class A, Class B and Class C) which were granted on 12 August
2020 (pre share consolidation) lapsed on 1 October 2021 upon the resignation of Melanie Leighton, the Company’s previous
alternate director to Mr Murray Black (also a previous director of the Company). The amounts previously expensed for Ms Leighton’s
performance rights, which did not vest, have been reversed during the current year.
78
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 17. SHARE-BASED PAYMENTS (CONT’D)
After the 50 to 1 share consolidation on 15 November 2021, the amount of performance rights and vesting hurdles under the terms
and conditions of the performance rights were updated to reflect the share consolidation, as follows:
Class of
Performance
Rights
Quantity
Granted
12 Aug 2020
(Post Share
Consolidation) (1)
Quantity
Granted
1 Sep 2020
(Post Share
Consolidation)
Quantity
Granted
3 Nov 2020
(Post Share
Consolidation) Vesting Conditions
Class A
133,334
266,668
33,334
Class B
133,334
266,666
33,333
Class C
133,334
266,666
33,334
The price of Shares traded on ASX is greater than
$3.00 per Share for 15 consecutive trading days
or more before 31 July 2023.
The price of Shares traded on ASX is greater than
$4.00 per Share for 15 consecutive trading days
or more before 31 July 2023.
The Company announcing to ASX global
independently estimated JORC compliant
resources at the Cortadera Project and
surrounding satellite projects, excluding currently
reported resources at Productora, of 750 Mt at
0.5% Cu equivalent or greater (within 0.2% CuEq
grade envelope or higher as deemed appropriate
in the independent resource estimate) before
31 July 2023.
(1) Excludes performance rights lapsed on 1 October 2021 upon the resignation of Melanie Leighton.
After the share consolidation on 15 November 2021, 100,002 performance rights lapsed upon the resignation of Mr Lloyd Flint, the
Company’s previous company secretary, on 31 January 2022. The amounts previously expensed for Mr Flint’s performance rights,
which did not vest, have been reversed during the current year.
The amount of performance rights originally granted during the 2021 year, excluding Ms Leighton’s and Mr Flint’s performance rights
lapsed, post consolidation and with updated post consolidation terms and conditions are as follows:
Class of
Performance
Rights
Quantity
Granted
12 Aug 2020
(Post Share
Consolidation) (1)
Quantity
Granted
1 Sep 2020
(Post Share
Consolidation)
Quantity
Granted
3 Nov 2020
(Post Share
Consolidation) Vesting Conditions
Class A
133,334
133,334
133,334
Class B
133,334
133,334
133,334
Class C
133,334
133,334
133,334
The price of Shares traded on ASX is greater than
$3.00 per Share for 15 consecutive trading days
or more before 31 July 2023.
The price of Shares traded on ASX is greater than
$4.00 per Share for 15 consecutive trading days
or more before 31 July 2023.
The Company announcing to ASX global
independently estimated JORC compliant
resources at the Cortadera Project and
surrounding satellite projects, excluding currently
reported resources at Productora, of 750 Mt at
0.5% Cu equivalent or greater (within 0.2% CuEq
grade envelope or higher as deemed appropriate
in the independent resource estimate) before
31 July 2023.
79
HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
17. SHARE-BASED PAYMENTS (CONT’D)
(b) Options Granted
(i) Fair Value of Options Granted in September 2021
92,500,000 options were issued (pre share consolidation) to lead managers of a capital raising and the issue was approved in a
general meeting on 15 September 2021. The fair value was determined using the Hoadley ESO2 valuation model that takes into
account the exercise price, the share price at value date and expected price volatility of the underlying share, and the risk-free
interest rate for the options term. The inputs for the fair value model for fee options were as follows:
Number of options
Consideration
Exercise price
Value date
Expiry date
Expected price volatility of the Company’s shares
Risk-free interest rate
Spot price at date of issue
Fair value of per option
Total value of options granted
(ii) Fair Value of Options Granted in January 2022
Pre Share
Consolidation
Post Share
Consolidation
Equivalent
92,500,000
1,850,001
Nil
$0.045
20/9/2021
30/9/2024
80%
0.17%
$0.041
$0.0183
Nil
$2.25
20 /9/2021
30/9/2024
80%
0.17%
$2.05
$0.915
$1,692,750
$1,692,750
1,259,789 options were issued (post share consolidation) to lead managers of a capital raising and the issue was approved in
a general meeting on 31 January 2022. The fair value was determined using the Hoadley ESO2 valuation model that takes into
account the exercise price, the share price at value date and expected price volatility of the underlying share, and the risk-free
interest rate for the options term. The inputs for the fair value model for the fee options were as follows:
Post Share
Consolidation
1,259,789
Nil
C$1.85
(A$1.998)
31/01/2022
28/01/2025
75%
0 .9%
A$1.61
A$0.6473
$815,461
Number of options
Consideration
Exercise price
Value date
Expiry date
Expected price volatility of the Company’s shares
Risk-free interest rate
Spot price at date of issue
Fair value of per option
Total value of options granted
80
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 17. SHARE-BASED PAYMENTS (CONT’D)
(iii) Fair Value of Options Granted in January 2021
25,000,000 options were issued to lead managers of a capital raising which took place in December 2020 and the issue was
approved in general meeting on 14 January 2021. 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 inputs for the fair value model for the fee options were
as follows:
Number of options
Consideration
Exercise price
Value date
Expiry date
Expected price volatility of the Company’s shares
Risk-free interest rate
Spot price at date of issue
Fair value of per option
Total value of options granted
Pre Share
Consolidation
Post Share
Consolidation
Equivalent
25,000,000
500,000
Nil
$0.10
Nil
$5.00
14 Jan 2021
14 Jan 2021
30 Nov 2022
30 Nov 2022
80%
0.08%
$0.042
$0.00789
$197,250
80%
0.08%
$2.10
$0.3945
$197,250
(iv) Fair Value of Options Granted in January 2021 as Part of Creditor Payment
16,666,667 options exercisable at $0.025 each expiring 22 May 2022 (pre share consolidation) were issued pursuant to a creditor
taking shares in lieu of cash. The creditor was Blue Spec Sondajes, an entity controlled by Mr Murray Black (the Company’s
previous Non-Executive Chairman) and were free attaching options. They have the same terms and conditions of options issued
at Note (iii) above and were approved in general meeting 14 January 2021.
(c) Convertible Notes
During the year the Company issued 3,666,369 pre-consolidation shares and 284,402 post consolidation shares (2021:
20,034,236 pre- consolidation shares) at a fair value of $646,300 (2021: $622,593) in lieu of interest on the convertible note issue.
As at 30 June 2021 interest of $139,448 had accrued and the 4,026,784 shares issued on 12 July 2021 are not included in total
issued for the year.
18. LOSS PER SHARE
Consolidated Entity
2022
$
2021
$
Loss after tax attributable to the owners of Hot Chili Limited
(7,146,653)
(9,644,817)
Basic loss per share (cents)
Diluted loss per share (cents)
Unexercised options are not dilutive.
(7.49)
(7.49)
(17.37)
(17.37)
The weighted average number of ordinary shares on issue used in the calculation of
basic loss per share (post consolidation number of shares)
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator in calculating diluted loss per share
95,441,990
55,514,217
95,441,990
55,514,217
81
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
19. REMUNERATION OF AUDITORS
(a) RSM Australia Partners and Related Network Firms
Audit or review of financial reports for the Group
Other statutory review required by Canadian legislation to be provided by the
auditor to the Group for the purposes of the TSX listing
Other services:
Tax compliance services
Consulting services
Consolidated Entity
2022
$
2021
$
67,000
50,500
8,700
8,800
55,000
-
8,750
Total Audit and Other Services Provided by RSM Australia Partners
and Related Network Firms
135,000
63,750
(b) Other Auditors and Their Related Network Firms
Other assurance and agreed-upon procedures under other contractual arrangements
131,648
Total Audit and Other Services Provided by Other Auditors and Their
Related Network Firms
Total Remuneration of Auditors
131,648
266,648
-
-
63,750
20. KEY MANAGEMENT PERSONNEL DISCLOSURES
The following were the directors and other key management personnel of the consolidated entity at any time during the current
and previous financial years and unless otherwise indicated, were key management personnel for the entire period:
Non-Executive Directors
Dr Nicole S Adshead-Bell (appointed 5 January 2022)
Murray E Black (retired 1 March 2022)
Dr Michael Anderson (resigned 4 November 2020)
Dr Allan Trench
Roberto de Andraca Adriasola
George R Nickson
Position
Independent Non-Executive Chairman
(from 1 March 2022)
Non-Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Mark Jamieson (appointed 3 September 2021)
Non-Executive Director
Executive Director
Christian E Easterday
Position
Managing Director
Other Key Management Personnel
Melanie Leighton (resigned 1 October 2021)
Jose Ignacio Silva
John Hearne
Grant King
Position
Corporate Projects Manager and
Alternate Director for M Black
Country Manager and Chief Legal Counsel
Executive Studies Manager
Chief Operating Officer
82
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
20 KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)
Details of Remuneration of Key Management Personnel for the Year Ended 30 June 2022:
Directors
Short-term benefits
Post-employment benefits
Share based payments
Other Key Management Personnel
Short-term benefits
Other Benefits
Post-employment benefits
Share-based payments
Total
21. NOTES TO STATEMENT OF CASH FLOWS
(a) Reconciliation of Net Cash used in Operating Activities
Loss for the year
Non-cash items:
Depreciation
Effect of exchange rates on holdings in foreign currencies
Effect on revaluation of derivative liability
Amortised finance costs
Non-cash finance costs
Share based payments
Lease adoption
Net cash flows from operating activities before change in assets and liabilities
Change in assets and liabilities during the financial year:
Other current assets
Trade and other payables
Provisions
Net cash outflow from operating activities
(b) Non cash investing and financing activities
2022
Consolidated Entity
2021
2022
$
$
603,813
48,933
75,607
728,353
802,104
125,000
55,708
357,948
1,340,761
2,069,114
553,989
43,560
353,367
950,916
461,755
-
21,533
681,737
1,165,025
2,115,941
(7,278,756)
(9,744,002)
90,034
466,471
(2,425,593)
2,364,841
44,502
774,902
14,684
(5,948,915)
(69,765)
(106,890)
116,513
(6,009,057)
4,777
101,304
1,874,949
601,231
1,455,406
2,234,736
-
(3,471,599)
6,826
(150,216)
-
(3,614,989)
92,500,000 options (pre-consolidation (1,850,001 post consolidation) were issued to lead managers of a capital raising. The options
are exercisable at AUD$5 per option (AUD$0.10 pre-consolidation) per and expire 30 September 2024.
1,259,789 options were issued (post consolidation) to lead managers of a capital raising. The options are exercisable at C$1.85 and
expire on 31 January 2025.
Quarterly convertible note interest that accrued to noteholders was settled through the issue of fully paid ordinary shares calculated
on the 5 day volume weighted average price (VWAP) prior to quarter end:
Quarter ended
Date paid
Interest due $
VWAP
Shares issued pre
share consolidation
Shares issued post
share consolidation
30 September 2021
31 December 2021
31 March 2022
22 June 2022
8 Oct 2021
17 Jan 2022
13 April 2022
30 June 2022
139,615
139,617
121,918
105,652
$0.03808
$1.70101
$1.38965
$0.92309
3,666,369
-
-
-
82,043
87,904
114,455
83
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
21 NOTES TO STATEMENT OF CASH FLOWS (CONT’D)
A total of 9,695 Convertible Notes and respective interest to dates of conversion were converted to 2,043,668 pre-consolidation
shares and 547,451 post-consolidation shares during the year.
A total of 59,758 Convertible Notes remaining outstanding at final maturity (22 June 2022) were converted to 6,473,671 shares at
a deemed price of $0.92309 as per the terms and conditions of the notes.
2021
All numbers for 2021 are pre-consolidation.
33,333,334 shares and 16,666,667 free attaching options were issued to Blue Spec Sondajes as part of an issue of securities in
lieu of cash. The options are exercisable at AUD$0.025 per and expire 22 May 2022.
25,000,000 options were issued to lead managers of a capital raising. The options are exercisable at AUD$0.10 per and expire
30 November 2022.
Quarterly convertible note interest that accrued to noteholders was settled through the issue of fully paid ordinary shares
calculated on the 5 day volume weighted average price (VWAP) prior to quarter end:
Quarter ended
30 September 2020
31 December 2020
31 March 2021
30 June 2021
Date paid
5 October 2020
5 January 2021
9 April 2021
12 July 2021
Interest due $
160,820
155,660
145,303
139,448
VWAP
$0.03866
$0.04194
$0.04099
$0.03463
Shares issued
4,159,818
3,711,453
3,544,806
4,026,784
A total of 9,768 Convertible Notes and respective interest to dates of conversion were converted to 29,456,210 shares during
the year.
22. 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
More than five years
(b) Option Payment Commitments
Consolidated Entity
2022
$
555,680
2,222,721
5,080,563
7,858,964
2021
$
558,807
2,022,410
5,652,949
8,234,166
The mining rights (which vary between 90% to 100%) of the various projects undertaken by Hot Chili will be transferred upon
satisfaction of the Option payments committed as at 30 June 2022 tabled below.
Within one year
Later than one year but not later than five years
(c) Operating Leases
653,215
16,257,802
16,911,017
1,463,116
35,846,346
37,309,462
The Chilean entities leases office premises under an operating lease. Operating leases are on a month-to-month basis and are not
accounted for as Right-of-Use Assets under AASB16. Further, the Australian entity has entered into a lease agreement for further
floor space at its current premises. This lease is effective 1 August 2022 and is disclosed as a commitment for future expenditure
and will be accounted for under AASB 16 from effective date in terms of the group’s accounting policy disclosed in Note 1.
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
69,535
187,731
257,266
103,285
68,857
172,142
* Operating leases are not material to the consolidated entity and are not accounted for as Right-of-Use Assets under AASB16.
84
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 23. EVENTS OCCURRING AFTER REPORTING DATE
The impact of the COVID-19 pandemic was ongoing during the year and while it has not significantly impacted the Group up to
30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date.
There were no other significant events occurring after the balance date that require reporting.
24. RELATED PARTIES
Parent Entity
Hot Chili Limited Is the parent entity
Subsidiaries
Interests in subsidiaries are set out in Note 26.
Key Management Personnel
Disclosures relating to key management personnel are set out in Note 20 and the Remuneration Report included in the
Directors’ Report.
Transactions with Related Parties
The following transactions occurred with related parties during the current and previous financial years:
Quarterly Interest Paid on Convertible Notes Payable
Quarterly interest accruing on the convertible notes payable to Blue Spec Drilling Pty Ltd of $30,108 for the year ended 30 June
2022 was settled by the issue of shares and cash as follows:
Pre-Retirement (Settled by Shares)
Pre Share
Consolidation
Post Share
Consolidation
Total Settled
Pre-Retirement
Value of interest settled
No. of shares issued (post-consolidation equiv-alent)2
$7,783
4,0881
$7,782
4,575
$15,565
8,663
1 The number of shares stated here is the post share consolidation equivalent of 204,388 shares which were issued, pre the 50 to 1 share
consolidation, to Blue Spec Drilling Pty Ltd to settle the interest accruing on the convertible notes payable.
2 Stated at the number of total shares, equivalent post share consolidation.
During the year ended 30 June 2021, quarterly interest accruing on the convertible notes payable to Blue Spec Drilling Pty Ltd of
$30,877 was settled by the issue of 15,898 (post share consolidation equivalent of 794,912 shares).
No interest on convertible notes was payable to Blue Spec Drilling Pty Ltd at 30 June 2022. The interest payable at 30 June 2021
of $7,698 was settled by the issue of 4,446 (post share consolidation equivalent of 222,291 shares) on 12 July 2021.
The shares were issued to Blue Spec Drilling Pty Ltd, a company associated with Mr Murray Black, a director (retired 1 March
2022), following shareholder approval.
Maturity of Convertible Notes
On 30 June 2022, the Company issued 415,344 shares on final maturity of the 3,834 convertible notes (with a face value of $100
each, totalling $383,400) which had been issued to Blue Spec Drilling Pty Ltd on 8 September 2017. The deemed price for the
conversion of the notes was $0.92309 per share as per the terms and conditions of the notes.
The shares were also issued to Blue Spec Drilling Pty Ltd, a company associated with Mr Murray Black, a director, following
shareholder approval. The shares were issued post Mr Black’s retirement on 1 March 2022.
Other Fees and Charges
Blue Spec Sondajes Chile Limitada, a company in which Mr Murray Black is a director, charged a total of $12,948,500 to
the consolidated entity for the period from 1 July 2021 to just prior to Mr Black’s retirement on 1 March 2022 (2021 full year
$10,379,605), for rent and drilling services at Cortadera. Of this amount, $2,466,497 was owing at the date of his retirement (30
June 2021: $3,718,982) and was paid in April 2022.
MRA Consulting Pty Ltd, a company associated with Dr Anderson, a previous director, was paid $9,607 in directors and
consulting fees during the previous financial year. There were no amounts payable as at 30 June 2021. No amounts were paid or
were payable to Dr Anderson or to MRA Consulting Pty Ltd during the current financial year.
Commercial Terms
All transactions were made at commercial terms.
85
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022
13 Notes to the
Financial Statements (cont’d)
25. CONTINGENT LIABILITIES
As at 30 June 2022, Hot Chili Limited had accumulated VAT refund payments of $12,903,932 (CLP 8,178,026,868) (2021:
$11,001,642 (CLP 6.018.998.372)) with respect to VAT recovered as at 30 June 2022 by Sociedad Minera El Águila SpA and
$5,263,509 (CLP3.335.840.009) (2021: $2,062,843 (CLP1.128.581.298)) for VAT recovered by Sociedad Minera Frontera SpA .
Under the initial terms of the VAT refund payment, the consolidated entity initially had until the 31 December 2019 to
commercialise production from Productora and meet certain export targets. Hot Chili also had the right to extend this term. The
Company has exercised its right to extend the date of commercial production from Productora with the Chilean Tax Authority.
An extension to the benefit was extended to 30 June 2022 and a further extension until 30 June 2026 has been granted. In the
event that the term is not extended further and Hot Chili does not meet certain export targets, Hot Chili will be required to re-pay
the VAT refund payments to the Chilean Tax Authority subject to certain terms and conditions. However, if Hot Chili achieves the
export targets from Productora within that timeframe or its renewal, if required, any VAT refund payments will not be required to
be repaid.
26. INTEREST IN SUBSIDIARIES
(a) Material subsidiaries
The consolidated financial statements incorporate the assets, liabilities, and results of the following material subsidiaries, in
accordance with the accounting policy described in Note 1:
Name of Entity
Sociedad Minera El Corazon Limitada
Sociedad Minera El Aguila SpA*
Sociedad Minera Los Mantos SpA
Sociedad Minera Frontera SpA
Sociedad Minera Bandera SpA
Equity Holding
Country of
Incorporation
Chile
Chile
Chile
Chile
Chile
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2022
%
100
80*
100
100
100
2021
%
100
80*
100
100
100
* The non-controlling interests hold 20% of Sociedad Minera El Aguila SpA (SMEA) - refer to Note 26 (b).
(b) Non-controlling interests (NCI)
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity are set
out below:
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Revenue
Expenses
Loss before income tax expense
Income tax expense
Loss after income tax expense
Other comprehensive income
Total comprehensive loss
86
SMEA
30-Jun-22
SMEA
30-Jun-21
193,314
223,291
116,360,366
110,424,030
116,553,680
110, 647,321
1,864,351
34,194,262
36,058,613
63,596
29,428,152
29,491,748
80,495,067
81,155,573
116,929
(777,441)
(660,512)
-
-
(495,924)
(495,924)
-
(660,512)
(495,924)
-
-
(660,512)
(495,924)
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 26
INTEREST IN SUBSIDIARIES (CONT’D)
Statement of cash flows
Net cash used in operating activities
Net cash used in investing activities
Net cash from financing activities
Net increase in cash and cash equivalents
Other financial information
Loss attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
27. FINANCIAL RISK MANAGEMENT
SMEA
30-Jun-22
SMEA
30-Jun-21
1,114,734
(5,910,821)
4,766,110
(29,977)
(525,833)
(1,026,903)
1,643,911
91,175
(132,103)
(99,185)
18,848,770
18,980,873
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 market risk (including interest rate risk and foreign
exchange 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 summarized 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.
Risk Exposures and Responses
(a) Interest rate risk exposure
The consolidated entity’s is exposed to interest rate risk on financial assets and financial liabilities at the end of the reporting
period where a change in interest rates may affect future cashflows or fair values of financial instruments. Borrowings are nil at
the end of the financial year (2021: Borrowings issued at fixed rates) (Note 13).
(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 trades and other receivables.
Receivable balances are not significant and 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.
87
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 13 Notes to the
Financial Statements (cont’d)
27. FINANCIAL RISK MANAGEMENTS (CONT’D)
Financing arrangements
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate
%
1 year
or less
$
Between 1
and 5 years
$
Remaining
contractual
maturities
$
Amount as
per Statement
of Financial
Position
$
Consolidated - 2022
Non-derivatives
Non-interest bearing
Trade payables
Convertible note debt
– fixed rate
Lease Liabilities
Total non-derivatives
Derivatives
-%
-%
13%
Convertible note debt
-%
Total derivatives
Consolidated - 2021
Non-derivatives
Non-interest bearing
Trade payables
Refundable deposit
Convertible note debt
– fixed rate
Total non-derivatives
Derivatives
Convertible note debt
Total derivatives
(d) Market risk
-%
-%
8%
-%
6,376,830
-
67,081
6,443,911
-
-
4,379,936
1,995,212
4,999,787
11,374,935
2,729,777
2,729,777
-
-
263,767
263,767
6,376,830
6,376,830
-
330,848
6,707,678
-
330.848
6,707,678
-
-
-
-
-
-
-
-
-
-
-
-
4,379,936
1,995,212
4,379,936
1,995,212
4,999,787
4,999,787
11,374,935
11,374,935
2,729,777
2,729,777
2,729,777
2,729,777
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
and the CLP/AUD rate. The consolidated entity is exposed to foreign exchange risk through its USD and CLP cash holdings
and liabilities at reporting date. The table below summarises the impact of + / - 10% strengthening / weakening of the AUD
against the USD and CLP 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 and CLP at reporting date with all other factors remaining constant.
88
HOT CHILI Annual Report 2022HOT CHILI Annual Report 2022 27. FINANCIAL RISK MANAGEMENTS (CONT’D)
2022
AUD/USD + 10%
AUD/USD - 10%
2021
AUD/USD + 10%
AUD/USD - 10%
2020
AUD/USD + 10%
AUD/USD - 10%
28. PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Total comprehensive income
Consolidated Entity
Post tax profit
Equity
$
246,748
(301,581)
61,746
(75,468)
(47,884)
87,061
$
246,748
(301,581)
61,746
(75,468)
(47,884)
87,061
2022
$
2021
$
21,017,491
2,654,013
191,315,824
139,040,075
212,333,315
141,694,088
363,728
272,912
581,859
8,067,082
-
8,067,082
269,189,584
188,314,123
5,519,117
2,775,764
(63,012,027)
(57,462,881)
211,711,558
133,627,006
(6,088,892)
(6,088,892)
(9,076,357)
(9,076,357)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2022 or 30 June 2021.
Contractual commitments for the acquisition of property, plant or equipment
The parent entity did not have any contractual commitments for the acquisition of property, plant or equipment as at 30 June 2022
or 30 June 2021.
89
HOT CHILI Annual Report 2022 14 Shareholder
Information
AS AT 31 AUGUST 2022
Information Required by the Australian Securities Exchange Limited
(a) Spread of Holdings
1
1,001
5,001
10,001
100,001 & Over
- 1,000
- 5,000
- 10,000
- 100,000
Shareholders
3,138
2,245
688
806
126
7,003
Units
1,382,501
5,706,964
5,087,161
23,733,109
83,535,471
119,445,206
%
1.16%
4.77%
4.26%
19.87%
69.94%
100%
There are 2,144 holders of unmarketable parcels comprising 589,500 shares.
(b) The names of the twenty largest shareholders as at 31 August 2022, who between them held 51.60% of the
issued capital are listed below:
GLENCORE AUSTRALIA HOLDINGS PTY LIMITED
CITICORP NOMINEES PTY LIMITED
CDS & CO
GS GROUP AUSTRALIA PTY LTD
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