Costa Fuego PFS: $1.20B NPV, 19% IRR
Hot Chili Limited's Costa Fuego in Chile, Atacama Coastal belt, Huasco Valley, ~60km from port has a Pre-Feasibility Study (PFS) outlining an after-tax NPV of $1.20B, an after-tax IRR of 19%, and initial capital of $1.27B. The mine plan runs 20 years at about 116 kt CuEq per year.
Hot Chili Limited's Costa Fuego has reported Pre-Feasibility Study (PFS) results for the copper project in Chile, Atacama Coastal belt, Huasco Valley, ~60km from port. The study headlines an after-tax net present value of $1.20B at a 8% discount rate. It reflects Hot Chili Limited's (HCH.V) latest disclosed economics for the asset.
Economics. The after-tax NPV is $1.20B using a 8% discount rate. After-tax IRR is 19%. Initial capital expenditure is estimated at $1.27B. The study models a payback period of 4.5 years. All-in sustaining costs are pegged at 1.38 USD/lb Cu. Economics are based on Long-term US$4.30/lb copper price and US$2,280/oz gold price.
Production and mine plan. Life of mine is 20 years. Average annual production is approximately 116 kt CuEq. The open-pit strip ratio is 1.5.
These figures are extracted from Hot Chili Limited's technical disclosures and reflect the most recent PFS on file. Compare this project against other developers and producers in our project economics database, and always verify the numbers against the original technical report before making any investment decision.
Our Analysis
- IRR after-tax
- 19%
higher than 37% of 27 projects we track
- NPV after-tax
- $1.20B
higher than 72% of 36 projects we track
- Initial capex
- $1.27B
106% of NPV
costlier than 62% of 39 projects we track
- Payback
- 4.5yrs
slower than 74% of 27 projects we track
- Mine life
- 20yrs
- Discount rate
- 8%
- Study price assumption
- Long-term US$4.30/lb copper price and US$2,280/oz gold price
- Spot copper today
- $6.60/lb
The build cost is the story. At roughly 5.8x the company's entire US$218M market cap, the US$1.27B initial capex cannot be financed quietly. This is a micro-cap attempting a project that would value it at 5.5x its current equity, which means the outcome hinges entirely on who writes the cheque and at what dilution. Realistic paths are limited: a strategic partner taking a substantial equity stake, a streaming or royalty deal, or project finance that requires a far stronger balance sheet than this company currently has. Each path carries a different cost for existing holders, and none of them is a rounding error.
The economics are the supporting act, and they are adequate rather than exciting. The 19% after-tax IRR sits in the lower half of the 27 copper projects we track, and while it clears the ~15% hurdle that typically attracts project finance, it falls short of the 20%+ threshold investors usually demand from a higher-risk junior with a diversified but thinly capitalised portfolio. The US$1.20B NPV ranks well, but that figure is inflated by a long-term copper price assumption of US$4.30/lb against a live spot of US$6.60/lb, so the downside cushion is real. A 4.5-year payback and a 20-year mine life are unremarkable. The PFS stage narrows estimates to roughly plus or minus 25%, which is not the confidence level a lender will want for a build of this size.
The jurisdiction cuts both ways: Chile's Atacama Coastal belt is a known copper district with established infrastructure and a port 60km away, which de-risks execution and permitting relative to less familiar regions. But that familiarity also means the market will price this asset on its financing mechanics, not its geology. The single question that decides whether this works is whether a partner or lender emerges who is willing to fund a build worth nearly six times the company's entire value, and at what price existing shareholders pay for that capital.
Our take, benchmarked against the project economics in the Mining Stocks database. Figures are estimates drawn from company technical reports — not investment advice; always verify against the source filing.