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-gold 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. Economics are based on US$4.30/lb Cu, US$2,280/oz Au, US$20/lb Mo, US$27/oz Ag.
Production and mine plan. The project envisions an open-pit operation. Life of mine is 20 years. Average annual production is approximately 116 kt CuEq. The open-pit strip ratio is 1.5.
Resources and ownership. The company holds a 80% interest in the project. Royalties and streams: Glencore can purchase up to 60% of concentrate for first 8 years life of mine – at benchmark terms but must maintain >7.5% ownership in Company.
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.
Reserves & Resources
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Proven & Probable | 502 Mt | 0.43% CuEq | — |
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Measured & Indicated | 798 Mt | 0.45% CuEq | — |
| Inferred | 203 Mt | 0.31% CuEq | — |
Our Analysis
The 19% after-tax IRR sits in the bottom quartile of our tracked peer set and barely clears the practical financing hurdle for a single-asset junior developer. While it surpasses the 15% threshold for project finance, it offers thin margin for execution risk. The 8% discount rate is within standard reporting range but flatters the NPV; a higher rate would compress the $1.20B figure significantly. The NPV-to-market-cap ratio of 4.2x cuts both ways—it suggests the market has not priced in the asset's full potential, but equally signals skepticism about the developer's ability to finance and execute a $1.27B initial capex that exceeds NPV itself. Capital intensity this high, paired with a 4.5-year payback, creates material dilution risk for equity holders.
The copper price assumption of $4.30/lb sits well below the current spot of $6.21/lb, which provides a cushion against cost overruns but also means the study's returns are not stress-tested at lower prices. Chile's Atacama Coastal belt is a mining-friendly jurisdiction with established infrastructure, reducing permitting and logistics risk. The single most important watch-item is funding: a $1.27B capex on a modest market cap leaves little margin for error in securing project finance without heavy dilution.
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.