Costa Fuego (Productora + Cortadera) PFS: $1.20B NPV, 19% IRR
Hot Chili Limited's Costa Fuego (Productora + Cortadera) in Chile, Atacama Region (Huasco Valley) 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 (Productora + Cortadera) has reported Pre-Feasibility Study (PFS) results for the copper project in Chile, Atacama Region (Huasco Valley). 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 Copper US$4.30/lb, Gold US$2,280/oz, Molybdenum US$20/lb, Silver US$27/oz (CuEq calc); PFS listed on slide 38 (not included).
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 100% interest in the project. Royalties and streams: Glencore can purchase up to 60% of concentrate for first 8 years of life of mine at benchmark terms (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 |
|---|---|---|---|
| Total | 502 Mt | 0.43% CuEq | — |
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Measured & Indicated | 798 Mt | 0.45% CuEq | — |
| Inferred | 203 Mt | 0.31% CuEq | — |
Our Analysis
- IRR after-tax
- 19%
higher than 42% of 43 projects we track
- NPV after-tax
- $1.20B
higher than 60% of 50 projects we track
- Initial capex
- $1.27B
106% of NPV
costlier than 51% of 53 projects we track
- Payback
- 4.5yrs
slower than 71% of 41 projects we track
- Mine life
- 20yrs
- Discount rate
- 8%
- Study price assumption
- Copper US$4.30/lb, Gold US$2,280/oz, Molybdenum US$20/lb, Silver US$27/oz (CuEq calc); PFS listed on slide 38 (not included)
- Spot copper today
- $6.55/lb
A US$1.27B build against a US$191M market cap is the fact that governs this project. The company cannot fund it from its own balance sheet, and it cannot raise it quietly: the capex is roughly 6.6 times the value the market currently assigns the entire company. That leaves a narrow set of paths, a partner or offtaker carrying a large share, a project-level debt package with a sponsor of real standing behind it, or heavy equity issuance. Each of those dilutes or subordinates existing holders, and at this scale the dilution would not be marginal. The company's 14-project portfolio cuts both ways: it shows a developer with other irons in the fire, but it also means this asset competes internally for whatever capital and management attention exist.
The economics are respectable rather than decisive. A 19% after-tax IRR sits in the lower half of the copper projects we track, above only 42% of them, and against the roughly 15% hurdle for project finance, or the 20%+ a junior with little else would need, it lands just short of comfortable. Payback of 4.5 years is long, ranking below 29% of peers. The US$1.20B after-tax NPV ranks above 60% of the 50 copper projects we track, which is why the NPV-to-market-cap gap looks so wide, but that gap is equally consistent with a market pricing financing and dilution risk rather than missing the asset. The PFS stage matters here: a pre-feasibility estimate carries a wide margin and is not yet a build decision.
The study assumes copper at US$4.30/lb against a live spot of US$6.55/lb, so the returns rest on a price well below today's market, which is the one clear source of upside if spot holds. Chile's Atacama Region is a mining-friendly jurisdiction, a genuine positive. The question that decides this project is whether a credible partner or lender can be brought in to carry a build several times the company's equity value without gutting existing holders.
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.
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