Mineral exploration company Hot Chili has entered into an offtake agreement with trading and mining firm Glencore for its Costa Fuego copper-gold project in Chile.

The deal allows Glencore to purchase 60% of copper concentrate from Costa Fuego project for eight years after the commencement of commercial production.

Glencore has became Hot Chili’s largest shareholder with 9.96% stake after it  investment in August last year and participation in the firm’s recent TSXV capital raising in December 2021.

Hot Chili managing director Director Christian Easterday said: “The quality of Costa Fuego continues to be externally validated with Glencore’s 2021 equity investments and the execution of this Offtake Agreement on commercially competitive terms.

“We ensured project financing flexibility with 40% of our first eight years of concentrate production remaining uncommitted ahead of initiating project financing discussions in 2022, following completion of the Costa Fuego pre-feasibility study.”

The Costa Fuego copper project consists of Cortadera porphyry copper-gold deposit and the Productora copper-gold deposit.

Hot Chili intends to advance the project with a preliminary feasibility study and testing several high-priority exploration targets.

Productora is 100% owned by a Chilean incorporated firm Sociedad Minera El Aguila (SMEA), which is a joint venture firm that is 80% owned by Sociedad Minera El Corazón Limitada, a subsidiary of Hot Chili.

CMP Productor, a subsidiary of Compañía Minera del Pacífico (CMP)) owns the remaining 20% stake in the project.

Cortadera is 100% owned by a Chilean incorporated firm Sociedad Minera La Frontera, which is a subsidiary of Hot Chilli. The deposit is said to contain a higher grade component of 104Mt at 0.74% CuEq.

In July 2020, Hot Chili had started mining at its Productora copper-gold project.