HCH - Hot Chili

[Sean K]

This is as expected, I guess. Just drilling through the previous holes to prove that it's another plot of copper and gold. Not sure how many more tons they need to add to this before they do some detailed feasibility studies that show us a Capex and NPV etc. Capex will be about a billion or so I guess with in situ value of many billions. Currently 3.4Mt of copper (30.6b) and 3Moz gold (5.5b) equals about $36b. Maybe they get it to 4Mt Cu and 3.5Moz Au and it's enough to get the financing or Glencore take over. Might need to wait out the negative politics in Chile too. So, might be a mine in 20 years or so.

 

[aus_trader]

This is as expected, I guess. Just drilling through the previous holes to prove that it's another plot of copper and gold. Not sure how many more tons they need to add to this before they do some detailed feasibility studies that show us a Capex and NPV etc. Capex will be about a billion or so I guess with in situ value of many billions. Currently 3.4Mt of copper (30.6b) and 3Moz gold (5.5b) equals about $36b. Maybe they get it to 4Mt Cu and 3.5Moz Au and it's enough to get the financing or Glencore take over. Might need to wait out the negative politics in Chile too. So, might be a mine in 20 years or so.

View attachment 153460

It's got to happen in less than 20 years !

I think there will be more hunting for these type of large deposits by the majors as time goes by, simply 'cause there are hardly any new discoveries being made...

 

[Sean K]

It's got to happen in less than 20 years !

I think there will be more hunting for these type of large deposits by the majors as time goes by, simply 'cause there are hardly any new discoveries being made...

The confounding thing with copper projects is that it's a no-brainer about the supply/demand deficit that's on the horizon but the red tape to get projects approved is mind blowing. Maybe because some of the projects are very large scale and there's a lot of purple spotted green tree frogs on the land. There's a project in Arizona that BHP and RIO own that is worth gazillions and it's locked up in ESG disputes preventing it from being developed. There's a sacred tree above it, or a rock, or a cactus. It would change the life of the local population just on royalties but nope... In the end, we're not going to be able to go full electric if new projects don't get fast tracked. It's a long term narrative and need to be patient I think.

 

[Sean K]

Trying to see where HCH might end up one day if they ever get to mine this project according to their plans and I've been trying to benchmark it on other copper gold assets to see a future. Looking at OZL, most of their value is in their SA mines which are producing around 120K Cu and 200K Au. HCH will likely be aiming for 150Kt Cu and 80k Au (Au probably streamed) in their feasibility studies. OZL obviously has a lot of explorations plays including Musgrave which must be worth a lot, but OZL valued at over $9.5b compared to $100m for HCH is a bit off. Maybe I'm comparing apples with donuts here and am just trying to reassure myself this might get out of the toilet in a couple of decades.

 

[Sean K]

I've seen this before, which I just don't understand. Someone manipulating the price up a few cents in order to dump a chunk most probably. Or, maybe some good news coming. Holding until the supply/demand train crash happens in a couple of years and copper goes to 10 bucks.

 

[aus_trader]

Yes, seen this play out a few times as the stock is range bound lately.

Hoping it breaks to the upside, any positive news might help...

 

[Sean K]

Yes, seen this play out a few times as the stock is range bound lately.

Hoping it breaks to the upside, any positive news might help...

Looks like it may have been this news. Very good extension result for Cuerpo 1. Looks like it might add quite a bit to the MRE.

I was expecting results from the new property to be honest, I didn't think they were still drilling Cortadera.

Getting through $1.05 was good, been a bit of a wall for a while. I have no faith that it's going to get re-rated without change of President in Chile or copper breaking through $4.80-5.00 - which I think is inevitable, but will take some time.

 

[Sean K]

We might be experiencing a 31 March moment with HCH having a nice morning on no news. Maybe the news will be in 4 days time such as above.

Significant resistance under $1.28. ?

 

[Sean K]

We might be experiencing a 31 March moment with HCH having a nice morning on no news. Maybe the news will be in 4 days time such as above.

Significant resistance under $1.28. ?

View attachment 155956

No announcement yet, but done as expected.

$1.28

 

[Sean K]

A 'please explain' delivered to HCH this morning because it's had one good day out of the last 730. Really? Must be a slow day for the ASX bouncers.

What is probably due is the PEA but that's not till the end of June. Wouldn't expect it early. Maybe more drill results. More likely is a CR. They are running out of money.

Last Qtly below.

"Strong cash balance" my arse.

 

[Sean K]

A 'please explain' delivered to HCH this morning because it's had one good day out of the last 730. Really? Must be a slow day for the ASX bouncers.

What is probably due is the PEA but that's not till the end of June. Wouldn't expect it early. Maybe more drill results. More likely is a CR. They are running out of money.

View attachment 157423

Last Qtly below.

"Strong cash balance" my arse.

View attachment 157424

Will be interesting to see if they produce the PEA on schedule. 10 days to go.

I anticipate drill results, PEA and a CR in swift succession in the next week or four.

The PEA is potentially going to scare the crap out of people with a capex going north of a billion, for a $120m company.

But if it shows a long life copper mine producing 100Kt pa, it might look feasible, one day...

 

[Sean K]

PEA out on Thursday plus a 'form of an investment agreement' of some sort. That's not really expected, I just thought a CR would coincide with it to get them to the next hurdle, which would be more drilling and a PFS in 6-12 months.

Not sure what an investment agreement is. Maybe Glencore are going to tip in some more cash or increase their stake, or off-take agreement for advanced cash to keep things going. Could be anything.

 

[Sean K]

This is about as expected except the initial production rate is lower than I guessed. They're still aiming for what I thought this initial assessment would be - 120-150Mt Cu and 60-80Koz pa. Maybe the PFS will improve the metrics with a resource upgrade between now and then.

Capex as expected, circa $1b. post tax NPV of around that with current EV about $110m. So, quite a bit of room to move. Not sure where they're going to get the Capex from eventually. Surely a big JV partner to build it and take over production, or it gets taken over once the dust settles on Chile politics and it's derisked.

Funding for the next year or so via a stream to an organisation I've not heard of. Thought it might have been a Franco or someone similar.

Highly leveraged to the copper price. If it gets squeezed over the next few years as expected the NPV will go a long way north of this.

'Low start up capital' LOL

 

[Sean K]

Been a good recovery, based on nothing really. Just oversold perhaps by those running out of patience or overly worried about Chile geo risk. Capex was always going to be a concern, but perhaps just over $1b was less than expected. I was certainly thinking more.

Still a long way to go here but getting the royalty group on board (another Rick Rule supported company) is good news. On the basic sums it's way undervalued. Post tax NPV of US$1b and it's trading at $130m. The resource is going to grow and the underground perhaps become part of a larger open pit improving the numbers. And every 10c a pound increase in the POC over the base case adds $100m to the NPV. Could be quite extraordinary if copper goes to something like 5 bucks. NPV will go well over $3b.

Not sure if it'll make it through this resistance. Might be some technical selling, especially for those who jumped in mid last year. A nice 100% gain.

 

[Sean K]

Being patient can sometimes be the hardest thing. Or, ability to withstand a significant DD. Or, foolishness.

I'll be happy to take chips off the table when it gets to 50% of the PEA post tax NPV. That was US$1.1b, so about a US$500m MC. 120m shares on issue = $4.10 in USD. So, that's about $6 in AUD. Hmmm, $3.00? But, who knows with a copper developer in Chile.

 

[peter2]

Going to the moon. Any news, publicity? DFS 2026, Capital cost ~ $1Bill, Prod - 2028 A long, long way to go.

 

[Sean K]

Going to the moon. Any news, publicity? DFS 2026, Capital cost ~ $1Bill, Prod - 2028 A long, long way to go.

Maybe a decade away from turning dirt... Going to the moon will be when I've broken even with this puppy. I've been banking on the copper story, but bloody hell, who in their right mind invests in a copper play in Chile right now? You'd have to be a moron. Still might make money out of it though. Just because ... copper. With a 10 year plan. Hopefully I'm not dead by then.

 

[peter2]

As I've mentioned in the copper thread. I think the price of copper will rise over the next five years but it's going to be a messy trend higher. Slow growth in China has crimped any chance of a decent rally now, but even China will need to replenish its stockpiles one day. The energy transition is going to take decades longer than the lefties think.

 

[Sean K]

Started drilling again. Not sure why they stopped... they had cash to spin some drills around. Maybe contracts or something else not really explained. Would be nice if they get some more of the inferred into indicated for the next MRE but it sounds like they're aiming for resources growth. It seems like the golden number for the PFS is to have a production profile of about 150Mt cueq pa.That should put their NPV around the $1.3b mark if the copper price stays up.

Another cuerpo next to the other three at Cortadera would be very handy.

Interesting flag has developed since breaking $1.30.

Been satisfying watching this double in the past year.

Could turn to dust in short time also with Chile politics the elephant in the room.

 

[peter2]

Maybe the drilling team were gobsmacked by the recent price rally. Not drilling, seems to have perked up the price more than drilling.