Hot Chili (ASX: HCH) launches A$40m raise to accelerate Costa Fuego and La Verde

Hot Chili Limited (ASX: HCH, TSXV: HCH, OTCQX: HHLKF) has launched a private placement to raise up to approximately A$40 million, as disclosed on February 2, 2026. The share offering will be priced at A$1.65 per share, a roughly 15 percent discount to its last closing price, and will fund high-priority work across its Chilean copper-gold projects. The capital raise, led by Veritas Securities Limited, Cormark Securities Inc., Desjardins Capital Markets, and BMO Capital Markets, targets institutional and professional investors across Australia and Canada, with additional exemption-based participation allowed in the United States.

Why is Hot Chili raising capital now, and what does this say about Costa Fuego’s development stage?

The timing of this raise points to a deliberate shift in execution strategy for Hot Chili Limited as it positions its flagship Costa Fuego copper-gold project for pre-development de-risking. The Perth-based company, which controls one of the few large-scale copper developments not yet owned by a major miner, appears to be preparing for a strategic inflection point. The placement proceeds are earmarked for a range of project-defining milestones, including the feasibility study, an Environmental Impact Assessment, and resource delineation drilling at the La Verde discovery.

By structuring the placement to include the LIFE exemption in Canada and sophisticated investor exemptions in Australia, Hot Chili is expanding its institutional exposure while maintaining listing compliance. The A$1.65 per share pricing represents a 15 percent markdown versus last trade and roughly 13.6 percent below the 5-day volume-weighted average price. That pricing dynamic implies that Hot Chili’s management is prioritizing execution momentum over near-term share price optics.

The issue will be conducted without shareholder approval under ASX Listing Rules 7.1 and 7.1A, utilizing the company’s existing placement capacity. This signals that the board is confident in the strategic necessity of the raise and unwilling to delay project timelines for procedural approvals. With the issue date expected around February 12, 2026, the capital injection could rapidly unlock fieldwork and documentation required for potential joint venture, offtake, or M&A conversations.

How will the proceeds be deployed across Hot Chili’s project portfolio in Chile?

The company has outlined a multi-pronged deployment strategy across several critical assets. The most immediate use will be aggressive resource delineation and scoping work at La Verde, a copper-gold discovery within the broader Costa Fuego district. Establishing a maiden mineral resource at La Verde could allow Hot Chili to define a high-grade starter pit strategy that improves the project’s near-term development economics.

Simultaneously, funds will be directed toward finalizing the feasibility study and submitting the Environmental Impact Assessment for Costa Fuego, both prerequisites for advancing toward a construction decision. The capital raise will also support development at the Huasco Water Project, which underpins the long-term water infrastructure for the Costa Fuego operation.

This allocation profile underscores Hot Chili’s efforts to bring integrated value across infrastructure, permitting, and grade control. Rather than funding just one dimension of development, the company appears focused on ensuring multiple de-risking levers are pulled in parallel to drive up the project’s strategic value for potential acquirers or partners.

What does the raise imply about Hot Chili’s access to capital and investor sentiment?

The fact that Hot Chili was able to mandate a consortium of joint lead managers across both Australian and North American markets points to growing institutional comfort with its Chilean copper exposure. The involvement of Veritas Securities Limited, Cormark Securities Inc., Desjardins Capital Markets, and BMO Capital Markets reinforces the company’s dual-listing strategy and its efforts to deepen liquidity on the TSX Venture Exchange.

Notably, the placement was executed on a “best endeavours” basis rather than a firm commitment underwriting, which suggests that while investor interest is solid, market conditions or sector sentiment may have prompted some pricing discipline. Offering LIFE-exempt securities in Canada without hold periods improves post-issue liquidity and signals Hot Chili’s intent to facilitate smoother secondary market trading.

A six percent cash commission and five percent broker options issued to the agents reflect standard compensation structures for cross-border placements. Broker options are exercisable at A$2.145 per share for 30 months, effectively placing a medium-term incentive for participating firms if Hot Chili’s share price performance improves following key milestones.

Investor sentiment toward copper juniors remains sensitive to macro signals around demand recovery, particularly from China. However, Hot Chili’s execution-oriented placement structure could give it a relative advantage in investor eyes versus peers with limited upcoming catalysts or permitting exposure.

What strategic optionality does this placement unlock ahead of potential industry consolidation?

With copper supply pipelines tightening globally and exploration assets in Tier 1 jurisdictions under pressure, Hot Chili’s strengthened balance sheet could make it a more attractive strategic partner or acquisition target. By retaining optionality through this placement—and not tying proceeds to any specific third-party deal—the company signals that it intends to define more of Costa Fuego’s intrinsic value before entertaining partnerships.

If the feasibility study and Environmental Impact Assessment are completed on schedule, and if the La Verde mineral resource confirms near-surface, high-grade potential, then Hot Chili may reach a position to initiate discussions with offtake partners or suitors from mid-2026 onward. The fact that Costa Fuego is not yet controlled by a major makes it a unique outlier in the current copper development landscape.

Moreover, in a capital-constrained environment for juniors, Hot Chili’s ability to close a near-A$40 million raise with multi-market support gives it the flexibility to choose its timing and structure for any future farm-in, earn-in, or outright sale discussions. Investors will be watching closely to see how the company sequences these levers across 2026 and 2027.

What are the key takeaways for investors, competitors, and the copper development industry?

• Hot Chili Limited is raising up to A$40 million via a private placement targeting institutional investors across Australia and Canada.

• The proceeds will be used to fast-track project milestones for the Costa Fuego and La Verde copper-gold developments in Chile.

• The raise was priced at A$1.65 per share, a 15 percent discount to the last closing price and 13.6 percent below the 5-day VWAP.

• Shares offered in Canada will be exempt from resale restrictions under the LIFE exemption, enhancing post-issue liquidity.

• Joint lead managers include Veritas Securities Limited, Cormark Securities Inc., and Desjardins Capital Markets, with BMO Capital Markets acting as co-manager.

• Broker commissions include a six percent cash fee and five percent in options exercisable at A$2.145.

• The capital will support feasibility work, permitting, water infrastructure, and a maiden resource at La Verde.

• The placement allows Hot Chili to execute multiple de-risking initiatives in parallel, boosting strategic value.

• Liquidity on the TSX Venture Exchange is expected to improve, aligning with dual-listing goals.

• The raise enhances strategic funding flexibility ahead of potential industry consolidation or M&A overtures.