Hot Chili is pleased to announce that the Board has approved the full commencement of the Productora Pre-feasibility Study. The decision follows the highly favourable findings of the Scoping Study and a near-doubling of the Productora resource estimate. It also puts Hot Chili on track to make a decision to mine next year. Leading engineering and project development group Ausenco has been commissioned to manage the study in conjunction with Hot Chili's own development team. 

DEVELOPMENT STRATEGY

During 2013, Hot Chili is continuing to pursue a strategy of project development and de-risking in parallel with an on-going focus on resource growth for the Productora copper project. In line with this strategy, a number of conceptual/scoping studies were undertaken in 2012 to identify risks and opportunities related to potential future mining operations at Productora.  The outcomes from the conceptual/scoping studies have provided a framework for the PFS and given the Company confidence to initiate advanced environmental work streams in the early stages of 2013.

Pre-feasibility Study Underway - Conceptual/Scoping Study Successfully Completed

The PFS will be based on the upgraded 165.2Mt Productora resource estimate and will benefit from a second major resource upgrade scheduled to be completed in the second half of 2013. Development studies at Productora will continue to assess the establishment of an open cut mining operation, a copper concentrator processing facility and other associated infrastructure. The study will be managed by Ausenco, which will be supported by a number of specialised consultants both in Chile and Australia.  Ausenco has considerable relevant experience in study management and project execution.

It is anticipated that the Study will be undertaken in three distinct phases:

1. A strategic optimisation phase -  utilising outcomes from the concept/scoping studies;
2. A project design phase - including option studies;
3. A realignment phase - to incorporate any new resource information.

The first two phases will take place through to Q3 of 2013. The third phase will take place as appropriate based on resource drilling results.  

Environmental and Social Impact

The Environmental Impact Assessment (EIA) commenced early in January 2013.  Two leading environmental consultants in Chile, MIMA and GAC, have been engaged to support the program.  MIMA will be responsible for running the EIA process while GAC will provide support through a peer review process. Baselines studies have commenced in the project area including both the flora and fauna summer campaigns.  Importantly, work has also commenced on possible infrastructure corridors and maritime concessions.  Social baseline studies are due to commence shortly.

Conceptual/Scoping Study Outcomes

Hot Chili has successfully completed a conceptual/scoping study of the Productora copper project.  The study assessed the viability of a ~11Mtpa mining and processing operation at Productora.
 The conceptual/scoping study was specifically designed to identify risks and opportunities for the anticipated project and provide a basis to meet long lead environmental requirements.  Importantly, the studies demonstrated that the project site can support the 'footprint' of a large mining operation and that the established infrastructure within the region will deliver considerable time and cost advantages for Productora.