Hot Chili (ASX:HCH) is noteworthy as they've survived a bear market with a large, pre-development porphyry copper deposit in Chile as many would-be competitors fallen away. They didn't just wait for better conditions to fuel development of their flagship Productora project, but pushed to find a better way. Enter "El Fuego", a trio of mines nearby that give new life to Hot Chili.
Listen in to interview with Christian Easterday, Managing Director of Hot Chili, about all this and more.
Christian had lots of insight to share in our interview, but his comments about macro aspects of copper jumped out at me. I realized that there's a wealth of knowledge among family-owned mines in Chile that may create something special when combined with the expertise of Australian operators who specialize in big, open pit copper mines.
I told Christian that I was shocked by statistics I've seen on monthly layoffs in the Chilean mining industry for years now. Combined with yesterday's news of strike action again at Escondida, I wonder if this an industry in peril?
Read Christian's comments at length, edited for clarity, starting here https://youtu.be/yRslh5BmwEg?t=618
"To some degree, that's right Peter. There are obvious issues. The unions and the labor market in Chile have high expectations. The country itself is closely tied to the copper price as over 30% of GDP comes from copper exposure. The copper price is a telling sign for the Chilean economy.
The last time Escondida had a strike, with the 1.2-1.3 million tonnes of copper production annually from that mine, it actually impacted the quarterly GDP of the entire country. With a rising copper price over the last eight months, outside of the last four to six weeks with trade tensions, the copper prices have generated a lot of income in Chile. Expectations need to be tempered against the pressures on the Chilean copper industry, which are related to supply.
You may have heard that Codelco recently moved to put a lot of investment into their into aging mines just to maintain production. That's a significant drain on the state, of course, but it also goes to the heart of the issues, which has to do with a lack of new large-scale discoveries and developments."
Thank you very much Christian for your insight into this important situation unfolding in Chile today. As primary source of mine production globally for "Doctor Copper", which is the metal that recently got another PhD in Green Energy!
Hot Chili has a well-known copper development project with Productora, but the change pivot towards an expanded growth strategy that aims to transform the economics of the project by increasing margins and lowering production costs through higher head grade and expanded metal output doesn't seem to have been noticed by the market. Yet.
Watch for more news from Hot Chili soon as they move towards majors catalyst like a definitive feasibility study, additional acquisitions, and a new TSX listing.
Find another interview with Rick Rule and Christian Easterday of Hot Chili released today here https://www.sprottmedia.com/hot-chili/ Thanks to Hot Chili for acting as a Platinum Sponsor for the 2018 Sprott Symposium!