Hot Chili Limited (TSX-V: HCH) (OTCQX: HHLKF) (ASX: HCH) is pleased to announce the execution of a binding US$15 million Investment Agreement with Osisko Gold Royalties Ltd for a 1.0% Net Smelter Return royalty on copper and a 3% NSR royalty on gold across the Company’s Costa Fuego Copper-Gold Project located 600 km north of Santiago, at low elevation (<1,000 m) in the coastal range of the Atacama Region, Chile.

Completion of the Investment is expected within coming weeks, subject to satisfaction of customary conditions, with Hot Chili to receive US$15 million at Closing.

Highlights

• Significant investment by Osisko provides strong endorsement from one of North America’s leading royalty-streaming groups, and will boost Hot Chili’s cash position to approximately A$26 million upon Closing
• US$15 million in funds for growth and development with the investment (Royalty Consideration) to be used to advance the Costa Fuego Pre-Feasibility Studies (PFS), resource growth drilling programmes and for the general advancement of the Project
• Clear “look-through” value given the Osisko NSR is equivalent to a 1.12% CuEq¹ NSR royalty across payable metals for US$15 million and Hot Chili’s current market capitalisation is US$80 million
• Buyback rights if a change of control event occurs prior to the fourth anniversary of Closing. The Osisko NSR can be reduced to 0.5% NSR royalty on copper and 2.5% NSR royalty on gold
• Osisko to have a Right of First Offer with respect to the sale of any future royalty, stream, or similar interests by Hot Chili
• Preliminary Economic Assessment for Costa Fuego confirms strong economics²
• 30,000m drill programme set to commence, following Closing

Hot Chili’s Managing Director Mr Christian Easterday commented, “The investment agreement is yet another strong endorsement and follows extensive due diligence of the Company and its Costa Fuego copper-gold project by Osisko, renowned for their technical rigour and capabilities.

We consider that the Osisko investment will deliver a strong outcome for our shareholders by significantly strengthening our treasury without the dilution of a share issuance, while only adding a minor incremental royalty burden to Costa Fuego.

Importantly, Osisko’s involvement alongside Glencore’s strategic shareholding in Hot Chili demonstrates Costa Fuego’s global relevance and the projects’ potential to deliver near-term, meaningful, new copper supply.

We are pleased with the outcomes of our recently announced PEA, which has been validated by Osisko’s investment. We look forward to the commencement of drilling activities across multiple growth targets and the completion of our PFS for Costa Fuego next year.”

Hot Chili’s financial advisor is National Bank Financial Inc., and its Canadian legal counsel is Bennett Jones LLP.

Summary of Material Terms of Investment Agreement

The Investment Agreement between Hot Chili Limited, its Chilean subsidiaries holding title to the properties comprising the Costa Fuego Project, and Osisko Gold Royalties Ltd, provides for the purchase by Osisko of a royalty from each Seller, the material terms of which are summarised below:

The Directors look forward to an exciting period ahead. Further details of the Company’s next steps are expected to be announced shortly.