The Hot Chili Ltd (ASX: HCH) share price is soaring after the miner announced an offtake agreement for its Chilean copper site.
Hot Chili is an ASX-listed copper exploration and development company operating in Chile's Atacama Region.
At the time of writing, the Hot Chili share price is up 17% at $1.60. To compare, the broader S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.74%.
So, what did the copper explorer announce?
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Largest shareholder to buy 60% of copper production
Hot Chili has announced it will enter into an offtake agreement with its largest shareholder, Glencore. The agreement covers 60% of future copper concentrate production from Hot Chili's Costa Fuego copper-gold project.
As of August last year, Glencore holds a 9.96% stake in Hot Chili.
Costa Fuego is a large-scale copper site that includes the Cortadera copper site and the Productora copper-gold project.
Chili says the site is ideal in a "low altitude, coastal range of Chile, infrastructure rich, low capital intensity" area.
The agreement will be in place for eight years and effective from the start of commercial production.
During that time, Glencore will be able to have Board representation and participate in a technical steering committee, as long as it maintains at least a 7.5% stake in Hot Chili.
What did management say?
Hot Chili managing director Christian Easterday said:
The quality of Costa Fuego continues to be externally validated with Glencore's 2021 equity investments and the execution of this Offtake Agreement on commercially competitive terms.
We ensured project financing flexibility with 40% of our first eight years of concentrate production remaining uncommitted ahead of initiating project financing discussions in 2022, following completion of the Costa Fuego Pre-Feasibility Study.
Glencore's expertise and support is welcomed and is an important part of our strategy to successfully transform the Company into a material copper-gold producer.
Hot Chili share price snapshot
The Hot Chili share price has seen a volatile 12 months, trickling down by 32%. In fact, the shares hit a 52-week low of $1.25 just last week.
The company has a market capitalisation of $149.77 million.
