Chili's: Hot Chili Announces PFS for Huasco Water & MOU for Seawater Supply to Costa Fuego

PERTH, Australia , March 31, 2025 /PRNewswire/ - Hot Chili Limited (ASX: HCH) (TSXV: HCH) (OTCQX: HHLKF) ("Hot Chili" or the "Company") is pleased to announce the results of a Pre-Feasibility Study ("PFS") for the Company's subsidiary Huasco Water, an 80%-owned entity that controls strategic water assets in the Huasco Valley of Chile. Highlights Strong Economics for a Large, Multi-User, Water Business Stage 1- Multi-Decade Seawater Supply to Costa Fuego Stage 2 and 3 - Regional, Desalinated Water Supply Opportunity Two Independent Engineering Groups Utilised First-Mover Advantage ______________________________ 1 The Huasco Water PFS has been aligned with the Costa Fuego PFS, shares the same assumptions for Costa Fuego in stage 1. See announcement dated 27 th March 2025 "Hot Chili Announces PFS & Maiden Mineral Reserve for the Costa Fuego Cu-Au Project". Hot Chili's Managing Director Mr. Christian Easterday commented , "We are very pleased to deliver our PFS for Huasco Water with first economics outlining potential for an attractive long-life industrial water project. The Water Supply PFS has been undertaken in conjunction with the Company's recently announced PFS for our Costa Fuego Copper-Gold Project, which outlines a multi-decade project with top quartile copper production capacity and lowest quartile capital intensity. The outcomes of the Water Supply PFS provide an opportunity for Hot Chili to fully consider the strategic value of its 80% owned subsidiary company Huasco Water, which controls all our critical water assets. The Company considers the potential to outsource its water infrastructure for seawater supply to be a value-enabler and have anchored Huasco Water by executing an MOU to negotiate a foundation seawater off-take agreement for Costa Fuego. The Company has received significant interest in Huasco Water from both Chilean and international water investment groups in addition to several neighbouring mine developers, agricultural groups, community groups and government. With PFS level engineering complete for stage 1 and stage 2 water supply, the Company is well positioned to pursue potential strategic partnership and additional off-taker discussions for Huasco Water. We look forward to providing further updates on drilling results from our recently confirmed La Verde copper-gold porphyry discovery which is providing an exciting additional growth platform for our shareholders." The Company will be hosting webinars on Monday 31 st March 10.00 am EST (for North American audience) to brief shareholders and investors on the outcomes of the Costa Fuego and Huasco Water PFS. Hot Chili's Chief Executive Officer Christian Easterday , Executive Vice President Jose Ignacio Silva , Chief Operating Officer Grant King and Chief Financial Officer Ryan Finkelstein will be hosting the call, which will also include a Q&A session. The following links will provide access to the investor briefing webinar: Register Here for North American Webinar Monday 31 st March at 10.00 am EST After registering, you will receive a confirmation email containing information about joining the webinar. This announcement is authorised by the Board of Directors for release to ASX and TSXV. Hot Chili's Managing Director and Chief Executive Officer Mr Christian Easterday is responsible for this announcement and has provided sign-off for release to the ASX and TSXV. For more information please contact: Christian Easterday Managing Director - Hot Chili Tel: +61 8 9315 9009 Email: admin@hotchili.net.au Carol Marinkovich Company Secretary - Hot Chili Tel: +61 8 9315 9009 Email: admin@hotchili.net.au Graham Farrell Investor & Public Relations (Canada) Email: graham@hotchili.net.au or visit Hot Chili's website at www.hotchili.net.au Reasonable Grounds for Customer Base Under 769C of the Australian Corporations Act the company provides the following 'reasonable grounds' basis for the assessment of its forecast customer base. Huasco Water is the only company with permitted access to supply industrial scale seawater to the Huasco Valley region. Huasco Water is also advanced in its permitting application to enable its existing maritime concession to be upgraded to provide desalinated water. The current maritime concession regulatory process in Chile is long, as evidenced by Hot Chili's 10-year lead time to secure its maritime concession. This combined with the current regulatory environment, restricting the use of continental water in the Atacama region of Chile , places Huasco Water's water assets as a key enabler for industrial scale water supply to the Huasco Valley region. Water supply networks are typically bound by areas of influence related to water transmission distance from intake. This distance has been determined by Huasco Water's independent consulting experts as an area defined by 75km north and 75km south of Huasco Waters permitted water intake location. Potential alternative far-field water supply networks from the north (Copiapo) or south (La Serena) have been assessed and determined to be economically challenged (from the perspective of capital and operating cost) to provide water supply to the Huasco Valley region. All parties identified in the water demand table for stage 2 and 3 require desalinated water supply in order to develop their projects and are engaged in ongoing discussions with Huasco Water concerning potential water supply solutions. All project development timeframes have been sourced from publicly available information and from direct discussion with each potential customer to determine a schedule of potential water supply. MOU's to study and negotiate off-take arrangements for 165 L/s of desalinated water demand for stage 2 have been executed with private parties (Agrosuper and Nutram) in the Huasco Valley already and further MOU's are expected to be executed in cooperation with other potential off-takers. Rising global demand for copper is translating to rising long-term consensus price for copper. The Huasco Valley region represents one of the largest groupings of major undeveloped copper projects in the world and is attracting significant capital investment. There are currently no alternatives to industrial scale water supply for the Huasco Valley region over the next ten years given current regulatory timeframes. Given global copper supply and demand fundamentals, it is expected that the majority of these projects will advance into production should copper incentive price be sufficient and water supply be available within the coming ten-year period. Huasco Water's approach to developing a regional multi-user water network to reduce environmental and social impacts and drive commercial and community synergies is aligned with the Chilean government's approach to addressing water scarcity in the Atacama region. While approximately 4,000 L/s of potential desalinated demand has been identified from undeveloped mineral resource projects in the Huasco Valley area of influence, only 1,300 L/s in stage 2 and 2,300 L/s of demand in stage 3 have been forecast. Huasco Water has determined that these projects, their forecast demand and timing are considered reasonable grounds for forecasts as determined by independent water industry expert reports (PFS engineering report) commissioned by Huasco Water and taking into consideration direct discussions with potential customers. Reasonable Grounds for Financial Forecasts The basis for forecasting the tariff (or price) that client's pay for water supply is as follows: Our independent water industry expert report (PFS engineering report) outlined engineering designs for water transmission for Stage 1, Stage 2 and Stage 3 and designs were costed for construction and operation. Capital and operating costs formed the basis of the tariff estimation, with the fixed tariff established to service capital cost repayment and the variable tariff established to service operating costs to supply. Capital and operating cashflows and discount rate are combined to estimate the levelised cost of water for each stage and client. For the Huasco Water PFS financial model, the capital and operating cashflows require a margin to make a minimum return on capital investment. The combination of cost and margin produce a tariff that is specific to each client and represents the price of water supply to the location of their demand. The tariff is estimated to a value that will produce a target Internal Rate of Return (IRR) for Huasco Water. For a higher or lower IRR target, a higher or lower tariff is estimated that achieves target IRR and provides a sensitivity range of water price for the financial model forecast. A reasonable range of IRR values was defined from consultation with independent water industry experts as being from 12% to 19% and these returns form the basis of the range of tariffs presented in Table 1. Water prices are estimated using this approach instead of a market based, long-term price forecast as there is no existing market for water supply in the Huasco Valley region. Given potential earnings forecasts are for periods of more than two-years, financial forecasts have been supported by independent water industry expert reports and are considered by the Company as being objectively verifiable sources of information. Disclaimer and Forward-Looking Statements Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release. This news release does not purport to be complete or contain all the information that may be material to the current or future business, operations, financial condition, or prospects of Hot Chili, Huasco Water or the results of the Water Supply PFS. Certain information contained herein is based on, or derived from, information obtained from independent third-party sources, publicly available reports and other trade and