Hot Chili Ltd.'s (HCH:ASX; HCH:TSXV; HHLKF:OTCQX) La Verde deposit, where phase two drilling is underway, is "fast demonstrating its potential to add an additional open-pit resource" to the Costa Fuego copper-gold project in Chile, reported Paradigm Capital Analyst Jeff Woolley in a Dec. 10 research note. Paradigm raised its target price on the copper development company by 30% by applying a 0.75x multiple to its updated corporate NAV10% estimate of CA$756 million (CA$756M).
"We view La Verde as enticing upside to an already strong Costa Fuego project outlook," Woolley wrote.
207% Upside Implied
Paradigm's new target price on the Australian mineral explorer is CA$3.25 per share, previously CA$2.50. The company, in comparison, was trading at about CA$1.06/share at the time of Woolley's report. From that price, the return to target is 207%.
Hot Chili remains a Buy.
Paradigm updated its financial model on Hot Chili, based on the 2025 prefeasibility study (PFS) mine plan, to reflect its long-term copper price forecast of US$4.50 per pound, Woolley wrote.
Hot Chili has 175 million basic shares outstanding. Its market cap is CA$186M.
About the Project
Woolley described Costa Fuego. It is a modest-grade but large-scale, development-stage project with a resource base of 1,000,000,000 tons of 0.45% copper equivalent (Cu eq). A 2025 prefeasibility study (PFS) outlined an operation producing about 116,000 tons Cu eq annually over a 20-year life of mine; this would deplete the total resource by about half.
The project differentiates itself from other copper development projects in Chile with its low altitude location, closeness to established infrastructure, a renewable power agreement, a maritime water concession, and water pipeline land easements.
Potential 'Game Changer'
As for La Verde, a target Hot Chili acquired in 2024 that it is quickly exploring, it is emerging as a copper-gold porphyry discovery and a possible third ore source for Costa Fuego, Woolley wrote. The company's first exploration phase of La Verde, comprised of a 10,000-meter (10,000m) reverse circulation (RC) drilling, was "immensely successful." It confirmed a +0.2% copper mineralized footprint extending over 1 kilometer in length, 750m in width, and up to 400m in vertical depth.
"Importantly, three higher-grade centers with grades up to 0.7% copper and 0.3 grams per ton (0.3 g/t) gold have been encountered and are highly prospective candidates for starter pits," Woolley wrote.
Initial results from phase two diamond drilling, in progress, further supported the potential for delineating a high-grade, La Verde starter pit with mineralization starting within 30m of surface. Hole DKD032, a twin of discovery hole DK002 but 200m deeper, returned 529m of 0.41% copper and 0.21 g/t gold, starting 41m downhole, including 148m of 0.6% copper and 0.3 g/t gold starting at 70m downhole in the northeast high-grade center.
Holes DKD035 and DKD036, also in the northeast high-grade zone, (assays are pending), visually showed wide intersections of strong copper porphyry-style mineralization at a shallow depth updip. The holes potentially expand the zone.
In the southeast high-grade zone, hole DKP005D, a 200m deepening of earlier RC hole DKP005, extended the zone 60m to the east. The hole showed 47m of 0.57% copper and 0.12 g/t gold, as well as 28m of 0.49% copper and 0.15 g/t gold.
"These initial diamond drill results are exciting and potentially indicate a convergence of the northeast and southeast high-grade centers, which may be mined as a single pit," Woolley wrote.
Including DKD035 and DKD036, results are pending for six holes.
Financial Implications
Woolley highlighted that La Verde "could balloon" the already solid returns of Costa Fuego. Potentially, it could boost the life-of-mine free cash flow by 50%, or 44% on an NPV10% basis, by adding the La Verde open pit to the beginning of the mine plan. Doing so would delay the need for about US$800M needed for the block cave expansion and provide free cash flow beforehand. Also, it would materially decrease the underground project timeline risk.
"The expanding resource base could attract strategic investment to accelerate technical work needed to incorporate La Verde into the Costa Fuego mine plan," Woolley added.
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- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Paradigm Capital, Hot Chili Ltd., December 10, 2025
Hot Chili Ltd. HCH-CA 3 Note: Please refer to above table for applicable disclosure numbers. 1. The analyst has an ownership position in the subject company. 2. Paradigm Capital Inc. has assumed an underwriting liability for, and/or provided financial advice for consideration to the subject companies during the past 12 months. 3. Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months. 4. Paradigm Capital Inc. has greater than a 1% ownership position in the subject company. 5. The analyst has a family relationship with an Officer/Director of subject company. 6. A partner, director, officer, employee or agent of Paradigm Capital Inc. is an officer or director of the issuer. Paradigm’s disclosure policies and research distribution procedures can be found on our website at www.paradigmcap.com. Paradigm Capital Inc. research is available on Bloomberg, CapitalIQ, FactSet and LSEG or at www.paradigmcap.com. Issued by Paradigm Capital Inc. Stock Coverage History Research Rating System Paradigm Capital Inc. uses the following rating recommendation guidelines in its research: About Paradigm Capital Inc. Paradigm Capital Inc. (PCI) is a research-driven, independent, institutional equity investment dealer focused on sectors and companies that have attractive longterm secular growth prospects. PCI’s research is available on our website at www.paradigmcap.com. Please speak to your Sales or Trading Representative if you require access to the website. The analyst (and associate) certify that the views expressed in this report accurately reflect their personal views about the subject securities or issuers. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations expressed in this research report. Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated directly or indirectly from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance and client feedback. Analysts are not directly compensated for specific Investment Banking transactions. The opinions, estimates and projections contained herein are those of PCI as of the date hereof and are subject to change without notice. PCI makes every effort to ensure that the contents herein have been compiled or derived from sources believed reliable and contain information and opinions, which are accurate and complete. However, PCI makes no representation or warranty, express or implied, in respect thereof, and takes no responsibility for any errors and omissions that may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this research report or its contents. Information may be available to PCI, which is not reflected herein. This research report is not to be construed as an offer to sell or solicitation for or an offer to buy any securities. PCI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. PCI may act as financial advisor and/or underwriter for certain of the corporations mentioned herein and may receive remuneration for same. PCI is a member of The Toronto Stock Exchange, The TSX Venture Exchange and The Canadian Investment Regulatory Organization (CIRO). Any products or services mentioned on this website are made available only in accordance with local law (including applicable securities laws) and only where they may be lawfully offered for sale. PCI will not open accounts except in jurisdictions in which it is registered. To U.S. Residents: This report was prepared by PCI which is not subject to U.S. rules with regard to the preparation of research reports and the independence of analysts. PCUS, affiliate of PCI, accepts responsibility for the contents herein, subject to the terms as set out above. Any U.S. person wishing to effect transactions in any security discussed herein should do so through PCUS.
