DGAP-News: Hot Chili Limited : Quarterly Report

Highlights

Hot Chili Completes CAD$33.8 Million Capital Raising and Share Consolidation

* Strong demand underpinned by several international and North American institutional investors, and some of Hot Chili's largest shareholders including Glencore

* Share consolidation complete and funds secured for 18 months of drilling and development studies to advance the Company's Costa Fuego copper-gold development project in Chile

Commencement of Trading on Canadian TSX Venture Exchange (TSXV:HCH)

* Completion of Initial Public Offering prospectus and commencement of TSXV trading on 4th January

* Appointment of experienced Canadian director Dr Nicole Adshead-Bell to the Board of Hot Chili

2021 Resource Drilling at Cortadera Complete

* Wide and shallow drill results expand open pit potential at Cortadera

o 156m grading 0.4% CuEq* (0.4% copper (Cu), 0.1g/t Gold (Au)) from surface

o 80m grading 0.4% CuEq* (0.4% copper (Cu), 0.1g/t gold (Au)) from 10m depth

o 28m grading 0.7%CuEq* (0.7% copper (Cu), 0.1g/t gold (Au)) from surface

2022 Work Programme and Development Milestones On-Track

* Exploration drilling commenced across Productora Central porphyry target, first of several targets set for first drill testing in 2022

* Commercial negotiations advancing for Glencore Off-take (60% for first 8years) and Port Access-Service agreements

* Cortadera resource up-grade expected in Q1 2022 and Costa Fuego PFS expected in Q3 2022

SUMMARY OF OPERATIONAL ACTIVITIES

Cortadera Resource Growth Drilling

The Company's 2021 resource growth drilling programme at the Cortadera copper-gold discovery in Chile continued with three drill rigs completing a total of 33 drill holes for 7,437m during the quarter.

Drilling during the quarter focussed on expanding remaining open flanks on each of Cortadera's three porphyries and in-fill drill holes to upgrade the resource classification. Approximately 46,000m of additional drilling has been completed at Cortadera in 2021.

Highlights from Cortadera resource drilling during the quarter include:

* New drill results from Cortadera confirm growth of shallow resources at both Cuerpo 1 and 2. These include:

CRP0148 - 156m grading 0.4% CuEq* (0.4% copper (Cu), 0.1g/t gold (Au)) from surface, including 32m grading 0.6%CuEq* (0.5% copper (Cu), 0.2g/t gold (Au)) from 90m depth

CRP0183 - 80m grading 0.4% CuEq* (0.4% copper (Cu), 0.1g/t gold (Au)) from 10m depth including 12m grading 0.6%CuEq* (0.6% copper (Cu), 0.1g/t gold (Au)) from 44m depth

CRP0178 - 72m grading 0.4% CuEq* (0.4% copper (Cu), 0.1g/t gold (Au)) from surface including 28m grading 0.7%CuEq* (0.7% copper (Cu), 0.1g/t gold (Au)) from surface

* Expansion of the +0.4% CuEq mineralisation from surface at Cuerpo 2, and further expansion of the +0.3 CuEq* mineralisation extent across Cuerpo 1.

* Further assay results from Cortadera being compiled for release in advance of the Q1 2022 resource upgrade.

* Multiple resource development workstreams advancing across all resources comprising Costa Fuego

Cost Fuego Development PFS Advancing

The integrated Pre-Feasibility Study (PFS) on the combined Costa Fuego copper-gold development is progressing well with significant advances on metallurgical testwork programmes, mine scheduling, project right-sizing, geotechnical studies and infrastructure access.

Highlights from the Costa Fuego PFS during the quarter include:

* Execution of a Letter of Intent with Puerto Las Losas SA (PLL) to negotiate a port access and port services agreement for PLL's facilities located at Huasco, approximately 50km west of Costa Fuego's proposed processing plant (announced mid-January 2022).

o Under the terms of the Letter of Intent, PLL will finance a study for port services using the existing Puerto Las Losas dock for the shipment of copper concentrates and other materials related to the future construction and operation of Costa Fuego.

o PLL have undertaken to present Hot Chili with a binding offer for port services, within the next 12 weeks or less.

* Completion of initial power supplier process - multiple power providers confirm highly competitive, long-term power price environment with indicative quotations.

* Metallurgical flowsheet optimisation, as well as sulphide and oxide metallurgical testwork programmes underway in Australia.

* Preliminary mine scheduling and mine optimisations (open pit and cave extraction) complete to test 15Mtpa and 20Mtpa sulphide concentrator scale options is complete.

* Re-commencement of Environmental Impact Assessment baseline studies across Costa Fuego with the appointment of leading Chilean environmental consultancy GAC.

* Commencement of Hot Chili's Environmental, Social and Governance (ESG) framework, leveraging-off the company's strong involvement in local partnerships, social programmes and green credentials.

* Development study diamond drilling underway at Cortadera in mid-January to facilitate geotechnical and hydrology modelling.

Costa Fuego Exploration Drilling Commences

The Company has continued to advance its exploration strategy across its consolidated Costa Fuego landholding during the quarter.

In addition to regional soil sampling and mapping, the company commenced drilling activities across the first of several high impact growth targets, scheduled to be tested in 2022.

Highlights from Exploration across Costa Fuego during the quarter include:

* Exploration drilling commenced across the Productora central porphyry target, immediately adjacent to the Productora Mineral Resource - several large copper-gold targets scheduled for testing in 2022.

* Five deep RC holes complete at Productora Central, results pending.

* Approximately 889 soil samples were collected across the Cortadera regional area during the quarter.

* Systematic mapping and sampling undertaken across the gap zone between Cortadera and Santiago Z, as well as extensional work to the west of Santiago Z.

* Acquisition of advanced remote sensing datasets across the Costa Fuego region.

* Regulatory approval for drilling at Santiago Z received in early January, clearing scheduled to commence in February.

* Several regulatory applications submitted for drilling across new growth targets at Productora and Cortadera.

View looking SE across Productora - Drilling underway across a new, large 3D geochemical target identified immediately adjacent to the Productora resource.

Figure 1 Location of Productora and the Cortadera discovery in relation to the coastal range infrastructure of Hot Chili's combined Costa Fuego copper project, located 600km north of Santiago in Chile

Refer to ASX Announcement 'Costa Fuego Becomes a Leading Global Copper Project' (12th October 2020) for JORC Table 1 information related to the Cortadera JORC compliant Mineral Resource estimate by Wood and the Productora re-stated JORC compliant Mineral Resource estimate by AMC Consultants.

* Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery) + (Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne). The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz. For Cortadera (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%. For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%. For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

** Reported on a 100% Basis - combining Cortadera and Productora Mineral Resources using a +0.25% CuEq reporting cut-off grade

Significant intercepts are calculated above a nominal cut-off grade of 0.2% Cu. Where appropriate, significant intersections may contain up to 30m down-hole distance of internal dilution (less than 0.2% Cu). Significant intersections are separated where internal dilution is greater than 30m down-hole distance. The selection of 0.2% Cu for significant intersection cut-off grade is aligned with marginal economic cut-off grade for bulk tonnage polymetallic copper deposits of similar grade in Chile and elsewhere in the world.

Down-hole significant intercept widths are estimated to be at or around true-widths of mineralisation

* Copper Equivalent (CuEq) reported for the drill holes were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne). The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz. Average Metallurgical Recoveries used were: Cu=83%, Au=56%, Mo=82%, and Ag=37%

Note 1: NSR - no significant intersection recorded

Figure 2. Plan view across the Cortadera discovery area displaying significant copper-gold DD intersections across Cuerpo 1, 2 and 3 tonalitic porphyry intrusive centres (represented by modelled copper envelopes, yellow- +0.1% Cu and magenta +0.4% Cu). Note the collar locations of HCH drilling (red) during the quarter

Figure 3. Plan view across Cuerpo 1 of the Cortadera discovery area displaying significant copper-gold DD intersections since the October 2020 resource estimate. The plan view displays the Mineral Resource extents (represented by modelled copper envelope, yellow- +0.1% Cu). Note the new significant results reported including CRP0183, CRP0176 and CRP0178. All new results are shown by cyan collars.

Figure 4 Plan view across Cuerpo 2 of the Cortadera discovery area displaying significant copper-gold DD intersections since the October 2020 resource estimate. The plan view displays the Mineral Resource extents (represented by modelled copper envelope, yellow- +0.1% Cu). Note the new significant results reported including CRP0158, and CRP0148. All new results are shown by cyan collars.

SUMMARY OF CORPORATE ACTIVITIES

CAD$33.8M Funding and Successful TSXV Canadian Dual Listing

During the fourth quarter, Hot Chili completed a successful CAD$33.8 million capital raising associated with its Initial Public Offering for dual listing on the Canadian TSX Venture Exchange (TSXV).

In addition, shareholders voted to consolidated the Company's existing capital structure on a fifty for one basis.

Key Corporate Highlights during the quarter included:

* Shareholders overwhelmingly approved to consolidate the Company's share structure on a fifty for one basis on 15th November

o The consolidation aligns Hot Chili's share price within a range of its Canadian peers including Filo Mining (TSX: FIL, Share Price: CAN$9.00, Mkt Cap: CAN$1.019B), Josemaria Resources (TSX: JOSMF, Share Price: CAN$0.911, Mkt Cap: CAN$346M), Oroco Resources (TSXV: OCO, Share Price: CAN$2.40, Mkt Cap: CAN$460.3M) and Solaris Resources (TSX: SLS, Share Price: CAN$13.13, Mkt Cap: CAN$1.42B) as of 12th October 2021.

* IA Capital Markets and Cormark Securities Inc. of Canada (co-lead underwriters) agreed to arrange CAD$33.8M placement (the 'Offering' or 'Placement') underpinned by several international and North American institutional investors, and some of Hot Chili's largest shareholders including Glencore.

* Funds for 18 months of drilling and development studies to advance the Company's Costa Fuego copper-gold development in Chile

* The Offering comprised new fully paid ordinary shares ("Shares") priced at CAD$1.55 per Share (14% discount to 15 day VWAP) as well as a half free-attaching warrant, exercisable at CAD$2.50 for every new Share successfully applied for with a term of two years ('Warrants').

* Final prospectus in support of the Company's application to list on the TSX Venture Exchange (TSXV) was filed on 21st December along with the issue of 21,567,286 Shares under the Offering, following receipt of CAD$33,429,293 in gross proceeds.

* Hot Chili was admitted to the TSXV with trading commencing on 4th January 2022 (TSXV:HCH).

* Appointment of Harbor Access LLC to provide investor relations consulting service to the Company and Independent Trading Group to provide market-making services in compliance with the policies and guidelines of the TSX Venture Exchange (the 'TSXV') and applicable legislation.

* Appointment of experienced mining and global capital markets professional, Dr Nicole Adshead-Bell, to the Board of Hot Chili.

Additional ASX Disclosure Information

ASX Listing Rule 5.3.2: There was no substantive mining production and development activities during the quarter.

ASX Listing Rule 5.3.3 - Schedule of Mineral Tenements as at 31 December 2021

The schedule of Mineral Tenements and changes in interests is appended at the end of this activities report.

ASX Listing Rule 5.3.4: Reporting under a use of funds statement in a Prospectus does not apply to the Company currently.

ASX Listing Rule 5.3.5: Payments to related parties of the Company and their associates during the quarter per Section 6.1 of the Appendix 5B totaled $5,732,545. This is comprised of Directors' salaries and fees of $161,770 and payments to Blue Spec Sondajes, a company controlled by Mr Murray Black, for rents of $6,025 and drilling services of $5,564,750.

ASX Waivers. The Company applied for and was granted a waiver for the issue of up to 167,090 shares to unrelated parties and up to 14,996 shares to related parties in consideration for the payment of interest of 8% per annum on Convertible Notes, payable quarterly through the issue of shares ('Interest Shares') over the 12 month period from the date of the Company's Annual General Meeting held 14 December 2021 in respect to the quarters ending on 31 December 2021, 31 March 2022 and the period to 20 June 2022. Interest Shares issued during the quarter:

Health, Safety, Environment and Quality

Hot Chili's sustainability framework ensures an emphasis on business processes that target long-term economic, environmental and social value. The Company is dedicated to continual monitoring and improvement of health, safety and the environmental systems.

Importantly, the Company has implemented COVID safety measures and procedures to ensure the safety of its staff, consultants and contractors during these challenging times. This has been critical in allowing for continuation of drilling and other field activities during the quarter.

The Company has refined these protocols and ensured adequate manning of each operational shift to maintain strong productivity at its operations, there is no greater importance than ensuring the safety of our people and their families.

No safety incidents were recorded this quarter. Field operations during the period including geological reconnaissance activities, RC and diamond drilling, field mapping and sampling exercises across the Cortadera, El Fuego and Productora landholdings. El Fuego field activities are run from the Cortadera operations centre and safety statistics are combined for reporting.

The Company's HSEQ quarterly performance is summarised below:

Notes: HSEQ is the acronym for Health, Safety, Environment and Quality. LTIFR per million man hours. Safety performance is reported on a monthly basis to the National Mine Safety Authority on a standard E-100 form; (1) man-hours; (2) Average monthly headcount

Tenement Changes During the Quarter

Changes to the Company's tenement holdings during the quarter included:

1. Cortadera agreement: Ownership of all tenements in the Cortadera option agreement have been transferred 100% to Sociedad Minera Frontera SpA after payment of the final exercise price.

2. Purisima: Ownership of the Purisima tenement in the Purisma option agreement have been transferred 100% to Sociedad Minera Frontera SpA after payment of the final exercise price

3. 14 new mining exploration concessions petitions (pedimentos) have been submitted, have been granted and are soon to be exploration concessions (Solar 1 up to Solar 10, and Soledad 1 up to Soledad 4).

El Fuego Landholding

Qualifying Statements

The Mineral Resource summary for the Costa Fuego Project is presented in the following tables.

Productora Mineral Resource Summary - reported by classification (open pit, using +0.25% CuEq cut-off grade), 28 October 2021

Reported at or above 0.25% CuEq*. Figures in the above table are rounded, reported to appropriate significant figures, and reported in accordance with CIM and NI 43-101. Metal rounded to nearest thousand, or if less, to the nearest hundred.

Copper Equivalent (CuEq) reported for the drill holes were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1% per tonne). The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz. Average Metallurgical Recoveries used were: Cu=83%, Au=56%, Mo=82%, and Ag=37%

** Note: Silver (Ag) is only present within the Cortadera Mineral Resource estimate

Competent Person's Statement- Exploration Results

Exploration information in this Announcement is based upon work compiled by Mr Christian Easterday, the Managing Director and a full-time employee of Hot Chili Limited whom is a Member of the Australasian Institute of Geoscientists (AIG). Mr Easterday has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code). Mr Easterday consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Competent Person's Statement- Productora Mineral Resources

The information in this Announcement that relates to the Productora Project Mineral Resources, is based on information compiled by Mr N Ingvar Kirchner. Mr Kirchner is employed by AMC Consultants (AMC). AMC has been engaged on a fee for service basis to provide independent technical advice and final audit for the Productora Project Mineral Resource estimates. Mr Kirchner is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a Member of the Australian Institute of Geoscientists (AIG). Mr Kirchner has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (the JORC Code 2012). Mr Kirchner consents to the inclusion in this report of the matters based on the source information in the form and context in which it appears.

Competent Person's Statement- Cortadera and Costa Fuego Mineral Resources

The information in this report that relates to Mineral Resources for the Cortadera and combined Costa Fuego Project is based on information compiled by Elizabeth Haren, a Competent Person who is a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Elizabeth Haren is employed as an associate Principal Geologist of Wood, who was engaged by Hot Chili Limited. Elizabeth Haren has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Elizabeth Haren consents to the inclusion in the report of the matters based on her information in the form and context in which it appears. For further information on the Costa Fuego Project, refer to the technical report titled "Resource Report for the Costa Fuego Technical Report", dated December 13, 2021, which is available for review under Hot Chili's profile at www.sedar.com.

Reporting of Copper Equivalent

Copper Equivalent (CuEq) reported for the resource were calculated using the following formula: CuEq% = ((Cu% × Cu price 1% per tonne × Cu_recovery)+(Mo ppm × Mo price per g/t × Mo_recovery)+(Au ppm × Au price per g/t × Au_recovery)+ (Ag ppm × Ag price per g/t × Ag_recovery)) / (Cu price 1 % per tonne). The Metal Prices applied in the calculation were: Cu=3.00 USD/lb, Au=1,550 USD/oz, Mo=12 USD/lb, and Ag=18 USD/oz. For Cortadera (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=56%, Mo=82%, and Ag=37%. For Productora (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=43% and Mo=42%. For Costa Fuego (Inferred + Indicated), the average Metallurgical Recoveries were: Cu=83%, Au=51%, Mo=67% and Ag=23%.

1. This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2. This statement gives a true and fair view of the matters disclosed.

Date: .................30 January 2022.........................................

Authorised by: ...........By the Board.....................................................

(Name of body or officer authorising release - see note 4)

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market by your board of directors, you can insert here: 'By the board'. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: 'By the [name of board committee - eg Audit and Risk Committee]'. If it has been authorised for release to the market by a disclosure committee, you can insert here: 'By the Disclosure Committee'.
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About Hot Chili

Hot Chili Limited is a mineral exploration company with assets in Chile. The Company's flagship project, Costa Fuego, is the consolidation into a hub of the Cortadera porphyry copper-gold discovery and the Productora copper-gold deposit, set 14 km apart in an excellent location - low altitude, coastal range of Chile, infrastructure rich, low capital intensity.The Costa Fuego landholdings, contains an Indicated Resource of 391Mt grading 0.52% CuEq (copper equivalent), containing 1.7 Mt Cu, 1.5 Moz Au, 4.2 Moz Ag, and 37 kt Mo and an Inferred Resource of 334Mt grading 0.44% CuEq containing 1.2Mt Cu, 1.2 Moz Au, 5.6 Moz Ag and 27 kt Mo, at a cut-off grade of 0.25% CuEq.The Company is working to advance its Costa Fuego Project through a preliminary feasibility study (followed by a full FS and DTM), and test several high-priority exploration targets.

Certain statements contained in this news release, including information as to the future financial or operating performance of Hot Chili and its projects may include statements that are "forward-looking statements" which may include, amongst other things, statements regarding targets, estimates and assumptions in respect of mineral reserves and mineral resources and anticipated grades and recovery rates, production and prices, recovery costs and results, and capital expenditures and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions.These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Hot Chili, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements.

Hot Chili disclaims any intent or obligation to update publicly or release any revisions to any forward-looking statements, whether as a result of new information, future events, circumstances or results or otherwise after the date of this news release or to reflect the occurrence of unanticipated events, other than as may be required by law. The words "believe", "expect", "anticipate", "indicate", "contemplate", "target", "plan", "intends", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements.

All forward-looking statements made in this news release are qualified by the foregoing cautionary statements. Investors are cautioned that forward-looking statements are not a guarantee of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.

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.

Investor Relations

Graham Farrell

+1 416-842-9003

Graham.Farrell@harboraccessllc.com

Investor Relations

Jonathan Paterson

+1 475-477-9401

Jonathan.Paterson@harboraccessllc.com

CEO

Christian Easterday

admin@hotchili.netau

https://www.hotchili.net.au/investors/