About Hot Chili Limited (ASX: HCH)

Hot Chili Limited (ASX: HCH) was incorporated in 2008 and is headquartered in Applecross (Perth), Western Australia. The company explores for copper, gold, silver, and molybdenum, with copper being its primary focus. Its strategic rationale is built around the anticipated structural shortfall in global copper supply — a critical metal for the energy transition. The company is currently positioning itself as one of the few independent developers globally with a project of significant scale, capable of producing over 100,000 tonnes of copper equivalent annually. It is also listed on the TSX Venture Exchange (TSXV: HCH) and the OTCQX market (OTCQX: HHLKF).

Field of Activity

Hot Chili (ASX: HCH) operates primarily in the Atacama Region of Chile, a top-tier mining jurisdiction. Its activities are distinguished by three key pillars:

1- Copper-Gold Development (Costa Fuego): The company’s core focus is the Costa Fuego hub, which consolidates three major deposits:

● Cortadera – focused on copper-gold discoveries.

● Productora – an advanced-stage copper-gold project

● San Antonio – part of the El Fuego copper project, which also includes the Valentina underground mine

Unlike many Chilean projects located at high altitudes in the Andes, Costa Fuego is situated at low elevation (coastal range), which significantly reduces capital intensity and infrastructure challenges.

2- Water Infrastructure (Huasco Water): A unique strategic advantage is its subsidiary, Huasco Water. Hot Chili holds granted maritime concessions and water rights, allowing it to extract and process seawater. This ensures a sustainable water supply for its own operations and offers a potential "utility-style" business model by supplying desalinated water to other miners in the water-scarce Huasco Valley.

3- Exploration: The company continues active exploration to expand its resource base, recently discovering the La Verde porphyry system, located just 30km from its main hub, which has shown potential to further scale the project.

Flagship Project: Costa Fuego

As one of the largest independent copper projects globally, Costa Fuego offers a unique blend of scale and strategic backing. With a resource base of over 725Mt , the project integrates open-pit and underground mining, feeding a central processing facility to create a clean, arsenic-free concentrate. Its status is reinforced by partnerships with industry giants Glencore (which holds a 60% offtake agreement) and Osisko Gold Royalties. Costa Fuego was rated by S&P Global Market Intelligence (2022) as one of the top 10 "low risk" undeveloped copper projects globally, giving it a strong competitive positioning among undeveloped copper assets worldwide.

Relative Market Valuation of Measured & Indicated Copper Resources by Project and Study Stage. Source: www.hotchili.net.au

Future Plans

Key near-term objectives include submitting the Environmental Impact Assessment (EIA) for Costa Fuego, expanding its water business to create a secondary revenue stream, and integrating the La Verde discovery to further enhance the project's scale. With construction funding discussions underway, the company is targeting a production start by late 2028, positioning Costa Fuego to capitalise on an anticipated global copper supply deficit.

What were the main reasons for Hot Chili's share price fall?

Hot Chili Limited (ASX: HCH) has seen its share price fall mainly due to a discounted capital raising, ongoing dilution risk, and concerns about valuation and execution, rather than a sudden operational disaster.

1- Discounted equity raising and dilution

In early‑February 2026, Hot Chili completed a $40 million placement at A$1.65 per share, below the prevailing market price, which triggered immediate selling pressure and a pull‑back of around 7–8% at the time.

Equity raisings at a discount are typically seen as dilutive to existing shareholders, even if the funds are intended to de‑risk development of the Costa Fuego copper‑gold project, and this dynamic has weighed on sentiment.

2- No current revenue and high cash burn

Recent assessments categorise Hot Chili as a pre‑revenue company, given that it generates only minimal non‑operating or statutory revenue and has yet to record any substantial operating income from mining activities.

Consequently, the company lacks operating cash inflows to counterbalance its expenditures on exploration, studies, and corporate operations. Its valuation, therefore, hinges on Costa Fuego's anticipated potential rather than on existing earnings.
Analysts have noted that without a significant reduction in its cash burn, Hot Chili may be compelled to pursue additional capital raising efforts. This prospect creates a persistent overhang on the stock and contributes to its current price softness.

3- Valuation and “rich‑price” concerns

Some recent commentary notes that Hot Chili’s valuation already appears elevated relative to its near‑term fundamentals, with its price reflecting an optimistic view of the Costa Fuego project (for example, a large discounted‑cash‑flow NPV) rather than current cash flow.

When sentiment shifts or the market adopts a more conservative copper‑price and discount‑rate view, that valuation premium can unwind quickly, leading to a fall in the share price.

4- Sector and market‑specific factors

The stock has also been affected by broader copper‑price volatility and risk‑off sentiment in the mining sector, which can hit high‑beta growth‑style developers like Hot Chili harder than established producers.

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Technical Analysis of Hot Chili Limited (ASX: HCH)

Source: Trading view

Hot Chili's chart shows an uptrend that has now entered a correction phase and has formed certain support levels near the current price. Immediate momentum indicators suggest that the consolidation phase may continue before the next increase. These technical boundaries can be a good guide for risk management in trading.

Support levels

Three clear horizontal supports are visible: Support 1 around 1.25–1.30, Support 2 near 1.15, and Support 3 just above 1.00, each formed by previous consolidation and breakout levels. The current pullback is approaching Support 1 and the 100-day MA, creating a confluence area where buyers are likely to reassess positioning.

Stop-loss zone

A lower red zone around 0.80–0.90 is highlighted as a stop-loss/last-defence region; a sustained break below this area would significantly weaken the bullish structure and suggest a deeper trend reversal.

Moving Average Dynamics

50-Day MA (Red) – Immediate Resistance: Price action has broken below the 50-day MA, shifting its role from dynamic support to immediate overhead resistance. This marks the termination of the aggressive upward trend observed in early 2026.

100-Day MA (Blue) – Critical Support: The 100-day MA remains in an uptrend and serves as the primary "line in the sand" for the broader uptrend. It is currently converging with the Support 1 horizontal zone (approx. $1.25), creating a confluence of technical support.

Momentum (Histogram) and Divergence

The lower panel displays a MACD-style histogram, which expanded sharply into positive territory during the recent rally, but has since contracted and now shows a slight negative reading—indicating that upward momentum has diminished.

There is a visible bearish divergence: price made a higher high, while the histogram made a lower high (marked by the red line on the histogram), often an early warning that the uptrend is losing strength and vulnerable to a correction or consolidation.

Volume analysis

The recent upward breakout segment shows a clear, significant increase in volume compared to the much more subdued volume during the consolidation phase in the middle of the chart. The heavy volume during the recent peak and subsequent sharp pullback is typically seen in a distribution phase, where participants are exiting the market due to urgency rather than waiting for liquidity. If new lows are recorded below the current $1.495 level with another increase in selling volume, it supports a continued downward move towards the lower support areas, such as the $1.249 "Support 1" band or the underlying moving averages. Conversely, if the price makes new marginal lows with much lower volume, this indicates seller fatigue and increases the likelihood of a bounce or pullback towards the nearest resistance band formed by the recent breakdown.

FAQs about Hot Chili (ASX: HCH)

Who are Costa Fuego's competitors in Chile?

Costa Fuego competes mainly with other development-stage copper projects for financing, permits, skilled labor and future concentrate buyers. Key Chile-based rivals include Atex Resources’ Valeriano copper‑gold project in Atacama, Marimaca Copper’s 100%-owned Marimaca project in Antofagasta, and Los Andes Copper’s Vizcachitas copper project.

What are the risks facing Hot Chili Company?

Hot Chili faces typical pre-development copper-project risks: securing funding without excessive dilution, maintaining access to capital, and coping with market volatility. Commodity-price swings (copper/gold) can materially change project economics. Progress also depends on permitting/ESG approvals and successful feasibility, engineering and construction execution—especially seawater-supply infrastructure—where cost overruns or delays could impact timelines and valuation.

What is the significance of the Huasco Water project?

Huasco Water, 80% owned by Hot Chili, is a key water infrastructure asset in Chile's Huasco Valley. A 2025 Pre-Feasibility Study outlined its three-stage development: initially supplying seawater to Hot Chili's Costa Fuego project, then expanding into a regional desalination network for agriculture, communities, and other mines. The project secures water for Hot Chili’s operations while creating a potentially large-scale, standalone revenue stream.