Mr. Christian Easterday reports

HOT CHILI SIGNS BINDING LETTER OF INTENT FOR OPTION TO ACQUIRE COMETA PROJECT IN CHILE

Hot Chili Ltd. has entered into a binding letter of intent (LOI) with Bastion Minerals Ltd. for the grant to Hot Chili of an option to acquire 100 per cent of Bastion's Cometa project in Chile, located near Hot Chili's Costa Fuego copper-gold project in the coastal range of the Atacama region, Chile.

Cometa consists of exploration and mining concessions covering approximately 56 square kilometres in an area located approximately 15 km southeast of Costa Fuego's planned operating centre and contiguous with Hot Chili's landholdings in the region.

The option is another step in Hot Chili's consolidation strategy for the Costa Fuego copper project.

The company's recently published preliminary economic assessment entitled "Costa Fuego Copper Project -- NI 43-101 Technical Report Preliminary Economic Assessment," with an effective date of June 28, 2023, establishes Costa Fuego as a low-risk, long-life copper project benefiting from a low start-up capital and a high annual copper equivalent metal production profile of over 100,000 tonnes for a 16-year mine life, including 95,000 tonnes copper and 49,000 ounces gold during primary production (first 14 years) at C1 cash cost of $1.33 (U.S.)/pound (estimated net of byproduct credits).

Hot Chili is focused on upscaling Costa Fuego's resource base and potential study scale toward a 150,000-tonne-per-annum (tpa) copper production profile ahead of the delivery of the Costa Fuego prefeasibility study (PFS), expected in H2 2024. Cometa provides additional optionality for the discovery of further mineral deposits in the Costa Fuego project area with the potential to provide supplemental feed and/or a longer mine life to the project laid out in the PEA.

The material terms of the LOI are as follows:

• Exclusivity period of 60 days for Hot Chili to conduct due diligence and for Hot Chili's subsidiary Sociedad Minera La Frontera SpA (Frontera) to enter into a definitive option agreement with Bastion's subsidiary SCM Cornet Constelacion, the holder of a 100-per-cent interest in the concessions comprising Cometa, for the grant to Frontera of an option to acquire a 100-per-cent interest in the Cometa concessions;
• Non-refundable cash payment of $100,000 (U.S.) to Bastion upon grant of the option;
• Non-refundable cash payment of $200,000 (U.S.) within 12 months from the grant of the option to keep the option in good standing;
• Option may be exercised within 30 months of the date of grant;
• If the option is exercised, the consideration payable to Bastion to purchase the Cometa concessions is:
  • $2.4-million (U.S.) if the option is exercised by Hot Chili within 18 months from the date of grant of the option;
  • $3-million (U.S.) if the option is exercised by Hot Chili within 30 months from the date of grant of the option.
• Hot Chili may elect to satisfy the purchase consideration in cash (100 per cent), or in cash (50 per cent) and ordinary shares of Hot Chili (50 per cent) issued at a price per share equal to the 15-day volume-weighted average price at the date of exercise of the option, subject to applicable regulatory approvals, including the approval of the TSX Venture Exchange.

The company will provide further updates on the grant and any exercise of the option in due course.

Cortadera expansion drilling update

Drilling operations at Cortadera continue, with nine reverse circulation (RC) drill holes completed so far for 2,010 metres.

Four of these drill holes have been completed across the western extension of the Cortadera porphyry resource, including one precollar in preparation for a deep diamond hole beneath Cuerpo 4. Following the drilling of RC precollars at Cortadera, the RC drill rig will begin a hydrogeological program at Cortadera commencing in mid-September.

One diamond drill rig is planned to commence double-shift drilling in September. Preparations are under way to bring a second diamond drill rig on-line as the company ramps up for its extensive 30,000 m expansion drilling campaign across multiple exploration targets.

Qualifying statements

Technical report

Certain scientific, technical and economic information contained in this news release is derived from the PEA. For readers to fully understand such information, they should read the PEA technical report prepared in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects (available on SEDAR+ or on Hot Chili's website) in its entirety, including all qualifications, assumptions, limitations and exclusions that relate to the information set out in this news release. The PEA is intended to be read as a whole, and sections should not be read or relied upon out of context. The technical information in this news release is subject to the assumptions and qualifications contained in the PEA.

Qualified persons -- NI 43-101

The PEA was compiled by Wood Australia Pty. Ltd. with contributions from a team of independent qualified persons (within the meaning of NI 43-101). The scientific, technical and economic information contained in this news release pertaining to Coast Fuego is based on the PEA, which was prepared by the following independent qualified persons (within the meaning of NI 43-101):

• Elizabeth Haren (MAUSIMM (CP) and MAIG) of Haren Consulting -- mineral resource estimate;
• Dean David (FAUSIMM (CP)) of Wood -- metallurgy;
• Piers Wendlandt (PE) of Wood -- market studies and contracts, economic analysis;
• Jeffrey Steven (PE) of Wood -- capital and operating costs;
• Anton von Wielligh (FAUSIMM) of ABGM Consulting Pty. Ltd. -- mine planning and scheduling;
• Edmundo Laporte (PE) of GAC -- environmental studies, permitting, and social or community impact;
• Dave Morgan (PE) of Knight Piesold -- project infrastructure (TSF).

The independent qualified persons have verified the information disclosed in the PEA, including the sampling, preparation, security and analytical procedures underlying such information.

Disclosure regarding mine planning and infrastructure has been reviewed and approved by Grant King, FAUSIMM, Hot Chili's chief operations officer and a qualified person within the meaning of NI 43-101.

The scientific and technical information in this new release, other than such information derived from the PEA, has been reviewed and approved by Christian Easterday, MAIG, Hot Chili's managing director and chief executive officer, and a qualified person within the meaning of NI 43-101.

Ms. Haren, Mr. David, Mr. Wendlandt, Mr. Kossari and Mr. von Wielligh have sufficient experience, which is relevant to the style of mineralization and types of deposits under consideration, and to the activities undertaken, to qualify as competent persons as defined in the 2012 edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves and as qualified persons under NI43-101.

We seek Safe Harbor.