Mr. Christian Easterday reports

HOT CHILI MATERIALLY IMPROVES OPTION TERMS FOR COSTA FUEGO COASTAL COPPER HUB IN CHILE

Hot Chili Ltd. has materially improved the terms of several option agreements to acquire landholdings as part of the company's Costa Fuego copper-gold project in the coastal range of the Atacama region, Chile.

Highlights:

• Three options due for exercise in 2024 have been terminated and replaced with one new option agreement (the El Fuego option) now exercisable in September, 2026;
• The El Fuego option covers the San Antonio, Valentina and Santiago Z privately owned landholdings located along the eastern extent of Costa Fuego;
• The new El Fuego option:
  • Materially reduces the company's option payments due in 2024 from $11-million (U.S.) to $1-million (U.S.);
  • Increases Hot Chili's ownership from 90 per cent to 100 per cent, subject to exercise of the option;
  • Extends the option expiry from 2024 to 2026 in exchange for aggregate payments of $4.3-million (U.S.) over the next three years, including the $1-million (U.S.) noted above.

Christian Easterday, Hot Chili's managing director, commented that the option renegotiation is further confirmation of the strength of the company's local partnerships in Chile:

"Alignment of local partners has been a key element of our consolidation strategy for Costa Fuego.

"The El Fuego option allows the company to focus its balance sheet toward exploration and growth of our mineral resource as opposed to property payments.

"Our near-term focus on increasing value per share and leverage to future copper price for our shareholders centres around enhancing Costa Fuego's mineral resource and potential economics in advance of a planned prefeasibility study.

"We are actively evaluating the region for consolidation opportunities, and we expect to see further success on this front as we look to up-scale Costa Fuego's potential study scale toward 150,000 tonnes per annum copper development, from its current 95,000 t per annum copper metal production scale, as outlined in our recent preliminary economic assessment (see news release dated June 28, 2023).

"Updates on growth drilling, resource upgrades and water conceptual studies are also expected."

The remaining payments for the three terminated options covering the El Fuego landholdings were:

• Hot Chili's subsidiary Sociedad Minera La Frontera SpA had the right to earn a 90-per-cent interest, subject to final exercise payments, in the following privately owned landholdings:
  • Valentina -- $4-million (U.S.) payable June, 2024;
  • San Antonio -- $6.6-million (U.S.) payable September, 2024;
  • Santiago Z -- $400,000 (U.S.) payable January, 2024;
  • Total option payments previously due in 2024 -- $11-million (U.S.).

The material terms of the El Fuego option covering the El Fuego landholdings now:

• Frontera has been granted the right to purchase a 100-per-cent interest in the El Fuego landholding, privately owned by Arnaldo and Alfredo del Campo Arias (Arnaldo in his own capacity and also through several vehicles with Alfredo), by making the following payments:
  • $300,000 (U.S.) paid Sept. 30, 2023 (already satisfied);
  • $1-million (U.S.) payable Sept. 30, 2024;
  • $1-million (U.S.) payable Sept. 30, 2025;
  • $2-million (U.S.) payable at Frontera's election, by Sept. 30, 2026, to exercise the El Fuego option.
• The total purchase price for the El Fuego landholdings, if the El Fuego option is exercised in 2026, is now $4.3-million (U.S.).
• If the option is not abandoned, additional payments of up to $4-million (U.S.) in total are conditional on the following matters:
  • Additional payment of $2-million (U.S.), if the copper price average $5 (U.S.)/pound (lb) or above for a period of 12 consecutive months, within a period that expires Jan. 1, 2030.
  • Additional payment $2-million (U.S.), if an independently estimated JORC-compliant mineral resource is reported by Hot Chili or its subsidiaries containing 200 million tonnes or greater within the El Fuego landholdings, within a period that expires Jan. 1, 2030. Such mineral resource shall be reported at or above Hot Chili's current mineral resource reporting cut-off grade (above 0.21 per cent copper equivalent (CuEq) for open pit and over 0.3 per cent CuEq for underground).
  • An additional payment is to be made by March, 2027, if compliance of the condition that justifies payment is verified until Sept. 30, 2026. From October, 2026, payment is to be paid within 70 days after the relevant condition is satisfied.
• Continuation of existing lease mining agreements to third parties in respect to the San Antonio copper mine (limited to the mining rights San Antonio 1 al 5; Santiago 15 al 19; Santiago 1 al 14/20; San Juan Sur 1 al and San Juan Sur 6 al 23. The lease mining agreements are limited to 50,000 tonnes of material extracted per year and will expire Dec. 31, 2025.

Hot Chili thanks the Del Campo family for their continuing support of Hot Chili, both as shareholders and partners, toward building a new large-scale copper mining hub for the Huasco region of Chile.

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 at the company'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 Pty. Ltd. -- 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 (tailings storage facility)).

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 Mr. Easterday, MAIG, Hot Chili's managing director and chief executive officer, and a qualified person within the meaning of NI 43-101.