Mr. Christian Easterday reports

HOT CHILI TO UNDERTAKE A CAPITAL RAISING BY PRIVATE PLACEMENT

Hot Chili Ltd. has engaged joint lead managers to undertake a capital raising by way of a placement of shares to institutional, professional and other investors, to raise up to $29.9-million (Australian).

Proposed placement

The company has appointed Veritas Securities Ltd. and Cormark Securities Inc. as joint lead managers (JLMs), and BMO Capital Markets, as co-manager (together with the JLMs, the agents), to raise up to $29.9-million (Australian) on a best-endeavours basis by way of a private placement of up to 29.86 million new fully paid ordinary shares offered to institutional, professional and other investors.

The issue of the shares under the placement will not be subject to shareholder approval and will be made within the company's 25-per-cent placement capacities under Australian Securities Exchange (ASX) listing rules 7.1 and 7.1A.

The shares will be issued at a price of $1 (Australian) per share (89 cents) per share, and will rank equally with all other shares currently on issue.

The issue price of $1 (Australian) per share represents an approximate 20-per-cent discount to the company's last closing price and an approximate 18.6-per-cent discount to the 10-day volume-weighted average price of Hot Chili shares traded on ASX prior to the company entering into a trading halt on May 1, 2024.

The issue of the shares under the placement is expected to occur on May 9, 2024, or on such other date as the company and the JLMs may agree.

The placement is being made in Australia under an offer to investors that qualify as professional or sophisticated investors under sections 708(8), (10) and (11) of the Corporations Act 2001 (C'h). The placement is being made in Canada by way of private placement in reliance on the listed issuer financing exemption (LIFE) from the prospectus requirements, available under Part 5A of National Instrument 45-106 -- Prospectus Exemptions, in each of the provinces and territories of Canada, other than Quebec, for aggregate gross proceeds of up to $10-million ($11,235,955 (Australian)), or up to approximately 11,235,955 shares. The shares issued pursuant to the LIFE under the Canadian offering will not be subject to a hold period pursuant to applicable Canadian securities laws. There is an offering document related to the Canadian offering that can be accessed on SEDAR+ under the company's profile and on the company's website. Prospective investors in the Canadian offering should read the offering document before making an investment decision.

The shares under the placement may also be offered in the United States pursuant to available exemptions from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws, and in those other jurisdictions outside of Australia, Canada and the United States, provided it is understood that no prospectus filing or comparable obligation, continuing reporting requirement, or requisite regulatory or governmental approval arises in such other jurisdictions.

The placement remains subject to the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

Purpose of capital raising and use of funds

The company has been receiving increasing interest from potential strategic financing parties in its advanced Costa Fuego copper-gold development and its recently announced water supply studies. This interest, in combination with a rising copper price environment, provides confidence to accelerate the company's growth and development plans, while preserving control of these assets.

Proceeds from the placement will provide up to 18 months financing to be used for the completion of the Costa Fuego prefeasibility study, completion of the water supply business case study, completion of the Costa Fuego environmental impact assessment, continuing exploration, drilling and consolidation activities, and for general working capital purposes.

The placement aims to increase Hot Chili's trading liquidity on the TSX-V and maintain the company's strategic financing optionality, while ensuring Costa Fuego remains one of a limited number of globally significant copper developments not owned by a major mining company, that could deliver meaningful new copper supply this decade.

At the closing of the placement, the company will pay to the agents a cash commission equal to 6 per cent of the gross proceeds of the placement and, subject to the approval of Hot Chili shareholders in accordance with ASX Listing Rule 7.1, will issue to the agents such number of non-transferable and unlisted options in the company as is equal to 6 per cent of the number of shares issued under the placement. Each broker option will be exercisable to acquire one share at a price of $1.50 (Australian) per share on or before the date that is 24 months following the issue of the broker options.

Further announcement of placement details

The company's securities are presently in a trading halt, and the company will request continuation of the trading halt and voluntary suspension of trading in its securities on ASX and TSX-V until an announcement regarding the result of the placement. The placement announcement is anticipated to be made prior to commencement of trading on ASX on Monday, May 6, 2024 (Australian Eastern Time).

We seek Safe Harbor.