Mr. Christian Easterday reports

HOT CHILI ARRANGES A$29.9 MILLION FUNDING TO ACCELERATE COSTA FUEGO COPPER HUB, CHILE

Hot Chili Ltd. has successfully arranged a $24.9-million (Australian) private placement to institutional and professional investors through the issue of 24.9 million new fully paid ordinary shares at an offer price of $1 (Australian) per share.

Veritas Securities Ltd. and Cormark Securities Inc. acted as joint lead managers (JLMs), and BMO Capital Markets and Beacon Securities Ltd. acted as co-managers to the placement. The placement received strong demand from Australian, Canadian and overseas institutional and other investors as well as existing shareholders.

In addition to the placement, the company will offer to all eligible shareholders the opportunity to participate in a share purchase plan (SPP) to raise up to $5-million (Australian) at the same offer price as the placement ($1 (Australian) per share).

The placement and the SPP aim to increase Hot Chili's trading liquidity on the TSX Venture Exchange and provide all of the company's eligible shareholders with access to the same offer price.

Proceeds from the placement and SPP, in addition to existing treasury, 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.

Christian Easterday, Hot Chili's managing director, said: "We control large-scale assets in two of the most critical commodities of our time -- copper and water -- with two of the most desirable attributes -- low risk and near term.

"The company has been receiving increasing interest from potential strategic funding 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 for our shareholders.

"The placement and share purchase plan maintain the company's strategic funding 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.

"Market conditions are indicative of the initial stages of a new copper price cycle being driven by a lack of new supply. The company is now well funded to take advantage of controlling the right assets at the right time in the right place."

Details of the placement

The company has arranged a placement of 24.9 million shares to raise $24.9-million (Australian) (before costs). The placement will be completed in Australia under an offer to investors who qualify as professional or sophisticated investors under sections 708(8), (10) and (11) of the Corporations Act 2001 (Cth), and 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 $6,897,500 ($7.75-million (Australian)), or 7.75 million shares (the Canadian offering). 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 new shares will be issued within the company's 25 per cent placement capacities under Australian Securities Exchange (ASX) listing rules 7.1 and 7.1A.

Shares under the placement will be issued at a price of $1 (Australian) (89 cents) each 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.

Details of the share purchase plan

In addition to the placement, Hot Chili will offer existing eligible shareholders with a registered address in Australia or New Zealand who were holders of shares on the ASX at 5 p.m. (Western Time) on Friday, May 3, 2024, the opportunity to subscribe for up to five million new shares at the same price as the placement (being $1 (Australian) per share) by way of an SPP offer without incurring brokerage fees to raise up to $5-million (Australian).

Eligible shareholders will have the opportunity to apply for up to $30,000 (Australian) worth of SPP shares. The SPP shares will rank equally with Hot Chili's existing shares on issue. Hot Chili retains the right to accept oversubscriptions or to scale back applications (in whole or part) at its absolute discretion, which may result in the SPP raising more or less than $5-million (Australian). Hot Chili also reserves the right to place any shortfall under the SPP (at the same issue price), within its placement capacity under ASX Listing Rule 7.1.

Full details of the SPP offer, including the terms and conditions of the offer, will be set out in the SPP offer document, which is expected to be released to the ASX and dispatched to eligible shareholders on or around Friday, May 10, 2024. The company reserves the right to vary the terms of the SPP without notice. Eligible shareholders should review the SPP offer terms and conditions in full before deciding whether or not to participate in the SPP.

The SPP offer period will open on Friday, May 10, 2024, and is expected to close at 5 p.m. WT on Friday, May 24, 2024.

We seek Safe Harbor.