Mr. Christian Easterday reports

HOT CHILI LAUNCHES NEW WATER COMPANY - HUASCO WATER

Hot Chili Ltd. has established Huasco Water, a new joint venture water company (Hot Chili -- 80 per cent; Compania Minera del Pacifico -- 20 per cent) formed to supply both sea water and desalinated water to the Huasco Valley region of Chile.

Highlights:

• Hot Chili and its partner, Chilean iron ore company Compania Minera del Pacifico (CMP), have established a new water company called HW Aguas para El Huasco SpA (Huasco Water).
• Hot Chili holds an 80-per-cent interest in Huasco Water and CMP holds a 20-per-cent interest, in line with the two companies' ownership interest in Sociedad Minera El Aguila SpA (SMEA), holder of all critical water assets for the development of Hot Chili's Costa Fuego copper-gold project in Chile.
• The transfer of all water assets (maritime water extraction licence, water easements, costal land accesses and second maritime application) from SMEA to Huasco Water has commenced.
• Huasco Water aims to develop a multiuser sea water and desalinated water supply network to supply future water demand for communities, agriculture and new mining developments for the Huasco Valley region of Chile.
• Hot Chili and CMP underpin Huasco Water as potential foundation offtakers (Hot Chili's Costa Fuego copper project -- approximately 700 litres per second of future sea water demand; and CMP's Los Colorados iron ore mine -- approximately 200 litres per second of future desalinated water demand).
• First water offtaker discussions are under way with nearby mine developers accounting for 3,700 litres per second of potential future desalinated water demand, with additional non-mining, desalinated water customers also identified within the Huasco Valley, proximal to Hot Chili's Costa Fuego copper hub.
• Further updates on water supply business case study and potential offtaker discussions are expected.

The Huasco Valley is located in the Atacama region -- one of the most water-stressed regions of the world and where Hot Chili has outlined approximately 3,700 litres per second of potential future desalinated water demand from new mine developments alone (see announcement dated Feb. 26, 2024) as well as other community and industrial sources of demand.

A conceptual study completed by Hot Chili in February, 2024 (see announcement dated Feb. 26, 2024) outlined significant economic, environmental and social synergies for all potential customers in the Huasco Valley, especially given growing community and regulatory opposition to continental water extraction in the Atacama and the long lead times involved in securing maritime concessions and associated permitting in Chile.

Transfer of water assets (previously held by SMEA) into Huasco Water has commenced and the new water company will soon hold the only active granted maritime water concession and most of the necessary permits to provide non-continental water supply to the Huasco Valley, following over a decade of permitting advance for Hot Chili's coastal range, Costa Fuego copper-gold project.

Importantly, Huasco Water provides Hot Chili and CMP water supply security as potential foundation offtakers (Hot Chili's Costa Fuego copper project -- approximately 700 litres per second of future sea water demand; and CMP's Los Colorados iron ore mine -- approximately 200 litres per second of future desalinated water demand.

Discussions with other potential water offtakers are advancing well and the company is pleased to confirm that several non-mining desalinated water customers have also been identified. The company is progressing discussions with several potential Tier 1 infrastructure partners and further updates are expected.

Recent deal in Chile highlights growing trends in water infrastructure development for mining:

• Hot Chili is pleased to note a recent announcement by Antofogasta Minerals on June 5, 2024, in Chile.
• Copper mining major Antofagasta have sold its water assets and water rights to the Centinella copper mine for $600-million (U.S.) to a consortium (Transelec and Almar Water), which will also finance; build, own and operate (BOO); and sell sea water for the Centinella mine expansion, aiming to increase copper metal production by 140,000 tonnes per annum.
• The Centinella copper mine is operated using sea water for processing.
• The existing Centinella water assets include a 144-kilometre-long sea water pipeline from port to mine, which Transelec and Almar will acquire and continue supplying Centinella with approximately 1,200 litres per second.
• Transelec and Almar will build a parallel 144-kilometre-long sea water pipeline using Centinella's water rights to supply an additional 650 litres per second to Centinella.
• Antofogasta expects to save $380-million (U.S.) in capital expenditure for the construction of its Stage 2 water infrastructure expansion.
• The Centinella water expansion project will begin operations in 2026 following a 20-month construction process.

The transaction announced by Antofagasta highlights the strategic nature and implicit value of critical water access rights within the Atacama region and an increasing trend in Chile toward outsourcing in the industrial infrastructure sector.

Importantly, Hot Chili's approach toward potential outsourcing and development of shared infrastructure, in addition to preserving scarce continental water sources, is fast becoming the accepted and responsible approach for unlocking future mining developments in the world's most prolific copper-producing region.

Hot Chili's managing director and chief executive officer, Christian Easterday, is responsible for this announcement and has provided signoff for release to the Australian Securities Exchange and the TSX Venture Exchange.

Qualified person

The technical information in this news release has been reviewed and approved by Christian Easterday, MAIG, Hot Chili's managing director and a qualified person within the meaning of National Instrument 43-101.

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