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Diversified major Glencore has purchased a 9.99% stake in Chile-based copper miner Hot Chili for $10.5m (A$14.4m).

A related binding agreement has been signed between the two firms, providing support for the completion of a feasibility study and development of Hot Chili’s Costa Fuego copper-gold project.

The Costa Fuego project involves the Cortadera, Productora and El Fuego assets.

According to estimates, the project hosts about 2.9Mt of copper, 2.7Moz of gold, 9.9Moz of silver and 64,000t of molybdenum.

Furthermore, Hot Chili will grant Glencore offtake agreements more than 60% of the concentrate production for eight years, on ‘arms-length commercially competitive benchmark terms’.

Glencore will also have the right to appoint a director to the Hot Chili board.

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By GlobalData

It will have the option to appoint members to a technical steering committee that will advise on Hot Chili’s operational matters.

In a statement, Hot Chili said: “The Glencore investment is a positive endorsement of the company’s Costa Fuego copper-gold project as it progresses to become a globally significant, low-altitude development.”

The Chilean miner said that it intends to leverage Glencore’s expertise in project development and production through its addition as a strategic investor.

Hot Chili managing director Christian Easterday said: “Hot Chili welcomes the strategic alignment with Glencore, especially as the Company moves toward a dual listing on the TSX Venture exchange by the end of 2021.”

“We believe Glencore will make an excellent partner in the development of Costa Fuego and are a testament to Hot Chili’s staff and consultants who are working tirelessly to transition Hot Chili into a Tier-1 copper developer.”

Earlier this year, Glencore temporarily reduced production at the Murrin Murrin operation in Western Australia as a result of a malfunction at an acid plant at the site.

The Murrin Murrin fully integrated nickel and cobalt operation is located approximately 880km east of Perth in the north-eastern Goldfields region.

It is equipped to process and refine nickel and cobalt to produce LME grade metal briquettes on-site.