Challenger Gold has production lined up for Hualilán with finalised PFS and strategic funding

Challenger Gold has rolled out a toll treatment PFS that reveals a low-cost, near-term production path at Hualilán in Argentina.

With funding secured, Challenger Gold is advancing its Hualilán Project in Argentina via a newly released toll treatment PFS. Pic: Getty Images

Special Report: Challenger Gold has unveiled a toll treatment PFS highlighting ultra-low capital expenditure to take it to first gold at the Hualilán project in Argentina, with funding already in place to support the next phase of development. 

• Challenger Gold’s PFS delivers forecast EBITDA of A$221m over three years of tolling  
• Total upfront spend is just US$8.9m with payback achieved by December 2025 
• A $34.5m institutional placement fully funds development through to first cash flow 

Based on conservative spot prices of US$2500/oz for gold and US$27.50/oz for silver, the three-year toll milling strategy delivers an estimated EBITDA of A$136 million, a post-tax NPV of US$50.5 million, and cumulative post-tax-free cash flow of US$56.7 million. 

Using a gold price of US$3300/oz, which is $50 below spot prices, this EBITDA increases to A$221 million.  

These impressive financial metrics are from Toll Milling only which is based on only 3% of the current 2.8 million ounce resource at Hualilan. 

The project requires a modest upfront capital investment of just US$8.9 million (A$13.8m), with a rapid payback period expected by December 2025, only three months after mining begins.

Forecasts indicate a strong cost position, with AISC at US$1454/oz gold equivalent, supported by efficient toll milling and minimal haulage requirements, keeping costs comfortably below spot pricing.

With $34.5 million raised through an equity placement, Challenger Gold (ASX:CEL) is fully funded through first production and is now positioned to expedite work on a larger, standalone Hualilán project. 

Key operational findings 

The PFS outlines a high-grade production schedule using only reserves. That means mining will be based on ore with a high degree of confidence.

Mining will be focused on three shallow open pits producing 465,000 wet metric tonnes of mineralised material above the cut-off grade at an average mined grade of 6.2g/t gold and 35g/t silver. 

A production target of 76,600oz payable gold and 338,500oz silver has been set out with a life-of-mine strip ratio of 6:1 and a forecast mining cost of US$8.12/t.

Ore will be hauled 165km on a sealed highway to the fully permitted Casposo plant, where recoveries are expected at 84.4% gold and 65.7% silver. 

Hualilán ore will be batch-treated by Casposo at a rate of about 25,000t per month under three months on and three months off schedule with the entire toll program lasting for 33 months in total.

Next fully financed gold producer 

That is all fully funded after Challenger locked in commitments to raise $34.5m from investors.

The placement was supported by prominent institutional investors L1 Capital, Helikon Investments, and the Elsztain Group at 8c per share, representing a 16.7% discount to the May 30 closing price of 9.6c and a 6.4% discount to CEL’s 20-day VWAP.

Proceeds will help fund the company through to first cash flow from the toll milling operation at Hualian. 

Capital will be spent towards drilling and studies for an upsized standalone Life of Mine development at Hualilán. 

CEL managing director Kris Knauer said the placement is transformational for Challenger. 

“We believe the success of the Placement validates our strategy to generate near-term cash flow from Hualilán via toll-milling while simultaneously providing Challenger the funding and runway to accelerate studies and drilling on an upsized standalone development of Haulilán,” he said. 

“Challenger hopes to emerge from the placement as an unhedged and fully financed gold developer with a clear pathway to production which is expected later this calendar year.”

This article was developed in collaboration with Challenger Gold, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Challenger Gold has production lined up for Hualilán with finalised PFS and strategic funding