Challenger Gold breathes easy in Ecuador with investment protection for El Guayabo project

Challenger Gold has secured protection for up to US$75m worth of investment in its El Guayabo project in Ecuador.

Challenger Gold can proceed with confidence that any investment in El Guayabo will be protected under its agreement with the Ecuador government. Pic: Getty Images

Special Report: Challenger Gold has secured a great deal of certainty for its investment into the El Guayabo project after reaching an investment protection agreement with the Ecuadorian government.

• Challenger Gold secures El Guayabo certainty with Ecuador investment protection agreement
• Initial eight-year IPA covers $75m worth of investment from initial acquisition in 2019 to any spending to the end of 2027
• El Guayabo shares the same geology as Lumina Gold’s nearby 20.5Moz Cangrejos project

The project is just 6km from Lumina Gold’s 20.5Moz Cangrejos project that secured a $300m streaming deal with Wheaton Precious Metals in 2023.

It also shares the same geology, surface footprint, mineralisation style and similar grades as Cangrejos with both deposits interpreted as being part of the same system that is split by a tenement boundary.

Adding further interest, Lumina is being acquired by China’s CMOC Group for C$581m ($650m), highlighting the potential value of Challenger Gold’s (ASX:CEL) El Guayabo project.

Under the investment protection agreement, the government has granted the company legal protections including stability of the regulatory framework, resolution of disputes through international arbitration, and protection of the company’s investment.

The IPA covers US$75m of investment encompassing its initial acquisition of El Guayabo in 2019 through to expenditure incurred until the end of 2027.

It has an initial term of eight years and is renewable.

This comes on the back of the company upgrading resources in Ecuador by 100% to 9.1Moz silver equivalent in April 2025, making it one of the larger, undeveloped gold resources in South America.

The El Guayabo project in Ecuador. Pic: Challenger Gold

“The completion of the Investment Protection Agreement is a significant development for the project,” managing director Kris Knauer said. 

“The IPA provides certainty with respect to the legal framework governing the project, including stable mining regulations and fiscal terms, and security of title and investment for the term of the agreement. 

“Additionally, it provides protection from all forms of confiscation and a mechanism for international arbitration should there be any disputes related to the project. 

“The IPA is also timely given recent corporate action in Ecuador as we take steps to monetise our Ecuador assets following the significant resource upgrade from 4.5 million ounce to 9.1 million ounce.”

Investment Protection Agreement

The IPA provides regulatory stability and protection from changes to the current legal framework.

It means the legal framework at the time of execution will continue to apply if the terms are more favourable to the project owner than any potential new framework.

The agreement also guarantees rights including non-discriminatory treatment, property protection and legal certainty.

Should any disputes arise in relation to the project, both parties will undergo international arbitration in London under the rules of the International Chamber of Commerce.

Listen: Kris Knauer chats with Barry FitzGerald

In a previous instalment of the Explorers Podcast, host Barry FitzGerald spoke with CEL managing director Kris Knauer, about the company’s progress at Hualilán in Argentina, which is fast approaching mining and toll milling readiness.

Ecuadorian projects

CEL holds 100% of El Guayabo and half of Colorado V, which sit 35km from a deepwater port with existing power, water and road access and are located on granted mining leases.

The current 9.1Moz resource is based on drilling at five of the 15 regionally significant gold-copper in soil anomalies located across the project.

All 13 soil anomalies drilled by the company have returned significant mineralisation.

Monetisation options being considered include a TSX-listing of the Ecuador assets, an outright sale to generate cash for development of the Hualilan development in Argentina or a strategic partnership/farm-in with a major mining company.

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.