Challenger Gold puts pieces together for Hualilan mining and toll milling

Challenger continues to make progress towards mining and toll milling readiness at Hualilan with all key workstreams on schedule. 

Challenger Gold is making headway on a number of front at the Hualian gold project in Argentina. Pic: Getty Images

Special report: Argentina’s only near-term gold producer Challenger Gold has taken another step towards production later this year with open pit mine design and mining schedules now completed for toll milling. 

• Challenger gold completes mine pit design and schedules at Hualilan
• A 10% increase in grade is now entirely based on indicated resources 
• A PFS for toll milling is on schedule for March 

Both achievements pave the way for the next stage of development, which includes quote finalisation for contract mining and trucking of material to the Casposo plant, 170km down the road. 

The completed pit design follows a site visit in early January that resulted in design improvements, increasing contained mineralisation and adding operational flexibility. 

Challenger Gold (ASX:CEL) says the mining schedule optimises the delivery of high-grade frontloading material with 8.7 g/t gold and 34.5 g/t silver ore to be delivered to Casposo in the first year.

A three to six-month stockpile buffer is maintained through toll milling, providing further operational flexibility and security. 

Only three of the four initial toll milling pits were required, reducing reliance on any single pit while preserving optionality for additional tolling feed.

Cashflow to fund larger operation 

CEL managing director Kris Knauer said the final mining schedule for tolling itself represents a significant improvement over the company’s initial case. 

It shows a 10% improvement in grade, delivers 6-months toll milling feed in the first 3- months of mining, front loads cashflows with grades of 8.7 g/t Au and 34.5/t Ag during the first year of tolling and provides significant flexibility and optionality, he said. 

An additional 120,000t of material will be available in the finalised pits for the toll milling process.

The idea is to start small then grow big, raising funds for a larger standalone developed utilising more of the 2.8Moz gold equivalent resource defined at Hualilan so far.

At the end of last year Austral’s subsidiary, Casposo Argentina Mining (Casposo) entered into a toll treatment agreement with CEL where Casposo will process mineralised material from CEL’s site in San Juan, Argentina.

As part of the deal, Casposo committed to use its best commercial efforts, directly or through third parties, to secure the necessary funding for the refurbishment and commercial startup of the plant by July 31, 2025 – and so have secured a US$7m loan from Banco San Juan S.A.

A strategic $6.6m placement was also received by an entity controlled by Eduardo Elsztain, which now sees him as the largest shareholder with a stake of 12.7% in CEL. 

Speaking with Stockhead, CEL managing director Kris Knauer said the placement and toll treating agreement will help the company finance a larger operation. 

“That cashflow will cover the cost to get into production and effectively go towards the larger, stand-alone development at Hualian,” he said. 

“This will change things socially in the region, as the operation is set to provide about 500 jobs, which is a big deal. 

PFS underway 

With metallurgical test work and processing cost models in progress, CEL will now focus attention on the toll milling start-up pre-feasibility study, targeted for completion in March. 

Following discussions with lead consultants, it has been determined that given the substantial work already completed, the scoping study will be advanced directly to PFS level. 

The PFS will be prepared in accordance with both Australian Joint Ore Reserves Committee (JORC) and Canadian NI 43-101 standards.

Toll milling pit designs 

Although the initial plan was to develop four small toll milling pits Sanchez, Norte, Magnata, and Sentazon, a strategic review has determined that objects can be met using only three. 

As a result, Sentazon has been held in reserve, providing operational flexibility and an opportunity for additional toll milling, if required.

Various San Juan based consultants have been engaged to assist with environmental studies, permitting, and social and community engagement. 

Whittle Consulting has completed an optimisation of the Toll Milling pits, as part of the broader enterprise optimisation study for the standalone Hualilan full-scale study. 

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 puts pieces together for Hualilan mining and toll milling