CEL moves closer to early cashflow
Special Report: Challenger Gold is on track to realise its plans to toll treat gold ore from its Hualilan project in Argentina after Austral Gold said refurbishment of its Casposo plant is progressing to plan.
Challenger Gold on track to start Hualilan toll treatment plan that will deliver robust cashflow
Refurbishment of Austral Gold's Casposo plant progressing to plan with commissioning in August
Cashflow from toll treatment to fund plans for standalone development at Hualilan
The Hualilan project in San Juan is the subject of a three-year toll milling strategy that could deliver 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 conservative spot prices of US$2500/oz for gold and US$27.50/oz for silver.
Using a gold price of US$3300/oz, which is a little less than US$30 below spot prices, this EBITDA increases to A$221 million.
The company will capitalise on the current high gold price to generate early cash flow.
What makes this even more lucrative for Challenger Gold (AX:CEL) is that this potential for robust returns is based on just 3% of the current 2.8 million ounce resource at Hualilan.
This toll treatment strategy outlined in a pre-feasibility study requires an upfront capital investment of just US$8.9 million with payback within three months.
Watch: Met test success paves way for broader gold development
Austral plant
Central to this plan is the use of Austral Gold's (ASX:AGD) Casposo plant that is 165km away via sealed road.
AGD has now said that commissioning of the plant remains on target for August 2025 with the majority of Q2 key activities having wrapped up and the remaining tasks in progress and on track for completion in early August.
So far, the primary crusher refurbishment has been completed and is ready for operation.
Installation of a sampling tower is currently underway in this area to improve grade control of the material to be sourced from Hualilan.
The SAG mill relining is underway and expected to be wrapped up with recently arrived materials, while the SAG engine repair (part of the grinding circuit) is also finished.
Installation of new hydrocyclones is underway and awaiting the vendor's delivery date, while the repair of engines and reducers for leaching tanks and the counter current decantation have also wrapped up.
The filter band refurbishment is underway and modifications and improvements to the piping and ducts have also now completed.
This will allow for toll processing of Hualilan material to begin in November 2025, which is in line with CEL's schedule.
Toll treatment will see the processing of at least 450,000t of near surface Hualilan material for more than three years.
Cashflow from the agreement will be allocated towards the construction of the larger stand-alone Hualilan gold project, which boasts a high-grade core of 1.6Moz at 5g/t gold.
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 closer to Hualilan toll milling with Casposo plant refurb on track
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