Latest news with #ChallengerGold
News.com.au
5 days ago
- Business
- News.com.au
Break it Down: Challenger's ‘land of gold' inches closer to production
Challenger Gold has raised $34.5 million to advance its Hualilan gold project into production, with first cash flows expected soon.
News.com.au
22-05-2025
- Business
- News.com.au
The next gold producers? These juniors are closer than you think
A key moment takes place once a company enters into production In an environment of declining discoveries, capital is flowing more frequently toward near-term developers Here are a few lesser-known junior gold companies nearing production For junior exploration companies, the leap into production is a defining moment. It signifies the transition from discovery of a high potential deposit to the unlocking of its commercial value through extraction and market sales. Timing production during a period of elevated gold prices, like the boom we're in now, can also bring multiple advantages from stronger balance sheets to higher valuations, faster development timelines and potential interest from larger mining companies seeking to secure future supply. In fact, in its second volume of the 'The Emerging Precious Metals Book', Canaccord Genuity says with less discoveries being made, inorganic growth through M&A and strategic investment into emerging developers is becoming more common. 'We believe this is likely driven by rapid growth of mid-tier gold companies over the past 10 years causing a shift in skillsets away from grassroots exploration to a more operational focus,' the broker says. ASX-listed companies nearing gold production often draw strong investor interest, yet the select few highlighted below remain largely overlooked, despite holding tier-one assets. Argentina's next gold producer A prime example is Challenger Gold (ASX:CEL), which has its sights set squarely on bringing the Hualilan gold project in Argentina into production. Last December, the company locked in a three-year toll mining deal with Casposo Argentina Mining – part of ASX-listed Austral Gold (ASX:AGD) – for 150,000tpa of processing capacity. A total of 450,000t of capacity has been locked in, with the deal also providing working capital support for mining, trucking, and processing until CEL's operations begin generating revenue. That will enable Challenger to start churning out cash from a small, high grade portion of its 2.8Moz AuEq Hualilan project. Speaking to Stockhead, CEL managing director Kris Knauer noted that the company has revised its strategy in response to the current high gold price environment. 'The market simply isn't valuing companies fully or anywhere near close to fully unless they are in production,' he said. 'We are going into production imminently by toll milling, and changed our plans given the high gold price – we'll be toll milling nearly 3% of our ore body to fund a standalone, larger development project. 'We've got a 2.8-million-ounce resource and the opportunity to start a really large gold mine all for toll milling 3% of that ore body, which means we can effectively leverage ourselves into production for very minimal capital expenditure upfront.' Knauer said 100% of the company's focus right now is on getting the project mine ready. 'We are working through our mine readiness plan, getting final quotes from mining contractors, with the aim to be pouring first gold in November.' First gold pour in Q4 South African gold developer West Wits Mining (ASX:WWI) is hoping to make the transition at its Qala Shallows asset, part of the larger Witwatersrand Basin Project (WBP). The project boasts a global resource of ~5Moz at 4.66g/t gold, with 65% of that contained within the indicated and measured categories that provide certainty for mine-planning. The underground component, Qala Shallows, is the initial development focus which has a resource of 10.28Mt at 3.04g/t for just over 1Moz of contained gold. Under the definitive feasibility study, the project is expected to produce 924,000oz of gold over a 17-year mine life to deliver post-tax life-of-mine cashflow of US$522m at a conservative gold price of US$2200/oz. This will deliver post-tax net present value and internal rate of return – both measures of the project's profitability – of US$366m and 72% respectively. Speaking with Stockhead's Tylah Tully last week, WWI CEO Rudi Deysel noted the cut-off grade used in the mine plan was far below the record price levels seen today. "In our case we've used a gold price of US$1750/oz ... considering that we came down to a cut-off grade which is considerably higher ... which gives us the opportunity to optimise our production plan even further," Deysel said. That means a number of mineralised blocks now clear the economic hurdles to enter the mine plan. "For that reason we need to reconsider ... the project itself and even the future projects we're looking at, because that will make a huge economic difference to those projects and the valuation thereof." West Wits director Warwick Grigor, Australia's first specialist gold analyst in the 1980s and the steward of research firm Far East Capital, said current gold price movements mirror the transformational run after the end of the Gold Standard in the 1970s and 1980s. With global economic uncertainty growing, there's no reason its run can't continue he said, providing incredible tailwinds for WWI. "I see no reason why this gold price won't go on for another year, year and a half, at least and could quite comfortably get to US$5000/oz," he told Tully. "The way to tell when it's starting to peak is if you have movement of US$500 a day. Now I think we're a long way from that. "It's the best place to be at the moment, and being the best place to be, what a position to be in opening a new gold mine in the famous Witwatersrand goldfield." A major funding milestone was hit with a ZAR 902.5 million (~US$50 million) credit-backed senior loan from the IDC and Absa, covering roughly 55% of Phase 1's project costs. The company is targeting first gold pour from Qala Shallows in Q4 this year, with steady state production of 70,000tpa expected by 2028. Gold Duke ready to break ground Western Gold Resources (ASX:WGR) owns the shovel-ready 3.25Mt Gold Duke project in WA's northern Goldfields. The company's planned stage 1 development involves the production of 447,000t at 2.55g/t gold for 34,000oz of gold from the Eagle, Emu, Gold King and Golden Monarch deposits. All mining approvals have been secured for all four proposed mining pits within Gold Duke. A 2024 scoping study, based on a ~$3,500/oz gold price, has forecasted an un discounted cash surplus of $38.1 million, with upfront CAPEX in the range of $2.1–$2.5 million. But this figure may significantly understate the project's potential, with surging gold prices and a soft Australian dollar driving the local gold price up to around ~$5100/oz. With the wind at its back, WGR managing director Callum Winn told Stockhead there's potential to grow the production target at Gold Duke as the company works on updating the scoping study. 'We're purely focused on the scoping study, and the outputs on that will feed into an updated grade control and infield drilling design as well as more current parameters in terms of gold price and costs of haulage and processing,' he said. 'We're negotiating gold processing options which include toll treatment and ore purchase agreements and production is looking like seven to eight months after that.' GWR Group (ASX:GWR) holds a gold royalty over tenements M53/1016-1, M53/1017-1, and M53/1018-1, part of the Gold Duke Project owned by WGR. A gold royalty of $10 per troy ounce applies to the first 50,000 ounces produced, decreasing to $5 per ounce thereafter. Immediate cashflow potential TG Metals (ASX:TG6) is wasting no time at its newly acquired Van Uden project in WA, with work underway to determine the potential of near-term cashflow using material from existing stockpiles. Existing stockpiles could mean early cashflow through toll treating — and with gold prices on a tear, the shallow historic workings could open the door to a much bigger operation. Van Uden sits within WA's Forrestania greenstone belt and consists of four mining leases within short distance to the producing Marvel Loch as well as the mothballed Edna May gold processing plants. The project already has a historical resource of 5.4Mt at 1.38g/t for 238,000oz of gold, which is now set to guide follow-up drilling and analysis aimed at upgrading it to a JORC 2012-compliant estimate. Historical production at the site includes 1142oz of gold from the Tasman and Diemens open pits as well as surface gold-bearing laterites, providing confidence that a gold system is present. CEO David Selfe views getting stuck into the stockpiles as a key focus, with PoWs now in place to test the revenue opportunity. 'In consideration of the large amount of drilling completed since the last publicly stated mineral resource estimate, we are in the process of completing a JORC 2012 compliant resource, which will form the foundation of mining studies, focused on a low capital cost startup,' he said.
News.com.au
18-05-2025
- Business
- News.com.au
Kristie Batten: Challenger emerges for crown of ASX's next rising gold producer
One of Australia's top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene. In the coming weeks, the market will get a taste of just how much cash will start flowing into the coffers of Challenger Gold (ASX:CEL). In the December 2024 quarter, Challenger finalised a toll processing agreement for its Hualilan gold project in Argentina. The agreement with Austral Gold (ASX:AGD) allows for a total of 450,000t of Hualilan ore to be processed through the Casposo mill, 170km away. Austral's board is led by Argentinean businessman and real estate mogul Eduardo Elsztain, who is the major shareholder in Challenger and was recently appointed as its non-executive chairman. The aim of the 'Western Australia-style' toll milling agreement is to establish early cashflow to fund a larger Hualilan operation. 'There really wasn't a pathway for a company like us to get into production,' Challenger managing director Kris Knauer said during a virtual presentation last week. Hualilan has a resource of 60.6 million tonnes at 1.1 grams per tonne gold, 6g/t silver, 0.4% zinc and 0.06% lead, or 1.4g/t gold equivalent, for 2.8 million ounces of AuEq. Knauer pointed out that the 450,000t of ore to be processed at Casposo, containing roughly 85,000oz of gold and 495,000oz of silver represented only 3% of the orebody. The company recently secured a US$20 million funding facility with the first US$2 million drawn down for early works. Challenger expects to be mining in October, with first gold produced in November or December. A pre-feasibility study on the toll milling operation is due in the next couple of weeks. Knauer said the PFS would likely surprise the market in terms of how much cash the toll milling operation could generate. Bigger fish While the figures aren't out yet, Challenger is expecting the proceeds from toll milling to fund a much larger standalone Hualilan operation. The late 2023 scoping study focused on the high-grade core of the deposit, comprising 1.5Moz at 5g/t AuEq. Pre-development capital costs were forecast at US$134 million, though the company believes there are opportunities to reduce that. The scoping study identified the potential to produce 141,000oz of AuEq per year at all-in sustaining costs of US$830 an ounce over more than 12 years. 'It will be a globally significant operation,' Knauer said, adding that it would make the company a top 20 gold producer on the ASX. The study outlined a post-tax net present value of $454 million, internal rate of return of 66% and payback period of just 1.25 years. However, the study used metal prices of US$1750/oz of gold and US$20/oz of silver. On Friday, spot gold was trading at just over US$3200/oz, while silver was sitting at US$32/oz, representing significant upside to the study numbers. Interest in Ecuador Challenger also has the 100%-owned El Guayabo project and 50%-owned Colorado V projects in Ecuador. The combined resources for the projects recently doubled to 9.1Moz of AuEq, with 6.9Moz of that attributable to Challenger. Earlier this month, the company entered into an investment protection agreement with the Ecuadorian Government, which, as the name suggests, grants Challenger legal protections. The company had been exploring options, including a sale, partnership or Toronto spin-off, to realise value for the Ecuador projects in order to focus on Hualilan. However, Challenger has halted the process after its neighbour to the north, Toronto-listed Lumina Gold, agreed to a C$581 million takeover from China's CMOC Group. Lumina holds the undeveloped Cangrejos deposit, which has a resource of 20.5Moz of gold, 2.64 billion pounds of copper, 31.3Moz of silver and 50 million pounds of molybdenum. 'It certainly shines a light on the value we have in Ecuador that the market hasn't recognised,' Knauer said. Knauer said the company was receiving approaches from Canadian companies about the Ecuadorian assets but would pause the process in light of the Lumina takeover. 'It makes sense for the buyer of Lumina to buy us,' he said. While shares in the company spiked following the Lumina news, Challenger still has a market capitalisation of just $128.5 million. The company counts BlackRock as a 9.4% shareholder, while board and management have major skin in the game, holding a combined 27%.
The Australian
08-05-2025
- Business
- The Australian
CEL secures protection for El Guayabo
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. 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. 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. 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.
