Latest news with #Hualilan
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
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%.
