Challenger Gold Refines Hualilán Strategy with Integrated Processing Plan

Challenger Gold (ASX: CEL) has reset the near-term operating strategy for its 100%-owned Hualilán gold project in Argentina after a review reinforced the case for a larger integrated mining and processing development.

The transition is backed by an A$85 million equity raising, a strengthened leadership team, and a new minimum 35,000-metre diamond drilling campaign aimed at resource growth, conversion, and development work.

Challenger plans to move away from the current small-scale third-party toll treatment model, which it considers less suited to the broader disseminated grade distribution now better understood across the orebody.

The longer-term pathway remains anchored by the recently disclosed pre-feasibility study (PFS), which outlined a 14.25-year mine life and a 1.84 million-ounce gold equivalent production target.

Integrated Development Reinforced

The PFS envisages an integrated open-pit operation combining a conventional 1.5 million tonnes per annum flotation plant with an 8Mtpa heap leach circuit to provide greater ore-routing flexibility and reduce reliance on toll treatment.

At a US$3,500/oz gold price, the study delivered a pre-tax net present value at a 5% discount rate of US$1.45 billion and post-tax value of US$1.10 billion, alongside an all-in sustaining cost of US$1,618 per ounce of payable gold.

Estimated start-up capital is US$232m excluding contingency, with payback targeted at about 2.25 years from production commencement and annual output averaging around 135,000 ounces of gold equivalent after the staged start-up period.

Subject to engineering, permitting, financing, project approvals and regulatory processes including potential approval under Argentina’s Incentive Regime for Large Investments, Challenger is targeting construction activities during 2027 and standalone production in early 2029.

Transition Targeting Cash Flow

Over an approximately four-month transition period, Challenger intends to focus on mining, preparing, stockpiling, and commercialising ore confirmed as technically and economically suitable while aligning activity with the future standalone development.

The company is assessing replacing the current toll treatment structure with an ore purchase arrangement with Casposo, which it expects would reduce direct exposure to third-party processing cost risk while retaining a commercial pathway for cash flow.

Mining contractor resources may also be redirected where appropriate to earthworks for the Phase 1 standalone Heap Leach project and to areas requiring smaller equipment, including zones that could produce high-grade ore for sale to Casposo.

Challenger is progressing mine plan optimisation, engineering design, permitting, financing, early procurement, and detailed engineering as it works toward construction readiness.

Drilling Adds Upside

The diamond program is Hualilán’s first exploration drilling campaign in more than three years, with most drilling targeting extensions of known mineralisation along strike and at depth while supporting mineral resource conversion within the existing open-pit design.

Around 5,000m is allocated to geotechnical drilling for the proposed Phase 1 standalone Heap Leach project, while Challenger is also reinterpreting existing geophysical datasets across the broader property to generate district-scale targets.

The existing mineral resource of about 2.8Moz gold equivalent remains open along strike and at depth, giving the campaign scope to test growth potential while improving understanding of the mineralised system’s scale, geometry and continuity.

The funding package is supported by existing institutional shareholders and new global mining investors, including a lead commitment from Peter Marrone and associated investors, with Marrone appointed non-executive chair alongside new senior operating, finance, and project-planning appointments.