Challenger Exploration (ASX: CEL) is on track to “rapidly advance” its South American gold exploration projects following the completion of a $6.5 million placement.
The gold explorer today announced it has received commitments to raise the funds through the issue of 65 million shares at $0.10 each.
The placement was made to a group of strategic investors and domestic institutions and according to the company, it attracted strong demand with bids received for more than double the amount raised.
Participants included Challenger chairman Fletcher Quinn, who has subscribed for $1.3 million, subject to shareholder approval.
Challenger said the funds will be substantially used to advance the company’s high-grade Hualilan gold project in Argentina and the El Guayabo gold and copper project in Ecuador.
Hualilan gold project
Challenger’s 75%-owned Hualilan project comprises 15 mining leases in Argentina’s San Juan Province.
The project’s non-JORC historical resource of 627,000 ounces at 13.7 grams per tonne gold remains open in most directions.
Challenger is planning to restart drilling at the project this month and said thanks to the placement funds, the program is likely to be substantially upgraded and involve additional drilling rigs.
The company also plans to undertake a geophysical survey, designed to target extensions to the known mineralisation within 300m of surface, and metallurgical test work.
In December, Challenger announced high-grade gold results from its first drilling campaign at Hualilan. Highlights included 6.1m grading at 34.6g/t gold, 21.9g/t silver and 2.9% zinc, and 10.4m at 10.4g/t gold, 28g/t silver and 4.6% zinc.
The company said this recent drilling success provided “significant justification for the implementation of a substantial and comprehensive exploration program” to “realise the full potential of Hualilan”.
El Guayabo gold and copper project
Earlier this month, Challenger announced it had increased its tenement position at El Guayabo by 830% by signing a deal to farm-in to the adjoining 23,000-hectare Colorado V tenement in Ecuador.
The company said a portion of the placement funds will be used for an extensive program of re-assaying the historical Colorado V drill core, as well as following up on geophysics and drilling at the El Guayabo project.
In addition, the placement funds will go toward further expanding the company’s tenement position at both South American projects, as well as general working capital.
Challenger also holds a 95% stake via a subsidiary in a shale gas play in South Africa’s Karoo Basin, but has not announced plans for this.
Tranche one of the placement is expected to settle this Thursday with tranche two, the director’s tranche, conditional upon shareholder approval at a general meeting to be held “as soon as practicable”.
By afternoon trade, Challenger shares were up 26.09% to $0.15.