Challenger Gold sees major Hualilan upgrade opportunity through doré production

Challenger Gold (ASX: CEL) has identified a significant opportunity to improve the return from its proposed Hualilan gold project in Argentina.

In early November Challenger unveiled the results of a positive Hualilan scoping study which highlighted the project’s potential as a high-grade, low cost, high return operation.

The study forecast earnings before interest, taxes, depreciation and amortisation of $1.1 billion over the life of the mine, with a rapid payback period of under 1.25 years based on the current production target.

Operationally, the study identified the mine could produce at an average annual production target of 116,000 ounces of gold, 440,000oz of silver and 9,175 tonnes of zinc at a gold equivalent of 141,000oz.

Potential material improvements identified

In releasing the study results, the company revealed it had identified several clear and potentially material opportunities for optimisation and improvement of operations and capital returns.

This included an opportunity to upgrade the gold-silver concentrate produced in the Hualilan bulk flotation circuit into doré, a semi-pure alloy of the two metals.

As a result of that observation, a high-intensity leach testwork program has now successfully demonstrated a major upgrade pathway to doré production with the results now being considered for potential inclusion in the project’s pre-feasibility study.

Excellent upgrade outcome

“This is an excellent outcome from the first of a series of metallurgical tests targeting several material opportunities we have identified to improve the already attractive Hualilan scoping study economics,” Challenger managing director Kris Knauer said.

“The testwork demonstrates a clear and simple pathway to produce gold doré on-site which has several benefits for the project.”

“Firstly, it removes some $100 million in costs associated with the transport and treatment of gold-silver concentrate. Secondly, it increases the payability on the gold produced and removes the delay associated with payment for gold sold via a concentrate reducing working capital requirements.”

On-site production a major cost-saver

The majority of the gold and silver produced at Hualilan is via the gold-silver concentrate which will likely be sold to off-takers in Asia, with forecast costs of around $230 estimated to transport the concentrate and concentrate treatment and refining charges of approximately $153/t.

The new studies have confirmed the potential for major cost savings through the ability to produce the gold-silver doré bars on-site from the 412,000t of gold-silver concentrate produced over the mine life of the project.

The payability for doré (99.5% gold and 97.5% silver) was also found to compare favourably to the forecast payability of the gold-silver concentrate (95% gold and 60% silver).

The company has identified a low-cost and simple process option which would potentially allow for doré production on-site involving a fine grind of the gold-silver concentrate followed by an intensive cyanide leach cycle to recover the gold and silver, with the pregnant leach solution containing the gold and silver added to the existing carbon-in-leach circuit, which is required for the flotation tailings leach process.

In the meantime, Challenger is also progressing test-work to address other material opportunities identified in the scoping studies that may enhance Hualilan.

This includes further optimisation of metallurgy studies and the potential saleable values of a zinc concentrate.