Challenger Gold revives monetisation plans after doubling Ecuador resource estimate
Challenger Gold (ASX: CEL) has revived plans to monetise its Ecuadorian portfolio after doubling the size of the mineral resource estimate (MRE) for its assets from 4.5 to 9.1 million ounces gold equivalent.
The company had previously announced its intention to focus on the near-term high-grade production opportunity at its flagship Hualilan gold project in Argentina.
However, the company has since determined that the market is undervaluing the previous net MRE and the substantial exploration potential of its Ecuadorian assets.
Monetisation process
Managing director Kris Knauer says that, with the completion of the maiden Colorado V MRE and the upgrade of the estimate from El Guayabo, the company is now positioned to advance the monetisation process.
Options include a spin-off of the Ecuador projects into a standalone entity listed on the Toronto Stock Exchange, where similar projects trade at premium valuations compared to peers listed in Australia.
The company is also considering an outright divestment of the assets to generate immediate capital for advancing Hualilan or a farm-out agreement with a major mining company to fund development while retaining exposure through royalties or equity participation.
Unlocking value
“This resource update represents a transformational milestone for Challenger Gold shareholders, enabling us to move forward with unlocking significant value from our Ecuador assets while focusing entirely on bringing our flagship Hualilan project into production,” Mr Knauer said.
“This is only the beginning for the asset—the current resource is based on drilling just five of 15 major anomalies identified across our Ecuador projects, with all 13 anomalies drilled so far returning significant mineralisation.”
The new MRE comprises 570.3 million tonnes at 0.50 grams per tonne gold equivalent, with 4.4Moz of the resource accredited to the Colorado V project and 4.7Moz to the adjoining El Guayabo project.
Farm-in completed
The completion of the maiden MRE at Colorado V completes Challenger’s requirements under the farm-in to earn a 50% interest in the MRE.
Challenger and the current owner will now jointly fund a definitive feasibility study and ongoing development.
Challenger owns 100% of El Guayabo.