Challenger Gold Accelerates Hualilan Production with Toll Processing Deal

Toll Processing Agreement Secures Early Cash Flow

Challenger Gold Limited (ASX: CEL) has taken a decisive step towards commercialising its flagship Hualilan Gold Project in San Juan, Argentina, by executing a definitive Binding Toll Processing Agreement with Casposo Argentina Mining Limited, a subsidiary of Austral Gold Limited. This agreement guarantees Challenger an annual toll processing capacity of 150,000 tonnes over three years at the Casposo plant, located approximately 170 kilometres from Hualilan.

The strategic move is designed to capitalise on current record gold prices, which have surged above US$2,500 per ounce, enabling Challenger to generate early cash flow. This revenue will be instrumental in funding the development of a standalone processing plant at Hualilan, accelerating the project’s timeline towards production.

Robust Ore Inventory and Plant Readiness

Challenger has identified 478,000 tonnes of ore with a high-grade average of 5.8 grams per tonne gold and 32.2 grams per tonne silver, containing approximately 85,550 ounces of gold and 495,334 ounces of silver, earmarked for initial toll milling. The Casposo plant, historically productive with over 323,000 ounces of gold and 13.2 million ounces of silver processed, has undergone an independent audit confirming its suitability and readiness for refurbishment.

The audit highlighted the plant’s capacity to process up to 300,000 tonnes per annum, well above the contracted 150,000 tonnes, and indicated potential gold recoveries exceeding 90%, surpassing previous estimates. The refurbishment capital expenditure is estimated at US$4 million, funded by the plant operator following a successful US$7 million debt financing.

Encouraging Drilling Results at Colorado V, Ecuador

Beyond Argentina, Challenger reported positive exploration outcomes at its Colorado V gold-copper project in El Oro, Ecuador. The final four holes of the resource drilling program intersected extensive mineralisation, with intervals such as 399.8 metres at 0.4 g/t AuEq and significant high-grade zones. These results, combined with earlier drilling, underpin expectations for a substantial maiden Mineral Resource Estimate (MRE) at Colorado V, reinforcing the project’s potential.

Strategic Placement and Board Renewal

To support these developments, Challenger completed a $6.6 million strategic placement to Inversiones Financieras del Sur S.A. (IFISA), part of the Elsztain Group, which now holds 12.7% of the company, becoming its largest shareholder. The proceeds will fund the upfront payment under the toll processing agreement, preparation costs for toll milling, and general working capital.

In line with this strategic partnership, Challenger plans to appoint Eduardo Elsztain as Non-Executive Chairman and Saul Zang as Non-Executive Director, bringing extensive experience and networks in Argentina and Latin America to the board. This board renewal is expected to bolster the company’s governance and commercialisation efforts.

Financial Discipline and Forward Outlook

Exploration expenditure for the quarter was $2.9 million, with a focus on completing drilling programs and advancing project readiness. Administration costs rose slightly due to one-off expenses related to the strategic placement and toll milling agreement. Importantly, no substantive mining production or development activities were undertaken during the quarter, consistent with the company’s phased approach.

Challenger’s next update is anticipated to provide further clarity on the progress towards toll milling commencement and the maiden resource estimate at Colorado V, both critical milestones in the company’s growth trajectory.