Hualilan Toll Milling PFS Projects US$142.8M EBITDA Amid Permit Approval

Permit Milestone Unlocks Toll Milling Operations

Challenger Gold Limited (ASX – CEL) has reached a pivotal regulatory milestone with its Argentinian subsidiary, Golden Mining S.A., securing the final explosives permit required to commence drill and blast operations for toll milling at the Hualilan Gold Project. Issued by Argentina’s Ministry of National Security, this permit clears the way for the company to activate its binding agreement with Casposo Argentina Mining Limited to process a minimum of 450,000 tonnes of mineralised material over three years at the Casposo Plant.

Toll Milling Strategy – Early Cash Flow and Low Capital Intensity

The toll milling approach is designed to capitalise on the current elevated gold price environment, which recently hovered above US$3,300 per ounce. By leveraging the existing Casposo processing facility; historically a prolific producer of gold and silver; Challenger aims to generate early cash flow with minimal upfront capital expenditure. The Pre-Feasibility Study (PFS) released in June 2025 highlights compelling economics, projecting an EBITDA of US$142.8 million and a post-tax net present value (NPV) of US$82.2 million at spot prices. Even under conservative metal price assumptions, the project maintains robust margins and a rapid payback period, estimated by December 2025.

Ore Reserve and Resource Confidence

The company has also disclosed an Ore Reserve estimate underpinning a three-year mine life aligned with the toll milling plan. This reserve is derived from a JORC-compliant Mineral Resource Estimate (MRE) of 2.8 million ounces gold equivalent (AuEq) at Hualilan, supported by extensive drilling and metallurgical test work. The Ore Reserve incorporates realistic mining assumptions, including dilution and recovery factors, and reflects a technically and economically viable mine plan. Importantly, the toll milling operation targets only a small fraction; approximately 3%; of the total resource, leaving significant upside potential for future standalone development.

Technical and Environmental Foundations

Challenger’s comprehensive technical work includes detailed geological modelling, metallurgical testing, and environmental impact assessments. The company received its Environmental Impact Assessment approval in October 2024 and is preparing an addendum to cover the new mine plan. Metallurgical results confirm high recoveries for gold, silver, zinc, and lead, supporting the economic assumptions of the toll milling strategy. Infrastructure requirements are modest due to the toll treatment arrangement, focusing on mining support facilities rather than processing plants.

Looking Ahead – Advancing Hualilan and Strategic Options

With the explosives permit in hand and a clear path to production, Challenger is positioned to commence operations imminently, aiming to deliver early cash flow that will fund the larger standalone Hualilan Gold Project. Meanwhile, the company continues to explore strategic options for its El Guayabo Gold/Copper Project in Ecuador, which holds a significant resource but remains outside the immediate toll milling plan. Investors will be watching closely as Challenger transitions from development to production, navigating operational execution and market dynamics.