The company is moving toward an integrated mining and processing model while carrying out a 35,000-metre drilling program and evaluating an ore sale agreement with Casposo.
By Panorama Minero
Challenger Gold Limited provided an update on the development strategy for Hualilán, a gold project located in the Ullum Department of San Juan Province, following the completion of an operational review aimed at advancing toward a larger-scale integrated mining and processing model.
The company is seeking to transition from its current small-scale selective mining and third-party processing (toll treatment) model to an operation with on-site processing. According to Challenger, experience gained during the initial campaign provided new information on reconciliation, mining, grade control, metallurgy and costs, which has now been incorporated into project planning.
The review determined that the current model is less suited to the broader and more disseminated grade distribution identified within the mineralized body. Based on these findings, Challenger believes an integrated operation would allow for closer alignment between mine planning, processing and cost management.
The strategy is based on the recently released Pre-Feasibility Study (PFS) for Hualilán, which outlines production of 1.84 Moz AuEq (million ounces of gold equivalent) over a 14.25-year mine life, with average annual production of approximately 135 koz AuEq (thousand ounces of gold equivalent) once the staged ramp-up period has been completed.
Transition toward an Integrated Operation
In parallel, Challenger has launched its first exploration drilling program at Hualilán in more than three years. The campaign initially comprises a minimum of 35,000 metres of diamond drilling to test extensions of known mineralization and advance Mineral Resource conversion.
The program will also provide geotechnical information for the proposed standalone Phase 1 heap leach project.
During an estimated transition period of approximately four months, Challenger plans to focus its activities on the mining, preparation, stockpiling and sale of ore whose technical and economic suitability has been confirmed.
In this context, the company is evaluating replacing its current toll treatment arrangement with an ore purchase agreement with Casposo. If completed, Challenger expects to maintain a commercial alternative for generating cash flow while reducing its direct exposure to costs associated with third-party processing.
The company is also assessing the possibility of reallocating mining contractor resources to earthworks for the construction of the Phase 1 heap leach operation and to areas requiring smaller equipment. Some of these areas could generate high-grade ore suitable for sale to Casposo under the agreement currently being evaluated.
The PFS outlines an integrated open-pit development comprising a conventional flotation plant with a capacity of 1.5 Mtpa (million tonnes per annum) and an 8 Mtpa heap leach circuit.
According to the study, this configuration would provide greater flexibility to direct ore to the different processing alternatives. The PFS estimates start-up capital of US$232 million, excluding contingencies, and a payback period of approximately 2.25 years from the start of production.
The production profile used as a reference contemplates more than 105 koz AuEq in each of the first two years, corresponding to the staged ramp-up period. The project would subsequently reach average production of approximately 135 koz AuEq per year over the following 12 years.
Next Steps
Challenger will continue working on updates to the Pre-Feasibility studies, optimization of the mine plan, design and detailed engineering, permitting and financing for Hualilán.
The company also plans to move forward with early procurement activities and planning for long-lead equipment, as part of preparations for the project’s future construction and operation.
The review of the operating model, together with the exploration program currently underway, forms part of Challenger’s strategy to advance Hualilán through a staged development approach with greater integration between mining and processing activities.
