The company aims to accelerate the development of the deposit located in San Juan to take advantage of the rising gold price environment.
By Panorama Minero
Challenger Gold (ASX: CEL) has signed a Binding Term Sheet that includes a private placement by Dolphin Real Assets Fund SPC Ltd., part of the Elsztain Group, and a toll milling opportunity for Hualilán ore, which is expected to finance the costs of mining, transporting, and processing until the firm, operating through its subsidiary Golden Mining SA, begins to generate revenue from its first gold sales.
The Toll Milling Agreement will guarantee CEL a minimum of 450,000 tons of high-grade near-surface Hualilán ore containing approximately 85,000 ounces of gold and 495,000 ounces of silver. Of this total, approximately 79,044 ounces of gold are indicated and 18,240 ounces are inferred, along with 448,861 ounces of indicated silver and 88,782 ounces of inferred silver. "The successful execution of this agreement will be a transformational event for the company," they stated.
The primary objective of this strategy is to capitalize on the current high gold price, exceeding US$2,500 per ounce, to generate early cash flow. This revenue will be allocated towards the construction of the standalone Hualilán gold project, which will include a Flotation with Tails Leach (FTL) circuit, a potential Heap Leach pad, and an open-pit mining fleet.
Challenger Gold plans to publish a preliminary study on the startup of the toll milling, with results that will subsequently be integrated into the life-of-mine (LOM) plan for Hualilán and included in the Pre-Feasibility Study.
Additionally, the company has submitted an Environmental Impact Assessment (EIA) application for approval of mining activities, which is the final requirement for Hualilán to obtain full production permitting. Furthermore, CEL is preparing a separate EIA for the road transport of Hualilán ore, which will be the final permit required before commencing toll milling.
The closing of these agreements is subject to the completion of due diligence, execution of Definitive Agreements, and the necessary approvals under ASX listing rules. To date, due diligence has included further metallurgical testing of Hualilán ore, a detailed economic analysis of the tolling agreement terms conducted by a leading San Juan mining consultancy, and the design of the toll milling pits.
Finally, Challenger Gold intends to apply for a listing on the TSX or another recognized Canadian stock exchange as soon as practically possible following the closing of these agreements. This TSX listing will serve as a catalyst for a board renewal process, seeking to incorporate one to two independent directors based in Canada, who would replace the current CEL directors.
