Challenger Gold sees potential to significantly improve Hualilan’s already outstanding economics

About Challenger Gold

Challenger Gold Limited (Challenger Gold, the company, ASX:CEL) is developing two complementary gold/copper projects in South America. The company’s flagship project is the 100 percent owned Hualilan Gold Project in Argentina containing 2.8Moz Gold Equivalent. The other project is in southern Ecuador with a maiden Mineral Resource Estimate of 4.5Moz Gold Equivalent.

Potential to significantly improve Hualilan’s already outstanding economics

Early metallurgical testing as part of the Scoping Study for the Hualilan Gold Project indicates that converting the gold-silver concentrate into doré on-site will materially improve the economics of the Hualilan Gold Project.

Late in the preparation of the November 2023 Scoping Study for the Hualilan Gold Project an opportunity was identified to upgrade the gold-silver concentrate into gold doré, however at the time of the Scoping Study release the supporting test work was incomplete. Gold doré refers to a bar composed of a mixture of gold and silver created at the mine site before being transported to a refinery for further purification. Doré bars can weigh as much as 25kg.

Using a fine-grind and high-intensity cyanide leach circuit to upgrade the gold-silver concentrate into doré on site delivers cost savings US$150/t for transport and US$100/t for Treatment Costs/Refining Costs. The on-site process increases payability on gold from 95 percent to 99.5 percent and payability on silver from 60 percent to 97.5 percent. Capital expenditure is expected to be minimal to produce   doré in this process because of the relatively low tonnage of concentrate to be fine-ground and intensely leached. The other advantage of producing gold doré on site is that it removes the time delay associated with payment for gold sold via a concentrate, reducing working capital requirements.

Hualilan Project forecast EBITDA of US$738M over Life of Mine

Prior to this cost saving initiative to enhance Hualilan, the Scoping Study initial results were released to the ASX on 8 November 2023. The Scoping Study demonstrated a rapid payback period of just 1.25 years and forecast EBITDA of US$738 million (A$1.1 billion) over Life of Mine. The mine has an annual production target of 116,000 ounces of gold, 440,000 ounces of silver and 9,175 tones of zinc.

Significantly, forecast All in Sustaining Cost (AISC) is estimated at just US$830 per ounce. This is at the lowest quartile of AISC globally.

Looking Ahead

Testwork is continuing to address other material opportunities identified to enhance Hualilan and these enhancements have the potential for inclusion in the Pre-feasibility Study. Meanwhile intensive-leach tests on the representative concentrate sample to optimise for grind size and reagent consumption against gold-silver recovery are the next steps in this process.

As Challenger presents these test results and opportunities to the market, the share price should strengthen in the period ahead.