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Highlights
- Binding MOU: Austral Gold’s subsidiary, Casposo Argentina, has entered into a Binding MOU with Challenger Gold for the toll treatment of ore from the Hualilan project at Casposo’s plant in San Juan, Argentina.
- Toll Treatment Agreement: A formal toll treatment agreement is expected within 15 days, guaranteeing 450,000 tonnes of capacity over three years.
- Funding for Refurbishment: Casposo commits to securing funding for the refurbishment of its plant, with the goal of restarting operations by July 31, 2025.
Austral Gold Limited (ASX:AGD) has announced that its subsidiary, Casposo Argentina Mining Ltd. (Casposo), has entered into a Binding Memorandum of Understanding (MOU) with Challenger Gold Limited (ASX:CEL) to process mineralised material from Challenger’s Hualilan gold-silver-zinc project at the Casposo plant located in San Juan, Argentina. This agreement marks a major milestone for both companies as they move forward with plans for toll processing.
Key Terms and Considerations
The Binding MOU outlines several important terms:
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Toll Treatment Agreement: The parties will enter into a formal toll treatment agreement to govern the processing of Challenger’s Hualilan project material at the Casposo plant. The agreement guarantees 150,000 tonnes per year of toll treatment for Challenger, with a total guaranteed capacity of 450,000 tonnes over a three-year period.
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Financial Commitments: Challenger will pay Casposo US$3 million, with US$2 million to be paid within the next 15 business days and the remaining US$1 million to be paid two years later. Interest will accrue at 6% per annum. Notably, the upfront payment is refundable if the ore is not processed at the Casposo plant due to low recovery rates (below 70%) or if the plant has not been relaunched by July 31, 2025.
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Incentives and Fees: Challenger will also pay a fixed monthly fee of US$110,000 once the Casposo plant reopens. Additionally, an incentive fee of 20-30% of milling costs will be paid, depending on recovery rates.
Refurbishment and Operations Timeline
Casposo has committed to securing the necessary funding for the refurbishment and startup of the Casposo plant by July 31, 2025, with the goal of reinitiating operations within the given timeframe. During the negotiation period, the MOU ensures exclusivity between Casposo and Challenger regarding the toll treatment of Hualilan ore.
Ownership Structure
Austral Gold also disclosed that Tyrus SA, an entity controlled by Eduardo Elsztain (Austral’s Non-Executive Chairman), currently holds a 4.33% stake in Challenger. This interest is expected to rise to approximately 12.74% following the completion of a private placement.
