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Highlights
- Toll Milling Agreement Signed: Challenger Gold secures a binding deal with Casposo Argentina Mining for processing ore from the Hualilan Gold Project.
- Processing Capacity Secured: The agreement guarantees 150,000 tonnes of ore processing annually for three years, totaling 450,000 tonnes.
- Strategic Investment Progress: CEL’s $6.6M strategic investment continues to advance, with finalization of subscription agreement terms.
Challenger Gold (ASX:CEL) shares rose by 8.89% to 4.9 cents on December 5, 2024, following the company’s announcement of a binding toll milling agreement with Casposo Argentina Mining Limited, the operator of the Casposo treatment plant in San Juan, Argentina. The agreement marks a significant milestone for CEL’s Hualilan Gold Project, securing essential processing capacity for the next three years.
Toll Milling Agreement Details
The agreement guarantees toll processing capacity of 150,000 tonnes per annum, totalling 450,000 tonnes over the three-year term. The terms are designed to align with the economic framework of the Hualilan Project, with CEL benefiting from cost-efficient processing and an incentive structure linked to gold recovery.
Key terms of the agreement include:
- A base toll processing fee of US$8.80 per tonne, with a monthly minimum payment of US$110,000.
- An upfront payment of US$2 million, with US$1 million deferred until the second year.
- A performance fee structure, offering an additional 20-30% of milling costs based on recovery rates, expected to range between US$12-18 per tonne.
Financial Support and Operational Terms
The agreement also provides for working capital support to cover CEL’s costs for mining, trucking, and processing until cash flow begins from the toll milling operations. Importantly, the upfront payment is refundable if the plant is not operational by July 31, 2025.
Initial processing will be conducted in 90-day campaign cycles over a 12-month period, with the possibility of transitioning to continuous processing after the first year, pending favorable operational performance.
Path to Production
CEL continues to progress on key workstreams to support the commencement of toll milling operations. The company is finalizing operational procedures with the Mill Operator, with a definitive toll milling agreement expected within 15-20 days. Mining schedules are also set to be completed within the next 10 days, while options for contract mining and owner-operated solutions are being evaluated.
CEL’s structured approach to advancing the Hualilan Gold Project ensures a clear and flexible path to production, while maintaining financial discipline and operational flexibility.
