Challenger Gold Grows Cash Reserves to Accelerate Hualian Project Towards Production

Challenger Gold Ltd (ASX: CEL) has secured an additional $4 million share placement from a single investor.

Funds will be used to fast-track the company’s flagship Hualian Gold Project in San Juan province, Argentina, into production.

This brings the total raised to $9.6 million from two parties, with the new investment on the same terms as the placement to Eduardo Elsztai earlier in the month.

Elsztain is a prominent Argentine businessman.

The new shares are issued at $0.085 with a one-for one option exercisable at $0.14 a share until 25 March 2025.

Adding extra value for Challenger, no fee is payable on the placement.

Progressing towards Hualian

Challenger will also use the new funds to maximise the value of its Ecuador assets which currently host a resource of 4.5 million ounces gold equivalent, for divestment.

The company will complete the final 8,000 metres of a 22,000 metre drill program designed to produce a maiden resource at Colorado-V.

The next steps following this resource, Challenger intends to initiate a strategic process to explore options to monetise, or spin-off, its Ecuador assets.

This then allows the company to explore all options to fast-track the wholly-owned high-grade Argentinian gold project into production.

Argentina

A recent Scoping Study demonstrated outstanding economics, rapid payback and strong cashflows for Hualilan, which is located in the San Juan Province.

The San Juan Province was voted the number 1 mining jurisdiction in South America in the recent Fraser Institute Survey.

The study focused on the high-grade core of Hualilan to present a low startup-capital project capable of being funded by the company.

Hualilan currently hosts a JORC 2012 resource of 60.6 million tonnes at 1.4 g/t gold equivalent for 2.8 million ounces gold equivalent.

The resource remains open in most directions.

Within this, is a high-grade core containing 9.9 million tonnes at 5.0 g/t gold equivalent for 1.6 million ounces gold equivalent and 29.1 million tonnes at 2.2 g/t gold equivalent for 2.4 million ounces gold equivalent.

The study forecast Challenger to be one of the lowest cost Top 20 ASX-listed producers.

Compelling financial metrics

  • Forecast EBITDA of US$738 million (A$1.1 billion) over life-of-mine
  • Rapid payback period of under 1.25 years (post-tax, ungeared)
  • Pre-tax NPV US$409 million (A$629 million) at US$1,750 gold ounce and US$20 silver ounce
  • Project IRR 75% (Pre-Tax Real)

Making these metrics so compelling is the recent rally in precious metals.

Gold is currently trading at US$2380 an ounce, with silver up over 40% to US$28.30 an ounce.

 

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