Challenger Gold has raised A$34.5 million through an institutional placement to fund near-term gold production and expand development at its Hualilan project in Argentina.
- A$34.5 million placement at A$0.08 per share with institutional backing
- Funds allocated to toll milling, drilling, feasibility studies, and working capital
- Placement includes free-attaching options exercisable at $0.12, pending shareholder approval
- First cash flow from Hualilan targeted in second half of 2025
- Placement increases share capital by approximately 20%
Challenger Gold's Strategic Capital Raise
Challenger Gold Limited (ASX, CEL) has successfully secured approximately A$34.5 million through a two-tranche institutional placement priced at A$0.08 per share. This capital raise, announced on 4 June 2025, is a pivotal step in funding the company’s transition to near-term gold production at its high-grade Hualilan Gold Project in Argentina.
The placement attracted strong support from notable institutional investors including L1 Capital, Helikon Investments, and the Elsztain Group, which is closely associated with Challenger’s Chairman, Eduardo Elsztain. The offer price represents a 16.7% discount to the last closing price, reflecting a strategic balance between raising funds efficiently and maintaining shareholder value.
Funding Allocation and Project Advancement
The proceeds from the placement will be directed primarily towards capital expenditure for toll milling operations and working capital, totaling A$16 million. This approach aims to generate first cash flow from toll milling activities in the second half of 2025, marking a significant milestone for the company.
Additionally, A$5 million is earmarked for accelerated drilling activities to expand the resource base, while A$2.5 million will fund feasibility studies to support an upsized standalone Life of Mine development at Hualilan, with results expected by the first quarter of 2026. The remaining funds will cover transaction costs and general working capital needs.
Shareholder Approval and Equity Impact
The placement will issue approximately 431 million new shares, increasing Challenger’s share capital by about 20%. Alongside the new shares, the company will issue free-attaching unlisted options exercisable at $0.12, representing a 50% premium to the placement price. These options, totaling approximately 215.5 million, are subject to shareholder approval at an extraordinary general meeting expected in late July 2025.
Notably, company directors Kris Knauer and Fletcher Quinn have participated in the placement, subscribing for shares and options, signaling confidence in the company’s near-term prospects.
Looking Ahead
Challenger’s Managing Director, Kris Knauer, described the placement as transformational, enabling the company to emerge as an unhedged and fully financed gold developer. The dual strategy of generating early cash flow through toll milling while advancing a larger standalone development positions Challenger to capitalize on the high-grade potential of Hualilan.
With the capital raise complete and key milestones on the horizon, Challenger Gold is poised to deliver on its production targets and unlock value for shareholders in the coming months.
Bottom Line?
Challenger Gold’s successful placement sets the stage for near-term production and growth, but shareholder approval and execution remain critical next steps.
Questions in the middle?
- Will shareholder approval for the options and Elsztain Group participation be secured without delay?
- How will the market respond to the dilution from the 20% increase in share capital?
- What are the risks and timelines associated with achieving first cash flow from toll milling in H2 2025?