Heap Leach Success at Hualilan Raises Questions on Environmental and Toll Treatment Risks

Metallurgical Milestone at Hualilan

Challenger Gold Limited (ASX, CEL) has reached a pivotal stage in the development of its Hualilan Gold Project in Argentina, with the final phase of metallurgical testwork now underway. This work is critical to the upcoming full-scale Pre-Feasibility Study (PFS), scheduled for completion by early Q4 2025. The company’s recent column leach test results have been particularly encouraging, demonstrating that heap leaching; a low-cost, large-scale processing method; can effectively recover gold from low-grade mineralisation previously excluded from economic consideration.

Heap Leach Unlocks Low-Grade Mineralisation

The standout feature of the testwork is the exceptional gold recovery rates achieved through heap leaching. Recoveries reached up to 85% with an average of 75% gold recovery at a practical crush size of ½ inch. These figures compare very favourably against global heap leach operations, which typically average 60-65% recovery. Notably, the tests confirmed strong recoveries even at very low grades, such as 67.2% recovery from ore containing just 0.15 g/t gold. This breakthrough opens the door to monetising a substantial portion of the mineral resource that was previously considered waste.

Implications for Project Scale and Economics

Integrating heap leach processing into the Hualilan project could be economically transformative. The 2023 Mineral Resource Estimate (MRE) includes 74.3 million tonnes of material above a 0.2 g/t gold equivalent cut-off, containing 2.9 million ounces of gold equivalent. The addition of a heap leach circuit alongside the existing flotation circuit for higher-grade ore could significantly increase the volume of material mined and processed. This would support a larger open-pit mining operation with lower unit costs, a longer mine life, and substantially higher life-of-mine gold production compared to the underground mining scenario outlined in the 2023 Scoping Study.

Robust Technical Foundation and Mining Plan

The metallurgical program includes sequential flotation grind optimisation, comminution testing, and large diameter column leach scale-up tests, all progressing on schedule. The company’s Managing Director, Kris Knauer, highlighted the significance of these results, stating they confirm the viability of processing low-grade mineralisation and enhance the project’s development pathway.

Supporting the metallurgical advances, Challenger Gold has developed a detailed mining plan based on a toll treatment agreement with Austral Gold’s Casposo processing facility. This arrangement allows for near-term production without the capital expenditure of building an on-site plant. The Ore Reserve estimate, classified to a Pre-Feasibility level, contemplates open pit mining with realistic assumptions on dilution, recovery, and equipment productivity, underpinning the project’s economic viability.

Environmental and Regulatory Progress

Environmental approvals are advancing, with the company having received its Environmental Impact Assessment (EIA) approval in October 2024. An addendum to the EIA will be required to cover the updated mine plan incorporating heap leach processing. Heap leaching is a well-established method in Argentina, with several successful operations in the San Juan Province, which bodes well for regulatory acceptance.

Looking Ahead

Challenger Gold is now focused on completing the remaining metallurgical testwork and finalising the PFS. The next phase includes larger-scale column tests to better simulate commercial heap leach operations. The company’s progress positions Hualilan as a compelling gold project with the potential to deliver significant value through expanded resource utilisation and improved economics.