Adelong Gold Blocks Challenger JV Plan Over Production and Cost Concerns

Background to the Dispute

Adelong Gold Limited (ASX, ADG) has taken the rare and serious step of issuing a Deadlock Notice to its joint venture partner, Great Divide Mining Ltd (ASX, GDM), over the Challenger Gold Mine project. The disagreement centers on the approval process and substance of the first annual programme and budget for Challenger Mines Pty Ltd, the joint venture entity operating the mine.

While GDM publicly announced on 13 August 2025 that the plan was adopted and approved, Adelong Gold strongly contests this claim, stating that the approval did not follow the contractual procedures outlined in their joint venture agreement. This fundamental divergence has escalated tensions between the partners and triggered formal dispute resolution mechanisms.

Technical and Commercial Concerns

At the heart of Adelong Gold’s objection are serious concerns about the technical basis and financial assumptions underpinning GDM’s proposed plan. The ADG board highlights insufficient technical work supporting the ambitious production targets, including processing of materials not accounted for in prior resource estimates or the 2022 scoping study. Cost assumptions within the budget also appear inadequately justified.

Adelong Gold’s Managing Director, Ian Holland, emphasized the company’s responsibility to shareholders to ensure any funding commitment is backed by a robust, technically sound programme that offers a compelling risk-adjusted return. He described the current plan as falling short of this standard, making it irresponsible to approve significant expenditure under these conditions.

Next Steps and Potential Outcomes

Under the joint venture agreement’s deadlock provisions, senior representatives from both ADG and GDM must meet within ten business days to attempt resolution. Should these discussions fail, the dispute will move to mediation, with the possibility of court involvement if necessary. Adelong Gold has indicated its willingness to pursue legal avenues to protect shareholder interests.

Despite the dispute, Adelong Gold remains committed to the joint venture and the broader Adelong Project, which includes a substantial gold resource and promising exploration prospects in Victoria and New South Wales. The company also holds a lithium portfolio in Brazil, diversifying its asset base.

Market and Investor Implications

This deadlock introduces uncertainty around the Challenger Gold Mine’s near-term production trajectory and budget execution. Investors will be watching closely for how the mediation unfolds and whether the partners can reconcile their differences without protracted legal conflict. The outcome will significantly influence Adelong Gold’s operational momentum and financial outlook.

Accurate and transparent communication will be critical as the situation develops, given the conflicting public statements and the potential impact on shareholder confidence. The resolution process will also serve as a test of governance and partnership dynamics within the joint venture.