Hualilán Toll Milling Greenlit: 450,000 Tonnes to Casposo Plant Over 3 Years

A Regulatory Green Light for Toll Milling

Challenger Gold Limited (ASX – CEL) has reached a pivotal regulatory milestone with the approval of the Environmental Impact Assessment (EIA) amendment for its Hualilán Gold Project in Argentina. This amendment, granted under Resolution No. 688-MM-2024, modifies the original EIA to permit the trucking of ore from Hualilán to the Casposo processing plant, a critical step enabling toll milling operations to commence.

The approval represents the final government consent required to initiate toll milling, effectively rendering the Hualilán Project fully permitted for this low-capital development strategy. The company anticipates executing key mining and drill-and-blast contracts imminently, setting the stage for operational ramp-up.

Toll Milling – A Strategic Move to Accelerate Cash Flow

Challenger Gold has secured a binding toll milling agreement with Casposo Argentina Mining Limited, operator of the Casposo plant located approximately 165 kilometres from Hualilán. The agreement guarantees processing of at least 450,000 tonnes of near-surface mineralised material over roughly three years.

The Casposo plant, historically productive with over 323,000 ounces of gold and 13.2 million ounces of silver recovered, offers a proven processing facility with strong recovery rates. By leveraging this existing infrastructure, Challenger Gold aims to capitalise on the current elevated gold price environment (above US$3,300 per ounce) to generate early cash flow, which will be reinvested into advancing the larger standalone Hualilán development.

Robust Economics Underpinning the Toll Milling Plan

The company’s recently released Pre-Feasibility Study (PFS) for toll milling underscores the financial attractiveness of this approach. At spot prices of approximately US$3,300 per ounce for gold and US$33 per ounce for silver, the three-year toll milling plan forecasts an EBITDA of US$142.8 million and a post-tax net present value (NPV5) of US$82.2 million, with cumulative post-tax free cash flow of US$91.8 million.

Even under more conservative commodity price assumptions (US$2,500 per ounce gold and US$27.50 per ounce silver), the project maintains robust margins, generating EBITDA of US$88 million and post-tax free cash flow of US$56.7 million. The low upfront capital expenditure of US$8.9 million and a rapid payback period of just three months post-mining commencement significantly reduce financing risk.

Resource and Reserve Confidence Backing Development

The Hualilán Gold Project boasts a JORC-compliant Mineral Resource Estimate of 2.8 million ounces gold equivalent, with a high-grade core supporting near-term mining. The Ore Reserve underpinning the toll milling plan comprises approximately 427,500 tonnes at 7.0 g/t AuEq, classified as Probable, reflecting a well-defined and economically viable deposit.

Challenger Gold’s comprehensive metallurgical test work confirms strong recoveries for gold, silver, zinc, and lead, supporting the processing assumptions used in the PFS. The company’s detailed geological modelling and resource classification provide a solid foundation for the planned mining and toll milling operations.

Looking Ahead – Advancing Toward Standalone Production

While toll milling offers a rapid route to cash flow and de-risks the project, Challenger Gold continues to progress studies for a standalone processing plant at Hualilán, with a full Life of Mine Pre-Feasibility Study expected in early 2026. The early cash flow generated through toll milling is expected to fund and accelerate this larger-scale development.

The company is also advancing exploration and resource extension drilling, alongside ongoing metallurgical and environmental studies, to enhance project value and support future expansion.