Challenger Gold Mobilises MAPAL, Drills and Blasts Ahead of December Mining Start

Contract and Mobilisation Milestone

Challenger Gold Limited (ASX – CEL) has taken a significant step forward in advancing its Hualilán Gold Project in Argentina by executing a 24-month mining services contract with MAPAL Constructions and Mining S.A. The contract covers the Toll Milling phase, which involves moving approximately 3.37 million tonnes of material. Mobilisation to the site was completed in late October 2025, and preparatory mining activities are now underway, setting the stage for production mining to formally commence on December 1.

Operational Progress and Early Production

Production drilling kicked off on schedule on November 1, with the first blast successfully completed on November 20. This marks a pivotal transition from development to production activities. The drilling contractor THOR S.A. has reported penetration rates meeting or exceeding expectations, while Orica has commenced explosive charging operations on site. The mining team is primarily composed of local Argentine personnel, reflecting Challenger’s commitment to leveraging regional expertise and supporting the local workforce.

Strategic Toll Milling Approach

The Toll Milling strategy is central to Challenger’s growth plan, designed to generate early cash flow by processing near-surface mineralised material at the Casposo Plant, located 165km from Hualilán. This plant, with a strong historical production record, recently resumed commercial operations in October 2025. By toll milling approximately 450,000 tonnes over three years, Challenger aims to reduce capital intensity and de-risk the broader standalone development of the Hualilán Gold Project, one of Argentina’s most advanced undeveloped gold assets.

Robust Economics and Resource Base

Challenger’s recent Pre-Feasibility Study (PFS) for Toll Milling highlights compelling economics, projecting EBITDA of US$195 million and a post-tax net present value (NPV) of US$110.4 million at current spot prices above US$4,000 per ounce of gold. Even under conservative price assumptions, the project remains economically attractive. The Toll Milling phase targets only about 3% of the total 2.8 million ounce gold equivalent mineral resource at Hualilán, underscoring significant upside potential as the company advances toward full-scale standalone development.

Local Expertise and Risk Mitigation

Engaging MAPAL, a well-established local contractor with over 60 years of experience in mining and civil construction in San Juan Province, is a strategic move to reduce execution risk. Challenger’s CEO Kris Knauer emphasized that MAPAL’s local workforce and operational excellence provide confidence in delivering reliable early production outcomes. This approach also aligns with the company’s policy of prioritizing local employment, which may foster stronger community relations and operational stability.

Looking Ahead

With mining on track to commence in early December, Challenger is poised to unlock near-term cash flow that will support the construction of the larger standalone Hualilán Gold Project. The company is also progressing a standalone Life of Mine Pre-Feasibility Study due in the first quarter of 2026, which will provide further clarity on the project’s long-term development pathway. Meanwhile, Challenger continues to explore strategic options for its El Guayabo Gold/Copper Project in Ecuador, adding another dimension to its South American portfolio.