Challenger Gold Secures Final EIA Amendment, Paving Way for Hualilan Toll Milling Operations
Challenger Gold (ASX: CEL) has reached a critical milestone in its development strategy with the approval of the Environmental Impact Assessment (EIA) Amendment for its Hualilan Gold Project in Argentina’s San Juan Province. This final regulatory clearance removes the last barrier for the company to begin toll milling operations, positioning it to generate early cash flow by capitalising on currently strong gold prices.
Final Regulatory Approval Sets Stage for Gold Production
The approval, granted through Resolution No. 688-MM-2024, amends the original environmental permit received in November 2024 to specifically allow for the trucking of Hualilan ore to the Casposo plant for toll treatment.
“This approval represents a major milestone as it is the final government approval required to enable toll milling of Hualilan ore. The project is now fully permitted for toll milling operations,” stated Kris Knauer, Managing Director and CEO of Challenger Gold.
With this regulatory clearance in hand, Challenger Gold can now execute key mining and drill and blast contracts in the coming weeks and implement its toll milling strategy. This approach involves processing a minimum of 450,000 tonnes of near-surface Hualilan mineralised material over approximately three years at the Casposo Plant, located 165km from Hualilan via established roads.
Understanding Toll Milling: A Strategic Approach to Gold Production
Toll milling represents an innovative approach for junior mining companies to generate cash flow without the substantial capital expenditure required to build processing facilities. For Challenger Gold, this strategy allows the company to utilise the established Casposo Plant, which has historically produced over 323,000 ounces of gold and 13.2 million ounces of silver with average recoveries of 90% for gold and 79% for silver.
The primary advantage of toll milling is the reduction in upfront capital and acceleration of the timeline to first cash flow. By processing ore at an existing facility, Challenger avoids the lengthy permitting, construction, and commissioning process typically associated with building a new processing plant. The generated cash can then be reinvested in developing the larger standalone project.
Leveraging Strong Gold Prices to Fund Larger Development
The strategic importance of this approval cannot be overstated given current market conditions. With gold prices currently above US$3,300/oz, Challenger’s toll milling operation is well-positioned to generate substantial early cash flow that will fund the construction of the larger standalone Hualilan Gold Project.
According to the company’s Pre-Feasibility Study (PFS) released in June 2025, the toll milling plan demonstrates compelling economics:
| Financial Metric | At Current Prices (~$3,300/oz Au) | At Conservative Prices ($2,500/oz Au) |
|---|---|---|
| EBITDA | $142.8 million | $88.0 million |
| Post-tax free cash flow | $91.8 million | $56.7 million |
| Post-tax NPV5 | $82.2 million | $50.5 million |
| Upfront capital | $8.9 million (A$13.8 million) | Same |
| Payback period | 3 months from mining commencement | Same |
| All-In Sustaining Cost | ~$1,454/oz AuEq | Same |
Perhaps most significantly, the toll milling strategy extracts only 3% of Hualilan’s 2.8 Moz Mineral Resource Estimate (MRE), preserving the vast majority of the resource for future development.
The company’s financing risk has been eliminated through a recent A$37.5 million equity placement, which funds development through to first cash flow and accelerates the development of the larger standalone Hualilan project.
Hualilan Gold Project: A Substantial Resource Base
Challenger Gold’s flagship Hualilan Project boasts a JORC Compliant resource of 2.8 Moz AuEq that remains open in most directions. The resource includes a high-grade core of 9.9 Mt at 5.0 g/t AuEq for 1.6 Moz AuEq and 29.1 Mt at 2.2 g/t AuEq for 2.4 Moz AuEq within the larger MRE of 60.6 Mt at 1.4 g/t AuEq.
The project benefits from extensive exploration history, with over 150 historical drill holes and nearly 900 holes drilled by Challenger. The resource estimation is based on approximately 220,000 meters of drilling, with impressive drill results including intercepts of 67.7m at 7.3 g/t Au and 63.3m at 8.5 g/t Au.
Investment Thesis: Why Challenger Gold Deserves Attention
Challenger Gold presents a compelling investment opportunity for several key reasons:
- Immediate Path to Production: With all necessary permits now secured, the company is positioned to begin generating revenue in the near term through its toll milling strategy.
- Strong Economics: The PFS demonstrates robust financial returns even at conservative gold prices, with exceptional upside at current market prices.
- Minimal Capital Requirements: The low upfront capital expenditure of $8.9 million and short payback period of just three months significantly reduce investment risk.
- Substantial Resource Growth Potential: With the toll milling strategy targeting only 3% of the current resource, Challenger maintains tremendous growth potential through further resource expansion and development of the larger standalone project.
- Favorable Jurisdiction: San Juan Province in Argentina has a history of supporting mining development, with established infrastructure and access to skilled labor.
- Exposure to Gold Price Strength: With gold prices at historically high levels, Challenger is well-positioned to capitalise on current market conditions.
- Fully Funded: The recent A$37.5 million equity raise ensures the company is fully funded through to first cash flow.
Why Investors Should Follow Challenger Gold
The approval of the EIA Amendment represents more than just another regulatory milestone—it signifies Challenger Gold’s transition from explorer to producer. By implementing a phased development approach beginning with toll milling, the company has positioned itself to generate early cash flow while preserving the option to develop a larger standalone operation.
For investors seeking exposure to gold in the near term, Challenger offers an attractive combination of imminent production, strong economics, and substantial resource upside. With gold prices at record levels and the company now fully permitted to begin operations, the Hualilan Project by Challenger Gold represents an opportunity to invest in a gold project at the inflection point between development and production—typically a period of significant value creation.
As the company executes on its toll milling strategy and advances toward the development of the larger Hualilan project, investors should watch for progress on mining contracts, commencement of ore haulage, and initial production results from the Casposo plant. Each of these milestones has the potential to drive further value creation and solidify Challenger Gold’s position as an emerging gold producer in Argentina.
Why Miss This Opportunity to Invest in Challenger Gold’s Production Journey?
Discover how Challenger Gold is strategically positioned to generate early cash flow through toll milling operations at its Hualilan Project while gold prices remain strong. With final regulatory approvals secured, minimal capital requirements, and robust economics even at conservative gold prices, now is the time to consider this emerging producer. Visit www.challengergold.com to learn more about this compelling investment opportunity as Challenger transitions from explorer to producer in Argentina’s prolific San Juan Province.
