ASX minnow Challenger Gold maintains it can become one of the lowest cost, top-20 gold producers on the Australian market if it can advance a circa-US$150 million project in San Juan, Argentina, to the starting blocks.
The company this week released a scoping study for 100%-owned Hualilan that outlined a relatively short-life, one million tonnes per annum surface and underground operation producing about 116,000oz of gold plus silver and zinc at a gold AISC around US$830/oz.
However, Challenger says its current 2.8 million-ounce gold-equivalent resource remains open in all directions and sits in a 600sq.km tenement package. It says a “low capital-intensive start-up [operation] capable of rapid self-funding” of project development and resource extension activity can potentially add life and scale at Hualilan.
“With mineralisation open at depth and along strike, the company is poised to explore numerous regional opportunities,” the company said.
Challenger says as well as gold, Hualilan can produce 440,000 oz of silver and 9175 tonnes of zinc a year for circa-141,000ozpa gold-equivalent.
“The project has inherent optionality given that the Hualilan mineral resource estimate starts at surface and contains a high-grade core of 8.1Mt at 5gpt gold, 17.4gpt silver and 1.8% zinc at the underground optimisation cut-off grade of 2.37gpt gold-equivalent, within the larger MRE of 60.5Mt at 1.1gpt gold, 6gpt silver and 0.44% zinc,” the company said.
“The project will commence with a low-risk starter pit and transition to conventional sub-level open stope underground mining. The processing facility will include a crusher, mill, gravity recovery circuit, and a superior economic outcome from conventional sulphide floatation and flotation-tails leaching.”
Challenger said it wanted to “fast-track production by expediting metallurgical testwork and evaluating options to recover lower-grade mineralisation through a larger openpit”.
“The company will decide whether to advance both conventional flotation and CIL in the next study stage upon receiving further metallurgical testing results.”
Challenger has current market value of circa-A$100 million. It had about $12 million cash on hand at the end of June this year.
BlackRock Group owned 13.5% of the company at the end of September.