Argentina: Challenger to produce 135.000oz/a of gold at Hualilán with total investment of US$604mn

The Australian company Challenger Gold presented the prefeasibility study for its Hualilan project in Argentina, confirming a total investment of US$604 million for a 14-year mine life and average annual production of 135,000oz of gold equivalent. The company is now moving on to the definitive feasibility stage and is considering applying for the RIGI.

The initial development of the deposit, located in the province of San Juan, would require capex of US$267 million (mn), to which US$337mn earmarked for maintenance and expansion would be added, according to the company’s report. 

Challenger also plans a two-year startup, a period in which the mine would reach a production of 105,000oz of gold equivalent, out of a total extraction of around 1.84Moz of gold during the life of the deposit.

The Perth-based company will begin the definitive feasibility study in the third quarter of 2026, while preparing the submission of an application to join the Incentive Regime for Large Investments (RIGI) before the Argentine government.

Challenger has planned an open-pit mine for Hualilan and a metallurgical processing strategy based on two parallel operations. On one hand, a conventional 1.5Mt/y flotation and leaching plant, and on the other, a separate 8Mt/y heap leaching circuit. 

While both facilities will be able to produce gold and silver doré, the flotation plant will also allow for the production of zinc concentrate, the company said in its report, which considers a significant reduction in operational risks compared with a 2023 technical study.

The project update now considers a net present value (NPV) before taxes of US$1.45 billion (bn), an internal rate of return of 45% and a payback period of 2.25 years, based on a gold price of US$3,500/oz.

Hualilán involves a significant social impact since, according to Challenger, it will allow the creation of 900 jobs, in addition to generating provincial royalty payments of US$287mn and Argentine corporate taxes and export duties of US$542mn.

All these aspects, combined with the project’s growth potential, represent an opportunity for Challenger Gold to obtain financing.

In recent hours Challenger completed a capital raising of A$85mn, equivalent to about US$61mn, funds that it will use to finance a drilling campaign, finalize the definitive feasibility study, and support working capital, among other objectives.

Among the opportunities identified to improve Hualilan's technical and financial results, with a view to final feasibility, is the signing of a memorandum of understanding with YPF Luz on power supply. 

The agreement contemplates third-party financing for the electrical infrastructure through a power purchase agreement, with the potential to reduce approximately US$48mn in capital investment. 

Hualilan is located 230 km from the border with Chile, at the latitude of the Coquimbo Region, so there could be opportunities for cooperation in the future. "For Argentina it is much more efficient to use Chile's logistics, infrastructure and ports to send its mining products to the world market," Álvaro Merino, executive director of the Chilean consultancy Núcleo Minero, told BNamericas.

(The original version of this content was written in Spanish)