Challenger Gold Finalizes Toll Milling Agreement and Advances Strategic Investment
CHALLENGER GOLD LIMITED (CEL) Share Update December 2024 Wednesday 4th
Challenger Gold Secures Toll Milling Agreement and Advances $6.6M Investment
Challenger Gold Limited (ASX: CEL) has announced the finalization of a binding toll milling agreement with Casposo Argentina Mining Limited, alongside significant progress in a $6.6 million strategic investment.
Instant Summary:
- Binding agreement with Casposo Argentina Mining Limited for toll milling.
- Guaranteed processing capacity of 150,000 tonnes per annum for three years.
- Strategic $6.6 million investment nearing completion.
- Working capital support for mining, ore transport, and processing.
Agreement Details
Challenger Gold Limited has finalized a binding agreement with Casposo Argentina Mining Limited, securing toll milling operations for ore from its Hualilan Gold Project. The agreement guarantees an annual processing capacity of 150,000 tonnes over three years, totaling 450,000 tonnes. This ensures a stable processing arrangement for the company, crucial for its operational success.
In addition to processing capacity, the agreement includes working capital support, covering mining, trucking, and processing costs until the company begins receiving cash flow from these operations. This financial backing is pivotal, providing Challenger Gold with the necessary resources to maintain operations without immediate cash flow pressures.
Investment Progress
Parallel to the toll milling agreement, Challenger Gold is advancing a $6.6 million strategic investment, initially announced in October. The terms of the subscription agreement have been finalized, and the investment is nearing completion. This injection of capital is expected to bolster the company's financial position, supporting its growth and expansion plans.
Operational and Financial Terms
The toll milling agreement includes a base processing fee of US$8.80 per tonne, with a minimum monthly payment of US$110,000. An upfront payment of US$2 million is required, with US$1 million deferred until the second year. Additionally, a performance fee based on recovery rates is set between 20-30% of milling costs, expected to range from US$12-18 per tonne.
Importantly, the upfront payment is refundable if the plant is not operational by July 31, 2025, safeguarding Challenger Gold's investment. The company retains full ownership of ore and resulting products throughout the process, ensuring control over its resources.
The finalization of the toll milling agreement and the strategic investment are significant milestones for Challenger Gold. These developments are likely to enhance the company's operational capabilities and financial stability. The guaranteed processing capacity and working capital support provide a solid foundation for future growth. However, the company's stock may experience fluctuations as investors assess the long-term benefits of these agreements.
Investor Reaction:
Analysts are expected to view the toll milling agreement positively, as it secures processing capacity and financial support. The strategic investment further strengthens the company's position. However, investors may remain cautious, monitoring the execution of these agreements and their impact on the company's financial performance.
Conclusion:
Investors should keep an eye on Challenger Gold's progress in executing the toll milling agreement and the strategic investment. These developments are crucial for the company's growth trajectory and could significantly impact its market position. Staying informed on the company's future announcements will be key for investors looking to capitalize on these opportunities.