Challenger Gold scoping study outlines EBITDA of $1.1bn over seven years, capex of $211.1m with payback in 1.25 years
\nPre-tax NPV and IRR estimated at $629m and 75% respectively
\nProduction from project focused entirely on high-grade core estimated at 141,000oz AuEq per annum
\nNumerous opportunities identified to optimise operations and deliver further growth<\/p>\n
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Special Report:<\/em> Strong cashflows, potential lowest quartile costs and rapid payback are just some of the standout features that a high-grade starter mine at the Hualilan gold project could deliver to Challenger Gold.<\/strong><\/p>\n A new scoping study suggests the mining of a high core at the 2.8Moz Hualilan will rake in more than $1 billion in earnings over seven years.<\/p>\n A hefty 81% of that resource at the Argentine treasure trove is in the higher confidence indicated category, where drilling is close spaced enough to provide the certainty needed for mine planning.<\/p>\n This includes a high-grade core of 1.6Moz at 5 grams per tonne (g\/t) gold equivalent (AuEq).<\/p>\n Challenger Gold (ASX:CEL)<\/strong><\/a> also has plenty of room to grow the resource, which remains open in most directions, as drilling outside the current resource estimate has yielded some very encouraging results.<\/p>\n Notable intersections outside the resource include:<\/p>\n 13m at 15.5g\/t AuEq ~600m south of the resource Adding further interest, regional exploration has also indicated that there\u2019s more gold to be found in the broader project land holding.<\/p>\n Rock chip sampling has returned (separate) high-grade assays of up to 26.9g\/t gold and 1,785g\/t silver in a series of old workings 2km north of Hualilan while stream sediment sampling about 10km to the northwest returned a top result of 54.4g\/t gold and 151g\/t silver.<\/p>\n \u00a0<\/p>\n The scoping study, which focuses exclusively on the high-grade core, has now delivered outstanding economics for a mine that will deliver annual production consisting of 116,000oz of gold, 440,000oz of silver and 9,175t of zinc (141,000oz AuEq).<\/p>\n This is forecast to deliver EBITDA of $1.1bn over the initial mine life of seven years while total pre-production capital is estimated at a relatively low $211.1m with payback in just 1.25 years.<\/p>\n CEL notes that this represents a low start-up project that can be funded even in current challenging market conditions.<\/p>\n Hualilan is also likely to be amongst the lowest cash cost quartile gold producers with all-in sustaining costs of US$830\/oz ($1,291\/oz).<\/p>\n Unsurprisingly, this delivers strong returns with pre-tax net present value (NPV) and internal rate of return (IRR) \u2013 both measures of profitability \u2013 estimated at $629m and 75% respectively.<\/p>\n Where it gets even more interesting is that the scoping study uses conservative price assumptions of US$1,750\/oz gold and US$20\/oz silver.<\/p>\n Should current spot prices be used instead, the NPV shoots up to $820m, which is a huge positive to say the least.<\/p>\n The Hualilan gold project. Pic: Supplied (CEL).<\/p>\n \u00a0<\/p>\n While attractive, the scoping study ignores the 1.7Moz AuEq remaining after the life of mine considered in its scope.<\/p>\n CEL says work is underway to evaluate heap leach processing and a larger open pit to capture this remaining resource.<\/p>\n Metallurgical testing is underway to evaluate options to recover this lower-grade mineralisation.<\/p>\n Other material opportunities to improve the scoping study findings include a low-grade zinc concentration pathway which could triple the recovered zinc and add up to an additional US$250m net revenue.<\/p>\n Potential processing of the gold-silver concentrate on site to produce gold and silver dore is also being considered as this could deliver additional revenue of over US$165m before costs.<\/p>\n The test work will also help the company determine if both conventional flotation and carbon-in-leach (CIL) processing will be evaluated in the next stage of studies.<\/p>\n It noted that while flotation delivered superior economics, the CIL case had a capex that is US$20m lower.<\/p>\n The company adds that while previous mine optimisation was done using US$1,700\/oz and unit costs 10-20% higher than final costs, re-optimisation using a US$1,750\/oz gold price and final costs is likely to see materially more ounces in the mine.<\/p>\n \u00a0<\/p>\n CEL is now awaiting final results for the column leach test, which will allow it to assess the viability of heap leaching as a potential processing pathway for low-grade mineralisation.<\/p>\n It will also complete additional flotation testing on the potential low-grade zinc concentration pathway and other tests including locked-cycle and variability test work required to provide sufficient data for the pre-feasibility study.<\/p>\n Additionally, the company will develop a detailed first principles open pit mining cost model, in collaboration with equipment vendors, to evaluate the potential owner-operated bulk mining efficiencies.<\/p>\n Other work includes completing geotechnical data gathering, updating underground stop optimisation for final underground mining and development cost forecasts, and additional drilling of targets identified in the regional exploration program.<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span>\u00a0<\/p>\n This article was developed in collaboration with Challenger Gold, a Stockhead advertiser at the time of publishing. <\/em><\/p>\n \u00a0<\/em><\/p>\n This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n <\/span><\/p>\n The post Challenger Gold\u2019s Hualilan is a true treasure with scoping study outlining low costs and attractive economics<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\n4m at 5.8g\/t AuEq 600m vertically below the resource
\n42m at 5.9g\/t AuEq that is open beyond this intersection; and,
\n32.5m at 3.5g\/t AuEq that is open beyond this intersection.<\/p>\nHigh-grade core pays off in spades<\/strong><\/h2>\n
Potential for more<\/strong><\/h2>\n
Next steps<\/strong><\/h2>\n