• Challenger Gold secures additional $4m investment from a single investment
  • Placement priced at 8.5c – the same as the placement to Eduardo Elsztain’s affiliate
  • Proceeds will be used to fast track Hualilan towards gold production
  • Funds will also complete drilling at Colorado-V ahead of divesting the El Guayabo gold project in Ecuador


Special Report: The advanced Hualilan gold project in Argentina is drawing investors in like moths to a flame with Challenger Gold securing a $4m investment just weeks after a prominent businessman injected $5.6m into the company.

Earlier this month, an affiliate of Argentinian businessman and entrepreneur Eduardo Elsztain’s asset group took up a private placement of 66.38 million shares priced at 8.5c each in the company.

This represented a 9% premium to the 20-day volume weighted average price of 7.8c, a welcome change from the usual discount that such placements are made at and an indication that Elsztain – who now holds a 5% stake in CEL – is really confident about his investment.

After all, Challenger Gold (ASX:CEL) already has a resource of 2.8Moz gold equivalent (AuEq) at Hualilan and a scoping study focused on its high-grade core that outlined some very attractive economics.

The study estimated that the high-grade core of 1.6Moz at 5g/t AuEq could deliver 116,000ozpa gold, 440,000ozpa silver and 9,175t of zinc for 141,000oz AuEq, raking in $1 billion in earnings over a seven-year mine life.

Capex is a low $211.1m with a quick 1.25-year payback period and low AISC of just $1,291/oz.


New investment

Hualilan has clearly proved irresistible to the new investor, which had approached the company about its interest to co-invest with Elsztain’s group on the same terms.

This led to the new placement of shares priced at 8.5c to raise a further $4m, taking the total raised by CEL up to $9.6m.

Proceeds from both placements will be used to fast-track the project into production. This includes carrying pre-feasibility study and metallurgical work.


Advancing Ecuadorian divestment

The additional placement also provides the company with the opportunity to add further value to its Ecuadorian assets prior to a planned divestment.

CEL plans to complete the final 8000m of the 22,000m drill program that is aimed at producing a maiden resource for the Colorado-V deposit within the broader El Guayabo project in Ecuador

A Colorado-V resource will add to the existing resource of 4.5Moz at El Guayabo, increasing its value ahead of a strategic process to explore options to monetise or spin-off the project.

It will also complete the earn-in commitments under the Colorado-V farm-in, which will simplify the ownership structure and remove a perceived risk associated with the asset.

This is especially true given the current high gold price environment while sentiment surrounding Ecuador is clearly improving with Hancock Prospecting moving to invest up to US$120m to earn up to 80% in Titan Mineral’s (ASX:TTM) Linderos copper project.



This article was developed in collaboration with Challenger Gold, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.