Challenger Gold’s toll milling plant ready for action

Audit confirms Casposo plant in Argentina is suitable for toll treatment
Plant capacity of 300,000tpa is double Challenger’s required 150,000tpa annual commitment
Gold recoveries projected above 90%, exceeding previous assumption of 80-85%

Special report: An independent technical audit has confirmed the suitability of the Casposo plant to treat oxide material that will comprise the bulk of the toll milling ore from the Hualilan Project in Argentina.

The Casposo Plant, owned by Austral Gold and located 170km from Hualilan via established roads, has historically produced over 323,000oz of gold and 13.2Moz of silver.

It has a nominal capacity of 400,000tpa, with the audit confirming the crushing and grinding circuits are in good condition.

According to Challenger Gold (ASX:CEL), the only potential factor limiting the nameplate throughput capacity of 400,000tpa was the solid/liquid separation stage which does not appear to have sufficient capacity despite using high levels of flocculant dosing.

The recommendation was for this circuit to be operated at a lower capacity and a lower dosage of flocculant.

The audit included an extensive review of the toll milling plant flow sheet, engineering data, the re-start plan including capex and operating cost models, as well as a two-day field visit and plant inspection to determine the plant status.

It demonstrated that the plant could efficiently process 300,000tpa using lower flocculant levels, which is more than sufficient to cover the minimum toll milling commitment of 150,000tpa to CEL.

Pathway to early production

“The independent audit builds on our extensive due diligence into the toll milling opportunity for Hualilan,” CEL managing director Kris Knauer said.

“The recommended plant throughput comfortably exceeds our requirements, and the plant is well suited to treat oxide material that will comprise the bulk of the toll milling ore from Hualilan.

“Additionally, the independent review of the metallurgical results indicates potential for better recoveries than originally modelled.”

“Toll Milling provides a clear pathway to early production at Hualilan that will enable us to fund the larger stand-alone Hualilan Gold project development out of cashflow,” he added.

Capital and operating costs

The audit also included the review of the capital required for the plant refurbishment and the necessary working capital required for pre-commissioning, which is anticipated to be completed by 31 July 2025.

This funding is expected to be provided by the mill operator either directly or through third parties, in accordance with the binding agreement executed between the parties.

The estimated capital for the plant refurbishment primarily includes US$4m for spares and replacement parts, which is in line with expectations.

A small increase in treatment costs for Hualilan ore may occur due to the recommended 300,000tpa treatment rate by the plant operator.

Treatment cost estimates for Hualilan ore compared to Casposo ore are conservative including an allowance of US$5.50/t for additional cyanide consumption and an additional US$1.50/t G&A allowance for Hualilan ore.

After adequate resumption of operations at the Plant, operating costs could likely be optimised.

A more detailed review of the operating cost model was recommended which will be undertaken in the toll treatment startup scoping study.

Gold recoveries to exceed 90%

Other key findings included the leach kinetics for Hualilan material, with optimal gold recovery achieved in 24 hours compared to the 72 hours historically required for Casposo ore.

It was recommended the gravity circuit be included to maximise gold recovery.

The audit concluded testwork shows a strong correlation between the gold grade in the Hualilan ore and the gold recovery (from gravity plus cyanidation) that can be used to predict the gold recovery in the Casposo plant.

This indicates gold recoveries are projected to exceed 90%, compared to the recovery of 80-85% used in CEL desktop modelling.

Next steps include the finalisation of operating procedures, completion of the strategic placement, receive additional confirmatory metallurgical test work and finalise the toll milling mine plan and schedule.

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.