‘Surprise on the upside’: Challenger eyes better, lower cost processing options at monster 2.8Moz Hualilan gold project

Challenger is eyeing lower costs and higher metal recoveries at the flagship Hualilan gold project in Argentina following breakthrough metallurgical testing results.

Hualilan’s monster endowment sits at 2.8Moz, updated in March this year, and the company is aiming to find the best processing techniques for returns on investment.

The project is nearby two huge operating gold mines, Barrick Gold’s Veladero which produces ~400,000ozpa and Fortuna Silver’s Lindero with an output of 110,000ozpa.

As part of a scoping study – the first proper looks at the economics of building a project — Challenger Gold (ASX:CEL) ran met test work through world-class lab SGS Lakefield which demonstrated “excellent recoveries of gold and silver using traditional sodium cyanide leaching”, Challenger says.

Interestingly, both Veladero and Lindero are heap leach operations.

Metallurgical Diligence

This test work included ‘bottle rolling’ – the first step in assessing gold recoveries via cyanide leaching – which resulted in an 89% recovery for gold at a grind size of 100μm (P80), with sodium cyanide consumption @ 0.7kg per tonne (t).

That cyanide consumption is relatively low, good news for future processing costs.

Challenger believes carbon-in-pulp (CIP) or carbon-in-leach (CIL) processing offers several advantages, including lower capex, a simpler flowsheet, higher metal value and lower operational expenses, as well as transportation costs.

The gold hunter is investigating this process further before releasing the scoping study, as it believes these techniques may hold the key to unlocking the best value out of Hualilan.

Upside potential

A second, larger stage of testwork has commenced this week, with 13 samples of varying material types and grades to be leached for 90 days to provide a more definite insight into the possibility of recovering the lower-grade halo of more than 1.2 million ounces that surrounds Hualilans high-grade core of 1.6 million ounces grading 5 g/t gold that is the focus of the Scoping Study.

The so-called ‘Column’ leach tests are an industry accepted standard used to estimate expected gold and silver recoveries via heap leaching.

Challenger says it is a evaluating the upside presented by potentially attaching a low-grade heap leach option to either a CIL/CIP or flotation primary process route during the pre-feasibility study.

“Hualilan has the ability to continually surprise on the upside,” CEL MD Kris Knauer says.

“A program of metallurgical testwork conducted, really, for completeness, has the potential to change the way the project is developed.

“Initial trade-off work indicates that the outcome between developing Hualilan via flotation compared to CIL needs to be properly evaluated in the scoping study.

“Additionally, the ability to use CIL offers a number of benefits such a lower up front capital costs, lower operating costs, likely perceived lower overall project risk profile and a broadening of the potential investor/finance base for the company.”

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.