Challenger Gold (ASX: CEL) has delivered its first production blast at the Hualilán gold project in Argentina, marking the transition from preparatory works to active mining ahead of the planned 1 December start to the Toll Milling Phase.
The company has now executed a 24-month mining contract with MAPAL Constructions and Mining, which has completed mobilisation and is now ramping up load-and-haul, auxiliary works, and run-of-mine handling activities across the site.
MAPAL’s locally based workforce and long history in the San Juan mining sector were key to its selection, with Challenger emphasising reduced execution risk and community alignment.
Mining Contract and Early Works Progress
Challenger subsidiary Golden Mining S.A. has formalised the contract with MAPAL following an early-works authorisation that allowed the contractor to begin mobilisation in late October.
The company recently signed a processing agreement with Casposo Argentina Mining for a minimum of 450,000 tonnes over three years at its plant, located 165km from Hualilán.
MAPAL’s scope covers approximately 3.37 million tonnes of material movement during the Toll Milling Phase, reflecting the scale of near-surface development required to feed the Casposo processing plant.
Casposo returned to commercial operations in October and historically achieved gold recoveries of 90% and silver recoveries of 79%, providing a well-established processing pathway for Hualilán material.
“The Toll Milling Phase is a central component of our growth strategy—providing near-term cash flow, reducing capital intensity, and de-risking the development of the broader Hualilán gold project, one of Argentina’s most advanced undeveloped gold assets,” chief executive officer Kris Knauer said.
Blasting and Production Drilling Underway
THOR commenced blast-hole drilling on 1 November under a separate 24-month contract, with penetration rates during the first weeks of operation reportedly at or above expectations.
Orica (ASX: ORI) has now begun explosive-charging activities on site, culminating in the first multi-pattern production blast on 20 November—an early milestone in the shift to full mining operations.
Recruitment for critical operational roles is substantially complete, with Challenger noting that the mining team is predominantly drawn from the San Juan region in line with its local-employment policy.
Challenger’s overarching strategy is designed to leverage the current high gold price to generate early cash flow that will be reinvested into developing the larger standalone Hualilán project.
Economic Context From Recent PFS
A Pre-Feasibility Study (PFS) Challenger released earlier this year outlined strong margins for the toll-milling plan, including EBITDA of US$195 million and a post-tax net present value of US$110.4m at spot prices of approximately US$4,000/oz gold and US$40/oz silver.
Even under more conservative commodity assumptions, the three-year plan demonstrated EBITDA of US$88m and cumulative post-tax free cash flow of US$56.7m, reinforcing its role as a capital-efficient stepping stone to standalone development.
Challenger noted that only about 3% of the 2.8Moz gold equivalent resource is required for the Toll Milling Phase.
This will leave the broader development program intact as the company advances toward its Life-of-Mine PFS due in early 2026.
