Perth-based Challenger Gold on Friday announced the completion of a A$6.6-million strategic placement to an entity controlled by prominent Argentine businessman Eduardo Elsztain.

The investment makes Elsztain Challenger’s biggest shareholder, with a 12.7% stake, and paves the way for his appointment as nonexecutive chairperson.

The company also confirmed the payment of a S$2-million upfront fee under a toll processing agreement with Casposo Argentina Mining, guaranteeing the processing of 150 000 t/y of Hualilan material over three years. This milestone positions Challenger to capitalise on elevated gold prices and generate early cash flow to fund the development of its standalone Hualilan gold project in Argentina.

STRATEGIC INVESTMENT STRENGTHENS BOARD
The A$6.6-million placement was completed with Inversiones Financieras del Sur, a company within the Elsztain Group. Challenger issued 147.7-million ordinary shares at 4.5c each, along with share purchase warrants. The warrants carry a two-year term, with a strike price set at 10% above the placement price for the first year and 20% thereafter.

As part of the company’s ongoing board renewal process, Challenger intends to appoint Elsztain and Saul Zang to its board.

Elsztain, a major player in Argentine business with extensive real estate, agricultural, and mining interests, is expected to bring valuable expertise to the board. Zang, a legal expert with decades of experience in business law and corporate governance, has held prominent roles in major companies and institutions in Argentina.

“The extensive experience of Mr. Elsztain and Mr. Zang, and their network of contacts both within Argentina and internationally, will be invaluable for the company as it moves to commercialize Hualilan,” Challenger stated.

ADVANCING TOLL PROCESSING FOR EARLY CASH FLOW
The payment under the toll processing agreement secures a total capacity of 450 000 t of Hualilan material at the Casposo treatment plant in San Juan, Argentina. Historically, the plant has produced more than 323 000 oz of gold and 13.2-million ounces of silver, with recovery rates of 90% for gold and 79% for silver.

Challenger has identified 450 000 t of material from four starter pits at Hualilan, containing an estimated 85 550 oz of gold and 495 334 oz of silver. Mining operations will focus on high-grade material with an average grade of 5.8 g/t gold and 32.2 g/t silver.

“The primary objective of the toll treatment strategy is to capitalise on the current high gold price (above $2 500/oz) to generate early cash flow,” the company stated.

The Casposo plant operator recently secured a A$7-million loan from Banco San Juan to refurbish the facility, ensuring readiness to process Challenger’s material. Further, the operator has committed to making commercial efforts to secure working capital funding to support mining, ore transport, and processing costs.