Company Interview / A $6.6 million golden handshake

Key points:

$6.6 million investment fast-tracks production at San Juan siteShare purchase plan allows shareholders to invest on the same termsCommitment to sustainability with 100% renewable energy

Challenger Gold (ASX:CEL) secures a $6.6 million investment deal and a toll milling agreement to accelerate production at the San Juan site in Argentina by mid-next year. Kris Knauer, from Challenger Gold, views this as transformational, shifting the company from a developer to a funded producer.

Kris explains that the deal is part of a broader fundraising effort involving Dolphin Real Assets and Fieldstone Group, and includes a share purchase plan allowing shareholders to invest on the same terms. He highlights the promising outlook for gold prices and notes the favourable mining conditions in Argentina under new regulations.

Kris also discusses Challenger Gold's (ASX:CEL) commitment to environmental sustainability through a partnership with an Argentine power producer to use 100% renewable energy at the site. The company aims to become a top 20 ASX producer, capitalising on Argentina's evolving investment climate.

Full unedited transcript below:

0:00

Challenger. Gold has announced a $6.6 million investment deal and a toll milling agreement to fast track production at its San Juan site in Argentina by mid-next year. To tell us the details, challenger Gold CEO and MD Chris now joins me now. Chris, thanks so much for your time. Tell us how pivotal this is for your company. Oh look, it's transformational for challenger effectively takes us from a developer that's not funded to get into production to a clear pathway to be in production near term via toll milling. And then the cash flow from that effectively allows us to put the larger, standalone Wally Allen into production as well, and become a 120 to 150,000 ounce a year gold producer. That sounds very exciting. What is the timeline for this, Chris?

0:46

Uh, so we've announced the transaction this morning. Uh, it should close in the next 45 days. Uh, in terms of first production, they're targeting June next year. In terms of the toll milling startup, we hope we can do it a little bit before that, but. So we'll be producing cash flow effectively from the middle of next year over a three year period. And two years in, we look to sort of start the larger development of our set of 150,000oz a year standalone production facility. So over 6.6 million. How are you raising this? Understand? Sum is through a share purchase plan. Yes. So what we've done is we've taken 6.6 million from it's a group called Dolphin Real Assets, which is part of the Elstein Group. Um, Fieldstone Group's already a 5% shareholder. So they're taking another 10% of challenger to move to 15. And then we're doing a small share purchase plan of $1 million, effectively to let shareholders invest on the same terms. It's a very exciting time to be

1:46

a gold miner when you've got the precious metal at these records. Chris, um, what are your sort of, I guess, what is your outlook for the overall sector, particularly if you do get to mine, what you were mentioning in terms of ounces next year? Yeah. Look, it's really exciting. I mean, you're at that sort of tipping point now where the gold price on consensus forecasts look like it's going higher. If you're a gold miner now and you're in production, you're making a ton of money. And you're also at that inflection point where for the past three years, the juniors like us have had an absolutely terrible time where they couldn't raise funds, and all of a sudden that market is opening up. So I think what you'll see is, you know, a lot of the mid-tier producers, the explorers will start to play catch up. You know, I think we're sort of starting that next gold bull market that's got a good 3 or 4 years in it. Tell us what some exciting about the sun. One area in Argentina we're seeing a lot of Aussie miners go offshore.

2:42

Yeah. Look I mean San Juan is in Argentina. It's been ranked the number one mining jurisdiction in South America in the last Fraser Institute survey. You know what's really exciting with Argentina is they've got a new president. He's got, um, inflation under control. He's cut the red tape. The key challenge of producing gold in Argentina has been that you sell your gold. You've got to convert that into pesos and hold your dividends in pesos, which is not great when you've got high inflation. Um, there's a new law that's now being passed which effectively removes that, which is the key impediment. You can now hold your profits in us dollars. And, you know, you're seeing Argentina really become the next go to mining destination for both gold, lithium and copper. You know, it's really transforming overnight. I think that new investment regime, the Rigi they call it, is really what drove BHP to partner up with the London's and take a stake in, you know, the massive copper project in Argentina, which is also in San Juan. You've been touted as the asx's cleanest gold

3:42

mine developer. Tell us what you're doing that is so environmentally positive. Yeah. So look, we've signed an MOU with the largest Argentinian power producer where they'll provide 100% renewable energy to the site. And you know, what that does is that lets us have a carbon footprint per ounce, you know, roughly a sixth of the ASX average and, you know, almost 50% below the sort of the next, you know, greenest ASX or producer on the ASX. So it's really a factor of one, you know, the grades, but two, that we've signed an agreement to use 100% renewable energy.

4:18

What do you think this um, project or how do you think this project and becoming an actual gold producer is going to do to your share price? I know you can't control the market, but in terms of people that have really believed in challenger from the beginning. Yeah. Look, and you've got to look through the next ten days when our ship purchase plan is open, because what you see is, you know, shareholders, if they can get stock at four and a half cents, we'll sell it at 4.6 to take it back. We live with that. But, you know, you look at us when we're in full production and now we've got a clear path, clear pathway to do it. You know, challenger will be a top 20 ASX producer. Yeah. The two companies that would sort of sit either side of us on that production table and both capitalised at more than $1 billion, which makes challenges. Current market cap of around about $80 million look very cheap by comparison. So shareholders that can take a sort of three year view until we're in production fully. And it might only take nine months until our in production nearby tolling can see, I think, a significant return on their investment. You mentioned BHP to which

5:17

as we know has diversified a lot with its Oz minerals acquisition. How pivotal is the copper part of your business to

5:26

look? We don't have much copper in Argentina. It's purely gold with some silver. We do have some copper in a large 4.5 million ounce project in Ecuador. Although having said that, we've already announced that we're in the middle of running a process to divest that to focus exclusively on our high grade gold project in Argentina.