Challenger Gold Limited (ASX: CEL) (“Challenger” or “the Company”) has drawn US$2 million from its US$20 million Project Finance Facility. This move strengthens its ability to advance Toll Milling operations, covering early mining works, corporate expenses, and working capital.
The announcement follows a 7.02% gain in the past week, outperforming the sector by 3.36% over the past year. Currently (March 26, 2025), CEL’s stock price stands at $0.061, reflecting a 1.67% increase (+$0.001). This positive momentum highlights growing investor confidence in the Company’s strategy.
Challenger Gold’s First Step in Project Financing
Challenger Gold Limited (ASX: CEL) has taken a significant step towards advancing its Toll Milling operations. The Company has successfully drawn down an initial US$2 million (~AUD $3.2 million) from its US$20 million Project Finance Facility. This funding will kickstart early works for mining preparation, corporate overheads, and working capital.
Middlegate Securities Inc. (MSI) and ECM Capital Advisors Inc. (ECM), collectively known as the Advisory Team, structured the facility. They will receive a 4% fee on the first US$2 million drawdown.
Tranche 1 Terms and Conditions
The Tranche 1 drawdown comes with key financial terms:
- Loan Amount: US$2 million
- Interest Rate:
- 8.5% if repaid before 7 December 2025
- 12.75% if repaid after 7 December 2025
- Collateral: Unsecured
- Repayment: After receiving the first cash flow from Toll Milling
- Mandatory Amortisation: One bullet payment with the first Toll Milling cash flow
- Voluntary Prepayment: Allowed anytime without penalties
- Repayment Terms: 101% of the principal amount plus accrued interest
- Use of Funds: Early mining works, general corporate expenses, and working capital
- Fees: 4% of gross proceeds to the Advisory Team
- Future Drawdowns: Subject to satisfactory due diligence and mutual agreement
How Will Challenger Use the Funds?
The Company will use the first US$2 million for:
- Mining Preparation: Essential early works for mining operations to support Toll Milling
- Corporate Expenses: Covering operational and administrative costs
- Working Capital: Ensuring financial flexibility for ongoing activities
The Toll Milling strategy is central to Challenger’s growth, making this drawdown a crucial milestone.
What’s Next for Challenger?
The US$20 million facility provides significant financial backing for Challenger’s future expansion. However, each new drawdown requires due diligence and agreement with the Advisory Team.
The Company intends to integrate Tranche 1 into the larger facility before 7 December 2025. It plans to amortise the full loan over 24-36 months using cash flow from Toll Milling.
Investor’s Outlook
Gold’s surge past US$3,000 per ounce strengthens Challenger Gold’s outlook. With rising prices boosting project economics, the Company’s US$20M finance facility supports expansion. Analysts expect short-term volatility, but sustained levels could drive further buying. Challenger is well-positioned to capitalise on gold’s bullish momentum, enhancing its long-term growth prospects.
Key Market Metrics:
- Market Capitalisation: $101.26M
- Shares on Issue: 1,687,739,681
- 52-Week Range: $0.037 – $0.099
Recent Performance:
- 1 Week: +7.02%
- 1 Month: +5.17%
- 2025 YTD: +29.79%
- 1-Year vs Sector: +3.36%
With a 29.79% increase year-to-date, Challenger is outperforming many of its peers. The US$2M drawdown strengthens its balance sheet and provides essential capital for mining preparations. As the Company progresses with its Toll Milling plans, investors will closely watch future drawdowns and project execution.
Challenger’s ability to successfully integrate Tranche 1 into the full US$20M finance facility could unlock further upside potential. Given its steady price movement and sector outperformance, CEL remains an interesting prospect for investors tracking the gold and mining sector.
