Challenger Gold (ASX:CEL) has entered into definitive subscription agreements for US$24 million ($34.2 million) of unsecured convertible debentures, with potential additional proceeds of US$6 million.
Under the terms, the company can issue additional debentures to bring total gross proceeds to US$30.3 million. The debentures convert into ordinary shares at $2.72 per share, representing a 30% premium to the 20-day volume weighted average price prior to 16 September 2026.
The debentures carry an 11% annual coupon, comprising 6.5% payable in cash and 4.5% payable in cash or shares at the investor’s election. The instruments have a five-year maturity from the initial completion date.
The offering will be completed in two tranches. The first tranche of US$15 million is expected to complete early next month (October 2026), while the second tranche of US$9 million requires shareholder approval at a general meeting targeted for end-November 2026.
Challenger notes that the second tranche includes participation by Peter Marrone and Dolphin Real Assets Fund, an affiliate of Eduardo Elsztain.
COO and interim chief executive Yohann Bouchard says the funding demonstrates ‘strong’ support for the Hualilán Project and the company’s development strategy.
“The participation of Peter Marrone and Eduardo Elsztain is a powerful endorsement of both the quality of the asset and the company’s future prospects,” Bouchard says.
Proceeds will fund consultant services, detailed engineering, downpayments for long-lead-time equipment including crusher circuits, and general working capital purposes.
According to Challenger, the funding forms part of the initial US$184 million required to bring the phase one heap leach operation into production by early 2029.
“This funding allows the company to continue advancing key development activities along the critical path, further de-risking the project and strengthening the execution pathway to production,” Bouchard says.
Challenger has initiated talks with third-party financial partners for the balance of required funds and intends to progress these into next year. The company notes that Hualilán is expected to enter production 12 months earlier than contemplated in the Prefeasibility Study.
The debentures will be issued in US$100,00 units and include an establishment fee of 3% of the principal amount payable at completion. Following the third anniversary, Challenger may redeem the debentures at principal amount plus accrued interest under certain circumstances.
Challenger Gold is a gold explorer and developer with assets in Ecuador and Argentina.
Write to Paula Fabe at Mining.com.au
Main image: Challenger Gold
