Challenger Exploration Limited (CEL) has signed a non-binding Memorandum of Understanding (MOU) with YPF Luz for the supply of renewable energy to the Hualilan Gold Project.
According to CEL, renewable power will enable the project to have a lower carbon intensity compared to its peers.
It added that the low-cost power source will support the project’s economics and removes the need for expensive on-site power storage, which is often the consequence of 100 per cent renewable power.
Under the agreement, YPF will present CEL with a high-level technical alternative for the supply of renewable electric energy to the project, from which CEL will decide if it wants YPF to develop any of the alternatives presented.
It added that if the project reaches an energy supply price of below 7 U.S. cents per kilowatt hour, CEL shall award YPF with a power purchase agreement for the energy supply to Hualilan.
To develop the chosen alternative, the parties will negotiate a binding agreement that will include YPF’s obligation to develop future agreements that the parties may enter into if the development is satisfactory.
Additionally, YPF will have a right of first refusal for the energy supply to the project in any future tenders for a term of five years, providing it matches the best price.
According to CEL Managing Director Kris Knauer, the MOU serves as a “key milestone” in the development of the Hualilan project, noting that it provides the project with a secure source of renewable energy that will underpin project economics.
“With other measures already in train, it has the potential to see Hualilan emerge as one of the lowest carbon intensity gold mines in the world,” he added.
Knauer said the MOU also improves Challenger’s flexibility to move any capital costs associated with the provision of power to the project off-balance sheet.
