Austral Gold (ASX:AGD) unit Casposo Argentina Mining and Challenger Gold have terminated their toll processing agreement dated Dec. 27, 2024, effective Oct. 1, according to a Friday Australian bourse filing.

The company said Challenger has agreed to pay Casposo $1 million, representing the deferred balance of the initial fee under the agreement, payable on the earlier of April 2, 2029 and the start of commercial production at Challenger's Hualilan project.

Accrued interest on the deferred balance has been waived, with 6% annual default interest applying from Jan. 2, 2025 only if the amount is not paid when due, while the parties have mutually released each other from all other claims without admission of liability, the filing added.

Casposo continues to process material from its own mining operations, with an estimated remaining mine life of about 74 months based on its mineral reserves, and the company does not expect a material financial impact in the current period from ending the arrangement, Austral added.

The parties have agreed to continue discussions on a potential agreement for Casposo to purchase mineralized material from the Hualilan Project, while Austral Gold also continues to evaluate other third-party processing and material purchase opportunities in the San Juan region, per the filing.