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Faugheen has "one or two tests to pass" but is on course to run in the BHP Insurance Irish Champion Hurdle at Leopardstown on Saturday.
The Willie Mullins-trained 10-year-old put up what was arguably a career-best performance when slamming stablemate Arctic Fire by 15 lengths in the 2016 renewal of the prestigious contest, but was then sidelined by injury for the best part of two years.
He appeared to have lost none of his ability when making a scintillating reappearance in the Morgiana Hurdle at Punchestown in November, but will be on a recovery mission if lining up alongside stablemate Melon this weekend, after being pulled up in the Ryanair Hurdle at Leopardstown over the festive period.
Speaking at the official launch of the Irish Champion Hurdle at the Stephens Green Hibernian Club in Dublin on Monday, Mullins said: " I'm very happy with Faugheen. He has one or two tests to pass before this weekend, but I'm very pleased at this stage and both Melon and Faugheen will run in the Irish Champion Hurdle."
Mullins has won the Irish Champion Hurdle six times overall, with Hurricane Fly claiming a record five consecutive renewals between 2011 and 2015.
Although the popular hurdler ended his career unbeaten in 10 starts at Leopardstown, Mullins insists he never took his success for granted.
He added: " There was never any confidence with him, you never know what can go wrong or what will happen."
Faugheen and Melon are set to be part of a formidable Mullins team bound for the inaugural Dublin Racing Festival this weekend, as the Closutton handler bids to claw back Gordon Elliott's significant lead in the race to be crowned this season's champion National Hunt trainer.
"I'm happy with all my horses the way they are working - Min is good, Yorkhill is good and Djakadam is good. They all have a test to do before this weekend, but hopefully they'll all run," said Mullins.
"It's a great initiative with fantastic prize-money and hopefully I'll get a bit of it!"