Quarterly Report For The Period Ended 31 December 2022

Challenger Exploration (ASX: CEL) (“CEL” the “Company”) is pleased to provide its Quarterly Activities Report for the period ended 31 December 2022 (“Quarterly”, “Reporting Period”).

Highlights

• Hualilan Gold Project - San Juan, Argentina
  
  • Drilling post CEL's Maiden Mineral Resource Estimate (MRE) of 2.1 million ounces (AuEq)¹ continues to significantly expand the mineralisation with results Including (Table 4);
    
    • 50.0m at 3.4 g/t AuEq¹ - 2.4 g/t Au, 16.8g/t Ag, 1.8% Zn from 441.0m including,
      40.0m at 4.2 g/t AuEq¹ - 2.9 g/t Au, 20.9 g/t Ag, 2.2% Zn from 441.0m including,
      22.5m at 7.0 g/t AuEq¹ - 4.8 g/t Au, 33.5 g/t Ag, 3.8% Zn from 456.5m (GNDD-316 ext)
      
    • 65.3m at 2.4 g/t AuEq¹ - 2.3 g/t Au, 1.7 g/t Ag, 0.2% Zn from 209.0m and
      12.2m at 11.0 g/t AuEq¹ - 10.1 g/t Au, 11.7 g/t Ag, 1.5% Zn from 324.9m(GNDD-684)
    • 16.5m at 5.9 g/t AuEq¹ - 4.1 g/t Au, 18.9 g/t Ag, 3.4% Zn from 53.0 including,
      10.5m at 9.3 g/t AuEq¹ - 6.5 g/t Au, 29.6 g/t Ag, 5.3% Zn from 59.1m (GNDD-670),
      
    • 94.0m at 0.7 g/t AuEq¹ - 0.6 g/t Au, 1.2 g/t Ag, 0.1% Zn from 17.0m including
      2.0m at 8.8 g/t AuEq¹ - 8.8 g/t Au, 0.2 g/t Ag, 0.1% Zn from 109.0m and
      45.0m at 0.7 g/t AuEq¹ - 0.5 g/t Au, 6.3 g/t Ag, 0.2% Zn from 314.0m (GNDD-661);
  • Additional 50,000 metre drill program (to take total metres at Hualilan to 250,000 metres) more that 50% complete (assays pending)
  • Work on an updated MRE based on approximately 200,000 metres of assays underway with a March completion date to be followed by a third update, based on 250,000 metres, in H2 23.
  • Scoping Study commenced with Mining Plus appointed as managers for the Study.
• El Guayabo/Colorado V Gold/Copper Projects - El Oro, Ecuador
• 11 hole exploration program targeting the next 8 regionally significant Au-soil anomalies in Ecuador completed with all holes intersecting mineralisation and discoveries on 4 of the 8 anomalies. Outstanding results from first Phase 2 drill holes on the GY-B anomaly (Table 5):
• 778.2 m at 0.3 g/t AuEq²- 0.2 g/t Au, 0.6 g/t Ag, 0.01% Cu, 0.8 ppm Mo from 77.3m including;
  171.3m at 0.5 g/t AuEq² - 0.5 g/t Au, 0.9 g/t Ag, 0.01% Cu, 2.1 ppm Mo from 328.1m including;
  98.4m at 0.7 g/t AuEq² - 0.6 g/t Au, 0.6 g/t Ag, 0.01% Cu, 2.3 ppm Mo from 328.1m and
  150.8m at 0.5 g/t AuEq² - 0.4 g/t Au, 0.6 g/t Ag, 0.02% Cu, 3.1 ppm Mo from 688.2m including;
  42.5m at 1.4 g/t AuEq² - 1.3 g/t Au, 1.2 g/t Ag, 0.1% Cu, 2.4 ppm Mo (GYDD-22-019)
  (First hole CP-A Anomaly - new gold discovery)
• 638.2m at 0.6 g/t AuEq² - 0.3 g/t Au, 2.1 g/t Ag, 0.1 % Cu, 10.5 ppm Mo from 10.1m including;
  304.3m at 1.0 g/t AuEq² - 0.5 g/t Au, 3.4 g/t Ag, 0.3 % Cu, 14.5 ppm Mo from 344.0m including;
  108.5m at 2.4 g/t AuEq² - 1.3 g/t Au, 7.8 g/t Ag, 0.6% Cu, 20.0 ppm Mo from 344.0m including;
  54.2 m at 4.0 g/t AuEq²-2.2 g/t Au, 12.9 g/t Ag, 1.0% Cu, 24.7 ppm Mo (GYDD-22-024)
  (GY-B Phase 2 drilling - hole ending in mineralisation)

CORPORATE

The exploration expenditure for the quarter was $7.7 million including approximately $0.9m Argentinian VAT which will be recouped. Exploration spend was primarily drilling and assay expenditure which accounted for 70% of the total exploration spend and Scoping Study activities of

$150k.

A total of 11,745 metres were drilled during the December Quarter in Hualilan with 3-rigs utilised full time and rig production ahead of budgeted metres. With the drill out for the Hualilan Mineral Resource Update now completed the rig count has been reduced to 2-rigs with a second rig programmed to depart at the end of the quarter. Budgeted drill metres during the current quarter are approximately 7,500 metres, a 40% reduction.

Total drill metres during the quarter in Ecuador were 7,041 metres. Approximately 4,500 metres remain in the program designed to produce a maiden Mineral resource estimate, in accordance with the JORC Code, over the GY-A and GY-B anomalies. Consequently, the company will move from 2-rigs to 1-rig during February with this program expected to be completed around the end of the quarter.

In line with the current drill programs at both projects nearing completion, budgeted exploration spend is forecast to reduce significantly in the current quarter and again into the June quarter.

Net spend during the quarter was $9.1million which included the exploration spend of $7.7 million and Administration and Corporate costs of $1.2M including approximately $0.9m Argentinian VAT which will be recouped. The $1.2M administration and corporate costs included Interest associated with the Convertible Debenture with QRC of $400k. The balance was related to administration and other corporate costs. Amounts payable for staff costs of ($113k) and exploration staff costs ($91K) were to related parties and their associates. Cash at bank at the end of the quarter was $15.4 million.

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