Quarterly Report for The Period Ended 30 June 2022

Challenger Exploration (ASX: CEL) (“CEL” or the “Company”) is pleased to provide its Quarterly Activities Report for its Gold and Copper projects in Argentina and Ecuador for the period ended 30 June 2022 (“Quarterly”, “Reporting Period”).

Highlights

• Corporate
  • Cash at bank of $10.4 million at the end of the quarter
• Hualilan Gold Project - San Juan, Argentina
  • Maiden Mineral Resource Estimate (MRE) of 2.1 million ounces (AuEq) ¹ at CEL's flagship Hualilan Gold Project containing a high grade core of 6.3 Mt at 5.6 g/t AuEq¹ for 1.1 Moz AuEq
  • MRE is based on 125,700 metres of CEL's current 204,000 metre drill program and mineralisation remains open in all directions
  • Approximately 201,500 of the 204,000 metre drill program now completed with assays pending for 53,000 drill metres. Accordingly the rig count has been reduced from 9 to 3 rigs
  • Drilling post CEL's MRE significantly expands mineralisation, particularly the high-grade core of 1.1 Moz at 5.6 g/t AuEq ¹ , in multiple directions with results Including;
    
    • 28.5 metres at 5.3 g/t AuEq (5.0 g/t Au, 23.9 g/t Ag, 0.02 % Pb, 0.03 % Zn) - (GNDD-530)
    • 6.6 metres at 6.4 g/t AuEq (4.2 g/t Au, 50.0 g/t Ag, 0.01 % Pb, 3.4 % Zn) - (GNDD-536)
    • 34.4m at 0.7 g/t AuEq (0.5 g/t Au, 2.0 g/t Ag, 0.2 % Pb, 0.5 % Zn) from 59.0m including 6.3 metres at 2.4 g/t AuEq (1.1 g/t Au, 7.7 g/t Ag, 1.1 % Pb, 2.2 % Zn (GNDD-563)
    • 1.4 metres at 75.1 g/t AuEq (67.0 g/t Au, 101 g/t Ag, 0.04 % Pb, 15.0 % Zn) (GNDD-533)
  • Outstanding metallurgical testing with average gold recovery increased to 95% across all ore types and a clear route to recover silver, zinc and lead credits via standard sequential flotation
• El Guayabo/Colorado V Gold/Copper Projects - El Oro, Ecuador
  • Two new Au-Cu-Ag-Mo discoveries of significant scale in the first two regionally significant Au-soil anomalies drilled in Colorado V with results including (refer Table 8):
  • 528.7m at 0.5 g/t AuEq ² - 0.3 g/t Au, 2.0 g/t Ag, 0.1 % Cu from 4.5m to eoh, including;
    397.1m at 0.6 g/t AuEq ² - 0.3 g/t Au, 2.8 g/t Ag, 0.1% Cu from 4.5m including;
    108.0m at 0.7 g/t AuEq ² - 0.4 g/t Au, 2.8 g/t Ag, 0.1 Cu from 6.0m and;
    130.2m at 0.7 g/t AuEq ² - 0.4 g/t Au, 3.3 g/t Ag, 0.1 Cu from 166.6m (CVDD-22-001)
  • 570.0m at 0.4 g/t AuEq ² - 0.2 g/t Au, 2.0 g/t Ag, 0.1% Cu from 5.0m to eoh including;
    306.0m at 0.5 g/t AuEq ² - 0.2 g/t Au, 2.3 g/t Ag, 0.1% Cu from 14.0m (CVDD-22-002)
  • 564.1 m at 0.4 g/t AuEq ² - 0.2 g/t Au, 2.3 g/t Ag, 0.1 % Cu, from 8.1m including;
    278.0 m at 0.6 g/t AuEq ² - 0.3 g/t Au, 3.2 g/t Ag, 0.1% Cu, from 8.1m including;
    146.5 m at 0.7 g/t AuEq ² - 0.4 g/t Au, 3.2 g/t Ag, 0.1 Cu, from 8.1m (CVDD-22-005)
  • 509.9 m at 0.4 g/t AuEq ² - 0.2 g/t Au, 1.4 g/t Ag, 0.1% Cu, from 2.5m including;
    242.5 m at 0.6 g/t AuEq ² - 0.4 g/t Au, 1.8 g/t Ag, 0.1% Cu, from 2.5m (CVDD-22-003)

CORPORATE

Net spend during the quarter was $10.0m which included net exploration expenditure of $9.2 million, including approximately $1.7m Argentinian VAT which will be recouped, and administration and corporate costs of approximately $0.8 million. The exploration expenditure was primarily drilling and assay expenditure which accounted for 80% of the total exploration spend. Director associated fees of $100,000 was paid to related parties. During the quarter the Company had 9-rigs at Hualilan for 37,036 metres drilled and 2 rigs completing 6,440 metres in Ecuador for total drill metres of 43,476 metres.

Challenger had cash at the end of the quarter of $10.4m. With 201,500 metres of the 204,000 metre drill program at Hualilan now completed, the rig count has been decreased to from 9 -rigs to 3-rigs in Argentina with the 2-rigs maintained in Ecuador. Quarterly budgeted drill metres are approximately one third of the June quarter. Accordingly net spend for the next two quarters will reduce significantly.

Assay results for 53,000 metres of drilling at Hualilan that remain pending are anticipated to be received progressively over the next 4 months. The lesser rig count at Hualilan will allow the company the resources to undertake an extensive program of surface channel sampling, as several roads installed for drill rig access at Hualilan have uncovered surface mineralisation. Additionally, the Company will begin economic studies once the updated Hualilan MRE, that will be based on the entire 204,000 metre drill program, has been completed.

The drill program in Ecuador will remain unchanged with both rigs focussed on the main discovery zone at the GY-A anomaly, El Guayabo, from August. This additional 25,000 metres is designed to produce a maiden MRE in accordance with the JORC Code from the 100% owned GY-A anomaly.

Cerro Sur Looking north showing drill rig access roads both into the Hualilan Hills and on the plains

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