challengerex.com...challenger exploration limited acn 123 591 382 asx: cel issued capital 653.1m...

Challenger Exploration Limited

ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights

Australian Registered Office

Level 1

1205 Hay Street

West Perth WA 6005

Directors

Mr Kris Knauer, MD and CEO

Mr Scott Funston, Finance Director

Mr Fletcher Quinn, Chairman

Contact

T: +61 8 6380 9235

E: [email protected]

www.challengerex.com

ASX Release 31 January 2021

QUARTERLY REPORT FOR THE PERIOD ENDED 31 DECEMBER 2020

Highlights

• Hualilan Gold Project - San Juan, Argentina

- The company's 45,000 metre drill program continued with five rigs on site and drilling during the quarter. The Company expects to complete 6,500 metres drilling per month.

- 62 diamond core holes totalling 16,528 metres were completed during the quarter. The company has completed 27,000 of the 45,000 metre drill program at January 30, 2021.

- Broad gold intercepts in the first six holes testing the existence of a large scale intrusion-hosted gold system underlying the high-grade skarn with results including (Table 1):

▪ 39.0m at 5.7 AuEq1 - 5.5 g/t Au, 2.0 g/t Ag, 0.3% Zn, from 224m (GNDD-088)

▪ 61.0m at 1.2 g/t AuEq1 - 1.1 g/t Au, 1.1 g/t Ag, 0.1% Zn from 21m (GNDD-079)

▪ 102m at 0.6 g/t AuEq1 - 0.6 g/t Au, 1.1 g/t Ag, 0.2% Zn from 18m (GNDD-089)

- Intrusion-hosted mineralisation appears to be extensive and continuous at this early stage, with the first six holes extending mineralisation 300 metres into the Gap Zone.

- High-grade mineralisation continued to be intersected outside the boundaries of the historical resource with multiple high-grade drill intersections including (refer Table 2):

▪ 44.0m at 3.6 g/t AuEq1 - 2.8 g/t Au, 62.7 g/t Ag from 11m including; 12.0m at 10.4 g/t AuEq1 - 8.3 g/t Au, 190.1 g/t Ag, from 36m (GNRC-110)

▪ 7.0m at 13.8 g/t AuEq1 - 13.3 g/t Au, 12.6 g/t Ag, 0.8% Zn (GNRC-107)

▪ 5.0m at 12.3 g/t AuEq1 - 12.2 g/t Au, 7.2 g/t Ag, from 35m (GNRC-076)

- Mineralisation remains open in all directions and results continue to suggest the mineralisation is part of a much larger gold bearing system than was originally anticipated.

• El Guayabo/Colorado V Gold/Copper Projects - El Oro, Ecuador

- Assaying of historical core and rock saw channel sampling continued during the quarter with results confirming the potential for major gold porphyry discovery (refer Table 3):

▪ 385 metres of mineralisation in the main Humedo Adit

▪ 248 metres at 0.5 g/t AuEq2 including 114 metres at 0.7 g/t AuEq4 - ZK16-2

▪ 112 metres at 0.5 g/t AuEq2 within a zone of 454m at 0.3 g/t AuEq4 - ZK0-4

- Results are from the margins of regionally significant Au-Cu soil anomalies with grades now shown to increase towards the centre of the anomalies which are yet to be drill tested.

- The two main Au-Cu soil anomalies have the same geology, grades, and surface footprint as the Tier 1 Cangrejos Gold Project1 located five kilometres to the northeast.

- Recently acquired airborne magnetic data confirms these large Au-Cu anomalies are coincident with significant underlying magnetic anomalies indicative of porphyry systems.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




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 31 December 2020.

CORPORATE

Challenger is in a strong financial position, with approximately $15.13m cash at bank at the end of the quarter. Additionally, the Company has in the money options, that when exercised, will increase cash at bank by $3.5m. Exploration spend during the quarter was $5.9m of which approximately $575k was related to one-off items and $492k was Argentinian VAT which will be recouped. Thus, the net expenditure for the quarter with 5 rigs completing 16,500 metres in Hualilan, exploration in Ecuador and all overheads was approximately $4.8m, which was predominantly drilling and assays. Payments to related parties for the quarter, as per section 6 of the Appendix 5B was $37,500 for Directors

consulting fees. Payments for corporates costs amounted to $329k for and associated with listing and

compliance, investor relations, consulting fees and administration costs.

As a demonstration of their strong commitment to the Company and our projects, the board, key

management personnel, and senior employees (including employees in Ecuador and Argentina) all agreed

to receive shares in Challenger in lieu of cash consideration of between 40% and 100% of their current

gross salaries and consulting fees for a minimum of six months (commencing April 2020) or until the end

of the year. Shareholder approval was received for Directors at the Company's Annual General Meeting,

with the shares issued on 25 November 2020.

COVID-19

The Company continues to work with all levels of government and local communities in relation to COVID-

19.

During the quarter one employee from one of the three drilling contractors engaged at Hualilan tested

positive to COVID-19. Each of the drilling contractors on site operate in strict COVID-19 bubbles to

minimise any risk of spread. The Company has also split the 45,000 metre drill program over three drilling

contractors operating no more than 2 rigs each to minimise the potential impact of COVID-19.

Under the Company's COVID-19 protocols the drillers from both drill rigs being operated by the drilling

contractor were immediately tested for COVID-19 and rotated out. All close contacts including CEL staff,

were tested on site with results available in 15 minutes. Two additional drillers from the drilling company

were found to be COVID-19 positive with all other CEL staff, testing negative. As the drilling contractors

returned the positive results 7 days before the planned 2 week shutdown of drilling from December 22 the

Company took the decision to rotate in new drilling crews after the 2 week shutdown rather than

Immediately which would be the normal course of action. Accordingly, 7 days drilling time from 2 drill rigs

was lost due to COVID-19.

The Company's priority remains the health and wellbeing of all its staff and contractors and their families.

A copy of the Company's COVID-19 protocols is available on our website.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




HUALILAN GOLD PROJECT - ARGENTINA

MAJOR INTRUSION-HOSTED SYSTEM UNDERLYING THE HIGH-GRADE MINERALISATION

During the quarter the first 10,000 metres of the Company's high-impact 45,000 metre drill program

was primarily dedicated to testing the thesis of an intrusion-hosted gold system underlying the

historical high-grade skarn mineralisation. The potential for a significant intrusion-hosted gold system

was indicated by the Company's drill holes GNDD-025 (88 metres at 1.0 g/t AuEq and ending in

mineralisation) and GNDD-032 (116 metres at 1.2 g/t AuEq). Prior to these holes, the Company had

limited control on the distribution of the intrusives and their gold content, given previous explorers

policy of not sampling the intrusives and generally terminating holes upon reaching them.

This first 10,000 metres was effectively blind stratigraphic drilling as it was focussed predominantly

on the 1-kilometre undrilled Gap Zone between Cerro Sur and Cerro Norte which is under cover. The

results from these first 6 drill holes significantly exceeded the Company's expectations. They

confirmed not only the presence of a large intrusion-hosted gold system containing broad zones of

bulk gold mineralisation, but also significant zones of high-grade mineralisation.

The scale of the system is illustrated by:

▪ the identical nature of the mineralisation, alteration, and the host intrusive in drill holes

GNDD-079 (61 metres at 1.2 g/t AuEq), GNDD-025 (88 metres at 1.0 g/t AuEq), and GNDD-

032 (116 metres at 1.1 g/t AuEq) which extend over 1 kilometre of strike.

▪ The intersection of the same high grade endoskarn mineralisation in drill holes GNDD-088 and

GNDD-047 which are 1.5 kilometres apart.

The limited scout drilling into the intrusives has now intersected broad zones of plus 1 g/t gold over

1.5 kilometres of strike in 5 of 10 holes drilled by the Company encountering more than 50 metres of

intrusives. The average grade of the intrusion-hosted mineralisation across the Company's drill holes

is 1.1 g/t AuEq2 (0.9 g/t AuEq2 if GNDD-088 is excluded).

This program of deeper drilling is ongoing stepping north and south into the Gap Zone and to the

south at to Magnata and Sentazon as shown on Figure 1. Two of the five rigs will continue to define

this large intrusion-hosted discovery with the other three rigs focussing on extending the high-grade

skarn mineralisation.

Drill Hole GNDD-088

Drill hole GNDD-088 was collared 50 metres north of the GNDD-025 discovery hole which returned 88

metres at 1.0 g/t AuEq in the northern end of the Gap Zone between Cerro Sur and Cerro Norte. There

is no outcrop over 800 metres in the Gap Zone, with deep cover extending from 200 metres north to

600 metres south of drillhole GNDD-025.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Figure 1 - Overview of the Mineralised system at the Hualilan Gold Project showing Intercepts In Intrusives


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




GNDD-088 returned a high-grade zone of 39.0 metres at 5.5 g/t gold, 2.0 g/t silver, 0.3% zinc (5.7 g/t

AuEq), from 224m, in porphyry dacite with pyroxene/epidote and pyrite endoskarn alteration. The

intercept included a higher-grade zone of 7.4 metres at 23.4 g/t gold, 5.7 g/t silver, 1.3 % zinc (24.1

g/t AuEq) in strong pyroxene/epidote and pyrite endoskarn. GNDD-088 also returned lessor intercepts

of 23.5 metres at 0.3 g/t AuEq from 45 metres in dacite higher in the hole.

Figure 2 - Cross Section showing GNDD-088 and GNDD-108 (assays pending) and planned follow up hole

In addition to extending the mineralisation in the intrusives a further 50 metres north along strike

from GNDD-025, this hole demonstrates the potential for high grade mineralisation in the intrusives

and Gap Zone. Using 1 g/t AuEq bottom cut, the zone of strong endoskarn alteration returned 14.4

metres grading 14.4 g/t AuEq. GNDD-088 has been followed up by drillhole GNDD-108 (assays

pending) collared to test 50 metres up-dip from GNDD-088. The Company has also collared a drill hole

100 metres to the west designed to test underneath hole GNDD-088.

Importantly this high grade endoskarn zone in GNDD-088 appears to be the same pyroxene/epidote

alteration that was intersected in GNDD-047 (38.5 metres at 1.3 g/t gold, 1.2 g/t silver, including 6.0

metres at 6.3 g/t gold, 3.5 g/t silver, with the hole ending in mineralisation) some 1.5 kilometres

further south along strike (Photo 1 and Photo 2).

This demonstrates the significant scale of the system and opens the potential for the intrusives to host

significant high-grade mineralisation in addition to bulk gold mineralisation over, at least the 1.5


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




kilometres of strike between GNDD-088 drilled at the north of the Gap Zone and GNDD-047 drilled

south of Sentazon.

Photo 1 - GNDD-088 core 243 metres (interval 238.5-245.9m averaged 24.1 g/t AuEq)

Photo 2 - GNDD-047 core 68.3 to 73.4 metres (interval 62.5-68.6m averaged 6.4 g/t AuEq)

Drill Hole GNDD-079

Drill hole GNDD-079 was collared 100 metres north of drill hole GNDD-032 (116 metres at 1.2 g/t

AuEq) at the southern end of the Gap Zone. The hole was one of the few holes drilled with surface

control with altered porphyry dacite evident in outcrop between holes GNDD-032 and GNDD-0079.

The hole confirmed the extension of the near surface intrusion-hosted mineralisation 100 metres

along strike returning 61.0 metres at 1.1 g/t gold, 1.1 g/t silver, 0.1% zinc (1.2 g/t AuEq) from 21

metres.

The mineralisation encountered in GNDD-079 is hosted in dacite porphyry containing iron oxide, silica,

and pyrite alteration. Drill holes GNDD-079, GNDD-025 (88 metres at 1.0 g/t AuEq ending in


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




mineralisation) and GNDD-032 all intersected the same mineralisation, alteration, and host porphyry

dacite unit. These three drill holes extend over 1-kilometre of strike in the Gap Zone which was

undrilled prior to the Company's current scout drilling program for which the majority of assays are

pending.

The dacite unit intersected in GNDD-079 is mapped in outcrop both to the north and west of GNDD-

079 where the mineralisation remains open (Figure 3). GNDD-079 will be followed up with a hole

collared 50 metres to the west to test down dip where it is anticipated the porphyry dacite unit and

mineralisation thickens.

Drill Hole GNDD-089

Drill hole GNDD-089 was collared from the same drill pad as GNDD-079 and drilled at a lower dip and

a different direction being designed to have an end of hole location 50 metres south along strike from

GNDD-079. The hole intersected over 100 metres of mineralisation in the intrusives including 51.7

metres of 1.0 g/t AuEq from near surface in two zones. The hole successfully confirmed the extension

of a broad zone of mineralised dacite between hole GNDD-079 and GNDD-032 returning:

• 101.5 metres at 0.55 g/t gold, 1.1 g/t silver, 0.15% zinc (0.63 g/t AuEq) from 18m including;

• 30.0 metres at 0.95 g/t gold, 1.7 g/t silver, 0.09 % zinc (1.0 g/t AuEq) from 20m, and

• 21.7 metres at 0.88 g/t gold, 1.6 g/t silver, 0.43 % zinc (1.1 g/t AuEq) from 94.5m

Photo 3 - GNDD-079 core 47.2 to 55.6 metres (interval 47-56 metres averaged 3.3 g/t Au)


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235







ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Drill Hole GNDD-083

Drill hole GNDD-083 was collared 50 metres north along strike from GNDD-079 and GNDD-089 in the

southern end of the Gap Zone. The hole intersected dacite to 69 metres and returned a minor zone

of mineralisation in altered dacite of 21.0 metres at 0.2g/t gold, 10.0 g/t silver, 0.2 % zinc (0.4 g/t

AuEq). It is not yet clear if the hole represents the eastern extent of the mineralised dacite unit. The

company notes drillhole GNDD-093 drilled 50 metres east of GNDD-083 (assays pending) is not logged

as intersecting any significant mineralised zones and only encountered 29 metres of dacite at the top

of the hole. Mineralisation in the intrusives, however, remains open to the west and north along strike

into the Gap Zone. Follow up drilling will involve a hole collared 100 metres to the west of GNDD-083.

Drill Hole GNDD-082

Drill hole GNDD-082 was drilled in the north of the Gap Zone being collared 25 metres north and 30

metres west of GNDD-025. GNDD-082 was designed primarily to test along strike and underneath

(down dip) of hole GNDD-025, which ended in dacite porphyry grading 1.0 g/t gold.

The hole successfully extended the mineralisation encountered in GNDD-025, returning 80 metres of

mineralisation in porphyry dacite and ending in porphyry dacite grading 0.7 g/t gold. The

mineralisation occurred in three zones separated by thin intervals of limestone:

• 15.0 metres at 0.7 g/t gold, 0.4 g/t silver (0.7 g/t AuEq) from 168m

• 34.0 metres at 0.5 g/t gold, 1.0 g/t silver, 0.3% zinc (0.5 g/t AuEq) from 193.4m

• 31* metres at 0.4 g/t gold, 0.6 g/t silver 0.1% zinc (0.4 g/t AuEq) from 235.0m with the hole

ending in mineralisation grading 0.7 g/t gold.

GNDD-082 may be deepened and will be followed up with a hole which will be collared 100 metres to

the west of GNDD-082 to test approximately 100 metres down-dip (below) hole GNDD-082 (Figure 4).

Drill Hole GNDD-077

GNDD-077 was drilled 50 metres up-dip from GNDD-082 and only intersected 14 metres of dacite,

which returned 14 metres at 0.7 g/t gold, 5.9 g/t silver, 0.6% zinc (1.0 g/t AuEq). The hole has been

followed up by GNDD-121 which tested up-dip from GNDD-077. GNDD-121 intersected dacite in the

bottom 65 metres of the hole. Subject to assays additional drilling is planned up-dip of GNDD-121.

Drill Hole GNDD-092

Drill hole GNDD-092 was collared approximately 100 metres north of GNDD-025. The hole returned

two minor zones of mineralisation in altered dacite returning 21.7 metres at 0.3 g/t gold, 0.7 g/t

silver, 0.1 % zinc (0.4 g/t AuEq) and 17.0 metres at 0.2 g/t gold, 0.6 g/t silver, 0.1 % zinc (0.3 g/t

AuEq). The hole did encounter almost 200 metres of porphyry dacite which logging indicated was less

altered than GNDD-025, GNDD-088, and GNDD-082 located further south.

At this stage it is unclear if GNDD-092 represents the northern extent of the mineralisation in the

intrusive unit or just a lower grade part of the system.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Figure 3 - Plan view showing drilling and geology at the south of the Gap Zone


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




MULTIPLE HIGH-GRADE INTERCEPTS IN EXPLORATION DRILLING AT HUALILAN

During the quarter three of the five rigs on site targeted the high-grade skarn mineralisation. All holes

were designed to explore for extensions to the historical resource estimate with the exception of two

twin holes for JORC reporting.

The results (see Table 2) continue to extend the near surface skarn mineralisation along strike and

down dip in multiple locations and have defined two new zones of high-grade skarn mineralisation,

one above and one below, the historical limestone hosted skarn mineralisation. Drilling has confirmed

that there is a previously unrecognised broad continuous zone of bulk gold mineralisation overlying

the high-grade skarn which is likely to enhance the economics in an open pit development scenario.

This round of results has demonstrated that much of the historical drilling is under sampled and is

likely to have left zones of high-grade mineralisation unassayed and thus not included in the historical

resource.

Gap Zone

The first drilling to target possible extensions of the high-grade skarn mineralisation in the covered

and largely undrilled Gap Zone between Cerro Sur and Cerro Norte was completed during the quarter.

It confirmed that the skarn mineralisation intersected in GNDD-035 (5.8 metres at 9.5 g/t gold, 29 g/t

silver, 3.5% zinc) which extended the Main Manto 100 metres south into the Gap Zone has significant

strike extent and replicate zones.

GNRC-104

GNRC-104 was drilled above GNDD-035 to test for extensions of the Manto mineralisation. The hole

encountered 4 metres at 12.0 g/t AuEq (11.6 g/t gold, 10.5 g/t silver, 0.7% zinc) from 141 metres,

including 1 metre at 45.6 g/t gold, 40.0 g/t silver, 2.6% zinc.

The upper part of the limestone unit which hosts the skarn mineralisation in GNDD-035 was replaced

by dacite at the projected location of the mineralisation in GNRC-104, however the hole encountered

another high-grade zone of mineralisation slightly lower in the section near the limestone-intrusive

contact. It is believed that the dacite contact with the limestone has provided a significant fluid

pathway and site for mineralisation. High grade mineralisation in the limestone trends to broader

lower grade mineralisation in the dacite.

GNRC-098

GNRC-098 returned 2 metres at 17.0 g/t AuEq (15.6 g/t gold, 15.9 g/t silver, 2.8% zinc) from 88

metres within a broader zone of 8 metres at 5.3 g/t AuEq (4.9 g/t gold, 4.5 g/t silver, 0.8% zinc). Like

GNRC-104 the mineralisation was at the dacite - limestone contact. It is now understood that there is

potential for this contact zone to host significant high-grade mineralisation.

GNRC-098 was followed up with GNDD-141 (assays pending) to test up-dip. Additional drilling is

programmed to test up and downdip of GNDD-035, and downdip as well as along strike of GNRC-098,

and GNRC-104.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Figure 4 - Section showing new zones of high-grade mineralisation in the Gap Zone

Main Manto Cerro Norte

GNRC-076

GNRC-076 was collared between the Main Manto mineralisation and the Sanchez Fault. The hole was

collared as a downdip test of GNDD-034 which encountered a narrow high-grade zone of skarn

mineralisation of 0.3 metres at 11.6 g/t AuEq).

GNRC-076 intersected 5 metres at 12.3 g/t AuEq (12.2 g/t gold, 7.2 g/t silver) from 35 metres

including 1 metre at 53.1 g/t gold, 18 g/t silver. This is a new zone of skarn mineralisation in sandstone

above the main limestone unit which hosts broad zones of mineralisation, including high-grade skarn

mineralisation.

GNRC-076 then intersected the main limestone unit before it encountered no recovery from 62

metres (old workings) and had to be terminated. This zone of no recovery is believed to indicate the

presence of the main skarn mineralisation which has been exploited historically at this near surface

location. The historical mining seems to have been limited to the top 50 to 75 metres sub-surface

and, according to the historical records, generally recovered hand-sorted grades above 20 g/t gold.

Underground lower grade stockpiles have been observed and sampled as previously reported.

Gold Zone

Gold Zone


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




The discovery of the mineralisation in sandstone and the likely presence of the traditional Main Manto

mineralisation in limestone, albeit mined historically in this location, is encouraging as this area is

outside of the limit of the historical foreign resource estimate. The results open the potential for the

high-grade mineralisation to extend across this area of limited historical drilling which covers 200

metres of strike extent. A further hole has been completed to avoid the old workings (GNDD-119,

assays pending) and a hole is planned with a collar 80 metres to the west of GNRC-076 to test down-

dip in the sandstone and the limestone.

Magnata

Most of the skarn mineralisation at Magnata is controlled by the east-west sub-vertical Magnata fault

zone which splits into the M1 and M2 Magnata Faults. There is a north-south striking "manto

component" which dips west. In drilling completed to date, the mineralisation in the Magnata fault

appears to be relatively continuous over the 300 metres of strike and 120 metres vertical extent and

remains open at depth and in both directions along strike. As previously reported, the dacite near the

contact with the Magnata faults also contains broad zones of gold mineralisation which is not included

in the historic resource estimate.

The recent round of drilling at Magnata returned a number of significant results including holes

designed to extend the Magnata Fault mineralisation, holes designed to test for splays off this fault

and north-south limestone hosted skarn mineralisation, and confirmation historical drilling has not

sampled part of the ore zone.

GNRC-110

GNRC-110 was drilled to twin DDH-53 which is from a series of 79 diamond core holes drilled from

1999 to 2002 by Chilean Company CMEC. This series was regarded as the most reliable of the historical

drilling. It now appears that these DDH series holes may have significantly under-reported the width

of the skarn mineralisation due to under-sampling.

GNRC-110 returned 44.0 metres at 3.6 g/t AuEq (2.8 g/t gold, 62.7 g/t silver) from 11 metres

including 12.0 metres at 10.4 g/t AuEq (8.3 g/t gold, 190.1 g/t silver) compared to DDH-53 which

reported 28 metres at 3.2 g/t AuEq including 19.1 metres at 4.4 g/t AuEq. The under-reporting in

DDH-53 relates to two issues:

▪ not all of the mineralised zone was assayed. Only the core with abundant visible sulphides

was sampled and in hole DDH-53 this unsampled interval comprised some of the higher-grade

zones.

▪ DDH-53 recorded poor drill recovery, approaching 75%, over this zone which is now known to

result in under-reporting of grade. The poor recovery may have preferentially impacted the

sulphides and hence the gold.

The Company will review which of the DDH series of drill holes will be redrilled given the possibility

many of these holes have likely been under sampled. The initial focus of this review will be the 12 DDH

series holes which tested the Magnata Fault.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




GNRC-107

GNRC-107 was a twin of the Company's GNDD-008 and GND-008A drill holes to determine if RC drilling

provided a more representative sample than diamond core in areas of difficult drilling. GNDD-008

had to be redrilled after the original hole was abandoned. In the main M2 Magnata Fault where

GNDD-008A returned 2.6 metres at 25.5 g/t AuEq (22.8 g/t gold, 218 g/t silver, 0.7% zinc) the hole

reported recoveries as low as 40%. The Company's experience twinning historical holes is that where

core recovery drops below 90% the drilling can significantly under report both gold grade and width.

GNRC-107 was terminated short of the M2 Magnata Fault zone, however it identified a significant

high-grade near surface zone, interpreted as the M1 Magnata Fault, which was previously overlooked.

The zone returned 27 metres at 3.9 g/t AuEq (3.6 g/t gold, 14.8 g/t silver and 0.3% zinc) from 16

metres including 7 metres at 13.8 g/t AuEq (13.3 g/t gold, 12.6 g/t silver, 0.8% zinc). It correlates

with near surface mineralisation recorded in historical drill holes DDH 68 (17.9 metres at 2.2 g/t Au,

6.3 g/t silver, 0.2% zinc) and DDH-72 (11.7 metres at 3.8 g/t gold, 14.1 g/t silver, 1.3% zinc) collared 25

metres and 100 metres to the south-west confirming the potential for significant near surface

mineralisation on the M1 Magnata fault. A diamond drill core extension of GNRC-107 is planned.

GNDD-038 and GNDD-114

GNDD-038 was drilled to test the southern extension of GNDD005 and GNDD018 mineralisation in the

limestone and intercepted 2.85 metres at 2.0 g/t AuEq from 71 metres. GNDD-114 was collared 30

metres to the west of GNDD-038 to test down plunge intersecting a much broader and higher-grade

zone of mineralisation of 14.7 metres at 3.3 g/t AuEq (3.2 g/t gold, 3.3 g/t silver, 0.1% zinc) from 64

metres including 0.9 metres at 50.7 g/t AuEq (50.3 g/t gold, 27.2 g/t silver, 0.2% zinc). Further drilling

has been completed down dip with assay results pending.

Sanchez Zone

The Sanchez Fault has been mapped in outcrop over 500 metres of strike across the main Cerro Norte.

The steep terrain in this location has made drill pad location difficult and as such the Sanchez Fault

has historically only been drilled to 50 metres sub-surface over less than 50 metres of strike. The

Company's first hole GNRC-068 into the Sanchez Zone returned 69.0 metres at 4.8 g/t AuEq including

a broad high grade zone of 27.0 metres at 11.4 g/t AuEq containing a bonanza grade zone of 4.0 metres

at 48 g/t AuEq.

The Sanchez Zone is a high priority target as the Company's experience with its drilling of the Magnata

Fault Zone is that the mineralisation is generally:

▪ high-grade;

▪ laterally and vertically continuous;

▪ extensive at depth, with the Magnata Vein open below 160 metres;

▪ likely to extend under cover along strike beyond the limits of the main outcrop; and

▪ open at depth and under cover in both directions along strike


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GNRC-084

Drill hole GNRC-084 was drilled to test 40 metres under GNRC-068 (Figure 5) and is near to historical

drill hole 05-HD-40, although not a twin. 05-HD-40 is also thought to have understated both width

and grade due to poor core recovery. GNRC-084 intersected over 30 metres of mineralisation and

extended the Sanchez Zone 40 metres deeper, confirming 05-HD-40 has likely significantly

understated both grade and width.

GNRC-084 encountered two zones of extremely low recovery from 40 to 44 and 59 to 65 metres which

are believed to be old stopes. The hole is located within 75 metres of surface and historical mining

seems to have been limited to the top 50 to 75 metres. These stopes encountered in GNRC-084 may

correlate with the higher-grade zones in GNRC-068. Drillhole GNDD-147 (assays pending) has been

drilled as a deeper test designed to intersect the Sanchez Fault below the zone of historical mining.

The ground to the north and below GNRC-084 will be further tested as the bottom 2 metres of the

hole intersected mineralisation in intrusives grading 1.1 AuEq.

Figure 5 - Cross Section showing GNRC-084 and Sanchez Fault Zone

GNRC-070. GNRC-071 and GNRC-072

These were a series of shallow RC holes designed to test the Sanchez Fault near surface over 150

metres of strike to the west of GNRC-084. The holes confirmed that the Sanchez Fault is mineralised

Gold Zone


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over this 150 metres and remains open under cover to the west. All of these shallow holes have

subsequently been tested by deeper diamond core holes (assays pending) to extend the Sanchez fault

mineralisation deeper.

GNRC-070 was collared 50 metres west of GNRC-084 and intersected 1 metre at 6.6 g/t gold, 3.1 g/t

silver, 0.4% zinc from 41 metres however it is now believed that the hole was terminated prior to

reaching the Sanchez Fault.

GNRC-071 was collared 100 metres west along strike from GNRC-084 and intersected 2 metres at 1.5

g/t AuEq before encountering 6 metres of old workings and having to be terminated. The intersection

of the old workings confirms the high-grade mineralisation on the Sanchez Fault likely continues along

strike. GNRC-072 was redrilled behind and at a steeper angle to test underneath hole GNRC-071 and

encountered a broad lower-grade zone of mineralisation, however the hole appears to have been

terminated prior to reaching the Sanchez Fault due to poor drilling conditions.

Sentazon and Muchilera

Drill holes GNDD-085, GNDD-037 and GNDD-100 were drilled as further tests of the Muchilera Manto

which is located between the Magnata Manto in the north and the Sentazon Manto to the south. The

Muchilera Manto is historically mapped as a 2 to 3 metre thick, bedding-parallel mineralised zone.

Previous drill holes by the Company intersected minor skarn alteration and results such as 3.0 metres

at 1.0 g/t gold, 53.0 g/t silver, 0.1% zinc - 1.6 g/t AuEq in GNDD-030.

Drill hole GNDD-085 is located 30 metres north along strike from GNDD-030 and returned 1.3 metres

at 6.3 g/t AuEq (5.5 g/t gold, 75.6 g/t silver, 0.1% zinc) from 22.5m and 2.2 metres at 2.4 g/t AuEq

(2.1 g/t gold, 2.4 g/t silver, 0.6.% zinc). The hole confirms that the Muchilera Manto remains open

along strike to the north and now appears to join with the Sentazon Manto to the south. This forms

a zone of continuous mineralisation covering 350 metres of strike which remains open to the north

and south along strike and at depth.

BULK MINERALISATION ABOVE THE SKARN

GNRC-069 was collared to test under the Dona Justa Pit at Cerro Norte just south of the Sanchez Fault.

The hole is a good example of the broad zones of lower grade mineralisation that were not recognised

historically due to assaying only being conducted where sulphides were visible.

GNRC-069 recorded a combined 32 metres of mineralisation from 18 to 97 metres downhole. This

includes 7 metres at 0.7 g/t AuEq from 18 metres and 10 metres at 0.9 g/t AuEq from 53 metres and

15 metres at 0.6 g/t AuEq. This mineralisation has the potential to be economically significant in

exploitation via open cut.


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With the Company's policy of assaying all drill core it has recorded broad zones of lower grade

mineralisation, predominantly overlying the high-grade skarn mineralisation, in the majority of its drill

holes. Examples from the drill holes reported in this release are shown In Table 4 below.

Drill Hole (#) Results

GNDD-021 - Main Manto 19.8 metres at 1.9 g/t AuEq from 98.2m

GNDD-028 - Main Manto 18.6 metres at 1.2 g/t AuEq from 41.4m

GNDD-048 - Gap Zone 19 metres at 0.8 g/t AuEq from 36m

GNDD-050 - Main Manto 22 metres at 0.5 g/t AuEq from 21m

GNRC-069 - Main Manto 7 metres at 0.7 g/t AuEq from 18m;

10 metres at 0.9 g/t AuEq from 53m;

15 metres at 0.6 g/t AuEq.

GNRC-072 - Sanchez 19 metres at 0.3 g/t AuEq from 43m

GNRC-078 - Main Manto 17 metres at 0.4 g/t AuEq from 11m

GNRC-081 - Main Manto 30 metres at 0.5 g/t AuEq from 23m (hole terminated before

reaching target due to poor drilling conditions)




GNRC-097 - Main Manto 8 metres at 0.4 g/t AuEq

GNRC-098 - Gap Zone 19 metres at 0.3 g/t AuEq from 40m

GNDD-102 - Gap Zone 11 metres at 0.7 g/t AuEq from 36m;

8.9 metres at 0.5 g/t AuEq from 77.4 m

GNRC-111 - Sentazon 18 metres at 0.5 g/t AuEq from 31m

Table 4 - Bulk Mineralisation (additional to skarn) encountered in current drill holes

Complete assay results are available in Table 2 in this Quarterly Report.


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EL GUAYABO GOLD AND COLORADO V GOLD/COPPER PROJECT - ECUADOR

SIGNIFICANT INTERSECTIONS REINFORCE POTENTIAL FOR A GOLD PORPHYRY DISCOVERY During the quarter the Company continued with its program of assaying drill holes are from a series

of 60 historical holes drilled by CEL's farm-in partner targeting extensions to narrow high-grade vein

hosted gold mineralisation they are currently exploiting. These historical drill holes were not

systematically logged or assayed for bulk tonnage gold or base metal mineralisation. The company

also received results its initial 454 metres of rock-saw channel sampling along the main Humedo Adit

at Colorado V.

The main Humedo Adit and the drill holes are located adjacent to a series of regionally significant gold

and copper soil anomalies believed to be above intrusive porphyry-style targets. The Company's

recently acquired airborne magnetic data, which is currently being processed, confirms that these

large Au-Cu soil anomalies are coincident with significant underlying magnetic anomalies indicative of

porphyry systems.

None of the historical drill holes fully tested the Au-Cu soil anomalies as they were collared outside of

the soil anomalies and, at best, only tested the outer edges of the anomalies (see Figure 1). Similarly,

the main Humedo Adit at Colorado V only cuts the western edge of the largest Au-Cu soil anomaly

(Anomaly A).

Channel sampling in the Main adit, and new assays from historical drill core samples, returned

significant ore grade intersections from surface down to 450 metres. Importantly, the results returned

the highest grades closest to the centre of the main Au-Cu soil Anomaly A. Anomaly A is 1.2 kilometres

in length and remains untested with the historical drill holes only cutting the western edge of anomaly.

The Humedo Mine adit, while still on the western edge of Anomaly A, represents the nearest sampling

to the centre of the anomaly. The first 62 metres of the adit, which returned the highest grades of 62

metres at 0.8 g/t AuEq (0.6 g/t gold, 2.7 g/t silver, 848 ppm copper, 10.4 ppm molybdenum), is the

nearest section of the Adit to the centre of Anomaly A.

Management believes the results materially upgrade the main Au-Cu soil anomalies (Anomaly A and

Anomaly B) as compelling drill targets with significant scale. The mineralisation and grades

encountered in the Humedo Mine Adit and the historical drill holes is analogous to the 17 million-

ounce Cangrejos Project1 located 5 kilometres away. Additionally, the surface extent of the Anomaly

A and Anomaly B is similar to that of the Cangrejos deposit and of sufficient size to host a major gold

discovery.

Assays from a second phase of 340 metres of channel sampling in Humedo Mine, and the newly

discovered Cuenca Mine (within Anomaly A), located 450 metres south-east of the Humedo Mine, are

pending. Several additional historical drill holes have been logged, sampled and submitted for

assaying.


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Figure 6 : Showing location of drilling and channel sampling over Anomaly A (>100ppb gold in soil)

A


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Humedo Adit Channel Sampling

The main Humedo Adit is 430 metres long and provides access to a 500-metre northwest-southeast

trend currently being exploited by small scale underground mining. The Main adit cuts the western

flank of Anomaly A, the largest of a series of coincident gold, copper and molybdenum soil anomalies

believed to represent porphyry targets (Figure 6).

Channel sampling of the main Humedo Adit at Colorado V was undertaken during October 2020. The

sampling was conducted using a rock saw to cut a continuous channel in the wall of the Adit, which

was sampled, logged, and assayed in the same manner, and with the same QAQC standards, as drill

core. The channels are designed to provide a representative sample of the wall which is approximately

the same size and weight as a drill core sample. Assay results from these samples are expected to be

able to be utilised in any future resource estimates.

The channel sampling was undertaken continuously from surface at the Humedo Mine adit entrance

to 310 metres along the SW trending main Humedo Adit with another 146 metres sampled from the

Western Drive located at the end of Humedo Adit from +430 to +576 metres.

The main Humedo Adit returned 385 metres of mineralisation from the 456 metres rock saw sampled.

The northern section of the adit returned 264 metres at 0.4 g/t AuEq (0.3 g.t gold, 2.1 g/t silver, 512

ppm copper, 9.4 ppm molybdenum) including 112 metres at 0.7 g/t AuEq (0.6 g.t gold, 2.7 g/t silver,

784 ppm copper, 9.4 ppm molybdenum) plus 32 metres at 0.3 g/t AuEq (0.2 g.t gold, 1.4 g/t silver,

366 ppm copper, 5.1 ppm molybdenum). This mineralisation is located at the western edge of the

largest Au-Cu soil anomaly, Anomaly A (Figure 1).

The Humedo Adit, while located on the western flank of Anomaly A, is the nearest point sampled to

the centre of Anomaly A, with the northern section (top) of the adit the closest to the centre of

Anomaly A. The top of the adit returned the highest-grade intersection to date in Anomaly A recording

62 metres at 0.8 g/t AuEq (0.6 g/t gold, 2.7 g/t silver, 848 ppm copper, 10.4 ppm molybdenum).

Photos showing the main Humedo Adit and channel sample in the wall of the adit


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Channel sampling of the Western Drive from the end of the main Humedo Adit returned 39.1 metres

at 0.3 g/t AuEq (0.3 g.t gold, 2.3 g/t silver, 280 ppm copper, 4.5 ppm molybdenum) and 56 metres at

0.7 g/t AuEq (0.6 g.t gold, 1.8 g/t silver, 125 ppm copper, 3.0 ppm molybdenum). This mineralisation

is located well outside Anomaly A, is associated with antimony and bismuth, and has low associated

copper and molybdenum similar to the main zone of mineralisation currently being exploited

underground. This mineralisation is interpreted as an extension of the main Humedo Mine, which was

intersected in drill hole ZK0-2 (151m @ at 0.9 g/t Au, 3.8 g/t Ag - previously reported) a further 100

metres to the west along strike in an area of limited historical drilling.

Historical drill holes

The drill holes reported during the quarter were drilled adjacent to a series of regionally significant

gold-copper- molybdenum soil anomalies. These anomalies have significant scale with the plus 100

ppb gold footprint of both Anomaly A and B being over 1 kilometre long and 350-500 metres wide.

The anomalies had been interpreted to be targets for porphyry mineralisation prior to the assaying of

the historical drill holes. As can be seen from Figure 6 and 7, none of the historical drill holes test the

centre of the soil anomalies with the majority of the drill holes testing areas away from the anomalies.

Those holes which did penetrate the anomalies only drilled into their outer edges.

Drill hole ZK16-2

Drill hole ZK16-2 was collared to the north of Anomaly A and drilled south into the western margin of

Anomaly A before tracking outside of the anomaly. The hole returned a broad zone of significant

mineralisation of 248.3 metres at 0.5 g/t AuEq (0.3 g.t gold, 2.7 g/t silver, 686 ppm copper, 2.6 ppm

molybdenum) including 114 metres at 0.7 g/t AuEq (0.5 g.t gold, 2.9 g/t silver, 926 ppm copper, 3.4

ppm molybdenum) with a higher-grade zone of 30.0 metres at 1.1 g/t AuEq (0.9 g.t gold, 3.6 g/t silver,

1157 ppm copper, 3.4 ppm molybdenum).

The mineralisation encountered in ZK16-2, similar to all of the reported results, correlates extremely

well with the Au-Cu soil anomalies. The broad zone of ore grade mineralisation encountered in this

hole confirms the potential for ore grade mineralisation to be present throughout the entire footprint

of the series of regionally significant Au-Cu soil anomalies.

Drill hole ZK10-1

Drill hole ZK10-1 was collared outside of the main Au-Cu soil anomaly A and drilled into the north-

west corner of the anomaly. The hole recorded two broad intercepts of 126m at 0.3 g/t AuEq from

25m and 115 metres at 0.3 g/t AuEq from 309m. As can be seen on Figure 6 these two mineralised

zones correlate with the plus 100 ppb gold in soil anomaly. The end of hole is nearest the centre of

Au-Cu soil Anomaly A, with the last 15 metres of the hole returning the highest grades recording 15

metres at 0.5 g/t AuEq, ending in mineralisation.

Drill hole ZK0-4

Drill hole ZK0-4 intersected significant mineralisation over the entire length of the hole returning 454m

at 0.3 g/t AuEq (0.2 g.t gold, 1.3 g/t silver, 399ppm copper, 5.9 ppm molybdenum) including 112m at


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0.5 g/t AuEq (0.4 g.t gold, 1.9 g/t silver, 504 ppm copper, 7.6 ppm molybdenum). The hole was

collared at the extreme southern edge of Anomaly A and drilled vertically, affirming the potential for

ore grade mineralisation to be present throughout the entire footprint of the Au-Cu soil anomalies.

Figure 7 : Showing location of drilling and Anomaly A and B (>100ppb gold in soil)

Progressing Forward

Assays from a second phase of 340 metres of channel sampling in Humedo Mine and the newly

discovered Cuenca Mine located 450 metres south-east of the Humedo Mine are pending. Several

additional historical drill holes, located around the main Au-Cu soil anomalies and elsewhere in the

concession, have been logged, sampled and submitted for assaying with assay results pending.

The 50 square kilometre airborne magnetic survey was completed in the first week of December and

the Company has now received all data which is being externally post-processed prior to

interpretation. The processed magnetic data will be combined with other geophysical data, geology

and geochemistry to establish targets for initial drill testing by CEL.

A

B


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Figure 8 Showing highlights of the geologic mapping and rock chip sampling

KAROO BASIN - SOUTH AFRICA

The Company continues to pursue its application for shale gas exploration rights in South Africa. As

previously reported, the Department of Mineral Resources is progressing a new petroleum resources

development bill, and the Minister reportedly indicated during his address in the debate on the

Presidential State of the Nation Address in June 2020 that the bill will soon undergo public

participation, as part of the cabinet and parliamentary approval processes.

Ends

For further information contact:

Kris Knauer Managing Director +61 411 885 979 [email protected]

Scott Funston Chief Financial Officer +61 413 867 600 [email protected]

Bulk gold mineralisation defined by historical drilling


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Drill Hole From To Total Gold Ag Zn Au Equiv Comments

(#) (m) (m) (m) (g/t) (g/t) (%) (g/t)

GNDD-025 53.0 141.0 88* 0.9 2.3 0.1 1.0 g/t AuEq to end of hole 53.0 90.0 37.0 1.8 4.2 0.2 1.9g/t AuEq previously reported 61.0 75.0 14.0 3.1 5.3 0.2 3.2g/t AuEq previously reported 79.0 90.0 11.0 1.3 4.1 0.2 1.4g/t AuEq previously reported 93.0 94.0 1.0 1.1 2.5 0.1 1.1g/t AuEq previously reported 113.0 115.0 2.0 1.2 4.4 0.0 1.2g/t AuEq previously reported

139.0 141.0 2.0 1.0 0.5 0.0 1.0g/t AuEq previously reported

GNDD-032 from 9.0 29.0 20.0 0.2 6.7 0.1 0.3g/t AuEq 0.2 g/t AuEq cut and 49.0 165.0 116.0 1.1 4.0 0.2 1.2g/t AuEq previously reported inc 77.0 80.0 3.0 0.9 33.7 2.1 2.3g/t AuEq previously reported and 101.0 111.0 10.0 6.1 18.1 0.1 6.4g/t AuEq previously reported

and 136.0 140.0 4.0 9.8 18.5 1.5 10.7g/t AuEq previously reported

GNDD-047 from 61.0 99.5 38.5* 1.3 1.2 0.0 1.3 g/t AuEq to end of hole inc 62.5 68.5 6.0 6.3 3.5 0.2 6.4 g/t AuEq previously reported and 74.1 75.6 1.5 1.0 1.9 0.0 1.0 g/t AuEq previously reported and 83.6 84.0 0.5 7.3 12.0 0.0 7.4 g/t AuEq previously reported

and 98.5 99.5 1.0 1.2 0.8 0.0 1.2 g/t AuEq previously reported

GNDD-051 nsi nsi

GNDD-077 from 168.5 182.5 14.0 0.7 5.9 0.6 1.0 g/t AuEq 0.20 g/t AuEq cut inc 168.5 169.5 1.0 1.5 59.3 6.6 5.3 g/t AuEq 1.0 g/t AuEq cut

inc 180.6 182.5 1.9 1.8 4.9 0.8 2.2 g/t AuEq 1.0 g/t AuEq cut

GNDD-79 from 21.0 82.0 61.0 1.1 1.1 0.1 1.2 g/t AuEq 0.2 g/t AuEq cut 21.0 30.0 9.0 1.9 1.9 0.1 2.0 g/t AuEq 1.0 g/t AuEq cut 40.0 42.0 2.0 2.7 1.7 0.1 2.8 g/t AuEq 1.0 g/t AuEq cu 46.0 52.0 6.0 5.0 1.2 0.1 5.1 g/t AuEq 1.0 g/t AuEq cut


GNDD-082 from 168.0 183.0 15.0 0.7 0.4 0.0 0.7 g/t AuEq 0.2 g/t AuEq cut 168.0 169.0 1.0 2.4 0.5 0.1 2.4 g/t AuEq 1.0 g/t AuEq cut 175.0 175.5 0.5 10.0 5.6 0.4 10.0 g/t AuEq 1.0 g/t AuEq cut and 193.4 227.5 34.1 0.5 1.0 0.3 0.5 g/t AuEq 0.2 g/t AuEq cut 193.4 194.4 1.0 2.2 7.9 1.6 2.3 g/t AuEq 1.0 g/t AuEq cut 203.5 204.4 0.9 2.6 10.6 2.9 4.5 g/t AuEq 1.0 g/t AuEq cut 209.8 212.0 2.2 0.6 4.5 0.7 1.6 g/t AuEq 1.0 g/t AuEq cut and 235.0 266.0 31* 0.4 0.6 0.1 0.4 g/t AuEq to end of hole

242.5 244.0 1.5 1.0 2.1 0.2 1.1 g/t AuEq 1.0 g/t AuEq cut

GNDD-083 11.0 32.0 21.0 0.2 10.0 0.1 0.4 g/t AuEq 0.2 g/t AuEq cut 19.2 21.0 1.8 1.0 6.1 0.1 1.1 g/t AuEq 1.0 g/t AuEq cut

from 170 171 1.0 1.3 3.6 0.2 1.4 g/t AuEq 1.0 g/t AuEq cut

GNDD-088 from 45.1 68.5 23.5 0.1 0.2 0.5 0.3 g/t AuEq 0.2 g/t AuEq cut from 224.0 263.0 39.0 5.5 2.0 0.3 5.7 g/t AuEq 0.2 g/t AuEq cut

Inc 231.5 245.9 14.4 14.4 3.3 0.7 14.8 g/t AuEq 1.0 g/t AuEq cut inc 238.5 245.9 7.4 23.4 5.7 1.3 24.1 g/t AuEq 10 g/t AuEq cut

GNDD-089 from 18 119.5 101.5 0.5 1.1 0.2 0.6 g/t AuEq 0.2 g/t AuEq cut inc 20.0 50.0 30.0 1.0 1.7 0.1 1.0 g/t AuEq 1.0 g/t AuEq cut


GNDD-092 from 164.5 173.5 9.0 0.3 0.7 0.1 0.4 g/t AuEq 0.2 g/t AuEq cut and 213 230 17.0 0.2 0.6 0.1 0.3 g/t AuEq 0.2 g/t AuEq cut

and 257.5 258.5 1.0 3.6 5.9 0.6 3.9 g/t AuEq 0.2 g/t AuEq cut

GNRC-075 from 31.0 49.0 18.0 0.8 1.6 0.1 0.8 g/t AuEq 0.2 g/t AuEq cut

GNRC-094 from 13.0 25.0 12.0 0.8 4.6 0.4 1.1 g/t AuEq 0.2 g/t AuEq cut

GNDD-031 32.0 60.0 28.0 0.4 5.7 0.2 0.6 g/t AuEq 0.2 g/t AuEq cut

Table 1: Showing current intercepts by the Company in intrusives


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Drill Hole From To Total Gold Ag Zn Au Equiv Comments

(#) (m) (m) (m) (g/t) (g/t) (%) (g/t)



inc 104.20 105.00 0.80 0.88 12.6 22.7 11.7 g/t AuEq 10 g/t AuEq cut

GNDD-026 NSI GNDD-028 41.40 60.00 18.60 0.21 3.2 2.0 1.2 g/t AuEq 0.2 g/t AuEq cut


GNDD-033 NSI

GNDD-036 NSI

GNDD-037 NSI


GNDD-042 NSI

GNDD-044 NSI




GNDD-049 NSI



GNRC-069 18 25 7 0.62 3.0 0.11 0.71 g/t AuEq 0.2 g/t AuEq cut

inc 19 20 1 2.2 8.6 0.15 2.4 g/t AuEq 1.0 g/t AuEq cut

and 53 63 10 0.65 5.7 0.37 0.88 g/t AuEq 0.2 g/t AuEq cut

inc 59 62 3 1.7 11 0.84 2.3 g/t AuEq 1.0 g/t AuEq cut







GNDD-073 NSI

GNDD-074 41 43 2 1.2 20.5 0.04 1.4 g/t AuEq 0.2 g/t AuEq cut



inc 35 36 1 53.1 18 0.00 53.3 g/t AuEq 10 g/t AuEq cut



GNRC-080 NSI















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inc 88 90 2 15.6 15.9 2.8 17.0 g/t AuEq 10 g/t Au eq cut





GNDD-100 NSI GNDD-102 36.00 47.00 11.00 0.59 3.2 0.18 0.71 g/t AuEq 0.2 g/t AuEq cut



inc 84.30 85.20 0.90 - 1.3 3.3 1.6 g/t AuEq 1.0 g/t AuEq cut

GNRC-104 141 142 1 45.6 40.0 2.6 47.2 g/t AuEq 10 g/t Au eq cut










inc 36 48 12 8.3 190 0.12 10.4 g/t AuEq 1.0 g/t AuEq cut

inc 41 44 3 27.3 613 0.05 34.1 g/t AuEq 10 g/t Au eq cut






Table 2 - Drilling targeting the high-grade Mineralisation

1 See below for information regarding AuEq's reported under the JORC Code

1 Gold Equivalent (AuEq) values - Requirements under the JORC Code

• Assumed commodity prices for the calculation of AuEq is Au US$1450 Oz, Ag US$16 Oz, Zn US$2,200 /t

• Metallurgical recoveries for Au, Ag and Zn are assumed to be the same (see JORC Table 1 Section 3 Metallurgical

assumptions) based on metallurgical test work hence no weighting on recovery is required

• The formula used: AuEq (g/t) = Au (g/t) + Ag (g/t)x 0.011034 + Zn (%) x 0.471862

• CEL confirms that it is the company’s opinion that all the elements included in the metal equivalents calculation have a

reasonable potential to be recovered and sold


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Drill hole From Total AuEq Au Ag Cu Mo Comment

(#) (m) (m) (g/t) (g/t) (g/t) (%) ppm

Main Adit from 0.0 264.0 0.4 0.3 2.1 0.1 9.4 0.1 g/t AuEq cut off inc 0.0 150.0 0.6 0.5 2.4 0.1 9.8 0.5 g/t AuEq cut off inc 0.0 112.0 0.7 0.6 2.7 0.1 9.3 1 g/t AuEq cut off and 276.0 32.0 0.3 0.2 1.4 0.0 5.1 0.1 g/t AuEq cut off

Main Adit from 20.0 39.1 0.3 0.3 2.3 0.0 4.5 0.1 g/t AuEq cut off West Drive and 74.0 56.0 0.7 0.6 1.8 0.0 2.8 0.5 g/t AuEq cut off

84.0 46.0 0.8 0.8 2.1 0.0 2.8 1.0 g/t AuEq cut off

ZK0-4 from 3.7 454.3* 0.3 0.2 1.3 0.0 5.9 ends in mineralisation inc 42.6 111.7 0.5 0.4 1.9 0.1 7.6 0.5 g/t AuEq cut off inc 69.7 27.5 0.8 0.7 1.6 0.1 8.6 1.0 g/t AuEq cut off

ZK10-1 from 25.0 126 0.3 0.2 1.1 0.1 17.9 0.1 g/t AuEq cut off and 309 15 0.3 0.2 0.9 0.1 6.1 0.1 g/t AuEq cut off and 354 97.0* 0.3 0.2 1.2 0.1 15.8 ends in mineralisation inc 16.0* 0.5 0.3 1.8 0.1 2.6 ends in mineralisation

ZK16-2 from 19.0 248.3 0.5 0.3 2.7 0.1 2.6 0.1 g/t AuEq cut off inc 140.0 114.0 0.7 0.5 2.9 0.1 3.3 0.5 g/t AuEq cut off inc 224.0 30.1 1.1 0.9 3.6 0.1 3.4 1.0 g/t AuEq cut off

Table 3: Assay results from Colorado V assaying program

(1) Drill collar locations, hole dip and direction are available in this ASX Release see- JORC Table 1 Section 1

(2) See below for information regarding AuEq's reported under the JORC Code

(3) Results are reported using a cut-off of 0.1 g/t Au with up to 10 metres of internal dilution.

(4) Inclusive (incl) Intercepts use a cut-off of 0.5 g/t Au with up to 10 metres of internal dilution and 1 g/t Au

2 Gold Equivalent (AuEq) values - Requirements under the JORC Code

• Assumed commodity prices for the calculation of AuEq is Au US$1897 Oz, Ag US$24.3 Oz, Cu US$6,546 /t, Mo $17,852t

• Metallurgical recoveries for Au, Ag, Cu, Mo are assumed to be the same

• The formula used: AuEq (g/t) = Au (g/t) + Ag (g/t) x 0.1281 + Cu (%) x 1.5967 + Mo (%) x 4.35449

• CEL confirms that it is the company’s opinion that all the elements included in the metal equivalents calculation have a

reasonable potential to be recovered and sold


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




About Challenger Exploration

Challenger Exploration Limited's(ASX: CEL) aspiration is to become a globally significant gold producer. The Company is developing two complementary gold/copper projects in South America. The strategy for the Hualilan Gold project is for it to provide a high-grade low capex operation in the near term. This underpins CEL with a low risk, high margin source of cashflow while it prepares for a much larger bulk gold operation in Ecuador.

1. Hualilan Gold Project, located in San Juan Province Argentina, is a near term development

opportunity. It has extensive historical drilling with over 150 drill-holes and a non-JORC

historical resource (1) of 627,000 Oz @ 13.7 g/t gold which remains open in most directions.

The project was locked up in a dispute for the past 15 years and as a consequence had seen

no modern exploration until CEL acquired the project in 2019. Results from CEL's first drilling

program included 6.1m @ 34.6 g/t Au, 21.9 g/t Ag, 2.9% Zn, 6.7m @ 14.3 g/t Au, 140 g/t Ag,

7.3% Zn and 10.3m @ 10.4 g/t Au, 28 g/t Ag, 4.6% Zn. This drilling intersected high-grade gold

over almost 2 kilometres of strike and extended the known mineralisation along strike and at

depth in multiple locations. Recent drilling has demonstrated this high-grade skarn

mineralisation is underlain by a significant intrusion-hosted gold system with intercepts

including 116m at 1.0 g/t Au, 4.0 g/t Ag, 0.2% Zn and 39.0m at 5.5 g/t Au, 2.0 g/t Ag, 0.3% Zn

in porphyry dacites. CEL's current program includes 45,000 metres of drilling, metallurgical

test work of key ore types, and an initial JORC Compliant Resource and PFS.

2. El Guayabo Gold/Copper Project covers 35 sqkms in southern Ecuador and was last drilled by

Newmont Mining in 1995 and 1997 targeting gold in hydrothermal breccias. Historical drilling

has demonstrated potential to host significant gold and associated copper and silver

mineralisation. Historical drilling has returned a number of intersections including 156m @

2.6 g/t Au, 9.7 g/t Ag, 0.2% Cu and 112m @ 0.6 % Cu, 0.7 g/t Au, 14.7 g/t which have never

been followed up. The Project has multiple targets including breccia hosted mineralisation,

an extensive flat lying late stage vein system and an underlying porphyry system target neither

of which has been drill tested. CEL's first results confirm the discovery of large-scale gold

system with over 250 metres of bulk gold mineralisation encountered in drill hole ZK-02 which

contains a significant high-grade core of 134m at 1.0 g/t gold and 4.1 g/t silver including 63m

at 1.6 g/t gold and 5.1 g/t silver.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Competent Person Statement – Exploration results

The information in this release provided under ASX Listing Rules 5.12.2 to 5.12.7 is an accurate representation of the available data and studies for the material mining project. The information that relates to sampling techniques and data, exploration results and geological interpretation has been compiled Dr Stuart Munroe, BSc (Hons), PhD (Structural Geology), GDip (AppFin&Inv) who is a full-time employee of the Company. Dr Munroe is a Member of the AusIMM. Dr Munroe has over 20 years’ experience in the mining and metals industry and qualifies as a Competent Person as defined in the JORC Code (2012). Dr Munroe has sufficient experience of relevance to the styles of mineralisation and the types of deposits under consideration, and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results. Dr Munroe consents to the inclusion in this report of the matters based on information in the form and context in which it appears. The Australian Securities Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release.

Foreign Resource Estimate Hualilan Project

La Mancha Resources 2003 foreign resource estimate for the Hualilan Project ^

Category Tonnes

(kt)

Gold Grade

(g/t)

Contained Gold

(koz)

Measured 218 14.2 100

Indicated 226 14.6 106

Total of Measured & Indicated

445 14.4 206

Inferred 977 13.4 421

Total of Measured, Indicated & Inferred

1,421 13.7 627

^ Source: La Mancha Resources Toronto Stock Exchange Release dated 14 May 2003 -Independent Report on Gold Resource Estimate. Rounding errors may be present. Troy ounces (oz) tabled here

#1 For details of the foreign non-JORC compliant resource and to ensure compliance with LR 5.12 please refer to the Company's ASX Release dated 25

February 2019. These estimates are foreign estimates and not reported in accordance with the JORC Code. A competent person has not done sufficient work

to clarify the foreign estimates as a mineral resource in accordance with the JORC Code. It is uncertain that following evaluation and/or further exploration

work that the foreign estimate will be able to be reported as a mineral resource. The company is not in possession of any new information or data relating

to the foreign estimates that materially impacts on the reliability of the estimates or CEL's ability to verify the foreign estimates estimate as minimal resources

in accordance with Appendix 5A (JORC Code). The company confirms that the supporting information provided in the initial market announcement on

February 25, 2019 continues to apply and is not materially changed


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Appendix 1 - Schedule of Tenements

Project Property Name Tenure Title Interest Area DNPM No Status of

Holder % (ha) of Area Tenure

El Guayabo El Guayabo

Torata Mining Resources S.A earning 100% 281 COD225

Granted

El Guayabo Colorado V Goldking Mining

Company S.A earning 50% 2331 COD3363.1 Granted

El Guayabo El Guaybo 2 Mr. Segundo Ángel

Marín Gómez earning 80% 957 COD300964 Granted

Hualilan Divisadero

Golden Mining S.R.L.

earning 75% 6 5448-M-1960 Granted

Hualilan Flor de Hualilan


as above 6 5448-M-1960 Granted

Hualilan Pereyra y Aciar



Hualilan Bicolor



Hualilan Sentazon



Hualilan Muchilera



Hualilan Magnata



Hualilan Pizarro



Hualilan La Toro CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan La Puntilla CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan Pique de Ortega CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan Descrubidora CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan Pardo CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan Sanchez CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan Andacollo CIA GPL S.R.L. as above 6 5448-M-1960 Granted

Hualilan North of

"Pizarro" Mine Golden Mining

S.R.L. as above 1.9

195-152-C-1981

Granted

Hualilan South of "La Toro" Mine CIA GPL S.R.L.

as above 1.9 195-152-C-

1981 Granted

Hualilan Josefina


as above 2570 30.591.654 Pending


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




Appendix 3 - ASX Waivers The ASX granted the Company a waiver from ASX Listing Rule 7.3.2 to permit the notice of meeting (the “Notice”) seeking shareholder approval for the issue of up to 245,000,001 fully paid ordinary shares in the Company (“Waiver Securities”) upon the Company satisfying the milestones in relation to each of the Projects (“Milestones”) not to state that the Waiver Securities will be issued within 3 months of the date of the shareholder meeting. The Waiver Securities must be issued no later than 60 months after the date of reinstatement of the Company’s securities to official quotation. 15,000,001 Waiver Securities have been issued. The total Earn-In Shares will be issued progressively subject to the achievement of the following milestones:

El Guayabo Project Milestones (new milestones as approved by shareholders on 23 November 2020)

Project Interest Cumulative Interest

Project Milestones

19.9% 19.9% Existing interest in the project

80.1% 100% The issue of 18,000,000 Shares (Earn in Shares) to the Vendors by 15 December 2022.

Hualilan Project Milestones

• A payment of 1.667 million shares (being shares in CEL assuming the Transaction completes) to Cerro Sur owners for assignment of Cerro Norte farmin due no later than one month after re-listing on the ASX.

• A milestone payment of 1.667 million shares (being shares in CEL assuming the Transaction completes) due on 22 June 2019.

• Minimum expenditure of A$1 million on the Hualilan Project.

• The issue of a 11.667 million shares (being shares in CEL assuming the Transaction completes) no later than 1 July 2020 to acquire a 25% interest in the project.

• Completion of a Definitive Feasibility Study within five years and the issue of 50 million shares (being shares in CEL assuming the Transaction completes) to move from 25% to 75% of the project.

Performance Shares The Company has 60,000,000 Class A Performance Shares and 60,000,000 Class B Performance Shares on Issue. A summary of the terms and conditions of the Performance Shares are as follows: The Performance Shares shall automatically convert into Shares, provided that if the number of Shares that would be issued upon such conversion is greater than 10% of the Company’s Shares on issue as at the date of conversion, then that number of Performance Shares that is equal to 10% of the Company’s Shares on


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235




issue as at the date of conversion under this paragraph will automatically convert into an equivalent number of Company Shares. The conversion will be completed on a pro rata basis across each class of Performance Shares then on issue as well as on a pro rata basis for each Holder. Performance Shares that are not converted into Shares under this paragraph will continue to be held by the Holders on the same terms and conditions. (No Conversion if Milestone not Achieved): If the relevant Milestone is not achieved by the required date (being seven years from the date of the Proposed Acquisition or such other date as required by ASX), then all Performance Shares held by each Holder shall lapse. (After Conversion): The Shares issued on conversion of the Performance Shares will, as and from 5.00pm (WST) on the date of issue, rank equally with and confer rights identical with all other Shares then on issue and application will be made by the Company to ASX for official quotation of the Shares issued upon conversion (subject to complying with any restriction periods required by the ASX). (Milestones): The Performance Shares will, convert upon the satisfaction of the following milestones:

(Class A): A JORC Compliant Mineral Resource Estimate of at least Inferred category on either Project of the following:

a minimum 500,000 ounces of gold (AU) or Gold Equivalent (in accordance with clause 50 of the JORC Code) at a minimum grade of 6 grams per tonne Gold Equivalent; or a minimum 1,500,000 ounces of gold (AU) or Gold Equivalent (in accordance with clause 50 of the JORC Code) at a minimum grade of 2.0 grams per tonne Gold Equivalent; or a minimum 3,000,000 ounces of gold (AU) or Gold Equivalent (in accordance with clause 50 of the JORC Code) at a minimum grade of 1.0 grams per tonne Gold Equivalent.

(Class B): The Class B Performance Shares held by the holder will convert into an equal number of Shares upon the Company:

Completion and announcement by CEL (subject to the provision of information allowable at the time of completion) of a positive Scoping Study (as defined in the JORC Code) on either Project by an independent third-party expert which evidences an internal rate of return of US Ten Year Bond Rate plus 10% (using publicly available industry assumptions, including deliverable spot commodity / mineral prices, which are independently verifiable) provided that the total cumulative EBITDA over the project life is over US$50m.

No Performance Milestones were met during the quarter.


ACN 123 591 382

ASX: CEL

Issued Capital

653.1m shares

86.6m options

120m perf shares

16m perf rights


Level 1

1205 Hay Street

West Perth WA 6005

Directors




Contact

T: +61 8 6380 9235



JORC Code, 2012 Edition – Table 1 report template

Section 1 Sampling Techniques and Data -El Guayabo Project

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