Challenger Exploration announced results from its Phase 1 metallurgical testing at the Company's Hualilan Gold project. The results from Phase 1 of the program, which comprised first pass gravity and rougher flotation testing, indicate excellent gold and silver recoveries up to 94.2% (gold) and 85.7% (silver). The results are significantly better than both the historical recoveries and the Company's expectations. They demonstrate a simple process route for a bulk gold/silver concentrate and the ability recover the zinc and lead credits whilst maintaining high recoveries of 89% (gold) and 84% (silver). The initial metallurgical testwork from the high-grade skarn mineralisation was undertaken at SGS Canada Inc. in Lakefield Ontario. The initial testing comprised Phase 1 gravity and rougher flotation testing, now complete. Phase 2 testing will involve comminution and cleaner flotation testing. Phase 1 examined both the production of a bulk gold/silver concentrate and the production of rougher Cu/Pb and Zn concentrate streams. The test results are from the high-grade skarn mineralisation. A bulk sample for testing of the intrusion- hosted mineralisation is currently being prepared for testing. High gravity gold recoveries were achieved in all tests with gravity recovery averaging 42.4% and ranging from 32% to 49%. Grind sizes ranged from P80 of 106 to 72 microns with the best recoveries achieved at grind sizes of 86-106 microns indicating fine grinding is not required. High gravity recovery provides the flexibility to evaluate the production of gold dore on site. Simple flotation testing producing a simple bulk rougher and a bulk sulphide concentrate returned excellent recoveries of 91-94% (gold) and 84-86% (silver) at a P80 of 100-106 micron grind. The concentrate grades of 40-43 g/t (gold), 90-120 g/t (silver) and 11% (zinc) are expected to be improved with cleaning. Both concentrates produce excellent gold and silver recoveries via a simple bulk gravity/single stage sulphide flotation process and are expected to be saleable. Rougher flotation tests designed to produce a separate Cu/Pb concentrate followed by a Zn rougher concentrate demonstrated the recovery of significant base metal credits. The best result produced recoveries of 89% (gold), 84% (silver), 79% (zinc), 79% (lead) at a grind size of P80 of 86 microns. The output was a gravity concentrate grading 442 g/t gold, a Cu/Pb rougher concentrate grading 232 g/t gold, 632 g/t silver, 18.7% lead plus a zinc rougher concentrate. Phase 2 will include a series of additional rougher flotation tests to improve recoveries, cleaning to separate the Cu/Pb rougher concentrate into Cu and Pb concentrates, and cleaning to upgrade the zinc rougher concentrate. Gold concentrates are a burgeoning market with strong demand from smelters across China, Japan, Korea and India. The flotation and sale of a gold concentrate is a simple, low risk, and low capital intensive option, and Phase 1 testing demonstrates excellent recoveries in the 89-94% range for gold and 84-86% for silver with the potential to capture base metal credits. The Company notes that additional process such as pressure/biological oxidation or atmospheric leaching could possibly produce gold on site. While the Company will review these options as appropriate CEL's philosophy is to follow a simple, low risk, and well understood process route rather than chasing marginal additional recovery at the expense of a creating a capital intensive and complex operation. The testing program comprised Phase 1 Gravity and Rougher Flotation Testing which will be followed by Phase 2 Comminution and Cleaner Flotation testing. The Phase 1 testwork was conducted on a 147 kg bulk sample collected by the drilling and sampling of 3/4 core from four dedicated metallurgical holes, with additional material provided by a further 2 holes from which 1/4 core was provided. These were designed to provide a bulk sample containing grades and mineralogy representative of the high-grade skarn mineralisation hosted by limestone. The holes were located at Main Manto, Cerro Norte (GNDD003, GMDD-039 and GMDD-043), Sentazon (GMDD-0040), and the Magnata Manto (GNDD018 and GMDD-041). The grade of the bulk sample was 10.4 g/t gold, 31.7 g/t silver, 0.15% copper, 0.46% lead and 3.2% zinc. The program of metallurgical testing was designed prior to the discovery of the intrusive hosted mineralisation as a significant target at the Hualilan project. The bulk of the intercepts in the intrusives such as 209.0m at 1.1 g/t AuEq, including 49.0m at 3.0 g/t AuEq (GNDD-155), 130.8m at 2.5 g/t AuEq (GNDD-157), and 39.0m at 5.6 AuEq (GNDD-088A) occurred after the commencement of metallurgical testing. A bulk sample of the intrusive hosted mineralisation is currently being prepared for metallurgical testing. Phase 2 testing of the high-grade skarn mineralisation will not commence until the Phase 1 testing on the intrusion- hosted mineralisation has been completed. The Phase 1 Program comprised gravity separation and rougher flotation testing. Phase 1 was designed to determine the recovery of gold that is amenable to gravity separation while the rougher tests determine the relative rate of float recovery of the sulphide minerals. In the case of Hualilan due to a lack of data it was not known if any of the gold was amenable to gravity recovery. Phase 2 of the program will be undertaken after the completion of the Phase 1 metallurgical testing on the intrusion-hosted mineralisation. Phase 2 will involve Comminution Testing including Bond Ball Mill Grindability and Bond Abrasion tests and Cleaner Flotation and Cleaner Variability testing. The Cleaner Flotation and Cleaner Variability testing will investigate the effect of flowsheet and variables such as reagent scheme and regrind size on upgrading rougher concentrate into cleaner zinc and copper/lead concentrates. Phase 2 will also include additional rougher flotation testing utilising different reagent regimes designed to further improve the recoveries into the rougher Cu/Pb and Zn concentrates. This will be followed by a series of cleaning tests to separate the Cu/Pb rougher concentrate into separate copper and lead concentrates and cleaning tests to upgrade the zinc/gold rougher concentrate. The testing comprised an initial test which demonstrated excellent recoveries into a bulk rougher concentrate (F1); a series of rougher flotation tests designed to produce a Cu/Pb and a Zn rougher concentrate (F2-F4); and a final bulk sulphide float (F5). The overall recoveries and grades of the five tests (on the basis of combining the gravity and rougher concentrates into a single product).