Challenger Exploration : Exploration Drilling Extends Mineralisation at Hualilan

ASX Release

25 January 2022

For personal use only

Exploration drilling significantly extends mineralisation at Hualilan opening several new high-grade drill targets

Highlights

• In conjunction with resource drilling, CEL has completed a series of exploration holes designed to test new concepts and extend mineralisation away from existing boundaries.
• Several significant intersections have extended the existing mineralisation well beyond its current boundaries and opened new drill targets including (refer Table 1):

• 5.4m at 28.7 g/t AuEq2 - 28.6 g/t Au, 11.1 g/t Ag from 24.4m inc 2.4m at 60.2 g/t AuEq2 - 60.0 g/t Au, 20.4 g/t Ag from 26.0m within 67.6m at 2.6 g/t AuEq2 - 2.5 g/t Au, 2.6 g/t Ag from 24.4m

Drillhole GNDD-434, the most westerly hole on the Sanchez Fault, drilled with the portable rig, was collared almost 100 metres above the plain up in the Hualilan Hills.

• 97.8m at 2.2 g/t AuEq2 - 1.7 g/t Au, 11.9g/t Ag, 0.9% Zn from 313.5m including

16.8 at 9.7 g/t AuEq2 - 7.1 g/t Au, 50.7 g/t Ag, 4.4% Zn from 376.2m including 4.8m at 30.0 g/t AuEq2 - 21.6 g/t Au, 9.3 g/t Ag, 0.2% Zn from 376.2

Drillhole GNDD-450 tested the prognosed position of the Verde Zone across the Magnata Fault approximately 400 metres south of the known Verde mineralisation.

• 4.0m at 5.8 g/t AuEq2 - 3.7 g/t Au, 44.9 g/t Ag, 3.7% Zn from 1009m to end of hole including

3.0m at 7.7 g/t AuEq2 - 4.8 g/t Au, 58.9 g/t Ag, 4.9% Zn from 1010m to end of hole

Drillhole GNDD-308e is the deepest hole drilled at the Hualilan Gold Project and ended in a new zone of high-grade mineralisation below 1000 metres down hole.

▪ 5.0m at 8.7g/t AuEq2	- 7.3 g/t Au, 29.4 g/t Ag, 2.4% Zn from 224.0m including
3.0m at 14.3 g/t AuEq2	- 12.0 g/t Au, 46.4 g/t Ag, 3.9% Zn from 224.0m

Drillhole GNDD-394, a 400-metre step out north of the Sanchez Fault extended the strike extent of the high-grade mineralisation at the Hualilan Gold Project to 3.5 kilometres.

Commenting on the results, CEL Managing Director, Mr Kris Knauer, said

"Beyond the areas where previous drilling has been focused, this series of exploration drill holes demonstrates that Hualilan has a lot more to offer . This first series of exploration focused drill holes has significantly extended the mineralisation in multiple locations.

Intercepts such as 97.8m at 2.2 g/t and 3.0m at 14.3 g/t gold equivalent, both of which extend the mineralisation 400 metres, are outstanding. These results open several new areas that have considerable potential to add significant ounces to the Hualilan Gold Project.

Challenger Exploration Limited	Issued Capital	Australian Registered Office	Directors	Contact
ACN 123 591 382	979.4m shares	Level 1	Mr Kris Knauer, MD and CEO	T: [phone]
ASX: CEL	48.0m options	1205 Hay Street	Mr Scott Funston, Finance Director	E: [e-mail]
	120m perf shares	West Perth WA 6005	Mr Fletcher Quinn, Chairman
	16m perf rights		Mr Sergio Rotondo, Exec. Director

www.challengerex.com

ASX Release

25 January 2022

For personal use only

Challenger Exploration (ASX: CEL) ("CEL" or the "Company") is pleased to announce results from the Company's flagship Hualilan Gold Project in San Juan, Argentina. The results are from a series of exploration drill holes designed to test new targets and geological concepts and extend mineralisation well beyond the existing boundaries.

These exploration focused drill holes returned significant intercepts opening several new and material targets for drilling including:

• A possible third high-gradeeast-west fault 400 metres north of the Sanchez Fault in GNDD- 394 (5.0m at 8.7g/t AuEq including 3.0m at 14.3 g/t AuEq)
• A new high-grade target on a second magnetic trend west of the current Hualilan mineralisation in GNDD-326 (2.0m at 7.5 g/t AuEq)
• An extension of the high-grade Verde Zone mineralisation 400 metres south of the existing mineralisation in GNDD-450 (97.8m at 2.2 g/t AuEq including 16.8m at 9.7 g/t AuEq)
• High-grademineralisation which remains open at the eastern limit of the Sanchez Fault drilling in GNDD-441 and GNDD-434 (67.6m at 2.6 g/t AuEq including 5.4m at 28.7 g/t AuEq)
• A new zone of high-grade mineralisation over 1000 metres downhole below the Verde Zone with GNDD-308e ending in 4.0m at 5.8 g/t AuEq

DISCUSSION OF RESULTS

Eastern Extension of the Sanchez Fault - GNDD-425,GNDD-434,GNDD-441

GNDD-434 was drilled with the portable rig and is the deepest and most westerly hole on the Sanchez Fault for which results have been received. The hole was collared approximately 100 metres up into the Hualilan Hills at the eastern limit of the current drill access road. The closet hole to GNDD-434 is CEL's fourth drill hole GNDD-004 collared 120 metres to the east. It should be noted, GNDD-004 was designed to test under the Dona Justa Open Pit and wasn't drilled to intersect the Sanchez Fault.

GNDD-434 extended the Sanchez Fault mineralisation almost 200 metres to the east intersecting 5.4 metres at 28.7 g/t AuEq (28.6 g/t gold, 11.1 g/t silver) from 24.4m including 2.4 metres at 60.2 g/t AuEq (60.0 g/t gold, 20.4 g/t silver). This intersection was located directly above a 3-metre void with the void interpreted as old workings, given the proximity of the hole to surface and the access tunnels noted in the vicinity of the collar location. Historical mining generally, did not take ore grading less than 10 g/t, hence it is anticipated that the true width of the high-grade section of the Sanchez Fault mineralisation is almost 9 metres at this location.

Additionally, the hole intersected a much broader zone of mineralisation around this high-grade zone, with GNDD-434 intersecting 67.6 metres at 2.6 g/t AuEq (2.5 g/t gold, 2.6 g/t silver) from 24.4m. This lower grade halo is typical of the Sanchez Fault Zone mineralisation to date with drillholes such as GNRC-068 collared 200 metres east along the Sanchez Fault intersecting 69.0 metres at 4.7 g/t AuEq, including 27.0 metres at 11.2 g/t AuEq.

Challenger Exploration Limited	Issued Capital	Australian Registered Office	Directors	Contact
ACN 123 591 382	979.4m shares	Level 1	Mr Kris Knauer, MD and CEO	T: [phone]
ASX: CEL	48.0m options	1205 Hay Street	Mr Scott Funston, Finance Director	E: [e-mail]
	120m perf shares	West Perth WA 6005	Mr Fletcher Quinn, Chairman
	16m perf rights		Mr Sergio Rotondo, Exec. Director

www.challengerex.com

ASX Release

25 January 2022

For personal use only

Figure 1 - Sanchez Fault Cross Section 30N showing GNDD-434 and earlier drilling

Challenger Exploration Limited	Issued Capital	Australian Registered Office	Directors	Contact
ACN 123 591 382	979.4m shares	Level 1	Mr Kris Knauer, MD and CEO	T: [phone]
ASX: CEL	48.0m options	1205 Hay Street	Mr Scott Funston, Finance Director	E: [e-mail]
	120m perf shares	West Perth WA 6005	Mr Fletcher Quinn, Chairman
	16m perf rights		Mr Sergio Rotondo, Exec. Director

www.challengerex.com

ASX Release

25 January 2022

For personal use only

GNDD-441 and GNDD-425 were drilled from the same pad as GNDD-434, at shallower dips of 45 degrees (GNDD-441) and 60 degrees (GNDD-425), to test the Sanchez Fault near surface at this location. GNDD-441 successfully confirmed the Sanchez Fault continues to be mineralised from near surface at this eastern extension with the hole intersecting 11.9 metres at 3.7 g/t AuEq (3.2 g/t gold,

9.3 g/t silver, 0.8% zinc) from 15.1m including 1.2 metres at 14.1 g/t AuEq (13.3 g/t gold, 45.3 g/t silver, 0.6% zinc). GNDD-425intersected 50.4 metres at 0.4 g/t AuEq (0.3 g/t gold, 3.7 g/t silver, 0.1% zinc) from 19.8m including 5.0 metres at 1.3 g/t AuEq (1.2 g/t gold, 6.3 g/t silver).

GNDD-425,GNDD-434 and GNDD-441 (Figures 1 and 5) confirm that the high-grade mineralisation on the Sanchez Fault remains open at the current eastern limit of drilling, which is controlled by drill rig access. Additionally, grades appear to be improving at depth. The Sanchez Fault mineralisation has been historically mapped another 200 metres to the east in outcrop over the Hualilan Hills. Drilling is planned to target the Sanchez Fault from the eastern side of the Hualilan Hills.

Extension of Verde Zone south of the Magnata Fault (GNDD-450,GNDD-432)

GNDD-450 and GNDD-432 were drilled as a downdip test of GNDD-311 (22.0 metres at 0.5 g/t AuEq and 21.0 metres at 0.3 g/t AuEq) which had intersected lower grade mineralisation in sediments. This low-grade mineralisation in GNDD-311 was interpreted as being analogous to the lower grade sediment hosted halo mineralisation seen above the Verde Zone.

Drillholes GNDD-311, GNDD432, and GNDD-450 form a fence of drill holes located on the projected extension of the Verde Zone approximately 400 metres south of the existing Verde Zone mineralisation on the southern side of the Magnata Fault Zone.

GNDD-432 was collared to test 100 metres downdip of GNDD-311 and intersected two main zones of mineralisation. The upper zone, hosted in intrusives, returned and intersection of 48 metres at 0.5 g/t AuEq (0.4 g/t gold, 7.9g/t silver, 0.1% zinc) from 50.0m, including 3.4 metres at 3.0 g/t AuEq (2.7 g/t gold, 15.0 g/t silver, 0.2% zinc). The lower intersection of 37.4 metres at 0.8 g/t AuEq (0.7 g/t gold, 6.2g/t silver, 0.1% zinc) from 246.0m, including 1.3 metres at 7.0 g/t AuEq (6.7 g/t gold, 7.4 g/t silver, 0.3% zinc) was predominantly hosted in sediments. This zone is interpreted as being low-grade halo mineralisation in sediments seen above the higher-grade intrusion hosted mineralisation, albeit better developed than the mineralisation in GNDD-311up-dip, as it is closer to the intrusion-hosted mineralisation.

GNDD-450 was collared to test another 100 metres below GNDD-432, and successfully intersected a significant and wide zone of Verde style intrusion-hosted mineralisation. The hole intersected 97.8 metres at 2.2 g/t AuEq (1.7 g/t gold, 11.9g/t silver, 0.9% zinc) from 313.5m including 16.8 metres at

9.7 g/t AuEq (7.1 g/t gold, 50.7 g/t silver, 4.4% zinc) from 376.2m including 4.8 metres at 30.0 g/t AuEq (21.6 g/t gold, 9.3 g/t silver, 0.2% zinc) from 376.2m. As can be seen in Figure 2 (cross section) this possible extension of the Verde Zone is open and mineralisation appears to be getting stronger at depth.

Challenger Exploration Limited	Issued Capital	Australian Registered Office	Directors	Contact
ACN 123 591 382	979.4m shares	Level 1	Mr Kris Knauer, MD and CEO	T: [phone]
ASX: CEL	48.0m options	1205 Hay Street	Mr Scott Funston, Finance Director	E: [e-mail]
	120m perf shares	West Perth WA 6005	Mr Fletcher Quinn, Chairman
	16m perf rights		Mr Sergio Rotondo, Exec. Director

www.challengerex.com

ASX Release

25 January 2022

For personal use only

GNDD-513 (in progress at 33 metres in transported cover) has been collared to test a further 100 metres down dip of GNDD-450. Additionally, several holes (completed assays pending) have been collared to test the 400 metres of strike north and south of GNDD-450 with several holes programmed to further test this new zone of mineralisation.

Figure 2 - Cross Section Showing GNDD-450 and potential Verde Zone southern extension

Challenger Exploration Limited	Issued Capital	Australian Registered Office	Directors	Contact
ACN 123 591 382	979.4m shares	Level 1	Mr Kris Knauer, MD and CEO	T: [phone]
ASX: CEL	48.0m options	1205 Hay Street	Mr Scott Funston, Finance Director	E: [e-mail]
	120m perf shares	West Perth WA 6005	Mr Fletcher Quinn, Chairman
	16m perf rights		Mr Sergio Rotondo, Exec. Director

www.challengerex.com