More annual reports from Cellcom Israel, Ltd.:
2023 ReportAnnual
Report
For the Year Ended
30 June 2021
challengerex.com
Hualilan Gold Project, Gap Zone and Cerro Sur
Aerial view of Dona Justa Open Pit, Cerro Norte
Contents
2
4
6
8
10
12
14
57
Corporate Directory
Chairman’s Address
Directors’ Report
Company Projects
Project Highlights
Corporate
Hualilan Gold Project
El Guayabo and Colorado V Gold/Copper Project
108 Sustainability Report
113
Auditor’s Independence Declaration
114 Consolidated Statement of Profit or Loss and Other Comprehensive Income
115
Consolidated Statement of Financial Position
116 Consolidated Statement of Changes in Equity
117
Consolidated Statement of Cash Flows
118 Notes to the Financial Statements
161
165
173
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate
Directory
Company
Directors
Company
Secretary
Registered
Office
Fletcher Quinn
Non-Executive Chairman
Scott Funston
Kris Knauer
Managing Director
Scott Funston
Executive Director
Sergio Rotondo
(appointed 9 September 2021)
Executive Director
Level 1
1205 Hay Street
West Perth WA 6005
T (08) 6380 9235
2
Challenger Exploration Limited Annual Report Auditor
Share
Registry
Securities
Exchange
Listing
Website
Australian
Securities Exchange
ASX Code: CEL
challengerex.com
HLB Mann Judd
WA Partnership
Level 4,
130 Stirling Street
Perth WA 6000
Automic Pty Ltd
Level 2
267 St Georges
Terrace
Perth WA 6000
T 1300 288 664
within Australia
T +61 (0) 2 9698 5414
International
3
Challenger Exploration Limited Annual Report Chairman’s
Address
Dear Shareholder,
The past 18 months has thrown up some real challenges which have
impacted upon all our stakeholders in multiple ways. Our leadership
and agility allowed us to adapt to the quickly changing environment
to protect our people and deliver on strategy. Over the past year,
we have achieved considerable exploration success, delivered 100%
ownership of our flagship Hualilan Gold Project in Argentina, and
raised sufficient capital to allow us to keep aggressively drilling
beyond next year, irrespective of market conditions.
Since mid September last year, when the fifth drill rig arrived on site at
Hualilan, we have drilled more than 100,000 metres of diamond core and
within the next eight months, we expect the nine rigs onsite to complete
another 104,000 metres of drilling.
The commitment of our people was instrumental in achieving this.
I am proud of the dedication, energy and achievements of our management,
employees, and contractors who have established a solid platform for growth
for the next 12 months and beyond.
At our Hualilan Gold Project in Argentina, we achieved many significant
outcomes:
• additional discoveries within our large-scale gold system;
• extensions of mineralisation, with a strike length now exceeding 3.0 km;
• a fourfold increase in our ground position surrounding Hualilan;
• achieving 100% ownership of Hualilan in July 2021;
• continuous and significant high-grade gold intersections from drilling; and
• a committed 204,000 metre drilling program, which is nearing 50%
completion, as we move towards an initial JORC Compliant Resource.
4
Challenger Exploration Limited Annual Report Advances at El Guayabo included:
• commencement of a 20,000 metre drilling program in August 2021;
• completed program of logging and assaying of historical drill holes;
• completion of rock-saw channel sampling program in all adits and
underground workings at Colorado V, El Guaybo and El Guayabo 2, with
approximately 2,000 metres of channel sampling in the El Guayabo concession
at the Adriano and Ecuaba Adits;
• 50 square kilometre airborne magnetic survey and other geophysical data
which has been integrated to produce a significant number of high priority drill
targets; and
•
the generation of an exploration target at Colorado V which has demonstrated
the large-scale of the Project.
The remainder of 2021 and 2022 will see Challenger move into our next phase of
growth through continuing exploration activities, advancing to a maiden JORC
Compliant Resource and into Scoping and Feasibility Studies. As of writing, we
have $36m cash at bank, which will see us funded through the completion of next
years programs in Argentina and Ecuador, with a budgeted $10 million reserve.
The bulk of this $26m budget will be dedicated to the Hualilan Gold Project,
as it is rapidly emerging as a gold discovery of significance, having that rare
combination of both grade and scale.
Finally, I take this opportunity to thank all our shareholders for their continued
support as we continue towards our goal of becoming a significant gold producer.
Yours Sincerely,
Fletcher Quinn
Chairman
5
Challenger Exploration Limited Annual Report Directors’
Report
The Directors submit the financial report of the Group, consisting of
Challenger Exploration Limited (“the Company”) and the entities it
controlled during the period, for the financial year ended 30 June 2021.
Directors
The names and details of the Company’s Directors who held office during the year
and until the date of this report are as follows. Directors were in office for the entire
year unless otherwise stated.
Names, qualifications, experience and special responsibilities.
Fletcher Quinn
Scott Funston B.Bus CA ACIS
Non-Executive Chairman
Executive Director and Company Secretary
Mr Quinn has over 35 years’ experience
in venture capital, corporate finance and
investment banking. This includes extensive
experience with both listed and unlisted
companies, including public company
development, management and governance.
Mr Quinn was the founding Chairman for
ASX entities Citadel Resource Group and
Sirocco Resources.
Kris Knauer B.ASc.
(Geological and Earth Sciences, Geosciences)
Managing Director
Mr Knauer started his career as an
exploration geologist before moving into
investment banking, initially as a mining
analyst. He is an experienced listed company
CEO. He led the listing of a package of
copper/gold assets in Saudi Arabia to create
Citadel Resource Group Ltd, becoming the
Managing Director for the first 18 months.
Citadel completed a DFS on the Jabal Sayid
copper project in Saudi Arabia before being
taken over for $1 billion.
Mr Funston is a qualified Chartered
Accountant and Company Secretary with
nearly 20 years’ experience in the mining
industry and accounting profession.
His expertise is financial management,
regulatory compliance and corporate
advice. Mr Funston possesses a strong
knowledge of the Australian Securities
Exchange requirements. Scott has assisted
several resources companies operating
throughout Australia, South America, Asia,
USA and Canada with financial accounting,
stock exchange compliance and regulatory
activities. Mr Funston has performed roles as
an executive director, non-executive director,
chief financial officer and company secretary
for numerous ASX listed companies.
Sergio Rotondo (appointed 9 September 2021)
Executive Director
Mr Sergio Rotondo holds a Masters Degree in
Economics from University of CEMA and an
international MBA Degree from University of
CEMA. Sergio has an extensive background
in managing billion-dollar construction
projects from design through completion,
and has partnered with some of Argentina’s
largest real estate developers and designers.
6
The Directors have not been a director of other listed companies in the last 3 years.
Challenger Exploration Limited Annual Report Meetings Of Directors
Review Of Operations
The Directors held 5 meetings during the
financial year, and all meetings were attended
by Mr Quinn, Mr Knauer and Mr Funston.
Corporate Information
Challenger Exploration Limited is a public
company listed on the ASX (Code: CEL) and
is incorporated and domiciled in Australia.
Challenger Exploration Limited and the
entities it controlled during the period
are collectively referred to as Challenger
Exploration, Challenger, or the Group, as the
context requires.
Nature Of Operations
and Principal Activities
Challenger Exploration is a gold and copper
exploration company. There have been no
other significant changes in the nature of
those activities during the year.
Corporate Highlights
• Completion of $62,140,000 in Capital
Raisings. All funds were used or will
be used to progress exploration of the
Hualilan Gold Project, Argentina and the El
Guaybo Copper-Gold Project, Ecuador.
• BlackRock, the largest resource investor
in the world, welcomed as a substantial
shareholder with a $20m investment.
• Fully Funded for High Impact Exploration
Programs at Hualian, Colorado V and El
Guayabo.
• Strong financial position with cash at bank
of $47.5m (30 June 2021).
• Largely proceeds from the equity raising
will be used to:
• expedite a 120,000-metre drilling
program taking total metres drilled at
Hualilan by CEL to 204,000 metres,
scoping study, expand the tenement
position, and additional studies (mining
and geophysics) at its flagship Hualilan
gold project in San Juan, Argentina;
and
• deliver a 20,000-metre drilling
program at El Guayabo.
7
Challenger Exploration Limited Annual Report Company
Projects
The Hualilan Gold Project – San Juan,
Argentina is a high-grade gold and silver
prospect associated with a multi-phase
porphyry intrusive. It has extensive historical
drilling with over 150 drill-holes dating
back to the 1970s. There has been limited
historical production reported despite having
in excess of 6km of underground workings.
Prior to Challenger the property was last
explored in 2006 by La Mancha Resources,
a Toronto Stock Exchange listed company.
La Mancha’s work resulted in NI43-101 (non-
JORC) resource estimates.
Since July 2019, CEL has completed over
100,000 metres of drilling which has
significantly extended the high grade
mineralisation and discovered an underlying
intrusion-hosted gold system with significant
scale. The high-grade mineralisation at
Hualilan now covers 3 kilometres of strike
and mineralisation has been defined from
surface down to 500 metres, and remains
open in all directions. The project has a rare
combination of both grade and scale and is
emerging as one of the more exciting gold
discoveries in recent times.
The El Guayabo Project is located in El Oro
Provence, southern Ecuador, and comprises
three contiguous tenements, the El Guaybo,
El Guaybo 2, and Colorado V tenements.
Historical drilling has returned a number
of ore grade intersections of plus 100m
of intrusion-related breccia and vein
hosted mineralisation. The Project has
multiple targets including breccia hosted
mineralization, an extensive flat-lying
late-stage vein system and an underlying
porphyry system target neither of which
has been drill tested.
The Colorado V Copper-Gold Tenement
– El Oro, Ecuador (CEL earning 50%):
adjoins and has the same geology as the
El Guayabo Gold and Copper Project.
The Geology comprises a metamorphic
basement intruded by intermediate
alkaline intrusives which range in age
from 40 – 10 Ma (million years age). The
intrusions are commonly overprinted by
late porphyry dykes and intrusion breccia
suggesting deeper, evolving magmatic
systems are feeding shallower systems.
The current gold production comes from a
combination of veins and intrusive breccias
similar to those identified at El Guayabo
The El Guayabo 2 Tenement – El Oro,
Ecuador (CEL earning 80%): has the same
and continuous geology as CEL’s adjoining
El Guayabo and Colorado V tenements
which are believed to contain a “Low
Sulphide” porphyry gold copper system.”
The El Guayabo Copper-Gold Tenement
– El Oro, Ecuador (CEL 100%:) was
last drilled by Newmont Mining in 1997
targeting gold in hydrothermal breccias.
Historical drilling has demonstrated the
potential to host significant copper and
associated gold and silver mineralisation.
Limited historical exploration has been
undertaken on the tenement, with the
work that has been done undertaken by
local Ecuadorian groups that targeted
high-grade gold. Historical exploration
reports record gold mineralisation in
intrusive rocks in outcrop.
8
Challenger Exploration Limited Annual Report “
Hualilan has a
rare combination
of both grade
and scale“
January 2020:
Mineralised Domains
2.2 kilometres
18 months later: Mineralisation
remains open in all directions.
High-Grade Skarn Mineralisation
Intrusion-Hosted Mineralisation
C
h
a
l
l
e
n
g
e
r
E
x
p
l
o
r
a
t
i
o
n
L
m
i
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
9
Company Projects
Highlights
Hualilan Gold Project – San Juan, Argentina
• Exploration continued to return outstanding results and results significantly expanding
mineralisation.
•
Increase in the Company’s ground position at the Hualilan Gold Project four-fold to 80sqkm
and completion of the move to 100% of the Hualilan Gold Project.
• Subsequent to year end, CEL passed the milestone of 100,000 metres drilled.
• The Company is on track to complete the remaining 104,000 metres of drilling in the next 11
months with no less than 8 rigs programmed to be on site during this program.
• Drilling on the recently discovered Verde Zone has indicated it is likely a continuous zone of
mineralisation at least 1.5 kilometres long with results including (Table 1):
• 69.2m at 3.4 g/t AuEq² – 3.3 g/t gold, 4.8 g/t silver, 0.1% zinc from 9.0m including;
• 155.5m at 0.7 g/t AuEq² – 0.6 g/t gold, 2.1 g/t silver, 0.1% zinc from 201.5m including;
59.0m at 1.0 g/t AuEq² – 0.9 g/t gold, 1.0 g/t silver, 0.1% zonc from 137m;
• 55.5m at 1.2 g/t AuEq² – 1.0g/t gold, 1.5g/t silver, 0.4% zinc from 35m
• 96.0 m at 2.0 g/t AuEq² – 1.8g/t gold, 2.9g/t silver, 0.3% zinc from 13.0m
• Rock saw channel sampling extended the high-grade mineralisation 1km to the south and
defined a zone of bonanza grade mineralisation with results including (Table 2-3):
• 15.6m at 71.7 g/t AuEq² – 70.9 g/t gold, 59.1 g/t silver, 0.2% zinc including;
4.0m at 203.8 g/t AuEq² – 201.6 g/t gold, 172.0 g/t silver, 0.1% zinc;
• 64.8m at 28.3 g/t AuEq² – 23.4 g/t gold, 104.1 g/t silver, 8.3% zinc including;
8.8m at 49.3 g/t AuEq² – 45.2 g/t gold, 88.7 g/t silver, 6.8% zinc and;
26.5 m at 34.4 g/t AuEq² – 29.3 g/t gold, 114.4 g/t silver, 8.2% zinc
• 24.1 m at 19.8 g/t AuEq² – 16.9 g/t gold, 37.8 g/t silver, 5.8% zinc including;
13.8 m at 27.4 g/t AuEq² – 23.3 g/t gold, 59.0 g/t silver, 7.8% zinc.
10
Challenger Exploration Limited Annual Report • Drilling has doubled the footprint of Magnata Fault mineralisation along strike and at depth
with the deepest hole drilled to date on the Magnata fault intercepting some of the highest
grades recorded (Table 6):
• 27.8m at 7.3 g/t AuEq² – 5.5 g/t gold, 12.9g/t silver, 3.9% zinc from 399.0 including;
2.0m at 53.4 g/t AuEq² – 49.4 g/t gold, 77.4 g/t silver, 7.8% zinc;
• Deeper drilling significantly extended the mineralisation at Sentazon which now looks like it
will add material high-grade ounces to the mineral endowment of the Hualilan Gold Project
with results including (Table 7):
• 16.9m at 16.9 g/t AuEq² – 14.1 g/t gold, 18.3 g/t silver, 5.8% zinc from 193.0m including;
7.1m at 32.2 g/t AuEq² – 28.1 g/t gold, 36.1 g/t silver, 8.3% zinc from; and
• 2.8m at 62.5 g/t AuEq² – 59.0 g/t gold, 25.8 g/t silver, 7.2% zinc from 296.9m;
• Ongoing metallurgical testwork continued to produce outstanding results with excellent gold
and silver recoveries into a high grade concentrate with no deleterious elements.
El Guayabo/Colorado V Gold/Copper Projects – El Oro, Ecuador
• Soil geochemistry and surface mapping across the Company’s 35 square kilometres of
concessions was completed with results expected to be available subsequent to year end.
• Logging and sampling of the remaining historical drill core was completed, and was follow up
rock saw channel sampling of the underground adits/workings.
• As at the end of the year the Company was ranking its drill prospects to determine which
would be tested during the maiden 20,000m drill program commencing in August.
• An exploration target was generated at Colorado V to demonstrate the scale of the Project.
11
Challenger Exploration Limited Annual Report Corporate
Four fold increase in footprint
The year was a watershed for the Company.
CEL received formal notification of the
direct award of the 20.6 square kilometre
“Ayen” Exploration Licence which surrounds
the existing Hualilan Mining Licenses and a
four-fold increase in its ground position at
Hualilan. The increase to approximately 80
square kilometres is a combination of:
• The award of three new Exploration
Licenses which cover 12.6 square
kilometres adjoining the Company’s
newly awarded “Ayen” Exploration
Licence, and
• A farm-in deal concluded over a
package of 46 square kilometres of
concessions which captures the strike
extent of the Hualilan trend to the north
and south of the new Ayen Concession.
Move to 100% of Hualilan Gold
Project
CEL completed an agreement and received
shareholder approval on 3 September 2021
to acquire 100% ownership of its flagship
Hualilan Gold Project (was previously earning
up to 75%). This agreement was completed
via two transactions to move from the current
25% interest to 100%, the issue of 50 million
CEL shares for 50% (previously contingent
on completion of a DFS) and the issue of 64
million CEL shares and payment of US$3.69
million (paid in July 2021) for the final 25% of
the Project. The move to 100% ownership is
strategically important in the context of:
• Recent results which include 15.6m at
71.7 g/t AuEq (inc 4.0m at 204 g/t AuEq)
and 110.5m at 3.0 g/t AuEq from CEL
exploration concentrated over 2km of the
Hualilan Gold Trend; and
• The exploration potential of this strategic
footprint which covers 80 square
kilometres and contains 18 kilometres of
the main Hualilan Gold Trend which is
largely unexplored.
12
Challenger Exploration Limited Annual Report Figure 1 – Hualilan Project and surrounds Tenement Map
13
Challenger Exploration Limited Annual Report Hualilan Gold Project,
Argentina
Verde Zone Drilling
Verde is a recent discovery targeted using the
Company's surface magnetics and IP (Induced
Polarization) test lines at Cerro Norte. The IP
and magnetics indicated a possible second
trend of mineralised intrusives under cover
with the same north-south orientation as the
Gap Zone mineralisation. The three discovery
holes (ASX release 2 March 2021) returned
125.5m at 1.1 g/t AuEq including 71.0m at 1.8
g/t AuEq (GNDD-169), 37 metres at 1.0 g/t
AuEq (GNDD-164) and 45 metres at 0.5 g/t
AuEq (GNDD-163).
Mineralisation at Verde is primarily hosted
in intrusives, however there is a lower grade
halo of mineralisation that extends into the
overlying sedimentary rocks. The sedimentary
rocks above the intrusives have been
brecciated by the intrusion creating a second
west dipping zone of mineralisation which is a
useful exploration guide to deeper intrusive-
hosted mineralisation.
The overlying mineralisation in the
sedimentary rocks dips to the west at 30-40
degrees and is up to 50 metres thick. Verde
has similar dimensions to the mineralisation
in the Gap Zone being 50-100 metres wide,
steeply dipping, and starting below the
surface cover.
The follow up drilling at Verde consisted of
fences of drill holes spaced 40-80 metres
apart covering 500 metres strike south of
the Verde discovery holes. The next 500
metres of strike south from the discovery
hole was partially tested with 1-2 holes drilled
every 50-100 metres along strike. Drill holes,
GNDD-292 and GNDD-305 GNDD-196 and
GNDD-202 headline limited drilling over
the southern 500 metres of Verde. Figure 2
shows the location of the Verde Zone and
recent drilling.
14
New Hualilan core processing
Challenger Exploration Limited Annual Report Figure 2 – Plan view of Verde
15
Challenger Exploration Limited Annual Report This follow-up program at Verde was
an overwhelming success. All drill holes
intersected mineralisation (Table 1) and drilling
intersected broad zones of mineralisation
up to one kilometre south along strike,
with several holes in the intervening 500
metres (assays pending) encountering broad
zones of sulphide mineralisation. Drillholes
GNDD-292 and GNDD-305 (assays pending
located another 100 and 200 metres south)
also intersected sulphide mineralisation
including zones of massive sulphides. GNDD-
196 and GNDD-202 collared another 100
metres further south intersected significant
mineralisation. This encourages the Company
that ongoing extension and infill drilling at
Verde will demonstrate that it forms one
continuous zone of mineralisation at least 1.5
kilometres in length from the Sanchez Fault in
the north to the Magnata Fault in the south.
Figure 3 shows Cross Section 26 on the main
GNDD-169 discovery hole. GNDD-245 was
drilled to test above GNDD-169 and intersected
43.7m at 1.1 g/t AuEq (1.0 g/t gold, 1.8 g/t
silver 0.3% zinc) from 139 metres with GNDD-
183 (55.5m at 1.2 g/t AuEq (1.0 g/t gold, 1.5
g/t silver 0.4% zinc) from 35 metres another 50
metres up-dip. GNDD-183 also encountered a
deeper zone of limestone hosted mineralisation
(24 metres at 0.7 g/t AuEq including 1.2 metres
at 11.3 g/t AuEq) which correlates with the
down-dip position of the main Cerro Norte
Manto mineralisation. GNDD-237 was collared
to test 50 metres downdip of GNDD-169 and
confirmed mineralisation remains strong and
open at depth intersecting 155.5 metres at 0.7
g/t AuEq (0.6 g/t gold, 2.1 g/t silver, 0.1% zinc)
from 201.6 metres including 59.0 metres at 0.9
g/t AuEq (0.9 g/t gold, 1.0 g/t silver, 0.1% zinc)
from 298m.
16
Figure 3 – Cross Section 26 Main Verde mineralisation across the GNDD-169 discovery hole
Challenger Exploration Limited Annual Report A hole is programmed to extend the Verde
mineralisation another 50 metres down-dip of
GNDD-237.
Section 21 (Figure 4 below) is located south
along strike from Section 26 (Figure 3). The
mineralisation intersected in GNRC-091
(24.0 metres at 0.5 g/t AuEq and previously
announced) is interpreted to be the top of
Verde. It is possible GNRC-091 was terminated
above the high-grade Cerro Norte manto
which it was targeting. GNDD-185 was
collared to test underneath GNRC-091 and
intersected 60.0 metres at 0.7 g/t AuEq (0.6
g/t gold, 1.5g/t silver, 0.3% zinc) from 59
metres in the main Verde Zone. GNDD-185
also intersected 7.1 metres at 1.6 g/t AuEq
(1.0 g/t gold, 8.9g/t silver, 1.1% zinc) from
138 metres in limestone which, like GND-183
on Section 26, correlates with the down dip
position of the main Cerro Norte Manto.
GNDD-193 was collared to test 50 metres
down-dip of GNDD-185 and successfully
extended the Verde mineralisation down
dip returning 83.5 metres at 0.8 g/t AuEq
(0.7 g/t gold, 1.3g/t silver, 0.2% zinc) from
96.3 metres including four higher-grade
zones averaging 1.5 g/t AuEq. The hole also
intersected mineralisation deeper in the hole
in the downdip location of the main Cerro
Norte manto. GNDD-298 (assays pending) has
been completed downdip of GNDD-193 and
encountered sulphides.
Cross Section 19 (Figure 5 over the page)
illustrates the lower grade mineralisation
hosted in sedimentary rocks which was
encountered in GNDD-173 and returned 66.0
metres at 0.6 g/t AuEq (0.5 g/t gold, 3.1 g/t
silver, 0.1 zinc) from 83.0 metres.
Figure 4 – Cross Section 26 Main Verde mineralisation
17
Challenger Exploration Limited Annual Report Drill hole GNDD-236 was collared to test
100 metres downdip of GNDD-173 and
confirmed the Company’s model intersecting
the underlying intrusives returning 52.0
metres at 1.2 g/t AuEq (1.1 g/t gold, 3.1 g/t
silver, 0.3% zinc) from 175.0 metres including
4.4 metres at 8.9 g/t AuEq (8.4 g/t gold, 33.6
g/t silver, 0.2% zinc).
GNDD-229 was collared 50 metres south of
section 19 and intercepted 38.3 metres at
0.9 g/t AuEq (0.7 g/t gold, 6.5 g/t silver, 0.3%
zinc) from 167 metres. The mineralisation
occurred in sedimentary rocks and is
interpreted as being above the main zone of
Verde intrusives. Drilling is programmed to
test underneath GNDD-229. Drillhole GNDD-
162 was collared up dip of GNDD-229 too
far to the east to intersect the Verde Zone.
The hole encountered mineralisation in
limestone and intersected 14.8 metres at
2.2 g/t AuEq (2.0 g/t gold, 3.5 g/t silver,
0.3% zinc) from 98.0 metres including 6.9
metres at 4.2 g/t AuEq (3.9 g/t gold, 6.4 g/t
silver, 0.5% zinc) in the down-dip position of
the main Cerro Norte manto mineralisation.
This continues the trend of drilling at Verde
intercepting deeper limestone hosted
mineralisation in the down-dip position of
the high-grade skarn mineralisation.
GNDD-177 was collared between Section
26 and Section 21 up-dip of GNDD-164 (22
metres at 0.5 g/t AuEq, 10.0 metres at 0.5
g/t AuEq, and 37.0 metres at 1.0 g/t AuEq).
18
Hualilan core processing
facility in full use
Challenger Exploration Limited Annual Report GNDD-177 extended the Verde zone 50
metres up-dip intercepting 63.4m at 0.7 g/t
AuEq (0.6g/t gold, 1.8g/t silver, 0.2% zinc)
from 41.5 metres including 11.2m at 2.4
g/t AuEq (2.1 g/t gold, 3.0g/t silver, 0.6%
zinc) in sediments and intrusives. GNDD-
187 intersected a combined 37 metres
of mineralisation in three zones hosted
in sediments and limestones downdip of
GNDD-164 and is interpreted as not extending
deep enough to intersected the underlying
intrusives. The same is believed to have
occurred with GNDD-233 on the same
section. GNDD-254 (assays pending), which
was collared to test downdip of GNDD-187
and GNDD-233 appears to have successfully
penetrated the underlying intrusives with the
hole logged as encountering over 150 metres
of sulphide mineralisation in intrusives and thin
interbedded sediments.
Analogous to GNDD-177, drill hole GNDD-
225 (9.2 metres at 0.2 g/t AuEq, 2 metres
at 4.3 g/t AuEq, and 9.2 metres at 1.0
g/.t AuEq) predominantly encountered
sediments and limestone with the
mineralisation interpreted as being the halo
above the main intrusion-hosted system.
This appears to have been confirmed by and
GNDD-285 (assays pending). GNDD-285
was drilled at a higher angle to test below
GNDD-225 and intercepted intrusives under
the limestone with two zones logged as
containing strong sulphides in a series
of baked limestones and intrusives. The
system is interpreted as being deeper in
this location with GNDD-285 likely still
only intersecting the top of the mineralised
system. Additional drilling to test down dip
of GNDD-285 is programmed.
Figure 5 – Cross Section 19 Main Verde mineralisation GNDD-236 and GND-173
19
Challenger Exploration Limited Annual Report GNDD-220 – Southern Extent of Verde
GNDD-216 and GNDD-220 were drilled to
follow up earlier drillholes GNDD-137 ( 38
metres at 0.4 g/t AuEq and 1.4 metres at 11.6
g/t AuEq) and GNDD-122 (18.1 metres at 0.7
g/t AuEq and21m at 0.5 g/t AuEq, 1.5 metres
at 5.1 g/t AuEq) at Toro in the southern end
of the Gap Zone. Both holes tested magnetic
highs prior to CEL determining that the
intrusion-hosted mineralisation is located
on the flanks of a positive magnetic anomaly
due to demagnetisation by alteration of the
intrusions associated with the mineralisation.
Accordingly, any extension of the Verde or
Gap Zone intrusion-hosted mineralisation
was interpreted to be further west of
GNDDD-122 and GNDD-137.
GNDD-220 was collared 175 metres west
of GNDD-137 and intersected 108 metres
at 0.4 g/t AuEq (0.4 g/t gold, 1.6 g/t silver,
0.1% zinc) from 86 metres including 49
metres at 0.6 g/t AuEq (0.6 g/t gold, 1.3
g/t silver, 0.1% zinc) from 137 metres. This
is interpreted as the southern extension of
Verde 1 kilometre south.
As Figure 6 shows several drill holes (all
assays pending) both north and south of
GNDD-220 are logged as intersecting
significant sulphide mineralisation
in intrusives and sediments which is
interpreted as the extension of Verde to 1.2
kilometres in strike.
Noteworthy are drillholes GNDD-287,
GNDD-292, and GNDD-305 (assays
pending) collared 100, 150, and 200 metres
south of GNDD-220. Each has been logged
as encountering strong mineralisation.
GNDD-292 (Photos 3-5) is logged as
intersecting 100 metres of intrusives
containing sulphides including 5 zones of
mineralisation over 1-3 metres downhole
containing 15-30% pyrite and 5-30%
sphalerite which is indicative of strong skarn
mineralisation. This skarn alteration and
massive sulphide mineralisation intersected
in GNDD-292 (assays pending) is consistent
with mineralised intervals in other drill holes
for which high-grade gold assays have
been received.
20
GNDD-292 sulphide interval 233 metres downhole (skarn alteration 15% pyrite 5% sphalerite)
Challenger Exploration Limited Annual Report GNDD-292 – sulphide Interval 197-198m
GNDD-292 – sulphide Interval 218-219m
Verde and Gap Zone drilling at night (taken August 10th 2021)
21
Challenger Exploration Limited Annual Report GNDD-196
GNDD-202
GNDD-202 was collared to test 100 metres
down-dip of drill hole GNDD-196. The
intersection of 110m at 0.4 g/t AuEq (0.3
g/t gold, 3.1 g/t silver, 0.1% zinc) from 33.0
metres including 59.3m at 0.5 g/t AuEq (0.4g/t
gold, 4.7 g/t silver, 0.2% zinc) from 71.8m
confirmed the extension of a broad zone of
intrusion-hosted mineralisation 100 metres
down-dip from GNDD-196.
GNDD-196 was collared approximately 50
metres south of GNDD-287 and 1.2 kilometres
south of the GNDD-169 discovery hole (Figure
6). The intersection in GNDD-196 of 69.2m
at 3.4 g/t AuEq (3.3 g/t gold, 4.8 g/t silver,
0.1% zinc) from 9.0m including 12.0m at 1.8
g/t AuEq (1.7 g/t gold, 0.7 g/t silver, 0.1%
zinc) from 17.0m and 9.2m at 22.2 g/t AuEq
(21.9 g/t gold, 16.0 g/t silver, 0.4% zinc) from
69.0m has confirmed that the intrusion hosted
mineralisation remains strong and open to the
north. The broader gold zone is composed
of higher grade and lower grade mineralised
shoots typical of the intrusion-hosted
mineralisation at Hualilan.
Ongoing Verde Program
The Company will continue extensional drilling at Verde with at least three of the current nine drill
rigs on site continuing to expand and infill the existing mineralisation at Verde. This program will
involve the continuation of 40 to 80 metre spaced fences of holes over the remaining 900 metres
of strike and step-out drilling north and south along strike where mineralisation remains open.
Additionally, a series of holes will be collared further west to test another 50-100 metres below
the existing drilling at Verde with scout drilling programed further west to test Verde at depth.
22
Challenger Exploration Limited Annual Report Figure 6 – Intrusion-hosted mineralisation North Magnata now interpreted as southern Verde
(Figure as at May 2021)
23
Challenger Exploration Limited Annual Report Gap Zone Infil Drilling Program
The intrusive hosted mineralisation in the Gap
Zone had been defined over approximately 300
metres of strike and, unlike the mineralisation
north and south which dips to the west, the
Gap Zone mineralisation dips to the east. The
mineralisation was likely capped by a west-
dipping zone of mineralisation in the shale
which has since been eroded and covered.
Remnants of the mineralised cap have been
intersected in holes drilled west of the Gap
Zone. Earlier drilling such as GNDD-155
(209.0m at 1,1 g/t AuEq) was oriented parallel
to the dip of the mineralisation so the true
width of the mineralisation, was yet to be
determined.
Drillholes GNDD-200, GNDD-204, GNDD-
208, GNDD-211, GNDD-215 and GNDD-218
were the first in a series of 16 holes which
has been drilled in the reverse orientation of
the earlier drilling in order to drill back across
the Gap Zone mineralisation to better define
the width of the mineralisation. This series of
holes have been designed to not only infill
the existing mineralisation but to test for
extensions south along strike and downdip
and to allow more precise resource estimation.
The results confirm the Company’s view
that the Gap Zone will make a meaningful
contribution to the mineral endowment of the
Hualilan Gold Project and still remains open.
24
Figure 7 – Cross Section Gap Zone Mineralisation
Challenger Exploration Limited Annual Report GNDD-204 was drilled back across the lower
grade upper portion of the intercept in GNDD-
139 in what was believed to be lower grade
part of the Gap Zone mineralisation based on
the earlier drilling. Thus, the high-grade results
in GNDD-204 were unexpected and indicates
that the high grade shoots within the intrusives
may be more pervasive than first anticipated
and may have more than one orientation.
GNDD-204
GNDD-204 was drilled back across the
upper part of GNDD-139 (207.5m at 0.8 g/t
AuEq). The hole encountered the gold zone
mineralisation over 89 metres down hole,
which indicates an approximate true width of
60-70. The drill hole intersected 20 metres of
barren limestone interpreted as a limestone
block within the intrusives. Including the 20
metres of barren limestone as waste GNDD-
204 returned an intercept across the entire
mineralised zone of intrusives, and barren
limestone, of 89 metres at 1.7 g/t AuEq.
This broader gold zone intercept includes
44.0m at 3.3 g/t AuEq (3.2 g/t gold, 4.5 g/t
silver 0.1 % zinc) from 95 metres and contains
a higher grade zone of 20.6m at 6.6 g/t AuEq
(6.4 g/t gold, 6.4 g/t silver 0.1 % zinc) in the
upper part of the gold zone intercept.
Core sampling in progress
25
Challenger Exploration Limited Annual Report 26
Figure 8 – Gap Zone Mineralisation and drilling Plan View (Figure as at April 2021)
Challenger Exploration Limited Annual Report GNDD-208
GNDD-211
GNDD-211 was collared 40m along strike,
north of GNDD-208. The hole intersected
23.2m at 0.6 g/t AuEq (0.5 g/t gold, 0.8 g/t
silver 0.1 % zinc) at a lower grade portion
of the intersection with GNDD-155 (209.0m
at 1.1 g/t AuEq). As demonstrated in the
section for GNDD-204 and GNDD-208,
the gold zone is grade-variable and it is
believed that GNDD-211 intersected a lower
grade part of the zone lacking fractures
where more mineralisation is deposited.
Drill hole GNDD-277 (assays pending)
intersected the gold zone approximately 80
metres up dip of GNDD-211 which has been
logged as intersecting intrusives with strong
alteration and sulphide mineralisation over
83 metres from 59m downhole.
GNDD-208 was drilled to intercept the gold
zone approximately 75 metres down dip of
GNDD-204. The hole intercepted 73.7m
at 0.6 g/t AuEq (0.5 g/t gold, 1.4 g/t silver
0.2 % zinc) from 170.0 metres with a higher-
grade intercept of 35.7m at 1.1 g/t AuEq (0.8
g/t gold, 2.6 g/t silver 0.4 % zinc) including
13.0m at 2.3 g/t AuEq (1.9 g/t gold, 5.0 g/t
silver 0.8 % zinc) in the lower part of the
gold zone intercept. The higher-grade part
of the intercept in GNDD-208 is interpreted
to join to the higher grade intercept in
GNDD-204 to form a steeply dipping,
higher-grade zone of mineralisation within
the broader gold zone. This mineralisation
is controlled by a swarm of steeply dipping
narrow veins observed in the drill core.
GNDD-204 and GNDD-208 both
intersected GNDD-139 at points of lower
grade within the intercept of 207.5m at 0.8
g/t AuEq. As such the high-grades in GNDD-
204 and GNDD-208 were unexpected. This
is important because this demonstrates that
the high-grade shoots within the intrusive
in the Gap Zone are possibly more extensive
than the Company had first anticipated.
GNDD-215
GNDD-215 is located 40m south of GNDD204 and is drilled back across the upper part of
GNDD-113A (314m at 0.8 g/t AuEq). Two mineralised intersections within GNDD-215 were found
with only low grades intersected where the hole crossed GNDD-113A. An upper zone of 14.6m at
1.6 g/t AuEq (1.4 g/t gold, 2.4 g/t silver, 0.3% zinc) in shale, and a lower zone of 41.0m at 0.2 g/t
AuEq (0.2 g/t gold, 3.1 g/t silver, 0.1% zinc) in intrusion indicate that GNDD-215 intersected the
uppermost part of the gold zone. Approximately 80m down-dip from GNDD-215, hole GNDD-
262 has intersected approximately 70 metres of mineralisation in intrusion and breccia with
assays pending. The highest grade intersection within GNDD-113A is a further 60 metres down
dip from GNDD-262 and is targeted for future drilling.
27
Challenger Exploration Limited Annual Report GNDD-234
GNDD-200
Drillhole GNDD-234 returned 42.6 metres
at 1.0 g/t AuEq (0.9 g/t gold, 4.1 g/t silver,
0.3 zinc) from 33.4 metres including 6.5
metres at 10.1 g/t AuEq (9.2 g/t gold, 20.8
g/t silver, 1.5% zinc) hosted in intrusives.
This is interpreted as the northern extension
of the intrusion-hosted mineralisation in
the Gap Zone and extends the Gap Zone
mineralisation 50 metres north along strike.
GNDD-200 intercepted 66.8m at 0.7 g/t AuEq
(0.6g/t gold, 0.6 g/t silver, 0.1% zinc) from
60.8 metres including 7.2m at 1.1 g/t AuEq
(1.0g/t gold, 0.6 g/t silver) and 6.0m at 1.1
g/t AuEq (1.1g/t gold, 0.6 g/t silver) and 1.0m
at 5.3 g/t AuEq (4.7g/t gold, 5.6 g/t silver,
1/3% zinc). The mineralisation intersected in
GND-200 bridges exactly the space between
GNDD-077 and GNDD-082. This confirms the
true width of the mineralisation at the north
of the Gap Zone at approximately 60 metres.
The gold zone at this location remains open
down dip and is an obvious follow-up target in
this area with GNDD-082, which encountered
mineralisation in intrusives in three zones,
ending in mineralisation grading 0.7 g/t gold.
28
Challenger Exploration Limited Annual Report 29
Challenger Exploration Limited Annual Report GNDD-397 the first hole in the Hualilan Hills
at Cerro Norte using the man portable drill rig
to test the bonanza zone. Additional drill pads
prepared further up slope in the background.
30
Challenger Exploration Limited Annual Report Underground Rock Saw Channel Sampling
The Company announced the results
from the ongoing underground Rock Saw
Channel Sampling program from Cerro Sur
and the first continuous channel samples
taken above ground level in the Hualilan Hills
covering approximately 300 metres of strike
at Cerro Norte.
This is the first time a systematic program of
sampling has been conducted in many of the
underground tunnels and the first time the
Flor de Hualilan workings have been sampled.
The results were some of the more significant
released by the Company with the highlights
including:
The program has been designed to allow the
inclusion of the component of the historical
high-grade mineralisation which is up-dip
of the Company’s drilling in a resource
estimate that can be reported according
to JORC. This includes the majority of the
mineralisation within 40 metres of surface
and the extensions of mineralisation up
into the hills at Cerro Norte and Cerro Sur.
In historical foreign (non JORC compliant)
resource calculations this mineralisation
was included based on the results of
underground mapping and selective channel
sampling. Importantly, this near surface
component of the mineralisation generally
exhibits high-grades.
The sampling was done using a rock saw
to cut and recover a continuous channel
measuring approximately 40cm x 40cm,
with sample weight averaging 4.8 kg per
metre. Samples were logged, and submitted
for assay with QAQC samples (blanks and
standards) using the same procedure as drill
core. The channel sample is analogous to
a drill core sample. It is expected that the
data can be incorporated into a resource
estimation in the same way as drilling results.
1. Bonanza Zone in the Hualilan Hills
The sampling in the Hills returned the highest-
grade recorded at Hualilan of 2 metres at
301.5 g/t gold, 220 g/t silver, 0.1 g/t zinc with
several other samples grading over 100 g/t
gold. This supports the Company’s model that
the highest-grade mineralisation at Hualilan
occurs in the 200 metres above ground level
in the Hualilan Hills which has yet to be drilled.
High-grade mineralization has been mapped
in outcrop in the Hualilan Hills over 300
meters of strike at Cerro Norte, 600 meters
between the Magnata Fault and Sentazon and
500 metres south of Flor de Hualilan.
Should high-grade mineralisation extend 200-
300 metres up-dip from CEL drilling over this
1.4 kilometres mapped in outcrop it has the
potential to add material high-grace ounces.
Subsequent to the end of the year CEL
acquired a man portable, rig which will allow
the drill out of this significant zone of potential
bonanza grade mineralisation.
31
Challenger Exploration Limited Annual Report 2. Extension of the strike of high-grade
mineralisation by 50%
The Cerro Sur sampling includes results
from the Flor de Hualilan exploration drive
which is located 550 metres south of the
southernmost drill hole at Hualilan to intersect
mineralisation.
Sampling of the Flor de Hualilan Adit, which
is believed to date from the 1800s, returned
a number of high-grade intercepts with six
of the eight channels returning high-grade
mineralisation including 13.0m at 15.5 g/t
AuEq, 9.2m at 5.1 g/t AuEq including 4.6m
at 9.5 g/t AuEq, and 3.8m at 14.6 g/t AuEq.
These high-grade results and broad zones of
mineralisation in the Flor de Hualilan Adit was
not expected by the Company as the gold is
not visible.
3. Historical indicating high-grade
mineralisation over 500 metres south of Flor
De Hualilan
In addition to the Flor De Hualilan channel
sampling results, which extend the known
mineralisation 550 metres south, historical
mapping which was previously discounted,
indicates sulphide mineralisation outcropping
over approximately 500 metres strike south of
the Flor de Hualilan Adit. Reconnaissance by
the Company has confirmed what appears to
be weathered skarn mineralisation at surface
well south of the Flor de Hualilan Adit.
This extends the potential strike extent
of the high grade skarn mineralisation by
approximately 50% from 2.1 to 3.1 kilometres.
32
Location of channel sampling on the Sanchez Fault
Challenger Exploration Limited Annual Report Hualilan Hills Sampling
Sanchez Fault
The Sanchez Fault is one of the main east-
west feeder structures believed to control
the high-grade mineralisation at Hualilan.
The Sanchez Fault has been mapped in
outcrop over 500 metres in the Hualilan
Hills however, due to the topography,
limited drilling has been completed by CEL
testing the Sanchez Fault. Accordingly, it
remains a key and under-drilled target at
Hualilan, with CEL’s current plan to test
the Sanchez fault with a man portable rig
and from the eastern side of the Hualian
Hills now the Ayen Exploration Licence
has been formally granted.
Sampling along the Sanchez Fault produced
bonanza grades returning 15.6m at 71.7 g/t
AuEq (70.9 g/t gold, 59.1 g/t silver, 0.2%
zinc) including 4.0m at 203.8 g/t AuEq (201.6
g/t gold, 172.0 g/t silver, 0.1% zinc) and 6.3
metres at 44.0 g/t AuEq (43.4 g/t gold, 22.6
g/t silver, 0.2 % zinc) in SNV10-01. Channel
SNV10-02 returned 12.5m at 3.0 g/t AuEq (2.3
g/t gold, 12.4 g/t silver, 1.3% zinc).
As Photo 7 shows the channel sampling in
the Sanchez Fault is the highest point in the
Hualilan hills to be channel sampled by the
Company to date and supports the view that
the highest-grade mineralisation is in the
Hualilan hills above ground level.
Main Manto
At Cerro Norte the Main Manto covers at least 400 metres of strike (north south), dips at 30-40
degrees to the west and is generally 2-12 metres thick. The Main Manto includes a number of
thicker and higher-grade plunging shoots within its mineralised envelope which plunge to the
south-west.
In addition to cutting across the high-grade shoots the Main Decline, constructed in 1999 and
rehabilitated for the channel sampling, also cuts, and has provided access to, a number of the
historical (estimated 1890’s) old workings and access drives.
33
Challenger Exploration Limited Annual Report RNVV-11 and 12 levels (up-dip Cerro Norte)
Channels RNVV-11 and 12 are taken in crosscuts accessed from the main decline to the east
which is in the up-dip location. This section returned higher grades than the downdip portion
(RNVV-9 series and earlier channels). Notable intercepts in the channel sampling in the up-dip
portion of the Main Cerro Norte manto included:
• 64.8 metres at 28.3 g/t AuEq (23.4 g/t gold, 104.1 g/t silver, 8.3% zinc) including 8.8 metres
at 49.3 g/t AuEq (45.2 g/t gold, 88.7 g/t silver, 6.8% zinc) and 26.5 metres at 34.4 g/t AuEq
(29.3 g/t gold, 114.4 g/t silver, 8.2% zinc) including 3.3 metres at 76.0 g/t AuEq (67.7 g/t
gold, 268.2 g/t silver, 11.5% zinc) – RNNV12-05.
• 55.3 metres at 8.4 g/t AuEq (4.7 g/t gold, 172.1 g/t silver, 3.6% zinc) including 20.6 metres at
13.8 g/t AuEq (7.9 g/t gold, 351.9 g/t silver, 3.3% zinc) – RNNV11-02
• 5.4 metres at 35.6 g/t AuEq (30.9 g/t gold, 83.9 g/t silver, 8.4% zinc) – RNNV12-09
• 21.1 metres at 16.3 g/t AuEq (12.7 g/t gold, 37.7 g/t silver, 7.16% zinc) including 5.2 metres at
21.8 g/t AuEq (13.4 g/t gold, 41.0 g/t silver, 18.2% zinc) and 6.5 metres at 31.8 g/t AuEq (29.1
g/t gold, 51.3 g/t silver, 4.7% zinc) – RNNV12-04
• 19.8 metres at 16.3 g/t AuEq (13.7 g/t gold, 101.7 g/t silver, 3.0% zinc) – RNNV12-12
The results confirm the lateral continuity of and the high-grades in the Main Manto over a
significant plunge extent up-dip above all drilling. They also confirm the significant strike extend
defined by drilling down-dip with the channels retuning high-grade mineralisation over the entire
300 metres of strike sampled.
34
Figure 9 – showing existing mineralisation at Cerro Norte and undrilled up-dip potential
Challenger Exploration Limited Annual Report Cerro Sur Sampling
Flor De Hualilan Adit
The Flor de Hualilan adit, like the majority
of the old workings, is believed to date back
to at least the late 1800's. It is located at the
southern end of the Hualilan Gold Project
approximately 550 metres south of GNRC-
052 (6m at 1.7 g/t gold, 4.4 g/t silver, 0.3%
zinc), the southernmost drill hole at Hualilan
to intersect mineralisation.
Prior to this sampling conducted by CEL,
the Flor de Hualilan workings had not been
sampled. In light of the recent results from
this program, notably the broader zones of
mineralisation which appear to have been
missed by the selective historical sampling,
the underground channel sampling program
was extended to include all underground
workings and exploration adits including
those located outside of the footprint of the
known mineralisation such as the Flor de
Hualilan workings.
As listed in Table 4, the Flor de Hualilan
channel sampling program returned a number
of high-grade results including 13.0 metres at
15.5 g/t AuEq (12.0 g/t gold, 80.2 g/t silver,
5.7 % zinc, 4.8% lead) including 8.5 metres at
21.9 g/t AuEq (17.8 g/t gold, 113.7 g/t silver,
6.2% zinc, 6.9 % lead) and 3.8 metres at 14.6
g/t AuEq (3.8 g/t gold, 155.8 g/t silver, 20.2%
zinc, 4.2% lead).
The results extend the known high-grade
skarn mineralisation a further 550 metres
south of the southernmost drill intersection.
Additionally, historical mapping, which was
previously discounted by the Company,
indicates sulphide mineralisation in outcrop
over an additional 500 metres of strike south
of the Flor de Hualilan Adit.
Reconnaissance field mapping by the
Company has now confirmed what appears to
be weathered skarn mineralisation at surface
well south of the Flor de Hualilan Adit.
This has the potential to extend the strike
extent of the high-grade skarn mineralisation
by approximately 50% from 2.1 kilometers to
3.1 kilometers.
35
Challenger Exploration Limited Annual Report Channel
Sample
(#)
From
(m)
To
(m)
Total
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Cu
(%)
FHNV10-01A
6.4
FHNV10-01B
0.0
inc
1.9
8.2
9.2
6.5
1.8
9.2
4.6
0.1
2.9
0.4
0.0
3.0
89.6
2.2
5.6
175.1
3.8
FHNV10-02
0.0
13.0
13.0
12.0
80.2
5.6
inc
0.0
8.5
8.5
17.8
113.7
6.2
FHNV10-03
0.0
12.7
12.7
2.1
64.2
3.5
Pr
(%)
0.0
3.5
6.8
Au
Equiv
Comments
(g/t)
0.3
0.2 g/t AuEq cut
5.1
0.2 g/t AuEq cut
9.5
1.0 g/t AuEq cut
4.8
15.5
0.2 g/t AuEq cut
6.9
21.9
1.0 g/t AuEq cut
1.6
7.0
9.7
4.4
0.2 g/t AuEq cut
8.1
0.2/g/t AuEq cut
16.4
0.2 g/t AuEq cut
0.1
0.2
0.4
0.5
0.3
0.6
FHNV10-04
0.0
FHNV10-05
0.0
FHNV10-06
0.0
FHNV10-07
3.4
4.2
1.7
3.8
4.5
1.7
3.8
1.0
4.2
3.1
135.5
7.7
6.4
359.7
12.7
0.7
3.8
155.7
20.2
0.6
4.2
14.6
0.2 g/t AuEq cut
0.1
1.3
0.5
0.0
0.0
0.3
0.2 g/t AuEq cut
Table 4 – Flor de Hualilan channel significant channel sampling results
(See Table 3 below for information regarding AuEq’s reported under the JORC Code)
The Company also notes the same historical surface mapping indicates, not only mineralisation
in outcrop over 400 metres along strike south of Flor de Hualilan, but also 400 metres up dip.
This opens significant potential for additional high-grade mineralisation to the south. Several new
holes are programmed to test this previously unrecognised zone of mineralisation in the south.
36
Challenger Exploration Limited Annual Report Figure 11 – showing existing mineralisation at Cerro Sur and undrilled up-dip potential
Figure 12 – Location map of Cerro Sur channel sampling with Magnetic (aTE) data to the east
37
Challenger Exploration Limited Annual Report Magnata to Sentazon
All of the adits and old workings covering the 600 metres of strike between the Magnata Fault
and Sentazon were sampled. This included five adits in addition to the Magnata and Muchilera
Adits for which results have been previously announced. The significant new results are listed in
Table 5 with the locations of the Adits channel sampled shown in Figure 12.
Channel
Sample
(#)
From
(m)
To
(m)
Total
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Cu
(%)
MGNV10-09
0.0
MGNV10-10
0.0
6.5
1.0
6.5
1.0
L5NV10-01
8.6
18.0
9.4
L5NV10-02
0.0
inc
2.0
L5NV10-03
0.0
L5NV10-04
0.0
inc
2.2
L5NV10-05
0.0
L6NV10-01
0.0
inc
2.0
L6NV10-02
0.0
6.3
6.3
1.4
9.0
9.0
2.7
5.2
3.8
3.8
5.5
44.3
6.4
1.1
0.3
3.3
5.5
0.9
0.1
1.7
32.8
0.5
2.4
42.7
0.3
1.2
11.3
0.1
6.3
4.3
1.4
9.0
26.0
50.8
0.1
6.8
33.1
60.9
0.1
2.7
20.1
267.8
0.1
5.2
10.4
19.1
0.2
1.8
27.3
39.3
0.2
3.8
0.7
4.5
0.4
and
inc
14.4
24.9
10.5
11.2
215.3
0.3
18.1
24.9
6.8
17.0
328.7
0.2
CIINV10-01A
1.8
CIINV10-01B
0.0
8.8
7.0
7.0
7.0
0.9
17.9
0.3
1.4
79.3
0.2
CIINV10-03
0.0
26.9
26.9
0.8
43.2
0.2
inc
8.2
21.8
13.5
1.1
76.6
0.3
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Pr
(%)
0.1
0.1
Au
Equiv
Comments
(g/t)
8.9
0.2 g/t AuEq cut
1.6
0.2 g/t AuEq cut
0.0
0.4
0.2 g/t AuEq cut
0.1
0.1
0.5
2.3
0.2 g/t AuEq cut
3.1
1.0 g/t AuEq cut
1.3
0.2 g/t AuEq cut
1.1
26.7
0.2 g/t AuEq cut
1.2
34.0
1.0 g/t AuEq cut
1.0
23.5
0.2 g/t AuEq cut
0.5
10.7
0.2 g/t AuEq cut
0.8
27.9
1.0 g/t AuEq cut
0.1
0.9
0.2 g/t AuEq cut
1.0
14.0
0.2 g/t AuEq cut
1.5
21.3
1.0 g/t AuEq cut
0.2
0.3
0.2
0.3
1.2
0.2 g/t AuEq cut
2.6
0.2 g/t AuEq cut
1.4
0.2 g/t AuEq cut
2.2
1.0 g/t AuEq cut
CIIINV10-01
0.0
81.0
nsi
Table 5 - Significant underground channel sample results Magnata-Sentazon
(See Table 3 for information regarding AuEq reported under the JORC Code)
38
Challenger Exploration Limited Annual Report
These significant and extensive high-grade
results, coupled with the previously reported
high-grade underground channel sample
results from the Magnata and Muchilera
Adits, which included results such as 12.0
metres at 16.5 g/t AuEq including 3.7m at
38.9 g/t AuEq and 22.5 metres at 12.9 g/t
AuEq, support the likelihood of a continuous
zone of high-grade mineralisation extending
over at least 600 metres from Magnata in
the north to Sentazon in the south.
All the Adits, with the exception of Cal
III, which is located north of the Magnata
fault returned, significant high-grade
mineralisation.
Highlights include 9.0 metres at 26.7 g/t
AuEq (26.1 g/t gold, 50.8 g/t silver, 0.1%
zinc) including 6.9 metres at 34.0 g/t AuEq
(33.1 g/t gold, 60.9 g/t silver, 0.1 % zinc) in
Labor 5.
Results of 10.5 metres at 14.0 g/t AuEq
(11.2 g/t gold, 215.3 g/t silver, 1.0% zinc)
including 6.8 metres at 21.3 g/t AuEq (17.0
g/t gold, 328.7 g/t silver, 1.5 % zinc) in
Labor 6, and 6.5 metres at 8.9 g/t AuEq (5.5
g/t gold, 44.3 g/t silver, 6.4 % zinc) from
additional sampling at Magnata.
Core logging by Challenger geologists at Hualilan
39
Challenger Exploration Limited Annual Report Sentazon
The location of the Sentazon channel
sampling in relation to the drilling at Sentazon
is shown in Figure 3.
The results which include 12.0 metres at 9.3
g/t AuEq (8.3 g/t gold, 28.9 g/t silver, 1.4%
zinc), 25.7 metres at 5.5 g/t AuEq (2.0 g/t
gold, 8.1 g/t silver, 7.7% zinc), including 6.2
metres at 8.5 g/t AuEq (7.0 g/t gold, 17.0 g/t
silver, 3.0% zinc) and 30.7 metres at 7.7 g/t
AuEq (0.9 g/t gold, 70.2 g/t silver, 13.5% zinc)
are shown in Table 4.
The channel sampling has confirmed the
extension of the Sentazon Manto 100 metres
up-dip from the Company’s drilling (Figure 13),
and demonstrated excellent continuity of the
skarn mineralisation over the entire 50 metre
strike extent covered by the Sentazon Adit.
Additionally, channel sampling confirmed the
presence of broad zones of remnant lower
grade mineralisation including 52.0 metres at
3.4 g/t AuEq (1.3 g/t gold, 7.9 g/t silver, 4.5%
zinc) including 25.7 metres at 5.5 g/t AuEq
(2.0 g/t gold, 8.1 g/t silver, 7.7% zinc) and 30.4
metres at 2.2 g/t AuEq (1.2 g/t gold, 8.8 g/t
silver, 1.9% zinc).
These broad zones of halo mineralisation
surround the higher-grade mineralisation
and were missed by the selective historical
sampling; however, they may be important in
the context of potential open pit mining given
the near surface location.
40
Figure 13 – Cross section showing the location of Sentazon Channel Sampling and drilling
Challenger Exploration Limited Annual Report C
h
a
l
l
e
n
g
e
r
E
x
p
l
o
r
a
t
i
o
n
L
m
i
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
Challenger geologist core logging
41
These holes were drilled to test the Magnata
Fault underneath earlier CEL drillhole GNDD-
006 (6.5m at 4.6 g/t AuEq from 78.5m).
Drillholes GNDD-217 and GNDD-227 extended
the high grade Magnata fault Mineralisation
150 metres vertically below GNDD-006.
The drilling confirmed that a significant halo
of lower grade mineralisation surrounds the
high-grade Magnata Fault mineralisation. This
is illustrated by;
•
the top of GNDD-288 which intersected
96.0m at 2.0 g.t AuEq (1.8g/t gold, 2.9g/t
silver, 0.3% zinc) from 13.0m around a high
grade zone of 4.3m at 30.6 g/t AuEq (27.6
g/t gold, 35.4 g/t silver, 5.9% zinc) from
98.2m which is a continuation of the Verde
Zone south; and
• GNDD-272 which intersected 51.6m at 4.5
g/t AuEq (3.9 g/t gold, 11.8 g/t silver, 1.0%
zinc) from 96.5m around a high grade zone
of 11.1m at 20.0 g/t AuEq2 (17.4 g/t gold,
51.1 g/t silver, 4.5% zinc) with a second
zone of mineralisation 22 metres thick from
35.0m downhole above the main zone.
The surrounding halo of lower grade
mineralisation was not recognised in the
historical drilling and has the potential to
add significant ounces and be important
economically in an open cut development
scenario.
Given the encouraging results, a further 30
holes have been programmed to continue
to extend and infill the mineralisation to the
west on the Magnata Fault with 18 of these
completed (assays pending).
Magnata Fault Zone Extension Drilling
Subsequent to the year end the Company
announced the results from the first half of
drilling designed to test for extensions of
high-grade mineralisation on the Magnata
Fault at depth and along strike. The program
was particularly pleasing with all 33 drill holes
intersecting mineralisation and the footprint of
the high-grade Magnata Fault mineralisation
being doubles both vertically and along strike.
The results are included in Table 6 and following
this drilling the Magnata Fault mineralisation
remains open in all directions. Highligts from the
program included:
GNDD-288 which intersected a combined
422 gram metres over three zones from near
surface to 427 metres downhole and was the
second best hole ever drilled at Hualilan behind
historical hole DDH-61 which intersected
5.4m at 95.4 g/t AuEq for 515 gram metres.
Additionally, GNDD-288 is the deepest hole
drilled to test the Magnata Fault and the
intersection of 27.8m at 7.3 g/t (5.5 g/t gold,
12.9g/t silver, 3.9% zinc) from 399.0m including
2.0m at 53.4 g/t AuEq (49.4 g/t gold, 77.4
g/t silver, 7.8% zinc) is more than 100 metres
vertically below GNDD-203 (21.8m at 4.5 g/t
AuEq including 3.6m at 16.2 g/t AuEq) the
previous deepest intersection on the Magnata
Fault. GNDD-288 was collared to test below
GNDD-157 and confirmed the previously
reported intersection in GNDD-157 (12.0m
at 20.9 g/t AuEq) is a new, and third, zone of
east-west trending high-grade mineralisation
associated with the Magnata Fault. Mineralisation
on this new zone and the main Magnata Fault
zone is open below 400 metres (Figure 14).
GNDD-217 which intersected 21.1m at 7.6 g/t
AuEq (5.7g/t gold, 32.1 g/t silver, 3.4% zinc)
from 111.0m including 4.4m at 29.9 g/t AuEq
(23.1 g/t gold, 139 g/t silver, 11.7% zinc) and
GNDD-227 which intersected 8.0m at 5.7 g/t
AuEq (4.2g/t gold, 53.6 g/t silver, 1.7% zinc)
from 222.0m.
42
Challenger Exploration Limited Annual Report Figure 14 – Cross section showing Magnata Fault deeper drilling
43
Challenger Exploration Limited Annual Report Additionally, GNDD-142 had intersected a
broad zone of high-grade mineralisation
50 metres below the Sentazon Manto
returning an intercept of 40.0 metres at 6.2
g/t AuEq in limestones and intrusives.
These early results (Table 7) contain a
number of high-grade intersections such
as 16.9 metres at 16.9 g/t AuEq (14.1 g/t
gold, 18.3 g/t silver, 5.8% zinc) including
two higher grade zones of 7.1 metres at
32.2 g/t AuEq (28.1 g/t gold, 36.1 g/t silver,
8.3% zinc) and 2.9 metres at 18.8 g/t AuEq
(13.1 g/t gold, 13.0g/t silver, 12.6% zinc)
in GNDD-296 and 3.8 metres at 24.8 g/t
AuEq AuEq (22.1 g/t gold, 125.3 g/t silver,
2.6% zinc) in GNDD-214.
This drilling has doubled the dip extent
of the high-grade mineralisation at
Sentazon to 200 metres with mineralisation
remaining open both up-dip into the
Hualilan Hills and at depth.
Sentazon Extension Drilling
Subsequent to the year end the Company
announced the results from the first 14 holes
from the Company’s follow up drill program
at Sentazon which has now been expanded
to 32 holes.
Sentazon is the southernmost mineralisation
that was defined historically with its location
shown in Figure 12. Mineralisation as
Sentazon was described historically as;
“Manto-style” high grade lenses, oriented
parallel to the limestone beds, caused by
the replacement of the limestone beds with
massive sulphides. The Sentazon Manto is
one of three en-echelon manto zones at
Cerro Sur, over a strike interval of 330 metres,
the others being Muchilera and Magnata both
to the north. This mineralisation is lensoid in
shape, trending northerly, dipping 40 to 70
degrees west with thickness of 1 to 4 metres
ranging to 8 metres and open at depth.”
Previous drilling by CEL intersected
mineralisation over 150 metres of strike
and 100 metres of dip at Sentazon with
the mineralisation open along strike, at
depth, and up-dip into the Hualilan Hills.
44
Challenger Exploration Limited Annual Report Figure 15 – Cross section showing Sentazon mineralisation and new underlying Footwall Zone
Verde Zone drilling with Cerro Norte in the background
45
Challenger Exploration Limited Annual Report New Discovery – Sentazon Footwall Zone
The drilling confirmed the intercept in GNDD-
142 as a significant new zone of high-grade
gold mineralisation in the footwall below
the existing high-grade mineralisation at
Sentazon. Intercepts in intrusive such as 50.0
metres at 1.9g/t AuEq (1.8g/t gold, 1.0g/t
silver, 0.1% zinc) including 2.4 metres at
17.3 g/t AuEq (17.2 g/t gold, 3.76 g/t silver,
0.3% zinc) in GNDD-253 demonstrate this
new zone of footwall mineralisation below
Sentazon has significant true width.
The results from the first of several deep holes
at Sentazon GNDD-314 then confirmed a
significant extension to the new Footwall Zone
with an intersection of 2.8 metres at 62.5 g/t
AuEq (59.0 g/t gold, 25.8 g/t silver, 7.2% zinc)
from 296.9m.
This intercept extends the new Footwall
Zone at Sentazon 75 metres below the two
previous deepest intersections in this zone.
This new Footwall Zone of mineralisation
has substantial down-dip extent with a
number of deeper drill holes in the program
(assays pending – Photo 9 to 11) intercepting
zones of massive sulphides in limestone
containing pyrite-sphalerite-galena-
pyrrhotite with garnet-silica-pyroxene (skarn)
alteration up to 200 metres down dip of
the current results. This alteration style and
mineral assemblage is consistent with other
mineralised intervals in the limestone where
high-grade gold results were received.
46
Photo 8 – GNDD-314 Footwall Zone mineralisation from 297-300 metres (2.8m at 62.5 g/t AuEq)
Challenger Exploration Limited Annual Report Photo 9 – Footwall Zone mineralisation from 425-427 metres in GNDD-362 (assays pending)
Photo 10 – Close up of the Footwall Zone mineralisation from 324-326 metres in GNDD-352
(assays pending)
Photo 11 – Close up of the Main Manto mineralisation from 113.5-137.5 metres in GNDD-378
(assays pending)
47
Challenger Exploration Limited Annual Report Metalurgical Testwork
The Company received outstanding results from Phase 1 of its metallurgical testing program
on the lower-grade intrusion hosted with follow up results received subsequent to year end.
The Company received the results from the analysis of the concentrate produced from the
high-grade skarn material which has shown it is exceptionally clean and likely to have high
payability. Additionally, the results of cyanide leach testing on the float tails from the skarn
material were received showing the potential to significantly increase gold recoveries into the
high 90 percent level.
Bulk Sample
The first test was conducted on a 4 kilogram sub-sample of a 55.6 kg bulk sample of quarter
core from 4 drill holes across the project; GNDD-113, GNDD113A, GNDD155 (Gap Zone) and
GNDD157 (Magnata). The bulk sample provides material which has a grades and composition
representative of the low-grade intrusion-hosted mineralisation intersected to date. Assays
for holes used for the metallurgical bulk sample are shown in Table 8. The weighted average
grade of the bulk sample is 1.1 g/t gold, 7.0 g/t silver, 0.01% copper, 0.03% lead and 0.09% zinc.
Drill Hole
From
(#)
(m)
To
(m)
Total
(m)
Gold
(g/t)
Ag
(g/t)
Zn
(%)
Cu
(%)
Pr
(%)
Weight
(kg)
GNDD113
154.00
161.50
7.50
0.86
32.0
0.18
0.06
0.13
10.95
GNDD113A
352.00
360.00
8.00
1.06
0.90
0.02
0.00
0.01
12.88
GNDD155
195.00
200.00
5.00
0.92
1.26
0.10
0.00
0.02
10.38
GNDD155
248.00
253.00
5.00
1.39
0.95
0.07
0.00
0.01
10.06
GNDD157
345.00
352.00
7.00
1.27
0.53
0.11
0.00
0.00
11.38
Table 8 – Grades and weights of core samples that contributed to metallurgical sample
48
Challenger Exploration Limited Annual Report Initial Floatation Test result: intrusion-hosted mineralisation
The first test on the intrusion-hosted material (Test F7) was a repeat of the Test F5 test
conducted on the higher-grade material, which produced excellent recoveries from a
combination of gravity separation and single stage bulk sulphide float. It was conducted
at a slightly finer P80 = 80 micron grind. Gravity separation recovered 65.9% of the gold
into a gravity concentrate grading 283 g/t gold and 693 g/t silver. As in the tests done
on the higher-grade material gravity separation consisted of a Knelson Concentrator
followed by a Mozely Table.
The tailings grades of 0.04 g/t Au and 0.90 g/t Ag are exceptionally low and correspond
to a combined gravity and bulk rougher gold recovery of 96.4%. A single cleaning stage
was added after the bulk sulphide float which was extremely effective. This produced a
small (1.5%) reduction in recovery from 96.4% to 94.9% (gold) and 91.6% to 86.9% (silver)
at a significantly lower mass pull of 3.1%, down from 7%. The end concentrate, from the
combination of the gravity and first cleaner float concentrate, produced a concentrate
containing 31.5 g/t gold, 274 g/t silver, 0.5% copper, 0.5% lead, 2.7% zinc and 32%
sulphur. Recoveries were 94.9% (Au), 86.8% (Ag), 62.2% (Cu), 62.9% (Pb), 85.6% (Zn).
The production of a single stage bulk concentrate will be the lowest capital and
operating expenditure option on a per tonne throughput basis when compared to other
processes. It is a significant positive that these high recoveries from Phase 1 testing have
been achieved without the need for fine grinding.
Weight
Assays
Distribution
Product
g
%
Au
Ag
(g/t)
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
Mozley Conc
9.7
0.2
283
693
Ag
(%)
Cu
(%)
Pb
(%)
Zn
(%)
Au
(%)
16.9
1st Clnr Conc
116.2
2.9
10.4
239
0.55
0.59
2.95
69.9
62.2
62.9
85.6 94.78
1st Clnr Tails
154.0
3.8
0.41
12.1
0.01 0.021 0.059
4.7
1.5
3.0
2.3
1.8
Ro Tails
3722.0
93.0
0.04
0.90 <0.01 <0.01 0.013
8.4
36.3
34.1
12.1
3.4
Head (calc)
4001.9
100.0
1.04
9.92
0.03
0.03
0.10
100
100
100
100
100
Head (direct)
1.72
11.2
0.02
0.06
0.10
Table 9 – test F7 Metallurgical Balance Table
49
Challenger Exploration Limited Annual Report Follow Up Floatation Test Result:
Intrusion-Hosted Mineralisation
Test F8
Test F8 was a repeat of the first test conducted
on the intrusion-hosted material Test F7, which
involved simple gravity separation followed by
single stage sulphide flotation at a P80 = 76
micron grind, with the addition of regrind of
the rougher concentrate to P80 = 17 microns
followed by two stages of cleaning. The test
was undertaken using a 4kg sample of the
intrusion hosted composite.
The results were outstanding producing a
high-grade concentrate containing 53.6
g/t gold and 284 g/t silver with recoveries
of 93.4% (gold) and 70.4% (silver). The fine
regrind and addition of the second cleaning
stage produced a small (1.4%) reduction in
gold recovery at a significantly lower mass pull
of 2.1%, down from 3.1% in test F7 where the
fine regrind and second cleaning stage were
not utilised.
Similar to all testing at the Hualilan Gold
Project, the recovery via simple initial gravity
separation was impressive. Gravity separation
consisted of a Knelson Concentrator followed
by a Mozely Table, recovering 71.8% of the
gold in test F8.
The final rougher concentrate tailings
grade of 0.03 g/t gold and 0.80 g/t silver
are exceptionally low and correspond to a
combined gravity and bulk rougher gold
recovery of 97.8% (gold) and 91.5% (silver).
The bulk of the copper (65.4%), lead (67.8%)
and zinc (82.3%) were recovered into the bulk
rougher concentrate, however testing is yet
to target recoveries of the base metal credits
from the intrusion-hosted material.
The low (8%) mass pull into the bulk rougher
concentrate was in line with the earlier testing.
Accordingly, the regrind of the rougher
concentrate to P80 = 17 microns prior to
cleaning will only require a small regrind
circuit.
The increase in the gold grade of in the
concentrate by approximately by 20 g/t is
material and preliminary discussions with
off-takers have indicated this will increase
payability from approximately 80% for the
F7 concentrate to above 90% inclusive of all
treatment charges and penalties. The 70%
increase in the concentrate grade is expected
to materially decrease the concentrate
transport cost which can be a significant
component of cash cost when a concentrate
is produced.
The trade-off from the production of a
higher grade concentrate is small with a 1.4%
reduction in recovery.
Additionally, the recovery of residual gold and
silver in the cleaner concentrate tails via a
cyanide leach has the potential to offset this.
Should the cyanide leach testing of the various
cleaner float tails from the intrusion hosted
material (testing has commenced) return
similar results to the high-grade material the
theoretical recovery from Test F8 would be
96.4% (gold) and 85.2% (silver).
50
Challenger Exploration Limited Annual Report Weight
Assays %
Distribution %
Product
g
%
Au
Ag
(g/t)
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
S
(%)
Au
(%)
Ag
(%)
Cu
(%)
Pb
(%)
Zn
(%)
S
(%)
Gravity Conc
7.6
0.2
464
71.8 0.0
2nd Clnr Conc
78.1
2.0
13.6 312 0.78 0.83 3.86 45.6 21.6 70.4 57.6 56.9 69.4 79.9
2nd Clnr Tails
34.1
0.9
1.57 46.3 0.05 0.062 0.43 6.28
1.1
4.6
1.7
1.9
3.4
4.8
1st Clnr Tails
207.0
5.2
0.78 27.7 0.03 0.05 0.2
2.41
3.3
16.6
6.1
9.1
9.5
11.2
Ro Tails
3662.2
91.8
0.03 0.80 0.01 0.01 0.021 0.05
2.2
8.5
34.6 32.2 17.7
4.1
Head (calc)
3989.0 1000 1.23 8.68 0.03 0.03 0.11 1.12 100 100 100 100 100 100
Gravity Conc
7.6
0.2
464
71.8
Gravity Conc &
2nd Clnr Conc
Gravity Conc &
1st Clnr Conc
Gravity Conc &
Bulk Ro Conc
85.7
2.1
53.6 284.3 0.71 0.76 3.52 41.6 93.4 70.4 57.6 56.9 69.4 79.9
119.8
3.0
38.8 216.6 0.52 0.56 2.64 31.5 94.5 75.0 59.3 58.8 72.8 84.7
326.8
8.2
14.7 96.9 0.21 0.24 1.09 13.1 97.8 91.5 65.4 67.8 82.3 95.9
Table 10 – test F8 Metallurgical Balance Table
51
Challenger Exploration Limited Annual Report Test F10
Test F10 was similar to test F8 with a simple
gravity separation and single stage sulphide
flotation at a P80 = 76 micron grind followed
by the regrind of the rougher concentrate
to P80 = 19 microns. However, F10 was was
undertaken using a larger (12 kg) sample with
the 2nd cleaner circuit in F10 set up with three
incremental cleaner stages to give a guide to
floatation kinetics.
Gravity separation was again impressive
with gravity separation recovering 61.7%
(gold), 15.5% (silver), and 41.4% (lead) into
a gravity concentrate grading 418 g/t gold,
1037 g/t silver and 15.5% lead. The rougher
concentrate tailings grades of 0.03 g/t gold
and 0.80 g/t silver were the same as test F8
which is exceptionally low and corresponds
to a combined gravity and bulk rougher gold
recovery of 97.4% (gold) and 93.1% (silver). The
majority of the copper (64.5%), lead (84.5%)
and zinc (78.2%) credits were recovered into
the combination of the bulk rougher and
gravity concentrate. The mass pull at 7.6%
was slightly lower than the results of F8 and
confirmed that should this process route be
used the regrind circuit required will be small
and relatively inexpensive.
Combining the gravity and final cleaner
concentrate after the first increment of the
second cleaner stage produced a high-grade
concentrate containing 46.8 g/t gold and 375
g/t silver, with recoveries of 91.5% (gold) and
74.2% (silver) at a 2.1% mass pull. Combining
the gravity and cleaner concentrate after
the second increment of the second cleaner
produced a concentrate containing 40.3 g/t
gold and 346 g/t silver with recoveries of
94.2% (gold) and 81.8% (silver), at a 2.5% mass
pull. The use of all three incremental second
cleaner concentrates increased recoveries to
94.6% (gold) and 83.4% (silver) with the higher
mass pull from only a single cleaning stage
reducing the concentrate grades to 38.6 g/t
gold and 337 g/t silver.
Test F10 produced similar recoveries
compared to the 4 kg test in F8, although the
final concentrate grade was slightly lower in
test F10 than in test F8. The bulk sample of
the intrusion hosted material has a low head
grade and testing is sensitive to the mass
recovery, particularly the gravity recovery. At
this low head grade and a small decrease in
gravity recovery will have an impact on the
concentrate grade. The finer regrind in test F8
(P80 = 17 microns in F8, P80 = 19 microns in
F10) may have resulted in the slightly better
recoveries and grade in test F8. This will be
evaluated in further testing.
Should the exploratory cyanide leach
testing of the various cleaner float tails from
the intrusion hosted material, which has
commenced, return similar results to the
high-grade material the theoretical recovery
from Test F10 producing the high-grade
(46.8 g/t gold and 375 g/t silver) concentrate,
would be 95.6% (gold) and 87.4% (silver).
The results of Test F10, similar to Test F8, are
extremely encouraging resulting in high gold
recoveries into a high-grade gold concentrate
that will have excellent payability. The results
suggest that the use of the second cleaner
circuit, where adding incremental cleaner
flotation stages allows us to increase the final
concentrate grade with very low changes
in overall gold recovery, will be helpful
to achieve a specific concentrate grade
target. This is likely to allow the Company to
optimise Hualilan concentrate gold grades
to ensure an optimum economic trade-off
between gold payabilities, recovery, and
concentrate transportation costs, providing a
significant economic advantage in marketing
and selling a final concentrate product.
52
Challenger Exploration Limited Annual Report Weight
Assays %
Distribution %
Product
g
%
Au
Ag
(g/t)
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
S
(%)
Au
(%)
Ag
(%)
Cu
(%)
Pb
(%)
Zn
(%)
S
(%)
Gravity Conc 18.3
0.2
418 1,037 0.13
15.5 0.18 45.9 61.7
15.5
0.8
41.5
0.3
5.8
2nd Clnr
Conc 3
2nd Clnr
Conc 2
2nd Clnr
Conc 1
224.5
2.0
16.5
321
0.71
1.08 3.01 45.1 29.9 58.7 53.6 35.5 53.6 70.2
47.3
0.4
6.93
197
0.32 0.48 2.86 28.9
2.6
7.6
5.1
3.3
10.7
9.5
13.5
0.1
3.76
148
0.21 0.30 1.95
17.3
0.4
1.6
1.0
0.6
2.1
1.6
2nd Clnr Tails 86.7
0.8
1.57 30.6 0.02 0.077 0.23 2.95
1.1
2.2
0.6
1.0
1.6
1.8
1st Clnr Tails 478.7
4.2
0.46 19.3 0.02 0.037 0.26 2.03
1.8
7.5
3.4
2.6
9.9
6.7
Ro Tails
10,559 92.4 0.03 0.80 0.01 0.01 0.026 0.06
2.6
6.9
35.5
15.5 21.8
4.4
Head (calc)
11,428 100.0 1.09 10.7 0.03 0.06 0.11
1.26
100 100.0 100.0 100
100
100
Gravity Conc 18.3
0.2
418
61.7
Gravity Conc
& Increment
#1 of 2nd
Clnr
Gravity Conc
& Increments
1 & 2 of 2nd
Clnr
Gravity and
all 2nd Clnr
Concs
Gravity Conc
& 1st Clnr
Conc
Gravity Conc
& Bulk Ro
Conc
242.8
2.1
46.8 375.0 0.67 2.17 2.80 45.2 91.5
74.2 54.4 77.0 53.9 76.0
290.1
2.5
40.3 345.9 0.61
1.89 2.81 42.5 94.2 81.8 59.5 80.4 64.7 85.5
303.6
2.7
38.6 337.1 0.59 1.82 2.77 41.4 94.6 83.4 60.5 81.0 66.7 87.1
390.3
3.4
30.4 269.1 0.47
1.43 2.20 32.8 95.7 85.6 61.1 81.9 68.3 88.9
869.0
7.6
13.9 131.5 0.22 0.66 1.13
15.9 97.4 93.1 64.5 84.5 78.2 95.6
Table 11 – test F10 Metallurgical Balance Table
53
Challenger Exploration Limited Annual Report Analysis of the Concentrate
from the High-Grade Material
Detailed analysis of the composition of
the concentrate produced from the high-
grade skarn mineralisation (namely the
combination of the first cleaner concentrate
and the gravity concentrate from the high-
grade material test F5 - see metallurgical
balance below) has demonstrated that the
concentrate has significant advantages over
most concentrates. The composition of the
concentrate is shown in Table 12.
Of particular note is the arsenic content,
below the 30 ppm (g/t) detection level
which is rare for a gold concentrate, and all
other deleterious elements being well below
the level at which they would incur smelter
penalties.
This significantly expands the number of
potential treatment routes.
Preliminary discussions with potential
offtake partners and concentrate traders
have indicated that this concentrate is
likely to be highly sought and will attract a
significant premium to most similar grade
gold concentrates.
Early indicative payabilities show that the
sale of a concentrate from the combined
gravity and single stage float is an attractive
and robust option to use to evaluate the
economics of the project. The Company will
also continue to advance the production
and sale of separate zinc, copper, and lead
concentrate streams.
Ag g/t
Al g/t
As g/t
Ba g/t
Be g/t
Bi g/t
Ca g/t Cd g/t
Cl g/t Co g/t Cr g/t Cu g/t
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(%)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
113
1,510
< 30
7.5
0.28
< 20
4.6
1,130
20
< 5
65
0.6
Fe g/t
F %
Hg g/t
K g/t
Li g/t Mg g/t Mn g/t Mo g/t Na g/t Ni g/t
P g/t
Pb g/t
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
30.3
22
< 0.3
344
< 40
2,460
7,130
< 5
185
< 20
< 200
(%)
1.4
Sb g/t
Se g/t
Sn g/t
Sr g/t
Ti g/t
Tl g/t
U g/t
V g/t
Y g/t
Zn g/t
Au
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(ppm)
(%)
(ppm)
< 30
< 30
< 20
32.6
60.1
< 30
< 50
< 4
1.7
11.6
54.2
Table 12 – Composition of combined gravity and first cleaner concentrate test F5
(high-grade skarn)
54
Challenger Exploration Limited Annual Report C
h
a
l
l
e
n
g
e
r
E
x
p
l
o
r
a
t
i
o
n
L
m
i
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
Exploratory Cyanide Leach
of the Float Tails
For completeness, the Company undertook
an exploratory cyanide leach of the F5
concentrate tails produced in the flotation
testing of the high-grade skarn material.
Some 9.4% of the gold from the higher
grade sample is lost into the float tails in the
combined gravity single stage float with the
float tails grading 2.1 g/t gold and less than
10 g/t silver. Additionally, the first cleaner
float tails contain 3.7% of the gold at a grade
of 7.5 g/t.
Given that historical bulk sample bottle roll
testing, which was used to determine the
effectiveness of cyanide to recover the gold
at Hualilan, had produced recoveries of 20-
40% it was not expected that cyanide would
recover a significant portion of the residual
gold In the float tails.
Testing was conducted on a 1.34 kg sample
of the F5 float tails over a 48 hour leach
duration. Surprisingly, the testing resulted in
the recovery of 70% of the gold and 72% of
the silver. The cyanide consumption of 4.25
kg/t NaCn was at the higher end, however
it represents a viable option to significantly
increase recoveries. Additionally, no attempt
has been made to further clean the float
tails to remove the residual zinc and copper
which are likely to be responsible for the
majority of the cyanide consumption.
The likelihood of the recovery of the
majority of any residual gold and silver in
the concentrate tails provides not only
improved recoveries and most likely a better
outcome. It also provides the flexibility to
target a higher grade concentrate without
significantly reducing overall recoveries.
Hualilan at night
55
56
Adriano Adit, El Guayabo Project
Challenger Exploration Limited Annual Report El Guayabo and
Colorado V Gold/Copper
Projects – Ecuador
Preparation for Maiden Drill Program
The Company has now completed its
program of logging and assaying of historical
drill holes. The drill holes are from a series
of 60 historical holes drilled by CEL’s farm-in
partner. These holes were drilled targeting
extensions to narrow high-grade vein hosted
gold mineralisation currently exploited on a
small scale. These historical drill holes were
not systematically logged or assayed for bulk
tonnage gold or base metal mineralisation.
The final assays are currently pending.
Additionally, the Company has completed
its rock-saw channel sampling program
in the adits and underground workings at
Colorado V and El Guaybo and El Guayabo 2
with approximately 2,000 metres of channel
sampling in the El Guayabo concession at
the Adriano and Ecuaba Adits. This program
was extended and final assays are pending.
Similarly a soil geochemistry program
expanding the Company’s initial soil grid
to cover the Colorado V and El Guaybo 2
concession was completed, with results
pending.
This data together with the external
processed 50 square kilometre airborne
magnetic survey and other geophysical data
has been integrated to produce a significant
number of high priority drill targets. These
drilling targets are currently being ranked
internally prior to the finalisation of the
Company’s maiden drill program.
A drill contact for 20,000 metres of drilling
was entered into, which will involve 2
rigs on site. Land access agreements are
currently being finalised with drilling
commencing in August.
Colorado V Exploration Target
To assist shareholders, appreciate the scale of the opportunity CEL reported an Exploration
Target according to the JORC Code (2012). Highlights include:
Anomaly A
• Drill hole ZK0-5, drilled across the extreme south-eastern margin of the anomaly returned
51 m at 0.7 g/t gold, 1.4 g/t silver within a broader zone of 84 metres at 0.5 g/t gold
• This anomaly is one kilometre long and only tested by ZK0-5, ZK10-1 (pending) and panel
sampling in the main adit, which averaged 1.5 g/t gold and 0.15% copper.
Anomaly B
• SAZK2-1 returned 63m at 0.6 g/t gold, 2.1 g/t silver, 0.1% copper to the edge of the anomaly
and SAK0-2 (located so the bottom 50 metres of the hole penetrated Anomaly B) returned
55m at 0.7 g/t gold, 1.5 g/t silver, 0.1% copper with grade increasing at depth
• The anomaly is almost one kilometre in length and tested by only three drill holes, all
located near its edge, all of which encountered significant mineralisation.
57
Challenger Exploration Limited Annual Report Potential Size of the Exploration Targets
Anomaly A and Anomaly B, combined, define an Exploration Target ranging between 442 to 468
million tonnes grading from 0.5 to 1.0 g/t gold, 1.5 to 2.5 g/t silver, plus copper credits.
It should be noted that the potential quantity and grade of the Exploration Target is conceptual in
nature. There has been insufficient exploration to determine a mineral resource and there is no
certainty that further exploration work will result in the determination of mineral resources.
A detailed explanation of the basis for the statement, including specific description of the level of
exploration activity already completed is available below.
• Surface area defined by a 100 ppb gold soil anomaly which coincides with a 0.1 g/t gold cut-
off in drill hole assays and the panel sampling in the adit
• Depth extent of 400 metres assumed based on a reasonable depth extent for surface mining
operation of a large steeply plunging low grade Au-Ag-Cu deposit. Current intersections in
holes assayed by the Company which demonstrate mineralisation persist with depth, and is
open below 400 metres sub-surface
• Density estimates of 2,600 – 2,750 kg/m3 are based on typical expected values for diorite,
schist and diorite-schist breccia intersected in the drilling, in the adit, and observed on
surface. The assumed density is not supported by sample density measurements.
• Gold, Silver and Copper grade estimates are based on drill intersections that coincide with the
volume defined by the gold in soil anomaly to a depth of 400m below surface. A grade range
of 0.5 to 1.0 g/t gold and 1.5 to 2.5 g/t silver has been used in the Exploration Target estimate.
• The proportion above cut-off (0.2 g/t gold) is an estimate based on the variability of grade
from drilling and adit panel sampling. A range of 70-90% has been used.
58
Challenger Exploration Limited Annual Report Exploration Target Anomaly A
High estimate
Low estimate
Tonnage (Mt)
Gold Grade (g/t)
Silver Grade (g/t)
% tonnage above cut-off
275
1.0
2.5
90%
260
0.5
1.5
70%
Exploration Target Anomaly B
High estimate
Low estimate
Tonnage (Mt)
Gold Grade (g/t)
Silver Grade (g/t)
% tonnage above cut-off
Totals
Tonnage (Mt)
Gold Grade (g/t)
Silver Grade (g/t)
193
1.0
2.5
90%
182
0.5
1.5
70%
High estimate
Low estimate
468
1.0
2.5
442
0.5
1.5
59
Challenger Exploration Limited Annual Report 60
Figure 16 – El Guaybo Project Gold in soil geochemistry
Challenger Exploration Limited Annual Report Figure 17 – El Guaybo Project Copper in soil geochemistry
61
Challenger Exploration Limited Annual Report 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 that the bill will soon undergo public participation,
as part of the cabinet and parliamentary approval processes.
62
Challenger Exploration Limited Annual Report Hualilan Core samples to be assayed
63
Challenger Exploration Limited Annual Report 64
Part of the Hualilan Gold Project team on site – Core Logging Facility Hualilan
Challenger Exploration Limited Annual Report 65
Challenger Exploration Limited Annual Report Table 1: Hualilan Gold project Drill results
reported during the final quarter of 2021
Interval
Gold
Ag
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
Drill Hole
From
(#)
(m)
To
(m)
GNDD133
95.7
100.0
inc
and
95.7
96.8
163.0
174.5
11.5
(m)
4.3
1.1
GNDD135
31.0
53.6
22.6
inc
and
inc
inc
inc
41.0
43.0
2.0
78.0
105.2
27.2
79.6
83.0
95.0
97.0
104.3
105.2
3.4
2.0
0.9
GNDD138
43.0
97.0
54.0
GNDD150
40.0
62.0
22.0
and
and
76.0
111.9
35.9
180.3
181.6
GNDD154
125.9
128.5
1.3
2.6
and
inc
146.0
168.0
22.0
146.0
147.0
1.0
GNDD158
107.0
126.0
19.0
inc
and
120.1
121.0
139.0
145.0
1.0
6.0
GNDD-162
98.0
112.8
14.8
102.1
109.0
6.9
GNDD173
83.0
149.0
66.0
inc
inc
inc
87.0
93.0
116.0
122.0
130.4
131.0
6.0
6.0
0.6
66
(g/t)
1.3
3.8
0.3
0.4
1.6
0.5
1.4
1.9
0.1
0.4
0.3
0.2
2.2
5.3
1.0
1.1
0.7
2.6
3.9
2.0
5.3
2.4
0.9
2.6
16.8
26.1
4.6
0.2
1.8
0.6
2.8
0.4
2.0
3.9
0.5
2.0
1.4
8.9
34.6
1.0
12.6
1.0
4.2
0.8
3.5
6.4
3.1
18.8
2.8
23.9
0.2
0.5
0.0
0.1
0.1
0.4
0.3
0.2
3.2
0.2
0.1
0.4
2.9
3.0
0.0
0.1
0.1
0.3
0.3
0.3
0.5
0.1
0.3
0.1
0.1
1.4
4.1
0.3
0.5
1.7
0.7
1.6
2.0
1.5
0.5
0.3
0.5
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
18.4
1.0 g/t AuEq cut
6.3
0.2
2.0
0.7
2.9
0.6
2.2
4.2
0.6
2.4
1.5
9.3
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
Challenger Exploration Limited Annual Report
Drill Hole
From
(#)
(m)
GNDD176
73.9
Interval
Gold
To
(m)
76.9
76.9
(m)
3.0
0.8
1.3
inc
and
76.1
247.2
248.5
GNDD177
41.5
104.9
63.4
inc
inc
inc
inc
55.0
56.3
60.0
62.0
71.8
72.3
1.3
2.0
0.5
86.0
97.2
11.2
GNDD183
35.0
90.5
55.5
inc
inc
inc
and
inc
37.0
57.0
39.0
59.0
2.0
2.0
72.0
87.0
15.0
112.0
136.0
24.0
119.0
120.2
1.2
GNDD185
59.0
119.0
60.0
inc
inc
inc
67.0
71.5
4.5
83.0
93.0
10.0
114.0
119.0
and
138.0
145.1
5.0
7.1
GNDD187
145.0
161.0
16.0
inc
and
and
inc
149.0
151.0
2.0
192.0
207.0
15.0
302.5
308.0
302.5
305.0
5.5
2.5
(g/t)
0.9
2.5
0.3
0.6
1.3
1.0
1.3
2.1
1.0
1.1
1.0
3.2
0.2
2.6
0.6
1.8
1.0
1.4
1.0
0.4
1.6
0.5
1.7
3.7
Ag
(g/t)
3.3
1.7
98.9
1.8
3.5
1.2
7.3
3.0
1.5
1.0
0.4
3.5
6.8
Zn
(%)
Au Equiv
(g/t)
Comments
0.2
0.2
0.1
0.2
0.1
0.2
0.2
0.6
0.4
0.1
0.1
0.9
1.1
1.0
2.6
1.6
0.7
1.4
1.1
1.5
2.4
1.2
1.1
1.0
3.6
0.7
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
95.1
17.1
11.3
1.0 g/t AuEq cut
1.5
3.3
1.7
2.0
8.9
0.6
2.5
0.9
26.0
55.9
0.3
0.4
0.2
1.1
1.1
0.1
0.6
0.2
0.7
1.2
0.7
2.0
1.1
1.9
1.6
0.5
1.9
0.5
2.4
5.0
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
67
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
GNDD190
47.3
55.0
and
and
and
161.1
163.0
186.0
191.0
200.0
204.0
7.7
1.9
5.0
4.0
GNDD191
188.4
209.5
21.2
and
and
217.4
217.9
238.0
240.0
0.5
2.0
GNDD193
96.3
179.8
83.5
inc
inc
inc
inc
and
inc
and
and
96.3
105.8
9.5
121.4
135.2
13.9
147.8
149.0
1.2
160.5
171.6
11.1
191.0
198.5
194.7
198.5
218.0
219.5
251.0
252.9
7.5
3.8
1.5
1.9
GNDD199
26.0
172.0
146.0
inc
inc
inc
inc
inc
26.0
86.0
60.0
36.0
38.0
44.0
45.0
2.0
1.0
58.0
68.0
10.0
169.0
172.0
3.0
and
187.0
228.0
41.0
GNDD216
81.0
85.0
and
204.0
206.0
4.0
2.0
0.1
0.2
0.2
0.3
0.5
2.5
0.4
0.7
1.5
1.3
0.9
1.0
1.3
2.1
0.1
1.1
0.4
0.6
1.6
1.8
1.4
1.0
0.2
0.3
0.6
4.6
5.7
0.1
0.1
3.2
16.8
3.5
1.3
2.7
1.7
1.8
2.1
9.3
16.6
72.3
7.6
1.1
1.5
1.3
5.4
1.2
7.9
0.7
0.3
3.5
4.9
0.2
0.0
0.0
0.4
2.5
0.8
0.2
0.1
0.5
1.9
0.4
0.5
0.9
0.1
0.2
0.2
0.2
0.1
0.2
0.2
1.8
0.1
0.0
0.2
2.3
0.4
0.2
0.3
0.7
3.8
0.8
0.8
1.6
1.6
1.7
1.2
1.6
2.7
1.0
1.3
0.5
0.7
1.6
1.9
1.5
1.9
0.2
0.3
0.8
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
68
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
GNDD220
86.0
194.0
108.0
inc
inc
inc
inc
inc
88.0
90.0
2.0
137.0
186.0
49.0
146.0
150.0
158.3
162.0
182.0
184.0
GNDD225
79.0
88.2
and
and
207.0
209.0
235.0
244.2
GNDD226
109.0
125.0
16.0
inc
and
inc
inc
116.0
123.4
7.4
146.0
190.0
44.0
170.0
172.0
188.0
190.0
2.0
2.0
GNDD229
167.0
205.3
38.3
inc
inc
171.0
177.0
204.5
205.3
GNDD230
211.0
217.0
6.0
0.8
6.0
227.0
242.0
15.0
256.0
260.0
GNDD233
113.0
115.0
and
180.1
182.5
4.0
3.7
2.0
9.2
2.0
9.2
4.0
2.0
2.4
and
and
inc
inc
0.4
1.1
0.6
1.2
1.8
1.7
0.2
4.3
0.9
0.5
0.7
0.5
1.3
3.8
0.7
1.7
4.8
0.2
0.2
0.5
0.5
0.4
Ag
(g/t)
1.6
10.5
1.3
1.4
1.9
2.8
0.8
1.1
0.6
2.4
4.0
0.7
0.8
1.1
6.5
30.1
5.9
2.5
1.1
0.7
0.6
0.5
4.8
0.1
0.5
0.1
0.1
0.0
0.0
0.0
0.0
0.0
0.3
0.5
0.1
0.1
0.2
0.3
1.5
0.3
0.0
0.1
0.1
0.1
0.0
0.65
0.4
1.4
0.6
1.2
1.8
1.7
0.2
4.3
1.0
0.7
1.0
0.5
1.4
3.9
0.9
2.7
5.0
0.2
0.2
0.5
0.6
0.4
1.4
8.6
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2 g/t AuEq cut
0.2/g/t AuEq cut
1.0 g/t AuEq cut
GNDD234
33.40
76.00
42.60
1.08
50.00
56.00
6.00
6.8
16.0
3.6
53.25
54.30
1.05
25.5
51.9
0.35
26.3
10.0 g/t AuEq cut
69
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
GNDD236
175.0
227.0
52.0
inc
inc
inc
177.0
179.0
201.0
221.0
216.6
151.0
2.0
2.0
4.4
GNDD237
139.0
357.0
12.0
and
201.6
270.0
155.5
201.6
243.0
72.5
234.0
256.3
254.5
351.6
9.0
1.8
1.1
2.9
1.0
8.4
0.3
0.6
0.6
1.2
6.7
4.1
9.6
5.6
33.6
1.2
2.1
3.8
14.2
10.8
0.3
0.4
1.9
0.2
0.3
0.1
0.2
0.2
0.5
298
302
357.0
59.0
0.91
1
0.05
304.0
2.0
3.3
0.32
349.65
351.6
1.95
17.5
GNDD242
185.5
194.0
inc
and
185.5
187.1
306.5
307.2
8.6
1.6
0.7
GNDD245
139.0
182.7
43.7
inc
inc
143.0
145.0
181.3
182.7
2.0
1.4
GNDD192
15.00
65.00
50.00
inc
and
and
28.00
48.00
20.00
107.45
109.20
1.75
176.00
176.60
0.60
GNDD196
9.00
78.20
69.20
17.00
29.00
12.00
2.9
0.5
1.2
0.9
1.8
3.0
0.5
1.0
2.3
1.0
3.6
18.7
38.0
0.3
0.4
0.5
1.2
3.3
1.7
0.6
0.6
8.2
24.8
4.8
0.7
inc
inc
inc
inc
inc
inc
inc
inc
inc
0
0
0.1
0.3
0.0
0.4
0.8
6.8
0.1
0.1
0.1
7.0
0.1
0.1
0.4
0.2
0.0
69.00
78.20
9.20
21.9
16.0
69.00
70.30
1.30
136.5
47.6
and
279.50
280.10
0.60
2.0
0.2
70
1.2
3.3
1.9
8.9
0.5
0.7
0.7
1.5
7.1
1.0
3.3
0.2/g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
17.5
1.0 g/t AuEq cut
0.6
1.1
2.3
1.1
4.0
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
22.1
1.0 g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.3
0.5
0.7
4.6
3.4
1.8
22.2
137.2
10/g/t AuEq cut
2.0
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
GNDD202
33.00
143.00
110.00
inc
inc
inc
71.75
131.00
59.25
98.00
108.00
10.00
127.00
129.00
2.00
GNDD207
114.00
114.90
0.90
and
and
inc
and
inc
and
122.55
125.00
2.45
169.50
173.00
3.50
170.70
173.00
2.30
217.40
243.00
25.60
233.00
237.00
4.00
269.35
271.30
1.95
Gap Zone
GNDD167
NSI
GNDD171
126.00
136.75
10.75
inc
and
and
and
134.00
135.40
1.40
193.00
196.90
3.90
270.00
270.50
0.50
327.00
329.60
2.60
GNDD175
176.00
182.00
6.00
GNDD184
NSI
GNDD188
198.00
264.00
66.00
inc
inc
212.00
216.00
4.00
252.00
256.55
4.55
GNDD200
168.25
235.00
66.75
inc
inc
inc
176.45
183.60
7.15
208.00
214.00
6.00
232.00
233.00
1.00
0.3
0.4
1.0
1.2
2.0
8.5
0.2
0.2
0.4
1.4
1.7
0.4
1.1
0.3
1.3
1.9
0.3
0.3
0.9
1.1
0.6
1.0
1.1
4.7
Ag
(g/t)
3.1
4.7
21.7
1.1
1.9
15.5
68.2
98.2
0.9
0.6
3.4
1.9
5.9
0.4
2.5
6.1
6.3
6.6
21.9
4.5
0.6
0.6
0.6
5.6
Zn
(%)
Au Equiv
(g/t)
Comments
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.1
0.2
0.7
0.0
0.1
1.0
0.1
0.2
0.0
0.0
0.3
0.1
0.8
0.0
0.7
1.1
0.1
0.1
0.2
0.4
0.1
0.0
0.1
1.3
0.4
0.5
1.6
1.2
2.1
9.1
1.1
1.5
0.4
1.4
1.9
0.5
1.5
0.3
1.6
2.4
0.5
0.4
1.3
1.3
0.6
1.1
1.1
5.3
71
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
GNDD204
95.00
139.00
44.00
inc
and
97.38
118.00
20.62
183.00
184.00
1.00
GNDD208
170.00
243.65
73.65
inc
inc
inc
180.00
182.00
2.00
208.00
243.65
35.65
212.00
225.00
13.00
GNDD211
168.80
192.00
23.20
inc
177.10
181.45
4.35
GNDD215
126.20
140.80
14.60
inc
and
132.50
140.80
8.30
159.00
200.00
41.00
GNDD218
198.00
203.05
5.05
3.2
6.4
1.2
0.5
2.2
0.8
1.9
0.5
1.5
1.4
2.1
0.2
0.4
4.5
6.4
6.7
1.4
0.9
2.6
5.0
0.8
2.0
2.4
2.1
3.1
0.2
0.1
0.1
0.4
0.2
0.0
0.4
0.8
0.1
0.3
0.3
0.4
0.1
0.0
3.3
6.6
1.5
0.6
2.2
1.1
2.3
0.6
1.6
1.6
2.3
0.2
0.4
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
0.2/g/t AuEq cut
72
Challenger Exploration Limited Annual Report Cerro Sur looking south past Sentazon
73
Challenger Exploration Limited Annual Report Table 2: Channel Sampling results
Cerro Norte results as reported.
Drill Hole
From
(#)
(m)
To
(m)
Total
(m)
Gold
(g/t)
Ag
(g/t)
Zn
(%)
Au Equiv
(g/t)
Comments
RNNV09-01A
0.00
12.34
12.34
12.0
34.9
0.51
12.7
1.0 g/t AuEq cut
inc
2.00
10.41
8.41
17.2
39.5
0.41
17.8
10 g/t AuEq cut
RNNV09-01B
0.00
13.94
13.94
3.5
29.8
0.80
4.2
1.0 g/t AuEq cut
inc
10.04
11.98
1.95
15.0
84.0
RNNV09-01C
0.00
24.11
24.11
16.9
37.8
inc
6.24
20.03
13.79
23.3
59.0
2.5
5.8
7.8
17.2
10 g/t AuEq cut
19.8
1.0 g/t AuEq cut
27.4
10 g/t AuEq cut
RNNV09-01D
0.00
8.16
8.16
10.0
23.3
0.68
10.6
1.0 g/t AuEq cut
inc
0.00
6.56
6.56
12.4
21.9
0.77
13.0
10 g/t AuEq cut
RNNV09-02
0.00
4.77
4.77
0.84
15.5
RNNV09-03
0.00
3.55
3.55
45.5
7.1
4.7
7.9
57.3
55.3
24.5
20.6
10.2
10.2
0.19
5.4
4.7
5.4
4.7
35.2
35.2
6.0
6.0
12.8
12.8
2.3
3.7
3.2
1.9
8.7
3.1
1.1
2.4
8.2
8.4
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
172.1
3.59
351.9
3.29
13.8
10 g/t AuEq cut
6.4
6.6
3.21
4.87
24.6
4.20
18.2
8.0
41.4
10.5
1.7
4.5
5.9
6.9
6.9
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
16.9
5.2
7.1
11.2
1.0 g/t AuEq cut
16.3
1.0 g/t AuEq cut
21.1
21.1
12.7
37.7
5.2
13.4
41.0
18.2
21.8
10 g/t AuEq cut
14.7
21.1
29.1
51.3
5.2
6.5
RNNV12-05
0.0
64.8
64.8
23.4
104.1
7.6
16.4
8.8
45.2
88.7
20.1
46.6
26.5
29.3
114.4
4.7
8.3
6.8
8.2
31.8
10 g/t AuEq cut
28.3
1.0 g/t AuEq cut
49.3
10 g/t AuEq cut
34.4
10 g/t AuEq cut
49.7
52.8
56.9
60.1
3.1
3.3
13.3
337.4
13.1
23.3
10 g/t AuEq cut
67.7
268.2
11.5
76.0
10 g/t AuEq cut
RNNV11-02
inc
RNNV11-03
RNNV11-04
RNNV11-05
RNNV12-01
RNNV12-02
RNNV12-03
RNNV12-04
inc
inc
2.0
3.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
inc
inc
inc
inc
74
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
RNNV12-06
RNNV12-07
RNNV12-08
RNNV12-09
RNNV12-10
RNNV12-11
RNNV12-12
(m)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
To
(m)
5.0
3.1
3.5
5.4
8.7
2.3
5.0
3.1
3.5
5.4
8.7
2.3
Total
(m)
Gold
(g/t)
Ag
(g/t)
1.3
155.6
10.9
19.4
Zn
(%)
7.5
4.8
Au Equiv
(g/t)
Comments
6.6
1.0 g/t AuEq cut
13.3
1.0 g/t AuEq cut
17.6
37.3
0.31
18.2
1.0 g/t AuEq cut
30.9
83.9
3.8
836.7
8.4
1.4
35.6
10 g/t AuEq cut
15.0
10 g/t AuEq cut
29.7
70.8
0.86
30.9
10 g/t AuEq cut
19.8
19.8
13.7
101.7
3.0
16.3
10 g/t AuEq cut
CHNV10-01A
0.00
9.94
9.94
8.0
6.6
0.38
8.3
1.0 g/t AuEq cut
inc
5.10
8.20
3.09
21.6
12.7
0.61
22.0
10 g/t AuEq cut
CHNV10-01B
1.70
inc
3.32
8.97
8.97
7.27
5.65
1.4
1.6
CHNV10-02
0.00
19.30
19.30
0.69
3.2
3.7
8.6
1.1
1.4
0.95
inc
inc
inc
0.00
2.92
2.92
0.89
34.6
4.8
9.16
12.37
3.21
0.87
4.2
0.55
16.07
17.68
1.60
1.9
15.0
0.31
CHNV10-03
0.00
3.94
3.94
0.40
inc
3.21
3.94
0.73
CHNV10-04
0.00
7.96
7.96
DJNV10-01A
0.00
59.54
59.54
1.3
2.0
2.2
2.0
1.4
8.5
11.2
inc
57.49
59.54
2.06
15.7
49.7
0.50
0.70
1.1
5.1
2.1
2.0
2.3
1.2
3.4
1.2
2.2
0.6
1.6
2.6
4.5
0.2 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
0.2 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
1.0 g/t AuEq cut
17.2
10 g/t AuEq cut
DJNV10-01B
4.14
24.37
20.23
0.06
CINV10-02
0.00
5.27
5.27
0.69
inc
3.33
5.27
1.94
1.5
2.6
4.4
5.3
0.32
0.23
0.2 g/t AuEq cut
0.07
0.78
0.2 g/t AuEq cut
0.08
1.6
1.0 g/t AuEq cut
SNV10-01
0.00
15.55
15.6
70.9
59.1
0.18
71.7
1.0 g/t AuEq cut
inc
inc
0.00
4.00
8.19
14.49
4.0
6.3
201.6
172.0
0.07
203.8
10 g/t AuEq cut
43.7
22.6
0.15
44.0
10 g/t AuEq cut
SNV10-02
0.00
12.52
12.5
2.3
12.3
1.36
3.0
1.0 g/t AuEq cut
75
Challenger Exploration Limited Annual Report Table 3: Complete Channel Sampling results
Cerro Sur reported during the final quarter of 2021
Channel
From
Sample (#)
(m)
To
(m)
Total
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Cu
(%)
Pb
(%)
Au Equiv
(g/t)
Comments
0.1
0.2
0.4
0.3
0.5
0.1
0.1
0.1
0.2
0.2
0.2
0.4
0.5
0.6
0.3
SZNV10-01
2.0
32.4
30.4
1.2
8.8
1.9
inc
23.6
32.4
8.7
3.9
28.8
6.3
SZNV10-02
0.0
52.0
52.0
1.3
7.9
4.5
inc
inc
inc
inc
0.0
6.3
6.3
2.6
27.5
1.9
11.3
37.0
25.7
2.0
8.1
7.7
18.7
24.9
6.2
7.0
17.0
3.0
41.5
43.3
1.8
0.0
0.3
3.2
SZNV10-03
0.0
SZNV10-04
0.0
4.4
3.5
4.4
3.5
8.2
63.2
0.8
9.1
27.4
3.7
SZNV11-01
0.0
14.9
14.9
0.3
inc
0.0
11.2
11.2
0.4
2.3
2.3
4.0
5.0
SZNV11-02
0.0
SZNV11-03
0.0
inc
1.0
SZNV11-04
0.0
inc
0.0
SZNV11-05
0.0
inc
2.0
3.4
9.3
9.3
6.1
4.3
3.3
3.3
3.4
9.3
8.3
6.1
4.3
3.3
1.3
4.0
27.5
2.5
2.1
34.1
2.4
2.3
37.6
2.5
0.1
0.1
2.0
7.6
1.4
10.3
0.2
0.5
20.1
4.0
1.2
44.9
8.6
0.7
0.9
SZNV11-06
0.0
17.2
17.2
0.1
5.0
11.4
0.7
SZNV11-07
0.0
3.8
3.8
0.0
1.2
8.9
SZNV11-08
0.0
7.1
7.1
3.8
18.7
9.6
0.5
0.6
SZNV11-09
0.0
30.7
30.7
0.9
70.2
13.5
0.7
0.0
0.0
0.1
0.1
0.1
0.1
0.0
0.1
0.1
0.0
0.0
0.0
0.1
0.1
0.0
0.0
0.1
0.2
0.1
0.1
1.2
0.7
1.9
0.2 g/t AuEq cut
6.3
1.0 g/t AuEq cut
4.5
0.2 g/t AuEq cut
1.9
1.0 g/t AuEq cut
7.7
1.0 g/t AuEq cut
3.0
3.2
10/g/t AuEq cut
1.0 g/t AuEq cut
0.8
1.0 g/t AuEq cut
3.7
1.0 g/t AuEq cut
4.0
0.2 g/t AuEq cut
5.0
1.0 g/t AuEq cut
2.5
1.0 g/t AuEq cut
2.4
0.2 g/t AuEq cut
2.6
1.0 g/t AuEq cut
7.6
0.2 g/t AuEq cut
10.3
1.0 g/t AuEq cut
4.1
8.7
0.2 g/t AuEq cut
1.0 g/t AuEq cut
11.5
0.2 g/t AuEq cut
8.9
0.2 g/t AuEq cut
10.1
0.2 g/t AuEq cut
13.8
0.2 g/t AuEq cut
SZNV11-10
0.0
3.1
3.1
0.4
55.8
14.8
0.5
0.2
14.9
0.2 g/t AuEq cut
76
Challenger Exploration Limited Annual Report Channel
From
Sample (#)
(m)
SZNV11-11
0.0
inc
0.0
To
(m)
4.6
3.6
Total
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Cu
(%)
4.6
3.6
0.3
9.1
12.6
1.0
0.3
11.2
15.9
1.3
SZNV11-12
0.0
12.0
12.0
8.3
28.9
1.4
0.1
Pb
(%)
0.2
0.2
0.1
Au Equiv
(g/t)
Comments
12.7
0.2 g/t AuEq cut
16.0
1.0 g/t AuEq cut
1.5
0.2 g/t AuEq cut
BCNV10-02
2.8
4.7
1.9
0.3
2.2
0.4
0.0
0.0
0.5
0.2 g/t AuEq cut
2 Gold Equivalent (AuEq) values – Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1780 Oz, Ag US$24 Oz, Zn US$2,800 /t
• Metallurgical recoveries for Au, Ag and Zn are estimated to be 89%, 84% and 79% respectively (see JORC Table 1
Section 3 Metallurgical assumptions) based on metallurgical test work.
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x (24/1780) x (0.84/0.89)] + [Zn (%) x (28.00*31.1/1780) x (0.79/0.89)]
• 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.
Aerial view drill rig in the Dona Justa Pit, Cerro Norte
77
Challenger Exploration Limited Annual Report Table 6: New intercepts reported.
Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GMDD041E 31.00
47.00
16.00
2.60
4.93
0.27
2.78
0.2 g/t AuEq cut
inc
and
and
and
41.70
43.70
2.00
19.96
28.52
1.21
20.85 1.0 g/t AuEq cut
63.50 68.60
5.10
7.86
83.32
7.86
12.33 1.0 g/t AuEq cut
306.10 307.70
1.60
8.05
9.19
3.59
9.72
1.0 g/t AuEq cut
338.40 343.00
4.60
0.09
1.65
0.45
0.31
0.2 g/t AuEq cut
GNDD179
76.00 84.00
8.00
0.12
4.53
0.47
0.38
0.2 g/t AuEq cut
GNDD206
31.55
42.00
10.45
3.6
6.3
0.06
3.7
0.2 g/t AuEq cut
inc
and
and
34.65
38.55
3.90
9.5
14.9
0.03
9.7
1.0 g/t AuEq cut
263.00 265.00
2.00
0.88
0.37
0.10
0.93
0.2 g/t AuEq cut
277.00 281.00
4.00
0.54
0.65
0.01
0.55
0.2 g/t AuEq cut
GNDD210
8.00
10.00
2.00
0.86
17.9
0.02
1.1
1.0 g/t AuEq cut
and
28.00 34.00
6.00
0.04
1.4
0.47
0.26
0.2 g/t AuEq cut
and
308.00 310.00
2.00
1.3
3.8
0.71
1.6
1.0 g/t AuEq cut
GNDD212
15.00
16.80
1.80
0.5
1.1
0.12
0.53
0.2 g/t AuEq cut
and
42.20 43.60
1.40
1.2
8.1
0.08
1.4
1.0 g/t AuEq cut
44.5
41.7
62.9
15.6
1.4
3.1
38.8
37.9
1.9
2.2
2.2
1.6
3.2
1.0
1.9
GNDD217
111.00 132.00 21.00
5.7
32.1
3.4
7.6
0.2 g/t AuEq cut
158.9
inc
inc
114.65 126.35
11.70
10.1
54.8
5.9
13.3
1.0 g/t AuEq cut
156.1
116.7
121.00
4.35
23.1
139
11.7
29.9
1.0 g/t AuEq cut
130.3
GNDD219
12.00 20.00
8.00
0.13
0.46
0.02
0.15
0.2 g/t AuEq cut
and
68.90 108.25
39.35
0.04
10.8
0.08
0.22
0.2 g/t AuEq cut
GNDD221
82.80 84.00
1.20
and
156.85 165.00
8.15
1.1
1.5
6.7
0.10
1.2
1.0 g/t AuEq cut
7.5
0.83
2.0
1.0 g/t AuEq cut
GNDD223
26.00 28.00
2.00
0.60
0.41
0.02
0.61
0.2 g/t AuEq cut
1.2
8.6
1.4
16.2
1.2
78
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GNDD227
81.00 83.00
2.00
0.77
0.52
0.0
0.78
0.2 g/t AuEq cut
and
179.15 182.85
3.70
1.2
16.8
1.6
2.1
0.2 g/t AuEq cut
inc
181.95 182.85
0.90
4.2
64.5
6.6
7.9
1.0 g/t AuEq cut
and
222.00 230.00
8.00
4.2
53.6
1.7
5.7
0.2 g/t AuEq cut
inc
223.40 230.00
6.60
5.1
64.2
2.1
6.8
1.0 g/t AuEq cut
GNDD240 114.00 116.00
2.00
1.4
0.31
0.01
1.5
1.0 g/t AuEq cut
and
167.00 170.45
3.45
2.7
50.2
2.9
4.6
0.2 g/t AuEq cut
inc
169.20 170.45
1.25
6.6
116.0
7.6
11.3
10 g/t AuEq cut
GNDD243 136.00 143.10
7.10
2.2
27.2
2.6
3.6
0.2 g/t AuEq cut
inc
inc
138.00 143.10
5.10
2.1
25.9
2.5
3.5
1.0 g/t AuEq cut
142.00 143.10
1.10
9.0
126.0
14.0
16.7
10 g/t AuEq cut
GNDD258 250.00 252.00
2.00
0.26
17.7
2.9
1.7
1.0 g/t AuEq cut
GNDD261
22.00 26.00
4.00
inc
22.00 22.50
0.50
1.1
7.5
5.2
0.56
1.4
0.2 g/t AuEq cut
17.6
4.2
9.6
1.0 g/t AuEq cut
GNDD264
70.00 72.40
2.40
0.16
6.1
1.0
0.66
0.2 g/t AuEq cut
inc
71.50
72.40
0.90
0.36
12.0
2.0
1.4
1.0 g/t AuEq cut
1.6
8.0
7.1
45.2
44.9
2.9
15.9
14.2
25.7
17.8
18.4
3.5
5.5
4.8
1.6
1.3
and
104.95 127.00 22.05
1.4
16.7
1.7
2.3
1.0 g/t AuEq cut
51.2
GNDD265
56.00 60.00
4.00
0.57
1.3
0.08
0.63
0.2 g/t AuEq cut
and
and
152.00 166.00 14.00
0.20
1.1
0.11
0.26
0.2 g/t AuEq cut
237.00 238.00
1.00
8.97
19.7
2.48
10.30 10 g/t AuEq cut
GNDD266
34.00 50.00
16.00
0.4
9.0
0.6
0.8
0.2 g/t AuEq cut
inc
38.82 44.00
5.18
0.9
23.1
1.6
1.9
1.0 g/t AuEq cut
GNDD269
6.00
12.00
6.00
1.1
12.2
0.1
1.3
0.2 g/t AuEq cut
inc
and
and
10.00
12.00
2.00
2.8
34.4
0.3
3.4
1.0 g/t AuEq cut
48.00 50.00
2.00
0.2
87.3
0.4
1.5
1.0 g/t AuEq cut
86.00 96.00
10.00
0.3
1.1
0.0
0.3
0.2 g/t AuEq cut
2.5
3.6
10.3
12.3
10.0
7.9
6.8
3.1
2.7
79
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GNDD272
35.00
57.00
22.00
0.17
2.7
0.1
0.25
0.2 g/t AuEq cut
5.4
and
96.50 148.10 51.60
3.9
11.8
1.0
4.5
0.2 g/t AuEq cut
232.5
inc
inc
137.00 148.10 11.10
17.4
51.1
4.5
20.0
1.0 g/t AuEq cut
222.3
139.00 146.90
7.90
23.8
65.2
6.0
27.2
10 g/t AuEq cut
215.2
GNDD273
31.50 34.00
2.50
0.61
3.6
inc
and
31.50
32.37
0.87
1.47
6.5
50.33
59.50
9.17
0.07
5.9
GNDD274 298.00 317.00 19.00
0.74
9.6
0.8
2.0
0.6
0.5
1.0
0.2 g/t AuEq cut
2.4
1.0 g/t AuEq cut
0.4
0.2 g/t AuEq cut
1.1
0.2 g/t AuEq cut
inc
305.00 307.00
2.00
6.58
48.8
3.5
8.7
1.0 g/t AuEq cut
GNDD276
49.00 50.45
1.45
0.76
9.1
0.48
1.1
1.0 g/t AuEq cut
and
and
112.15 115.00
2.85
0.38
0.57
0.02
0.39
0.2 g/t AuEq cut
139.00 153.90 14.90
0.47
1.9
0.18
0.57
0.2 g/t AuEq cut
inc
143.00 145.00
2.00
1.3
2.5
0.22
1.5
1.0 g/t AuEq cut
and
and
188.30 193.15
4.85
0.32
0.59
0.13
0.38
0.2 g/t AuEq cut
212.00 216.00
4.00
0.46
1.8
0.25
0.60
0.2 g/t AuEq cut
GNDD278 221.00 232.75
11.75
0.43
1.0
0.09
0.48
0.2 g/t AuEq cut
inc
inc
223.00 224.00
1.00
228.00 229.00
1.00
1.0
1.4
1.3
0.07
1.1
1.0 g/t AuEq cut
1.9
0.19
1.5
1.0 g/t AuEq cut
GNDD279
49.00 59.30
10.30
0.66
1.7
0.08
0.71
0.2 g/t AuEq cut
inc
inc
50.65
52.00
1.35
1.04
0.6
58.00 59.30
1.30
1.81
9.1
0.0
0.5
1.1
1.0 g/t AuEq cut
2.1
1.0 g/t AuEq cut
2.5
2.1
3.9
20.2
17.4
1.6
1.1
8.5
2.9
1.8
2.4
5.6
1.1
1.5
7.4
1.4
2.8
80
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GNDD281
42.50 66.00
23.50
1.1
8.9
0.27
1.3
0.2 g/t AuEq cut
inc
42.50 60.00
17.50
1.3
11.3
0.29
1.6
1.0 g/t AuEq cut
and
196.30 198.90
2.60
1.1
26.2
3.1
2.8
0.2 g/t AuEq cut
inc
196.30 197.95
1.65
1.4
37.7
4.7
4.0
1.0 g/t AuEq cut
and
224.00 236.00 12.00
0.28
4.9
0.37
0.51
0.2 g/t AuEq cut
inc
231.10 232.35
1.25
0.72
16.0
3.0
2.2
1.0 g/t AuEq cut
and
and
and
292.00 293.20
1.20
3.0
80.4
0.32
4.2
1.0 g/t AuEq cut
309.00 312.85
3.85
0.43
4.3
0.10
0.53
0.2 g/t AuEq cut
426.00 427.55
1.55
0.27
24.6
1.6
1.3
1.0 g/t AuEq cut
GNDD282
11.00
19.00
8.00
0.20
187.00 197.00 10.00
0.45
1.7
1.7
0.07
0.25
0.2 g/t AuEq cut
0.02
0.48
0.2 g/t AuEq cut
216.50 224.00
7.50
0.20
2.7
0.11
0.28
0.2 g/t AuEq cut
and
and
GNDD283
7.00
11.00
4.00
2.9
17.8
0.15
3.2
0.2 g/t AuEq cut
inc
8.50
9.70
1.20
9.4
49.7
0.26
10.1
10 g/t AuEq cut
GNDD286
95.00 101.00
6.00
0.22
1.5
0.27
0.36
0.2 g/t AuEq cut
and
and
inc
inc
112.10 115.90
3.80
0.38
0.57
0.02
0.40
0.2 g/t AuEq cut
169.00 179.20 10.20
4.2
52.5
3.0
6.2
0.2 g/t AuEq cut
169.00 176.45
7.45
5.8
71.4
4.0
8.4
1.0 g/t AuEq cut
174.25 176.45
2.20
11.5
170.5
11.1
18.5
10 g/t AuEq cut
30.5
27.8
7.2
6.6
6.1
2.8
5.0
2.0
2.0
2.0
4.8
2.1
12.8
12.2
2.2
1.5
63.4
62.8
40.7
GNDD288
13.00 109.00 96.00
1.8
2.9
0.31
2.0
0.2 g/t AuEq cut
194.0
inc
inc
65.00 109.00 44.00
3.7
4.6
0.63
4.1
1.0 g/t AuEq cut
178.8
98.20 102.50
4.30
27.6
35.4
5.9
30.6
10 g/t AuEq cut
131.7
and
216.00 220.50
4.50
3.3
31.2
4.0
5.4
0.2 g/t AuEq cut
inc
inc
217.76 219.66
1.90
7.6
68.7
8.7
12.2
1.0 g/t AuEq cut
218.55 219.66
1.11
11.7
101.0
12.5
18.4
10 g/t AuEq cut
24.2
23.2
20.4
and
399.00 426.80 27.80
5.5
12.9
3.9
7.3
0.2 g/t AuEq cut
203.7
inc
inc
403.00 407.00
4.00
1.3
2.1
0.62
1.6
1.0 g/t AuEq cut
6.4
410.00 424.20 14.20
10.1
20.6
7.3
13.6
1.0 g/t AuEq cut
192.7
81
Challenger Exploration Limited Annual Report Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
0.3
0.2 g/t AuEq cut
12.2
GNDD289
inc
inc
and
and
and
23
27
62.2
39.2
0.2
2.1
29
2
1.0
16.9
60.9
62.2
1.3
132
136
165
179
201
207
4
14
6
0.3
0.7
0.3
0.2
7.1
0.4
1.6
1.7
0.1
0.1
2.6
0.0
0.0
0.2
1.3
1.0 g/t AuEq cut
1.5
1.0 g/t AuEq cut
0.7
0.2 g/t AuEq cut
0.3
0.2 g/t AuEq cut
0.3
0.2 g/t AuEq cut
GNDD290
27.45
36.00
8.55
0.20
6.0
0.07
0.30
0.2 g/t AuEq cut
and
70.00 74.00
4.00
0.71
13.4
1.1
1.4
0.2 g/t AuEq cut
inc
70.00 72.00
2.00
1.0
16.1
2.0
2.1
1.0 g/t AuEq cut
and
139.50 151.16
11.66
0.31
12.1
0.82
0.82
0.2 g/t AuEq cut
inc
139.50 141.60
2.10
1.4
25.3
2.1
2.7
1.0 g/t AuEq cut
2.5
2.0
2.8
4.2
1.7
2.6
5.4
4.1
9.6
5.6
and
162.60 166.56
3.96
1.9
19.9
5.5
4.6
1.0 g/t AuEq cut
18.0
GNDD294
35.83
GNDD297
inc
and
16
20
71
45
30
22
9.17
14
2
0.3
0.5
4.1
5.1
0.2
0.0
0.4
0.2 g/t AuEq cut
0.5
0.2 g/t AuEq cut
1.4
21.6
0.0
1.7
1.0 g/t AuEq cut
74.6
3.6
0.1
34.0
0.0
0.6
0.2 g/t AuEq cut
3.9
7.7
3.3
2.0
See below for information regarding AuEq's reported under the JORC Code.
2 Gold Equivalent (AuEq) values – Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1780 Oz, Ag US$24 Oz, Zn US$2,800 /t
• Metallurgical recoveries for Au, Ag and Zn are estimated to be 89%, 84% and 79% respectively (see JORC Table 1
Section 3 Metallurgical assumptions) based on metallurgical test work.
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x (24/1780) x (0.84/0.89)] + [Zn (%) x (28.00*31.1/1780) x (0.79/0.89)]
• 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.
82
Challenger Exploration Limited Annual Report Core trays delivered by a community business
started with sponsorship from Challenger
83
Challenger Exploration Limited Annual Report Table 7: New intercepts reported at Sentazon.
Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GNDD201
99.00 102.00
3.00
0.48
7.9
0.17
0.66
0.2 g/t AuEq cut
and
130.20 130.80
0.60
1.4
2.6
0.07
1.5
1.0 g/t AuEq cut
2.0
0.9
GNDD205 214.20 214.90
0.70
15.2
7.1
4.2
17.1
1.0 g/t AuEq cut
12.0
GNDD209
33.60 38.00
4.40
0.18
14.2
0.08
0.40
0.2 g/t AuEq cut
and
and
and
45.65
46.40
0.75
0.77
10.7
1.4
1.5
1.0 g/t AuEq cut
65.00 82.10
17.10
1.9
16.2
1.1
2.6
1.0 g/t AuEq cut
148.00 150.00
2.00
1.0
28.5
0.01
1.3
1.0 g/t AuEq cut
GNDD214
48.25
52.00
3.75
22.11
125.3
2.6
24.8
1.0 g/t AuEq cut
GNDD232
139.85 142.35
2.50
0.65
15.2
0.56
1.1
0.2 g/t AuEq cut
GNDD239
13.00
19.00
6.00
0.25
1.8
0.10
0.31
0.2 g/t AuEq cut
and
and
inc
26.40
27.25
0.85
3.3
54.7
2.5
5.1
1.0 g/t AuEq cut
47.00
49.35
2.35
1.9
7.3
1.5
2.6
0.2 g/t AuEq cut
48.30 49.35
1.05
4.2
16.2
0.71
4.7
1.0 g/t AuEq cut
GNDD241
NSI
GNDD246 179.50 182.00
2.50
4.5
9.0
2.9
5.9
0.2 g/t AuEq cut
inc
179.50 180.35
0.85
12.7
25.0
7.8
16.4
1.0 g/t AuEq cut
GNDD250
80.00 110.00 30.00
0.26
3.5
0.17
0.38
0.2 g/t AuEq cut
inc
98.00 103.00
5.00
0.88
9.2
0.63
1.3
1.0 g/t AuEq cut
GNDD253
112.00 114.00
2.00
1.0
and
133.00 183.00 50.00
1.8
inc
inc
139.00 177.00 38.00
2.2
151.55 153.92
2.37
17.2
and
201.40 226.53 25.13
0.8
inc
inc
211.00 214.64
3.64
2.4
220.00 222.00
2.00
3.4
1.1
1.0
1.2
3.7
0.3
1.3
0.5
0.1
0.1
1.0
1.0 g/t AuEq cut
1.9
0.2 g/t AuEq cut
0.2
2.3
1.0 g/t AuEq cut
0.3
17.3
10 g/t AuEq cut
0.0
0.9
0.2 g/t AuEq cut
0.1
0.0
2.4
1.0 g/t AuEq cut
3.4
1.0 g/t AuEq cut
1.7
1.1
44.5
2.7
93.2
2.7
1.9
4.3
6.2
4.9
0.0
14.8
13.9
11.4
6.3
2.0
93.6
88.7
41.0
21.6
8.8
6.8
84
Challenger Exploration Limited Annual Report
Drill Hole
From
(#)
(m)
To
(m)
Interval
Gold
(m)
(g/t)
Ag
(g/t)
Zn
(%)
Au Eq
(g/t)
Comments
Total intercept
(gram metres)
GNDD296
59.00 72.00
13.00
0.31
5.0
0.10
0.42
0.2 g/t AuEq cut
70.00 72.00
2.00
1.7
21.5
0.09
2.0
1.0 g/t AuEq cut
173.00 183.00 10.00
0.39
1.6
1.2
0.95
1.0 g/t AuEq cut
193.00 209.90 16.90
14.1
18.3
5.8
16.9
1.0 g/t AuEq cut
285.0
194.20 201.30
7.10
28.1
36.1
8.3
32.2
1.0 g/t AuEq cut
228.8
207.05 209.90
2.85
13.1
13.0
12.6
18.8
1.0 g/t AuEq cut
GNDD299 141.00 142.00
1.00
1.1
9.5
0.88
1.6
1.0 g/t AuEq cut
and
147.50 157.35
9.85
3.4
44.0
5.25
6.2
1.0 g/t AuEq cut
GNDD-302
NSI
GNDD314 102.00 106.00
4.00
0.34
11.8
0.22
0.58
0.2 g/t AuEq cut
and
115.35 118.00
2.65
1.5
13.8
0.06
1.7
2 g/t AuEq cut
inc
116.59 118.00
1.41
2.4
21.3
0.08
2.7
1.0 g/t AuEq cut
205
210.50
5.50
1.6
25.1
4.6
4.0
1.0 g/t AuEq cut
216
222.50
6.50
0.51
9.6
2.4
1.7
2 g/t AuEq cut
217
222.50
5.50
0.56
10.5
2.7
1.9
1.0 g/t AuEq cut
284
286.00
2.00
0.83
0.2
0.01
0.84
2 g/t AuEq cut
296.9 299.65
2.75
59.0
25.8
7.2
62.5 10.0 g/t AuEq cut
171.8
5.5
4.1
9.5
53.5
1.6
61.4
0.0
2.3
4.5
3.8
21.8
11.0
10.3
1.7
inc
and
and
inc
inc
and
and
inc
and
and
See over the page for information regarding AuEq's reported under the JORC Code.
2 Gold Equivalent (AuEq) values – Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1780 Oz, Ag US$24 Oz, Zn US$2,800 /t
• Metallurgical recoveries for Au, Ag and Zn are estimated to be 89%, 84% and 79% respectively (see
JORC Table 1 Section 3 Metallurgical assumptions) based on metallurgical test work.
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x (24/1780) x (0.84/0.89)] + [Zn (%) x
(28.00*31.1/1780) x (0.79/0.89)]
• 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.
85
Challenger Exploration Limited Annual Report
Foreign Resource Estimate Hualilan Project
La Mancha Resources 2003 foreign resource estimate for the Hualilan Project ^
Category
Measured
Indicated
Total of Measured & Indicated
Inferred
Total of Measured,
Indicated & Inferred
Tonnes (kt)
Gold Grade (g/t)
Contained Gold (koz)
218
226
445
977
1,421
14.2
14.6
14.4
13.4
13.7
100
106
206
421
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
86
Hualilan core processing facility at night
Challenger Exploration Limited Annual Report
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.
Competent Person Statement
– Exploration Results and
Exploration Target
The information that relates to sampling
techniques and data, exploration results and
geological interpretation and Exploration
Targets 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.
Competent Person Statement –
Foreign Resource Estimate
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
Mineral Resources has been compiled by 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 and has sufficient experience
which is relevant to the style of mineralization
and type of deposits under consideration to
qualify as Competent Person as defined in the
2012 Edition of the JORC Code for Reporting
of, Mineral Resources and Ore Reserves.
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.
87
Challenger Exploration Limited Annual Report Events Subsequent
to Balance Date
During July and August 2021, 34,675,001 options with an expiry date of 30 June 2022 were
exercised at 4 cents per share, raising $1,387,000. On 16 July 2021 and 5 August 2021, the
Company repaid $1,200,000 and $180,000 respectively of the Riverfort Facility from the
proceeds of the exercise of the options.
On 3 September 2021, shareholders approved the 100% acquisition of the Hualilan Project
in Argentina and the amendment to purchase 100% of the El Guayabo Project in Ecuador.
Subsequently the Company issued 114,000,000 ordinary shares for the acquisition of the
Hualilan Gold Project and 18,000,000 ordinary shares for the consideration of the El Guayabo
Gold Copper Project.
The impact of the Coronavirus (COVID-19) pandemic is ongoing, and while there has been no
material impact financially for the Group up to 30 June 2021, it is not practicable to estimate the
potential impact, positive or negative, after the reporting date. The situation is rapidly developing
and is dependent on measures imposed by the Australian Government and other countries, such
as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
Results of Operations
The net profit or (loss) after tax for the
financial year ended 30 June 2021 for the
Group was $2,619,506 (2020: ($1,735,299).
Dividends
The Directors do not recommend the
payment of a dividend and no amount
has been paid or declared by way of a
dividend to the date of this report.
Significant Changes
in State of Affairs
There have been no significant changes
in the state of affairs of the Group during
the financial year and up to the date of this
report, other than as set out in this report.
Likely Developments
and Expected Results
Likely developments in the operations of
the Group are set out in the above review of
operations in this annual financial report. Any
future prospects are dependent upon the
results of future exploration and evaluation.
Environmental Regulations
The Group carries or carried out operations
that are subject to environmental regulations
under legislation in Ecuador and Argentina.
The Group has formal procedures in place
to ensure regulations are adhered to. The
Group is not aware of any breaches in
relation to environmental matters.
88
Challenger Exploration Limited Annual Report “
shareholders
approved
the 100%
acquisition of
the Hualilan
Project in
Argentina”
89
Challenger Exploration Limited Annual Report “
Challenger
is in a strong
financial
position,
with cash at
bank of $36m”
90
Challenger Exploration Limited Annual Report COVID-19
The Company continues to work with all
levels of government and local communities
in relation to COVID-19. In addition to its
regular community support activities during
COVID-19, which include the donation
of fortnightly food packs to the 100 most
needy families in its local community
in around the El Guayabo Project, the
Company completed the donation for four
oxygen bottles and four intensive care beds
to the Santa Rosa community hospital at the
request of the local mayor.
During the year there were 7 cases of
COVID-19 at the Company’s projects; three
drill contractors at Hualilan and 4 staff in
Ecuador; all of who have fully recovered
and are back working. All of the company’s
employees from Ecuador are now
vaccinated for 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.
Challenger is in a strong financial position,
with cash at bank of $36m, following a
successful capital raising of $42.1m in
May 2021. The Company completed the
placement to sophisticated, professional and
institutional investors at an issue price of
A$0.28 per share. The Placement was strongly
supported by domestic and international
institutions, both new and existing, and
as part of the placement CEL welcomed
BlackRock, the largest resource investor in
the world, as a substantial shareholder with a
$20m investment.
Under a funding agreement RiverFort Global
Capital Ltd, a London based UK Institutional
Investment Manager focusing on high-growth
companies, has advanced the Company
$3.5 million which will be repaid from the
proceeds of Options, with the Options due to
be exercised on or before 30 June 2022 and
other cash reserves.
The Placement funds will be applied to;
• 100,000m drill program (resource)
and 20,000m drill program (regional
exploration) which has seen three new rigs
added to the five rigs on site with a ninth
rig due to arrive shortly;
• Scoping & Pre-Feasibility Study;
• Geological/Geophysical/Heritage Studies
ahead of DFS; and
• An additional 10,000m in the Company’s
maiden drill program at the El Guayabo
Project in Ecuador.
91
Challenger Exploration Limited Annual Report Remuneration
Report
Remuneration Policy
The remuneration policy of the Group has been designed to align
Director objectives with shareholder and business objectives by
providing a fixed remuneration component that is assessed on an
annual basis in line with market rates.
The Board of Challenger Exploration believes the remuneration policy to be appropriate and
effective in its ability to attract and retain the best directors to run and manage the Company,
as well as create goal congruence between directors and shareholders. The remuneration
policy, setting the terms and conditions for executive and non-executive directors and other
senior staff members, was developed and approved by the Board.
The Board’s policy for determining the nature and amount of remuneration for board
members is as follows:
In determining competitive remuneration
rates, the Board considers local and
international trends among comparative
companies and the industry generally so that
executive remuneration is in line with market
practice and is reasonable in the context of
Australian executive reward practices.
All executives receive a base salary (which
is based on factors such as length of service
and experience), superannuation, and may
be issued options or performance shares
from time to time.
The Group is currently an exploration
entity, and therefore speculative in terms
of performance. Consistent with attracting
and retaining talented executives, Executive
Directors and Senior Executives are paid
market rates associated with individuals in
similar positions within the same industry.
Options and other performance incentives
may be issued particularly if the Group
moves from exploration towards a producing
entity and key performance indicators such
as market capitalisation and production
and reserves growth can be used as
measurements for assessing executive
performance.
All remuneration paid to Executive Directors
and Senior Executives is valued at the cost
to the Company and expensed. Options and
other performance rights are valued using
the Black-Scholes methodology, which
takes account of factors such as the option
exercise price, the current level and volatility
of the underlying share price and the time to
maturity of the option.
92
Challenger Exploration Limited Annual Report Although a value is ascribed and included in
total remuneration, it should be noted that
the Executive Directors and Senior Executives
have not received this amount and the option
may have no actual financial value unless the
options achieve their exercise price.
The Board policy is to remunerate non-
executive Directors at market rates for
comparable companies for time, commitment
and responsibilities. The Board determines
payments to the non-executive Directors and
reviews their remuneration annually, based
on market practice, duties and accountability.
The maximum aggregate amount of fees
that can be paid to non-executive Directors
is subject to approval by shareholders at the
Annual General Meeting.
Fees for non-executive Directors are not
linked to the performance of the Company,
and they do not receive performance shares
or options, however, to align non-executive
Directors’ interests with shareholder interests,
the Directors are encouraged to hold shares
in the Company.
The Company may engage remuneration
consultants from time to time. The Company
will ensure any recommendation from a
remuneration consultant will be made free
from undue influence from any members of
Key Management Personnel. The Company
did not engage remuneration consultants for
the year ended 30 June 2021.
93
Challenger Exploration Limited Annual Report Key Management
Personnel
(a) Details of Key Management Personnel
Fletcher Quinn
Non-Executive Chairman
Kris Knauer
Managing Director
Scott Funston
Executive Director
Directors’ remuneration and other terms of employment are reviewed annually by the
Directors having regard to relative comparative information.
Except as detailed in Notes (b) – (d) below, no Director has received or become entitled
to receive, during or since the financial year, a benefit because of a contract made by
the Company or a related body corporate with a director, a firm of which a director is a
member or an entity in which a director has a substantial financial interest
94
Challenger Exploration Limited Annual Report (b) Compensation of Key Management Personnel
Remuneration Policy
The Board of Directors is responsible for determining and reviewing compensation arrangements
for the executive team. The Board will assess the appropriateness of the nature and amount
of emoluments of such officers on a periodic basis by reference to relevant employment
market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high-quality Board and executive team. Remuneration of Key Management
Personnel is set out below.
The value of remuneration received or receivable by Key Management Personnel for the financial
year ended 30 June 2021 is as follows:
2021
Primary
Equity
Compensation
Post-employment
Performance
Related %
Base Salary
and Fees
Bonus and
Non Monetary
Benefits(a)
Value of
Performance
Rights
Superannuation
Contributions
Termination
Benefits
Total
$
$
Directors
Fletcher Quinn
30,000
30,000
Kris Knauer
147,500
147,500
$
-
-
Scott Funston(b)
122,500
122,500
156,516
Total 2021
300,000
300,000
156,516
$
-
-
-
-
$
-
-
-
-
$
60,000
295,000
401,516
38.98
756,516
20.69
(a) Mr Quinn, Mr Knauer and Mr Funston received shareholder approval on 23 November 2020 to receive ordinary
shares in lieu of cash consideration for services for the period 1 July 2020 to 31 December 2020 as described in
the Explantory Statement of the Notice of Annual General Meeting dated 21 October 2020.
(b) The value attributable to Mr Funstons performance rights relate to those rights issued during the previous
financial year which are being brought to account over the vesting period.
95
Challenger Exploration Limited Annual Report 2020
Primary
Equity
Compensation
Post-employment
Performance
Related %
Base Salary
and Fees
Bonus and
Non Monetary
Benefits(a)
Value of
Performance
Rights
Superannuation
Contributions
Termination
Benefits
Total
$
Fletcher Quinn(a)
43,000
Kris Knauer(a)
268,296
$
-
-
$
-
-
Scott Funston(a)(c)
211,250
37,500(d)
154,815(e)
Michael Fry(b)
Robert Willes(b)
-
-
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
43,000
268,296
-
-
403,565
38.36
-
-
-
-
Total 2020
522,546
37,500
154,815
714,861
21.65
(a) Mr Quinn, Mr Knauer and Mr Funston were appointed 4 July 2019
(b) Mr Fry, Mr Willes and Mr Carey resigned 4 July 2019
(c) Mr Willes remains a consultant to the Company, however, is no longer a member of Key Management Personnel
(d) Mr Funston received shareholder approval on 28 November 2019 to receive 937,500 ordinary shares in lieu of
cash consideration for services on the reverse acquisition that closed on 4 July 2019.
(e) Performance rights have been valued based on the company share price on date of issue and the value is
brought to account over the vesting period.
(c) Compensation Options
No options were granted to Key Management Personnel of the Group during the year.
There have been no alterations to the terms and conditions of options granted as remuneration
since their grant date.
96
Challenger Exploration Limited Annual Report (d) Share, Option and Performance Rights holdings
Options and Performance Rights may be issued to Key Management Personnel as part of their
remuneration. The Options and Performance Rights are issued to increase goal congruence
between Executives, Executive Directors and Shareholders. Options and Performance Rights are
not issued to Non-Executive Directors.
During the 2020 financial year Mr Funston received 5,000,000 Class A Performance Rights and
5,000,000 Class B Performance Rights following shareholder approval on 28 November 2019.
Class A Performance Rights have the following vesting conditions:
A JORC Compliant Mineral Resource Estimate of at least Inferred category on either Project of
the following:
i. 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
ii. 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
iii. 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 Performance Rights will vest on the completion and announcement by Challenger
(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 the Hualilan Project or the El Guayabo 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.
97
Challenger Exploration Limited Annual Report (e) Employment Contracts of Key Management Personnel
The Managing Director Mr Kris Knauer entered into an agreement on 5 July 2021 pursuant to
which Mr Knauer was continued as Managing Director of the Company. The material terms
and conditions of the agreement are set out below:
(a) (Commencement Date): 5 July 2021.
(b) (Term): Two (2) years from the Commencement Date or until validly terminated.
(c) (Remuneration): Mr Knauer receives a base salary of $295,000 per annum (including
superannuation).
(d) (Incentives): Mr Knauer is eligible to receive Securities under the Company’s Incentive
Option Plan and Performance Rights Plan.
(e) (Accrued Entitlements): All entitlements that have accrued to Mr Knauer prior to the date
of this agreement will be honoured by the Company.
(f) (Termination): The Company may terminate the agreement by providing six (6) months’
written notice.
(g) (Expenses): Mr Knauer is entitled to reimbursement for all reasonable travelling expenses,
accommodation and general expenses incurred in the performance of his duties under
the agreement.
98
Challenger Exploration Limited Annual Report The Finance Director, CFO and Company Secretary, Mr Scott Funston entered into an
agreement on 5 July 2021, pursuant to which Mr Funston continued as Company Secretary,
Chief Financial Officer and Finance Director of the Company.
The material terms and conditions of the agreement are set out below:
(a) (Position): Company Secretary, Chief Financial Officer and Finance Director
(b) (Commencement Date): 5 July 2021.
(a) (Term): Two (2) years from the Commencement Date or until validly terminated.
(c) (Remuneration): Mr Funston receives a base salary of $245,000 per annum (including
superannuation).
(d) (Incentives): Mr Funston is eligible to receive Securities under the Company’s Incentive
Option Plan and Performance Rights Plan.
(e) (Accrued Entitlements): All entitlements that have accrued to Mr Funston prior to the date
of this agreement will be honoured by the Company.
(f) (Termination): The agreement may be terminated by either party by providing three (3)
months written notice.
(g) (Expenses): Mr Funston is entitled to reimbursement for all reasonable travelling
expenses, accommodation and general expenses incurred in the performance of his
duties under the agreement.
99
Challenger Exploration Limited Annual Report (f) Shares held by Key Management Personnel
Balance
at 1.7.20
Shares
Purchased
Net Change
Other
Balance
at 30.06.21
Directors
Fletcher Quinn
23,328,637
750,000
Kris Knauer(a)
42,195,332
1,229,167
Scott Funston(a)
4,804,167
356,250
70,328,136
2,335,417
-
-
-
-
24,078,637
43,424,499
5,160,417
72,663,553
(a) Subsequent to the financial year and up to the date of this report, Mr Knauer received 8,854,167 and Mr Funston
received 2,000,000 ordinary shares upon exercising 8,854,167 and 2,000,000 $0.04 unlisted options with an
expiry date of 30 June 2022.
No other shares were issued by the Company during or since the financial year ended 30
June 2021 as a result of the exercise of an option or conversion of a performance right.
(g) Options held by Key Management Personnel
Balance
at 1.7.20
Shares
Purchased
Net Change
Other
Balance
at 30.06.21
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
-
Kris Knauer(a)
8,854,167
Scott Funston(a)
2,000,000
10,854,167
-
-
-
-
-
-
-
-
-
-
8,854,167
8,854,167
5,160,417
2,000,000
72,663,553
10,854,167
-
-
-
-
(a) Subsequent to the financial year and up to the date of this report, Mr Knauer received 8,854,167 and Mr Funston
received 2,000,000 ordinary shares upon exercising 8,854,167 and 2,000,000 $0.04 unlisted options with an
expiry date of 30 June 2022.
100
Challenger Exploration Limited Annual Report (h) Performance Shares held by Key Management Personnel
Balance
at 1.7.20
Shares
Purchased
Net Change
Other
Balance
at 30.06.21
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
-
Kris Knauer(a)
37,000,000
Scott Funston
-
37,000,000
-
-
-
-
-
-
-
-
-
37,000,000
-
37,000,000
-
-
-
-
-
-
-
-
(a) Mr Knauer was issued performance shares in Challenger. They consist of 18,500,000 Performance A Shares and
18,500,000 Performance B Shares. Details of Performance Shares are disclosed in Note 14 of the financial report.
(i) Performance Rights held by Key Management Personnel
Balance
at 1.7.20
Shares
Purchased
Net Change
Other
Balance
at 30.06.21
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
Kris Knauer
-
-
Scott Funston(a)
10,000,000
10,000,000
-
-
-
-
-
-
-
-
-
-
10,000,000
10,000,000
-
-
-
-
-
-
-
-
(a) Please refer to (b) Compensation of Key Management Personnel, above for the value of performance rights
issued to Mr Funston during the previous financial year.
101
Challenger Exploration Limited Annual Report (j) Other Transactions with Key Management Personnel
Mr Quinn is a director of Seco Resource Finance Pty Ltd. Seco has provided his services as
Chairman to a value of $60,000 (2020: $43,000) to Challenger during the year on normal
commercial terms. This amount is included in the Remuneration Report section of the
Directors’ Report. $5,000 (2020: $20,000) was outstanding at year end.
Mr Knauer is a director of Greenfield Securities Pty Ltd. Greenfield has provided his services
as Managing Director and CEO to a value of $295,000 (2020: $268,296) to Challenger during
the year on normal commercial terms. This amount is included in the Remuneration Report
section of the Directors’ Report. $24,583 (2020: $98,333) was outstanding at year end.
Mr Funston is a director of Resourceful International Consulting Pty Ltd. Resourceful has
provided his services as Director, Company Secretary and CFO to a value of $245,000
(2020: $211,250) to Challenger during the year on normal commercial terms. This amount
is included in the Remuneration Report section of the Directors Report. $20,417 (2020:
$36,250) was outstanding at year end.
(k) Amounts owing to Key Management Personnel
A total of $50,000 was outstanding to Key Management Personnel as at 30 June 2021
(2020:$154,583), as noted above.
End of Remuneration Report
102
Challenger Exploration Limited Annual Report Channel sampling main Cerro Norte Decline
103
Challenger Exploration Limited Annual Report Options
At the date of this report, 61,969,443 unlisted options over new ordinary shares in the
Company were on issue:
Type
Date of Expiry
Exercise Price
Number Under Option
Unlisted
30 June 2022
$0.04
51,969,443
Unlisted(a)
14 April 2025
$0.40 or $0.45
10,000,000
(a) The exercise price of each option is $0.40 on or before 14 July 2022 and $0.45 thereafter.
No ordinary shares were issued upon the exercise of options during the financial year ended
30 June 2021. Since the end of the financial year ended 30 June 2021 up to the date of this
report, 34,675,001 ordinary shares were issued upon the exercise of options.
Performance Shares
At the date of this report, 120,000,000 Performance Shares over new ordinary shares in the
Company were on issue:
Type
Number
Performance A
60,000,000
Performance B
60,000,000
Performance A Rights have the following vesting conditions:
Vesting conditions of these rights are out in the Remuneration Report above.
104
Challenger Exploration Limited Annual Report Performance Rights
At the date of this report, 16,000,000 Performance Rights over new ordinary shares in the
Company were on issue:
Type
Number
Class A
8,000,000
Class B
8,000,000
Class A Performance Rights have the following vesting conditions:
A JORC Compliant Mineral Resource Estimate of at least Inferred category on either Project of
the following:
i. 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
ii. 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
iii. 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 Performance Rights will vest on the completion and announcement by Challenger
(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 the Hualilan Project or the El Guayabo 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.
105
Challenger Exploration Limited Annual Report Incentive Performance Rights
At the date of this report, 477,406 Incentive Performance Rights over new ordinary shares in the
Company were on issue:
Type
Number
Incentive
Performance Rights
477,406
Incentive Performance Rights have the following vesting condition:
The holder must remain employed or engaged by the Company for a minimum period of
twelve months from 28 November 2019.
4,772,594 ordinary shares were issued upon the vesting of performance rights or performance
shares during the financial year ended 30 June 2021. No ordinary shares were issued upon the
vesting of performance rights or performance shares since the end of the financial year ended
30 June 2021.
Indemnification And Insurance Of Directors And Officers
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001,
every officer, auditor or agent of the Group shall be indemnified out of the property of the
Group against any liability incurred by them in their capacity as an officer, auditor or agent of the
Group or any related corporation in respect of any act or omission whatsoever and howsoever
occurring or in defending any proceedings, whether civil or criminal.
The Company paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance
contracts for current officers of the Company, including officers of the Company’s controlled
entities. The liabilities insured are damages and legal costs that may be incurred in defending civil
or criminal proceedings that may be brought against the officers in their capacity as officers of
entities in the Group. The total amount of insurance premiums paid has not been disclosed due
to confidentiality reasons.
106
Challenger Exploration Limited Annual Report Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Group
or intervene in any proceedings to which the Group is a party for the purpose of taking
responsibility on behalf of the Group for all or any part of those proceedings. The Group was not
a party to any such proceedings during the year.
Auditor’s Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide
the Directors of the Company with an independence declaration in relation to the audit of the
financial report.
The lead auditor’s independence declaration is set out on page 113 and forms part of the
Directors’ Report for the year ended 30 June 2021.
Non-Audit Services
HLB Barnett Chown (South Africa), an overseas affiliated HLB firm, provided statutory compliance
non-audit services of $3,848 during the year ended 30 June 2021 (2020: $Nil).
HLB Mann Judd (WA Partnership) did not provide any non-audit services during the financial year.
This report is made in accordance with a resolution of the Directors.
Kris Knauer
Managing Director
20 September 2021
107
Challenger Exploration Limited Annual Report Sustainability
Report
“
Sustainability:
development
that meets the
needs of the
present without
compromising the
ability of future
generations to
meet theirs”
Report of the World Commission on environment
and Development: Our Common Future 1987
t
r
o
p
e
R
l
a
u
n
n
A
d
e
t
i
i
m
L
n
o
i
t
a
r
o
l
p
x
E
r
e
g
n
e
l
l
a
h
C
108
Challenger Exploration recognises that sustainability isn’t just
about company performance, there is an interconnectivity and an
obligation to integrate the creation of value through all stakeholders;
shareholders, communities, suppliers, government organisations and
employees. Sustainability and stakeholder value creation is a core
component of the Company’s Corporate Social Responsibility strategy.
Environment – Impact and Performance
During the year, the Company has focused on its environmental footprint with respect to
remediation work for historical activities undertaken by previous operators, and our likely future
work that has a positive impact on the livelihoods of our host communities.
Challenger made significant contributions in the area of the treatment of drinking water that
supplied local communities. This resulted in activities that secured safe drinking water to a large
number of families that would otherwise have been exposed to contaminated water.
Some of the highlights of our Environmental program included:
176,000,000 Litres of water treated by the Company
at the El Guayabo Project, Ecuador.
Historical artisanal mining activities at El Guayabo meant contaminated run-off and acid mine
drainage resulted in major environmental impact. Since acquiring the project, Challenger
implemented a special purpose water treatment plant that directly addressed these issues
which now sees all water used for mining operations safely treated prior to being recycled
into the local network.
25 Archaeological Sites preserved at the Hualilan Gold project.
130 Metres of bores drilled to supply safe drinking water to over 2,000 families
in local communities.
C
h
a
l
l
e
n
g
e
r
E
x
p
l
o
r
a
t
i
o
n
L
m
i
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
109
Social – People and Culture, And Community Engagement
Challenger Exploration has worked hard become a trusted and valued part of the local
communities that it operates in across its Argentina and Ecuador based projects. The Company
is successfully executing on its operating plan by aligning early with local communities to earn its
social licence to operate for the longer term.
Jobs
Community Engagement
364 Direct and in-direct jobs
created in Argentina & Ecuador
6 New local businesses created as a
direct result of Challenger’s presence
which in turn generated 108 new jobs
30 Geology Students now in full
time employment who received
work experience at Hualilan under a
partnership with the San Juan School
of Mines
85% Locals employed with a 95%
retention rate
1,145 Emergency food packs donated
to needy families in the El Guayabo and
Hualilan local communities during the
pandemic
5 New intensive care beds and 5
respirators donated to the local hospital
near El Guayabo
300 COVID-19 care packs distributed
among local communities
759 Children who received Christmas
gift packs in local communities
surrounding El Guayabo and Hualilan
The San Juan Mining Ministry confirms that Challenger Exploration is
the only exploration company operating in San Juan that meets the
government’s +85% local employment quota
110
Challenger Exploration Limited Annual Report Governance – Commitment
Challenger Exploration Limited is committed to be a good corporate citizen operating with
honesty, integrity and in a professional and respectful manner at all times in accordance with
applicable laws.
During the year, the Company updated and introduced new policies, including:
• Anti-Bribery and Corruption Policy
which forms part of a defined risk management and control framework;
• Continuous Disclosure and Communications Policy
Updated to ensure the highest standards are maintained in complying with the ASX
Continuous Disclosure rules; and
• Whistle-Blower Policy
Introduced to provide full protection to any staff reporting on breaches of these policies.
Additionally, every member of the Board of Directors and Senior management are significant
shareholders, and are therefore fully aligned with all Company shareholders’ interests, which
extends to community, supply chain, and end-user customer stakeholders.
C
h
a
l
l
e
n
g
e
r
E
x
p
l
o
r
a
t
i
o
n
L
m
i
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
111
112
Challenger Exploration Limited Annual Report Auditor’s
Independence
Declaration
As lead auditor for the audit of the consolidated financial report of Challenger
Exploration Limited for the year ended 30 June 2021, I declare that to the best
of my knowledge and belief, there have been no contraventions of:
a. the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b. any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
20 September 2021
B G McVeigh
Partner
113
Challenger Exploration Limited Annual Report Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2021
Consolidated
2021
$
Consolidated
2020
$
Other income
Accounting and audit fees
Consultants’ and directors’ fees
Legal and compliance
Investor relations, conferences, and corporate advice
Employee expenses
Travel expenses
Public company and administration expenses
Share based payments
Depreciation
Foreign exchange (losses) / gains
Loan facility expenses
Other
2
6,320,981
(46,764)
(761,016)
(162,445)
(213,718)
(46,593)
(6,594)
(802,689)
(1,234,925)
(30,878)
(88,790)
(303,589)
(3,474)
348,258
(63,506)
(666,948)
(141,721)
(270,804)
(24,421)
(228,827)
(230,777)
(511,695)
(4,785)
14,923
-
(2,021)
Profit / (Loss) before income tax
2,619,506
(1,782,324)
Income tax expense
3
(2,021,243)
47,025
Net profit / (loss) for the year
598,263
1,735,299
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Income tax on other comprehensive income / (loss)
(1,810,211)
(326,109)
Other comprehensive loss for the year
(1,810,211)
(326,109)
Total comprehensive income / (loss) for the year
(1,211,948)
(2,061,408)
Basic earnings/ (loss) per share
Diluted earnings / (loss) per share
20
20
0.09
0.08
114
The accompanying notes form part of these financial statements.
Challenger Exploration Limited Annual Report Consolidated Statement
of Financial Position
As at 30 June 2021
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total Current Assets
Non-Current Assets
Other receivables
Deferred exploration and evaluation expenditure
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Deferred Tax Liability
Loan Facility
Total Non-Current Liabiities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Consolidated
2021
$
Consolidated
2020
$
47,490,314
3,801,292
309,910
14,145
115,536
43,515
47,814,369
3,960,343
2,851,222
29,497,231
314,686
32,663,139
80,477,508
1,736,543
47,004
1,783,547
2,021,243
3,500,000
5,521,243
7,304,790
316,276
11,653,007
46,337
12,015,620
15,975,963
1,157,129
24,990
1,182,119
-
-
-
1,182,119
73,172,718
14,793,844
80,631,294
(486,566)
(6,972,010)
22,177,747
186,370
(7,570,273)
4
5
6
5
7
8
9
10
3
11
12
13
Total Equity
73,172,718
14,793,844
The accompanying notes form part of these financial statements.
115
Challenger Exploration Limited Annual Report Consolidated Statement
of Changes in Equity
For the year ended 30 June 2021
Issued
Capital
$
Accumulated
Losses
$
Share Based
Payment
Reserve
$
Foreign
Exchange
Reserves
$
Option
Reserves
$
Total
$
22,177,747
(7,570,273)
511,695
(326,109)
784
14,793,844
Consolidated
2021
Balance at
1 July 2020
Profit for the year
Other comprehensive
loss
Total comprehensive
income for the year
Balance at
30 June 2021
Balance at
1 July 2019
Loss for the year
Other comprehensive
loss
Total comprehensive
loss for the year
–
–
–
598,263
–
598,263
Issue of share capital
62,140,000
Issue of shares in lieu
of salary
620,464
Share based payments
97,650
Shares issued on
conversion employee
rights
477
Share issue costs
(4,405,044)
–
–
–
–
–
–
–
–
–
–
1,137,275
–
–
–
(1,810,211)
(1,810,211)
–
–
–
–
–
–
–
–
598,263
(1,810,211)
1,211,949
– 62,140,000
–
–
–
620,464
1,234,925
477
– (4,405,044)
80,631,294
(6,972,010)
1,648,970
(2,136,320)
784
73,172,718
13,000,904
(5,834,974)
511,695
(326,109)
784
7,166,714
–
–
(1,735,299)
–
–
(1,735,299)
Issue of share capital
6,639,500
Issue of deferred
consideration shares
2,826,667
Share based payments
–
Shares issued on
conversion of options
40,000
Share issue costs
(329,324)
–
–
–
–
–
–
–
–
–
–
511,695
–
–
–
(326,109)
–
–
(1,735,299)
(326,109)
(326,109)
– (2,061,408)
–
–
–
–
–
–
–
–
–
–
6,639,500
2,826,667
511,695
40,000
(329,324)
Balance at
30 June 2020
22,177,747
(7,570,273)
511,695
(326,109)
784
14,793,844
116
The accompanying notes form part of these financial statements.
Challenger Exploration Limited Annual Report Consolidated Statement
of Cash Flows
For the year ended 30 June 2021
Consolidated
2021
$
Consolidated
2020
$
Cash flows from operating activities
Payments to suppliers and employees
(1,709,038)
(1,343,043)
Other income
Interest received
6,317,507
3,474
342,799
3,249
Net cash from (used in) operating activities
4
4,611,943
(996,995)
Cash flows from investing activities
Expenditure on exploration
(21,278,602)
(5,543,857)
Expenditure on property, plant, and equipment
(322,751)
(47,558)
Net cash used in investing activities
(21,601,353)
(5,591,415)
Cash flows from financing activities
Loans received
Repayment of loans
Proceeds from share issue
Costs of loan facility
Share issue costs
11
3,500,000
–
–
(467,780)
62,140,477
6,540,500
(280,000)
–
(4,593,255)
(741,876)
Net cash provided by financing activities
60,767,222
5,330,844
Net increase / (decrease) in cash and cash equivalents
43,777,812
(1,257,566)
Cash and cash equivalents at beginning of the year
3,801,292
5,043,935
Effect of movements in exchange rates on cash held
(88,790)
14,923
Cash and cash equivalents at end of year
4
47,490,314
3,801,292
The accompanying notes form part of these financial statements.
117
Challenger Exploration Limited Annual Report Notes to The Financial Statements
for the Year Ended 30 June 2021
1.
Statement of Significant Accounting Policies
a. Basis of preparation
Challenger Exploration Limited is a for-profit listed public company limited by shares
that is incorporated and domiciled in Australia. The Group has operations in Ecuador
and Argentina and its principal activities are exploration for gold and copper.
The financial report is a general purpose financial report, which has been prepared
in accordance with the Corporations Act 2001, Accounting Standards and
Interpretations, and complies with other requirements of the law.
The financial information has been prepared on the accruals basis and is based on
historical costs and does not take into account changing money values. Cost is
based on the fair values of the consideration given in exchange for assets.
The financial report is presented in Australian dollars.
The financial report was authorised for issue on the date of the signing of the
Directors’ Declaration.
The financial report complies with Australian Accounting Standards, which include
Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report, comprising the financial
statements and notes thereto, complies with International Financial Reporting
Standards (IFRS).
The following is a summary of the accounting policies adopted by the Group in the
preparation of the financial report. The accounting policies have been consistently
applied unless otherwise stated.
b. Adoption of new and revised standards
Standards and Interpretations applicable to 30 June 2021
In the year ended 30 June 2021, the Directors have adopted all of the new and
revised Standards and Interpretations issued by the AASB that are relevant to the
Group and effective for the current annual reporting period. As a result of this
review the Group has not identified any changes that need to be applied.
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all Standards and Interpretations in issue not yet
adopted for the year ended 30 June 2021. As a result of this review the Directors
have determined that there is no material impact of the new and revised Standards
and Interpretations on the Group and, therefore, no change is necessary to the
Group’s accounting policies.
118
Challenger Exploration Limited Annual Report c. Basis of Consolidation
The consolidated financial statements comprise of the separate financial statements
of Challenger Exploration Limited (“Company” or “Parent”) and its subsidiaries as at
30 June each year (the “Group”). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
The financial statements of the subsidiaries are prepared for the same reporting
period as the Parent, using consistent accounting policies.
All intercompany balances and transactions, income and expenses, and profits and
losses from intra-group transactions are eliminated in full on consolidation.
Subsidiaries are fully consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is transferred
out of the Group. Control exists where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing when the Group controls another entity.
Business combinations have been accounted for using the acquisition method of
accounting. Investments in subsidiaries are accounted for at cost in the separate
financial statements of the parent entity less any impairment charges. Dividends
received from subsidiaries are recorded as a component of other revenues in the
separate statement of profit or loss and other comprehensive income of the parent
entity, and do not impact the cost of the investment. Upon receipt of dividend
payments from subsidiaries, the parent will assess whether any indicators of
impairment of the carrying value of the investment in the subsidiary exist. Where
such indicators exist, to the extent that the carrying value of the investment exceeds
its recoverable amount, an impairment loss is recognised.
Non-controlling interests represent the portion of profit or loss and net assets in
subsidiaries not held by the Group and are presented separately in the consolidated
statement of profit or loss and other comprehensive income and within equity in
the consolidated statement of financial position. Losses are attributed to the non-
controlling interest even if it results in a deficit balance.
119
Challenger Exploration Limited Annual Report d. Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted, or substantively enacted,
as at the end of the reporting period.
Deferred income tax is provided on all temporary differences as at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred income tax liabilities are recognised for all taxable
temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or
of an asset or liability in a transaction that is not a business combination and that, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-
forward of unused tax assets and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only
recognised to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are
recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted, or substantively enacted, as at the end of the reporting
period.
120
Challenger Exploration Limited Annual Report Income taxes relating to items recognised directly in equity are recognised in equity and not
in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred tax assets
and liabilities relate to the same taxable entity and the same taxation authority.
e. Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in which they are incurred
where the following conditions are satisfied:
(a) the rights to tenure of the area of interest are current; and
(b) at least one of the following conditions is also met:
(i) the exploration and evaluation expenditures are expected to be recouped through
successful development and exploitation of the area of interest, or alternatively, by its
sale; or
(ii) exploration and evaluation activities in the area of interest have not at the balance
date reached a stage which permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition
of rights to explore, studies, exploratory drilling, trenching and sampling and associated
activities and an allocation of depreciation and amortised of asset used in exploration and
evaluation activities. General and administrative costs are only included in the measurement
of exploration and evaluation costs where they are related directly to operational activities
in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of an exploration and evaluation asset may
exceed its recoverable amount. The recoverable amount of the exploration and evaluation
asset (for the cash generating unit(s) to which it has been allocated being no larger than
the relevant area of interest) is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular
area of interest, the relevant exploration and evaluation asset is tested for impairment and
the balance is then reclassified to development.
121
Challenger Exploration Limited Annual Report f. Trade and Other Payables
Trade payables and other payables are carried at amortised cost and represent liabilities
for goods and services provided to the Group prior to the end of the financial year that are
unpaid and arise when the Group becomes obliged to make future payments in respect
of the purchase of these goods and services. Amounts are unsecured and are usually paid
within 30 to 45 days of recognition.
g. Cash and Cash Equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in
current liabilities in the statement of financial position.
For the purpose of the statement of cash flows, cash consists of cash and cash equivalents
as defined above, net of bank overdrafts.
h. Foreign Currency Translation
Transactions in foreign currencies are initially recorded in the functional currency by
applying the exchange rates ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling
at the end of the reporting period.
All exchange differences in the consolidated financial report are taken to profit or loss with
the exception of differences on foreign currency borrowings that provide a hedge against a
net investment in a foreign entity. These are taken directly to equity until the disposal of the
net investment, at which time they are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined.
The functional currencies of the Group are United States Dollars (USD), Argentinian Peso’s,
South African Rand (ZAR) and Australian Dollars (AUD). The presentation currency is
Australian Dollars (AUD).
As at reporting date the assets and liabilities of the subsidiaries are translated into the
presentation currency of Challenger Exploration at the rate of exchange ruling at the end
of the reporting period and income and expenses are translated at the weighted average
exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate
component of equity, being recognised in the foreign currency translation reserve.
122
On disposal of a foreign entity, the deferred cumulative amount recognised in equity
relating to that particular foreign operation is recognised in profit or loss.
Challenger Exploration Limited Annual Report i. Earnings Per Share (“EPS”)
Basic earnings per share is calculated as net profit or loss attributable to members of
the parent, adjusted to exclude costs of servicing equity (other than dividends) and
preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit or loss attributable to members of the parent,
adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
•
the after-tax effect of dividends and interest associated with dilutive potential
ordinary shares that would have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that
would result from the dilution of potential ordinary shares;
divided by the weighted average number of shares and dilutive potential shares,
adjusted for any bonus element.
j. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker. The chief operating decision maker,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
k. Trade and Other Receivables
Trade receivables are measured on initial recognition at fair value and are
subsequently measured at amortised cost using the effective interest rate method, less
provision for impairment. Trade receivables are generally due for settlement within
periods ranging from 15 days to 30 days.
A provision for impairment is established based on 12-month expected credit losses
unless there has been a significant increase in credit risk when lifetime expected credit
losses are recognised. The amount of any provision is recognised in profit or loss.
l. Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received.
Any transaction costs arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the share proceeds received.
123
Challenger Exploration Limited Annual Report m. Revenue
The following specific recognition criteria must also be met before revenue is recognised:
Interest
Interest revenue is recognised when control of the right to receive the interest payment.
Capital Gain on Foreign Exchange Conversion
Blue chip swaps are bought in USD and sold in Argentinian Peso’s on the same day. The
income is recognised on the day of the sale.
n. Property, Plant & Equipment
Property, plant & equipment is measured at cost less accumulated depreciation and any
accumulated impairment losses. Depreciation is provided on a straight line basis on all
property, plant and equipment over 3 years. The assets’ residual values, useful lives and
amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting
date, with recoverable amount being estimated when events or changes in circumstances
indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount
is determined for the cash-generating unit to which the asset belongs, unless the asset’s
value in use can be estimated to be close to its approximate fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds
its estimated recoverable amount. The asset or cash-generating unit is then written down
to its recoverable amount.
For plant and equipment, impairment losses are recognised in the statement of profit or
loss and other comprehensive income in the cost of sales line item.
(ii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further
future economic benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.
124
Challenger Exploration Limited Annual Report o. Share-based Payment Transactions
Equity settled transactions:
The Group provides benefits to employees (including senior executives) of the
Group in the form of share-based payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled transactions).
The cost of equity-settled transactions with employees is measured by reference to
the fair value of the equity instruments at the date at which they are granted. The fair
value is determined by an external valuer using the Black & Scholes option-pricing
model. In valuing equity-settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of Challenger
Exploration Limited.
The cost of equity-settled transactions is recognised, together with a corresponding
increase in equity, over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which the relevant employees become
fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each
reporting date until vesting date reflects (i) the extent to which the vesting period
has expired and (ii) the Group’s best estimate of the number of equity instruments
that will ultimately vest. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in
the determination of fair value at grant date. The statement of profit or loss and
other comprehensive income charge or credit for a period represents the movement
in cumulative expense recognised as at the beginning and end of that period. No
expense is recognised for awards that do not ultimately vest, except for awards where
vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense
is recognised as if the terms had not been modified. In addition, an expense is
recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, measured at the
modification date.
If an equity-settled award is cancelled, it is treated as if it had vested on the date
of cancellation, and any expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as
described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share
dilution in the computation of earnings per share.
125
Challenger Exploration Limited Annual Report p. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are not recognised for future operating losses.
When the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of profit or loss and other comprehensive income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the
expenditure required to settle the present obligation at the end of the reporting period. If
the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects the risks specific to the liability. When discounting is used, the
increase in the provision due to the passage of time is recognised as a borrowing cost.
q. Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave
expected to be settled within 12 months of the balance date are recognised in other
payables in respect of employees’ services up to the balance date. They are measured at the
amounts expected to be paid when the liabilities are settled.
r. Critical Accounting Judgements and Key Sources of Estimation
Uncertainty
The application of accounting policies requires the Group’s management to make estimates
and assumptions that affect the carrying values of assets and liabilities that are not readily
apparent from other sources. The determination of estimates requires the exercise of
judgment based on various assumptions and other factors such as historical experience,
current and expected economic conditions and expectations of future events that are
believed to be reasonable under the circumstances. Actual results could differ from those
estimates.
Estimates and underlying assumptions are evaluated on an ongoing basis.
Revisions are recognised in the period in which the estimate is revised if it affects only that
period, or in the period of the revision and future periods if the revision affects both current
and future periods.
The estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of the assets and liabilities within the next financial year are
discussed below.
126
Challenger Exploration Limited Annual Report Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19)
pandemic has had, or may have, on the consolidated entity based on known information.
This consideration extends to customers, supply chain, staffing and geographic regions in
which the consolidated entity operates. Other than as addressed in specific notes, there
does not currently appear to be either any significant impact upon the financial statements
or any significant uncertainties with respect to events or conditions which may impact the
consolidated entity unfavourably as at the reporting date or subsequently as a result of the
Coronavirus (COVID-19) pandemic.
Share-based Payments
The Group measures the cost of equity-settled transactions with employees and consultants,
where the fair value of the services provided cannot be reliably measured by reference to the
fair value at grant date using the Black & Scholes formula, taking into account the terms and
conditions upon which the instruments were granted. The assumptions used are detailed in
Note 17.
Exploration and evaluation expenditure
The application of the Group’s accounting policy for exploration and evaluation expenditure
requires judgment in determining whether it is likely that future economic benefits are likely
either from future exploitation or sale or where activities have not reached a stage which
permits a reasonable assessment of the existence of reserves.
The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation
process that requires varying degrees of uncertainty depending on sub-classification and
these estimates directly impact the point of deferral of exploration and evaluation expenditure.
The deferral policy requires management to make certain estimates and assumptions about
future events or circumstances, in particular whether an economically viable extraction
operation can be established. Estimates and assumptions made may change if new
information becomes available.
s. Going Concern
The financial statements have been prepared on the going concern basis, which contemplates
continuity of normal business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business. In determining the appropriateness of the basis
of preparation, the Directors have considered the impact of the COVID19 pandemic on the
position of the Group at 30 June 2021 and its operations in future periods.
t. Parent Entity Disclosures
The financial information for the parent entity, which is the legal parent Challenger Exploration
Limited, disclosed in Note 26 has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the parent entity’s financial statements.
127
Challenger Exploration Limited Annual Report 2.
Other Income
Government cash flow boost
Capital gain on foreign exchange conversion
Interest received
Consolidated
2021
$
Consolidated
2020
$
29,460
6,288,047
3,474
6,320,981
21,202
323,807
3,249
348,258
3.
Income Tax
The prima facie tax benefit on profit/(loss) before income tax is reconciled to the
income tax expense as follows:
Consolidated
2021
$
Consolidated
2020
$
Net loss before income tax
2,619,506
(1,782,324)
Prima facie tax benefit on result
before income tax at 30% (2020: 30%)
29,460
21,202
Add
Share based payments
Movements in provisions, accruals and prepayments
Non-deductible entertainment
Other non-deductible expenses
Change in tax rate
Differences in tax rate of subsidiaries
operating in different jurisdictions
370,478
(3,003)
858
798,758
–
153,509
–
1,812
427,003
153,316
(131,407)
(30,648)
Other deferred tax assets and tax liabilities not recognised
(765,431)
(183,302)
Less
Black hole expenditure deductions
Non-assessable, non exempt income
Benefit of tax losses and other temporary
differences not brought to account
Recognition of previously unrecognised tax losses
128
Income tax expense
(31,837)
(674,471)
1,307,302
(570,395)
2,021,243
(12,078)
24,431
654
–
–
Challenger Exploration Limited Annual Report The following tax deferred tax balances
have been recognised:
Deferred tax assets / (liabilities) at 30% (2020: 30%):
Carry forward revenue losses
Capitalised exploration costs
Consolidated
2021
$
Consolidated
2020
$
(5,059,280)
3,038,038
(2,021,243)
–
–
–
Consolidated
2021
$
Consolidated
2020
$
The following tax deferred tax balances
have been recognised:
Deferred tax assets / (liabilities) at 30% (2020: 30%):
Carry forward revenue losses
4,340,727
3,298,644
Capital raising costs
Accrued expenses
Foreign exchange
Capitalised exploration costs
24,155
9,293
-
36,233
12,296
(4,477)
(1,304,575
(1,544,171)
3,069,601
1,798,525
The tax benefits of the above deferred tax assets will only be obtained if:
a. the Group derives future assessable income of a nature and of an amount sufficient to
enable the benefits to be utilised;
b. the Group continues to comply with the conditions for deductibility imposed by law; and
c. no changes in income tax legislation adversely affect the Group in utilising the benefits.
129
Challenger Exploration Limited Annual Report 3.
Income Tax
Movement in deferred
tax balances
Net balance at
1 July
$
Recognised in
profit or loss
$
Deferred tax
assets
$
Deferred tax
liabilities
$
12,296
36,233
(3,003)
(12,078)
9,293
24,155
–
–
(1,544,174)
(4,819,681)
–
–
(6,363,855)
–
–
Foreign exchange
(4,477)
4,477
Tax losses
3,298,644
4,080,121
7,378,765
Accrued expenses
Capital raising costs
Capitalised exploration
costs
Deferred tax assets/
liabilities recognised
Deferred tax assets/
liabilities not recognised
–
–
3,038,038
(5,059,280)
1,798,522
(750,163)
4,374,176
(1,304,575)
(2,021,243)
Net recognised
deferred
tax asset /
(liability)
$
–
–
–
–
–
–
Net deferred tax balance
–
–
–
–
(2,021,243)
130
Challenger Exploration Limited Annual Report 4.
Cash
For the purposes of the statement of cash flows, cash and cash equivalents comprise
cash on hand and at bank and investments in money market instruments, net of
outstanding bank overdrafts. Cash at bank earns interest at floating rates based on a
daily bank deposit rate.
Cash at Bank
47,490,314
3,801,292
Consolidated
2021
$
Consolidated
2020
$
Reconciliation of net loss after tax
to the net cash flows from operations:
Net profit / (loss)
Non cash items:
Deferred Tax Liability
Depreciation
Foreign exchange gains
Creditors settled for equity
Share based payments
Changes in assets and liabilities
Decrease / (Increase) in receivables and prepayments
Increase / (Decrease) in payables and accruals
598,263
(1,735,299)
2,021,243
30,878
88,790
341,817
1,234,925
(21,740)
317,768
(47,025)
4,785
(14,923)
139,000
511,695
18,658
126,114
Net cash flows used in from operating activities
4,611,943
(996,995)
Changes in liabilities arising from financing activities:
Opening balance
Loans received
Loan repayments
Net cash from financing activities
Closing balance
–
467,780
3,500,000
–
3,500,000
3,500,000
–
(467,780)
(467,780)
–
3
7
131
Challenger Exploration Limited Annual Report 5.
Trade & Other Receivables
Current
GST receivable
Other receivables
Closing balance
Non current
VAT receivable
6.
Prepayments
Current
Other pre-payments
Consolidated
2021
$
Consolidated
2020
$
3
7
7
225,905
84,005
309,910
15,958
99,578
115,536
2,851,222
316,276
Consolidated
2021
$
Consolidated
2020
$
14,145
43,515
These amounts arise from the usual operating activities of the Group
and are non-interest bearing.
7.
Deferred Exploration and Evaluation Expenditure
Consolidated
2021
$
Consolidated
2020
$
Non-current
Exploration and evaluation phase
29,497,231
11,653,007
Opening balance
11,653,007
3,277,843
Exploration and evaluation expenditure
17,844,224
5,063,274
Acquisition costs
Closing balance
–
3,311,890
7
29,497,231
11,653,007
The recoupment of costs carried forward in relation to areas of interest in the exploration
and evaluation phase is dependent on the successful development and commercial
exploitation or sale of the respective areas.
132
Challenger Exploration Limited Annual Report 8.
Property, Plant and Equipment
Property
Cost
Accumulated depreciation
Net carrying amount
Plant and Equipment
Cost
Accumulated depreciation
Net carrying amount
Computer Equipment and Software
Cost
Accumulated depreciation
Net carrying amount
Furniture, Fixtures and Fittings
Cost
Accumulated depreciation
Net carrying amount
Consolidated
2021
$
Consolidated
2020
$
69,124
(6,774)
62,350
233,054
(17,171)
215,883
38,992
(9,684)
29,308
7,850
(705)
7,145
–
–
–
29,691
(2,968)
26,723
12,834
(1,741)
11,093
8,569
(48)
8,521
Total Plant and Equipment
314,686
46,337
133
Challenger Exploration Limited Annual Report Movements in Property, Plant and Equipment
Consolidated
2021
$
Consolidated
2020
$
Property
At beginning of the period
Additions
Net exchange differences on translation
Depreciation charge for the year
Plant and Equipment
At beginning of the period
Additions
Net exchange differences on translation
Depreciation charge for the year
Computer Equipment and Software
At beginning of the period
Additions
Net exchange differences on translation
Depreciation charge for the year
Furniture, Fixtures and Fittings
At beginning of the period
Additions
Net exchange differences on translation
Depreciation charge for the year
134
–
76,729
(7,605)
(6,774)
62,350
26,723
218,394
(15,031)
(14,203)
215,883
11,093
27,628
(1,470)
(7,943)
29,308
8,521
–
(719)
(657)
7,145
–
–
–
–
–
–
26,163
3,528
(2,968)
26,723
–
12,790
44
(1,741)
11,093
–
8,604
(35)
(48)
8,521
Challenger Exploration Limited Annual Report 9.
Provisions
Current
Consolidated
2021
$
Consolidated
2020
$
Trade creditors and accruals
1,736,543
1,157,129
Terms and conditions:
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
9.
Provisions
Current
Employee benefits
Consolidated
2021
$
Consolidated
2020
$
47,004
24,990
The provision for employee benefits represents accrued annual leave entitlements.
Movements in Provisions:
Employee benefits
At beginning of the period
Additions
11.
Borrowings
Non-Current
Unsecured loans
24,990
22,014
47,004
-
24,990
24,990
Consolidated
2021
$
Consolidated
2020
$
3,500,000
–
Under a funding agreement RiverFort Global Capital Ltd, a London based UK Institutional
Investment Manager focusing on high-growth companies, has advanced the Company $3.5
million. The loan attracts an interest rate of 6% p.a. and is repaybale by 15 July 2022. The
Company will utilise the proceeds of the Options, that are exercisable at $0.04 on or before
30 June 2022, together with other cash reserves to repay the loan.
135
Challenger Exploration Limited Annual Report 12.
Issued Capital
a. Issued Capital
Consolidated
2021
$
Consolidated
2020
$
80,631,294
22,177,747
Consolidated 2021
Consolidated 2020
Movement in ordinary shares on issue
No.
$
No.
$
At start of period
548,724,627
22,177,747
465,560,126
13,000,904
Shares issued for cash
250,500,000
62,140,000
65,002,000
6,500,500
Shares issued on conversion
employee rights
Shares issued as deferred consideration
for Hualilan Gold Project
Shares issued on exercise of options
4,772,594
477
–
–
–
–
–
–
15,000,001
2,826,667
1,000,000
40,000
Shares issued in lieu of cash
4,684,219
718,114
2,162,500
139,000
Transaction costs relating to issued shares
–
(4,405,044)
–
(329,324)
808,681,440
80,631,294 548,724,627
22,177,747
The Group does not have authorised capital nor par value in respect of its issued capital.
Ordinary shares have the right to receive dividends as declared and, in the event of a
winding up of the Group, to participate in the proceeds from sale of all surplus assets in
proportion to the number of and amounts paid up on shares held. Ordinary shares entitle
their holder to one vote, either in person or proxy, at a meeting of the Group.
b. Options
At the date of this report, 61,969,443 unlisted options over new ordinary shares in the
Company were on issue:
Type
Unlisted
Unlisted(a)
Date of Expiry
Exercise Price
Number under Option
30 June 2022
$0.04
51,969,443
14 April 2025
$0.40 or $0.45
10,000,000
(a) The exercise price of each option is $0.40 on or before 14 July 2022 and $0.45 thereafter.
136
No ordinary shares were issued upon the exercise of options during the financial year
ended 30 June 2021. Since the end of the financial year ended 30 June 2021 and up to the
date of this report, 34,675,001 ordinary shares were issued upon the exercise of options.
Challenger Exploration Limited Annual Report 13.
Reserves
Consolidated
2021
$
Consolidated
2020
$
Option reserve
784
784
Share based payments reserve
1,648,970
511,695
Foreign currency translation reserve
(2,136,320)
(326,109)
(486,566)
186,370
a. Movements in Reserves
Option reserve
Opening balance
Movement during the financial year
Consolidated
2021
$
Consolidated
2020
$
784
–
784
784
–
784
Options reserve is used to record the proceeds of issued share options.
Share based payments reserve
Opening balance
Share based payment expense
Consolidated
2021
$
Consolidated
2020
$
511,695
1,137,275
1,648,970
–
511,695
511,695
The share based payment reserve is used to record the value of equity benefits for the
Riverfort Facility, and those provided to directors, executives and employees as part of their
remuneration and non-employees for their services. Refer to note 17 for further details of
the share based payments during the financial year.
137
Challenger Exploration Limited Annual Report Foreign currency translation reserve
Opening balance
Foreign currency translation
Consolidated
2021
$
Consolidated
2020
$
(326,109)
–
(1,810,211)
(326,109)
(2,136,320)
(326,109)
The foreign exchange differences arising on translation of the foreign controlled entities
are taken to the foreign currency translation reserve, as described in note 1(i). The reserve is
recognised in profit and loss when the net investment is disposed of.
14.
Performance Shares
At the date of this report, 120,000,000 Performance Shares over new ordinary shares
in the Company were on issue:
Type
Number
Performance A
60,000,000
Performance B
60,000,000
Performance A Shares have the following vesting conditions:
A JORC Compliant Mineral Resource Estimate of at least Inferred category on either
Project of the following:
i. 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
ii. 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
iii. 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.
Performance B Shares will vest on the completion and announcement by Challenger
(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 the Hualilan Project or the El
Guayabo 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.
138
Challenger Exploration Limited Annual Report The relevant interests held by each Director in shares, options and performance rights of
the Company at the date of this report are included in the Remuneration Report above.
No ordinary shares were issued upon the vesting of performance rights during the period.
15.
Performance Rights
At the date of this report, 16,000,000 Performance Rights over new ordinary shares
in the Company were on issue:
Type
Class A
Class B
Number
8,000,000
8,000,000
Class A Performance Rights have the following vesting conditions:
A JORC Compliant Mineral Resource Estimate of at least Inferred category on either
Project of the following:
i. 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
ii. 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
iii. 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 Performance Rights will vest on the completion and announcement by Challenger
(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 the Hualilan Project or the El
Guayabo 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.
The relevant interests held by each Director in shares, options, performance shares
and performance rights of the Company at the date of this report are included in the
Remuneration Report above.
139
Challenger Exploration Limited Annual Report 16.
Incentive Performance Rights
At the date of this report, 477,406 Incentive Performance Rights over new ordinary
shares in the Company were on issue:
Type
Number
Incentive Performance Rights
477,406
Incentive Performance Rights have the following vesting condition:
The holder must remain employed or engaged by the Company for a minimum period
of twelve months from 28 November 2019.
4,772,594 ordinary shares were issued upon the vesting of performance rights or
performance shares during the financial year ended 30 June 2021. No ordinary shares
were issued upon the vesting of performance rights or performance shares since the
end of the financial year ended 30 June 2021.
The relevant interests held by each Director in shares, options, performance shares
and performance rights of the Company at the date of this report are included in the
Remuneration Report above.
17.
Share Based Payments
Recognised share-based payment transactions
Share based payment transactions recognised as operating expenses in the statement
of profit or loss and other comprehensive income during the period were as follows:
Operating expenses
Supplier share based payment
Employee share based payment
Supplier Share Based Payment
Consolidated
2021
$
Consolidated
2020
$
667,261
567,664
1,234,925
–
511,695
511,695
Under a funding agreement RiverFort Global Capital Ltd (RGC), a London based UK
Institutional Investment Manager focusing on high-growth companies, has advanced the
Company $3.5 million which will be repaid from the proceeds of in the money Options,
with the Options due to be exercised on or before 30 June 2022. Under the funding
agreement RGC were issued 10,000,000 unlisted options. Refer to note 12(b) for further
details regarding the options.
140
Challenger Exploration Limited Annual Report The Riverfort Facility Options were valued using a Monte Carlo simulations as follows:
i. 1,000 Monte Carlo simulations of CEL share price based on the company’s closing share
price at the 16th April 2021;
ii. Used the terminal price of the 1000 simulations that were higher than the exercise price
of A$0.40 as at the end of 15 months as the input to a Black-Scholes model;
iii. Used the terminal price of the 1000 simulations as at the end of 4 year (1000 trading
days) that were higher than the exercise price of A$0.45as the input to a Black-Scholes
model; and
iv. Discounted the average value of those options back to the valuation date 16thApril 2021
using the applicable RBA bond rate;
Volatility: The Monte Carlo simulations were calculated using three-year historical volatility
of 93.2% for the CEL share price.
Discount rate: To NPV the valuation to the 16th April 2021 a discount rate of 0.10% was
used which represented the 3 year Australian Bond Rate.
Additionally, a supplier received ordinary shares in the Capital of the Company in lieu of
cash for services provided during the year.
Employee share based payment plan
The Group has established an Employee Share Option Plan and an Incentive Performance
Rights Plan (‘Plans’). The objective of the Plans are to assist in the recruitment, reward,
retention and motivation of employees of Challenger Exploration Limited. Under the
Plans, the Directors may invite individuals acting in a manner similar to employees to
participate in the Plans and receive options and / or performance rights. An individual
may receive the options and / or performance rights or nominate a relative or associate to
receive the options and / or performance rights. The Plans are open to directors, executive
officers, nominated consultants and employees of Challenger Exploration Limited.
The fair value at grant date of performance rights granted during the reporting period
was determined using the Company’s share price on the grant date. The table below
summaries options granted under Incentive Performance Rights Plan:
Grant Date
Expiry date
Balance at
30 June 2020
Granted /
(Exercised)
Balance at
30 June 2021
Vested and
exercisable at 30
June 2021
3 December 2019 4 July 2026
16,000,000
No.
No.
–
No.
16,000,000
No.
–
16 March 2020
4 July 2026
5,250,000
(4,772,594)
477,406
477,406
There were no performance rights forfeited or cancelled during the period.
141
Challenger Exploration Limited Annual Report 18.
Key Management Personnel Emoluments
a. Details of Key Management Personnel
Fletcher Quinn
Non-Executive Chairman
Kris Knauer
Managing Director
Scott Funston
Executive Director
Directors’ remuneration and other terms of employment are reviewed annually by the
non-executive Directors having regard to performance against goals set at the start of the
period, relative comparative information and independent expert advice, as appropriate.
b. Compensation of Key Management Personnel
The aggregate compensation paid to Directors and other members of key management
personnel is out below:
Short-term employee benefits
300,000
522,546
Consolidated
2021
$
Consolidated
2020
$
Short-term employee benefits in lieu of cash
consideration
Post-employment benefits
Share-based payments
300,000
37,500
–
156,516
756,516
–
154,815
714,861
Further details of key management personnel remuneration have been included in the
Remuneration Report section of the Directors’ Report.
142
Challenger Exploration Limited Annual Report c. Other Transactions with Key Management Personnel
Mr Quinn is a director of Seco Resource Finance Pty Ltd. Seco has provided his
services as Chairman to a value of $60,000 (2020: $43,000) to Challenger during
the year on normal commercial terms. This amount is included in the Remuneration
Report section of the Directors Report. $5,000 (2020: $20,000) was outstanding at
year end.
Mr Knauer is a director of Greenfield Securities Pty Ltd. Greenfield has provided his
services as Managing Director and CEO to a value of $295,000 (2020: $268,296) to
Challenger during the year on normal commercial terms. This amount is included in
the Remuneration Report section of the Directors Report. $24,583 (2020: $98,333)
was outstanding at year end.
Mr Funston is a director of Resourceful International Consulting Pty Ltd. Resourceful
has provided his services as Director, Company Secretary and CFO to a value of
$245,000 (2020: $211,250) to Challenger during the year on normal commercial
terms. This amount is included in the Remuneration Report section of the Directors
Report. $20,417 (2020: $36,250) was outstanding at year end.
d. Amounts owing to Key Management Personnel
A total of $50,000 was outstanding to Key Management Personnel as at 30 June
2021 (2020: $154,583), as noted above.
143
Challenger Exploration Limited Annual Report 19.
Segment Information
The Group is organised into one segment, being exploration operations. This
operating segment is based on the internal reports that are reviewed and used by
the Board of Directors (who are identified as the Chief Operating Decision Makers
(“CODM”) in assessing performance and in determining the allocation of resources.
30 June 2021
Interest income
Other income
Segment income
Segment profit / (loss)
before income tax
Australia
$
Ecuador
$
Argentina
$
Consolidated
$
3,474
29,460
32,934
–
–
–
–
3,474
6,288,047
6,317,507
6,288,047
6,320,981
(2,904,375)
(32,856)
3,535,494
598,263
Segment assets
47,452,511
9,697,355
23,327,642
80,477,508
Segment liabilities
3,756,927
172,475
3,375,388
7,340,790
Included within segment assets
Cash at bank
47,451,344
205,577
59,296
47,490,314
Property, plant and equipment
and exploration expenditure
1,170
9,431,360
20,379,387
29,811,917
Cash flow information
Net cashflow inflows / (outflows)
from operating activities
Net cashflow (outflows)
from investing activities
Net cashflow inflows
from financing activities
(1,524,428)
(32,856)
6,169,227
4,611,943
–
(3,878,000)
(17,723,353)
(21,601,353)
60,767,222
–
–
60,767,222
144
Challenger Exploration Limited Annual Report 30 June 2020
Interest income
Other income
Segment income
Australia
$
Ecuador
$
Argentina
$
Consolidated
$
3,249
21,202
24,451
–
–
–
–
3,249
323,807
345,009
323,807
348,258
Segment loss before income tax
(1,470,663)
(2,878)
(308,783)
(1,782,324)
Segment assets
3,777,636
5,655,760
6,542,567
15,975,963
Segment liabilities
400,817
199,309
581,993
1,182,119
Included within segment assets
Cash at bank
3,735,765
14,219
51,308
3,801,292
Plant and equipment and
exploration expenditure
Cash flow information
Net cashflow outflows
from operating activities
Net cashflow outflows
from investing activities
Net cashflow inflows
from financing activities
–
5,540,075
6,112,932
11,653,007
(685,334)
(2,878)
(308,783)
(996,995)
–
(2,892,747)
(2,698,668)
(5,591,415)
5,330,844
–
–
5,330,844
145
Challenger Exploration Limited Annual Report 20.
Earnings / Loss Per Share
Consolidated
2021
$
Consolidated
2020
$
The following reflects the loss and share data used in the
calculation of basic earnings / (loss) per share (EPS):
Profit / (Loss) used in calculation of basic EPS
598,263
(1,735,299)
Weighted average number of ordinary shares on issue used
in the calculation of basic and diluted EPS
Number
Number
664,268,915
495,389,099
The following reflects the loss and share data used in the
calculation of diluted earnings / (loss) per share (EPS):
Profit / (Loss) used in calculation of diluted EPS
598,263
(1,735,299)
Weighted average number of ordinary shares on issue used
in the calculation of basic and diluted EPS
Number
Number
751,390,765
495,389,099
21.
Related Party Disclosure
Interest in subsidiaries
The consolidated financial statements include the financial statements of Challenger
Exploration Limited and the subsidiaries listed in the following table:
Name
Country of
Incorporation
Percentage of equity interest
held by the Group
AEP Corporation Pty Ltd
Australia
Bundu Oil & Gas Exploration Pty Ltd
South Africa
Afro-Asian Resources Pty Ltd
Ecuador Mining Pty Ltd
Australia
Australia
2021
100%
95%
100%
100%
2020
100%
95%
100%
100%
The assets Bundu Oil & Gas Exploration (Bundu) are not material and Bundu does not have
a material non-controlling interest in the Group.
146
Challenger Exploration Limited Annual Report 22.
Auditor’s Remuneration
Consolidated
2021
$
Consolidated
2020
$
Amounts received or due and receivable by the auditor:
HLB Mann Judd (WA Partnership)
– audit or review of the financial reports of the Company
35,000
41,725
Amounts received or due and receivable by overseas
separate firms:
HLB Barnett Chown (South Africa)
– statutory compliance services
3,848
–
38,848
41,725
23.
Financial Instruments
a. Financial risk management and risk policies
The Group’s principal financial instruments comprise of cash and short-term deposits. The
main purpose of these financial instruments is to hold funds for the entity’s operations.
The entity has various other financial assets and liabilities such as trade receivables and
trade payables, which arise directly from its operations. It is, and has been throughout the
period under review, the entity’s policy that no trading in financial instruments shall be
undertaken. The main risks arising from the entity’s financial instruments are cash flow
interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and
agrees policies for managing each of these risks and they are summarised below.
b. Significant accounting policies
Details of the significant accounting policies and methods adopted, including the
criteria for recognition, the basis of measurement and the basis on which income
and expenses are recognised, in respect of each class of financial asset and financial
liability are disclosed in Note 1 to the financial statements.
c. Interest rate risk
The Group is exposed to movements in market interest rates on short term deposits.
The policy is to monitor the interest rate yield curve out to 120 days to ensure a
balance is maintained between the liquidity of cash assets and the interest rate return.
The Group has debt, repaybale from the exercise of deep in the money options and
therefore this risk is minimal.
147
Challenger Exploration Limited Annual Report Less than
1 month
1 to 3
months
3 months
to 1 year
Rate
$
$
$
1 to 5
years
$
Total
$
2021 Consolidated
Financial Assets
Non-interest bearing
50,665,591
50,665,591
Financial Liabilities
Non-interest bearing
(1,783,547)
Fixed interest rate
instruments
6%
–
Net Financial Assets
48,882,044
2020 Consolidated
Financial Assets
Non-interest bearing
3,865,336
Variable interest rate
instruments
0.01%
411,283
Financial Liabilities
Non-interest bearing
Net Financial Assets
4,276,619
(1,182,119)
3,094,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,665,591
– 50,665,591
–
(1,783,547)
– (3,500,000)
(3,500,000)
– (3,500,000) 45,382,044
–
–
–
–
–
–
–
–
–
–
3,865,336
411,283
4,276,619
(1,182,119)
3,094,500
Interest Rate Sensitivity Analysis
At reporting date, if interest rates had been 50 basis points higher or lower than the
prevailing rates realised, with all other variable held constant, there would have been
an immaterial change in post-tax loss for the year. The impact on equity would have
been the same.
There was no exposure to interest rate risk in 2021 (2020: Nil).
148
Challenger Exploration Limited Annual Report d. Net fair values of financial assets and liabilities
The following methods and assumptions are used to determine the net fair values of
financial assets and liabilities:
Recognised Financial Instruments
Cash and cash equivalents: The carrying amount approximates fair value because of their
short-term maturity.
Receivables, payables and borrowings: The carrying amount approximates fair value.
e. Credit risk exposures
The Group’s maximum exposure to credit risk at each balance date in relation to each class
of recognised financial assets is the carrying amount, net of any allowance for doubtful
debts, of those assets as indicated in the statement of financial position. The maximum
credit risk exposure on receivables of the Group at 30 June 2021 is $3,161,132 (2020:
$431,812). There are no impaired receivables at 30 June 2021.
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. The Group has adopted a policy of only dealing
with creditworthy counterparties and obtaining sufficient collateral where appropriate, as
a means of mitigating the risk of financial loss from defaults. The Group exposure and the
credit ratings of its counterparties are continuously monitored and the aggregate value
of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed and approved annually. The Group
measures credit risk on a fair value basis.
Concentration of Credit Risk
The Group is not exposed to any individual customer.
f. Liquidity risk management
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and
reserve borrowing facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities. The Group does not have
any bank debt.
g. Foreign exchange risk management
The Group is exposed to US Dollar (USD) and South African Rand (ZAR) currency
fluctuations. At 30 June 2020, there would have been an immaterial change in the post-tax
operating loss for the year as a result of a 10% change in the Australian Dollar (AUD) to the
USD and ZAR. The impact to equity would be the same.
149
Challenger Exploration Limited Annual Report h. Capital Risk Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a
going concern, so that it may continue to provide returns for shareholders and benefits for
other stakeholders.
Due to the nature of the Group’s activities, being gold exploration, it does not have
ready access to credit facilities, with the primary source of funding being equity raisings.
Accordingly, the objective of the Group’s capital risk management is to balance the current
working capital position against the requirements of the Group to meet exploration
programmes and corporate overheads. This is achieved by maintaining appropriate liquidity
to meet anticipated operating requirements, with a view to initiating appropriate capital
raisings as required.
24.
Contingent Assets and Liabilities
There are no known contingent liabilities or contingent assets.
25.
Commitments For Expenditure
There are no commitments for expenditure as at 30 June 2021 (2020: $Nil).
26.
Parent Entity Disclosures
Information relating to Challenger Exploration Limited, the legal Parent entity,
is detailed below:
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
150
Consolidated 2021
$
Consolidated 2020
$
47,444,774
32,655,518
3,752,021
16,664,981
80,100,292
20,417,002
(93,625)
3,500,000
3,406,374
50,312
–
50,312
76,693,917
20,366,690
Challenger Exploration Limited Annual Report Equity
Issued capital
Consolidated 2021
$
Consolidated 2020
$
110,676,866
52,223,319
Accumulated losses
(38,175,775)
(34,912,180)
Reserves
Total equity
Financial performance
(Loss) for the year
4,192,826
3,055,551
76,693,917
20,366,690
(2,849,077)
(2,257,263)
Other comprehensive income
414,547
174,738
Total comprehensive (loss)
(3,263,594)
(2,082,525)
27.
Subsequent Events
During July and August 2021, 34,675,001 options with an expiry date of 30 June 2022 were
exercised at 4 cents per share, raising $1,387,000. On 16 July 2021 and 5 August 2021, the
Company repaid $1,200,000 and $180,000 respectively of the Riverfort Facility from the
proceeds of the exercise of the options.
On 3 September 2021, shareholders approved the 100% acquisition of the Hualilan Project
in Argentina and the amendment to purchase 100% of the El Guayabo Project in Ecuador.
Subsequently the Company issued 114,000,000 ordinary shares for the acquisition of
the Hualilan Gold Project and 18,000,000 ordinary shares for the consideration of the El
Guayabo Gold Copper Project.
The impact of the Coronavirus (COVID-19) pandemic is ongoing, and while there has been
no material impact financially for the Group up to 30 June 2021, it is not practicable to
estimate the potential impact, positive or negative, after the reporting date. The situation is
rapidly developing and is dependent on measures imposed by the Australian Government
and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
151
Challenger Exploration Limited Annual Report 152
Hualilan core cutting and sampling
Challenger Exploration Limited Annual Report Directors’
Declaration
1. The Directors of the Company declare that:
a. the financial statements, notes and the additional disclosures are in accordance with the
Corporations Act 2001 including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance for the year then ended; and
ii. complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements;
b. there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable; and
c. the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2. This declaration has been made after receiving the declarations required to be made to the
Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2021.
This declaration is signed in accordance with a resolution of the Board of Directors.
Kris Knauer
Managing Director
20 September 2021
153
Challenger Exploration Limited Annual Report 154
Aerial view looking south from Cerro Norte to the Gap Zone and Cerro Sur
Challenger Exploration Limited Annual Report Independent
Auditor’s Report
155
Challenger Exploration Limited Annual Report Independent Auditor’s Report
to the members of Challenger Exploration Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Challenger Exploration Limited (“the Company”)
and its controlled entities (“the Group”), which comprises the consolidated statement of
financial position as at 30 June 2021, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a. giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
Key Audit Matters
Key audit matters are those matters that, in
our professional judgement, were of most
significance in our audit of the financial report
of the current period. These matters were
addressed in the context of our audit of the
financial report as a whole, and in forming
our opinion thereon, and we do not provide
a separate opinion on these matters. We have
determined the matters described below to be
the key audit matters to be communicated in
our report.
We conducted our audit in accordance
with Australian Auditing Standards. Our
responsibilities under those standards
are further described in the Auditor’s
Responsibilities for the Audit of the Financial
Report section of our report. We are
independent of the Group in accordance with
the auditor independence requirements of
the Corporations Act 2001 and the ethical
requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code
of Ethics for Professional Accountants (“the
Code”) that are relevant to our audit of the
financial report in Australia. We have also
fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
156
Challenger Exploration Limited Annual Report Key Audit Matter
How our audit addressed the key audit matter
Carrying value of Deferred Exploration and Evaluation Expenditure
Note 7 of the financial report
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises acquisition costs of rights to explore
together with subsequent exploration and
evaluation expenditure and applies the cost
model after recognition.
Our audit focussed on the Group’s assessment of
the carrying amount of the deferred exploration
and evaluation expenditure, because this is one of
the most significant assets of the Group. There is
a risk that the capitalised expenditure no longer
meets the recognition criteria of the standard.
In addition, we considered it necessary to assess
whether facts and circumstances existed to suggest
that the carrying amount of deferred exploration
and evaluation expenditure may exceed its
recoverable amount.
Revenue recognition
Notes 1n to the financial report
The Group generates revenue predominantly
from the trading of government bonds. The Group
recognised sales revenue of $6,288,047 for the
year (2020: $323,807).
Revenue recognition is considered to be a key
audit matter given the significance of revenue to
the Group’s results as well as the fraud risk around
cut-off including:
• An overstatement of revenues through
premature revenue recognition or recording of
fictious revenues.
• Revenue not being recognised when control
is transferred to the customer, resulting in
revenue not being recognised in the correct
accounting period.
Revenue is recognised when control is transferred
to the buyer
Our procedures included but were not limited
to the following:
• We obtained an understanding of the key
processes associated with management’s review
of the carrying value of deferred exploration and
evaluation expenditure;
• We considered the Directors’ assessment of
potential indicators of impairment;
• We obtained evidence that the Group has
current rights to tenure of its areas of interest;
• We examined the exploration budget for 2022
and discussed with management the nature of
planned ongoing activities;
• We enquired with management and reviewed
ASX announcements and minutes of Directors’
meetings to ensure that the Group had not
decided to discontinue exploration and
evaluation at its areas of interest; and
• We examined the disclosures made in the
financial report.
Our audit procedures included but were not limited
to the following:
• We reviewed the Group’s processes for revenue
and controls in place around bond trading;
• We tested all bond trading transactions during
the year to invoices and receipt of cash;
• We assessed the Group’s policies for recognition
of revenue against the requirements of the
accounting standards and checked these were
adequately disclosed in the financial statements;
and
• We reviewed sales cut-off procedures focussing
on sales in June 2021 and July 2021, testing
a sample of transactions to underlying
documentation and assessing the period in
which they were recognised.
157
Challenger Exploration Limited Annual Report Information other than the
financial report and auditor’s
report thereon
The directors are responsible for the other
information. The other information comprises
the information included in the Group’s
annual financial report for the year ended 30
June 2021, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not
cover the other information and accordingly
we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial
report, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial report or our
knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed,
we conclude that there is a material
misstatement of this other information, we
are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the directors
for the financial report
The directors of the Company are
responsible for the preparation of the
financial report that gives a true and fair view
in accordance with Australian Accounting
Standards and the Corporations Act 2001
and for such internal control as the directors
determine is necessary to enable the
preparation of the financial report that gives
a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the
directors are responsible for assessing the
ability of the Group to continue as a going
concern, disclosing, as applicable, matters
related to going concern and using the
going concern basis of accounting unless
the directors either intend to liquidate the
Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial report
Our objectives are to obtain reasonable
assurance about whether the financial
report as a whole is free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance with
Australian Auditing Standards will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually or
in the aggregate, they could reasonably be
expected to influence the economic decisions
of users taken on the basis of this financial
report.
As part of an audit in accordance with the
Australian Auditing Standards, we exercise
professional judgement and maintain
professional scepticism throughout the audit.
We also:
•
Identify and assess the risks of material
misstatement of the financial report,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence that
is sufficient and appropriate to provide a
basis for our opinion.
158
Challenger Exploration Limited Annual Report The risk of not detecting a material
misstatement resulting from fraud is higher
than for one resulting from error, as fraud
may involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the Group’s internal control.
• Evaluate the appropriateness of accounting
policies used and the reasonableness
of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the
directors’ use of the going concern basis
of accounting and, based on the audit
evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant
doubt on the Group’s ability to continue
as a going concern. If we conclude that
a material uncertainty exists, we are
required to draw attention in our auditor’s
report to the related disclosures in the
financial report or, if such 82 disclosures
are inadequate, to modify our opinion.
Our conclusions are based on the audit
evidence obtained up to the date of our
auditor’s report. However, future events or
conditions may cause the Group to cease
to continue as a going concern.
• Evaluate the overall presentation, structure
and content of the financial report,
including the disclosures, and whether the
financial report represents the underlying
transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit
evidence regarding the financial
information of the entities or business
activities within the Group to express an
opinion on the financial report. We are
responsible for the direction, supervision
and performance of the Group audit. We
remain solely responsible for our audit
opinion.
We communicate with the directors regarding,
among other matters, the planned scope
and timing of the audit and significant audit
findings, including any significant deficiencies
in internal control that we identify during our
audit.
We also provide the directors with a statement
that we have complied with relevant ethical
requirements regarding independence, and to
communicate with them all relationships and
other matters that may reasonably be thought
to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the
directors, we determine those matters that
were of most significance in the audit of the
financial report of the current period and are
therefore the key audit matters. We describe
these matters in our auditor’s report unless
law or regulation precludes public disclosure
about the matter or when, in extremely rare
circumstances, we determine that a matter
should not be communicated in our report
because the adverse consequences of
doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
159
Challenger Exploration Limited Annual Report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year
ended 30 June 2021.
In our opinion, the Remuneration Report of Challenger Exploration Limited for the year ended
30 June 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
B G McVeigh
Partner
Perth, Western Australia
20 September 2021
hlb.com.au
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street, Perth WA 6000 | PO Box 8124 Perth BC WA 6849
T +61 (0)8 9227 7500 | E mailbox@hlbwa.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
160
HLB Mann Judd (WA Partnership) is a member of HLB International, the global advisory and accounting network.
Challenger Exploration Limited Annual Report Cerro Sur looking south showing the Sentazon tailings dump
161
Challenger Exploration Limited Annual Report 162
RC Rig drilling at Cerro Norte
Challenger Exploration Limited Annual Report ASX Additional
Information
163
Challenger Exploration Limited Annual Report Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere
in this report is as follows. The information is current at 13 September 2021.
Substantial Shareholders
The names of the substantial shareholders who have notified the Company in accordance with
Section 671B of the Corporations Act 2001:
Shareholder
Number
Sergio Rotondo
89,000,000
Black Rock Group
71,733,253
Kris Knauer
52,278,666
%
9.16
7.38
5.38
Distribution of Shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
% Issued Share Capital
122
533
365
1,160
706
2,886
36,795
1,611,759
2,963,241
48,509,871
918,332,092
971,453,758
0.00%
0.17%
0.30%
4.99%
94.53%
100.00%
On-Market Buy Back
There is no current on-market buy back.
Voting Rights
All ordinary shares carry one vote per share without restriction.
164
Challenger Exploration Limited Annual Report Top 20 Shareholders
The names of the twenty largest holders of each class of quoted equity security, the number of
equity security each holds and the percentage of capital each hold is as follows:
Rank Holder Name
Sergio Rotondo
HSBC Custody Nominees (Australia) Limited
Moneybung Pty Ltd
Hsbc Custody Nominees (Australia) Limited
6,960,417
0.72%
6,858,334
0.71%
6,546,617
0.67%
Begley Superannuation Pty Ltd Continue reading text version or see original annual report in PDF
format above