More annual reports from Cellcom Israel, Ltd.:
2023 ReportAnnual
Report
For the Year Ended
30 June 2022
challengerex.com
Contents
2
4
6
90
92
94
95
96
97
98
133
134
141
Corporate Directory
Chairman’s Address
Directors’ Report
Sustainability Governance and Accountability
Independent Auditor’sDeclaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate
Directory
Company
Directors
Company
Secretary
Registered
Office
Auditor
Fletcher Quinn
Non-Executive Chairman
Scott Funston
Kris Knauer
Managing Director
Sergio Rotondo
Executive Director
Scott Funston
Executive Director
Level 1
1205 Hay Street
West Perth WA 6005
T (08) 6380 9235
Ernst and Young (EY)
11 Mounts Bay Road
Perth WA 6000
T + 61 8 9429 2222
2
Challenger Exploration Limited Annual Report Lawyer
Share
Registry
Securities
Exchange
Listing
Website
Australian
Securities Exchange
ASX Code: CEL
challengerex.com
Steinepreis Paganin
Automic Pty Ltd
Level 4
The Read Buildings
16 Milligan Street
Perth WA 6000
T + 61 8 9321 4000
Level 2
267 St Georges
Terrace
Perth WA 6000
T 1300 288 664
within Australia
T +61 (0) 2 9698 5414
International
3
Chairman’s
Address
Dear Shareholder,
The past year has seen the Company continue to rapidly grow,
culminating with the completion our maiden interim Mineral
Resource Estimate (MRE).
Further, major drilling projects were completed and or are underway.
The commitment and agility of our people throughout the year was instrumental in achieving our
considerable exploration succeses in both Argentina and Ecuador.
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 Argentinian Hualilan Gold Project, we achieved many significant outcomes:
• Maiden Mineral Resource Estimate (MRE) of 2.1 million ounces (AuEq)1 at CEL’s flagship
Hualilan Gold Project , containing a high grade core of 6.3 Mt at 5.6 g/t AuEq1 for
1.1 Moz AuEq
• MRE is based on 125,700 metres of CEL’s current 204,000 metre drill program and
mineralisation remains open in all directions
• The 204,000 metre drill program is now completed, with assays pending for 29,000 drill
metres with an additional 50,000 drill metres drilling recently announced.
• Drilling post CEL’s MRE significantly expands mineralisation, particularly the high-grade core of
1.1 Moz at 5.6 g/t AuEq1, in multiple directions with results including;
• 28.5 metres at 5.3 g/t AuEq (5.0 g/t Au, 23.9 g/t Ag, 0.02 % Pb, 0.03 % Zn)
- (GNDD-530)
• 6.6 metres at 6.4 g/t AuEq (4.2 g/t Au, 50.0 g/t Ag, 0.01 % Pb, 3.4 % Zn)
- (GNDD-536)
•
•
18.8 metres at 6.3 g/t AuEq (4.5 g/t Au, 22.3 g/t Ag, 3.3% Zn) from 344.4m
including 7.4 metres at 10.8 g/t AuEq (7.4 g/t Au, 36.8 g/t Ag, 6.3% Zn) - (GNDD-642)
11.1 metres at 9.1 g/t AuEq (9.0 g/t Au, 5.7 g/t Ag) from 356.0m
including 7.8 metres at 12.6 g/t AuEq (12.5 g/t Au, 7.9 g/t Ag) (GNDD-571);
• Outstanding metallurgical testing with average gold recovery increased to 95% across all ore
types and a clear route to recover silver, zinc and lead credits via standard sequential flotation.
4
Challenger Exploration Limited Annual Report Advances at El Guayabo included:
•
•
•
•
The releases of results from our maiden drill programs;
Results confirming three significant Au-Cu-Ag-Mo discoveries on our 100% owned El
Guayabo concession; and
Two additional Au-Cu-Ag-Mo discoveries on the 50% owned Colorado V concession;
The drilling confirmed the discovery of a significant intrusion hosted gold-copper-silver-
molybdenum system with multiple centers of mineralisation, all of which have returned ore
grade intercepts. The mineralisation has a similar scale and tenor to the Tier 1 Cangrejos
Gold project located 5 kilometres along strike to north-east.
The remainder of 2022 and 2023 will see Challenger move into our next phase of growth through
continuing exploration activities, advancing to a completion of an updated MRE and into a Scoping
Study in the first half of 2023, and following that our first Feasibility Study.
Finally, I take this opportunity to thank all our shareholders for their continued support as we
continue towards our goal to become a significant gold producer.
Yours Sincerely
Fletcher Quinn
Chairman
5
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 2022.
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
Sergio Rotondo MEcom, MBA
Non-Executive Chairman
Executive Director (appointed 9 September 2021)
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.
Mr Sergio Rotondo has an extensive background in
managing billion-dollar construction projects from
design through to completion and has partnered
with some of Argentina’s largest real estate
developers and designers. Importantly, Sergio is also
the founder of Golden Mining SA, which originally
consolidated 100% of the Hualilan Gold Project.
Kris Knauer BSc (Hons)
(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.
6
Scott Funston B.Bus CA ACIS
Executive Director and Company Secretary
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.
Mr Funston is currently a Non-Executive Director of
Kobar Resources Limited (appointed 21 December
2021). Mr Fletcher, Mr Knauer and Mr Rotondo have
not been a director of other listed companies in the
last 3 years.
Challenger Exploration Limited Annual Report Meetings of Directors
During the financial year, in addition to regular Board discussions, the number of meetings of
directors held during the year and the number of meetings attended by each director were as follows:
Director
Mr Fletcher Quinn
Mr Kris Knauer
Mr Sergio Rotondo
Mr Scott Funston
Number of Meetings
Eligible to Attend
Number of
Meetings Attended
6
6
5
6
6
6
5
6
Corporate Information
Review of Operations
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.
Highlights
• Completion of the acquisition for 100% of the
Hualilan Gold Project, Argentina
• 2.1 million ounce gold equivalent maiden
Mineral Resource Estimate at the Hualilan
Gold Project based on the Company’s first
126,000 metres of drilling at Hualilan
• Completion of 204,000 metre drill program
at the Company’s 100% owned Hualilan Gold
Project with an additional 50,000 metre
program commenced
• Significant expansion of tenement position at
the Hualilan Gold Project
• Completion of the acquisition for 100% of the
El Guayabo Gold Copper Project, Ecuador
• Two new Gold-Copper discoveries and
expansion of these discoveries at the
Colorado V Project, Ecuador
7
Company
Projects
The Hualilan Gold Project – San Juan,
Argentina (CEL 100%) 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 the
Company the property was last explored in
2006 by La Mancha Resources, a Toronto Stock
Exchange listed company. Since July 2019, CEL
has completed over 200,000 metres of drilling
which has significantly extended the high grade
mineralisation and discovered an underlying
intrusion-hosted 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 1000
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
South American gold discoveries in recent times.
El Guaybo Project Ecuador (CEL 100%): 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. The Company has
drilled five of fifteen regionally significant Au-soil
anomalies with over 500 metres of mineralisation
intersected at all anomalies, confirming the
potential for a major bulk gold system at the El
Guayabo Project.
8
The El Guayabo Copper-Gold Tenement – El Oro,
Ecuador (CEL 100%:) Prior to CEL the project was
last drilled by Newmont Mining in 1995 and 1997
targeting gold in hydrothermal breccias which
demonstrated potential to host significant gold
and associated copper and silver mineralisation.
Results from CEL’s maiden drill program included
257.8m at 1.4 g/t AuEq including 53.7m at 5.3
g/t AuEq and 309.8m at 0.7 g/t AuEq including
202.1m at 0.8 g/t AuEq and confirmed continuous
mineralisation over 900 metres strike.
The Colorado V Copper-Gold Tenement – El
Oro, Ecuador (CEL earning 50%): adjoins and has
the same geology as the El Guayabo 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 first drill holes by the
Company at Colorado V, confirmed two significant
Au-Cu-Ag-Mo discoveries. Results included
528.7m at 0.5 g/t AuEq from surface to the end
of the hole including 397.1m at 0.6 g/t AuEq and
570.0m at 0.4 g/t AuEq from surface to the end of
the hole including 306.0m at 0.5 g/t AuEq.
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.” Limited historical exploration has been
undertaken on the tenement, with the work that
has been done undertaken by local groups that
targeted high-grade gold. Historical exploration
reports record gold mineralisation in intrusive
rocks in outcrop.
Challenger Exploration Limited Annual Report “ The Hualilan
Gold Project
project has a
rare combination
of both grade
and scale“
9
Company
Projects Highlights
Hualilan Gold Project – San Juan, Argentina
• 2.1 Million Ounce (AuEq)1 maiden MRE for Hualilan Gold Project
• Skarn component: 6.3 Mt at 5.6 g/t AuEq1 for 1.1 Moz AuEq
•
Intrusion/sediment-hosted: 41.4 Mt at 0.8 g/t AuEq1 for 1.0 Moz AuEq
• Resource contains a higher grade core of mineralisation comprising 1.0 Moz at 6.4 g/t AuEq (at a 3.0 g/t
cut-off grade) or 1.2 Moz at 5.2 g/t AuEq (at a 2.2 g/t cut-off grade)
• Clear potential for resource to grow significantly via both extension and infill drilling with some of the more
significant intersections not impacting the resource including:
• 13.0m at 15.5 g/t AuEq1 (FHNV10-02): 600 metres south of the resource limit
• 5m at 8.7 g/t AuEq1 (GNDD-394): 400m north of the resource limit
• 4.0m at 5.8g/t AuEq1 (GNDD-308e): 700m vertically below the resource limit
• 26.6m at 2.5 g/t AuEq1 (GNDD-437): discovery below Verde – extension drilling ongoing
• 39.0m at 5.6 g.t AuEq1 (GNDD-088A): below the pit shell requires additional infill drilling
• 104.0m at 1.7g/t AuEq1 (GNDD-113A): top 30m only falls within the optimised pit shell
• 67.6m at 2.6 g/t AuEq1 (GNDD-434): top 20m only falls within the optimised pit shell
Mineralisation Style
Mt
(0.25 g/t AuEq cut-off)
Skarn (limestone hosted)
intrusion/sediment hosted
6.3
41.4
Mineralisation Style
Contained Metal
Skarn (limestone hosted)
intrusion/sediment hosted
Total Contained metal
Au
(g/t)
4.4
0.6
Au
(Moz)
0.9
0.8
1.7
Ag
(g/t)
19.4
4.0
Ag
(Moz)
3.9
5.3
9.2
Zn
(%)
2.0
0.2
Zn
(kt)
123
95
218
Pb
(%)
0.2
0.04
Pb
(kt)
11
19
29
Au Eq
(g/t)
5.6
0.8
Au Eq
(Moz)
1.13
1.00
2.13
Table 1: Interim MRE reported as Skarn and Intrusion/sediment hosted components of mineralisation
10
Challenger Exploration Limited Annual Report Domain
Category
Mt
Au
(g/t)
Ag g/t
(g/t)
US$1800 optimised shell
> 0.25ppm AuEq
Below US$1800 shell
> 1.0ppm AuEq
Indicated
Inferred
18.7
25.0
Inferred
4.0
Total
47.7
1.1
1.0
1.9
1.1
Note: Some rounding errors may be present
Table 2: Total MRE (Combined skarn and Intrusion hosted domains)
Zn
(%)
0.41
0.39
Pb
(%)
0.07
0.06
5.4
5.6
11.5
1.04
0.07
6.0
0.45
0.06
AuEq
(g/t)
AuEq
(Moz)
1.3
1.2
2.6
1.4
0.80
1.00
0.33
2.13
1 Gold Equivalent (AuEq) values – Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1900 Oz, Ag US$24 Oz, Zn US$4,000/t, Pb US$2000/t
• Metallurgical recoveries are estimated to be Au (95%), Ag (91%), Zn (67%) Pb (58%) across all ore types
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x 0.012106] + [Zn (%) x 0.46204] + [Pb (%) x 0.19961]
• 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
•
For additional information on the maiden MRE including Pit Optimisation Parameters, the Mineral Resource Estimate Model,
Compositing and Top Cuts refer to ASX Release dated 1 June 2022
• Mineralisation remains open in all directions and there is clear potential for the MRE to grow significantly
via extension and infill drilling. Sixty-three significant intersections did not impact the MRE which
compares to the 499 CEL drill holes used in the MRE. Of these intersections several are located 500 to
600 metres outside the resource limits, requiring additional infill drilling, and several define new zones of
mineralisation which are currently being followed up.
• The MRE comprises two styles of mineralisation, higher-grade limestone skarn (manto) mineralisation,
and lower grade mineralisation predominantly hosted in intrusives and sediments. These two components
of the Interim MRE of 2.13 Moz AuEq (at a 0.25 g/t AuEq cut-off near surface and 1.0 g/t AuEq at depth)
are reported in Table 1. Approximately 0.8 Moz AuEq of the MRE is classified as Indicated with the balance,
including all mineralisation outside the US$1800 AuEq optimised pit shell, classified as Inferred.
• Exploration continued to return outstanding results with the results significantly expanding mineralisation.
11
El Guayabo/Colorado V Gold/Copper Projects – El Oro, Ecuador
• Two new Au-Cu-Ag-Mo discoveries of significant scale in the first two regionally significant Au-soil
anomalies drilled in Colorado V with results including (refer Table 8):
• 528.7m at 0.5 g/t AuEq2 – 0.3 g/t Au, 2.0 g/t Ag, 0.1 % Cu from 4.5m to eoh, including;
397.1m at 0.6 g/t AuEq2 – 0.3 g/t Au, 2.8 g/t Ag, 0.1% Cu from 4.5m including;
108.0m at 0.7 g/t AuEq2 – 0.4 g/t Au, 2.8 g/t Ag, 0.1 Cu from 6.0m and;
130.2m at 0.7 g/t AuEq2 – 0.4 g/t Au, 3.3 g/t Ag, 0.1 Cu from 166.6m (CVDD-22-001)
• 570.0m at 0.4 g/t AuEq2 – 0.2 g/t Au, 2.0 g/t Ag, 0.1% Cu from 5.0m to eoh including;
306.0m at 0.5 g/t AuEq2 – 0.2 g/t Au, 2.3 g/t Ag, 0.1% Cu from 14.0m (CVDD-22-002)
• 564.1 m at 0.4 g/t AuEq2 – 0.2 g/t Au, 2.3 g/t Ag, 0.1 % Cu, from 8.1m including;
278.0 m at 0.6 g/t AuEq2 – 0.3 g/t Au, 3.2 g/t Ag, 0.1% Cu, from 8.1m including;
146.5 m at 0.7 g/t AuEq2 – 0.4 g/t Au, 3.2 g/t Ag, 0.1 Cu, from 8.1m (CVDD-22-005)
• 509.9 m at 0.4 g/t AuEq2 – 0.2 g/t Au, 1.4 g/t Ag, 0.1% Cu, from 2.5m including;
242.5 m at 0.6 g/t AuEq2 – 0.4 g/t Au, 1.8 g/t Ag, 0.1% Cu, from 2.5m (CVDD-22-003)
The Company released the results from its maiden drill program in Ecuador during the year. The results
confirmed the discovery of a significant intrusion hosted gold-copper-silver-molybdenum system
and significantly upgraded the discovery with high grade intersections including 53.7m at 5.3 g/t AuEq
(GYDD-21-008) and all holes intersecting significant mineralisation.
2 Gold Equivalent (AuEq) values El Guayabo Project Ecuador- Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1780 Oz, Ag US$22 Oz, Cu US$9,650 /t, Mo US$40,500 /t,
• Metallurgical recovery factors for gold, silver, copper, and molybdenum are assumed to be equal.
No metallurgical factors have been applied in calculating the Au Eq.
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x (22/1780)] + [Cu (%) x (9650/100*31.1/1780)]
+ [Mo (%) x (40500/100*31.1/1780)].
• CEL confirms that it is the Company’s opinion that all the elements included in the metal equivalents calculation have reasonable
potential to be recovered and sold.
12
Challenger Exploration Limited Annual Report
13
Corporate
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 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.
Subsequent to the financial year, Queens Road
Capital Investment Ltd (QRC) financed the
Company with a US$15m private placement of
unsecured convertible debentures. The Debentures
are convertible into fully paid ordinary shares in
CEL (“Shares”) at a price of $0.25, a 30% premium
to the 5-day volume weighted average price
(“VWAP”) prior to 2 September 2022. Additionally,
the Company’s largest institutional shareholder
invested pro-rata to its 12% shareholding via a
AUD$2.6m placement at $0.19.
QRC is a leading resource-focused investment
company based in Hong Kong and listed on the
main board of the Toronto Stock Exchange (“TSX”).
QRC acquires and hold securities for long-term
capital appreciation, with a focus on convertible
debt securities and resource projects in advanced
development or production located in safe
jurisdictions.
The funding allows the completion of several
important and value accretive milestones including;
an updated Mineral Resource Estimate and Scoping
Study at Hualilan; an additional 50,000m of drilling
at Hualilan; and an additional 25,000m drilling and
a maiden Mineral Resource Estimate at El Guaybo
in Ecuador. Importantly, the pro-rata at market
participation of CEL’s largest shareholder provides
discretionary expenditure of $2.6m which, is yet to
be allocated, and extends CEL’s runway into 2024.
Refer to the ASX announcement of 9 September
2022 for the terms of the debentures.
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 a second donation of four oxygen bottles and four intensive care
beds to the Santa Rosa community hospital at the request of the local mayor.
During the year the impact of COVID-19 in South America has continued to decrease in line with the rest
of the world. In addition, all of the company’s employees from Argentina and Ecuador are fully vaccinated
for COVID-19. Consequently the Company’s operations are functioning as they were prior to the pandemic
with the exception of the COVID-19 protocols which remain ongoing. CEL’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.
14
Challenger Exploration Limited Annual Report “ CEL’s priority
remains the
health and
wellbeing of
all its staff and
contractors and
their families”
15
Hualilan Gold Project,
Argentina
• Maiden Mineral Resource Estimate (MRE) of 2.1 million ounces (AuEq)1 at CEL’s flagship Hualilan Gold
Project containing a high grade core of 6.3 Mt at 5.6 g/t AuEq1 for 1.1 Moz AuEq.
• MRE is based on 125,700 metres of CEL’s current 204,000 metre drill program and mineralisation remains
open in all directions.
• The 204,000 metre drill program is now completed with assays pending for 29,000 drill metres.
Accordingly the rig count has been reduced from 9 to 3 rigs to complete the additional 50,000 metres
drilling recently announced.
•
First drilling post CEL’s MRE significantly expands mineralisation, particularly the high-grade core of 1.1 Moz
at 5.6 g/t AuEq1, in multiple directions with results including;
• 28.5 metres at 5.3 g/t AuEq (5.0 g/t Au, 23.9 g/t Ag, 0.02 % Pb, 0.03 % Zn) – (GNDD-530)
• 6.6 metres at 6.4 g/t AuEq (4.2 g/t Au, 50.0 g/t Ag, 0.01 % Pb, 3.4 % Zn) – (GNDD-536)
•
•
34.4m at 0.7 g/t AuEq (0.5 g/t Au, 2.0 g/t Ag, 0.2 % Pb, 0.5 % Zn) from 59.0m including
6.3 metres at 2.4 g/t AuEq (1.1 g/t Au, 7.7 g/t Ag, 1.1 % Pb, 2.2 % Zn (GNDD-563)
1.4 metres at 75.1 g/t AuEq (67.0 g/t Au, 101 g/t Ag, 0.04 % Pb, 15.0 % Zn) (GNDD-533)
• Outstanding metallurgical testing with average gold recovery increased to 95% across all ore types and a
clear route to recover silver, zinc and lead credits via standard sequential flotation.
Figure 1 – Hualilan Project and surrounds
16
Challenger Exploration Limited Annual Report Cut-off
(g/t AuEq)
0.25
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
2.10
2.20
2.30
2.40
2.50
2.60
2.70
2.80
2.90
3.00
Mt
47.7
42.7
35.1
29.6
25.3
22.2
19.8
18.0
16.5
15.0
13.6
12.4
11.6
10.8
10.2
9.5
8.9
8.5
8.0
7.6
7.2
6.9
6.5
6.3
5.9
5.6
5.4
5.2
4.9
Au
(g/t)
Ag g/t
(g/t)
1.1
1.2
1.4
1.6
1.8
2.0
2.2
2.3
2.4
2.6
2.8
3.0
3.1
3.2
3.3
3.5
3.6
3.7
3.9
4.0
4.1
4.2
4.3
4.4
4.6
4.7
4.8
4.9
5.1
6
6.5
7.5
8.3
9.2
10.0
10.7
11.3
11.8
12.4
13.3
13.9
14.4
14.9
15.3
15.8
16.3
16.7
17.2
17.6
18
18.5
19.0
19.4
20.2
20.6
21.0
21.4
21.9
Zn
(%)
0.46
0.50
0.58
0.66
0.75
0.82
0.89
0.96
1.02
1.09
1.18
1.26
1.31
1.37
1.44
1.50
1.57
1.62
1.68
1.73
1.79
1.85
1.90
1.95
2.05
2.10
2.16
2.21
2.27
Pb
(%)
0.06
0.07
0.07
0.08
0.09
0.10
0.10
0.11
0.11
0.12
0.12
0.13
0.13
0.14
0.14
0.15
0.15
0.15
0.16
0.16
0.16
0.17
0.17
0.17
0.18
0.18
0.19
0.19
0.19
Table 3 – Total MRE at various cut off grades – Note: Some rounding errors may be present
AuEq
(g/t)
Moz
(AuEq)
1.4
1.5
1.8
2.0
2.3
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.2
4.4
4.6
4.7
4.9
5.0
5.2
5.3
5.5
5.6
5.8
6.0
6.1
6.3
6.4
2.13
2.09
2.00
1.93
1.85
1.79
1.73
1.68
1.63
1.58
1.53
1.48
1.45
1.41
1.38
1.34
1.31
1.28
1.25
1.23
1.20
1.18
1.15
1.13
1.10
1.08
1.06
1.03
1.01
17
The high retention of metal as the cut-off grade is lifted is demonstrated by combined skarn/intrusion-
hosted Resource Estimate at cut-off grades above the 0.25 g/t cut-off grade. Within the same resource
model taking a cut-off grade of 0.40 produces a MRE containing 2.0 million ounces AuEq at a grade of 1.8
g/t AuEq while at a 0.50 g/t AuEq cut-off the MRE containing 1.9 million ounces at a grade of 2.0 g/t AuEq.
• 2.0 Moz at 1.8 g/t AuEq – 35.1Mt at 1.4 g/t Au, 7.5 g/t Ag, 0.6% Zn, 0.07% Pb (0.40 g/t AuEq cut-off)
• 1.9 Moz at 2.0 g/t AuEq – 29.6Mt at 1.6 g/t Au, 8.3 g/t Ag, 2.3% Zn, 0.08%Pb (0.50 g/t AuEq cut-off)
• 1.6 Moz at 3.1 g/t AuEq – 16.5Mt at 2.4 g/t Au, 12 g/t Ag, 1.0% Zn, 0.11%Pb (1.0 g/t AuEq cut-off)
This grade-tonnage distribution provides the Hualilan Gold project with significant flexibility in response to
a changing gold price or costs. It provides the opportunity to evaluate a staged startup using a higher grade
starter pit. As can be seen in Figure 3 (MRE block model in Long Section) there are distinct near surface
higher-grade zones of mineralisation at Sentazon, Muchilera, the Magnata Fault Zone and the main Norte
Manto. Additionally, Figure 2, the Long Section showing the MRE by resource classification shows these
zones of high-grade near surface mineralisation are predominantly in the Indicated Resource component
of the MRE.
18
Challenger Exploration Limited Annual Report Figure 2 – Long section (MRE classification)
Figure 3 – Long Section (MRE block model)
19
Growth Potential from Drill intercepts that have not impacted the MRE
The MRE includes significant intersections from 499 of the Company’s drill holes however there
remains many significant intercepts that have not impacted the MRE. Of these intersections several
are located 500 to 600 metres outside the resource limits, many require additional infill drilling,
several define new zones of mineralisation which are currently being followed up with drilling
with the majority located below the US$1800 (0.25 g.t AuEq) optimised pit shell. Some of these
intercepts are listed in Table 4 below.
Table 4 – Selected drill intercepts that were not impacted by the Resource Estimate
Drillhole
Intercept
(AuEq)
Comment
GNDD-113
104.0m at 1.7 g/t AuEq from 262.0m
30.0m at 0.4 g/t AuEq from 390.0m
top 30 metres only falls within the optimised pit
shell below the optimised pit shell
GNDD-394
5.0m at 8.7 g/t AuEq from 224.0m
inc 3.0m at 14.3 g/t AuEq
hole located approximately 400 metres north-
west of the current resource limit
FHNV10-1B
9.2m at 5.1 g/t AuEq (channel)
inc 4.6 m at 9.5 g/t AuEq
located 600 metres south of the resource
boundary
FHNV10-02
13.0m at 15.5 g/t AuEq (channel)
inc 8.5m at 21.9 g/t AuEq
located 600 metres south of the resource
boundary
FHNV10-03
12.7m at 4.4 g/t AuEq (channel)
FHNV10-04
4.2m at 8.1 g/t AuEq (channel)
FHNV10-05
1.7m at 16.4 g/t AuEq (channel)
FHNV10-06
3.8m at 14.6 g/t AuEq (channel)
located 600 metres south of the resource
boundary
located 600 metres south of the resource
boundary
located 600 metres south of the resource
boundary
located 600 metres south of the resource
boundary
GNDD-256
8.0m at 1.0 g/t AuEq from 104.0m
inc 2.0m at 2.0 g/t AuEq
100 metres south of resource boundary
GNDD-434
67.6m at 2.6 g/t AuEq from 24.4m
GNDD-336
2.9m at 17.7 g/t AuEq from 312.0m
Only top 20 metre of this intersection within the
optimised pit shell requires down dip drilling
Below optimised pit shell requires follow up
drilling
GNDD-254
26.8m at 1.9 g/t AuEq from 363.0m
inc 6.0m at 4.7 g/t AuEq
Below optimised pit shell new zone below Verde
needs follow up drilling
GNDD-106
4.0m at 2.6 g/t AuEq from 121.0m
8.0m at 0.5 g/t AuEq from 205.0m
Below the optimised pit shell
Below the optimised $1800 pit shell
GNDD-336
2.9m at 17.7 g/t AuEq from 312.0m
Below optimised pit shell requires follow up
drilling
Gram
Metres
176.8
12.0
43.5
47.2
201.3
56.0
34.6
27.4
55.8
8.0
175.8
51.3
49.4
10.4
4.0
51.3
20
Challenger Exploration Limited Annual Report Drillhole
Intercept
(AuEq)
Comment
GNDD-254
26.8m at 1.9 g/t AuEq from 363.0m
inc 6.0m at 4.7 g/t AuEq
Below optimised pit shell new zone below Verde
needs follow up drilling
GNDD-106
4.0m at 2.6 g/t AuEq from 121.0m
8.0m at 0.5 g/t AuEq from 205.0m
Below the optimised pit shell
Below the optimised $1800 pit shell
Gram
Metres
49.4
10.4
4.0
GNDD-088a
39.0m at 5.6 g/t AuEq from 224.0m
Below optimised pit shell and requires infill drilling
218.4
GNDD-515
19.6m at 0.8 g/t AuEq from 298.4m
inc 6.0m at 1.5 g/t AuEq
6.0m at 4.2 g/t AuEq from 376.0m
Below optimised pit shell
Below optimised pit shell and needs follow up
drilling
GNDD-250
30.0m at 0.4 g/t AuEq from 80.0m
inc 5m at 1.3 g/t AuEq
GNDD-306
25.0m at 0.6 g/t AuEq from 78.0m
inc 8m at 1.2 g/t AuEq
Below optimised pit shell
Below optimised pit shell
GNDD-532
14.5m at 2.1 g/t AuEq from 93.0m
inc 9.0m at 2.9 g/t AuEq
10.9m at 2.6 g/t AuEq from 416.5m
Below optimised pit shell
Below optimised pit shell new Zone requires
follow up drilling
GNDD-512
37.0m at 0.6 g/t AuEq from 196.0m
inc 4.0m at 1.6 g/t AuEq
GNDD-432
37.4m at 0.8 g/t AuEq from 246.0m
inc 1.3m at 7.0 g/t AuEq
Below optimised pit shell
Below optimised pit shell
GNDD-500
67.5m at 0.3 g/t AuEq from 81.5m
40.0m at 0.8 g/t AuEq from 267.9m
Below optimised pit shell
Below optimised pit shell
GNDD-343
55.0m at 0.7 g/t AuEq from 190.0m
Below optimised pit shell
GNDD-348e
53.0m at 0.5 g/t AuEq from 227.0m
Below optimised pit shell
GNDD-326
2.0m at 7.5 g/t AuEq from 288.0m
400m east of resource new zone needs follow up
GNDD-471
7.0m at 1.3 g/t AuEq from 372.0m
inc 2.0m at 3.9 g/t AuEq
Extension of Verde Zone below optimised pit shell.
Requires infill drilling as the hole was a 160m step
out
GNDD-134
20.0m at 1.5 g/t AuEq from 519.0m
inc 2.9m at 9.8 g/t AuEq
New zone which required follow up drilling below
optimised pit shell
GNDD-416
4.4m at 17.1 g/t AuEq from 240.0m
1.1m at 44.9 g/t AuEq from 530.7m
1.3m at 4.0 g/t AuEq from 424.6m
New zone below optimised pit shell follow up
drilling required
New zone below optimised pit shell follow up
drilling required
New zone below optimised pit shell follow up
drilling required
GNDD-207
25.6m at 0.4 g/t AuEq from 217.4m
Below optimised pit shell
GNDD-437
26.6m at 2.2 g/t AuEq from 348.5m
inc 4.2m at 12.7 g/t AuEq
new zone below Verde requires follow up drilling
(below optimised pit shell)
GNDD-329e
14.0m at 1.2 g/t AuEq from 104.0m
68.0m at 0.5 g/t AuEq from 282.0m
Within optimised pit requires infill drilling
below optimised pit shell
15.7
25.2
12.0
15.0
29.4
28.4
22.2
29.9
20.3
32.0
38.5
26.5
15.0
9.1
30.0
75.2
49.4
5.2
10.3
58.5
16.8
34.0
21
Drillhole
GNDD-308e
Intercept
(AuEq)
Comment
Gram
Metres
36.8m at 0.6 g/t AuEq from 258.3m
45.0m at 0.4 g/t AuEq from 640.0m
inc 27.0m at 0.6 g/t AuEq
4.0m at 5.8 g/t AuEq* from 1009m
Below optimised pit shell
Below optimised pit shell new zone requires follow
up drilling
Below optimised pit shell new zone requires follow
up drilling
GNDD-547
3.7m at 7.3 g/t AuEq from 157.0,m
Below optimised pit shell new zone requires follow
up drilling
GNDD-373
50.7m at 0.5 g/t AuEq from 376.9m
Below optimised pit shell
GNDD-285
2.0m at 6.9 g.t AuEq from 393.0m
Below optimised pit shell new zone requires follow
up drilling
GNDD-325
32.5m at 0.8 g/t AuEq from 301.1m
inc 15.5m at 1.4 g.t AuEq
Below optimised pit shell
GNDD-200
66.8m at 0.7 g/t AuEq from 168.3m
Below optimised pit shell
GNDD-082
34.1m at 1.6 g/t AuEq from 193.4m
Below optimised pit shell
GNDD-345
70.5m at 0.5 g/t AuEq from 227.0m
Below optimised pit shell
GNRC-104
4.0m at 12.0 g/t AuEq from104.0m
Below optimised pit shell
GNDD-504
15.4m at 1.1 g/t AuEq from 448.0m
Below optimised pit shell
GNDD-115
34.5m at 0.3 g/t AuEq from 176.5m
Below optimised pit shell and requires follow up
drilling
GNDD-356
27.0m at 0.5 g/t AuEq from 263.0m
Below optimised pit shell
GNDD-484
21.0m at 0.6 g/t AuEq from 343.0m
Below optimised pit shell
GNDD-298
21.0m at 0.8 g/t AuEq from 148.0m
Below optimised pit shell
GNDD-406
24.0m at 0.5 g/t AuEq from 242.0m
0.5m at 90.3 g/t AuEq from 349.5m
Below optimised pit shell
Below optimised pit shell needs follow up drilling
GNDD-237
2.0m at 17.5 g/t AuEq from 349.7m
Below optimised pit shell
GNDD-409
22.0m at 1.3 g/t AuEq from 83.0m
inc 10.0m at 2.5 g/t AuEq
Below optimised pit shell new zone needs follow
up drilling
GNDD-459
43.0m at 0.5 g/t AuEq from 339.0m
Below optimised pit shell needs infill drilling
GNDD-433
22.0 at 0.7 g/t AuEq from178.0m
GNRDC-084
21.0m at 0.9 g/t AuEq from 78.0m
Below optimised pit shell extreme northern
extension of Verde Zone limited drilling requires
follow up drilling
Below optimised pit shell requires follow up
drilling
GNDD-138
54.0m at 0.4 g/t AuEq from 43.0m
within optimised pit required infill drilling
GNDD-527
5.0m at 1.9 g/t AuEq from 410.0m
inc 3.1m at 2.9 g/t AuEq
Below pit shell new zone discovery requires follow
up drilling
22
22.1
18
23.2
27.1
25.4
13.8
26.0
46.8
54.6
35.3
48.0
16.9
10.4
13.5
12.6
16.8
12.0
45.2
35.0
28.6
21.5
15.4
18.9
21.4
9.5
Challenger Exploration Limited Annual Report Drilling Solidifies Outlook for a
Significant Uplift to the Maiden MRE
Significant intersections received
after the MRE cut-off date
During the year the Company released results
from drilling targeting extensions to the
mineralisation at the Company’s flagship Hualilan
Gold Project, in San Juan Argentina. The results
include the first drill holes that were not included
in the Company’s maiden 2.1 million ounce AuEq
Mineral Resource Estimate (MRE).
The results continue to exceed the Company’s
expectations and confirms that mineralisation
remains open in all directions, the majority of the
new mineralisation is high-grade, and there is
clear potential for the MRE to grow significantly
via extension and infill drilling. Several recently
completed holes (assays pending) opened new
high-grade targets for extension drilling and the
Company believes that Hualilan will remain open
in all directions at the completion of the current
204,000 metres.
In addition to the strong results from drilling
designed to extend the mineralisation outside
the interim MRE boundary several infill holes,
often between holes with minimal grade, have
returned significant high grade results which is
enormously encouraging.
Table 5 shows the contribution to the maiden 2.1Moz
AuEq1 MRE by domain. While drilling has been
ongoing in all domains as mineralisation remains
open in all directions, the majority of the drilling,
following the completion of the maiden Hualilan
MRE, has been focussed in five areas.
1. The Magnata Fault: where high-grade
mineralisation remains open in both directions
along strike and at depth
2. Sentazon: where in addition to the mineralisation
remaining open to the south along strike a
significant new high-grade discovery has been
made at depth
3. Verde Zone (at depth): where a significant new
high-grade skarn/endoskarn zone is emerging
down dip of parts of the Verde Zone
4. Verde Zone (north): where drilling continues to
extend the mineralisation north along strike and
at depth with mineralisation open in both these
directions
5. South Verde: where drilling continues to extend
the Verde Zone south of the Magnata Fault along
strike and at depth with mineralisation open in
both these directions
The results reported in this Annual Report comprise
the first half of the Verde, Southern Verde, and Gap
Zone drilling completed post the release of the
maiden and interim MRE. This release also includes
the results for the first holes targeting extensions
on the Magnata Fault for which assays have been
received. Results for the majority of the Magnata
Fault, Sentazon and Sentazon Deeps, Sanchez Fault
and the deeper high-grade zones within Verde
remain pending.
23
Domain
Sanchez Fault
Norte Manto
Magnata Fault
Magnata Manto
Muchilera Manto
Tonnes
673,754
510,533
‘000 oz
AuEq 1
Comments
87,212
Open at depth and to the east
97,954
Open north along strike
4,309,440
406,521
Open to the east and west and at depth (Drilling Focus)
571,746
299,504
63,106
Open up dip and along strike
18,532
Open along strike and at depth
Sentazon MM and FW
1,967,110
334,655
Significant depth extensions, open south (Drilling Focus)
Verde Skarn Zones
2,151,908
177,503
Open at depth and along strike (Drilling Focus)
Skarn Mineralisation
10,483,995
1,185,484
Sub-total (high grade skarn domains)
Verde
Gap Zone
South Verde
17,472,119
470,233
Open at depth and north along strike (Drilling Focus)
5,063,971
140,228
Open at depth and along strike
14,654,682
336,855
Open at depth and south along strike (Drilling Focus)
Intrusion/Sediment-hosted
37,190,772
947,316
Sub-total (intrusion/sediment-hosted domains)
Total MRE
47,674,767
2,132,800
(Refer Table 1 and Table 2 of this Financial Report)
Table 5 – Maiden Hualilan Mineral resource estimate by domains
Verde and Gap Zone Drilling
The Verde Zone contributes almost 1 million
ounces gold equivalent1 (Table 5) to the current
Hualilan MRE when the new high-grade zones at
depth are included. The Verde Zone was a CEL
discovery targeted using surface magnetics and IP
(Induced Polarisation) at the Hualilan Gold Project.
The discovery hole (ASX release 2/3/21) returned
125.5 metres at 1.1 g/t AuEq including 71.0 metres
at 1.8 g/t AuEq (GNDD-169). The Verde Zone covers
2.0 kilometres of strike and mineralisation remains
open along strike and at depth.
Mineralisation in the Verde Zone is oriented north-
south, is 50 to 100 metres wide, and hosted by
bedding parallel fault-fracture zones in sediments
and steeply dipping fracture zones in intrusives.
A lower grade halo of mineralisation extends into
the overlying sedimentary rocks which have been
locally brecciated by the hydrothermal fluids during
mineralisation. The overlying mineralisation in
the sedimentary rocks dips to the west at 30-50°
24
and is up to 50 metres thick. This overlying halo of
lower grade mineralisation is a useful exploration
guide to vector to the deeper intrusion-hosted
mineralisation. As drilling extends deeper, zones
of high-grade skarn mineralisation are being
intersected at both limestone-intrusive contacts
and also within limestone which is analogous to the
Main Norte and Sentazon Manto mineralisation.
The infill and extension drilling at the Verde and Gap
Zones is designed as a series of fences of holes at
40 metre spacing along strike. Holes on each fence
were collared to target the mineralisation 40 metres
below the previous hole. The intention is to drill
the entire 2.0 kilometre Verde Zone down to 400
metres vertically on 40 x 40 metre spacing. The infill
portion of this program is ongoing as mineralisation
continues to be extended further north and south
along strike, and at depth. Accordingly, the focus
has been to continue expanding the footprint of the
mineralisation rather than infill drilling.
Challenger Exploration Limited Annual Report GNDD-530 – Verde Zone
(South of the Magnata Fault)
GNDD-530 was a test for extensions of the Verde
style mineralisation, south of the Magnata Fault, at
depth. The hole was collared to test 80 metres below
GNDD-500 which intersected 67.6 metres at 0.3 g/t
AuEq from 81.5m and 40.0 metres at 0.8 g/t AuEq
from 267.0m. GNDD-530 intersected three zones of
mineralisation – 28.5 metres at 5.3 g/t AuEq (5.0 g/t
Au, 23.9 g/t Ag, 0.02 % Pb, 0.03 % Zn) from 357.5m,
23.0 metres at 0.3 g/t AuEq (0.3 g/t Au, 1.2 g/t Ag,
0.01 % Pb, 0.02 % Zn) from 107.0m, and 54.0 metres
at 0.4 g/t AuEq (0.3 g/t Au, 2.0 g/t Ag, 0.01 % Pb,
0.06 % Zn) from 159.0m.
All three intersections extended the mineralisation
80 metres down dip of the current MRE boundary
with the deepest intersection (28.5m at 5.3 g/t AuEq)
demonstrating significantly improved grades at
depth which is becoming common in the Verde Style
mineralisation at depth. The second intersection
(54.0m at 0.4 g/t AuEq) significantly expanded the
width of the mineralisation.
Figure 4 shows the MRE block model in section and
GNDD-530. On this section the mineralisation below
the US$1800 optimised pit shell was not included
in the MRE as it has a grade of less than the 1.0 g/t
AuEq cut off used for reporting the underground
component of the MRE. This area of the MRE is
relatively lightly drilled with additional drilling planned
along strike and both up and down-dip. The higher
grade mineralisation intersected at depth in GNDD-
530, and any additional high-grades in infill and
extensional drilling, has the potential to significantly
deepen the US$1800 optimised pit shell which would
provide a material increase to the current MRE.
Figure 4 – Cross Section GNDD-530
25
GNDD-563 – Northern Verde Zone
The results of GNDD-563 are significant, as the
hole is on the northern most section of the Verde
Zone and only a minor amount of mineralisation
was included in the maiden MRE from this section
(Figure 5). GNDD-563 intersected a broad zone of
consistent mineralisation 75 metres up-dip of the
maiden MRE boundary and several follow-up holes
(assays pending) indicate extensive mineralisation.
The upper intercept in GNDD-563 of 34.4 metres
at 0.8 g/t AuEq (0.5 g/t Au, 2.0 g/t Ag, 0.2 % Pb,
0.5 % Zn) from 59.0m including 6.3 metres at 2.4
g/t AuEq (1.1 g/t Au, 7.7 g/t Ag, 1.1 % Pb, 2.2 % Zn)
and 2.0 metres at 3.1 g/t AuEq (3.0 g/t Au, 0.4 g/t
Ag, 0.04 % Pb, 0.05 % Zn) in GNDD-563 lies within
the current US$1800 optimised pit. Additionally, the
results of GNDD-563 and the significant sulphide
zones logged in adjacent drill holes GNDD-657,
GNDD-686 and GNDD-697 (all assays pending)
demonstrate that the Verde Zone mineralisation at its
northern limit appears be up to 50 metres true width,
strong, consistent between drill holes, open at depth
and within the existing US$1800 optimised pit shell.
GNDD-563 intersected several deeper zones of
mineralisation including 3.1 metres at 0.5 g/t AuEq
(0.4 g/t Au, 0.6 g/t Ag, 0.02 % Pb, 0.1 % Zn) from
125.0m and 20.0 metres at 0.4 g/t AuEq (0.3 g/t Au,
1.7 g/t Ag, 0.04 % Pb, 0.1 % Zn) from 182.0m. These
intersections correlate with a deeper intersection in
GNDD-433 and appear to form a new deeper zone of
mineralisation that will require follow up.
Figure 5 – Cross Section GNDD-563 and northern most Verde Zone drilling
26
Challenger Exploration Limited Annual Report GNDD-533 – Verde Zone
GNDD-533 was drilled as an infill hole between
GNDD-187e and GNDD-406. The hole intersected
significantly higher grades than the two
surrounding holes included in the MRE intersecting
1.4 metres at 75.1 g/t AuEq (67.0 g/t Au, 101 g/t
Ag, 0.04 % Pb, 15.0 % Zn) from 362.0m and 0.7
metres at 17.0 g/t AuEq (16.6 g/t Au, 5.7 g/t Ag,
0.7 % Zn) from 378.2m. The high grades correlate
with an intersection of 0.5 metres at 90.3 g/t AuEq
in GNDD-406 downdip and demonstrate the high-
grade zones are continuous between drill holes.
Additionally, GNDD-533 intersected a deeper zone
of mineralisation intersecting 21.0 metres at 0.4
g/t AuEq (0.4 g/t Au, 0.9 g/t Ag, 0.01 % Zn) from
473.0m including 2.0 metres at 1.2 g/t AuEq
(0.3 g/t Au, 32.6 g/t Ag, 0.04 % Pb, 1.4 % Zn). As
Figure 7 shows this deeper intersection correlates
with intersections of 26.8 metres at 1.9 g/t AuEq
including 6.0m at 4.7 g/t AuEq and 4.8 metres
at 2.9 g/t AuEq (GNDD0254); 5.3 metres at 1.5
g/t AuEq including 0.7 metres at 10.0 g/t AuEq
(GNDD-406); and 0.5 metres at 11.8 g/t AuEq and
0.5 metres at 3.0 g/t AuEq (GNDD-187e).
None of these intersections were included in
the maiden MRE as potential wireframes could
not be extended across three adjacent drill holes
however, they now form a new discrete and
continuous zone of mineralisation that will be
captured in an updated MRE.
Figure 6 – Cross Section GNDD-533
27
GNDD-550 – Verde Zone
GNDD-508 – Southern Verde Zone
GNDD-550 was collared as a down dip test of the
central Verde Zone below GNDD-438 which had
intersected five zones of mineralisation including
17.0 metres at 1.2 g/t AuEq from 218.2m. GNDD-
550 intersected three zones on mineralisation
including 4.4 metres at 3.3 g/t AuEq (1.0 g/t Au,
16.0 g/t Ag, 0.03 % Pb, 4.5 % Zn) from 373.3m,
2.1 metres at 4.8 g/t AuEq (3.7 g/t Au, 27.0 g/t
Ag, 0.01 % Pb, 1.7 % Zn) from 425.0m, and 5.5
metres at 2.2 g/t AuEq (0.5 g/t Au, 15.3 g/t Ag,
0.02 % Pb, 3.3 % Zn) from 437.5m.
The intersections extend the mineralisation
100 metres below the MRE boundary with
mineralisation remaining open at depth.
Consistent with what is being seen elsewhere
in the Verde Zone grades are increasing at
depth with a skarn component of mineralisation
developing. Deeper drilling will resume most
likely after the upgraded MRE.
GNDD-508 was collared in the Verde Zone
north of the Magnata Fault. The hole intersected
1.4 metres at 1.0 g/t AuEq (0.9 g/t Au, 2.0 g/t
Ag, 0.1 % Pb, 0.3 % Zn) from 89.8m and 3.4
metres at 0.4 g/t AuEq (0.2 g/t Au, 8.6 g/t Ag,
0.2 % Zn) from 125.0 metres, both of which lie
within the optimised $1800 pit shell and are new
zones of mineralisation. A third intersection 24.0
metres at 0.4 g/t AuEq (0.3 g/t Au, 0.5 g/t Ag,
0.04 % Pb, 0.06 % Zn) from 167.0m is also a new
zone of mineralisation and is located just below
the current optimised pit shell. A fourth deeper
intersection 2.0 metres at 1.2 g/t AuEq (1.1 g/t
Au, 7.0 g/t Ag, 0.02 % Pb, 0.09 % Zn) extends
the Verde Zone mineralisation 40 metres below
the MRE boundary in this location.
28
Challenger Exploration Limited Annual Report GNDD-506, GNDD-536, GNDD-537
- Central Gap Zone
As Figure 7 shows, the Central Gap and Verde Zone
remain relatively lightly drilled. Assays have now
been received for drill holes GNDD-506, GNDD-
536, GNDD-537, part of the resource drill out in the
Central Gap and Verde Zones which are expected to
materially increase the MRE.
The near surface intercept in GNDD 506 of 2.1
meres at 1.0 g/t AuEq (0.02 g/t Au, 4.5 g/t Ag,
0.1 % Pb, 1.9 % Zn) from 116.1m and 10.6 metres
at 0.9 g/t AuEq (0.9 g/t Au, 1.1 g/t Ag, 0.1 % Zn)
extended the mineralisation 125 metres above the
current MRE boundary with this extension within
the $1800 Au optimised pit shell used to define the
MRE. The deeper intercepts including 8.6 metres at
1.0 g/t AuEq (0.9 g/t Au, 1.3 g/t Ag, 0.1 % Zn) from
205.4m, 35.2 metres at 0.6 g/t AuEq (0.3 g/t Au, 1.4
g/t Ag, 0.5 % Zn) from 238.4m and 8.0 metres at
0.5 g/t AuEq (0.4 g/t Au, 0.5 g/t Ag, 0.1 % Zn) from
294.0m extend the second eastern zone of Gap Zone
mineralisation 80 metres below the current MRE
boundary, with much of this extension inside the
US$1800 optimised pit shell.
In GNDD-536, the intercept of 6.6 metres at 6.4 g/t
AuEq (4.2 g/t Au, 50.0 g/t Ag, 3.4 % Zn) from 552.0m
including 1.8 metres at 22.1 g/t AuEq (14.2 g/t Au,
183 g/t Ag, 0.04 % Pb, 12.5 % Zn) extends the Gap
Zone mineralisation 100 metres below the current
MRE boundary. The intersection of 24.2 metres at
Figure 7 – Gap Zone Cross Section GNDD-506, GNDD-536, GNDD-537 and holes assays pending
29
0.9 g/t AuEq (0.7 g/t Au, 1.7 g/t Ag, 0.2 % Zn) from 188.8m including 1.8 metres at 4.1 g/t AuEq (2.9
g/t Au, 13.4 g/t Ag, 2.2 % Zn) and 2.0 metres at 4.4 g/t AuEq (4.4 g/t Au, 0.1 g/t Ag) correlates with
the intersection in GNDD-537of 16.3 metres at 0.3 g/t AuEq (0.3 g/t Au, 1.2 g/t Ag) from 78.0 m. The
intersection of 12.2 metres at 0.4 g/t AuEq (0.4 g/t Au, 0.4 g/t Ag) in GNDD-536, from 240.5m is also a
new zone at Verde which correlates with an intersection of 6.0 metres at 0.3 g/6t AuEq (0.2 g/t Au, 0.6
g/t Ag, 0.03 % Pb, 0.03 % Zn) from 144.0m in GNDD-537. Both of these new zones of mineralisation lie
inside the optimised US$1800 pit shell.
Figure 8 – 3D Model current MRE showing main areas of Focus for current Resource Extension drilling
30
Challenger Exploration Limited Annual Report GNDD-514 – Gap Zone
GNDD-570 – Verde Zone
GNDD-570 and GNDD-612 were collared on
the northern most fence of drilling on the Verde
Zone in an area that had seen limited drilling
prior to the MRE cut-off date. GNDD-570 was
collared to test 80 metres up-dip of GNDD-226
(16 metres at 0.6 g/t AuEq and 44.0 metres at
0.5 g/t AuEq), the most northerly Verde Zone
intersection included in the current MRE.
The intersections in GNDD-570 of 22.2 metres
at 0.9 g/t AuEq (0.6 g/t Au, 3.7 g/t Ag, 0.4% Pb,
0.4% Zn) from 55.8m including 7.3 metres at
1.8 g/t AuEq (1.4 g/t Au, 9.0 g/t Ag, 0.8% Pb,
0.4% Zn) and 10.0 metres at 0.4 g/t AuEq (0.3
g/t Au, 1.4 g/t Ag, 0.2% Zn) from 95.0m extend
the Verde Zone mineralisation 80 metres up-dip
of the current MRE boundary to near surface
(Figure 9).
GNDD-514 was designed as a deep test of the Gap
Zone Mineralisation. The hole intersected 1.4 metres
at 4.6 g/t AuEq (0.6 g/t Au, 268 g/t Ag, 0.6 % Pb,
1.5 % Zn) from 294.0m and 8.1 metres at 1.6 g/t
AuEq (1.0 g/t Au, 12.7 g/t Ag, 0.1 % Pb, 1.0 % Zn)
from 307.8 m and 2.4 metres at 11.6 g/t AuEq (8.5
g/t Au, 59.1 g/t Ag, 0.1 % Pb, 5.2 % Zn) from 324.1
metres. These intersections are new zones of higher
grade contact skarn mineralisation which occur at
the contact between the limestone-intrusion. These
intersections are 100 metres east of the current MRE
boundary and have been followed up by deeper hole
GNDD-566 (assays pending).
GNDD-521 and GNDD-535 – Gap Zone
GNDD-521 is located in the gap zone and was
designed to test for mineralisation east of the Gap
Zone. The hole intersected 40.0 metres at 0.3 g/t
AuEq (0.2 g/t Au, 2.0 g/t Ag) from 267.0m including
5.0 metres at 1.0 g/t AuEq (0.8 g/t Au, 3.4 g/t Ag,
0.1 % Pb, 0.3 % Zn). GNDD-535 was collared 80
metres north along strike from GNDD-521 and was
also designed to test for mineralisation east of the
Gap Zone. Like GNDD-521, GNDD535 intersected
lower grade mineralisation intersecting 22.3 metres
at 0.3 g/t AuEq (0.2 g/t Au, 0.4 g/t Ag, 0.1 % Zn) from
392.0m and 12.0 metres at 0.4 g/t AuEq (0.4 g/t Au,
0.1 g/t Ag) from 428.0m. These intersections are
interpreted as a new zone of mineralisation located
east of the current MRE boundary. Their orientation
is not yet understood and the new zones will require
follow up drilling.
31
GNDD-612
GNDD-612 was drilled as an infill hole between
GNDD-427 and GNDD-570 based on the
mineralisation logged in GNDD-570. It intersected
35.3 metres at 1.2 g/t AuEq (0.9 g/t Au, 2.7 g/t
Ag, 0.3% Pb, 0.5% Zn) from 64.9 metres including
8.0 metres at 4.5 g/t AuEq (3.4 g/t Au, 8.4 g/t
Ag, 0.9% Pb, 1.7% Zn) and 14.0 metres at 1.1 g/t
AuEq (1.0 g/t Au, 1.1 g/t Ag, 0.2% Zn) from 117.0m.
Additionally, GNDD-612 intersected a zone of
deeper mineralisation with an intersection of 14.5
metres at 1.1 g/t AuEq (0.9 g/t Au, 6.3 g/t Ag, 0.1%
Zn) from 148.0 metres including 4.0 metres at 2.5
g/t AuEq (2.4 g/t Au, 4.7 g/t Ag, 0.1% Pb, 0.1% Zn).
These three intersections lie within a broad
zone of 97.6 metres at 0.8 g/t AuEq (including
internal dilution) confirming the continuity of the
mineralisation and indicating that the Verde Zone has
thickened considerably at this location. Additionally,
the intersections are significantly higher-grade than
the intersections in earlier drilling, confirming that
the mineralisation at the northern limit of the Verde
Zone remains strong and open to the north. Results
for GNDD-680, collared to test 40 metres down dip
of GNDD-427 are pending.
Figure 9 – Cross Section GNDD-570 and GNDD-612 Northern Verde Zone
32
Challenger Exploration Limited Annual Report GNDD-587 and GNDD-594, GNDD-711
(assays pending) – Verde Zone
GNDD-587 and GNDD-594 were drilled on the fence
of drilling 40 metres south of GNDD-570 and GNDD-
612 where drilling is limited. They are part of a series
of extension holes (some of which are still assays
pending) collared as up and down-dip as step-outs
of GNDD-402 (37.0 metres at 0.3 g/t AuEq and 24.0
metres at 0.3 g/t AuEq) just inside the northern limit
of the Verde Zone. GNDD-587 intersected four zones
of mineralisation including 35.0 metres at 0.3 g/t
AuEq (0.2 g/t Au, 0.6 g/t Ag, 0.1% Pb, 0.1% Zn) from
85.0m, including 1.6 metres at 1.5 g/t AuEq (1.1 g/t
Au, 2.3 g/t Ag, 0.4% Pb, 0.7% Zn) which extends the
Verde Zone mineralisation 100 metres up-dip into a
zone of no drilling. Additionally, the hole intersected
31.0 metres at 0.8 g/t AuEq (0.7 g/t Au, 1.9 g/t Ag,
0.3% Zn) from 182.0m including 5.8 metres at 3.0 g/t
AuEq (2.3 g/t Au, 7.3 g/t Ag, 1.4% Zn, 0.1% Pb).
This deeper intersection extended the true width
of the mineralisation by approximately 15 metres
compared to the MRE block model.
GNDD-594 was effectively an infill hole between
GNDD-587 and GNDD402 on a 40 metres spacing
to allow the reporting of the MRE to indicated
status. GNDD-594 confirmed the extension of the
mineralisation between the two holes recording
intercepts of 12.0 metres at 1.0 g/t AuEq (0.7 g/t Au,
1.8 g/t Ag, 0.2% Pb, 0.5% Zn) from 104.0m including
2.0 metres at 3.9 g/t AuEq (3.1 g/t Au, 6.5 g/t Ag,
1.5% Zn, 0.5% Pb) and 1.4 metres at 2.1 g/t AuEq
(2.1 g/t Au, 0.3 g/t Ag) from 162.0m and 6.0 metres
at 0.7 g/t AuEq (0.6 g/t Au, 3.3 g/t Ag, 0.1% Zn)
from 198.0m. GNDD-711 (assays pending) has been
drilled as a test 80 metres downdip of GNDD-402
and has been logged as intersecting sulphides and
skarn alteration. Accordingly, an infill hole is planned
between GNDD-711 and GNDD-402.
Figure 10 – Cross Section GNDD-587 and GNDD-594 Northern Verde Zone
33
GNDD-554 – Verde Zone
GNDD-554 was collared on the next fence
of drilling 40 metres south of GNDD-587 and
GNDD-594 at the northern end of the Verde
Zone. The hole intersected 46.1 metres at 0.9
g/t AuEq (0.8 g/t Au, 0.9 g/t Ag, 0.1 % Zn) from
259.9m, including 6.5 metres at 3.9 g/t AuEq (3.7
g/t Au, 2.6 g/t Ag, 0.3 % Zn) and 24.0 metres at
0.9 g/t AuEq (0.9 g/t Au, 0.8 g/t Ag, 0.1 % Zn)
from 338.0m including 5.5 metres at 2.9 g/t
AuEq (2.8 g/t Au, 1.9 g/t Ag, 0.2 % Zn).
GNDD-554 confirmed both the continuity of, and
that drilling is providing significant extensions to, the
Verde Zone mineralisation. GNDD-554 was an infill
hole between GNDD-422 (28.0 metres at 0.3 g/t
AuEq and 64.0 metres at 0.4 g/t AuEq) and GNDD-
459 (29.0 metres at 0.2 g/t AuEq and 43.0 metres at
0.5 g/t AuEq). GNDD-554 will allow the extension of
the MRE between GNDD-422 and GNDD-549 which
was not possible in the maiden MRE as the spacing
between the holes had been too large (Figure 11). In
addition to allowing the MRE to be extended across
these 200 metres gap the intersections in GNDD-554
were significantly higher-grade than those in the
surrounding holes.
Figure 11 – Cross Section GNDD-554 Northern Verde Zone
34
Challenger Exploration Limited Annual Report GNDD-591 – Verde Zone
GNDD-591 was collared approximately 600
metres south of the Sanchez Fault in in a
relatively lightly drilled section of the northern
Verde Zone. The hole was collared to test 80
metres downdip of GNDD-242 (8.6 metres at
0.6 g/t AuEq and 0.7m at 2.3 g/t AuEq). The
intersections of 14.0 metres at 1.2 g/t AuEq
(1.2 g/t Au, 0.9 g/t Ag) from 224.0m including
2.8 metres at 4.5 g/t AuEq (4.4 g/t Au, 3.5 g/t
Ag, 0.1% Zn) correlates with the intersections
in GNDD242 and extends the Verde Zone
mineralisation 80 metres downdip. Importantly,
the mineralisation intersected in GNDD-591 is
approximately 50% thicker and considerably
higher-grade than surrounding holes.
GNDD-591 intersected several new zones of deeper
mineralisation. The intersection of 4.0 metres at
2.0 g/t AuEq (1.7 g/t Au, 3.7 g/t Ag, 0.4% Zn, 0.1%
Pb) from 250.0m including 0.7 metres at 10.1 g/t
AuEq (8.8 g/t Au, 17.7 g/t Ag, 2.2% Zn, 0.4% Pb) is
significant. This intersection extends a deeper zone
of higher-grade Verde mineralisation that covers 200
metres of strike another 40 metres south along strike.
A third deeper intersection of 3.3 metres at 5.4 g/t
AuEq (4.6 g/t Au, 12.4 g/t Ag, 1.3% Zn) from 382.0m
including 0.7m at 23.8 g/t AuEq (20.5 g/t Au, 55.7
g/t Ag, 5.6% Zn) occurs in the same stratigraphic
position as a series of high-grade intercepts in drill
holes 100 metres south along
strike and may represent the continuation of this
zone of mineralisation into this relatively lightly
drilled area of the project.
Figure 12 – Cross Section GNDD-604 and GNDD-538 Central Verde and Gap Zone
35
GNDD-604 – Verde Zone
GNDD-604 was collared 40 metres south of
GNDD-591 in the central Verde Zone and was
drilled to test 80 metres downdip of GNDD-
456 (12.4 metres at 2.8 g/t AuEq). GNDD-604
intersected 24.7 metres at 2.8 g/t AuEq (2.3 g/t
Au, 6.4 g/t Ag, 1.0% Zn) from 236.0m including
1.2 metres at 45.3 g/t AuEq (36.2 g/t Au, 92.1 g/t
Ag, 0.1% Pb, 17.3% Zn) and 1.5 metres at 5.2 g/t
AuEq (5.0 g/t Au, 3.4 g/t Ag, 0.2% Pb, 0.3% Zn).
This intersection extends the main zone of Verde
mineralisation 80 metres downdip from GNDD-
456 with additional drilling planned down-dip of
GNDD-604 as mineralisation remains strong and
open at depth. Importantly this extension lies
withing the current US$1800 pit shell used for
the initial MRE.
GNDD-604 also confirmed and extended deeper
zones of high-grade mineralisation intersected in
GNDD-591 and several holes along strike below
the main Verde Zone mineralisation. These
deeper intersections in GNDD-604 included
0.9 metres at 26.7 g/t AuEq (24.9 g/t Au, 15.3
g/t Ag, 3.5% Zn) from 375.0m, 2.3 meters at 7.5
g/t AuEq (3.3 g/t Au, 30.1 g/t Ag, 8.2% Zn) from
417.6m and 1.8 metres at 1.4 g/t AuEq (1.4 g/t
Au, 0.1 g/t Ag) from 426.4m. These intercepts
correlate with and extend intercepts in adjacent
holes including 2.0 metres at 9.4 g/t AuEq, 0.9
metres at 10.8 g/t AuEq (GNDD-361), 0.6 metres
at 22.6 g/t AuEq (GNDD-472), and 1.0 metres
at 14.4 g/t AuEq (GNDD-367). This high-grade
GNDD-539 – Verde Zone
GNDD-539 was drilled in the central Verde Zone
120 metres south along strike from GNDD-604
and 700 metres south of the Sanchez Fault.
The hole was oriented in the opposite direction
to the majority of previous drilling as it was
designed to test for extensions to the steeply
east dipping Gap Zone mineralisation below the
current MRE boundary. The hole intersected
21.0 metres at 0.9 g/t AuEq (0.9 g/t Au, 1.0 g/t
Ag) from 373.0m. The intersection extended
the Gap Zone mineralisation 100 metres deeper
with mineralisation remaining open at depth.
36
Challenger Exploration Limited Annual Report GNDD571 – Verde Zone
GNDD-571 was drilled on the same fence of drilling
as GNDD-539 however it was drilled 400 metres
to the west and drilled eastwards as an infill hole
in the central Verde Zone. GNDD-571 was drilled
as an up-dip test of GNDD-368 (56.3m at 0.9 g/t
AuEq including 5.5m at 5.6 g/t AuEq) with GNDD643
(assays pending) collared to test another 40 metres
up-dip as part of the resource drill out (Figure 13).
The intersection of 11.0 metres at 9.1 g/t AuEq (9.0
g/t Au, 5.7 g/t Ag, 0.1 % Zn) from 356.0m, including
7.8 metres at 12.6 g/t AuEq (12.5 g/t Au, 7.9 g/t
Ag, 0.1 % Zn) extends the Verde mineralisation 40
metres down dip from GNDD-368. Additionally,
the intersection is considerably higher in grade than
the existing MRE block model. GNDD-643 (assays
pending) is logged as intersecting three zones of
massive and semi massive sulphides and skarn
alteration which could significantly extend this zone
of high-grade mineralisation up-dip (Figure 13).
Additionally, GNDD-571 intersected 47.0 metres at
0.4 g/t AuEq (0.3 g/t Au, 1.1 g/t Ag, 0.1 % Zn) from
213.0m and 10.0 metres at 0.6 g/t AuEq (0.6 g/t
Au, 0.5 g/t Ag) from 328.8m. Both these shallower
intersections lie within the US$1800 Pit Shell used for
the MRE and expand the mineralisation expected to
be able to be mined from surface.
Figure 13 – Cross Section GNDD-571 Verde and Gap Zone mineralisation
37
GNDD-577 – Verde Zone
GNDD-633 and GNDD-546 – Verde Zone
GNDD-577 was collared on the next fence of
drilling 40 metres south of GNDD-570 as a
40 metre infill hole between GNDD-359 and
GNDD-337. GNDD-577 intersected seven zones
of mineralisation successfully extending the
mineralisation. The first of intersection 17.0 metres
at 1.6 g/t AuEq (1.6 g/t Au, 1.2 g/t Ag, 0.1% Pb,
0.1% Zn) from 126.0m correlates with a zone of
mineralisation intersected in GNDD-337 (7m at 0.5
g/t AuEq) and indicates significant increase in width
and grade down dip. This mineralisation lies within
the US$1800 pit shell used for the current MRE.
The deepest of the seven zones of mineralisation
produced an intersection of 0.6 metres at 32.0
g/t AuEq (22.8 g/t Au, 88.9 g/t Ag, 17.6% Zn),
located almost 200 metres below the current
MRE boundary. This intercept continues the
theme of intersecting higher grade mineralisation
in the Verde Zone at the contacts between the
intrusives and limestone due to this boundary
being a pathway for the flow of mineralising fluids.
Two additional holes GNDD-653 and GNDD-725
(both assays pending) have been completed to
test downdip of GNDD-577 and the Company
is planning for GNDD-359 to be re-entered and
extended 200 metres deeper.
GNDD-633 and GNDD-546 are located 40
metres south of GNDD-577 in the central Verde
Zone. Prior to the intersection of 67.7 metres at
7.7 g/t AuEq in GNDD-458, the Company had
only drilled two holes along this 200 metre strike
section of the central Verde Zone. GNDD-633 was
collared to test 40 metres down dip from GNDD-
458. GNDD-633 extended the mineralisation
intersected in GNDD-458 some 40 metres down
dip with an intersection 46.0 metres at 1.7 g/t
AuEq (1.2 g/t Au, 4.4 g/t Ag, 0.9% Zn) from 367.0
including 3.9 metres at 7.9 g/t AuEq (7.3 g/t Au,
18.7 g/t Ag, 0.8% Zn) from 380.3m and 5.1 metres
at 6.6 g/t AuEq (3.7 g/t Au, 19.7 g/t Ag, 5.9% Zn).
Additionally, GNDD-633 intersected three new
zones of mineralisation up-dip intersecting 13.1
metres at 0.6 g/t AuEq (0.6 g/t Au, 0.8 g/t Ag)
from 115.5m, 71.0 metres at 0.4 g/t AuEq (0.3 g/t
Au, 0.6g/t Ag) from 147.0, and 30.0 metres at 0.8
g/t AuEq (0.8 g/t Au, 1.7 g/t Ag, 0.1% Zn) from
246.0m including 0.7 metres at 25.3 g/t AuEq
(23.4 g/t Au, 46.4 g/t Ag, 0.3% Pb, 2.7% Zn).
38
Challenger Exploration Limited Annual Report As can be seen on Cross Section (Figure 14), which
includes the block model for the maiden MRE, the
intercept of 67.7 metres at 7.7 g/t AuEq in GNDD-458
was modelled conservatively in the maiden MRE due
to the limited drilling. The intersection in GNDD-633
will allow this zone of mineralisation to be extended
40 metres down dip. The three shallower zones of
mineralisation correlate with intersections in holes
up and down dip and these new results will allow this
mineralisation, that lies within the current US$1800
pit shell to be included in the next MRE. An additional
drill hole is planned to be collared to test 80 metres
down-dip of GNDD-633.
GNDD-546 was drilled to test 40 metres up-dip of
GNDD-458 and intersected 14.0 metres at 0.7 g/t
AuEq (0.6 g/t Au, 1.8 g/t Ag) from 316.0m including
2.0 metres at 1.9 g/t AuEq (1.8 g/t Au, 2.9 g/t Ag). In
GNDD-546 the intrusives that host the high-grade
mineralisation intersected in GNDD-458 appear not
to have extended up-dip with the intersection in
GNDD-546 was hosted in limestones that have been
baked; likely as they are adjacent to the intrusives
that host the high-grade intersection down-dip.
GNDD-546 Intersected two zones of mineralisation
above this main zone intersecting 4.0 metres at 1.2
g/t AuEq (1.2 g/t Au, 0.3 g/t Ag) from 55.0m and 4.0
metres at 0.5 g/t AuEq (0.5 g/t Au, 0.4 g/t Ag) from
134.0. These intersections correlate with the new
zones intersected in GNDD-633 80 metres downdip
and are located within the $1800 optimised pit shell.
Figure 14 – Cross Section GNDD-633, GNDD-546 and GNDD-458 Central Verde Zone
39
GNDD-588 and GNDD-606 – Verde Zone
GNDD-588 is located 200 metres south of GNDD-
633 in the Central Verde Zone. The hole was
collared to test 15 metres up-dip of hole GNDD-
303 and primarily targeted as a depth extension to
GNDD-303 which was ended at 240 metres. This
was subsequently interpreted to have been above
the main zones of Verde mineralisation.
GNDD-588 intersected several zones of
mineralisation. The intersection of 18.1 metres
at 2.6 g/t AuEq (2.3 g/t Au, 2.8 g/t Ag, 0.2% Pb,
0.5% Zn) from 281.4m including 1.0 metres at
34.0 g/t AuEq (32.6 g/t Au, 18.1 g/t Ag, 1.6% Pb,
1.9% Zn) from 289.7m appears to be a new zone
of mineralisation above the existing Verde Zone
mineralisation (Figure 15). The intersection of 87.0
metres at 0.7 g/t AuEq (0.7 g/t Au, 1.4 g/t Ag),
from 314.0m including 8.0 metres at 3.0 g/t
AuEq (2.9 g/t Au, 3.4 g/t Ag) and 10.0 metres
at 1.3 g/t AuEq (1.2 g/t Au, 1.6 g/t Ag, 0.1%
Zn) is interpreted as a north-east striking zone
of Verde mineralisation below GNDD-303.
The mineralisation intersected in this zone in
GNDD-588 is considerable wider and contains
higher-grade zones than in adjacent holes.
The intersection of 19.0 metres at 0.3 g/t AuEq
(0.3 g/t Au, 0.7 g/t Ag) from 182.0m higher in
the hole is the downdip extension of the near
surface mineralisation intersected in GNDD-341
(110.4 metres at 0.5 g/t AuEq) and confirms its
continuity 100 down-dip. Intersections of 7.0
metres at 0.6 g/t AuEq (0.6 g/t Au, 0.6 g/t Ag)
from 213.0m and 12.0 metres at 0.3 g/t AuEq
(0.2 g/t Au, 1.3 g/t Ag, 0.1% Pb, 0.2% Zn) from
242.0m represent new zones of mineralisation.
Figure 15 – Cross Section GNDD-588 and GNDD-606 Verde Zone
40
Challenger Exploration Limited Annual Report GNDD-629 – Verde Zone
GNDD-538 – Verde Zone
GNDD-629 is located 600 metres north of the
Magnata Fault in the southern section of the
Verde Zone. The hole was drilled as an infill hole
between GNDD-295 (42.0 metres at 0.3 g/t AuEq)
and GNDD-380 (22.0 metres at 0.4 g/t AuEq and
70.0 metres at 0.7 g/t AuEq). The hole intersected
98.0 metres at 0.4 g/t AuEq (0.4 g/t Au, 1.6 g/t
Ag, 0.1% Zn) from 117.0m including 2.0 metres at
2.0 g/t AuEq (1.9 g/t Au, 2.3 g/t Ag, 0.1% Zn) and
2.9 metres at 4.1 g/t AuEq (3.1 g/t Au, 19.1 g/t
Ag, 0.3% Pb, 1.4% Zn). The intersection is double
the thickness of mineralisation intersected in
GNDD-295 and will extend the mineralisation up
dip in the MRE US$1800 pit shell.
GNDD-538 was collared just south of the
Magnata Fault as a test for extensions to the Verde
Zone 40 metres north along strike from GNDD-
530 (54 metres at 0.4 g/t AuEq and 28.5 metres at
5.4 g/t AuEq; both hosted in intrusives) for which
results were received after the MRE cut-off date.
GNDD-538 extended these zones of intrusion-
hosted mineralisation, which is the extension of
the Verde Zone south of the Magnata Fault.
The hole produced several intersections, all of
which are all outside the boundary of the current
MRE. Results included 10.0 metres at 1.0 g/t
AuEq (1.0 g/t Au, 0.7 g/t Ag) from 176.0m and
2.0 metres at 3.1 g/t AuEq (3.1 g/t Au, 0.7 g/t Ag)
from 182.0m and 79.0 metres at 0.3 g/t AuEq
(0.2 g/t Au, 1.3 g/t Ag, 0.1% Zn) from 331.0m
including and 1.0 metre at 4.7 g/t AuEq (4.0 g/t
Au, 11.2 g/t Ag, 1.1% Pb, 0.6% Zn) from 404.0m.
41
The Magnata Fault
The Magnata and Sanchez Faults are two east-west striking sub-vertical faults. The faults can be seen in
outcrop and magnetic data extending for tens of kilometres to the east and west of Hualilan. The Magnata
Fault is located at Cerro Sur approximately 1.5 kilometres south of the Sanchez Fault and separates into the M1
and M2 Magnata Faults, both of which host high-grade shoots.
The Magnata and Sanchez Faults were historically recognised as hosting mineralisation at Hualilan. The
mineralising fluids are interpreted to have migrated from a source below or along strike, within the faults
forming steeply dipping zones of mineralisation in the Magnata and Sanchez Faults. These fluids migrating up
the faults also formed nearby replacement Manto-style high grade lenses, oriented parallel to the limestone
beds, dipping to the west.
GNDD-642 – Magnata Fault
GNDD-586 – Magnata Fault
GNDD-586 was drilled as a down-dip test below
GNDD-348 (53.0 metres at 0.5 g/t AuEq) on the
western limit of known mineralisation on the
Magnata Fault. GNDD-586 intersected 57.7 metres
at 0.4 g/t AuEq (0.3 g/t Au, 2.6 g/t Ag, 0.2 % Zn)
including 8.0 metres at 1.8 g.t AuEq (1.3 g/t Au,
10.0 g/t Ag, 0.9 % Zn).
Mineralisation remains open at depth, to the west
along strike, and within the intrusives near the
fault zone with additional drilling planned down-
dip. The broad halo of lower grade mineralisation
is similar to the near surface mineralisation
intersected 80 metres east in drill holes GNDD-
313 (24.0 metres at 0.7 g/t AuEq and 14.8 metres
at 0.9 g/t AuEq) and GNDD-351 (4 metres at 0.5
g/t AuEq and 4.0 metres at 0.6 g/t AuEq) before
deeper hole GNDD-491 intersected 16.8 metres at
11.7 g/t AuEq at depth.
GNDD-642 was an infill hole between the 80
metre spaced GNDD-399 (14.0m at 0.4 g/t AuEq)
and GNDD-157 (12.0 metres at 20.9 g/t AuEq) on
the Magnata fault. The hole intersected several
zones of mineralisation including 18.8 metres at
6.3 g/t AuEq (4.5 g/t Au, 22.3 g/t Ag, 3.3 % Zn, 0.1
% Pb) from 344.4m, including 7.4 metres at 10.8
g/t AuEq (7.4 g/t Au, 36.8 g/t Ag, 6.3 % Zn, 0.1 %
Pb) and 3.4 metres at 11.5 g/t AuEq (8.9 g/t Au,
42.5 g/t Ag, 4.5 % Zn, 0.1 % Pb). This extended
the high grade mineralisation intersected in
GNDD-157 40 metres up-dip. Additionally, the
hole intersected 64.0 metres at 0.5 g/t AuEq (0.4
g/t Au, 0.8 g/t Ag, 0.1 % Zn) from 18.0m hosted
in intrusives. This upper intersection confirms the
current MRE block model in this location.
As can be seen in Figure 16 over the page, the
Magnata Fault mineralisation remains open at
depth with GNDD-685 (assays pending) collared
to test 40 metres below GNDD-157. GNDD-685
is logged as intersecting several zones of massive
and semi massive sulphides and skarn alteration
from 544 to 589 metres and 625 to 651 metres
downhole. This (subject to assays) indicates that
the Magnata Fault and associated mineralisation
has swung to a steep northerly plunge in this
location and remains strong and open at depth.
A deeper follow up hole is planned to test an
additional 40 metres below GNDD-685.
42
Challenger Exploration Limited Annual Report Figure 16 – Cross Section GNDD-642 and GNDD-685 (assays pending) Eastern Magnata Fault
43
GNDD-595 – Magnata Fault
GNDD-595 was drilled as a downdip test below
GNDD-540 (52.5 metres at 0.5 g/t AuEq and 30.0
metres at 0.6 g/t AuEq and 2.5 metres at 8.1 g/t
AuEq) 40 metres east of GNDD-586. The hole
intersected a similar broad zone of lower grade
mineralisation to GNDD-540 with intersections
including 13.8 metres at 0.4 g/t AuEq (0.3 g/t Au,
2.5 g/t Ag) from 198.4m and 21.2 metres at 0.7 g/t
AuEq (0.6 g/t Au, 4.0 g/t Ag, 0.1 % Pb, 0.1% Zn)
from 226.0m, and 39.8 metres at 0.5 g/t AuEq (0.3
g/t Au, 2.9 g/t Ag, 0.1 % Pb, 0.3% Zn) from 266.0m
including 1.4 metres at 5.7 g/t AuEq (1.2 g/t Au,
28.5 g/t Ag, 2.1 % Pb, 8.0 % Zn).
The hole also intersected a fourth zone of deeper
mineralisation intersecting 6.9 metres at 0.5
g/t AuEq (0.3 g/t Au, 3.8 g/t Ag, 0.1 % Pb, 0.3%
Zn) from 381.4m including 0.8 meters at 3.8 g/t
AuEq (2.3 g/t Au, 30.8 g/t Ag, 0.2 % Pb, 2.3 % Zn).
GNDD-615 (assays pending) has been collared to
test another 40 metres down dip from GNDD-595
with deeper drilling contingent on the results on
GNDD-615.
GNDD-552 – Cerro Norte
GNDD-552 was an infill hole between GNDD-409
(22.0m at 1.3 g/t AuEq) and GNDD-411 (14.0m at 0.3
g/t AuEq). GNDD-522 intersected 33.8 metres at 1.0
g/t AuEq (0.7 g/t Au, 12.1 g/t Ag, 0.1 % Pb, 0.2 % Zn)
from surface including 3.4 metres at 7.4 g/t AuEq
(6.0 g/t Au, 82.4 g/t Ag, 0.8 % Pb, 0.6 % Zn). The
intersection in GYDD-552 is significantly wider and
higher-grade than expected based on the current
MRE block model and surrounding drill holes.
44
Challenger Exploration Limited Annual Report Metalurgical Testwork
The Company reported the results from its Stage
1 metallurgical testing at the Company's flagship
Hualilan Gold Project, in San Juan Argentina.
This program involved significantly more
detailed flotation, gravity recoverable gold (GRG)
tests and leach testing of the various flotation
tails components. It has been designed to lock
in the flow sheet to support a Scoping Study.
Additional Stage 2 work involving comminution
and variability testing, blended test work, and
pilot plant testing is ongoing.
The metallurgical testwork program has been
conducted using SGS Lakefield. Testwork
completed to date involved a sequence of
28 flotation tests (including gravity), gravity
recoverable gold tests (GRG), and leach testing
of the various flotation tail components.
This testing was conducted on composites
representative of the higher-grade skarn
material, the intrusion-hosted mineralisation,
and sediment-hosted mineralisation.
This testing has demonstrated:
• Average gold recovery increased to 95%
across all ore types at the Hualilan Gold
project
• Clear route to recover zinc and lead credits
via standard sequential flotation with
recoveries of:
• 89% for zinc (Zn): (high-grade skarn
mineralisation); and
• 77% for lead (Pb): (high-grade skarn
mineralisation)
• The confirmation of both of Pb and Zn as
payable metals will significantly boost project
economics with zinc comprising 11% of the
historical foreign resource estimate by value1
• Production of attractive lead (>65% Pb) and
zinc (>50% Zn) concentrates and discussions
with off-takers confirming excellent
payabilities for both concentrates.
• Sequential Flotation has the added advantage
of generating extremely high-grade Au-Ag
concentrates (120 g/t Au, 300 g/t Ag) which
will significantly reduce transport costs
•
the outstanding high-grade nature of the
concentrates produced with the average
gold and silver grades in the Company’s
concentrates more than double than
indicated by earlier testing
• Strong recoveries of gold and silver into an
Au-Ag concentrate from the low grade (0.7
g/t Au, 7.6 g/t Ag) sediment-hosted material
confirming excellent recoveries for all three
components of the Hualilan mineralisation.
• All Au-Ag concentrates have no deleterious
elements and are exceptionally low in arsenic
which, coupled with their high-grade nature,
will result in outstanding payability
• Recoveries of 70-80% of any residual gold
and silver not recovered into the concentrate
via a simple cyanide leach of the floatation
tails increasing total recoveries to 95% (Au)
and 91% (Ag)
Ongoing discussions with potential off-takers as
the Stage 1 testing has progressed, refining the
grades and compositions of the concentrates
likely to be produced, has indicated that
payabilities for all metals will be excellent.
Expected payability for gold in the Au-Ag
concentrates is >95%, with payability for Au-Ag
in the Pb concentrate also expected to be >95%
with lead payability >90%. Zinc payability is also
expected to be at the upper range of what was
expected with payability expected to be in the
mid to high 80 percent range.
45
High-grade Skarn Mineralisation
The balance of the Stage 1 metallurgical testing
on the high grade skarn material was primarily
aimed at evaluating:
a. various grind sizes, additional Cleaner
Flotation stages, Scavenger Flotation stages
and Flash Flotation on the production of a
single stage bulk Au-Ag concentrate bulk;
b. sequential flotation to allow recovery of
Zn and possibly Cu/Pb credits in addition
to the Au-Ag payable in a bulk single stage
concentrate, and if successful;
c. additional Cleaner Flotation and Cleaner
Variability testing to investigate the effect
of flowsheet and variables such as reagent
scheme and regrind size on upgrading
rougher concentrate into cleaner zinc and
copper/lead concentrates.
While a single Stage bulk sulphide Flotation
produced an exceptionally clean and high grade
Au-Ag concentrate at excellent recoveries
the concentrate contains 11-14% Zn, 2% Pb
and 0.5-1.0% Cu that the Company will receive no
credits for. Additionally, the Zn and Pb have the
potential to attract minor penalties depending on
off-take destination. Thus, Sequential Flotation tests
were designed to determine if there is potential to
economically recover the base metal credits.
The results of the Sequential Flotation testing on the
high-grade skarn mineralisation were outstanding.
Not only did it produce high-quality payable Zn and
Pb concentrate streams it significantly increased
the grade of the associated Au-Ag concentrate.
Additionally, the testing demonstrated the ability to
increase the grade of the Zn and Pb concentrates
via additional cleaner stages with minimal recovery
loss. This effectively provides the Company with the
ability to the tailor the concentrate grade to match
the specifications required by the off-taker and thus
maximise the payability.
The sequential flotation tests followed the
flowsheet used in earlier CEL testing involving
gravity separation followed by two stage flotation
Cerro Sur Looking north showing drill rig access roads both into the Hualilan Hills and on the plains
46
Challenger Exploration Limited Annual Report process to produce a Cu-b and then a Zn rougher
concentrate. A secondary grind of the Zn rougher
concentrate was added with several combinations
of cleaning stages, additional gravity stages,
different reagent mixes and grind sizes trialed
to optimise performance. This has allowed the
Company to get to a near final flow sheet which
will support a Scoping Study.
This flow sheet was used in the most recently
conducted Flotation Test F28. This was a 10kg test,
rather than the 2kg and 4kg tests generally used,
to provide more reliable data and also to produce
sufficient material to allow a full analysis of the
composition of the various concentrate. The F28
test flow sheet lends itself to relatively low capital-
intensive steady state production with the flow
sheet involving:
1. a primary P80 = 51 micron primary grind,
which was finer than the targeted P80 =
60-70 micron grind as the material ground
considerably more easily than expected
2. Gravity recovery
3. Pb-Cu followed by Zn Rougher Flotation
4. a P80 = 29 micron regrind of the Zn rougher
concentrate, which importantly only comprises
15% the feed hence this re-grinding is not
overly costly.
5. two Re-cleaning Stages were undertaken on
the Pb/Cu Rougher concentrate
6. four re-cleaning Sages on the Zn Rougher
concentrate, which can likely be reduced to
three cleaner stages increasing Zn recovery
from 89% to 93% while still maintaining a
saleable Zn concentrate
7. additional gravity recovery stages added to the
Zn Rougher Concentrate
The saleable products produced from Sequential
Flotation comprise the following:
1. Au-Ag concentrate containing 118 g/t Au, 286
g/t Ag
2. Pb concentrate containing 65% Pb, 178 g/t Au,
765 g/t Ag
3. Zn concentrate containing 51% Zn, 10 g/t Au,
178 g/t Ag
It should be noted that 12% of the lead reported
to the gravity circuit and in steady state operation
at least some of this lead would be displaced by
additional gravity recovered gold into the Pb-Cu
concentrate. Thus, lead recoveries are likely to be
better than the current reported recovery of 77%.
Detailed analysis of the composition of all of
the components from the sequential flotation
testing demonstrated that the concentrates have
significant advantages over most concentrates.
This includes exceptionally low arsenic contents
which has become a key driver of payability
for Au-Ag concentrates given the move by the
Chinese Government to impose tighter restrictions
on the arsenic content of imported concentrates.
Key points from this detailed analysis are:
• Au-Ag concentrate (118 g/t Au, 286 g/t Ag)
– Exceedingly low in all deleterious elements
including arsenic which, at 0.01% is a factor of
1000 below the level where arsenic penalties
begin, low mercury content of 1 ppm, and Cu/
Pb/Zn levels unlikely attract penalties
• Pb concentrate (65% Pb, 178 g/t Au, 765
g/t Ag) – Particularly clean concentrate with
extremely low arsenic, mercury and fluorine
content and no penalties
• Zn concentrate (51% Zn, 10 g/t Au, 178 g/t
Ag) – Exceptionally low arsenic, mercury and
fluorine. Below the detection level of other
deleterious elements with the exception of
cadmium which is below the 3000 ppm import
limit imposed into China
47
Intrusion Hosted Mineralisation
Sediment Hosted Mineralisation
Only one Flotation Test has been done on the
sediment-hosted mineralisation to date as a
proof of recovery test given the sediment hosted
mineralisation comprises 5-10% of the mineralisation
at Hualilan. This test was a repeat of Test F8
conducted on the intrusion-hosted mineralisation
conducted at a course primary grind of P80 = 83
microns and a P80 = 20 micron regrind of the
rougher concentrate which comprises 8% mass pull,
with two re-cleaner flotation stages.
This produced an Au-Ag concentrate grading 23.6
g/t Au and 234 g/t Ag at total recoveries of 85% (Au)
and 87% (Ag). The Company believes that additional
testing as part of a PFS will improve recoveries and
concentrate grade however given the small volume
of concentrate that will be produced from the
sediment-hosted mineralisation the concentrate will
be blended with the Au-Ag concentrate from the
skarn and intrusion-hosted material hence payability
will be >95% (Au) and >90% (Ag).
Detailed analysis of the composition of the sediment-
hosted mineralisation will not be undertaken
until additional testing to optimise flotation of the
sediment hosted material has been completed.
The balance of the Stage 1 metallurgical testing on
the intrusion-hosted material was primarily aimed a
evaluating:
a. various grind sizes, additional Cleaner Flotation
and Re-cleaner stages on the production of a
single stage bulk Au-Ag concentrate bulk; and
b. additional Cleaner Flotation and Cleaner
Variability testing to investigate the effect of
flowsheet and variables such as reagent scheme
and regrind size on upgrading Au-Ag concentrate.
This testing has allowed the Company to get to a
near final flow sheet which will support a Scoping
Study. This involves relatively simple flow sheet
involves:
1. a relatively course primary P80 = 120-80 micron
primary grind
2. gravity recovery
3. single stage rougher sulphide flotation
4. P80 = 20-30 micron regrind of the rougher
concentrate, which importantly only comprises
5-10% mass pull of the rougher concentrate
hence re-grinding is not overly costly.
5. One single or two Re-cleaning stages of the Au-
Ag Rougher concentrate
Best results were achieved in Flotation test F8 which
was conducted at a course primary grind of P80 =
76 microns and a regrind of P80 = 17 micron regrind
of the rougher concentrate which comprises 8%
mass pull, with two re-cleaner flotation stages. This
produced an exceptional result producing an Au-Ag
concentrate grading 54 g/t Au and 284 g/t Ag at total
recoveries of 97% (Au) and 85% (Ag).
Results from detailed analysis of the concentrate
produced from the intrusion hosted material are
pending however the Company does not anticipate
results to differ substantially from the compositions
of the high-grade skarn material.
48
Challenger Exploration Limited Annual Report Cyanide leach Testing
The Company has now completed an initial series
of cyanide leach test for various concentrate
tailing produced in the flotation testing as well
as a representative sample of the oxide ore. The
cyanide leach testing produced excellent results
with recoveries of in 70-80% range for both Au and
Ag. This excellent recovery of any Au or Ag that is
lost into the floatation tails provides the flexibility,
should it be required in the event concentrate
markets change, to allow the Company to target the
production of extremely high-grade concentrates
with minimal incremental loss in recovery.
Rail option for concentrate export
The company has confirmed a viable option to
export concentrate via rail from San Juan City
direct to the Rosario Port near Buenos Aries. This
is the same option that will be used for the export
of concentrate from the Jose Maria copper-gold
Project recently acquired by Lundin Mining.
Transport of Hualilan concentrate to Port for export
will involve a road haul of 130km from Hualilan to
San Juan City via a double lane sealed highway
which passes within 400 metres of Hualilan. This will
be followed by a 850 kilometre rail transport direct to
Rosario Port where bulk materials handling facilities
are currently in place. Indicative pricing provided by
the rail operator is US$35-40 per ton of concentrate
inclusive of rail loading costs at San Juan.
The rail option is approximately half the cost of
earlier options evaluated by the Company for
concentrate transport to port on a per ton basis.
Namely a 950 kilometre road haul to Rosario Port or
a 750 kilometre road haul via the all-weather road
from Mendoza City to Santiago for export from a
Chilean port. This will represent a significant saving
from the earlier options on a per ounce basis.
Some of the Challenger Exploration Team at Hualilan
4949
El Guayabo Gold/Copper
and Colorado V Gold/
Copper Project – Ecuador
Maiden Drill Program
The Company released the results from its maiden drill programs in Ecuador during the year. The results
confirmed three significant Au-Cu-Ag-Mo discoveries on the 100% owned El Guayabo concession and
two additional Au-Cu-Ag-Mo discoveries on the 50% owned Colorado V concession (Figure 17).
Figure 17 – Summary of maiden Ecuador Drill program
50
Challenger Exploration Limited Annual Report El Guayabo Drill Program
The maiden El Guyabo drill program comprised 16 holes for 9927 metres and was focused on three
main significant Au-Ag-Cu soil anomalies the GY-A, GY-B and GY-C anomalies. The drilling confirms the
discovery of a significant intrusion hosted gold-copper-silver-molybdenum system with multiple centers
of mineralisation, all of which have returned ore grade intercepts. The mineralisation has a similar scale
and tenor to the Tier 1 Cangrejos Gold project located 5 kilometres along strike to north-east. The
highlights of this maiden El Guaybo drill program included:
GYDD-21-001
GYDD-21-001 was collared to test a 1.8 kilometre
long gold in soil anomaly defined in the Company’s
100% owned El Guayabo concession. The hole
encountered a significant zone of mineralisation from
near surface to the end of the hole intersecting 784.3
metres at 0.4 g/t AuEq (0.2 g/t Au, 1.6 g/t Ag, 0.1
% Cu, 12 ppm Mo) from 16.2m. This mineralisation
is hosted in intrusives and intrusive breccia and is
consistent and pervasive throughout the length of
the drill hole. The mineralisation included a higher
grade core of 380.5 metres at 0.5 g/t AuEq (0.3 g/t
Au, 2.0 g/t Ag, 0.1 % Cu, 18 ppm Mo) from 167.5m
including 188.5 metres at 0.6 g/t AuEq (0.4 g/t Au,
2.3 g/t Ag, 0.1 % Cu, 30 ppm Mo) from 359.5m.
These 188.5 metres central core containing higher-
grade components of 21.0 metres at 1.1 g/t AuEq
(0.8 g/t Au, 3.0 g/t Ag, 0.2 % Cu, 139 ppm Mo) from
403.0m and 30.0 metres at 1.1 g/t AuEq (0.8 g/t Au,
2.6 g/t Ag, 0.2 % Cu, 25 ppm Mo) from 468.5m.
As Figure 18 shows GYDD-21-001 was located in a
lower priority section of a 1.8 km long gold in soil
anomaly with the high-grade 550 metre core of the
anomaly starting 100 metres to the south-west of
GYDD-21-001. The Company took the decision to
start the program with two lower priority drill holes
given this pad location provided the easiest access.
Additionally, the geochemical anomaly currently
being tested is the first of nine similar anomalies
which will be tested. Drilling on the highest priority of
these targets, located in Colorado V, is programmed
to start in the current quarter.
In the context of its location, off the main high-
grade section of the underlying gold in soil anomaly,
drill hole GYDD-21-001 delivered an outstanding
result. The mineralisation reflects the underlying soil
geochemistry with consistent mineralisation across
the hole and a higher-grade core that correlates with
the central part of the soil anomaly in this location.
The gold in soil values on the GDDD-21-001 location
is approximately 30ppb with subsequent drill holes
GYDD-003 and GYDD-004 located 200 metres
south-west along strike and GYDD-005 and GYDD-
006 located a further 250 metres south-west along
strike all collared over gold in soil values double that
of GYDD-21-001.
51
Figure 18 – Showing Location of first drill hole in maiden EL Guayabo drill program
GYDD-21-003 and GYDD-21-004
Drillholes GYDD-21-003 and GYDD-21-004 were collared 200 metres west along strike from drill hole
GYDD-21-001 which intersected 784.3 metres at 0.4 g/t AuEq from near surface including a higher grade
core of 188.5 metres at 0.6 g/t AuEq. Due to the steep topography to the south of the collar location
limiting access the drill pad was located within the underlying gold in soil anomaly with GYDD-21-003
and GYDD-21-004 drilled from the same drill pad in opposite directions. While both holes intersected
significant mineralisation (over 200 metres of mineralisation in both holes) the main zone of mineralisation
is now believed to be 200 to 300 metres in width and dipping steeply. Accordingly both GYDD-21-003
and GYDD-21-004 are now interpreted as having drilled from within the zone of mineralisation through a
near surface leached zone and then out of the mineralisation as shown in Cross Section (Figure 19).
52
Challenger Exploration Limited Annual Report GYDD-21-003
GYDD-21-004
GYDD-21-003 intersected 119.2 metres at 0.5 g/t
AuEq (0.4 g/t Au, 0.8 g/t Ag, 0.02% Cu, 2.2 ppm
Mo) from 71.8m. Below the 71 metre leached zone
mineralisation is hosted in intrusives, intrusive
breccia and metamorphic country rocks that have
been brecciated by the intrusion. The mineralisation
included a higher grade zone of 77.2 metres at 0.6
g/t AuEq (0.5 g/t Au, 0.5 g/t Ag, 0.01 % Cu, 1.1 ppm
Mo) from 76.4m including 26.2 metres at 1.1 g/t
AuEq (1.1 g/t Au, 0.9 g/t Ag, 0.02 % Cu, 1.7 ppm Mo).
GYDD-21-003 intersected three additional zones of
mineralisation below the main zone including 15.0
metres at 0.4 g/t AuEq (0.3 g/t Au, 0.4 g/t Ag, 0.02
% Cu, 5.0 ppm Mo) from 356.5m and 21.4 metres at
0.3 g/t AuEq (0.1 g/t Au, 2.6 g/t Ag, 0.08 % Cu, 57.7
ppm Mo) from 675.8m, and 61.0 metres at 0.2 g/t
AuEq (0.1 g/t Au, 0.9 g/t Ag, 0.05 % Cu, 24.5 ppm
Mo) from 662.2m until the end of the hole.
GYDD-21-004 intersected 338.7 metres at 0.3 g/t
AuEq (0.2 g/t Au, 1.0 g/t Ag, 0.03% Cu, 6.5 ppm
Mo) from 37.1m including 27.0 metres at 0.6 g/t
AuEq (0.5 g/t Au, 1.8 g/t Ag, 0.05 % Cu, 7.3 ppm
Mo) from 348.8m. GYDD-21-004 intersected
an additional zone of mineralisation below the
main zone including 33.0 metres at 0.3g/t AuEq
(0.2 g/t Au, 0.6 g/t Ag, 0.05 % Cu, 18.7 ppm Mo).
Similarly to GYDD-21-003 the mineralisation
is hosted in intrusives/intrusive breccia and
below the zone of surface leaching and the
mineralisation is consistent and pervasive.
GYDD-006 was drilled from the same pad as
GYDD-005, however GYDD-006 was drilled
at an azimuth of 100 degrees rather than 150
degrees to better target a steeper zone of
mineralisation defined by the underlying gold in
Figure 19 – Showing compromised collar location of GYDD-21-003 and GYDD-21-004 EL Guayabo drill program
(GYDD-21-006 and GYDD-21-008)
53
soil anomaly. The hole encountered a broad zone
of mineralisation from near surface predominantly
hosted in intrusives and intrusive breccias
intersecting 309.8 metres at 0.7 g/t AuEq (0.2 g/t
Au, 6.2 g/t Ag, 0.21% Cu, 3.0 ppm Mo) from 3.3m.
From 74.4 to 276.5 metres downhole GYDD-006
intersected a zone of intrusive breccia containing
extensive sheeted veining logged as containing
6-20% total sulphides with an average sulphide
content of 9.5% across the zone. The same interval
returned an intercept of 202.1m at 0.8 g/t AuEq
(0.3 g/t Au, 6.5 g/t Ag, 0.27 % Cu, 3.6 ppm Mo)
from 74.4m including two higher grade zones of
33.0m at 1.3 g/t AuEq (0.3 g/t Au, 15.5 g/t Ag,
0.49% Cu, 3.7 ppm Mo) from 74.4m, and 53.6m at
1.5 g/t AuEq (0.7 g/t Au, 8.8 g/t Ag, 0.41 % Cu, 1.1
ppm Mo) from 231.9m.
This mineralisation in the intrusive breccia
containing extensive sheeted veining has
significantly higher copper and silver contents than
the surrounding mineralisation. The gold:copper
ratios of 1:1 and silver:gold ratios of 20:1 are 5 to
10 times higher than the mineralisation intersected
in GYDD-21-001 to GYDD-21-005. It is interpreted
as a second and later pulse of Au-Cu-Ag rich
mineralisation.
Figure 20 – Showing orientation of GYDD-21-006 and the zone of sheeted/stockwork vein breccia body
54
Challenger Exploration Limited Annual Report GYDD-21-008
GYDD-21-008 was drilled from the same collar
as GYDD-21-005 which intersected 581.7 metres
at 0.3 g/t AuEq including 88.4 metres at 0.8 g/t
AuEq. GYDD-21-008 was drilled to the south, in
the reverse orientation to GYDD-21-005. Intrusive
breccia, containing sheeted veining and oxide copper
mineralisation was mapped in surface outcrop over
the 150 metres south of the GYDD-21-005 drill pad.
Accordingly, GYDD-21-008 was designed to target
the main part of the copper-silver-gold rich breccia
hosted mineralisation intersected in GYDD-21-006
(Figures 20 and 21).
GYDD-21-008 successfully intersected the higher-
grade mineralisation, intersecting 257.8 metres at 1.4
g/t AuEq (0.8 g/t Au, 7.9 g/t Ag, 0.3 % Cu) from 5.3m.
The copper-silver rich gold mineralisation was hosted
in the same intrusive breccia containing sheeted
veining as was intersected in GYDD-21-006. The
intersection in GYDD-21-008 contained a consistent
higher grade core coinciding with the highest density
of sheeted veining and sulphides logged. This higher
grade core returned an intersection of 79.0 metres
at 3.8 g/t AuEq (2.4 g/t Au, 17.5 g/t Ag, 0.7 % Cu)
including 53.7 metres at 5.3 g/t AuEq (3.5 g/t Au,
23.9 g/t Ag, 0.9 % Cu). The highest grade section
of the intercept, 6.8 metres at 20.6 g/t AuEq (16.9
g/t Au, 50.1 g/t Ag, 1.8 % Cu), occurred at the lower
contact between the intrusive breccia and country
rocks.
This is consistent with drill hole GYDD-21-006,
which returned an intercept of 202.1m at 0.8 g/t
AuEq within the zone of intrusive breccia containing
sheeted veining. In GYDD-21-006 the highest grades
were located at the upper (33.0m at 1.3 g/t AuEq) and
lower (53.6m at 1.5 g/t AuEq) contacts of the intrusive
breccia and the country rock. This is also evident in
the historical drill holes which are now interpreted
to have intersected this same zone of copper-silver
rich gold mineralisation hosted in intrusive breccia
containing extensive sheeted veining.
55
Figure 21 – Cross Section GYDD-21-005, GYDD-21-008 and GYDD-21-015 “Main Discovery zone”
56
Challenger Exploration Limited Annual Report Historical Drilling Results
A review of historical drilling along this main 500 metre long geochemical trend which the Company’s
initial drilling has been focussed (Figure 23) indicates that seven historical holes have intersected the
same zone of copper-silver rich gold mineralisation hosted in intrusive breccia with extensive sheeted
veining that was intersected in GYDD-21-008. The historical results are listed in Table 6.
Drill Hole
From
(#)
(m)
To
(m)
JDH-006
18.0
89.6
Interval
(m)
71.6
and
inc
164.8
281.0
116.2
227.8
281.1
JDH-007
39.7
84.5
JDH-008
104.7
136.7
and
inc
249.1
316.2
291.8
316.2
53.3
44.8
32.0
67.1
24.4
JDH-009
10.3
122.0
111.7
and
and
GY-005
inc
and
201.4
205.4
255.1
256.7*
4.0
1.5
12.0
14.0
162.0
150.0
54.0
40.0
180.0
194.0
14.0
GY-008
16.0
271.0
255.0
inc
235.0
271.0
36.0
GY-011
inc
inc
14.0
14.0
229.0
215.0
97.0
83.0
27.0
202.0
229.0
Au
(g/t)
0.23
0.60
1.20
0.30
0.15
0.20
0.45
0.70
11.40
0.70
0.35
0.63
0.20
0.14
0.35
0.17
0.22
0.38
Ag
(g/t)
2.0
8.9
13.2
1.4
3.6
5.7
9.2
14.6
9.7
1.5
11.0
25.5
6.1
6.5
11.5
9.6
14.9
15.2
Cu
(%)
0.10
0.40
0.62
0.04
0.13
0.21
0.34
0.58
0.01
0.02
0.30
0.60
0.22
0.24
0.50
0.36
0.50
0.80
AuEq
Comments
Gram
(g/t)
Metres
0.4
1.4
2.4
0.4
0.4
0.6
1.1
1.9
0.1 g/t AuEq
30.3
0.1 g/t AuEq
160.9
1.0 g/t AuEq
128.3
0.1 g/t AuEq
0.1 g/t AuEq
0.1 g/t AuEq
1.0 g/t AuEq
16.9
13.1
41.9
27.7
0.1 g/t AuEq
207.6
11.5
1.0 g/t AuEq
end of hole
46.1
1.1
0.8
1.0
2.0
0.6
0.6
1.3
0.9
1.2
1.9
0.1 g/t AuEq
149.2
1.0 g/t AuEq
cut
78.2
0.1 g/t AuEq
9.0
0.1 g/t AuEq
159.4
1.0 g/t AuEq
cut
48.1
0.1 g/t AuEq
192.6
1.0 g/t AuEq
103.5
1.0 g/t AuEq
51.8
Table 6: Historical intersections interpreted as copper rich intrusive breccia hosted mineralisation
Gold Equivalent (AuEq) values – Requirements under the JORC Code
•
Assumed commodity prices for the calculation of AuEq is Au US$1780 Oz, Ag US$22 Oz, Cu US$9,650 /t, Mo US$40,500 /t,
• Metallurgical recovery factors for gold, silver, copper, and molybdenum are assumed to be equal. No metallurgical factors have been
applied in calculating the Au Eq.
•
The formula used: AuEq (g/t) = Au (g/t) + [Ag (g/t) x (22/1780)] + [Cu (%) x (9650/100*31.1/1780)] + [Mo (%) x (40500/100*31.1/1780)].
• CEL confirms that it is the Company’s opinion that all the elements included in the metal equivalents calculation have reasonable
potential to be recovered and sold.
57
This historical drilling comprised fans of three and
four drill holes from two collar locations. Historical
drill holes JDH-009 (111.7 metres at 1.9 g/t AuEq)
and GY-005 (150.0 metres at 1.0 g/t AuEq including
40.0 metres at 2.0 g/t AuEq) were collared 100
metres east of GYDD-21-008. JDH-006, collared
100 metres northwest of GYDD-21-008, intersected
two zones of copper rich mineralisation hosted
in intrusive breccia (116.2metres at 1.4 g/t AuEq
including 53.3 metres and 71.6m at 0.4 g/t AuEq)
from near surface. GY-011, drilled from the same
pad as JDH-006 at a steeper angle, intersected
215.0 metres at 0.9 g/t AuEq including 83.0 metres
at 1.2 g/t AuEq and 27.0 metres at 1.9 g/t AuEq.
The historical drilling and GYDD-21-006 and
GYDD-21-008 define a continuous zone of
higher-grade copper-silver rich gold mineralisation
with a true width between 100 to 150 metres
and up to 200 metres in some holes. This zone
of mineralisation dips steeply to the northwest,
extends over at least 150 metres of strike and
remains open in both directions along strike and at
depth. Additionally, the historical drilling shows the
same distribution of higher-grade mineralisation
at the upper and lower contact of the Intrusive
breccia with the country rock.
58
Challenger Exploration Limited Annual Report Figure 21 – Cross Section GYDD-21-005, GYDD-21-008 and GYDD-21-015 “Main Discovery zone”
59
GYDD-21-011 – Main Discovery Zone,
GY-A Soil Anomaly
GYDD-21-011 was drilled approximately 300
metres southeast of the Company’s first
El Guayabo drillhole GYDD-21-001 which
intersected 784.3 metres at 0.4 g/t AuEq from near
surface to the end of the hole including a higher
grade core of 380.5 metres at 0.5 g/t AuEq from
167.5m including 188.5 metres at 0.6 g/t AuEq.
GYDD-21-011 was designed to test for extensions
to the mineralisation intersected in GYDD-21-001
some 300 metres down-dip. This main discovery
zone coincides with the GY-A Au soil anomaly that
covers 1.2 kilometres strike (Figure 22).
GYDD-21-011 intersected 307.9m at 0.6 g/t AuEq
(0.5 g/t Au, 2.4 g/t Ag, 0.05 % Cu, 13.6 ppm Mo)
from 3.0m, including 102.9m at 1.2 g/t AuEq (1.1
g/t Au, 2.7 g/t Ag, 0.04% Cu, 19.1 ppm Mo) from
156.1m including a higher grade zone of 57.0m at
1.8 g/t AuEq (1.7 g/t Au, 3.6 g/t Ag, 0.03% Cu, 9.0
ppm Mo). The hole was abandoned at 310 metres,
after the core barrel became stuck 300 metres
above the projected main target zone.
The mineralisation from surface until where
the hole was lost, is interpreted as an extension
of the main discovery zone of mineralisation
intersected in GYDD-21-001. This main discovery
zone starts at surface, is sub-vertical, remains
open at a depth of 500 metres, and was previously
interpreted as having a true width of 300 metres.
The results of GYDD-21-011 indicate that this
main zone is significantly larger, and it has a true
width of approximately 1000 metres in this location.
Historical hole GY-03, located between GYDD-21-
001 and GYDD-21-011 which intersected 220.8
metres at 0.4 g/t AuEq and channel sampling in the
Adriano Adit behind GYDD-21-011, which returned
136.0 metres at 0.5 g/t AuEq, demonstrate that
mineralisation is continuous and pervasive across
the 1000 metre true width.
GYDD-22-015 – Main Discovery Zone,
GY-A Soil Anomaly
GYDD-22-015 was drilled from the same drill pad as
GYDD-21-008 (257.8m at 1.4 g/t AuEq) at a steeper
angle to test 100 metres downdip of GYDD-21-008
which intersected the zone of high-grade copper
rich mineralisation hosted in intrusive breccia
with extensive sheeted veining that sits within the
broader zone of mineralisation at the El Guayabo
discovery zone. The hole successfully extended this
high-grade copper rich mineralisation down-dip
where it remains open at depth.
GYDD-22-015 intersected 305.7m at 0.5 g/t AuEq
(0.2 g/t Au, 4.6 g/t Ag, 0.2 % Cu, 1.5 ppm Mo) from
3.0m. This included two zones of higher-grade
mineralisation of 59.8m at 0.7 g/t AuEq (0.2 g/t
Au, 7.1 g/t Ag, 0.3% Cu, 1.5 ppm Mo) from 87.1
and 47.3m at 0.9 g/t AuEq (0.4 g/t Au, 6.7 g/t Ag,
0.3% Cu, 1.3 ppm Mo) from 257.7m, including 18.0
metres at 1.1 g/t AuEq and 15.0 metres at 1.2 g/t
AuEq from 289.9m. The two higher grade zones are
located at the top and base of this copper rich zone
which correlates well with copper-rich sheeted vein
hosted mineralisation intersected in GYDD-006 and
GYDD-008. Follow up drilling is planned both up
and down-dip.
60
Challenger Exploration Limited Annual Report GYDD-22-016 – Main Discovery Zone,
GY-A Soil Anomaly
GYDD-22-016 successfully extended the zone
of higher-grade copper rich mineralisation 150
metres along strike to the west. It also confirmed
continuous mineralisation between GYDD-21-
008 and GYDD-21-007 collared 500 metres west
along strike from GYDD-21-008 and 200 metres
west along strike from GYDD-22-016. Logging
indicates that the initial 68 metres from surface
was a zone of surface leaching. Below this, the
hole intersected 265.4m at 0.5 g/t AuEq (0.3 g/t
Au, 2.9 g/t Ag, 0.1% Cu, 2.9 ppm Mo) from 68.0m
including 107.6m at 0.9 g/t AuEq (0.5 g/t Au, 5.7
g/t Ag, 0.2% Cu 2.1 ppm Mo) from 225.8m.
The higher-grade zone from 225.8 metres
correlates well with the copper rich higher-grade
zone of mineralisation hosted in intrusive breccia
and containing sheeted veining. As is observed
elsewhere in the system the copper rich zone
contains two zones of higher-grade mineralisation
at the top and base of the zone with intersections
of 31.0m at 1.1 g/t AuEq (0.7 g/t Au, 6.1 g/t Ag,
0.2% Cu, 2.1 ppm Mo) from 225.8 and 39.1m at
1.1 g/t AuEq (0.6 g/t Au, 8.5 g/t Ag, 0.3% Cu, 1.9
ppm Mo) from 294.3m. A drill hole is planned to
test down-dip of GYDD-22-016.
First Drilling on separate regional Au
soil Anomaly Targets
Figure 23 (next page) shows the GY-B and GY-C
Au soil anomalies which are both approximately
800 metres long and 300 metres wide and have
similar peak Au in soil values to the GY-A Au
soil anomaly, which correlates with the main
discovery zone. These were the first two of
fifteen similar Au soil anomalies across the entire
project to be drill tested by the Company.
Drilling (with assays pending) is currently ongoing
on the CV-A and CV-B Au soil anomalies at
Colorado V in the northern part of the project.
Both these anomalies have a similar size footprint
to the GY-A Anomaly both being 1 kilometre long.
GYDD-21-009 – GY-B Au soil anomaly
GYDD-21-009 was collared as a deep hole under
the GY-B Au in soil anomaly which corresponds
to the zone of mineralisation historically termed
the "Gold Block Breccia". As Figure 24 shows,
the Gold Block Breccia was drilled historically,
however, the 10 historical holes were tightly
spaced, covering less than 30% of the GY-B soil
anomaly with drilling focussed within 200 metres
of surface. The best historical drill results from the
Gold Block Breccia were in drill hole GY-02 (156.0
metres at 3.0 g/t AuEq and 28.9 metres at 0.4
g/t AuEq, ending in mineralisation) and drill hole
JDH-13 (16.0 metres at 0.5 g/t AuEq and 65.0
metres at 1.5 g/t AuEq).
GYDD-21-009 was drilled as a deep test 200
metres under the GY-B anomaly and the historical
Gold Block Breccia drilling. The hole intercepted
mineralisation from surface to the end of the hole
recording, 692.7m at 0.3 g/t AuEq (0.2 g/t Au,
2.0 g/t Ag, 0.1% Cu, 7.7 ppm Mo). This included a
higher grade zone of 220.5m at 0.6 g/t AuEq (0.3
g/t Au, 4.3 g/t Ag, 0.1% Cu, 8.7 ppm Mo) from
220.5m including. 20.7m at 1.0 g/t AuEq (0.3 g/t
Au, 16.5 g/t Ag, 0.3% Cu, 5.5 ppm Mo) and 80.5m
at 0.9 g/t AuEq (0.5 g/t Au, 1.3 g/t Ag, 0.2% Cu,
5.8 ppm Mo).
This higher-grade 220 metre zone of
mineralisation correlates with the downdip
extensions of the historical drilling. Additionally,
rock saw channel sampling in the Adriano Adit,
which traverses the main area of historical
drilling approximately 80 metres below surface
returned 187 metres of 0.5 g/t AuEq, confirming
the approximate 200 metre true width of the
higher-grade component of the GY-B target
mineralisation. Given the 800m x 200 metre
dimensions of the GY-B Au soil anomaly, it has the
potential to host a significant bulk gold deposit.
61
Figure 23 – GY-A, GY-B and GY-C Au soil anomalies and current drilling
62
Challenger Exploration Limited Annual Report GYDD-21-012 and GYDD-21-013 – GY-C
Au soil anomaly
GYDD-21-012 and GYDD-21-013 were designed
to test the GY-C Au soil anomaly which is
approximately 800 metres long and 400 metres
wide. Both holes intercepted significant gold-
coper-silver mineralisation, demonstrating that
the mineralisation associated with this anomaly
is similar to that in the main discovery zone
(GY-A) and GY-B and has the potential to add
significant tonnage of bulk gold mineralisation to
the main discovery zone.
GYDD-21-013 was collared 200 metres outside
of the GY-C anomaly and drilled under the Au
soil anomaly. The hole intersected mineralisation
from near surface until the end of the hole
intersecting 130.9m at 0.4 g/t AuEq (0.2 g/t Au,
4.2 g/t Ag, 0.1% Cu, 5.7 ppm Mo) from 33.6m
and 328.3m at 0.4 g/t AuEq (0.2 g/t Au, 2.2 g/t
Ag, 0.1% Cu, 23.3 ppm Mo) from 189.2m until
the end of the hole. This included a higher grade
component of 91.0m at 0.6 g/t AuEq (0.4 g/t Au,
1.7 g/t Ag, 0.1% Cu, 32.2 ppm Mo).
GYDD-21-012 intersected 224.8m at 0.4 g/t
AuEq (0.3 g/t Au, 2.4 g/t Ag, 0.04% Cu, 2.7
ppm Mo) from 2.0m, including 42.5m at 0.7 g/t
AuEq (0.6 g/t Au, 2.3 g/t Ag, 0.03% Cu, 1.9 ppm
Mo) and 72.0m at 0.3 g/t AuEq (0.3 g/t Au, 0.8
g/t Ag, 0.02% Cu, 3.2 ppm Mo) from 669.6m
including 55.5m at 0.4 g/t AuEq (0.3 g/t Au,
0.7 g/t Ag, 0.02% Cu, 3.6 ppm Mo) plus several
lower grade zones between these intersections.
Additionally, two historical holes GY-01 and
JDH-14, both of which were not optimally sited
to test the GY-C mineralisation, also indicate
significant potential for bulk gold-copper-
silver mineralisation. GY-01 was a vertical hole
collared on the outer margin of the GY-C Au
soil anomaly. It intersected 59.0 metres at 0.54
g/t AuEq from 10.0m and 110.2 metres at 0.5
g/t AuEq from 139.0m to the end of hole.
Ongoing Drill program
The company has completed drill holes CVDD-22-
006 to CVDD-22-021 (assays pending) targeting
the CV-A and CV-B anomalies at Colorado V. The
next five drill holes have targeted CV-D (two holes
completed with assays pending), CV-E (completed
assays pending), CV-G (completed assays pending),
and CV-H and CV-G (both completed assays
pending) anomalies.
Three additional drill holes are planned to test
the GY-E and GY-D anomalies as both drill rigs
move back into the El Guayabo concession. The
rigs will then complete a Phase-2 drill program of
25,000-30,000 metres at GY-A and GY-B which
encompasses the main discovery zone at the 100%
owned El Guayabo concession. This program has
been designed to generate a maiden Resource
Estimate in accordance with the JORC 2012 Code at
the GY-A anomaly.
63
Figure 24 – GYDD-21-009 and historical drilling on GY-B “Gold Block Breccia”
64
Challenger Exploration Limited Annual Report Figure 25 – GYDD-21-013 on GY-C Au soil Anomaly
65
Figure 26 – Long Section El Guaybo to Colorado V and current and proposed drilling
66
Challenger Exploration Limited Annual Report Colorado V Drill program
The Company is farming in to earn an initial 50% interest in the Colorado V concession which adjoins CEL’s
100% owned El Guayabo concession to the south and the Cangrejos concession which hosts the 17 million
ounce Cangrejos Gold Project1, to the north. The Colorado V drill program comprised 17 drillholes (assays
pending for holes CVDD-22-006 and higher) for 11720 metres of diamond core.
CVDD-22-001 – First test CV-A anomaly
CVDD-22-001 was the Company's first drill hole
targeting the CV-A soil anomaly at Colorado V.
The CV-A anomaly is a gold, silver, and copper soil
anomaly some 1 kilometre long and 500 metres
wide which forms part of a greater 3 kilometre
linear trending gold in soil feature at Colorado V.
The CV-A anomaly, like the other fifteen regionally
significant Au-Ag-Cu-soil anomalies across the
Company’s 35.7 km2 tenement package has a
peak gold value some 50 times above background.
Additionally, it is coincident with significant
underlying magnetic anomalies indicative of
porphyry systems.
Limited historical drilling had been undertaken
outside the CV-A soil anomaly targeting vein and
breccia mineralisation which is currently being
exploited by small scale mining. Results included
248 metres at 0.5 g/t AuEq including 114 metres
at 0.7 g/t AuEq, in drillhole ZK16-2 located on the
northwest flank of the CV-A anomaly and 112
metres at 0.5 g/t AuEq within a zone of 454m at 0.3
g/t AuEq over the entire length of drillhole ZK0-4
located outside the southern boundary of the CV-A
soil Anomaly. These historic results had not been
followed up with drilling which directly targeted
the CV-A anomaly prior to the Company's current
program of which CVDD-22-001 was the first hole.
The intersection of 528.7m at 0.5 g/t AuEq (0.3 g/t
Au, 2.0 g/t Ag, 0.1 % Cu, 13.2 ppm Mo) from surface
until the end of the hole in the first hole to test the
CV-A anomaly confirms a significant gold discovery.
The mineralisation is consistent and pervasive
throughout the hole and appears to have a similar
paragenetic relation to mineralisation intersected
in the companies´ discovery holes 3 kilometres to
the south at El Guayabo, as well as Lumina Gold's
Cangrejos Project 3 kilometres to the north.
Importantly, from an open pit mining perspective,
hole CVDD-22-001 includes a higher-grade section
near surface, with an intersection of 397.1m at 0.6
g/t AuEq (0.3 g/t Au, 2.8 g/t Ag, 0.1 % Cu, 14.3 ppm
Mo) from surface including 108.0m at 0.7 g/t AuEq
(0.4 g/t Au, 2.8 g/t Ag, 0.1 % Cu, 15.6 ppm Mo)
from 6.0 metres.
67
CVDD-22-003: CV-A anomaly
CVDD-22-003 was the Company's second drill
hole targeting the CV-A soil anomaly at Colorado V.
The hole was drilled as a follow up to CVDD-22-
001 which intersected 528.7m at 0.5 g/t AuEq from
surface to the end of the hole including 397.1m at
0.6 g/t AuEq from surface. CVDD-22-003 was drilled
from the same pad as CVDD-22-001 in the opposite
direction outwards from the CV-A soil anomaly to
test the entire 500 metre width.
As can be seen from Figure 28 (Plan view), CVDD-22-
003 drilled outside the projected CV-A soil anomaly
at approximately 200 metres down hole. This makes
the intercept of 509.9m at 0.4 g/t AuEq (0.2 g/t Au,
1.4 g/t Ag, 0.1 % Cu, 31.3 ppm Mo) from surface until
the end of the hole more impressive as it confirms
that the mineralisation extends significantly beyond
the boundary of the CV-A soil anomaly.
The hole intersected a higher-grade zone of 242.5
metres at 0.6 g/t AuEq (0.4 g/t Au, 1.8 g/t Ag, 0.1%
Cu, 44.8 ppm Mo) including 156.9 metres at 0.7
g/t AuEq (0.4 g/t Au, 1.8 g/t Ag, 0.1% Cu, 54.7 ppm
Mo) and 75.8 metres at 0.8 g/t AuEq (0.6 g/t Au,
1.8g/t Ag, 0.1% Cu, 59.1 ppm Mo), all from surface.
This higher-grade zone correlates with the area
below the CV-A soil anomaly, which is an extension
of mineralisation intersected in CVDD-22-001
(397.1m at 0.6 g/t AuEq from surface), confirming
mineralisation at the CV-A anomaly begins at surface
and has higher-grades at surface.
The intersection confirms that the CV-A soil anomaly
which is a gold, silver, and copper soil anomaly some
1 kilometre long and 500 metres wide is mineralised
across its entire 500 metre width and beyond. The
mineralisation is consistent and pervasive throughout
the hole and appears to have similar paragenetic
relationships to mineralisation intersected in the
discovery holes 3 kilometres to the south at El
Guayabo, as well as Lumina Gold's Cangrejos Project
6 kilometres to the northeast.
68
Challenger Exploration Limited Annual Report Figure 27 – Cross Section showing CV-A drilling
69
CVDD-22-005: CV-A anomaly
CVDD-22-005 was the Company's third drill hole
targeting the CV-A soil anomaly. It was drilled
from the same pad at CVDD-22-001 and CVDD-
22-003 at an azimuth of 030, perpendicular to
holes CVDD-22-001 and 003, to test mapped
stockwork veining at surface in the north of the
CV-A anomaly (Figure 28). The hole intersected
564.1 metres at 0.4 g/t AuEq (0.2 g/t Au, 2.3
g/t Ag, 0.1% Cu, 44.0 ppm Mo) from 8.1m. This
included a higher-grade near surface zone of
278.0 metres at 0.6 g/t AuEq (0.3 g/t Au,3.2 g/t
Ag, 0.1% Cu, 68.2 ppm Mo) from 8.1m including
146.5 meters at 0.7 g/t AuEq (0.4 g/t Au, 3.2 g/t
Ag, 0.1% Cu, 101.0 ppm Mo) also from 8.1m.
The results extend the mineralisation intersected
in CVDD-22-001 and CVDD-22-003 some 300
metres to the northern extent of the CV-A soil
anomaly. They confirm a continuous zone of
mineralisation from surface which is 600 metres
wide extending over 400 metres of strike that
remains open at depth and to the south along
the 600 additional metres of strike of the CV-A
soil anomaly. This 600 metres strike extent to the
south-west has been tested by drill holes CVDD-
22-007 and CVDD-22-010 (both assays pending).
Figure 28 - Plan View - CV-A and CV-B anomalies with the company´s drilled, currently and proposed drilling
70
Challenger Exploration Limited Annual Report CVDD-22-002 - First test CV-B anomaly
CVDD-22-002 was the Company's first drill hole
targeting the CV-B soil anomaly in the Colorado V
concession. CV-B is a gold, silver and copper soil
anomaly 1 kilometre long and 500 metres wide
which also forms part of the greater 3-kilometre
linear NE/SW trending gold in soil feature at
Colorado V (Figure 28).
Limited historical drilling had been undertaken on
the south-eastern edge of the CV-B soil anomaly
with results including 276 metres at 0.4 g/t AuEq
including 69 metres at 0.7 g/t AuEq, in drillhole
SAZK2-1 and 105 metres at 0.7 g/t AuEq including
55m at 0.9 g/t AuEq in drillhole SAZK0-2A also on
the eastern limit of CV-B.
The intersection of 570.0m at 0.4 g/t AuEq (0.2
g/t Au, 2.0 g/t Ag, 0.1% Cu 11.4 ppm Mo) from
4.5m to until the end of the hole in the first hole
to test CV-B anomaly confirms a significant gold
discovery. Like the first hole on the CV-A anomaly
the mineralisation in CVDD-22-002 is consistent
and pervasive throughout the intersection and
appears to have a similar paragenetic relation to
the mineralisation intersected in El Guayabo to
the south and Lumina Gold's Cangrejos Project
immediately to the north.
Importantly from an open pit mining perspective
the hole included a higher-grade section from
surface. Including intersections of 306.7m at 0.5
g/t AuEq (0.2 g/t Au, 2.3 g/t Ag, 0.1 % Cu, 13.6
ppm Mo) from surface including 24.9m at 0.9
g/t AuEq (0.4 g/t Au, 4.5 g/t Ag, 0.3% Cu, 53.4
ppm Mo) from 174.6m. The hole also included
two higher grade deeper zones with intersections
of 9.1m at 1.1 g/t AuEq (0.8 g/t Au, 6.9 g/t
Ag, 0.1% Cu, 8.9 ppm Mo) from 387.1m and
14.0m at 0.9 g/t AuEq (0.8 g/t Au, 1.3 g/t Ag,
24.7 ppm Mo) from 490.2m.
Drill holes CVDD-22-006, and CVDD-22-008
which collectively step another 550 metres
northeast along strike from CVDD-22-002
have been completed (assays pending)
with a third hole planned to test a further 1
kilometre northeast along strike (Figure 28).
CVDD-22-004: CV-B anomaly
CVDD-22-004 was drilled 250 metres north
of CVDD-22-002 in a lower tenor portion of
the CV-B soil anomaly. CV-B is the second
1 kilometre long and 500 metres wide gold,
silver and copper soil anomaly to be drilled in
Colorado V (Figure 28).
CVDD-22-004 intersected 456.0 metres at
0.25 g/t AuEq (0.1 g/t Au, 0.9 g/t Ag, 0.1%
Cu 10.9 ppm Mo) from 203.0m. This included
higher-grade zones of 205.4 metres at 0.3 g/t
AuEq (0.2 g/t Au, 1.0 g/t Ag, 0.1% Cu 11.1 ppm
Mo) from 443.9 including 56.1 metres at 0.4
g/t AuEq (0.2 g/t Au, 1.1 g/t Ag, 0.1% Cu 8.3
ppm Mo) from 448.4m plus 9.0 metres at 0.7
g/t AuEq (0.6 g/t Au, 0.9 g/t Ag, 0.05% Cu 6.7
ppm Mo) from 593.0m.
CVDD-22-004 extends the mineralisation in the
CV-B anomaly 250 metres north of the CVDD-
22-002 discovery hole which intersected 570.9
metres at 0.4 g/t AuEq including 306.7 metres
at 0.5 g/t AuEq from surface. Mineralisation
at CV-B remains open to the north over 750
metres strike extent, at depth, and has a true
width of approximately 500 metres.
71
Figure 29 - Cross Section showing CVDD-22-002 and historical drilling at the CV-B anomaly
72
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.
Hualilan Gold Project Maiden JORC 2012 Mineral Resource Estimate
JORC 2012 Mineral Resource Estimate for the Hualilan Gold Project
Domain
Category
Mt
Au g/t
Ag g/t
Zn %
Pb %
AuEq g/t
AuEq (Moz)
US$1800 optimised shell
> 0.25ppm AuEq
Below US$1800 shell
> 1.0ppm AuEq
Indicated
Inferred
18.7
25.0
Inferred
4.0
Total
47.7
1.1
1.0
1.9
1.1
5.4
5.6
11.5
6.0
0.41
0.39
1.04
0.07
0.06
0.07
0.45
0.06
1.3
1.2
2.6
1.4
0.80
1.00
0.33
2.13
Mineralisation
Mt
Style
(0.25 g/t AuEq cut-off)
Skarn (limestone hosted)
intrusion/sediment hosted
6.3
41.4
Au
(g/t)
4.4
0.6
Ag
(g/t)
19.4
4.0
Zn
(%)
2.0
0.2
Mineralisation
Style
Skarn (limestone hosted)
intrusion/sediment hosted
Total Contained metal
Contained Metal
Au
Ag
(Moz)
(Moz)
0.9
0.8
1.7
3.9
5.3
9.2
Zn
(kt)
123
95
218
Pb
(%)
0.2
0.04
Pb
(kt)
11
19
29
Au Eq
(g/t)
5.6
0.8
Au Eq
(Moz)
1.13
1.00
2.13
Interim MRE reported as Skarn and Intrusion/sediment hosted components of mineralisation
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.
73
Competent Person Statement – Exploration Results and Mineral Resources
The information in this report that relates to sampling techniques and data, exploration results and
geological interpretation and Mineral Resources 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 and Mineral Resources. 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.
La Mancha Resources 2003 foreign resource estimate for the Hualilan Project ^
Category
Tonnes
Gold Grade
Contained Gold
Measured
Indicated
Total of Measured & Indicated
Inferred
(kt)
218
226
445
977
Total of Measured, Indicated & Inferred
1,421
(g/t)
14.2
14.6
14.4
13.4
13.7
(koz)
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
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.
74
Challenger Exploration Limited Annual Report 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 ineralization 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.
75
Events Subsequent
to Balance Date
On 9 September 2022, the Company announced it has entered into binding agreements for a
US$15m (A$22.1m) private placement of unsecured convertible debentures (the “Debentures”)
with Queen’s Road Capital Investment Ltd (“QRC”). The Debentures are convertible into fully paid
ordinary shares in CEL (“Shares”) at a price of $0.25, a 30% premium to the 5-day volume weighted
average price (“VWAP”) prior to 2 September 2022. Additionally, the Company’s largest institutional
shareholder has committed to invest pro-rata to its 12% shareholding via a $2.6m placement at 5-day
VWAP, increasing combined funds raise to $24.7m from two parties.
The Company received the US$15m less fees on 12 September 2022, and on 16 September 2022
$2.6m less fees.
On 12 September the Company issued 3,513,457 ordinary shares in lieu of cash for the 3%
establishment fee on the QRC debenture.
On 16 September 2022, the Company issued 13,684,213 ordinary shares for the placement.
Results of Operations
The net profit after tax for the financial
year ended 30 June 2022 for the Group
was $25,785,965 (2021: $3,258,568).
Dividends
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.
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.
76
Challenger Exploration Limited Annual Report Remuneration
Report (Audited)
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 Directors and Senior Executives
remuneration is in line with market practice and is
reasonable in the context of Australian executive
reward practices. All Executive Directors and Senior
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. 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 2022.
77
Key Management
Personnel
(a) Details of Key Management Personnel
Fletcher Quinn
Non-Executive Chairman
Kris Knauer
Managing Director
Sergio Rotondo
Executive Director
Scott Funston
Finance Director, Company Secretary
and Chief Financial Officer
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, apart from Mr Rotondo, 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.
A contract was entered into by the Company before Mr Rotondo was appointed a Director of the Company.
As announced on 9 July 2021, the Company has entered into a sale agreement with the vendors of the
Hualilan Project for the Cerro Sur and Cerro Norte Farm-in Interests for the Company to acquire a 100%
interest in the Hualilan Gold Project in Argentina.
Mr Rotondo received 89,000,000 fully paid ordinary shares in the Company as a result of the acquisition
as a vendor of the Hualilan Project. Shareholders approved the acquisition at an Extraordinary General
Meeting on 3 September 2021, Mr Rotondo was appointed to the board on 9 September 2021.
Full details of the acquisition are contained in the Notice of General Meeting dated 3 September 2021,
which is available on the Company website.
78
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 2022 is as follows:
2022
Primary
Base Salary
and Fees
$
Directors
Fletcher Quinn
60,000
Kris Knauer
295,000
Sergio Rotondo
205,257
Scott Funston
245,000
Total 2022
805,257
Equity
Compensation
Value of
Bonus and
Non Monetary
Performance
Benefits
$
Rights
$
–
–
–
–
–
–
–
–
(48,949)
(48,949)
Post-employment
Superannuation
Termination
Contributions
Benefits
$
–
–
–
–
–
$
–
–
–
–
–
2021
Primary
Base Salary
and Fees
$
Bonus and
Non Monetary
Benefits a
$
Equity
Compensation
Value of
Performance
Rights
$
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
Post-employment
Superannuation
Termination
Contributions
Benefits
$
–
–
–
–
$
–
–
–
–
Performance
Related %
Total
$
60,000
295,000
205,257
–
–
–
196,051
(24.9%)
756,308
–
Performance
Related %
Total
$
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 Explanatory Statement of the Notice of
Annual General Meeting dated 21 October 2020.
b The value attributable to Mr Funston’s performance rights relate to those rights issued during the previous financial year which are
being brought to account over the vesting period.
79
(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.
(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.
80
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.
(d) (Incentives): Mr Knauer is eligible to receive Securities under the Company’s Incentive Option Plan and
Performance Rights Plan. No Securities were granted under the Company’s Incentive Option Plan and
Performance Rights Plan during the financial year ended 30 June 2022 to Mr Knauer.
(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.
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.
(c) (Term): Two (2) years from the Commencement Date or until validly terminated.
(d) (Remuneration): Mr Funston receives a base salary of $245,000 per annum.
(e) (Incentives): Mr Funston is eligible to receive Securities under the Company’s Incentive Option Plan
and Performance Rights Plan. No Securities were granted under the Company’s Incentive Option Plan
and Performance Rights Plan during the financial year ended 30 June 2022 to Mr Funston.
(f) (Accrued Entitlements): All entitlements that have accrued to Mr Funston prior to the date of this
agreement will be honoured by the Company.
(g) (Termination): The agreement may be terminated by either party by providing three (3) months written
notice.
(h) (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.
81
(f) Shares held by Key Management Personnel
Balance
at 1.7.21
Shares
Purchased
Net Change
Other
Balance
at 30.06.22
Directors
Fletcher Quinn
Kris Knauer
24,078,637
43,424,499
–
8,854,167 (b)
–
–
24,078,637
52,278,666
Sergio Rotondo
–
–
89,000,000(a)
89,000,000
Scott Funston
5,160,417
2,000,000 (b)
–
7,160,417
72,663,553
10,854,167
89,000,000
172,517,720
(a) Refer to (a) Details of Key Management Personnel, above for further details.
(b) During the financial year Mr Knauer received 8,854,167 and Mr Funston received 2,000,000 ordinary shares
upon exercising 8,854,167 and 2,000,000 unlisted options with an exercise price each of $0.04 with an expiry
date of 30 June 2022. Mr Knauer and Mr Funston paid $0.04 per share.
No other shares were issued by the Company during or since the financial year ended 30
June 2022 as a result of the exercise of an option or conversion of a performance right.
(g) Options held by Key Management Personnel
Balance
at 1.7.21
Options
Exercised
Options
Issued
Balance
at 30.06.22
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
–
–
Kris Knauer (a)
8,854,167
(8,854,167)
Sergio Rotondo
–
–
Scott Funston (a)
2,000,000
(2,000,000)
10,854,167
(10,854,167)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(a) During the financial year 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.
82
Challenger Exploration Limited Annual Report (h) Performance Shares held by Key Management Personnel
Balance
at 1.7.21
Shares
Net Change
Balance
Purchased
Other
at 30.06.22
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
–
Kris Knauer (a)
37,000,000
Sergio Rotondo
Scott Funston
–
–
37,000,000
–
–
–
–
–
–
–
–
–
–
–
37,000,000
–
–
37,000,000
–
–
–
–
–
–
–
–
–
–
(a) Mr Knauer was issued these consideration performance shares in 2019 as part of the Group’s acquisition of AEP Corporation
Pty Ltd disclosed in the Prospectus document dated 16 May 2019. They consist of 18,500,000 Performance A Shares and
18,500,000 Performance B Shares. These consideration performance shares were not issued for Mr Knauer’s remuneration.
Details of Performance Shares are disclosed in Note 14 of the financial report.
(i) Performance Rights held by Key Management Personnel
Balance
at 1.7.21
Shares
Net Change
Balance
Purchased
Other
at 30.06.22
Total
Vested
Total
Exercisable
Directors
Fletcher Quinn
Kris Knauer
Sergio Rotondo
–
–
–
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 2020 financial year.
83
(j) Other Transactions with Key Management Personnel
Mr Quinn is a director of Seco Resources Pty Ltd. Seco has provided his services as Chairman to a
value of $60,000 (2021: $60,000) to Challenger during the year on normal commercial terms. This
amount is included in the Remuneration Report section of the Directors’ Report. $10,000 (2021:
$5,000) 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 (2021: $295,000) to Challenger during the year
on normal commercial terms. This amount is included in the Remuneration Report section of the
Directors’ Report. $49,167 (2021: $24,583) 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 (2021: $245,000) to
Challenger during the year on normal commercial terms. This amount is included in the Remuneration
Report section of the Directors Report. $40,833 (2021: $20,417) was outstanding at year end.
(k) Amounts owing to Key Management Personnel
A total of $100,000 was outstanding to Key Management Personnel as at 30 June 2022 (2021: $50,000),
as noted above.
End of Remuneration Report
84
Challenger Exploration Limited Annual Report 85
Options
At the date of this report, 10,000,000 unlisted options over new ordinary shares in the
Company were on issue:
Type
Unlisted
Date of Expiry
Exercise Price
Number Under Option
14 April 2025
$0.45
10,000,000
86,644,444 ordinary shares were issued upon the exercise of options during the financial year ended 30
June 2022. No ordinary shares have been issued since the end of the financial and up to the date of this
report 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. These Performance Shares were issued as part of the Group’s acquisition of AEP Corporation Pty Ltd
disclosed in the Prospectus document dated 16 May 2019
Type
Performance A
Performance B
Number
60,000,000
60,000,000
Class A Performance 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.
Class B Performance 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.
86
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
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.
87
Incentive Performance Rights
At the date of this report, 8,772,427 Incentive Performance Rights over new ordinary shares in the
Company were on issue:
Type
Incentive Performance
Rights (a)
Incentive Performance
Rights (b)
Number
267,027
8,505,400
(a)
(b)
Incentive Performance Rights have the following vesting condition, where the holder must remain employed
or engaged by the Company for a minimum period of twelve months from 28 November 2019.
Incentive Performance Rights have the following vesting condition, where the holder must remain employed
or engaged by the Company for a minimum period of twelve months from 28 November 2021.
210,379 ordinary shares were issued upon the vesting of performance rights during the financial
year ended 30 June 2022. No ordinary shares were issued upon the vesting of performance rights or
performance shares since the end of the financial year ended 30 June 2022.
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.
88
Challenger Exploration Limited Annual Report Indemnification of Auditors
To the extent permitted by law, the Group has agreed to indemnify its auditors, Ernst & Young Australia, as
part of the terms of its audit engagement agreement against claims by third parties arising from the audit
(for an unspecified amount). No payment has been made to indemnify Ernst & Young Australia during or
since the financial year.
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, Ernst and Young, 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 92 and forms part of the Directors’ Report
for the year ended 30 June 2022.
Non-Audit Services
Erst and Young 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
29 September 2022
89
Sustainability, Governance
and Accountability
Values – How we work together
Challenger Exploration recognises that sustainability, governance and accountability 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 & 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:
174,000,000
Litres of water treated
by the Company from at the
El Guayabo Project, Ecuador from January to September 2022
Historical activities at El Guayabo meant contaminated run-off and acid mine drainage created by
past owners and artisinal mining 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.
126
Metres in the initial water bore to prove sufficient bore water for
Hualilan production allowing the replacement of spring water
Challenger’s Community program has provided a strong
Social Licence to develop the Hualilan Gold Project
90
Challenger Exploration Limited Annual Report Social - People & 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
+420
Direct and in-direct jobs created in
Argentina & Ecuador
+30
New local businesses supported via CEL’s
local supplier development plan
+100
Geology Students trained via our local internship
program with San Juan Universities with some
assisted via our scholarship program with the
San Juan School of Mines
95%
Locals employed with a 95% retention rate
COMMUNITY ENGAGEMENT
+38
Community meetings held from January to
September 2022 with communities in the direct
area of influence of the El Guayabo Project
+4
Additional intensive care beds and 4 respirators
donated to the local hospital near El Guayabo
+58%
Of families in the local community part of the
Women’s Association that provides catering, cleaning,
and laundry services to the Company
+15
University Students attended the 2022 short course
for geology sampling programs provided by
Challenger in Ecuador
Winner, Annual ESG Award, Argentina Mining 2022
The San Juan Mining Ministry confirms that Challenger Exploration and Barrick
Gold are the only exploration companies operating in San Juan that meet the
government’s +80% local employment quota
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.
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.
91
Auditor’s Independence
Declaration
92
Challenger Exploration Limited Annual Report Auditor’s Independence Declaration
93
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Challenger Exploration Limited As lead auditor for the audit of the financial report of Challenger Exploration Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Challenger Exploration Limited and the entities it controlled during the financial year. Ernst & Young V L Hoang Partner 29 September 2022 Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2022
Other income
Gain on net monetary position
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
Loan facility expenses
Other
Profit before income tax
Income tax expense
Net profit for the year
Note
2
1 (d)
17
Consolidated
2022 $
Consolidated
Restated *
2021 $
18,988,173
16,247,563
133,277
818,330
132,125
244,840
138,128
33,766
1,238,267
2,179,473
62,920
376,717
145,905
392,092
6,879,467
3,287,584
46,764
761,016
162,445
213,718
46,593
6,594
802,689
1,234,925
30,878
88,790
303,589
124,328
29,339,896
6,344,722
3
(3,553,931)
(3,086,154)
25,785,965
3,258,568
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
(1,227,303)
(2,349,675)
Income tax on other comprehensive income
Other comprehensive loss for the year
Total comprehensive income for the year
–
–
(1,227,303)
(2,349,675)
24,558,662
908,893
Basic earnings per share
Diluted earnings per share
20
20
2.56
2.53
0.49
0.43
* For disclosure around restatement, see note 1(c)
The accompanying notes form part of these financial statements.
94
Challenger Exploration Limited Annual Report Consolidated Statement
of Financial Position
For the year ended 30 June 2022
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
Loan facility
Provisions
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Loan facility
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated profits/(losses)
Total Equity
* For disclosure around restatement, see note 1(c)
The accompanying notes form part of these financial statements.
Note
Consolidated
2022 $
Consolidated
Restated *
2021 $
4
5
6
5
7
8
9
11
10
3
11
12
13
10,415,522
47,490,314
140,783
815,294
309,910
14,145
11,371,599
47,814,369
8,149,755
2,851,222
133,675,262
32,587,630
534,092
410,039
142,359,109
35,848,891
153,730,708
83,663,260
3,997,695
1,220,000
95,292
1,736,543
-
47,004
5,312,987
1,783,547
6,639,276
-
6,639,276
11,952,263
3,086,154
3,500,000
6,586,154
8,369,701
141,778,445
75,293,559
120,378,045
(73,860)
21,474,260
141,778,445
80,631,294
(1,026,030)
(4,311,705)
75,293,559
95
Consolidated Statement
of Changes In Equity
For the year ended 30 June 2022
Issued
Capital
Accumulated
Share Based
Foreign
(Losses)/
Profits
Payment
Exchange
Reserve
Reserves
Option
Reserves
Total
$
$
$
$
$
$
80,631,294
(4,311,705)
1,648,970
(2,675,784)
784
75,293,559
Balance at 1 July 2021
(restated*)
Profit for the year
Other comprehensive income
Total comprehensive income for
the year
–
–
–
25,785,965
–
25,785,965
Issue of shares for project
acquisition
36,300,000
Issue of shares in lieu of fees
51,962
Shares issued on conversion of
options
3,465,778
Shares issued on conversion
employee rights
Share based payments
21
–
Share issue costs
(71,010)
–
–
–
–
–
–
–
–
–
–
–
–
–
2,179,473
–
–
(1,227,303)
(1,227,303)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,785,965
(1,227,303)
24,558,662
36,300,000
51,962
3,465,778
21
2,179,473
(71,010)
Balance at 30 June 2022
120,378,045
21,474,260
3,828,443
(3,903,087)
784 141,778,445
Balance at 1 July 2020
22,177,747
(7,570,273)
511,695
(326,109)
784
14,793,844
Profit for the year (restated*)
Other comprehensive loss
(restated*)
Total comprehensive loss for
the year
–
–
–
3,258,568
–
3,258,568
Issue of share capital
62,140,000
Issue of deferred consideration
shares
Share based payments
Shares issued on conversion of
employee rights
620,464
97,650
477
Share issue costs
(4,405,044)
–
–
–
–
–
–
–
–
–
–
1,137,275
–
–
–
(2,349,675)
(2,349,675)
–
–
–
–
–
–
–
–
–
–
–
–
–
3,258,568
(2,349,675)
908,893
62,140,000
620,464
1,234,925
477
(4,405,044)
Balance at 30 June 2021
(restated*)
80,631,294
(4,311,705)
1,648,970
(2,675,784)
784
75,293,559
* For disclosure around restatement, see note 1(c)
The accompanying notes form part of these financial statements.
96
Challenger Exploration Limited Annual Report Consolidated Statement
of Cash Flows
For the year ended 30 June 2022
Cash Flows From Operating Activities
Payments to suppliers and employees
Interest received
Note
Consolidated
Consolidated
2022 $
2021 $
(2,697,447)
(1,709,038)
1,888
3,474
Net Cash From (Used In) Operating Activities
4
(2,695,559)
(1,705,564)
Cash Flows From Investing Activities
Receipts from Blue Chip Swaps transactions *
Expenditure on exploration
15,399,749
6,317,507
(51,550,354)
(21,278,602)
Expenditure on property, plant, and equipment
(166,579)
(322,751)
Net Cash Used In Investing Activities
(36,317,184)
(15,283,846)
Cash Flows From Financing Activities
Loans received
Repayment of loans
Proceeds from share issue
Costs of loan facility
Share issue costs
Net Cash Provided by Financing Activities
11
4
-
3,500,000
(2,280,000)
-
3,465,778
62,140,477
(145,905)
(280,000)
117,202
(4,593,255)
1,157,075
60,767,222
Net (Decrease)/ Increase in Cash And Cash Equivalents
(37,855,668)
43,777,812
Cash and cash equivalents at beginning of the year
47,490,314
3,801,292
Effect of movements in exchange rates on cash held
780,876
(88,790)
Cash and Cash Equivalents at End Of Year
4
10,415,522
47,490,314
* Gain on blue chip swaps has been recognised in net cash flows used in operating activities in the Group’s most recent Appendix 5B
The accompanying notes form part of these financial statements.
97
Notes to The Financial Statements
for the Year Ended 30 June 2022
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
with the exception of financial instruments measured at fair value. 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 International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB).
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 2022
In the year ended 30 June 2022, the Directors have adopted all of the new and revised Standards
and Interpretations issued by the IASB 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 2022. 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.
c. Prior period restatement
The Group identified that AASB 129 Financial Reporting in Hyperinflationary Economies (AASB 129)
had not been applied in relation to its subsidiary, Golden Mining SA (Argentine peso). There was no
material impact to the Consolidated Statement of Financial Position at 1 July 2020.
98
Challenger Exploration Limited Annual Report The Group has restated each of the affected financial statement line items in the consolidated
statement of financial position and statement of profit or loss and other comprehensive income
for the corresponding prior period, 30 June 2021 as shown below:
Consolidated Statement
of Financial Position $
Deferred exploration and evaluation expenditure
Plant and equipment
Total non-current assets
As previously
Note
reported at 30
Adjustments
As restated
June 2021
(d) iii
(d) iii
29,497,231
3,090,399
32,587,630
314,686
95,353
410,039
32,663,139
3,185,752
35,848,891
Total assets
80,477,508
3,185,752
83,663,260
Deferred tax liabilities
Total non-current liabilities
(d) iii
2,021,243
1,064,911
3,086,154
5,521,243
1,064,911
6,586,154
Total liabilities
7,304,790
1,064,911
8,369,701
Reserves
Accumulated losses
Total equity
Consolidated statement of profit or loss
and other comprehensive income $
Other income
Gain on net monetary position
Total expenses
Profit before income tax
Income tax expense
Profit for the year
(d) vii
(d)
(486,566)
(539,464)
(1,026,030)
(6,972,010)
2,660,305
(4,311,705)
73,172,718
2,120,841
75,293,559
As previously
Note
reported at 30
Adjustments
As restated
June 2021
(d) iv
(d) v
(d) iv
6,320,981
558,486
6,879,467
-
3,287,584
3,287,584
(3,701,475)
(120,854)
(3,822,329)
2,619,506
3,725,216
6,344,722
(d) vi
(2,021,243)
(1,064,911)
(3,086,154)
598,263
2,660,305
3,258,568
Exchange differences on translation of foreign operations
(d) iv
(1,810,211)
(539,464)
(2,349,675)
Total comprehensive profit/ (loss) for the half-year
(1,211,948)
2,120,841
908,893
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
0.09
0.08
0.40
0.35
0.49
0.43
99
d. Hyperinflation
The Group’s accounting policy in relation to the adoption of AASB 129 is disclosed below:
AASB 129 requires that the financial statements of entities whose functional currency is that of a
hyperinflationary economy to be adjusted for the effects of changes in a suitable general price index and
to be expressed in terms of the current unit of measurement at the closing date of the reporting period.
For the purposes of concluding on whether an economy is categorised as high inflation under AASB 129,
the standard details a series of factors to consider, including a cumulative inflation rate over three years
that is close to or exceeds 100%. Based on these factors, the Argentine economy has been considered a
high inflation economy for accounting period ending on or after 1 July 2018.
In accordance with AASB 129, the financial statements of an entity that reports in the currency of a high-
inflation economy must be reported in terms of the unit of measure in effect at the date of the financial
statements. All amounts in the statement of financial position that are not indicated in terms of the
current unit of measure at the date of the financial statements must be restated by applying a general
price index. All the components of the income statement must be indicated in terms of the unit of
measurement updated at the date of the financial statements, applying the change in the general price
index that has occurred since the date on which the income and expenses were originally recognised in
financial statements.
The Argentine Securities Commission established that the series of indexes to be used in the AASB 129
application is the one established by the Argentine Federation of Professional Councils in Economic
Sciences. The inflation was 64.0% and 50.2% in the periods ended 30 June 2022 and 30 June 2021,
respectively. The effects of the application of AASB 129 are detailed below:
Statement of financial position
i. The monetary items (those with a fixed face value in local currency) are not restated as these
are stated in the current measurement unit at the closing date of the reported period. In an
inflationary period, keeping monetary assets causes the loss of purchasing power and keeping
monetary liabilities causes gain in purchasing power as long as those items are not tied to an
adjustment mechanism compensating those effects. The monetary loss or gain is included in the
statement of profit or loss and other comprehensive income for the reported period.
ii. Non-monetary items that are measured at their current values at the end of the reported period
are not restated. However, an adjustment process must be completed to determine the impact to
the statement of profit or loss and other comprehensive income for holding these non-monetary
items at a uniform measurement unit instead of a current measurement unit. There were no non-
monetary items measured at current values as at 30 June 2021 and 30 June 2022.
iii. Non-monetary items at historical cost or measured at current values based on previous dates
to the reported period are restated at rates to reflect the movement that has occurred from the
acquisition or current value date until the reported period date. The amounts restated for these
assets are then compared with the corresponding recoverable values. As a result, depreciation
and amortisation are determined in accordance with the new restated amounts. Non-monetary
items at historical cost are property, plant and equipment, exploration and evaluation assets and
deferred tax liabilities.
100
Challenger Exploration Limited Annual Report Statement of profit or loss and other comprehensive income
iv. Income and expenses, which includes interest and currency exchange differences are restated
from the original date of recognition. This is except for items such as depreciation and
amortisation as explained above in (d)iii. Where there is income or losses arising from using two
different measurement units i.e., items measured at different dates, it is necessary to identify
the compared amounts, separately restate them and compare them again, but with amounts
already restated.
v. The income or losses arising due to the exposure to the change in purchasing power of
currency due to the holding of monetary assets and liabilities is shown in a separate item in the
statement of profit or loss and other comprehensive income for the period.
vi. The restatement of non-monetary assets in the terms of the current unit of measurement at
the end of the reporting period without an equivalent adjustment for tax purposes, results in
a temporary taxable difference and the recognition of a deferred tax liability. The movement
in any deferred tax balances is recognised through the statement of profit or loss and other
comprehensive income.
Statement of changes in equity
vii. All components of equity are restated by applying the general prices index as from the
beginning of the period. Movements in relation to the components of equity is determined
based on the original recognition date with the exception of share capital which is maintained
at its nominal value.
Assets, liabilities, equity items, income (excluding comparatives) of the subsidiary in Argentina
whose functional currency is the currency of a hyperinflationary economy is translated into the AUD
presentation currency at the closing rate at the date of the most recent statement of financial position.
The Group’s comparative balances and amounts were presented in a stable currency and therefore are
not adjusted for subsequent changes in the price level or exchange rates. This resulted in a difference,
arising on the adoption of hyperinflation accounting, between the closing equity of the previous
year and the opening equity of the current year. The Group recognised this difference directly in the
foreign currency translation reserve in the statement of changes in equity.
e. 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 when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect its returns
101
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has power over an
investee, including:
• The contractual arrangements with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Profit or loss and each component of Other Comprehensive Income (“OCI”) are attributed to the equity
holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation. A change in the ownership
interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised at fair value.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent,
using consistent accounting policies.
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.
102
Challenger Exploration Limited Annual Report f. 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.
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.
103
g. 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.
h. 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.
104
Challenger Exploration Limited Annual Report i. 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.
j. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the
GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of
cash flows arising from investing and financing activities that are recoverable from, or payable to,
the ATO are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the ATO.
k. 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).
105
As at reporting date the assets and liabilities of the non-hyperinflationary subsidiaries are translated
into the presentation currency of Challenger Exploration Limited 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.
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.
l. 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.
m. 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.
n. 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.
106
Challenger Exploration Limited Annual Report o. 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.
p. Other Income
The following specific recognition criteria must also be met before income is recognised:
Interest
Interest income is recognised as the interest accrues on the related financial asset. Interest
is determined using the effective interest rate method, which applies the interest rate that
discounts estimated future cash receipts over the expected life of the related financial asset.
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.
q. 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 to 10 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.
107
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.
(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.
r. 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.
108
Challenger Exploration Limited Annual Report 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.
s.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.
t. 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.
u. Significant accounting judgements, estimates and assumption
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.
109
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.
Estimates and assumptions
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 as well as the probability that various non-market vesting
conditions are being met. 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.
v. 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.
110
Challenger Exploration Limited Annual Report w. 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.
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.
2.
Other Income
Government cash flow boost
Gain on Blue Chip Swaps (a)
Interest received
Consolidated
Consolidated
2022 $
2021 $
–
29,460
18,986,285
6,846,533
1,888
3,474
18,988,173
6,879,467
In 2019, the Argentine government reinstituted exchange controls restricting the purchase
of foreign currencies. As a result of these exchange controls, the Group use a legal trading
mechanism commonly known as the Blue Chip Swap in which the Argentinian subsidiary,
Golden Mining SA, buys Argentinian securities in USD, who then sells the securities in Argentina
for Argentinian Peso on the same day. This is to enable the Group to fund working capital in
its Argentinian operations. The Blue Chip Swap rate has diverged significantly from Argentina’s
official exchange rate resulting in the Group recognising a gain from Blue Chip Swap transactions.
The Blue Chips Swaps are financial instruments where the gain or loss associated with the trading
of these financial instruments are treated as other income or other expenses. The Group holds no
Blue Chip Swaps at 30 June 2022 (30 June 2021: nil) and never holds Blue Chip Swaps overnight.
111
3.
Income Tax
Current tax
Deferred tax
Income tax expense
Consolidated
Consolidated
2022 $
2021 $
–
3,555,931
3,555,931
–
3,086,154
3,086,154
The prima facie tax benefit on profit before income tax is reconciled to the income tax expense as follows:
Net profit before income tax
29,339,896
6,344,722
Prima facie tax benefit on result before income tax at 30% (2021: 30%)
8,801,969
1,903,417
Add:
•
Share based payments
• Non assessable income – hyper inflation
• Differences in tax rate of subsidiaries operating in different
jurisdictions
• Other deferred tax assets not recognised relating to tax losses
• Prior year overprovision
• Other
Income tax expense
The following tax deferred tax balances have been recognised:
Deferred tax assets / (liabilities) at 30% (2021: 30%):
Gain on blue chip swaps
Hyperinflation adjustments
Tax losses
Exploration costs
Unrecognised tax losses
653,842
(6,976,183)
370,478
(144,478)
1,607,624
461,525
188,479
(723,257)
1,456
(765,431)
–
1,720
3,553,931
3,086,154
(6,883,231)
(3,032,043)
(1,033,039)
(400,060)
18,418,775
6,890,674
(14,479,213)
(3,789,889)
(2,662,568)
(2,754,836)
(6,639,276)
(3,086,154)
112
Challenger Exploration Limited Annual Report 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.
Tax consolidation
i. Members of the tax consolidated group and the tax sharing arrangement
Challenger Exploration Limited and its 100% owned Australian resident subsidiaries formed a tax
consolidated group with effect from 1 July 2020. Challenger Exploration Limited is the head entity of
the tax consolidated group. Members of the tax consolidated group have not entered into a tax sharing
agreement, as in Australia the group has nominal taxable income, however has an arrangement that
provides for the allocation of income tax liabilities between the entities should the head entity default
on its tax payment obligations. No amounts have been recognised in the financial statements in respect
of this agreement on the basis that the possibility of default is remote. A Tax Sharing Agreement and a
Tax Funding Agreement may be entered into in the future.
ii. Tax effect accounting by members of the tax consolidated group
Measurement method adopted under AASB Interpretation 1052 Tax Consolidation Accounting
Effectively, each entity is treated as though it is a separate division of the consolidated group, and
transactions between entities that are part of the same consolidated group are ignored for Australian
income tax purposes. However, entities that form part of a consolidated group for Australian income tax
purposes remain separate legal entities. As such, they are still required to maintain, among other items,
separate accounts and records. The asset-based model determines the tax cost base of assets held by
a subsidiary member when it joins a consolidated group. The tax cost base to the head company of the
joining entity’s assets is determined through the allocation of the ACA to the entity’s underlying assets.
There is no resetting of the tax cost of assets held by the head company of a consolidated group.
113
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
Reconciliation of net profit after tax to the net cash flows from operations:
Net profit
Non cash items:
Deferred Tax Liability
Depreciation
Foreign exchange gains
Creditors settled for equity
Share based payments
Movements in Hyperinflation
Gain on sale of Blue Chip Swaps
Changes in assets and liabilities
Decrease / (Increase) in receivables and prepayments
Increase / (Decrease) in payables and accruals
Consolidated
Consolidated
2022 $
2021 $
10,415,522
47,490,314
25,785,965
3,258,568
3,553,931
3,086,154
62,920
(780,777)
25,221
30,878
88,790
341,817
2,179,473
1,234,925
(18,126,060)
(3,725,217)
(15,399,749)
(6,317,507)
3,517
28,440
(21,740)
317,768
Net cash flows used in from operating activities
(2,695,559)
(1,705,564)
Changes in liabilities arising from financing activities:
Opening balance
Loans received
Loan repayments
Net cash from financing activities
Closing balance
3,500,000
–
–
3,500,000
(2,280,000)
–
(2,280,000)
3,500,000
1,220,000
3,500,000
114
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
7.
Deferred Exploration and Evaluation Expenditure
Non-current
Exploration and evaluation phase
Opening balance
Exploration and evaluation expenditure
(including foreign exchange differences)
Consolidated
Consolidated
2022 $
2021 $
34,175
106,608
140,783
225,905
84,005
309,910
8,149,755
2,851,222
Consolidated
Consolidated
2022 $
2021 $
815,294
14,145
Consolidated
Consolidated
2022 $
2021 $
133,675,262
32,587,630
32,587,630
3,277,843
64,787,632
29,309,787
Acquisition costs – equity based settlement
36,300,000
–
Closing balance
133,675,262
32,587,630
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.
115
During the year ended 30 June 2022, the Group issued 114 million CEL shares and a payment of
US$3.69 million (AUD$5.026 million) to increase the Group’s interest in the Hualilan Gold Project to
100%. In addition, the Group issued 18 million CEL shares during the half-year to get a 100% interest in
the El Guayabo project. The share issuance for both acquisitions was approved by the shareholders at
a general meeting on 3 September 2021. These shares were valued at $0.275 per share being the share
price at approval date.
The acquisitions have been accounted for as asset acquisitions on the basis that the assets acquired do
not meet the definition of a business under AASB 3 Business Combinations. The assets acquired relate
to only deferred exploration and evaluation, and as such do not represent a business but an asset.
8.
Property, Plant and Equipment
Property, Plant and Equipment
Cost
Accumulated depreciation
Net carrying amount
9.
Trade & Other Payables
Trade creditors and accruals
Terms and conditions:
Consolidated
Consolidated
2022 $
2021 $
694,972
(160,880)
534,092
444,373
(34,334)
410,039
Consolidated
Consolidated
2022 $
2021 $
3,997,695
3,997,695
1,736,543
1,736,543
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
116
Challenger Exploration Limited Annual Report 10.
Provisions
Current
Employee benefits
Consolidated
Consolidated
2022 $
2021 $
95,292
47,004
The provision for employee benefits represents accrued annual leave entitlements.
Movements in Provisions:
Employee benefits
At beginning of the period
Additions
11.
Borrowings
Current
Unsecured loans
Non-Current
Unsecured loans
47,004
48,288
95,292
24,990
22,014
47,004
Consolidated
Consolidated
2022 $
2021 $
1,220,000
–
–
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 repayable by 15 July 2022. The Company utilised the proceeds
of the Options, that were exercisable at $0.04 on or before 30 June 2022, together with other cash
reserves to repay the loan. The remaining balance of $1,220,000 was transferred to current liabilities as
at 30 June 2022 with loan fully repaid in July 2022.
117
12.
Issued Capital
(a) Issued Capital
120,378,045
80,631,294
Movement in ordinary shares on issue
Consolidated 2022
$
No.
Consolidated 2021
$
No.
At start of period
Shares issued for cash
808,681,440
80,631,294
548,724,627
22,177,747
–
–
21
250,500,000
62,140,000
4,772,594
477
Shares issued on conversion employee rights
210,379
Shares issued as consideration for Hualilan
Gold Project
114,000,000
31,350,000
–
Shares issued as consideration
47,004
for El Guayabo Gold Copper Project
18,000,000
4,950,000
Shares issued on exercise of options
86,644,444
3,465,778
24,990
–
–
–
–
–
Shares issued in lieu of cash
177,317
51,962
4,684,219
718,114
Transaction costs relating to issued shares
–
(71,010)
–
(4,405,044)
1,027,713,580
120,378,045
808,681,440
80,631,294
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 10,000,000 unlisted options over new ordinary shares in the Company were on issue:
Type
Unlisted (a)
Date of Expiry
Exercise Price
Number under Option
14 April 2025
$0.45
10,000,000
(a) The exercise price of each option is $0.45.
86,644,444 ordinary shares were issued upon the exercise of options during the financial year
ended 30 June 2022. No ordinary shares were issued upon the exercise of options since the end of
the financial year ended 30 June 2022 and up to the date of this report.
118
Challenger Exploration Limited Annual Report 13.
Reserves
Option reserve
Share based payments reserve
Foreign currency translation reserve
(a) Movements in Reserves
Share based payments reserve
Opening balance
Share based payment expense
Consolidated
Consolidated
2022 $
2021 $
784
784
3,828,443
1,648,970
(3,903,087)
(2,675,784)
(73.860)
(1,026,030)
1,648,970
2,179,473
511,695
1,137,275
3,828,443
1,648,970
The share based payment reserve is used to recognise share based payments in relation to
the RiverFort Facility, 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.
Foreign currency translation reserve
Opening balance
Foreign currency translation
Consolidated
Consolidated
2022 $
2021 $
(2,675,784)
(326,109)
(1,227,303)
(2,349,675)
(3,903,087)
(2,675,784)
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(k). The reserve is
recognised in profit and loss when the net investment is disposed of.
119
14.
Performance Shares
Option reserve
Share based payments reserve
Foreign currency translation reserve
(a) Movements in Reserves
Share based payments reserve
Opening balance
Share based payment expense
Consolidated
Consolidated
2022 $
2021 $
784
784
3,828,443
1,648,970
(3,903,087)
(2,675,784)
(73.860)
(1,026,030)
1,648,970
2,179,473
511,695
1,137,275
3,828,443
1,648,970
At the date of this report, 120,000,000 Performance Shares over new ordinary shares in
the Company were on issue. These Performance Shares were issued as part of the Group’s
acquisition of AEP Corporation Pty Ltd disclosed in the Prospectus document dated 16 May 2019.
Type
Performance A
Performance B
Number
60,000,000
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,
120
Challenger Exploration Limited Annual Report The relevant interests held by each Director in shares, options and performance shares and rights of the
Company at the date of this report are included in the Remuneration Report.
The performance shares were measured at fair value and recognised as part of the original acquisition
value of the Hualian Project. These performance shares were issued as consideration to the
shareholders of the seller to the Company.
No ordinary shares were issued upon the vesting of performance shares 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 A Performance Rights have been measured using a Black Scholes model assuming a probability
of 100% and expected vesting date. At the date of this report, these performance rights have not vested.
The probability and vesting date is reassessed at each reporting date.
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.
121
Class B Performance Rights have been measured using a Black Scholes model assuming
a probability of 0% based on the certainty of meeting the vesting conditions by an
expected vesting date. At the date of this report, these performance rights have not
vested. The probability and vesting date is reassessed at each reporting date.
No ordinary shares were issued upon the vesting of performance rights during the period.
16.
Incentive Performance Rights
At the date of this report, 8,772,427 Incentive Performance Rights over new ordinary shares in
the Company were on issue:
Type
Number
Incentive Performance Rights
8,772,427
The Incentive Performance Rights have the following vesting condition where the holder must remain
employed or engaged by the Company for a minimum period of twelve months from 28 November
2019.
210,379 ordinary shares were issued upon the vesting of performance rights or performance shares
during the financial year ended 30 June 2022. No ordinary shares were issued upon the vesting of
performance rights or performance shares since the end of the financial year ended 30 June 2022.
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:
Consolidated
Consolidated
2022 $
2021 $
–
2,179,473
2,179,473
667,261
567,664
1,234,925
Operating expenses
Supplier share based payment
Employee share based payment
122
Challenger Exploration Limited Annual Report Supplier Share Based Payment
For the financial year ended 30 June 2021, 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.
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$0.45 as the input to a Black-Scholes model; and
iv. Discounted the average value of those options back to the valuation date 16th April 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.
123
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 performance rights
granted under Incentive Performance Rights Plan:
Grant Date
Expiry date
Balance at
30 June 2021
Granted /
Balance at
(Exercised)
30 June 2022
Number
Number
Number
Vested and
exercisable at
30 June 2022
Number
3 December 2019
4 July 2026
16,000,000
–
16,000,000
–
16 March 2020
4 July 2026
477,406
(210,379) *
267,027
267,027
9 September 2021
4 July 2026
–
8,505,400 **
8,505,400
8,505,400
Total
16,477,406
8,295,021
24,772,427
8,772,427
*
The weighted average exercise price of these options at exercise is $0.0001.
** The weighted average exercise price of these options granted is $0.0001.
The weighted average remaining contractual life for the share options outstanding as at 30 June 2022
was 4.0 years (2021: 5.0 years).
The weighted average fair value of options granted during the year was $0.274 (2021: Nil). The
exercise price for options outstanding at the end of the year was $0.0001 (2021: $0.0001).
There were no performance rights forfeited or cancelled during the period. The performance rights
are issued for Nil consideration and have an exercise price of $0.0001. 201,379 performance rights
were exercised during the period at a prevailing share price of $0.355.
18.
Key Management Personnel Emoluments
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:
(a) Details of Key Management Personnel
Fletcher Quinn:
Kris Knauer:
Scott Funston:
Sergio Rotondo:
Non Executive Chairman
Managing Director
Executive Director
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.
124
Challenger Exploration Limited Annual Report (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
Short-term employee benefits (shares in lieu of cash consideration)
Post-employment benefits
Share-based payments
Consolidated
Consolidated
2022 $
2021 $
805,257
–
–
(48,949)
756,308
300,000
300,000
–
156,516
756,516
Further details of key management personnel remuneration have been included in the Remuneration
Report section of the Directors’ Report.
(c) Other Transactions with Key Management Personnel
Mr Quinn is a director of Seco Resources Pty Ltd. Seco has provided his services as Chairman to a
value of $60,000 (2021: $60,000) to Challenger during the year on normal commercial terms. This
amount is included in the Remuneration Report section of the Directors Report. $10,000 (2021:
$5,000) 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 (2021: $295,000) to Challenger during the year
on normal commercial terms. This amount is included in the Remuneration Report section of the
Directors Report. $49,167 (2021: $24,583) 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 (2021: $245,000) to
Challenger during the year on normal commercial terms. This amount is included in the Remuneration
Report section of the Directors Report. $40,833 (2021: $20,417) was outstanding at year end.
(d) Amounts owing to Key Management Personnel
A total of $100,000 was outstanding to Key Management Personnel as at 30 June 2022 (2021:
$50,000), as noted above.
125
19.
Segment Information
The Group is organised into one business segment, being exploration operations with three
geographies. 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 Maker (“CODM”) in
assessing performance and in determining the allocation of resources.
30 June 2022
Interest income
Other income
Segment income
Australia
$
Ecuador
$
Argentina
$
Consolidated
$
1,888
–
1,888
–
–
–
–
1,888
18,986,285
18,986,285
18,986,285
18,988,173
Segment profit before income tax
828,316
(29,128)
28,540,708
29,339,896
Segment assets
Segment liabilities
60,304,718
15,446,406
77,979,584
153,730,708
1,767,018
727,302
9,457,943
11,952,263
Included within segment assets
Cash at bank
8,625,821
1,068,439
721,262
10,415,522
Plant and equipment and exploration expenditure
51,663,672
14,332,337
68,213,345
134,209,354
30 June 2021
Interest income
Other income
Segment income
Australia
$
Ecuador
$
Argentina
$
Consolidated
$
3,474
29,460
32,934
–
–
–
–
3,474
6,288,047
6,317,507
6,288,047
6,320,981
Segment profit / (loss) before income tax
(2,904,375)
(32,856)
6,195,799
3,258,568
Segment assets
Segment liabilities
47,452,511
9,697,355
26,513,394
83,663,260
3,756,927
172,475
4,440,299
8,369,701
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
23,565,139
32,997,669
126
Challenger Exploration Limited Annual Report 20.
Earnings Per Share
Consolidated
Consolidated
2022 $
2021 $
The following reflects the loss and share data used in the
calculation of basic earnings per share (EPS):
Profit used in calculation of basic EPS
25,785,965
3,258,568
Weighted average number of ordinary shares on issue used in the
calculation of basic and diluted EPS
958,308,551
664,268,915
Number
Number
The following reflects the loss and share data used in the
calculation of diluted earnings per share (EPS):
Profit used in calculation of diluted EPS
25,785,965
3,258,568
Weighted average number of ordinary shares on issue used in the
calculation of basic and diluted EPS
967,080,978
751,390,765
Number
Number
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
AEP Corporation Pty Ltd
Bundu Oil & Gas Exploration Pty Ltd *
Challenger Exploration Argentina Pty Ltd **
Ecuador Mining Pty Ltd
Golden Mining SA ***
Ecuador Mining SA ***
Torata Mining SA ***
Country of
Incorporation
Percentage of equity interest
held by the Group
2022
2021
Australia
South Africa
Australia
Australia
Argentina
Ecuador
Ecuador
100%
95%
100%
100%
100%
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.
** Previously named Afro-Asian Resources Pty Ltd
*** These entities hold exploration tenements in Argentina and Ecuador. During the year, the Group acquired
100% interests in these entities. As disclosed in Note 7, these acquisitions were treated as asset acquisitions.
100%
95%
100%
100%
20%
–
–
127
22.
Auditor’s Remuneration
Fees to Ernst & Young Australia
Fees for the audit and review of the financial reports of the Group
and any controlled entities
Total fees to Ernst & Young Australia
62,500
62,500
–
–
Consolidated
2022 $
Consolidated
2021 $
Fees to HLB Mann Judd (WA Partnership)
Fees for the audit and review of the financial reports of the Group
and any controlled entities
Total fees to HLB Mann Judd (WA Partnership)
–
–
35,000
35,000
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for the audit and review of the financial reports of the Group
and any controlled entities
100,770
Total fees to overseas member firms of Ernst & Young (Australia)
100,770
–
–
Fees to other overseas member firms of HLB Mann Judd
Taxation and other non-audit services
Total fees to overseas member firms of HLB Mann Judd
–
–
3,848
3,848
Total auditor’s remuneration
163,270
38,848
23.
Financial Instruments
(a) Financial risk management and risk policies
The Group’s principal financial instruments comprise of cash, short-term deposits, loans and
payables. 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 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.
128
Challenger Exploration Limited Annual Report (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 fixed interest debt, however
this was repaid subsequent to 30 June 2022.
2022
Consolidated
Financial Assets
Less than
1 to 3
3 months
Rate
1 month
$
months
$
to 1 year
$
1 to 5
years
Total
$
Non-interest bearing
140,783
Variable interest rate instruments
0.01%
10,415,522
Financial Liabilities
Non-interest bearing
10,556,305
(3,997,695)
Fixed interest rate instruments
6%
(1,220,000)
Net Financial Assets
6,102,546
–
–
–
–
–
–
–
–
–
–
–
–
2021
Consolidated
Financial Assets
Less than
1 to 3
3 months
Rate
1 month
$
months
$
to 1 year
$
1 to 5
years
Non-interest bearing
84,005
Variable interest rate instruments
0.01%
47,490,314
Financial Liabilities
Non-interest bearing
47,574,319
(1,783,543)
Fixed interest rate instruments
6%
(3,500,000)
Net Financial Assets
42,290,776
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
140,783
10,415,522
10,556,305
(3,997,695)
(1,220,000)
6,102,546
Total
$
84,005
47,490,314
47,574,319
(1,783,543)
(3,500,000)
42,290,776
129
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 variables 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 minimal exposure to interest rate risk in 2022 (2021: Nil).
(d) Fair value disclosure of financial assets and liabilities
The fair value of a financial asset or a financial liability is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
The fair values of cash and cash equivalents, trade and other receivables, borrowings and
trade and other payables approximate their carrying values, as a result of their short maturity.
The valuation techniques used have not changed for each of these financial instruments
from the prior period.
(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 provision for expected credit
loss, of those assets as indicated in the statement of financial position. The maximum credit
risk exposure on receivables of the Group at 30 June 2022 is $140,783 (2021: $84,005). There
are no impaired receivables at 30 June 2022.
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.
The Group’s VAT receivable is a statutory asset mainly with the Argentinian authorities and
not considered a financial asset as defined under AASB 9 Financial Instruments.
(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. All associated financial assets
and liability are classified as current. The Group does not have any bank debt.
130
Challenger Exploration Limited Annual Report (g) Foreign exchange risk management
The Group is exposed to US Dollar (USD) and South African Rand (ZAR) currency fluctuations.
At 30 June 2022, 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.
The Group use a legal trading mechanism commonly known as the Blue Chip Swap in which
the Argentinian subsidiary, Golden Mining SA, buys Argentinian securities in USD, then sells the
securities in Argentina for Argentinian Peso on the same day. This is to enable the Group to
fund working capital in its Argentinian operations. See Note 2 for further information.
(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 2022 (2021: $Nil).
131
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
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial performance
Loss for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
27.
Subsequent Events
2022 $
2021 $
8,653,747
112,205,120
120,858,867
47,444,774
32,655,518
80,100,292
1,416,489
–
1,416,489
119,442,378
(93,625)
3,500,000
3,406,374
76,693,917
150,423,617
110,676,866
(37,353,538)
(38,175,775)
6,372,299
119,442,378
4,192,826
76,693,917
822,237
(3,263,594)
–
–
822,237
(3,263,594)
On 9 September 2022, the Company announced it has entered into binding agreements for a US$15
million (A$22.1 million) private placement of unsecured convertible debentures (the “Debentures”) with
Queen’s Road Capital Investment Ltd (“QRC”). The Debentures are convertible into fully paid ordinary
shares in CEL (“Shares”) at a price of $0.25, a 30% premium to the 5-day volume weighted average price
(“VWAP”) prior to 2 September 2022. Additionally, the Company’s largest institutional shareholder has
committed to invest pro-rata to its 12% shareholding via a $2.6m placement at 5-day VWAP, increasing
combined funds raise to $24.7 million from two parties.
The Company received the US$15 million on 12 September 2022, and on 16 September 2022 $2.6
million less fees.
On 12 September the Company issued 3,513,457 ordinary shares in lieu of cash for the 3%
establishment fee on the QRC debenture.
On 16 September 2022, the Company issued 13,684,213 ordinary shares for the placement.
132
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 2022 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.
c.
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
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 2022.
This declaration is signed in accordance with a resolution of the Board of Directors.
Kris Knauer Managing
Director
29 September 2022
133
Independent
Auditor’s Report
134
Challenger Exploration Limited Annual Report Independent Auditor’s Report
135
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au 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 subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, 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 consolidated financial position of the Group as at 30 June 2022and of its consolidated financial performance for the year ended on that date; andb.Complying with Australian Accounting Standards and the Corporations Regulations 2001.Basis for opinion 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 (including Independence Standards) (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. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. 136
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 1.Restatement of comparative informationWhy significant How our audit addressed the key audit matter As set out in Note 1(c) to the financial report, the prior period comparative financial information has been restated to adjust for the adoption of AASB 129 Financial Reporting in Hyperinflationary Economies (AASB 129) in relation to its subsidiary, Golden Mining SA. The Group has restated each of the affected financial statement line items for the corresponding prior period, 30 June 2021. Due to the judgment involved in determining the accounting treatment for hyperinflation economies and the quantum of the amounts involved, we consider this restatement to be a key audit matter. Our audit procedures in assessing the treatment of, and the adjustments required, for this restatement included: ►Obtained and reperformed the calculations for the measurement of the restatement as at 1 July 2020and 30 June 2021; ►Reviewed, in conjunction with our IFRS accounting technical specialists, the application of AASB 129 and the associated accounting treatment as at 1 July 2020 and 30 June 2021; and ►Reviewed the adequacy of the disclosures in relation to the restatement of comparative information set out in note 1(c) to the financial report. 2.Carrying value of exploration and evaluation assetsWhy significant How our audit addressed the key audit matter At 30 June 2022, the Group held exploration and evaluation assets of $133,675,262, representing 87% of the Group’s total assets. The carrying value of exploration and evaluation assets is assessed for impairment by the Group when facts and circumstances indicate that the exploration and evaluation assets may exceed their recoverable amount. The determination as to whether there are any indicators to require an exploration and evaluation asset to be assessed for impairment, involves a number of judgements including whether the Group has tenure, will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. The Group did not identify any impairment indicators as at 30 June 2022 Refer to Note 7 in the financial report for exploration and evaluation asset balances and related disclosures. We evaluated the Group’s assessment as to whether there were any indicators of impairment to require the carrying value of exploration and evaluation assets to be tested for impairment. In performing our procedures, we: ►Considered whether the Group’s right to explore was current, which included obtaining and assessing supporting documentation such as license agreements; ►Considered the Group’s intention to carry out significant ongoing exploration and evaluation activities in the relevant areas of interest which included reviewing the Group’s approved cash flow forecast and enquiring of senior management and the directors as to their intentions and the strategy of the Group; ►Assessed whether any exploration and evaluation data existed to indicate that the carrying value of exploration and evaluation assets is unlikely to be recovered through development or sale; and ►Assessed the adequacy of the disclosures in Note 7of the financial report. Challenger Exploration Limited Annual Report 137
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 3.Other income – gain on blue chip swaps Why significant How our audit addressed the key audit matter For the year ended 30 June 2022, the Group recognised $18,986,285 of other income from gains on blue chip swaps, representing 100% of the Group’s total other income. Due to the quantum of the amount involved, we consider this to be a key audit matter. Refer to Note 2 of the financial report for other income from gains on blue chip swaps and related disclosures. Our audit procedures included the following: ►Reviewed the Group’s processes for recognising other income and controls in place around blue chip swap trading; ►Obtained and reperformed the other income calculations in relation to the gains on blue chip swaps; ►Agreed, on a sample basis, transactions during the year to underlying external supporting documents; ►Completed cut off procedures to test the timing of recognition of other income for the months of June 2022 and July 2022 by agreeing a sample of transactions to underlying external supporting documents; and ►Reviewed the adequacy of the disclosures in relation to other income set out in note 2 to the financial 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 Company’s 2022 annual report other than the financial report and our auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of this auditor’s report. Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. 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 on the other information obtained prior to the date of this auditor’s report, 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. 138
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters relating 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 the 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 judgment 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. 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 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. Challenger Exploration Limited Annual Report 139
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ►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, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year 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. 140
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Challenger Exploration Limited for the year ended 30 June 2022, 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. Ernst & Young V L Hoang Partner Perth 29 September 2022 Challenger Exploration Limited Annual Report ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this
report is as follows. The information is current at 29 September 2022.
Substantial Shareholders
The names of the substantial shareholders who have notified the Company in accordance with Section
671B of the Corporations Act 2001:
Shareholder
Sergio Rotondo
Black Rock Group
Kris Knauer
Distribution of Shareholders
Number
%
89,000,000
140,756,653
52,278,666
8.52
13.47
5.00
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
136
505
341
996
674
37,873
1,515,394
2,773,491
41,685,933
998,898,559
2,652
1,044,911,250
0.00%
0.15%
0.27%
3.99%
95.60%
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.
141
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:
Units
142,128,308
13.60%
89,000,000
8.52%
34,897,940
3.34%
32,954,167
3.15%
20,954,167
2.01%
15,208,332
1.46%
14,312,500
1.37%
14,299,467
1.37%
13,804,167
1.32%
13,000,000
1.24%
12,216,550
1.17%
11,764,341
1.13%
11,060,000
1.06%
8,978,943
0.86%
Rank
Holder Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SERGIO ROTONDO
CITICORP NOMINEES PTY LIMITED
MONEYBUNG PTY LTD
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
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