Presentación de PowerPoint - Challenger Exploration Limited

ARGENTINA AND ECUADORGOLD/COPPER PROJECTS

AEP CORPORATION (to be renamed)

CHALLENGER EXPLORATION LIMITED

(ASX : CEL)

Pre-IPO Presentation

March 2019

The release, publication or distribution of this presentation in certain

jurisdictions may be restricted by law and therefore persons in such

jurisdictions into which this presentation is released, published or

distributed should inform themselves about and observe such

restrictions.

DISCLAIMER

This presentation is for informational purposes only and does not

constitute an offer to sell, or solicitation to purchase, any securities.

Such Offer can be made only through proper subscription

documentation and only to investors meeting strict suitability

requirements. Any failure to comply with these restrictions may

constitute a violation of applicable securities laws. In providing this

presentation Ecuador and Argentina Projects Corporate Pty Ltd and its

subsidiaries (“EAP”) has not considered the financial position or needs

of the recipient. Persons needing advice should consult their

stockbroker, bank manager, solicitor, attorney, accountant or other

independent financial and legal advisors.

FORWARD LOOKING STATEMENTS

Various statements in this presentation constitute statements relating

to intentions, future acts and events. Such statements are generally

classified as “forward looking statements” and involve known and

unknown risks, uncertainties and other important factors that could

cause those future acts, events and circumstances to differ materially

from what is presented or implicitly portrayed herein. Words such as

“anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”,

“estimates” and similar expressions are intended to identify forward-

looking statements. EAP caution shareholders and prospective

shareholders not to place undue reliance on these forward-looking

statements, which reflect the view of EAP only as of the date of this

presentation. The forward-looking statements made in this presentation

relate only to events as of the date on which the statements are made.

COMPETENT PERSON

The information in this report that relates to exploration results and

historical mineral estimates is based on, and fairly represents, information

and supporting documentation compiled by John King. Mr King is a

competent person who is a senior fellow of the Society of Economic

Geologists in the USA. This is a Recognised Professional Organisation (RPO)

under the Joint Ore Reserves Committee (JORC) Code. Mr King has

sufficient experience which is relevant to the style of mineralisation and

type of deposit under consideration and to the activity which he is

undertaking to qualify as a competent person as defined in the 2012

edition of the JORC Code. Mr King consents to the inclusion of the matters

based in this Prospectus on his information noted in the form and context

in which it appears.

HISTORICAL MINERAL ESTIMATES

The historical mineral estimates in this report are not reported in

accordance with the guidelines of the JORC Code (2012). A competent

person has not completed sufficient work to classify these estimates as

Mineral Resources or Ore Reserves in accordance with the guidelines of

the JORC Code (2012). It is uncertain that following evaluation and/or

further exploration work that the estimates will be able to be reported as

Mineral Resources or Ore Reserves in accordance with JORC Code (2012).

Ecuador and Argentina Projects (AEP Corporation Pty Ltd)

Pre-IPO Presentation – March 2019 2

IMPORTANT INFORMATION

3

1. OVERVIEW

❑ Two complementary advanced exploration gold / copper targets in South America

• high grade gold project with historic, non JORC compliant resource of c.600,000 Oz at 12g/t with mineralisation

open in most directions located in San Juan, Argentina

• breccia and porphyry gold / copper project with sufficient historical drilling to identify multiple targets including

an underlying porphyry system that has never been tested located in Ecuador - numerous +100m plus ore

grade drill intersections

❑ Wild card South African shale gas exposure

• 1m acre application in train in Karoo Basin with an EIA that implies > 7 tcf risked recoverable gas resource

❑ Sensible pre money valuation of A$8.8m with c.A$5m cash at bank post and $2.5m spent to date

• Sufficient cash to deliver re-rating project milestones

• Comparable ASX listed gold stocks are trading at an average of 3-4 times the proposed valuation

❑ Proven management team with a history of real success for shareholders

• Incoming CEO & Chairman founding CEO & Chairman of Citadel Resources (4c to 80c on take out by Barrick)

Completed $2.25m Seed funding with final round $0.75m underwritten by founders

- $1.25 million @ 2.4 cents in August 2018 (3x commitment into the IPO)

- $1.0 million @ 3.0 cents in December 2018

- $0.75 million @ 3 cents (1 for 2 founder option - 4c with 3 Year term)

- $4.8m IPO round @ 3.0 cents in April 2019 and ASX Listing via a prospectus


Pre-IPO Presentation – March 2019

4

2. CORPORATE INFORMATION

Sensible Valuation and Sufficient Cash to allow re-rating

ASX Listing Metrics ASX:CEL

Re-compliance Share Price 3.0c

Consolidation equation 1 new share for 5

Pre Re-compliance Metrics

RTO Shares 87.9

Vendor Shares 94.7m

Existing Seed Round Shares ($2.25m) 85.3m

Founder Loan/Seed Shares ($0.75m) 25.0m

Re-compliance Shares ($5.0m) 169.7m

Undiluted Shares on Issue 462.6m

Undiluted Market Cap A$13.8m

Cash at Bank c.A$5m

Fully Diluted:

Ordinary Shares

Opts (4c)

Vendor Perf Shares*

Hualilan Acquisition Shares

El Guayabo Acquisition Shares

Total

462.6m

78.4m

120m

65.0m

180m

906.0m

Seed Round

Share Price 3.0c

Funds Raised to date A$2.25m



Proposed use of Funds (IPO)

El Guayabo Project (including, surface mapping, and

ancillary including community engagement programs)$1.89m

Hualilan Project (including, geophysical survey,

surface mapping, drilling program and ancillary

including community engagement programs)

$1.35m

Costs of the Transaction $300k

Payment of retiring CEO Accruals $200k

Payment of retiring non-executive Director Accruals $54k

Working Capital, Existing Projects and Administration $1.21m

Total: $5.0m

Use of Funds – Final $0.75m Pre IPO

Acquisition Expense - Hualilan Project $120k

Sample Assays (~ 800 samples) $50k

Additional Funding CEL (Costs of Re-compliance) $150k

Geophysical Survey Ecuador (final payment) $240k

Geologic Studies/current technical team $100k

Legal/Audit/Company Secretarial $40k

Acquisition of adjoining concession (contingent) $50k

Total $0.75m

5

2. KEY EXECUTIVES

Quality management team and in-country experience



• Over 35 years experience in venture capital, corporate finance and investment banking

• Extensive experience with both listed and unlisted companies, including public company

development, management and governance.

• Fletcher was the foundation chairman for ASX entities Citadel Resources and Sirocco Resources.

• Citadel completed a DFS on its Jabal Sayid copper project in Saudi Arabia prior to a $1Bn take over

Fletcher QuinnChairman

Kris KnauerCEO/Managing Director

Scott FunstonCFO/FinanceDirector

Carlos MoncayoExploration Manager

John KingSenior Technical Consultant

• Exploration geologist before moving into investment banking, initially as a mining analyst.

• Experienced CEO of ASX Listed companies

• He led the listing of a package of copper/gold assets in Saudi Arabia to create Citadel Resources

becoming the founding MD with the transaction leading to an eventual $1Bn takeover by Barrick.

• Qualified Chartered Accountant and Company Secretary with nearly twenty years’ experience in the

mining industry and accounting profession predominantly as CFO.

• His expertise is financial management, regulatory compliance and corporate advice.

• Most recently Mr Funston was CFO and Company Secretary of Avanco Resources, a Brazilian

focussed copper and gold producer, that was acquired by Oz Minerals Limited.

• A graduate from the University Central of Ecuador with over 20 years international; experience.

• Core competency in gold/copper exploration, primarily focused in South and North America on

precious and base metal deposits.

• Geologist/Exploration Manager to a large number of international companies including Gold Fields

South Africa, IAMGOLD Ltd, Andean Gold Ltd, Ascendant Copper, and Rio Perdido Gold.

• John is a porphyry copper specialist with a unique skill set derived from 40 years of porphyry

exploration predominantly with US majors including a number of projects in Ecuador.

• At Asarco and Anaconda Copper he was part of the team to use porphyry copper field experience, as

gained in North & South America, to understand the significance of hydrothermal porphyry related

breccias to ore grade mineralization. John is a Competent Person under the JORC Code.

6

2. KEY INVESTOR TIMELINES



Meaningful news flow in the 6 months after Listing

# - contingent on results of geophysics program

May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov/Dec-19

Assay results:162 km MMI

Survey and

interpretation

(El Guayabo)

Assay results:500m of core re-

assaying

(El Guayabo)

Assay results:

500m of core re-

assaying

(El Guayabo)

Assay results:Phase 3 of surface

mapping and

sampling program

(El Guayabo)

Drilling results(Hualilan project

Drilling results#

(El Guayabo )

(contingent on start

date)

Drilling results#

(El Guayabo)

Assay results:Phase 1 of

underground

sampling program

(El Guayabo)

Results 162 km

geophysics

survey and

interpreted drill

targets(El Guayabo)

Assay results:Phase 2 of

underground

sampling program

(El Guayabo)

Assay results:infill and

extension MMI

Survey and

interpretation

(El Guayabo) #

Drilling

Commences#

(3000-5000m

program)

El Guayabo

Assay results:mapping and

sampling targeting

extensions to

mineralisation

(Hualilan Project)

Drilling results(Hualilan project)

Assay results:surface and

underground

sampling program

(Hualilan Project)

Assay results:surface and

underground

sampling program

(Hualilan Project)


mapping and

sampling program

(El Guayabo)

Drilling

Commences(1000m program)

Hualilan Project

Drilling

Commences (second 1000m

program)

Hualilan Project

Commence

independent

resource estimate

(Hualilan project)

Re-interpretation

of all mineralised

zones

(Hualilan Project)


mapping and

sampling program

(El Guayabo)

Results - review of

requirements for

JORC resource

(Hualilan Project)

Announcement of

proposed drilling

program and

preparation

(El Guayabo)

Update - post

drilling re-

interpretation of

geological model

(Hualilan Project)

Metallurgical test

work commences

(Hualilan project)

7

3. ARGENTINA – HUALILAN GOLD PROJECT

600koz at 12g/t gold in a well known mining district – earning 75%

▪ Skarn/Manto deposit in Ordovician sediments

associated with a porphyry intrusive

▪ Over 150 drill holes from the 1950’s with the most

recent drilling in 2006

▪ Historical resource and Exploration Target

calculated by La Mancha Resources in early 2000

of ~ 600,000 Oz Au at 12 g/t* Au open in most

directions

▪ The most recent metallurgical work (1999-2000)

indicated 80% recoveries of gold and silver via

flotation plus production of a ~ 50% zinc

concentrate stream

▪ Typical intersections:

• High grade : 1-2m @ 25-50 g/t Au

+ 150 g/t Ag + 5% Zn

• Lower grade : 2-5m @ 2-10 g/t Au +

20 g/t Ag minimal Zn

▪ Located in San Juan province which is the most

pro-mining region in Argentina

* Non JORC compliant and no top cut was applied to the historical resource

which includes numerous values in excess of 100 g/t Au

Veladero- 12 Moz Au

Del Carmen/Alturas - 6.8 Moz Au

Casposo ~900,000 OzAu Eq @ 7.5 g/t AuEq

Manantiales ~370,000 OzAu Eq @ 8g/t AuEq

Hualilan Project

Pascua-Lama- 21 Moz Au

El Pachon- 3.1Bn t @ 0.5% Cu

Los Azules- 3.6Bn t @ 0.45% Cu



8


Additional permit applications in train

▪ Hualilan Project comprises the Cerro Norte and Cerro Sur existing

mining leases which contain all existing mineralisation

▪ New 26km2 exploration licence covers the immediate northern and

southern strike extensions



Cerro Sur Mining

Leases

Cerro Norte Mining

Leases

26 sq km Exploration

Licence Application

0 4 km

9

3. HUALILAN PROJECT –

A number of low risk extension opportunities to add ounces


Pre-IPO Confidential Presentation – March 2019

10

3. HUALILAN PROJECT – OUR NEAREST ANALOGUE

Comparison to Bellevue Gold (ASX : BGL)



Hualilan Project - Selected Historical

Intersections

‒ 2.8 m @ 128.5 g/t gold from 107m

‒ 6.6 m @ 47.6 g/t gold from 56m

‒ 4.7 m @ 53.7 g/t gold from 54m

‒ 3.0 m @ 30.3 g/t gold from 115m

‒ 5.0 m @ 95.4 g/t gold from 4m

‒ 7.2 m @ 25.6 g/t gold from 83m

‒ 2.9 m @ 27.0 g/t gold from 51m

‒ 3.9 m @ 18.0 g/t gold from 44m

‒ 1.2 m @ 56.7 g/t gold from 65m

‒ 6.8 m @ 15.4 g/t gold from 105m

► 600,000 Oz @ 12 g/t gold (2)

► resource open in most directions

► Market Capitalisation $13.8m

Conclusion: a compelling

investment (and the roadmap)

(1) Source BGL ASX Release 5 Feb 2019

(2) Historical non-JORC Resource

Bellevue Gold - Recent Viago Lode

Intersections

‒ 3 m @ 87.6 g/t gold from 597m

‒ 6.4 m @ 27.9 g/t gold from 587.6m

‒ 4.3 m @ 58.8 g/t gold from 575.5m

‒ 2.8 m @ 32.3 g/t gold from 606.8m

‒ 3.35 m @ 37.4 g/t gold from 562.45m

‒ 6.9 m @ 18.0 g/t gold from 535.9m

‒ 2.8 m @ 19.0 g/t gold from 571.65m

‒ 2.5 m @ 13.1 g/t gold from 560.5m

‒ 1.5 m @ 23.9 g/t gold from 566.3m

‒ 4.3 m @ 8.8 g/t gold from 575.3m

► 1,530,000 Oz @ 11.8 g/t gold (1)

► resource has grown quickly

► Market Capitalisation $300m

Conclusion: a great success story

11


Peer Group Comparison – gold explorers with resource > 5 g/t Au

Notes:

▪ OGX resource includes a 120,000 Oz exploration target, KRM is currently producing 25,000 Oz pa

▪ CEL calculation is fully diluted for performance shares, Huaiiian farmin shares and options



0

2

4

6

8

10

12

14

16

18

20

0

20

40

60

80

100

120

140

160

180

AGS KRM EGA LLO BGL NTL ERM OGX TTM Average CEL

181,0

00 O

z @

5.1

g/t

–A

us

Avera

ge -

$91 O

z

Reso

urc

e G

rade

EV

per

reso

urc

e O

unce

1.5

3 M

Oz @

12.3

g/t

–A

us

401,0

00 O

z @

8.8

g/t

–A

us

469,8

00 O

z @

15.1

g/t

–N

Z

739,0

00 O

z @

9.6

g/t

–Fiji

364,0

00 O

z @

7.3

g/t

–In

donesi

a

250,0

00 O

z @

16 g

/t –

Aus

200,0

00 O

z @

19 g

/t –

Bra

zil

647,0

00 O

z @

12 g

/t -

Arg

entina

Source – goldnerds.com.au & ASX Releases

Prices as at ASX close 15 Oct 2018

g/t

g/t

g/t

g/t

g/t

g/t

g/t

g/t

g/t

g/t

g/t

$

$

$

$

$

$

$

$

$

Potential 3-4 x uplift

based on currently

identified mineralisation

at Hualilan onlyEV of $26 Oz Vs Peer Group EV $91 Oz

2.1

MO

z@

5.0

g/t

Ecu

ador

$

12

3. KEY INVESTOR TIMELINES – HUALILAN



Underway

Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20

Re-interpretation of all zones of mineralisation

Surface and Underground Sampling

Metallurgical test work

Drilling

Resource Calculation

Validation of

mineralisation

Bulk

sample

Independent

Resource

Drilling

1000m

Follow up sampling

(contingent)

Results Results

Results

Results

Hualilan Project – key milestones next 12 months

Digitisation and validation of historical data Complete

ResultsResults - batches

Results

Extensions to

mineralisation

Results

Drilling

1000m

Post

drilling

Results

Review

requirements for

JORC

Review post

first drilling

Scoping StudyStart

in

2020

Results

Results

13

4. ECUADOR – EL GUAYABO COPPER GOLD PROJECT

Hunting for Copper and Gold in Elephant Country – can acquire 100%

▪ Ecuador is host to world class deposits in one of the most

prospective and under explored belts globally

▪ Ecuador is now “open for business” following major

Government initiatives in 2015 and 2016

▪ In the past 12 months majors have made significant

commitments to invest including BHP, Anglo, FMG,

Hancock and Newcrest

▪ Multiple targets:

• Additional high grade breccia hosted

mineralisation at depth

• Extensive flat lying late stage vein system (1-2m at

10-20g/t Au) never drilled

• Porphyry system never tested at depth

▪ Substantial historical drilling results including:

✓ 156m @ 2.6 g/t Au + 9.7 g/t Ag + 0.2% Cu

✓ 112m @ 0.6 % Cu +0.7 g/t Au +14.7 g/t Ag

✓ 116m @ 0.4% Cu + 0.6 g/t Au + 8.9 g/t Ag

✓ 215m @ 0.4% Cu + 0.2 g/t Au + 9.6 g/t AgSource: Early to middle Miocene gold deposits in southern Ecuador and northern Peru (after PRODEMINCA / BGS, 2000 a, b; Sillitoe, 1998)



14


Sufficient historical exploration to confirm opportunity

▪ Newmont (1994-95) and Odin (1996-97)

were focused on solely on gold in

hydrothermal breccias

▪ the programs were designed and

directed by local geologists with no

porphyry experience

▪ review of the core, including a renown

South American porphyry expert, has

confirmed porphyry nature of the system

▪ majority of drilling was 100-250m with

the deepest hole 352m

▪ only 3 of 33 holes were deep enough to

tag the top of the porphyry – all

mineralised

▪ many of the holes terminated prior to

target and many ended in ore grade

mineralisation

▪ initial holes assayed for gold only (250m

@ 0.4g/t Au + logged chalcopyrite never

followed up)

Table of Selected Drilling Results from Newmont Exploration



Drillhole Mineralised IntervalTotal Gold Ag Cu

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

JDH-002 from 7.6 152.9 145.3 m @ 0.4 g/t Au +

and 199 243 44.0 m @ 0.4 g/t Au +

JDH-006 from 164.8 281 116.2 m @ 0.6 g/t Au + 8.9 g/t Ag + 0.40 % Cu

and 227.8 281.09 53.3 m @ 1.2 g/t Au + 13.2 g/t Ag + 0.62 % Cu

JDH-009 from 10.3 122.03 111.7 m @ 0.7 g/t Au + 14.6 g/t Ag + 0.58 % Cu

inc 34.6 91.54 56.9 m @ 0.2 g/t Au + 19.1 g/t Ag + 0.82 % Cu

JDH-013 from 53.35 69.6 16.3 m @ 0.5 g/t Au + 1.2 g/t Ag + 0.01 % Cu

and 89.9 154.9 65.0 m @ 1.4 g/t Au + 2.8 g/t Ag + 0.06 % Cu

inc 114.32 142.76 28.4 m @ 2.8 g/t Au + 4.9 g/t Ag + 0.10 % Cu

GGY-002 from 9.7 166 156.3 m @ 2.6 g/t Au + 9.7 g/t Ag + 0.16 % Cu

inc 27 102 75.0 m @ 4.6 g/t Au + 19.1 g/t Ag + 0.22 % Cu

GGY-005 from 12 162 150.0 m @ 0.4 g/t Au + 11.0 g/t Ag + 0.30 % Cu

inc 14 54 40.0 m @ 0.6 g/t Au + 25.5 g/t Ag + 0.60 % Cu


inc 21 50 29.0 m @ 2.9 g/t Au + 2.7 g/t Ag + 0.03 % Cu


inc 14 97 83.0 m @ 0.2 g/t Au + 14.9 g/t Ag + 0.50 % Cu

inc 202 229 27.0 m @ 0.4 g/t Au + 15.2 g/t Ag + 0.80 % Cu

not assayed

not assayed

15


Cross Section highlighting strong mineralisation and drilling targets



Porphyry Targets

16


+10 MOz ounce Cangrejos Deposit lies 10km along strike in the same geological setting

Source: Lumina Gold Corporate Presentation – Mar 2019



Recent deeper intersections:

138m @ 1.8 g/t Au, 0.5% Cu

305m @ 1.9 g/t Au, 0.3% Cu

Topography and Magnetics

El Guayabo

Cangrejos

0 km 4 km

17


Section showing Cangrejos and El Guayabo (gold/copper blocks) to scale



10km

Along

strike

Cangrejos(10M Oz Au)

No drilling

Larger footprint

thanCangrejos

18

4. EL GUAYABO CURRENT WORK PROGRAM

Geophysical/Geochemical Survey – commenced Feb 2019



162 km geophysics (3D MT

plus test IP) and MMI survey

19

4. KEY INVESTOR TIMELINES – EL GUAYABO



Collection

and assaying

Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20

MMI Program (16 km2)

Underground Sampling

Surface mapping and sampling (incl an additional 10 breccia bodies)

Geophysics (16 km2 MT survey

with IP)

Drilling

Data collection and assaying

Data collection and assaying

Survey Process

Design program

prepare drill padsExploration Drilling (3000-5000m)#

Metallurgical

testing

Infill sampling

(contingent on results)

Follow up sampling


Results Results

Results

Results

Results Results

Results

Results

El Guayabo Project – key milestones next 12 months

Core logging and re-assaying

(1000m)Log and

samplingAssays (1000m)

Results

Results

Results

Results Results

Results

Results


20

5. SOUTH AFRICA – KAROO BASIN GAS PROJECT

Challenger is the only small cap entity with exposure to the basin

▪ 95% interest via subsidiary in an application

for a permit to explore 3,500km2

▪ World class shale gas province ranked eighth

largest basin for shale gas reserves globally

▪ Karoo basin recoverable resource estimated

at 390 trillion cubic feet (tcf) (US EIA, June

2013)

▪ Challengers’ application is centered on the

1968 discovery well

▪ EIA study implies over 7 tcf risked

recoverable in application area (Woodside’s

Pluto LNG Project has reserves of 5 tcf

▪ Only other applicants in the fairway are Shell

and Chevron

… a world class shale gas play …



21

6. PROJECT EXECUTION

Focus on quick delivery of value for Ecuador and Argentina projects

▪ Re-logging and re-assaying core better vector on the porphyry

and breccia targets – available assays 6 elements only, no

SWIR, and not logged by porphyry experts (completed)

▪ Channel sampling of the adit and artisanal workings > 1km of

underground exposure of the system which has never been

systematically mapped or sampled (underway)

▪ Sampling of additional breccia bodies – only 2 of the 11

known breccias have been systematically defined and properly

sampled

▪ Systematic channel sampling of newly identified high grade

gold target – Ecuaba Structure (completed)

▪ 3D MT survey (with IP lines) covering 16 sq. kms (Q1 19)

• geophysics never been done before over the property

• will image existing and new breccia bodies and define

porphyry targets to a depth of 1.5 km

El Guayabo Project Hualian Project

▪ Digitise all historical data (approx. 165 drill holes and

numerous phases of underground mapping) (near

completion)

▪ Reinterpret all existing data in 3D (in progress)

▪ Structural interpretation and alteration mapping using high

resolution satellite data – to better target extensions of

known mineralisation

▪ Field mapping program targeting extensions of known

mineralisation

▪ Initial drill program comprising of verification (twinned drill

holes) and resource extension drilling

▪ JORC Resource

▪ Metallurgical test work - last work, done 20 years ago,

indicated 80% recoveries of Au and Ag

The aim of the program above will be to define targets

for a drilling program within 3-6 months of listing

Aim is to redefine the scope to focus on the

potential for early cashflow via exploitation



22

7. SUMMARY

Sensible valuation metrics with early re-rating activities planned

▪ Two complimentary advanced exploration gold /

copper targets in South America

• high grade gold project with a historic (non JORC

compliant) resources of ~600,000 Oz @ 12g/t, open in

most directions with the potential to provide early

cashflows

• Porphyry/breccia project with significant historical

drilling which has identified multiple targets:

‒ including; high grade breccia hosted

mineralisation (156m @ 2.6 g/t Au + 0.2% Cu

and 112m @ 0.6 % Cu +0.7 g/t Au )

‒ extensive flat lying late stage vein system

‒ underlying porphyry system that has never

been tested

▪ Wild card South African shale gas exposure

▪ Sensible post money RTO valuation of A$13.8m with

c.A$5m cash at bank

▪ Proven management team with a history of real

success for shareholders



Use of Funds to Date (Pre IPO/Founder)

Acquisition Expense - El Guayabo Project $812,000

Geophysical Survey - El Guayabo Project $441,000

Geological Studies - El Guayabo Project $450,000

Environmental Rehab - El Guayabo Project $100,000

Acquisition Expense - Hualilan Project $64,000

Geological Studies - Hualilan Project $155,000

Due Diligence $50,000

Loan Funds to CEL $300,000

Legal Fees $145,000

Total $2,517,000

Use of Funds – Final $0.75m Pre IPO

Acquisition Expense - Hualilan Project $120,000

Sample Assays (~ 800 samples) $50,000

Additional Funding CEL (Costs of Re-compliance) $150,000

Geophysical Survey Ecuador (final payment) $240,000

Geologic Studies/current technical team $100,000

Legal/Audit/Company Secretarial $40,000

Acquisition of adjoining concession (Ecuador) $50,000

Total $750,000

APPENDICES

24

APPENDIX 1: PROJECT EARN IN TERMS

Modest earn in terms enable projects to be proven pre acquisition

Agreement to earn 75% of Hualilan Project

Project

Interest

Cumulative

Interest

Consideration / Expenditure

Commitment

25% 25% Minimum expenditure on project of

A$1m within 2 years of listing

Issue of and additional 15m CEL

shares post $1m expenditure

50% 75% Minimum expenditure on project of

A$2m (additional A$1m)

Completion of a DFS within six years

Issue of 50 million CEL shares

25% 100% First right of refusal to acquire the

outstanding 25% of the project

Note: at any stage, CEL can elect to cease further work and withdraw from both projects at its absolute discretion

Agreement to earn 100% of El Guayabo Project

Project

Interest

Cumulative

Interest

Consideration / Expenditure

Commitment

19.9% 19.9% earned following minimum

expenditure commitment of US$1

million being achieved

15.1% 35% Additional expenditure on project of

A$2m within 2 years of listing

16% 51% Additional expenditure of project of

A$3 million by June 15 2022

51% 100% 180m CEL shares payable at the sole

discretion of the Board of CEL

subject to CEL having a market cap

of greater than A$60m



25

APPENDIX 2: HUALILAN TECHNICAL INFORMATION

High grade historic resource with upside

▪ 2004 historical non-JORC

compliant resource:

644,179 Oz @ 14 g/t AuEq

▪ 2006 historical non-JORC

compliant resource:

198,000 Oz @ 12 g/t Au +

47 g/t Ag + 2.3% Zn (#1)

▪ 2006 resource excluded the

Magnata Vein (#2) (Meas, Ind &

Inf historical resource of

142,516 Oz @ 13.4 g/t AuEq

in 2004) and included arbitrary

tonnage reduction factors of

25% (Ind) and 50% (Inf)

▪ Mineralisation is open along

strike and at depth

The Historical Resources are non JORC and 43-101 compliant and are presented for context only

(#1) In the calculation of the 2006 historical non-JORC resource included arbitrary tonnage reduction factors of 25% (Indicated), 50% (Inferred), 75% (Potential). The 2006

Potential resources were not reported in this presentation(#2) The Magnata Vein was not included in the calculation of the 2006 Historical Resource due to limited underground mapping



Location Category (t) Au (g/t) Ag (g/t) Gold Eq (Oz)

CERRO NORTE Measured 83,907 14.1 43.0 39,412

CERRO SUR Measured 43,555 15.3 83.3 22,942

MAGNATA VEIN Measured 172,843 12.8 44.6 74,357

TAILINGS Measured 19,726 2.6 23.2 1,840

TOTAL Measured 320,031 138,552

CERRO NORTE Indicated 77953 14.1 43.0 36,616

CERRO SUR Indicated 14,079 15.3 83.3 7,416

MAGNATA VEIN Indicated 53,400 12.8 44.6 22,973

TOTAL Indicated 145,432 67,005

CERRO NORTE Inferred 394,600 13.2 167,772

CERRO SUR Inferred 477,362 14.7 225,646

MAGNATA VEIN Inferred 104,577 13.4 45,204

TOTAL Inferred 976,539 438,622

GRAND TOTAL 1,442,002 644,179

26


Controls of Mineralisation

▪ Typical Skarn/Manto deposit

▪ Two orthogonal sets of mineralisation

controlled by steeply dipping east-west

faults and north-south steeply dipping

bedding

▪ The faults were the conduit for

mineralising fluids from the intrusives

▪ Where the mineralising solutions

migrating up the faults intersected

limestone beds the mineralisation travel

outwards replacing the limestone with

mineralisation

▪ Qtz vein mineralisation occurs along faults

with mantos (replacement of limestones)

along beds

▪ larger breccia bodies form at the

intersection of the limestone beds and

east-west faults



27


Cerro Norte Plan View



28


Cerro Sur Plan View



29


Long Section – Cerro Norte main mineralised zone



30


Long Section – Cerro Sur main mineralised zone



31


Magnata Vein – Long Section



32

APPENDIX 3: EL GUAYABO TECHNICAL INFORMATION

Porphyry Expert Report - Bocanegra



▪ Mineralization related to magmatic-

hydrothermal breccias with magmatic

porphyritic matrix.

▪ Alteration patterns identified are an early

potassic event overprinted by

quartz+sericite (poor py) alteration

▪ Geochemistry presents two Cu-Mo-Pb

zones, surrounded by an outer halo with

Au+Ag+Zn+Sb.

▪ Supports the evidence recognised in the

core suggesting the breccias are related

to a porphyry source.

▪ Favourable conditions to develop high

grade mineralization at depth were

observed, like development of a sealed

system by older metamorphic basement,

and amphibolite mafic lithology that

could act as a sulphides trap (buffer),

proved in many know porphyry systems

(e.g. Resolution, Oyu Tolgoi).

33

APPENDIX 4: KAROO TECHNICAL INFORMATION

Massive opportunity for Challenger once application is granted

▪ Near term catalysts:

• New Mining Legislation 2H CY18

• Exploration Licence Awarded (CY19

target)

▪ Pre development World class shale basin

is valued between US$10 and US$1,000

per acre

▪ Value lies between US$10m and US$1bn

▪ Farm in likely upon licence award

▪ Chevron has a farm in agreement on the

adjoining acreage with the terms

including a US$1m upfront payment

Challenger Energy | 28 October 2014 11

Funding risk: a farm-out is required to fund the bulk of the proposed E&A programme in 2015-

18. Ahead of a farm-out deal, Challenger may require small equity top-ups from existing

shareholders to cover general and administrative costs, though this does not appear to be an

issue given support from existing key shareholders.

Valuation

As set out in our Oil & gas research principles, we normally value oil companies with an asset-by-

asset NAV derived from detailed DCF modelling. Such a valuation includes production,

development and contingent resources (core NAV), while exploration is valued only if there is a plan

and resources to drill in the next 12-18 months (RENAV). However, for a frontier region explorer like

Challenger, there is little basis for a reliable NAV valuation as the high risk discounting (in the low

single digits) that would be applied to very large potential undiscovered resources would render

results almost meaningless.

Going up the valuation S-curve

A more useful approach is to look at top-down metrics such as $/acre for unconventional plays. The

S-curve below is a stylised illustration of the value uplift in Australian shale acreage valuations as

the assets are de-risked over time. De-risking is typically a long process that requires substantial

data acquisition as well as other forms of economic validation, eg third-party farm-outs.

Exhibit 10: Representative unconventional play/player maturation S-curve

Source: Edison Investment Research

Farm-outs and acquisitions from other regions with a rich M&A history such as the US and Australia

provide useful valuation benchmarks for an acreage-rich explorer like Challenger.

It is fairly clear to us that the US shale experience and US-style multiples are currently not

applicable to South Africa given the far earlier stage of development and lower infrastructure and

service sector availability in South Africa. As a point of reference, US farm-out multiples range from

US$3-5k/acre for appraisal plays (Mississippian Lime, Powder River) to US$15-30k/acre for plays

in large-scale development (Eagle Ford, Haynesville). We note that US dry gas plays typically

attract a c 45% discount to oily shales in farm-out deals.

We argue that the Australian example is more applicable, though evidently far from perfect. For

reference, Australian shale farm-out multiples range from A$10-50/acre in frontier basins (Canning,

Southern Georgina, Beetaloo) to A$150-1,000/acre for a more established play such as the Cooper

basin. Farm-out deals in the Cooper basin announced in the past year (where terms have been

0%

5%

10%

15%

20%

25%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19Concept (A$10/acre)● regional analysis & interp.

● acquire acreage● desktop focus

Pla

y m

atu

rity

an

d u

nco

nve

ntio

nal v

alu

ati

on

ba

sis

(lo

g

sc

ale

)

Pre-feasibility/Frontier (A$10-20/acre)● prospective resource delineation focus

● G&G work programme, 2D seismic● committed proof of concept plan

Appraisal/Success-backed growth (A$1k/acre)● horizontal well success

● pilot production, testing, 2P focus● FID to initial development

Established production (A$15-30k/acre)● facility development, marketing

● steady state production● scale focus

Development (A$5-10k/acre)● production well drilling

● FID to full regional development ● delivery focusEarly-stage appraisal (A$250-

1k/acre)● vertical well success/failure

● 3D seismic acquisition● vertical fraccing response

Feasibility/Emerging (A$50-250/acre)● vertical exploration well drilling

● sampling & testing, 2C delineation● interpretation, feasibility study

Year 1 2 3 4 5 6+

Representative unconventional play/player maturation S-curve

Notes:

▪ The Company has applied for 3,500km2

▪ 3,500km2 equals c. 1m acres

“applications for shale-gas explorationrights in the Karoo are to be fast-tracked.”

Mineral Resources Minister Gwede MantasheMaiden Speech to Parliament

(15 May 2018)



34

APPENDIX 4: KAROO TECHNICAL INFORMATION

EIA Study implies c. 32tcf GIP, > 7 tcf risked recoverable

▪ Late 1960s: three wells drilled; uniform shale

sections

▪ Application area surrounds discovery well (CR 1/68)

• strong gas ‘kick’ and flow to surface, (~2

mmcfd)

• extensive core collected

▪ Thick shales

• Upper-middle Ecca shales 1500-1800m

• Basal Ecca shales 110-150m

▪ EIA only considers Basal Ecca shale

• higher organic content

• gas flow came from upper shales

▪ EIA study implies ~32tcf GIP, > 7 tcf risked

recoverable in Challengers permit area from the, Basal

Ecca only

• Volumetrically the upper-middle Ecca shales

are 10 times larger than the basal Ecca shale

and flowed at in excess of 2 million cubic feet

per day unfracked

Sketch section through Karoo Basin



35

APPENDIX 5: LONG TERM KEY INVESTOR TIMELINES



Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22

JORC Resource(Hualilan project)

Studies(Hualilan project)

Drilling(El Guayabo)

Geol/Geophysics(El Guayabo)

3000-5000m

(initial drilling

program) #

Scoping

Study

Geophysics/

other

Resource

Extension

/Infill

Follow up drilling


Long Term Project Milestones

Drilling(Hualilan Project)

Studies(El Guayabo)

Resource

Extension

/Infill

PFS

As

required

for DFS

Start DFS

Define

Scope

Initial Upgrade

Met

Test

Initial

Resource

MetallurgyScoping/PFS

Study

Upgrade

2020 2021 20222019


Kris Knauer

Email: [email protected]

Phone: +61 411 885 979

Web: www.challengerex.com

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