Arabian Nubian Shield

Chalice Gold Mines (ASX: CHN)(TSX: CXN) is pleased to report that commercial discussions with ENAMCO (the Eritrean National Mining Corporation) to agree the purchase price for their 30% paid participating interest in the Zara Project are proceeding satisfactorily.

Both Chalice and ENAMCO are hopeful that an agreement on the fair value of the interest can be mutually agreed between the parties. If the parties cannot agree, then an independent valuation will be undertaken.

If, as Chalice currently expects, ENAMCO agrees to pay for their paid participating interest shortly after grant of the Mining Licence, the funding task for Chalice to develop the Koka Gold Deposit will be substantially reduced.

The amount of funding that Chalice may need to source externally will be further reduced by ENAMCO’s progressive contribution to development costs (which will be funded 33.33% by ENAMCO and 66.66% by Chalice).

The project permitting process is also proceeding as expected. Chalice is currently negotiating the terms of the Mining Agreement, which, along with the Mining Licence and the Eritrean Mining Proclamation, will govern all of the rights and obligations of the Eritrean operating company relating to the development and operation of the Zara Project.

About the Zara Gold Project

The Zara Project comprises six Exploration Licences covering an area of 615km2 situated in northern Eritrea, approximately 160km northwest of Asmara city. Chalice currently holds a 100% interest in the project subject to the Eritrean Governments right to acquire a further 30%, at a fair value, in addition to their 10% carried interest.

The Koka Gold Deposit within the project contains a Probable Reserve of 4.6 million tonnes of ore grading 5.1 grams of gold per tonne and containing 760,000 ozs of gold. This is contained within an Indicated Resource of 5.0 million tonnes grading 5.3 grams of gold per tonne containing 840,000 ozs of gold.

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