Eritrea

East African-focused company Chalice Gold Mines Limited (ASX:CHN), developing the high grade 1 million ounce Zara Project in Eritrea, advises that new results from infill drilling at the Koka Gold Deposit continue to confirm the high grade nature of the ore body.

The results, which will form part of the final resource estimate for the Koka feasibility study, include:

• 6 metres grading 12.37 grams of gold per tonne in ZARD 135;
• 5 metres grading 21.90 grams of gold per tonne in ZARD 135;
• 10 metres grading 9.97 grams of gold per tonne in ZARD 136;
• 4 metres grading 32.76 grams of gold per tonne in ZARD 137;
• 2 metres grading 10.58 grams of gold per tonne in ZARD 139, and;
• 9 metres grading 4.68 grams gold per tonne in ZARD 141.

The new results come from diamond drill holes ZARD 135 through to 144 (results from ZARD 143 pending) which achieved significant intersections of quartz stockwork mineralisation within the Koka Main Zone.

A complete tabulation of results is provided in Table 1.

Assays have now been received from 15 holes of the 31-hole, ~5,000 metre infill diamond drilling program (Figure 2). Results received to date are consistent with previous drilling that indicated a decline in quartz stockwork development and gold grades at around 150 metres depth (Figure 3).

All 31 holes have now been completed with the last five holes currently being logged prior to processing through the sample preparation facility in Asmara and transport to Genalysis Laboratories in Perth, Western Australia for analysis. Further assay results will be released to the market as they become available.

Following completion of the infill drilling program, one of the drill rigs has moved to the Koka East Zone, which lies 80-100 metres into the hangingwall of Koka Main Zone. Planning for drilling of the Koka South Zone is in progress. In the meantime one of the rigs will be employed on tailings dam foundation testing.

Four geotechnical holes have also been completed which will provide data on ground conditions in the pit highwall that will potentially allow a redesign of the pit to a lower strip ratio.

Koka, which is the flagship deposit at Chalice’s 80 per cent-owned Zara Project, has JORC compliant Indicated and Inferred resources of 944,000 ounces.

Table 1: Significant Koka Prospect Diamond Drill Assay Intercepts:

About the Zara Gold Project

The Zara Joint Venture comprises four Exploration Licenses and two Prospecting Licenses covering an area of 615 km2 situated in northern Eritrea, approximately 160 km northwest of Asmara city (Figure1). Chalice holds an 80% interest in the project with the remaining 20% held by Dragon Mining (ASX: DRA). The Koka Gold Deposit within the project contains an estimated resource of 5 million tonnes of ore containing 944,000ozs gold, grading 5.8grams of gold per tonne. Metallurgical test work indicates +95% recovery with ~60% recovered by gravity.

DR DOUG JONES

Managing Director

22 February 2010

Competent Persons’ Statement

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3. Chalice Gold Market Capitalisation 10 Times Greater Than Last Year
4. Eritrea: Audio Broadcast with Executive Chairman of Chalice Gold Mines Limited
5. Chalice Gold Plans Gold Production in Eritrea by 2011