Zara Project

Chalice Gold Mines Limited (ASX: CHN) is pleased to advise that the first results from the latest round of infill drilling at its Koka Gold Deposit in Eritrea have highlighted the continuity and high grade nature of the ore body.

The results from diamond drill hole ZARD 128 intersected the Koka Main Zone between 44 and 75 metres down-hole, with 31 metres of quartz stockwork mineralisation grading 6.48 grams of gold per tonne. This included intervals of up to 2 metres grading 38.2 grams of gold per tonne (Table 1).

Additional narrow intervals of high grade mineralisation were also intersected in the hanging wall, with up to 1 metre grading 100.5 grading grams of gold per tonne encountered.

These assays are the first from a planned thirty one (31) diamond drill hole infill programme, designed to bring further confidence to the high grade mineralisation of the Koka Main Zone and to be used as part of the final resource estimation for the Koka Bankable Feasibility Study.

Koka, which is the flagship deposit at Chalice’s 80 per cent-owned Zara Project, has JORC resources of 944,000 ounces. A total of 13 diamond drill holes have now been completed and further assay results will be released to the market as they become available (Figure 2).

Chalice Managing Director Doug Jones said: “The results from this first hole have further demonstrated the overall continuity of the Koka ore body and we expect additional good results over the coming weeks as the programme advances and we start to receive a steady flow of assays”.

The current resource estimate of 944,000oz @ 5.8g/t is based on a 40 metre x 20 metre drill pattern and the current programme will infill most of the Koka Main Zone to 20 metres x 20 metres.

The deposit extends over 570 metres along strike and the resource remains open both along strike to the south and at depth.

Following completion of this infill drilling program the drill rigs will focus on exploration of nearby targets, particularly the Koka South and KokaEast zones.

Note: The metres quoted are down hole metres and gold grades are uncut with up to 2 metres of internal dilution (<0.25g/t gold). All samples are prepared at the Africa Horn Laboratory in Asmara, Eritrea and then analysed by Genalysis Laboratories in Perth, Western Australia.

About the Zara Gold Project

The Zara Joint Venture comprises four Exploration Licenses and two Prospecting Licenses covering an area of 615km2 situated in northern Eritrea, approximately 160km northwest of Asmara city (Figure 1). 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 December 2009

Chalice Gold First Assays Koka Drilling (PDF)

Related posts:

1. Chalice Declares Maiden Gold Reserve for Eritrea’s Koka Deposit
2. Chalice Gold Mines Quarterly Report
3. Koka Resource Upgrade Imminent After More High-Grade Results in Eritrea
4. Chalice Gold Mines: Drilling Results Confirm High Grade Koka Gold Deposit in Eritrea
5. Chalice Gold Announces Further Results From Koka Drilling