East Africa-focused Chalice Gold Mines would raise A$9,1-million through a share placement to major shareholder Franklin Resources and other institutional and sophisticated investors.

The company said on Monday that it would place more than 21,6-million shares, at A$0,42 a share.

Around 11,6-million shares would be taken up by Franklin Resources, while a further ten-million shares would be placed with investors. The placement would be made pursuant to the 15% allowance under the ASX-listing rules.

Of the funds raised, A$7,8-million would be used to purchase the remaining 20% interest in the Zara gold project, in Eritrea, from fellow listed Dragon Mining. The balance of the funds raised would be used for working capital purposes.

The Zara gold project has an estimated resource of one-million ounces of gold. The company was currently conducting a feasibility study, with a targeted first production in 2011.

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5. Chalice Gold Plans Gold Production in Eritrea by 2011
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