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

Eritrea

Chalice Gold Mines Limited (ASX:CHN) advises that following its merger with Sub-Sahara Resources NL (“Sub-Sahara”), it became entitled to a payment of A$5 million upon commercial production at the Nyanzaga Project in Tanzania.

The Nyanzaga Project, which hosts the Tusker Gold Project, is currently owned 49% by Tusker Gold Limited (ASX:TKA) and 51% by Barrick Gold Corporation (“Barrick”) following Sub-Sahara’s sale of its interest in the project to Indago Resources Limited (ASX:IDG) (“Indago”) in February 2009. Barrick has announced a takeover bid for Tusker.

As advised to ASX by Indago on 8 February 2010, Indago has entered into a Pre-bid Acceptance Agreement with Barrick in respect of 17.5 million Tusker shares it owns and has notified that it intends to accept the Barrick bid for its remaining 50 million shares.

Should the Barrick takeover of Tusker be successful, Barrick will own 100% of the Nyanzaga Project. Chalice sees this as a positive transaction which may expedite the development of the Nyanzaga Project and hence receipt by Chalice of the A$5 million deferred consideration

Chalice Gold Mines has projects in Eritrea and Australia. In 2009 the merger with Sub-Sahara Resources gave Chalice a 80% stake in the Zara Gold Project in Eritrea.

At the end of 2009 Chalice subscribed for 1.6M shares in London Africa at 12.5p per share for GBP200,000 (A$358,000) which will gave Chalice an 11.8% interest in the Company. London Africa Limited signed in June 2009 a prospecting licence to cover 1562 km² around Akordat – Orota in central Eritrea.

East African-focused company Chalice Gold Mines (ASX: CHN) has advised that further results from infill drilling at its Koka Gold Deposit in Eritrea continue to confirm the robust nature of the ore body.

Following the announcement, shares in the company rose 3.4%, or 1.5c, to 45.5c during the afternoon trade.

The new results come from diamond drill holes ZARD 129, 130, 131, 132 and 134 which all achieved significant intersections of quartz stockwork mineralisation within the Koka Main Zone.

The better intersections included 8 metres grading 9.47 grams of gold per tonne in ZARD 129; 6 metres grading 26.92 grams of gold per tonne in ZARD 130; 11 metres grading 4.68 grams of gold per tonne in ZARD 131; 18 metres grading 29.30 grams of gold per tonne in ZARD 132, and 11 metres grading 8.29 grams of gold per tonne in ZARD 134.

The results from infill drilling continue to confirm the continuity and high grade nature at the rich Koka Gold Deposit at the Zara Project in Eritrea.

Close to 80% of infill drilling program now completed with further assays pending, with a geotechnical drilling program about to commence.

The company has reported that follow-on drill programs at Koka East and Koka South underway.

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.

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. Source: (ProactiveInvestors)

New Generation Gold 2009 Presentation by Dan Hamer- Chalice Gold Mines Country Manager Eritrea.

• The material used in this presentation is intended to be a Case History of the Koka Gold Deposit and includes activities that are current and proposed based on the information available to Chalice Gold Mines Limited as at 24th November 2009.

• This presentation may contain value references and “forward looking statements“ which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results

• This presentation does not include all available Information on Chalice Gold Mines Limited and should not be used in isolation as a guide to investing in the Company. Any potential investor should also refer to Chalice Gold Mines Limited Annual Reportsand to ASX releases and take independent professional advice  before considering investing in the Company.

Chalice Gold Mines Presentation based on information 24th November 2009

Gold Wave

In recent days news coverage all over the globe states that pressures metals are highly demanded, as investors continue to escape from the dollar to look for a safe haven in gold, silver and copper.

The latest headlines state that gold prices soared to their highest levels in more than a year to above USD 1.150 an ounce, as stronger-than-expected U.S. consumer prices stirred inflation worries.

The Dollar fell against other major currencies such as the Euro on Wednesday as investors took profits on the currency’s biggest rise in three weeks.

This shows the fear and insecurity of investors in respect to the length of the current recession, which is one of the toughest recessions to estimate. Therefore, investors look out for commodities such as gold until they can be very sure to spot a light at the end of the tunnel.

No doubt many new mining markets and businesses are gaining from this development, as it impacts positively their ability to raise capital and increase their share price. Since June 2009 the share price of Chalice Gold Mines increased by 2.4 times, Nevsun Resources 1.95 times and Sunridge Gold 1.65 times.

As long as the dollar remains weak, the gold price will continue to surprise the markets with record breaking levels. Only a better outlook for the global economy and an end of the recession in sight will make the dollar rise again. For gold mining companies, which are due to start operations in near future, this comes like a ride on a wave until they are ready to produce and sell the gold.

Chalice Gold has unveiled its new corporate design and is laying out its new strategy for the proposed merger between Chalice Gold Mines Limited and Sub Sahara Resources.

• The material used in this presentation is intended to be a summary of the proposed merger between Chalice Gold Mines Limited and Sub Sahara Resources NL and includes activities that are current and proposed based on the information available to Chalice Gold Mines Limited as at 14 October 2009.

• This presentation may contain value references and “forward looking statements“ which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results. 

• This presentation does not include all available Information on Chalice Gold Mines Limited and should not be used in isolation as a guide to investing in the Company. Any potential investor should also refer to Chalice Gold Mines Limited Annual Reports and to ASX releases and take independent professional advice before considering investing in the Company. 

View the presentation in pdf format here The New East African-Focused Gold Company or for further information about Chalice Gold Mines Limited, visit the website at www.chalicegold.com

There’s been plenty of activity on and around Chalice Gold’s Zara property in Eritrea recently, as Chalice chief Doug Jones explained when Minesite rang him up in his office in Perth for a chat the other day. Around a month ago the company sent some satellite imagery on Zara and the surrounding ground over to Peter Wilson, a well-known consultant in Perth, for analysis. That analysis duly showed up around 60 anomalies that are, according to the Chalice press release, “indicative of gold or base metal targets”.

That certainly makes for decent enough looking pipeline of work to run behind, or even in parallel with, Chalice’s flagship Koka deposit, which currently boasts an indicated and inferred resource of 944,000 ounces, most of which is in the indicated category. Upgrade work on Koka has been held up slightly by the non-arrival of the drill rigs the company was hoping to source from Pakistan. But new rigs coming down from Serbia are due on site within the next month or so, at which point work on moving the resource up to measured and indicated status will commence.

Despite that slight delay, the ongoing scoping study on Koka is continuing unabated. “The scoping study has been coming along”, says Doug. One of the early issues facing potential development at Koka will face will be access to water, but Chalice already has that well in hand. “The water drilling has been very successful”, says Doug. “Three bores have hit water and have sufficient water flows”. So that ticks that box, at least for now. In terms of metallurgy, progress has been good too. “We conducted some testwork in terms of hardness and grindability”, continues Doug, “and were pleasantly surprised by the results. It’s not going to be a tough rock to grind down”.

It’s a fairly coarse grind, too, so the current thinking is that a simple crushing and grinding operation with a ball mill will suffice for the front end of the plant, with around 60 per cent of the contained gold likely to be recovered via a gravity circuit. Overall, says Doug, with gravity and cyanide, recoveries ought to come in at around 95 per cent or better. It’s easy to see why Doug calls Koka “robust”. Those numbers are enough to tempt anyone in for a closer look.

It’s not all been happy news, though. A company surveyor and a government hydrologist on Chalice business were recently murdered when their car was ambushed by bandits while they were driving towards Keren, Eritrea’s second city. This tragic development has caused a major security rethink on Chalice’s part, and on the Eritrean government’s part too. That the murders didn’t actually occur on Chalice’s ground is no real consolation, and that such deaths are relatively rare in Eritrea isn’t either. As yet the precise motive isn’t clear, as nothing was stolen, although it’s thought that the killers may have been disturbed by the approach of another vehicle. A police investigation is ongoing.

Still, on a more prosaic level, investors in Chalice haven’t been overly spooked by the killings. That’s perhaps because the political risk discount for a place like Eritrea doesn’t necessarily get any greater just because events show that investors were right to apply a discount. More significantly from the perspective of the share price has been Chalice’s progress in consolidating the Zara ground such that it now holds 80 per cent of the title, with partner Dragon holding the rest. As that consolidation process, involving the absorption of previous title-holder Sub Sahara, continued, Chalice’s shares have risen fourfold.

Chalice has made no secret of its desire to go up to 100 per cent on Zara, but Dragon, it seems, is quite happy to sit on its 20 per cent and watch the value grow. A strengthening gold price has also been helpful, as perhaps, has Chalice’s immunity from the Aussie dollar costs that most of its peers on the ASX are either currently facing or looking to face in the future. It’ll be interesting to watch what happens next. Source: (Minesite.com)

Koka Gold Deposit

Chalice Gold Mines Limited (ASX:CHN) announced that it has upgraded and enhanced the regional exploration potential at its 80 percent owned Zara Gold Project in Eritrea, after completing the initial stage of a regional exploration program.

The program includes tenements adjoining the Zara Project recently granted to the company (100 percent).

Intepretation to date has resulted in the definition of over 60 priority anomalies indicative of gold or base metal targets on the 615 km2 tenement area outside of the current resource base at the Koka Deposit (Indicated and Inferred Resources of 5.04 million tones at 5.8 g/t Au for 944000oz)

This provides a very strong pipeline of regional exploration opportunities with the potential to yield new discoveries within 25 km radius of a potential future mining operation at Zara, where Chalice is currently completing a Scoping Study.

Landsat Interpretation Identifies Numerous Anomalies. 

After its merger with Sub Sahara Resources and the acquisition of the Zara asset, Chalice hired Perth- based remote sensing consultants Eearthscan Pty Ltd to undertake an interpretation of satellite imagery covering the Proterozoic (earlier life of earth) sedimentary and volcanic formations in north-western Eritrea, the prospective stratigraphy which hosts the Koka and Bisha Deposit.

The study area covered over 35000 km2, centered on the Company’s 615 km2 Zara Project, which is located 165 km north of the capital of Asmara. The satellite data was computer enhanced to highlight geological outcrop, regolith landform, structural features and mineral alteration zones within the study area, which lies along major north-west trending structural corridors.

Spectral signatures of known gold and base metal mineral occurrences were used to identify similar signatures elsewhere within the targeted terranes. The target zones were then tanked using various parameters.

Within the Zara Project area the interpretation identified over 60 anomalies with spectral signatures indicative of alteration or iron enrichment commonly associated with known gold and/or base metal mineralization in the region, including the Company’s Koka Gold Deposit.

According to Chalice iron-rich anomalies were also traced within the newly granted Zara South permit where ground follow-up has identified gossans (massive iron-oxide rich rocks derived from the weathering of massive sulphides).

The gossans are associated with altered and pyritised rhyolites and cherty exhalites in a rock assemblage typical of Volcanic-hosted Massive Sulphide (VHMS) mineralization. The gossans lie within interpreted northerly extensions of the volcanic stratigraphy hosting the Bisha polymetallic VHMS deposit approximately 100 km to the south.

Chalice refers to Canadian-based Nevsun Resources Limited who recently secured financing for a US$250 million development of Bisha, which will be a low cost gold producer for its first two years of operations (430000 ounces of gold per year) and low cost, high grade copper concentrate producer (75700 tonnes of contained copper metal per year) for a further three years before commencing long-term zinc concentrate production.

Chalice Gold states that it is looking forward to progressing the evaluation, ranking and exploration of these exciting regional targets. Immediate exploration plans include the acquisition and analysis of high resolution Aster satellite imagery, ground-based geophysics mapping and regional drainage geochemical sampling. Further, a ground-base gravity survey will be conducted over the gossanous zone on Zara South. Gravity surveys have been successfully used to identify massive sulphide bodies elsewhere in Eritrea.

The regional exploration strategy will be advanced in parallel with forthcoming programs of in-fill and resource extension drilling at the Koka Deposit, together with completion of the Feasibility and Feasibility Studies.

Chalice Gold Mines

Eritrea

Brendan Ryan from Miningmx, a platform providing content exclusively about shares and people involved in African mining, says that Eritrea is fast developing as a hot new destination for mining exploration companies following in the tracks of pathfinder TSX- listed Nevsun Resources.

Addressing the Africa Down Under conference held recently in Perth, the Eritrean minister of energy and mines Ahmed Haj Ali listed 12 companies now operating in the country looking at gold and base metal projects.

Reasons for the surge in interest include the country’s prospective geology and the willingness of the Eritrean government to fund its share of the development costs of mining projects up-front.

Eritrean state mining company Enamco holds a 40% stake in Nevsun’s Bisha gold/copper/zinc project which consists of a 10% free carry and a 30% stake to be purchased at “fair value.”

Enamco made a first provisional payment of $25m in 2008. The final amount to be paid will be determined by an independent valuator and will be based on the net present value of 30% of the project as at the date of the first shipment of gold from the mine.

That should take place during the third quarter of 2010.

Enamco has so far contributed $35m to the project as part of its requirement to provide one third of owners’ financing contributions.

Interviewed on the sidelines of the Africa Down Under conference, Eritrean mines department director-general Alem Kibreab commented the state’s attitude was that it should be prepared to share in the risks as well as the benefits from the project.

Haj Ali stressed that Eritrea’s exploration and mining regulation code involved a simple, one-stop licencing system in which the right to exploit commercial deposits discovered under a valid exploration licence was guaranteed.

He added the licensee has the right to sell locally – or export free of duties and taxes – all minerals it produced. Mining licences were valid for 20 years with optional 10 year renewals.

Nevsun reached financial close in July this year on the $235m debt package it required to complete the Bisha mine. One of the participants is the Industrial Development Corporation.

Nevsun CEO Cliff Davis commented on July 29 that, “The Export Credit Insurance Corporation of South Africa is finalising a policy of insurance tied to South African supply of goods and services.

“Similarly, Nevsun appreciates the unwavering support from the government of South Africa since the first financial commitment in October 2008 during a very difficult time for major international financial institutions.”

But it has not all been plain sailing for Nevsun. The company went through a torrid period from 2004 to 2006 while the Eritrean government was finalising its mining policy and regulations and not being clear about its intentions.

Nevsun shares soared from C$0.55 to C$3.94 in the 12 months to February 2003 on the back of the initial, high-grade borehole results from Bisha. They subsequently peaked at a record $9 during 2004.

But the shares plummeted 50% in a single day’s trading on September 3, 2004 when the Eritrean government forced Nevsun and two other gold exploration companies to shut down operations but provided no reasons.

The uncertainty over what was actually going on lasted for months. Nevsun finally signed a mining agreement over Bisha with the Eritrean government in December 2007.

The shares collapsed again to just C$0.35 in October last year during the global financial crisis but have recovered to current levels around C$2.00 on the back of the finalisation of the debt funding package.

Latest exploration company into Eritrea is ASX-listed Chalice Gold Mines which is assessing the Zara gold project. It must complete a prefeasibility study by end-October and a detailed feasibility study by May 25 next year.

As with the Bisha mine, the Eritrean government is entitled to a 10% free carry and has the right to buy a further 30% equity stake.

In his address to the Africa Down Under conference Chalice director Michael Griffiths told delegates “the Eritrean mining code works very well for me. It’s based on the Western Australian mining code and, so far, it’s only half a centimetre thick.”

Chalice – which has a number of gold prospects in Australia – got its exposure to Zara through a merger with ASX-listed Sub Sahara Resources which was announced in April.

Since the beginning of April the Chalice share price has quadrupled from around A$0.10 to the current level of A$0.40.

According to Chalice, the Zara project lies within an emerging gold and base metal province in East Africa which includes the Sukari gold project in Egypt, the Ariab/Hassai gold and base metal deposit in Sudan and the Bisha gold and base metal project in Eritrea.

Chalice Gold Mines Limited (“Chalice”) advises that it has raised $4,401,000 (before issue costs) to fund the ongoing development of the Zara Project in Eritrea through the placement of 16,300,000 shares at 27 cents per share (“the Placement”).

The Placement, to institutional and sophisticated investors introduced by Southern Cross Equities as lead manager, will be made pursuant to the 15% allowance under the ASX Listing Rules and is scheduled to be completed on or around September 10, 2009.

The capital raising will increase Chalice’s cash balance to approximately $10.5 million.

All costs and liabilities associated with the merger with Sub-Sahara Resources are now settled.

Dr. Doug Jones, the Managing Director of Chalice said:

“The Placement strengthens Chalice’s balance sheet while it undertakes the scoping study for the Koka Gold Deposit, scheduled for completion by late October 2009, and the feasibility study, scheduled to be delivered in May 2010. Importantly, it will also allow for a substantial program of exploration on the 615 square kilometre Zara Project where we have previously identified numerous gold targets for follow up and where we are already seeing encouraging additional prospectivity for both gold and base metals.”

Chalice also advises that subject to shareholder approval at the Company’s next General Meeting, it will issue Southern Cross Equities and Thomas Weisel Partners Canada Inc, one million unlisted share options each for providing ongoing services to the Company, including the share placement. These options will have an exercise price of 35 cents and expire two years from the date of issue.