London Africa Ltd.

Chalice Gold Mines Limited (ASX:CHN) has agreed to invest in the United Kingdom based London Africa Limited (”London Africa”) which holds a number of prospecting licences in Eritrea.

London Africa Limited is a private company registered in England and Wales, originally set up in 2006 to acquire  precious and base metal projects in Africa.

Chalice will subscribe for 1.6M shares in London Africa at 12.5p per share for GBP200,000 (A$358,000) which will give Chalice an 11.8% interest in the Company. The funds will be applied to a work program currently being undertaken and managed by London Africa.

London Africa Limited signed in June 2009 a prospecting licence to cover 1562 km² around Akordat – Orota in central Eritrea.

The company says it is the first business in 4 years to sign a new Prospecting Licence in Eritrea. The agreement was signed back in June with the new Eritrean Minister of Mines, Mr Ahmed Haj Ali.

The company’s Web site states that numerous gold-bearing quartz veins systems as well as as alterations zones characteristic of volcanogenic massive sulphide (VMS) mineralisation have been identified after just two field visits to the southern part of the licence area.

Additional Landsat and Aster image anomalies remain to be visited (field checked) and the company is confident that it will have a series of quality gold and VMS targets to evaluate going forward.

London Africa is aiming to explore and find similar volcanic massive sulphide deposits like those of Nevsun Resources’ Bisha deposit. The four prospects of London Africa are Akordat VMS Prospect, Melih VMS Prospect, Enjehay Kereb Gold Prospect, Adinjera Gold Prospect.

London Africa Limited in Eritrea

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)

Chalice Gold Mines (CHN.AX) released a research report completed by Australian independent stockbroker and financial advisory group Southern Cross Equities. The report states that Chalice is an early participant in the development of a gold industry in Eritrea, where it has highly attractive exploration ground and an advanced prospect in Koka’s 1.0moz resource.

Southern Cross Equities believes that the completion of feasibility by mid 2010 and exploration activity will maintain a great deal of interest in the stock. Thus it recommends a speculative buy at the current price of $0.57 predicting a target price of $0.73 in 12 month.

Southern Cross Equities Report on Chalice Gold Mines

Koka Gold Deposit

Tim Goyder has told Chalice’s shareholders that the market capitalisation of Chalice Gold Mines is close to $70 million which is 10 times greater than the $6.5 million recorded last year.

Speaking at the Chalice Gold Mines Limited (ASX:CHN) Annual General Meeting, the chairman laid out recent achievements, future plans and strategies of the company. He further welcomed former Sub- Sahara shareholders and expressed his gratitude for their support of the successful merger between Chalice Gold Mines and Sub- Sahara Resources earlier this year.

Following Sub- Sahara’s former 69% ownership of the Zara Project in Eritrea as well as recently done transaction, Chalice now owns 80% of the project, together with a large tenement position of 615 square miles.

The company has recently released details of an independent Scoping Study on the project, undertaken by Lycopodium Minerals, a Perth-based engineering company. The study found the Koka Gold Deposit was financially robust at a gold price of US$800 per oz. Production is forecasted to be in the vicinity of 110,000 oz per year for a minimum of 6 years, with a cash cost of US$424 per oz. Capital expenditure will be approximately US$98 million.

Tim Goyder told shareholders that the potential to extend the resource base through further exploration is considered to be outstanding. According to the chairman geological interpretation of the area suggest that there is considerable opportunity to locate additional ore bodies in similar geological settings along strike and parallel to the Koka Gold Deposit, and that is planned that once the resource drilling has been completed the diamond rigs will be deployed following up these near-mine targets to test their potentials.

In addition to the work on the Feasibility Study on the Koka Gold Deposit in Eritrea, the company will also look out for further regional exploration opportunities within the tenement area of 615 square kilometres. The area holds a great potential for the discovery of additional gold and base metal deposits.

For the immediate future Chalice Gold Mines plans a three-pronged strategy for its operation in Eritrea.

First, the completion of the Feasibility Study by mid- 2010, which includes in-fill diamond drilling with two rigs on double shift, and the exploration of existing targets at depth and along strike from the Koka Deposit.

The second pillar of the strategy is to commence drilling gold and VMS targets with a recently acquire man-portable rig. This rig is expected to be in operation by late December. Any success from this drilling will then be followed up by the larger rigs currently deployed in drilling out those targets.

The third arm of the strategy is to ground-truth some of the 60 Landsat anomalies already defined by mapping, sampling and then drilling.

Chalice Gold Mines Limited is planning to start production at the Koka Gold Deposit in Eritrea in late 2011.

Moto Goldmines disappeared from stock market listings this week, following its friendly takeover by a joint venture involving AngloGold Ashanti and Randgold Resources, the target being more than 20m ounces of gold that have been outlined at the Moto project in the far north east Democratic Republic of the Congo.

The transaction has further intensified investor interest in listed gold stocks active on the continent as a whole; at least 80 names can be identified.

A good number of these stocks currently rank as the world’s most in-demand gold stocks, as indicated by the table that follows this article.

While gold mining in South Africa has been very much a formal activity for well over a century, various kinds of gold mining activity have for many centuries characterised gold belts located in parts of Africa. New “discoveries” are indeed rediscoveries; relative to the gold belts available, very little modern exploration has taken place. In the DRC, as an instance, the semi-continuous Kilo Moto greenstone belt is currently under exploration by Moto Goldmines, AngloGold Ashanti (separately, to the south) and Mwana Africa.

London-listed Mwana recently announced an initial resource of 452,000 ounces of gold outlined on the Zani-Kodo trend within the Kilo Moto gold district. The general Kilo Moto location is remote, and the new Moto JV partners will be budgeting good amounts of money for basic infrastructure, and rehabilitation of one or more of a number of run-down hydropower facilities.

History shows, however, that these are old hats, albeit good ones.

The semi-continuous Kilo Moto greenstone belt was exploited primarily in the 1950s and 1960s by Belgian charter companies, producing more than 3m ounces of a total recorded 11m ounces of gold production from hard-rock mines in the Kilo Moto belt.

The mining was mainly focused on surface operations, a mixture of alluvials and shallow oxide pits.

The concessions are like small countries. To the south of Zani-Kodo lies what’s currently known as Mongbwalu, where the 10,000 km2 kilometer concession 40 (AngloGold Ashanti, 86.22% and OKIMO (a DRC parastatal), 13.78%) is being extensively explored by AngloGold Ashanti. Mwana Africa, in a 80:20 JV formed with OKIMO, holds gold mining rights over 1,610 km2 in Orientale Province.

The Moto Goldmines project, 570km north east of the city of Kisangani and 150km west of the Ugandan border town of Arua, covers an aggregate lease area of some 1,841 km2. Activities to date have primarily focused on just 35 km2 surrounding the old Durba gold mine, where a monumental resource of 25.7m ounces of gold has been outlined.

Some considerable distance to the south, Banro holds gold concessions in the Kivu provinces, stretching west of Lake Kivu. Mine build at Twangiza, nearest deposit to Bukavu, is underway. Annual production from the first phase plant is anticipated at between 80,000 and 110,000 ounces of gold a year. London-based Mark Smith of GMP Securities Europe fancies the Banro story: “We have tracked the evolution of Banro in terms of the development of the gold projects and the share price performance.

“The share price chart appears to have mirrored the classic ‘resource value curve’, from exploration discovery through to resource expansion and project development. We believe Banro is entering the fourth phase in the mining project life cycle, given recent development land marks.

“First, in June 2009 Banro raised C$100m to commence the development of the Twangiza oxide gold project. Second, in August 2009 Banro purchased a refurbished 1.0m tons a year CIP plant from Australia and plans to expand the plant to 1.3Mtpa.Third, in August 2009 the DRC government ratified Banro’s four mining licences and agreed on the fiscal terms for the 25 year exploitation permits. Four, in September 2009 Banro appointed Standard Chartered as the debt advisor to raise the project debt for Twangiza”.

In its initial phase, Banro is to opt for diesel rather than hydroelectric power; capital expenditure is anticipated at around US$145m. Further phases, and capital outlays, could see output at the multi million ounce Twangiza property increase to 300,000 ounces a year. There is gold all over the place: there is evidence of considerable artisanal activity on parts of Banro’s considerable concessions.

With at least 80 listed gold stocks active in African gold, there is lots of competition to attract investor interest. Some of these stocks are out of the top draw, such as Barrick, the world’s biggest gold miner by output and market value. There are other Tier I global gold miners with operations on the continent, in the form of AngloGold Ashanti, as mentioned, Gold Fields, Harmony, and Newmont, which has concentrated on West Africa, just as Barrick has on East Africa.

Further down the pecking order, there are a dozen or so African gold stocks that attract what may loosely be described as interest from professional investment analysts. For more detailed information on this article please visit Proactiveinvestors

Chalice Gold

Chalice Gold Mines Limited regrets to advise that an incident on a public road 110km south of its Zara Gold Project and 35km northwest of the town of Keren in Eritrea earlier this week has resulted in the tragic death of one of its Eritrean employees and two of its Eritrean contractors.

The deaths are believed to be the result of a shooting incident and an investigation by the Eritrean authorities is underway. Chalice Gold Executive Chairman Tim Goyder said the Company deeply regrets the incident and the tragic loss. Executive Director Mike Griffiths is currently in Eritrea to assist where possible.

Mr Goyder also said that, based on the information available, the incident was an isolated event unrelated to the Company and its operations at the Zara Gold Project. The current Scoping Study is continuing and remains on track for completion later this month.

CHALICE

The Executive Chairman of Chalice Gold Mines Limited addressed shareholders in an opening letter of the Annual Report 2009.

 

 Dear Shareholder

During the 2009 Financial Year your Directors have focused activities towards a transaction that would change the profile of the Company through the acquisition of a major asset. At the time of writing I am pleased to report that we have now completed such a transaction through the merger of your Company with ASX-listed Sub-Sahara Resources NL (“Sub-Sahara”).

This merger together with the acquisition of a direct interest in Sub- Sahara’s main undertaking, being the Zara Gold Project in Eritrea, will give the Company 80% of that project. The project is located in the East African country of Eritrea and contains 944,000 oz at an average grade of 5.8 g/t at the Koka deposit.

This transaction provides shareholders with the opportunity to participate in the development of a potentially highly profitable, high grade gold project with untouched exploration opportunities near the current resource and regionally.

The Company now holds a substantial land package of 615 km2. This area has had little exploration, if any, and this provides a unique opportunity for the discovery of additional gold and base metal deposits. Full details of the project are disclosed in the following Review of Operations.

With the merger now behind us, the Company has commissioned Lycopodium Ltd to undertake a scoping study to be completed by October 2009 and then a detailed feasibility study to be completed by May 2010. In parallel with this work, a 5,000 metre diamond drilling program using two rigs will commence during November 2009 to upgrade the resource from Inferred and Indicated to a Measured category.

In conjunction with the studies being undertaken at the Koka deposit, the Company will also focus its attention towards the potential of further gold discoveries at depth and along strike. A 2,500 metre diamond drilling program has been planned to test these targets. Our preliminary geological assessment of the region suggests that there is considerable opportunity to locate additional ore bodies in similar geological settings along strike from the main Koka deposit.

TSX-listed gold and base metals company Nevsun Resources Ltd has recently secured US$235M of financing to develop the Bisha Project which lies approximately 90km south of our project and will be Eritrea’s first significant mining operation. We look forward to working with the Government and people of Eritrea to become the next mining operation within the country, which, all going well, could be in production in 2011.

I would like to thank my fellow Directors and staff for their efforts during the last 12 months as we continue to grow and develop your Company. I would also like to welcome Mike Griffiths who was formerly Managing Director of Sub-Sahara to the Board of Chalice. Mike brings to the Board considerable experience both in Eritrea and Africa generally and will be a valuable member of our Board and management team.

Last but not least, I would like to thank you for your ongoing support and I welcome the Sub-Sahara Resources shareholders to our register. ANNUAL REPORT 2009.