Zara Project

SHANGHAI Dec 27  - A subsidiary of Shanghai Construction Group Co. Ltd. will acquire gold mining assets in Eritrea, according to a company announcement.

Shanghai Construction will acquire a 60 percent equity stake in Zara Mining Share Co. for $80 million, the statement said, citing a framework agreement signed by the two companies.

The deal also gives Shanghai Construction the option to acquire additional mining rights from Zara for areas where gold reserves have not yet been confirmed.

Shanghai Construction will conduct the acquisition through wholly-owned subsidiary China Shanghai (Group) Corporation for Foreign Economic & Technological Cooperation (SEFCO Group).

SEFCO is involved in various infrastructure projects overseas, including Vietnam, where it is building a 40,000-seat stadium in the capital Hanoi, a coal-fired thermal power plant, and a conference center, according to its website.

The company is also building a liquified petroleum gas pipeline and terminal project in Pakistan and has worked on some of Shanghai’s highest-profile infrastructure projects, including the Shanghai World Financial Center, the country’s tallest skyscraper.

Reuters

[wikichart align="left" ticker="CHN.ax" showannotations="true" livequote="true" startdate="25-07-2010" enddate="25-01-2011" width="250" height="200"]Chalice Gold Mines  Quarterly Report Highlights:

-Regional exploration ramps up at the Zara Gold Project, Eritrea with a focus on identifying new prospects to increase the current Indicated Mineral Resource of 840,000oz at 5.3g/t within the Koka deposit.

– New “Koka-like” signatures identified by a deep penetration 3D IP survey over the Koka-Konate corridor-providing a priority drilling opportunity for early 2011.

-Further results from Zara North confirm strong stream sediment anomalism over 10km strike length.

– The Eritrean Government advises its intention to purchase, at fair value, a 30% paid participating interest in the Zara Project- Chalice shares commence trading on the Toronto Stock Exchange (TSX) under the symbol CXN

During the Quarter, Chalice Gold Mines (ASX: CHN) (TSX: CXN) continued to ramp up its near?mine and regional exploration activities at the Zara Gold Project in Eritrea, East Africa, with a focus on identifying new prospects to increase resources in the vicinity of the high?grade Koka Gold Deposit, which hosts an indicated Mineral Resource of 840,000oz at a grade of 5.3g/t gold.

Early results from a key deep penetration Induced Polarisation (IP) survey over the Koka?Konate corridor reveal strong IP resistivity targets below the Koka Deposit and the Koka East prospect. Strong IP chargeability anomalies have also been identified to the west of the Koka Deposit.

The results of the IP survey have provided exceptional targets for drilling in early 2011.

Follow-up geochemical sampling and geological mapping on the Zara North licence has continued to confirm previously reported gold anomalism. Identifying the source of this anomalism will be a key focus for intensive exploration planned over the coming months.

During the Quarter, the Eritrean Government advised its intention to purchase, at fair value, a 30% paid participating interest in the Zara Project through the Eritrean National Mining Corporation (ENAMCO). Discussions in relation to the acquisition are currently ongoing.

Find the full report here: Chalice Gold Mines Quarterly Report

Chalice Gold Mines

Minesite, By Alastair Ford - “We’ve done a lot in the last year or so”, says Doug Jones, managing director of Australian-listed Chalice Gold Mines, which is one of the trailblazers in the new mining district of Eritrea. The company is working up the Zara gold project in the centre of the country, a few hundred kilometres north of the famous Bisha mine, which has just been brought into production by Nevsun. And Chalice has been developing Zara at a fair old lick, as Doug is keen to point out.

“In August of 2009 we’d just completed the merger with Sub-Sahara. Then we cleaned it up to get a 100 per cent interest in the project, subject to the government’s option to purchase 30 per cent. Then we got the drilling done, produced a maiden reserve, got all the water drilling and environmental studies done, and then completed a feasibility study in July. We got through a TSX listing and did a couple of capital raisings.”

At times it’s been hard to keep up, such has been the whirlwind of activity produced by the company. But then the Chalice boys are like that. On their frequent visits to London they barely have time to touch the ground and raise a beer glass to their lips before they’re off to their next meeting with existing, or potential investors.

In any case, those same investors must be well satisfied at the moment with progress on Zara. The results of the feasibility study were released in August and showed that at the Koka deposit, the company has a project capable of producing 100,000 ounces per year over a seven year mine life, based on the current resource of 840,000 ounces. The study used a US$900 gold price, and assumed cash costs of US$338 per ounce from a basic open pit. So far so good, and perhaps not surprising that the company’s shares have doubled in the last 12 months or so to the current A$0.70 from a 52-week low of A$032 hit early in 2010. But now’s the time to be moving established gold ounces towards production, especially with costs likely to be so low, and given the complexities and uncertainties in the Australian tax system, it’s perhaps not surprising that local Aussie investors have in recent months favoured African developers over their local home-grown types.

That’s a big turnaround, but it hasn’t done Chalice any harm. Indeed it’s allowed the company to build up enough momentum to get the shares listed on the Toronto exchange too, a development which was ongoing in the final quarter of last year, and which was finally completed in the latter part of November, just in time for the big Mines & Money conference in London, at which Chalice’s had a particularly high profile.

The interest stems not only from the track record of success that’s now building up, but also from the possibilities on the ground at Koka, and at Zara, that still remain. There’s never been much doubt in Doug’s mind, nor indeed that of Chalice’s chairman Tim Goyder, that resources at Koka will go over the million ounce mark in due course. Doug talks of “big exploration upside” without hesitation, and adds that in addition to its existing ground Chalice will pick up further acreage before too long.

It will be helped along the way by a government that is enthusiastic, to say the least, about the potential of Zara and Koka. The government now looks likely to exercise its option to buy into Koka, although at what price remains to be seen. Negotiations are likely to be tough, but Doug is quite clear. “The government want to see this go forward”, he says. “The biggest question is how much they’re going to pay, and when they’re going to pay it”. But both sides have already agreed that if a deal can’t be thrashed out then the matter will be settled by independent arbitration. Whatever happens, with the government on board, the political risk will be much reduced, in what is still seen as a volatile area.

After that it’ll be a question of completing the permitting process, and raising the necessary funding to get Koka into production. Initial costs have been put at around US$122 million, and all options are still on the table. Some nice drilling results from the ongoing programme at Zara would certainly help build up a bit of a tail wind as far as that fundraising is concerned. But first, the negotiators will have to come to an agreement as to the precise terms on which the government will be allowed to participate. It should be an interesting year.

Zara Project

Dragon Mining Limited announces that Chalice Gold Mines Limited (“Chalice”) has exercised its option to purchase the Company’s 20% interest in the Zara Gold Project, Eritrea. Settlement, which will occur in two days, will result in Dragon Mining receiving $8.0 million in cash and 2 million Chalice shares (current market value of $0.9m) which will be escrowed for 12 months.

In addition, Chalice has the obligation to pay Dragon Mining a further $4.0 million on the delineation of 1 million ounces of gold Reserves at the Zara Gold Project. On 4 June 2010, Chalice announced a maiden gold Reserve at the Zara Gold Project of 760,000 ounces from an Indicated gold Resource of 840,000 ounces.

As at 31 May 2010, Dragon Mining had $21.4 million of cash and gold concentrate receivables compared to $11.8m at 31 March 2010 as reported in the quarterly report. With the receipt of the $8.0 million, the Company will have total cash and receivables of $29.4 million.

The limited obligations of Dragon Mining comprise a working capital facility of 2 million euros ($2.8m) which is repayable in two equal tranches on 30 June 2010 and 31 December 2010. In addition, as a result of on-market purchases by the Company, the outstanding number of convertible notes amount to 9.2 million.

Executive Chairman Peter Cordin stated, “It is pleasing that with the final delivery in August 2009 into the original hedge to finance the Svartliden development, the Company has substantially improved its balance sheet and cash position.

We are well positioned to meet forecasted production of 70,000 ounces of gold for 2010 and continue to generate strong operating margins with the appreciation of the gold price and the weakening of the euro and Swedish krona. The strong cash position will allow the Company to grow and enhance shareholder value.”

The Company is focussed on increasing the Reserves and mine life of its existing gold mines in Sweden and Finland. Feasibility studies for the underground operation at the Svartliden Gold Mine in Sweden and Jokisivu Gold Mine in Finland are nearing completion with commitment to development expected in the third quarter of 2010.

In addition the Company will be able to commit further funding to enhance the value of its exploration properties, particularly at Kuusamo in northern Finland.

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)

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)

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 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.