spectacular drilling results, page-2

High grades continue for Chalice

Wednesday, 31 March 2010

A RESOURCE upgrade is on the horizon for Chalice Gold Mines following the receipt of more high-grade results from infill drilling at the Zara gold project in Eritrea.

Chalice Gold Mines' Zara project in Eritrea.

The Koka deposit falls within the Zara Joint Venture and comprises four exploration and two prospecting licences and is owned 80% by Chalice Gold and 20% by Dragon Mining.

At a decision to mine, the government of Eritrea has a statutory right to a 10% free-carried interest and a further right, at its election, to purchase a further 30%.

The new results, which are the last from the infill program at Koka, were returned from the Koka Main Zone and included 7m grading 18.71 grams per tonne, 5m at 40.28gpt gold, 23m at 5.58gpt, 21m at 9.30gpt, 16m at 11.07gpt and 9m at 6.28gpt.

An upgraded resource estimate is due to be handed down next quarter, followed by a feasibility study in June.

The last resource estimate for Koka outlined 5 million tonnes grading 5.8gpt for 944,000 ounces.

Metallurgical testwork has indicated overall recoveries exceeding 95% with around 60% recovered by gravity.

Assays have now been received from all 30 holes from the 5000m infill diamond drilling program and two diamond drill rigs are now drilling around the clock at the Koka East Zone, which lies 80-100m into the hanging wall of the Koka Main Zone.

Site preparation for drilling of the Koka South Zone is in progress with drilling expected to start shortly.