re: Ann: Eritrea Regional Joint Venture with ... bombastic...

re: Ann: Eritrea Regional Joint Venture with ... bombastic NEWS

ASX ANNOUNCEMENT
Eritrea Regional Joint Venture with
Newmont
Chalice Gold Mines Limited ABN 47 116 648 956 23 July 2010
Chalice Gold Mines Limited (ASX:CHN) (?Chalice? ) is pleased to announce it has
agreed principle terms with Newmont Ventures Limited, a subsidiary of Newmont
Mining Corporation (NYSE:NEM) (?Newmont?) to enter into a regional venture to
explore for gold in Eritrea, East Africa covering areas outside of its Zara Gold
Project.
The proposed venture, the formation of which is subject to formal documentation,
is to be between Chalice subsidiary Keren Mining and Newmont and is for the
exploration and evaluation of regional gold opportunities in Eritrea. The area the
subject of the venture covers approximately 24,000 square kms and is currently
subject to applications for grant from the Eritrea Government.
The venture excludes Chalice?s Zara Gold Project (615 sq km), where a Feasibility
Study is currently nearing completion on the high‐grade, open pit Koka Gold
Deposit (Ore Reserve of 760,000oz @ 5.1g/t Au).
Under the proposed venture, Newmont will fund an initial US$1 million
reconnaissance exploration program taking advantage of proprietary exploration
techniques developed by Newmont and successfully utilised in other jurisdictions,
and Chalice?s extensive experience in Eritrea. At the conclusion of this program,
Newmont and Chalice will select areas to be retained in the venture, with the
interests of the parties being Newmont 75% and Chalice 25%.
The parties will then contribute to exploration on a pro rata basis, subject to rights
of dilution. An interest falling below 10% will revert to a net smelter royalty interest
of between 1% and 1.25%.
Chalice is able to acquire, in its own right, any areas the parties decide not to
pursue, with Newmont having a right of first refusal (?ROFR?) on the disposal by
Chalice of any area it takes up. The ROFR (on an area‐by‐area basis) expires
following the completion of 5,000 metres of drilling on the relevant area by Chalice.
If the venture declares a gold mineral resource of greater than 500,000 oz but less
than 1,000,000 oz and the venture does not advance the same within 18 months,
either party can carve this out from the venture and at an agreed value.
Chalice will manage the initial exploration program under a joint Newmont‐Chalice
management committee. Newmont may elect to become manager following the
initial program.
INVESTMENT HIGHLIGHTS
High grade Indicated gold
Resource (840,000 oz @
5.3 g/t gold)
Feasibility Study completed:
‐ Low cash costs of $338/oz
‐ 7 year mine life at
>100,000 oz average
production per year
Drilling at near mine Konate
Prospect in progress
Large unexplored ground
position in the Arabian Nubian
Shield
www.chalicegold.com
Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +618 9322 5800 E: [email protected]
Chalice has the right to increase its interest to 30% in venture areas if the Eritrean Government elects not
to exercise the right it has under Eritrean law to acquire a further 20% interest in the event of mining. This
additional interest can be acquired by Chalice at a pro rata cost based on previous exploration.
Commenting on the new joint venture, Chalice Managing Director, Dr Doug Jones, said: ?We are very
pleased to welcome Newmont as a partner in Eritrea. We see this venture as beneficial to both companies,
providing Newmont with our in‐country presence and knowledge base and Chalice with Newmont?s
financial strength and cutting‐edge technological expertise.
?It also reflects the growing recognition amongst the gold majors that the Arabian Nubian Shield, which
underlies a large part of Eritrea, is a highly prospective yet underexplored geological province with
tremendous potential for new gold discoveries.
?The joint venture is also in line with Chalice?s commitment to Eritrea and our ongoing engagement with the
country and its people?.