re: Ann: Option to Acquire Dragon Mining'... halice Gold Mines...

re: Ann: Option to Acquire Dragon Mining'... halice Gold Mines has confirmed plans to acquire an option to buy the remaining 20 per cent of the Zara gold project in Eritrea it does not already own from joint venture partner Dragon Mining.

Under the terms of the $16.2 million cash and scrip deal foreshadowed in The West Australian today, Chalice can exercise the option before June 30 by paying Dragon $8 million and issuing it with two million Chalice shares ($800,000 at current market value).

Chalice has agreed to pay Dragon a further $4 million on delineation of a one million ounce economically mineable gold ore reserve at the project, within the currently held joint venture licences.

Chalice shares issued to Dragon would be placed in escrow for 12 months.

Dragon would be relieved of any debt to Chalice at the completion of the bankable feasibility study, estimated to be $3.4m.

Dragon, which is focused on gold projects in Sweden and Finland, said the deal would further enhance its cash position.

The current JORC compliant resource estimate for the Koka deposit within the Zara Project is 944,000 ounces gold at 5.8 grams per tonne.

Chalice executive chairman Tim Goyder said the option gave Chalice a valuable opportunity to increase its exposure to the enormous potential at the Zara Project.

"The option comes at a time when we are moving full-steam ahead with the feasibility study on the Koka deposit and the commencement of drilling at the nearby and parallel Koka East target," he said.

Upon settlement, Chalice will own 100 per cent of the Zara exploration licences with the Eritrean Government being entitled to a 10 per cent free carried interest on the grant of a mining lease.

The Government will also have the right to purchase a further interest, up to 30 per cent, based on an independently determined value.

Chalice acquired its stake in Zara through last year's merger with Sub-Sahara Resources and Mr Goyder has made no secret of the group's desire to acquire 100 per cent of the project.

Chalice said it had engaged Thomas Weisel Partners as its corporate adviser.

The company also confirmed it was considering listing on the Toronto Stock Exchange.
Chalice shares were up half a cent, or 1.24 per cent, to 41 cents at 7.25am while Dragon shares had risen 0.4 cents, or 4.82 per cent, to 8.7 cents.