ASX ANNOUNCEMENT Chalice confirms high gold prospectivity over 10km of strike Chalice Gold Mines Limited ABN 47 116 648 956 22 July 2010 Chalice Gold Mines Limited (ASX: CHN) is pleased to advise that the results from a recently completed regional sampling program from within the Zara Project in Eritrea have returned compelling results. The highly promising finding stems from samples collected from streams that lie along strike from the flagship Koka Gold Deposit (?Koka?). The streams emanate from several major drainages, highlighting pronounced gold anomalism over a strike length of at least 10km. These anomalies are not related to previously known gold occurrences (Figure 1), highlighting the significant prospectivity for further gold deposits at the Zara Project. A feasibility study released last week on the development of Koka found it would be robust and viable based on production of 104,000 ounces of gold a year over seven years. Cash costs would average US$338 an ounce. Further near mine discoveries will significantly add to the already solid economics of Koka. In the latest results, a total of 59 samples were collected as part of a Bulk Leach Extractable Gold (BLEG) drainage sampling program completed over the Zara North and Zara South Prospecting Licenses. Six samples contained greater than 10 parts per billion (ppb) gold, with the best sample returning 362ppb (Table 1) gold. A further seven samples gave values of between five and 10ppb gold, a level still considered anomalous. The high-grade nature of these samples and their value as an indicator of extensive gold mineralisation is highlighted by the fact that similar sampling conducted around the Koka deposit returned a highest value of 75ppb gold. The highest value of 362ppb from the recent program also represents the highest value obtained to date from all of the Zara Project BLEG samples and is an order of magnitude higher than most of those obtained in the lead up to the Koka discovery. Significantly, the exploration potential is enhanced by the fact that this BLEG program has been the first to sample the areas showing anomalous results. 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] BLEG samples greater than 10ppb gold BLEG samples 5 to 10 ppb gold Sample number and PL Value/ppb Sample number and PL Value/ppb 540483 Zara South 14.8 540462 Zara South 7.36 540490 Zara North 11.36 540475 Zara South 9.16 540491 Zara North 52.8 540482 Zara South 6.18 540492 Zara North 82.4 540489 Zara North 5.74 540493 Zara North 362.0 540499 Zara North 6.4 540494 Zara North 61.4 540505 Zara North 9.1 540506 Zara North 6.14 Table 1: Significant BLEG results for Chalice Gold Zara Project The highest gold values from the BLEG samples show clustering in the northern drainages of Zara North, highlighting the substantial exploration potential for the areas upstream of the samples. Importantly, the best values have been obtained from streams draining from the same north-south trending package of rocks that hosts Koka. A program of geological mapping, rock chip sampling and infill BLEG stream sediment sampling will now be undertaken upstream of the anomalous values to identify the sources of the anomalies.
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