Chalice Gold Mines Limited (ASX: CHN) Update

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1 Chalice Gold Mines Limited (ASX: CHN) Update Ryan Armstrong - Research Analyst rarmstrong@taylorcollison.com.au Capital Summary Ordinary Shares 261.2m Unlisted Options 2.3m Unlisted Performance Rights 12.3m Market Capitalisation (undil.) Cash and Equiv. (m) 30/6 $47.0m ~$53.0m Share Price (25/10/2017) $ week high/low $0.235/$0.145 Share Price Graph Key Points 25 th October 2017 Speculative Buy Price Target 20c Chalice Gold (CHN) has outlined a A$7.5 million budget, including 22,000m+ drilling planned on five gold and base metals projects across five projects in Canada and Australia in FY East Cadillac Project (Quebec): 390km of Induced Polarisation (IP) survey lines have been completed, with a number of targets identified. 7,700m of diamond drilling is now underway. Six gold and copper targets have been identified at the West Pilbara Copper-Gold Project (Ashburton Mineral Field). Once the heritage surveys are completed, the plan is to do 4,000m AC and 2,500m RC drilling during the December Quarter. Directors & Key Management Tim Goyder Anthony Kiernan Stephen Quin Morgan Ball Kevin Frost Richard Hacker Steven Chadwick Major Shareholders Managing Director Non-Executive Chairman Non Executive Director Non Executive Director GM Exploration CFO Technical Manager Tim Goyder 17.2% Franklin Resources Inc. 11.9% Further exploration licenses (ELs) covering the stratigraphy of the Ashburton and Fortescue Group. Chalice will immediately embark on an assessment of the newly-secured areas to establish the presence of the basal conglomeratic unit of the Fortescue Group, which hosts recently reported gold discoveries, including those by Novo Resources, Artemis Resources and De Grey Mining. Kinebik Gold Project: 55km (lines) of Induced Polarisation (IP) surveys to be completed. This will be followed by 1,800m of diamond drilling during the December Quarter. Warrego North: proximal to previously mined high grade Warrego Mine (produced 1.3Moz 7g/t and 90kt 2.5% Cu). Further RC and diamond drilling (~1,750m) has been completed and assays are awaited. Chalice Gold (CHN) is backed by ~A$53m (as at 30 th June) in cash/investments, which equates to ~20c/share and remains our 12mth Price Target. 1 P a g e

2 Exploration Projects East Cadillac Gold Project, Quebec (Canada) Figure 1 East Cadillac Gold Project Chalice s East Cadillac Gold Project encompasses a contiguous ~16km strike length of the highly prospective Larder Lake-Cadillac fault in Quebec. It is located adjacent to the former producing Chimo gold mine at the eastern end of the prolific Archaean Abitibi greenstone belt, ~35km east of the >20 million oz Val d Or gold camp. The project includes an Indicated Mineral Resource of 4.17g/t gold for 30,200oz gold and an Inferred Mineral Resource of 4.09g/t gold for 146,300oz gold at the Nordeau gold deposit, which still has exploration upside. No modern surface geochemistry, geological mapping or structural analysis has been completed in the district. Chalice Gold has analysed historical exploration information and merged this data with results from recent exploration activities. 7,700m of diamond drilling has now commenced. West Pilbara Gold Project (Chalice earning up to 70%) Chalice Gold Limited (ASX:CHN) and Red Hill Iron Limited (ASX:RHI) reached agreement to allow Chalice to explore the highly prospective West Pilbara Gold Project located in the Ashburton Basin in WA s Pilbara region through a Joint Venture. Chalice can earn up to 70% in the gold and base metals interests through expenditure of $3m with an initial minimum commitment of $500k. A total of 130 rock-chip samples were taken across nine prospects. Some samples show strong surficial copper mineralisation consisting of malachite, chalcopyrite and chalcocite in hydrothermal breccia zones - assay results are expected to be received over the next two weeks. Other results from a reconnaissance rock chip sampling competed last quarter at the Urandy, Ken s Bore and Derek s Bore s prospects have been evaluated. Ken s Bore confirmed previous high-grade surface gold grades with assay results returning a peak gold value of 40.3g/t. Follow-up RC drilling has been planned to test high-grade surface mineralisation at depth. Rock chip results from altered fault breccia zones at Derek s Bore and Urandy returned weakly anomalous results. While the gold values are of low tenor, the rock samples displayed encouraging alteration, characteristic of hydrothermal gold systems. Once the heritage surveys are completed, the plan is to do 4,000m AC and 2,500m RC drilling. 2 P a g e

3 Figure 2 West Pilbara Gold Project (Regional Geology) Chalice has applied for further Exploration Licenses (ELs) covering the continuation of the major structures paralleling the southern and western margins of the Hamersley Basin and the stratigraphy of the Ashburton and Fortescue Group. Chalice will immediately embark on an assessment of the areas to establish the presence of the basal conglomeratic unit of the Fortescue Group. Kinebik Gold Project, Quebec (Canada) The 100% owned Kinebik Gold Project covers 187km 2, including 30km of strike of the Casa Berardi fault, which hosts Hecla Mining Company s (NYSE:HL) Casa Beradi multi-million ounce gold mine and numerous other gold occurrences (Figure 2). Chalice has identified three strong geochemical anomalies which have been prioritised with an IP survey and diamond drilling (expected to be ~1,800m). Figure 3 - East Cadillac and Kinebik Gold Project Locations 3 P a g e

4 Warrego North Project (Chalice earning up to 70%) Chalice Gold has secured a prospective copper-gold exploration opportunity adjacent to the high-grade Warrego copper-gold mine in the Tennant Creek Mineral Field of the Northern Territory after entering into a farm-in agreement with Meteoric Resources. The farm-in agreement gives Chalice the right to earn up to a 70% interest in the Project by sole funding a total of $800k in exploration expenditure. Warrego contains several high-priority exploration targets including prominent magnetic anomalies identified by aeromagnetic surveys and anomalous copper, bismuth and gold results from historical drilling. The Company s first diamond drill hole at Warrego North, WND17-001, targeted a coincidental magnetic-gravity and IP chargeability anomaly and intersected chalcopyrite in magnetite ironstones grading 1.74% copper and 0.42g/t gold between m down-hole depth. Pervasive chlorite-sericite alteration indicates the potential for an extensive hydrothermal system, which is a characteristic of IOCG deposits. Further RC and diamond drilling (~1,750m) has been completed and assays are awaited. Latitude Hill Project, WA (Chalice earning up to 70%) The Latitude Hill Project is a farm-in and joint venture with Traka Resources Limited (ASX: TKL) in the West Musgrave Province of Western Australia (Figure 4). A number of EM targets were identified (dimensions of m lengths at depths of between m) and have moderate to low conductance and a variety of orientations from steep to shallow plunging. These targets are the focus of the current ~4,000m of RC drilling Chalice Gold is now awaiting assays. Figure 4 Location of the geophysical targets at the Latitude Hill Project 4 P a g e

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