Chalice Gold Mines : 30/01/2017 - Quarterly Activities Report and Cashflow

• Binding option and farm-in term sheet executed with Richmont Mines Inc. (TSX: RIC; NYSE: RIC) to acquire a 70% interest in the Chimo Gold Project, located in the highly endowed Abitibi region of Quebec, Canada, a premier gold district hosting several multi-million ounce deposits.
• The Chimo Gold Project is located adjacent to the Nordeau Gold Project (together now named the East Cadillac Gold Project), which Chalice also secured recently under an option agreement - allowing it to consolidate a contiguous ~16km strike length along the Larder Lake-Cadillac fault, ~35km east of the >20Moz Val d'Or gold camp.
• Recent drilling by TSX-V-listed gold explorer Cartier Resources close to the boundary of the East Cadillac Gold Project has returned impressive intercepts.
• Approvals received for drilling at Warrego North Project in the Northern Territory with drilling to commence as soon as possible (weather permitting) targeting high-grade copper-gold Tennant-Creek-style mineralisation.
• Planning and approvals continue in preparation for an active drilling campaign at four projects in Canada, the Northern Territory and WA within the next 6 months.
• During the Quarter Chalice sold 14.1 million shares in First Mining Finance for gross revenue of A$11.5 million.
• Chalice remains well-funded with cash of A$40.4 million and 18.2 million shares held in First Mining Finance Corp (TSX-V: FF).
• Chalice continues to target additional high-potential opportunities globally.

Chalice Gold Mines Limited (ASX: CHN: TSX: CXN - "Chalice" or "the Company") is pleased to report on an active period in the December 2016 Quarter which saw the Company execute a further exploration joint venture resulting in the consolidation of a significant ground position along the highly endowed Larder Lake-Cadillac fault in the Abitibi gold province in Quebec, Canada.

Planning for upcoming drilling programs also continued during the quarter in parallel with the process of obtaining drilling approvals in preparation for an active period of exploration set to commence during the March and June Quarters at four of the Company's projects - East Cadillac (Quebec), Warrego North (NT), Latitude Hill (WA) and West Pilbara (WA) projects.

1. East Cadillac Gold Project (formerly Chimo Gold Project) Farm-in Agreement

   During the Quarter, Chalice took a further important step towards consolidating a significant ground position in the highly prospective Abitibi gold province in Quebec, Canada after entering into a binding option and farm-in term sheet to acquire a 70% interest in the Chimo Gold Project from Richmont Mines Inc. ("Richmont"). The Project, together with the Company's

   Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +618 9322 5800 E: info@chalicegold.com www.chalicegold.com

   recently secured Nordeau Gold Project and adjacent claims owned 100% by Chalice is now named the "East Cadillac Gold Project".

   Chalice can earn a 70% interest in the project by making total option payments of C$200,000 to Richmont and funding exploration expenditures of C$3.1 million over a period of four years (Table 1).

   Upon meeting these requirements and exercising the option, Chalice shall then grant a 1% Net Smelter Royalty ("NSR") to Richmont on claims with no pre-existing royalties. Chalice has the right to withdraw without earning an interest in the Project at any time.

   Upon completing all obligations under the term sheet and forming a joint venture, the agreement is subject to usual joint venture dilution terms, including reverting to a 1.5% NSR (0.5% NSR on certain claims with pre-existing royalties), with a right to buy back 0.5% of the royalty for C$1.0 million, upon either party diluting its Project interest to less than 10%.

   Table 1. Chimo Gold Project option and farm-in commitments

   Timing	Option Payments	Expenditure Commitment
   Upon completion of due diligence	C$25,000	-
   12 months	C$50,000	C$700,000
   24 months	C$50,000	C$700,000
   36 months 48 Months	C$65,000 -	C$700,000 C$1,000,000
   At completion	C$10,000	-
   Total	C$200,000	C$3,100,000

   The project gives Chalice a significant contiguous land position along the Larder Lake-Cadillac fault, and a strategic foothold in the most prolific gold endowment trend in Canada.

   The Abitibi region of Canada is a premier gold district hosting multi-million ounce gold deposits that are preferentially sited on well-defined structural breaks, of which the Larder Lake-Cadillac fault hosts approximately 100Moz of gold in past production and current mineral resources (Figure 1).

   Figure 1. Location map of Chimo Gold Project in the Abitibi Sub-Province of Canada.

   The East Cadillac Gold Project is located ~35km east of Val d'Or and comprises approximately 6,725Ha of claims in two main blocks along strike to the east and west of the former Chimo gold mine (Figure 2). Historical exploration in the area in the

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   1940's led to the discovery of the Chimo gold deposit, which was subsequently developed in the 1960's and has produced ~ 380,000oz of gold over three phases of mining activity - the latest being 1989-1997.

   The historical Chimo gold mine is currently held by Cartier Resources Inc. (TSX-V: ECR) which announced on 18th January 2017 the results of recent exploration drilling which tested exploration targets including a strike extension east of the historical mining areas. Cartier Resources reported drill results which included 15.0m @ 3.2g/t Au (includes 4.0m @ 9.9g/t Au), 9.0m

   @ 1.5 g/t Au and 1.0m @ 8.6 g/t Au..

   The easternmost drill hole is located close to the boundary of the claims comprising the Company's East Cadillac Gold project and demonstrates the broader potential to locate prospective gold trends with the Company's tenements.

   The Company's East Cadillac Gold project hosts the Nordeau West and Nordeau east Au deposits as well as numerous gold prospects along the interpreted trend of the Larder Lake Cadillac fault. Exploration work undertaken to date has highlighted targets to the west of the historical Chimo mine including the Simon West target, which is in a similar geological setting as the historical Chimo Mine and the Nordeau West deposits to the east.

   No modern surface geochemistry, geological mapping or structural analysis has been completed in the district for decades. The Company will commence a review of historical exploration results and merge the Globex and Richmont databases to allow an integrated approach to exploration targeting over the Company's consolidated land position.

   An extended fall field season in late 2016 allowed for the completion of reconnaissance surface and core sampling on part of the Project. Historical reports and digital data were obtained from the two property vendors and from online government digital records. An updated 43-101 report was initiated in late 2016 and will be completed in the March Quarter. All historical and new field data is being merged into a single database with 3D modelling to follow in early 2017.

   Proposed follow-up work will include high quality helicopter aeromagnetic and VLM-EM surveys and reconnaissance diamond drilling towards the end of the March Quarter, to be followed by further comprehensive surface mapping, sampling, stripping and additional diamond drilling later in the year.

   Figure 2. Local geology and tenure of the consolidated East Cadillac Gold Project.

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2. Kinebik Gold Project, Quebec (Chalice 100%)

   Data integration began during the Quarter, incorporating soil, rock and spectral data collected in the northern summer field season 2016 and combining it with historical data. Preliminary interpretations from the property-wide soil sampling program has identified a pathfinder element gradient that includes a proximal, oxidized signature with anomalous Mo, Bi, a distal, reduced signature containing anomalous Sb, As & W, and areas with anomalous Au adjacent to the Casa Berardi fault. Additional data integration and interpretation is in progress.

   Proposed follow-up work will include high quality geophysical surveys, in-fill surface sampling and reconnaissance drilling of existing anomalies during 2017.

3. Warrego North Joint Venture, NT (Chalice earning up to 70%)

The Warrego North Project is a farm-in and joint venture with Meteoric Resources Limited (ASX: MEI) in the Tennant Creek Mineral Field in the Northern Territory of Australia.

During the Quarter, Chalice obtained all necessary approvals for proposed drilling activities at the Warrego North Project late in the quarter and drilling is now anticipated to commence as soon as possible at the end of the northern Australian wet season (March Quarter), weather permitting.

Chalice plans to undertake an initial 2-hole (800m) Reverse Circulation/diamond drilling program to test the Parakeet targets at depth (~300m depth) as shown in Figure 3. Drilling is targeted to test magnetic and gravity inversion models where these are interpreted to intersect with the apparent trend of mineralisation as defined from previous intersections of low-grade copper, bismuth and/or gold.

The target for the proposed drill holes is high-grade copper-gold-bismuth of the Tennant Creek-style ironstone-hosted deposits. However, it has been demonstrated from recent gold discoveries in the Tennant Creek Mineral Field that hematite ironstones are also important host rock (e.g. Edna Beryl, Emmerson Resources) and these deposits have a weak to non-magnetic expression.

The Company will evaluate the potential for hematite ironstones within the broader project area.

Figure 3. Parakeet target showing previous and proposed drilling and interpreted mineralised structure on a TMI image.

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