Chalice Gold Mines : Quarterly Activities Report and Cashflow

• Sale of the Cameron Gold Project in Canada to TSX-V listed First Mining Finance Corp for 32.26M shares in First Mining, unlocking significant value for the Company.
• Chalice's investment in First Mining had a market value of ~A$25M at 30 June 2016. Therefore, at financial year-end, Chalice had net cash and investments totalling ~A$63M (or 22c per share).
• At closing on 26 July 2016, the First Mining shares were worth ~A$35M, A$10M more than on 30 June.
• Subsequent to Quarter-end, Chalice commenced a share buy-back for up to 28.3M shares within 12 months.
• Low-cost and potentially high-impact exploration initiative continues to ramp-up with drilling to commence as soon as possible at the Warrego North project in the Tennant Creek Mineral Field of the Northern Territory.
• Significant ground positions secured in two of the world's premier gold provinces with further applications and claims staked in the Yilgarn Craton of Western Australia and the Abitibi Terrane in Canada.
• Agreements executed for the sale of two non-core exploration projects, Ardeen and Gnaweeda.
• Chalice continues to target additional high-potential opportunities globally.
• Appointment of respected Australian mining executive Morgan Ball as a non-executive Director.

Chalice Gold Mines Limited (ASX: CHN: TSX: CXN - "Chalice" or "the Company") is pleased to report on a successful quarter which saw the Company complete the sale of its 100%-owned Cameron Gold Project ("Cameron" or "the Project") in Ontario, Canada to First Mining Finance Corp (TSX-V: FF) for 32.26 million shares. Chalice retains its exposure to the Cameron Project through its shareholding in First Mining, while maintaining a strong cash balance of approximately A$36 million to pursue other opportunities.

Chalice considers that First Mining would be better placed to unlock the value of the Cameron Project given its domicile in North America, its business model and the experience of its board and key management. In addition to retaining an indirect interest in Cameron, Chalice shareholders gain exposure to First Mining's diversified portfolio of advanced gold exploration projects in central and eastern Canada, including the Springpole and Pickle Crow projects in Ontario, the Duquesne project in Quebec, and the Hope Brook project in Newfoundland.

The sale of the Cameron Project has unlocked significant value for the Company, with the First Mining shares having a market value of approximately A$25 million at 30 June 2016, and approximately A$35 million on 26 July 2016.

In addition to its primary objective of acquiring a significant resource project, Chalice continued to progress low-cost and potentially high-impact exploration initiatives during the quarter including a farm-in agreement with Meteoric Resources

at the Warrego North project and the application and staking of significant ground positions in two of the world's premier gold provinces, the Yilgarn Craton in Western Australia and the Abitibi Terrane in Canada.

1. Sale of the Cameron Gold Project (Chalice 100%)

   During the Quarter, the Company sold the Cameron Gold Project in Ontario, Canada, to First Mining Finance Corp ("First Mining"), a mineral property holding company listed on the TSX-V (TSX-V:FF) for 32,260,836 common shares which holding now represents approximately 6.5% of First Mining.

   Chalice has also a 1% Net Smelter Return royalty over certain exploration licences within the Cameron Gold Project which are not encumbered by pre-existing royalties.

   The shares in First Mining are subject to a statutory resale restriction in Canada for a four-month period from 9 June 2016. In addition, Chalice agreed to restrict the sale of the shares to not more than approximately one eighth of the total shares per month over the eight months following ending of the escrow period unless the sale is in a single block to a purchaser acceptable to First Mining.

2. Warrego North Farm-in Agreement

   During the Quarter, Chalice secured a prospective copper-gold exploration opportunity adjacent to the historic 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 NL (ASX: MEI) ("Meteoric") owner of Warrego North copper-gold project.

   The farm-in agreement gives Chalice the right to earn up to a 70% interest by sole funding $800,000 in exploration expenditures. Chalice may earn an initial 51% by sole funding $400,000. Chalice is required to drill at least one diamond drill hole of at least 300m within 12 months before it can withdraw.

   Figure 1: Location map of Warrego North Project (EL23764) in the Tennant Creek Mineral Field

   The project contains several high-priority exploration targets that include prominent magnetic anomalies identified by aeromagnetic surveys, and anomalous copper, bismuth and gold results from historical drilling.

   Chalice plans to undertake an initial 2-hole (800m) Reverse Circulation/diamond drilling program as soon as relevant government approvals are obtained to test the Parakeet target at depth (~300m depth) as shown in Figure 2. Drilling is

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   targeted to test an overlapping magnetic and gravity inversion model where it is interpreted to intersect an apparent trend of anomalous low-grade copper-gold-bismuth mineralisation associated with typical Tennant Creek-style iron oxide copper gold alteration as defined from previous RC drilling results.

   Figure 2: Parakeet target showing previous and proposed drilling and interpreted mineralised structure on a TMI image.

3. New Exploration Initiative

As part of the Company's strategy of identifying low-cost and potentially high-impact exploration opportunities in high- quality jurisdictions, Chalice has recently applied for extensive tenement positions in two of the world's leading gold provinces, the Yilgarn Craton of Western Australia and the Abitibi terrane of the Superior Craton, eastern Canada.

This exploration initiative is consistent with one of Chalice's core strategies, which is to identify and pursue innovative and low-cost generative exploration opportunities with the potential to deliver significant upside. These opportunities, including the Warrego North farm-in deal, can be advanced without detracting from the Company's focus of acquiring a substantial resource asset.

Yilgarn Craton, Western Australia

During the Quarter, the Company applied for a further seven Exploration Licenses ("ELAs") and 10 Prospecting Licenses ("PLAs") in the Western Australian goldfields. To date, the total number of tenement applications made under the program is 13 ELAs and 13 PLAs which are grouped in 10 projects for a total of 1,479.9km2 under application in three main regions in the Yilgarn Craton as shown in Figure 3.

While this program is generative in nature, Chalice believes it offers good potential to leverage off the compilation of historical digital exploration data from these areas which the Company has access to. Chalice is reviewing previous exploration on the areas covered by the tenement applications with a view to being able to initiate field work when the applications are granted.

The tenement applications cover areas with indications of gold anomalism in the surface sampling datasets, and inferred extensions and trends in other WAMEX open file GIS datasets - including geology, aeromagnetic, regolith mapping and digital drill collar-only location datasets.

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Figure 3: Location plan of Chalice Gold Mines Ltd tenement applications, Yilgarn Craton, Western Australia.

Abitibi Terrane, Québec, Canada

The Company has staked a contiguous block of 303 claims totaling 16,930 Ha and extending over a 30km strike length of the Casa Berardi fault in the northern Abitibi terrane of the Superior Province. The land package is located between several significant gold deposits and was selected as an area which is considered prospective for orogenic gold mineralisation.

The geological attributes of this part of the Casa Beradi faults are interpreted to indicate a prospective setting for orogenic gold mineralisation include: (i) a significant bend in a late tectonic fault, (ii) preserved Timiskaming-type sediments in one or more fault panels, (iii) proximity to late tectonic intrusions; and (iv) proximity to historical gold deposits and occurrences.

Community engagement protocols are underway and field crews have begun mobilising ahead of the planned commencement in late July of a program of first-pass reconnaissance surface mapping, rock chip sampling and a soil sampling program to be undertaken over the coming months.

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