Chalice Gold Mines : Quarterly Activities Report and Cashflow

31 July 2017

• A$7.5m exploration initiative, including >22,000m drilling, commenced across five high-potential gold and base metals projects in Canada and Australia:

  • East Cadillac Gold Project, located 35km east of Val-d'Or and covering a 16km strike of the eastern part of the Larder Lake-Cadillac Fault, a district that has a gold endowment of

    +100Moz.

  • Kinebik Gold Project which covers a 30km strike of the Casa Berardi Fault, a structure that hosts multiple gold deposits.

  • 9,500m of diamond drilling planned in H2 2017 on the Canadian gold projects to test multiple targets, including extensions of the existing high-grade mineral resource and along the prospective Larder Lake-Cadillac Fault corridor, plus follow-up geochemical anomalies at Kinebik.

  • Warrego North Iron Oxide Copper-Gold ("IOCG") Project, Northern Territory - drilling planned in H2 2017 to expand the recent Parakeet copper-gold discovery.

  • Latitude Hill Nickel Project, Western Australia - 9,000m drill program in H2 2017 to test multiple Spectrem EM conductors with Voisey's Bay and Nova-Bollinger style nickel-copper discovery potential.

  • West Pilbara Gold and Base Metals Project, Western Australia - 4,000m aircore and RC drill program at three gold and copper targets in H2 2017.

• Tennant Creek-style IOCG mineralisation confirmed at the Parakeet prospect, with maiden drill hole WND17-001 returning an intercept of 8m at 1.74% Cu and 0.42g/t Au from 249m down-hole. Follow-up drilling planned for the September Quarter.
• Chalice subscribed to a share placement of 40m shares in Ausgold Limited (ASX: AUC) at an issue price of 2.5c for a total of $1.0m.
• Chalice is well positioned to expand exploration activities based on success, with cash and liquid investments of A$52.4m at Quarter-end.

1. OVERVIEW

   Chalice Gold Mines Limited ("Chalice" or "the Company") (ASX: CHN) (TSX: CXN) is pleased to report on an active Quarter, which saw it completed preparations for a A$7.5 million exploration initiative, including up to 22,000m of planned drilling, to advance several high-priority gold and base metal targets contained within its extensive Canadian and Australian project portfolio (Table 1).

   The ramp-up in exploration activities includes geophysical programs across all core projects which are aimed at defining additional targets for immediate drill follow-up. The Company is conducting extensive 3D 'Orevision' pole-dipole Induced Polarisation ("IP") surveys on its Canadian gold projects, including ˜390 line km at East Cadillac and ˜75 line km at Kinebik.

   These surveys should assist in defining targets along the prominent gold endowment trends that host known gold deposits and mineralization in the region (the Larder Lake-Cadillac and Casa Beradi faults). Geophysical surveys are also currently underway on the Company's Australian projects, include a ˜100 line km moving-loop EM survey at the Latitude Hill Nickel Project to follow up on Spectrem airborne EM conductors, three gradient array IP surveys (25 line km) at the West Pilbara Gold Project, and a detailed 3D pole-dipole IP survey (23 line km) at Warrego North.

   During the Quarter, the Company intersected Tennant Creek-style IOCG mineralisation at Warrego North in its maiden drill program with drill hole WND17-001 reporting 8m @ 1.74% Cu and 0.42g/t Au between 249-257m from interstitial and stringer (vein)-style chalcopyrite mineralisation in magnetite ironstone. A ground IP survey is currently underway over the Parakeet prospect to assist with defining drill targets in the vicinity of the WND17-001 copper-gold intersection, and elsewhere within the prospect.

   Chalice has systematically assembled a global exploration portfolio that offers outstanding potential for new discoveries in some of the best exploration addresses in the world. It is now time to evaluate the potential of this portfolio and the Company is in the enviable position of having the balance sheet and the in-house technical expertise to support a mid- tier scale exploration effort without diluting our shareholders at either the company or project level.

   Table 1: Overview and approximate timeline for proposed FY 2018 exploration program

   Project/Exploration Program	September 2017 Quarter		December 2017 Quarter
   East Cadillac Gold Project
   Sampling/trenching	Extensive surface sampling and trenching
   IP Geophysical Survey	390 line km
   Drilling	7,700m diamond
   Kinebik Gold Project
   IP Geophysical Survey	55 line km
   Drilling	1,800m diamond
   Latitude Hill Nickel Project
   MLEM Geophysical Survey	Survey 7 anomalies
   Drilling	9,000m RC
   Warrego North IOCG Project
   IP Geophysical Survey	23 line km
   Drilling	1,000m RC & diamond
   West Pilbara Gold & Base Metals Projects
   IP Geophysical Survey	25 line km
   Drilling	4,000m aircore, RC

2. EXPLORATION ACTIVITIES

East Cadillac Gold Project, Quebec, Canada

The East Cadillac Gold Project ("ECG Project") covers an area of 107km2 and is located 35km east of the 20 million oz Val- d'Or gold camp (Figure 1). With land holdings encompassing a strike length of 16km of the Larder Lake-Cadillac Fault, the most prolifically gold endowment trend in southern Abitibi, the project is situated amongst some of the region's most significant mines and is adjacent to the historical Chimo gold mine (owned by Cartier Resources (TSX: ECR)).

No modern surface geochemistry, geological mapping or structural analysis has been completed in the district. The Company has analysed historical exploration information and merged this data with results from recent exploration activities undertaken by Chalice. This compilation provides the basis for an integrated approach to exploration targeting over the Company's consolidated land position.

Figure 1. East Cadillac and Kinebik Gold Project Locations (A) and detailed East Cadillac Property and Geology Map (B)

During the Quarter, the Company completed a five-week field program which comprised 1,149 soil Mobile Metal Ion ("MMI") on a 400m x 400m and 200m x 200m grid and 64 rock-chip samples covering the entire ECG project area (Figure 2). Samples are currently awaiting analysis and results are expected to be received commencing in late July.

A detailed aeromagnetic survey at 70m line spacing and a LIDAR (Light Detection and Ranging) survey were also completed over the entire ECG project to assist in understanding the broad controls on gold mineralization and identifying favourable lithological and/or structural targets.

In addition, as a result of limited historical IP survey data, a proof-of-concept Dipole-Dipole IP 3D 'Orevision' survey was completed over the Nordeau West deposit on eight 100m spaced survey lines, which delineated a chargeability anomaly coincident with the drill indicated position of the Nordeau West deposit.

Given the positive results of this survey, the dipole-dipole P survey has been extended to survey the entire extent of Larder Lake-Cadillac (Figures 3 and 4) fault on 200m spaced lines to further assist in defining drill targets for the upcoming drilling campaign.

Figure 2. June-July 2017 surface geochemical program ECG

Figure 3. Proposed IP survey - East Block (Black rectangle), drill lines (red boxes)