ASX Announcement 2 October 2017

ABN 47 116 648 956

West Pilbara Gold Project: New Gold and Base Metal Drilling Programs to Commence as Chalice Expands its Tenement Holding to encompass prospective basal conglomerate targets Newly-secured tenements to be reviewed for presence of basal conglomeratic unit of Fortescue Group

Highlights

  • Up to 6,500m of RC and Aircore drilling to commence in early October at the West Pilbara Gold Project following encouraging results from copper and gold rock chip sampling of up to 29% Cu and 9.5 g/t Au.
  • Chalice has applied for further Exploration Licenses (881 km2) (Table 1) 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 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.
  • Following these applications, the West Pilbara Project, which is located ~160km south- southwest of Karratha, now has a total area 2,271 km2.

Chalice Gold Limited (ASX:CHN, TSX:CXN) is pleased to advise that it will shortly commence a new Reverse Circulation (RC) and Aircore drilling program at its West Pilbara Gold Project in Western Australia, having received all required clearances and permits. The West Pilbara Project is subject to an earn-in and joint venture with Red Hill Iron (ASX: RHI).

The proposed drill program, which is scheduled to commence in early October 2017, will follow-up on gold targets at Wyloo East, Urandy, Kens Bore and Derek's Bore and on copper targets at Red Hill and Wyloo West (Figure 1).

Drill programs have been planned following a review of the encouraging gold and copper rock chip results previously reported (see ASX Quarterly Activities Report dated 31 July 2017) and the completion of gradient array Induced Polarisation ("IP") geophysical surveys at the Red Hill, Derek's Bore and Wyloo West prospects. A total of up to 4,000m of aircore and 2,500m of RC drilling will be completed.

Gradient array IP surveys (25.8 line km) have been completed across two copper targets (Red Hill and Wyloo West) and one gold target (Derek's Bore) to follow up high grade surficial copper and gold results in rock chips. Higher grade rock chip results hosted within hydrothermal quartz breccias (Figure 2) at Red Hill and Wyloo West typically range between 1 to 10% Cu with a maximum result of 29% Cu from the Red Hill prospect, while surface gold in brecciated rock chips at Derek's Bore peak at 9.48g/t Au and 12.3 g/t Au at Kens Bore (Table 2).

Several priority IP chargeability anomalies (>25 v/mV) have been defined at the Red Hill prospect and will be the focus of systematic RC drilling to further assess these anomalies. Several lower priority (

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

No significant chargeability targets were identified at Derek's Bore although the anomalous rock chip results are coincidental with a well-defined zone of low chargeability, the significance of which remains uncertain but may be caused by alteration. A small RC program is designed to further assess the anomaly.

First-pass RC drilling has also been planned at the Ken's Bore prospect, which hosts high-grade gold in limonitic rock chips up to 12.3 g/t Au within a well-defined (250 x 250m) gold-in-soil anomaly.

In addition to the targeted RC drill programs described above, regional AC programs (240 holes) have been planned along the greater Wyloo West and Urandy gold trends and the B2 copper + zinc trend. These programs are regional in nature with the primary objective of geologically and geochemically vectoring into targets of potential interest.

Increased Land-holding

Based on the encouraging exploration results received to date, Chalice has applied for 10 Exploration Licenses (Table

1) covering a total area of 881.3 km2 located to the south of Pannawonica in the West Pilbara (Figure 1).

The tenements, to the west and south of the existing West Pilbara Project area, cover 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 application area to confirm (or not) the presence of the basal conglomeratic unit of the Fortescue Group. This highly prospective unit hosts some of the recently reported gold discoveries in the Pilbara by companies including Novo Resources (TSX-V: NVO), Artemis Resources (ASX: ARV) and De Grey Mining (ASX: DEG). In addition, Chalice's tenement applications are adjacent to Novo Resources' tenements in the Wyloo Dome area.

Figure 1: West Pilbara Project Location, Tenure and Geology Map

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Figure 2: Hydrothermal Breccia with malachite and chalcocite mineralisation at Wyloo West Prospect

Table 1: Tenement application numbers and area

Tenement Application

Blocks

Area km2

E08/2951

44

121

E08/2952

137

376

E08/2953

102

280

E47/3830

1

2.7

E47/3831

10

27.5

E47/3832

8

22

E47/3833

11

30.2

E47/3834

4

11

E47/3835

3

8.2

E47/3836

1

2.7

881.3

Background - West Pilbara Project

The 1,390km² West Pilbara Project is located approximately 160km south-southwest of Karratha and has contiguous coverage of 90km of strike of prospective geology along the contact between the Ashburton and Hamersley Basins, referred to as the Paraburdoo Hinge Zone and is defined by regional fault/shear zones.

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The region is under-explored for both gold and base metals and the south-west boundary of the property is approximately 8km from Northern Star Resources' (ASX: NST) multi-million-ounce Paulsens gold mine. The project (excluding the newly secured tenement applications above) is subject to a farm-in and joint venture whereby Chalice can earn up to a 51% interest in the non-iron rights from Red Hill Iron Limited (ASX: RHI) (and up to 70% if Red Hill elects not to contribute at this stage).

Table 2: Rock Chip Sampling Results - all results reported above >0.1% Cu and 0.1ppm Au.

Sample ID

Prospect

MGA East

MGA

North

Cu (%)

Au (ppm)

Ag (ppm)

111468

Wyloo East Target

427898

7529842

0.1

0.00

0.0

111481

Wyloo East Target

424130

7537029

0.1

0.00

0.1

111508

Wyloo West Target

406579

7538646

14.1

0.07

28.2

111511

Wyloo West Target

406516

7538633

1.0

0.00

1.8

111513

Wyloo West Target

406504

7538527

5.5

0.01

2.9

111514

Wyloo West Target

406506

7538526

0.6

0.00

0.5

111515

Wyloo West Target

406502

7538524

5.3

0.02

4.6

111516

Wyloo West Target

406498

7538521

4.5

0.02

4.4

111517

Wyloo West Target

406491

7538517

3.2

0.10

6.5

111518

Wyloo West Target

406489

7538511

13.7

0.05

12.2

111519

Wyloo West Target

406441

7538487

0.2

0.00

0.3

111520

Wyloo West Target

406476

7538527

3.1

0.10

2.0

111521

Wyloo West Target

406472

7538719

0.6

0.00

0.5

111523

Wyloo West Target

406749

7538803

0.2

0.01

0.2

111527

Wyloo West Target

406697

7538599

29.0

0.04

229.0

111530

Wyloo West Target

406398

7539419

1.6

0.01

12.2

111534

Wyloo West Target

405846

7540152

0.0

0.17

0.1

111540

Kens Bore

414171

7557994

0.1

12.30

0.2

111553

B2 Target

420685

7529759

0.3

0.06

0.8

111554

B2 Target

420802

7529746

0.1

0.00

0.9

111565

Derek's Bore

409910

7571246

0.1

9.48

17.1

111580

G1

407671

7580749

0.0

1.25

1.4

TIM GOYDER

Managing Director

For further information, please contact: Tim Goyder, Managing Director

Chalice Gold Mines Limited Telephone +618 9322 3960

2 October 2017

For media inquiries, please contact: Nicholas Read

Read Corporate

Telephone +618 9388 1474

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Chalice Gold Mines Limited published this content on 02 October 2017 and is solely responsible for the information contained herein.
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