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Chalice Signs Non-Binding Letter of Intent for Zara Gold Project, Eritrea

December 12, 2011

Symbol:  ASX: CHN TSX:  CXN
Shares outstanding:    250 million
Fully diluted: 258 million

PERTH, Western Australia, Dec. 12, 2011 /PRNewswire/ – Chalice Gold Mines (ASX: CHN; TSX: CXN) advises that it has signed a Letter of Intent with an entity setting
out a proposal for terms upon which that entity may acquire Chalice’s
interest in the Zara Gold Project.

The proposal is non-binding and incomplete and the directors advise that
no assurance can be given that any binding transaction will result.

The directors expect to be able to advise of any further developments
within the next 14 days.

About Chalice
Chalice Gold Limited is an exploration and development company which
owns a 60% beneficial interest in the high grade, open-pittable Koka
Gold Deposit and a substantial, largely unexplored, land package in
Eritrea.   The Koka Gold Deposit consists of an “in-pit” JORC and NI
43-101 compliant Indicated Mineral Resource of 5.0 million tonnes
grading 5.3 grams of gold per tonne, containing 840,000 ounces of gold.
This Mineral Resource includes a Probable Mineral Reserve of 4.6
million tonnes grading 5.1 grams of gold per tonne, containing 760,000
ounces of gold. The Company is focused on developing the Koka Gold
Deposit into a low cost gold mine which is expected to produce 104,000
ounces of gold per year over a 7 year mine life at an average cash cost
of US$338/oz gold (refer to the 43-101 Technical Report on the Koka
Gold Deposit, Eritrea dated 27 July 2010).  Chalice also holds a
substantial strategic ground position of 1,372 km
(2) consisting of licences along strike of the Koka Gold Deposit, and
proximal to Nevsun’s Bisha Mine. These exploration concessions host
numerous, high potential, early and advanced stage gold and base metal
exploration targets.  Chalice is undertaking a systematic exploration
effort on these exploration concessions with the aim of discovering
significant new deposits.

Forward Looking Statements
This document may contain forward-looking information within the meaning
of Canadian securities legislation and forward-looking statements
within the meaning of the United States Private Securities Litigation
Reform Act of 1995 (collectively, forward-looking statements).  These
forward-looking statements are made as of the date of this document and
Chalice Gold Mines Limited (the Company) does not intend, and does not
assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance
and reflect Company management’s expectations or beliefs regarding
future events and include, but are not limited to, statements with
respect to the estimation of mineral reserves and mineral resources,
the realization of mineral reserve estimates, the likelihood of
exploration success, the timing and amount of estimated future
production, costs of production, capital expenditures, success of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance
coverage.  In certain cases, forward-looking statements can be
identified by the use of words such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates” or “does not anticipate”, or
“believes”, or variations of such words and phrases or statements that
certain actions, events or results may, could, would, might or will be
taken, occur or be achieved or the negative of these terms or
comparable terminology.  By their very nature forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements.  Such factors include, among others, risks related to
actual results of current exploration activities; changes in project
parameters as plans continue to be refined; future prices of mineral
resources and gold; possible variations in ore reserves, grade or
recovery rates; accidents, labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities; imposition of trade embargos or sanctions; as well as those
factors detailed from time to time in the Company’s interim and annual
financial statements and management’s discussion and analysis of those
statements, all of which are filed and available for review on SEDAR at
sedar.com.  Although the Company has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated,
estimated or intended.  There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements.

Accordingly, readers should not place undue reliance on forward-looking
statements.

Cautionary Note

For readers to fully understand the information in this news release,
they should read the Technical Report for the Koka Gold Deposit dated
July 27,  2010  (available at www.chalicegold.com) in its entirety, including all qualifications, assumptions and
exclusions that relate to the information set out in this news release
which qualifies the Technical Information.  Readers are advised that
mineral resources that are not mineral reserves do not have
demonstrated economic viability.  The Technical Report is intended to
be read as a whole, and sections should not be read or relied upon out
of context.  The technical information in the report is subject to the
assumptions and qualifications contained in the Technical Report. 

SOURCE Chalice Gold Mines Limited


Source: PR Newswire