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CHALICE MINING LIMITED Capital/Financing Update 2010

May 20, 2010

64649_rns_2010-05-20_471087cb-aa06-4fbf-97b7-48cdb339aaf3.pdf

Capital/Financing Update

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ASX ANNOUNCEMENT

Increased investment in London Africa

Chalice Gold Mines Limited ABN 47 116 648 956

Chalice Gold Mines Limited (ASX:CHN) advises that it has increased its investment in unlisted United Kingdom based London Africa Limited (“London Africa”) from an 11.8% interest to a 20% interest.

Chalice has subscribed for a further 1.4 million shares in London Africa at 12.5p per share for £175,000 (~A$304,000). The funds will be applied to a continuing work program currently being undertaken and managed by London Africa.

21 May 2010

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The London Africa prospecting licences cover 1,562 square kilometres in the prospective Akordat-Orata area in Eritrea and are contiguous to Chalice’s Zara Gold Project (Figure 1).

INVESTMENT HIGHLIGHTS

Feasibility study scheduled for completion by July 2010

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Medium term production potential

Large underexplored ground position with potential for discovery of additional resources

TIM GOYDER Executive Chairman

21 May 2010

www.chalicegold.com

Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +618 9322 5800 E: [email protected]

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Figure 1: London Africa Prospecting Licences in relation to the Zara Project

Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +618 9322 5800 E: [email protected]