CHALICE MINING LIMITED — Interim / Quarterly Report 2007

Oct 30, 2007

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Quarterly Report for the period ended 30 September 2007

Yandeearra

A detailed mapping and sampling program was completed at the Nevada Prospect to follow up on anomalous gold and uranium mineralisation in reconnaissance rock-chip sampling undertaken in the previous quarter.

Gnaweeda

Teck Cominco Australia Pty Ltd plan to undertake a deep RC drilling program to further test for strike and depth extensions to known gold mineralisation at the Turnberry and St Anne’s Prospects.

Corporate

Chalice Gold Mines Limited (‘Chalice Gold Mines’ or ‘the Company’) now has cash at bank of approximately $8.9 million following the sale of 3.5 million Avoca Resources Limited (Avoca) shares for net proceeds of $6.9 million.

2 million, $1.79, 3-year unlisted Avoca options have been retained, along with the right to receive a further $0.8 million of Avoca shares upon completion of the second tranche of the sale.

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Andrew Bantock Executive Chairman 31 October 2007

Quarterly Report – 30 September 2007

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1.0 AVOCA RESOURCES LIMITED SHARES/OPTIONS

Chalice Gold Mines has sold 3.5 million Avoca Resources Limited (Avoca) shares for net proceeds of $6.9 million which represents a 38% premium to the original Avoca transaction value of $1.43 per share.

Following the sale, the Company holds approximately $8.9 million of cash, together with 2 million, $1.79, 3-year unlisted Avoca options and the right to receive a further $0.8 million of Avoca shares upon completion of certain tenement registration matters associated with the sale of tenements to the south of the Chalice Gold Mine.

2.0 YANDEEARRA PROJECT (100% CHALICE GOLD MINES LIMITED)

Nevada Prospect

During the period, a detailed mapping and sampling program was completed at the Nevada Prospect to follow up on anomalous gold and uranium mineralisation in reconnaissance rockchip sampling undertaken in the previous quarter.

A total of 24 rock-chip samples (samples 114536 to 114559) were taken from the prospect area. Assay results are detailed in Table 1.

Six rock-chips were collected from the area of a discrete radiometric and aeromagnetic anomaly which has been interpreted to represent a volcanic vent or feeder for the voluminous Mt Roe Basalts present in the area. Rock-chip sampling in the volcanic vent area returned the best gold results of 1.91g/t Au and 1.57g/t Au from sample numbers 114543 and 114541 respectively. The best uranium result was 45ppm U from sample number 114538. The gold mineralisation appears to be preferentially associated with clasts of ferruginous quartz pebble conglomerate within the volcanic vent area.

Twelve rock-chip samples were also taken to further test the extent of gold mineralisation in an area of gold in soil anomalism, which is located approximately 700m to the north of the volcanic vent. Rock-chip sampling of the conglomerate matrix adjacent to the gold in soil anomaly returned the best result of 215ppb Au.

It appears that the soil anomaly is most likely derived from detrital gold in the conglomerates of the Hardey Formation. Numerous old dryblower workings on creeks draining the conglomerates support this conclusion. The conglomerates are extremely immature comprising angular and rounded, polymict clasts ranging in size from sub-centimetre scale to in excess of 1 metre in diameter.

Additional sampling targeting chert horizons and several gossanous zones within basalts returned a best result of 164ppb Au.

Uranium assays are still pending from the rock-chip samples taken in the area of gold in soil anomalism. Once all assays are received the results will be compiled to determine the significance of the mineralisation defined to date.

A geology plan of Nevada Prospect showing the location of the recent sampling is shown in Figure 1.

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Quarterly Report – 30 September 2007

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Sample Number	Easting (GDA 94)	Northing (GDA94)	Description	Au Average (ppb)	Au 1 (ppb)	Au 2 (ppm)	U (ppm)
114536	629123	7652209	Chert	164	164
114537	629101	7652198	Chert	25	25
114538	628015	7651547	Volcanic vent	4	4		45.24
114539	628002	7651532	Volcanic vent	69	69		28.2
114540	627983	7651513	Volcanic vent	46	46		30.23
114541	628022	7651545	Volcanic vent	1567	1567		4.39
114542	628069	7651567	Volcanic vent	57	57		18.37
114543	628073	7651564	Volcanic vent	1911	1833	1.99	8.77
114544	628592	7652525	Conglomerate	32	32
114545	628442	7652520	Conglomerate	8	8
114546	628119	7652266	Conglomerate	6	6
114547	628420	7652029	Conglomerate	215	230	0.20
114548	628427	7652019	Gossan-Basalt	10	10
114549	628105	7651881	Gossan-Basalt	8	8
114550	628388	7652018	Conglomerate	4	4
114551	628321	7651996	Conglomerate	4	4
114552	628021	7652004	Conglomerate	5	5
114553	628185	7651899	Sandstone	6	6
114554	628181	7651929	Conglomerate	12	12
114555	628255	7652027	Conglomerate	16	16
114556	628295	7652014	Conglomerate	5	5
114557	628617	7652492	Conglomerate	7	7
114558	628600	7652425	Conglomerate	3	3
114559	628572	7652340	Conglomerate	3	3
Analyses on 2 - 3kg surface rockchip samples by Genalysis Laboratory Services, Perth. Gold assays were carried out by Method FA25/MS to a detection limit of 1 ppb. Gold repeats were carried out by Method FA25/AASF to a detection limit of 0.01ppm. Uranium assays were carried out by Method A/MS to a detection limit 0.01 ppm (U).

Table 1: Rock Chip Sample Results – Nevada Prospect

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Quarterly Report – 30 September 2007

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Figure 1: Geology Plan – Nevada Prospect

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Quarterly Report – 30 September 2007

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3.0 GNAWEEDA (100% CHALICE GOLD MINES LIMITED – TECK COMINCO EARNING 70% INTEREST)

During the quarter, no exploration field work was completed at the Gnaweeda Project.

Chalice Gold Mines’ joint venture partner, Teck Cominco, has advised that a further five deep RC holes (5 x 300m) are planned for the Turnberry Prospect to test for strike and depth extensions to known gold mineralisation, while a single RC hole is planned to test beneath anomalous historical drill results at the St Anne’s Prospect, 3km south of Turnberry, where only limited drilling has been done to date. The drilling program is expected to commence in late October.

4.0 WILGA (100% Chalice Gold Mines Limited)

No work was undertaken during the period.

The information in this report that relates to Exploration Results is based on information compiled by Mr Bryan Alexander, a full-time employee of Archaean Exploration Services Pty Ltd, who is a Member of the Australian Institute of Mining and Metallurgy. Archaean Exploration Services Pty Ltd consults to Chalice Gold Mines Ltd. Mr Alexander has sufficient experience in the field of activity being reported to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, and consents to the release of information in the form and context in which it appears here.

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