CHALICE MINING LIMITED — Interim / Quarterly Report 2020

Mar 9, 2020

==> picture [114 x 94] intentionally omitted <==

Chalice Gold Mines Limited ABN 47 116 648 956

Half Year Report 31 December 2019

==> picture [595 x 429] intentionally omitted <==

Chalice Gold Mines Limited Half Year Report

Contents

Directors’ Report	1
Auditor’s Independence Declaration	8
Condensed Consolidated Statement of Comprehensive Income	9
Condensed Consolidated Statement of Financial Position	10
Condensed Consolidated Statement of Changes in Equity	11
Condensed Consolidated Statement of Cash Flows	12
Notes to the Condensed Consolidated Financial Statements	13
Directors’ Declaration	22
Independent Auditor’s Review Report	23

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

Your directors submit the financial report for Chalice Gold Mines Limited (‘Chalice’ or ‘the Company’) and its subsidiaries (together ‘the Group’) for the half year ended 31 December 2019. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

DIRECTORS

The names of directors who held office during or since the end of the half year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Timothy R B Goyder	Executive Chairman
Alexander C Dorsch	Managing Director
Morgan S Ball	Lead Independent Non-executive Director
Stephen P Quin	Independent Non-executive Director

REVIEW OF OPERATIONS

1. Overview

Chalice Gold Mines Limited had a productive first half of the year with a significant exploration program underway in the highly prospective Bendigo gold district of Victoria and several other reconnaissance level exploration programs completed in Western Australia.

At the time of reporting, two rigs are drilling at the flagship Pyramid Hill Gold Project in Victoria, with three greenfield targets significantly upgraded during the half year. Chalice is well positioned with a large >5,000km² land holding surrounding two world-class gold deposits, including the high-grade Fosterville Gold Mine owned by Kirkland Lake Gold Ltd (TSX/NYSE: KL and ASX: KLA). The project will remain the key focus for exploration in the year ahead.

Chalice has also been exploring the King Leopold Nickel Project , a district-scale 1,800km[2 ] land holding in the frontier west Kimberley region of Western Australia. King Leopold represents a new nickel exploration opportunity in a frontier province which is attracting the attention of major mining companies. Exploration is expected to recommence in mid- 2020 once access is regained.

Chalice remains fully funded with a strong working capital and investments balance of ~$28M (or ~$0.10 per share), including $9.7M in cash at 31 December 2019.

2. Exploration

2.1 Pyramid Hill Gold Project, Victoria (100% owned)

The Company commenced its second phase of reconnaissance air-core (AC) drilling in late September 2019. This 250 hole, ~25,000m program was designed to refine the anomalous gold zones identified in Phase 1 (completed in June 2019).

Highly encouraging results have been received throughout the program, with three large targets (Karri, Ironbark North and Ironbark) significantly upgraded during the period. Based on these results, in January 2020, the Company commenced its maiden geological diamond drilling program. This 11 hole, ~4,000m program is designed primarily for geological and structural purposes, to give an initial reconnaissance level insight into the underlying geology and, combined with the AC program, determine the optimal strategy for future deeper drilling.

1

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

==> picture [511 x 274] intentionally omitted <==

Figure 1. Chalice’s exploration, royalty and investment portfolio, March 2020

The key outcomes from activities during the half year include:

• Karri Target – a greenfield target located ~65km north-west of Bendigo under 50-85m of Murray Basin cover: o A 4km long, continuous gold trend has been defined at the top of Castlemaine Group basement, based on 180 vertical AC drill holes.

• The trend remains open along strike and as yet untested at depth.

• Significant AC intercepts include:

  • 1m @ 15.85g/t Au within 2m @ 11.5g/t Au within 30m @ 1.12g/t Au;

  • 3m @ 3.86g/t Au to end-of-hole (EOH) within 23m @ 0.59g/t Au;

  • 4m @ 1.35g/t Au within 20m @ 0.39g/t Au; and,

  • 4m @ 1.28g/t Au within 12m @ 0.53g/t Au.

• Infill and step-out AC drilling continues on a 250m x 50m spaced grid.

• Maiden geological diamond drill program continues.

• Ironbark and Ironbark North Targets – greenfield targets located ~45km north-west of Bendigo under 3580m of Murray Basin cover:

• Two mineralised diorite intrusions have been identified which are approximately 500-700m in diameter.

• Anomalous gold and pathfinder metals have been intersected in ~100 vertical AC holes, within the diorites and on the margins in the surrounding Castlemaine Group sediments.

• All gold zones remain open and as yet untested at depth.

• Significant 4m composite AC intercepts include:

  • 4m @ 3.0g/t Au within 8m @ 2.0g/t Au

  • 8m @ 0.45g/t Au within 16m @ 0.24g/t Au

  • 1m @ 1.1g/t Au within 12m @ 0.22g/t Au

• Beech Target – a greenfield target located ~25km north-north-west of Bendigo under 25-110m of Murray Basin cover:

2

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

• A total of 14 AC drill holes were completed, which identified zones of elevated gold, arsenic and antimony

• The encouraging results are currently being reviewed to determine the timing of future step-out drilling

The forward work program at the date of this report includes:

• ~170 hole, ~20,000m step-out and infill AC drill program at the Karri and Ironbark Targets – expected to continue until early April 2020;

• 11 hole, ~4,000m maiden geological diamond drill hole program at the Karri and Ironbark Targets – expected to continue until late April 2020; and,

• 15 line-km 2D seismic program within the Muckleford Area (including across the Karri Target) – acquisition completed, full interpretation of results expected in April 2020.

At the date of this report, all assays from the diamond drill program are pending.

Three new Exploration Licence Applications were made during the period (EL007040, EL007120 and EL007121) and a submission was made to the North Central Victorian Goldfields Ground Release tender.

2.2 King Leopold Nickel Project, Western Australia (85-100%)

In July 2019, Chalice acquired private nickel explorer North West Nickel Pty Ltd (“NWN”). NWN held a portfolio of nickel exploration projects, including the Ruins Project, located adjacent to the recent nickel sulphide discoveries reported by Buxton Resources Ltd (“Buxton”, ASX: BUX) at its Merlin Project.

Chalice acquired all of the outstanding shares in NWN by issuing 7.5 million fully paid ordinary Chalice shares to the shareholders of NWN (“Vendors”). The agreement also includes a contingent deferred consideration whereby, subject to the following milestones being achieved at the Ruins Project, Chalice will pay to the Vendors:

• A$1.75 million in cash or Chalice shares, at Chalice’s election, within 60 days of Chalice releasing to the ASX a Mining Scoping Study or Feasibility Study in relation to the Project;

• A$4.5 million in cash or Chalice shares, at Chalice’s election, within 60 days of commencement of commercial production and cumulative gross sales exceeding A$300 million from the Project.

Any future issuance of Chalice shares to the Vendors remains subject to Chalice shareholder approval, as required. The consideration shares issued by Chalice are subject to separate 12-month escrow periods.

Field-based exploration commenced early in the half year, following the acquisition of NWN. Activities during the period focused on areas immediately south-east of the Merlin Prospect within an area of extensive outcropping Ruins Dolerite. The following activities were completed during the period:

• A maiden ground-based EM survey (MLEM) was completed in July 2019 over the Waterford Area to followup on conductors identified from a 2018 airborne “Xcite” EM survey.

• A maiden airborne EM survey (SkyTEM) was completed in early August 2019 over the King Sound Area.

• The two surveys resulted in the delineation of several highly prospective EM conductors.

No further field activities were undertaken during the latter part of the half year due to the onset of the summer wet season, which prevented site access. Planned field activities including ground EM and RC drilling are expected to re-commence in mid-2020 once access is regained.

2.3 Other Projects

The Company completed several low-cost reconnaissance level exploration programs on other Projects during the period, including:

• An initial ground-based Moving Loop EM (MLEM) program at the Julimar Nickel Project in WA;

• A reconnaissance soil geochemistry program (~800 samples) was completed at the Mt Jackson Gold Project in WA;

• A maiden reconnaissance AC drilling program was completed at the Flinders River Vanadium Project in Qld;

No activity was completed on other projects during the period.

3

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

3. Asset Sales

3.1 Quebec Gold Projects, Canada

On 25 July 2019, Chalice completed the disposal of its wholly-owned subsidiary Chalice Gold Mines (Quebec) Inc. (“CGMQ”) to O3 Mining Inc. (“O3 Mining”)(TSX.V:OIII). CGMQ was the registered holder of the East Cadillac and Kinebik Gold Projects in Quebec, Canada.

As consideration O3 Mining issued Chalice 3,092,784 common shares and agreed to pay cash consideration of approximately C$1,4 million upon CGMQ receiving tax credits owing from Canadian tax authorities. As at 31 December 2019, C$885,557 of this cash consideration remains receivable.

In addition, O3 Mining has granted Chalice a net smelter return royalty of 1% on certain mining claims within the East Cadillac and Kinebik Gold projects which are not encumbered by pre-existing royalties.

Following the disposal of CGMQ, Chalice ceased all remaining operational activities in Canada.

3.2 Jericho and Bunjarra Well Gold Projects, Western Australia

On 31 October 2019, Chalice agreed to sell its interest in the Jericho and Bunjarra Well Gold Projects in the Edjudina region of WA to OreCorp Limited (“OreCorp”)(ASX:ORR). The Company was issued 468,809 fully paid ordinary shares in OreCorp and retains a 1% Net Smelter Return (NSR) royalty capped at $2.5 million as consideration.

3.3 Kurrajong Bore Gold Project, Western Australia

On 8 November 2019, Chalice agreed to sell its interest in the Kurrajong Bore Gold Project near Leonora in WA to Golden Mile Resources Limited (ASX: G88). The Company retains a 1.25% NSR royalty as consideration.

4. Investments

During the half-year ended 31 December 2019, Chalice acquired 97.1 million shares in Spectrum Metals Limited (“Spectrum”)(ASX:SPX) at a cost of $5.7 million (average price of 5.3 cents per share). Chalice made its investment following the highly valuable new gold discovery made by Spectrum at the Penny West Gold Project in Western Australia.

On 10 February 2020, Ramelius Resources Limited (“Ramelius”)(ASX:RMS) announced a recommended takeover offer to acquire Spectrum in exchange for 1 Ramelius share for every 10 Spectrum shares plus $0.017 cash for each Spectrum share.

At 31 December 2019, listed equity investments held by Chalice were valued at $17.3 million.

5. Corporate

5.1 Financial Review

At 31 December 2019, the Group had net assets of $28,306,815 (30 June 2019: $21,819,078) and an excess of current assets over current liabilities of $27,708,898 (30 June 2019: $21,186,961). At 31 December 2019, the Group’s cash at bank totaled $9,696,527 (30 June 2019: $18,620,857).

The Group reported a net loss after tax from continuing operations for the period of $4,733,317 (31 December 2018: net loss of $2,608,852). The gain from discontinued operations following the disposal of Chalice Gold Mines (Quebec) Inc. was $8,769,089 (31 December 2018: loss $1,892,678)

The Group’s focus during the half year period was on exploration and evaluation activities in Australia, with cash outflows of $2,690,903 (31 December 2018: $3,146,909). Cash outflows from operating activities to 31 December 2019 totaled $4,398,951 (31 December 2018: $4,362,938).

5.2 Voluntary Delisting from the Toronto Stock Exchange

In November 2019, Chalice advised that it applied for voluntary de-listing of its ordinary shares from trading on the Toronto Stock Exchange (TSX). The last day of trading on the TSX was 16 December 2019.

4

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

The decision to de-list was taken due to several factors. Since listing on the TSX in 2010, the Company has not raised capital in Canada and, as a result, there has been limited trading volume of shares on the TSX over a sustained period. In addition, the disposal in July 2019 of the Company’s Canadian Projects to O3 Mining. marked an exit of Chalice from Canada. This strategic change has allowed Chalice to focus on its flagship Pyramid Hill Gold Project in Victoria.

The Board of Directors determined that regulatory and other costs associated with maintaining the TSX listing versus the ongoing benefits to the Company were no longer justified.

EVENTS SUBSEQUENT TO REPORTING DATE

The Group holds 97,148,016 ordinary shares in Spectrum Metals Ltd (“Spectrum”)(ASX:SPX). On 10 February 2020, Ramelius Resources Limited (“Ramelius”)(ASX:RMS) announced a recommended takeover offer (‘Offer”) to acquire Spectrum in exchange for 1 Ramelius share for every 10 Spectrum shares plus cash consideration of $0.017 per Spectrum share. The Offer valued Spectrum shares at $0.15 per share based on the closing price of Ramelius on the last trading day prior to the Offer announcement.

Other than as disclosed above, no other matters or circumstances have arisen after balance date that have significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of the affairs of the Group in future financial periods.

AUDITOR’S INDEPENDENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the Company with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is set out on page 8 and forms part of this directors’ report for the half-year ended 31 December 2019.

This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306 (3) of the Corporations Act 2001.

==> picture [98 x 65] intentionally omitted <==

ALEX DORSCH Managing Director

Dated at Perth this 10[th] day of March 2020

5

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

COMPETENT PERSONS & QUALIFYING PERSONS STATEMENT

The Information in this report that relates to the exploration results for the Pyramid Hill Project is extracted from the following ASX announcements:

• “Drilling to recommence at the Pyramid Hill Gold Project in late September”, 2 September 2019.

• “Extensive gold and arsenic footprint points towards potential gold system at Ironbark Target, Pyramid Hill Gold Project”, 14 November 2019.

• “Discovery of new >2km gold trend in air-core drilling at Karri Target indicates potential for a significant gold system”, 12 December 2019.

• “Several new gold zones discovered in first drill holes at Ironbark North Target”, 19 December 2019.

• “Karri gold trend expanded to over 3km of strike extent”, 13 January 2020.

• “Infill AC drilling at Karri returns best intercept to date of 4m at ~4g/t gold”, 3 February 2020.

• “New High Grade Zones at the Large-Scale Karri Target”, 4 March 2020.

The information in this report that relates to the exploration results for the King Leopold Project is extracted from the following ASX announcements:

• “Chalice acquires highly prospective nickel sulphide project in west Kimberley region of WA”, 18 June 2019.

• “Strong, shallow EM conductors identified ahead of maiden drill program at King Leopold Nickel Sulphide Project, WA”, 20 August 2019.

The above announcements are available to view on the Company’s website at www.chalicegold.com. The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant original market announcements. The Company confirms that the form and context in which the Competent Person and Qualified Person’s findings are presented have not been materially modified from the relevant original market announcements.

FORWARD LOOKING STATEMENTS

This report 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 report 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, the Company’s strategy, the estimation of mineral reserve and mineral resources, the realisation of mineral resource estimates, the likelihood of exploration success including results of drilling at the Pyramid Hill Gold Project and at the Company’s other exploration projects, the prospectivity of the Company’s exploration projects, the timing of future exploration activities on the Company’s exploration projects, planned expenditures and budgets and the execution thereof, the timing and availability of drill results, potential sites for additional drilling, the timing, the future share price performance of the Company’s listed investments, that general business and economic conditions will not change in a materially adverse manner; 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”, “planning” “expects” or “does not expect”, “is expected”, “will”, “may”, “would”, “potential”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “believes”, “occur” or “be achieved” 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 may include, among others, risks related to actual results of current or planned exploration activities; changes in exploration programmes based upon results of exploration; future prices of commodities; geophysical anomalies may or may not be associated with economic mineralisation; grade or recovery rates; accidents; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the

6

Chalice Gold Mines Limited Directors’ Report For the half year ended 31 December 2019

completion of development or construction activities, movements in the share price of O3 Mining and Spectrum Metals securities and future proceeds and timing of potential sale of O3 Mining and Spectrum Metals securities, as well as those factors detailed from time to time in the Company’s interim and annual financial statements, all of which are filed and available for review on SEDAR at sedar.com, ASX at asx.com.au and OTC Markets at otcmarkets.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 forwardlooking 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.

7

==> picture [165 x 49] intentionally omitted <==

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the consolidated financial report of Chalice Gold Mines Limited for the half-year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) any applicable code of professional conduct in relation to the review.

==> picture [113 x 51] intentionally omitted <==

Perth, Western Australia 10 March 2020

M R Ohm Partner

==> picture [440 x 83] intentionally omitted <==

8

Chalice Gold Mines Limited

Condensed Consolidated Statement of Comprehensive Income For the half year ended 31 December 2019

Note Continuing Operations Revenue 2(a) Net finance income 2(b) Net gain on sale of exploration and evaluation projects 2(c) Foreign exchange gain Derecognition of investment in associate Exploration and evaluation expenditures 2(f) Corporate and administrative expenses 2(d) Share-based payments 8 Business development expenses 2(e) Depreciation and amortisation expense Loss from dissolution of subsidiaries Loss for the period from continuing operations before income tax Income tax benefit/(expense) 3 Loss for the period from continuing operations Discontinued operations Net gain/(loss) for the year from discontinued operations Income tax benefit/(expense) Profit/(loss) for the year from discontinued operations 4 Total profit/(loss) for the period attributed to owners of the parent Other comprehensive income net of income tax Items that will not be reclassified to profit or loss Net fair value gain/(loss) on fair value of equity investments through other comprehensive income, net of tax Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Foreign exchange on deconsolidation of subsidiaries Total other comprehensive income Total comprehensive income/(loss) for the period attributable to owners of the parent Basic and diluted (loss) per share from continuing operations (cents) Basic earnings/(loss) per share (cents) Diluted earnings/(loss) per share(cents)	31 December 31 December 2019 2018 $ $ 176,759 112,800 19,531 247,508 178,147 - 156,329 682,035 - 148,828 (3,585,777) (1,568,260) (1,136,268) (1,091,612) (103,087) (451,822) (432,923) (363,335) (135,918) (36,800) (80,945) -
	(4,944,152) (2,320,658) 210,835 (288,194)
	(4,733,317) (2,608,852)
	8,769,707 (2,231,596) (618) 338,918
	8,769,089 (1,892,678) 4,035,772 (4,501,530)
	303,060 (203,387) (55,692) 86,423 1,022,310 -
	1,269,678 (116,964)
	5,305,450 (4,618,494)
	(1.73) (0.98) 1.48 (1.71) 1.47 (1.71)

The accompanying notes form part of the financial statements.

9

Chalice Gold Mines Limited

Condensed Consolidated Statement of Financial Position As at 31 December 2019

Note Current assets Cash and cash equivalents Trade and other receivables 5 Financial assets 6 Income tax receivable 3 Assets held for sale Total current assets Non-current assets Financial assets 6 Receivables Right of use assets Property, plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Employee benefits Lease liabilities Other Liabilities directly associated with assets held for sale Total current liabilities Non-current Liabilities Lease Liabilities Other Total non-current liabilities Total liabilities Net assets Equity Issued capital 7 Accumulated losses Reserves Total equity	31 December 2019 30 June 2019 $ $ 9,696,527 18,620,857 1,407,565 472,936 17,436,735 1,469,956 107,897 - - 1,584,349
	28,648,724 22,148,098
	235,422 349,272 29,731 - 95,769 - 266,695 328,530
	627,617 **677,802 **
	29,276,341 22,825,900
	600,835 730,840 160,471 217,466 131,027 - 47,493 - - 12,831
	939,826 961,137
	29,700 - - 45,685
	29,700 45,685
	969,526 1,006,822
	28,306,815 21,819,078
	30,886,508 29,807,308 (4,475,322) (9,132,908) 1,895,629 1,144,678
	28,306,815 21,819,078

The accompanying notes form part of the financial statement

10

Chalice Gold Mines Limited

Condensed Consolidated Statement of Changes in Equity For the half-year ended 31 December 2019

Balance at 30 June 2019 Profit for the period Other comprehensive income for the period Net change in fair value of equity investments Exchange differences on translation of foreign operations Exchange differences on deconsolidation of subsidiaries Total comprehensive income for the period Share issue costs Issue of share capital Transfers between equity items Share based payments Balance at 31 December 2019 Balance at 30 June 2018 Modified retrospective standard application (AASB 9) Loss for the period Other comprehensive income for the period Net change in fair value of equity investments Exchange differences on translation of foreign operations Total comprehensive loss for the period Share issue costs Capital return Shares issued to acquire a Joint Venture interest Performance rights vested Transfers between equity items Share based payments Balance at 31 December 2018	Issued capital Accumulated Losses Share-based payments reserve $ $ $	Investment revaluation reserve Foreign currency translation reserve Total $ $ $
	29,807,308 (9,132,908) 1,461,524	(74,490) (242,356) 21,819,078
	- 4,035,772 -	- - 4,035,772
	- - -	303,060 - 303,060
	- - -	- (55,692) (55,692)
	- - -	- 1,022,310 1,022,310
	- 4,035,772 -	303,060 966,618 5,305,450
	(8,300) - -	- - (8,300)
	1,087,500 - -	- - 1,087,500
	- 621,814 (329,571)	(292,243) - -
	- - 103,087	- - 103,087
	30,886,508 (4,475,322) 1,235,040	(63,673) 724,262 28,306,815
	Issued capital Retained earnings/ (Accumulated Losses) Share based payments reserve $ $ $	Investment revaluation reserve Foreign currency translation reserve Total $ $ $
	39,836,041 956,081 977,078	243,572 (379,864) 41,632,908
	- 552,368 -	(552,368) - -
	- (4,501,530) -	- - (4,501,530)
	- - -	(203,387) - (203,387)
	- - -	- 86,423 86,423
	- (4,501,530) -	(203,387) 86,423 (4,618,494)
	(20,907) - -	- - (20,907)
	(10,662,725) - -	- - (10,662,725)
	415,114 - -	- - 415,114
	240,348 - (240,348)	- - -
	- 45,625 (45,625)	- - -
	- - 390,754	- - 390,754
	29,807,871 (2,947,456) 1,081,859	(512,183) (293,441) 27,136,650

The accompanying notes form part of the financial statements.

11

Chalice Gold Mines Limited Condensed Consolidated Statement of Cash Flows For the half year ended 31 December 2019

Note Operating activities Cash receipts from operations Payments to suppliers and employees Payments for mineral exploration and evaluation Interest received Interest paid Transaction costs relating to disposal of subsidiary Income tax paid Net cash used in operating activities Investing activities Proceeds from sale of financial assets Payment for acquisition of financial assets Proceeds from disposal of subsidiary Payment for plant and equipment Proceeds from sale of plant and equipment Net cash used in investing activities Financing activities Payment of capital return Refund/(payment) of security deposits Share issue and capital return costs Principal elements of lease payments Net cash used in financing activities Net decrease in cash and cash equivalents Net foreign exchange difference Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the financial period	31 December 31 December 2019 2018 $ $ 249,098 74,163 (1,853,150) (1,561,713) (2,690,903) (3,146,909) 41,971 273,061 (8,874) (10) (137,093) - - (1,530)
	(4,398,951) (4,362,938)
	508,329 - (5,632,752) - 615,344 - (5,770) (7,438) 9,185 -
	(4,505,664) (7,438)
	- (10,662,725) 10,000 (55,000) (8,300) (8,784) (95,822) -
	(94,122) (10,726,509)
	(8,998,737) (15,096,885) 74,407 699,225 18,620,857 35,739,484
	9,696,527 21,341,824

The accompanying notes form part of the financial statements.

12

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

1. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

These interim consolidated financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134 ‘Interim Financial Reporting’, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’.

This condensed half-year report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Group as in the full financial report.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2019 and any public announcements made by Chalice Gold Mines Limited (‘Chalice’ or ‘the Group’) and its subsidiaries during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the rules of the Australian Securities Exchange, Toronto Stock Exchange and OTC Markets.

(b) Basis of preparation

The interim report has been prepared on a historical cost basis, except for the revaluation of certain financial instruments. Cost is based on the fair value of the consideration given in exchange for assets. The Company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted. For the purposes of preparing the interim financial statements, the half year has been treated as a discrete reporting period.

(c) Accounting policies and methods of computation

The accounting policies and method of computation adopted are consistent with those of the previous financial year and corresponding half year except as mentioned below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

(d) Significant accounting judgments and key estimates

The preparation of interim financial reports requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing this interim report, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2019.

(e) Adoption of new and revised Accounting Standards

Standards and Interpretations applicable to 31 December 2019

In the half-year ended 31 December 2019, the Directors have reviewed the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group and effective for the half-year reporting periods beginning on or after 1 July 2019. Those which have a material impact on the Group are set out below.

AASB 16 Leases

The Group has adopted AASB 16 from 1 July 2019. AASB 16 replaces AASB 117 Leases.

The adoption of AASB 16 has resulted in changes in classification, measurement and recognition leases. The changes result in almost all leases where the Company is the lessee being recognised in the Condensed Statement of Financial Position and removes the former distinction between ‘operating and ‘finance leases’. The new standard requires recognition of a right-of-use asset (the leased item) and a financial liability (to pay rentals). The exceptions are short-term, and low value leases.

Impact on operating leases

The Group has adopted AASB 16 using the modified retrospective approach under which the reclassifications and the adjustments arising from the new leasing rules are recognised in the opening Condensed Statement of Financial Position on 1 July 2019. There is no initial Impact on retained earnings under this approach. The Group has not restated comparatives for the 2019 reporting period.

13

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

The Group leases various offices, property, plant and equipment. As at 30 June 2019, leases were classified as operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease.

As at 30 June 2019, the Group had non-cancellable operating lease commitments of $314,829. Refer note 26 of the Annual Report for the year ended 30 June 2019.

From 1 July 2019, where the Company is a lessee, the Group recognises a right-of-use asset and a corresponding liability at the date which the lease asset is available for use by the Group. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a consistent rate of interest on the remaining balance of the liability for each period.

On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of AASB 117. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average lessee's incremental borrowing rate applied to lease liabilities on 1 July 2019 was 8.85%.

The transitional impact at 1 July 2019 is set out below:

he transitional impact at 1 July 2019 is set out below:
Right of use assets - Property leases Current lease liabilities Non-current lease liabilities	$ 249,648 (193,586) (56,062)
	-

Following adoption, in the condensed statement of cash flows, the Group has recognised cash payments for the principal portion of the lease liability within financing activities, cash payments for the interest portion of the lease liability as interest paid within operating activities and short-term lease payments and payments for lease of low-value assets within operating activities.

No extension options are included in the property leases across the Group. There were no onerous lease contracts that required an adjustment to the right-of-use assets of initial application.

Right-of-use leased assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

Lease Liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

Other than AASB 16, there is no material impact of the new and revised Standards and Interpretations on the Company and therefore, no material change is necessary to Group accounting policies.

14

Chalice Gold Mines Limited

Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

Standards and Interpretations in issue not yet adopted

The Directors have reviewed all of the new and revised Standards and Interpretations in issue not yet adopted that are relevant to the Group and effective for reporting periods beginning on or after 1 January 2020. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue not yet adopted on the Group and, therefore, no change is necessary to Group accounting policies.

15

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

2. REVENUE AND EXPENSES

The following revenue and expense items are relevant in explaining the financial performance for the half-year:

(a) Revenue Corporate and administration service fees Other (b) Net finance income Finance Income Interest income from financial assets Interest income from lease receivables Finance costs Interest on lease liabilities Net finance income	2019 2018 $ $ 173,800 112,800 2,959 -
	176,759 112,800
	2019 2018 $ $ 27,452 247,508 953 -
	28,405 247,508
	8,874 -
	8,874 -
	19,531 247,508

(c) Net gain on sale of exploration and evaluation projects Net gain on sale of exploration and evaluation projects represents the net gain from the sale of the Company’s Jericho and Bunjarra Well tenements to OreCorp Limited in November 2019.

(d) Corporate and administrative expenses Insurance Travel costs Legal fees Head office costs Personnel expenses Regulatory and compliance Other	2019 2018 $ $ 19,678 23,259 55,289 56,848 16,902 3,632 93,665 78,827 670,679 632,802 215,878 247,927 64,177 48,317
	1,136,268 1,091,612

(e) Business development expenses Along with exploration and evaluation activities, the Company undertakes business development to review and potentially acquire new resource projects. Business development costs represent the costs associated with the review of these new business opportunities and potential asset acquisitions.

Personnel expenses Consultants and legal fees Travel and conferences Other (f) Exploration and evaluation expenditures Pyramid Hill, Victoria King Leopold, Western Australia Acquisition of exploration project - fair value adjustment(1) Other Generative Projects	2019 2018 $ $ 235,757 190,037 76,629 15,522 60,162 77,936 60,375 79,840
	432,923 363,335
	2019 2018 $ $ 1,469,661 744,253 537,965 - 1,086,308 - 491,843 824,007
	3,585,777 1,568,260

(1) On 18 July 2019, the Company acquired 100% of the ordinary shares of North West Nickel Pty Ltd (“North West”). North West is the holder of the Ruins Nickel Project (“Project”), which now forms a central part of the King Leopold Project. The Acquisition of exploration project fair value adjustment represents the difference between the consideration paid and the net assets of North West at the date of acquisition.

16

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

As consideration, the Company issued 7.5 million fully paid ordinary shares to the shareholders of North West (“Vendors”). The acquisition also includes a contingent deferred consideration whereby, subject to the following milestones being achieved at the Ruins Nickel Project (“Project”), the Company will pay to the Vendors:

• A$1.75 million in cash or Chalice shares, at Chalice’s election, within 60 days of Chalice releasing to the ASX a Mining Scoping Study or Feasibility Study in relation to the Project;

• A$4.5 million in cash or Chalice shares, at Chalice’s election, within 60 days of commencement of commercial production and cumulative gross sales exceeding A$300 million from the Project.

The transaction has been accounted for as an asset acquisition as North West does not meet the definition of a business combination under AASB 3 Business Combinations.

3. INCOME TAX

Income Tax benefit Current income tax expense Over/under provision of prior year tax benefit Deferred income tax benefit/(expense) relating to investments held at fair value through other comprehensive income Income tax receivable Group’s subsidiaries	2019 2018 $ $ - (1,530) 109,162 - 101,673 (286,664)
	210,217 (288,194)
	31 December 2019 30 June 2019 $ $ 107,897 1,412,434
	107,897 **1,412,434 **

4. DISCONTINUED OPERATIONS

(a) On 26 July 2019, the Group disposed of its wholly owned subsidiary Chalice Gold Mines (Quebec) Inc. (“CGMQ”) to O3 Mining Inc. (“O3 Mining”) (formerly Chantrell Ventures Corp). CGMQ was the registered holder of the Group’s East Cadillac and Kinebik Project in Quebec, Canada. As a consequence of disposing of CGMQ during the half-year ended 31 December 2019 the Group discontinued all remaining exploration and business development activities in Canada.

O3 Mining acquired all outstanding shares in CGMQ in consideration for 3,092,784 common shares of O3 Mining. In addition, the Group will retain a partial 1% Net Smelter Return Royalty and receive outstanding tax credits owing to CGMQ.

The Group has classified the activities of CGMQ and the cessation of exploration and business development activities in Canada as a discontinued operation. The results of the discontinued operations for the period are presented below:

(b) Financial performance and cashflow information

Revenue Finance income Expenses Net loss on sale of plant and equipment Loss before tax from discontinued operations Income tax benefit/(expense) Loss for the year from discontinued operations Gain on sale of subsidiary after income tax (see (c) below) Profit/(loss) from discontinued operations Exchange differences on translation of discontinued operation Other comprehensive income/(loss) from discontinued operation The net cash flows from discontinued operations are as follows: Operating cash flows Investing cash flows Net cash inflows/(outflows)	2019 2018 $ $ - 163 - 157 (376,530) (2,231,916) (18,004) -
	(394,534) (2,231,596) (618) 338,918
	(395,152) (1,892,678) 9,164,241 -
	8,769,089 (1,892,678) 941,366 -
	9,710,455 (1,892,678)
	(549,503) (2,451,111) 624,529 -
	75,026 (2,451,111)

17

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

4. DISCONTINUED OPERATIONS (CONT’D)

(c) Details of the sale of subsidiary

Consideration received or receivable: Cash Fair value of 03 Mining Inc. shares received Tax credits receivable Total disposal consideration Carrying amount of net assets sold Transaction costs associated with the disposal Gain on sale before income tax and reclassification of foreign currency translation reserve Reclassification of foreign currency translation reserve Income tax expense on gain Gain on sale after income tax (d) Earnings per share Basic earnings/(loss) per share from discontinued operations Diluted earnings/(loss) per share from discontinued operations RADE AND OTHER RECEIVABLES Current Other trade receivables Prepayments Proceeds receivable from disposal of subsidiary1	2019 2018 $ $ 615,344 - 10,138,059 - 965,548 -
	11,718,951 (1,591,449) - (21,895) -
	10,105,607 - (941,366) - - -
	9,164,241 -
	3.21 (0.7) 3.20 (0.7) 31 December 2019 30 June 2019 $ $ 341,383 299,182 96,281 173,754 969,901 -
	1,407,565 472,936

5. TRADE AND OTHER RECEIVABLES

(1) Proceeds owing by O3 Mining Inc. (“O3 Mining “) for the acquisition of Chalice Gold Mines (Quebec) Inc. (“CGMQ”). The outstanding proceeds are payable by O3 Mining upon CGMQ receiving the balance of outstanding tax credits following the lodgement of its 2019 taxation return.

6. FINANCIAL ASSETS

Current Bond in relation to office premises Equity instruments designated at fair value through other comprehensive income Listed equity investments Unlisted equity investments Options and warrants in listed entities Total current financial assets Non-current Bond in relation to office premises Bank guarantees and security deposits Options and warrants in listed entities Total non-current financial assets	31 December 2019 30 June 2019 $ $ 70,829 -
	70,829 - 17,360,513 885,789 - 584,167 5,393 -
	17,365,906 1,469,956
	17,436,735 1,469,956
	- 70,829 235,422 244,444 - 33,999
	235,422 **349,272 **

18

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

6. FINANCIAL ASSETS (CONT’D)

Listed equity investments represents investments in various companies listed on the ASX and TSX including 97,148,016 ordinary shares in Spectrum Metals Ltd (ASX:SPX) and 3,092,784 ordinary shares in O3 Mining Inc. (TSX:OIII).

During the half year ended 31 December 2019 the Company disposed of its investment in Navarre Minerals Limited (ASX:NML) realising net proceeds of $494,407.

Unlisted equity investments represent the Company’s investment in GeoCrystal Limited .

Refer to Note 12 for further information on the fair value of financial assets.

7. ISSUED CAPITAL

(a) Issued and fully paid ordinary shares Movements in ordinary shares on issue: At 1 July Shares issued on vesting of performance rights Shares issued to acquire a joint venture interest(1) Shares issued to acquire subsidiary(2) Capital return(3) Share issue costs	31 December 2019 30 June 2019 No. $ No. $ 266,568,134 29,807,308 261,210,294 39,836,041 - - 2,357,840 240,348 - - 3,000,000 415,114 7,500,000 1,087,500 - - - - - (10,662,725) - (8,300) - (21,470)
	274,068,134 30,886,508 266,568,134 29,807,308

(1) On 10 September 2018, the Company issued 3,000,000 fully paid ordinary shares to Monarque Gold Corporation to acquire the remaining 30% interest in the Company’s joint venture property within the East Cadillac Gold Project, Quebec.

(2) On 18 July 2019, the Company issued 7,500,000 fully paid ordinary shares (subject to a 12 month voluntary escrow) to acquire 100% of the ordinary shares of North West Nickel Pty Ltd (“North West”). North West is the holder of the Ruins Nickel Project, which now forms a central part of the King Leopold Project.

(3) Following Shareholder approval at the Company’s 2018 Annual General Meeting, the Company completed a capital return to shareholders, amounting to $0.04 per share. Payment was made to Shareholders registered at the close of business on 30 November 2018.

8. SHARE BASED PAYMENTS

(a) Recognised Share Based Payment Expense The share based payment expense recognised during the period: Expense arising from equity-settled share based payment transactions Reversal of expense previously recognised on performance rights that lapsed during the period (b) Share Options Movements in options over ordinary shares on issue: At 1 July Options granted(1) Options lapsed Outstanding at the end of the period	31 December 2019 31 December 2018 $ $ 400,250 451,822 (297,163) -
	103,087 451,822
	31 December 2019 30 June 2019 No. No. 6,200,000 5,500,000 2,000,000 1,200,000 (1,000,000) (500,000)
	7,200,000 6,200,000

19

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

8. SHARE BASED PAYMENTS (CONT’D)

(1) On 27 November 2019, following Shareholder approval at the Company’s 2019 Annual General Meeting, the Company issued 2,000,000 unlisted share options under the Employee Share Option Plan (ESOP). Details of the options issued are set-out below:

• 1,000,000 options to Mr Dorsch, Managing Director of which 500,000 vested immediately and 500,000 vested on 30 November 2019. The options have an exercise price of $0.21 and expire 30 November 2021.

• 500,000 unlisted share options each to Mr Ball, Non-executive Director and Mr Quin NonExecutive Director. The options vested immediately, have an exercise price of $0.21 and expire on 30 November 2022.

The fair value of options is estimated at the date of grant using a Black-Scholes option-pricing model. Non-market performance conditions are not taken into account in determining the grant date fair value. The following table provides the assumptions made in determining the fair value of the options granted during the period:

(c)

Share price at grant date Exercise price Expected volatility Weighted average vesting period (years) Expected dividends Weighted average risk-free interest rate Weighted average valuation per right Performance Rights Movements in performance rights: At 1 July Performance rights lapsed Performance rights issued(1) Performance rights vested Outstanding at the end of the period	31 December 2019 $0.165 $0.21 65% 2.5 - 0.65% $0.053 31 December 2019 30 June 2019 No. No. 14,324,889 12,092,639 (4,011,447) (1,711,714) 5,292,347 6,301,804 - (2,357,840)
	15,605,789 14,324,889

(1) On 27 November 2019, the Company issued 5,292,347 performance rights to Key Management Personnel (‘KMP’) and employees of the Company under the Employee Securities Incentive Plan (ESIP). The issue included 735,294 performance rights to Mr Goyder, Executive Chairman and 1,074,402 performance rights to Mr Dorsch, Managing Director. Shareholder approval of the issue of performance rights to Mr Goyder and Mr Dorsch was obtained at the Company’s 2019 Annual General Meeting.

The following table provides the assumptions made in determining the fair value of the performance rights granted during the period:

rights granted during the period:
	31 December
	2019
Share price at grant date	$0.165
Exercise price	Nil
Expected volatility	65%
Weighted average performance period (years)	2.59
Weighted average vesting period (years)	2.59
Expected dividends	-
Weighted average risk-free interest rate	0.65%
Weighted average valuation per right	$0.143

The performance rights contain both market and non-market performance conditions. Non-market performance conditions are not taken into account in the grant date fair value measurement of the services rendered. Refer to the 2019 Annual Report for details of vesting and performance conditions set by the Board for the above grant of performance rights.

20

Chalice Gold Mines Limited Notes to the Condensed Consolidated Financial Statements For the half year ended 31 December 2019

9. COMMITMENTS AND CONTINGENCIES

(a) Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements as specified by various governments in order to maintain exploration tenements in good standing. Therefore, amounts stated are based on the minimum commitments known within the next 12 months. The Group may in certain situations apply for exemptions under relevant mining legislation or enter into joint venture arrangements which significantly reduce working capital commitments. These obligations are not provided for in the financial report and are payable:

financial report and are payable:
Within 1 year Within 2-5 years Later than 5 years	31 December 2019 30 June 2019 1,455,897 366,891 - - - -
	1,455,897 **366,891 **

Other than as disclosed above there has been no material change in commitments and contingencies since the last annual reporting date.

10. SIGNIFICANT EVENTS AFTER BALANCE DATE

The Group holds 97,148,016 ordinary shares in Spectrum Metals Ltd (“Spectrum”)(ASX:SPX). On 10 February 2020, Ramelius Resources Limited (“Ramelius”)(ASX:RMS) announced a recommended takeover offer (‘Offer”) to acquire Spectrum in exchange for 1 Ramelius share for every 10 Spectrum shares plus cash consideration of $0.017 per Spectrum share. The Offer valued Spectrum shares at $0.15 per share based on the closing price of Ramelius on the last trading day prior to the Offer announcement.

Other than as disclosed above, no other matters or circumstances have arisen after balance date that have significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of the affairs of the Group in future financial periods.

11. OPERATING SEGMENTS

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group considers that it only operated in one reportable segment, being mineral exploration and evaluation. The segment financial information is as per the Group’s consolidated financial statements.

12. FINANCIAL INSTRUMENTS

The directors consider the carrying value of financial assets and financial liabilities recognised in the consolidated financial statements to approximate their fair values. In particular, listed equity investments designated at fair value through other comprehensive income which comprise of various ASX and TSX listed entities are measured at fair value using quoted market prices at the reporting date (Level 1 fair value measurement).

Non-listed equity investments designated at fair value through other comprehensive income includes the Company’s investment in GeoCrystal Limited (“GeoCrystal”) is measured at fair value using unobservable inputs (Level 3 fair value measurement). As GeoCrystal is an unlisted company there is no liquid market to reference a market value. At 31 December 2019, following a review of the most recent financial statements available for Geocrystal the fair value of the investment has been assessed as nil and written off to other comprehensive income.

The directors have assessed that the fair value of cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

21

Chalice Gold Mines Limited Directors’ Declaration For the half year ended 31 December 2019

In the opinion of the directors of Chalice Gold Mines Limited (‘the Company’):

1. The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including:

2. a. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. b. giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the half-year then ended.

4. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001.

Dated this 10th day of March 2020

==> picture [94 x 63] intentionally omitted <==

ALEX DORSCH Managing Director

22

==> picture [165 x 49] intentionally omitted <==

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Chalice Gold Mines Limited

Report on the Condensed Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of Chalice Gold Mines Limited (“the company”) which comprises the condensed consolidated statement of financial position as at 31 December 2019, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory notes, and the directors’ declaration, for the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Chalice Gold Mines Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

==> picture [433 x 82] intentionally omitted <==

23

==> picture [165 x 49] intentionally omitted <==

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

==> picture [120 x 33] intentionally omitted <==

HLB Mann Judd Chartered Accountants

==> picture [112 x 50] intentionally omitted <==

M R Ohm Partner

Perth, Western Australia 10 March 2020

24