CHALICE MINING LIMITED — Interim / Quarterly Report 2021

Mar 11, 2021

==> picture [125 x 104] intentionally omitted <==

HALF YEAR REPORT

==> picture [127 x 11] intentionally omitted <==

==> picture [539 x 545] intentionally omitted <==

CHALICE MINING LIMITED (formerly Chalice Gold Mines Limited)

Half Year Report 2020 1

TABLE OF CONTENTS

Directors’ Report .......................................................................................................................................................3 Auditor’s Independence Declaration ..................................................................................................................13 Condensed Consolidated Statement of Comprehensive Income ..................................................................14 Condensed Consolidated Statement of Financial Position...............................................................................15 Condensed Consolidated Statement of Changes in Equity .............................................................................16 Condensed Consolidated Statement of Cash Flows .........................................................................................17 Notes to the Condensed Consolidated Financial Statements .........................................................................18 Directors’ Declaration ............................................................................................................................................25 Independent Auditor’s Review Report ................................................................................................................26

==> picture [457 x 165] intentionally omitted <==

2 | Page

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [111 x 15] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

Your directors submit the financial report for Chalice Mining Limited (formerly known as Chalice Gold Mines Limited) (‘Chalice’ or ‘the Company’) and its subsidiaries (together ‘the Group’) for the half year ended 31 December 2020. 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	Non-executive Chairman
Alexander C Dorsch	Managing Director
Morgan S Ball	Lead Independent Non-executive Director
Stephen P Quin	Independent Non-executive Director
Garret J Dixon	Independent Non-executive Director (appointed 21 August 2020)
Stephen M McIntosh	Independent Non-executive Director (appointed 20 February 2021)

REVIEW OF OPERATIONS

1. OVERVIEW

During the half year, Chalice has continued to rapidly advance its high-grade Platinum Group Element (PGE)Nickel-Copper-Cobalt-Gold discovery at the Julimar Project in Western Australia. The Company has also completed drill programs and other exploration activities elsewhere across its portfolio.

The 100%-owned Julimar Project covers a recently discovered ~26km long mafic-ultramafic intrusive complex (the Julimar Complex), located ~70km north-east of Perth. Julimar is considered Australia's first major PGE discovery and has established an entirely new mineral province in Western Australia – the West Yilgarn NickelCopper-PGE Province.

The Julimar discovery was made in March 2020 and is currently in the advanced exploration stage. At the time of reporting, a six-rig resource definition drilling program is underway on private farmland at the ~1.8km x >0.8km Gonneville Intrusion, with the aim of defining a maiden mineral resource estimate in 2021. Initial metallurgical, mining, infrastructure and environmental studies have also commenced, in preparation for the completion of a mining scoping study in 2022.

Government approvals were received in early 2021 to enable the commencement of initial non-ground disturbing exploration activities at the Hartog, Baudin and Jansz airborne electromagnetic (AEM) anomalies to the north of the discovery along the Julimar Complex. Reconnaissance exploration activities are now underway, which will aid in determining whether the Julimar Complex hosts additional mineralisation.

Chalice's portfolio also includes a number of generative exploration opportunities in premier terrains across Australia, including the >5,000km[2 ] Pyramid Hill Gold Project in Victoria and the >1,800km[2 ] Hawkstone NickelCopper-Cobalt Project in Western Australia. Exploration programs continue with the ultimate aim of making a new, tier-1 scale (>US$1bn NPV) greenfield discovery.

Chalice maintains a strong balance sheet, following a strongly supported share placement (Placement) of A$100 million (before costs) and $15 million Share Purchase Plan (SPP) recently completed at $3.75 per share. As at 31 December 2020, Chalice had ~$119 million in cash with a further $15 million received from the SPP after period end.

The Company effectively managed the impacts of the COVID-19 pandemic during the period and continues to apply appropriate protocols and controls to ensure the effects remain minimised.

2. SUSTAINABILITY

Chalice aims to uphold the highest corporate, social and environmental standards and recognises the importance of building respectful and inclusive relationships with our Western Australian stakeholders, communities and governing organisations.

Half Year Report 2020 3

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

The Company is in the process of formalising comprehensive environmental, social and governance (ESG) systems and processes, to ensure appropriate practices and controls are in place across our operations, and to ensure sustainability metrics can be measured and reported.

Given the increased level of exploration activities at the Julimar Project during the half-year, the Company has enhanced its ESG activities at that Project as a priority. This has included compiling a comprehensive stakeholder register, increased stakeholder communications and proactive environmental surveys. This approach has also been adopted across the portfolio at other exploration projects. Reporting of activities and specific ESG metrics in relation to these activities is planned in the near term.

There are strict regulations governing all exploration and mining activity in Western Australia, and additional rules and regulations on activities within State Forest designated areas. Chalice’s current exploration activities in State Forest are governed by an approved project specific Conservation Management Plan (CMP), which details Chalice’s exploration approach, the identified conservation values of the area and the mitigations and controls which Chalice will adopt to minimise impact.

Chalice is committed to open and transparent communication with the local communities in which it operates. During the half year, the Company distributed its first Julimar Project Newsletter (now a regular publication), hosted several public briefing sessions and published community fact sheets, to ensure the community is kept aware of its activities.

There was one contractor Lost Time Injury (LTI) for the half-year period. Chalice has updated and implemented a Health, Safety, Environment, Community and Heritage Management System (HSECMS) and significantly advanced its safe work practices to ensure risks are appropriately controlled.

3. EXPLORATION AND EVALUATION

• 3.1 Julimar Nickel-Copper-PGE Project, Western Australia (100% owned)

Gonneville Drilling

The Company is continuing a ~160,000m step-out and resource definition drill program at the Gonneville Intrusion, with three Reverse Circulation (“RC”) and three diamond rigs currently operating. Drilling is designed to test the extent of the mineralised system and to define a JORC compliant maiden mineral resource estimate, which is targeted for completion in 2021 .

To date, 201 RC holes for 47,040m and 51 diamond holes for 18,800m have been completed. Drilling has defined a total of 11 high-grade (>1g/t Pd cut-off grade) massive/matrix/heavily disseminated sulphide zones (G1-G11) within the Intrusion to date (Figure 1and Figure 2). The high-grade zones in fresh rock extend over considerable strike length (Table 1) and extend from ~25m up to ~400m below surface. All high-grade zones remain open.

In addition, wide zones of shallow, high-grade PGE+/-Au mineralisation in saprolitic clays developed over Gonneville ultramafic geology have been defined (Figure 1). The PGE enriched oxide zone now extends over two distinct areas of ~1km x ~0.5km (south) and ~1km x ~0.15km (north).

Half Year Report 2020 4

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [111 x 15] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [425 x 448] intentionally omitted <==

Figure 1. Gonneville Intrusion Plan View – new key drill results and high-grade G1-G11 zone outlines over TMI-RTP magnetics.

Half Year Report 2020 5

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

==> picture [499 x 251] intentionally omitted <==

Figure 2. Gonneville high-grade G1-G11 zones 3D View looking North-West (approx. down-dip of the high-grade zones).

Table 1. Maximum dimensions and status of high-grade zones at Gonneville.

Zone	Current strike extent	Current dip-extent	Status
G1			Merges with G2 at depth
G2	690m	490m	Open down-dipand to the north
G3	465m	280m	Open down-dipand to the north
G4	1000m	430m	Open down-dipand to the north
G5	450m	270m	Open down-dip
G6	300m	450m	Open down-dip
G7	350m	500m	Open down-dip
G8	350m	250m	Open down-dipand alongstrike
G9	350m	200m	Open down-dipand alongstrike
G10	400m	300m	Open down-dipand to the north
G11	1000m	300m	Open down-dipand to the north

Julimar Complex Reconnaissance

During the half year, Chalice identified three new large, untested airborne electromagnetic (AEM) anomalies immediately north of Gonneville (Figure 3). The new targets extend over a significant portion of the interpreted Julimar Complex, pointing to the potential for additional mineral discoveries along strike. The ~6.5km long Hartog EM Anomaly extends immediately north of Gonneville into the Julimar State Forest and has a similar EM signature to Gonneville, making it the highest priority target.

In early 2021, consent was obtained for initial non-ground disturbing activities within the State Forest under an approved Stage 1 Conservation Management Plan (CMP). Initial reconnaissance activities commenced in January 2021.

Half Year Report 2020 6

==> picture [111 x 15] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [426 x 485] intentionally omitted <==

Figure 3. Julimar Complex Plan View – 2020 AEM Survey and 2021 planned exploration corridor.

Preliminary Metallurgical Testwork

Locked-cycle sulphide flotation test results from high grade G1-G2 composites indicate that good concentrate grades and metal recoveries are likely using a conventional sequential flotation flowsheet.

Total Platinum Group Element (PGE) recovery of 86.3% Pd and 73.9% Pt was achieved into two separate, commercially attractive concentrates:

• Cu-PGE Concentrate grading 24.7% Cu, 173.0g/t Pd, 22.0g/t Pt, with metal recoveries of 80.9% Cu, 60.2% Pd, 37.6% Pt; and,

• Ni-PGE Concentrate grading 12.2% Ni, 24.1g/t Pd, 6.9g/t Pt, with metal recoveries of 70.7% Ni, 26.1% Pd, 36.3% Pt and an Fe:MgO ratio of ~8:1.

Half Year Report 2020 7

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

Leach tests completed on oxide zone composite JOS1 (head grade 2.02g/t Pd, 0.59g/t Au) at 26µm grind size achieved 76% Pd and 95% Au extraction into solution.

Further work is underway to optimise the flowsheet and variability testwork continues for other mineralisation styles found at Gonneville, with promising initial results. Early studies are also underway to determine mineralogical, metallurgical, processing and marketing factors.

Private Property Acquisitions

Chalice acquired three key private properties at the Julimar Project covering ~85% of the Gonneville Intrusion. The properties, plus associated livestock and farming assets were acquired for consideration comprising $7 million in cash and 2,303,010 fully paid ordinary Chalice shares. A further private property, which is adjacent to the Gonneville Intrusion, was acquired in December 2020 for $3.5 million in cash and settled in early February 2021.

Securing the title to these properties is an important milestone and a significant de-risking step for the potential development of a future mining operation.

Forward Plan

The forward work program for the project includes:

• « A maiden mineral resource estimate for Gonneville, following completion of the ongoing resource definition drill program;

• « Further sulphide flotation and oxide leach metallurgical testwork on various mineralisation styles within the Gonneville Intrusion, including the collection of additional samples to improve overall representivity;

• « Initial reconnaissance exploration activities over the untested parts of the Julimar Complex; and,

• « Initial mineralogical, mining, processing and marketing studies.

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

Chalice is continuing its systematic approach to gold exploration under cover in Central Victoria, following promising maiden drill results at the Karri, Ironbark North and Ironbark South Prospects returned in H1 2020. A 12 hole, ~4,000m Phase 2 diamond drill program was recently completed at the Karri Prospect, testing beneath the >4km gold trend identified by previous air-core (AC) drilling.

Elsewhere on the Project, the Company is continuing reconnaissance exploration activities across multiple target areas in the southern, shallow cover parts of the Muckleford and Mt William areas. Wide spaced AC drilling is underway, aiming to outline potential new large-scale gold targets.

Additional AC drilling is also planned at the Ironbark North and Ironbark South prospects to further refine the footprint of secondary gold anomalism observed to date. Results will then determine the next phase of focused diamond drilling.

3.3 Hawkstone Nickel-Copper-Cobalt Project, Western Australia (85-100%)

A maiden RC drill program of 11 holes for 2,043m was completed during the period to test priority ground MLEM targets in the Waterford area and the King Sound area. Weakly disseminated sulphides in Ruins Dolerite containing anomalous nickel and copper were intersected, which is viewed as encouraging for the broader NiCu sulphide prospectivity of these intrusions.

Due to surface access constraints, the two highest priority conductors at the Ephesus Target were not able to be drilled. Diamond drilling at this Target is planned for mid-2021.

Half Year Report 2020 8

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [111 x 15] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

3.4 Other Projects

==> picture [511 x 262] intentionally omitted <==

Figure 4.Chalice’s project locations in Australia, non-operated JV interests, investments and royalties.

In July 2020, Chalice secured a significant new opportunity in the South West region of Western Australia with the potential for nickel-copper-PGE sulphide discoveries. The South West Nickel Project includes a ‘Julimar lookalike’ Ni-Cu-PGE target, a ~20km long interpreted mafic-ultramafic complex with a strong magnetic signature and massive sulphide occurrence (the Thor Target). Initial reconnaissance activities at the project are underway.

The Company continued to progress access approvals for the Barrabarra and Viking Projects. These projects are early-stage opportunities where low-cost prospect generation can contribute to a diversified pipeline of future projects in the Chalice portfolio (Figure 4).

The Company has also significantly expanded its licence holdings in the West Yilgarn Ni-Cu-PGE Province, with a total of >8,000km[2] of new licence applications made since the discovery at Julimar. The West Yilgarn holdings comprise the Julimar, Barrabarra and Narryer Ni-Cu-PGE Projects.

4. INVESTMENTS

During the half-year, Chalice acquired a strategic 10% interest in ASX listed Caspin Resources (“Caspin”, ASX: CPN) for $1.2 million as part of an Initial Public Offering (market value of $3.2 million at 31 December 2020). Caspin holds a 400km[2] licence area ~40km north of Chalice’s Julimar discovery.

Chalice holds approximately 3.1 million shares in TSX listed O3 Mining Inc with a market value of $10.0 million at 31 December 2020.

5. CORPORATE

5.1 Equity Raising

During the half-year Chalice completed a A$100 million Placement to sophisticated, professional and institutional investors at an issue price of $3.75. In addition to the Placement, the Company also announced a Share Purchase Plan (SPP) of up to A$10 million at the same price as the Placement. Due to strong demand, the SPP was subsequently increased to $15 million and was completed after period end.

Half Year Report 2020 9

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

The combined Placement and SPP comprised the issue of ~30.7 million new fully paid ordinary shares and raised gross proceeds of $115 million.

5.2 Financial Review

At 31 December 2020, the Group had net assets of $146.9million (30 June 2020: $53.4 million) and an excess of current assets over current liabilities of $127.3 million (30 June 2020: $52.9 million). At 31 December 2020, the Group’s cash at bank totalled $118.7 million (30 June 2020: $45.7 million).

The Group reported a net loss after tax from continuing operations for the period of $16.3 million (31 December 2019: net loss of $4.7 million).

The Group’s focus during the half year period was on exploration and evaluation activities at the Company’s Julimar Project, with cash outflows on exploration and evaluation of $12.9 million (31 December 2019: $2.7 million). Cash outflows from operating activities to 31 December 2020 totalled $14.7 million (31 December 2019: $4.4 million) and cash outflows from investing activities for the period totalled $9.0 million (31 December 2019: $4.5 million) mainly due to the acquisition of three private properties at the Company’s Julimar Project.

Net cash inflows from financing activities was $96.7 million (31 December 2019: net cash outflow of $94,122) as a result of the Placement carried out in December 2020.

EVENTS SUBSEQUENT TO REPORTING DATE

On 15 January 2021, the Company completed a Share Purchase Plan. Under the Share Purchase Plan, raising ~$15 million (before issue costs) by issuing 3,999,952 shares at an issue price of $3.75.

On 9 March 2021, the Company entered into a contract to acquire a private property in close proximity to the Julimar Project to provide short term accommodation for employees working on the Julimar project. The purchase price for the property was $1.65 million and settlement is expected to occur early April 2021.

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 13 and forms part of this directors’ report for the half-year ended 31 December 2020.

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 [90 x 60] intentionally omitted <==

ALEX DORSCH

Managing Director

Dated at Perth this 12th day of March 2021

Half Year Report 2020 10

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [111 x 15] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

COMPETENT PERSONS & QUALIFYING PERSONS STATEMENT

The information in this Half-Year Report that relates to the exploration results for the Julimar Project is extracted from the following ASX announcements:

• « “High-grade nickel-copper-palladium sulphide intersected at Julimar Project in WA”, 23 March 2020

• « “Preliminary results from second target at Julimar Project”, 24 March 2020

• « “Significant nickel-palladium discovery confirmed at Julimar”, 15 April 2020

• « “Second diamond hole intersects discovery zone at Julimar”, 20 April 2020

• « “Exciting visual results from deep diamond drill hole at Julimar”, 5 May 2020

• « “Large-scale PGE system further expanded at Julimar”, 11 May 2020

• « “High-grade Ni-Cu-PGEs confirmed in discovery zone at Julimar”, 25 May 2020

• « “Extension of wide, high-grade PGE-Ni-Cu matrix zone at Julimar”, 15 June 2020

• « “Chalice discovers new high-grade PGE-Cu-Au zone at Julimar”, 9 July 2020

• « “Significant extension of high-grade PGE-Ni-Cu-Co zones at Julimar”, 17 August 2020

• « “Positive preliminary metallurgical results at Julimar”, 1 September 2020

• « “Major new 6.5km-long EM anomaly identified at Julimar", 22 September 2020

• « “Significant new PGE-copper-gold horizon defined at Julimar”, 6 October 2020

• « “Significant high-grade PGE-Cu-Au extensions at Julimar”, 18 November 2020

• « “Four new high-grade zones defined as Julimar continues to grow”, 27 January 2021

• « “More positive results from ongoing metallurgical testwork at Julimar”, 16 February 2021

The above announcements are available to view on the Company’s website at www.chalicemining.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 Half-Year report may contain forward-looking statements and forward information, including 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 Mining 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 fair value of investments ultimately realised, the estimation of mineral reserves and mineral resources, the realisation of mineral resource estimates, estimation of metallurgical recoveries, the forecast timing of the estimation of mineral resources, the likelihood of exploration success at the Company’s projects, the prospectivity of the Company’s exploration projects, the existence of additional EM anomalies within the project, the timing of planned studies and 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 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 “aim”, “expected”, “considered”, “will”, “interpreted”, “likely”, “may”, “potential”, “plan” or “planned”, “promising”, “targeted”, “attractive”, 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.

Half Year Report 2020 11

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

Such factors may include, among others, risks related to: actual results of current or planned exploration activities; the ability of exploration activities (including drill results) to accurately predict mineralisation; the predictability of geological modelling; assay results of visually interpreted mineralised intersections; whether geophysical anomalies are related to economic mineralisation or some other feature; obtaining access to undertake additional exploration work on EM anomalies located in the Julimar State Forrest; the results from testing EM anomalies; results of planned metallurgical test work Including results from other zones not tested yet, scaling up to commercial operations; changes in project parameters as plans continue to be refined; changes in exploration programs based upon the results of exploration, future metal prices; grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining necessary governmental approvals or financing; the completion of development or construction activities; movements in the share price of investments and the timing and proceeds realised on future disposals of investments, the impact of the COVID 19 epidemic 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 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.

Half Year Report 2020 12

==> picture [60 x 12] intentionally omitted <==

==> picture [101 x 14] intentionally omitted <==

==> picture [78 x 11] intentionally omitted <==

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [164 x 47] intentionally omitted <==

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the consolidated financial report of Chalice Mining Limited for the half-year ended 31 December 2020, 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 [99 x 44] intentionally omitted <==

Perth, Western Australia M R Ohm 12 March 2021 Partner

==> picture [359 x 81] intentionally omitted <==

Half Year Report 2020 13

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [79 x 11] intentionally omitted <==

==> picture [164 x 12] intentionally omitted <==

==> picture [181 x 14] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [483 x 27] intentionally omitted <==

----- Start of picture text -----

31 December 2020 31 December 2019
Note $ $
----- End of picture text -----

Continuing operations Revenue 2(a) Net finance income 2(b) Net gain on sale of exploration and evaluation assets Foreign exchange gain/(loss) Exploration and evaluation expenditure 2(e) Corporate administrative expenses 2(c) Business development expenditure 2(d) Share-based payments 11 Fair value adjustments 6 Loss from deconsolidation of subsidiaries Loss before tax from continuing operations Income tax benefit 3 Loss for the period from continuing operations Discontinued operations Net gain from discontinued operations Income tax expense Profit for the period from discontinued operations 4 Profit/(loss) for the period attributed to owners of the parent Other comprehensive income/(loss) Items that may be reclassified to profit or loss Foreign exchange gain on deconsolidation of subsidiaries Items that will not be reclassified to profit or loss Net gain on fair value of financial assets, net of tax Exchanges differences on translation of foreign operations Other comprehensive income for the period Total comprehensive income/(loss) for the period Total comprehensive income/(loss) for the period attributable to owners of the parent Basic and diluted loss per share from continuing operations (cents per share) Basic and diluted earnings per share from discontinued operations (cents per share) Basic and diluted earnings/(loss) per share from continuing and discontinued operations (cents per share)	435,634 176,759 91,269 19,531 - 178,147 (94,950) 156,329 (13,284,179) (3,585,777) (1,912,841) (1,272,186) - (432,923) (2,362,944) (103,087) (47,678) - (8,794) (80,945)
	(17,184,483) (4,944,152)
	918,914 210,835
	(16,265,569) (4,733,317) - 8,769,707 - (618)
	- 8,769,089 (16,265,569) 4,035,772
	8,385 1,022,310 3,483,898 303,060 (327,494) (55,692)
	3,164,789 1,269,678
	(13,100,780) 5,305,450
	(13,100,780) 5,305,450
	(6.0) (1.73) - 1.48 (6.0) 1.47

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Half Year Report 2020 14

==> picture [79 x 11] intentionally omitted <==

==> picture [164 x 12] intentionally omitted <==

==> picture [132 x 11] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

AS AT 31 DECEMBER 2020

==> picture [496 x 31] intentionally omitted <==

----- Start of picture text -----

31 December 2020 30 June 2020
Note $ $
----- End of picture text -----

Current assets Cash and cash equivalents Receivables 5 Biological assets 6 Income tax receivable 3 Financial assets 7 Total current assets Non-current assets Financial assets Right-of-use assets Receivables Property, plant and equipment 8 Total non-current assets Total assets Current liabilities Trade and other payables 9 Lease liabilities Employee benefits Total current liabilities Non-current liabilities Lease liabilities Other liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital 10 Accumulated losses Reserves Total equity	118,706,497 45,693,727 1,275,733 611,401 512,324 - 129,624 - 13,539,166 8,579,785
	134,163,344 54,884,913
	301,776 278,536 274,440 13,681 - 14,601 19,377,687 295,946
	19,953,903 602,764
	154,117,247 55,487,677
	6,520,118 1,744,566 80,353 47,218 277,188 207,867
	6,877,659 1,999,651
	261,018 11,633 40,376 49,351
	301,394 60,984
	7,179,053 2,060,635
	146,938,194 53,427,042
	164,804,949 59,500,883 (22,987,545) (6,751,967) 5,120,790 678,126
	146,938,194 53,427,042

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Half Year Report 2020 15

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [79 x 11] intentionally omitted <==

==> picture [91 x 12] intentionally omitted <==

==> picture [69 x 11] intentionally omitted <==

==> picture [14 x 11] intentionally omitted <==

==> picture [122 x 14] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [482 x 55] intentionally omitted <==

----- Start of picture text -----

Foreign
Share based Investment
currency
Issued Accumulated payments revaluation translation
capital losses reserve reserve reserve Total
$ $ $ $ $ $
----- End of picture text -----

	Issued capital $ Accumulated losses $ Share based payments reserve $ Investment revaluation reserve $ Foreign currency translation reserve $ Total $
Balance at 30 June 2020 Loss for the period Other comprehensive income for the period Net change in fair value of equity investments Exchange differences on deconsolidation of subsidiaries Exchange differences on translation of foreign operations Total comprehensive income/(loss) for the year Issue of share capital (net of costs) Share-based payments Transfers between equity items Balance at 31 December 2020 Balance at 30 June 2019 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 Exchange differences on deconsolidation of subsidiaries Total comprehensive income/(loss) for the year Share issue costs Issue of share capital Share-based payments Transfers between equity items Balance at 31 December 2019	59,500,883 (6,751,967) 1,630,679 (1,468,250) 515,697 53,427,042
	- (16,265,569) - - - (16,265,569) - - - 3,483,898 - 3,483,898 - - - - 8,385 8,385 - - - - (327,494) (327,494)
	-(16,265,569) - 3,483,898 (319,109) (13,100,780)
	104,719,826 - - - - 104,719,826 - - 1,892,106 - - 1,892,106 584,240 29,991 (645,039) 30,808 - -
	164,804,949(22,987,545) 2,877,746 2,046,456 196,588 146,938,194
	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 - - 103,087 - - 103,087 - 621,814 (329,571) (292,243) - -
	30,886,508 (4,475,322) 1,235,040 (63,673) 724,262 28,306,815

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Half Year Report 2020 16

==> picture [19 x 11] intentionally omitted <==

==> picture [59 x 11] intentionally omitted <==

==> picture [90 x 12] intentionally omitted <==

==> picture [51 x 11] intentionally omitted <==

==> picture [30 x 11] intentionally omitted <==

==> picture [70 x 11] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [482 x 30] intentionally omitted <==

----- Start of picture text -----

31 December 2020 31 December 2019
Note $ $
----- End of picture text -----

Cash flows from operating activities Cash receipts from operations Cash paid to suppliers and employees Payments for mineral exploration and evaluation Government grants and incentives received Interest received Interest paid Transaction costs relating to disposal of subsidiary Net cash used in operating activities Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of farming equipment Acquisition of biological assets 6 Acquisition of freehold land and buildings 8 Proceeds from sale of fixed assets Proceeds from sale of financial assets Payment for acquisition of financial assets 7 Proceeds from disposal of subsidiary Net cash used in investing activities Cash flows from financing activities Payment of principal portion of lease liabilities Security deposits Proceeds from issue of shares 10 Share issue costs 10 Net cash from/(used) in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the financial period	242,684 249,098 (2,500,498) (1,853,150) (12,894,893) (2,690,903) 337,000 - 105,714 41,971 (10,890) (8,874) - (137,093)
	(14,720,883) (4,398,951)
	(124,680) (5,770) (330,000) - (560,000) - (6,851,758) - - 9,185 101,854 508,329 (1,201,500) (5,632,752) - 615,344
	(8,966,084) (4,505,664)
	(17,336) (95,822) (22,740) 10,000 100,303,500 - (3,585,098) (8,300)
	96,678,326 (94,122)
	72,991,359 (8,998,737) 45,693,727 18,620,857 21,411 74,407
	118,706,497 9,696,527

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Half Year Report 2020 17

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [81 x 11] intentionally omitted <==

==> picture [174 x 12] intentionally omitted <==

==> picture [139 x 11] intentionally omitted <==

l d d l 1. SUMMARY OF SIGNIFICANT 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 annual financial report.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2020 and any public announcements made by Chalice Mining 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 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. 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 addition to those significant estimates and judgements disclosed in the consolidated financial report for the year ended 30 June 2020, two additional significant accounting judgements and estimates have been applied relating to new transactions and balances during the period ended 31 December 2020. Refer to note 6 (Biological assets) and note 8 (Property, plant and equipment) for further details.

(e) New or amended Accounting Standards

The Group has adopted all new or amended Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting period. Apart from the adoption of the new “concentration test” under AASB 3 Business Combinations (refer note 8), the impact on the financial performance and position of the Company from the adoption of the new or amended Accounting Standards and Interpretations was not material. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Half Year Report 2020 18

==> picture [81 x 11] intentionally omitted <==

==> picture [79 x 11] intentionally omitted <==

==> picture [90 x 12] intentionally omitted <==

==> picture [60 x 12] intentionally omitted <==

==> picture [75 x 11] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

2. REVENUE AND EXPENSES

==> picture [170 x 25] intentionally omitted <==

----- Start of picture text -----

2020 2019
$ $
----- End of picture text -----

• (a) (a) Revenue

(a) Revenue	2020 $ 2019 $
Corporate and administration services Government grants and incentives(1) Other	34,700 173,800 383,550 - 17,384 2,959
	435,634 176,759

• (1) Government incentives predominately include amounts received or receivable under the Federal Government’s Jobkeeper Payment Scheme ($316,050) and Cashflow Boost Scheme ($50,000), which provide temporary subsidies to eligible business.

(b) Net finance income

==> picture [169 x 25] intentionally omitted <==

----- Start of picture text -----

2020 2019
$ $
----- End of picture text -----

Finance Income Interest income from financial assets Interest income from lease receivables Finance costs Interest on lease liabilities (a)(c) Corporate administrative expenses Depreciation Investor relations and marketing Regulatory and compliance Personnel expenses Other corporate and administration costs	103,078 27,452 1,695 953
	104,773 28,405
	(13,504) (8,874)
	(13,504) (8,874)
	91,269 19,531
	2020 $ 2019 $ 42,412 135,918 119,172 101,315 314,647 232,780 1,271,451 670,679 165,159 131,494 1,912,841 1,272,186

(d) Business development expenditure

Business development costs for the prior period ended 31 December 2019 represent costs associated with the review of new business opportunities and potential asset acquisitions. As the Group’s focus from 1 July 2020 is predominately on mineral exploration at the Group’s material Julimar Project, the Group reported nil business development costs for the period ended 31 December 2020.

(e) Exploration and evaluation expenditure

==> picture [170 x 25] intentionally omitted <==

----- Start of picture text -----

2020 2019
$ $
----- End of picture text -----

Pyramid Hill, Victoria Julimar, Western Australia(1) Hawkstone, Western Australia Acquisition of exploration project – fair value adjustment Other generative projects	1,180,469 1,469,661 10,675,223 25,041 801,558 537,965 - 1,086,308 626,929 466,802
	13,284,179 3,585,777

(1) Exploration and evaluation expenditure for the half year ended 31 December 2020 is predominately made up of exploration expenditures relating to the Julimar Project, Western Australia following the significant Gonneville discovery in late March 2020.

Half Year Report 2020 19

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [81 x 11] intentionally omitted <==

==> picture [174 x 12] intentionally omitted <==

==> picture [139 x 11] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

3. INCOME TAX

==> picture [169 x 29] intentionally omitted <==

----- Start of picture text -----

2020 2019
$
$
----- End of picture text -----

Income tax benefit Over provision for income tax Deferred income tax benefit relating to investments held at fair value through other comprehensive income Income tax receivable Group subsidiaries	129,624 109,162 789,290 101,673 918,914 210,835 31 December 2020 $ 30 June 2020 $ 129,624 - 129,624 -

4. DISCONTINUED OPERATIONS

Discontinued operations reported for the prior period ended 31 December 2019 represents the disposal of the Group’s wholly owned subsidiary Chalice Gold Mines (Quebec) Inc. (“CGMQ”) to O3 Mining Inc. Refer to note 9 in the Group’s 2020 Annual Report for further details.

5. TRADE AND OTHER RECEIVABLES

==> picture [172 x 26] intentionally omitted <==

----- Start of picture text -----

31 December 2020 30 June 2020
$ $
----- End of picture text -----

Current Trade receivables GST receivable Lease receivable Prepayments Non-Current Lease receivable	105,344 61,706 992,425 383,337
	30,396 33,601
	147,568 132,757
	1,275,733 611,401
	- 14,601
	- 14,601

6. BIOLOGICAL ASSETS

==> picture [171 x 25] intentionally omitted <==

----- Start of picture text -----

31 December 2020 30 June 2020
$ $
----- End of picture text -----

Livestock Carrying amount at 1 July 2020 Acquisition of livestock(1) Loss from changes in fair value Carrying amount at 31 December 2020	- - 560,000 - (47,676) - 512,324 -

(1) At 31 December 2020, livestock comprises of sheep and cattle which were acquired as part of the acquisition of the three private properties at the Julimar Project.

Livestock is measured at fair value less costs to sell. At 31 December 2020, current market prices are used in determining the fair value of livestock on hand.

Half Year Report 2020 20

==> picture [81 x 11] intentionally omitted <==

==> picture [79 x 11] intentionally omitted <==

==> picture [90 x 12] intentionally omitted <==

==> picture [60 x 12] intentionally omitted <==

==> picture [75 x 11] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

7. FINANCIAL ASSETS

Current financial assets consists of listed equity investments in various companies listed on the ASX and TSX. This includes 3,092,784 ordinary shares in O3 Mining Inc and 6,007,192 ordinary shares in Caspin Resources Limited (“Caspin”). At 31 December 2020, the market value of the Company’s holding in these Companies was ~$10.0 million and ~$3.2 million respectively.

During the half year ended 31 December 2020, the Company acquired a strategic 10% interest in Caspin for $1.2 million as part of an Initial Public Offering.

8. PROPERTY, PLANT AND EQUIPMENT

==> picture [287 x 45] intentionally omitted <==

----- Start of picture text -----

Plant, Office furniture
Equipment & & Computer Freehold land
Vehicles Equipment and buildings Total
$ $ $ $
----- End of picture text -----

Cost At 1 July 2020 Additions Acquisition of freehold land and buildings(1&2) At 31 December 2020 Accumulated depreciation and impairment losses At 1 July 2020 Depreciation charge for the period At 31 December 2020 Net book value at 31 December 2020
	183,260 589,368 - 772,628
	392,126 35,324 - 427,450
	- - 18,702,870 18,702,870
	575,386 624,692 18,702,870 19,902,948
	85,705 390,977 - 476,682
	20,934 27,645 - 48,579
	106,639 418,622 - 525,261
	468,747 206,070 18,702,870 19,377,687

(1) On 15 December 2020, the Group acquired three private properties covering ~85% of the Gonneville Intrusion at the Julimar Project, The properties, plus associated livestock and farming assets were acquired for consideration comprising $7 million in cash and 2,303,010 ordinary fully paid shares in the Company.

(2) In December 2020, the Group entered into a contract to acquire an additional private property, adjacent to the Gonneville Instrusion for ~$3.6 million (inclusive of stamp duty and settlement costs) with settlement occurring in February 2021. As the contract of sale was unconditional, the Group has recognised the acquisition as a payable at 31 December 2020. Refer note 9.

Accounting Estimates and Judgement

At 31 December 2020, the acquisition of the three private properties has been accounted for as an asset acquisition rather than a business combination under AASB 3 Business Combinations as the Group has applied the “concentration test”. Under AASB 3, if an acquisition meets the concentration test, whereby substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets, then an entity may elect to account for an acquisition as an asset acquisition rather than a business combination.

As substantially all of the fair value of the assets acquired was attributable to the land and buildings acquired rather than the value attributable to the livestock and farming equipment, the Group has determined that the acquisition meets the concentration test and as such is recognised as an asset acquisition rather than a business combination.

Half Year Report 2020 21

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [81 x 11] intentionally omitted <==

==> picture [174 x 12] intentionally omitted <==

==> picture [139 x 11] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [274 x 46] intentionally omitted <==

----- Start of picture text -----

Plant, Office furniture
Equipment & & Computer Freehold land
Vehicles Equipment and buildings Total
$ $ $ $
----- End of picture text -----

9. TRADE AND OTHER PAYABLES Trade and other payables Property acquisition payable (refer note 8) Accrued expenses 10. EQUITY Issued and fully paid ordinary shares Movements in ordinary shares on issue At 1 July Shares issued to Key Management Personnel and employees on vesting of performance rights Shares issued to acquire private properties – refer note 8. Shares issued to acquire subsidiary Exercise of options - directors Exercise of options - other Share placement(1) Share issue costs Cost At 1 July 2019 Additions Disposals Exchange differences At 30 June 2020 Accumulated depreciation and impairment losses At 1 July 2019 Depreciation charge for the period Disposals Exchange differences At 30 June 2020 Net book value at 30 June 2020	9. TRADE AND OTHER PAYABLES Trade and other payables Property acquisition payable (refer note 8) Accrued expenses 10. EQUITY Issued and fully paid ordinary shares Movements in ordinary shares on issue At 1 July Shares issued to Key Management Personnel and employees on vesting of performance rights Shares issued to acquire private properties – refer note 8. Shares issued to acquire subsidiary Exercise of options - directors Exercise of options - other Share placement(1) Share issue costs Cost At 1 July 2019 Additions Disposals Exchange differences At 30 June 2020 Accumulated depreciation and impairment losses At 1 July 2019 Depreciation charge for the period Disposals Exchange differences At 30 June 2020 Net book value at 30 June 2020	221,296 653,101 - 874,397 87,266 39,679 - 126,945 (127,864) (105,511) - (233,375) 2,562 2,099 - 4,661	221,296 653,101 - 874,397 87,266 39,679 - 126,945 (127,864) (105,511) - (233,375) 2,562 2,099 - 4,661
		183,260 589,368 - 772,628
		147,680 398,187 - 545,867 21,638 66,893 - 88,531 (85,072) (75,543) - (160,615) 1,459 1,440 - 2,899
		85,705 390,977 - 476,682
		97,555 198,391 - 295,946
		31 December 2020 No. $	31 December 2020 $ 30 June 2020 $ 255,366 136,136 3,642,150 - 2,622,602 1,608,430
			6,520,118 1,744,566
		3,967,290 584,240 - - 2,303,010 8,198,716 - - - - 7,500,000 1,087,500 850,000 178,500 150,000 31,500 500,000 125,000 700,000 140,000 26,666,667 100,000,000 28,619,046 30,049,998 - (3,782,390) - (1,615,423)
		337,824,147 164,804,949 303,537,180 59,500,883

(1) On 8 December 2020, the Company completed a Share Placement to institutional and sophisticated investors raising $100 million (before costs) at an issue price of $3.75.

Half Year Report 2020 22

==> picture [81 x 11] intentionally omitted <==

==> picture [79 x 11] intentionally omitted <==

==> picture [90 x 12] intentionally omitted <==

==> picture [60 x 12] intentionally omitted <==

==> picture [75 x 11] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

The following table illustrates the number and movements in unlisted options during the period.

31 December 2020	30 June 2020
Share Options No.	No.
At 1 July 6,350,000	6,200,000
Options exercised during the year (1,350,000)	(850,000)
Options lapsed during the year -	(1,000,000)
Options issued during the year (refer note 11) 700,000	2,000,000
Outstanding at the end of the period 5,700,000	6,350,000
The following table illustrates the number and movements in performance rights during the period.
31 December 2020	30 June 2020
Performance Rights No.	No.
At 1 July 15,605,789	14,324,889
Performance rights issued (refer note 11) 1,108,063	5,292,347
Performance rights vested – equity settled (3,967,290)	-
Performance rights vested – cash settled (refer note 11) (415,365)	-
Performance rights lapsed -	(4,011,447)
On issue at 30 June 12,331,197	15,605,789

11. SHARE-BASED PAYMENTS

In October 2020, the directors resolved to issue, subject to shareholder approval at the Company’s Annual General Meeting, 700,000 unlisted options to directors with an exercise price of $2.20 and expiring 30 June 2023. The options were subsequently approved by shareholders on 25 November 2020 and the fair value of the unlisted options on grant date (being the date of shareholder approval) is approximately $1.9 million (or $2.723 per option) using a Black-Scholes option valuation methodology. The fair value of the options on grant date was significantly higher than the fair value of $0.748 per option determined at the date of directors’ resolution in October 2020 as the Company’s share price increased significantly between those two dates.

Approximately $1.5 million has been expensed during the period because the majority of the options vested on the date of grant.

The following table provides the assumptions made in determining the fair value of the options granted during the year:

==> picture [91 x 35] intentionally omitted <==

----- Start of picture text -----

31 December 2020
----- End of picture text -----

Share price at grant date (date of shareholder approval)	$3.78
Exercise price	$2.20
Expected volatility	110%
Life of options (years)	2.59
Risk-free interest rate	0.105%
Valuation per option	$2.723

During the half-year, the Board resolved to pay ~$0.4 million cash in lieu of the exercise of 415,365 Performance Rights that were held by a non-Australian resident.

In addition, 1,108,063 performance rights were granted to eligible Key Management Personnel and employees under the Group’s Long-Term Incentive. The fair value of the performance rights granted was determined using the MonteCarlo simulation model (market-based conditions) and Black-Scholes option valuation methodology (non-market conditions). The fair value of these performance rights shall vest over the vesting period of the performance rights (~3 years). Refer to section 7.4.2(c) of the Directors’ report within the Company’s 2020 Annual Report for details of the performance conditions related to those performance rights granted during the half year period.

Half Year Report 2020 23

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [81 x 11] intentionally omitted <==

==> picture [174 x 12] intentionally omitted <==

==> picture [139 x 11] intentionally omitted <==

12. COMMITMENTS AND CONTINGENCIES

Other than as disclosed above, there has been no material changes to commitments since 30 June 2020.

13. EVENTS SUBSEQUENT TO REPORTING DATE

On 15 January 2021, the Company completed a Share Purchase Plan. Under the Share Purchase Plan, raising ~$15 million (before issue costs) by issuing 3,999,952 shares at an issue price of $3.75.

On 9 March 2021, the Company entered into a contract to acquire a private property in close proximity to the Julimar Project to provide short term accommodation for employees working on the Julimar project. The purchase price for the property was $1.65 million and settlement is expected to occur early April 2021.

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.

14. 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.

15. 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).

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.

Half Year Report 2020 24

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

==> picture [62 x 12] intentionally omitted <==

==> picture [78 x 12] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

In the opinion of the directors of Chalice Mining 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 2020 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 12th day of March 2021

==> picture [101 x 68] intentionally omitted <==

Alex Dorsch Managing Director

Half Year Report 2020 25

==> picture [72 x 60] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [151 x 15] intentionally omitted <==

==> picture [96 x 15] intentionally omitted <==

==> picture [165 x 48] intentionally omitted <==

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Chalice Mining Limited

Report on the Condensed Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of Chalice Mining Limited (“the company”) which comprises the condensed statement of financial position as at 31 December 2020, the condensed statement of comprehensive income, the condensed statement of changes in equity and the condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration, for the Group 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 Mining Limited does not comply with the Corporations Act 2001 including:

• (a) giving a true and fair view of the Group’s financial position as at 31 December 2020 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 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s responsibilities for the review of the financial report section of our report. We are independent of the company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibility of the directors for the 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 for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether 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 Group’s financial position as at 31 December 2020 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 .

==> picture [346 x 80] intentionally omitted <==

Half Year Report 2020 26

==> picture [147 x 15] intentionally omitted <==

==> picture [96 x 15] intentionally omitted <==

==> picture [72 x 59] intentionally omitted <==

==> picture [238 x 52] intentionally omitted <==

==> picture [165 x 48] intentionally omitted <==

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.

Independence

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

==> picture [119 x 21] intentionally omitted <==

==> picture [99 x 44] intentionally omitted <==

HLB Mann Judd M R Ohm Chartered Accountants Partner

Perth, Western Australia 12 March 2021

Half Year Report 2020 27