CHALICE MINING LIMITED - Investor Presentation 2011

Developing a High Grade Gold Mine in Eritrea

TSX: CXN ASX: CHN

Africa Down Under 31 August – 2 September 2011 www.chalicegold.com

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Disclaimer and Competent Persons Statement

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This presentation does not include all available Information on Chalice Gold Mines Limited and should not be used in isolation as a guide to investing in the Company. Any potential investor should also refer to Chalice Gold Mines Limited Annual Reports and to ASX releases and take independent professional advice before considering investing in the Company.

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For further information about Chalice Gold Mines Limited, visit the website at www.chalicegold.com

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The information in this report that relates to Exploration Results is based on information compiled by Dr Doug Jones, a full-time employee and Director of Chalice Gold Mines Limited, who is a Member of the Australasian Institute of Mining and Metallurgy and is a Chartered Professional Geologist. Dr Jones has sufficient experience in the field of activity being reported to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, and consents to the release of information in the form and context in which it appears here.

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The Mineral Resource estimate was prepared by Mr. John Tyrrell who is a Member of the Australasian Institute of Mining and Metallurgy. Mr. Tyrrell is a full time employee of AMC and has sufficient experience in gold resource estimation to act as Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)'. Mr. Tyrrell consents to the inclusion of this information in the form and context in which it appears.

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The information in this statement of Ore Reserves is based on information compiled by Mr David Lee who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of AMC. Mr Lee has sufficient relevant experience to be a Competent Person as defined in the JORC Code. Mr Lee consents to the inclusion of this information in the form and context in which it appears.

Chalice Gold Mines Limited

ASX: CHN; TSX: CXN

Mine Development and Exploration in Eritrea High-grade, low cost gold development project (Koka)*: Open pittable 760,000 oz Probable Reserve @ 5.1g/t Au Forecast gold production of 104,000 oz p.a. over 7 years for Koka alone Lowest quartile cash operating costs of global cost curve - US$ 338/oz First gold pour estimated 2013 Exploration Upside:

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Located in the highly prospective and underexplored Arabian-Nubian Shield 1372 km[2] of granted tenements Drilling underway to test IP targets in ‘mine corridor’ Major regional exploration program underway

*** 60% owned by Chalice, 40% by ENAMCO (state-owned mining entity)**

Corporate Snapshot

Capital Structure

Share price A$0.33 Shares on issue 250 million Market capitalisation ~A$82 million Options on issue 7 million - Debt Cash ~A$9 million

Board

Tim Goyder Executive Chairman Dr Doug Jones Managing Director Juan Jeffery Executive Director & COO Mike Griffiths Non-Executive Anthony Kiernan Non-Executive Stephen Quin Non-Executive

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ASX: CHN; TSX: CXN

Share Price Movement

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80
70
60
50
40
30
20
10
0
Aug10 Oct10 Dec10 Feb11 Apr11 Jun11
Cents per share
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Substantial Shareholders

Franklin Resources 12.4% Directors & Management 12.4% Lujeta Pty Ltd 7.8% City Securities 6.1% Acorn Capital 5.0%

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The Arabian-Nubian Shield

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Centamin Barrick
Sukari Jabal Sayid
15 year 10 year
500 koz pa Au 61 kt pa Cu
La Mancha Chalice
Hassai Zara
Nevsun Sunridge
6 year Bisha Asmara 7 year
156 koz pa + VMS 104 koz pa Au
5 year
>10 year
Cu Zn Ag Au
Au, Ag, Cu, Zn
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Long mining history (>1,000 recorded ancient copper and gold mines) Minimal modern exploration

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Hosts resources of +20Moz gold

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World-class projects now being developed

High Grade

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6
5
4
3
2
1
0
Chalice Semafo Noble Teranga Avocet Adamus Banro Cluff Perseus Centamin
Reserve Grade (g/t)
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Gold mine cost curve – Q1 2011

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1,400
1,200
1,000
800
Koka Gold Mine
600 US$338/oz
400
200
-
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cumulative costed production, %
Cash cost, $/oz
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Source: VM Group/Haliburton Mineral Services

NPV vs Market Cap

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300 1.2
Cash balance
250 1
NPV at 8%
Current share
200 0.8 price
150 0.6
100 0.4
50 0.2
0 0
$1,600 $1,800 $2,000
Gold Price ($US)
Market Cap
($AUD millions)
$AUD per share
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-Current cash balance of approximately $9 million + $32 million ENAMCO payment (US$) less taxes payable -NPV represents Chalice’s 60% share at 8% discount, based on Feasibility Study

-USD/AUD exchange rate 1:1

Current Ground Position – 1372 sq km

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Koka – Feasibility Study Cost Profile

Operating Cost Estimates
Average mining costs (incl. pre-strip)	$/t mined	2.01
Processing cost	$/t milled	24.78
General and administration	$/t milled	7.36
Refining charges	$/t milled	0.63

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Koka – Feasibility Study Production Profile

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160 900 Enamco (40%)
800 CHN (60%)
140
Cash Costs
700
120
600
100
500
80
400
60
300
40
200
20
100
- -
2014 2015 2016 2017 2018 2019 2020 2021
Financial years ended 30 June
(US$/oz)
Production ('000 oz's) Cash costs
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Koka Deposit – Project Life of Mine Value

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US$
Revenue Gold Sales $1168M
US$1168M
Mining ($97M)
EBITDA
$866M
Processing ($113M)
Costs
($302M)
Free cash flow before tax G&A ($34M)
$735M
Royalties ($58M)
PP&E ($60M)
Infrastructure ($28M)
Capital
($131M)
Pre-strip ($12M)
Assumptions:
US$ 1600 gold price
Other ($31M)
100% Project (Chalice have a 60% share)
Uses 2010 Koka Feasibility Study
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Koka Development Schedule

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Calendar Year 2011 2012 2013
Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Shareholders
Agreement
Mining Agreement
Mining License
Project Funding
Contractor Selection
& Engagement
Construction ramp -
up
Construction
Pre-Strip
First Production
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Koka – a low risk project

Development Risks	Risk Level	Risk Mitigation
	Low High Risk
Resource and reserves		High grade JORC/NI43-101 reserves
Management experience		Experienced development team
Geography and infrastructure		Managed through project design
Political risk		Stable government (18 years) – equity participation in project
Construction risk		Fixed price contracts (EPC)
Mining process		Conventional open pit
Metallurgy		Free milling and 96% recovery
Processing technology		Proven technology
Currency risk		Revenues and costs matched
Cost contingencies		Conservative cost estimates

Key Objectives 2011

 Crystallise Government purchase price Q2 2011  Develop pipeline of exploration targets Q1 – 2 2011  Commence drilling of Koka near-mine targets Q2 2011  Complete mine permitting Q3 2011  Secure funding Q4 2011  Commence construction Q1 2012

Regional Geology & Mineralisation

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Near Mine Exploration - Koka 3D IP

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Long Section
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Koka 3D IP – Priority Targets Koka & Koka East

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W E
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Zara Tenements – Other Targets

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Zara North Prospects
Koka
Konate-Fah-Alidar
Debre Tsaeda
Debre Tsaeda Artisanal Workings
Soil Geochemistry – Gold Anomalies
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Mogoraib North Exploration Licence

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Located ~10 km north of Nevsun’s Bisha VHMS Project with similar geological setting

Landsat spectral signatures similar to Bisha

VTEM survey completed -~3825 line kilometres

Preliminary interpretation has identified several promising targets Geological mapping & stream sediment sampling completed 2000m diamond drilling budgeted

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Analysts Covering the Chalice Story

Australia

Europe

Southern Cross Equities

Peter Chapman E: [email protected] T: +612 9231 0880

Ambrian Partners Limited Adam Kiley E: [email protected] T: +44 20 7634 4777

Paterson Securities Limited Simon Tonkin E: [email protected] T: +618 9225 2816

North America

Haywood Securities Limited Joe Mazumdar E: [email protected] T: +1 604 697 7124

Stifel Nicolaus

Josh Wolfson E: [email protected] T: +1 416 566 4080

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Forward Looking Statements

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

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

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

Corporate Contact Details

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Tim Goyder Executive Chairman M: +61 418 942 908 [email protected]	Dr Douglas Jones Managing Director M: 61 438 872 090 [email protected]	Dan Hrushewsky Senior VP – Corporate Development M: +1 647 864 2735 [email protected]	Joanne Jobin Investor Relations – North America M: +1 647 964 0292 [email protected]

Chalice Gold Mines Limited

Level 2, 1292 Hay Street, West Perth, Western Australia 6005 GPO Box 2890, Perth, Western Australia 6001 T: +618 9322 3960 F: +618 9322 5800 E: [email protected] W: www.chalicegold.com

Appendix 1: Eritrea Mining Act Summary

Prospecting licence

One year, not renewable & not transferrable Maximum size 100km[2] Licence fee (US)$33.33 Annual rental (US)$3.33/km[2]

Exploration licence

3 year term

2 renewals for 1 year each - transferrable with approval

One quarter relinquishment of original licence area with each renewal

Maximum size 50km[2]

Licence fee (US)$100 Annual rental (US)$13.30/km[2]

Mining licence

Maximum of 20 years or life of deposit (whichever is shorter)

Royalties

5% for precious metals and 3.5% for other metallic minerals

Government Participation

10% free-carried interest at the mining stage 30% participating interest acquired by Government based on fair value

Taxes

Corporate income tax 38%

20% flat tax on expatriate employee earnings 0.5% on all imports of machinery equipment, vehicles and parts

No dividend tax

Straight line depreciation over 4 years with no salvage

The right to carry forward operational losses and deduct them from gross income

Renewable for 10 years Maximum size 10km[2]

Licence fee is (US)$400 Annual rental is (US)$40/km[2]

Appendix 2: Joint Ownership Agreement with ENAMCO

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Signed July 27, 2011.

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Chalice first in country to conclude partnership agreement with ENAMCO (as required by Mining Act). Represents a “green light” for financing & construction of the Koka Gold Project, subject to signing of Shareholder’s Agreement and Mining License.

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The Government of Eritrea, via the Eritrean National Mining Corporation (ENAMCO) acquired a 30% paid participating interest in the Koka Gold Project and surrounding exploration tenements (together “Zara Mining SC”) for US$ 34 million (due in January 2012).

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Ownership in Zara Mining SC becomes Chalice (60% participating interest), ENAMCO (30% participating interest, 10% free carried interest). Ownership agreement excludes Hurum and Mogoraib North Licenses. ENAMCO will, going forward, contribute 1/3 of capital costs of the mine, and 1/3 of exploration expenditures on surrounding exploration tenements.

Appendix 3: Eritrea Quick Facts

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Independent since 1993 Politics: transitional single party Republic Capital: Asmara Area: 121,144 square kilometers Population: ~5.9 Million

Culture: 45% Islamic, 45% Coptic Christian, 10% Other Languages: Tigrinya, Arabic, Tigre, Afar, Kunama Business & Government language: English Legal system: mixed civil, customary, and Islamic religious law

GDP: $3.625 billion (2010 est.) GDP per Capita: U.S. $700

Exports: $25 million (2010 est. pre Bisha production) Currency: Nakfa (Nkf) - pegged to $ USD (15Nkf = US$1) Life Expectancy: 54

Adult Literacy Rate: ~60%

Proactive Government stance on mining developments – modern (1995) Mining Code

Increasing foreign exploration & mining investment – 18 groups now active in country

No corruption

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Appendix 4: Koka Gold Deposit

Feasibility Study Assumptions and Parameters

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Base Case Assumptions
Gold price base case			US$/oz	900
Foreign exchange rate Foreign exchange rate	~600m strike	length AUD/US$ ERN/US$		0.85 15.00
Fuel price			$/litre	1.00
Fiscal Parameters			7 years
Corporate tax rate			%	38
Royalty			%	5.0
Base Case Mine Parameters Ore milled (Mt)			Mt	4.6
Waste mined (Mt)			Mt	48.3
Strip ratio			W:O	10.4
Average gold grade			g/t	5.10
Total contained gold			oz	760,000
Estimated gold recovery			%	96.3
Total recovered gold			oz	730,780
Life of mine			Years	7
Average annual gold production			oz	104,000
Base Case Cost Parameters Pre-production capital			$M	122
Sustaining capital and mine closure			$M	9
Average total cash costs ($/oz)			$/oz	338

AI assistant

CHALICE MINING LIMITED — Investor Presentation 2011

64649_rns_2011-08-31_39c63baa-c149-444b-bc88-9bb7a44524d8.pdf

Developing a High Grade Gold Mine in Eritrea

Disclaimer and Competent Persons Statement

Chalice Gold Mines Limited

ASX: CHN; TSX: CXN

Corporate Snapshot

Capital Structure

Board

ASX: CHN; TSX: CXN

Share Price Movement

Substantial Shareholders

The Arabian-Nubian Shield

High Grade

Gold mine cost curve – Q1 2011

NPV vs Market Cap

Current Ground Position – 1372 sq km

Koka – Feasibility Study Cost Profile

Koka – Feasibility Study Production Profile

Koka Deposit – Project Life of Mine Value

Koka Development Schedule

Koka – a low risk project

Key Objectives 2011

Regional Geology & Mineralisation

Near Mine Exploration - Koka 3D IP

Koka 3D IP – Priority Targets Koka & Koka East

Zara Tenements – Other Targets

Mogoraib North Exploration Licence

Analysts Covering the Chalice Story

Australia

Europe

Southern Cross Equities

North America

Stifel Nicolaus

Forward Looking Statements

Corporate Contact Details

Chalice Gold Mines Limited

Appendix 1: Eritrea Mining Act Summary

Prospecting licence

Exploration licence

Mining licence

Royalties

Government Participation

Taxes

Appendix 2: Joint Ownership Agreement with ENAMCO

Appendix 3: Eritrea Quick Facts

Appendix 4: Koka Gold Deposit

Feasibility Study Assumptions and Parameters

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CHALICE MINING LIMITED Investor Presentation 2011