CHALICE MINING LIMITED — Share Issue/Capital Change 2014

Sep 29, 2014

30 September 2014

Australian Securities Exchange Limited Level 40 Central Park 152-158 St Georges Terrace PERTH WA 6000

Dear Sir

Proposed issue of performance rights

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Chalice Gold Mines Limited (ASX: CHN, TSX: CXN) advises that the Board has resolved to issue a total of 7,349,779 performance rights to directors and executives of the Company under the terms of the Chalice Long term Incentive Plan.

The issue of all performance rights to directors, as set out below, is subject to shareholder approval at the Company’s 2014 AGM. The performance rights will not vest and the underlying shares will not be issued unless the performance conditions set by the Board have been satisfied with the final quantum to be determined on the measurement date of 30 June 2016.

Please refer to the Annexure A for details of the proposed performance/vesting conditions.

The Company provides the following information in relation to the proposed issue:

Class	Unlisted Performance Rights
Number proposed to be issued toDirectors(subjecttoshareholderapproval)	3,961,422
Number proposed to be issued toexecutives and staff	3,388,357
Principle terms	The unlisted performance rights will be issued under the terms ofthe Company’s Long term Incentive Plan with vesting conditionsto be based on share price, achieving key business objectives andservice periods**(see Annexure A)**
Issue price	Nil

Yours faithfully

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Leanne Stevens Company Secretary

ANNEXURE A – PERFORMANCE RIGHTS PROPOSED VESTING CONDITIONS

The performance rights shown above will not vest (and the underlying shares will not be issued) unless the performance conditions set by the Board (as outlined below) have been satisfied. For the proposed 2014/2015 annual grant of performance rights, a maximum of 50% is to be based on achieving share price hurdles and the remaining 50% is to be based on achieving key business objectives.

In addition to the measurement period of 1 July 2014 to 30 June 2016, a 12 month service period must also be completed by each person, meaning that performance rights will not vest or convert into shares until 30 June 2017 at the earliest.

The following table outlines key business objectives and the weightings of the performance condition:

		Percentage of
		granted performance
		rights that will vest if
Overall Performance		performance
Condition	Specific Performance Conditions	conditions are met
Strategic objectives	**Undertake a significant acquisition:**acquire one or moreassets in addition to the Cameron Gold Project with
	potential to generate returns above the Company’s internal
	hurdle rates based on consensus commodity prices and cost
	assumptions.
	AND/OR	50%
	**Make a significant new discovery:**at the Cameron Gold
	Project or any other Projects/Joint Venture acquired by the
	Company which shows potential to be economic based on
	consensus commodity prices and cost assumptions.
Share price objectives	Below 23 cents	0%
If the 60 Day VWAP asat the measurement	23 cents	16.5%
date is:	Between 23 cents and 38 cents	Pro rata between16.5% and 50%
	Above 38 cents	50%