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E it ’ N t G ld MiEritrea’s Next Gold Miner
Analyst Site Visit - EritreaApril 2011
www.chalicegold.com
Disclaimer and Competent Persons StatementDisclaimer and Competent Persons Statement
This presentation may contain value references and "forward looking statements“ which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results.
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.
For further information about Chalice Gold Mines Limited, visit the website at www.chalicegold.com
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 Miningfull‐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.
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 i f i i h f d i hi h iinformation in the form and context in which it appears.
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 informationexperience 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.
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Chalice Gold Mines ‐ ProfileChalice Gold Mines ‐ Profile
Chalice Gold Mines, based in Australia, owns 100% of the strategically positioned Zarastrategically positioned Zara Project in Eritrea, East Africa. Chalice, a progressive
l i d d l
SAUDI ARABIASAUDI ARABIA
EGYPTEGYPT exploration and development company is dedicated to building shareholder value
SUDANSUDAN
through the development of the Zara Property (Koka Deposit) and will continue to
CHALICECHALICEZaraZara
aggressively explore high‐quality gold and base metal targets in Africa.
ERITREA
ARABIAN NUBIAN SHIELD
ZaraZara targets in Africa.
ARABIAN‐NUBIAN SHIELD
CHALICE, ZARA PROPERTY
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Chalice Gold Mines – an OverviewChalice Gold Mines – an Overview
A gold exploration & development company focused in Eritrea
V l d i d b th hi h d l t Z G ld P j tValue underpinned by the high‐grade, low cost Zara Gold Project
Feasibility completed, permitting underway
O it 760 000 O R @ 5 1 /t AOpen pit ‐ 760,000oz Ore Reserve @ 5.1g/t Au
Average annual production of 104,000oz over 7 year mine life
L h ti t US$338/Low cash operating costs US$338/oz
Significant exploration upside
d i h hi hl i d d l d bi bi hi ldLocated in the highly prospective and underexplored Arabian‐Nubian Shield
1437 km2 of granted tenements
ill dDrill‐ready targets
Major exploration program underway
E i i l li iExtensive regional tenement applications
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Corporate Snapshot and CapabilityCorporate Snapshot and Capability ASX: CHN; TSX: CXN
Capital Structure Share price A$0.52
Shares on issue 218 million
Market capitalisation ~A$113 millionMarket capitalisation A$113 million
Options on issue 7 million
Debt ‐
Cash ~A$5 2m
Board Substantial Shareholders
Cash A$5.2m
Tim Goyder Executive Chairman
Dr Doug Jones Managing Director
Franklin Resources 14.8%
Directors & Management 12.8%
Mike Griffiths Executive Director
Anthony Kiernan Non‐Executive
Lujeta Pty Ltd 7.4%
Acorn Capital 4.7%
Cit S iti 3 0%Stephen Quin Non‐Executive City Securities 3.0%
5
The Opportunity – by cash costThe Opportunity – by cash cost
775 8006h d ( / )
6607005
Ct)
Cash Costs Grade (g/t)
577
514492 492
463 461500
600
3
4
Cash Costs (e Grade
(g/t
355
338
4002
US$/oz)Re
serve
200
300
0
1
Teranga Avocet Cluff Noble Adamus Centamin SEMAFO Perseus Banro ChaliceTeranga Avocet Cluff Noble Adamus Centamin SEMAFO Perseus Banro Chalice
6
Comparative Market ValuationComparative Market Valuation
8001,403
600
700
800
z)
400
500
serve (A$/oz
200
300
EV / Res
‐
100
Banro Chalice Centamin Perseus Noble Adamus Teranga Avocet Cluff SEMAFO
*Avocet multiples have been adjusted on a pre‐tax basis for the sale of its South East Asian assets.
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The Arabian‐Nubian ShieldThe Arabian‐Nubian Shield
EquinoxJabal Sayid
CentaminSukari
10 year 61 kt pa Cu
15 year500 koz pa Au
ChaliceZara
La ManchaHassai
7 year104 koz pa Au
NevsunBisha6 year
156 koz pa + VMS
SunridgeAsmara
5 year
The Zara Project is located within southern Arabian‐Nubian Shield
>10 yearAu, Ag, Cu, Zn
5 yearCu Zn Ag Au
Current resources +20Moz gold Over 1,000 recorded ancient copper and gold minesMinimal modern explorationMinimal modern exploration
World‐class projects now being developed8
Significant Ground PositionSignificant Ground Position
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The Mine SiteThe Mine Site
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Koka Gold DepositKoka Gold Deposit
Indicated Resource of contained gold 840,000 Oz
~600m strike length,
Probable Reserve of contained gold 760,000 Oz (within resource)
*Both based on 1.2 g/t cut‐off
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Metallurgically SimpleMetallurgically Simple
Quartz –carbonate‐sulphide stockwork veins cutting microgranite; simple mineralogy & free‐millingmicrogranite; simple mineralogy & free milling
Metallurgically benign
Overall recoveries >95% for grind sizes of 80%Overall recoveries >95% for grind sizes of 80% passing 150 to 75µ respectively
~50% of gold recoverable by gravity f g y g y
Low reagent consumptions ‐ <0.5 kg/t for both lime and cyanide
Ore has medium competency ‐ Bond Work Index (15‐18kWhrs/t)
Abrasion index of 0.3
Simple processing route – single‐stage crushing SAG ill it CILSAG mill gravity CIL
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Koka Project – Key Financial OutcomesKoka Project – Key Financial Outcomes
100% Project Financial Outcomes(Unleveraged)
Gold Price$900 $1,200 $1,500(Unleveraged) $900 $1,200 $1,500
Life‐of‐mine EBITDA $381M $589M $797M
Average annual EBITDA $54M $84M $114M
NPV5% after‐tax cash flows $99M $196M $293M
IRR after tax 22% 35% 45%
Payback period (years) 2 8 2 1 1 8Payback period (years) 2.8 2.1 1.8
* The Eritrean Government has a statutory 10% non‐contributinginterest and a 30% contributing interest
Operating Cost Estimates $/t milled $/t mined $/recoverable oz
Average mining costs 20 46 1 92 129 80Average mining costs 20.46 1.92 129.80
Processing cost 24.78 2.33 157.20
General and administration 7.36 0.69 46.70
Refining charges 0.63 0.06 4.00g g
Operating cash costs (LOM) 53.23 5.00 337.70
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Koka Outstanding ReturnsKoka Outstanding Returns
600700800
900
100000
120000
140000
160000Production
Cash costs
(koz)
US$/oz)
100
200300400500600
20000
40000
60000
80000
100000
Prod
uctio
n
Cash Costs (U
00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
150
50
100Distributions
Equity contributions
Flow
(US$m)
Cash flow to equity
‐100
‐50
0
Cash
US$1300 gold price
100% project case funded by 100% equity
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
100% project case, funded by 100% equity
Capex US$122M, after tax cash flow generation US$477M (excluding royalty)14
ENAMCO InterestENAMCO Interest
ENAMCO has elected to acquire a 30% paid participating interest in Zara (+10% carried interest)
Participating interest to be acquired at negotiated “fair value” based on NPV valuation
Provision to go to external arbitration if required
Payment three months after grant of mining licence
ENAMCO to contribute 33% of capital costs
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Koka Development ScheduleKoka Development Schedule
Calendar Year 2010 2011 2012 2013
Quarter Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Maiden Reserve
Quarter Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Feasibility Study
Release 43‐101COMPLETED
TSX listing
Zara Permitting
Funding Period
Construction
Pre‐Strip
First Production
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Exploration PotentialExploration Potential
Zara NorthBLEG & ‐80# gold anomaliesRock‐chips to 27.5 g/t Au
Zara NorthBLEG & ‐80# gold anomaliesRock‐chips to 27.5 g/t Au
Koka
Tenement Boundary
840,000 oz Resource
Konate
3D IP Survey & Soil
3D IP Survey & Soil
KonateIntersections to 7m @ 22.3g/t
SamplingSampling
2 km
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Koka 3D IP – Near Mine TargetsKoka 3D IP – Near Mine Targets
W EKOKAW EKOKA
KOKA EASTKOKA EAST
DEBRA KONATE
500 ANOMALY D500m ANOMALY D
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Koka 3D IP – Priority Targets A & CKoka 3D IP – Priority Targets A & C
W EW E
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Zara North Gold AnomalyZara North Gold Anomaly
Extensive gold anomalism over 10km strike length
High tenor gold values of up to 876ppb gold Hamid Keir High tenor gold values of up to 876ppb gold in stream sediment samples
Regional‐scale high‐strain zone with intenseRegional‐scale high‐strain zone with intense carbonate‐sericite alteration and quartz veining
Artisanal workings ‐ up to 27.5 g/t in rock chips
Soil GeochemGrid
Detailed mapping and soil sampling underway to define drill targets – mid 2011
20
Zara North Gold Anomaly
21
New Data ‐ Aeromagnetics & RadiometricsNew Data ‐ Aeromagnetics & Radiometrics
22
Hurum Exploration LicenceHurum Exploration Licence
23
Mogoraib North Exploration LicenceMogoraib North Exploration Licence
Located ~10 km north of Nevsun’sBisha VHMS Project
Area 555 sq km
G l i l i i il Bi hGeological setting similar to Bisha
Landsat spectral signatures similar to p gBisha
VTEM survey to commence AprilVTEM survey to commence April 2011 ‐ ~4000 line kilometres
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Exploration TimelineExploration Timeline
Exploration program to generate strong news flow
l l $ d
Calendar Year 2011
Exploration program totaling ~$10M expected
Quarter Q1 Q2 Q3 Q4
InducedPolarisation (IP)
SurveySurveyAero‐Magnetics &
Radiometrics
VTEM
Geochemical Sampling & Geological Mapping
Drilling – Koka IP targets 10,000m
Drilling ‐ Zara North
Drilling – Mog Nth 5,000m
5,000m
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SummarySummary
Value of Company underpinned by Koka Gold Deposit
Advanced high grade gold depositAdvanced high grade gold deposit
Feasibility completed
Strong economics
Low technical risk
Mine permitting in progress
Strategic ground position in emerging gold & base metal province
Aggressive exploration programs underway to expand current resource base
Experienced Board and Management with extensive expertise in African gold sector
Currently building development team
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Analysts Covering the Chalice StoryAnalysts Covering the Chalice Story
Australia Europe
Southern Cross EquitiesPeter Chapman
E: [email protected] T: +612 9231 0880
Paterson Securities Limited
Ambrian Partners LimitedE: [email protected] T: +44 (20) 7634 4777
Simon TonkinE: [email protected] T: +618 9225 2816
Argonaut LimitedTroy Irvin
E: troy@argonautlimited com T: +618 9224 6871E: [email protected] T: +618 9224 6871
North America
Haywood Securities Limited
Joe MazumdarE: [email protected] T: +1 (604) 697 7124
Clarus Securities Inc
Nana SangmuahE: [email protected] T: +1 416 343 350
Stifel Nicolaus Canada Inc
J h W lfJosh WolfsonE: [email protected] T: +1 416 815 3080
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Corporate Contact DetailsCorporate Contact Details
Tim Goyder Dr Douglas Jones Joanne JobinExecutive Chairman Managing Director Investor Relations Manager – North AmericaM: +61 418 942 908 M: +61 438 872 090 M: +1 647 964 0292
[email protected] [email protected] [email protected]
Chalice Gold Mines LimitedLevel 2, 1292 Hay Street, West Perth, Western Australia 6005
GPO Box 2890, Perth, Western Australia 6001T: +618 9322 3960 F: +618 9322 5800 E: [email protected] W: www.chalicegold.com
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Appendix 1: Eritrea Mining Act SummaryAppendix 1: Eritrea Mining Act Summary
Prospecting licenceOne year, not renewable & not transferrableMaximum size 100km2
Royalties5% for precious metals and 3.5% for other metallic mineralsMaximum size 100km
Licence fee (US)$33.33Annual rental (US)$3.33/km2
Exploration licence
metallic minerals
Government Participation10% free-carried interest at the mining stage30% participating interest acquired by GovernmentExploration licence
3 year term2 renewals for 1 year each - transferrable with approvalOne quarter relinquishment of original licence area
30% participating interest acquired by Government based on fair value
TaxesCorporate income tax 38%One quarter relinquishment of original licence area
with each renewalMaximum size 50km2
Licence fee (US)$100Annual rental (US)$13 30/km2
Corporate income tax 38%20% flat tax on expatriate employee earnings0.5% on all imports of machinery equipment, vehicles and partsNo dividend taxAnnual rental (US)$13.30/km2
Mining licenceMaximum of 20 years or life of deposit (whichever is shorter)
No dividend tax Straight line depreciation over 4 years with no salvageThe right to carry forward operational losses and deduct them from gross incomeshorter)
Renewable for 10 yearsMaximum size 10km2
Licence fee is (US)$400Annual rental is (US)$40/km2
deduct them from gross income
Annual rental is (US)$40/km2
29
