Chalice Gold Mines Intersects 1meter at 92g/t Gold at a new Mineral Zone in 'Debre Konate'

Chalice intercepts high grade gold at a new mineralisation zone called 'Debre Konate'

By Jeff Coote,

Chalice Gold Mines (ASX: CHN; TSX: CXN) and its 60% owned subsidiary Zara Mining Share Company (ZSMC) have intersected more high-grade mineralisation from diamond drilling at the Koka South and Debre Konate prospects.

The prospects are located immediately south of the Koka Gold Deposit at its Zara Project in northern Eritrea, north east Africa.

At Koka South highlights include:

– 1 metre at 168.8 grams per tonne (g/t) gold from 144 metres;
– 5 metre at 86.2g/t gold from 98 metres including 1 metre at 401g/t gold (repeat assay 341g/t) and 1 metre at 25.7g/t gold from 113 metres.
– 1 metre at 44.4g/t gold from 145 metres.

The Koka South prospect, which adjoins the Koka Main deposit to the south, was previously drilled in 2010, returning intersections of up to 1 metre at 92 g/t gold. A further 17 diamond drill holes were drilled in the current campaign for 3,034 metres.

The latest results from Koka South confirm that previously reported high-grade mineralisation extends to depth and remains open to the south and at depth.

The widths and grades of mineralisation encountered have the potential to provide a significant extension to the Koka deposit and will be explored by further drilling in the coming months.

The new results have confirmed and extended previously intersected high-grade mineralisation at Koka South and identified a significant new mineralized zone at Debra Konate, 2.5 kilometres south of the Koka Deposit.

At Debre Konate better intersections included:

– 1 metres at 38.4g/t gold from 146 metres;
– 1 metres at 10.3g/t gold from 180 metres; and
– 2 metres at 14.7g/t gold from 223 metres.

The Company would find encouragement in the new results, which highlighted the prospectivity of the Zara Project and the potential for discovering additional Koka-style orebodies, as well as now a potential new style of bulk tonnage mineralisation such as that found at Debra Konate.

Doug Jones, Chalice Gold’s managing director, said “with project development and production now fast-approaching at Koka, we will increasingly turn our attention to exploration to continue to grow our resource inventory.”

These results have confirmed two priority targets for follow-up drilling, and there are many more to follow next year and beyond.”

The intersection of significant new gold mineralisation at Debre Konate opens up a previously unrecognized zone of mineralisation that appears to have potential for larger, bulk-tonnage styles of mineralisation compared with the smaller-tonnage, high-grade style of deposit at Koka.

Koka has a Probable Mineral Reserve of 760,000 ounces at a grade of 5.1 g/t gold and an Indicated Mineral Resource of 840,000 ounces at a grade of 5.3 g/t gold.

The project feasibility study is based on annual average production of approximately 104,000 ounces of gold per year at a cash cost of US$338 per ounce of gold.

Chalice and its partner ENAMCO are planning to commence development of an open-pit mine in early 2012.

On November 12 Chalice a step moved closer to development of its Koka Gold Mine after executing an agreement with the Government of the State of Eritrea.

ZMSC has also applied for a Mining License for a period of 18 years, which the Government has advised will be issued shortly.

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