Monday, August 09, 2010-Chalice Gold Mines (ASX: CHN) has proposed a 1‐for‐6 rights issue to existing shareholders at 42 cents to raise $12.6M before issue costs to underpin the continued exploration and development of the company’s 100%‐owned Zara Gold Project in Eritrea, East Africa, which has a high grade Indicated gold Resource (840,000 oz @ 5.3 g/t).

On 13 July Chalice completed a Definitive Feasibility Study based on a proposed open pit mine at the Koka deposit, which forms part of the Zara Project. The project has low cash costs of $338/oz and a 7 year mine life at more than 100,000 oz average production per year.

Tim Goyder, executive chairman, said Chalice will continue diamond drilling at the priority Konate Prospect, located 4.5km south of Koka and undertake target generation within the prospective 6km long Koka‐ Konate corridor.

It will also integrate exploration data over the entire 615 sq km Zara tenement package to define further exploration targets undertake an in‐fill bulk leach extractable gold (BLEG) regional stream sampling program.

In addition the company plans to complete an airborne magnetic and radiometric survey over the Zara tenement package, undertake further exploration on regional tenements and provide general working capital and meet the issue costs.

Subject to completion of due diligence and execution of an underwriting agreement on usual market terms, the rights issue will be fully underwritten by Southern Cross Equities Limited.

Chalice anticipates lodging the Prospectus for the rights issue on about 13 August 2010.
(Proactive Investors)