Chalice to raise $9.1m for Zara

West Perth-based Chalice Gold Mines will place 21,613,080 shares at 42 cents per share on the ASX in order to raise approximately $9.1 million capital for purchasing a greater interest in the Zara Gold Project.

Of the funds raised, $7.8 million will be used to exercise the option to purchase the remaining 20% interest in the Zara Gold Project in Eritrea from Dragon Mining with the balance to be used for working capital.

The Placement comprises a non-brokered component of approximately 11.6 million shares to CHN's major shareholder Franklin Resources with a further 10 million shares to be placed by Southern Cross Equities.

The Placement is scheduled to be completed on or around 28 May 2010.

Full statement below:

Chalice Gold Mines Ltd ('CHN') announces that it has agreed to place 21,613,080 shares at $0.42 per share to raise approximately $9.1 million before issue costs (the 'Placement').

Of the funds raised, $7.8 million will be used to exercise the option to purchase the remaining 20% interest in the Zara Gold Project in Eritrea from Dragon Mining Ltd (ASX: DRA) as announced to the ASX on 3 March 2010.

The balance will be used for working capital.

The Placement comprises a non-brokered component of approximately 11.6 million shares to CHN's major shareholder Franklin Resources Inc. with a further 10 million shares being placed by Southern Cross Equities Ltd to institutional and sophisticated investors.

The Placement will be made pursuant to the 15% allowance under ASX Listing Rules and is scheduled to be completed on or around 28 May 2010.

The Company is extremely pleased with the strong level of investor support
for the Placement in the current market environment.