Chalice Gold Mines and Coventry Resources to merge

NOT FOR DISSEMINATION IN THE UNITED STATES

Chalice takes first significant step in its growth strategy through deal with Canadian gold developer


Highlights:

- Chalice and Coventry agree to merge by way of Statutory Plan of Arrangement

- Consideration will comprise 1 Chalice Share for every 1.78 Coventry Shares

- The offer represents a premium of approximately 23% based on the closing share prices of Chalice and Coventry on the ASX on Friday September 27th, 2013

- The transaction represents the first significant step in Chalice's stated strategy of acquiring quality assets while preserving its cash balance at approximately A$55M

- The proposed merger will combine Chalice's strong technical team and financial capacity with Coventry's quality gold asset located in a low risk, stable mining jurisdiction (Ontario, Canada)

- Coventry's 100%-owned Cameron Gold Deposit hosts Measured and Indicated Mineral Resources of 567,000 ounces of gold at 2.45 g/t, and an Inferred Mineral Resource of 829,000 ounces of gold at 2.11 g/t

- There is significant additional exploration potential within the Cameron Gold Camp, including defined Mineral Resources at the Dubenski and Dogpaw satellite deposits


PERTH, Western Australia, Sept. 30, 2013 /CNW/ - Australian gold company Chalice Gold Mines Ltd. (TSX: CXN; ASX: CHN; "Chalice") and Canadian gold developer Coventry Resources Inc. (ASX: CYY; TSX-V: CYY; "Coventry") are pleased to announce that they have agreed to merge the two companies by way of a Statutory Plan of Arrangement ("Merger") under the British Columbia Business Corporations Act. The proposed merger will combine Chalice's strong cash position of A$55 million (see Appendix B) with Coventry's 100% interest in the Cameron Gold Camp in Ontario, Canada (see Appendix A).

Chalice and Coventry have executed a binding term sheet for the proposed merger and expect to execute an Arrangement Agreement ("AA") shortly. The proposed transaction represents the first significant step in Chalice's stated strategy of acquiring quality resource assets capable of generating strong cash flow. The structure of the transaction will preserve Chalice's strong cash position while giving Coventry shareholders exposure to a well-funded resource company with a strong technical capability and clear growth strategy.

Under the proposed Merger, Coventry shareholders will receive 1 Chalice Share for every 1.78 Coventry Shares and will hold approximately 17% of the merged company. Other security classes, comprising options and warrants, are to be exercised by the holder, converted to Chalice options and/or warrants or purchased by Chalice as may be agreed between the option and warrant holders and Chalice. Further details will be provided in the Arrangement Agreement ("AA") which is expected to be executed by October 18, 2013.

The Merger is subject to a due diligence period of 14 days and will require approval by ⅔ of eligible Coventry security holders voting at a special meeting of the company, the Supreme Court of British Columbia, as well as the Toronto Stock Exchange, Vancouver Stock Exchange and the Australian Securities Exchange. The Merger is not subject to approval by Chalice shareholders.

The proposed Merger has the full support of the Board of Directors of both Chalice and Coventry. The Board of Coventry has advised Chalice that, in the absence of an unfavourable fairness opinion or a superior offer, it will unanimously recommend that its shareholders vote in favour of the proposed Merger.

The parties anticipate signing the definitive Arrangement Agreement by October 25, 2013 with a view to completing the Merger by mid-December, 2013. A full copy of the Term Sheet is included in Appendix C.


Overview of the Cameron Gold Deposit

The Cameron Gold Deposit currently comprises an NI 43-101/JORC (2004) (1.0 g/t cut-off) compliant Measured and Indicated Mineral Resource of 567,100 ounces of gold at 2.45 g/t and an Inferred Mineral Resource of 830,100 ounces of gold at 2.11 g/t. In addition, at two satellite deposits, there are NI 43-101/JORC(2004) (1.0 g/t cut-off) compliant Mineral Resources at Dubenski of 59,000oz Indicated at 2.28 g/t and 18,200oz at 1.44g/t Inferred; and NI 43-101/JORC(2012) (1.0 g/t cut-off) compliant Mineral Resources at Dogpaw of 24,000oz indicated at 3.02 g/t and 4,600oz at 2.27g/t inferred.

A positive Preliminary Economic Assessment ("PEA") was completed on the deposit in January 2013 which showed average annual production of 61,000 ounces of gold and an initial 10-year mine life at an average cash cost of US$852/oz. Initial development and capital expenditure was estimated at US$110 million (inclusive of $17m contingency).

The PEA is considered preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves and there is no certainty that the PEA will be realised. Mineral Resources that are not mineral reserves do not have demonstrated economic viability.


Overview of Merged Group and Management Comment

Following completion of the merger, Chalice will have approximately 302.3 million shares outstanding and is forecasting a cash balance of approximately A$54 million as at December 31, 2013 for the Merged Group, putting it in a strong position to progress the Cameron Gold Project, while still having the financial capacity to continue to execute its strategy of acquiring other quality resource assets globally.

Coventry's corporate office in Perth will transfer to the Chalice corporate office and Steven Chadwick will continue to support the handover and future development of the Cameron Project in his existing role as Technical Manager for Chalice, with in country operations expected to remain unchanged. The Board of Chalice, as the surviving entity following the merger, is expected to remain unchanged.


Commenting on the transaction, Chalice's Managing Director, Mr Bill Bent, said:

"The Cameron Gold Project is a quality asset in a low-risk, favourable mining jurisdiction. The transaction preserves our strong cash balance while the low holding costs of the Cameron Project provide us with plenty of flexibility in our future development strategy as we continue to look at further complementary transactions targeting high quality projects capable of generating strong cash flow.

"What particularly attracted us to this project were the good grades, excellent exploration upside potential and access to good infrastructure with a local labour force with strong mining experience. This project sits right in our sweet spot in terms of our current technical capability and I am very confident we can add significant value to this project with our current team and a focused exploration budget. We are delighted to have the opportunity to participate in the project's future development."


Commenting on the transaction, the President of Coventry, Mr Steven Chadwick, said:

"The proposed merger with Chalice represents an excellent opportunity to fund the ongoing exploration and potential ultimate development of the Cameron Gold Project in an extremely difficult economic climate. Existing Coventry shareholders will hold approximately 17% of the merged entity and will continue to have exposure to the project through their shareholding in Chalice, while also benefiting from Chalice's strong balance sheet, experienced technical team and the future growth of the Company. Shareholders will have exposure to any future transactions that Chalice undertakes as it seeks further quality resource assets globally."


BILL BENT, Managing Director
Chalice Gold Mines Ltd.

Steven Chadwick, President and CEO
Coventry Resources Inc.


September 30, 2013



Competent Persons and Qualified Person Statement - Chalice

The information in this news release that relates to exploration results is based on information compiled by Dr Doug Jones, a full-time employee and Director of Chalice Gold Mines Ltd., 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 2012 edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, and is a Qualified Person under National Instrument 43-101 - 'Standards of Disclosure for Mineral Projects'. The Qualified Person has verified the data disclosed in this release, including sampling, analytical and test data underlying the information contained in this release. Dr Jones consents to the release of information in the form and context in which it appears here.


Competent Persons and Qualified Person Statement - Coventry

The Mineral Resource statements for all Mineral Resource estimates within the Cameron Gold Camp Project have been prepared by Mr Peter Ball of Datageo Geological Consultants, an "independent qualified person" as that term is defined in National Instrument 43-101.

The information in this report that relates to the Cameron Gold Deposit and Dubenski Gold Deposit Mineral Resources or Ore Reserves is based on information compiled by Mr Peter Ball who is a Chartered Professional and Member of the Australasian Institute of Mining and Metallurgy. Mr Ball is the Director of DataGeo Geological Consultants. Mr Ball has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Ball consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

The information in this report that relates to the Dogpaw Gold Deposit Mineral Resources or Ore Reserves is based on information compiled by Mr Peter Ball who is a Chartered Professional and Member of the Australasian Institute of Mining and Metallurgy. Mr Ball is the Director of DataGeo Geological Consultants. Mr Ball has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Ball consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.


Forward Looking Statements

This document may contain forward-looking information within the meaning of Canadian securities legislation and forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). These forward-looking statements are made as of the date of this document and Chalice Gold Mines Ltd. (the Company) does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law or regulation.

Forward-looking statements relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and Mineral Resources, the realisation of mineral reserve estimates, the likelihood of exploration success, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage.

In certain cases, forward-looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the conditions to the completion of the merger between Chalice and Coventry Resources are not met, risks related to actual results of current exploration activities, changes in project parameters as plans continue to be refined, future prices of Mineral Resources, progressing the project beyond a PEA, the ultimate economics of a future project, future permitting, future funding of the project, possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry, as well as those factors detailed from time to time in the Company's interim and annual financial statements, all of which are filed and available for review on SEDAR at sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Accordingly, readers should not place undue reliance on forward-looking statements.

None of the securities anticipated to be issued pursuant to the Arrangement have been or will be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and any securities issued in the Arrangement are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

PDF available at:
http://stream1.newswire.ca/media/2013/09/30/20130930_C5567_DOC_EN_31493.pdf

PDF available at:
http://stream1.newswire.ca/media/2013/09/30/20130930_C5567_DOC_EN_31492.pdf

PDF available at:
http://stream1.newswire.ca/media/2013/09/30/20130930_C5567_DOC_EN_31494.pdf




Contact

Chalice Gold Mines Ltd.
Bill Bent, Managing Director
Telephone (W): +61 9322 3960
Telephone (M): +61 433790070

Tim Goyder, Executive Chairman
Telephone (W): +61 9322 3960

Keith Smart, Business Development Manager
Telephone (W): +61 9322 3960

Coventry Resources Inc.
Steven Chadwick, President & CEO
Telephone (W): +61 8 9324 1266


For media inquiries, please contact:
Nicholas Read
Read Corporate
Telephone: +618 9388 1474