Chalice increases holding in GeoCrystal Limited to 24 per cent

Symbol: ASX: CHN TSX: CXN
Shares outstanding: 297 million
Fully diluted: 299 million

Webb Diamond Project continues to show potential to be a large kimberlite field

Highlights:

• GeoCrystal recently completed a successful exploration program at the Webb Diamond Project:
• 10 kimberlite pipes discovered to date from drill testing of 16 aeromagnetic targets
  
• 4 microdiamonds identified in wide spaced reconnaissance loam sampling
  
• 1 microdiamond found in a drill sample over a magnetic kimberlite target
  
• 3 of the 5 microdiamonds exhibit crystalline habits of diamonds derived from kimberlite
  
• Diamond indicator minerals identified in 30 out of 67 loam samples, outlining a 20km-long anomaly coincident with numerous aeromagnetic targets reflecting potential kimberlite pipes
• Following the success of this exploration program, Chalice has:
• Subscribed for 4.25 million shares of GeoCrystal at 20c, as part of a 5 million share placement
• Each share has a free attached option exercisable at 25c expiring on the 31st March 2016
• Exercised 2.1 million GeoCrystal options at 20c (expiring 11 April 2014)
• GeoCrystal will use the $1.4 million proceeds to fund the next phase of the exploration program at the Webb Diamond Projectz
• Bill Bent (MD of Chalice) will join the Board of GeoCrystal

WEST PERTH, Western Australia, April 14, 2014 /CNW/ - Following a successful exploration program at the Webb Diamond Project in Western Australia, Chalice Gold Mines Ltd. ("Chalice") (ASX:CHN; TSX:CXN) is pleased to announce that it has increased its holding in GeoCrystal Limited ("GeoCrystal") to 9.68 million shares, which represents 24 per cent of the issued and outstanding shares of GeoCrystal.

Chalice has agreed to subscribe for 4.25 million shares and 4.25 million free attaching options in GeoCrystal at an issue price of 20c. Each attaching option is exercisable at 25c on or before the 31st March 2016. GeoCrystal will place an additional 0.75 million shares under the same terms, for gross proceeds of $1 million. Additionally, Chalice has exercised 2.1 million options at 20c which were due to expire on the 29th of March 2014.

Chalice will retain the existing 3,333,333 long dated options received in the previous round of funding with an exercise price of 20c expiring in September 2015. Chalice also has a conditional first right of refusal on future financings until its interest has reached 51 per cent of GeoCrystal.

Bill Bent, (Managing Director of Chalice) has joined the Board of GeoCrystal to represent Chalice's interests.

The proceeds of the capital raising will be used to fund the next stage of the exploration program at the Webb Diamond Project in Western Australia. Following this stage of exploration GeoCrystal is expected to have completed the conditions required to earn 70 per cent of Meteoric Resources' ("Meteoric") (ASX:MEI) interest in the Webb Diamond Project. The next stage of exploration will consist of two phases:

• Phase 1: Flying of 8,000 line-km of 100 metre line spaced aeromagnetics over those parts of the project not already covered by detailed data to obtain tighter definition of the existing 80 plus aeromagnetic targets and assist in prioritising the drill targets. In addition, a further 150 loam heavy mineral samples will be collected on a broad grid pattern over the kimberlite field to analyse for kimberlite indicator minerals and micro diamonds.
  
  
• Phase 2: Completion of up to 6000 metres of Reverse Circulation (RC) drilling aimed at testing an additional 50 prioritised potential kimberlite targets out of the 80 plus magnetic anomalies identified to date.

"We are delighted to have increased our exposure to the Webb Diamond Project in Western Australia. The recent exploration results continue to give us encouragement that the project has the potential to be a large kimberlite field, and this round of funding will allow GeoCrystal to prioritise and test up to 50 additional magnetic anomalies", said Managing Director, Bill Bent.

Exploration Highlights

The recent exploration program completed in December 2013 consisted of 23 aircore holes totalling 1,657 metres to test 16 kimberlite targets. In addition 46 line-km of ground magnetic surveys have been completed, together with 67 loam samples totalling 4.9 tonnes of samples taken on a broad grid pattern over the kimberlite field.

Processing of the 67 loam samples and samples from 22 aircore drill holes has identified a microdiamond in four of the loam samples and a single aircore sample. In addition, kimberlite indicator minerals have been identified in 30 out of the 67 loam samples. The microdiamond and kimberlite indicator minerals contained in the loam samples outline a large 20km-long anomaly some 3km to 5km wide, open to the NE, coincident with numerous kimberlite targets.

One loam sample which contained a microdiamond is located in the eastern part of the project area in close proximity to drill hole W13AC011 on Target KJ25 which also reported a microdiamond in a drill sample taken from overburden sediments directly overlying a kimberlite intersection.

Three of the five microdiamonds that were recovered exhibit characteristic crystalline habits of diamonds derived from kimberlite, while the remaining two microdiamonds are irregular shaped fragments.

It should be emphasized that these results are preliminary, with further validation work, including microprobe analysis of kimberlite indicator mineral grains, still to be completed. The significance of the reported results is open to interpretation in that microdiamonds occurring in surface material can potentially be derived from various sources either near or distal. However, the occurrence of microdiamonds and indicator minerals spatially coincident with more than 80 magnetic targets, the majority of which remain untested, provides a compelling case to accelerate the pace of exploration in order to assess the diamond potential of this large kimberlite field.

For further information on the Webb Diamond Project, plus previously released test work on the kimberlites, please see Meteoric Resources website (www.meteoric.com.au), and ASX releases, dated 1 August 2013 and 6 February, 2014.

BILL BENT
Managing Director
APRIL 14, 2014

Competent Persons and Qualified Person Statement

The information in this news release that relates to exploration results is based on information compiled by Mr Thomas Reddicliffe, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Reddicliffe is a self-employed consultant to the Meteoric Resources NL - GeoCrystal Limited joint venture and a director of GeoCrystal Limited. Mr Reddicliffe 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. Mr Reddicliffe consents to the release of information in the form and context in which it appears here.

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, risks related to actual results of exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; 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.

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

SOURCE Chalice Gold Mines Ltd.

Image with caption: "Figure 1. Loam Sampling and Drilling Results (CNW Group/Chalice Gold Mines Ltd.)". Image available at: http://photos.newswire.ca/images/download/20140414_C9659_PHOTO_EN_39192.jpg

PDF available at: http://stream1.newswire.ca/media/2014/04/14/20140414_C9659_DOC_EN_39190.pdf

PDF available at: http://stream1.newswire.ca/media/2014/04/14/20140414_C9659_DOC_EN_39191.pdf