Chalice Gold Announces Financing

PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 05/20/11 -- Chalice Gold Mines ('The Company') (TSX: CXN)(ASX: CHN) announces that it has agreed to place 32,000,000 shares at A$0.30 per share to raise approximately A$9.6 million before issue costs (the 'Placement').

The funds raised from the Placement will be used for the further exploration and development of Chalice's projects in Eritrea and for general working capital purposes in the ordinary course of business.

The Placement was effected through Southern Cross Equities Ltd and is to be made to institutional and sophisticated investors and made pursuant to the 15% allowance under ASX Listing Rules. Southern Cross Equities Ltd has received commitments for the Placement which is scheduled to be completed on or around 26 May 2011.

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

TIM GOYDER, Executive Chairman

The shares will be issued without a prospectus and by way of private placement. No securities are to be issued to investors in the USA or Canada. This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States or any other jurisdiction outside of Australia, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Shares offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the '1933 Act'), or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act and applicable state securities laws.

About Chalice

Chalice Gold Limited is a gold exploration company which owns the high grade, open-pittable Koka Gold Deposit and a substantial, largely unexplored, land package in Eritrea. The Koka Gold Deposit consists of an 'in-pit' JORC and NI 43-101 compliant Indicated Resource of 5.0 million tonnes of ore with a grade of 5.3 grams of gold per tonne, containing 840,000 ounces of gold including a Probable Reserve of 4.6 million tonnes of ore with a grade of 5.1 grams of gold per tonne, containing 760,000 ounces of gold. Chalice's interest in the project is subject to the State of Eritrea's 10% carried interest, and Eritrea's right to purchase, at fair value, a further 30% ownership in the deposit. The Company is focused on developing the Koka Gold Deposit into a low cost gold mine which is expected to produce 104,000 ounces of gold per year over a 7 year mine life at an average cash cost of US$ 338/oz gold. Chalice also holds a substantial strategic ground position of 1,437 km(2) consisting of licenses along strike of the Koka Gold Deposit, and proximal to Nevsun's Bisha Mine. These exploration concessions host numerous, high potential, early and advanced stage gold and base metal exploration targets. Chalice is undertaking a systematic exploration effort on these exploration concessions with the aim of discovering significant new deposits.

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 Limited (the Company) does not intend, and does not assume any obligation, to update these forward-looking statements.

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 realization 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 current 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; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those 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.

Shares outstanding: 218 million

Fully diluted:      225 million

Contacts:

Chalice Gold Mines Limited

Mr Tim Goyder

Executive Chairman

61 9322 3960


Chalice Gold Mines Limited

Dr Doug Jones

Managing Director

61 9322 3960


For media inquiries, please contact:

Read Corporate

Nicholas Read

618 9388 1474


For North American Investors, please contact:

Chalice Gold Mines

Dan Hrushewsky

Senior Vice President, Business Development

1 647 864 2735
dhrushewsky@chalicegold.com


Chalice Gold Mines

Joanne Jobin

Investor Relations Manager, North America

1 647 964 0292
jjobin@chalicegold.com
www.chalicegold.com