Chalice Gold Mines Limited ('Chalice' or 'the Company') (ASX: CHN | OTCQB: CGMLF) is pleased to announce encouraging new reconnaissance air-core (AC) drilling results from the Karri Target at its 100%- owned Pyramid Hill Gold Project, located in the Bendigo Region of Victoria.

The Karri Target is located 65km north-west of Bendigo, under 50-85m of Murray Basin cover.

The new results, which follow the initial discovery of the gold trend under cover at the Karri Target in late 2019 (refer ASX announcement on 12 December 2019), have significantly expanded the footprint and the robustness of the Karri Target.

The Company is also pleased to announce a significant ramp-up in activities at the Project, with the impending commencement of its maiden diamond drill program, along with a trial 2D seismic survey.

Chalice's Managing Director, Alex Dorsch, said: 'The latest air-core drill results continue to demonstrate the scale and robustness of the gold trend under cover at the Karri Target, with a contiguous gold zone now extending over a strike length of more than 3km.'

'Given the scale of the target, the favourable geological setting and the tenor of the results being generated by this relatively early stage of exploration, we believe there is the potential to discover a largescale gold system at depth.'

'The Karri gold trend has a consistent north-south orientation, sub-parallel to the interpreted position of the regional scale Muckleford Fault. This structural setting is similar to many large-scale gold deposits in the Bendigo Zone, such as Fosterville, 70km south-east of Karri, where the high-grade gold zones are associated with a secondary structure, sub-parallel to the regional-scale fault.'

'In addition, given the location of very high-grade historical gold deposits along the Muckleford Fault to the south of the Project - such as Ballarat (14Moz @ 12g/t Au) and Maldon (2Moz @ 33g/t Au) - we believe there is the potential for similar high grades to be intersected as we drill deeper.'

'Our highly effective AC drilling program will continue throughout the current quarter, and we look forward to commencing our first diamond program and 2D seismic survey later this month to better understand the geology and structural controls, and to optimise our future drilling strategy.'

'Our strong financial position and significant in-house technical expertise positions the Company exceptionally well for the systematic exploration program ahead.'

AC drill results - Karri Target

The Company's 25,000m Phase 2 reconnaissance AC drill program continues at the Karri, Ironbark North and Ironbark Targets in the Muckleford Area. The program is designed to further refine the secondary gold and pathfinder dispersion zones defined in shallow, wide-spaced vertical AC drilling in Phase 1. These dispersion zones in the weathered top of basement can be used to vector towards primary gold mineralisation in future deeper, tighter spaced drill holes.

A total of 99 Phase 2 AC drill holes for 11,000m have now been completed at the Karri Target. Encouraging new assays have now been received for 3,275m of this program, following on from the initial 4,700m released in December.

All AC holes were drilled vertically to AC blade refusal, which typically occurs at the base of the weathered Castlemaine Group basement. The Castlemaine Group is the target basement rock which hosts >60Moz of high-grade historical gold production from the outcropping areas of the Bendigo Zone to the south of the Project.

Drilling tested the projected north-south strike of the main gold trend a further 1km south of the previous drilling, with results showing the anomalous gold zone now extends over 3km in strike length and is up to 500m wide.

Encouragingly, in-fill drilling has demonstrated that the zones are likely contiguous, and all identified zones remain open along strike to the north and south.

The in-fill and step-out drilling on 500m-spaced lines has returned anomalous gold values with the better gold intersections associated with zones of quartz veining with accompanying sulphides (pyrite +/- arsenopyrite).

The gold zones are within an interbedded sequence of weathered sandstones and shales that have been variably altered (silicified) and show strongly elevated levels of arsenic (up to 220ppm), an important gold pathfinder in the region. The highly anomalous gold grades intersected are considered significant for this early stage of widespaced, vertical reconnaissance drilling into the weathered top of basement only.

Future work - drilling

20,500m of the 25,000m Phase 2 AC program has now been completed in the Muckleford Area, with assays currently pending for 3,000m of drilling at the Karri Target. Further reconnaissance AC drilling is currently underway at the Ironbark North Target, after which further step-out and in-fill AC drilling will be completed at the Karri Target on a 500m x 50m grid.

An initial diamond drill program will commence in mid-January in parallel to the ongoing Phase 2 AC drill program. One 300m deep hole is planned at each of the Karri, Ironbark North and Ironbark Targets to provide an early understanding of the local geology and structural controls. This initial information would be used to determine the optimal drilling strategy for the next phases of exploration.

Based on real-time results from these initial diamond holes, the program may be expanded. It is expected that further reconnaissance diamond drilling would follow these initial holes to systematically test each target at depth.

Future work - 2D seismic

An initial 2D high-resolution seismic survey will be completed in February 2020. This initial trial survey has been designed to determine if the technique can resolve stratigraphic horizons, which could then be used to model the regional and prospect-scale geological setting and highlight any areas of enhanced structural complexity.

The survey has been designed to image the relatively shallow part of the underlying Castlemaine Group sediments and associated structures to a depth of 2km. If successful, the technique may prove valuable in guiding and optimising future deeper drilling.

The 15km east-west line will extend from the western margin of the Karri Target to the eastern boundary of the Muckleford Area. As such, the line will cross the interpreted positions of the regional-scale Campbelltown, Muckleford and Sebastian Faults beneath younger Murray Basin cover. These Faults are important controls of mineralisation in the region.

Geoscience Australia completed a crustal-scale 2D seismic transect in Victoria in 2006 which successfully resolved the positions of the regional scale faults across the southern part of the Company's Project. By utilising a higher resolution set-up, the Company expects that the 2D seismic technique will be effective in modelling shallow structural features in the Castlemaine Group.

Contact:

Nicholas Read

Tel: +61 8 9388 1474

Email: info@readcorporate.com.au

About the Pyramid Hill Gold Project, Victoria, Australia

The 100%-owned Pyramid Hill Gold Project was staked in 2017 and now covers an area of >5,000km2 in the Bendigo region of Victoria. The Project comprises three key districts within the Murray Basin covered North Bendigo and North Stawell Zones: Muckleford, Mt William and Percydale.

The central Muckleford Area extends to the north-west of the high-grade historic >22Moz Bendigo Goldfield. The Mt William Area extends to the north-east of one of the world's highest-grade producing gold mines, the >8Moz Fosterville Gold Mine owned by Kirkland Lake Gold (NYSE / TSX: KL | ASX: KLA). The Percydale Area is located north-west of the historical St Arnaud Goldfield within the Stawell Zone.

The 'Gold Undercover' initiative by the Victorian Government in 2006-2009 estimated a potential 32Moz (P50 mid-case) of undiscovered gold beneath Murray Basin cover in the Bendigo Zone. However, the vast majority of the under cover areas remain sparsely explored. Given the highly variable cover is less than 100m deep over a large portion of the Project, the Company believes the opportunity for new commercially viable gold discoveries is significant.

Chalice is targeting large-scale, high-grade gold discoveries under cover and is currently conducting a systematic, regional-scale greenfield exploration program. The Company is utilising all available targeting tools at its disposal, including the substantial pre-existing regional geophysics database (including crustal scale 2D seismic), regional-scale soil sampling and ground geophysics. Low-cost reconnaissance air-core (AC) drilling to the top of the target basement on wide-spaced lines is being used effectively to narrow the target search space over the very large Project area. 60,000m of this drilling has been completed to date, which has outlined 3 high priority targets within the Muckleford Area - Ironbark, Ironbark North and Karri.

Forward Looking Statements

This announcement 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 report 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, the Company's strategy, the price of O3 Mining Inc. securities and Spectrum Metals Limited securities, receipt of tax credits and the value of future tax credits, the estimation of mineral reserve and mineral resources, the realisation of mineral resource estimates, the likelihood of exploration success at the Company's projects, the prospectivity of the Company's exploration projects, the timing of future exploration activities on the Company's exploration projects, planned expenditures and budgets and the execution thereof, the timing and availability of drill results, potential sites for additional drilling, 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 'planned', or 'will', 'would', 'followed', potential', 'anticipated' 'may', 'completed', 'impending', 'likely', 'expected', 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 may include, among others, risks related to actual results of current or planned exploration activities; changes in project parameters as plans continue to be refined; changes in exploration programs based upon the results of exploration; future prices of mineral resources; possible variations in mineral resources or 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; movements in the share price of O3 Mining and Spectrum Metals securities and future proceeds and timing of potential sale of O3 Mining and Spectrum Metals securities, 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, ASX at asx.com.au and OTC Markets at otcmarkets.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 forwardlooking 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.

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