Chalice Gold Mines Limited : Quarterly Report - 30 September 2012
10/24/2012| 04:13am US/Eastern
ABN 47 116 648 956
ASX Announcement September 2012 Quarterly Report Highlights:
? Chalice completes the sale of the Zara Gold Project in Eritrea to China
SFECO Group and ENAMCO for combined proceeds of US$114M.
? Chalice has a net cash of $80 million after tax following completion of
the Zara transaction, with a focus on acquiring new projects.
? A capital reduction and return of 10 cents per share is proposed, subject
to shareholder approval.
? Drilling of VTEM targets has recommenced at the Mogoraib North Project in
Eritrea,
located immediately north of the world-class Bisha Mine.
? A new gold target has been defined at the Area C Prospect, Mogoraib North.
1. Sale of the Zara Project to China SFECO Group
During the Quarter, Chalice Gold Mines Limited ("Chalice") completed the
sale of the Zara Gold Project in Eritrea to China SFECO Group for US$78
million plus a deferred payment of US$2 million upon commencement of
commercial production at the Koka Gold Mine.
In addition, the Eritrean National Mining Corporation ("ENAMCO") settled the
remaining balance of US$29 million for its acquisition of a 30 per cent
interest in the Zara Project (in addition to its 10 per cent free carried
interest).
Together with the interim payments received from ENAMCO of US$3 million in
January 2012 and US$2 million in July 2012, this amounts to total sale
proceeds of US$114 million.
Chalice has paid all applicable taxes due in Eritrea for both the SFECO
transaction and the ENAMCO transaction. Chalice's net cash balance at the
end of September was $80 million, which equates to approximately 32 cents
per share, putting the Company in an exceptionally strong position to embark
on its next chapter of growth.
Chalice has retained suitable independent expertise to assist its
experienced management and Board of Directors in the assessment and
identification of potential opportunities.
2. Capital Management
Following completion of the sale of the Company's interest in the Zara
Project, Chalice has approximately $80 million cash on hand. The Board has
undertaken a review of its capital management options and determined that
these funds exceed its current capital requirements, providing justification
to return some of this capital to shareholders.
Chalice has announced that its Board will seek shareholder approval under
section 256B and 256C of the Corporations Act (2001) for an equal capital
reduction and return of $25 million (10 cents cash per share) to those
persons or entities that are shareholders at the appropriate record date.
Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western
Australia <
http://www.chalicegold.com/> T: +618 9322 3960 F: +618 9322 5800
E: info_at_chalicegold.com www.chalicegold.com
2. Capital Management (continued)
Chalice has received a draft Class Ruling from the Australian Taxation
Office ('ATO') indicating that the proposed distribution will not be taxed
as a dividend. The draft Class Ruling may not be relied on by Chalice
shareholders until it is issued in final form by the ATO. The final version
of the Class Ruling will be published and notice will be included in The
Gazette. Chalice will also display the final version on the Class Ruling on
its website as soon as it becomes available.
Full details of the proposed capital return are set out in the 2012 AGM
Notice of Meeting and Explanatory Statement. The AGM will be held on 30
November 2012 and it is expected that the Record Date for the capital return
will be on or around 10 December 2012.
3. Mogoraib North Exploration
Diamond drilling of VTEM conductor targets at Mogoraib North was suspended
in late June due to the onset of the Eritrean wet season. Drilling up to
that point comprised 11 holes for 2,358 metres and tested 10 VTEM targets
(see Figure 2). Most of the conductors were confirmed to be carbonaceous
shales containing variable amounts of sulphides (primarily pyrite and
pyrrhotite).
Although no significant base metal sulphides were encountered, assaying of
pyrite-rich sections in one hole, MOGD-007, returned highly anomalous levels
of silver and barium. The 17m section below 183 metres in hole MOGD-007 (see
Figure 3) averaged 2.21g/t silver and just under
1,000ppm barium. These levels of silver and barium are regarded as
potentially indicative of distal portions of a volcanic-hosted massive
sulphide (VHMS) system.
Based on the results of the drilling to date, geophysical consultants
Southern Geoscience Consultants (SGC) have reviewed the VTEM targets and
re-ranked the priority of targets for testing. Field checking of these
targets is in progress together with further soil sampling where
practicable.
Drilling of the highest priority targets recommenced on the 12th October.
The current campaign will see an initial 15 diamond drill holes completed
for 2,650m, with additional drilling contingent on the results of ongoing
soil sampling and mapping programs.
Soil sampling conducted over the Area C gold anomaly, located in the
north-central part of the tenement, returned encouraging results, revealing
coincident gold, bismuth, tellurium and molybdenum anomalism centred on a
quartz vein system being exploited by artisanal miners (see Figure 4). This
suite of anomalous elements is also associated with the Koka gold deposit
and is characteristic of Intrusive-Related Gold Systems (IRGS). The soil
sampling grid is currently being extended to determine the limits of
anomalism and define targets for drilling.
4. Gnaweeda Project
In early June, Chalice agreed to sell its remaining 13.5% interest in the
Gnaweeda Gold Project in Western Australia to Archean Star Resources Inc.
(Archean). Archean is listed on the TSX Venture Exchange (TSX?V). The
consideration for the sale was 5 million common shares in Archean. Chalice
has subsequently advised that it has terminated the agreement because of
non-performance by Archean.
Chalice has now reverted to its 13.5% interest in the Project with all
commensurate rights.....continue to read in PDF
Received on Wed Oct 24 2012 - 19:53:52 EDT
