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From: B-Haile (eritrea.lave@comhem.se)
Date: Mon Oct 25 2010 - 21:36:08 EDT
Chalice Gold Mines Limited
25/10/2010 Annual Report to Shareholders
Chairman's letter
Dear Shareholder
I am pleased to present Chalice Gold's 2010 Annual Report after what has been, in many respects, a landmark year for our Company.
At a time of considerable investor interest and activity in the global gold sector, I am confident that Chalice has established the foundations required to build a first-rate international gold mining company focused on East Africa and underpinned by the high-quality Zara Project in Eritrea.
We believe that the Nubian Shield, in which the Zara Project is located, is highly prospective and offers similar potential to some of the better-known parts of West Africa, such as Ghana and Burkina
Faso, but is still very much in its infancy in terms of exploration. Most of our 615 square kilometre tenement package at Zara remains virtually untouched by modern exploration.
Notwithstanding this exciting potential, our first priority at the Zara Project was to progress development of the high-grade Koka gold deposit to provide us with a pathway to initial production and cashflow.
We expect that this high-grade, open-cut deposit - which contains a resource of 840,000oz of gold at a grade of 5.3g/t gold, including an Ore Reserve of 4.6 million tonnes at a grade of 5.1g/t for 760,000oz of gold - offers an outstanding opportunity to develop a high-margin gold operation, with an expected head grade not seen in the Western Australian gold sector for some years.
In October 2009, the Company completed a detailed Scoping Study for the development of the Koka gold deposit and, given the positive results, we moved immediately to undertake a full Feasibility Study.
Both of these technical studies were undertaken by leading industry consultants Lycopodium Minerals Pty Ltd, AMC Consultants Pty Ltd and Knight Piésold.
The Feasibility Study, which was completed in early July 2010, confirmed that the deposit can support a robust gold operation producing 104,000oz per year with low cash operating costs of US$338 per oz and an initial mine life of seven years.
The Feasibility Study forecast initial capital costs for the Project - including mine equipment, mining pre-strip, processing plant infrastructure and other owner's costs - totalling US$122 million, with an additional $9 million in sustaining capital over the life of mine.
Read more http://chalicegold.com/upload/documents/InvestorRelations/releases/CHALICEAR10WEB.pdf
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