Chalice Gold Mines Limited (ASX: CHN; TSX: CXN) advises that it has agreed to vary the payment and completion terms of its agreement with the Eritrean National Mining Corporation (“ENAMCO”) for ENAMCO’s acquisition of a 30 per cent interest in the Zara Gold Project in Eritrea, East Africa.

The variation is in line with the timetable for completing the proposed sale of Chalice’s remaining 60 per cent interest in the Zara Project to China SFECO Group (“SFECO”), announced last month.

Under the revised agreement, ENAMCO will make an interim payment of US$3 million to Chalice by Friday, 27 January 2012 with the balance of ~US$31 million (including reimbursement of certain costs) payable to Chalice on completion of the sale to SFECO or by no later than 30 June 2012. If the SFECO transaction is terminated pursuant to the conditions of that deal, the balance will also be payable by ENAMCO by 30 June 2012.

Chalice is targeting completion of the SFECO transaction by May/June 2012 (see transaction update below).

Under the terms of the Shareholders Agreement, from 1 January 2012, ENAMCO have been and will continue to sole fund ~US$4M of exploration and pre-development expenditures at the Zara Project.

The variation to the payment schedule was requested by ENAMCO following the proposed broader transaction between Chalice and SFECO announced on 27 December 2011, under which SFECO has agreed to pay Chalice US$80 million for Chalice’s remaining 60 per cent share of the Koka Gold Mine. SFECO is a subsidiary of the Shanghai Construction Group Co. Ltd (www.scg.com.cn).

In addition, SFECO will pay Chalice a further sum, not to exceed US$20 million for the balance of the area falling within the Zara Project (including Zara North, South and Central). This figure is to be agreed between the parties and, failing agreement, will be determined by binding independent arbitration to a cap of US$20 million.

The agreement with SFECO exclude the Company’s 100%-owned Mogoraib North and Hurum exploration licences. Drilling is planned to commence at Mogoraib North in early Q2, 2012 targeting potential repeats of the world-class Bisha polymetallic VMS deposit currently being mined by Nevsun Resources.

Chalice Executive Chairman, Mr Tim Goyder, said the completion of the SFECO transaction, combined with proceeds from the sale of the 30 per cent stake to ENAMCO, would leave the Company with a strong cash balance – estimated at around US$90M to US$95 million post-tax – and the ability to identify, acquire and develop high quality resource assets. In addition, Chalice will ramp up exploration activities within its high-quality portfolio in Eritrea. Mr Goyder commented: “ENAMCO have reiterated their commitment to complete the transaction in parallel with the SFECO transaction, with an immediate payment of US$3 million to be made by the end of this week. This will strengthen Chalice’s cash resources in the interim, giving us the ability to accelerate exploration activities within our 100%-owned exploration licences.

We are planning to commence drilling next month to test a series of strong EM conductors identified within our Mogoraib North licence, which is located just 10km north of Nevsun’s world-class Bisha mine. This will provide exciting near-term exploration news flow for the Company while we progress the work required to complete both the ENAMCO and SFECO transactions.”

Update on SFECO Transaction

The Agreement with SFECO is subject to SFECO being satisfied with its due diligence which must be completed by 12 March 2012. Due diligence activities are currently underway, with key consultants appointed.

The agreement is also subject to approval by Chalice shareholders and the Company intends to convene an Extraordinary General Meeting (EGM) in May to seek this approval.

The SFECO transaction is subject to certain regulatory approvals within China including the National Development and Reform Commission, the Ministry of Commerce, the State Asset Supervision and Administration Commission and the State Administration of Foreign Exchange.

Other conditions include no material adverse change or event of force majeure affecting the Zara Project, SFECO procuring a letter indicating suitable financing by completion of due diligence and completion of the ENAMCO transaction (which can be waived by Chalice).

TIM GOYDER Executive Chairman M: +61 418 942 908 E: tgoyder@chalicegold.com w: chalicegold.com DOUG JONES Managing Director M: +61 438 872 0990 E: djones@chalicegold.com JOANNE JOBIN North American Investor Relations M: +1 647 963 0292 E: jjobin@chalicegold.com