Chalice Gold Mines and Zara Mining Share Company are pleased to advise that new drilling results have confirmed extensions to the high-grade mineralisation at the emerging Koka South discovery, located immediately south of its flagship Koka Gold Deposit, part of the Zara Gold Project in northern Eritrea.

Results have now been received for a further two holes that were drilled to the south of previous drilling, with both holes returning high-grade intersections, including:

• 3m @ 39.25g/t gold from 124m (ZARD 233) including 1m @ 115.33g/t gold from 126m
• 5m @ 21.38g/t gold from 132m (ZARD 233)
• 7m @ 9.73g/t gold from 135m (ZARD 234) including 1m @ 49.64g/t gold from 146m

The latest results confirm that high-grade mineralisation at Koka South extends to depth in the south and remains open (see Figure 3). The widths and grades of mineralisation encountered have the potential to provide a significant underground addition to the Koka open pit resource.

Koka South lies immediately to the south of the Koka Main deposit (Probable Mineral Reserve of 760,000oz @ 5.1g/t gold). Mineralisation at Koka South has so far been delineated over a strike length of 250 metres and remains open to the south and at depth (See Announcement – November 7, 2011).

Assays are pending from three additional holes completed into this zone. A full tabulation of all significant assays from 2011 drilling at Koka South is attached below.

Diamond drilling in the second half of 2011 (see Figure 1) has focused on testing high priority targets within a 7.5km long corridor encompassing the Koka deposit (Probable Mineral Reserve of 760,000oz @ 5.1g/t gold).

Drilling will re-commence in mid-January after a short break.

Regards
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