Chalice to Maintain its Mogoraib North Deposit after Zara Sale

Development News
Chalice Gold vowed to develop its lucrative Mogoraib North Deposit with the significant cash it generates from Zara sale

By TesfaNews,

After Chalice Gold Mines (ASX: CHN; TSX: CXN) announced its intention to enter into a conditional short form agreement with China’s SFECO Group on selling its 60 percent share in the Zara Project in Eritrea, many thought it was a pack and leave for Chalice.

However, Chalice announced today that it will definitely maintain its active presence in Eritrea by undertaking a significant exploration program at its Mogoraib North Project that lies about 100km south of the Zara Project and immediately north of the world-class Bisha mine.

After the completion of its sells agreement with SFECO group for around US$ 100 million along with the US$ 32 million it is expecting from the sale of its 30% stake to ENAMCO, Chalice will end up with a significant amount of money in its balance sheet.

Chalice anticipates settlement of both payments in the second quarter of 2012.

A recent VTEM, magnetic and radiometric survey completed over Mogoraib North identified a series of conductive bodies with the potential to host mineralisation similar in style to the world-class Bisha polymetallic VHMS mine.

Chalice reported also that an initial 5,000 metre drilling program at its Mogoraib project is expected to commence in the first quarter of 2012.

Chalice Chairman Tim Goyder said successful completion of the Zara Project sale would put the Company in an attractive position with a substantial cash balance, enabling it to pursue other opportunities in Eritrea.

On completion of the sales of its interests in the Zara Poject, Chalice would be ideally placed to identify, acquire and develop resource projects which could offer investors substantial leveraged growth prospects,” Mr Goyder said. “This is an extremely strong position that would enable the Company to take full advantage of growth opportunities.”