From 7/7/22 AnalystDavid Coates 612 8224 2887AuthorisationRegan...

From 7/7/22

Analyst

David Coates 612 8224 2887

Authorisation

Regan Burrows 618 9326 7677

Chalice Mining Ltd (CHN) Dampier drilling lights up

Early signs of fresh discovery at Julimar

CHN has announced visual results from drilling of the greenfield Dampier Target, located ~10km north of the Gonneville Deposit, at its 100%-owned Julimar Ni-Cu-PGE Project in WA. Three wide-spaced holes (HD009, HD010 & HD013) were drilled to test two discrete, low-conductance MLEM (Moving Loop EM) conductors with coincident Ni-Cr soil anomalism. Visual logging has reported ~15m to ~80m wide zones of disseminated sulphides, with locally abundant matrix sulphides in ultramafic-mafic intrusive host rocks. The highlight visual result is from hole HD013, which includes a ~145m interval of mostly disseminated sulphides from the base of oxidation to 231m down hole (from ~40m below surface to ~160m below surface). Within the broad interval are three intervals of heavily disseminated to semi-massive sulphides. Copper and nickel mineralisation has been confirmed, as well as PGE mineralisation in Hole HD010 (250m down dip), but assays will be required, with the results expected within six weeks.

Cracking the code

These results are a very exciting development for CHN and are the strongest indication yet of further mineralisation at Julimar and for potential repeats of the Gonneville deposit. The mineralisation style is almost identical to Gonneville and the drilling has provided additional information that has enabled CHN to prioritise multiple targets. The step-out (~10km) from the Gonneville deposit and the continuity of ~350m strike and over ~250m dip for the initial three holes is highly encouraging for the prospectivity of the entire Julimar Complex. At Dampier specifically, the mineralised intersection in HD013 starts from the top of fresh rock (~40m below surface (mbs)) and extends to ~160mbs – depths amenable to potential open-pit mining. The success at Dampier has highlighted the prospectivity of multiple other targets in similar settings. Four diamond drill rigs will now actively test them in coming months. We expect further exploration success to drive significant Resource growth, which has flow-on effects for the potential scale and/or mine life extension of operations at Julimar. These are currently the subject of a Scoping Study, planned for release in the current quarter.

Investment thesis – Speculative Buy, Valuation $11.10/sh

CHN’s 100%-owned Julimar project has already emerged as a globally significant PGE-Ni-Cu deposit. Located 70km north of Perth in WA, it represents a unique opportunity to establish a new, strategic PGE and base metals supply in a top mining jurisdiction. This is reinforced by the inclusion of PGE’s on Australia’s critical minerals list, due to their role in the hydrogen production value chain and Russia’s market dominance. The demonstrated Resource growth potential and the catalysts of regional exploration programs and completion of an initial Scoping Study signal upcoming positive news flow. With this latest update, we see the likelihood of further positive catalysts emerging on exploration success. Our valuation remains unchanged at $11.10/sh and we retain our Speculative Buy recommendation.