World class Resource with substantial growth potential

Analyst

David Coates 612 8224 2887

Authorisation

Bradley Watson 618 9326 7672

Chalice Mining Ltd (CHN) Maiden Resource raises the bar

Maiden Resource Estimate for Gonneville

CHN has achieved a major milestone with the release of a maiden Mineral Resource Estimate (MRE) for the Gonneville deposit, part of its 100%-owned Julimar PGE, Ni, Cu Project, ~70km NE of Perth, WA. CHN has effectively reported two MRE’s:

1. A large scale, lower grade, pit-constrained Resource of 330Mt @ 0.94g/t 3E, 0.16% Ni, 0.10% Cu, 0.016% Co for 10Moz 3E, 530kt Ni, 330kt Cu, 53kt Co, and

2. A higher-grade sulphide Resource (within the pit-constrained Resource) of 74Mt @ 1.8g/t 3E, 0.22% Ni, 0.21% Cu, 0.021% Co for 4.2Moz 3E, 160kt Ni, 150kt Cu, 15kt Co.

Both Resources are of high quality, with 45% (150Mt) of the pit-constrained Resource and 51% (38Mt) of the high grade sulphide Resource in the higher confidence Indicated category and available for conversion to Reserves. This is a strong foundation for the completion of mining and development studies, the first of which is planned to be a Scoping Study for release in mid-CY22.

World class Resource with substantial growth potential

This is an excellent outcome for CHN that demonstrates significant scale. The high grade sulphide Resource alone shows potential to support a 6Mtpa mining and processing operation for +12 years. The large scale, lower grade pit-constrained Resource shows potential to maintain and potentially expand production while supporting a multi-generational asset of the type attractive to the world’s largest mining companies. This is a strategic and globally significant Resource relevant to key market thematics. We estimate Pd and Pt account for 55-60% of the MRE’s recovered value. These exposures create the opportunity for diversity of supply beyond Russia and South Africa, as well as supporting green hydrogen, green ammonia and hydrogen fuel cell production. Nickel and copper combined account for 33-36% of the recovered value and are key exposures to the decarbonisation thematic that is dominating global markets. Even so, we view the maiden MRE as a starting point. It is interpreted to cover just ~7% of the 26km long Julimar Complex, across which the geophysical anomalies associated with Gonneville are contiguous and repetitive. The maiden MRE comprises results from 520 drill holes and a further 160 completed infill and extension holes are yet to be included.

Investment thesis – Speculative Buy, Valuation $11.73/sh

CHN’s 100%-owned Julimar project has emerged as a globally significant PGE-Ni-Cu deposit. Located 70km north of Perth in WA, it represents a unique opportunity to open up new supply in a top mining jurisdiction. The maiden MRE is a major milestone and de-risking event. Incorporating it into our notional mining scenario increases our risk- adjusted NPV-based valuation for CHN by 85%, to $11.73/sh. We retain our Speculative Buy recommendation.

.

9 November 2021