Chalice Mining : March 2022 - Quarterly Activities and Cash Flow Report

ASX Announcement

26 April 2022

March 2022 Quarterly Activities Report

Extensional drilling highlights underground potential at Gonneville as exploration ramps up on five key fronts within the new West Yilgarn Ni-Cu-PGE Province

Highlights

Julimar Nickel-Copper-PGE Project, Western Australia (100%-owned)

• « Wide-spaced step-out drilling is continuing at Gonneville, focused on extending the high-grade in-pit Resource (Indicated + Inferred 74Mt @ 1.8g/t 3E1, 0.22% Ni, 0.21% Cu, 0.021% Co (~1.0% NiEq2) as at 9 Nov 21)3:

  « High-grade (>0.6% NiEq) sulphide zones have now been intersected up to ~400m beyond the limit of the current Gonneville Resource pit shell.

  « Drilling is continuing across ~1km of untested plunge extent on Chalice-owned farmland.

• « Infill drilling within the shallow (<250m deep) Inferred component of the Gonneville Resource was completed, with these Resource blocks expected to be upgraded to a higher-confidence category as part of the next Mineral Resource update targeted for June 2022.

• « Regional drilling and geophysics across the >30km long Julimar mafic-ultramafic intrusive complex confirms multiple areas highly prospective for orthomagmatic Ni-Cu-PGE sulphides:

  • « 8 of 70 planned sites have been drilled at Hartog to date, all covering lower priority targets while access is restricted to existing tracks only - final permitting approvals are imminent.

  • « A high-priority late-time AEM anomaly, coincident with a 'Gonneville-like' lens-shaped magnetic feature, was identified at the new Flinders target, ~25km NE of Gonneville.

  • « Ultramafic geology and/or highly anomalous Ni-Cu-Co-PGEs have been confirmed at the Jansz and Torres targets in shallow AC drilling.

• « Scoping Study for initial mine development at Gonneville targeted for Q3 2022, once sufficient Resources have been defined in the Measured/Indicated categories.

• « Initial metallurgical testwork and flowsheet development has commenced for a bulk enrichment process to produce a battery-grade nickel-cobalt intermediate product (in addition to a copper-PGE concentrate) as a potential alternative to selling nickel concentrate.

West Yilgarn Nickel-Copper-PGE Province, Western Australia

«

Airborne EM surveys were completed over priority target areas across the greater Julimar and Barrabarra Projects, with nine priority target areas identified so far for follow-up reconnaissance.

• 1 3E = Palladium (Pd) + Platinum (Pt) + Gold (Au), with an average in-situ ratio of ~4:1:0.04 (Pd:Pt:Au)

• 2 NiEq (Nickel Equivalent %) = Ni (%) + 0.37xPd (g/t) + 0.24xPt (g/t) + 0.25xAu (g/t) + 0.65xCu (%) + 3.24xCo (%)

• 3 Refer to Appendix B

Registered Office ABN 47 116 648 956

Level 3, 46 Colin Street

West Perth, Western Australia PO Box 428, Perth WA 6872

T: [phone]

[e-mail]

@chaliceminingchalice-mining

• « Maiden RC drill program at the Recherche target (Barrabarra) scheduled for May 2022 to test prospective mafic-ultramafic intrusive units identified in shallow AC drilling.

• « Chalice's maiden diamond drilling program commenced at the South West Project, with ongoing drilling testing three late-time EM targets with coincident copper-in-soil anomalism.

Corporate

«

Favourable Class Ruling received clarifying the Australian income tax implications of the recently completed demerger of Falcon Metals Ltd ("Falcon", ASX: FAL) for Chalice shareholders.

« Chalice ended the quarter in a strong financial position with ~$54.5 million in cash.

1. Environment, Social and Governance

There were no significant environmental or safety incidents during the quarter.

The Company continues to maintain operational protocols to minimise the potential transmission of COVID-19. The Company's head office and operations continued to operate through the quarter, with minimal disruptions only.

The Company is continuing its comprehensive program of baseline environmental surveys at Julimar, including ground water, surface water, flora, fauna and dieback. The intention is to compile sufficient baseline environmental data to support a potential project referral, expected in early 2023.

The Whadjuk and Yued Traditional Owners conducted cultural heritage monitoring of drilling activities at the Hartog target in the Julimar State Forest during the quarter. Cultural heritage monitoring requirements are set out in cultural heritage management plans developed by the Whadjuk and Yued Peoples for the Hartog-Dampier exploration drilling program.

Chalice's stakeholder engagement activities on the Julimar Project continued during the quarter, including active engagement with the Local, State and Federal Governments. The Company continues to prioritise local procurement options and support for our host communities through the Company's sponsorship and grants program.

2.	Exploration and Development Activities
2.1	Julimar Nickel-Copper-PGE Project, WA
2.1.1	Overview of Activities

Exploration activities continued across the >30km long Julimar Complex during the quarter, with most activity focussed on the Gonneville PGE-Ni-Cu-Co-Au Deposit at the southern end of the Complex (Indicated + inferred 330Mt @ 0.94g/t Pd+Pt+Au (3E), 0.16% Ni, 0.10% Cu, 0.016% Co, refer to Appendix B). Initial early-stage exploration continues at the Hartog, Jansz and Torres targets to the north of Gonneville however access for exploration remains restricted across large parts of the Complex.

Chalice's strategy for the Julimar Project is to advance development studies and regulatory approvals for the Gonneville Deposit (as the likely starter mine for the project) in parallel with defining the full extent of the Julimar mineral system through exploration activities across the district.

The following activities continued at the project during the quarter:

• « Resource definition and exploration RC/diamond drilling at the Gonneville Deposit (ongoing).

• « Metallurgical, geotechnical and groundwater drilling at Gonneville (ongoing).

• « Reconnaissance diamond drilling at the Hartog target (ongoing).

• « Reconnaissance AC drilling surrounding the Gonneville Deposit and at the Torres and Jansz targets (ongoing).

• « Moving Loop Electromagnetic (MLEM) surveys across the Julimar Complex (ongoing).

• « Access discussions for the Julimar State Forest, Bindoon Training Area and private farming properties (ongoing).

• « Mine development studies to support a Scoping Study for the initial development stage of the Gonneville Deposit (ongoing).

2.1.2

Gonneville drilling

Resource definition and extensional drilling at the Gonneville Deposit continued on Chalice-owned farmland during the quarter, which included:

• « 35 Reverse Circulation (RC) holes drilled for 5,900m - comprising holes testing selected exploration targets and holes to provide samples for metallurgical testwork.

• « 53 diamond holes (including diamond tails on RC pre-collars) drilled for 17,600m - comprising infill drilling, predominantly in areas where access had previously been restricted due to permitting, as well as extensional drilling predominantly down-dip of high-grade mineralised zones.

• « Infill drilling within the shallow (<250m deep) Inferred component of the Gonneville Resource, which was completed during the quarter with these Resource blocks expected to be upgraded to a higher-confidence category as part of the next Mineral Resource update in June 2022 (required for completion and publication of the Scoping Study).

Drilling outside the Gonneville Resource pit shell (9 Nov 2021) continues to intersect broad intervals of sulphide mineralisation and extend the high-grade zones up to 400m beyond the limit of the current Resource pit shell(Figure 1).

Figure 1. Gonneville 3D View (looking east-north-east) - key extensional drill results, sulphide Resource blocks (>0.6% NiEq only shown) and pit shell.

Significant new extensional high-grade (>0.6% NiEq) sulphide results included:

• « 16m @ 2.9g/t Pd, 0.6g/t Pt, 0.4g/t Au, 0.1% Ni, 0.1% Cu, 0.01% Co (1.5% NiEq) from 448m (JD225);

• « 14.8m @ 3.0g/t Pd, 0.5g/t Pt, 0.1g/t Au, 0.2% Ni, 0.1% Cu, 0.01% Co (1.5% NiEq) from 545m (JD232);

• « 3.7m @ 7.3g/t Pd, 1.2g/t Pt, 0.7g/t Au, 0.6% Ni, 1.0% Cu, 0.04% Co (4.5% NiEq) from 429.3m (JD232);

• « 13m @ 1.7g/t Pd, 0.4g/t Pt, 0.1g/t Au, 0.2% Ni, 0.1% Cu, 0.01% Co (1.0% NiEq) from 412m (JD227);

• « 14m @ 1.5g/t Pd, 0.5g/t Pt, 0.2g/t Au, 0.1% Ni, 0.1% Cu, 0.01% Co (0.9% NiEq) from 523m (JD232);

• « 15m @ 1.1g/t Pd, 0.4g/t Pt, 0.1g/t Au, 0.2% Ni, 0.1% Cu, 0.01% Co (0.8% NiEq) from 277m (JD182);

• « 5m @ 1.4g/t Pd, 0.4g/t Pt, 0.2g/t Au, 0.1% Ni, 0.4% Cu, 0.01% Co (1.1% NiEq) from 424m (JD197); and,

• « 3m @ 1.2g/t Pd, 0.7g/t Pt, 0.1g/t Au, 0.2% Ni, 0.8% Cu, 0.02% Co (1.4% NiEq) from 400m (JD197).

Infill drilling within the Gonneville Resource pit shell (9 Nov 2021) has continued to deliver results in line with expectations. New high-grade (>0.6% NiEq) sulphide results included:

• « 25m @ 2.4g/t Pd, 0.4g/t Pt, 0.7g/t Au, 0.2% Ni, 1.1% Cu (2.1% NiEq) from 67m (JD203, G6);

• « 14.5m @ 7.5g/t Pd, 0.9g/t Pt, 0.3g/t Au, 0.2% Ni, 0.3% Cu (3.5% NiEq) from 376.3m (JD227, G11);

• « 28m @ 1.4g/t Pd, 0.4g/t Pt, 0.1g/t Au, 0.2% Ni, 0.4% Cu, 0.02% Co (1.1% NiEq) from 97m (JD203, new zone);

• « 26m @ 1.5g/t Pd, 0.3g/t Pt, 0.4% Ni, 0.2% Cu, 0.03% Co (1.2% NiEq) from 73m (JD227, G7);

• « 5.2m @ 8.2g/t Pd, 1.0g/t Pt, 0.1g/t Au, 1.6% Ni, 1.1% Cu, 0.1% Co (5.9% NiEq) from 265.8m (JD194, G2);

• « 9.3m @ 1.7g/t Pd, 0.3g/t Pt, 0.4g/t Au, 0.2% Ni, 0.5% Cu, 0.02% Co, (1.4% NiEq) from 159m (JD234, G6);

• « 9.5m @ 1.6g/t Pd, 0.3g/t Pt, 0.3g/t Au, 0.1% Ni, 0.4% Cu (1.2% NiEq) from 180m (JD234, G7); and

• « 8.2m @ 3.1g/t Pd, 0.5g/t Pt, 1.1% Ni, 0.9% Cu, 0.07% Co (3.2% NiEq) from 142.8m (JD228, G8).

2.1.3

Hartog exploration drilling

Six initial low-impact diamond holes for 3,164m were drilled at the Hartog target during the quarter, and a further two holes post quarter end, with drilling so far restricted to testing lower priority targets located proximal to cleared tracks/roads within the Julimar State Forest, due to permitting constraints(Figure 2).

Figure 2. Gonneville-Hartog-Dampier Plan View - drill holes, MLEM conductors and soil geochemistry over regional magnetics.

Low-impact, small footprint diamond rigs are being utilised in this initial reconnaissance program to minimise impact to the environment.

Several of the wide-spaced holes drilled to date have intersected prospective mafic intrusive geology, with evidence of minor magmatic sulphides (pyrrhotite-pentlandite with trace chalcopyrite). This represents the first strong indication of the presence of orthomagmatic sulphides outside of the Gonneville Intrusion and highlights the potential to locate mineralised mafic+/-ultramafic intrusives elsewhere within the Julimar Complex.

A high Cr-Ni gabbronorite intersected in the central Hartog area has a similar lithogeochemical signature to the gabbro/pyroxenite units intersected at Gonneville ~1.5km south. Only trace amounts of pyrrhotite and chalcopyrite have been observed in the gabbronorite intervals, although the recognition of similar rock types from early drilling at the Hartog target highlights the potential to define further prospective intrusive sequences along strike from Gonneville.

A total of 70+ drill sites are planned across the target area extending from Hartog to Dampier (immediately south of Baudin), which measures ~10km x ~2.0km. All high-priority EM/gravity/soil targets are yet to be tested, and these will be drilled once final permitting approvals have been received.