Highlights from December Quarter, Quarterly Activity Statement. Disc: Held in my SMSF. Remain very long-term bullish on CHN. Mid-term price guide around $10 for me but believe it could be significantly higher over time.

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

• Maiden Indicated and Inferred, pit-constrained mineral resource estimate (Resource) defined for the Gonneville PGE-Ni-Cu-Co-Au deposit (Deposit), located on Chalice-owned farmland:
• 330Mt @ 0.94g/t 3E, 0.16% Ni, 0.10% Cu, 0.016% Co (~0.58% NiEq or ~1.6g/t PdEq);
• Containing 10Moz 3E, 530kt Ni, 330kt Cu, 53kt Co (~1.9Mt NiEq or ~17Moz PdEq);
• The pit-constrained Resource includes a significant higher-grade sulphide component above a 0.6% NiEq cut-off grade, starting from a depth of ~30m: 74Mt @ 1.8g/t 3E, 0.22% Ni, 0.21% Cu, 0.021% Co (~1.0% NiEq or~2.8g/t PdEq).
• The Deposit remains open to the north and at depth, with the maiden Resource interpreted to cover just ~7% of the 26km long Julimar Complex, demonstrating the potential for material growth with ongoing drilling.
• Step-out drilling is continuing at Gonneville on Chalice-owned farmland with multiple rigs, focused on extending the high-grade Resource.
• New “blind’ shallow, high-grade PGE-Ni-Cu-Co sulphide discovery made on Chalice-owned farmland within a newly identified ultramafic intrusive unit located immediately south of the ~6.5km long Hartog Airborne EM (AEM) anomaly. 
• Initial low-impact diamond drilling commenced in January 2022 at the Hartog-Baudin Targets on existing tracks within the Julimar State Forest following key WA State Government approvals.
• First-pass air-core (AC) drilling completed at the Torres Target on private farmland at the northern end of the Julimar Complex, with several zones of prospective ultramafic geology intersected – all assays are pending.
• Scoping Study for the initial development of Gonneville progressing with all key study scopes awarded to highly-regarded external consultancies.

West Yilgarn Nickel-Copper-PGE Province, Western Australia 

• First-pass AC drilling completed at the Recherche Target (Barrabarra Project), with a 150-400m wide sequence of prospective mafic-ultramafic geology intersected – all assays are pending.

Corporate

• Falcon Metals (ASX: FAL) demerger and IPO completed – $30 million raised from existing and new shareholders, with Falcon commencing trading on the ASX on 22 December 2021.
• Derek La Ferla appointed as Non-executive Chairman at the 2021 AGM, following the retirement of Company founder and long-standing Chairman, Tim Goyder. 
• Chalice ended 2021 in a strong financial position with ~$65 million in cash.

Next phase of drilling commencing for CHN at Julimar. Share price up >5% on the announcement (presumably) which does just seem to reinforce how sensitive many are to the smallest positive announcement.

Diamond drilling commences at Hartog

First ever exploration drilling underway at the exciting Hartog Target on existing access tracks within the Julimar State Forest

Highlights

• « Approval received from the WA Department of Mines, Industry Regulation and Safety (DMIRS) for initial low-impact diamond drilling at the Hartog-Baudin targets within the Julimar Project.
• « Drilling has commenced on existing access tracks only within the Julimar State Forest, which avoids any disturbance to vegetation.
• « The drill program aims to provide an initial indication of the mineral potential of the area, while minimising environmental impact.
• « All planned activities will comply with strict environmental requirements and will have no impact on the ongoing recreational use of the forest.

Stock trading up >5% on announcement today of access approval at Julimar to allow drilling on new targets...

Conservation Management Plan approval received from the WA State Govt for initial low-impact drilling at the Hartog-Baudin Targets

Highlights

• « The WA State Government has approved the Stage 2 Conservation Management Plan (CMP) for initial low-impact drilling at the Julimar Project Hartog-Baudin targets.
• « The CMP is based on a comprehensive and detailed environmental assessment process and is designed to minimise disturbance and environmental impact.
• « Strict environmental requirements include no mechanised clearing of vegetation and a maximum operational footprint of 4.4ha across the ~2,000ha Hartog-Baudin target area.

Following from Naga's straw below, Alan Kohler and Tim Treadgold at Eureka just released an interview with CHN CEO Alex Dorsch. Behind a paywall at https://www.eurekareport.com.au/investment-news/chalices-platinum-find-may-promise-more-excitement/150713. A few highlights:

AK: Alex, at the end of September quarter you had $81 million in the bank, cash but you’re chomping through the money at a ferocious rate, $17 million in the quarter. How long is that $81 million going to last? 

It should last us at least 12 months. Our run rate is sort of between $5 and $6 million a month, which is high for an exploration company. Six rigs basically have been working for us for the last 18 months – I should say, anywhere from six to nine rigs working for us at any one time, as well as obviously a big support contingent and a lot of geologists chasing those rigs around. We think that’s at least 12 months, it’s a fairly comfortable cash balance to do what we want to do for the next 12 months.

AK: What do you think you’ll do next year, raise more money or farm it out?

It’s a good question. We’re sort of open to both avenues. Obviously, the equity market is very strong at the moment, I guess the demand is there, we feel, from large institutional investors to contribute at the equity level. If we got the right party inbound, yeah, we would consider a farm-in or strategic sort of partnership.

TT: So everything you’re looking at points to this not being a one-deposit-wonder, but a true PGM province on the doorstep of Perth? 

Yeah, that’s the way we’ve been thinking about it for some time and I think what we see is potentially Julimar is a district or a camp of deposits. We found obviously the first one at the very southern end, but we only really drilled that southern end because of access constraints. In theory, if we had been allowed to drill all the way along that anomaly to begin with, we may already have two or three discoveries or two or three separate deposits along the Julimar district. But the province as a whole, we feel, is actually much, much larger than Julimar. We think that really, the entire sort of western half of WA could be a new nickel province just by the fact that that western half of Western Australia has a fraction of the exploration effort when compared to the gold fields or the Pilbara or even the Kimberley.

TT: Alex, if I can take you back to a question Alan asked at the start and that was funding, either more cash or a JV partner. There are two standout companies which really ought to be involved with you. One is Anglo American which controls South Africa’s platinum industry and must be looking at what you’re doing with great interest. The other is BHP which has gone off exploring for nickel in Canada when it’s got an enormous nickel division in Western Australia and doesn’t appear to have recognised what you’ve got. Are Anglo American and BHP knocking on your door? 

Look, they’ve both been very positive about our discovery basically since the day we announced the discovery hole all the way back in March of last year. They’ve both made themselves aware to us and they’ve showed some interest since then. At this stage, we don’t really have any interest in pursuing any transaction with them. We’ve got 100 per cent control… I think we’ve found a very, very interesting discovery on the global scale, so we’re not limited to just going to corporates as partners or for sources of capital. We’ll continue to engage with them but at this stage we want to know what we have first and I think obviously we owe that to shareholders to determine what is the true scale of this -- is this just a single deposit or is this just a series of deposits or is this a new mineral province of which we own 100 per cent of.

TT: Have you worked out what the copper equivalent or nickel equivalent cost of production is? I assume it’s very low? 

Not a cost of production, obviously, we’re just in the resource stage at the moment. We’re working as fast as we can on studies which will start to highlight what sort of net smelter return and costs we’re likely to see. At this stage, the resource grades, we’ve reported those in both nickel equivalent and palladium equivalent. Palladium is currently the most valuable metal out of the six on spot basis, but nickel does drive the recovery into concentrate, so the nickel-sulphide content is an important factor and this is a nickel-copper-PGE deposit, so that is the orthomagmatic – nickel, copper, PGE is the family of deposits, if you like, so we’ve reported in nickel-equivalent terms as well and obviously the contained metal numbers in terms of metal equivalent values are pretty impressive and almost two million tonnes of nickel equivalent or about 17 million ounces of palladium equivalent.

AK: So you could be 10 years off earning some money from this? 

Yeah, I think the average sort of time period that you see quoted is anywhere from six to 13 years, I think is the time periods between discovery through to cash flow, and the average is around about 10 for Western Australia. Given the discovery was only 18 months ago, we do have some work to be done and do have a number of years ahead of us to be ready for actually studying, making an investment decision and then actually building a mining operation.

Big announcement from Chalice this morning on resource even more positive than initially thought. Very positive market reaction at time of writing (up nearly 10%).

DISC: held in my SMSF but not in SM (have always felt I missed the boat on it here during my inactive SM period but looks like I might be proven wrong about that as usual)

Tier-1 scale maiden Mineral Resource for Gonneville –

10Moz Pd+Pt+Au (3E), 530kt Ni, 330kt Cu and 53kt Co

Largest nickel sulphide discovery in over 20 years and largest PGE discovery in Australian history establishes foundation for world-class ‘green metals’ project

Highlights

• « Maiden Indicated and Inferred, pit constrained, mineral resource estimate (Resource) defined for the Gonneville PGE-Ni-Cu-Co-Au deposit (Deposit), located on Chalice-owned farmland within the 100%-owned Julimar Project, ~70km NE of Perth, WA:
• « 330Mt @ 0.94g/t 3E1, 0.16% Ni, 0.10% Cu, 0.016% Co (~0.58% NiEq2 or ~1.6g/t PdEq3);
• « Containing 10Moz 3E, 530kt Ni, 330kt Cu, 53kt Co (~1.9Mt NiEq or ~17Moz PdEq);
• « ~150Mt (45%) is within the Indicated category (55% within the Inferred category);
• « Resource is constrained within a pit shell and reported above a 0.4% NiEq cut-off grade (sulphide) and 0.9g/t Pd cut-off grade (oxide).
• « The pit-constrained Resource includes a significant higher-grade sulphide component above a 0.6% NiEq cut-off grade, starting from a depth of ~30m:
• « 74Mt @ 1.8g/t 3E, 0.22% Ni, 0.21% Cu, 0.021% Co (~1.0% NiEq or ~2.8g/t PdEq);
• « Containing 4.2Moz 3E, 160kt Ni, 150kt Cu, 15kt Co (~760kt NiEq or ~6.6Moz PdEq);
• « This higher-grade component affords the project significant optionality in development and could potentially materially enhance project economics in the initial years of operations.
• « Gonneville is already the largest nickel sulphide discovery worldwide since 20004 (>20 years), and the largest PGE discovery in Australian history.
• « The Deposit remains open to the north and at depth, demonstrating the potential for material growth with ongoing drilling.
• « High-grade mineralisation begins at surface and has already been intersected ~60m below the limit of the Resource pit;
• « Wide-spaced extensional drilling is continuing down-plunge, with >1,000m of potential plunge extent yet to be fully tested on Chalice-owned farmland.
• « The maiden Resource, which is interpreted to cover just ~7% of the 26km long Julimar Complex, confirms the world-class nature of the Julimar Project, and demonstrates the potential for the project to become a strategic, long-life ‘green metals’ asset.

Further to the previous straw on the intention to de-merge their gold assets, Chalice provided further detail today. It would be presumptuous to correlate the share price improvement to the announcement of course but CHN finished the day up 5.39% to close at $6.84. I originally bought in to CHN (at about $0.16) to get some exposure to what I thought at the time were under-valued gold assets. Not long afterwards they announced the Julimar discovery and the share price went on a tear. I foolishly sold 20% of my holding way too early on the way up. Now the very thing I was buying CHN for in the first place is being de-merged and I'll be holding 6000 Falcon shares. Shows how Muddled I can be. I guess it's back to the beginning and try and put a value on Falcon.

Falcon Metals Limited

Demerger Summary - Falcon Metals Ltd 

Chalice recently announced its intention to seek Shareholder approval for the demerger and concurrent IPO of its Australian gold assets, comprising the Pyramid Hill Project and Mt Jackson Project, (together, the Spin-Out Projects). If approved, the demerger will establish a new ASX listed gold exploration company, Falcon Metals (ASX: FAL).

The demerger will allow Chalice to focus on its world-class Julimar Ni-Cu-PGE Project and the new West Yilgarn Ni-Cu-PGE Province in Western Australia, where exploration and evaluation activities are rapidly accelerating.

If the demerger is approved by shareholders, Chalice will transfer the Spin-Out Projects to Falcon Metals and distribute the Falcon Metals shares held by Chalice to Chalice Shareholders by way of a pro rata in-specie distribution, on the basis of 1 Falcon Metals share for approximately every 3.017 Chalice Shares held on the In-specie Record Date of 7 December 2021. Chalice shareholders will also retain their existing Chalice shares.

In connection with the demerger, Falcon Metals intends to undertake an initial public offering (IPO) of Falcon Metals shares and lodge a prospectus under section 710 of the Corporations Act for the issue of a minimum of 30,000,000 and a maximum of 60,000,000 Falcon Metals Shares at a price of $0.50 per Falcon Metals Share to raise a minimum of $15,000,000 and a maximum of $30,000,000 (before costs) (IPO). It is intended that the IPO will comprise:

(a) a priority pro rata rights offer to eligible Chalice shareholders (Priority Offer); and

(b) an offer of any shortfall from the Priority Offer to eligible Chalice shareholders and the general public (Shortfall Offer).

Following the Priority Offer record date of 5 November 2021, shareholders will be provided with instructions on how to participate in the Priority Offer and Shortfall Offer.

Detailed information regarding the proposed demerger is contained in the Notice of Meeting (Notice) and accompanying explanatory statement (Meeting Materials).

General Meeting 

The demerger will be voted on by Chalice shareholders at a General Meeting of the Company (Meeting) to be held on:

Wednesday, 1 December 2021 at 10.00 am (AWST)

CHN announces it is spinning out gold projects through demerger and IPO, will be in specie distribution to current CHN shareholders.

DISC:  Held in SMSF, missed the boat here 

Chalice confirms gold spin-out into Falcon Metals Limited

Highlights
 

• Chalice’s Pyramid Hill, Viking and Mt Jackson gold projects to be spun-out (via a demerger and concurrent IPO) into a new standalone, gold-focused ASX-listed exploration company called Falcon Metals Ltd (“Falcon”; proposed ASX code: FAL).
   
• Highly qualified Board and Management secured to lead Falcon, including one of most decorated explorers in Australia, Dr Mark Bennett, who has been appointed Non-Executive Chair.
  ?
• Highly-regarded geologist and executive Tim Markwell appointed as Managing Director.
   
• Chalice’s MD & CEO Alex Dorsch will join the Board of Falcon as a Non-Executive Director to ensure a smooth transition of the projects into the new standalone entity.
   
• Eligible Chalice shareholders are expected to receive 1 ordinary Falcon share for every 3 ordinary Chalice shares (1-for-3) via an in-specie distribution, subject to Chalice shareholder and regulatory approval.
   
• As part of the concurrent IPO, Falcon to raise a minimum of $15 million and up $30 million under a pro-rata Priority Offer to Chalice shareholders.
   
• Prospectus and offer documentation currently being prepared and to be issued in due course.

Overview

Chalice Mining Limited (“Chalice” or “the Company”, ASX: CHN | OTCQB: CGMLF) is pleased to confirm that it is proceeding with the previously foreshadowed demerger and IPO of its highly prospective Australian gold assets (see Figure 1). The proposed demerger will establish a new ASX-listed gold exploration company called Falcon Metals Limited (proposed ASX: FAL), with its own highly experienced board and management team.

The decision follows a strategic review of Chalice’s portfolio which concluded that a demerger of the Company’s gold projects (including the district-scale, 100%-owned Pyramid Hill Gold Project in Victoria) is the optimal structure to maximise value for our shareholders.

The demerger will allow Chalice to focus on its world-class Julimar Ni-Cu-PGE Project and the new West Yilgarn Ni-Cu-PGE Province in Western Australia, where exploration and evaluation activities are rapidly accelerating.

Following its admission to the official list of ASX, Falcon intends to transition its headquarters to Melbourne, Victoria, as its principal focus will be its highly prospective Pyramid Hill Gold Project in the Bendigo Zone of Victoria. Following the planned demerger, Falcon will hold exploration interests over the largest exploration licence holding (>5,000sqkm) of any company in the Bendigo Zone, which hosts the world-class Fosterville Gold Mine (>8Moz Au) and historic Bendigo Goldfield (>22Moz Au).

Falcon’s portfolio will be further enhanced by two other early-stage but highly prospective gold projects in Western Australia, the Viking Project and the Mt Jackson Project.
 

Chalice's Managing Director and Chief Exectutive Officer, Alex Dorsch, said “We are pleased to confirm the details of the upcoming demerger and IPO of our highly prospective Australian gold assets into Falcon Metals. This will result in the establishment of a significant new, well-funded ASX-listed gold explorer with a high-quality portfolio spanning some of Australia’s most highly-endowed gold provinces.

“Importantly, Chalice shareholders will retain exposure to these assets via an in-specie distribution of shares in Falcon Metals on a 1-for-3 basis. I think this is a great result for our shareholders, particularly coming on the back of the standout returns that Chalice has been able to generate over the past 18 months.

“I’d also like to formally welcome Mark and Tim to the Falcon Board. We are incredibly fortunate to have secured the services of these two highly-regarded explorationists, and we are looking forward to their stewardship of what will be one of the most dynamic new gold companies on the ASX.

“Given their vast depth of expertise and capability – building on the strong foundations already created by Chalice – I am confident that Falcon Metals will be incredibly well-placed for discovery success.

“The Chalice technical team, led by Dr Kevin Frost and Graham Kubale, have done a superb job in advancing the Pyramid Hill Project over the last three years, setting Falcon up with an incredible array of compelling drill targets.

“I am very much looking forward to the demerger and IPO proceeding, obviously subject to shareholder approval. I encourage shareholders to look out for the Prospectus and Offer documentation and encourage shareholders to take advantage of the opportunity to participate in the upcoming priority offer.”

ASX Announcement Summary

1. Overview

   Chalice Mining Limited (“Chalice” or “the Company”, ASX: CHN | OTCQB: CGMLF) is pleased to report significant new results from ongoing exploration and evaluation activities at its 100%-owned Julimar Nickel-Copper-Platinum Group Element (PGE) Project, located ~70km north-east of Perth in Western Australia.

   The step-out and resource definition drill program at the ~1.8km x 0.9km Gonneville Intrusion is continuing, with over 136,000m of drilling completed to date and a significant number of assay results pending. The COVID-19 pandemic and associated travel restrictions have resulted in minor delays in drilling progress. Additional diamond drill rigs are currently being sourced and are expected on site in the coming weeks.

   Results have now been received for drilling targeting:

   • «  The northern and down-dip extensions to the high-grade G1-G9 zones;

   • «  Infill of the high-grade G1-G9 zones on a nominal 40m x 40m spaced grid and of the northern extensions of the G11 zone on a nominal 40m x 80m spaced grid;

   • «  The non-magnetic pyroxenite-rich north-western part of the Gonneville Intrusion (initial wide- spaced lines on a nominal ~80m x 160m spaced grid);

     A total of 131 diamond drill holes and 372 RC drill holes (including RC pre-collars with diamond tails) have been completed to date at the project (~136,000m), of which assay results have now been reported for 88 diamond and 300 RC holes (including RC pre-collars with diamond tails). Assay results are pending for a further 116 completed drill holes, with lab turnaround times currently averaging approximately seven weeks.

     The current geological interpretation indicates the G8 and G9 zones have been extended significantly along strike to the north-east, while a new high-grade zone (G12) has been defined at the north-western hanging wall contact of Gonneville.

     Infill drilling has confirmed that the G5 zone merges with the G2 zone at the northern end, and step- out drilling has closed off the G7 and G10 zones. Importantly, infill drilling continues to support the geological interpretation and in selected cases defines new mineralised zones not seen in wide- spaced drilling.

     Chalice Managing Director, Alex Dorsch, said: “The fact that we are still discovering new high-grade zones and identifying significant extensions in step-out drilling so far into the resource drill-out is testament to the exceptional scale and quality of the Gonneville deposit.

     “We have now identified a 12th high-grade zone in drilling targeting the non-magnetic, pyroxenite- rich north-western contact of the intrusion. This is an exciting development, with the newly defined zone projecting some ~380m down-dip to a previous intersection in deep diamond hole JD018. The new zone remains wide open and requires further drilling to refine.

     “In addition, step-out drilling has delivered some exceptional new high-grade results, extending the existing G8 and G9 zones by over 500m along strike. Infill drilling elsewhere within the deposit continues to support our geological model and demonstrate the continuity of the mineralisation.

     “Our resource drill-out is continuing at pace, with assays currently pending for 116 holes. We remain on track to deliver our maiden Mineral Resource Estimate next quarter, providing a strong foundation for preliminary economic studies, which are also advancing in parallel.

     “We continue to receive positive feedback from the relevant State Government departments regarding access to the Julimar State Forest for initial drill testing to the north of Gonneville. Initial wide-spaced drilling anticipated to commence at Hartog in late Q3 2021, subject to access approval.”