Chalice Gold Mines has lost hope of finding gold in the Pilbara, last night withdrawing from its joint venture with Red Hill in the west of the mining region.

Dual-listed Chalice (ASX:CHN/TSE:CXN), which has been in a joint venture with Red Hill Iron (ASX:RHI) since September 2016, told investors last night the tenements just weren’t good enough.

“In total, 276 holes for 9259m were drilled including 276 (air core) holes for 5685m and 59 (reverse circulation) holes for 3574m. While anomalous results were returned from several of the prospects, they are not considered sufficiently encouraging to warrant follow-up exploration,” Chalice wrote to its joint venture partner.

“Accordingly, the company has provided notification to Red Hill of its withdrawal from the farm-in and joint venture agreement, subsequent to quarter-end.”

A farm-in deal is a written agreement under which one party is entitled to acquire an interest in a mining tenement by carrying out exploration work.

CHN share price movements over the past six months. Source: Investing.com
CHN share price movements over the past six months. Source: Investing.com

Chalice shares fell 5 per cent to 18 in early Friday morning trade.

The shares have traded between 14.5c and 26c in the past 52 weeks.

Its soon-to-be former partner was largely unchanged at about 63c in early trade.

It’s a fall from initial high hopes for the project.

Chalice initially described the site as under-explored for gold and base metals, and had -hopes to strike it lucky with a multi-million-ounce gold mine like neighbours Northern Start Resources (ASX:NST).

Stepping back from the Pilbara will give Chalice a chance to focus on its East Cadillac gold project in Quebec, where its currently undertaking 21,000m of additional diamond drilling from their initial 7700m program.

Earlier this week Chalice expanded its drilling program at the site, after identifying 14 new high-priority targets, go so far as to add two additional diamond rigs.

“Our decision to significantly expand and extend the drilling program at East Cadillac reflects our excitement about the potential of the project and our commitment to aggressively explore this highly-endowed region,” Managing director Tim Goyder told shareholders.

“The aim of the program is to continue building a high-grade resource base in the most efficient manner, leveraging our strong financial position and technical expertise.

“This is a unique opportunity for shareholders to be exposed to an exploration campaign of this size, within a highly endowed gold district, which should generate strong and consistent news-flow over the coming weeks and months.”

Chalice remains in  WA with its Latitute Hill nickel project in conjunction with Traka (ASX:TKL) and in the NT searching for gold and copper with Meteoric Resources (ASX:MEI).

In the last quarter they applied or two exploration licences in Victoria.

Their quarterly cashflow statement, released on Friday, showed $42.5 million in the bank at the end of December, after spending $3.5 million on exploration and evaluation activities.

There are an estimated $6.7 million in outgoings for the current quarter.

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