ALCHEMY RESOURCES LIMITED — Capital/Financing Update 2009

Dec 21, 2009

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ABN 17 124 444 122
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22 December 2009

HERMES GOLD PROJECT PROJECT DEVELOPMENT UPDATE

DISCOVERS THREE NEW MINERALISED GOLD PROSPECTS

Alchemy Resources Limited (ASX Code: ALY) (“Alchemy” or the “Company”) has completed the 2009 drilling program at its Hermes Gold Project, which consisted of 30 reverse circulation (RC) holes for 4,475 metres and 214 aircore (AC) holes for 8,830 metres.

The drilling to date has confirmed that the mineralisation at the Hermes Gold Project is similar to the quartz vein hosted gold mineralisation at the Plutonic Gold Mine, located 60kms to the northeast of Hermes.

The Hermes Gold Project was originally acquired from Troy Resources NL in June 2008. Alchemy was attracted to the project by the existing JORC code compliant indicated gold resource of 1.7Mt @ 2.4g/t gold (equivalent to 131,000 ounces of gold), which the Company believed could be developed quickly to fund future exploration expenditure.

• Significant increases in the both the world demand and price of gold has proved the strategic benefit of this acquisition

• Identification of Wilgeena Mining Centre in tenement package further enhances Alchemy’s fortunes and shareholders value

Alchemy was initially restricted by native title agreements from drilling the ground until May 2009.

Since that time the Company has achieved considerable success by having 17 of 30 RC holes (57%) return significant gold intersections which has improved the potential to increase the existing gold resource.

• Alchemy now has a better understanding of the existing resource and will utilise this knowledge in targeting potential extensions for drilling in 2010.

Following the initial successful drilling campaign, Alchemy contracted an outstanding geological team, led by highly experienced geologist Jon Standing, to extensively map and survey the Hermes Gold Project tenement area. That field mapping exercise significantly expanded the area of exploration at the Hermes Gold Project by 5 km North-South and 3.5km East-West.

The field mapping exercise identified a number of zones that could potentially host mineralisation outside the existing JORC code compliant gold resource.

The primary purpose of this drilling program, undertaken in the 4[th] quarter of 2009, was to find new and extended zones of gold mineralisation and increase the existing gold resource.

• Alchemy’s drilling program at the Hermes Gold Project was successful in discovering 3 new gold zones (Trapper West, Winchester and Blake) outside the existing gold resource at Hawkeye and Trapper (Fig. 1)

T: +61 8 9481 4400 E: admin@alchemyresources.com.au F: +61 8 9481 4404 W: www.alchemyresources.com.au

18 Emerald Terrace West Perth WA 6005

GPO Box 2815 Perth WA 6001

The Wilgeena Mining Centre, which has an exploration target with the potential to host 40,000 to 50,000 ounces of gold, was also identified within Alchemy’s Three Rivers tenements, 15 km southwest of the Hermes Gold Project (Fig. 3).

Hawkeye and Trapper Deposits – Existing Gold Resource

The Hawkeye and Trapper deposits contain the existing JORC code compliant indicated gold resource of 1.7Mt @ 2.4g/t gold (equivalent to 131,000 ounces of gold).

Prior to Alchemy’s drilling, only 13 holes had extended beyond 150m. RC drilling by Alchemy has intersected gold mineralisation below this depth.

Best results from drilling at Hawkeye and Trapper included

• 8m @ 10.30g/t gold from 156m (including 1m @ 64.9g/t gold)

Re-examination of historical diamond core identified the existence of a narrow zone of porphyry in a hole at the northern end of the Trapper deposit.

Alchemy will investigate the potential for this porphyry to provide a conduit and mechanism for gold mineralisation to move from depth to its position within the Trapper gold deposit.

In 2010, Alchemy intends to complete a staged drill out of the Trapper deposit and further reduce the drill spacing in the central and western portion of the Trapper deposit to 20m x 20m spacing to improve confidence in an updated resource estimate.

In addition, Alchemy will further test depth extensions at both the Hawkeye and Trapper deposits.

Trapper West Prospect – New Gold Zone

The Trapper West Prospect is located directly west of the Trapper deposit and indications from drilling are that it is a new zone of gold mineralisation.

Best results from drilling at the Trapper West Prospect included:

• 5m @ 6.40g/t gold from 3m (including 1m @ 23.4g/t gold)

• 15m @ 3.20g/t gold from 34m (including 1m @ 7.5g/t gold & 1m @ 10.8g/t gold)

• 5m @ 34.0g/t gold from 34m (including 1m @ 118.2g/t gold & 1m @ 16.1g/t gold)

• 7m @ 5.50g/t gold from 113m (including 1m @ 15.4g/t gold)

• 9m @ 6.54g/t gold from 126m (including 4m @ 14.1 g/t gold from 126m)

• 12m @ 8.35g/t gold from 74m (including 1m @ 84.2 g/t gold from 82m)

These are significant high grade gold intersections, some of which are at shallow depth.

This prospect has the potential to increase the size of the existing gold resource.

Step out RC drilling and diamond drilling will be conducted in 2010 to fast track a resource estimate for Trapper West.

Winchester Prospect – New Gold Zone

The Winchester Prospect is located approximately 700m northeast of the Hawkeye Deposit.

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Best results from drilling at the Winchester Prospect included:

• 29m @ 2.26g/t gold from 72m (including 5m @ 10.70g/t gold)

In 2010, Alchemy intends to conduct a step out RC drilling program to test for gold at depth and diamond drilling to determine the orientation and plunge component of the gold mineralisation.

Blake Prospect – New Gold Zone

The Blake Prospect is located directly south of the existing gold resource and represents a significantly underexplored area warranting further exploration.

Best results from drilling at the Blake Prospect included:

• 19m @ 10.78g/t gold from 84m (including 14m @ 14.54g/t gold)

• 4m @ 2.14g/t gold from 12m (4m composite sample)

• 12m @ 0.53g/t gold from 16m (4m composite sample)

This prospect has significant potential for additional gold mineralisation and step out RC drilling will be undertaken in 2010 to test the depth potential.

AC and RC drilling conducted at the Blake prospect has provided important information for follow up drilling in 2010, which will concentrate on the potential at depth (ie. below 40m). The shallow reconnaissance AC drilling that was recently conducted has shown that the gold mineralisation in this prospect may occur at depth.

In addition to assaying for gold in the soil profile during AC drilling, Alchemy has collected end of hole samples in bedrock for multi-element analysis. These results are yet to be analysed and will provide a better understanding for potential gold mineralisation at depth.

Mine Development – Transition to Gold Miner

In anticipation of making a decision on development of the Hermes Gold Project in 2010, Alchemy has:

• Entered into a Memorandum of Understanding with Barrick (Plutonic) Limited, the operator of the Plutonic gold mine, to provide a framework for a toll treatment or ore sales agreement

• Planned a number of diamond drill holes to collect samples for metallurgical test work to determine the optimum process for gold recovery

• Completed flora and fauna surveys to satisfy the West Australian Department of Environment and Conservation requirements

• Retained Coffey Mining Pty Ltd to undertake scoping studies relating to reestimation of the gold resource, geotechnical work relating to pit design, hydrology and hydrogeology, metallurgy and process engineering and studies relating to tailings storage facilities

• Conducted a review of mill processing options including the use of a mini-mill with capacity to process 500,000 tonnes of ore per annum

• Lodged miscellaneous licence applications for haulroads to haul gold ore to the Plutonic processing plant

• Commenced work on a mining proposal to be submitted to the West Australian Department of Mines and Petroleum

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The confirmation of the extinguishment of native title over the Hermes Gold Project by the West Australian Department of Mines and Petroleum in June 2009 has enabled Alchemy to expedite its drilling program and progression to mine development.

Managing Director Michael Hannington said, “Alchemy’s drilling campaign at Hermes which commenced in May this year was well thought out and strategically targeted new zones of gold mineralisation. The drilling results this year have developed our understanding of both the grade and extent of gold mineralisation at Hermes.”

“Whereas 2009 was a year of assessing the potential for new zones of gold mineralisation at Hermes, 2010 will be a year of more intensive drilling to define the extents of gold mineralisation at the Winchester, Trapper West and Blake prospects and re-optimise a gold resource based on all Alchemy’s drilling using a current gold price.”

The JORC code compliant gold resource was last defined by Snowdens in 1998 and studies were completed using a gold price of A$550 per ounce.

 Current gold price is A$1,250 per ounce

Wilgeena Mining Centre

Alchemy has submitted a program of work to the West Australian Department of Mines and Petroleum for approval to drill a combination of RC, Diamond and AC holes in the 1[st] quarter of 2010 at the Wilgeena Mining Centre (Fig. 4).

This program is intended to both confirm the in-house gold resource estimate undertaken by Plutonic Operations Ltd in 1997 and allow Alchemy to estimate a JORC code compliant resource for this advanced prospect.

Alchemy believes that Wilgeena represents an exploration target with the potential to host 40,000 to 50,000 ounces of gold.

Alchemy intends to rapidly integrate the development of the Wilgeena Project with the Hermes Gold Project and Wilgeena may even precede the commencement of mining operations at Hermes.

The Company believes that the combined development of both projects will significantly enhance the economy of scale of a stand alone gold operation.

Managing Director Michael Hannington said, “Alchemy has a clear strategy to systematically drill out the Wilgeena and Hermes Gold Projects. We have put in place the right people to take Wilgeena to a gold resource and Hermes from a dormant gold resource with native title and tenure issues to a decision to mine with all studies and permitting for development occurring to a clear timeline”.

“We have had a very busy and successful year and I wish to express my appreciation to the Alchemy team for their dedication and we look forward to 2010 and significantly enhancing shareholder value.”

ENDS

For further information contact:

Michael Hannington Managing Director Ph: (08) 9481 4400

Media: Tony Dawe – 0413 322 110

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Figure 1. – Hermes Gold Project – Existing Deposits and Prospects with significant gold assay results

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Figure 2. – Hermes Gold Project – Aircore Drilling November & December 2009

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Figure 3. – Location of Wilgeena Mining Centre at Alchemy’s Three Rivers Tenements

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Figure 4. – Aerial Photograph of the Wilgeena Mining Centre

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Figure 5. – Three Rivers Project Location Map

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Table 1. - Significant RC Drilling Results from Hermes Gold Project 2009

RC Hole ID	East (MGA94)	North MGA94)	From (m)	To (m)	Interval (m)	Grade (g/t Au)	Including (g/t Au)
TRC236 TRC237 TRC238 TRC243 TRC244 TRC247 TRC248 TRC249 TRC251 TRC252 TRC255 TRC257 TRC258 TRC260 TRC261 TRC262 TRC263	691383 691284 691756 691723 691701 691805 691354 691033 691589 691652 692252 691611 691602 692021 691296 691363 691404	7168721 7168679 7168972 7169335 7169314 7169036 7168668 7168134 7169175 7169280 7169728 7168832 7168751 7168565 7168296 7168700 7168743	21 34 104 113 86 138 128 159 132 156 8 47 68 88 97 60 144 72 122 81 84 114 94 5 34 74 102 137 151 30	29 39 112 120 88 143 131 162 136 164 10 55 73 97 110 72 152 101 133 98 103 118 103 19 37 86 117 147 162 54	8 5 4 7 2 5 3 3 4 8 2 8 5 9 13 12 8 29 11 17 19 4 9 14 3 12 15 10 11 24	2.0 34.0 3.2 5.5 18.7 3.8 3.1 6.5 12.2 10.3 2.02 1.41 1.39 2.74 1.11 0.92 1.58 2.26 2.82 0.54 10.78 1.96 4.46 0.72 0.79 8.35 1.32 0.58 0.54 0.42	1m @ 5.6 1m @ 118.2 4m composite 1m @ 15.4 1m @ 22.7 1m @ 11.8 1m @ 5.4 1m @ 9.9 1m @ 31.7 1m @ 64.9 4m composite 4m composite 5m @ 10.70 7m @ 4.25 4m composite 14m @ 14.54 1m @ 84.2

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Table 2. - Significant AC Drilling Results surrounding Hermes Gold Project – November & December 2009

AC Hole ID	East (MGA94)	North MGA94)	From (m)	To (m)	Interval (m)	Grade (g/t Au)
TR1414 TR1426 TR1427 TR1439 TR1452 TR1490 TR1493 TR1507 TR1512 TR1516 TR1532 TR1533 TR1548	691171 691069 691040 690924 690885 691114 690956 689910 690097 690256 692154 692155 692544	7168104 7167977 718010 7167813 7167571 7166940 7166804 7167013 7167134 7167245 7166492 7166546 7166501	12 12 28 16 20 24 32 24 16 20 24 12 16 24 36 36 28	16 16 32 20 24 28 36 28 20 24 28 16 20 28 40 40 32	4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4	2.14 0.141 0.195 0.67 0.356 0.56 0.105 0.147 0.138 0.497 0.306 0.688 0.271 0.131 0.101 0.11 0.113

All assay results reported using Aqua Regia digest. Fire Assay method assays have been completed on all assays that graded > 0.5 g/t Au. Results calculated using 0.2 g/t Au cutoff with maximum 3m internal dilution.

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Competent Persons Statement

The information in this report that relates to Exploration Results is based on information compiled by Mr Michael Cowin, who is a Member of the Australasian Institute of Geoscientists and is an employee of Cowin Holdings Pty Ltd which consults to Alchemy Resources Limited. Mr Cowin has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves’. Mr Cowin consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Mineral Resources is based on information compiled by Mr Shaun Hackett, who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Snowden Mining Industry Consultants Pty Ltd. Mr Hackett has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves’. Mr Hackett consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.

Alchemy Resources Limited has not yet reported resources from the Wilgeena Mining Centre Project. While the company remains optimistic it will report resources in the future, any discussion in relation to targets, resources, reserves or ‘ore’ is only conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

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