ALCHEMY RESOURCES LIMITED — Capital/Financing Update 2010

May 24, 2010

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ASX Announcement

25 May 2010

Exploration Update ‐ Magnus Copper‐Gold project First round of drilling confirms geology has strong potential to host VMS mineral deposits

• Initial seven hole reconnaissance reverse circulation drilling program completed on seven high priority VTEM conductor targets

• Drilling on individual targets provides strong geological evidence that Magnus has potential to host deposits similar to the DeGrussa copper‐gold discovery made on Sandfire Resources Ltd’s adjacent tenements

• Drilling reveals Alchemy’s ground contains stratigraphic horizons within the prospective Narracoota volcanic formation which hosts DeGrussa. This shows Magnus has the potential to host volcanogenic massive sulfide (VMS) deposits

• Drilling will now test up to a further 26 priority conductor targets and downhole EM will be conducted on existing holes. This drilling will utilise the knowledge gained from the first seven holes to provide a more targeted approach

Alchemy Resources Limited (ASX: ALY ) advises that the first round of exploration drilling at its Magnus Copper‐Gold Project in Western Australia has produced promising results which highlight the potential for the area to host repeats of Sandfire Resources Ltd’s neighbouring DeGrussa discovery.

The drilling program at Magnus, which is located 130km north‐east of Meekatharra, comprised seven reverse circulation (RC) holes on seven high priority targets (Fig. 2) that were identified by a VTEM survey completed in December 2009. The first seven RC holes were selected across the width of the Magnus project to conduct initial testing of the high priority conductors identified by the VTEM survey and to assist with targeting the drilling of the remaining 26 priority conductor targets.

The initial drilling at Magnus has:

• successfully identified extensive stratigraphic horizons within the prospective Narracoota volcanic formation with the potential to host volcanogenic massive sulfide (VMS) deposits. The Narracoota volcanic formation hosts the rich DeGrussa copper‐gold deposit; and

• identified minor disseminated sulfides, which in conjunction with geochemical tests being done on bedrock samples, may help to uncover VMS mineralisation.

Down‐hole electromagnetic (DHEM) surveys were carried out in five of the RC drill holes. DHEM surveys are used to identify the source of any conductors that were not intersected in the hole by drilling.

In four of the RC drill holes, which intersected dominantly mafic volcanic and intrusive rocks with minor interflow shales, the source of the VTEM anomaly remains unexplained and will be followed up with further drilling to determine the source of the conductor. In the other three drill holes, intersections of thick intervals of shale are believed to explain the original VTEM anomaly.

Re‐modelling of the VTEM and DHEM data was carried out to better determine the geometry and conductivity of the sources of anomalies. These results, in conjunction with ground electromagnetic surveys, will refine the location of modelled conductors prior to further drill testing.

18 Emerald Terrace GPO Box 2815 T: +61 8 9481 4400 E: admin@alchemyresources.com.au West Perth WA 6005 Perth WA 6001 F: +61 8 9481 4404 W: www.alchemyresources.com.au

Forward Program

Ongoing drilling at Magnus will test up to another 26 bedrock conductors identified by the VTEM survey (refer ASX announcement dated 23 February 2010).

Other activities will include:

• first‐pass Aircore drilling of untested gold‐in‐soil geochemical anomalies delineated by previous explorers at areas across the Magnus project area (Fig. 3). Near‐surface gold is an important indicator of copper mineralisation at depth;

• a program of multi‐element geochemical soil sampling across the Magnus project, aimed at upgrading and/or identifying new geochemical anomalies. Processing of this information and assessment of results is likely to result in the identification of new drill targets; and

• targeted ground‐based EM surveys to complement the VTEM survey and identify exploration targets at depth.

“These results are very encouraging and provide Alchemy with more strong evidence that Magnus hosts the geology associated with world‐class VMS deposits such as the DeGrussa discovery,” Alchemy Managing Director Michael Hannington said.

“We will now push full‐steam ahead with the next phase of drilling at Magnus to test this enormous exploration potential.”

ENDS

For further information, please contact: For media inquiries, please contact: Mr Michael Hannington Paul Armstrong Managing Director Read Corporate Ph: +61 8 9481 4400 Ph: +61 421 619 084

ABOUT ALCHEMY RESOURCES

Alchemy is actively exploring four key areas; the Magnus Copper‐Gold Project, the Hermes and Wilgeena Gold Projects, and the Murchison Projects (comprising six separate areas in the Murchison District).

The Magnus Copper/Gold Project is at the beginning of a rapid evaluation that will see drill testing of conductors identified by the VTEM survey and gold in soil anomalies associated with prospective areas identified by recently completed geological field mapping. An initial RC drill program commenced in April 2010, and Alchemy will devote significant expenditure to additional drill programs over the next six months of 2010.

The Hermes Gold Project is the most advanced with a JORC code‐compliant resource and an active drilling campaign. 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 believes can be quickly developed to fund future exploration expenditure.

The Wilgeena Gold Project, located 20 kilometres south of Hermes, was identified as a key exploration target in 2009. Alchemy commenced a RC and diamond drill program in March 2010 with the aim to confirm and extend existing zones of gold mineralisation, previously explored by Plutonic Operations Ltd in 1997, which will potentially allow Alchemy to estimate a JORC code‐compliant resource for this advanced project.

Following a successful capital raising in March 2010, Alchemy is now fully funded for a concerted exploration effort at its Projects in the Gascoyne and Murchison Districts.

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Competent Persons Statement

The information in this report that relates to Exploration Results is based on information compiled by Dr Kevin Cassidy, who is a Fellow of the Australian Institute of Geoscientists and is a full‐time employee of Alchemy Resources Limited. Dr Cassidy 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’. Dr Cassidy consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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Figure 1. – Magnus Copper‐Gold Project Location

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Figure 2. – Magnus Copper‐Gold Project – RC Drill holes and priority VTEM targets over Airborne Electromagnetics Image (VTEM Channel 30)

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Figure 3. – Magnus Copper‐Gold Project – Aircore drill targets and completed RC drill holes over simplified geology

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