ALCHEMY RESOURCES LIMITED — Interim / Quarterly Report 2011

Jul 20, 2011

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ASX RELEASE

JUNE 2011 QUARTERLY REPORT

21 JULY 2011

Highlights

MAGNUS COPPER PROJECT

CODE: ALY

BOARD OF DIRECTORS

Mr Warwick Davies Non-Executive Chairman

Mr Robert Brierley Managing Director

Mr John Arbuckle Non-Executive Director

Mr Jeffrey Moore Non-Executive Director

• Orientation AMT survey at Magnus Copper Project completed with excellent data quality

• AMT profiles successfully delineated geological packages, defined conductors that correlated well with previous geophysics, and resolved new features at depth and along trend

• Re-evaluation of geophysics across Magnus Copper Project identifies additional conductors and revised drill targets

ISSUED CAPITAL

SHARES 97,447,408 OPTIONS 2,800,000 (Unlisted)

GASCOYNE GOLD PROJECT

• High-grade gold intersected in diamond drill holes at Central Bore prospect, including 4m @ 25.8g/t gold in CBDD002

PROJECTS

MAGNUS COPPER (100%) GASCOYNE GOLD (100%) MURCHISON (80-100%)

• Aircore drilling at Gascoyne Gold Project returns several areas of gold anomalism, including 3m @ 5.94g/t and 1m @ 9.60g/t gold about 1km west of Central Bore prospect

18 Emerald Terrace WEST PERTH WA 6005 Phone: +61 8 9481 4400 Facsimile: +61 8 9481 4404 www.alchemyresources.com.au

• Data compilation and validation completed at Hermes and Wilgeena Gold Deposits

MURCHISON PROJECTS

• Aircore drilling at Jeffery Well, Gidgee South and Big Bell North in Murchison to commence in July 2011

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CORPORATE

• Strong cash position with $4.7 million cash at hand at 30 June 2011

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MAGNUS COPPER PROJECT (ALCHEMY 100%)

The Magnus Copper Project covers over 20 kilometres of strike length of volcanic and sedimentary rocks of the highly-prospective Bryah Group, located 130km north-east of Meekatharra, Western Australia (Figure 1). Alchemy is undertaking systematic exploration for VMS-type (base and precious metals) mineralisation at Magnus, which is along strike and to the west of Sandfire Resources’ DeGrussa deposit that contains measured, indicated and inferred resources of 10.67Mt @ 5.6% copper and 1.9g/t gold.

A total of 42 RC holes have been drilled at the Magnus Copper Project to date (Figure 2). The majority of holes tested conductors delineated from an interpretation of the helicopter-borne VTEM survey flown in December 2009 and/or areas of multi-element anomalism identified from soil sampling over the Magnus region. A number of VTEM targets remain untested.

Although no massive sulfide accumulations were encountered through the RC drilling, exploration has confirmed that the Magnus project area is highly prospective for the discovery of copper-gold mineralised systems and has provided a strong platform for continued systematic exploration.

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Figure 1: Location of Magnus Copper Project and Gascoyne Gold Project.

Geophysics Review

Prior to further drill testing, a comprehensive review of all geophysical data (electromagnetic, magnetic, gravity) collected over the Magnus Copper Project has been undertaken to re-evaluate each of the conductors delineated in the VTEM survey.

Quarterly Report 1 April 2011 – 30 June 2011

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The review incorporated down-hole geology and EM survey data as well as revisions to interpreted geology across the project. The review resulted in a re-assessment of the targets drill tested to date and delineated additional drill targets across the Magnus project.

Audio-Magnetotellurics Survey

An orientation audio-magnetotelluric (AMT) survey was completed in May 2011 to assess the quality and depth penetration of previous geophysical surveys as well as applicability of the AMT technique to exploration of base and precious metals at Magnus. Magnetotelluric methods can detect conductors linked to base metal mineralisation as well as map variations in resistivity associated with changes in lithology.

AMT data was acquired along two parallel, offset profiles that in combination form a continuous profile across the prospective stratigraphic sequence on the eastern side of Magnus (Figure 2). Each profile was approximately 4 km long with AMT data acquired at 100m station spacing. The profiles coincided with profiles from previous VTEM, MLEM and gravity surveys enabling direct comparisons to be made.

Depth conductivity sections for each of the AMT profiles successfully delineated major geological packages and their boundaries, defined conductors that correlate well with the VTEM, gravity and known geology, and resolved new features that were not detected in the VTEM survey. In particular, the AMT conductivity depth sections image a number of interesting anomalies including significant conductors at depths over 300m within the Narracoota volcanic sequence (Figure 3).

Of the geophysical methods applied to date at Magnus, AMT appears to be the only one that has provided good correlation to mapped geology, imaged conductive responses within the resistive Narracoota volcanic sequence and has the deepest depth of penetration to over 600m.

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Figure 2: Magnus Copper Project – Location of AMT profiles, VTEM and AMT targets, and completed RC drilling over VTEM Channel 20 image. Inset shows location with respect to Alchemy projects in Figure 1.

Quarterly Report 1 April 2011 – 30 June 2011

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Figure 3: Magnus Copper Project – Three-dimensional view looking upwards and north-east (towards DeGrussa) showing AMT conductivity depth sections, new AMT targets (pink ellipses), initial VTEM targets (yellow) and RC drill holes (white lines) under VTEM image. Note the strong conductor at depth on the right hand side of the closest AMT depth section.

Work during the September 2011 quarter will include finalisation of revised geological interpretation across the Magnus project area and commencement of ground geophysics, including follow-up AMT surveys, to define additional targets that are expected to be drill tested in the December 2011 quarter.

Alchemy’s exploration at Magnus Copper Project has highlighted the challenging nature of targeting repeats of the DeGrussa copper-gold deposit. Nevertheless, Alchemy is committed to thoroughly and systematically exploring the Magnus area for both VMS-type copper mineralisation and for ‘gold only’ mineralised systems, such as the Central Bore gold prospect, as the potential reward is considered significant.

GASCOYNE GOLD PROJECT (ALCHEMY 100%)

The Gascoyne Gold Project covers over 270km[2] within the highly-prospective Marymia Inlier and Bryah Basin, located 130km north-east of Meekatharra, Western Australia (Figure 1). The project comprises the Hermes and Wilgeena Gold Deposits, and the Central Bore Prospect.

Hermes and Wilgeena Gold Deposits

The planned re-estimation of JORC compliant resources at Hermes is scheduled to be completed in the September 2011 quarter after compilation and assessment of umpire assays received for selected intervals from selected historic and Alchemy drill holes and completion of cutting and assaying of diamond core derived from the 2010 and 2011 programs.

Metallurgical test work undertaken on oxide core material obtained from a diamond drill program in August 2010 from the Hawkeye and Trapper resource areas at Hermes and each of the three resource areas at Wilgeena was received in January 2011 and reviewed by an independent metallurgist. This test work indicates that the ore is amenable to treatment in a conventional crush, grind and CIL plant with good recoveries across all size fractions.

Quarterly Report 1 April 2011 – 30 June 2011

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At both Hermes and Wilgeena, a high proportion of gold is contained in the coarse fraction. Gravity test work indicates that a large percentage (40-60%) of the free gold could be recovered by gravity concentration. No technical issues were identified that would result in a poor recovery or extenuating cost issues.

Central Bore Gold Prospect

In 2010, two phases of RC drilling over a strike length of 300 metres in the central part of the Central Bore area resulted in the discovery of high-grade gold mineralisation related to quartz veining in granite (see ASX announcement dated 10 December 2010). The majority of the high-grade intervals include single metre intercepts of around an ounce-per-tonne, and appear to have some continuity within broader zones of low-grade (<1g/t Au) mineralisation.

Diamond Drilling

A targeted diamond drilling program of two holes for 450 metres was completed in April 2011 to obtain technical information on the nature, orientation and continuity of the high-grade intervals and the broad mineralised envelopes (see ASX announcement dated 15 July 2011). Structural studies indicate that gold mineralisation plunges gentle-moderate towards the south-east.

High-grade gold mineralisation was returned (Figure 5), and includes best intersections (applying a 1.0g/t lower cut-off and maximum 2 metres of internal dilution) of:

• 4 metres at 25.8 g/t gold from 125 metres, including 1 metre at 99.3 g/t gold from 125 metres, in hole CBDD002

• 1 metre at 12.1 g/t gold from 222 metres in hole CBDD002

• 1 metre at 6.51 g/t gold from 119 metres in hole CBDD001

Diamond hole CBDD002 intersected a zone of mineralized quartz-sulfide lode with visible gold at 125 metres down hole (Figure 4). The interval returned an assay of 4m @ 25.8 g/t gold, including 1m @ 99.3g/t. Additional high-grade mineralisation (1m @ 12.1 g/t gold) was returned from 222 metres down hole. Table 1 lists all significant intercepts above 1 g/t gold.

These results are very encouraging and, combined with detailed structural orientation and logging of the core, have enhanced the Company’s understanding of the gold mineralisation at Central Bore. Further drilling targeting down-plunge positions is planned for the second half of 2011.

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Figure 4: Central Bore Gold Prospect – strong quartz-sulfide veining and quartz-sericite-pyrite alteration and visible gold at about 125m in CBDD002.

Quarterly Report 1 April 2011 – 30 June 2011

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Figure 5: Central Bore Gold Prospect – Significant intervals from recent Diamond drilling and previous RC drilling.

Table 1: Central Bore Gold Prospect – Significant intervals from Diamond Drilling, >1.0g/t gold, April 2011

Hole ID	Easting (m)	Northing (m)	Dip/ Azimuth	From (m)	To (m)	Interval (m)	Gold (g/t)	Comment
CBDD001	702239	7160342	-60/0	56	57	1	1.88
				74	75	1	1.34
				109	110	1	1.73
				119	120	1	6.51
				124	125	1	4.44
				182	183	1	2.20
CBDD002	702284	7160286	-60/0	121	122	1	1.92
				125	129	4	25.8	incl.1m @ 99.3g/t(125m)
				140	141	1	2.01
				156	157	1	5.65
				218	219	1	1.36
				222	223	1	12.1

Calculation of Assay Results:

Quoted drill intersections are based on a lower cut-off of 1.0g/t gold with a maximum of 2 metres of internal dilution (i.e., samples with less than 1.0g/t gold). Assay results were obtained from geochemical analysis of 1 metre samples of half NQ2 core. All samples were analysed at ALS Global Laboratories in Perth. Samples are prepared using single stage pulverization of the entire sample. Gold assays are obtained using a 30g fire assay and atomic absorption spectrometry analysis technique. Full analytical quality assurance - quality control is achieved using a suite of certified standards, laboratory standards, field duplicates, laboratory duplicates, repeats, blanks and grind size analysis.

The location of drill holes is determined using a handheld GPS achieving less than 10m accuracy and using the MGA datum (Zone 50). All drill holes were drilled at -60 degrees to 0 degrees MGA azimuth.

Quarterly Report 1 April 2011 – 30 June 2011

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Regional Aircore Drilling

Aircore drilling programs were completed during the June 2011 quarter over areas surrounding the Central Bore gold prospect, Wilgeena gold deposit and the Moby NE anomaly (Figure 6).

The Central Bore aircore program tested the interpreted contact between the host granite body and the package of sedimentary and mafic volcanic rocks that extends to the south. Significant results for 1m samples, representing intervals delineated from 4m-composite samples, are listed in Table 2. Best results include 3m @ 5.94g/t in CBAC090 and 1m @ 9.60g/t in CBAC091. Both of these drill holes are located about 1 kilometre west of the main zone of mineralisation at Central Bore and represent a discrete target that requires additional drilling.

The Wilgeena and Moby NE programs targeted areas outside the gold resource area at Wilgeena as well as a goldin-soil anomaly at Moby NE. The programs did not detect significant gold mineralisation, with significant results for 1m samples listed in Table 2. The drilling did delineate weak base metal mineralisation, including 9m @ 1,070ppm zinc in WGAC017, 16m @ 864ppm zinc in WGAC023 and 3m @ 984ppm copper in WGAC018. The base metal anomalism is associated with a redox boundary within the regolith, which likely reflects mobilisation of base metals in modern groundwaters.

The results of the aircore drilling programs will be used to further develop working geological models for Central Bore and Wilgeena, with recommendations for further exploration in the second half of 2011.

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Figure 6: Gascoyne Gold Project – Location of aircore and diamond drilling, April 2011.

Quarterly Report 1 April 2011 – 30 June 2011

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Table 2: Gascoyne Gold Project – Significant intervals from Aircore Drilling, >0.20g/t gold, April 2011

Prospect	Hole ID	Easting (m)	Northing (m)	Dip/ Azimuth	From (m)	To (m)	Interval (m)	Gold (g/t)	Comments
Central Bore	CBAC008	703144	7160998	-60/0	64	67	3	0.97
	CBAC044	702343	7160507	-60/0	5	6	1	0.25
					20	24	4*	1.06
					40	44	4*	0.47
	CBAC063	701937	7160206	-60/0	25	26	1	0.26
	CBAC065	701941	7160000	-60/0	49	50	1	0.24
	CBAC070	701738	7160103	-60/0	4	8	4	0.51
	CBAC079	701541	7159904	-60/0	34	35	1	0.89
	CBAC090	701141	7159903	-60/0	31	32	1	0.72
					43	44	1	1.45
					62	64	2	0.24
					68	71	3	5.94
	CBAC091	701145	7159799	-60/0	46	47	1	9.60
Wilgeena	WGAC005	686324	7155798	-60/0	60	61	1	0.26
	WGAC018	685596	7155549	-60/0 -60/0	63	64	1	2.74
					86	87	1	0.60
	WGAC040	685332	7155398	-60/0	66	68	2	0.61
	WGAC048	685242	7155303	-60/0	32	34	2	0.23
	WGAC050	685136	7155402	-60/0	52	53	1	0.49

Calculation of Assay Results:

Quoted drill intersections are based on a lower cut-off of 0.20g/t gold with a maximum of 2 metre of internal dilution (i.e., samples with less than 0.20g/t gold). Assay results were obtained from geochemical analysis of 1 metre spear samples, except where marked by ‘*’ indicating 4 metre composite samples. Sampling was undertaken following logging of geological boundaries within the drill hole. All samples were analysed at ALS Global Laboratories in Perth. Samples are prepared using single stage pulverization of the entire sample. Gold assays are obtained using a 25g aqua regia digest and either ICP or atomic absorption spectrometry analysis techniques. Full analytical quality assurance - quality control is achieved using a suite of certified standards, laboratory standards, field duplicates, laboratory duplicates, repeats, blanks and grind size analysis.

The location of drill holes is determined using a handheld GPS achieving less than 10m accuracy and using the MGA datum (Zone 50). All drill holes at Central Bore, Moby NE and majority of holes at Wilgeena were drilled at -60 degrees to 0 degrees MGA azimuth. Remaining holes at Wilgeena were drilled at -60 degrees to 0 degrees local grid.

Quarterly Report 1 April 2011 – 30 June 2011

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MURCHISON PROJECTS

Assessment of the Company’s Murchison tenements continued with planning of drilling programs at Jeffery Well, Gidgee South and Big Bell North, field evaluation of the Wydgee, Ninden Hill and Pollele projects and commencement of surface geochemistry at Wydgee, Polelle and Gidgee South (Figure 7).

Jindalee Resources Limited (“Jindalee”) is a 20% JV partner in a number of Alchemy’s Murchison Projects. Jindalee’s interest is noted where relevant.

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Figure 7: Murchison Projects – Location of planned aircore drilling programs.

Quarterly Report 1 April 2011 – 30 June 2011

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Jeffery Well Project (Alchemy 80%, Jindalee 20%)

A 3,600 metre aircore drilling program is planned to commence in July 2011 at Jeffery Well to test for high-grade, vein-style gold mineralisation within a regional gold corridor delineated during aircore drilling in November 2010 (Figures 7 & 8). The gold corridor may represent a southern extension of the Sarus gold prospect previously drilled by MPI Ltd in the 1990s.

Significant results from 1m assays from the November 2010 program (reported in an ASX Announcement dated 24 January 2011), using a lower cut-off of 0.20g/t gold, include:

• 2m @ 15.27g/t gold (62m), including 1m @ 30.2g/t gold (63m), in JWAC023

• 5m @ 1.53g/t gold (78m), including 1m @ 6.35g/t gold (78m), in JWAC025

• 7m @ 0.54g/t gold (81m) in JWAC008, and

• 1m @ 2.89g/t gold (54m) in JWAC028.

The results warrant further work to interpret the significance of the high-grade intersection (2m @15.27g/t gold) in hole JWAC023. The exploration effort at Jeffery Well highlights the potential in the Murchison District for not only large lode gold systems but also for narrow high grade gold systems, similar to the gold mineralisation identified north of Meekatharra at Andy Well by Doray Minerals Limited.

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Figure 8: Jeffery Well Project – proposed aircore drilling and previous drilling (see legend) over geology.

Gidgee South Project (Alchemy 100%)

An initial 6,500 metre aircore drilling program is planned to commence in August 2011 at Gidgee South (Figure 7) to drill test for gold mineralisation in the north-eastern part of the project area. This priority structural target was identified during regional targeting following development of Alchemy’s proprietary three-dimensional model of the Murchison Projects area and was a key reason for acquiring this project in 2010.

Quarterly Report 1 April 2011 – 30 June 2011

10

The gold target may represent the northern continuation of the highly-mineralised Big Bell – Meekatharra shear zone, which hosts the Big Bell gold deposit (3.9 Moz).

A surface geochemistry program commenced with 235 soil samples collected to date from the southern part of the Gidgee South Project in an area largely covered by sheet-wash; results to date have not identified any significant areas of anomalism. The surface geochemistry program will resume in the September 2011 quarter.

Wydgee, Ninden Hill and Gidgee Projects (Alchemy 80%, Jindalee 20%)

Re-assessment of the Wydgee and Ninden Hill projects (Figure 7) during the June 2011 quarter has highlighted the base metal prospectivity of these project areas. Mapping by the Geological Survey of Western Australia, in combination with discovery of base metal mineralisation by Silver Swan Group at Austin, Reed Resources at Chunderloo and Silver Lake Resources at Eelya, indicates that the northern Murchison district hosts volcanic sequences with significant base metal potential.

Field assessment of the Ninden Hill and central part of the Wydgee projects was completed in June and indicates the possible continuation of prospective volcanic sequences into these project areas.

At Wydgee, field mapping on E51/1048 shows a number of north-south structural corridors associated with silicacarbonate alteration of volcanic and sedimentary rock units. Mafic volcanic breccias containing basalt and dolerite clasts appear to be associated with these corridors. The corridors are likely to reflect zones of high fluid flow and are the focus of further exploration. Assessment of historic exploration data over E51/1048 indicates base metal anomalism, including 0.25% Cu in a bottom-of-hole sample in shallow RAB hole JB0137, associated with felsic volcanic and sedimentary rock units.

A surface geochemistry program over the central part of the Wydgee Project commenced in June 2011. The program will be completed in the September 2011 quarter, with any delineated areas of base metal anomalism the subject of further exploration and drill testing.

At Ninden Hill, field mapping and rock chip sampling of a sequence of graphitic metasedimentary and felsic volcanic rocks in the north-central part of the project area indicate that the sequence is characterized by elevated base (>800 ppm Zn; >75ppm Pb) and precious (>1.0g/t Ag; 0.44g/t Au) metals. A surface geochemistry program is planned for the September quarter.

Big Bell North Project (E20/667: Alchemy 100%; E20/594: Alchemy 80%, Jindalee 20%)

In 2010, two phases of aircore drilling and an initial RC drill program delineated a coherent mineralised envelope over 600 metres strike length and around 40 metres true width at the Big Bell North prospect (Figure 7). One metre assays (previously reported in September 2010 and December 2010 Quarterly Reports), using a cut-off of 0.20g/t gold, indicate a number of encouraging intersections, including:

• 21m @ 0.76g/t gold (49m), including 2m @ 3.28g/t gold (67m), in BBNAC092

• 60m @ 0.27 g/t gold (40m) in BBNAC004

• 26m @ 0.65 g/t gold (81m) and 6m @ 0.48 g/t gold (118m) in BBRC002

• 7m @ 0.90g/t gold (8m) in BBNAC088, and

• 1m @ 4.30g/t gold (20m) in BBNAC096.

Gold mineralisation is localised at the top of a dolerite unit, immediately beneath sandstone, which is in turn overlain by carbonaceous shale. The sequence is folded into an open, shallowly north-northeast-plunging antiform.

Quarterly Report 1 April 2011 – 30 June 2011

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Flat stratigraphy and shallow-plunging open folds represent excellent structural trap sites for gold mineralisation. The flat geometry of the stratigraphy and mineralised zone mean that drilling that ended in the overlying sedimentary package has not tested the target, which is confined to below this unit.

An initial 1,500 metre aircore drilling program is planned to commence in August 2011 at Big Bell North to drill test for gold mineralisation in the western part of E20/667 (Alchemy 100%). This target was generated as part of regional targeting and development of the three-dimensional model for the northern Murchison region. It tests an along-strike position of the northeast-trending Big Bell Fault in an area undercover and with a subdued magnetic character.

Polelle Project (E51/1326: Alchemy 100%; E51/1042, E51/1225 & E51/1226: Alchemy 80%, Jindalee 20%)

A field assessment and surface geochemistry program commenced over the southern part of the Pollele Project (Figure 7) in June 2011. In an area north of Burnakura Bore on E51/1326 (Alchemy 100%), an interpreted northsouth corridor of quartz-carbonate alteration associated with a folded sequence of mafic rocks and corresponding with a de-magnetised zone in magnetic images, represents a favourable target for further exploration. Results of surface geochemistry program over the south-eastern part of E51/1326 are expected early in the September 2011 quarter and any areas of gold anomalism will be the subject of further exploration in late 2011.

CORPORATE

Alchemy continues to control costs while actively exploring its project areas with $4.7 million cash at hand at 30 June 2011.

During this quarter, Alchemy spent approximately $0.9 million on drilling and evaluation of its tenements.

The Western Australian Warden’s Court action by Alchemy against Grosvenor Gold Pty Ltd seeking forfeiture over tenements adjacent to Alchemy’s tenure in the Gascoyne District has been rescheduled from July to October 2011. The Company remains confident of a favourable outcome.

Contact Details: Mr Robert Brierley Telephone: +61 8 9481 4400

Quarterly Report 1 April 2011 – 30 June 2011

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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 fulltime 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 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’. 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.

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.

The information in this report that relates to Mineral Resources at the Wilgeena Gold Project is based on information compiled by Mr Simon Coxhell of Coxsrocks Pty Ltd, who is a Member of the Australian Institute of Geoscientists and a Member of the Australasian Institute of Mining and Metallurgy and is a consultant to Alchemy Resources Limited. Mr Coxhell 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 Coxhell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Quarterly Report 1 April 2011 – 30 June 2011

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