ALCHEMY RESOURCES LIMITED — Interim / Quarterly Report 2011

Apr 19, 2011

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MARCH 2011 QUARTERLY REPORT

Highlights

COMPANY PROFILE

Operations

Board of Directors

Warwick Davies Chairman

Robert Brierley Managing Director

John Arbuckle Non-Executive Director

Jeffrey Moore Non-Executive Director

• Metallurgical test work on oxide material from Hermes and Wilgeena indicates potential for high gold recoveries using conventional crush, grind and CIL plant

• Diamond drilling programs commenced in March 2011 to provide technical information on nature, orientation and continuity of mineralised zones at Wilgeena and Central Bore. Visible gold encountered in first hole at Central Bore

Company Secretary Bernard Crawford

Contact Details

Alchemy Resources Limited GPO BOX 2815 PERTH WA 6001 admin@alchemyresources.com.au www.alchemyresources.com.au Telephone +61 8 9481 4400 Facsimile +61 8 9481 4404

Additional Information Market: ASX Sector: Gold Mining ASX Code: ALY

• Aircore drilling programs commenced in March 2011 to test gold-in-soil anomalies and structural targets at Central Bore, Wilgeena and Moby NE

• Systematic exploration continued at the Magnus copper project including DHEM surveys on selected RC drill holes, review of VTEM and MLEM surveys and delineation of additional drill targets

Corporate

• Strong cash position with $6.1 million cash on hand at 31 March 2011

Shares on Issue 97,447,408

• Appointment of highly experienced mining and finance industry executive Mr Robert Brierley as Managing Director

Quarterly Report 1 1 January 2011 – 31 March 2011

Gascoyne Gold Project (Alchemy 100%)

The Gascoyne Gold Project covers over 300km[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.

The planned re-estimation of JORC compliant resources at Hermes and Wilgeena is scheduled to be completed after the logging and re-assaying of selected historical drill holes; the cutting and assaying of diamond core derived from the 2010 and April 2011 programmes; and potential finalisation of some additional metallurgical tests. A significant change to the total resource is not anticipated.

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

Metallurgical test work - Hermes and Wilgeena gold projects

Results of 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.

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.

Quarterly Report 2 1 January 2011 – 31 March 2011

Wilgeena Gold Project

RC drilling completed in December 2010 at Wilgeena returned significant intervals of gold mineralisation (Figure 2) outside the Indicated Resource of 659,480t @ 2.34g/t gold (equivalent to 49,536 ounces of gold) , highlighting the potential to boost the project’s development prospects (see ASX announcement dated 28 January 2011).

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Figure 2: Wilgeena Gold Project – Location of RC drilling completed in December 2010 and significant gold intervals (>1.0g/t gold).

A highly specific diamond drilling program of around 350 metres will target down-dip extensions of the mineralised zones to provide technical information on the nature, orientation and continuity of the gold mineralisation. Known mineralisation at Wilgeena comprises three east-southeast plunging mineralised zones and is localised along contacts between mafic, ultramafic and sedimentary rocks.

In combination with the results from RC drilling and metallurgical test work, the diamond drilling results will underpin a scoping study to assess the economic viability of establishing mining operations at Wilgeena. A Mining Lease (M52/1049) over Wilgeena was granted in September 2010.

An aircore drilling program of 53 aircore holes for 3,624 metres was completed at the end of March 2011 targeting four areas outside the gold resource area at Wilgeena (Figure 3). The targets, identified through surface geochemistry and geological mapping, are being tested for the presence of additional Wilgeena-style mineralisation that may help to support future mining operations. Some of the drilling may also sterilise ground that can be used for mine infrastructure.

Quarterly Report 3 1 January 2011 – 31 March 2011

Four-metre composite and bottom-of-hole samples have been submitted for gold and gold/multielement analysis, respectively. Results are expected to commence flowing from late April 2011 and will be reported once collated and assessed.

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Figure 3: Gascoyne Gold Project – Location of aircore and diamond drilling commenced in March 2011.

Central Bore Gold Prospect

Two phases of RC drilling were completed in 2010 over a strike length of 300 metres in the central part of the Central Bore area, resulting 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 these appear to have some continuity within broader zones of low-grade (<1g/t Au) mineralisation.

A targeted diamond drilling program of 450 metres commenced on 24 March 2011 to obtain technical information on the nature, orientation and continuity of the high-grade intervals and the broad mineralised envelopes (Figure 4). Gold mineralisation is associated with quartz-sericite-pyritealbite alteration zones and quartz-carbonate-sulphide veining, with visible gold present at 125 metres in CBDD001 (Figure 5). The results will help to determine if Alchemy’s future Central Bore exploration should be geared towards bulk-tonnage or high-grade vein targets.

A regional 9,000 metre aircore drilling program will be undertaken over the area surrounding the Central Bore gold project in April 2011 (Figure 3). The program to commence following completion of aircore programs at Wilgeena and Moby NE will test the interpreted contact between the host granite body and the package of sedimentary and mafic volcanic rocks that extends to the south. Additional aircore holes will drill test interpreted northwest-tranding faults that are thought to control the location of high-grade gold mineralisation at Central Bore.

Quarterly Report 4 1 January 2011 – 31 March 2011

Results from both the diamond and aircore drilling are expected to commence flowing from early May 2011 and will be reported once collated and assessed.

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Figure 4: Central Bore Gold Prospect – Proposed diamond drilling over interpreted geology and RC drilling.

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Figure 5: Central Bore Gold Prospect – visible gold at about 125m in CBDD001. Note strong quartz-sericitepyrite alteration.

Quarterly Report 5 1 January 2011 – 31 March 2011

Pelorus Gold Prospect

Two phases of aircore drilling have been completed at the Pelorus gold prospect. The second phase program, completed in November 2010, in-filled a 1km-plus long anomaly delineated by first-pass aircore drilling, as well as drill testing an area of surface gold anomalism to the northwest. Gold anomalism is centred around a major mafic-sedimentary contact in the hinge zone of a large, steeply south- to southeast-plunging fold.

Sampling of 1m samples from the significant intervals returned from assays of 4m composite samples (reported in December 2010 Quarterly Report) were undertaken in February 2011 following delays due to significant rain in December 2010.

Results from the 1m samples (Figure 6), using a cut-off of 0.25g/t gold and internal dilution of 2 metres, include (see Table 1):

• 2m @ 7.64g/t gold (38m) in MGAC116

• 10m @ 0.71g/t gold (29m) in MGAC130

• 9m @ 0.41g/t gold (54m) in MGAC142

The drilling has outlined scattered zones of high-grade mineralisation, although with only limited continuity of grade or width between sections. Further drill testing at Pelorus is dependent on additional targets being generated.

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Figure 6: Pelorus Gold Prospect – aircore drilling results (November 2010 results in red; May-June 2010 results in grey), significant intervals from 1m-spear samples, >0.25g/t gold, over interpreted geology.

Quarterly Report 6 1 January 2011 – 31 March 2011

Table 2: Pelorus Gold Prospect – aircore drilling results, significant intervals from 1m-spear samples, >0.25g/t gold, November 2010.

	Easting (m)	Northing (m)	From (m)	To (m)	Interval (m)	Gold (g/t)
Hole ID							Comment
MGAC113	695000	7159502	60	61	1	0.69
			74	76	2	0.51
			79	83	4	0.51
			102	107	5	0.58
MGAC115	694896	7159394	69	70	1	1.07
MGAC116	695000	7159400	38	40	2	7.84	incl. 1m@15.4g/t(38)
MGAC118	695198	7159403	35	36	1	0.56
MGAC119	695330	7159400	14	17	3	0.60
MGAC121	695701	7158900	44	46	2	0.34
MGAC124	695426	7158902	59	60	1	1.08
MGAC125	695302	7159001	68	70	2	0.68
			82	84	2	1.17
			90	91	1	0.27
MGAC129	695405	7159101	86	87	1	1.59
MGAC130	695359	7158918	19	29	10	0.71
			68	69	1	0.34
			87	89	2	0.40
MGAC133	695614	7159004	26	27	1	0.86
MGAC136	695178	7159298	38	39	1	1.38
MGAC142	695504	7159303	45	54	9	0.41
			57	58	1	0.73
			69	70	1	0.26
			73	77	4	0.28

Calculation of Assay Results:

Quoted drill intersections are based on a lower cut-off of 0.25g/t gold with a maximum of 2 metres of internal dilution (i.e., samples with less than 0.25g/t gold). Assay results were obtained from geochemical analysis of 1 metre spear 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 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 either 0 degrees MGA azimuth or 330 degrees MGA azimuth.

Magnus Copper Project (Alchemy 100%)

A total of 42 RC holes were drilled at the Magnus Copper Project in 2010 (Figure 7). 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.

Exploration has confirmed that the Magnus Copper Project area is highly prospective for the discovery of copper-gold mineralised systems although no massive sulphide accumulations were encountered through the RC drilling.

Prior to further drill testing, a comprehensive review of all geophysical data (electromagnetic, magnetic, gravity) collected to date over the Magnus Copper Project is being undertaken to reevaluate and re-interpret each of the conductors delineated in the VTEM survey. The review is incorporating down-hole geology logging and EM survey data as well as revisions to interpreted geology across the project area. The review will result in a complete re-assessment of the targets drill tested to date as well as potentially delineate additional drill targets across the Magnus project.

			Quarterly Report	7
1	January	2011	– 31 March 2011

Down-hole EM surveys were completed in March 2011 on seven RC holes that were part of the third RC drilling program (MGRC027-MGRC042) completed in November 2010, which drill tested areas of multi-element anomalism and/or VTEM conductors (Figure 7). Down-hole and off-hole conductors delineated in three of the surveys are being modelled and interpreted to determine if they have been adequately drill tested.

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Figure 7: Magnus copper-gold project – Completed RC drilling over VTEM Channel 30 image.

Alchemy’s drilling program at Magnus has highlighted the challenging nature of targeting repeats of the DeGrussa copper-gold discovery. Nevertheless, Alchemy is committed to thoroughly and systematically exploring the Magnus Copper Project area for both copper-gold mineralization and for ‘gold only’ mineralized systems, such as the recent Central Bore gold discovery.

OPR Copper-Nickel Anomaly

No exploration was undertaken at the OPR Copper-Nickel anomaly, southwest of the Hermes Gold Project, during the March 2011 quarter.

Reverse circulation drilling in 2010 tested resistivity and chargeability features outlined from an orientation Induced Polarization survey. Low-grade copper, nickel and zinc mineralisation is associated with mafic rocks, including:

• TRC337: 42m @ 0.12% Cu, 5m @ 0.35% Ni and 4m @ 0.1% Zn

• TRC338: 6m @ 0.17% Ni, 1m @ 0.29g/t Au, 1m @ 0.12% Cu and 0.24g/t Au, and 2m @ 0.12% Zn

• TRC339: 12m @ 0.19% Ni, 2m @ 0.13g/t Au, 2m @ 811ppm Cu & 0.28g/t Au, and 3m @ 855ppm Cu.

Further interpretation is required prior to additional drilling in the second half of 2011.

Quarterly Report 8 1 January 2011 – 31 March 2011

Murchison Projects

Assessment of the Company’s Murchison tenements continued with planning of RC and aircore drilling programs at Big Bell North and Jeffery Well, respectively, field evaluation of the Ninden Hill project and commencement of surface geochemistry at Gidgee South project (Figure 8).

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 8: Murchison Projects

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Quarterly Report 9 1 January 2011 – 31 March 2011

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 9). 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.

There are several metre intervals with greater than 1 g/t gold in these and other holes, but the most encouraging aspects of the drilling are the width of some mineralised intervals, the excellent structural setting, and the strong pathfinder anomalism. The entire drilling corridor shows elevation in pathfinder elements (As, Sb, W, Mo, Bi), indicating that the prospect is likely part of a large mineralising system. The focus of exploration is to target high-grade positions within the mineralised envelope although the grades intercepted to date are uneconomic based on today’s parameters.

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 northnortheast-plunging antiform (Figure 9). 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.

The dolerite-sediment contact is not mineralised along its entire length, with mineralisation restricted to the hinge zone and part of the eastern limb (Figure 8). Mineralisation appears to be controlled by the intersection of a steep north-south structure with the contact horizon. Mineralised intervals are characterised by chlorite + pyrite alteration of the dolerite, with localised development of veining and strong white mica alteration. Steep intersecting structures – as potential controls on high-grade mineralisation – are, therefore, primary targets of further exploration at Big Bell North.

A 1,500 metre RC drilling program is planned for July 2011 to drill test the Big Bell North prospect (Figure 9). The holes target the intersection of the mineralised contact zone with mapped and/or interpreted structures.

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

A 3,600 metre aircore drilling program scheduled for July 2011 is planned at Jeffery Well (Figures 8 & 10) to drill test for high-grade, vein-style gold mineralisation within a regional gold corridor delineated during aircore drilling in November 2010. The gold corridor may represent a southern extension of the Sarus gold prospect previously drilled by MPI Ltd in the 1990s.

Significant results of 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.

Quarterly Report 10 1 January 2011 – 31 March 2011

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Figure 9: Big Bell North Project – planned RC drilling and previous drilling (see legend) over geology.

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.

Gidgee South Project (Alchemy 100%)

A surface geochemistry program at the Gidgee South Project (Figure 8) commenced with 35 soil samples collected prior to suspension of the program following significant rain events in February and March. The soil samples were collected from the southern part of the tenement and did not return any significant results. The surface geochemistry program will resume in the June 2011 quarter.

Quarterly Report 11 1 January 2011 – 31 March 2011

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Figure 10: Jeffery Well Project – proposed aircore drilling and previous drilling (see legend) over geology.

This project hosts a high priority gold target identified during regional targeting undertaken in early 2008 following the development of Alchemy’s three-dimensional geological model for the Murchison District. The acquisition of this project provides further highly prospective exploration ground over the Big Bell – Meekatharra shear, which hosts the Big Bell gold deposit (3.9 Moz).

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

A desktop study of historic exploration and a field review of the Ninden Hill project were undertaken in March 2011. Field mapping shows a series of meta–volcanic and –sedimentary rocks striking north-south, and dissected by steeply-dipping shear zones.

Results from rock chip sampling include a peak value of 0.44g/t gold returned on silicified-goethite breccia material associated with a sequence of graphitic metasedimentary and felsic volcanic rocks in the north-central part of the project area. The sequence is also 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 June 2011 across the northern half of the project.

Comprehensive office based reviews of the Wydgee and Gidgee projects will be undertaken in the June 2011 quarter. Field mapping will be undertaken before any further drilling campaigns are planned.

Quarterly Report 12 1 January 2011 – 31 March 2011

Corporate activity

Alchemy appointed highly experienced mining and finance industry executive Robert Brierley as Managing Director, taking effect from 11 April 2011.

Alchemy continues to seek ‘value creating’ acquisitions of both early stage exploration projects and more advanced projects with resources able to be developed in the near-term.

Alchemy continues to control costs while actively exploring its project areas with $6.1 million cash at hand at 31 March 2011.

During this quarter, Alchemy spent approximately $0.4 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 fifteen tenements adjacent to Alchemy’s tenure in the Gascoyne District is scheduled for commencement of proceedings on 18 July 2011. The Company remains confident of a favourable outcome.

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

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 13 1 January 2011 – 31 March 2011