ALCHEMY RESOURCES LIMITED — Interim / Quarterly Report 2013

Oct 25, 2012

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SEPTEMBER 2012 QUARTERLY REPORT

Highlights

BRYAH BASIN PROJECT

BOARD OF DIRECTORS

Mr Oscar Aamodt Non-Executive Chairman

Ms Sofia Bianchi Non-Executive Director

Mr Lindsay Dudfield Non-Executive Director

Mr Anthony Ho Non-Executive Director

• Drilling to test multiple geochemical targets within prospective Narracoota sequence (host to DeGrussa copper-gold deposit) currently underway

• Electromagnetic (EM) surveys commenced over selected geophysical anomalies to better define targets for drill testing

• Over 70 targets identified through interpretation of geological and geophysical data across project area, including EM anomalies within Narracoota sequence

ISSUED CAPITAL

SHARES 156,852,955 OPTIONS 2,210,000 (Unlisted)

• Mapping and surface sampling completed over priority areas delineates coherent multi-element (copper, lead, zinc, gold, silver, arsenic, antimony, bismuth and/or molybdenum) anomalism

PROJECTS

BRYAH BASIN (80-100%) MURCHISON (80-100%)

• Gold resources at Hermes and Wilgeena increased by 20% to 4.7Mt at 2.0 g/t Au (equivalent to 0.3Moz gold)

• Drilling indicates potential to add further resources at Hermes and Wilgeena

Level 2/72 Kings Park Road WEST PERTH WA 6005

Phone: +61 8 9481 4400 Facsimile: +61 8 9481 4404 www.alchemyresources.com.au

CORPORATE

• $3.5 million cash at hand at 30 September 2012

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Bryah Basin Project

Alchemy is focussed on unlocking the copper – gold potential of its Bryah Basin Project, located 130km NE of Meekatharra, Western Australia (Figure 1). Alchemy is undertaking systematic exploration for base and precious metals across the project through employing innovative geophysical and geochemical methods in conjunction with drill testing of priority targets.

Alchemy’s Bryah Basin Project is uniquely located along strike and west of Sandfire Resources’ high-grade DeGrussa copper-gold deposit (Measured, Indicated and Inferred Resources of 14.33Mt at 4.6% copper and 1.6g/t gold) and southeast of Horseshoe Metals’ Horseshoe Lights copper-gold project (past production of 300,000oz gold, 54,000t copper), and adjacent to Peak Hill where about 1Moz of gold has been mined from several deposits.

Alchemy holds 100% in the majority of the landholding with the exception of several tenements held in jointventure with Jackson Minerals Pty Ltd (20%), a subsidiary of Fe Ltd (ASX: FEL).

Exploration activities over this period comprised:

• completion of geological mapping and geochemical sampling;

• interpretation of versatile time electromagnetic (VTEM) and audio-magnetotelluric (AMT) surveys; and

• commencement of ground moving-loop (MLEM) and fixed-loop electromagnetic (FLEM) surveys.

Drill testing of selected geochemical targets in four areas across the project commenced in October. The drilling program is also providing geochemical and stratigraphic information critical for exploring for base metal deposits.

In addition, a resource estimation update was completed for the Hermes and Wilgeena gold deposits as well as continuation of planning of targeted extensional and in-fill drilling at the Central Bore gold prospect.

Results to date support the view that the expanded Bryah Basin Project has multiple prospective exploration opportunities that will sustain and justify long term exploration efforts at the project.

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Figure 1: Bryah Basin Project – Alchemy tenements and prospective Narracoota volcanic sequence.

Quarterly Report 1 July 2012 – 30 September 2012

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Geological and geochemical investigations

The Bryah Basin Project covers over 45km strike length of volcanic and sedimentary rocks of the highlyprospective Narracoota sequence. Over the past six months, systematic field mapping and multi-element surface, rock-chip and end-of-hole sampling have been completed over priority areas of the project. Interpretation of the results from these programs in conjunction with the interpretation of project-wide geophysical datasets delineated targets with coherent multi-element geochemical anomalism that have not been tested by drilling.

Field mapping over the west and central Magnus areas identified the prospective Narracoota sequence (Figure 2), host to the DeGrussa copper-gold deposit along strike to the east of Magnus area. The Narracoota volcanosedimentary sequence as well as sedimentary and mafic volcanic and intrusive units in the immediate footwall exhibit bedding-parallel zones with intensive carbonate, sericite, silica and sulphide alteration in places at surface. Linear magnetic horizons may represent volcanogenic cherts, similar to those in the Fiddler and Reefer Well areas to the northwest.

Comprehensive regional soil, rock-chip and end-of-hole geochemical sampling across the Magnus area as well as results from limited, shallow historic vacuum and rotary air-blast (RAB) drilling indicates widespread multielement anomalism, including arsenic, antimony, gold, copper, zinc, bismuth, molybdenum, silver, cadmium, as well as barium and manganese, particularly in the west and central parts of the Magnus area. Rock-chip samples of ferruginous sedimentary and/or mafic volcanic rocks in the west and central Magnus areas returned up to 1,600ppm copper and 1.4g/t gold. Multi-element data were obtained from end-of-hole sampling of historic drill holes that were originally assayed for only gold and arsenic, resulting in variable multi-element anomalism, including copper, zinc, arsenic, antimony, gold, cobalt, manganese, molybdenum and thallium.

In the northwest Bryah Basin Project, field mapping over the Fiddler, Bullgullan Bore and Reefer Well areas (Figure 2) has identified the upper part of the prospective Narracoota volcanic sequence, which is the host stratigraphy of the Horseshoe Lights copper-gold mine. The upper part of the Narracoota sequence is host to silica-iron oxide cherts within the mafic-ultramafic sequence, which are thought to represent the products of exhalative, volcanogenic processes, as well as mafic and lesser felsic volcaniclastic rocks.

Rock-chip sampling of ferruginous and manganiferous horizons and veining within the upper Narracoota volcanic sequence returned regionally and locally anomalous levels of copper, lead, zinc, silver, cadmium, manganese, molybdenum, arsenic and antimony. Soil geochemistry supports the anomalism, with elevated copper, lead, zinc, gold, silver, manganese, cadmium and molybdenum.

The multi-element coherent geochemical targets delineated in the Fiddler and Magnus areas to date represent broadly anomalous horizons that may be related to volcanogenic massive sulphide-style base metal mineralising processes.

Geophysics

A comprehensive review of all geophysical data was completed by the respected geophysical consulting group Southern Geoscience Consultants. Interpretation of airborne VTEM surveys acquired over priority areas within the prospective Bryah Basin has resulted in delineation of over 70 targets. In conjunction with interpretation of geological and geochemical data over the priority areas, 15 anomalies from across the Bryah Basin Project area were initially selected for follow-up ground geophysics (Figure 2).

The ground geophysics program comprising a combination of moving-loop and fixed-loop electromagnetic surveys commenced in late September (refer ASX announcement dated 27 September 2012) and will result in delineation of better-defined bedrock conductors that will then be the subject of targeted drill testing.

Quarterly Report 1 July 2012 – 30 September 2012

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Surveying is expected to be completed by the end of October, with data processing and interpretation of the results expected by the end of November.

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Figure 2. Bryah Basin Project – prospective Narracoota stratigraphy and exploration activities in September quarter.

Moving-loop EM and FLEM surveys of 14 VTEM anomalies are being undertaken to further define the orientation and depth of the bedrock conductors and better define the targets for drill testing. The geophysical anomalies have been targeted if they (i) have a moderate-high conductance similar to that of the DeGrussa orebody, (ii) appear to be discrete and not stratigraphic (i.e., less than 1500m in length), and (iii) are unlikely to be due to edge effects from currents in the near surface environment (e.g., regolith, paleochannels).

A FLEM survey is also being undertaken over a priority AMT anomaly that was drill tested in April 2012 and returned an interpreted off-hole conductor at depth following a down-hole EM survey of the drill hole (Figure 2). For discrete anomalies, such as the AMT anomaly, fixed-loop EM is the preferred technique to define bedrocks conductors as it generally has a significantly larger energising force than MLEM.

Drilling

A 6,000 metre aircore drilling program has commenced to follow up encouraging geochemical and geophysical results identified by the Company (refer ASX announcement dated 16 October 2012). The data collected from the aircore drilling is critical to the ongoing development of the detailed project geology as well as providing important geochemical data that can then be further targeted with follow-up ground geophysics and/or RC drilling.

The drilling is targeting geochemical anomalism in four areas, including two areas at west Magnus and at Fiddler in the northwest of the project (Figure 2). At west Magnus, highly anomalous drill spoil, rock chip and soil

Quarterly Report 1 July 2012 – 30 September 2012

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samples and coincident VTEM anomalies are being drill tested. A highlight of the geochemical results includes end-of-hole sampling from a historic RAB hole that returned 1,710ppm copper, 350ppm zinc, 4.93ppm antimony, 298ppm arsenic, >10% manganese, 743ppm cobalt, 13.45ppm molybdenum and 14.4ppm thallium.

Aircore drilling is also targeting anomalous multi-element results returned from a reconnaissance aircore drilling program at the Churchill prospect in the west Magnus area. Four-metre composite samples returned anomalous levels of copper, lead, zinc, gold, silver, cadmium, cerium, cobalt, manganese, molybdenum, antimony and tungsten, including 36 metres at 521ppm copper in MGAC081 and 20 metres at 412ppm copper in MGAC091.

In the Fiddler area, multi-element surface geochemistry anomalism is being drill tested in two areas (Figure 2). Rock-chip sampling of ferruginous and manganiferous horizons and veining within the upper Narracoota volcanic sequence and soil geochemistry returned regionally and locally anomalous levels of copper, lead, zinc, gold, silver, cadmium, manganese, molybdenum, arsenic and antimony.

Previous drilling in the Fiddler area was shallow, mostly less than 100 metres depth, and with many drill holes assayed for gold only. Where assayed, base metal anomalism is recorded in several areas including the Fiddler and Fiddler South prospects. The best historic results include:

Fiddler prospect:

• 24 metres at 0.29g/t gold and 718ppm copper from 10 metres, including 4 metres at 0.94g/t gold and 0.19% copper from 20 metres, in FB84 (partial Cu assays)

• 12 metres at 0.97g/t gold and 174ppm copper from 24 metres, including 2 metres at 2.95g/t gold and 700ppm copper from 30 metres, in FB122

• 12 metres at 0.47g/t gold and 685ppm copper from 8 metres in FB81

Fiddler South prospect :

• 10 metres at 0.03g/t gold, 0.23% copper, 0.11% zinc and 251ppm lead from 90 metres in FP37

• 6 metres at 0.77g/t gold, 0.11% copper, 0.10% lead and 427ppm zinc from 27 metres in HAP20

• 14 metres at 0.32g/t gold from 46 metres to EOH (no base metal assays)

Pulps from some of the historic drilling have been recovered and a selection of 2m-composite samples previously assayed for gold only are being re-assayed for a multi-element suite, including copper, lead and zinc.

The multi-element coherent geochemical targets delineated in the Magnus and Fiddler areas represent broadly anomalous horizons that may be related to volcanogenic massive sulphide-style base metal mineralising processes.

Reconnaissance drilling is also being undertaken at central Magnus in an area with significant transported cover to improve geological and geochemical characterisation of the prospective Narracoota volcano-sedimentary sequence.

The drilling program has the aim of identifying secondary/oxide copper-gold anomalism within the weathered profile that will allow better delineation of deeper RC drilling targets. Work to date indicates strong base metal and pathfinder depletion in the transported cover and/or upper 10 to 15 metres of strongly weathered rock.

The drilling program commenced in October and is expected to take approximately four weeks with assay results expected in December.

Quarterly Report 1 July 2012 – 30 September 2012

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Hermes and Wilgeena Gold Deposits

The Bryah Basin Project includes the Hermes and Wilgeena Gold Deposits and the Central Bore Gold Prospect, and the landholding represents a significant under-explored area prospective for gold mineralisation. Alchemy has a goal of increasing its gold resources whilst continually evaluating opportunities to commercialise these assets.

Subsequent to the end of the reporting period, an updated resource estimate, contained at the Hermes and Wilgeena deposits, was completed for the Bryah Basin Project (refer to ASX announcement dated 22 October 2012). The updated total Indicated Resource at Hermes and Wilgeena now stands at

4.7Mt at 2.0 g/t gold (equivalent to 300,060 oz of gold )

This represents a 21% increase in total resource and 36% increase in resource tonnes from the previous estimate and has established additional potential at Hermes and Wilgeena. This revised resource has greatly enhanced the value of the Hermes and Wilgeena gold deposits.

A breakdown of the updated Indicated Resource estimate is in Table 1 below.

Table 1. Indicated Mineral Resource Estimate (0.5g/t cut-off) – October 2012

		Indicated
Deposit	Tonnes	Au grade	Au
	(Mt)	(g/t)	(oz)
Hermes	3.34	1.98	212,687
Wilgeena	1.36	1.99	87,373
Total	4.71	1.99	300,060

The re-estimation of resources was undertaken following completion of recent targeted extensional and in-fill RC drilling programs at the Hermes and Wilgeena gold deposits and provides refined block models based on improved geological interpretation and confidence in grade continuity.

The resource modelling and estimation was undertaken by Simon Coxhell of CoxsRocks Pty Ltd, an external and independent resource consultancy.

Since Alchemy acquired the deposits from Troy Resources in 2008, significant work programmes including systematic data validation and review, geological mapping, aircore and RC drilling, diamond drilling and metallurgical test-work have greatly improved the understanding of the Hermes and Wilgeena deposits.

The Hermes deposit consists of five areas of gold mineralisation – Trapper, Trapper West, Hawkeye, Winchester and Blake. Assay results, including screen fire assays for selected high grade samples, from targeted diamond and extensional RC drilling programs in 2011 into four areas of gold mineralisation confirmed the grade and width of mineralisation at Hermes and highlight the depth continuity of many of the high-grade ore zones, particularly in the Hawkeye, Trapper and Trapper West areas.

The resource drilling data were incorporated into a new and refined resource model for the Hermes area based on gold mineralisation interpreted and wire-framed at a nominal 0.5g/t gold lower cut-off. The recent results also indicate that mineralisation remains open at depth and further drilling has good potential to expand the area of gold mineralisation outside of the current Indicated Resource at Hermes (Figure 3).

Quarterly Report 1 July 2012 – 30 September 2012

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Figure 3. Bryah Basin Project – Hermes gold deposit – Section through Hawkeye and Trapper resource areas.

A maiden Indicated Resource of 659,480t at 2.34g/t gold was estimated at the Wilgeena gold deposit in 2010 (refer ASX announcement dated 9 July 2010). Up to five stacked mineralised zones have been defined by the drilling with an erratic and variable weathering profile superimposed on the gold mineralisation. The zones strike approximately east-west and dip to the south at about 45 degrees, with a steeper plunge to the east-southeast indicated.

Subsequent to the initial estimation, an extensional RC drilling program intersected wide zones of gold mineralisation outside of the known resource (refer ASX announcement dated 28 January 2011; Figure 4).

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Figure 4. Bryah Basin Project – Wilgeena gold deposit – 3D oblique view.

Quarterly Report 1 July 2012 – 30 September 2012

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Metallurgical test-work undertaken on oxide core material from the Hermes and Wilgeena gold deposits, obtained from the diamond drilling program in 2010, indicates that the ore is amenable to treatment in a conventional crush, grind and CIL plant with good recoveries across all size fractions. A high proportion of gold is contained in the coarse fraction, and the test-work indicates that a large percentage (40-60%) of the free gold at Hermes and Wilgeena could be recovered by gravity concentration. No technical issues have been identified that would result in a poor recovery or extenuating cost issues.

The mineralisation at Hermes and Wilgeena is open at depth and further drilling has excellent potential to add to the known resource and expand the area of gold mineralisation outside of the Indicated Resource.

Planning of additional drilling to test positions along strike and at depth at Hermes is continuing with drilling scheduled for 2013.

Central Bore Gold Prospect

Recent in-fill and step-out RC drilling programs at the Central Bore Prospect (Figure 1), located 13 kilometres to the south-east of the Hermes gold deposit, indicate that gold mineralisation remains open along strike to the southwest and northeast as well as at depth (refer to ASX announcement dated 5 July 2012). There is also potential for additional stacked zones of gold mineralisation, as indicated in diamond hole CBDD002 in which additional high-grade mineralisation (1 metre @ 12.15 g/t gold) was returned from 222 metres down hole.

Gold mineralisation at Central Bore is in high grade zones of up to an ounce-per-tonne (including 4 metres @ 25.8 g/t Au from 125 metres in CBDD002) within a broad (40-60 metre thick) lower grade gold envelope, associated with a series of northeast-trending veins and structures. The high-grade intervals appear to have some continuity within the low-grade mineralisation. The hanging-wall of the mineralisation zone appears to be bounded by the contact between silicified granitic rocks and overlying sedimentary rocks of the Karalundi Formation or Peak Hill Schist.

The silicified granitic rocks form a topographic basement or bedrock high at the interpreted contact between a granite pluton and sedimentary rocks. The interpreted silicified zone (up to one kilometre in length) may be the result of significant hydrothermal alteration.

The results to date are very encouraging and a follow-up drill program is being designed to test the along strike and down-dip extent of the gold mineralisation.

Regional assessment

Regional assessment of the gold exploration potential across the Bryah Basin project continued in the September quarter. Historic gold exploration is limited, with best results returned from the Henry and Jones prospects (Figure 1), to the south of the Hermes deposit, within the Peak Hill Schist. Previous drilling has intersected high grade gold mineralisation at the Jones prospect, including 3 metres @ 250 g/t gold from 27 metres in OPAC126 and 3 metres @ 41 g/t gold from 36 metres in OPAC246. Anomalous results, including 6 metres @ 3.5 g/t Au from 20 metres in HBRC15, have also been returned from the Henry prospect and further drill testing is recommended.

Aircore drill testing of gold targets about 1 kilometre to the west of Central Bore delineated several areas that required further evaluation. Three RC drill holes at one of these areas in 2012 returned encouraging results, including 1 metre at 12.75 g/t gold from 62 metres and 2 metres at 2.52 g/t gold from 77 metres in CBRC054.

Quarterly Report 1 July 2012 – 30 September 2012

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Murchison Projects

Assessment of the Company’s Murchison tenements continued with evaluation of the Big Bell North, Jeffery Well, Wydgee and Pollele projects. Jindalee Resources Limited (“Jindalee”) is a 20% JV partner in a number of Alchemy’s Murchison Projects. Jindalee’s interest is noted where relevant.

Exploration results to date show that the Murchison District is prospective 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. Aircore drilling programs at Jeffery Well (Alchemy 80%, Jindalee 20%) and Gidgee South (Alchemy 100%) in 2010 and 2011 delineated zones of gold anomalism localised in a structural corridor at the regional lithological contact between basalts and felsic-intermediate volcaniclastics. Planning of infill aircore and targeted RC drilling that will test the most prospective parts of the gold anomalous zone at Jeffery Well is underway. The Jeffery Well and Gidgee South prospect areas were initially targeted based on regional fault flexures identified from Alchemy’s 3D Murchison GOCAD model, which may represent the northern continuation of the highly-mineralised Big Bell – Meekatharra shear zone, which hosts the Big Bell gold deposit (3.9 Moz).

Re-assessment of the Big Bell North, Wydgee and Ninden Hill projects (Alchemy 80%; Jindalee 20%) in 2011, in combination with discovery of base metal mineralisation by Silver Lake Resources at Eelya, Silver Swan Group at Austin and Reed Resources at Chunderloo, indicates that the northern Murchison district hosts volcanic sequences with significant base metal potential.

A review of the Big Bell North project (Alchemy 80-100%; Jindalee 20-0%) indicates the eastern side of the project has base metal potential. Historic exploration north and south of the project area indicates base metal anomalism associated with felsic and mafic volcanic sequences in the Wattagee Hill area. Work on gossans and inducedpolarisation anomalies by previous explorers resulted in near economic base metal drill intercepts at the AM14 prospect, located about 250m south of Alchemy’s project boundary. The best drill intercept at the AM14 prospect is 3 metres at 7.5% zinc, 0.53% lead and 0.42% copper associated with graphitic shales and tuffs within mafic volcanic rocks in diamond hole WP138. The host volcanic sequences extend into the Big Bell North project area and surface geochemistry over this area is recommended.

Corporate

At 30 September 2012, the Company had $3.5 million in cash to fund the Company’s highly focussed exploration program for DeGrussa-style copper-gold deposits on its expanded Bryah Basin landholding.

The Company’s Annual General Meeting will be held at 10.00 am (WST) on 23 November 2012 at The Celtic Club, 48 Ord Street, West Perth, Western Australia.

Please direct enquiries to: Mr Oscar Aamodt – Chairman

Dr Kevin Cassidy – Chief Executive Officer

Telephone: +61 8 9481 4400

Quarterly Report 1 July 2012 – 30 September 2012

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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 at the Hermes Gold Deposit and Wilgeena Gold Deposit 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 July 2012 – 30 September 2012

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