ARCHER MATERIALS LIMITED — Capital/Financing Update 2010

Dec 16, 2010

17[th] December 2010

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REE values to 0.47% identified in Ketchowla K1, K2, K3 and K9 Manganese Deposits

Excellent Recoveries of Mn, Ni, Co, Cu and Zn from acid leach

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Highlights

• Peak assays of 0.47% REE (from rock chip samples) and 0.36% REE in drill cuttings recorded from previously reported drilling results at K1, K2, K3 and K9 manganese deposits.

• Elevated REE and lithium results are coincident with anomalous Ni, Co, Cu and Zn at the K1 manganese deposit.

• Elevated REE at K9 is not related to manganese and occurs within a clay horizon thought to represent a weathered intrusive.

• Agitated acid leach tests have shown >90% recoveries for Mn, Ni, Co, Cu and Zn from K1 manganese‐rich drill cuttings.

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Archer Exploration Limited’s 100% owned North Burra EL4266, located approximately 200km north of Adelaide, hosts a number of manganese occurrences known collectively as the Ketchowla deposits.

Previous exploration undertaken by the Company at Ketchowla has included rock chip sampling and limited reverse circulation drilling. Routine assaying for manganese revealed anomalous nickel, cobalt, copper and zinc as shown in figure 1.

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Fig 1. Rock chip grades (red) and drill hole results (blue) K1 and K2 Ketchowla

Bench Scale Leach Tests

25 kgs of manganese‐rich drill cuttings were collected from two drill holes drilled into K1 and subjected to agitated acid leach tests at AMMTEC. Agitated acid leaching demonstrated metal recoveries of >90% were achieved for all elements tested (Mn, Ni, Co, Cu and Zn).

Rare Earth Elements

As a result of test work to determine the recoveries of the nickel, cobalt, copper and zinc it was decided to analyse for a larger suite of elements.

This revealed significant assays for the Rare Earth Elements Yttrium , Neodymium and Cerium in four of Archer’s Ketchowla manganese deposits K1, K2, K3 and K9 . Lithium is also highly anomalous.

The potential economic significance of the REE values is not known at this time.

1. REE from Rock Chip Sampling

Previously reported manganese rich rock chip samples returned REE assays up to:

• Cerium to 2,200ppm

• Lanthanum to 172ppm

• Terbium to 413ppm

• Yttrium to 1695ppm

• Neodymium to 759ppm

The rock chip samples also returned Lithium values to 4400ppm

Assaying was by four acid digest followed by ICPMS.

2. REE in RC Drilling

Significant REE values from K9 drilling (manganese results previously reported) are as follows;

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Rare Earth Element enrichment appears to be confined to Mn poor rocks at K9. Shallow thin clay‐rich intervals for K9RC009 and K9RC010 reported elevated REE’s as well as strontium. This material appears to be a weathered intrusive rock having caused chlorite alteration to the surrounding dolomite and siltstones.

The REE’s may have been introduced through fluids into the rocks from a local source. This is supported by an isolated hole (K9RC011) drilled vertically into siltstones to the north that reports 7m @ 103ppm Ce (entire length of hole), see figure 2.

No other sampling of the siltstones or country rocks has been undertaken to the north due to the lack of manganese. The 2 anomalous holes reside in a “basin‐like” area possibly reflecting an as yet unseen intrusive body, which maybe the source of the REEs.

In addition to these intervals is the presence of anomalous molybdenum (Mo) in a 1m interval in each hole that reports 1850ppm Mo (K9RC009) and 250ppm (K9RC010). Drilling revealed intercepts of:

• K9RC009 3 ‐ 5m, 2 metres @ 0.9% Mn, 279ppm Nd, 226ppm Dy , 1223 ppm Y , 288ppm Ce, 149ppm Sc , as well as Er, Gd, Sm and Yb all reporting above 100ppm

• K9RC010 5 ‐ 7m, 2 metres @ 9.6% Mn, 192ppm Nd, 120ppm Dy , 540 ppm Y , 153ppm Ce, 60ppm Sc and 110ppm Gd.

These results indicated that other drill samples, both Mn rich and Mn poor should be re‐ assayed to determine the extent of REE mineralisation.

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Figure 2. Plan of drill holes at K9

K1 Manganese Deposit

The manganese enrichment appears to be controlled by a 7.5km NS fault, with rafted blocks of siltstone being observed in the face of historic workings, these rafted blocks imply some form of emplacement of the manganese i.e. fluid origin.

This is the only location this is observed due to historic workings.

Drilling to the immediate north of the workings revealed intercepts of:

• K1RC001 6 ‐ 14m, 6 metres @ 15.6% Mn; 0.21% Cu; 0.14% Co; 0.24% Ni, 0.15% Zn, 0.12% Li, 255ppm Mo, 637ppm Sr and 272ppm Yttrium

• K1RC004 11 ‐ 15m, 4 metres @ 17.5% Mn; 0.34% Cu; 0.11% Co; 0.24% Ni, 0.15% Zn, 0.10% Li , 126ppm Mo, 338ppm Sr and 311ppm Yttrium

The high manganese assays imply a scavenging of these other elements. The presence of an aluminium – lithium mineral species called lithiophorite may explain the concentrations of Ni, Co, Cu and Zn previously reported with the manganese. It may also explain the presence of elevated rare earth elements, lithium and strontium.

Similar high base metal and high REE manganese deposits have been reported from Japan and Orissa in India.

K1 Rock Chip Results

8 rock chip samples were collected from an area 2.4km along strike to the north of the K1 drilling. This area has never been drill tested. These samples reported an average of;

Element	**ppm **	Element	%
Cerium	446	Manganese	26.67
Lanthanum	103	Nickel	0.52
Scandium	111	Cobalt	0.23
Yttrium	1160	Zinc	0.25
Dysprosium	194	Copper	0.28
Erbium	120
Gadolinium	214
Neodymium	555
Samarium	194
Ytterbium	133
Total REE	3474.9
NON REE’s
Strontium	111
Lithium	2557

These 8 samples were taken from an area of 70m by 40m from sub cropping manganese‐rich material on the K1.

Elevated REE’s are also observed at the K3 prospect and the K2 prospect, neither of which were targeted during previous drilling, see figure 3.

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Figure 3. Plan view of anomalous REE results from rock chips at Ketchowla

Further Work

Additional work is necessary to understand the implications of the rare earths and other elevated elements, as it can be seen that scavenging by manganese is not solely responsible for the highly anomalous REEs.

Additional work planned for the first quarter of 2011 will include;

• Ground gravity to better define the potential extent of manganese buried below alluvium.

• Field mapping and sampling of all manganese outcrops and sampling to identify extensions to and repetitions of the REE rich clay horizons.

• Reverse circulation drilling to outline the extent of the manganese and REE resources.

• Petrology and SEM (scanning Electron Microscopy) to determine the chemistry of the manganese mineralisation i.e. is the ore lithiophorite dominant.

• Additional test work to determine if Ni, Co, Cu, Zn and REE’s can be recovered and concentrated in the manganese.

For further information please contact:

Mr Greg English Mr Gerard Anderson Chairman Managing Director Archer Exploration Limited Archer Exploration Limited Tel: (08) 8272 3288 Tel: (08) 8272 3288

The exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr. Wade Bollenhagen, Exploration Manager of Archer Exploration Limited. Mr. Bollenhagen is a Member of the Australasian Institute of Mining and Metallurgy who has more than sixteen years experience in the field of activity being reported. Mr. Bollenhagen consents to the inclusion in the report of matters based on his information in the form and context in which it appears.