ARCHER MATERIALS LIMITED — Capital/Financing Update 2016

May 10, 2016

ABN 64 123 993 233

ASX Announcement

ABN 64 123 993 233 11 May 2016

Capital Raising - update

Archer has been, and continues to be, engaged with key service providers concerning Archer's Leigh Creek Magnesite project. Negotiations with key service providers are continuing and currently remain inconclusive with definitive agreements yet to be finalised.

As the agreements have taken longer than anticipated to be finalised, and there is a prospect that the details of the definitive agreements may differ from current expectations, or may involve other parties, or may not be agreed upon by all the parties involved, Archer has suspended the capital raising pending the finalisation of these contract negotiations to allow clarity of the final process arrangements to be achieved.

While these recent events have temporarily delayed the magnesite project timelines Archer remains confident that the previously announced milestones of Q4 calendar 2016 for trial product and Q1 calendar 2017 for commercial sales will occur.

Notwithstanding the above, Archer has decided to offer to its existing shareholders a share purchase plan that is capped at $500,000 to continue its progress with its magnesite, agricultural carbon and graphite projects.

For further information, please contact:

Mr Greg English Chairman Archer Exploration Limited Tel: (08) 8272 3288

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

Archer Exploration Limited Level 1, 28 Greenhill Rd Wayville SA 5034 www.archerexploration.com.au

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Archer Exploration Limited is an Australian Stock Exchange listed company with 100% ownership of 16 tenements all in South Australia covering more than 5,000 km[2] .

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Archer Exploration Limited Level 1, 28 Greenhill Rd Wayville SA 5034 www.archerexploration.com.au