ARCHER MATERIALS LIMITED — Interim / Quarterly Report 2011

Jul 25, 2011

26[th] July 2011

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Quarterly Activities Report For the period ended 30[th] June 2011

HIGHLIGHTS FOR THE QUARTER

EXPLORATION

GRAPHITE

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• Upgrade of exploration target* at Sugarloaf graphite project with lower bound increasing by 267% from 9 million tonnes to 24 million tonnes and the upper bound increasing by 185% from 24 million tonnes to 37 million tonnes. The grade bound remains at 10-12% C. Sugarloaf remains open along strike to the north and south and at depth.

• Fine flake graphite identified in drill samples from Sugarloaf.

• Several coarse flake graphite occurrences identified on the neighbouring Wildhorse Plains tenement.

• Archer applied for and was granted ELA148/11 covering 54km[2] west of Wildhorse Plains.

COPPER

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• Drilling recorded an intercept of 10m at 0.5% copper at Emu Plain. Interpretation places the intercept was in the footwall of the main lode. Further drilling is planned.

METALLURGICAL STUDIES:

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• Commencement of flotation work on Sugarloaf Graphite

• 200% upgrade of MnO from screen test work at Salt Creek.

FINANCIAL

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• Cash in bank on 30[th] June 2011 of $2.7 million.

• $360,000 spent on exploration during the quarter.

*The potential quantities and grades presented are conceptual in nature, there has been insufficient exploration to define an overall Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource

Summary of the June 2011 Quarter Exploration Activities

1.1 Graphite Exploration

Sugarloaf Graphite Drilling

Assay results for the four RC drill holes drilled in the previous quarter were returned.

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• Numerous wide drill intersections reporting above 10% Total Carbon.

• The drilling indicates that the previously reported exploration target of 9 to 20Mt* of highly graphitic schist was a conservative estimate.

• Hole SLRC11_004 intersected 70m @ 10.04% Total Carbon from 81m. The wide interval included a highest grade of 3m reporting 25.23% Total Carbon.

• Drilling has confirmed the down dip continuity of the graphitic schist at >100m.

• Drill intersections of the graphitic unit indicate a true width of >40m.

• Sugarloaf remains open along strike and there are no signs of the horizon tapering in width or diminishing in grade with depth.

*The potential quantities and grades presented are conceptual in nature, there has been insufficient exploration to define an overall Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource

The purpose of the drill program was to follow up historically reported wide but un-assayed intervals of graphitic schist encountered during gold exploration. Significant graphitic intervals were identified in 3 of the 4 holes. Table 1 (below) reports the average Total Carbon grade for the graphitic intervals observed.

Hole ID	From(m)	To(m)	Interval(m)	Total Carbon %
SLRC11_001	60	82	22	12.31%
SLRC11_001	96	144	48	10.02%
SLRC11_002	0	20	20	6.31%
SLRC11_002	28	93	65	9.00%
SLRC11_003	47	53	6	9.90%
SLRC11_004	81	151	70	10.04%

Table 1. Significant intervals of Total Carbon (TC) % for 2011 drilling

Figure 1, below, shows the locations of the holes drilled which cover a strike length of 1000m. SLRC11_002, 003 and 004 were drilled near historic holes that had reported intervals of highly graphitic schist.

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Figure 1. Location of 2011 Sugarloaf Drill holes (SLRC11_)

SLRC11_002 (2770N)

This hole was drilled to confirm the historical interval from hole SLR041, which reported 61m of graphite downhole.

Figure 2 below, is a simple section highlighting the significant Total Carbon grades intersected down hole.

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Figure 2. Section for SLRC11_002 (2770N)

Graphite was intersected throughout the entire hole with the highest grade reported being 3m @ 15.4 % Total Carbon (“TC”) from 33m. From figure 2 a true width of approximately 40m can be applied, with graphitic schist extending to a vertical depth of at least 100m. Sporadic outcrops of graphite can be observed at the surface.

SLRC11_001 (2950N)

Hole SLRC11_001 was drilled north of outcropping graphite.

Figure 3 below, is a simple section highlighting the significant Total Carbon grades intersected down hole.

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Figure 3. Section for SLRC11_001 (2950N)

In hole SLRC11_001 the graphite is present as two zones separated by a chlorite schist (possible shear zone and termed marker unit). The first zone has an apparent true width of 12m and the second 25m. The highest grade reported is 3m at 19.22% TC.

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Plate 1. A photograph of sample intervals 127m to 131 from Hole SLRC11_001

SLRC11_003 (3370N)

This hole was drilled on the western edge of a previously drilled section that recorded a wide graphitic intersection. The hole appears to have been collared too far to the east and has missed the main graphitic schist zone.

SLRC11_004 (3770N)

This hole was drilled to test the reported graphitic schist in an historical drillhole, SLR002.

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Figure 4 . Section for SLRC11_004 (3770N)

The first 80m of the hole comprised mafic schists and dolerite. The transition to graphite was marked by the chlorite marker unit, similar to that seen in SLRC11_001. The hole was terminated at 151m in graphitic schist. The whole interval from 81-151m downhole returned an intersection of 70m grading 10.04%TC.

The hole collar was preserved should re-entry with diamond drilling be required to take deeper controlled samples for metallurgical and graphite characterisation tests.

The highest TC reported was 3m at 25.23% TC from 93m (plate 2).

The interval in SLRC11_004 is highly encouraging since outcrop can be observed to the east. Other holes drilled to the east on the section do not have reliable co-ordinates and similar to other historical holes have no carbon analyses to quantify their carbon and graphite compositions.

During the drilling all intervals were tested for the presence of carbonate with hydrochloric acid, no reportable carbonate was seen at Sugarloaf.

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Plate 2 Graphitic intervals from SLRC11_004, note, the rocky nature (93-96m) is due to the sample being sieved and washed, before being placed in the chip tray, intervals 92 and 100 are representative of what is recovered from drilling.

Sugarloaf Graphite Flake Potential

Samples of graphite from various drill intercepts were submitted to Pontifex and Associates in Adelaide for petrological examination to determine the mode of occurrence of the graphite and to provide an indication as to the average flake size.

Hole SLRC11_004

Four drill intervals were submitted; 83 to 84m; 96 to 97m; 112 to 113m and 124 to 125m. These 4 samples represent 2 zones reported in SLRC11_004, the first zone from 81 to 114m (10% TC) and the second 124 to 151m (11.9% TC).

	From (m)	To (m)	Width (µm)	Length (µm)	Max (µm)	Carbon (%)
Hole Id
SLRC11_004	96	97	20	40	55	13.6
SLRC11_004	112	113	10	40	65	17.75
SLRC11_004	124	125	20	60	150	10.15

Table 2. Average dimensions and maximum length of graphite flakes observed

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Graphite
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Plate 3. Photomicrograph of SLRC11_004 96 to 97m - graphite flakes are the white crystals

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Graphite
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Plate 4. SLRC11_004 124 to 125m, graphite flakes are the white crystals

Hole SLRC11_001

Four Intervals were submitted; 96 to 97m; 122 to 123m; 128 to 129m and 134 to 135m. These 4 samples are from the lower graphitic interval of 48m (from 96m) at 10% TC.

	From (m)	To (m)	Width (µm)	Length (µm)	Max (µm)	Carbon ( %)
Hole Id
SLRC11_001	96	97	15	45	50	5.06
SLRC11_001	122	123	5	15	15	10.85
SLRC11_001	128	129	5	20	20	16.25
SLRC11_001	134	135	10	20	35	10.9

Table 3 . Reported average sizes and maximum length of graphite flake observed

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Graphite
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Plate 5. SLRC11_001 96 to 97m, graphite flakes occur as well liberated free crystals

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Plate 6. SLRC11_001 128 to 129m, very fine graphite flakes circled. Brightest material is sulphide.

This preliminary petrological examination has shown that at Sugarloaf the graphite is present mostly as fine crystalline graphite. The deposit is also likely to provide both coarser graphite flake and amorphous or powder graphite.

Exploration Potential

Exploration Potential – Tonnage*

When combined all drilling results confirm that the graphitic-rich body consists of two steeply dipping zones of graphitic schist that in aggregate average 40m in true width, extend to a vertical depth of at least 120m and show no sign of thinning at depth. Drilling results are limited to a strike length of 2km however the deposit remains open along strike and at depth. The host rock is a muscovite bearing quartz-rich metasiltstone. No density measurements have been conducted at this time but given the dominant quartz and muscovite composition it is reasonable to ascribe a density of 2.5gm/cc.

The lower bound exploration potential assuming a strike length of 2,000m, a width of 40m, a down-dip extent of 120m and a specific gravity of 2.5gm/cc is estimated at 24Mt.

The upper bound exploration target assumed a strike of 2,500m and a vertical extent to the deposit of 150m is estimated at 37Mt.

Exploration Potential – Grade*

Prior to the April 2011 drilling Archer was reluctant to allocate a grade range for the graphitic schist due to the paucity of assay results. The April 2011 drilling when combined with the 4 holes assayed in 2009 is now considered sufficient in terms of the number of assayed intervals to enable a conservative estimate of the Total Carbon grade for the graphitic schist. The arithmetic average of all drill intervals of graphitic schist (sample size n=319) is 10.9% Total Carbon. Intervals chosen for the analysis had to have visible graphite however no lower grade cut-off was used. In view of no lower cut-off grade being applied it is therefore reasonable to assume that the likely grade will be between 10 – 12% Total Carbon.

The depth of oxidation in the area is approximately 80m vertically below surface corresponding with the current water table. Petrological observations when combined with field observations of this large oxidised portion of the deposit suggest that the run-of-mine total carbon grade may be able to be significantly upgraded by dry screening out coarse gangue material (largely quartz).

*The potential quantities and grades presented are conceptual in nature, there has been insufficient exploration to define an overall Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource

Metallurgical Testwork

Composited samples from Sugarloaf have been submitted for comminution and flotation test work. Results will be available during the next quarter. The aim is to establish an optimum process flow to recover the graphite.

Regional Graphite

Wildhorse Plains

During the quarter a literature search of historic exploration identified several coarse flake graphite occurrences on EL4693 Wild Horse Plains.

Coarse flake graphite to 0.5mm (US 35 mesh) were recorded associated with high grade metamorphic rocks – dolomitic marble, gneiss and sillimanite-cordierite bearing schist.

A prominent outcrop at Campoona South has visible coarse flake graphite to 1mm (US 18 mesh). A sample from the Campoona South outcrop assayed 25.4% Total Carbon.

Background

The Eyre Peninsula has long been explored for its uranium and base metal potential. Many companies including Kerr McGee, Esso, BHP and Shell explored the area and reported graphitic rocks.

Historic electro-magnetic surveys identified numerous conductors which when drilled recorded graphitic rocks. Graphite was targeted as it was considered a favourable host for Alligator River style uranium mineralisation.

Occurrences

Literature searches and ground inspections for EL4693 Wildhorse Plains has identified a number of highly prospective graphite occurrences including the identification of coarse flake graphite at Campoona, Campoona South, A405, Wilklow and Calkookra. At Ben Buy graphite to 0.1mm (US 140 mesh) is recorded. In addition abundant graphite is recorded at High Bluff (Grid 2), Mt Shannan and Cock Hill (Figure 5).

Archer through a farm-in agreement has earned the rights to 100% of the minerals other than uranium on EL4693.

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Figure 5. Wildhorse Plains graphite occurrences. NB Proximity to Archer’s Sugarloaf Graphite Deposit.

1. Campoona

In the mid 1980s airborne electro-magnetic surveys were conducted as part of exploration focused on base metals. A highly conductive graphitic schist over 4km long was identified adjacent to the Lower Middleback Jaspilite in the Campoona Hill region. A small historic shaft exists on the graphitic schist however literature searches have failed to find production records.

Other elongate EM conductors, which are parallel to the graphitic schist were also thought to be graphitic in origin. This was confirmed by drilling by ESSO where 3 holes were drilled at High Bluff.

In 1991 PIRSA received a petrology report on the graphite. The graphite displayed a limited range of 0.1mm to 0.3mm with an average flake size of 0.2mm .

2. Campoona South

At the southern end of the Campoona EM anomalies there is an outcrop of graphite that has visible ultra coarse flake graphite to 1mm . The outcrop of high grade crystalline graphite was sampled and returned 25.4% Total Carbon.

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Plate 7. Prominent outcrop of high grade coarse grained graphite at Campoona South.

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Plate 8. Close up of hand specimen from Campoona South

3. A405

Graphite was reported in drill holes as a part of uranium exploration in 1968 by Kerr McGee. These drill holes were sampled by Archer and reported 16.5m @ 0.32g/t Au and 7.43 g/t Ag (September 2010 quarterly).  Hole A405/2 graphite flakes were reported from 32 to 56 metres, within altered dolomites.

• Hole A405/3 medium crystalline graphite was reported over a few metres.

• Hole A405/3A common graphite flakes were reported from 28 to 41m downhole.

• Hole A 405/3B trace graphite flake from 41 to 52m (EOH)

Archer will recover samples from the hole to examine the quality of the graphitic material.

4. Wilklow

Graphite was reported during exploration for uranium. Historically a sample of graphitic schist was taken from the surface that “ yielded 4.25% of flake graphite which assayed 39.25% carbon.” It was believed at the time (pre 1952) that grinding to minus 200 mesh (74 micron) would not generate an economic product.

Two holes were drilled in 1952, both intersected graphite within clay-rich weathered quartzite, the only comment was recovery was poor and graphite appeared fine.

One hole was drilled in 1991 to test a IP/resistivity anomaly intersected high grade metamorphic rocks with graphite. The IP anomaly was attributed to the graphite.

One sample submitted for petrology at the time (1990) contained graphite, it was reported “moderate amounts of graphite forming well developed flakes up to 0.5mm in length.”

The metamorphic grade of these rocks is conducive to graphite flake development.

5. Calkookra

Campoona was a historic underground copper mine. In 1968 regional exploration for uranium identified graphite in an exploration drill hole. Although no qualitative work was performed on the graphite, the metamorphic grade of the surrounding rocks (mylonite and amphibolite) provides encouragement for coarse flake development.

A copper enriched sample was submitted for petrology in 1983, it was reported as having 5% graphite with flakes of approximately 0.3mm in length .

6. Ben Buy

In 1980 graphitic schists were identified within altered dolomite units during exploration for uranium. IP surveys were able to trace out the graphitic units.

One petrology sample was collected by PIRSA from a trench in 1991 and recorded graphite flakes in the range 0.05 to 0.1mm .

Other Graphite Occurrences on EL4693 Wildhorse Plains

In addition to the coarse and medium graphite recorded above, three other graphite bodies have been identified at Wildhorse Plains. The grain size of these deposits is yet to be determined.

High Bluff (Grid 2)

High Bluff was tested for base metal mineralisation by ESSO with 3 + 150m holes spaced at 200m apart. Graphitic schist was reported in all holes. The holes lie on the southerly extent of one of the Campoona EM conductors.

• Drill hole logs report;  Hole G2P-1 0 to 147m Biotite quartz, muscovite, feldspar, garnet schist/micro gneiss with varying graphite, pyrite and magnetite as accessories.

• Hole G2P-2 0 to 161m Biotite quartz, muscovite, feldspar graphite schist, intruded by pegmatites.

• Hole G2P-3 0 to 150m Biotite quartz schist with varying feldspar, garnet, graphite, chlorite and pyrite, with minor pegmatites.

No petrological or qualitative work was performed on the graphite occurring in the drill holes. Within the drill logs high grade metamorphic minerals such as sillimanite and cordierite as well as zone of migmatite provide encouragement for graphitic flake development.

Mt Shannan

This area comprises a number of historical drill intersections as well as rock chip sampling of graphitic schists associated with the Mt Shannon Iron Formation. Outcrops were identified during historical exploration for gold, base metals and uranium.

Archer will attempt to recover any historical core available from PIRSA with the intention of performing petrology to identify the graphite quality.

New Tenement Application

Archer applied for a new mineral tenement covering prospective ground west of Wildhorse Plains. The application is shown on Figure 1 as ELA 148/11.

Manganese

Exploration for the quarter was focused on metallurgical work to determine if an economic product could be achieved through screening of the raw samples. Additional samples were taken from the Salt Creek area to extend the strike potential and generate a mineralisation model. This resulted in:

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• Simple wet screening of drill samples upgrades manganese values by over 200%.

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• Rock chip sampling confirms northern extension of manganese enriched limbs.

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• High potential within the Salt Creek syncline for manganese enrichment.

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• 40% Mn recorded in rock chips from the eastern limb.

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• Drill testing of the syncline and the high grade eastern limb will be conducted following the 2011 harvest.

Salt Creek Manganese Deposit - Wildhorse Plains

Five samples were selected to represent a variety of mineralisation styles intersected during drilling.

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Sample	1	Manganese enriched schist	(SLRC011-002 14-29m)
Sample	2	Clay and Manganese	(SLRC011-003 25-37m)
Sample	3	Clay and manganese	(SLRC011-003 40-53m)
Sample	4	Sand and Manganese nodules	(SLRC011-004 21-37m)
Sample	5	Banded Iron Formation (BIF) and Manganese	(SLRC011-005 1-12m)

The five samples comprised composite sampling of a number of continuous drill intervals enriched in manganese. Samples 1-3 and 5 were crushed to 5mm. Sample 4, being mostly sand did not require crushing. All samples were then wet screened into 5 size fractions: +3.35mm; -3.35mm +2mm; -2mm +1mm; -1mm +0.5mm; and -5mm.

		Head Assay	Head Assay		Recovery Assay	Recovery Assay	Recovery Assay
	MnO%	SiO2%	Fe2O3%	Recovery %	MnO%	SiO2%	Fe2O3%
SAMPLE 1	11	18.7	36.2	18.94	23.59	8.31	41.93
SAMPLE 2	8.1	24.3	44.7	25.42	18.56	7.62	52.51
SAMPLE 3	14.1	21.7	39.4	35.95	21.78	16.84	40.84
SAMPLE 4	6.3	70.3	7.81	23.48	20.20	53.39	11.21
SAMPLE 5	15.1	18.2	39.5	30.42	21.24	14.29	39.12

Table 4. Initial upgrade from wet screening of selected drill intervals

Sample 1

Sample 1 consisted of 15 drill intervals from hole SCRC11_002 from 15 to 29m down hole and was made up of weathered sediments (schists).

SIZE FRACTION	Recovery %	MnO%	**Fe2O3% **	**SiO2% **	**Al2O3% **
+3.35mm	1.47	27.3	33.2	8.81	8.30
-3.35 +2.00mm	4.24	28.0	35.0	7.59	7.44
-2.00 +1.00mm	7.14	26.5	36.7	7.48	7.33
-1.00 +0.50mm	6.09	16.2	55.0	9.67	2.90
-0.50mm	81.06	6.9	36.7	21.80	16.60
Total +0.5mm	18.94	23.6	41.9	8.31	6.01
Head Assay		11.0	36.2	18.7	14.50

Table 5. Size fraction results and assays for screening of Sample 1.

The test demonstrates that significant upgrading in manganese can be achieved through wet screening with silica and aluminium preferentially reporting to the fines (-0.5mm). It is believed that additional Dense Media Separation will improve the manganese grades.

Sample 2

This sample comprised of 12 drill intervals from hole SCRC11_003 from 25 to 37m down hole. The material consisted of weathered sediments and the material screened off was dominated by clays.

SIZE FRACTION	Recovery %	MnO%	**Fe2O3% **	**SiO2% **	**Al2O3% **
+3.35mm	3.52	17.2	55.1	9.06	2.55
-3.35 +2.00mm	6.60	16.8	56.3	7.78	2.71
-2.00 +1.00mm	8.50	15.5	58.5	7.12	2.84
-1.00 +0.50mm	6.81	24.8	40.0	7.36	6.88
-0.50mm	74.58	5.6	41.6	29.8	8.91
Total +0.5mm	25.42	18.6	52.5	7.62	3.85
Head Assay		8.1	44.7	24.30	7.82

Table 6. Size fraction results and assays for screening of Sample 2.

Of note is the tenor of the iron, which reports >55% in the +1mm and coarser fractions. Iron at 52.51% Fe2O3% in the plus 0.5mm fraction confirms that iron and manganese are mineralogically associated.

Sample 3

This sample comprised of 12 drill intervals from hole SCRC11_003 from 40 to 53m down hole.

SIZE FRACTION	Recovery %	MnO%	**Fe2O3% **	**SiO2% **	**Al2O3% **
+3.35mm	3.29	23.7	38.5	16.80	3.30
-3.35 +2.00mm	10.41	23.3	38.9	17.20	3.51
-2.00 +1.00mm	12.76	21.3	41.8	16.60	3.57
-1.00 +0.50mm	9.48	20.1	42.5	16.80	3.76
-0.50mm	64.05	10.5	38.7	24.70	10.4
Total +0.5mm	35.95	21.8	40.8	16.84	3.58
Head Assay		14.1	39.4	21.70	8.28

Table 7 . Size fraction results and assays for screening of Sample 3.

Sample 3 is a downhole continuation of sample 2, to the end of mineralisation.

When sample 2 and 3 are combined they comprise some 25m at 30% recovery with 20% MnO and 46% Fe2O3, not including the 3m of waste separating the two mineralised horizons.

Sample 4

This sample comprised of 16 drill intervals from hole SCRC11_004 from 21 to 37m downhole. This interval ended in mineralisation, in which manganese nodules have precipitated in transported sands.

SIZE FRACTION	Recovery %	MnO%	**Fe2O3% **	**SiO2% **	**Al2O3% **
+6.30mm	3.96	22.7	9.1	52.8	2.02
-6.30 +3.35mm	4.55	22.9	10.2	51.5	2.04
-3.35 +2.00mm	4.05	21.7	12.4	49.6	2.50
-2.00 +1.00mm	5.57	20.8	14.0	47.8	3.15
-1.00 +0.50mm	5.35	14.3	9.8	64.1	2.44
-0.50mm	76.52	3.1	6.64	76.1	7.96
Total +0.5mm	23.48	20.2	11.2	53.4	2.47
Head Assay		6.3	7.8	70.3	7.39

Table 8. Size fraction results and assays for screening of Sample 4.

Although there is considerable upgrade in the MnO values the residual silica values indicate that further upgrading is likely. It appears that sand is still attached to the nodules which can be liberated, possibly through fine crushing and screening.

Sample 5

This sample comprised of 12 drill intervals from hole SCRC11_005 from 1 to 12m down hole. This sample is of weathered BIF and is considered to be common for the mineralisation encountered at the surface on the western limb.

SIZE FRACTION	Recovery %	MnO%	**Fe2O3% **	**SiO2% **	**Al2O3% **
-6.30 +3.35mm	1.85	19.9	36.4	16.9	3.76
-3.35 +2.00mm	7.93	20.6	38.0	15.4	3.75
-2.00 +1.00mm	11.38	21.6	38.9	14.3	3.64
-1.00 +0.50mm	9.27	21.6	40.9	12.8	3.75
-0.50mm	69.58	12.6	39.9	20.3	9.65
Total +0.5mm	30.42	21.2	39.1	14.3	3.71
Head Assay		15.1	39.5	18.2	7.77

Table 9. Size fraction results and assays for screening of Sample 5.

Discussion

Figure 6 below, shows the upgraded intervals in respect to their location in drill sections and in their interpreted mineralised units. Samples 1, 2 and 3 are representative of the manganese enriched sediments, which are believed to be the westerly dipping limb of an antiformal structure.

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Figure 6. Cross section of southerly line showing location of samples taken for beneficiation

Salt Creek Manganese Mineralisation Model

During drilling it was noticed that both the manganese and iron have been mobilised by weathering as evidenced by the presence of manganese nodules in the sands and the leached BIF’s.

It is believed that the syncline, shown in Figure 7, has potential to host manganese mineralisation that has been weathered out of both the east and west sheared limbs.

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Figure 7. A simple cross section of the modelled mineralisation hosted in the syncline

Ketchowla Manganese

A composite RC drill hole sample from the Ketchowla manganese deposit was sent to Nagrom in Kelmscott, Perth for dense media separation and analysis. Test work using density separation and gravity concentration successfully upgraded the 17.47% Mn sample to >35% Mn (23.21% recovery) as shown in the table below.

Product Summary	Yield (%)	Mn % dist	Mn % dist	%	Fe dist	SiO2 % dist	SiO2 % dist
Coarse Concentrate	11.99%	36.49	25.04%	1.77	5.12%	17.42	5.21%
Fines Concentrate	2.58%	38.95	5.74%	5.42	3.37%	8.75	0.56%
Middlings	8.64%	33.67	16.65%	3.65	7.61%	18.68	4.02%
Waste	76.79%	11.96	52.56%	4.53	83.91%	47.11	90.21%
Calculated Head	100.00%	17.47	100.00%	4.15	100.00%	40.11	100.00%

Table 10 Ketchowla K1 manganese beneficiation results

The test work also demonstrated upgrading of the Ni (0.258% to 0.412%); Co (0.175% to 0.296%); Cu (0.226% to 0.377%) and Zn (0.164% to 0.277%) in the combined coarse and fine concentrate and the middlings products. Yttrium similarly increased from 113.2ppm to 204ppm.

A trial gravity survey was completed during the quarter over the K1 and K9 prospects, raw data has been received and as yet no additional modelling has been performed. The raw data provides some encouragement that gravity can be used to identify the location of manganese under cover.

OMM Joint Venture – Jamieson Tank (EL3711)

Monax Exploration Limited (project managers for OMM) completed 14 Rotary Air Blast holes on EL 3711 in March 2011. A proposed diamond drill hole to test the metallurgical character of the manganese mineralisation was postponed until cropping by has been completed.

Best results reported by OMM were:

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• 4m at 14.86% Mn

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• 3m at 17.65% Mn

Copper

As follow up to the identification of chalcopyrite from thin section work, drill testing of the Emu Plain prospect was completed in the March quarter. Results from the drilling were received in the June quarter and the highlights were:

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• Three RC drill holes at Emu Plain drilled adjacent to the historic Emu Plain copper mine shaft each intersected broad zones of highly anomalous copper mineralisation including:

• 37m @ 0.13% Cu and 4.2g/t Ag from 0 to 37m in EPRC11_001 (EOH)

• 60m @ 0.11% Cu and 1.0g/t Ag from 0 to 60m in EPRC11_002

• 10m @ 0.50% Cu , 6.9g/t Ag and 600ppm Mo from 27 to 38m in EPRC11_003 including 1m@ 2.18% Cu and 6g/t Ag from 29m.

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• Copper mineralisation, present as disseminated chalcopyrite, occurs within highly altered muscovite, biotite and quartz schists.

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• The scale and intensity of alteration suggests that the drilling intersected part of a much larger alteration and mineralisation system.

A review indicates that the drill holes each intersected disseminated copper mineralisation in the footwall of the main copper lode. Further drilling will be undertaken to intersect the main lode (approximately 7m wide from historic records) below the historic workings.

Leigh Creek Magnesite

During 2010, Archer applied for two tenements covering the Leigh Creek magnesite deposits that were formerly owned by Magnesium International Limited. Termination Hill EL 4567 was granted on 20[th] September 2010 giving Archer ownership over high grade magnesite deposits at Mt Hutton, Mt Playfair, Pug Hill and Termination Hill.

Termination Hill EL 4567 JORC Measured, Indicated and Inferred Resources are shown in Table 11 below.

	Termination Hill EL 4567 JORC Magnesite Resources*	Termination Hill EL 4567 JORC Magnesite Resources*	Termination Hill EL 4567 JORC Magnesite Resources*
Area	Measured(Mt)	Indicated(Mt)	Inferred(Mt)	MgO (%)
PugHill		10	10	42.7%
Termination Hill	4	5	20	42.8%
Mt Hutton	18.3	42	53	42.9%
Mt Playfair		11	23	42.5%

Table 11 JORC Magnesite Resources within Termination Hill EL4567 Source: SAMAG Project Report 1999 # Magnesite (MgCO3) has a maximum possible MgO grade of 47.8%

Witchelina ELA 173/10 covering 452km[2] was granted as EL4729 for 2 years during the quarter. The tenement covers the NW extension of the magnesite beds covered by Archer’s Termination Hill EL and hosts the substantial Witchelina magnesite deposit.

	ELA 173/10 Witchelina JORC Magnesite Resources*	ELA 173/10 Witchelina JORC Magnesite Resources*	ELA 173/10 Witchelina JORC Magnesite Resources*
Area	Measured(Mt)	Indicated(Mt)	Inferred(Mt)	MgO (%)
Witchelina	23.7	94	99	40.0%
Table 11 JORC Magnesite Resources within Witchelina ELA 173/10

*Source: Reproduced from MDL Report “Economic Evaluation of the Pug Hill Magnesite Deposit, North Flinders Ranges, South Australia. 2001. Note full BFS completed and JORC resources for 5 deposits and JORC reserve for Mt Hutton calculated. The independent resource estimates were completed by Mr. Colin Arthur (BSc, MSc, FGS, MAusIMM, CGeol, CEng) Manager, Micromine Resource Centre, August 1999. The estimates were based on 69 fully cored DDHs and all other attendant studies required to support resource and reserve estimation.

During the December 2010 quarter a series of calcining tests were carried out on un-beneficiated run-of-mine magnesite to determine the lower bound quality of magnesia that could be produced from the deposits. Calcining produced highly reactive magnesia grading ≈92% MgO. SiO2 levels at ≥4.5% were too high relative to current marketing specifications for comparable magnesia products.

During the quarter a consultant expert metallurgist was contracted to design and oversee the second stage of test work on the deposits. This test work including flotation was tendered and AMDEL appointed to run the test work.

The Leigh Creek magnesite deposits are World Class in terms of tonnage and grade. Identification of a successful process flow sheet has the potential to unlock the enormous value inherent in the deposits.

Cash balance:

The Company’s cash balance at the end of the quarter was $2.7 million.

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.

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Figure 8. Archer Exploration Tenement Position June 2011.