Alchemy...4 Alchemy Resources Limited’s vision is to be a successful minerals explorer and subsequently a proﬁtable producer of metals with a portfolio of quality assets with opportunity

A n n u a l R e p o r t 2 0 1 2

AlchemyResources LimitedACN 124 444 122

Alchemy

ALCH

EMY RESO

URCES LIM

ITED

AN

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AL REPO

RT 2012

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Alchemy Resources LimitedAnnual Report 2012

Directors Oscar Aamodt Non-Executive Chairman Sofia Bianchi Non-Executive Director Lindsay Dudfield Non-Executive Director Anthony Ho Non-Executive Director Company Secretary Bernard Crawford Registered & Principal Office Level 2, 72 Kings Park Road West Perth WA 6005 Telephone: (08) 9481 4400 Facsimile: (08) 9481 4404 Email: [email protected] Website: www.alchemyresources.com.au Auditors BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008 Bankers National Australia Bank 226 Main Street Osborne Park WA 6017 Share Registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233 Securities Exchange Listing The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: ALY

1Alchemy Resources Limited Annual Report 2012

Contents

CHAIRMAN’S LETTER...........................................................................................................................2

KEY INVESTMENT HIGHLIGHTS............................................................................................................3

REVIEW OF ACTIVITIES ........................................................................................................................4

DIRECTORS’ REPORT..........................................................................................................................16

AUDITOR’S INDEPENDENCE STATEMENT...........................................................................................27

CORPORATE GOVERNANCE STATEMENT ...........................................................................................28

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME.............................................................35

CONSOLIDATED STATEMENT OF FINANCIAL POSITION......................................................................36

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................37

CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................................38

NOTES TO THE FINANCIAL STATEMENTS ...........................................................................................39

DIRECTORS’ DECLARATION ................................................................................................................74

INDEPENDENT AUDITOR’S REPORT ...................................................................................................75

ADDITIONAL SHAREHOLDER INFORMATION.....................................................................................77

TENEMENT SCHEDULE.......................................................................................................................79

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Chairman’s Letter

Dear Shareholders

The year under review has seen the Board change completely following the resignations of the previous directors on the 25th November 2011 and the new Board being appointed on the same date.

Following the Board changes shareholders approved the transaction with Grosvenor Gold Pty Ltd on the 16th December 2011. In order to complete the transaction there was a requirement to raise $4 million by way of capital raising and this was successfully completed in February 2012. This enabled settlement of the transaction with Grosvenor in March 2012, thereby adding an extensive package of highly prospective tenements to our Bryah Basin Project exploration portfolio.

Since finalising the transaction with Grosvenor the Company has focused on the generation of quality data sets over the increased landholding through innovative geophysical and geochemical methods of exploration that has resulted in multiple prospective target areas that will sustain and justify long term exploration over this landholding. This is a more targeted approach to our exploration activities and we anticipate that this will lead to better target definition and focused drilling activities.

The main focus of gold exploration activities this year has been in-fill and step-out drilling programs at the Hermes deposit and the Central Bore prospect, with encouraging results returned from both areas and resulting in an improved understanding of controls on mineralisation and confirming the orientation and dip of the mineralised structures.

We have also focused on the team set up, and congratulate Kevin Cassidy on his appointment as the CEO with direct reporting to the Board which gives him more responsibility for the success of the exploration outcomes.

On the 1st of March 2012 Sofia Bianchi was appointed Non-Executive Director of the Company. This appointment satisfied a condition of the Grosvenor asset acquisition whereby a nominee of Grosvenor was to be appointed to the Company’s Board on completion of the acquisition. We are pleased to have a director of Sofia’s calibre on the Board.

With attention to detailed budgeting and control of overheads in place and with funding in hand, I believe the Company is in a strong position to reward shareholders with future exploration success.

The Board sincerely appreciates the commitment and focused efforts of the Alchemy team in what was a difficult year for them and I am sure that they will be a credit to the Company in the coming year.

I thank the shareholders for their ongoing support during the traumas of the Board changes and for their participation in the capital raising during the year.

Oscar AamodtChairman


Key Investment Highlights

• Landmark agreement acquires high prospective tenements to double Alchemy’s landholding in Bryah Basin to 630km2

• Focussed strategy towards unlocking copper-gold potential across Bryah Basin Project employing innovative geophysical and geochemical methods of exploration

• Landholding uniquely positioned with over 45km strike length of prospective Narracoota volcanics (host to the DeGrussa copper-gold deposit)

• Multiple copper-gold target areas identified across project through application of advanced geological understanding of key controls on mineralisation

• Upgraded JORC Resource now totals 3.45Mt at 2.22g/t gold (equivalent to over 246,000 oz gold) at Hermes and Wilgeena gold deposits close to existing processing plants

• Potential for growth through depth and strike extent of existing resources at Hermes and Wilgeena and at the Central Bore gold prospect, which has had additional encouraging drill results

• Experienced and proven Board and management team in place to enable future exploration success

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Alchemy Resources Limited’s vision is to be a successful minerals explorer and subsequently a profitable producer of metals with a portfolio of quality assets with opportunity for further exploration growth.

Over the past 12 months Alchemy has explored and continued to develop its portfolio of highly prospective exploration projects in the Gascoyne and Murchison districts of Western Australia (Figure 1). The primary focus has been to advance the flagship Bryah Basin Project while continuing to progress its Murchison Project.

Alchemy’s strategy for the next twelve months is to:

• create value for shareholders through focused, innovative exploration for copper-gold deposits at the Company’s Bryah Basin Project;

• continue to expand the Company’s position within the highly prospective Bryah Basin through strategic acquisition of additional projects; and

• grow mineral resources principally through targeted extensional drilling at Hermes and Wilgeena as well as seeking quality advanced project opportunities for acquisition and exploration.

BRYAH BASIN PROJECT

(100% or 80% Alchemy Resources Ltd)

Alchemy is focussed on unlocking the copper–gold potential of its Bryah Basin Project, located 130km NE of Meekatharra, Western Australia (Figure 1), which covers over 45km strike length of volcanic and sedimentary rocks in the highly-prospective Bryah Basin and Marymia Inlier. Alchemy is undertaking systematic exploration for base and precious metals mineralisation across the project through employing innovative geophysical and geochemical methods in conjunction with drill testing of priority targets.

Figure 1. Location of Alchemy Projects.

Review of Activities


Alchemy’s landholding is uniquely located along strike and to the west of Sandfire Resources’ DeGrussa deposit (Measured, Indicated and Inferred Resources of 14.33Mt at 4.6% copper and 1.6g/t gold) and to the southeast of Horseshoe Metals’ Horseshoe Lights Project (past production of over 300,000 oz gold and 54,000 t copper). The Bryah Basin Project is also adjacent to Peak Hill where about 1Moz of gold has been mined from several gold deposits in the district (Figure 2).

The Bryah Basin Project contains the Hermes and Wilgeena gold deposits with Indicated Resources totalling 246,000oz of gold and the Central Bore gold prospect (Figure 2). Alchemy has a goal of increasing its gold resources whilst continually evaluating opportunities to commercialise these assets.

Alchemy finalised a series of agreements with Grosvenor Gold Pty Ltd that has substantially increased its landholding in the Bryah Basin to over 630 km2, and has focused on the generation of quality data sets over this increased landholding. 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.

Alchemy’s copper-gold exploration focus over the last year has included:

• geological mapping of prospective Narracoota volcanics;

• geochemical sampling of priority areas;

• detailed ground geophysical surveys of priority areas across the expanded project area;

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

• targeted drill testing of priority anomalies delineated from the innovative AMT geophysical survey; and

• down-hole electromagnetic surveys (DHEM).

Exploration to date has confirmed that the Bryah Basin Project area is highly prospective for the discovery of copper-gold mineralised systems and provided a strong platform for continued systematic exploration.

In addition to these copper-gold exploration activities, targeted extensional drilling programs have been undertaken at the Hermes gold deposit and the Central Bore gold prospect where mineralisation remains open at depth. The encouraging results from recent drilling programs at the Hermes and Wilgeena gold deposits, as well as the completion of a comprehensive review and validation of all exploration data, will result in the re-estimation of gold resources at these deposits in late 2012.

Geological and geochemical investigationsField mapping and geochemical sampling has been undertaken across the Bryah Basin Project including over priority areas on the acquired tenements, in particular, concentrating on the prospective Narracoota volcanic sequence and immediate footwall and hangingwall sedimentary rocks.

To the southeast of the Horseshoe Lights copper-gold mine gold and base-metal prospective horizons have been identified in the upper 800-1,200 metres of the Narracoota volcanic sequence. These horizons, up to seven kilometres in length, likely represent volcanogenic massive sulphide (VMS) style mineralisation, based on their polymetallic character, stratiform geometry, host rock characteristics and alteration styles. Mapping of the prospective volcanic and sedimentary sequence is continuing on priority areas across the project area, with the results underpinning the delineation of copper-gold targets that will be tested by ground geophysics and drilling over the next year.


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Figure 2. Bryah Basin Project – copper-gold prospective stratigraphy and gold resource areas.

Rock-chip samples of selected ferruginous gossan material and a variety of lithologies with intensive carbonate-sericite-sulphide alteration have been collected from the prospective sequence across the Bryah Basin Project area. Assays from the rock-chip samples indicate variable base metal and pathfinder anomalism, as well as anomalous barium and manganese, which are commonly associated with VMS-style mineralisation. The base metal and pathfinder element assemblage identified in the rock-chip samples closely matches the multi-element (copper, zinc, lead, gold, silver, arsenic, antimony, bismuth, molybdenum and tellurium) anomalism associated with the DeGrussa deposit.

In addition, samples of the drill spoils from historic shallow rotary air-blast (RAB) and aircore drilling have been collected from across the Bryah Basin Project. For the majority of historic drill holes previous explorers only assayed for gold and bottom-of-hole samples collected by Alchemy are being assayed for base metal and pathfinder elements to assist in the recognition of geochemical anomalies that may represent the presence of base metal mineralisation. Based on the results returned to date, several areas of base metal and pathfinder anomalism have been delineated within the prospective volcanic and sedimentary sequence and will be the subject of drill testing over the next year.



Over 1,500 surface soil samples have been collected for multi-element geochemistry, including base metal and pathfinder elements, over the parts of the recently acquired tenements containing prospective Narracoota stratigraphy, to complement the historic gold-focussed geochemical database. The assay results from this work, which are expected after the reporting period, will assist in the delineation of additional areas of base metal, gold and pathfinder anomalism as well as provide an important input into the ranking of the geophysical and geological targets.

Comprehensive review and interpretation of geophysics

A comprehensive review and interpretation of all geophysics across the Bryah Basin Project was undertaken by Southern Geoscience Consultants to identify further targets and re-evaluate previously identified targets. This involved reprocessing the VTEM and magnetic data from the survey acquired by Alchemy in 2009 as well as VTEM and magnetic surveys undertaken on the acquired Grosvenor tenements in late 2010 and late 2011, as well as a re-assessment of the targets drill tested to date. The review incorporated down-hole geology and EM survey data as well as revisions to interpreted geology across the project.

The review resulted in delineation of over 50 additional geophysical targets across the Bryah Basin Project. The targets are currently being ranked for follow-up exploration over the next twelve months based on the geophysical, geological and geochemical character of each target. In particular, targets will be subject to further exploration 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., <1,500m), and (iii) are unlikely to be due to effects from the regolith or paleochannels.

Follow-up copper-gold exploration

Follow-up copper-gold exploration over the next twelve months in the Bryah Basin Project will be target specific. Emphasis will be on the geophysical and geochemical targets identified through evaluation of the systematic geological, geochemical and geophysical exploration across the Bryah Basin Project area, and in particular, the targets delineated on the recently acquired tenements.

The higher priority geophysical targets will be followed up with further ground-based geophysical surveys, such as moving loop EM (MLEM) and fixed loop EM (FLEM), to test late-time VTEM targets. Moving loop EM and/or FLEM traverses over these targets could confirm the presence of bedrock conductors, and better define targets for drill testing.

Aircore drilling to test geochemical and/or geophysical targets is scheduled to commence in the second half of 2012 subject to receiving the necessary statutory approvals. The data collected from the aircore drilling will be 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.

Alchemy has been awarded a grant through the WA Government’s Exploration Incentive Scheme to support a targeted drilling program at its Bryah Basin Project. The grant will be used to investigate untested geophysical targets within the prospective Narracoota volcanic sequence and Peak Hill Schist on tenements acquired from Grosvenor. Award of the competitive grant validates Alchemy’s innovative and systematic approach to conducting its exploration at the Bryah Basin Project.

Drill testing of AMT anomalies

A combination of RC and diamond drill testing of three targets generated from the AMT survey over the east Magnus area was completed in 2012 (Figure 3). The drill testing of the AMT anomalies forms part of Alchemy’s R&D plan to develop effective exploration methods for both geological mapping purposes and to detect discrete conductors not detected or resolved by previous geophysical surveys.

The innovative AMT survey completed in late 2011 acquired data over a three kilometre strike length of the


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prospective Narracoota volcanic sequence and indicated a number of anomalies at depth that may represent massive sulphide targets. Magnetotelluric methods potentially have the greatest depth of penetration of the geophysical methods applied to date at the Bryah Basin Project as well as the potential to detect conductors linked to base metal mineralisation.

Base metal anomalism was intersected in three of the five holes drilled. The best result of 1 metre at 0.58% copper was returned in a RC drill hole, within a broader intersection of 5 metres at 0.17% copper and 2 metres at 0.17% zinc, and was associated with a chloritic shear zone within an altered dolerite in the Narracoota volcanic sequence. Weak copper-zinc anomalism associated disseminated sulphides was also returned from two diamond drill holes that tested a single AMT anomaly within the northwest part of the AMT survey area. Although drill testing of targets to date did not intersect massive sulphide, the intersected disseminated

copper-sulphide mineralisation confirms the presence of prospective base metal horizons.

Figure 3. Bryah Basin Project – Targeted drill testing of AMT anomalies.


The localisation of base metal anomalism associated with zones of disseminated sulphides within mafic sedimentary rocks, mafic volcanic rocks and dolerite intrusions is similar to the position of base metal mineralisation elsewhere in the Bryah Basin. For comparison, base metal mineralisation is localised at contacts between dolerite and mafic volcanic-sedimentary rocks at DeGrussa, dolerite and sedimentary rocks at Red Bore and mafic sediment and felsic schist at Horseshoe Lights.

Down-hole EM (DHEM) surveys of the drill holes were completed to delineate conductors that may be related to massive copper-gold sulphides ‘off-hole’ from the base metal anomalous zones. Two drill holes that tested a single AMT anomaly in the northwest part of the AMT survey area returned weakly anomalous DHEM responses, which may indicate a conductor at depth off the end of these holes. Further interpretation of these anomalies is required before drill testing of these ‘off-hole’ anomalies is warranted.


Hermes and Wilgeena Gold Deposits

The Bryah Basin Project contains the Hermes and Wilgeena gold deposits and the Central Bore gold prospect, and the acquired Grosvenor tenements represent a significant additional under-explored area prospective for ‘gold-only’ mineralisation (Figure 2).

Indicated Resources at the Bryah Basin Project total 246,000oz of gold, contained at the Hermes and Wilgeena deposits. Alchemy has a goal of increasing its gold resources whilst continually evaluating opportunities to commercialise these assets.

During the year a revised Indicated Resource of 2.79 Mt at 2.19g/t gold (equivalent to 196,650 oz of gold) was estimated for the Hermes gold deposit. This revised resource estimate, using a 0.5g/t gold lower cut-off grade, has enhanced the value of the Hermes gold deposit. The revised Indicated Resource represents an approximate 50% increase from the previous estimate (1.68Mt at 2.39g/t gold for 130,000oz of gold) based on drilling up to 1998.

Since Alchemy acquired the Hermes gold deposit from Troy Resources in 2008, significant work programs 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 deposit to a vertical depth of 150 metres.

The Hermes resource consists of five areas of gold mineralisation – Trapper, Trapper West, Hawkeye, Winchester and Blake (Figure 4). Assay results, including screen fire assays for selected high grade samples, from recent targeted diamond and extensional RC drilling programs into four areas of gold mineralisation confirm the grade and width of mineralisation at Hermes and highlight the depth continuity of many of the high-grade ore zones.

Significant results from the targeted diamond drilling program assayed in 2011 include intersections of:

HRD002 30.8 metres at 7.06 g/t gold from 126.8 metres

HRD003 13 metres at 5.77 g/t gold from 89 metres5 metres at 6.95 g/t gold from 135 metres

HRD004 11 metres at 1.66 g/t gold from 35 metres10 metres at 1.17 g/t gold from 80 metres

Results from the extensional RC drilling program completed in December 2011 include gold intersections of:

TRC351 18 metres at 9.79 g/t gold from 107 metres1 metre at 13.4 g/t gold from 173 metres

TRC352 10 metres at 3.05 g/t gold from 154 metres

TRC343 3 metres at 4.82 g/t gold from 138 metres25 metres at 1.57 g/t gold from 168 metres


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Figure 4. Bryah Basin Project – Hermes gold deposit, recent drilling results.

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.

A maiden Indicated Resource of 659,480t at 2.34g/t gold (equivalent to 49,536 ounces of gold) was estimated at the Wilgeena gold deposit in 2010. Subsequent to the initial estimation, significant work programs 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 Wilgeena deposit to a vertical depth of 120 metres.



An extensional RC drilling program completed in late 2010 intersected wide zones of gold mineralisation outside of the known resource. Significant results, including screen fire assays for selected high grade samples, from the extensional RC drilling program include best intersections of:

WGRC032 15 metres at 2.39 g/t gold from 87 metres




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.

Following the encouraging results of the recent drilling programs at Hermes and Wilgeena, a re-estimation of the gold resources is being undertaken in the second half of 2012. Dependent on the re-estimation, a preliminary economic analysis of the deposit will be conducted to determine the viability of a gold mining operation at current gold prices.

Central Bore Gold Prospect

Gold mineralisation at the Central Bore gold prospect, located 13 kilometres to the south-east of the Hermes gold deposit (Figure 2), was initially intersected over a strike length of 300 metres by two phases of RC drilling in 2010. High-grade (>10g/t gold) mineralisation is related to quartz veining within broader (40-60 metre thick) zones of lower grade (<1g/t gold) mineralisation, associated with a series of northeast-trending veins and structures in granite.

A targeted diamond drilling program in 2011 and a further in-fill and extensional RC drilling program in 2012 were undertaken to test the continuity of mineralisation intersected. The RC drilling program targeted down plunge positions interpreted following structural studies of the diamond drill core that resulted in an improved understanding of controls on mineralisation with the drilling results confirming the orientation and dip of the mineralised structures.

Assay results, including screen fire assays for selected high grade samples, delineated significant intervals of gold mineralisation (Figure 5), and included best intersections of:

CBDD002 4 metres at 25.79 g/t gold from 125 metres1 metre at 12.15 g/t gold from 222 metres

CBRC035 14 metres at 3.26 g/t gold from 44 metres13 metres at 1.41 g/t gold from 80 metres

CBRC038 3 metres at 9.12 g/t gold from 123 metres


The drilling confirms and extends previously reported drilling results (Figure 5) that included:

CBRC004 9 metres at 5.86 g/t gold from 35 metres9 metres at 3.79 g/t gold from 49 metres

CBRC005 20 metres at 1.99 g/t gold from 32 metres2 metres at 10.64 g/t gold from 80 metres4 metres at 5.35 g/t gold from 86 metres


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CBRC011 8 metres at 2.48 g/t gold from 61 metres3 metres at 3.80 g/t gold from 80 metres 15 metres at 1.90 g/t gold from 96 metres, and


Gold mineralisation at Central Bore remains open along strike to the southwest and northeast as well as at depth. 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 at 12.15 g/t gold) was returned from 222 metres down hole.

These results are very encouraging and, combined with detailed structural orientation and logging of the core, have enhanced the Company’s understanding of the gold mineralisation at Central Bore. Further drilling targeting down-plunge positions is planned prior to estimation of an initial resource in 2013.

Figure 5. Bryah Basin Project – Central Bore gold prospect, recent drilling results.



Regional assessment

Regional assessment of the Bryah Basin Project for ‘gold-only’ mineralisation continued during the past year, with the acquired Grosvenor tenements representing a significant additional under-explored prospective area.

Aircore and RC drill testing of gold targets to the west of the Central Bore prospect delineated several areas that require further evaluation. Significant results at one of these areas include:

CBRC054 1 metre at 12.7 g/t gold2 metres at 2.52 g/t gold

CBAC090 3 metres at 5.94 g/t gold

CBAC091 1 metre at 9.60 g/t gold

Assessment of the ground acquired from Grosvenor indicates that it is also prospective for gold-only mineralisation. Historic gold exploration is limited, with best results returned from the Jones and Henry prospects, to the south of the Hermes gold deposit (Figure 2). Previous drilling has intersected high grade gold mineralisation at the Jones prospect, including:

OPAC126 3 metres @ 250 g/t gold

OPAC246 3 metres @ 41 g/t gold

The Henry prospect covers a three kilometre strike length geochemical anomaly along a major structure at the contact between sedimentary and mafic volcanic rocks of the Peak Hill Schist. Previous drilling in the 1990’s intersected gold mineralisation, including 6 metres at 3.5 g/t gold in HBRC15, and further drill testing of this gold mineralised trend is proposed.

A review of previous drilling results also indicates base metal anomalism associated with mafic schists in the Henry prospect area. Results include 7 metres at 0.2% copper and 7 metres at 0.15% copper in OPR194 and 4 metres at 0.25% copper in OPR195. Further interpretation and follow-up exploration will be undertaken over the next year.

Alchemy remains committed to thoroughly and systematically exploring the Bryah Basin Project area for both VMS-type copper-gold mineralisation and for ‘gold only’ mineralised systems, as the potential reward for success is significant.

MURCHISON PROJECT

(100% or 80% Alchemy Resources Ltd)

The Murchison Project comprises over 600 km2 of prospective greenstones, mostly located between the Big Bell Mine (3.9Moz gold) and Paddys Flat (2Moz gold).

Although Alchemy’s emphasis over the past 12 months has been directed toward the advancement of the Bryah Basin Project, exploration of the Murchison Project continued with completion of drilling programs at Jeffery Well and Gidgee South as well as further assessment of Wydgee and Ninden Hill.

At Jeffery Well, an aircore drilling program in late 2011 confirmed a coherent zone of gold anomalism extends to over one kilometre and is localised in a structural corridor at the regional lithological contact (Figure 6). Significant assay results from the aircore drilling program include:

JWAC058 5 metres at 5.00 g/t gold from 60m

JWAC071 6 metres at 2.06 g/t gold from 83m

JWAC082 6 metres at 1.92 g/t gold from 79m2 metres at 5.63 g/t gold from 89m


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In combination with results from the initial aircore drilling program in 2010 that returned high-grade intersections, including 2 metres at 15.27g/t gold in JWAC023, these results are encouraging.

An initial broad-spaced aircore drilling program at Gidgee South in late 2011 outlined a zone of weak gold anomalism extending over four kilometres in length, with weakly anomalous pathfinder element geochemistry on bottom-of-hole samples confirming the gold assay results.

The Jeffery Well and Gidgee South areas were initially targeted based on regional fault flexures identified from Alchemy’s proprietary three-dimensional Murchison GOCAD model, and may represent the northern continuation of the highly-mineralised Big Bell – Meekatharra shear zone, which hosts the Big Bell gold deposit (3.9Moz) to the south. The exploration results from Jeffery Well highlight the potential in the Murchison district for not only large lode gold systems but also for narrow high grade gold systems, similar to Doray Minerals Limited’s Andy Well gold deposit north of Meekatharra.

Figure 6: Murchison Project – Jeffery Well gold prospect, recent drilling results.

In-fill aircore and targeted RC drilling that will test the most prospective parts of the gold anomalous zones at Jeffery Well and Gidgee South for internal structures hosting high-grade vein mineralisation is recommended.

Re-assessment of the Wydgee and Ninden Hill projects in 2011 highlighted the base metal prospectivity of these project areas. Mapping by the Geological Survey of Western Australia, in combination with discovery of base metal mineralisation by Silver Swan Group at Austin and Silver Lake Resources at Eelya, indicates that the northern Murchison district hosts volcanic sequences with significant base metal potential.



Field mapping, rock chip sampling and surface geochemistry programs over the Wydgee and Ninden Hill projects delineated several areas of gold and/or base metal anomalism that are recommended as areas for further exploration and drill testing.

Competent Person’s Statement

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 the Chief Executive Officer 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 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’. 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 and Wilgeena gold deposits 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.


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The Directors present their report on the consolidated entity consisting of Alchemy Resources Limited (“Company” or “Alchemy”) and the entities it controlled at the end of, or during the year ended 30 June 2012.

Directors The following persons were directors of Alchemy Resources Limited during the financial year and until the date of this report. Directors were in office for the entire period unless otherwise stated. Oscar Aamodt, FCIS Non Executive ChairmanAppointed 25 November, 2011 Mr Aamodt is a member of the Institute of Chartered Secretaries and Administrators and has more than 26 years experience in the administration and management of mining and exploration companies in Australia and overseas. Mr Aamodt was a Director of the highly successful ASX-listed mining house Independence Group from August 2005 until his resignation in July 2011. He had been Chairman since March 2009 until his resignation. Mr Aamodt also served as a Non-Executive Director and Chairman of Energy Metals from July 2005 until the completion of a friendly proportional cash takeover by China Guangdong Nuclear Power Corporation in December 2009. Other current directorshipsNone

Former directorships in last 3 yearsIndependence Group NL (Appointed 3 August 2005, resigned 29 July 2011) Energy Metals Limited (Appointed 6 July 2005, resigned 23 December 2009) Special responsibilitiesChair of the Board and the Remuneration and Nomination Committees Member of the Audit Committee Sofia Bianchi, BA, MBA – Non Executive DirectorAppointed 1 March, 2012 Ms Bianchi is Portfolio Manager at BlueCrest Capital Management. Ms Bianchi served as Deputy Managing Director of the Emerging Africa Infrastructure Fund with Standard Bank London from 2002 to 2007. She has previously held a senior position with the European Bank for Reconstruction & Development. Ms Bianchi has extensive experience in banking, fund management and mergers & acquisitions. She holds a BA in Economics from George Washington University, Washington, DC and an MBA from Wharton School, University of Pennsylvania. Other current directorshipsNone

Directors’ Report


Former directorships in last 3 yearsNone Special responsibilitiesNone Lindsay Dudfield, B.SC, Non Executive Director Appointed 25 November, 2011 Mr Dudfield is a qualified geologist with over 30 years experience exploring for a wide range of commodities in Australia and overseas, including close involvement with a number of greenfields discoveries. He was a founding director of Jindalee Resources, Alchemy’s largest shareholder, and is currently the Managing Director of Jindalee. Mr Dudfield also co-founded Energy Metals and remains a Non-Executive Director of the company. Mr Dudfield is a member of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists, the Geological Society of Australia and the Society of Economic Geologists. Other current directorshipsManaging Director of Jindalee Resources Limited Non-Executive Director of Energy Metals Limited

Former directorships in last 3 yearsExtract Resources Limited (Appointed 16 March 2012, resigned 25 June 2012) Special responsibilitiesMember of the Audit, Remuneration and Nomination Committees Anthony Ho Non Executive DirectorAppointed 25 November, 2011 Mr Ho is a Chartered Accountant and a partner in a consulting practice focused principally on corporate and financial services to listed companies. He has significant experience in the resource industry, having served as director and secretary of companies listed on ASX. He is currently a Director of Newfield Resources Limited, Siburan Resources Limited and Redisland Australia Limited. Other current directorshipsExecutive Director of Newfield Resources Limited Non-Executive Director of Siburan Resources Limited Non-Executive Director of Redisland Australia Limited

Former directorships in last 3 yearsDragon Energy Limited (Appointed 18 December 2008, resigned 13 June 2012) Audalia Resources Limited (Appointed 27 August 2010, resigned 17 August 2011) Brumby Resources Limited (Appointed 24 February 2006, resigned 22 March 2011)

Special responsibilitiesChair of the Audit Committee Member of the Remuneration and Nomination Committees

Directors’ Report

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Warwick Davies, BA (Economics), Certificate of Chemistry Appointed 16 March 2007, resigned 25 November 2011. Robert Brierley, B. Eng (Mining), Grad Dip. Finance & Investment, GAICD Appointed 11 April 2011, resigned 25 November 2011. John Arbuckle, B.Bus CPA Appointed 16 March 2007, resigned 25 November 2011. Jeffrey Moore, B.Appl.Sc (Geology)

Appointed 1 December 2010, resigned 25 November 2011. Company Secretary Bernard Crawford B.Com, CA, MBA, ACIS Mr Crawford is a Chartered Accountant with over 20 years experience in the resources industry in Australia and overseas. He has held various positions in finance and management with NYSE, TSX and ASX listed companies. Mr Crawford was appointed as Company Secretary on 1 December 2010.

Directors’ Interests in the Shares and Options of the Company As at the date of this report, the interests of each director in the shares of Alchemy Resources Limited is as shown below. No directors hold options in the Company.

DirectorOrdinaryShares

O Aamodt 250,000 S Bianchi - L Dudfield 18,114,907 A Ho -

Directors’ Report


Directors’Meetings The number of meetings of the Group’s board of directors and of each board committee held during the year ended 30 June 2012, and the numbers of meetings attended by each director were as follows:

Board ofDirectors

AuditCommittee

NominationCommittee

RemunerationCommittee

A B A B A A A BO Aamodt 8 8 1 1 1 1 1 1 S Bianchi 2 2 * * * * * * L Dudfield 8 8 - 1 1 1 1 1 A Ho 7 8 1 1 1 1 1 1 W Davies 6 7 1 1 - - - - R Brierley 5 5 * * * * * * J Arbuckle 5 5 1 1 - - - - J Moore 5 5 1 1 - - - -

A = Number of meetings attended B = Number of meetings held during the time the director held office or was a member of the committee during the year * = Not a member of the relevant committee Principal Activities The principal activity of the consolidated entity during the financial year was exploration for copper and gold. Review of Operations A detailed review of operations during the financial year is set out in the section titled “Review of Activities” in this Annual Report. Corporate Activity Alchemy continues to control costs while actively exploring its project areas. At 30 June 2012, Alchemy had $4.0 million in cash. Alchemy’s AGM was held on 25 November 2011, with the three directors up for re-election (John Arbuckle, Jeffrey Moore and Robert Brierley) deciding to resign prior to the meeting and the remaining Board member (Warwick Davies) resigning immediately thereafter. Experienced resource director Oscar Aamodt was appointed Non-Executive Chairman and Lindsay Dudfield and Anthony Ho were appointed Non-Executive Directors of the Company. On 15 November, 2011 Alchemy announced that it had entered into a series of agreements with Grosvenor Gold Pty Ltd (Grosvenor) to settle the Warden’s Court forfeiture action commenced by Alchemy in March 2010. Alchemy and Grosvenor agreed to enter into an Asset Sale Agreement to transfer Grosvenor’s interest in 15 tenements (the Grosvenor tenements) in the Bryah Basin to Alchemy in exchange for $3.5 million worth of Alchemy shares (Consideration Shares). These Consideration Shares were to be issued at a price to be determined by an equity raising to be conducted before completion of the transaction.

Directors’ Report

20

On 16 December 2011 Alchemy shareholders approved the issue of $3.5 million worth of Consideration Shares to Grosvenor (or its nominee) to acquire the Grosvenor tenements. On 24 February 2012 Alchemy completed a pro-rata non-renounceable offer to eligible shareholders of 1 ordinary fully paid share for every 3 shares held (the Issue) at a price of $0.13 per share to raise approximately $4.2 million (before costs). The Issue, which was underwritten by Jindalee Resources Ltd and Grandor Pty Ltd, satisfied a condition of the Grosvenor acquisition and settlement, being a capital raising of a minimum of $4.0 million. On 1 March 2012 Alchemy issued 26,923,077 shares to Grosvenor’s nominee (Bluecrest Mercantile Master Fund Limited) to complete the acquisition of Grosvenor’s Bryah Basin exploration assets. On 1 March 2012 Sofia Bianchi was appointed Non-Executive Director of the Company. This appointment satisfied a condition of the Grosvenor asset acquisition whereby a nominee of Grosvenor was to be appointed to the Company’s Board on completion of the acquisition. Operating Results The operating loss of the Consolidated Entity was $1,405,336 (2011:$1,481,134). Financial PositionDuring the year ended 30 June 2012, the consolidated entity’s net assets have increased by $6,172,912 to $21,484,948. This is largely due to a combination of the non-renounceable offer to eligible shareholders, the issue of shares to complete the acquisition of Bryah Basin exploration assets and the capitalisation of exploration expenditure. Significant Changes in the State of Affairs The Group’s issued capital has increased to $27,932,586 from $20,422,910, an increase of $7,509,676. The movement in issued capital was due to the non-renounceable offer to eligible shareholders completed in February 2012 which raised $4.2 million (before costs) and the issue, in March 2012, of $3.5 million worth of shares to complete the acquisition of Grosvenor’s Bryah Basin exploration assets. In the opinion of the directors there were no other significant changes in the state of affairs of the consolidated entity other than those referred to in this financial report.

Significant Events after Reporting Date There has been no matter or event that has occurred subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future years. Likely Developments and Expected Results The consolidated entity will continue to pursue and further the exploration of its tenements in Western Australia. Further comments on likely developments in the operations of the consolidated entity are included in the section “Review of Activities” in this Annual Report. Disclosure of any further information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been disclosed in this report.

Directors’ Report


Environmental Regulation and Performance The consolidated entity’s environmental obligations are regulated under both State and Federal legislation. Performance with respect to environmental obligations is monitored by the board of directors and may be subject to government agency audits and site inspections. No environmental breaches have been notified by any government agency during the year ended 30 June 2012. Dividends No dividends have been paid or declared since the start of the financial year. No recommendation for the payment of a dividend has been made.

Proceedings on Behalf of the Consolidated Entity No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Options over Unissued Capital At the date of this report, the following options were on issue: Expiry Date Grant Date Exercise Price Number30 September 2012 16 September 2009 $0.25 750,000 30 June 2013 1 August 2007 & 28 July 2009 $0.50 1,050,000 30 April 2015 29 March 2012 $0.40 1,160,000 2,960,000

Indemnification and Insurance of Directors and Officers During the financial year, the Company paid a premium to insure the directors and officers of the consolidated entity against any liability incurred as a director or officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits the disclosure of the nature of the liabilities covered or the amount of the premium paid. The consolidated entity has not entered into any agreement with its current auditors indemnifying them against claims by a third party arising from their position as auditor.

Non Audit Services The consolidated entity may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or group are important. Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for the audit and non-audit services provided during the year are set out in note 19. $29,780 was paid to the auditor for audit services and $10,164 paid to related practices of the auditor for taxation services. The board of directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor did not

Directors’ Report

22

compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality

and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in

APES 110 Code of Ethics for Professional Accountants.

Auditor’s Independence Declaration The copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 27. Remuneration Report (Audited) This remuneration report, which forms part of the directors’ report, sets out remuneration information for Alchemy Resources Limited’s non-executive directors, executive directors and other key management personnel for the financial year ended 30 June 2012. The information in the remuneration report has been audited as required by Section 308(3C) of the Corporations Act. Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company, including directors of the Company and other executives. Key management personnel comprise the directors of the Company and senior executives for the group. The key management personnel of the Company for 2012 were: Oscar Aamodt Non-Executive Chairman (appointed 25 November 2011) Sofia Bianchi Non-Executive Director (appointed 1 March 2012) Lindsay Dudfield Non-Executive Director (appointed 25 November 2011) Anthony Ho Non-Executive Director (appointed 25 November 2011) Warwick Davies Non-Executive Chairman (resigned 25 November 2011) Robert Brierley Managing Director (resigned 25 November 2011) John Arbuckle Non-Executive Director (resigned 25 November 2011) Jeffrey Moore Non-Executive Director (resigned 25 November 2011) Kevin Cassidy Chief Executive Officer (appointed 1 April, 2012) Bernard Crawford Chief Financial Officer and Company Secretary

Compensation levels for directors and key management personnel of the Company are competitively set to attract and retain appropriately qualified and experienced directors and executives. The board is responsible for compensation policies and practices. The board, where appropriate, seeks independent advice on remuneration policies and practices, including compensation packages and terms of employment. There is no direct link between remuneration paid to any non-executive and executive directors and corporate performance. There are no termination or retirement benefits for non-executive directors (other than statutory superannuation). Given the Company is at its early stage of development and the financial restrictions placed on it, the Company may consider it appropriate to issue unlisted options to non-executive directors, subject to obtaining the relevant approvals.

Directors’ Report


Non Executive Directors The non-executive directors receive a fixed fee for their services of $40,000 per annum. The Chairman receives $50,000 per annum. Fixed Compensation for Executives Fixed compensation consists of base salary plus statutory superannuation. Compensation levels are reviewed annually by the board where applicable. Remuneration levels for directors, secretaries, senior managers of the Company are competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

the capability and experience of the directors and senior executives; the directors and senior executives ability to control the relevant segments performance; the group’s performance including:

o the group’s operational and financial performance o the scale and complexity of operations o the growth in share price and returns on shareholder wealth; and o the amount of incentives within each directors and senior executives remuneration

Remuneration packages may include a mix of fixed and variable remuneration, short and long-term performance-based incentives and are reviewed on an annual basis. Given the size of the Group, its current stage of activities and its relatively small number of employees, the Group has not implemented performance-based remuneration for the current year. The Company has not used the services of a remuneration consultant in relation to the compensation of key management personnel. Service Contracts On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms of appointment, including compensation relevant to the office of director. Remuneration and other terms of employment for other members of key management personnel are formalised in service agreements as summarised below. K Cassidy, Chief Executive Officer Dr Cassidy was appointed as Chief Executive Officer on 1 April, 2012, is remunerated pursuant to an ongoing Executive Employment Agreement and paid a base salary of $240,000 (exclusive of superannuation). The notice period (other than for gross misconduct) is three months and the payment of nine month’s salary.

Directors’ Report

24

B Crawford, Chief Financial Officer and Company Secretary Mr Crawford is remunerated pursuant to the terms of a Consultancy Agreement to fulfil the duties of the Company Secretarial and Chief Financial Officer. Fees paid during the year totalled $132,485 and were charged at usual commercial rates on a daily basis. Unless extended the current agreement will expire on 30 June 2014. The agreement may be terminated by either party on three months written notice. Voting and comments made at the Company’s 2011 Annual General Meeting At Alchemy Resources Limited’s 2011 Annual General Meeting more than 25% of the votes cast were against the adoption of the Company’s remuneration report. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. It is noted that the board of directors changed completely following the resignations of the previous directors on the day of the 2011 Annual General Meeting and that a new board was also appointed on that date. The current board considers that this change has addressed shareholders concerns. Remuneration of Key Management Personnel 2012 Short term benefits

Postemploymentbenefits

Sharebased

payment

% ofRemuneration to

total from Name

Salaryand Fees

$

CashBonus

$

NonMonetaryBenefit

$

Superannuation

$Options

$Total$

Options%

Bonus%

Directors O Aamodt (1) 29,167 - - - - 29,167 - - S Bianchi (2) 13,332 - - - - 13,332 - - L Dudfield (1) 23,333 - - - - 23,333 - - A Ho (1) 23,331 - - - - 23,331 - - W Davies (3) 20,833 - - - - 20,833 - - R Brierley (3) 131,154 - - 11,250 - 142,404 - - J Arbuckle (3) 16,667 - - - - 16,667 - - J Moore (3) 15,291 - - 1,376 - 16,667 - - Executives K Cassidy 211,375 - - 19,024 19,592 249,991 8% - B Crawford 132,485 - - - 9,796 142,281 7% - Totals 616,968 - - 31,650 29,388 678,006 (1) Appointed 25 November 2011 (2) Appointed 1 March 2012 (3) Resigned 25 November 2011

Directors’ Report


2011 Short term benefits

Postemploymentbenefits

Sharebased

payment

% ofRemuneration to

total from Name

Salaryand Fees

$

CashBonus

$

NonMonetaryBenefit

$

Superannuation

$Options

$Total$

Options%

Bonus%

Directors W Davies 50,000 - - - - 50,000 - - R Brierley 66,667 - - 6,600 - 73,267 - - J Arbuckle (1) 80,603 - - - - 80,603 - - J Moore 21,407 - - 1,927 - 23,334 - - M Hannington 244,196 - - 21,978 - 266,174 - - R Downey (2) 94,718 - - - - 94,718 - - Executives K Cassidy 196,139 - - 17,653 (28,084) 185,708 - - L Hopkins 147,765 - - 12,338 (22,467) 137,636 - - B Crawford 23,290 - - - - 23,290 - - Totals 924,785 - - 60,496 (50,551) 934,730 (1) Mr Arbuckle received $40,003 for directors’ fees and $40,600 for services rendered outside of his

duties as a director. (2) Mr Downey received $24,998 for directors’ fees and $69,720 for services rendered outside of his

duties as a director. Consequences of company performance on shareholder wealth The Remuneration Committee has observed the following indices in respect of the current financial year and the previous four financial years.

30 June2012

30 June2011

30 June2010

30 June2009

30 June2008

Comprehensive loss attributable to owners of the company (1,405,336) (1,481,134) (1,558,124) (1,498,908) (923,592) Change in share price $0.02 ($0.25) $0.20 $0.13 ($0.16) Share based payment option plan The following share-based payment arrangements for key management personnel were in existence during the current reporting period. Issue Grant Date Expiry Date Fair value

per option $ExercisePrice $

Vesting Date No. OfOptions

9 29 March 2012 30 April 2015 0.04 0.40 On grant 600,000

There are no performance criteria that need to be met in relation to the options granted under issue 9, however any unexercised options lapse immediately upon termination of employment. Further information on the options is set out in note 25 to the accounts.

Directors’ Report

26

Details of options over ordinary shares in the Company provided as remuneration to key management personnel are set out below.

Name Number of optionsgranted

Value of options atgrant date $

Number of optionsvested

Number of optionslapsed

K Cassidy 400,000 19,592 400,000 -

B Crawford 200,000 9,796 200,000 -

End of Remuneration Report (Audited)

Signed in accordance with a resolution of the Directors Oscar AamodtChairmanPerth, 18 September 2012

Directors’ Report


38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

18 September 2012

Alchemy Resources Limited The Board of Directors Level 2, 72 Kings Park Road WEST PERTH, WA 6005

Dear Sirs,

DECLARATION OF INDEPENDENCE BY CHRIS BURTON TO THE DIRECTORS OF ALCHEMY RESOURCES LIMITED

As lead auditor of Alchemy Resources Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Alchemy Resources Limited and the entities it controlled during the period.

Chris Burton Director

BDO Audit (WA) Pty Ltd Perth, Western Australia

Auditor’s Independence Declaration

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Alchemy Resources Limited (“the Company”) has adopted systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with the spirit of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (“Principles & Recommendations”), the Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company’s corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not why not” regime, where, after due consideration, the Company’s corporate governance practices depart from a recommendation, the Board has offered full disclosure and an explanation for the adoption of its own practice. Further information about the Company's charters, policies and procedures may be found at the Company's website (www.alchemyresources.com.au) under the section marked Corporate Governance. The Company’s corporate governance practices were in place throughout the reporting period ended 30 June 2012, unless noted otherwise. BOARD FUNCTIONS The Company has established the functions reserved to the Board, and those delegated to senior executives and has set out these functions in its Board Charter. The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the Company, providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging appropriate management commensurate with the Company’s structure and objectives, involvement in the development of corporate strategy and performance objectives, and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance. Senior executives are responsible for supporting the Managing Director (or equivalent) and assisting the Managing Director (or equivalent) in implementing the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the Company’s materiality thresholds at first instance to the Managing Director (or equivalent) or, if the matter concerns the Managing Director (or equivalent), directly to the Chair or the lead independent director, as appropriate. The Company’s Board Charter is available on the Company’s website. STRUCTURE OF THE BOARD A profile of each Director in office at the date of the financial report setting out their skills, experience, expertise and period of office is set out in the Directors’ Report. Directors of the Company are considered to be independent when they are not a member of management and are free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement.

Corporate Governance Statement


The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter:

Statement of financial position items are material if they have a value of more than 5% of pro-forma net assets. Statement of comprehensive income items are material if they have an impact on the current year operating result of 5% or more.

Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of business, they could affect the Company’s rights to its assets, if accumulated they would trigger the quantitative tests, involve a contingent liability that would have a probable effect of 5% or more on the statement of financial position or statement of comprehensive income, or they will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 5%.

Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default, and the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the Company and cannot be replaced, or cannot be replaced without an increase in cost of such a quantum, triggering any of the quantitative tests, contain or trigger change of control provisions, they are between or for the benefit of related parties, or otherwise trigger the quantitative tests.

In accordance with the above definition of independence, and the Company’s materiality thresholds the following directors of the Company are considered to be independent: Name PositionOscar Aamodt Non-Executive Chairman (appointed 25 November 2011)Anthony Ho Non-Executive Director (appointed 25 November 2011) The Board does not have a majority of independent directors. The Board believes that the current composition of the Board is most appropriate for the Company having regard to its size, its current level of operations, its strategy of minimising operating costs and includes an appropriate mix of relevant skills and expertise. The Board recognises the ASX Corporate Governance Council’s recommendation that the majority of the Board should be comprised of independent directors and as the Company grows and/or its circumstances change, the Board may make further appointments of independent directors if considered appropriate. Directors may, should they consider it necessary to properly discharge their responsibilities as a director, obtain independent professional advice at the Company’s expense subject to first obtaining approval from the Board. PERFORMANCE

The Chair is responsible for evaluating the performance of the Board, Board Committees, individual directors and the Managing Director (or equivalent). The Managing Director (or equivalent) is responsible for evaluating the performance of senior executives. The Company has a formal process for the performance evaluation of the Board and its committees. Procedures include an annual internal Board performance assessment and ongoing discussions with regard to the performance of the Board and its directors. The performance review process for senior executives comprises an interview between the Managing Director (or equivalent) and each senior executive during


30

which the senior executive's performance is reviewed against the written statement of their responsibilities and key performance indicators. Performance reviews for senior executives (with the exception of the Chief Executive Officer) were conducted during the reporting period in accordance with this process. Given the timing of the changes during the financial year at both the Board and Chief Executive Officer level a formal performance review of the current Board, Board Committees, directors and Chief Executive Officer did not occur during the current reporting period. The Board is committed to a formal process of performance evaluation and will conduct these reviews during the coming reporting period. The Company’s Process for Performance Evaluation is available on the Company’s website. AUDIT COMMITTEE The Board has established an Audit Committee which operates under a Charter approved by the Board. The Audit Committee Charter describes the role, composition, functions and responsibilities of the Audit Committee. The members of the Audit Committee during the year were: Name PositionAnthony Ho Committee Chairman, Non-Executive Director (appointed 1 December 2011) (Independent)Oscar Aamodt Non-Executive Chairman (appointed 1 December 2011) (Independent) Lindsay Dudfield Non-Executive Director (appointed 1 December 2011)John Arbuckle Committee Chairman, Non-Executive Director (resigned 25 November 2011) Warwick Davies Non-Executive Director (resigned 25 November 2011) (Independent) Jeffrey Moore Non-Executive Director (resigned 25 November 2011) (Independent) The Audit Committee did not meet the structural requirements of Recommendation 4.2 of the ASX’s Corporate Governance Principles and Recommendations for the full reporting period in that it did not have an independent chair at all times during the reporting period. However, with the appointment of Mr Ho as chair on 1 December 2011 the Audit Committee now meets all of the structural requirements of Recommendation 4.2 Details of each of the current director’s qualifications, the number of Audit Committee meetings held during the reporting period and of each committee member’s attendance are set out in the Directors’ Report. The Company’s Audit Committee Charter and the Company’s Procedure for the Selection, Appointment and Rotation of External Auditor are available on the Company’s website. CONTINUOUS DISCLOSURE

The Company has established a written policy designed to ensure compliance with the ASX Listing Rule disclosure requirements and accountability at a senior executive level for that compliance. The Company’s Policy on Continuous Disclosure is available on the Company’s website.



SHAREHOLDER COMMUNICATION The Board of the Company endeavours to ensure that shareholders are informed of all of the activities affecting the Company. Alchemy Resources Limited is committed to:

Ensuring that shareholders and the financial markets are provided with full and timely information about the Company’s activities in a clear and balanced way.

Complying with its ASX and Corporations Act continuous disclosure obligations.

Communicating effectively with its shareholders and making it easier for shareholders to communicate with the Company.

To promote effective communication with shareholders and encourage effective participation at general meetings, information is communicated to shareholders:

Through the release of information to the market via the ASX.

Through the distribution of the annual report and notices of annual general meeting.

Through shareholder meetings and investor relations presentations.

Through letters and other forms of communications directly to shareholders.

By posting relevant information on the Company’s website: www.alchemyresources.com.au Information is conveyed to shareholders via the annual report, quarterly reports and other announcements which are delivered to the ASX and posted on the Company’s website. Shareholders with access to the internet are encouraged to submit their email addresses to receive electronic copies of information distributed by the Company. Hard copies of this information are available on request. The Board encourages the attendance and participation of shareholders at the Annual General Meeting and specifically convened General Meetings. The Company has designed a communications policy for promoting effective communication with shareholders and encouraging shareholder participation at general meetings. The Company’s Shareholder Communication Policy is available on the Company’s website. NOMINATION COMMITTEE The Board has established a Nomination Committee which operates under a Charter approved by the Board. The members of the Nomination Committee during the year were: Name PositionOscar Aamodt Committee Chairman (appointed 1 December 2011) (Independent) Anthony Ho Non-Executive Director (appointed 1 December 2011) (Independent) Lindsay Dudfield Non-Executive Director (appointed 1 December 2011)Jeffrey Moore Committee Chairman, Non-Executive Director (resigned 25 November 2011) (Independent)Warwick Davies Non-Executive Director (resigned 25 November 2011) (Independent) John Arbuckle Committee Chairman, Non-Executive Director (resigned 25 November 2011)


32

The number of Nomination Committee meetings held during the reporting period and details of each committee member’s attendance are set out in the Directors’ Report. The Company’s Nomination Committee Charter is available on the Company’s website. In determining candidates for the Board, the Nomination Committee follows a procedure whereby it evaluates the mix of skills, experience and expertise of the existing Board, the balance of independent directors on the Board as well as the particular skills and qualifications of potential candidates that will best enhance the Board's effectiveness. The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. Subject to Clause 13.39 of the Company's Constitution, at the Annual General Meeting in every year one-third of the directors for the time being, or, if their number is not 3 nor a multiple of 3, then the number nearest one-third, and any other director not in such one-third who has held office for 3 years or more (except the Managing Director), must retire from office. Re-appointment of directors is not automatic. The Company’s Policy and Procedure for the Selection and (Re)Appointment of Directors is available on the Company’s website. REMUNERATION COMMITTEE The Board has established a Remuneration Committee which operates under a Charter approved by the Board. The members of the Remuneration Committee during the year were: Name PositionOscar Aamodt Committee Chairman (appointed 1 December 2011) (Independent) Anthony Ho Non-Executive Director (appointed 1 December 2011) (Independent) Lindsay Dudfield Non-Executive Director (appointed 1 December 2011)Jeffrey Moore Committee Chairman, Non-Executive Director (resigned 25 November 2011) (Independent)Warwick Davies Non-Executive Director (resigned 25 November 2011) (Independent) John Arbuckle Committee Chairman, Non-Executive Director (resigned 25 November 2011) The number of Remuneration Committee meetings held during the reporting period and details of each committee member’s attendance are set out in the Directors’ Report. Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of part of the Directors’ Report. Non-Executive directors are remunerated at market rates (for comparable companies) for their time, commitment and responsibilities. Remuneration for non-executive directors is not linked to the performance of the Company. There are no termination or retirement benefits for non-executive directors (other than for superannuation). Pay and rewards for executive directors and senior executives consist of a base salary and performance incentives. Long term performance incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals. Executives are offered a competitive level of base pay at market rates and this is reviewed annually to ensure market competitiveness.



The Company’s Remuneration Committee Charter is available on the Company’s website and includes a statement of the Company’s policy on prohibiting transactions in associated products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes. CODE OF CONDUCT The Company has established a code of conduct as to the practices necessary to maintain confidence in the Company's integrity, practices necessary to take into account their legal obligations and the expectations of their stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company’s Code of Conduct is available on the Company’s website. DIVERSITY The Company is committed to supporting and managing diversity as a means of enhancing the Company's performance by recognising and utilising the contribution of the diverse skills and talents of its directors, officers and employees. Diversity involves recognising and valuing the unique contribution people can make because of their individual background, skills, experiences and perspectives. Diversity may result from a range of factors including age, gender, ethnicity, cultural background or other personal factors. The Company values the differences between its people and the contribution these differences make to the Company. The Company has not complied with Recommendation 3.3 of the ASX’s Corporate Governance Principles and Recommendations in that it has not set measurable objectives for achieving gender diversity. The Board monitors diversity across the Company and is satisfied with the current level of gender diversity. Due to the small size of the Company and its small number of employees, the Board does not consider it appropriate to formally set measurable objectives for gender diversity at this time. As at the reporting date, the proportion of women employees across the organisation was as follows:

PercentageProportion of women employees in the whole organisation 42% Proportion of women in senior executive positions 0% Proportion of women on the Board 25% The Company’s Diversity Policy is available on the Company’s website. SECURITIES TRADING POLICY The Company has implemented a Policy for Trading in Company Securities designed to ensure that all directors, officers and employees of the Company act ethically and do not use confidential inside information for personal gain. The policy states acceptable and unacceptable times for trading in the Company’s securities and outlines the responsibility of directors, officers and employees to ensure that trading complies with the


34

Corporations Act 2001, the ASX Listing Rules and Company Policy. As required by the ASX Listing Rules, the Company notifies the ASX of any transaction entered into by directors in the securities of the Company. The Company’s Policy for Trading in Company Securities is available on the Company’s website. RISK MANAGEMENT The Board has adopted a Risk Management Policy, which sets out the Company's approach to risk. Under the policy, the Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. Under the policy, the Board delegates day-to-day management of risk to the Managing Director (or equivalent) who, with the assistance of senior executives, is responsible for identifying, assessing, monitoring and managing risks. The Managing Director (with the assistance of senior executives) is also responsible for updating the Company's material business risks to reflect any material changes, with the approval of the Board. In fulfilling the duties of risk management, the Managing Director (or equivalent) may have unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board. The Audit Committee also monitors and reviews the integrity of financial reporting and the Company's internal financial control systems and risk management systems and reports to the Board. In addition, the following risk management measures have been adopted by the board to manage the Company's material business risks:

the Board has established authority limits for management which, if exceeded, will require prior Board approval;

the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous disclosure obligations; and

the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices.

The Chief Executive Officer and the Chief Financial Officer (or equivalent) have provided a declaration to the Board in accordance with section 295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial risk.



This Consolidated Statement of Comprehensive Income should be read in conjunction with the

accompanying notes

Consolidated 2012 2011 Notes $ $ Revenue from continuing operations Other income 3 229,278 443,261Corporate expense 3 (486,557) (557,016)Exploration expense 3 (69,658) (49,727)Employee expense 3 (754,032) (1,064,354)Administration expense 3 (447,472) (362,917)Finance costs (15,169) (21,886) Loss from continuing operations before income tax (1,543,610) (1,612,639) Income tax benefit 5 138,274 131,505 Loss for the period attributable to the owners ofAlchemy Resources Limited

(1,405,336) (1,481, 134)

Other comprehensive income - Other comprehensive income for the period, net of tax - Total comprehensive loss for the period attributable tothe owners of Alchemy Resources Limited

(1,405,336) (1,481,134)

Cents Cents per share per share Earnings / (Loss) per share - basic loss per share 18 (1.19) (1.58) - diluted loss per share 18 n/a n/a

Consolidated Statement of Comprehensive IncomeFor the ended 30 June 2012

36

Consolidated 2012 2011 Notes $ $ ASSETS Current Assets Cash and cash equivalents 6 4,037,224 4,673,511Trade and other receivables 7 277,008 375,829Other current assets 8 13,128 20,817 Total Current Assets 4,327,360 5,070,157 Non Current Assets Exploration and evaluation 9 17,385,087 10,547,710Property, plant and equipment 10 350,914 380,826 Total Non Current Assets 17,736,001 10,928,536 TOTAL ASSETS 22,063,361 15,998,693 LIABILITIES Current Liabilities Trade and other payables 12 360,406 411,442Provisions 13 74,404 90,058Interest bearing liabilities 14 81,152 41,554 Total Current Liabilities 515,962 543,054 Non Current Liabilities Interest bearing liabilities 14 62,451 143,603 Total Non Current Liabilities 62,451 143,603 TOTAL LIABILITIES 578,413 686,657 NET ASSETS 21,484,948 15,312,036 EQUITY Contributed equity 15 27,932,586 20,422,910Reserves 16 419,456 350,884Accumulated losses 17 (6,867,094) (5,461,758) TOTAL EQUITY 21,484,948 15,312,036 This Consolidated Statement of Financial Position should be read in conjunction with the accompanying

notes

Consolidated Statement of Financial PositionFor the ended 30 June 2012


Attributable to equity holders

of the entity Issued Capital Option

ReservesAccumulated

LossesTotal Equity

$ $ $ $ At 1 July 2010 15,208,016 545,436 (3,980,624) 11,772,828 Loss for the period - - (1,481,134) (1,481,134)Other comprehensive income - - - -Total comprehensive loss for theperiod net of tax (1,481,134) (1,481,134) Transactions with owners in theircapacity as owners

Issue of shares 5,461,273 - - 5,461,273Transactions costs of issuing shares (246,379) - - (246,379)Share based payments - (194,552) - (194,552)

At 30 June 2011 20,422,910 350,884 (5,461,758) 15,312,036 Attributable to equity holders

of the entity Issued Capital Option

ReservesAccumulated

LossesTotal Equity

$ $ $ $ At 1 July 2011 20,422,910 350,884 (5,461,758) 15,312,036 Loss for the period - - (1,405,336) (1,405,336)Other comprehensive income - - - -Total comprehensive loss for theperiod net of tax (1,405,336) (1,405,336) Transactions with owners in theircapacity as owners

Issue of shares 7,722,721 7,722,721Transactions costs of issuing shares (213,045) (213,045)Share based payments 68,572 68,572

At 30 June 2012 27,932,586 419,456 (6,867,094) 21,484,948 This Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying

notes

Consolidated Statement of Changes in EquityFor the ended 30 June 2012

38

Consolidated 2012 2011 Notes $ $ Cash flows from operating activities Payments to suppliers and employees (1,593,390) (1,792,857)Interest income 249,343 335,147Interest expense (15,179) (22,288)Net cash flows from/(used in)operating activities

26 (1,359,226) (1,479,998)

Cash flows from investing activities Purchase of property, plant & equipment (72,685) (153,545)Proceeds from sale of plant & equipment 864 21,818Payment for exploration assets (3,173,362) (4,578,638)

Net cash flows from/(used in)investing activities

(3,245,183) (4,710,365) Cash flows from financing activities Proceeds from issue of shares 4,222,721 -Proceeds from issue of options 5,317,272Payments for capital raising (213,045) (246,379)Payment of finance lease (41,554) (34,836)

Net cash flows from/(used in)financing activities

3,968,122 5,036,057 Net increase / (decrease) in cash and cash equivalents (636,287) (1,154,306)Cash and cash equivalents at beginning of period

4,673,511 5,827,817

Cash and cash equivalentsat end of period

6 4,037,224 4,673,511

This Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes

Consolidated Statement of Cash FlowsFor the ended 30 June 2012


1. Corporate Information The consolidated financial report of Alchemy Resources Limited for the year ended 30 June 2012 was

authorised for issue in accordance with a resolution of the directors on 18 September 2012. Alchemy Resources Limited is a company incorporated in Australia and limited by shares which are

publicly traded on the Australian Securities Exchange. The nature of the operation and principal activities of the consolidated entity are described in the attached Directors’ Report.

The principal accounting policies adopted in the preparation of these consolidated financial

statements are set out below and have been applied consistently to all periods presented in the consolidated financial statements and by all entities in the consolidated entity.

2. Statement of Compliance

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Compliance with IFRSThe consolidated financial statements of Alchemy Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). New and amended accounting standards and interpretations adopted by the group The following standards and interpretations relevant to the operations of the Group and effective from 1 July 2011 have been adopted. The adoption of these standards did not have any impact on the current period, any prior period nor is their adoption likely to affect future periods.

AASB 124: Related Party Disclosures (December 2009) Revised

AASB 2009-12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119,133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052]

AASB 2010-4: Further Amendments to Australian Accounting Standards arising from the AnnualImprovements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13]

AASB 2010-5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118,119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132& 1042]

AASB 1054: Australian Additional Disclosures

AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers ofFinancial Assets [AASB 1 & AASB 7]

AASB 2010-9: Amendments to Australian Accounting Standards – Severe Hyperinflation andRemoval of Fixed Dates for First time adopters [AASB 1]

Notes to the Financial StatementsFor the ended 30 June 2012

40

New accounting standards and interpretationsThe following new and amended accounting standards and interpretations have been published but are not mandatory for the current financial year. The Group has decided against early adoption of these standards, and has not yet determined the potential impact on the financial statements from the adoption of these standards and interpretations.

New or revised requirement Application date of standard

Application date for Group

AASB 2010-8: Amendments to Australian Accounting Standards –Deferred Tax: Recovery of Underlying Assets [AASB 112]

These amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that the carrying amount will be recoverable through sale.

1 Jan 2012 1 Jul 2012

AASB 2011-9: Amendments to Australian Accounting Standards –Presentation of Other Comprehensive Income [AASB 1, 5, 7, 101, 112,120, 121, 132, 133, 134, 1039 & 1049]

This Standard requires entities to group items presented in other comprehensive income on the basis of whether they might be reclassified subsequently to profit or loss and those that will not.

1 Jul 2012 1 Jul 2012

AASB 10: Consolidated Financial Statements

AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate FinancialStatements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities.

1 Jan 2013 1 Jul 2013

AASB 11: Joint Arrangements

AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly controlled Entities – Non monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change.

1 Jan 2013 1 Jul 2013

AASB 12: Disclosure of Interests in Other Entities

AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

1 Jan 2013 1 Jul 2013



New or revised requirement Application date of standard

Application date for Group

AASB 13: Fair Value Measurement

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets.

1 Jan 2013 1 Jul 2013

AASB 119: Employee Benefits

The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognised in full with actuarial gains and losses being recognised in other comprehensive income. It also revised the method of calculating the return on plan assets.

1 Jan 2013 1 Jul 2013

AASB 2012-5: Amendments to Australian Accounting Standards arisingfrom Annual Improvements 2009–2011 Cycle

The objective of this Standard is to make amendments to AASB 1: First time Adoption of Australian Accounting Standards, AASB 101: Presentation of Financial Statements, AASB 116: Property, Plant andEquipment, AASB 132 Financial Instruments: Presentation, AASB 134 Interim Financial Reporting and Interpretation 2 Members’ Shares inCo operative Entities and Similar Instruments as a consequence of the issuance of International Financial Reporting Standard AnnualImprovements to IFRSs 2009–2011 Cycle by the International Accounting Standards Board in May 2012.

1 Jan 2013 1 Jul 2013

AASB 2011-4: Amendments to Australian Accounting Standards toRemove Individual Key Management Personnel DisclosureRequirements [AASB 124]

This Amendment deletes from AASB 124 individual key management personnel disclosure requirements for disclosing entities that are not companies.

1 Jul 2013 1 Jul 2013

AASB 1053: Application of Tiers of Australian Accounting Standards

This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements.

1 Jul 2013 1 Jul 2013

AASB 9: Financial Instruments

AASB 9 includes requirements for the classification and measurement of financial assets. It was further amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139.

1 Jan 2015 1 Jul 2015


42

(a) Basis of measurement

Historical Cost Convention These consolidated financial statements have been prepared under the historical cost convention,

except where stated.

Critical Accounting Estimates The preparation of financial statements requires the use of certain critical accounting estimates. It

also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed where appropriate.

(b) Principles of consolidation

Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the

Company as at 30 June 2012 and the results of all subsidiaries for the year then ended. The Company and its subsidiaries together are referred to in this financial report as the group or the consolidated entity.

Subsidiaries are all entities (including special purpose entities) over which the group has the power to

govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They

are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the group. Intercompany transactions, balances and unrealised gains on transactions between group companies

are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the

consolidated statement of comprehensive income, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Joint Ventures

The proportionate interests in the assets, liabilities and expenses of a joint venture activity have been

incorporated in the financial statements under the appropriate headings.



Critical accounting judgements and key sources of estimation uncertainty

The application of accounting policies requires the use of judgments, estimates and assumptions

about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are

recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Share based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair

value of the equity instruments at the date at which they are granted. The fair value is determined using a Black & Scholes option pricing model and the assumptions detailed in Note 25.

Exploration and evaluation costs carried forward

The recoverability of the carrying amount of exploration and evaluation costs carried forward has

been reviewed by the directors. In conducting the review, the recoverable amount has been assessed by reference to the higher of “fair value less costs to sell” and, if applicable, “value in use”.

In determining value in use, future cash flows are based on estimates of ore reserves and mineral

resources for which there is a high degree of confidence of economic extraction, production and sales levels, future commodity prices, future capital and production costs and future exchange rates.

Variations to any of these estimates, and timing thereof, could result in significant changes to the

expected future cash flows which in turn could result in significant changes to the impairment test results, which in turn could impact future financial results.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the

chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Alchemy Resources Limited.

(d) Functional and presentation of currency The consolidated financial statements are presented in Australian dollars, which is the Company’s

functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.


44

Foreign exchange gains and losses that relate to borrowings are presented in the statement of

comprehensive income, within finance costs. All other foreign exchange gains and losses are presented in the statement of comprehensive income on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

(e) Revenue recognition Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as

revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Interest income is recognised as it accrues.

(f) Income tax

The income tax expense or benefit for the period is the tax payable on the current period's taxable

income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if

it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current

tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Alchemy Resources Limited and its wholly-owned Australian controlled entities have implemented

the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.



Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items

recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(g) Leases

Leases of property, plant and equipment where the group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases (note 14). Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

(h) Impairment of assets Intangible assets that have an indefinite useful life are not subject to amortisation and are tested

annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the

purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(i) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,

other short-term, highly liquid investments with original maturities of six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.


46

(j) Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for doubtful receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

Cash flows relating to short-term receivables are not discounted if the effect of discounting is

immaterial. The amount of the provision is recognised in the profit or loss. (k) Exploration and evaluation expenditure Exploration and evaluation expenditure, including the costs of acquiring licences and permits are

capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the group has obtained the legal rights to explore an area are recognised in the statement of comprehensive income.

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: (i) the expenditures are expected to be recouped through successful development and

exploitation or from sale of the area of interest; or (ii) activities in the area of interest have not at the reporting date, reached a stage which permits

a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine

technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of minerals in an area of

interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mineral property and development assets within property, plant and equipment.

When an area of interest is abandoned or the directors decide that it is not commercial, any

accumulated costs in respect of that area are written off in the financial period the decision is made.



(l) Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical

cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.

Where parts of an item of property, plant and equipment have different useful lives, they are

accounted for as separate items of property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives, or in the case of certain leased plant and equipment, the shorter lease term as follows:

Motor vehicles 5 – 7 years Office and computer equipment 3 – 5 years Furniture, fittings and equipment 3 – 5 years

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of

each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's

carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These

are included in profit or loss. When revalued assets are sold, it is group policy to transfer any amounts included in other reserves in respect of those assets to retained earnings.

(m) Trade and other payables These amounts represent liabilities for goods and services provided to the group prior to the end of

the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.

(n) Employee benefits

Short–term Obligations

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of reporting period and are measured at the amounts expected to be paid when the liabilities are


48

settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. All other short-term employee benefit obligations are presented as payables.

Other Long term Obligations

The liability for long service leave and annual leave which is not expected to be settled within 12

months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Share Based Payments

The Company provides benefits to employees of the Company in the form of share options. The fair value of options granted is recognised as an employee benefits expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black Scholes valuation model, taking into account the terms and conditions upon which the options were granted.

The cost of equity-settled transactions is recognised, together with a corresponding increase in

equity, on a straight line basis over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number that vest.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the

computation of earnings per share.

Termination Benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

(o) Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new

shares or options are shown in equity as a deduction, net of tax, from the proceeds.



(p) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing:

the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares

by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: the after income tax effect of interest and other financing costs associated with dilutive potential

ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding

assuming the conversion of all dilutive potential ordinary shares. (q) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST

incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net

amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing

or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(r) Financial assets Financial assets are classified as either financial assets at fair value through profit or loss, loans and

receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Company determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Company commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.


50

Consolidated 2012 2011 $ $3. Revenue and Expenses Other income Finance income – banks 216,466 376,465 Other 12,812 66,796 Total other income 229,278 443,261 Expenses Corporate expense Company secretary fees 140,819 23,290 Related-party consultancy 110,320 Exploration expense Exploration expense 69,658 49,727 Total exploration expense 69,658 49,727 Employee expense Employee benefit and director compensation expense 640,024 932,902 Expense of share based payments 68,572 (50,552) Training & development costs 17,930 50,470 Other employee costs 27,506 131,534 Total employee expense 754,032 1,064,354 Administration expense Depreciation - Property, plant and equipment 101,047 82,727 Loss on sale of vehicles 11,727 Loss on sale of other assets 686 - Occupancy 114,442 50,287 Government grants of $38,800 were received under the Exploration Incentive Scheme. The grant is

directly offset against the drilling costs incurred under the conditions of the grant.



4. Segment information The Group operates in one geographical segment, being Western Australia and in one operating

category, being mineral exploration. Therefore, information reported to the chief operating decision maker (the Board of Alchemy Resources Limited) for the purposes of resource allocation and performance assessment is focused on mineral exploration within Western Australia.

MineralExploration

Unallocated Consolidation

2012 $ $ $ Segment income Other income 12,812 216,466 229,278 Total income 12,812 216,466 229,278 Segment expense Exploration expense (69,658) - (69,658) Net other costs (2,608) (1,599,575) (1,602,183) Profit / (loss) before amortisation and depreciation (59,454) (1,383,109) (1,442,563) Amortisation and depreciation - (101,047) (101,047) Profit / (loss) before income tax benefits (59,454) (1,484,156) (1,543,610) R&D concession 138,274 - 138,274 Total comprehensive income / (loss) for the

period78,820 (1,484,156) (1,405,336)

Segment assets and liabilities

Assets 17,506,388 4,556,973 22,063,361 Liabilities 251,406 327,007 578,413 Net assets 17,254,982 4,229,966 21,484,948

2011

Segment income Other income 69,701 373,560 443,261 Total income 69,701 373,560 443,261 Segment expense Exploration expense (49,727) - (49,727) Net other costs (3,128) (1,920,318) (1,923,446) Profit / (loss) before amortisation and depreciation 16,846 (1,546,758) (1,529,912) Amortisation and depreciation - (82,727) (82,727) Profit / (loss) before income tax benefits 16,846 (1,629,485) (1,612,639) R&D concession 131,505 - 131,505 Total comprehensive income / (loss) for the

period148,351 (1,629,485) (1,481,134)

Segment assets and liabilities

Assets 10,722,600 5,276,093 15,998,693 Liabilities 90,825 595,832 686,657 Net assets 10,631,775 4,680,261 15,312,036


52

Consolidated 2012 2011 $ $5. Income Tax Major components of income tax expense are as follows: Statement of Comprehensive Income Current income tax - R&D tax concession (138,274) (131,505) Deferred income tax - Relating to origination and reversal of temporary

differences - Income tax expense / (benefit) reported in the statement of

comprehensive income (138,274) (131,505) A reconciliation of income tax expense / (benefit) applicable

to accounting profit / (loss) before income tax at the statutory income tax rate to income tax expense / (benefit) at the Company’s effective income tax is as follows:

Accounting loss from continuing operations before income

tax (1,543,610) (1,612,639) At the statutory income tax rate of 30% (2011: 30%) (463,083) (483,792) Add - Non-deductible expenses 46,203 10,560 - Tax loss not brought to account as a deferred tax asset 518,632 563,527 - Capital raising costs (101,752) (90,295) - R&D tax concession (138,274) (131,505) Income tax expense / (benefit) reported in the statement of

comprehensive income (138,274) (131,505) Tax Consolidation The company and its 100% owned controlled entities have formed a tax consolidated group. The head entity of the tax consolidated group is Alchemy Resources Limited.



Consolidated 2012 2011 $ $5. Income Tax (continued) Deferred income tax Recognised on the statement of financial position Deferred income tax at the end of the reporting period

relates to the following: Deferred income tax liabilities - Capitalised expenditure deductible for tax purposes 5,215,526 3,165,758 - Trade and other receivables 15,278 24,846 5,230,804 3,190,604 Deferred income tax assets - Loans (45,000) - Trade and other payables (67,067) (10,706) - Employee benefits (22,321) (27,017) - Capitalised expenditure (258) - Tax losses (5,141,416) (3,107,622) Net deferred tax asset / (liability) - Deferred tax assets have not been recognised in respect of

the following items: - Capital raising costs 163,300 176,087 - Tax losses 1,963,008 1,426,028

Potential unrecognised tax benefit at 30% 2,126,308 1,602,115

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise benefits.


54

Consolidated 2012 2011 $ $6. Cash and cash equivalents Cash at bank and on hand 777,503 283,036 Deposits at call 3,259,721 4,390,475 4,037,224 4,673,511 The weighted average interest rate for the year was 4.39% (2011: 4.59%).

The group’s exposure to interest rate risk is set out in Note 23. The maximum exposure to credit risk

at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

7. Trade and other receivables Current GST receivable 86,851 120,356 R&D concession 138,274 131,505 Other 51, 883 123,968 277,008 375,829 8. Other current assets Prepayments 13,128 20,817 13,128 20,817 9. Exploration and evaluation Opening balance 10,547,710 6,398,131 Exploration expenditure during the year 3,163,212 4,149,579 Acquisition of tenements 3,674,165 - Closing balance 17,385,087 10,547,710

The recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on the successful development and commercial exploitation, or alternatively the sale, of the respective areas of interest.



Consolidated 2012 201110. Property, plant and equipment $ $ Motor vehicle - At cost 192,559 191,381 - Accumulated depreciation (52,024) (18,243) Total motor vehicle 140,535 173,138 Mobile accommodation - At cost 164,296 164,296 - Accumulated depreciation (54,272) (30,737) Total mobile accommodation 110,024 133,559 Office equipment - At cost 29,936 25,450 - Accumulated depreciation (15,016) (9,125) Total office equipment 14,920 16,325 Computer equipment - At cost 81,745 73,892 - Accumulated depreciation (52,565) (38,748) Total computer equipment 29,180 35,144 Field equipment - At cost 82,138 31,883 - Accumulated depreciation (25,883) (9,223) Total field equipment 56,255 22,660

Total property, plant and equipment 350,914 380,826 Movement in carrying amounts Movements in the carrying amounts for each class of property, plant and equipment between the

beginning and the end of the current period:

Motor Mobile Office Computer Field Total Vehicles Accomm. Equipment Equipment Equipment Consolidated: Balance at the

beginning of the year

173,138 133,559 16,325 35,144

22,660 380,826 Acquisitions 1,179 - 4,486 16,765 50,255 72,685 Depreciation expense (33,782) (23,535) (5,891) (21, 179) (16,660) (101,047) Disposals - - - (1,550) - (1,550) Carrying amount at

the end of the year

140,535 110,024 14,920 29,180

56,255 350,914


56

11. Subsidiaries Details of the Company’s subsidiaries at are as follows: Principal

ActivityCountry of

IncorporationProportion ofOwnership

Subsidiary 2012 2011 Alchemy Resources (Murchison) Pty Ltd Exploration Australia 100% 100% Alchemy Resources (Three Rivers) Pty Ltd Exploration Australia 100% 100% Goldtribe Corporation Pty Ltd Exploration Australia 100% 100%

Alchemy Resources Limited is the head entity of the tax-consolidated group to which all controlled entities are a party.

Consolidated 2012 2011 $ $12. Trade and other payables Trade creditors and accruals 360,406 411,442 Trade creditors are non-interest bearing and are normally settled on 30 day terms. 13. Provisions Current Employee benefits 74,404 90,058 14. Interest bearing liabilities Current Secured Lease liabilities 81,152 41,554 Non current Secured Lease liabilities 62,451 143,603 Details of the group’s exposure to risk arising from current and non-current borrowings is set out in

Note 23.



14. Interest bearing liabilities (continued) a) Assets pledged as security

Lease liabilities are effectively secured as the rights to hire purchase assets, recognised in the financial statements and revert to the lessor in the event of default.

The carrying amounts of assets pledged as security for current and non-current borrowings are: 2012 2011 Hire purchase $ $ Motor vehicle (Note 10) 47,775 57,556 Term deposit (Note 6) 161,000 161,000 Total assets pledged as security 208,775 218,556 b) Fair value The carrying amounts and fair values of borrowings at reporting date On statement of financial position Non traded financial liabilities Lease liabilities 143,603 185,157

None of the classes are readily traded on an organised market in standardised form. Fair value is inclusive of costs which would be incurred on settlement of a liability.

c) Interest rate risk exposure

The following table sets out the group’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate by maturity periods. Exposures are predominantly from liabilities bearing variable interest rates as the group intends to hold fixed rate liabilities to maturity.

2012 Fixed Interest rates

Lease1 Year or Less

Over 1 Yr to 2 Yrs

Over 2Yrs to 3 Yrs

Over 3 Yrs to 4 Yrs

Lease liabilities 8,475 3,814 659 9.37% 9.37% 9.50% 2011 Fixed Interest rates

Lease1 Year or Less

Over 1 Yr to 2 Yrs

Over 2Yrs to 3 Yrs

Over 3 Yrs to 4 Yrs

Lease liabilities 15,169 8,475 3,814 659 9.37% 9.37% 9.50% 9.50%


58

14. Interest bearing liabilities (continued) The group has provided bank guarantees amounting to $95,900, secured by term deposits. The bank

guarantees are: $34,900 to the landlord for the rental bond of the current premises; $10,000 to the Minister responsible for the Mining Act 1978 (“Minister”) for a performance

bond on tenement E20/667; $22,000 to the Minister for a performance bond on tenement E51/859; $19,000 to the Minister for a performance bond on tenement E51/1044; and $10,000 to the Minister for a performance bond on tenement M52/685;

No liability was recognised by the group in relation to the guarantees, as the fair value of the guarantees is immaterial.

Consolidated 2012 201115. Issued capital $ $ a) Share capital Ordinary shares fully paid 27,932,586 20,422,910 Consolidated Number $ b) Movements in ordinary shares on issue Balance at 1 July 2010 76,202,316 15,208,016 Option conversion 21,245,092 5,317,272 Amounts transferred from option reserve - 144,001 Costs incurred in option conversion - (246,379) Balance at 30 June 2011 97,447,408 20,422,910 Non-renounceable issue to shareholders 32,482,470 4,222,721 Shares issued to acquire Grosvenor tenements 26,923,077 3,500,000 Share issue costs - (213,045) Balance at 30 June 2012 156,852,955 27,932,586 Ordinary shares have the right to receive dividends as declared, and in the event of winding up the

Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid upon on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.



Consolidated 2012 2011 Number Number15. Issued capital (continued) c) Movements in options on issue Balance at beginning of the financial year 2,800,000 28,545,092 Options granted 1,400,000 - Options converted (21,245,092) Options cancelled (1,000,000) Options expired (1,000,000) (3,500,000) Balance at end of the financial year 3,200,000 2,800,000 16. Reserves $ $ Options Reserve Opening balance 350,884 545,436 Options issued 68,572 - Options cancelled (50,551) Options converted (144,001) Balance at the end of the financial year 419,456 350,884 17. Accumulated losses Balance at the beginning of the financial year (5,461,758) (3,980,624) Net loss attributable to members (1,405,336) (1,481,134) Balance at the end of the financial year (6,867,094) (5,461,758) 18. Earnings per share - basic loss per share (1.19) (1.58) - diluted loss per share n/a n/a The following reflects the income and share data used in the

calculations of basic and diluted loss per share:

$ $ Profits / (losses) used in calculating basic and diluted

earnings per share (1,405,336) (1,481,134) 2012 2011 Number Number

Weighted average number of ordinary shares used in calculating basic and diluted loss per share 117,796,946 93,877,854


60

Consolidated 2012 201119. Auditor’s remuneration $ $ Audit services BDO Audit (WA) Pty Ltd - Audit and review of the financial reports 29,780 23,080 Other services BDO Audit (WA) Pty Ltd related practices - Taxation services 10,164 10,600 Total remuneration 39,944 33,680 20. Contingent assets and liabilities The group had contingent liabilities at 30 June 2012 in respect of :

GuaranteesFor information about guarantees given by the group and the parent entity, please refer to note 14. Future success and royalty payments On 31 July 2008, Alchemy Resources, pursuant to the sales agreement with Troy Resources NL agreed:

contingent future payments of $690,000 upon Alchemy Resources Limited either making an announcement that it had delineated gold reserves of not less than 50,000 ounces on the mining tenements or the lodgement of a notice of intent to mine, whichever is earlier;

a royalty of 1% NSR (net smelter return) royalty to be paid after production exceeds 50,000 ounces up to production of 70,000 ounces; and

an iron ore royalty of $0.75 per tonne of iron ore produced. Litigation Mr Robert Brierley, the Company’s former Managing Director, has withdrawn his application in the Industrial Relations Commission for the payment of a total of $163,500 being 6 months’ salary plus superannuation he claims should be paid to him in lieu of notice of termination following his resignation from the Company in November 2011. There are no other material contingent assets or liabilities as at 30 June 2012.

21. Events occurring after the reporting period

There have been no events subsequent to reporting date which are sufficiently material to warrant disclosure.



22. Commitments In order to maintain an interest in the exploration tenements in which the Company is involved, the

Company is committed to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligations of the group are subject to the minimum expenditure commitments required as per the Mining Act, as amended, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. Currently, the minimum expenditure commitments for the granted tenements are $1,903,475 (2011: $995,835) per annum.

Commitments in relation to the lease of office premises are payable as follows: Consolidated 2012 2011 $ $ Within 1 year 136,080 - Later than one year but not later than five years 147,420 - Later than five years - 283,500 - Commitments in relation to lease liabilities are payable as follows: Within 1 Year 89,891 57,001 Later than one year but not later than five years 67,095 156,986 Later than five years - Less: Unexpired hire purchase charges 13,383 28,830 Recognised as a liability 143,603 185,157 Representing hire purchase liabilities: Current 81,152 41,554 Non-current 62,451 143,603 143,603 185,157 23. Financial risk management objectives and policies Financial Risk Management

OverviewThe group has exposure to the following risks from their use of financial instruments: Interest rate risk Credit risk Liquidity risk Commodity risk

This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.


62

23. Financial risk management objectives and policies (continued)

The board of directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Audit Committee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The group’s principal financial instruments are cash, short-term deposits, receivables and payables. Interest rate riskInterest rate risk is the risk that the value of a financial instrument of cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial assets and liabilities that the group uses. Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets. It is the group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances. The following table set out the carrying amount, by maturity, of the financial instruments that are exposed to interest rate risk:

Fixed interest rate maturing in Consolidated – 2012 Floating

interestrate

1 Year orless

Over 1to

5 years

Morethan

5 years

Noninterestbearing

Total

$ $ $ $ $ $ Financial assets Cash and cash equivalents 766,986 3,259,721 - - 10,517 4,037,224 Trade and other receivables - - - - 277,008 277,008 766,986 3,259,721 - - 287,525 4,314,232

Weighted average interest rate 4.39% 4.46% - - - - Financial liabilities Trade and other payables - - - - 360,406 360,406 Interest bearing liabilities - 81,152 62,451 - - 143,603 - 81,152 62,451 - 360,406 504,009

Weighted average interest rate - 9.37% 9.41% - - -



23. Financial risk management objectives and policies (continued) Fixed interest rate maturing in

Consolidated – 2011

Floatinginterestrate

1 Year orless

Over 1to

5 years

Morethan

5 years

Noninterestbearing Total

$ $ $ $ $ $ Financial assets Cash and cash equivalents 223,749 4,390,475 - - 59,287 4,673,511 Trade and other receivables - - - - 375,831 375,831 223,749 4,390,475 - - 435,118 5,049,342

Weighted average interest rate 4.59% 5.99% - - - - Financial liabilities Trade and other payables - - - - 411,442 411,442 Interest bearing liabilities - 41,554 143,603 - - 185,157 - 41,554 143,603 - 411,442 596,599

Weighted average interest rate - 9.37% 9.41% - - - Fair value sensitivity analysis for fixed rate instruments

The group does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable rate instrumentsA change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by the amounts shown below:

Profit or loss Equity

Consolidated 2012

Carryingvalue at

period end

100 bpincrease

100 bpdecrease

100 bpincrease

100 bpdecrease

$ $ $ $ $ Financial assets Cash and cash equivalents 4,037,224 56,461 (56,461) 56,461 (56,461) Cash flow sensitivity (net) 56,461 (56,461) 56,461 (56,461) Profit or loss Equity

Consolidated 2011

Carryingvalue at

period end

100 bpincrease

100 bpdecrease

100 bpincrease

100 bpdecrease

$ $ $ $ $ Financial assets Cash and cash equivalents 4,673,511 60,581 (60,581) 60,581 (60,581) Cash flow sensitivity (net) 60,581 (60,581) 60,581 (60,581)


64

23. Financial risk management objectives and policies (continued) Credit risk

Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and investment securities. The group trades only with recognised, creditworthy third parties. It is the group policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad debts is not significant. The maximum exposure to credit risk is the carry value of the receivable, net of any provision for doubtful debts.

With respect to credit risk arising from the other financial assets of the group, which comprise cash and cash equivalents, the group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. This risk is minimised by reviewing term deposit accounts from time to time with approved banks of a sufficient credit rating which is AA and above. Exposure to credit riskThe carrying amount of the group’s financial assets represents the maximum credit exposure. The group’s maximum exposure to credit risk at the reporting date was:

Consolidated 2012 2011 $ $ Cash and cash equivalents 4,037,224 4,673,511 Trade & other receivables 277,008 375,829 4,314,232 5,049,340 Foreign currency risk

The group’s exposure to foreign currency risk is minimal at this stage of its operations.

Commodity price riskThe group’s exposure to commodity price risk is minimal at this stage of its operations.

Liquidity riskLiquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation. The group’s objective is to maintain a balance between continuity of funding and flexibility. The following are the contractual maturities of financial liabilities:



23. Financial risk management objectives and policies (continued)

Consolidated 2012Carryingamount

Contractualcash flows

6 monthsor less

$ $ $ Trade and other payables 360,406 - 360,406 Interest bearing liabilities 143,603 143,603 40,576

504,009 143,603 400, 982 Receivables 277,008 277,008 277,008

277,008 277,008 277,008

Consolidated – 2011Carryingamount

Contractualcash flows

6 monthsor less

$ $ $ Trade and other payables 411,442 - 411,442 Interest bearing liabilities 185,157 185,157 20,777 596,599 185,157 432,219 Receivables 375,829 375,829 375,829 375,829 375,829 375,829 Fair value of financial assets and liabilities

The fair value of cash and cash equivalents and non-interest bearing financial assets and financial liabilities of the group is equal to their carrying value. Capital risk managementThe group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The management of the group’s capital is performed by the board. The capital structure of the group consists of net debt ( trade payables and provisions detailed in notes 12, 13, & 14 offset by cash and bank balances) and equity of the group (comprising issued capital, reserves, offset by accumulated losses detailed in notes 15, 16 & 17). The group is not subject to any externally imposed capital requirements. To date the board has ensured that sufficient funds are available to meet its projected 18 months commitments. None of the group’s entities are subject to externally imposed capital requirements.


66

24. Key management personnel disclosures

(a) Key management personnel compensation 2012 2011 $ $ Short-term employee benefits 616,968 924,785 Post-employment benefits 31,650 60,496 Share-based payments 29,388 (50,551) 678,006 934,730

Detailed key management personnel compensation disclosures are provided in the

Remuneration Report which forms part of the Directors’ Report and has been audited.

(b) The following were key management personnel of the Company at any time during thereporting period:

Directors Oscar Aamodt (appointed 25 November 2011) Sofia Bianchi (appointed 1 March 2012) Lindsay Dudfield (appointed 25 November 2011) Anthony Ho (appointed 25 November 2011)

Warwick Davies (resigned 25 November 2011) Robert Brierley (resigned 25 November 2011) John Arbuckle (resigned 25 November 2011) Jeffrey Moore (resigned 25 November 2011)

Executives Kevin Cassidy (Chief Executive Officer – appointed 1 April 2012) Bernard Crawford (Chief Financial Officer and Company Secretary)

(c) Individual directors and executives compensation disclosures Apart from details disclosed in this note, no director has entered into a material contract with

the group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year end.

(d) Other key management personnel transactions with the Company In February 2012 Alchemy completed a pro-rata non-renounceable offer to eligible

shareholders of 1 ordinary fully paid share for every 3 shares held (“the Issue”). The Issue was fully underwritten by Jindalee Resources Ltd (“Jindalee”) and Grandor Pty Ltd (“Grandor”) (an entity controlled by Mr Mark Scott, Jindalee’s Chairman). Mr Lindsay Dudfield is the Managing Director of Jindalee and holds approximately 23% of Jindalee’s shares. Jindalee and Grandor each received underwriting fees of $94,053.



24. Key management personnel disclosures (continued) (e) Options holdings

2012

OpeningBalance1 July

Granted asremuneration

Optionsexercised

Net changeother

Balanceat 30 June

Vested butnot

exercisable

Vested andexercisable

Vestedduringthe year

Executives K Cassidy - 400,000 - - 400,000 - - 400,000 B Crawford - 200,000 - - 200,000 - - 200,000

600,000 600,000 600,000

2011Directors W Davies 1,564,750 - (400,000) (1,164,750) - - - - J Arbuckle 5,336,500 - (1,000,000) (4,336,500) - - - - M Hannington (1) 4,225,971 - (1,140,000) (1,085,971) 2,000,000 - 2,000,000 - R Downey (1) 5,014,000 - (677,500) (4,336,500) - - - - Executives K Cassidy 500,000 - - (500,000) - - - - L Hopkins 400,000 - - (400,000) - - - -

17,041,221 - (3,217,500) (11,823,721) 2,000,000 - 2,000,000 -

(1) Resigned 14 February, 2011

(f) Shareholdings

2012Opening Balance

1 JulyGranted as

remunerationOptionsexercised

Net changeother

Balanceat 30 June

Directors O Aamodt - - - 133,334 133,334 L Dudfield 10,054,000 - - 8,060,907 18,114,907 W Davies 816,500 - - - 816,500 R Brierley 200,000 - - (100,000) 100,000 J Arbuckle 3,788,000 - - - 3,788,000 Executives B Crawford 90,000 - - 310,000 400,000

14,948,500 - - 8,404,241 23,352,741

2011

Directors W Davies 416,500 - 400,000 - 816,500 R Brierley - - - 200,000 200,000 J Arbuckle 5,576,000 - 1,000,000 (2,788,000) 3,788,000 M Hannington (1) 937,661 - 1,140,000 (51,000) 2,026,661 R Downey (1) 4,896,000 - 677,500 (2,785,500) 2,788,000 Executives B Crawford - - - 90,000 90,000

11,826,161 - 3,217,500 (5,334,500) 9,709,161

(1) Resigned 14 February, 2011


68

25. Share based payments

Share option planThe Group has an Incentive Option Scheme (“Scheme”) for executives and employees of the Group. In accordance with the provisions of the Scheme, as approved by shareholders at a previous annual general meeting, executives and employees may be granted options at the discretion of the directors. Each employee share option converts into one ordinary share of Alchemy Resources Limited on exercise. No amounts are paid or are payable by the recipient on receipt of the option. The options carry neither rights of dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Options issued to directors are not issued under the Scheme but are subject to approval by shareholders.

Details of share-based payment arrangements in existence during the reporting period are disclosed in the Remuneration Report which forms part of the Directors’ Report and has been audited. Fair value of share options granted during the year The fair value of options at grant date are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk free rate for the term of the option. The model inputs for options granted during the year ended 30 June 2012 are as follows:

Inputs Issue 9 Exercise price $0.40 Grant date 29 March 2012 Expiry date 30 April 2015 Share price at grant $0.145 Expected volatility (%) 85% Risk free interest rate (%) 3.517%



25. Share based payments (continued)

Movements in share options during the year Movement in the number of share options held by directors, employees and advisors:

2012 2011

No. ofoptions

Weightedaverageexerciseprice $

No. ofoptions

Weightedaverageexerciseprice $

Outstanding at the beginning of the year 2,800,000 0.38 7,350,000 0.48 Granted and vested during the year 1,400,000 0.40 - Cancelled during the year (1,000,000) 1.56 Exercised during the year (50,000) 0.37 Expired during the year (1,000,000) 0.37 (3,500,000) 0.25 Outstanding at the end of the year 3,200,000 0.40 2,800,000 0.38

Exercisable at the end of the year 3,200,000 0.40 2,800,000 0.38

The weighted average remaining contractual life of share options outstanding at the end of the year

was 1.63 years (2011 - 1.45 years). Expenses arising from share based payment transactions 2012 2011 $ $ Options issued under the employee option plan 68,572 (50,552) 68,572 (50,552)

Share options outstanding at the end of the year Share options issued and outstanding at the end of the year have the following exercise prices:

Expiry Date Exercise

price$

2012No.

2011No.

30 June 2012 0.37 - 1,000,00030 September 2012 0.25 750,000 750,00030 June 2013 0.50 1,050,000 1,050,00030 April 2015 0.40 1,400,000 -

3,200,000 2,800,000


70

Consolidated 2012 2011 $ $26. Reconciliation of cash flows from operating activities Cash flows from operating activities Loss for the period (1,405,336) (1,481,134) Non-cash flows in profit/(loss): - Depreciation 101,047 82,727 - Loss on sale of assets 686 11,727 - Share based remuneration 68,572 (50,551) - Exploration expenditure write-off 69,658 49,727 Changes in assets and liabilities - Decrease/(increase) in trade receivables (75,691) (101,498) - Decrease/(increase) in prepayments 7,689 (6,071) - Increase/(decrease) in trade creditors and accruals (121,937) 6,850 - Increase/(decrease) in provisions (3,914) 8,225 Net cash used in operating activities (1,359,226) (1,479,998)

Non cash investing and financing activities During the year the Company issued $3.5 million worth of shares (26,923,077 shares) to Grosvenor Gold Pty Ltd’s nominee to acquire various tenements adjacent to the Company’s tenements in the Bryah Basin and settle litigation.

27. Joint ventures

The Company has an interest in the following joint venture:

Equity Interest Carrying Value2012 2011 2012 2011

% % $ $

Murchison Project JV Gold Exploration 80 80 1,335,057 1,310,314

The Company’s aggregate interests in the assets and liabilities of this joint venture are reflected in the following asset and liability categories in the financial statements. The contingent liabilities and commitments in respect thereto are referred to in notes 20 and 22 respectively.

Carrying Value2012 2011

$ $ Non Current Assets Exploration and evaluation 1,335,057 1,310,314

Share of net assets employed in joint ventures 1,335,057 1,310,314



28. Business Combinations There were no business combinations in the 2012 financial year. 29. Related party disclosure The consolidated entity has the following investments in subsidiaries:

ClassCountry of

incorporationInvestmentat cost

Investmentat cost

2012 2011 $ $ Parent Entity Alchemy Resources Limited Ord Australia - - Controlled Entity Alchemy Resources (Murchison) Pty Ltd Ord Australia 100 100 Alchemy Resources (Three Rivers) Pty Ltd Ord Australia 100 100 Goldtribe Corporation Pty Ltd Ord Australia 1 1

On 16 March 2007, Alchemy Resources (Murchison) Pty Ltd was incorporated. At incorporation Alchemy Resources Limited was allotted 100% of the issued capital being 100 shares at $1.00 each. On 27 May 2008, Alchemy Resources (Three Rivers) Pty Ltd was incorporated. At incorporation Alchemy Resources Limited was allotted 100% of the issued capital being 100 shares at $1.00 each. On 13 July 2009, Alchemy Resources Limited purchased Goldtribe Corporation Pty Ltd and was allotted 100% of the issued capital being 1 share at $1.00.


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30. Parent entity disclosure 2012 2011 Financial Position $ $ ASSETS Current Assets Cash and cash equivalents 3,967,284 4,594,963 Trade and other receivables 203,951 257,792 Other current assets 13,128 20,817 Total Current Assets 4,184,363 4,873,572 Non Current Assets Exploration and evaluation - Property, plant and equipment 350,914 380,826 Financial asset 2,287 2,287 Total Non Current Assets 353,201 383,113 TOTAL ASSETS 4,537,564 5,256,685 LIABILITIES Current Liabilities Trade and other payables 109,000 320,617 Provisions 74,404 90,058 Interest bearing liabilities 81,152 41,554 Total Current Liabilities 264,556 452,229 Non Current Liabilities Interest bearing liabilities 62,451 143,603 Total Non Current Liabilities 62,451 143,603 TOTAL LIABILITIES 327,007 595,832 NET ASSETS 4,210,557 4,660,853 EQUITY Issued capital 27,932,586 20,422,910 Reserves 419,456 350,884 Accumulated losses (24,141,485) (16,112,941) TOTAL EQUITY 4,210,557 4,660,853



30. Parent entity disclosure (continued) 2012 2011 Financial Performance $ $ Profit / (loss) for the year (8,028,544) (5,980,450) Other comprehensive income Total comprehensive profit / (loss) (8,028,544) (5,980,450)


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The directors of Alchemy Resources Limited declare that: (a) in the directors’ opinion the financial statements and notes set out on pages 35 to 73 and the

Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including :

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of it’s performance, for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), Corporations Regulations 2001 and mandatory professional reporting requirements.

(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2; and

(c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the chief executive officer and chief financial officer for the financial year ended 30 June 2012. Signed in accordance with a resolution of the directors.

Oscar AamodtChairman Perth, Western Australia 18 September 2012

Directors’ Declaration


Auditor’s Report

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALCHEMY RESOURCES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Alchemy Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,which has been given to the directors of Alchemy Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

76

Auditor’s Report

Opinion

In our opinion:

(a) the financial report of Alchemy Resources Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Alchemy Resources Limited for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001.

BDO Audit (WA) Pty Ltd

Chris BurtonDirector

Perth, Western Australia Dated this 18th day of September 2012


Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. 1. Distribution of Equity Securities

Analysis of number of equity security holders by size of holding:

Shares 1 - 1,000 136 1,001 - 5,000 287 5,001 - 10,000 265 10,001 - 100,000 740 100,001 and over 207 Total 1,635

The number of holders of less than a marketable parcel of ordinary fully paid shares is 424. 2. Substantial Shareholders Substantial shareholders (ie. shareholders who hold 5% or more of the issued capital):

Number ofshares

Percentageheld

Citicorp Nominees Pty Limited 26,937,577 17.17 Jindalee Resources Limited 17,469,759 11.14

3. Voting Rights

(a) Ordinary Shares Each shareholder is entitled to receive notice of and attend and vote at general meetings of the Company. At a general meeting, every shareholder present in person or by proxy, representative of attorney will have one vote on a show of hands and on a poll, one vote for each share held.

(b) Options No voting rights

4. Quoted Securities on Issue

The Company has 156,852,955 quoted shares on issue. No options on issue by the Company are quoted.

5. On Market Buy BackThere is no current on-market buy back.

6. Unquoted Equity Securities Number

on issueNumber ofholders

Options exercisable at $0.25 on or before 30 September 2012 750,000 1 Options exercisable at $0.50 on or before 30 June 2013 1,050,000 2 Options exercisable at $0.40 on or before 30 April 2015 1,160,000 9

Additional Shareholders’ InformationAs at 7 September 2012

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7. Top 20 Quoted ShareholdersShareholder Number of

sharesPercentage

heldCiticorp Nominees Pty Ltd 26,937,577 17.17 Jindalee Resources Limited 17,469,759 11.14 Grandor Pty Ltd 7,394,213 4.71 Mrs Stella Emily Downey 4,919,750 3.14 Mr Richard Barry 4,000,000 2.55 Canaccord Capital (Australia) Pty Ltd 2,785,500 1.78 KE & PW Holdings Pty Ltd 2,000,000 1.28 Bouta Pty Ltd 1,653,573 1.05 Wythenshawe Pty Ltd 1,600,000 1.02 Prodigy Management Pty Ltd 1,266,667 0.81 Novus Capital Limited 1,218,750 0.78 Denton Pty Ltd 1,200,000 0.77 Mrs Claire Elizabeth Arbuckle 1,002,500 0.64 Warramboo Holdings Pty Ltd 1,000,000 0.64 Ms Frances Johanna Schwarzbach 1,000,000 0.64 Bart Superannuation Pty Ltd 969,230 0.62 Wavet Fund No 2 Pty Ltd 922,500 0.59 Prince Family Pty Ltd 870,407 0.55 Zelia Pty Ltd 784,000 0.50 M C Donnelly Holdings Pty Ltd 769,230 0.49 79,763,656 50.85

Additional Shareholders’ InformationAs at 7 September 2012


PROJECT/Tenement

Holder JV Partner AlchemyEquity %

BRYAH BASIN E52/1668 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) E52/1678 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) E52/1722 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) E52/1723-I Alchemy Resources (Three Rivers) Pty Ltd 100 (2) E52/1730 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) E52/1731 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/1810 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/1852 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/1881 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/2360 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/2361 Alchemy Resources (Three Rivers) Pty Ltd 100 E52/2362 Alchemy Resources (Three Rivers) Pty Ltd 100 L52/116 Alchemy Resources (Three Rivers) Pty Ltd 100 L52/117 Alchemy Resources (Three Rivers) Pty Ltd 100 L52/118 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/685 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/722 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/723 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/737 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/753 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/795 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/796 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/797 Alchemy Resources (Three Rivers) Pty Ltd 100 M52/844-I Alchemy Resources (Three Rivers) Pty Ltd 100 M52/1049 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1167 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) P52/1168 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) P52/1195 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) P52/1196 Alchemy Resources (Three Rivers) Pty Ltd Jackson Minerals Pty Ltd 80 (1) P52/1199 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1200 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1314 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1315 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1316 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1317 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1318 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1320 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1321 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1322 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1323 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1327 Alchemy Resources (Three Rivers) Pty Ltd 100 P52/1365 Alchemy Resources (Three Rivers) Pty Ltd 100

MURCHISON E20/507 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E20/536 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E20/549 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3)

Tenement Schedule

80

PROJECT/Tenement

Holder JV Partner AlchemyEquity %

E20/594 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E20/667 Alchemy Resources (Murchison) Pty Ltd 100 E51/859 Alchemy Resources (Murchison) Pty Ltd 100 E51/1042 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E51/1044 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E51/1048 Alchemy Resources (Murchison) Pty Ltd Jindalee Resources Ltd 80 (3) E51/1225 Alchemy Resources (Murchison) Pty Ltd 100 E51/1226 Alchemy Resources (Murchison) Pty Ltd 100 E51/1326 Alchemy Resources (Murchison) Pty Ltd 100 P51/2623 Alchemy Resources (Murchison) Pty Ltd 100 P51/2632 Alchemy Resources (Murchison) Pty Ltd 100

Notes: (1) Jackson Minerals Pty Ltd retains a 20% interest free carried to decision to mine. (2) Excludes iron ore rights. (3) Jindalee Resources Limited retains a 20% interest free carried to decision to mine.

Tenement Schedule

Corporate Directory Corporate Directory

Alchemy Resources LimitedAnnual Report 2012

Directors Oscar Aamodt Non-Executive Chairman Sofia Bianchi Non-Executive Director Lindsay Dudfield Non-Executive Director Anthony Ho Non-Executive Director Company Secretary Bernard Crawford Registered & Principal Office Level 2, 72 Kings Park Road West Perth WA 6005 Telephone: (08) 9481 4400 Facsimile: (08) 9481 4404 Email: [email protected] Website: www.alchemyresources.com.au Auditors BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008 Bankers National Australia Bank 226 Main Street Osborne Park WA 6017 Share Registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233 Securities Exchange Listing The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: ALY

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Documents

Alchemy...4 Alchemy Resources Limited’s vision is to be a successful minerals explorer and subsequently a proﬁtable producer of metals with a portfolio of quality assets with opportunity