Geological and Structural Setting

The Polelle Project comprises three granted Exploration Licences (E51/1225, E51/1226 and E51/1042) one Exploration Licence application (E51/1326) and two Prospecting Licence Applications (P51/2523 and P51/2632). E51/1225 and E51/1226 were recently granted on 22 May 2009.

The Project covers a section of the Meekatharra-Wydgee greenstone belt at the eastern margin of the Norie Pluton. The regionally extensive Mt Magnet Shear Zone extends NNW through the centre of E51/1225 and E51/1226. A smaller granitic intrusion is situated in the south-central portion of E51/1225. On a local scale, the geology comprises foliated ultramafics, high Mg basalts and intermediate volcanics which are folded and form the Polelle Syncline. The axis of the syncline extends NNW immediately east of the tenements, and is displaced in places by small scale NE trending faults. Major deposits including Meekatharra, Bluebird, Caledonian and the Reedy’s deposits are located on splays off the Mt Magnet Shear Zone along the western margin of the Norie Pluton. Burnakura, Quinns and Ridgeback (now Silver Swan’s Austin prospect) are all located south of the Polelle tenements.

The Polelle Project area has all of the critical elements seen in similar settings of nearby gold deposits to also host a significant gold deposit including a nearby mafic group granite, Mt Magnet Shear Zone and small scale crosscutting faults, BIFs and dolerites).

Gold Mineralisation and Planned Exploration

Gold mineralisation at Polelle is associated with quartz veins and stockworks hosted by sheared ultramafic rocks, altered mafic rocks and quartz-feldspar porphyry. The Polelle tenements are surrounded by over 1,000km² of Mercator Gold tenements. Approximately 4 million ounces of gold has been produced from the area which contains four historic mining centres at Yaloginda, Paddy’s Flat, Nannine and Reedy. The blind Mulla Mulla prospect (on Mercator Gold tenements) lies on the intervening ground between E51/1225 and E51/1226 (Figure 3). Best intercepts at Mulla Mulla include 6m @ 4.02g/t Au from 137m (MMRC3), 19m @ 2.32g/t Au from 91m (MMRC4).

Several drill holes at Polelle have returned significant gold drill intercepts yet have received no systematic follow-up, including one RC fence which is open for over 6km of strike. A total of 59 RC holes and 21 aircore holes have been drilled in the Project area, none of which exceeds 100m depth. The focus of Alchemy’s exploration on the Polelle Project is for ductile shear hosted gold mineralisation within pervasive alteration halos in sheared ultramafic schists (comparable to the Reedy’s and Big Bell gold deposits) and brittle lode mineralisation within splays off the Mt Magnet Shear Zone at the intersection of strong but brittle rock units.

Alchemy has undertaken a large-scale, wide-spaced soil and rock geochemical sampling program across E51/1225 and E51/1226. Samples were analysed for a suite of elements to enable geochemical trends, alteration halos and major rock type differences to be highlighted. Drill targets have been designed based on the results of this program and the interpretation of reprocessed aeromagnetics.

Drilling to test a number of gold targets will be undertaken in 2010.