Geological and Structural Setting

The Wydgee Project comprises two granted Exploration Licences (E51/1048 and E20/549), two Exploration Licence Applications (E20/610 and E20/702) and three Prospecting Licence Applications covering a total area of over 130 km² and is located approximately 40km northwest of Cue.  The Project lies to the southeast of the Weld Range Greenstone Belt and covers a structurally complex package of coarse clastic sedimentary rocks and finer grained, felsic volcaniclastic sedimentary rocks of the Ryansville Formation and komatiitic basaltic rocks of the Wattagee Formation, which are within the c. 2720Ma Glen Group. Thick differentiated mafic-ultramafic sills are associated with the komatiitic basalts of the Glen Group and are exposed along the eastern margin of the Project area.

Isoclinal east-west trending synclines have been mapped to the west, south and north of the Project area. A large, open, southwest plunging syncline mapped to the north of the Project area displays evidence of overprinting north-striking foliations and folds. Within the Project area numerous faults and shear zones trending NNW and dipping steeply west have been mapped. Structural mapping within the shear zones indicates reverse movement on faults. A major northeast-southwest fault truncates stratigraphy along the eastern margin of the Project area and is interpreted to represent the contact of the Glen Group overlying the basal Polelle Group.

Gold Mineralisation and Planned Exploration

Shallow historic pits and small shafts are located at the Laterite Hill, MacGuires Reward and Yallon Well prospects within the Project area where gold is hosted in north-south trending quartz veins within strongly altered and sheared basalts and altered felsic sediments within NNW shear zones. The Hercules gold mine is located just west of the Project area within the Weld Range and produced 88 kilograms of gold from 7,273 tonnes of ore in the early 1900s. Mineralisation occurs near the edge of circular bodies of high level granite porphyry that intrude the edges of the Weld Range Greenstone Belt. Exploration in the variably thick transported soils which cover 75% of the Wydgee Project has hindered past explorers. Exploration has predominantly involved ineffective wide spaced, shallow drilling on the Laterite Hill and Mustang Sally prospects which lie within E51/1048. Exploration beneath the soil cover in these areas is incomplete. The Mustang Sally Prospect is a large coincident gold, copper, arsenic and antimony anomaly located in the south central part of the Project area hosted in weathered shale, minor mafic rocks and quartz-feldspar porphyry. Mustang Sally has been the subject of shallow drilling in the past with best intersections of 13m @ 0.6g/t Au from 89m (hole:MS256_4) and 23m @ 0.53g/t Au from 41m (hole: MS264_5). Conversely, the area covered by E20/610 and E20/549 remains completely untested by drilling.

Alchemy has undertaken reconnaissance aircore drilling, geological mapping and a 3D structural interpretation based on reprocessed aeromagnetic data to enhance the structural understanding of the Mustang Sally Prospect. The area was found to be complexly folded and dominated by asymmetric sheared synforms comprising predominantly sediments, undifferentiated mafic rocks and dolerites. The new target area for this prospect lies to the north of the historic drilling, where an interpreted antiform extends south and intersects an interpreted overturned synform. The junction of these structures is a potential trap for gold mineralisation. A folded ultramafic unit is interpreted to extend south (towards the location of the historic drilling) in a 'V' shape and the trend of this unit parallels the trend of the gold  mineralised corridor in the northern cluster of historic drilling. The N-S trend to gold mineralisation may be related to the fold axis of the antiform, and the trap site may be at the junction of the fold axis and the overturned synform to the north or northeast of the historic drilling area. The Mustang Sally Prospect and a number of targets within the Wydgee Project area will be drill tested in 2010.