The ace was the fifth of his career, but the first at a professional tournament.
"It was a straight forward shot - a wedge down the hill. The ball has been getting to that green quick over the last couple of days.
"I took a bit off the wedge, landed it a foot past the hole and it spun back.
"One of the boys called it two to three seconds beforehand."
Flanagan is three shots adrift of fellow Australians Terry Pilkadaris and Callan O'Reilly who lead the field at 15-under par through two holes today.
Pilkadaris is chasing his first title in 13 years.
O'Reilly set a course record at The Hills yesterday with an 11-underpar round of 61.
Nick Voke is the best of the New Zealanders today.
He is four-under par through 10 holes to be 13-under overall, one shot behind fellow Kiwis Harry Bateman, Tim Wilkinson and Mark Brown.
Brown completed a five-under par round of 66.