ABX GROUP LIMITED — Capital/Financing Update 2009

Dec 16, 2009

AUSTRALIAN BAUXITE LIMITED ASX:ABZ

Supplementary Prospectus

Dated 17 December 2009

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the replacement prospectus dated 28 October 2009 (Replacement Prospectus).

It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.

Neither the ASIC nor ASX take any responsibility for the content of this Supplementary Prospectus. A copy of this Supplementary Prospectus was lodged with the ASIC on 17 December 2009.

ADDITIONS TO THE REPLACEMENT PROSPECTUS

This Supplementary Prospectus has been prepared:

• to provide details of a waiver to Listing Rule 5.6 granted by the ASX with respect to the reporting of historical tonnage figures, where this information was prepared many years before the JORC Code was implemented;

• to provide information in relation to targets for drilling programmes where the targets should have been detailed as 'ranges' rather than concise figures;

• to provide sufficient information in relation to samples to ensure that the information can be interpreted in context; and

• to include a competent person’s statement accepting responsibility for the accuracy of the geological information presented.

On 25 November 2009 ABx sought a waiver from the ASX with respect to the provisions of Listing Rule 5.6.

Listing Rule 5.6 requires a report prepared by a mining entity to be prepared in accordance with the JORC Code if the report includes a statement relating to exploration results and/or mineral resources or ore reserves. The Replacement Prospectus includes such statements.

NON-JORC CODE COMPLIANT HISTORICAL REPORTING

On page 16 of the Replacement Prospectus the following statement is made in relation to a historical tonnage estimate reported by the Australian Bureau of Mineral Resources:

Tonnage estimates made up to 1954 were relatively modest. According to H. B. Owen (Bauxite in Australia, Bureau of Mineral Resources Bulletin no. 24), in 1954 the largest known bauxite deposit was Parish’s:

• 4,755,000 long tonnes averaging 3.2% SiO2, 38.6% Al2O3, 30.1% Fe2O3, 5.0% TiO2, 33.7% Available Al2O3 (=Al2O3 soluble in 10 percent NaOH solution boiling at atmospheric pressure).

And on page 28 of the Replacement Prospectus:

Tonnage estimates made in the period up to 1954 were relatively modest. According to H. B. Owen [Bauxite in Australia, Bureau of Mineral Resources Bulletin no. 24], in 1954 the largest known bauxite deposit was Parish’s: 4,755,000 long tonnes averaging 38.6% Al2O3, 33.7% available Al2O3 [Al2O3 soluble in 10% NaOH solution boiling at atmospheric pressure], 3.2% SiO2, 30.1% Fe2O3 and 5.0% TiO2.

AUSTRALIAN BAUXITE LIMITED ACN 139 494 885 Level 2 Hudson House 131 Macquarie Street Sydney NSW 2000 P: +61 2 9251 7177 F: +61 2 9251 7500

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To satisfy the requirements for non-JORC Code Compliant Historical Reporting, the following information is provided:

1. The historical estimate is not reported in accordance with the JORC Code and it is uncertain that following evaluation and/or further exploration the resource or reserve will ever be able to be reported in accordance with the JORC Code.

2. The estimate was made between 1945 and 1952.

The full citation of the source of the estimate is:

OWEN HB, Bauxite in Australia, Commonwealth of Australia, Department of National Development, Bureau of Mineral Resources, Geology and Geophysics, Bulletin No 24, 1954, issued under the Authority of Senator the Hon. WH Spooner, Minister for National Development pp 53 – 55; plates 5 & 6.

1. The historical tonnage estimates are considered relevant because;

2. a. they were conducted by highly competent professionals under government supervision and authority;

3. b. bauxite had previously been discovered by others in the mid 20[th] century and that the target area reported by them lies entirely within the ABx tenements;

4. c. the bauxite was proven to be relatively thick by the historical pits.

This was based on pit tests and channel sampling methods that were more rigorous and conservative methods of bauxite evaluation than modern day drilling which, for cost and environmental reasons is now the norm for bauxite resource drilling; and

• d. At the time the historic estimates were made it “constitutes the largest proved body of bauxite in Australia”.

• The work was conducted by the Bureau of Mineral Resources, Geology and Geophysics (Bureau) and the Aluminium Commission. This work consisted of very thorough testing by shaft-sinking and boring. A total of 343 shafts and bores were sunk on the deposit, including many sunk through the younger basalt into laterite or bauxite. The grade and tonnage were calculated from results obtained by sampling 177 shafts and bores which gave positive results.

The work was done under a government mandated and supervised programme. The source publication details at length the testing methodology used, which was to the highest standard and conformed to the Bureau standards for exploration.

The historical reports are exhaustively detailed and rigorous.

1. The historical tonnage estimates were material information because they were part of the discovery history of the deposit and they represent independent, third-party confirmation of the unusually large thicknesses of this particular bauxite occurrence which is at least twice the thickness of the bauxite being mined at Weipa today.

In early 2009 an air-core drilling programme was conducted over the historical resource area, consisting of 83 drillholes totalling 1,600 metres, sampled at 1 metre intervals (this program was reported to the ASX in a form complying with the JORC code on 31 July 2009). The drilling program was supervised by a major consulting firm and assay samples were certificated by ALS Chemex (Australian Laboratory Services Pty Ltd), which is a NATA-registered commercial laboratory that has expertise in bauxite analyses. The first stage programme confirmed the bauxite deposit dimensions and tonnages in the area previously assessed by the historical pits.

Exploration and drilling reported to the ASX by Hudson Resources in compliance with JORC reporting standards shows that the bauxite layer has been found to extend well beyond the area pitted historically.

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the Replacement Prospectus dated 28 October 2009 (Replacement Prospectus). It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.

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Therefore, the pit estimation of the resource is considered valid and meaningful in the areas tested.

1. The historical tonnages are simply statements of tonnes and deposit details. If reported today, they would most probably have been called Inferred Resources as defined in the JORC Code.

2. The early indication from geostatistical work done on modern drill data is that the current drill program may be sufficiently close-spaced to classify some of the new resource estimates as Indicated Resources but the bulk will probably also be classified as Inferred Resources.

The only work that has been completed to JORC Code reporting standards is that reported to the ASX on 31 July 2009. The highlight summary stated:

An initial wide spaced scoping drilling programme (total of 83 shallow holes for 1,600m) was completed. Extensive tabular unit of bauxite covering an area of 2.5 km x 0.8 km were identified. The bauxite layer varies from 4m to 9m thick with an average thickness of around 7m from surface.

Screened Al2O3 grades within the bauxite zone average about 41.8% Al2O3 and 4.1% SiO2 (+1.2mm fraction).

A recovery of +1.2mm fraction of at least 50% and potentially more than 75% is expected after simple washing and screening; further tests on undisturbed samples from test pits are planned to determine optimal screen size and recovery.

Modern drilling of 118 drillholes totalling 1,773 metres of drilling that was sampled at 1 metre intervals under supervision of a major consulting firm and analysed in the NATA-registered ALS Laboratories in Brisbane has confirmed the bauxite deposit dimensions and tonnages in the area previously assessed by the historical pits.

1. ABx is in the process of conducting a JORC Code compliant resource estimation on parts of EL 6997 (Inverell), which includes the historical reporting area. This, however will not be completed until:

2. a. funds are available from the IPO to conduct the programme as detailed in Section 5 of the Replacement Prospectus;

3. b. geostatistical studies are finalised;

4. c. personnel are available to peer-review; and

5. d. the report is finalised ready for publication as a JORC-compliant resource statement.

Barring any unforseen obstacles and assuming availability of key personnel, further estimates should be completed within 3 or 4 months.

Mr Ian Levy (whose background is detailed in Section 7 of the Replacement Prospectus) will take responsibility for the estimates of Mineral Resources or Ore Reserves in order that may be reported in accordance with the JORC Code.

1. The inclusion of the historical tonnage estimates in the Replacement Prospectus are consistent with the guidance contained in the ASX Companies Updates numbered 11/07 and 05/04.

TARGET SIZE AND TYPE

Statements made in the Replacement Prospectus that relate to exploration target size are only approximate statements.

The potential quantity and grade is conceptual in nature, and there has been insufficient exploration to date to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

Such statements are based on the knowledge and experience of the responsible geologists and have been reviewed by independent geologists.

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the Replacement Prospectus dated 28 October 2009 (Replacement Prospectus). It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.

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The following statement on page 41 of the Replacement Prospectus:

“The objective of the second drilling programme will be to prove up a resource of at least 10 million t of high quality bauxite.”

is hereby deleted and replaced with:

“The objective of the second drilling programme will be to prove up a resource of between 7.5 million tonnes and 10 million tonnes of raw unprocessed bauxite.

“Subject to the results of the first drilling program, where the potential tonnage range is listed in the following table, based on best estimates of aerial extent and probable bauxite thickness but which cannot be guaranteed.

“Based on more than 80 samples as summarised in the table on page 41 (Summary of Windellama/Bungonia Bauxite Data) , the potential tonnage range is expected to contain between 34-51% available Al2O3 and 0.8-2.6% reactive silica.”

The following table on page 42 of the Replacement Prospectus:

TARGET	No	Holes	Holes	Meters	Potential tonnes
NAME	Holes	first Stage	second Stage	Total	Million
Bald Hill	4	4	0	40	0.25
Hawkes Lane Hill	6	3	3	60	0.5
Cows - Firewood – One
Tree Hill	25	12	13	250	1.5
Silage	9	4	5	90	0.75
Doctor’s Bush	9	9	0	90	2
Norm’s Bush	7	4	3	70	0.75
Dead Tree	9	6	3	90	0.75
Ploughed Field	6	4	2	60	1
	75	46	29	750	7.5

is hereby deleted and replaced with

TARGET	No	Holes	Holes	Meters	Al2O3 avl %	Al2O3 avl %	Rx SiO2 %	Rx SiO2 %	Potential available bauxite millions tonnes	Potential available bauxite millions tonnes
NAME Bald Hill Hawkes Lane Hill Cows - Firewood – One Tree Hill Silage* Doctor’s Bush Norm’s Bush	Holes 4 6 25 9 9 7	first Stage 4 3 12 4 9 4	second Stage 0 3 13 5 0 3	Total 40 60 250 90 90 70	From	To	From	To	From 0.25 0.50 1.50 0.75 2.00 0.75	To 0.40 0.75 1.75 1.00 2.25 1.00
					48.80	50.70	1.70	1.70
					34.40	46.00	3.46	6.93
					34.80	41.00	1.00	2.60
					34.80	41.00	1.00	2.60
					49.40	50.10	1.90	3.00
					28.00	28.30	0.70	0.80
* Assay range is an estimate based on Cows - Firewood - One Tree Hill targets which is similar in presentation (sparse lumps of bauxite in red soil on a gentle mesa-type rise).

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the Replacement Prospectus dated 28 October 2009 (Replacement Prospectus). It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.

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The following statement on page 49 of the Replacement Prospectus:

“The Pechey/Geham target areas, each with dimensions of around 10 to16 sq km, could host more than 50 million cubic metres of bauxite and can be tested by about 20 holes drilled to a depth of 10m, to obtain data for analyses for alumina, silica, iron oxide and loss on ignition, followed by specialist analyses to determine total and available alumina, total and reactive quartz, loss on ignition and other analyses as required in bauxite search. Preliminary resource estimation will then be possible.”

is hereby deleted and replaced with:

“The Pechey/Geham target areas, each with dimensions of around 10 to16 sq km, could host between 40 million and 60 million cubic metres of raw unprocessed bauxite with from 28%-45% available Al2O3 and 1.5%-5% reactive silica and can be tested by about 20 holes drilled to a depth of 10m, to obtain data for analyses for alumina, silica, iron oxide and loss on ignition, followed by specialist analyses to determine total and available alumina, total and reactive quartz, loss on ignition and other analyses as required in bauxite search. Preliminary resource estimation will then be possible to determine the prospect of economic extraction and subsequent processing. The deposit may not become economically extractable.”

The following statement on page 51 of the Replacement Prospectus:

“The southeastern Binjour Plateau has dimensions of 9 km by 2 km, which means a prospective area of more than 10 sq km. If half of the target area is underlain by a 5m layer of cemented bauxite, a potential for more than 50 million cubic metres of bauxite may exist.”

is hereby deleted and replaced with:

“The southeastern Binjour Plateau has dimensions of 9 km by 2 km, which means a prospective area of more than 10 sq km. If half of the target area is underlain by an average thickness of 5m of cemented bauxite, there is a potential to host between 40 million and 60 million cubic metres of raw unprocessed bauxite containing 35%-50% total Al2O3.” Current work on other bauxite tenements indicates that a 5m thick of bauxite layer is not uncommon .However, until tested It is not possible to determine the prospect of economic extraction and subsequent processing.”

SAMPLE INTERPRETATION

Pages 24 and 25 of the Replacement Prospectus contain summary sampling information.

This information is prefixed with the statement:

“The following summary of the bauxite mineralisation has been determined by hand-sampling in most instances, with limited systematic surface and drill sampling recorded in some areas as noted.”

The summary was extracted from the Geological Review of ABx Projects section of the Independent Technical (Geologist) Report and should not be read in isolation. The samples should only be interpreted in the context of the review of each tenement which includes the sampling type, intervals and methods (where applicable).

Reported sampling locations and distribution can be determined from the maps included in each tenement review where new bauxite discoveries are identified. The report summarises those sample data into a typical range of results, as determined by the Independent Expert.

In excess of 4,000 samples have been tested over the ABx Project Tenements.

QUALIFYING STATEMENT

Except where otherwise stated, the information in the Replacement Prospectus and this Supplementary Prospectus that relates to the Project were prepared by Mr Jacob Rebek. Mr Rebek is a director of ABx and

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the Replacement Prospectus dated 28 October 2009 (Replacement Prospectus). It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.

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has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration.

Mr Rebek is a Member of the Australian Institute of Mining and Metallurgy. He has sufficient experience which is relevant to the type of deposits 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.

Mr Rebek has consented in writing to the inclusion in the Replacement Prospectus and this Supplementary Prospectus of the matters based on this information in the form and context in which it appears.

CONSENT

Terrence Willsteed & Associates has consented in writing to the inclusion in this Supplementary Prospectus of the amendments to the Independent Technical (Geologist's) Report on the ABx Project Tenements in which ABx has an interest in the form and context in which it appears and at the time of lodgement of this Supplementary Prospectus with ASIC have not withdrawn that consent. It takes no responsibility for any part of the Prospectus other than the Independent technical (geologist's) report.

DIRECTORS’ AUTHORISATON & RESPONSIBILITY STATEMENT

The Directors of the Company who authorised the issue of this Supplementary Prospectus accept responsibility for the information contained in this Supplementary Prospectus.

In accordance with Section 720 of the Corporations Act, each Director has consented to the signature, issue and lodgement of this Supplementary Prospectus and has not withdrawn that consent before lodgement.

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Peter Meers

Director For and on behalf of Australian Bauxite Limited

This is a supplementary prospectus dated 17 December 2009 prepared by Australian Bauxite Limited (ABx) (Supplementary Prospectus) to the Replacement Prospectus dated 28 October 2009 (Replacement Prospectus). It supplements, and should be read together with, the Replacement Prospectus. Unless the context otherwise requires, terms defined in the Replacement Prospectus have the same meaning when used in this document.