ABX GROUP LIMITED — Capital/Financing Update 2016

May 9, 2016

ASX ANNOUNCEMENT 10 May 2016

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High grade ABx maiden cargo. Payment completed on schedule.

Australian Bauxite Limited (ABx) is pleased to announce the high grades of its maiden cargo of 5,557 tonnes of cement-grade bauxite that was despatched from Bell Bay Port in northern Tasmania on 28 April 2016. Full payment has been received on schedule, thus concluding the first sale of bauxite from ABx’s Bald Hill mine - the first new bauxite project in Australia for more than 35 years.

Specifications of the shipped bauxite

The delivered product exceeded the offered specifications in line with our policy of under promising and over delivering: Sampling by independent experts has returned the following specifications:

Tonnage Shipped Moisture Powder less than 2.5mm Shippingspecification	5,557 gross metric tonnes 8.8% 8.0% of total shipload by weight Group C non-hazardous,stable. Triple confirmation	5,557 gross metric tonnes 8.8% 8.0% of total shipload by weight Group C non-hazardous,stable. Triple confirmation	5,557 gross metric tonnes 8.8% 8.0% of total shipload by weight Group C non-hazardous,stable. Triple confirmation
Major Elements Al2O3 SiO2 Fe2O3 TiO2 LOI - loss on ignition	Delivered 42.80% 4.46% 24.40% 2.72% 25.02%	Offered 42% 5.88% 24.80% 2.90% 24%	Improvement 0.80% 1.42% 0.40% 0.18% 1.02%

Complete specifications of the shipped cargo are included in the Appendix.

The customer’s preparations for the second shipment of 30,000 to 40,000 tonnes are progressing satisfactorily with the large stockpile site in the receiving port being set up to receive bauxite. This is planned to occur within 2 months. The sale price is satisfactorily profitable but remains commercial-in-confidence at this time.

Continuing sales will allow ABx to continue to fund the company’s growth from revenues, including the funding of research and development (R&D) into TasTech technology which allows ABx to separate Tasmanian bauxite into the 3 constituent product-types (see Figures 2 & 3):

1. High grade, ultra-cleaned metallurgical-grade bauxite for the aluminium industry;

2. Cement-grade bauxite for the manufacture of certified, high specification cement; and,

3. Fertiliser-grade bauxite for the fertiliser industry.

Due to the downturn in the market for metallurgical bauxite used in the aluminium industry, ABx has taken steps since December to conserve cash until its balance sheet strengthens from sales of cement-grade bauxite and other income. This includes a temporary suspension of production and haulage of bauxite products from its Bald Hill Bauxite Project at Campbell Town, Tasmania.

Once additional sales contracts are finalised, ABx and its contractors can reopen the Bald Hill Bauxite Project within two weeks. Rehabilitation work and sales of bauxite from existing stockpiles at the mine will continue and the mine can quickly ramp-up bauxite production without delay.

Negotiations with 3 new potential customers have commenced since the maiden shipment.

For further information please contact:

Ian Levy, CEO and MD Australian Bauxite Limited Telephone: +61 (0) 2 9251 7177 Mobile: +61 (0) 407 189 122

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About Australian Bauxite Limited

ASX Code ABX Latest News: www.australianbauxite.com.au

Australian Bauxite Limited (ABx) has started its first bauxite mine in Tasmania and holds the core of the Eastern Australian Bauxite Province. ABx’s 37 bauxite tenements in Queensland, New South Wales & Tasmania exceed 5,000 km[2] and were rigorously selected for (1) good quality bauxite; (2) near infrastructure connected to export ports; & (3) free of socio-environmental constraints. All tenements are 100% owned, unencumbered & free of third-party royalties.

ABx’s discovery rate is increasing as knowledge, technology & expertise grows.

The Company’s bauxite is high quality gibbsite trihydrate (THA) bauxite & can be processed into alumina at low temperature. ABx has declared large Mineral Resources at Inverell & Guyra in northern NSW, Taralga in southern NSW, Binjour in central QLD & in Tasmania confirming that ABx has discovered significant bauxite deposits including some of outstandingly high quality.

In Tasmania, at Bald Hill, the Company’s first bauxite mine commenced operations on schedule on 9 December 2014 – the first new Australian bauxite mine for more than 35 years.

ABx aspires to identify large bauxite resources in the Eastern Australian Bauxite Province, which is emerging as a globally significant bauxite province. ABx has created significant bauxite developments in 3 states - Queensland, New South Wales and Tasmania. Its bauxite deposits are favourably located for direct shipping of bauxite to both local and export customers.

ABx endorses best practices on agricultural land, strives to leave land and environment better than we find it. We only operate where welcomed.

Directors / Officers Paul Lennon Chairman Leon Hawker Chief Operating Officer Ian Levy CEO & MD Rob Williams General Manager Ken Boundy Director Jacob Rebek Chief Geologist Henry Kinstlinger Secretary

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Burnie Bell Bay Bridport
Scottsdale
Mining & screening
DL-130 Project DL-130Rubble Flat
Launceston
Nile Road Project
Fingal Rail Project Nile Road Project
Fingal Rail Project
Bald Hill Bauxite Mine Campbell Town Rail to port
Bald Hill Project
LEGEND
ABx Bauxite Lease Port stockpiling
Hobart
Major Export Port
Aluminium Smelter
Coal Mines
Major Roads
Rail Lines N
0 kilometres 100
Bell Bay bulk port
Figure 1
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Map showing ABx mines and transport infrastructure in Tasmania, Australia. Pictures show (top to bottom):

1. Simple open pit mining at Bald Hill Bauxite Project near Campbell Town, northern Tasmania;

2. High quality rail transport from the Bald Hill mine to the Bell Bay Port by TasRail;

3. Efficient, low-dust transfer onto the berth stockpile at Port by QUBE Ports stevedores; and

4. The port stockpile of ABx bauxite which currently exceeds 35,000 tonnes.

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TASMANIAN MINES ALUMINA
REFINERIES
TasTech
High grade trihydrate
Separation
gibbsite bauxite
35% - 50%
3% - 15% 30% - 40%
Fertiliser CEMENT
manufacture MANUFACTURE
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Figure 2

TasTech’s Role in ABx Marketing Strategy: TasTech is a low-cost, 3-stage physical process that separates Tasmanian bauxite into its 3 constituent product-types, namely:

1. High grade, ultra-clean metallurgical-grade bauxite for the aluminium industry;

2. Cement-grade bauxite for the manufacture of certified, high specification cement; and,

3. Fertiliser-grade bauxite for the fertiliser industry.

Qualifying statements

The information in this report that relates to Exploration Information is based on information compiled by Jacob Rebek and Ian Levy who are members of The Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Rebek and Mr Levy are qualified geologists and Mr Levy is a director of Australian Bauxite Limited. Mr Rebek and Mr Levy have sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Rebek and Mr Levy have consented in writing to the inclusion in the report of the Exploration Information in the form and context in which it appears.

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(1)
Metallurgical
Grade Bauxite
Al2O3 48.0%
SiO2 4.4%
Fe2O3 16.4%
45% TiO2 2.0%
TOC 0.13%
(2)
Low Grade Cement Grade
Feed Bauxite
40%
Al2O3 38.8% Al2O3 34.5%
SiO2 9.2% SiO2 5.6%
Fe2O3 21.8% Fe2O3 29.5%
TiO2 2.6% 3% TiO2 2.8%
TOC 0.18% TOC 0.18%
TOC = total organic carbon
(3) Fertiliser Grade
Bauxite
Al2O3 32.5%
SiO2 18.1%
Fe2O3 24.9%
TiO2 3.7%
TOC 0.24%
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Mixture of the 3 bauxite types can be seen in this image of the maiden cargo. Largest lumps are approximately 100 to 115mm

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Figure 3

Recent test results from TasTech separation of bauxite from Bald Hill into its 3 constituent product-types, namely:

1. High grade, ultra-clean metallurgical-grade bauxite for the aluminium industry;

2. Cement-grade bauxite for the manufacture of certified, high specification cement; and,

3. Fertiliser-grade bauxite for the fertiliser industry.

TasTech can adjust settings to produce certified bauxite products to suit the customers’ specifications.

For further information please contact:

Ian Levy, CEO and MD Australian Bauxite Limited

Telephone: +61 (0) 2 9251 7177 Mobile: +61 (0) 407 189 122

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Appendix

Bauxite Specifications as Shipped

Bauxite Specifications as Shipped	Bauxite Specifications as Shipped
Tonnage Shipped Moisture Powder less than 2.5mm Shippingspecification		5,557 gross metric tonnes 8.8% 8.0% of total shipload by weight Group C non-hazardous,stable. Triple confirmation
Major Elements Al2O3 SiO2 Fe2O3 TiO2 LOI - loss on ignition		Delivered 42.80% 4.46% 24.40% 2.72% 25.02%		Offered 42% 5.88% 24.80% 2.90% 24%		Improvement 0.80% 1.42% 0.40% 0.18% 1.02%
Minor & Trace Elements CaO MgO SO3 Na2O K2O MnO P2O5 V2O5 SrO Cr2O3 Zn ZrO2		0.02% 0.06% 0.31% 0.02% 0.01% 0.03% 0.03% 0.06% 0.01% 0.06% 0.01% 0.03%
Metallurgical bauxiteparameters
Reactive "Rx" SiO2at 140 deg C		3.92%		: . Quartz content= 0.54%
Available "Avl" Al2O3at 140 deg C		36.6%
Non-available, non-clay Al2O3 2.88% in spinel, minor in goethite & trace as boehmite Total organic carbon (TOC) < 0.15% Rapid settling in refinery liquors and red mud tailings Excellent refinery liquor clarities with low flocculent required. Helps reduce frothing in circuit Contains no radioactive or fibrous components. Clean handling, ideal for transport on land or sea. See https://www.youtube.com/watch?v=tqSNioU9gEc. High angle of repose (35 to 45 degrees) in stockpiles Bulk densityin stockpile 1.35 to 1.40 tonnesper broken cubic metre
Cement-grade bauxiteparameters
Sodium Equivalence 0.03% Alumina Ratio "AM" 1.75 Silica Ratio "SM" 0.07 C3A(tricalcium aluminate) 72.14% C4AF (tetracalcium aluminoferite) 74.25% Contains no radioactive or fibrous components. Clean handling, ideal for transport on land or sea. See https://www.youtube.com/watch?v=tqSNioU9gEc. High angle of repose (35 to 45 degrees) in stockpiles Bulk densityin stockpile 1.35 to 1.40 tonnesper broken cubic metre
Particle size distribution "PSD" and	moistures from 25 Sub-Lot samples(1 sampleper 200 tonnes) ABx Laboratory Briar Maritime Laboratory ALS Laboratory Burnie Tas. Agreed Values (Maximum) 8.0% 6.3% -- 8.0% 8.5% 7.4% 8.8% 8.8%
Moisture & PSD determinations done in 3 separate laboratories	ABx Laboratory		Briar Maritime Laboratory		ALS Laboratory Burnie Tas.		Agreed Values (Maximum)
Powder less than 2.5mm	8.0%		6.3%		--		8.0%
Moisture	8.5%		7.4%		8.8%		8.8%