ABX GROUP LIMITED — Interim / Quarterly Report 2011

Oct 30, 2011

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ABx Pic of the Quarter
Bauxite fields forever...
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AUSTRALIAN BAUXITE LIMITED

ASX: ABZ

QUARTERLY REPORT

Quarterly Activities Statement period ending 30 September 2011

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Darren Fermor (Furry) : Senior field
assistant collecting samples at
Binjour.
Photo: Brian Roach
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About Australian Bauxite Limited: ASX Code ABZ

Australian Bauxite Limited (ABx) holds the core of the newly discovered Eastern Australian Bauxite Province. Its 37 bauxite tenements in Queensland, NSW and Tasmania covering 8,500 km[2] were rigorously selected on 3 principles:

This quarterly activities statement is dated 31 October 2011 and is for the three months ending 30[th] September 2011.

1. good quality bauxite;

PRINCIPAL POINTS

1. proximity to infrastructure connected to export ports; and,

Corporate

1. free of socio-environmental or native title land constraints.

MOU signed with Marubeni Corp of Japan (a significant & highly respected participant in the global aluminium industry) to jointly conduct a Pre-Feasibility Study (PFS) in relation to the Goulburn-Taralga Project, NSW.

All tenements are 100% owned and free of obligations for processing and third-party royalties. ABx has already discovered many bauxite deposits and new discoveries are still being made as knowledge and expertise grows.

Exploration

The company’s bauxite is high quality and can be processed into alumina at low temperature – the type that is in short-supply globally. Global resources declared to date total 84 million tonnes. At the company’s first drilling prospect in Inverell, northern NSW, an interim resource of 35 million tonnes[1] has been reported from drilling 15% to 20% of the area prospective for bauxite and a resource of 25 million tonnes[2] of bauxite has been reported at the Taralga project in southern NSW. 6 million tonnes maiden resource was declared at Guyra[3] . A 16.8 million tonnes[4] maiden resource has been declared at the Binjour Plateau in central QLD, confirming that ABx has discovered a significant bauxite deposit including some bauxite of outstandingly high quality. Australian Bauxite Limited aspires to identify large bauxite resources in the Eastern Australian Bauxite Province, which is emerging as one of the world’s best bauxite provinces.

• Company global bauxite resources grow to 84 million tonnes (Figure 1).

• Binjour, QLD: Maiden JORC resource of 16.8Mt, comprising 39% Avail Al2O3 and 3.1% Reactive SiO2, with an A/S ratio of 12.7 (high grade)[4] .

• Guyra NSW: Maiden JORC resource of 6Mt, comprising 36.5% Avail Al2O3 and 2.3% Reactive SiO2, with an A/S ratio of 15.8 (in close proximity to Inverell)[3] .

Tenements Granted

Guyra Extension, NSW

EL 7824 was granted on 24 August 2011 for a period of 2 years. It covers an area of 288 sq kms and is being explored as an extension to the Guyra resource.

New Applications

ABx has the potential to create significant bauxite developments in three states - Queensland, New South Wales and Tasmania. Its bauxite deposits are favorably located for direct shipping of bauxite to both local and export customers.

Merriwa Extension, NSW

ELA 4398 was lodged on 7 October 2011 covering 88 units (264 sq kms) located 33 kms east-northeast of Ulan, NSW.

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

The tenement applications are contiguous to EL 7361.

The geological setting is similar to that of EL 7596 -7598.

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

Quarterly Activities Report – September 2011 Page 2

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Taralga 2[nd] Extension, NSW

Application ELA 4323 was lodged on 14 July 2011 covering 102 units (306 sq kms) and is considered to be an extension of the Taralga resource.

Taralga 3[rd] Extension, NSW

Application ELA 4350 was lodged on 15 August 2011 covering 103 units (309 sq kms) and is also considered to be an extension of the Taralga resource.

Tenement Status

Tenements are 100% in good standing.

CORPORATE

Register snapshot

On 30[th] September 2011, ABx had 100,592,337 ordinary shares on issue and 10,320,000 options.

Trading summary

During the September quarter the total market trade value was $1,434,000, with 379 trades (average value per trade was $3783). 2.64 million shares were traded – the VWAP for the September quarter was 54.35 cents.

Chinese Bauxite Statistics

The Chinese bauxite import statistics for the month of September 2011 show another record month with imported tonnage of bauxite being 37% more than last year at 4.48 million tonnes for the month ( Figure 2 ).

The price of Australian bauxite imported into China has risen to US$57.23/tonne CIF. Prices for ABxquality bauxite are significantly higher than for currently exported Australian bauxite.

MOU with Marubeni Corporation

ABx and Marubeni Corporation (Marubeni) concluded a Memorandum of Understanding to jointly conduct a pre-feasibility study at the Goulburn-Taralga bauxite project located in New South Wales, Australia. Marubeni will contribute 35% toward the Pre-feasibility funding, estimated to be $1.5 million.

A 25 million tonne bauxite resource has already been declared at Taralga[2] .

ABx will conduct the pre-feasibility study with participation by Marubeni, to investigate the market for bauxite and other credits produced from the Goulburn-Taralga bauxite project. At the completion of the pre-feasibility study Marubeni can elect to acquire a 35% joint venture interest in the Goulburn-Taralga bauxite project and to contribute 35% of the bankable feasibility and development costs. Marubeni will assist in arranging the finance for the first bauxite project.

	New South Wales
	ABx1 Pty Ltd	Project	Km2
	EL 6997	Inverell	297
	EL 7268	Pindaroi	138
	EL 7361	Guyra	300
	EL 7824	Guyra Extension	288
	EL 7596	Merriwa - 1	75
	EL 7597	Merriwa - 2	639
	EL 7598	Merriwa-3	558
	ELA 4398*	Merriwa Extension	264
	ELA 4252*	Glencoe	300
	ELA 4312*	Stannifer	294
	ABx2 Pty Ltd
	EL 7269	Windellama	270
	EL 7279	Wingello West	21
	ELA 4038*	Wingello Extended	39
	EL 7357	Taralga	300
	EL 7681	Taralga Extension	300
	ELA 4323*	Taralga 2nd Ext	306
	ELA 4350*	Taralga 3rd Ext	309
	EL 7601	Bungonia	276
	EL 7546	Penrose	33
			5,007
	Queensland
	ABx3 Pty Ltd
	EPM 17790	Hampton	336
	EPM 17800	Red Hill	144
	EPM 17801	Red Hill South	150
	EPM 17830	Haden	264
	EPM 17831	Hillgrove	267
	EPM 18014	Binjour	150
	EPM 18772	Binjour Extension	123
	EPM 19169	Tellebang	150
	TBA*	Brovinia	147
			1,584
	Tasmania
	ABx4 PtyLtd
	EL 4/2010	Evandale	197
	EL 5/2010	Powranna	234
	EL 6/2010	Cleveland	209
	EL 7/2010	Conara	238
	EL 9/2010	Deloraine	224
	EL 14/2010	Myalla	80
	EL 37/2010*	Westbury	237
	TBA*	Sassafras	250
			1,669
	*Application		8,260

Quarterly Activities Report – September 2011 Page 3

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EXPLORATION

Exploration during the September quarter was focused on resource definition drilling at Guyra (NSW) and Binjour (QLD), which together with the NSW Goulburn assets represent the making of 3 significant projects.

GUYRA, NSW (EL 7631)

6 Million Tonnes Maiden Resource: HighGrade Bauxite[3]

• Resource is based on 71 first-pass exploration holes that intersected a thick bauxite layer that is concealed beneath a thin surface clay horizon.

• 87% of the 71 bauxite intercepts were a superior quality bauxite suitable for sweetening circuits in refineries. It is termed “Brown Sugar” bauxite.

• The deposit sits next to a rail siding on a recently decommissioned rail line.

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A thick layer of bauxite lies near surface beneath a thin clay horizon. Results from 71 holes into the bauxite include some exceptionally high grade, thick gibbsite bauxite, ideal as a “sweetener” to any bauxite refinery. ABx refers to such high grade bauxite as “Brown Sugar” which commands a large price premium.

Resource estimates after application of cut-off grades for the drilled resource areas on the initial deposits tested at Guyra are summarised as follows:

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Resource category	Tonnes millions	Thick- ness	Over- burden	Al2O3 Avl % Rx SiO2 % Avl/Rx Ratio	Al2O3 % SiO2 % A/S Ratio Fe2O3 % TiO2 % LOI %	Yield %
Inferred Indicated	2.3 3.8	4.2 m 5.9 m	3.4 m 4.4 m	35.0 2.8 12.5 37.4 2.0 18.3	41.4 3.6 11.6 26.2 3.3 24.6 43.1 2.6 16.3 27.3 3.9 24.5	56% 61%
TOTAL	6.0 Mt	5.3 m	4.0 m	36.5 2.3 15.8	42.5 3.0 14.3 26.9 3.7 24.5	59%

Cut-off grades applied: Minimum 30% Al2O3, 2m thickness, 45% yield. Maximum strip ratio (metres overburden:bauxite) 3:1. Leach conditions to measure available alumina "Al2O3 Avl" & reactive silica "Rx SiO2" is 1g leached in 10ml of 90gpl NaOH at 143 degrees C for 30 mins. "Avl/Rx" ratio is (Al203 Avl)/(Rx SiO2). Values above 10 are excellent. "A/S" ratio is Al203/SiO2. Tonnage is for bauxite in-situ. Yield is for screening all samples at 0.26mm. The significant tonnages requiring no upgrade will have 100% yield.

The deposit lies at surface, commonly on topographic high points which have been cleared for grazing but left uncultivated because of the poor soil that develops on bauxite.

The bauxite is relatively consistent in quality as demonstrated by the fact that 87% of the 71 bauxite intercepts) are “Brown Sugar” bauxite, being a superior quality, low silica, gibbsite bauxite suitable for sweetening circuits in refineries.

Logistical setting and relationship with Inverell Bauxite Project

The Guyra bauxite is adjacent the standard gauge rail line connecting Guyra to Armidale, Werris Creek and thence to the heavy-duty rail to Newcastle minerals export port. Operations of the Guyra-Armidale rail leg has recently been decommissioned after being used for logging transport.

Guyra is located near the company’s Inverell and Pindaroi bauxite deposits (see Figure 1) and may provide sufficient tonnages to justify a major bauxite project in northern NSW.

Review of Environmental Factors

A Review of Environmental Factors (REF) has been approved by the Department of Industry and Investment so that more intensive exploration drilling can be undertaken.

Quarterly Activities Report – September 2011 Page 4

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Further work planned

The bauxite deposit is open in many locations and many other deposits have been identified. Follow-up drilling of the Guyra discovery is being scheduled over the coming months in line with the REF.

BINJOUR, QLD (EPM 18014)

16.8 Million Tonnes Maiden Resource: High-Grade Bauxite[4]

• Resource is based on 88 infill exploration holes that intersected a thick bauxite layer that is largely concealed beneath a surface clay horizon.

• Most of the bauxite resources identified in this estimation are a superior quality bauxite suitable for sweetening circuits in refineries. It is termed “Brown Sugar” bauxite.

• A high grade core totalling 9 million tonnes contains extremely high grade bauxite.

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A thick layer of very high quality bauxite was discovered at the Binjour project in central QLD. The bauxite lies beneath a clay horizon. Results from 88 holes into the bauxite are generally exceptionally high grade, thick gibbsite bauxite, ideal as a “sweetener” to any bauxite refinery. ABx refers to such high grade bauxite as “Brown Sugar” which commands a large price premium.

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Resource category	Tonnes millions	Thick- ness	Over- burden	Al2O3 Avl % Rx SiO2 % Avl/Rx Ratio	Al2O3 % SiO2 % A/S Ratio Fe2O3 % TiO2 % LOI %	Yield %
Inferred Indicated	6.8 10.0	3.7 m 5.3 m	8.1 m 10.6 m	37.7 3.7 10.3 39.9 2.7 14.9	43.4 4.1 10.5 24.2 3.6 24.1 44.7 3.0 14.8 22.8 3.8 25.0	61% 60%
TOTAL	16.8 Mt	4.5 m	9.3 m	39.0 3.1 12.7	44.2 3.5 12.7 23.4 3.7 24.6	61%

Cut-off grades applied: Minimum 30% Al2O3, 2m thickness, 45% yield. Maximum strip ratio (metres overburden:bauxite) 4.5:1. Leach conditions to measure available alumina "Al2O3 Avl" & reactive silica "Rx SiO2" is 1g leached in 10ml of 90gpl NaOH at 143 degrees C for 30 mins. "Avl/Rx" ratio is (Al203 Avl)/(Rx SiO2). Values above 10 are excellent. "A/S" ratio is Al203/SiO2. Tonnage is for bauxite in-situ. Yield is for screening all samples at 0.26mm. The significant tonnages requiring no upgrade will have 100% yield.

The Binjour deposit lies near the top of a plateau which has been widely cleared for farming but large parts are now left uncultivated because of the dry, poor soil that develops on bauxite.

The bauxite in the resource area is consistently high quality and most is “Brown Sugar” bauxite, being a superior quality, low silica, gibbsite bauxite suitable for sweetening circuits in refineries.

New areas of bauxite have been discovered in recent months and are currently being drilled to expand resource extent.

Logistical setting

The Binjour bauxite project is located approximately 160kms inland from Bundaberg port. Australian Bauxite Limited is participating in a major transport study of the region to assess the alternative ways to transport this high quality bauxite to markets, either in Australia or overseas.

Further work planned

The bauxite deposit is open in many locations and many other deposits have been identified. Follow-up drilling of the Binjour plateau (25km x 10km in area) and surrounding new prospects is being scheduled over the coming months.

Quarterly Activities Report – September 2011 Page 5

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Figure 1 - Growing JORC resources

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Figure 2 - Bauxite trends – China imports; bauxite prices

Quarterly Activities Report – September 2011 Page 6

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About Marubeni Group

• One of the largest General Trading Companies in Japan by turnover, founded in 1858

• Publicly listed on the Tokyo, Nagoya and Osaka Stock exchanges (8002.T), with a market capitalisation of US$ 12.5 Billion at 31 March 2011.

• Global trader of a wide range of commodities, it conducts business investment, development and management on a global basis with 119 offices in 69 countries

• In the field of industrial services, Marubeni combines engineering functions and risk management capabilities in various fields such as Renewable Energy, Power and Water Projects, Oil and Gas, Metals and Mineral Resources, Pulp & Paper, Transportation Infrastructure, and Food materials & products.

• Marubeni is a 22.5% owner of Portland Aluminium Smelter, located in Portland in South West Victoria and also owns 8% interest in Boyne Smelters (Line 3), which is located in Boyne Island in Queensland, Australia's largest aluminium smelter. In addition, Marubeni is also a 6.67% owner of Alouette Aluminium Smelter, located in Canada, North America’s largest aluminium smelter.

FURTHER INFORMATION

Henry Kinstlinger Investor Relations

Telephone: +61 2 9251 7177

Quarterly Activities Report – September 2011 Page 7

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QUALIFYING STATEMENTS

The information in this report that relate to exploration programmes are based on information compiled by Jacob Rebek who is a member of Australian Institute of Mining and Metallurgy. Mr. Rebek is a qualified geologist and is a director of Australian Bauxite Limited.

Mr. Rebek has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of exploration Results, Mineral Resources and Ore Resources. Mr. Rebek consents to the inclusion in the report of the matters based on information in the form and context in which it appears.

Exploration Target Statement

ABx has an exploration target of 200 to 300 million tonnes of bauxite (40-50 million tonnes is the exploration target for the Goulburn Bauxite Project area), based on the Mineral Resources totalling 36 million tonnes of bauxite from 196 drillholes drilled across an area that is less than 15% of the known bauxite deposits on a single Exploration Lease EL 6997 at Inverell in northern NSW. Furthermore, Mineral Resources totalling 25 million tonnes of bauxite have been estimated from 577 drillholes that have tested approximately 60% of the known bauxite deposits at Taralga on EL 7357.

In accordance with the JORC Code, readers are advised that with regards this exploration target of 200 to 300 million tonnes, “the potential quality and grade is conceptual in nature, that there has been insufficient exploration to define full Mineral Resources and that it is uncertain if further exploration will result in the determination of a Mineral Resource”. Inverell tenement EL 6997 was the first of 30 tenements to be drilled and has since discovered sizeable, good quality bauxite occurrences on several other tenements.

Direct Shipping Ore

In this report all references to direct shipping ore (DSO) refers to the company’s exploration objective of defining DSO grade mineralisation.

JORC Code Compliant Public Reports

The Company advises that this presentation contains summaries of Exploration Results and Mineral Resources as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”).

The following table references the location of the Code-compliant Public Reports or Public Reporting on which the summaries are based. These references can be viewed on the ASX website and the Company will provide these reports, free of charge, to any person who requests it.

1	02	September 2010	ASX Inverell JORC Resource Update 36 Million Tonnes
2	12	May 2011	ASX Taralga Bauxite Resource Doubled to 25 Million Tonnes
3	15	August 2011	ASX Guyra Maiden Resource 6 Million Tonnes
4	12	October 2011	ASX Binjour Maiden Resource 17 Million Tonnes

Quarterly Activities Report – September 2011 Page 8

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Project Tenements and Major Infrastructure – September 2011