TALONX RESOURCES LIMITED — Interim / Quarterly Report 2011

Jan 29, 2012

ACN: 009 067 476

==> picture [417 x 39] intentionally omitted <==

==> picture [285 x 44] intentionally omitted <==

REPORT FOR THE QUARTER ENDED 31 DECEMBER 2011

KIHABE-NXUU ZN/PB/AG PROJECT BOTSWANA (100%)

Continuing Soil Geochemical Sampling Generates further Zn/Pb Anomalies

During the quarter the Company collected 2,142 soil geochemical samples along strike and to the NE of the Kihabe Zn/Pb/Ag resource. These were analysed through the Company’s on-site XRF machine, producing a further group of elevated Zn/Pb anomalies. (See diagram below for geochemical anomalies). In the last nine months, the Company has collected 8,825 soil geochemical samples and delineated six Zn/Pb and one Cu/Co anomaly on the Botswana side of the border, all of which have the potential to increase the Company’s resource base. These anomalies are now ready for drill testing.

==> picture [388 x 365] intentionally omitted <==

The Company controls 100% of some 3000 sq km of a neo-Protorozoic belt spanning the border between Namibia and Botswana, which is highly prospective for copper, zinc, lead, silver and vanadium mineralisation. To date the Company has delineated the Kihabe and Nxuu Zn/Pb/Ag resources, situated 7kms apart, totaling a combined 25 million tons @ 3% Zn/Pb, together with 3.3 million ozs of silver . (Refer attached resource statement).

Gravity and Dense Media Separation of Zn Oxide Mineralisation

The Nxuu resource is totally oxidised to the full depth of the resource at 60m. The Kihabe resource is oxidised in the top 35m – 50m. Below this, the resource is in sulphide mineralisation. Metallurgical test work to date has confirmed the following metal recoveries:

Nxuu Resource – totally oxidised

Zn recoveries 93%, Pb recoveries 93% through acid leaching in 12 hours @ 25 deg C.

Kihabe Resource - oxide zone

Zn recoveries 92%, Pb recoveries 92% through acid leaching in 24 hours @ 40 deg C.

Kihabe resource – sulphide zone

Recoveries Zn 94%, Pb 88% and Ag 96% within 15 minutes, through flotation and concentration.

With regard to the oxide zones of mineralisation in both the Nxuu and Kihabe resources, because of the high SGs of the Zn host minerals smithsonite and baileychlore, the Company is investigating the metallurgical process of an initial up-front concentration by way of gravity separation of these minerals. This pre-concentration could significantly reduce power costs and acid consumption.

Interest from Independent Parties

The Company has recently been approached by a number of parties expressing interest in involvement in the Kihabe - Nxuu project. Discussions are taking place.

TSUMKWE BASE METALS PROJECT NAMIBIA (90%)

In the September quarterly report the Company reported high magnetite recoveries from drilling conducted at its Makuri Vlei Project as follows:

Drill Hole	Interval	Width	Fe Head	Recovered Mass	Conc	Interpreted
			(XRF)	(DTR)	Fe	Mineralogy**
NAM917	10m – 13m	3m	49.21%	28.6%	66.15%	HO, GO, MO
	16m – 18m	2m	36.72%	21.6%	62.00%	HO, GO, MO
	27m - 37m	10m	49.22%	66.4%	68.65%	MO
	47m - 61m	14m	50.94%	69.0%	67.87%	MO

During December 2011, attempts at further drilling were made some 6km to the SW of the above drilling, into a linear magnetic high anomaly believed to be associated with the magnetic anomaly relative to the above results.

Because of excessive rainfall during December, only a very limited amount of drilling was completed. Four holes for a total of 400m were drilled, however no significant assay or DTR Fe results were returned from this drilling.

The information in this release that relates to exploration results for the Kihabe/Nxuu base metals project in Botswana and the Tsumkwe base metals project in Namibia, together with any related assessments and interpretations, is based on information approved for release by Mr. Giles Rodney Dale of GR Dale and Associates. Mr. Dale is a Fellow of the Australian Institute of Mining and Metallurgy. Mr. Dale has sufficient experience which is relevant to the style of mineralisation under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr. Dale consents to the inclusion in this release of matters based on this information in the form and context to which it appears.

FUNDING

During the quarter the Company raised $219,000 through the placement of 36,500,000 shares at 0.6 of 1c per share.

As at 31 December, the Company had available $157,000 in credit standby arrangements plus $100,000 in un-used loan facilities.

KIHABE RESOURCE STATEMENT

Deposit	External Cut %	Indicated M Tonnes %	Inferred M Tonnes %	Total M Tonnes %
Kihabe	1.5%	11.4 @ 2.90%	3.0 @ 2.60%	14.4 @ 2.84%
Nxuu	0.3%	-	10.9 @ 3.20%	10.9 @ 3.20%
		11.4 @ 2.90%	13.9 @ 3.07%	25.3 @ 3.00%

Zinc Equivalent Grade

Kihabe calculated on metal prices as at	Zn US$1,810/t	Pb US$1,955/t	Ag US$18.75/oz
17 July 2008:
Grades applied:	Zn 1.75%	Pb 0.76%	Ag 6.93 g/t
Nxuu calculated on zinc and lead at
US$ par value
Grades applied:	Zn 1.8%	Pb 1.4%

The information in the resource statement that relates to the Kihabe Resource is compiled by Byron Dumpleton, B.Sc., a member of the Australasian Institute of Geoscientists. The information that relates to the Nxuu Resource is compiled by Mr Ben Mosigi, M.Sc., (Leicester University – UK), B.Sc., (University of New Brunswick – Canada), Diploma Mining Tech (Haileybury School of Mines – Canada), a member of the Geological Society of South Africa.

Mr Dumpleton is an independent qualified person and Mr Mosigi is a Technical Director of the Company. Both Mr Dumpleton and Mr Mosigi have sufficient experience relevant to the style of mineralisation under consideration and to the activity to which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code of Reporting of Mineral Resources and Ore Reserves”. Both Mr Dumpleton and Mr Mosigi consent to the inclusion in this report of the matters based on the information in the form and context in which it appears.

About Mount Burgess Mining N.L.

Mount Burgess Mining N.L. is an established and experienced Australian exploration company with interests focused in southern Africa. The Company’s primary asset is the zinc, lead and silver resource currently being developed at Kihabe-Nxuu in North Western Botswana. The Company has tenements covering the entire proterozoic meta-sedimentary belt between Botswana and Namibia. The area has excellent potential for hosting Kimberlites, rare earth elements and base metals, the focus for continuing exploration. Perth based Mount Burgess has been listed on the Australian Stock Exchange since 1985 and has local asset status in Botswana.

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity MOUNT BURGESS MINING N.L. ABN Quarter ended (“current quarter”) 31009067476 31 December 2011

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes refund 1.7 Other (provide details if material) Net Operating Cash Flows	Current quarter $A’000	Year to date (6 months ) $A’000
	- (163) - - (183) - - (13) 91 -	- (360) - - (365) - - (21) 91 -
	(268)	(655)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - - - - - - - -	- - - - - - - - -
	-	-
	(268)	(655)

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	1.13 Total operating and investing cash flows (brought forward)	(268)	(655)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other – Lease liability repayments Other – Placement fees Net financing cash flows		304 - 71 (23) - - (13)	518 - 131 (23) - (1) (17)
		339	608
Net increase / decrease in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter		71 (316) -	(47) (197) (1)
		(245)	(245)
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 52 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions N/A
	N/A

Non-cash financing and investing activities

2.1 2.2	Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
	N/A
	Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
	N/A

• See chapter 19 for defined terms.

Appendix 5B Page 2

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	566	466
	415	258

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	50
	-
	-
	150
Total	200

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to therelateditemsinthe accountsis asfollows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	13	10
	-	-
	(258)	(326)
		-
Total: cash at end of quarter(item 1.22)	(245)	(316)

Changes in interest in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	-	-	-	-
	-	-	-	-

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted share securities at the end of current quarter

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions	N/A
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	502,171,937	502,171,937
	71,000,000 N/A	71,000,000 N/A
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	N/A	N/A
7.7 Options Employee Share Plans 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired	16,350,000 500,000	NIL NIL	5 cents 5 cents	31/12/15 31/12/16
	NIL
	NIL
	NIL
7.11 Debentures (totals only)	NIL
7.12 Unsecured notes (totals only)	NIL

• See chapter 19 for defined terms.

Appendix 5B Page 4

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Serene Chau

Date: 30 January 2011

~~(Director/~~ Company secretary)

Print name: Serene Chau

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

== == == == ==

• See chapter 19 for defined terms.

30/9/2001

Appendix 5B Page 5