AUSTRALIAN BAUXITE LIMITED

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1 AUSTRALIAN BAUXITE LIMITED ASX: ABZ OPERATIONS REPORT Quarterly Activities Statement period ending 31 December January 2010 This quarterly operations report is dated 29 January 2010 and is for the three months ending 31 December Company Overview Australian Bauxite Limited (ABx) (ASX: ABZ) is an Australian exploration company that was admitted to the Official List of the Australian Stock Exchange on 21 December ABx was formed specifically for the purpose of acquiring the bauxite interests of Hudson Resources Limited; increasing the value of the portfolio through a staged development program in each of three bauxite provinces which will include exploration sampling, drill testing & analyses from a wide range of targets on all exploration tenements; resource definition drilling and bauxite metallurgical testwork on the more advanced prospects. The ABx project tenements consist of seventeen exploration tenements granted or under application covering over 5,000 sq kms of ground considered prospective for bauxite; 3,477 sq kms in NSW and 1,617 sq kms in Queensland. The bauxite deposits are located close to existing transport and other infrastructure, close to coal mines, industrial centres and ports on the east coast of Australia. HIGHLIGHTS IPO closed 3 weeks early, oversubscribed. $4 million raised, opened strongly Website launched Queensland tenements transfer complete CORPORATE Register snapshot At 31st December 2009, ABx had 70 million ordinary shares on issue and 10,200,000 options. Cash at hand At the end of the December quarter, ABx had available cash of $3.5 million. Trading summary On 24 December 2009 Official Quotation of the Company s securities commenced. The opening price (first trade) was 25.5 cents and the shares closed at 31 cents. The high price for the stock in December was 49 cents, the low was 25 cents. During December (4 days trading) the total trade value was $1.46 million, with 395 trades (average of $3,706 per trade). According the weekend Financial Review (Jan ), there were 41 IPOs in 2009; the ABx IPO was the 10 th most successful. ABx website launched The ABx website went online on 21 December 2010, coinciding with the Company s Listing. It can be accessed at australianbauxite.com.au where subscription to an update service is available. AUSTRALIAN BAUXITE LIMITED ACN Level 2 Hudson House 131 Macquarie Street Sydney NSW 2000 P: F:

2 Page 2 Extension of time to hold AGM The Company applied for and was granted an extension of time within which to hold its 2009 annual general meeting by the Australian Securities and Investments Commission (ASIC). ASIC granted the Company an extension to 28 May 2010 and the Company must now hold its annual general meeting by this date. The Corporations Act requires that a public company holds an annual general meeting each calendar year. A company with only one shareholder is exempt; accordingly as the Company had only 1 shareholder prior to 18 December 2009 it was exempt and further, it was not practicable to conduct an audit and hold an AGM within the 13 days remaining in EXPLORATION Update of work completed by Hudson Resources Limited - EL 6997 Inverell, drilling programme August 2009 A total of 35 holes were completed (NR ), using push-tube technique and the following particle size fractions were assayed: +1.2mm mm mm Total sample (so that assay values for -0.18mm fraction can also be calculated) Results were as follows: 1) Holder and Lockwood Plateau: Nine new holes (six on Holder Plateau and three on Lockwood Plateau) were drilled adjacent to six of the Jan-Feb 09 drill holes to obtain fresh samples for a new assaying programme including 4 particle size fractions and assays for Reactive Silica and Available Alumina. Three additional new holes were drilled adjacent to above holes to obtain undisturbed sample for metallurgical testing. Eleven holes were drilled in the area between Holder and Lockwood Plateaus to confirm that the bauxite layer extends from one Plateau to the other. A preliminary resource estimate of the order of 20 million tonnes has been made (for Holder and Lockwood Plateaus and the connecting zone between them). This estimate is currently being prepared to JORC code standards. 2) Cherry Tree Group of Plateaus: a bauxite layer (3 to +10m thick) was intersected in all drill holes; follow-up drilling is being planned to infill the gaps between existing holes and to expand the drill pattern over other parts of a 5km by 2km zone. A progress report of the maiden Resource Estimate at EL 6997 is attached as Appendix A. A resource estimate has not been stated and the report only presents methodology being adopted in preparation of a JORC compliant statement. A comprehensive drilling programme (650 holes) on targets drill tested to date by wide spaced pattern of holes and on new targets is planned to commence in early 2010.

3 Page 3 Queensland Tenement transfer ABx received advice from Queensland Mines and Energy that title in all the Queensland ABx Project Tenements has been transferred from Hudson Resources Limited to ABx3 Pty Ltd, a wholly owned subsidiary of ABx. The effective date of transfer was 23 rd December The Queensland tenements are: Licence No Project Geological Description EPM EPM EPM EPM EPM EPM Haden Hillgrove Hampton Red Hill Red Hill South Binjour Outcrops of a massive cemented bauxite layer. Bauxite in thick red soil on a 3 kilometres wide plateau. Whilst close to Brisbane Port, alternative transport options warrant consideration. Outcrops of massive cemented bauxite layers in a Tertiary Volcanic area similar to those in EL 6997 at Inverell, NSW Bauxite in thick lateritic red soil profile developed on a wide plateau. May be transported to Gladstone via an old rail line that could be rehabilitated Exploration Programme Target prioritisation and planning for an accelerated exploration and evaluation programme for the coming year is well underway. FURTHER INFORMATION Henry Kinstlinger, investor Relations, Telephone: 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.

4 Quarterly Operations Report December 2009 Quarterly Operations Report December 2009 Page Page 4 4 Map 1 - Extent of ABx Project Tenements in Eastern Australia

5 Page 5 APPENDIX A BAUXITE RESOURCE ASSESSMENT FOR INVERELL EL6997 Progress as at 27 January 2010 Drilling on a random pattern governed by site availability was done in the southwestern part of EL6997 at a location selected because of a prominent bauxite plateau and ease of access. During 2009, 118 holes were drilled totalling 1,773 metres across the tenement to evaluate approximately 10% to 30% of a bauxite deposit called Deposit A-B which has been mapped for more than 4.6 kilometres to date and is open to the north and west (see Figure 1). 5 km Figure 1: Bauxite Areas and Initial Resource Areas of EL 6977 Inverell Bauxite areas mapped & sampled to date (yellow) Deposit A-B (open north & south) Initial resource area 1.6 km 2 (red): (estimation in progress) 1. THICKNESS OF BAUXITE LAYER The bauxite is typically 3.5 to 9 metres thick with minimal soil cover. Resource estimation is in progress. 2. BAUXITE GRADES Drilling has confirmed a relatively uniform deposit with the following typical grades: All bauxite 2m to 9m thick Average 75 percentile Total Al 2 O 3 % RAW BAUXITE IN SITU Total SiO 2 % Total Fe 2 O 3 % LOI % Total A/S ratio Weight % +1.2mm SIMPLE SCREENED BAUXITE Al2O3 % SiO2% Fe2O3% LOI % A/S ratio % % Note: 75 percentile is the typical values at the 75th percentile (ie. if the worst 25% is excluded) A/S is Al 2 O 3 % divided by SiO 2 %. Values above 8 are good quality, above 12 is excellent quality.

6 Page 6 3. YIELDS FROM SIMPLE SCREENING Screening at a relatively coarse 1.2mm mesh demonstrated that the bauxite can be easily upgraded and that a finer screen size may be more appropriate and would produce high yields of high quality bauxite. To further assess potential yields, 169 bauxite samples were each screened into 3 size fractions and chemically analysed. On average, it would appear that at 80% yield, the recovered beneficiated bauxite will grade typically between 37% and 43% total Al 2 O 3 and around 2.5% reactive SiO 2 which is high-quality bauxite. Figure 2: Inverell Bauxite: Summary Section Soil & o burden Bauxite Percentages Percentile Results ie. excluding worst 25% of bauxite Depth (metres) Raw Al2O3 % Raw SiO2% Raw A/S Ratio % Yield +1.2mm Al2O3 % SiO2% A/S Ratio 9 10 Basal clays & basalt REACTIVE SILICA AND AVAILABLE ALUMINA The 169 screened samples were analysed for reactive silica (Rx SiO 2 ) and available alumina (Avl Al 2 O 3 ) under leach conditions that simulate of the mildest refinery leaching conditions which suit bauxite that is rich in gibbsite, the most valuable tryhydrate alumina mineral. Reactive silica is that silica which dissolves into the caustic soda leach and is a measure of SiO 2 in reactive minerals, principally reactive clays. Available alumina is that portion of the Al 2 O 3 that dissolves in the caustic soda leach and is net of the amount of Al 2 O 3 required to remove the dissolved reactive silica.

7 Page 7 Ore -All Grades & All Depths. Individual Samples Ore -All Grades & All Depths. Comb washed samples Reactive SiO2 % y = x R 2 = Reactive SiO2 % y = x R 2 = Total SiO Total SiO2 Regression line for individual samples Regression line for cumulative washed samples Rx SiO2 = x SiO Rx SiO2 = x SiO Results Raw SiO2 Rx SiO2 Ratio Results Raw SiO2 Rx SiO2 Ratio % % % % % % % % RAW INDIVIDUAL ORE SAMPLES CUMULATIVE WASHED ORE SAMPLES RAW INDIVIDUAL ORE SAMPLES CUMULATIVE WASHED ORE SAMPLES Ore -All Grades & All Depths. Individual Samples Ore -All Grades & All Depths. Comb washed samples y = x R 2 = y = x R 2 = Available Al2O3 % Available Al2O3 % Total Al2O3 - Total SiO2 Total Al2O3 - Total SiO2 Regression line for individual samples Regression line for cumulative washed samples Avl Al2O3 = xal2o3-sio Avl Al2O3 = xal2o3-sio Results Raw Al2O3 Avl Al2O3 Ratio Results Raw Al2O3 Avl Al2O3 Ratio % % % % % % % %

8 Page 8 CONCLUSIONS: In the bauxites of area A-B at Inverell: Reactive Silica (Rx SiO 2 ): Rx SiO 2 = 80% of SiO 2 in raw ore sample or 91% of SiO 2 in washed ore samples. Available Alumina (Avl Al 2 O 3 ) Avl Al 2 O 3 = 93% of Al 2 O 3 - SiO 2 in raw ore sample and 93% of Al 2 O 3 - SiO 2 in washed ore. 5. DEPOSIT STYLE The deposit nature is a mantle deposit as a layer coating the topography. The following cross-section from the Initial Resource Area demonstrates this geometry: Note: deposit shown in blue cut-off grades have not been applied. Qualifying statements The information in this Appendix A that relate to exploration programmes are based on information compiled by Ian Levy who is a member of Australian Institute of Mining and Metallurgy. Mr. Levy is a qualified geologist and is a director of Australian Bauxite Limited. Mr. Levy 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. Levy consents to the inclusion in the Appendix A of the matters based on information in the form and context in which it appears.