Third Annual Report on EPM 18014 – BINJOUR for the Period Ended 8

Third Annual Report

EPM 18014 – BINJOUR

For the period ended 8 October 2012

Report prepared for

ABx3 Pty Ltd

Jacob Rebek – Chief Geologist

Brian Roach – Project Geologist

Thomas Grieve – Geologist

Andrew Clarke – Geologist

Date: 8 November 2012

PAGE LEFT BLANK INTENTIONALLY

EPM 18014 Binjour - Third Annual Report | October 2012

CONTENTS

1 SUMMARY ...... 3 2 INTRODUCTION ...... 4 3 GEOLOGICAL DATA ...... 6 4 WORK PERFORMED ...... 7 5 CONCLUSIONS AND RECOMMENDATIONS ...... 32 6 STATEMENTS ...... 34 7 REFERENCES ...... 36 TABLES

Table 1 EPM 18014 Blocks and Sub-blocks Composition ...... 4

Table 2 – Summary of Bauxite Resources at Binjour, Central QLD ...... 7

Table 3 - High Grade Portion of Bauxite Resources at Binjour, Central QLD ...... 10

Table 4 – Location of Core Holes ...... 27

Table 5 – Depth of Core Holes ...... 28

MAPS

Map 1 – Drill holes, Resource Categories & Distribution of Bauxite Types Across Binjour Plateau ...... 8

Map 2 – Grade Distribution of DSO Bauxite Resources Across Binjour Plateau. Thickness x

Al2O3 ...... 9

Map 3 – EPM 18014 overview of target areas. Blue dots indicate drill holes completed in the reporting period...... 11

Map 4 - Drill hole locations with bauxite width (shaded blue) and total hole depth ...... 13

Map 5 - Drilling on the north east of the Plantation Plateau. Red dots indicate bauxite...... 14

Map 6 - Plantation Plateau drilling March 2012. Red dots indicate bauxite...... 15

Map 7 - Swains Plantation drilling October 2011. Red dots indicate >3m of bauxite...... 16

Map 8 - Drilling Swain Plateau early October 2011. Red dot indicates bauxite...... 17

Map 9 – Forestry Blocks drill plan showing outline of bauxite and bauxite width and depth to top of mineralisation ...... 18

Map 10 – Sandows Swain Rd Intersection - drill plan showing bauxite outline with bauxite width and depth to top of bauxite ...... 19

Map 11 – Sandows Swains Rd Intersection - drill plan showing bauxite outline with bauxite width and depth to top of bauxite ...... 20

Map 12 – Properties with drill holes. Drill plan showing bauxite outline with bauxite width and depth to top of bauxite...... 21

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Map 13 – Properties with drill plan showing bauxite outline with bauxite width and depth to top of bauxite ...... 22

Map 14 – Burnett Highway prospect with Al2O3 and SiO2 Niton assays ...... 23

Map 15 - Old School prospect with Al2O3 and SiO2 Niton assays ...... 24

Map 16 - Dempsters South prospect with Al2O3 and SiO2 Niton assays ...... 25

Map 17 - Dempsters North prospect with Al2O3 and SiO2 Niton assays ...... 25

Map 18 - Al2O3-SiO2 Niton results north Merediths Plateau ...... 26

Map 19 - Core hole locations ...... 29

Map 20 – Proposed Exploration Area marked by yellow highlighted area ...... 33

APPENDICES

Appendix 1 – Drill Collars

Appendix 2 – Drill Survey

Appendix 3A – Assay Results Unsieved

Appendix 3B – Assay Results Sieved

Appendix 3 – Assay Results Niton

Appendix 4 – Lithology

Appendix 5 – Core Drilling Report

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1 SUMMARY

Exploration Permit for Minerals (EPM) 18014 “Binjour” was applied for in order to facilitate an exploration program to discover economically viable deposits of bauxite associated with Tertiary Volcanics, in an area with old peneplained surfaces preserved as plateaus.

In the third year of tenure, the following exploration program was undertaken in EPM 18014:

1. Desktop assessment including geological mapping – interpretation of satellite images and geomorphological mapping.

2. Drilling was conducted in November 2011, then February through to May 2012 by an RC drill rig to get samples representing the whole zone prospective for bauxite.

3. Chemical analyses of samples was undertaken, including specialist analyses to determine total and available alumina, total and reactive quartz, loss on ignition and other analyses as required in bauxite search

1. Systematic drill testing at close intervals to obtain data for resource estimation in the best target areas defined by programme under 2.

2. During April 2012 a series of PQ core holes were drilled in order to better understand the form of the bauxite and to study is density and mineralogy more closely (Map 19). The full core report has been attached in Appendix 5.

3. A JORC resource of 24.5 Million Tonnes of thick gibbsite-rich bauxite was declared on 29 June 2012

4. Field traversing on foot was conducted throughout 2011/2012 to explore for new prospective areas in the EPM

The following are the highlights and conclusions from work conducted in the third year of tenure:

 Maiden Resource: 24.5 million tonnes of gibbsite-rich bauxite at Binjour, central QLD

 Resource is based on 517 drill holes into less than 25% of the identified bauxite layer.

 Huge bauxite mineralisation – identified bauxite layer extends over entire 44 square kilometre Binjour Plateau

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2 INTRODUCTION

Tenure Information EPM 18014 was granted to Hudson Resources Limited (Hudson) on 9 October 2009 for a two year period, covering an area of 50 sub-blocks. The sub-block composition is outlined in Table 1 below.

An assignment application was lodged and subsequently approved by Queensland Mines and Energy on 23 December 2009, transferring the holding of EPM 18014 from Hudson to ABx3 Pty Ltd (ABx3).

EPM 18014 was 100% renewed on 24 September 2012 for a further two years, expiring on 8 October 2013.

The EPM is now in its third year of tenure, with this annual report being the third submitted for this EPM, outlining the exploration conducted in the third year of tenure for the period ending 8 October 2012.

The tenement is covered by a Level 2 Code Compliant environmental authority (EA), number MIC200864809.

Table 1 EPM 18014 Blocks and Sub-blocks Composition BIM BLOCK SUB-BLOCKS

BRIS 1241 U, Z

BRIS 1242 Q, V, W, X, Y

BRIS 1314 B, C, D, E, G, H, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, Z

BRIS 1315 F, L, M, Q, R, V, W

BRIS 1386 A, B, C, D, E, G, H, J, K

BRIS 1387 A, B, F, G

TOTAL 50 Sub-blocks

Tenement Location EPM 18014 is located approximately 15 km north-west of Gayndah in southeast Queensland and is featured on the Eidsvold (9147), Mundubbera (9146) and Gayndah (9246) 1:100,000 topographic map sheets. North Burnett Regional Council is the governing local authority.

Exploration Rationale EPM 18014 was applied for to explore the potential of economically viable deposits of bauxite associated with Tertiary Volcanics, in an area with old peneplained surfaces preserved as plateaus.

Binjour has been selected as a priority for bauxite exploration for the following reasons:

 Extensive areas of plateaus with Tertiary Volcanics and old weathering profile preserved.

 Reported bauxite occurrence in Geological Survey data base.

| Page 4 EPM 18014 Binjour - Third Annual Report | October 2012 INTRODUCTION Cont

 Located close to existing infrastructure (rail, highway, power, water).

 Located close to Gladstone.

Potential for discovery of bauxite deposits have been identified within the application area. Geological Survey Data Base, notably Mineral Occurrences data base (called “all mines” in IRTM v4.2) has greatly assisted in the interpretation of potential for discovery of bauxite in the Binjour area.

ABx3 understands that no systematic exploration for bauxite has been undertaken within the EPM 18014 area to date, and believes that systematic exploration should extend over the entire extent of areas with Tertiary Volcanics and old weathering profiles preserved, and that other bauxite occurrences will be found.

How many bauxite occurrences remain to be found is the question to be addressed during the proposed exploration program and the quality of the bauxite (notably alumina, silica and LOI) will also be investigated.

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3 GEOLOGICAL DATA

Geological Setting Significant portions of EPM 18014 are underlain by Tertiary Volcanics– as shown on Geological Maps.

The Tertiary Volcanics are underlain by sedimentary strata.

Geological Interpretation Study of geomorphology using Digital Terrain Model and Landsat images led to the conclusion that Tertiary Volcanics (including basaltic and alumina rich trachytic volcanics) have been deposited as a thin package of near-horizontal strata of volcanic origin and are preserved on an old peneplained surface which has been preserved as a series of plateaus.

There is a thick lateritic weathering profile on the Tertiary Volcanic strata in the plateaus, as observed on the main highway between Gayndah and Mundubbera.

There was only one known bauxite occurrence in the area of Binjour EPM at the time when the application for the EPM was lodged:

 Binjour Bauxite Occurrence – located on the eastern edge of the Binjour plateau (reported by Geological Survey of Queensland and by Australian Geological Survey Organization in their data bases)

Based on the study of geomorphology using the Digital Terrain Model and Landsat images, one could make the conclusion that the known bauxite occurrence in Binjour area is located on a remnant of old peneplained surface where the old lateritic weathering profile is likely preserved. The reported bauxite occurrences are likely to represent the upper part of the old lateritic weathering profile.

Bauxite has formed during the Tertiary period when a tropical climate prevailed (high rainfall and relatively high temperatures). Bauxite is present in the upper part of the old lateritic / saprolitic weathering profile, so that during erosion, the bauxite zone is the first zone to be removed. The old lateritic / saprolitic weathering profile is easily eroded because weathered rocks are soft. Therefore the following questions will be addressed during the proposed exploration programme:

 What is the extent, thickness and quality of bauxite?

 How much of the bauxite has been preserved?

 How much bauxite can be found under soil and other types of thin laterally extensive cover?

The drilling and reconnaissance programs over the last year have begun to shed light on these questions.

The recent Maiden Resource declaration of 24.5 million tonnes of gibbsite-rich bauxite was based on 517 drill holes that intersected a thick bauxite layer that is largely concealed beneath a surface clay horizon.

Field and drilling reconnaissance will continue over areas not yet explored on the EPM to gain better clarity of the extent and nature of the bauxite.

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4 WORK PERFORMED

Overview of Work Performed The following work was performed during the third year of tenure of EPM 18014:

 Desktop assessment including geological mapping – interpretation of satellite images and geomorphological mapping.

 Drilling was conducted in November 2011, then February through to May 2012 by an RC drill rig to get samples representing the whole zone prospective for bauxite. In addition, 8 PQ core holes were drilled in order to better understand the form of the bauxite and to study is density and mineralogy more closely. The full core report has been attached in Appendix 5.

 Field traversing on foot was conducted throughout 2011/2012 to explore for new prospective areas in the EPM

Resource Summary The Maiden Resource was upgraded from 16.8 to 24.5 million tonnes of gibbsite-rich bauxite in the third year of tenure. This resource was based on 517 drill holes into less than 25% of the identified bauxite layer.

A 3 to 15 metres thick layer of bauxite extends over the entire 44 square kilometre Binjour Plateau (see Map 1). Parts of this bauxite layer contain silica gel veinlets which in its current form, makes the bauxite grades too silica-rich. However, this material has been shown to be easily removed by washing and the recovered bauxite then meets DSO grade. The large potential of Binjour is just being revealed, however, this resource estimate only includes bauxite that meets DSO grade (Table 2).

The district’s deposits contain thick zones of premium grade gibbsite-rich bauxite often referred to as “Brown Sugar” bauxite, with good potential for more discoveries. ABx has recently applied for several exploration permits covering the extensions of Binjour Plateau geology “Brown Sugar” bauxite.

“Brown Sugar” bauxite is ideal feedstock for sweetener circuits in alumina refineries and will demand a premium price.

Table 2 – Summary of Bauxite Resources at Binjour, Central QLD

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Red = Indicated Resources Extent of bauxite Orange = Inferred Resource 8-12 hole blocks 1 & 0 hole blocks layer2-7 hole blocks over Binjour 7181000 7181000 Mauve hatch = insufficient holes Plateau

7180000 7180000 Silica gel in the bauxite layer

7179000 7179000

7178000 7178000 Silica gel in the bauxite layer

7177000 7177000

7176000 7176000

7175000 7175000

7174000 7174000

7173000 7173000

 Red circles are holes with thick DSO bauxite

7172000 7172000  Triangles have 1m of DSO bauxite 345000 346000 347000 348000 349000 350000 351000

 Crosses mainly have a silica gel

344000 345000 346000 347000 348000 349000 350000 351000 343000 bauxite

Map 1 – Drill holes, Resource Categories & Distribution of Bauxite Types Across Binjour Plateau

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Resource Estimation and Deposit Geometry The Binjour bauxite unit is a distinct and predictable horizontal layer averaging approximately 6 metres in thickness, lying beneath a red mud unit averaging 8 metres in thickness that is free diggable and similar in density to the bauxite layer. The bauxite is high in Al2O3 but varies in SiO2 grade, mainly due to the presence of soft silica gel veinlets on joints and cavities. Only areas of low SiO2 grade have been included in the estimate of DSO grade bauxite (see definitions).

The known extent of the Binjour bauxite layer is currently 44 square kilometres which is 15 times larger than the 3.0BINJOUR square kilometres RESOURCE of DSO bauxite resources UPGRADE estimated hereinJUNE to contai 2012n 24.5 million tonnes. Bauxite thickness x Al2O3%

80-149.99 m.Al2O3 150-174.99 m.Al2O3 175-200 m.Al2O3 200-249.99 m.Al2O3

250-320 m.Al2O3 +320 m.Al2O3 80-149.99 m.Al2O3 Bauxite150-174.99 with m.Al2O3 too few175-200 holes m.Al2O3 200-249.99 m.Al2O3 250-320 m.Al2O3 +320 m.Al2O3 Bauxite with too few holes 7181000

7180000

7179000

7178000

7177000

7176000

7175000

7174000

7173000

7172000

343000 344000 345000 346000 347000 348000 349000 350000 351000

Map 2 – Grade Distribution of DSO Bauxite Resources Across Binjour Plateau. Thickness x Al2O3

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Table 3 - High Grade Portion of Bauxite Resources at Binjour, Central QLD

DSO Bauxite Resources Sieved at 0.26mm

Bauxite Al2O3 Rx Over- Internal Resource Tonnes Avl/Rx Al2O3 SiO2 A/S Fe2O3 TiO2 LOI Yield Thick- Avl % SiO2 burden Waste category millions Ratio % % Ratio % % % % ness 143o % m m Inferred 5.0 4.0 m 39.0 2.8 13.9 43.5 3.3 13.0 23.9 3.6 24.4 60% 8.4 m 0.2 m Indicated 14.5 5.4 m 39.8 2.5 16.1 44.4 2.9 15.3 23.5 3.7 25.0 62% 9.5 m 0.3 m TOTAL 19.5 5.0 m 39.6 2.6 15.5 44.2 3.0 14.7 23.6 3.7 24.8 61% 9.2 m 0.2 m

Cut-off grades applied: Minimum 30% available Al2O3, 2m thickness & 3 data points in 350m search ellipse for each 25m x 25m block. 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) and "A/S" ratio is Al203/SiO2. Values above 10 are excellent. 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. Estimate excludes very large tonnages of bauxite containing washable silica gel. Metallurgical Results Encouraging: Silica Gel Removal to Expand DSO Bauxite Resources From January 2012, preliminary metallurgical tests have been conducted by a clay processing engineer who found that the silica gel substance was easily removed by a simple, low-cost washing procedure that may become a proprietary technology. The gel is soft and only loosely adhered to the bauxite, which allows for easy liberation when washed, leaving a recovered bauxite that is low-silica, high alumina DSO Grade Bauxite.

Work is continuing to develop a standard sample preparation protocol for future analysis of the silica gel-bearing bauxite samples by commercial laboratories so that large tracts of the bauxite layer can be included in future resource estimations.

Summary of Exploration Work Drilling Data A total of 457 exploration RC holes have been completed over the reporting period. 8 diamond core holes were also drilled for stratigraphic and density studies. An upgraded resource base of 24.5 million tonnes has been estimated. Total whole count for EPM 18014 is 910 RC holes, 8 diamond core holes.

Relatively wide spaced drill testing has been undertaken in three main target areas in the centre and north of EPM 18014 (see Map 3) - Plantation Plateau, Swains Plateau, and Redvale Plateau. Due to the large size of these targets, the drilling was done on traverses at relatively wide spacing (>75m) so as to cover entire plateaus. Whilst this has advantages in assessing the extent of bauxite over a large area, it is difficult to assess the continuity of the bauxite at such wide spacing between drill intersections.

Much of the drilling to date has taken place on the tops of the plateaus particularly around the edges. The focus of drilling has now changed to target the lower slopes of the plateaus as it appears promising for bauxite at shallow depth. Follow up drilling in central parts of the plateaus has also been completed with some success.

The Binjour bauxite unit is a distinct and predictable horizontal layer averaging approximately 6 metres in thickness, lying beneath a red mud unit averaging 8 metres in thickness that is free diggable and similar in density to the bauxite layer. The bauxite is high in Al2O3 but varies in SiO2 grade, mainly due to the presence of soft silica gel veinlets on joints and cavities

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EPM 18772

Plantation Plateau EPM 18014

Swains Plateau

Redvale Plateau

 Grey outline represents tenement boundaries  Shaded red area represents Plantation Plateau Target  Shaded yellow represents Swains Plateau Target  Shaded organge represents Redvale Plateau Target  Blue dots represent drill holes completed in reporting period

Map 3 – EPM 18014 overview of target areas. Blue dots indicate drill holes completed in the reporting period.

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Plantation Plateau Drilling Drilling from 12 - 21 March 2012 was carried out on Queensland Forestry Plantations blocks either close to the storage shed or on land behind the Binjour Bowling Club.

In total 21 holes were drilled (BJ685-705) for 421m. Drilling was delayed on a number of occasions by wet weather.

QFP / Darlingtons The prospect area is located at least a kilometre ENE of the Binjour Bowling club (Map 4). The eastern end of the prospect extends on to the Plantation Plateau and has been outlined by 2010-2011 drilling. A number of holes contain between 5-10m of good bauxite. Several low bauxite ridges extend west from the southwest escarpment of the Plantation Plateau.

These were targeted by drilling with BJ689 and BJ696 assaying 6m of good bauxite (<10% SiO2) and five other holes 2-4m of bauxite (<15% SiO2).

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 Blue outline represents bauxite mineralisation  Blue dots represent drill holes (with hole depth black nos and bauxite depth turquoise numbers)  Pink line represents property boundaries  Red shaded line represents road

Map 4 - Drill hole locations with bauxite width (shaded blue) and total hole depth

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North East Plantation Plateau Drilling in the north east of the Plantation Plateau during November/December 2011 (Map 5) intersected extremely high grade (<2% reactive silica, >40% available Alumina) near surface and thick bauxite (maximum 9m). The bauxite appears confined to the edges of the plateau large outcrop and boulder float found at the edge of the plateau. Much of the intersected bauxite in this area was accompanied by clay veinlets of halloysite which significantly affected the grade in the surrounding holes.

Coloured circles represent drill holes:  Red, 3m or more of bauxite  Orange, 1-2m of bauxite  Yellow, 0.5-1m of bauxite  Green, no bauxite in drill hole

Map 5 - Drilling on the north east of the Plantation Plateau. Red dots indicate bauxite.

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Large Plantation Plateau Target Drilling until the end of March 2012 focused on the large Plantation Plateau target (Map 6). Many thick intersection of bauxite where found at this location, much of the bauxite being extremely high grade (<3% reactive silica, >40 available alumina). Mineralisation was mainly found around the edges of the plateau with bauxite width and quality decreasing significantly closer to the centre.

Coloured circles represent drill holes:  Red, 3m or more of bauxite  Orange, 1-2m of bauxite  Yellow, 0.5-1m of bauxite  Green, no bauxite in drill hole

Map 6 - Plantation Plateau drilling March 2012. Red dots indicate bauxite

| Page 15 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont Swains Plateau Drilling Drilling was carried out at the southern edge of Swains Plateau during September 2011 (BJ454-BJ483). The drilling intersected some high grade bauxite (Map 7) however the quality was patchy and difficult to follow. The best intersections occurred between BJ480-BJ482 with a consistent 4m of good quality bauxite.

Coloured circles represent drill holes:  Red, 3m or more of bauxite  Orange, 1-2m of bauxite  Yellow, 0.5-1m of bauxite  Green, no bauxite in drill hole

Map 7 - Swains Plantation drilling October 2011. Red dots indicate >3m of bauxite.

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Drilling during early October 2011 occurred over a large area of Swains Plateau (Map 8). Bauxite was sporadic at best with most of the holes returning disappointing results (BJ517-BJ549). The exception was hole BJ536 with thick high quality bauxite occurring near surface (4m of cover).

Coloured circles represent drill holes:  Red, 3m or more of bauxite  Orange, 1-2m of bauxite  Yellow, 0.5-1m of bauxite  Green, no bauxite in drill hole

Map 8 - Drilling Swain Plateau early October 2011. Red dot indicates bauxite.

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Drilling on Forestry Blocks – Swains Plateau The drilling was carried out on forestry blocks during the first part of April 2012 (BJ741-795). Most of the drilling involved outlining the extent of previously discovered mineralization. The biggest target was located directly west of Sandows Rd in native forest. BJ783-795 were drilled to better define the extent of mineralization (see Map 9). The results outlined three smaller bauxite deposits with a thickness of 1-2m at a consistent 11m depth to the top of the bauxite.

Sandows Rd

Map 9 – Forestry Blocks drill plan showing outline of bauxite and bauxite width and depth to top of mineralisation

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Sandows Rd – Swains Rd Intersection Holes BJ746-762 were drilled to test the extent of bauxite in an undrilled area either side of Sandows Road. The results were disappointing and existing mineralization was not significantly increased with only holes BJ746-747 intersecting good bauxite (see Map 10).

Drilling was also undertaken near the Sandows – Swaind Rd Intersection where BJ193 contained 5m of good bauxite (see Error! Reference source not found.). BJ767 returned a 3m bauxite intercept whilst BJ 766 intersected 13-14m at 29.6% available Al2O3 / 10% reactive silica. Mineralisation is still open to the west into Paul Aitkenhead’s place.

Further to the south BJ770-782 were drilled to test for extensions to the main Swains bauxite deposit to the north. Whilst BJ771-772 intersected one metre of bauxite all other results were negative.

Sandows Rd

Map 10 – Sandows Swain Rd Intersection - drill plan showing bauxite outline with bauxite width and depth to top of bauxite

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 Blue outline represents bauxite mineralisation  Blue dots represent drill holes (with hole depth black nos and bauxite depth Sandows Rd turquoise numbers)  Pink line represents property boundaries  Red shade line represents roads Swains Rd

Map 11 – Sandows Swains Rd Intersection - drill plan showing bauxite outline with bauxite width and depth to top of bauxite

Redvale Plateau During the second half of the April 2012 drilling shifted to the Redvale Plateau. Here tracks were found to allow access to a terrace containing widespread bauxite subcrop and float just below the east edge of the Redvale Plateau. Drilling was undertaken on Con van Este’s place and also on a road reserve. A total of 28 holes were drilled (BJ796-823).

ALS analyses have been received and are somewhat disappointing as some material interpreted as bauxite has turned out to be ironstone. This has significantly decreased the size of the deposit (see Map 12).

Following on during May, a further 87 holes (BJ824-910) were drilled in the area. These included eight holes (BJ824-831) in the road reserve before the rig was shifted from the terrace onto the plateau proper. The remaining drill holes were all located on Merv Ekhert and Doug Darlington’s properties.

Widespread mineralization was intersected (see Map 13) at a consistent depth of 11m on the plateau. The largest anomaly is approximately circular with a diameter of 700m and an approximate bauxite width (<15% SiO2) of 2m. Secondary anomalies occur to the south and west of the main bauxite body. Interestingly the bauxite anomalies on top of the plateau are quite separate from the mineralization intersected below the escarpment. The plateau bauxite is spatially separate from the mineralisation identified on Con Van Este’s place. The plateau mineralization is on average about 30m higher than the escarpment mineralization. Laboratory results for this area where somewhat disappointing with much of the bauxite mineralisation extremely high in iron (Fe>50%).

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 Blue outline represents bauxite mineralisation  Blue dots represent drill holes (with hole depth black nos and bauxite depth turquoise numbers)  Pink line represents property boundaries

Map 12 – Properties with drill holes. Drill plan showing bauxite outline with bauxite width and depth to top of bauxite

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The bauxite sub-crop and float found immediately below the plateau edge extends for about 800m NS on Con Van Este’s place and the road reserve. It extends for a further 100-200m onto Ian Buckley’s place but then is not seen further to the south. This suggests that the bauxite has a strong NS orientation which is consistent with the strike of the bauxite mineralization found elsewhere on the Redvale Plateau (Merediths / Tarlingtons).

Further drilling is required here as the mineralization has not been closed off. Traversing the escarpment to the south and southwest is also needed to identify more bauxite mineralization. (The eastern escarpment has been traversed to just north of the Telecom Tower).

 Blue outline represents bauxite mineralisation  Blue dots represent drill holes (with hole depth black nos and bauxite depth turquoise numbers)  Pink line represents property boundaries

Map 13 – Properties with drill plan showing bauxite outline with bauxite width and depth to top of bauxite

Reconnaissance Burnett Highway This area was targeted as prospective on the basis of bauxite float observed from the Burnett Highway, shedding off low ridges to the south.

Traversing identified good bauxite sub-crop near the top of the NW arm of the Redvale Plateau (see Map 7). The bauxite looks like it could be reasonably thick (>5m) although it is hard to be certain of this as bauxite outcrop is minimal. There is also the possibility that some of the low subsidiary ridges contain bauxite as there is extensive bauxite scree around them.

Niton analyses of typical bauxite were encouraging (see Map 14).

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Following the main NW arm of the Redvale Plateau provides the best drill access to the top of the main prospect. The rig would gain access to the ridge-top from either Stringers or Scneider’s properties where there is cleared land as far as BJ172. From here there is an overgrown logging track which provides access all the way to the end of the plateau. (Away from the track the ridge is thickly wooded).

 Red diamonds represent niton samples – yellow numbers represent aluminium readings and turquoise numbers represents Burnett Highway silica readings  Pink line represents property boundaries  Red shaded line represents roads/highway  Yellow dots represent waypoints  Blue line represents bauxite mineralisation

Map 14 – Burnett Highway prospect with Al2O3 and SiO2 Niton assays Old School (Tarlington / Savage / Morris Properties) This prospect was initially found because of a large bauxite boulder under the school sign (Map 15). The prospect extends south from the top of the ridge on Tarlington’s place to just north of the Humphrey Rd in the south. The two landowners involved on the Humphrey Rd side are Ray Savage and Hilda Morris.

The bauxite also appears to extend north past the Tarlington’s house to just above a water bore. There is a large cleared area between the house and BJ318-320 (mineralised holes) where there is room to drill several holes. North of the house though access is very limited. The only track north from the house also contains a partly exposed PVC water pipe (house supply) so is definitely not a feasible option.

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 Yellow diamonds represent waypoints (some with niton assays) – yellow numbers represent aluminium readings and red numbers represents silica readings  Pink lines represent property boundaries  Red shaded line represents roads/highway  Yellow dots represent waypoints  Blue line represents bauxite mineralization  Green outline represents red mud

Map 15 - Old School prospect with Al2O3 and SiO2 Niton assays No field work has been undertaken below the Redgrave escarpment east from Hilda Morris’ property. Given the discovery of extensive bauxite within the eastern Redgrave Plateau it should be a priority to identify possible extensions of this bauxite to the south.

Dempster’s Lane (Slack / Hooper Properties) This area is located directly to the north of the Plantation Plateau. Bauxite sub-crop was found on subsidiary ridges trending north from the main plateau. Two separate prospects were identified along the western and eastern boundaries of Hooper’s place (see Map 16).

The northern part of the east anomaly should be accessible via Dempster’s Lane. Access to the southern parts however will need further investigation.

Similarly the bauxite occurrence along the west boundary of Hooper’s place will need further work to find drill access. There is a large reasonably level terrace behind and above the bauxite float which should be accessible from the south.

No reconnaissance has been undertaken on the Bremnar’s place but should be a priority. Access agreements need to be negotiated.

| Page 24 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont

Map 16 - Dempsters South prospect with Al2O3 and SiO2 Niton assays Legend for Map 16 and Map 17:

 Red diamonds represent waypoints (some with niton assays) – yellow numbers represent aluminium readings and turquoise numbers represents silica readings  Pink lines represent property boundaries  Red shaded line represents roads/highway  Yellow dots represent waypoints  Blue line represents bauxite mineralization  Brown outline represents Basalt extent  Green outline represents red mud

Map 17 - Dempsters North prospect with Al2O3 and SiO2 Niton assays The area to the north of Dempster’s Lane on Leggett’s property was also explored. In particular a prospective looking hill was targeted (see Map 17) but contained only pink and red tuff. The southern

| Page 25 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont parts of the accessed area consisted of poorly outcropping basalt overlain by pink and lesser red tuff along low north trending ridges. Palaeozoic metasediments cropped out to the north and west of the survey area.

Very minor bauxite float was alongside Dempster’s Lane and probably represents float from the bauxite found on Hooper’s place.

Meredith Plateau Two landowners from the Meredith Plateau area contacted ABx about the possible bauxite occurrences on their properties. The two properties were accessed during May 2012.

Peter Bennett owns land immediately to the north of the plateau. A prominent hill, an outlier to the main plateau was sampled (see Map 18). The hill was sampled at the summit and also halfway down. The main rock type was fairly consistent and could be described as intermediate bauxite. Niton analyses were encouraging with 14-15% Al2O3 and between 14-18% SiO2.

Map 18 - Al2O3-SiO2 Niton results north Merediths Plateau Lyle Opperman owns Bethmanor located about 1 km west of the Branch Ck Rd – Goorgena Rd intersection at the east end of the plateau. The property consists of a thin layer of red tuff overlying whitish Mesozoic sandstone. No bauxite was seen.

| Page 26 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont

Core Drilling During April 2012 8 PQ core holes were drilled in order to better understand the form of the bauxite and to study its density and mineralogy more closely (Map 19). The full core report has been attached in Appendix 5.

Goals of the program To determine contact with:

 Red mud/Bauxite and Silica rich zones

 Bauxite and Si zones

 Tenor of the Red mud, Bauxite and basal fine grained Bauxite

 Basement Geology

 Other data;

o Metallurgical Testing

o Hand specimens for petrographic description of the Si interface zones

o RD/Gravimetric determination of Specific Gravity

o Generation of geological and resource sections with real contacts/angles/thicknesses

The drill hole prefix for the program are designated BJC_nnn , (being Binjour Cored). The drill hole locations varied from what was originally proposal for a number of reasons, mostly to do with access and site clearing, (no site clearing was undertaken using the selected locations).

Table 4 – Location of Core Holes

East MGA HOLE ID Lat Long North MGA 94 94 RL

BJC-001 -25.52436 151.501416 7176139.88 349415.56 395.39

BJC-002 -25.525621 151.498972 7175997.44 349171.52 395.52

BJC-003 -25.524242 151.499619 7176150.91 349234.82 394.82

BJC-004 -25.483797 151.482339 7180610.91 347447.08 363.17

BJC-005 -25.483774 151.481837 7180612.89 347396.59 361.66

BJC-006 -25.485963 151.481873 7180370.47 347402.97 372.63

BJC-007 -25.48726 151.482704 7180227.77 347488.15 371.53

BJC-008 -25.520978 151.496217 7176508.57 348888.83 368.46

| Page 27 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont

Table 5 – Depth of Core Holes

Collar Cored Total Cored HOLE ID From/To from Cored to Interval

BJC-001 0-2.00 2.00 20.70 18.70

BJC-002 0-2.00 2.00 20.10 18.10

BJC-003 0-2.00 2.00 20.30 18.30

BJC-004 0-1.00 1.00 12.00 11.00

BJC-005 0-1.00 1.00 14.40 13.40

BJC-006 0-1.00 1.00 15.20 14.20

BJC-007 0-1.00 1.00 13.00 12.00

BJC-008 0-1.00 1.00 26.00 25.00

Total Metres Drilled 141.70

Total Metres Cored 130.70

| Page 28 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont

Map 19 - Core hole locations Core Holes Geology The geology of the core holes generally conforms with the interpreted geology of the Air-core drilling with a number of exceptions which will be outlined in the discussion below.

Firstly the accepted model of the bauxite stratigraphy on the Binjour Plateau has been confirmed by the core drilling, being the bauxite layer is overlain by a 5 to 10 metre layer of red mud and underlain by a brecciated basal tuff derived from country rock of the Gayndah Beds.

Secondly the thickness of the bauxite layer is consistent with the intercepts from the Air-core drilling.

The main differences encountered with coring versus Air-coring is the bauxite was interpreted as being a coherent and massive flow or layer using the chip logging methodology but the coring indicates the bauxite is a mass of fused volcanic bombs which have been fused and cemented by gibbsite during the deposition and later oxidization. The bauxite layer can best be described as a bomb field or crater debris field. It is becoming evident that the bauxite layer is a low angled cone or wide debris field composed of varying sized bauxitic fragments, which has been fused/cemented by gibbsite into a

| Page 29 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont porous matrix supported mass. The bauxite bombs/ejected fragments are surrounded by a matrix of either red mud or fine bauxitic tuff with extensive gas/steam conduits at the margin of the larger fragments indicating the bauxite was laid down when hot and cooled insitu.

Further work is required to reach a conclusive deposition model for the bauxite but the evidence gathered so far indicates a volcanic origin and oxidization process.

The next interesting development was the testing of the contact halo which revealed a bleached red mud zone above the bauxite horizon which was very low in Si levels. This red mud was seen and tested in a number of holes using Air-core and gave similar results. Seeing the red mud in core raises a number of issues. Firstly the alteration seems to be from the base up (retrograde) or from the contact with the bauxite upwards, raising the possibility that the bauxite was the cause of the silica migration. In addition to this there is the possibility that a significant portion of the plateau resource has excluded this material as rig geologists would not test this zone as it is considered to be red mud and as such not part of the testing regime and focus on testing the obvious bauxite. A rethink of the field testing protocol is required for future Air-core drilling campaigns to include “Bleached red mud” zones in the NITON analysis. Additionally re-examination of the Air-core logs for reference to the bleached colour and extracting duplicate samples stored for analysis by NITON to check for intervals overlooked during early drilling campaigns in the same region of the resource.

Conclusions of Core Drilling The drilling of the Binjour Plateau bauxite deposit using triple-tube PQ drilling was most successful and fulfilled the majority of the goals set out in the rationale.

A large quantity of data has been produced which is being examined to better understand the genesis and metallurgy of the deposit. In addition to helping understand this deposit a number of qualities of this bauxite are able to be better understood in other deposits on the east coast in the tenements held by ABx.

Geochemical Data Geochemical data was collected during the reporting period. The data was obtained from drill programs undertaken in in November 2011, then February through to May 2012 by an RC drill rig to get samples representing the whole zone prospective for bauxite. These samples were sent to ALS Laboratory Group (ALS) throughout the December 2011 and through February - May 2012. Assay results can be found in Appendices 3A, 3B and 3C.

Very good assay results resulted in an upgrade of the Binjour Maiden Resource from 16.8 to 24.5 million tonnes of gibbsite-rich bauxite in the third year of tenure. See Table 2 for a summary of the resource results.

In addition, 8 PQ core holes were drilled in order to better understand the form of the bauxite and to study is density and mineralogy more closely. The full core report has been attached in Appendix 5.

Geological Mapping During the reporting period, no formal geological mapping was undertaken within EPM 18014. However, geological interpretations were undertaken based on open file data and available geological maps, as well as observations during the traverses and sampling. An interpretation is provided in the Geological Interpretation in section 0.

| Page 30 EPM 18014 Binjour - Third Annual Report | October 2012 WORK PERFORMED Cont Geophysical Data During the reporting period, no geological surveys were undertaken and no geophysical data was collected or interpreted within EPM 18014.

Remote Sensing Data Landsat imagery, Digital Terrain Model and Google Earth imagery was used to define the zone of main interest (ie. the zone with ancient laterically weathered profile preserved, which is situated beneath the thick pile of Younger Tertiary Volcanics during a very long quiet period with a climate favourable for formation of laterite/bauxite).

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5 CONCLUSIONS AND RECOMMENDATIONS

Extensive exploration has been undertaken on EPM 18014 during the first three years of tenure as evidenced above; however, much is left to be done.

Drilling results point strongly toward economic potential to sustain a bauxite mining operation. High grade bauxite results and the proximity to a rail line make EPM 18014 a high priority for ABx3 to further explore. ABx3 has been granted 100% renewal of EPM 18014 “Binjour” so that in the next two years we can traverse all unexplored areas and drill-test all targets.

The following are the highlights and conclusions from work conducted in the third year of tenure:

 JORC Resource upgrade to 24.5 million tonnes of gibbsite-rich bauxite at EPm 18014

 Resource is based on 517 drill holes into less than 25% of the identified bauxite layer.

 Huge bauxite mineralisation – identified bauxite layer extends over entire 44 square kilometre Binjour Plateau

 A series of PQ core holes were drilled in order to better understand the form of the bauxite and to study is density and mineralogy more closely. The full core report has been attached in Appendix 5

Recommendations

 Continued drill testing in Swain, Plantation and Redvale Plateaus’ including in-fill drilling at closer spacing’s to define JORC resources

 Traversing on foot to find new bauxite exposures along the prospective horizon on those parts of the tenement that remain to be explored

 Drill testing of new targets where the thickest and most continuous bauxite exposures have been found

Experiences and knowledge accumulated in the course of exploration by traversing on public roads and on foot across private land as well as drill testing of best targets in other EPMs in Queensland and across the border in similar geological settings in northern NSW will be used to improve success rate of exploration.

The Australian Bauxite team is comprised of 6 geologists and 4 field technicians with high level of knowledge and hands-on experience in bauxite exploration in Eastern Australia (Qld, NSW, and Tasmania).

| Page 32 EPM 18014 Binjour - Third Annual Report | October 2012 CONCLUSIONS AND RECOMMENDATIONS Cont

Proposed Exploration Area

EPM 18014

Map 20 – Proposed Exploration Area marked by yellow highlighted area

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6 STATEMENTS

Statements of Resources / Reserves In accordance with the Mineral Resources Regulation 2003, ABx3 confirms that a 24.5 million tonne JORC Resource has been identified within EPM 18014 during the reporting period.

Statement Describing Significant Mineralisation ABx3 has outlined significant exposures of bauxite in outcrop which following drilling are expected to be added to the JORC resource as published.

Statement of Compliance During the reporting period, the actual program of activities undertaken within EPM 18014 included the following:

1. Detailed geological mapping, including geomorphological mapping, to define the areas with best potential for bauxite.

2. Systematic sampling of natural outcrops and exposures in road cuts of lateritic weathering profile

3. Chemical analyses of samples, including specialist analyses to determine total and available alumina, total and reactive quartz, loss on ignition and other analyses as required in bauxite search

4. Drill testing of zones with best potential defined by work under 1, 2. and 3, by an RC drill rig to get samples representing the whole lateritic weathering profile (from upper-most iron rich zone through alumina rich zone down into mottled and pallid saprolite zone)

5. Systematic drill testing at close intervals to obtain data for resource estimation in the best target areas defined by programme under 4.

6. JORC resource estimation

The program of works proposed for EPM 18014 for the two year period from 9 October 2011 through to the period ending 8 October 2013 included the following activities:

1. Detailed geological mapping, including geomorphological mapping, to define the areas with best potential for bauxite.

2. Systematic sampling of natural outcrops and exposures in road cuts of zones prospective for bauxite

3. Chemical analyses of samples, including specialist analyses to determine total and available alumina, total and reactive quartz, loss on ignition and other analyses as required in bauxite search

4. Drill testing of zones with best potential defined by work under 1, 2. and 3, by an RC drill rig to get samples representing the whole zone prospective for bauxite

5. Systematic drill testing at close intervals to obtain data for resource estimation in the best target areas defined by programme under 4.

6. JORC resource estimation

| Page 34 EPM 18014 Binjour - Third Annual Report | October 2012 STATEMENTS Cont

The actual program of works undertaken for the reporting year is considered to be consistent with this proposed program, and ABx3 is committed to completing its proposed work program for EPM 18014 during the current term.

Statement of Proposed Activities During the forthcoming period, the following activities are proposed for EPM 18014:

 Further reconnaissance exploration by traversing on foot;

 Sampling of exposures of bauxite;

 Identification and rating of targets;

 Drilling to define JORC resources; and

 Laboratory analysis of samples by specialist assay methods for bauxite.

1. Subject to 2, the tenure holder acknowledges that this Report, including the material, information and data incorporated in it, has been made under the direction or control of the State of Queensland (the State) within the meaning of section 176 of the Copyright Act 1968 (Cwth).

2. To the extent that copyright in any material included in this Report is not owned by the State, the tenure holder warrants that it has the full legal right and authority to grant, and does hereby grant, to the State, subject to any confidentiality obligation undertaken by the State, the right to do (including to authorise any other person to do) any act in the copyright, including to:

 Use;

 Reproduce;

 Publish; and

3. Communicate in electronic form to the public, such material, including any data and information included in the material.

4. Without limiting the scope of 1 and 2 above, the tenure holder warrants that all relevant authorisations and consents have been obtained for all acts referred to in 1 and 2 above, to ensure that the doing of any of the acts is not authorised within the meaning of section 29(6) of the Copyright Act (Cwth).

| Page 35 EPM 18014 Binjour - Third Annual Report | October 2012

7 REFERENCES

Rebek, J; Coyte, T; Grieve, T: Statement in Support of Renewal Application for EPM 18014 – Binjour, for period reporting to 8 October 2012, ABx3 Pty Ltd.

Rebek, J: Annual Report – EPM 18014 “Binjour” – for the period ending 8 October 2010, ABx3 Pty Ltd

Rebek, J, Grieve, T: Second Annual Report – EPM 18014 “Binjour” – for the period ending 8 October 2011, ABx3 Pty Ltd

Roach, B: Mineralogical Report on Two Drill Core Samples from the Binjour Area, Southeast Queensland – 2 August 2012, Australian Bauxite Limited

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