Quarterly Activities/Appendix 5B Cash Flow Report

Quarterly Report September 2021

Report dated 31 October 2021

ASX: ABX

Quarterly report and activity statement, 3 months to 30 September 2021

Corporate

• Group available cash at quarter end was $2.92 million and is currently about $2.67 million
• In addition, the company successfully completed an SPP, raising a further $4 million
• ABx securities now total 223,590,814 ordinary shares and 38,034,000 unquoted options and a further 40,786,500 million options are pending issue following the successful SPP

Exploration - Rare Earth Element Discoveries Continue in Tasmania

• ABx's Rare Earth Elements (REE) Deep Leads discovery at its DL130 bauxite project in northern Tasmania was enlarged in both areal extent and grade of mineralisation
• The latest hole DL187 returned a grade of 3,036 ppm total rare earths oxide (TREO), our highest REE grade to date from the Deep Leads discovery 1
• Hole DL187 also represents an 870 metre southerly extension of the REE mineralisation
• Drilling step-out holes commenced in October and encountered thicker clay zones that can be the favourable host of REE mineralisation. Further REE assays are pending
• Prices and demand for the key REE elements, Nd and Pr, are rising strongly because of their widespread use in new technologies, including electric vehicles - see below

Project (87% owned by ABx): achieves an innovative breakthrough

• Fabrication of components of the pilot plant has commenced, using designs provided by Alcore's international process engineers. Fabrication in Australia commenced with laser cutting in mid October
• Alcore's international process engineers have completed process flowsheet modelling for a commercial 10,000 t/y AlF3 plant using dross as the feedstock
• Results increase confidence in the Alcore process and support Alcore's approach to process development
• Thermodynamic modelling identifies another, potentially more effective, process route for producing AlF3 from dross - to be further investigated in Q4 2021
• Accelerating process development with appointment of Dr Xiao Liang as Senior Engineer
• Alcore process is new technology, proprietary to Alcore and will deliver significant economic and environmental benefits
• Production of AlF3 is at a projected lower operating cost when using dross in the process - reduced from A$1,080/t AlF3 to A$800/t AlF3 2
• AlF3 is an essential ingredient in aluminium smelters and Alcore's planned production in Bell Bay,
  Tasmania will provide security of supply and increased recycling of wastes for Australasian aluminium production, which is worth more than A$4.5 billion per year
• Alcore's engineering firms are to design and cost the first 10,000 tonne/year AlF3 production module and subsequent modules up to a total of 60,000 tonnes/year AlF3. At current cost scenarios, this could achieve an EBITDA of approximately A$50 million pa. Alcore can expand into other commodities including fluorine chemicals, advanced lithium-ion batteries and high purity alumina.

1. Refer to ASX announcement dated 14 October 2021
2. Refer to ASX announcement dated 12 April 2021

Australian Bauxite Limited t/a ABx Group	Level 5 52 Phillip Street	Sydney NSW 2000
ABN 14 139 494 885	P: [phone]	F: [phone]

Quarterly Report September 2021 page 2

Market for Aluminium Fluoride

AlF3 is a strategically important mineral that is an essential ingredient for aluminium smelting and is being investigated for advanced lithium-ion batteries. Australian aluminium smelters rely entirely on imported AlF3, typically more than 70% from China, but this proportion has reduced by more than 60% in 2021, illustrating the supply risks (see Figure 1).

The commercialisation of Alcore's proprietary technology and development of Australia's first production plant will provide much-needed security of supply for Australasian aluminium smelters.

	25,000
(tonnes)	20,000
from China
15,000
imports	10,000
fluoride
Aluminium	5,000
	0
	2016	2017	2018	2019	2020	2021 YTD

Figure 1

Imports of AlF3 from China into Australia have contracted substantially in 2021

Source: BACI, CCS

Figure 2

Engineering plan for a component of the Alcore pilot plant currently being fabricated

Figure 3

Alcore's forecast production costs are in the lowest quartile.

Raw materials are typically 75% of traditional cost.

Alcore is low-cost because of its lower- cost raw materials

Quarterly Report September 2021 page 3

Operations: Fingal Rail mine, Tasmania

• Mining lease application is being progressed for the large Fingal Rail deposit in northern Tasmania which can supply cement and fertiliser grade bauxite for many years
• A bulk sample of fertiliser-grade bauxite is being extracted for evaluation by a local fertiliser manufacturer that considers ABx bauxite to be an essential ingredient in their super phosphate
• DL130 bauxite deposit is being assessed as an alternative supplier of cement-grade bauxite because mining at DL130 may accelerate development of the Deep Leads REE discovery

Figure 4

Bulk-sampling of fertiliser-grade bauxite at ABx's Fingal Rail Project for assessment by the fertiliser manufacturer

This work will also allow ABx to apply and monitor its rehabilitation technology at this location

Exploration for Rare Earth Elements used for super-magnets

ABx's has discovered Rare Earth Elements (REE) mineralisation at its Deep Leads rare earth discovery that extends well beyond its DL130 bauxite deposit in northern Tasmania. The mineralisation is enriched in the strategically important super-magnet REE metals neodymium, praseodymium, terbium and dysprosium, which are needed in electric vehicles, wind turbines, smart phones and military electronics.

Figure 5

Location of ABx's two main project areas in northern Tasmania and main infrastructure

Recent hole DL187 returned the highest grade to date of 3,036 ppm total rare earths oxide (TREO) and extended the strike length of the REE mineralisation by 870 metres. The strike length of the Deep Leads REE now exceeds three kilometres (3km) and is open in several directions.

Quarterly Report September 2021 page 4

Figure 6

Total Rare Earth Element Oxides (ppm TREO) grades of drillholes at ABx's Deep Leads discovery

Hole DL187 with 3,306ppm TREO is the highest grade hole to date

Drilling recommenced mid-October to test for major extensions of the Deep Leads REE deposit to the northwest, northeast and south. More assays are pending.

Figure 7

Drilling at ABx's Deep Leads REE discovery in a recently harvested hardwood plantation

ABx's soluble rare earths deposit differs from the more traditional hard rock deposits in many ways and is dominated by the four super-magnet type of REEs. ABx' results from Deep Leads REE discovery to date are consistent with the Ionic Adsorption Clay type of REE mineralisation (IAC) which are readily soluble and can be recovered into a bulk concentrate.

Quarterly Report September 2021 page 5

ABx REE Business Strategy

Traditional hard-rock rare earth mines and processing plants usually take many years and up to billions of dollars investment in technically difficult processing plants. For this reason, ABx has explored for these IAC water-soluble type of REE occurrence which can be developed rapidly and at low cost, to produce a concentrate of REE elements that can be sold to the existing processing plants so that they can expand production rapidly.

The fastest and environmentally best method to develop of this type of REE is outlined in Figure 8 below.

REE accumulations in northern Tasmania are relatively free of radioactive elements uranium and thorium which means that a simple bulk concentrate could be sold to any producer, in any country.

China was until recently the main producer from such "water soluble" IAC types of REE deposits, mainly from southern China. China no longer produces from IAC deposits and is sourcing IAC REEs from Myanmar.

This type of deposit is rare

ABx has been advised that it is one of only three public-listed companies world-wide that is focussed on these Ionic Adsorption Clay REE deposits.

Figure 8

Summary of an in-situ leaching project

This production technology can only be conducted in suitable areas and after rigorous testing of the environmental technology

A grid of drillholes defines the location of the orebody.

Four holes around a central hole pump water into the ore layer and the central hole draws up the water

The other surrounding holes monitor water flow to ensure that the process is working properly

This production method has operated successfully in South Australia since 2001.

This announcement is authorised by the Board of Australian Bauxite Limited.

For further information please contact:
Ian Levy, CEO	Dr Mark Cooksey, CEO
ABx Group	Alcore Limited
Mobile: [phone]	Mobile: [phone]
Email:[e-mail]	Email:[e-mail]