BAUXITE RESOURCES LIMITED DECEMBER 2015 QUARTERLY REPORT‌‌

Level 2, Building E, Garden Office Park, 355 Scarborough Beach Road, OSBORNE PARK WA 6017

PO Box 1315, OSBORNE PARK DC WA 6916 Phone: +61 8 9200 8200 Fax: +61 8 9200 8299 www.bauxitersources.com.au

ACTIVITY SUMMARY FOR DECEMBER 2015 QUARTER

During the quarter exploration activities were minimal within the Bauxite Alumina Joint Venture (BAJV) as activities were focused on the completion of the sale of BRL's interest in the BAJV to Yankuang and on other administrative measures to reduce ongoing corporate expenditure. Completion of the Yankuang transaction occurred on 21 January 2016 (refer details below).

EXPLORATION ACTIVITIES UNDERTAKEN UNDER THE JOINT VENTURE WITH HD MINING

Background

In 2010 the Company entered into a JV with HD Mining & Investment Pty Ltd (HD Mining) a wholly- owned subsidiary of the Shandong Bureau No1 Institute for Prospecting of Geology & Minerals (Shandong) to explore for bauxite. The JV provides for HD Mining to fund 100% of exploration and feasibility costs for HD Mining to earn:

1. a 40% interest in any defined area of exploration on the making a binding commitment by HD Mining to undertake a detailed feasibility study for the commercial mining of the defined area; and

2. a further 20% interest in a defined area upon completion of the feasibility study and the making by the JV committee of a decision to commence mining.

Current Activities

Current fiscal restraints advised in the last quarter have led to HD Mining deferring a decision to commence a feasibility study for the HDJV's Dionysus project. Water level monitoring continues at Dionysus.

A meeting has been scheduled for February to determine the way forward for the HDJV following delays from HD Mining in meeting its JV contribution commitments over the last quarter.

CORPORATE

Completion of Sale of Yankuang Joint Venture Interest and Buy-Back of Shares

As announced on 21 January 2016, following shareholder approval on 18th January 2016, completion occurred on the sale of BRL's interest in the joint ventures with its Chinese partner Yankuang Resources for $7.15m and the buy-back of Yankuang's 19,700,00 shares for $1.15m.

As a consequence of the transaction the following changes have occurred:

• BRL's net cash funds have increased by $6m, being the difference between the sale price of

  $7.15M received for its interest in the BAJV and the buy-back sum of $1.15M paid by BRL for Yankuang's shares in BRL;

• BRL has a royalty right of 0.9% of the FOB price (presently estimated to be worth approx. 50 cents per tonne) from the sale of all bauxite mined from the Felicitas and Fortuna tenements. The royalty is payable on the first 100 million tonnes of bauxite mined but is subject to a reduction to 87 million tonnes if the Fortuna tenement holder does not agree to consent to the assignment of BRL's bauxite rights in the Fortuna tenements to Yankuang within 90 days of 21 January 2016;

  • Following the cancellation of the 19,700,000 shares the subject of the buy-back, the total shares on issue will be reduced to 214,302,336 shares;

  • Yankuang's representative Mr Cunliang Lai has resigned from the BRL Board; and

  • BRL has no further obligations under the BAJV to continue to fund the joint ventures, which has substantially reduced BRL's ongoing costs of operation.

Cash Position and Shareholder Information

Bauxite Resources is in a strong financial position with significant cash reserves and no debt. As at 31 December 2015 the Company held AU$21.1 million in cash.

Following completion of the Yankuang transaction on 21 January 2016, the company received net proceeds of $6m (increasing cash funds to $27.1m), and the number of shares on issue were reduced from 234,002,336 to 214,302,336.

Future Operations

The Board is now focussed on identifying new oportunities both within and outside the mining industry and will undertake reviews of new projects in the coming months. The Company's current cash burn rate is in the process of being reduced significantly, and the revised budgeted cost of operations will be expected to reduce to less than $350k/quarter (before any interest receipts) and all surplus assets will be reviewed and rationalised in an orderly manner as markets allow for reasonable prices to be achieved.

The Board will continue to manage the Company in the best manner in which to maximise returns to shareholders and these may include various capital management initiatives.

Sam Middlemas, CEO, Bauxite Resources Ltd 28 January 2016

The Company advises that this material contains summaries of Mineral Resources as defined in the JORC Code 2012, and confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions continue to apply.

Schedule of interests in mining tenements as at 31 December 2015

BRL TENEMENTS (100%)

BRL retain 100% interest in bauxite and other minerals on the following tenements

BRL TENEMENTS (BAUXITE RIGHTS ONLY)

BRL retain 100% bauxite interest on the following tenements

HD MINING & INVESTMENTS JOINT VENTURE TENEMENTS

The JV requires HD Mining to fund 100% of all exploration and feasibility costs to earn up to 60% of the bauxite rights. HD Mining is currently working towards obtaining 40% interest in the bauxite rights on the tenements below. This will be triggered if HD Mining enters into a binding commitment to undertake a feasibility study on the tenements. Should HD Mining and BRL make a decision to mine, HD Mining will earn an additional 20% interest in bauxite rights. BRL maintains 100% interest in other minerals. At the date of this report BRL still has 100% interest in these tenements.

YANKUANG JOINT VENTURE INTERESTS

Bauxite Resources Limited has 30% interest in the bauxite rights on the tenements below. BRL retain 100% interest in other minerals except for iron on tenement E70/3900. BRL retain 100% interest in other minerals on all other tenements below except E70/3366 and E70/3730.