Ann: Upgrade of Resource & Scoping Study, page-6

Clarification of 30 October Scoping Study announcement
On behalf of the Directors of Queensland Bauxite (ASX:QBL) (“the Company”), I am delighted to release the new Scoping Study for South Johnstone Bauxite Project as set out in this announcement, which supersedes completely the Scoping Study of 30 October 2014. The new Scoping Study sets out initial production targets and financial forecasts based solely on the now upgraded JORC compliant Indicated Mineral Resources.
The Company advises that investors, brokers and analysts may only use the current updated scoping study announcement as a basis for investment decisions and not the previous one released on 30 October which we hereby retract, as we have been advised that in our specific circumstances only a JORC Indicated Resource together with the appropriate associated disclosures of the modifying factors to a level which meets the reasonable grounds requirements in the Corporations Act 2001 may be used when completing and releasing the results of our scoping study. We have been advised that the release of results of the previous scoping study solely on the basis of JORC Inferred resources alone in our specific circumstances does not accord with ASX Guidance Note 31, para 8.7 and the Australian Corporations Act 2001, as Inferred Resources alone is considered to not provide reasonable grounds to imply economic viability unless under exceptional circumstances. An Inferred resource is a lower geological level of confidence by comparison to an Indicated resource, as an Indicated resource enables a greater level of confidence in projecting more accurate production and profitability in the pre-mining Scoping Study.
Therefore we are pleased to have been able to replace the previous scoping study announcement with this new Scoping Study announcement which is based solely on the higher confidence level JORC compliant Indicated Resources as set out in this announcement.
This announcement sets out the Company’s progress over the last few weeks and includes numerous significant milestones as set out below.

South Johnstone Bauxite Project Upgrade of Mineral Resource & Updated Scoping Study Based on the Upgraded JORC Compliant Indicated Mineral Resource
Key points
 The Company’s geological bauxite continuity model has now been confirmed
 Upgrade to Higher Confidence Initial JORC Indicated Mineral Resource
 The Upgraded Indicated Resource and updated Scoping Study Stage 1 Project are major milestones in the development of South Johnstone
 Low Capex, Low Opex, Payback and Revenues justifies initial production decision
 Current initial JORC Indicated Resource area drilled is significantly less than 1% of surface Exploration Target area
 The upcoming program of drilling aims to rapidly further increase Indicated Mineral Resources tonnages and grade at depth and along strike
 New Scoping Study results are based solely on new initial JORC Indicated Resource Stage 1 Project and does not rely on any lower confidence Inferred Resources
 Payback of estimated capital costs: <6 months
 Annual Gross Revenue: A$42.4m
 IRR: 223%
 Operating annual positive cash flow before tax (from year 1; Operating Stage 1 Scenario only): A$12.3M
 Average available alumina of 29.7% and reactive silica of 3.2% for current initial Indicated Resource
 Surface drilling returned up to 33.6% available alumina and as low as 1.8% reactive silica
 Alumina to silica (A:S) ratio for Indicated Resource is approximately 10:1
 Limited deeper drilling to 3m has seen higher alumina, lower silica grades
 Recent drilling is down to average of 1.4 metres bauxite depth only
 Drilling at depth to follow in upcoming program
 Cashed up for development
 Potential for increased bauxite production in Operating Scenario Stage 2 Project
 Commenced Environmental Approval and Mining Lease preparations
 Additional off taker interest received from further commodity trading and alumina refinery groups
 Limited new supplies of seaborne bauxite is forecast on-stream in the next 12 months
 Aiming for mining to commence in second half of 2015
The Directors are looking forward to the further development of the South Johnstone Project and to a most successful 2015 for all our shareholders.