Bauxite Resources : Annual Report to shareholders

ANNUAL REPORT 2017

ABN: 72 119 699 982

Corporate Information

Robert Nash - Non-Executive Chairman Luke Atkins - Non-Executive Director Neil Lithgow - Non-Executive Director

Zhaozhong Wang - Non-Executive Director

Sam Middlemas

Patrick Soh

Suite 10, 295 Rokeby Road

SUBIACO WA 6008

Telephone +61 8 9200 8200

Facsimile +61 8 9200 8299

Email: admin@bauxiteresources.com.au Web: www.bauxiteresources.com.au

Security Transfer Registrars Pty Ltd Alexandrea House

Suite 1, 770 Canning Highway

PO Box 535

APPLECROSS WA 6953

Telephone +61 8 9315 2333

Facsimile +61 8 9315 2233

Moore Stephens

Level 15, 2 The Esplanade

PERTH WA 6000

Telephone +61 8 9225 5355

Facsimile +61 8 9225 6181

ASX Code: BAU

Contents

Corporate Information 1

Chairman's Report 2017 2

Review of Operations 3

Mineral Resources and Ore Reserves 8

Directors' Report 11

Auditors' Independence Statement 22

Statement of Profit or Loss and

Other Comprehensive Income 23

Statement of Financial Position 24

Statement of Changes in Equity 26

Statement of Cash Flow 27

Notes to the Financial Statements 28

Directors' Declaration 51

Independent Audit Report 52

ASX Additional Information 56

Chairman's Letter to Shareholders 2017

Dear Shareholders,

The financial year ending 30 June 2017 has been a period of substantially reduced expenditure and operating tempo for the Company in the wake of the termination of our joint venture with Yankuang Group in the prior reporting period. The operational focus of the Company has, accordingly, been:

1. to preserve the cash resources of the Company of about $16.5M by keeping expenditure low including reducing non-executive director fees in recognition of the lower operating tempo of the Company at this time;

2. to continue managing the bauxite joint venture with the HD Mining & Investment Pty Ltd ("HD Mining"), the

   costs of which are 100% funded by HD Mining; and

3. undertaking extensive work reviewing numerous potential future projects:

4. within the resources industry, including silica sands, gold, and "battery related" mineral projects;

   and

5. outside the resources industry, primarily high tech and medical products opportunities.

6. A new sub-committee comprising three board members and the CEO was created at the start of the financial year with the sole purpose of regularly assessing new project opportunities and developing strategy for the board's consideration going forward. The sub-committee has met about once every six weeks, depending on what opportunities are under consideration. Despite our enthusiasm, there have been no prospective projects reviewed which we have been satisfied have a strong probability of increasing shareholder wealth. Further, the board has been reluctant to take chances on backing projects outside the resources space unless they are readily understandable and compelling, which none of those reviewed have been.

   The more recent focus has been on a number of Silica Sand tenements which have been pegged around GinGin, Albany and Esperance in Western Australia based on historical exploration data. Assessment of the exploration data, logistics and market considerations are being undertaken, along with analytical work with a view to designing a flowsheet with the ultimate goal of achieving a valuable High Purity Quartz product.

   The Company continues to actively consider further investment opportunities and further capital management initiatives.

   I thank the CEO, Sam Middlemas, for all his work, including his ongoing focus on keeping our costs of operation down. I also thank our small team of staff and my fellow board members for their support during the last financial year.

   Finally, I thank you, the shareholders, for your continued support of this Company, and again assure you that your board, together with our committed staff and CEO, are focused on maximising shareholder value and returns as we move forward.

   Yours sincerely

   Robert Nash Chairman

   2 | Financial Report 2017 Bauxite Resources