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2008 Annual Report

Aurox Resource Limited ('Aurox') remains on-track to become Western Australia's first magnetite iron ore producer.

Introduction

Aurox Resource Limited ('Aurox') remains on-track to become Western Australia's first magnetite iron ore producer.

In mid-2007 Aurox raised A$102 million from a placement of shares and convertible notes with a number of international and local institutions and sophisticated investors. The placement was undertaken with specific aims to:

• exercise the option to purchase the Balla Balla tenements outright;
• drill to increase Balla Balla mineral resources and ore reserves;
• design, order and place deposits on key processing plant equipment;
• secure shipping rights at Port Hedland’s Utah Point;

The Company has delivered on all the above as well as making significant progress in many other areas including:

• plant, port and slurry pipeline engineering
• the appointment of key operating, engineering and construction personnel;
• negotiating fixed price construction agreements with manufacturing & engineering giants FLSmidth & Siemens;
• completing testwork and installation of water bores required for concentrate production;
• delineation of titanium and phosphate ‘bi-product’ resources and advancing the associated laboratory testwork and product marketing; and achieving an EPS level of environmental assessment.

All technical aspects of the Balla Balla magnetite project are now well advanced including detailed engineering of the concentrate plant, port dewatering house and material handling equipment. In-house design engineers, supporting staff and consultants are working closely with FLSmidth and Siemens to finalise engineering and planning in the lead up to construction activities. Tender documents for mining, civil engineering, accommodation, earthworks, plant erection and other disciplines complementing the FLSmidth/Siemens scope of works have been compiled and tenders will be released and negotiated once appropriate funding and final approvals are in place.

The following review summarizes the advancements made at Balla Balla during the past 12 months. It is clear that the world class Balla Balla project is not only one of the most advanced and potentially profitable of the emerging iron ore endeavors in Australia, but has considerable upside with respect to sales growth and the development of its titanium and phosphate bi-products.