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2007 Annual Report

This year Aurox Resources limited (“Aurox”) has achieved milestones which puts it firmly on-track to become Western Australia’s first magnetite iron ore producer.

Introduction

This year Aurox Resources limited (“Aurox”) has achieved milestones which puts it firmly on-track to become Western Australia’s first magnetite iron ore producer.

In conjunction with industry leading consultants, the company completed two Bankable Feasibility Studies (“BFS”) on its Balla Balla project; one for the production of ferrovanadium and a second for the production of iron ore concentrate.

The BFS results clearly show the production and sale of iron concentrate is a superior alternative to the production of ferrovanadium. the positive aspects of producing iron ore concentrate at Balla Balla include low operating costs, low capital costs, very simple mining-processing-transport mechanics and a readily available product shipping solution at Port Hedland.

A second 2007 milestone was the signing of long term sales contracts with two Chinese steel-vanadium producers for the annual delivery of six million tonnes of concentrate. the customers are both expanding their operations in China and require Balla Balla feed to supplement increases to their production capacity. the contract price to be paid for the Balla Balla concentrate is linked directly to the price steel mills worldwide pay for Hamersley iron premium iron ore Fines.

The positive magnetite BFS and the new sale agreements underpinned a successful $102 million capital raising by Aurox. the funds, in part, were used to finalise the $15 million Balla Balla option agreement giving Aurox 100% ownership of the project. the remaining funds are ear-marked for ordering of long-lead plant equipment and resource drilling scheduled to commence october 2007 to upgrade the vast amounts of magnetite resources at Balla Balla to new ore reserves.

The Company’s decision to produce magnetite at Balla Balla is further reinforced by strong iron ore prices which are projected to remain at high levels for many years to come.

At the Company’s 100% owned yalgoo project, located in the mid-west iron ore region of Western Australia, the Company has commenced testing iron ore targets of significant extent. Surface mapping, geophysical surveying and outcrop sampling generated iron magnetite and hematite targets which were tested by wide-spaced, first-pass drill patterns using a reverse circulation drill rig. the results confirm the presence of thick iron units of highly economic tenor and will be immediately followed-up next year with in-fill resource definition drilling.

Aurox’s tight capital structure, superior project economics, strong financial position and full ownership of the Balla Balla and yalgoo project puts the Company in a strong position as it moves ever closer to iron ore concentrate production.