Tallying a +14 offensive rebound edge and a +24 rebound advantage overall, Australia's hard work under the rim was countered by 24 turnovers for the game and a 16-27 final quarter.
Trailing by seven points in the third term, Spain put together a 16-2 run spanning the third and fourth periods to bring the crowd into the game and take control.
A three-pointer from Kyle Zunic (five points, two assists) kept the Aussies close in the dying stages but they were forced to send the Spaniards to the free-throw line where the hosts sealed the game.
Patrick Bines was a beast in the paint, finishing with five points, 13 rebounds and two steals while his six offensive boards were more than Spain's total as a team.
Kody Stattman also impressed with eight points but Dragan Elkaz could not weave his magic once again, shooting just 1-10 for five points.
Spain looked to bully their way to the basket from the opening tip but they did not reckon for the bigger frames of Matthew Johns and Callum Dalton who were able to match them under the rim and force Spain to shoot from outside.
Those shots were not dropping for the home side as they hit just 4-18 but eight turnovers for the Aussies in the first quarter led to a stagnant start for both teams.
The two stand-outs from the tournament so far, Tom Fullarton (16 points, nine rebounds) and Samson Froling (12 points, 13 boards), were again the stars of the show in the first half and they were able to settle the team down in the second period with their work on the glass allowing several second chance opportunities for Australia.
Froling went close to a double-double in the first half alone, recording ten points and nine boards to help the visitors to a massive rebound advantage and a 33-30 lead overall.
Australia continued to disrupt the Spanish offence in the third period, trapping them at half-court and restricting the hosts from any gaining any momentum.
A Kody Stattman three-pointer then threatened to blow the game open but just when Australia looked to take over, Spain finished the third period on a 7-0 run to turn the game on it's head.
Click here for the final box score while a replay of the game can be found below courtesy of FIBA.
The tournament does not finish for the Australians just yet as they face Canada, a team they narrowly lost to on the opening night of the tournament, Friday night or early Saturday morning in the 5-8 classification game.