DOTZ NANO LIMITED — Capital/Financing Update 2009

Aug 26, 2009

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, US PERSONS

NOT FOR DISTRIBUTION OR RELEASE IN CANADA OR TO RESIDENTS THEREOF UNLESS ACCOMPANIED BY THE CANADIAN OFFERING MEMORANDUM AND ONLY TO ACCREDITED INVESTORS AS DEFINED IN NI 45-106

NORTHERN IRON LIMITED (ABN 71 125 264 575)

PATHFINDER PROSPECTUS

This draft prospectus ( Pathfinder ) has not been lodged with the Australian Securities and Investments Commission ( ASIC ). It is in draft form only, and is subject to change prior to it being approved by the directors of Northern Iron Limited ( Northern Iron ) and being lodged with ASIC. Northern Iron intends to make a pro rata accelerated non-renounceable entitlement offer of ordinary shares (the Entitlement Offer ). A prospectus ( Prospectus ) under Chapter 6D of the Corporations Act 2001 (Cth) ( Corporations Act ) will be made available to eligible shareholders after lodgement with ASIC. Lodgement is expected to be on or around 2 September 2009.

This Pathfinder is not a prospectus under Australian law and does not constitute an offer, invitation or recommendation to subscribe for or purchase any security or financial product and neither this Pathfinder nor anything contained in it shall form the basis of any contract or commitment.

This Pathfinder is a draft of the Prospectus which will, when finalised and lodged with ASIC, speak from the date of such lodgement. It therefore remains subject to change, and also contains statements which are either missing information or which assume completion of matters expected to be completed by the lodgement date. By participating in the Entitlement Offer you are committing to subscribe for New Shares under the Prospectus and not the Pathfinder, and you acknowledge that:

• there may be changes between the Pathfinder and the Prospectus and that you will remain bound despite any such changes; and

• a supplementary Prospectus may be lodged with ASIC and that despite any such prospectus, you will remain bound, to the extent permitted by law, to subscribe for New Shares under the Prospectus.

None of Macquarie Capital Advisers Limited, Euroz Securities Limited or Royal Bank of Canada, or their respective related bodies corporate, directors, employees or agents, have authorised this Pathfinder or are responsible for the issue or making of any statements or the contents of this Pathfinder. No responsibility for any errors or omissions from this Pathfinder arising out of negligence or otherwise is accepted. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of information and opinions expressed in this Pathfinder, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the Pathfinder ("forward-looking statements").

Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Northern Iron and its directors) which may cause the actual results or performance of Northern Iron to be materially different from any future results or performance expressed or implied by such forward-looking statements. The forwardlooking statements should not be relied on as an indication of future value or for any other purpose.

To the maximum extent permitted by law, none of Northern Iron or Macquarie Capital Advisers Limited, Euroz Securities Limited or Royal Bank of Canada, or their respective related bodies

PERDM01_1425366_2

1

corporate, directors, employees or agents, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this Pathfinder or its contents or otherwise arising in connection with it. Any investment decision should be made solely on the basis of the lodged Prospectus.

The provision of this Pathfinder is not, and should not be considered as, the provision of financial product advice. This Pathfinder does not take into account your individual investment objectives, financial situation or particular needs. You must not act on the basis of any matter contained in this Pathfinder but must make your own independent assessment of Northern Iron and the shares which are being offered under the Entitlement Offer and conduct your own investigations and analysis.

PERDM01_1425366_2

2

Draft Prospectus

Non-Renounceable Entitlement Offer

Northern Iron Limited ABN 71 125 264 575

ASX: NFE

One-for-five non-renounceable Entitlement Offer of approximately 42.3 million New Shares at an issue price of $1.45 per New Share to raise approximately $61.4 million

This is an important document and requires your immediate attention.

You should read this Prospectus in its entirety before deciding whether to take up the offer of New Shares.

If you do not understand any part of this Prospectus, or are in doubt as to how to deal with it or your Entitlements, you should consult your stockbroker, solicitor, accountant and/or other professional financial adviser immediately.

NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO US PERSONS

This document is not an offer of securities for sale in the United States or to any persons that are, or are acting for the account or benefit of, US Persons. The securities to be issued under the Entitlement Offer have not been, and will not be, registered under the United States Securities Act of 1933 and may not be offered, sold or delivered, directly or indirectly, in, or to persons in, the United States or to or for the account or benefit of any US Persons, except in accordance with an available exemption from registration.

JOINT LEAD MANAGERS AND UNDERWRITERS

==> picture [86 x 33] intentionally omitted <==

==> picture [45 x 49] intentionally omitted <==

==> picture [144 x 37] intentionally omitted <==

PERDM01_1425366_2

3

IMPORTANT INFORMATION

About this Prospectus

This Prospectus relates to a one-for-five non-renounceable Entitlement Offer of fully paid new ordinary shares by Northern Iron Limited ( Northern Iron ). This Prospectus is dated [insert] 2009 and was lodged with the Australian Securities and Investments Commission ( ASIC ) on the same date. No New Shares will be allotted or issued on the basis of this Prospectus later than 13 months after this date. Northern Iron will apply within seven days after the date of this Prospectus for the grant by ASX Limited ( ASX ) of official quotation of the New Shares issued under this Prospectus. ASIC and ASX do not take responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

Defined words and expressions

Some words and expressions used in this Prospectus have defined meanings. These words and expressions are capitalised and are defined in the Glossary in Section 7.

Financial amounts and times

A reference to dollars, ($) or cents in this Prospectus is a reference to Australian currency unless otherwise identified.

This Prospectus does not provide investment advice

The information provided in this Prospectus is not investment advice or financial product advice and has been prepared without taking into account your investment objectives, financial situation or particular needs (including financial and taxation issues). It is important that you read this Prospectus in full before deciding whether to take up your Entitlement and consider all of the risk factors that could affect the performance of New Shares. Risks identified in relation to investing in New Shares that you should consider include those described in Section 5. You should carefully consider these risks and your investment objectives, financial situation or particular needs (including financial and taxation issues) and seek independent professional advice from your stockbroker, accountant, solicitor, or other professional adviser before deciding whether to invest in New Shares.

The potential tax effects of the Entitlement Offer will vary between investors. All investors should satisfy themselves of any possible tax consequences by consulting their own professional tax advisers.

Future performance

Except as required by law, and then only to the extent that it is required by law, neither Northern Iron nor any other person warrants the future performance of New Shares or any return on any investment made by you under this Prospectus.

No representations other than in this Prospectus

No person is authorised to provide any information or to make any representations in connection with the Entitlement Offer which is not contained in this Prospectus. Any information or representations not contained in this Prospectus may not be relied upon as having been authorised by Northern Iron in connection with the Entitlement Offer.

Restrictions applicable to foreign Shareholders

The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law. If you are a Shareholder in any jurisdiction outside Australia or New Zealand and you come into possession of this Prospectus you should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This Prospectus does not constitute an offer or invitation to potential investors to whom it would not be lawful to make such an offer or invitation. This Prospectus does not

PERDM01_1425366_2

4

constitute an offer of securities in the United States, or to any US Person, or to any person acting for the account or benefit of a US Person.

The New Shares and the Entitlements have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, a US Person, except in a transaction exempt from the registration requirements of the US Securities Act and applicable United States state securities laws. The New Shares being offered under this Prospectus are offered in New Zealand in reliance on the Shares Act (Overseas Companies) Exemption Notice 2002 (New Zealand). This Prospectus is not an investment statement or prospectus under New Zealand law and may not contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

No action has been taken to register or qualify the New Shares being offered under the Entitlement Offer or otherwise permit a public offering of the New Shares in any jurisdiction other than Australia and New Zealand. This Prospectus may not be distributed to, or relied on by persons outside Australia and New Zealand.

Prospectus availability

Eligible Shareholders will receive a copy of the Prospectus together with a personalised Entitlement and Acceptance Form. A copy of the Prospectus without an Entitlement and Acceptance Form will be available on the Northern Iron website at http://www.northerniron.com.au.

No applications may be made pursuant to the electronic version of this Prospectus.

A copy of the Prospectus may also be obtained by calling the Northern Iron Capital Raising Information Line on 1300 764 285 (from within Australia) or +61 3 9415 4874 (from outside Australia)

Information

Unless otherwise indicated, all data contained in charts, graphs, tables or included in the text is based on information available at the date of this Prospectus.

Privacy

Please read the privacy statement located under Section 6.9. It is important you understand that by submitting an Entitlement and Acceptance Form in or accompanying this Prospectus, you consent to the matters outlined in that statement.

Enquiries

If you would like more information or have any questions in relation to the Entitlement Offer, please contact your stockbroker, accountant, solicitor, or other professional adviser, or call the Northern Iron Capital Raising Information Line on 1300 764 285 (from within Australia) or +61 3 9415 4874 (from outside Australia).

PERDM01_1425366_2

5

CONTENTS

Chairman's letter

Key dates and key statistics

1. The Entitlement Offer

2. Action required by Eligible Shareholders

3. Project update

4. Effect of the Entitlement Offer on Northern Iron

5. Risk factors

6. Additional information

7. Glossary

PERDM01_1425366_2

6

CHAIRMAN'S LETTER

[insert] August 2009

Dear Shareholder,

On behalf of Northern Iron Limited, I invite you to participate in a one-for-five non-renounceable entitlements offer of Northern Iron shares ( New Shares ) at an issue price of $1.45 per share.

On [27] August 2009 Northern Iron announced its intention to raise $61.4 million through an Entitlement Offer.

The Entitlement Offer is fully underwritten, subject to standard conditions, by the Underwriters. The institutional component of the Entitlement Offer will be conducted by way of a bookbuild on [27 and 28] August 2009.

The Entitlement Offer is being undertaken to finance completion of the Sydvaranger Iron Ore Project and to augment Northern Iron's working capital.

Northern Iron's major shareholder Tschudi Group has shown its continuing support for the Company by participating in the institutional component of the Entitlement Offer to the extent of $6m worth of New Shares, and the Directors who own shares in Northern Iron have taken up their Entitlements, either in whole or in part.

You will find enclosed in this booklet the following important information:

• Key Dates for the Entitlement Offer;

• instructions on “How to Apply” setting out how to accept all or part of your entitlement under the Entitlement Offer;

• an ASX announcement in relation to the Entitlement Offer made on [27] August 2009; and

• a personalised Entitlement and Acceptance Form which details your Entitlement, to be completed in accordance with the instructions provided.

It is important to note that the Entitlement Offer closes at 5.00pm (WST) on [21] September 2009. To participate, you need to ensure that your completed Entitlement and Acceptance Form is received by Northern Iron before this time and date OR you have paid your application monies via BPay® pursuant to the instructions set out on the Entitlement and Acceptance Form. For further information, please refer to the instructions on “How to Apply” that accompany this letter.

Entitlements are non-renounceable and will not be tradeable on ASX or otherwise transferable. Shareholders who do not take up their entitlements in full will not receive any payment or value in respect of those entitlements.

If you have any questions in respect of the Entitlement Offer, please call Northern Iron's share registry, Computershare Investor Services Pty Limited, on 1300 764 285 between 8.30am and 5.30pm (WST) Monday to Friday before the Closing Date or, alternatively, consult your stockbroker, accountant or other professional adviser.

In particular, your attention is drawn to the Investor Presentation which the Company released to ASX on 27 August 2009 which contains additional information that is or may be relevant to a Shareholder's decision whether to take up his Entitlement. For further information on Northern Iron you can also visit the Company's website at www.northerniron.com.au.

On behalf of the Board I encourage you to consider this investment opportunity and look forward to your continuing support of Northern Iron.

Yours sincerely

Neil Hamilton Chairman Northern Iron Limited

PERDM01_1425366_2

7

Key Dates and Statistics

Key dates

Institutional Offer opened	[27 August 2009]
Institutional Offer closed	[28 August 2009]
Record Date to determine right to participate in the	[2 September 2009]
Entitlement Offer
Prospectus lodged with ASIC and ASX	[2 September 2009]
Retail Entitlement Offer opens	[2 September 2009]
Retail Entitlement Offer closes	[21 September 2009]
Allotment of New Shares under the Retail Entitlement Offer	[28 September 2009]
Despatch of holding statements	[28 September 2009]
Expected date for trading of New Shares under the Retail	[29 September 2009]
Entitlement Offer on ASX on a normal settlement basis

Note: The above timetable is indicative only. Northern Iron in conjunction with the Underwriters, reserves the right to amend any or all of these events, dates and times subject to the Corporations Act, the Listing Rules and other applicable laws. In particular, Northern Iron, in conjunction with the Underwriters, reserves the right to extend the closing dates for the Entitlement Offer to accept late Applications either generally or, in particular cases, to withdraw the offers without prior notice. The commencement of quotation of the New Shares is subject to confirmation from ASX. If the Closing Date is extended, the subsequent dates may also be extended. All references to time in this Prospectus are references to Australian Eastern Standard Time ( AEST ).

Key statistics

Offer Price $1.45 per New Share Entitlement one New Share for every five Shares held at the Record Date Approximate number of New Shares to be issued under the 42.3 million Entitlement Offer Entitlement Offer proceeds (before expenses) Approximately $61.4 million

PERDM01_1425366_2

8

1. THE ENTITLEMENT OFFER

1.1 The Entitlement Offer

Northern Iron is offering Eligible Retail Shareholders the opportunity to subscribe for one New Share for every five Shares held on the Record Date at an offer price of $1.45 per New Share. The Entitlement Offer is structured as an accelerated, non-renounceable pro rata entitlement offer. This means that the Entitlements are non-transferable and cannot be sold or traded. Each New Share will be issued fully paid. From the date of issue, the New Shares will rank equally with existing Shares.

The Entitlement Offer comprises:

• the Institutional Entitlement Offer; and

• the Retail Entitlement Offer.

1.2 Purpose of the Entitlement Offer

Northern Iron is seeking to raise approximately $61.4 million from the Entitlement Offer. The net funds raised will be used to finance completion of the Sydvaranger Iron Ore Project and to augment Northern Iron's working capital.

1.3

Capital structure

The effect of the Entitlement Offer on the capital structure of Northern Iron, assuming it is fully subscribed[(2)] , is set out in the table below:

	Number of shares
	(million)
Before the Entitlement Offer [211.74] Institutional Entitlement Offer insert Retail Entitlement Offer insert Total 254.09t

• (1) Due to rounding of Entitlements and reconciliation of Entitlements under the Institutional Entitlement Offer to shareholdings on the Record Date, the exact number of New Shares to be issued, and the number to be issued under each part of the Entitlement Offer, will not be known until completion of the Entitlement Offer.

• (2) The Entitlement Offer will be underwritten.

In addition, as at the date of this Prospectus there are 4,700,000 options to subscribe for Shares outstanding, exercisable at various prices and with various expiry dates. The above capital structure assumes that none of these options is exercised prior to the Record Date.

1.4 The Retail Entitlement Offer

(a) Overview

Under the Retail Entitlement Offer, Eligible Retail Shareholders are invited to take up their Entitlements at the Offer Price.

The proceeds of the Retail Entitlement Offer will form part of the Entitlement Offer proceeds, which will be used as described in Section 1.2.

PERDM01_1425366_2

9

(b) Who can participate in the Retail Entitlement Offer

The Retail Entitlement Offer is only open to Eligible Retail Shareholders. Eligible Retail Shareholders are those persons who:

• (i) were registered as Shareholders as at 7.00pm (Sydney time) on 2 September 2009 ( Record Date );

• (ii) have registered addresses in Australia or New Zealand;

• (iii) are not in the United States and are not, and are not acting for the account or benefit of, a US Person;

• (iv) did not receive an offer under the Institutional Entitlement Offer (whether or not they accepted that offer);

• (v) are not Ineligible Institutional Shareholders;

• (vi) are not a nominee for a person referred to in (iv) or (v) above (in respect of Shares held for such a person); and

• (vii) are eligible under all applicable securities laws to receive an offer under the Entitlement Offer.

Northern Iron reserves the right to reject any acceptance which it believes comes from a person who is not an Eligible Retail Shareholder. See Section 1.12 for further details on Ineligible Retail Shareholders and certain representations each Shareholder accepting its Entitlement under the Retail Entitlement Offer will be deemed to have made.

(c) What Eligible Retail Shareholders can apply for under the Retail Entitlement Offer

Under the Retail Entitlement Offer, Eligible Retail Shareholders are entitled to apply for one New Share for every five Shares held as at 7.00pm (Sydney time) on the Record Date. This is called your Entitlement.

This ratio is the same ratio for the issue of New Shares under the Institutional Entitlement Offer, and the Record Date is the same for both the Retail Entitlement Offer and the Institutional Entitlement Offer.

The number of New Shares for which an Eligible Retail Shareholder is entitled to apply is shown on the personalised Entitlement and Acceptance Form that accompanies the copy of this Prospectus sent to each Eligible Retail Shareholder.

Where fractions arise in the calculation of an Entitlement, they will be rounded to the nearest whole number of New Shares, with fractions of one-half being rounded up to the next whole number of New Shares.

(d) Offer Price

The Offer Price is $1.45 per New Share. This is payable on acceptance of your Entitlement and is the same price as that paid for New Shares by Eligible Institutional Shareholders under the Institutional Entitlement Offer.

(e)

Accepting Entitlements

Eligible Retail Shareholders may accept all or any of their Entitlements by:

• (i) completing the personalised Entitlement and Acceptance Form accompanying this Prospectus in accordance with the instructions set out on the Entitlement and Acceptance Form;

PERDM01_1425366_2

10

• (ii) attach payment for the full amount payable ($1.45 multiplied by the number of New Shares applied for) to the Entitlement and Acceptance Form (cheque or money order); and

• (iii) returning the Entitlement and Acceptance Form and Application Monies to the Share Registry.

Alternatively, Australia-resident Eligible Retail Shareholders may elect to use BPay® in accordance with the instructions on the Entitlement and Acceptance Form. In this case, no Entitlement and Acceptance form needs to be submitted, but the Eligible Retail Shareholder will be taken to have made the statements on the Entitlement and Acceptance Form.

Once an Entitlement and Acceptance Form is returned, or a BPay® payment instruction is given, it is irrevocable and may not be varied or withdrawn except as required by law.

Eligible Retail Shareholders may elect to apply for all, some or none of the New Shares offered to them under the Retail Entitlement Offer.

1.5 The Institutional Entitlement Offer

The Institutional Entitlement Offer was conducted between [27] and [28] August 2009.

The Institutional Entitlement Offer raised approximately $[insert] million for Northern Iron through the issue of [insert] million New Shares. Settlement of the issue of New Shares under the Institutional Entitlement Offer is expected to occur on [9] September 2009. Those New Shares are expected to commence trading on ASX on [10] September 2009.

1.6 No trading of Entitlements

The Entitlements are personal and cannot be renounced, traded, transferred, assigned or otherwise dealt with.

1.7 Underwriting

The Entitlement Offer is fully underwritten by the Underwriters. This means that the Underwriters will subscribe for, or procure subscriptions for, any New Shares that are not subscribed for by Shareholders or new investors under the Entitlement Offer. A summary of the terms and conditions of the Underwriting Agreement is set out in more detail in Section 6.2.

1.8 Ranking of New Shares

New Shares issued pursuant to the Entitlement Offer will rank equally in all respects with existing Shares from the date of allotment.

1.9

Quotation and trading

In accordance with the Listing Rules and the Corporations Act, Northern Iron will apply to ASX within seven days of the date of this Prospectus for the official quotation of the New Shares issued under this Prospectus. Subject to approval being granted, quotation of the New Shares is expected to commence on:

• (a) [10 September] 2009 for New Shares issued under the Institutional Entitlement Offer (on a normal settlement basis); and

• (b) [29 September] 2009 for New Shares issued under the Retail Entitlement Offer (on a normal settlement basis).

Holding statements will be dispatched in accordance with the relevant Listing Rules. A summary of the rights and liabilities attaching to New Shares is set out in Section 6.3. It is

PERDM01_1425366_2

11

the responsibility of each Applicant to confirm their holding before trading in New Shares. Any Applicant who sells New Shares before receiving confirmation of their holding in the form of their holding statement will do so at their own risk. Northern Iron and the Underwriters disclaim all liability, whether in negligence or otherwise to any person who trades in New Shares before receiving their holding statement.

1.10 CHESS

The New Shares will participate from the date of commencement of quotation in CHESS, operated by ASX Settlement and Transfer Corporation Pty Limited. They must be held in uncertificated form on the CHESS subregister under sponsorship of a sponsoring participant (usually a broker) or on the issuer-sponsored subregister.

1.11

Taxation implications for Shareholders

Northern Iron does not consider it appropriate to give Eligible Shareholders advice regarding the taxation consequences of subscribing for New Shares under this Prospectus. Northern Iron, its advisers and its officers do not accept any responsibility for any such taxation consequences to Eligible Shareholders.

Eligible Shareholders should consult their professional advisers on the tax consequences of subscribing for New Shares under this Prospectus.

1.12 Ineligible Retail Shareholders

Northern Iron is of the view that it is unreasonable to make an offer under this Prospectus to certain Shareholders with an address in Northern Iron's register of Shareholders which is outside of Australia and New Zealand, having regard to the cost of complying with legal and regulatory requirements outside Australia and New Zealand.

This Prospectus does not, and is not intended to, constitute an offer of Shares in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus.

No action has been taken to register or qualify the New Shares, or otherwise to permit an offering of the New Shares, outside of Australia and New Zealand. The New Shares may not be offered in a jurisdiction outside Australia and New Zealand where such offer is not made in accordance with the laws of that place. The distribution of this Prospectus in jurisdictions outside of Australia and New Zealand may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

2. ACTION REQUIRED BY ELIGIBLE SHAREHOLDERS

2.1

What you may do

Before taking any action in relation to the Entitlement Offer, Eligible Shareholders should read all of this Prospectus. If you do not understand any part of this Prospectus, or you are in any doubt as to how to deal with your Entitlement, you should consult your stockbroker, accountant, solicitor or professional adviser.

Eligible Shareholders may either:

• take up their Entitlements in full (refer to Section 2.1(b));

• take up part of their Entitlements (refer to Section 2.1(c)); or

• not take up any of their Entitlements (refer to Section 2.1(d)).

• (a) Avoid reducing your percentage shareholding

PERDM01_1425366_2

12

The Entitlement Offer is a pro rata offer to Eligible Shareholders. Eligible Shareholders who take up their Entitlements in full will not have their percentage shareholdings in Northern Iron reduced by the Entitlement Offer. Shareholdings of Eligible Shareholders who do not take up all of their Entitlements will be diluted by the Entitlement Offer.

(b) If you wish to take up your Entitlement in full

If you wish to take up all of your Entitlement and you wish to pay by cheque or money order, you should:

• complete the personalised Entitlement and Acceptance Form accompanying this Prospectus in accordance with the instructions set out on the form; and

• attach payment for the full amount payable (being $1.45 multiplied by the number of New Shares comprising your Entitlement) to the form; and

• return the Entitlement and Acceptance Form to the Registry; OR

If you wish to take up all of your Entitlement and you wish to pay by BPay® you should make your payment by BPay® for the full amount payable (being $1.45 multiplied by the number of New Shares comprising your Entitlement).

If you choose to pay by BPay® you are not required to submit the personalised Entitlement and Acceptance Form.

(c) If you wish to take up part of your Entitlement only

If you wish to take up part of your Entitlement and you wish to pay by cheque or money order, you should:

• complete the personalised Entitlement and Acceptance Form accompanying this Prospectus in accordance with the instructions set out on the form, indicating the number of New Shares you wish to take up. This will be less than your Entitlement as specified on the Entitlement and Acceptance Form; and

• attach payment for the full amount payable (being $1.45 multiplied by the number of New Shares you are taking up – you will need to calculate this number yourself) to the form; and

• return the Entitlement and Acceptance Form to the Registry; OR

If you wish to take up part of your Entitlement and you wish to pay by BPay® you should make your payment by BPay® for the full amount payable (being $1.45 multiplied by the number of New Shares you are taking up – you will need to calculate this number yourself).

If you choose to pay by BPay® you are not required to submit the personalised Entitlement and Acceptance Form.

(d) If you do not wish to take up any of your Entitlement

If you do not wish to take up any of your Entitlement, you need not do anything.

PERDM01_1425366_2

13

2.2 Acceptance of some or all of your Entitlement

Eligible Shareholders may only apply for New Shares using the personalised Entitlement and Acceptance Form accompanying this Prospectus. The Entitlement and Acceptance Form must be completed in accordance with the instructions set out on the form.

If you have not received OR you have lost your personalised Entitlement and Acceptance Form, please contact the Northern Iron Capital Raising Information Line on 1300 764 285 (within Australia) or +61 3 9415 4874 (outside Australia).

The Closing Date and time for receipt by the Registry of your Entitlement and Acceptance Form is 5.00pm (WST) on [21] September 2009 (subject to variation).

Eligible Shareholders who are paying by cheque or money order should return their completed Entitlement and Acceptance Forms and payment in the reply-paid envelope provided with this Prospectus.

Eligible Shareholders who are paying by BPay® should make their payment by BPay® in accordance with the instructions on the Entitlement and Acceptance Form.

Eligible Shareholders are encouraged to submit their completed Entitlement and Acceptance Form or make their BPay® payment as soon as possible. If you have lost the reply-paid envelope enclosed with this Prospectus, please send or deliver your Entitlement and Acceptance Form and payment to the Registry at:

By hand delivery to: By mail to: Computershare Investor Services Pty Ltd Computershare Investor Services Pty Ltd Level 2 Locked Bag 2508 45 St Georges Terrace Perth WA 6001 Perth WA 6000 Australia Australia

Entitlement and Acceptance Forms will not be accepted at Northern Iron’s registered office.

2.3 Payment, application monies and interest

The Offer Price of $1.45 per New Share accepted is payable on acceptance of your Entitlement (whether you are accepting all of your Entitlement or only some of it). Payment must be made by cheque, money order or BPay®.

Payment by cheque or money order must be:

• in Australian currency drawn on an Australian branch of a financial institution; and

• payable to “Northern Iron Limited – Entitlement Offer Account” and crossed “Not Negotiable”.

Eligible Shareholders must submit a completed personalised Entitlement and Acceptance Form if they elect to submit their application monies using cheque or money order.

Payment by BPay®:

• The biller code and reference number appears on the personalised Entitlement and Acceptance Form.

• Payment by BPay® should be made according to the instructions set out on the personalised Entitlement and Acceptance Form. If you pay by BPay® and do not pay for your full Entitlement, the balance of your Entitlement will be treated as not having been taken up.

Eligible Shareholders are not required to submit a completed personalised Entitlement and Acceptance Form if they elect to submit their application monies using BPay®.

PERDM01_1425366_2

14

Please do not forward cash.

2.4 Applications for Additional Shares

Eligible Shareholders may apply for Additional Shares, over and above their Entitlements, at the Offer Price. If you wish to apply for Additional Shares, complete the accompanying Shortfall Application Form specifying the number of Additional Shares you wish to apply for. You must provide the application money separately for the number of Additional Shares for which you are applying. Applications for Additional Shares may be satisfied out of the Shortfall.

As permitted by the ASX Listing Rules, the Directors reserve the right to issue the Shortfall at their discretion in consultation with the Underwriters and in accordance with the provisions of the Underwriting Agreement. Accordingly, neither the Company nor the Underwriters guarantee that you will receive any Additional Shares you may apply for in excess of your Entitlement. The Underwriters may, after consultation with the Company, direct the Company to reject, in whole or in part, any application for Additional Shares.

If you do not receive all of the Additional Shares you applied for, any excess application monies will be returned to you (without interest).

Directors and other related parties of the Company may not apply for Additional Shares.

2.5 Application monies

Application monies received from Eligible Shareholders will be held in a bank account established and kept by Northern Iron in Australia solely for the purpose of holding the application monies.

2.6 Interest

Northern Iron reserves the right to cancel the Entitlement Offer at any time prior to the issue of New Shares under the Entitlement Offer. If the Entitlement Offer is cancelled, all application monies will be refunded without interest. Each Eligible Shareholder agrees that any application monies paid by it to Northern Iron will not entitle it to any interest and that any interest earned in respect of those application monies will belong to Northern Iron.

2.7 Enquiries

This Prospectus is important and requires your immediate attention. You should read all of it. If you are in doubt as to the course you should follow, you should consult your stockbroker, accountant, solicitor or other professional adviser.

Any questions relating to the Shares upon which your Entitlement has been calculated and the processing of your application under the Entitlement Offer should be directed to the Northern Iron Capital Raising Information Line on 1300 764 285 (from within Australia) or +61 3 9415 4874 (from outside Australia).

3. PROJECT UPDATE

3.1

Mining update

Mining at the Sydvaranger Iron Ore Project continues to progress well with a total of 237,000 tonnes of ore stockpiled on the ROM pad.

Given the delay in commissioning the concentrator, the mining schedule has been revised to match the mining activity to the required start date for ore processing. This has resulted in lower mining rates over the next 3 months than previously planned.

Whilst mining in the Kjellmannsåsen and Hyttemalmen pits is at an early stage, the reconciliation trends so far are encouraging. Ore tonnages at Kjellmannsåsen are approximately 73% higher than budgeted. Ore tonnages at Hyttemalmen are

PERDM01_1425366_2

15

approximately 11% below budget. The initial grade control data is indicating that grades at Kjellmannsåsen are slightly above budgeted grades.

3.2 Process plant

The primary crusher and cobbing plant has been commissioned on ore and has been handed over to the operations team. Commissioning of the rail load out facility and rail system is underway and expected to be completed by early September 2009.

Commissioning of the secondary and tertiary crushing circuit (fine crushing) is underway, with the remainder of the concentrator scheduled to be mechanically complete in the second week of September.

Electrical installation continues to be the critical path item on the schedule.The expected date for electrical completion has been pushed back to the third week of September. Key issues relating to electrical installation are:

• low productivity;

• lack of experienced contractor supervisors;

• insufficient manning during the European holiday period; and

• disruption to electrical equipment manufacture and reduced vendor responsiveness during the holiday period .

The actions being taken to address these issues are:

• additional supervisors provided by the contractor as well as additional experienced supervisors mobilised from Australia to assist the contractor in planning the work; and

• electrical manning has increased from 39 in the last week of July 2009 to a peak of 108 in the week commencing 24 August 2009.

Electrical installation will remain the critical path item for the completion of construction as commissioning of each area cannot commence until the electrical installation is complete. The performance of the electrical contractor has improved significantly over the last few weeks. Commencement of commissioning of the concentrator is now expected in the last week of September 2009, with first concentrate production between three and four weeks later.

Whilst the delays in completion are disappointing, the successful commissioning of the primary crusher and cobbing plant and start of commissioning of the railway and fine crushing circuit are important milestones for Northern Iron.

A startup processing team with a proven track record has joined Northern Iron and is rapidly progressing the commissioning effort. This has resulted in a rapid commissioning of the primary crushing and cobbing plant, with the railway expecting to commence operations in the next week.

Commissioning of the secondary and tertiary crushing circuit will commence as soon as power is available in this area, with the plan being to commission as much of the plant as possible before the commissioning of the mill area commences.

The concentrate handling facilities are complete and have mostly been commissioned. The shiploader will be fully commissioned once concentrate is available. The port is ready for use.

PERDM01_1425366_2

16

3.3 Sales

Northern Iron has entered into an offtake agreement with Sinosteel to sell 0.5 Mt of concentrate over a 12 month period, with pricing linked to the Vale benchmark for China.

This now takes the committed tonnage to 1.75 Mt over the first year of operations, representing approximately 60% of planned production over that period. Northern Iron has received several offers for spot sales into Europe, the Middle East and China. The remainder of the sales for the first year (40%) are planned to be made into the spot market.

Spot prices in China have increased significantly over the last two months, whilst freight rates have stabilised and reduced slightly over the same period. As a consequence, the Free on Board (FOB) prices for Northern Iron's planned production have increased to be above the benchmark prices achievable.

Demand in the key European market appears to be returning, with Arcelor Mittal and Severstal both restarting furnaces over the last two months. Demand in the Middle East remains strong, with key potential customers operating at full capacity.

3.4 Management changes

After an extensive international search for a Chief Executive Officer ( CEO ), Northern Iron has appointed an internal candidate to the position.

John Sanderson has been the Manager of Mining for the operations since December 2008 and during that time has built a cohesive team that has delivered on schedule and budget. He has spent nine and a half years with Rio Tinto in a variety of roles, including:

• Manager Mine Operations Brockman Mine – leading a team that mined 15Mpta of iron ore;

• Manager technical Services East Pilbara; and

• Manager production Planning East Pilbara.

John is based in Kirkenes and assumed responsibility for the operations from Monday 24 August 2009 in a Chief Operations Officer role. The current CEO will remain in place until the end of October to ensure a smooth transition period and John will assume the role of CEO from the start of November. The outgoing CEO will remain available for a period post 1 November to provide assistance as required.

The previously announced transition period for the Group CFO is underway and expected to be complete during September.

PERDM01_1425366_2

17

4. EFFECT OF THE ENTITLEMENT OFFER ON NORTHERN IRON/FINANCIAL INFORMATION

NORTHERN IRON LIMITED

Current assets Cash and cash equivalents Trade and other receivables Inventory Derivative asset Prepayments Total current assets Non-current assets Trade and other receivables Mine properties Property, plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Tax liability Employee benefits Total current liabilities Non-current liabilities Provisions Borrowings Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated (losses) Total equity	Consolidated Unaudited 30 June 2009 A$000 17,045 12,090 1,036 342 28 30,541 440 26,259 218,063 244,762 275,303 38,068 10,795 1,161 2 50,026 1,726 77,755 79,481 129,507 145,796 177,715 10,738 (42,657) 145,796	Consolidated Unaudited 18 August 2009 A$000 7,206 9,862 5,866 63 340 23,337 447 28,588 238,745 267,780 291,117 31,736 16,971 1,161 2 49,870 1,762 107,845 109,607 159,477 131,640 177,715 9,358 (55,433) 131,640	Effect of the Offer A$000 57,574 - - - - 57,574 - - - - 57,574 - - - - - - - - - 57,574 57,574 - - 57,574	Consolidated Unaudited Proforma 18 August 2009 A$000 64,780 9,862 5,866 63 340
				80,911
				447 28,588 238,745
				267,780
				348,691
				31,736 16,971 1,161 2
				49,870
				1,762 107,845
				109,607
				159,477
				189,214
				235,289 9,358 (55,433)
				189,214

PERDM01_1425366_2

18

5. RISK FACTORS

Investing in Northern Iron involves a degree of risk. This Section describes the potential risks that may be significant for you to consider in relation to an investment in Northern Iron.

Before applying for New Shares, you should consider whether they are a suitable investment for you. You should be aware that there are risks associated with an investment in New Shares. Many of the risks are outside the control of Northern Iron and its Directors. These risks include those identified in this Section and other matters referred to in this Prospectus. Additional risks and uncertainties that Northern Iron is unaware of or the Northern Iron currently believes immaterial, may also become important factors that affect Northern Iron. The occurrence of any of the events which pose these risks could have a material adverse effect on Northern Iron's prospects, financial condition and results of operations. In that case, the trading price of Shares could decline and you could lose some or all of your investment.

5.1 Specific Risk Factors

The business activities of Northern Iron are subject to a number of risks that could affect Northern Iron and the industry in which it operates. These factors may substantially impact on its future financial performance and/or financial position. In addition to the general risks applicable to any investment in a listed resources company, the Directors believe that there are a number of specific factors that should be taken into account before investors decide whether or not to invest in Northern Iron. These are set out below.

(a) Operational risks

Exploration, development, mining and processing are labour and machineryintensive processes. Notwithstanding that Northern Iron intends to maintain its machinery regularly, unforseen major failures, breakdowns or repairs required to key items of mining plant and equipment or mine infrastructure may result in significant delay or cost to Northern Iron. In addition, poor weather conditions over a prolonged period may adversely affect mining and exploration activities and hence the timing of receipt of operating revenue. The Sydvaranger Iron Ore Project is also reliant on the port of Kirkenes as the only means by which its iron concentrate product can be transported by ship.

In addition, as much of the infrastructure and equipment owned by the Company is second-hand, there is a risk that mechanical availability will be lower than planned, resulting in plant down time and additional maintenance costs in the future. This may result in delays to production or increased cost.

A rise in operating costs (for materials or labour) may adversely affect Northern Iron and could render some opportunities or projects uneconomic.

A reduction in iron recovery when in operation may adversely affect Northern Iron and its share price.

(b) Iron ore and concentrate price

Northern Iron’s business is dependent on the market price for iron ore and concentrates which is driven by supply and demand factors which are outside of the control of the Company. A fall in the market price of iron ore may substantially impact on the economics of the Sydvaranger Iron Ore Project and on exploration and development programs, and consequently on the Company's share price. This risk is heightened by the fact that iron ore will be the only commodity the Company relies upon to derive its revenue.

PERDM01_1425366_2

19

(c) Project development timetable

The project development timetable has been delayed by three months over the past year. There is a risk that circumstances (including unforseen circumstances) may cause a further delay in recommissioning the Sydvaranger Iron Ore Project, resulting in the receipt of revenue at a later date than expected.

(d) Capital requirements and costs

While Northern Iron believes it will have sufficient funds following completion of the Entitlement Offer to meet the capital requirements for the development of the Sydvaranger Iron Ore Project, there is a risk that the capital costs of the redevelopment of the project and the operating costs once in operation could be greater than expected. Although the Entitlement Offer is fully underwritten, should the Underwriting Agreement be terminated by the Underwriters for any reason and the Entitlement Offer not otherwise be fully subscribed, Northern Iron may have insufficient funds to complete construction and commissioning of the Sydvaranger Iron Ore Project.

(e) Resource estimates/assumptions

Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates that were valid when made may change significantly when new information becomes available. In addition, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may prove to be inaccurate. Should Northern Iron encounter mineralisation or formations different from those predicted by past drilling, sampling and similar examinations, resource estimates may have to be adjusted and mining plans may have to be altered in a way which could adversely affect Northern Iron’s operations.

(f) Reliance on historical operational data

The planned mining operations at the Sydvaranger Iron Ore Project are similar to those carried out until closure of the mine in 1996. As a result, significant reliance has been placed on historical operational data to prepare production rates and cost estimates for the Project. There is a risk that historical production rates and cost estimates may not reflect future production rates and costs at the Project. A material change in production rates or cost estimates could have an adverse impact on the Company’s operations and consequently its share price.

(g) Iron ore concentrate quality

It is expected that the iron ore concentrate produced at the Sydvaranger Iron Ore Project will grade in the order of 67.5% Fe and be suitable feed for a pellet plant. However, if Northern Iron is unable to produce concentrate of this quality, or of a quality suitable for feed in a pellet plant, this could have an adverse impact on the Company’s operations and consequently its share price.

(h) Not all production covered by off-take agreements

Northern Iron has signed off-take agreements in respect of approximately 60% of its planned production of concentrate from the Sydvaranger Iron Ore Project. As a result, there is a risk that Northern Iron may be unable to find a buyer for the remaining 40% of concentrate which is currently planned to be sold on the spot market. This could have an adverse impact on the Company’s operating results and consequently its share price. In addition, under one of the Company's existing off-take agreements the off-take party has the right in certain circumstances to reduce the quantity of concentrate it is committed to take from Northern Iron.

(i) Personnel and access to labour

PERDM01_1425366_2

20

The success of the Company's proposed operations depends to some extent on the ability of the Company to attract and retain qualified and capable management, staff and consultants to perform geological, exploration, analytical, geotechnical, engineering, metallurgical and mining work. The bulk of the operational workforce has now been recruited, but if key individuals were to leave, this could have an adverse impact on the operations and consequently the Company’s share price.

(j)

Competitive landscape/marketing of product

The supply of seaborne iron ore to the global market is dominated by three major suppliers, BHP Billiton, Rio Tinto and Vale, and in the European market by LKAB and Vale. There are high barriers to entry for potential new entrants into these markets due to the significant capital costs required to commence mining operations to scale and to construct the infrastructure facilities to deliver iron ore to the market. Northern Iron's major competitors have substantially greater financial resources and as a result have a greater capacity to respond to competitive pressures and market dynamics in the seaborne iron ore market. There can be no assurance that Northern Iron will be able to respond successfully to such competitive pressures or the competitive activities of the other major suppliers in its markets.

(k) Exploration results

Exploration to date on the Sydvaranger Iron Ore Project has generated drill results which allow for preliminary observations about the prospectivity of the mineral rights. This may change significantly when new information becomes available as a result of further drilling and test work.

If exploration or mining programmes prove to be unsuccessful, or there are fluctuations in grades or values of the product being mined, this could result in a diminution of the value of the Project which could have a negative impact on the Company’s share price. In the event that programmes yield negative results, mineral rights may be relinquished, either in total or in part, and/or the Company may cease exploration, even though a viable mineral deposit may be present but undiscovered.

(l)

Foreign exchange risk

A significant portion of the Sydvaranger Iron Ore Project’s costs are incurred in Norwegian Kroners and the iron ore price is determined in US dollars. The value of the Norwegian Kroner compared to other currencies varies considerably from one year to another, particularly with changes in the oil price and interest rates. Adverse movements in the Kroner to US dollar exchange rate may have negative impacts on the economics of the Sydvaranger Iron Project.

The proceeds of the Entitlement Offer will be received in Australian dollar, and the bulk of the remaining construction costs are in Norwegian Kroner. The Company intends to convert the bulk of the proceeds of the Entitlement Offer to Norwegian Kroner on settlement. However, there is a risk that the exchange rate may vary between the date of this Prospectus and settlement.

Northern Iron will report any earnings in Australian dollars, and any adverse movement in the Kroner to the Australian dollar exchange rate or the Australian dollar to US dollar exchange rate will have negative impacts on any earnings reported by Northern Iron.

(m) Related party agreements

Northern Iron is reliant upon the Tschudi Group providing access to the port, concentrate storage and handling facilities to ship iron concentrate production. Should the Tschudi Group fail to perform its obligations, Northern Iron would be

PERDM01_1425366_2

21

forced to find an alternative means of exporting its product potentially at a higher cost (if at all), which could render production of magnetite concentrate from the Sydvaranger Iron Ore Project uneconomic.

(n) Litigation

Norblock AS had an agreement with Sydvaranger AS to extract ornamental stone from parts of the land comprising the Sydvaranger Iron Ore Project until December 2022. Sydvaranger AS has revoked the agreement due to non-performance on the part of Norblock AS. In the event that a court upholds Norblock AS’s agreement with Sydvaranger AS, there is a possibility that the activities of Norblock AS could interfere with those of the Company in Norblock's defined area of operation.

(o) Reliance on the Sydvaranger Iron Ore Project

As at the date of this Prospectus, the Company relies solely on the Sydvaranger Iron Ore Project being recommissioned to derive its revenue.

6. ADDITIONAL INFORMATION

6.1 Transaction-specific prospectus

This Prospectus is a prospectus to which the special content rules under Section 713 of the Corporations Act apply. Section 713 allows the issue of a more concise prospectus in relation to offers of securities in a class which have been continuously quoted on ASX for the three months prior to the date of this Prospectus.

6.2 Underwriting Agreement

Macquarie Capital Advisers Limited, Euroz Securities Limited and Royal Bank of Canada have agreed to underwrite the Entitlement Offer pursuant to an Underwriting Agreement executed on [insert] August 2009.

The Underwriters will be remunerated for providing these services at market rates. The Underwriting Agreement contains customary representations, warranties, indemnities and rights of termination in favour of the Underwriters, including a right to terminate their underwriting commitment in the event of a 10% or greater fall in the S&P/ASX 200 Resources Index or Mr John Sanderson indicating that he will not take up the position of chief executive officer of Northern Iron.

6.3

Rights attaching to Shares

The New Shares will be issued fully paid and will rank equally with existing Shares.

This section contains a summary of the rights and liabilities attaching to the Shares as at the date of this Prospectus. The summary does not contain all rights and liabilities. It also does not constitute a definitive statement of the rights and liabilities of Shareholders – rights and liabilities can involve complex questions arising from the interaction of the Constitution of Northern Iron, statutes, common law and Listing Rule requirements. To obtain a definitive assessment of the rights and liabilities which attach to the Shares in any specific circumstances, investors should seek their own advice.

(a) Voting rights

At a general meeting of Northern Iron, every Shareholder present in person or by proxy, representative or attorney, has one vote on a show of hands (except where a Shareholder has appointed two proxies, in which case neither proxy is entitled to vote) and, on a poll, one vote for each Share held. Voting at any meeting of Shareholders is by a show of hands unless a poll is demanded. A poll may be demanded by at least five Shareholders entitled to vote on the resolution,

PERDM01_1425366_2

22

Shareholders with at least 5% of the votes that may be cast on the resolution, or the chairman.

(b) General meetings

Each Shareholder is entitled to receive notice of, attend and vote at general meetings of Northern Iron and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution, the Corporations Act and the Listing Rules.

(c)

Dividends

The Board may from time to time resolve to pay dividends to Shareholders out of the profits of Northern Iron and fix the amount of the dividend, the time for determining entitlements to the dividend, and the timing and method of payment.

(d) Reinvestment of dividends

The Constitution authorises the Directors, with Shareholder approval, to establish a dividend reinvestment plan at their discretion under which any member may elect that the dividends payable by Northern Iron be reinvested in further shares. No dividend reinvestment plan has been established as at the date of this Prospectus.

(e)

Winding up

If Northern Iron is wound up, then subject to any rights or restrictions attached to a class of shares, any surplus must be divided among Shareholders in the proportions which the amount paid (including amounts credited) on the shares held by them respectively bear to the total amount paid and payable (including amounts credited) on the Shares held by all Shareholders.

(f)

Transfer of Shares

Subject to the Constitution, Shares may be transferred by a proper transfer affected in accordance with the ASTC Settlement Rules, by a written instrument of transfer which complies with the Constitution, or by any other method permitted by the Corporations Act, the Listing Rules or the ASTC Settlement Rules.

The Board may refuse to register a transfer of Shares where permitted to do so under the Corporations Act, the Listing Rules or the ASTC Settlement Rules. The Board must refuse to register a transfer of Shares when required to do so by the Corporations Act, the Listing Rules or the ASTC Settlement Rules.

(g)

Further issues of Shares

Subject to the Corporations Act, the Listing Rules and the ASTC Settlement and any rights or restrictions attached to a class of shares, Northern Iron may issue or grant options in respect of further shares on such terms and conditions as the Directors resolve.

(h)

Variation of rights

At present, Northern Iron's only class of shares on issue is ordinary shares. Subject to the Corporations Act and the terms of issue of a class of shares, the rights attaching to any class of shares may be varied or cancelled:

• with the consent in writing of the holders of a majority of the issued shares in that class; or

• by an ordinary resolution passed at a separate meeting of the holders of those shares.

PERDM01_1425366_2

23

In either case, the holders of not less than 10% of the votes in the class of shares, the rights of which have been varied or cancelled, may apply to a court of competent jurisdiction to exercise its discretion to set aside such a variation or cancellation.

The creation or issue of further shares ranking equally with a class of shares already on issue is not a variation of class rights.

6.4 Reporting and disclosure obligations

Northern Iron is a disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. These obligations require Northern Iron to prepare and lodge with ASIC and ASX both annual and half-yearly financial statements accompanied by a Directors' statement and report, with audit or review report. Copies of these and other documents lodged with ASIC may be obtained from or inspected at an ASIC office and on Northern Iron’s website on http://www.northerniron.com.au.

During the offer period Northern Iron will provide a copy of any of the following documents free of charge to any Applicant who requests a copy:

• the annual financial report for the year ended 31 December 2008; and

• any continuous disclosure notices lodged after the date of that report and before the lodgment of this Prospectus with ASIC.

As a company listed on ASX, Northern Iron must ensure that ASX is continuously notified of information about specific events and matters as they arise for the purpose of ASX making the information available to investors on ASX. Northern Iron has an obligation under the Listing Rules to notify ASX immediately of any information concerning it of which it becomes aware, which a reasonable person would expect to have a material effect on the price or value of its securities, subject to certain exemptions.

ASX maintains files containing publicly disclosed information about all listed companies. The file of Northern Iron is available for inspection at ASX during normal business hours. In addition, Northern Iron is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Northern Iron may be obtained from, or inspected at, an ASIC office.

In particular, Shareholders' attention is drawn to the Investor Presentation which the Company released to ASX on 27 August 2009 which contains additional information that is or may be relevant to a Shareholder's decision whether to take up his Entitlement.

6.5 Consents

Each of the parties referred to as consenting parties who are named below:

• (a) has given and has not, before the lodgement of this Prospectus with ASIC , withdrawn its written consent to be named in this Prospectus in the form and context in which it is named;

• (b) has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based; and

• (c) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Prospectus.

Role	Consenting Parties
Underwriters	Macquarie Capital Advisers Limited, Euroz Securities Limited and Royal Bank of Canada

PERDM01_1425366_2

24

Registry Computershare Investor Services Pty Limited

6.6 Interests of advisers

Except as set out in this Prospectus, no:

• person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus;

• promoter of Northern Iron; or

• broker or underwriter to the Entitlement Offer,

(each a relevant person) holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before lodgement of this Prospectus with ASIC, an interest in:

• the formation or promotion of Northern Iron;

• the Entitlement Offer; or

• any property acquired or proposed to be acquired by Northern Iron in connection with its formation or promotion or the Entitlement Offer.

Except as set out in this Prospectus, no one has paid or agreed to pay any amount or given or agreed to give any benefit for services provided by a relevant person in connection with the formation or promotion of Northern Iron or the Entitlement Offer. The amounts set out below are exclusive of GST.

Macquarie Capital Advisers Limited, Euroz Securities Limited and Royal Bank of Canada have agreed to underwrite the Entitlement Offer, in respect of which they will be entitled to receive fees and commissions totalling 6% of the amount to be raised by the Entitlement Offer (other than amounts subscribed by the Directors and their associates).

6.7 Disclosure of interests of Directors

As at the date of this Prospectus, the Directors of Northern Iron had the following relevant interests in Northern Iron Shares:

Director	Number of Northern Iron Shares	Entitlement to New Shares under the Entitlement Offer
Michael McMullen	5,020,691	1,005,138
Ashwath Mehra	10,377,093	2,075,419
Neil Hamilton	252,558	50,512
David Griffiths	335,583	67,117
Peter Bilbe	115,023	23,005
Felix Tschudi	85,000,000	17,000,000
Peter Larsen	20,000	4,000

PERDM01_1425366_2

25

Remuneration and indemnification

The Northern Iron Constitution contains provisions as to remuneration of Directors. As remuneration for services, each non-executive Director is to be paid an amount determined by the Board, subject to a maximum aggregate amount determined by Shareholders in general meeting. The maximum aggregate cash remuneration to be paid to directors for their services as directors has been set at $500,000 per annum.

Northern Iron’s Non-executive Directors do not receive any performance/incentive payments and are not eligible to participate in Northern Iron’s incentive arrangements. Each non-executive Director is also entitled to fees for performance of additional services and to reimbursement of reasonable out-of-pocket expenses. Northern Iron has entered into a Deed Relating to Officer's Indemnity with each director. Under that deed, a Director is entitled (among other things) to be indemnified against liabilities incurred as a director to the extent permitted by law. They are also entitled to the benefit of an insurance policy taken out for their benefit.

6.8 Consent to lodgement

Each Director of Northern Iron has authorised and consented to the lodgement of this Prospectus with ASIC under the Corporations Act and has not withdrawn that consent prior to its lodgement with ASIC.

6.9 Privacy

As a Shareholder, Northern Iron and the Registry have already collected certain personal information from you. If you apply for New Shares, Northern Iron and the Registry may update that personal information or collect, hold and use additional personal information about you. Such information may be used to assess your acceptance of New Shares, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration.

To do that, Northern Iron and the Registry may disclose your personal information, for purposes related to your shareholding, to their agents, contractors or third party service providers to whom they outsource services in order to assess your acceptance of New Shares, the Registry for ongoing administration of the register, printers and mailing houses for the purposes of preparation and distribution of Shareholder information and for handling of mail, or as otherwise authorised under the Privacy Act 1988 (Cth).

Company and tax laws require some personal information to be collected. If you do not provide us with your personal information we may not be able to process your application.

In most cases you can gain access to your personal information held by (or on behalf of) Northern Iron or the Registry. Northern Iron aims to ensure that the personal information it retains about you is accurate, complete and up to date. To assist with this, please contact the Registry if any of the details you have provided change. If you have concerns about the completeness or accuracy of the information Northern Iron or the Registry have about you, they will take steps to correct it. You can request access to your personal information by telephoning or writing to Northern Iron through the Registry as follows:

Computershare Investor Services Pty Ltd Locked Bag 2508 Perth WA 6001 AUSTRALIA

or by telephone: 1300 764 285 (within Australia)

or +61 3 9415 4874 (outside Australia),

or by email: [insert]

PERDM01_1425366_2

26

6.10 Governing law

This Prospectus and the contracts which arise on acceptance of Entitlement and Acceptance Forms are governed by the law applicable in Western Australia, and each Applicant submits to the non-exclusive jurisdiction of the courts of Western Australia.

7. GLOSSARY

In this Prospectus unless the context requires otherwise:

Additional Shares means New Shares applied for by Eligible Shareholders in excess of their Entitlements.

Applicant means an Eligible Retail Shareholder who applies to participate in the Entitlement Offer.

Application Monies means monies received from persons applying for New Shares pursuant to the terms of the Entitlement Offer.

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691) or the securities market it operates (as applicable).

CHESS means Clearing House Electronic Subregister System.

Corporations Act means the Corporations Act 2001 (Cth) .

Director means a director of Northern Iron.

Eligible Institutional Shareholder means each Shareholder who, as at the Record Date, is not an Ineligible Institutional Shareholder and who is:

• (a) an Institutional Investor; and

• (b) entitled to receive an offer under the Institutional Entitlement Offer as agreed by Northern Iron and the Underwriters under the Underwriting Agreement.

• Eligible Retail Shareholder means each Shareholder who, as at the Record Date:

• (a) has a registered address in Australia or New Zealand;

• (b) is not in the United States and is not, and is not acting for the account or benefit of, a US Person;

• (c) did not receive an offer under the Institutional Entitlement Offer (whether or not he accepted that offer);

• (d) is not an Ineligible Institutional Shareholder;

• (e) is not a nominee for a person referred to in (c) or (d) above (in respect of Shares held for such a person); and

• (f) is eligible under all applicable securities laws to receive an offer under the Entitlement Offer.

Eligible Shareholder means an Eligible Institutional Shareholder or an Eligible Retail Shareholder.

Entitlement means the entitlement to one New Share for every five Shares held at the Record Date.

PERDM01_1425366_2

27

Entitlement and Acceptance Form means each entitlement and acceptance form accompanying this Prospectus upon which an application for New Shares may be made.

Entitlement Offer means the non-renounceable offer of approximately 42.3 million New Shares at the Offer Price.

Ineligible Institutional Shareholder means a Shareholder who, if it had a registered address in Australia would, in the reasonable opinion of Northern Iron, be an Institutional Investor, but who Northern Iron and the Underwriters agree (under the Underwriting Agreement) shall not receive an offer under the Institutional Entitlement Offer.

Ineligible Retail Shareholder means a Shareholder who is not an Eligible Institutional Shareholder, Ineligible Institutional Shareholder or an Eligible Retail Shareholder.

Institutional Investor means a person:

• (a) to whom offers and issues of New Shares may lawfully be made in Australia without the need for disclosure to investors under Chapter 6D of the Corporations Act and who is not a US Person and is not acting for the account of or for the benefit of a US Person; and

• (b) to whom offers and issues of New Shares may lawfully be made outside Australia without any other lodgement, registration or approval with or by a government agency (other than one with which Northern Iron, in its absolute discretion, is willing to comply), and is not in the United States and is not acting for the account or benefit of a US Person.

Institutional Entitlement Offer is described in Section 1.5.

Listing Rules means the Official Listing Rules of ASX as amended and waived from time to time.

New Shares means the Shares offered under the Entitlement Offer.

Northern Iron or Company means Northern Iron Limited ABN 71 125 264 575.

Northern Iron Constitution means the constitution of Northern Iron.

Northern Iron Group means Northern Iron and its controlled entities.

Offer Price means the price of $1.45 per New Share.

Prospectus this prospectus, dated [insert] 2009, including any supplementary or replacement prospectus.

Record Date means 7.00pm Sydney time [2 September] 2009.

Registry means Computershare Investor Services Pty Limited.

Retail Entitlement Offer means the offer of New Shares to Eligible Retail Shareholders pursuant to this Prospectus.

Section means a section of this Prospectus.

Share means a fully paid ordinary share in the capital of Northern Iron.

Shareholder means the holder of a Share.

Shortfall means the number of New Shares for which applications (not being applications for Additional Shares) have not been received by the Company on or prior to the closing date for the Retail Entitlement Offer.

PERDM01_1425366_2

28

Shortfall Application Form means the shortfall application form accompanying this Prospectus.

Tschudi Group means Tschudi Shipping Company AS and Tschudi Mining Company AS.

Underwriters means Macquarie Capital Advisers Limited, Euroz Securities Limited and Royal Bank of Canada.

Underwriting Agreement means the underwriting agreement in respect of the Entitlement Offer between Northern Iron and the Underwriters dated [insert] August 2009.

US Person has the same meaning as given to it in the US Securities Act.

US Securities Act means the United States law titled the Securities Act of 1933, as amended.

PERDM01_1425366_2

29