DOTZ NANO LIMITED — Capital/Financing Update 2009

Aug 26, 2009

NORTHERN IRON LIMITED

ABN 71 125 264 575

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Level 3, 3 Ord St, West Perth West Perth WA 6005

T: (08) 9321 9334 F: (08) 9321 9335 info@northerniron.com.au

www.northerniron.com.au

27 August 2009

FULLY UNDERWRITTEN ACCELERATED NON-RENOUNCEABLE ENTITLEMENT OFFER TO RAISE GROSS PROCCEDS OF APPROXIMATELY A$61.4 MILLION

NOT TO BE RELEASED OR DISTRIBUTED IN THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAWS

Entitlement Offer

Northern Iron Limited (“Northern Iron”) today launched a 1 for 5 pro-rata accelerated nonrenounceable entitlement offer (the “Entitlement Offer”) to raise A$61.4 million at an offer price of A$1.45 per share. The institutional component of the Entitlement Offer ("Institutional Entitlement Offer") is fully underwritten by a syndicate of underwriters comprising Euroz Securities Limited (“Euroz”), Macquarie Capital Advisors Limited (“Macquarie”) and RBC Capital Markets (“RBC”). Additionally, Euroz and Macquarie will fully underwrite the retail component of the Entitlement Offer ("Retail Entitlement Offer").

Eligible shareholders are invited to subscribe for 1 new Northern Iron ordinary share ("New Share") for every existing 5 Northern Iron shares held as at 7pm (AEST) on 2 September 2009 ("Record Date").

The offer price of A$1.45 per New Share represents a 22.5% discount to the last traded price on 14 August 2009 of A$1.87 and a discount of 19.4% to the theoretical ex-rights price. New Shares will rank equally with existing fully paid ordinary shares in Northern Iron from allotment.

Use of Proceeds

Northern Iron has been developing the Sydvaranger iron ore project in Norway, with commissioning of the complete plant to commence in September 2009. There have been cost overruns at the project due to a delay in completion of construction (and thus commissioning), as well as a foreign exchange loss due to appreciation of the Norwegian Krone. These events plus a desire to maintain an allowance for additional working capital have led to the need for a capital raising. The Entitlement Offer is intended to raise sufficient funds to see the Sydvaranger iron ore project entirely commissioned by October 2009 and to leave sufficient working capital flexibility for project ramp-up.

The use of proceeds of the Entitlement Offer are forecast to be as follows:

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Sources of funds	$Am1	$USm
Entitlement Offerproceeds	61.4	51.0
Total funding	61.4	51.0
Uses of funds
Sydvarangercost overruns	36.3	30.1
Foreign exchange loss	11.0	9.2
Total movementincompletionbudget	47.3	39.3
TransactionCosts	3.8	3.2
Additional working capitaland other	10.3	8.5
Total use of funds	61.4	51.0
Cash Balances
Cashon hand (pre Offer)	7.2	6.0
Cashon hand (post Offer)	64.8	53.8

1. Assumes a AUD/USD exchange rate of 0.83

Project Update

The Sydvaranger iron ore project is located less than 10 kilometres from the township and existing port at Kirkenes. The major shareholder of Northern Iron, the Tschudi Group, has spent US$28m upgrading port facilities in time for the first concentrate shipment. 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.

Upon successful commissioning of the project, Northern Iron expects first ore shipments in November 2009 as it ramps-up production to 2.9Mtpa in 2010. Production is supported by off-take agreements with Corus (a subsidiary of Tata Steel) for 5 years (1.25Mtpa) and Sinosteel for the first year (0.5Mtpa). Reserves and resources support a 19 year mine life at a competitive cost structure of US$36/t with expansion potential pending approval.

More detailed information on Northern Iron and the Sydvaranger iron ore project is contained in the investor presentation and pathfinder prospectus released together with this announcement.

Management Changes

After an extensive international search for a Chief Executive Officer (“CEO”), Northern Iron has appointed John Sanderson, an internal candidate, as Chief Operating Officer who will assume the role of CEO in November 2009.

John Sanderson has been the Manager of Mining since December 2008 and during that time has built a cohesive team that has delivered the mining operations on schedule and on budget. He has previously 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 Operating Officer role. The current CEO, Mick McMullen, will remain 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.

Institutional Entitlement Offer

Existing Institutional Shareholders will be invited to participate in the Institutional Entitlement Offer under a pathfinder prospectus that was lodged with ASX with this announcement. The Institutional Entitlement Offer will open today (27 August 2009) and close at 2:00pm (AEST) on 28 August 2009.

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Eligible Institutional Shareholders can choose to take up their entitlement in whole, in part, or not at all. In addition, under the Institutional Entitlement Offer entitlements not taken up by eligible Institutional Shareholders, together with entitlements which would otherwise have been offered to ineligible Institutional Shareholders, will be offered to eligible Institutional Shareholders who apply for New Shares in excess of their entitlements, and to certain other eligible institutional investors.

Retail Entitlement Offer

Eligible Retail Shareholders will be invited to participate in the Retail Entitlement Offer on the same terms as the Institutional Entitlement Offer under a final prospectus to be lodged with the ASX and the Australian Securities and Investments Commission on 2 September 2009 ("Prospectus").

The Retail Entitlement Offer will open on 2 September 2009 and is expected to close at 5:00pm WST on 21 September 2009.

Eligible Retail Shareholders can choose to take up their entitlements in whole, in part, or not at all. Eligible Retail Shareholders who take up their entitlement in full may also apply for New Shares in excess of their Entitlement ("Additional New Shares"). However, Additional New Shares will only be allocated to Eligible Retail Shareholders if there are sufficient New Shares from Eligible Retail Shareholders who do not take up their full Entitlement or from New Shares that would have been offered to Ineligible Retail Shareholders if they had been entitled to participate in the Retail Entitlement Offer, subject to any allocation policy and scale-back that Northern Iron, in consultation with Euroz, Macquarie and RBC, may apply (in Northern Iron's absolute discretion).

The Prospectus will be sent to eligible Retail Shareholders by 8 September 2009 and be made available on Northern Iron's website www.northerniron.com.au. Eligible Retail Shareholders wishing to acquire New Shares under the Retail Entitlement Offer will need to complete, or otherwise apply in accordance with, the Entitlement and Acceptance Form that will accompany the Prospectus.

Eligible Retail Shareholders are Northern Iron shareholders who:

• Are registered as a holder of shares as at the Record Date;

• Have a registered address in Australia or New Zealand;

• Are not in the United States; and

• Are eligible under all applicable laws to receive an offer under the Retail Offer.

All dates are indicative only and subject to change. Northern Iron reserves the right to amend the timetable including, in consultation with Euroz, Macquarie and RBC, to extend the closing date for the Retail Entitlement Offer, and to accept late applications either generally or in specific cases.

Neil Hamilton, the Chairman of Northern Iron, commented that:

“With the addition of John Sanderson as the new COO and the successful completion of the Entitlement Offer, Northern Iron will be well placed both managerially and financially to meet its goal of commissioning the full operation of the Sydvaranger iron ore project by October 2009. We acknowledge that there have been challenges associated with the development of the project and we have made some significant changes to address these. We remain excited about the future of the project as we move into production on this long life independent iron ore asset.”

For and on behalf of the Board.

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Mick McMullen Managing Director and Chief Executive Officer

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NOT TO BE RELEASED OR DISTRIBUTED IN THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAWS

This announcement and its accompanying documents do not constitute an offer of securities for sale in the United States, or in any other place in which, or to any person to whom, it would not be lawful to make such an offer. This document may not be distributed or released in the United States. The New Shares have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, within the United States.

Disclaimer

This announcement contains certain forward-looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Northern Iron, and its officers, employees, agents and associates, that may cause actual results to differ materially from those expressed or implied in such statements. Actual results, performance or outcomes may differ materially from any projections and forwardlooking statements and the assumptions on which those assumptions are based. You should not place undue reliance on forward-looking statements and neither Northern Iron nor any of its directors, employees, servants, advisers or agents assume any obligation to update such information.

This document has been prepared by Northern Iron. No party other than Northern Iron has authorised or caused the issue of this document, or takes responsibility for, or makes any statements, representations or undertakings in this document. Each of Euroz, Macquarie and RBC and each of their related bodies corporate, directors, employees, servants or agents ( Affiliates ) make no representation or warranty, expressed or implied, as to the accuracy or completeness of this document. Except for any liability which cannot be excluded by law, each of Euroz, Macquarie and RBC and their Affiliates expressly disclaim and accept no responsibility or liability (including liability for negligence) for the contents of this document.

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