DOTZ NANO LIMITED - Capital/Financing Update 2012

PROSPECTUS

Accelerated 1 for 3 Non-renounceable Entitlement Offer

The Retail Entitlement Offer closes on Friday, 26 October 2012

This is an important document and requires your immediate attention.

If you are an Eligible Shareholder you should read this Prospectus in its entirety before deciding whether to accept the offer of New Shares. Your Entitlement may have value and you should therefore consider whether to take up your Entitlement rather than allow it to lapse. If you do not understand any part of this Prospectus, or are in any doubt as to how to deal with your Entitlement, you should consult your stockbroker, accountant, solicitor and/or other professional adviser.

This Prospectus is not for release or distribution in the United States.

Sole Lead Manager and Legal Adviser Underwriter Co-Lead Manager Northern Iron Limited ACN 125 264 575

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IMPORTANT INFORMATION

This Prospectus is important and requires your immediate attention. You should read this Prospectus carefully in its entirety before deciding whether to invest in New Shares. In particular, you should consider the risk factors that could affect the performance of Northern Iron or the value of an investment in Northern Iron, some of which are outlined in Section 7 of this Prospectus. Note, however, that the information contained in this Prospectus is not financial product advice and does not take into account the investment objectives, financial situation, tax position or particular needs of individual investors.

Before deciding whether to apply for New Shares, you should consider whether they are a suitable investment for you in light of your own investment objectives and financial circumstances and having regard to the merits or risks involved. If, after reading this Prospectus, you have any questions about the Entitlement Offer, you should contact your stockbroker, accountant, solicitor and/or other professional adviser.

The potential tax effects of the Entitlement Offer will vary between investors. A general summary of the potential Australian tax implications for Eligible Retail Shareholders is contained in Section 3.15 of this Prospectus. However, all investors should satisfy themselves of any possible tax consequences by consulting their own professional tax advisers and obtaining their own independent specific tax advice having regard to their particular circumstances. Investors should note that the past share price performance of Northern Iron provides no guidance as to its future share price performance.

Entitlements are not transferable. Eligible Retail Shareholders should carefully read and follow the instructions in Section 4 of this Prospectus and on the back of the accompanying Entitlement and Acceptance Form when making the decision to invest in New Shares.

This Prospectus is dated Monday, 8 October 2012 and was lodged with ASIC on that date. ASIC takes no responsibility for the contents of this Prospectus or the merits of the investment to which it relates. This Prospectus expires on 7 November 2013, being the date 13 months after the date of this Prospectus. No New Shares will be issued on the basis of this Prospectus after that expiry date.

Northern Iron has applied, or will apply within seven days after the date of this Prospectus, for the grant by ASX of official quotation of the New Shares. ASX takes no responsibility for the contents of this Prospectus or the merits of the investment to which it relates.

Prospectus availability

Eligible Retail Shareholders will be mailed a copy of this Prospectus, together with a personalised Entitlement and Acceptance Form. Eligible Retail Shareholders can obtain a copy of this Prospectus during the Offer Period on the Northern Iron website (www.northerniron.com.au) or, a paper copy of this Prospectus free of charge, by calling the Northern Iron Shareholder Information Line on 1300 764 285 (within Australia) or +61 3 9415 4000 (outside Australia) at any time between 8.30am and 5.00pm (Sydney time) Monday to Friday during the Offer Period. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus. You may also download a copy of your Entitlement and Acceptance Form from the Computershare Investor Centre by following the link www.investorcentre.com. To use this facility you will need internet access and your Holder Identification Number or Securityholder Reference Number to pass the security features on the website. New Shares may only be issued on receipt of a completed Entitlement and Acceptance Form issued together with this Prospectus, or by paying by BPAY®, as applicable (see Section 4 for further information). The Corporations Act prohibits any person from passing on an Entitlement and Acceptance Form to another person unless it is attached to a hard copy of this complete Prospectus or the complete and unaltered electronic version of this Prospectus. Neither this Prospectus nor the accompanying Entitlement and Acceptance Form may be sent to investors in the United States (or to investors acting for the account or benefit of persons in the United States). The distribution of this Prospectus and the accompanying Entitlement and Acceptance Form (including an electronic copy) outside of Australia and New Zealand may be restricted by law. If you come into possession of this Prospectus and the accompanying Entitlement and Acceptance Form, you should observe such restrictions and should seek your own advice on such restrictions.

Future performance and forward looking statements

Neither Northern Iron nor any other person warrants or guarantees the future performance of the New Shares or any return on any investment made pursuant to this Prospectus. The pro-forma financial information provided in this Prospectus is for illustrative purposes only and is not represented as being

indicative of Northern Iron's view on its future financial condition and/or performance.

The forward looking statements in this Prospectus are based on Northern Iron's current expectations about future events. They are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of Northern Iron and its Directors, that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by the forward looking statements in this Prospectus. These risks include, but are not limited to, the risks outlined in Section 7. Forward looking statements include those containing such words as 'anticipate', 'estimates', 'should', 'will', 'expects', 'plans' or similar expressions.

Foreign jurisdictions

This Prospectus has been prepared to comply with the requirements of the securities laws of Australia. This Prospectus contains an offer to Eligible Retail Shareholders of continuously quoted securities (as defined in the Corporations Act) of Northern Iron, and has been prepared in accordance with section 713 of the Corporations Act. In preparing this Prospectus regard has been given to the fact that Northern Iron is a disclosing entity for the purposes of the Corporations Act and that certain matters may reasonably be expected to be known to investors and professional advisers who investors may consult. No action has been taken to register or qualify the Entitlement Offer or the New Shares, or otherwise permit the public offering of the New Shares, in any jurisdiction other than Australia and New Zealand.

The Entitlement Offer does not, and is not intended to, constitute an offer 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.

The Entitlement Offer is not being extended to any person outside Australia, New Zealand and Norway, other than to Eligible Institutional Shareholders and to certain Institutional Investors as part of the Institutional Entitlement Offer.

The distribution of this Prospectus (including an electronic copy) outside Australia and New Zealand is restricted by law. If you come into possession of this Prospectus, you should observe such restrictions and should seek your own advice on such restrictions. Any non-compliance with these restrictions may contravene applicable securities laws. The return of an Entitlement and Acceptance Form, or payment for New Shares by BPAY[®] , will be taken by Northern Iron to constitute a representation and warranty made by the Shareholder to Northern Iron that there has been no breach of such laws and that all necessary approvals and consents have been obtained.

New Zealand

The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand).

This Prospectus has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). This Prospectus is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

Norway

This Prospectus has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this Prospectus shall not be deemed to constitute an offer to the public in Norway within the meaning of the Norwegian Securities Trading Act of 2007.

The New Securities may not be offered or sold, directly or indirectly, in Norway except:

to "professional clients" (as defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-professional clients having met the criteria for being deemed to be professional and for which an investment firm has waived the protection as non-professional in accordance with the procedures in this regulation);
to fewer than 150 natural or legal persons (other than "professional clients"); or

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in any other circumstances provided that no such offer of New Securities shall result in a requirement for the registration, or the publication by the Company or an underwriter, of a prospectus pursuant to the Norwegian Securities Trading Act of 29 June 2007.

United States

This Prospectus may not be released or distributed in the United States. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Any securities described in this Prospectus have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

Disclaimer of representations

No person is authorised to give any information, or to make any representation, in connection with the Entitlement Offer that is not contained in this Prospectus. Any information or representation that is not in this Prospectus may not be relied on as having been authorised by Northern Iron, the Sole Lead Manager and Underwriter, the Co-Lead Manager, or their respective related bodies corporate in connection with the Entitlement Offer. Any references to documents on Northern Iron's website (or any other website) are provided for convenience only, and none of the documents or other information on the website is incorporated by reference into this Prospectus. Please refer to Section 9.11 for details regarding international offer restrictions.

Defined words and expressions

Some words and expressions used in this Prospectus have defined meanings, which are explained in the Glossary. A reference to time in this Prospectus is to the time in Sydney, Australia, unless otherwise stated. All financial amounts in this Prospectus are expressed in Australian currency, unless otherwise stated.

Enquiries

If you are an Eligible Retail Shareholder and have any questions in relation to the Entitlement Offer, please contact your stockbroker, accountant, solicitor and/or other professional adviser. If you have questions in relation to the Shares upon which your Entitlement has been calculated, or how to complete the Entitlement and Acceptance Form or take up your Entitlement, please call the Northern Iron Shareholder Information Line on 1300 764 285 (within Australia) and +61 3 9415 4000 (outside Australia). The Northern Iron Shareholder Information Line is open from 8.30am to 5.00pm (Sydney time) Monday to Friday during the Offer Period.

Privacy

Please read the privacy statement located in Section 9.10. It is important you understand that by applying for New Shares you consent to the matters outlined in that statement.

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Page CHAIRMAN'S LETTER ..................................................................................................................................................... 2 1. INVESTMENT OVERVIEW ........................................................................................................................................... 4 2. ANSWERS TO KEY QUESTIONS ............................................................................................................................. 11 3. DETAILS OF THE ENTITLEMENT OFFER ................................................................................................................ 15 4. HOW TO APPLY ......................................................................................................................................................... 23 5. OVERVIEW OF NORTHERN IRON ........................................................................................................................... 26 6. FINANCIAL EFFECT OF THE ENTITLEMENT OFFER ON NORTHERN IRON ....................................................... 39 7. RISK FACTORS .......................................................................................................................................................... 44 8. INVESTIGATING ACCOUNTANT'S REPORT ........................................................................................................... 49 9. ADDITIONAL INFORMATION .................................................................................................................................... 56 GLOSSARY ..................................................................................................................................................................... 68 NORTHERN IRON CORPORATE DIRECTORY ............................................................................................................ 72

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Key Entitlement Offer Statistics

Offer Price	$0.45
Entitlement Offer ratio	1 New Share for every 3 Shares held as at
	7:00pm (Sydney time) on Tuesday, 9 October
	2012
Underwritten component of the Entitlement Offer	Approximately $47.2 million (representing the
	Institutional Entitlement Offer)
Total Entitlement Offer proceeds	Between approximately $47.2 million and
	approximately $55.5 million, depending on the
	take up of Entitlements under the Retail
	Entitlement Offer
Total number of New Shares to be issued under the Entitlement	Between approximately 104.8 million and
Offer	approximately 123.3 million New Shares,
	depending on the take up of Entitlements
	under the Retail Entitlement Offer

Note : New Shares issued and the amount raised under the Entitlement Offer are approximates only due to the non-underwritten nature of the Retail Entitlement Offer as well as the rounding of Entitlements and reconciliations of Entitlements under the Entitlement Offer to shareholders as at the Record Date. The exact number of New Shares to be issued and the number of New Shares that may be issued under each part of the Entitlement Offer will not be known until completion of the Entitlement Offer.

Key dates of the Entitlement Offer

Announcement of Entitlement Offer	Thursday, 4 October 2012
Lodgement of the Pathfinder Prospectus with ASX	Thursday, 4 October 2012
Institutional Entitlement Offer opened	Thursday, 4 October 2012
Institutional Entitlement Offer closed	Friday, 5 October 2012
Institutional Shortfall Bookbuild conducted	Friday, 5 October 2012
Lodgement of this Prospectus with ASIC and ASX	Monday, 8 October 2012
Record Date for the Entitlement Offer	7.00pm (Sydney time) Tuesday, 9 October 2012
Prospectus despatched	Thursday, 11 October 2012
Issue of New Shares under the Institutional Entitlement Offer	Friday, 12 October 2012
and normal trading of those New Shares expected to commence
on ASX
Retail Entitlement Offer opens	Friday, 12 October 2012
Retail Entitlement Offer closes	5.00pm (Sydney time) Friday, 26 October 2012
Issue of New Shares under the Retail Entitlement Offer	Tuesday, 6 November 2012
Despatch of holding statements to Retail Shareholders	Wednesday, 7 November 2012
Normal trading of New Shares issued under the Retail	Thursday, 8 November 2012
Entitlement Offer expected to commence on ASX

Note : The above timetable is indicative only and subject to change. Northern Iron reserves the right to extend these dates without prior notice subject to ASX Listing Rules and other applicable laws. In particular, Northern Iron reserves the right to extend the Retail Closing Date or to accept late Applications. The commencement of quotation of New Shares is subject to confirmation from ASX.

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CHAIRMAN'S LETTER

NORTHERN IRON LIMITED (ASX: “NFE”)

4 October 2012

Dear Shareholder,

On behalf of the Directors of Northern Iron, I invite you to participate in a 1 for 3 accelerated non-renounceable entitlement offer. The New Shares will be issued at $0.45 each to raise up to approximately $55.5 million before costs.

Background to the Entitlement Offer

Northern Iron continues to make progress towards achieving 2.8 million tonnes per annum (Mtpa) nameplate capacity with concentrate production rates regularly over 7,000 tonnes per day (annualised 2.5Mtpa) and at times over 8,000 tonnes per day (annualised 2.7Mtpa). Having significantly improved the capacity of the concentrator at the Sydvaranger Iron Ore Project (“Sydvaranger”) while maintaining the quality improvements achieved earlier in the year, our objective is to implement the operational procedures and enhanced maintenance performance plans necessary to ensure that the project consistently and sustainably produces at nameplate production rates. Northern Iron is confident that this objective is achievable and regular nameplate production levels should become the standard operating benchmark for Sydvaranger.

However, the recent material decline and continued volatility in iron ore prices, coupled with the cost implications of the slower than anticipated production ramp-up detailed in our update to you on 17 September 2012, have materially weakened Northern Iron’s working capital position. In light of this, the Northern Iron Board has determined that an Entitlement Offer is the most appropriate means available to ensure that Northern Iron has adequate working capital.

Entitlement Offer proceeds and uses

Northern Iron is seeking to raise up to approximately $55.5 million under the Entitlement Offer, comprising a fully underwritten Institutional Entitlement Offer and a non-underwritten Retail Entitlement Offer. The discount in the price of the New Shares reflects the Board’s desire to make your participation in the Entitlement Offer attractive.

The proceeds of the Entitlement Offer will be used to compensate for a reduction in the amount able to be drawn under the Company's working capital facility brought on by the material decline in iron ore price, to strengthen the Company’s working capital position and to ensure greater financial and operational flexibility for the Company, enabling the Company to be properly funded whatever the outcome of the Strategic Review may be. In addition, the raising will provide the Company with increased headroom under the financial covenants of its debt facilities.

As a result of the Entitlement Offer, Northern Iron has successfully renegotiated its banking covenants, providing the Company with increased financial flexibility and demonstrating the support Northern Iron continues to enjoy from its lenders.

Update on Strategic Review

As Shareholders will be aware from earlier announcements, the Company is undertaking a Strategic Review. As part of that review, in late July 2012, Northern Iron received, from Essel Mining (a wholly owned subsidiary of the Aditya Birla Group) and Prominvest, highly conditional, non-binding indicative proposals to acquire all of the Shares of Northern Iron for $1.40 per Share and $1.42 per Share, respectively.

Both Essel Mining and Prominvest are aware of the Entitlement Offer and are continuing to undertake stage two due diligence on Northern Iron to determine whether to submit a binding offer for Northern Iron. Final binding offers are currently due to be submitted by mid October 2012, unless otherwise agreed.

INVESTMENT OVERVIEW

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Even if an offer were received and put to shareholders for consideration, it is essential that Northern Iron is appropriately capitalised as it undertakes any discussions with a party to the Strategic Review and that the Company strengthens its working capital position given it would take some months to complete an offer which resulted in the Company being acquired.

Accordingly, regardless of the outcome of the Strategic Review, the Northern Iron Board must ensure that the Company is appropriately capitalised and positioned to continue to develop as a standalone company.

The Northern Iron Board, in consultation with its advisers, has determined that raising the required funding would be logistically difficult once an offer (if any) was received under the Strategic Review. The Board also noted that progressing the fundraising after final binding bids (if any) were received would in all likelihood put Northern Iron in breach of the usual and expected conditions of such final bids, rendering the bids ineffective from Northern Iron’s perspective. The Board also formed the view that potential bidders would feel more comfortable continuing in the Strategic Review process if they were informed of the funding and its implications for the process before any final bids were submitted. Accordingly the Board concluded it was in shareholders best interests to proceed with the raising at this point in time.

It is essential to note that the fact that the Company is undertaking this Entitlement Offer does not suggest that receipt of a final binding proposal is either more or less likely.

The Northern Iron Board is excited at the improvement and expansion opportunities that lay ahead of the Company. Northern Iron remains committed to its value creation strategy which your directors believe outlines the exciting potential for the Company.

The Entitlement Offer

This Prospectus relates to the Retail Entitlement Offer.

Under this Prospectus, Eligible Retail Shareholders will have the opportunity to subscribe for 1 New Share for every 3 Existing Shares held at 7.00pm (Sydney Time) on Tuesday, 9 October 2012. The Offer Price is $0.45 per New Share and the Retail Entitlement Offer will close at 5.00pm (Sydney time) on Friday, 26 October 2012. To participate in the Retail Entitlement Offer, applications must be received no later than this time.

For information on how to take up your Entitlement, please refer to see Section 4 of this Prospectus.

Further information

Further details of the Retail Entitlement Offer are set out in this Prospectus.

If you have any questions in respect of the Entitlement Offer, please call the Northern Iron Shareholder Information Line on 1300 764 285 (within Australia) and +61 3 9415 4000 (outside Australia), any time between 8:30am and 5:00pm (Sydney Time) Monday to Friday during the Offer Period, or alternatively consult your stockbroker, accountant, legal adviser, tax adviser or other professional adviser.

I encourage you to read this Prospectus carefully before making your investment decision.

It is the current intention of each of your Directors (including Felix Tschudi who controls approximately 20.3% of the share capital of the Company) to participate in the Entitlement Offer to the full extent of his Entitlement.

On behalf of the Board of Northern Iron, I thank you for your continued support as a Northern Iron shareholder and commend the Entitlement Offer for your consideration.

Yours faithfully David Griffiths

Non-Executive Chairman Northern Iron Limited

INVESTMENT OVERVIEW

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1. INVESTMENT OVERVIEW

INVESTMENT OVERVIEW

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1.1 KEY ENTITLEMENT OFFER INFORMATION

1.1.1 UPDATE ON STRATEGIC REVIEW

In late July 2012, as part of the Strategic Review, Northern Iron received, from Essel Mining (a wholly owned subsidiary of the Aditya Birla Group) and Prominvest, highly conditional, non-binding indicative proposals to acquire all of the Shares of Northern Iron for $1.40 per Share and $1.42 per Share, respectively.

It is essential to note that the fact that the Company is undertaking this Entitlement Offer does not suggest that receipt of a final binding proposal is either more or less likely.

1.1.2 INVESTMENT HIGHLIGHTS

Significant improvement in concentrator capacity achieved	•	Successful implementation of the two year rectification and debottlenecking plan in two phases has delivered significantly improved production capacity in the concentrator.
	•	Northern Iron continues to make progress towards achieving 2.8 Mtpa nameplate
		capacity at its processing plant (capacity implies the technical ability and installed
		infrastructure to achieve these rates). The Company is now turning its focus to
		achieving 2.8 Mtpa capability, that is ensuring that the processing plant, together
		with the mine, can produce concentrate at a rate of 2.8 Mtpa consistently and
		sustainably. Concentrate production rates are regularly over 7,000 tonnes per day
		(annualised 2.5 Mtpa) and at times over 8,000 tonnes per day (annualised 2.7
		Mtpa). Production volumes at a 2.6 Mtpa rate are expected for the next six months,
		rising to a 2.7 Mtpa rate for the remainder of 2013.
	•	Steady state production towards nameplate capability is expected as final
		maintenance performance plans are implemented and operational improvements in
		the mining operation are implemented.
	•	Further minor investments are required in management systems and capital
		equipment to lift the plant to a sustainable 2.8 Mtpa operating rate.
Advantaged infrastructure access	•	Northern Iron is the sole user of the 8km rail from mine to the Kirkenes concentrator and port.
	•	Kirkenes port, through which Northern Iron exports iron ore, is uncongested and
		ice-free.
	•	The operation has excellent access to Western European road, sea and air links,
		and enjoys the benefits of operating within an established community.
Leverage to any iron ore price	•	Northern Iron is one of the few pure play iron ore producers listed on the ASX.
recovery	•	Northern Iron has a high degree of exposure to any iron ore price recovery.
	•	Northern Iron benefits from high demand for premium magnetite concentrate
		product (high iron content, low silica) and close proximity to key European
		steelmaker customers.
Expansion potential	•	Over the course of 2012, Northern Iron has outlined a comprehensive value creation strategy.
	•	Northern Iron is evaluating the potential to upgrade port facilities to handle
		180,000t vessels in the long term, which is expected to result in an increase in
		realised sales price.

INVESTMENT OVERVIEW

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In consultation with three engineering firms, Northern Iron has completed a scoping study for the doubling of concentrate production capacity at Sydvaranger to 5.6 Mtpa and is continuing to progress the regulatory and environmental approvals required to enable its development.
A lower risk brownfield expansion opportunity with the potential to stage development depending on market conditions.
Experienced senior management • The experienced operational and management team have successfully overseen the ramp up and optimisation of Sydvaranger.
The key members of the senior management team have significant experience in arctic mining operations.

1.1.3 KEY RISKS ASSOCIATED WITH AN INVESTMENT IN NORTHERN IRON

Outcome of the	The Company announced a Strategic Review in November 2011, part of which consisted of
Company’s Strategic	soliciting interest from potential acquirers of Northern Iron. The Company currently has two
Review	parties undertaking detailed stage two due diligence on the Company (see Section 5.2 for more
	details). Final binding offers are currently due to be submitted by mid October 2012, unless
	otherwise agreed. There is no guarantee that any party will submit a final binding bid for
	consideration by the Company either at all or at the price of the indicative, non-binding proposals
	submitted by each of Essel Mining and Prominvest. There is also no guarantee that Northern
	Iron will receive a final binding bid which can be provided to Shareholders for consideration. If
	Northern Iron does not receive a final binding bid, or does not receive a final binding bid which
	can be put to Shareholders for consideration there is a risk that the trading price of the Shares
	could decline and you could lose some or all of your investment. Given the outcome of the
	Strategic Review is expected to occur during the period that the Entitlement Offer is open, this
	could have an impact on a decision to participate in the Entitlement Offer.
Production	There is a risk that circumstances (including unforeseen circumstances) may cause a delay in
	Northern Iron achieving 2.8Mtpa nameplate production, or may otherwise impact production.
	These circumstances could include, among other things, the need for unplanned maintenance
	and unforeseen operational difficulties or breakdowns of the Company’s mining, processing, rail
	or port equipment and infrastructure, a failure to improve maintenance performance and increase
	the number of maintenance personnel and the Company experiencing lower than expected
	temperatures during the winter months which can reduce throughput at Sydvaranger. Lower than
	expected production volumes will impact revenue (by decreasing sales) and increase the unit
	cost of production (as a result of less tonnes of concentrate produced in a given period). There is
	also a risk that the quality of Northern Iron’s concentrate product could be impacted. Lower than
	expected concentrate quality could decrease the price Northern Iron receives for its concentrate
	production and this would adversely impact revenue.
	Production rates guided for quarter 4 2012, quarter 1 2013 and 2013, as well as production of 2.8
	Mtpa of concentrate, require the mining operation to achieve production rates of up to 7.0 million
	tonnes of ore per annum at a certain iron grade. This rate is above production rates achieved by
	the Company historically, but is not beyond the capacity of the equipment in use. Should the
	mining operation not reach these rates for operational or maintenance reasons, and/or should the
	iron grade be lower than is expected (as outlined in Section 5.3.4), the targeted production rate of
	concentrate produced may not be achieved.
Offtake Agreement	Northern Iron is party to an offtake agreement for the supply of iron ore concentrate from its
	mining operation in northern Norway. The offtake agreement contains specifications around the
	quality of concentrate required. There is a risk that Northern Iron may not produce the quality of
	concentrate required under the offtake agreement which may in turn impact upon the revenue
	and overall financial performance of Northern Iron.
Capital Costs	While Northern Iron believes it will have sufficient funds following completion of the Entitlement
	Offer to meet the ongoing near term capital requirements for Sydvaranger, there is a risk that the
	capital costs of the project could be greater than expected. The near term capital expenditure
	requirements comprise purchases of plant and equipment, licenses and railway rolling stock.

INVESTMENT OVERVIEW

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Commodity Prices	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 Sydvaranger and on
	exploration and development programs, and consequently on the Company's share price. This
	risk is heightened by the fact that iron ore is the only commodity the Company relies upon to
	derive its revenue. This exposure is not hedged given the primary exposure the Company offers
	to investors as a pure play iron ore producer.
Related Party	Northern Iron is reliant upon the Tschudi Group providing access to the port, concentrate storage
Agreements	and handling facilities to ship iron concentrate production. Should the Tschudi Group fail to
	perform its obligations, Northern Iron would be 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 Sydvaranger uneconomic.
Resources Estimates /	Resource estimates are expressions of judgement based on knowledge, experience and industry
Assumptions	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.
Personnel and Access	The success of the Company's operations depends to some extent on the ability of the Company
to Labour	to attract and retain qualified and capable management staff and consultants to perform
	geological, exploration, analytical, geotechnical, engineering, metallurgical, mining and
	maintenance work, including in a competitive local market. If key individuals were to leave, this
	could have an adverse impact on the operations and consequently the Company's share price.
Foreign Exchange Rates	Northern Iron earns revenues from the sale of iron ore concentrate in United States and incurs
	operating expenses primarily in Norwegian Kroner and United States Dollars. The proceeds of
	the Entitlement Offer will be received in Australian dollars, and the proceeds will be deployed in
	Norwegian Kroner and United States Dollars from the date of settlement. However, there is a risk
	that the exchange rates applicable to these currencies may vary between the date of this
	Prospectus and settlement.
Financing Risk	The Company's ability to operate as a going concern is dependent on the Company’s cash flows,
	and the availability of any financing necessary to support the activities which generate those cash
	flows. As outlined in this risks section, factors including production levels, operating and capital
	costs, and commodity prices in particular, have an impact on the Company’s cash generation
	capabilities and therefore its ability to meet the costs of its operations. In addition to supporting
	operating activities, cash flows must also be sufficient to service financiers, whose funding is
	contingent on repayment and covenant obligations and which the Company must satisfy as and
	when required. Should the Company be unable to meet its ongoing obligations, or be unable to
	secure adequate financing, it may not be able to fund its operations and exist as a going concern.
	The Company may be able to secure waivers and other relief from its financiers in the event of a
	potential breach of its repayment and covenant obligations, but this is not guaranteed.
	The availability of capital or relief from financiers to meet the Company's needs may be impacted
	by factors in financial markets beyond the Company's control, such as changes in interest rates
	and capital market liquidity.
Regulatory Risk	Northern Iron's Sydvaranger Iron Ore Project is subject to Norwegian laws and regulations.
	Although Northern Iron conducts its operations in a responsible manner and in compliance with
	applicable laws and regulations, non-compliance with these could in the worst instance result in
	the cessation of production and substantial liabilities and penalties. There can be no assurance
	that new laws, regulations or stricter policies, once implemented (prospectively or
	retrospectively), will not oblige Northern Iron to incur significant expenditure which could have a
	material adverse effect on Northern Iron’s business, financial condition and operating results or,
	in an extreme case, prevent the continuation of operations.
	SVG is presently in discussions with the Norwegian environmental authority, KLIF, over the
	length of the tailings pipeline at Kirkenes. The tailings line has been measured as 400m long, and
	in the permit is required to be 450m long. The Company has made contingency plans to return
	the line to its correct length and is in discussions with the regulator about the requirement and
	timing to do so. The Company does not believe this issue represents a material risk to the
	business, and rectification costs and production impacts have been accounted for in forward

INVESTMENT OVERVIEW

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	looking statements.
Litigation Risk	Litigation risks to Northern Iron may include, but are not limited to, contractual, personal injury,
	intellectual property disputes, customer claims, and employee claims. If any claim were to be
	pursued and be successful it may adversely impact the sales, financial performance or financial
	position of Northern Iron.
Major Shareholder Risks	Northern Iron currently has a number of substantial shareholders on its share register who are
	supportive of the Strategic Review. There is a risk that these shareholders or other large
	shareholders may sell their shares at a future date. This could cause the price of Shares to
	decline.
Marketing Strategy	Northern Iron’s iron ore type (pellet feed) is presently limited in its application within the current
	European iron ore fines market. The Company therefore relies on the Chinese market for sales
	outside the Tata offtake agreement. New pellet feed projects are expected to come online in
	future years and potentially impact demand for Northern Iron’s product. If the construction of
	pellet plants does not match this increase, or if these are predominantly based in China, Northern
	Iron may find itself in a lower price environment (either due to oversupply into Europe, or due to
	further reliance on the Chinese market for sales, which may result in higher freight costs and a
	lower realised sales price).

1.1.4 KEY RISKS ASSOCIATED WITH THE ENTITLEMENT OFFER

		Where should I go for
	Explanation	further information?
Dilution	The Entitlement Offer will result in the issue of up to approximately	Section 7.3.1
	123.3 million New Shares. If you do not participate in the
	Entitlement Offer, your percentage holding in Northern Iron (held
	at the Record Date) will decrease.
	The Entitlement Offer is being conducted at a 39.2% discount to
	TERP. The level of discount to market price reflects the Board’s
	desire to make participation by Shareholders in the Entitlement
	Offer attractive. However, should you choose not to participate,
	this will result in dilution of your holding.
Inability to complete the	A termination event of the Underwriting Agreement may be	Sections 7.3.2 and 9.5.4
Entitlement Offer	triggered prior to the Institutional Allotment Date. If a termination
	event is triggered and $47.2 million (representing the underwritten
	Institutional Entitlement Offer) is unable to be raised, Northern Iron
	would be required to renegotiate the terms of its financing facilities
	and seek other sources of funding.

1.1.5 WHAT ARE THE DETAILS OF THE ENTITLEMENT OFFER?

*1.1.5WHAT ARE THE***	*DETAILS OF THE ENTITLEMENT OFFER?*
		Where should I go for
Question	Explanation	further information?
What is the Entitlement	The Entitlement Offer is an accelerated non-renounceable	Section3
Offer?	entitlement offer made to Eligible Shareholders on the basis of 1
	New Share for every 3 Existing Shares held as at the Record
	Date. The Entitlement Offer comprises:
	(i)the Institutional Entitlement Offer– Eligible Institutional
	Shareholders were invited to take up all or part of their
	Entitlement; and
	(ii)the Retail Entitlement Offer– Eligible Retail Shareholders will
	be sent this Prospectus together with a personalised
	Entitlement and Acceptance Form and are required to decide
	whether to take up all or some of their Entitlement, or take no

INVESTMENT OVERVIEW

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		Where should I go for
Question	Explanation	further information?
	action.
What is my entitlement under the Entitlement	Each Eligible Retail Shareholder has the right to apply for 1 New Share for every 3 Existing Shares held as at the Record Date	Section 3 and Entitlement and Acceptance Form
Offer?	(7.00pm (Sydney time) on Tuesday, 9 October 2012).
	If you are an Eligible Retail Shareholder, your Entitlement is set
	out in the personalised Entitlement and Acceptance Form
	accompanying this Prospectus.
	You may take up all, part, or none of your Entitlement.
	If you have any queries regarding your Entitlement and
	Acceptance Form, you should call the Northern Iron Shareholder
	Information Line on 1300 764 285 (within Australia) and +61 3
	9415 4000 (outside Australia) at any time between 8.30am and
	5.00pm (Sydney time) Monday to Friday during the Offer Period.
	You may also download a copy of your Entitlement and
	Acceptance Form from the Computershare Investor Centre
	following the link www.investorcentre.com. To use this facility you
	will need internet access and your Holder Identification Number or
	Securityholder Number to pass the security features on the
	website.
How much will I pay for	The Offer Price is $0.45 per New Share, which represents a	Section3
New Shares under the	discount of:
Entitlement Offer?
	• 46.4% to the closing price of $0.84 on the last day of ASX
	trading in Shares before Northern Iron announced the
	Entitlement Offer; and
	• 39.2% to the Theoretical Ex-Rights Price of $0.74.
What will the Entitlement	The proceeds of the Entitlement Offer will be used to:	Section 3.3, 6.3 and 9.5
Offer proceeds be used
for?
	• compensate for a reduction in the amount able to be drawn
	under the Company's working capital facility brought on by the
	material decline in iron ore price;
	• strengthen the Company’s working capital position and to
	ensure greater financial and operational flexibility for the
	Company, enabling the Company to be properly funded
	whatever the outcome of the Strategic Review may be; and
	• provide the Company with increased headroom under the
	financial covenants of its debt facilities.
	• Northern Iron expects that the proceeds of the Institutional
	Entitlement Offer, which is underwritten, will be sufficient to
	address these funding requirements.
How much will Northern	Northern Iron is seeking to raise up to $55.5 million before	Section3
Iron raise under the	transaction costs. The actual amount raised depends on the level
Entitlement Offer?	of subscriptions received under the Retail Entitlement Offer.
Is the Entitlement Offer	The Institutional Entitlement Offer, which is fully underwritten by	Section 9.5
underwritten?	the Sole Lead Manager and Underwriter, will raise approximately
	$47.2 million. The Retail Entitlement Offer, which is not
	underwritten, may raise up to an additional approximate $8.3
	million.

INVESTMENT OVERVIEW

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1.2 OTHER KEY INFORMATION

		Where should I go for
Question	Explanation	further information?
What is Northern Iron's business model?	Northern Iron is incorporated in Australia and was listed on the ASX in December 2007. Northern Iron’s primary objective is to operate and manage its 100% owned iron ore project,	Section5
	Sydvaranger. Sydvaranger consists of mining, rail and processing
	assets located close to Kirkenes in Northern Norway, with access
	to an uncongested and efficient port. Northern Iron produces and
	exports premium quality iron ore concentrate to steel industry
	customers worldwide.
What is Northern Iron's key financial and financing information?	Details of the financial effect of the Entitlement Offer on Northern Iron and of its current financing arrangements are contained in Section 6.	Section6
Who are the directors and key managers of Northern Iron?	Northern Iron's Board comprises David Griffiths (Non-Executive Chairman), John Sanderson (Managing Director and Chief Executive Officer), Peter Bilbe (Non-Executive Director), Ashwath Mehra (Non-Executive Director) and Felix Tschudi (Non-Executive	Section 5.5
	Director). Further details in relation to each of these Director's
	expertise and experience are set out in Section 5.5 of this
	Prospectus.
	In addition to John Sanderson, Northern Iron's key management
	includes:
	• Antony Beckmand who is the Company’s Chief Financial
	Officer;
	• Ismo Haaparanta who is the Chief Executive Officer of SVG;
	and
	• Harald Martinsen who is the Chief Development Officer of
	Northern Iron and SVG.
What are the significant interests and benefits	These details are set out in Sections 9.6 and 9.7 of this Prospectus.	Sections 9.6 and 9.7
payable to directors and
other persons
connected with Northern
Iron and the Entitlement
Offer?
What are the significant related party transactions that Northern Iron is a party to?	Northern Iron exports the concentrate production from Kirkenes via a port which is owned by the Tschudi Group and operated by the Company. Access to port capacity is secured under a long-term lease arrangement with Tschudi Bulk Terminals AS, a Tschudi Group company. The Group is also a party to a finance lease with Tschudi Bulk Terminals AS.	Sections 5.3.5 and 6.3.1
	Felix H Tschudi, a Non-Executive Director of Northern Iron, is the
	Chairman and sole owner of Tschudi Shipping Company AS,
	which is the holding company of the Tschudi Group.

INVESTMENT OVERVIEW

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2. ANSWERS TO KEY QUESTIONS

ANSWERS TO KEY QUESTIONS

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Participation in the		Where to find more
Retail Entitlement Offer		information
Who is eligible to	An Eligible Retail Shareholder is a person who:	Section 3.7
participate in the Retail Entitlement Offer?	• was registered as a holder of Shares as at 7.00pm (Sydney time) on Tuesday, 9 October 2012;
	• has a registered address in Australia, New Zealand or
	Norway;
	• is not in the United States or acting for the account or benefit
	of a person in the United States;
	• is not an Eligible Institutional Shareholder or an Ineligible
	Institutional Shareholder and does not hold Shares on behalf
	of an Eligible Institutional Shareholder or an Ineligible
	Institutional Shareholder (to that extent) (in respect of persons
	holding Shares as nominees for such Shareholders, see
	Section 3.7); and
	• is eligible under all applicable securities laws to receive an
	offer under the Retail Entitlement Offer.
What is my Entitlement?	Eligible Shareholders have the right to apply for 1 New Share in	Entitlement and
	Northern Iron for every 3 Existing Shares, held as at the Record	Acceptance Form
	Date (7.00pm (Sydney time) Tuesday, 9 October 2012).
What can I do with my	You can do one of the following:	Section 4
Entitlement?	• take up your Entitlement in full;
	• take up part of your Entitlement and reject the balance; or
	• decline to take up any of your Entitlement by doing nothing.
Can I trade my	No. Entitlements are non-renounceable, which means they cannot	Section 3
Entitlement?	be traded on ASX or any other exchange, or be privately
	transferred.
What happens if I take	The Retail Entitlement Offer will lapse in respect of those New	Sections 3 and 4
up only part of my Entitlement, or if I do nothing?	Shares which are not acquired by Eligible Retail Shareholders. Eligible Shareholders will not receive any proceeds in respect of any part of their Entitlement that they do not take up.
Will my shareholding in	Eligible Shareholders who take up their Entitlement in full should	Section 3
Northern Iron be	not have their percentage shareholding in Northern Iron diluted by
diluted?	the Entitlement Offer (subject to immaterial movements as a result
	of rounding of Entitlements).
Can I apply for	No. The number of New Shares offered to Eligible Retail	Sections 3 and 4
additional New Shares	Shareholders under the Retail Entitlement Offer is on a pro rata
above my Entitlement?	basis in respect of Existing Shares held as at the Record Date (7.00pm (Sydney time), Tuesday, 9 October 2012).
What are the rights and	New Shares offered under the Entitlement Offer will be fully paid	Section 9.4
liabilities attaching to	and will rank equally with Existing Shares.
the New Shares?

ANSWERS TO KEY QUESTIONS

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Participation in the Retail Entitlement Offer

Where to find more information

How do I participate in If you are an Eligible Retail Shareholder and wish to take up all or Section 4 the Retail Entitlement part of your Entitlement you have two options: Offer? • Option 1 : If paying by cheque, bank draft or money order, complete the personalised Entitlement and Acceptance Form in accordance with the instructions on that form, and then return that form to the Share Registry together with payment of the full Application Monies in respect of the New Shares you wish to take up, made payable to “Northern Iron Limited - Offer A/C” and crossed “Not Negotiable”. The completed Entitlement and Acceptance Form and cheque, bank draft or money order must be received by the Share Registry before 5.00pm (Sydney time) on Friday, 26 October 2012 in the envelope enclosed with this Prospectus or otherwise at the following address:

Northern Iron Limited Entitlement Offer

C/- Computershare Investor Services Pty Limited GPO Box 505 Melbourne VIC 3001

Australia

Option 2 : If paying by BPAY®, pay the full Application Monies in respect of the New Shares you wish to take up in accordance with the instructions on the personalised Entitlement and Acceptance Form. Payment by BPAY® must be received by the Share Registry before 5.00pm (Sydney time) on Friday, 26 October 2012.

If you are paying by BPAY®:

You do not need to submit the personalised Entitlement and Acceptance Form but are taken to make the statements on that form; and
You must check the processing cut-off time for BPAY® transactions with your financial institution, and take that into consideration when making payment, as that cut-off time may be earlier than the Retail Closing Date.

What are the key risks associated with an investment in New Shares?

What is my Entitlement if I become a Shareholder after the Record Date?

A summary of some of the key risks associated with an investment Section 7 in New Shares is contained in Section 7.

Before making any investment decision, you should read the entire Prospectus and carefully consider those risk factors.

You have no Entitlement if you become a Shareholder after the Section 3 Record Date.

		Where to find more
Other information		information
What are the Australian	A general summary of the potential Australian tax implications for	Section 3.15
tax implications of the Entitlement Offer?	Eligible Retail Shareholders is set out in Section 3.15. The summary is not intended to provide specific advice in relation to
	the circumstances of any particular Shareholder. Eligible Retail
	Shareholders should obtain their own tax advice from a suitably
	qualified adviser before deciding how to deal with their Entitlement.
What are the fees and	Fees and costs associated with the Entitlement Offer are expected	Section 9.13

ANSWERS TO KEY QUESTIONS

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		Where to find more
Other information		information
costs of the Entitlement	to total a maximum of approximately $2.4 million and will be paid
Offer?	out of the proceeds of the Entitlement Offer.
What is the financial	The financial effect of the Entitlement Offer on Northern Iron is	Section 6
effect of the Entitlement	discussed in Section 6.
Offer on Northern Iron?
How can Eligible Retail	If you would like further information you can:
Shareholders obtain further information?	• contact your stockbroker, accountant, solicitor and/or other professional adviser; and/or;
	• call the Northern Iron Shareholder Information Line on 1300
	764 285 (within Australia) and +61 3 9415 4000 (outside
	Australia) at any time between 8.30am and 5.00pm (Sydney
	time) Monday to Friday during the Offer Period.

ANSWERS TO KEY QUESTIONS

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3. DETAILS OF THE ENTITLEMENT OFFER

DETAILS OF THE ENTITLEMENT OFFER

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3.1 OVERVIEW

Under the Entitlement Offer, approximately 123.3 million New Shares are being offered at an Offer Price of $0.45 per New Share. Each Eligible Retail Shareholder has the opportunity to subscribe for 1 New Share for every 3 Existing Shares held on the Record Date.

The Entitlement Offer is intended to raise up to approximately $55.5 million. The Institutional Entitlement Offer is fully underwritten by the Sole Lead Manager and Underwriter and will raise approximately $47.2 million. The Retail Entitlement Offer is not underwritten, and depending on the level of take-up by Eligible Retail Shareholders, may raise up to an additional amount of approximately $8.3 million.

The Entitlement Offer is being managed by the Sole Lead Manager and the Co-Lead Manager.

The Entitlement Offer is comprised of two parts:

1. Institutional Entitlement Offer

The Entitlement Offer to Eligible Institutional Shareholders comprised an invitation to take up all or part of their Entitlement and to apply for New Shares in excess of their Entitlement. In addition, the Institutional Entitlement Offer comprised an offer of Institutional Shortfall Shares to Eligible Institutional Shareholders who applied for New Shares in excess of their Entitlement, and to certain other Institutional Investors.

2. Retail Entitlement Offer

Eligible Retail Shareholders will be sent this Prospectus together with a personalised Entitlement and Acceptance Form and are required to decide whether or not they will take up all or part of their Entitlement. Applications under the Retail Entitlement Offer must be received by 5:00pm (Sydney time) on the Retail Closing Date, being Friday, 26 October 2012.

3.2 UNDERWRITING

The Institutional Entitlement Offer has been underwritten by the Sole Lead Manager and Underwriter (approximately $47.2 million) pursuant to the Underwriting Agreement. Subject to the terms of the Underwriting Agreement, the Sole Lead Manager and Underwriter will subscribe at the Offer Price for any New Shares that are not subscribed for by Eligible Institutional Shareholders under the Institutional Entitlement Offer and not taken up by Institutional Investors under the Institutional Shortfall Bookbuild. The Retail Entitlement Offer is not underwritten and will raise up to approximately $8.3 million.

A summary of the Underwriting Agreement is set out in Section 9.5, including the conditions to the underwriting and the circumstances under which the Sole Lead Manager and Underwriter is entitled to terminate its underwriting obligations.

For the results of the Institutional Entitlement Offer and Institutional Shortfall Bookbuild, see the ASX announcement “Successful Completion of Institutional Entitlement Offer” lodged with ASX on Monday, 8 October 2012.

3.3 PURPOSE OF THE ENTITLEMENT OFFER

Under the Entitlement Offer, Northern Iron will raise up to $53.1 million (net of transaction costs). The proceeds of the Entitlement Offer will be used to:

compensate for a reduction in the amount able to be drawn under the Company's working capital facility brought on by the material decline in iron ore price;
strengthen the Company’s working capital position and to ensure greater financial and operational flexibility for the Company, enabling the Company to be properly funded whatever the outcome of the Strategic Review may be; and
provide the Company with increased headroom under the financial covenants of its debt facilities.

Northern Iron expects that the proceeds of the Institutional Entitlement Offer, which is underwritten, will be sufficient to address these funding requirements.

3.4 CAPITAL STRUCTURE

The effect of the Entitlement Offer on the capital structure of Northern Iron is set out in the table below.

	Number of Shares(1)
	Shares on issue before the Entitlement Offer (as at 4 October 2012) 369,980,113
	New Shares issued under the
	Institutional Entitlement Offer 104,827,699
	New Shares issued under the Retail
	Entitlement Offer (maximum) 18,499,006 Total Shares on issue following completion of the Entitlement Offer (maximum) 493,306,818
	__ (1) The figures set out in this table are the maximum shares to be issued. Due to the non underwritten nature of the Retail Entitlement Offer, rounding of
	Entitlements and reconciliations 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 the completion of the Entitlement

DETAILS OF THE ENTITLEMENT OFFER

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Offer. Northern Iron also has 1,500,000 options to subscribe for Shares on issue, details of which are set out in Section 5.5.

3.5 REASONS FOR USING THE ENTITLEMENT OFFER TO RAISE CAPITAL

The Entitlement Offer structure is seen by Northern Iron to provide a number of benefits to Northern Iron and Shareholders as a whole, including:

as the Entitlement Offer is a pro rata offer, all Eligible Shareholders have the opportunity to participate in the Entitlement Offer on an equal basis;
Eligible Shareholders do not have to pay any brokerage or other transaction costs for New Shares acquired under the Entitlement Offer; and
Northern Iron will receive the proceeds from the Institutional Entitlement Offer a few weeks before the Retail Entitlement Offer is finalised.

3.6 INSTITUTIONAL ENTITLEMENT OFFER

Under the Institutional Entitlement Offer, Eligible Institutional Shareholders were invited to take up all or part of their Entitlement at the Offer Price of $0.45 per New Share, and (if they take up their Entitlement in full) to apply for New Shares in excess of their Entitlement. The Record Date applies to Eligible Institutional Shareholders for the Institutional Entitlement Offer (subject to those ASX waivers summarised in Section 9.8).

3.7 RETAIL ENTITLEMENT OFFER

3.7.1 WHAT IS THE RETAIL ENTITLEMENT OFFER?

The Retail Entitlement Offer will be conducted between Friday, 12 October 2012 and Friday, 26 October 2012.

Under the Retail Entitlement Offer, Northern Iron is offering Eligible Retail Shareholders the opportunity to subscribe for 1 New Share for every 3 Existing Shares held at 7.00pm (Sydney time) on Tuesday, 9 October 2012 (“Record Date”) at the Offer Price.

The ratio and the Offer Price for the New Shares you are entitled to subscribe for are equal to the ratio and Offer Price as under the Institutional Entitlement Offer. The Record Date is also the Record Date that applies to Eligible Institutional Shareholders under the Institutional Entitlement Offer.

The number of New Shares for which an Eligible Retail Shareholder is entitled to subscribe is shown on the personalised Entitlement and Acceptance Form that accompanies this Prospectus and which will be sent to each Eligible Retail Shareholder. Where fractions arise in the calculation of Entitlements, they will be rounded up to the next whole number of New Shares.

The Retail Entitlement Offer does not constitute an offer to any person who is not an Eligible Retail Shareholder, including:

any Eligible Institutional Shareholder (whether or not it accepted the Institutional Entitlement Offer);
any Ineligible Institutional Shareholder;

Eligible Institutional Shareholders were offered the opportunity to subscribe for New Shares on the same ratio as under the Retail Entitlement Offer.

The Institutional Entitlement Offer is fully underwritten such that $47.2m will be raised under the Institutional Entitlement Offer. Eligible Institutional Shareholders are those persons who are registered as the holder of Shares on the Record Date (either directly or through a nominee) and are Institutional Investors to whom an invitation to participate in the Institutional Entitlement Offer was made.

In addition, the Institutional Shortfall Shares have been offered to Eligible Institutional Shareholders who apply for New Shares in excess of their Entitlement and to certain other Institutional Investors. Settlement of the Institutional Entitlement Offer is expected to occur on Thursday, 11 October 2012. The New Shares issued under the Institutional Entitlement Offer are then expected to commence trading on ASX on Friday, 12 October 2012.

any Ineligible Retail Shareholder; or
a nominee for such a person, in respect of Shares held for such a Shareholder.

3.7.2 Who is eligible to participate in the Retail Entitlement Offer?

The Retail Entitlement Offer is only open to Eligible Retail Shareholders.

Eligible Retail Shareholders are those persons who:

are registered as Shareholders as at 7.00pm (Sydney time) on the Record Date;
have a registered address in Australia, New Zealand or Norway;
are not in the United States or acting for the account or benefit of a person in the United States;
are, in the opinion of Northern Iron and the Sole Lead Manager and Underwriter, otherwise eligible under all applicable securities laws to receive an

DETAILS OF THE ENTITLEMENT OFFER

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offer for New Shares under the Retail Entitlement Offer; and

are not an Eligible Institutional Shareholder or an Ineligible Institutional Shareholder.

If you have acquired Shares in a Post Ex-Date Transaction, those Shares will be disregarded in determining your Entitlement as described in this Section 3.7 and in Section 9.8.

Northern Iron, in its absolute discretion, reserves the right to determine whether a Shareholder is an Eligible Retail Shareholder and therefore able to participate in the Retail Entitlement Offer, or an Ineligible Retail Shareholder and therefore unable to participate in the Retail Entitlement Offer. Northern Iron disclaims all liability to the maximum extent permitted by law in respect of the determination as to whether a Shareholder is an Eligible Retail Shareholder or an Ineligible Retail Shareholder.

The Retail Entitlement Offer is not being extended to any Shareholder whose registered address is outside Australia, New Zealand or Norway, or who is a person in the United States or acting for the account or benefit of a person in the United States. See Section 3.14 for further details on the treatment of foreign Shareholders under the Retail Entitlement Offer.

It is the responsibility of each applicant to ensure compliance with the laws of any country relevant to their Application. Return of a completed Entitlement and Acceptance Form together with the payment by cheque, bank draft or money order or payment of any Application Monies by BPAY® will be taken by Northern Iron to constitute a representation to Northern Iron that there has been no breach of such laws, and that the applicant is an Eligible Retail Shareholder.

Nominees, trustees or custodians must not apply on behalf of any beneficial holder that would not itself be an Eligible Retail Shareholder.

Accordingly, any Application made on the respective personalised Entitlement and Acceptance Forms by a nominee on behalf of a beneficiary must be in accordance with the Offer Documents.

A nominee must not send any materials relating to the Entitlement Offer into the United States and must not submit an Application or otherwise accept the Retail Entitlement Offer on behalf of a person in the United States.

Because of legal restrictions, nominees may not send copies of this Prospectus or any material in relation to the Entitlement Offer to any person in the United States, or in any other jurisdiction outside Australia or New Zealand except to beneficial shareholders in any other country (except the United States) where the Company may determine it is lawful and practical to make the Entitlement Offer.

The Company is not required to determine whether or not any registered holder is acting as a nominee or the identity or residence of any beneficial owners of Shares.

For the avoidance of doubt, the Company may (in its absolute sole discretion) reduce the number of New Shares allocated to Eligible Retail Shareholders, or persons claiming to be Eligible Retail Shareholders, if their claims prove to be overstated or they fail to provide information to substantiate their claims.

3.7.3 OFFER PRICE

The Offer Price is $0.45 per New Share. This is payable on taking up your Entitlement and is the same as the price to be paid for New Shares by Eligible Institutional Shareholders under the Institutional Entitlement Offer.

3.7.4 TAKING UP ENTITLEMENTS

Eligible Retail Shareholders may take up their Entitlement in full or in part by returning their personalised Entitlement and Acceptance Form and payment to the Share Registry, or by BPAY[®] payment instruction, by no later than 5.00pm (Sydney time) on Friday, 26 October 2012 (the Retail Closing Date). Payment may be made via cheque, bank draft, money order or BPAY[®] by following the instructions as set out on the personalised Entitlement and Acceptance Form.

To determine the amount that is payable, you will need to multiply the aggregate number of New Shares you wish to apply for by the Offer Price and write this amount in the relevant space provided for in your personalised Entitlement and Acceptance Form. Returning a completed Entitlement and Acceptance Form or paying the Offer Price for New Shares by BPAY[®] will be taken to constitute a representation by the Eligible Retail Shareholder that they:

have received a copy of this Prospectus and the accompanying personalised Entitlement and Acceptance Form, and have read those documents in full;
declare that all details and statements in the Entitlement and Acceptance Form are complete and accurate;
acknowledge that once their Entitlement and Acceptance Form is returned, or a BPAY® instruction is given, the Application may not be varied or withdrawn except as required by law;
agree to being issued the number of New Shares they applied or paid for; and
authorise Northern Iron and its officers or agents to do anything on their behalf necessary for New Shares to be issued to them, including to act on instructions received by the Share Registry using

DETAILS OF THE ENTITLEMENT OFFER

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the contact details in the Entitlement and Acceptance Form.

The Entitlements are personal and cannot be traded, transferred, assigned or otherwise dealt with. Northern Iron reserves the right to extend the Retail Closing Date without notice, subject to the Corporations Act, the ASX Listing Rules and other applicable laws. The Retail Entitlement Offer will lapse in respect of those New Shares for which there is no demand. In these circumstances, the Retail Entitlement Offer will close undersubscribed and an amount less than the total amount sought under the Retail Entitlement Offer will be raised. The Retail Entitlement Offer is not underwritten.

3.7.5 ALLOTMENT OF NEW SHARES UNDER THE RETAIL ENTITLEMENT OFFER

New Shares issued under the Retail Entitlement Offer are expected to be allotted on Tuesday, 6 November 2012. Following allotment, Shareholders will be sent holding statements confirming the number of New Shares issued to them. After the allotment date, Applicants may call the Northern Iron Shareholder Information Line to seek confirmation of their allocation.

To avoid postal delays in receiving your confirmation statement, we recommend you check your holding online at Computershare Investor Centre following the link www.investorcentre.com. To use this facility you will need internet access and your Holder Identification Number of Securityholder Reference Number to pass the security features on the website.

3.8 NO TRADING OF ENTITLEMENTS

Entitlements under the Entitlement Offer are non-renounceable, meaning they are personal and cannot be traded on ASX or any other exchange or privately transferred. Shareholders will not receive any value if they do not take up their Entitlement to the New Shares.

3.9 EFFECT OF THE ENTITLEMENT OFFER ON CONTROL OF NORTHERN IRON

Generally, Eligible Shareholders who take up their Entitlement in full should not have their percentage shareholding in Northern Iron diluted by the Entitlement Offer (subject to immaterial movements as a result of rounding of Entitlements).

The potential effect of the Entitlement Offer on the control of Northern Iron is as follows:

if all Eligible Shareholders take up their Entitlements under the Entitlement Offer, then the

Entitlement Offer will have no significant effect on the control of Northern Iron;

if some Eligible Shareholders do not take up all of their Entitlements under the Entitlement Offer, then the interests of those Eligible Shareholders will be diluted;
the proportional interests of Ineligible Shareholders will be diluted because those Ineligible Shareholders are not entitled to participate in the Entitlement Offer;
upon completion of the Entitlement Offer and assuming the Entitlement Offer is fully subscribed, existing Northern Iron substantial Shareholders (as set out in Section 5.6) will maintain their percentage shareholdings in Northern Iron should they take up their Entitlements under the Entitlement Offer. To the extent they do not take up their Entitlements, their holding will be diluted;
if the Retail Entitlement Offer is not fully subscribed, any person who takes up their Entitlement in full will increase their percentage shareholding in Northern Iron;
if Tschudi Mining Company AS (Northern Iron’s largest substantial holder) takes up its full Entitlements under the Entitlement Offer and no Eligible Retail Shareholder takes up their Entitlement under the Retail Entitlement Offer, Tschudi Mining Company AS’ voting power in Northern Iron will increase to 21.1%;
if Tschudi Mining Company AS does not take up its Entitlements under the Entitlement Offer and all other Eligible Retail Shareholders take up their Entitlements under the Retail Entitlement Offer, Tschudi Mining Company AS’ voting power in Northern Iron will decrease to 15.2%;
to the extent to which any person applies for and obtains any New Shares under the Entitlement Offer, other than by way of accepting their Entitlement, this will have the effect of increasing their interest in Northern Iron.

The Institutional Entitlement Offer is underwritten by the Sole Lead Manager and Underwriter.

If the Sole Lead Manager and Underwriter is required to take up its underwriting commitment of $47.2 million in full and no Eligible Retail Shareholder takes up their Entitlement under the Retail Entitlement Offer, the Sole Lead Manager and Underwriter would acquire approximately 104.8 million New Shares resulting in a maximum voting power in Northern Iron of 28.3%.

The voting power of the Sole Lead Manager and Underwriter will be less than the maximum voting power percentage mentioned above to the extent that Eligible Shareholders take up (and pay the Offer Price

DETAILS OF THE ENTITLEMENT OFFER

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in respect of) their Entitlements under the Entitlement Offer.

Any issue of New Shares to the Sole Lead Manager and Underwriter pursuant to the Underwriting Agreement will be made under this Prospectus.

3.10 ALLOCATION POLICY

Under the Institutional Entitlement Offer, Institutional Shortfall Shares will be allocated to Eligible Institutional Shareholders and Institutional Investors.

All Eligible Retail Shareholders will be allocated New Shares applied and paid for up to their Entitlement.

3.11 RANKING OF NEW SHARES

New Shares will be issued on a fully paid basis and will rank equally in all respects with Existing Shares on issue as at the Record Date. A summary of the rights and liabilities attaching to the New Shares is set out in Section 9.4.

3.12 ASX QUOTATION AND TRADING OF NEW SHARES

Northern Iron has applied, or will apply within seven days after the date of this Prospectus, to ASX for official quotation of the New Shares.

Subject to approval being granted, it is expected that normal trading of New Shares issued under the Institutional Entitlement Offer will commence on 12 October 2012 and the New Shares issued under the Retail Entitlement Offer will commence on Thursday, 8 November 2012.

If ASX does not grant approval for official quotation of the New Shares within three months after the date of this Prospectus, none of the New Shares offered under the Entitlement Offer will be issued, unless ASIC grants Northern Iron an exemption permitting the issue.

Holding statements for New Shares issued under the Retail Entitlement Offer are expected to be despatched to Eligible Retail Shareholders on Wednesday, 7 November 2012. It is 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, the Sole Lead Manager and Underwriter, and the Co-Lead Manager disclaim all liability whether in negligence or otherwise (and to the maximum extent permitted by law) to persons who trade New Shares before receiving their holding statements, whether on the basis of confirmation of the allocation provided by Northern Iron, the Share Registry or the Sole Lead Manager and Underwriter.

To avoid postal delays in receiving your confirmation statement, we recommend that you check your holding online at www.investorcentre.com. To use this facility, you will need internet access and your Holder Identification Number or Securityholder Reference Number to pass the security features on the website.

3.13 APPLICATION MONIES

All Application Monies will be held by Northern Iron in a bank account on trust for Applicants until the New Shares are issued. The bank account will be established and maintained by Northern Iron solely for the purpose of depositing Application Monies and retaining those funds for as long as required under the Corporations Act. Applicants in the Retail Entitlement Offer who apply for more than the number of New Shares that they are entitled to will be sent a refund payment for the relevant amount of Application Monies (without interest) not applied towards the issue of New Shares, as soon as practicable after the Retail Closing Date (except for where the amount is less than the Offer Price, in which case it will be retained by Northern Iron).

Interest earned on the Application Monies will be for the benefit of, and will remain the property of, Northern Iron and will be retained by Northern Iron whether or not the allotment and issue of New Shares takes place. If the Entitlement Offer is withdrawn and the New Shares are not issued, all Application Monies will be refunded by Northern Iron as soon as practicable, without interest, and Entitlements will lapse.

3.14 TREATMENT OF FOREIGN RETAIL SHAREHOLDERS

3.14.1 GENERAL

Neither this Prospectus nor the Entitlement and Acceptance Form constitutes an offer to sell, or the solicitation of an offer to buy, any securities in the United States, or in any jurisdiction in which, or to any persons to whom, it would be unlawful to make such an offer or sale.

The making of an Application (whether by returning a completed Entitlement and Acceptance Form or making a payment by BPAY®) will constitute a representation and warranty that there has been no breach of laws and regulations in the relevant overseas jurisdiction.

Northern Iron, the Sole Lead Manager and Underwriter and the Co-Lead Manager reserve the right to reject any Application which they believe comes from a person who is not an Eligible Retail Shareholder.

DETAILS OF THE ENTITLEMENT OFFER

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3.14.2 INELIGIBLE RETAIL SHAREHOLDERS

Retail Shareholders who are not Eligible Shareholders are deemed to be Ineligible Retail Shareholders.

Northern Iron is of the view that it is unreasonable to extend the Entitlement Offer to Ineligible Shareholders, having regard to the:

small number of Ineligible Retail Shareholders in each of those foreign jurisdictions;
the small number and value of the New Shares which would be offered to Ineligible Retail Shareholders if they were Eligible Retail Shareholders; and
the cost of complying with the legal requirements, and requirements of the regulatory authorities, in the respective overseas jurisdictions.

Accordingly, the Retail Entitlement Offer is not being extended to any Shareholders outside Australia, New Zealand and Norway. Northern Iron will notify all Ineligible Shareholders of the Entitlement Offer and advise that Northern Iron is not extending the Retail Entitlement Offer to them on the basis that they are Ineligible Retail Shareholders.

3.15 TAXATION IMPLICATIONS

3.15.1 General

The taxation implications of the Entitlement Offer, including the implications of acquiring, holding and disposing of New Shares and taking up or allowing Entitlements to lapse, will vary depending upon the particular circumstances of each Shareholder. Accordingly, all investors should obtain their own professional advice from a qualified adviser having regard to their own particular circumstances before concluding on the particular taxation treatment that will apply to them, whether or not those investors participate in the Entitlement Offer and acquire New Shares.

The following is a general summary of the potential Australian taxation implications for Eligible Retail Shareholders arising from participating in the Retail Entitlement Offer (including not taking-up the Retail Entitlement Offer). The summary reflects relevant Australian tax law as at the date of this Prospectus. The summary does not take into account or anticipate changes in the law, whether by way of judicial decision or legislative action. The summary is intended as a general guide only and is not an authoritative or complete statement of all potential tax implications for each Eligible Retail Shareholder. It is not advice and should not be relied on as such. Set out below is a general summary of the potential Australian tax implications arising from participating in the Retail Entitlement Offer for Eligible Retail Shareholders who hold their Existing Shares as capital assets. The

summary below does not apply to Eligible Retail Shareholders who hold their Shares (or will hold their Entitlements) as revenue assets (ie. they carry on the business of share trading, banking or investment) or as trading stock or otherwise, who have obtained their Shares for the purposes of resale at a profit or hold their Shares (or will hold their Entitlements) under an arrangement that constitutes an 'employee share scheme' for Australian tax purposes.

3.15.2 Grant of Entitlement

Subject to the qualifications above, the granting of the Entitlement should not of itself result in any amount being included in the assessable income of an Eligible Retail Shareholder. For Eligible Retail Shareholders who take up all or part of their Entitlement and subscribe for New Shares:

the Entitlement will cease to exist and a capital gains tax event will occur. However, any capital gain or loss made on the exercise of the Entitlement should be disregarded for income tax purposes;
the New Shares acquired as a result of exercising the Entitlements will be treated for CGT purposes as having been acquired on the day on which the Entitlements are exercised; and
the New Shares should have a cost base for CGT purposes equal to the Offer Price payable for those New Shares plus any non-deductible incidental costs incurred in acquiring those Shares.

If an Eligible Retail Shareholder does not take up their Entitlement to acquire New Shares, the Entitlement will lapse. Eligible Retail Shareholders are not able to otherwise dispose of their Entitlement. Eligible Retail Shareholders will not receive any proceeds as a result of their Entitlement lapsing, and accordingly there should be no tax consequence for Eligible Retail Shareholders in respect of an Entitlement that lapses. Eligible Retail Shareholders who take up all or part of their Entitlement will acquire New Shares. Any future dividends or other distributions made in respect of the New Shares will be subject to the same taxation treatment as dividends or other distributions made on Existing Shares held in the same circumstances.

3.15.3 Disposal of New Shares

On any future disposal of New Shares, Eligible Retail Shareholders may make a capital gain or capital loss, depending on whether:

the sale price is more than the cost base; or
the sale price is less than the reduced cost base of those Shares.

Any capital gain arising to Eligible Retail Shareholders who are Australian Residents and are individuals and

DETAILS OF THE ENTITLEMENT OFFER

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trusts (other than trusts that are complying superannuation funds) can generally be reduced by 50%. (after first offsetting current year or prior year capital losses from other asset disposals) if those Shares are held for at least 12 months between the date those Shares are acquired and the date of disposal (not including the day on which the shares were acquired or the day on which they are sold). For Eligible Retail Shareholders who are complying superannuation funds, any capital gain can generally be reduced by one-third (after first offsetting current year or prior year capital losses from other asset disposals) if those Shares are held for at least 12 months between the date those Shares are acquired and the date of disposal (not including the day on which the shares were acquired or the day on which they are sold). The CGT discount is not available to Eligible Retail Shareholders that are companies.

New Shares acquired by Eligible Retail Shareholders taking up all or part of their Entitlement to acquire New Shares, will be treated for the purposes of the CGT discount as having been acquired when the Eligible Retail Shareholders exercise the Entitlement to subscribe for them. New Shares acquired by the acceptance of Applications by Eligible Retail Shareholders for New Shares in excess of their Entitlement will be treated for the purposes of the CGT discount as having been acquired when Northern Iron accepts their Application for those New Shares. Accordingly, for Eligible Retail Shareholders who are individuals, trusts or complying superannuation funds, in order to benefit from the CGT discount in respect of a disposal of those New Shares, they must have been held for at least 12 months (not including the day on which the shares were acquired or the day on which they are sold).

at the time of disposal, more than 50% of the market value of Northern Iron is attributable to 'taxable Australian real property' (i.e. real property situated in Australia or mining, quarrying or prospecting rights, where the minerals, petroleum or quarry materials are in Australia).

A non-resident shareholder should determine whether, at the time of the disposal, more than 50% of the market value of Northern Iron is attributable to ‘taxable Australian real property’. Northern Iron’s Norwegian assets should not count as taxable Australian real property for these purposes.

If you are a non-resident for Australian tax purposes, it is strongly recommended that you obtain your own independent advice from a qualified adviser as to the tax implications, both under the Australian tax laws and the tax laws of the country in which you are a tax resident, of disposing of the New Shares, and of the Retail Entitlement Offer generally.

3.15.5 Other Taxes

No Australian Goods and Services Tax or stamp duty is payable in respect of the grant of the Entitlements or the acquisition of New Shares.

3.16 DISCLAIMER

Northern Iron, the Sole Lead Manager and Underwriter and the Co-Lead Manager disclaim all liability (to the maximum extent permitted by law) in respect of the determination as to whether a Shareholder is an Eligible Retail Shareholder, an Eligible Institutional Shareholder, an Ineligible Retail Shareholder or an Ineligible Institutional Shareholder.

3.17 RISKS AND FURTHER INFORMATION

3.15.4 Non-resident Shareholders

For an Eligible Retail Shareholder who is a non-resident for Australian tax purposes, a capital gain or loss made on a disposal of the New Shares by the non-resident Eligible Retail Shareholder will, subject to any applicable Double Taxation Agreement, only be taxable if those Shares have been held by the Eligible Retail Shareholder in carrying on a business through a permanent establishment in Australia or if both of the following conditions are satisfied:

the Eligible Retail Shareholder and their associates (if any) held at least 10%. of the issued share capital in Northern Iron at the time of the disposal or throughout a 12 month period that began no earlier than 24 months before the date of disposal; and

This Prospectus contains important information in relation to the Entitlement Offer. You should read it carefully and in its entirety, including Section 7 which contains a summary of the major risks associated with an investment in Northern Iron. If you are in doubt as to the course you should follow, you should seek appropriate professional advice before making an investment decision. Any questions relating to your Entitlement and the processing of your Application under the Entitlement Offer can be directed to the Northern Iron Shareholder Information Line on 1300 764 285 (from within Australia) or on +61 3 9415 4000 (from outside Australia) between 8.30am and 5.00pm (Sydney time) Monday to Friday during the Offer Period.

DETAILS OF THE ENTITLEMENT OFFER

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4. HOW TO APPLY

HOW TO APPLY

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Before taking any action in relation to the Retail Entitlement Offer, Eligible Retail Shareholders should read this Prospectus in its entirety, including Section 7 which summarises key risk factors associated with an investment in New Shares and Northern Iron.

Your Entitlement is set out in the personalised Entitlement and Acceptance Form. If you are an Eligible Retail Shareholder and you have not received a personalised Entitlement and Acceptance Form, you should contact the Northern Iron Shareholder Information Line between 8.30am and 5.00pm (Sydney time) Monday to Friday during the Entitlement Offer Period on 1300 764 285 (within Australia) or +61 3 9415 4000 (from outside Australia).

4.1 OPTIONS AVAILABLE

Eligible Retail Shareholders may do any of the following:

take up their full Entitlement under the Retail Entitlement Offer;
partially take up their Entitlement; or
do nothing.

The Retail Entitlement Offer is a pro rata offer to Eligible Retail Shareholders. Eligible Retail Shareholders who take up their Entitlements in full will not have their percentage shareholding in Northern Iron (held at the Record Date) diluted by the Entitlement Offer. As the Retail Entitlement Offer is not underwritten, Eligible Retail Shareholders who take up their Entitlement in full may have their percentage shareholding in Northern Iron (held at the Record Date) increased if other Eligible Retail Shareholders do not take up their Entitlements.

The percentage shareholding in Northern Iron (held at the Record Date) of Eligible Retail Shareholders who do not take up all of their Entitlements will be diluted (i.e. it will reduce). Ineligible Retail Shareholders who are not eligible to take up their Entitlements will also have their percentage shareholding in Northern Iron (held at the Record Date) diluted.

4.2 ACCEPT THE RETAIL ENTITLEMENT OFFER IN FULL OR IN PART

If you are an Eligible Retail Shareholder and you wish to take up all or part of your Entitlement, you have two options.

Option 1: Submit your completed Entitlement and Acceptance Form together with cheque, bank draft or money order

To follow this Option 1, you should:

complete the personalised Entitlement and Acceptance Form accompanying this Prospectus in accordance with the instructions set out on that form, and indicate the number of New Shares for which you wish to subscribe; and
return the Entitlement and Acceptance Form to the Share Registry (address details below) together with a cheque, bank draft or money order which must be:
for the full Application Monies (being $0.45 multiplied by the number of New Shares you wish to subscribe for – if you are not taking up all of your Entitlement you will need to calculate this amount yourself);
— in Australian currency drawn on an Australian branch of a financial institution; and
made payable to 'Northern Iron Limited – Offer A/C' and crossed 'Not Negotiable'.

You should ensure that sufficient funds are held in the relevant account(s) to cover the Application Monies. If the amount of your cheque for Application Monies is insufficient to pay in full for the number of whole New Shares you have applied for in your Entitlement and Acceptance Form, you will be taken to have applied for such lower number of New Shares as your cleared Application Monies will pay for (and to have specified that number of New Shares on your Entitlement and Acceptance Form). Alternatively, your Application will be rejected. If your cheque does not clear due to insufficient funds in your account, your Application will be rejected.

Cash payments will not be accepted. Receipts for payment will not be issued.

You need to ensure that your completed Entitlement and Acceptance Form and cheque, bank draft or money order reaches the Share Registry at the following address by no later than 5.00pm (Sydney time) on Friday, 26 October 2012:

Northern Iron Limited Entitlement Offer

C/- Computershare Investor Services Pty Limited GPO Box 505

HOW TO APPLY

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Melbourne VIC 3001 Australia

For the convenience of Eligible Retail Shareholders, a reply paid envelope has been enclosed with this Prospectus. If mailed in Australia, no postage stamp is required.

Entitlement and Acceptance Forms (and payments for Application Monies) may be accepted if received after the Retail Closing Date at the discretion of Northern Iron and the Sole Lead Manager and Underwriter.

Option 2: Pay via BPAY[®] payment

To follow this Option 2, you should pay the full Application Monies (being $0.45 multiplied by the number of New Shares you wish to subscribe for – if you are not taking up all of your Entitlement you will need to calculate this amount yourself) via BPAY[®] in accordance with the instructions set out on the personalised Entitlement and Acceptance Form (which includes the biller code and your unique customer reference number (“CRN”)). You can only make a payment via BPAY[®] if you are the holder of an account with an Australian financial institution.

Please note that should you choose to pay by BPAY[®] :

you do not need to submit the personalised Entitlement and Acceptance Form but are taken to make the statements on that form; and
you are deemed to have applied for such whole number of New Shares as your Application Monies will pay for.

You need to ensure that your BPAY[®] payment is received by the Share Registry by no later than 5.00pm (Sydney time) on Friday, 26 October 2012.

When completing your BPAY[®] payment, please make sure to use the specific Biller Code and unique Customer Reference Number (CRN) provided on your personalised Entitlement and Acceptance Form. If you receive more than one personalised Entitlement and Acceptance Form (ie. where you have multiple holdings), please only use the CRN specific to the Entitlement on that form. If you inadvertently use the same CRN for more than one of your Entitlements, you will be deemed to have applied only for New Shares on the Entitlement to which that CRN applies.

Applicants should be aware that their own financial institution may implement earlier cut-off times with regards to electronic payment, and should therefore take this into consideration when making payment. It is the responsibility of the Applicant to ensure that funds submitted through BPAY[®] are received by 5.00pm (Sydney time) on Friday, 26 October 2012.

You may not apply for more than the Entitlement shown on your personalised Entitlement and Acceptance Form.

4.3 IF YOU DO NOTHING

If you are an Eligible Retail Shareholder and you do not wish to take up any of your Entitlement, you should do nothing.

You will not receive any proceeds with respect to any part of your Entitlement which you do not take up. You should also note that, if you do not take up your Entitlement, then your percentage shareholding in Northern Iron will be diluted due to the issue of New Shares under the Entitlement Offer.

HOW TO APPLY

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5. OVERVIEW OF NORTHERN IRON

OVERVIEW OF NORTHERN IRON

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5.1 BACKGROUND

Northern Iron is incorporated in Australia and was listed on the ASX in December 2007. Northern Iron's primary objective is to operate and manage its 100% owned iron ore project, Sydvaranger, which consists of mining, rail and processing assets located close to Kirkenes in Northern Norway, with access to an uncongested and efficient port. Northern Iron produces and exports premium quality iron ore concentrate to steel industry customers worldwide.

5.2 STRATEGIC REVIEW

In November 2011, Northern Iron announced that its Board of Directors had decided to undertake a strategic review of the Company’s options and that the review would consider corporate and operational strategies, including a review of the ownership options available to the Company (“Strategic Review”).

The review of the ownership options available to Northern Iron being undertaken as part of the Strategic Review is seeking to determine whether a proposal for Northern Iron is available at a price, and on terms, that are in the best interests of all Northern Iron shareholders. To this end, and within a market practice confidentiality regime, Northern Iron agreed to provide high level information to any bona fide interested party to allow that party to assess a preliminary value for Northern Iron and submit a first stage indicative and non-binding proposal as part of a two stage sales process in respect of the Company. The purpose of this first stage proposal was to allow Northern Iron to consider whether there was justification for progressing to a more detailed second stage in the sales process.

On 15 May 2012, Northern Iron announced that a subsidiary of the Aditya Birla Group (being Essel Mining) had submitted an indicative, highly conditional, non-binding proposal to acquire all of the Shares of Northern Iron for US$1.28 – 1.35 per share (equivalent A$ consideration was noted in the proposal as A$1.23 – A$1.29 per share). This highly conditional proposal was subject to a number of assumptions.

After an additional period of limited due diligence which was provided to Essel Mining to determine whether it could see fit to make a higher indicative, non-binding proposal, Northern Iron announced on 24 July 2012 that it had received a revised indicative, non-binding stage one proposal from Essel Mining to acquire all the Shares of Northern Iron for A$1.40 per share, assuming net debt of US$90 million, among other things.

On 30 July 2012, Northern Iron announced that it had received a second indicative non-binding proposal from Prominvest AG (“Prominvest”) to acquire all the Shares of Northern Iron for A$1.42 per share, assuming net debt of US$90m and subject to a number of conditions including a request for exclusivity.

On 3 August 2012 Northern Iron announced that it had agreed to provide detailed stage two due diligence to both Essel Mining and Prominvest (which had withdrawn its request for exclusivity under a revised proposal and had amended its assumed net debt to US$93 million).

As part of this stage two due diligence, both Essel Mining and Prominvest have been provided access to a detailed data room in respect of Northern Iron, along with management meetings and Q&A, and have attended site visits to the Company’s operations in Norway.

There is, of course, no certainty that the Strategic Review will result in an offer to acquire all of the Shares of Northern Iron either at all or at the above indicative amounts. If an offer is made, the price per Share is also likely to be reduced in light of the New Shares which will be issued. Though this adjustment would not, of itself, impact the overall value received by shareholders who take up their Entitlement in respect of their total holding of Shares.

It is essential to note that the fact that the Company is undertaking this Entitlement Offer does not suggest that receipt of a final binding proposal is either more or less likely.

OVERVIEW OF NORTHERN IRON

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5.3 SYDVARANGER IRON ORE PROJECT

5.3.1 OVERVIEW

The Sydvaranger mine consists of four iron deposits (Kjellmannsåsen, Fisketind Øst, Bjørnevatn and Tverrdalen) and numerous prospects with JORC compliant resources and reserves, and known iron mineralisation over a 12km strike length.

Sydvaranger is located adjacent to the towns of Bjørnevatn and Kirkenes in Norway, approximately 1,500km north east of the capital, Oslo, as shown in Figure 1. The mine at Bjørnevatn is connected to a concentrator facility and port via a rail line to Kirkenes which is located 8km to the north on the northern coast of Norway, providing direct access to the Barents Sea.

The Sydvaranger mine has a long history, having commenced production in 1910 and, apart from interruptions during the World Wars, operated continuously until the closure of operations in 1997. During this period, in excess of 200 Mt of iron ore was mined from the operation.

Figure 1: Location of Sydvaranger

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5.3.2 MINERAL RESOURCES AND RESERVES

Northern Iron's most recent statement of Mineral Resources and Reserve estimates for Sydvaranger are shown in Figure 2:

OVERVIEW OF NORTHERN IRON

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Figure 2: Mineral Resources and Ore Reserves of Sydvaranger

**Mineral Resource Summary* (at 15% Fe total cut-off grade)**

Deposit	Indicated (Mt)	Fe (total %)	Inferred (Mt)	Fe (total %)	Total (Mt)	Fe (total %)
Bjørnevatn	146.2	32	136.7	30	282.9	31
Kjellmannsåsen	13.2	33	4.2	30	17.4	32
FisketindØst	11.1	31	19.2	31	30.3	31
Tverrdalen	20.4	32	26.4	31	46.8	31
Hyttemalmen	0.4	34	1.0	32	1.4	32
Bjornfell			13.6	32	13.6	32
Söstervann			4.7	37	4.7	37
Grundtjern			2.9	34	2.9	34
Fisketind SW			17.5	33	17.5	33
Jerntoppen			17.0	31	17.0	31
Total	191.3	32	243.2	31	434.5	31

**Ore Reserve Summary* (at 15% Fe total cut-off grade)**

Deposit	Probable reserve (Mt)	Fe (total %)
Bjørnevatn	136.8	32
Kjellmannsåsen	11.8	33
FisketindØst	6.7	30
Tverrdalen	11.2	31
Total	166.5	32

* The Mineral Resource and Reserve statements are based on Wardell Armstrong International's (WAI) comprehensive 2011 review of the resources and reserves held by SVG. The figures reported herein are based on the Company's resource and reserve models and account for mining depletion up to 1 February 2012 for all deposits except Bjørnevatn. For the Bjørnevatn deposit resource and reserve figures were updated as of 1 June 2012 following mining on the western pit ramp, south of the primary crusher showing a lack of mineralisation in this area. This conflicted with the previous geological model. The deviation was the result of an erroneous hole in the geological model which has since been corrected by WAI.

The information in this Prospectus that relates to Mineral Resources is based on information compiled by Mark Owen, who is a Chartered Geologist with the Geological Society of London. Mark Owen is employed full time by WAI. Mark Owen has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mark Owen consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which it appears.

The information in this Prospectus that relates to Ore Reserves is based on information compiled by Lewis Meyer, who is a Fellow of the Institute of Materials, Minerals and Mining and is a Chartered Engineer. Lewis Meyer is employed full time by WAI. Lewis Meyer has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Lewis Meyer consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which it appears.

5.3.3 MINING

Mining of iron ore at Sydvaranger is conducted via conventional open pit methods, with drill and blast followed by load and haul to extract the ore and waste. Mining is conducted all year round, with only short production interruptions due to winter weather conditions.

The Company operates its own leased mining fleet comprised of:

2 O&K RH 120 excavators, one in face shovel configuration, one as an excavator;
2 Cat 992K Front End Loaders;
12 Cat 777F dump trucks;
4 Cat 785C dump trucks;
2 Cat 16M motor graders;
2 Cat D10R track dozers;
1 Cat 844 Wheel dozer;
4 Atlas Copco L8 drills; and
2 Atlas Copco DML drills.

OVERVIEW OF NORTHERN IRON

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This equipment was delivered new in 2009 and is currently maintained under 5 year maintenance and repair agreements with the Scandinavian original equipment manufacturer dealers. Equipment is operated by SVG employees.

The mining operation is currently implementing an operational improvement program which is designed to ensure the mine is able to support the higher production capacity now installed at the Kirkenes concentrator. The program is focused on delivering improved blasting results, more efficient equipment utilisation, enhanced operational management techniques and improved dewatering management. The Company is being supported by external consultants in exercising this program, and is expecting a material improvement in mine production rates in the near term.

5.3.4 PROCESSING

In addition to the mine at Bjørnevatn, Sydvaranger also comprises of a concentrator designed to produce iron ore concentrate at a rate of 2.8 Mtpa. Mined ore is crushed at the primary crushers located at the Bjørnevatn pit, after which the crushed ore is conveyed to the cobbing plant which contains two large magnetic drum separators that perform a coarse separation of the magnetite ore from the waste.

Ore is then fed into a silo (dump hopper) below the cobbing plant, from where it is loaded into the bottom dump rail wagons for transport to the concentrator plant in Kirkenes. The ore is then dropped into a storage silo adjacent to the finer crushing facility, from where it is subsequently conveyed into secondary and tertiary crushers. Following fine crushing, the product is fed to the primary mill and then passed through the primary magnetic drum circuit to produce a first pass magnetite concentrate. This concentrate is then fed into the secondary grinding mills and ground to a finer size to liberate additional waste before being passed over the secondary magnetic drum separators. The concentrate is then screened, with over size material recirculated for additional grinding. The concentrate is then filtered to reduce moisture and stored in one of the concentrate silos in the mountain above the port facility. The tailings, consisting of inert silica rich finely ground mineral particles mixed with flocculants, is then deposited in the marine tailings deposition area located near to the concentrator at Kirkenes. The flow chart in Figure 3 provides an overview of the process from mine to ship including each stage of processing at the concentrator.

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Figure 3: Illustrative flow diagram for Sydvaranger

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Note: this is an indicative process flow diagram for Sydvaranger and is not representative of the type or actual number of equipment used.

To enable the processing plant at Kirkenes to run at nameplate capacity of 2.8 Mtpa, and markedly reduce silica and other impurities, Northern Iron has conducted two phases of throughput debottlenecking and quality rectification projects since January 2010.

During phase one of the rectification programme, commenced in January 2010, new filtration capacity and concentrate screens were commissioned. In addition, an extra secondary mill was commissioned in August 2010 and a successful EPCM, infrastructure and contingency program enacted. This phase was completed by January 2011 for a cost of US$19.5m. The result was a reduction of silica concentrate to 6% and a 1.5 Mtpa production rate, a marked improvement on the production rates and 12% silica product witnessed in 2009.

Phase two of the rectification programme commenced in October 2010 and comprised installation of a new tertiary crushing circuit, concentrator modifications as well as completion of general electricity, infrastructure and water upgrades. This phase was completed in September 2012 for a cost of US$23.1 million. The result of phase two was a significant improvement in production capacity and consistent silica content of less than 5%.

As demonstrated in figure 4 below, Northern Iron has consistently achieved improved iron content and reduced silica impurity content for its iron ore concentrate, demonstrating the positive trend the Company's rectification programme has achieved.

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Figure 4: Fe and Silica Grade of Sydvaranger Production

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----- Start of picture text -----

16.00% Average Silica in Concentrate (SiO2%) 70.00%
Average Fe grade in concentrate (Fe%)
14.00%
Jun-12 68.00%
68.36%
12.00%
66.00%
10.00%
8.00% 64.00%
6.00%
62.00%
4.00%
Jun-12
4.42%
60.00%
2.00%
0.00% 58.00%
Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12
Fe in Concentrate (%)
Silica in Concentrate (%)
----- End of picture text -----

Source: silica and iron concentrate percentage values are monthly averages of Northern Iron bi-daily mill concentrate assay results

Actual production performance in September 2012 was impacted by a number of unplanned maintenance outages and operational events (such as generator failure and a minor rail derailment) that delayed the plant reaching designed operating rates. It is expected that a 2.6 Mtpa rate will be achieved in quarter 4 2012 and quarter 1 2013, with a 2.7 Mtpa rate achieved in quarter 2 2013. Ongoing maintenance and operational improvements over the next six months are expected to underpin this steady increase. Whilst the Company anticipates that its nameplate 2.8 Mtpa capacity (capacity implies the technical ability and installed infrastructure to achieve these rates) will be achieved during quarter 4 2012, achieving 2.8 Mtpa production is reliant on ore with grades consistent with the average over the life of mine being mined, and steady improvement in utilisation rates of the concentrator. Lower grade ore is expected to be mined in 2013, and coupled with a ramp up in utilisation, this results in anticipated concentrate production of 2.7 Mtpa for 2013.

5.3.5 INFRASTRUCTURE

Northern Iron is the sole user of the ~8km railway line, shown below in Figure 5, that runs from the cobbing plant at the Bjørnevatn open pit to the concentrator facility at Kirkenes. Rail operations are conducted with 22 wagons, a tamping machine and 2 locomotives on an uncongested railway line.

Northern Iron exports the concentrate production from Kirkenes via a port which is owned by the Tschudi Group and operated by the Company. Access to port capacity is secured under a long-term lease arrangement with Tschudi Bulk Terminals AS, a Tschudi Group company. The port itself is ice-free year round, uncongested and is currently capable of handling vessels up to Panamax class.

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Figure 5: Sydvaranger Iron Ore Project Rail line to concentrator

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5.3.6 MARKETING

Northern Iron, through its wholly-owned Norwegian subsidiary, SVG, has an offtake agreement with Tata Steel signed in July 2011. Offtake volumes under this agreement currently constitute the majority of sales. The offtake agreement with Tata Steel became effective on 1 April 2011 and has a term of 5 years such that it terminates at the end of March 2016, subject to an option in favour of Tata Steel to extend the contract for an additional 2 years.

Under the Tata Steel offtake contract, Northern Iron has agreed to supply a minimum volume of concentrate of 1 million tonnes per annum. Under the terms of the agreement Tata Steel has the option to increase the volume of its offtake in each year of the contract by an additional 0.5 Mtpa.

The pricing mechanism for sales under the Tata Steel offtake contract is in line with the prevailing market mechanism for iron ore fines in the Atlantic basin, and incorporates adjustments to reflect the proximity of Tata Steel to Sydvaranger and the characteristics of the pellet feed concentrate product produced (iron and silica content).

In May 2012, Northern Iron announced that it had entered into an agreement with Tata Steel under which its offtake volume would be increased by 275k wet tonnes during the current contract year to a total 1.775 million wet tonnes of

OVERVIEW OF NORTHERN IRON

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concentrate. The additional offtake was taken up by Tata Steel to support trials of concentrate in sinter plants. Northern Iron believes this could potentially give the Company access to the large European market for sinter fines which could result in a boost to revenue given the lower freight costs to Europe relative to China.

In January 2011, the Group signed a five year marketing agreement with OM Holdings’ subsidiary OM Materials (S) Pte Ltd, following a short-term marketing agreement signed between the parties in July 2010. Under this five-year agreement, which superseded the short-term marketing agreement, SVG appointed OM Materials (S) Pte Ltd as its sole and exclusive provider of marketing services into the Asian market.

The balance of saleable production is marketed to the region that generates the highest realised sales price, taking into account freight costs, market development, and product use.

The Company expects to further develop its marketing strategy through the production of higher quality concentrates (sub 4% silica targeted in quarter 1 2013, and sub 2% silica targeted in 2014) which potentially opens access to markets in the Middle East. Trial of the product in sinter plants potentially opens access to a large European market for sinter fines.

5.3.7 RECENT DEVELOPMENTS AND GROWTH STRATEGY

The analysis of corporate and operational strategies for Northern Iron undertaken as part of the Strategic Review has resulted in the development of a comprehensive four year value creation strategy for Northern Iron which draws together and formalises a number of the studies being undertaken by the Company as follows:

achieving and sustaining nameplate production capacity and product quality;
optimising the Company's operating performance and profitability from its existing operations over the course of 2012-2014. This stage comprises a programme to reduce silica impurities in the concentrate to below 4% (which is scheduled to be implemented in quarter 1 2013) and later to below 2% (targeted for 2014). In addition, the Company initiated a feasibility study into upgrading the port at Kirkenes to handle capsize bulk carriers of up to 180,000 dwt capacity; and
doubling the concentrate production capacity of Sydvaranger. The Company completed a scoping study for this project in (1H) 2012 which indicated a doubling of production could be achieved for a capital cost in the range of US$280-360m.

The focus of Northern Iron in 2012 has been on implementing the final upgrades and rectification works to the Sydvaranger processing circuit to ensure it reaches its nameplate production capacity of 2.8 Mtpa. As at the end of September 2012, the Company had successfully implemented a significant number of improvements required for Sydvaranger to operate at nameplate capacity. The focus of the Company is now on improving operational and maintenance practices and procedures to enable it to achieve and maintain a 2.8 Mtpa production rate in both the concentrator and the mining operation.

Further investment will be required to realise the optimisation and expansion opportunities outlined above. Northern Iron expects to progress engineering and licensing activities in quarter 4 2012 and 2013, but will review the state of the market and the Company’s working capital position before making any decision to proceed with equipment purchasing or construction. A more detailed summary of Northern Iron’s growth strategy (which remains subject to Board appraisal, having regard to the market conditions at the relevant time) is provided in the table below:

Growth Project		Description
Near Term Mine	•	Developing more detailed short-term and longer-term mine plans to enable better decision making,
Plans		trigger point assessment and control
	•	Efficiency gains to be made through a number of training, development and workflow management
		strategies
	•	Productivity gains and cost reduction to be achieved by:
		—Drill & Blast improvement program
		—Rehabilitation of crusher tunnels to cut truck cycle times
		—Review of truck & shovel operations to ensure consistent operation andproductivity
Optimise	*Key details:*
Nameplate

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Capital required : US$50 – 60m
Prior to the commitment of capital expenditure, NFE will conduct a review of market conditions and its working capital position
Implemented over 2013 to 2014
Expected LOM operating costs (real, US$/dmt): <US$55/t
Expected life of mine sales price FOB (% from base case): 120%

Key components:

Sub 4% Silica Project (Blast Furnace Pellet Feed)
Complete
Sub 2% (DRI Pellet Feed) Project:
Prior to 1997 operated a flotation circuit to produce DRI grade pellet feed
Amine flotation agents were disposed of via the marine tailings disposal system
Plan is to introduce flotation again, but requires an acceptable waste disposal solution. Two avenues are being pursued:
- Different flotation agent
- Alternative tailings disposal options
Potential commissioning in 2014 subject to Board approval
A Project Manager has been commissioned to produce a feasibility study during Q1 2013
Port Upgrade Project:
Three main activities required to enable cape sized vessels to be loaded at Kirkenes:
- Upgrade the shiploader to allow correct positioning of the cargo in the wider vessels
- Dredging the berth to required depth
- Commission an additional concentrate silo to take total storage capacity to approximately 240,000 dry metric tonnes
Current Status
- Pre-feasibility study completed, with 4 options identified
- Expected capital cost between USD 22 – USD 40m
- Earliest commissioning mid 2013 assuming lowest cost option (modify existing shiploader) feasible, likely mid 2014 if more expensive option (new shiploader) required
- Engineering work on low cost option underway, and critical path application for environmental approvals is being prepared, with targeted submission in quarter 4 2012
- Will require further definition of the Company’s marketing strategy and discussions with Tata before committing to the project
- Prior to the commitment of capital expenditure, NFE will conduct a review of market conditions and its working capital position
Benefits
- Lower shipping costs results in higher FOB sales realized, especially for Asian sales

Expand

Production

Key details:

Capital required: US$280 – 360m
Prior to the commitment of capital expenditure, NFE will conduct a review of market conditions and its working capital position
Implemented over 2014 to 2016
Expected LOM operating costs (real, US$/dmt): <US$40/t
Expected life of mine sales price FOB (% from base case): 120%

Key components:

An engineering scoping study examining doubling concentrate production has been completed by Noramco Engineering Corporation and Barr Engineering, with second opinions on cost and concept provided by major Norwegian engineering consultancy Multiconsult and SRK Consulting (UK)
The study examined four possible plant concepts to lift total SVG production to 5.6 Mtpa:

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Duplication of existing plant within existing buildings
Construction of a new 2.8 Mtpa standalone plant adjacent to the existing facility at Kirkenes
Construction of a new 2.8 Mtpa plant at the mine site at Bjørnevatn
A “hybrid solution” with primary grinding at mine site and pumping of slurry to separators and filtering at Kirkenes
The study also examined three different tailings disposal options:
Continued use of the existing marine disposal system approved for the existing plant
Construction of tailings dams adjacent to the mine site for disposal of wet tailings
Construction of a dry tailings disposal plant for disposal of dried tailings into the planned mine waste dumps
Update on local government and environmental approvals status:
Scope of work for environmental and social investigation expected to be approved in November 2012
Environmental permits targeted by Q4 2013 subject to Board approval

5.4 UPDATE TO GUIDANCE

The Company announced on 17 September 2012 that it expected to produce 475-500kt of dry concentrate at an average C1 direct operating cost of US$80-85/t in quarter 3 2012. Based on management accounts, actual performance for the period was 469kt of concentrate produced at an average C1 direct operating cost of US$83/t. The Company also indicated that work to complete the final step to achieve a 2.8 Mtpa capable plant would be completed by the end of September 2012. Northern Iron continues to make progress towards 2.8 Mtpa nameplate capacity with concentrate production rates regularly over 7,000 tonnes per day (annualised 2.5 Mtpa) and at times over 8,000 tonnes per day (annualised 2.7 Mtpa).

5.5 SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

David C Griffiths

Non-Executive Chairman
Member of the Remuneration, Nomination, Governance and Audit Committees

Mr Griffiths joined the Northern Iron Board in November 2007. He was appointed Non-Executive Chairman in April 2010.

Mr Griffiths has significant experience in senior financial and executive roles across a wide range of industries. In particular he is the Chairman of Automotive Holdings Group Limited, Deputy Chairman of Thinksmart Limited, a former Division Director of Macquarie Bank, and former Executive Chairman of stockbroking firm Porter Western.

John S Sanderson

Managing Director
Chief Executive Officer

Mr Sanderson has been Chief Executive Officer of Northern Iron since November 2009, and was appointed Managing Director in February 2010. Prior to this Mr Sanderson was Chief Operating Officer and Manager of Mining within the Company. Mr Sanderson is a mining engineer with over 18 years' experience and his previous positions include that of Manager, Mine Operations for Rio Tinto's Brockman iron ore mine and Manager Technical Services East Pilbara for Rio Tinto.

Peter R Bilbe

Non-Executive Director
Member of the Remuneration, Nomination, and Governance Committees, and Chairman of the Audit Committee

Mr Bilbe was appointed as a Director in November 2007. He has over 35 years' experience in senior operational and corporate roles in the resources sector both in Australia and overseas.

Until January 2007, Mr Bilbe was the Managing Director and Chief Executive Officer of Aztec Resources Limited which successfully developed the Koolan Island iron ore project. Mr Bilbe also has significant experience as a mining

OVERVIEW OF NORTHERN IRON

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engineer, and prior to his role with Aztec Resources Limited was General Manager of Operations for Portman Limited, managing the Koolyanobbing and Cockatoo Island iron ore projects.

Ashwath Mehra

Non-Executive Director
Member of the Audit Committee

Mr Mehra was, until mid-2011, the Chief Executive Officer of the MRI Group, a commodities group with annual turnover of approximately $3 billion. He is currently Chief Executive Officer of Astor Management AG, a holding company with interests in natural resources businesses.

Mr Mehra has worked in the minerals industry for 26 years, starting his career with Philipp Brothers after which he spent 10 years with Glencore, where he was a senior partner and ran the Nickel and Cobalt Divisions. He has substantial experience in projects and project finance and has worked on equity and bond issues.

Felix H Tschudi

Non-Executive Director
Member of the Remuneration, Nomination, and Governance Committees

Mr Tschudi was appointed a Director in 2007, and is a substantial shareholder of Northern Iron. He is the Chairman and, together with family members, owner of Tschudi Shipping Company AS, the holding company of the Tschudi Group. Northern Iron exports the concentrate production from Kirkenes via the Kirkenes port which is owned by the Tschudi Group.

Before joining the family shipping company Tschudi & Eitzen in 1989, Mr Tschudi worked for the Vienna-based trading and finance house AWT specialising in trade structures in Eastern Europe and the former Soviet Union. Felix was the joint managing director of Tschudi & Eitzen from 1992 until 2002. He worked as the Managing Director of the Oslo stock exchange listed company Tschudi & Eitzen Shipping ASA from 1995 until 1997.

Mr Tschudi is the Chairman of the Centre for High North Logistics, a non-profit organisation focusing on transportation solutions in the Arctic, member of the board of Oslo Maritime Network, member of the Committee of the P&I Club Skuld, former president of the Oslo Shipowners Association and member of the board of the Norwegian publishing house Aschehoug & Co.

Antony Beckmand

Chief Financial Officer

Mr Beckmand was appointed as Chief Financial Officer of the Company in September 2009, having previously been appointed the Chief Financial Officer of SVG in October 2008. He is an accountant (CPA) with over 16 years of experience across a range of industries, and 9 years experience in the iron ore industry.

Ismo Haaparanta

Chief Executive Officer of SVG
Mr Haaparanta joined SVG in May 2012, from Yara International, where he was General Manager of a Finnish fertiliser mine, processing and port complex. Mr Haaparanta is an experienced Nordic mining professional, with a degree in Process Engineering and an EMBA from Turku University.

Harald Martinsen

Chief Development Officer of Northern Iron and SVG

Mr Martinsen joined Northern Iron and SVG in September 2011. He is an experienced business development professional with 25 years of industry experience, previously at Norsk Hydro.

5.6 CAPITAL STRUCTURE AND OWNERSHIP

At the date of this Prospectus, Northern Iron's capital comprises 369,980,113 fully paid ordinary shares on issue, 600,000 performance rights and 1,500,000 unlisted options with the following terms:

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Type	Number	Exercise Price	Expiry
Unlisted options	500,000	$2.15	24 August 2013
Unlisted options	500,000	$2.50	24 August 2013
Unlisted options	500,000	$3.00	24 August 2013

Type	Number	Hurdle Price	Expiry
Performance rights 100,000 $1.25 01 December 2013
Performance rights 100,000 $1.50 01 December 2014
Performance rights 100,000 $2.00 01 December 2015
Performance rights 50,000 $2.50 15 March 2013
Performance rights 50,000 $3.00 28 May2013
Performance rights 50,000 $3.00 1 July2013
Performance rights 50,000 $2.50 15 March 2014
Performance rights 50,000 $3.00 28 May2014
Performance rights 50,000 $3.50 28 May2015

The performance rights are subject to vesting conditions including service periods and performance targets. Subject to the satisfaction of these conditions the performance rights vest 3 months prior to expiry.

At the date of this Prospectus, the substantial shareholders and their interests in Northern Iron (each as disclosed to the ASX) were:

Shareholder	Date of last notice	Shares	%
Tschudi Mining Company AS	16 March 2012	75,137,931	20.30
OM Holdings Ltd	8 February 2010	42,801,5651	14.60
Eley Griffiths Group Pty. Ltd	5 April 2012	33,370,489	9.02
AMP Limited	5 April 2012	19,162,713	5.18
Perpetual Investments Ltd	15 May 2012	18,771,351	5.07

1 OM Holdings Ltd has, since the date of its last notice, participated in capital raisings to maintain its percentage interest and currently holds 54,482,500 Shares, representing 14.19% of the current issued share capital.

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6. FINANCIAL EFFECT OF THE ENTITLEMENT OFFER ON NORTHERN IRON

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6.1 OVERVIEW

The selected consolidated financial information in relation to Northern Iron set out in this Section 6 has been extracted from the unaudited half year financial report of Northern Iron for the six month period ended 30 June 2012.

6.2 INTRODUCTION AND BASIS OF PREPARATION AND PRESENTATION OF PRO-FORMA BALANCE SHEET

Northern Iron prepares its financial statements in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements also comply with the International Financial Reporting Standards issued by the International Accounting Standards Board. The accounting policies upon which the pro-forma financial information has been prepared are set out in Northern Iron's financial statements for the year ended 31 December 2011. A copy of Northern Iron's annual report and financial statements for the year ended 31 December 2011 and its unaudited half year financial statements for the six month period ended 30 June 2012 can be viewed on Northern Iron's website (www.northerniron.com.au).

The pro-forma balance sheet is presented in abbreviated form and does not contain all the disclosures that are usually found in financial statements prepared in accordance with the Corporations Act. The pro-forma balance sheet has been prepared for illustrative purposes to show the impact on the 30 June 2012 interim balance sheet of the proceeds of the Entitlement Offer. This information is not represented as being indicative of Northern Iron's views on its future financial condition and/or performance.

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6.2.1 PRO-FORMA BALANCE SHEET 30 JUNE 2012

	Reviewed	Institutional Offer Pro-Forma	Retail Offer and Institutional Offer
	as at 30-Jun-2012	as at 30-Jun-2012	Pro-forma as at 30-Jun-2012
	(US$000)	(US$000)	(US$000)
Current Assets
Cash and cash equivalents	21,250	54,880	63,538
Trade and other receivables	41,188	38,119	38,119
Inventory	19,980	13,348	13,348
Prepayments	437	437	437
Total Current Assets	82,855	106,785	115,442
Non-Current Assets
Trade and other receivables	1,282	1,282	1,282
Property,plant and equipment	243,439	247,552	247,552
Mineproperties	56,381	60,099	60,099
Deferred tax asset	24,384	24,384	24,384
Total Non-Current Assets	325,486	333,316	333,316

Total Assets	408,341	440,101	448,759
Current Liabilities
Trade and other payables	(37,089)	(37,089)	(37,089)
Derivative financial liabilities	(154)	(154)	(154)
Provisions	(8,476)	(4,655)	(4,655)
Interest bearingloans and borrowings	(55,268)	(57,306)	(57,306)
Total Current Liabilities	(100,987)	(99,203)	(99,203)
Non-Current Liabilities
Provisions	(1,714)	(1,714)	(1,714)
Interest bearingloans and borrowings	(60,550)	(55,543)	(55,543)
Total Non-Current Liabilities	(62,264)	(57,257)	(57,257)

Total Liabilities	(163,251)	(156,460)	(156,460)

Net Assets	245,090	283,641	292,299
Equity
Issued capital	(330,747)	(377,321)	(386,979)
Reserves	(17,218)	(17,218)	(17,218)
Accumulated losses	102,875	110,898	110,898
Total Equity	(245,090)	(283,641)	(292,299)

6.2.2 NET SHARE ISSUE PROCEEDS OF THE ENTITLEMENT OFFER

The pro-forma balance sheet is presented on the basis of the completion of the Institutional Entitlement Offer only and the completion of both the Institutional Entitlement Offer and the Retail Entitlement Offer and on the assumption that the following transactions occurred as at 30 June 2012:

the issue by the Company pursuant to this Prospectus of 104,827,699 Shares issued at a price of 45 cents each, raising approximately $47,173,000 (US$49,060,000) under the Institutional Entitlement Offer and the issue by the Company pursuant to this Prospectus of 18,499,006 Shares issued at a price of 45 cents each, raising approximately $8,325,000 (US$8,658,000) under the Retail Entitlement Offer;
the net effect of receipts and payments for the period July 2012 to September 2012, specifically:
net reduction in cash and cash equivalents of US$12,945,000;
net reduction in trade and other receivables of US$3,068,000;
net reduction in inventory of US$6,632,000;
net increase in mine properties of US$4,113,000;
net increase in property, plant and equipment of US$3,718,000;
net reduction in interest bearing loans and borrowings of US$2,970,000; and

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— net reduction in current provisions of US$3,821,000;

The write off to the issued capital account of the estimated costs of the Entitlement Offer being an estimated US$2,485,000.

The above assumptions result in an increase in issued capital of $55.5 million, and an increase in cash and cash equivalents of $2.2 million.

No other transactions subsequent to 30 June 2012 have been reflected in the pro-forma balance sheet. Note that an exchange rate of AUD:USD = 1.04 has been assumed.

6.3 FINANCING ARRANGEMENTS AND OBLIGATIONS

The Company’s financing facilities as at 30 June 2012 are set out below:

Facility	Amount (US$m)
Innovasjon Norge Loan	11.4
DNB Working Capital Facility	33.1
DNB Long Term Facility	24.7
DNB Equipment Finance Lease Facility	23.8
Finance lease – concentrate storage,	22.8
handling and ship loading facility
*Gross Debt*	*115.8*

The next repayment on the DNB long term facility is due March 2013 (US$ 2.5 million), whilst the next repayment on the Innovasjon Norge loan is due December 2013 (NOK 6.4 million).

6.3.1 Debt facility restructuring

DNB Bank ASA (“DNB”)

During the second quarter of 2011, SVG signed an agreement with DNB Bank (DNB) for a US$25m working capital facility which is to be renewed yearly. The borrowing base of this facility was determined by adding 80% of accounts receivable and 60% of the value of inventory (concentrate in silos). The applicable interest rate on drawn amounts for this facility is LIBOR plus 3.50% per annum.

The Company sought financing relief from DNB in September 2012 due to an anticipated potential breach of its debt covenants and an anticipated potential cash shortfall for working capital purposes.

Conditional on the Company completing an equity capital raising of at least US$35 million, and the transfer to SVG of US$6 million in cash by the Company, DNB has offered:

an extension of the working capital facility to an amount of US$35 million until the end of quarter 4 2012 and an increase in the borrowing base under the facility to 80% of inventory value and 90% of sales in respect of each period; and
a waiver of the EBITDA covenant in favour of DNB for 12 months, such that the first test will occur on 31 December 2013. The covenant will be re-established in successive increases each quarter of US$7 million in EBITDA up to a maximum of US$27.5m EBITDA on an LTM basis by 31 December 2014.

Also during the second quarter of 2011, SVG signed an agreement for a US$30 million US$ loan with DNB Bank. The facility was partly drawn (with US$21 million) in 30 June 2011 and was used to repay previously established shorter term facilities with Credit Suisse and DNB. The second tranche of the loan (US$9 million) was made available in November 2011. This loan has a term of six years with semi-annual repayments, the first was on 30 September 2011. Effective from 1 May 2012 the applicable interest rate is LIBOR plus 2.75% (previously 3.75%) per annum.

Equipment lease financing facility

A lease finance facility with DNB was established in October 2008 for the purpose of financing mining fleet equipment. In April 2009, the facility was converted from being denominated in NOK, to being denominated in US$. The total facility is US$52.4 million and has the ability to be drawn in a number of currencies. As at 30 June 2012, US$ 52.4 million of equipment had been accepted under the facility and included in property, plant and equipment. The period of

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each lease is 5 years. Interest on the facility is payable quarterly at a floating rate based on the 3 month LIBOR rate plus 1.90%. As at 30 June 2012, the rate applied to drawings on the facility was 2.37% per annum (31.12.2011: 2.43% per annum). The lease finance facility is guaranteed by Northern Iron. Under the terms of the agreement, interest cannot be charged on intercompany borrowings.

Innovasjon Norge financing facility

SVG signed agreements (July 2009) with Innovasjon Norge for three separate seven year term loans for a total facility of NOK 90m (~US$15.0m). An initial repayment grace period of 12 months ending June 2010 was included, but was subsequently extended by a further 12 months. The facility incurs a fixed weighted nominal interest rate of 5.4%. The facility is guaranteed by Northern Iron.

The Company also sought financing relief from Innovasjon Norge in September 2012. Innovasjon Norge provided repayment deferrals on principal amounts that were due in December 2012, and February, June and August 2013. The maturity of the loans will accordingly be extended by 1 year. There are no covenants under this facility though through an intercreditor agreement, the covenants under the DNB facility also apply to this facility.

Finance lease - concentrate storage, handling and ship loading facility

SVG has a finance lease agreement with a related company, Tschudi Bulk Terminals AS, regarding goods storage and handling assets. The lease payment ends in December 2017. However, the lease will be in effect until 31 December 2034 with the option to extend for two periods, each of ten years. Repayments on the facility are in NOK, payable monthly, and include principal and interest at a rate of 8.42% per annum. Amounts paid toward the facility are not available to be re-drawn and there are no restrictions on dividends, or further leasing, or borrowings.

There has been no change to the terms of this facility.

6.3.2 Security

Assets pledged as security

DNB and Innovasjon Norge share a fixed and floating charge over all the assets and undertakings of SVG with the exception of the assets under finance lease. Tschudi Bulk Terminals AS is the legal owner and has security over the concentrate storage, handling and ship loading facility assets under finance lease. DNB Finans is the legal owner and has security over the mining fleet equipment assets under finance lease.

6.4 EFFECT OF THE ENTITLEMENT OFFER ON CAPITAL STRUCTURE AND SHAREHOLDERS

6.4.1 EFFECT OF THE ENTITLEMENT OFFER ON CAPITAL STRUCTURE

The Entitlement Offer will have the effect of increasing the number of Shares as set out in Section 3.4.

Northern Iron currently has a total of 1,500,000 options on issue as set out in Section 5.6. As a result of the terms on which these options were issued, the exercise price of these options will be adjusted in accordance with a formula set out in Listing Rule 6.22.2, with such adjustment to take effect on and from the date of the final date of allotment of the New Shares (being 6 November 2012). Optionholders are not entitled to participate in the Entitlement Offer without first exercising their options so that Shares issued on exercise are allotted by the Record Date.

6.4.2 EFFECT ON SHAREHOLDERS

Refer to Section 1 for details of the effect of the Entitlement Offer on Shareholders.

6.4.3 DIVIDENDS

Northern Iron does not currently pay a dividend.

FINANCIAL EFFECT OF THE ENTITLEMENT OFFER ON NORTHERN IRON

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7. RISK FACTORS

RISK FACTORS

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7.1 INTRODUCTION

This Section 7 identifies the areas that are believed to be the major risks associated with an investment in Northern Iron Shares. Prospective investors should note that this list of risks is not exhaustive.

There are a number of risks specific to an investment in Northern Iron Shares and Northern Iron itself as well as other general investment risks which may materially affect the performance and value of Northern Iron Shares. Many of these risks are difficult to predict and are outside the control of Northern Iron and its Directors. There can be no guarantee that Northern Iron will achieve its stated objectives or that any forward-looking statements or forecasts will eventuate. This may have an adverse effect on the value of Northern Iron Shares.

An investment in Northern Iron Shares should be considered in light of these risks, both specific and general. Each of the risks set out below could, if they eventuate, have an adverse impact on Northern Iron and the value of Northern Iron Shares.

The risks and uncertainties described below are not the only ones facing Northern Iron. Additional risks and uncertainties of which Northern Iron is unaware, or that it currently considers to be immaterial, may also become important factors that adversely affect Northern Iron’s business, financial condition and results of operations. Accordingly, no assurances or guarantees of future performance, profitability, distributions or return on capital are given in respect of Northern Iron.

Prior to making an investment decision, prospective investors should read the entire Prospectus and carefully consider the following risk factors. Investors should have regard to their own investment objectives and financial circumstances and should seek professional guidance from their stockbroker, solicitor, accountant or other professional adviser before deciding whether or not to invest.

7.2 RISKS ASSOCIATED WITH NORTHERN IRON

7.2.1 OUTCOME OF THE COMPANY'S STRATEGIC REVIEW

The Company announced a Strategic Review in November 2011, part of which consisted of soliciting interest from potential acquirers of Northern Iron. The Company currently has two parties undertaking detailed stage two due diligence on the Company (see Section 5.2 for more details). Final binding offers are currently due to be submitted by mid October 2012, unless otherwise agreed. There is no guarantee that any party will submit a final binding bid for consideration by the Company either at all or at the price of the indicative, non-binding proposals

submitted by each of Essel Mining and Prominvest. There is also no guarantee that Northern Iron will receive a final binding bid which can be provided to Shareholders for consideration. If Northern Iron does not receive a final binding bid, or does not receive a final binding bid which can be put to Shareholders for consideration there is a risk that the trading price of the Shares could decline and you could lose some or all of your investment. Given the outcome of the Strategic Review is expected to occur during the period that the Entitlement Offer is open, this could have an impact on a decision to participate in the Entitlement Offer.

7.2.2 PRODUCTION

There is a risk that circumstances (including unforeseen circumstances) may cause a delay in Northern Iron achieving 2.8Mtpa nameplate production, or may otherwise impact production. These circumstances could include, among other things, the need for unplanned maintenance and unforeseen operational difficulties or breakdowns of the Company’s mining, processing, rail or port equipment and infrastructure, a failure to improve maintenance performance and increase the number of maintenance personnel and the Company experiencing lower than expected temperatures during the winter months which can reduce throughput at Sydvaranger. Lower than expected production volumes will impact revenue (by decreasing sales) and increase the unit cost of production (as a result of less tonnes of concentrate produced in a given period). There is also a risk that the quality of Northern Iron’s concentrate product could be impacted. Lower than expected concentrate quality could decrease the price Northern Iron receives for its concentrate production and this would adversely impact revenue.

Production rates guided for quarter 4 2012, quarter 1 2013 and 2013, as well as production of 2.8 Mtpa of concentrate, require the mining operation to achieve production rates of up to 7.0 million tonnes of ore per annum at a certain iron grade. This rate is above production rates achieved by the Company historically, but is not beyond the capacity of the equipment in use. Should the mining operation not reach these rates for operational or maintenance reasons, and/or should the iron grade be lower than is expected (as outlined in Section 5.3.4), the targeted production rate of concentrate produced may not be achieved.

7.2.3 OFFTAKE AGREEMENT

Northern Iron is party to an offtake agreement for the supply of iron ore concentrate from its mining operation in northern Norway. The offtake agreement contains specifications around the quality of concentrate required. There is a risk that Northern Iron may not produce the quality of concentrate required under the offtake agreement which may in

RISK FACTORS

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turn impact upon the revenue and overall financial performance of Northern Iron.

7.2.4 CAPITAL COSTS

While Northern Iron believes it will have sufficient funds following completion of the Entitlement Offer to meet the ongoing near term capital requirements for Sydvaranger, there is a risk that the capital costs of the project could be greater than expected. The near term capital expenditure requirements comprise purchases of plant and equipment, licenses and railway rolling stock.

7.2.5 COMMODITY PRICES

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 Sydvaranger and on exploration and development programs, and consequently on the Company's share price. This risk is heightened by the fact that iron ore is the only commodity the Company relies upon to derive its revenue. This exposure is not hedged given the primary exposure the Company offers to investors as a pure play iron ore producer.

7.2.6 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 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 Sydvaranger uneconomic.

7.2.7 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.

7.2.8 PERSONNEL AND ACCESS TO LABOUR

The success of the Company's 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, mining and maintenance work, including in a competitive local market. If key individuals were to leave, this could have an adverse impact on the operations and consequently the Company's share price.

7.2.9 FOREIGN EXCHANGE RATES

Northern Iron earns revenues from the sale of iron ore concentrate in United States Dollars and incurs operating expenses primarily in Norwegian Kroner and United States Dollars. The proceeds of the Entitlement Offer will be received in Australian dollars, and the proceeds will be deployed in Norwegian Kroner and United States Dollars from the date of settlement. However, there is a risk that the exchange rates applicable to these currencies may vary between the date of this Prospectus and settlement.

7.2.10 FINANCING RISK

The Company's ability to operate as a going concern is dependent on the Company’s cash flows, and the availability of any financing necessary to support the activities which generate those cash flows. As outlined in this risks section, factors including production levels, operating and capital costs, and commodity prices in particular, have an impact on the Company’s cash generation capabilities and therefore its ability to meet the costs of its operations. In addition to supporting operating activities, cash flows must also be sufficient to service financiers, whose funding is contingent on repayment and covenant obligations and which the Company must satisfy as and when required. Should the Company be unable to meet its ongoing obligations, or be unable to secure adequate financing, it may not be able to fund its operations and exist as a going concern. The Company may be able to secure waivers and other relief from its financiers in the event of a potential breach of its repayment and covenant obligations, but this is not guaranteed.

The availability of capital or relief from financiers to meet the Company's needs may be impacted by factors in financial markets beyond the Company's control, such as changes in interest rates and capital market liquidity.

7.2.11 REGULATORY RISK

Northern Iron's Sydvaranger Iron Ore Project is subject to Norwegian laws and regulations. Although Northern Iron conducts its operations in a responsible manner and in compliance with applicable laws and

RISK FACTORS

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regulations, non-compliance with these could in the worst instance result in the cessation of production and substantial liabilities and penalties. There can be no assurance that new laws, regulations or stricter policies, once implemented (prospectively or retrospectively), will not oblige Northern Iron to incur significant expenditure which could have a material adverse effect on Northern Iron’s business, financial condition and operating results or, in an extreme case, prevent the continuation of operations.

SVG is presently in discussions with the Norwegian environmental authority, KLIF, over the length of the tailings pipeline at Kirkenes. The tailings line has been measured as 400m long, and in the permit is required to be 450m long. The Company has made contingency plans to return the line to its correct length and is in discussions with the regulator about the requirement and timing to do so. The Company does not believe this issue represents a material risk to the business, and rectification costs and production impacts have been accounted for in forward looking statements.

7.2.12 LITIGATION RISK

Litigation risks to Northern Iron may include, but are not limited to, contractual, personal injury, intellectual property disputes, customer claims, and employee claims. If any claim were to be pursued and be successful it may adversely impact the sales, financial performance or financial position of Northern Iron.

7.2.13 MAJOR SHAREHOLDER RISKS

Northern Iron currently has a number of substantial shareholders on its share register who are supportive of the Strategic Review. There is a risk that these shareholders or other large shareholders may sell their shares at a future date. This could cause the price of Shares to decline.

7.2.14 MARKETING STRATEGY

Northern Iron’s iron ore type (pellet feed) is presently limited in its application within the current European iron ore fines market. The Company therefore relies on the Chinese market for sales outside the Tata offtake agreement. New pellet feed projects are expected to come online in future years and potentially impact demand for Northern Iron’s product. If the construction of pellet plants does not match this increase, or if these are predominantly based in China, Northern Iron may find itself in a lower price environment (either due to oversupply into Europe, or due to further reliance on the Chinese market for sales, which may result in higher freight costs and a lower realised sales price).

7.3 RISKS ASSOCIATED WITH THE ENTITLEMENT OFFER

7.3.1 DILUTION

The Entitlement Offer will result in the issue of up to approximately 123.3 million New Shares. If you do not participate in the Entitlement Offer, your percentage holding in Northern Iron (held at the Record Date) will decrease.

The Entitlement Offer is being conducted at a 39.2% discount to TERP. The level of discount to market price reflects the Board’s desire to make participation by Shareholders in the Entitlement Offer attractive. However, should you choose not to participate, this will result in dilution of your holding.

7.3.2 INABILITY TO COMPLETE THE ENTITLEMENT OFFER

The institutional component of the Entitlement Offer was underwritten by the Sole Lead Manager and Underwriter. Key conditions and termination events under the Underwriting Agreement are detailed in Section 9.5.

The Retail Entitlement Offer is not underwritten.

If the Underwriting Agreement is terminated prior to the Institutional Allotment Date and Northern Iron is unable to raise A$47.2 million, Northern Iron would be required to renegotiate the terms of its financing facilities and seek other sources of funding.

7.4 GENERAL RISKS

7.4.1 SHARE MARKET FLUCTUATIONS

As with any share investment, the market price of Northern Iron Shares may rise or fall due to numerous factors including:

i. general economic conditions, including inflation rates and interest rates;
ii. variations in the local and global markets for listed shares in general or for Northern Iron’s Shares in particular;
iii. changes to government policy, legislation or regulation;
iv. inclusion in or removal from major market indices;
v. investor sentiment in the local or international stock markets; and
vi. general operational and business risks.

In particular, the share prices for many companies have in recent times been subject to wide fluctuations,

RISK FACTORS

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which in many cases may reflect a diverse range of non-company specific influences such as sentiment towards the general state of the global economy.

Such market fluctuations may have an adverse effect on the market price of the Shares.

The price of Northern Iron’s Shares could be adversely affected by any such market fluctuations or factors. None of Northern Iron, its Directors or any other person guarantees the price of the Company’s Shares and there is no guarantee that the New Shares will trade at or above the Offer Price.

7.4.2 LIQUIDITY AND REALISATION

There may be relatively few or many potential buyers or sellers of the Shares on ASX at any time. This may affect or cause volatility in the market price of the Shares. It may also affect the prevailing market price at which Shareholders are able to sell their Shares. This may result in Shareholders receiving a market price for their Shares that is less or more than the price that Shareholders paid.

RISK FACTORS

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8. INVESTIGATING ACCOUNTANT'S REPORT

INVESTIGATING ACCOUNTANT'S REPORT

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INVESTIGATING ACCOUNTANT'S REPORT

Investigating Accountant’s Report

8 October 2012

The Directors

Northern Iron Limited

Level 3

3 Ord Street

WEST PERTH WA 6005

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT

Introduction

This Investigating Accountant’s Report (“Report”) has been prepared for inclusion in a non-renounceable entitlement offer prospectus to be dated on or about 8 October 2012 (“Prospectus”) by Northern Iron Limited (“NFE” or the “Company”) (“Offer”).

This Report has been included in the Prospectus to assist potential investors and their financial advisers to make an assessment of the financial position of Northern Iron Limited.

Structure of Report

This Report has been divided into the following sections:

Background information;
Scope of Report;
Financial information;
Subsequent events;
Statements; and
Declaration.

1. BACKGROUND INFORMATION

The Company was registered in Australia on 22 May 2007. The current directors of the Company are Mr David Griffiths, Mr John Sanderson, Mr Peter Bilbe, Mr Ashwath Mehra and Mr Felix Tschudi. Mr Alex Neuling acts as the Company Secretary.

Investigating Accountant’s Report

The Company is the 100% owner of Sydvaranger Iron Project in northern Norway.

As at the date of this Report, the issued share capital of the Company is 369,980,113 ordinary fully paid shares.

2. SCOPE OF REPORT

You have requested HLB Mann Judd (“HLB”) to prepare this Report in relation to the historical and proforma financial information presented in Section 6.2 of the Prospectus, and as described in section 3 below.

The historical financial information has been extracted from the half year report of NFE lodged with the Australian Securities Exchange on 28 August 2012.

The proforma financial information is presented in an abbreviated form in the Prospectus in that it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act 2001.

The Directors have prepared and are responsible for the proforma financial information. We disclaim any responsibility for any reliance on this Report or on the financial information to which it relates for any purposes other than that for which it was prepared. This Report should be read in conjunction with the full Prospectus.

We performed a review of the proforma financial information of the Company and its controlled entities as at 30 June 2012 in order to ensure consistency in the application of applicable Accounting Standards and other mandatory professional reporting requirements.

Our review of the proforma financial information of the Company and its controlled entities was conducted in accordance with Australian Auditing Standards applicable to review engagements. Our review was carried out in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe and we do not believe that the proforma financial information is not:

i) prepared or presented fairly, in all material respects, in accordance with the basis of preparation described in Section 6.2 of the Prospectus, including the proforma transactions and the other adjustments described in Section 6.2.2 of the Prospectus; and
ii) prepared, in all material respects, in accordance with the recognition and measurement principles prescribed in applicable Accounting Standards and other mandatory reporting requirements in Australia, and the accounting policies adopted by NFE as disclosed in its Annual Financial Report.

In conducting our review in accordance with Australian Auditing Standards applicable to review engagements, we made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances, including:

Investigating Accountant’s Report

i) a review of the extraction of historical financial information from the reviewed half year report of NFE for the six months ended 30 June 2012;
ii) analytical procedures on the historical financial information of NFE;
iii) a review of the proforma transactions and adjustments made to the historical financial information;
iv) analytical procedures on the proforma historical financial information of NFE;
v) a review of the Company’s work papers, accounting records and other documents;
vi) a comparison of consistency in application of the recognition and measurement principles in applicable Accounting Standards and other mandatory reporting requirements in Australia, with the accounting policies adopted by NFE; and
vii) enquiry of directors and management as we considered necessary for the purposes of this Report.

The review procedures undertaken by HLB in our role as Investigating Accountant were substantially less in scope than that of an audit examination conducted in accordance with generally accepted auditing standards. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the proforma information included in the Prospectus.

3. FINANCIAL INFORMATION

Set out in Section 6 of this Prospectus are:

a) The Statement of Financial Position of the Company as at 30 June 2012; and
b) The proforma Statement of Financial Position of the Company as at 30 June 2012, as it would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 30 June 2012:
i) the issue by the Company pursuant to the Prospectus of 104,827,699 ordinary shares issued at a price of 45 cents each, raising approximately $47,173,000 (US$49,060,000) under the Institutional offer and the issue by the Company pursuant to the Prospectus of 18,499,006 ordinary shares issued at a price of 45 cents each, raising approximately $8,325,000 (US$8,658,000) under the Retail offer;
ii) The net effect of receipts and payments for the period July 2012 to September 2012, specifically:
- Net reduction in Cash and cash equivalents of US$12,945,000;
- Net reduction in Trade and other receivables of US$3,068,000;
- Net reduction in Inventory of US$6,632,000;
- Net increase in Mine Properties US$4,113,000;
- Net increase in Property, plant and equipment of US$3,718,000;
- Net reduction on Interest bearing loans and borrowings of US$2,970,000; and
- Net reduction of current provisions of US$3,821,000

Investigating Accountant’s Report

iii) the write off to the issued capital account of the estimated costs of the Offer being an estimated US$2,485,000.

(together with the notes to the proforma information, the “Pro Forma Financial Information”).

This information is presented on the basis of the completion of the Institutional offer only and on the completion of the Institutional and Retail offer.

4. SUBSEQUENT EVENTS

In our opinion, there have been no material items, transactions or events subsequent to 30 June 2012 not otherwise disclosed in the Prospectus that have come to our attention during the course of our review that would require comment in, or adjustment to, the content of this Report or which would cause such information included in this Report to be misleading.

5. STATEMENTS

Based on our review, which was not an audit, nothing has come to our attention that causes us to believe that and we do not believe that:

a) The Pro Forma Financial Information does not present fairly the consolidated financial position of the Company as at 30 June 2012 in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia as if the proforma transactions and adjustments referred to in Section 6.2.1 of the Prospectus had occurred during the period;
b) The pro forma transactions do not provide a reasonable basis for the Pro Forma Financial Information; and
c) The Pro Forma Financial Information has not been prepared on the basis of the transactions set out in Section 6.2.1 of the Prospectus.

6. DECLARATION

a) HLB will be paid its usual professional fees based on time involvement, for the preparation of this Report and review of the financial information, at our normal professional rates.
b) Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report.
c) Neither HLB, nor any of its employees or associated persons has any interest in Northern Iron Limited or the promotion of the Company. HLB is the Company’s auditor.

Investigating Accountant’s Report

d) Unless specifically referred to in this Report, or elsewhere in the Prospectus, HLB was not involved in the preparation of any other part of the Prospectus and did not cause the issue of any other part of the Prospectus. Accordingly, HLB makes no representations or warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus.
e) HLB has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears. The inclusion of this Report should not be taken as an endorsement of the Company or a recommendation by HLB of any participation in the Company by an intending subscriber.

Yours faithfully

HLB MANN JUDD

N G NEILL

Partner

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9. ADDITIONAL INFORMATION

ADDITIONAL INFORMATION

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9.1 NATURE AND PURPOSE OF THIS PROSPECTUS

This Prospectus is issued pursuant to section 713 of the Corporations Act. This enables listed disclosing entities such as Northern Iron to issue this Prospectus with limited disclosure requirements given that the New Shares are in a class of share that are continuously quoted securities. This Prospectus is only required to contain information that investors and their professional advisers would reasonably require to make an informed assessment of the effect of the issue on Northern Iron and the rights and liabilities attaching to the New Shares, but only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in this Prospectus.

In addition, this Prospectus needs to include price sensitive information excluded from disclosure by virtue of the 'confidentiality carve-out' from disclosure (especially being confidential information which is incomplete and which no reasonable person would expect to be disclosed). No such information exists as at the date of this Prospectus.

9.2 REPORTING AND DISCLOSURE OBLIGATIONS

Northern Iron is a disclosing entity for the purposes of the Corporations Act and is therefore subject to regular reporting and disclosure obligations under the Corporations Act and the ASX Listing Rules.

These obligations require ASX to be continuously notified of information about specific events and matters as they arise for the purpose of ASX making the information available to the financial market operated by ASX.

In particular, Northern Iron has an obligation under the ASX Listing Rules (subject to certain limited exceptions) to notify ASX immediately of any information concerning Northern Iron and the Group, of which it becomes aware, which a reasonable person would expect to have a material effect on the price or value of Northern Iron’s securities. Northern Iron is also required to prepare and lodge with ASIC and ASX both yearly and half-yearly financial statements accompanied by a Directors’ declaration and report, and an audit or review report. 9.3 DOCUMENTS INCORPORATED BY REFERENCE AND AVAILABILITY OF OTHER DOCUMENTS

9.3.1 DOCUMENTS INCORPORATED BY REFERENCE – RESULTS OF

INSTITUTIONAL ENTITLEMENT OFFER

The ASX announcement “Successful Completion of Institutional Entitlement Offer” is incorporated by reference in this Prospectus under section 712 of the Corporations Act. The announcement includes the results of the Institutional Entitlement Offer and Institutional Shortfall Bookbuild.

9.3.2 COPIES OF DOCUMENTS

ASIC maintains records in respect of documents lodged with it by Northern Iron, and these may be obtained from or inspected at any office of ASIC.

Northern Iron will provide a copy of any of the following documents, free of charge, to any person who requests a copy during the application period for this Prospectus:

the annual financial report lodged with ASIC by Northern Iron for the year ended 31 December 2011;
the half yearly financial report for the period ended 30 June 2012;
the ASX announcement “Successful Completion of Institutional Entitlement Offer”; and
any other document used to notify ASX of information relating to Northern Iron under the continuous disclosure provisions of the ASX Listing Rules and the Corporations Act after the date of lodgement with ASIC of the annual financial report referred to above and before lodgement with ASIC of this Prospectus.

9.4 RIGHTS AND LIABILITIES ATTACHING TO NORTHERN IRON'S SHARES

A shareholding in Northern Iron is held subject to its Constitution which is similar to those of other publicly listed companies and which states that the Listing Rules prevail in the event of any inconsistency. The following is a summary of the principal rights and liabilities attaching to the New Shares as set out in the Constitution and under the Corporations Act:

Issue of Shares

The power to issue Shares and other securities in the capital of Northern Iron, lies with the Board of Northern Iron, subject to the restrictions contained otherwise in the Constitution, the Listing Rules and the Corporations Act.

Voting

Every Shareholder present in person or by proxy at a meeting of Shareholders has one vote on a vote taken

ADDITIONAL INFORMATION

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by a show of hands, and on a poll every Northern Iron shareholder who is present in person or by proxy has one vote for every fully paid Share held. Voting at any meeting is by a show of hands unless a poll is demanded. A poll may be demanded at a meeting in the manner permitted by the Corporations Act.

Dividends

Subject to the Corporations Act, the Board may resolve to pay any dividend it thinks appropriate and fix the time for payment. A dividend must not be paid except out of the profits of Northern Iron. The Board may resolve to pay a dividend in cash or satisfy it by distribution of specific assets. Northern Iron will not pay interest on dividends.

Transfer of Shares

A Shareholder may transfer Shares by a market transfer in accordance with the electronic share registration and transfer system established or recognised by the Corporations Act, the Listing Rules, or the business rules of the securities clearinghouse to which they apply, for the purpose of facilitating dealings in shares, or by an instrument in writing in a form approved by the Directors.

Where permitted or required by the Listing Rules, the Directors may refuse to register any transfer of Shares.

Meetings and Notice

Each Shareholder is entitled to receive notice of, and to attend, 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.

A Director or the Board may call a meeting of Shareholders and Shareholders may also requisition or convene general meetings in accordance with the procedures for Shareholder-initiated meetings set out in the Corporations Act. Shareholders must be given a least 28 days written notice of any general meeting unless otherwise permitted by the Corporations Act.

Rights on Winding Up

All Shares rank equally in the event of liquidation, subject to any amount remaining unpaid on any Shares. On winding up, the liquidator may, with the sanction of a special resolution of the Shareholders, divide amongst the Shareholders all or any of Northern Iron’s assets and for that purpose fix the value of the assets and determine how the liquidator will carry out the division between the different classes of Shareholders.

Variation of Rights

Under the Corporations Act, if the share capital is divided into different classes of shares, the rights attached to any class may be varied or cancelled by a special resolution passed at a general meeting of the holders of shares in that class or with the written consent of three quarters of the holders of shares in that class.

Unmarketable Parcels

The Constitution provides that the Directors may cause Northern Iron to sell a Shareholder’s Shares, if that Shareholder holds less than a marketable parcel of Shares, provided that the procedures set out in the Constitution are followed. A marketable parcel is defined in ASX Operating Rules.

9.5 UNDERWRITING AGREEMENT

This section contains a summary of the fee, warranty, indemnity, conditions and termination provisions of the Underwriting Agreement.

Northern Iron and the Sole Lead Manager and Underwriter entered into the Underwriting Agreement on 4 October 2012. Under and subject to the terms of the Underwriting Agreement, Northern Iron appointed the Sole Lead Manager and Underwriter as the lead manager, underwriter and bookrunner for the Institutional Entitlement Offer. The Retail Entitlement Offer is not underwritten.

On 4 October 2012, the Sole Lead Manager and Underwriter appointed the Co-Lead Manager as a colead manager in respect of the Entitlement Offer. The fees payable to the Co-Lead Manager, which are being paid by Northern Iron, are set out in section 9.7.

9.5.1 Fees and Expenses

The Sole Lead Manager and Underwriter will receive the following total fees under the Underwriting Agreement:

an underwriting fee of 3% of the Institutional Entitlement Offer proceeds; and
a management and selling fee of 1% of the Institutional Entitlement Offer proceeds.

Northern Iron must also pay to the Sole Lead Manager and Underwriter its reasonable expenses including legal expenses and out-of-pocket expenses.

9.5.2 Warranties and Indemnities

Customary and usual representations and warranties are given by the parties in relation to matters such as power to enter into the Underwriting Agreement, corporate authority and approvals and Northern Iron’s

ADDITIONAL INFORMATION

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compliance with the Corporations Act and Listing Rules in relation to the Entitlement Offer.

Northern Iron gives a number of further representations and warranties to the Sole Lead Manager and Underwriter, including that this Prospectus and related public documents and information do not contain any statements that are misleading or deceptive and that none of the information supplied to the Sole Lead Manager and Underwriter is misleading or deceptive, together with warranties regarding compliance with law, regulations and the Listing Rules, due diligence, accounting controls, insurance, licences used to conduct its business, ownership of assets, litigation, environmental compliance, no events of insolvency, debt facilities, financial information and accounts, the New Shares and other matters concerning the Entitlement Offer, Northern Iron and its affairs.

Northern Iron indemnifies the Sole Lead Manager and Underwriter and persons associated with it in respect of certain loss that may be suffered by them in connection with the Entitlement Offer.

9.5.3 Conditions

The obligations of the Sole Lead Manager and Underwriter to underwrite the Institutional Entitlement Offer is subject to the fulfilment or waiver of certain conditions by the time specified in the Underwriting Agreement, in summary being:

( ASX ) ASX not having indicated that it will not grant quotation of the New Shares under the Institutional Entitlement Offer, and having granted the necessary Listing Rule waivers;
( Prospectus lodgement ) Northern Iron having lodged the Prospectus in a form and substance approved by the Sole Lead Manager and Underwriter with ASIC and the ASX;
( announcements ) Northern Iron releasing to ASX the documents required under the Underwriting Agreement;
( due diligence ) delivery of the “Due Diligence Report” and accompanying due diligence materials to the Directors and Sole Lead Manager and Underwriter as required under the Underwriting Agreement;
( Trading halt ) ASX granting Northern Iron a trading halt pursuant to Listing Rule 17.1 as required under the Underwriting Agreement;
( Closing certificates ) the Sole Lead Manager and Underwriter receiving the certificate required to be furnished by Northern Iron under the Underwriting Agreement confirming that Northern Iron has complied with its obligations under the
Underwriting Agreement and in respect of the Entitlement Offer, that no event set out in the Underwriting Agreement’s termination provisions has occurred, and the warranties given by Northern Iron are true and correct;
( Shortfall Notice ) receipt by the Underwriter of the “Institutional Shortfall Notice” required under the Underwriting Agreement;
( New circumstances sign-off ) the Underwriter receiving the “new circumstances” due diligence sign-offs required under the Underwriting Agreement;
( availability of s 713 ) Northern Iron having obtained from ASIC confirmation that it may use, or an indication that ASIC will not object to the use of, a prospectus under section 713, and ASIC not having indicated to Northern Iron or the Sole Lead Manager and Underwriter that it will make a determination under section 713(6) of the Corporations Act;
( Institutional Entitlement Offer Announcement ) the results of the Institutional Entitlement Offer being announced to ASX by Northern Iron before 10.00am on the Business Day after the Institutional Entitlement Offer bookbuild closes in the form and substance satisfactory to the Sole Lead Manager and Underwriter; and
( consent to covenant breaches ) Northern Iron having obtained consent to or waiver of any covenant breaches relating to the Entitlement Offer in respect of its debt or financing arrangements or any related documentation from its lenders and/or financiers, and those consents or waivers not having been withdrawn or amended.

9.5.4 Termination Events

The Sole Lead Manager and Underwriter may terminate the Underwriting Agreement without cost or liability on the occurrence of any of the events set out below before the Retail Allotment Date.

No event set out below and which is marked with an “*” entitles the Sole Lead Manager and Underwriter to exercise its rights to terminate unless, in the actual and reasonable opinion of the Sole Lead Manager and Underwriter, the event:

has, or is likely to have, individually or in the aggregate, a material adverse effect on the success or settlement of the Entitlement Offer;
has, or is likely to have, individually or in the aggregate, a material adverse effect on the business, financial position or prospects of the Group; or

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leads, or is likely to lead, to a contravention by the Sole Lead Manager and Underwriter of, or the Sole Lead Manager and Underwriter being involved in a contravention of, the Corporations Act or any other applicable law or to a liability for the Sole Lead Manager and Underwriter under the Corporations Act or any other applicable law.

Termination Events

( misleading disclosure ) a statement contained in the Entitlement Offer materials specified in the Underwriting Agreement is or becomes false, misleading or deceptive (including by omission) or likely to mislead or deceive or a matter required to be included (having regard to requirements of section 713 of the Corporations Act) is omitted from the Prospectus;
- ( disclosures in due diligence report ) the due diligence committee’s report or any other information supplied by or on behalf of Northern Iron to the Sole Lead Manager and Underwriter in relation to the Group, or the Entitlement Offer is false, misleading or deceptive (including by omission);
( Prospectus ) the Prospectus omits any information required by the Corporations Act or any other applicable law, contains a statement which is or becomes misleading or deceptive or is likely to mislead or deceive or otherwise fails to comply with the Corporations Act or any other applicable law or the issue or distribution of the Prospectus is misleading or deceptive or likely to mislead or deceive;
( lodgement ) Northern Iron fails to lodge the Prospectus with ASIC on or before the date specified in the Underwriting Agreement (or such later date approved in writing by the Sole Lead Manager and Underwriter);
( Tschudi ) Tschudi Mining Company AS does not take up its full entitlement for New Shares in the Institutional Entitlement Offer;
( adverse change* ) any adverse change occurs in the assets, liabilities, financial position or performance, profits, losses or prospects of the Group (insofar as the position in relation to one of those entities affects the overall position of Northern Iron), including any adverse change in the assets, liabilities, financial position or performance, profits, losses or prospects of a Group member from those respectively disclosed in the Entitlement Offer materials specified in the Underwriting Agreement;
( new circumstance ) in the reasonable opinion of the Underwriter, at any time on or after the Institutional Opening Date an event occurs within

the meaning of section 719(1)(c) of the Corporations Act for the Offer;

- ( future matters ) any estimate, expression of opinion, belief, expectation or intention or statement in each case relating to future matters (including any forecast or prospective financial statements, information or data or the assumptions or sensitivity in relation thereto) in any Entitlement Offer materials specified in the Underwriting Agreement is or becomes incapable of being met or, in the reasonable opinion of the Underwriter, unlikely to be met in the projected timeframe;
- ( hostilities ) hostilities not presently existing commence (whether war has been declared or not) or escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of Australia, New Zealand, the United States of America, a member state of the European Union, Norway, Switzerland, South Korea, North Korea, India, the Russian Federation or the People’s Republic of China (including without limitation the Special Administrative Region of Hong Kong), or a major terrorist act is perpetrated anywhere in the world;
- ( political or economic conditions ) the occurrence of any adverse change or disruption to financial, political or economic conditions, currency exchange rates or controls or financial markets in Australia, a member of the European Union, Norway, Switzerland, India, the Russian Federation, the United States of America or the United Kingdom or any change or development involving a prospective adverse change in any of those conditions or markets;
- ( change of law ) there is introduced or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any State of Australia a new law, or the Reserve Bank of Australia, or any Commonwealth or State authority, adopts or announces a proposal to adopt a new policy (other than a law or policy which has been publicly announced before the date of this agreement), any of which does or is likely to prohibit or materially adversely regulate the Entitlement Offer, capital issues or stock markets or materially adversely affect the taxation treatment of the New Shares;
- ( change in management ) a change in management or in the Board occurs;
( prosecution ) any of the following occurs:
a Director or senior executive of Northern Iron is charged with an indictable offence;
a government agency commences public proceedings against Northern Iron or any

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  - Director in their capacity as a Director, or announces that it intends to take such action; or

any Director is disqualified from managing a corporation under Part 2D.6 of the Corporations Act;
- ( compliance with regulatory requirements ) a contravention by a Group member of the Corporations Act, its constitution, or any of the Listing Rules;
- ( Entitlement Offer materials ) any Entitlement Offer materials specified in the Underwriting Agreement or any aspect of the Entitlement Offer does not comply with the Corporations Act, the Listing Rules or any other applicable law or regulation;
( supplementary Entitlement Offer document ) a supplementary offer document (other than a replacement prospectus lodged with ASIC solely for the purposes of disseminating the results of the Institutional Entitlement Offer) must, in the reasonable opinion of the Sole Lead Manager and Underwriter, be lodged with ASIC under section 719 of the Corporations Act or Northern Iron lodges a supplementary offer document without the prior written approval of the Sole Lead Manager and Underwriter;
( listing ) Northern Iron ceases to be admitted to the official list of ASX or the Shares are suspended from official quotation on the ASX (other than a voluntary suspension requested by Northern Iron and consented to by the Sole Lead Manager and Underwriter to facilitate the Entitlement Offer);
( listing approvals ) approval is refused or approval is not granted which is unconditional (or conditional only on customary listing conditions which would not, in the reasonable opinion of the Sole Lead Manager and Underwriter, have a material adverse effect on the success of the Entitlement Offer) to the official quotation of all the New Shares on ASX, on or before the Institutional Settlement Date or Retail Settlement Date (as the case may be), or if granted, the approval is subsequently withdrawn, qualified or withheld;
( notifications and stop orders ) ASIC gives notice of an intention to hold a hearing under section 739(2) of the Corporations Act or issues an order under section 739(1) of the Corporations Act or an interim order under section 739(3) of the Corporations Act or ASIC applies for an order under sections 1324B or 1325 of the Corporations Act in relation to the Entitlement Offer or the Entitlement Offer documents specified in the Underwriting Agreement, or gives notice of an intention to prosecute Northern Iron or any Director, or an application is made by ASIC for an order under Part 9.5 in relation to the Entitlement

Offer documents specified in the Underwriting Agreement or the Entitlement Offer or ASIC commences any investigation or hearing under Part 3 of the ASIC Act in relation to the Entitlement Offer or Entitlement Offer materials specified in the Underwriting Agreement;

( withdrawal ) Northern Iron withdraws or indicates that it does not intend to proceed or unable to proceed with the Entitlement Offer;
- ( default ) a default by Northern Iron in the performance of any of its obligations under the Underwriting Agreement occurs;
- ( warranties ) a representation or warranty contained in this agreement on the part of Northern Iron is not true or correct;
( closing certificate ) a “Closing Certificate” which is required to be furnished by Northern Iron under the Underwriting Agreement is not furnished when required, or is furnished and is untrue, incorrect or misleading;
( timetable ) any event specified in the Underwriting Agreement (including in the timetable) is:
to the extent that event is scheduled to occur before the Institutional Settlement Date, delayed; or
to the extent that the event is scheduled to occur after the Institutional Settlement Date, delayed for more than 2 business days,
in both cases, without the prior written consent of the Sole Lead Manager and Underwriter;
( market fall ) the S&P/ASX 200 Resources Index is at the close of trading on ASX on any Business Day in the period from and including the Institutional Opening Date until and including the Institutional Settlement Date at or lower than 87.5% of the level of that index as at the close of trading on ASX on the Business Day immediately prior to the Institutional Opening Date;
( change of control ) a scheme of arrangement, reconstruction or capital reduction is announced by Northern Iron;
( insolvency ) a Group member becomes insolvent or there is an act or omission which is likely to result in such an entity becoming Insolvent;
( trading halt ) an ASX trading halt ends before the expiry of the relevant period referred to in the Underwriting Agreement timetable without the prior written consent of the Sole Lead Manager and Underwriter;

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( ASX waivers ) ASX withdraws, revokes or amends the ASX waivers granted in respect of the Entitlement Offer;
( section 730 notice ) any person other than the Sole Lead Manager and Underwriter gives a notice under section 730 of the Corporations Act;
( market disruption ) either of the following occurs:
a general moratorium on commercial banking activities in Australia, the United States of America or the United Kingdom is declared by the relevant central banking authority in any of those countries, or there is a material disruption in commercial banking or security settlement or clearance services in any of those countries; or
trading in all securities quoted or listed on ASX, the London Stock Exchange or the New York Stock Exchange is suspended or limited in a material respect for a day on which that exchange is open for trading or substantially all of such a day,
in either case the effect of which is such as to make it, in the reasonable judgment of the Sole Lead Manager and Underwriter, impractical to promote the Entitlement Offer (or any component of the Entitlement Offer) or to enforce contracts to issue and allot the New Shares; or
( debt facilities ) Subject to the terms of the Underwriting Agreement:
- a Group member breaches, or defaults under any provision, undertaking, covenant or ratio of a debt or financing arrangement or any related documentation to which that entity is a party;
an event of default or event which gives a lender or financier the right to accelerate or require repayment of the debt or financing, or other similar material event occurs under or in respect to any such debt or financing arrangement or related documentation; or
any financing or related arrangement referred to in the investor presentation specified in the Underwriting Agreement is not or will not be refinanced, terminated, amended or entered in to (or a consent or waiver is or will not be given in relation to any such financing or related arrangement) in the manner or by the time described in the investor presentation, or a term sheet accepted by Northern Iron or its related body corporate on or about the date of the Underwriting Agreement or a condition precedent, or condition to funds being available for draw down, under any such arrangement is not or will not be, or is incapable of being, satisfied by the time and in the manner required.

9.6 INTERESTS OF DIRECTORS

Interests

Except as set out in this Prospectus, no Director or proposed director of Northern Iron 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,
other than in their capacity as a Shareholder.

Except as set out in this Prospectus, no one has paid or agreed to pay any amount, and no one has given or agreed to give any benefit, to any Director or proposed director of Northern Iron:

to induce that person to become, or qualify as, a Director; or
for services provided by that person in connection with the formation or promotion of Northern Iron or the Entitlement Offer.

The interests of the Directors in Northern Iron's securities as at the date of this Prospectus are set out in the table below:

Securities held as at the date Name of of this Prospectus Director

Director
	Shares	Options
David C Griffiths	459,067	-
John S Sanderson	180,000	1,500,000
Peter R Bilbe	161,465	-
Ashwath Mehra	11,777,093	-
Felix H Tschudi	75,137,931	-

The Tschudi Group (which holds approximately 20.3% of the share capital of the Company) intends to take up its Entitlements under the Offer. The Tschudi Group is controlled by Felix Tschudi, a Non-Executive Director of the Company.

In connection with the funding of its participation in the Entitlement Offer, the Tschudi Group intends to transfer a portion of its Shares, and enter into call option arrangements in relation to an identical number of Shares. There will be no percentage change in Tschudi Group’s substantial shareholding in the Company as a result of entering into these arrangements.

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The Company notes that any hedging activities by the counterparty to the call option arrangements may impact the Company’s share price.

9.7 INTERESTS OF EXPERTS AND 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 the 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 the formation or promotion of Northern Iron 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 Sole Lead Manager and Underwriter, together with its affiliates, is a full service financial institution engaged in various activities, which may include trading, financing, financial advisory, investment management, investment research, principal investment, hedging, market making, margin lending, brokerage and other financial and nonfinancial activities and services including for which they have received or may receive fees and expenses. In the ordinary course of their various business activities, the Sole Lead Manager and Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of Northern Iron. The Sole Lead Manager and Underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments

and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

The Sole Lead Manager and Underwriter, in conjunction with its affiliates, is acting as sole lead manager and bookrunner to, and underwriter to the institutional component of, the Entitlement Offer. Goldman Sachs and/or its affiliates has received and/or expects to receive fees and expenses for acting in this capacity (see Section 9.5 for details). The Sole Lead Manager and Underwriter, in conjunction with its affiliates, is also acting as financial adviser to Northern Iron in relation to its announced Strategic Review for which it has received and/or expects to receive fees and expenses. The Sole Lead Manager and Underwriter and/or its affiliates have performed, and may perform, other financial or advisory services for Northern Iron, and/or may have other interests in or relationships with Northern Iron, and its related entities and/or persons and entities with relationships with the Company and/or its related entities for which they have received or may receive fees and expenses.

Clifford Chance is acting as legal adviser to Northern Iron in relation to the Entitlement Offer. In aggregate, Northern Iron has paid or agreed to pay Clifford Chance approximately $250,000 (excluding disbursements and GST) for these services to the date of this Prospectus. Further amounts may be paid to Clifford Chance in accordance with its normal timebased charges.

HLB Mann Judd is acting as investigating accountant in relation to the Offer. In aggregate, Northern Iron has paid or agreed to pay HLB Mann Judd approximately $7,500 (excluding disbursements and GST) for these services to the date of this Prospectus. Further amounts may be paid to HLB Mann Judd in accordance with its normal time-based charges.

The Co-Lead Manager is acting as co-lead manager of the Entitlement Offer. In aggregate, Northern Iron has agreed to pay the Co-Lead Manager $150,000 (including GST) for this service to the date of this Prospectus.

9.8 REGULATORY MATTERS

In connection with the Entitlement Offer, ASX has granted Northern Iron waivers from ASX Listing Rules 7.1 and 10.11 to the extent necessary to:

permit Northern Iron to make the Entitlement Offer in the manner described in this Prospectus without the requirement to obtain Shareholder approval; and
permit related parties of Northern Iron to participate in the Entitlement Offer up to the extent of their Entitlements on the same terms as other

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Shareholders without the requirement to obtain Shareholder approval.

The ASX Listing Rule 7.1 waiver is subject to conditions, the effect of which is to permit Northern Iron to offer New Shares pro rata to Eligible Institutional Shareholders on or before the Record Date under the Institutional Entitlement Offer prior to offering New Shares to Eligible Retail Shareholders under the Retail Entitlement Offer, as long as:

Eligible Institutional Shareholders and Ineligible Institutional Shareholders who sell down their holding of Shares before the Record Date have their pro rata allocations reduced accordingly; and
New Shares are issued under the Institutional Entitlement Offer and the Retail Entitlement Offer at the same price and on the same ratio.

The ASX Listing Rule 10.11 waiver permits related parties of Northern Iron to participate in the Entitlement Offer on the same terms as other Eligible Retail Shareholders without a requirement to obtain Shareholder approval. The waiver is subject to the same conditions imposed in relation to the waiver from ASX Listing Rule 7.1. Additionally, it is a condition of this waiver that the related parties only participate in the Entitlement Offer up to the extent of their pro rata Entitlement unless they do so pursuant to bona fide underwriting arrangements and the terms of the underwriting are included in the Offer Documents to be sent to all security holders.

Pursuant to a waiver from ASX and for the purposes of determining shareholder entitlements under the Entitlement Offer, Northern Iron may ignore changes in security holdings which occur after the announcement of the Entitlement Offer (other than registrations which were effected through ASX before the announcement of the Entitlement Offer). Therefore, if you have acquired Shares in a post ex-date transaction, you will not be entitled to receive an Entitlement in respect of those Shares.

The waivers set out the arrangements for dealing with holdings registered in the names of nominees. In particular, a nominee Shareholder is treated as a separate holder in respect of Shares held for each of one or more Eligible Shareholders. Offers under the Institutional Entitlement Offer will be treated as being made to the nominee, and therefore to an Eligible Institutional Shareholder, even where made directly to the Eligible Institutional Shareholder for whom the nominee holds.

ASX has also granted waivers of ASX Listing Rules 3.20.2 and 7.40 to the extent necessary to permit the Entitlement Offer to proceed on the timetable described in this Prospectus.

9.9 WITHDRAWAL OF ENTITLEMENT OFFER

Northern Iron reserves the right to withdraw all or part of the Entitlement Offer and this Prospectus at any time prior to the issue of New Shares under the Retail Entitlement Offer, in which case Northern Iron will refund any application monies in relation to New Shares not already issued in accordance with the Corporations Act and will do so without interest.

9.10 PRIVACY

As a Shareholder, Northern Iron and the Share Registry have already collected certain personal information from you. If you apply for New Shares, Northern Iron and the Share Registry may update that personal information or collect additional personal information. Such information will be used to assess your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration. Company and tax law requires some of the information to be collected. If you do not provide the information requested, your Application may not be able to be processed efficiently, if at all. Northern Iron and the Share Registry may disclose your personal information for purposes related to your shareholding to their agents and service providers, including those listed below or otherwise authorised under the Privacy Act:

The Sole Lead Manager and Underwriter in order to assess your Application;
The Share Registry for administration of the Entitlement Offer and ongoing administration of the Northern Iron share register; and
Printers and mailing houses for the purposes of preparation and distribution of Shareholder statements and for handling of mail.

Under the Privacy Act, you may request access to your personal information held by (or on behalf of) Northern Iron or the Share Registry. You can request access to your personal information by contacting the Share Registry.

If Northern Iron's or the Share Registry's record of your personal information is incorrect or out of date, it is important that you contact the Share Registry so that your records can be corrected.

9.11 FOREIGN SELLING RESTRICTIONS

The Prospectus and Entitlement and Acceptance Form will be sent only to Eligible Retail Shareholders with registered addresses in Australia, New Zealand or Norway, and will not be sent to and does not constitute an offer of securities in any other jurisdiction. Northern Iron is of the view that it is unreasonable to extend the Entitlement Offer to Ineligible Shareholders having

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regard to their small number and the value of New Shares which would be offered to them and the cost of complying with the legal requirements and requirements of the regulatory authorities in those overseas jurisdictions. Northern Iron has written to Ineligible Shareholders advising them regarding their Entitlements. For further details refer to Section 3.14.

New Zealand

Norway

The New Securities may not be offered or sold, directly or indirectly, in Norway except:

to "professional clients" (as defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-professional clients having met the criteria for being deemed to be professional and for which an investment firm has waived the protection as non-professional in accordance with the procedures in this regulation);
to fewer than 150 natural or legal persons (other than "professional clients"); or
in any other circumstances provided that no such offer of New Securities shall result in a requirement for the registration, or the publication by the Company or an underwriter, of a prospectus pursuant to the Norwegian Securities Trading Act of 29 June 2007.

United States

This Prospectus may not be released or distributed in the United States. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy,

securities in the United States. Any securities described in this Prospectus have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

9.12 CONSENTS

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

has not made any statement in this Prospectus or any statement on which a statement made in this Prospectus is based, other than as specified in this Section 9.12;
does not cause or authorise the issue of this Prospectus and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus or any statements in or omissions from this Prospectus, other than the reference to its name and a statement included in this Prospectus with the consent of that person as specified in this Section 9.12;
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; and
in the case of HLB Mann Judd, has given and has not, before the lodgement of this Prospectus with ASIC, withdrawn its consent for the inclusion of the Investigating Accountant’s Report in Section 8 in the form and context in which the report is included.

Role Sole Lead Manager and Underwriter	Consenting party Goldman Sachs Australia Pty Ltd	Consenting party Goldman Sachs Australia Pty Ltd
Co-Lead Manager	Euroz Securities	Ltd
Australian legal adviser	Clifford Chance
Investigating Accountant	HLB Mann Judd
Auditor	HLB Mann Judd
Share Registry Employer of Competent Persons	Computershare Investor Services Pty Limited Wardell Armstrong International

9.13 EXPENSES OF THE ENTITLEMENT OFFER

The total estimated expenses connected with the Entitlement Offer paid or payable by Northern Iron,

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including underwriting, advisory, legal, accounting, tax, quotation and administrative fees, as well as printing, advertising and other expenses will not be known until the completion of the Entitlement Offer. Expenses are currently estimated to be up to approximately $2.4 million.

9.14 PROSPECTUS EXPIRY DATE

No Shares will be offered or issued on the basis of this Prospectus after the date which is 13 months after the date of this Prospectus.

9.15 GOVERNING LAW

This Prospectus and the contracts that arise from the acceptance of the Applications are governed by the laws applicable in the State of Western Australia, Australia and each Applicant submits to the exclusive jurisdiction of the courts of the State of Western Australia, Australia.

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9.16 CONSENTS TO LODGEMENT OF THIS PROSPECTUS

Each Director of Northern Iron has consented, and not withdrawn their consent, to the lodgement of this Prospectus with ASIC as required by section 720 of the Corporations Act.

Signed for and on behalf of the Board:

....................................................................................... David Griffiths

Non-Executive Chairman

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GLOSSARY

In this Prospectus the following expressions have the meanings set out below unless the context requires otherwise.

"$", "$", "AUD" or "cents"

"Applicant"

"Application"

"Application Monies"

"ASIC"

"ASX"

"Board"

"BPAY[®] "

"CGT"

"Co-Lead Manager"

"Constitution"

"Corporations Act"

"CY"

"Directors"

"Eligible Institutional Shareholder"

"Eligible Retail Shareholder"

means Australian dollars or cents (as appropriate) and excludes GST unless the context otherwise requires.

means a person who makes an Application under this Prospectus.

means an application to subscribe for New Shares under this Prospectus.

means the monies payable in connection with an Application.

means the Australian Securities & Investments Commission.

means ASX Limited.

means the board of Directors of Northern Iron.

means the BPAY electronic bill payment system, registered to BPAY Pty Limited ABN 69 079 137 518.

means Australian capital gains tax.

means Euroz Securities Limited.

means the constitution of Northern Iron as amended from time to time.

means the Corporations Act 2001 (Cth) as amended from time to time.

means calendar year.

means the directors of Northern Iron.

means an Institutional Shareholder who holds shares at the Record Date and is eligible to participate in the Entitlement Offer, being an Institutional Shareholder with an address in a Permitted Jurisdiction to whom Northern Iron or the Sole Lead Manager and Underwriter (on behalf of Northern Iron) make an invitation to subscribe for New Shares under the Institutional Entitlement Offer (either directly or indirectly through a nominee).

means a Retail Shareholder who is eligible to participate in the Entitlement Offer, being a person who, as determined by Northern Iron in its absolute discretion:

was registered as the holder of Shares as at 7.00pm (Sydney time) on the Record Date;
has a registered address in Australia, New Zealand or Norway;
is not in the United States or acting for the account or benefit of a person in the United States;
is not an Eligible Institutional Shareholder or an Ineligible Institutional Shareholder and does not hold Shares on behalf of an Eligible Institutional Shareholder or an Ineligible Institutional Shareholder; and
is eligible under all applicable securities laws to receive an offer under the Retail Entitlement Offer.

"Eligible Shareholder"

"Entitlement"

"Entitlement and Acceptance Form" "Entitlement Offer"

means a Shareholder who is eligible to participate in the Entitlement Offer, being either an Eligible Institutional Shareholder or an Eligible Retail Shareholder.

means an Eligible Shareholder's right to apply for New Shares in proportion to their holding at the Record Date. Eligible Shareholders will be offered an Entitlement at the Entitlement Ratio in proportion to the number of Existing Shares held as at the Record Date. Where fractions arise in the calculation of Entitlements, they will be rounded up to the next whole number of New Shares as applicable.

means the personalised application form accompanying this Prospectus, which is to be used to apply for New Shares under the Entitlement Offer.

means the offer of approximately 123.3 million New Shares to Eligible Shareholders in the proportion of 1 New Share for every 3 Existing Shares held on the Record Date. The

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Entitlement Offer comprises two parts: the Institutional Entitlement Offer and the Retail Entitlement Offer.

"Entitlement Ratio"

“Essel Mining”

"Existing Share"

“Group”

"GST"

"Ineligible Institutional Shareholder"

"Ineligible Retail Shareholder"

"Ineligible Shareholder"

“Institutional Allotment Date”

"Institutional Entitlement Offer"

"Institutional Investor"

means the ratio which New Shares are offered to Eligible Shareholders in proportion to their holding of Existing Shares at the Record Date. Eligible Shareholders have the right to apply for 1 New Share in Northern Iron for every 3 Existing Shares, held as at the Record Date.

means Essel Mining & Industries Limited, a wholly owned subsidiary of the Aditya Birla Group.

means a Share on issue at the Record Date.

means Northern Iron and its subsidiaries: SVG, Northern Iron Marketing AG and Sydvaranger Malmtransport AS.

means Australian goods and services tax pursuant to the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

means an Institutional Shareholder who is not eligible to participate in the Entitlement Offer.

means a Retail Shareholder who is not eligible to participate in the Entitlement Offer.

means a Shareholder who is not eligible to participate in the Entitlement Offer (being either an Ineligible Institutional Shareholder or an Ineligible Retail Shareholder).

means Friday, 12 October 2012.

means the offer of New Shares to Eligible Institutional Shareholders under the Entitlement Offer and includes the offer of Institutional Shortfall Shares to Eligible Institutional Shareholders who apply for New Shares in excess of their Entitlement and to certain other Institutional Investors.

means a person:

to whom an offer and issue of New Shares may be lawfully made in Australia without a disclosure document (as defined in the Corporations Act) on the basis that an offer to such person is exempt from the disclosure requirements of Part 6D.2 pursuant to section 708(8) or 708(11) of the Corporations Act; or
to whom an offer and issue of New Shares may be made outside Australia without registration, lodgement or approval of a formal disclosure document or other filing in accordance with the laws of any foreign jurisdiction (except to the extent to which Northern Iron, in its absolute discretion, is willing to comply with such requirements).

“Institutional Opening Date”

“Institutional Settlement Date”

"Institutional Shareholder"

"Institutional Shortfall Bookbuild"

"Institutional Shortfall Shares"

"JORC Code"

"Listing Rules"

"Mtpa"

means Thursday, 4 October 2012.

means Thursday, 11 October 2012.

means an Institutional Investor who holds Shares.

means the bookbuild process conducted by the Sole Lead Manager and Underwriter, on behalf of Northern Iron.

means New Shares equivalent to the number of New Shares not taken up by Eligible Institutional Shareholders, together with New Shares that would have been offered to Ineligible Institutional Shareholders if they had been eligible to participate in the Entitlement Offer.

means the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

means the listing rules of the ASX.

means Million tonnes per annum.

ADDITIONAL INFORMATION

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means a new fully paid ordinary share in the capital of Northern Iron offered under the Entitlement Offer.

"New Share" means a new fully paid ordinary share in the capital of Northern Iron offered under the Entitlement Offer. "Northern Iron" or the means Northern Iron Limited (ABN 71 125 264 575). “Company” "Northern Iron Shareholder means the telephone information line at which Retail Shareholders can enquire about the Information Line" Entitlement Offer. The phone numbers are 1300 764 285 from within Australia and +61 3 9415 4000 from outside Australia. “Offer Documents” means this Prospectus, the ASX announcements for the Institutional Entitlement Offer and Retail Entitlement Offer, and certain offer documentation for the Institutional Entitlement Offer. "Offer Period" means the period ending 5.00pm (Sydney time) on the Retail Closing Date. "Offer Price" means the price at which New Shares will be issued under the Entitlement Offer, being $0.45 per New Share. "Permitted Jurisdiction" means Australia, New Zealand and such other jurisdictions as Northern Iron determines. "Post Ex Date Transactions" means transactions occurring after the announcement of the trading halt in Shares on Thursday, 4 October 2012. “Prominvest” means Prominvest AG. "Prospectus" means this prospectus dated Monday, 8 October 2012 and lodged with ASIC on that date and any supplementary or replacement prospectus in relation to this document. "Record Date" means 7.00pm (Sydney time) on Tuesday, 9 October 2012, being the date and time at which Entitlements to New Shares under the Entitlement Offer are determined. “Retail Allotment Date” means Tuesday, 6 November 2012. "Retail Closing Date" means the date at which the Retail Entitlement Offer closes, being 5.00pm Sydney time on Friday, 26 October 2012. "Retail Entitlement Offer" means the offer of New Shares to Eligible Retail Shareholders under the Entitlement Offer. “Retail Settlement Date” means Monday, 5 November 2012. "Retail Shareholder" means a Shareholder who is not an Institutional Shareholder. "Share" means a fully paid ordinary share in the capital of Northern Iron. "Shareholder" means a holder of Shares in Northern Iron. "Share Registry" means Computershare Investor Services Pty Limited (ABN 48 078 279 277). "Sole Lead Manager and means Goldman Sachs Australia Pty Ltd ACN 006 797 897. Underwriter" “Strategic Review” means the strategic review initially announced by the Company in November 2011. “SVG” means Sydvaranger Gruve AS, a wholly-owned Norwegian subsidiary of Northern Iron. “Sydvaranger” means the Sydvaranger Iron Ore Project. "Theoretical Ex-Rights Price" means the theoretical adjusted share price of Shares after the completion of the Entitlement Offer. "TOFA" means taxation of financial arrangements, a taxation regime introduced into Australia that makes gains or losses arising from certain 'financial arrangements' either assessable or deductible. “Tschudi Group” means the group of companies controlled by Felix Tschudi, a Non-Executive Director of Northern Iron. “US$” means the lawful currency of the United States of America. "US Securities Act" means the US Securities Act of 1933, as amended. "Underwriting Agreement" means the agreement between Northern Iron and the Sole Lead Manager and Underwriter under which the Sole Lead Manager and Underwriter has agreed to manage the Entitlement Offer and fully underwrite the Institutional Entitlement Offer as set out in Section 9.5.

ADDITIONAL INFORMATION

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ADDITIONAL INFORMATION

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NORTHERN IRON CORPORATE DIRECTORY

Northern Iron Limited

Corporate Head Office Level 3, 3 Ord Street West Perth, WA 6005 Australia

Sole Lead Manager and Underwriter

Goldman Sachs Australia Pty Ltd Level 46, Governor Phillip Tower, 1 Farrer Place Sydney NSW 2000 Australia

Website

www.northerniron.com.au

Northern Iron Shareholder Information Line: 1300 764 285 (within Australia) or +61 3 9415 4000 (outside Australia)

Open between 8.30am and 5.00pm (Sydney time) Monday to Friday during the Offer Period

Co- Lead Manager

Euroz Securities Limited Level 18 Alluvion 58 Mounts Bay Road Perth, WA 6000 Australia

Australian legal adviser

Clifford Chance Level 7 190 St Georges Terrace Perth WA 6000 Australia

Auditor and Investigating Accountant

HLB Mann Judd Level 4 130 Stirling Street Perth WA 6000 Australia

Share Registry

Computershare Investor Services Pty Limited Level 2 45 St Georges Terrace Perth WA 6000

ADDITIONAL INFORMATION

Northern Iron Limited ABN 71 125 264 575

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(within Australia) 1300 764 285 (outside Australia) 61 3 9415 4000

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www.investorcentre.com/contact

T 000001 000 NFE MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

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See over for details of the Entitlement Offer and how to make your payment

Retail Entitlement Offer — Entitlement and Acceptance Form

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This is an important document that requires your immediate attention. It can only be used in relation to the shareholding represented by the details printed overleaf. If you are in doubt about how to deal with this Entitlement and Acceptance Form, please contact your financial or other professional adviser.

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Please check the details provided and update your address via www.investorcentre.com if any of the details are incorrect.

If you have a CHESS sponsored holding, please contact your Controlling Participant to notify a change of address.

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You can apply to accept either all or part of your Entitlement. Enter the number of New Shares you wish to apply for and the amount of payment for those New Shares.

By making your payment you confirm that you agree to all of the terms and conditions as detailed in the Prospectus dated 8 October 2012.

Choose one of the payment methods shown below. BPAY ®: See overleaf. Do not return the slip with BPAY payment. �� Complete the reverse side of this payment slip and detach and return with your payment. Make your cheque or bank draft payable in Australian dollars to

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and crossed 'Not Negotiable'.

The cheque must be drawn from an Australian bank. Cash is not accepted.

Payment will be processed on the day of receipt. Receipts will not be forwarded. Funds cannot be debited directly from your account.

Entering your contact details is not compulsory, but will assist us if we need to contact you.

Turn over for details of the Entitlement Offer è

Northern Iron Limited Retail Entitlement Offer Payment must be received by 5:00pm (Sydney time) Friday, 26 October 2012

® Registered to BPAY Pty Limited ABN 69 079 137 518

916CR_0_Sample_CA/000001/000001

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MR SAM SAMPLE �� 123 SAMPLE STREET SAMPLETOWN VIC 3000

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----- Start of picture text -----

X 9999999991 I ND
----- End of picture text -----

[For your security keep your SRN/] HIN confidential.

Entitlement No: 00005856

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Existing Shares entitled to participate as at

7.00pm (Sydney time) Tuesday, 9 October 2012: Entitlement to New Shares on a 1 for 3 basis: Amount payable on acceptance at A$0.45 per New Share:

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Biller Code: 999999 Ref No: 1234 5678 9123 4567 89 �

Make your cheque or bank draft payable to 'Northern Iron Limited - Offer A/C' and crossed 'Not Negotiable'. Return your payment with the below slip to:

Contact your financial institution to make your payment from your cheque or savings account.

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Personal information is collected on this form by Computershare Investor Services Pty Limited (CIS) as registrar for Northern Iron Limited (the issuer), for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the issuer in addition to general corporate communications. You may elect not to receive marketing material by contacting CIS using the details provided above or email [email protected]

Detach here

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Entitlement taken up: Amount enclosed at A$0.45 per New Share: �� 

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00005856

Entitlement No: 00005856

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MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

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��  Drawer Cheque Number BSB Number Account Number Amount of Cheque

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123456789123456789+0000000001-3051+14

AI assistant

DOTZ NANO LIMITED — Capital/Financing Update 2012

64794_rns_2012-10-07_80f14302-b73d-4ea7-92cf-be54573d7917.pdf

PROSPECTUS

Accelerated 1 for 3 Non-renounceable Entitlement Offer

IMPORTANT INFORMATION

Prospectus availability

Future performance and forward looking statements

Foreign jurisdictions

New Zealand

Norway

United States

Disclaimer of representations

Defined words and expressions

Enquiries

Privacy

CONTENTS

Key Entitlement Offer Statistics

Key dates of the Entitlement Offer

CHAIRMAN'S LETTER

NORTHERN IRON LIMITED (ASX: “NFE”)

Background to the Entitlement Offer

Entitlement Offer proceeds and uses

Update on Strategic Review

The Entitlement Offer

Further information

1. INVESTMENT OVERVIEW

1.1 KEY ENTITLEMENT OFFER INFORMATION

1.1.1 UPDATE ON STRATEGIC REVIEW

1.1.2 INVESTMENT HIGHLIGHTS

1.1.3 KEY RISKS ASSOCIATED WITH AN INVESTMENT IN NORTHERN IRON

1.1.4 KEY RISKS ASSOCIATED WITH THE ENTITLEMENT OFFER

1.1.5 WHAT ARE THE DETAILS OF THE ENTITLEMENT OFFER?

1.2 OTHER KEY INFORMATION

2. ANSWERS TO KEY QUESTIONS

Participation in the Retail Entitlement Offer

Where to find more information

If you are paying by BPAY®:

What are the key risks associated with an investment in New Shares?

3. DETAILS OF THE ENTITLEMENT OFFER

3.1 OVERVIEW

1. Institutional Entitlement Offer

2. Retail Entitlement Offer

3.2 UNDERWRITING

3.3 PURPOSE OF THE ENTITLEMENT OFFER

3.4 CAPITAL STRUCTURE

3.5 REASONS FOR USING THE ENTITLEMENT OFFER TO RAISE CAPITAL

3.6 INSTITUTIONAL ENTITLEMENT OFFER

3.7 RETAIL ENTITLEMENT OFFER

3.7.1 WHAT IS THE RETAIL ENTITLEMENT OFFER?

3.7.2 Who is eligible to participate in the Retail Entitlement Offer?

3.7.3 OFFER PRICE

3.7.4 TAKING UP ENTITLEMENTS

3.7.5 ALLOTMENT OF NEW SHARES UNDER THE RETAIL ENTITLEMENT OFFER

3.8 NO TRADING OF ENTITLEMENTS

3.9 EFFECT OF THE ENTITLEMENT OFFER ON CONTROL OF NORTHERN IRON

3.10 ALLOCATION POLICY

3.11 RANKING OF NEW SHARES

3.12 ASX QUOTATION AND TRADING OF NEW SHARES

3.13 APPLICATION MONIES

3.14 TREATMENT OF FOREIGN RETAIL SHAREHOLDERS

3.14.1 GENERAL

3.14.2 INELIGIBLE RETAIL SHAREHOLDERS

3.15 TAXATION IMPLICATIONS

3.15.1 General

3.15.2 Grant of Entitlement

3.15.3 Disposal of New Shares

3.15.5 Other Taxes

3.16 DISCLAIMER

3.17 RISKS AND FURTHER INFORMATION

3.15.4 Non-resident Shareholders

4. HOW TO APPLY

4.1 OPTIONS AVAILABLE

4.2 ACCEPT THE RETAIL ENTITLEMENT OFFER IN FULL OR IN PART

Option 1: Submit your completed Entitlement and Acceptance Form together with cheque, bank draft or money order

Option 2: Pay via BPAY[®] payment

You need to ensure that your BPAY[®] payment is received by the Share Registry by no later than 5.00pm (Sydney time) on Friday, 26 October 2012.

4.3 IF YOU DO NOTHING

5. OVERVIEW OF NORTHERN IRON

5.1 BACKGROUND

DOTZ NANO LIMITED Capital/Financing Update 2012

**Mineral Resource Summary* (at 15% Fe total cut-off grade)**

**Ore Reserve Summary* (at 15% Fe total cut-off grade)**