DOTZ NANO LIMITED — Interim / Quarterly Report 2012

Oct 30, 2012

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Quarterly)Activities)Report:)period)ended)30)September)2012)
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NORTHERN)IRON)LIMITED)(ASX:)“NFE”)) Quarterly)Activities)Report:)Period)ended)30)September)2012)

Highlights)

• Concentrate) production) of) 469) kt) for) the) quarter,) up) 54%) on) the) same) quarter) last) year) and) down)2%)on)the)previous)quarter.

• Commissioning!of!new!processing!equipment!during!the!quarter!did!not!result!in!a!significant!lift! in! production! volumes! quarter! on! quarter! due! to! further! plant! modifications! required! in! September!and!October.!

• The! Company! is! presently! focused! on! addressing! operations! and! maintenance! management! issues!to!reduce!concentrator!downtime!and!enable!higher!throughput!rates.!These!initiatives! are!expected!to!underpin!an!improvement!in!production!volumes!over!the!next!six!months.!

1!

• Concentrate)sales)of)484)kt)for)the)quarter,)up)43%)on)the)same)quarter)last)year)and)up)4%)on) the)previous)quarter.

• 5! vessels! dispatched! to! Tata! Steel! Europe! and! 2! vessels! to! the! Chinese! spot! market,! with! an! average!price!of!USD!86!/!dry!metric!tonne!FOB!Kirkenes!obtained,!a!20%!decrease!to!the!price! obtained!during!the!prior!quarter!of!USD!107!/!dmt!as!a!result!of!a!material!fall!in!the!iron!ore! price! in! August! 2012! and! also! significantly! lower! than! the! average! price! of! USD! 139! /! dmt! achieved!during!the!same!period!last!year.!

• Mine)Production)achieved)a)new)record)of)4.2)million)tonnes)mined,)up)6%)on)the)prior)quarter)

• Mine!production!continues!to!ramp!up!to!meet!the!improved!concentrator!performance.!

• Improved! production! rates! are! anticipated! in! Q4! due! to! mining! areas! developing! into! more! productive,!wider!benches.!

• Unaudited)EBITDA)pre)inventory)movements)of)USD)5)million,)USD)(1.0))million)post)inventory) movements

• Revenues!were!adversely!impacted!by!the!decline!in!iron!ore!prices!during!the!quarter!resulting! in!an!average!price!for!the!quarter! of!USD!86!/!dry!metric!tonne!FOB!Kirkenes.!C1!unit!cash! operating!cost!of!USD!83!/!dmt!for!the!quarter!remained!broadly!in!line!with!the!USD!78!/!dmt! achieved!in!the!last!quarter,!resulting!in!a!small!operating!margin!being!achieved!and!EBITDA!pre! inventory!movements!of!USD!5!million.!However!a!reduction!in!product!inventory!stocks!across! the!quarter!resulted!in!the!EBITDA!loss!for!the!period.

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Quarterly)Activities)Report:)period)ended)30)September)2012)

• Corporate)Activity)

• The!Company!continued!with!its!previously!announced!strategic!review!during!the!quarter,!with! detailed!due!diligence!continuing!with!Aditya!Birla!subsidiary!Essel!Mining!and!Prominvest!SA.! The!deadline!for!submission!of!final!binding!offers,!if!any,!has!been!set!for!early!November.!

• Subsequent!to!the!end!of!the!quarter,!the!Company!successfully!concluded!a!nonZrenounceable! rights!issue!to!institutional!shareholders!that!raised!approximately!AUD!47.2!million.!The!retail! component! closed! on! 26! October! and! raised! approximately! AUD! 7.7! million! (subject! to! any! withdrawals).

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Quarterly)Activities)Report:)period)ended)30)September)2012)

Corporate)

Treasury)and)Finance)

Group!cash!balances!at!the!end!of!the!quarter!(and!prior!to!the!nonZrenounceable!rights!offer)!were! USD! 9.0! million,! which! consisted! of! unrestricted! cash! of! USD! 8.3! million! and! restricted! supplier! guarantees!of!USD!0.7!million.!The!balance!of!trade!receivables!were!approximately!USD!37.4!million! (June!2012:!USD!40.5!million).!Funds!on!deposit!earned!an!average!interest!rate!of!1.6%!per!annum.!

At!the!end!of!the!quarter,!the!Company!held!the!following!cash!balances!in!a!combination!of!AUD,! Euro,!NOK,!CHF!and!USD!as!presented!in!Table!1.!!

	AUD	EUR	NOK	CHF	USD
Amount(USD’000)	1,522	81	6,351	34	1,010
%Total	16.9%	0.9%	70.6%	0.4%	11.2%
Rate:USDto	0.96	0.78	5.73	0.94	1.00

Table)1)

3!

Subsequent!to!the!end!of!the!quarter!the!Company!successfully!concluded!an!institutional!and!retail! non! renounceable! rights! offer! that! raised! approximately! AUD! 53.2! million.! ! During! the! second! quarter!of!2012,!the!company!accepted!an!offer!from!DNB!Bank!and!Innovasjon!Norge!to!increase! the!limit!of!the!working!capital!facility!with!DNB!from!25.0!million!to!USD!35.0!million!for!the!period! extending! until! 31! August! 2012.! During! the! current! quarter,! conditional! upon! the! Company! completing!an!equity!capital!raising!of!at!least!USD!35.0!million:!!

• DNB!offered!an!extension!of!the!working!capital!facility!to!an!amount!of!USD!35.0!million!until! 31! December! 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!

• Innovasjon! Norge! offered! to! defer! repayments! 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,!and!

• Both!DNB!and!Innovasjon!Norge!offered!a!waiver!of!the!EBITDA!covenant!for!12!months,!such! that!the!first!test!will!occur!on!31!December!2013.!!The!covenant!will!be!reZestablished!in! successive! increases! each! quarter! in! the! amount! of! USD! 7.0! million! in! EBITDA! up! to! a! maximum!of!USD!27.5!million!EBITDA!by!31!December!2014.!

The!Company!accepted!these!offers.!

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Quarterly)Activities)Report:)period)ended)30)September)2012)

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Sales)and)Marketing)

Concentrate! sales! of! 484,000! dry! metric! tonnes! (dmt)! in! seven! vessels! were! achieved! during! the! quarter,!representing!a!4%!increase!over!the!preceding!quarter.!Five!vessels!were!sold!to!TATA!Steel! and!two!vessels!were!sold!on!the!Chinese!spot!market.!Sales!increased!by!43%!on!the!same!quarter! last!year!due!to!that!quarter!being!significantly!impacted!by!an!extended!production!outage.!

During! the! period! the! average! price! obtained! for! concentrate! sales! was! USD! 86! per! dmt! FOB! Kirkenes,!a!significant!20%!decrease!compared!to!the!average!price!of!USD!107!/!dmt!achieved!in!the! previous!quarter.!The!overall!market!condition,!including!a!reduction!in!the!premium!applicable!to! high!grade!product,!was!the!main!cause!of!the!significant!price!drop.!

Corporate)Activity)

Subsequent! to! the! end! of! the! quarter,! the! Company! successfully! concluded! a! nonZrenounceable! rights!issue!to!institutional!shareholders!that!raised!approximately!AUD!47.2!million.!The!proceeds! from! this! issue! will! be! used! to! reduce! short! term! debt! and! to! ensure! NFE! maintains! sufficient! working!capital.!

4!

On!the!26[th] !October!the!retail!component!of!the!rights!issue!concluded,!with!approximately!99% of! eligible!retail!rights!taken!up!under!the!offer.!Allotment!of!these!shares!is!expected!to!be!concluded! on!the!6[th] !November.!The!Company!notes!that,!as!a!supplementary!prospectus!dated!19!October! 2012!has!been!issued,!eligible!retail!shareholders!who!accepted!prior!to!receiving!the!supplementary! prospectus!will!have!until!the!close!of!business!19!November!2012!to!withdraw!acceptances.!

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Quarterly)Activities)Report:)period)ended)30)September)2012)

Mining)

A!record!4,190,000!tonnes!of!material!was!mined!during!the!period,!including!901,000!tonnes!of! ore! and! 3,289,000! tonnes! of! waste.! Compared! to! the! previous! quarter! this! represents! a! 6%! increase!in!!total!tonnes!mined.!Table!2!

!contains!a!summary!of!mining!activity!for!the!quarter!compared!to!the!previous!two!quarters.!

	MarQtr	JunQtr	SepQtr	QtrVariance (fromJunQ)	QtrVariance(% fromJunQ)
OreTonnes(kt)	1,059	899	901	2	+0.2
WasteTonnes(kt)	2,456	3,043	3,289	246	+8.1
TotalTonnes(kt)	3,515	3,942	4,190	248	+6.3

Table)2)

Production!during!the!September!quarter!improved!but!fell!short!of!the!targeted!rate!due!to!higher! annual!leave!obligations!during!the!northern!summer,!and!delays!in!dewatering!the!Bjørnevatn!pits! which! restricted! the! rate! of! vertical! advance! and! delayed! access! to! higher! productivity! wider! benches.!Increased!management!efforts!and!higher!pumping!capacity!is!expected!to!result!in!access! issues!being!resolved!in!Quarter!4,!with!a!corresponding!increase!in!production!rate!expected.!!

The!lower!than!expected!mine!production!rates!in!the!June!and!September!quarters!has!impacted! the!quantity!of!ore!mined.!During!this!six!month!period!a!total!of!1,800!kt!of!ore!has!been!mined,! whilst!a!total!of!2,412!kt!of!ore!was!fed!to!the!primary!crushers,!requiring!supplemental!ore!from! stockpiles.! These! stockpiles! have! now! been! substantially! depleted,! with! the! corresponding! implication!that!achievement!of!concentrate!production!targets!will!now!depend!upon!improving! production!rates!at!the!mine.!The!Company!expects!these!targets!to!be!achieved!as!a!result!of!the! improvement!in!production!rates!expected!as!the!mining!areas!widen.!

Quarterly)Resource)Model)Reconciliation)

Ore!was!mined!from!the!Bjørnevatn,!Kjellmansåsen!and!Fisketind!Øst!pits!during!the!quarter.!

Actual! tons! mined! versus! those! predicted! from! the! Resource! model! are! outlined! in! Table! 3! Development! of! the! pits! this! quarter! saw! 121kt! of! Inferred included! in! the! Bjørnevatn! pit! development.!

Bjørnevatn!pit!displayed!a!Z11%!negative!tonnage!reconciliation!for!the!quarter.!Kjellmanåsen!pit! displayed!a!Z17%!reconciliation!for!the!quarter.!

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Quarterly)Activities)Report:)period)ended)30)September)2012)

	ActualOreMined(kt)	ResourceModelEstimate(kt)	Variance(kt)	Variance(%)
Bjørnevatn	812	916*	Z104	Z11
Kjellmannsåsen	76	92*	Z16	Z17
FisketindØst	13**	13*	Z	Z
Total	901	1,021*	Z120	Z11

Table)3)

*Total!Reserve!and!Resources!includes!floor!stocks!carried!over!from!previous!Quarter!minus!the!floor!stocks! left!at!the!end!of!current!quarter!and!represents!the!theoretical!ore!tonnage!extracted!from!the!pit.!

**As!well!as!13kt!of!ore!having!been!extracted!from!Fisketind!Øst!pit!an!additional!44kt!of!ore!is!remaining!as! floor! stocks,! having! been! defined! through! grade! control.! ! This! indicates! a! 35%! increase! in! blasted! ore! compared!to!the!Resource!model.!

The!negative!variance!for!Bjørnevatn!is!due!to!less!ore!identified!in!the!narrow!ore!horizons!in!the! saddle!than!was!predicted!by!the!block!model.!These!ore!horizons!are!classified!as! Inferred !and!are! very!unpredictable!due!to!minor!exploration!in!these!horizons.!Due!to!this!section!of!the!deposit! having!an! Inferred !classification!there!is!no!impact!on!the!overall!Reserves!and!mine!schedule.!

6! The!negative!variance!exhibited!in!Kjellmannsåsen!is!due!to!mining!in!the!southern!part!of!the!pit,! where!the!geology!is!more!complicated!than!was!predicted!in!the!resource!model.!Mining!also!took! place!along!the!south!west!wall!where!the!orebody!is!dipping!away!from!the!pit!on!a!very!shallow! angle.!

Variance!between!the!Resource!model!and!the!actual!tonnages!mined!at!Fisketind!Øst!cannot!be! fully! quantified! as! a! large! amount! of! material! was! left! in! pit! as! floor! stocks.! The! resource! model! slightly! underestimates! the! width! of! an! ore! horizon! on! the! western! flank! of! the! deposit.! Grade! control!results!compared!to!the!Resource!model!displayed!an!additional!15kt!of!ore.!

Table!4!gives!a!comparison!of!the!average!ore!grade!for!the!quarter!exiting!the!pits!compared!to!the! average!feed!grade!into!the!plant!following!primary!crushing!and!upgrading!through!the!cobbing! plant.!

	JuneQ2 Fetotal	SetemberQ3 Fetotal
OreMined(%Fe)	33,68	33,87
OreMilled(%Fe)	35,10	33,30

Table)4)

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Quarterly)Activities)Report:)period)ended)30)September)2012)

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)Processing)

Production)

Production!results!from!the!processing!facilities!are!outlined!in!Table!5!

	MarQtr	JunQtr	SepQtr	Qtr Variance (tonnes)	Qtr Variance (%)
Crushed(kt)	1,110	1,186	1,226	40	3
Milled(kt)	1,155	1,104	1,151	47	4
ConcentrateProduced(kt)	501	480	469	Z11	Z2
ConcentrateShipped(kt) (drymetrictonnes)	507	464	484	20	4

Table)5)

7!

Concentrate!production!was!2%!lower!than!the!prior!period,!but!up!54%!on!the!same!period!last! year!due!to!that!period!being!significantly!impacted!by!an!extended!unplanned!production!outage.! The!slight!decline!compared!to!the!prior!period!was!despite!the!completion!of!a!scheduled!7!day! maintenance!outage!in!July!to!reline!the!Primary!mill!and!complete!other!works.!A!planned!shut!of! this!duration!did!not!occur!in!the!March!and!June!quarters.!

Work! continued! during! the! quarter! to! improve! the! concentrator! production! rate,! with! the! last! significant!capital!component!of!the!throughput!debottlenecking!program!commissioned!in!July.!The! commissioning!of!the!new!secondary!crusher!preZscreen!has!resulted!in!a!significant!reduction!in!the! average!size!of!material!fed!to!the!primary!mill,!which!resulted!in!improved!mill!throughput!rates.! The!removal!of!the!bottleneck!due!to!material!sizing!exposed!a!number!of!minor!processing!issues! which!were!steadily!addressed!during!the!quarter.!!

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!utilization!rates!of!the!concentrator.

The! concentrator! has! continued! to! experience! a! higher! than! expected! frequency! of! unscheduled! maintenance!events!that!has!detracted!from!the!overall!production!result.!These!events!either!result! in!the!temporary!suspension!of!concentrate!production!or!else!result!in!a!lower!than!planned!mill! throughput!rate.!By!the!end!of!the!quarter!and!into!October!an!improving!trend!was!evident!on! overall! plant! utilisation! (reduction! in! production! stoppage! events),! but! other! events! continue! to! impact!the!mill!throughput!rate!achieved.!!

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Quarterly)Activities)Report:)period)ended)30)September)2012)

Improving! the! concentrate! production! rate! is! dependent! upon! reducing! the! frequency! of! these! unscheduled!maintenance!events.!This!is!expected!to!occur!by!steady!improvement!in!operations! and! maintenance! management! practices,! coupled! with! further! training! and! support! of! Company! employees!in!specific!maintenance!and!planning!competencies.!The!Company!expects!a!ramp!up!in! production! performance! as! these! initiatives! are! implemented,! and! anticipates! this! ramp! up! will! occur!over!the!next!six!months.!

Quality)

Average! concentrate! quality! was! slightly! lower! during! the! quarter,! but! remained! within! all! agreed! contractual! obligations.! The! slight! decline! in! quality! was! due! to! efforts! to! maximise! production!throughput!rates!during!the!period.!Table!6!

!summarises!concentrate!quality!for!the!last!four!quarters,!and!compares!the!actual!grade!with!the! Company’s!published!shipping!specification!for!2012.

	Iron	Silica	Alumina	Phos	Sulphur	Mn
Sep’11QtrActual(%)	66.8	6.1	0.2	0.01	0.02	0.05
Dec’11QtrActual(%)	66.9	5.7	0.2	0.01	0.02	0.08
Mar’12QtrActual(%)	67.2	5.7	0.2	0.01	0.01	0.05
Jun’12 Qtr Actual (%)	68.6	4.2	0.2	0.01	0.01	0.06
Sep’12QtrActual(%)	68.1	4.7	0.2	0.01	0.01	0.06
2012Specification(%)	68.5	4.5	0.3	0.01	0.02	0.05

Table)6)

)Operational)Financial)Performance))

Sales!prices!reduced!by!approximately!20%!quarterZonZquarter!to!an!average!price!of!USD!86!per!dry! metric!tonne!FOB!Kirkenes!following!a!material!decline!in!iron!ore!prices!in!August!2012,!yielding! unaudited! EBITDA! (pre! inventory! movements)! of! approximately! USD! 5! million! and! an! unaudited! EBITDA!loss!for!the!quarter!from!the!Sydvaranger!operations!of!approximately!USD!1!million.!!The!C1! unit!cash!operating!cost!for!the!September!2012!quarter!was!USD!83/dmt,!broadly!in!line!with!the! previous!quarter!C1!unit!cash!operating!cost!of!USD!78!/dmt.!!

Operational!performance!at!the!Sydvaranger!Project!month!to!date!has!been!somewhat!reduced! due!to!a!higher!than!expected!quantity!of!Kjellmannsasen!high!grade!material!being!processed!in!the! first!half!of!the!month!while!dewatering!was!completed!at!the!Bjørnevatn!pit!resulting!in!slower! than!expected!production!rates,!and!the!failure!of!a!clutch!on!a!secondary!mill!which!has!restricted! throughput!rates.!!The!Company!continues!to!monitor!performance!against!guidance.!

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Growth)Strategy)

During!the!March!‘12!quarter!NFE!outlined!a!four!year!growth!strategy!aimed!at!optimising!revenue! from!the!Sydvaranger!Project.!Growth!for!NFE! beyond!the!ramp!up!of!production!to!name!plate! referred!to!above!now!consists!of!medium!term!opportunities!to!optimise!the!performance!of!the! existing! plant! within! its! designed! capacity! of! 2.8! Mtpa,! and! a! longer! term! option! to! double! the! capacity!to!5.6!Mtpa.!These!opportunities!are!discussed!separately!below.!

2013`2014)Optimise)Nameplate)

The! “Optimise! Nameplate”! stage! consists! of! three! projects! that! aim! to! enhance! revenue! by! increasing!the!sales!price!received!for!Sydvaranger!concentrate.!Two!projects!aim!to!further!improve! product! quality,! while! a! third! aims! at! upgrading! the! port! at! Kirkenes! to! handle! Cape! size! bulk! carriers,!leading!to!a!reduction!in!freight!costs.!!

Improving!the!product!quality!further!is!expected!to!be!achieved!in!two!stages.!The!first!objective!is! to!reduce!the!silica!content!of!the!ore!to!below!4%!at!a!2.8!Mtpa!dry!concentrate!production!rate.! This!project!was!suspended!during!the!quarter!in!response!to!the!significant!decline!in!iron!ore!price,! and!is!now!expected!to!be!completed!in!Q1!2013.!

The! second! stage! will! be! to! produce! a! Direct! Reduced! Iron! (DRI)! grade! pellet! feed! concentrate,! typically!requiring!a!silica!grade!of!less!than!2%!and!iron!of!greater!than!70%.!The!Company!has! engaged!the!same!metallurgy!and!engineering!team!that!successfully!designed!the!sub!5%!and!sub! 4%!silica!projects!to!produce!a!preZfeasibility!study!by!March!2013.!The!key!enabler!for!progressing! this! project! will! be! the! identification! of! an! environmentally! acceptable! tailings! disposal! option.! Provided! the! environmental! requirements! are! met,! the! Company! believes! completion! in! 2014! is! possible!for!this!project.!

The!Company!continued!to!evaluate!engineering!options!for!the!upgrade!to!the!capacity!of!the!port! during!the!quarter.!Engineering!and!permitting!is!expected!to!continue!for!the!remainder!of!2012,! with!the!Company!anticipating!an!investment!decision!may!be!possible!in!the!first!quarter!of!2013.! Such!a!decision!will!reflect!the!market!conditions!and!the!working!capital!position!of!NFE.!

2016)Expand)Production)

During! the! quarter! the! Company! continued! to! work! with! the! public! authorities! on! agreeing! the! scope!of!the!expansion!project!Consequences!Study.!The!draft!scope!has!been!available!for!public! comment!during!the!quarter,!and!it!is!now!expected!the!local!authority!will!make!a!decision!on!the! study!scope!during!the!current!quarter.!This!would!enable!NFE!to!commence!executing!the!agreed! plan!of!work!in!Q1!2013.!

NFE!is!targeting!regulatory!approval!of!the!expansion!by!December!2013!which!is!expected!to!result! in!first!production!from!the!expansion!by!January!2016.

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Quarterly)Activities)Report:)period)ended)30)September)2012)

Strategic)Review)

In!November!2011!the!Company!announced!it!was!initiating!a!strategic!review!with!an!objective!of! maximising! value! for! all! shareholders.! The! review! is! considering! corporate! and! operational! strategies! including! a! review! of! ownership! options! available! to! the! Company.! ! The! Company! has! appointed!Goldman!Sachs!to!advise!it!on!the!review.!

During!the!quarter!the!Company!continued!to!support!the!completion!of!detailed!due!diligence!by! Aditya!Birla!subsidiary!Essel!Mining!and!Prominvest!SA.!The!deadline!for!submission!of!final!binding! offers,!if!any,!has!been!set!for!early!November.!!!

Program)for)next)quarter)

• Improving'mine'production'rates'to'support'improved'plant'capacity.'

• Continuing'to'improve'plant'reliability'and'production'rates'to'achieve'a'2.8'million'tonne'per' annum'production'rate.'

• Advance'projects'aiming'to'increase'the'size'of'vessel'that'can'be'handled'by'the'port'and' produce'sub'4%'silica'concentrate.'

10!

• Achieve' local' authority' agreement' on' the' scope' of' work' of' the' Expansion' project' Consequences'Study.'

• Completion'of'the'strategic'review.'

For'and'on'behalf'of'the'board.'

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John!Sanderson! Managing!Director!/!CEO!

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Quarterly)Activities)Report:)period)ended)30)September)2012)

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Note:

The'information'in'this'report'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' the'report'of'the'matters'based'on'his'information'in'the'form'and'context'in'which'it'appears.'

The'information'in'this'report'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'the'report'of'the'matters'based'on'his'information'in'the'form'and' context'in'which'it'appears.'

This!report!contains!some!references!to!forward!looking!assumptions,!estimates!and!outcomes.!!These!are!uncertain!by! nature!and!no!assurance!can!be!given!by!Northern!Iron!Limited!that!its!expectations,!estimates!and!forecast!outcomes! will!be!achieved.

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11!

Appendix(5B( Mining(exploration(entity(quarterly(report(

Rule%5.3%

Appendix 5B

Mining exploration entity quarterly report

Introduced!1/7/96.!!Origin:!!Appendix!8.!!Amended!1/7/97,!1/7/98,!30/9/2001,!01/06/10.!

Name!of!entity!

Consolidatedstatementofcashflows
Cashflowsrelatedtooperatingactivities 1.1 Receiptsfromproductsalesandrelated debtors 1.2 Paymentsfor (a)exploration&evaluation (b)development (c)production (d)administration 1.3 Dividendsreceived 1.4 Interestandotheritemsofasimilarnature received 1.5 Interestandothercostsoffinancepaid 1.6 Incometaxespaid 1.7 Other(providedetailsifmaterial) NetOperatingCashFlows	Currentquarter $US’000*	Yeartodate (9months) $US’000*
	43,440 (967) (1,341) (34,718) (5,074) / 14 (1,816) / /	132,117 (1,268) (6,142) (118,822) (14,458) / 113 (5,417) / /
	(462)	(13,877)
Cashflowsrelatedtoinvestingactivities 1.8 Paymentforpurchasesof: (a)prospects (b)equityinvestments (c)otherfixedassets 1.9 Proceedsfromsaleof: (a)prospects (b)equityinvestments (c)otherfixedassets 1.10 Loanstootherentities 1.11 Loansrepaidbyotherentities 1.12 Other–securitydeposits(paid)/returned Netinvestingcashflows 1.13 Totaloperatingandinvestingcashflows (carriedforward)	/ / (3,679) / / / / / (10)	/ / (10,457) / / / / / 2,180
	(3,689)	(8,277)
	(4,151)	(22,154)

*As%previously%announced,%the%Company%has%changed%its%reporting%currency%to%US$%with%effect%from%1%January%2011.%

+!See!chapter!19!for!defined!terms.!

Appendix!5B!!Page!1!

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Appendix(5B( Mining(exploration(entity(quarterly(report(

1.13 Totaloperatingandinvestingcashflows (broughtforward)	(4,151)	(22,154)
Cashflowsrelatedtofinancingactivities 1.14 Proceedsfromissuesofshares,options,etc. 1.15 Shareissuecosts 1.16 Proceedsfromborrowings 1.17 Repaymentofborrowings 1.18 Dividendspaid 1.19 Other–salesprepayments Netfinancingcashflows	/ / 5,605 (4,082) / (860)	/ / 46,113 (38,872) / (3,440)
	663	3,801
Netincrease(decrease)incashheld 1.20 Cashatbeginningofquarter/yeartodate 1.21 Exchangerateadjustmentstoitem1.20 1.22 Cashatendofquarter	(3,488) 13,237 (1,467)	(18,353) 26,745 (110)
	8,282	8,282

Payments(to(directors(of(the(entity(and(associates(of(the(directors( Payments(to(related(entities(of(the(entity(and(associates(of(the( related(entities(

1.23 Aggregateamountofpaymentstothepartiesincludedinitem1.2 1.24 Aggregateamountofloanstothepartiesincludedinitem1.10	Currentquarter $US'000 2,196 /

• 1.25! Explanation!necessary!for!an!understanding!of!the!transactions!

Line%1.23%includes%US$1,083%for%directors%fees,%and%US$2,194,703%for%transactions% with%related%parties%of%Sydvaranger%Gruve%AS,%representing%a%leasing%agreement%for% handling,%storage%and%loading%of%iron%ore%concentrate,%and%administrative%services.%

NonAcash(financing(and(investing(activities(

• 2.1! Details!of!financing!and!investing!transactions!which!have!had!a!material!effect!on! consolidated!assets!and!liabilities!but!did!not!involve!cash!flows!

• 2.2! Details!of!outlays!made!by!other!entities!to!establish!or!increase!their!share!in!projects!in! which!the!reporting!entity!has!an!interest!

+!See!chapter!19!for!defined!terms.!

Appendix!5B!!Page!2!

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Appendix(5B( Mining(exploration(entity(quarterly(report(

Financing(facilities(available(

Add%notes%as%necessary%for%an%understanding%of%the%position.%

	3.1 Loanfacilities 3.2 Creditstandbyarrangements	Amountavailable $US’000	Amountused $US’000
		119,018	119,018
		/	/

Estimated(cash(outflows(for(next(quarter(

Estimatedcashoutflowsfornextquarter
4.1 Explorationandevaluation 4.2 Development 4.3 Production 4.4 Administration	$US’000
	(776)
	(1,611)
	(35,148)
	(3,651)
Total	(41,186)

Reconciliation of cash

Reconciliation of cash
Reconciliationofcashattheendofthequarter(as shownintheconsolidatedstatementofcashflows)to therelateditemsintheaccountsisasfollows.	Currentquarter $US’000	Previousquarter $US’000**
5.1 Cashonhandandatbank 5.2 Depositsatcall 5.3 Bankoverdraft 5.4 Other(providedetails)	8,282	13,237
	/	/
	/	/
	/	/
Total:cashatendofquarter(item1.22)	8,282	13,237

**A$12,351,000%as%previously%reported,%translated%at%the%30%June%2011%rate%of%1.0718.%

Changes(in(interests(in(mining(tenements(

6.1 Interestsinmining tenementsrelinquished, reducedorlapsed 6.2 Interestsinmining tenementsacquiredor increased	Tenement reference	Natureof interest (note(2))	Interestat beginningof quarter	Interestat endof quarter

+!See!chapter!19!for!defined!terms.!

Appendix!5B!!Page!3!

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Appendix(5B( Mining(exploration(entity(quarterly(report(

Issued(and(quoted(securities(at(end(of(current(quarter(

Description%includes%rate%of%interest%and%any%redemption%or%conversion%rights%together%with%prices%and%dates.%

	Totalnumber	Number quoted	Issuepriceper security(see note3)(cents)	Amountpaidupper security(seenote3) (cents)
7.1 Preference+securities (description) 7.2 Changesduringquarter (a)Increasesthrough issues (b)Decreasesthrough returnsofcapital,buyd backs,redemptions
7.3 +Ordinarysecurities 7.4 Changesduringquarter (a)Increasesthrough issues (b)Decreasesthrough returnsofcapital,buyd backs	336,084,863	336,084,863
7.5 +Convertibledebt securities(description) 7.6 Changesduringquarter (a)Increasesthrough issues (b)Decreasesthrough securitiesmatured, converted
7.7 Options(description andconversionfactor) 7.8 Issuedduringquarter 7.9 Exercisedduring quarter 7.10 Expiredduringquarter	500,000 500,000 500,000		Exerciseprice A$2.15 A$2.50 A$3.00	Expirydate 24August2013 24August2013 24August2013
	200,000 200,000		Exerciseprice A$4.05 A$4.73	Expirydate 4August2011 4August2011
7.11 Debentures (totalsonly)
7.12 Unsecurednotes (totalsonly)

+!See!chapter!19!for!defined!terms.!

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Appendix(5B( Mining(exploration(entity(quarterly(report(

7.13! Performance(rights (totals%only)% 650,000% nil Various% performance% conditions%and% hurdle%prices%

Compliance statement

• 1! This!statement!has!been!prepared!under!accounting!policies!which!comply! with!accounting!standards!as!defined!in!the!Corporations!Act!or!other! standards!acceptable!to!ASX!(see!note!4).!!

• 2! This!statement!does give!a!true!and!fair!view!of!the!matters!disclosed.!

Sign!here:!! ............................................................!Date:!31%October%2011% ~~(Director~~ /Company!secretary)!

Print!name:!! ALEX%NEULING

Notes

• 1! The!quarterly!report!provides!a!basis!for!informing!the!market!how!the!entity’s! activities!have!been!financed!for!the!past!quarter!and!the!effect!on!its!cash! position.!!An!entity!wanting!to!disclose!additional!information!is!encouraged!to! do!so,!in!a!note!or!notes!attached!to!this!report.!

• 2! The!“Nature!of!interest”!(items!6.1!and!6.2)!includes!options!in!respect!of! interests!in!mining!tenements!acquired,!exercised!or!lapsed!during!the! reporting!period.!!If!the!entity!is!involved!in!a!joint!venture!agreement!and! there!are!conditions!precedent!which!will!change!its!percentage!interest!in!a! mining!tenement,!it!should!disclose!the!change!of!percentage!interest!and! conditions!precedent!in!the!list!required!for!items!6.1!and!6.2.!

• 3!!! Issued(and(quoted(securities !!The!issue!price!and!amount!paid!up!is!not! required!in!items!7.1!and!7.3!for!fully!paid!securities .%

• 4! The!definitions!in,!and!provisions!of,! AASB%1022:%Accounting%for%Extractive% Industries% and %AASB%1026:%Statement%of%Cash%Flows !apply!to!this!report.!

• 5! Accounting(Standards !ASX!will!accept,!for!example,!the!use!of!International! Accounting!Standards!for!foreign!entities.!!If!the!standards!used!do!not!address! a!topic,!the!Australian!standard!on!that!topic!(if!any)!must!be!complied!with.!

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+!See!chapter!19!for!defined!terms.!

Appendix!5B!!Page!5!

30/9/2001! !