DREADNOUGHT RESOURCES LTD — Interim / Quarterly Report 2011

Mar 15, 2011

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ERO Mining Limited ABN 40 119 031 864

Financial report for the half-year ended 31 December 2010

ABN 40 119 031 864 ERO Mining Limited Financial report - 31 December 2010

Contents

	Page
Directors' report	1
Auditor's Independence Declaration	3
Financial statements
Statement of comprehensive income	4
Statement of financial position	5
Statement of changes in equity	6
Statement of cash flows	7
Notes to the financial statements	8
Directors' declaration	13

These financial statements cover the consolidated financial statements for the consolidated entity consisting of ERO Mining Limited and its subsidiaries. The financial statements are presented in the Australian currency.

ERO Mining Limited is a company limited by shares, incorporated and domiciled in Australia. The registered office and principal place of business is:

ERO Mining Limited 62 Beulah Road Norwood SA 5067

Registered postal address is:

ERO Mining Limited PO Box 3126 Norwood SA 5067

The financial statements were authorised for issue by the directors on 16 March 2011. The directors have the power to amend and reissue the financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.eromining.com.

ERO Mining Limited Directors' report 31 December 2010

Directors' report

Your directors present their report on the consolidated entity consisting of ERO Mining Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2010.

Directors

The following persons were directors of ERO Mining Limited at any time during the financial year and up to the date of this report:

Robert Michael Kennedy (Chairman) Shane Gale (Managing Director, appointed 24 January 2011) Neville Foster Alley (Executive Director, appointed 24 January 2011) Hector Mackenzie Gordon (Non-Executive Director, appointed 24 January 2011)

Ian Roy Witton (Alternate for R M Kennedy since 26 August 2010, Alternate for K J Lines from 10 September 2010 to 24 January 2011) Ewan John Vickery (Non-Executive Director, ceased 24 January 2011) Kevin James Lines (Managing Director, ceased 24 January 2011) Adam Simon Bannister (Alternate for E J Vickery, ceased 24 January 2011)

The directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Review of operations

The loss for the consolidated entity for the half-year ended 31 December 2010 is ($9,062,991) (2009: $586,867).

During the half-year, the company proposed to acquire unlisted lithium and uranium explorer South East Energy Limited (South East). Just weeks after the end of this report the company successfully acquired South East making the transition from a more diversified explorer and gold mining company to one primarily intent on exploration for lithium, uranium and gold. As a result of the transaction ERO acquired exploration licences at Lake Frome (EL4601 and EL4602), at the southern end of Lake Torrens (EL4580), and nine Exploration Licences totalling 4,400 km2 of freehold land straddling the Padthaway Ridge and the on-lapping Murray Basin sediments.

In respect of the tenements named Abminga (EL3601, EL3602, EL3964, EL3982, EL4019 & EL4020), Marree (EL3579), Mount Grainger/Nackara (EL3692, EL3741, EL3832, EL4294, EL4593 & EL4638) and Kingoonya (EL3573, EL3576, EL3590, EL 3591 & EL3613) the ERO Mining Limited Board (ERO) has decided it is reasonable to recognise impairment to the tenement package and continue to focus mineral exploration activities on other tenements that provide the best prospects. The Georgetown Gold Operation is available for sale and an impairment has been recognised on the measurement of alluvial and hard rock gold assets to a fair value less costs to sell. The result in total is an impairment write off of $8,341,318.

The Company’s key Wertaloona Project is located northeast of Port Augusta in the Lake Frome district where two previous Comalco holes (CF1 and CF2) intersected lithium ranging up to 250 parts per million (ppm).The Company held eight exploration licences in the Tanami Desert region, within Aboriginal Freehold Land and Pastoral land. Following collaborative and final consultation the Traditional Owners agreed to a Deed for Exploration consenting to grant an exploration licence over the prospective Suplejack tenement (ELA26625).

At the Georgetown Gold Mining Operation, the company completed a Heritage Survey with the Traditional Landowners and accessed the unmined alluvial terraces to the south and eastern portions of ML30091. The gold recovery plant worked the western limits of ML30091 with all mining activities occurring entirely within this tenement. Due to the onset of the wet season the gold recovery plant and site operations shut down effective 1 December 2010. All plant and equipment has been relocated to high ground, away from flood prone areas or taken off site for scheduled maintenance. The December half year gold sales totalled $196,538 from the production of 150 ounces of gold. The Company is reviewing options for the Georgetown operations and is in discussions with a number of interested parties.

The company raised $450,000 via the issue of 11,250,000 ordinary shares at 4 cents per share, together with one free attaching option exercisable at 5 cents each on or before 31 October 2011 for each share issued (the “Placement”). The Placement was made to sophisticated and professional investors under the Company’s 15% placement capacity and as a result did not require shareholder approval.

Page 1

ERO Mining Limited Directors' report 31 December 2010 (continued)

Matters subsequent to the end of the financial half-year

Subsequent to reporting date, ERO Mining Limited shareholders gave approval for the acquisition of 100% of the capital of South East Energy Limited. The consideration for the acquisition of South East Energy Limited shares amd cancellation of options was a follows:

• 4.5 ERO Mining Limited shares issued for each existing South East Energy Limited share

• 4.5 ERO Mining Limited options exercisable before 31 October 2011 at $0.05 for every existing South East Energy Limited option.

A total of 152,325,015 shares and 191,250,000 options were issued.

Auditor's Independence Declaration

The lead auditor's independence declaration for the year ended 31 December 2010 has been received and can be found on page 3.

Dated at Adelaide this 16th day of March 2011 and signed in accordance with a resolution of the Directors.

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Robert M Kennedy Director

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001

T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF ERO MINING LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Ero Mining Limited for the half-year ended 31 December 2010, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

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P S Paterson Partner

Adelaide, 16 March 2011

Grant Thornton South Australian Partnership ABN 27 244 906 724 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

Page 3

ERO Mining Limited Consolidated statement of comprehensive income For the half-year ended 31 December 2010

Revenue from continuing operations Cost of goods sold Marketing expense Administrative expense Finance costs Impairment of exploration assets Impairment of development assets (Loss) before income tax Income tax (expense)/ income (Loss) from continuing operations (Loss) for the half-year Other comprehensive income Total comprehensive income for the half-year Total comprehensive income for the half-year is attributable to: Owners of ERO Mining Limited Earnings per share for (loss) attributable to the ordinary equity holders of the parent entity: Basic earnings per share Diluted earnings per share

Half-year 31 December 31 December 2010 2009 $ $ 204,773 18,950 (716,875) - (42,334) (3,695) (158,532) (494,599) (605) (524) (7,863,137) (93,667) (478,181) - (9,054,891) (573,535) (8,100) (13,332) (9,062,991) (586,867) (9,062,991) (586,867) - - (9,062,991) (586,867) (9,062,991) (586,867) (9,062,991) (586,867) Cents Cents (5.61) (0.41) (5.61) (0.41)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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ERO Mining Limited Consolidated statement of financial position As at 31 December 2010

Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Available-for-sale assets Total current assets Non-current assets Investments accounted for using the equity method Property, plant and equipment Exploration and evaluation Mine properties Other non-current assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 4 Reserves 5(a) Retained earnings/ (losses) 5(b) Total equity	31 December 2010 $ 290,188 188,263 1,567 1,600,000 2,080,018 1 757,652 2,729,222 - 17,750 3,504,625 5,584,643 205,140 28,050 233,190 19,434 19,434 252,624 5,332,019 26,019,299 882,007 (21,569,287) 5,332,019	30 June 2010 $ 361,294 410,527 41,086 - 812,907 1 822,496 10,307,911 2,326,431 17,750 13,474,589 14,287,496 267,348 28,165 295,513 28,073 28,073 323,586 13,963,910 25,588,199 882,007 (12,506,296) 13,963,910

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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ERO Mining Limited Statement of changes in equity For the half-year ended 31 December 2010

Consolidated Notes Balance at 1 July 2009 Total comprehensive income for the half-year as reported in the 2009 financial statements Profit/ (loss) for the period Transactions with owners in their capacity as owners: Contributions of equity Transaction costs, net of tax Balance at 31 December 2009 Consolidated Notes Balance at 1 July 2010 Total comprehensive income for the half-year Profit/ (loss) for the period 5(b) Transactions with owners in their capacity as owners: Contributions of equity 4 Transaction costs, net of tax 4 Balance at 31 December 2010	Contributed equity $ 23,551,107 - 2,068,201 (31,110) 2,037,091 25,588,198 Contributed equity $ 25,588,199 - 450,000 (18,900) 431,100 26,019,299	Reserves $ 882,007 - - - - 882,007 Reserves $ 882,007 - - - - 882,007	Retained earnings $ (9,069,294) (586,867) - - - (9,656,161) Retained earnings $ (12,506,296) (9,062,991) - - - (21,569,287)	Total equity $ 15,363,820 (586,867) 2,068,201 (31,110) 2,037,091 16,814,044 Total equity $ 13,963,910 (9,062,991) 450,000 (18,900) 431,100 5,332,019

The above statement of changes in equity should be read in conjunction with the accompanying notes.

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ERO Mining Limited Statements of Cash Flows For the half-year ended 31 December 2010

Cash flows from operating activities Receipts from operating activities Interest received Tax receipts received Payments to suppliers and employees Net cash (outflow) inflow from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payment for development assets Payment for exploration activities Repayment of loans to related parties Net cash (outflow) inflow from investing activities Cash flows from financing activities Proceeds from issues of shares Capital raising costs Net cash (outflow) inflow from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the half-year Cash and cash equivalents at end of the half-year

Half-year 31 December 31 December 2010 2009 $ $ 196,538 - 8,235 18,957 263,136 328,319 (690,359) (461,665) (222,450) (114,389) - (221,407) - (313,369) (346,656) (1,060,676) 75,000 - (271,656) (1,595,452) 450,000 2,068,201 (27,000) (31,110) 423,000 2,037,091 (71,106) 327,250 361,294 758,184 290,188 1,085,434

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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ERO Mining Limited Notes to the financial statements 31 December 2010

1 Summary of significant accounting policies

Basis of preparation of half-year financial report

Reporting Entity

ERO Mining Limited (the "Company") is a company domiciled in Australia. The consolidated financial report of the Company as at and for the half year ended 31 December 2010 comprises the Company and it's subsidiaries (together referred to as the "consolidated entity").

The consolidated annual financial report of the consolidated entity as at and for the year ended 30 June 2010 is available upon request from the Company’s registered office at 62 Beulah Road, Norwood SA or at www.eromining.com.au.

Statement of Compliance

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

Compliance with the Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2010 and any public announcements made by ERO Mining Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies applied by the entities in the consolidated group in this half-year report are consistent with those applied by the consolidated entity in its consolidated financial report for the year ended 30 June 2010.

Reporting Basis and Conventions

The half year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

2 Segment information

(a) Description of segments

Identification of reportable segments

ERO Mining Limited has identified it's operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. ERO Mining Limited is managed primarily on the basis of geographical area of interest, since the diversification of ERO Mining Limited operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• external regulatory requirements

• geographical and geological styles

Mining

The Georgetown Development segment is an alluvial gold site. Further listed segmented assets for ERO Mining Limited including development costs and costs associated with the mining lease are reported on in this segment.

Accounting policies developed

Unless stated otherwise, all amounts reported to the Board of Directors, as chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of ERO Mining Limited.

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ERO Mining Limited Notes to the financial statements 31 December 2010 (continued)

2 Segment information (continued)

(b) Business segments Period ending 31 December 2010 Segment revenue Adjusted EBITDA Cost of goods sold Amortisation Impairment Segment assets for the period ending 31 December 2010 Segment asset movements for the period Capital expenditure Impairment Amortisation Total movement for the period Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities		Georgetown Gold Abminga Gold Billa Kalina Uranium Other Total $ $ $ $ $ 196,538 - - - 196,538 (2,590,105) (5,072,632) - (1,166,871) (8,829,608) (468,625) - - - (468,625) (248,250) - - - (248,250) (2,069,768) (5,072,632) - (1,166,871) (8,309,271) 1,600,000 - 2,654,170 75,052 4,329,222
		227,846 4,352 1,173 19,028 252,399 (2,069,768) (5,072,632) - (1,166,871) (8,309,271) (248,250) - - - (248,250) (2,090,172) (5,068,280) 1,173 (1,147,843) (8,305,122) - - - - 4,329,222 1,255,421 5,584,643 53,168 9,042 - - 62,210 190,414 252,624
		- - - - 53,168 9,042 - -

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ERO Mining Limited Notes to the financial statements 31 December 2010

(continued)

2 Segment information (continued) Period ending 31 December 2009 Georgetown Gold Abminga Gold Billa Kalina Uranium Other Total $ $ $ $ $ Segment revenue - - - - Adjusted EBITDA - - - - - Cost of goods sold - - - - - Impairment - - - - - Segment assets for period ending 30 June 2010 3,731,258 5,376,518 2,344,759 1,222,893 12,675,428 Segment asset movements for the period Capital expenditure 1,510,892 45,550 12,326 294,509 1,863,277 Amortisation (124,125) - - - (124,125) Impairment - - - (2,569,994) (2,569,994) Total movement for the period 1,386,767 45,550 12,326 (2,275,485) (830,842) Total segment assets - - - - 12,675,428 Unallocated assets 1,612,068 Total assets 14,287,496 Total segment liabilities - - - - - Unallocated liabilities 323,586 Total liabilities 323,586 Half-year 31 December 31 December 2010 2009 $ $ Adjusted EBITDA Allocated adjusted EBITDA (8,829,608) - Unallocated: Interest revenue 8,235 18,950 Marketing expenses (42,334) (3,695) Administrative expenses (158,532) (494,599) Finance costs (605) (524) Exploration general written off (32,047) (93,667) Profit before income tax from continuing operations (9,054,891) (573,535)	2 Segment information (continued) Period ending 31 December 2009 Georgetown Gold Abminga Gold Billa Kalina Uranium Other Total $ $ $ $ $ Segment revenue - - - - Adjusted EBITDA - - - - - Cost of goods sold - - - - - Impairment - - - - - Segment assets for period ending 30 June 2010 3,731,258 5,376,518 2,344,759 1,222,893 12,675,428 Segment asset movements for the period Capital expenditure 1,510,892 45,550 12,326 294,509 1,863,277 Amortisation (124,125) - - - (124,125) Impairment - - - (2,569,994) (2,569,994) Total movement for the period 1,386,767 45,550 12,326 (2,275,485) (830,842) Total segment assets - - - - 12,675,428 Unallocated assets 1,612,068 Total assets 14,287,496 Total segment liabilities - - - - - Unallocated liabilities 323,586 Total liabilities 323,586 Half-year 31 December 31 December 2010 2009 $ $ Adjusted EBITDA Allocated adjusted EBITDA (8,829,608) - Unallocated: Interest revenue 8,235 18,950 Marketing expenses (42,334) (3,695) Administrative expenses (158,532) (494,599) Finance costs (605) (524) Exploration general written off (32,047) (93,667) Profit before income tax from continuing operations (9,054,891) (573,535)	2 Segment information (continued) Period ending 31 December 2009 Georgetown Gold Abminga Gold Billa Kalina Uranium Other Total $ $ $ $ $ Segment revenue - - - - Adjusted EBITDA - - - - - Cost of goods sold - - - - - Impairment - - - - - Segment assets for period ending 30 June 2010 3,731,258 5,376,518 2,344,759 1,222,893 12,675,428 Segment asset movements for the period Capital expenditure 1,510,892 45,550 12,326 294,509 1,863,277 Amortisation (124,125) - - - (124,125) Impairment - - - (2,569,994) (2,569,994) Total movement for the period 1,386,767 45,550 12,326 (2,275,485) (830,842) Total segment assets - - - - 12,675,428 Unallocated assets 1,612,068 Total assets 14,287,496 Total segment liabilities - - - - - Unallocated liabilities 323,586 Total liabilities 323,586 Half-year 31 December 31 December 2010 2009 $ $ Adjusted EBITDA Allocated adjusted EBITDA (8,829,608) - Unallocated: Interest revenue 8,235 18,950 Marketing expenses (42,334) (3,695) Administrative expenses (158,532) (494,599) Finance costs (605) (524) Exploration general written off (32,047) (93,667) Profit before income tax from continuing operations (9,054,891) (573,535)	Total $ - - - - 12,675,428 1,863,277 (124,125) (2,569,994) (830,842)
	1,510,892 45,550 12,326 294,509 (124,125) - - - - - - (2,569,994) 1,386,767 45,550 12,326 (2,275,485)
		- 12,675,428 1,612,068 14,287,496 - - 323,586 323,586 Half-year 31 December 31 December 2010 2009 $ $ (8,829,608) - 8,235 18,950 (42,334) (3,695) (158,532) (494,599) (605) (524) (32,047) (93,667) (9,054,891) (573,535)	12,675,428 1,612,068 14,287,496
			- 323,586 323,586

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ERO Mining Limited Notes to the financial statements 31 December 2010 (continued)

3 Contingencies

Contingent liabilities

There have been no changes in contingent liabilities since the last reporting date.

4 Contributed equity

4 Contributed equity
31 December 2010 Shares (a) Share capital Ordinary shares Fully paid 171,425,576 (b) Movements in ordinary share capital: Date Details 1 July 2009 Opening balance Shares issued during the year Less: Transaction costs arising on share issue 31 December 2009 Balance 1 July 2010 Opening balance 24 September 2009 Share placement Proceeds received Less: Transaction costs arising on share issue 31 December 2010 Balance 5 Reserves and retained earnings (a) Reserves Share-based payments	30 June 31 December 2010 2010 Shares $ 160,175,576 26,019,299 Number of shares Issue price 125,705,680 34,469,896 $0.06 160,175,576 160,175,576 11,250,000 $0.04 171,425,576 31 December 2010 $ 882,007 882,007			30 June 2010 $ 25,588,199 $ 24,222,176 2,068,200 (702,178) 25,588,199 25,588,199 450,000 26,038,199 (18,900) 26,019,299 30 June 2010 $ 882,007 882,007

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ERO Mining Limited Notes to the financial statements 31 December 2010

(continued)

5 Reserves and retained earnings (continued)

(b) Retained earnings

Movements in retained earnings were as follows:

Balance at beginning of period Net profit/ (loss) for the period Balance at end of period	31 December 2010 $ (12,506,296) (9,062,991) (21,569,287)	30 June 2010 $ (9,069,294) (3,437,002) (12,506,296)

6 Events occurring after the reporting period

Subsequent to reporting date, ERO Mining shareholders gave approval for the acquisition of 100% of the capital of unlisted South Austraian based lithium and uranium mineral explorer South East Energy Limited. The fair value of assets acquired and liabilities assumed have not yet been determined.

4.5 ERO Mining Limited shares were issued for each existing South East Energy Limited share. A total of 152,325,015 shares were issued.

4.5 ERO Mining Limited options exercisable before 31 October 2011 at $0.05 for every existing South East Energy Limited option. A total of 191,250,000 options were issued.

Apart from the above, no further events have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

7 Going concern

The financial report has been prepared on the basis of going concern.

The cash flow projections of the consolidated entity evidence that the consolidated entity will require positive cash flows from gold mining operations and/or additional capital for continued operations.

The consolidated entity's ability to continue as a going concern is contingent on obtaining additional capital or generating sufficient cash flows from gold mining operations. If additional capital is not obtained, the going concern basis may not be appropriate, with the result that the consolidated entity may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business and in amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.

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ERO Mining Limited Directors' declaration 31 December 2010

In the directors' opinion:

• (a) the financial statements and notes set out on pages 4 to 12 are in accordance with the Corporations Act 2001, inc

• (i) complying with Accounting Standard AASB 134: Interim Financial Reportings, and

• (ii) giving a true and fair view of the company's and consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date, and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable,and

This declaration is made in accordance with a resolution of the directors.

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Robert M Kennedy

Director

Adelaide 16 March 2011

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001

T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF ERO MINING LIMITED

We have reviewed the accompanying half-year financial report of Ero Mining Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Ero Mining Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton South Australian Partnership ABN 27 244 906 724 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Ero Mining Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• b complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

Without qualifying our conclusion, we draw attention to Note 7 - going concern basis of accounting to the Half Year Financial Report. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern, and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the ordinary course of business, and at the amounts stated in the financial report.

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GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

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P S Paterson Partner

Adelaide, 16 March 2011

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