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Annual Report 2011

Chairman’s Statement	1
Review of Operations	2
Schedule of Tenements	10
Directors’ Report	11
Auditor's Independence Declaration	20
Corporate Governance	21
Statement of Comprehensive Income	26
Statement of Financial Position	27
Statements of Cash Flows	28
Statement of Changes in Equity	29
Notes to the Consolidated Financial Statements	30
Directors' Declaration	54
Independent Auditor’s Report	55
Shareholder Information	57

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CHAIRMAN’S STATEMENT

Eastern Iron has made steady progress over the past year in its efforts to assemble a portfolio of logistically well placed, east coast Australian iron ore properties and to evaluate diversification opportunities in gold, gold/copper and other commodities in Australia and elsewhere.

On the iron ore front, Eastern Iron is now actively seeking partners to assist it evaluate and develop a significant iron ore mining operation in Queensland, near the port of Gladstone. In Victoria, we have the option to acquire the small, high grade Nowa Nowa iron ore project that is capable of early evaluation and development at very modest capital cost with solid cashflow generation potential. The NSW Iron Ore Project continues to be advanced by our joint venture partner, which is seeking to prove additional tonnage and to optimise the processing methodology. During the past year, your Company has also evaluated coal, gold and copper/gold opportunities in Australia, various Asia Pacific countries and western Africa. These project assessment activities will continue into 2012.

In NSW, the joint venture with 3E Steel over the NSW iron pisolite project became unconditional with 3E funding a program of further resource drilling and beneficiation studies. Much of the beneficiation research is being conducted at the Jiangxi University of Science and Technology in China and initial results are encouraging with an iron product of up to 58.7% Fe being produced. Further work is awaiting the completion of the current drilling program.

In April of this year the Company announced the resignation of Peter Buckley as a Director. Peter played a significant role in the creation of Eastern Iron. We thank him for his passion and commitment and wish him well in his future endeavours. The vacancy on the Board has been filled by Ivo Polovineo who was appointed as a Non Executive Director of the Company effective 5 April 2011. Ivo has over 30 years experience in corporate accounting, finance and company secretarial work for a diverse range of companies. Ivo’s extensive experience in the areas of finance, corporate compliance and governance has complemented the composition of the Board.

The Central Queensland Iron Project includes Hawkwood, in which Eastern Iron may earn up to an 80% interest, and the recently acquired 100%-owned Eulogie.

Eulogie has been the focus of activity during most of 2011 since it is ideally placed for a low cost development being only 80km west of major export facilities at the port of Gladstone and close to existing bulk transport rail. We believe that these transport facilities together with the well developed power, water and road infrastructure in the region provides our projects with a definite advantage over other more remote iron ore projects proposed for development elsewhere in Australia.

During the past year Eastern Iron conducted further drilling at both the Eulogie and Hawkwood projects. The results from the drilling have provided data for a soon to be announced maiden resource, prepared under the principles of the JORC code, for the Eulogie project. The Company has also carried out metallurgical testwork on both projects which has shown that a saleable iron product can be produced using standard beneficiation processes. This work has produced basic iron product specifications which will be used in discussions with potential development and offtake partners as well as market and product pricing analysis.

I would like to acknowledge our Managing Director, Greg De Ross and the team at Eastern Iron, whose continued hard work and commitment in developing and promoting your Company during this year have been commendable. With $3.5million in cash reserves at the time of writing, a growing portfolio of worthwhile projects and the ongoing evaluation of new opportunities, the next year should be an exciting one for Eastern Iron.

The Board would like to thank shareholders for their ongoing support.

Yours Sincerely

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Glenn Goodacre Chairman

Our recent acquisition of an option to purchase a 100% interest in the Victorian Nowa Nowa Iron Ore Project brings to our portfolio a small, potentially low capex project that could develop into a solid cashflow generator for the Company if developed. We will be actively evaluating this property over the next year.

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Eastern Iron Limited Annual Report 2011 1

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REVIEW OF OPERATIONS

Highlights

Eulogie

Completed acquisition of the Eulogie project adding to resource and development potential of an iron ore project in Central Queensland
Carried out preliminary metallurgical testwork on drill core samples from Eulogie

Nowa Nowa

Agreed terms for an option to acquire 100% of the high grade Nowa Nowa iron project in eastern Victoria.

NSW 3E Steel Pisolite iron Joint Venture

Completed transport options study
Exploration target tonnage of 500 million - 1 billion tonnes1
Completed 34 hole 3,369m resource drilling program leading to maiden resource estimate
Completed joint venture agreement with 3E steel whereby 3E have committed $1.9 million to further resource drilling and beneficiation studies.
Concept development study underway.

Hawkwood

First pass 1,848m RC drilling program confirmed magnetite layers as the source of the magnetic anomaly

1 Potential exploration target tonnages and grades in this report are conceptual in nature as there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. Tonnages and grades are not to be quoted outside this context.

Preliminary Davis Tube analysis produced high quality iron concentrates
Follow up 637m diamond drilling confirmed structure of magnetite layers and provided samples for further metallurgical testwork
Exploration target tonnage of 500 million – 1 billion tonnes1.

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2 Eastern Iron Limited Annual Report 2011

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INTRODUCTION

Early in 2010 the Company announced that it had signed an agreement with Rugby Mining to farm-in to the Hawkwood magnetite project in Central Queensland. Hawkwood has the potential to deliver a large tonnage iron ore mine in an area well serviced by infrastructure vital to the establishment of a bulk tonnage project. Early in 2011 the Company saw the opportunity to add to the development potential of the project by acquiring the Eulogie project. Eulogie is in many respects similar to Hawkwood particularly in terms of the nature of the product and size of the potential resource. Eulogie is closer to operating rail networks and the port of Gladstone and represents an opportunity to fast track development at a lower capital cost. As a result much of the focus since January 2011 has been on an evaluation of the Eulogie project.

In October 2011 Eastern Iron announced that it had entered into an option to purchase agreement with Waygara Mines Pty Ltd for the 100% purchase of the Nowa Nowa iron project in eastern Victoria. This project is a small tonnage high grade iron deposit close to transport infrastructure with the potential for a low cost development that could see the Company achieve producer status.

Eastern Iron has also continued its search for other mineral project acquisitions in the area of gold, iron and other bulk commodities.

Late in 2010 Eastern Iron completed a joint venture arrangement with 3E Steel Pty Ltd whereby 3E took over management of the NSW iron pisolite project allowing Eastern Iron to focus on evaluation of the Queensland magnetite projects.

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Eastern Iron Limited Annual Report 2011 3

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EULOGIE PROJECT (EFE 100%)

The Eulogie project is located 23 kilometres south of Mount Morgan in Central Queensland and 80 kilometres west of Gladstone. The project is ideally placed for development close to bulk tonnage transport infrastructure including sealed roads and both the main Moura and Blackwater railway lines, which are part of the Central Queensland coal network and provide direct access to the expanding, deepwater export port of Gladstone.

At Eulogie, iron-bearing magnetite with accessory titanium and vanadium is concentrated within shallow dipping (30-40 degrees) gabbroic layers (ferrigabbro) up to 100 metres thick within a layered igneous complex. The geology and nature of the ferrigabbro layers is almost identical to that at Hawkwood.

Development Study and Resource Drilling Program

Eastern Iron have sought to build on the pre existing Thiess data in compiling sufficient information to complete a concept study for a potential development of the Eulogie deposit. The outcomes of this study will assist the Company in determining how best to progress the project.

Components of this study being carried out by Eastern Iron include:

Resource drilling program

In 1989 Thiess Contractors Pty Ltd examined the project as a possible source of iron ore for a proposed steel plant located in Gladstone. A pre-feasibility study was completed and included 30 reverse circulation and cored drill holes. Based on the limited drilling Thiess estimated a resource, which was not reported under the guidelines of the JORC code. Thiess also identified potential upside to this estimate beyond the areas tested by drilling.

As part of their study Thiess completed some preliminary magnetic separation test work which at a relatively coarse final grind size of 100 microns produced high grade iron ore concentrates containing 55-61% Fe, 4-8% TiO2 and significantly, an average 1.0% V2O5, a valuable additive to high quality steels.

This recently completed program consisted of 3,369m in 34 drillholes. The program is designed to delineate a portion of the resource to indicated status and a further portion to inferred.

With assay results still awaited it is expected that the resource information will be available by the end of October 2011. The total exploration target resource has previously been estimated at approximately 500 – 1,000 million tonnes[1] of magnetite-bearing ferrigabbro to between 100 and 200m below surface. Whilst only a portion of the exploration target resource will be tested in this drilling program this will be sufficient to support further feasibility studies for a possible mining development.

Metallurgical study

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Location of Central Queensland Project - Eulogie and Hawkwood

Early in 2011 Eastern Iron engaged METS Pty Ltd to undertake a sighter metallurgical program to investigate the amenability of the Eulogie ferrigrabbro to producing a saleable iron ore product. This work was conducted on drill core samples from diamond core drilling carried out by Thiess in the 1980’s and stored in the Queensland Government facility at Mount Morgan.

The testwork included:

Head assay and assay by size distribution – concluding that the majority of the gangue material occurs as silicates indicating that the ore should be suitable for magnetic separation and upgrading. Additionally the distribution of the components is consistent across the size range suggesting that no size fraction could be eliminated to provide a gain in recovery and grade.

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4 Eastern Iron Limited Annual Report 2011

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DTR Testwork – Davis Tube Recovery (DTR) testwork was carried out on a fresh ore sample at various grind sizes. The highest recovery (66.9%) was achieved at a grind size of 150 micron, resulting in the lowest grade of 59.3%. As the grind size decreases, a higher grade is achieved, though a lower recovery is experienced as expected. The DTR results show that magnetic separation is successful for recovery of an iron concentrate from these ores.

Grind Size 150 micron 75 micron 45 Micron
____________
Wt % 17.6 16.8 15.1
____________
Fe % 59.34 61.15 61.94 ____________
SiO2 % 2.72 1.42 1.52
____________
Al2O3 % 3.61 3.02 2.87
____________
TiO2 % 7.03 6.55 6.34 ____________
P % 0.002 0.002 0.002
____________
V % 0.541 0.561 0.57
____________
S % 0.65 0.57 0.66 ____________

Table: Eulogie Davis Tube Recovery results

This work is ongoing and will focus on completing the LIMS testwork which is aimed at producing a concentrate which will closely replicate that produced in any commercial scale operation. Product from this work will be used to provide marketing samples. DTR work will also be carried out at coarser grind sizes of 250 and 500 micron to determine whether the resultant product could be produced at lower cost but still meet market specifications and alternatively whether a magnetic separation could be used at these coarser grinds to reduce the cost of the final grind.

Product Transport Study

Innovative Shipping Pty Ltd completed a preliminary study into options for transporting iron product from the Eulogie project site to Gladstone Port.

The study concluded that a range of options exist for product transport, including via either the Blackwater or Moura rail systems or a combination of rail and/or trucking options via existing road and rail infrastructure.

There are several options for bulk loading at Gladstone Port, some of which are tonnage and timing constrained, with the choice of a viable option dependent on the timing for development.

Magnetic separation using low intensity separation (LIMS) and wet high intensity separation (WHIMS) was trialled but with limited outcomes. It is evident however from the WHIMS testwork combined with QEMSCAN results that it is unlikely that a separate ilmenite concentrate can be produced at the grind sizes examined.

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Aeromagnetic image at Eulogie showing locations of drilling

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Eastern Iron Limited Annual Report 2011 5

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HAWKWOOD IRON ORE JOINT VENTURE (EFE earning 100%)

The Hawkwood iron-vanadium project is located in southeast Queensland approximately 240 kilometres by rail from the port of Gladstone, Australia’s third largest coal export port. In 2010 Eastern Iron completed a low level airborne magnetic survey with a follow up preliminary drilling campaign consisting of 19 reverse circulation drill holes for 1,848m. Within the area tested by drilling Eastern Iron identified an exploration target tonnage of 500 million – 1 billion tonnes[1] .

The average concentrate analysis is shown in the table below. Of note are the low SiO2, Al2O3, P and TiO2 and high Fe concentrations.

Fe% V2O5% TiO2 SiO2 Al2O3% P% S%
_________ 66.6 0.67 2.2 1.8 1.7 <.001 0.14
_________

Table: Hawkwood average concentrate analysis results

Early in 2011 the Company carried out a three-hole, 637m diamond drilling program. The drill holes provided information on the dip and thickness of the magnetite bearing zones as well as more reliable sample for grade information.

These results are very encouraging as they indicate that Hawkwood can produce a high quality iron concentrate with low contaminants.

Further resource drilling is planned for Hawkwood and is scheduled to commence in late October.

Half core was sent for analysis including Davis Tube (DTR) determinations, the results are summarised below.

North Burnett Rail Transport Options Study

Hole No From (m) To (m) Interval (m) Fe% (Head) DTR% DTC%
_______________ HWD001 174 221 47 15.6 15.2 66.6% Fe
_______________
HWD002 126 190 64 15 15 64.3% Fe _______________
HWD003 88 128 40 13.5 14 67.0% Fe _______________

Eastern Iron has contributed to a 15 64.3% Fe cooperative study into rail transport 14 67.0% Fe options for mineral transport in the North Burnett region of Queensland. The study has been jointly funded by Eastern Iron, the Queensland Government and other potential users, Macarthur Coal and Australian Bauxite Limited.

Table: Hawkwood Davis Tube Recovery results

The ferrigabbro units dip approximately 50 degrees north and the units represented in the table above outcrop at surface. The DTR results are a measure of the percentage of the ore recovered to concentrate, the DTC results are the iron content of the concentrate.

The study examined the potential options for upgrading the rail link to Gladstone port via the currently unused Maryborough rail line. A variety of options were examined for total hauled tonnage, line capacity and rail locomotives and wagons which flowed through

to capital cost estimates for the upgrade and operating cost estimates for the individual users. In the case of producing around 5Mtpa product from Eastern Iron’s Hawkwood project it was estimated that the cost would be around $20-25/t delivered to Gladstone, including all rail user and operating costs and including a return on capital for the rail upgrade, wagons and locomotives and a spur line and loading facility at Hawkwood. This is a very preliminary estimate and further work will be required to define a more accurate cost.

Location of drilling Hawkwood

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6 Eastern Iron Limited Annual Report 2011

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NSW IRON ORE PROJECT (EFE 100%, 3E Steel Pty Ltd earning 77.5%)

On the 3rd of November 2010 Eastern Iron shareholders approved all of the arrangements pursuant to which Eastern Iron farmed out 13 of the 17 NSW Iron tenements to 3E Steel Pty Ltd. 3E is able to earn up to a 77.5% interest in the tenements.

The JV agreement required 3E Steel Pty Ltd to lodge an amount of $600,000 in a cosigned account which represents the funding for the first year’s minimum expenditure commitment. This has been completed, the agreement is now unconditional and 3E have commenced work on the approved program and budget.

Eastern Iron and 3E have approved a $1.9 million program and budget for the project. The budget is being sole funded by 3E as part of their requirement to earn a 77.5% interest in the project.

The program which extends over the next 12 -18 months includes:

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Location of NSW Iron Pisolite Projects

6,000m of aircore drilling to upgrade and extend the current resource.
Bulk sampling to obtain samples for metallurgical beneficiation testwork and information for a mining study.
Beneficiation testwork – undertaken in both Australia and China, aimed at upgrading the iron pisolites to a saleable product.
Investigations into the potential for downstream development including pig iron production.
Infrastructure and transport logistics study.
Environmental studies preliminary to a mining environmental impact study.

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Exploratory beneficiation tests for maghemite pisolites from the NSW project were carried out from January to December 2010 in the Mineral Process Laboratory, Jiangxi University of Science and Technology in China, with programs of “single magnetic separation”, “magnetic separation – reverse flotation”, “Magnetic roasting low intensity magnetic separation concentrate regrinding and further magnetic separation” and “magnetic roasting – low intensity magnetic separation cationic reverse flotation”. Test results showed that “magnetic roasting – low intensity magnetic separation reverse flotation” program was able to upgrade the iron concentrates to 58.70% Fe at 72.10% iron recovery, which is the best result among the four test programs. Further work building on these encouraging first results is planned.

An additional four tenements are held in a contributing joint venture between Eastern Iron (49%) and PlatSearch NL (51%). These are also prospective for iron pisolites and are subject to an arrangement whereby 3E have a right to explore the tenements for iron pisolites and have first call over any product from the areas.

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Eastern Iron Limited Annual Report 2011 7

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NOWA NOWA PROJECT

Eastern Iron has recently entered into an agreement with Waygara Mines Pty Ltd which provides Eastern with an option to purchase a 100% interest in the Nowa Nowa Iron Project which is located in Eastern Victoria. Under the agreement Eastern has paid a $20,000 option payment for a two year option over the project. The option can be extended by a further 12 months and can be exercised at any time by Eastern paying Waygara $300,000 or $100,000 cash plus 1 million Eastern Iron shares, at Eastern’s option.

The Nowa Nowa iron deposit is a high grade magnetite skarn which has been the subject of some government drilling in the 1950’s. Since then little work has been carried out although two additional drill holes were completed by a previous explorer.

Location of Nowa Nowa Project

Over the next few months Eastern Iron will compile all existing data in an attempt to bring previous resource estimates to a standard which will enable them to be reported under the JORC code. Investigations will also focus on obtaining drill core samples for preliminary metallurgical and product testing.

Massive magnetite has been intersected over widths up to 80m at shallow depth. Drilling carried out by the Victorian Government in the 1950’s is reported in GSV Bulletin 57 and includes detailed logs and assay information from 27 core holes drilled at the Five Mile Deposit. These outlined the approximate area of the mineralisation and the section below is taken from that report. Drill hole DH14 was reported as follows:

The Nowa Nowa project is located 50 kilometres by sealed road from the East Gippsland town of Bairnsdale which is connected via 250 kilometres rail link to port facilities at Melbourne and Hastings on Western Port Bay.

DH14 39.6m – 121.92m (82.28m) averaging 56.9% Fe, 13.1% SiO2, 1.3% A1 0 2 3

The Nowa Nowa project represents an opportunity to develop a low capital cost small high grade iron operation and is a significant opportunity for the Company to progress to producer status.

Drill Section – Five Mile Iron Deposit Nowa Nowa (from GSV Bull 57, G Bell 1959)

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8 Eastern Iron Limited Annual Report 2011

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PROGRAM FOR 2011 – 2012

Eulogie

Other

The Company will continue to assess the outcomes of the related studies leading to the completion of the concept development study in late 2011. Based on the outcomes of this study and a decision to proceed further, the Company will consider progressing to more detailed studies including a feasibility study. At this stage the potential to introduce a funding and potential offtake partner to the project will also be assessed.

In Queensland the time frame for project permitting and approval is approximately two years or more depending on the complexity of the proposal. In order to reduce the potential timeframe for development the Company will pre commit to some of the longer lead time items for the feasibility/permitting stage. This includes initiation of environmental baseline studies including stream gauging and water quality testing.

Actively seek and evaluate opportunities for investment in Australia and internationally for potentially valuable projects in commodities including iron, gold, copper, coal and other commodities.

The year ahead should see significant value adding of the Company’s asset portfolio through advancing our existing projects and the addition of new projects.

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Greg De Ross Managing Director

Hawkwood

Eastern Iron will complete resource drilling at Hawkwood later in 2011 and the potential for development will be assessed along with Eulogie.

Nowa Nowa

Over the coming months the Company will be seeking to produce a resource estimated under the guidelines of the JORC code for the Nowa Nowa project along with related studies into producing a marketable iron product and identifying options for product transport.

NSW Pisolite Iron Project

Monitor progress of joint venture activities

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Greg De Ross, BSc, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Greg De Ross is Managing Director of Eastern Iron Limited and a full-time employee of Eastern Iron Limited and 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”. Greg De Ross consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Eastern Iron Limited Annual Report 2011 9

As at 21 September 2011

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SCHEDULE OF TENEMENTS

Tenement Tenement Number Interest Joint Venture Details

_____________
COBAR PROJECT AREA
_____________
Cobar East EL 6710 100% 3E can earn up to 77.5%
_____________
Coolabah West EL 6711 49% PlatSearch 51%
_____________
Oakvale EL 6706 49% PlatSearch 51%
_____________
Quartermaine EL 6953 100% 3E can earn up to 77.5%
_____________
Techno EL 6954 49% PlatSearch 51%
_____________
Tottington EL 6956 49% PlatSearch 51%
_____________
Wendoline EL 6957 100% 3E can earn up to 77.5%
_____________
Shaun EL 6958 100% 3E can earn up to 77.5%
_____________
Wallace EL 6959 100% 3E can earn up to 77.5%
_____________
Gromit EL 6960 100% 3E can earn up to 77.5%
_____________
Gorgonzola EL 7282 100% 3E can earn up to 77.5%
_____________
Camembert EL 7283 100% 3E can earn up to 77.5%
_____________
MAIN LINE PROJECT AREA
_____________
Bimbella EL 6671 100% 3E can earn up to 77.5%
_____________
Euabalong EL 6672 100% 3E can earn up to 77.5%
_____________
McGraw EL 6961 100% 3E can earn up to 77.5%
_____________
Flamingo EL 6952 100% 3E can earn up to 77.5%
_____________
Preston EL 6962 100% 3E can earn up to 77.5%
_____________
QuEENSLAND
_____________
Hawkwood EPMs 15289
and 17099 0% Rugby 100%, Note 1
_____________
Auburn EPM 18566 100% -
_____________
Redwood EPM 18533 100% -
_____________
Fairhill EPC 2175 100% -
_____________
Rolleston EPC 2206 100% -
_____________
Comet EPC 2330 100% -
_____________
Eulogie MDL 362 100% - _____________

EL = Exploration Licence EPM = Exploration Permit for Minerals EPC = Exploration Permit for Coal

Note 1: Joint Venture with Rugby Mining P/L and Rugby Mining Limited where by Eastern Iron can earn up to 80% interest

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10 Eastern Iron Limited Annual Report 2011

Direct o o rt rs’ Rep

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Gold projects. Greg ha s extensive commercia l e x perience covering joint venture ne g otiation an d p r oject acquisit i on.

Your Directo r s submit their report for th e year ended 30 June 2011.

Directors

During the past three years Greg has not served as a director of any o ther listed c o mpanies.

The names and details o f the Compa n y’s directors in office during the financial y ear and unti l the date of this report are a s follows. Di r ectors were i n office for this entire period unless other w ise stated.

Wendy Corbett, BSc, Dip Ed (Sydney), MAIG

Non-executive director Director since N ovember 20 0 7

Glenn Goodacre, BA (Macquarie)

Non-executive chairman of the board Director sinc e November 2 007

W endy has 39 years’ experi e nce in mine r al exploratio n a n d administra t ion. Since 1 9 95 Wendy h a s specialise d in the applicati o n of compu t er technolog y to tenemen t management, databases, mapping and GI S a p plications. S he has d e veloped a n d maintain s d a tabase syst e ms to man a ge the Co m pany’s larg e q u antity of t e chnical dat a . She has considerabl e e x perience in exploration, project and joint ventur e management.

Glenn has a background as an inves t or in resour c es and private equities hav i ng commen c ed investing in resources in the late 1960s. He work e d in the min i ng industry in t h e 1980s with Alkane Reso u rces NL, Na u ru Phosphate C orporation a n d Lachlan R e sources NL a nd has been a director of a listed explor e r from 1987 till 2003. His experience enc o mpasses the pre-float sta g es of mineral e xplorers thro u gh to mana g ement roles in established mining and exploration companies in Australia an d the Pacific.

S h e is a mem b er of the Ne w South Wal e s Geologica l A d visory Committee that advises the Minister fo r Mineral Resources on matte r s relating to the Geologica l S u rvey of Ne w South Wal e s and is par t of the NS W B r anch of the A IG committe e .

Glenn has p articipated i n the private equity indu s try since 1990 a nd he brings broad busin e ss strategy a nd commercial e xperience to the Board of Eastern Iron as well as ext e nsive netwo r ks with bro k ers and min i ng companies. H e is currentl y a director of several unlis t ed industrial an d investment b usinesses.

During the pas t three years W endy has n o t served as a director of any o ther listed c o mpanies.

Gregory Jones, BSc Hons (UTS), MAusIMM Non-executive director Director since A pril 2009

During the p a st three yea r s Glenn has not served a s a director of a n y other listed companies.

Greg De Ross, BSc (Monash), FAusIMM

Greg is a geo l ogist with 3 2 years of e x ploration an d o p erational ex p erience gai n ed in a br o ad range o f metalliferous c ommodities b oth within A ustralia an d o v erseas. Greg has held se n ior positions in a number o f r e source co m panies in c luding We s tern Minin g C o rporation and Sino Gold and his exp e rience span s the spectrum o f exploratio n activity fro m grass-root s e x ploration through to res o urce definition and ne w p r oject gener a tion, as we l l as mine geology, or e r e source/reser v e generat i on and new min e d e velopment.

Managing director

Director sinc e July 2010

Greg is a g e ologist with o ver 30 year s ’ experience in corporate management, exploration a nd mining. H is experience h as included a variety of roles in ar e as covering ex p loration ma n agement, fe a sibility studi e s, resource de v elopment an d mining in c o mmodities s u ch as base and precious m e tals, uranium , mineral san d s, coal and iro n ore. He has worked extensively in Cen t ral and South E a st Asia, Oce a nia and Australia.

Greg was aw a rded the In s titute Medal for academi c e x cellence wh i lst at unive r sity and is credited wit h s e veral econo m ic discoveri e s including t h e Blair nicke l a n d the Orion g old deposits in Western A u stralia.

Prior to joini n g Eastern Iron he was General Mana g er for a C h inese com p any seeki n g investm e nt opportunitie s in the Australian and Chinese resour c es sector. Pre v ious to thi s he spent 12 years w ith Highlands P a cific / Highla n ds Gold as G eneral Mana g er Exploration w here he ha d responsibilit y for explorat i on and pre-de v elopment w o rk on a va r iety of proje c ts including the Ramu Nickel, Frieda Cop p er and Kaina n tu

During the pas t three years G reg has als o served as a director of the f o llowing othe r listed companies:

PlatSearc h NL - appoint e d April 2009
� Silver City Minerals Limi t ed – appoint e d April 2009

Eastern Iron Limited and its controlled entities Annual Report 2011 < 1 1

Direct o o rt rs’ Rep

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� Thomson Resources L td – appoint e d July 2009 Steve Gemell, BE Mining (Hons), FAusIMM (CP), MAIME, MMICA

Non-executive director

P e ter resigne d as a Non-Executive Director of th e B o ard on 4 April 2011.

Directors' interests in shares and options

Director sinc e January 20 1 0

Steve is a c o nsulting mini n g engineer with more than 30 years of ex p erience in t he mining i n dustry, both in Australia an d overseas. H e has previously held se n ior operating roles including C EO position s , and execut i ve and non-ex e cutive Direct o rships in A S X-listed min i ng companies and unliste d mine ope r ations or j o int ventures. Hi s experience h as included a variety of ro l es in areas c o vering reso u rce develop m ent, feasibility studies, min e planning, a n d operations in a large ra n ge of commodities including b ase and pre c ious metals a nd uranium.

During the p a st three yea r s Steve has a lso served a s a director of th e following ot h er listed companies:

UXA Re s ources Limit e d - appointe d March 2005
Argent M inerals Limit e d - appointe d July 2010
Indochi n e Mining Limited – appoint e d March 2011

Ivo Polovineo, FIPA

Non-executive director

Director sinc e April 2011

Ivo was appointed as a N on-Executiv e Director of t he Company ef f ective 5 April 2011.

Ivo has o v er 30 year s ’ experienc e in corpor a te accounting, f inance and c o mpany secr e tarial work f o r a diverse rang e of compani e s. He has s p ent the past 20 years in se n ior manage m ent roles i n the resour c es sector inclu d ing 7 years a s company s ecretary (an d 5 years as C F O) of Sino G old Mining L i mited (a for m er ASX 100 c o mpany) until December 2 0 09. He is also company se c retary of Ly n as Corporation Ltd, an A S X 100 compan y , PlatSearch NL, Thomso n Resources L td and Silver City Minerals Limited.

During the p ast three ye a rs Ivo has also served a s a director of th e following ot h er listed company:

Galaxy R esources Limited - appointed July 20 1 0, resigne d September 2 011

Peter Buckley, BSc, Hons (New England), MAIG

Non-executive director

A s at the date of this re p ort, the int e rests of th e Directors in the shares an d options of Eastern Iro n Limited were:

Directors	Shares and ind he directly irectly ld	Options
G Goodacre	480, 000	500,000
G De Ross	-	1,200,000
W Corbett	75,0 00	300,000
G Jones	698, 975	300,000
S Gemell	-	300,000
I Polovineo	-	-

Company secretary

Michelle Lilley, BBus, CA

Michelle Lilley, Chartered A c countant, is the Compan y S e cretary and F inancial Con t roller of Eastern Iron sinc e N o vember 2007. Michelle i s an experie n ced financia l a c countant w h o holds a Bachelor of Busines s ( A ccounting). H er experienc e has been g a ined over 1 7 y e ars in finan c ial and ma n agement accounting an d includes Finan c e Manager fo r an ASX li s ted compan y in the bioscien c e industry a n d as a financ i al accountan t f o r an ASX listed iron o r e developm e nt company . Michelle previously held the Compa n y Secretar y p o sition for an ASX listed c o mpany in the educationa l s o ftware industry.

Principal activities

T h e principal a c tivity of the G roup is the e xploration fo r a n d delineatio n of iron ore, precious an d base metal s r e sources in A ustralia/Asi a Pacific re g ion and th e d e velopment of those reso u rces into economic, cas h fl o w generating mines.

Results

T h e net result o f operations a fter applica b le income ta x e x pense was a loss of $ 9 45,738 (2010: $593,336 ) which includes the write-off of exploratio n expenditur e d u ring the year of $488,975 ( 2010: $8,823).

Director sinc e July 2007 ( R esigned April 2011)

12 > Eastern Iron Limited and its controlled entities Annual R e port 2011

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Dividends

T h e information in this report that relates to exploration targets fo r E a stern Iron Limite d is based on inforormation compiled by Mr Arnold va n d e r Heyden who is a Member of thee Australian Instit u te of Mining an d M e tallurgy and a f u ll time employeee of Hellman & S chofield Pty Ltd . T h e data used to d e rive the exploratition target was s u pplied by Easter n Ir o n Limited and compiled by Mr Greeg De Ross who is a Fellow of th e A u stralian Institute o f Geoscientists aand a full time employee of Easter n Ir o n Limited. Mr v an der Heyden, and Mr De Ro s s have sufficien t e x perience which i s relevant to the style of minerali s ation and type o f d e posit under co n sideration and to the activity which they ar e u n dertaking to qua l ify as "Competennt Persons" as d e fined in the 200 4 E d ition of the “Aus t ralasian Code forr Reporting of E x ploration Results , M i neral Resources and Ore Reservees”. Mr van der H eyden and Mr D e R o ss consent to th e inclusion in this Report of the inf o rmation compile d b y them in the form and context in whhich they appear.

No dividend s were paid or proposed du r ing the perio d .

Review of operations

Eulogie

Comple t ed acquisitio n of the Eulog i e project add i ng to reso u rce and dev e lopment pot e ntial of an i r on ore proj e ct in Central Q ueensland
Carried out prelimin a ry metallurgical testwork on drill cor e samples fro m Eulogie
Comple t ed transport o ptions study
Explora t ion target tonnage of 500 m illion - 1 bill i on tonnes[*]
Comple t ed 35 hol e 3,369m r e source drill i ng progra m leading to m a iden resourc e estimate
� Concep t developmen t study under w ay.

Hawkwood

First pa s s 1,848m RC drilling program confir m ed magneti t e layers as the source o f the magn e tic anomal y
Prelimin a ry Davis T u be analysis produced h i gh quality i r on concentra t es
Follow up 637m diamond drilling confir m ed structur e of magnetit e layers and p r ovided samp l es for furth e r metallurgic a l testwork
Explora t ion target tonnage of 500 m illion – 1 bill i on tonnes[*] .

NSW 3E Steel Pisolite iron Joint Venture

Comple t ed joint vent u re agreeme n t with 3E st e el whereb y 3E have co m mitted $1.9 million to furt h er resourc e drilling and b eneficiation s tudies.

Other

The Co m pany is cur r ently negoti a ting for anot h er significant iron ore as s et in Australi a .

Significant changes in the state of affairs

T h e Directors a re not aware of any significant change s in the state of a ffairs of the G roup occurr i ng during th e fi n ancial period, other than a s disclosed in this report.

Significant events after th balance date

T h ere were, a t the date of this report, n o matters o r circumstances which have a risen since 3 0 June 2011 that have sig n ificantly aff e cted or ma y significantl y a f fect the oper a tions of the G roup, the results of thos e o p erations, or the state of a ff airs of the G r oup, in futur e fi n ancial years, other than:

The Com p any has is s ued 2,500,0 0 0 fully pai d ordinary s h ares as consideration for the acquisitio n of the Eul o gie Park Pr oj ect. Details o f the Eulogi e Park Purc h ase Agreem e nt were announced to AS X on 19 Jan u ary 2011.

Likely developments and expected results

A s the Comp a ny’s areas o f interest ar e at an earl y stage of explor a tion, it is not possible to postulate likel y d e velopments a nd any expe c ted results. T he Compan y is hoping to id e ntify other ir o n ore, preci o us and bas e metal explorati o n and evalu a tion targets.

* Potential expl _o ration target to_ _n nages and grad_ _e s in this report are conceptual in n_ _a ture as there ha_ _s been insufficient exploration to define a Mineral Reso_ _u rce and that it is uncertain if fu_ _r ther exploration will result in the det_ _e rmination of a Mi_ _n eral Resource. T onnages and grades are not to be qu_ _o ted outside this_ _c** ontext._

Eastern Iron Limited and its controlled entities Annual Report 2011 < 1 3

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Shares under option or issued on exercise of options

Details of unissued share s or interests under option for Eastern Iron Limited as at the date of th i s report are:

No. shares under option	Class of share	Exercise price of option	Expiry dat of options e
5,000,000	Ordinary	$0.35	19/12/2012
1,200,000	Ordinary	$0.18	09/03/2015
1,850,000	Ordinary	$0.20	23/11/2013
8,050,000

The holders of these opti o ns do not h a ve the right, by virtue of the option, to pa r ticipate in an y share issu e of the Compa n y or of any other body corporate or registered s c heme.

During the financial year, shareholders have exerci s ed options to a c quire 19,307,419 fully paid ordinary sha r es in Eastern Iron Limited u nder the C o mpany’s Bo n us Option issu e in Novemb e r 2008 (options expired 19 December 2 0 10).

Environmental performance

Eastern Iron holds explor a tion licence s issued by N e w South Wal e s Minerals and Energy, which spe c ify guidelines f o r environm e ntal impacts in relation to exploration a ctivities. The licence conditions provide for the full reh a bilitation of the areas o f exploration in accordance with the Department’s guidelines a nd standards. T here have been no si g nificant kno w n breaches of t he licence conditions.

Indemnification and insurance o directors and officers

Indemnification

their conduct w hile acting in the capacity of director o r o f ficer of the Company, oth e r than cond u ct involving a wilful breach of duty in relati o n to the Com p any.

T h e premium s paid are not disclos e d as suc h disclosure is pr o hibited unde r the terms of the contract.

Remuneration report (audited)

T h is remunera t ion report fo r the year e n ded 30 Jun e 2 0 11 outlines the remuner a tion arrangements of th e C o mpany and the Group in accorda n ce with th e r e quirements o f the Corpo r ations Act 2 0 01 (the Act ) a n d its regulations. This inf o rmation has been audite d a s required by s ection 308(3 C ) of the Act.

T h e remuner a tion report details the remuneratio n a r rangements f or key man a gement per s onnel (KMP ) who are define d as those p e rsons having authority an d r e sponsibility f o r planning, directing and c ontrolling th e major activities of the Comp a ny and the G roup, directl y o r indirectly, including any d irector (whether executiv e o r otherwise) o f the parent c o mpany.

Details of key management personnel

D e tails of KMP including t he top five remunerate d e x ecutives of t h e Parent and Group are s e t out below.

D irectors	D irectors
G lenn Goodac re	Non- executiv e Chairman
G regDe Ross	ManagingDir ector
P eter Buckley	Non-executiv resigned Apr e Director - il 2011
W endyCorbet t	Non-executiv e Director
G regJones	Non-executiv e Director
S teve Gemell	Non-executiv e Director
Iv o Polovineo	Non-executiv e Director
K ey managem entpersonn el
M ichelle Lilley	Company Se Financial Con cretary and troller

The Compa n y has not, d u ring or sinc e the end of t he financial period, in respec t of any pers o n who is or h as been an of f icer of the C ompany or a related b o dy corporate in d emnified or m ade any rel e vant agreem e nt for indemnif y ing against a liability incurred as an offi c er, including co s ts and expenses in succe s sfully defend i ng legal procee d ings.

Insurance premiums

During the financial per i od the Co m pany has p a id premiums to insure each of the Direc t ors and offic e rs against liabi l ities for cost s and expen s es incurred by them in def e nding any le g al proceedin g s arising ou t of

14 > Eastern Iron Limited and its controlled entities Annual R e port 2011

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Service agreements

Remuneration philosophy

The objective of the Company’ s remunerat i on framework i s to ensure reward for performance is competitive a nd appropri a te for the r e sults deliver e d. The frame w ork align s executive reward w ith achievemen t of strategic o bjectives an d the creation of value for s hareholders. The Board believes t h at executive r e muneration satisfies th e following k ey criteria:

Compet i tiveness and reasonablen e ss.
Acceptability to share h olders.
� Perform a nce linka g e/alignment of execut i ve compen s ation.
Transparency.
Capital m anagement.

These criteri a result in a framework which can be u s ed to provide a m ix of fixed a n d variable remuneration, a nd a blend of s h ort and long t erm incentives in line with t he Company’s l i mited financi a l resources.

Fees and p a yments to t h e Company’ s Non-Execut i ve Directors and Senior Ex e cutives refle c t the dema n ds which are m ade on, an d the responsibilities of, t he Directors an d the senior m anagement. Such fees a nd payments a r e reviewed a nnually by t he Board. T he Company’s Executive a n d Non-Exe c utive Direct o rs, Senior Exec u tives and O f ficers are e n titled to rece i ve options und e r the Comp a ny’s Employ e e Share Opt i on Scheme.

Non-executive director remuneration arrangements

Directors ar e entitled to re m uneration o u t of the fund s of the Compa n y but the remuneratio n of the N o n- Executive Directors (NED ) may not ex c eed in any y e ar the amount f ixed by the C ompany in g eneral meet i ng for that pur p ose. The a g gregate rem u neration of t he NED’s has b een fixed at a maximum o f $250,000 p er annum to b e apportioned among the N ED’s in suc h a manner as t he Board d e termines. Di r ectors are a l so entitled t o be paid reasona b le travelli n g, accommoda t ion and other expens e s incurred in consequenc e of their at t endance at B oard meeti n gs and otherwi s e in the execution of their duties as Directors.

The Chairm a n’s fee was s et at $30,000 p.a. and N E D fees at $24, 0 00 p.a. for t h e year ende d 30 June 20 1 1. As at 1 Jul y 2011 the B o ard resolved to increase t he Chairman’s fee to $54, 0 00 p.a. an d NED fees to $36,000 p. a . In addition, members of the Bo a rd Committees a re paid 10% of NED fees.

R e muneration a nd other te rm s of emplo y ment for ke y management personnel are formalised i n employmen t c o ntracts and c ontractor ag r eements. D e tails of thes e a g reements ar e set out belo w .

Managing Director – Greg De Ross

Contract t e rm: No fix e d term. Eith e r party ma y terminate the letter o f employm e nt with tw o months’ n o tice.
Remunera t ion: $260,00 0 p.a. as at 3 0 June 2011 to be revi e w annually. Increased to $ 273,000 p.a . from 1 Jul y 2011.
Termination payments: A 3 month s e verance pa y with an a d ditional 3 m o nths after m ore than fiv e years.

Chairman – Glenn Goodacre

Contract t e rm: Rolling c o ntract. The C ompany ma y terminate t he agreeme n t if Mr Good a cre breache s the agree m ent and fail s to remedy s uch a breac h with 14 da y s of receipt o f written notice.
Remunera t ion: $220 p er hour plus GST fo r consultancy services as at 30 June 2011 . Increased to $240 per h our plus GS T from 1 Jul y 2011.
Termination payments: N il.

Non-Executive Director – Wendy Corbett

Contract t e rm: Rolling c ontract. Either party ma y terminate the agreemen t with one mo n ths’ notice.
Remunera t ion: $99 p er hour pl u s GST fo r consultancy services as at 30 June 2011 . Increased to $104 per h our plus GS T from 1 Jul y 2011.
Termination payments: N il.

Non-Executive Director – Greg Jones

Contract t e rm: Rolling 12 months contract wit h PlatSearc h NL (48.26 % sharehold e r of Easter n Iron) of w h ich Greg is a n employee. No notice i s required f rom either party to t e rminate th e agreement.
Remunera t ion: $145 p er hour plus GST fo r consultancy services a s at 30 June 2011. Greg’ s fees were paid directl y to PlatSea r ch NL. Fee s increased to $153 per h our plus GS T from 1 Jul y 2011.
Termination payments: N il.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 1 5

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Non-Executive Director – Steve Gemell

respect of Peter when h e resigned fr o m PlatSearc h NL in Mar c h 2011.
Contrac t term: Roll i ng contract. No notice is required from eith e r party to terminate t he agreem e nt.
Remunera t ion: $80 p er hour pl u s GST fo r consultancy services a s at 30 June 2011. Peter’ s fees were p aid directly t o PlatSearch N L.
Remun e ration: $18 0 per hour plus GST for consult a ncy service s as at 3 0 June 20 1 1. Increas e d to $200 p e r hour plus G ST from 1 J u ly 2011.

Termination payments: N il.

Company Secretary – Michelle Lilley

Contract t e rm: Rolling c ontract. Either party ma y terminate the agreemen t with one mo n ths’ notice.
Termination payment s : Nil.

Non-Executive Director – Peter Buckley

Remunera t ion: $93 p er hour pl u s GST fo r consultancy services as at 30 June 2011 . Increased to $98 per h our plus GS T from 1 Jul y 2011.
Contrac t term: Rolli n g 12 months contract w ith PlatSea r ch NL (48. 2 6% shareho l der of East e rn Iron) of w hich Peter w as an emplo y ee. No notic e is required from eith e r party to terminate t he agreem e nt. This agreement wa s terminated in
Termination payments: N il.

16 > Eastern Iron Limited and its controlled entities Annual R e port 2011

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Directors and key management personnel remuneration for the year ended 30 June 2011

Shor term benef t- its	Shor term benef t- its	Shor term benef t- its	Pt	Sha re-
			os	base d
			employme nt	payme nts
Ca a sh salary nd fees $	Consulting		Superannu at		T otal $	Co nsisting of options %
	fees		ion	Optio ns
	$		$	$
-		31,759	-	1 0,425	42,184	25%
-		31,759	-	1 0,425	42,184
367,859		167,944	33,1 07	15 7,055	7 25,965

(a) The Co m pany engag e d PlatSearch NL to provid e the service s of Peter Buckley. Fees to t alling $53,16 0 were paid t o PlatSea r ch. PlatSear c h is a 48.26% sharehold e r in Eastern Iron. Peter r e signed as a Non-Executi v e Director o f Eastern Iron in April 2011.
(b) The Co m pany enga g ed PlatSear c h to provide the services of Greg Jones. Fees tot a lling $6,163 were paid t o PlatSea r ch. PlatSear c h is a 48.26 % shareholder in Eastern Ir o n.
(c) Appoint e d April 2011.

No performa n ce based re m uneration w a s paid in the 2011 and 2010 financial period. Directors and key management personnel remuneration for the year ended 30 June 2010

	Short term benefi - ts	Short term benefi - ts	Post employm ent	Post employm ent	Sha bas paym re- ed ents
	Cas an h Salary d fees $		Superann uati			T otal $	C o onsisting f options %
		Consulting	on		Opti ons
		$	$		$
Directors
G Goodacre	28,624	23,265	2 ,576		-	54,465	-
G De Ross	79,511	-	7 ,156		5 6,960	143,627	40%
P Buckley (a )	7,339	98,350	661		-	106,350	-
W Corbett	22,569	46,084	2 ,031		-	70,684	-
G Jones(b)	22,018	15,038	1 ,982		-	39,038	-
S Gemell	11,814	1,207	1 ,063		-	14,084	-
Total Directo rs	171,875	183,944	15 ,469		5 6,960	428,248
Other key m anagementp ersonnel
M Lilley	-	37,758	-	-		37,758	-
Total KMP	-	37,758	-	-		37,758
Totals	171,875	221,702	15,4 69	5 6,960		466,006

(a) The Co m pany engag e d PlatSearch NL to provid e the service s of Peter Buckley. Fees to t alling $98,35 0 were paid t o PlatSea r ch. PlatSear c h is a 48.26 % shareholder in Eastern Ir o n.
(b) The Co m pany enga g ed PlatSearch to provide the services of Greg Jon e s. Fees tota l ling $15,038 were paid t o PlatSea r ch. PlatSear c h is a 48.26 % shareholder in Eastern Ir o n.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 1 7

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Share-based compensation

If, prior to the expiry date of o ptions, a per s on ceases t o b e an employ e e of a Grou p company f o r any reaso n ( o ther than ter m ination with c ause), the o p tions held b y that person (or that per s on’s nomin e e) must b e e x ercised within one mont h thereafter otherwise the y will automatically lapse. The Plan may be terminated o r s u spended at any time.

Employee share option plan

The Comp a ny has es t ablished th e Eastern I r on Employee Share Option P lan (“Plan”) to assist in t he attraction, re t ention and m otivation of employees of t he Company. T h ere have be e n 1,350,000 options gran t ed under the Plan as at the date of this r eport. The P l an will be administered by t h e Board in a ccordance w ith the rules of the Plan, an d the rules are subject to t he Listing Rule s .

E x cept with th e consent of t he Directors , options ma y n o t be transferred. The C o mpany will not apply fo r o f ficial quotati o n of any op t ions. Shares issued as a r e sult of the e x ercise of op t ions will ran k equally wit h the Company’s previously is s ued shares.

A summary o f the Rules o f the Plan is s et out below. All full-time em p loyees will b e eligible to p articipate in t he Plan. The al l ocation of o p tions to eac h employee is at the discretio n of the Boa r d. The optio n s will be iss u ed for nil consi d eration and are non-tran s ferable, exc e pt with the consent of Direc t ors. However, at the time of accepting t h e offer to p articipants o f the Plan, t he eligible em p loyee may n ominate an o ther person in whose favour the opti o ns should be granted. If permitted b y the Board, o ptions may b e issued to an employee’s n ominee (for example, a s pouse or fa m ily company).

If there is a bo n us share iss u e to the holders of shares , the number o f shares o v er which a n option i s e x ercisable will be increase d by the number of share s which the optionholder w o uld have re c eived if th e o p tion had be e n exercised before the r e cord date fo r the bonus issue. The optio n s or exercis e price of th e o p tions will b e adjusted if there is a pro-rata issue , b o nus issue o r any reconst r uction in ac c ordance wit h the Listing Rul e s. If there is a pro-rata iss u e (other tha n a bonus shar e issue) to t h e holders o f shares, th e e x ercise price of an optio n will be reduced to tak e a c count of the effect of the p ro-rata issu e . If there is a r e organisation of the issue d capital of t h e Company , u n exercised o p tions will be reorganised in accordanc e with the Listing Rules.

Each option is to subscri b e for one fu l ly paid ordin a ry share in the C ompany an d will expire fi v e years from its date of issu e . An option i s exercisable a t any time fr o m its date of i ssue. Optio n s will be gr a nted free. T he exercise pri c e of option s will be det e rmined by t he Board. The total numb e r of shares the subject of options issu e d under the Plan, when a ggregated w ith issues durin g the previo u s five years pursuant to t he Plan and a n y other em p loyee share plan, must n ot exceed 5% o f the Compa n y’s issued sh a re capital.

S u bject to ob t aining requi re d members ’ approval t o a u thorise the granting of financial as s istance to a p a rticipant, th e Directors c a n make loans to eligibl e e m ployees in connection wit h shares to b e issued upo n e x ercise of opti o ns under th e Plan.

T h e Board ma y amend the Plan Rules s ubject to th e r e quirements o f the Listing R ules.

18 > Eastern Iron Limited and its controlled entities Annual R e port 2011

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Compensation options: granted and vested during the year

The followin g options wer e granted duri n g the financi a l year.

Share-based payments awarded during the year to directors and key management

	Grant date	Granted no.	Vested no.	Vested %	Value of options granted at the grant dated (note 14) $	Number of options exercised	Value of options exercised at the exercise date $	Value of options lapsed at the date of lapse $
Directors
G Goodacre	23 Nov 1 0	500,000	500,000	100%	34,750	-	-	-
W Corbett	23 Nov 1 0	300,000	300,000	100%	20,850	-	-	-
G Jones	23 Nov 1 0	300,000	300,000	100%	20,850	-	-	-
S Gemell	23 Nov 1 0	300,000	300,000	100%	20,850	-	-	-
P Buckley	23 Nov 1 0	300,000	300,000	100%	20,850	-	-	-
Other key m anagement personnel
M Lilley	29 Sep1 0	150,000	150,000	100%	10,425	-	-	-

The value o f options gra n ted during th e period is recognised as c ompensatio n over the ve s ting period o f the grant, i n accordance w ith Australia n Accounting S tandards. T h ere were no o ptions exerci s ed during th e year.

For details o n the valuatio n of the optio n s, including m odels and assumptions us e d, please re f er to Note 14 . There were n o alterations to the terms and conditio n s of options g ranted as re m uneration since their gra n t date. Ther e were no forf e itures during the period.

Meetings of directors

The followin g table sets o ut the number of Directo r s’ meetings (including meetings of co m mittees of D irectors) hel d during the fi n ancial year a n d the number of meetings attended by e ach director:

	Board of dire ctors	Board of dire ctors	Remunerat nomination c ion and ommittee	Remunerat nomination c ion and ommittee	Remunerat nomination c ion and ommittee	Audit c	o mmittee
	Held	A ttended	Held	Attended		Held	Attended
Directors
G Goodacre	6	6	1		1	3	3
G De Ross	6	6	-		-	-	-
W Corbett	6	6	-		-	3	3
G Jones	6	6	1		1	-	-
S Gemell	6	6	1		1	3	3
I Polovineo - appointedA pril 11	2	2	-		-	-	-
P Buckley - resigned Apr il 11	4	4	-		-	-	-

The duties of the Corpor a te Governan c e Committee were carried out by the full Board at B o ard meeting s for the 2011 financial yea r .

Eastern Iron Limited and its controlled entities Annual Report 2011 < 1 9

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Auditor’s independence and non-audit services

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Non-audit services

The Compa n y’s auditor, B arnes Dowell James did n ot provide n o n-audit servi c es for East e rn Iron durin g the financia l year ended 3 0 June 201 1 . The Direct o rs are satisf i ed that the p rovision of n o n-audit serv i ces is comp a tible with th e general stan d ard of inde p endence for a uditors imp o sed by the Corporations A ct 2001. The nature and s cope of eac h type of non- a udit service p rovided mea n s that audito r independen c e was not co m promised.

Signed at S y dney this 28t h day of Sept e mber 2011 i n accordance w ith a resoluti o n of the Dire c tors.

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Glenn Goodacre Chairman

20 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Corporate Go v ernance

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The Board o f Directors of E astern Iron i s responsible for the corpora t e governan c e of the C o mpany and is committed to maintaining a hig h standard of governance.

Approval o f budgets. M onitoring the operationa l and finan c ial positions and perfor m ance of th e Company a nd other rep o rting.
Appointment and remov a l of the CEO.

The Board m onitors the managemen t , business a nd affairs of Ea s tern Iron on behalf of the shareholders by whom they are electe d and to w hom they a re accountable. The Board d r aws on relev a nt best pract i ce principles, p articularly t h e ASX re v ised Corpor a te Governance Principles a nd Recom m endations ( 2 nd edition) iss u ed by the A SX Corpor a te Governa n ce Council (the Principles).

Evaluating the performa n ce of the CEO.
� Review and approve th e Company’s policy on ris k oversight a nd manage m ent of mat e rial busines s risks.
Monitoring the effe c tiveness of the ris k managem e nt and inter n al control sy s tems throug h oversight a nd managem e nt reports.
� Approving and m o nitoring m a jor capita l expenditur e , acquisitio n s and divestitures abov e the authori t y level deleg a ted to mana g ement.
� Determining dividend p o licy.

The Principl e s are revie w ed on a pe r iodic basis a nd Eastern Iron endeavours to adhere t o the Principl e s, mindful that there may be some i n stances wh e re compliance is not practic a ble for a co m pany of its size and level of o perations.

In many cas e s, the Comp a ny is achievi n g the standa r ds required by t h e Principles. In a number o f instances, t he Company m a y not meet c e rtain standa r ds set out in t he Principles. W here the C o mpany doe s not meet t he recommend a tions, the B o ard anticipa t es that, as t he Company’s o perations gr o w, it will adjust its struct u re over time to s atisfy the rel e vant Principl e s.

Ensuring a ppropriate r e sources ar e available t o Senior Ex e cutives.
Appointment and re m oval of ext e rnal audito r including t e rms of appoi n tment and remuneration.

T h e Constitution and Board C harter is available on C o mpany’s we b site ‘www.ea s terniron.co m .au’.

This statement address e s each of the eight A S X Corporate Governance Recomme n dations. E a ch Recommendation is set out and followed with an explanation o f our corpor a te governance practices. T he extent to w hich Eastern Iron ha s followed t he recommend a tions is addr e ssed and th e Company h as identified any Principles t hat have no t been follo w ed (and provide d reasons for not doing so) .

Directors’ appointment letter

A formal let t er is prov i ded to Di r ectors upo n a p pointment s e tting out the k ey terms an d conditions o f their appointm e nt. The Com p any’s appoin t ment letter t o Directors contains the eleme n ts suggeste d in Box 1.1 o f the ASX princi p les.

Authority delegated to CEO/Managing director

Principle 1: Lay solid foundations for management and oversight

T h e CEO/Man a ging Directo r is responsible for the da y t o day manage m ent of the C o mpany and i ts operations . F u rther details of responsi b ilities are s e t out in th e C o mpany’s Bo a rd Charter.

The Compa n y has establi s hed the func t ions reserve d to the Board a n d those dele g ated to Seni o r Executives. A summary of t he Board’s r o le is stated b e low:

Management performance evaluation

The role and responsibility of the Board

T h e Board, i n conjunctio n with the R emuneratio n C o mmittee, i s responsi b le for a p proving th e p e rformance objectives a nd measu r es for th e CEO/Managing Director. P e rformance e v aluations ar e c o nducted an n ually agains t individual a nd Compan y p e rformance o bjectives. P e rformance e valuations o f management a re conduct e d by the CEO/Managin g Director. The m anagement p erformance e valuations fo r the current financial year w e re conducted in June 2011 in accordance w ith Compan y ’s policy.

The Boar d Charter outlines the roles a nd responsibiliti e s of the Boa r d and, in con j unction with t he Constitution, allows the Board to determine th o se matters to b e delegated t o its Commit t ees and Se n ior Executives.

The Board’s responsibiliti e s include:

Approv a l and review o f corporate s t rategic direct i on and maj o r operating p lans.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 2 1

Corporate Go v ernance

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To ensure that managem e nt are able t o participate f u lly and actively in managem e nt decision m aking and to be able to meet their perform a nce objectiv e s, managem e nt are provided with an indu c tion package on appointm e nt.

Principle 2: Structure the Board to add value

The compos i tion of the B o ard has bee n determined on the basis of p roviding the Company wit h an appropri a te range of te c hnical, admi n istrative and financial skills, combined with an appropriate level of experience a t a corporate m a nagement l e vel. The Board comprises of an Executiv e and five N o n-Executives. For details on the skills, ex p erience and expertise of e ach Director, as well as the p e riod of office held by each Director; ple a se refer to page 1 of the Dire c tors’ Report.

Director independence

The Board regularly as s esses the i n dependence of each Direc t or. Directo r s are con s idered to be independent if they are f r ee of any b u siness or ot h er relationship t hat could m a terially interf e re with or co u ld reasonably b e perceived t o materially i n terfere with t he independent exercise of t h eir judgemen t .

The Board h as applied t h e points set out in ASX B ox 2.1 “Relatio n ships affecti n g independe n t status” of t he Principles in determining d irector inde p endence. In t he context of d irector inde p endence, a relationship is considered “ m aterial” if th e payment m a de to a dire c tor or related p arty is greater than 10 percent of t he Company’s e xpenses for that financial y ear.

In accordance with the definition o f independe n ce above, the f ollowing Dir e ctors are c o nsidered to be independent :

Mr Glenn G o odacre (Non-Executive Ch a irman)

Mr Steve Gemell (Non-Ex e cutive Direct o r)

Mr Goodacr e and Mr G e mell undert a ke consulta n cy work for the Company; however, i t is under t he Company’s materiality t h reshold of 1 0 percent a nd therefore, is not considered to affect t h eir independen c e.

The remaini n g Non-Executive Directors of the Comp a ny are not co n sidered to b e independent due to t h eir association with a sub s tantial shar e holder of t he Company, PlatSearch NL . All Director s also undert a ke consultancy work for t he Company. The Bo a rd considers th a t the skills a nd experien c e of the curr e nt non-indepen d ent Director s are essenti a l in this curr e nt phase of op e rations, in li g ht of the na t ure and size of the Compan y and its busi n ess interests . The Board i s of

the view that it s members h a ve a sufficie n tly broad mi x o f skills and t hat the Dire c tors’ level o f experienc e e n ables them t o be aware o f and capable of acting i n a n independe n t manner a n d in the be s t interests o f s h areholders.

A l l Directors, whether indep e ndent or not, are expecte d t o bring an ind e pendent jud g ement to Bo a rd decisions . T o facilitate thi s , each Direc t or may obtai n independen t e x perts’ advice to enable th e m to fulfil th e ir obligation s a t the expense of the Comp a ny after obta i ning approva l b y the Chairman.

Independence and role of Chairman

T h e Board c onsiders th e Chairman , Mr Glen n Goodacre to b e independe n t as per the guidelines o f director indepe n dence state d in this princi p le.

T h e role of the Chairman is d escribed in t h e Company’ s B o ard Charter which is av a ilable on the Company’ s w e bsite ‘www. e asterniron.co m .au’. The ro l e of the Chai r a n d the CEO is not exercise d by the same individual, a s r e commended b y the ASX P r inciples.

Board remuneration and nomination committee

T h e Remuner a tion and N o mination C o mmittee wa s e s tablished to make reco m mendations on selection , c o mpetencies a nd re-electi o n of Directo r s as well a s a s sisting the Board in the o versight of t h e Company’ s r e muneration policies. F urther det a ils of th e r e sponsibilities of the Com m ittee can be found on th e C o mpany’s website ‘www.e a sterniron.co m .au’. Boar d v a cancies are fulfilled with experienced and qualifie d members and m atters such a s diversity and board skil l levels are con s idered to id e ntify potenti a ls gaps. Th e R e muneration and Nominat i on Committ e e consists o f three membe r s, their na m es and a t tendance a t meetings are detailed on page 9 of the Director s R e port. The C ommittee co nsists of a majority o f independent D irectors an d is chaire d by a no n independent Director.

Board performance review

T h e Board reviews its perfo r mance annu a lly to ensur e that individual D irectors and the Board as a whole wor k e f ficiently and effectively i n achieving t h eir function s a n d duties. T h e Chairman meets ann u ally with th e B o ard to cond u ct a review o f individual Directors an d the Board as a whole. The Board’s performance wa s r e viewed agai n st its respo n sibilities as stated in th e C o mpany’s Bo a rd Charter i n July 2011 in accordanc e with the Com p any’s policy . On appoin t ment a ne w director is given an inductio n pack to en s ure that ne w

22 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Corporate Go v ernance

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directors gai n an overall understanding of the Comp a ny and their rol e as a directo r .

A s recommen d ed the Co m mittee has a t least thre e members and the majority o f members ar e independen t which the Co m pany compli e d with. Furt h er details o n the qualificatio n s of the Dire c tors are on p a ge 1 and th e n u mber of me e tings held a n d attendanc e of member s a r e on page 9 o f the Directo rs ’ Report.

Principle 3: Promote ethical and responsible decision making

T h e Audit Co m mittee revi e ws the external auditor’ s t e rm of engag e ment and audit plan, and assesses th e independence o f the extern a l auditor. Th e Company i s s a tisfied that t h e level of no n -audit work c arried out b y the external au d itor is comp a tible with ma i ntaining audi t independence.

Code of ethics and conduct

The Compa n y’s Code of E thics and C o nduct promo t es ethical and responsible d ecision making by Direct o rs and employ e es. The Co d e requires hi g h standards of honesty, int e grity, fairne s s and equit y in all deali n gs internally a n d externally . The Code of Ethics a nd Conduct is available o n the Company’s web s ite ‘www.easter n iron.com.au’ .

T h e Audit C o mmittee’s Charter sets out its role , r e sponsibilities, membersh i p requirem e nts, audito r s e lection and rotation a n d is avail a ble on th e C o mpany’s we b site “www.e a sterniron.co m .au”.

Securities trading policy

Principle 5: Make timely and balanced disclosure

The Compa n y’s Securitie s Trading Poli c y governs w h en Eastern Ir o n’s Direct o rs, employ e es and k ey consultants m ay deal in the Company’s securities a nd the procedur e s that must b e followed fo r such dealin g s.

Continuous disclosure

Trading in t h e Company’ s securities i s permitted only during trading windows, w hich are ope n for a period of up to five weeks com m encing the day after t he announcem e nt of the half year financial results, full y e ar financial results and the AGM, quart e rly report o r a major anno u ncement le a ding, in the opinion of t he Board, to an informed ma r ket.

T h e Company is committe d to maintaining a level o f disclosure that meets th e highest standards an d p r ovides all in v estors with t i mely and equal access t o information. T h e Compan y ’s Continuo u s Disclosur e P o licy is desi g ned to ens u re complian c e with AS X Listing Rule requirement s and has considere d s u ggestions m a de in Box 5.1 of ASX Prin c iple 5.

Staff are req u ired to seek approval bef o re trading in t he Company’s s hares during the trading w indow with t he Chairman of the Board or t he Managing Director.

T h e Continuous Disclosure Policy is av a ilable on th e C o mpany’s we b site ‘www.ea s terniron.co m .au’.

The Compa n y prohibits D irectors, em p loyees and k ey consultants from using derivatives o r entering i n to transactions that operate, or are intend e d to operate , to limit the e c onomic risk of security holdings o v er unvested Ea s tern Iron sh a res.

Principle 6: Respect the rights of shareholders

Shareholder communications policy

Directors, e mployees a nd key consultants a re prohibited fr o m buying o r selling Co m pany shares at any time if t h ey are awar e of price sen s itive informat i on that has not b een made p u blic.

T h e Company strives to c o mmunicate effectively an d tr a nsparently w ith sharehol d ers and th e community . T h e Company’s Sharehol d er Communication Polic y includes the following elements to ensure shareholder s r e ceive timel y and equ a l access to balance d information:

Principle 4: Safeguard integrity in financial reporting

Material announcemen t s released t o the marke t are posted on the Com p any’s websit e as soon as i t is practical after it is rele a sed to the A S X.

Audit committee

Informatio n provided to analysts or media durin g briefings are released t o ASX and t h en posted o n the Comp a ny’s website.

The Audit Committee co n sists of thre e Non-Execut i ve Directors. T h e current me m bers of the A udit Commit t ee are Mr Gemell (Chair), M r Goodacre a nd Ms Corb e tt. The Committee membe r s are considered to h a ve appropriate e xpertise an d skills required for an A u dit Committee.

The full t e xt of Notice of Meetings, Explanator y Notes and the last thr e e years of material AS X

Eastern Iron Limited and its controlled entities Annual Report 2011 < 2 3

Corporate Go v ernance

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announ c ements and f inancial repo r ts are posted on the Co m pany’s websi t e.

Further i n formation about the Sharehol d er Communication Policy is available on the Company’s website ‘ww w .easterniron.com.au’.

Annual general meeting (AGM)

The Comp a ny’s AGM i s considere d an import a nt opportunity f or communi c ating with s h areholders a nd encouraging active shareholder participati o n. Shareholder s are encour a ged to atten d the AGM a nd the Compan y ’s external A uditor will be available at t he AGM to a n swer share h older questions about t he conduct of t h e audit, and t he preparation and conten t of the Indepen d ent Audit Re p ort.

Principle 7: Recognise and manage risk

It is the C ompany’s b e lief that a n effective r isk managemen t system is integral to the Company’s strategic obj e ctives and m aintaining sh a reholder val u e. The Compa n y’s Risk Management P o licy reflects t he Company’s risk profile an d tolerance le v els.

Risk management roles and responsibilities

The Board i s responsible for reviewing the Company’s policies for the oversight and manage m ent of mate r ial business ris k s and satis f ying itself that managem e nt has develop e d and imple m ented a sou n d system of r isk managemen t and internal control.

Managemen t is resp o nsible for the desi g n, implementation and development of ri s k managem e nt and interna l control sy s tems to manage mate r ial business ris k s. The Boar d reviews the effectivenes s of the implem e ntation of t h e risk man a gement syst e m annually.

The Board d o es not have a formal Ris k Committee a nd issues nor m ally covered by a Risk Committee a re discussed at each Board m eeting.

statements declare that the C ompany’s fi n ancial report s give a true and fair view, in a ll material respects, of th e C o mpany’s fin a ncial positio n and comply in all materia l r e spects with relevant a c counting st a ndards. Th e statement als o provides th a t declaratio n s made ar e p r ovided in accordance w ith section 295A of th e C o rporations A c t and are fo u nded on a so u nd system o f ri s k managem e nt and inte r nal control and that th e s y stem is oper a ting effective l y in all material respects i n r e lation to financial reporting risks.

T h e Managing Director an d the Finan c ial Controlle r h a ve reported to the Boar d in accorda n ce with AS X P r inciple 7.2 that the risk management and interna l c o ntrol system s are operati n g effectively in relation t o material business risks for th e period.

A summary of t he Risk Man a gement Poli c y is availabl e o n the Company’s website ‘ w ww.easternir o n.com.au’.

Principle 8: Remunerate fairly and responsibly Remuneration and nomination committee

T h e Board h a s a Remu n eration an d Nominatio n C o mmittee. T h e Committ e e assists t h e Board b y r e viewing and recommend i ng to the B oard on th e C o mpany’s re m uneration policies and pra c tices.

T h e Committe e consists of t hree members of which a majority are in d ependent. F o r the financi a l year ende d 3 0 June 2011, the Compa n y did not co m ply with th e r e commendati o n that t h e Remun e ration an d N o mination Committee be c haired by a n independen t director due to t he small size of the Comp a ny. Details o f the names and attendance o f members at meetings ar e o n page 9 of th e Directors R e port.

A summary o f the Rem u neration an d Nominatio n C o mmittee Charter is available on th e Company’ s w e bsite ‘www. e asterniron.co m .au’.

Remuneration of directors and executives

Managing Director and Financial Controller assurance

The Board r e ceives reports about the fi n ancial condit i on and operational result s of the C ompany fr o m managemen t .

The Managing Director a nd the Fin a ncial Contro l ler annually pro v ide formal s tatements to the Board, a nd have done s o for the ye a r ended 30 J une 2011. T he

N o n-Executive Directors are paid an ann u al fee and d o n o t receive performance rel a ted payment s or bonuses . Options have been issued to Non-Executi v e Directors i n the period end e d 30 June 2011.

E x ecutive remuneration pa c kages are f ormulated t o align executiv e reward wit h achieveme n t of strategi c o b jectives and t he creation o f value for sh a reholders.

T h e Company has an Em p loyee Share Option Pla n which is sum m arised in t h e Directors’ Report. Th e

24 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Corporate Go v ernance

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Company b e lieves that i t s measures of equity-ba s ed remuneratio n are appropriate and shar e holder appro v al is not requir e d for paym e nt of equity- b ased execut i ve remuneratio n .

There are n o schemes for retirement benefits other t h an statutory su p erannuation. The Compa n y prohibits t he entering int o transaction s in products which limit t he economic ri s k of particip a ting in unvested entitleme n ts under any e q uity-based remuneration s c hemes.

Further det a ils on the r e muneration o f Directors a nd Executives a re disclose d on pages 4 to 9 of t he Directors’ R e port.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 2 5

Consol i dated S tatem e nt of C o mpre h ensive Income For the year ended 30 Ju n e 2011

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	Note 2011 $	2010 $
Revenue	3 484,150	132,504

ASX and AS IC fees	(21,803 )	(23,721)
Audit fees	18 (16,900 )	(16,500)
Contract ad ministrations ervices	(141,710 )	( 141,228)
Directors fe es	(129,327 )	(93,135)
Employeec osts(net of co sts recharge d to exploratio nprojects)	(243,935 )	(93,053)
Exploration expendituree xpensed	9 (488,975 )	(8,823)
Marketing c osts	(57,279 )	(3,102)
Recruitmen t expenses	(11,445 )	(61,253)
Rent	(20,595 )	(25,780)
Share base d payments	14 (157,055 )	(56,960)
Other expen ses from ord inaryactivities	(140,864 )	(73,729)
Loss befor e income tax expense	(945,738 )	( 464,780)

Income tax expense	4 -	( 128,556)

Loss after income tax e xpense	13 (945,738 )	( 593,336)

Other com prehensive in come
Othercomp rehensiveinc omeforthe p eriod,net ofta x	-	-
Other com prehensive (l oss)	-	-
Total comp Eastern Iro rehensive (lo n Limited ss) attributa ble to memb ers of	(945,738 )	( 593,336)


Basic lossp er share(cen ts per share)	15 1.1 6	1.29
Dilutedloss pershare (ce nts pershare )	15 1.1 6	1.29

Th e Statement o f Comprehen s ive Income s h ould be rea d in conjunctio n with the ac c ompanying n o tes.

26 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Consol i dated S tatem e nt of Financial Positio n As at 30 Jun e 2011

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Current ass Cash assets Receivables Total curre Non-curren Tenements Property, pl Deferred ex Total non-c Total asset Current lia Payables Provisions Total curre Total liabili Net assets Equity Contributed Accumulate Reserves Total equit ets nt assets t assets ecurity depos ant and equip ploration and urrent asset s bilities nt liabilities ties equity d losses y its ment evaluation ex s penditure	Note	2011 $ 2010 $
	5 6 7 8 9 10 11 12 13 14	3,618,543 84,694 2 ,679,433 51,428
		3,703,237 2 ,730,861
		105,850 37,897 2,458,669 1 120,000 30,086 ,861,682
		2,602,416 2 ,011,768
		6,305,653 4 ,742,629
		418,519 18,892 73,606 6,789
		437,411 80,395
		437,411 80,395
		5,868,242 4 ,662,234
		7,552,017 (2,012,355 328,580 5 ) (1 ,557,326 ,066,617) 171,525
		5,868,242 4 ,662,234

T he Stateme n t of Financial Position sho u ld be read in conjunction w ith the acco mp anying note s .

Eastern Iron Limited and its controlled entities Annual Report 2011 < 2 7

Consol i dated S tatem e nt of C a sh Flo w s For the year ended 30 Ju n e 2011

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Cash flows Payment to R&D tax co Consultingf Rental inco Interest rece Net cash fl Cash flows Purchase o Expenditure Tenements Net cash fl Cash flows Proceeds fr Equity raisin Net cash fl Net increas Add openin Closing ca from operat suppliers and ncession offse ees me ived ows (used in from investi f motor vehicl on mining in ecurity depos ows (used in from financ om issue of s g expenses ows from fin e/(decrease) g cash brough sh carried fo ing activities employees t ) operating a ng activities e and fixed as terests (explo its ) investing a ing activities hares ancing activi in cash held t forward rward ctivities sets ration) ctivities ties	Note	2011 $ 2010 $
	25 25	(715,245 266,973 7,310 1,536 171,909 ) ( 525,340) - - 1,536 118,690
		(267,517 ) ( 405,114)
		(18,784 (786,779 17,500 ) ) ( (10,820) 533,522) -
		(788,063 ) ( 544,342)
		1,994,690 - 322,200 -
		1,994,690 322,200
		939,110 2,679,433 ( 3 627,256) ,306,689
		3,618,543 2 ,679,433

The State m ent of Cash F lows should b e read in co n junction with the accompa n ying notes.

28 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Consol i dated S tatem e nt of C h anges in Equi t y For the year ended 30 Ju n e 2011

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At 1 July 20 Loss for the Other comp Total comp period Transactio as owners: Cost of sha Equity Issue of sha At 30 June At 1 July 20 Loss for the Other comp Total comp period Transactio as owners: Cost of sha Equity Issue of sha At 30 June 09 period rehensive inc rehensive in ns with owne re based paym re capital, ne 2010 10 period rehensive inc rehensive in ns with owne re based paym re capital, ne 2011 ome come/(loss) rs in their ca ents takend t of transactio ome come/(loss) rs in their ca ents takend t of transactio for the pacity irectly to n costs for the pacity irectly to n costs	Attributabl e to the shar eholders of E astern Iron Limited	Attributabl e to the shar eholders of E astern Iron Limited
	N ote 14 12 14 12	Is ca sued pital $ Acc umulated losses $ Reserves $ Total equity $
		5,106 ,570 (4 - (5 - 73,281) 93,336) - 114,565 - - 4,747,854 (593,336) -
		450 - (5 - ,756 93,336) - - - 56,960 - (593,336) 56,960 450,756
		5,557 ,326 (1,0 66,617) 171,525 4,662,234
		5,557 ,326 (1,0 - (9 - 66,617) 45,738) - 171,525 - - 4,662,234 (945,738) -
		1,994 - (9 - ,691 45,738) - - - 157,055 - (945,738) 157,055 1,994,691
		7,552 ,017 (2,0 12,355) 328,580 5,868,242

T he Stateme n t of Changes in Equity sho u ld be read in conjunction w ith the acco m panying notes.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 2 9

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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1. Corporate information

The financial report o f Eastern Iron Limited ( t he Compan y ) for the ye a r ended 30 June 2011 w as authoris e d for issue in accordance w ith a resolut i on of the Di r ectors on 28 S eptember 2 0 11.

Eastern Iron Limited i s a company l i mited by sha r es incorpor a ted and d o miciled in A ustralia wh o se shares are publicly traded on the Austral i an Securitie s Exchange Ltd using the A SX code EF E .

The con s olidated fina n cial stateme n ts comprise t he financial statements o f Eastern Iro n Limited and its subsidia r ies (the Grou p or Consolid a ted Entity).

The nat u re of the ope r ations and p r incipal activit i es of the C onsolidated Entity are d e scribed in t he Director s ’ Report.

2. Summary of significant accounting policies

Basis of preparation

The fina n cial report i s a general purpose finan c ial report, which has bee n prepared in accordance w ith the requirements of t h e Corporatio n s Act 2001 a nd Australia n Accountin g Standards. The finan c ial report h a s been prep a red on a hist o rical cost ba s is. All amou n ts are prese n ted in Australian dollars.

Statement of compliance

The fina n cial report i s a general purpose finan c ial report w h ich has bee n prepared in a ccordance w ith the Cor p orations Act 2001, Accounting Standa r ds and Int e rpretations, and complies with ot h er requirements of the law. Accou n ting Standa r ds include Australian e quivalents t o Internatio n al Financial Reportin g Standa r ds (AIFR S ). Complia n ce with AIF R S ensures t h at the finan c ial stateme n ts and notes of the Comp a ny comply w ith Internati o nal Financial Reporting St a ndards (IFR S ).

Basis of consolidation

The con s olidated fina n cial stateme n ts comprise t he financial statements of Easter n Iron Limi t ed (Eastern Iron or the “ C ompany”) an d its subsidiaries if applic a ble (“the Gro u p”) as at 30 June each y e ar. The fin a ncial state m ents of subsidiaries a re prepared for the sa m e reporting period as t he parent c ompany, u s ing consist e nt account i ng policies. Adjustments are made t o bring into l i ne any dissimilar accounting policies t h at may exist. All

inter-company balances and transactions, including u n realised p r ofits arisin g from i n tra-group tr a nsactions, have been eliminated in full. S u bsidiaries a r e fully cons o lidated fro m date on which control i s transferred t o the Group a nd cease t o be consolidated from the d ate on which control is tr a nsferred out of the Group.

Property, plant and equipment

P l ant and equipment is stated at c ost, less a c cumulated depreciation a nd any imp a irment in v a lue. Depreci a tion is calcu l ated on a straight-line b a sis over the estimated us e ful life of th e asset as f o llows:

Plant and e quipment – 3 - 5 years.
Motor vehi c le – 6 years.

Impairment

T h e carrying v alues of pla n t and equi p ment are r e viewed for impairment wh e n events or c hanges in circumstances indicate the c arrying valu e may not b e recoverable. An item of p lant and eq u ipment is d e recognised upon dispos a l. Any gai n or loss a r ising on derecognition of t h e asset (cal c ulated as the difference between the net disposal proceeds a n d the carrying amount of t he item) is i n cluded in the income st a tement in t h e period the item is d e recognised.

Borrowing costs

B o rrowing costs directly attributable to the a c quisition, c o nstruction o r producti o n of a q u alifying asse t (i.e. an ass e t that necess a rily takes a substantial p eriod of tim e to get ready for its intended use or sale) are c a pitalised as p art of the c o st of that a s set. All oth e r borrowing costs are e x pensed in th e period they occur. Borro w ing costs c o nsist of inte r est and oth e r costs that an entity incurs in connection with the borrowing of f unds. Interest in jointly controlled operations – joint ventures

T h e Company has an inte re st in explor a tion joint v e ntures that a r e jointly cont r olled. A joint venture is a contractual a rrangement whereby tw o or more p a rties undert a ke an eco n omic activit y that is s u bject to joint control. A joi n tly controlled operation involves use o f assets and other resour c es of the v e nturers rath e r than estab l ishment of a separate e n tity. The Co m pany recog n ises its inte r est in the jointly controll e d operation s by recog n ising the a s sets that it c o ntrols and th e liabilities th a t it incurs. T h e Company also recognis e s the expen s es that it incurs and its share of any i n come that it e arns from

30 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes to th e Consolidated F inanci a l State m ents

For the y ear ended 3 0 June 2011

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the sal e of goods or services by the joi n tly controlle d operations.

b a sed on the expected cash flows of the u nderlying n e t asset base of the invest m ent.

Recoverable amount of assets

P u rchases and sales of fina n cial assets t h at require d e livery of assets within th e time frame generally e s tablished b y regulation or conventi o n in the market place a re recognis e d on the tr a de date, b e ing the date that the C ompany c o mmits to p u rchase he asset.

At each reporting d a te, the Co m pany asses s es whether t here is any i n dication that a n asset may be impaired . Where an i n dicator of impairment exi s ts, the Co m pany mak e s a form a l estimate of recovera b le amount. W here the ca r rying amoun t of an asset exceeds its r ecoverable a m ount the as s et is consi d ered impaired and is wri t ten down to its recovera b le amount. Recoverable amount is t he greater o f fair value l e ss costs to s ell and valu e in

Exploration, evaluation, development and restoration costs

Exploration and evaluation E x ploration an d evaluation e xpenditure i n curred by o r on behalf of the Co m pany is ac c umulated s e parately fo r each are a of interest. Such e x penditure c o mprises net direct cost s and an a p propriate portion of relate d overhead expenditure, b u t does no t include g e neral over h eads or a d ministrative expenditure not having a specific c o nnection wit h a particular a rea of intere s t.

use.

Investments

All inve s tments are initially reco g nised at c o st, being th e fair value o f the conside r ation given a nd including acquisition c harges ass o ciated with t he investm e nt. After initial recognition, investme n ts, which a re classifie d as held- f or-trading a nd available-for-sale, are measured at f air value. Gains or loss e s on inve s tments held - for-trading a re recognis e d in the i n come state m ent. Gains or losses on availabl e -for-sale investments a re recognis e d as a sepa r ate component of equity u n til the inv e stment is sold, collecte d or otherw i se disposed of, or until the investment is determine d to be impaired, at whic h time the cu m ulative gain or loss pre v iously report e d in equity i s included in t he income s tatement. N o n-derivative financial ass e ts with fix e d or deter m inable payments and fi x ed maturity are classified as held-to-maturity when t he Compan y has the positive intention and ability to hold to m aturity. Inves t ments intend e d to be held for an und e fined period are not i n cluded in this classific a tion. Other l o ng term inve s tments that a re intended to be held-to-maturity, su c h as bonds, a re subsequ e ntly measur e d at amortis e d cost using t he effective interest meth o d.

E x ploration a n d evaluatio n costs in r e lation to s e parate areas of interest fo r which rights of tenure a r e current ar e brought to a ccount in t h e year in which they are incurred and carrie d forward p r ovided that:

Such cos t s are expe c ted to be recouped through successful development and exploitatio n of the area, or alternatively through its sale.
Exploratio n and/or evaluation activit i es in the area hav e not yet re a ched a stage which permits a reasonable assessment of the existence or otherw i se of ec o nomically recoverabl e reserves.

Once a development decisi o n has been taken, all p a st and fu t ure explor a tion and e valuation e x penditure in respect of t he area of interest is a g gregated wit h in costs of d e velopment.

Exploration and evaluation – impairment T h e Directors assess at each repor t ing date whether there is an indica t ion that an a sset has b e en impaired and for exp l oration and e valuation c o st whether the above carry-forward c r iteria are met.

Amortised cost is cal c ulated by taking into acco u nt any disc o unt or pre m ium on acquisition, over t he period to maturity.

For inve s tments carried at amorti s ed cost, gains and los s es are reco g nised in in c ome when t he investm e nts are dere c ognised or i m paired, as w ell as thr o ugh the a mortisation process. F or investm e nts that are actively trad e d in organi s ed financial markets, f a ir value is determined by referenc e to Securitie s Exchange q u oted market b id prices at the close of b usiness on t h e balance sh e et date. F o r investment s where there is no quo t ed market p rice, fair value is determined by refere n ce to the c u rrent market value of an o ther instrum e nt which is substantiall y the same o r is calcula t ed

A c cumulated costs in resp e ct of areas o f interest a r e written off or a provision made in t h e Income S t atement when the above c riteria do not apply or when the Dire c tors assess t hat the carr y ing value may exceed the recoverabl e amount. Th e costs of p r oductive are a s are amorti s ed over the life of the a r ea of interest to which s u ch costs rel a te on the p r oduction output basis, provisions w ould be r e viewed and if appropriate, w ritten back.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 31

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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Development

a sale transaction rather t h an through c ontinuing u s e, the asset s are reclas s ified as Min e Property H e ld for Sale and carried at t he lower of t h e assets’ c a rrying amou n t and fair va l ue less cost s to sell – where such fair value can be r e asonably d e termined, and otherwise a t its carryin g amount. Liabilities and provisions re l ated to min e property h e ld for sale ar e similarly re c lassified as Liabilities – Mine Property H eld for Sale and, Provisions – Mine P r operty Held for sale, as a p plicable, and carried at the value at which the liability or p rovisions e x pected to be settled.

Develop m ent expendi t ure incurred by or on be h alf of the C o mpany is ac c umulated se p arately for e a ch area of interest in which economi c ally recovera b le reserves have been i d entified to the satisfaction of the Dir e ctors. Such expenditure comprises n et direct c o sts and, in the same manner as for explorati o n and e v aluation e x penditure, an appropri a te portion of related overhead expendit u re having a specific con n ection with the developm e nt property.

All expe n diture incurr e d prior to the commencem e nt of com m ercial level s of produc t ion from e a ch develop m ent propert y is carried forward to t he extent t o which reco u pment out o f revenue to be derived from the s a le of production from t he relevant development property, or f rom the sale of that property, is reaso n ably assured.

Trade and other receivables

T r ade receivables, which g e nerally have 7-30 day t e rms, are recognised and c a rried at origi n al invoice a m ount less a n allowanc e for any uncollectible a m ounts. An e stimate for d oubtful debt s is made when collectio n of the full amount is n o longer p r obable. Bad d ebts are writ t en off when i d entified.

No am o rtisation is provided in respect of develop m ent properti e s until a de c ision has b e en made to commence m ining. After t h is decision, t he costs ar e amortised over the life of the area of interest to which such costs relate on a product i on output b a sis.

Cash and cash equivalents

C a sh and shor t term deposi t s in the balance sheet c o mprise cash at bank and i n hand and s hort term d e posits with a n original m aturity of on e year or less. For the p urposes of t he Statemen t of Cash Flows, cash a n d cash equi v alents consi s t of cash a n d cash equi v alents as de f ined above, n et of any o u tstanding ba n k overdrafts, if any.

Restoration

Provisio n s for resto r ation costs are recogni s ed when th e Company h a s a present obligation (le g al or const r uctive) as a r e sult of a past event, and i t is probable that an out f low of resou r ces embody i ng economi c benefits w i ll be requir e d to settle t he obligatio n and a relia b le estimate c an be made of the amo u nt of the obli g ation. If the e ffect of the ti m e value o f money i s material, provisions a re determin e d by discou n ting the exp e cted cash fl o ws at a p r e-tax rate t h at reflects current mar k et assessments of the ti m e value of m o ney and, wh e re appropri a te, the risks specific to th e liability. W h en discounting is used, t he increase in the provis i on due to t he passage of time is r e cognised a s a finance c ost.

Trade and other payables and provisions

P r ovisions are recognised w hen the Co m pany has a present obli g ation (legal or constructive) as a r e sult of a past event, it is probable that a n outflow o f resources e m bodying ec o nomic bene f its will be r e quired to s e ttle the obli g ation and a reliable e s timate can be made o f the amou n t of the o b ligation.

W here the C o mpany exp e cts some o r all of a p r ovision to b e reimbursed, for example under an insurance c o ntract, the reimburse m ent is r e cognised as a separate a s set but only when the r e imbursement is virtually certain. The expense r e lating to any provision is p resented in t h e income statement net o f any reimbu r sement. If th e effect of the time value of money is m aterial, provisions are d e termined by d iscounting t h e expected f u ture cash fl o ws at a pre-tax rate that reflects curr e nt market a s sessments o f the time val u e of money and, where a p propriate, th e risks specif i c to the liabi l ity. When discounting is used, the in c rease in the provision d u e to the passage of ti m e is recogni s ed as a fi n ance cost.

Remaining mine life

In estim a ting the rem a ining life of t h e mine at e a ch mine pr o perty for the purpose of a mortisation a nd deprecia t ion calculati o ns, due reg a rd is given n ot only to the volume of remaining economic a lly recovera b le reserves but also to limitations which could a r ise from th e potential f or changes in technolo g y, demand, p roduct subst i tution and ot h er issues that are inhere n tly difficult to estimate ov e r a lengthy time frame.

Mine property held for sale

Where t h e carrying a mount of mi n e property a nd related a ssets will be recovered pr i ncipally thro u gh

32 > Eastern Iron Limited and its controlled entities Ann u al Report 2011

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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Employee entitlements

If the terms of a n equity-sett l ed award are modified, a t a minimum an expense i s recognised as if the t e rms had n o t been mo d ified. In ad d ition, an e x pense is re c ognised for any modific a tion that increases the total fair val u e of the sh a re-based p a yment arran g ement, or is otherwise b e neficial to the employee , as meas u red at the date of modification. If an equity-set t led award is c ancelled, it is treated as if it had ve s ted on the d a te of the c a ncellation, a n d any expen s e not yet rec o gnised is r e cognised im m ediately. Ho w ever, if a ne w award is s u bstituted for t he cancelled award and designated a replacement award on th e date it is gr a nted, the c a ncelled and the new awar d are treated a s if there w a s a modifi c ation of th e original a ward, as d e scribed in t h e previous p aragraph. T h e dilutive e f fect, if any, of outstanding options is reflected as a d ditional sha r e dilution i n the comp u tation of e a rnings per share excep t where such dilution w o uld serve to reduce a loss per share.

Liabilitie s for wages and salaries are recogni s ed and are measured as an amoun t unpaid at t he reporting date at curr e nt pay rates in respect of an employe e ’s services up to that date. Curr e nt employe e s are entitl e d to annual leave and l o ng service leave. A liability i n respect of superan n uation at t he current superannuat i on guarantee rate has b e en accrued at the report i ng date.

Share-based payments

In addit i on to salaries, the Co m pany provi d es benefits to certain e m ployees (including Direct o rs and Key Managemen t personnel) o f the Comp a ny in the f o rm of share-based paym e nt transactio n s, whereby employees r ender servic e s in excha n ge for shar e s or rights over shares (“equity-sett l ed transacti o ns”). There is currentl y an Emplo y ee Share O ption Plan in place to provide th e se benefits.

Leases

Finance lease s , which tra n sfer to the Company s u bstantially all the risks an d benefits in c idental to o w nership of t h e leased ite m , are capitali s ed at the inception of th e lease at the fair value of the leased p r operty or, if lower, at th e present value of the minimum leas e payments. Lease pay m ents are a p portioned b e tween the finance charges and r e duction of the lease liabil i ty so as to a chieve a c o nstant rate o f interest on t h e remaining b alance of the liability. Fi n ance charg e s are charg e d directly a g ainst incom e . Capitalis e d leased a s sets are d e preciated ov e r the shorter of the estimated useful lif e of the asset or the lease t erm.

The cos t of these e q uity-settled t r ansactions w ith employe e s is measu r ed by refer e nce to the f air value at t he date at w h ich they are g ranted. The f air value of the options is determined by using t he Black-Scholes option pricing mo d el. In valu i ng transacti o ns settled b y way of issue of options, no account i s taken of a n y vesting limits or hurdles, or the fact t hat the opti o ns are not t r ansferable. T he cost of equity-settled transactions is recognis e d, together with a corresponding inc r ease in equity, over the period in which the vestin g conditions a re fulfilled, e nding on th e date on which the relev a nt employe e s become f u lly entitled t o the award ( t he vesting p eriod).

L e ases where t he lessor ret a ins substanti a lly all the ri s ks and ben e fits of owne r ship of the asset are cl a ssified as o perating lea s es. Initial di r ect costs incurred in n e gotiating an operating lease are a d ded to the c arrying amo u nt of the lea s ed asset a n d recognise d over the le a se term on the same b a ses as th e lease inc o me. Operating lease p a yments are recognised a s an expen s e in the income statem e nt on a stra i ght-line basi s over the lease term.

The cu m ulative exp e nse recogni s ed for equ i tysettled transactions a t each rep o rting date until vesting date reflects:

The extent to w h ich the ves t ing period h as expi r ed.
The Company’s best estimate o f the numbe r of equi t y instrument s that will ulti m ately vest.

No adju s tment is ma d e for the like l ihood of mar k et perform a nce conditio n s being met as the effect of these co n ditions is in c luded in the d etermination of fair valu e at grant d ate. The in c ome statem e nt charge or credit fo r a period represents t he moveme n t in cumulative expense recognised a s at the begi n ning and end of that perio d .

Revenue

R e venue is r e cognised to the extent that it is p r obable that t h e economic b enefits will flow to the C o mpany an d the reve n ue can b e reliably measured. The following sp e cific recognition criteria must also be met before rev e nue is recog n ised:

No expense is recog n ised for aw a rds that do n ot ultimatel y vest, excep t for awards w here vestin g is only con d itional upon a market con d ition.

Sale of goods R e venue is re c ognised wh e n the signifi c ant risks a n d rewards of ownershi p of the go o ds have

Eastern Iron Limited and its controlled entities Annual Report 2011 < 33

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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passed t o the buyer and can be m e asured relia b ly. Risks a n d rewards a r e considere d passed to t he buyer at the time of delivery of t h e goods to t he custome r .

liability in a transaction that is not a business combination and, at the time of the tr a nsaction, affects nei t her the acco u nting profit nor taxable profit or lo s s.

In respect of deductibl e temporary differences associated with invest m ents in su b sidiaries, associates and intere s ts in joint ventures, deferred t a x assets are only recogni s ed to the extent tha t it is proba b le that the t emporary difference s will revers e in the foreseeable future an d taxable p r ofit will be available against which the temp o rary differences can be utilised.

Interest

Revenu e is recognised as the interest accr u es (using t h e effective i n terest meth o d, which is t he rate that exactly dis c ounts estimated future c a sh receipts through the e xpected life of the finan c ial instrume n t) to the n et carrying amount of t he financial asset.

Dividends

Revenu e is recognise d when the shareholder’s ri g ht to receiv e the paymen t is established.

T h e carrying a m ount of def e rred income t ax assets is reviewed a t each bal a nce sheet date and r e duced to the extent that i t is no longe r probable that sufficient t a xable profit w ill be availab l e to allow all or part of t h e deferred i n come tax a s set to be u t ilised.

Income tax

Current t ax assets an d liabilities for the current a nd prior periods are mea s ured at the amount expec t ed to be r e covered from or paid t o the taxat i on authoriti e s. The tax r ates and ta x laws used to compute the amount a re those tha t are enacted or substantively enacted at the balanc e sheet date.

D e ferred inco m e tax ass e ts and liabilities are measured at the tax rates that are expected to a p ply to the year when the a sset is reali s ed or the li a bility is settled, based on t ax rates (and tax laws) that have been enacted or substantively e nacted at the balance s h eet date. In c ome taxes r elating to it e ms recognis e d directly in e quity are rec o gnised in e q uity and not in the income statement.

Deferred income tax is provided o n all tempor a ry differenc e s at the bal a nce sheet d a te between t he tax base s of assets a n d liabilities a n d their carry i ng amounts for financial r e porting purp o ses.

Deferred income tax liabilities are r e cognised for all taxable t e mporary diff e rences:

Other taxes

R e venues, exp e nses and as s ets are reco g nised net o f the amount o f GST excep t :

Exc e pt where th e deferred in c ome tax liability aris e s from the in i tial recogniti o n of an asse t or liability in a transaction that is not a busin e ss com b ination and, at the time o f the transacti o n, affe c ts neither th e accounting p rofit nor taxa b le profit or loss.
Where th e GST incur r ed on a purchase of goods and services is n o t recoverabl e from the taxation a u thority, in w hich case the GST is recognise d as part of t h e cost of ac q uisition of the asset or as part o f the expens e item as applicable.
In r e spect of ta x able tempo r ary differen c es ass o ciated with investments in subsidiari e s, ass o ciates and interests in joint ventur e s, exc e pt where the timing of th e reversal of t he tem p orary differe n ces can be c ontrolled an d it is p r obable that the temporar y differences w ill not r everse in the foreseeable f u ture.
Receivabl e s and payab l es are state d with the amount of GST included.

T h e net amo u nt of GST recoverable from, or p a yable to, the taxation auth o rity is includ e d as part o f receivables o r payables in the balance s heet.

Deferred income tax a ssets are r e cognised for all deductible temporary differences, c arry-forward of unused t ax assets a n d unused ta x losses, to t he extent that it is probable that taxa b le profit will be available against whi c h the dedu c tible tempor a ry differenc e s, and the carry-forward of unused t ax assets a n d unused ta x losses can b e utilised:

C a sh flows a re included in the C a sh Flow S t atement on a gross b asis and t he GST c o mponent of c ash flows ari s ing from inv e sting and fi n ancing activities, which i s recoverabl e from, or p a yable to, the taxation aut h ority, are cl a ssified as o p erating cash flows.

C o mmitments a nd continge n cies are dis c losed net o f the amount o f GST recov e rable from, o r payable t o , the taxation authority.

Exc e pt where th e deferred in c ome tax as s et relating to the deductible tem p orary differe n ce aris e s from the in i tial recogniti o n of an asse t or

34 > Eastern Iron Limited and its controlled entities Ann u al Report 2011

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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Currency

p r ior years. Su c h reversal i s recognised in profit or loss unless the asset is carri e d at revalue d amount, in which cas e the reve rs al is treat e d as a r e valuation in c rease. After such a re v ersal the d e preciation c h arge is adju st ed in future p eriods to allocate the a s set’s revised carrying am o unt, less a n y residual v a lue, on a s ys tematic basis over its r e maining usef u l life.

Both th e functional a nd presenta t ion currency is Australia n dollars (A$).

Investment in controlled entities

The Co m pany’s inves t ment in its c o ntrolled entities is acco u nted for u n der the eq u ity method of accounti n g in the Company’s financ i al statement s .

Significant accounting judgements, estimates and assumptions

Impairment of assets

The Co m pany asse s ses at each reporting d a te whether t here is an in d ication that a n asset may be impaired . If any suc h indication e xists, or w h en annual i m pairment te s ting for an a s set is requir e d, the Co m pany makes an estimate of the ass e t’s recovera b le amount . An asse t ’s recovera b le amount is the higher of its fair val u e less costs to sell and its value in u se and is d e termined for an individual asset, unles s the asset d o es not gener a te cash infl o ws that are largely independent of th o se from ot h er assets o r groups of assets and t he asset’s v alue in use cannot be e stimated to be close to its fair value. In such ca s es the asse t is tested fo r impairment a s part of the cash-generat i ng unit to which it belongs. When the c arrying amo u nt of an a s set or cash - generating u nit exceeds its recovera b le amount, t he asset or cash-generat i ng unit is c o nsidered im p aired and is written down to its recov e rable amoun t .

T h e carrying amounts o f certain assets and li a bilities are o f ten determin e d based on estimates a n d assumpti o ns of future events. The key e s timates and assumptions that have a significant ri s k of causing a material ad j ustment to the carrying a m ounts of ce r tain assets a nd liabilities within the n e xt annual re p orting period a re: Share-based payment transactions

T h e Company measures t h e cost of c a sh-settled s h are-based p a yments at f air value at the grant d a te using the Black and S choles form u la taking into account the terms and conditions u p on which the instrument s were grante d , as detaile d in Notes 1 4 and 16.

Capitalisation and write-off of capitalised exploration costs T h e determina t ion of when t o capitalise a nd writeo f f exploration expenditure re quires the exercise of judgement bas e d on various assumptions and other f a ctors such a s historical e x perience, c u rrent and e x pected econ o mic conditio n s.

In asses s ing value in u se, the estimated future c a sh flows ar e discounted t o their prese n t value usin g a pre-tax d iscount rate that reflects current mar k et assessments of the t i me value of money and t he risks specific to th e asset. Im p airment los s es relating t o continuing operations a r e recognised in those e x pense categories consistent with t he function of the impair e d asset unl e ss the asse t is carried a t a revalued amount (in which case t he impairm e nt loss is treated as a revaluat i on decreas e ).

Issued capital

Ordinary shares are c lassified a s equity. Incremental co s ts directly att r ibutable to t h e issue of n e w shares or options are shown in e q uity as a d e duction, net o f tax, from th e proceeds.

Earnings per share

B a sic earnings per share is calculated as net profit a t tributable to m embers of t he Company, adjusted t o exclude any costs of ser v icing equity d ivided by the weighted a v erage numb e r of ordinary s hares.

An asse s sment is als o made at ea c h reporting d a te as to wh e ther there is any indicatio n that previously recognis e d impairme n t losses may no longer e x ist or may h ave decrea s ed. If such i n dication exi s ts, the reco v erable amo u nt is estimat e d. A previously recognis e d impairmen t loss is reve r sed only if th e re has be e n a change in the estimates used to determin e the asset’s recoverable a mount since t he last imp a irment loss w as recognis e d. If that is t he case the carrying am o unt of the asset is increa s ed to its re c overable amount. The in c reased amo u nt cannot e x ceed the ca r rying amount that would h a ve been d e termined, n e t of depre c iation, had no impairm e nt loss been recognised f or the asset in

Diluted earnings per share i s calculated a s net profit a t tributable to m embers of t he Company, adjusted f o r:

Costs of s e rvicing equit y
.
The after tax effect of dividends and interest associated with diluti v e potential ordinary shares t h at have b een recog n ised as expenses.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 35

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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Oth e r non-discre t ionary chan g es in reven u es or e x penses duri n g the period t hat would re s ult from the dilution of potential or d inary shares.
Divi d ed by the w eighted ave r age number of ordi n ary shares a nd dilutive p o tential ordin a ry sha r es, adjusted f or any bonus element.

New accounting standards and interpretations

Apart from the chang e s in accounting policy no t ed below, t h e accounti n g policies and methods of computa t ion are the same as thos e adopted in t he most re c ent annual f inancial rep o rt. Adoption of these S t andards did not have any effect on t he financial position or perform a nce of t he Consolid a ted Entity.

AASB 2009-5 (Application date 1 January 2010)

Further A mendments t o Australian A ccounting Standar d s arising fro m the Annual I m provements Project – The subject o f amendmen t s to the standard s are set out b elow:

AA S B 8 – Disclosure of in f ormation ab o ut seg m ent assets
AA S B 101 – Current/non-curr e nt classificat i on of c o nvertible inst r uments

Accounting standards issued but not yet effective

Australia n Accounting Standards and interpretati o ns that hav e been issue d or amended but are not y et effective have not been ad o pted by t he Consolid a ted Entity f o r the year e nded 30 J u ne 2011.

AASB 9 Financial Instruments (Application date 1 January 2013)

AASB 9 includes requirements for t he classificat i on and measurement of f inancial asse t s resulting fr o m the first part of Phas e 1 of the I A SB’s project to replace IAS 39 Financial Instrume n ts: Recognit i on and M easurement (AASB 1 39 Finan c ial Instrume n ts: Recognition and Meas u rement).

These r equirements improve a n d simplify t he approac h for classifi c ation and m easurement of financial assets comp a red with the requirement s of AASB 1 3 9. The main changes fro m AASB 139 a re describe d below.

(a) Financial assets a re classified b ased on (1) t he obje c tive of the entity’s busi n ess model for managing the financial a s sets; (2) t he characteristics of the contrac t ual cash flo w s. This replaces t h e numerou s categories of

financial a s sets in AA S B 139, each of which had its ow n classificatio n criteria.

( b ) AASB 9 allows an irrev o cable electio n on initial recognition to present gains and losses on investments in equity i n struments th a t are not held for trading in other com p rehensive income. D ividends i n respect o f these investments that are a r e turn on investment can be recognised in profit o r loss and t h ere is no impairmen t or recyclin g on disposal of the instrument .
( c ) Financial assets can be design a ted and measured at fair value t hrough profit or loss at initial rec o gnition if d o ing so eli m inates or significantl y reduces a measur e ment or recognition inconsisten cy that would a rise from measuring assets or li a bilities, or r e cognising the gains and losses on them, o n different bases.

ASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (Application date 1 January 2013)

T h ese amend m ents arise from the is s uance of A A SB 9 Fin a ncial Instru m ents that sets out r e quirements for the classificati o n and measurement o f financial as s ets. The requirements in AASB 9 form part of t he first pha s e of the International A c counting St a ndards Boar d ’s project t o replace IAS 39 F inancial In s truments: R e cognition an d Measurem e nt .

T h is Standard shall be ap p lied when A ASB 9 is a p plied.

AASB 124 (Revised) Related Party Disclosures (December 2009) (Application date 1 January 2011)

T h e revised A A SB 124 sim p lifies the defi n ition of a r e lated party, c larifying its i ntended me a ning and eliminating in c onsistencies from the definition, including:

( a ) The defini t ion now ide n tifies a subs i diary and an associate with the s a me investor a s related parties of e ach other
( b ) Entities si g nificantly infl u enced by o n e person and entities significantl y influenced b y a close member of the family o f that pers o n are no longer rela t ed parties of each other
( c ) The defini t ion now ide n tifies that, w h enever a person or entity has b o th joint cont r ol over a second e n tity and join t control or significant influence o ver a third p arty, the second and third entiti e s are related t o each other

36 > Eastern Iron Limited and its controlled entities Ann u al Report 2011

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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A partial exemption is also pro v ided from t he disclosu r e requirem e nts for go v ernment-rela t ed entities. E ntities that a re related b y virtue of be i ng controlle d by the sa m e governm e nt can prov i de reduced r elated party d isclosures.

P u blic sector entities oth e r than the A ustralian Government a nd State, Territory a n d Local Governments

AASB 1054 Australian Additional Disclosures (Application date 1 July 2011)

AASB 2009-12 Amendments to Australian Accounting Standards (Application date 1 January 2011)

T h is standard i s as a cons e quence of phase 1 of the joint Trans - Tasman Con v ergence pro j ect of the A A SB and FR S B.

This a m endment m akes num e rous edito r ial changes to a rang e of Australian Account i ng Standar d s and Interpr e tations.

T h is standard relocates a ll Australia n specific disclosures fro m other stan d ards to one place and r e vises disclos u res in the foll o wing areas:

In parti c ular, it a m ends AAS B 8 Operat i ng Segmen t s to requi r e an entit y to exerc i se judgeme n t in assessi n g whether a g overnment a nd entities k nown to b e under the control of t h at governm e nt are cons i dered a sin g le customer for the pu r poses of c ertain ope r ating segm e nt disclosu r es. It also makes nu m erous edito r ial amendm e nts to a ra n ge of Austr a lian Account i ng Standar d s and Interpretatio n s, includ i ng amendm e nts to reflec t changes made to the tex t of IFRS by t he IASB.

( a ) Complianc e with A ustralian A ccounting Standards
( b ) The statut o ry basis or r eporting fra m ework for financial st a tements
( c ) Whether t h e financial s tatements are general purpose or special purp o se

( d ) Audit fees ( e ) Imputation credits AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13] (Application date 1 January 2011)

AASB 1053 Application of Tiers of Australian Accounting Standards (Application date 1 July 2013)

This St a ndard establishes a diff e rential finan c ial reporting framework consisting of two Tiers of reporting requireme n ts for preparing gen e ral purpose f inancial stat e ments:

E m phasises t h e interactio n between q u antitative a n d qualitative AASB 7 dis c losures and t he nature a n d extent of risks ass o ciated with financial instruments.

(a) Tier 1: Australian A ccounting S t andards

Clarifies that an entity will p resent an analysis of o t her compreh e nsive incom e for each co m ponent of e q uity, either i n the stateme n t of change s in equity o r in the notes t o the financi a l statements.

(b) Tier 2: Australi a n Accountin g Standards – Red u ced Disclos u re Requirem e nts

Tier 2 comprises the r e cognition, m e asurement a nd presenta t ion requir e ments of Tier 1 a nd substantially reduced disclosures c orresponding to those re q uirements.

P r ovides guid a nce to illustrate how to apply disclosure principles in AA S B 134 for significant e v ents and tra n sactions.

The foll o wing entities apply Tier 1 requirement s in preparin g general pur p ose financial statements:

Clarifies that w h en the fair v a lue of award credits is measured bas e d on the v a lue of the awards for which they c o uld be rede e med, the a mount of discounts or incentives o therwise g r anted to c u stomers not participatin g in the aw a rd credit s c heme, is to be taken into a c count.

(a) For- p rofit entities i n the private sector that h a ve publ i c accounta b ility (as defined in this Sta n dard)
(b) The Australian G o vernment an d State, Territ o ry and Local Governments

AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] (Application date 1 July 2011)

The foll o wing entities apply either Tier 2 or Tie r 1 requirements in prepa r ing general p urpose finan c ial stateme n ts:

(a) For- p rofit private sector entities that do n ot hav e public acco u ntability

T h e amend m ents incre a se the d isclosure r e quirements f o r transaction s involving tr a nsfers of fi n ancial asset s . Disclosure s require enh a ncements t o the existing d isclosures in IFRS 7 wher e an asset

(b) All not-for-profit p r ivate sector entities

Eastern Iron Limited and its controlled entities Annual Report 2011 < 37

Notes to th e Consolidated F inanci a l State m ents For the y ear ended 3 0 June 2011

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is transf e rred but is n o t derecognis e d and introd u ce new dis c losures for a ssets that a r e derecogni s ed but the entity conti n ues to hav e a continu i ng exposur e to the asset a fter the sale.

AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127] (Application date 1 January 2013)

The req u irements fo r classifying and measur i ng financial liabilities w e re added to AASB 9. T he existing requirement s for the c lassification of financial liabilities an d the ability to use the f air value option have be e n retained. H owever, wh e re the fair v alue option is used for fi n ancial liabilit i es the chan g e in fair valu e is accounte d for as follo ws :

The change attri b utable to c h anges in cr e dit risk are present e d in other comprehens i ve inco m e (OCI).
The remaining change is pres e nted in profit or loss .

If this a p proach creat e s or enlarge s an account i ng mismatc h in the pro f it or loss, t h e effect of t he changes in credit risk a re also pres e nted in profi t or loss.

Consolidated Financial Statements (Application date 1 January 2013)

IFRS 1 0 establishes a new control model t h at applies t o all entities. It replaces parts of IAS 27 Consolid a ted and S e parate Financial Stateme n ts dealing with the a ccounting f o r consolida t ed financial statements a nd SIC-12 Consolidatio n – Special P urpose Entiti e s.

The ne w control m o del broaden s the situati o ns when a n entity is co n sidered to b e controlled by another entity and includes ne w guidance for applying the model t o specific situ a tions, includ i ng when a c ting as a m a nager may g ive control, t he impact of potential v o ting rights a n d when hold i ng less tha n a majority v o ting rights m ay give cont r ol. This is likely to le a d to more entities be i ng consolid a ted into the g roup. Joint Arrangements (Application date 1 January 2013)

I F RS 11 replaces IAS 31 Int e rests in Join t Ventures a n d SIC-13 J ointly- contr o lled Entitie s – Non- m onetary Cont r ibutions by V entures. IFR S 11 uses the principle o f control in I F RS 10 to d e fine joint c o ntrol, and th e refore the d e termination o f whether joint control exists may chan g e. In additio n IFRS 11 r e moves the o p tion to acco u nt for jointly controlled e n tities (JCEs) using prop o rtionate con s olidation. Instead, acco u nting for a joint arran g ement is d e pendent on the natur e of the ri g hts and o b ligations ari s ing from t h e arrangem e nt. Joint o p erations tha t give the v e nturers a ri g ht to the u n derlying assets and obli g ations the m selves is a c counted for by recognisi n g the share of those a s sets and obligations. Joi n t ventures th a t give the v e nturers a rig h t to the net a ssets is acc o unted for u s ing the equ i ty method. This may r e sult in a c h ange in the a ccounting fo r the joint arrangements h e ld by the gro u p.

Disclosure of Interests in Other Entities (Application date 1 January 2013)

I F RS 12 includes all disc l osures relating to an e n tity’s interest s in subsidiar i es, joint arra n gements, a s sociates and structures e n tities. New disclosures h a ve been intr o duced abou t the judgem e nts made b y managem e nt to deter m ine wheth e r control e x ists, and to r e quire summ a rised information about joint arrange m ents, asso c iates and structured e n tities and subsidiaries with non- c ontrolling interests.

Fair Value Measurement (Application date 1 January 2013)

I F RS 13 esta b lishes a sin g le source of guidance u n der IFRS for determining t he fair value of assets a n d liabilities. I FRS 13 doe s not change when an e n tity is required to use f air value, but rather, p r ovides guida n ce on how t o determine fair value u n der IFRS when fair value i s required or permitted b y IFRS. Appli c ation of this definition ma y result in different fair v alues bein g determine d for the r e levant assets.

IFRS 13 also exp a nds the d isclosure requireme n ts for all as s ets or liabiliti e s carried at fair val u e. This incl u des informa t ion about the assu m ptions mad e and the q ualitative impact of t hose assum p tions on the fair value determine d .

38 > Eastern Iron Limited and its controlled entities Ann u al Report 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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3. Revenue from ordinary activities

3. Rev enue fro m ordin ary activ ities
	2011 $ 2010 $
Interest rece ived – other persons/corpo ration	185,109 132,149
R&D tax co ncession offse t	266,973 -
Gain on ten ement transfe r	23,280 -
Consultingf ees	7,251 -
Rental inco me	1,537 355
	484,150 132,504

4. Income tax

4. Inco me tax
	2011 $ 2010 $
Income tax expense
The majorc omponentso f income taxe xpense are:
Current inco me tax	- -
Current inco me tax benef it	- -
Deferred inc ome tax	- -
Relating to origination an d reversal oft emporary diff erences	- 206,024
Recognition of previously unrecognised losses	- (77,468)
Income tax Income (benefit)/expe nse reported in the Statem ent of Compre hensive	- 128,556
Reconciliat ion
Prima facie income tax (b enefit)/expen se on operatin g (loss)/profi t at 30%	(283,722 ) ( 139,434)
Non-deduct ible expenses	(58,686 ) 17,333
Recognition of previously unrecognised losses	- (77,468)
De-recognit ion of current year loss	342,408 279,124
Recognition / de-recognit ion of tempor arydifference s	- 49,001
Income tax (benefit)/expe nse	- 128,556
Recognise d deferred ta x assets and liabilities
Opening de ferred tax liab ility balance	- -
Charged to income expen se / (benefit)	- 128,556
Charged to equity (credit)	- ( 128,556)
Closing bala nce	- -

Tax(benefit )/expense in t he Statement of Comprehe nsive Income	- 128,556
Amounts re cognised in th e Statemento f FinancialP osition	- -
Deferred tax asset	- 565,745
Deferred tax liability	- 565,745
Net deferred tax balance	- -

Eastern Iron Limited and its controlled entities Annual Report 2011 < 3 9

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Deferred inc o me tax at 30 June relates t o the followi n g:

	2011 $ 2010 $
(i) Deferre d tax liabilitie s
Capitalised exploration	- 558,505
Other	- 7,240
Gross defer red tax liabilit ies	- 565,745
(ii) Deferre d tax assets
Carry-forwa rd tax losses	- 899,078
Provisions	- 4,287
Share issua nce costs	- 53,844
Tax losses not booked	- ( 391,464)
Gross defer red tax assets	- 565,745
Net deferred tax assets/(l iabilities)	- -

The total av a ilable carrie d forward los s es attributa b le to Easter n Iron Limited are $3,407, 9 60 (tax ben e fit at 30% i s $1,022,388). No franking c redits are av a ilable for sub s equent year s .

The parent e ntity and the g roup are not tax consolid a ted. The par e nt company a nd each of t h e subsidiarie s in the grou p are in tax lo s s. The Direct o rs are of the view that the r e is insufficient probability that the pare n t entity and i t s subsidiarie s will derive s u fficient inco m e in the for e seeable future to justify b ooking the t a x losses an d temporary d ifferences a s deferred tax a ssets and d e ferred tax lia b ilities.

5. Cash and cash equivalents

5. Cas h and ca sh equi valents
	2011 $ 2010 $
Cash at ban k	221,792 37,751
Money mark et securities – bank depos its	3,396,751 2 ,641,682
	3,618,543 2 ,679,433

Bank negoti a ble certificat e s of deposit, which are n o rmally invested between 30 and 365 d ays were used during th e period and a r e used as part of the cash management function.

6. Receivables – current

6. Rec eivables – curre nt
	2011 $ 2010 $
Trade recei vables	- 11,675
GST receiva bles	35,953 4,153
Interest rece ivable	37,334 24,134
Prepaymen ts	11,407 11,466
	84,694 51,428

40 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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7. Tenement security deposits

	2011 $ 2010 $
Cash withg overnment m ines departme nt	105,850 120,000
	105,850 120,000

These depo s its are restr i cted so that they are av a ilable for an y rehabilitation that may b e required o n exploratio n tenements ( N ote: 21).

8. Property, plant and equipment

	M otor vehicle	e Plant and quipment	Total
Year ended 30 June 201 0
Opening ne t book amoun t	20,490	5,485	25,975
Additions	-	11,087	11,087
Disposals	-	-	-
Depreciatio n expense	(3,940)	(3,036)	(6,976)
Closingnet book amount	16,550	13,536	30,086
At 30 June 2010
Cost	24,166	18,072	42,238
Accumulate d depreciation	(7,616)	(4,536)	(12,152)
Net book am ount	16,550	13,536	30,086
Year ended 30 June 201 1
Opening ne t book amoun t	16,550	13,536	30,086
Additions	-	18,785	18,785
Disposals	-	-	-
Depreciatio n expense	(4,028)	(6,946)	(10,974)
Closingnet book amount	12,522	25,375	37,897
At 30 June 2011
Cost	24,166	36,857	61,023
Accumulate d depreciation	(11,644)	(11,482)	(23,126)
Net book am ount	12,522	25,375	37,897

9. Deferred exploration and evaluation expenditure

	2011 $ 2010 $
Costs broug ht forward	1,861,682 1 ,429,648
Costs incur red during the period	1,062,682 440,857
Expenditure written off du ring period	(203,203 ) (8,823)
Gain on tran sfer of tenem ents (discuss ed below)	23,280 -
Loss on tran sfer of tenem ents(discuss ed below)	(285,772 ) -
Costs carrie d forward	2,458,669 1 ,861,682
Exploration expenditure costs carrie d forward ar e made up o f:
� Expend iture on joint venture areas	2,118,830 1 ,832,796
� Expend iture on nonj oint venturea reas	339,839 28,886
Costs carrie d forward	2,458,669 1 ,861,682

Eastern Iron Limited and its controlled entities Annual Report 2011 < 4 1

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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The above a mounts repr e sent costs of areas of inte r est carried f o rward as an a sset in acco r dance with t h e accountin g policy set o u t in Note 2. T he ultimate r ecoupment o f deferred exploration and evaluation e x penditure in respect of a n area of inte r est carried f o rward is dep e ndent upon the discover y of commercially viable r e serves and t h e successfu l developmen t and exploita t ion of the re s pective area s or alternativ e ly sale of th e underlying a reas of inter e st for at leas t their carryin g value. Amor t isation, in re s pect of the r e levant area o f interest, is n ot charged u ntil a mining operation ha s commenced.

The gain an d loss on tra n sfer of tene m ents relates to the East e rn Iron and P latSearch N L Joint Venture restructur e approved by shareholders at the Comp a ny’s EGM in November 2 0 10. The net l o ss of $262k r elates to the write down o f previously c a pitalised exploration expe n diture on th o se tenement s where the C ompany’s int e rest reduce d from 80% t o 49%.

An amount o f $337,460 i s included in t he 2009 ope n ing costs br o ught forward of $498,225. This amoun t represents a Sale and J o int Venture a greement with PlatSearc h NL entered into on 30 January 200 8 for the purchase by th e Company of an 80% inte r est in 15 ten e ments in ex c hange for 1 1 ,000,000 sh a res in the C o mpany at $0.03 per shar e ($330,000) a nd 5,000,000 options at $0.001 per option ($5,0 0 0) with an e xercise pric e of 35 cents (Note: 12) . Additionally, $2,460 was spent on registering the ten e ments.

10. Payables – current liabilities

10. Pay ables – current l iabilities
	2011 $ 2010 $
Trade credi tors	312,906 39,208
Accrued ex penses	91,470 13,026
PAYG ands uperannuatio n payable	14,143 20,311
GST payab le	- 1,061
	418,519 73,606

11. Provisions – current liabilities

11. Pro visions – curren t liabiliti es
	2011 $ 2010 $
Annual leav e provision	18,892 6,789
12. Con tributed equity
	2011 $ 2010 $
Share capi tal
65,307,419 fully paid ordi nary shares ( 2010: 48,685, 000)	7,846,980 5 ,852,290
Fully paido dividends. rdinary shares carry one vo te per sharea nd carry the right to
Options on Issue
5,000,000 ( 2010: 5,000,0 00)	5,000 5,000
Share issu e costs	(299,963 ) ( 299,964)
	7,552,017 5 ,557,326

42 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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	Number $
Movements in ordinary shares on is sue
At 1 July 20 09	46,000,000 5 ,530,090
Shares issu ed (i)	2,685,000 322,200
At 30 June 2010	48,685,000 5 ,852,290
Shares issu ed (ii)	16,622,419 1 ,994,690
At 30 June 2011	65,307,419 7 ,846,980

(i) The Co m pany issued 2,685,000 fully paid ordin a ry shares in June 2010 o n the exercis e of 2,685,00 0 options at a price of $ 0.12.
(ii) The Co m pany issued 16,622,419 f ully paid ordinary shares d uring the pe r iod to 30 Ju n e 2011 on t h e exercise o f 16,622, 4 19 options at a price of $0.12.

	Number $
Movements in options o n issue
At 1 July 20 09	28,000,011 5,000
Exercise of options (i)	(2,685,000 ) -
At 30 June 2010	25,315,011 5,000
Exercise of options (ii)	(16,622,419 ) -
Expired (iii)	(3,692,592 ) -
At 30 June 2011	5,000,000 5,000

(i) The Co m pany issued 2,685,000 fully paid ordin a ry shares in June 2010 o n the exercis e of 2,685,00 0 options at a price of $ 0.12.
(ii) The Co m pany issued 16,622,419 f ully paid ordinary shares d uring the pe r iod to 30 Ju n e 2011 on t h e exercise o f 16,622, 4 19 options at a price of $0.12.

(iii) 3,692,5 9 2 options ex p ired on 19 D e cember 201 0 .

An additiona l 3,050,000 o p tions are on issue under S h are based p a yments (Not e : 14).

Terms and conditions of contributed equity

Ordinary shares

Ordinary sh a res have th e right to rec e ive dividends as declare d and, in the event of wi n ding up the Company, t o participate i n the proceed s from the s a le of all surplus assets in proportion to the number o f and amounts paid up o n shares held.

Ordinary sh a res entitle th e ir holder to o n e vote, eithe r in person or by proxy, at a meeting of t h e Company.

Options

Options do not carrying v o ting rights or r ights to divid e nd until options are exerci s ed.

13. Accumulated losses

13. Acc umulate d losses
	2011 $ 2010 $
Balance att he beginning of period	1,066,617 473,281
Operatinglo ss after incom e tax expens e	945,738 593,336
Balance att he end of per iod	2,012,355 1 ,066,617

Eastern Iron Limited and its controlled entities Annual Report 2011 < 4 3

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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14. Reserves/share-based payments

Reserves

Reserves
10.96	2011 $ 2010 $
Balance at 1 July	171,525 114,565
Share-base d payment co sts issued un der Share Iss ue Costs	- -
Share-base d payment ex pense during the financialy ear	157,055 56,960
Balance at3 0 June	328,580 171,525

The share-b a sed paymen t plans are d e scribed belo w . There hav e been no ca n cellations or modifications to any of th e plans during 2011 and 20 1 0.

Types of share-based payment plans

Share-based payments

An Employe e Share Opti o n Plan (ESO P ) has been e stablished w h ere selected officers and e mployees of the Compan y can be issued with option s over ordinar y shares in E a stern Iron Li m ited. The options, issued f or nil consid e ration, will b e issued in ac c ordance wit h a performa n ce review b y the Director s . The options cannot be t ransferred a n d will not b e quoted on th e ASX. There have been 1,350,000 opti o ns granted u n der the Plan a s at the dat e of this report.

Summary of options granted by the parent entity

Summary of options granted b y the paren t entity
	2011 no . 2010 no.
Outstanding at the beginn ing of the yea r	5,470,000 4 ,270,000
Granted during the ye ar	1,850,000 1 ,200,000
Forfeited during they ear	- -
Exercise d during they ear	- -
Expired duringtheye ar	(4,270,000 ) -
Outstanding at the end of the year	3,050,000 5 ,470,000

The outstan d ing balance a s at 30 June 2 011 is repre s ented by:

1,850,0 0 0 options ex e rcisable at $ 0 .20, expiry 2 3 November 2013
1,200,0 0 0 options ex e rcisable at $ 0 .18, expiry 9 M arch 2015
There a r e an addition a l 5,000,000 o ptions under contributed e q uity (Note: 1 2 ) which is re p resented by:
� 5,000,0 0 0 options ex e rcisable at $ 0 .35, expiry 1 9 December 2012

44 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Option pricing model and terms of options

The followin g table lists th e inputs to th e options mod e l and the ter m s of options granted:

Grant date	Number of options issued	Exer- cise price	E xpiry date	Ex vo pected latility	Ris r k-free ate	Exp ed l yea ec- ife rs	Estim ed fa value at- ir	Model used
Dec 07	320,000	$0.25	19 Dec 10	1 20%	6. 51%	3	$0.002 5	Black-S choles	(a)
Feb 08	2,150,00	$0.25	19 Dec 10	1 20%	6. 51%	3	$0.002 5	Black-S choles	(b)
Apr 08	1,800,00	$0.25	19 Dec 10	10 5.56%	6. 39%	3	$0.059 8	Black-S choles	(c)
Mar 10	1,200,00	$0.18	9 Mar 15	10 4.16%	5. 01%	5	$0.07 12	Binom ial	(d)
Sep10	150,000	$0.20	23 Nov 13	10 6.99%	4. 87%	3	$0.069 5	Binom ial	(e)
Nov 10	1,700,00	$0.20	23 Nov 13	10 6.99%	4. 87%	3	$0.069 5	Binom ial	(f)

(a) 320,000 options were issued to co n sultants of t h e Company. 1 60,000 options vested on 30 June 200 8 and 160,00 0 options v ested on 30 J une 2009.

(b) 2,150,0 0 0 options w e re issued to Directors a n d approved b y sharehold e rs at the G e neral Meeting held on 1 3 Februar y 2008. 1,075,000 options v ested on 30 J une 2008 an d 1,075,000 v e sted on 30 J u ne 2009.
(c) 1,800,0 0 0 options were issued to a broker and c onsultant in relation to ca p ital raising, w hich has be e n included i n share is s ue costs wit h in contribute d equity on th e balance she e t. Options v e sted on grant date.
(d) 1,200,0 0 0 options w e re issued to G reg De Ros s . 600,000 o p tions vested on grant dat e and 600,00 0 vested on 9 March 2 0 11.
(e) 150,000 options were issued to a c o nsultant. Th e options vest e d on grant d a te.
(f) 1,700,0 0 0 options were issued to D irectors and a pproved by s hareholders a t the AGM h e ld in Novem b er 2010. Th e options v ested on gra n t date.

Weighted average disclosures on options

Weighted average exercise price of o p tions at 1 Jul y Weighted average exercise price of o p tions granted during period Weighted average exercise price of o p tions outstan d ing at 30 Ju n e Weighted average exercise price of o p tions exercis a ble at 30 June Weighted average contr a ctual life Range of e x ercise price

	2011	2010
	$0.23	$0.25
	$0.20	$0.18
	$0.19	$0.23
	$0.19	$0.24
	2.91 years	1. 40 years
	$0.18 - $0.20	$0.18 - $0.25

15. Earnings per share

		2011	2010
e r share		(922,738)	(5 93,336)
		Number	Number
t he year		57,684,224	46 ,154,479
	C ents per sha re		Cents per share
		(1.16)	(1.29)
		(1.16)	(1.29)

Net profit/(l o ss) used in c alculating ba s ic and dilute d gain/(loss) p e r share Weighted average numb e r of ordinary shares outst a nding during t he year used in cal c ulation of ba s ic EPS Basic earni n gs (loss) per share Diluted ear n ings (loss) p e r share

Eastern Iron Limited and its controlled entities Annual Report 2011 < 4 5

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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16. Key management personnel

Key management personnel compensation

The aggregate compensa t ion made to k ey managem e nt personnel of the Comp a ny is set out b elow:

	2011 $ 2010 $
Short terme mployee ben efits	535,803 403,739
Post-emplo yment benefit s	33,107 15,469
Other longt erm benefits	- -
Termination benefits	- -
Share-base d payments	157,055 56,960
	725,965 476,168

Shareholdings of key management personnel

Fully paid ordinary shares held in Eastern Iron Limited

	Ba lance at 1 July no.	Granted compensa no. as tion	Re e ceived on xercise of options no.	Net oth chang no. er e	Bal ance at 30 June no.
2011
G Goodacre	3 20,000	-	160,000	-	4 80,000
G De Ross	-	-	-	-	-
W Corbett	50,000	-	25,000	-	75,000
G Jones	-	-	698,975	-	6 98,975
S Gemell	-	-	-	-	-
I Polovineo	-	-	-	-	-
P Buckley	1 00,000	-	12,500	-	112,500
M Lilley	-	-	-	-	-
	4 70,000	-	896,475	-	1 ,366,475
2010
G Goodacre	3 20,000	-	-	-	3 20,000
G De Ross	-	-	-	-	-
W Corbett	50,000	-	-	-	50,000
G Jones	-	-	-	-	-
S Gemell	-	-	-	-	-
I Polovineo	-	-	-	-	-
P Buckley	1 00,000	-	-	-	100,000
M Lilley	-	-	-	-	-
	4 70,000	-	-	-	4 70,000

46 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Option holdings of key management personnel

Share options held in Eastern Iron Ltd

	Balance at 1 July no.	Granted as compensa tion no.	Exerci sed no.	Ne c t other hange no. *	B at alance 30 June no.	Bal ves at Ju n ance ted 30 ne o.	Veste but no exercis ble no. d t a	Vested and exercisa ble no.	Options vested during year no.
2011
G Goodacre	500,000	500,000	-	( 500,000)	500,000	50 0,000	-	500,000	500,000
G De Ross	1,200,000	-	-	-	1, 200,000	1,2 00,00	-	1,200,000	600,000
W Corbett	250,000	300,000	-	( 250,000)	300,000	30 ~~0~~ 0,000	-	300,000	300,000
G Jones	-	300,000	-	-	300,000	30 0,000	-	300,000	300,000
S Gemell	-	300,000	-	-	300,000	30 0,000	-	300,000	300,000
I Polovineo	-	-	-	-	-	-	-	-	-
P Buckley	1,000,000	300,000	-	(1 ,000,000)	300,000	30 0,000	-	300,000	300,000
M Lilley	100,000	150,000	-	( 100,000)	150,000	15 0,000	-	150,000	150,000
	3,050,000	1,850,000	-	(1 ,850,000)	3, 050,000	3,0 50,00	-	3,050,000	2,450,000
2010
G Goodacre	500,000	-	-	-	500,000	50 0,000	-	500,000	-
G De Ross	-	1,200,000	-	-	1, 200,000	60 0,000	-	600,000	600,000
W Corbett	250,000	-	-	-	250,000	25 0,000	-	250,000	-
G Jones	-	-	-	-	-	-	-	-	-
S Gemell	-	-	-	-	-	-	-	-	-
I Polovineo	-	-	-	-	-	-	-	-	-
P Buckley	1,000,000	-	-	-	1, 000,000	1,00 0,000	-	1,000,000	-
M Lilley	100,000	-	-	-	100,000	10 0,000	-	100,000	-
	1,850,000	1,200,000	-	-	3, 050,000	2,4 50,00	-	2,450,000	600,000

*Expired options

17. Related party disclosures

Subsidiaries

The consolidated financial statements i n clude the fin a ncial statem e nts of Easter n Iron Limited (the Parent E ntity) and th e following su b sidiaries:

		% Equ ity interest	% Equ ity interest
Name	C inc ountry of orporation	2011	2 010
Queensland Iron PtyLtd	Australia	100	-
Eastern Res ources PNG Limited	Papu a New Guinea	100	100

Queensland Iron Pty Ltd w as incorpora t ed on 18 No v ember 2010. Eastern Res o urces PNG L imited was in c orporated o n 21 April 200 9 (Name changed from Ra k u 91 Limited o n 20 May 20 1 0).

Eastern Iron Limited and its controlled entities Annual Report 2011 < 4 7

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Transactions with other related parties

PlatSearch NL

PlatSearch N L (PlatSearc h ) is a 48.26 % shareholde r of Eastern I r on. The Com p any engage d PlatSearch t o provide th e services of M r Peter Buc k ley as a ge o logical cons u ltant, with p a yments as a t 30 June 20 1 1 totalling $ 3 5,160 (2010 : $98,350). The Compa n y engaged PlatSearch to p rovide the te c hnical servic e s of Mr Greg Jones with p a yments for t h e year ende d 30 June 201 1 totalling $6, 1 63 (2010: $15,038).

The Compa n y has paid P latSearch re n t of $20,595 (2010: $25,780) for the fi n ancial year e nded 30 June 2011 whic h includes rei m bursement o f office cos t s. The contr a ct with PlatSearch is b a sed on nor m al commercial terms an d conditions.

18. Auditors’ remuneration

18. Aud itors’ re munerat ion
	2011 $ 2010 $
Total amou nts receivable by the curren t auditors oft he Company for:
Audit of the Company’sa ccounts	16,900 16,500
Other servi ces	- -
	16,900 16,500

19. Joint ventures

The Compa n y is a party t o three joint v e nture agree m ents to expl o re for iron or e . Under the t e rms of the a g reements th e Company will be required to contribute towards the exploration and other costs if it wishes to maintain o r increase it s percentage h oldings. The j oint ventures are not separate legal entities. There are contractual arrangement s between th e participants f or sharing co s ts and futur e revenues in t he event of e xploration su c cess. There a re no assets and liabilitie s attributable t o the Compa n y at the bal a nce date res u lting from th e se joint ventures, other t h an exploration expenditur e costs carried forward as d e tailed as in N ote 9.

Percentage e quity interests in joint vent u res at 30 Ju n e 2011 were as follows:

		Percentage	Perc entage	Perc entage
		interest 2011	intere st	2010
New South Wales
Eastern Ten ement Block	(4 Exploratio n Licences)	49 %		80%
Western Te nement Block	(13 Explorat ion Licences	100 %		80%
Hutch		0 %		0%
Queenslan d
Hawkwood – EFE can ea rn 80%		0 %		0%

20. Financial report by segment

The operatin g segments i d entified by m a nagement a r e as follows:

Exploration projects funded directly by Eastern Iron Limited (“Exploration”)

Regarding t h e Exploration segment, th e Chief Opera t ing Decision Maker (the B o ard of direct o rs) receives information o n the explorati o n expenditur e incurred. T h is informatio n is disclosed i n Note 9 of this financial re p ort. No seg m ent revenue s are disclose d as each e x ploration ten e ment is not at a stage w here revenu e s have bee n earned. Fu r thermore, n o segment costs are disclos e d as all seg m ent expendit u re is capitali s ed, with the e xception of e x penditure written off whic h is disclosed in Note 9.

48 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Financial inf o rmation abo u t each of the s e tenements i s reported to the Managin g Director on a n ongoing basis. Corporate of f ice activities are not allocated to operating segments as they are n o t considered part of the c o re operation s of any segm e nt and comp r ise of the foll o wing:

Interest revenue.
Corpora t e costs.

� Depreci a tion and am o rtisation of n o n-project specific property, plant and eq u ipment. The Group’s accounting p o licy for repor t ing segment s is consistent with that disclosed in Note 2.

21. Contingent liabilities

The Compa n y has provid e d guarantee s totalling $10 5 ,850 in resp e ct of explora t ion tenement s in NSW an d Queensland . These guarantees in resp e ct of explora t ion tenemen t s are secure d against dep o sits with NS W Minerals a n d Energy an d DERM Que e nsland. Rug b y Mining has been reimbu r sed $850 by the Compan y for Eastern Iron’s share o f the securit y deposit on E PM 17099 i n Queensland. The Company does not e xpect to inc u r any materi a l liability in r espect of th e guarantees.

22. Financial instruments

The Board a s a whole i s responsible for reviewin g the Compa n y’s policies o n risk overs i ght and management an d satisfying its e lf that Seni o r Manageme n t have deve l oped and implemented a sound syste m of risk ma n agement an d internal cont r ol. The Company’s risk m anagement p olicy has be e n designed to identify, as s ess, monito r and manag e material bus i ness risks to ensure effective manage m ent of risk. T h ese policies are reviewed regularly to r e flect materia l changes in m arket conditi o ns and the Company’s ris k profile.

The main ris k s identified i n the Compa n y’s financial i n struments a r e capital risk, credit risk, li q uidity risk, interest rate ris k and commo d ity price risk. Summarised below is info r mation about the Compan y ’s exposure t o each of th e se risks, thei r objectives, p olicies and processes f o r measuring and managing risk, the manageme n t of capital and financia l instruments.

Capital risk management

The Compa n y manages its capital to e n sure that it w ill be able to continue as a going concern. The Boar d ’s policy is t o maintain a s trong capita l base so a s to maintain investor, cr e ditor and m a rket confide n ce and to s ustain futur e developmen t of the Com p any. In orde r to achieve t his objective, the Company seeks to m aintain a suf f icient fundin g base to ena b le the Comp a ny to meet it s working capi t al and strate g ic investmen t needs.

The Board ensures costs are not incur r ed in excess of available funds and will seek to rais e additional fu n ding throug h the issue of s hares for the continuation o f the Compa n y’s operatio n s when requi r ed.

The Compa n y considers its capital to comprise of i t s ordinary s h are capital, o ption reserv e and accum u lated losses . There were n o changes in the Compan y ’s approach t o capital ma n agement during the year. T he Company is not subjec t to externally imposed capi t al requireme n ts.

Financial risk management objectives

In common w ith all other businesses, t h e Company is exposed t o risks that arise from its u s e of financi a l instruments . This note de s cribes the C o mpany’s obj e ctives, polici e s and proces s es for mana g ing those ris k s and the m e thods used t o measure th e m. Further q uantitative i n formation in respect of t hese risks i s presented t hroughout t h ese financia l statements.

There have b een no subs t antive chang e s in the Company’s exposure to financi a l instrument r isks, its obje c tives, policie s and process e s for manag i ng those risk s or the meth o ds used to m easure them from previo u s periods unl e ss otherwis e stated in this note.

The Board h as overall re s ponsibility for the determi n ation of the Company’s risk managem e nt objective s and policie s and, whilst r e taining ultim a te responsibility for them i t has delegat e d the authori t y for designi n g and operat i ng processe s that ensure the effectiv e implementa t ion of the o bjectives an d policies to the Compa n y’s finance function. Th e

Eastern Iron Limited and its controlled entities Annual Report 2011 < 4 9

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Company’s risk management policies a n d objectives are designed to minimise t h e potential i m pacts of the s e risks on th e results of th e Company w here such i m pacts may b e material. T h e Board rec e ives regular reports from the Financia l Controller through which it reviews th e effectivene s s of the processes put i n place and t he appropria t eness of th e objectives a n d policies it s ets. These r i sks include c redit risk, liq u idity risk, int e rest rate ris k and commo d ity price risk . The Compa n y does not u s e derivative financial instru m ents to hed g e these risk e xposures.

The overall o bjective of th e Board is to s et policies th a t seek to reduce risk as far as possible w ithout undul y affecting th e Company’s c ompetitivene s s and flexibility. Further d e tails regardin g these risks a re set out be l ow.

Credit risk

Credit risk r e fers to the ri s k that a counterparty will d efault on its c ontractual o b ligations res u lting in finan c ial loss to th e Company.

The Compa n y mitigates c redit risk on cash and ca s h equivalent s by dealing w ith banks t h at have high credit-rating s assigned b y Standard a nd Poors. T here are t w o counterp a rties for C a sh and Ca s h equivalen t s which ar e Commonwe a lth Bank a n d Bank of W estern Aus t ralia Limite d . Credit risk of receivab l es is low a s it consist s predominant l y of GST re c overable fro m the Australi a n Taxation O ffice and int e rest receiva b le from dep o sits held wit h regulated ba n ks.

The maximu m exposure t o credit risk at balance date is as follows:

	2011 $ 2010 $
Cash andc ash equivalen ts	3,618,543 2 ,679,433
Receivables	84,694 51,428
Deposits wi th Governmen t Department s and banks	105,850 120,000
	3,809,087 2 ,850,861

Liquidity risk

Liquidity risk is the risk th a t the Compa n y will not be a ble to meet its financial o b ligation as th e y fall due. T h e Company’ s approach to managing liquidity is to e n sure, as far as possible, that it will al w ays have s u fficient liquidity to meet it s liabilities wh e n due.

Ultimate res p onsibility for liquidity risk r e sts with the B oard of Dire c tors, who ha v e built an a p propriate risk managemen t framework f o r the manag e ment of the C ompany’s s h ort, medium a nd long-ter m funding and liquidity requirements. Th e Company m a nages liquidi t y by maintai n ing adequate cash reserv e s by continuously monitori n g forecast a n d actual cas h flows and m a tching the m a turity profiles of financial a s sets and liabilities.

The followin g table details the Compan y ’s contractua l maturities of financial liabilities:

Financial li abilities	C a arrying mount $			>3 years $
		<12 month s	1-3 years
		$	$
2011
Payables	4 18,519	418,519	-	-
	4 18,519	418,519	-	-
2010
Payables	73,606	73,606	-	-
	73,606	73,606	-	-

50 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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The followin g table details the Compan y ’s expected m aturity for fin a ncial assets:

Financial li abilities	C a arrying mount $				>3 years $
			<12 month s	1-3 years
			$	$
2011
Cash at ban k and term de posits	3,6 18,543		3,618,543	-	-
Receivables	84,694	84,694		-	-
Deposits wi Department th banks and s Government	1 05,850	-		-	105,850
	3,8 09,087	3,703,237		-	105,850
2010
Cash at ban k and term de posits	2,6 79,433		2,679,433	-	-
Receivables	51,428	51,428		-	-
Deposits wi Department th banks and s Government	1 20,000	-		-	120,000
	2,8 50,861	2,730,861		-	120,000

Interest rate risk

The Compa n y’s exposur e to the risks of changes in market in t erest rates r e lates primar i ly to the Co m pany’s cas h holdings an d short term deposits. The s e financial a s sets with var i able rates expose the Co m pany to cas h flow interes t rate risk. All other financi a l assets and liabilities in t h e form of re c eivables and payables ar e non-interest bearing. Th e Company does not engag e in any hedging or derivati v e transactio n s to manage interest rate r i sk.

At balance d a te, the Com p any was exp o sed to floati n g weighted a v erage intere s t rates as foll o ws:

Weighted a Cash balan Weighted a Term depo verage rate of ces verage rate of sits cash balance term deposit s s	2011 $ 2010 $
	1.47% 0.03%
	$221,792 $37,751
	5.92% 5.72%
	$3,396,751 $2 ,641,682

The Compa n y invests sur p lus cash in i n terest-bearin g term depos i ts with financial institution s and in doing so it expose s itself to the fluctuations in interest rates that are inhe r ent in such a market. Term deposits are normally inv e sted betwee n 30 to 365 da y s and other c ash at bank b alances are a t call.

The Compa n y’s exposure to interest rat e risk is set o u t in the table below:

		+1.0% of AUD IR	+1.0% of AUD IR	-1.0% of A UD IR	-1.0% of A UD IR
	Carry amo ing unt	P rofit $	e Other quity $	Profit $	Other equity $
2011
Cash and c ash equivalen ts	3,618,5 43	36, 185	-	(3 6,185)	-
Tax charge of 30%	-	(10, 856)	-	10 ,856	-
After taxpro fit increase/(d ecrease)	3,618,5 43	25, 329	-	(2 5,329)	-
2010
Cash and c ash equivalen ts	2,679,4 33	26, 794	-	(2 6,794)	-
Tax charge of 30%	-	(8, 038)	-	8,038	-
After taxpro fit increase/(d ecrease)	2,679,4 33	18, 756	-	( 18,756)	-

The above a n alysis assu m es all other v a riables remain constant.

Eastern Iron Limited and its controlled entities Annual Report 2011 < 5 1

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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Commodity price risk

The Compa n y is exposed to commo d ity price ris k . This risk a rises from its activities directed at e x ploration an d developmen t of mineral c o mmodities. If commodity p r ices fall, the m arket for co m panies expl o ring for thes e commoditie s is affected. T he Company does not hed g e its exposu r es.

Net fair value of financial assets and liabilities

The carrying amount of fi n ancial asset s and liabilitie s of the Com p any approxi m ate their net fair values, given the shor t time frames t o maturity an d or variable interest rates.

23. Commitments

Exploration licence expenditure requirements

In order to m aintain the Company’s tenements in go o d standing w ith the vario u s mines dep a rtments, the Company wil l be required t o incur explo r ation expenditure under th e terms of ea c h licence. The Company h as commitm e nts to expen d funds towar d s earning o r retaining an interest under its joint v e nture agree m ent with Pl a tSearch NL and Drysdal e Resources P ty Ltd.

ResourcesP ty Ltd.
	2011 $ 2010 $
Payable not later than on e year	939,283 1 ,425,759
Payable late r than oneye ar but not late r than twoye ars	189,250 250,000
	1,128,533 1 ,675,759

It is likely th a t the granting of new licen c es and chan g es in licence areas at rene w al or expiry w ill change the expenditur e commitment to the Comp a ny from time t o time.

24. Events after the balance sheet date

There were, at the date o f this report, no matters o r circumstan c es which ha v e arisen sin c e 30 June 2 0 11 that hav e significantly a ffected or m a y significantl y affect the o p erations of t h e Group, the results of th o se operation s , or the stat e of affairs of t h e Group, in future financial years, other than:

The Co m pany has is s ued 2,500,0 0 0 fully paid o rdinary shar e s as consid e ration for th e acquisition o f the Eulogi e Park Pr o ject. Details o f the Eulogie Park Purcha s e Agreement were announced to ASX o n 19 January 2011.

52 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Notes t o the Consolidated Fi n ancial S tatem e nts For the year ended 30 Ju n e 2011

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25. Statement of cash flows

25. Stat ement o f cash f lows
	2011 $ 2010 $
Reconciliat operating lo ion of net cas ss after inco h outflow fr me tax om operating activities to
(a) Operatin g (loss) after income tax	(945,738) (5 93,336)
Depreci ation	10,973 6,976
Shareb ased paymen ts	157,055 56,960
Tax ben efit – deferred tax	- 128,556
Salaryc osts charged to exploration	(66,146) -
Gain on tenements	23,280 -
Non cas h exploration capitalised	488,975 8,823
Explora tions costs in trade and oth er creditors	(251,084) -
Other	(8,582) -
Change in assets an d liabilities:
(Increas e)/decreasei n receivables	(33,266) (6,319)
(Decrea se)/increase in trade ando ther creditors	344,913 (13,563)
(Decrea se)/increase in provisions	12,103 6,789
Net cas h outflow from operating ac tivities	(267,517) (4 05,114)
(b) For the on hand manage facilities purpose of th , at bank, dep ment function . e Statemento osits and ban . The Compa f Cash Flows k bills useda ny does noth , cash include s part of thec ave any unus s cash ash ed credit
The bal ance at 30 Ju ne 2011 comp rised:
Cash as sets	221,792 37,751
Bank de posits(Note: 5)	3,396,751 2,6 41,682
Cash on hand	3,618,543 2,6 79,433

26. Parent entity information

26. Par ent entit y inform ation
	2011 $ 2010 $
Current ass ets	3,703,235 2 ,730,861
Total asset s	6,306,065 4 ,742,629
Current liab ilities	437,411 80,395
Total liabili ties	437,411 80,395
Issued cap ital	7,552,017 5 ,557,326
Accumulate d losses	(2,011,943 ) (1 ,066,617)
Share base d payment res erve	328,580 171,525
Total share holders’ equ ity	5,868,654 4 ,662,234

Profit/(loss) of the parent entity	(945,326 ) ( 593,336)
Total comp rehensive in come of the parent entity	(945,326 ) ( 593,336)

Eastern Iron Limited and its controlled entities Annual Report 2011 < 5 3

Direct o rs’ Dec l aration

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In accordan c e with a resolution of the directors of Ea s tern Iron Lim i ted, I state th a t: In the opinio n of the direct o rs:

(a) The financial stateme n ts and notes of the Comp a ny are in acc o rdance with t he Corporati o ns Act 2001, including: (i) Gi v ing a true an d fair view of t he Company financial posi t ion as at 30 J une 2011 an d of its perfor m ance for th e ye a r ended on t h at date.
(ii) Co m plying with A ustralian Ac c ounting Sta n dards (includ i ng the Austr a lian Account i ng Interpreta t ions) and th e Co r porations Re g ulations 200 1 .
(b) The fin a ncial statem e nts and notes also compl y with Intern a tional Financial Reporting Standards a s disclosed i n note 2; a nd
(c) There a r e reasonabl e grounds to b elieve that th e Company w ill be able to pay its debts as and when they becom e due and payable.
(d) This de c laration has b een made af t er receiving t he declaratio n s required to be made to t he Directors in accordanc e with sec t ion 295A of t h e Corporations Act 2001 f o r the financi a l year ending 30 June 201 1 .

On behalf of the Board

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Glenn Good a cre Chairman

Sydney, 28 S eptember 2011

54 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Independent A uditor’s Repo r t

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Eastern Iron Limited and its controlled entities Annual Report 2011 < 5 5

Independent A uditor’s Repo r t

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56 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Shareholder I n formation

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Information r e lating to shareholders at 2 1 September 2011 (per ASX Listing Rul e 4.10) Ordinary shares There were a total of 67,8 0 7,419 fully p a id ordinary s h ares on issu e . Options There were a total of 8,05 0 ,000 unquot e d options on i ssue.

Substantia l shareholde rs	Sharehol ding	Sharehol ding	Sharehol ding
PlatSearch NL	24,000,0 00
Bluestone2 3 Limited	7,500,0 00

Top 20 sha reholders of ordinary sha res as at 21 September 2 011	N umber	%
PlatsearchN L	24 ,000,000		35.39
Bluestone 23 Limited	7 ,500,000		11.06
Mr MalcolmJ ames Hill	1 ,722,000		2.54
Warman Inve stments PtyLt d	1 ,500,000		2.21
Mr Neville Jo hn Holz & Mrs Lynette Holz	1 ,428,500		2.11
Belmont Par k InvestmentsP tyLtd	1 ,250,000		1.84
PanoramaR idge PtyLtd	1 ,250,000		1.84
Budberth Pty Ltd /F A/C>	1 ,125,000		1.66
Mr Robert Si meon Lord	1 ,000,000		1.48
Mrs Annette Sylvia Mizon< The Bobbin Su per Fund A/C>	800,000		1.18
Mr Chris Car r & Mrs Betsy C arr	750,000		1.11
Mr Gregory L ee & Mrs Lesle yLee & MissS hanna Lee <L ee FamilySupe r Fund A/C>	737,500		1.09
Hart Financia l Services Pty Ltd r Fund Accoun\ t>	725,000		1.07
Mr Gregory J ones nes FamilyAcc\ ount>	698,975		1.03
Fonomes Pty Ltd	4 20,511		0.62
Accord MBO PtyLtd Super Fund A\ /C>	375,000		0.55
Mr MauriceW illiam Buckley	375,000		0.55
Ms NadineM ayBuckley	375,000		0.55
Sal-Corporat ion Asia Pacific PtyLtd	330,000		0.49
Mr Bruce Ba ker Software S/FA\ /C>	325,000		0.48
Total of to p 20 holdings	46 ,687,486		68.85
Other holdi ngs	21 ,119,933		31.15
Total fully paid shares issued	67 ,807,419		100.00

Distributio n of shareho lders
Range of s hareholding	No of shar eholders	Ordinary s hares
1 – 1,000	20	12,73 7
1,001 – 5,00 0	76	259,85 0
5,001 – 10,0 00	10 8	967,75 4
10,001 – 10 0,000	32 2	11,647, 841
100,001 –a nd over	66	54,919, 237
	59 2	67,807, 419

Eastern Iron Limited and its controlled entities Annual Report 2011 < 5 7

Shareholder I n formation

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At the prevailing market p rice of 11 cents per shar e , there are 7 4 shareholde r s with less t h an a market a ble parcel o f $500.

There is no c urrent on-ma r ket buy-back.

Voting rights

There are n o restrictions o n voting rights. On a sho w of hands e v ery member present or b y proxy shall h ave one vot e and upon a p oll each sha r e shall have o ne vote. Where a member holds share s which are n o t fully paid, t he number o f votes to whi c h that mem b er is entitled on a poll in r espect of those part paid s hares shall b e that fraction of one vot e which the a m ount paid up bears to the total issued pr i ce thereof. Optionholders h ave no votin g rights until t h e options ar e exercised.

58 > Eastern Iron Limited and its controlled entities Annual R e port 2011

Corporate Directory

Board of Directors

Glenn Goodacre Non-Executive Chairman

Greg De Ross Managing Director

Gregory Jones Non-Executive Director

Wendy Corbett Non-Executive Director

Steve Gemell Non-Executive Director

Ivo Polovineo Non-Executive Director

Company Secretary

Registered Office and Place of Business

Share Registry

Auditors

Solicitors

Bankers

Securities Exchange Listing

Michelle Lilley

Level 1, 80 Chandos Street St Leonards, NSW 2065 or PO Box 956, Crows Nest NSW 1585 Phone: (+61 2) 9906 7551 Email: [email protected] Website: www.easterniron.com.au

Boardroom Pty Limited GPO Box 3993 Sydney, NSW 2001 Phone: (+61 2) 9290 9600 Website: www. boardroomlimited.com.au

Barnes Dowell James Level 13, 122 Arthur Street North Sydney, NSW 2060

Dibbs Barker Level 8, 123 Pitt Street Sydney, NSW 2000

Bank West Commonwealth Bank Macquarie Bank Suncorp-Metway Ltd

Australian Stock Exchange ASX Code: EFE

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EASTERN IRON LIMITED Level 1, 80 Chandos Street St Leonards, NSW 2065 Australia ACN 126 678 037

AI assistant

EASTERN RESOURCES LIMITED — Annual Report 2011

64824_rns_2011-10-19_4781f55a-0a16-4277-bdb7-ee486360e02d.pdf

Annual Report 2011

Contents

CHAIRMAN’S STATEMENT

REVIEW OF OPERATIONS

Highlights

Eulogie

Nowa Nowa

NSW 3E Steel Pisolite iron Joint Venture

Hawkwood

INTRODUCTION

EULOGIE PROJECT (EFE 100%)

Development Study and Resource Drilling Program

Resource drilling program

Metallurgical study

The testwork included:

Table: Eulogie Davis Tube Recovery results

Product Transport Study

HAWKWOOD IRON ORE JOINT VENTURE (EFE earning 100%)

North Burnett Rail Transport Options Study

Table: Hawkwood Davis Tube Recovery results

NSW IRON ORE PROJECT (EFE 100%, 3E Steel Pty Ltd earning 77.5%)

NOWA NOWA PROJECT

PROGRAM FOR 2011 – 2012

Eulogie

Other

Hawkwood

Nowa Nowa

NSW Pisolite Iron Project

SCHEDULE OF TENEMENTS

Direct o o rt rs’ Rep

Directors

Wendy Corbett, BSc, Dip Ed (Sydney), MAIG

Glenn Goodacre, BA (Macquarie)

Non-executive chairman of the board Director sinc e November 2 007

Gregory Jones, BSc Hons (UTS), MAusIMM Non-executive director Director since A pril 2009

Greg De Ross, BSc (Monash), FAusIMM

Managing director

Direct o o rt rs’ Rep

� Thomson Resources L td – appoint e d July 2009 Steve Gemell, BE Mining (Hons), FAusIMM (CP), MAIME, MMICA

Non-executive director

Directors' interests in shares and options

Director sinc e January 20 1 0

Ivo Polovineo, FIPA

Non-executive director

Non-executive director

Company secretary

Michelle Lilley, BBus, CA

Principal activities

Results

Direct o o rt rs’ Rep

Dividends

Review of operations

Eulogie

Hawkwood

NSW 3E Steel Pisolite iron Joint Venture

Other

Significant changes in the state of affairs

Significant events after th balance date

Likely developments and expected results

Direct o o rt rs’ Rep

Shares under option or issued on exercise of options

Environmental performance

Indemnification and insurance o directors and officers

Indemnification

Remuneration report (audited)

Details of key management personnel

Insurance premiums

Direct o o rt rs’ Rep

Service agreements

Remuneration philosophy

Non-executive director remuneration arrangements

Managing Director – Greg De Ross

Chairman – Glenn Goodacre

Non-Executive Director – Wendy Corbett

Non-Executive Director – Greg Jones

Non-Executive Director – Steve Gemell

Company Secretary – Michelle Lilley

EASTERN RESOURCES LIMITED Annual Report 2011