EASTERN RESOURCES LIMITED - Capital/Financing Update 2010

. . . ASX Announcement

9 November 2010

NEW ACQUISITION TO ENHANCE CENTRAL QUEENSLAND IRON PROJECT

Eastern Iron Limited has agreed to purchase a 100% interest in the Eulogie Magnetite project in Central Queensland.
In consideration, Eastern Iron will issue 2.5 million shares to RMM Capital Pty Ltd (RMM) subject to the satisfactory completion of due diligence.
Previous drilling at Eulogie defined a historic (pre-JORC Code) resource of magnetite bearing ferrigabbro, which formed the basis of a pre-feasibility study completed in 1989.
Previous metallurgical testwork produced a magnetite concentrate containing 58-64%Fe, 2-5% TiO2 and 0.87%V2O5.
Eulogie is ideally located 20km from sealed roads and 40km from a possible loading point on the Moura–Gladstone rail line, 125km west of Gladstone, thereby providing ready access to Australia’s third largest coal export port.
Eastern Iron will assess how Eulogie might optimally fit into the company’s strategy to develop a major iron ore production industry in Central Queensland based on the potential development of the Hawkwood and Eulogie magnetite projects.

Eulogie Magnetite Project

The Eulogie project lies within Mineral Development Licence (MDL) 362, located 23km south of Mount Morgan and close to sealed roads connected to the main Moura–Gladstone railway line. This line is rated for high tonnage loadings and is part of the Central Queensland coal network.

Titanium and vanadium-bearing magnetite is concentrated within shallow dipping (30-40 degrees) gabbroic layers (ferrigabbro) up to 100m thickness within a layered igneous complex. The geology and nature of the ferrigabbro layers is almost identical to those recently drilled at the Hawkwood project and it is expected that iron products from the two areas will have many similarities.

In 1989 Thiess Contractors Pty Ltd examined the project as a possible source of iron ore for a proposed steel plant located at Gladstone. A pre-feasibility study was completed and included 30 RC and cored drill holes. Thiess estimated a resource based on the drilling, which at this stage may not be considered as JORC compliant, and also identified additional potential beyond the areas tested by drilling.

Thiess also completed preliminary magnetic separation testwork which, at a final grind size of 100 micron, produced concentrates containing 58-64% Fe, 2-5% TiO2 and 0.87% V2O5.

Level 1, 80 Chandos Street St Leonards, NSW 2065 PO Box 956, Crows Nest, NSW 1585 Ph: 02 9906 7551 Fax: 02 9906 5233 www.easterniron.com.au

…iron’s new horizon

…ASX Announcement

Eastern Iron Limited

Sale Terms

In consid e ration of a cquiring a 100% interest in t h e Eulogie project a n d associated Mineral Developm e nt Licenc e , Eastern Iron has agreed t o issue 2. 5 million s hares to R MM. Th e transactio n is subject only to the satisfactor y completion of legal due diligenc e . There re m ains an o v erriding 2. 5 % gross p roceeds r o yalty on p r oduction f r om the M D L which i s payable to the origin a l vendors o f the property.

Central Queensland Iron Project

The acqui s ition of th e Eulogie p roject pro v ides Eastern Iron wit h a potenti a l addition a l source o f iron ore p r oduct in t h e Central Q ueenslan d area sup p lying a common exp o rt point at Gladston e Port. Eulogie, whilst with less resource p otential th a n Hawkw o od, is ev e n better p laced with respect to existing rail, road an d port infra s tructure a n d potentially could be brought o n stream a t relatively low capital cost and w ithin a s h orter time frame. This provides a number of option s including s equential o r staggere d develop m ent of the two projec t s using ca s hflow fro m Eulogie t o support a d evelopme n t at Hawk w ood.

Over the coming m o nths East e rn Iron w i ll continue evaluatin g the reso u rce poten t ial at both Hawkwoo d and Eul o gie including further product s a mpling a n d testwor k to better define th e characteri s tics of the iron conce n trate.

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