EASTERN RESOURCES LIMITED — Capital/Financing Update 2010

Jan 19, 2010

. . . AS X Announcement Hawkwood Iron - Vanadium Project

20 January 2010

Hawkwood JV - Heads of Agreement signed with Rugby Mining

• New Joint Venture to explore iron ore potential at Hawkwood in Queensland

• Iron-titanium-vanadium prospective layered intrusive complex with possible copper, platinum, palladium and PGE credits

• Rock chip grades up to 52.1% Fe and 0.29% V2O5, and magnetite concentrate grades up to 63.5% Fe

• Previous exploration has focused only on magnetite for use in coal washeries

• Located in Queensland, approximately 250 kilometres (by existing rail) from the port of Gladstone

Eastern Iron Limited (ASX Code: EFE) is pleased to announce the completion of a Joint Venture Heads of Agreement between Eastern Iron, Rugby Mining Pty Ltd (Rugby) and Rugby Mining Limited (TSX Code: RUG) to explore the magnetite-rich portion of the Hawkwood layered intrusive complex in Queensland. Hawkwood is located 160 kilometres from the coast and 250 kilometres by rail from the coal export port of Gladstone, an area well serviced with existing infrastructure (Figure 1).

Under the terms of the agreement Eastern Iron can earn a 50% interest in the exploration area by spending $700,000 within 3 years and can earn up to an 80% interest by spending in staged increments to a Bankable Feasibility Study. Eastern Iron must complete a work program costing a minimum of $200,000 within 12 months. The tenements that are the subject of the joint venture agreement are the portions of EPM 15289 and of EPM application 17099 as shown in Figure 2 (the “Exploration Area”). Rugby is the holder of both these tenements, with EPM 15289 subject to a 2% Net Smelter Royalty held by Newcrest Operations Limited (ASX Code: NCM). The JV is also subject to regulatory approval by the TSX Venture Exchange.

The Hawkwood Project area contains layered intrusive complexes of the Bushveld Type, South Africa. These intrusions often form large, sill-like bodies of differentiated igneous rock which exhibit extensive layering (distinct differences in mineral compositions and textures) extending laterally over many square kilometres. They are important hosts for titanium- and vanadium-bearing magnetite iron deposits such as at Savage River, Tasmania and Balla Balla, Western Australia as well as some of the world’s largest platinum-palladium group element (PGE) deposits such as the Merensky Reef, South Africa. At Hawkwood, previous exploration for iron focused on defining coal washery material from outcropping magnetite-bearing layers near the southern margin of the large magnetic signature within the Hawkwood intrusion, Figure 2. This work identified numerous cumulate layers of vanadium-bearing magnetite with rock chip grades up to 52.1% iron and 0.29% vanadium, and magnetite concentrate grades up to 63.5% iron recorded from past exploration.

Suite 3, 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

The Company believes that there is excellent potential for significant iron deposits in the area and over the next 12 months intends to undertake an aggressive exploration program to rapidly advance the project. A program of evaluation of existing data has been initiated and a low level, close-spaced, high resolution airborne magnetic survey is planned to commence as soon as a contractor can be mobilised. This survey will help define the aerial extent of the magnetite and establish an exploration target tonnage. The initial program will also include reverse circulation drilling and related metallurgical test work to establish the quality and marketability of magnetite/vanadium concentrates.

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Figure 1. Location of Eastern Iron/Rugby, Hawkwood Project

The Hawkwood project joint venture fits Eastern Iron’s strategy of creating shareholder value and reducing exploration risk by acquiring an interest in projects located close to infrastructure with a good discovery potential or a known resource with growth potential.

Peter Buckley Managing Director

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Peter M Buckley, BSc (Hons), who is a member of the Australian Institute of Geoscientists. Peter M Buckley is Managing Director of Eastern Iron Limited and a full-time employee of PlatSearch NL. Peter M Buckley 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”. Peter M Buckley 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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…iron’s new horizon

Eastern Iron Limited

…ASX Announcement

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Figure 2. Hawkwood Project Area with background aeromagnetic image (red tones have greater magnetic intensity)

Inves tor Information

Eastern Iron is negotiating with potential joint venture parties to investigate downstream processing options for the large tonnage Cobar Iron Project (627 Mt @ 10.3% Fe, above a 5% total Fe cut-off grade, announced to the ASX on 30 September 2009) and is also evaluating further new projects and exploration opportunities involving iron ore and other steel-related minerals that have potential to add value to our existing iron assets. Additionally, recent board appointments have further strengthened our project generation/evaluation team in our search for quality iron, copper, copper gold and precious metal assets that have the potential to generate cash.

Further information, previous Eastern Iron announcements and exploration updates are available at the News and Reports tab on the Company’s website - www.easterniron.com.au

Mr Peter B uckley, Managing Director, 0405 513 993 Webs ite: www.eas terniron.com.au

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… the eas tern dragon

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…iron’s new horizon