EASTERN RESOURCES LIMITED — Capital/Financing Update 2014

Jan 23, 2014

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ASX Announcement – 24 January 2014
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NOWA NOWA IRON PROJECT - FEASIBILITY STUDY RESULTS

• Feasibility Study nears completion

• Results confirm scoping study outcomes indicating low capital cost

• Robust operating margins over the projected life of the mine

Eastern Iron (ASX:EFE) is pleased to announce the results to date of its feasibility study into a potential mining development at its 100% owned Nowa Nowa Iron Project. This follows results of the mine scoping study which were announced on 6 December 2012.

Mining studies completed as part of the feasibility study have indicated that parts of the Inferred Resource at the Five Mile will be mined early in the life of the operation. Consistent with the requirements of JORC 2012, a short program of confirmatory drilling will be required to upgrade the confidence level in the Inferred Resource areas before production and financial forecasts completed as part of the feasibility study can be released.

The feasibility study was undertaken on Eastern Iron’s behalf by project delivery specialist, Engenium with input from specialist sub-consultants in the areas of:

• Mining – mine design, scheduling, waste rock and tailings storage (McCracken Mining Services/Mining One Consultants Pty Ltd)

• Resource estimation – H&S Consultants Pty Ltd

• Geotechnical investigations – Mining One Consultants Pty Ltd

• Hydrology/hydrogeology – AECOM Ltd, Earth Systems Pty Ltd

• Port and Transport studies – Engenium, Innovative Shipping Pty Ltd

• Marketing – Fundmax Pty Ltd

• Process testwork and design – Resource Engineering Pty Ltd, Engenium

• Environmental Studies – Earth Systems Pty Ltd

• Waste rock management and storage – Earth Systems Pty Ltd, Mining One Consultants Pty Ltd

The Nowa Nowa Iron project is based in East Gippsland, Victoria approximately 250 kilometres from Melbourne and close to the Princes Highway which provides access to several nearby towns and an existing export port facility at Eden in southern NSW.

Eastern Iron has completed resource drilling at the Five Mile deposit outlining 9.6Mt averaging 50% Fe (at a lower cutoff of 40% Fe) of magnetite iron (see Company announcement dated 12 June 2013).

	Measured	Measured	Indicated	Indicated	Inferred	Inferred	Total	Total
Prospect	Mt	Fe%	Mt	Fe %	Mt	Fe%	Mt	Fe%
Five Mile	2.1	52	3.7	50	3.9	50	9.6	50

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ABN 70 126 678 037
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Figure 1: Nowa Nowa Locality Plan

The workforce for the operation will live in the surrounding towns of which there are several within a 50km radius including Nowa Nowa, Bairnsdale, Lakes Entrance and Orbost. Although a 22kVA power line runs by the site power requirements will be provided by site diesel operated gensets due to the doubtful load capacity of the existing line. Other options are being investigated as power costs are a large component of the total operating costs.

In the current study 1 Mtpa of ore will be mined by contract mining in a single open pit and hauled to a three stage crushing plant close to the pit where ore is crushed to -10mm before dry magnetic separation to a final upgraded magnetic iron product. Average magnetic yield to product is over 80% and yield has been estimated for individual ore blocks in the mine production schedule.

The product grade is expected to be 56% Fe which represents the average grade achieved from metallurgical testwork completed to date using laboratory scale separation equipment available at the ALS Global testing laboratory in WA. Eastern Iron will be carrying out further process optimisation over the coming months using larger commercial scale units with an aim to further improve the upgrade of the ROM ore to at least +58%Fe.

Upgraded ore is stockpiled at site and loaded into 42 tonne capacity B-double trucks for haulage via a short 1 km new mine access road to an existing sealed road and then onto the Princes Highway to the SEFE (South East Fibre Exporters Pty Ltd) port south of Eden in southern NSW. The haulage is some 234 km and quotes have been obtained from haulage operators for input in the feasibility study.

SEFE have indicated that one of its two existing stockpile areas (Stockpile No2) at the port may be available for use by Eastern Iron. The stockpile area has its own reclaim system and feeds directly to the wharf conveyor and ship loader. Use of Stockpile No2 will require minimal capital cost with some minor upgrade to the conveyor transfer points and wind protection screens. SEFE have proposed to provide a “full service operation” including truck weighing and load management, stockpile

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management and shiploading. The two companies have established commercial terms for the use of the site which will require sign off from the Japanese owners of SEFE.

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Figure 2: Nowa Nowa Project – site layout

Capital Costs

The feasibility study has confirmed capital and operating estimates broadly in line with those previously quoted for the scoping study completed in late 2012 as follows:

Capital Cost Estimate

Capital Cost Summary	A$ (millions)
Mine	$3.8M
ProcessingPlant	$11.3M
Site Works	$10.7M
Port	$0.7M
Owners Cost/Contingency/EPCM	$9.7M
Total	$36.1M

Note: Working capital is not included. Contingency has been included at 10% of Capex.

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The capital cost shown in the table above has been estimated to an accuracy of +/- 15% and assumes all new equipment purchased. It also includes the capital cost of a processing plant which in the scoping study was assumed to be provided by a contractor.

Site works include the cost of a major water management system to ensure no discharge from the site during the life of the operation. This includes three water management dams around the site including an operations dam which will contain water from pit dewatering and runoff from the waste rock stockpile. It is anticipated that cost of this system can be reduced by better utilisation of waste rock from the initial pit development in dam construction.

Overall the Company expects the total capital cost to be reduced further by focussing on fit-forpurpose equipment and structures for the site facilities and a continued focus on reducing the cost of preliminary earthworks.

Operating Costs

The operating costs shown in the table are similar to those from the scoping study. Again the company is of the view that further reductions will be made through a process of detailed design prior to development. The mining cost is a large component of the site base operating costs and it is anticipated that with further optimisation of the mine layout and actual quotes from mining contractors this can be reduced.

Operating Cost Estimates

	A$
MiningCost	$4.42/t ore mined(waste and ore)
Processing	$3.78/t ROM oreprocessed
Admin	$3.36/t ore mined
Haulage and Port Costs	$39.4/t product
Total(FOB Eden)	$75.76/dry tonne exportproduct

Note: Operating cost contingency is yet to be estimated.

Revenue

Revenue assumptions are based on the index price for iron ore less a discount for contained iron and contaminants. The formula has been provided by marketing consultant, Fundmax Pty Ltd and is based on extensive discussions with potential offtake groups. For the purpose of the feasibility study the product is assumed to achieve an FOB(Eden) price of US$88/t. The feasibility study has used an exchange rate of US$0.9 to the A$. It is anticipated that the sale price can be improved by delivering an enhanced +58% product which is the focus of the ongoing metallurgical optimisation program.

INVESTOR INFORMATION

Eastern Iron is investigating the potential for development of a high grade magnetite resource at Nowa Nowa in Eastern Victoria as well as a magnetite processing operation based on magnetite deposits it holds under permit in Central Queensland.

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

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Mr Greg De Ross Managing Director Mob: 0417 711 274

ASX: EFE

For enquiries on your shareholding or change of address please contact:

Boardroom Limited GPO Box 3993, Sydney NSW 2001, Phone: (02) 9290 9600

The information in this report that relates to Exploration Results 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 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

The information in this report that relates to Mineral Resources is based on information compiled by Rupert Osborn MSc BSc, who is a Member of the Australasian Institute of Geoscientists. Mr Osborn is a full-time employee of H&S Consultants Pty Ltd 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Both Messrs Osborn and De Ross consent 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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JORC Code, 2012 Edition – Table 1 report for Nowa Nowa Project

Section 1 Sampling Techniques and Data

Criteria	Commentary
Sampling	Reverse circulation (RC) percussion drillholes were sampled over 2 metre downhole
techniques	depth intervals via a sealed collar dust diverter and cyclone. Diamond core was sampled nominally at 2 metre composite intervals at the
	boundaries of lithological contacts.
	Both RC and diamond core drill samples were 3-4kg in weight and pulverised in the
	ALS Adelaide laboratory to produce a fused disk for ME-XRF21 spectrometry
	analysis.
	Diamond core from the 1950’s Victorian Geological Survey (GSV) drillholes was
	nominally sampled by the GSV at both 5ft and 10ft intervals at the boundaries of
	lithological contacts and is reported in Bell, 1959 GSV Bulletin 57. EFE considers that
	there are no detrimental issues in the sampling procedure with regard to the resource
	estimation.
Drilling	RC percussion drillholes were drilled using a 5 ½ inch (140mm) RC face-sampling
techniques	buttoned drill bit. Diamond core drilling was drilled using triple-tube conventional wireline HQ (96mm)
	and PQ (122.5mm) diameter techniques.
	All EFE drillholes were drilled vertically and consequently diamond core was not
	orientated.
	All GSV drillholes were drilled vertically using conventional NQ (47.5mm) diameter
	diamond drilling methods. There is no record of the core being oriented.
Drill sample	The sample recovery for all the Eastern Iron Ltd (EFE) drillholes was excellent. RC
recovery	drillhole sample recovery was determined by visual inspection of 1metre bulk samples in the field by an experienced supervising geologist. All assay samples submitted as
	two metre composites were weighed upon receipt at the laboratory. The consistency
	of these weights is monitored as part of Eastern Iron’s sample QAQC programme.
	Company protocol is that if any RC percussion drillhole returns less than 70% by
	volume of the drill cuttings over a 10metre interval, the drillhole will be re-drilled.
	Full core recovery was achieved in the EFE diamond drillholes except in minor
	instances where friable zones were intersected downhole resulting in core losses,
	typically occurring at the start of a new drill run. These losses were considered to be
	insignificant.
	Recovery rates of drill core from diamond drilling are closely monitored by the
	supervising geologist. Should the integrity of the drillhole or representivity of the
	sample become compromised, the drillhole is abandoned at the supervising
	geologist’s discretion.
	Recovery details for the GSV drillholes are not known. Historical geology logs do not
	document any significant core losses and EFE considers that there are no detrimental
	issues in this with regard to the resource estimation.
Logging	All EFE drillholes have been geotechnically and geologically logged by an
	experienced geologist for their entirety with a uniform set of company specific codes.
	Geological drillhole data is collected based on geological intervals as opposed to a
	metre interval basis.
	All data was digitally captured into purposed designed spreadsheet templates. All data
	is uploaded, validated and stored in the Eastern Iron company database.
	GSV drillholes were logged by Victorian government geologists. EFE has no
	knowledge of their qualifications or given levels of experience. As a result of twinning
	several of these drillholes,where there was excellent loggingcorrelation,EFE has

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Criteria	Commentary
	assumed that the data from these drillholes is valid for the resource estimation.
Sub-sampling	RC drillhole samples were split using a 75/25 riffle splitter mounted to the cyclone. A
techniques and sample	3-4kg composite sub-sample was produced, with the split samples sent to ALS laboratories Brisbane and Perth for analysis. The bulk reject fraction of the sample was bagged and retained on site for storage.
preparation	Diamond core was cut using a core saw for composite sampling. Half-core for HQ
	diameter drillholes and quarter-core PQ diameter drillholes were sampled
	respectively. The retained fraction of drill core has been securely stored and archived
	on site.
	Upon receipt at the lab, both EFE percussion rock chip and drill core samples were
	dried and crushed to a 70% passing at -6mm. The entire sample is then pulverised to
	an 85% passing at -75µm.
	Diamond core from the GSV drillholes was split using a core saw and half-core was
	composited for assay analysis.
	EFE have limited knowledge of the laboratory methods used for the GSV samples
	except as reported in Bell, 1959 GSV Bulletin 57 but it appears that samples were
	crushed, split and pulverised during their preparation. It is reasonable to assume that,
	as the samples were prepared by a certified independent laboratory, that industry-best
	analytical practices were employed at the time. As a result of twinning several of these
	holes, where there was excellent assay correlation, EFE has assumed that the data
	from these drillholes is valid.
Quality of	EFE samples were assayed by ALS Global Laboratories Brisbane and Perth.
assay data and	Assay samples were cast using a 12:22 flux to form a glass disk. The resultant disk is in turn analysed for the industry standard iron oxide suite of elements by XRF spectrometry. LOI values were determined using a thermogravimetric analyser
laboratory	system.
tests	EFE collected field duplicate samples at a ratio of 1 in 15 samples throughout all
	drillholes. RC duplicate samples are taken in the field using a riffle splitter mounted
	onto the drill rigs cyclone. Diamond core duplicate samples are prepared by the laboratory every 15thcrushed sample and inserted sequentially into the sample
	sequence for each drillhole.
	Duplicate samples were analysed by ALS Global and triplicate QAQC samples by
	Bureau Veritas Mineral Laboratories Perth.
	Certified reference materials are inserted nominally every 15thsample using
	internationally accredited standards.
	Blanks are inserted at regular intervals within each batch of RC drilling samples and
	one per diamond drillhole to verify the cleanliness of laboratory sample preparation
	machinery.
	Good reproducibility was obtained in the comparison of results from the umpire quality
	control programme. A minor high bias for total SiO2and Al2O3(~0.15%) and
	corresponding low bias for Fe (~0.15%) was present in the assay standards. These
	biases are considered insignificant.
	EFE have no knowledge on the method of chemical method used by the GSV for
	assay analysis but it is reasonable to assume that best-practice industry standards
	were used.
Verification	Six of the historical GSV drillholes have been twinned by EFE drilling, comprising one
of sampling and assaying	RC and five diamond drillholes. Twinned drillholes were used to verify the geological interpretation, confirm the assay tenor and to provide sample for metallurgical testwork. All drillhole data and assays are consistent with those from the earlier
	independent GSV drilling.
	Data is captured in hardcopy format in the field before being transposed digitally into
	spreadsheets. Data entry self-audits are made routinely during this process.
	All data is validatedprior to and upon uploadingto the companydatabase by purpose

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Criteria	Commentary
	built in-house software applications. EFE’s database is compatible for use with
	MapInfo and Micromine software applications.
	All EFE drillhole assay data was received from the laboratory in excel spreadsheet
	and pdf formats.
	Victorian Geological Survey data was obtained from historical reports and digitised
	manually, before being uploaded to the company database.
	Digital data for the project is stored on two separate remote computers as well as the
	Sydney office server which is backed up daily.
	Hard copies of drillhole & assay data, including report estimations, are kept secure in
	the Sydney office.
Location of	EFE drillholes collar co-ordinates and elevations were located in the field using a
data points	handheld Garmin Map60 GPS, with an accuracy of +/- 3-5m. Following the completion of resource drilling, all drill collars were surveyed using a Trimble Differential GPS
	system with an accuracy of +/- 0.5m. DGPS drill collar data has been incorporated
	into the company database and is used for the resource estimation.
	All data is georeferenced and projected through the Map Grid of Australia (MGA) 1994
	geodatum within Zone 55.
	All GSV drillhole collars were surveyed and documented on a local grid. Drilled in the
	1950’s, the location of these drill collars were reprojected and georeferenced into
	MGA 1994 using MapInfo software. The comparability of data between historical and
	current twinned drillholes is excellent.
	EFE has produced a digital terrain model (DTM) and surface contour map from
	accurate levelling data that was recorded by geophysical contractors who carried out
	an airborne LIDAR over the prospect for Eastern Iron. The accuracy of this survey is
	within +/- 0.5m.
	All EFE drillholes were vertical and as drillholes are relatively short (<150m), it is
	assumed that any deviation would be negligible and have minimal impact on the
	resource estimation. No downhole surveys of drillholes were carried out..
	EFE is not aware of any downhole surveying on the vertical GSV drillholes and
	assumes any effect on the resource estimation is negligible.
Data spacing	At the Five and Seven Mile prospects, nineteen and eight EFE drillholes were sited
and distribution	on the main magnetic anomalies respectively. Staggered drill-centres were nominally spaced at 25 metres across east-west cross-sections and 25 metres between drill profiles. The drill layout was designed to provide the best possible integration and
	validation of the historical GSV drillholes.
	At the Five Mile prospect, six of the previously drilled GSV drillholes were twinned by
	EFE drilling to confirm their results.
	EFE considers the density of drilling is sufficient to establish the degree of geological
	and grade continuity appropriate for the Mineral Resource Estimation and
	Classifications applied. Continuity of the mineralisation is strongly supported by the
	ground-based geophysical survey data.
	EFE RC and diamond core samples were composited nominally into 2 metre intervals
	for head assay analysis.
Orientation of	The main body of mineralisation at Five Mile is almost horizontal. Drilling carried out
data in	by the GSV and subsequently by Eastern Iron was vertical to give close to true width intersections of the mineralisation.
relation to
geological
structure
Sample	All EFE drilling samples were collected in securely tied calico mining bags. RC and
security	diamond samples were placed in clearly labelled polyweave and green plastic bags respectively, five at a time and secured with metal twist ties. Samples were

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Criteria	Commentary
	transported, loaded onto pallets and despatched from a freight depot in Lakes
	Entrance to Adelaide for sample preparation. No samples were stored overnight in
	unsecured storage facilities.
	Company sample despatch documentation was verified against laboratory arrival
	documentation upon the receipt of samples to the facility to ensure all samples were
	received.
	Drill core was archived in plastic core trays on site - stacked, covered with lids and
	secured to pallets with metal strapping.
	RC percussion drilling chip trays, with representative geological material from each
	metre interval, are archived and securely stored in a lock-up facility on site.
	Drill core from the GSV drilling is stored in the departmental core store in Melbourne
	however it has been reported that there is little of the original core remaining.
Audits or	Eastern Iron have not sought external audits or reviews of sampling techniques used
reviews	during the drilling campaigns.
	EFE data capture protocol, sampling techniques and drilling datasets have been
	reviewed by H&S Consultants for the resource estimation. They have all been found
	to be satisfactory for the resource estimation.

Section 2 Reporting of Exploration Results

Criteria	Commentary
Mineral	The Five and Seven Mile Resources are contained within the Victorian EL4509.
tenement and land tenure status	EL4509 was granted on August 23rd2006 over 95 graticule units for a period of 5 years. Renewal of EL4509 over an area of 50units for three years until August 22nd 2014 was completed in November 2011. Transfer of the licence from Waygara Mines Pty Ltd to Eastern Iron Ltd was completed on February 2nd2012.
	EL4509 is located within the Crown Land of the Colquhoun State Forest. No access
	agreements with landholder are required, however, notification and approval of
	proposed exploration activities is sought from the Department of State Development,
	Business and Innovation.
	EFE recognises the GurnaiKurnai people as the traditional custodians of the land
	situated on and immediately surrounding EL4509 and they are the Registered
	Aboriginal Party. A Project consent Deed was negotiated with the GunaiKurnai and
	has been assigned to EFE. All cultural heritage requirements have been met.
Exploration	Previous exploration at the Nowa Nowa Project was carried out by the Victorian
done by other	Geological Survey (GSV), Pickhands Mather, Australian Coal & Gold and by Gulf Mines Ltd.
parties	To the best of EFE’s knowledge this exploration that led to the discovery of the Nowa
	Nowa deposit was conducted in a professional manner using recognised and widely
	accepted exploration and mining industry standards employed at that time.
	Historical reports and results of the GSV exploration and previous explorers are
	available on open file in the Department of Primary Resources database.
Geology	The Nowa Nowa Project is situated in the Lachlan Orogen, which extends from
	eastern Tasmania, through central and eastern Victoria, into New South Wales and
	Queensland.
	The Silurian Yalmy Group and Devonian Snowy River Volcanics host the Nowa Nowa
	iron ore mineralisation. They are considered to be replacement deposits of the Iron
	Ore Copper Gold (IOCG) style of mineralisation.
	The mineralisation is characterised by massive magnetite-hematite with lesser
	chlorite,talc/carbonates, pyrite, quartz and chalcopyrite.

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Criteria	Commentary
	Mineralisation at the Five Mile prospect occurs in a zone that is up to 500m in length,
	150m in width and 100m in thickness. At the Seven Mile prospect, mineralisation
	occurs in a discrete zone approximately 100m in length, 50m in width and up to 65m
	in thickness.
Drill hole	A tabulation of the drillhole information was presented in the_Nowa Nowa Resource_
Information	_Upgrade_announcement to the ASX on 12/06/2013. No additional exploration results have since been reported.
Data	A lower cut-off grade of 40% Fe has been used in the resource estimate for the Five
aggregation	and Seven Mile deposits. No top cuts have been applied.
methods
Relationship	Iron mineralisation at the Five Mile prospect replaces sediments and volcanic units
between mineralisatio	which appear to be sub-horizontal or dip moderately to the southeast. Drillholes are drilled vertically and are assumed to be close to the true width intersection of the mineralisation. The geometry and attitude of the mineralisation is well constrained by
n widths and	close-spaced drilling which has also defined a bounding fault on the western side of
intercept lengths	the mineralisation. Mineralisation at Seven Mile is constrained by the current extents of drilling information.
Diagrams	Diagrams and schematics of the drilling information were presented in the_Nowa_
	_Nowa Resource Upgrade_announcement to the ASX on 12/06/2013.
Balanced	All exploration results are reported.
reporting
Other	Ground magnetic surveys have clearly defined the limits of mineralisation at Five Mile
substantive	and are used to guide drillhole targeting.
exploration	A ground magnetics survey was conducted by Gulf Mines in 2008, using two Geometrics 856 magnetometers. Lines were run east - west with a 100m line-spacing
data	between traverses. Infill lines at 50m spacing were used over the strongest anomalies
	at the Five and Seven Mile prospects. Measurements were recorded every five
	metres along each profile. Computer modelling and reporting of the ground magnetics
	dataset was conducted by geophysical consultant Steve Webster. A single tabular
	body was modelled to simulate the main anomaly at Five Mile. Strong magnetic field
	gradients at Seven Mile resulted in a complex modelled anomaly.
	Geophysical consultants Planetary Geophysics were contracted by Gulf Mines in
	2009 to conduct a gravity survey at the Nowa Nowa Project. Carried out using a
	LaCoste & Romberg Model-G gravity meter, a total of 210 stations were recorded.
	Computer modelling and reporting of the gravity dataset was conducted by
	geophysical consultant Steve Webster. The gravity models display an excellent fit with
	the observed data and are in agreement with the known geology and magnetic data
	acquired in the area.
	Metallurgical testwork has been carried out investigating appropriate methods of
	beneficiating the iron mineralisation.
Further work	Further work at the Nowa Nowa Project is dependent on the results of the feasibility
	study currently being undertaken by EFE and in consideration of other commercial
	aspects.

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Section 3 Estimation and Reporting of Mineral Resources

Criteria	Commentary
Database	Limited validation was conducted by H&S Consultants to ensure drillhole database is
integrity	internally consistent. Validation included checking that no assays, density measurements or geological logs occur beyond the end of hole and that all drilled
	intervals have been geologically logged. The minimum and maximum values of
	assays and density measurements were checked to ensure values are within
	expected ranges.
	H&S Consultants has not performed detailed database validation and Eastern Iron
	personnel take responsibility for the accuracy and reliability of the data used to
	estimate the Mineral Resources.
Site visits	Site visits have been carried out by G De Ross and C Hosie both employees of
	Eastern Iron and Competent Persons for the reporting of exploration results.
	No site visit has been undertaken by Rupert Osborn of H&S Consultants, Competent
	Person for the reporting of the resource estimate due to time and cost constraints.
Geological	Lithological units were identified with the use of geological logs from drillholes. The
interpretation	geological model of the Five Mile deposit is reasonably simple and integral to the resource estimation procedure with the Fe mineralisation interpreted to be replacing
	the limestone unit. It is however complicated by the presence of at least two faults that
	truncate mineralisation to the west and south of the deposit. The eastern edge of
	mineralisation, where it is in contact with unmineralised limestone, is assumed to be
	irregular and gradational. The geometry of sedimentary units and mineralisation in the
	northern part of Five mile is variable between sections and has therefore been
	classified at a lower confidence level. It is possible that unidentified faults or folds may
	occur in this region.
	At Seven Mile the link between the mineralisation and the limestone unit is less
	convincing and mineralisation appears to be replacing volcanics. The geometry of the
	mineralisation is also not entirely clear although estimated resources are confined
	almost entirely to volumes within the bounds of drill tested material.
	Although other interpretations are possible, the effect of alternative interpretations is
	unlikely to unduly alter the global resource estimates. The wireframes constraining
	mineralisation, external waste, and, in the case of Five Mile, the limestone unit, were
	used to define assays used for estimation of blocks in corresponding units.
	A base of oxidation surface was constructed from the geological logs. The densities of
	blocks above this surface, which are derived from the estimated iron grades, were
	reduced by 7%.
Dimensions	Dimensions of the estimated resources of Five Mile at a lower cut-off grade of 40% Fe
	are 160 to 620 m long and 7.5 to 210 m wide. The thickness of the mineralisation
	ranges from 2.5 to 110 m. Average dimensions are around 500 m long, 120 m wide
	and 40 m thick. The depth below surface to the upper limit of the resource varies from
	2.5 to 140 m and the lower limit of the resource varies in depth from 65 to 200 m.
	Mineralisation remains open and currently untested to the east, north and south due
	to access restrictions for drilling equipment.
	Dimensions of the estimated resources of Seven Mile at a lower cut-off of 40% Fe are
	90 m long and 7.5 to 80 m wide. The thickness of the mineralisation ranges from 15 to
	70 m. Average dimensions are around 70 m long, 65 m wide and 30 m thick. The
	depth below surface to the upper limit of the resource varies from 0 to 22 m and the
	lower limit of the resource varies in depth from 15 to 75 m. Mineralisation currently
	remains open in all directions until further drilling is completed at the Seven Mile
	prospect.
Estimation	The resources at Nowa Nowa were estimated using Ordinary Kriging in the Micromine
and	software. H&S Consultants considers Oridinary Kriging to be an appropriate estimation technique for the type of mineralisation and extent of data available at

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Criteria	Commentary
modelling	Nowa Nowa. At Five Mile the mineralisation is interpreted to occur as a replacement
techniques	of the limestone unit. Wireframes representing the mineralised and limestone units were created. At Seven Mile a wireframe was created to represent the extents of
	mineralisation.
	No check estimates were conducted in this round of estimation. H&S Consultants
	estimated the resources of Five Mile in August 2012 and the resources of both Five
	Mile and Seven Mile were estimated in February 2012. The resource estimates are
	consistent with previous estimates but a slight reduction in tonnes at a lower cut-off of
	40% Fe has occurred due to the drilling of several new holes altering the interpreted
	location of a fault.
	Concentrations of Fe, SiO2, Al2O3, P, S and Cu were included in the resource
	estimation. No assumptions were made regarding the recovery of by-products as
	estimated grades are unlikely to result in economic by-products.
	Block dimensions at both Five Mile and Seven Mile deposits are 10 x 10 x 5 m (E, N,
	RL respectively). Both deposits have been drilled on an irregular nominal grid of
	around 25 x 25 m. The average sample interval is two metres. Three progressively
	larger estimation search passes were employed, the first with radii of 40 x 40 x 15 m,
	the second with 60 x 60 x 20 m and the final pass with radii 90 x 90 x 30 m (along
	strike, down dip and across mineralisation respectively). Pass one used a four sector
	search requiring a minimum of 16 composites from at least three drill holes. Pass two
	used a four sector search requiring a minimum of 8 composites from at least two drill
	holes. Pass three used a two sector search requiring a minimum of 8 composites from
	at least one drill hole. Each pass used a maximum of 32 composites for estimation.
	Each element was estimated separately by Ordinary Kriging. A small percentage of
	the blocks were estimated for Fe grade but not the other elements as more intervals
	have been assayed for Fe. The SiO2and Al2O3grades for these blocks were derived
	from the estimated Fe grade using regressions based on the negative correlations
	found between Fe and SiO2or Al2O3grades. No significant correlation was found to
	occur between Fe and P, S or Cu grades. Blocks estimated for Fe that were not
	estimated for either P, S or Cu were therefore assigned average grades for the
	particular domain (mineralised, limestone or external waste).
	At Five Mile, assays from both the mineralised unit and the limestone unit were used
	to estimate blocks inside the mineralised wireframe. Assays from the limestone unit
	(only) were used to estimate blocks in the limestone wireframe and assays outside the
	wireframes (only) were used to estimate blocks outside the wireframes.
	At Seven Mile, the wireframe representing mineralisation was used as a hard
	boundary to estimate corresponding blocks.
	No top cutting was applied as extreme values were not significant.
	The block model was validated visually against drill hole data and compared against
	block models produced from previous resource estimates.
Moisture	Tonnages of the Mineral Resource are estimated on a dry weight basis.
Cut-off	The lower cut-off of 40% Fe was used to maximise average grade and minimise
parameters	internal waste.
Mining	The Nowa Nowa deposits were estimated on the assumption that the material will be
factors or assumptions	mined by open cut methods. Minimum mining dimensions are envisioned to be around 5 x 5 x 5 m (E, N, RL respectively). The resource estimation includes internal mining dilution.

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Criteria	Commentary
Metallurgical	Metallurgical testwork completed so far including dry and wet LIMS has shown that
factors or assumptions	the Nowa Nowa iron mineralisation is amenable to a range of magnetic separation and beneficiation techniques to produce an upgraded and saleable iron ore product. Levels of deleterious elements SiO2 and S are relatively high but can probably be
	reduced to acceptable levels during beneficiation.
Environmen-	During beneficiation the non-magnetic tailings are enriched in sulphur with respect to
tal factors or assumptions	the ore and magnetic product. These tailings may be further processed to recover sulphide concentrate and hematite however the sulphide bearing tailings are potentially acid generating and if they remain on site they will need to be stored in an
	appropriately designed tailings storage facility (TSF).
Bulk density	The density of the rock was measured for eight drill holes in Five Mile and one drill
	hole at Seven Mile. Density measurements were made, on average, every 1.6 m
	down hole on pieces of core averaging 25 cm in length. Efforts were made at the time
	of sample selection to ensure sample representivity and the high frequency of
	sampling reduces the impact of potential local biases. Core was air dried prior to
	weighing and the volume was measured using calipers to measure the length and
	diameter at three different locations for each sample. This technique takes into
	account void spaces. The fact that the samples were not oven dried prior to weighing
	may have the effect of overstating the density but the effect of this is likely to be
	negligible.
	The measured densities were compared against Fe assays and a regression
	calculated. The assay interval averages 2 m whereas density samples average
	around 25 cm in length so it was assumed that the density samples are representative
	of the assayed interval. The densities of the block models were then calculated using
	the estimated Fe grade and the regression between Fe grade and density. The
	densities of blocks above the base of oxidation surface were reduced by 7% following
	assessment of the relative densities of weathered rock from Nowa Nowa.
Classification	The Mineral Resource estimates at Five Mile deposit have been classified according
	to the search pass so that blocks populated in pass one are classified as Measured,
	blocks populated in pass two have been classified as Indicated and blocks populated
	in pass three are classified as Inferred. The resources in the northern part of Five Mile
	and the entire Seven Mile deposit are classified as Inferred due uncertainties in the
	geometry of mineralisation.
	H&S Consultants believes the confidence in tonnage and grade estimates, the
	continuity of geology and grade, and the distribution of the data reflect the Measured,
	Indicated and Inferred categorisation. The estimates appropriately reflect the
	Competent Person’s view of the deposit. H&S Consultants has not assessed the
	reliability of input data and Eastern Iron personnel take responsibility for the accuracy
	and reliability of the data used to estimate the Mineral Resources.
Audits or	The estimation procedure was reviewed as part of an internal H&S Consultants peer
reviews	review and the block model was reviewed visually by Eastern Iron geologists. No audits of the Mineral Resource estimates have been completed.

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Criteria	Commentary
Discussion of	No statistical or geostatistical procedures were used to quantify the relative accuracy
relative accuracy/	of the resource. The global Mineral Resource estimates of the Five Mile and Seven Mile deposits are moderately sensitive to the cut-off grade applied. The cut-off grade applied makes tentative assumptions on the relative amounts of magnetic and non-
confidence	magnetically recoverable Fe and may change following metallurgical and/or Davis
	Tube test work. The grades of the concentrate produced from any form of
	beneficiation have not been estimated as this data has not yet been produced. The
	global Mineral Resource estimates may also be inaccurate due to local uncertainties
	in the exact locations of the boundaries of mineralisation (+/-~10 m). Several of the
	boundaries are interpreted to be fault surfaces, the locations of which are moderately
	well defined. Additional drilling may alter the geometries of these fault surfaces.
	No production data is available for comparison to the resource estimate

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