EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2009

Mar 8, 2009

HALF YEAR FINANCIAL REPORT 31 DECEMBER 2008

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CORPORATE DIRECTORY

Eastern Iron Limited

ABN 70 126 678 037

DIRECTORS

Glenn Goodacre Non-Executive Chairman Peter Buckley Managing Director Bob Richardson Non-Executive Director Wendy Corbett Non-Executive Director

COMPANY SECRETARY

Michelle Lilley

REGISTERED AND ADMINISTRATION OFFICE

Suite 3, Level 1, 80 Chandos Street St Leonards, NSW 2065 PO Box 956, Crows Nest, NSW 1585 Telephone: 02 9906 7551 Facsimile: 02 9906 5233 Website: www.easterniron.com.au E-mail: info@easterniron.com.au

SHARE REGISTRY

Registries Limited Level 7, 207 Kent Street, Sydney, NSW 2000 GPO Box 3993 Sydney, NSW 2001 Telephone: +61 2 9290 9600 Facsimile: +61 2 9279 0664

AUDITORS

Barnes Dowell James

BANKERS

Commonwealth Bank of Australia

STOCK EXCHANGE LISTING

Listed on Australian Securities Exchange Limited ASX Code: EFE

CONTENTS Directors' Report .........................................................1 Income Statement.......................................................3 Balance Sheet.............................................................4 Statement of Changes in Equity..................................5 Statement of Cash Flows............................................6 Notes to the Financial Statements ..............................7 Directors’ Declaration..................................................9 Independent Auditor’s Review Report.......................10 Auditor’s Independence Declaration .........................12

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DIRECTORS’ REPORT

Your directors submit their report for Eastern Iron Limited for the half year ended 31 December 2008.

DIRECTORS

The names of the Company’s directors in office during the half year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Glenn Goodacre (Non-Executive Chairman)

Peter Buckley (Managing Director)

Bob Richardson (Non-Executive Director)

Wendy Corbett (Non-Executive Director)

REVIEW AND RESULTS OF OPERATIONS

The net result of operations after applicable income tax expense for the half year was a loss of $134,687 (2007 - $38,326).

• The scout exploration drilling on NSW Channel Iron deposits was completed in November 2008 after drilling 7,390 metres in 508 scout drillholes at 26 separate palaeochannel prospects.

• An area for resource trial drilling was outlined with potential to produce ex-mine products grading approximately 50% iron using simple magnetic separation. Close spaced drilling has been completed and magnetic separation test work is in progress prior to a resource calculation.

• Two new areas of palaeochannel development, applied for in the previous half, have been offered for grant as exploration licences.

• A number of exploration and development projects that have the possibility of adding value to the Company’s iron ore assets, including the provision of lower tonnage yet higher grade iron blending products, are continuing to be evaluated.

• Single pass magnetic separation test work results from the Belah Tank prospect indicate that product upgrades from an approximate 50% “head grade” material to as high as 55.2% Fe. This type of testing will be extended to regional prospects.

The scout drilling, foreshadowed in the IPO prospectus is now complete. The program included cross section and long section drilling and was completed before time and under budget with 26 individual palaeochannel targets drill tested at the Cobar and Main Line projects. All bulk “in-situ” assays have now been received and much like a magnetite project, the iron grades are quoted prior to beneficiation. Unlike magnetite projects, which in some cases can be deep and in hard rock, most Eastern Iron intersections are from the surface, in free digging gravels without the need for waste stripping and blasting. The results indicate that broad intersections of iron-rich gravel occur throughout the Cobar project and at two new prospect areas at the Main Line project. Most exploration targets drilled lie within 50 kilometres by road from major public-access rail infrastructure that connects with the deepwater, bulk-export ports of Newcastle and Port Kembla.

Three palaeochannels are scheduled for drill test within the Hutch JV area and additional targets will be defined by geophysical modelling following the successful grant of the Gorgonzola and Camembert ELA areas. The Company is now moving to metallurgy, marketing and logistical studies. The resource calculation for Belah Tank will also be accelerated.

The differential magnetic separation process is being refined using a larger (approximately 2 tonne) sample of representative drill cuttings from the Belah Tank prospect. Although the ~50% product is very inexpensive and easy to produce, a higher grade product such as the initial result of 55.17%, is important to pursue using low cost methods such as differential magnetic separation. Test work underway at the Belah Tank test area will be extended to regional prospects in the March quarter. Further fine grinding and pyrometallurgical test work programs are being considered and joint funding of these activities is being pursued with potential customers. However, a higher grade, direct shipping product, produced by differential magnetic separation may provide a route towards early cash flow, whilst downstream processing and value adding is developed for the lower grade product fractions.

The size potential of the 12 exploration targets Eastern Iron considers to have been adequately scout drill tested can be measured in hundreds of millions of tonnes. It is important to note that the prospect areas are only a small subset of the channels identified by geophysical interpretation. In many cases the scout drilling has not tested the entire length of palaeochannel at each of the targets and there is potential for considerably more tonnage. Early test work is showing recoveries of magnetically separated product ranging from 10 to 30% of the in-situ tonnage, depending on palaeochannel target. Whilst the eventual tonnage potential of separated product will be determined with further testing, the results to date and the size of the potential tonnages has encouraged Eastern Iron to commence resource calculation work while continuing with metallurgical testing, preliminary economic studies and holding discussions with potential project partners.

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DIRECTORS' REPORT

DIVIDENDS

No dividends were paid or proposed during the period.

SUBSEQUENT EVENTS

The directors are not aware of any significant changes in the state of affairs of the Company occurring since the end of the half year 31 December 2008.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the Auditor’s Independence Declaration to the Directors as required under section 307C of the Corporations Act 2001 is set out on page 12.

Signed at Sydney this 9[th] day of March 2009 in accordance with a resolution of the directors.

G E GOODACRE Chairman

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INCOME STATEMENT

For the half-year ended 31 December 2008

Note REVENUE 4 Annual report and other shareholder costs ASX and ASIC fees Contract administration services Directors fees Exploration expenditure written off Insurance Legal fees Marketing and public relations Rent Share based payments Travel and accommodation Other expenses from ordinary activities LOSS BEFORE INCOME TAX EXPENSE Income tax expense LOSS AFTER INCOME TAX EXPENSE NET LOSS ATTRIBUTABLE TO MEMBERS OF EASTERN IRON LIMITED Basic loss per share (cents per share) 8 Diluted loss per share (cents per share) 8	31 Dec 2008 31 Dec 2007 (From 23/7/07) $ $ 138,902 12 (9,446) - (17,136) - (89,092) (35,051) (39,000) - (76,898) - (6,758) - (1,641) - (2,686) - (15,000) (2,000) (1,594) (800) (763) (45) (13,575) (442)
	(134,687) (38,326) - -
	(134,687) (38,326)
	(134,687) (38,326)
	0.29 6.05 0.29 6.05

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BALANCE SHEET

For the half year ended 31 December 2008

Note ASSETS Current Assets Cash and cash equivalents 5 Receivables Total Current Assets Non-Current Assets Tenement security deposits Plant and equipment Deferred exploration and evaluation expenditure 6 Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Payables Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Accumulated losses Reserves TOTAL EQUITY	31 Dec 2008 30 Jun 2008 $ $ 3,603,417 4,428,843 106,448 93,102
	3,709,865 4,521,945
	100,000 100,000 24,613 21,308 1,146,032 498,225
	1,270,645 619,533
	4,980,510 5,141,478
	66,476 53,984
	66,476 53,984
	66,476 53,984
	4,914,034 5,087,494
	5,106,570 5,146,937 (305,887) (171,200) 113,351 111,757
	4,914,034 5,087,494

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STATEMENT OF CHANGES IN EQUITY

For the half-year ended 31 December 2008

AT 23 JULY 2007 (date of incorporation) Loss for the period Issue of share capital, net of transaction costs Cost of share based payments taken directly to equity AT 31 DECEMBER 2007 AT 1 JULY 2008 Loss for the period Issue of share capital, net of transaction costs Cost of share based payments taken directly to equity AT 31 DECEMBER 2008	Attributable to the shareholders of Eastern Iron Limited
	Contributed Equity $ Accumulated Losses $ Reserves $ Total Equity $ - - - - - (38,326) - (38,326) 191,690 - - 191,690 - - 800 800
	191,690 (38,326) 800 154,164
	5,146,937 (171,200) 111,757 5,087,494 - (134,687) - (134,687) (40,367) - - (40,367) - - 1,594 1,594
	5,106,570 (305,887) 113,351 4,914,034

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CASH FLOW STATEMENT

For the half year ended 31 December 2008

CASH FLOWS FROM OPERATING ACTIVITIES Payment to suppliers and employees Interest received NET CASH FLOWS (USED IN) OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of motor vehicle and fixed assets Expenditure on mining interests (exploration) Tenement security deposits NET CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Proceeds from issue of shares Equity raising expenses NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH HELD Add opening cash brought forward CLOSING CASH CARRED FORWARD	31 Dec 2008 31 Dec 2007 (From 23/7/07) $ $ (188,098) (41,644) 113,820 12
	(74,278) (41,632)
	(5,605) (373) (719,392) (34,829) - (100,000)
	(724,997) (135,202)
	- 100,010 - 200,090 (26,151) -
	(26,151) 300,100
	(825,426) 123,266 4,428,843 -
	3,603,417 123,266

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NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2008

1. CORPORATE INFORMATION

The financial report of Eastern Iron Limited (the Company) for the half year ended 31 December 2008 was authorised for issue in accordance with a resolution of the directors on 9 March 2009. Eastern Iron Limited is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange using the ASX code EFE.

The nature of the operations and principal activities of the Company are described in Note 3.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report.

The half year financial report should be read in conjunction with the Annual Financial Report of EFE as at 30 June 2008.

It is also recommended that the half year financial report be considered together with any public announcements made by EFE during the half year ended 31 December 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

Comparative figures for half year ended 31 December 2007 are from the date of incorporated 23 July 2007 to 31 December 2007.

(a) Basis of Preparation

The half year financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 , applicable Accounting Standards, including AASB 134 Interim Financial Reporting and other mandatory professional reporting requirements. The half year financial report has been prepared on a historical cost basis.

For the purpose of preparing the half year financial report, the half year has been treated as a discrete report period.

(b) Significant Accounting Policies

The half year financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2008.

3. SEGMENT INFORMATION

The Company operates predominantly in the one business segment and in one geographical area, namely Australian mineral exploration and evaluation.

4. REVENUE FROM ORDINARY ACTIVITIES

4. REVENUE FROM ORDINARY ACTIVITIES Interest received 5. CASH AND CASH EQUIVALENTS Cash at bank Money market securities – bank deposits	31 Dec 2008 31 Dec 2007 $ $ 138,902 12
	31 Dec 2008 30 Jun 2008 $ $ 203,417 64,539 3,400,000 4,364,304
	3,603,417 4,428,843

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NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2008

6. DEFERRRED EXPLORATION AND EVALUATION EXPENDITURE Costs brought forward Costs incurred during the period Mining tenements acquired Expenditure written off during the period Costs carried forward	31 Dec 2008 30 Jun 2008 $ $ 498,225 35,628 724,705 125,137 - 337,460 (76,898) -
	1,146,032 498,225

7. CONTINGENT ASSETS AND LIABILITIES

The Company has provided guarantees totalling $100,000 in respect of exploration tenements. These guarantees in respect of mining tenements are secured against deposits with the relative State Department of Mines. The Company does not expect to incur any material liability in respect of the guarantees.

8. EARNINGS PER SHARE

Basic loss per share (cents per share) 0.29 cents (2007 – 6.05 cents).

Diluted loss per share (cents per share) 0.29 cents (2007 – 6.05 cents).

Weighted average number of ordinary shares on issue used in the calculation of basic and diluted loss per share is 46,000,000 (2007 – 633,285).

Loss used in calculating basic and diluted loss per share	31 Dec 2008 31 Dec 2007 $ $ 134,687 38,326

The number of potential ordinary shares that are not dilutive, by reason of the loss result, and not included in determining diluted EPS are 32,270,011.

Conversion, call, subscription or issue after 31 December 2008

Since the end of the financial half year there have been no other conversions to, call of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of these financial statements.

9. OPTIONS ISSUE

During the half year to 31 December 2008 the Company made a pro rata bonus issue of Bonus Options to Eligible Shareholders on the basis of one Bonus Option for every two Shares held in the Company on the record date of 28 November 2008. On 10 December 2008 the Company allotted 23,000,011 bonus options for nil consideration with an exercise price of 12 cents and expiry date of 19 December 2010. These options are quoted on the Australian Securities Exchange. As at the date of this report the Company has 46,000,000 ordinary fully paid shares (30 Jun 08 - 46,000,000) and 32,270,011 (30 Jun 08 - 9,270,000) options at various exercise prices and expiry dates.

10. SUBSEQUENT EVENTS

No event has occurred subsequent to 31 December 2008 requiring disclosure in, or amendment to, these financial statements.

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DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Eastern Iron Limited, I state that: In the opinion of the Directors:

• a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001 , including:

• i) give a true and fair view of the Company’s financial position as at 31 December 2008 and the performance for the half year ended on that date; and

• ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

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

On behalf of the Board

G E GOODACRE Chairman

Sydney, 9 March 2009

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B A R N E S D O W E L L J A M E S Incorporating P J Hennessy & Co

CHARTERED ACCOUNTANTS

Partners	North Sydney
C H Barnes FCA	Level 13, 122 Arthur St
A J Dowell CA	North Sydney NSW 2060
M W James CA
B Kolevski (Affiliate ICAA)Manly
M Galouzis CA	Level 5, 22 Central Ave
	Manly National Building
Associate	Manly NSW 2095
M A Nakkan CA
	Correspondence
Consultant	PO Box 1664
P J Hennessy FCA	North Sydney NSW 2059
	Telephone
	(02) 9956 8500
	Facsimile
	(02) 9929 7428
	Email:
	bdj@bdj.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF EASTERN IRON LIMITED

Report on the Half‐Year Financial Report

We have reviewed the accompanying half‐year financial report of Eastern Iron Limited which comprises the balance sheet as at 31 December, 2008, and the income statement, statement of changes in equity and cash flow statement for the half‐year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Half‐Year Financial Report

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

Auditors’ Responsibility

Our responsibility is to express a conclusion on the half‐year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the company’s financial position as at 31 December, 2008 and its performance for the half‐year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Eastern Iron Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half‐year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and

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Website: www.bdj.com.au

Liability limited by a scheme approved under Professional Standards Legislation

B A R N E S D O W E L L J A M E S Incorporating P J Hennessy & Co

CHARTERED ACCOUNTANTS

consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in audit. Accordingly we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Eastern Iron Limited on 23 February, 2009, would be in the same terms if provided to the directors as at the date of this auditor’s review report.

Conclusion

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

• A. giving a true and fair view of the company’s financial position as at 31 December, 2008 and of its performance for the half‐year ended on that date; and

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

BARNES DOWELL JAMES

…...............……................ Anthony J Dowell 13/122 Arthur Street NORTH SYDNEY NSW 2060

Dated this 9[th] day of March, 2009

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Liability limited by a scheme approved under Professional Standards Legislation

Website: www.bdj.com.au

Incorporating P J Hennessy & Co

B A R N E S D O W E L L J A M E S

CHARTERED ACCOUNTANTS

AJD:ED

23 February, 2009

The Directors Eastern Iron Limited PO Box 956 CROWS NEST NSW 1585

Partners North Sydney C H Barnes FCA Level 13, 122 Arthur St A J Dowell CA North Sydney NSW 2060 M W James CA B Kolevski (Affiliate ICAA) Manly M Galouzis CA Level 5, 22 Central Ave Manly National Building Associate Manly NSW 2095 M A Nakkan CA Correspondence Consultant PO Box 1664 P J Hennessy FCA North Sydney NSW 2059

Telephone (02) 9956 8500 Facsimile (02) 9929 7428 Email: bdj@bdj.com.au

Dear Board of Directors,

EASTERN IRON LIMITED

We declare that to the best of our knowledge and belief, during the half‐year ended 31 December, 2008 there have been:

• i. No contraventions of auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit, and

• ii. No contraventions of any applicable code of professional conduct in relation to the audit.

Yours faithfully, BARNES DOWELL JAMES Chartered Accountants

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...........................................

A.J. DOWELL Partner

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Website: www.bdj.com.au

Liability limited by a scheme approved under Professional Standards Legislation

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…the Eastern dragon