EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2013

Oct 24, 2012

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QUARTERLY REPORT – SEPT 2012
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ASX Code: EFE

HIGHLIGHTS

ACN 126 678 037

NOWA NOWA IRON PROJECT

• Engenium progressing scoping study into mining Seven Mile and Five Mile iron Deposits.

Issued Capital (30 Sept 2012) 114,679,032

Directors

Glenn Goodacre (Chair) Greg De Ross (MD) Ivo Polovineo Wendy Corbett Greg Jones Steve Gemell Adrian Critchlow

• Resource upgrade of 23% at Five Mile Iron Deposit.

• New Five Mile resource of 11 Mt at 49.8% Fe includes 6.8Mt Indicated and 4.2Mt Inferred.

• MOU executed with South East Fibre Exporters Pty Ltd, operators of Eden export port terminal.

Eastern Iron Managing Director, Greg De Ross commented: “Good progress has been made on completing the scoping study at Nowa Nowa and we remain on track for completion in the December quarter.”

CENTRAL QUEENSLAND IRON PROJECT

• Discussions continue with potential funding partners.

Address

Level 1, 80 Chandos Street St Leonards, NSW 2065

CORPORATE

• $1.26 million raised via placement of the rights issue shortfall to sophisticated investors at a 28% premium. Funds primarily to be used in continuing assessment at Nowa Nowa.

Postal

PO Box 956, Crows Nest NSW 1585

T: +61 2 9906 7751 F: +61 2 9906 5233

Twitter: @EasternIronEFE

www.easterniron.com.au

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NOWA NOWA IRON PROJECT

Scoping Study

Throughout the quarter Eastern Iron continued to focus its activities on the preparation of a scoping study into a possible mining development at the Nowa Nowa Iron project in eastern Victoria. The proposed development would see hematite and magnetite iron ore mined from open pits at the Seven Mile and Five Mile deposits. The ore would be beneficiated by crushing and simple low intensity magnetic separation (LIMS) to produce around 1Mt pa of +60% Fe coarse sinter product. Iron product would be trucked some 220km along sealed roads from the mine site to a bulk loading facility at the SEFE operated port facility south of Eden.

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Nowa Nowa Locality Plan

Project delivery specialists, Engenium, coordinated ongoing work on the scoping study which has included the following areas of activity:

• Further metallurgical testwork on composite samples from drilling at the Five Mile and smaller Seven Mile iron deposits to determine possible product specifications and a likely beneficiation path. This work is being carried out in conjunction with ALS Metallurgy.

• Mining optimization studies and preliminary planning by Australian Mine Design and Development Pty Ltd.

• Provision of services and infrastructure.

• Transport and port studies including design of stockpile areas and reclaiming system at the SEFE Eden port facility.

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Quarterly Report – September 2012

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• Environmental baseline and issues investigations by Earth Systems Pty Ltd.

• Capital and operating cost estimates by Engenium.

It is expected that the study will be completed in the December quarter as scheduled.

Resource Estimate

During the previous quarter a limited program of diamond drilling was completed at Seven Mile and Five Mile. The purpose of the drilling was to provide drill core for metallurgical testwork and confirm the results of drilling carried out by the Victorian Government in the mid 1950’s. Four diamond drill holes were completed including one at the Seven Mile deposit and three at the larger Five Mile deposit. All drill holes were vertical and details of the drilling program are shown in the table below:

Drill hole	Location	North (GDA)	East (GDA)	Dip °	Total Depth (m)
NDD011	7 Mile	599462	5832270	‐90	124.1
NDD012	5 Mile	598407	5830862	‐90	101.97
NDD013	5 Mile	598399	5830825	‐90	119.4
NDD014	5 Mile	598378	5830801	‐90	132.15

Quarter core samples were collected and assayed by XRF on a down hole 2m basis except where obvious geological contacts were present.

An updated resource estimate was compiled by H&S Consultants Pty Ltd (H&S) using data from 23 drillholes drilled by the Victorian Government as well as results from holes drilled in the recent program. The estimate, at a cutoff grade of 40% Fe, is shown in the table below and was detailed in a release dated 4 September 2012. Information provided from the latest Eastern Iron drilling resulted in an increase of 23% in the Five Mile resource against that reported earlier in the year. Additionally, confirmation of iron ore grades has been supported by twinning of some of the earlier holes by drillholes from the latest program. This has provided the basis for a portion of the resource to be upgraded to an Indicated category.

	Indicated	Indicated	Inferred	Inferred	Total	Total
Prospect	Mt	Fe %	Mt	Fe %	Mt	Fe %
Five Mile	6.8	50.4	4.2	49.0	11	49.8
Seven Mile			0.55	48.3	0.55	48.3
Total	6.8	50.4	4.75	48.9	11.55	49.8

Note decimals do not imply precision and are used to avoid rounding errors

The mineralised body at Five Mile has been faulted along its western and eastern boundaries but otherwise replaces conformable sedimentary layers lying below volcanic rocks. Reported

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Quarterly Report – September 2012

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estimates are constrained by wireframes of the mineralised sedimentary layer. A typical drill section including drillhole NND014 from the recent program is shown as follows:

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Assays from the Eastern Iron drilling program including NND014 are shown in the table below:

	From (m)	To (m)	Total (m)	Fe%	**SiO2% **	**Al2O3% **	P%	S%
NDD011	0.0	71.4	71.4	46.3	26.9	2.77	0.006	0.03
NND012	53.2	85	31.8	56.3	9.87	1.6	0.014	1.93
NND013	83	117.9	34.9	43.29	11.3	2	0.025	0.7
NND014	67.7	130.6	62.9	57.6	9.78	1.77	0.035	2.1

In the resource estimate reported earlier this year an assumed density of 3.9t/m[3] was used. During the latest drilling program density measurements were taken from core samples enabling a relationship between rock density and iron grade to be defined. The density for each block was then derived from the estimated iron grade. The average density of material included in the resources at a cutoff of 40% iron is 4.1 t/m[3] .

MOU ‐ South East Fibre Exports Pty Ltd

South East Fibre Products Pty Ltd (SEFE) operate a woodchip mill and associated wharf and bulk loading port facility at Two Fold Bay near Eden in southern NSW. Eastern Iron and SEFE have executed an MOU which will see the two companies cooperate in assessing the Two Fold Bay facility as a possible site for export of iron ore product from Eastern Iron’s Nowa Nowa project. The assessment will form part of the ongoing scoping study being carried out on Eastern Iron’s behalf by Engenium.

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Quarterly Report – September 2012

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EULOGIE IRON ‐ VANADIUM PROJECT

In the previous quarter Eastern Iron reported the results of a concept development study for a possible mining development at the Eulogie. The study was based on open pit mining of a drill defined global Indicated and Inferred resource of 465Mt at 14.6%Fe (for details of the resource estimate see announcement dated 19 October 2011). The mining operation was scoped to mine around 20 million tonne of ROM ore per year. Capital costs are estimated at close to $600 million for a project producing 3.2 million tonne per year of magnetite concentrate to be exported via Gladstone Port.

The relatively low total capital cost is a function of the favourable location of the project being in close proximity to the Port of Gladstone with the potential to load product onto capesize vessels across open access wharves.

Eastern Iron has had initial discussions with parties interested in joining Eastern Iron in further evaluation of the project including funding to completion of the mine feasibility study. These discussions are ongoing.

NSW IRON ORE PROJECT

Joint venture partners 3E Steel Pty Ltd have completed drilling of additional palaeochannel areas within the joint venture tenements near Cobar in central western NSW. The objective of this drilling will be to substantially increase the current total resource. 3E have also approved a program of beneficiation testwork at a major Chinese University to be completed over the next six months.

CORPORATE

In June 2012, Eastern Iron completed a capital raising by way of a pro‐rata non‐renounceable Entitlement Offer of New Shares whereby shareholders were offered 2 shares for every 3 fully paid ordinary share held in the Company on 30 May 2012 at an issue price of $0.055 per New Share.

A total of 23,028,507 Shares were subscribed representing approximately 50.2% of available entitlements.

The primary purpose of the Entitlement Offer was to raise funds for the ongoing work program and scoping study of the Nowa Nowa Project. The total amount raised under the Entitlement Offer was $1,266,568 before costs. The New Shares were quoted with ASX on a deferred settlement basis on 28 June 2012 and Holding Statements were despatched on 5 July 2012.

Subsequent to the rights issue the company announced that it had raised a further $1.26M via a placement of 22,843,106 shares at $0.055 which was at a 28% premium to the average closing price for the week prior to the placement. The placement was made to sophisticated investors and consisted of all of the shares available from the shortfall of the rights issue .

The board announced that founding Chairman, Glenn Goodacre had resigned from the Board, effective 31 October 2012. Mr Goodacre played an instrumental role in the Company’s establishment, IPO and listing in 2008. The Board wishes to thank Glenn for his outstanding contribution to the Company’s growth.

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Quarterly Report – September 2012

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The Board further announced that Mr Adrian Critchlow had been appointed as a Non‐Executive Director of the Company effective 1 October 2012.

FORWARD PROGRAM

Over the next quarter the company intends to achieve the following:

Nowa Nowa

Complete the Scoping Study including an evaluation of the results and provide recommendations to the Board for the next stage at Nowa Nowa.

Queensland Iron Project

Progress discussions with potential joint venture partners for the Queensland Iron Project.

FINANCIAL POSITION

Total exploration expenditure for the quarter was $464,588. Expenditure by joint venture partners on exploration tenements in which Eastern Iron has an interest amounted to $168,000. The cash balance at the end of the quarter was $3,066,884.

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Mr Greg De Ross Managing Director Mob: 0417 711 274

The information in this report that relates to Exploration Results, Mineral Resources and 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 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”. Mr De Ross consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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

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Quarterly Report – September 2012