EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2011

Jan 29, 2012

Quarterly Activities Report For the period ending 31[st] December 2011

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30 January 2012

HIGHLIGHTS FOR THE QUARTER

 CENTRAL QUEENSLAND IRON PROJECT

Eulogie Iron – Vanadium Project

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• Additional metallurgical testwork has demonstrated the potential for coarse cobbing to significantly reduce grinding costs.

• Concept Development Study underway with estimates of operating and capital costs expected to be completed in the next quarter.

Hawkwood Iron – Vanadium Project

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• A 17 hole, 2,689m reverse circulation drilling program completed along northern limb of the magnetic body. A resource estimate is being prepared and should be available in February.

 NOWA NOWA IRON PROJECT

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• Eastern Iron has advised Waygara Mines Pty Ltd that it has exercised its option to acquire a 100% interest in the Nowa Nowa project.

• Eastern Iron is undertaking a review of the resource potential at the Five Mile and Seven Mile magnetite deposits as well as preliminary metallurgical testwork and product transport options.

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December 2011 Quarterly Report

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EULOGIE IRON - VANADIUM PROJECT

On the 19[th] of October 2011, Eastern Iron reported the results of a resource drilling program at Eulogie wherein drilling defined an Indicated and Inferred Resource of 465 million tonnes at 14.2% Fe above a 10% DTR cutoff. The Resource was estimated to a depth of 200m and resulted from the drill testing of around 30% of the mapped area of the magnetite-bearing rocks.

Using this Resource as a basis for a potential development the Company is now completing further metallurgical testwork and a concept development study before seeking parties to assist in funding further feasibility studies and possible development of the project.

Metallurgical Testwork

During the quarter further metallurgical testwork was undertaken on samples from Eulogie which demonstrated that coarse cobbing of ground ore at 100% passing 500 micron can reject around 75% of the mass to a non-magnetic tailings fraction with no loss of iron recovery. Grinding of the magnetic fraction will then produce an acceptable product at a final grind of 100% passing 150 micron leaving open the potential to produce either a pellet or sinter feed product.

Eulogie ground ore P100 = 500 micron

Fraction	Mass %					Assays (%)	Assays (%)	Assays (%)
		Fe	SiO2	Al2O3	TiO2	S	P	MnO	K2O	MgO	V	Na2O
Magnetics	23.2	47.22	12.09	6.61	7.55	0.572	0.003	0.29	0.025	2.93	0.411	0.621

Eulogie 500 micron magnetic fraction regrind at P100 = 150 micron

Fraction	Mass %					Assays (%)	Assays (%)	Assays (%)
		Fe	SiO2	Al2O3	TiO2	S	P	MnO	K2O	MgO	V	Na2O
Magnetics	71.63	61.45	1.44	3.29	6.81	0.623	-0.001	0.29	0.002	1.37	0.571	0.039

The final product at 100% passing 150 micron contains 61.45% Fe and 1.02% V2O5.

This process development will be used in the project concept study and is expected to deliver significant savings in capital and operating costs.

Development Studies

The Company has recently obtained various technical data and reports prepared for the original prefeasibility study completed by Thiess in 1989. This data will be combined with more recent studies completed on behalf of Eastern Iron to complete a concept development study with updated capital and operating cost estimates. This study will form the basis for a decision on progressing the project to a feasibility study and is expected to be completed in the March quarter.

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December 2011 Quarterly Report

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HAWKWOOD IRON PROJECT

During the previous quarter Eastern Iron completed a program of reverse circulation drilling at the Hawkwood Project. The program consisted of 1,689m in 17 holes and was designed to systematically test the northern section of the magnetic anomaly. Assay and mass recovery data has now been received and a resource estimate is being prepared by Hellman and Schofield. It is expected that the estimate will be available in early February.

NOWA NOWA IRON PROJECT

The Nowa Nowa project (EL4509) is subject to an option agreement whereby Eastern Iron has the right to acquire a 100% interest in the tenement by giving notice to the holder, Waygara Mines Pty Ltd and paying Waygara $100,000 and issuing 1,000,000 Eastern Iron shares.

The project area is located north of the township of Nowa Nowa, which is 270km east of Melbourne, Victoria. The area is well serviced by sealed roads, power and a local population in nearby townships.

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December 2011 Quarterly Report

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Magnetite iron deposits at Nowa Nowa were drilled in 1955 by the Victorian Mines Department as a follow up to regional magnetic surveys. Most drilling was centred on the largest of the magnetic targets, the Five Mile Deposit, with 27 cored drill holes completed. Massive magnetite with lesser hematite occurs at 30-50m depth below tertiary sands and Devonian volcanic rocks. These deposits appear to have formed mantos 40-80m in thickness associated with lesser coarse pyrite within altered sediments and are possibly skarns related to nearby, as yet unidentified intrusives.

Other nearby magnetic targets, including the Seven Mile, Six Mile and Three Mile deposits, have received some exploratory drilling but not to the same extent as the Five Mile deposit. Nevertheless these are also potential sources of additional resource and will be explored further.

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Seven Mile quarry with boulders of massive hematite lying at surface

Resource Estimate

Available data from the early Victorian Government drilling and some more recent drillholes is being compiled into a resource estimate in accordance with JORC guidelines. This estimate is being prepared by Hellman and Schofield Pty Ltd and should be completed in the March quarter, 2012.

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December 2011 Quarterly Report

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Metallurgy

Drill core samples have been collected from a single drillhole from the Five Mile deposit. Samples are of massive unoxidised magnetite mineralisation and are being tested at AMMTEC laboratories in Perth to provide an initial guide to possible product specifications. The results of this preliminary investigation should be available next quarter.

FORWARD PROGRAM

Over the coming period the company will focus on the following:

Queensland Iron Project

• The completion of the concept development study for Eulogie.

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

• Complete evaluation of the drilling results from Hawkwood and produce a resource estimate.

Nowa Nowa

• Complete the preliminary metallurgical testwork program.

• Complete a maiden resource estimate for the Five Mile Deposit.

• Receive the results of a transport options study for a potential development at Nowa Nowa.

• Initiate a large diameter core drilling program to collect sample for further more detailed metallurgical testing.

NSW IRON ORE PROJECT

(EFE 100%, 3E Pty Ltd may earn 77.5%)

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.

FINANCIAL POSITION

Total exploration expenditure for the quarter was $743,000 and expenditure by joint venturers on Eastern Iron projects was $299,000. The cash balance at the end of the quarter was $1.8 million.

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December 2011 Quarterly Report

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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. The Company is also in joint venture with 3E Steel to investigate the potential for developing large low cost low grade iron deposits in central western NSW.

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

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

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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