EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2015

Oct 30, 2014

QUARTERLY REPORT – SEPTEMBER 2014

ASX Code: EFE

Issued Capital: 146,246,644 ASX Code: EFE (as at 30 September 2014)

Issued Capital: Directors

Share Price at Steve Gemell (Chairman) Ivo Polovineo Market Capitalisation at Wendy Corbett Cash on hand at Greg Jones Directors Adrian Critchlow Glenn Goodacre - Chairman Michael Giles Greg De Ross - Managing Director

Ivo Polovineo - Non-Ex Director Greg De Ross (CEO) Wendy Corbett - Non-Ex Director Greg Jones - Non-Ex Director

Steve Gemell - Non-Ex Director Address

Investor and Media Contact: Level 1, 80 Chandos Street Fergus Ross St Leonards, NSW 2065 Six Degrees Investor Relations Fergus.ross@sdir.com.au

Address Postal

Level 1, 80 Chandos Street PO Box 956, Crows Nest St Leonards, NSW 2065 NSW 1585

Postal

PO Box 956, Crows Nest T: +61 2 9906 7751 NSW 1585 F: +61 2 9906 5233

T: +61 2 9906 7751

F: +61 2 9906 5233 Twitter: @EasternIronEFE

www.easterniron.com.au

Twitter: @EasternIronEFE

HIGHLIGHTS

NOWA NOWA COPPER EXPLORATION

• Silurian rock sequence considered highly prospective for massive sulphide copper/lead/zinc deposits shown to underlie Nowa Nowa Exploration Licence.

• Drilling carried out by previous explorers intersected significant mineralisation including 13.6m @ 3.8% Cu at Three Mile Prospect.

• VTEM survey completed over licence generated four strong conductors, one of which is located at Three Mile.

• Follow-up ground EM and drilling is planned.

NOWA NOWA IRON PROJECT

• Definitive Feasibility Study has confirmed many of the Scoping Study outcomes including:

• Low capital cost - $33.6 million

• Low production costs - $26.1 per tonne of finished product at the mine gate.

• Production of 780,000 tonnes of 58% Fe beneficiated magnetite per annum over a seven year mine life.

• Alternative port and product transport solutions being examined.

CORPORATE

• Eastern Iron has received $1.015 million from the Australian Government R&D refund scheme.

• An additional $147,000 to be raised via a placement.

www.easterniron.com.au

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Eastern Iron Limited (ASX: EFE) is pleased to report on activities undertaken during the quarter ended 30 September 2014.

NOWA NOWA COPPER EXPLORATION

During the quarter Eastern Iron completed a detailed heli-borne electromagnetic VTEM survey over the Nowa Nowa tenement (EL 4509). The survey was completed following a review of previous exploration and the identification of extensive Silurian volcanics believed to be the same rocks that host important volcanogenic massive base metal sulphide (VMS) deposits in Victoria and southern NSW.

Drilling carried out by previous explorers within the Nowa Nowa area intersected significant copper, lead, zinc and gold mineralisation in altered volcanics and sediments consistent with the VMS interpretation, with a best intersection of 13.6m assaying 3.8% Cu at the Three Mile prospect in the south eastern corner of the licence.

Geophysical consultants reviewed and analysed the results of the VTEM survey and identified 25 anomalous responses. These were ranked on the basis of shape and geological setting and the four highest priority VTEM anomalies (Figure 1) were modelled using conductor plates to fit the observed data in order to predict the target size, orientation and depth below surface of the potential source. Initial interpretation is that these anomalies may have been generated by massive sulphide deposits. Ground EM is planned for the highest priority targets in order to better define their location and orientation prior to drilling.

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Figure 1 - EL4509 – VTEM targets

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NOWA NOWA IRON PROJECT

The Nowa Nowa Iron Project is located some 250 kilometres east of Melbourne close to the Princes Highway, which provides ready access to several nearby towns and possible export sites (Figure 2).

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Figure 2 - Nowa Nowa Locality Plan

Over the past 12 months, Eastern Iron has advanced a Definitive Feasibility Study (DFS) into the potential development of the magnetite-rich iron ore at the Five Mile deposit.

Definitive Feasibility Study

During the quarter Eastern Iron released the results of the Definitive Feasibility Study (DFS) being prepared for the Nowa Nowa Iron Project.

The Nowa Nowa Iron Project is based on the potential development of the Five Mile magnetite iron deposit by upgrading the ore to a beneficiated product at site then transporting this product to market by the most efficient and cost effective means. Key milestones in progressing this project have been achieved with the completion of a Native Title Agreement with the Gunaikurnai Land and Waters Aboriginal Corporation in December 2013 and the grant of the mining licence in April 2014

The study was compiled for Eastern Iron by Engenium Pty Ltd (Engenium) as an independent consultant. It is based in part on information supplied by Eastern Iron, specialist consultants, contract service operators, vendors of equipment and Engenium’s engineering and project personnel.

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Mineral Resource

An updated JORC compliant resource of 9.05 Mt @ 50.8% Fe was prepared by H&S Consultants for the Five Mile deposit. The estimate shown below uses historical drilling data compiled by Eastern Iron and results from recent drilling programmes and has been reported at a lower cutoff of 40% Fe.

Prospect	Measured	Measured	Indicated	Indicated	Inferred	Inferred	Total	Total
	Mt	Fe%	Mt	Fe%	Mt	Fe%	Mt	Fe%
Five Mile	2.25	52.8	4.32	50.4	2.49	49.7	9.05	50.8

This information is extracted from the report entitled “Resource Upgrade at Nowa Nowa Iron Project” announced to the ASX on 21 May 2014 and is available to view on www.easterniron.com.au. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

Mining

The DFS mining model was developed by Coffey Mining Consultants in conjunction with Woodhawk Mining Consultants. This model identified the option of accessing the ore body by means of an external box-cut, which would allow both the southern and northern sections of the pit to be mined independently. This in turn would facilitate backfill of the northern section of the pit, whilst maintaining access to the southern section of the pit. This modification reduces waste haulage distances and results in substantial savings in unit mining costs.

The shallow dipping almost flat, tabular attitude of the ore body allows for the use of surface miners for mining ore and waste. It is envisaged that two Wirtgen 2500 units would be supplied and operated by a contract mining group. This approach has several advantages including:

• Drill and blast requirements are eliminated.

• No requirement for storage of explosives and operating licences for handling and storage of blasting materials.

• Surface miners reduce the broken ore size so that a primary crusher is not required.

• Significant reduction to the unit mining cost.

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Processing

The processing plant consists of a fairly conventional two-stage gyratory crushing circuit producing a -6mm dry product feeding a rotating magnetic drum and producing a magnetic product and non-magnetic waste. The magnetic product is loaded from one of two stockpiles directly into trucks for transport to the export point. The waste product is conveyed back to the waste stockpile for storage pending disposal in the mined-out pit at the end of the mining operation.

Large scale pilot testing was carried out on representative composite drill samples to produce a product averaging 58% Fe, 12.2% SiO2, 0.65% S at an 81% mass yield.

Transport

The DFS was carried out on the assumption that the finished iron ore product would be trucked to the SEFE wharf and ship loading facility at the port of Eden and loaded onto bulk carriers for dispatch to market. The recent decision by SEFE’s shareholders not to allow access by Eastern Iron to the port facilities has caused the Company to examine other options for transport of the product to market. The Company intends to provide an update of studies of transport alternatives during the next quarter.

Capital Costs

The DFS 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 Summary	Costs (AUD $)
Direct Costs
Mine	$3,005,028
ProcessingPlant and Materials handling	$10,651,812
Site Works	$9,815,417
Total Direct Costs	$23,472,257
Indirect Costs
Owners Costs	$2,907,294
EPCM	$2,679,308
Contingency	$4,509,523
Total Indirect Costs	$10,159,125
Total	$33,631,382

Note: Working capital is not included. Contingency has been included at 15%.

The capital cost shown in the table above has been estimated to an accuracy of +/- 15% and assumes the purchase of new equipment apart from the mining fleet which would be supplied

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by the mining contractor. It also includes the capital cost of a processing plant which in the scoping study was assumed to be provided by a contractor.

Operating Costs

Operating costs shown in the table below 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 optimisation prior to development. The mining cost is a large component of the site based operating costs due to a 4.2 waste to ore ratio. Since the scoping study significant progress has been made in reducing the unit mining cost through adopting a more efficient pit and dump design which reduced waste haul distances and the application of continuous miners for waste and ore mining which removes the requirement for drill and blast.

	Costs (AUD $/t conc)
Mining Cost	$18.67
Processing	$3.48
Indirects	$3.95
Total(Minegate)	$26.10

CORPORATE

During the quarter the company received $1.015 million from a refund of R&D expenditure from the Australian Government. The Company has also agreed to place 3,500,000 shares with existing substantial shareholder, Harland Capital Fund LLC, to raise a further $147,000. This placement is subject to shareholder approval at the upcoming Annual General Meeting scheduled for 19 November 2014.

The funds will be used to support ongoing programs relating to copper-gold exploration at Nowa Nowa and developing transport solutions for the Nowa Nowa Iron Project in Eastern Victoria.

FORWARD PROGRAM

Nowa Nowa Copper Exploration

• Complete field geological mapping and sampling of VTEM target areas

• Undertake ground EM survey over high priority targets

Nowa Nowa Iron Project

• Undertake a review of alternative transport and port options

FINANCIAL POSITION

Total exploration expenditure for the quarter was $309,000. The cash balance at the end of the quarter was $49,000 however $1,015,588 was received on the 1[st] of October 2014 from the Federal Government R&D rebate.

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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 exploring for high grade copper deposits in the Nowa Nowa region.

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

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 2012 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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