EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2013

Jan 29, 2014

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QUARTERLY REPORT - DECEMBER 2013
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ASX Code: EFE

Issued Capital: 117,870,484 ASX Code: EFE

Directors Issued Capital: Steve Gemell (Chairman) Share Price at Greg De Ross (MD) Market Capitalisation at Ivo Polovineo Wendy Corbett Cash on hand at Greg Jones Directors Adrian Critchlow Glenn Goodacre - Chairman

Greg De Ross - Managing Director Address Ivo Polovineo - Non-Ex Director

Wendy Corbett - Non-Ex Director Level 1, 80 Chandos Street Greg Jones - Non-Ex Director Steve Gemell - Non-Ex DirectorSt Leonards, NSW 2065

Investor and Media Contact: Postal Fergus Ross

Six Degrees Investor Relations PO Box 956, Crows Nest Fergus.ross@sdir.com.au NSW 1585

Address

Level 1, 80 Chandos Street T: +61 2 9906 7751 St Leonards, NSW 2065

F: +61 2 9906 5233 Postal

PO Box 956, Crows Nest NSW 1585 Twitter: @EasternIronEFE

T: +61 2 9906 7751

F: +61 2 9906 5233

www.easterniron.com.au www.easterniron.com.au

Twitter: @EasternIronEFE

HIGHLIGHTS

NOWA NOWA IRON PROJECT

• Feasibility Study nearing completion with results confirming scoping study outcomes of low capital cost and robust margins over the projected life of the mine.

• Decision by the Victorian Government initiates permitting process.

• Project Consent Deed signed with native title holding body Gunaikurnai Land and Waters Aboriginal Corporation.

• Receipt of funds totalling $970,574 from proceeds of sale of Eastern Iron’s interest in NSW pisolite project and Australian Government R&D grant.

Eastern Iron Limited (ASX: EFE) is pleased to report on activities undertaken during the quarter ended 31 December 2013.

NOWA NOWA IRON PROJECT

The Nowa Nowa Iron Project is located some 250 kilometres east of Melbourne close to the Princes Highway, which provides access to several nearby towns and a proposed export facility south of Eden, approximately 200 kilometres further east (Figure 1 on next page).

During 2013 Eastern Iron has been undertaking a Feasibility Study into the potential development of the magnetite-rich iron ore at the Five Mile deposit. A scoping study, completed in 2012, indicated the potential for an economically robust mine development based on mining iron ore from the Five Mile deposit. It proposed that ore would be crushed and beneficiated to export quality at site, and trucked to a port facility at Two Fold Bay south of Eden in southern NSW.

In parallel with the progress of the Feasibility Study, Eastern Iron has undertaken environmental studies and the preparation and submission of documentation to support permitting and approval of the project should the Company make a decision to proceed to development based on the results of the Feasibility Study.

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Figure 1: Nowa Nowa Locality Plan

Feasibility Study

The Feasibility Study with detailed capital and operating cost estimates has now been largely completed and the report document will be finalised in early February 2014.

Mining studies completed as part of the Feasibility Study have indicated that parts of the Inferred Resource at 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 managed by project delivery specialist, Engenium with input from specialist subconsultants 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

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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* reported under the guidelines of the JORC 2012 Code.

The project development includes no onsite accommodation and the workforce, expected to number around 120, will live in the surrounding towns of which there are several within a 50 kilometre 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.

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Figure 2: Nowa Nowa Project – site layout

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 run-of-mine (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 kilometre new mine access road to an existing sealed road and then via the Princes Highway to

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the SEFE (South East Fibre Exporters Pty Ltd) port south of Eden in southern NSW. The haulage is some 234 kilometres 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 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 management and ship loading. The two companies have established commercial terms for the use of the site which will require sign off from the Japanese owners of SEFE.

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	$3.8
ProcessingPlant	$11.3
Site Works	$10.7
Port	$0.7
Owners Cost/Contingency/EPCM	$9.7
Total	$36.1

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

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-for-purpose 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 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 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.

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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 export product

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.

Environmental Effects Statement (EES)

In late December 2013 Eastern Iron was advised by the Victorian Minister for Planning of the requirements for an Environmental Effects Statement (EES) pursuant to the Environmental Effects Act (1978) as part of the permitting process for the proposed development at Nowa Nowa . The EES approval process is a one-stop-shop permitting approach, which includes all planning and operating license requirements for the development and operation of the project.

Planning, assessment and permitting for the Nowa Nowa project is now well advanced and the Company, in cooperation with Government officers overseeing the process, is working to a timetable that should see the EES submitted for a decision for approval by the Minister by the end of 2014.

Native Title Agreement

The project area at Nowa Nowa is entirely within a granted Native Title claim area held by the traditional owners, the Gunaikurnai people. During the quarter the Company announced that it had reached agreement with the Gunaikurnai Land and Waters Aboriginal Corporation (‘GLaWAC’), regarding the granting of Mining Licence Application 5571 covering the Nowa Nowa iron ore. A Project Consent Deed has been signed between Gippsland Iron Pty Ltd and GLaWAC, which is the native title holding body for the Gunaikurnai People of Gippsland. Gippsland Iron is a wholly owned subsidiary of Eastern Iron. The Company expects that the Victorian Government will sign the Section 31 Deed during the coming quarter. This will be the final step towards the granting of the Mining Licence.

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Funding

During the quarter the Company received $150,000 from the proceeds of the sale of its remaining interest in the pisolite iron project located in central western NSW to its former joint venture partner 3E Steel Pty Ltd. The transfer of the tenements has also released $130,000 from security deposits held by Mineral Resources to Eastern Iron.

Eastern Iron has also received $690,574 from the Australian Government as a refund against eligible research and development expenditure incurred in the 2012/2013 financial year.

The Company anticipates receiving a further $300,000 from the Victorian Government as a grant towards completion of studies relating to the provision of infrastructure for the Nowa Nowa project. These funds are payable on completion of the Feasibility Study and the Company expects that these will be paid in the March quarter 2014.

The receipt of these funds totalling $1,270,574 will enable the Company to complete the program of work at Nowa Nowa including the Feasibility Study.

FORWARD PROGRAM

• Finalise the Nowa Nowa Feasibility Study

• Complete a port access agreement

• Progress the EES compilation

• Increase stakeholder engagement

• Progress product off-take discussions.

FINANCIAL POSITION

Total exploration expenditure for the quarter was $679,000. The cash balance at the end of the quarter was $710,000.

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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.

*This information is extracted from the report entitled “Nowa Nowa Iron Project – Feasibility Study Results” announced to the ASX on 24 January 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

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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.

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

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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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

EASTERN IRON LIMITED

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ABN 70 126 678 037

Quarter ended (“current quarter”) 31 December 2013

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid/received on R&D tax offset 1.7 Other - consulting fees and rental income - tenement security deposits (paid)/refunded Net Operating Cash Flows	Current quarter 31 December 2013 $A’000	Year to date (6 months) 31 December 2013 $A’000
	0 (679) 0 0 (217) 0 5 0 691 0 130	0 (1,581) 0 0 (376) 0 23 0 691 10 120
	(70)	(1,113)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other Net investing cash flows 1.13 Totaloperating andinvesting cash flows (carriedforward)	0 0 0 150 0 0 0 0 0	0 0 0 150 0 0 0 0 0
	150	150
	80	(963)

Appendix 5B Page 1

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

	Current quarter $A’000	Year to date $A’000
1.13 Total operating and investing cash flows (brought forward)	80	(963)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other – Equity raising costs Net financing cash flows	0 0 0 0 0 0	0 0 0 0 0 0
	0	0
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	80 630 0	(963) 1,673 0
	710	710

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 Aggregate amount of payments to the parties included in item 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
	153
	Nil

• 1.25 Explanation necessary for an understanding of the transactions

• Salaries, directors’ fees and consultancy fees at normal commercial rates

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

None

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Financing facilities available

Add notes as necessary for an understanding of the position.

	3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
		Nil	Nil
		Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A'000
	260
	0
	0
	236
Total	496

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows	Current quarter $A'000	Previous quarter $A'000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other - bills receivable, bank accepted and short term bank deposits	435	100
	24	24
	0	0
	251	506
Total: cash at end of quarter(item 1.22)	710	630

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	ELs 6710, 6952, 6953, 6957-6962, 6671, 6672, 7282 and 7283 ELs 6711, 6706, 6954 and 6956 Auburn EPM 18566	ELs transferred ELs transferred EPM dropped	100% 49% 100%	0% 0% 0%

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

6.3 The full Eastern Iron schedule of tenements is included as an attachment to this report.

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total Number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference securities 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions	Nil
	Nil
7.3 Ordinary securities - fully paid EFE 7.4 Changes during quarter (a) Increases through issues (b) Decreases through return of capital, buy-backs	117,870,484	117,870,484
	See *
7.5 Convertible debt securities 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	Nil
	Nil
7.7 Options EFE 10 cents EFE 18 cents EFE 6.2 cents 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	3,700,000 1,200,000 1,000,000	0 0 0	Exercise price $0.10 $0.18 $0.062	Expiry date 23 Nov 2015 9 Mar 2015 26 Nov 2016
	1,000,000	0	$0.062	26 Nov 2016
	Nil
	1,850,000 1,650,000	0 0	$0.20 $0.18	23 Nov 2013 23 Nov 2013
7.11 Debentures (totals only)	Nil
7.12 Unsecured notes (totals only)	Nil

• *1,978,009 shares were issued on 23/10/13 shown in September 2013 quarter Appendix 5B

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Compliance statement

1. This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

2. This statement does give a true and fair view of the matters disclosed.

Sign here:

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Date: 30 January 2014

( ~~Director~~ / Company Secretary)

Print name: Ian K White

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenements, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3. Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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Appendix 5B Page 5

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED Schedule of Tenements as at 31 December 2013

Tenement	Tenement Number	Interest	Joint Venture Details
QUEENSLAND
Hawkwood Fairhill and Rolleston Eulogie	EPMs 15289 and 17099 EPCs 2175 and 2206 MDL 362	0% 100% 100%	Rugby 100%, Eastern can earn up to 80%, Note 1 - Note 2
VICTORIA
Nowa Nowa Nowa Nowa MIN	EL 4509 MINA 5571	100% 100%	- Note 3
EL = Exploration Licence ELA = Exploration Licence Application EPM = Exploration Permit for Minerals (Qld) EPC = Exploration Permit for Coal (Qld) MDL = Mining Development Licence (Qld) MIN = Mining Licence (Vic)

Notes:

1. Joint Venture with Rugby Mining Pty Ltd and Rugby Mining Limited whereby Eastern can earn up to an 80% interest.

2. MDL 362 is held by Queensland Iron Pty Ltd a wholly owned subsidiary of Eastern Iron.

3. MINA 5571 is held by Gippsland Iron Pty Ltd a wholly owned subsidiary of Eastern Iron.

Appendix 5B Page 6

30/9/2001