EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2016

Mar 10, 2016

Table of Contents

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EASTERN IRON LIMITED ABN 70 126 678 037

HALF YEAR FINANCIAL REPORT 31 DECEMBER 2015

4 > Eastern Iron Limited

Table of Contents

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Directors’ Report ...............................................................................................................................................................................1 Consolidated Statement of Comprehensive Income...................................................................................................................3 Consolidated Statement of Financial Position..............................................................................................................................4 Consolidated Statement of Changes in Equity.............................................................................................................................5 Consolidated Statement of Cash Flows ........................................................................................................................................6 Notes to the Consolidated Financial Statements.........................................................................................................................7 Directors’ Declaration .................................................................................................................................................................... 11 Independent Auditor’s Review Report ........................................................................................................................................ 12 Auditor’s Independence Declaration ........................................................................................................................................... 14 Corporate Directory ....................................................................................................................................................................... 15

Directors’ Report

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Your directors submit their report for Eastern Iron Limited for the half year ended 31 December 2015.

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.

Steve Gemell Non-Executive Chairman Greg Jones Non-Executive Director Michael Giles Non-Executive Director Dahui Zhang Non-Executive Director (appointed 22 January 2016) Yungang Wu Non-Executive Director (appointed 22 January 2016)

Review and results of operations

Financial results

The net results of operations after applicable income tax expense for the half year was a loss of $258,607 (2014: $516,458).

Highlights

Subsequent to the approval of Eastern Iron shareholders at the recent Annual General Meeting held on December 10, 2015, Fortune Future Holdings (“Fortune”) has invested $2 million dollars in Eastern Iron Limited and now holds 46.6% of the issued shares. Fortune nominated two experienced mining executives as non-executive directors.

The purpose of the investment in Eastern Iron by Fortune will be to use the Company as a vehicle to secure major near - development or operating mining projects in Australia and elsewhere. The Company has commenced actively reviewing opportunities and will be assisted in the acquisition and development phase by companies related to Fortune. Fortune has a small number of shareholders and represents the interests of private Chinese investors who are significant shareholders in listed mining companies in China. Fortune is an active investor in the global mining industry and is currently the largest shareholder of GoWest Gold Ltd, a Toronto-listed gold explorer.

Nowa Nowa 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. Little work has been undertaken on the Nowa Nowa project during the half year. However, the Company will continue to monitor conditions in the global iron ore market to determine when work on the project can recommence.

Under applicable Victorian legislation all exploration licenses (EL’s) have a maximum term of ten years and then need to be surrendered. As a result, the Nowa Nowa EL was surrendered in mid-2015 and a replacement EL applied for over the Nowa Nowa project area. In October 2015, the Company was advised that the application was accepted and given the highest priority ranking, thus giving the Company confidence that the tenement will in due course be granted. Upon grant the Company will continue investigation of the VTEM and copper anomalies reported in late 2014.

Principal activities

The principal activity of the Group is the exploration for and delineation of iron ore, precious and base metals resources in the Australia/Asia Pacific region and the development of those resources into economic, cash flow generating mines.

1 > Eastern Iron Limited

Directors’ Report

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Dividends

No dividends were paid or proposed during the period.

Significant events after the balance date

There were, at the date of this report, no matters or circumstances which have arisen since 31 December 2015 that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than:

• In January 2016 a further $1,000,000 ($1,000,000 received in December 2015) was received from Fortune Future Holdings (Fortune). 133,333,333 shares were issued to Fortune at $0.015 per share raising $2,000,000 as approved at the Company’s AGM on 10 December 2015. A total of $186,366 was paid for share issue costs in December 2015 and January 2016 in relation to the share issue. Fortune currently hold 46.6% of the shares in Eastern Iron Limited.

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 14.

Signed at Sydney this 11[th] day of March 2016 in accordance with a resolution of the directors.

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Steve Gemell Chairman

2 > Eastern Iron Limited

Consolidated Statement of Comprehensive Income

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For the half year ended 31 December 2015

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Note	31 Dec 2015 $	31 Dec 2014 $
Revenue 4 ASX and ASIC fees Audit fee Contract administration services Directors fees Employee costs (net of costs recharged to exploration projects) Exploration expenditure written off Finance costs Legal costs Rent Share based payments Travel and accommodation costs Other expenses from ordinary activities Loss before income tax expense Income tax expense Loss after income tax expense Other comprehensive income Other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income for the period attributable to members of Eastern Iron Limited Earnings per share Basic loss per share (cents per share) 8 Diluted loss per share (cents per share) 8	339	519 (26,770) (11,500) (52,933) (50,560) (72,372) (226,350) (9,740) (4,000) (12,750) (4,052) (11,422) (34,528)
	(17,678)
	(12,500)
	(41,495)
	(30,971)
	(65,073)
	(30,323)
	-
	(7,776)
	(2,400)
	-
	(23,075)
	(27,655)
	(258,607)	(516,458) -
	-
		(516,458)
	(258,607)
		-
	-
	-	-
		(516,458)
	(258,607)
		(0.35) (0.35)
	(0.17)
	(0.17)

The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

3 > Eastern Iron Limited

Consolidated Statement of Financial Position

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As at 31 December 2015

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Note	31 Dec 2015 $ 30 Jun 2015 $
ASSETS Current assets Cash and cash equivalents 5 Receivables Total current assets Non-current assets Tenement security deposits 7 Plant and equipment Deferred exploration and evaluation expenditure 6 Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 9 Accumulated losses Reserves 10 Total equity	1,068,647 84,331 17,010 294,907
	1,085,657 379,238
	10,000 10,000 6,164 7,122 6,421,993 6,389,930
	6,438,157 6,407,052
	7,523,814 6,786,290
	41,630 36,454 10,427 8,379
	52,057 44,833
	24,615 23,203
	24,615 23,203
	76,672 68,036
	7,447,142 6,718,254
	13,194,228 12,206,733 (5,761,718) (5,531,971) 14,632 43,492
	7,447,142 6,718,254

The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

4 > Eastern Iron Limited

Consolidated Statement of Changes in Equity

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For the half year ended 31 December 2015

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	Note	Contributed equity $	Accumulated losses $ Reserves $ Total equity $
At 1 July 2014 Loss for the period Other comprehensive income Total comprehensive income/(loss) for the period Transactions with owners in their capacity as owners: Issue of share capital, net of transaction costs Cost of share based payments taken directly to equity At 31 December 2014		11,865,045	(5,246,511) 124,880 6,743,414 (516,458) - (516,458) - - -
		-
		-
		-	(516,458) - (516,458) - - 307,773 - 4,052 4,052
	9	307,773
		-
		12,172,818	(5,762,969) 128,932 6,538,781
	Note	Contributed equity $	Accumulated losses $ Reserves $ Total equity $
At 1 July 2015 Loss for the period Other comprehensive income Total comprehensive income/(loss) for the period Transactions with owners in their capacity as owners: Issue of share capital, net of transaction costs Share capital applications, net of transaction costs Expired option value transferred to Accumulated Losses At 31 December 2015		12,206,733	(5,531,971) 43,492 6,718,254 (258,607) - (258,607) - - -
		-
		-
		-	(258,607) - (258,607) - - 6,195 - - 981,300 28,860 (28,860) -
	9	6,195
	9	981,300
	10	-
		13,194,228	(5,761,718) 14,632 7,447,142

The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

5 > Eastern Iron Limited

Consolidated Statement of Cash Flows

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For the half year ended 31 December 2015

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	Note	31 Dec 2015 $	31 Dec 2014 $
Cash flows from operating activities Payment to suppliers and employees Interest received R&D tax concession offset Net cash flows (used in) operating activities Cash flows from investing activities Expenditure on mining interests (exploration) Tenement security deposits Net cash flows (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Net cash flows (used in) from financing activities Net increase (decrease) in cash held Add opening cash brought forward Closing cash carried forward			(310,047) 534 1,015,588
		(217,106)
		339
		281,080
		64,313	706,075
			(839,554) 2,500
		(64,997)
		-
		(64,997)	(837,054)
			147,000 -
		1,000,000
		(15,000)
		985,000	147,000
			16,021 247,153
		984,316
		84,331
	5	1,068,647	263,174

The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

6 > Eastern Iron Limited

Notes to the Consolidated Financial Statements

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For the half year ended 31 December 2015

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1. Corporate information

The financial report of Eastern Iron Limited (the Company) for the half year ended 31 December 2015 was authorised for issue in accordance with a resolution of the directors on 11 March 2016. 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 the Directors Report.

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 Eastern Iron as at 30 June 2015.

It is also recommended that the half year financial report be considered together with any public announcements made by Eastern Iron during the half year ended 31 December 2015 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

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.

Significant accounting policies

The half year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2015.

Management has reviewed and assessed the new accounting standards effective 1 July 2015 and these have been deemed to be not applicable to the Group.

Fair value measurement

The carrying amounts of the Group’s assets and liabilities are a reasonable approximation of their fair values. The only exception to this is the carrying amount of deferred exploration and evaluation expenditure which is estimated to be not in excess of its fair value.

Basis of consolidation

The half year consolidated financial statements comprise the financial statements of Eastern Iron Limited and its subsidiaries (the Group). The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. The subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transfe rred out of the Group.

Going concern

The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of busines s. The Directors believe that the Company will have sufficient working capital to meet its minimum project development and administrative expenses in the next twelve months following the date of signing of the financial report.

7 > Eastern Iron Limited

Notes to the Consolidated Financial Statements

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For the half year ended 31 December 2015

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3. Financial report by segment

The operating segment identified by management is as follows:

Exploration projects funded directly by Eastern Iron Limited (“Exploration”)

Regarding the Exploration segment, the Chief Operating Decision Maker (the Board of directors) receives informati on on the exploration expenditure incurred. This information is disclosed in Note 6 of the half year financial report. No segment revenues are disclosed as each exploration tenement is not at a stage where revenues have been earned. Furthermore, no segment costs are disclosed as all segment expenditure is capitalised, with the exception of expenditure written off which is disclosed in Note 6 of the half year financial report.

Financial information about each of these tenements is reported to the CEO on an ongoing basis.

Corporate office activities are not allocated to operating segments as they are not considered part of the core operations of any segment and comprise of the following:

• Interest revenue

• Corporate costs

• Depreciation and amortisation of non-project specific property, plant and equipment

The Group’s accounting policy for reporting segments is consistent with that disclosed in Note 2.

4. Revenue

. Revenue
Interest received	31 Dec 2015 $ 31 Dec 2014 $
	339 519
	339 519

5. Cash and cash equivalents

. Cash and cash equivalents
Cash at bank Cash from share capital applications Money market securities – bank deposits	31 Dec 2015 $ 30 Jun 2015 $
	43,646 59,597 1,000,000 - 25,001 24,734
	1,068,647 84,331

6. Deferred exploration and evaluation expenditure

Costs brought forward Costs incurred during the period Expenditure written off during the period Costs carried forward		31 Dec 2015 $ 30 Jun 2015 $
		6,389,930 5,931,671 62,386 698,975 (30,323) (240,716)
		6,421,993 6,389,930

7. Contingent assets and liabilities

The Company has provided a guarantee totalling $10,000 (30 June 2015: $10,000) in respect of an exploration tenement in Victoria. This guarantee in respect of exploration tenements is secured against a deposit with a banking institution. The Company does not expect to incur any material liability in respect of the guarantees.

8 > Eastern Iron Limited

Notes to the Consolidated Financial Statements

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For the half year ended 31 December 2015

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8. Earnings per share

8. Earnings per share
	31 Dec 2015	31 Dec 2014
	$	$
Net profit/(loss) used in calculating basic and diluted gain/(loss) per share	(258,607)	(516,458)
	Number	Number
Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS	152,491,869	146,619,194
	Cents per share	Cents per share
Basic earnings (loss) per share	(0.17)	(0.35)
Diluted earnings (loss) per share	(0.17)	(0.35)

9. Contributed equity

9. Contributed equity
Share capital 152,524,401 fully paid ordinary shares (30 June 2015:152,008,130) Fully paid ordinary shares carry one vote per share and carry the right to dividends. Share capital applications Share issue costs	31 Dec 2015 $ 30 Jun 2015 $
	12,597,896 12,591,701 1,000,000 - (403,668) (384,968)
	13,194,228 12,206,733
	Number $
Movements in ordinary shares on issue At 31 December 2014 Shares issued (i) At 30 June 2015 Shares issued (ii) At 31 December 2015	151,200,630 12,557,786 807,500 33,915
	152,008,130 12,591,701
	516,271 6,195
	152,524,401 12,597,896

(i) The Company issued 807,500 shares at $0.042 to a creditor as settlement for services provided. (ii) The Company issued 516,271 shares at $0.012 to a creditor as settlement for services provided.

9 > Eastern Iron Limited

Notes to the Consolidated Financial Statements

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For the half year ended 31 December 2015

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10. Reserves (share based payments)

10. Reserves (share based payments)
	Number $
Movements in share based payments At 31 December 2014 Options expired (i) At 30 June 2015 Options expired (ii) At 31 December 2015	6,350,000 128,932 (1,200,000) (85,440)
	5,150,000 43,492
	(3,700,000) (28,860)
	1,450,000 14,632

• (i) 1,200,000 options expired on 9 March 2015.

• (ii) 3,700,000 options expired on 23 November 2015.

11. Events after the balance sheet date

There were, at the date of this report, no matters or circumstances which have arisen since 31 December 2015 that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than:

• In January 2016 a further $1,000,000 ($1,000,000 received in December 2015) was received from Fortune Future Holdings (Fortune). 133,333,333 shares were issued to Fortune at $0.015 per share raising $2,000,000 as approved at the Company’s AGM on 10 December 2015. A total of $186,366 was paid for share issue costs in December 2015 and January 2016 in relation to the share issue. Fortune currently hold 46.6% of the shares in Eastern Iron Limited.

10 > Eastern Iron Limited

Directors’ Declaration

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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 consolidated entity are in accordance with the Corporations Act 2001 , including:

• (i) Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the half year ended on that date; and

• (ii) Complying with Australian Accounting Standards AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

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

On behalf of the Board

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Steve Gemell Chairman

Sydney, 11 March 2016

11 > Eastern Iron Limited

Independent Auditor’s Review Report

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Independent Auditor’s Review Report

To the members of Eastern Iron Limited

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Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Eastern Iron Limited and controlled entities (the consolidated entity), which comprises the consolidated statement of financial position as at 31 December 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of Eastern Iron Limited (the company) are responsible for the preparation of the half -year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s 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 a 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 consolidated entity's financial position as at 31 December 2015 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 consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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12 > Eastern Iron Limited

Independent Auditor’s Review Report

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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 , which has been given to the directors of Eastern Iron Limited, would be in the same terms if given to the directors as at the time of this auditor’s 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 and controlled entities is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 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 .

BDJ Partners

Chartered Accountants

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

Anthony J Dowell

Partner

11 March 2016

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Auditor’s Independence Declaration

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Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Eastern Iron Limited and Controlled Entities

I declare that, to the best of my knowledge and belief during the half year ended 31 December 2015 there have been:

• a. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b. no contraventions of any applicable code of professional conduct in relation to the review.

BDJ Partners

Chartered Accountants

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........................................... Anthony J Dowell Partner

8 March 2016

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14 > Eastern Iron Limited

Corporate Directory

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Eastern Iron Limited

Share Registry

ABN 70 126 678 037

Directors

Steve Gemell Non-Executive Chairman Greg Jones Non-Executive Director Michael Giles Non-Executive Director Dahui Zhang Non-Executive Director Yungang Wu Non-Executive Director

Boardroom Pty Limited GPO Box 3993 Sydney, NSW 2001 Telephone: +61 2 9290 9600 Facsimile: +61 2 9279 0664 Website: www.boardroomlimited.com.au

Auditors

BDJ Partners

Company Secretary

Bankers

Ian White

Registered and Administration Office

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

Commonwealth Bank of Australia Bank West Macquarie Bank

Stock Exchange Listing

Listed on Australian Securities Exchange Limited ASX Code: EFE

15 > Eastern Iron Limited