EASTERN RESOURCES LIMITED — Proxy Solicitation & Information Statement 2010

Sep 30, 2010

Notice of General Meeting

NOTICE IS HEREBY GIVEN that a General Meeting of Eastern Iron Limited (“Eastern Iron” or “The Company”) will be held at 2:30pm on 3 November 2010 at Level 6, 80 Chandos St, ST LEONARDS, New South Wales.

The business to be considered at the meeting is set out below. This Notice of Meeting should be read in conjunction with the accompanying Explanatory Memorandum, which contains information in relation to each of the following resolutions. A Proxy Form also accompanies this Notice of Meeting.

ORDINARY BUSINESS

1. RESTRUCTURE OF NSW IRON JOINT VENTURE WITH PLATSEARCH NL

To consider and, if thought fit to pass the following resolution:

That, for the purpose of ASX Listing Rule 10.1 and for all other purposes, Shareholders approve the restructure of Eastern Iron’s NSW Iron Joint Venture with PlatSearch NL.

Voting Exclusion Statement

The Company will disregard votes cast on this Resolution by any person or entity or any of their associates that participated in this agreement.

VOTING ENTITLEMENT

In accordance with Regulation 7.11.37 of the Corporations Regulations 2001 , the Board has determined that, for the purposes of the General Meeting, shares will be taken to be held by the persons who are registered holders at close of business (5pm Sydney time) on 1[ST] November 2010. Only those persons will be entitled to vote at the General Meeting on 3[RD] November 2010.

ADMISSION TO MEETING

Corporate representatives are required to bring appropriate evidence of appointment as a representative in accordance with the constitution of the Company. Attorneys are requested to bring the original or certified copy of the power of attorney pursuant to which they were appointed. Proof of identity will also be required for corporate representatives and attorneys.

PROXIES

• Votes at the General Meeting may be given personally or by proxy, attorney or representative;

• Each shareholder has a right to appoint one or two proxies;

• A proxy need not be a shareholder of the Company;

Suite 3, Level 1, 80 Chandos Street St Leonards, NSW 2065 PO Box 956, Crows Nest, NSW 1585 Ph: 02 9906 7551 Fax: 02 9906 5233 www.easterniron.com.au

…iron’s new horizon

• If a shareholder is a company it must execute under its common seal or otherwise in accordance with its constitution;

• Where a shareholder is entitled to cast two or more votes, the member may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise;

• If a shareholder appoints two proxies, and the appointment does not specify the proportion or number of the shareholder’s votes, each proxy may exercise half of the votes. If a shareholder appoints two proxies, neither proxy may vote on a show of hands;

• A proxy must be signed by the member or his or her power of attorney who has not received any notice of revocation of the authority. Proxies given by corporations must be signed in accordance with the corporation’s constitution and the Corporations Law.

To be effective, proxy forms must be received by the Company’s share registry (Registries Limited) no later than 48 hours before the commencement of the General Meeting, that is no later than 2.30pm Sydney time on 1[ST] November 2010. Any proxy form received after that time will not be valid for the scheduled meeting.

Hand Delivery By Mail By Facsimile Registries Limited Registries Limited (02) 9290 9655 Level 7, GPO Box 3993 207 Kent St SYDNEY NSW 2001 SYDNEY NSW 2000

BY ORDER OF THE BOARD Michelle Lilley Company Secretary

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Explanatory Notes

These Explanatory Notes set out information in connection with the business to be considered at the General Meeting.

ORDINARY BUSINESS

Resolution 1 – Restructure of NSW Iron Joint Venture with PlatSearch NL

From the time of listing in February 2008, Eastern Iron Limited carried out a detailed assessment of its NSW Pisolite Iron Project in central western NSW. Although drilling was successful in delineating a large, albeit low grade, iron resource, preliminary concept studies into potential development highlighted that the resource was uneconomic as a direct shipping low capital development which was the original objective. Consequently in November 2009, the Company announced that it would seek joint venture funding for further studies into alternative uses and beneficiation studies that could have the potential to render the project economic to develop. That process has resulted in the recently announced proposal to joint venture the project with 3E Steel Pty Ltd.

3E Steel Pty Ltd – Eastern Iron Limited Joint Venture

The conditional agreement with 3E Steel Pty Ltd (3E) will allow 3E to earn up to a 77.5% interest in 13 tenements (out of 17) in Eastern Iron’s NSW Pisolite Iron Project. 3E may earn its interest by completing further investigations, including a bankable feasibility study, into the potential development of an iron ore project. Under an earlier agreement with PlatSearch NL, Eastern Iron had earned an 80% interest in the project tenements with obligations to sole fund project expenditure to the completion of a bankable feasibility study. The agreement with 3E includes a requirement that Eastern Iron and PlatSearch NL execute an agreement to restructure the ownership of the 15 project tenements in which the companies hold interests.

The terms of the agreement with 3E provide that:

• 3E will expend a minimum commitment of $600,000 in the first year to undertake bulk sampling and beneficiation testing of the iron resource, aimed at producing a saleable product from the ore.

• 3E can then earn up to a 77.5% interest by continuing to sole fund project expenditure including completing a bankable feasibility study into an iron ore processing operation producing at least 2 million tonnes per annum of iron ore concentrate.

• At the completion of these funding stages Eastern Iron may choose to fund its interest or, at its option, convert to a royalty of $2.00 per tonne of iron ore product when the prevailing spot FOB price for 58% iron ore is US$100 per tonne or greater or a royalty of $1.00 per tonne of iron ore product when the FOB price is less than this amount.

Restructure of tenement ownership between Eastern Iron and PlatSearch NL

Preliminary to completing the joint venture with 3E, it will be necessary to restructure ownership of the project tenements which up until now have been subject to a joint venture agreement between Eastern Iron and PlatSearch NL (PlatSearch). Under this agreement, Eastern Iron had earned an 80% interest in the project and had obligations to continue sole funding ongoing exploration including the completion of a bankable feasibility study to retain its interest. PlatSearch held a free-carried 20% interest. Exploration and drilling across the 15 tenements held under the joint venture had identified a global resource of 286 million tonnes of low grade channel iron grading 13.4% iron (above a 10% total iron cut-off grade) including 4.9Mt of indicated resource and the balance in the inferred category.

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The new agreement with PlatSearch will see the project tenements split into two groups, i.e. the Eastern Block, comprising four exploration licences and the Western Block comprising 13 tenements. A breakdown of the global resource at a 10% total Fe cut off as determined by Hellman and Schofield (Jan 2010) in the Eastern and Western Blocks is shown in the table below.

			Western Block
	Inferred		Inferred
Grade Fe %	Million tonnes	Grade Fe %	Million tonnes	Grade Fe %
14.6	124	12.5	157.2	14

Under the new agreement PlatSearch will give up its 20% free-carried interest in the project tenements in favour of a 51% contributing interest in the four Eastern Block tenements, with Eastern Iron holding the balance 49% contributing interest. PlatSearch will retain no interest in the Western Tenements in which Eastern Iron will hold 100% and which are subject to the 3E joint venture arrangements.

The accompanying maps and table show the tenement ownership interests as they are at present and how they will be if the proposed transactions proceed.

	• Interests of Parties before restructure	• Interests of Parties before restructure	• Interests of Parties before restructure	• Interests of Parties after	• Interests of Parties after	restructure
	• PlatSearch	• Eastern	• 3E	• PlatSearch	• Eastern	• 3E
• Eastern Tenements		•		•	•	•
• EL 6956	• 20%	• 80%	• 0%	• 51%	• 49%	• 0%
• EL 6711	• 20%	• 80%	0%	• 51%	• 49%	• 0%
• EL 6954	• 20%	• 80%	0%	• 51%	• 49%	• 0%
• EL 6706	• 20%	• 80%	0%	• 51%	• 49%	• 0%
• **Western Tenements ***		•		•	•	•
EL 6957	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6958	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6959	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6960	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6961	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6962	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6710	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6671	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6672	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6952	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 6953	• 20%	• 80%	0%	• 0%	• 100%	• 0%*
EL 7282	• 0%	• 100%	0%	• 0%	• 100%	• 0%*
EL 7283	• 0%	• 100%	0%	• 0%	• 100%	• 0%*

• 3E will have a right to earn up to 77.5% in all Western Block Tenements subject to completion of the proposed agreements.

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Shareholder Approval

Under the Australian Stock Exchange (ASX) listing rules (10.1, 10.1.1) a company such as Eastern Iron may not dispose of or acquire a substantial asset (such as the NSW pisolite iron project) to a related party (i.e. PlatSearch, by virtue of its 48.65% shareholding in Eastern Iron) without the consent of its shareholders. The proposed restructure of the ownership of the NSW pisolite iron project tenements to be undertaken between Eastern Iron and PlatSearch therefore requires approval of Eastern Iron’s shareholders as voted at a meeting of shareholders scheduled for the 4[TH] November 2010 at Level 6, 80 Chandos St, St Leonards. Listing rule 10.10.2 also requires that the company must obtain a report on the transaction from an independent expert as to whether the transaction is “fair and reasonable” to holders of the Company’s ordinary securities.

Independent Experts Report

To advise shareholders, the independent Directors of Eastern Iron Limited have procured GEOS Mining, Mineral Consultants, Suite 301, 68 Alfred St, Milsons Point to prepare an independent experts report on the proposed tenement restructure between Eastern Iron and PlatSearch. The report which is appended to this memorandum reviews in detail the NSW iron project, including the results of work completed to date. Using a

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series of well established methodologies in accordance with the Code for the Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports – The VALMIN Code 2005 Edition, GEOS place a range of values on the tenements and the transaction comparing the value of the assets to Eastern Iron both before and after the proposed transaction with PlatSearch. GEOS conclude that the transaction both fair and reasonable for Eastern Iron shareholders. Shareholders are advised to read the report in its entirety.

Eastern Iron Board Recommendation

The proposed restructure of ownership of the NSW iron project tenements between Eastern Iron Limited and PlatSearch NL is not only “fair and reasonable” but will benefit Eastern Iron shareholders primarily because it will allow the company to conclude its proposed arrangements with 3E Steel that will see the project taken forward to investigate other development and beneficiation options without cost to Eastern Iron. This arrangement will allow the Company to focus its management and financial resources on the Hawkwood Iron project. The independent directors recommend that shareholders approve the transaction as specified.

The information in this report that relates to mineral resources for Eastern Iron Limited is based on information compiled by Mr Arnold van der Heyden who is a Member of the Australian Institute of Mining and Metallurgy and a full time employee of Hellman & Schofield Pty Ltd. The data used to derive the mineral resource estimate was supplied by Eastern Iron Limited and compiled by Mr Peter Buckley who is a Member of the Australian Institute of Geoscientists and a full time employee of PlatSearch NL. Mr van der Heyden, and Mr Buckley have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as "Competent Persons" as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr van der Heyden and Mr Buckley consent to the inclusion in this Report of the information compiled by them in the form and context in which they appear.

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Proxy Form Name Address 1 Name Address 2 Name Address 3 Name Address 4 Barcode Name Address 5 Reference Number Name Address 6

being a shareholder of Eastern Iron Limited, I/we hereby appoint:

Name

Address

or failing that person: Name

Address

or failing that person, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the General Meeting of this Company to be held at Level 6, 80 Chandos St, ST LEONARDS, NSW on Wednesday, 3 November 2010 commencing at 2:30pm and at any adjournment thereof.

Proxy Voting Instructions

If you do not wish to direct your proxy how to vote, please insert X in the box.

�

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chairman will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

If the Chairman of the meeting is voting as your proxy, he intends to vote any undirected proxies held on the item of business in favour of the resolution on that item of business.

Signature of shareholder (companies to execute under seal or director’s signature if applicable)

Dated this day of 2010

If you desire to direct your proxy/proxies how to vote, please insert X in the appropriate box. If you do not direct your proxy/proxies, the proxy holder may vote as they think fit or may abstain from voting.

BUSINESS			For	Against	Abstain
Resolution	1	– Restructure of NSW Iron Joint Venture
		with PlatSearch NL	�	�	�

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Independent Valuation

Cobar Iron Project

Eastern Iron Limited

Job No. 2322-03 18 August 2010

Prepared for:

Reviewed by:

Greg de Ross

Eastern Iron Limited Managing Director

Sue Border

BSc Hons, Gr Dip, FAIG, FAusIMM, MMICA

Principal

Prepared by:

Jeff Randell Alistair Muir BSc Hons, MAIG BApSc (Geology), Dip Man Technical Manager General Manager (S. Australia)

GJN Enterprises Pty Ltd (ABN 63 076 664 572) trading as Geos Mining

2322-03 Eastern Iron Limited Independent Valuation

Geos Mining

Executive Summary

Geos Mining has been engaged by Eastern Iron to undertake valuation work related to a tenement transaction between itself and a major Eastern Iron shareholder PlatSearch. The transaction relates to a number of exploration licences in the Cobar region which are prospective for channel iron deposits.

Fifteen of the 17 licences in the Cobar Iron Project have been the subject of a joint venture between Platsearch and Eastern Iron. The transaction that is occurring is a separation of the exploration licences into two blocks, with Eastern Iron gaining 100% of the West Block and reducing its effective interest in the East Block. Geos Mining has been asked to assess whether the transaction is fair and reasonable to Eastern Iron shareholders. In determining this, Geos Mining’s methodology has been to focus on identifying differences between the two blocks. Geos Mining has not attempted a full financial valuation of the leases given the early stages of exploration and development on these tenements and the current status of the project.

The Cobar Iron Project tenements are either licensed or subject to a renewal process in line with statutory requirements. Major expenditure shortfalls are noted when comparing expenditure commitments versus actual expenditure which will need to be addressed prior to the end of calendar 2010. Significant area reductions are expected to be required but it is anticipated that these reductions will not materially affect resources. However, there may be some reduction in Exploration Target tonnages as a result of this requirement. Access restrictions to several small parts of five exploration licences are noted.

A total of 1,117kms of iron-rich palaeochannels have been defined by the joint venture and of this, a total of 206kms are considered as priority areas. Eastern Iron and PlatSearch have completed almost 9,000m of aircore drilling with more than 145 intersections grading greater than 10% iron and minimum down hole lengths of 4 metres. Resource estimations have been completed by independent consultants Hellman & Schofield Pty Ltd and although Geos Mining has not interrogated any of the data nor applied any modelling parameters, we have no reason to doubt any of the estimates or assumptions made. Identified resources to date are not evenly distributed across the tenements.

A series of tests on bulk samples aimed to determine relatively simple process paths to create a marketable product i.e. greater than 60% Fe with acceptable alumina and silica content. Test results indicated that regrinding of a fine fraction and then gravity separation achieved a grade of 53% iron, still well short of the target grade. While the use of heavy liquid and gravity separation together with differential magnetic separation produced a sample of 58.3% Fe, it is concluded that this may not be a practical method in a production environment.

There have been two conceptual economic studies undertaken: the first is a “big picture” study using average grades and focusing heavily on market opportunities, logistics and innovation. The second study looks specifically at the Belah Prospect but only considers supplying existing defined markets. The fundamental finding of the studies is that using conventional mining and low cost magnetic separation processing, the potential product is too low grade to meet standard market specifications. The development of innovative cost effective beneficiation and treatment processes that deliver a high value product that would be readily accepted by the steel industry is seen as a way forward. Without a processing breakthrough, the project is unlikely to have any significant economic value within the foreseeable future.

In order to assess the differences in the East Block and West Block tenements Geos Mining has evaluated a total of seven parameters to qualitatively determine ‘fair value’. These parameters are: economic potential,

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mineral resources and exploration targets, exploration potential for non-ferrous minerals, infrastructure/ logistics, metallurgy, restructuring arrangement and attributable expenditure.

The parameters consistently value the West Block tenements (to be controlled by Eastern Iron) higher than the East Block tenements (to be controlled by PlatSearch). While no sensitivities have been applied to the valuation due to the relative and qualitative nature of the results, it is clear that Eastern Iron shareholders will benefit from the proposed restructure. Platsearch will also benefit through its ability to control one sector of the tenements and may also if Eastern Iron develop new processing technology through research on the West Block and then choose to apply it on the East Block.

Geos Mining considers the transaction to be fair and reasonable for Eastern Iron shareholders entitled to vote at the meeting and not associated with the transaction.

Disclaimer

While every effort has been made, within the time constraints of this assignment, to ensure the accuracy of this report, Geos Mining accepts no liability for any error or omission. Geos Mining can take no responsibility if the conclusions of this report are based on incomplete or misleading data.

Geos Mining and the authors are independent of Eastern Iron Limited, and have no financial interests in Eastern Iron Limited or any associated companies. Geos Mining is being remunerated for this report on a standard fee for time basis, with no success incentives.

The opinions expressed herein are given in good faith and Geos believes that any assumptions or interpretations are reasonable. This report contains forecasts and projections prepared by Geos Mining. However, these forecasts and projections cannot be assured and factors both within and beyond the control of Eastern Iron Limited could cause the actual results to be materially different from Geos Mining’s assessments and estimates contained in this report.

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Contents

1. INTRODUCTION......................................................................................................... 6
2. CORPORATESTRUCTURE........................................................................................... 10
3. INFORMATIONSOURCES........................................................................................... 11
4. COBARIRONPROJECT.............................................................................................. 11
4.1. PROJECTOVERVIEW............................................................................................................................. 11
4.2. SITELOCATION.................................................................................................................................... 12
4.3. TENEMENTS........................................................................................................................................ 12
4.4. HISTORY............................................................................................................................................. 17
4.5. GEOLOGY ANDMINERALISATION............................................................................................................ 18
4.6. EXPLORATIONCOMPLETED.................................................................................................................... 19
4.7. EXPLORATIONRESULTS......................................................................................................................... 22
4.8. PALEOCHANNELINTERPRETATION........................................................................................................... 25
4.9. RESOURCES ANDRESERVES.................................................................................................................... 30
4.10. METALLURGY.................................................................................................................................. 31
4.10.1. BULKSAMPLETESTING................................................................................................................................. 31
4.10.2. POWDEREDX-RAY ANDSEM-EDAXSTUDY....................................................................................................... 32
4.11. MININGECONOMICS........................................................................................................................ 33
4.11.1. ECONOMICFEASIBILITYSTUDY– INNOVATIVESHIPPINGGROUP........................................................................... 33
4.11.2. PRELIMINARYCONCEPTSTUDY– BELAHTANKPROSPECT.................................................................................... 35
4.11.3. COMMENTARYONSTUDIES........................................................................................................................... 37
5. VALUATIONPRINCIPLES ANDMETHODOLOGIES.............................................................. 37
5.1. EFFECTIVEDATE FORVALUATION............................................................................................................ 37
5.2. STANDARDS ANDPROCEDURES............................................................................................................... 37
5.3. VALUATION- GENERALPRINCIPLES......................................................................................................... 37
5.4. VALUATIONMETHODOLOGIES................................................................................................................ 38
5.4.1. NETPRESENTVALUE.................................................................................................................................... 38
5.4.2. ALTERNATIVEVALUATIONMETHODS............................................................................................................... 38
5.4.2.1. RELATED ORCOMPARABLETRANSACTIONS....................................................................................................... 38
5.4.2.2. RULES OFTHUMB ORYARDSTICKS................................................................................................................... 38
5.4.2.3. MARKETVALUATION.................................................................................................................................... 39
5.4.2.4. PASTEXPENDITURE...................................................................................................................................... 39
5.4.2.5. ALTERNATIVEOFFERS ANDJOINTVENTURETERMS............................................................................................ 40
5.4.3. SPECIALCIRCUMSTANCES.............................................................................................................................. 40
5.5. VALUATIONMETHODOLOGIESUTILISED TOVALUEEASTERNIRON’SMINERALASSETS.................................... 40
5.6. COBARPROJECTVALUATION.................................................................................................................. 41
5.6.1. ECONOMIC POTENTIAL.................................................................................................................................. 41
5.6.2. MINERAL RESOURCES AND EXPLORATION TARGETS............................................................................................. 41
5.6.3. EXPLORATIONPOTENTIAL–OTHER MINERALS................................................................................................... 44
5.6.4. LOCALINFRASTRUCTURE ORLOGISTICALDIFFERENCES........................................................................................ 46

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	5.6.5. METALLURGICALDIFFERENCES....................................................................................................................... 46
	5.6.6. PROPOSEDRESTRUCTURINGARRANGEMENT.................................................................................................... 47
	5.6.7. ATTRIBUTABLEEXPLORATIONEXPENDITURE ANDVALUATION............................................................................... 47
	5.6.8. ASSESSMENT OFDIFFERENCES........................................................................................................................ 49
6.	CONCLUSIONS........................................................................................................ 50
7.	STATEMENT OFCAPABILITY........................................................................................ 51
8.	STATEMENT OFINDEPENDENCE.................................................................................. 52
9.	LIMITATIONS ANDCONSENT....................................................................................... 52
10.	BIBLIOGRAPHY..................................................................................................... 53
11.	GLOSSARY.......................................................................................................... 54

Tables

TABLE 1: COBAR IRON PROJECT TENEMENT STATUS ............................................................................................................ 15 TABLE 2: COBAR IRON PROJECT - EXPENDITURE STATUS ....................................................................................................... 17 TABLE 3: COBAR IRON PROJECT - EXPLORATION SUMMARY .................................................................................................. 21 TABLE 4: COBAR IRON PROJECT - MAJOR EXPLORATION RESULTS .......................................................................................... 25 TABLE 5: PALEOCHANNEL LENGTH AND INTERPRETED TONNAGES ........................................................................................... 27 TABLE 6: RESOURCE ESTIMATE (VAN DER HEYDON, 2010) ................................................................................................... 31 TABLE 7: INNOVATIVE SHIPPING GROUP ECONOMIC STUDY .................................................................................................. 34 TABLE 8: PROSPECTIVITY ENHANCEMENT MULTIPLIERS ........................................................................................................ 39 TABLE 9: RESOURCE COMPARISON EAST AND WEST BLOCKS ................................................................................................. 43 TABLE 10: QUALITATIVE PROSPECTIVITY OF COBAR IRON PROJECT TENEMENTS FOR NON-FERROUS MINERALISATION ..................... 46 TABLE 11: VALUATION OF THE COBAR IRON PROJECT BY EXPENDITURE .................................................................................. 48 TABLE 12: ASSESSMENT DIFFERENCES BETWEEN EAST AND WEST BLOCK TENEMENTS ............................................................... 49

Figures

FIGURE 1: COBAR IRON PROJECT TENEMENTS – NORTHERN TENEMENTS .................................................................................. 8 FIGURE 2: COBAR IRON PROJECT TENEMENTS – SOUTHERN TENEMENTS ................................................................................... 9 FIGURE 3: COBAR IRON PROJECT NORTH BLOCK – PALEOCHANNELS ....................................................................................... 28 FIGURE 4: COBAR IRON PROJECT SOUTH BLOCK – PALEOCHANNELS ....................................................................................... 29

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2322-03 Eastern Iron Limited Independent Valuation

Geos Mining

1.Introduction

Mr Greg de Ross, Managing Director of Eastern Iron Limited (Eastern Iron) has requested Geos Mining undertake valuation work related to a related party transaction. Under ASX listing rules Eastern Iron are required to seek shareholder approval for an upcoming lease transaction with PlatSearch NL on a number of exploration licences in the Cobar region.

To allow this transaction to be concluded the Independent Directors of Eastern Iron require an Expert Valuation report to go to shareholders to advise them regarding the transaction.

The valuation is required to be a fully VALMIN compliant valuation primarily focused on:

• The nature of the defined resources including its geological setting and factors affecting its continuity and consistency.

• An assessment of the resource estimates in each tenement group.

• The undefined resource potential of each of the exploration tenements (referred to as Eastern and Western Blocks).

• The factors affecting the mining and delivery and marketing of iron ore to a prospective market, especially focussed on whether there are any differences in these factors between the Eastern and Western Blocks.

• The status of the included tenements, their related conditions and verification that lease commitments have been met and are up-to-date.

• Risk assessment.

The valuation will need to consider existing and revised conditions surrounding the reallocation of resources to the two participating companies and to assess the financial implications of these changes.

The tenements included in the valuation are shown in Figure 1 and Figure 2.

Eastern Iron has provided data on exploration results for the exploration projects covered by this report and Geos Mining has reviewed the resources and reserves in accordance with Australian industry standards, for compliance with the Australasian Code for Reporting Identified Mineral Resources and Ore Reserves prepared by the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, December 2004 (“the JORC Code”). The valuation assessment of the exploration properties has been conducted in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (“the Valmin Code”) as issued in 1995 and updated in 2005.

As part of Geos Mining’s review, a site visit has been made to the Cobar Iron Project and representative aircore samples have been inspected.

Geos Mining has not re-estimated the resources, conducted any independent analyses or metallurgical test work. Eastern Iron has advised that all material tenements are in good standing. Geos Mining’s assessments are based on technical reviews of project data and discussions with technical personnel, in particular with Mr P. Buckley, Director of Eastern Iron.

This report provides an independent assessment and valuation of the mineral assets of Eastern Iron’s Cobar Iron Project. The sole purpose of this report is to be provided to shareholders to advise them regarding the transaction. A draft copy of the report has been provided to Eastern Iron for correction of any material errors or omissions. Neither the whole nor any part of this report nor any reference thereto may be

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included in or with or attached to any document or used for any other purpose, without Geos Mining’s written consent to the form and context in which it appears.

Geos Mining has not conducted a thorough review of the legality of the tenements held by Eastern Iron but has obtained such information as can be reasonably acquired to verify the details of the tenements as provided by Eastern Iron.

Geos Mining has not completed an independent audit of issues relating to mining and ore processing, capital and operating costs, commissioning, revenue or finance but has commented on the reasonableness and quality of these factors as provided in previous reports.

The report makes comment as to risk and uncertainty of relevant features of the project.

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Geos Mining

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Figure 1: Cobar Iron Project Tenements – Northern Tenements

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Geos Mining

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Figure 2: Cobar Iron Project Tenements – Southern Tenements

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2322-03 Eastern Iron Limited Independent Valuation

Geos Mining

2. Corporate Structure

Eastern Iron has reached agreement with PlatSearch NL (“PlatSearch”) to restructure the respective companies’ holdings in their Cobar Iron Project.

Initially an 80% interest in the tenements was purchased by Eastern Iron from PlatSearch, prior to Eastern Iron’s IPO in Jan 2008, for $335,000 in shares and options. Under the existing Eastern Iron/PlatSearch Joint Venture Agreement (PlatSearch NL, 2008):

• Eastern Iron will earn an 80% interest in the project by the expenditure of $2m within four years and has obligations to continue sole funding of ongoing exploration including the completion of a bankable feasibility study to retain its interest.

• PlatSearch will hold a free carried 20% interest.

Eastern Iron has spent about $1.5 million on exploration according to statutory reports held by the NSW government.

Eastern Iron has previously announced that preliminary studies into the development of the resource show it to have limited economic value and that it is unlikely that a low cost beneficiation process will be readily identified to improve the value of the proposed product.

As such Eastern Iron has been actively progressing discussions with prospective joint venture partners that would undertake further development work at no cost to Eastern Iron. The aim of the restructuring arrangement with PlatSearch is to therefore allow Eastern Iron to introduce a new funding partner into the project who would earn a direct interest in one part of the project, the Western Block. Eastern Iron and PlatSearch would form a 49:51 JV over the Eastern Block. This allows PlatSearch to retain control over at least part of the resource which they require as part of a Singapore Stock Exchange listing which they are planning whilst at the same time allowing Eastern Iron to move the project forward in the Western block at no cost to Eastern Iron through the new JV partner.

The new agreement will see the tenements comprising the project split into two groups, i.e. the Eastern Block, comprising 4 Exploration Licences and the Western Block comprising 13 tenements. In the Eastern Block, the new agreement will see PlatSearch give up its 20% free carried interest in favour of a 51% contributing interest with Eastern Iron holding the balance 49% contributing interest. In the Western Block PlatSearch will give up its 20% free carried interest to Eastern Iron such that Eastern Iron will control 100% of the tenements and PlatSearch will retain no residual interest.

There is proposed to be no other consideration to be made in the transaction between Eastern Iron and PlatSearch other than the swapping of interests in the tenements. As such the transaction is intended to be neutral in terms of its value, i.e. the value of the assets before the transaction should be the same as after to both parties.

Under ASX listing rules Eastern Iron are required to seek shareholder approval for the Platsearch transaction (since Platsearch are a 48.65% shareholder of Eastern Iron and therefore is a related party). Eastern Iron is yet to conclude the farm in agreement with the incoming third party and as such need to conclude the Platsearch agreement (complete with shareholder approval) before they can proceed.

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3.Information Sources

The project descriptions and details of the prior exploration have been obtained from technical reports held by Eastern Iron. The expenditure data and joint venture details have been obtained from the Eastern Iron files.

The principal information sources used are listed in Section 10 of this report.

As required by the Valmin process, Geos Mining undertook a site visit to the region. This took place between the 6[th] and 8[th] July 2010 and included a visit to:

• Aircore sample storage at Orange to examine representative samples (only sub-samples viewed) ;

• Shaun Prospect (EL6957) in the West Block to examine local conditions and surface features.

• Belah Prospect (EL6706) in the East Block similarly to examine local conditions and surface features.

Due to the similarity of the surface expression of the material, as confirmed by viewing aerial photos and Google Earth, it was only considered necessary to visit representative areas where resource delineation has been undertaken.

4.Cobar Iron Project

4.1.PROJECT OVERVIEW

The exploration industry has long recognised the existence of weakly magnetic, lateritic material and palaeochannel systems containing iron-rich material. The iron-rich palaeochannel systems of the project area occur in one of Australia’s richest non-ferrous metal producing areas (Buckley, 2008).

Iron ore in the Pilbara Region of Western Australia comprise three main forms:

• Banded Iron Formation (BIF) - hard rock source of iron ore with many of the commercially important iron ore deposits formed by natural enrichment

• Channel Iron Deposit (CID) - often referred to as “pisolite-type” iron ore formed by the weathering and alluvial concentration of lateritic soil material.

• Detrital Iron Deposit (DID) - found where weathering has eroded iron deposits such as BIF and CID and redeposited fragments of ore in “traps” such as drainage channels

Similar palaeoenviromental conditions that formed Western Australia’s CID ores also occurred in New South Wales, and extensive lateritic profiles and iron-rich palaeosystems are preserved within an area known as the Cobar Peneplain, an area that represents an erosional remnant of Tertiary age landform which stretches from Bourke in the north, to Lake Cargelligo in the south. Extensive iron-rich palaeochannel systems have concentrated lateritic iron in palaeochannels that may be prospective for CID, reworked alluvial DID ore and possibly, alluvial gold and tin. Eastern Iron believes there are equivalents of Hamersley deposits in New South Wales, and defines them as:

• New South Wales Channel Iron Deposit (New South Wales—CID); and,

• New South Wales Detrital Iron Deposit (New South Wales—DID).

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During the Tertiary age, iron-rich lateritic material and iron-rich rock fragments have been washed into now long extinct river and stream systems, where the process of lateritisation may have further upgraded iron content through further development of iron-rich pisolitic material to form a New South Wales equivalent of Western Australian CID (New South Wales-CID). Subsequently, these palaeochannels may themselves have been eroded and redistributed to form a New South Wales equivalent of Western Australian DID (New South Wales-DID).

The primary or bulk iron content of New South Wales CID and New South Wales DID is much lower than Western Australian CID’s. However, much of the iron in these, now extinct stream channels in western New South Wales occurs in the form of the mineral maghemite (Fe2O3) which is an oxidised, magnetic iron mineral with the same molecular formula as the favoured iron ore mineral haematite (Fe2O3). Maghemite’s magnetic nature makes it simpler to target with existing airborne geophysical data and importantly, amenable to onsite magnetic separation and therefore grade beneficiation. Another advantage that New South Wales has over the Hamersley Range is a relatively flat geomorphology, making access less difficult and exploration more rapid.

4.2.SITE LOCATION

The project is located in central New South Wales, in the vicinity of the towns of Cobar and Nyngan ( Figure 1 and Figure 2).

4.3.TENEMENTS

There are a total of 17 Exploration Licences (Table 1, Figure 1, Figure 2) held either solely by Eastern Iron Limited (2 ELs) or jointly with PlatSearch NL (15 ELs). Beneficial interests in each of the tenements are included in Table 1.

It is noted that ten exploration licences (EL6952-54, EL6956-62) have passed their expiry date but enquiries with Industry and Investment NSW indicate that renewals are pending for all these licences.

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Tenement Block	Tenement Name	EL No	Registered Holder	Beneficial Holder	Grant Date	Expiry Date	Renewal Pending	Area (units	) Expenditure Commitment	Reported Expenditure	Annual Reports
East	Oakvale	EL 6706	EFE PTS	EFE 80%, PTS 20%	23/01/2007	22/01/2011		96	07/08 $68,000 08/09 $68,000 09/10 $126,000 10/11 $126,000	$65,385 $222,776 $72,194 $3,036	2008 2009 2010 2010(15 July)
	Coolabah West	EL 6711	EFE	EFE 80%, PTS 20%	01/02/2007	31/01/2011		100	07/08 $70,000 08/09 $70,000 09/10 $130,000 10/11 $130,000	$81,092 $36,677 $12,077 $497	2008 2009 2010 2010(15 July)
	Techno	EL 6954	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	100	07/08 $70,000 08/09 $70,000 09/10 $130,000	$98,914 $52,710 $2,356	2008 2009 2010(29May)
	Tottington	EL 6956	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	99 76	07/08 $69,500 08/09 $58,000 09/10 $106,000	$47,942 $47,479 $3,910	2008 2009 2010(29May)
West	Bimbella	EL 6671	EFE	EFE 80%, PTS 20%	05/12/2006	04/12/2010		99	06/07 $69,500 07/08 $69,500 08/09 $129,000 09/10 $129,000	$17,968 $32,852 $7,844 $5,078	2007 2008 2009 2010 (4 June)
	Euabalong	EL 6672	EFE	EFE 80%, PTS 20%	05/12/2006	04/12/2010		100 80 80	06/07 $70,000 07/08 $60,000 08/09 $110,000 09/10 $110,000	$17,902 $73,613 $10,635 $966	2007 2008 2009 2010 (4 June)

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Tenement Block	Tenement Name	EL No	Registered Holder	Beneficial Holder	Grant Date	Expiry Date	Renewal Pending	Area (units	) Expenditure Commitment	Reported Expenditure	Annual Reports
	Cobar East	EL 6710	EFE PTS	EFE 80%, PTS 20%	01/02/2007	31/01/2011		71	07/08 $55,500 08/09 $55,500 09/10 $101,000 10/11 $101,000	$22,887 $19,980 $8,839 $147	2008 2009 2010 2010(15 July)
	Flamingo	EL 6952	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	91 69	07/08 $65,500 08/09 $54,500 09/10 $99,000	$28,374 $19,346 $1,859	2008 2009 2010(29May)
	Quartermaine	EL 6953	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	64	07/08 $52,000 08/09 $52,000 09/10 $94,000	$75,045 $39,032 $1,960	2008 2009 2010(29May)
	Wendoline	EL 6957	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	73	07/08 $56,500 08/09 $56,500 09/10 $103,000	$60,372 $45,740 $4,228	2008 2009 2010(29May)
	Shaun	EL 6958	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	78 65	07/08 $59,000 08/09 $52,500 09/10 $95,000	$40,068 $54,305 $3,178	2008 2009 2010(29May)
	Wallace	EL 6959	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	70 48	07/08 $55,000 08/09 $44,000 09/10 $78,000	$40,728 $33,783 $4,574	2008 2009 2010(29May)
	Grommit	EL 6960	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	71	07/08 $55,500 08/09 $55,500 09/10 $101,000	$63,477 $43,504 $1,317	2008 2009 2010(29May)
	McGraw	EL 6961	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	89	07/08 $64,500 08/09 $64,500 09/10 $119,000	$65,777 $37,835 $5,288	2008 2009 2010(29May)

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Tenement Block	Tenement Name	EL No	Registered Holder	Beneficial Holder	Grant Date	Expiry Date	Renewal Pending	Area (units	) Expenditure Commitment	Reported Expenditure	Annual Reports
	Preston	EL 6962	PTS	EFE 80%, PTS 20%	30/11/2007	30/11/2009	20/10/2009	91 52	07/08 $65,500 08/09 $46,000 09/10 $82,000	$33,270 $26,360 $3,021	2008 2009 2010(29May)
	Gorgonzola	EL 7282	EFE	EFE	05/02/2009	05/02/2011		61	09/10 $50,500 10/11 $50,500	$14,696 $442	2010 2010(15July)
	Camembert	EL 7283	EFE	EFE	05/02/2009	05/02/2011		67	09/10 $53,500 10/11 $53,500	$17,468 $611	2010 2010(15 July)

Eastern Iron Limited = EFE; PlatSearch NL = PTS

Table 1: Cobar Iron Project Tenement Status

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A comparison of reported expenditure against current annual commitments (Table 2) indicates that East Block tenements are under-expended by more than $400,000 (due by 22/01/2011) in addition to $230,000 pro rata commitments. Similarly, West Block tenements are under-expended by more than $800,000 (due by 04/12/2010) in addition to $745,000 pro rata commitments.

This expenditure shortfall will be very difficult to make up by the expiry date of the tenements, placing the tenements at risk and almost certainly requiring significant area reductions to be proposed at renewal.

Tenement Name	Expenditure Commitment	Reported Expenditure	Shortfall (current term)
EAST BLOCK
Oakvale EL 6706	07/08 $68,000 08/09 $68,000 09/10 $126,000 10/11 $126,000	$65,385 $222,776 $72,194 $3,036	$176,770 by 22/01/2011
Coolabah West EL 6711	07/08 $70,000 08/09 $70,000 09/10 $130,000 10/11 $130,000	$81,092 $36,677 $12,077 $5,497	$242,426 by 31/01/2011
Techno EL 6954	07/08 $70,000 08/09 $70,000 09/10 $130,000	$98,914 $52,710 $2,356	$127,644 (prorata) by 30/11/2010
Tottington EL 6956	07/08 $69,500 08/09 $58,000 09/10 $106,000	$47,942 $47,479 $3,910	$102,090 (prorata) by 31/11/2010
SUMMARY: $419,196 required by 22/01/2011 (tenement expiry)
	WEST BLOCK
Bimbella EL 6671	06/07 $69,500 07/08 $69,500 08/09 $129,000 09/10 $129,000	$17,968 $32,852 $7,844 $5,078	$245,078 by 04/12/2010
Euabalong EL 6672	06/07 $70,000 07/08 $60,000 08/09 $110,000 09/10 $110,000	$17,902 $73,613 $10,635 $966	$208,399 by 04/12/2010
Cobar East EL 6710	07/08 $55,500	$22,887	$193,014 by 31/01/2011
	08/09 $55,500	$19,980
	09/10 $101,000	$8,839
	10/11 $101,000	$147
Flamingo EL 6952	07/08 $65,500 08/09 $54,500 09/10 $99,000	$28,374 $19,346 $1,859	$97,141 (prorata) by 30/11/2010

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Tenement Name	Expenditure Commitment	Reported Expenditure	Shortfall (current term)
Quartermaine EL 6953	07/08 $52,000 08/09 $52,000 09/10 $94,000	$75,045 $39,032 $1,960	$92,040 (prorata) by 30/11/2010
Wendoline EL 6957	07/08 $56,500 08/09 $56,500 09/10 $103,000	$60,372 $45,740 $4,228	$98,772 (prorata) by 30/11/2010
Shaun EL 6958	07/08 $59,000 08/09 $52,500 09/10 $95,000	$40,068 $54,305 $3,178	$91,822 (prorata) by 30/11/2010
Wallace EL 6959	07/08 $55,000 08/09 $44,000 09/10 $78,000	$40,728 $33,783 $4,574	$73,426 (prorata) by 30/11/2010
Grommit EL 6960	07/08 $55,500 08/09 $55,500 09/10 $101,000	$63,477 $43,504 $1,317	$99,683 (prorata) by 30/11/2010
McGraw EL 6961	07/08 $64,500 08/09 $64,500 09/10 $119,000	$65,777 $37,835 $5,288	$113,712 (prorata) by 30/11/2010
Preston EL 6962	07/08 $65,500 08/09 $46,000 09/10 $82,000	$33,270 $26,360 $3,021	$78,979 (prorata) by 30/11/2010
Gorgonzola EL 7282	09/10 $50,500 10/11 $50,500	$14,696 $442	$85,862 by 05/02/2011
Camembert EL 7283	09/10 $53,500	$17,468	$88,921 by 05/02/2011
	10/11 $53,500	$611
SUMMARY: $821,274 required by 04/12/2010 (tenement expiry)

Table 2: Cobar Iron Project - Expenditure Status

A review of the licence documents indicates that there are no special conditions associated with any of the licences. Several instances of access restrictions are noted:

• EL 6956 – small parcel of Crown Land may be subject to Native Title

• EL 6751 – registered aboriginal heritage site at Mt Drysdale

• EL 6672, 6952 – Nature Reserves abut parts of the tenements

• EL 6961 – small Conservation Area at southern end

All statutory reports have been completed and are up to date.

4.4.HISTORY

The Cobar Iron Project was initiated by Mr P. Buckley, Exploration Manager of PlatSearch NL, who studied the results of the NSW DPI drilling programme at Hermidale, Byrock and Nyngan. Specifically, Mr Buckley

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observed that significant (up to 20m) thicknesses of pisolitic material were obtained from drill cuttings near surface and that these had similarities to occurrences in WA. In particular, the channel iron deposits and detrital iron deposits of the Pilbara region are significant producers of iron ore although it was noted that while the WA deposits are predominantly hematite, the deposits in the Central West of NSW mainly consist of maghemite (a magnetic form of Fe2O3).

PlatSearch applied for five exploration licences after obtaining the NSW government stream sediment database then completed reconnaissance aircore drilling along road verges. Following this success some additional licences were applied for and Eastern Iron Limited was formed as the holding company.

Eastern Iron drilled an additional three lines of aircore holes (29 in total) at 80m spacing (some infill). Samples were collected at 1m intervals although 4m composites were collected from basement samples for base metal analysis. The best of these holes returned 12m @ 15% Fe which was upgraded by dry magnetic separation to 48-51% Fe (with 10% Al2O3 and the remainder SiO2). Discussions were held with several potential customers to determine the type of product likely to attract a market. Due to metallurgical characteristics of the mineralisation it was considered that there was little potential for marketing the product without locating a high grade or enriched zone to give higher grades and potential for DSO.

Eastern Iron submitted an IPO and eventually raised $5m (prior to the global financial crisis). More recently Eastern Iron has been negotiating with an incoming party, who is an Australian steel importer. This party will fund any future exploration with the intent of possibly establishing a steel operation locally.

4.5.GEOLOGY AND MINERALISATION

The Cobar Iron Project is situated within the Lachlan Orogen, which underlies most of central New South Wales, extending south into Victoria and eastern Tasmania. The oldest rocks are Ordovician continental margin, craton-derived turbidite packages, deposited on Cambrian oceanic crust, that are now separated from the Ordovician intra-oceanic Macquarie Arc by suture zones containing relics of Ordovician ocean crust. The Macquarie Arc hosts world class porphyry Cu-Au deposits in the Cadia Valley and North Parkes districts. Smaller deposits occur at Cargo and Copper Hill. Silurian volcanic-hosted, structurally controlled base metal deposits at Captains Flat, Woodlawn and Mineral Hill occur in volcanic-rich rifts. Sediment-hosted structurally controlled deposits in sediment rich basins include those in the Hill End Trough as well as three operating gold-base metal mines in the richly endowed Cobar Basin.

The Lachlan Orogen in both New South Wales and Victoria has a rich history of alluvial mining from modern and palaeochannel systems. Much early alluvial gold production has been derived from palaeochannels and deep leads. Platinum and tin have also been mined from palaeochannel systems in central western New South Wales. There are also excellent opportunities for further major discoveries under the shallow alluvial cover.

Paleochannels do not overlie current drainages and often they are represented as low rises. The paleochannels in cross section are zoned with discernible characteristics in each as determined by Al-Fe-Si ratios. It is also evident that where drainages overlie Cobar Basin sediments that the maghemite is more silica rich while those that overlie Girilambone Group greywackes are more aluminous.

The southern tenements are covered by 10-30m of lacustrine sediments which will dramatically affect the viability of mining any resources.

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Eastern Iron believe there is little opportunity to locate ‘sweet spots’ since plots of Fe-Si-Al ternary diagrams do not give any outliers indicative of higher iron grades. All samples cluster fairly well although maghemite samples do have different chemical characteristics.

4.6.EXPLORATION COMPLETED

Eastern Iron and PlatSearch have completed a total of 8,895m of aircore drilling in 572 holes together with geophysical interpretation, mineralogical examination, metallurgical testwork, resource estimation and preliminary scoping studies (Table 3). This work has been completed over several years in five campaigns and has resulted in the definition of Indicated/ Inferred Resources.

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Project	2006/07	2007/08	2008/09	2009/10
Oakvale EL 6706		• Aircore drilling (33 holes 30-62)	• Aircore drilling (118 holes 108-174, 179-210, 299-303) • Magnetic/ gravityseparation	• Beneficiation testwork • Resource estimation
Cobar East EL 6710		• No access	• No access	• No access
Coolabah West EL 6711		• Aircore drilling (29 holes 1-29)	• Aircore drilling (15 holes 304-318)	• Beneficiation testwork • Resource estimation
Bimbella EL 6671	• geophysical modelling • ground magnetic traverses • interpretation of magnetic data • reconnaissance field visit	• Aircore drilling (2 holes)	• No work
Euabalong EL 6672		• Aircore drilling (14 holes)
Flamingo EL 6952		• Aircore drilling (8 holes 488-495)	• No work
McGraw EL 6961		• Aircore drilling (36 holes 443-478)	• Beneficiation testwork • Resource estimation
Preston EL 6962		• Aircore drilling (9 holes 479-487)	• Beneficiation testwork
Quartermaine EL 6953		• Aircore drilling (27 holes 352-366, 411-422)	• Beneficiation testwork • Resource estimation
Techno EL 6954		• Aircore drilling (98 holes 211-298, 423-431)
Tottington EL 6956		• Aircore drilling (11 holes 432-442)
Wendoline EL 6957		• Aircore drilling (33 holes 319-351)	• Beneficiation testwork • Resource estimation
Shaun EL 6958		• Aircore drilling (20 holes 74-93)
Wallace EL 6959		• Aircore drilling (11 holes 63-73)

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Project	2006/07	2007/08	2008/09	2009/10
Grommit EL 6960		• Aircore drilling (44 holes 368-410)
Gorgonzola EL 7282				• Preliminary exploration
Camembert EL 7283

Table 3: Cobar Iron Project - Exploration Summary

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4.7.EXPLORATION RESULTS

The main exploration results are summarised in Table 4. Drill intersections are shown as reported by Eastern Iron while other results can often be applied to the tenement package as a whole.

Project			Other Results
	No. AC Holes	Intersections
Oakvale EL 6706		• EIAC0108: 10m @ 13.17% Fe (0-10 m) • EIAC0109: 10 m @ 14.86% Fe (0-10 m) • EIAC0110: 10 m @ 13.6% Fe (0-10 m) • EIAC0111: 7 m @ 13.63% Fe (0-7 m) • EIAC0112: 10 m @ 15.09% Fe (0-10 m) • EIAC0113: 10 m @ 14.68% Fe (0-10 m) • EIAC0114: 6 m @ 14.66% Fe (0-6 m) • EIAC0115: 6 m @ 9.72% Fe (0-6 m). • EIAC0116: 11 m @ 9.74% Fe (0-11 m) • EIAC0117: 11 m @ 14.83% Fe (0-11 m) • EIAC0118: 10 m @ 9.23% Fe (0-10 m). • EIAC0119: 10 m @ 12.78% Fe (0-10 m) • EIAC0120: 8 m @ 11.56% Fe (0-8 m) • EIAC0121: 9 m @ 12.31% Fe (0-9 m) • EIAC0122: 9 m @ 14.37% Fe (0-9 m) • EIAC0123: 10 m @ 14.71% Fe (0-10 m) • EIAC0124: 9 m @ 11.08% Fe (0-9 m). • EIAC0125: 9 m @ 15.32% Fe (0-9 m). • EIAC0126: 10 m @ 12.67% Fe (0-10 m) • EIAC0127: 10 m @ 12.9% Fe (0-10 m) • EIAC0128: 9 m @ 13.83% Fe (0-9 m) • EIAC0129: 10 m @ 13.1% Fe (0-11 m • EIAC0130: 10 m @ 14.56% Fe (0-10 m) • EIAC0131: 8 m @ 13.99% Fe (0-8 m). • EIAC0132: 6 m @ 12.83% Fe (0-6 m). • EIAC0133: 7 m @ 16.15% Fe (0-7 m)	• Test work at the Belah Tank Prospect indicates that a low P, low S, iron concentrate grading 50% iron or better can be produced using simple, inexpensive, on-site magnetic separation. • A low magnetic flux beneficiation test has produced a product grading 55.2% Fe. • Gravity separation test work has generated a product grading 58.3% Fe • Magnetic separation results (ave): • 41-47% Fe • 16-22% SiO2 • 9-12% Al2O3
Cobar East EL 6710
Coolabah West EL 6711		• EIAC0304: 5 m @ 12.89% Fe (0-5 m). • EIAC0305: 6 m @ 14.05% Fe (0-6 m). • EIAC0306: 2 m @ 24.27% Fe (2-4 m). • EIAC0307: 8 m @ 19.01% Fe (1-9 m). • EIAC0308: 10 m @ 13.82% Fe (0-10 m). • EIAC0309: 11 m @ 17.14% Fe (0-11 m). • EIAC0310: 6 m @ 15.21% Fe (3-9 m). • EIAC0311: 10 m @ 14.13% Fe (0-10 m). • EIAC0312: 11 m @ 15.93% Fe (0-11 m). • EIAC0313: 8 m @ 14.03% Fe (3-11 m). • EIAC0314: 8 m @ 14.46% Fe (4-12 m). • EIAC0315: 11 m @ 13.96% Fe (0-11 m). • EIAC0316: 9 m @ 12.91% Fe (2-11 m). • EIAC0317: 13 m @ 14.89% Fe (0-13 m). • EIAC0318: 9 m@15.91% Fe(0-9 m).	• Magnetic separation results (ave): • 42% Fe • 23% SiO2 • 11% Al2O3

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Project			Other Results
	No. AC Holes	Intersections
Quartermaine EL 6953	27	• EIAC0352: 5 m @ 17.92% Fe (0-5 m). • EIAC0357: 4 m @ 24.03% Fe (1-5 m). • EIAC0358: 7 m @ 15.37% Fe (2-9 m). • EIAC0360: 10 m @ 15.64% Fe (0-10 m). • EIAC0361: 4 m @ 19.83% Fe (13-17 m). • EIAC0362: 9 m @ 18.09% Fe (2-11 m). • EIAC0363: 7 m @ 18.09% Fe (0-7 m). • EIAC0364: 9 m @ 16.40% Fe (0-9 m). • EIAC0365: 11 m @ 16.24% Fe (0-11 m). • EIAC0366: 7 m @ 16.79% Fe (0-7 m). • EIAC0411: 6 m @ 21.14% Fe (1-7 m). • EIAC0412: 11 m @ 12.22% Fe (0-11 m). • EIAC0413: 9 m @ 16.51% Fe (0-9 m). • EIAC0415: 6 m @ 18.18% Fe (1-7 m). • EIAC0416: 4 m@17.66% Fe(0-4 m).	• Magnetic separation results (ave): • 38% Fe • 31% SiO2 • 8% Al2O3
Techno EL 6954	98	• EIAC0214: 7 m @ 16.20% Fe (3-10 m). • EIAC0215: 6 m @ 17.08% Fe (4-10 m). • EIAC0233: 7 m @ 15.58% Fe (2-9 m). • EIAC0243: 5 m @ 16.70% Fe (7-12 m). • EIAC0245: 8 m @ 14.44% Fe (5-13 m). • EIAC0254: 4 m @ 17.07% Fe (10-14 m). • EIAC0279: 6 m @ 16.19% Fe (9-15 m). • EIAC0280: 5 m@16.02% Fe(10-15 m).	• Magnetic separation results (ave): • 35-38% Fe • 28-34% SiO2 • 9-10% Al2O3
Tottington EL 6956	11	• EIAC0432: 7 m @ 14.65% Fe (5-13 m). • EIAC0433: 7 m @ 12.91% Fe (5-12 m). • EIAC0434: 7 m @ 13.31% Fe (6-13 m). • EIAC0435: 7 m @ 17.92% Fe (8-14 m). • EIAC0436: 7 m @ 14.73% Fe (7-14 m). • EIAC0437: 11 m @ 16.43% Fe (6-17 m). • EIAC0339: 5 m @ 13.03% Fe (4-9 m). • EIAC0341: 11 m @ 13.92% Fe (6-17 m). • EIAC0342: 12 m@11.03% Fe(8-20 m).	• Magnetic separation results (ave): • 39% Fe • 25% SiO2 • 12% Al2O3
Bimbella EL 6671	2	nil	• Up to 40m cover • Access difficulties
Euabalong EL 6672	14	• EIAC0095: 11 m @ 10.46% Fe (31-41 m). • EIAC0096: 15 m @ 11.27% Fe (18-32 m). • EIAC0097: 5 m @ 11.38% Fe (34-38 m). • EIAC0102: 10 m @ 12.03% Fe (18-27 m). • EIAC0104: 10 m@10.51% Fe(32-41 m).
Flamingo EL 6952	8	• EIAC0491: 8 m @ 10.24% Fe (33-40 m). • EIAC0493: 4 m @ 11.83% Fe (33-40 m). • EIAC0494: 2 m @ 13.62% Fe (25-26 m).	• identification of possible regional trends in iron and contaminant mineralogy.

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Project			Other Results	Other Results
	No. AC Holes	Intersections
McGraw EL 6961		• EIAC0443: 7 m @ 13.66% Fe (4-11 m). • EIAC0444: 8 m @ 12.73% Fe (5-14 m). • EIAC0454: 6 m @ 17.31% Fe (7-14 m). • EIAC0457: 5 m @ 12.45% Fe (3-8 m). • EIAC0462: 6 m @ 12.62% Fe (0-6 m). • EIAC0465: 6 m @ 16.28% Fe (1-7 m). • EIAC0468: 7 m @ 16.38% Fe (10-17 m). • EIAC0470: 10 m @ 14.48% Fe (3-13 m). • EIAC0471: 10 m @ 13.07% Fe (1-11 m). • EIAC0472: 12 m @ 13.15% Fe (0-12 m). • EIAC0473: 10 m @ 14.59% Fe (0-12 m). • EIAC0474: 10 m @ 13.95% Fe (0-12 m). • EIAC0475: 10 m @ 14.88% Fe (0-12 m). • EIAC0476: 10 m @ 13.94% Fe (0-12 m). • EIAC0477: 9 m @ 13.84% Fe (0-12 m). • EIAC0478: 7 m@15.29% Fe(0-12 m).	• • • • • • • • •	magnetic product has a simple mineralogy of iron, silica and alumina with minor phosphorous, sulphur and alkalis. recognition of varying mineralogy between prospect areas Magnetic separation results (ave): McGraw 28-31% Fe 40-44% SiO2 9% Al2O3 Preston 32% Fe 40% SiO2 8% Al2O3
	36
Preston EL 6962	9	• EIAC0481: 1 m @ 12.95% Fe (9-10 m).
Wendoline EL 6957		• EIAC0324: 3 m @ 21.67% Fe (1-4 m). • EIAC0326: 2 m @ 22.95% Fe (1-3 m). • EIAC0328: 3 m @ 20.30% Fe (2-5 m). • EIAC0329: 5 m @ 21.52% Fe (1-6 m). • EIAC0332: 4 m @ 18.34% Fe (1-5 m). • EIAC0334: 3 m @ 18.37% Fe (1-4 m). • EIAC0335: 3 m @ 23.78% Fe (1-4 m). • EIAC0336: 3 m @ 15.94% Fe (1-4 m). • EIAC0342: 6 m @ 14.58% Fe (1-7 m). • EIAC0343: 4 m @ 17.33% Fe (1-5 m). • EIAC0348: 3 m@16.88% Fe(1-4 m).	• • • •	Magnetic separation results (ave): 43% Fe 28% SiO2 6% Al2O3
Shaun EL 6958		• EIAC00075: 4 m @ 14.78% Fe (3-7 m). • EIAC00076: 3 m @ 22.97% Fe (3-6 m). • EIAC00077: 3 m @ 21.13% Fe (1-4 m). • EIAC00079: 3 m @ 20.82% Fe (0-3 m). • EIAC00080: 8 m @ 19.88% Fe (0-8 m). • EIAC00081: 6 m @ 20.17% Fe (0-6 m). • EIAC00084: 5 m @ 15.82% Fe (2-7 m). • EIAC00087: 5 m @ 18.92% Fe (0-5 m). • EIAC00090: 8 m @ 16.68% Fe (0-8 m). • EIAC00091: 7 m @ 19.61% Fe (0-7 m). • EIAC00092: 7 m@20.33% Fe(0-7 m).	• • • •	Magnetic separation results (ave): 38% Fe 33% SiO2 7% Al2O3
Wallace EL 6959		• EIAC0064: 4 m @ 21.05% Fe (0-4 m). • EIAC0065: 4 m @ 21.30% Fe (0-4 m). • EIAC0066: 5 m @ 17.95% Fe (0-5 m). • EIAC0068: 6 m @ 17.98% Fe (0-6 m). • EIAC0071: 4 m @ 22.31% Fe (0-4 m). • EIAC0072: 5 m @ 28.18% Fe (0-5 m).	• • • •	Magnetic separation results (ave): 40% Fe 27% SiO2 8% Al2O3

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Project			Other Results
	No. AC Holes	Intersections
Grommit EL 6960		• EIAC0369: 4 m @ 26.65% Fe (0-4 m). • EIAC0372: 5 m @ 23.30% Fe (0-5 m). • EIAC0373: 4 m @ 18.09% Fe (0-4 m). • EIAC0377: 4 m @ 22.53% Fe (0-4 m). • EIAC0378: 5 m @ 21.01% Fe (0-5 m). • EIAC0379: 5 m @ 18.31% Fe (0-5 m). • EIAC0383: 5 m @ 19.50% Fe (0-5 m). • EIAC0384: 7 m @ 22.71% Fe (0-7 m). • EIAC0385: 4 m @ 23.33% Fe (0-4 m). • EIAC0389: 3 m @ 25.20% Fe (2-5 m). • EIAC0393: 6 m @ 22.59% Fe (0-6 m). • EIAC0394: 5 m @ 22.05% Fe (0-5 m). • EIAC0395: 3 m @ 19.23% Fe (0-3 m). • EIAC0396: 6 m @ 21.39% Fe (0-6 m). • EIAC0397: 4 m @ 23.73% Fe (7-11 m). • EIAC0398: 7 m @ 21.30% Fe (6-13 m). • EIAC0400: 5 m @ 20.27% Fe (6-11 m). • EIAC0401: 6 m @ 22.12% Fe (8-14 m). • EIAC0402: 5 m @ 19.89% Fe (7-12 m). • EIAC0404: 3 m @ 24.70% Fe (4-7 m). • EIAC0406: 6 m @ 20.90% Fe (8-14 m). • EIAC0407: 4 m @ 19.57% Fe (10-14 m). • EIAC0408: 6 m @ 22.95% Fe (8-14 m). • EIAC0409: 6 m@18.92% Fe(10-16 m).	• Magnetic separation results (ave): • 42% Fe • 25% SiO2 • 9% Al2O3

Table 4: Cobar Iron Project - Major Exploration Results

4.8.PALEOCHANNEL INTERPRETATION

A total of 1117kms of iron-rich palaeochannels have been defined by PlatSearch/ Eastern iron and of this, a total of 206kms are considered as priority areas. The most magnetic portions of the channels (shown in red above) contain the largest proportions of iron rich material.

The paleochannels are shown in Figure 3, Figure 4 and Table 5 together with the number of aircore holes drilled, resources where estimated (van der Heydon, 2010) and potential Exploration Target[1] tonnages.

1 Potential Exploration Target tonnages and grades in this report are specifically for comparison purposes between the individual tenements of PlatSearch. Potential quantity and grade is conceptual in nature as there has been insufficient exploration to define a Mineral resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. Tonnages and grades are not to be quoted outside of this context. Paleochannels have been defined by PlatSearch from aeromagnetic data.

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Project	Paleo Name/Lgth (km)	EFE Priority (km)	Drilled (No. holes/ ave m @ %Fe)	Resource (Mt @ % Fe) 10% MagRec Fe cog	ExplorationTarget2 (Mt @ % Fe )
Bimbella EL 6671	Bimbella2/17.1 6/92	9.6	2/ nil	No	950-1050 @ 13-15%
Camembert EL 7283	No name/8.0	3.7	nil	No	50-100 @ 13-15%
Cobar East EL 6710	No name/10.0 8/64.7	8.0	Nil nil	No	600-700 @ 13-15%
Coolabah West EL 6711	Line1/7.3	3.5	26/8m@15%	Inf 23.7@14.1%	30-50@14-16%
	Line2/10.7 Line3/22.3 1/17.1	4.9 5.9	9/nil 8/nil		400-500 @ 14-16%
Euabalong EL 6672	Euabalong2/ 6.0 No name/7.6 No name/ 13.6 Curlew/ 7.4 Laneway/ 3.4 11/81.3	5.1 5.8 6.0 7.4 nil	1/nil 4/ 10m@10% 8/ 10m@11%	No	1000-1100 @ 13-15%
Flamingo EL 6952	St Omar/7.5 6/74.3	2.9	8/5m@12%	No	700-800 @ 13-15%
Gorgonzola EL 7282	1/33.5		nil	No	300-400 @ 13-15%
Grommit EL 6960	Grommit/25.7	21.3	44/5m@22%	Inf 48.6@16.2%	20-50@15-17%
	3/38.6				250-350@15-17%
McGraw EL 6961	McGraw1/6.2	3.7	14/9m@14%	Inf 37.8@12.5%	30-50@14-16%
	McGraw2/16.5	9.0	22/6m@14%	Inf 37.8@10.0%	50-100@13-15%
	No name/10.6 2/27.0	3.4			400-500 @ 13-15%
Oakvale EL 6706	Belah Tank/3.7	2.9	83/??	Ind 4.4 @ 14.8% Inf 2.5@14.1%	10-30 @ 14-16%
	Oakvale3/5.9	2.7	22/9m@13%	Inf 11.0@14.2%	30-50@11-13%
	No name/3.9 Powerline and Gadsbys Tank Track/5.1 Carpenters/11.9 Bendy/ 11.5 9/40.4	5.1 9.8 6.2	Nil 13/ 6/		650-750 @ 13-15%
Preston EL 6962	Preston1/5.1 Preston2/2.4 6/ 36.7	5.0 2.4	2/ nil 7/1m @13%	No	350-450 @ 13-15%
	Quartermaine1/11.0	6.5	28/7m@17%	Inf 23.2@13.7%	50-100@16-18%

2 Assumptions: channel width 800m, bulk density 1.8, assigned grade is average resource grade or actual resource grade where resource has been estimated, deposit thickness is either average resource thickness or actual thickness where intersections are known.

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Project	Paleo Name/Lgth (km)	EFE Priority (km)	Drilled (No. holes/ ave m @ %Fe)	Resource (Mt @ % Fe) 10% MagRec Fe cog	ExplorationTarget2 (Mt @ % Fe )
EL 6953	No name1/2.3 No name2/1.0 No name3/8.3 No name4/22.1 2/8.4	2.3 1.0 3.2 15.8			400-500 @ 15-17%
Shaun EL 6958	Amphitheatre/16.4	4.1	20/5m@19%	Inf 9@15.6%	20-40@20-22%
	No name/31.4 1/30.2	4.8			600-700 @ 19-21%
Techno EL 6954	Techno1/9.2	8.4	40/6m@17%	Inf 18.3@12.1%	50-100@11-13%
	Techno2/20.3	12.3	55/5m@16%	Inf 39.4@10.5%	50-100@11-13%
	5/61.0				600-700@11-13%
Tottington EL 6956	Tottington/9.5	4.9	11/8m@14%	Inf 21.4@12.9%	40-60@12-14%
	8/45.6				200-300@12-14%
Wallace EL 6959	Shearlegs/43.5	5.2	11/5m@22%	Inf 4.2@16.2%	30-50@17-19%
	No name/3.6	1.6			300-400 @ 17-19%
Wendoline				Inf 4.7@13.3%	20-30@11-13%
EL 6957	Wendoline/58.4	4.4	33/4m@19%		400-500@11-13%

Table 5: Paleochannel Length and Interpreted Tonnages

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==> picture [642 x 407] intentionally omitted <==

Figure 3: Cobar Iron Project North Block – Paleochannels

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• [ green = identified paleochannels, red = priority paleochannels, black dots = aircore holes]

==> picture [637 x 403] intentionally omitted <==

Figure 4: Cobar Iron Project South Block – Paleochannels

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4.9.RESOURCES AND RESERVES

Hellman and Schofield Pty Ltd (independent consultants) were engaged to produce resource estimates for 13 prospect areas identified from drilling. Magnetically recoverable resources were estimated for four of these prospect areas: Belah Tank, Gromit, Quartermaine and Wendoline. The remaining nine prospect areas were modelled and reported only on the basis of total iron resources. A summary of their parameters is shown below:

• database of 4,918 samples from 417 vertical aircore holes

• drill spacing 200 - 400 m spaced lines along the channels with 80 m hole spacing across the channels

• model projected up to 400 m laterally from the base of drilling.

• most holes were sampled at one metre intervals with a spear sample taken from each interval for chemical analysis and the remainder kept for any future work.

• each interval selected for magnetic separation was riffle split, sieved (600 microns) and passed over a magnetic separation barrel with the magnetic fraction weighed as a percentage of the original sample split. The magnetic fraction was then analysed for the standard iron ore suite of elements by XRF, at ALS Laboratories in Perth.

• holes were geologically logged including textural logging of chips, stratigraphy, colour and magnetic susceptibility of each interval.

• resource wireframes have been drawn using the interpretation of aeromagnetic data to define the channel outlines.

• resource estimates were made using the ordinary kriging method of calculating head grade and magnetic gravel product grades. Block size was 80 x 80 x 1 m and 1 m sample intervals were used for interpolation. The estimates used search radii up to 400 m laterally to define Inferred Resources and Indicated Resources using 100 x 200 m search radii.

• the spatial continuity of the attributes of interest (head grade, magnetic recovery and magnetic gravel product grades – Fe, SiO2 and Al2O3) was examined through variography. Variograms showed good lateral continuity and very limited vertical continuity.

• the available density data, comprising 18 samples from two holes tested by Metcon, was examined and showed a reasonable relationship between iron head grade and bulk density. With the exclusion of one outlier, the data was consistent with a mixture of iron pisolites and silicates with porosity between 30 and 40%. A theoretical formula using 35% porosity was derived and used to estimate bulk density from head Fe grade for the resource estimates.

• all drill hole data is collected and stored in a digital format with appropriate validation checks to ensure integrity of the database. Based on sample density and confidence in the predictability of the distribution of maghemite, the resource has been reported as Indicated and Inferred as per the 2004 JORC Code.

The results of the resource estimation (van der Heydon, 2010) are tabulated below:

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==> picture [453 x 293] intentionally omitted <==

Table 6: Resource Estimate (van der Heydon, 2010)

Geos Mining has reviewed the report by (van der Heydon, 2010) but has not interrogated any of the data nor applied any modelling parameters. However, on this basis Geos Mining has no reason to doubt any of the estimations completed by Hellman & Schofield.

4.10. METALLURGY

The range of testing that has been undertaken falls into the following categories:

• Standard laboratory testing on aircore samples.

• Analytical testing of basement samples.

• Bulk sample testing.

• Powdered X-ray and Sem-Edax study.

4.10.1. BULK SAMPLE TESTING

A number of holes were drilled at the Belah Prospect to obtain a bulk sample for metallurgical purposes. A series of tests were undertaken by METCON (Rayner, 2007) (Rayner, 2009) to determine what relatively simple process paths could be used to create a marketable product i.e. greater than 60% Fe with acceptable alumina and silica content. Testing included a number of options of magnetic separation, washing and grinding.

Results from one sample with a head assay of 22% using traditional separation techniques resulted in a product of 41.2% iron. Then as described in the report an “extreme measure” was taken in an attempt to further upgrade the 41.2% Fe >300 micron concentrate by crushing to <300 microns and then applying

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magnetic separating it again. A product of 48.6% iron was achieved, falling well short of the desired >60% iron.

Similar results were seen in composite 3 and sample 192 and after completion of that work it was concluded that (Rayner, 2007):

“Regrinding has shown a substantial increase in the product assay from 44% to 50% and there will be a limit to the grade that can be produced. However before drawing a line at 50% Fe fine regrind sizes should probably be examined”.

Test results indicated that there is some silica adherence to the maghemite (+30 to -200u). According to Eastern Iron (P. Buckley, pers comm.), very fine crushing and differential magnetic separation can result in a product like ‘soup’ which is difficult to market. Other processes are to melt it or wash it (similar to coal although only get 3-4% upgrade).

Summary details on further testwork undertaken (Rayner, 2009) targeted a product upgrade to 55-60%. The format of the test work is not clear but it included grinding, grading into size fractions and then separation on a Wilfley (gravity) Table which allowed for a series of gravity concentrate cut fractions to be taken. Test work was based on a Belah Tank bulk sample. It was concluded that “although some upgrading occurred it failed to meet the target of 55-60% Fe. Additional attempts by Metcon Laboratories to upgrade the gravity concentrate from the minus 53μm fraction only achieved a grade of 53% Fe.”

Subsequent work by Titanatek using heavy liquid and gravity separation together with differential magnetic separation produced a sample of 58.3% Fe. It is noted that the use of heavy media separation may not be a practical method in a production environment and therefore it may be more prudent to conclude that a product of greater than 55% Fe may not be achievable.

A brief examination was made (P. Buckley, pers comm.) of the procedure used for treating the large number of 1m drill samples. This work concluded “that the grades of the primary concentrates being produced by dry screening and magnetic separation could be increased by about 2% Fe in reality after wet scrubbing to remove adhering fines”.

It is also noted that (P. Buckley, pers comm.) that the Cobar maghemite has little interstitial goethite which in WA deposits, permits available iron upgrading in smelting. However, the Cobar maghemite does form dessication cracks in the blast furnace which does permit less energy to be consumed to melt the ore.

4.10.2. POWDERED X-RAY AND SEM-EDAX STUDY

X-ray and Sem-Edax work was undertaken on samples from the Shaun and Wallace licences (EL 6958 and 6959) between 2007 and 2009 (Chapman & Williams, 2009). This work indicated that:

• Samples of crushed and ground concentrates are, as expected, heterogeneous in nature. Their dominant mineralogy is maghemite > hematite = quartz >> muscovite ± kaolinite and/or illite.

• Aluminium is distributed between muscovite and clays and maghemite carries up to 2.0 wt% Al substituted in the spinel lattice.

• Quartz is the dominant silica-contaminating phase in the concentrates.

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• Clay coatings are more prominent in the pisolite samples and rims are comparatively richer in aluminium.

4.11. MINING ECONOMICS

There have been two conceptual economic studies undertaken both using average data rather than targeting specific resource recovery.

The first study (Innovative Shipping Group Pty Ltd, 2009) is a “big picture” study using averages grades and focusing heavily on market opportunities, logistics and innovation. The second study (Heywood, 2009) looks specifically at the Belah Prospect but only considers supplying existing defined markets. Both of these reports were prepared at the height of the Global Financial Crisis (GFC).

4.11.1. ECONOMIC FEASIBILITY STUDY – INNOVATIVE SHIPPING GROUP

This study considered primary cost components of:

• Preferred location and management of processing (i.e. needing to be relocatable every 3-4 years to where mining is being undertaken).

• Transport to railhead most likely by truck possibly tippers, B doubles or road trains.

• Road construction requirements to support transport.

• Stockpile requirements at the railhead.

• The nature of the rail wagons and its relation to the market for the product.

• The conditions of the rail line.

• Buyers’ requirements in regard to ship size and the preference for Cape size vessels (large).

• Port availability and constraints i.e. Newcastle vs Sydney vs Port Bonython vs CBH ship loader vs Port Kembla.

• Ship size and shipping costs from various ports and the pricing differentials thereof.

• The probable need for additional processing and options for locating this and the implications for shipping .

Five options were assessed and listed below (Table 7) are the parameters considered:

Option 1 Ship Pt Bonython	Option 2 Bluescope	Option 3 Concentrate & Ship to Newcastle	Option 4 Pig Iron prod’n Newcastle - Export	Option 5 Pig iron prod’n Lithgow – Export
Return to investor	Return to investor	Return to investor	Return to investor	Return to investor
Mining cost	Mining cost	Mining cost	Mining cost	Mining cost
Trucking to railhead	Trucking to railhead	Trucking to CBH	Trucking to railhead	Trucking to railhead

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Option 1 Ship Pt Bonython	Option 2 Bluescope	Option 3 Concentrate & Ship to Newcastle	Option 4 Pig Iron prod’n Newcastle - Export	Option 5 Pig iron prod’n Lithgow – Export
Depot at railhead	Depot at railhead	Generate concentrate	Depot at railhead	Depot at railhead
Rail to Pt Bonython	Rail to Pt Kembla	Depot at railhead	Rail to Newcastle	Rail to Lithgow
Loading				Pig Iron processing
	FIS rail to Bluescope	Rail to Newcastle	Pig Iron processing
Shipping - Capes	Not required	Shipping Supramax	Shipping Supramax	Rail to Pt Kembla or Sydney
				Shipping Panamax

Table 7: Innovative Shipping Group Economic Study

Conclusions of the study were as follows:

• Option 1 - not viable at today’s pricing (2009).

• Option 2 - probably not viable at today’s pricing (2009).

• Option 3 - with the co-operation of mine owners in the region with concentrating facilities this option appears to be viable at today’s pricing and subject to the chemical suitability of the ore for concentration - (assumes a concentrate can be produced).

• Option 4 - subject to a great deal more research, this option could be viable if the steel market picks up only a few percentage points from its current levels or if the price of bulk shipping increases dramatically as it did in early 2008.

• Option 5 - similar story to Newcastle. Looks promising subject to a lot more research into pig iron production technology and total input costs.

One additional option was considered which was described as an “innovative approach”. This included:

• Setting up a major concentrate plant at a point able to service both resource areas and convert the maghemite to a concentrate of no less than 60% iron to a level acceptable to blast furnace operators.

• It is suggested that near Parkes could seem to be a good location for such a plant. Parkes is becoming a hub for rail freight throughout Australia and a concentrate plant there could even possibly provide feed for One Steel Mini Mills in Western Sydney and in Western Melbourne and/or the BluesScope facility at Port Kembla. A further and radical suggestion was to create an integrated steel mill at Parkes using the AusIron or similar technology. It was proposed that such an option should be discussed with the Federal and State Governments and key industry players.

Conclusions and recommendations were general in nature but flagged the importance of waiting for more stable economic times before making any major decisions:

• That the future prospects of the project were promising although acknowledging that sample analysis was still in progress.

• Undertaking further work along the lines of:

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• Determining the total resource potential

• Differentiated grades of the product by size and suitability for secondary processing

• The range of concentrating and smelting technologies available, suitable locations for their establishment and their cost and delivery timeline

• Market projections for secondary processed iron products

• Detailed logistics supply chains to service those identified markets

• The capital costs of establishing a secondary processing facility and funding of such a project.

• The levels of financial support which may be available from three levels of Government for the creation of secondary processing facilities in regional NSW.

• Development of three different business plans for

• production and export of raw feed pisolites at 50-55% iron

• production and export of beneficiated iron ore concentrate

• production and export of pig iron and/or steel

4.11.2. PRELIMINARY CONCEPT STUDY – BELAH TANK PROSPECT

This study (Heywood, 2009) is a more straight forward assessment that follows a traditional approach to mining, transport and export based on the then current metallurgical testing and recoveries and excludes consideration of any “innovative” options like beneficiation or local smelting.

To quote the study the scope of work covers:

“the concepts behind the development of a 1.5Mtpa direct shipping operation at a specific EFE deposit within the Cobar project area - the Belah Tank prospect. The design concept proposes that the ore is dry screened and concentrated through magnetic separation before being trucked to Hermidale Siding and railed to Newcastle port.”

The mining of ore considers:

• Excavators/loader and trucks mining all material.

• No drilling or blasting, although some material could require ripping.

• Haulage to a relatively mobile plant that could be moved regularly (every ~6 months) to keep haulage distances less than 500m.

• Plant services, especially power are required to be readily re-locatable, indicating the usage of gen-sets rather than main grid power.

• Front end loaders feeding the plant, loading ore containers and trucks returning plant non-magnetic material to the mined out pit.

Three options were considered:

• Mining the bulk resource i.e. all channel material

• Partially selective mining at a 10% cut-off grade, where most channel material reports to ore.

• Selective mining of 2-3m high grade zones within the channel with the majority of the in-channel material reporting to overburden

Note – no mining dilution or mining recovery factors were applied.

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In addition to these options, two costing scenarios were considered:

• Scenario 1 - is the Base Case or Likely Case.

• Scenario 2 - is an Upside Case presuming that very favourable outcomes are achieved by:

• mining/treatment costs reduced by 20%

• lower end estimates achieved for truck, rail and port costs

• customers paying for the ore on the basis of iron content and not discount the price due to the other impurities.

The following general conclusions were made:

• The Eastern Iron tenements contain very large tonnages of ore but at very low grades. A comprehensive scout drilling program in 28 separate channels has to date delineated 627Mt of resources but the better deposit grades are typically only 10 - 15% Fe.

• Although unit mining costs are relatively low due to the shallow nature of the deposits and the ease of mining, product mining costs are very high due to the combination of low grade (~10%) and low recovery (~10%). This represents an effective product strip ratio of ~10:1 and results in a mining/treatment cost of ~A$60/tonne.

• The proposed mine is a substantial operation requiring the movement of ~15Mtpa. This scale was dictated by economies of scale in the railing operation.

• The beneficiation testwork undertaken indicates there is little likelihood of a low/medium cost treatment process that can produce a concentrate product >50% iron.

• The project area is remote with total distances to port of ~750km. Transportation costs using largely existing road/rail systems are therefore very high ~A$40/tonne.

• The VIU derived unit product value is very low at ~US$23/tonne due to the combination of low iron content, high alumina and high silica. In addition the high alkali content is likely to limit the proportion of Belah Tank material and hence the volume that could be used by any single customer to below commercial levels. The product specifications also mean that market acceptance would be slow and difficult to obtain.

• There is no low capital option for commencing commercial production. Although capital requirements have not been examined in any detail, the concept assessed would require >A$50m.

• Commencing commercial production requires substantial long term (5-10 years) contractual commitments being entered into with mining, trucking, rail and port providers. These commitments are likely to require support through some form of financial security.

• The current analysis indicates an operating cost structure of ~A$110/tonne (excluding capital charges). Based on current benchmark prices and the VIU assessment the project has a cash deficit of ~A$80/tonne.

• Benchmark prices would need to increase by >200% (to >US$3.00/DMTU from US$0.97/DMTU) to achieve cash breakeven.

• No attempt was made to determine an NPV or IRR for the project.

• The report analysis was based on the Belah Tank prospect which appears likely to have somewhat better economics than all/most of the other deposits.

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4.11.3. COMMENTARY ON STUDIES

Although both studies are conceptual, they are distinctly different with the first report exploring options and considering innovation and the second being pragmatic and considering only traditional approaches to mining and processing.

The fundamental finding of the studies is that the potential product, using conventional mining and low cost magnetic separation processing, does not deliver a product that has a potential market. If the distance from rail heads and port infrastructure is included then the project is unlikely to have any significant economic value within the foreseeable future even with much improved commodity pricing.

What is identified is that the key to unlocking the areas potential is the development of cost effective beneficiation and treatment processes that delivers a high value product that is readily accepted by the steel industry.

Within this area of beneficiation not a great deal of work has been undertaken by Eastern Iron. Mineralogical work suggests that beneficiation of the alumina rich eastern ores could be difficult due to the fine nature of its occurrence but the theory postulated by P Buckley that the siliceous ores of the western area may be more easily beneficiated has not been examined. Eastern Iron’s judgement has been that such process should be examined as part of a future process.

5.Valuation Principles and Methodologies

5.1.EFFECTIVE DATE FOR VALUATION

The date of this report is 30 July 2010. For accounting purposes there has been no material change in the valuation between the date of site visit and the date of this report.

5.2.STANDARDS AND PROCEDURES

This report has been prepared in keeping with the Code for the Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports - The VALMIN Code 2005 Edition, which has been adopted by the Australasian Institute of Mining and Metallurgy, The Australian Institute of Geoscientists and the Mineral Industry Consultants Association. As far as practical, resources and reserves quoted in this report conform to the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“the JORC Code”). Where resource figures are referred to that either pre-date or for other reasons in Geos Mining’s opinion, do not comply with the JORC code, this is clearly stated.

- 5.3.VALUATION GENERAL PRINCIPLES

The fair market value of a property as stated in the VALMIN Code (Definition 43) is the amount of money (or cash equivalent of some other consideration) that an asset should change hands on the valuation date

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in an open and unrestricted market between a willing buyer and a willing seller in an arm’s length transaction, with each party acting knowledgeably, prudently and without compulsion.

5.4.VALUATION METHODOLOGIES

There is no single method of valuation which is appropriate for all situations. Rather, there are a variety of valuation methods, all of which have some merit and are more or less applicable depending on the circumstances. The Australian Securities and Investment Commission in its Practice Note 43 on Valuation Methodology list the following as appropriate items to be considered:

• Discounted cash flow.

• Amount an alternative acquirer might be willing to offer.

• The most recent quoted price of listed securities.

• The current market price of the asset, securities or company.

5.4.1.NET PRESENT VALUE

If a project is in operation, under development, or at a advanced feasibility study stage (which includes detailed pre-feasibility studies) and reserves, mining and processing recoveries, and capital and operating costs are well defined, it is generally accepted that the net present value of the project cash flows is a primary component of any valuation study, and is generally the most relevant and appropriate valuation tool.

If a project is at the feasibility or pre-feasibility study stage additional weight has to be given to the risks, due to uncertainties in capital and operating costs, operational performance, and potentially a lower degree of confidence in the reserves. In an ongoing operation many of these items are relatively well defined.

This method was not used due to the nature of the transaction being considered and the fact that previous studies had concluded that a viable operation could not be sustained in current market conditions.

5.4.2.ALTERNATIVE VALUATION METHODS

• 5.4.2.1. RELATED OR COMPARABLE TRANSACTIONS

Of relevance to the valuation of projects and tenements is the price paid in recent comparable transactions. The difficulty in utilising this method is in determining to what extent the property or transaction is indeed comparable, unless the transactions involve the specific parties, projects or tenements under review. There can also be substantial change in value with time.

5.4.2.2. RULES OF THUMB OR YARDSTICKS

Certain industry ratios are commonly applied to derive an approximate indication of value. The most commonly used ratios are dollars per ounce of gold in resources, dollars per ounce of gold in reserves, and dollars per ounce of annual production. The ratios used commonly cover a substantial range which is

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generally attributed to the ‘quality’ of the ounces in question. Low cost ounces are clearly worth more than high cost ounces. Where a project has substantial future potential not yet reflected in the quoted resources or reserves a ratio towards the high end of the range may be justified. Such ratios can be used to provide an overall guide to value, but are subject to a significant degree of interpretation and are less precise than the NPV method. This method is far less commonly used for other commodities.

5.4.2.3. MARKET VALUATION

In the case of a one project company or a company with one major asset, the market capitalisation clearly gives some guide to the value that the market places on that asset at that point in time. Commonly however companies usually have several projects at various stages of development, together with a range of assets and liabilities, and in such cases it is difficult to define the value of individual projects in terms of the share price and market capitalisation.

5.4.2.4. PAST EXPENDITURE

Past expenditure, or the amount spent on exploration of a tenement is commonly used as a guide in determining the value of exploration tenements, and ‘deemed expenditure’ is frequently the basis of joint venture agreements. The assumption is that well directed exploration has added value to the property. This is not always the case and exploration can also downgrade a property and therefore a ‘prospectivity enhancement multiplier’ (“PEM”), which commonly ranges from 0.5-3.0, is applied to the effective expenditure. The selection of the appropriate multiplier is a matter of experience and judgement but is obviously highly subjective. To eliminate some of the subjectivity with respect to this method, Geos Mining commonly utilises the following PEM ranges to establish metallic exploration projects value based on the prior exploration expenditure:

PEM	Applicability
0.5 – 0.9	Previous exploration indicates the area has limited potential and its prospectivity may have been downgraded by the prior exploration.
1.0 – 1.4	The existing (historical and/or current) data consists of pre-drilling exploration and the results are sufficiently encouraging to warrant further exploration.
1.5 – 1.9	The prospect contains one or more defined significant targets warranting additional exploration.
2.0 – 2.4	The prospect has one or more targets with significant drill hole intersections.
2.5 – 2.9	Exploration is well advanced and infill drilling is required to define or up- grade a resource such that a reserve can be estimated.
3.0	A resource has been defined but a pre-feasibility study has not been recently completed.

Table 8: Prospectivity Enhancement Multipliers

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Some valuation practitioners also take into account the proposed exploration expenditure for the next phase of exploration in developing an overall project valuation using this method. In Geos Mining’s view, there are a variety of potential outcomes from the next phase of exploration which are not known at the time of valuation. These include enhancing, diminishing or entirely negating further prospectivity of the project concerned. Consequently we do not believe it is appropriate to include the proposed next budget amount when undertaking valuations using this method.

5.4.2.5. ALTERNATIVE OFFERS AND JOINT VENTURE TERMS

If discussions have been held with other parties and offers have been made on the project or tenements under review, then these values are certainly relevant and worthy of consideration and can be used in establishing a value of the project. Similarly, joint venture terms where one party pays to acquire an interest in a project and/or spends exploration funds in order to earn an interest provide an indication of the project’s value.

5.4.3.SPECIAL CIRCUMSTANCES

Special circumstances of relevance to mining projects or properties can have a significant impact (both positive and negative) on value and modify valuations which might otherwise apply. Examples could include:

• environmental risks - which can result in a project being subject to extensive opposition, delays and possibly refusal of development approvals

• indigenous peoples/land rights issues - projects in areas subject to claims from indigenous peoples can experience prolonged delays, extended negotiations or veto

• country issues - the location of a project can significantly impact on the cost of development and operating costs and has a major impact on perceived risk and sovereign risk

• technical issues peculiar to an area or orebody such as geotechnical or hydrological conditions, or metallurgical difficulties could affect a project’s economics.

5.5.VALUATION METHODOLOGIES UTILISED TO VALUE EASTERN IRON’S MINERAL ASSETS

In undertaking this comparison of the two tenement groups the following has been considered:

• Overall economic potential as discussed in the available reports.

• Content of quantified resources including grade, tonnage and mineability e.g. looking at strip ratios and ease of excavation.

• Resource potential i.e. any identified and unidentified resource potential such as channels located by geophysical data but as yet not drilled. This includes consideration of the possibility of any other potential non-ferrous mineralisation.

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• Local infrastructure or logistical differences that may make it easier to recover ore from one tenement group compared with the other i.e. availability of road and rail facilities and possible access to beneficiation or other processing facilities;

• Metallurgical differences which may in the future make one parcel more economic than another;

• Benefits or release from obligations due to the cancelation of the current agreement.

• Comparison of previous expenditure

In utilising the Past Expenditure method we have only included exploration expenditure incurred by Eastern Iron. The areas in which Eastern Iron’s tenements occur have all been subjected to extensive prior exploration by numerous companies over considerable periods of time. This work has generated considerable valuable data although almost all previous exploration has been conducted in regard to gold and base metals. This data is available to all parties at no cost through the DIGS system at the Industry and Investment NSW and consequently we have not included any prior company expenditure when applying this methodology to the Cobar Iron Project tenements.

In cases where significant reductions in the tenement size has progressively taken place during the period of Eastern Iron’s exploration, we have subjectively adjusted (reduced) the total expenditure to reflect expenditure incurred on the portions of the areas that have been relinquished.

5.6.COBAR PROJECT VALUATION

As previously mentioned, Geos Mining approach has been to value the differences in the East Block and West Block tenements to determine fair value in the proposed transaction between Eastern Iron and PlatSearch. A total of seven approaches have been considered to qualitatively determine ‘fair value’.

5.6.1.ECONOMIC POTENTIAL

Two conceptual economic studies have been completed both indicating that a ROM lump ore of 50% or less iron would have little or no economic value. Further it was proposed that to achieve a product of economic value it would be necessary to identify some form of mineral processing to achieve this. It is not possible at this stage to quantify any monetary differences between a project utilising either West Block or East Block resources.

5.6.2.MINERAL RESOURCES AND EXPLORATION TARGETS

Using resource estimates provided by (van der Heydon, 2010) and Exploration Target tonnages estimated in this report (Table 5) the data shown in Table 9 was calculated. It is important to note that the term ‘tonnage equivalent’ used in this report is a colloquial term used solely to compare tonnages within each tenement by permitting a comparison of ‘apples with apples’.

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Tenement Block	Project Tenement	Indicated Resource3	Indicated Resource3	Indicated Resource3	Inferred Resource4	Inferred Resource4	Inferred Resource4	Exploration Target5(Mt Fe)	Tonnage Equivalent6	Deposit
		Mt ore	Grade %	Mt Fe	Mt ore	Grade %	Mt Fe
East	Oakvale EL 6706	4.4	14.8	0.7	13.5	12.8	1.7	97-116		Belah Tank Oakvale 3
	Coolabah West EL 6711				23.7	14.1	3.3	65-83		Line 1
	Techno EL 6954				57.7	11.0	6.4	84-108		Techno 1 Techno 2
	Tottington EL 6956				21.4	12.9	2.8	31-47		Tottington
	TOTAL			0.7			14.2	277-354	36-43
West	Bimbella EL 6671							133-147
	Euabalong EL 6672							140-154
	Cobar East EL 6710							84-98
	Flamingo EL 6952							98-112
	Quartermaine EL 6953				23.2	13.7	3.2	73-97		Quartermaine
	Wendoline EL 6957				4.7	13.3	0.6	50-64		Wendoline
	Shaun EL 6958				9.0	15.6	1.4	124-148		Amphitheatre
	Wallace EL 6959				4.2	16.2	0.7	59-81		Shearlegs
	Grommit EL 6960				48.6	16.2	7.9	43-64		Gromit
	McGraw EL 6961				75.6	11.2	8.5	67-92		McGraw 1 McGraw 2

3 Based on 10% magnetic recovery cutoff grade; see Table 6

4 Based on 10% magnetic recovery cutoff grade; see Table 6

5 the potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

6 Assumptions: Allow conversion of Exploration Target to Inferred Resource = 20%; Inferred Resource to Indicated Resource = 50%

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Tenement Block	Project Tenement	Indicated Resource3	Indicated Resource3	Indicated Resource3	Inferred Resource4	Inferred Resource4	Inferred Resource4	Exploration Target5(Mt Fe)	Tonnage Equivalent6	Deposit
	Preston EL 6962							49-63
	Gorgonzola EL 7282							42-56
	Camembert EL 7283							7-14
	TOTAL						22.3	969-1190	108-119

Table 9: Resource Comparison East and West Blocks

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The results indicate that Inferred Resources within the West Block are almost double that estimated for the East Block. In addition, the Exploration Target tonnages identified for the West Block are approximately three times that identified for the East Block.

5.6.3.EXPLORATION POTENTIAL – OTHER MINERALS

A brief review of the regional geology and mineralisation has been completed to suggest potential for gold, copper, lead-zinc and tin mineralisation within the West and East Blocks. No in depth review of previous exploration history has been completed.

The assessment (Table 10) suggests a slightly higher relative prospectivity for the West Block tenements when compared to the East Block.

Project Tenement	Regional Setting	Known Mineralisation	Exploration Target	Prospectivity Rating (1 low to 10 high)
		EAST BLOCK
Oakvale EL 6706		Small gold-molybdenum prospects	Vein gold	3
	Shelf sequence Giilb G
	(ramone roup), no major faulting
Coolabah West EL 6711	Shelf sequence (Girilambone Group), no major faulting although strong magnetic linear immediately to west	None		2
Techno EL 6954	Shelf sequence (Girilambone Group), no major faulting	In SE block, numerous vein and disseminated greisen tin workings associated with magnetic linears (?faults)	Stockwork vein granite related tin	5
Tottington EL 6956	Shelf sequence (Girilambone Group), no major faulting	None but evidence of alluvial tin nearby	Stockwork vein granite related tin	2
		WEST BLOCK
Bimbella EL 6671	Mt Hope trough sediments and Silurian granites with numerous NS fault splays	Minor gold workings	Vein style gold-tin	3
Euabalong EL 6672	Mt Hope trough sediments and Silurian granites	None but numerous tin workings adjacent	Vein style gold-tin	2

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Project Tenement	Regional Setting	Known Mineralisation	Exploration Target	Prospectivity Rating (1 low to 10 high)
Cobar East EL 6710	Shelf sequence (Girilambone Group) very close to Cobar Basin margin	Stratabound manganese (-lead-silver) in proximity to major splay faults	Lode style gold-lead remobilised in basin margin faults	5
Flamingo EL 6952	Mt Hope trough sediments and Silurian granites with several NS fault splays	None	Vein style gold-tin	2
Quartermaine EL 6953	Shelf sequence (Girilambone Group) very close to Cobar Basin margin, strong faulting	None although several vein style gold-copper workings nearby	Lode style gold-lead remobilised in contact with granitoids	5
Wendoline EL 6957	Cobar Basin, Amphitheatre		Reef and stockwork gold in fault splays	4
	Group sandy sediments,	Vein gold in far east
	major NW trending faults as splays off Rookery Fault	Mn and Fe occurrences
Shaun EL 6958	Cobar Basin, Amphitheatre Group sandy sediments, several WSW trending faults as splays off Rookery Fault	None although small lead-copper working to east and major Cobar gold-copper deposits 10kms to east	East block has potential for lode gold-copper	5
Wallace EL 6959	Cobar Basin, Amphitheatre Group sandy sediments, intersection of major WNW and NS trending fault	None, follows major drainage	Structurally controlled gold-copper	4
Grommit EL 6960	Cobar Basin, Amphitheatre Group sandy sediments, some NW trending faults where Rookery Fault splits	None	En echelon polymetallic veins	4
McGraw EL 6961	Cobar Basin, Amphitheatre Group sandy sediments, some NNE trending faults associated with Mt Hope copper deposits	Vein/breccia gold-lead- silver-copper workings immediately to west	Vein/breccia gold- lead-silver-copper on margins of discrete magnetic anomalies	5
Preston EL 6962	Mt Hope trough sediments and Silurian granites	Dry Blower gold workings on eastern block	Lode gold associated with NS magnetic linears	4
Gorgonzola EL 7282	Shelf sequence (Girilambone Group), no major faulting although adjacent to distinct NS magnetic linear	Alluvial and vein tin overlying magnetic low (?alteration) and minor vein style gold-antimony	Vein style gold- antimony-tin	3

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Project Tenement	Regional Setting	Known Mineralisation	Exploration Target	Prospectivity Rating (1 low to 10 high)
Camembert EL 7283	Shelf sequence (Girilambone Group), no major faulting	Small vein style antimony-lead-silver deposits along NNE and WNW shears	Epigenetic vein antimony-lead-silver	3

Table 10: Qualitative Prospectivity of Cobar Iron Project Tenements for Non-Ferrous Mineralisation

5.6.4.LOCAL INFRASTRUCTURE OR LOGISTICAL DIFFERENCES

The following comments are made as a result of investigation of these parameters:

• Western licences located around Cobar (West Block) – Surficial deposits and although licences are more scattered they are on average significantly closer to the rail facilities and potential transport costs to a suitable railhead could be $10 less per tonne[7] than those in the north eastern area. They are also located near to mine sites where beneficiation could be undertaken.

• North eastern licences located adjacent to the Bourke-Nyngan road (East Block) – Surficial deposits, close to one another but will need to be transported to the Nyngan – Cobar railway line - discussed above.

• Mainline licences located near Parkes (West Block) – Some cover and located beneath arable land which could be expected to impact negatively but immediately adjacent to the Transcontinental rail line.

5.6.5.METALLURGICAL DIFFERENCES

The metallurgical data available indicates that:

• All samples show similar recovery characteristics through the process of magnetic separation. Although chemically similar, the West Block samples appear to be more siliceous but generally of lower grade (approx 2%) when compared with the East Block. However, East Block samples generally show a higher alumina content. It has been postulated that this difference in silica and alumina content is related to the composition of the source rocks (ie Cobar Basin vs Kopyje Shelf).

• In terms of mineability, Geos Mining has only viewed sieved aircore samples and surface features on site; we have not inspected the in-situ host material and are unable to comment as to whether one host material may be more problematic to another e.g. the presence of sticky clays, siliceous hard bands or such like. The inspection of descriptive chip logs does not appear to provide any conclusive evidence and indeed, a variety of host materials are present in all maghemite-rich samples, regardless of location. Retention of representative pre-sieved samples is recommended for any future drilling.

7 based on the reduction of the $15/tonne cost quoted in the Kerry Heywood mining study and trucking the ore to Hermidale (110km).

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• Mineralogical work has been undertaken confirming the presence of finally disseminated muscovite as the source of the alumina. It has been postulated by P Buckley (pers comm) that the siliceous samples may be more amenable to separation because of their more siliceous nature, despite the raw grades being lower. In Geos Mining’s view this theory is worthy of examination and if proven correct could represent a major difference between the two tenement blocks.

• There has been other metallurgical work focused on improving grades above those achieved by straight magnetic separation. This work is not sufficiently advanced to determine any quantifiable differences between samples from East Block or West Block tenements.

5.6.6.PROPOSED RESTRUCTURING ARRANGEMENT

There are two points of note in regard to the current agreement:

• The basis of the PlatSearch/Eastern Iron agreement (PlatSearch NL, 2008) is that Eastern Iron will earn a 80% interest in the exploration licences principally through the meeting the conditions of a share issue and issuing of options to PlatSearch and completion of expenditure of $2m within 4 years commencing i.e. 1[st] November 2007. Current expenditure as provided by Eastern Iron stands at $1.5m showing a shortfall of $500,000.

• Further, the agreement states that PlatSearch will have a 20% free carried interest in the project through to completion of a BFS (Bankable Feasibility Study) and decision to mine implying it is Eastern Iron’s responsibility to meet this cost. This is a significant point as the cost of work to achieve a BFS could be significant, in the order of a minimum of $20million. Geos considers that Eastern Iron shareholders will benefit by a reduction of risk, in that their funding in future will be proportional to their interest, rather than funding 100% for 80% interest.

The aim of the restructuring arrangement with PlatSearch is to allow Eastern Iron to introduce a new funding partner into the project who would earn a direct interest in one part of the project, the West Block. Eastern Iron and PlatSearch would form a 49:51 JV over the East Block which will further allow PlatSearch to retain control over at least part of the resource.

From an equity perspective, the proposal will result in PlatSearch losing a 20% free carried interest to gain a 51% managing and contributing interest in the five East Block tenements.

The effect of this restructure on the agreement already in place (PlatSearch NL, 2008) is not known. However, Eastern Iron has advised that this agreement will be revoked on exercise of the current agreement. If the requirement of Eastern Iron to expend $2m within 4 years of commencement is not revoked then there is a requirement to expend ~$500,000 by 30 November 2011 (see also statutory commitments Table 2).

5.6.7.ATTRIBUTABLE EXPLORATION EXPENDITURE AND VALUATION

Attributable expenditure has been calculated from expenditure statements in PlatSearch and Eastern Iron Annual Reports since 30/01/2008 (date of Sale and Joint Venture Agreement) then reduced to allow for tenement reductions and the equity held by Eastern Iron. The PEM (Section 5.4.2.4) used varies according to the presence or absence of both mineral resources and significant drill intersections. This work is summarised in Table 11.

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Tenement Name			s	ions		Valuation	Preferred Value PEM ($’000)
	EFE Exenditure	Attributable Exenditure	urce	sect	PEM Rane	Range
	p	p	Reso	Inter	g	($’000)
EAST
Oakvale EL 6706	$298,006	$238,405	√		2.5-2.9	596-691	660
Coolabah West EL 6711	$49,251	$39,401	√		2.5-2.9	98-114	107
Techno EL 6954	$153,980	$123,184	√		2.5-2.9	308-357	350
Tottington EL 6956	$99,331	$70,554	√		2.5-2.9	176-205	190
					TOTAL	1178-1367	1307
WEST
Bimbella EL 6671	$45,774	$36,619		×	1.5-1.9	55-70	60
Euabalong EL 6672	$85,214	$68,171		√	2.0-2.4	136-164	150
Cobar East EL 6710	$28,966	$23,173		×	1.0-1.4	23-32	25
Flamingo EL 6952	$49,579	$34,175		√	2.0-2.4	68-82	70
Quartermaine EL 6953	$116,037	$92,830	√		2.5-2.9	232-269	260
Wendoline EL 6957	$110,340	$88,272	√		2.5-2.9	221-256	250
Shaun EL 6958	$97,551	$72,968	√		2.5-2.9	182-211	200
Wallace EL 6959	$79,085	$53,027	√		2.5-2.9	133-154	140
Grommit EL 6960	$108,298	$86,638	√		2.5-2.9	217-251	250
McGraw EL 6961	$108,900	$87,120	√		2.5-2.9	218-253	250
Preston EL 6962	$62,651	$38,714		√	2.0-2.4	77-93	80
Gorgonzola EL 7282	$15,138	$15,138		×	1.0-1.4	15-21	20
Camembert EL 7283	$18,079	$18,079		×	1.5-1.9	27-34	30
					TOTAL	1604-1890	1785

Table 11: Valuation of the Cobar Iron Project by Expenditure

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Note that the dollar values here are derived purely for the purpose of comparing East and West Block values. If Geos Mining were to derive dollar values for these tenements, this is only one of the methods that would be used, and our final preferred values may differ significantly from these values.

5.6.8.ASSESSMENT OF DIFFERENCES

Based on assumptions and interpretation as previously discussed:

• the economic studies undertaken clearly indicate the current non-economic status of either tenement block and therefore there is no point in attempting a net present value assessment and there is no identified value differential. The split of tonnage equivalent (see footnote Table 9 ) is quite different between East Block and West Block. The disparity is significant and is in Eastern Iron’s favour.

• the assessment of prospectivity for minerals other than iron shows a similar level for East and West Blocks although the West Block has a slightly higher prospectivity in Geos Mining opinion. An in depth review of the exploration history would be required to comment further.

• local infrastructure and logistical differences are difficult to quantify but suggest some benefit to Eastern Iron.

• there has been insufficient metallurgical testwork done to be able to quantify any differences between East and West Block samples. However there is a suggestion that the higher silica mineralisation of part of the West Block may be more amenable to treatment.

• The effect on equities in the restructure proposal would appear to favour Eastern Iron although Eastern iron retains a liability in terms of an earning requirement to be met.

• Attributable exploration expenditure differences indicate that the West Block is valued ~30% higher than the East Block.

In summary:

Valuation Parameter	Difference	Impact on Valuation
Economic Potential	Not quantified nor known	No comment
Iron Resources and Exploration Targets	West Block contains ~ 3times more tonnage equivalents than East Block	Appreciable, much more favourable to Eastern Iron
Resource Potential – non ferrous	West Block slightly more prospective relative to East Block	Little, slightly more favourable to Eastern Iron
Local infrastructure and Logistics	West Block closer to railhead and closer to potential treatment facilities	As yet unquantified benefit to Eastern Iron
Metallurgy	Suggestion that Cobar Basin tenements (West Block) may be more amenable to treatment	As yet unquantified benefit to Eastern Iron
Proposed Restructure	PlatSearch will lose a 20% free carried interest but gain a 51% managing and contributing interest.	Moderate loss to PlatSearch
Exploration Expenditure	West Block is valued ~30% higher than the East Block	Moderate, more favourable to Eastern Iron

Table 12: Assessment Differences between East and West Block Tenements

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The valuation methods used consistently value the West Block tenements higher than the East Block tenements. While no sensitivities have been applied to the valuation due to the relative and qualitative nature of the results, it is clear that Eastern Iron will benefit from the proposed restructure. Geos notes that Platsearch will also benefit through its ability to control one sector of the tenements, which will assist in their proposed Singapore Stock Exchange listing. Platsearch may also benefit if Eastern Iron develop new processing technology through research on the West Block and then choose to apply it on the East Block.

6.Conclusions

The Cobar Iron Project tenements are either current or subject to a renewal process in line with statutory requirements. Major expenditure shortfalls are noted when comparing expenditure commitments versus actual expenditure which will need to be addressed prior to the end of calendar 2010. Significant area reductions are expected to be required. Access restrictions to several small parts of five exploration licences are noted.

The Cobar Iron Project is situated within the Lachlan Orogen, which hosts numerous copper-gold and leadzinc deposits within the Cobar Basin and Kopyje Shelf sediments. The region has a rich history of alluvial mining from modern and palaeochannel systems but very little attention has been paid to the potential for iron deposits within these paleochannels.

A total of 1117kms of iron-rich palaeochannels have been defined by PlatSearch/ Eastern iron and of this, a total of 206kms are considered as priority areas.

Geos Mining has reviewed previous resource estimate reports but has not interrogated any of the data nor applied any modelling parameters. However, on this basis Geos Mining has no reason to doubt any of the estimations completed by Hellman & Schofield.

A series of tests on bulk samples aimed to determine what relatively simple process paths could be used to create a marketable product i.e. greater than 60% Fe with acceptable alumina and silica content. Crushing to <300 microns resulted in a product of 48.6% iron, falling well short of the desired >60% iron. Regrinding showed a substantial increase in the product assay to 50% while additional grading into size fractions and then separation on a Wilfley Table allowed for a series of gravity concentrate cut fractions to be taken with the minus 53μm fraction achieving a grade of 53% iron. While the use of heavy liquid and gravity separation together with differential magnetic separation produced a sample of 58.3% Fe, it is concluded that this may not be a practical method in a production environment.

There have been two conceptual economic studies undertaken but they are distinctly different: one report explores options and considers innovation while the second is more pragmatic and considers only traditional approaches to mining and processing. The fundamental finding of the studies is that the potential product, using conventional mining and low cost magnetic separation processing, does not deliver a product that has a potential market and is unlikely to have any significant economic value within the foreseeable future. However the development of cost effective beneficiation and treatment processes that delivers a high value product that is readily accepted by the steel industry is seen as a way forward.

Geos Mining approach has been to assess the differences in the East Block and West Block tenements to determine fair value in the proposed transaction between Eastern Iron and PlatSearch. A total of seven approaches have been considered to qualitatively determine ‘fair value’.

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The valuation methods used consistently ‘value’ the West Block tenements higher than the East Block tenements. It is clear that Eastern Iron will benefit from the proposed restructure. Platsearch will also benefit through its ability to control one sector of the tenements and also if Eastern Iron develop new processing technology through research on the West Block and then choose to apply it on the East Block. Geos Mining considers the restructure is fair and reasonable for Eastern Iron shareholders.

7.Statement of Capability

This report has been prepared by Geos and has been compiled and edited by Project Manager, Jeff Randell and General Manager South Australia, Alistair Muir. Principal Consultant, Sue Border, has reviewed this document. Significant contributors are listed below.

Sue Border (BSc Hons, Gr Dip, FAIG, FAusIMM, MMICA)

Ms Border has 30 years experience in the minerals industry working mainly in Africa, Australia and Asia. Sue specialises in project assessment, exploration management and resource and reserve estimation. Sue’s broad experience includes periods as a mine geologist, consultant, academic, and exploration manager before starting Geos. Sue is the Principal of Geos Mining, a consultancy company providing specialist exploration services to the coal, uranium, gold, base metals and industrial minerals sectors. Sue has specialist experience in a wide variety of metals and industrial minerals and supervises all independent geological reports produced by Geos.

All information in this report relating to Mineral Resources is based on and accurately reflects, information compiled by consultants and contractors employed by Geos Mining under the supervision of the company’s Project Manager who is a Competent or Qualified Person as defined in the Australasian Code for Reporting or Mineral Resources and Ore Reserves.

Alistair Muir (BApSc, DipM)

Mr Muir has more than 20 years’ experience in the mining industry and has considerable exploration experience in coal and iron ore. Alistair is General Manager , South Australia, for Geos Mining and has strong organisational and public relationship skills.

Jeff Randell (BSc Hons, MAIG)

Mr Randell is a widely experienced professional geologist in both exploration and mining with more than 35 years experience in gold, base metals and bauxite. Mr Randell has particular expertise in the administrative management of projects and is currently employed as a Project Manager for Geos Mining.

All information in this report relating to Mineral Resources is based on and accurately reflects, information compiled by consultants and contractors employed by Geos Mining under the supervision of the company’s Project Manager who is a Competent or Qualified Person as defined in the Australasian Code for Reporting or Mineral Resources and Ore Reserves.

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Signature: Name: Jeff Randell

Qualifications: BSc (Hons), MAIG

Position: Project Manager Date: 18 August 2010

8.Statement of Independence

Geos Mining is independent of all parties involved with the project activities described in this report. Geos Mining will receive a professional fee based on standard rates plus reimbursement of out of pocket expenses for the preparation of this report. The payment of these fees is not contingent upon the success or otherwise of the proposed listing or any associated fundraising. There are no pecuniary or other interests, which could be reasonably regarded as being capable of affecting the independence of Geos or the undersigned.

Geos Mining, the authors and members of the authors’ families, have no interest in, or entitlement to, any of the project areas the subject of this report.

9.Limitations and Consent

The opinions expressed herein are given in good faith and Geos Mining believes that any assumptions or interpretations are reasonable.

With respect to this report and its use by Eastern Iron Limited and its advisers, Eastern Iron Limited agrees to indemnify and hold harmless Geos Mining, its shareholders, directors, officers and associates against any and all losses, claims, damages, liabilities or actions to which they or any of them may become subject under any securities act, statute or common law, except in respect to fraudulent conduct, negligence or wilful misconduct, and will reimburse them on a current basis for any legal or other expenses incurred by them in connection with investigating any claims or defending any actions, except where they or any of them are found liable for, or guilty of fraudulent conduct, negligence or wilful misconduct.

This report is provided to Eastern Iron Limited solely for the purpose of assisting Eastern Iron shareholders and other interested parties in assessing the geological and technical issues as well as the potential risks associated with Eastern Iron Limited exploration of the project outlined above and should not be used or relied upon for any other purpose. This report does not constitute a full technical audit but rather it seeks to provide an independent overview and technical appreciation of Eastern Iron’s Cobar Iron Project. This report may be reproduced only in its entirety and then only with Geos Mining’s written consent.

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10. Bibliography

Buckley, P.M., 2007. First Joint Annual Report for Exploration Licences 6671 and 6672 "Bimbella" and "Euabalong" for the period 5 December 2006 to 4 December 2007. PlatSearch NL.

Buckley, P., 2008. First Joint Annual report for Exploration Licences. unpublished.

Buckley, P.M., 2008. First Joint Annual Report for Exploration Licences 6706, 6710 and 6711 "Oakvale", "Cobar East" and "Coolabah West" for the period 23 January 2007 to 22 January 2008. PlatSearch NL.

Chapman, J.R. & Williams, P.A., 2009. A Powder X-Ray and Sem-Edax Study of Concentrate Samples EIH37c and EIH45c, and Pisolite Samples EIH61, EIH66 and EIH75 from the Amphitheatre and Shearlegs Prospects, Central New South Wales. Penrith South: School of Natural Sciences, University of Western Sydney.

Chapman, J.R. & Williams, P.A., 2009. A Powder XRay and SEM-EDAX Study of Concentrate Samples EIH37c and EIH45c, and Pisolite Samples EIH61, EIH66 and EIH75 from the Amphitheatre and Shearlegs Prospects, Central New South Wales. School of natural Sciences, University of Western Sydney.

Clissold, M.E. & Williams, P.A., 2007. A Powder X-Ray and Sem-Edax Study of Pisolith Samples EIZONE2, M1382, M1412, EI1221 and EI1257 from a Region North of Cobar, New South Wales. Penrith South: School of Natural Sciences, University of Western Sydney.

Heywood, K., 2009. Preliminary Concept Study.

Heywood, K., 2009. Preliminary Concept Study Belah Tank Prospect.

Innovative Shipping Group Pty Ltd, 2009. Economic Feasability Study. Innovative Shipping Group Pty Ltd.

MacRae, G.P., 2008. First Annual Report for Exploration Licences EL6952 "Flamingo", EL6961 "McGraw" and EL6962 "Preston" for the period 30th November 2007 to 29th November 2008. Eastern Iron Limited.

MacRae, G.P., 2008. First Annual Report for Exploration Licences EL6953 "Quartermaine", EL6954 "Techno", and EL6956 "Tottington" for the period 30th November 2007 to 29th November 2008. Eastern Iron Limited.

MacRae, G.P., 2008. First Annual Report for Exploration Licences EL6957 "Wendoline", EL6958 "Shaun", EL6959 "Wallace" and EL6960 "Gromit" for the period 30th November 2007 to 29th November 2008. Eastern Iron Limited.

MacRae, G., 2008. Second Annual Report for Exploration Licences EL6671 "Bimbella" and EL6672 "Euabalong" for the period 5th December 2007 to 4th December 2008. Eastern Iron Limited.

MacRae, G., 2009. Second Annual Report for Exploation Licences EL6953 "Quartermaine", EL6954 "Techno", and EL6956 "Tottington" for the period 30th November 2008 to 29th November 2009. Eastern Iron Limited.

MacRae, G., 2009. Second Annual Report for Exploration Licences EL6952 "Flamingo", EL6961 "McGraw" and EL6962 "preston" for the period 30th November 2008 to 29th November 2009. Eastern Iron Limited.

MacRae, G., 2009. Second Annual Report for Exploration Licences EL6957 "Wendoline", EL6958 "Shaun", EL6959 "Wallace", and EL6960 "Gromit" for the period 30th November 2008 to 29th November 2009. Eastern Iron Limited.

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MacRae, G., 2009. Second Joint Annual Report for Exploration Licences 6706 "Oakvale", 6710 "Cobar East" and 6711 "Coolabah West" for the period 23rd January 2008 to 22nd January 2009. Eastern Iron Limited.

MacRae, G., 2009. Third Annual Report for Exploration Licences EL6671 "Bimbella" and EL6672 "Euabalong" for the period 5th December 2008 to 4th December 2009. Eastern Iron Limited.

MacRae, G., 2010. Annual Report for Exploration Licences EL7282 and EL7283 for the period 5th February 2009 to 5th February 2010. Eastern Iron Limited.

MacRae, G., 2010. Third Annual Report for Exploration Licences 6706, 6710 and 6711 for the period 23rd January 2009 to 22nd July 2010. Eastern Iron Limited.

PlatSearch NL, 2008. Eastern Iron Project Sale and Joint Venture Agreement.

Rayner, S., 2007. Assessment of 1m Spaced Samples from the Carpenters Prospect Gravels. Brookvale: Metron Laboratories.

Rayner, S., 2007. Assessment of 'Magnetic' Gravels as a Source of Iron. Brookvale: Metcon Laboratories.

Rayner, S., 2007. Assessment of Zone 3 'Magnetic' Gravels. Brookvale: Metcon Laboratories.

Rayner, S., 2009. Preparation and Upgrading of Primary Magnetic Concentrates from Belah Tank Drill Hole 47. Brookvale: Metcon Laboratories.

Rayner, S., 2009. Upgrading and Analysis of Magnetic Iron Bearing Gravel Samples. Holes 30-36, 38-51,6162, 64-93. Brookvale: Metcon Laboratories.

van der Heydon, A., 2010. Resource Estimates of Channel iron Deposits (no actual title given). Hellman & Schofield.

Williams, P.A., 2007. A Powder X-Ray and Sem-Edax Study of a Pisolith Sample EI 1128 from a Region North of Cobar, New South Wales. Penrith South: School of Natural Sciences, University of Western Sydney.

11. Glossary

Terms not included in this glossary are used in accordance with their definitions in the Australian Concise English Dictionary.

Aeromagnetic Data: Geophysical data indicating the variation in magnetic intensity captured from an aircraft.

Aircore drilling: A combination of reverse circulation and diamond drilling techniques in which a small diameter core is air-lifted up the inside of the drill string. Suited to sticky clays and unconsolidated rock.

Alluvium/ Alluvial: Sediment deposited by a stream or river.

Alumina: any of various forms of aluminum oxide occurring naturally

Anatase: a blue or brown mineral; one of the three mineral formd of titanium dioxide

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Antimony: A metal, atomic symbol, Sb, antimony is the 51st element in the periodic table

Arc: chain of volcanic islands or mountains formed as an oceanic tectonic plate subducts under another tectonic plate and produces magma at depth under the over-riding plate. The magma ascends to form an arc of volcanoes parallel to the subduction zone

Banded Iron Formation (BIF): hard rock source of iron ore with many of the commercially important iron ore deposits formed by natural enrichment

Barite: a mineral consisting of barium sulphate with the chemical formula BaSO4

Base Metal: Any metal at the lower end of the electrochemical series that oxidizes readily

Basement: the rocks below a sedimentary platform or cover, or more generally any rock below sedimentary rocks or sedimentary basins that are metamorphic or igneous in origin

Basin: A depressed segment of rock in which sediments accumulate and where hydrocarbons may be located.

Beneficiation: variety of process whereby extracted ore from mining is reduced to particles that can be separated into mineral and waste, the former suitable for further processing or direct use

BFS: Bankable Feasibility Study

Biotite: A common rock forming silicate mineral of the mica group, containing varying proportions of potassium, iron, magnesium and aluminium.

Bulk Density: A measure of the relative weight of a geological material as it is found in the ground before excavation, expressed in tonnes per cubic metre (t/m[3] ).

Breccia: A coarse-grained rock consisting of angular broken rock fragments held together by a fine-grained matrix, distinct from conglomerate.

Cambrian: The earliest period of the Palaeozoic era, covering the time between 570 and 500 million years ago.

Channel iron deposits (CID): often referred to as “pisolite-type” iron ore formed by the weathering and alluvial concentration of lateritic soil material.

Continental Margin: zone of the ocean floor that separates the thin oceanic crust from thick continental crust

Craton: an old and stable part of the continental lithosphere. Having often survived cycles of merging and rifting of continents, cratons are generally found in the interiors of tectonic plates

Deposit: A mineral occurrence of sufficient size and grade that it might, under favorable circumstances, be considered to have economic potential

Detrital Iron Deposit (DID): found where weathering has eroded iron deposits such as BIF and CID and redeposited fragments of ore in “traps” such as drainage channels

Disseminated: Said of a mineral deposit in which the desired minerals occur as scattered particles in the rock.

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En Echelon Veins: structures within rock caused by noncoaxial shear; and appear as sets of short, parallel, lenses on the surface of a rock. They are planar structures within the rock and originate as tension fractures which are subsequently filled by precipitation of a mineral.

Epigenetic: formed later than the surrounding or underlying rock formation

Exploration Licence: A granted title over an area of land entitling the holder to explore for one or more mineral commodities for a set period of time

Exploration Target: Information relating to exploration targets must be expressed so that it cannot be misrepresented or misconstrued as an estimate of Mineral Resources or Ore Reserves. The terms Resource(s) or Reserve(s) must not be used in this context. Any statement referring to potential quantity and grade of the target must be expressed as ranges and must include (1) a detailed explanation of the basis for the statement, and (2) a proximate statement that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

Fault: A geological fracture along which rocks on one side of the fault are dislocated relative to those on the other side.

Feasibility Study: A study of the economic viability of the mining and production of base or precious metals or other minerals

Ferrous: of or relating to or containing iron

Goethite: an iron bearing hydrous oxide mineral found in soil and other low-temperature environments

Grade: Average quantity of ore or metal in a specified quantity of rock.

Granite/Granitic: Coarse-grained acid igneous rock containing quartz and feldspar.

Granitoid: A granitic rock.

Gravity Separation: Gravity separation is an industrial method of separating two components from a suspension or any other homogeneous mixture where separating the components with gravity is sufficiently practical

Greisen: A form of alteration restricted to the outer edges of some granite intrusions

Greywacke: A rather poorly sorted sandstone which contains fragmentary material mixed in with a matrix of finer material such as clay

Head Grade: the grade of the ore as delivered to the metallurgical plant

Hematite: the principal form of iron ore, and is the mineral form of iron(III) oxide (Fe2O3), one of several iron oxides. Hematite crystallizes in the rhombohedral system

Illite: a non-expanding, clay-sized, micaceous phyllosilicate mineral with aggregates of grey or white monoclinic crystals

In Situ: In its original position, said of rock or soil when it has not moved from whence it was deposited and or lithified.

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Indicated Resource: that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

Inferred Resource: that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

JORC Code: A code prepared by the Joint Ore Reserves Committee which sets out minimum standards, recommendations and guidelines for public reporting in Australasia of exploration results, mineral resources and ore reserves.

JV: Joint venture

Kaolinite: A clay mineral with the chemical composition Al₂Si₂O₅(OH)₄. It is a layered silicate mineral, with one tetrahedral sheet linked through oxygen atoms to one octahedral sheet of alumina octahedra.

Kriging Method: a group of geostatistical techniques to interpolate the value of a random field at an unobserved location from observations of its value at nearby locations.

Lacustrine: of or relating to lakes

Laterite: Highly weathered material rich in secondary oxides of iron, aluminium or both.

Lode: a deposit of valuable ore occurring within definite boundaries separating it from surrounding rocks

Maghemite: A magnetic form of Fe2O3. It has the same structure as magnetite

Magnetic Flux: a measure of the strength of a magnetic field over a given area

Magnetic Separation Processing: Magnetic separation is a process in which magnetically susceptible material is extracted from a mixture using a magnetic force. This separation technique can be useful in mining iron as it is attracted to a magnet

Magnetic Susceptibility: the degree of magnetization of a material in response to an applied magnetic field

Mineralisation: Term describing the hydrothermal deposition of economically important minerals in the formation of ore bodies.

Molybdenum: A metallic chemical element (symbol Mo) with an atomic number of 42

Muscovite: A common rock forming silicate mineral of the mica group. It is a transparent mineral and commonly occurs in igneous rocks such as granite.

Ocean Crust: the part of Earth's lithosphere that surfaces in the ocean basins. Oceanic crust is primarily composed of mafic rocks, or sima, which is rich in iron and magnesium

Ordovician: The second earliest period of the Palaeozoic Era between 500 and 440 million years ago.

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Orogen: Referring to the process of mountain building and uplift, folding and faulting

Palaeo-topography: The topography of a given area in the geologic past.

Palaeochannels: Deposits of unconsolidated or semi-consolidated sediments deposited in ancient, presently inactive river and stream channel systems.

Palaeoenviromental: Environment in the geologic past

PEM: Prospectivity enhancement multiplier. It commonly ranges from 0.5-3.0 and is applied to the effective expenditure. The selection of the appropriate multiplier is a matter of experience and judgement but is highly subjective.

Pig Iron: the name used for the iron directly produced from a blast furnace

Pisolitic: A somewhat spherical accretionary body in sediments

Polymetallic: refers to a substance composed of a combination of different metals

Porphyry/Porphyritic: An igneous rock in which larger crystals (“phenocrysts”) are scattered through a matrix of smaller crystals (“groundmass”)/descriptive of rocks displaying such textures.

Porosity: Porosity is a measure of the void spaces in a material and is a fraction of the volume of voids over the total volume, between 0–1, or as a percentage between 0–100%

Quartz: second most abundant mineral in the Earth's continental crust, after feldspar. It is made up of a continuous framework of SiO4 silicon–oxygen tetrahedra, with each oxygen being shared between two tetrahedra, giving an overall formula SiO2.

Recoverable Resources: Recoverable resource refers to the amount of resource that can be removed.

Reserves: The economically mineable part of a measured or indicated resource at the time of reporting, as defined in the JORC Code.

Resource: The part of a deposit for which there is a reasonable prospect for eventual economic extraction, as defined in the JORC Code. Not all of a resource may be economically minable.

Riffle Splitter: is a sampling device that is used for sample splitting. In the riffle splitter, the sample is poured from a suitable vessel, into a battery of about ten open chambers which are so arranged that any two adjacent chambers permit the material to flow out towards two different sides

Rift: a rift is a place where the Earth's crust and lithosphere are being pulled apart and is an example of extensional tectonics

Sediment: Material such as mud and sand that has been moved and deposited by water, ice or wind.

Shear: A deformation resulting from stresses that cause parts of a body to slide relative to each other in a direction parallel to their plane of contact

Smelting: Smelting is a form of extractive metallurgy; its main use is to produce a metal from its ore. This includes iron extraction (for the production of steel) from iron ore

Silicates: A silicate is a compound containing an ion in which one or more central silicon atoms are surrounded by electronegative ligands

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Siliceous: Name used to describe silicon dioxide compounds.

Silurian: A period within the Palaeozoic era between 440 and 400 million years ago

Source Rocks: rocks reflecting high productivity; most common source rocks: shales and mudstones; basalts; and quartz sandstones and limestones.

Spear Sample: Conducted using a PVC tube. This method is not equi-probable as it is susceptible to density segregation in the sample bag

Spinel: a hard glassy mineral consisting of an oxide of magnesium and aluminium which occurs in various colours

Stockwork Veins: Three dimensional network of irregular veinlets

Strata: Layers of sedimentary rock, visually separable from other layers above and below.

Stratigraphy: The science of rock strata, concerned with all characteristics and attributes of rocks as strata, and their interpretation in terms of mode of origin and geologic history.

Strip Ratios: In open pit mining, the ratio of the total waste removed to the total mined, expressed as bank cubic metres per tonne (BCM/tonne).

Surficial: pertaining to or occurring on or near the earth's surface

Tenement: An area granted for exploration or mining purposes.

Tertiary: Thought to have covered the time between 65 and 2 million years ago.

Ternary Diagrams: a triangular graph used to plot percentages of each of three components such as sand, silt, and clay. Each apex is considered 100% of one component

Tonnage Equivalent: used in this report as a colloquial term used solely to compare tonnages within each tenement by permitting a comparison of ‘apples with apples’.

Trough: refers to a linear structural depression that extends laterally over a distance, while being less steep than a trench. A trough can be a narrow basin or a geologic rift

Turbidite: Sediments which are transported and deposited by density flows

Valmin Code: Code for the Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports. A code prepared to assist those involved in the preparation of public Independent Expert Reports that are required for the assessment and/or valuation of mineral and petroleum assets and securities so that the resulting reports will be reliable, thorough, understandable and include all the material information required by investors and their advisers when making investment decisions.

Variogram: A graph of the function of the spatial dependence of variance

Vein: A fracture in rock which has been filled with mineral, often quartz.

Workings: The entire system of openings in a mine for the purpose of operation

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XRD: X-ray diffraction. A technique in which the patterns formed by the diffraction of X-rays on passing through a crystalline substance yield information on the lattice structure of the crystal, and the molecular structure of the substance.

XRF: X-ray fluorescence. X-rays are diffracted when directed at a crystalline material according to its lattice structure. The generation of an x-ray diffraction pattern that is characteristic for the crystalline phases contained within the sample is the result of the data collection process.

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