HAWTHORN RESOURCES LIMITED — Capital/Financing Update 2011

Aug 14, 2011

ASX Announcement 15 August 2011

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I R O N O R E L I M I T E D
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About Legacy Iron Ore

Legacy Iron Ore Limited (“Legacy” or the “Company”) is a Western Australian based Exploration Company, focussed on iron ore and gold exploration and discovery.

Legacy’s mission is to increase shareholder wealth through capital growth, created via the discovery, development and operation of profitable mining assets.

The Company was listed on the Australian Securities Exchange on 8 July 2008. Since then, Legacy has had a number of iron ore, manganese and gold discoveries which are now undergoing drilling and resource definition.

Board and Management

Timothy Turner , Non-Executive Chairman Sharon Heng , Executive Director & Chief Executive Officer Tao Han , Non-Executive Director Ben Donovan , Company Secretary Steve Shelton , Exploration Manager Marina Watts , Senior Geologist

The Company Announcements Office ASX Limited

Via E Lodgement

SECOND PHASE DRILLING TO COMMENCE AT MT BEVAN IRON ORE PROJECT

Highlights

• 6,000m RC drilling program commencing next week.

• At Western BIF target – present 617Mt resource defined on 40% of strike.

• Drilling to extend the resource over the whole extent of the southern part of the Western BIF.

• Exploration Target* for this drilling is 600Mt – 800Mt.

• Intention to double the existing resource.

• Completion scheduled for early November 2011.

Key Projects

Mt Bevan Iron Ore Project Hamersley Iron Ore Project Robertson Range Iron Ore and Manganese Project South Laverton Gold Project East Kimberley Gold and Base Metals Project

Enquiries

Sharon Heng Chief Executive Officer Phone: +61 8 9421 2005

• Current resource has excellent mining and metallurgical qualities.

Legacy Iron Ore Limited (“Legacy”) is pleased to announce that a second phase of deep RC drilling is to commence next week at the Mt Bevan Iron Ore project.

Mt Bevan is a joint venture between Legacy and Hawthorn Resources Limited (“Hawthorn”) whereby Legacy will earn a 60% interest in the project by expending a minimum of $3.5 million to develop the project to a prefeasibility status.

ASX Codes: LCY, LCYO, LCYOA, LCYOB

HYATT CENTRE SUITE 32, 23 PLAIN STREET EAST PERTH WA 6004

PO BOX 6878 EAST PERTH BC WA 6892

Phone: +61 8 9421 2005 Fax: +61 8 9421 2001 Email: info@legacyiron.com.au Web: www.legacyiron.com.au

The second phase 6,000m drilling program will be targeted on the southern part of the Western BIF unit, and cover the strike extensions of the presently defined resource ( Figure 1 ). The Exploration Target* for this drilling program is 600Mt – 800Mt grading between 30% - 40% Fe.

The intention of the drilling program is to double the current inferred resource, further adding to the potential economics of the project.

The drilling program is scheduled for completion by early November 2011.

A total Exploration Target* for the whole of this southern part of the Western BIF is considered to be 1.5Bt – 2.0 Bt at 30% - 40% Fe, down to a vertical depth of 300m.

Legacy Iron Ore Limited

ASX Announcement 15 August 2011

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Figure 1: Drilling programs on the southern Western BIF unit Phase 1 drilling completed – blue,

Phase 2 drilling commencing - yellow

Background

A maiden JORC compliant Inferred Resource of 617 Mt at 32.1% Fe for the first phase RC drilling program was announced on 20 July 2011. This first phase drilling program was conducted over some 40% of the strike length of the Western BIF unit – the first of several iron ore prospects to be drill tested within the project area. Recently, the joint venture announced the results of comprehensive Davis Tube Recovery (“DTR”) metallurgical tests that place the Mt Bevan magnetite resource at the highest quality level of West Australian magnetite projects both in the low level of silica and the relatively coarse grind size used.

Mt Bevan is considered to hold excellent potential for the definition of substantial DSO hematite and magnetite iron resources that are located close to existing road, rail and port facilities.

The announcement to the ASX on 20 June 2011 provides a comprehensive account of the exploration of the project to date and the calculation of a maiden inferred resource for a small part of the magnetite targets. The announcement to the ASX on 20 July 2011 concerns the excellent metallurgical results to date, while a following announcement on 3 August 2011 provides information on the excellent potential of the Mt Alexander prospect to host significant magnetite and hematite resources.

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

The first phase drilling program was located in the southern part of the Mt Bevan project area, to the immediate north of the significant magnetite and hematite resources held by Jupiter Mines Limited (“Jupiter”) ( Figure 2 ). The Jupiter Mt Ida magnetite resource consists of an inferred mineral resource of 530Mt grading 31.9% Fe (15% Fe grade cut-off) and the hematite resource consists of 5.75Mt @ 59.9% Fe (inferred) at Mt Mason close to the Mt Bevan southern boundary. This mineralisation is known to extend into the Legacy/Hawthorn joint venture ground at Mt Bevan. Jupiter has recently announced that scoping studies, carried out by Promet Engineering Pty Ltd, have been completed on both the Mt Ida magnetite resource and Mt Mason DSO haematite resource, delivering financially robust results in both cases. Jupiter commenced Feasibility Study RC drilling at Mt Mason during May 2011.

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Figure 2: Mt Bevan Iron Ore Project

Legacy commenced deep drilling on the southern part of the Western BIF target on the basis of several thick magnetite intersections made earlier by joint venture partner Hawthorn. This target is an 11km continuous magnetite bearing BIF unit as shown in Figures 3 and 4 .

A total of 20 vertical and angle RC drill holes were completed in the first phase of drilling. Drilling on the five drill fences covered an approximately 4.6km strike of the Western BIF horizon and tested to depths of 200m – 250m ( Figure 4 ). This BIF horizon is the northern, more extensive part of the same horizon that hosts the Mt Ida magnetite resource of Jupiter (currently an inferred mineral resource of 530Mt grading 31.9% Fe). In addition, this Western BIF horizon is present over several kilometres of strike length in the northern part of the project area. The project area also contains the Eastern BIF unit that occupies some 20km strike within the project area. No drill testing for magnetite has been undertaken on this unit to date.

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

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Figure 3: Aeromagnetic image showing magnetite bearing BIF units (red) and drillholes for first phase (light blue) and proposed second phase drilling (dark blue)

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

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Figure 4: Phase 1 RC Drilling - Drill Hole Locations

Drilling intersected a continuous thick central magnetite bearing BIF slab together with a thin discontinuous hanging wall BIF and a thicker more continuous footwall BIF. True thicknesses of the central BIF unit usually typically exceed 100m true thickness. Figures 5 and 6 show typical drill cross sections.

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

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Figure 5: Drill Section Line 4 - 6 780 300N

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Figure 6: Drill Section Line 3 - 6 779 500N

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

Modelling and ore reserve estimation by SRK Consulting has resulted in the calculation of a JORC compliant Inferred Resource for this first phase program as shown in Table 1 below:

Cut off grade Fe %	Tonnes (Mt)
		Fe %	SiO2 %	Al2O3 %	CaO %	P %	S %	LOI %
15	616.8	32.1	47.4	3.4	3.1	0.05	0.13	-0.25
25	522.2	34.4	46.8	2.5	2.7	0.06	0.13	-0.38

Table 1: SRK Consulting Results

Modelling of the magnetite BIF units by SRK is illustrated by Figures 7 and 8 below.

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Figure 7: Mt Bevan First Phase Drilling – modelled mineralised units. View to west (up dip direction) showing all units. (green = thick central, purple = hanging wall, yellow = foot wall )

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Figure 8: Modelled central magnetite mineralised unit – view to west

The modelling and drilling cross sections illustrate the very strong continuity of the magnetite bearing units along strike and also down dip. The shallow dip and substantial thickness of the mineralisation will allow low waste ore stripping ratios, meaning that final open cut depths could potentially far exceed the approximately 250m vertical depth tested by drilling to date.

The results from comprehensive DTR test work are excellent, with an average weight recovery of 44.63%, and an average concentrate grade of 69.8% Fe, Silica contents average a very low 3.28%, with very low sulphur and phosphorus.

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Legacy Iron Ore Limited

ASX Announcement 15 August 2011

These results place the Mt Bevan magnetite resource at the highest quality level of West Australian magnetite projects, particularly in the low silica component of the concentrate. Most peer projects show DTR concentrate silica in the 4.5% to 6% range and utilise a more costly finer grind. Put simply, even with a lower cost coarse grind size, a premium concentrate with low silica can be produced.

The DTR results indicate that a high purity magnetite concentrate can be produced. This gives the project potentially the flexibility to produce either normal BF (Blast furnace) grade pellets (silica < 5.5%) which may be produced at a coarser grind size, or premium DR (Direct reduction) grade pellets (silica < 3%) at a finer grind size.

Legacy has previously announced an exploration target for magnetite mineralisation in the order of 1–1.5 billion tonnes grading between 30% and 40% Fe within the Mt Bevan project area ( see foot note on the Clause 18 inclusion ). Based on the results of the first phase drilling program, we have reconsidered the exploration target for magnetite mineralisation. It is now considered that an exploration target of 1.5 – 2.0 billion tonnes grading between 30% - 40% Fe exists purely within the southern part of the Western BIF target zone** . There also exists significant potential for the definition of shallow DID and DSO hematite iron ore resources that could allow for early stage mining.

Yours faithfully, LEGACY IRON ORE LIMITED

Sharon Heng

Chief Executive Officer

END

Competent Person’s Statement:

The information in this report that relates to Exploration Results, Exploration Targets, Mineral Resources or Ore Reserves (excluding the SRK Consulting study) is based on information compiled by Steve Shelton who is a member of The Australasian Institute of Geoscientists and a full time employee of Legacy Iron Ore Limited. Mr. Shelton has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves“. Mr. Shelton consents to the inclusion in this report of the matters based on his information in the form and the context in which it appears.

• The exploration target for the Mt Bevan project of between 1.5 – 2.0Bt grading 30%–40% Fe should be considered in line with clause 18 of the JORC code. 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.

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