Eastern Resources : Positive Feasibility Study for Nowa Nowa Iron Project

ASX Announcement - 24 January 2022

Level 1, 80 Chandos Street

St Leonards NSW 2065

T [phone]

only	FEASIBILITY STUDY FINDS NOWA NOWA IRON PROJECT IS TECHNICALLY
ROBUST WITH POSITIVE CASHFLOW
HIGHLIGHTS
use
∙ Feasibility Study confirms the technical and financial viability of Nowa Nowa
Iron Project.
∙ Study posits production of 1.0Mtpa, with LOM of 6 years.
∙ LOM production in base case underpinned by JORC Measured and
Indicated Resources of 4.65Mt at 51.75% Fe
∙ Low capital cost of $15.7 million (including contingency)
	∙ Cash operating costs of A$72.00 per tonne FOB (LOM average)
	∙ Pre-tax NPV of A$61.94 million and IRR of 11.8%

personalEastern Resources Limited ("EFE" or the "Company") is pleased to report on the results from the Feasibility Study ('FS') relating to the Nowa Nowa Project ("Project").

The Study is the third assessment undertaken by EFE for the entire Project following successful completion of the Scoping Study in 2012 and Feasibility Study in 2014. This Study has been revised as of January 2022 to reflect the current product philosophy and operational approach, along with updated financial metrics.

The FS shows the Project is technically robust and under the assumptions of the FS would be likely to generate positive financial returns.

Overview

This FS outlines the findings for the Project and includes assessment on the following:

• geology and mineral resource;
  For∙ metallurgical testwork;
• mining, crushing & screening;
• infrastructure requirements;
• utilities supply (power, water, fuel and communications);
• product haulage;
• port product handling and export;
• operations management and human resources;
• health and safety management;
• environmental and social impacts;

∙	project approvals process;
∙	cultural heritage and native title; and
∙	capital costs, operating costs and financial modelling.
only
Key Outcomes
The following describes the key elements of the Project's base case:
∙	life of mine of approximately 6 years;
∙	mining from a single pit, the Five Mile deposit, using conventional drill, blast, load and haul
	mining methodology;
∙	produce approximately 1 Mtpa magnetite direct shipping ore (DSO) -30 mm product with
	average grade of 51.75% Fe over the life of mine;
∙	haulage via a trucking operation to the Eden port, 234 km one way from the mine site;
∙	approximately 12 - 14 shipments per annum exported through the port, operated by Pentarch
	Logistics (ANWE);
∙	capital cost of A$15.7 million (15% contingency)
use∙	cash operating costs of A$72.00 per tonne of DSO including royalties (FOB); and
∙	pre-tax NPV (8%) of A$61.94M and IRR of 11.8%.
personaleast of Melbourne, and approximately 234km by road west of the Port of Eden. (see Figure 1).

Background

The Company engaged Engenium Pty Ltd ("Engenium") to investigate the potential for development of a magnetite direct shipping ore1 ("DSO") operation based on magnetite-rich iron ore deposits at its Five Mile deposit near Nowa Nowa in Eastern Victoria. DSO product would be trucked through existing road network to the Port of Eden in NSW, where the DSO product would be exported via existing port infrastructure.

For the purpose of the FS, the Project has been considered as a standalone project for Five Mile deposit only and the other deposits (e.g. Six Mile and Seven Mile) have been excluded from consideration at this point in time.

Project Location

The Project is located 7 km north of the township of Nowa Nowa, Victoria. It is some 320km by road For

1 No Ore Reserves in accordance with the JORC Code 2012 have been estimated. The word 'ore' where used in this announcement is not intended to imply the existence or likelihood of the estimation of ore reserves in accordance with the JORC Code 2012.

Page 2

use only
personal
Figure 1 - Project Location

JORC Mineral Resource

The Mineral Resource at Five Mile was estimated by H&SC in accordance with the JORC Code 2012.

H&SC estimated a total mineral resource of 9.05 Mt with an average iron content of 50.8%Fe, in the Measured, Indicated and Inferred categories as set out in Table 1 below. This estimate assumes a commercially minable lower cut-off of 40% iron.

	Prospect		Measured	Indicated	Inferred	Total
			Mt	Fe %	Mt	Fe %	Mt	Fe %	Mt	Fe %
	Five Mile		2.25	52.8	4.32	50.4	2.49	49.7	9.05	50.8
		Table 1 - Five Mile Resource Estimate (cut off of 40% Fe) 1
Project Operation
For

The operating strategy is summarised as follows:

• engage a mining contractor for ore extraction and stockpiling at the ROM pad;
• engage a mining contractor for crushing plant encompassing all crushing, screening, and stockpiling;
• engage a road haulage contractor for product haulage from the mine to the port;
• product unloading, stockpile, reclaim, ship loading and all charges at the port; and
• miscellaneous indirects and services for the supply of operations infrastructure and support.

Page 3

Extending the LOM by upgrade existing inferred resources in Five Mile deposit to measured and/or indicated resources;

Exploration upside based on areas of Seven Mile project where iron ore has been identified; Increasing the production rate materially to 1.5Mtpa;

Improvements in operational efficiencies and reduction of operating costs Project partnership arrangement.

The FS indicates a plan to produce magnetite DSO at a 1.0 million tonnes per annum over a six-year LOM (totally approximately 4.65 million tonnes), with the opportunity to expand production once existing inferred resources at Five Mile deposit is upgraded to measured and/or indicated resources.

onlyAn open cut mine is proposed, with an average waste to ore ratio of 3.22 over the six years mining including pre-strip period. Ore will be crushed and screened to produce DSO lump product ("Product"), with estimated average product grade of 51.75% over the LOM.

The Product will be trucked from mine to the Port of Eden predominantly by sealed road, where it will be stockpiled prior to being loaded directly into Panamax ship vessels for export to customers.

Opportunities and Risks

The Company is studying further opportunities to enhance the value of the Project, include the usepotential as follows:

∙

∙

∙

∙

personal∙

The key risks identified for the Project include:

∙ A significant strengthening of the Australian currency against the US currency; ∙ A significant decline in the iron ore price from the forecasted price in the FS; ∙ Delays in obtaining necessary approvals/permits;

∙ Restrictions in access to ANWE port facilities; ∙ Increased operating costs and shipping costs; ∙ Shortages in suitable staffing and contractors.

Cautionary Statement

As the Feasibility Study for the Project utilises a portion of Inferred Resources, the Company draws attention to the following cautionary statement in accordance with the ASX Listing Rules.

The FS referred to in this announcement is based upon a JORC Compliant Mineral Resource Estimate For(refer to the Company announcement dated 21 May 20141).

The Company advises that the production targets in the FS uses measured and indicated resources as base case, and uses measured, indicated and inferred resources as upside case. The forecast financial information in this announcement is based on the base case only.

There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the conversion of Inferred Mineral Resources to Indicated or Measured Mineral Resources or that the production targets of upside case reported in this announcement will be realized.

The Mineral Resource Estimate that underpins the FS has been prepared by a Competent Person, with a Competent Person's Statement in accordance with the JORC Code included in this announcement.

Page 4

The Company has concluded that it has a reasonable basis for providing the forward-looking statements included in this announcement. The detailed reasons for this conclusion are outlined throughout this announcement.

onlyForward Looking Statements

This announcement contains "forward-looking information" that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to the FS, the Company's business strategy, plan, development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, mineral resources, ore reserves, results of exploration, production rates, costs, expenses, industry growth and other trend projections, generally, this forward looking information can be identified by the use of forward-looking terminology such as, "anticipate", "project", "target", "likely", "believe", "estimate",

use"expect", "intend", "may", "would", "should", "scheduled", "will", "plan", "forecast", "evolve" and similar expressions. Persons reading this announcement are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

The Company believes that the forward-looking information in this announcement is based on reasonable grounds having regard to the fact the production targets and forecast financial information in base case are underpinned by a 100% Measured and Indicated Mineral Resources and the relevant assumptions as set

out in this announcement, and that the financial and other parameters on which production targets and personalfinancial forecasts are based are current, and that all assumptions on which production targets and those financial forecasts are based regarding future matters which of the nature cannot be known with

reasonable certainty are made on a reasonable basis. However, neither the Company nor any other person makes or gives any representation, assurance or guarantee that the production targets or expected outcomes in this announcement will ultimately be achieved. The forward-looking information in this announcement is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such risks include but are not limited to future prices and demand of iron and other metals; foreign exchange rates, availability of funding; results of further optimisation activities (including further exploration and metallurgical work);changes in project parameters as plans continue to be refined; failure of plant; equipment or processes to operate as anticipate; possible variations of ore grade or recovery rates; accident, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities and general business, economic, competitive, political and social uncertainties.

ForA number of key steps need to be completed in order to achieve production at the Project. Many of these steps are referred to in this announcement. Investors should note if there are delays associated with completing those steps, or completion of the steps does not yield the anticipated results, the actual estimated production and forecast financial information may differ materially from the FS results presented in this announcement.

These risks are not exhaustive of the factors that may affect or impact forward-looking information. These and other factors should be considered carefully, and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to revise any forward-looking statement whether as a result of new information, estimates, or options, future events or results or otherwise, unless required to do so by law.

Page 5