Annual Report 2016
Contents
Chairman's Letter 1
Review of Operations 2
Tenement Schedule and Resource Summary 5
Directors' Report 6
Auditor's Independence Declaration 13
Corporate Governance 15
Consolidated Statement of Comprehensive Income 22
Consolidated Statement of Financial Position 23
Consolidated Statement of Cash Flows 24
Consolidated Statement of Changes in Equity 25
Notes to the Consolidated Financial Statements 26
Directors' Declaration 45
Independent Auditor's Report 46
Shareholder Information 48
Chairman's Letter
Dear Fellow Shareholder,
During the year, we have been steadily, albeit slowly, progressing the permitting of our Nowa Nowa iron ore project. As you are aware, amendment of the feasibility study to incorporate a changed ore shipping profile and other improvements was suspended last year when the iron ore price collapsed. Although iron prices have partially recovered during the current year, they have not achieved a level which will draw project development capital at terms attractive to shareholders. At the date of writing, industry participants are predicting volatile iron ore pricing in the range of US$40 to US$60 per tonne in the near future, which does not encourage development of new, small-scale projects. However, your Company will continue to observe iron ore price movements and projections and will adjust its strategy with respect to Nowa Nowa accordingly.
During the year, Eastern Iron welcomed Fortune Future Holdings Limited ("Fortune") to its register as its major shareholder. With the funds provided by Fortune, Eastern Iron commenced assessing advanced precious metal and base metal projects both overseas and in Australia. The Company has investigated more than a dozen projects, some of them quite intensively. Several remain under investigation and, with the support of Fortune, we hope to identify and acquire a suitable project in the near future. Acquisition of the right project will permit Eastern Iron to reposition itself within the industry, with the capability of creating substantial value for shareholders.
Fortune nominated two directors to the Eastern Iron board, Mr Dahui Zhang and Mr Yungang Wu. These gentlemen have extensive experience in the Australian and Canadian mining environment, and have made valuable contributions to your Company.
Once again, I wish to extend my thanks to my fellow directors, employees and consultants for their diligence and perseverance throughout the year, and to the shareholders for their ongoing support.
Yours sincerely,
Steve Gemell
Chairman
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> Eastern Iron Limited Annual Report 2016
Review of Operations
Highlights
New Project Acquisition
$2 million dollar placement to Chinese company, Fortune Future Holdings Limited provides Eastern Iron with the capacity to investigate potential investments in near development or operating mines for base and precious metals.
Nowa Nowa Iron
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Definitive Feasibility Study has confirmed many of the Scoping Study outcomes including:
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Combined use of a slurry pipeline and self-decanting bulk carriers shows the potential to deliver an upgraded 62% Fe iron product at an FOB cash cost of approximately A$32/t (US$24/t) and a CFR (China) cost of US$36/t.
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Further detailed studies required to confirm alternative low cost transport option have been put on hold pending an improved outlook for the iron ore market.
Nowa Nowa Copper
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VTEM geophysical survey completed in the search for massive sulphide copper-gold deposits.
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Several high priority targets identified with drilling recommended.
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Follow up ground geophysics and drilling awaits granting of replacement tenement over target areas.
Nowa Nowa Project
The Nowa Nowa Iron Project is located some 250 kilometres east of Melbourne close to the Princes Highway, which provides ready access to several nearby towns and possible export sites. The project is also located only 20kms from the coast which also opens the potential for a coastal transport option close to the mine site. (Figure 1)
Figure 1: Locality Plan,Nowa Nowa Project
During the previous twelve months, Eastern Iron has advanced a Definitive Feasibility Study (DFS) into the potential development of the magnetite-rich iron ore at the Five Mile deposit at Nowa Nowa. The results of this study were reported in a release dated 29 September 2014, Nowa Nowa Project Feasibility Results.
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> Eastern Iron Limited Annual Report 2016