northern iron limited

NORTHERN IRON LIMITED

ABN 71 125 264 575

ANNUAL REPORT

31 DECEMBER 2008

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008

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CORPORATE DIRECTORY Directors ND Hamilton (Chairman) MJ McMullen (Chief Executive Officer and Managing Director) FH Tschudi (Non-Executive Director) A Mehra (Non-Executive Director) PR Bilbe (Non-Executive Director) DC Griffiths (Non-Executive Director) PS Larsen (Non-Executive Director) Company Secretary RA Anderson Auditors HLB Mann Judd (WA Partnership) Bankers Westpac Banking Group Limited Australia and New Zealand Banking Group Limited DnB NOR Bank ASA Registered Office Level 3 3 Ord Street West Perth WA 6005 Telephone: +61 8 9321 9334 Facsimile: +61 8 9321 9335 Email: [email protected] Website: www.northerniron.com.au Share Registry Computershare Investor Services Pty Limited Level 2 45 St Georges Terrace Perth, WA 6000 Australia Investor Enquiries: 1300 557 010 (within Australia) Investor Enquiries: +61 3 9415 4000 (outside Australia) Facsimile: +61 8 9323 2033

Stock Exchange Listing Securities of Northern Iron Limited are listed on ASX Limited. ASX Code: NFE - ordinary shares

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CONTENTS Chairman’s Review 3 Operating and Financial Review 4-8 Directors’ Report 9-21 Auditor’s Independence Declaration 22 Income Statements 23 Balance Sheets 24 Statements of Changes in Equity 25-26

Statements of Cash Flows 27 Notes to the Financial Statements 28-58 Directors’ Declaration 59

Independent Audit Report 60-61 Corporate Governance Statement 62-63 Additional Shareholder Information 64-67

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 CHAIRMAN’S REVIEW

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Dear Shareholder, Northern Iron’s first year of life as a publicly listed company began in January 2008 shortly after the very successful completion of a $ 140 million IPO in December 2007. We looked forward to the challenge of the commissioning and re-opening the Sydvaranger Iron Ore Mine and Plant with great enthusiasm. To say that our first year of life as a public company has been a baptism of fire is, perhaps, an understatement. Since the unfolding of the Global Financial Crisis, industry worldwide has been confronted by challenges, threats and financing restrictions unseen since the times of the 1930’s. Against this grim background much has been achieved by Northern Iron. The highlights of the last year have been:

‐ We remain substantially on time and on budget with our project, anticipating commissioning in July ‐ We have been able to increase resources by 39 % and announce a reserve of 111.5 Mt grading 32% Fe (total) ‐ An expansion project has been developed to pre-feasibility stage and identified very significant financial benefit to

the Company. Whilst current economic conditions prohibit execution at this time the project represents a very valuable asset to the Company in a return to more stable market environment.

‐ The company has entered into a long term off-take agreement with Corus in respect of approximately one half of likely first stage production and discussions continue with other potential offtake partners, with a Memorandum of Understanding signed with another party for the remainder of the offtake tonnage

‐ We have substantially completed the recruitment of a management team (and taken first steps to put in place a work force) ready for the commencement of operations in the middle of this year. One positive flowing from current market conditions is the availability of skilled labour at more competitive cost than the experience of the last few years

‐ The Company completed a capital raising in February 2009 to accelerate the case for an incremental expansion, order the long lead items required for the refurbishment of the flotation circuit and to provide funds as security against a potential worsening of market conditions or other unexpected contingencies that may emerge in these very difficult times.

‐ The Company is continuing to review its mine plans and production schedules against the background of market conditions, reviewing its access to all international markets for the sale of its production and more generally will continue to explore all necessary steps to guard against the risks of further significant deterioration in market conditions.

On balance we believe the Company is well placed, and as secure as one could realistically plan, in these very difficult and changing market conditions. We will however remain alert to continuing new challenges which may well emerge until stability returns to economic markets generally and, in our case particularly, in Europe. On behalf of our Board I would like to express thanks to the local Kirkenes community for embracing the mine redevelopment, and to the management and people of Northern Iron for their contributions during a very difficult 2008, and ask them for their continued support and energy in what we expect to be a challenging 2009. Sincerely Neil Hamilton Chairman F

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 OPERATING AND FINANCIAL REVIEW

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OPERATING REVIEW Subsequent to the Company’s ASX listing in December 2007, activities have continued towards recommissioning the Sydvaranger Iron Ore Project. With construction of the project substantially on schedule and within budget the company is well placed to be a long term supplier of quality magnetite concentrate with an operation in a politically stable country. The focus of the Company remains the successful commissioning and operation of the Sydvaranger Iron Ore Project to provide long term supply of a quality product to European, Middle Eastern, and potentially Asian pellet producers. The results of the Expansion Study indicate that this remains a valuable path for organic growth for the Company in the medium term and the Company intends to progress this once the first phase of production has been delivered on. The signing of the Corus offtake provides product sales over the short to medium term for the base case production. Negotiations on offtake contracts for the remainder of the base case production are well advanced and there is significant interest on the spot market for the Company’s product. The Company has signed a Memorandum of Understanding signed with another party for the remainder of the offtake tonnage, with work continuing to convert this to a fomal sales contract. Specific areas of progress during the year are highlighted below: Schedule The project remains on schedule for commissioning in July 2009 with commercial production in late July 2009. The critical path item is the fabrication and shipping of the primary grinding mill shell. The mill supplier has notified the Company of a three week delay in the fabrication of the mill shell and has commenced daily inspections of the work on this item to reduce the risk of further slippage. Completion of the ship loader and the upgrade of the high voltage substation are both on schedule. The bulk of the new equipment will be delivered in the first quarter of 2009 with the mill scheduled for delivery in the second quarter. No material delays apart from the mill shell have been indicated by the suppliers at this stage. The delay in the mill shell will result in a delay of up to three weeks in commissioning. Offtake agreements An offtake agreement was signed with Corus for an initial term of 5 years from 1 July 2009 with contracted sales of 6Mt of concentrate representing approximately 45% of the planned base case production over the contract term. The contract provides for sales of up to an additional 2.25Mt of concentrate at the mutual option of both parties. Pricing for the concentrate is to be based on the Vale benchmark for similar products delivered into Europe on a Free on Board (FOB) basis. The Company is pleased to be entering into a long term supply agreement with a partner with the financial backing of Corus. Corus is a subsidiary of Tata Steel Group, which was established in 1907 as Asia's first integrated private sector steel company. Tata Steel Group (including Corus) is the world's sixth largest steel producer with a crude steel capacity of over 28 million tonnes. It is now the world's second most geographically diversified steel producer, with operations in 26 countries and a commercial presence in over 50 countries. Corus, which manufactured over 20 million tonnes of steel in 2007, has operations in the UK, the Netherlands, Germany, France, Norway and Belgium. The Company has also entered into a Memorandum of Understanding (MOU) with a third party to sell the remainder of the planned base case production. Negotiations are continuing to convert the MOU to a formal offtake contract. The Company’s marketing strategy is to enter into long term FOB sales agreements directly with pellet producers in Europe and the Middle East. The base product planned to be produced is expected to grade 68 % Fe with between 2.5% and 3% SiO2 and low levels of deleterious elements (P, Ti, V, Al2O3, S, As, Hg). In the current iron ore market, the Company believes that producing the highest quality product is the best strategy for ensuring the ability to sell 100% of the mine production. The Company intends (subject to minor amendments to approvals) to move towards the production of a lower silica product suitable for DR pellet production (Fe -71%, SiO2-1.5% to 2%). The Sydvaranger mine has historically produced a range of products that are well known throughout the European steel market and can, if required, produce a product grading 0.5% SiO2 through the use of existing site equipment that can be refurbished.

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Resource and Reserve Statement A large drilling program has been underway to infill gaps in the historical drilling and to confirm the validity of the historical data. This work has been required to upgrade the resources from the Inferred category to Measured and Indicated, enabling the estimation of a Reserve. Resources have now been estimated for the first three deposits (Bjørnevatn, Hyttemalmen and Kjellmannsåsen) incorporating this new data. Total project resources are shown in Table 1 below. Table 1 – Mineral Resources

Mineral Resource Summary as at 9 February 2009 (at 15% Fe total cut-off grade)

Prospect Indicated (Mt)

Fe(Tot)

% Inferred (Mt)

Fe(Tot)

%

Total Tonnes

(Mt) Fe(Tot)

% Bjørnevatn 152 32 138 30 290 31

Kjellmannsåsen 18 34 5 30 23 33

Fisketind Øst 29 31 29 31 Tverrdalen 43 32 43 32

Hyttemalmen 4 34 1 32 5 34 Bjornfell

14

32

14

32

Söstervann

5

37

5

37

Grundtjern

3

34

3

34

Fisketind SW

17

33

17

33

Jerntoppen

21

31

21

31

Blixmalmen

9

33

9

33

Total

174

32

285

31

459

31

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Resource and Reserve Statement (continued) Resources have increased by 129Mt over the last year, an increase of 39%, with 38% of all resources now in the Indicated category. The estimation of Indicated resources for the Bjørnevatn, Hyttemalmen and Kjellmannsåsen deposits has enabled the Company’s consultants to estimate Reserves for these deposits. After applying suitable modifying factors, the Reserve statement for these three deposits is shown in Table 2. Table 2 – Ore Reserves

Ore Reserve Summary (at 15% Fe total cut-off grade)

Prospect Probable Reserve (Mt) Fe(Tot) %

Kjellmannsåsen 16.8 32

Hyttemalmen 4.2 33

Bjørnevatn 90.5 32 Total

111.5

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The Reserves from the initial three deposits underpin a 16 year mine life and will provide the bulk of the ore over a planned 30 year mine life. In addition to the Reserves, there is approximately 118Mt grading 31% Fe (total) of Inferred resources within pit designs which may, subject to conversion to Reserves, provide additional mine life. Work is ongoing to convert these resources to a higher level of confidence which is the only outstanding item for conversion to Reserve status. Note: The information in this report that relates to Mineral Resources is based on information compiled by David Slater, who is a Member of The Australasian Institute of Mining and Metallurgy. David Slater is employed full time by Coffey Mining Pty Ltd. David Slater 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 Mineral Resources and Reserves”. David Slater consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The reported Ore Reserves have been compiled by Mr Stuart Cruickshanks. Mr Cruickshanks is a Member of the Australian Institute of Mining and Metallurgy and an employee of Coffey Mining Pty Ltd. He has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a Competent Person as defined in the ‘Australasian Code for Reporting of Mineral Resources and Ore Reserves’ of December 2004 (“JORC Code”) as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia. Mr Cruickshanks gives Northern Iron Limited consent to use this estimate in reports.

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Mining Progress Pre stripping of the Hyttemalmen and Kjellmannsåsen pits have progressed well, with all vegetation and topsoil cleared. Drilling and blasting is planned for early in 2009 following the receipt of the blasting approvals in November. Construction of the explosives factory is well advanced with the concrete slab completed and the majority of the building and equipment fabricated offsite and in the process of being delivered. Deliveries of mine fleet have commenced, with the first four 777 mine trucks and a tool carrier on site by early 2009. Delivery times for fleet have shortened significantly over the past quarter, and no issues are expected with the planned fleet delivery schedule. Work has commenced on refurbishing the leased workshop facility which will provide a suitable facility for the assembly and servicing of the mine fleet. DnB NOR Lease Facility In July 2008 Northern Iron awarded the supply and maintenance contracts for the mine fleet to Pon Equipment (Caterpillar) and Atlas Copco. The Company also accepted an offer to provide NOK 350 million of lease finance for the fleet from DnB NOR, the largest bank in Norway. Draw downs on the fleet lease facility continue to be made in accordance with the lease agreement, with a total of NOK60.7 million equivalent drawn down at year end. The supply and maintenance of the excavate, load and haul fleet was awarded to the local Caterpillar dealer, Pon Equipment. The supply contract covers two x 100t truck fleets and a third 150t truck fleet and associated equipment. The maintenance contract covers an initial five year period. Delivery of the first 100t truck fleet is complete, with the remainder of the fleet to be delivered by the September quarter of 2009. The supply and maintenance of the drill fleet has been awarded to Atlas Copco. The maintenance contract covers an initial five year period. Delivery of the first drill is expected in the March quarter of 2009. Process Plant Work continues on the refurbishment of the concentrator and associated facilities. An extensive work program on the first primary crusher is close to completion, and the bulk of the rail line repairs have been carried out. Refurbished equipment is now being reinstalled in the concentrator and deliveries of new equipment have commenced. The secondary and tertiary crushers, tailings thickener, cyclones and the majority of the pumps have now been delivered to site and are in various stages of installation. The refurbishment and upgrade of the ship loading facility by the Tschudi Group is well advanced and on schedule for commissioning in April and hand over in May 2009. Recruitment Recruitment of the senior management team has progressed with Sydvaranger Gruve AS appointments made for the Managing Director, Chief Financial Officer, Manager Mining, Chief Geologist, Senior Mining Engineer and a range of middle management positions. The bulk of the senior management team is now in place and recruitment has commenced for the operational employee positions with strong interest from Scandinavia.

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Expansion Study The Expansion Study has been completed and has determined that the optimal production rate is a doubling of the current planned 7Mtpa rate to a 14Mtpa production rate. This would produce approximately 6Mtpa of concentrate, and based on the current open pit Reserve and Mineral Inventory, would give a mine life of 15 years. Inclusion of the underground mine would add a further 2 years to the mine life. The estimated capital cost for the Expansion is A$200 million at a +-15% accuracy level, plus an additional US$21 million for the mine fleet which has assumed to be leased. Operating costs per tonne of concentrate are reduced by 10% and the payback period for the Expansion capital is around one year. Whilst the Expansion Project adds significant value to the Company, in light of the current economic climate the Company has elected to defer work on the Expansion. In the interim, the relevant applications for the modifications required for the environmental approvals are being lodged to enable the Company to implement the Expansion rapidly when required. Permits The Company has received the permits required to operate the Sydvaranger Iron Ore Project. The two main permits are:

a) The Industrial Concession governs the mining operations and is required prior to the commencement of mining activities on site.

b) The Environmental Permit (the SFT Permit) governing the disposal of waste from the operations, including submarine tailings deposition, waste rock dumps and water disposal.

Both the Industrial Concession and the SFT Permit cover mining and processing of not only the three deposits currently in the mine schedule (Bjørnevatn, Fisketind Øst and Kjellmannsåsen), but also enable the Company to mine and process material from the other deposits owned by the Company within the Industrial Concession area. All operational approvals required by the Company are now in place for the base case Sydvaranger Iron Ore Project. FINANCIAL REVIEW The consolidated net profit after tax of $1,874,000 (2007: $681,000 loss) reflects:

- $8.2 million of interest income earned on the consolidated entity’s cash deposits - $6.8 million of foreign exchange gains, primarily unrealised, arising on consolidation of the Norwegian

subsidiary, Sydvaranger Gruve AS, due to significant A$/US$ and NOK/US$ exchange rate fluctuations during the reporting period

- $9.7 million of site based operational costs, travel, personal, and administration costs - $1.5 million of share based payments expense, primarily relating to options issued in 2007 but vesting in

2008 - Income tax expense of $1.9 million

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 DIRECTORS’ REPORT

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The directors present their report together with the financial report of Northern Iron Limited (“Company”) and of the Group, being the Company and its legal subsidiary, and the auditor’s report thereon.

Northern Iron Limited is a listed public company incorporated and domiciled in Australia. Directors The names and details of the Company’s directors in office at any time during or since the end of the financial year are as follows. Directors were in office for this entire period unless otherwise stated. Neil D Hamilton Chairman Age 56. Appointed a director and Chairman on 5 November 2007. Neil has over 26 years experience in the law and in business with substantial experience in a number of industries including investment/funds management, insurance, banking and resources. Neil commenced his professional career at Robinson Cox (now Clayton Utz) as an Articled Clerk, and became Partner in 1977. His legal experience includes mergers and acquisitions, resources and mining, banking and finance, and general corporate/commercial law. Mr Hamilton is Chairman of the Remuneration, Nomination, and Governance Committee. During the past three years Mr Hamilton has held the following listed company directorships: Mount Gibson Iron Limited (Chairman) Since April 2007 IRESS Market Technology Limited (Chairman) Since September 2000 Metcash Limited Since February 2008 Insurance Australia Group Limited From June 2000 to August 2008 Integrated Group Limited From August 1999 to June 2007 Programmed Maintenance Services Limited From June 2007 to February 2009 Michael J McMullen Chief Executive Officer and Managing Director BSc (Geology) Age 38. Appointed a director on 22 May 2007. Mick McMullen is a geologist with in excess of 16 years experience in exploration, financing, development and operation of mining projects. During that time he has worked in Australia, Africa, Europe, Asia and South America. He has acted as technical adviser to many of the major resource banks for project financing and mergers & acquisitions and has worked on several corporate finance transactions on the ASX, AIM, JSE and TSX markets. He was formerly a founding shareholder and executive director of Tritton Resources Limited, a company that developed a copper mine in Australia prior to being acquired by Straits Resources. He was most recently a partner and the Manager of Audits at RSG Global Consulting Pty Ltd. During the past three years Mr McMullen has held the following listed company directorships: Lachlan Star Limited Since October 2007 Tritton Resources Limited From December 2003 to August 2006 F

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Directors (continued) Felix H Tschudi Non-Executive Director Bsc (Econ), MBA Age 48. Appointed a director on 13 December 2007. Felix is the chairman and sole owner of Tschudi Shipping Company AS, the holding company of the Tschudi Group and the majority shareholder in Northern Iron. Mr Tschudi attended the Royal Norwegian Naval Academy and served as Sub-Lieutenant in the Royal Norwegian Navy. He earned a Second Mate’s certificate from merchant navy colleges in the UK, a BSc (Econ) from London School of Economics, and an MBA from INSEAD, France. Before joining the shipping company Tschudi & Eitzen in 1989, Mr Tschudi worked for a subsidiary of the Vienna-based Creditanstalt Group focussing on trade finance and counter trade structures in Eastern Europe and the former Soviet Union. Mr Tschudi was the joint managing director of Tschudi & Eitzen from 1992 until 2003. He worked as the managing director of the Oslo stock exchange listed company Tschudi & Eitzen Shipping ASA from 1993 until 1997. Mr Tschudi is the former president of the Oslo Shipowners Association, a Norwegian representative at the Executive Council of Intertanko, a member of the Committee of the P&I Club Skuld and a member of the board of Oslo Maritime Network and the publishing house Aschehoug & Co. Mr Tschudi is a member of the Remuneration, Nomination, and Governance Committee. During the past three years Mr Tschudi has not been a director of any other listed entity. Ashwath Mehra Non-Executive Director BSc (Econ) Age 44. Appointed a director on 22 May 2007. Ashwath Mehra, an economist, is the CEO of MRI Resources AG, a raw materials trading company with annual turnover of approximately $4 billion. He has worked in the minerals industry for 23 years, starting his career with Philipp Brothers after which he spent 10 years with Glencore, where he was a senior partner and ran the Nickel and Cobalt Divisions. He has substantial experience in projects and project finance and has worked on equity and bond issues. During the past three years Mr Mehra has held the following listed company directorships: EMED Mining Since October 2008

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Directors (continued) Peter R Bilbe Non-Executive Director B.E. (Mining) (Hons), M AusIMM Age 58. Appointed a director on 5 November 2007. Peter has over 30 years experience in senior operational and corporate roles in the resources sector both in Australia and overseas and until January 2007 was Managing Director and Chief Executive Officer of Aztec Resources Limited, which recently announced the successful development of the Koolan Island iron ore project. Peter has significant experience as a mining engineer, and prior to his role with Aztec Resources Limited was General Manager of Operations for Portman Limited, managing the Koolyanobbing and Cockatoo Island iron ore projects. Mr Bilbe is a member of the Remuneration, Nomination, and Governance Committee, and a member of the Audit Committee. During the past three years Mr Bilbe has held the following listed company directorships: RMA Energy Limited Since March 2007 Aurox Resources Limited Since September 2007 Mount Gibson Iron Limited From February 2007 to November 2007 Aztec Resources Limited From February 2006 to February 2007 David C Griffiths Non-Executive Director B Ec (Hons) M Ec Age 58. Appointed a director on 5 November 2007. David has over 26 years experience in senior financial and executive roles in a wide range of industries, and is a former Division Director of Macquarie Bank. Prior to this role, David was executive chairman of Perth stockbroking firm Porter Western. David holds an Honours Degree in Economics from The University of Western Australia, a Masters Degree in Economics from Australian National University and is a Fellow of the Australian Institute of Company Directors. David also sits on the Board of the Perth International Arts Festival. Mr Griffiths is a member of the Remuneration, Nomination, and Governance Committee, and Chairman of the Audit Committee. During the past three years Mr Griffiths has held the following listed company directorships: Great Southern Limited (Chairman) Since July 2005 Automotive Holdings Group Limited (Deputy Chairman) Since February 2007 Thinksmart Limited Since November 2000 ARC Energy Limited (Chairman) From July 2005 to August 2008 Antaria Limited (formerly Advanced

Nanotechnology Limited) From December 2003 to November 2008

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Directors (continued) Peter S Larsen Non-Executive Director MSc (Econ) Age 46. Appointed a director on 13 December 2007. Peter Larsen, an economist, is currently the Chief Financial Officer of Tschudi Shipping Company AS. He has worked in the shipping and energy industries for 20 years, starting his career with Burmeister & Wain Shipyard, followed by 10 years in the European energy sector with a focus on project development and financing. He has considerable experience in risk management within the power and commodity sectors. Mr Larsen is a member of the Audit Committee. During the past three years he has not been a director of any other listed entity. Company Secretary Mr Robert Anderson was appointed Company Secretary on incorporation of the Company in May 2007. Mr Anderson is a Chartered Accountant who has previously held company secretarial positions in both ASX-listed companies and private entities. Directors’ and committee meetings The number of directors’ and committee meetings and the number of those meetings attended by each of the directors of the Company during the period are as follows:

Board

Audit Committee

Remuneration, Nomination and

Governance Committee (a) (b) (a) (b) (a) (b)

ND Hamilton MJ McMullen FH Tschudi A Mehra PR Bilbe DC Griffiths PS Larsen

10 10 10 10 10 10 10

10 10 10 10 10 10 10

- - - - 2 2 2

- - - - 2 2 2

3 - 3 - 3 3 -

3 - 3 - 3 3 -

(a) Number of meetings held during period of office (b) Number of meetings attended Remuneration, Nomination, and Governance Committee The committee considers remuneration packages and policies applicable to the executive directors, senior executives, and non-executive directors. It is also responsible for share option schemes, Employee Share Plans, incentive performance packages, and retirement and termination entitlements. Identification of independent directors The independent directors are identified in the Corporate Governance Statement section of this Annual Report as set out on pages 62 to 63. Remuneration report The Remuneration Report is set out on pages 15 to 20 and forms part of this Directors’ Report.

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Audit Committee Names and qualifications of Audit Committee members The committee is to include at least 3 members. Current members of the committee are Mr David Griffiths (Chair), Peter Bilbe and Peter Larsen. Qualifications of Audit Committee members are provided in the Directors section of this directors’ report. Principal activities The principal activities of the consolidated entity are included in the operating and financial review as set out on pages 4 to 8. Non-audit services The auditors’ of the Group entities did not provide any non-audit services during the period under review. Details of the amounts paid or payable to the auditors of Group entities for audit and non-audit services paid or provided during the year are set out below:

Consolidated 2008($)

Audit and audit review of financial reports HLB Mann Judd 47,500Ernst & Young AS 113,971 Directors’ interests At the date of this report, the relevant interests of the directors in securities of the Company are as follows: Name

Ordinary shares

Options over ordinary shares

ND Hamilton 247,558 300,000MJ McMullen 5,015,691 -FH Tschudi 85,000,000 -A Mehra 10,372,093 300,000PR Bilbe 110,023 300,000DC Griffiths 325,583 300,000PS Larsen 20,000 300,000

Likely developments The likely developments for the 2009 financial year are contained in the operating and financial review as set out on pages 4 to 8. The directors are of the opinion that further information as to the likely developments in the operations of the group would prejudice the interests of the Company and the group and it has accordingly not been included. Operating and financial review An operating and financial review of the group for the financial year ended 31 December 2008 is set out on pages 4 to 8 and forms part of this report. Dividends No dividends were paid during the year and the directors do not recommend payment of a dividend in respect of the current financial year.

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Lead auditor’s independence declaration The lead auditor’s independence declaration, as required under Section 307C of the Corporations Act, is set out on page 22 and forms part of the directors’ report for the financial year ended 31 December 2008. Significant changes in state of affairs There were no significant changes in the state of affairs in the period under review. Environmental regulation and performance The Group’s mining development and exploration activities are carried out through its 100% Norwegian subsidiary, Sydvaranger Gruve AS. As part of the due diligence process for the Company’s IPO in December 2007 Sydvaranger Gruve AS had an extensive environmental study carried out in Bøkfjorden where tailings had been deposited for more than two decades prior to closing the previous mining activity. The study was carried out by the Norwegian Institute for Water Research. The Norwegian Pollution Control Authority (“SFT”) approved the application for emission permits, submarine disposal of tailings and waste in April 2008. No significant environmental breaches have been notified by any government agency during the year ended 31 December 2008, nor is the Group aware of any having occurred. Share options Options granted to directors and officers of the group During the year the Company granted options for no consideration over unissued ordinary shares of the Company to the following executive officer as part of his remuneration: Executive Officers Number of options granted Exercise price per option Expiry date D Hunter 200,000 $4.12 04/08/11 D Hunter 200,000 $4.80 04/08/11 Shares under option

The following unissued ordinary shares of the Company are under option.

Exercise

Number Expiry Date price 01/01/08 Issued Exercised Expired 31/12/08 13/12/10 $2.15 1,150,000 - - - 1,150,000 13/12/10 $3.01 1,150,000 - - - 1,150,000 13/06/10 $3.01 2,000,000 - - - 2,000,000 04/08/11 $4.12 - 200,000 - - 200,000 04/08/11 $4.80 - 200,000 - - 200,000 4,300,000 400,000 - - 4,700,000

No options have been granted since the end of the financial year, nor have any options been exercised during or since the end of the reporting period. During the reporting period there was no forfeiture of options granted in previous periods. In the event that the option holder ceases to be an employee, director or consultant of the Company, the Board may at its sole discretion resolve that all vested options held by that employee, director or consultant must be exercised within 21 days of that employee, director or consultant ceasing to be an employee, director or consultant (as applicable) of the Company. Any unvested options held by that employee, director or consultant will lapse.

Insurance of directors and officers During the financial year the Company paid a premium to insure the directors and officers of the Company and its controlled entities. The policy prohibits the disclosure of the nature of the liabilities covered and the amount of the premium paid.

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Remuneration Report The Remuneration, Nomination, and Governance Committee determines remuneration policies and practices, evaluates the performance of senior management, and considers remuneration for those senior managers. This Committee assesses the appropriateness of the nature and amount of remuneration on an annual basis by reference to industry and market conditions, and with regard to the Company’s financial and operational performance. Total non-executive directors’ fees are approved by shareholders and the Board is responsible for the allocation of those fees amongst the individual members of the Board. The value of remuneration is determined on the basis of cost to the Company and Group. Principles of compensation Remuneration of directors and executives is referred to as compensation, as defined in AASB 124. Compensation levels for key management personnel of the Company and group are competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The Remuneration, Nomination, and Governance Committee obtains, when required, independent advice on the appropriateness of remuneration packages, given trends in comparative companies both locally and internationally. Compensation arrangements include a mix of fixed and performance based compensation. A component of share-based compensation is awarded at the discretion of the Board, subject to shareholder approval when required. Compensation structures take into account the overall level of compensation for each director and executive, the capability and experience of the directors and senior executives, the executive’s ability to control the financial performance of the relative business segment, the group’s performance (including earnings and the growth in share price), and the amount of any incentives within each executive’s remuneration. In October 2008 the Board adopted a policy that prohibits those that are granted share-based payments as part of their remuneration from entering into other arrangements that limit their exposure to losses that would result from share price decreases. The Company requires all executives and directors to sign annual statements of compliance with this policy throughout the preceeding period. The Company was incorporated in May 2007 and listed on ASX in December 2007 at an Initial Public Offer price of $2.15 per share. Historical share price, earnings, and dividends were not relevant factors in determining remuneration during the reporting period as the Company is in the start-up phase. 31/12/08 31/12/07 Share price Consolidated net profit / (loss) after tax from continuing operations ($000)

$0.90

1,874

$2.80

(681) Fixed compensation Fixed compensation consists of base compensation as well as any employer contributions to superannuation funds. Base compensation may be supplemented by an element of equity based compensation. Equity-based compensation is set out in the Equity Instruments section of this Remuneration Report. F

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Remuneration Report (continued) Non-executive directors Total remuneration for all non-executive directors, last voted upon by shareholders at a General Meeting in November 2007, is not to exceed $500,000 per annum. A non-executive director’s base fee is currently $50,000 per annum. The Chairman receives a base fee of $100,000 per annum. Non-executive directors do not receive any performance related remuneration. Directors’ fees cover all main Board activities and membership of Board committees. The Company does not have any terms or schemes relating to retirement benefits for non-executive directors. Non-executive directors receive share-based compensation at the discretion of the Board, and subject to approval by shareholders. Service contracts The contract duration, period of notice, and termination conditions for key management personnel are as follows: (i) Mick McMullen, Chief Executive Officer of Northern Iron Limited is engaged through a Consultancy Agreement.

Termination by the Company is with 12 months notice or payment in lieu thereof. Termination by the consultant is with 6 months notice.

(ii) Robert Anderson, Company Secretary and Chief Financial Officer of Northern Iron Limited, is engaged through a

Consultancy Agreement. Termination by the Company is with 12 months notice or payment in lieu thereof. Termination by the consultant is with 3 months notice.

(iii) Donald Hunter, Chief Executive Officer of Sydvaranger Gruve AS. Termination by the company or the employee is

with 6 months notice. (iv) Antony Beckmand, Chief Financial Officer of Sydvaranger Gruve AS. Termination by the company or the employee

is with 6 months notice. Directors’ and executive officers’ remuneration, Company and consolidated Details of the nature and amount of each major element of the remuneration of each director of the Company and each of the named Company and group executives receiving the highest remuneration are set out on pages 17 and 18. The fair value of options is calculated at the grant date using the Black-Scholes Option Pricing Model and recognized as an expense over the vesting period. The following factors and assumptions were used in determining the fair value of options at grant date: 2008 Grant date

Expiry date

Fair value per option

Exercise price

Price of shares at grant date

Expected volatility

Risk free interest rate

Dividend yield

04/08/08 04/08/11 $1.14 $4.12 $3.39 50% 6.75% 0% 04/08/08 04/08/11 $0.98 $4.80 $3.39 50% 6.75% 0% 2007 Grant date

Expiry date

Fair value per option

Exercise price

Price of shares at grant date

Expected volatility

Risk free interest rate

Dividend yield

13/12/07 13/12/10 $0.86 $2.15 $2.15 50% 6.75% 0% 13/12/07 13/12/10 $0.63 $3.01 $2.15 50% 6.75% 0%

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Remuneration Report (continued) Directors’ and executive officers’ remuneration, Company and consolidated (continued)

Short Term Post

employment Share based

payments

Name Salary and

fees Cash bonus

Superannuation

contributions Options Total

% of remuneration performance

related

Value of options as a proportion of remuneration (%)

Directors Non-Executive Mr ND Hamilton (Chairman) 2008 $92,296 - $7,704 $212,776 $312,776 - 68.0% 2007 $14,327 - $1,289 $11,502 $27,118 - 42.4% Mr A Mehra 2008 $50,000 - - $212,776 $262,776 - 81.0% 2007 $2,603 - - $11,502 $14,105 - 81.6% Mr FH Tschudi 2008 $50,000 - - - $50,000 - -% 2007 $2,603 - - - $2,603 - -% Mr PR Bilbe 2008 $34,404 - $15,596 $212,776 $262,776 - 81.0% 2007 $7,163 - $645 $11,502 $19,310 - 59.6% Mr DC Griffiths 2008 $34,404 - $15,596 $212,776 $262,776 - 81.0% 2007 $7,163 - $645 $11,502 $19,310 - 59.6% MR PS Larsen 2008 $50,000 - - $212,776 $262,776 - 81.0% 2007 $2,603 - - $11,502 $14,105 - 81.6% Executive Mr MJ McMullen (Chief Executive Officer – Northern Iron Limited)

2008 $400,000 $200,000 - - $600,000 33.33% - 2007 $22,473 - - - $22,473 - - Total compensation: directors 2008 $711,104 $200,000 $38,896 $1,063,880 $2,013,880 2007 $58,935 - $2,579 $57,510 $119,024

Directors’ fees are paid or payable to the director or a director related entity.

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Remuneration Report (continued) Directors’ and executive officers’ remuneration, Company and consolidated (continued)

Short Term Post

employment Share based

payments

Name Salary and

fees Cash bonus

Superannuation

contributions Options Total

% of remuneration performance

related

Value of options as a proportion of remuneration (%)

Executive Officers Mr D Hunter 2008 (Chief Executive Officer - Sydvaranger Gruve AS, appointed 13 August 2008) 96,102 -

147,436 243,538

2007 - - - - - - - Mr RA Anderson (CFO/Company Secretary – Northern Iron Limited)

2008 $130,000 $70,000 - $120,290 $320,290 21.9% 37.6% 2007 $27,608 - - $178,747 $206,355 - 86.6% Mr A Beckmand 2008 (CFO - Sydvaranger Gruve AS, appointed 23 October 2008) $38,462 -

- $38,462

2007 - - - - - - - Per Helge Hogaas (General Manager Operations– Sydvaranger Gruve AS) (1)

2008 - - - - - - - 2007 $100,018 - - $178,746 $278,764 - 64.1% Total compensation: key management personnel (Company and Consolidated)

2008 $264,564 $70,000 - $267,726 $602,290 2007 $127,626 - - $357,493 $485,119

Notes: (1) Mr Hogaas is not considered to fall within the definition of an Executive Officer for the purposes of current year disclosure

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Remuneration Report (continued) Equity instruments (i) Shares There were no shares in the Company granted as compensation to key management personnel during the reporting period. (ii) Options over equity instruments granted as compensation Details of options granted to directors and executive officers and vesting during the reporting period are as follows: Directors

Number of options granted

Grant date

Fair value per option at

grant date

Exercise price per

option

Expiry date ND Hamilton 150,000 13/12/07 $0.86 $2.15 13/12/10 ND Hamilton 150,000 13/12/07 $0.63 $3.01 13/12/10 A Mehra 150,000 13/12/07 $0.86 $2.15 13/12/10 A Mehra 150,000 13/12/07 $0.63 $3.01 13/12/10 PR Bilbe 150,000 13/12/07 $0.86 $2.15 13/12/10 PR Bilbe 150,000 13/12/07 $0.63 $3.01 13/12/10 DC Griffiths 150,000 13/12/07 $0.86 $2.15 13/12/10 DC Griffiths 150,000 13/12/07 $0.63 $3.01 13/12/10 PS Larsen 150,000 13/12/07 $0.86 $2.15 13/12/10 PS Larsen 150,000 13/12/07 $0.63 $3.01 13/12/10 At the end of the reporting period the following unvested options were on issue. Executive Officer

Number of

options granted

Grant date

Fair value

per option at grant date

Exercise price per

option

Expiry date

Vesting dateD Hunter 200,000 04/08/08 $1.14 $4.12 04/08/11 11/08/09D Hunter 200,000 04/08/08 $0.98 $4.80 04/08/11 11/02/10 Options are recognised as an expense over their vesting period. No options have been granted since the end of the financial year, nor have any options been exercised during or since the end of the reporting period. During the reporting period there was no forfeiture of options granted in previous periods. In the event that the option holder ceases to be an employee, director or consultant of the Company, the Board may at its sole discretion resolve that all vested options held by that employee, director or consultant be exercised within 21 days of that employee, director or consultant ceasing to be an employee, director or consultant (as applicable) of the Company. Any unvested options held by that employee, director or consultant will lapse.

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Equity instruments (continued) (iii) Analysis of movements in options The movement during the reporting period, by value, of options over ordinary shares for each Company director and Company and group executive and granted as part of remuneration is detailed below: 2008

Value of Options Executive Officer

Granted in year ($)

Exercised in year ($)

Forfeited in year ($)

Total option value in year ($)

D Hunter 423,909 - - 423,909 2007

Value of Options Directors

Granted in year ($)




ND Hamilton 224,278 - - 224,278 A Mehra 224,278 - - 224,278 PR Bilbe 224,278 - - 224,278 DC Griffiths 224,278 - - 224,278 PS Larsen 224,278 - - 224,278

Value of Options

Executive Officers

Granted in year ($)




RA Anderson 299,037 - - 299,037 PH Hogass 299,037 - - 299,037 The value of options granted in the year is the fair value of the options at grant date using the Black-Scholes Option Pricing Model. The total value of options granted is included in the table above, however this amount is allocated to expense over the vesting period. (iv) Analysis of options granted as compensation Details of vesting profiles of the options granted as remuneration to each director of the Company and each of the named executives and other key management personnel are detailed below: Directors


Grant date

% vested in current year

Financial year in which grant

vests

Value to vest minimum ($)

Value to vest maximum ($)

ND Hamilton 300,000 13/12/07 100% 2008 - -A Mehra 300,000 13/12/07 100% 2008 - -PR Bilbe 300,000 13/12/07 100% 2008 - -DC Griffiths 300,000 13/12/07 100% 2008 - -PS Larsen 300,000 13/12/07 100% 2008 - -

Executive Officers


Grant date

% vested in current year

Financial year in which grant

vests

Value to vest minimum ($)

Value to vest maximum ($)

RA Anderson 200,000 13/12/07 100% 2008 - -PH Hogass * 200,000 13/12/07 100% 2008 - -D Hunter 200,000 04/08/08 - 2009 Nil 228,813D Hunter 200,000 04/08/08 - 2010 Nil 195,096 The minimum value of options yet to vest is $Nil as the service criteria may not be met and consequently the option may not vest. There were no options forfeited during the year. * not considered an executive officer in the current reporting period

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Indemnity of directors Deeds of Access and Indemnity have been executed by the parent entity with each of the directors and the Company Secretary. The deeds require the Company to indemnify each director and the Company Secretary against any legal proceedings, to the extent permitted by law, made against, suffered, paid or incurred by the director or the Company Secretary pursuant to, or arising from or in any way connected with the director or the Company Secretary being an officer of the Company. Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Rounding of amounts The company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission relating to the rounding off of amounts in the Directors’ Report and financial report. Amounts in the Directors’ Report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order. Events subsequent to reporting date On 20 February 2008 the Company announced a $17.5 million institutional placement comprising 17.5 million ordinary shares at an issue price of $1.00 per share. Funds raised will be applied to accelerate the case for an incremental expansion of production, ordering the long lead items required for the refurbishment of the flotation circuit and for working capital. The Company also announced that smaller Australian and New Zealand shareholders would have the right to subscribe for new shares at the same price via a Share Purchase Plan. The Company announced in the December 2008 quarterly report that the mill supplier has advised of a 3 week delay in the mill shell. On 20 February 2008 the Company announced that this delay was likely to result in a delay of up to 3 weeks in commissioning of the Sydvaranger Iron Project. as well as announcing an increase of US$4 million over the most recently released capital cost estimate to US$110 million. The 85 million shares held by Tschudi Mining Company AS were the subject of a Voluntary Escrow Deed with the Company. The conditions of this deed were taken to have been satisfied, and the voluntary escrow released, on 10 March 2009. The mandatory escrow over the shares applied by ASX Limited until 13 December 2009 remains in place. Other than this no matter or circumstance has arisen since 31 December 2008 that in the opinion of the directors has significantly affected, or may significantly affect in future financial years:

(i) the group’s operations, or

(ii) the results of those operations, or

(iii) the group’s state of affairs Signed in accordance with a resolution of the directors. MJ McMullen ND Hamilton Chief Executive Officer Chairman Perth, 11th March 2009

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a world-wide organisation of accounting firms and business advisers

Auditor’s Independence Declaration As lead auditor for the audit of the financial report of Northern Iron Limited for the year ended 31 December 2008, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Northern Iron Limited.

Perth, Western Australia WM CLARK 11 March 2009 Partner, HLB Mann Judd

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INCOME STATEMENTS For the year ended 31 December 2008 Consolidated Company

Notes 2008$000

2007 $000

2008 $000

2007$000

Other income 4 8,286 1,274 8,160 470 Operating expenses (6,278) (1,030) - -Administrative, personnel and travel expenses (3,403) (242) (1,990) (120)Foreign exchange gain / (loss) 6,835 (219) (4,666) (4)Share based payments (1,452) (415) (1,452) (415)Depreciation (17) - (5) -Interest costs (143) (49) - - Profit / (loss) before income tax

3,828

(681)

47

(69)

Income tax expense

8

(1,954)

-

(1,954)

-

Profit / (loss) from continuing operations attributable to members of the parent entity

1,874

(681)

(1,907)

(69)

Basic earnings / (loss) per share from continuing operations (cents per share)

7

1.14

(0.8)

Diluted earnings / (loss) per share from continuing operations (cents per share)

7

1.13

(0.8)

The income statements should be read in conjunction with the accompanying notes to the financial statements.

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BALANCE SHEETS As at 31 December 2008

Consolidated Company

Notes

2008$000

2007$000

2008 $000

2007$000

Current assets Cash and cash equivalents 19(b) 61,955 132,030 58,435 131,991 Trade and other receivables 9 14,377 906 236 816 Prepayments 80 - 60 - Total current assets 76,412 132,936 58,731 132,807 Non-current assets Trade and other receivables 9 424 426 63,248 73 Other investments 10 - - 194,886 182,750 Mine properties 11 17,601 974 - - Property, plant and equipment 12 81,646 782 27 7 Deferred tax 13 398 - 398 - Total non-current assets 100,069 2,182 258,559 182,830 Total assets 176,481 135,118 317,290 315,637 Current liabilities Trade and other payables 14 18,632 1,552 133 359 Tax liability 982 - 982 - Employee benefits 15 240 - 1 - Total current liabilities 19,854 1,552 1,116 359 Non-current liabilities Provisions 16 1,789 1,736 - - Borrowings 17 12,566 - - - Total non-current liabilities 14,355 1,736 - - Total liabilities 34,209 3,288 1,116 359 Net assets 142,272 131,830 316,174 315,278 Equity Issued capital 18 132,560 131,209 315,202 313,851 Reserves 8,943 1,726 2,948 1,496 Accumulated profits / (losses) 769 (1,105) (1,976) (69) Total equity 142,272 131,830 316,174 315,278

The balance sheets should be read in conjunction with the accompanying notes to the financial statements.

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STATEMENTS OF CHANGES IN EQUITY

Group For the year ended 31 December 2008

Share based

Issued Accumulated Translation payments capital profits /(losses) reserve reserve Total $000 $000 $000 $000 $000 Balance at 1 January 2007 145 (1,828) 109 - (1,574) Shares issued for cash, net of

transaction costs

131,064

-

-

-

131,064Exchange differences on translation of foreign operations

-

-

121

-

121

Share based payments - - - 1,496 1,496Owner’s contribution - 1,404 - - 1,404Loss attributable to members of

parent entity

-

(681)

-

-

(681) Balance at 31 December 2007 131,209 (1,105) 230 1,496 131,830 Shares issue transaction costs (19) - - - (19)Exchange differences on

translation of foreign operations

-

-

5,765

-

5,765Share based payments - - - 1,452 1,452Profit attributable to members of

parent entity

-

1,874

-

-

1,874Deferred tax asset on equity

raising costs

1,370

-

-

-

1,370 Balance at 31 December 2008 132,560 769 5,995 2,948 142,272

The statements of changes in equity should be read in conjunction with the accompanying notes to the financial statements.

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STATEMENTS OF CHANGES IN EQUITY

Parent Entity

For the year ended 31 December 2008

Share based

Issued Accumulated payments capital losses reserve Total $000 $000 $000 $000 Balance at 1 January 2007 - - - - Shares issued for cash, net of transaction costs 131,101 - - 131,101Shares issued as part of business combination 182,750 - - 182,750Share based payments - - 1,496 1,496Loss attributable to members of parent entity - (69) - (69) Balance at 31 December 2007 313,851 (69) 1,496 315,278 Shares issue transaction costs (19) - - (19)Share based payments - - 1,452 1,452Loss attributable to members of parent entity - (1,907) - (1,907)Deferred tax asset on equity raising costs 1,370 - - 1,370 Balance at 31 December 2008 315,202 (1,976) 2,948 316,174 The statements of changes in equity should be read in conjunction with the accompanying notes to the financial statements.

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STATEMENTS OF CASH FLOWS For the year ended 31 December 2008

Consolidated Company 2008 2007 2008 2007 Notes $000 $000 $000 $000 Cash flows from operating activities Goods and Services Tax recovered 691 - 691 - Payments to suppliers and employees (14,934) (737) (1,797) (662)Interest received 7,990 443 7,722 424 Interest paid (92) - - - Net cash flows (used in) operating activities 19(a) (6,345) (294) 6,616 (238) Cash flows from investing activities Mine properties development (11,975) (1,018) - - Acquisition of property, plant and equipment (42,278) (168) (24) (7)Cash acquired in business combination - 11 - - Net security deposits lodged (6,636) - - - Advances to related entity - - (81,177) (73)Net cash flows (used in) investing activities (60,889) (1,175) (81,201) (80) Cash flows from financing activities Proceeds from issue of share capital - 139,750 - 139,961 Payment of share issue costs (211) (7,652) (211) (7,652)Proceeds from owner’s contribution - 1,404 - - Net cash flows (used in) / from financing activities

(211)

133,502

(211)

132,309

Net (decrease) / increase in cash and cash equivalents

(67,445)

132,033

(74,796)

131,991

Cash and cash equivalents at the beginning of the financial year

132,030

-

131,991

-

Effect of exchange effect on cash and cash equivalents

(2,630)

(3)

1,240

-

Cash and cash equivalents at the end of the financial year

19(b)

61,955

132,030

58,435

131,991

The statements of cash flows should be read in conjunction with the accompanying notes to the financial statements.

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS

28

1. Reporting entity

The consolidated financial report of the Company for the financial year ended 31 December 2008 comprises the Company and its subsidiary (the “Group”). The financial report was authorised for issue by the directors on 11th March 2009.

2. Basis of preparation of the financial report Statement of compliance The financial report is a general purpose financial report prepared in accordance with Australian Accounting Standards (“AASBs”) (including Australian Accounting Interpretations), as adopted by the Australian Accounting Standards Board (“AASB”), and the Corporations Act 2001.

Compliance with Australian Accounting Standards ensures that the financial report is prepared in accordance with International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Standards Board.

Basis of measurement

The financial report is prepared on a historical cost basis. Functional and presentation currency

The consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.

Use of estimates and judgements

The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year and judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the financial statements, are as follows:

(i) Deferred tax asset Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The Group carrying value of recognized deferred tax assets at 31 December 2008 was $398,000 (2007: $Nil). The estimated value of Group unrecognized deferred tax assets at 31 December 2008 was $5,315,000 (2007: $3,444,000).

(ii) Provisions The Company has recognized provisions regarding environmental restoration. These provisions have been measured based on the management’s estimates of the probable amount of resources that will be required to settle the obligation and the timing of settlement. Such estimates are subjective and there may be a future need to revise the book value of the provisions as a result of changes in estimates.

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2. Basis of preparation of the financial report (continued)

Use of estimates and judgements (continued)

(iii) Exploration for, evaluation of, and development of mineral resources Expenses for exploration for, evaluation of, and development of mineral resources are capitalized in accordance with the accounting policy in Notes 3(g) and 3(i). Determining the amount to be capitalized requires management to estimate in which phase the project is and make assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefits. In the opinion of the directors the Sydvaranger Iron Project is in the development phase. At 31 December 2008, the Group carrying amount of capitalized mine properties was $17,601,000 (2007: $974,000). (iv) Functional currency Companies in the group have to determine their functional currencies based on the primary economic environment in which each entity operates. In order to do that, the management has to analyze several factors, including which currency mainly influences sales prices of product sold by the entity, which currency influences the main expenses of providing services, in which currency the entity has received financing, and in which currency it keeps its receipts from operating activities. For Sydvaranger Gruve AS, the Company’s subsidiary, the above indicators are mixed and the functional currency is not obvious. Management used its judgment to determine which factors are most important and concluded the US dollar is the functional currency for that company. (v) Impairment and going concern The recoverability of the carrying amount of property, plant and equipment and mineral interests under development has been reviewed by the Company. In conducting the review, the recoverable amount has been assessed by reference to the higher of ‘fair value less costs to sell’ and ‘value in use’. In determining value in use, future cash flows are based on estimates of: Quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic

extraction; Future production levels and sales; Timing of future production; Future exchange rates; Future commodity prices; and Future cash costs of production and capital expenditure. Variations to the expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which could in turn impact future financial results. The Company has prepared a budget for the life of the mine which indicates that existing cash reserves will be sufficient to meet the liquidity ratio on the DnB NOR Finans lease facility and to pay costs as and when they fall due. This budget assumes that there will be a substantial fall in the benchmark iron ore price for the 2009 contract year and that all tonnage available to be shipped will be sold. Given the current uncertain economic climate, the Company cannot guarantee by what percentage the benchmark price may fall or that the tonnage will be sold as contemplated under the sales contracts in place. In the event that prices were to fall significantly more than the budgeted amount, and / or customers were unable to take the committed tonnage, the Company may need to raise additional funding to be a going concern. F

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3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial report. The accounting policies have been applied consistently by all entities in the group. Certain comparative amounts have been reclassified to conform with the current year’s presentation. (a) Basis of consolidation Reverse acquisition accounting Under AIFRS the acquisition of Sydvaranger Gruve AS (“Sydvaranger”) by the Company in the prior year has been accounted for as a business combination. In applying the requirements of AASB 3 Business Combinations a number of factors, in particular the vendor of Sydvaranger acquiring a majority shareholding in Northern Iron, resulted in this being treated as a reverse acquisition. As a result:

Northern Iron Limited is the legal parent entity of the Group and presents consolidated financial information Sydvaranger, which is neither the legal parent nor legal acquirer, is deemed to be the accounting parent for

the Group The consolidated financial information incorporates the assets and liabilities of Northern Iron and the results of that entity from the date acquired by Sydvaranger. The assets and liabilities of Northern Iron were recorded at fair value while the assets and liabilities of Sydvaranger were maintained at their book value. The impact of all transactions between the entities is eliminated in full. Subsidiaries The consolidated financial report comprises the financial statements of the Company and its controlled entity. A controlled entity is any entity controlled by the Company whereby the parent entity has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those applied by the parent entity. Where a subsidiary enters or leaves the economic entity during the year, its operating results are included or excluded from the date control was obtained or until the date control ceased. Investments in subsidiaries are carried at cost in the Company’s financial statements. Sydvaranger Gruve AS was established in 2007 from a de-merger from Sydvaranger AS, as a result of which the mining related assets and liabilities of Sydvaranger AS were transferred to Sydvaranger Gruve AS. The pooling of interests method was used for the accounting treatment of the de-merger, meaning the financial information of Sydvaranger Gruve AS was presented as if that company always existed. Under the pooling of interests method the existing carrying values of the assets and liabilities transferred to Sydvaranger Gruve AS were recognized in the balance sheet as of 1 January 2006 and no fair value adjustments were made. Any difference between the amount recorded as share capital issued by Sydvaranger Gruve AS and the book value of net assets transferred was adjusted against equity. F

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3. Significant accounting policies (continued)

(b) Business combinations All business combinations are accounted for by applying the purchase method which includes the reverse acquisition method. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognized directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange using the entity’s incremental borrowing rate. Goodwill on business combination

Goodwill represents the differences between the cost of the acquisition and the fair value of the identifiable net assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is not amortised but is allocated to cash generating units and tested annually for impairment.

(c) Income tax The charge for current income tax expense is based on the result for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is recognised in the income statement except where it relates to items recognised directly in equity, in which case it is recognised in equity. Deferred income tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and tax losses. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company / group intends to settle its current tax assets and liabilities on a net basis. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only recognised to the extent that sufficient future assessable income is expected to be obtained.

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(d) Recoverable amount of assets and impairment testing Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment by estimating their recoverable amount. Assets that are subject to depreciation are reviewed annually to determine whether there is any indication of impairment. Where such an indicator exists, a formal assessment of recoverable amount is then made. Where this is in excess of carrying amount, the asset is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the present value of the future cash flows expected to be derived from the asset or cash generating unit. In estimating value in use, a pre-tax discount rate is used which reflects the current market assessments of the time value of money and the risks specific to the asset. Any resulting impairment loss is recognised immediately in the income statement. (e) Trade receivables Trade receivables are stated at fair value and subsequently measured at amortised cost, less impairment losses. Impairment testing is carried out in accordance with Note 3(d). (f) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less any estimated selling costs. Cost includes those costs incurred in bringing each component of inventory to its present location and condition. (g) Mine properties Mine property and development assets include costs transferred from exploration and evaluation assets once technical feasibility and commercial viability of an area of interest are demonstrable, together with subsequent costs to develop the asset to the production phase. Where the directors decide that specific costs will not be recovered from future development, those costs are charged to the income statement during the financial period in which the decision is made. Depreciation of mining property and development costs is calculated on a unit of production basis so as to write off the costs in proportion to the depletion of the estimated recoverable reserves.

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(h) Property, plant and equipment

Recognition and measurement All property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. The cost of an item also includes the initial estimate of the costs of dismantling and removing an item and restoring the site on which it is located.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Impairment The carrying amount of property, plant and equipment is reviewed at each balance date to determine whether there are any objective indicators of impairment that may indicate the carrying values may not be recoverable in whole or in part. Impairment testing is carried out in accordance with Note 3(d). Where an asset does not generate cash flows that are largely independent it is assigned to a cash generating unit and the recoverable amount test applied to the cash generating unit as a whole. If the carrying value of the asset is determined to be in excess of its recoverable amount, the asset or cash generating unit is written down to its recoverable amount. Depreciation Depreciation on plant and equipment is calculated on a straight line basis over expected useful life to the economic entity commencing from the time the asset is held ready for use. Depreciation on plant and equipment is calculated on a straight line basis over expected useful life to the economic entity commencing from the time the asset is held ready for use. The major depreciation rates used for each class of depreciable assets are:

Plant and equipment: 10% to 20% The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at least annually. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

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(i) Intangible assets Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that the group’s rights of tenure to the area are current and that the costs are expected to be recouped through the successful development of the area, or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Each area of interest is assessed for impairment to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Impairment testing is carried out in accordance with Note 3(d). Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from intangible assets to mine properties.

(j) Provisions Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Restoration costs The amount of the provision for future restoration and rehabilitation costs is capitalised and depreciated in accordance with the policy set out in Note 3(g). The unwinding of the effect of discounting on the provision is recognised as an interest cost.

(k) Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments that are operating in other economic environments. (l) Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. Leases which transfer to a lessee substantially all the risks and benefits incidental to ownership of the leased asset are classified as finance leases. Other lease agreements are treated as operating leases. Finance leases are capitalized at the inception of the lease at the fair value of the leased assets or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income except for borrowing costs related to the financing of the assets constructed for own use (during the construction period). Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term.

Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.

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(m) Investments and other financial assets The group determines the classification of its financial instruments at initial recognition and re-evaluates this designation at each reporting date. Fair value is the measurement basis, with the exception of held-to-maturity investments and loans and receivables which are measured at amortised cost. Fair value is inclusive of transaction costs. Changes in fair value are either taken to the income statement or to an equity reserve (refer below). Fair value is determined based on current bid prices for all quoted investments. If there is not an active market for a financial asset fair value is measured using established valuation techniques. The group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets are impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists the cumulative loss is removed from equity and recognised in the income statement.

(i) Financial assets at fair value through profit and loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method, less any impairment losses. (iii) Held-to-maturity investments These investments have fixed maturities, and it is the group’s intention to hold these investments to maturity. Held-to-maturity investments are stated at amortised cost using the effective interest rate method. (iv) Available-for-sale financial assets Available for sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not included in any of the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity in an available-for-sale investments revaluation reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

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(n) Foreign currency Functional and presentation currency The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates (the “functional” currency). The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary assets and liabilities are translated at the exchange rate at balance sheet date. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge. Translation differences arising on non-monetary items, such as equities held at fair value through profit and loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.

Foreign operations The financial performance and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

assets and liabilities are translated at exchange rates prevailing at balance sheet date. income and expenses are translated at average exchange rates for the period.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve as a separate component of equity. These differences are recognised in the income statement upon disposal of the foreign operation. (o) Share capital Incremental costs directly attributable to an equity transaction are shown as a deduction from equity, net of any recognised income tax benefit. (p) Earnings per share The group presents basic and diluted earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to equity holders of the Company by the weighted number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all potential ordinary shares, which comprise share options granted. (q) Employee benefits Wages and salaries, annual leave Provision is made for the group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.

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(r) Share based payments – shares and options

The fair value of shares and share options granted is recognised as an expense with a corresponding increase in equity. Fair value is measured at grant date and recognised over the period during which the grantees become unconditionally entitled to the shares or share options.

The fair value of share grants at grant date is determined by the share price at that time.

The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, any vesting and performance criteria, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option. Upon the exercise of the option, the balance of the share-based payments reserve relating to the option is transferred to share capital.

(s) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with banks, and other short-term highly liquid investments.

(t) Goods and services tax Revenues, expenses and assets are recognised net of the amount of Australian goods and services tax (“GST”) and Norwegian value added tax (“VAT”), except where the amount of GST or VAT incurred is not recoverable from the taxation authorities. In these circumstances the GST or VAT is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the balance sheet are shown inclusive of GST and VAT. Cash flows are presented in the cash flow statement on a gross basis, except for the GST or VAT component of investing and financing activities, which are disclosed as operating cash flows. (u) Trade and other payables Trade and other payables are stated at amortised cost. The amounts are unsecured and usually paid within 45 days of recognition. (v) Interest income and expenses Interest revenue on funds invested is recognised as it accrues, using the effective interest rate method. Interest expenses comprise interest expense on borrowings and the unwinding of the discount on provisions.

(w) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (x) Contingent liabilities Contingent liabilities are defined as: possible obligations resulting from past events whose existence depends on future events; obligations that are not recognized because it is not probable that they will lead to an outflow of resources; obligations that cannot be measured with sufficient reliability. Contingent liabilities are not recognized in the balance sheet, but are disclosed in the notes to the financial statements, with the exception of contingent liabilities where the probability of the liability occurring is remote.

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3. Significant accounting policies (continued) (y) Adoption of new and revised standards In the year ended 31 December 2008 the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 January 2008. It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $0004. Other income

Interest income 8,209 490 8,160 470Re-estimation of rehabilitation provision - 784 - -Other 77 - - -

8,286 1,274 8,160 470 5. Auditors’ remuneration

Audit services: Auditors of the Company – current year 40 15 40 15Auditors of the Company – underprovision prior year 8 - 8 -Other auditors (Ernst & Young AS) 82 53 - -Other auditors (Ernst & Young AS) – underprovision

prior year

32

-

-

-

Other services: Auditors of the Company:

Investigating Accountant’s Report - 35 - 35Other Auditors:

Taxation services - 3 - - 162 106 48 50 6. Business combination

Northern Iron Limited was incorporated on 22 May 2007 and legally acquired Sydvaranger Gruve AS on 12 December 2007. In accordance with AASB 3 Business Combinations, in particular the vendor of Sydvaranger acquiring a majority shareholding in Northern Iron, this acquisition was determined to be a “reverse acquisition”. In a reverse acquisition the legal acquirer becomes the accounting subsidiary and the legal acquiree becomes the accounting parent. Summary of acquisition $000 Purchase consideration 174 Fair value of identifiable net assets acquired 174 Goodwill - Northern Iron Limited issued 85 million shares to Tschudi Mining Company AS to acquire 100% of the share capital of Sydvaranger Gruve AS. $000 Outflow of cash to acquire subsidiary - Cash balances acquired 11 Net inflow of cash 11

Assets and liabilities arising from the acquisition The assets and liabilities arising from the acquisition were as follows:

Carrying amount

$000 Fair value

$000 Cash 11 11Trade and other receivables 173 173Property, plant and equipment 7 7Trade and other payables (17) (17)Net assets acquired 174 174

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7. Earnings per share

2008 2007 Weighted average number of ordinary shares (basic): Number of shares Shares of parent on issue post business combination 165,000,000 8,589,041Shares issued as part of business combination - 80,575,342Weighted average number of ordinary shares 31 December 165,000,000 89,164,383 Weighted average number of ordinary shares (diluted): Shares of parent on issue post business combination 165,000,000 8,589,041Unissued options 265,391 -Shares issued as part of business combination - 80,575,342Weighted average number of ordinary shares 31 December 165,265,391 89,164,383 Earnings /(loss) attributable to ordinary shareholders for basic and diluted loss per

share ($000): $1,874 ($681)

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $000 8. Income tax expense Numerical reconciliation between pre-tax profit /( loss ) and income tax expense:

Prima facie income tax expense / (benefit) on pre-tax

profit / (loss)

1,148 (204) 14 (21) Tax effect of: Effect of lower foreign income tax rate (85) 13 - - Temporary difference not brought to account 1,400 77 1,400 1 Share based payment expense 436 125 436 125 Equity issue costs - (467) - (467)Current year tax benefit not brought to account - 456 - 362Prior year losses not previously brought to account (1,049) - - -Underprovision in prior year 104 - 104 -Income tax expense 1,954 - 1,954 - Income tax expense comprises:

Current tax expense: Current tax payable 982 - 982 -Movement in deferred tax 868 - 868 -Underprovision in prior year 104 - 104 - 1,954 - 1,954 - Unrecognised net deferred tax assets Deferred tax assets have not been recognised in respect of the following items (refer Note 3(c)):

Deductible temporary differences (6,687) 2,747 2,363 1,883Tax losses 12,002 697 - 362 5,315 3,444 2,363 2,245

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $000 9. Trade and other receivables Current Trade and other receivables 6,991 906 219 816 Security deposits 7,386 - 17 - 14,377 906 236 816 Non-Current Amounts receivable from related party - - 63,248 73 Security deposits 424 426 - - 424 426 63,248 73 10 Other investments Non-current Investment in controlled entity– at cost - - 194,886 182,750 - - 194,886 182,750 11 Mine properties Cost: Balance at beginning of financial year 974 - - - Additions 13,166 1,018 - - Effects of movements in foreign exchange 3,461 (44) - - Balance at end of financial year 17,601 974 - - Carrying amount 17,601 974 - - 12. Property, plant and equipment Constructed Cost: Balance at beginning of financial year 7 - 7 - Additions 137 7 25 7 Effects of movements in foreign exchange 27 - - - Balance at end of financial year 171 7 32 7 Depreciation: Balance at beginning of financial year - - - - Depreciation charge for year 17 - 5 - Effects of movements in foreign exchange 3 - - - Balance at end of financial year 20 - 5 - Carrying amount 151 7 27 7

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $00012. Property, plant and equipment (continued) Under construction Cost: Balance at beginning of financial year 721 444 - - Additions 45,055 339 - - Transfers 1,117 - - - Effects of movements in foreign exchange 11,042 (62) - - Balance at end of financial year 57,935 721 - - Carrying amount 57,935 721 - - Prepayments Cost: Balance at beginning of financial year 54 - - - Transfers (1,117) - - - Additions 20,140 54 - - Effects of movements in foreign exchange 4,483 - - - Balance at end of financial year 23,560 54 - - Carrying amount 23,560 54 - - Total Cost: Balance at beginning of financial year 782 444 7 - Additions 65,332 400 25 7 Effects of movements in foreign exchange 15,552 (62) - - Balance at end of financial year 81,666 782 32 7 Depreciation: Balance at beginning of financial year - - - - Depreciation charge for year 17 - 5 - Effects of movements in foreign exchange 3 - - - Balance at end of financial year 20 - 5 - Carrying amount 81,646 782 27 7 Additions during the year include $163,000 of capitalised interest (2007: $Nil).

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $00013. Deferred tax asset Non-current Equity raising costs 398 - 398 - 398 - 398 - 14. Trade and other payables Current Trade payables – third parties 10,552 559 83 259Trade payables – related parties 1,833 854 - -Non-trade payables and accrued expenses –

third parties

6,114139 50 100

Non-trade payables and accrued expenses – related parties

133

-

-

-

18,632 1,552 133 359 15. Employee benefits Current Liability for annual leave 240 - 1 - 240 - 1 - 16. Provisions Current

Site restoration: Balance at beginning of financial year - 2,427 - - Transfer to non-current provision - (2,611) - - Effects of movements in foreign exchange - 184 - - Balance at end of financial year - - - - Non-current Site restoration: Balance at beginning of financial year 1,736 - - - Transfer from current provision - 2,611 - - Effects of movements in foreign exchange (34) (139) - - Provision (reversed) during the year - (785) - - Interest 87 49 - - Balance at end of financial year 1,789 1,736 - - A subsidiary has recognized provisions for environmental restoration obligations due to previous mining activities. In 2006 it was considered that the obligation would be settled in the near future and therefore it was recognized at nominal amount based on the management’s estimates of the probable amount of resources that would be required to settle the obligation. In 2007 the subsidiary reviewed its estimates regarding provisions and reassessed the probable timing of the settlement of the obligation from the near future to 2027 - 2029. As a result, the estimate was revised to reflect the expected expenses in 2027 – 2029 and then discounted to present value. The obligation is denominated in Norwegian Kroner, which is taken into account when assessing the estimate and the related discounting procedure.

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2008 2007 2008 2007 $000 $000 $000 $00017. Borrowings Non-current Lease liability 12,566 - - - 12,566 - - - Equipment lease financing facility A lease finance facility with DnB Nor Finans was established in October 2008 to finance the mine fleet. The total facility is for 350 million Norwegian Kroner and can be drawn in a number of currencies. As at 31 December, A$12,566,000 of the facility had been utilized for prepayments to suppliers for the mining fleet. Individual 5 year lease contracts will be entered into for each fleet item. The first leases are expected to commence in March 2009. Interest on the facility is payable at a floating rate based on the 3 month NIBOR or LIBOR, depending upon currency of drawdown, plus 1.90%. As at 31 December the rate applied to drawings on the facility was 4.96% per annum. The lease finance facility is guaranteed by the parent entity, Northern Iron Limited.


2008 2007 2008 2007

$000 $000 $000 $000

Finance lease facility Equipment lease financing facility 72,402 - - -

Facility utilised at balance date 12,566 - - -

Facilities not utilised at balance date 59,386 - - - Lease liabilities are payable as follows: Between 2 and 5 years 11,830 - - -

More than 5 years 736 - - - The liability for the facility at 31 December 2008 has been classified as non-current on the basis a current liability will only be recognized upon inception of each lease.

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Consolidated 2008 2008 2007 2007 Number $000 Number $00018. Capital and reserves Issued capital Balance at beginning of financial year 165,000,000 131,209 85,000,000 145Shares on issue at date of acquisition - - 15,000,000 174Issued under a prospectus at $2.15 per share - - 65,000,000 139,750Deferred tax asset on equity raising costs - 1,370 - -Share issue costs - (19) - (8,860)Balance at end of financial year 165,000,000 132,560 165,000,000 131,209 Company 2008 2008 2007 2007 Number $000 Number $000Issued capital

Balance at beginning of financial year 165,000,000 313,851 - - Issued for cash at $0.001 per share - - 1,000,000 1 Issued for cash at $0.015 per share - - 14,000,000 210 Issued under a prospectus at $2.15 per share - - 65,000,000 139,750 Deferred tax asset on equity raising costs - 1,370 - -Share issue costs - (19) - (8,860) Issued as part of business combination - - 85,000,000 182,750 Balance at end of financial year 165,000,000 315,202 165,000,000 313,851 Ordinary shares have the right to one vote per share at meetings of the Company, to receive dividends as declared and, in the event of a winding-up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of, and amounts paid up on, shares held. The Company does not have authorised capital or par value in respect of its issued shares. Translation reserve Movements in the translation reserve are set out in the Statement in Changes of Equity on page 25. The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity. Share based payments reserve Movements in the share based payments reserve are set out in the Statements of Changes in Equity on pages 25 and 26. This reserve accumulates the fair value as at grant date of share options issued. The fair value is recognised as an expense over the vesting period. The reserve is reversed against share capital when shares are issued on exercise of the options.

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19. Reconciliation of cash flows from operating activities Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $000(a) Cash flows from operating activities Profit / (loss) for the period 1,874 (681) (1,907) (69) Adjustments for: Share based payment expense 1,452 415 1,452 415 Foreign exchange (gain) / loss (6,573) 208 4,666 - Depreciation 17 5 Income tax expense 1,954 - 1,954 - Operating (loss) / profit before changes in working

capital and provisions:

(1,276)

(58)

6,170

346 Changes in assets and liabilities: (Increase) / decrease in trade and other receivables (5,267) (632) 452 (710) Increase / (decrease) in trade and other payables 197 1,132 (7) 126 Increase / (decrease) in provisions and employee

benefits

1 (736)

1 - Cash flows (used in) / from operating activities after

changes in working capital and provisions:

(5,069)

(236)

446

(584) Net cash flows (used in) operating activities (6,345) (294) 6,616 (238) (b) Reconciliation of cash and cash equivalents

Cash at bank and at call 61,955 132,030 58,435 131,991 In addition to these cash balances the consolidated entity has A$7,810,000 in lodged cash security deposits classified under trade and other receivables (2007: A$17,000). 20. Non-key management personnel disclosures Identity of related parties The Company has a related party relationship with its legal subsidiary (see Note 21), its parent entity Tschudi Mining Company AS, and its ultimate parent entity Tschudi Shipping Company AS. 21. Consolidated entities Ownership interest Name Country of Incorporation 2008 2007 Legal parent Northern Iron Limited Australia Legal subsidiary Sydvaranger Gruve AS Norway 100% 100%

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22. Operating leases Leases as lessee During the reporting period $791,000 was recognised as an expense in the consolidated income statement in respect of operating leases (2007: $30,000). Operating lease commitments The future minimum lease payments under non-cancellable operating leases are as follows:


2008 2007 2008 2007

$000 $000 $000 $000

Within 1 year 1,243 - 34 -

Between 2 and 5 years 890 - 21 -

More than 5 years 2,231 - - - 23. Employee benefits Employee benefit liabilities are disclosed in note 15. Share options The fair value of services received in return for options for both the Company and group is measured by reference to the fair value of share options granted using the Black-Scholes model, as set out below.

Key management personnel

Key management personnel

Fair value of share options granted and related assumptions 2008 2007 Fair value at measurement date (cents) $0.98 to $1.14 $0.63 to $0.86Share price at date of issue $3.39 $2.15Exercise prices $4.12 to $4.80 $2.15 and $3.01Expected volatility 50% 50%Option life 3 years 3 yearsExpected dividends Nil NilRisk-free interest rate 6.75% 6.75%Share based expense recognised $1,451,895 $415,003

Given the short history of the Company as a listed entity, expected volatility is based on averaging peer comparatives. Share based payment expense includes the allocation over the vesting period of options granted in the prior year. Further details of shares and options issued to directors are set out in Note 27, and in the Remuneration Report set out on pages 15 to 20. F

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Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $00024. Capital and other commitments Capital expenditure commitments

Property, plant and equipment 21,826 474 - - The Company has provided a letter of support to its subsidiary that it will provide the necessary financial support to that subsidiary until withdrawn in writing. 25. Related party disclosures Ultimate parent Tschudi Shipping Company AS is the ultimate parent entity. Wholly-owned subsidiary During the reporting period $12,136,000 of loans to the subsidiary were converted into equity. During the reporting period loans from the Company to the subsidiary totalled $68,741,000 (2007: $73,000) excluding the equity component noted above. The carrying value of the Company’s loans to controlled entities at 31 December 2008 was $63,248,000 (2007: $73,000). Advances were made in NOK and A$. In October 2008 the loan denomination was converted from A$ to NOK with the loan converted at the exchange rate prevailing on that date. The carrying value of the loan in the Company at period end is less than the A$ value of advances made by the Company as a result of the appreciation in the $ against the NOK from the time advances were made to the year end rate. The loans are being secured by a second ranking fixed and floating charge over Sydvaranger’s assets and are repayable by 31 December 2014 in accordance with the terms of a loan agreement. The Company has waived interest on the loan amount from 1 July 2008 until the commencement of production at the Sydvaranger Iron Project. Transactions between related entities Sydvaranger Gruve AS had transactions in the following amounts with companies which are ultimately controlled by the same company, Tschudi Shipping Company AS. These transactions are in the normal course of business and on normal terms and conditions:

services purchased from its sister companies in the amount of $1,623,000 (2007: $423,000); capitalized expenses and assets purchased from its sister companies in the amount of $8,011,000 (2007:

$105,000); goods and services purchased from its ultimate parent, or paid for on behalf of Sydvaranger Gruve AS, in the

amount of $87,000 (2007: $Nil); in 2007, owner’s contribution received (without issuing new shares) in the amount of $1,404,000; borrowings and equity investment from the parent company in the amount of $80,877,000 (2007: $73,000).

As a result of the transactions described above the Group has trade payables and accruals owing to subsidiaries of Tschudi Shipping Company AS for the amount of $1,966,000 (2007: $854,000). The Company incurred $507,000 of travel costs with a travel agency which engages the spouse of the Chief Executive Officer, Mick McMullen, as a consultant. Other related party payables At 31 December 2008 an amount of $Nil (2007: $50,000) is included in Company and consolidated “trade and other payables” for outstanding director fees and expenses.

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26. Segment information Segment information is presented in respect of the Group’s primary format, geographical segments, based on the Group’s management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Group operates in one business segment, mine development and exploration in Norway.

Australia (A$000)

Norway (A$000)

Consolidated

(A$000) 2008 2007 2008 2007 2008 2007Geographical Segments Revenue Other 7,821 470 465 804 8,286 1,274 Total revenue 7,821 470 465 804 8,286 1,274 Segment result Result from continuing operations (2,388) (32) 4,262 (649) 1,874 (681) Total segment result (2.388) (32) 4,262 (649) 1,874 (681) Assets Property, plant and equipment 27 7 81,619 775 81,646 782 Other 59,129 132,807 35,706 1,529 94,835 134,336 Total segment assets 59,156 132,814 117,325 2,304 176,481 135,118Liabilities Total segment liabilities 1,116 359 33,093 2,929 34,209 3,288 Other segment information: Acquisition of property, plant and

equipment 25 7 65,307 393 65,332 400 Depreciation 5 - 15 - 20 -

Mining and exploration

(A$000)

Unallocated

(A$000)

Consolidated

(A$000) 2008 2007 2008 2007 2008 2007Business segments Segment assets 176,481 134,295 - 823 176,481 135,118 Acquisition of non-current assets 78,473 1,411 25 7 78,498 1,418

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27. Key management personnel disclosures (a) Key management personnel compensation Key management personnel compensation is as follows: Consolidated Company 2008($) 2007($) 2008($) 2007($)

Short term benefits 1,284,564 189,140 1,150,000 72,347 Share based payments 1,331,606 415,003 1,331,606 415,003 2,616,170 604,143 2,481,606 487,350

Information regarding individual directors and executives compensation is provided in the Remuneration Report as set out on pages 15 to 20. Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the Group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year end. (b) Other key management personnel transactions At 31 December 2008 an amount of $19,815 (2007: $50,182) is included in Company and consolidated “trade and other payables” for outstanding director and key management personnel fees and expenses. (c) Shares The movement during the current and prior reporting periods in the number of ordinary shares in Northern Iron Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows: Directors

Held at

01/01/07 Net

acquired / (sold)Held at

01/01/08

Net

acquired / (sold) Held at

31/12/08ND Hamilton - 232,558 232,558 15,000 247,558MJ McMullen - 5,000,000 5,000,000 15,691 5,015,691FH Tschudi - 85,000,000 85,000,000 - 85,000,000A Mehra - 10,372,093 10,372,093 - 10,372,093PR Bilbe - 93,023 93,023 17,000 110,023DC Griffiths - 325,583 325,583 - 325,583PS Larsen - - - 20,000 20,000 Executive Officers RA Anderson - 93,023 93,023 - 93,023D Hunter - - - - -A Beckmand - - - - - Mr Hunter and Mr Beckmand became key management personnel in the current reporting period. Mr Hogass is not considered to fall under the definition of key management personnel in 2008.

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27. Key management personnel disclosures (continued) (d) Share options The movement during the reporting period in the number of options in Northern Iron Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows: 2008 Directors

Held at

01/01/08 Granted as

compensationHeld at

31/12/08

Vested in year

Vested and exercisable at

31/12/08ND Hamilton 300,000 - 300,000 300,000 300,000A Mehra 300,000 - 300,000 300,000 300,000PR Bilbe 300,000 - 300,000 300,000 300,000DC Griffiths 300,000 - 300,000 300,000 300,000PS Larsen 300,000 - 300,000 300,000 300,000

Executive Officers

Held at

01/01/08 Granted as

CompensationHeld at

31/12/08

Vested in year


31/12/08RA Anderson 400,000 - 400,000 200,000 400,000D Hunter - 400,000 400,000 - - 2007 Directors

Held at

01/01/07 Granted as

compensationHeld at

31/12/07

Vested in year


31/12/07ND Hamilton - 300,000 300,000 - -A Mehra - 300,000 300,000 - -PR Bilbe - 300,000 300,000 - -DC Griffiths - 300,000 300,000 - -PS Larsen - 300,000 300,000 - -

Executive Officers

Held at

01/01/07 Granted as

CompensationHeld at

31/12/07

Vested in year


31/12/07RA Anderson - 400,000 400,000 200,000 200,000PH Hogaas - 400,000 400,000 200,000 200,000 Mr Hogass is not considered to fall under the definition of key management personnel in 2008. Information regarding individual directors’ and executives’ compensation is provided in the Remuneration Report as set out on pages 15 to 20.

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28. Financial instruments The Group’s activities expose it to market risk (including currency risk, commodity price risk and interest rate risk), credit risk and liquidity risk. This note presents qualitative and quantitative information about the Company’s and Group’s exposure to each of the above risks, their objectives, policies and procedures for managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Group’s overall risk management approach focuses on the unpredictability of financial markets and seeks to minimize the potential adverse effects on the financial performance of the Group. The Group does not currently use derivative financial instruments to hedge financial risk exposures and therefore it is exposed to daily movements in exchange rates and interest rates. The Group uses various methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange, and commodity price risk and ageing analysis for credit risk. The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future development of the business. Given the stage of the Group’s development there are no formal targets set for return on capital. There were no changes to the Group’s approach to capital management during the year. During the year a subsidiary entered into an equipment finance lease facility with DnB Nor Finans (refer note 17). Under the terms of the facility the subsidiary is required to maintain a minimum equity ratio of 50%, where equity is deemed to include its loan from the parent entity. The subsidiary was in compliance with this requirement throughout the reporting period. (a) Commodity price risk management Commodity price risk is the risk of financial loss resulting from movements in the price of the Group’s commodity output, being iron ore, which is denominated in US$ and not normally traded in derivative markets. The consolidated entity has yet to commence production and make sales. The Group’s marketing strategy is to enter into long term FOB sales agreements directly with pellet producers in Europe and the Middle East. The Group has entered into an offtake agreement for an initial term of 5 years from 1 July 2009 with contracted sales of 6Mt of concentrate representing approximately 45% of the planned base case production over the contract term. The contract provides for sales of up to an additional 2.25Mt of concentrate at the mutual option of both parties. Pricing for the concentrate is to be based on the Vale benchmark for similar products delivered into Europe on a Free on Board (FOB) basis. Negotiations with other potential offtake partners are ongoing. Given the Group is not yet in the production phase there is no sensitivity analysis presented on equity and profit and loss from changes in contractual or spot iron ore prices.

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28. Financial instruments (continued) (b) Credit risk management Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Company or Group. Neither the Group nor the Company has any trade receivables at 31 December 2008 or 31 December 2007, however credit risk does arise from security deposits and receivables from taxation authorities. Credit risk is reduced through diversification and through accepting counterparties with good credit rating. Exposure to credit risk is considered minimal but is monitored on an ongoing basis. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The Group’s maximum exposure to credit risk at the reporting date was: Consolidated Company 2008 2007 2008 2007 $000 $000 $000 $000Carrying amount: Cash and cash equivalents 61,955 132,030 58,435 131,991Trade and other receivables 14,801 1,332 63,484 889 76,756 133,362 121,919 132,880 (c) Interest rate risk management The significance and management of this risk on investments to the Group and the Company is dependent on a number of factors including:

interest rates (current and forward) and the currencies that are held; level of cash and liquid investments and their term; maturity dates of investments; proportion of investments that are fixed rate or floating rate.

The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate investments. The Group is exposed to interest rate risk under its lease finance facility (see note 17) and continues to monitor opportunities to mitigate this interest rate risk. At the reporting date the effective interest rates of variable rate interest bearing assets and liabilities of the Company and the Group were as follows. Consolidated Company 2008 2007 2008 2007Carrying amount $000 $000 $000 $000 Financial assets 69,765 132,456 58,452 131,991Financial liabilities 12,566 - - - Weighted average interest rate (%) Financial assets 5.00% 7.2% 4,98% 7.19%Financial liabilities 4.96% - - - F

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28. Financial instruments (continued) (c) Interest rate risk management (continued) Sensitivity analysis An increase in 50 basis points from the weighted average year-end interest rates at 31 December would have increased equity and post tax profit and loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2007: Consolidated Company Equity Profit and loss Equity Profit and loss $000 $000 $000 $000 31 December 2008 261 261 205 20531 December 2007 464 464 462 462 A decrease in 50 basis points from the weighted average year-end interest rates at 31 December would have decreased equity and post tax profit and loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2007: Consolidated Company Equity Profit and loss Equity Profit and loss $000 $000 $000 $000 31 December 2008 (261) (261) (205) (205)31 December 2007 (464) (464) (462) (462) (d) Currency risk management Currency risk currently arises from purchases, assets and liabilities that are denominated in a currency other than the functional currencies of the entities within the Group, and from purchases in currencies other than those in which cash balances are held. The Group operates predominantly in Norway and is exposed to currency risk arising from various foreign currency exposures, primarily with respect to the US$ and Norwegian Kroner (“NOK”). The functional currency of its Norwegian operations is considered to be the US$. The Company’s foreign exchange risk predominantly resides in its NOK loan to its controlled entity. The Group does not currently use derivative financial instruments to hedge foreign currency risk and therefore is exposed to daily movements in exchange rates. It is the Group’s policy to hedge foreign currency exposure on purchases in the mine redevelopment phase as they become known by purchasing the currency in which the exposure arises. The majority of the Group’s expenditure during the redevelopment phase is denominated in A$, NOK and Euro. The sale of iron ore will be denominated in US$. The Group’s management of currency risk in the operational phase will be monitored as the denomination of expenditures becomes known.

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28. Financial instruments (continued) (d) Currency risk management (continued) The Company and Group’s exposure to foreign currency risk at balance date was as follows, based on carrying amounts. NOK SEK US$ Euro A$ Totals A$000 A$000 A$000 A$000 A$000 A$000Consolidated 2008 Cash and cash equivalents 12,501 - - 3,270 46,184 61,955Trade and other receivables 14,565 - - - 236 14,801Trade and other payables (16,257) (1,262) (234) (94) (785) (18,632)Tax liability - - - - (982) (982)Borrowings (12,566) - - - - (12,566)Gross balance sheet exposure (1,757) (1,262) (234) 3,176 44,653 44,576 Company 2008 Cash and cash equivalents 9,013 - - 3,270 46,152 58,435Trade and other receivables 63,248 - - - 236 63,484Trade and other payables (23) - - - (110) (133)Tax liability - - - - (982) (982)Gross balance sheet exposure 72,238 - - 3,270 45,296 120,804 Consolidated 2007 Cash and cash equivalents 39 - - - 131,991 132,030Trade and other receivables 516 - - - 816 1,332Trade and other payables (1,224) - - - (328) (1,552)Gross balance sheet exposure (669) - - - 132,479 131,810 Company 2007 Cash and cash equivalents - - - - 131,991 131,991Trade and other receivables - - - - 889 889Trade and other payables (50) - - - (309) (359)Gross balance sheet exposure (50) - - - 132,571 132,521 The following significant exchange rates applied during the year: Average rate Reporting date spot rate AUD to: 2008 2007 2008 2007 1 Norwegian Kroner 1 USD I Euro

0.212 1.197 1.743

0.204 1.195 1.636

0.206 1.449 2.042

0.211 1.142 1.682

Sensitivity analysis A 5% strengthening of the following currencies at 31 December would have changed equity and pre tax profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates and the exchange rate between other currencies, remain constant. The analysis is performed on the same basis for 2007: Consolidated Company Equity Profit and loss Equity Profit and loss $000 $000 $000 $00031 December 2008 US$ to NOK (4,136) (4,136) - -A$ to US$ (4,034) (203) (4,032) (201) 31 December 2007 US$ to NOK (129) (129) - -A$ to US$ - - - -

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28. Financial instruments (continued) (d) Currency risk management (continued) Sensitivity analysis (continued) A 5% weakening of the following currencies at 31 December would have changed equity and pre tax profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates and the exchange rate between other currencies, remain constant. The analysis is performed on the same basis for 2007: Consolidated Company Equity Profit and loss Equity Profit and loss $000 $000 $000 $00031 December 2008 US$ to NOK 3,742 3,742 - -A$ to US$ 4,457 222 4,457 22231 December 2007 US$ to NOK 116 116 - -A$ to US$ - - - - (e) Fair values The fair values of financial assets and financial liabilities, together with their carrying amounts shown in the balance sheet, are as follows: Carrying amount Fair Value Carrying amount Fair Value 2008

$0002008$000

2007 $000

2007$000

Consolidated Cash and cash equivalents 61,955 61,955 132,030 132,030Trade and other receivables 14,801 14,801 1,332 1,332Trade and other payables (18,632) (18,632) (1,552) (1,552)Borrowings (12,566) (12,566) - -Tax liability (982) (982) - - 44,576 44,576 131,810 131,810

Company Cash and cash equivalents 58,435 58,435 131,991 131,991Trade and other receivables 63,484 63,484 889 889Other investments 194,886 194,886 182,750 182,750Trade and other payables (133) (133) (359) (359)Tax liability (982) (982) - - 315,690 315,690 315,271 315,271

The basis for determining fair values is disclosed in Note 3(m).Trade and other receivables / payables with a life of less than one year are carried at their notional amount which is deemed to reflect their fair value. (f) Liquidity risk management Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group’s approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under a range of financial conditions. F

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28. Financial instruments (continued) (f) Liquidity risk management (continued) The Group’s borrowing facilities are set out in note 17. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of any netting agreements: Carrying

amountContractual

cashflows6 months

or less 1 to 5 years $000 $000 $000 $000

Consolidated 2008 Non-derivative financial liabilities Trade and other payables 18,632 18,632 18,632 -Current tax liability 982 982 982 -Lease liability 12,566 13,545 - 13,545 32,180 33,159 19,614 13,545

Company 2008 Non-derivative financial liabilities Trade and other payables 133 133 133 - Current tax liability 982 982 982 - 1,115 1,115 1,115 -

Consolidated 2007 Non-derivative financial liabilities Trade and other payables 1,552 1,552 1,552 - 1,552 1,552 1,552 -

Company 2007 Non-derivative financial liabilities Trade and other payables 359 359 359 - 359 359 359 -

29. Events subsequent to reporting date On 20 February 2008 the Company announced a $17.5 million institutional placement comprising 17.5 million ordinary shares at an issue price of $1.00 per share. Funds raised will be applied to accelerate the case for an incremental expansion of production, ordering the long lead items required for the refurbishment of the flotation circuit and for working capital. The Company also announced that smaller Australian and New Zealand shareholders would have the right to subscribe for new shares at the same price via a Share Purchase Plan. The Company announced in the December 2008 quarterly report that the mill supplier has advised of a 3 week delay in the mill shell. On 20 February 2008 the Company announced that this delay was likely to result in a delay of up to 3 weeks in commissioning of the Sydvaranger Iron Project. as well as announcing an increase of US$4 million over the most recently released capital cost estimate to US$110 million. The 85 million shares held by Tschudi Mining Company AS were the subject of a Voluntary Escrow Deed with the Company. The conditions of this deed were taken to have been satisfied, and the voluntary escrow released, on 10 March 2009. The mandatory escrow over the shares applied by ASX Limited until 13 December 2009 remains in place. Other than this no matter or circumstance has arisen since 31 December 2008 that in the opinion of the directors has significantly affected, or may significantly affect in future financial years:

(i) the group’s operations, or

(ii) the results of those operations, or

(iii) the group’s state of affairs

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 DIRECTORS’ DECLARATION

59

(1) In the opinion of the directors of Northern Iron Limited: (a) the financial statements and notes of the Company and of the group (including the audited remuneration

disclosures contained in the Remuneration Report contained in the Directors’ Report) set out on pages 23 to 58 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s and group’s financial position as at 31 December

2008 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they

become due and payable. (2) This declaration has been made after receiving the declarations required to be made to the directors in

accordance with section 295A of the Corporations Act 2001 for the financial period ended 31 December 2008. Signed in accordance with a resolution of the directors. MJ McMullen ND Hamilton Chief Executive Officer Chairman Perth, 11th March 2009

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a world-wide organisation of accounting firms and business advisers

INDEPENDENT AUDITOR’S REPORT

To the members of Northern Iron Limited

We have audited the accompanying financial report of Northern Iron Limited (“the company”), which comprises the balance sheets as at 31 December 2008, and the income statements, statements of changes in equity and statements of cashflows for the period ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration for both the company and the Northern Iron Limited Group (“the consolidated entity”) as set out on pages 23 to 59. The consolidated entity comprises the company and the entities it controlled at balance date or from time to time during the period.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

In Note 2, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian Accounting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion

In our opinion:

(a) the financial report of Northern Iron Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 2008 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report included on pages 15 to 20 of the directors’ report for the year ended 31 December 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Northern Iron Limited for the year ended 31 December 2008 complies with section 300A of the Corporations Act 2001.

HLB MANN JUDD Chartered Accountants

Perth, Western Australia WM CLARK 11 March 2009 Partner, HLB Mann Judd

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 CORPORATE GOVERNANCE STATEMENT

62

Introduction Northern Iron has in place corporate governance practices that are formally embodied in corporate governance policies and codes adopted by the Board (the Policies). The aim of the Policies is to ensure that the Company is effectively directed and managed, that risks are identified, monitored and assessed and that appropriate disclosures are made. In preparing the Policies, the directors considered the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations” (ASX Principles). The Board has adopted these ASX Principles, subject to the departures noted below. The directors incorporated the ASX Principles into the Policies to the extent that they were appropriate, taking into account the Company’s size, the structure of the Board, its resources, and its proposed activities. The Board has adopted the following Policies. Statement and Charters Corporate Governance Statement Board Charter Audit Committee Charter Remuneration, Nomination and Governance Committee Charter Policies and Procedures Code of Conduct Trading in Company Securities Risk Management Policy (within the Board and Audit Committee Charters) Shareholder Communication Strategy Continuous Disclosure Policy As the Company and its activities grow, the Board may implement additional corporate governance structures and committees. The Company’s corporate governance Policies are available on the Company’s website at www.northerniron.com.au. Number of Audit Committee meetings, names and qualification of members The number of Audit Committee meetings and the names of attendees is set out in the directors' report together with their qualifications. Number of Remuneration, Nomination and Governance Committee meetings, names and qualification of members The number of Remuneration, Nomination and Governance Committee meetings and the names of attendees is set out in the directors' report together with their qualifications. Performance evaluation of the board, its committees and senior executives The Board reviews and evaluates the performance of the Board and its committees, which involves consideration of all the Board’s key areas of responsibility. A performance evaluation of senior executives was undertaken during the year, in the case of the Chief Executive officer by the Remuneration, Nomination and Governance Committee, and in all other cases by the Chief Executive Officer. Skills, experience, expertise and term of office of each director A profile of each director containing the applicable information is set out in the directors' report.

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 CORPORATE GOVERNANCE STATEMENT

63

Explanations for departures from best practice recommendations From 1 January 2008 to 31 December 2008 (the “Reporting Period”) the Company complied with each of the Corporate Governance Principles and the corresponding Recommendations as published by the ASX Corporate Governance Council ("ASX Principles and Recommendations"), other than in relation to the matters specified below: Principle Reference

Recommendation Reference

Notification of Departure

Explanation for Departure

2 2.1 The Board did not comprise a majority of independent directors. The Board currently consists of three independent and four non-independent directors.

The Board considers that its current composition (which includes an independent chairman with a casting vote at Board meetings) reflects the range of experience and skills required at this stage of the Company's development. One of the non-executive directors, Ashwath Mehra, fails to satisfy the independence test under the ASX Principles because his shareholding in the Company marginally exceeds the relevant threshold set by the ASX Corporate Governance Council for this purpose.

Statement concerning availability of independent professional advice If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his office as a director then, provided the director first obtains approval for incurring such expense from the Chairman, the Company will pay reasonable expenses associated with obtaining such advice. Existence and terms of any schemes for retirement benefits for non-executive directors The Company does not have any terms or schemes relating to retirement benefits for non-executive directors. Company’s remuneration policies The Company’s remuneration policies are set out in the Remuneration Report on pages 15 to 20. The Company has separate remuneration policies for executive and non-executive directors. Non-executive directors receive a fixed fee and, when appropriate, share options. Executive directors receive a salary or fee and, when appropriate, performance based remuneration and share options. Identification of independent directors The Company’s three independent directors are considered to be Mr Neil Hamilton, Mr David Griffiths, and Mr Peter Bilbe. None of these directors was considered to have a material relationship with the Company or another group member (other than their directorships) during the Reporting Period as professional advisor, consultant, supplier, customer, or through any other contractual relationship, nor did they have any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company. The Board considers “material” in this context to be where any director related business relationship represents the lesser of at least 5% of the Company’s or the director-related business’s revenue. Material business risks Management has reported to the Board as to the effectiveness of the Company’s management of its material business risks.

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 ADDITIONAL SHAREHOLDER INFORMATION

64

Additional information required by the ASX Limited (“ASX”) Listing Rules and not disclosed elsewhere in this report is set out below.

a) Shareholdings as at 20 February 2009

Substantial shareholders

The following shareholders have lodged substantial shareholder notices with ASX:

Name of Shareholder Number of Shares % held

Tschudi Mining Company AS 85,000,000 51.52Ashwath Mehra 10,372,093 6.29FMR LLC & FIL 9,993,148 6.06 Voting Rights

The voting rights attaching to Ordinary Shares are governed by the Constitution. On a show of hands every person present who is a member or representative of a member shall have one vote and on a poll, every member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each share held. No options have any voting rights.

Twenty Largest Shareholders Name of Shareholder

Number of Shares

% held

Tschudi Mining Company AS 85,000,000 51.52%HSBC Custody Nominees (Australia) Limited 15,194,494 9.21%Ashwath Mehra 10,000,000 6.06%JP Morgan Nominees Australia Limited 9,033,793 5.48%Zero Nominees Pty Ltd 8,481,834 5.14%National Nominees Limited 7,349,914 4.45%Wildeville Enterprises Pty Ltd (The McMullen Family A/C) 5,015,691 3.04%ANZ Nominees Limited (Cash Income A/C) 2,377,799 1.44%Citicorp Nominees Pty Limited 2,260,185 1.37%Citicorp Nominees Pty Limited (CFS Future Leaders Fund A/C) 2,128,362 1.29%Cogent Nominees Pty Ltd (SMP Accounts) 1,110,763 0.67%Egmont Pty Ltd (C Carter Superfund No1 A/C) 850,000 0.52%Queensland Investment Corporation 621,001 0.38%Citicorp Nominees Pty Limited (CFSIL CFS WS Small Comp A/C) 592,199 0.36%Mr Timothy Guy Lyons and Mrs Heather Mary Lyons (Gnowellen Superfund A/C) 485,000 0.29%

Ashwath Mehra 372,094 0.23%Societe Generale Australia Branch A/C 363,000 0.22%Cogent Nominees Pty Limited 362,557 0.22%RBC Dexia Investor Services Australia Nominees Pty Ltd (PISELECT A/C) 357,010 0.22%

Spar Nominees Pty Ltd 325,000 0.20% 152,280,696 92.31%

Distribution of equity security holders

Size of Holding Number of shareholders Number of fully paid shares 1 to 1,000 125 62,369

1,001 to 5,000 337 1,076,620 5,001 to 10,000 180 1,486,358

10,001 to 100,000 255 6,999,738 100,001 and over 36 155,374,915

933 165,000,000

The number of shareholders holding less than a marketable parcel of ordinary shares is 60.

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NORTHERN IRON LIMITED ANNUAL REPORT 31 DECEMBER 2008 ADDITIONAL SHAREHOLDER INFORMATION

65

b) Unlisted option holdings as at 20 February 2009

Unlisted $2.15

options expiring

13/12/10

Unlisted $3.01options expiring

13/12/10

Unlisted $3.01options expiring

13/06/10

Unlisted $4.12 options expiring 4/08/11

Unlisted $4.80options expiring4/08/11

Number on issue 1,150,000 1,150,000 2,000,000 200,000 200,000Number of holders 7 7 1 1 1 Those holding more than 20% of the class:

Macquarie Equity Capital Markets Limited

2,000,000

Donald Hunter 200,000 200,000 c) On-market buyback

There is no current on-market buyback.

d) Restricted securities

The following securities are subject to restriction under the Listing Rules of ASX Limited: Restricted to 13 December 2009

Number

Fully paid ordinary shares 99,891,795 Options exercisable at $2.15 each, expiring 13 December 2010 750,000 Options exercisable at $3.01 each, expiring 13 December 2010 750,000 Options exercisable at $3.01 each, expiring 13 June 2010 2,000,000

e) Voluntary escrow

The 85 million shares held by Tschudi Mining Company AS are the subject of a Voluntary Escrow Deed until the earliest of: a) 13 December 2011 b) the date on which all requisite approvals and permits to recommission the Sydvaranger Iron Project to

production of approximately 2.9 million tonnes per annum of iron concentrate are obtained pursuant to Clause 9A.1 of the Share Sale and Purchase Agreement between the Company and Sydvaranger (“Share Sale and Purchase Agreement”)

c) the date on which the put option under Clause 9A of the Share Sale and Purchase Agreement is exercised.

The conditions of this deed were taken to have been satisfied, and the voluntary escrow released, on 10 March 2009. The mandatory escrow over the shares applied by ASX Limited until 13 December 2009 remains in place.

f) Use of funds

The Company has used the cash and assets in a form readily convertible to cash that it had at the time of admission to the Official List of ASX Limited in a way consistent with its business objectives.

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NORTHERN IRON LIMITEDANNUAL REPORT 31 DECEMBER 2008ADDITIONAL SHAREHOLDER INFORMATION

g) Schedule of permits

Tenement Tenement AreaNumber Type (m2)

Bjørnevatn V NU 1/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 2/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 3/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 4/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 5/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 6/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 7/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 8/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 9/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASBjørnevatn V NU 10/1974 Claim 56000 6/12/1902 Sydvaranger Gruve ASBjørnevatn Ø NU 11/1974 Claim 56000 6/12/1902 Sydvaranger Gruve ASBjørnevatn Ø NU 12/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASBjørnevatn Ø NU 13/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASBjørnevatn Ø NU 14/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASBjørnevatn Ø NU 15/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 24/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 25/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 26/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 27/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 28/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 29/1974 Claim 168000 6/12/1902 Sydvaranger Gruve ASTverrdalen NU 30/1974 Claim 168000 6/12/1902 Sydvaranger Gruve ASFisketind NU31/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASFisketind NU 32/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASFisketind NU 33/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASFisketind NU 34/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASFisketind NU 35/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 40/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 41/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 42/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 43/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 44/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASGrunntjern NU 45/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASSøstervann NU 46/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASSøstervann NU 47/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASSøstervann NU 48/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASSøstervann NU 49/1974 Claim 112000 6/12/1902 Sydvaranger Gruve ASØrnevann NU 63/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASØrnevann NU 64/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASØrnevann NU 65/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASØrnevann NU 66/1974 Claim 84000 6/12/1902 Sydvaranger Gruve ASJernhatten NU 77/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASJernhatten NU 78/1974 Claim 140000 6/12/1902 Sydvaranger Gruve ASHyttemalmen NU 81/1974 Claim 56000 6/12/1902 Sydvaranger Gruve ASHyttemalmen NU 82/1974 Claim 56000 6/12/1902 Sydvaranger Gruve ASKjellmannsåsen LU 101/1903 Claim N/A 6/12/1902 Sydvaranger Gruve ASKjellmannsåsen LU 102/1903 Claim N/A 6/12/1902 Sydvaranger Gruve ASKjellmannsåsen LU 105/1903 Claim N/A 6/12/1902 Sydvaranger Gruve ASKjellmannsåsen LU 106/1903 Claim N/A 6/12/1902 Sydvaranger Gruve ASAndehatten 0679/2001-FB Preclaim 62500 22/08/2001 Sydvaranger Gruve ASReitanmalmen 1 0680/2001-FB Preclaim 150000 22/08/2001 Sydvaranger Gruve ASReitanmalmen 2 0681/2001-FB Preclaim 137500 22/08/2001 Sydvaranger Gruve ASFisketd. S / Jernt. N 0682/2001-FB Preclaim 45000 22/08/2001 Sydvaranger Gruve ASØrnåsen 0683/2001-FB Preclaim 105000 22/08/2001 Sydvaranger Gruve AS

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g) Schedule of permits (continued)

Tenement Tenement AreaNumber Type (m2)

Teltbuktmalmen 0684/2001-FB Preclaim 300000 22/08/2001 Sydvaranger Gruve ASMattilamalmen 0685/2001-FB Preclaim 192500 22/08/2001 Sydvaranger Gruve ASMattilamalmen 0686/2001-FB Preclaim 280000 22/08/2001 Sydvaranger Gruve ASBoris Gleb 1 0687/2001-FB Preclaim 300000 22/08/2001 Sydvaranger Gruve ASBoris Gleb 2 0688/2001-FB Preclaim 300000 22/08/2001 Sydvaranger Gruve ASBoris Gleb 3 0689/2001-FB Preclaim 240000 22/08/2001 Sydvaranger Gruve ASVakkeråsen 1 0690/2001-FB Preclaim 160000 22/08/2001 Sydvaranger Gruve ASVakkeråsen 2 0691/2001-FB Preclaim 240000 22/08/2001 Sydvaranger Gruve ASVakkeråsen 3 0692/2001-FB Preclaim 240000 22/08/2001 Sydvaranger Gruve ASVakkeråsen 4 0693/2001-FB Preclaim 175000 22/08/2001 Sydvaranger Gruve ASVarrevann 1 0694/2001-FB Preclaim 250000 22/08/2001 Sydvaranger Gruve ASVarrevann 2 0695/2001-FB Preclaim 250000 22/08/2001 Sydvaranger Gruve ASVarrevann 3 0696/2001-FB Preclaim 250000 22/08/2001 Sydvaranger Gruve ASVarrevann 4 0697/2001-FB Preclaim 60000 22/08/2001 Sydvaranger Gruve ASKjellmannsåsen 1 1658/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASKjellmannsåsen 2 1659/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASKjellmannsåsen 3 1660/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASKjellmannsåsen 4 1661/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASFisketind Syd 2 1662/2006-FB Preclaim 300000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 1 1664/2006-FB Preclaim 300000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 2 1665/2006-FB Preclaim 300000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 3 1666/2006-FB Preclaim 300000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 4 1667/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 5 1668/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 6 1669/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 101 1672/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASBjørnevatn 102 1673/2006-FB Preclaim 250000 19/01/2007 Sydvaranger Gruve ASKjellmannsåsen 5 3135/2007/FB Preclaim 78750 7/10/2007 Sydvaranger Gruve ASKjellmannsåsen 6 3136/2007-FB Preclaim 275000 7/10/2007 Sydvaranger Gruve ASKjellmannsåsen 7 3137/2007-FB Preclaim 200000 7/10/2007 Sydvaranger Gruve ASBrattli 1 3138/2007-FB Preclaim 140000 7/10/2007 Sydvaranger Gruve ASBrattli 2 3139/2007-FB Preclaim 120000 7/10/2007 Sydvaranger Gruve ASVarrevann 5 3296/2007-FB Preclaim 170000 7/10/2007 Sydvaranger Gruve ASVarrevann 6 3297/2007-FB Preclaim 280000 7/10/2007 Sydvaranger Gruve ASReitan 3 3298/2007-FB Preclaim 145000 7/10/2007 Sydvaranger Gruve ASReitan 4 3299/2007-FB Preclaim 266000 7/10/2007 Sydvaranger Gruve ASReitan 5 3300/2007-FB Preclaim 266000 7/10/2007 Sydvaranger Gruve ASReitan 6 3301/2007-FB Preclaim 280000 7/10/2007 Sydvaranger Gruve ASReitan 7 3302/2007-FB Preclaim 175000 7/10/2007 Sydvaranger Gruve ASReitan 8 3303/2007-FB Preclaim 250000 7/10/2007 Sydvaranger Gruve ASVakkeråsen 5 3304/2007/FB Preclaim 90000 7/10/2007 Sydvaranger Gruve ASVakkeråsen 6 3305/2007-FB Preclaim 90000 7/10/2007 Sydvaranger Gruve ASVakkeråsen 7 3306/2007-FB Preclaim 150000 7/10/2007 Sydvaranger Gruve ASVakkeråsen 8 3307/2007-FB Preclaim 150000 7/10/2007 Sydvaranger Gruve ASVakkeråsen 9 3308/2007-FB Preclaim 120000 7/10/2007 Sydvaranger Gruve ASBjørnefjell 1 3309/2007-FB Preclaim 240000 7/10/2007 Sydvaranger Gruve ASBjørnefjell 2 3310/2007-FB Preclaim 250000 7/10/2007 Sydvaranger Gruve ASBjørnevann 7 3311/2007-FB Preclaim 297600 7/10/2007 Sydvaranger Gruve ASBjørnevann 8 3312/2007-FB Preclaim 240000 7/10/2007 Sydvaranger Gruve ASBjørnevann 9 3313/2007-FB Preclaim 225000 7/10/2007 Sydvaranger Gruve ASBjørnevann 10 0785/2008-FB Preclaim 80000 22/10/2008 Sydvaranger Gruve AS

Bjørnevann 11 0786/2008-FB Preclaim 190000 22/10/2008 Sydvaranger Gruve ASJerntoppen 1 0787/2008-FB Preclaim 250000 22/10/2008 Sydvaranger Gruve AS

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