IMAGE RESOURCES NL — Annual Report 2011

Sep 29, 2011

ABN: 57 063 977 579

ANNUAL REPORT FINANCIAL YEAR ENDED 30 JUNE 2011

CONTENTS
Corporate Directory		3
Review of Operations		4
Directors’ Report		17
Auditor’s Independence Declaration		23
Corporate Governance Statement		24
Statement of Comprehensive Income		28
Statement of Financial Position		29
Statement of Changes in Equity		30
Statement of Cash Flows		31
Notes to and forming part of the Financial Statements		32
Directors’ Declaration		48
Independent Auditor’s Report		49
Tenement Schedule		51
Other Information		53

• 2 -

CORPORATE DIRECTORY

DIRECTORS

PETER THOMAS Non-Executive Chairman

GEORGE SAKALIDIS Managing Director

ROGER THOMSON Executive Director

COMPANY SECRETARY

FOR INFORMATION ON THE COMPANY CONTACT

PRINCIPAL & REGISTERED OFFICE

2[nd] Floor

16 Ord Street, West Perth WA 6005 Telephone (08) 9485 2410 Facsimile (08) 9485 2840

BANKERS

Bank of Western Australia Ltd Hay Street, West Perth WA 6005

Rudolf Tieleman

AUDITORS

REGISTERED OFFICE

2[nd] Floor 16 Ord Street, West Perth WA 6005 Telephone (08) 9485 2410 Facsimile (08) 9485 2840

Somes & Cooke Chartered Accountants Level 1, 1304 Hay Street, West Perth WA 6005

STOCK EXCHANGE

Australian Securities Exchange (ASX)

WEBSITE

www.imageres.com.au

COMPANY CODE

IMA (Fully paid shares)

FOR SHAREHOLDER INFORMATION CONTACT

SHARE REGISTRY

Computershare Investor Services Limited Level 2 Reserve Bank Building 45 St George’s Terrace, Perth WA 6000 Telephone (08) 9323 2000 Facsimile (08) 9323 2033

ISSUED CAPITAL

90,788,959 fully paid ordinary shares

2,500,000 options exercisable at $1.80 cents by 16 November 2011 2,500,000 options exercisable at $1.50 cents by 19 November 2011 2,200,000 options exercisable at $2.12 cents by 20 November 2012 2,345,000 options exercisable at $1.1162 cents by 18 December 2014 95,000 options exercisable at $0.6995 cents by 21 December 2015

• 3 -

REVIEW OF OPERATIONS

PROJECT SUMMARIES

Image Resources is a mineral sands explorer with a major landholding and an expanding resource base in both the North Perth and the Eucla Basins of Western Australia. With titanium minerals and zircon prices at record levels and a strong market outlook for these commodities, Image is focused on advancing both its North Perth basin and Eucla Basin projects development.

In addition Image retains interest in a package of gold, nickel and iron prospects through joint ventures with Emu Nickel NL, Magnetic Resources NL, Integra Mining Ltd, Sipa Resources Ltd and Catalpa Resources Ltd. The locations of Images’ main projects are shown in Figure 1.

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Figure 1 Location Map

• 4 -

REVIEW OF OPERATIONS

NORTH PERTH BASIN

During the year Image significantly advanced its North Perth Basin heavy mineral (HM) project on several fronts.

Cooljarloo (Image 100%)

Image has continued its evaluation of the high grade Atlas deposit. The preliminary Atlas resource statement issued in October 2010 required additional mineralogical data to fully assess the mineral assemblage. The results of QEMSCAN analyses of 47 mineralogy composites were integrated with the existing composites, bringing the total mineralogical analyses to 81 composites spread at 400m line intervals along the strike of the deposit. This data was combined with the October resource model to produce an updated Measured and Indicated Resource for the Atlas deposit. The HM component of this resource estimate is tabulated at various cut-off grades in Table 1, with the mineral assemblages at the same cut-offs shown in Table 2.

The zircon content of the HM increases from north to south with a zone of +10% zircon evident in the southern 2.5km of the Atlas deposit. This distribution is shown in Figure 2, where the zircon content can be seen to vary up to 20% of the HM in the southern zone, correlating with increased HM content.

The mineral assemblage results show that a small zone included in the October resource estimate contains significantly higher levels of iron-oxides than had been expected and therefore this zone has been excluded from the updated estimate, reducing the overall resource at a 2.5% HM cut-off by 1.4Mt to 10.8Mt and increasing the grade from 7.4% HM to 7.8% HM containing 844,000t of HM at 10.7% zircon, 7.0% rutile and 55.8% ilmenite. The Measured Resource at 2.5% HM cut-off is similarly reduced to 9.7Mt @ 8.3% HM, containing 810,000t of HM at 10.9% zircon, 7.1% rutile and 55.5% ilmenite.

Table 1 Atlas HM Resource April 2011

Category	HM	Cut-off	Volume	Tonnes	HM %	HM Tonnes	Slimes %	OS %
Indicated		5.0	4,900	9,800	5.6	500	15.7	10.2
Indicated		4.0	40,000	80,000	4.4	3,600	16.0	5.4
Indicated		3.0	309,000	635,000	3.5	22,000	19.0	4.1
Indicated		2.5	524,000	1,079,000	3.2	34,000	19.2	3.8
Indicated		2.0	807,000	1,663,000	2.9	48,000	19.4	3.4
Indicated		1.5	1,050,000	2,140,000	2.6	56,000	19.1	3.5
Indicated		1.0	1,240,000	2,530,000	2.4	61,000	18.9	3.3
Measured		5.0	2,980,000	6,120,000	11.0	670,000	16.2	4.0
Measured		4.0	3,660,000	7,460,000	9.8	730,000	15.8	4.2
Measured		3.0	4,410,000	8,930,000	8.8	790,000	15.5	4.4
Measured		2.5	4,800,000	9,700,000	8.3	810,000	15.3	4.5
Measured		2.0	5,300,000	10,700,000	7.7	830,000	15.2	4.7
Measured		1.5	6,400,000	12,800,000	6.8	860,000	15.0	5.1
Measured		1.0	9,100,000	17,900,000	5.2	930,000	14.5	5.5
Total		5.0	2,980,000	6,130,000	11.0	671,000	16.2	4.0
Total		4.0	3,700,000	7,540,000	9.8	734,000	15.8	4.2
Total		3.0	4,720,000	9,560,000	8.4	812,000	15.7	4.4
Total		2.5	5,300,000	10,800,000	7.8	844,000	15.7	4.4
Total		2.0	6,100,000	12,400,000	7.1	878,000	15.8	4.5
Total		1.5	7,400,000	14,900,000	6.2	916,000	15.6	4.9
Total		1.0	10,300,000	20,500,000	4.8	991,000	15.1	5.3

Slimes: minus 63 micron fraction OS: oversize, plus 1mm fraction

• 5 -

REVIEW OF OPERATIONS

Table 2 Atlas Mineral Assemblage by Cut-off Grade

Category	HM Cut-off	HM Tonnes	Zircon (% of HM)	Ilmenite (% of HM)	HiTi (% of HM)	Leucoxene (% of HM)	Rutile (% of HM)	Garnet (% of HM)
Indicated	5.0	500	7.8	65.3	3.5	2.3	4.9	2.3
Indicated	4.0	3,600	6.9	62.4	3.2	1.7	6.0	3.2
Indicated	3.0	22,000	6.9	63.8	3.6	1.3	6.6	3.7
Indicated	2.5	34,000	6.8	63.8	3.6	1.3	6.7	3.7
Indicated	2.0	48,000	6.8	63.6	3.6	1.3	6.7	3.7
Indicated	1.5	56,000	6.8	63.7	3.6	1.3	6.7	3.7
Indicated	1.0	61,000	6.9	63.8	3.6	1.3	6.7	3.7
Measured	5.0	670,000	11.1	55.5	2.9	1.0	7.0	4.8
Measured	4.0	730,000	11.0	55.5	3.0	1.0	7.0	4.8
Measured	3.0	790,000	10.9	55.5	3.0	1.0	7.1	4.8
Measured	2.5	810,000	10.9	55.5	3.0	1.1	7.1	4.7
Measured	2.0	830,000	10.8	55.5	3.0	1.1	7.1	4.7
Measured	1.5	860,000	10.8	55.5	3.1	1.1	7.0	4.6
Measured	1.0	930,000	10.9	55.5	3.1	1.2	7.0	4.4
Total	5.0	671,000	11.2	55.5	2.9	1.0	7.0	4.8
Total	4.0	734,000	11.0	55.5	3.0	1.0	7.0	4.8
Total	3.0	812,000	10.8	55.7	3.0	1.0	7.1	4.7
Total	2.5	844,000	10.7	55.8	3.0	1.1	7.0	4.7
Total	2.0	878,000	10.6	56.0	3.0	1.1	7.0	4.6
Total	1.5	916,000	10.6	56.0	3.1	1.1	7.0	4.5
Total	1.0	991,000	10.6	56.0	3.2	1.2	7.0	4.3

• 6 -

REVIEW OF OPERATIONS

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Figure 2 Atlas Resource

A programme of resource drilling was carried out at the Rhea deposit. The results were encouraging and show the potential for the estimation of resources on two strand lines, the Rhea strand and the Middle strand. Significant intersections are shown in Table 3. Figure 3 shows the location of the drilling.

• 7 -

REVIEW OF OPERATIONS

Table 3 Rhea and Middle Strand Drilling Results

Hole **Number **	MGA East	MGA **North **	From m	To m	Interval m	HM %
RH155	340035	6617805	1	3	2	11.2
RH187	339883	6617604	13	16	3	8.3
RH272	339512	6617465	5	10	5	10.8
RH286	339338	6617591	9	11	2	8.5
RH292	339268	6617674	6	8	2	12.5
RH298	339204	6617748	3	7	4	8.1
RH305	339119	6617806	6	9	3	10.3
RH313	339050	6617873	4	6	2	11.0
RH319	338980	6617947	6	8	2	24.8
RH324	338916	6618034	3	7	4	11.5
RH328	338839	6618113	3	6	3	13.4
RH330	338812	6618096	7	9	2	9.1

The Middle Strand main mineralised zone occurs on the 50mRL with low grade (2-4% HM) sheet mineralisation 4-6m below it on a clay basement in a similar stratigraphic position to the central mineralisation at Rhea. The main mineralised zone at Middle Strand is 2-6m thick, 20m to 40m wide, continuous over 1100m of strike with between 1m and 6m of cover. HM grades are higher than Rhea with a continuous core greater than 10% HM throughout.

The Rhea deposit consists of a narrow upper mineralised zone, 2-4m thick with HM grades up to 11.2% HM and a central zone, 2-10m thick with grades up to 10% HM, but generally between 2-8% HM. These two zones are separated by between 2m and 4m of barren sand, with the central zone overlying a clay basement of interpreted Mesozoic sediments. The central mineralisation is quite extensive and stretches across the entire drill section overlying a channel of 4-20% slimes cut into the basement clays. This channel contains low levels of HM, but is not as significantly mineralised as the Calypso channel to the north-east.

The water table at Rhea is quite close to the surface, generally between 7m and 10m depth and this, combined with low slimes and moderate HM grades, may make it suitable for a dredging operation.

Magnetic mapping of the newly acquired Munbinia tenement (E70/3997), which covers the southern strike extension of the Atlas deposit has identified a potential 3.5km extension to the Atlas deposit. Image views this as a significant outcome as the potential extension lies in the direction of increasing grade and increased zircon content.

• 8 -

REVIEW OF OPERATIONS

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Figure 3 Rhea Resource Drilling

Gingin (Image 100%)

Resource definition drilling on the Gingin South deposit and first pass drilling on the Chandala tenement was completed with a total of 333 holes drilled for 10,114m from which 5,380 samples were selected for laboratory processing. During the year an interim resource estimate was made based on a 200m x 20m drill spacing. This interim estimate of Indicated and Inferred Resources for the Gingin South extension totals 5.2Mt @ 6.6% HM, containing 348,000t of HM at a 2.5% HM cut-off. Table 4 summarises the resource status and Table 5 shows the corresponding mineral content.

Table 4

	Table 4	Table 4	Table 4	Table 4
	Gingin South Extension Resource 18 July 2011
Classification	Volume (cu m)	Tonnes	HM (%)	HM Tonnes	Slimes (%)	OS (%)
Indicated	2,502,000	4,499,000	6.7	300,000	6.7	11.0
Inferred	398,000	733,000	6.5	48,000	8.4	8.8
TOTAL	2,900,000	5,232,000	6.6	348,000	6.9	10.7

1. 5% HM cut-off Slimes: minus 63micron fraction OS: oversize, plus 1mm fraction

	Table 5 GinginSouth Extension, % Mineral Content of HM	Table 5 GinginSouth Extension, % Mineral Content of HM	Table 5 GinginSouth Extension, % Mineral Content of HM	Table 5 GinginSouth Extension, % Mineral Content of HM
Classification	HM Tonnes	Ilmenite	Leucoxene	Rutile	Zircon	VHM Total
Indicated	300,000	70.1	9.0	5.1	8.2	92.3
Inferred	48,000	67.4	7.5	5.8	10.9	91.6
TOTAL	348,000	69.7	8.8	5.2	8.5	92.2

This new resource is situated immediately south of and contiguous with the HM deposit within mining lease M70/448 acquired from Iluka Resources Limited in March 2011, as shown in Figure 4. The new extension has increased the total deposit length to 5.5km, with widths varying between 40m and 250m and averaging 120m.

• 9 -

REVIEW OF OPERATIONS

Using drilling and mineralogical data supplied by Iluka on mining lease M70/448, Image estimated a total Measured and Indicated resource at a 2.5% HM cut-off of 2.8Mt at 5.1% HM, containing 144,000t of HM. Together with the southern extension, the overall Gingin South resource has increased to 8.08Mt @ 6.1% HM, segregated into Measured, Indicated and Inferred categories, as shown in Table 6.

Table 6 Overall Gingin South HM Resource 18 July 2011

Classification	HM Cutoff	Volume	Tonnes	HM	Slimes	HM Tonnes
Measured	2.5	873,000	1,526,000	4.4	7.2	67,000
Indicated	2.5	3,242,000	5,820,000	6.5	7.1	377,000
Inferred	2.5	398,000	733,000	6.5	8.4	48,000
TOTAL	2.5	4,513,000	8,079,000	6.1	7.3	492,000

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Figure 4 Gingin South and Gingin South Extension

• 10 -

REVIEW OF OPERATIONS

Chandala (Image 80%)

During the period Image completed its earn-in requirement and earned an 80% interest in the Chandala tenement E70/2742. Assay results received during the quarter identified a significant strand intersection on the Chandala North target area situated 2.5km south and along strike from the Gingin South resource (Figure 3). These results confirm field estimates of a high grade deposit with intercepts up to 15m @ 11.1% HM from surface and 4m @ 24.0% HM from 30m (2.5% cut-off). Significant intercepts are summarised in Table 7 and drill hole locations shown on Figure 5. A drill section is shown in Figure 6, illustrating the mineralisation outlined to date. Two strand levels have been identified in this section, an upper strand at 74mRL, which contains high grades and outcrops at the surface and a westerly dipping strand at 65mRL, also containing a >10% HM core. These strands are present in drilling to the north and south of this section, giving a total inferred strike length of 2.3km and leaving the mineralisation open to both the north and south.

Table 7

Chandala North Drilling Results (2.5% HM cut-off)

Hole **Number **	MGA East	MGA **North **	From m	To m	Interval m	HM %
GG455	401493	6517442	30	32	2	8.9
GG456	401465	6517442	30	34	4	24.0
GG457	401435	6517442	31	35	4	6.3
GG466	401277	6518223	0	6	6	4.2
GG467	401263	6518214	0	11	11	10.3
		including	5	11	6	14.1
GG468	401246	6518211	0	15	15	11.1
		including	8	12	4	18.2
GG469	401231	6518203	0	11	11	9.6
		including	4	11	7	11.8
GG470	401214	6518199	0	12	12	8.1
GG471	401196	6518205	0	8	8	4.9
		including	16	19	3	25.9
GG472	401178	6518211	0	5	5	3.0
GG473	401161	6518204	18	22	4	9.2
GG474	401143	6518212	23	26	3	22.0
GG475	401124	6518228	22	27	5	18.1
GG476	401105	6518229	27	29	2	36.7

Notes:

1. All drilling NQ size aircore

2. Samples collected at 1m intervals with ~20% split taken for assay using rotary splitter

3. All samples processed at Western Geolabs Pty Ltd – a mineral sands specialist laboratory, with HM grades determined by TBE heavy liquid separation.

4. All collar located in field using handheld GPS and locations subsequently located with DGPS to +/- -0.1m accuracy

5. Holes drilled at 20m spacing in areas of mineralisation along existing tracks approximately perpendicular to strike

6. Major intersections calculated at 2.5% HM cut-off.

7. 11 -

REVIEW OF OPERATIONS

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Figure 5 Gingin to Chandala North Drilling

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Figure 6
Chandala North Cross-section 6518220mN
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• 12 -

REVIEW OF OPERATIONS

Iluka Tenement Acquisitions (Image 100%)

During the year Image finalised an agreement with Iluka Resources (ASX:ILU) to acquire a 100% interest in four granted Mining Leases, shown in Figure 7. Three of these tenements are surrounded by exploration licences comprising Image’s 100%-owned Gingin project, with the fourth adjacent to Image’s Cataby West and Quinns Hill projects.

This acquisition gives Image control of a 65km strike length of the Gingin Scarp. Image has recognised the Gingin Scarp as a high grade/high priority target area based on its drilling at Gingin South; the presence of the high grade 2.5km-long Gingin Mine owned by Iluka; and on detailed ground magnetic surveys carried out over the last two years by Image.

The Iluka Mining Lease resources have been analysed as part of a due diligence process and Table 8 summarises Image’s estimates of the resources at a 2.5% HM cut-off. The fact that the mining leases are granted is considered significant as it will facilitate the fast track of these resources through the permitting process to development, subject to the completion of appropriate agreements with landowners.

Table 8

New Acquisition Resource Inventory (2.5%HM cut-off)

Project	Ore (Mt)	HM (%)	HM (kt)	Ilmenite	Leuc	Rutile	Zircon
Gingin South	2.8	5.1	144	54.1	14.2 *	5.3	7.8
Boonanarring	3.1	7.2	221	48.5	0.9	2.65	15
Gingin North	2.4	5.5	130	57.3	10.2 *	3.45	5.7
Red Gully	6.0	7.7	460	65.8	8.3 *	3.1	12.4
Total	14.3	6.7	955	58.9	7.7	3.4	11.3

• Leuc = N/Magnetic Leucoxene + Magnetic Leucoxene

This acquisition increases Image’s dry mining resource inventory from 1.8Mt of HM to 2.8Mt, an increase of 55% and increases the total dry mining + dredge mining resource to 7.53Mt of HM. The elevated zircon content of the Boonanarring resource has been shown by ground magnetics to have the potential to extend at least a further 7.7km to the north on existing Image tenure. This anomaly remains open to the north and will be subjected to ground magnetic surveys. The Gingin South Mining Lease lies directly to the north of Image’s Gingin South deposit (see Figure 5), which extends into the Mining Lease.

• 13 -

REVIEW OF OPERATIONS

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Figure 7
Gingin Target Corridor and New Acquisitions
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Bidaminna (Image 100%)

During the year Image began drilling at its Bidaminna project and completed a total of 6 lines of drilling for 57 holes and 3,035m (Figure 8). Two lines were drilled on the northern end of the Bidaminna deposit that was identified by previous explorers in 1990. Image has included the Bidaminna deposit in its resource inventory as an Inferred Resource of 44.6M tonnes at 3.0% HM, containing 1.4M tonnes of HM at a 1% HM cutoff.

The current programme was designed principally to test new magnetic targets to the north and east of the Bidaminna deposit. However, two lines were drilled into the northern extent of the known deposit and one hole in the southernmost line (BN018) was found to contain a 30m-thick mineralised zone from 27m depth which averaged 7.7% HM using a 1% HM cut-off and includes a 3m intersection averaging 34.7% HM. This grade is significantly higher than reported in adjacent historical drill holes and was confirmed visually by a twinned hole and holes drilled 20m either side across strike. However, this intersection has encouraged Image to re-assess the prospectivity of the Bidaminna deposit and more drilling will be scheduled to follow up the potential for a high-grade core to the deposit.

• 14 -

REVIEW OF OPERATIONS

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Figure 8 Bidaminna Drilling

North Perth Basin Scoping Study

During the year Image commenced an economic analysis of its North Perth Basin heavy mineral deposits which are likely to be amenable to dry mining techniques. The study will include estimation of capital costs, operating costs and likely product recoveries based on the test work completed to date.

EUCLA BASIN (Image 100%)

Image has defined a significant zircon resource at Cyclone Extended of 86.3Mt @1.9% HM (1.0% HM cut-off). Image’s estimate of the defined resources at Diatreme Resources’ adjacent Cyclone deposit and the Cyclone Extended deposit total some 1.8Mt of contained zircon and 0.7Mt of contained rutile and leucoxene (1.0% HM cut-off), indicating a globally significant resource at a time of near record zircon and titanium mineral prices. Discussions with Diatreme are continuing with regard to cooperation on possible development options for these resources.

Wet weather delayed the start of an 8,000m aircore drilling programme designed to test strike extensions of the Cyclone Extended strandlines. A survey team has completed geophysical traverses across the main target areas and identified 22km of potential strandline targets. The regional stratigraphic drilling approach has now been more tightly focussed to concentrate on these targets. Figure 9 shows the identified target areas. The aircore drilling programme is now scheduled to commence in August 2011.

• 15 -

REVIEW OF OPERATIONS

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Figure 9 Serpentine Lakes Geophysical Targets

ERAYINIA JV (Image 100%, diluting)

Image entered into a farm-in and joint venture agreement with Integra Mining on two exploration licences totalling 120sq km in area held by Image along strike from Integra’s 0.5Moz Aldiss Gold Project situated 130km east of Kalgoorlie. Under the terms of the agreements Integra may earn a 70% interest in the tenements by expenditure of $750,000 within a five year period. The joint venture will allow Image to focus on its core heavy mineral assets whilst retaining equity in a grassroots gold play at a time of rising gold prices.

The information in this report that relates to exploration results and mineral resources is based on information compiled or reviewed by Paul Leandri BAppSc is a full time employee of Image Resources NL. Paul Leandri 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 Persons as defined in the 2004 edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Paul Leandri consents to the inclusion of this information in the form and context in which it appears in this report

• 16 -

DIRECTORS' REPORT

Your directors present their report on the Company for the year ended 30 June 2011.

DIRECTORS

The following persons were directors of Image Resources NL (“ Image ”) during the whole of the year and up to the date of this report:

Peter Thomas George Sakalidis Roger Thomson

PRINCIPAL ACTIVITIES

The principal activity of the Company during the year was the exploration for heavy minerals and the evaluation thereof for determining mineral resources in the North Perth Basin and the Eucla Basin of Western Australia.

RESULTS FROM OPERATIONS

During the year the Company recorded an operating loss of $4,609,354 (2010: $2,889,660).

The previous year’s operating loss included $398,650 as an expense in respect of “share based payments”. This was not a cash outlay. It was brought to account by virtue of a requirement at law. Net of this figure, the operating loss for that year was $2,491,010.

DIVIDENDS

No amounts have been paid or declared by way of dividend by the Company since the end of the previous financial year and the Directors do not recommend the payment of any dividend.

REVIEW OF OPERATIONS

A review of operations is covered elsewhere in this Annual Report.

EARNINGS PER SHARE

Basic Loss per share for the financial period was 5.20 cents (2010: 3.37 cents). Diluted Loss per share in respect of the year ended 30 June 2011 is the same (2010: 3.37 cents).

FINANCIAL POSITION

The Company’s cash position as at 30 June 2011 was $2,952,941, a reduction from the 30 June 2010 cash balance which was $4,049,572. The cash position is adequate to fund committed exploration expenditure.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Significant changes in the state of affairs of the Company during the financial year were the placement of 3,125,000 fully paid ordinary shares at $0.40 each and 1,200,000 fully paid ordinary shares as part consideration for the acquisition of tenements from Iluka Resources NL.

During the year, the Company entered an agreement with Potash West NL ( Potash ) under which Potash (with Image’s shareholders’ approval) acquired from Image the exclusive rights to prospect and explore for and mine glauconite and phosphate (and any by-products resulting from the processing of any glauconite or phosphate or both) on Quinns Hill (E70/3100), Fernview (ELA70/3999), Dunterry (ELA70/4000), Whyona (ELA70/4001) and Bell (E70/3418). As part of that agreement, Image’s shareholders as at 27 January 2011 were issued fully paid ordinary shares in Potash West for no consideration. Potash West was first quoted on the ASX 13 May 2011. Shareholders who had a holding in Potash West on the date Potash listed on ASX are reminded that if they hold shares in Potash on the first business day following 12 May 2013 they will thereby participate in the distribution of the pool of Contingent Entitlement Shares in Potash and they should refer to source documentation to determine their rights, verify the correct dates and other attendant issues.

Also during the year, the remaining 30% interest in tenements comprising the Cooljarloo JV was acquired from Metal Sands Pty Ltd. The acquisition price of $1,570,000 (excluding stamp duty) was agreed in November 2010 and was settled after year end by way of a cash payment together with the issue of 3,000,000 fully paid ordinary shares.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

No material matters have occurred subsequent to the end of the financial year which require reporting on other than the matters as reported to ASX.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company.

• 17 -

DIRECTORS' REPORT

ENVIRONMENTAL ISSUES

The Company carries out operations in Australia which are subject to environmental regulations under both Commonwealth and State legislation in relation to those exploration activities.

The Company’s exploration manager is responsible for being aware of and monitoring compliance with regulations. During or since the financial year there have been no known significant breaches of these regulations.

INFORMATION ON DIRECTORS AND COMPANY SECRETARIES

Peter Thomas

Chairman

Mr Thomas was a practising solicitor from 1980 until June 2011, specialising in the provision of corporate and commercial advice to explorers and miners. Since the mid-1980s, he has served on the boards of various listed companies. He is also non-executive founding chairman of Magnetic Resources NL (since that company was incorporated on 23 August 2006), Meteoric Resources NL (since that company was incorporated on 13 February 2004), Emu Nickel NL (since that company was incorporated 29 August 2007) and Middle Island Resources Limited (since 2 March 2010), all four of whom are ASX listed. He was also appointed non-executive director of ANCOA Pty Ltd (previously known as Court Resources WA Pty Ltd) on 28 July 2010. Within the last three years, he was the founding chairman of Sandfire Resources NL for the period June 2003 to December 2006 and non-executive director of GoldLink IncomePlus Limited from 4 April 2008 to 18 June 2008.

Mr Thomas has a relevant interest in 1,100,306 ordinary fully paid shares, 600,000 unquoted options exercisable at $1.80 each by 16 November 2011, 650,000 unquoted options exercisable at $2.12 each by 20 November 2012 and 500,000 unquoted options exercisable at $1.1162 each by 18 December 2014.

George Sakalidis

Managing Director

Mr Sakalidis is an exploration geophysicist with over 25 years’ industry experience, during which time his career has included extensive gold, diamond, base metals and mineral sands exploration. Mr Sakalidis has been involved in a number of significant mineral discoveries, including the Three Rivers and Rose gold deposits in Western Australia and the tenement applications over the Silver Swan nickel deposit. He was also instrumental in the design of the magnetic surveys and exploration drilling program that led to the discovery of the large mineral sands resources at Magnetic Minerals Limited's Dongara Project. He is managing director of this company, Image Resources NL (director since 13 May 1994, managing director since 13 June 2007), Magnetic Resources NL (since that company was incorporated on 23 August 2006), Emu Nickel NL (since that company was incorporated 29 August 2007), executive director of Meteoric Resources NL (since that company was incorporated on 13 February 2004) and non-executive director of Potash West NL (since that company was incorporated on 12 November 2010), all five of whom are ASX listed. He is also non-executive chairman of unlisted Imperium Resources Limited (appointed 23 June 2008).

Mr Sakalidis has a relevant interest in 2,781,372 ordinary fully paid shares, 950,000 unquoted options exercisable at $1.80 each by 16 November 2011, 800,000 unquoted options exercisable at $2.12 each by 20 November 2012, 2,000,000 unquoted options exercisable at $1.50 each by 19 November 2011 and 800,000 unquoted options exercisable at $1.1162 each by 18 December 2014.

Roger Thomson

Executive Director

Mr Thomson is a geologist with more than 35 years’ experience in mineral exploration, mining geology and management in Australia, Africa, South America and Southeast Asia. He has held the positions of General Manager Exploration with Delta Gold Ltd and Sons of Gwalia Ltd and has been responsible for, or closely associated with, making economic discoveries of gold and tantalum in Australia. Mr Thomson successfully managed the exploration programme that led to the discovery of the multi-million ounce Sunrise gold deposit near Laverton in Western Australia. He is an Associate of the Royal School of Mines, a Member of the Australasian Institute of Mining and Metallurgy and a Member the Australian Institute of Geoscientists. He is managing director of Meteoric Resources NL (since the company was incorporated on 13 February 2004), executive director of this company, Image Resources NL (since 19 April 2002), Magnetic Resources NL (since that company was incorporated on 23 August 2006) and Emu Nickel NL (since that company was incorporated 29 August 2007), all four of whom are ASX listed. He was a non-executive director of Mariana Resources Limited from 20 February 2006 to 28 November 2008.

Mr Thomson has a direct interest in 2,143,969 ordinary fully paid shares, 950,000 unquoted options exercisable at $1.80 each by 16 November 2011, 750,000 unquoted options exercisable at $2.12 each by 20 November 2012 and 550,000 unquoted options exercisable at $1.1162 each by 18 December 2014.

Rudolf Tieleman

Company Secretary

Mr Tieleman is an accountant with over 25 years’ experience in public practice. He has extensive knowledge in matters relating to the operation and administration of listed mining companies in Australia.

AUDIT COMMITTEE

At the date of this report the Company does not have a separately constituted Audit Committee as all matters normally considered by an audit committee are dealt with by the full board.

• 18 -

DIRECTORS' REPORT

MEETINGS OF DIRECTORS

During the financial year ended 30 June 2011, there were nine meetings of directors, all of which were attended by all the directors.

REMUNERATION REPORT (Audited)

Names and positions held of key management personnel in office at any time during the financial year were:

Key Management Person	Position
Peter Thomas	Non-Executive Chairman
George Sakalidis	ManagingDirector
Roger Thomson	Executive Director
Rudolf Tieleman	CompanySecretary

The Company’s policy for determining the nature and amount of emoluments of key management personnel is set out below:

Key Management Personnel Remuneration and Incentive Policies

The Remuneration Committee (“ committee ”) makes decisions with respect to appropriate and competitive remuneration and incentive policies (including basis for paying and the quantum of any bonuses), for key management personnel and others as considered appropriate to be singled out for special attention, which:

• motivates them to contribute to the growth and success of the Company within an appropriate control framework;

• aligns the interests of key leadership with the interests of the Company’s shareholders;

• are paid within any limits imposed by the Constitution and make recommendations to the Board with respect to the need for increases to any such amount at the Company’s annual general meeting; and

• in the case of directors, only permits participation in equity-based remuneration schemes after appropriate disclosure to, due consideration by and with the approval of the Company’s shareholders.

The committee is to ensure that recommendations are made to the Board with respect to the above.

Non-Executive Directors

• The committee is to ensure that non-executive directors are not provided with retirement benefits other than statutory superannuation entitlements.

• To the extent that the Company adopts a remuneration structure for its non-executive directors other than in the form of cash and superannuation, the committee shall document its reasons for the purpose of disclosure to stakeholders.

Incentive Plans and Benefits Programs

The committee is to:

• review and make recommendations concerning long-term incentive compensation plans, including the use of equity-based plans. Except as otherwise delegated by the Board, the committee will act on behalf of the Board to administer equity-based and employee benefit plans, and as such will discharge any responsibilities under those plans, including making and authorising grants, in accordance with the terms of those plans;

• ensure that, where practicable, incentive plans are designed around appropriate and realistic performance targets that measure relative performance and provide remuneration when they are achieved; and

• continually review and, if necessary, improve any existing benefit programs established for employees.

Retirement and Superannuation Payments

Prescribed benefits were provided by the Company to all directors by way of superannuation contributions to externally managed complying superannuation funds during the year. These benefits were paid as superannuation contributions to satisfy (at least) the requirements of the Superannuation Contribution Guarantee Act and in satisfaction of any salary sacrifice requests. All contributions were made to accumulation type funds selected by the director and accordingly actuarial assessments were not required.

• 19 -

DIRECTORS' REPORT

Key Management Personnel Remuneration

		Year ended 30 June	2011
Key Management Person	Short-term benefits Fees & contractual payments ($)	Post- employment Statutory superannuation ($)	Total cash and cash equivalent benefits ($)	Equity-settled share based payments ($)	Total ($)
Peter Thomas Non-Executive Chairman	40,000	3,600	43,600	-	43,600
George Sakalidis Executive Managing Director	135,480	3,600	139,080	-	139,080
Roger Thomson Executive Director	77,530	3,600	81,130	-	81,130
Rudolf Tieleman Company Secretary	61,682	-	61,682	-	61,682
Total	314,692	10,800	325,492	-	325,492

		Year ended 30 June	2010
Key Management Person	Short-term benefits Fees & contractual payments ($)	Post- employment Statutory superannuation ($)	Total cash and cash equivalent benefits ($)	Equity-settled share based payments (1) ($)	Total ($)
Peter Thomas Non-Executive Chairman	56,095	3,600	59,695	85,000	144,695
George Sakalidis Executive Managing Director	155,675	3,600	159,275	136,000	295,275
Roger Thomson Executive Director	89,410	3,600	93,010	93,500	186,510
Rudolf Tieleman Company Secretary	57,745	-	57,745	51,000	108,745
Total	358,925	10,800	369,725	365,500	735,225

Note (1) Equity remuneration represents share options granted during the previous year as approved at the general meeting of shareholders held 30 November 2009. These options were valued in accordance with International Financial Reporting Standards which specifies that an option-pricing model be applied to employees’ or directors’ stock options to estimate their fair value as at their grant date. The independent valuer used a range of open form models (Basic and Binomial). The options vested immediately.

• 20 -

DIRECTORS' REPORT

Key Management Personnel Remuneration (Continued..)

Consultant Agreements

A consulting agreement has been executed between the Company and Mr Sakalidis’ nominated associated entity under which Mr Sakalidis deliver consulting services to the Company. Either party may, in its sole and absolute discretion, terminate the engagement by providing 30 days written notice. The Company may, at its option, elect to pay the consultant the equivalent remuneration for the period of the notice and dispense with the notice period. There are no provisions for the payment of any other termination payments.

There is another consulting agreement between the Company and Mr Thomson’s nominee which is in the same form as the one above described.

Other major provisions of those agreements are set out as follows:

	Term of agreements	Base rate	Reviewperiods	Increase
Leeman Pty Ltd (G Sakalidis)	No set term	$155.00 per hour	Annually on 1 July	Discretionary by Board
Regor Consulting Pty Ltd (R Thomson)	No set term	$135.00 per hour	Annually on 1 July

Guaranteed Rate Increases

There are no guaranteed rate increases fixed in the contracts of any of the key management personnel.

DIRECTORS’ INTERESTS

The relevant interest of each director in the shares and options over such instruments issued by the Company as notified by the directors to the Australian Securities Exchange in accordance with Section 205G(1) of the Corporations Act 2001, at the date of this report is as follows:

	Fully Paid Ordinary Shares		Options over Ordinary Shares	Options over Ordinary Shares
		Expiring 16.11.2011 Exercisable at $1.80	Expiring 19.11.2011 Exercisable at $1.50	Expiring 20.11.2012 Exercisable at $2.12	Expiring 18.11.2014 Exercisable at $1.1162
Peter Thomas	1,100,306	600,000	-	650,000	500,000
George Sakalidis	2,781,372	950,000	2,000,000	800,000	800,000
Roger Thomson	2,143,969	950,000	-	750,000	550,000

SHARE OPTIONS GRANTED TO DIRECTORS AND OFFICERS

No options have been issued to directors and officers during or since the end of the financial year.

END OF AUDITED SECTION

EMPLOYEES

Aside from directors (all of whom are, for tax purposes, treated as employees), the Company had six non-casual employees at 30 June 2011 (2010: six).

CORPORATE STRUCTURE

Image is a no liability company incorporated and domiciled in Australia.

• 21 -

DIRECTORS' REPORT

ACCESS TO INDEPENDENT ADVICE

Each director has the right, so long as he is acting reasonably in the interests of the Company and in the discharge of his duties as a director, to seek independent professional advice and recover the reasonable costs thereof from the Company.

The advice shall only be sought after consultation about the matter with the chairman (where it is reasonable that the chairman be consulted) or, if it is the chairman that wishes to seek the advice or it is unreasonable that he be consulted, another director (if that be reasonable).

The advice is to be made immediately available to all board members other than to a director against whom privilege is claimed.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into agreements indemnifying, to the extent permitted by law, all the directors and officers of the Company against all losses or liabilities incurred by each director and officer in their capacity as directors and officers of the Company. During the year an amount of $12,716 (2010: $10,206) was incurred in insurance premiums for this purpose.

OPTIONS

As at the date of this report there are the following unquoted options over unissued ordinary shares in the Company:

• (a) 2,500,000 exercisable at $1.80 per option on or before 16 November 2011;

• (b) 2,500,000 exercisable at $1.50 per option on or before 19 November 2011;

• (c) 2,200,000 exercisable at $2.12 per option on or before 20 November 2012;

• (d) 2,345,000 exercisable at $1.1162 per option on or before 18 December 2014;

• (e) 95,000 exercisable at $0.6995 per option on or before 21 December 2015.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to 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 part of those proceedings.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out in this annual report.

Signed in accordance with a resolution of the directors

G SAKALIDIS

Managing Director Perth 30 September 2011

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• 22 -

AUDITOR’S INDEPENDENCE DECLARATION

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Auditors Independence Declaration

To those charged with governance of Image Resources NL

As auditor for the audit of Image Resources NL for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been:

• a) No contraventions of the 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.

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Somes and Cooke

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Nicholas Hollens

1304 Hay Street West Perth WA 6005 Date: 30 September 2011

• 23 -

CORPORATE GOVERNANCE STATEMENT

Preamble

This statement is provided in compliance with the recommendations ( Recommendations ) in the ASX Corporate Governance Council’s second edition of the Corporate Governance Principles and Recommendations.

Reference is to be made to this Statement or the Directors’ Report for the information required by the Recommendations to appear in an Annual Report.

Except to the extent indicated in the “if not, why not” exception report appearing below, the Company has resolved that for so long as it is admitted to the official lists of the ASX it shall abide by the ASX Recommendations.

Due to the exigencies and vagaries of commercial life and changing circumstances, there will, no doubt, be occasions when, especially because of the size of the Company and the composition of its Board, that it can be expected to depart from the policies and charters which it has adopted. These policies have been adopted on the basis that, in the circumstances of the Company, they reflect what is considered to reflect a reasonable aspiration. It is not expected that they will be slavishly adhered to. Their object is to focus attention upon the issues they address and provoke thought about and awareness of those issues and the pitfalls that one could otherwise fall into inadvertently. The important thing is to develop a culture conducive only to good and appropriate conduct and practices.

Honesty and integrity must be the overriding and guiding principle in all things - substance must prevail over form and lip service. The Company intends that adherence to these policies be a condition of each contract of employment or service.

The Board encourages all key management personnel, other employees, contractors and other stakeholders to monitor compliance with this Corporate Governance manual and periodically, by liaising with the Board, management and staff, especially in relation to observable departures from the intent of hereof and with and any ideas or suggestions for improvement. Suggestions for improvements or amendments can be made at any time by providing a written note to the chairman.

If not why not exception report

Except to the extent stated below, during the financial year ended 30 June 2011, the Company complied with each of The Recommendations (set out below). Exceptions are stated in italics following an “If not, why not”: heading.

1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Companies should establish and disclose the respective roles and responsibilities of board and management.

• 1.1. Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

• 1.2. Companies should disclose the process for evaluating the performance of senior executives.

• 1.3. Companies should provide the information indicated in the Guide to reporting on Principle 1 .

2. STRUCTURE THE BOARD TO ADD VALUE

• Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.

• 2.1. A majority of the board should be independent directors.

“If not, why not”:

The Company has a three person board. Two of the directors (namely, Messrs G Sakalidis and RM Thomson) serve as executives and are not considered to be independent directors. As to the other director (namely, PS Thomas), see the “If not, why not” response to Recommendation 2.2.

The Company has a small close knit team which has a positive interactive working history.

Given all the circumstances attendant upon the Company including its objectives, the nature and extent of its actual and proposed operations, its capital base and other resources, the costs associated with a board comprised of more than the minimum number and the need for a board comprised of persons with a blend of traits, skills, experience, expertise, entrepreneurialism, innovation, tenacity, vision and dedication in order to enliven the prospects of creating value for shareholders, this recommendation is thought by the board to be inappropriate.

• 2.2. The chair should be an independent director.

• 24 -

CORPORATE GOVERNANCE STATEMENT

“If not, why not”:

The chair, namely Mr PS Thomas, holds securities in the Company (directors are encouraged to own the same), and contributes to the development of its corporate strategy and promotion.

The chair considers himself to be an independent director as he is neither part of nor expected to be a part of the day to day management team. The chair regards himself as being free of any relationship that could materially interfere with his independent exercise of judgement and ability to act in an entirely disinterested manner in all things.

The remaining directors consider Mr Thomas to be an independent director for the same reasons. Refer to the Company’s website to view a copy of its formal policies for further details regarding independence.

• 2.3. The roles of the chair and chief executive officer (or equivalent) should not be exercised by the same individual.

• 2.4. The board should establish a Nomination Committee.

“If not, why not”:

The Company has a small board which does not perceive that any gains are to be derived through the operation of a formal committee structure. The board will deal with nomination issues on an ad hoc unstructured basis.

• 2.5. Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

“If not, why not”:

No formal performance evaluation has been conducted because of the size of the Company and the fact that the directors (of which there are only three) work as a close knit team and each is cognisant of what the others are doing and constantly encouraging the others to secure better outcome for shareholders.

• 2.6. Companies should provide the information indicated in the Guide to Reporting on Principle 2.

3. PROMOTE ETHICAL AND RESPONSIBLE DECISION- MAKING

Companies should actively promote ethical and responsible decision-making.

• 3.1. Companies should establish a Code of Conduct and disclose the code or a summary of the code as to the:

• 3.1.1. practices necessary to maintain confidence in the Company’s integrity;

• 3.1.2. practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders;

• 3.1.3. responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

• 3.2. Companies should establish a policy concerning trading in Company securities by directors, senior executives and employees and disclose the policy or a summary of that policy.

• 3.3. Companies should provide the information indicated in the Guide to reporting on Principle 3.

4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Companies should have a structure to independently verify and safeguard the integrity of their financial reporting.

• 4.1. The board should establish an audit committee.

• 4.2. The audit committee should be structured so that it:

• 4.2.1. consists only of non-executive directors;

• 4.2.2. consists of a majority of independent directors;

• 4.2.3. is chaired by an independent chair, who is not chair of the board; and

• 4.2.4. has at least three members.

• 4.3. The audit committee should have a formal charter.

• 4.4. Companies should provide the information indicated in Guide to reporting on Principle 4.

• 25 -

CORPORATE GOVERNANCE STATEMENT

“If not, why not”:

The Company has a policy regarding the formation, composition, role, powers and responsibilities of an audit committee although it has not yet established such a committee.

	The Company has a policy regarding the formation, composition, role, powers and responsibilities of an audit committee although it has not yet established such a committee.
	The Company is small, has a small board with a tight management structure, relies on equity capital for funding and in all the
	circumstances of the Company the board does not perceive that any gains are to be derived through the operation of a formal committee
	structure.
5.	MAKE TIMELY AND BALANCED DISCLOSURE
	Companies should promote timely and balanced disclosure of all material matters concerning the Company.
5.1.	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to
	ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.
5.2.	Companies should provide the information indicated in the_Guide to reporting on Principle 5._
6.	RESPECT THE RIGHTS OF SHAREHOLDERS
	Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.
6.1.	Companies should design a communications policy for promoting effective communication with shareholders and encouraging their
	participation at general meetings and disclose their policy or a summary of that policy.
6.2.	Companies should provide the information indicated in the Guide to reporting on Principle 6.
7.	RECOGNISE AND MANAGE RISK
	Companies should establish a sound system of risk oversight and management and internal control.
7.1.	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those
	policies.
7.2.	The board should require management to design and implement the risk management and internal control system to manage the
	company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that
	management has reported to it as to the effectiveness of the company’s management of its material business risks.
7.3.	The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial
	officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound
	system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial
	reporting risks.
7.4.	Companies should provide the information indicated in the Guide to reporting on Principle 7.
	“If not, why not”:
	Management has not reported to the board as to the effectiveness of the Company’s management of its material business risks as the
	board has not required this of it.
	Whilst the board recognises the benefit of the discipline of documenting such matters, the board has deployed its scarce resources to
	other endeavours in priority to the preparation of a written report on the matter of risk given the Company has strict procedures in place
	and the board has two executive directors so they are well versed in the day to day affairs of the Company and know what measures are
	in place.
8.	REMUNERATE FAIRLY AND RESPONSIBLY
	Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to
	performance is clear.
8.1.	The board should establish a Remuneration Committee.
8.2.	Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior
	executives.
8.3.	Companies should provide the information indicated in the Guide to reporting on Principle 8.

• 26 -

CORPORATE GOVERNANCE STATEMENT

ADDITIONAL INFORMATION

The following information is required by the Recommendations to appear in this Statement.

The board has agreed on the following guidelines for assessing the materiality of matters:

1. MATERIALITY – QUANTITATIVE

• 1.1. Statement of Financial Position items:

Statement of Financial Position items are material if they have a value of more than 5% of pro-forma net assets.

• 1.2. State of Comprehensive Income items:

Profit and loss items are material if they will have an impact on the current year operating result of 10% or more.

2. MATERIALITY – QUALITATIVE

Items are also material if:

• 2.1. they are of a character that enlivens the obligation to disclose under either ASX Listing Rule 3.1 or the continuous disclosure obligations arising in terms of the Corporations Act;

• 2.2. they impact on the reputation of the Company;

• 2.3. they involve a breach of legislation;

• 2.4. they are outside the ordinary course of business;

• 2.5. they could affect the Company’s rights to its assets;

• 2.6. if accumulated they would trigger the quantitative tests;

• 2.7. they involve a contingent liability that would have a probable effect of 5% or more on Statement of Financial Position or Statement of Comprehensive Income items; or

• 2.8. they will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 10%.

• 3. MATERIAL CONTRACTS Contracts will be considered material if:

• 3.1. they are outside the ordinary course of business;

• 3.2. they contain exceptionally onerous provisions in the opinion of the Board;

• 3.3. they impact on income or distribution in excess of the quantitative tests;

• 3.4. there is a likelihood that either party will default, and the default may trigger any of the quantitative tests;

• 3.5. they are essential to the activities of the Company and cannot be replaced, or cannot be replaced without an increase in cost of such a quantum, triggering any of the quantitative tests;

• 3.6. they contain or trigger change of control provisions; 3.7. they are between or for the benefit of related parties; or 3.8. they otherwise trigger the quantitative tests.

• 27 -

STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2011

Notes Revenue: Interest and dividends income Other revenue 3 Expenses: Depreciation expense 11 Exploration and tenement expenses written off 12 Share based payments expense 22 Other expenses 3 (Loss) before income tax expense Income tax expense 4 (Loss) from continuing operations Other comprehensive income: Changes in the fair value of available-for-sale financial assets Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income for year attributable to members of the Company Basic (loss) per share (cents per share) 7 Diluted (loss) per share (cents per share) 7	2011 ($) 207,277 859,594 (40,796) (4,656,131) - (979,298) (4,609,354) - (4,609,354) (2,308,349) (2,308,349) (6,917,703) (6,917,703) (5.20) (5.20)	2010 ($) 267,998 350,023 (45,081) (2,132,431) (398,650) (931,519)
		(2,889,660) -
		(2,889,660)
		2,429,617
		2,429,617
		460,043
		(460,043)
		(3.37) (3.37)

The accompanying notes form part of these financial statements.

• 28 -

STATEMENT OF FINANCIAL POSITION As at 30 June 2011

Notes Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Other assets 10 Total Current Assets Non-Current Assets Property, plant and equipment 11 Mineral interests 12 Other financial assets 13 Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables 14 Provisions 15 Total Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Contributed equity 16 Reserves 16 Accumulated (losses) TOTAL EQUITY The accompanying notes form part of these financial statements.	2011 ($) 2,952,941 181,002 39,216 3,173,159 47,514 - 1,998,544 2,046,058 5,219,217 1,858,811 13,117 1,871,928 1,871,928 3,347,289 24,951,646 4,248,309 (25,852,666) 3,347,289	2010 ($) 4,049,572 252,363 50,468
		4,352,403
		78,725 - 4,311,173
		4,389,898
		8,742,301
		305,591 24,396
		329,987
		329,987
		8,412,314
		23,098,968 6,556,658 (21,243,312)
		8,412,314

• 29 -

STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2011

Balance at 1.7.2009 Operating (loss) for the year Other comprehensive income Shares issued during the year Share based payments expense Balance at 30.6.2010 Balance at 1.7.2010 Operating (loss) for the year Other comprehensive income Shares issued during the year Share issue costs Balance at 30.6.2011		Ordinary Share Capital (Net of Costs) ($) Available for Sale Financial Asset Reserve ($) Employee Benefit Reserve ($)	Accumulated Losses ($) Total ($)
		22,625,273 407,132 3,321,259 - - - - 2,429,617 - 473,695 - - - - 398,650	(18,353,652) 8,000,012 (2,889,660) (2,889,660) - 2,429,617 - 473,695 - 398,650
		23,098,968 2,836,749 3,719,909	(21,243,312) 8,412,314
		23,098,968 2,836,749 3,719,909 - - - - (2,308,349) - 1,920,380 - - (67,702) - -	(21,243,312) 8,412,314 (4,609,354) (4,609,354) - (2,308,349) - 1,920,380 - (67,702)
		24,951,646 528,400 3,719,909	(25,852,666) 3,347,289

The accompanying notes form part of these financial statements.

• 30 -

STATEMENT OF CASH FLOWS For the Year Ended 30 June 2011

Notes CASH FLOWS FROM OPERATING ACTIVITIES Cash payments to suppliers and contractors Interest received Dividends received Net cash (used in) operating activities 17 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment Proceeds from sale of equipment Payments for exploration and evaluation Purchase of new prospects Purchase of investments Proceeds on sale of investments Proceeds on sale of plant and equipment Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new issues of shares and exercise of options Share issue expenses Net cash provided by financing activities Net (decrease) in cash held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 8 The accompanying notes form part of these financial statements.	2011 ($) (791,533) 204,684 2,593 (584,256) (10,385) - (1,980,240) (310,961) (269,251) 819,864 800 (1,750,173) 1,305,500 (67,702) 1,237,798 (1,096,631) 4,049,572 2,952,941	2010 ($) (484,322) 263,905 4,093
		(216,324)
		(40,617) - (2,066,870) (32,955) (783,952) 298,661 -
		(2,625,733)
		473,695 -
		473,695
		(2,368,362) 6,417,934
		4,049,572

• 31 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

This financial report includes the financial statements and notes of the Company.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements were authorised for issue on 28 September 2011.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Going Concern

The directors have prepared the financial statements of the Company on a going concern basis.

In the directors’ opinion, the Company is able to continue as a going concern and therefore realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in the financial report.

Accounting Policies

(a) Revenue Interest revenue is recognised on a proportional basis taking into account interest rates applicable to the financial asset. All revenue is stated net of the amount of goods and services tax (GST).

(b) Employee Benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by non-casual 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. There is no liability for long service leave entitlements.

(c) Exploration and Evaluation Expenditure All exploration and evaluation expenditure is expensed to Statement of Comprehensive Income as incurred. The effect of this write-off is to increase the loss incurred from continuing operations as disclosed in the Statement of Comprehensive Income and to decrease the carrying values in the Statement of Financial Position. That the carrying value of mineral assets, as a result of the operation of this policy, is zero does not necessarily reflect the board’s view as to the market value of that asset.

(d) Acquisition of Assets The cost method is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of assets given up at the date of acquisition plus costs incidental to the acquisition. Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure or mine properties based on the stage of development reached at the date of acquisition. (e) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

• 32 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

(f) Income Tax

The income tax expense for the year comprises current income tax expense and deferred tax expense.

Current income tax expense charged to the Statement of Comprehensive Income is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities and assets are therefore measured at the amounts expected to be paid to or recovered from the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses, if any in fact are brought to account.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. 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 assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(g) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

(h) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Comprehensive Income. This policy has no application where paragraph (c) (Exploration and Evaluation Expenditure) applies.

• (i) Earnings per Share

• (i) Basic Earnings per Share – Basic earnings per share (EPS) is determined by dividing the loss from continuing operations after related income tax expense by the weighted average number of ordinary shares outstanding during the financial period.

• (ii) Diluted Earnings per Share – Diluted EPS is calculated as net loss attributable to members, adjusted for:

  • costs of servicing equity (other than dividends);

  • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

  • other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares.

(j) Property, plant, and equipment

Each class of plant, equipment and motor vehicles is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Plant, equipment and motor vehicles are measured on the cost basis.

The carrying amounts of plant, equipment and motor vehicles are reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all plant, equipment and motor vehicles are depreciated on a straight-line basis over the asset’s useful life to the Company commencing from the time the asset is held ready for use.

• 33 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

The depreciation rates used for the class of plant, equipment and motor vehicle depreciable assets range between 20% and 100%.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position date.

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 Statement of Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(k) Financial Instruments

Recognition and Initial Measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset.

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified at fair value through profit and loss, in which case transaction costs are expensed to profit and loss immediately.

Classification and Subsequent Measurement

Finance instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

the amount at which the financial asset or financial liability is measured at initial recognition;

less principal repayments;

plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method ; and

less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit and loss.

The Company does not designate any interests in joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

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 subsequently measured at amortised cost.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity or determinable payments.

They are subsequently measured at fair value with changes in such fair value (i.e., gains and losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit and loss.

Available-for-sale financial assets are included in current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as non-current assets.

Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

• 34 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the profit or loss.

Financial Guarantees

Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition.

The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118.

The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on:

the likelihood of the guaranteed party defaulting in a year period;

the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and the maximum loss exposed if the guaranteed party were to default.

De-recognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

(l) Provisions

Provisions are recognised when the Company 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.

(m) Leases

Lease payments for operating leases (where substantially all the risks and benefits remain with the lessor) are charged as an expense in the periods in which they are incurred.

Lease incentives under operating leases, if any, are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(n) Interest in Joint Ventures

Interest in joint venture operations are brought to account by including in the respective classifications, the share of individual assets employed, liabilities and expenses incurred and revenue from the sale of joint venture output. Interest in joint venture operations are brought to account by including assets and liabilities in their respective classifications using the cost method.

(o) Contributed Equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(p) Share-based Payments and Value Attribution to Equity Remuneration/Benefits

Share-based compensation benefits provided to directors are approved in general meeting by members. Share-based benefits provided to non-directors are approved by the Board of Directors and form part of that employee’s remuneration package.

The International Financial Reporting Standards specifies that a valuation technique must be applied in determining the fair value of employees’ or directors’ stock options as at their grant date. No particular model is specified.

In respect of share options granted, the (theoretical) fair value is recognised over the vesting period as an employee benefit expense with a corresponding increase in equity. The theoretical fair value of the options is calculated at the date of grant taking into account the terms and conditions upon which the options were granted, the effects of non-transferability, exercise restrictions and behavioural considerations. Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital.

(q) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period.

(r) Segment Reporting

Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (“CODM”), which has been identified by the Company as the Managing Director and other members of the Board of directors.

• 35 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

(s) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data obtained both externally and from within the Company.

Key Estimates - Taxation

Balances disclosed in the financial statements and the notes thereto related to taxation are based on best estimates by directors. These estimates take into account both the financial performance and position of the Company as they pertain to current income tax legislation and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current tax position represents the directors’ best estimate pending an assessment being received from the Australian Taxation Office.

Key Judgment – Environmental Issues

Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation and the directors understanding thereof. At the current stage of the Company’s development and its current environmental impact, the directors believe such treatment is reasonable and appropriate.

Key Estimates - Impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

(t) Changes in Accounting Policies

The Company has adopted the following revisions and amendments to AASB’s issued by the Australian Accounting Standards Board and IFRS issued by the International Accounting Standards’ Board, which are relevant to and effective for the Company’s financial statements for the annual period beginning 1 July 2010:

• a) Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project – AASB 2009-5: The amendment requires that leases are classified as finance or operating by applying the general principles of AASB 117. The Company has assessed that none of its leases require reclassification.

• b) Improvements to IFRS – AASB 2010-03: Most of these amendments become effective in annual periods beginning on or after 1 July 2010 or 1 January 2011. The 2010 improvements amend certain provisions of AASB 3, clarify presentation of the reconciliation of each of the components of other comprehensive income and clarify certain disclosure requirements for financial instruments. The 2010 improvements did not have a material impact on the Company’s financial statements.

An overview of standards, amendments and interpretations to IFRS’s and AASB’s issued but not effective is given in note ‘u’ below.

(u) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company. Management anticipates that all of the relevant pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Company’s financial statements.

NOTE 2 OPERATING SEGMENTS

Segment Information

Identification of reportable segments

The Company has identified that it operates in only one segment based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company's principal activity is mineral exploration.

Revenue and assets by geographical region

The Company's revenue is received from sources and assets are located wholly within Australia.

Major customers

Due to the nature of its current operations, the Company does not provide products and services.

Financial information

Reportable items required to be disclosed in this note are consistent with the information disclosed in the Statement of Comprehensive Income and Statement of Financial Position and are not duplicated here.

• 36 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 3 REVENUE AND EXPENDITURE REVENUE Other Income Profit on sale of investments Research and development grant (net of costs) Expense recoveries EXPENDITURE Other Expenses Occupancy costs Filing and ASX Fees Corporate and management Other expenses from continuing operations NOTE 4 INCOME TAX The components of tax expense comprise: Current tax Deferred tax asset/liability The prima facie tax on loss from ordinary activities before income tax is reconciled to income tax as follows: Loss from continuing operations before income tax Prima facie tax benefit attributable to loss from continuing operations before income tax at 30% Tax effect of Non-allowable items • Equity-settled share based payments • Other Deferred tax benefit on tax losses not brought to account Income tax attributable to the Company Unrecognised temporary differences Net deferred tax assets (calculated at 30%) have not been recognised in respect of the following items: Prepayments Provisions Unrecognised deferred tax assets relating to the above temporary differences Unrecognised deferred tax assets The Company has accumulated tax losses of $16,214,509 (2010: $14,037,527). The potential deferred tax benefit of these losses $4,864,353 will only be recognised if:	2011 ($) 546,335 43,259 270,000 859,594 (221,247) (38,942) (209,927) (509,182) (979,298) 2011 ($) - - - 4,609,354 1,382,806 (729,712) (15,978) (637,116) - (11,764) 17,231 5,467	2010 ($) 33,816 98,707 217,500
		350,023
		(158,544) (13,224) (222,205) (537,546)
		(931,519)
		2010 ($) - -
		-
		2,889,660
		866,898 (119,595) (6,527) (740,776)
		-
		(15,140) 27,606
		12,466

(i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released;

(ii) the Company continues to comply with the conditions for deductibility imposed by the law; and

(iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.

• 37 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 5 KEY MANAGEMENT PERSONNEL REMUNERATION AND HOLDINGS Short-term employee benefits Post-employment benefits Equity-settled share based payments	2011 ($) 314,692 10,800 - 325,492	2010 ($) 358,925 10,800 365,500
		735,225

Further key management personnel remuneration information has been included in the Remuneration Report section of the Directors Report.

Information on related party and entity transactions are disclosed in Note 23.

Options held by Key Management Personnel

The number of options over ordinary shares in the Company held during the financial year by key management personnel and/or their statutorily related entities are set out below:

30 June 2011:

Name	Balance at the start of the year	Granted during the year	Exercised during the year	Other changes during the year	Balance at the end of the year	Vested & exercisable at the end of the year
Peter Thomas	2,150,000	-	-	(400,000)	1,750,000	1,750,000
George Sakalidis	5,350,000	-	(150,000)	(650,000)	4,550,000	4,550,000
Roger Thomson	3,050,000	-	-	(800,000)	2,250,000	2,250,000
Rudolf Tieleman	300,000	-	-		300,000	300,000
30 June 2010:
Name	Balance at the start of the year	Granted during the year	Exercised during the year	Other changes during the year	Balance at the end of the year	Vested & exercisable at the end of the year
Peter Thomas	1,650,000	500,000	-	-	2,150,000	2,150,000
George Sakalidis	5,209,164	800,000	(659,164)	-	5,350,000	5,350,000
Roger Thomson	3,055,440	550,000	(555,440)	-	3,050,000	3,050,000
Rudolf Tieleman	-	300,000	-	-	300,000	300,000

These were the only options granted, vested or sold in which any of the key management personnel had an interest (directly or indirectly) during each of those two years.

• 38 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

Shares held by Key Management Personnel

The number of shares in the Company held during the financial year by key management personnel and/or their related entities are set out below:

30 June 2011:

30 June 2011:
Name	Balance at the start of the year	Shares movements	Balance at the end of the year
Peter Thomas	1,100,306	-	1,100,306
George Sakalidis	2,631,372	150,000	2,781,372
Roger Thomson	2,143,969	-	2,143,969
Rudolf Tieleman	396,754	3,246	400,000

30 June 2010:

Name	Balance at the start of the year	Shares movements	Shares movements	Balance at the end of the year	Balance at the end of the year
Peter Thomas	1,100,306		-		1,100,306
George Sakalidis	1,148,742		1,482,630		2,631,372
Roger Thomson	1,731,386		412,583		2,143,969
Rudolf Tieleman	396,754		-		396,754
NOTE 6 AUDITORS REMUNERATION Amounts received or due and receivable by the auditors of the Company for: Auditing and reviewing the financial reports Other NOTE 7 EARNINGS PER SHARE The following reflects the earnings and share data used in the calculation of basic and diluted earnings per share Loss for the year Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share			2011 ($) 19,500 -
			19,500		31,050
			2011 ($) (4,609,354) (4,609,354)		2010 ($) (2,889,660) (2,889,660)
			88,613,891		85,821,462

The Company had 9,640,000 (2010: 12,545,000) options over fully paid ordinary shares on issue at balance date. Options are considered to be potential ordinary shares. However, they are not considered to be dilutive in this period and accordingly have not been included in the determination of diluted earnings per share.

Since the end of the financial year no ordinary shares have been issued pursuant to the employee share incentive scheme.

NOTE 8 CASH AND CASH EQUIVALENTS Cash at bank Deposits at call NOTE 9 TRADE AND OTHER RECEIVABLES	2011 ($) 295,012 2,657,929 2,952,941 2011	2010 ($) 164,257 3,885,315
		4,049,572
		2010

• 39 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

Trade receivables GST and tax refundable NOTE 10 OTHER ASSETS Prepayments NOTE 11 PROPERTY PLANT AND EQUIPMENT Plant, equipment and motor vehicles Less: Accumulated depreciation Reconciliations of the carrying amount of plant, equipment and motor vehicles from the beginning to the end of the financial year. Plant, equipment and motor vehicles Carrying amount at beginning of year Additions Disposals Depreciation expense Total plant, equipment and motor vehicles at end of year NOTE 12 MINERAL INTERESTS Opening balance Net exploration and evaluation expenditure incurred during the year Tenements disposed of during the year Expenditure written off during the year Closing balance NOTE 13 OTHER FINANCIAL ASSETS Non-Current Available-for-sale financial assets – shares in listed corporations Investments in related parties Available-for-sale financial assets includes the following investments held in director- related party entities: Emu Nickel NL Magnetic Resources NL – fully paid shares Magnetic Resources NL – partly-paid shares Meteoric Resources NL – fully paid shares Meteoric Resources NL – partly-paid shares	($) 96,250 84,752 181,002 2011 ($) 39,216 2011 ($) 252,832 (205,318) 47,514 78,725 10,385 (800) (40,796) 47,514 2011 ($) - 4,656,131 - (4,656,131) - 2011 ($) 1,998,544 1,998,544 164,602 1,087,202 14 350,760 179 1,602,757	($) 202,966 49,397
		252,363
		2010 ($)
		50,468
		2010 ($) 306,816 (228,091)
		78,725
		83,189 42,617 (2,000) (45,081)
		78,725
		2010 ($) - 2,132,431 - (2,132,431)
		-
		2010 ($) 4,311,173
		4,311,173
		242,571 3,216,724 1,844 584,600 299
		4,046,038

• 40 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 14 TRADE AND OTHER PAYABLES Trade creditors and accruals Other payable (i) (i) Relates to the acquisition of the remaining 30% interest in tenements comprising the Cooljarloo JV held by Metal Sands Pty Ltd. Subsequent to year end, $1,470,000 was settled by way of the issue of 3,000,000 fully paid ordinary shares in part consideration and the remainder was settled by a cash payment. NOTE 15 CURRENT PROVISIONS Employee leave benefits	2011 ($) 214,041 1,644,770 1,858,811 2011 ($) 13,117	2010 ($) 305,591 -
		305,591
		2010 ($) 24,396

• 41 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 16 ISSUED CAPITAL Contributed Equity – Ordinary Shares At the beginning of the year Issue of shares at $0.39 pursuant to exercise of options Issue of shares at $0.40 Issue of shares at $0.37 pursuant to exercise of options Issue of shares at $0.5124 as consideration to acquire tenements Share issue costs Closing balance: Reserves Available-for-sale financial assets reserve Employee benefits reserve Closing balance Options The Company had the following options over un-issued fully paid ordinary shares at the end of the year: Options exercisable at $0.37 on or before 21.11.2010 - Lapsed Options exercisable at $1.80 on or before 16.11.2011 Options exercisable at $1.50 on or before 19.11.2011 Options exercisable at $2.38 on or before 26.3.2012 Options exercisable at $2.12 on or before 20.11.2012 Options exercisable at $1.1162 on or before 18.12.2014 Options exercisable at $0.6995 on or before 21.12.2015 Total Options	2011	2011
	No.	$
	86,313,959 - 3,125,000 150,000 1,200,000
	90,788,959
	- 2,500,000 2,500,000 - 2,200,000 2,345,000 95,000
	9,640,000

Terms and conditions of contributed equity

Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held, regardless of the amount paid up thereon.

At a general meeting every shareholder present in person or by proxy, representative or attorney has: a) on a show of hands, one vote; and b) on a poll, one vote for each fully paid share held and in respect of a partly paid share, a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price.

• 42 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 17 CASH FLOW INFORMATION Reconciliation of operating loss after income tax with funds used in operating activities: Operating loss after income tax Depreciation and amortisation Exploration expenditure written off Share based payments (Profit) on sale of investments Changes in operating assets and liabilities: (Increase) / decrease in trade and other receivables relating to operating activities Decrease / (increase) in prepayments (Decrease) in trade and other payables relating to operating activities (Decrease) / (increase) in provisions Cash flow from operations	2011 ($) (4,609,354) 40,796 4,656,131 - (546,335) (117,797) 11,252 (7,670) (11,279) (584,256)	2010 ($) (2,889,660) 45,081 2,132,431 398,650 (33,816) 192,530 (28,531) (39,062) 6,053
		(216,324)

During the year, the Company issued 1,200,000 shares at $0.5124 in part consideration for the acquisition of tenements. This transaction is not reflected in the cash flow statement.

NOTE 18 TENEMENT EXPENDITURES AND LEASING COMMITMENTS

The Company has entered into certain obligations to perform minimum exploration work on tenements held. These obligations vary from time to time in accordance with contracts signed. Tenement rentals and minimum expenditure obligations which may be varied or deferred on application are expected to be met in the normal course of business. The minimum statutory expenditure requirement on granted tenements (in which the Company has an interest) for the next twelve months amounts to $1,835,100. Of this amount, $125,000 is expected to be met by JV participants as a result of various joint ventures entered into.

The Company has leased office premises in Ord Street West Perth. The lease is for a four year term expiring on 30 September 2013. The commitment for the year ended 30 June 2012 amounts to $151,826 (net of GST). A substantial proportion of this commitment will be shared between other listed mineral exploration companies which will utilise a proportion of the leased area. The total residual commitment until the expiry of the lease is $350,647.

NOTE 19 JOINT VENTURES

The Company is or has been party to a number of unincorporated exploration joint ventures. Some of those joint ventures involve the Company “farming into” (earning) or “farming out” (diluting) interests in tenements. The following is a list of unincorporated exploration joint ventures under which the Company has earned or is earning an interest:

Name of Project Interest Cooljarloo JV 100% Chandala JV Earned 80% Reagan’s Ford South JV Earning 75% Sipa JV Diluting to 60% Eraynia JV Diluting to 70%	Carrying Amount - Image has acquired the remaining 30% interest - Image has earned its interest - Image is earning its interest - Image is diluting its interest - Image is diluting its interest -

NOTE 20 TENEMENT ACCESS

The interests of holders of freehold land encroached by the Tenements are given special recognition by the Mining Act (WA). As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on the freehold land. Unless it already has secured such rights, there can be no assurance that the Company will secure rights to access those portions of the Tenements encroaching freehold land but, importantly, any native title was extinguished by the grant of freehold so wherever the Tenements encroach freehold the Company is in the position of not having to abide by the Native Title Act albeit aboriginal heritage matters still be of concern.

• 43 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 21 EVENTS SUBSEQUENT TO REPORTING DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years other than the matters referred to in the directors' report or as reported to ASX.

NOTE 22 SHARE BASED PAYMENTS

On 27 June 2011, 95,000 share options were granted to employees and contractors to take up ordinary shares at an exercise price of $0.6995 each. The options are exercisable on or before 21 December 2015, are not listed, hold no voting or dividend rights, are transferable and vested immediately upon issue. No share based payment expense is included in the Statement of Comprehensive Income as the options had minimal value on date of issue. The share based payments expense shown in the financial report ended 30 June 2010 amounted to $398,650.

NOTE 23 RELATED PARTY AND RELATED ENTITY TRANSACTIONS

Transactions with directors, director-related parties and related entities other than those disclosed elsewhere are as follows:

Leeman Pty Ltd, a George Sakalidis related company, was paid $4,950 in respect of the hire of specialised equipment made available to the Company (2010: $7,500).

Total amounts owing to directors and/or director-related parties at 30 June 2011 amounted to $42,813 (2010: $44,328).

The Company has entered into Serviced Office Agreements with Meteoric Resources NL, Magnetic Resources NL and Emu Nickel NL, all director-related parties, whereby it has agreed to provide various administrative services on a monthly basis to those companies commencing from the date each company was listed on the ASX. The amount payable by each company is $7,500 per month. A total of $74,250 (including GST) was owing to the Company as at 30 June 2011 in relation to these agreements.

The Company has also entered into Joint Venture Agreements with Meteoric Resources NL, Magnetic Resources NL and Emu Nickel NL whereby the Company has agreed to farm out interests in a number of its tenements.

NOTE 24 CONTINGENT LIABILITIES

Native Title

The Company has been notified of a number of native title claims impacting its tenements.

The Company is not in a position to assess the likely effect of any native title claim impacting the Company.

The existence of native title and heritage issues represent, as a general proposition, a serious threat to explorers and miners, not only in terms of delaying the grant of tenements and the progression of exploration development and mining operations, but also in terms of costs arising consequent upon dealing with aboriginal interest groups, claims for native title and the like.

• 44 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

NOTE 25 FINANCIAL INSTRUMENTS DISCLOSURE

(a) Financial Risk Management Policies

The Company’s financial instruments consist of deposits with banks, receivables, available-for-sale financial assets and payables.

Risk management policies are approved and reviewed by the board. The use of hedging derivative instruments is not contemplated at this stage of the Company’s development.

Specific Financial Risk Exposure and Management

The main risks the Company is exposed to through its financial instruments, are interest rate and liquidity risks.

Interest Rate Risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.

Liquidity Risk

The Company manages liquidity risk by monitoring forecast cash flows, cash reserves, liquid investments, receivables and payables.

Capital Risk

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern so that they may continue to provide returns for shareholders and benefits for other stakeholders.

Due to the nature of the Company’s activities being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raising as required.

The working capital position of the Company at 30 June 2011 and 30 June 2010 was as follows:

Cash and cash equivalents Trade and other receivables Trade and other payables and provisions (excludes payables to be settled by way of share issue) Working capital position	2011 ($) 2,952,941 181,002 (401,928) 2,732,015	2010 ($) 4,049,572 252,363 (329,987)
		3,971,948

Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position and notes to the financial statements.

There is no material amounts of collateral held as security at balance date.

The credit risk for counterparties included in trade and other receivables at balance date is detailed below.

Trade and other receivables Trade receivables GST and tax refundable	2011 ($) 96,250 84,752 181,002	2010 ($) 202,966 49,397
		252,363

• 45 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

(b) Financial Instruments

The Company holds no derivative instruments, forward exchange contracts and interest rate swaps.

Financial Instrument composition and maturity analysis

The table below reflects the undiscounted contractual settlement terms for financial instruments.

2011 Weighted Average Effective Interest Rate %	Floating Interest Rate ($) Non Interest Bearing ($)	Total ($)
Financial Assets: Cash and cash equivalents 2,950,541 2,400 Trade and other receivables - 181,002 Available-for-sale financial assets - 1,998,544 Total Financial Assets 5.44% 2,950,541 2,181,946 Financial Liabilities: Trade and other payables and provisions - (401,928) Net financial assets 2,950,541 1,780,018 Trade and other payables are expected to be settled as follows: Less than 6 months (see note 14) 2010 Weighted Average Effective Interest Rate % Floating Interest Rate ($) Non-Interest Bearing ($)	2,950,541 2,400 - 181,002 - 1,998,544	2,952,941 181,002 1,998,544
	2,950,541 2,181,946	5,132,487
	- (401,928)	(401,928)
	2,950,541 1,780,018	4,730,559
		2011 $ (1,871,928)
		(1,871,928)
		Total ($)
Financial Assets: Cash and cash equivalents Trade and other receivables Available-for-sale financial assets Total Financial Assets 5.36% Financial Liabilities: Trade and other payables Net financial assets Trade and other payables and provisions are expected to be Less than 6 months	4,047,073 2,499 - 252,363 - 4,311,173	4,049,572 252,363 4,311,173
	4,047,073 4,566,035	8,613,108
	- (329,987)	(329,987)
	4,047,073 4,236,048	8,283,121
	settled as follows:	2010 $ (329,987)
		(329,987)

• 46 -

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2011

(c) Net Fair Values

Fair value estimation

The fair values of financial assets and liabilities are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms’ length transaction.

Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a material impact on the amounts estimated. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted bid prices

The carrying values of financial assets and liabilities as presented in the statement of financial position approximate their fair values.

Sensitivity Analysis – Interest rate risk

The Company has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. The sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in this risk.

As at balance date, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

		2011	2010
		($)	($)
Change	in loss – increase/(decrease):
-	Increase in interest rate by 2%	(59,011)	(80,941)
-	Decrease in interest rate by 2%	59,011	80,941
Change	in equity – increase/(decrease):
-	Increase in interest rate by 2%	59,011	80,941
-	Decrease in interest rate by 2%	(59,011)	(80,941)

• 47 -

DIRECTORS’ DECLARATION

The directors of the Company declare that:

1. the accompanying financial statements and notes are in accordance with the Corporations Act 2001 and:

2. (a) comply with Accounting Standards and the Corporations Act 2001; and

3. (b) give a true and fair view of the financial position as at 30 June 2011 and performance for the year ended on that date of the Company;

4. (c) the audited remuneration disclosures set out in the Remuneration Report section of the Directors’ Report for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001.

5. the Chief Financial Officer has declared pursuant to section 295A(2) of the Corporations Act 2001 that:

6. (a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;

7. (b) the financial statements and the notes for the financial year comply with Accounting Standards; and

8. (c) the financial statements and notes for the financial year give a true and fair view.

9. in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

10. the directors have included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.

This declaration is made in accordance with a resolution of the Board of Directors.

==> picture [182 x 38] intentionally omitted <==

George Sakalidis MANAGING DIRECTOR

PERTH

Dated this 30th day of September 2011

• 48 -

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMAGE RESOURCES NL

INDEPENDENT AUDITOR’S REPORT

==> picture [95 x 109] intentionally omitted <==

To the members of Image Resources NL

Report on the Financial Report

We have audited the accompanying financial report of Image Resources NL which comprises the statement of financial position as at 30 June 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply 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. Those 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 of the financial report that gives a true and fair view 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.

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

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which was given to the directors of Image Resources NL, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion

In our opinion:

• (a) the financial report of Image Resources NL is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

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

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

• 49 -

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMAGE RESOURCES NL

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 19 to 21 of the directors’ report for the year ended 30 June 2011. 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.

Opinion

In our opinion the Remuneration Report of Image Resources NL for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.

==> picture [136 x 47] intentionally omitted <==

Somes and Cooke

==> picture [181 x 38] intentionally omitted <==

Nicholas Hollens

Somes and Cooke 1304 Hay Street West Perth WA 6005 30 September 2011

• 50 -

TENEMENT SCHEDULE

Tenement	Nature of Interest	Project	Equity (%)
2004/0921	Granted	SA-Oolden Range	100%
E28/1496	Granted	Junction Lake East(Sipa JV)	60%
E28/1656	Granted	Ponton	100%
E28/1895	Granted	King (Erayinia JV)	100% dilutingto 70%
E28/1926	Granted	KingEast(Erayinia JV)	100% dilutingto 70%
E28/2071	Granted	Talc Lake(Erayinia JV)	100% dilutingto 70%
E28/2072	Granted	Junction Lake	100%
E28/2148	Application	Bronco Plains	100%
E46/0938	Application	Mt Hays	90%
E69/2033	Granted	Serpentine Lakes	100%
E69/2034	Granted	Serpentine Lakes	100%
E69/2035	Granted	Serpentine Lakes	100%
E69/2036	Granted	Forrest Lakes	100%
E69/2434	Granted	Wanna South	100%
E69/2826	Application	Forrest Lakes West	100%
E69/2827	Application	Victoria Desert 1	100%
E69/2828	Application	Victoria Desert 2	100%
E70/2636	Granted	Cooljarloo	100%
E70/2742	Granted	Chandala(DerbyMines JV)	Earned 80%
E70/2825	Granted	Bidaminna Sth	100%
E70/2844	Granted	Bidaminna Nth	100%
E70/2845	Granted	Bidaminna Nth	100%
E70/2892	Granted	Cadda Springs	100%
E70/2898	Granted	Cooljarloo	100%
E70/3032	Granted	Gingin	100%
E70/3033	Granted	Mckinley	100%
E70/3041	Granted	Regans Ford South(Kings Reef JV)	Earning75%
E70/3068	Granted	CatabyWest	100%
E70/3086	Granted	Gaby's Peak	100%
E70/3100	Granted	Quinns Hill	100%
E70/3192	Granted	Bootine	100%
E70/3292	Granted	Cooljarloo(Matilda Minerals JV)	Earning70%
E70/3298	Granted	Bidaminna - Park	100%
E70/3328	Granted	Verne Hill(Cooljarloo)	100%
E70/3339	Granted	Jurien North	100%
E70/3359	Granted	Nabaroo	100%
E70/3411	Granted	Regans Ford	100%
E70/3418	Granted	Bell	100%
E70/3494	Application	Bryalana	100%
E70/3551	Granted	Mandowin	100%
E70/3612	Application	Muchea	100%
E70/3720	Granted	Blue Lake	100%
E70/3889	Granted	Winooka Hill	100%
E70/3892	Application	Chapman Hill	100%
E70/3893	Granted	Wonnerup	100%
E70/3894	Application	Harvey	100%
E70/3966	Granted	Regans Ford West	100%

• 51 -

TENEMENT SCHEDULE

Tenement	Nature of Interest	Project	Equity (%)
E70/3997	Application	Munbinia	100%
E70/3999	Application	Fernview	100%
E70/4000	Granted	Dunterry	100%
E70/4001	Application	Whyona	100%
E70/4075	Application	Mt Horner	100%
E70/4077	Application	DarlingRange	100%
E70/4129	Application	MulleringSouth	100%
E70/4130	Application	MulleringNorth	100%
E70/4135	Application	Waidup	100%
E70/4176	Application	Hill River	100%
E77/1132	Granted	Catalpa(Edwards Find)	100%
E77/1850	Granted	Diemals	100%
M70/0448	Granted	Gingin South	100%
M70/1192	Granted	Red Gully	100%
M70/1193	Granted	Gingin North	100%
M70/1194	Granted	Boonanarring	100%
P70/1502	Granted	Cooljarloo	100%
P70/1516	Granted	Cooljarloo	100%
P70/1520	Application	Cooljarloo	100%
P70/1521	Application	Cooljarloo	100%
P70/1540	Granted	Cadda Springs	100%
P70/1594	Granted	Winooka Hill	100%
P70/1595	Granted	Winooka Hill	100%

• 52 -

OTHER INFORMATION

The following information was applicable as at 20 September 2011.

Share and Option holdings

Category(Size of Holding)	Fully Paid Ordinary Shares	Options 16.11.2011	Options 19.11.2011	Options 20.11.2012	Options 18.12.2014	Options 21.12.2015
1 to 1,000	375
1,001 to 5,000	971				3	3
5,001 to 10,000	529				2	2
10,001 to 100,000	658		2		4	4
100,001 and over	107	3	2	3	4	4
Total	2,640	3	4	3	13	13

The number of shareholdings held in less than marketable parcels is 447.

There are no listed options.

Substantial shareholders:

The names of the substantial shareholders listed in the Company's register as at 20 September 2011:

Shareholder Name	Number of Shares	% of Issued **Share Capital **
Denis Ribton	7,559,895	8.33
Pontian Orico Plantations Sdn Bhd	6,539,728	7.20
CiticorpNominees PtyLtd	5,683,339	6.26
Cairnglen Investments PtyLtd	5,678,995	6.26
Total	25,461,957	28.05

Twenty largest fully paid shareholders:

	Shareholder Name	Number of Shares	% of Issued **Share Capital **
1.	Pontian Orico Plantations Sdn Bhd	6,539,728	7.20
2.	DenisRibton	6,512,295	7.17
3.	Citicorp Nominees Pty Ltd	5,683,339	6.26
4.	Cairnglen InvestmentsPtyLtd	5,678,995	6.26
5.	WIT team Enterprises Ltd	3,984,600	4.39
6.	ABN Amro Clearing SydneyNomineesPtyLtd	2,646,547	2.92
7.	Roger M Thomson	2,143,969	2.36
8.	JP Morgan NomineesAustraliaLtd	1,924,000	2.12
9.	Auto Management Pty Ltd	1,311,924	1.45
10.	Leeman PtyLtd	1,284,188	1.41
11.	George Sakalidis	1,202,708	1.32
12.	IlukaResourcesLtd	1,200,000	1.32
13.	NEFCO Nominees Pty Ltd	1,135,771	1.25
14.	Denis and JRibton	1,047,600	1.15
15.	Devomp Pty Ltd	1,012,737	1.12
16.	Vernonand JWheatley	792,425	0.87
17.	Earle G McIntosh	650,000	0.72
18.	Grosvenor PirieManagementLtd	600,000	0.66
19.	Eric and J Terace	600,000	0.66
20.	AlwaysHoldingsPtyLtd	570,000	0.63
	Total	46,520,826	51.24%

• 53 -

OTHER INFORMATION

All Option-holders - All options are unquoted:

	Option-holder Name	Options Expiring 16.11.2011	Options Expiring 19.11.201 1	Options Expiring 20.11.201 2	Options Expiring 18.12.2014	Options Expiring 21.12.2015	Total Options Granted	% Held
1.	George Sakalidis	950,000	2,000,000	800,000	800,000	-	4,550,000	47.20
2.	Roger M Thomson	950,000	-	750,000	550,000	-	2,250,000	23.34
3.	Peter S Thomas	600,000	-	650,000	500,000	-	1,750,000	18.15
4.	Employee Share Option Plan Participants	-	-	-	195,000	95,000	290,000	3.01
5.	Rudolf Tieleman	-	-	-	300,000	-	300,000	3.11
6.	Bulow Pty Ltd Super A/c>	-	300,000	-	-	-	300,000	3.11
7.	Bethia F Newton	-	100,000	-	-	-	100,000	1.04
8.	Janet S Newton	-	100,000	-	-	-	100,000	1.04
	Total	2,500,000	2,500,000	2,200,000	2,345,000	95,000	9,640,000	100.00

There is a total of 90,788,959 fully paid ordinary shares and 9,640,000 option on issue. The fully paid ordinary shares are listed on Australian Securities Exchange Limited.

Buy-Back Plans

The Company does not have any current on-market buy-back plans.

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 fully paid ordinary share held and a fraction of a vote for each partly-paid contributing share held. The fraction must be equivalent to the proportion which any amount paid (not credited) is of the total amounts paid (if any) and payable (excluding amounts credited). Any amounts paid in advance of a call are ignored when calculating these fractional voting rights. None of the options have any voting rights.

• 54 -