IMAGE RESOURCES NL — Annual Report 2012

Oct 29, 2012

From explorer to producer Annual Report 2012

Contents

Corporate Directory	1
Review of Operations	2
Directors' Report	21
Auditor's Independence Declaration	30
Corporate Governance Statement	31
Statement of Comprehensive Income	37
Statement of Financial Position	38
Statement of Changes in Equity	39
Statement of Cash Flows	40
Notes to and forming part of the Financial Statements	41
Directors' Declaration	62
Independent Auditor's Report	63
Tenement Schedule	64
Other Information	66
North Perth Basin Project Team	68

Corporate Directory

DIRECTORS

Peter Thomas Non-Executive Chairman

Peter Davies Managing Director

SENIOR MANAGEMENT

Paul Leandri Exploration Manager

Rudolf Tieleman Chief Financial Officer

REGISTERED OFFICE

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

WEBSITE

www.imageres.com.au

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

FOR INFORMATION ON THE COMPANY CONTACT

Principal & Registered Office 2nd 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

George Sakalidis Executive Technical Director

JOINT COMPANY SECRETARIES

Dennis Wilkins Fiona Lawe Davies

(DW Corporate)

AUDITORS

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

STOCK EXCHANGE Australian Securities Exchange (ASX)

COMPANY CODE

IMA (Fully paid shares)

ISSUED CAPITAL

106,488,193 fully paid ordinary shares 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 2,600,000 options exercisable at \$0.3908 cents by 27 December 2016 1,250,000 options exercisable at \$0.50 cents by 1 June 2015 1,250,000 options exercisable at \$0.70 cents by 1 June 2016 1,250,000 options exercisable at \$1.00 cents by 1 June 2016

ABN 57 063 977 579

Review of Operations

MANAGING DIRECTOR'S REPORT

In the twelve months covered by this report Image has made the major transition from the exploration phase into project evaluation and the organization of an experienced team to take the project through the development phase and into production by the end of 2014.

The work over the last three months of the period has established a very robust and technically sound basis for the next stage of the Feasibility Study. It has also confirmed the possibility and practicality of producing HMC from Boonanarring in 2014 as the first step to becoming a multi-mine long life producer in the North Perth Basin.

Through the competitive advantage gained by the interpretation of low cost geophysical survey techniques pioneered by George Sakalidis, Image has defined a world class minerals sands resource within the region which has already provided company making deposits for two major mineral sands companies. We are confident that the drilling planned on the extensions of the known Boonanarring resources and south of the known Atlas resource will continue not only to add to the Image's resource base, but will confirm our North Perth Basin Project is one of the most attractive and low risk minerals sands projects currently under evaluation anywhere in the world.

A new minerals sands project, based initially on the Boonanarring deposit 90km north of Perth, has several major competitive advantages.

• • Low sovereign risk
• • Known mineral field and mineralogy
• • High grade resources
• • Low U+Th coarse grain Ilmenites and good quality Zircon products
• • Established road and rail logistics
• • Several multi user ports in the region
• • Existing power and gas infrastructure crossing the main project area
• • Proximity to existing mineral separation and SR plants
• • Availability of a pool of experienced mineral sands technical and operational staff in the region around the project.

The last point above is critical to successful start-ups of new mineral sands operations. This advantage has already paid dividends in terms of the contribution of the project development team and this is expected to be carried through the rest of the technical study phases and into development and production.

This year has also seen another form of transition in the widening of our field of operations and contacts. These now include the Traditional Owners at the Atlas deposit (over a section of which a Native Title claim exists), the local communities and landowners in the Gingin and Dandaragan Shires, local and state government agencies, a number of non-government organisations, engineering companies and service providers. Successful co-operation with this wider range of stakeholders will be both a key factor in our success and a key measure of that success.

Signed: Peter Davies Managing Director Perth 28 September 2012

NORTH PERTH BASIN PROJECT FEASIBILITY STUDIES

During the financial year 2011/2012 the main focus of Image was on the Feasibility Study of the North Perth Basin Heavy Mineral Sands Project (the "NPB Project") and the associated exploration and resource definition work.

In August 2011 Image released the results of the first comprehensive Scoping Study of the NPB Project. This study was based on total JORC Resources of 45.5Mt of which over 90% were classified as Measured and Indicated Categories (refer Table 1).

Mining Order	Deposit	Classification	HM Cut-off	Volume	Tonnes	HM (%)	Slimes (%)	HM t
1	Atlas	Indicated	2.5	524,000	1,079,000	3.2	19.2	34,000
		Measured	2.5	4,808,000	9,697,000	8.5	15.3	822,000
		Total	2.5	5,332,000	10,776,000	7.8	15.7	841,000
2	Boonanarring	Measured	2.5	1,685,000	3,063,000	7.2	9.9	221000
3	Red Gully	Indicated	2.5	1,930,000	3,410,000	7.8	11.5	267,000
		Inferred	2.5	1,455,000	2,570,000	7.5	10.7	192,000
		Total	2.5	3,385,000	5,980,000	7.7	11.2	459,000
4	Hyperion	Indicated	2.5	1,800,000	3,700,000	7.8	19.3	290,000
5	Helene	Indicated	2.5	5,600,000	11,500,000	4.6	18.6	523,000
6	Gingin South	Inferred	2.5	399,000	733,000	6.5	8.4	48,000
	(combined)	Indicated	2.5	3,242,000	5,820,000	6.5	7.1	377,000
		Measured	2.5	873,000	1,526,000	4.4	7.2	67,000
		Total	2.5	4,513,000	8,080,000	6.1	6.5	492,000
7	Gingin North	Indicated	2.5	680,000	1,319,000	5.7	15.7	75,000
		Inferred	2.5	577,000	1,090,000	5.2	14.0	57,000
		Total	2.5	1,257,000	2,408,000	5.5	15.0	132,000
	Total High Grade Resource		2.5	23,572,000	45,507,000	6.5	14.1	2,958,000
	Telesto	Indicated	1.0	1,716,000	3,512,000	3.8	18.4	134,000
	Calypso	Inferred	1.0	27,114,000	51,457,000	1.7	13.72	853,000
	Titan	Inferred	1.0	58,518,000	115,445,000	1.9	18.90	2,210,000
		Indicated	1.0	10,335,000	21,164,000	1.8	22.07	378,000
		Total	1.0	68,853,000	136,609,000	1.9	19.4	2,587,000
8	Cooljarloo	Total	1.0	97,683,000	191,578,000	1.9	16.3	3,575,000
9	Bidaminna	Inferred	1.0	26,260,000	44,642,000	3.0	3.6	1,348,000
	Total Low Grade Resource		1.0	123,943,000	236,220,000	2.1	13.9	4,922,000

Table 1 – Resources Selected for Inclusion in Scoping Study

Two items should be noted in particular. First, the Scoping Study only considered the high grade resources in Table 1. These will all be developed using dry mining techniques. The low grade resources are considered to be more effectively developed using dredge mining techniques. These resources will be subject to separate technical studies.

Second, the Boonanarring resource shown in Table 1 only includes the resources within the existing Mining Lease area acquired from Iluka during 2011. These amounted to 3.1 Mt extending over a strike length of 2.3km. The full potential strike length at Boonanarring is over 12km. Exploration work carried out by Image during the period covered by this report and subsequently has confirmed the potential for high grade mineralisation over a strike length of 9km. Further testing of the southern extensions of the mineralisation is planned.

The results of the Scoping Study confirmed that the project represents one of the largest undeveloped high-grade HM resources in Australia. Robust economic returns for the project demonstrated by and within the parameters of the study, indicated a capital payback period of between 18 and 22 months from a 3.6M tonnes per annum sequential, multi-pit operation encompassing six of Image's defined resources located between Cooljarloo in the north to Gingin in the south.

The study envisaged the use of dry mining techniques and production of an average of approximately 185,000 tonnes of heavy minerals in concentrate per annum for 12 years. Production over the life of the mine was expected to total approximately 1,393,000t of Ilmenite , 85,000t of Rutile, 193,000t of Zircon and 93,000t of Leucoxene using a conventional Wet Concentrator and Dry Mill.

The assumptions used in the Scoping Study and the projected economics are summarised in Table 2.

Exchange Rate (A\$:US\$)	1.00	0.90
Commodity prices:
Ilmenite		US\$ 200
Rutile		US\$ 1350
Zircon		US\$ 2240
Leucoxene		US\$ 500
Mine Life	12 years
NPV @ 10% discount	\$58.8M	\$97.6M
Average IRR (Internal Rate of Return)	32.1%	42.9%
Net project cash flow after capital costs	\$170M	\$259M
Total Revenue Life of Mine	\$872M	\$969M
Annual Average Operating costs		\$44.7M
Capital costs		\$83.8M

Table 2 – Scoping Study Key Parameters

The study adopted commodity pricing having regard to widely published industry forecasts current at that time.

Based on these results and views, the Board of Image resolved to commence a Feasibility Study with the aim of achieving production in 2014

Work on the Feasibility Study was focused initially on the commencement of the environmental studies required to support the approvals process for the Atlas deposit and on continuing resource definition drilling at Boonanarring and the Atlas South extension of the Atlas deposit.

In March 2012, Image commenced a detailed review of the August 2011 Scoping Study in order to determine the basis of design for the Feasibility Study and to confirm the project development schedule. The work was also aimed at updating the project strategy to incorporate the recent high grade drilling results from extension drilling along strike from the existing Mining Lease held by Image at Boonanarring.

The work, carried out by a team of independent consultants, all with extensive experience in their individual fields, included:

• • Resource upgrades
• • Open pit mine optimisation and scheduling studies
• • Preliminary process testwork
• • Preliminary assessment of product quality and marketability/pricing
• • Process flowsheet design for the Wet Concentrator and Dry Mill
• • Fixed and variable operating cost estimates
• • Consideration of logistics arrangements and costs
• • Project capital cost estimates
• • Project development schedules.

Early in the review process, it was acknowledged that the Atlas deposit is the most attractive mining target in terms of grade, strip ratio and product quality, resulting in the highest operating cost margin of any of the deposits. However, given the expected higher level of environmental assessment at Atlas and the Native Title negotiation process, the feasibility study team judged that Boonanarring had the potential to provide a quicker and lower risk route to production. In order to test this judgement, the resource models at Boonanarring were notionally extended into the gaps in the then available drilling results. This was done in order to provide a more realistic basis for analysis of the full project in the period pending completion of the planned exploration programme (expected in the second quarter of 2012/2013). These extensions cannot be classified as resources and therefore the detailed results of the analysis have not been included in any ASX release. However, experience in the correlation between the results of Image's proprietary geophysical survey work and the drilling results which have more recently become available, provides a high degree of confidence that the use of this approach, at this stage of project evaluation and planning, has been appropriate.

As part of the review carried out in the fourth quarter of the year, three alternative development approaches were considered:

• 1. Construction of a full mining, Wet Concentrator and Dry Mill operation at Boonanarring with sequential development of the Atlas deposit and other resources
• 2. Deferral of the Dry Mill construction and transport of Heavy Minerals Concentrates for toll treatment at plants owned and operated by other companies
• 3. Deferral of the Dry Mill construction and sale of Heavy Minerals Concentrates ("HMC") for treatment by other companies.

In each case it was assumed that only one mine would be operational at any time.

The results of this detailed review exercise were as follows:

• • The basis for the full project Feasibility Study was confirmed
• • Fast track staged development to produce HMC at Boonanarring for sale or toll treatment should be actively progressed
• • Capital payback was projected within first three years of operation
• • There was an increased degree of confidence in a high value mineral inventory to support 3.3Mtpa multi-pit operation over more than twelve years mine life, with further significant exploration potential
• • The Boonanarring site, north of Gingin, is ideally located in terms of existing infrastructure, access and local sources of employees
• • Environmental and land access issues could now be actively progressed.

In May 2012 Image entered into an option agreed to purchase the block of land at Boonanarring which is expected to contain the core of the high grade mineralisation in the area and to be the optimum site for establishing the initial mining and processing operations.

Work related to land tenure, access, community relations, environmental approvals and other primary approvals continued in parallel with the technical studies. Again, Image has been fortunate in being able to secure the services of a team of independent experts with strong experience and track records in these fields.

The current status of these aspects of the project is that Image has:

• • Completed the seasonal fauna surveys at Atlas
• • Applied for a Mining Lease to cover the main Atlas deposit
• • Commenced the negotiations process with the Traditional Owners having a claim over part of the Atlas deposit. The southern part of the Atlas deposit is on vacant crown land and is subject to Native Title. All other resources which form part of the NPB Project are on freehold farmland and are not subject to Native Title
• • Carried out the initial consultation with the majority of landowners and local residents at Boonanarring, together with several government agencies and Members of Parliament
• • Completed a full analysis of environmental constraints over all the deposits within the NPB Project
• • Commenced the hydrological studies at Boonanarring and Atlas
• • Commenced discussions with the relevant government agencies regarding to environmental approvals process for the Boonanarring deposit and the level of assessment.

In June 2012 the Board approved the next stage of the Feasibility Study work programme, including undertaking:

• • drilling of the remaining targets at Boonanarring
• • drilling of the southern target extensions at Atlas South
• • associated resource modelling and mine planning
• • bulk sample testing for process flowsheet design
• • continuation of the hydrological studies and testwork
• • detailed planning for project infrastructure and logistics
• • consideration of the benefits of mining from more than one project area simultaneously
• • discussions with potential downstream customers
• • further environmental studies and project approvals activities
• • consideration of project finance options.

Project development schedules are dependent on the environmental approvals processes, but work to date has shown that commencement of operations at Boonanarring in 2014 remains achievable. The plans and the team to achieve this outcome are already in place.

Figure 1 – NPB Project Resource Locations

EXPLORATION UPSIDE

In parallel with transitioning to production, Image remains committed to a focused exploration programme in order to increase the NPB Project resource base.

Significant upside is expected from:

• • grant of the 285 sq. km of new tenure applications between the Bidaminna and Atlas deposits which will open up 36km of potential mineralisation along historical shorelines for the use of Image's proprietary magnetic surveying techniques. This exploration programme will target shallow high-grade deposits, similar to Atlas, which have the capacity to increase the project life and/or throughput and to improve project economics.
• • the established Zircon-rich Boonanarring resource has not been completely closed off to the north where a further 2.2km of magnetic strike extent remains to be drilled. Similarly drilling south of the currently defined resources is expected to result in further resource expansion.
• • at least another 100km of magnetic targets remain to be drill tested on a number of prospective historical shoreline positions, particularly in the Gingin area. This exploration programme will again target high-grade deposits.

PROJECT SUMMARIES

Image Resources has a major landholding and an expanding resource base in both the North Perth Basin and the Eucla Basin in Western Australia. Titanium minerals and zircon prices are currently at record levels and there is a strong market outlook for these commodities.

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

Figure 2 – Overall Project Location Map

NORTH PERTH BASIN

During the year, Image significantly advanced exploration and resource definition work at its North Perth Basin heavy mineral (HM) project on several fronts.

Boonanarring (Image 100%)

The Feasibility Study team identified the Boonanarring deposit as having the best prospects for a rapid low risk path to production. Consequently most of the exploration work for the year was concentrated on proving up the resources north and south of the Boonanarring Mining Lease (M70/1194) purchased from Iluka in March 2011 (Figure 3).

8 Image Resources Annual Report 2012

Image identified potential strike extensions to the Boonanarring deposit of up to 7.7km to the north and 2.3km to the south, giving a potential overall strike extent of 12.0km. These extensions all fall within the Regans Ford South exploration licence E70/3041 in which Image had an agreement to earn up to 70% interest from the owner Kingsreef Resources Pty Ltd. In December 2011 Image earned that interest by expenditure and cash payments of \$300,000 and in January 2012 acquired the remaining 30% interest from Kingsreef for a consideration of 1 million fully paid Image shares. This acquisition is of significant strategic value to Image because the Boonanarring HM resource on M70/1194 contains Zircon values averaging 15% of the HM suite, with concentrations up to 70% of the HM suite in some areas. Notably, 38% of the reported composite samples average more than 15% Zircon in the HM fraction and 31% of the reported composite samples average more than

During the year a total of 312 holes for 12 880m were drilled on the northern and southern sections of the Boonanarring deposit (see Figure 3). Subsequent to year end, a further 234 holes were drilled to complete the pattern to a sufficient density for a JORC Indicated Resource to be estimated. Drilling mainly concentrated on Blocks B and C (see Figure 3) with some drilling in Block E aimed at testing the southern 2.3km extension. Negotiations are in progress with the landowners on Blocks A and F and testing of these extensions is scheduled for the 2012/2013 financial year.

20% Zircon. This is significantly above the average Zircon grades of 10% to 13% for all the North Perth Basin resources.

Results of the drilling on Blocks B and C were very encouraging with a continuous high grade core identified over the full strike length of these Blocks as shown on Figures 4 to 6.

All HM samples from Block B grading >2.0% were examined and the mineral content visually estimated. Approximately one third of the samples were estimated to have Zircon contents ranging from 15% to 50% of the HM suite which, combined with high HM grades, results in unusually high in-ground Zircon grades, reminiscent of the high grade Zircon strands at Eneabba. These results, also supported by the earlier magnetometer survey readings confirm that the high Zircon grades observed at the Boonanarring deposit can be expected to extend into Block A. Whilst further mineral assemblage studies are required to confirm the mineral assemblages and Zircon grades at Boonanarring and its extensions, these early results are considered to be most encouraging. Image will be conducting these analyses as part of its resource estimation work in the first half of 2012/2013.

Figure 4 – Section on Line 2 (refer Figure 3 for location)

Figure 5 – Section on Line 6 (refer Figure 3 for location)

Figure 6 – Section on Line 10 (refer Figure 3 for location)

Cooljarloo (Image 100%)

Early in the year, Image purchased Metal Sands' 30% interest in the Cooljarloo Joint Venture for \$100,000 cash plus 3 million ordinary fully paid Image shares, escrowed for twelve months, bringing the interest held by Image to 100%. Image considers that this consolidation will simplify future project financing.

The Munbinea tenement (E70/3997) south of Atlas was granted in October 2011. A drilling program totalling 247 holes for 4784m was drilled on the Atlas South project area (see Figure 7). These holes extend the length of the Atlas resource by 700m.

Figure 7 – Atlas South Project Area Drilling

Gingin (Image 100%)

In March 2011 Image undertook an infill drilling program over the Gingin South deposit. This enabled Image to issue an Indicated and Inferred resource, as reported in last year's Annual Report. In October 2011 the 800m gap in the Gingin South resource that contained the Inferred Resource was infill drilled to 200m hole spacing, which will allow the Inferred portion of the resource to be upgraded to Indicated

status. Figure 8 shows the drillhole locations and Figure 9 shows a typical cross-section illustrating the high grade nature of the deposit. These sections also show that the mineralisation occurs on two levels, the western strand at ~ 58m RL and the eastern strand at ~70m RL. The eastern strand appears to merge with the western strand in the central area and then separate further north.

Figure 9 – Gingin South Cross Section

Red Gully (Image 100%)

In the August 2011 Scoping Study Red Gully was identified as a priority deposit. Consequently, Image initiated a drill programme to increase the drill density on the accessible northern half of the deposit to 200m x 20m (as required for an Indicated Resource) and compare the Image drilling results to the previous work carried out by Iluka.

The drilling confirmed that the deposit extends over the northern half of the granted Mining Lease (M70/1192) with the best grades and thicknesses in the southern 2.5km. The deposit consists of two parallel strands as shown on Figure 10, which also shows the drilling results coloured by HM% x thickness ("HM m%"). To the north, the eastern strand narrows, but continues to the northern end of the tenement. The best intersection is 17m at 12.7% HM from 10m depth, using a 2.5% cut-off and minimum 3m thickness. A typical section is shown in Figure 11.

In general, the Image HM results correspond well to the Iluka results with only minor variations. Visual examination of the drill sample HM concentrate estimated Zircon contents between 1 and 40% of HM, averaging 11%. This correlates well with the 12.4% Zircon in the current resource estimate based on Iluka's mineralogy data.

In March 2012, Image was successful in negotiating access to the Inferred Resource in the southern half of the tenement where previous drilling indicated that the mineralisation tenor increases. In April, Image undertook a detailed magnetic survey over this area which confirmed the continuity of the mineralisation and indicated a similar high grade tenor extending at least 3km south of the Indicated Resource. Image intends to negotiate drilling access and infill drill this Inferred Resource in order to upgrade it to JORC Indicated status. It is anticipated that the infill drilling will confirm the tonnage and grade of this shallow resource in addition to delineating a high grade core.

Figure 10 – Red Gully Drilling Results (Showing Line 31 location)

EUCLA BASIN (IMAGE 100%)

Serpentine Lakes (Image 100%)

In late August to mid-September 2011 a 172 hole drilling program totalling 6,710m was drilled in the Serpentine Lakes project area, targeting extensions of the Cyclone Extended deposit. These extensions had been interpreted from the geophysical survey work carried out earlier in the year and reported in the June 2011 Quarterly Report. Figure 12 shows the location of these drill holes with the currently identified

resource areas and the geophysical targets. 1107 samples were submitted for HM determination and the results confirmed the continuity of the Cyclone Extended resource and indicated that its limits are well defined by the current drilling. Typical cross sections through Cyclone Extended resource are shown in Figure 13. The holes drilled outside of the resource area intersected only minor anomalous HM concentrations.

Figure 12 – Cyclone Extended Drilling Locations

Figure 13 – Cyclone Extended Drill Cross Sections

Wanna South (Image 100%)

The Wanna South tenement is an elongate tenement which has been pegged over a north west to south east trending ridge that was postulated to be a second historical shoreline along the same orientation as the shoreline containing the Cyclone and Cyclone Extended deposits, which lie 43 km to the west. A total of 11 scout holes for 493.5m were drilled during the year (Figure 14). No significant mineralisation was intersected, but a couple of the holes intersected possible shoreline sediments. One hole also intersected moderate amounts of ground water that may be useful for future mining operations in the vicinity.

Erayinia JV (Image 30%)

Joint venture operator Integra Mining has reported results of a 156-hole, 8019m aircore drilling programme on the northern of two exploration licences held by Image about 160km southwest of Kalgoorlie. This programme brings the Erayinia JV aircore drilling to 285 holes totalling 13,799m. The tenements form part of Integra's Aldiss Gold Project, where Integra has recently announced encouraging reconnaissance aircore drilling results at Zone A as shown in Figure 15. Significant drilling results are summarised in Table 3.

Figure 14 – Wanna South Drilling Locations

Table 3 – Aircore Drilling Results – Zone A

Hole Number	Co-ordinates		From	To	Interval	Gold
	East	North	m	m	m	g/t
SISC 1499	468630	6539278	44	52	8	0.80
SISC 1497	468860	6539511	20	24	4	0.50
SISC 1483	468750	6539840	32	36	4	0.24
SISC 1539	469085	6538377	51	52	1	0.21

Azimuth 045°, dip -60°

The Zone A gold trend extends for at least 3km into Image's tenements and forms part of a broader zone, the Admiral Trend, extending a further 5km into Integra's adjacent tenements. The geology comprises a sequence of mafic and andesitic volcanics, sediments and granites below complex regolith cover. Integra is planning a programme of follow up drilling at Zone A and soil sampling of other target areas on the Image tenements. Towards the end of the year Integra completed 11 RC drill holes totalling 1984m at Zone A and advised that it had earned a 70% interest in the joint venture tenements. Significant results include 4m @ 0.74g/t Au from 112m in hole ISRC1022 and 4m @ 1.20g/t Au from 104m in hole ISRC1029 (4m composite samples).

Figure 15 – Zone A Aircore Drilling Results Overlain on Grey-scale Magnetics

(Source: Integra Mining Ltd)

COMPETENT PERSON'S STATEMENT – EXPLORATION RESULTS

The information in this presentation is based on information compiled by Paul Leandri BAppSc who is a member of the Australasian Institute of Mining and Metallurgy. Paul Leandri is an employee of Image Resources NL. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Paul Leandri consents to the inclusion of this information in the form and context in which it appears in this presentation.

COMPETENT PERSON'S STATEMENT – RESOURCE ESTIMATES

The information in this presentation that relates to mineral resources is based on information compiled by Lynn Widenbar BSc, MSc, DIC MAIG MAusIMM employed by Widenbar & Associates who is a consultant to the Company. Lynn Widenbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the 'Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Lynn Widenbar consents to the inclusion of this information in the form and context in which it appears in this presentation.

COMPETENT PERSON'S STATEMENT – PROJECT EVALUATION

The information in this presentation that relates to project evaluation is based on information compiled by Peter Davies BSc Eng (Hons) ARSM, C.Eng. MIMMM, FAusIMM FRSA, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Peter Davies is Managing Director/Project Manager of Image Resources NL. Peter Davies has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Peter Davies consents to the inclusion of this information in the form and context in which it appears in this report.

FORWARD LOOKING AND EXPLORATION TARGET STATEMENTS

Some statements in this presentation regarding estimates or future events are forward looking-statements. They involve risk and uncertainties that could cause actual results to differ from estimated results. Forward-looking statements include, but are not limited to, statements concerning the Company's exploration programme, outlook, target sizes and mineralisation estimates. They include statements preceded by words such as "expected", "planned", "target", "scheduled", "intends", "prospective", "potential" and similar expressions.

Directors' Report

Your directors present their report on the Company for the year ended 30 June 2012.

DIRECTORS

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

Peter Thomas (full year and to the date of this report)

Peter Davies (appointed 24 May 2012)

George Sakalidis (full year and to the date of this report) Roger Thomson (resigned 24 May 2012)

PRINCIPAL ACTIVITIES

The principal activity of the Company during the year was the evaluation of the North Perth Basin Heavy Mineral Sands Project in Western Australia and the related exploration and resource definition work. The Company's major mineral sands tenements and resources are located 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 \$5,509,919 (2011: \$4,609,354).

The operating loss included \$723,840 (2011: \$Nil) 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 was \$4,786,079 (2011: \$4,609,354).

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 5.82 cents (2011: 5.20 cents). Diluted Loss per share in respect of both years ended 30 June 2011 and 30 June 2012 are the same.

FINANCIAL POSITION

The Company's cash position as at 30 June 2012 was \$902,826, a reduction from the 30 June 2011 cash balance which was \$2,952,941. The company was engaged in fundraising at year end to fund the ongoing Feasibility Study work for the North Perth Basin Project.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Significant changes in the state of affairs of the Company during the financial year were the placement of 3,000,000 fully paid ordinary shares at \$0.49 each as settlement of the acquisition of the remaining 30% interest in the Cooljarloo JV tenements from Metal Sands Pty Ltd, a placement to professional and sophisticated investors of 5,395,858 fully paid ordinary shares at \$0.35 each and the issue of 1,000,000 fully paid ordinary shares at \$0.30 each as part consideration for the acquisition of tenements from Kingsreef Pty Ltd.

The Company completed a Scoping Study on the North Perth Basin Project in August 2011. Based on the results of this study the Board resolved to commence a Feasibility Study in respect of that project.

Peter Davies was appointed Managing Director on 24th May 2012. George Sakalidis remains as Technical Director. Roger Thomson resigned from the Board on that date.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

No material matters have occurred subsequent to the end of the financial year other than the matters as reported to ASX. The Company is in transition status from explorer to mineral sands producer.

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.

Directors' Report (cont.)

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), each of which is ASX listed.

Mr Thomas has a relevant interest in 1,600,306 ordinary fully paid shares, 650,000 unquoted options exercisable at \$2.12 each by 20 November 2012, 500,000 unquoted options exercisable at \$1.1162 each by 18 December 2014 and 650,000 unquoted options exercisable at \$0.3908 each by 27 December 2016.

Peter Davies

Managing Director

Peter Davies, appointed as Managing Director 24 May 2012, is a mining engineer with 39 years of global experience in project evaluation and management of mining, chemicals and mineral sands operations. He graduated from the Royal School of Mines, London and holds First Class Certificates of Competency for coal mines (UK) and metal mines (Queensland). After early experience in British coal mines and as Mine Captain at Ashanti Goldfields, Peter was engaged for 10 years in international project evaluation and project management roles with Billiton International Metals/Shell Metals. Between 1990 and 1995 he was the senior mining professional at Dominion Mining and Delta Gold.

From 1995 to 2000 he was Manager/General Manager of the Tiwest Chandala mineral sands and Synthetic Rutile processing facilities north of Perth. In 2000 he was transferred by Kerr-McGee Chemicals (later Tronox) to manage the TiO2 pigment plant at Antwerp and from 2001 to 2006 was Director of European Operations, in charge of the pigment plants at Uerdingen (Germany) and Botlek (The Netherlands).

Since 2006 he has been an independent consultant and was a Director of CSA Global. Mr Davies is an Associate of the Royal School of Mines, a Chartered Engineer in UK, FRSA, Member of IMMM and Fellow of AusIMM.

Mr Davies has a relevant interest in 100,000 ordinary fully paid shares, 1,250,000 unquoted options exercisable at \$0.50 each by 1 June 2015, 1,250,000 unquoted options exercisable at \$0.70 each by 1 June 2016 and 1,250,000 unquoted options exercisable at \$1.00 each by 1 June 2016.

George Sakalidis

Technical Director (Managing Director until 24 May 2012)

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 an executive director of this company, Image Resources NL (director since 13 May 1994, managing director during the period 13 June 2007 to 24 May 2012), 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), each of which is ASX listed.

Mr Sakalidis has a relevant interest in 2,881,372 ordinary fully paid shares, 800,000 unquoted options exercisable at \$2.12 each by 20 November 2012, 800,000 unquoted options exercisable at \$1.1162 each by 18 December 2014 and 800,000 unquoted options exercisable at \$0.3908 each by 27 December 2016.

Rudolf Tieleman

Company Secretary (Resigned 25 September 2012)

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.

Dennis Wilkins and Fiona Lawe Davies

Joint Company Secretaries (Appointed 25 September 2012)

Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a leading privately held corporate advisory firm servicing the natural resources industry. Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquired by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas' initial public offering in 2006. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd, where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector. Mr Wilkins is currently a director of Key Petroleum Limited and Minemakers Limited.

Ms Lawe Davies is an employee of DWCorporate Pty Ltd, a leading privately held corporate advisory firm servicing the natural resources industry. Since 2009, Ms Lawe Davies has been acting as company secretary or assistant company secretary for emerging companies in the Australian resources sector and providing advice on formation, capital raising and corporate compliance. Ms Lawe Davies is a qualified lawyer with previous experience in providing corporate law advice and being involved in M&A work with global clients.

Directors' Report (cont.)

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.

REMUNERATION COMMITTEE

At the date of this report the Remuneration Committee ("committee") comprises Messrs Thomas and Tieleman.

During the year, the committee did not meet in that capacity however, the directors met as a Board, fulfilling the functions of a remuneration committee in relation to the discussion, evaluation and appointment of a project manager and later, the managing director. These meetings were not attended by Mr Tieleman and were recorded as being board meetings.

MEETINGS OF DIRECTORS

During the financial year ended 30 June 2012, there were eleven meetings of directors, each of which were attended by all the directors.

REMUNERATION REPORT (AUDITED)

Names and positions held of key management personnel (defined by the Australian Accounting Standards as being "those people having authority and responsibility for planning, directing, and controlling the activities of an entity, either directly or indirectly. This includes an entity's directors") in office at any time during the financial year were:

Key Management Person	Position
Peter Thomas	Non-Executive Chairman
Peter Davies	Managing Director – appointed 24.5.2012
George Sakalidis	Managing Director until 24.5.2012 then Technical Director
Roger Thomson	Executive Director – resigned 24.5.2012
Rudolf Tieleman	Company Secretary – resigned 25.9.2012

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's mandate is to make recommendations to the Board 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.

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 disclosure therefor shall be made to stakeholders and approvals obtained as required by law and the ASX listing rules.

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 equitybased 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
• • 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.

Relationship between Company Performance and Remuneration

There is no relationship between the financial performance of the Company for the current or previous financial year and the remuneration of the key management personnel. Remuneration is set having regard to market conditions and encourage the continual services of key management personnel.

Use of Remuneration Consultants

The Company did not employ the services of a remuneration consultant during the financial year ended 30 June 2012.

Directors' Report (cont.)

Key Management Personnel Remuneration

Year ended 30 June 2012
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	40,000	3,600	43,600	98,410	142,010
Peter Davies Managing Director	28,115	2,530	30,645	330,200	360,845
George Sakalidis Executive Director	126,955	3,600	130,555	121,120	251,675
Roger Thomson Executive Director	69,636	3,242	72,878	113,550	186,428
Rudolf Tieleman Company Secretary	56,017	-	56,017	60,560	116,577
Total	320,723	12,972	333,695	723,840	1,057,535

	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

Note (1) Equity remuneration represents share options granted during the year as follows. 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 (the expression "fair value" – and derivatives thereof – wherever used in this report bears the meaning ascribed to that expression by the Australian Accounting Standards Board. "Fair value" commonly does not reflect realisable value and the Board does not represent that stated fair values reflect their view of market values. This observation is over-riding and shall prevail over any inconsistent possible interpretation) as at their grant date.

Options granted to directors as approved at the general meeting of shareholders held 29 November 2011 were valued independently using the Binomial Options Pricing Model using an underlying share price of \$0.335, a volatility factor of 76%, a risk-free rate of 4.04% with the resulting value being discounted by 20% on the basis that the options are unlisted and there is an associated lack of marketability. The options vested immediately. Options granted to the company secretary on the same date pursuant to the Company's employee share option scheme were valued on the same basis.

Options granted to Peter Davies as incoming Managing Director were valued by the Company using the Black-Scholes pricing model using an underlying share price of \$0.33, a volatility factor of 70%, a risk-free rate of 2.4% with the resulting value being discounted by 20% on the basis that the options are unlisted and there is an associated lack of marketability.

Managing Director Agreement

Peter Davies was appointed Managing Director effective from 24 May 2012. This contractual engagement is for a three year term commencing on that date with a fixed annual salary of \$300,000, inclusive of statutory superannuation. Remuneration reviews are to be conducted annually by the Company. In addition to the fixed salary and in order to provide incentive to excel in providing the contracted services, Peter was issued options to acquire fully paid ordinary shares as detailed above.

Consultant Agreements

A consulting agreement has been executed between the Company and Mr Sakalidis' nominated associated entity under which Mr Sakalidis delivers 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. Mr Thomson resigned as a director on 24 May 2012.

Other major provisions of these consulting agreements are:

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

Messrs Thomas and Tieleman do not have employment contracts with the Company save to the extent that the Company's constating documents comprise the same.

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
		Granted 20.11.2007 Expiring 20.11.2012 Exercisable at \$2.12	Granted 18.11.2009 Expiring 18.11.2014 Exercisable at \$1.1162	Granted 27.12.2011 Expiring 27.12.2016 Exercisable at \$0.3908	Granted 1.6.2012 Expiring 1.6.2015 Exercisable at \$0.50	Granted 1.6.2012 Expiring 1.6.2016 Exercisable at \$0.70	Granted 1.6.2012 Expiring 1.6.2016 Exercisable at \$1.00
Peter Thomas	1,600,306	650,000	500,000	650,000
Peter Davies	100,000				1,250,000	1,250,000	1,250,000
George Sakalidis	2,881,372	800,000	800,000	800,000

SHARE OPTIONS GRANTED TO DIRECTORS AND OFFICERS

No options were issued to directors and officers during or since the end of the financial year other than those noted above.

What follows in this Directors' Report has not been subject to audit.

EMPLOYEES

At 30 June 2012, aside from directors who are for tax purposes treated as employees, the Company had six full-time employees. The same position prevailed at 30 June 2011.

CORPORATE STRUCTURE

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

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 \$11,766 (2011: \$12,716) 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) 2,200,000 exercisable at \$2.12 per option on or before 20 November 2012;
• (b) 2,345,000 exercisable at \$1.1162 per option on or before 18 December 2014;
• (c) 95,000 exercisable at \$0.6995 per option on or before 21 December 2015;
• (d) 2,600,000 exercisable at \$0.3908 per option on or before 27 December 2016;
• (e) 1,250,000 exercisable at \$0.50 per option on or before 1 June 2015;
• (f) 1,250,000 exercisable at \$0.70 per option on or before 1 June 2016;
• (g) 1,250,000 exercisable at \$1.00 per option on or before 1 June 2016.

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

Signed: Peter Davies Managing Director Perth 28 September 2012

Auditor's 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 2012, 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.

Somes Cooke

Signed: Nicholas Hollens 1304 Hay Street West Perth WA 6005 Date: 28 September 2012

Corporate Governance Statement

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 with 2010 Amendments.

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 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 the Corporate Governance manual and periodically, by liaising with the Board, management and staff, especially in relation to observable departures from the intent of hereof as well as with 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.

The board has reviewed its current practices in light of the Recommendations with a view to making amendments where applicable after considering the Company's size and the resources it has available. The Company is currently reviewing its Corporate Governance manual and committee structure and will publish the updated manual on the Company's website as soon as it is approved by the Board.

As the Company's activities develop in size, nature and scope, the size of the board and the implementation of any additional formal corporate governance committees will be given further consideration.

The board has adopted the Recommendations save as set out in the following table.

	ASX Principle	Status	Reference/comment
Principle 1:	Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions	A	This information is disclosed in the Company's Board Charter, a copy of which can be viewed on the Company website.
1.2	Companies should disclose the process for evaluating the performance of senior executives	N/A	Executives are effectively under a constant process of performance evaluation as measured by the Company's market capitalisation/share price at a point in time compared to previous periods or points in time. The Board concurs with the full implementation of this Principle and will review appropriate ways of compliance as and when further senior executives are engaged.
1.3	Companies should provide the information indicated in the Guide to reporting on Principle 1	A	A copy of the Company's Board Charter can be viewed on the Company website.

Corporate Governance Statement (cont.)

	ASX Principle	Status	Reference/comment
Principle 2:	Structure the board to add value
2.1	A majority of the board should be independent directors	N/A	There are three directors on the board, two of which clearly serve as executives. The Chair, Peter Thomas, considers himself to be an independent director as he is not part of the management team and he regards himself as being free of any relationship that could materially interfere with the independent exercise of his judgement. However he acknowledges that it might well be perceived that his shareholding in the Company and his remuneration as a director compromise or materially interfere with his independent exercise of judgement and ability to act in an entirely disinterested manner in all things.
			The Board believes that this is both appropriate and acceptable at this stage of the Company's development and regularly reviews Board composition.
2.2	The chair should be an independent director	A	The Chair, Peter Thomas, considers himself to be an independent director as he is not part of the management team and he regards himself as being free of any relationship that could materially interfere with the independent exercise of his judgement. However he acknowledges that it might well be perceived that his shareholding in the Company and his remuneration as a director compromise or materially interfere with his independent exercise of judgement and ability to act in an entirely disinterested manner in all things.
2.3	The roles of chair and chief executive officer should not be exercised by the same individual	A
2.4	The board should establish a nomination committee	N/A	The full board undertakes the duties which would normally fall to the nomination committee on an ad hoc unstructured basis. The Company does not currently have a formal nomination committee policy, but is currently reviewing its corporate governance policies and intends to include such a policy in its updated policies manual.
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors	A	This information is disclosed in the Company's Board Charter, a copy of which can be viewed on the Company website.
2.6	Companies should provide the information indicated in the Guide to reporting on Principle 2	N/A	The skills, experience and period of office of Directors are set out in the Company's Annual Report (Directors' Report) and on its website. Statements as to the composition of the board and the Company's materiality thresholds are disclosed in the Company's Board Charter, which can be viewed on the Company website.
			The Company does not currently have a formal nomination policy or committee.

Corporate Governance Statement (cont.)

	ASX Principle	Status	Reference/comment
Principle 4:	Safeguard integrity in financial reporting (cont.)
4.2	The audit committee should be structured so that it:
	• consists only of non-executive directors	N/A	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 full Board undertakes the duties that would otherwise fall to the audit 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 did not perceive that any gains could be derived through the operation of a formal committee structure. However, the Company is currently reviewing its corporate governance and committee structure and intends to constitute an audit committee.
	• consists of a majority of independent directors	N/A	See answer to 4.2 above.
	is chaired by an independent • chair, who is not chair of the board	N/A	See answer to 4.2 above.
	• has at least three members	N/A	See answer to 4.2 above.
4.3	The audit committee should have a formal charter	A	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. A copy of the Audit Policy can be viewed on the Company website.
4.4	Companies should provide the information indicated in the Guide to reporting on Principle 4	A	The Board is required to consider audit committee issues at least half yearly, with further meetings on an as required basis.
Principle 5:	Make timely and balanced disclosure
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	A	A copy of the Company's Continuous Disclosure Policy can be viewed on the Company website.
5.2	Companies should provide the information indicated in the Guide to reporting on Principle 5	A

	ASX Principle	Status	Reference/comment
Principle 6:	Respect the rights of shareholders
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	A	A copy of the Company's Shareholder Communication Policy can be viewed on the Company website.
6.2	Companies should provide the information indicated in the Guide to reporting on Principle 6
Principle 7:	Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies	A	A copy of the Company's Risk Management Policy can be viewed on the Company website.
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	N/A	Management has not reported to the board as to the effectiveness of the Company's management of its material business risks. 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 that the Company has a Risk Management Policy in place and that the board has two executive directors who are well versed in the day to day affairs of the Company and the internal control measures in place, the Company considers that it is managing its material business risks just as effectively as if a formal independent committee was established for the purpose recommended. The Company will review the need to require management to design and implement risk management and internal control systems as it develops.
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	A	Assurances received.
7.4	Companies should provide the information indicated in the Guide to	A

reporting on Principle 7

Corporate Governance Statement (cont.)

	ASX Principle	Status	Reference/comment
Principle 8:	Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee	A	The whole Board acted, in effect, as a Remuneration Committee on a number of occasions during the course of the financial year ended 30 June 2012 when considering (i) candidates for appointment of the position of managing director; (ii) and putting to shareholders for approval, the issue of equity remuneration to directors, at the 2011 Annual General Meeting.
			A Remuneration Committee has been formed with the Charter available on the Company's website. The remuneration committee is comprised of Peter Thomas and Rudolf Tieleman (Company Secretary), however the composition of the Remuneration Committee can vary to accommodate the requirement that a director must not sit on the committee to consider that director's remuneration.
			The composition of the Committee was, until recently, considered to be appropriate given the Company's size and stage of development. The Company is reviewing the structure of the Remuneration Committee.
8.2	The remuneration committee should be structured so that it:
	• consists of a majority of independent directors	N/A	As there is only one independent director of the Company, it is not possible that the Committee be comprised of a majority of independent directors. Sourcing alternative directors to strictly comply with this Principle is considered expensive with costs outweighing the potential benefits. The Company is reviewing the structure of the Remuneration Committee given its transitioning status.
	• is chaired by an independent chair	N/A	As the Chair of the board is the only independent director of the Company, it is not possible to have an independent chair that is not chair of the board. Sourcing alternative directors to strictly comply with this Principle is considered expensive with costs outweighing the potential benefits. However, given the transitioning status of the Company, it is reviewing the structure of the Remuneration Committee.
	• has at least three members.	N/A	As there are only three members of the Board, only one of whom is independent and non-executive, the Board was of the view until it started to transition its status that this was both appropriate and acceptable. However, the Company is now reviewing the structure of the Remuneration Committee.
8.3	Companies should clearly distinguish the structure of non-executive directors' remuneration from that of executive directors and senior executives	A	Refer to the Remuneration Report in the Company's Annual Report.
8.4 A = Adopted	Companies should provide the information indicated in the Guide to reporting on Principle 8	A	The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits.

N/A = Not adopted

Statement of Comprehensive Income

For The Year Ended 30 June 2012

	Notes	2012 (\$)	2011 (\$)
Revenue:
Interest and dividends income		100,802	207,277
Other revenue	3	477,301	859,594
Expenses:
Depreciation expense	11	(18,547)	(40,796)
Exploration and tenement expenses		(3,741,818)	(4,656,131)
Impairment of available-for-sale financial assets		(521,310)	-
Share based payments expense	21	(723,840)	-
Other expenses	3	(1,082,507)	(979,298)
(Loss) before income tax expense		(5,509,919)	(4,609,354)
Income tax expense	4	-	-
(Loss) from continuing operations		(5,509,919)	(4,609,354)
Other comprehensive income:
Changes in the fair value of available-for-sale financial assets		(528,400)	(2,308,349)
Other comprehensive income for the year, net of tax		(528,400)	(2,308,349)
Total comprehensive income for the year		(6,038,319)	(6,917,703)
Total comprehensive income for year attributable to members of the Company		(6,038,319)	(6,917,703)
Basic (loss) per share (cents per share)	7	(5.82)	(5.20)
Diluted (loss) per share (cents per share)	7	(5.82)	(5.20)

Statement of Financial Position

As at 30 June 2012

	Notes	2012 (\$)	2011 (\$)
Current Assets
Cash and cash equivalents	8	902,826	2,952,941
Trade and other receivables	9	509,208	181,002
Other assets	10	24,034	39,216
Total Current Assets		1,436,068	3,173,159
Non-Current Assets
Property, plant and equipment	11	33,423	47,514
Other financial assets	12	900,717	1,998,544
Total Non-Current Assets		934,140	2,046,058
TOTAL ASSETS		2,370,208	5,219,217
Current Liabilities Trade and other payables	13	742,862	1,858,811
Provisions	14	21,343	13,117
Total Current Liabilities		764,205	1,871,928
TOTAL LIABILITIES		764,205	1,871,928
NET ASSETS		1,606,003	3,347,289
Equity
Contributed equity	15	28,524,839	24,951,646
Reserves	15	3,080,490	4,248,309
Accumulated (losses)		(29,999,326)	(25,852,666)
TOTAL EQUITY		1,606,003	3,347,289

Statement of Changes in Equity

For the year ended 30 June 2012

	Contributed Equity (Net of Costs) (\$)	Available for Sale Financial Asset Reserve (\$)	Employee Benefit Reserve (\$)	Accumulated Losses (\$)	Total (\$)
Balance at 1.7.2010	23,098,968	2,836,749	3,719,909	(21,243,312)	8,412,314
Operating (loss) for the year	-	-	-	(4,609,354)	(4,609,354)
Other comprehensive income	-	(2,308,349)	-	-	(2,308,349)
Shares issued during the year	1,920,380	-	-	-	1,920,380
Share issue costs	(67,702)	-	-	-	(67,702)
Balance at 30.6.2011	24,951,646	528,400	3,719,909	(25,852,666)	3,347,289
Balance at 1.7.2011	24,951,646	528,400	3,719,909	(25,852,666)	3,347,289
Operating (loss) for the year	-	-	-	(5,509,919)	(5,509,919)
Other comprehensive income	-	(528,400)	-	-	(528,400)
Shares issued during the year	3,658,550	-	-	-	3,658,550
Share issue costs	(85,357)	-	-	-	(85,357)
Share based payments expense	-	-	723,840	-	723,840
Expiry of unexercised director and employee options	-	-	(1,363,259)	1,363,259	-
Balance at 30.6.2012	28,524,839	-	3,080,490	(29,999,326)	1,606,003

Statement of Cash Flows

For the Year Ended 30 June 2012

	Notes	2012 (\$)	2011 (\$)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash payments to suppliers and contractors		(812,086)	(791,533)
Interest received		97,784	204,684
Dividends received		3,018	2,593
Net cash (used in) operating activities	16	(711,284)	(584,256)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment		(4,456)	(10,385)
Payments for exploration and evaluation	16	(3,119,619)	(1,980,240)
Purchase of new prospects		(74,788)	(310,961)
Purchase of investments		-	(269,251)
Proceeds from sale of investments		56,839	819,864
Proceeds from sale of plant and equipment		-	800
Net cash (used in) investing activities		(3,142,024)	(1,750,173)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new issues of shares	15	1,888,550	1,305,500
Share issue costs		(85,357)	(67,702)
Net cash provided by financing activities		1,803,193	1,237,798
Net (decrease) in cash held		(2,050,115)	(1,096,631)
Cash and cash equivalents at the beginning of the financial year		2,952,941	4,049,572
Cash and cash equivalents at the end of the financial year	8	902,826	2,952,941

Notes to and forming part of the Financial Statements

For the Year Ended 30 June 2012

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 2012.

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 arriving at this position, the directors have considered the following pertinent matters:

• (a) cash on hand at the date of this report is approximately \$1,484,000 and it holds liquid securities which valued on a marked-to-market basis have a value of \$936,951 (it is acknowledged that the marked-to-market approach to valuing equities in junior explorers is an unreliable basis for determining realisable value);
• (b) current cash resources are inadequate to fund the Company's desired level of activities over the next twelve months;
• (c) the North Perth Basin Project is not a mere exploration asset but rather is the subject of a feasibility study and is thought by the Board to have a very substantial net present value;
• (d) offers of and opportunities to raise additional funding are being considered to enable the entity to maintain its desired level of activities over the coming twelve months;
• (e) if such additional funding is not secured, the company will reduce its rate of expenditure to the extent necessary to ensure it remains solvent – amongst other significant opportunities to reduce expenditure, as detailed in Note 17, the Company has a clear path to protect its core assets by applying for retention licences over its JORC resources; and
• (f) the Board expects to be able to raise funding at least sufficient to maintain its going concern status.

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.

Notes to and forming part of the Financial Statements (cont.)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(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.

(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.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

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 Options that are considered to be dilutive are taken into consideration when calculating the diluted earnings per share.

(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.

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.

Notes to and forming part of the Financial Statements (cont.)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(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.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

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. The expression "fair value" – and derivatives thereof – wherever used in this report bears the meaning ascribed to that expression by the Australian Accounting Standards Board."Fair value" commonly does not reflect realisable value and the Board does not represent that stated fair values reflect their view of market or realisable values. This observation is over-riding and shall prevail over any inconsistent possible interpretation.

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.

Notes to and forming part of the Financial Statements (cont.)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(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.

The Directors do not consider the resultant value as determined by the Black-Scholes Option Pricing Model is in anyway representative of the market value of the share options issued, however, in the absence of reliable measure of the goods or services received, AASB 2: Share Based Payments prescribes the measurement of the fair value of the equity instruments granted. The Black-Scholes European Option Pricing Model is an industry accepted method of valuing equity instruments, at the date of grant.

(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.

(s) Critical Accounting Estimates, Assumptions 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.

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.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

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.

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.

Share based payments

Share-based payment transactions, in the form of options to acquire ordinary shares, are ascribed a fair value using the Black-Scholes option pricing model. This model uses assumptions and estimates as inputs.

(t) New Accounting Standards for Application in Future Periods

The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Company. The Company has decided not to adopt any of the new and amended pronouncements before this becomes mandatory. The Company's assessment of the new and amended pronouncements that are relevant to the Company but applicable in future reporting periods is set out below:

AASB 9: Financial Instruments (December 2010) and AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applicable for annual reporting periods commencing on or after 1 January 2013).

These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments.

The key changes made to accounting requirements include:

• • simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
• • simplifying the requirements for embedded derivatives;
• • removing the tainting rules associated with held-to-maturity assets;
• • removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
• • allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
• • requiring financial assets to be reclassified where there is a change in an entity's business model as they are initially classified based on: (a) the objective of the entity's business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and
• • requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity's own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

The Company has not yet been able to reasonably estimate the impact of these pronouncements on its financial statements.

AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).

Notes to and forming part of the Financial Statements (cont.)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

This Standard makes amendments to AASB 112: Income Taxes and incorporates Interpretation 121: Income Taxes – Recovery of Revalued Non-Depreciable Assets into AASB 112.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments are not expected to significantly impact the Company.

AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011), AASB 128: Investments in Associates and Joint Ventures (August 2011) and AASB 2011–7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009–11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 10 replaces parts of AASB 127: Consolidated and Separate Financial Statements (March 2008, as amended) and Interpretation 112: Consolidation – Special Purpose Entities. AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. The Company has not yet been able to reasonably estimate the impact of this Standard on its financial statements.

AASB 11 replaces AASB 131: Interests in Joint Ventures (July 2004, as amended). AASB 11 requires joint arrangements to be classified as either "joint operations" (where the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities) or "joint ventures" (where the parties that have joint control of the arrangement have rights to the net assets of the arrangement). Joint ventures are required to adopt the equity method of accounting (proportionate consolidation is no longer allowed).

AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture, joint operation or associate. AASB 12 also introduces the concept of a "structured entity", replacing the "special purpose entity" concept currently used in Interpretation 112, and requires specific disclosures in respect of any investments in unconsolidated structured entities. This Standard will affect disclosures only and is not expected to significantly impact the Company.

To facilitate the application of AASBs 10, 11 and 12, revised versions of AASB 127 and AASB 128 have also been issued. These Standards are not expected to significantly impact the Company.

AASB 13: Fair Value Measurement and AASB 2011–8: Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009–11, 2010–7, 101, 102, 108, 110, 116, 117, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurement.

AASB 13 requires:

• • inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; and
• • enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) to be measured at fair value.

These Standards are not expected to significantly impact the Company.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

AASB 2011–9: Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1 July 2012).

The main change arising from this Standard is the requirement for entities to Company items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently.

This Standard affects presentation only and is therefore not expected to significantly impact the Company.

AASB 119: Employee Benefits (September 2011) and AASB 2011–10: Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) [AASB 1, AASB 8, AASB 101, AASB 124, AASB 134, AASB 1049 & AASB 2011–8 and Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2013).

These Standards introduce a number of changes to accounting and presentation of defined benefit plans. The Company does not have any defined benefit plans and so is not impacted by the amendment.

AASB 119 (September 2011) also includes changes to the accounting for termination benefits that require an entity to recognise an obligation for such benefits at the earlier of:

• • for an offer that may be withdrawn when the employee accepts;
• • for an offer that cannot be withdrawn when the offer is communicated to affected employees; and
• • where the termination is associated with a restructuring of activities under AASB 137: Provisions, Contingent Liabilities and Contingent Assets, and if earlier than the first two conditions – when the related restructuring costs are recognised.

The Company has not yet been able to reasonably estimate the impact of these changes to AASB 119.

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 principal activity of the Company during the year was the evaluation of the North Perth Basin Heavy Mineral Sands Project in Western Australia and the related exploration and resource definition work. The Company's major mineral sands tenements and resources are located in the North Perth Basin and the Eucla Basin of Western Australia.

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 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.

Notes to and forming part of the Financial Statements (cont.)

	2012 (\$)	2011 (\$)
NOTE 3 REVENUE AND EXPENDITURE
REVENUE
Other Income
Profit on sale of investments	8,721	546,335
Research and development grant (net of costs)	198,580	43,259
Expense recoveries	270,000	270,000
	477,301	859,594
EXPENDITURE
Other Expenses
Occupancy costs	(230,247)	(221,247)
Filing and ASX Fees	(38,183)	(38,942)
Corporate and management	(249,811)	(209,927)
Other expenses from continuing operations	(564,266)	(509,182)
	(1,082,507)	(979,298)
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	5,509,919	4,609,354
Prima facie tax benefit attributable to loss from continuing operations before income tax at 30%	1,652,976	1,382,806
Tax effect of Non-allowable items
• Equity-settled share based payments	(307,152)	(729,712)
• R & D claim rebate	70,090	15,268
• Impairment of available-for-sale financial assets	(156,393)
• Other	(18,420)	(31,246)
Deferred tax benefit on tax losses not brought to account	(1,241,101)	(637,116)
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	(7,210)	(11,764)
Provisions	27,762	17,231
Unrecognised deferred tax assets relating to the above temporary differences	20,552	5,467

NOTE 4 INCOME TAX (cont.)

Unrecognised deferred tax assets

The Company has accumulated tax losses of \$20,351,512 (2011: \$16,214,509).

The potential deferred tax benefit of these losses \$6,105,454 will only be recognised if:

• (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.

NOTE 5 KEY MANAGEMENT PERSONNEL REMUNERATION AND HOLDINGS

	2012 (\$)	2011 (\$)
Short-term employee benefits	320,723	314,692
Post-employment benefits	12,972	10,800
Equity-settled share based payments	723,840	-
	1,057,535	325,492

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 22.

Options held by Key Management Personnel

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

30 June 2012:

						Vested & exercisable at
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	the end of the year
Peter Thomas	1,750,000	650,000	-	(600,000)	1,800,000	1,800,000
Peter Davies		3,750,000	-	-	3,750,000	3,750,000
George Sakalidis	4,550,000	800,000	-	(2,950,000)	2,400,000	2,400,000
Roger Thomson Dennis Wilkins	2,250,000 -	750,000 -	- -	(950,000) (2,050,000) -	Non-reportable -	Non-reportable -
Fiona Lawe Davies	-	-	-	-	-	-
Rudolf Tieleman	300,000	400,000	-	-	700,000	700,000
Totals	8,850,000	6,350,000	-	(6,550,000)	8,650,000	8,650,000

Notes to and forming part of the Financial Statements (cont.)

NOTE 5 KEY MANAGEMENT PERSONNEL REMUNERATION AND HOLDINGS (cont.)

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
Totals	10,850,000	-	(150,000)	(1,850,000)	8,850,000	8,500,000

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.

Shares held by Key Management Personnel

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

30 June 2012:

	Balance at the start	Net share	Balance at the end
Name	of the year	movements	of the year
Peter Thomas	1,100,306	500,000	1,600,306
Peter Davies	-	100,000	100,000
George Sakalidis	2,781,372	100,000	2,881,372
Roger Thomson	2,143,969	(2,143,969)	Non-reportable
Dennis Wilkins	-	-	-
Fiona Lawe Davies	-	-	-
Rudolf Tieleman	400,000	-	400,000
Totals	6,425,647	(1,443,969)	4,981,678

30 June 2011:

	Balance at the start	Net share	Balance at the end
Name	of the year	movements	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
Totals	6,272,401	153,246	6,425,647

	2012 (\$)	2011 (\$)
NOTE 6 AUDITORS REMUNERATION
Amounts received or due and receivable by the auditors of the Company for:
Auditing and reviewing the financial reports	21,000	19,500
Other	1,050	-
	22,050	19,500
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	(5,509,919)	(4,609,354)
Earnings used in calculating basic and diluted earnings per share	(5,509,919)	(4,609,354)
Weighted average number of ordinary shares used in calculating basic earnings per share	94,695,444	88,613,891

The Company had 10,990,000 (2011: 9,640,000) 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	43,014	295,012
Deposits at call	859,812	2,657,929
	902,826	2,952,941
NOTE 9 TRADE AND OTHER RECEIVABLES
Trade receivables	158,427	96,250
GST and tax refundable	350,781	84,752
	509,208	181,002
NOTE 10 OTHER ASSETS
Prepayments	24,034	39,216

Notes to and forming part of the Financial Statements (cont.)

	2012 (\$)	2011 (\$)
NOTE 11 PROPERTY PLANT AND EQUIPMENT
Plant, equipment and motor vehicles	257,288	252,832
Less: Accumulated depreciation	(223,865) 33,423	(205,318) 47,514
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	47,514	78,725
Additions	4,456	10,385
Disposals	-	(800)
Depreciation expense	(18,547)	(40,796)
Total plant, equipment and motor vehicles at end of year	33,423	47,514
NOTE 12 OTHER FINANCIAL ASSETS Non-Current
Available-for-sale financial assets – shares in listed corporations	900,717	1,998,544
	900,717	1,998,544
Investments in related parties
Available-for-sale financial assets includes the following investments held in director-related party entities:
Emu Nickel NL	70,880	164,602
Magnetic Resources NL – fully paid shares	536,353	1,087,202
Magnetic Resources NL – partly-paid shares	213	14
Meteoric Resources NL – fully paid shares	151,996	350,760
Meteoric Resources NL – partly-paid shares	40	179
	759,482	1,602,757
NOTE 13 TRADE AND OTHER PAYABLES
Trade creditors and accruals	742,862	214,041
Other payable (i)	-	1,644,770
	742,862	1,858,811

(i) Previous year's "Other payable" relates to the acquisition of the remaining 30% interest in tenements comprising the Cooljarloo JV held by Metal Sands Pty Ltd This was settled during the current year by way of the issue of 3,000,000 fully paid ordinary shares in part consideration and the remainder by a cash payment.

NOTE 14 CURRENT PROVISIONS

Employee leave benefits	21,343	13,117

NOTE 15 ISSUED CAPITAL

	2012		2011
	No.	\$	No.	\$
Contributed Equity – Ordinary Shares
At the beginning of the year	90,788,959	24,951,646	86,313,959	23,098,968
Issue of shares at \$0.40	-	-	3,125,000	1,250,000
Issue of shares at \$0.37 pursuant to exercise of options	-	-	150,000	55,500
Issue of shares at \$0.5124 as consideration to acquire tenements	-	-	1,200,000	614,880
Issue of shares at \$0.49 as part consideration to acquire the remaining interest in previously joint ventured tenements	3,000,000	1,470,000
Issue of shares at \$0.35	5,395,858	1,888,550
Issue of shares at \$0.30 as consideration to acquire tenements	1,000,000	300,000
Share issue costs		(85,357)		(67,702)
Closing balance:	100,184,817	28,524,839	90,788,959	24,951,646
Reserves
Available-for-sale financial assets reserve		-		528,400
Employee benefits reserve (i)		3,080,490		3,719,909
Closing balance		3,080,490		4,248,309
(i) The employee benefits reserve is used to recognise the fair value of options issued.
Options
The Company had the following options over un-issued fully paid ordinary shares at the end of the year:
Options exercisable at \$1.80 on or before 16.11.2011	-		2,500,000
Options exercisable at \$1.50 on or before 19.11.2011	-		2,500,000
Options exercisable at \$2.12 on or before 20.11.2012	2,200,000		2,200,000
Options exercisable at \$1.1162 on or before 18.12.2014	2,345,000		2,345,000
Options exercisable at \$0.6995 on or before 21.12.2015	95,000		95,000
Options exercisable at \$0.3908 on or before 27.12.2016	2,600,000		-
Options exercisable at \$0.50 on or before 1.6.2015	1,250,000		-
Options exercisable at \$0.70 on or before 1.6.2016	1,250,000		-
Options exercisable at \$1.00 on or before 1.6.2016	1,250,000		-
Total Options	10,990,000		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.

Notes to and forming part of the Financial Statements (cont.)

NOTE 16 CASH FLOW INFORMATION

	2012 (\$)	2011 (\$)
Reconciliation of operating loss after income tax with funds used in operating activities:
Operating loss after income tax	(5,509,919)	(4,609,354)
Depreciation and amortisation	18,547	40,796
Exploration expenditure	3,741,818	4,656,131
Share based payments	723,840	-
(Profit) on sale of investments	(8,721)	(546,335)
Impairment of available-for-sale-asset	521,310	-
Changes in operating assets and liabilities:
(Increase) / decrease in trade and other receivables relating to operating activities	(328,206)	(117,797)
Decrease / (increase) in prepayments	15,181	11,252
Increase / (Decrease) in trade and other payables relating to operating activities	106,639	(7,670)
Increase / (Decrease) in provisions	8,227	(11,279)
Cash flow from operations	(711,284)	(584,256)

During the year, the Company issued (a) 3,000,000 shares at \$0.49 to Metal Sands Pty Ltd as settlement of the acquisition of the remaining previously joint ventured 30% interest in the Cooljarloo JV and (b) 1,000,000 shares at \$0.30 in part consideration for the acquisition of tenements from Kingsreef Pty Ltd. These transactions are not reflected in the cash flow statement.

NOTE 17 TENEMENT EXPENDITURE CONDITIONS AND LEASING COMMITMENTS

The Company has certain obligations to perform minimum exploration work on the tenements in which it has an interest. These obligations may vary from time to time. The aggregate of the prescribed expenditure conditions applicable to the granted tenements for the next twelve months amounts to \$2,326,980. Of this amount, \$389,000 is expected to be met by JV participants as a result of various joint ventures. Application for exemption from all or some of the prescribed expenditure conditions may be made but no assurance is given that any such application will be granted. Nevertheless, the Company is optimistic, given its level of expenditure in the North Perth Basin, that it would likely be granted exemptions, on a project basis, in respect of the prescribed expenditure conditions applicable to many if its North Perth Basin tenements.

In the worst case scenario, it is expected that applications for retention licences would be granted over the Company's JORC resources in both the North Perth and Eucla Basins – the effect of this would be that no expenditure conditions would apply over the resource areas. If the prescribed expenditure conditions are not met with respect to a tenement, that tenement is liable to forfeiture. The Company is rationalising its tenement interests in order to focus on its core assets.

The Company has the ability to diminish its exposure under these conditions through the application of a variety of techniques including applying for exemptions (from the regulatory expenditure obligations), surrendering tenements, relinquishing portions of tenements or entering into farm-out agreements whereby third parties bear the burdens of such obligation in whole or in part.

The Company has leased office premises in Ord Street West Perth. The lease expires on 30 September 2013. The commitment for the year ended 30 June 2013 amounts to \$151,826 (net of GST). A substantial proportion of this commitment is expected to 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 \$198,821. After the return of the rental bond, the net commitment is \$136,002.

NOTE 18 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	Carrying Amount
Chandala JV	Earned 80%	-	Image has earned its interest
Eraynia JV	Diluting to 70%	-	Image is diluting its interest
Matilda Minerals JV	Earning 70%	-	Image is earning its interest
		-

NOTE 19 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 such 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.

The Company has entered into an option agreement with the freehold owner of the key block of land at Boonanarring. Once acquired, this land will provide the site for the supporting infrastructure and initial mining and processing operations for the North Perth Basin project.

The Company has commenced negotiations with the Traditional Owners and their representatives in regard to the Native Title claim affecting part of the Atlas deposit and being the subject of a registered (but undetermined) claim. This is the only deposit forming part of the NPB Project which has, insofar as the Company is aware, any potential to be subject to Native Title. However, heritage aspects of the remaining areas of the project still have to be taken into due consideration.

The Company is aware that there may be a number of other Native Title claims impacting its tenements outside the North Perth Basin project.

The Company is not in a position at this time to assess the likely effect of any Native Title claim impacting the Company.

NOTE 20 EVENTS SUBSEQUENT TO REPORTING DATE

Subsequent to 30 June 2012, 6,303,376 fully paid ordinary shares were issued to a combination of professional and sophisticated investors at an issue price of \$0.30 each, raising an amount of \$1,891,013.

Other than the above issue of shares and the Company's cash position (the latter in the context of sentiment in the equities market), 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 21 EQUITY-SETTLED SHARE BASED PAYMENTS

Share options to take up ordinary shares were granted to directors, the company secretary and key management personnel as follows:

• Granted to directors and company secretary on 27.12.2011 2,600,000 exercisable at \$0.3908 on or before 27.12.2016;
• Granted to Peter Davies on 1.6.2012 1,250,000 exercisable at \$0.50 on or before 1.6.2015;
• Granted to Peter Davies on 1.6.2012 1,250,000 exercisable at \$0.70 on or before 1.6.2016;
• Granted to Peter Davies on 1.6.2012 1,250,000 exercisable at \$1.00 on or before 1.6.2016.

All granted options are not listed, hold no voting or dividend rights, are transferable and vested immediately upon issue.

The share based payments expense (assessed by reference to "fair value") shown in the financial report amounted to \$723,840 (2011: \$Nil).

Notes to and forming part of the Financial Statements (cont.)

NOTE 22 RELATED PARTY AND RELATED ENTITY TRANSACTIONS

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

• Leeman Pty Ltd, a George Sakalidis related company, was paid \$4,050 in respect of the hire of specialised equipment made available to the Company (2011: \$4,950).
• Total amounts owing to directors and/or director-related parties at 30 June 2012 amounted to \$9,377 (including GST) (2011: \$42,813).
• 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 \$148,500 (including GST) was owing to the Company as at 30 June 2012 in relation to these agreements and received after the end of the year.
• The Company is party to 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 23 CONTINGENT LIABILITIES

Native Title

The Company has commenced negotiations with the Traditional Owners and their representatives in regard to the Native Title claim affecting part of the Atlas deposit and being the subject of a registered (but undetermined) claim. This is the only deposit forming part of the NPB Project which has, insofar as the Company is aware, any potential to be subject to Native Title. However, heritage aspects of the remaining areas of the project still have to be taken into due consideration.

The Company is aware that there may be a number of other Native Title claims impacting its tenements outside the North Perth Basin project.

The Company is not in a position at this time to assess the likely effect of any Native Title claim impacting the Company.

NOTE 24 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.

NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE (cont.)

Due to the nature of the Company's activities, 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 2012 and 30 June 2011 was as follows:

	2012 (\$)	2011 (\$)
Cash and cash equivalents	902,826	2,952,941
Trade and other receivables	509,208	181,002
Trade and other payables and provisions (excludes payables to be settled by
way of share issue)	(742,862)	(401,928)
Working capital position	669,172	2,732,015

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.

The Company has lodged term deposits totalling \$352,742 (2011: \$255,747) with the bank as collateral security for both rental and tenement guarantees.

The following table provides information regarding the credit risk relating to cash and cash equivalents based on credit ratings:

	2012 (\$)	2011 (\$)
AAA rated
AA rated
A rated	902,826	2,952,941
The credit risk for counterparties included in trade and other receivables at balance date is detailed below.
Trade and other receivables
Trade receivables	158,427	96,250
GST and tax refundable	350,781	84,752
	509,208	181,002

							.
				_________
___	____	______	____	_________		______	______
__				_____
the contract of the con-				______		__
____	_					___
_________		_________	_________	--	_________		_________

Notes to and forming part of the Financial Statements (cont.)

NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE (cont.)

(b) Financial Instruments

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

Financial Instrument composition and maturity analysis

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

	Weighted Average Effective Interest Rate %	Floating Interest Rate	Non-Interest Bearing	Total
2012	(\$)	(\$)	(\$)	(\$)
Financial Assets:
Cash and cash equivalents		901,446	1,380	902,826
Trade and other receivables		-	509,208	509,208
Available-for-sale financial assets		-	900,717	900,717
Total Financial Assets	4.76%	901,446	1,411,305	2,312,751
Financial Liabilities: Trade and other payables and provisions Net financial assets		- 901,446	(764,205) 647,100	(764,205) 1,548,546
				2012 \$
Trade and other payables are expected to be settled as follows: Less than 6 months (see note 13)				(764,205)

	Weighted Average	Floating Interest	Non-Interest
	Effective Interest Rate %	Rate	Bearing	Total
2011	(\$)	(\$)	(\$)	(\$)
Financial Assets:
Cash and cash equivalents		2,950,541	2,400	2,952,941
Trade and other receivables		-	181,002	181,002
Available-for-sale financial assets		-	1,998,544	1,998,544
Total Financial Assets	5.44%	2,950,541	2,181,946	5,132,487
Financial Liabilities:
Trade and other payables and
provisions		-	(401,928)	(401,928)
Net financial assets		2,950,541	1,780,018	4,730,559
				2011
				\$
Trade and other payables are expected to be settled as follows:

Less than 6 months (see note 14) (1,871,928)

(1,871,928)

(764,205)

NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE (cont.)

(c) Financial Instruments Measured at Fair Value

The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels:

Quoted prices in active markets for identical assets or liabilities (Level 1);

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

	Level 1	Level 2	Level 3	Total
2012	\$	\$	\$	\$
Financial Assets:
Financial assets at fair value through profit or loss:
Available-for-sale financial assets:
• Listed investments	900,717	-	-	900,717
	900,717	-	-	900,717
	Level 1	Level 2	Level 3	Total
2011	\$	\$	\$	\$
Financial Assets:
Financial assets at fair value through profit or loss:
Available-for-sale financial assets:
• Listed investments	1,998,544	-	-	1,998,544
	1,998,544	-	-	1,998,544

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:

	2012 (\$)	2011 (\$)
Change in loss – increase/(decrease):
Increase in interest rate by 2% •	(18,029)	(59,011)
• Decrease in interest rate by 2%	18,029	59,011
Change in equity – increase/(decrease):
• Increase in interest rate by 2%	18,029	59,011
• Decrease in interest rate by 2%	(18,029)	(59,011)

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:
• (a) comply with Accounting Standards and the Corporations Act 2001;
• (b) give a true and fair view of the financial position as at 30 June 2012 and performance for the year ended on that date of the Company; and
• (c) the audited remuneration disclosures set out in the Remuneration Report section of the Directors' Report for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001;
• 2. the Chief Financial Officer has declared pursuant to section 295A(2) of the Corporations Act 2001 that:
• (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;
• (b) the financial statements and the notes for the financial year comply with Accounting Standards; and
• (c) the financial statements and notes for the financial year give a true and fair view;
• 3. 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;
• 4. 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.

Original signed by Peter Davies Managing Director Perth Dated this 28th day of September 2012

Independent Auditor's Report 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 2012, 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 2012 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.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 21 to 25 of the directors' report for the year ended 30 June 2012. 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 2012, complies with section 300A of the Corporations Act 2001.

Somes Cooke

Signed: Nicholas Hollens Somes Cooke 1304 Hay Street West Perth WA 6005 28 September 2012

Tenement Schedule

Tenement	Nature of Interest	Project	Equity (%)
2004/0921	Application	SA-OOLDEN RANGE	100%
E28/1895	Granted	KING (ERAYINIA JV)	100% diluting to 70%
E28/1926	Granted	KING EAST	100
E28/2071	Granted	TALC LAKE (ERAYINIA JV)	100% diluting to 70%
E28/2072	Granted	JUNCTION LAKE	100%
E28/2148	Granted	BRONCO PLAINS	100%
E28/2207	Granted	KING WEST	100%
E46/0938	Granted	MT HAYS	90%
E69/2033	Granted	SERPENTINE LAKES	100%
E69/2034	Granted	SERPENTINE LAKES	100%
E69/2035	Granted	SERPENTINE LAKES	100%
E69/2434	Granted	WANNA SOUTH	100%
E69/2826	Granted	FORREST LAKES WEST	100%
E69/2827	Granted	VICTORIA DESERT 1	100%
E69/2828	Granted	VICTORIA DESERT 2	100%
E70/2636	Granted	COOLJARLOO	100%
E70/2742	Granted	CHANDALA (Derby Mines JV)	Earned 80%
E70/2825	Granted	BIDAMINNA STH	100%
E70/2844	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)	100%
E70/3068	Granted	CATABY WEST	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)	Earning 70%
E70/3298	Granted	BIDAMINNA – PARK	90%
E70/3328	Granted	VERNE HILL (COOLJARLOO)	100%
E70/3359	Granted	NABAROO	100%
E70/3411	Granted	REGANS FORD	100%
E70/3418	Granted	BELL	100%
E70/3494	Granted	BRYALANA	100%

Tenement	Nature of Interest	Project	Equity (%)
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%
E70/3894	Application	HARVEY	100%
E70/3966	Granted	REGANS FORD WEST	100%
E70/3997	Granted	MUNBINIA	100%
E70/3999	Granted	FERNVIEW	100%
E70/4000	Granted	DUNTERRY	100%
E70/4001	Granted	WHYONA	100%
E70/4075	Granted	MT HORNER	100%
E70/4077	Application	DARLING RANGE	100%
E70/4129	Granted	MULLERING SOUTH	100%
E70/4130	Granted	MULLERING NORTH	100%
E70/4135	Granted	WAIDUP	100%
E70/4176	Granted	HILL RIVER	100%
E70/4244	Application	WOOLKA	100%
E70/4245	Granted	WOOLKA	100%
E70/4246	Application	WEROONA	100%
E70/4306	Granted	MT HILL	100%
E70/4310	Application	TOMBSTONE	100%
E77/1850	Granted	DIEMALS	100%
E77/2049	Application	MALGAP ROCK	100%
M70/0448	Granted	GINGIN SOUTH	100%
M70/1192	Granted	RED GULLY	100%
M70/1193	Granted	GINGIN NORTH	100%
M70/1194	Granted	BOONANARRING	100%
M70/1194	Application	ATLAS	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%

Other Information

The following information was applicable as at 20 September 2012.

Share and Option holdings
Category (Size of Holding)	Fully Paid Ordinary Shares	Options 20.11.2014	Options 18.12.2014	Options 1.6.2015	Options 21.12.2015	Options 1.6.2016	Options 27.12.2016
1 to 1,000	350
1,001 to 5,000	855				3
5,001 to 10,000	481				2
10,001 to 100,000	663				4
100,001 and over	119	3	5	1	4	2	4
Total	2,468	3	5	1	13	2	4

The number of shareholdings held in less than marketable parcels is 1,786.

There are no listed options.

Substantial shareholders:

The names of the substantial shareholders listed in the Company's register as at 20 September 2012:

		% of Issued Share
Shareholder Name	Number of Shares	Capital
Denis Ribton	7,559,895	7.10
Cairnglen Investments Pty Ltd	6,548,995	6.150
Pontian Orico Plantations Sdn Bhd	6,539,728	6.14
Citicorp Nominees Pty Ltd	5,849,202	5.49
Total	26,497,820	24.88

Twenty largest fully paid shareholders:

			% of Issued Share
	Shareholder Name	Number of Shares	Capital
1.	Cairnglen Investments Pty Ltd	6,548,995	6.15
2.	Pontian Orico Plantations Sdn Bhd	6,539,728	6.14
3.	Denis Ribton	6,512,295	6.12
4.	Citicorp Nominees Pty Ltd	5,849,202	5.49
5.	New Eastern International Investment Pty Ltd	5,000,000	4.70
6.	WIT team Enterprises Ltd	3,984,600	3.74
7.	Metal Sands Pty Ltd	3,000,000	2.82
8.	ABN Amro Clearing Sydney Nominees Pty Ltd	2,643,375	2.48
9.	Roger M Thomson	2,143,969	2.01
10.	Grosvenor Pirie Management Ltd	1,550,000	1.46
11.	Ava Cartel Sdn Bhd	1,500,872	1.41
12.	JP Morgan Nominees Australia Ltd	1,494,549	1.40
13.	Auto Management Pty Ltd	1,311,924	1.23

			% of Issued Share
	Shareholder Name	Number of Shares	Capital
14.	George Sakalidis	1,302,708	1.22
15.	Leeman Pty Ltd	1,289,188	1.21
16.	NEFCO Nominees Pty Ltd	1,259,000	1.18
17.	Iluka Resources Ltd	1,061,491	1.00
18.	Denis and J Ribton	1,047,600	0.98
19.	Devomp Pty Ltd	1,012,737	0.95
20.	Donald S Anson	1,000,000	0.94
	Total	56,052,233	52.63%

All Option-holders – All options are unquoted:

	Option-holder Name	Options Expiring 20.11.2012	Options Expiring 18.12.2014	Options Expiring 1.6.2015	Options Expiring 21.12.2015	Options Expiring 1.6.2016	Options Expiring 27.12.2016	Total Options Granted and % Held
1.	Peter Davies	-	-	1,250,000	-	2,500,000	-	3,750,000 34.12%
2.	George Sakalidis	800,000	800,000	-	-	-	800,000	2,400,000 21.84%
3.	Roger M Thomson	750,000	550,000	-	-	-	750,000	2,050,000 18.65%
4.	Peter S Thomas	650,000	500,000	-	-	-	650,000	1,800,000 16.38%
5.	Rudolf Tieleman	-	300,000	-	-	-	400,000	700,000 6.37%
6.	Employee Share Option Plan Participants	-	195,000	-	95,000	-	-	290,000 2.64%
	Total	2,200,000	2,345,000	1,250,000	95,000	2,500,000	2,600,000	10,990,000

There are a total of 106,488,193 fully paid ordinary shares and 10,990,000 options 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.

North Perth Basin Project Team

Paul Leandri – Image Exploration Manager

Over 25 years experience in mining and exploration geology, including 8 years working for RGC Mineral Sands consisting of 5 years mine planning at Capel operations and 3 years exploration around Eneabba and the Murray Basin. Past 12 years working on mine planning, development and exploration projects for various mineral sands companies, including 6 years on the Coburn Mineral Sands project and 1.5 years in Project Generation for Iluka Resources. Joined Image as Exploration Manager in August 2010.

Lynn Widenbar – Widenbar and Associates

Consultant resource geologist with over 40 years experience in the exploration, evaluation and mining of mineral resources in Australia, Asia, Africa, North, Central and South America and Europe; this includes more than 10 years involvement in resource estimation mineral sands, mainly in Western Australia, for companies such as Image Resources, Magnetic Minerals and Diatreme Resources.

Stephen Miller – Red Rock Engineering

With 20 years of mining engineering experience in operations (including 3 years as Mid West Mining Manager for Iluka) and 7 years in project development, Stephen has the right balance of skills and experience to be able to work across technical boundaries in order to optimise the full span from resources to final product.

Per Scrimshaw – Creative Mined

Consultant mining engineer with 14 years experience in technical support for mining operations within Australia and abroad. Over 10 Years of this has been servicing Mineral Sands clients in the key areas of optimisation, design, scheduling and economic evaluation. Supported operations have included North Capel Extended, Stratham West, Gingin, Cataby, Eneabba South Mine, Dardanup / Burekup, Kwale.

Eugene Dardengo – Processing Manager

Eugene is an accomplished Metallurgist and Operations Manager with over 27 years' experience in the Australian mining and mineral industry. Eugene has held a number of other diverse roles and was held accountable for Logistics Services, Technical Support Services and Safety, Health and Environment Advice for Tiwest Northern Operations. Has worked as a Metallurgist, with Hamersley Iron (Rio), and Allied Mineral Laboratories and the Readings Group of Companies, and has had exposure to the planning, prioritising and implementation of various metallurgical test work programs for iron ore projects and a wide range of industrial minerals.

Steve Benson – Allmineral

Over 33 years experience in Mineral Sands at Allied Eneabba (RGC) and Tiwest Chandala and Cooljarloo operations. Steve has worked at all levels in Wet Plant and Dry Mill operations up to Plant Manager and has provided technical support both as an in house specialist and as a specialist with equipment suppliers. He has strong knowledge of and experience in physical separation techniques and some unique skills in the assessment of heavy minerals mineralogy.

Maurice Ibbotson – Engineering Manager

Over 47 years experience in the global mining, steelmaking and mineral processing industries. This includes 15 years in mineral sands processing, 5 years as Engineering Superintendent at Tiwest (Chandala), 6 years as Project Manager at Iluka Resources (Capel, Narngulu) and 4 years as Major Project Management Consultant for Kerr McGee/ Tronox (Germany, Netherlands).

Peter McSweeney – MSP Engineering

Peter has over 25 years experience in delivering industrial minerals projects throughout Australia and overseas. He has been the Managing Director of MSP Engineering for the past 16 years and during this period the company has delivered over \$AUD 500M in capital projects including:

• • ISK Mineral Sands Wet and dry mineral sands processing facility at Waroona and Picton WA
• • MBT (now Bemax) MBT wet and dry mineral sands processing facility in the Murray Basin
• • Bemax Relocation of the Jangardup wet plant floating concentrator to Murray Basin
• • Rocla Design and construction of their 1.6mtpa high purity silica sands plant in South Australia
• • Sons of Gwalia / GAM Numerous expansions of the Wodgina and Greenbushes tantalum gravity/grind concentrators valued in excess of \$200M.

Jackie Boyer – JASS (Aust) Pty Ltd

Jackie has over 27 years' experience in statutory approvals management, environmental impact assessment, environmental planning, environmental management and environmental policy matters. Her experience has been gained working with a wide range of interests from State and local government, construction, industry and academic institutions to landowners, community groups and the general public.

Felicity Donaldson – 360 Environmental

Ten years of experience in the resources sector undertaking baseline environmental studies, impact assessments and State/ Federal approvals under environmental and mining legislation. Recent mining projects have included iron ore, gold and uranium.

Level 2, 16 Ord Street, West Perth WA 6005 Telephone (08) 9485 2410 Facsimile (08) 9485 2840 www.imageres.com.au

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