IMAGE RESOURCES NL — Annual Report 2013

Sep 16, 2013

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NL

ABN: 57 063 977 579

ANNUAL REPORT FINANCIAL YEAR ENDED 30 JUNE 2013

CONTENTS
Corporate Directory			3
Review of Operations			4
Resources and Reserves Schedule			11
Directors’ Report			15
Auditor’s Independence Declaration			23
Corporate Governance Statement			24
Statement of Profit and Loss and Other Comprehensive Income			29
Statement of Financial Position			30
Statement of Changes in Equity			31
Statement of Cash Flows			32
Notes to and forming part of the Financial Statements			33
Directors’ Declaration			49
Independent Auditor’s Report			50
Tenement Schedule			52
Other Information			53

• 2 -

CORPORATE DIRECTORY

DIRECTORS

PETER THOMAS Non-Executive Chairman

PETER DAVIES Managing Director

GEORGE SAKALIDIS Executive Director - Exploration

JOINT COMPANY SECRETARIES

FOR INFORMATION ON THE COMPANY CONTACT

PRINCIPAL & REGISTERED OFFICE

2[nd] Floor

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

BANKERS

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

Dennis Wilkins and Fiona Lawe Davies (DW Corporate)

AUDITORS

REGISTERED OFFICE

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

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

STOCK EXCHANGE

Australian Securities Exchange (ASX)

WEBSITE

www.imageres.com.au

COMPANY CODE

IMA (Fully paid shares)

FOR SHAREHOLDER INFORMATION CONTACT

SHARE REGISTRY

Security Transfers Registrars 770 Canning Highway Applecross, WA 6153 Telephone (08) 9315 2333 Facsimile (08) 9315 2233

ISSUED CAPITAL

140,156,193 fully paid ordinary shares

8,790,000 unlisted options:

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

• 3 -

REVIEW OF OPERATIONS

MANAGING DIRECTOR’S REPORT

In the twelve months covered by this report, Image has made major advances towards becoming a producer through the completion of resource definition and the feasibility study on the Boonanarring and Atlas deposits. The feasibility study has clearly demonstrated that the project is technically feasible and that the project economics are robust. Subject to securing finance and the necessary environmental and other approvals, Image is now in a position where it can take the project through the development phase and into production by early 2015.

In parallel with the feasibility study, the Company completed the environmental and hydrological studies to support applications for the required environmental approvals and water licences. The associated submissions have been made; starting the approvals processes which are expected to take until mid 2014 to be completed.

Drilling carried out during the year on the extensions of the Boonanarring resources confirmed the presence of high grade mineralisation previously indicated by Image’s low cost geophysical survey techniques. This drilling and the feasibility studies clearly demonstrated that our North Perth Basin Project is one of the most attractive and low risk minerals sands projects currently under evaluation anywhere in the world. It is pleasing that the extensive geological and environmental field work programmes completed during the year were carried out without any reportable injuries.

Process testwork on samples of the mineralisation from both Boonanarring and Atlas, confirmed the amenability of the material to conventional wet processing methods and produced samples of final product quality for analysis. Feedback from prospective customers has confirmed that the ilmenite material is of high quality, coarse grained, low in contaminants and suitable for a wide range of downstream applications.

The proposed new minerals sands project, based initially on the Boonanarring deposit which is located 90km north of Perth, has several major competitive advantages:

• low sovereign risk;

• known mineral field and mineralogy;

• high grade resources in terms of Valuable Heavy Mineral (VHM) content;

• unusually high in-situ zircon grades;

• low U+Th and coarse grain ilmenites;

• 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; and

• availability of a pool of experienced mineral sands technical and operational staff in the region around the project.

The comment was made in this report last year that the last point above is critical to successful start-ups of new mineral sands operations. This advantage has already been clearly demonstrated by the contributions made by the project development team during the feasibility study phase. We are confident that the same team will carry the project successfully through development and into production.

Work has continued during the year to establish good contacts and open communication with the Traditional Owners at the Atlas deposit (over section of which Native Title exists), the local communities and landowners in the Gingin and Dandaragan Shires, local and state government agencies and a number of non-government organisations.

The feasibility study has established a strong basis for Image to secure off-take partners and funding for the projects. We are now focussed on securing finance to expedite the Project.

NORTH PERTH BASIN PROJECT FEASIBILITY STUDIES

During the financial year 2012/2013, the main focus of the Company was on the feasibility study for the Boonanarring and Atlas projects which comprise part of Image’s North Perth Basin Heavy Mineral Sands Project ( the “NPB Project” ) and the associated resource definition work and environmental studies.

In July 2013 the Company released the results of the feasibility study which was carried out by a very experienced team of leading industry experts managed by Peter Davies, managing director of Image.

HIGHLIGHTS

• DRY MINE : 10 years of dry mining yield a JORC Code Probable Reserve of 24 million tonnes grading 8.2% Heavy Mineral ( HM) (containing 15% of HM as zircon);

• START UP : production could commence within 8 months from securing finance and the necessary project approvals;

• PRE-TAX NPV@ 8% : $145 million;

• PRE-TAX IRR : 57.4% (based on first 10 years of operation only).

Given the very positive outcomes demonstrated by the feasibility study, the Company will pursue the development of the Boonanarring and Atlas deposits, whilst continuing to find ways to reduce project development cost and further increase net cashflow.

• 4 -

REVIEW OF OPERATIONS

Other highlights include:

• net life of mine pre-tax cashflow after capital of $245 million;

• capital payback within first 22 months of production;

• 3.3mtpa dry mining and wet processing operation over initial 10-year mine life;

• in the lowest cost quartile of zircon producers;

• Boonanarring ore body location contains adequate water supply and is within excellent infrastructure and transport links;

• low cost dry mill option shows high potential to increase project NPV;

• additional NPB resources (Hyperion, Helene, Red Gully, Gingin North and Gingin South) represent a potential further net pit value of $100 – $110 million; and

• granted Mining Leases over Boonanarring extend beyond the planned project life.

SUMMARY

The results of Image’s feasibility study on its 100% owned Boonanarring and Atlas heavy mineral sands deposits in the North Perth Basin indicate that the Company could, subject to financing, begin producing ilmenite, leucoxene, rutile and zircon by early 2015.

The Boonanarring and Atlas deposits (situated near Gingin and inland from Cervantes respectively) and which form part of the Company’s North Perth Basin Mineral Sands Project represent one of the highest grade mineral sands deposits under evaluation worldwide. Image owns other projects containing JORC Code Resources in the North Perth Basin. These may be developed after completion of operations at Boonanarring and Atlas. They do not form part of the recently completed project technical study or economic evaluation.

All Resources and Reserves in this report are estimated and reported in accordance with the 2004 JORC Code.

Boonanarring and Atlas represent a total Resource of 32.3 million tonnes @ 8.1% heavy minerals and the intention is to mine the deposits at a rate of 3.3Mtpa over a projected 10-year mine life. Annual production from the mine is expected to average 89,000t of ilmenite, 5,400t of leucoxene, 9,000t of rutile and 32,400t of zircon for a combined average annual production of these heavy minerals of 135,900t. Zircon and ilmenite annual production will be higher in the early years when the mined grades are higher than the average.

These products are used in a wide range of industry applications, including the making of ceramics, surface glazes and pigments used in paint, paper and plastics.

Based on the assumptions stated in the Company’s ASX release dated 17 July 2013, the study indicated that the project can generate a net project cashflow (pre-tax and after capital) of $245 million over the 10-year period.

• 5 -

REVIEW OF OPERATIONS

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Figure 1: Project Location Map

• 6 -

REVIEW OF OPERATIONS

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Figure 2: Boonanarring Site Plan

• 7 -

REVIEW OF OPERATIONS

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Figure 3: Proposed Site Layout at Boonanarring

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:

• the 185 sq. km of newly granted exploration licences between the Bidaminna and Atlas deposits which has not previously been surveyed using Image’s ground magnetic techniques. Image is particularly attracted to the Woolka tenement adjacent to Tronox’s new Cooljarloo West minesite, where the mineralisation appears to trends towards Image’s tenement. A total of 460 line km of survey will be conducted to test these tenements. This exploration programme is targeting shallow high-grade deposits, similar to Atlas, which have the capacity to increase the NPB Project life and/or throughput and to improve project economics;

• a northern extension of the zircon-rich Boonanarring resource which has been defined by ground magnetic surveys. These targets are scheduled for drilling in the 2013/2014 financial year.

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 recovering and there is confidence in a return to a positive market outlook for these commodities.

In addition, Image retains interest in a gold joint venture with Silver Lake Resources at the Erayinia JV. The locations of Images’ main projects are shown in Figure 4.

• 8 -

REVIEW OF OPERATIONS

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Figure 4: Overall Project Location Map

NORTH PERTH BASIN

During the year, Image concentrated on resource definition work at the Boonanarring heavy mineral (HM) deposit, which is the primary focus of the NPB Project development.

Image also undertook three small ground magnetic surveys totalling 68 line kilometres over the reporting period. The results of these surveys will be used to guide further exploration.

Boonanarring (Image 100%)

The feasibility study team identified the Boonanarring deposit as having the best prospects for a rapid low risk path to production. Drilling of Blocks B and C in the 2012 – 2013 financial year had shown that the at least 5.5 km of the potential 7.7km extension north of the original Boonanarring Mining Lease (M70/1194) contained a high grade HM deposit with excellent zircon content. Exploration work for the year was concentrated on proving up the resources north and south of the original Boonanarring Mining Lease to JORC Indicated status (Figure 2). Image defined a 2.0km strike extension to the mineralisation in Block A and a further 0.8km to the south of Block D, bringing the total strike extent of the Boonanarring deposit to 10.5km. In March 2013 Image was granted Mining Lease M70/1311 over the mineralisation to the north of M70/1194, covering the entire high grade resources in Blocks A, B and C. Only the remaining 0.8km of strike south of M70/1194 remains within the Regans Ford South exploration licence E70/3041.

During the year a total of 483 holes for 24,069m were drilled on the northern and southern sections of the Boonanarring deposit, bringing the total drilling tally over the Boonanarring deposit to 797 holes for 37,066m.

Results of the drilling were very positive, with a continuous high grade core identified over the full strike length of Blocks A, B, C and D.

Mineral assemblage studies confirmed the high value of the Boonanarring mineral assemblages with zircon grades varying between 7% and 60% of HM in the mineralised zones, resulting in an average of 21% zircon for the total resource.

The total resource estimate for the Boonanarring deposit was completed in May 2013 and the results released on 31 May 2013. The total JORC resource now stands at 21.5 million tonnes at 8.3% HM, containing 1.7 million tonnes of HM at a 2.5% HM cut-off. This resource has an overall zircon content of 21% HM and ilmenite content of 49%, giving a contained 370,000 tonnes of zircon and 870,000 tonnes of ilmenite. The resource has principally been defined to JORC Code Indicated status, with approximately 14% classified as Measured and 20% as Inferred status.

• 9 -

REVIEW OF OPERATIONS

EUCLA BASIN

Serpentine Lakes (Image 100%)

Following the disappointing results of the 2011 – 2012 exploration programme a review of the project was conducted resulting in the relinquishment of E69/2035 and a significant reduction in the area of E69/2033 and E69/2034. Image has now applied for a Retention Licence over the Cyclone Extended resource (Figure 5) and will assess its options for realising value from this resource. E69/2033 was relinquished on 31/07/2013 following submission of the Retention Licence application.

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Figure 5: Cyclone Extended Exploration Licences and Retention Licence

• 10 -

RESOURCES AND RESERVES SCHEDULE

Table A: North Perth Basin HM resource at 2.5%HM cut-off

Project Area	JORC Resource Category	VOLUME (m3) TONNES HM (%) SLIMES (%) HM TONNES
Atlas	Measured	4,810,000 9,700,000 8.5 15.3 820,000
Atlas	Indicated	520,000 1,080,000 3.2 19.2 34,000
Atlas Total		5,330,000 10,780,000 7.9 15.7 854,000
Boonanarring	Measured	1,680,000 3,000,000 7.8 10.1 230,000
Boonanarring	Indicated	7,000,000 14,300,000 9 17.2 1,270,000
Boonanarring	Inferred	2,100,000 4,200,000 6.5 17.4 270,000
Boonanarring Total		10,780,000 21,500,000 8.3 16.2 1,770,000
Gingin Nth Gingin Nth	Indicated Inferred	680,000 1,320,000 5.7 15.7 80,000 580,000 1,090,000 5.2 14 60,000
Gingin Nth Total		1,260,000 2,410,000 5.5 15 140,000
Gingin South	Measured	870,000 1,530,000 4.4 7.2 67,000
Gingin South	Indicated	3,240,000 5,820,000 6.5 7.1 380,000
Gingin South	Inferred	400,000 730,000 6.5 8.4 48,000
Gingin South Total		4,510,000 8,080,000 6.1 7.3 495,000
Helene Hyperion	Indicated Indicated	5,600,000 11,500,000 4.6 18.6 520,000 1,800,000 3,700,000 7.8 19.3 290,000
Cooljarloo Nth Total		7,400,000 15,200,000 5.3 18.7 810,000
Red Gully Red Gully	Indicated Inferred	1,930,000 3,410,000 7.8 11.5 270,000 1,455,000 2,570,000 7.5 10.7 190,000
Red Gully Total		3,385,000 5,980,000 7.7 11.2 460,000
Grand Total
		32,665,000 63,950,000 7.1% 13.9 4,529,000

• 11 -

RESOURCES AND RESERVES SCHEDULE

Table B: North Perth Basin Resources Mineral Contents as % of HM at 2.5%HM cut-off

Project Area	JORC Resource Category	HM TONNES VHM (%) Ilmenite (%) Leucoxene (%)	Rutile (%)	Zircon (%)
Atlas	Measured	820,000 76.0 52.0 5.0	8.0	11.0
Atlas	Indicated	34,000 74.0 53.0 8.0	7.0	6.0
Atlas Total		854,000 76.0 52.0 5.0	8.0	10.0
Boonanarring	Measured	230,000 70.0 49.0 1.0	3.0	17.0
Boonanarring	Indicated	1,270,000 80.0 49.0 6.0	3.0	22.0
Boonanarring	Inferred	270,000 83.0 51.0 8.0	7.0	18.0
Boonanarring Total		1,770,000 79.0 49.0 6.0	4.0	21.0
Gingin Nth	Indicated	80,000 75.0 57.0 9.0	3.0	5.0
Gingin Nth	Inferred	60,000 78.0 57.0 11.0	4.0	6.0
Gingin Nth Total		140,000 77.0 57.0 10.0	3.0	6.0
Gingin South	Measured	67,000 79.0 51.0 15.0	6.0	8.0
Gingin South	Indicated	380,000 91.0 68.0 10.0	5.0	8.0
Gingin South	Inferred	48,000 92.0 67.0 8.0	6.0	11.0
Gingin South Total		495,000 89.0 65.0 10.0	5.0	8.0
Helene	Indicated	520,000 84.0 70.0 1.0	3.0	11.0
Hyperion	Indicated	290,000 71.0 56.0 0.0	6.0	9.0
Cooljarloo Nth Total		810,000 78.5 64.2 0.5	4.4	9.4
Red Gully	Indicated	270,000 90.0 66.0 8.0	3.0	12.0
Red Gully	Inferred	190,000 90.0 66.0 8.0	3.0	12.0
Red Gully Total		460,000 90.0 66.0 8.0	3.0	12.0
Grand Total		4,529,000 80.4 57.1 6.0	4.8	13.1

• 12 -

RESOURCES AND RESERVES SCHEDULE

Table C: Dredge Resources at 1.0% HM cut-off

Project Area	JORC Resource Category	VOLUME (m3) TONNES HM (%) SLIME (%) HM TONNES
Titan Titan	Indicated Inferred	10,300,000 21,200,000 1.8 22.1 380,000 58,500,000 115,400,000 1.9 18.9 2,210,000
Titan Total Telesto Calypso	Indicated Inferred	68,800,000 136,600,000 1.9 19.4 2,590,000 1,700,000 3,500,000 3.8 18.4 130,000 27,100,000 51,500,000 1.7 13.7 850,000
Cooljarloo Total		97,600,000 191,600,000 1.9 17.8 3,570,000
Bidaminna	Inferred	26,300,000 44,600,000 3.0 3.6 1,350,000
**Total Dredge **		123,900,000 236,200,000 2.1 15.1 4,920,000

Table D: Dredge Resources Mineral Content as %HM at 1.0% HM cut-off

Project Area	JORC Resource Category	HM TONNES VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 380,000 84.4 71.9 2.0 1.0 9.5 2,210,000 84.3 71.8 2.0 1.0 9.5 2,590,000 84.4 71.9 2.0 1.0 9.5 130,000 82.6 67.5 3.4 2.2 9.5 850,000 84.6 68.8 3.5 1.6 10.6 3,570,000 84.8 71.3 2.4 1.2 9.8 1,350,000 96.0 82.4 7.2 1.0 5.4 4,920,000 84.3 65.6 4.6 2.9 11.3
Titan Titan	Indicated Inferred
Titan Total Telesto Calypso	Indicated Inferred
Cooljarloo Total
Bidaminna	Inferred
**Total Dredge **

Table E: Cyclone Extended Resource at 1.0% HM cut-off

Project Area	JORC Resource Category	VOLUME (m3) TONNES HM (%) SLIMES (%) HM TONNES
Cyclone Extended Cyclone Extended	Indicated Inferred	44,500,000 77,300,000 2.0 5.6 1,500,000 5,400,000 9,000,000 1.2 3.3 100,000
Total Cyclone Extended
		49,900,000 86,300,000 1.9 5.3 1,600,000

Table F: Cyclone Extended Resource Mineral content as % of HM at 1% HM cut off

Project Area	JORC Resource Category	HM TONNES VHM (%) Ilmenite (%) Hi Ti Oxide (%) Leucoxene (%)	Rutile (%)	Zircon (%)
Cyclone Extended Cyclone Extended	Indicated Inferred	1,500,000 75.4 23.4 20.9 1.3 100,000 85.6 30.6 29.3 0.7	8.7 4.3	21.1 19.0
Total Cyclone Extended
		1,600,000 76.5 24.2 21.8 1.3	8.2	21.1

• 13 -

RESOURCES AND RESERVES SCHEDULE

Table G: North Perth Basin Reserves

Project Area	JORC Reserve Category	Volume Tonnes HM (%) SLIMES (%)	Oversize (%)	HM Tonnes
Boonanarring Atlas	Probable Probable	7,160,000 14,420,000 8.3 17.0 4,760,000 9,600,000 8.1 15.5	8.1 4.4	1,190,000 780,000
Total NPB Reserve		11,920,000 24,020,000 8.2 16.4	6.6	1,970,000

Table H: North Perth Basin Reserves Mineral Content

Project Area	JORC Reserve Category	HM Tonnes	VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%)
Boonanarring Atlas	Probable Probable	1,190,000 780,000	80.3 46.9 5.5 3.3 24.5 74.1 55.0 1.0 7.0 11.0
Total NPB Reserve		1,970,000	77.8 50.1 3.7 4.8 19.1

Table I: Image Summary of Total Heavy Mineral Resources

	RESOURCE Mt HM GRADE %HM CONTAINED HM kt CUT-OFF GRADE (%HM)	RESOURCE Mt HM GRADE %HM CONTAINED HM kt CUT-OFF GRADE (%HM)	RESOURCE Mt HM GRADE %HM CONTAINED HM kt CUT-OFF GRADE (%HM)
JORC RESOURCES
Total North Perth Basin (Dry Mining) Cyclone Extended Bidaminna (Dredge) Cooljarloo (Dredge)	64.0 7.1 4,530 2.5 86.3 1.9 1,640 1.0 44.6 3.0 1,300 1.0 191.6 1.9 3,600 1.0
TOTAL IMAGE	386.5	2.9	11,070

COMPETENT PERSON’S STATEMENT – EXPLORATION RESULTS The information in this report 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 report.

COMPETENT PERSON’S STATEMENT – RESOURCE ESTIMATES The information in this report that relates to mineral resources is based on information compiled by Lynn Widenbar BSc, MSc, DIC MAusIMM MAIG 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 report.

COMPETENT PERSON’S STATEMENT – TECHNICAL STUDIES AND ORE RESERVES

The information in this report that relates to Ore Reserves and technical studies 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.

• 14 -

DIRECTORS' REPORT

Your directors present their report on the Company for the year ended 30 June 2013.

DIRECTORS

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

Peter Thomas Peter Davies George Sakalidis

PRINCIPAL ACTIVITIES

The principal activity of the Company during the year was the evaluation of the Boonanarring and Atlas deposits comprising part of Image’s North Perth Basin Heavy Mineral Sands Project in Western Australia; completion of a feasibility study, the related resource definition work and environmental studies. The Company’s major mineral sands tenements and resources are located in the North Perth Basin of Western Australia.

RESULTS FROM OPERATIONS

During the year the Company recorded an operating loss of $6,548,522 (2012: $5,509,919).

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 5.26 cents (2012: 5.82 cents). Diluted Loss per share in respect of both years ended 30 June 2013 and 30 June 2013 are the same as for basic loss per share.

FINANCIAL POSITION

The net assets of the Company increased by $1,672,991 from 30 June 2012 to $3,278,994, including cash and cash equivalents of $3,176,042. This is largely due to the net proceeds from share issues of $8,231,513 offset by exploration, evaluation and tenement expenses (including the feasibility study) aggregating $5,952,761 and other expenses of $1,482,403.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

The following significant changes in the state of affairs of the Company occurred during the financial year:

• a) 25 July 2012, placement of 6,303,376 shares at $0.30 per share to raise $1,891,013.

• b) Placement share issues on 10 December and 20 December 2012, for a total of 33,500,000 shares at $0.20 to raise $6,700,000.

• c) Working on the Feasibility Study on the North Perth Basin Project (Results announced on ASX 17 July 2013).

• d) Working on the environmental studies for submission of the draft PER document to OEPA (lodged on 12 July 2013).

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Other than the release of the feasibility study results and lodgement of the draft PER (referred to above), no material matters have occurred subsequent to the end of the financial year save any reported to ASX. The Company is positioned to transition 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. However, as noted above, following the completion of the feasibility study the Company is positioned and seeks to transition from mineral sands explorer to producer which is subject to securing the necessary approvals and financing.

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.

• 15 -

DIRECTORS' REPORT

INFORMATION ON DIRECTORS AND COMPANY SECRETARIES

Peter Thomas

Non-Executive 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 Meteoric Resources NL (since incorporation on 13 February 2004), Emu NL (since incorporation 29 August 2007) and Middle Island Resources Limited (since 2 March 2010) each of which is ASX listed. He was founding non-executive chairman of Magnetic Resources NL, a position he held until he resigned in July 2013.

Mr Thomas has a relevant interest in 2,100,306 ordinary fully paid shares, 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 is a mining engineer with over 40 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 (UK), FRSA, Member of IMMM and Fellow of AusIMM.

Mr Davies has a relevant interest in 200,000 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

Executive Director - Exploration

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 programme that led to the discovery of the large mineral sands resources at Magnetic Minerals Limited's Dongara Project. He is also a director of Magnetic Resources NL (since incorporation on 23 August 2006), Emu NL (since incorporation on 29 August 2007; retiring at the forthcoming AGM on 8 November 2013), Meteoric Resources NL (since incorporation on 13 February 2004) and Potash West NL (since incorporation on 12 November 2010), each of which is ASX listed.

Mr Sakalidis has a relevant interest in 3,108,489 ordinary fully paid shares, 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.

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.

• 16 -

DIRECTORS' REPORT

AUDIT COMMITTEE

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

REMUNERATION COMMITTEE

At the date of this report the Remuneration Committee (“ committee ”) comprises Messrs Wilkins (Chair), Thomas, Davies and Sakalidis. During the year, the committee held one meeting. All members except Mr Wilkins attended the meeting.

MEETINGS OF DIRECTORS

During the financial year ended 30 June 2013, there were 9 meetings of directors, each of which was attended by each of 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	ManagingDirector
George Sakalidis	Executive Director - Exploration
Graeme Scott	CFO – appointed 1.4.2013
Rudolf Tieleman	CFO & CompanySecretary–ceased 31.3.2013 & 25.9.2012
Dennis Wilkins / Fiona Laws Davies	CompanySecretary– appointed 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 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 equity-based and employee benefit plans, and as such will discharge any responsibilities under those plans, including making and authorising grants, in accordance with the terms of those plans;

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

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

• 17 -

DIRECTORS' REPORT

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 continued 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 2013.

• 18 -

DIRECTORS' REPORT

Key Management Personnel Remuneration

Key Management Personnel Remuneration	Key Management Personnel Remuneration	Key Management Personnel Remuneration	Key Management Personnel Remuneration	Key Management Personnel Remuneration	Key Management Personnel Remuneration
		Year ended 30 June	2013
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	82,247	4,702	86,949	-	86,949
Peter Davies Managing Director	269,936	24,294	294,230	-	294,230
George Sakalidis Executive Director - Exploration	171,946	3,600	175,546	-	175,546
Graeme Scott(appointed 1 April 2013) CFO	43,750	3,938	47,688	-	47,688
Rudolf Tieleman1 CFO and Company Secretary	54,835	-	54,835	-	54,835
Dennis Wilkins / Fiona Lawe Davies2(appointed 25 September 2013) CompanySecretary	-	-	-	-	-
Total	622,714	36,534	659,248	-	659,248

Note 1 Mr Tieleman ceased as Company Secretary on 25 September 2012 and as CFO on 31 March 2013. Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987 (Exc. GST) were payable to DW Corporate for Company Secretarial services.

Year ended 30 June 2012

Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.	Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.	Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.	Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.	Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.	Note 2 Mr Wilkins and Ms Lawe Davies are principal and employee respectively of corporate advisory firm DW Corporate P/L. During the financial year fees of $88,987(Exc. GST)werepayable to DW Corporate for CompanySecretarial services.
Year ended 30 June 2012
Key Management Person	Short-term benefits Fees & contractual payments ($)	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(appointed 24 May 2012) Managing Director	28,115	2,530	30,645	330,200	360,845
George Sakalidis Executive Director - Exploration	126,955	3,600	130,555	121,120	251,675
Roger Thomson(ceased 24 May 2012) Executive Director	69,636	3,242	72,878	113,550	186,428
Rudolf Tieleman CFO and Company Secretary	56,017	-	56,017	60,560	116,577
Total	320,723	12,972	333,695	723,840	1,057,535

Note (1) Equity remuneration represents share options granted during the 2012 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 its view of market values. This observation is over-riding and shall prevail over any inconsistent possible interpretation) as at their grant date.

• 19 -

DIRECTORS' REPORT

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. Termination provisions provide for 3 months’ notice to be given by the executive or 6 months’ notice to be given by the Company.

Other Executive Agreements

Other executives including the CFO are employed by letter agreement. Termination provisions provide for one month notice from either party.

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.

Other major provisions of this consulting agreement are:

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

Mr Thomas and (to the date of his cessation) Mr Tieleman do not have employment contracts with the Company save to the extent that the Company’s constating documents comprise the same.

DW Corporate Services P/L provides the services of Dennis Wilkins and Fiona Lawe Davies as joint Company Secretaries. These services are provided under a services agreement for a fixed monthly retainer fee plus additional services charged at specified hourly rates. Four months written notice of termination is required from either party.

Guaranteed Rate Increases

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

• 20 -

DIRECTORS' REPORT

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	Options over Ordinary	Shares
		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	2,100,306	500,000	650,000
Peter Davies	200,000			1,250,000	1,250,000	1,250,000
George Sakalidis	3,108,489	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.

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

EMPLOYEES

At 30 June 2013, aside from directors who are for tax purposes treated as employees, the Company had four full-time employees (2012:six).

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 $13,750 (2012: $11,766) 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) 2,345,000 exercisable at $1.1162 per option on or before 18 December 2014;

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

• (c) 2,600,000 exercisable at $0.3908 per option on or before 27 December 2016.

• (d) 1,250,000 exercisable at $0.50 per option on or before 1 June 2015;

• (e) 1,250,000 exercisable at $0.70 per option on or before 1 June 2016;

• (f) 1,250,000 exercisable at $1.00 per option on or before 1 June 2016.

• 21 -

DIRECTORS' REPORT

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

16 September 2013

• 22 -

AUDITOR’S INDEPENDENCE DECLARATION

---

==> picture [513 x 102] intentionally omitted <==

To those charged with governance of Image Resources NL

As auditor for the audit of Image Resources NL for the year ended 30 June 2013, 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: 16 September 2013

• 23 -

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.

24

CORPORATE GOVERNANCE STATEMENT

	ASX Principle	Status Reference/comment
Principle	1: Lay solid foundations for management
	and oversight
1.1	Companies should establish the functions	A This information is disclosed in the Company’s Board Charter, a copy of
	reserved to the board and those	which can be viewed on the Company website.
	delegated to senior executives and
	disclose those functions
1.2	Companies should disclose the process	N/A Executives are effectively under a constant process of performance
	for evaluating the performance of senior	evaluation as measured by the Company’s market capitalisation/share price
	executives	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	A A copy of the Company’s Board Charter can be viewed on the Company
	information indicated in the Guide to	website.
	reporting on Principle 1
Principle	2: Structure the board to add value
2.1	A majority of the board should be	N/A There are three directors on the board, two of which clearly serve as
	independent directors	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	A The Chair, Peter Thomas, considers himself to be an independent director
	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	A
	officer should not be exercised by the
	same individual
2.4	The board should establish a nomination	N/A The full board undertakes the duties which would normally fall to the
	committee	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	A This information is disclosed in the Company’s Board Charter, a copy of
	for evaluating the performance of the	which can be viewed on the Company website.
	board, its committees and individual
	directors
2.6	Companies should provide the	N/A The skills, experience and period of office of directors are set out in the
	information indicated in the Guide to	Company’s Annual Report (Directors’ Report) and on its website.
	reporting on Principle 2	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.
Principle	3: Promote ethical and responsible
	decision-making
3.1	Companies should establish a code of	A The Company has established a Code of Conduct which can be viewed on
	conduct and disclose the code	its website.

25

CORPORATE GOVERNANCE STATEMENT

		ASX Principle	Status Reference/comment	Status Reference/comment
3.2		Companies should establish a policy	N/A The Company has not established a diversity policy, but intends to include
		concerning diversity and disclose the	one in its corporate governance manual currently being updated. The
		policy or a summary of that policy. The	Company does not have requirements for the board to establish measurable
		policy should include requirements for the	objectives for achieving gender diversity. Given the Company’s size and
		board to establish measurable objectives	stage of development as an exploration company, the board does not think it
		for achieving gender diversity and for the	is appropriate to include measurable objectives in relation to gender. As the
		board to assess annually both the	Company grows and requires more employees, the Company will review and
		objectives and progress in achieving	amend this policy if it sees fit.
		them
3.3		Companies should disclose in each	N/A The Company has not established a diversity policy, but intends to include
		annual report the measurable objectives	one in its corporate governance manual currently being updated. The
		for achieving gender diversity set by the	Company does not have requirements for the board to establish measurable
		board in accordance with the diversity	objectives for achieving gender diversity. Given the Company’s size and
		policy and progress towards achieving	stage of development as an exploration company, the board does not think it
		them	is appropriate to include measurable objectives in relation to gender. As the
			Company grows and requires more employees, the Company will review and
			amend this policy if it sees fit.
3.4		Companies should disclose in each	A The proportion of women employees in the whole organisation is 25%
		annual report the proportion of women	(excluding directors).
		employees in the whole organisation, women in senior executive positions and	There are currently no women in senior executive positions or on the board.
		women on the board.
3.5		Companies should provide the	N/A	The Company does not currently have a diversity policy.
		information indicated in the Guide to
		reporting on Principle 3
Principle	4:	Safeguard integrity in financial
		reporting
4.1		The board should establish an audit	N/A The Company has a policy regarding the formation, composition, role,
		committee	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.
4.2		The audit committee should be structured
		so that it:
		• consists only of non-executive	N/A The Company has a policy regarding the formation, composition, role,
		directors	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	N/A See answer to 4.2 above.
		directors
		• is chaired by an independent chair,	N/A See answer to 4.2 above.
		who is not chair of the board
		• has at least three members	N/A See answer to 4.2 above.
4.3		The audit committee should have a	A The Company has a policy regarding the formation, composition, role,
		formal charter	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	A The Board is required to consider audit committee issues at least half yearly,
		information indicated in the Guide to	with further meetings on an as required basis.
		reporting on Principle 4

26

CORPORATE GOVERNANCE STATEMENT

		ASX Principle	Status Reference/comment	Status Reference/comment
Principle	5:	Make timely and balanced disclosure
5.1		Companies should establish written	A	A copy of the Company’s Continuous Disclosure Policy can be viewed on
		policies designed to ensure compliance		the Company website.
		with ASX Listing Rule disclosure
		requirements and to ensure
		accountability at a senior executive level
		for that compliance and disclose those
		policies or a summary of those policies
5.2		Companies should provide the	A
		information indicated in the Guide to
		reporting on Principle 5
Principle	6:	Respect the rights of shareholders
6.1		Companies should design a	A A copy of the Company’s Shareholder Communication Policy can be viewed
		communications policy for promoting	on the Company website.
		effective communication with
		shareholders and encouraging their
		participation at general meetings and
		disclose their policy or a summary of that
		policy
6.2		Companies should provide the	A
		information indicated in the Guide to
		reporting on Principle 6
Principle	7:	Recognise and manage risk
7.1		Companies should establish policies for	A A copy of the Company’s Risk Management Policy can be viewed on the
		the oversight and management of	Company website.
		material business risks and disclose a
		summary of those policies
7.2		The board should require management to	A The Managing Director reports to the Board monthly on material risks
		design and implement the risk	identified and mitigation measures taken (if any). Whilst the board
		management and internal control system	recognises the benefit of the discipline of documenting such matters, the
		to manage the company’s material	board has deployed its scarce resources to other endeavours in priority to
		business risks and report to it on whether	the preparation of a written report on the matter of risk. Given that the
		those risks are being managed	Company has a Risk Management Policy in place and that the board has
		effectively. The board should disclose	two executive directors who are well versed in the day to day affairs of the
		that management has reported to it as to	Company and the internal control measures in place, the Company
		the effectiveness of the company’s	considers that it is managing its material business risks just as effectively as
		management of its material business	if a formal independent committee was established for the purpose
		risks	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	A Assurances received.
		received assurance from the chief
		executive officer (or equivalent) and the
		chief financial officer (or equivalent) that
		the declaration provided in accordance
		with section 295A of the Corporations Act
		is founded on a sound system of risk
		management and internal control and that
		the system is operating effectively in all
		material respects in relation to financial
		reporting risks
7.4		Companies should provide the	A
		information indicated in the Guide to
		reporting on Principle 7

27

CORPORATE GOVERNANCE STATEMENT

ASX Principle	ASX Principle	Status Reference/comment	Status Reference/comment
Principle 8: Remunerate fairly and responsibly
8.1 The	board should establish a	A A Remuneration Committee has been formed with the Charter available on
remuneration committee		the Company’s website. The remuneration committee is currently comprised
		of Dennis Wilkins (Company Secretary - Chair), Peter Thomas, Peter Davies
		and George Sakalidis, 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.
8.2 The	remuneration committee should be
structured so that it:
•	consists of a majority of independent	N/A As there is only one independent director of the Company, it is not possible
	directors	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		A Refer to the Remuneration Report in the Company’s Annual Report.
structure of non-executive directors’
remuneration from that of executive
directors and senior executives
8.4 Companies should provide the		A The executive directors and executives receive a superannuation guarantee
information indicated in the Guide to		contribution required by the government, which is currently 9% (9.25%
reporting on Principle 8		effective 1 July 2013), and do not receive any other retirement benefits.
A = Adopted
N/A = Not adopted

28

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2013

Notes Revenue: Interest and dividends income Other revenue 3 Expenses: Depreciation expense 11 Exploration and evaluation expenses Impairment of available-for-sale financial assets Share based payments expense 22 Other expenses 3 (Loss) before income tax expense Income tax benefit / (expense) 4 (Loss) from continuing operations Other comprehensive income: Items that may be reclassified subsequently to profit and loss Changes in the fair value of available-for-sale financial assets Other comprehensive income for the year, net of tax Total profit and loss and other comprehensive income for the year Total profit and loss and other comprehensive income for year attributable to members of the Company Basic (loss) per share (cents per share) 7 Diluted (loss) per share (cents per share) 7	2013 ($) 158,896 727,746 (34,987) (5,952,761) - - (1,447,416) (6,548,522) - (6,548,522) (10,000) (10,000) (6,558,522) (6,558,522) (5.26) (5.26)	2012 ($) 100,802 477,301 (18,547) (3,741,818) (521,310) (723,840) (1,082,507)
		(5,509,919) -
		(5,509,919)
		(528,400)
		(528,400)
		(6,038,319)
		(6,038,319)
		(5.82) (5.82)

The accompanying notes form part of these financial statements.

29

STATEMENT OF FINANCIAL POSITION As at 30 June 2013

Notes Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Other assets 10 Total Current Assets Non-Current Assets Property, plant and equipment 11 Other assets 12 Other financial assets 13 Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables 14 Provisions 15 Total Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Contributed equity 16 Reserves 16 Accumulated (losses) TOTAL EQUITY The accompanying notes form part of these financial statements.	2013 ($) 3,176,042 180,943 264,626 3,621,611 94,117 - 185,633 279,750 3,901,361 573,858 48,509 622,367 622,367 3,278,994 36,756,352 1,112,490 (34,589,848) 3,278,994	2012 ($) 617,382 509,208 24,034
		1,150,624
		33,423 285,444 900,717
		1,219,584
		2,370,208
		742,862 21,343
		764,205
		764,205
		1,606,003
		28,524,839 3,080,490 (29,999,326)
		1,606,003

30

STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2013

Balance at 1.7.2011 Operating (loss) for the year Other comprehensive income Shares issued during the year Share issue costs Share based payments expense Expiry of unexercised director and employee options Balance at 30.6.2012 Balance at 1.7.2012 Operating (loss) for the year Other comprehensive income Shares issued during the year Share issue costs Share based payments expense Expiry of unexercised director and employee options Balance at 30.6.2013	Contributed Equity (Net of Costs) ($) Available for Sale Financial Asset Reserve ($) Employee Benefit Reserve ($) Accumulated Losses ($) Total ($)
	24,951,646 528,400 3,719,909 (25,852,666) 3,347,289 - - - (5,509,919) (5,509,919) - (528,400) - - (528,400) 3,658,550 - - - 3,658,550 (85,357) - - - (85,357) - - 723,840 - 723,840 - - (1,363,259) 1,363,259 - 28,524,839 - 3,080,490 (29,999,326) 1,606,003
	28,524,839 - 3,080,490 (29,999,326) 1,606,003 - - - (6,548,522) (6,548,522) - (10,000) - - (10,000) 8,641,313 - - - 8,641,313 (409,800) - - - (409,800) - - - - - - - (1,958,000) 1,958,000 - 36,756,352 (10,000) 1,122,490 (34,589,848) 3,278,994

The accompanying notes form part of these financial statements.

31

STATEMENT OF CASH FLOWS For the Year Ended 30 June 2013

Notes CASH FLOWS FROM OPERATING ACTIVITIES Cash payments to suppliers and contractors Research and development tax incentives received Expense recoveries received Other receipts Interest received Dividends received Net cash (used in) operating activities 17 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment Payments for exploration and evaluation Purchase of new prospects Release of restricted cash – term deposits for bank guarantees Proceeds from sale of investments Proceeds from sale of plant and equipment Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new issues of shares 16 Share issue costs Net cash provided by financing activities Net increase / (decrease) in cash held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 8 The accompanying notes form part of these financial statements.	2013 ($) (1,730,368) 522,092 348,750 - 145,584 2,703 (711,239) (96,865) (5,834,285) (18,163) 22,000 941,849 23,850 (4,961,614) 8,641,313 (409,800) 8,231,513 2,558,660 617,382 3,176,042	2012 ($) (822,054) - - 9,968 97,784 3,018
		(711,284)
		(4,456) (3,119,619) (74,788) - 56,839 -
		(3,142,024)
		1,888,550 (85,357)
		1,803,193
		(2,050,115) 2,667,497
		617,382

32

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

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 16 September 2013.

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

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

Reporting Basis and Conventions

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

Going Concern

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

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

Accounting Policies

(a) Revenue

Interest revenue is recognised on a proportional basis taking into account interest rates applicable to the financial asset.

Research and development tax incentives are recognised as other revenue during the financial period in which the claim for refund is made.

All revenue is stated net of the amount of goods and services tax (GST).

(b) Employee Benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by non-casual employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. There is no liability for long service leave entitlements.

(c) Exploration and Evaluation Expenditure

All exploration and evaluation expenditure is expensed to Statement of Profit and Loss and other 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 Profit and Loss and other 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.

33

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

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

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

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

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

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

(g) Cash and Cash Equivalents

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

(h) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Profit and Loss and Other 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.

34

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Profit and Loss and Other Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(k) Financial Instruments

Recognition and Initial Measurement

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

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

Classification and Subsequent Measurement

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

Amortised cost is calculated as:

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

less principal repayments;

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

less any reduction for impairment.

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

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

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Held-to-maturity investments

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

Available-for-sale financial assets

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

They are subsequently measured at fair value with changes in such fair value (i.e., gains and losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit and loss. Available-for-sale financial assets are included in current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as non-current assets.

Financial liabilities

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

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

35

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

Impairment

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

Financial Guarantees

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

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

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

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

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

De-recognition

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

(l) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(m) Leases

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

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

(n) Interest in Joint Ventures

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

(o) Contributed Equity

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

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

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

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

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

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.

36

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

(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.

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

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012, and have not been applied in preparing these financial statements. Those which may be relevant to the Company are set out below. The Company does not plan to adopt these standards early.

AASB 9 Financial Instruments (2010), AASB 9 Financial Instruments (2009)

AASB 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under AASB 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. AASB 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project that may result in limited amendments to the classification and measurement requirements of AASB 9 and add new requirements to address the impairment of financial assets and hedge accounting.

AASB 9 (2010 and 2009) are effective for annual periods beginning on or after 1 January 2015 with early adoption permitted. The adoption of AASB 9 (2010) is expected to have an impact on the Company’s financial liabilities.

AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosures of Interests in Other Entities (2011)

AASB 10 introduces a single control model to determine whether an investee should be consolidated. The introduction of this standard is not expected to impact on the Company.

Under AASB 11, the structure of the joint arrangement, although still an important consideration, is no longer the main factor in determining the type of joint arrangement and therefore the subsequent accounting.

• The Company’s interest in a joint operation, which is an arrangement in which the parties have rights to the assets and obligations for the liabilities, will be accounted for on the basis of the Company’s interest in those assets and liabilities.

• The Company’s interest in a joint venture, which is an arrangement in which the parties have rights to the net assets, will be equity accounted.

The introduction of AASB 11 is not expected to significantly impact on the Company.

AASB 12 brings together into a single standard all the disclosure requirements about an entity’s interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Company is currently assessing the disclosure requirements for interests in subsidiaries,

37

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

interests in joint arrangements and associates and unconsolidated structured entities in comparison with the existing disclosures. AASB 12 requires the disclosure of information about the nature, risks and financial effects of these interests.

These standards are effective for annual periods beginning on or after 1 January 2013 with early adoption permitted.

AASB 13 Fair Value Measurement (2011)

AASB 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement guidance that is currently dispersed throughout Australian Accounting Standards. Subject to limited exceptions, AASB 13 is applied when fair value measurements or disclosures are required or permitted by other AASBs. The Company is currently reviewing its methodologies in determining fair values. AASB 13 is effective for annual periods beginning on or after 1 January 2013 with early adoption permitted.

AASB 119 Employee Benefits (2011)

AASB 119 (2011) changes the definition of short-term and other long-term employee benefits to clarify the distinction between the two. AASB 119 (2011) is effective for annual periods beginning on or after 1 January 2013 with early adoption permitted. The introduction of this standard is not expected to impact on the Company.

NOTE 2 OPERATING SEGMENTS

Segment Information

Identification of reportable segments

The Company has identified that it operates in only one segment based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company is a minerals sands exploration and evaluation company. Currently all the Company’s mineral sands tenements and resources are located in Western Australia.

Revenue and assets by geographical region

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

Major customers

Due to the nature of its operations, the Company does not yet 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 Profit and Loss and Other Comprehensive Income and Statement of Financial Position and are not duplicated here.

NOTE 3 REVENUE AND EXPENDITURE REVENUE Other Income Profit on sale of investments Profit on Sale of Plant and Equipment Research and development tax incentive (net of costs) Expense recoveries EXPENDITURE Other Expenses Occupancy costs Filing and ASX Fees Corporate and management Other expenses from continuing operations	2013 ($) 236,766 22,665 237,565 230,750 727,746 (245,008) (56,950) (550,704) (594,754) (1,447,416)	2012 ($) 8,721 - 198,580 270,000
		477,301
		(230,247) (38,183) (249,811) (564,266)
		(1,082,507)

38

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

NOTE 4 INCOME TAX The components of tax expense comprise: Current tax Deferred tax asset/liability The prima facie tax on loss from ordinary activities before income tax is reconciled to income tax as follows: Loss from continuing operations before income tax Prima facie tax benefit attributable to loss from continuing operations before income tax at 30% Tax effect of Non-allowable and additional deductible items  Equity-settled share based payments  Research and development tax incentive  Profit / (Impairment) of available-for-sale financial assets  Other Deferred tax benefit on tax losses not brought to account Income tax attributable to the Company Unrecognised temporary differences Net deferred tax assets (calculated at 30%) have not been recognised in respect of the following items: Prepayments Provisions Unrecognised deferred tax assets relating to the above temporary differences Unrecognised deferred tax assets The Company has accumulated tax losses of $22,394,817 (2012: $19,161,372). The potential deferred tax benefit of these losses $6,718,445 will only be recognised if:	2013 ($) - - - 6,548,522 1,964,557 - 87,243 71,030 41,633 (2,164,463) - (2,852) 48,036 45,184	2012 ($) - -
		-
		5,509,919
		1,652,976 (307,152) 70,090 (156,393) (18,420) (1,241,101)
		-
		(7,210) 27,762
		20,552

(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 Short-term employee benefits Post-employment benefits Equity-settled share based payments	2013 ($) 622,714 36,534 - 659,248	2012 ($) 320,723 12,972 723,840
		1,057,535

Further key management personnel remuneration information has been included in the Remuneration Report section of the Directors Report. Information on related party and entity transactions are disclosed in Note 23.

Options held by Key Management Personnel

The number of options over 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:

39

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

30 June 2013:

30 June 2013:
Name	Balance at the start of the year	Granted during the year	Exercised during the year	Other changes during the year	Balance at the end of the year	Vested & exercisable at the end of the year
Peter Thomas	1,800,000	-	-	(650,000)	1,150,000	1,150,000
Peter Davies	3,750,000	-	-	-	3,750,000	3,750,000
George Sakalidis	2,400,000	-	-	(800,000)	1,600,000	1,600,000
Graeme Scott(appointed 1 April 2013)	-	-	-	-	-	-
Rudolf Tieleman(ceased 25 September 2012)	700,000	-	-	(700,000)	Non-reportable	Non-reportable
Dennis Wilkins(appointed 25 September 2012)	-	-	-	-	-	-
Fiona Lawe Davies(appointed 25 September 2012)	-	-	-	-	-	-
Totals	8,650,000	-	-	(2,150,000)	6,500,000	6,500,000
30 June 2012:
Name	Balance at the start of the year	Granted during the year	Exercised during the year	Other changes during the year	Balance at the end of the year	Vested & exercisable at the end of the year
Peter Thomas	1,750,000	650,000	-	(600,000)	1,800,000	1,800,000
Peter Davies(appointed 24 May 2012)	-	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(ceased 24 May 2012)	2,250,000	750,000	-	(2,950,000)	Non-reportable	Non-reportable
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

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 2013:

30 June 2013:
Name	Balance at the start of the year	Net share movements	Balance at the end of the year
Peter Thomas	1,600,306	500,000	2,100,306
Peter Davies	100,000	100,000	200,000
George Sakalidis	2,881,372	145,000	3,026,372
Graeme Scott(appointed 1 April 2013)	-	-	-
Rudolf Tieleman(ceased 25 September 2012)	400,000	(400,000)	Non-reportable
Dennis Wilkins(appointed 25 September 2012)	-	1,000	1,000
Fiona Lawe Davies(appointed 25 September 2012)	-	-	-
Totals	4,981,678	346,000	5,327,678

40

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

30 June 2012:

Name	Balance at the start of the year	Net share movements	Balance at the end 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(ceased 24 May 2012)	2,143,969	(2,143,969)	Non-reportable
Rudolf Tieleman	400,000	-	400,000
Totals	6,425,647	(1,443,969)	4,981,678

NOTE 6 AUDITORS REMUNERATION Amounts received or due and receivable by the auditors of the Company for: Auditing and reviewing the financial reports Other NOTE 7 LOSS PER SHARE The following reflects the earnings and share data used in the calculation of basic and diluted loss per share Loss for the year Loss used in calculating basic and diluted loss per share Weighted average number of ordinary shares used in calculating basic loss per share	2013 ($) 23,950 - 23,950 2013 ($) (6,548,522) (6,548,522) 124,608,296	2012 ($) 21,000 1,050
		22,050
		2012 ($) (5,509,919) (5,509,919)
		94,695,444

The Company had 8,790,000 (2012: 10,990,000) 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 loss per share.

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

NOTE 8 CASH AND CASH EQUIVALENTS Cash at bank Deposits at call NOTE 9 TRADE AND OTHER RECEIVABLES Trade receivables GST and tax refundable NOTE 10 OTHER ASSETS - CURRENT Restricted cash – security for bank guarantees Prepayments	2013 ($) 868,444 2,307,598 3,176,042 2013 ($) 37,342 143,601 180,943 2013 ($) 241,694 22,932 264,626	2012 ($) 43,014 574,368
		617,382
		2012 ($) 158,427 350,781
		509,208
		2012 ($) - 24,034
		24,034

41

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

Restricted cash represent term deposits held by the Company’s banks as security for bank guarantees issued in relation to operating lease commitments for the office premises and the Department of Mines and Petroleum in respect of potential rehabilitation on certain of the Company’s tenement holdings. It is anticipated that these funds will soon be released back to the Company under the new Mining Rehabilitation Fund regime.

NOTE 11 PROPERTY PLANT AND EQUIPMENT Plant, equipment and motor vehicles Less: Accumulated depreciation Reconciliations of the carrying amount of plant, equipment and motor vehicles from the beginning to the end of the financial year. Plant, equipment and motor vehicles Carrying amount at beginning of year Additions Disposals Depreciation expense Total plant, equipment and motor vehicles at end of year NOTE 12 OTHER ASSETS – NON - CURRENT Restricted cash – security for bank guarantees Restricted cash – See note 10 for details NOTE 13 OTHER FINANCIAL ASSETS Non-Current Available-for-sale financial assets – shares in listed corporations Investments in related parties Available-for-sale financial assets includes the following investments held in director- related party entities: Emu Nickel NL Magnetic Resources NL – fully paid shares Magnetic Resources NL – partly-paid shares Meteoric Resources NL – fully paid shares Meteoric Resources NL – partly-paid shares NOTE 14 TRADE AND OTHER PAYABLES Trade creditors and accruals NOTE 15 CURRENT PROVISIONS Employee leave benefits	2013 ($) 283,651 (189,534) 94,117 33,423 96,865 (1,184) (34,987) 94,117 2013 ($) - 2013 ($) 185,633 - - 113 134,459 40 134,612 2013 ($) 573,858 2013 ($) 48,509	2012 ($) 257,288 (223,865)
		33,423
		47,514 4,456 - (18,547)
		33,423
		2012 ($) 285,444
		2012 ($) 900,717
		70,880 536,353 213 151,996 40
		759,482
		2012 ($) 742,862
		2012 ($) 21,343

42

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

NOTE 16 ISSUED CAPITAL Contributed Equity – Ordinary Shares At the beginning of the year Issue of shares at $0.49 as part consideration to acquire the remaining interest in previously joint ventured tenements Issue of shares at $0.35 Issue of shares at $0.30 as consideration to acquire tenements Placement issue of shares at $0.30 Placement issue of shares at $0.20 Issue of shares at $0.20 Share issue costs Closing balance: Reserves Available-for-sale financial assets reserve Employee benefits reserve (i) Closing balance (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 $2.12 on or before 20.11.2012 Options exercisable at $1.1162 on or before 18.12.2014 Options exercisable at $0.6995 on or before 21.12.2015 Options exercisable at $0.3908 on or before 27.12.2016 Options exercisable at $0.50 on or before 1.6.2015 Options exercisable at $0.70 on or before 1.6.2016 Options exercisable at $1.00 on or before 1.6.2016 Total Options	2013	2013	2012	2012
	No.	$	No.	$
	100,184,817 - - - 6,470,376 33,500,000 1,000 -		90,788,959 3,000,000 5,395,858 1,000,000 - - - -	24,951,646 1,470,000 1,888,550 300,000 - - - (85,357)
	140,156,193		100,184,817	28,524,839
	- 2,345,000 95,000 2,600,000 1,250,000 1,250,000 1,250,000	(10,000) 1,122,490 1,112,490	2,200,000 2,345,000 95,000 2,600,000 1,250,000 1,250,000 1,250,000	- 3,080,490 3,080,490
	8,790,000		10,990,000

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.

43

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

NOTE 17 CASH FLOW INFORMATION Reconciliation of operating loss after income tax with funds used in operating activities: Operating loss after income tax Depreciation and amortisation Exploration and evaluation expenditure Share based payments (Profit) on sale of plant and equipment (Profit) on sale of investments Impairment of available-for-sale-asset Changes in operating assets and liabilities: (Increase) / decrease in trade and other receivables relating to operating activities Decrease in prepayments Increase / (Decrease) in trade and other payables relating to operating activities Increase in provisions Cash flow from operations	2013 ($) (6,548,522) 34,987 5,952,761 - (22,665) (236,766) - 328,265 1,102 (247,566) 27,165 (711,239)	2012 ($) (5,509,919) 18,547 3,741,818 723,840 - (8,721) 521,310 (328,206) 15,181 106,639 8,227
		(711,284)

NOTE 18 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 vary from time to time. The aggregate of the prescribed expenditure conditions applicable to the granted tenements for the next twelve months amounts to $1,485,043. Of this amount, $97,800 is expected to be met by JV participants.

Application for exemption from all or some of the prescribed expenditure conditions will 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.

If the prescribed expenditure conditions are not met with respect to a tenement, that tenement is liable to forfeiture.

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 is rationalising its tenement interests in order to focus on its core assets in its continuing drive to reduce outgoings.

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.

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 2014, to expiry, amounts to $60,347 (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.

NOTE 19 JOINT VENTURES

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

Name of Project Interest Chandala JV Earned 80% Erayinia JV 16.1% Matilda Minerals JV Earning 70%	Carrying Amount - Image has earned its interest - Image is diluting its interest - Image is earning its interest -

NOTE 20 TENEMENT ACCESS

The interests of holders of freehold land encroached by the Tenements are given special recognition by the Mining Act (WA). As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on 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.

44

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

The Company has entered into an option agreement with the freehold owner of key block of land at Boonanarring upon which the feasibility study postulates that the processing plant will be constructed and the starter mining pit will be located . If 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 high grade dry mining targets within 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 consideration.

Outside of the NPB Project the Company’s other tenements may contain dredge mining targets which could be subject to Native Title claim.

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

NOTE 21 EVENTS SUBSEQUENT TO REPORTING DATE

Other than the release of the Feasibility Study results and lodgement of the draft PER (referred to above), 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.

NOTE 22 EQUITY-SETTLED SHARE BASED PAYMENTS

No share options were granted during the financial year (2012: 6,350,000).

All share options granted in the year ended 30 June 2012 are unlisted, 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 $0 (2012: $723,840).

NOTE 23 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:

	2013	2012
	($)	($)
Serviced office charges to Emu Nickel NL1	48,750	90,000
Serviced office charges to Meteoric Resources NL1	89,750	90,000
Serviced office charges to Magnetic Resources NL1	92,250	90,000
Plant and equipment sold to Meteoric Resources NL	20,000	-
Plant and equipment sold to Magnetic Resources NL	3,850	-
Plant and equipment purchased from EMU Nickel NL	(1,700)	-
Plant and equipment purchased from Meteoric Resources NL	(42,000)	-
Plant and equipment purchased from Magnetic Resources NL	(35,400)	-
Leeman Pty Ltd, a George Sakalidis related party, hire of specialised equipment	(6,750)	(4,050)

1The Company has entered into Serviced Office Agreements with Meteoric Resources NL, Magnetic Resources NL, and (but now ceased) Emu Nickel NL, all director-related entities, whereby it has agreed to provide various support services on a monthly basis to those companies. A total of $26,412 (including GST) (2012: $148,500) was owing to the Company as at 30 June 2013 in relation to these agreements and received after the end of the year.

Total amounts owing to directors and/or director-related parties at 30 June 2013 amounted to $27,655 (including GST) (2012: $9,377).

During the year ended 30 June 2013 the Company disposed of its entire investment in the fully paid ordinary shares of Magnetic Resources NL and Emu Nickel NL (refer to Note 13) to non-related parties. The Company made a profit on these disposals of $252,929 and $79 respectively.

NOTE 24 CONTINGENT LIABILITIES AND COMMITMENTS

Other than those matters disclosed in Notes 18 and 20 above, there are no contingent liabilities or commitments.

45

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

NOTE 25 FINANCIAL INSTRUMENTS DISCLOSURE

• (a) Financial Risk Management Policies

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

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

Specific Financial Risk Exposure and Management

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

Interest Rate Risk

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

Liquidity Risk

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

Capital Risk

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

Due to the nature of the Company’s activities, the Company does not have ready access to credit facilities, with the primary source of funding having been 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.

In addition, following the completion of the NPB Project feasibility study the Company will be required to raise a significant amount of finance if it is to develop the project. Activities will be directed at progressing discussions with potential providers of project finance. The Company is mindful of managing existing shareholder dilution under any financing proposals that may eventuate.

The working capital position of the Company at 30 June 2013 and 30 June 2012 was as follows:

Cash and cash equivalents Restricted cash Trade and other receivables Trade and other payables and provisions Working capital position	2013 ($) 3,176,042 241,694 180,943 (573,858) 3,024,821	2012 ($) 617,382 - 509,208 (742,862) 383,728

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 (designated as restricted cash above) totalling $241,694 (2012: $285,444) 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 and restricted cash based on credit ratings:

tings:
	2013	2012
	($)	($)
AAA rated	-	-
AA rated	-	-
A rated	3,417,736	902,826

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

46

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

Trade and other receivables Trade receivables GST and tax refundable	2013 ($) 37,342 143,601 180,943	2012 ($) 158,427 350,781 509,208

(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.

2013 Weighted Average Effective Interest Rate %	Floating Interest Rate ($) Non-Interest Bearing ($)	Total ($)
Financial Assets: Cash and cash equivalents 3,174,316 1,726 Restricted cash 241,694 - Trade and other receivables - 180,943 Available-for-sale financial assets - 185,633 Total Financial Assets 3.17% 3,416,010 368,302 Financial Liabilities: Trade and other payables and provisions - (622,367) Net financial assets 3,416,010 (254,065) Trade and other payables are expected to be settled as follows: Less than 6 months (see note 14) 2012 Weighted Average Effective Interest Rate % Floating Interest Rate ($) Non-Interest Bearing ($)	3,174,316 1,726 241,694 - - 180,943 - 185,633	3,176,042 241,694 180,943 185,633
	3,416,010 368,302	3,748,312
	- (622,367)	(622,367)
	3,416,010 (254,065)	3,161,945
		2013 $ (573,858) (573,858) Total ($)
Financial Assets: Cash and cash equivalents 616,002 1,380 Restricted cash 285,444 - Trade and other receivables - 509,208 Available-for-sale financial assets - 900,717 Total Financial Assets 4.76% 901,446 1,411,305 Financial Liabilities: Trade and other payables and provisions - (764,205) Net financial assets 901,446 647,100 Trade and other payables are expected to be settled as follows: Less than 6 months (see notes 14)	616,002 1,380 285,444 - - 509,208 - 900,717	617,382 285,444 509,208 900,717
	901,446 1,411,305	2,312,751
	- (764,205)	(764,205)
	901,446 647,100	1,548,546
		2012 $ (742,862) (742,862)

47

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the Year Ended 30 June 2013

(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).

2013	Level 1 $ Level 2 $ Level 3 $ Total $
Financial Assets: Financial assets at fair value through profit or loss: Available-for-sale financial assets: - Listed investments 2012	185,633 - - 185,633
	185,633 - - 185,633
	Level 1 $ Level 2 $ Level 3 $ Total $
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

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 financial 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:

		2013	2012
		($)	($)
Change	in loss – increase/(decrease):
-	Increase in interest rate by 2%	(68,790)	(18,029)
-	Decrease in interest rate by 2%	68,790	18,029
Change	in equity – increase/(decrease):
-	Increase in interest rate by 2%	68,790	18,029
-	Decrease in interest rate by 2%	(68,790)	(18,029)

48

DIRECTORS’ DECLARATION

The directors of the Company declare that:

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

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

3. (b) give a true and fair view of the financial position as at 30 June 2013 and performance for the year ended on that date of the Company; and

4. (c) the audited remuneration disclosures set out in the Remuneration Report section of the Directors’ Report for the year ended 30 June 2013 complies with section 300A of the Corporations Act 2001;

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

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

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

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

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

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

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

ORIGINAL SIGNED BY PETER DAVIES MANAGING DIRECTOR

PERTH

Dated this 16[th] day of September 2013

49

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

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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 2013, and the statement of profit and loss and other 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 2013 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.

50

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

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 17 to 21 of the directors’ report for the year ended 30 June 2013. 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 2013, complies with section 300A of the Corporations Act 2001.

Somes Cooke

SIGNED: NICHOLAS HOLLENS

Somes Cooke 1304 Hay Street West Perth WA 6005

16 September 2013

51

TENEMENT SCHEDULE

Tenement	Nature of Interest	Project	Equity (%)
2004/0921	Application	SA-OOLDEA RANGE	100%pending grant
E28/1895	Granted	KING(ERAYINIA JV)	16.1% diluting
E28/2071	Granted	TALC LAKE(ERAYINIA JV)	16.1% diluting
E28/2207	Granted	KING WEST	100%
E69/2034	Granted	SERPENTINE LAKES	100%
R69/0001	Application	SERPENTINE LAKES	100%pending grant
E70/2636	Granted	COOLJARLOO	100%
E70/2742	Granted	CHANDALA(DerbyMines JV)	Earned 80%
E70/2825	Granted	BIDAMINNA STH	100%
E70/2844	Granted	BIDAMINNA NTH	100%
E70/2892	Granted	CADDA SPRINGS	100%
E70/2898	Granted	COOLJARLOO	100%
E70/3032	Granted	GINGIN	100%
E70/3041	Granted	REGANS FORD SOUTH(Kings Reef JV)	100%
E70/3086	Granted	GABY'S PEAK	100%
E70/3100	Granted	QUINNS HILL	100%
E70/3192	Granted	BOOTINE	100%
E70/3292	Granted	COOLJARLOO(Matilda Minerals JV)	Earning70%
E70/3298	Granted	BIDAMINNA - PARK	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%
E70/3720	Granted	BLUE LAKE	100%
E70/3892	Granted	CHAPMAN HILL	100%
E70/3966	Granted	REGANS FORD WEST	100%
E70/3997	Granted	MUNBINIA	100%
E70/4077	Granted	DARLING RANGE	100%
E70/4129	Granted	MULLERING SOUTH	100%
E70/4130	Granted	MULLERING NORTH	100%
E70/4244	Granted	WOOLKA	100%
E70/4245	Granted	WOOLKA	100%
G70/0250	Granted	BOONANARRING	100%
M70/0448	Granted	GINGIN SOUTH	100%
M70/1192	Granted	RED GULLY	100%
M70/1193	Granted	GINGIN NORTH	100%
M70/1194	Granted	BOONANARRING	100%
M70/1305	Application	ATLAS	100%pending grant
M70/1311	Granted	BOONANARRING	100%
P70/1516	Granted	COOLJARLOO	100%
P70/1520	Application	COOLJARLOO	100%pending grant
P70/1521	Application	COOLJARLOO	100%pending grant
P70/1540	Granted	CADDA SPRINGS	100%
E28/2241	Granted	WOODLINE	100%
E28/2242	Granted	WOODLINE	100%

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OTHER INFORMATION

The following information was applicable as at 31 August 2013.

Share and Option holdings

Category(Size of Holding)	Fully Paid Ordinary Shares	Options 18.12.2014	Options 1.6.2015	Options 21.12.2015	Options 1.6.2016	Options 27.12.2016
1 to 1,000	335
1,001 to 5,000	782			3
5,001 to 10,000	446			2
10,001 to 100,000	751			4
100,001 and over	171	5	1	4	2	4
Total	2,485	5	1	13	2	4

The number of shareholdings held in less than marketable parcels is 1,117.

There are no listed options.

Substantial shareholders:

The names of the substantial shareholders listed in the Company's register as at 31 August 2013:

s of the substantial shareholders listed in the Company's register as at 31 August	2013:
Shareholder Name	Number of Shares	% of Issued Share Capital
Pontian Orico Plantations Sdn Bhd	11,539,728	8.23
Denis Ribton	7,559,895	5.39
CiticorpNominees PtyLtd	7,128,776	5.09
Total	26,228,399	18.71

Twenty largest fully paid shareholders:

	Shareholder Name	Number of Shares	% of Issued Share Capital
1.	Pontian Orico Plantations Sdn Bhd	11,539,728	8.23
2.	Citicorp Nominees Pty Ltd	7,128,776	5.09
3.	Denis Ribton	6,512,295	4.65
4.	JP Morgan Nominees Australia Ltd	5,744,549	4.10
5.	New Eastern International Investment Pty Ltd	5,000,000	3.57
6.	WIT team Enterprises Ltd	3,984,600	2.84
7.	Grosvenor Pirie Management Ltd	2,875,000	2.05
8.	Barrington Dance	2,639,500	1.88
9.	Ava Cartel Sdn Bhd	2,500,872	1.78
10.	Lim Choon Kong	2,500,000	1.78
11.	Roger Michael Thomson	2,043,969	1.46
12.	Afro Pacific Capital Pty Ltd	1,867,710	1.33
13.	NEFCO Nominees Pty Ltd	1,359,000	0.97
14.	Auto Management Pty Ltd	1,311,924	0.94
15.	Leeman Pty Ltd	1,289,188	0.92
16.	National Nominees Ltd	1,268,268	0.90
17.	Devomp Pty Ltd	1,250,000	0.89
18.	Denis and J Ribton	1,047,600	0.75
19.	Kong Chong-Soon	1,000,000	0.71
20.	George Sakilidis	957,364	0.68
	Total	63,820,343	45.52%

53

OTHER INFORMATION

All Option-holders - All options are unquoted:

	Option-holder Name	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 42.66%
2.	George Sakalidis	800,000	-	-	-	800,000	1,600,000 18.20%
3.	Roger M Thomson	550,000	-	-	-	750,000	1,300,000 14.79%
4.	Peter S Thomas	500,000	-	-	-	650,000	1,150,000 13.08%
5.	Rudolf Tieleman	300,000	-	-	-	400,000	700,000 7.96%
6.	Employee Share Option Plan Participants	195,000	-	95,000	-	-	290,000 3.30%
	Total	2,345,000	1,250,000	95,000	2,500,000	2,600,000	8,790,000

There are a total of 140,156,193 fully paid ordinary shares and 8,790,000 options on issue. The fully paid ordinary shares are listed on the 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. None of the options have any voting rights.

54