IMAGE RESOURCES NL — Capital/Financing Update 2006

Jul 18, 2006

ASX RELEASE

19 July 2006

OPTION HOLDERS NOTICES and PROPOSED IPO

2^nd Floor, 35 Outram St West Perth WA 6005 PO Box 644 West Perth WA 6872 Telephone 08 9485 2410 Facsimile 08 9485 2840

info@imageres.com.au

www.imageres.com.au

ABN 57 063 977 579

Image Resources NL wishes to advise that holders of approximately 13 million options expiring 25 August 2006 have today been mailed the attached letter advising of the details required by ASX Listing Rules together with an application form detailing the terms and conditions for exercising the options. A number of options have already been exercised as they are well and truly "in the money". The directors are pleased to have been able to attach a positive research report as prepared by RM Research summarising the company's (Image) investment highlights This report can be found at RM Capital's website http://www.rmcapital.com.au/company_research.htm under the heading "Current Research".

Image is planning to spin out selected tenements at Forrestania and in other areas into a new company to be called Magnetic Resources NL (Magnetic Resources). As the plan is incomplete, none of it is cast in concrete but the Board's current intention is that persons holding shares in Image at the record date (yet to be set but to post date the expiry date of the options), will participate in an issue of bonus shares in Magnetic Resources. It is not currently intended that any seed capital will be raised by Magnetic Resources thus ensuring that significant value from the spin out will be passed on to Image's shareholders (both indirectly via Image's equity in Magnetic Resources and directly via the distribution of securities to participating shareholders). In order to receive the bonus shares if the plan eventuates, option holders will need to exercise their options and retain the ensuing fully paid Image shares until the record date.

The anticipated IPO of Magnetic Resources will provide dedicated resources and focus for accelerated exploration and is expected to achieve similar positive outcomes to that experienced by Image shareholders via Magnetic Minerals Limited and Meteoric Resources NL. The directors have a strong successful track record of listing companies as well as identifying and acquiring exploration targets using aeromagnetic and other data. Image was called "Magnetic Resources" until it changed its name to Image to allow the incorporation of Magnetic Minerals Limited. The directors are pleased to continue the use of the Magnetic name in the creation of value adding opportunities for shareholders. No quarantee is given that the spin out will be implemented or that Magnetic Resources will list.

Image will continue to focus on its core heavy mineral projects and existing joint ventures which are being actively explored to produce increased value for shareholders.

Yours faithfully MANAGING DIRECTOR

ROGER M THOMSON

IMAGE RESOURCES NL

2^nd Floor, 35 Outram St West Perth WA 6005 PO Box 644 West Perth WA 6872

Telephone 08 9485 2410

Facsimile 08 9485 2840 info@imageres.com.au www.imageres.com.au ABN 57 063 977 579

19 July 2006

## OPTIONS DUE TO EXPIRE 25 AUGUST 2006 AND PROPOSED IPO HIN/SRN: Number of options held: Shares to be issued if exercised: Latest due date for payment: Amount pavable: **XXX** XXX **XXX** 5.00pm WST 25 August 2006 **SXXX** Dear Option Holder. As you may be aware, approximately 13 million options in the company are due to expire on 25 August 2006. A number of options have already been exercised as they are well and truly "in the money". The directors are pleased to be able to attach a positive research report as prepared by RM Research summarising the company's (Image) investment highlights. Image is planning to spin out selected tenements at Forrestania and in other areas into a new company to be called Magnetic Resources NL (Magnetic Resources). As the plan is incomplete, none of it is cast in concrete but the Board's current intention is that persons holding shares in Image at the record date (yet to be set but to post date the expiry date of the options). will participate in an issue of bonus shares in Magnetic Resources. It is not currently intended that any seed capital will be raised by Magnetic Resources thus ensuring that significant value from the spin out will be passed on to Image's shareholders (both indirectly via Image's equity in Magnetic Resources and directly via the distribution of securities to participating shareholders). In order to receive the bonus shares if the plan eventuates, option holders will need to exercise their options and retain the ensuing fully paid Image shares until the record date The anticipated IPO of Magnetic Resources will provide dedicated resources and focus for accelerated exploration and is expected to achieve similar positive outcomes to that experienced by Image shareholders via Magnetic Minerals Limited and Meteoric Resources NL. The directors have a strong successful track record of listing companies as well as identifying and acquiring exploration targets using aeromagnetic and other data. Image was called "Magnetic Resources" until it changed its name to Image to allow the incorporation of Magnetic Minerals Limited. The directors are pleased to continue the use of the Magnetic name in the creation of value adding opportunities for shareholders. No quarantee is given that Magnetic Resources will list or that the spin out will be implemented. Image will continue to focus on its core heavy mineral projects and existing joint ventures which are being actively explored to produce increased value for shareholders. Our records indicate that you are the holder of options to subscribe for fully paid ordinary shares in the company (ASX Code "IMAO"). These options expire on 25 August 2006. In accordance with the Australian Stock Exchange (ASX) Listing Rules, the company is required to provide notice to each option holder of the following information: - 1. The number of options held by you is shown in the header above. Should you choose to exercise the options, you will receive one fully paid ordinary share (ASX code IMA) (Ordinary Share) for every one option held. - 2. The exercise price of each option is \$0.25. - 3. The due date for payment is 5pm (Western Standard Time) on 25 August 2006. - 4. The exercise of the options is entirely at your discretion and you are not under any obligation to exercise them. Should you choose not to exercise the options, you will lose all your rights as an option holder. - 5. Quotation of the options (IMAO) on the ASX will end at close of business on 18 August 2006. - 6. At the date of this notice, the market price of each ordinary share is 50 cents. In the three months prior to the date of issue of this notice, the highest market price was 63 cents (on 12 April 2006) and the lowest market price was 41 cents (on 28 June 2006). - $\overline{7}$ . The company has not entered into any underwriting agreement in respect of the exercise of the options. If you choose to exercise your options, please complete the attached Option Exercise Form, attach a cheque or money order made payable to "Image Resources NL" for the amount payable as shown in the header above and post or deliver to: Computershare Ltd Level 2 45 St Georges Terrace Perth WA 6000 Computershare Ltd GPO Box D182 Perth WA 6840 Telephone: 1300 55 70 10 If you are unsure what action to take in respect of this matter, we would advise you to seek independent professional advice. Yours sincerely **Roger M Thomson Managing Director**