IMAGE RESOURCES NL — Capital/Financing Update 2007

Feb 18, 2007

IMAGE RESOURCES NL

2^rd 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 February 2007

Dear Image Shareholder

MAGNETIC RESOURCES NL

Image's wholly owned subsidiary, Magnetic Resources NL, lodged its initial public offering prospectus on 16 February. Given the expressions of interest Image has received in relation to the offer, it anticipated it will be heavily over subscribed. The prospectus can be viewed at www.magres.com.au.

Image will retain a significant shareholding in Magnetic post listing and Image shareholders as at 26 February 2007 will receive bonus fully paid and partly paid shares in Magnetic.

The board is confident that the Magnetic float will add value to your investment in Image while providing Magnetic shareholders with exposure to an intensive exploration programme over the next 24 months. Each holder of shares in Image at a date yet to be determined will be sent a copy of the prospectus together with a "green application form". No one else will receive a green application form.

Magnetic has, as detailed in the prospectus, set aside a pool of 5 million Magnetic shares to be issued under the prospectus for priority distribution to applicants applying for shares on green application forms.

To take up your priority right, read the prospectus (which will be sent to you shortly) in its entirety then complete and return the green application form together with the relevant monies as soon as possible.

Yours sincerely,

Peter S Thomas Chairman