IMAGE RESOURCES NL — Interim / Quarterly Report 2003

Jul 30, 2003

QUARTERLY REPORT

For the Quarter Ended 30 June 2003

SUMMARY

JOINT VENTURES

Recently announced farmout agreements underpin Image's strategy of identifying and acquiring quality gold and nickel prospects. These new joint ventures will result in vigorous exploration programmes being maintained on Image's projects.

• Emu Lake (nickel): Jubilee Mines earning 60% by sole funding to completion of bankable feasibility by December 2008.
• Woongaring (gold and base metals); Mt Zephyr (gold); Adam Range (gold and nickel); and Scorpion Well (gold): Troy Resources earning 60% (45% at Mt Zephyr) by spending \$2 million.
• Lake Percy (nickel): Western Areas earning 60% in a 500 sq km tenement package.
• Jilbadgie (nickel): Westonia Mines earning 65% in 225 sq km of tenements. $\bullet$

ONGOING PROJECTS

• Vacuum drilling at Wilthorpe near Peak Hill has confirmed a 400m-long goldanomalous zone with surface values up to 25.2 g/t gold.
• Rock sampling at Adam Range near Laverton has identified surface values up to 9.5 g/t gold, within a 1.5km-long anomalous gold trend.

NEW PROJECTS

Three project areas were applied for at Bronco Plains, Top Well and Mt Remarkable in the Eastern Goldfields region following interrogation of Image's extensive aeromagnetic database.

JOINT VENTURES

In keeping with its strategy of maintaining a high level of exploration activity on its large tenement holding and yet conserving funds for new project acquisition, Image has been discussing possible joint ventures on several of its exploration projects with a variety of interested companies. Drilling targets have been outlined on several of the projects under discussion. Image is also mindful of the benefit of partnering with companies possessing particular expertise in their areas of focus, in order to add value to its projects. Joint ventures on several projects were established during the quarter as follows:

Emu Lake (Image 30%)

Image has reached agreement with Sir Samuel Mines NL, a wholly owned subsidiary of Jubilee Mines NL, whereby Sir Samuel will acquire a 60% interest in the Emu Lake nickel project by payment of \$100,000 cash, sole funding exploration and completing a bankable feasibility study by December 2008. Image and the vendor will retain a 30% interest and 10% interest respectively, free carried to completion of feasibility. Previous exploration has intersected several narrow zones of nickel sulphide mineralisation, including 0.3m at 7.55%Ni (ELD 5; 256.4 - 256.7m); 0.17m at 7.08%Ni (ELD 5; 277.06 - 277.23m) and 1.0m at 2.28%Ni (ELRC 10; 192.0 - 193.0m). These intercepts confirm that the ultramatic units contained within the Emu Lake project area are very prospective for high-grade nickel sulphide mineralisation.

Jubilee is a successful nickel miner and explorer with significant cash flow from its profitable Cosmos nickel mine in Western Australia. It is considered that Jubilee, with its expertise in nickel exploration, has the potential to add significant value to the Emu Lake project. It is anticipated that further drilling programmes at Emu Lake will commence in the short term.

A two-hole, 520m reverse circulation (RC) drilling programme at the 45000N prospect was completed during the quarter to follow-up anomalous nickel, copper and PGE values encountered in previous shallow drilling on the favourable contact along strike from the gossan zone. The first hole, ELRC13, steepened significantly in dip and as a result did not intersect the target contact and was terminated at a depth of 275m. A downhole EM survey of this hole did not identify any significant off-hole conductors. The second hole, ELRC14, intersected the contact at 151m and a narrow zone of anomalous values (2905 ppm Ni, 552 ppm Cu and 244 ppb Pt plus Pd) over a 4m interval from 230m, some 150m below previously reported anomalous nickel, copper and PGE values intersected in RAB drilling. A downhole EM survey was not completed on this hole because of a collapse near the top of the hole.

Troian Joint Venture (Image mostly 100%)

Following an extensive review of its projects. Image has reached agreement in principle with Trov Resources NL for Troy to earn a 60% interest in several of Image's tenements in Western Australia by means of cash payments totalling \$75,000 and sole funding \$2 million of expenditure within five years. The package comprises 560 sq km of tenements and includes the 100% owned Woongaring, Adam Range and Scorpion Well projects and the Mt Zephyr JV. In the case of the Mt Zephyr JV, Troy will have the right to earn a 45% interest (60% of Image's right to earn a 75% interest).

It is anticipated that exploration will commence immediately on identified targets at Adam Range, 25km northeast of Laverton and Mt Zephyr, 55km west of Laverton. Upon grant of tenement applications, exploration will progress to Woongaring, 140km northwest of Southern Cross, where a 10km-long anomalous gold and base metal corridor has been outlined and then to Scorpion Well. 15km south of the 2Moz Darlot gold mine where an unexplored section of greenstone belt has been identified.

At Adam Range geological mapping and sampling by Image has identified sub outcropping ferruginous quartz with grades up to 9.5 g/t Au adjacent to the 1.5 km-long gold anomaly outlined by Image's shallow vacuum drilling during the March 2003 quarter. This encouraging result confirms the excellent gold prospectivity of this area. In addition, Image has lodged an exploration licence application over an adjacent area covering a possible 3.5km extension of the gold-anomalous zone.

Troy is a successful gold miner and explorer with profitable gold mines in Western Australia and Brazil. It is expected that Troy will maintain the vigorous pace of exploration on these projects in what is regarded as a significant joint venture for Image and its stakeholders.

Lake Percy (Image 100%)

Image holds some 500 sq km of granted tenements and applications in the Forrestania-Emily Ann region of Western Australia which are prospective for both nickel and gold. These tenements include the Lake Percy nickel project north of the Emily Ann nickel mine where Image has completed a detailed aeromagnetic survey.

Following a recent increase in nickel exploration activity in this region. Image has reached agreement with Western Areas NL for that company to earn a 60% interest in the tenements by expenditure of \$700,000 before February 2006. Western Areas may withdraw from the joint venture after a minimum expenditure of \$75,000. Western Areas is an active and successful nickel explorer in the Forrestania area and is envisaged to bring valuable local knowledge and expertise to the Image landholding in this emerging nickel district.

Jilbadgie (Image 100%)

Following the discovery of a nickel sulphide mineralisation at Westonia. Image has reached an agreement with Westonia Mines Limited on its 225 sq km Jilbadgie project for Westonia to earn a 65% interest in the project tenements (some of which are applications) by expenditure of a sum equal to twice the statutory annual expenditure requirement for the tenements. This sum totals approximately \$297,000.

The Jilbadgie project, situated 30km south of Southern Cross in the southeastern part of the Westonia greenstone belt, is interpreted to cover extensive ultramatic rocks on which very little nickel exploration has been completed. The discovery of nickel sulphides at Westonia is considered to have significantly increased the mineral potential of the Jilbadgie project.

ONGOING PROJECTS

Mt Zephyr Joint Venture (Image earning 75%)

Following the identification of a previously unrecognised and untested aeromagnetic target, Image reached agreement with Heron Resources NL to farm in on a 37 sq km exploration licence situated 55km west of Laverton. Image can earn a 75% interest in the tenement by spending \$100,000 within four years. A 40 line-km ground magnetic survey has been completed over the colluvium-covered target area and defined several features which warrant drill testing. This tenement is included in the Trojan Joint Venture with Troy Resources NL.

Wilthorpe (Image 90%)

An 86-hole shallow vacuum drilling programme was completed during the quarter to test the extent of the mineralised quartz vein zone discovered in the March 2003 quarter. The geochemical drilling programme confirmed anomalous gold values over a 400m strike length with a peak value of 25.2 g/t Au in a sample adjacent to the scout RAB drilling reported in the previous quarter (best intercepts 3m at 2.4 g/t Au from 24m and 3m at 2.3 g/t Au from 65m). Nearby anomalous vacuum drilling results suggest the presence of extensions or repetitions of the mineralised zone and these are being investigated. Further drilling to assess this new discovery is being planned.

NEW PROJECTS

Image's extensive aeromagnetic database continues to be interrogated to identify new exploration targets and opportunities for Image. During the quarter four tenements totalling some 300 square kilometres were applied for over targets identified from the database. These applications include Bronco Plains, 140km east of Kalgoorlie; Top Well, 250km northwest of Kalgoorlie and Mt Remarkable, 190km northeast of Kalgoorlie, all in the Eastern Goldfields region of Western Australia.

PROJECT LOCATIONS

For more information on the company visit www.imageres.com.au

Please direct enquiries to: Roger Thomson Managing Director Phone (08) 9485 2410 Mobile 0419 969 183 Email roger@imageres.com.au

George Sakalidis Executive Director - Exploration Phone (08) 9485 2410 Mobile 0411 640 337 Email george@imageres.com.au

The information on mineralisation contained in this report accurately reflects the information compiled by Mr Roger Thomson BSc, MAusIMM, who is a competent person (as defined by the Australasian Code of Reporting of Identified Mineral Resources and Ore Reserves) with relevant experience in relation to such mineralisation.

MINING EXPLORATION ENTITY QUARTERLY REPORT

Г

Name of entity

Image Resources NL

ABN

57 063 977 579

Quarter ended ("current quarter")

30/6/2003

Year to date

Current quarter

Consolidated statement of cash flows

	Cash flows related to operating activities	\$AUD'000	$(12$ months) \$AUD'000
1.1	Receipts from product sales and related debtors
1,2	Payments for: (a) exploration and evaluation (b) development (c) production (d) administration	(281) (76)	(1,260) (487)
1.3	Dividends received
1.4	Interest and other items of a similar nature received	31	107
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(327)	(1,640)
1.8	Cash flows related to investing activities Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets	(10) (5)	(61) (35) (72)
1.9	Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets		1,297
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other (provide details if material)
	Net investing cash flows	(15)	1,129
1.13	Total operating and investing cash flows (carried forward)	(342)	(511)

1.13	Total operating and investing cash flows	(342)	(511)
	(brought forward)
1.14 1.15 1.16 1.17 1.18 1.19	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material)
	Net financing cash flows
	Net increase (decrease) in cash held	(342)	(511)
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	2,786	2,955
1.22	Cash at end of quarter	2,444	2,444

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter \$AUD'000
1.23	Aggregate amount of payments to the parties included in item 1.2
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions $N/A$

Non-cash financing and investing activities

Details of financing and investing transactions which have had a material effect on $2.1$ consolidated assets and liabilities but did not involve cash flows

$N/A$

$2.2$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

$N/A$

Financing facilities available

		Amount available \$AUD'000	Amount used \$AUD'000
3.1	Loan facilities	$\blacksquare$
3.2	Credit standby arrangements	$\blacksquare$

Estimated cash outflows for next quarter

	Total	(182)
4.2	Development
4.1	Exploration and evaluation	(182)
		\$AUD'000

Reconciliation of cash

follows.	Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as	Current quarter \$AUD'000	Previous quarter \$AUD'000
5.1	Cash on hand and at bank	21	274
5.2	Deposits at call	2,423	2,512
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	2,444	2,786

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at	Interest at
		reference		beginning	end of
				of quarter	quarter
6.1	Interests in	E52/1453	50% reduction in area	90%	90%
	mining	E63/628	50% reduction in area	100%	100%
	tenements	E45/1832	Relinquished	39.6%	0%
	relinquished,	E45/1683	Reverted to JV Partner	39%	0%
	reduced or	E45/2108	Reverted to vendor	90%	0%
	lapsed	E27/84	Diluted	90%	30%
		E27/168	Diluted	90%	30%
		E77/1169	Withdrawn	100%	0%
6.2	Interests in	E28/1377	Application	0%	100%
	mining	E29/547	Application	0%	100%
	tenements	P29/1799	Application	0%	100%
	acquired or	E39/1020	Application	0%	100%
	increased	P77/3368	Purchased	0%	100%
		P77/3369	Purchased	0%	100%
		P77/3370	Purchased	0%	100%
		E38/1585	Application	0%	100%
		P38/3166	Application	0%	100%
		E77/1179	Application	0%	100%
		P45/2303-2305	JV Partner withdrawn	25%	66.5%
		P45/2370-2373	JV Partner withdrawn	39.6%	90%
		P45/2362-2365	JV Partner withdrawn	49%	100%

				Issued and quoted securities at end of current quarter
--	--	--	--	--------------------------------------------------------	--	--	--	--

		Total number	Number quoted	Issue price per security (cents)	Amount paid up per security (cents)
7.1	Preference securities	N/A
7.2	Issued during quarter	N/A
$\overline{7.3}$	Ordinary securities	48,716,257	32,211,564
7.4	Issued during quarter	Nil	Nil
7.5	Convertible debt securities	N/A
7.6	Issued during quarter	N/A
7.7	Options Non-employee			Exercise price	Expiry date
	Options Employee	15,512,191	Not quoted	\$0.25	25.8.2006
	Options	1,100,000	Not quoted	\$0.25	4.7.2005
7.8	Issued during quarter	Nil
7.9	Exercised during quarter	Nil
7.10	Expired during quarter	Nil
7.11	Debentures	N/A
7.12	Unsecured notes	N/A

Other Information

Compliance statement

• This statement has been prepared under accounting policies which comply $\overline{1}$ with accounting standards as defined in the Corporations Act or other standards acceptable to ASX.
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Rudolf Tieleman (Company Secretary) Date: 31 July 2003