IMAGE RESOURCES NL — Interim / Quarterly Report 2005

Jul 27, 2005

QUARTERLY REPORT For the Quarter Ended 30 June 2005

HIGHLIGHTS

• Acquisition of an 18km-long section of the Bidaminna heavy mineral strand in the North Perth Basin. This prospective and underexplored area contains known heavy mineral concentrations with the potential for the identification of high-grade heavy mineral strands using ground magnetic techniques developed by Image.
• A large and strategic 2845sq km land holding prospective for gold, nickel and uranium acquired in the southern Yilgarn region of WA following release of new government magnetic and radiometric surveys, increasing Image's landholding in this under-explored region to 6550sq km.
• A 992sq km joint venture in the zircon-rich Eucla Basin, increasing Image's landholding in this emerging mineral province to 2966sq km.
• Early encouragement from geochemical sampling of aeromagnetic targets at Bronco Plains.
• Deep drilling of high-grade nickel targets planned at Emu Lake. $\mathbf{u}$ .
• Drilling of a strong EM anomaly prospective for nickel imminent at Forrestania.

BIDAMINNA (Image 100%)

As announced on 15 July 2005, Image has applied for a 73sq km exploration licence at Bidaminna, 65km south of the world-class Cooljooloo mineral sands mine in the North Perth Basin. The North Perth Basin, which also hosts the world-class Eneabba mine. produces almost 50% of the world's chloride ilmenite and close to 25% of the world's Image's licence application contains drill intersections of valuable heavy zircon. minerals (HM) with at least two large coherent strandlines totalling 18.4km in length having been interpreted from recently flown low level aeromagnetic surveys, as shown in the attached map.

The main HM strand in Image's application is 15km in length and forms the southern part of the 30km-long Bidaminna strand. The Bidaminna deposit, situated 5km north of Image's application, is reported to contain an Inferred Resource of 44Mt at 3% HM. A number of wide-spaced reconnaissance drill lines have previously been completed within Image's application and recorded several intersections including 12m @ 3.3% HM, 21m @ 3.2 HM, 4m @ 3.6% HM and 4m @ 4.5% HM. These intersections confirm that the mineralised Bidaminna strand extends into the Image application and extends further south than previously recognised.

A strong relationship between the average percentage of HM and ground magnetic anomaly amplitude has been shown to exist in the North Perth Basin. Significantly, the magnetic amplitudes of the strands in the central part of Image's application area (see map) have greater amplitudes than the Bidaminna deposit itself, suggesting potential for higher grades of HM. The scout drilling completed to date appears to be too widespaced to properly assess the potential of the strands.

Image believes that the stage of exploration on its Bidaminna application is similar to when former subsidiary Magnetic Minerals Ltd first began work on its Dangara project in early 2000 and that detailed ground magnetic surveys and tighter drill densities are necessary for the identification of high-grade HM deposits.

Following the recognition of these encouraging results, Image proposes to use magnetic mapping to identify potentially higher grade HM within the defined shorelines. Drilling will be targeted within the stronger magnetic anomaly areas which will allow a more focussed approach and make for cost effective exploration.

SOUTH YILGARN (Image 100%)

As previously updated (26 May 2005 and 21 July 2005) Image has applied for 48 exploration licences totalling 2,845sg km in the Coolgardie-Merredin-Ravensthorpe region of the southern Yilgarn in WA. These applications now increase Image's landholding in this under-explored region to 6,550sq km, as shown in the attached map.

The image applications follow the recent release of Department of Industry and Resources 400m-spaced aeromagnetic and radiometric surveys over the Hyden, Lake Johnston, Boorabbin, Southern Cross, Kellerberrin, Newdegate and Ravensthorpe 1:250,000-scale map sheets. The new government surveys reveal a large number of structural features potentially favourable for gold and interpreted ultramafic trends and

circular features considered to be prospective for nickel. Many of these features are not evident in the previous lower resolution, wide-spaced data based on government surveys carried out between 1956 and 1976. Image acted quickly on this new information and secured what it considers to be the most significant features on the currently available ground.

Included in the recent applications are six exploration licences over strong radiometric anomalies of 5-10 times background. These uranium responses are evident in the new airborne data and were selected as being the best anomalies in the 85,000sq km surveyed.

The setting of the uranium anomalies acquired by Image appear to be similar to those of the calcrete uranium deposits at Yeelirrie (reported 52,000 t of $U_3O_8$ ) and Lake Way-Centipede (reported approximate 8,200 t of $U_3O_8$ ) near Wiluna. These calcrete uranium deposits are near-surface uranium concentrations (usually as the mineral carnotite) in calcrete, silts and clays in valley-fill sediments within Tertiary drainage channels and in salt lake sediments. The uranium anomalies acquired by Image range from 11ppm to 41ppm Uranium Equivalent (UEq) compared to backgrounds of 1-5ppm UEq responses. These responses compare favourably with the uranium response of 30-70ppm UEq over the partly excavated Yeelirrie deposit.

Initial follow up of the uranium anomalies will comprise ground radiometric surveys to define the uranium targets in more detail prior to any follow up sampling. Image is currently considering the various options available to fund exploration for gold and nickel on the balance of these large and strategic landholdings.

BARTON JV (Image earning up to 70%)

As previously announced (5 July 2005) Image entered into a joint venture with Mithril Resources Ltd exploring for mineral sands on Mithril's Barton project situated 50km northeast of Iluka's recent zircon-rich discoveries at Jacinth and Ambrosia.

The joint venture covers 992sq km of the Barton Range Shoreline, an older coastal barrier than that hosting Jacinth, which is situated on the Ooldea Range Shoreline. Government drilling in 1993 demonstrated the mineral sands potential of the Barton Range Shoreline identifying a heavy mineral concentrate comprised of 56% altered ilmenite, 17% zircon, 15% leucoxene and 3% rutile from a down hole depth of 16-22 metres in hole LBR17 which is located in the joint venture area.

Image is required to spend \$300,000 within three years to earn a 51% interest in the joint venture and may elect to increase its interest to 70% through an additional expenditure of \$200,000. Mithril was successful in its application for funding to assist with mineral sands exploration from the state government's PACE initiative regarding collaborative drilling programs. As the application is within the Maralinga Tjarutja Lands, exploration will commence on finalising heritage and land access agreements.

This new venture brings Image's landholding in the zircon-rich Eucla Basin to 2,966sq km. In the area around the existing heavy mineral intersection Image plans to use the magnetic mapping technique developed by Image to define heavy mineral concentrations for drill testing.

BRONCO PLAINS (Image 100%)

A reconnaissance geochemical survey has been completed over 45sq km of the Bronco Plains exploration licence situated 140km east of Kalgoorlie. The sampling covered targets identified for interpretation of aeromagnetic data and considered to be prospective for gold. The wide-spaced sampling (400m centres) of this soil covered area identified several gold-anomalous areas (up to 54ppb Au compared to a background of 5ppb Au). Follow-up sampling of these encouraging early results is scheduled to start in August.

EMU LAKE JV (Image 30%, Jubilee 60%, Skryne 10%)

Jubilee Mines has advised that planning of a series of deep diamond drill holes at the Gossan Zone is in progress. The drilling programme is likely to consist of up to four diamond drill holes to test for depth extensions of the massive nickel sulphides intersected in previous drilling (best intersection 2m at 6.20% Ni and 1.78% Cu from 336m) followed by down hole EM surveys. Subject to drill availability this work will be completed by the end of calendar 2005.

FORRESTANIA (Image 100%)

As previously reported (31 March 2005) two strong EM conductors have been identified along the interpreted extension of the Flying Fox ultramafic sequence within Image's tenements. Drilling of the shallower EM target, termed IR2, is scheduled to commence within the next three weeks. The target anomaly is a strong conductor at less than 100m depth with a 50m strike length and a 100m depth extent and coincides with a ground magnetic anomaly consistent with a massive sulphide target. Anomaly IR4 is a deeper conductor at about 300m below surface and a larger drill rig to test this target is being Further EM surveys are being carried out on the western limb of the sourced. prospective ultramafic-granite contact.

TROJAN JV (Image 100%, Troy earning 60%)

Following rain delays, fixed loop ground EM surveys over two areas of elevated nickel and copper values in RAB drilling at Woongaring (140km northwest of Southern Cross) are scheduled to start in the next two weeks. The EM surveys are designed to test for conductive nickel sulphides at each of the two nickel-anomalous areas, about 5km apart. Following the grant of a second exploration licence at Woongarring geochemical surveys over 100sq km of interpreted greenstone sequences are scheduled to start in August.

Scout RAB drilling (52 holes, 1,429m) at Scorpion Well about 10km southeast of the 2Moz Centenary gold mine has intersected favourable rock types and confirmed Image's aeromagnetic interpretation of this alluvium-covered area. The drilling, in two east-west lines about 2.7km apart, encountered weathered gabbro and mafic rocks, quartz veined in places in a north-south belt up to 1,400m wide. Drill sample analyses are currently awaited. The Centenary gold deposit is located in a magnetic unit within a doleritegabbro sequence and Image targeted the Scorpion Well area as containing potentially favourable host rocks within a structural corridor passing through the Darlot and Centenary mines.

Geochemical vacuum drilling to test the interpreted 4km extension of a gold-anomalous clear zone identified in previous drilling at Adam Range near Laverton is scheduled to start in early August.

JILBADGIE (Image 35%, Westonia Mines 65%)

Fixed loop EM surveys have been completed over three nickel anomalies at Jilbadgie, about 25km south of Southern Cross. Moderate-strength conductors have been identified in all these areas and modelling of the results is currently in progress.

LAKE PERCY (Image 100%)

Fixed loop around EM surveys over the Bondi and Town Hall nickel targets situated about 25km north-northwest of the Emily Ann nickel mine are in progress. A moderate strength conductor has been located at the Bondi target.

MT HAYS (Image 90%)

A 6-hole, 684m RC drilling programme has been completed at Mt Hays, about 50km east-northeast of Nullagine. The RC drilling tested below and along strike from previous RAB drilling which tested an outcropping zone of guartz veining and stockworks. The previous RAB drilling intersected anomalous gold values over a strike length of 650m with best intercepts of 1m at 8.1g/t Au for 34m and 2m at 4.0g/t Au from 33m. RC sample analysis results are awaited.

MT ELSIE (Image 67%)

A 3-hole, 138m RC drilling programme has been carried out at Mt Elsie about 60km northeast of Nullagine. The drilling followed up previous RAB intercepts at the T4 prospect where a best intercept of 14m at 4.3g/t Au had been obtained. RC sample analysis results are awaited.

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

Please direct enquiries to: Roger Thomson Managing Director Phone (08) 9485 2410 Mob 0419 969 183

George Sakalidis Executive Director - Exploration Phone (08) 9485 2410 Mob 0411 640 337

The information in this report that relates to exploration results is based on information compiled by Roger Thomson BSc, ARSM who is a Member of the Australian Institute of Geoscientists. Roger Thomson is an employee of Image Resources NL. Roger Thomson 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'. Roger Thomson consents to the inclusion of this information in the form and context in which it appears in this report.

Bidaminna Prospect - Aeromagnetic Interpreted Strandlines and Historical Drilling Results

South Yilgarn Project - Tenement Locations

MINING EXPLORATION ENTITY QUARTERLY REPORT

Name of entity:

Image Resources NL

	57 063 977 579		Quarter ended ("current quarter") 30/6/2005
	Consolidated statement of cash flows
	Cash flows related to operating activities	Current quarter \$AUD'000	Year to date $(12$ months) \$AUD'000
1.1	Receipts from product sales and related debtors	18	30
1.2	Payments for: (a) exploration and evaluation (b) development (c) production	17	(620)
	(d) administration	(102)	(600)
1.3 1.4	Dividends received Interest and other items of a similar nature received	40	157
1.5 1.6 1.7	Interest and other costs of finance paid Income taxes paid Other (provide details if material)
	Net Operating Cash Flows	(27)	(1,033)
1.8	Cash flows related to investing activities Payment for purchases of:
	(a) prospects (b) equity investments (c) other fixed assets	(145) (4)	(271) (57) (33)
1.9	Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets	5	289 5
1.10	Loans to other entities
1.11 1.12	Loans repaid by other entities Other (provide details if material)	(4)	438
	Net investing cash flows	(148)	371
1.13	Total operating and investing cash flows (carried forward)	(175)	(662)

1.13	Total operating and investing cash flows (brought forward)	(175)	(662)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	50.	223
1.15	Proceeds from sale of forfeited shares	$\blacksquare$
1.16	Proceeds from borrowings	$\overline{\phantom{a}}$
1.17	Repayment of borrowings	$\blacksquare$
1.18	Dividends paid
1.19	Other (provide details if material)	13	13
	Net financing cash flows	63	236
	Net increase (decrease) in cash held	(112)	(426)
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	2,771	3.085
1.22	Cash at end of quarter	2,659	2,659

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	(141
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

$2.1$ Details of financing and investing transactions which have had a material effect on 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

L,

Financing facilities available

		Amount available	Amount used
		\$AUD'000	\$AUD'000
3.1	Loan facilities
3.2	Credit standby arrangements	$\overline{\phantom{a}}$

Estimated cash outflows for next quarter

	Total	(250)
-4.2	Development	$\sim$
4.1	Exploration and evaluation	(250)
		SAUD'000

Reconciliation of cash

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 follows.		Current quarter \$AUD'000	Previous quarter \$AUD'000
5.1	Cash on hand and at bank	75	224
5.2 Deposits at call
5.3	Bank overdraft
5.4 Other (provide details) – Short Term Deposit		2,584	2,547
	Total: cash at end of quarter (item 1.22)	2,659	2.771

Changes in interests in mining tenements

		Tenement reference	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
-6.1	Interests in mining	P45/2362	Relinquished	100%	0%
	tenements	P45/2363	Relinquished	100%	0%
	relinguished, reduced	P45/2364	Relinquished	100%	0%
	or lapsed	P45/2365	Relinguished	100%	0%

Interests in mining
tenements acquired or
increased $6.2$

E15/882	Application	0%	100%
E15/883	Application	0%	100%
E15/884	Application	0%	100%
E15/885	Application	0%	100%
E15/886	Application	0%	100%
E15/887	Application	0%	100%
E15/888	Application	0%	100%
E15/889	Application	0%	100%
E15/890	Application	0%	100%
E63/974	Application	0%	100%
E63/975	Application	0%	100%
E63/976	Application	0%	100%
E63/977	Application	0%	100%
E63/978	Application	0%	100%
E63/979	Application	0%	100%
E63/980		0%	100%
	Application
E63/981	Application	0%	100%
E63/984	Application	0%	100%
E63/985	Application	0%	100%
E70/2790	Application	0%	100%
E70/2791	Application	0%	100%
E70/2792	Application	0%	100%
E70/2793	Application	0%	100%
E70/2794	Application	0%	100%
E70/2806	Application	0%	100%
E70/2807	Application	0%	100%
E70/2808	Application	0%	100%
E70/2809	Application	0%	100%
E70/2810	Application	0%	100%
E70/2812	Application	0%	100%
E74/344	Application	0%	100%
E74/347	Application	0%	100%
E74/348	Application	0%	100%
E74/349	Application	0%	100%
E77/1284	Application	0%	100%
E77/1285	Application	0%	100%
E77/1286	Application	0%	100%
E77/1287	Application	0%	100%
E77/1288	Application	0%	100%
E28/1400	Granted	100%	100%
E28/1496	Granted	100%	100%
E39/1057	Granted	100%	100%
E45/2447	Granted	100%	100%
E45/2555	Granted	100%	100%
E74/316	Granted	100%	100%
E77/1172	Granted	100%	100%
E77/1193	Granted	100%	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	Nil
$\overline{7.3}$	Ordinary securities	56,493,590	56,493,590
7.4	Issued during quarter	150,000
7.5	Convertible debt securities	N/A
7.6	Issued during quarter	Nil
7.7	Options			Exercise price	Expiry date
	Non-employee Options	14,399,858 1,850,000 2,000,000	Quoted Not Quoted Not Quoted	\$0.25 \$0.335 \$0.39	25.8.2006 27.11.2008 26.11.2009
	Employee Options	1,035,000	Not Quoted	\$0.25	4.7.2005
7.8	Issued during quarter	Nil
7.9	Exercised during quarter	150,000	Unquoted	\$0.335	27.11.2008
7.10	Expired during quarter	Nil
7.11	Debentures	N/A
7,12	Unsecured notes	N/A

Compliance statement

• This statement has been prepared under accounting policies which comply with $\mathbf{1}$ 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: 28 July 2005