IMAGE RESOURCES NL — Interim / Quarterly Report 2005

Mar 14, 2005

IMAGE RESOURCES NL

ACN 063 977 579

HALF-YEAR REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2004

CONTENTS

HALF-YEAR REPORT

Page No.

Directors' Report	3.
Independence Declaration	5.
Statement of Financial Performance	6
Statement of Financial Position	7.
Statement of Cashflows	8.
Notes to the Financial Statements	9
Directors' Declaration	11
Independent Review Report	12

IMAGE RESOURCES N1

ACN 063 977 579

DIRECTORS REPORT

Your directors submit the financial report of the company for the half-year ended 31 December 2004.

DIRECTORS

The following persons were directors of Image Resources NL ("Image") during the whole of the half-year and up to the date of this report:

Mr Peter Thomas Mr Roger Thomson Mr George Sakalidís

REVIEW OF OPERATIONS

The loss for the half-year ended 31 December 2004 was \$526,728 (2003 - \$533,642).

The company's activities during the six month period are summarised as follows:

TROJANJV

A 171-hole, 7,001m reconnaissance RAB drilling programme was completed at Woongaring, situated 140 km NW of Southern Cross. The drilling targeted a 10km-long corridor of multi-element anomalism and encountered a sequence of ultramafic; mafic and granite rocks beneath transported cover.

Two separate areas of elevated Ni and Cu Values associated with ultramafic rocks were identified by the wide-spaced drilling, with peak values of 0.77% Ni and 174 ppm Cu over 4m from 8m in drillhole WGRB-01. Infill ground magnetics surveys and follow-up sampling of the anomalous zones is in progress in order to more fully access the significance of these results.

EMU LAKE JV

Down hole EM surveys ("DHEM") were carried out in drillholes ELRC 15 to 19 adjacent to the Gossan Zone. These holes were drilled to test strike extensions of the Gossan Zone mineralisation and obtain an intersection of 2.0 m at 0.65% Ni in hole ELRC 18. A small off-hole conductor was identified in ELRC 19 to the south of the Gossan Zone.

A 2,000m reconnaissance RAB drilling programme was completed to test a large magnetic feature at Area B, interpreted to be the northern extension of the ultramafic sequence which hosts high-grade nickel mineralisation at the Gossan Zone. Results are awaited.

WINDARRAJV

Four targets have been identified from geophysical data for a drilling programme, scheduled for the March 2005 quarter, in search of northern extensions or repetitions of the ultramafic sequence hosting the Windarra nickel deposits.

.......................................

DIRECTORS' REPORT

LAKE PERCY JV

A 10-hole 1028m RC drilling programme was completed during the period of follow-up anomalous RAB drilling intercepts at the Town Hall and Bondi prospects. The preliminary RC results indicate elevated Ni and Cu values in weathered ultramatic rocks of the Bondi and Ouav prospects. The Bondi intercepts include 24m at 0.28% Ni and 394 ppm Cu from 28m in hole LPRC-04, drilled 50m apart. At Quay, hole LPRC-05 intersected 14m at 0.38% Ni and 237 ppm Cu from 11m. Follow-up sampling to confirm these results is in progress.

FORRESTANIA

Interpretation of aeromagnetic and gravity data identified a large area west of the Forrestania greenstone belt with potential to host ultramafic rocks prospective for nickel sulphides. Exploration licences have been applied over these target areas, increasing Image's landholdings in the region from 1,448 sq km to 3,500 sq km. Preliminary field and ground magnetic surveys on the eastern part of the large project area have provided encouraging results supporting the interpretation that the ultramafic sequence hosting the Flying Fox nickel deposits may extend into Image's tenements.

EUCLA BASIN

Following the discovery of the world-class Jacinth mineral sands deposit, Image applied for a large ground position totaling 1947 sq km in the Eucla Basin of South Australia and Western Australia. It is considered that the Eucla Basin is prospective for further world-class high-grade and zircon-rich mineral sand deposits. Image plans to use the magnetic mapping technique developed by its then subsidiary Magnetic Minerals Ltd and applied successfully in the Perth Basin to identify mineral sand resources near Dongara.

METEORIC JV

Image formed an eight-project joint venture with Meteoric Resources NL following that company's listing on the ASX. Under the terms of the joint venture Meteoric may earn 80% of Images interest in the Warrego North, Murchison Range, Wilthorpe, Bullfinch, Jarbora Hill, Ruby Well, Junction Lake and Ularring projects by expenditure of \$1 million on any or all of the projects by mid 2006.

Meteoric must spent at least \$500,000 by mid 2005 and may increase its interest to 100% of Image's interest by spending another \$1 million over a further three years, at which point Image is entitled to a 1% gross rovalty.

Meteoric carried out drilling at Warrego North, Wilthorpe, Jarbora Hill and Bullfinch and announced encouraging gold intersections of the Wilthorpe project and plans for the further drilling at Warrego North, Jarbora Hill and Bullfinch.

This report has been signed in accordance with a resolution of directors.

For and on behalf of the Directors

RM THOMSON Managing Director Perth 15 March 2005

IMAGE RESOURCES NL
ACNOSA 077 579 ACN 063 977 579

DIRECTORS' REPORT AND RESIDENCE

INDEPENDENCE DECLARATION Contract of the Committee Committee Committee

The Board of Directors Image Resources NL Level 2, 35 Outram Street WEST PERTH WA 6005

15 March 2005

Dear Directors

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Image Resources NL.

As lead audit partner for the review of the financial statements of Image Resources NL for the halfyear ended 31 December 2004, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to $(i)$ the review; and
• $(ii)$ any applicable code of professional conduct in relation to the review.

Yours sincerely

SOMES and COOKE

Partner Chartered Accountants

a a chuid ann an IMAGE RESOURCES NL ACN 063 977 579

STATEMENT OF FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2004

	Notes	31 Dec 2004 (5)	31 Dec 2003 $($ \$)
Revenue from ordinary activities	2	116,311	71,701
Depreciation expense		(103, 456)	(101, 218)
Exploration and tenement expenses written off		(223,964)	(133,097)
Other expenses from ordinary activities		(315, 619)	(371,028)
Loss from ordinary activities before income tax expense		(526, 728)	(533, 642)
Income tax expense relating to ordinary activities
Loss from ordinary activities after related income tax expense		(526, 728)	(533, 642)
Basic loss per share (cents per share) Diluted loss per share (cents per share)		(0.9465) (0.9465)	(1.0294) (1.0294)

The accompanying notes form part of these financial statements.

STATEMENT OF FINANCIAL POSITION STATEMENT AS AT 31 DECEMBER 2004

	31 Dec 2004 (3)	30 June 2004 (5)
Current Assets
Cash assets	2,753,479	3,085,231
Receivables	292,611	482,347
Prepayments	21,154	15,461
Other financial assets	9,111	2,111
Total Current Assets	3,076,355	3,585,150
Non-Current Assets
Plant and equipment	71,205	52,286
Aeromagnetic database	1,960,016	2,053,347
Mineral interests	995,963	1,109,324
Other financial interest	1	1
Total Non-Current Assets	3,027,185	3,214,958
TOTAL ASSETS	6,103,540	6,800,108
Current Liabilities
Payables	32,748	202,587
Total Current Liabilities	32,748	202,587
TOTAL LIABILITIES	32,748	202,587
NET ASSETS	6,070,792	6,597,521
Equity
Contributed equity	9,675,943	9,675,943
Accumulated losses	3,605,151	3,078,422
TOTAL EQUITY	6,070,792	6,597,521

The accompanying notes form part of these financial statements.

STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2004 Alban Millim Manus (

	31 Dec 2004	31 Dec 2003
	$\left( 5\right)$	(5)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	32,665	49,421
Payments to suppliers and contractors	(701, 768)	(416,714)
Interest received	81,405	71,701
Net cash provided by / (used in) operating
activities	(587, 698)	(295, 592)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment	(29,045)	(2,980)
Payments for exploration and evaluation	(280, 561)	(271, 578)
Proceeds on sale of tenements/recoupments	260,166	230,909
Repayment of loan	431,177
Purchase of investments	(7,000)
Purchase of new prospects	(118,791)	(90, 875)
Net cash provided by / (used in) investing
activities	255,946	(134, 524)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new issues of shares		1,500,000
Share issue expenses		(61,500)
Net cash provided by financing activities		1,438,500
Net (decrease) / increase in cash held	(331,752)	1,008,384
Cash at the beginning of the financial period	3,085,231	2,444,428
Cash at the end of the financial period	2,753,479	3,452,812

The accompanying notes form part of these financial statements.

IMAGE RESOURCES NL

ACN 063 977 579

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALL YEAR ENDED 31 DECEMBER 2004

NOTE₁ BASIS OF PREPARATION

The general purpose financial report for the interim half-year reporting period ended 31 December 2004 has been prepared in accordance with Accounting Standard AASB 1029 Interim Financial Reporting, other mandatory professional reporting requirements (Urgent Issues Group Consensus Views), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2004 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year end and corresponding interim reporting period.

	NOTE 2 LOSS FROM ORDINARY ACTIVITIES	2004 (3)	2003 (5)
	Profit from ordinary activities before income tax expense includes the following revenue which disclosure is relevant in explaining the financial performance of the Company:
Interest revenue		81.405	71.701

NOTE3 SEGMENT INFORMATION

The Company operates only in one business, being the exploration for and development of minerals. Geographically, the company's activities are conducted mainly within Western Australia and the Northern Territory.

NOTE₄ EVENTS SUBSEQUENT TO REPORTING DATE

Since balance date, Meteoric Resources NL has met its obligations under the joint venture agreement entered into with Image on 30 April 2004 to earn 80% of Image's interests in the joint-ventured tenements.

NOTE₅ CONTINGENT LIABILITIES

Native Title

The Company has been notified of a number of native title claims under the Commonwealth Native Title Act 1993, covering areas in Western Australia.

Until further information is available and State legislation is finalised, the Company will not be in a position to assess the likely effect, if any, of any claim on the Company. However, the directors expect that existing exploration activities will not be materially affected by any claim or the claims in aggregate.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2004

NOTE 6 INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

In accordance with the Financial Reporting Council's strategic directive, the Company will be required to prepare financial statements that comply with Australian equivalents to International Financial Reporting Standards ("A-IFRS") for annual reporting periods beginning on or after 1 January 2005. Accordingly, the Company's first half-year report prepared under A-IFRS will be for the half-year reporting period ended 31 December 2005, and its first annual financial report prepared under A-IFRS will be for the year ended 30 June 2006.

The company believes it will be able to achieve A-IFRS implementation by the beginning of 2005. Key areas of accounting policy difference that will arise on adopting A-IFRS are identified in the 2004 Annual Report in Note 25 on page 40.

DIRECTORS' DECLARATION

The directors of the company declare that:

• $\mathbf{1}$ . the accompanying financial statements and notes:
• (a) comply with Accounting Standard AASB 1029 : Interim Financial Reporting and the Corporations Regulations 2001; and
• (b) give a true and fair view of the financial position of the company as at 31 December 2004 and its performance for the half-year ended on that date.
• $2.$ 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.

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

Signed at Perth:

George Sakalidis Director

Dated this 15th day of March 2005.

INDEPENDENT REVIEW REFORT TO THE MEMBERS OF IMAGE RESOURCES NL

Scone

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the Image Resources NL (the company) during the half-year, and the directors' declaration for the company, for the period ended at 31 December 2004.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the company, and that complies with Accounting Standard AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conduct an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investment Commission.

Our review was conducted in accordance with Australian Audit Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory financial reporting requirements in Australia, so as to present a view which is consistent with our understanding of the company's financial position, and of its performances as represented by the results of its operations and cash flows

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express and audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the Company during the period is not in accordance with:

• the Corporations Act 2001, including $(a)$
• giving a true and fair view of the financial position of the consolidated entity at 31 December 2004 and ì. of its performance for the period ended on that date; and
• ii. complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Somes and Cooke

J Cooke Partner 15 March 2004