IMAGE RESOURCES NL — Interim / Quarterly Report 2006

Oct 29, 2006

QUARTERLY REPORT

For the Quarter Ended 30 September 2006

SUMMARY

• Infill drilling confirms near-surface high-grade heavy minerals over 1.7km and 2km strike lengths at the 35 AHD and 28000 strands respectively at Cooljarloo.
• Exciting, thick heavy mineral intersections with large tonnage potential continue to be made at Cooliarloo in channel deposits with ground magnetics identifying new targets.
• Image's 51% interest at Cooljarloo confirmed, with an election to $\bullet$ proceed to 70%.
• Early encouragement from 100%-owned Cooljarloo North where ground magnetics have identified four target zones with coincident shallow, high-grade historical drilling intersections.
• A new 40sq km tenement application at Cooljarloo South 20km SE along strike from Tiwest's Cooljarloo mine covering aeromagnetic HM targets, bringing Image's landholding in the North Perth Basin to 560sq km.
• Progress at an unusual mercury prospect at Glen Herring with potential for an epithermal gold system at depth.
• A very strong response to exercising of Image options boosting Image's cash reserves at quarter end to \$4.8 million and bringing the number of fully paid ordinary shares on issue to 73.9 million.

COOLJARLOO (Image earning up to 70%)

Infill drilling of the northern part of the 35 AHD strand at Cooliarloo 200km north of Perth has confirmed shallow, high-grade heavy minerals (HM) in detailed 20m x 100m drilling (ASX release 8 August 2006) with highlights including:

Hole 351	8m @ 13.4% HM from 2m
Hole 369	8m @ 5.0% HM from 4m
Hole 378	8m @ 5.6% HM from 2m
Hole 384	10m @ 8.0% HM from 2m
Hole 396	2m @ 12.5% HM from 4m
Hole 397	6m @ 10.9% HM from 4m
Hole 472	4m @ 10.7% HM from 6m
Hole 474	2m @ 10.4% HM from 6m
Hole 492	10m @ 7.0% HM from 4m
Hole 493	10m @ 12.0% HM from 2m
Hole 511	2m @ 8.6% HM from 8m
Hole 514	4m @ 8.3% HM from 6m

The drilling delineated two near-surface high-grade cores which have excellent continuity over a strike length of 1.7km. The cores are linked and surrounded by a lower grade envelope which provides an easy shallow target for possible future mining - see Figures 1 to 3 and Table 1. These high-grade zones are interpreted to extend a further 3.5km into Vacant Crown Land (VCL) to the south which has been previously drilled on a 500m spacing and where similar high grades have been reported.

The drilling has confirmed the effectiveness of Image's ground magnetic mapping technique as the drilling was sited on two high amplitude target lines with average amplitudes of 2.1nT (eastern high-grade core) and 1.5nT (western high-grade core). The extensions into the VCL have higher average amplitudes of 3.5nT (eastern) and 7.8nT (western) suggesting good potential for shallow high-grade extensions of the 35 AHD strand.

	JJ AND DHIIIIIY RESURS
Hole No	Collar Coordinates		From	Tо	Interval	HM Grade
	Е	N	m	m	m	%
349	332260	6621030	2	16	14	2.4
351	332180	6621030	$\overline{2}$	10	8	13.4
		including	4	8	4	24.5
352	332160	6621030	4	8	4	5.3
353	332180	6621200	8	16	8	4.7
		includina	8	12	4	7.2
354	332220	6621200	12.	16	4	2.8
355	332260	6621200	12	16	4	2.9
356	332300	6621200	10	14	4	3.2
359	332420	6621200	10	12	$\overline{2}$	3.5
365	332080	6621400	6	10	4	2.7
367	332160	6621400	8	10	$\overline{2}$	4.2
369	332220	6621400	4	12	8	5.0
		including	4	6	$\overline{2}$	10.9 °
377	332260	6621600	2	8	6	2.8
378	332220	6621600	2	10	8	5.6
		including	4	6	2	11.8
382	332100	6621600	8	10	$\overline{2}$	4.0
384	332040	6621600	2	12	10	8.0

Table 1 20 ALID DJIHAA DAAMA

Hole No	Collar Coordinates		From	То	Interval	HM Grade
	Е	N	m	m	m	%
		including	4	8	4	15.5
385	332020	6621600	4	$\overline{8}$	4	5.1
389	332020	6621800	$\overline{2}$	$\overline{8}$	6	3.0
390	332040	6621800	$\overline{6}$	$\overline{8}$	$\overline{2}$	$\overline{3.2}$
391	332060	6621800	$\overline{6}$	$\overline{8}$	$\overline{2}$	3.8
396	332220	6621800	$\overline{4}$	$\overline{6}$	$\overline{2}$	12.5
397	332240	6621800	4	10	6	10.9
		including	4	$\overline{8}$	4	15.1
400	332240	6621600	$\overline{6}$	10	$\overline{4}$	2.2
405	331480	6621800	$\overline{2}$	6	$\overline{4}$	2.9
422	332040	6622000	$\overline{4}$	10	$\overline{6}$	4.7
423	332020	6622000	4	6	$\overline{2}$	$\overline{3.7}$
427	332060	6622000	$\overline{6}$	$\overline{\bf 8}$	$\overline{2}$	4.6
428 429	332080 332100	6622000 6622000	6 6	8 10	$\overline{2}$ 4	2.9
		including	6	8	$\overline{c}$	5.8 9.1
450	332280	6621200	4	$\overline{6}$	$\overline{2}$	9.4
452	332200	6621200	$\overline{4}$	$\overline{12}$	$\overline{8}$	6.3
453	332160	6621200	8	10	$\overline{2}$	2.9
454	332140	6621200	10	14	4	3.3
455	332120	6621200	8	10	$\overline{2}$	5.0
456	332100	6621200	8	10	$\overline{2}$	9.5
457	332080	6621200	4	8	4	2.4
458	332060	6621200	4	10	6	5.7
		including	$\overline{\overline{\overline{8}}}$	10	$\overline{2}$	9.0
459	332040	6621200	$\overline{\boldsymbol{8}}$	10	$\overline{2}$	7.5
460	332020	6621200	4	$\overline{12}$	$\overline{\mathbf{8}}$	3.5
461	332000	6621200	$\overline{6}$	10	4	6.6
470	332120	6621030	$\overline{\overline{\overline{8}}}$	10	$\overline{2}$	7.6
472	332080	6621030 including	6 $\overline{6}$	10 8	4 $\overline{2}$	10.7 18.6
473	332060	6621030	6	8	$\overline{\mathbf{c}}$	7.7
474	332040	6621030	$\overline{6}$	$\overline{8}$	$\overline{2}$	10.4
475	332020	6621030	$\overline{6}$	14	$\overline{\mathbf{8}}$	5.6
		including	$\overline{8}$	$\overline{12}$	$\overline{4}$	8.6
476	332000	6621030	4	6	$\overline{2}$	4.1
477	331980	6621030	4	6	$\overline{2}$	3.1
486	332060	6621400	$\overline{\boldsymbol{8}}$	10	$\overline{2}$	4.0
492	332180	6621110	4	14	10	7.0
		including	6	10	4	11.6
493	332200	6621110	$\overline{2}$	12	10	12.0
		including	$\overline{4}$	8 $\overline{8}$	4	24.5
504	332160	including 662130	$\overline{6}$ $\overline{\bf 8}$	12	$\overline{2}$ 4	35.7 5.7
505	332180	662130	$\overline{6}$	10	4	2.3
509	332120	662130	$\overline{\bf 6}$	10	4	7.3
510	332100	662130	8	12	4	4.9
511	332080	662130	4	6	$\overline{2}$	4.8
			8	10	$\overline{2}$	8.6
512	332060	662130	$\overline{\mathbf{8}}$	$\overline{12}$	$\overline{4}$	5.5
513	332040	662130	$\overline{8}$	10	$\overline{2}$	5.2
514	332020	662130	$\overline{\epsilon}$	10	4	8.3
515	332000	662130	4	8	4	5.1

2m samples. HM grade determined by TBE heavy liquid separation

Figure 1

Cooljarloo: 35 AHD Strand, 28000 Strand and Channel Area Drill Lines

Figure 2

Cooljarloo Project 35 AHD Strand - Stacked Sections

Figure 3

Cooljarloo Project 35 AHD Strand - Stacked Sections

Infill drilling was also completed on the southern 2km of the 3km-long 28,000 strand which has now been drilled on a 20m x 200m spacing (ASX release 26 September 2006). Several very shallow, high-grade intersections were made including:

4m @ 9.1% HM from surface
4m @ 7.2% HM from 4m
4m @ 15.8% HM from surface
8m @ 19.0% HM from surface
6m @ 10.4% HM from surface
4m @ 7.9% HM from surface
8m @ 9.4% HM from surface
4m @ 26.0% HM from 2m
4m @ 13.6% HM from 2m
4m @ 5.7% HM from 2m

These results define a continuous near-surface, high-grade core zone over a 2km strike - see Figure 1, Figures 4-6 and Table 2.

Modal analyses of composite samples from the 35 AHD strand indicate an average valuable heavy mineral content of 75% composed of 55% ilmenite. 8% rutile, 4% leucoxene and 8% zircon. The high-grade parts of 35 AHD average an 80% valuable heavy mineral content composed of 65% ilmenite, 6% rutile, 3% leucoxene and 6% zircon. Modal analysis of a composite sample from the higher grade parts of the 28,000 strand indicate a valuable heavy mineral content of 72% composed of 59% ilmenite, 5% rutile, 1% leucoxene and 7% zircon.

Significant thicknesses of heavy minerals have been intersected in Image's recent drilling east of the 28000 strand (ASX releases of 28 September 2006 and 12 October 2006). The intersections appear to be of a similar nature to a thick historical intersection of 30m @ 6.6% HM from 39m reported on the eastern margin of the project. The recent drilling for which laboratory results are available has been completed 2.5km to the NW of this intersection on four separate lines over a strike length of 850m (refer to Figure 1, Figure 7 and Table 3) where thick intersections have been made including:

Hole 268	22m @ 6.1% HM from 18
Hole 269	14m @ 5.3% HM from 18m
Hole 270	30m @ 14.6 HM from 18m
Hole 271	40m @ 4.4% HM from 18m
Hole 277	42m @ 2.8% HM from 16m
Hole 524	16m @ 4.0% HM from 16m
Hole 528	8m @ 4.6% HM from 16m
Hole 533	20m @ 3.9% HM from 16m
Hole 713	12m @ 3.8% HM from 18m
Hole 725	16m @ 3.0% HM from 16m

Modal analysis of a composite sample from the northernmost section which includes an intercept of 40m @ 4.4% HM from 18m indicates a valuable heavy mineral content of the HM to be 85% comprised of 68% ilmenite, 11% zircon, 3.3% rutile and 2.6% leucoxene. The channel deposit occur within a broad area of thicker sands in the eastern part of the project area and extend down to 40m or more below the base of the main strandlines. The Cooliarloo channels appear to have excellent dredging characteristics with a high proportion of free running sand, low slime or clay content and little induration.

Figure 4

Cooljarloo Project - 28000 Strand - Stacked Sections, Northern Section

Cooljarloo Project - 28000 Strand - Stacked Sections, Central Section

Figure 6

Cooljarloo Project - 28000 Strand - Stacked Sections, Southern Section

Hole No		Collar Coordinates	From	To	Interval	HM Grade
	Е	N	m	М	m	$\%$
573	6994	19913	0	4	4	9.1
579	6934	20064	0	$\overline{2}$	$\overline{2}$	3.3
			4	$\overline{\overline{\overline{8}}}$	4	5.4
580	6920	20054	4	8	4	$\overline{7.2}$
581	6903	20043	$\overline{0}$	$\overline{2}$	$\overline{2}$	5.7
582	6886	20031	$\overline{4}$	$\overline{\overline{\overline{8}}}$	4	4.5
585	6798	20231	$\overline{0}$	$\overline{2}$	$\overline{2}$	3.5
585	6813	20244	6	$\overline{\overline{\overline{8}}}$	$\overline{2}$	6.2
587	6670	20385	$\overline{6}$	$\overline{\bf 8}$	$\overline{2}$	4.0
590	6716	20418	0	4	4	15.8
591	6725	20423	0	8	$\overline{8}$	19.0
592	6560	20555	$\overline{2}$	$\overline{8}$	$\overline{6}$	4.6
593	6576	20570	$\overline{2}$	4	$\overline{2}$	10.7
			$\overline{8}$	10	$\overline{2}$	3.0
594	6592	20581	$\overline{0}$	$\overline{2}$	$\overline{2}$	4.5
			6	$\overline{12}$	$\overline{6}$	7.4
595	6450	20720	$\overline{6}$	8	$\overline{2}$	3.1
596	6465	20733	10	12	$\overline{2}$	3.0
597	6481	20745	0	4	4	4.3
598	6496	20756	0	$\overline{2}$	$\overline{2}$	6.4
599	6512	20770	0	$\overline{2}$	$\overline{2}$	6.5
605	6525	20780	$\overline{0}$	$\overline{6}$	$\overline{6}$	10.4
606	6541	20791	0	4	4	$\overline{7.9}$
609	6606	20592	$\overline{0}$	$\overline{10}$	10	8.2
610	6622	20606	$\overline{0}$	$\overline{2}$	$\overline{2}$	3.6
613	6737	20431	$\overline{2}$	4	$\overline{2}$	$\overline{3.2}$
625	7097	19714	$\frac{2}{8}$	$\overline{6}$	4	26.0
627	7126	19735		$\overline{10}$	$\overline{2}$	3.2
630	7108	19485	$\overline{2}$	6	4	4.3
637	7201	19555	$\overline{2}$	$\overline{6}$	4	13.6
645	7298	19368	$\overline{2}$	6	4	5.7
			$\overline{\mathbf{8}}$	$\overline{10}$	$\overline{2}$	3.2
662	7510 1.13.8	19080	$\overline{2}$ warm are in	4	$\overline{2}$	$\overline{3.2}$

Table 2 28000 Strand Drilling Results

2m samples, HM grade determined by TBE heavy liquid separation.

Based on visual results from the ongoing drilling programme six separate channels have been outlined to date aggregating some 7km in length, however, laboratory results for most of this drilling have yet to be received. The current drilling programme is expected to be completed at the end of October.

In addition a number of broad (up to 500m wide), shallower strands have been identified, based on visual drilling results at depths of generally less than 18m, however laboratory results for this drilling have also yet to be received. These broad strands occur above or adjacent to the recently identified channel deposits.

Ongoing interpretation and re-interpretation of ground magnetic data has highlighted excellent potential for additional strands and channels within the joint venture area which have not yet been properly drill tested and which augers well for the economic potential of the project. Efforts are continuing to obtain closed file reports on previous coal exploration in the area in order to access the significance of a 2m coal intersection reported in the company's June 2006 quarterly report.

Cooljarloo Project - Channel Area - Stacked Sections

Hole No		Collar Coordinates	From	То	Interval	HM Grade
	Е	N	m	LJ.	m	%
267	30240	20945	20	34	14	$\overline{3.2}$
268	30280	20945	18	40	22	6.1
269	30320	20945	18	32	14	5.3
$\overline{270}$	30360	20945	$\overline{18}$	48	30	4.6
271	40400	20945	18	$\overline{58}$	40	4.4
272	40440	20945	16	20	4	5.1
273	40480	20945	16	20	4	4.1
274	40520	20845	16	20	4	3.9
275	40560	20945	16	20	4	3.1
276	40600	20945	16	20	4	3.6
277	40640	20945	16	58	42	2.8
517	39960	20620	14	18	4	3.7
519	40040	20620	14	18	4	4.2
524	40240	20620	12	28	16	4
526	40320	20620	16	18	$\overline{2}$	3.1
527	40280	20650	20	28	8	4.6
532	40520	20660	16	20	$\overline{4}$	3.5
533	40560	20660	24	34	10	5.5
535	40640	20645	32	36	$\overline{2}$	3.3
540	40280	20120	16	18	$\overline{2}$	3.5
541	40320	20119	16	18	$\overline{2}$	4.2
542	40360	20118	16	18	2	4.3
546	40520	20114	16	$\overline{18}$	$\overline{2}$	3.3
547	40560	20113	16	18	$\overline{2}$	3.4
548	40440	20116	16	18	$\overline{2}$	3.2
554	40080	20076	16	18	$\overline{2}$	3.7
556	40240	20121	16	20	4	3.8
708	40220	20620	12	14	$\overline{2}$	3.5
709	40260	20620	16	34	18	3.4
$\overline{712}$	40360	20512	16	$\overline{18}$	$\overline{2}$	3.6
713	40280	20490	18	30 2	$\overline{12}$	3.8
715	40200	20472	14	18	4	3.5
716	40160	20461	16	20	4	4
717	40120	20449	16	20	4	3.8
718	41348	20415	$\overline{28}$	34	6	2.7
719	41387	20600	46	60	14	1,3
721	41364	20200	16	20	4	3.1
725	41354	19426	16	32	16	3.0
727	41358	19165	12	22	10	2.2
728	41357	19000	14	24	10	2.3
729	41377	19000	12	26	14	2.5

Table 3 Channel Area Drilling Results

2m samples. HM grade determined by TBE heavy liquid separation.

As recently announced (ASX release 20 October 2006) Image Resources has earned a 51% in the Cooljarloo joint venture and elected to proceed to earn a 70% interest in this 75sq km project. Under the terms of its joint venture with Metal Sands Pty Ltd, Image has earned a 51% interest by expenditure of \$500,000 and may increase this to a 70% interest by expenditure of a further \$300,000 within five years.

COOLJARLOO NORTH (Image 100%)

Image has completed 83 line-km of detailed ground magnetic surveys at its recently granted 100%-owned Cooliarloo North tenement about 5km north of the Cooliarloo JV. Four high priority heavy mineral targets have been identified with an aggregate strike length of more than 12km (ASX release 24 October 2006). Historical drilling results from this area have reported significant, shallow HM intersections coincident with the magnetic targets (see Table 4, note results are not available for all drill holes).

Target 1 is a well defined ground magnetic anomaly (average amplitude 3.3nT) some 1.3km in length, which forms part of a 4km-long aeromagnetic target (ASX release 27 March 2006) with a very high-grade intersection in drill hole JTN 5280 of 8m @ 28.1% HM from 6m, including 4m @ 49.2% HM from 6m. This is the highest grade encountered to date by Image in the Cooljarloo area.

Target 2 is 4km in length and 400m in width with magnetic amplitudes of 2.9-3.3nT. Previous drilling on approximately 400m line spacings has confirmed significant mineralisation over the 4km strike with best intersections of 8m @ 11.9% HM from 3m in drillhole HR 574 and 6m @ 15.3% HM from 13.5m in drillhole HR 767.

The dimensions of Targets 3 and 4 are 1.1km x 350m (amplitude 1.5nT) and 3.3km x 150m (amplitude 1.9nT) respectively. Previous drilling appears to be limited to the northern end of Target 3 with a best intersection of 3m @ 11.4% HM from 18m in drill hole HR 600.

Further ground magnetic surveys are planned over the remainder of the tenement to further define Target 1 and to test for additional similar targets. Drilling of the targets defined to date is scheduled to commence upon completion of access agreements.

Table 4 Construction Month

			COOITATIOO NOTTI
			Historical Drilling Results
Hole Number		Collar Coordinates	From	Τo	Interval	Grade
	Е	N	m	m	m	% HM
JND 6150	30489	37500	12	20	8	5.0
HR 627	30809	37253	12	17	5	5.0
HR 630	30910	37319	15	18	3	6.1
HR 930	31003	36896	10.5	15	4.5	10.5
		including	12	13.5	1.5	15.0
HR 931	30969	36874	13.5	18	4.5	8.2
HR 482	30802	36516	19.	25	6	5.9
HR 491	31002	36520	12	17	5	5.8
HR 496	31240	36525	12	16	4	7.0
CR 6840	31179	36450	8	18	10	4.4
CR 7080	31419	36450	10	16	6	7.8
HR 573	31526	36061	3	11	8	9.6
		including	6	9	3	13.5
HR 574	31495	36039	4	12	8	11.9
		including	9	11	$\overline{2}$	21.0
HR 578	31378	35951	4	10 1	ĥ	60

Hole Number		Collar Coordinates	From	Τo	Interval	Grade
	Е	N	m	m	m	% HM
HR 586	31044	35731	10	13	3	6.9
HR 600	30097	35348	$\overline{18}$	$\overline{21}$	$\overline{3}$	11.4
HR 766	31765	35722	15	19.5	4.5	7.0
HR 767	31732	35700	13.5	19.5	6	15.3
HR 768	31698	35678	16.5	21	4.5	12.4
HR 777	31396	35482	12	15	3	6.1
HR 782	31229	35373	10.5	13.5	3	6.0
HR 789	31916	35342	12	19.5	7.5	5.7
HR 792	31815	35277	14	20	6	5.4
HR 796	31681	35190	13.5	18	4.5	9.0
HR 798	31614	35146	13.5	18	4.5	$\overline{7.0}$
JWB 7320	31659	34840	24	28	4	5.4
JWB 7440	31779	34844	14	20	6	5.5
HR 815	32285	34628	25.5	33	7.5	6.9
HR 819	32151	34541	24	27	3	19.2
HR 821	32083	34498	16.5	24	7.5	5.9
HR 888	32503	34293	21	24	3	8.1
HR 892	32368	34206	19.5	22.5	$\overline{3}$	8.9
EDB 8460	32799	33650	14	24	10	6.8
EDB 8940	33279	33650	20.	28	8	5.7
JTN 5280	29619	31165	6	14	8	28.1
		including	6	10	4	49.1

COOLJARLOO SOUTH (Image 100%)

Image has applied for a 40sq km exploration licence about 20km SE of Tiwest's Cooljarloo mine covering aeromagnetic targets along strike from the mine and interpreted to have potential for HM strandlines. Programmes of ground magnetics and aircore drilling will be carried out upon grant of the tenement and completion of land access agreements. This application brings Image's landholdings in the North Perth basin to 560sq km.

BIDAMINNA (Image 100%)

Environmental permitting for the 1.5km strike extension south of Image's previously reported drilling on the Callisto heavy mineral strand is in progress and is expected to be granted in the next month, opening the way for further drilling. Callisto is situated about 15km NW of Gingin and forms part of Image's large, 100%-owned landholding in the Bidaminna area covering known heavy mineral resources outlined by historical drilling.

Previously reported scout drilling by Image identified a broad zone of mineralisation more than 500m in width at Callisto (ASX release 3 July 2006) with a best intersection of 12m at 5.4% HM from 34m. Modal analysis of a composite sample from this broad zone indicates a high total valuable heavy mineral content of 93% composed of 84% ilmenite, 0.4% rutile, 2.3% leucoxene and 6% zircon.

EMU LAKE (Image $30\%$ )

The Emu Lake nickel project is situated 70km NE of Kalgoorlie and covers a sequence of ultramafic rocks that has been demonstrated to be highly prospective for high grade nickel sulphides. During the quarter joint venturer Jubilee Mines (60%) completed a detailed surface electromagnetic survey over the gossan Zone where the best drill intersections have been obtained to date. Assessment of this survey is currently being completed.

GLEN HERRING (Image 90%)

Image holds a 90% interest in an unusual mercury occurrence situated at Glen Herring about 20km SW of Marble Bar in the Pilbara region of WA. The prospect comprises veins and stringers of cherty quartz and carbonate within Lower Proterozoic basalts. In places the veins contain visible cinnabar, a mercury sulphide. The veins occur sporadically over a 600m strike length with some evidence of old exploration trenches but with no record of previous drilling. The mineralisation appears to be a low temperature (epithermal) style. Epithermal gold systems are often strongly zoned with an upper mercury-rich zone overlying a gold-bearing zone at depth and as such Glen Herring is considered to have near surface mercury potential and gold potential at depth.

Image has completed geochemical soil sampling and defined a large coherent 800m x 250m mercury anomaly (peak 11.6ppm Hg compared to a background of less than 0.5ppm Hg). Scout open hole percussion drilling (43 holes, 710 metres) in five shallow traverses across the geochemical anomaly intersected anomalous mercury values on all lines with a best intercept of 9m at 177ppm Hg at end of hole. Image is seeking a joint venture partner to follow-up these encouraging results while Image focuses on its core mineral sands projects.

BRONCO PLAINS (Image 100%, diluting)

Processing and interpretation of aeromagnetic data by Troy Resources over the project area is nearing completion. Target modelling of magnetic anomalies is in progress with RAB drilling to be dependant on the outcome of the modelling.

TROJAN JV (Image 100%)

Troy Resources has withdrawn from this joint venture and Image is currently reappraising the Woongaring, Scorpion Well and Adam Range projects that comprised this venture.

CORPORATE

99.67% of options due to be exercised on or before 26 August 2006 have been exercised, resulting in Image increasing its cash reserves at the end of the quarter to \$4.8 million. A total of 15.658.691 25cent options have been exercised bringing the number of fully paid ordinary shares on issue to 73,897,978.

The increased cash reserves place Image in a strong position to actively pursue and add value to its North Perth Basin mineral sands interests and to its other joint Image is also proceeding with its proposed spin out of Magnetic ventures. Resources NL which is expected to result in Image shareholders (as at the record date yet to be set) receiving free bonus shares in Magnetic Resources.

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 in this report that relates to exploration results is based on information compiled by Roger Thomson BSc. ARSM, MAusIMM, 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 mineralization 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 of Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Rnaer Thomson consents to the inclusion of this information in the form and context in which it appears in this report.

MINING EXPLORATION ENTITY QUARTERLY REPORT

Name of entity:

Image Resources NL

ABN:			Quarter ended ("current quarter")
	57 063 977 579		30/9/2006
	Consolidated statement of cash flows
		Current quarter	Year to date
	Cash flows related to operating activities	\$AUD'000	(3 months) \$AUD'000
1.1	Receipts from product sales and related debtors	41	41
1.2	Payments for:
	(a) exploration and evaluation (b) development	(428)	(428)
	(c) production
1.3	(d) administration Dividends received	(182)	(182)
1.4	Interest and other items of a similar nature received	40	40
1.5	Interest and other costs of finance paid
1.6 1.7	Income taxes paid Other (provide details if material)
	Net Operating Cash Flows	(529)	(529)
	Cash flows related to investing activities
1.8	Payment for purchases of: (a) prospects	(35)	(35)
	(b) equity investments	(72)	(72)
	(c) other fixed assets	(6)	(6)
1.9	Proceeds from sale of: (a) prospects
	(b) equity investments
	(c) other fixed assets
1.10	Loans to other entities
1.11 1.12	Loans repaid by other entities Other (provide details if material)	(45)	(45)
	Net investing cash flows	(158)	(158)
1.13	Total operating and investing cash flows	(687)	(687)
	(carried forward)

1.13	Total operating and investing cash flows (brought forward)	(687)	(687)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	3,422	3,422
1.15	Proceeds from sale of forfeited shares	$\overline{\phantom{m}}$
1.16	Proceeds from borrowings	$\overline{\phantom{m}}$
1.17	Repayment of borrowings	$\blacksquare$
1.18	Dividends paid
1.19	Other (provide details if material)
	Net financing cash flows	3,422	3,422
	Net increase (decrease) in cash held	2,735	2,735
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	2,125	2,125
1.22	Cash at end of quarter	4,860	4,860

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	(90)
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	(350)
-4.2	Development	$\sim$
4.1	Exploration and evaluation	(350)
		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	3,027	18
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (provide details) - Short Term Deposit	1,833	2,107
	Total: cash at end of quarter (item 1.22)	4,860	2,125

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 tenements relinquished, reduced or lapsed		N/A
6.2	Interests in mining tenements acquired or	E70/3068	Application	$0\%$	100%
	increased	E70/2892	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	73,897,978	73,897,978
7.4	Issued during quarter	13,210,893		\$0.25	\$0.25
7.5	Convertible debt securities	N/A
7.6	Issued during quarter	Nil
7.7	Options			Exercise price	Expiry date
	Non-employee Options	1,850,000 2,000,000 2,000,000	Not Quoted Not Quoted Not Quoted	\$0.335 \$0.39 \$0.37	27.11.2008 26.11.2009 21.11.2010
	Employee Options	1,035,000	Not Quoted	\$0.25	4.7.2007
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

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.

Roger Thomson Managing Director Date: 30 October 2006