IMAGE RESOURCES NL — Interim / Quarterly Report 2006

Mar 15, 2006

ABN 57 063 977 579

HALF-YEAR FINANCIAL REPORT

31 DECEMBER 2005

ABN 57 063 977 579

CONTENTS

HALF-YEAR FINANCIAL REPORT

Page No.

Directors' Report	3
Auditor's Independence Declaration	11
Income Statement	12
Balance Sheet	13
Statement of Changes in Equity	14
Statement of Cashflows	15
Notes to and forming part of the Financial Statements	16
Directors' Declaration	26
Independent Review Report	27

ABN 57 063 977 579

DIRECTORS' REPORT

Your directors submit the financial report of the company for the half-year ended 31 December 2005.

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 Sakalidis

REVIEW OF OPERATIONS

The loss for the half-vear ended 31 December 2005 was \$701,657 (2004 - \$3,482,707).

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

EMU LAKE (Image 30%)

Jubilee Mines completed two diamond drill holes at the Emu Lake nickel project situated 70km northeast of Kalgoorlie. The drilling targeted the depth extensions of high grade nickel sulphides intersected by previous drilling at the Gossan Zone. The previous high grade intercepts include 2m at 6.20% Ni, 1.78% Cu, 2.17g/t Pt+Pd from 338m and 2m at 2.63% Ni, 1.05% Cu, 4.19g/t Pt+Pd from 345.5m in drill hole ELD15 and 0.28m at 6.66% Ni, 0.24% Cu, 0.65g/t Pt+Pd from 337m in drill hole ELD16.

The two wide-spaced step-out diamond drill holes both intersected narrow intervals of massive nickel sulphides as summarised below.

Hole No	Collar Coordinates		From	Тo	Interval	Ni	Сu	$Pt+Pd$
			m	m		$\frac{\theta}{0}$	ppm	g/t
ELD 025	48316	9658	346.60	346.70	0.10	10.9	757	4.17
ELD 026	48446	9655	414.10	414.21	0.11	1.94	830	0.20
			414.53	414.58	0.05	2.42	668	0.52

These results are considered to be encouraging as they occur on the main mineralised contact and significantly expand the area of massive sulphide mineralisation. Grade thickness contours indicate the presence of two south-plunging shoots within a broad sulphide-bearing contact zone some 300m in strike length as shown in Figure 1. The two interpreted higher grade zones remain open down plunge.

Down-hole EM surveys continued to indicate continuity of mineralisation between the existing sulphide intersections. In addition, geochemical surveys have identified three coincident Ni-Cu targets, two of which warrant high priority follow-up.

DIRECTORS REPORT

Figure 1 EMU LAKE - GOSSAN ZONE LONGITUDINAL SECTION

BIDAMINNA (Image 100%)

152 line-km of ground magnetic surveys were completed over the southern part of the Bidaminna heavy mineral project near Gingin – see Figure 2 and 3. The results show several higher magnetic amplitude mineral strand targets in the northern section of EL70/2825 at Bidaminna South - see Figure 4.

In this area, 9km of high-amplitude magnetic anomalies (>2.5 nano Teslas) occur at the intersection of the interpreted Ganymede and Callisto strands. The zone where these strands merge is termed the central highgrade target zone which is some 2.5km long and up to 800m wide. This area is interpreted to comprise multiple stacked strands and is the focus of Image's proposed initial drilling programme and is considered to be the likely centre of any possible future development.

A further 18km of linear magnetic anomalies ranging from 1.5 to 2.5nT in amplitude and about 200m in width have been identified which may represent extensions to the interpreted high-grade strands. An additional 9km of strands up to 100m in width and with magnetic amplitudes of 1.0 to 1.5nT have also been interpreted and which appear parallel with and unconnected to the defined 27km of higher amplitude targets.

The westernmost (youngest) strand, Amalthea, is a sizeable 4.4km-long target zone which remains open to the south. This interpreted strand represents a potential zircon target as it may represent a reworking and upgrading of the older Ganymede and Callisto strands to the east. Further detailed ground magnetic surveys (50 line-km) are planned to define the extent of the Amalthea strand and determine if the Callisto and Io strands are linked.

An extensive 280-hole, 14,000m aircore drilling programme (subject to access agreements) is planned on 40m x 400m spacings which is anticipated to confirm the resource potential of the five interpreted strands outlined so far. Two access agreements have been signed to date and Mines Department approval for drilling is anticipated to be imminent. The drilling, scheduled in April 2006, will provide data on the heavy mineral content and mineral assemblages (i.e. zircon, rutile, leucoxene and ilmenite) of the targeted strands. It is expected that this data will be used to define a heavy mineral resource for the first time in the Bidaminna South area.

DIRECTORS' REPORT

Figure 2 BIDAMINNA, COOLJARLOO LOCATION MAP

DIRECTORS' REPORT ELECTRONIC REPORT

Figure 3 BIDAMINNA PROJECT

Figure 4 BIDAMINNA SOUTH

COOLJARLOO (Image earning up to 70%)

Image reached agreement with Metal Sands Pty Ltd to earn a majority interest in exploration licence applications E70/2636 and E70/2898 and prospecting licence applications P70/1502 and 1503 at Cooljarloo in the North Perth Basin, a region which produces 20-25% of the world's zircon. The 77sq km of tenements are strategically situated between Tiwest's Cooljarloo and Jurien mineral sand operations and is 80km south of Iluka's world-class Eneabba operation, in an area of well established infrastructure - see Figure 2.

DIRECTORS' REPORT

Previous exploration by Geopeko and RGC Exploration discovered several paleo-strandlines with significant heavy mineral (HM) concentrations and reported Inferred Resources on three strands with identified resources totaling in excess of 80Mt containing 2.4Mt of HM concentrate as summarised below.

Deposit	Resource	Grade	HM	Ilmenit	Rutile	Leucoxene	Zircon
	Tonnes	(%)	Tonnes	e	Tonnes	Tonnes	Tonnes
				Tonnes
28,000	850,000	8.6	73,000	25,000	8.000	6.700	9,800
Mid-	49,000,000	2.3	1,127,000	531,000	96,000	60.500	91,000
level
35 AHD	30,860,000	4.0	1,234,000	Na	na	na	na
Total	80.710.000	3.0	2.434.000

na: information not available

The 28,000 strand is particularly encouraging, exhibiting high grades of 8.6% HM with a 24% combined zircon and rutile content. This grade and mineral assemblage compares very favourably with other zirconrich HM deposits elsewhere in Australia. Image has commenced a 140 line-km ground magnetic mapping survey which is a technique developed by Image to identify the high-grade portions of the known strands. Image plans to focus on the high-grade strands and on the valuable zircon and rutile-rich assemblages and also explore for additional strands where no previous drilling has been carried out.

Under the terms of the agreement Image may earn a 51% interest by sole funding expenditure of \$500,000 within four years of the grant date of the tenement and may elect to earn up to a 70% interest by expenditure of an additional \$300,000 over a total of six years. Image must spend a minimum of \$70,000 before the right of withdrawal.

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

Geochemical sampling on recently granted exploration licences at Woongaring, 140km northwest of Southern Cross, commenced in the December quarter but was suspended after several rain events. The sampling is anticipated to resume in early calendar 2006, together with ground EM surveys over two nickel sulphide targets.

BRONCO PLAIN (Image 100%)

Geochemical sampling over aeromagnetic targets at this project situated 140km east of Kalgoorlie has identified several gold-anomalous areas up to 10 times background. Discussions for a possible joint venture on this project have commenced with a WA-based mining company.

NEPEAN EAST (Image 100%)

Geochemical sampling of interpreted ultramafic targets has outlined two areas of coincident anomalous Ni-Cu values over a cumulative strike length of 3.5km on a possible extension of the prospective Nepean ultramafic unit. Follow-up sampling is planned to further define the anomalous areas.

SOUTH YILGARN (Image 100%)

Image has continued to actively follow up new releases of aeromagnetics and geochemical data in the southwest quadrant of the Yilgarn Craton, particularly in the Coolgardie-Merredin-Ravensthorpe region. New applications, including rationalisation of some existing tenements, have increased Image's landholdings in this region to in excess of 8,000sq km making it one of the largest players in this underexplored nickel and gold-prospective area.

Reconnaissance geochemical sampling programmes are in progress on several target areas in the Coolgardie-Merredin-Ravensthorpe region. Numerous targets for both nickel sulphides and gold have been identified and sampling of these targets is anticipated to continue through much of calendar 2006.

DIRECTORS' REPORT

WINDARRA NORTH (Image 100%)

Following a review of exploration results to date, Western Areas has withdrawn from this joint venture.

IILBADGIE (Image 35%)

Westonia Mines is planning to RAB drill three nickel sulphide targets identified on this project 25km south of Southern Cross. The targets comprise nickel and multi-element anomalies with coincident moderatestrength EM conductors. Drilling is scheduled to commence in the March quarter 2006.

MT HAYS (Image 100%)

A 6-hole, 684m RC drilling programme was carried out over a 500m strike length of quartz veining and stockworks previously discovered by Image at this project situated 60km east of Nullagine in the Pilbara region. The drilling returned a best intersection of 2m at 52.1g/t Au from 92m, including 1m at 102.6g/t Au (3.3oz/t) - (ASX release 5 August 2005). This drill hole tested below a previous RAB intercept of 2m at 4.0g/t Au from 33m in drill hole MHDRB-6A and confirmed the down-dip extension of the mineralisation. Three of the remaining five holes intersected anomalous gold values as summarised below.

Hole No		Collar Coordinates	Azimuth	From	Тο	Interval	Gold Grade
	N	E		m	m	m	g/t Au
MHRC-2	6799	1454	$145^\circ$	68	72	$4^*$	0.3
MHRC-3	6830	1514	$151^\circ$	92	94	2	52.1
Including				92	93		102.6
MHRC-4	6859	1592	$170^\circ$	117	118		0.5
MHRC-6	6879	1867	$137^{\circ}$	116	120	$4*$	$0.8$ eoh

1m samples, uncut, dip -60°, "4m composite sample, eoh; end of hole. Samples analysed using an aqua regia digestion, solvent extraction and flame atomic absorption spectrometry.

This wide-spaced drilling suggests a potential for high grade shoots within this mineralised shear zone situated about 25km east along strike from Golden Gate where Wedgetail Exploration has recently announced a gold resource as part of its 886,000oz Nullagine Gold Project. Further drilling is being planned to follow up these encouraging results, together with follow up sampling of anomalous gold values obtained about 1.5km to the north of the shear zone.

MT ELSIE

A 3-hole, 138m RC drilling programme intersected shallow mineralisation over a 50m strike length of the T4 prospect summarised as follows:

Hole No	Collar Coordinates		From	Tо	Interval	Gold Grade
	N	E	m	m	m	g/t Au
ERC-36	8465	50506	12	18	o	2.5
			36	40		1.5
ERC-37	8479	50519				1.1
			19	27	8	1.2
ERC-38	8494	50534	10	14		3.2

1m samples, uncut, dip -60°, azimuth 130°. Samples analysed using an aqua regia digestion, solvent extraction and flame atomic absorption spectrometry.

This drilling followed up a previous best intercept at T4 of 17m at $3.7g/t$ Au from 2m. Following a review of the exploration results to date it was concluded that the project was unlikely to meet Image's requirements and Image withdrew from this project in the eastern Pilbara region.

IMAGE RESOURCES NL ABN 57 063 977 579 March 2014 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12:00 12

1999 - James Alexandro III (

DIRECTORS' REPORT

ADOPTION OF AUSTRALIAN EQUIVALENTS TO IFRS

This interim financial report has been prepared under Australian equivalents to IFRS. A reconciliation of differences between previous GAAP and Australian equivalents to IFRS has been included in Note 2 of this report.

INDEPENDENCE DECLARATION BY AUDITOR

The lead auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 11 for the half-year ended 31 December 2005.

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

For and on behalf of the Directors

RM THOMSON Managing Director 16 March 2006

AUDITOR INDEPENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF IMAGE RESOURCES NL

In relation to the review of the financial report of Image Resources NL for the half-year ended 31 December 2005, 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 the review; or $(i)$

$(ii)$ any applicable code of professional conduct in relation to the review.

Yours sincerely

KC Somes

SOMES and COOKE Chartered Accountants

INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

	Notes	Half Year Ended 31 Dec 2005 $($ \$)	Half Year Ended 31 Dec 2004 (3)
Revenue from ordinary activities	3	116,990	116,311
Depreciation and amortisation expense	2(a)	(10, 893)	(2,063,472)
Exploration and tenement expenses written off	2(a)	(494, 162)	(1,219,927)
Other expenses from ordinary activities		(313,592)	(315,619)
Loss from ordinary activities before income tax expense		(701, 657)	(3,482,707)
Income tax expense relating to ordinary activities
Loss from ordinary activities after related income tax expense		(701, 657)	(3,482,707)
Loss from ordinary activities after related income tax expense attributable to members of Image Resources NL		(701, 657)	(3,482,707)
Basic loss per share (cents per share) Diluted loss per share (cents per share)		(1.1) (1.1)	(6.2582) (6.2582)

BALANCE SHEET AS AT 31 DECEMBER 2005 And Accept and Accept and Accept and Accept

	Notes	31 Dec 2005 (5)	30 June 2005 (5)
Current Assets
Cash assets		2,881,767	2,659,488
Receivables		97,446	129,530
Prepayments		21,354	13,956
Other financial assets		5,000	5,000
Total Current Assets		3,005,567	2,807,974
Non-Current Assets
Plant and equipment		56,831	64,179
Other financial assets		157,306	50,001
Total Non-Current Assets		214,137	114,180
TOTAL ASSETS		3,219,704	2,922,154
Current Liabilities
Payables		19,345	102,312
Provisions		6,672
Total Current Liabilities		26,017	102,312
TOTAL LIABILITIES		26,017	102,312
NET ASSETS		3,193,687	2,819,842
Equity
Contributed equity		10,987,445	9,911,943
Accumulated losses		(7,793,758)	(7,092,101)
TOTAL EQUITY		3,193,687	2,819,842

STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

	Notes	Share Capital	Accumulated Losses	Total
		(5)	$($ \$)	(3)
Balance at 1.7.2004		9,675,943	(3,078,422)	6,597,521
Loss for period			(3,482,707)	(3,482,707)
Balance at 31.12.2004		9,675,943	(6,561,129)	3,114,814
Balance at 1.7.2005		9,911,943	(7,092,101)	2,819,842
Shares issued during the period		1,067,472		1,067,472
Share based payments		8,030		8,030
Loss for period			(701,657)	(701,657)
Balance at 31.12.2005		10,987,445	(7,793,758)	3,193,687

STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

	Half Year	Half Year
	Ended	Ended
	31 Dec 2005	31 Dec 2004
	(5)	(6)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	48,282	32,665
Payments to suppliers and contractors	(265,015)	(701, 768)
Interest received	84,591	81,405
Net cash provided by / (used in) operating
activities	(132, 142)	(587, 698)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment	(3,545)	(29, 045)
Payments for exploration and evaluation	(473, 604)	(280, 561)
Proceeds on sale of
tenements/recoupments	(22, 297)	260,166
Repayment of loan		431,177
Purchase of investments	(107, 305)	(7,000)
Purchase of new prospects	(106, 300)	(118, 791)
Net cash provided by / (used in) investing
activities	(713,051)	255,946
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new issues of shares	1,096,433
Share issue expenses	(28,961)
Net cash provided by financing activities	1,067,472
Net (decrease) / increase in cash held	222,279	(331,752)
Cash at the beginning of the financial period	2,659,488	3,085,231
Cash at the end of the financial period	2,881,767	2,753,479

ABN 57 063 977 579

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE₁ SUMMARY OF ACCOUNTING POLICIES

Basis Of Preparation

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134 - Interim Financial Reporting, Urgent Issues Group Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

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 2005 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements arising under the Corporations Act 2001.

As this is the first interim financial report prepared under Australian equivalents to IFRS, the accounting policies applied are consistent with those applied in the 30 June 2005 annual report as this report was presented under the previous Australian GAAP. Accordingly, a summary of the significant accounting policies under Australian equivalents to IFRS has been included below. A reconciliation of equity and profit and loss between previous GAAP and Australian equivalents to IFRS has been prepared per Note 2.

(a) Revenue

Interest revenue is recognised on a proportional basis taking into account interest rates applicable to the financial asset.

Revenue from the rendering of a service is recognised upon delivery of the service to the customer. All revenue is stated net of amount of goods and services tax (GST).

(b) Employee Entitlements

Wages and Salaries and Annual Leave - Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employees' services up to that date. There is no liability to Long Service Leave entitlements.

(c) Exploration and Evaluation Expenditure

All exploration and evaluation expenditure is expensed to profit and loss as incurred. The effect of this write-off is to increase the loss incurred from ordinary activities as disclosed in the Income Statement by \$494,162 and to decrease the carrying values in the Balance Sheet to \$Nil.

(d) Acquisition of Assets

The cost method is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of assets given up at the date of acquisition plus costs incidental to the acquisition.

Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure or mine properties based on the stage of development reached at the date of acquisition.

ABN 57 063 977 579

NOTES TO THE HNANCIAL STATEMENTS FOR THE HALL-YEAR ENDED 31 DECEMBER 2005

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

(e) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

Cash flows are included in the Statement of Cash Flow on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

$(f)$ Income Tax

The change for current income tax expenses is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognized to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

$(g)$ Cash

For the purpose of the statement of cash flows, cash includes:

• cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and $(i)$
• (ii) investments in money market instruments with less than 30 days to maturity.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YFAR ENDED 31 DECEMBER 2005

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

(h) Impairment of Assets

At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

(i) Earnings Per Share

• (i) Basic Earnings Per Share Basic earnings per share is determined by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year.
• (ii) Diluted Earnings Per Share Diluted EPS is calculated as net profit attributable to members, adiusted for:
• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares.

(i) Non-current Assets

Items of plant and equipment are recorded at cost, being the fair value of consideration provided plus incidental costs. This cost is written off over its expected economic life, adjusted for any salvage value, if applicable. Estimates of remaining useful lives range between 4 and 5 years.

(k) Recoverable Amount

Non-current assets are not carried at an amount greater than their recoverable amount, and where carrying values exceed this recoverable amount, assets are written down. In determining recoverable amount the expected net cash flows have not been discounted.

$(1)$ Financial Instruments

Financial Assets: Security deposits are recognised at their fair value. Other receivables are carried at nominal amount due less any provision for doubtful debts. An estimate of doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Sundry debtors and other receivables are non-interest bearing and have repayment terms between 30 and 90 days.

Financial Liabilities: Liabilities for trade creditors and other accruals are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. Trade creditors are normally settled on 30 day terms.

Available-for-sale Financial Assets: Available-for-sale financial assets include any financial assets not included in the above categories and are initially measured at cost being the fair value of the consideration and including acquisition charges associated with the investment. Unrealised gains and losses arising from changes in the fair value of the investment are taken directly to equity.

NOTES TO THE FINANCIAL STATIMENTS FOR THE HALF-YFAR ENDED 31 DECEMBER 2005

NOTE₁ SUMMARY OF ACCOUNTING POLICIES (Continued)

(m) Contributed Equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(n) Share-based Payments

Share-based compensation benefits are provided to directors as approved in general meeting by members.

No expense is recognised in respect of share options granted prior to 1 January 2005. The shares will be recognised when the options are exercised and the proceeds are received and allocated to share capital.

In respect of share options granted after 1 January 2005, the fair value is recognised as an employee benefit expense with a corresponding increase in equity. The fair value of the options are calculated at the date of grant using Black-Scholes calculation principles and allocated to each reporting period evenly over the period from grant date to vesting date. The expected life used in the model has been adjusted, based on management's best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. Upon the exercise of options, the balance of the sharebased payments reserve relating to those options is transferred to share capital.

(o) Joint Ventures

Interest in joint venture operations are brought to account by including in the respective classifications, the share of individual assets employed, liabilities and expenses incurred and revenue from the sale of joint venture output. Interest in joint venture operations are brought to account by including assets and liabilities in their respective classifications.

(p) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE₂ FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

	Previous AGAAP At 1.7.2004	Transition Effect to A- IFRS	A-IFRS at 1.7.2004
	\$	\$	\$
Reconciliation of Equity at 1 July 2004
CURRENT ASSETS
Cash and cash equivalents	3,085,231		3,085,231
Trade and other receivables	482,347		482,347
Prepayments	15,461		15,461
Other financial assets	2,111		2,111
TOTAL CURRENT ASSETS	3,585,150	u.	3,585,150
NON-CURRENT ASSETS
Plant and equipment	52,286		52,286
Aeromagnetic database	2,053,347	(2,053,347)
Mineral interests	1,109,324	(1,109,324)
Other financial assets	1		Ĩ.
TOTAL NON-CURRENT ASSETS	3,214,958	(3,162,671)	52,287
TOTAL ASSETS	6,800,108	(3,162,671)	3,637,437
CURRENT LIABILITIES
Trade and other payables	202,587		202,587
TOTAL CURRENT LIABILITIES	202,587		202,587
TOTAL LIABILITIES	202,587	μ,	202,587
NET ASSETS	6,597,521	(3,162,671)	3,434,850
EQUITY
Issued capital	9,675,943		9,675,943
Accumulated losses	(3,078,422)	(3,162,671)	(6,241,093)
TOTAL EQUITY	6,597,521	(3,162,671)	3,434,850

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

	Previous AGAAP	Transition Effect to A-	A-IFRS at 31.12.2004
	At 31.12.2004	IFRS
	\$	\$	\$
Reconciliation of Equity at 31 December 2004
CURRENT ASSETS
Cash and cash equivalents	2,753,479		2,753,479
Trade and other receivables	292,611		292,611
Prepayments	21,154		21,154
Other financial assets	9,111		9,111
TOTAL CURRENT ASSETS	3,076,355		3,076,355
NON-CURRENT ASSETS
Plant and equipment	71,205		71,205
Aeromagnetic database	1,960,016	(1,960,016)
Mineral interests	995,963	(995, 963)
Other financial assets	1		Ĩ.
TOTAL NON-CURRENT ASSETS	3,027,185	(2,955,979)	71,206
TOTAL ASSETS	6,103,540	(2,955,979)	3,147,561
CURRENT LIABILITIES
Trade and other payables	32,748		32,748
TOTAL CURRENT LIABILITIES	32,748	ш.	32,748
TOTAL LIABILITIES	32,748		32,748
NET ASSETS	6,070,792	(2,955,979)	3,114,813
EQUITY
Issued capital	9,675,943		9,675,943
Accumulated losses	(3,605,151)	(2,955,979)	(6,561,130)
TOTAL EQUITY	6,070,792	2,955,979	3,114,813

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

Previous AGAAP	Transition Effect to A-	AFRS at 30.6.2005
At 30.6.2005	IFRS
\$	\$	\$
2,659,488		2,659,488
129,530		129,530
		13,956
		5,000
	u.	2,807,974
64,179		64,179
50,001		50,001
114,180		114,180
	w.	2,922,154
102,312		102,312
102,312	u.	102,312
		102,312
2,819,842	ш.	2,819,842
9,911,943		9,911,943
(7,092,101)		(7,092,101)
2,819,842	ш.	2,819,842
	13,956 5,000 2,807,974 2,922,154 102,312	u.

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

	Previous AGAAP	Transition Effect to A- IFRS	A-IFRS
Reconciliation of Profit or Loss for the half year ended 31 December 2004		\$	\$
Revenue from ordinary activities	116,311		116,311
Depreciation and amortisation expense	(103, 456)	(1,960,016)	(2,063,472)
Exploration and tenement expenses written off	(223,964)	(995, 963)	(1,219,927)
Other expenses from ordinary activities	(315, 619)		(315,619)
Loss from ordinary activities before income tax expense	(526, 728)	(2,955,979)	(3,482,707)
Income tax expense relating to ordinary activities
Loss from ordinary activities after related income tax expense	(526, 728)	(2,955,979)	(3,482,707)
Net Loss attributable to members of Image Resources NL	(526, 728)	(2,955,979)	(3,482,707)
Reconciliation of Profit or Loss for the year ended 30 June 2005
Revenue from ordinary activities	225,452		225,452
Revenue from non-ordinary activities	1,341		1,341
Depreciation and amortisation expense	(2,074,300)		(2,074,300)
Exploration and tenement expenses written off	(1,614,698)		(1,614,698)
Other expenses from ordinary activities	(551, 474)		(551, 474)
Loss from ordinary activities before income tax expense	(4,013,679)		(4,013,679)
Income tax expense relating to ordinary activities
Loss from ordinary activities after related income tax expense	(4,013,679)		(4,013,679)
Net Loss attributable to members of Image Resources NL	(4,013,679)		(4,013,679)

ABN 57 063 977 579

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Continued)

Notes to the reconciliations of equity and profit and loss at 1 July 2004, 31 December 2004 and 30 June 2005

		30.6.2005 \$	31.12.2004 \$	1.7.2004 \$
(a)	Retained earnings comprise: Impairment loss on aeromagnetic database and mineral interests		(2,955,979)	(3,162,671)
	An impairment loss amounting to \$2,955,979 has been recognised under the Australian equivalents to IFRS relating to aeromagnetic database and mineral tenements written down to its recoverable amount. This has been recognised in the income statement for the year ended 30 June 2005
	NOTE 3 LOSS FROM ORDINARY ACTIVITIES		Half Year Ended 31.12.2005 (5)	Half Year Ended 31.12.2004 (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		84,591	81,405

NOTE₄ 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, Northern Territory and South Australia.

NOTE₅ EVENTS SUBSEQUENT TO REPORTING DATE

No events have occurred since balance date which require additional disclosure.

ABN 57 063 977 579

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALE YEAR ENDED 31 DECEMBER 2005

NOTE 6 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.

The Company is not in a position to assess the likely effect, if any, of any claim on the Company.

NOTE₇ INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

In accordance with the Financial Reporting Council's strategic directive, the Company is 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, this is the Company's first half-year report prepared under A-IFRS.

DIRECTORS DECLARATION the contract of the contract of the contract of

The directors of the company declare that:

• $\mathbf{1}$ . the accompanying financial statements and notes:
• (a) comply with Accounting Standard AASB 134 : 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 2005 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:

Roger M Thomson Director

Dated this 16th day of March 2006.

INDEPENDENT REVIEW REFORT TO THE MEMBERS OF IMAGE RESOURCES NL Manazarta (1999), martin a shekara 1999) a shekara 1999 da shekara 1999 da shekara 1999 da shekara 1999 da sh

SomesondCooke

Scope

The financial report and directors' responsibility

The financial report comprises the income statement, balance sheet, statement of changes in equity, 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 2005.

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 134 "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 134 "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 2005 and ì. of its performance for the period ended on that date; and
• Ħ complying with Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Somes and Cooke

KC Somes Portner 16 March 2006