IMAGE RESOURCES NL — Interim / Quarterly Report 2007

Jan 29, 2007

QUARTERLY REPORT

For the Quarter Ended 31 December 2006

HIGHLIGHTS

• Drilling confirms the presence of multiple, thick mineralised channels in the eastern part of the Cooljarloo heavy minerals project.
• The number of Cooljarloo shallow strand targets greatly increased from 2 to 16 totalling 45km and deeper channel targets from 4 to 20 totalling 50km, providing some 95km of target strike length for drill testing. Drilling is currently in progress.
• Image triples its North Perth Basin holdings to 1,660sq km to cover new Mesozoic heavy mineral targets, following its exploration success at Cooljarloo.
• Drilling commences on shallow high-grade heavy mineral targets at $\bullet$ Image's 100%-owned Cooljarloo North project.
• Farm out of ten 100%-owned Image exploration licences prospective for nickel sulphides to Mincor Resources at Kambalda West.
• Farm out of three 100%-owned Image exploration licences prospective for gold to Meteoric Resources.
• Progress with the spin out of Magnetic Resources with free bonus shares planned for Image shareholders.

COOLJARLOO (Image earning 70%)

The remaining results from the aircore drilling programme completed in the September 2006 quarter confirmed that a further 19 drill holes intersected substantial heavy mineral intervals ranging from 20m to 67m in thickness, bringing the total number of thick channel intersections to 28 (ASX release 30 November 2006). These new intersections continue to confirm the presence of deep, thick channels in the eastern part of the Cooliarloo project area and points to another three channel target zones extending more than 10km in length. The channel targets are defined by some limited historical drilling and significantly, by distinctive ground magnetic signatures. Significant new intersections from the recent programme include:

Hole 907		66m @ 2.1% HM from 14m
Hole 908		67m @ 2.1% HM from 14m
Hole 927.		54m @ 1.7% HM from 14m
Hole 929		30m @ 2.1% HM from 18m including 16m @ 2.9% HM from 18m
Hole 930.		28m @ 2.5% HM from 38m
Hole 931		67m @ 1.9% HM from 14m including 26m @ 2.2% HM from 16m
Hole 914		67m @ 1.6% HM from 14m including 20m @ 2.1% HM from 16m
Hole 915		67m @ 2.1% HM from 14m including 22m @ 3.0% HM from 54m
Hole 916.		54m @ 1.4% HM from 16m
Hole 709.		46m @ 2.8% HM from 12m
	Hole 755	45m @ 1.5% HM from 36m
Hole 748		67m $@$ 1.5% HM from 14m including 15m $@$ 2.3% HM from 14m
Hole 747		66m @ 1.4% HM from 14m including 20m @ 1.8% HM from 60m
Hole 932		27m @ 1.2% HM from 56m
Hole 788		48m @ 1.7% HM from 30m
Hole 799		14m $@$ 5.3% HM from 2m including 4m $@$ 13.0% HM from 2m

Results from the recent drilling programme are shown in Table 1 indicating that at least four main channels (termed A, B, C and D) have been identified. Drilling to date has been confined to pastoral land within exploration licence E70/2636 - see Figures 1 to 4. The adiacent exploration licence E70/2898, which covers vacant crown land. has now been granted and, subject to environmental permitting, will allow Image to drill test the three high priority channel target zones referred to above.

One of the channel target zones is interpreted to be the extension of channels A. B and C in the southeast part of the tenement where these channels appear to merge. Historical drilling has confirmed at least four channels in this part of the tenement. including the merged A, B and C channels, with a best intersection of 30m @ 6.6% HM from 39m on the eastern margin. The ground magnetics in the southeast part of the joint venture area show channels A, B and C as merging into two broad features about 350m and 250m in width respectively and with an average ground magnetic amplitude approximately 1.5 times the amplitude of the channels drilled to the north, indicating a potential for higher average grades.

The two other large channel target zones which have been defined by limited historical drilling and by ground magnetics are 2.3km long and 0.6km wide and 2km long and 0.5km wide respectively with strong average amplitudes of 1.5 times the amplitude of the channels drilled to the north. These channels have superimposed shallow, higher amplitude strand-like magnetic targets, which will also be drill tested. The combination of both of these mineralisation styles make these channels very attractive drilling targets.

Hole No		Collar Coordinates	From	To	Interval	HM Grade
	E	N	m	m	m	$\%$
709	340260	6620620	12	58	46	2.8
725	341354	6619426	20	32	12	3.6
746	340865	6620100	14	20	6	4.1
747	340830	6620100	14	80	66	1.4
		including	60	80	20	1.8
748	340800	6620100	14	81	67	1.5
		including	14	29	15	2.3
755	340760	6620500	36	81	45	1.5
788	338745	6620800	30	78	48	1.7
799	338595	6619400	$\overline{\mathbf{c}}$	16	14	5.3
		including	$\overline{2}$	6	4	13.0
801	338545	6619400	8	16	8	3.3
907	340470	6620745	14	80	66	2.1
908	340510	6620750	14	81	67	2.1
914	340580	6620660	14	81	67	1.6
		including	16	36	20	1.6
915	340620	6620645	14	81	67	2.1
		including	54	76	22	3.0
916	340660	6620640	16	70	54	1.4
927	340412	6620821	14	68	54	1.7
929	340398	6620784	18	48	30	2.1
		including	18	34	16	2.9
930	340379	6620710	38	66	28	2.5
931	340360	6620675	14	81	67	1.9
		including	16	42	26	2.2
932	340910	6619825	56	83	27	1.2

Table 1 Cooliarloo Aircore Drilling Results

2m samples. HM determination by TBE heavy liquid separation

Significantly, 15 holes from the September quarter drilling programme ended in deep, thick mineralisation which is believed to be substantially thicker than the deposits being dredged at the nearby world-class Cooljarloo Mine some 3km south of the southern boundary of the project area. The Cooljarloo Mine is a major dredging operation with an average grade of approximately 2.3% HM which is similar to the grades being encountered in the Cooliarloo channels.

Ongoing interpretation of detailed ground magnetics, together with the results of both recent and historical drilling, has identified several more potential HM channels and strands within the Cooliarloo project (ASX release 21 December 2006). The number of channel targets has increased from four totalling 7km in length to 20 channels totalling 50km in length. The number of interpreted strand lines has increased from the two previously reported resources (the 35 AHD and 28000 strands) totalling 8km in length to 16 strands totalling 45km, a total of some 95km of target strike length see Figure 5.

To date, drilling by Image has been carried out over a 3.7km length of the 35AHD and 28000 shallow high-grade resource strands, and over a 7km length on the channel targets in the south-eastern part of the Cooljarloo project. This represents only about 10% of the extensive targets outlined to date. A further aircore drilling programme has now commenced aimed at drill testing the bulk of the remaining targets, subject to completion of exploration access agreements. The programme will utilise a larger drilling rig with the capacity to drill to 100m depth into the channels, where previous drilling ended in mineralisation.

Figure 2 Cooljarloo Project - Channel Area - Stacked Sections

Figure 3 Cooljarloo Project - Channel Area - Stacked Sections

Figure 4 Cooljarloo Project - Channel "D" - Stacked Sections

The strand target zones are made up of multiple individual shallow strand targets and have been separated into various groups with high average magnetic amplitudes above 2.5nT, which at the 35AHD and 28000 resource strands has equated to shallow high-grade mineralisation. Limited historical drilling of some of these target strands has confirmed the presence of shallow high-grade heavy mineral (HM) concentrations. It is significant to note that the 25000 and Middle strand resources on the adjacent Tiwest mining area appear to extend into the Cooljarloo project area. A number of lower amplitude targets have also been identified but not shown in Figure 5 map although some of these will be tested in the current programme.

The 16 new channel targets total an additional 43km, 9 of which have stronger average magnetic amplitudes than the channels drilled to date and range from 1.5 times to twice the average amplitude previously drilled. Several of the channels shown in Figure 5 have deep historical drill intersections confirming the current interpretation and auguring well for the new drilling campaign. It is anticipated that expenditure on the current programme will complete Image's 70% earn-in after which each joint venture party contributes its share of expenditure

COOLJARLOO NORTH (Image 100%)

Exploration licence E70/2892 has been granted and Image has signed access agreements with all of the landowners in the project area. In addition to the drill rig at Cooliarloo, a second drill rig is now on site at Cooliarloo North and has commenced drilling on the 12km of targets identified by recent ground magnetic surveys (ASX release 24 October 2006).

NORTH PERTH BASIN PROJECT (Image 100%)

Following its successful heavy mineral exploration at Cooliarloo. Image has extended the scope of its exploration targets to the older basement Mesozoic sediments east of the Gingin Scarp. The thick channel-style mineralisation discovered at Cooljarloo is interpreted to occur within these older sediments beneath the shallow vounder Pleistocene sediments which have been the subject of most of the HM exploration in the North Perth Basin to date.

Image has applied for three large tenements totalling 1100sg km effectively tripling its land position in the North Perth Basin to 1660sq km, as shown in Figure 6, becoming a dominant land holder in the region. The most northern tenement, E70/3092 Cowalla, which extends from just 15km east of the Cooliarloo tenements, contains a prominent interpreted shoreline feature in excess of 40km in length with potential for concentration and exposure of channel-style mineral sands, particularly on the southern end where a number of drainages transect it.

The central tenement, E70/3100 Quinns Hill, covers several interpreted shoreline features totalling over 70km in length, which are parallel to and east of the Gingin Scarp which hosts the major Eneabba, Cooljarloo, Cataby and Gingin HM deposits.

The eastern tenement, E70/3093 Wannamal, covers an interpreted shoreline feature in excess of 30km parallelling the Darling Scarp and adjacent to the ex-BHP Mindarra HM resource that, significantly, occurs within Mesozoic sediments.

Using the experience gained at Cooljarloo, Image plans to carry out reconnaissance ground magnetic surveys in an attempt to identify channel and potential strand-like features within the Mesozoic tenements in the near future and to follow up targets with aircore drilling.

Figure 5 Cooljarloo Project - Ground Magnetic Interpreted Strandlines

Figure 6 Image Tenements North Perth Basin

KAMBALDA WEST (Image 100% diluting)

Image has reached agreement with Kambalda nickel miner Mincor Resources NL for a joint venture on ten granted. 100%-owned Image tenements in the Nepean district south of Coolgardie and west of Kambalda - see Figure 7.

The tenements were acquired by Image immediately following the release of new state government aeromagnetic data which identified potential for ultramafic rocks prospective for nickel sulphides. In particular, the 725sq km tenement package is considered to have potential for high-grade Nepean-style nickel sulphide mineralisation

Under the terms of the agreement Mincor may earn a 51% interest in the tenements by expenditure of \$750,000 within three years and may elect to increase this by a further 19% interest by expenditure of an additional \$750,000 within a further two vears, i.e. up to 70% for \$1.5million.

Figure 7 Kambalda West Joint Venture Tenements

METEORIC JOINT VENTURE (Image 100% diluting)

Image has concluded an agreement with Meteoric Resources NL for a joint venture on three 100%-owned Image gold projects at Scorpion Well, Top Well and Mt Remarkable in the Eastern Goldfields of WA. Image has carried out preliminary exploration at Scorpion Well, 10km southeast of the +2Moz Centenary gold mines and confirmed the presence of host rocks favourable for Centenary-style gold

mineralisation within a structural corridor passing through the Darlot and Centenary mines.

At Top Well, 85km west of Leonora, and at Mt Remarkable, 80km southwest of Laverton, Image has interpreted aeromagnetic and gravity data to identify potential greenstone sequences below cover and considered to be prospective for gold.

Under the terms of the joint venture Meteoric may earn a 30% interest in 244sq km of granted tenements by expenditure of \$300,000 within two years. Meteoric may then elect to earn a further 21% interest by expenditure of \$200,000 within an additional two vears. Meteoric may make a further election to earn an additional 19% interest by expenditure of another \$200,000 within a further two years i.e. up to a 70% interest by expenditure of \$700,000 within six years.

MT HAYS (Image 90%)

A 10-hole. 300m shallow open hole percussion drilling programme was completed at the Mt Hays gold project situated 65km ENE of Nullagine, WA and along-trend from Wedgetail Mining's 860,000oz Nullagine Gold Project. The drilling tested the extent of shallow mineralisation up dip or adjacent to previous drilling where previously reported gold intercepts include: 2m at 52.1g/t from 92m in MHRC-03: 1m at 8.1g/t from 34m in MHDRB-02 and 2m at 4.0g/t from 33m in MHDRB-06A (ASX Release 5 August 2005).

The recent percussion drilling tested a central 200m-long section within a 650m-long zone of quartz veining and stockworks containing anomalous gold values. Results of the drilling are shown in Table 2, with best gold intercepts of 8m at 4.5g/t from 4m and 4m at 3.0g/t from 8m. Further drilling to follow up these encouraging results is being planned.

Hole No	Collar Coordinates		Azimuth	From	Tо	Interval	Gold Grade
	Е	N		m	m	m	g/t
MHAT 02	61945	86935	161	4	12		4.5
MHAT 04	61809	86949	190	24	28		1.7
MHAT 08	61760	86943	150	24	30		$1.0$ eoh
MHAT 09	61760	86933	142		4		1.5
				12	24	12	0.6
MHAT 10	61766	86927	142	8	12		3.0

Table 2 Mt Hays Drilling Results

4m composite samples, uncut. Dip -60°

Samples analysed using an aqua regia digestion followed by solvent extraction and flame absorption spectrometry.

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 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 of 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.

MINING EXPLORATION ENTITY QUARTERLY REPORT

Name of entity:

Image Resources NL

ABN:			Quarter ended ("current quarter")
	57 063 977 579		31/12/2006
	Consolidated statement of cash flows
		Current quarter	Year to date
	Cash flows related to operating activities	\$AUD'000	$(6$ months) \$AUD'000
1.1	Receipts from product sales and related debtors	29	70.
1.2	Payments for: (a) exploration and evaluation (b) development (c) production	(374)	(802)
	(d) administration	(68)	(250)
1.3 1,4	Dividends received Interest and other items of a similar nature received	65	105
1.5 1.6	Interest and other costs of finance paid Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(348)	(877)
1.8	Cash flows related to investing activities Payment for purchases of: (a) prospects	(40)	(75)
1.9	(b) equity investments (c) other fixed assets Proceeds from sale of:	(21)	(93) (6)
	(a) prospects (b) equity investments (c) other fixed assets	19	19
1.10 1.11 1.12	Loans to other entities Loans repaid by other entities Other (provide details if material)	(33)	(78)
	Net investing cash flows	(75)	(233)
1.13	Total operating and investing cash flows (carried forward) -	(423)	(1, 110)

1.13	Total operating and investing cash flows (brought forward)	(423)	(1, 110)
1.14	Cash flows related to financing activities Proceeds from issues of shares, options,	34	3,337
1.15 1.16 1.17	etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings	$\blacksquare$ $\blacksquare$
1.18 1.19	Dividends paid Other (provide details if material)	(119)
	Net financing cash flows	(85)	3,337
	Net increase (decrease) in cash held	(508)	2,227
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	4,860	2,125
1.22	Cash at end of quarter	4,352	4,352

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	(103).
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

$N/A$

Financing facilities available

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

Estimated cash outflows for next quarter

• $4, 1$ Exploration and evaluation
• $4.2$ Development

Total

\$AUD'000
(350)
m
(350)

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	494	3.027
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (provide details) – Short Term Deposit	3,859	1,833
	Total: cash at end of quarter (item 1.22)	4,353	4.860

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 increased	E70/3092 E70/3093 E70/3086 E77/1212 E70/2827 E70/2849	Application Application Application Granted Granted Granted	0% 0% 0% 100% 100% 100%	100% 100% 100% 100% 100% 100%

		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
7.3	Ordinary securities	74,032,978	74,032,978
7,4	Issued during quarter	135,000		\$0.25	\$0.25
7.5	Convertible debt securities	N/A
7.6	Issued during quarter	$N$ il
7.7	Options			Exercise price	Expiry date
	Non-employee Options	1,850,000 2,000,000 2,000,000 2,500,000	Not Quoted Not Quoted Not Quoted Not Quoted	\$0.335 \$0.39 \$0.37 \$1.80	27.11.2008 26.11.2009 21.11.2010 16.11.2011
	Employee Options	900,000	Not Quoted	\$0.25	4.7.2007
7.8	Issued during quarter	2,500,000	Not Quoted	\$1.80	16.11.2011
7.9	Exercised during quarter	135,000		\$0.25	4.7.2007
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 January 2007