IMAGE RESOURCES NL — Interim / Quarterly Report 2012

Apr 29, 2012

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QUARTERLY REPORT - for the Quarter Ended 31 March 2012

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Image Resources NL ABN 57 063 977 579

HIGHLIGHTS

ASX Code: IMA

Level 2, 16 Ord Street West Perth WA 6005

T +61 8 9485 2410 F +61 8 9485 2840 E info@imageres.com.au

PO Box 644 West Perth WA 6872

Issued Capital : Shares - Quoted: 100,184,817 fully paid ordinary shares

Options - Unquoted: 2,200,000 options exercisable at $2.12 by 20.11.2012 2,345,000 options exercisable at $1.162 by 18.12.2014

95,000 options exercisable at $0.6995 by 21.12.2015 2,600,000 options exercisable at $0.3908 by 27.12.2016

Cash : $2.18 million

NORTH PERTH BASIN

• Mining Lease Application submitted covering Atlas deposit

• Feasibility Study Team has been assembled and work has commenced to determine the project base case

• Image acquires 100% ownership of Regans Ford South tenement, which covers the 9 km strike extent of its 100% owned high zircon grade Boonanarring deposit

• Red Gully assay results encouraging with best intersection is 17m at 12.7%HM from 10m depth, using a 2.5% HM cut-off.

ERAYINA JV (Image 100%, reducing)

• Joint venture partner Integra Mining recently announced encouraging aircore results at Aldiss Project, extending zone at least 3km into Image’s tenement.

Directors:

Peter Thomson Chairman

George Sakalidis Managing Director Roger Thomson Executive Director

CORPORATE

• $1.88 million raising from a share placement.

NORTH PERTH BASIN

Feasibility Study

On 28 February Peter Davies was appointed as Project Manager for the North Perth Basin mineral sands project.

Peter Davies has extensive operational experience in the mineral sands industry including the positions of General Manager Chandala for Tiwest (mineral sands processing and synthetic rutile production) and Director European Operations for Kerr-McGee Chemicals/Tronox (titanium dioxide pigment manufacturing). In addition Peter has held senior staff and/or operational positions with Billiton International/Shell Metals, Dominion Mining, Delta Gold and CSA Global.

A team of independent senior professionals with wide experience in their own specialist fields in the minerals sands industry has been assembled to carry out the project Feasibility Study.

Work has commenced to review the results of the Scoping Study which was completed in August 2011 and to incorporate the more recent exploration results, in order to define the “base case” concepts for the Feasibility Study. The Feasibility Study is scheduled to be completed by 1Q 2013, with the start of production currently scheduled for 2014.

The study team is also considering a fast track/low capital cost approach to production of HMC from the Boonanarring deposit where recent drilling has confirmed both high HM grades and relatively high Zircon content.

Consultants have been appointed to carry out the associated environmental studies and the progress the required project primary approvals. Consultation with the community and other stakeholders has also commenced during the quarter.

Regans Ford South (Image 100%)

In the December 2011 Image earned a 70% interest in exploration licence E70/3041 (Regans Ford South) from Kingsreef Pty Ltd by expenditure and cash payments totalling $300,000 and in this quarter reached agreement with Kingsreef to purchase the remaining 30% interest in the tenement for a consideration of 1 million fully paid Image shares (ASX Release 22 March 2012). E70/3041 covers the extensions north and south of the Boonanarring deposits held on Image’s wholly owned Mining Lease (M70/1194) south of Regans Ford. As previously announced (ASX Release 15 September 2011), Image has identified potential strike extensions to the Boonanarring deposit of up to 7.7km to the north and 2.3km to the south, giving a potential overall strike extent of 12.5km. Importantly, these extensions all fall within the recently acquired Regans Ford tenement. This makes the acquisition of the Regans Ford tenement of significant strategic value to the Company because the Boonanarring HM resource on M70/1194 contains Zircon values averaging 15% of the HM suite, with concentrations up to 70% of the HM suite in some areas (IMA ASX release 15 September 2011).

Drilling on the Northern extensions to Boonanarring was completed in the December Quarter and a further 121 holes totalling 5398m were drilled to test the southern 2.5km extension of Boonanarring. All assay results from the December quarter program and intersections over 5%HM are summarised in Table 1, with more detailed results presented in a release to the ASX on 22 March 2012. Figure 1 shows the drilling results coloured by HM% x thickness (HM m%). Typical cross sections are shown in Figures 2 and 3. Further sampling is being carried out to assess the potential for low grade HM in the overburden to the mineralised horizons with results expected in the June quarter.

All HM samples >2.0% were examined and the mineral content visually estimated. Approximately one third of the samples were estimated to have zircon contents ranging from 15% to 50% of the HM suite, which combined with high HM grades results in unusually high in-ground zircon grades, reminiscent of the high zircon strands at Eneabba. These results

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confirm that the high zircon grades observed at the Boonanarring deposit can be expected to extend into the northern extension.

Whilst further mineral assemblage studies and drilling are required to confirm the zircon grade at Boonanarring and its extensions, these early results are considered to be most encouraging. Image will be targeting the zircon-enhanced eastern side of the Boonanarring trend in its ongoing exploration.

Further drilling has been carried out on the southern strike extension of the Boonanarring resource with laboratory processing of drill samples in progress. In addition, negotiations to gain exploration access to the 3.6km strike extension immediately north of Boonanarring are continuing.

Table 1 Boonanarring North HM intersections 5% HM cut-off

Hole ID	Northing	Easting	From (m)	To (m)	Thick (m)	HM (%)	Slimes (%)	Zircon (Est % of HM)
GG773*	6549530	386907	26	31	5	12.7	12.4	19
GG774*	6549551	386937	29	38	9	17.2	29.3	48
GG783*	6549717	386822	26	33	7	7.8	6.8	6
GG816	6550438	386484	31	35	4	15.1	11.5	26
GG860	6550984	386229	36	41	5	35.3	14.5	37
GG866	6550806	386315	33	39	6	23.4	13.2	50
GG873	6550976	386212	30	35	5	25.8	9.3	14
GG876	6550796	386299	30	35	5	8.5	12.3	15
GG908	6549540	386922	31	35	4	12.0	18.1	36
GG911	6549899	386735	24	30	6	12.5	16.5	9
GG916	6549904	386755	35	39	4	36.8	12.4	51
GG917	6549891	386719	28	31	3	14.2	16.2	2

Notes:

1. • Results previously reported December 2011

2. HM determined by TBE separation at 2.96 SG and expressed as % of total (in-ground) sample

3. Zircon content visually estimated from HM sinks

4. Slimes determined as fraction passing 63 micron

5. Intersections > 30% slimes excluded

At the time of the North Perth Basin Scoping Study (IMA ASX releases 25 August 2011) insufficient drilling had been undertaken to justify Boonanarring being included in the study. However, due to the encouraging exploration results from Boonanarring discussed above, Image will immediately commence technical and environmental studies to evaluate the possibility of developing this high grade, high zircon-content mineralisation in parallel with the planned development of the Atlas deposit west of Badgingarra, which is currently subject to a Feasibility Study.

Subject to the necessary environmental approvals and land access agreements being obtained it is anticipated that Image could be producing heavy minerals concentrate for sale by mid 2014, ahead of commissioning of the planned mineral separation plant (dry mill) and production of finished ilmenite, rutile and zircon products.

The fast tracking of the Boonanarring deposit would position Image to take advantage of the current strong market for both titanium feedstock and zircon products and would generate significantly greater positive cash flow for the company than indicated by the Scoping Study. With a strong technical team already in place for the Atlas Feasibility Study, Image is well placed to progress the necessary studies for this additional short lead time project. Drilling at Boonanarring is continuing and there are indications of further extensions to the identified high grade zones. The Boonanarring target is large (12km in length) as indicated by drilling and geophysical surveys undertaken by Image.

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Figure 1 Boonanarring Drilling Locations

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Figure 2 Boonanarring North Drill Section (Line 4)

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Figure 3 Boonanarring North Drill Section (Line 8)

Red Gully (Image 100%)

In the 2011 Scoping Study Red Gully was identified as a priority deposit and consequently Image initiated a drill program to increase the drill density on the accessible northern half of the deposit (Indicated Resource) to 200m x 20m and compare the Image drilling results to the Iluka results. The first stage of this drilling program was completed in December 2011 with 152 holes drilled for a total of 5539m. During the quarter an additional 27 holes totalling 892m holes were drilled, bringing the total drilling at Red Gully to 179 holes for 6,431m.

All of the HM results from the drilling program have now been received, enabling Image to determine the significance of the infill drilling. Intersections over 5%HM and 3m thickness are summarised in Table 2 and more detailed information is available from ASX Release 18 April 2012. The best intersection is 17m at 12.7%HM from 10m depth, using a 2.5% cut-off and minimum 3m thickness. Figure 4 shows the drilling results coloured by HM% x thickness (HM m%) and a typical section shown in Figure 5.

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The drilling confirms that the deposit extends over the northern half of the granted mining lease with the best grades and thicknesses in the southern 2.5km. The deposit consists of two parallel strands as shown on Figure 4. To the north the eastern strand narrows, but continues to the northern end of the tenement. Mineralisation on three lines was left open due to seasonal agricultural restrictions and is now being delineated by further drilling.

In general the Image HM results correspond well to the Iluka results with only minor variations. Visual examination of the drill sample HM concentrate estimated zircon contents between 1 and 40% of HM, averaging 11%, which correlates well with the 12.4% zircon in the current resource estimate based on Iluka’s mineralogy data. Image will confirm these observations with its own assemblage studies in the coming months. This data will be used to update the Indicated Resource estimate and add confidence to the mining studies being undertaken as part of the North Perth Basin Feasibility Study.

During the quarter Image was successful in negotiating access to the Inferred Resource in the southern half of the tenement where previous drilling indicated that the mineralisation tenor increases At the beginning of April Image began a detailed magnetic survey over this area and Once the magnetic data has been interpreted, the company intends to negotiate drilling access and infill drill this Inferred Resource upgrading it to Indicated status. It is anticipated that the tonnage and grade of this shallow resource will be confirmed by the proposed infill drilling.

Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m	Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m	Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m	Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m	Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m	Table 2 Red Gully Significant Intersections 5%HMcut-off, >=3m
Hole Number	Depth From (m)	Depth To (m)	Thickness (m)	HM (%)	Slimes (%)
RG063 including	10.0	27.0	17.0	12.7	16.2
	14.0	27.0	13.0	15.4	13.1
RG058 including	9.0	27.0	18.0	9.6	16.9
	11.0	25.0	14.0	11.2	16.4
RG103 including	14.0	23.0	9.0	16.1	10.4
	15.0	22.0	7.0	19.8	10.1
RG125 including	14.0	24.0	10.0	13.6	11.3
	14.0	23.0	9.0	14.7	11.7
RG088 including	13.0	25.0	12.0	12.1	12.8
	16.0	23.0	7.0	18.5	11.4
RG113 including	16.0	23.0	7.0	19.0	9.6
	16.0	22.0	6.0	21.4	9.7
RG064 including	12.0	28.0	16.0	9.5	13.6
	16.0	25.0	9.0	13.9	11.6
RG062 including	14.0	26.0	12.0	8.7	13.0
	18.0	26.0	8.0	11.5	10.9
RG054 including	15.0	25.0	10.0	9.3	12.8
	16.0	24.0	8.0	10.8	12.3
RG152 including	20.0	25.0	5.0	16.8	7.8

HM determined by TBE heavy liquid separation nominal 2.96 SG Slimes is fraction less than 63 microns

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Figure 4 Red Gully Drilling Results

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Figure 5 Red Gully Drill Section (Line 31)

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Cooljarloo Project (Image 100%)

During the quarter Image Resources applied for a mining lease over the Atlas Measured and Indicated Resource at its 100%-owned Cooljarloo project in the North Perth Basin, as shown in Figure 6. The application for a mining lease over this resource is a significant milestone in the development of Image’s North Perth Basin assets which are currently in the feasibility study stages.

Drilling on the Atlas South target (E70/3997) which lies along strike of the Atlas deposit immediately to the south on private property (Figure 7) was begun during the Quarter with 176 holes drilled for 3038m. Further drilling is scheduled for May after which Image will be able to assess the significance of the program.

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Figure 6 Atlas Mining Lease Application M70/1305

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Figure 7 Atlas South Drilling

OTHER PROJECTS

Erayinia JV (Image 100%, diluting)

Joint venture operator Integra Mining has reported results of a 156-hole, 8019m aircore drilling programme on the northern of two exploration licences held by Image about 160km southwest of Kalgoorlie. This programme brings the Erayinia JV drilling to 285 holes totalling 13,799m. The tenements form part of Integra’s Aldiss Gold Project where Integra has recently announced encouraging reconnaissance aircore drilling results at Zone A as shown in Figure 8. Significant drilling results are summarised in Table 3.

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Table 3 Aircore Drilling Results – Zone A

Hole Number	Co-ordinates	Co-ordinates	From m	To m	Interval m	Gold g/t
	East	North
SISC 1499	468630	6539278	44	52	8	0.80
SISC 1497	468860	6539511	20	24	4	0.50
SISC 1483	468750	6539840	32	36	4	0.24
SISC 1539	469085	6538377	51	52	1	0.21

Azimuth 045°, dip-60°

The Zone A gold trend extends for at least 3km into Image’s tenements and forms part of a broader zone, the Admiral Trend, extending a further 5km into Integra’s adjacent tenements. The geology comprises a sequence of mafic and andesitic volcanics, sediments and granites below complex regolith cover. Integra is planning a programme of follow up drilling at Zone A and soil sampling of other target areas on the Image tenements.

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Figure 8

Zone A Aircore Drilling Results Overlain on Grey-scale Magnetics (Source: Integra Mining Ltd)

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CORPORATE

During the quarter Image raised $1,888,550 by issuing 5,395,858 shares at 35 cents per share to a combination of sophisticated and professional investors. Following the placement Image had 99,184,817 fully paid shares on issue and will hold cash and liquid assets of approximately $2.8 million after payment of the costs of the placement.

The funds will allow Image to accelerate its Feasibility Study on the North Perth Basin project, particularly on its shallow high grade Atlas discovery and the fast tracking of the Boonanarring deposit. In addition, Image plans to carry out further drilling at Boonanarring with the aim of expanding this zircon-rich deposit which is currently not included in the Feasibility Study resource inventory and further drilling of the southern extension of the Atlas resource.

For more information on the company visit www.imageres.com.au Please direct enquiries to:

Roger Thomson	George Sakalidis
Executive Director	Managing Director
Phone (08) 9485 2410	Phone (08) 9485 2410
Mobile 0419 969 183	Mobile 0411 640 337
Email roger@imageres.com.au	Email george@imageres.com.au

The information in this report that relates to exploration results and mineral resources for the Mineral Sands projects is based on information compiled or reviewed by Paul Leandri BAppSc is a full time employee of Image Resources NL. Paul Leandri 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 Persons as defined in the 2004 edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Paul Leandri consents to the inclusion of this information in the form and context in which it appears in this report.

The information in this report that relates to exploration results for the Erynia JV is based on information compiled by Roger Thomson BSc, ARSM, MAusIMM, who is a Member of the Australian Institute of Geoscientists. Roger Thomson is a Director 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.

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