IMAGE RESOURCES NL — Interim / Quarterly Report 2013

Oct 30, 2013

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QUARTERLY REPORT - for the Quarter Ended 30 September 2013

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Image Resources NL ABN 57 063 977 579

ASX Code: IMA

Suite 4a, 5 Mumford Place Balcatta WA 6021 T +61 8 9485 2410 F +61 8 9240 7845 www.imageres.com.au PO Box 644 West Perth WA 6872

Issued Capital :

Shares - Quoted: 140,156,193 fully paid ordinary shares

Options - Unquoted: 8.8 Million total

Cash at end of quarter : $2.179M

Directors:

Peter Thomas

HIGHLIGHTS

NORTH PERTH BASIN (NPB)

• Base case feasibility study (BCFS) completed (results released ASX 16 July 2013).

• BCFS recommended various upside options and optimisation studies to be undertaken.

• Work undertaken but not completed in respect of the recommended further studies.

• Project environmental approvals process progressed as planned.

• Ground magnetic surveys progressed in preparation for drilling of priority targets elsewhere in NPB.

Non-executive Chairman

Peter Davies

Managing Director

George Sakalidis Executive Director – Exploration

Investment Highlights

 ‘Pure play’ mineral sands company with tenements only in WA

• Base Case Feasibility Study points to the project having very high project returns and rapid payback

• Production could start early 2015 if financed

• Follow up with interested off-take and project funding partners were progressed.

CORPORATE

• Cash position of $2.179M at end September is sufficient for 12 months of activities at the current expenditure levels.

• Additional ~$1M expected to be received during the December quarter through return of bonds and R&D rebate.

• Head Office relocated from West Perth to Balcatta, and staffing numbers reduced to conserve cash.

• Projected production of 180kt/year high quality products including over 50kt Zircon in the first two years

• Experienced mineral sands project team established

NORTH PERTH BASIN

The Base Case Feasibility Study clearly demonstrated the attractiveness of the project, coupled with low technical, infrastructure and sovereign risks. The project economics are robust, even under very low pricing environments.

Discussions progressed with interested parties for project finance and off-take continued, with the ambition of progressing towards first production in early 2015.

Work on optimisation studies as proposed by the BCFS were initiated but not completed during the quarter.

Work planned for the December Quarter

Work is continuing on the approvals front progressing towards the five week public review period for the PER, planned for November and December

Subject to securing initial project funding, activities may be carried out to include:

• Further process testwork to progress the Low Cost Dry Mill concept

• Continuation of capital cost reduction initiatives

• Continuation of overall project optimisation studies

• Continuation of land access discussions at Boonanarring and Atlas

• Further discussions with potential offtake partners for Ilmenite and Zircon products.

Ground magnetic surveys to test remaining prospective areas will be completed and steps taken to either drill high priority targets or drop ground with low prospectivity..

DIVESTMENT OF NON-CORE ASSETS

During the Quarter, Image continued to rationalise non-core assets, including surrender or reduction in area of some tenements and conversion of other tenements to retention licences.

Ground magnetic surveys are in progress to enable Image either to identify drill targets with high potential or to further reduce tenement holding costs by dropping areas which are demonstrated to have limited prospectivity.

CORPORATE

No equity funds were raised during the quarter. Image has 140,156,193 fully paid shares on issue.

The Board continues to look for suitable NED candidates to broaden and strengthen

the composition of the Board.

Expenditure remains under constant review and is being deferred to the maximum extent possible pending finance.

For more information on the company visit www.imageres.com.au

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Please direct enquiries to: Peter Davies Managing Director Phone (08) 9485 2410 Mob: 0409 296 676

George Sakalidis Executive Director Exploration Phone (08) 9485 2410 Mob: 0411 640 337

COMPETENT PERSON’S STATEMENT – TECHNICALSTUDIES

The information in this presentation that relates to technical studies is based on information compiled by Peter Davies BSc Eng (Hons) ARSM, C.Eng. MIMMM, MAICD, FAusIMM, FRSA, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Peter Davies is Managing Director/Project Manager of Image Resources NL. Peter Davies 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 for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Peter Davies consents to the inclusion of this information in the form and context in which it appears in this report.

FORWARD LOOKING STATEMENTS

Certain statements made during or in connection with this communication, including, without limitation, those concerning the economic outlook for the mining industry, expectations regarding prices, exploration or development costs and other operating results, growth prospects and the outlook of Image’s operations contain or comprise certain forward looking statements regarding Image’s operations, economic performance and financial condition. Although Image believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct.

Accordingly, results could differ materially from those set out in the forward looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes that could result from future acquisitions of new exploration properties, the risks and hazards inherent in the mining business (including industrial accidents, environmental hazards or geologically related conditions), changes in the regulatory environment and other government actions, risks inherent in the ownership, exploration and operation of or investment in mining properties, fluctuations in prices and exchange rates and business and operations risks management, as well as generally those additional factors set forth in our periodic filings with ASX. Image undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events.

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Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

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Name of entity
IMAGE RESOURCES NL
ABN Quarter ended (“current quarter”)
57 063 977 579 30/9/2013
Consolidated statement of cash flows
Year to date
Current quarter
Cash flows related to operating activities (3.months)
$A’000
$A’000
1.1 Receipts from product sales and related debtors 51 51
1.2 Payments for
(a) exploration & evaluation (787) (787)
(b) development
(c) production
(d) administration (271) (271)
1.3 Dividends received
1.4 Interest and other items of a similar nature received 27 27
1.5 Interest and other costs of finance paid
1.6 Income taxes paid/R&D refund received
1.7 Other (provide details if material)
Net operating cash flows (980) (980)
Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects (1) (1)
(b) equity investments
(c) other fixed assets
1.9 Proceeds from sale of:
(a) prospects
(b) equity investments
(c) other fixed assets
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Other (provide details if material) – bond security
(16) (16)
deposits
Net investing cash flows (17) (17)
1.13 Total operating and investing cash flows (carried
(997) (997)
forward)
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• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(997)	(997)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) – share issue expenses Net financing cash flows	- -	- -
	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(997) 3,176 -	(997) 3,176 -
	2,179	2,179

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000 137
1.25	Explanation necessaryforanunderstanding ofthe transactions

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 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

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements–bankguarantees	Amount available $A’000	Amount used $A’000
	-	-
	264	264

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	597
	-
	-
	238
Total	835

Reconciliation of cash

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 $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	168	868
	2,011	2,308
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	2,179	3,176

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	P70/1521 E28/2207 E69/2033 E70/4176 E70/4472 E70/3999 E70/4000 E70/4001	Relinquished Relinquished Relinquished Relinquished Relinquished Relinquished Relinquished Relinquished	100% 100% 100% 100% 100% 100% 100% 100%	0% 0% 0% 0% 0% 0% 0% 0%
	R69/001	Application	0%	100%

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (seenote 3)	Amount paid up per security (seenote 3)
7.1 Preference+securities (description) 7.2 Changes during quarter:	N/A
(a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary securities Fully paid 7.4 Changes during quarter:
	140,156,193	140,156,193
(a) Increases through issues	-	-
(b) Decreases through returns of capital, buy-backs
7.5 +Convertible debt securities (description) 7.6 Changes during quarter:	N/A
(a) Increases through issues
(b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) Over fully paid shares Over fully paid shares Over fully paid shares Over fully paid shares Over fully paid shares Over fully paid shares 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter			Exercise price	Expiry date
	2,345,000	Not quoted	$1.1162	18/12/2014
	95,000	Not quoted	$0.6995	21/12/2015
	2,600,000	Not quoted	$0.3908	27/12/2016
	1,250,000	Not quoted	$0.50	1/6/2015
	1,250,000	Not quoted	$0.70	1/6/2016
	1,250,000	Not quoted	$1.00	1/6/2016
	N/A
	N/A
	N/A
7.11 Debentures (totals only)	N/A
7.12 Unsecured notes(totals only)	N/A

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

1. This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

2. This statement does give a true and fair view of the matters disclosed.

Sign here: ..................... ....................................... Date: 31 October 2013 Print name: Dennis Wilkins (Company Secretary)

Notes:

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3. Issued and quoted securities

The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

1. The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

2. Accounting Standards

3. ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

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