IMAGE RESOURCES NL — Investor Presentation 2014

Feb 5, 2014

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6 February 2014
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MD on NPB Mineral Sands Project

Open Briefing interview with Managing Director Peter Davies

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Image Resources NL Suite 4A 5 Mumford Place Balcatta WA 6021

Image Resources NL (ASX: IMA) is an emerging mineral sands producer with an extensive landholding and an expanding mineral sands resource base in the North Perth Basin of Western Australia.

In this Open Briefing[®] , Peter discusses:

• North Perth Basin Mineral Sands Project feasibility study

• Boonanarring high grade, low risk advantage

• Project Economics

• Funding and Outlook

Record of interview:

openbriefing.com

In November 2013 Image Resources announced details of an update to the Feasibility Study for its 100% owned North Perth Basin (NPB) mineral sands project, situated 90km north of Perth WA, which has a JORC compliant Probable Reserve of 24Mt at 8.2% Heavy Minerals (HM). With first production targeted for Q1 2015. When do you expect to complete funding for the project?

MD Peter Davies

At the moment we are in discussion with parties on sales off-take agreements and debt finance options which we are looking to complete in the March and June quarters this year. Assuming we receive our final Western Australian development approvals and once funding has been secured, we will begin a six month build in the September quarter. So our aim is to tie up all the funding elements of the project before September.

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What do you see as being the major competitive advantages of the NPB Project?

MD Peter Davies

We believe that the NPB Project is ideally suited to a junior company such as Image, making the transition from explorer to producer in a difficult market. There are five main drivers for this: low sovereign risk, location (particularly the fact that all the required infrastructure is already in place), access to a local workforce with extensive mineral sands mining and processing experience, the high grade and in-situ value of the resource and the high quality of the products.

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What is the significance of the project’s particular product grade and quality and how does this impact your confidence regarding the projects economics?

MD Peter Davies

It is a mining industry truism that ‘grade is king’ and in the case of the NPB Project, we have one of the highest value per tonne mineral sands deposits in the world. The JORC Reserve 8.2% heavy minerals (HM) grade is very high; double or triple that of most other projects globally. When companies quote HM grade it can include low value materials such as iron

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sands and garnet. Importantly, the NPB Project valuable heavy minerals content (the content of the ore which represents the saleable products such as ilmenite, leucoxene, rutile and zircon, known as VHM) is 6.5%. Again, this is high relative to other projects. In some sweet spots we have 11.7% HM with a quarter of the assemblage being zircon. It is this unusually high in-situ grade of the highly priced zircon that drives the project’s exceptional economics.

In terms of zircon quality, the test work carried out in December 2013 confirmed that we can produce final products which exceed the requirements for the globally accepted premium grade zircon. In addition, our ilmenites are coarse grained, low in radioactivity levels and other contaminants which can be a concern to downstream users and high in TiO ₂ content. Boonanarring will produce 60% of its ilmenite at 54.5% TiO ₂ , (suitable for a sulphate route pigment plant or slag plant feed) and 40% of its ilmenite at 60%TiO ₂ (suitable as synthetic rutile plant feed or as feedstock for certain chloride route pigment plants).

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As reported in the November investor presentation, what is the distinction between the reported capital cost of $36M, the targeted funding requirement of $60M and maximum negative cash flow of $71M? What number should investors focus on?

MD Peter Davies

The capital cost figure of $36M refers to the cost of the Wet Plant, the Dry Mill and the project infrastructure. It excludes other costs during project development and start-up such as technical studies, land purchase costs, Engineering Procurement and Construction Management (EPCM), indirect costs, mobilisation and pre-strip and owner’s costs.

The maximum negative cash flow of $71M refers to the total amount of money required from the time of securing funding to first positive monthly cash flow. It includes all costs such as working capital during the construction and ramp up periods as well as operating costs until the revenue stream kicks in. We are optimistic that in the course of further design work for the plant that we can further reduce the total funding requirement and have set ourselves the target of bringing the project to the point of first positive monthly cash flow for around $60M.

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What is the targeted average production rate for the NPB Project and how does it compare with other mineral sands projects internationally?

MD Peter Davies

Our targeted average annual production is 34,000 tonnes of zircon, and 89,000 tonnes of ilmenite. That said, in the first two years of production we expect to produce 60,000 tonnes of zircon and 110,000 tonnes of ilmenite annually. This production rate would account for 4.5% of world zircon demand of 1.2-1.3 Mtpa.

For us the key issue is not about scale. We are not going to move the market by bringing this project into production. For Image, it is about the quality of the resource and the strong returns we can make from it, coupled with both the low risk profile and a low funding requirement which looks achievable in this market. Once in production and with good cash flow, we will look at modular expansion into areas in our current tenements which are showing potential to host larger medium grade deposits.

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When do you anticipate finalising sales off-take agreements and will they cover 100% of production?

MD Peter Davies

We are aiming to have most of the off-take agreements in place by the end of the June quarter. The aim is to finalise our off-take agreements at about the same time as project debt is arranged. Commonly, a debt provider wants the comfort of secure take or pay off-

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take arrangements and similarly a product customer wants comfort that the project will be funded. It is unlikely we will need to lock in 100% of the production. Nor would this be realistic or desirable under current market conditions

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In early January 2014 Image announced potential magnetic anomalies to the north of the very high grade Boonanarring deposit. Do you need to do any more resource drilling for the NPB Project and what does the resource base provide in terms of mine life and scale potential?

MD Peter Davies

We have more than sufficient resources at Boonanarring and at the Atlas deposit, 60kms away, to support the strong project economics. At Boonanarring the strike length of the currently defined Ore Reserves is 10.5km and we have now identified a new magnetic feature along strike from Boonanarring to the north. It is still early days, but if this were to ultimately prove to be a resource, then it might allow us to stay in the Boonanarring district for longer and to delay the move to the Atlas deposit which is in the current mining schedule for years six to ten. We have a limited drill programme planned for the January quarter to test the potential for Resource additions in a number of areas. Importantly the area which hosts the NPB Project has been home to great company-making deposits for Iluka and Tiwest (now Tronox). Given our tenements in the region and the results of ground magnetic surveys carried out to date on a broad scale, we see plenty of longer term opportunity for Image.

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What is the major difference between the results released in the Base Case Feasibility Study (BCFS) released in July 2013 and the updated case announced in November 2013?

MD Peter Davies

In essence, the difference is that rather than toll treating our Heavy Mineral Concentrates (HMC) as proposed in the BCFS, we have added a low cost Dry Mill and zircon cleaning circuit to the flow sheet. This means that the operation can be fully independent and produce high quality final products which can be exported anywhere in the world. Together with opportunities which have been identified to significantly reduce the Wet Plant capital costs, the net cost of the additional plant is only about $7M and it will allow us to capture higher margins and improve the project economics from what were already impressive IRRs in the BCFS to now around 90%.

openbriefing.com

What assumptions do you use for zircon and ilmenite prices to arrive at your A$240M project NPV and IRR of 90%?

MD Peter Davies

We assume an exchange rate of US$0.80 – 0.85 and a premium grade zircon price of US$1500/t together with a chloride grade ilmenite price of US$275/t. A large range of zircon and ilmenite products are sold globally, so when you see published forecasts by analysts and commentators you need to compare our price forecasts with the right product suite. We attended the TZMI conference in Hong Kong in November 2013 and although short term zircon pricing forecasts have been lowered, beyond 2015 the price forecast for premium product is still maintained at US$1500/t by most commentators and analysts.

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Image Resources and the mineral sands industry often talk of ”Zircon Inducement Prices”, what does this mean and how does this relate to the NPB Project?

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MD Peter Davies

The Zircon Inducement Price is defined as the zircon price at which a project has an IRR of 15% and is cash generating in each year of operation. It is in essence a “stress test” case illustrating that should prices fall to a certain level, a project could generate a hurdle rate of return. In the case of the NPB Project the inducement price is around $600/t. In other words, the NPB Project would still be cash generative and make a rate of return of 15% if zircon prices fell to $600/t, which is around 50% of the currently depressed prices. I don’t know of too many resource projects, let alone mineral sands projects, in the world that could sustain such a significant fall in prices and still generate a 15% rate of return.

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What is the outlook for mineral sands prices and does this have any impact on your confidence that the NPB Project can be developed successfully ?

MD Peter Davies

We believe the NPB Project returns are compelling and I have every confidence in the NPB project. When it comes to the mineral sands market, most of the commentary and analyst commodity price downgrades have been for synthetic rutile (SR) and rutile. We will not produce SR and will produce only small quantities of rutile. For zircon, which accounts for around 70% of our revenue stream in the first two years, most of the forecasts are for higher longer term prices than we see today. We stress the importance of looking behind the data and distinguishing the relevant product quality and related prices for a specific product under the current market conditions.

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The company had $2.6M in cash at the end of the December quarter. Is there sufficient capital to meet all your current and planned activities?

MD Peter Davies

Current spending is about $200k per month so we have adequate funds to take us through to the end of the project finance negotiations. We do not need to raise money anytime soon to cover our normal running costs. Our plan is that any equity raising would be delayed until progress with project finance and off-take negotiations has resulted in a re-valuation of our share price in order to minimise any associated dilution for current shareholders. Funds required for the next stage of the technical studies and detailed design will be structured as part of the overall project financing package.

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Thank you Peter.

For more information about Image Resources, visit www.imageresources.com.au or call Peter Davies on +61 8 9485 2410.

To receive future Open Briefings by email, visit openbriefing.com

DISCLAIMER: Orient Capital Pty Ltd has taken all reasonable care in publishing the information contained in this Open Briefing®; furthermore, the entirety of this Open Briefing® has been approved for release to the market by the participating company. It is information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Orient Capital Pty Ltd is not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.

Please see Competent Persons Statements following:

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COMPETENT PERSON’S STATEMENT – EXPLORATION RESULTS

The information in this Open Briefing is based on information compiled by Paul Leandri BAppSc who is a member of the Australasian Institute of Mining and Metallurgy. Paul Leandri is an employee of Image Resources NL. He 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 2012 edition of the ‘Australasian Code for 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 Open Briefing.

COMPETENT PERSON’S STATEMENT – TECHNICALSTUDIES

The information in this Open Briefing 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 2012 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 Open Briefing.

COMPETENT PERSON’S STATEMENT – PROJECT EVALUATION

The information in this Open Briefing that relates to project evaluation and financial analysis is based on information compiled by Mr Ray Cary, BSc., who is a Fellow of the Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Geoscientists. Ray Cary is the Director and Principal of Northwind Resources Pty Ltd, a Perth, Western Australia based minerals industry consultancy. Ray Cary has sufficient experience in the technical and economic evaluation of minerals development projects and mining operations which is relevant to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ray Cary consents to the inclusion of this information in the form and context in which it appears in this Open Briefing.

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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