IMAGE RESOURCES NL — Capital/Financing Update 2011

Dec 18, 2011

ABN 57 063 977 579

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ASX Release 19 December 2011

ASX code: IMA

2[nd] Floor, 16 Ord Street West Perth WA 6005 PO Box 644 West Perth WA 6872 Telephone 08 9485 2410 Facsimile 08 9485 2840 info@imageres.com.au www.imageres.com.au

PRODUCT PRICE INCREASES IMPROVES NORTH PERTH BASIN RETURN

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HIGHLIGHTS

• IRR of 47.7% - 58.6%

• Capital payback within first 13 - 16 months of operation

• Net life of mine cash flow after capital of $280M - $381M

• Capital costs of $84M

Recently announced increases in the prices of both Titanium Dioxide and Zircon mineral sand products (see Iluka Resources Ltd ASX Release 8 December 2011) have significantly improved the expected return from the North Perth Basin Mineral Sand project.

The previously announced scoping study results on this project (see IMA ASX release 25 August 2011) are based on a Wet Concentrator feed rate of 400tph and sequentially mining six of Image’s 100% owned resources to produce some 1,393,000t of ilmenite, 85,000t of rutile, 193,000t of zircon and 93,000t of leucoxene over a twelve year mine life.

A comparison of the effect of the improved market prices is shown in Table 1 which includes both A$0.90 and A$1.00 to the US dollar exchange rates.

Table 1 Updated Project Economics Summary

	Previous Estimate	Previous Estimate	Updated Estimate	Updated Estimate
Exchange Rate (A$:US$) Commodity Prices: ilmenite rutile zircon leucoxene	1.00	0.90	1.00	0.90
	US$200 US$1,350 US$2,240 US$500		US$200 US$2,400 US$2,400 US$500
Life of Mine	12years
NPV@10% discount	$58.8M	$97.6M	$109.3M	$153.7M
AverageInternal Rate of Return	32.1%	42.9%	47.7%	58.6%
Net project cash flow after capital costs	$170M	$259M	$280M	$381M
Total Revenue (life of mine)	$872M	$969M	$992M	$1,102M
Annualaverage operating costs	$44.1M	$44.7M	$44.9M	$45.6M
CapitalCosts	$83.8M
Capitalpaybackperiod	22 months	18months	16months	13months

Assumes 400tph Wet Concentrator Plant and 30tph Mineral Separation Plant

As previously announced, Image has commenced a Feasibility Study on the North Perth Basin project. Environmental consultants have been commissioned to carry out baseline studies and progress the environmental permitting of the Atlas deposit, the first of the resources scheduled to be developed. Field work on the environmental studies is well underway. In addition, bulk samples from the Atlas and Red Gully resources are being collected in preparation for further metallurgical test work to be carried out during the first quarter 2012. This test work is expected to demonstrate that metallurgical recoveries for these resources can be improved.

In the meantime Image is continuing its search for an industry professional to manage this major, company-transforming project.

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

Please direct enquiries to: George Sakalidis Roger Thomson Managing Director Executive Director Phone (08) 9485 2410 Phone (08) 9485 2410 Mob 0411 640 337 Mob 0419 969 183

The information in this report is based on information compiled or reviewed by Alan Luscombe BSc (Hons), who is a Fellow of the Australasian Institute of Mining and Metallurgy. Alan Luscombe is the principal of Lassin Services Pty Ltd, a consultant to Image Resources NL. Alan Luscombe 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’. Alan Luscombe consents to the inclusion of this information in the form and context in which it appears in this report.