IMAGE RESOURCES NL — Interim / Quarterly Report 2011

Jul 28, 2011

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QUARTERLY REPORT - for the Quarter Ended 30 June 2011

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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 – All ordinary fully paid: 88,388,959 – Quoted 1,200,000 - Unquoted

Options – All Unquoted: 2,500,000 options exercisable at $1.80 by 16.11.2011 2,200,000 options exercisable at $2.12 by 20.11.2012 2,500,000 options exercisable at $1.50 by 19.11.2011 2,345,000 options exercisable at $1.12 by 18.12.2014 95,000 options exercisable at $0.6995 by 21.12.2015

Cash : $2.9 million

NORTH PERTH BASIN

• 240% increase to Gingin South resources to 492,000t of contained heavy minerals.

• Expansion of Gingin South resource to 5.5km length.

• Identification of significant strand intersections at Chandala North 2.5km south of Gingin South. Best grades 15m @ 11.1% HM from surface and 4m @ 24.0% HM from 30m (2.5% cut-off).

• Image interest in the prospective Chandala JV tenement increased to 80%.

• HM Analysis of Rhea and Middle Strand deposits completed with best intersections of 5m at 10.8% HM from 5m in drill hole RH272 and 2m at 34.8% HM from 6m in RH319.

• Two senior consultants with significant mineral sands experience appointed to provide impetus to the commercialisation of the North Perth Basin Project.

• Scoping Study commenced in order to fast track a financial analysis of Image’s North Perth Basin heavy mineral deposits.

EUCLA BASIN

• 22km of geophysical targets identified along strike from Cyclone Extended.

• 8,000m aircore drilling programme to test these targets scheduled to commence in August.

Directors: Peter Thomson Chairman George Sakalidis Managing Director Roger Thomson Executive Director

NORTH PERTH BASIN

Gingin (Image 100%)

Image identified high grade HM mineralisation immediately south of the Gingin South HM deposit in 2010 and subsequently infilled it to a 100m x 20m drill spacing in early 2011. During the quarter an interim resource estimate was estimated based on a 200m x 20m drill spacing. This interim estimate of Indicated and Inferred Resources for the Gingin South extension totals 5.2Mt @ 6.6% HM, containing 348,000t of HM at a 2.5% HM cut-off. Table 1 summarises the resource status and Table 2 shows the corresponding mineral content.

Table 1 Gingin South Extension Resource 18 July 2011

Classification	Volume (cu m)	Tonnes	HM (%)	HM Tonnes	Slimes (%)	OS (%)
Indicated	2,502,000	4,499,000	6.7	300,000	6.7	11.0
Inferred	398,000	733,000	6.5	48,000	8.4	8.8
TOTAL	2,900,000	5,232,000	6.6	348,000	6.9	10.7

1. 5% HM cut-off Slimes: minus 63micron fraction OS: oversize, plus 1mm fraction

Table 2 Gingin South Extension, % Mineral Content of HM

Classification	HM Tonnes	Ilmenite	Leucoxene	Rutile	Zircon	VHM Total
Indicated	300,000	70.1	9.0	5.1	8.2	92.3
Inferred	48,000	67.4	7.5	5.8	10.9	91.6
TOTAL	348,000	69.7	8.8	5.2	8.5	92.2

This new resource is situated immediately south of and contiguous with the HM deposit within mining lease M70/448 acquired from Iluka Resources Limited in March 2011, as shown in Figure 1. The new extension has increased the total deposit length to 5.5 km, with widths varying between 40m and 250m and averaging 120m. The resource was released to the market on 21 July with a detailed description of criteria and parameters.

Using drilling and mineralogical data supplied by Iluka on mining lease M70/448, Image estimated a total Measured and Indicated resource at a 2.5% HM cut-off of 2.8Mt at 5.1% HM, containing 144,000t of HM (refer IMA ASX Release 9 March 2011). Together with the southern extension, the overall Gingin South resource has increased to 8.08Mt @ 6.1% HM, segregated into Measured, Indicated and Inferred categories, as shown in Table 3.

Table 3 Overall Gingin South HM Resource 18 July 2011

Classification	HM Cutoff	Volume	Tonnes	HM	Slimes	HM Tonnes
Measured	2.5	873,000	1,526,000	4.4	7.2	67,000
Indicated	2.5	3,242,000	5,820,000	6.5	7.1	377,000
Inferred	2.5	398,000	733,000	6.5	8.4	48,000
TOTAL	2.5	4,513,000	8,079,000	6.1	7.3	492,000

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Figure 1 Gingin South and Gingin South Extension

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Chandala (Image 80%)

During the quarter Image met the expenditure level required to obtain a further 20% interest in the Chandala Project tenement E70/2742 and has had this recognised by its JV partner, bringing total Image interest in this tenement to 80%. Negotiations are in train with the JV Partner, Derby Mines Pty Ltd, to formalise a contributing JV or purchase the remaining 20%.

Assay results received during the quarter identified a significant strand intersection on the Chandala North target area situated 2.5km south and along strike from the Gingin South resource (Figure 2). These results confirm field estimates of a high grade deposit with intercepts up to 15m @ 11.1% HM from surface and 4m @ 24.0% HM from 30m (2.5% cut-off). Significant intercepts are summarised in Table 4 and drill hole locations shown on Figure 2. A drill section is shown in Figure 3, illustrating the mineralisation outlined to date. Two strand levels have been identified in this section, an upper strand at 74m RL, which contains high grades and outcrops at the surface and a westerly dipping strand at 65m RL, also containing a >10% HM core. These strands are present in drilling to the north and south of this section, giving a total inferred strike length of 2.3km and leaving the mineralisation open to both the north and south. Image is planning to infill the Chandala North mineralisation to 100m x 20m drill spacing to allow estimation of Measured resources as part of its 4[th] quarter drilling program.

Table 4 Chandala North Drilling Results (2.5% HM cut-off)

Hole Number	MGA East	MGA North	From m	To m	Interval m	HM %
GG455	401493	6517442	30	32	2	8.9
GG456	401465	6517442	30	34	4	24.0
GG457	401435	6517442	31	35	4	6.3
GG466	401277	6518223	0	6	6	4.2
GG467	401263	6518214	0	11	11	10.3
		including	5	11	6	14.1
GG468	401246	6518211	0	15	15	11.1
		including	8	12	4	18.2
GG469	401231	6518203	0	11	11	9.6
		including	4	11	7	11.8
GG470	401214	6518199	0	12	12	8.1
GG471	401196	6518205	0	8	8	4.9
		including	16	19	3	25.9
GG472	401178	6518211	0	5	5	3.0
GG473	401161	6518204	18	22	4	9.2
GG474	401143	6518212	23	26	3	22.0
GG475	401124	6518228	22	27	5	18.1
GG476	401105	6518229	27	29	2	36.7

Notes:

1. All drilling NQ size aircore

2. Samples collected at 1m intervals with ~20% split taken for assay using rotary splitter

3. All samples processed at Western Geolabs Pty Ltd – a mineral sands specialist laboratory, with HM grades determined by TBE heavy liquid separation.

4. All collar located in field using handheld GPS and locations subsequently located with DGPS to +/- -0.1m accuracy

5. Holes drilled at 20m spacing in areas of mineralisation along existing tracks approximately perpendicular to strike

6. Major intersections calculated at 2.5% HM cut-off.

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Figure 2 Gingin to Chandala North Drilling

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Figure 3

Chandala North Cross-section 6518220mN

Cooljarloo (Image 70%)

All analytical results were received from the Rhea resource drilling described in previous releases. The results are encouraging and show the potential for the estimation of resources on two strand lines, the Rhea strand and the Middle strand. Better intersections are shown in Table 5, including 5m at 10.8% HM from 5m in drill hole RH272 and 2m at 34.8% HM from 6m in RH319. Figure 4 shows the location of the drilling.

Table 5 Rhea and Middle Strand Drilling Results

Hole Number	MGA East	MGA North	From m	To m	Interval m	HM %
RH155	340035	6617805	1	3	2	11.2
RH187	339883	6617604	13	16	3	8.3
RH272	339512	6617465	5	10	5	10.8
RH286	339338	6617591	9	11	2	8.5
RH292	339268	6617674	6	8	2	12.5
RH298	339204	6617748	3	7	4	8.1
RH305	339119	6617806	6	9	3	10.3
RH313	339050	6617873	4	6	2	11.0
RH319	338980	6617947	6	8	2	24.8
RH324	338916	6618034	3	7	4	11.5
RH328	338839	6618113	3	6	3	13.4
RH330	338812	6618096	7	9	2	9.1

The Middle Strand main mineralised zone sits at about 50m RL with low grade (2-4% HM) sheet mineralisation 4-6m below it on a clay basement in a similar stratigraphic position to the central mineralisation at Rhea. The main mineralised zone at Middle Strand is 2-6m thick, 20m to 40m wide, continuous over 1100m of strike with between 1m and 6m of cover. HM grades are higher than Rhea with a continuous core greater than 10% HM throughout. The Middle Strand high grade core will be attractive as a potential satellite orebody to Atlas, Hyperion Helene and Rhea.

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The Rhea deposit consists of a narrow upper mineralised zone, 2-4m thick with HM grades up to 11.2% HM and a central zone, 2-10m thick with grades up to 10% HM, but generally between 2- 8% HM. These two zones are separated by between 2m and 4m of barren sand, with the central zone overlying a clay basement of interpreted Mesozoic sediments. The central mineralisation is quite extensive and stretches across the entire drill section overlying a channel of 4-20% slimes cut into the basement clays. This channel contains low levels of HM, but is not as significantly mineralised as the Calypso channel to the north-east.

The water table at Rhea is quite close to the surface, generally between 7m and 10m depth and this, combined with low slimes and moderate HM grades, may make it suitable for a dredging operation. In the meantime further increases in titanium feedstock and zircon prices continue to improve the economic outlook for Image’s North Perth Basin project.

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Figure 4 Rhea Resource Drilling

Bidaminna North (Image 100%)

Drilling completed on E70/2844 during the quarter totalled 39 holes for 2369 m. Drilling was focused on targets to north of Moore River along strike from the exiting Bidaminna deposit. No further significant intersections were encountered before the program was prematurely curtailed due to the rig having to move on to jobs for other clients.

Scoping Study

During the quarter two senior consultants were appointed to the following roles as part of Image’s drive to commercialise its North Perth Basin mineral sand project:

• Mr Per Scrimshaw of Creative Mined Enterprises was appointed Development Manager . Creative Mined Enterprises provides specialist technical support to the mining and civil engineering sectors. Creative Mined Enterprises’ experience covers a wide range of commodities, including extensive project exposure to many of the major mineral sand deposits in the Perth Basin.

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• Mr Alan Luscombe of Lassin Services Pty Ltd was appointed Manager Mineral Process Design . Alan has extensive experience working for RGC Mineral Sands in metallurgical and management positions at both of RGC’s previous east coast and west coast operations, including time as Manager West Coast Operations (Capel and Eneabba) and as Group Mining Manager. More recently Alan has worked as General Manager, Coburn Mineral Sand Project for Gunson Resources, where he has been instrumental in determining metallurgical flowsheets and plant layouts as well as managing the Definitive Feasibility Study for this project.

These appointments were made to significantly strengthen Image’s development team and provide further impetus to Image’s quest to add value for shareholders from its North Perth Basin project. The development team have begun by preparing an economic analysis of Image’s current deposits, including defining new capital estimates, operating costs and using the Nagrom testwork on Atlas to determine likely product recoveries.

EUCLA BASIN (Image 100%)

Wet weather has delayed the start of an 8,000m aircore drilling programme designed to test strike extensions of the Cyclone Extended strandlines. A survey team has completed geophysical traverses across the main target areas and identified 22km of potential strandline targets. The regional stratigraphic drilling approach discussed in previous releases has now been more tightly focussed to concentrate on these targets. Figure 5 shows the identified target areas. The aircore drilling programme is now scheduled to commence in late August.

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Figure 5 Serpentine Lakes Geophysical Targets

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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 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.

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