IMAGE RESOURCES NL — Capital/Financing Update 2011

Apr 19, 2011

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

ABN 57 063 977 579

ASX Release ASX Code: IMA 20 April 2011

Atlas Resource:

High Zircon Content (up to 20%) in Southern 2.5km

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HIGHLIGHTS

• Identification of zircon concentrations up to 20% of HM in southern 2.5km of Atlas, corresponding to high HM grade zones averaging over 10% HM.

• Overall HM grade increase from 7.4% HM to 7.8% HM with the Measured Resource grading 8.3% HM.

• Updated Measured plus Indicated Resource estimate for Atlas of 10.8 million tonnes @ 7.8% HM, containing 10.7% zircon and 55.8% ilmenite.

• Increasing titanium and zircon product prices with predictions of sulphate ilmenite at $US180 - 200 per tonne and zircon at US$2000/tonne by end of 2011.

Atlas Mineralogy Update

In October 2010 Image announced the upgrade of the majority of the Atlas JORC compliant resources to Measured classification. At the time there was insufficient mineralogical data to update the Atlas mineral assemblage. Subsequently Image has analysed a further 47 Heavy Mineral (HM) composites using QEMSCAN techniques increasing the number of mineral assemblage composites to 81 samples. This data has been combined with the October resource model to produce an updated Measured and Indicated Resource for the Atlas deposit. The HM component of this resource estimate is tabulated at various cut-off grades in Table 1, with the mineral assemblages at the same cut-offs shown in Table 2.

Figure 1 shows the zircon distribution over the deposit compared to the HM distribution at the same scale. This highlights a zone of + 10% zircon content correlating with higher HM grades in the southern 2.5km of the Atlas deposit. Image expects that this will have significant economic implications for the exploitation of the deposit, allowing the scheduling of high value ore at the start of mining. This zonation is very apparent south of the 6,190,000m northing where zircon contents increase from 10% to 20% zircon. This trend of increasing zircon content to the south is encouraging for Image’s 100% owned Munbinia tenement where a potential 3.5km southern extension of the Atlas mineralisation has been identified from magnetic surveys (see ASX release 1 March 2011).

Mineral Quality

Metallurgical testwork on a series of bulk samples from the deposit has been undertaken and results indicate that approximately 65% of the Ilmenite product may be suitable as synthetic rutile (SR) feed with TiO2 contents of between 58% and 62%, FeO averaging 6.5% (all <10% FeO). Combined U + Th average a low 145ppm and other minor elements are generally well below the minimum required levels for both SR feed and chloride route Ilmenite, indicating the likelihood of a high quality product.

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Figure 1 Comparison of Zircon Grades and HM Grades

The QEMSCAN testwork shows that the majority of the ilmenite (90%-97%) contains greater than 56% TiO2. Grain coatings on the TiO2 minerals and zircon are minor, with 98% of the TiO2 minerals classified as clean. Grain size analysis shows that 50% of the HM grains have a diameter of greater than 163 microns, which is typical of coarse grained North Perth Basin strand HM.

Significant Increase in Product Prices

Recent market research released by Goldman-Sachs and TZMI has predicted greater increases in zircon and sulphate ilmenite prices than those forecast in Image’s December Quarterly Report, leading Image to revise its product pricing. In the short term TZMI is reportedly predicting zircon prices to reach US$2000/t by the end of 2011 and to maintain this level to at least 2015. Table 3 shows the product pricing that Image believes is now justified based on this new data.

Table 3 Forecast Product Pricing 2009 – 2014 (US$/t)

Product	2010	2011	2014
Zircon	850	1500	>2000
Rutile	600	820	>950
Chloride Ilmenite	110	180	190
Sulphate Ilmenite	110	180	200

The increased predicted sulphate ilmenite pricing is significant in the context of Image’s Atlas deposit, where approximately 35% of the ilmenite is likely to be sold to this market. It is also significant for other Image deposits such as Bidaminna which is primarily a sulphate ilmenite deposit.

Resource Estimate

The mineral assemblage results show that a small zone included in the October resource estimate contained significantly higher levels of iron-oxides than had been expected and therefore this zone has been excluded from the updated estimate, reducing the overall resource by 1.4Mt to 10.8Mt and increasing the grade from 7.4% HM to 7.8% HM containing 844,000t of HM at 10.7% zircon, 7.0% rutile and 55.8% ilmenite using a 2.5% HM cut-off. The Measured Resource is similarly affected at 9.7 Mt @ 8.3% HM, containing 810,000 t of HM at 10.9% zircon, 7.1% rutile and 55.5% ilmenite. The reconciliation between the October and April resource estimates is attached as Appendix 1.

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 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 2004 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 report.

Table 1 Atlas HM Resource 18 April 2011

Category	HM Cut-	Volume	Tonnes	HM	HM	Slimes	OS
	off			%	Tonnes	%	%
Indicated	5.0	4,900	9,800	5.6	500	15.7	10.2
Indicated	4.0	40,000	80,000	4.4	3,600	16.0	5.4
Indicated	3.0	309,000	635,000	3.5	22,000	19.0	4.1
Indicated	2.5	524,000	1,079,000	3.2	34,000	19.2	3.8
Indicated	2.0	807,000	1,663,000	2.9	48,000	19.4	3.4
Indicated	1.5	1,050,000	2,140,000	2.6	56,000	19.1	3.5
Indicated	1.0	1,240,000	2,530,000	2.4	61,000	18.9	3.3
Measured	5.0	2,980,000	6,120,000	11.0	670,000	16.2	4.0
Measured	4.0	3,660,000	7,460,000	9.8	730,000	15.8	4.2
Measured	3.0	4,410,000	8,930,000	8.8	790,000	15.5	4.4
Measured	2.5	4,800,000	9,700,000	8.3	810,000	15.3	4.5
Measured	2.0	5,300,000	10,700,000	7.7	830,000	15.2	4.7
Measured	1.5	6,400,000	12,800,000	6.8	860,000	15.0	5.1
Measured	1.0	9,100,000	17,900,000	5.2	930,000	14.5	5.5
Total	5.0	2,980,000	6,130,000	11.0	671,000	16.2	4.0
Total	4.0	3,700,000	7,540,000	9.8	734,000	15.8	4.2
Total	3.0	4,720,000	9,560,000	8.4	812,000	15.7	4.4
Total	2.5	5,300,000	10,800,000	7.8	844,000	15.7	4.4
Total	2.0	6,100,000	12,400,000	7.1	878,000	15.8	4.5
Total	1.5	7,400,000	14,900,000	6.2	916,000	15.6	4.9
Total	1.0	10,300,000	20,500,000	4.8	991,000	15.1	5.3

Slimes: minus 63 micron fraction OS: oversize, plus 1mm fraction

Table 2 Atlas Mineral Assemblage by Grade Cut-off

Category	HM	HM	Zircon	Ilmenite	HiTi	Leucoxene	Rutile	Garnet
	Cut-off	Tonnes	(% of HM)	(% of HM)	(% of HM)	(% of HM)	(% of HM)	(% of HM)
Indicated	5.0	500	7.8	65.3	3.5	2.3	4.9	2.3
Indicated	4.0	3,600	6.9	62.4	3.2	1.7	6.0	3.2
Indicated	3.0	22,000	6.9	63.8	3.6	1.3	6.6	3.7
Indicated	2.5	34,000	6.8	63.8	3.6	1.3	6.7	3.7
Indicated	2.0	48,000	6.8	63.6	3.6	1.3	6.7	3.7
Indicated	1.5	56,000	6.8	63.7	3.6	1.3	6.7	3.7
Indicated	1.0	61,000	6.9	63.8	3.6	1.3	6.7	3.7
Measured	5.0	670,000	11.1	55.5	2.9	1.0	7.0	4.8
Measured	4.0	730,000	11.0	55.5	3.0	1.0	7.0	4.8
Measured	3.0	790,000	10.9	55.5	3.0	1.0	7.1	4.8
Measured	2.5	810,000	10.9	55.5	3.0	1.1	7.1	4.7
Measured	2.0	830,000	10.8	55.5	3.0	1.1	7.1	4.7
Measured	1.5	860,000	10.8	55.5	3.1	1.1	7.0	4.6
Measured	1.0	930,000	10.9	55.5	3.1	1.2	7.0	4.4
Total	5.0	671,000	11.2	55.5	2.9	1.0	7.0	4.8
Total	4.0	734,000	11.0	55.5	3.0	1.0	7.0	4.8
Total	3.0	812,000	10.8	55.7	3.0	1.0	7.1	4.7
Total	2.5	844,000	10.7	55.8	3.0	1.1	7.0	4.7
Total	2.0	878,000	10.6	56.0	3.0	1.1	7.0	4.6
Total	1.5	916,000	10.6	56.0	3.1	1.1	7.0	4.5
Total	1.0	991,000	10.6	56.0	3.2	1.2	7.0	4.3

Appendix 1 Resource Reconciliation October 2010 to April 2011 Resource Estimates

October 2010 Resource	October 2010 Resource	October 2010 Resource	October 2010 Resource	October 2010 Resource	October 2010 Resource	October 2010 Resource
Category	HM Cutoff	Tonnes	HM	HM Tonnes	Slimes	OS
Indicated	2.50	1,097,000	3.2	35,200	19.2	4.1
Measured	2.50	11,058,000	7.8	859,900	15.7	5.0
Total	2.50	12,155,000	7.4	895,000	16.0	5.0

Zone 109 Resource

Category	HM Cutoff	Tonnes	HM	HM Tonnes	Slimes	OS
Indicated	2.50	19,000	3.8	700	18.3	21.3
Measured	2.50	1,357,000	3.9	54,000	18.4	8.6
Total	2.50	1,376,000	3.9	54,700	18.4	9.0

October 2010 Less Zone 109

Category	HM Cutoff	Tonnes	HM	HM Tonnes	Slimes	OS
Indicated	2.50	1,078,000	3.2	35,000	19.2	3.8
Measured	2.50	9,700,000	8.4	810,000	15.3	4.5
Total	2.50	10,779,000	7.8	845,000	15.7	4.4

April 2011 Resource

Category	HM Cutoff	Tonnes	HM	HM Tonnes	Slimes	OS
Indicated	2.50	1,079,000	3.2	34,000	19.2	3.8
Measured	2.50	9,697,000	8.3	810,000	15.3	4.5
Total	2.50	10,776,000	7.8	844,000	15.7	4.4

Note: Discrepancy in tonnages due to rounding of significant figures.