ApplicationLibraryCaching -> MainPage.xaml
<UserControl x:Class="ApplicationLibraryCaching.MainPage"
xmlns="http://schemas.microsoft.com/winfx/2006/xaml/presentation"
xmlns:x="http://schemas.microsoft.com/winfx/2006/xaml"
xmlns:d="http://schemas.microsoft.com/expression/blend/2008" xmlns:mc="http://schemas.openxmlformats.org/markup-compatibility/2006"
mc:Ignorable="d" d:DesignWidth="640" d:DesignHeight="480">
<Grid x:Name="LayoutRoot" Height="300" Width="640">
<Image Height="55" Margin="150,92,0,0" VerticalAlignment="Top" Source="/AppResources;Component/images/1.jpg" Stretch="None" Width="146" HorizontalAlignment="Left" d:LayoutOverrides="Width"/>
<Image Margin="126,0,0,223" Source="/AppResources;Component/images/3.jpg" Stretch="None" Height="55" VerticalAlignment="Bottom" HorizontalAlignment="Left" Width="146"/>
<Image Height="39" Margin="126,0,0,97" VerticalAlignment="Bottom" Source="/AppResources;Component/images/4.jpg" Stretch="None" HorizontalAlignment="Left" Width="67" d:LayoutOverrides="VerticalAlignment"/>
<Image Margin="233,164,280,64" Source="/AppResources;Component/images/2.jpg" Stretch="None"/>
<Image Margin="395,38,0,79" Source="/AppResources;Component/images/5.jpg" Stretch="None" HorizontalAlignment="Left" Width="71"/>
</Grid>
</UserControl>
Make sure to check "Reduce XAP size by using application library caching" in project property

Here we are referencing image resources which we are going to cache them in browser.
AppResources -> *.jpg
Make sure to set the Build Action to Resource!

AppResources -> AppResources.extmap.xml
<?xml version="1.0"?>
<manifest xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
xmlns:xsd="http://www.w3.org/2001/XMLSchema">
<assembly>
<name>AppResources</name>
<version>1.1.0.0</version>
<publickeytoken>b7738a32bde2be25</publickeytoken>
<relpath>AppResources.dll</relpath>
<extension downloadUri="AppResources.zip" />
</assembly>
</manifest>
Make sure to use [Assembly Name].extmap.xml and Build Action is content and Copy if newer

Everything above is self explanatory only thing not so obvious is how to get public token.
To get public token make sure that the assembly is signed; right click on Silverlight resource project (AppResources) and property:

ApplicationLibraryCaching -> MainPage.xaml
<UserControl x:Class="ApplicationLibraryCaching.MainPage"
xmlns="http://schemas.microsoft.com/winfx/2006/xaml/presentation"
xmlns:x="http://schemas.microsoft.com/winfx/2006/xaml"
xmlns:d="http://schemas.microsoft.com/expression/blend/2008" xmlns:mc="http://schemas.openxmlformats.org/markup-compatibility/2006"
mc:Ignorable="d" d:DesignWidth="640" d:DesignHeight="480">
<Grid x:Name="LayoutRoot" Height="300" Width="640">
<Image Height="55" Margin="150,92,0,0" VerticalAlignment="Top" Source="/AppResources;Component/images/1.jpg" Stretch="None" Width="146" HorizontalAlignment="Left" d:LayoutOverrides="Width"/>
<Image Margin="126,0,0,223" Source="/AppResources;Component/images/3.jpg" Stretch="None" Height="55" VerticalAlignment="Bottom" HorizontalAlignment="Left" Width="146"/>
<Image Height="39" Margin="126,0,0,97" VerticalAlignment="Bottom" Source="/AppResources;Component/images/4.jpg" Stretch="None" HorizontalAlignment="Left" Width="67" d:LayoutOverrides="VerticalAlignment"/>
<Image Margin="233,164,280,64" Source="/AppResources;Component/images/2.jpg" Stretch="None"/>
<Image Margin="395,38,0,79" Source="/AppResources;Component/images/5.jpg" Stretch="None" HorizontalAlignment="Left" Width="71"/>
</Grid>
</UserControl>
Make sure to check "Reduce XAP size by using application library caching" in project property

Here we are referencing image resources which we are going to cache them in browser.
AppResources -> *.jpg
Make sure to set the Build Action to Resource!

AppResources -> AppResources.extmap.xml
<?xml version="1.0"?>
<manifest xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
xmlns:xsd="http://www.w3.org/2001/XMLSchema">
<assembly>
<name>AppResources</name>
<version>1.1.0.0</version>
<publickeytoken>b7738a32bde2be25</publickeytoken>
<relpath>AppResources.dll</relpath>
<extension downloadUri="AppResources.zip" />
</assembly>
</manifest>
Make sure to use [Assembly Name].extmap.xml and Build Action is content and Copy if newer

Everything above is self explanatory only thing not so obvious is how to get public token.
To get public token make sure that the assembly is signed; right click on Silverlight resource project (AppResources) and property:
