The reason is simple geometry.
Consider the following image.
![](http://images.tutorvista.com/content/light-reflection/plane-mirrors-inclined-90-image-formation.gif)

Then you can clearly see the image at $O_{3}$ is due to double reflection from mirrors $M'$ and $M$. In general all the images including the object will be on a circle centered around the intersection point between two mirrors.
For two mirrors inclined at $n^{0}$ with respect to each other.The number of images are $\frac{360}{n}-1$.