Dear Shareholders,

Despite the significant fall in nickel prices and challenging world market conditions, 2008/9 was another strong year for the Company. I would like to thank all of our employees and contractors for the following achievements:

Safety and Environmental Standards

• Continued excellent safety record at the Long Nickel Mine (only 8 Lost Time Injuries since the mine opened in October 2002) and no environmental incidents.

Financial

• Net profit after tax of $16 million (2008: $51 million). Given the fall in average nickel prices from A$31,800/tonne in 2008 to A$17,451/tonne in 2009 this was an outstanding result.
• Cash and net receivables of $141 million (2008: $150 million).
• Fully franked dividends per share of 5 cents (2008: 10 cents).
• Fully franked dividends paid during the year totalled $8.1 million (7 cents per share).

Operations

• Above budget nickel production of 8,779 Ni tonnes (2008: 9,275 Ni tonnes).
• Head grade remained one of the highest of all nickel producers at 4.0% Ni (2008: 3.6%).
• Below budget cash costs of A$3.85/payable pound of nickel (2008: $4.12), the lowest of all mid-sized Australian nickel producers. The mine’s cash costs fell by approximately 7%.

Mine Exploration

• Discovery of the Moran Deposit south of Long, resulting in the announcement of the largest resource and reserve tonnes ever recorded at the mine by the Company.
• McLeay deposit now comprising six separate shoots remains open to the south-east.

Regional Exploration

• An aggressive exploration effort resulting in expenditure of $14 million on regional exploration in 2008/9, including exploration programs at Tropicana.
• Nickel sulphides intersected at Duketon.
• Significant gold mineralisation intersected at Karlawinda.

Tropicana Project

• Completion of a Pre-feasibility Study and commencement of a Bankable Feasibility Study on the Tropicana and Havana Zones which is expected to be completed within the next 12 months. A resource of 5.01Moz gold was released in 2009.
• Continued high-grade intercepts at Tropicana and Havana which remain open down-plunge.
• Significant surface and bedrock mineralisation intersected at a number of Tropicana regional prospects, highlighting the potential for other gold discoveries on the large project area.

2009/10 will be another important year for the growth of the Company. The focus will remain on maintaining our excellent safety and environmental record. We will strive to continue producing low-cost nickel at the mine and aim to continue paying shareholder dividends. The recovery in nickel prices should provide the opportunity to produce a higher profit in 2009/10.

In the coming year particular focus will be on the following projects:

Long Nickel Mine

• Development of the Moran ore body with the aim of commencing production by the end of the year.
• Once access is available to the Moran ore body, test for extensions and other nickel sulphides along strike.
• Test for nickel sulphides north of the Long ore body and south of the McLeay deposit.

Regional Exploration

• Test the large Karlawinda gold system for potential economic gold deposits.
• Generate targets from the recently acquired De Beers data base.
• Test the new Holleton gold geochemical anomalies.
• Continue testing for nickel sulphides at Duketon.

Tropicana Project

• Completion of the Feasibility Study.
• Delineate additional ore along strike or beneath the current known gold resources.
• Test other gold targets in this new Australian gold province.
  

I would like to thank all shareholders for their strong support and assure you that Independence will continue its commitment to delivering shareholder value.

Christopher Bonwick
Managing Director