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32 Independence Group NL
DIRECTORS’ REPORT
Directors' report
30 June 2016
(continued)
Operating and financial review (continued)
• The Jaguar zinc, copper and silver mine and processing operations, located 60km north of Leonora in Western
Australia - 100% owned. The Jaguar Operation consists of the Bentley underground mine, the Jaguar processing
facility and administration infrastructure and the accommodation village. These assets are situated on tenure that
hosts a 50km long corridor of prospective stratigraphy.
The prospective corridor has hosted three economically viable volcanogenic massive sulphides (VMS) ore bodies.
The first deposit discovered was Teutonic Bore in 1976. The Jaguar deposit was discovered in 2002, approximately
4km south of Teutonic Bore and the most recent discovery, the Bentley deposit located another 4km south of
Jaguar, was discovered in 2008.
All ore is processed at the Jaguar concentrator, which produces both a copper concentrate and a zinc concentrate.
The copper concentrate also contains significant silver and gold credits. The concentrates are trucked to the port of
Geraldton for export.
• The Long nickel mine located near Kambalda - 100% owned. The Company acquired the Long Operation in
Kambalda, Western Australia, from BHP Billiton Nickel West Pty Ltd (BHPB Nickel West) in September 2002. The
mine was successfully re-commissioned in October 2002 and has been operating successfully and safely since
then.
Since recommissioning, and through to 30 June 2016, the Long Operation has mined 3.2Mt ore for 124,600t of
contained nickel metal and has achieved exploration success with the discovery of the McLeay (2005) and Moran
(2008) ore bodies. At the time of purchasing the Long Operation, the Group entered into an offtake agreement with
BHPB Nickel West whereby the ore produced from the mine is delivered to the adjacent BHPB Nickel West
Kambalda Nickel Concentrator for toll treatment and production of nickel concentrate. The current offtake
agreement with BHPB Nickel West expires in February 2019.
In September 2015, the Company restructured its mining activities at the Long Operation to ensure that the mine
remains profitable and sustainable at lower nickel prices. Future mining activities at the Long Operation are focused
on longhole stoping, supported by twin boom jumbo development. Other mining methods and activities, including
mechanised cut and fill and air-leg mining, were discontinued with effect from 9 September 2015.
The Group also has one operation in the construction phase in Western Australia as follows:
• Nova Project - The Company completed the acquisition of Sirius Resources NL (Sirius) in September 2015. Sirius
was an ASX listed minerals exploration and development company with a key focus on the development of the
Nova Project, located east of Norseman in Western Australia.
On 25 May 2015, the Company and Sirius announced two separate but inter-conditional Schemes of Arrangement,
being the Acquisition Scheme of Arrangement (the Acquisition Scheme), whereby the Company would acquire all of
the shares in Sirius, and the Demerger Scheme of Arrangement (Demerger Scheme), under which Sirius would
create a new listed company, S2 Resources Limited. Following the approval of the Schemes on 12 September
2015, the scheme participants received 0.66 new shares in IGO and $0.52 cash per Sirius ordinary share.
The transaction was completed on 22 September 2015, resulting in cash consideration paid for the acquisition of
Sirius of $250.6 million plus the issue of 275,842,684 shares in the Company. Suspension of trading of Sirius was in
effect on close of business 10 September 2015. Implementation of the Schemes occurred on 22 September 2015
and integration of Sirius into the Group was completed during the December 2015 quarter. An Optimisation Study to
a bankable feasibility level, which demonstrated a significant enhancement of the project value, was also completed
in the December 2015 quarter.
Progress at Nova has continued according to plan during the period, reaching the 93.4% mark as at 30 June 2016
and remaining ahead of schedule and on budget relative to the Optimisation Study schedule. Total expenditure for
the period on the Nova Project was $240.4 million, with $179.5 million spent since the Company completed the
transaction.
The Nova Project comprises an underground mine to mine two orebodies, Nova and Bollinger, as well as a 1.5Mtpa
processing facility that will produce a nickel concentrate and a copper concentrate, and associated infrastructure.
Independence Group NL
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