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Annual Report 2016 33
DIRECTORS’ REPORT
Directors' report
30 June 2016
(continued)
Operating and financial review (continued)
• In July 2016, the Company announced it was accelerating the development of the Bollinger orebody (Bollinger).
This work would enable earlier access to Bollinger which is expected to deliver enhanced early cash flow and
additional project value while staying within the original $443 million capital cost estimate announced in the
Optimisation Study schedule.
Total mine development of 5.53km had been completed and the first ore from development activities was mined
and hauled to the surface by the end of the period. The current schedule indicates concentrate will be produced and
ready for shipment, as planned, during December 2016.
The Company has actively focused on organic growth during FY16 through dedicated exploration programs for base
and precious metals. An outline of the key work activities during this period include:
Brownfields Exploration
• Tropicana Gold Mine - An extensive resource extension drilling program, which was initiated at Tropicana during
2015 to provide a framework for the understanding of the Tropicana Mineralised Complex, was completed in the
June 2016 quarter. The drilling forms part of the ongoing mining studies internally referred to as the Long Island
Study. A total of 106,750m of drilling has been completed since June 2015 to the end of the period. The drilling has
focused on the resource extension to the Boston Shaker, Tropicana, Havana and Havana South mineralised zones
at depth. The drilling has returned encouraging results which continue to highlight the potential of the Tropicana
mineralised system. A mineral resource update is scheduled for the September 2016 quarter.
• Jaguar Operation - Exploration activities during FY16 focused on in-mine diamond drilling programs designed to
upgrade the Mineral Resource confidence on the Flying Spur lens along with testing resource extensions on the
Arnage lens. Regional exploration was focused on the Triumph Prospect, located approximately 5km north of the
Jaguar processing plant. Drilling at Triumph has identified mineralisation over a strike length of 400m.
• Nova Project - The focus on the Nova Project has been on the commencement of grade-control drilling from
underground drill platforms as part of the development of the project to production of first concentrate scheduled for
December 2016. Exploration focused on resource extensions and discovery of additional orebodies will be a key
focus for work streams in FY17. This will include utilisation of the underground drilling platforms to test for
mineralised positions beneath the Nova and Bollinger orebodies.
• Long Operation - Exploration activities at Long were suspended in early calendar year 2016 due to low nickel
prices. Renewed exploration activities are planned to re-commence in FY17.
Greenfields Exploration
• Greenfields exploration during FY16 has focused on in-ground expenditure on three projects that deliver belt-scale
opportunities, being Fraser Range/Tropicana Belt, Lake Mackay and Bryah Basin projects.
This review should be read in conjunction with the financial statements and the accompanying notes.
The objective and strategy of the Group is to create long-term shareholder value through the discovery, development
and acquisition of low cost and high grade gold and base metals projects. Since incorporation in 2002, and including the
current financial year, the Company has returned to shareholders in excess of $146.6 million by way of a combination of
$136.9 million fully franked dividends and a $9.7 million share buy back in 2009. The Company currently has
586,698,580 shares outstanding.
The Group’s future prospects are dependent on a number of external factors that are summarised towards the end of
this report.
At the end of the financial year, the Group had cash and cash equivalents of $46.3 million and marketable securities of
$5.0 million (2015: $121.3 million and $15.6 million respectively).
Cash flows from operating activities for the Group were $95.2 million, despite the drop in base metals prices during the
year. This was a result of strong gold sales from the Tropicana Gold Mine, combined with sound operating cash flows
from the Jaguar Operation and the Long Operation. Payments for exploration expenditure fell by 22% to $20.0 million.
Included in operating activities were cash outflows of $6.9 million in relation to the Syndicated Facility Agreement (refer
Facility Agreement below) and $12.4 million in acquisition and other integration costs.
Independence Group NL
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