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Annual Report 2016 37
DIRECTORS’ REPORT
Directors' report
30 June 2016
(continued)
Operating and financial review (continued)
Operations (continued)
Long Operation (continued)
The Long Operation constitutes an operating segment as disclosed in the Financial Report. During the year a total of
215,337t of ore was mined, sourced from Moran (93%), Long Lower (3%), McLeay (2%) and Victor South (2%). The
majority of ore continued to be mined from long hole stoping (91%) with lesser amounts coming from other mechanised
mining methods and non-mechanised methods.
Total segment revenue decreased by 43% during 2016, driven predominantly by a 34% lower realised AUD nickel price
together with 16% lower payable nickel tonnes sold. In addition, the restructure that was implemented in September
2015 resulted in the discontinuation of a number of mining methods at the Long Operation, resulting in lower, though
more profitable, sales volumes.
Based on current ore reserves, the mine currently has a life of approximately 1.5 years.
The table below highlights the key results and operational statistics during the current and prior year.
Long Operation
2016
2015
Total revenue
$'000
63,926
111,423
Segment operating (loss) profit before tax
$'000
(3,532)
32,110
Total segment assets
$'000
65,738
92,546
Total segment liabilities
$'000
35,200
36,180
Ore mined
tonnes
215,337
258,634
Nickel grade
head %
3.94
3.94
Copper grade
head %
0.28
0.28
Tonnes milled
tonnes
215,337
258,634
Nickel delivered
tonnes
8,493
10,198
Copper delivered
tonnes
610
723
Metal payable (IGO share)
- Nickel
tonnes
5,125
6,151
- Copper
tonnes
247
293
Ni cash costs and royalties
A$ per pound of payable metal
3.67
4.01
* Cash costs include credits for copper
Jaguar Operation
The Jaguar Operation was acquired by the Company in 2011 through the acquisition of Jabiru Metals Limited. The
Operation is located 60km north of Leonora and 300km north of Kalgoorlie. All ore is currently mined from the Bentley
underground mine, located 6km south of the Jaguar processing facility, which is used to beneficiate the ore mined to
produce zinc and copper concentrates. These concentrates are trucked to the Geraldton port for shipping to customers
primarily in Asia. The copper concentrate contains significant levels of silver and gold as by-products, which attract
precious metal credits that contribute significantly to the Group’s cash flows and revenue. The zinc concentrate has
minor amounts of silver in its concentrate.
In addition, both near mine and greenfields exploration targets continue to be investigated for potential to add mine life
to the operation. Two potential areas are projects known as the ‘Bentley deeps', beneath the existing Bentley
underground mine, and Triumph, located 6km north of the Jaguar processing facility. Both projects continued to be
targeted in the 2016 financial year for drilling, once completed they will be further evaluated.
The performance of the Bentley underground mine outperformed the previous year; ore mined increased by 3% and ore
milled increased by 4%. Copper grades were constant at 1.8% while zinc grades mined fell 1.6% to 8.9%. This variation
in run of mine grades is due to the variable nature of the geology and the stopes scheduled for mining. Both reserves
and resources are reconciling well.
Copper and zinc concentrate sales are paid on a quotational period that varies between one and four months, with
generally 90% of the sales receipt payable by the customer shortly after shipment. The one month or four month
average LME copper and zinc price ultimately determines the final price paid by the customer.
Independence Group NL
8