INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Directors' report 30 June 2017 (continued) Operating and financial review (continued) Brownfields Exploration • Tropicana Gold Mine - Resource extension drilling program continued during the first half of FY17 to form the basis of the Mineral Resource for the Long Island Study, based on a strip mining strategy designed to significantly reduce waste mining costs. Mineralisation remains open with high-grade ore shoots defined at both Boston Shaker and Havana South. Additional drilling will be completed in FY18 to test the down plunge extensions on these shoots as part of an underground mining study. • Jaguar Operation - Exploration activities during FY17 were focused on three key work streams including: • Underground drilling at Bentley which resulted in the discovery of a new massive sulphide lens named Bentayga, located approximately 250m to the south of the main Arnage lens; • Resource definition drilling on the Triumph deposit to upgrade the Mineral Resource from Inferred to Indicated status on the upper Stag lens, which formed the basis of the Triumph Feasibility Study; and • Reconnaissance exploration on the northern portion of the tenement portfolio at Heather Bore and Wilson Creek prospects. • Nova Project - The focus for the Nova Project in FY17 has been on the underground grade-control drilling, with up to five underground diamond drill rigs executing this work program. The grade-control drilling is scheduled for completion towards the end of CY17 at which point the underground drilling focus will shift to exploration for resource extensions. Surface exploration activities include diamond drill testing of a number of electromagnetic plates along with the completion of a 2D seismic traverse. • Long Operation - Reprocessing and reinterpretation of 3D seismic data has resulted in the development of a number of exploration targets at Long. These targets will be tested as part of the FY18 exploration program. Greenfields Exploration • Fraser Range - During FY17, the Company has consolidated a prospective tenement package over the Fraser Range of approximately ~12,000km 2 . The tenement package is under explored and considered highly prospective for nickel, copper and cobalt mineralisation. Systematic geophysical and aircore drilling has commenced during the second half of FY17. • Lake Mackay - Work programs during FY17 have included a regional aeromagnetic survey and the completion of an 18 hole RC program which lead to the discovery of the Grapple Prospect. Encouraging drilling intersections were reported and have defined mineralisation over a strike length of 300m with mineralisation remaining open to the west. Negotiations with the Central Land Council to gain access to the entire tenement package remains ongoing. 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, acquisition, development and operation 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 $164.2 million by way of a combination of $154.5 million fully franked dividends and a $9.7 million share buy back in 2009. The Company currently has 586,747,023 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 $35.8 million and marketable securities of $15.3 million (2016: $46.3 million and $5.0 million respectively). Cash flows from operating activities for the Group were $77.7 million, a result of strong operational cash flows from the Tropicana, Long and Jaguar operations. Cash flows from operations were higher at Tropicana as a result of lower production costs, with payments reducing by $8.7 million, offset by lower gold and silver sales receipts. Long Operation delivered exceptional operational and financial results throughout the year, with cash from operating activities up 55% to $28.8 million. Jaguar’s contribution to cash from operations was $40.9 million. Included in cash from operating activities were two significant stamp duty payments made to the Western Australian State Government during the year. These comprised of $52.5 million for the interim assessment of Sirius Resources Limited’s Nova acquisition (in September 2015) and a $5.7 million payment in relation to the completed duties assessment for the Company’s acquisition of Jabiru Metals Limited (Jaguar Operation) in 2011. Lastly, payments for exploration expenditure amounted to $18.0 million for the year. Independence Group NL 4 IGO ANNUAL REPORT 2017— 35 DIRECTORS’ REPORT 30 JUNE 2017 (continued)