INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Directors' report 30 June 2017 (continued) Operating and financial review (continued) Operations (continued) Jaguar Operation (continued) Processing plant performance was constrained by the availability of ore from the Bentley underground mine, resulting in 62,093 fewer tonnes milled, which was 12.3% lower than the prior year. Based on current Ore Reserves only, the Bentley underground mine is currently anticipated to have a life of approximately 2.5 years. The table below outlines the key results and operational statistics during the current and prior year. Jaguar Operation 2017 2016 Total revenue $'000 137,470 132,987 Segment operating profit before tax $'000 33,534 17,317 Total segment assets $'000 175,917 145,892 Total segment liabilities $'000 25,665 22,816 Ore mined tonnes 444,700 497,751 Copper grade % 1.3 1.7 Zinc grade % 8.3 8.9 Silver grade g/t 134 128 Gold grade g/t 0.52 0.75 Ore milled tonnes 443,485 505,578 Metal in concentrate - Copper tonnes 4,565 7,412 - Zinc tonnes 32,638 39,335 - Silver ounces 1,376,521 1,603,565 - Gold ounces 2,532 4,880 Metal payable (IGO share) - Copper tonnes 4,377 7,122 - Zinc tonnes 27,067 32,634 - Silver ounces 951,182 1,071,989 - Gold ounces 2,328 4543 Zinc cash costs and royalties* A$/lb total Zn metal produced 0.76 0.53 * Cash costs include credits for copper, silver and gold. Nova Operation The Nova Operation is based on a designed 1.5Mtpa underground operation with decline access, 1.5Mtpa processing plant and associated infrastructure and services. The principal stoping methods is sub-level open stoping with paste fill to maximise extraction of the orebody. The stopes measure up to 25 metres by 25 metres horizontally and 70 metres in height. The processing plant comprises conventional crushing and grinding by open circuit SAG mill, followed by a ball mill in closed circuit, and sulphide flotation to produce separate copper and nickel concentrates. Significant progress was achieved during FY17 to ramp up Nova mining, with the mine contractor Barminco continuing to advance development and stoping, with the emphasis shifting to production drilling and stoping activities toward the end of the financial year. Mine design and scheduling continues to be optimised to reflect the increased understanding of the orebody through the ongoing grade control drilling program and ongoing mining activity. This work has delivered further reductions in total metres of development whilst focusing on operational flexibility and the number of mining fronts that can be brought on line in FY18. Since commissioning in October 2016, the processing plant has been constrained by ore production from underground and, as such, has operated on a campaign basis. Campaign processing has allowed the process design and installed equipment to be tested but has not provided opportunity for the process to be optimised. With the commencement of mining of the first of the larger stopes from the Nova underground mine, the processing plant transitioned to continuous operations towards the end of June 2017. Independence Group NL 9 40 — IGO ANNUAL REPORT 2017 DIRECTORS’ REPORT 30 JUNE 2017 (continued)