IGO Interactive Annual Report 2018

Notes to the consolidated financial statements 30 June 2018 (continued) 26 Share-based payments (continued) Equity settled awards outstanding (continued) 2018 2017 Number of share rights Weighted average fair value at grant date Number of share rights Weighted average fair value at grant date Outstanding at the beginning of the year 1,648,285 2.00 1,352,123 1.91 Rights issued during the year 1,246,722 2.46 589,967 2.26 Rights vested during the year - - (220,353) 2.14 Rights lapsed during the year (622,637) 2.34 (73,452) 2.14 Rights cancelled during the year (229,751) 2.22 - - Outstanding at the end of the year 2,042,619 2.14 1,648,285 2.00 Fair value of share rights granted The fair value of the share rights granted during the year ended 30 June 2018 are determined using a trinomial tree which has been adopted by the Boyle and Law (1994) node alignment algorithm to improve accuracy, with the following inputs: Fair value inputs CEO Senior management Other employees Grant date 24 November 2017 29 September 2017 29 September 2017 Vesting date 1 July 2020 1 July 2020 1 July 2020 Share price at grant date 4.40 3.46 3.46 Fair value estimate at grant date 3.09 2.41 2.41 Expected share price volatility (%) 52 52 52 Expected dividend yield (%) 1.14 1.45 1.45 Expected risk-free rate (%) 1.90 2.12 2.12 The share-based payments expense included in profit or loss for the year totalled $3,266,876 (2017: $1,147,168). Vesting of share rights Vesting of the performance rights granted to executive directors and executives during the year is based on two equally weighted performance hurdles as follows: • Relative TSR; and • Absolute TSR. Relative TSR The relative TSR scorecard for the three year measurement period will be determined based on a percentile ranking of the Company's TSR results relative to the TSR of each of the companies in the peer group over the same three year measurement period. The peer group is to comprise the constituents of the S&P ASX 300 Metals and Mining Index. The vesting schedule of the performance rights subject to relative TSR testing is as follows: Relative TSR performance Level of vesting Less than 50th percentile Zero Between 50th and 75th percentile Pro-rata straight line percentage between 50% and 100% 75th percentile or better 100% Independence Group NL 51 IGO ANNUAL REPORT 2018— 115 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2018