IGO Interactive Annual Report 2018

DIRECTORS’ REPORT 30 JUNE 2018 TROPICANA OPERATION Revenue from the Tropicana Operation for the period was $240.4 million, up 13% on the previous year result of $211.9 million as a result of higher AUD dollar gold prices and more gold sold. The average AUD gold price achieved throughout the period was $1,729 per ounce, an increase of $79 per ounce compared to the previous period. The Company’s share of gold refined and sold was 138,748 ounces, up 8% on the prior year. The drivers for the higher gold sold include higher ore milled, and improved mill feed grades attributed to the grade streaming strategy commenced towards the end of the financial year. The grade streaming is expected to continue in FY19. Cash costs per ounce produced, which comprises the costs of producing gold at the mine site and includes credit adjustments for waste stripping costs and inventory build and draw costs, were $713 per ounce, while All-in Sustaining Costs (AISC) per ounce sold were $1,061 per ounce. AISC comprises of cash costs and capitalised sustaining deferred waste stripping costs, sustaining exploration costs, sustaining capital and non-cash rehabilitation accretion costs. AISC excludes improvement capital expenditure and greenfields exploration expenditure. Total Tropicana Operation assets increased by 22.5% due to ongoing contributions by the Company to the operation by way of cash calls paid to the joint venture manager ($166.2 million for the year). Tropicana Operation liabilities largely remained steady, increasing by $2.4 million to $36.5 million. During the year, a total of 9.6 million tonnes of full grade ore (>0.6 grams per tonne), 0.9 million tonnes of marginal ore (grading between 0.4 & 0.6 grams per tonne Au) and 76.5 million tonnes of waste material was mined, with the average run-of-mine grade for full grade ore (>0.6 grams per tonne Au) being 1.88 grams per tonne Au for the year. Ore milled was 7.8 million tonnes, which was up 7% on the prior year as a result of improved mill feed grades, while grade milled was 2.11 grams per tonne for FY18. At year end, the capitalised run of mine stockpile totalled 11.3 million tonnes grading an average of 0.92 grams per tonne (2017: 9.5 million tonnes at 0.93 grams per tonne). During the year, an underground concept study in the Boston Shaker open pit was undertaken. Following successful initial results, the study was progressed through to a Pre-feasibility Study, which is expected to be completed by the December 2018 quarter. The table below outlines the key results and operational statistics during the current and prior year. TROPICANA OPERATION 2018 2017 Total revenue $’000 240,377 211,915 Segment operating profit before tax $’000 86,292 58,300 Total segment assets $’000 1,270,549 1,037,257 Total segment liabilities $’000 36,486 34,071 Gold ore mined (>0.6g/t Au) ‘000 tonnes 9,568 7,900 Gold ore mined (>0.4 and 0.6g/t Au) ‘000 tonnes 884 975 Waste mined ‘000 tonnes 76,544 73,249 Gold grade mined (>0.6g/t) g/t 1.88 2.05 Ore milled ‘000 tonnes 7,781 7,326 Gold grade milled g/t 2.11 2.07 Metallurgical recovery % 88.9 89.1 Gold recovered ounces 469,071 431,005 Gold produced ounces 467,139 431,625 Gold refined and sold (IGO share) ounces 138,748 128,601 Cash Costs $ per ounce produced 713 817 All-in Sustaining Costs (AISC)* $ per ounce sold 1,061 1,162 * All-in Sustaining Costs is a measure derived by the World Gold Council. On 27 June 2013, the Council released a publication outlining definitions of both Cash Costs and All-in Sustaining Costs. IGO ANNUAL REPORT 2018— 39