IGO Interactive Annual Report 2018

DIRECTORS’ REPORT 30 JUNE 2018 INTEREST RATES Interest rate movements affect both returns on funds on deposit as well as the cost of borrowings. Furthermore, AUD and USD interest rate differentials are intimately related to movements in the AUD/USD exchange rate. NATIVE TITLE AND HERITAGE SITES With regard to tenements in which the Group has an existing interest in, or will acquire an interest in the future, it is the case that there are areas over which Native Title rights exist, or may be found to exist, which may preclude or delay exploration, development or production activities. The comparable, albeit lesser risk, arises from the potential presence of archaeological and ethnographic sites. The Company engages suitably qualified personnel to assist with the management of its exposure to native title and heritage risks, including appropriate legal and community relations experts. These risks are discussed in more detail in the Company’s Sustainability Report which can be found on the Company’s website. EXPOSURE TO ECONOMIC, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY RISKS The Group has material exposure to economic, environmental and social sustainability risks, including changes in environmental regulatory legislation. The Group employs suitably qualified personnel to assist with the management of its exposure to environmental and social sustainability risks, including appropriate health and safety personnel and environmental professionals. These risks are discussed in more detail in the Company’s Sustainability Report which can be found on the Company’s website. OTHER EXTERNAL FACTORS AND RISKS • Operational performance including uncertain mine grades, seismicity, ground support conditions, grade control, in fill resource drilling, mill performance, access to water and experience of the workforce; - Contained metal (tonnes and grades) are estimated annually and published in resource and reserve statements, however actual production in terms of tonnes and grade often vary as the orebodies can be complex and inconsistent. - Active underground mining operations can be subjected to varying degrees of seismicity. This natural occurrence can represent significant safety, operational and financial risk. To mitigate this risk, substantial amounts of resources and technology are used in an attempt to predict and control seismicity. • Exploration success or otherwise; - Due to the nature of an ever depleting reserve/resource base, the ability to find or replace reserves/resources presents a significant operational risk. • Operating costs including labour markets and productivity; - Labour is one of the main cost drivers in the business and as such can materially impact the profitability of an operation. • Changes in market supply and demand of products; - Any change in supply or demand impacts on the ability to generate revenues and hence the profitability of an operation. • Changes in the technological advancement of the energy storage market, and the discovery and adoption of alternate product streams; • Changes in government taxation legislation; • Changes in health and safety regulations; • Environmental issues and social expectations; and • Assumption of estimates that impact on reported asset and liability values. 42 — IGO ANNUAL REPORT 2018