Dear Fellow Shareholders,

Along with improving market conditions and nickel price, 2009/10 was a year of strong growth for the Company resulting in a number of new growth opportunities. I would like to thank all of our employees and contractors for the following achievements:

Safety and Environmental Standards

• Continued excellent safety record at the Long Nickel mine (only 13 Lost time Injuries since the mine opened in October 2002) and no environmental incidents.

Financial

• Net profit after tax increased 78% to $29 million (2009: $16 million).
• Cash and net receivables of $144 million (2009: $141 million).
• Fully franked dividends per share of 5 cents (2009: 5 cents).
• Fully franked dividends paid during the year totalled $5.7 million (5 cents per share).

Operations

• Above budget nickel production of 8,615 Ni tonnes (2009: 8,779 Ni tonnes).
• Head grade remained one of the highest of all nickel producers at 4.2% Ni (2009: 4:0% Ni).
• Cash costs including royalties of A$4.43/ payable pound of nickel (2009: $3.85), the lowest of all mid-sized Australian nickel producers.
• Development and the commencement of mining from Moran.

Mine Exploration

• Extension of the high grade Moran nickel ore body to the north and south.
• Discovery of new nickel sulphide shoots and DHTEM conductors north of Long.
• Moran, McLeay and Long ore bodies remain open along strike.

Regional Exploration

• Continued aggressive exploration effort resulting in expenditure of $24 million in 2009/10, including exploration programs at Tropicana.
• High-grade massive nickel sulphides containing associated copper, cobalt and platinum group elements intersected at Duketon.
• Further oxide and primary gold mineralisation intersected at Karlawinda.
• 1.3km long gold auger geochemical anomaly identified at the Holleton project with encouraging first-pass drilling results.

Tropicana Project

• Tropicana, Havana and Havana South open cut Bankable Feasibility Study results expected to be announced in the December 2010 quarter.
• New Boston Shaker open-pit gold discovery and Havana Deeps gold intercepts, which remain open down plunge, could add to the current mine life estimate.
• Significant surface and bedrock mineralisation at a number of Tropicana regional prospects, highlighting the potential for other gold discoveries.

Proposed 2010/11 Exploration, Capital Development and Equipment Programs

Due to the promising growth opportunities generated in 2009/10, the Company expects to spend about $80 million on capital expenditure in the 2010/11 financial year as follows:

In the 2011 year, particular focus is expected to be on the following projects:

Long Nickel Mine

• Continued development of the Moran ore body including construction of a paste plant.
• Expand the current mining fleet to accelerate in-house underground development.
• Underground drilling to scope the size of the Moran, McLeay and Long North ore systems.

Tropicana Joint Venture

• Complete the Tropicana Bankable Feasibility Study for board approvals in late 2010.
• Continue Boston Shaker and Havana Deeps infill and extensional drilling with the aim of completing Scoping Studies by late 2010.
• Following project approval, commence road, airstrip and camp detailed design and construction.
• Test other targets in this new Australian gold province.

Regional Exploration

• Continue testing the extensive Karlawinda gold system for economic open-pit and underground gold deposits.
• Drill test Holleton geochemical anomalies for open-pit ore bodies.
• Depending on approvals, drill out the Duketon massive and disseminated nickel sulphide discoveries and start a scoping study.
• Continue ranking and testing targets in our extensive Australian and overseas project portfolio.
• Continue generating and follow up De Beers database targets.

I would like to thank all shareholders for their strong support and assure you that Independence will continue its commitment to delivering shareholder value.

Christopher Bonwick
Managing Director