INDEPENDENCE GROUP NL SUSTAINABILITY REPORT 2017

ANNUAL EXPENDITURE COMMITMENT All types of mining tenure in Australia, other than ancillary, requires the tenement holders to ensure that a minimum level of qualifying expenditure is made in connection with exploration or production activities on the relevant tenement. In this way, governments ensure that the right to ongoing land tenure is conditional on the requisite investment. With some minor exceptions, IGO has met all of its expenditure obligations. Expenditure is generally required to be made in connection with mining and exploration, and would typically include costs associated with drilling, travel to and from site, purchase of plant and equipment, and wages and administrative overheads among others. Notably, expenses incurred in handling recovered minerals (such as marketing or freight) cannot generally be counted towards satisfaction of an expenditure condition. In some cases, exemptions from this condition may be granted for a set period of time. ACCESSING LAND AND EARLY STAGE PROJECTS An investment in the mining sector generally involves either the acquisition of a direct interest in the assets of a mining project (including its tenements), earning an interest in a mining project, or the acquisition of shares in a company that owns an interest in a mining project. A typical means of acquiring a direct interest is through ‘farm-in’ agreements. Such agreements are commonly used in the Australian mining industry, particularly where an investor is seeking to earn an interest in a mining project during its exploration phase – an approach commonly used by IGO. Under a farm-in agreement, the investor typically agrees to fund particular exploration costs or make a capital contribution in order to earn an interest in the tenement. Generally, once the investor earns this interest, it will form an unincorporated joint venture with the initial owner for the further exploration of the tenement and consequent mining and production of minerals. EXPLORATION INCENTIVE SCHEME In 2009, the Western Australian Government announced an Exploration Incentive Scheme (EIS), an initiative that aims to encourage exploration in under- explored greenfield regions of the state. In August 2017, the state government announced its continued support providing $10 million a year for the next two years. In FY17 IGO received grants totalling $269,880. IGO SUSTAINABILITY REPORT 2017— 43