IGO Interactive Annual Report 2018

DIRECTORS’ REPORT 30 JUNE 2018 OPERATING AND FINANCIAL REVIEW This review should be read in conjunction with the financial statements and the accompanying notes. Independence Group NL is a company listed on the Australian Securities Exchange (ASX:IGO). The Company has been listed on the ASX since 17 January 2002, having traded as Independence Gold NL from 17 January 2002 to 19 December 2003. SUMMARY OF OPERATIONS The Group currently has the following operations in the production phase in Western Australia: • The Nova Operation, 100% owned, was acquired as a development stage project via the acquisition of Sirius Resources NL (Sirius) in September 2015. The Nova Operation is located in the Fraser Range, approximately 160km east-northeast of Norseman, 360km southeast of Kalgoorlie and 380km from the Port of Esperance in Western Australia. The Ngadju People are the Traditional Owners of the land. The Nova Operation comprises an underground mine consisting of two orebodies, Nova and Bollinger, as well as a processing facility with a nameplate production capacity of 1.5 million tonnes per annum that produces a nickel concentrate and a copper concentrate, and associated infrastructure. Commercial production was declared at the Nova Operation on 1 July 2017, with nameplate production capacity reached shortly thereafter. In late FY18, a higher than nameplate rate of 1.8 million tonnes per annum was trialled, and the initial results have been positive. Learnings from this trial will be utilised to make future mining and process plant changes to enable continuous operations at 1.8 million tonnes per annum. • The Tropicana Operation (IGO: Non-operator joint venturer; 30% owned) is located 330km east northeast of Kalgoorlie. The gold deposits occur over a 5km strike length with gold mineralisation intersected to a depth of 1km vertically beneath the natural surface. The original designed nameplate capacity of the processing plant of 5.8 million tonnes per annum was achieved in March 2014. In 2016 and early 2017, the processing plant went through a re-design and optimisation project to increase the throughput capacity to 7.5 million tonnes per annum, a rate at which the Tropicana Operation was able to demonstrate in the second half of FY17. In FY18, the Tropicana Operation announced the construction of a second 6 mega watt ball mill, with the installation of the mill expected to be completed by December 2018. The second ball mill will enable processing throughput rate to be increased by about 5% to 8.2 million tonnes per annum and gold recovery to be increased by up to 3% to approximately 92%. During FY18, a pre-feasibility study investigating underground mining under the Boston Shaker pit commenced. Encouraging results have been received from 100m x 100m framework drilling. A program of 50m x 25m spaced infill drilling commenced to support underground/open-pit interface studies and will be incorporated into the Mineral Resource estimate to be completed as part of the Underground Prefeasibility Study. This study is confirming underground mining potential at Boston Shaker, extending mineralisation to ~700m down dip from Long Island pit designs, with mineralisation remaining open at depth. The study is expected to be completed in the December 2018 quarter. Other Group activities during the year included: • A decision to divest the Jaguar Operation. On 28 May 2018, the Company announced the divestment of the Jaguar Operation to CopperChem Pty Limited (CopperChem), a wholly owned subsidiary of Washington H. Soul Pattinson and Company Limited. Completion of the transaction occurred on 31 May 2018, when IGO received a cash payment of $25 million. Three future annual cash payments of $16.1 million are scheduled, which will make up the total consideration of $73.2 million. • Placing the Long Operation into care and maintenance in June 2018. IGO is actively maintaining the Long Operation during care and maintenance to ensure it remains in a state of readiness for a number of options, including recommencement of mining, exploration and/or rehabilitation. Whilst in care and maintenance, the Company will continue to dewater the underground mine, maintain surface and underground infrastructure, and undertake earthworks to ensure public safety and minimise environmental impacts. IGO is also taking this opportunity to progressively rehabilitate some of the legacy landforms on the site including the old tailings storage facilities and waste (mullock) rock dump. • IGO successfully produced nickel sulphate hexahydrate crystals as part of a prefeasibility metallurgical testwork program. The testwork has demonstrated the technical feasibility (proof of concept) for the proposed hydrometallurgical process to produce nickel sulphate directly from nickel concentrate. The prefeasibility study has commenced. IGO ANNUAL REPORT 2018— 33