Intrepid Mines Limited ABN 11 060 156 452
RENEWAL ANNUAL INFORMATION FORM
FOR THE TWELVE MONTH FISCAL YEAR ENDED 31 DECEMBER 2009
(DATED 22 MARCH 2010)
FORWARD-LOOKING STATEMENTS QUALITY CONTROL This annual information form contains certain forward-looking The Company exercises a strict chain of sample custody in its drilling statements, relating to, but not limited to the Company's expectations, program at Tujuh Bukit, Indonesia. Joint Venture personnel remove the core intentions, plans and beliefs. Forward-looking information can often be from the drill rig and deliver it to a project geologist who logs the core and identified by forward-looking words such as 'anticipate', 'believe', marks the core into two metre sample intervals. The Company and Joint 'expect', 'goal', 'plan', 'intend', 'estimate', 'may' and 'will' or similar words Venture personnel supervise the immediate splitting, sawing and bagging of suggesting future outcomes, or other expectations, beliefs, plans, samples, and packaging of groups of samples for dispatch to the laboratory. objectives, assumptions, intentions or statements about future The remainder of the split core remains on site. outcomes, or statements about future events or performance. Forward- Samples are securely packaged, batched, and then transported under looking information may include reserve and resource estimates, supervision to Intertek’s laboratory facility in Jakarta. At the laboratory, the estimates of future production, unit costs, costs of capital projects, and samples are prepared by crushing and pulverising and a 30 gram charge is timing of commencement of operations and is based on current assayed for gold by conventional fire assay and/or atomic absorption expectations that involve a number of business risks and uncertainties. methods. Multi-element ICP analysis is carried out using a multi-acid Factors that could cause actual results to differ materially from any digestion process. All samples that contain silver and/or copper, lead, and forward-looking statement include, but are not limited to, failure to zinc values that exceed the upper detection limits for ICP are re-analysed by establish estimated resources and reserves, the grade and recovery of conventional atomic absorption methods to determine the absolute values of ore which is mined varying from estimates, capital and operating costs these metals. varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project At Paulsens all core is logged and whole core samples (if LTK48 size, NQ2 approvals, inflation, changes in exchange rates, fluctuations in sized core is cut and half cored) are marked and prepared for shipping at the commodity prices, delays in the development of projects and other Paulsens Mine Property and sent to an independent laboratory (Australian factors. Forward-looking statements are subject to a variety of known Laboratory Services Pty Limited “ALS Chemex”) for assay. The remaining and unknown risks, uncertainties and other factors that could cause half core is stored on site. All samples from which information in this actual events or results to differ materially from those expressed or document is derived were received by ALS Chemex in Karratha, Western implied. Australia. Samples are weighed and crushed to 70% passing -6mm mesh. The crushed material is split and a portion is pulverised. A 100-gram pulp is Shareholders and potential investors are cautioned not to place undue sent to ALS Perth, Western Australia for assay. A 30-gram portion of the pulp reliance on forward-looking information. By its nature, forward-looking is treated by fire assay method with atomic absorption finish (Au-AA25). A information involves numerous assumptions, inherent risks and second pulp sample split (150-200g) is kept in Karratha. Sample rejects are uncertainties, both general and specific, that contribute to the possibility discarded after 90 days. that the predictions, forecasts, projections and various future events will not occur. The Company undertakes no obligation to update publicly or Limited samples (>100ppm Au) are re-analysed using ALS’ dilution method otherwise revise any forward-looking information whether as a result of (Au-DIL). The Company inserts one standard in each hole, and recently new information, future events or other such factors which affect this began inserting one blank in each ore zone as well. Laboratory standards information, except as required by law. and blanks are inserted by ALS and several pulp duplicates are also assayed as a determinant of mineralisation variability. Statements relating to gold reserve and resource estimates are expressions of judgment, based on knowledge and experience and ALS has AS/NZS ISO 9001:2000 certification in Perth. This does not cover may require revision based on actual production experience. Such the sample preparation facilities; however the preparation laboratories follow estimates are necessarily imprecise and depend to some extent on the same quality management system. They are not audited by NCSI but are statistical inferences and other assumptions, such as gold prices, cut- audited internally. off grades and operating costs, which may prove to be inaccurate. Information provided relating to projected costs, capital expenditure, At the Taviche project samples are prepared and sent to the SGS Minerales production profiles and timelines are expressions of judgment only and facility in Durango, Mexico. The drill core samples are dried, crushed to 75% no assurances can be given that actual costs, production profiles or passing 2mm mesh and a 250-gram split is pulverised to 85% passing 75µm timelines will not differ materially from the estimates contained in this mesh. Prepared pulps were analysed for gold and silver by Fire assay with a document. gravimetric finish (SGS method FAG323) in Durango. Pulps are shipped to SGS Minerals Services in Toronto, Canada for multi-element analysis using an ICP40 element package. For both the surface and drilling programs, blanks and certified reference standards were inserted into the sample stream to control the quality of sample preparation and analysis.
2010 Annual Information Form, Intrepid Mines Limited
TABLE OF CONTENTS
1. Important Notice About Information In This Annual Information Form 3 2. Interpretation 3 2.1 Definitions 3 2.2 Mineral Resource And Mineral Reserves 4 2.3 Gold Prices 4 2.4 Financial Information 4 2.5 Conversion Table And Technical Abbreviations 4 2.6 Reporting Currency 4 3. Corporate Structure 5 4. General Development of The Business 6 4.1 Three Year History 6 4.2 Significant Tansactions 7 5. Description of Business 8 5.1 General 8 5.2 Risk Factors 9 5.3 Principal Properties of The Company 13 Paulsens Gold Mine, Australia 13 The Tujuh Bukit Project , Indonesia 14 6. Dividends 15 7. Description of Capital Structure 15 7.1 Ordinary Shares 15 7.2 Exchangeable Shares 16 8. Market for Securities 16 9. Directors And Officers 17 9.1 Details 17 9.2 Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions 18 9.3 Conflicts Of Interest 18 10. Legal Proceedings And Regulatory Actions 18 11. Interest Of Management and others in Material Transactions 18 11.1 Loans to Directors and Executives 19 11.2 Other Transactions with Directors and other Executives 19 12. Transfer Agents and Registrars 19 13. Material Contracts 19 14. Interests of Experts 19 15. Additional Information 19 16. Audit and Risk Committee Disclosure 20
2010 Annual Information Form, Intrepid Mines Limited 2 of 24
1. IMPORTANT NOTICE ABOUT INFORMATION IN THIS ANNUAL INFORMATION FORM On 11 March 2008 the Company completed a merger with Emperor Mines Limited (“Emperor”). For details of this transaction, please see heading “4.1 Three Year History” or please see the Company’s AIF for the year ended 31 December 2008. On 6 May 2009 the Company completed the sale of its shares in Intrepid Minerals Corporation (“IMC”) (see heading “4.2 Significant Transactions”). In certain parts of this Annual Information Form (“AIF”), the Company has included historical information relating to Emperor and IMC and information regarding the Company subsequent to the merger with Emperor and sale of IMC. These sections have been clearly marked. The information may be subject to different risks and uncertainties than the historical information relating to the Company set forth in this AIF (see heading 5.2 “Risk Factors”).
2. INTERPRETATION 2.1 Definitions The following is a glossary of terms used in this Annual Information Form: AIF means this Annual Information Form; ASX means the Australian Securities Exchange; A$ means Australian dollars; AuEq means Gold Equivalent; Board of Directors means the Directors appointed to the Board of Intrepid Mines Limited; C$ means Canadian dollars; Callco means 6554636 Canada Ltd which was a wholly-owned subsidiary of the Company until it was amalgamated with INEC on 30 April 2009; Company means, collectively, Intrepid Mines Limited and its subsidiaries; Emperor means Emperor Mines Limited (ACN 007 508 787), a wholly-owned subsidiary of the Company since 25 March 2008; grams or g means the metric measure of mass or weight equivalent to 0.03215 troy ounces; IMC means Intrepid Minerals Corporation, a wholly-owned subsidiary of the Company until 6 May 2009; IML means Intrepid Mines Limited (ACN 060 156 452); INEC means Intrepid NuStar Exchange Corporation, a wholly-owned subsidiary of IML formed on 4 May 2009 on the amalgamation of Callco and Original INEC; JORC Australasian Joint Ore Reserves Committee; JORC Code means the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia; NI 43-101 means Canadian National Instrument 43 101 – Standards for Disclosure for Mineral Projects; NuStar means NuStar Mining Corporation Pty Ltd (ACN 075 489 235) (formerly Bushsun Pty Ltd), a wholly- owned subsidiary of the Company; Ordinary Shares means the shares into which the capital of IML is divided from time to time; Original INEC means Intrepid NuStar Exchange Corporation formed on 20 April 2006; ounce or oz means a troy ounce of 31.103 grams; Paulsens means the Company’s 100% owned Paulsens Gold Mine in Western Australia's Ashburton Mineral Field approximately 1,000 kilometres north of Perth; PT IMN means PT Indo Multi Niaga; tonnes or t means metric tonnes equal to 2,204.6 pounds; TSX means the Toronto Stock Exchange; Tujuh Bukit Project means the exploration project centred on Tumpangpitu Mountain, Sumberagung Village, Pesanggaran Sub-district, Banyuwangi Regency, East Java Province, in which the Company holds an 80% interest pursuant to the Cooperation and Development Agreement with PT IMN; and US$ means United States dollars.
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 3 of 24
2.2 Mineral Resource and Mineral Reserves All estimates of mineral resources and mineral reserves referred to in this AIF have been prepared in accordance with the JORC Code or Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definition applicable under NI 43-101. There can be no assurance that those portions of such mineral resources that are not mineral reserves will ultimately be converted into mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. 2.3 Gold Prices The high, low, average and closing afternoon fixing gold prices in US$ per troy ounce for the year ended 31 December 2009 were as follows: 2009 US$ High 1,213 Low 810 Average 973 Closing 1,088 2.4 Financial Information The information contained under the heading “ Selected Financial Annual Information ” in the Management’s Discussion and Analysis dated 24 February 2010 is incorporated into this AIF by reference. Financial information for the Company for the year ended 31 December 2009 was prepared in accordance with Australian equivalents to International Financial Reporting Standards (“IFRS”). 2.5 Conversion Table and Technical Abbreviations All data and information is presented in metric units. In this AIF the following conversion factors were used: 2.47 acres = 1 hectare 0.4047 hectares = 1 acre 3.28 feet = 1 metre 0.3048 metres = 1 foot 0.62 miles = 1 kilometre 1.609 kilometres = 1 mile 0.032 ounces (troy) = 1 gram 31.103 grams = 1 ounce (troy) 1.102 tons (short) = 1 tonne 0.907 tonnes = 1 ton 0.029 ounces /ton = 1 gram/tonne 34.28 grams/tonne = 1 ounce/ton 1 ppm = 1 gram/tonne 1 ounce/ton = 34.286 ppm 1% = 10,000 ppm Abbreviations Ag, Au silver, gold km kilometres aver. average m metres cm centimetres M million g grams opt ounces per ton g Ag/t grams of silver per tonne oz ounce(s) g Au Eq/t grams of gold equivalent per tonne t tonne g Au/t grams of gold per tonne tr trench ha hectares > greater than 2.6 Reporting Currency In this document, unless otherwise specified, all references to “dollars” or “US$” are to United States dollars or “C$” are to Canadian dollars and all references to “A$” are to Australian dollars. On 31 December 2009 the nominal noon rate in Toronto payable in Australian dollars, as reported by the Bank of Canada was A$1.06 for each C$1.00. On 8 March, 2010 the nominal noon rate in Toronto payable in Australian dollars, as reported by the Bank of Canada was A$1.07 for each C$1.00. This document also contains references to US$. On 31 December 2009 the nominal noon rate in Toronto payable in US$, as reported by the Bank of Canada was US$ 0.96 for each C$1.00. On 8 March 2010 the nominal noon rate in Toronto payable in U.S. dollars, as reported by the Bank of Canada was US$0.97 for each C$1.00. The Company uses Westpac Banking Corporation (“Westpac”) as one of its bankers in Australia. The Westpac rate of exchange at 31 December 2009 was A$0.8929 for each US$1.00. The average Westpac rate of exchange for 2009 was A$0.7916 for every US$1.00.
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 4 of 24
3. CORPORATE STRUCTURE IML was incorporated in Western Australia on 9 June 1993 as Taipan Resources NL (“Taipan”). Taipan was listed on the ASX on 9 November 1993 and then changed its company status and name on 20 February 2004 to NuStar Mining Corporation Limited (“NMC”). On 26 June 2006 NMC implemented a consolidation of its outstanding capital on the basis of one post- consolidated ordinary share for each twelve pre-consolidated ordinary shares. On 4 July 2006 NMC changed its name to Intrepid Mines Limited (“IML”) upon the completion of the merger with Intrepid Minerals Corporation (“IMC”) pursuant to a scheme of arrangement. On 7 July 2006 IML commenced trading on the TSX in addition to its continued listing on the ASX. On 11 March 2008 IML completed a business combination by merging with Emperor and subsequently acquiring all of the issued securities of Emperor. For additional information on this transaction, please see the Company’s AIF for the year ended 31 December 2008. On 6 May 2009 the Company completed a transaction, disposing of its Argentinean assets by selling the shares in IMC to a third party. Additional information on this transaction is set out under heading “4.2 Significant Transactions - Sale of Casposo”. The Company’s registered office is located at Level 1, 490 Upper Edward Street, Spring Hill, Queensland, Australia, 4004. The Company no longer maintains an office in Canada but retains an investor relations officer based in Toronto. Table 1: IML’s Material Subsidiaries as at 31 December 2009 Company Parent company Date of Incorporation Place of Incorporation Percentage held by IML
Emperor (1) IML 15 July 2002 2 Australia 100%
Intrepid Mines (Isle of Man) Limited DRD (Porgera) 6 October 2008 Isle of Man 100%
DRD Isle of Man Limited Emperor 27 January 1999 Isle of Man 100%
DRD (Porgera) Limited DRD Isle of Man 23 May 1996 Papua New Guinea 100%
Fortis Limited DRD Isle of Man 16 February 2004 Papua New Guinea 100%
Tujuh Bukit Pte Ltd 3 Emperor 9 September 2008 Singapore 80%
INEC 4 IML 20 April 2006 Canada 100%
Intrepid Mines Mexico S.A. de C.V. IML 28 May 2007 Mexico 100% Notes 1 Converted to a proprietary company on 10 March 2009; 2 Date Emperor was registered as an Australian company under the Corporations Act 2001 (Cth); 3 20% interest held by PT IMN; 4 Formed on the amalgamation of Callco and Original INEC. The following chart illustrates IML’s principal subsidiaries as of the date hereof, together with the jurisdiction of incorporation of each company and the percentage of voting securities held by IML where such subsidiary is not wholly-owned.
Intrepid Mines Ltd (Australia)
Intrepid Mines Mexico Intrepid NuStar Emperor Mines Pty Ltd S.A. de C.V. Exchange Corporation (Australia) (Mexico) (Canada)
DRD Isle of Man Tujuh Bukit Pte Ltd (Isle of Man) (Singapore) 80%
DRD Porgera Fortis Limited (Papua New Guinea) (Papua New Guinea)
Intrepid Mines (IOM) Ltd (Isle of Man)
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 5 of 24
4. GENERAL DEVELOPMENT OF THE BUSINESS 4.1 Three Year History The following is a summary of the general development of the Company’s business over its last three financial years: (a) Year ended 31 December 2007 February - Company announces an update to the Paulsens resource and reserve calculation. March - Company announces proposed unsecured short term convertible loan of A$5,000,000 net of fees from Claymore Capital Pty Ltd which is subsequently converted into equity in September 2007. - Company receives Feasibility Study for the Casposo Project in Argentina (the “Casposo Project”). June - Company restructures its Paulsens debt facility with Westpac to align with life of mine plan. August - Company announces six month results including an impairment of the merger acquisition accounting carrying values. September - Company announces proposed merger with Emperor and provision of loan facility by Emperor to IMC. December - Company obtains approval for the Environmental Impact Statement for the Casposo Project. (b) Year Ended 31 December 2008 March - Company completes the acquisition of all of the issued and outstanding securities of Emperor. May - Company makes the final A$3.95 million principal repayment to Westpac Banking Corporation extinguishing all bank debt associated with Paulsens. July - Company announces an inaugural Inferred Resource for Zone C of the Tumpangpitu area of the Tujuh Bukit Project of 1.1 million ounces gold equivalent. - Company receives an updated Feasibility Report including an updated NI 43-101 Resource and Reserve on the Casposo Project. October - Company provides an update on mine life extension drilling at Paulsens and announces that an updated Resource and Reserve calculation will be delivered in 2009. November - Company announces completion of additional 1,200 metres of resource extension drilling at Paulsens. December - Company announces inaugural 1.47 million ounce gold equivalent Inferred Resource at the Tujuh Bukit Project Zone A. - Paulsens’ hedge is retired. (c) Year Ended 31 December 2009 April - Original INEC announces that all outstanding exchangeable shares of IMC will be redeemed. Holders of exchangeable shares will receive one Ordinary Share for each exchangeable share held. - the amalgamation of Original INEC and Callco is completed. May - the sale of the Casposo Project, by way of the sale of the shares of IMC to Troy Resources NL for a total consideration of US$22 million cash, is completed subject to satisfaction of the conditions subsequent. July - Company signs a Heads of Agreement with Vale Exploration Pty Ltd (a wholly-owned subsidiary of Vale S.A) (“Vale”) in respect of Vale obtaining an option to earn a 60% interest in the Tujuh Bukit sulphide copper-gold project. October - Production hiatus determined for Paulsens from April 2010 until results from further drilling are obtained. - Company signs a Binding Term Sheet outlining the terms of an option/joint venture arrangement with Cornerstone Capital Resources Inc (“Cornerstone”) in relation to Cornerstone’s Shyri property in Ecuador. December - Company announces that further deep drill testing at Paulsens has identified a high grade component to the Voyager mineralisation providing positive indications that gold production will be resumed within six months of the previously announced production hiatus. - Company announces the discovery of a new porphyry system at the Tujuh Bukit Project named Katak Prospect which is 2.5 kilometres north east of the known Tumpangpitu mineralisation. - The negotiations with Vale in respect of the option to earn an interest in the Tujuh Bukit sulphide copper- gold project were terminated. - Company announces the inaugural Inferred Resource estimate at the Tujuh Bukit Project’s Zone B. The aggregate results of Zones A, B and C are approximately 100 million tonnes at 1.0 g/t gold equivalent at a 0.5 g/t gold equivalent cut-off.
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 6 of 24
(d) Matters Subsequent to 31 December 2009 On 8 February 2010, the Company reported important regulatory progress in the advancement of the Tujuh Bukit Project in Indonesia. Indonesian regulatory authorities (the Bupati of Banyuwangi) have granted the Company’s joint venture partner, PT IMN, two Izin Usaha Pertambangan (“IUP”) for the Tujuh Bukit Project, replacing the Kuasa Pertambangan (“KP”’) previously held. The first IUP, an Exploration IUP for an area of 6,623 hectares, is valid until 25 January 2014 thus allowing the joint venture to conduct a broad exploration program at the Tujuh Bukit Project. The other, an Operation and Production IUP for an area of 4,998 hectares, covers the multi-million ounce Zones A, B and C deposits, deeper sulphide extensions, and the new Katak discovery and is valid until 25 January 2030. The latter IUP will enable the Company to complete a scoping study and progress to a feasibility study, should exploration results warrant it. The Exploration IUP may be converted to an Operation and Production IUP in due course, should all relevant conditions be fulfilled and drilling results justify the conversion. The IUPs have been issued pursuant to Indonesia’s new Mining Law, promulgated on 12 January 2009. The Forestry Permit which allows PT IMN to conduct exploration activities within forestry areas expired on 16 February 2010. Application has been made for the renewal of the permit and PT IMN is in dialogue with the relevant authorities. Exploration activities continue at Tujuh Bukit, with the knowledge of the Forestry Department. Subsequent to the year end, the Company made the decision not to fund any further commitments to complete its earn in (35%) to the Taviche Project. This does not have any impact on the Company’s financial statements as all expenditure relating to the project is expensed as incurred. This decision will result in the Company diluting its participation (with Aura Silver) in the option to earn in to the project. On 4 March 2010 the Company reported further drilling results at the Tujuh Bukit Project on the Tumpangpitu Prospect. Two significant mineralised zones, intersecting high sulphidation gold-copper-silver mineralisation and porphyry related copper- gold-molybdenum mineralisation have been intersected. This confirms the previous interpretations of a high sulphidation gold- silver +/- copper zone overlying and partially overprinting a porphyry copper-gold-molybdenum zone. During 2010, the Company will work hard to deliver on and expand the Tujuh Bukit Project’s potential value. Plans for the year include continuing drilling on Zones A, B, C, E and F in preparation for expanding the oxide resource, conducting initial drill testing of the new Katak discovery, testing several of the new target areas that have been identified, and defining an initial gold-copper sulphide inferred resource. Management is confident that the results of this work will attract more worldwide interest in both the world-class potential of the Tujuh Bukit Project and in the Company. 4.2 Significant Tansactions (a) Sale of Casposo Project On 6 May 2009 the Company completed the sale of the Casposo Project, to Troy Resources NL (“Troy”) by way of the sale of the shares of IMC, for a total consideration of US$22 million. On completion of the sale transaction Troy paid US$20 million cash. The remaining US$2 million is payable six months after the commencement of production at the Casposo Project which is currently expected to be early in 2011. (b) Shyri Project Earn in On 30 October 2009, the Company and Cornerstone signed a Binding Term Sheet outlining the terms of an option/joint venture arrangement over Cornerstone’s Shyri gold-silver-copper project in Ecuador. The Term Sheet allows for the Company to earn a 60% interest in the Shyri project by making initial cash payment of US$250,000 and making a US$500,000 private placement in Cornerstone shares. The Company has also committed to spending US$6 million dollars over 5 years, including a commitment of US$1 million in the first year. The Company may withdraw from the arrangement at any time after expending US$1 million. The private placement into Cornerstone was made on 28 January 2010. The first year’s funding will commence upon receipt of necessary government approvals to recommence activities at the project.
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 7 of 24
5. DESCRIPTION OF BUSINESS 5.1 General The Company’s principal business is the operation of Paulsens and the advanced exploration of the tenement portfolio in pursuit of precious metal projects and exploration assets. The two principal properties of the Company as at 31 December 2009 were Paulsens and the Tujuh Bukit Project (see heading 5.3 – “Principal Properties of the Company”).
(a) Principal Product As a result of the operation of Paulsens, the Company produces gold. There is a world wide gold market into which the Company can sell its gold. Gold is a metal that is traded on world markets, with benchmark prices generally based on the London market (London fix). Given the nature of the market for gold, the Company is not dependent on any particular purchaser.
(b) Competitive Conditions Both the exploration and production operations carried on by the Company are highly competitive. The Company competes with numerous other companies and entities in the acquisition of suitable gold, silver and other precious mineral exploration properties. The ability of the Company to acquire additional properties in the future will depend on its ability to operate and develop its existing properties and its ability to evaluate potential properties. (c) Adequate financing and investor support Historically, the major sources of liquidity have been the capital markets and project financing. Following the merger with Emperor in 2008 and with continued good performance of Paulsens as well as proceeds from the sale of the Casposo Project, the Company has significantly improved its liquidity. As a result, the Company expects to be able to meet its financial commitments and requirements for the year.
(d) Environmental Protection Requirements The Company’s production and exploration operations are all subject to varying degrees of government regulation relating to, among other things, the acquisition of land, pollution control and environmental protection, land reclamation, safety and production. Changes in any applicable governmental regulations to which the Company is subject may adversely affect its operations. Failure to comply with any condition set out in any required permit or failure to comply with applicable regulatory requirements may result in the Company being unable to continue to carry out its activities. The impact of these requirements cannot accurately be predicted. (e) Employees As at 31 December 2009 the Company had 11 permanent employees and one contractor in the Brisbane (Australia) corporate office, and 36 permanent and six casual employees at Paulsens. In addition at 31 December 2009, 64 contractors were engaged at Paulsens (including Barminco - underground mining, Downer EDI - crushing, ESS- camp services and Powerwest – power supply). At year end PT IMN employed 160 permanent Indonesian employees and three permanent expatriates who were associated with the Tujuh Bukit Project (including 13 PT IMN corporate office employees). (f) Specialised skill and knowledge The skill and knowledge required to develop and operate an underground mine includes experience in exploration, development, construction, mine operations, engineering, metallurgical processing and environmental compliance. The Company employs a number of technical personnel with a variety of relevant experience, education and professional designations and acquires other specialised skills and knowledge by engaging on a contract basis, professionals in geological, metallurgical, engineering, environmental and other relevant disciplines. The Company effectively seconds highly skilled technical personnel to PT IMN to work on the Tujuh Bukit Project. (g) Production In 2009 the Company’s gold production totalled 75,089 ounces (2008: 78,252 ounces), and gold sales during the year totalled 74,184 ounces (2008: 79,276 ounces). The average realised gold price in 2009 was US$966 per ounce and at an average exchange rate of A$/US$ 0.7916 and sales proceeds totalled US$ $71,736,000 This compares to an average realised gold price of US$685 per ounce, at an average exchange rate of A$/US$ 0.8532 and sales proceeds of US$54,407,000 in 2008 (43,971 ounces of the total 79,276 ounces sold in 2008 were delivered into the hedge book at A$627 per ounce).
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 8 of 24
(h) Changes to Contracts Contractors, under the supervision of the Company’s staff are engaged to carry out various aspects of the Company’s mining, development and exploration activities, including underground development, surface and underground diamond drilling and maintenance of equipment and infrastructure. Contracts are periodically renewed and/or renegotiated as and when required. The Company does not expect that the renewal and/or renegotiation of any contracts or sub-contracts will have a material effect, adverse or otherwise on the Company’s activities in the current financial year. (i) Mineral Reserves and Mineral Resources The table on page 14 summarises Paulsens’ most current mineral resources and the table on page 16 sumarises the Tujuh Bukit Project’s most current mineral reserves and mineral resources as at the dates indicated. (j) Exploration Taviche Project, Mexico During 2009 the Company was involved in exploration for silver and gold at its Taviche project in Oaxaca State, Mexico (the “Taviche Project”). The Taviche Project is a joint venture with Aura Silver Limited (“Aura”), whereby Aura and the Company are together acquiring a 70% interest in the project from Pan American Silver Corporation. The 2009 drill program (4,018.6 metres) was designed to test the geologic structure of the Higo Blanco trend on the East Taviche and Alma Delia concessions. A total of 22 holes were completed and significant mineralisation was encountered in 17 of the holes. The most significant values occurred in holes 2, 3, 16 and 22, and returned values up to 34.2 metres averaging 219.5 grams per tonne (g/t) silver equivalent at a depth of only 85 metres, including 12.1 metres averaging 533.4 g/t silver equivalent, and 1.3 metre grading 2,466.8 g/t silver equivalent in hole HBET-03. The results of the 2009 program are currently being reviewed prior to further planning for a 2010 program. Subsequent to the year end, the Company made the decision not to fund any further commitments to complete its earn in (35%) to the Taviche Project. This decision will result in the Company diluting its participation in the option to earn in to the project. Shyri Project, Ecuador On 29 October 2009 the Company and Cornerstone announced that they had signed a Binding Term Sheet outlining the terms of an option/joint venture arrangement for Cornerstone's Shyri gold-silver-copper property in Ecuador. The 300 square kilometre Shyri property is located in Azuay province, southern Ecuador, about 25 kilometres west of the city of Cuenca. The property encompasses three gold prospects, Gama, Vetas Grandes, and Canaribamba. It is strategically located between the 3.5 million ounce Quimsacocha gold project to the east (IAMGold) and the Rio Blanco gold project to the northwest (International Minerals).
5.2 Risk Factors The operations of the Company are speculative due to the high-risk nature of its business which is the acquisition, financing, exploration, development and operation of mining properties. These risk factors can materially affect the Company’s future performance and outlook and could cause some actual events to differ materially from those described in the forward-looking statements contained in this AIF. The Company employs an overall risk management program that seeks to minimise potential adverse effects on the Company’s overall performance. The program is carried out under policies approved by the Company’s Audit and Risk Committee and Board of Directors. Some of the key risks of the Company include, but are not limited to, the following: (a) Forestry issues The Indonesian Forestry Law restricts non forestry activities within protected forests and prohibits mining using an open pit method in protected forest areas. The Zone A, Zone B and Zone C resources fall within a protected forest area. PT IMN is working with relevant Indonesian authorities regarding a potential review of forest land status. While similar reviews have recently led to the granting of reclassifications, there is no assurance that the forestry reclassification will take place in this instance.
Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 9 of 24
(b) Tenement risk The Company’s economic rights to the Tujuh Bukit Project are derived from contractual arrangements in place with PT IMN, the holder of the Tujuh Bukit Project IUPs. With no direct rights in the IUPs at this stage, the Company is reliant on the observance by its joint venture partners of the contractual arrangements in place. The ownership structure in relation to the Tujuh Bukit Project is being reviewed in accordance with Indonesia’s new mining law, which was enacted in January 2009. (c) Gold price/hedging Gold price is a key performance driver and fluctuations in the price of gold can have a significant impact on the Company’s results. The gold price fluctuates daily and is affected by numerous factors beyond the Company's control. The price of gold is influenced by supply and demand, exchange rates, inflation rates, changes in global economies, and political, social and other factors. The supply of gold consists of a combination of new mine production and existing stocks held by governments, banks, producers and consumers. If the market price for gold falls below the Company's full production costs and remains at such levels for any sustained period of time, the Company may, depending on hedging practices, experience losses and may determine to discontinue mining operations or development of a project. If the price of gold dropped significantly, the economic prospects of Paulsens, the Tujuh Bukit Project and other areas of interest in which the Company has an interest could be significantly reduced or rendered uneconomic. Gold markets are marked by volatility over short periods. (d) Exploration, development and operating risks Unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, explosions, tailings impoundment failures, cave-ins, landslides and the inability to obtain adequate machinery, equipment or labour are some of the risks involved in the operation of mines and the conduct of exploration programs. The Company has relied on, and may continue to rely upon, consultants and others for exploration and development expertise. Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis. The Company believes that it will hold all the necessary licenses and permits under applicable laws and regulations and believes it is currently complying in all material respects with the terms thereof. However, there is no certainty that the Company will be able to obtain or maintain all necessary licenses and permits that may be required to further explore and develop its properties. The economics of developing mineral properties are affected by many factors including the cost of operations, variations in the grade of ore mined and metals recovered, fluctuations in metal markets, costs of processing equipment, continuing access to refining facilities on acceptable terms and other factors such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. There is no assurance that the Company's mineral exploration, development and acquisition activities will be successful. (e) Failure to retain key employees The Company is dependent on a relatively small number of key employees, the loss of any of whom could have an adverse effect on the Company. The Company has taken key personnel insurance on the Chief Executive Officer and other key executives. (f) Political Risk The primary operations of the Company are located in Australia and Indonesia. Indonesia is subject to a higher degree of political risk than that experienced in Australia or Canada. The Company is therefore subject to political, economic, social and other uncertainties, including the risk of civil rebellion, expropriation, nationalisation, land ownership disputes, renegotiation or termination of existing contracts, mining licenses and permits or other agreements, changes in laws or taxation policies, currency exchange restrictions, changing political conditions and international monetary fluctuations. The effects of these factors cannot be accurately predicted and any combination of one or other of the above may impede the operation or development of a project and even render it uneconomic.
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(g) Capital funding The Company may require additional financing. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. There can be no assurances that the Company will be successful in its efforts to arrange additional financing, if needed, on terms satisfactory to the Company. If additional financing is raised by the issuance of shares from the treasury of the Company, control of the Company may change and security holders may realise additional dilution of their investment in the Company. (h) Foreign exchange rates Dual listings on the ASX and TSX, as well as plans to develop projects in jurisdictions where the currency is US$, has resulted in the Company adopting US$ as its reporting currency. Consequently, fluctuations in the US dollar against the functional currencies of the individual subsidiaries of the Company could result in unanticipated changes in the Company’s financial results.
(i) Ore reserve and resource estimates The Company’s reported mineral reserves and resources are only estimates. No assurance can be given that the estimated mineral reserves and resources will be recovered or that they will be recovered at the rates estimated. Mineral reserve and resource estimates are based on limited sampling, and, consequently, are uncertain because the samples may not be representative. Mineral reserve and resource estimates may require revision (either up or down) based on actual production experience. Market fluctuations in the price of metals, as well as increased production costs or reduced recovery rates, may render certain mineral reserves and resources uneconomic and may ultimately result in a restatement of reserves and/or resources. Moreover, short-term operating factors relating to the mineral reserves and resources, such as the need for sequential development of ore bodies and the processing of new or different ore grades, may adversely affect the Company's profitability in any particular accounting period. (j) Safety and other hazards The mining industry is exposed by nature to safety and other hazards risks. To minimise these risks the Company provides training, testing and awareness programs to its employees in order to continuously improve work practices and the working environment. (k) Environmental regulation and liability The Company’s activities are subject to laws and regulations controlling not only the mining and exploration of mineral properties, but also the possible effects of such activities upon the environment. Environment laws may change and make the mining and processing of ore uneconomic, or result in significant environmental or reclamation costs. Environmental legislation provides for restrictions and prohibitions on spills, releases, or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas which could result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties or the suspension or closure of mining operations. In addition, certain types of operations require the submission of environmental impact statements and approval thereof by government authorities. Environmental legislation is evolving in a manner that may mean stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, Directors and employees. Permits from a variety of regulatory authorities are required for many aspects of mine development, operation and reclamation. Future legislation and regulations could cause additional expense, capital expenditures, restrictions, liabilities and delays in the development of the Company’s properties, the extent of which cannot be predicted. In the context of environmental permits, including the approval of reclamation plans, the Company must comply with standards, laws and regulations which may entail costs and delays depending on the nature of the activity to be permitted and how stringently the regulations are enforced by the permitting authority. The Company does not maintain specific environmental liability insurance. The Company will operate to ensure required environmental standards are met in all respects and has a strong commitment to ensure that environmental standards are fully integrated into the construction, commissioning and operation of the Company’s mining projects. The Company’s operation at Paulsens has environmental impacts. While this project currently complies with the applicable licence conditions accepted by the relevant authorities and government bodies in granting such approvals, the environmental
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impacts of the operation or project could be greater than estimated. In such event, the relevant authorities or government bodies could require the Company to remedy such consequences. The costs of such remediation could be material and could result in the cessation of production.
(l) Competition There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Company will compete with other mining companies, many of which have greater financial resources than the Company, for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.
(m) Uninsurable risks Exploration, development and production operations on mineral properties involve numerous risks, including unexpected or unusual geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes and other environmental occurrences, as well as political and social instability. It is not always possible to obtain insurance against all such risks and the Company may decide not to insure against certain risks because of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any further profitability and result in increasing costs and a decline in the value of the securities of the Company. The Company does not maintain insurance against political or specific environmental risks. (n) Community Risks In addition to mineral tenure and environmental permitting, the Company engages local communities where it explores. Communities may respond differently to exploration and mineral development activities from region to region. Increasingly the exploration sector is required to engage in social contracts with local residents, communities and surface land owners. Factors affecting social acceptance of exploration are variable and can be unpredictable over time. Local opinions can change rapidly about exploration activities and opinions may not be related to the activity of the Company although its ability to enter an area and conduct its programs may be affected by shifts in perception. Due to prevailing socio-economic conditions in the area in which the Tujuh Bukit Project is located, there is potential for small- scale illegal miners to return to areas located approximately 4 kilometres east, and 6 kilometres northwest, of the main project area. There is no record of illegal mining having taken place in the area of the Company’s drilling program. Illegal mining may result in injury, environmental incident and/or reputational impact. The Company is working with the local community to educate people on the risks and dangers associated with illegal mining as well as maintaining a stable local workforce to discourage such activities. (o) Native Title and Aboriginal Heritage issues Native Title claims and Aboriginal heritage issues may affect the ability of the Company to pursue exploration, development and mining on its prospective areas of interest. Paulsens access was negotiated with a native title claim group, Puutu Kunti Kurrama and Pinikura (“PKKP”) People in October 2002. In Australia the Native Title Act 1994 (Cth) (“NTA”) provides for native title claims to be filed in the Federal Court of Australia and if a claim satisfies certain threshold requirements, to be registered by the National Native Title Tribunal pending the ultimate determination of the claim by the Federal Court. The NTA also provides for the Australian States and Territories to validate certain titles and tenements which may have been invalid by reason of the existence of native title and also establishes procedures which must be followed before actions affecting native title rights are undertaken, such as the grant of mining leases and other tenements. In the case of applications for mining leases, the procedure involves a period of negotiation with the registered native title claimants/holders and, if agreement cannot be reached, an arbitrated decision by the National Native Title Tribunal. Renewals of mining tenements and applications for exploration licenses may be exempted from this process in some circumstances. Registered native title claimants/holders also have the right to object to infrastructure titles (such as for power lines and pipelines) in which event a process of consultation and independent determination applies. The resolution of Native Title and Aboriginal heritage issues is an integral part of exploration and mining operations and the Company is committed to managing the issues effectively. However, in view of the legal and factual uncertainties, no assurance can be given that material adverse consequences will not arise in connection with Native Title and Aboriginal heritage issues.
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In addition, native title claims could arise at any of the Company’s other properties throughout the world. There can be no assurance that any such claim arising can be dealt with in a manner acceptable to the parties involved and may result in the loss of the property to the Company.
5.3 Principal Properties of the Company Paulsens Gold Mine, Australia The following information is extracted from and is qualified in its entirety by the more detailed disclosure in the technical report titled “Technical Report Mineral Resource Estimates for the Paulsens Gold Mine, Pilbara Western Australia as at 31 December 2009” dated 22 January 2010, and compiled by Mr Jonathon Abbott, and Mr Brook Ekers, being Qualified Persons as described under NI 43-101 (the “Paulsens Report”). The Paulsens Report is available for viewing under the Company’s profile at www.sedar.com or www.asx.com.au and is incorporated herein by reference in its entirety. Paulsens is located in the Pilbara region of Western Australia 7 kilometres off the Nanutarra Munjina road and 190 kilometres to the west of Paraburdoo. The project is 100% owned and operated by the Company. After completion of a feasibility study in 2004, construction of the 250,000 tonne per year mine commenced in July of 2004 and concluded in early May of 2005. The first gold pour occurred in June 2005. Since then the mine and mill have been expanded to 330,000t per year and have produced at an average of 75,000 ounces of gold per year. The current mining method at Paulsens utilises long hole retreat bench stoping methods and air leg mining techniques. Ore is processed on site by conventional carbon in leach (CIL) methods. The mine operates on a fly in - fly out basis with around 80 people on site at any time. Paulsens is a mesothermal, orogenic lodestyle gold deposit with mineralisation occurring within a structurally controlled quartz veining, hosted by a folded, sedimentary sequence. Gold is associated with quartz, carbonate and pyrite with high gold grades commonly associated with massive sulphide zones. Shallow portions of the Paulsens mineralisation have been largely depleted, with remaining Mineral Resources restricted to deeper mineralisation designated as the Voyager Zone which includes upper and lower domains at the hanging wall and footwall of the quartz vein respectively. Very little of this mineralisation has been exposed by mining development and it has been largely defined by surface and underground diamond drilling undertaken by the Company. Future exploration programs are proposed to improve drill coverage of the Voyager mineralisation and test for potential down-dip extensions and lode repetitions offset by thrust faults. The current Mineral Resource estimates are based on sampling from 225 diamond holes, of which the majority represent underground diamond drilling undertaken by the Company during 2008 and 2009. Gold grades were estimated by Ordinary Kriging of nominally one metre composited gold grades within mineralised wireframes interpreted on the basis of geological logging and assayed gold grades. The resource estimates presented in Table 2 represent the remnant Paulsens mineralisation reported above a cut off grade of 4.0 g/t excluding small isolated zones that are not amenable to eventual economic extraction. The figures in this table are rounded to reflect the accuracy of estimates and exhibit rounding errors. Table 2: Paulsens - Mineral Resources as at 31 December 2009 1, 2, 3, 4 (Estimated December 2009) Measured Indicated Measured & Indicated Inferred Tonnes Au Tonnes Au Tonnes Au Au Tonnes Au Au Zone t g/t t g/t t g/t Ounces t g/t Ounces Voyager Upper - - 138,000 15.0 138,000 15.0 66,400 40,000 14 18,000 Voyager Lower - - 66,000 11.0 66,000 11.0 23,300 70,000 9 21,000 Total - - 204,000 13.7 204,000 13.7 89,700 110,000 11 39,000 Notes 1. Estimate of undiluted resource remaining at 31 December 2009 using a cut-off grade of 4.0 g/t Au, for Voyager only. Minor remnant mineralisation remains in Paulsens above Voyager. This is not included. 2. The resource estimates are based on data and mineralised domain interpretation compiled under the supervision of Mr Brook Ekers, a Qualified Person. 3. The resource estimates were prepared by Mr Jonathon Abbott, a Qualified Person, on the basis of the data and mineralisation interpretation provided by the Company. 4. Variations may occur due to rounding. Remaining resources presented here are wholly within the Voyager quartz, separated from the original Paulsens quartz by the Apollo fault. Although exploration of the Voyager mineralisation comprises some mapping of development faces, face
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sampling, and sludge hole sampling of holes drilled with a production drill rig, it is dominated by surface and underground diamond drilling, with underground diamond drilling providing the majority of exploratory sampling. The estimates are based on sampling from 225 diamond holes, of which the majority (204) represent underground diamond drilling undertaken by the Company during 2008 and 2009. Pre-collared surface diamond holes drilled by the Company and other companies provide only a small proportion (21 holes) of the resource data. Results from face sampling and sludge holes drilled with underground production rigs were used to aid interpretation of the mineralised domains, but were not used for estimation of gold grades. Reserve estimates and mining assesments are still being finalised. No reserves are currently reported. Drilling in late 2009 significantly upgraded the Voyager resource, especially once drill access allowed testing of a shallow plunging fold hinge in the main quartz. This structure is of limited horizontal extent but open down plunge and high grade. The Company expects to produce approximately 8,000 ounces during the March 2010 quarter, with production ceasing part way through the period. While production beyond this date is dependent upon mine planning and ore reserve calculations, production post recommencement is expected to continue through to at least the first quarter of 2011. The Tujuh Bukit Project , Indonesia The following information is extracted from and is qualified in its entirety by the more detailed disclosure in the two technical reports titled: 1. “Tujuh Bukit Project, Report on Mineral Resources, Located in East Java, Indonesia, Technical Report ” dated 23 September 2008 compiled by Phillip Hellman of Hellman & Schofield Pty Ltd, being a Qualified Person (the “Resource Zone C Report”). The Resource Zone C Report is available for viewing under the Company’s profile at www.sedar.com or www.asx.com.au and is incorporated herein by reference in its entirety. 2. “Tujuh Bukit Project, Report on Mineral Resources, Located in EAST JAVA, INDONESIA, Technical Report ” dated 1 February 2009 compiled by Phillip Hellman of Hellman & Schofield Pty Ltd, being a Qualified Person (the “Resource Zone A Report”). The Resource Zone A Report is available for viewing under the Corporation’s profile at www.sedar.com or www.asx.com.au and is incorporated herein by reference in its entirety. It was determined that the Zone B results were not material and therefore a technical report was not required. The announcement relating to the inaugral inferred resource Zone B is available for viewing under the Corporation’s profile at www.sedar.com or www.asx.com.au and is incorporated herein by reference in its entirety. Property The Tujuh Bukit Project comprises two tenements (Izin Usaha Pertambangan (“IUP”)). An Exploration IUP covers an area of 6,623 hectares, and is valid until 25 January 2014 thus allowing the joint venture to conduct a broad exploration program at the project. The other, an Operation and Production IUP for an area of 4,998 hectares, covers the multi-million ounce Zones A, B and C deposits, deeper sulphide extensions, and the new Katak discovery and is valid until 25 January 2030.
Location The property is located approximately 205 kilometres south east of Surabaya, the capital of the province of East Java, Indonesia and 60 kilometres south west of the regional centre of Banyuwangi. The property is centred near 8° 35’ 20.6” S and 114° 01’ 08” N and is bound within UTM co-ordinates 163,000-179,000 E and 9,042,000-9,055,000 N.
Ownership Indonesian regulatory authorities (the Bupati of Banyuwangi) have granted the Company’s joint venture partner, PT IMN, two IUPs for the Tujuh Bukit Project, replacing the KPs previously held. Tujuh Bukit Pte Ltd (Singapore) (Emperor 80%) and PT IMN have a contractual agreement in place providing for Emperor to hold an economic interest in the Tujuh Bukit Project.
Geology and mineralisation The principal styles of mineralisation that are the focus of exploration and delineation drilling on the Tujuh Bukit Project are high-sulphidation epithermal copper-gold-silver mineralisation and porphyry copper-gold mineralisation. The rocks within the porphyry environment become intensely altered by the passage of hot saline fluids of varying pH and by the late descent of cool oxidised ground-waters that are out of equilibrium with the host rocks. These areas of rock alteration are typically zoned at the district-scale, a feature that can provide vectors to porphyry copper- gold ore in magmatic-related hydrothermal systems. Porphyry deposits contain the vast majority of the copper resources of the Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 14 of 24
Pacific Island arcs and significant amounts of gold, silver and molybdenum. Porphyry copper-gold deposits tend to be large, fairly uniformly mineralised and relatively low-grade deposits with great vertical extent.
Exploration concept The Tujuh Bukit Project is of an advanced nature, with well understood geological potential and an inferred resource. It will progress by infill drilling, step-out drilling, drilling to depth and follow-up of geophysical (eg IP) and geochemical targets around the immediate area of identified mineralisation.
Status of exploration Resource delineation and step-out drilling.
Development and operations None as yet.
Qualified Person’s conclusions resource Zone C report (December 2008 Technical Report) In the qualified person’s opinion, the character of the property is of sufficient merit to justify continued drilling.
Qualified Person’s conclusions resource Zone A report (February 2009 Technical Report) A confirmatory phase of drill testing a gold-silver enriched cap over high-sulphdation epithermal Cu-Au-Ag and porphyry-style mineralisation has resulted in the delineation of an Inferred Resource in Zone A, at one of several zones of known oxide and sulphide gold-silver mineralisation within the Tumpangpitu Prospect. Zone A remains open in all directions. Resource estimation has been confined to the oxidised portions of Zone A.
Qualified Person’s recommendations February 2009 Technical Report A staged drilling program that is guided by inputs from metallurgy, pit optimisation and mine planning, geotechnical data and resource estimation along with exploration geophysics and geochemistry is recommended to proceed as budgets allow. Table 3: Summary of Inferred Resource Estimates, by g/t AuEq cut-offs, ALL ZONES 1, 2, 3, 4 Tonnes Cut-off (AuEq) Au (g/t) Ag (g/t) AuEq (g/t) Moz Au Moz AuEq (Mt) 0.50 101.6 0.60 24 0.99 2.0 3.3 0.75 56.0 0.82 31 1.31 1.5 2.3 1.00 33.7 1.05 37 1.60 1.1 1.7 Notes 1 Gold equivalents: Gold equivalence ("AuEq") has been calculated based on a US$650/oz gold price and US$11/oz silver price. Metallurgical testing achieved recoveries of app. 87% for Au and 80% for Ag. The gold equivalent grade was calculated using the following formula: AuEq = Au + (Ag / 65). The ratio of 65:1 is derived from the relative prices and metallurgical recoveries of each metal, or (Au Price x Au Recovery) / (Ag Price x Au Recovery) = (650*0.87)/(11*0.80) = 0.65 (rounded up). It is the Company's opinion that the gold and silver included in the metal equivalent calculation have a reasonable potential to be recovered. All ounces are reported and calculated as Troy ounces. 2. Cut-off grade of 0.5 g/t AuEq applied. 3 Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. 4 Tonnage and grade measurements are in metric units. Gold ounces are reported as Troy ounces.
6. DIVIDENDS IML has not paid any dividends since incorporation. The Company does not have a fixed dividend policy. Payment of dividends in the future will depend upon, among other factors, the earnings, capital requirements and financial conditions of the Company. The Company does not anticipate that any dividends will be paid in the foreseeable future.
7. DESCRIPTION OF CAPITAL STRUCTURE 7.1 Ordinary Shares The Company is authorised to issue an unlimited number of Ordinary Shares. As of the date of this AIF, IML has issued 427,902,350 Ordinary Shares. The holders of the Ordinary Shares are entitled to: - dividends, if, as and when declared by the Board of Directors; - receive notice of meetings of shareholders of IML; - one vote per share at meetings of the shareholders of IML; and - upon liquidation receive such assets of IML as are distributable to the holders of the Ordinary Shares. Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 15 of 24
Holders of Ordinary Shares do not have cumulative voting rights with respect to the election of Directors and, accordingly, holders of a majority of the votes eligible to vote at a meeting of shareholders may elect all the Directors of IML standing for election. Dividends, if any, will be paid on a pro rata basis only from funds legally available therefore. The rights set out herein are subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro rata basis with the holders of the Ordinary Shares with respect to dividends or liquidation. The Ordinary Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. IML currently has outstanding options to acquire a total of 17,986,508 Ordinary Shares. These options have exercise prices ranging from A$0.243 per share to A$1.05 per share and expire between 18 May 2010 and 29 June 2014.
7.2 Exchangeable Shares As part of the completion of the merger between IML and IMC in 2006, Original INEC issued exchangeable shares to certain shareholders of IMC to permit the deferral of taxes that would otherwise have been payable on the completion of the merger. Original INEC was authorised to issue an unlimited number of exchangeable shares. On 30 April 2009 Original INEC announced that all outstanding exchangeable shares would be redeemed. Holders of exchangeable shares were offered one Ordinary Share of IML for each exchangeable share held. Following this offer there were no remaining exchangeable shares. 8. MARKET FOR SECURITIES Since 7 July 2006 IML’s Ordinary Shares have traded on both the TSX and the ASX under the symbol “IAU”. Table 4 sets out the price ranges and volumes of the ordinary shares on the TSX from 1 January 2009 to 31 December 2009. Table 4: IAU 2009 TSX Price Range and Volume Month High (C$) Low (C$) Volume January 0.24 0.15 2,870,430 February 0.24 0.17 6,576,478 March 0.29 0.22 10,600,922 April 0.28 0.21 4,714,700 May 0.30 0.21 5,125,959 June 0.36 0.30 4,024,637 July 0.36 0.26 4,463,561 August 0.33 0.26 4,282,514 September 0.33 0.26 4,129,951 October 0.43 0.27 10,709,075 November 0.32 0.23 5,347,861 December 0.31 0.25 3,307,444 Table 5 sets out the price ranges and volumes of the ordinary shares on the ASX for each month from 1 January 2009 to 31 December 2009. Table 5: IAU 2009 ASX Price Range and Volume Month High (A$) Low (A$) Volume January 0.24 0.19 8,360,751 February 0.29 0.22 26,465,391 March 0.32 0.27 31,359,826 April 0.31 0.24 27,096,900 May 0.34 0.25 54,426,139 June 0.42 0.31 40,075.049 July 0.40 0.25 38,020,123 August 0.38 0.29 15,993,452 September 0.35 0.29 21,399,842 October 0.38 0.30 32,079,522 November 0.34 0.23 36,596,013 December 0.32 0.25 24,642,318 Intrepid Mines Limited, Annual Information Form for the year ended 31 December 2009 16 of 24
9. DIRECTORS AND OFFICERS
9.1 Details Table 6 sets out the name, province/state and country of residence, position held with the Company, principal occupation and number of shares beneficially owned by each person who is a Director and/or an executive officer of the Company. The statement as to the number of Ordinary Shares owned directly, or over which control or direction is exercised by the Directors and executive officers hereinafter named is in each instance based upon information furnished by the person concerned and is stated as at 15 March 2010. Table 6: Directors and Officers’ Details Name and municipality Position with the Ordinary Principal Occupation within the preceding five years of residence Company Shares Mr Jackson has been the Chairman of the Board and Director of the Company since 2003. He is a Non-executive Director of Red 5 Limited (since November 2003) and EIM Capital Colin Jackson 1, 2 Chairman and Non- Managers Pty Limited. Mr Jackson was a Non-executive Director of Terramin Australia 52,084 South Australia, Australia Executive Director Limited (resigned December 2005). Prior to that he was Group Executive Corporate of Normandy Mining Limited. Mr Jackson was re-elected for a further term of office on 30 May 2008 and will retire by rotation and stand for re-election in 2010. CEO of Emperor from April 2006 and of the Company since March 2008. Prior to that he was Managing Director of Placer Dome Niugini Ltd from 2004 to 2006, General Manager Brad Gordon 3 Managing Director and Porgera from 2003 to 2004, General Manager Kanowna Belle from 2000 to 2003, and 235,294 4 Queensland, Australia CEO General Manager Kalgoorlie West in 2003. In accordance with the Company’s constitution, the Managing Director is not subject to retirement by rotation. Mr Curtis was President and Managing Director of IML from July 2006 to March 2008 and Laurence Curtis 3 prior to that President and Chief Executive Officer of IMC for 11 years. He is currently a Non-Executive Director 583,834 Ontario, Canada Director of Homeland Energy Group Ltd and an Advisor to Clarus Securities Inc. Mr Curtis was re-elected to a further term of office on 15 May 2009. Currently Principal of the Minera Group Pty Ltd, a Non-executive Director of Sedgman Limited and also a Non-executive Director of Kimberley Metals Limited. He was previously Robert McDonald 1,2 a Managing Director of NM Rothschild & Sons (Australia) Limited and a Principal of New South Wales, Non-Executive Director 847,059 Resource Finance Corporation Limited, and prior to that held various roles within the Rio Australia Tinto Group. Mr McDonald was re-elected for a further term of office on 30 May 2008 and will retire by rotation and stand for re-election in 2010. Mr McMaster was the CEO of CSR Sugar Limited from 1999 to 2006 and prior to that held Ian McMaster AM 1, 3 Lead Non-Executive various senior management roles over a 30 year career with BHP. Mr McMaster was re- 470,588 Director Queensland, Australia elected to office on 30 May 2008.
Alan Roberts 2 Chairman of the Board of Ok Tedi Mining Limited and a member of the Investment Non-Executive Committee of Taurus Investment Fund. He was previously Managing Director of Lihir Gold - New South Wales, Director Limited. Director of the Company since November 2008. Mr Roberts’ appointment was Australia confirmed at the Company’s Annual General Meeting on 15 May 2009. General Counsel and Company Secretary of the Company since March 2008 and for Vanessa Chidrawi General Counsel and Emperor from May 2006 to March 2008. Prior to that attorney practising for her own 19,412 5 Company Secretary Queensland, Australia account for the past 12 years.
Stephen Smith Appointed CFO on 2 June 2008. He was CFO at Peabody Pacific Pty Ltd from July 2006 to Chief Financial Officer September 2007. Prior to that he was Executive General Manager Finance for Placer 250,000 6 Queensland, Australia Dome Asia Pacific Limited from October 2002. Executive General Executive General Manager of Exploration and New Business for Emperor since October Malcolm Norris Manager of 2006 and of the Company since March 2008. Prior to that he was General Manager 92,529 7 Victoria, Australia Exploration and New Exploration and Business Development with Indophil Resources NL from 2005 to 2006 and Business Group Manager, Exploration with WMC Resources Ltd from 2003 to 2005.
Kathleen Skerrett Canadian Company Partner with Gardiner Roberts since February 2008 and prior to that associate with 30,000 8 Ontario, Canada Secretary Gardiner Roberts LLP since February 2005. Notes 1. Member of the Audit and Risk Committee. 2. Member of the Remuneration and Nomination Committee. 3. Member of the Safety and Social Responsibility Committee. 4. Also holds options to acquire 1,470,588 Ordinary Shares and 4,500,000 share options. 5. Also holds options to acquire 2,188,235 Ordinary Shares. 6. Also holds options to acquire 2,000,000 Ordinary Shares. 7. Also holds options to acquire 3,399,999 Ordinary Shares. 8. Also holds options to acquire 95,000 Ordinary Shares.
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Any Director, other than the Managing Director, casually appointed holds office only until the conclusion of the next General Meeting of the Company and is eligible for re-election at that meeting. In addition at every Annual General Meeting one-third of the Directors shall retire from office provided that no Director (except a Managing Director or a Director being re-elected to fill a casual vacancy) may retain office for more than three years or until the third Annual General Meeting following their appointment, whichever is the longer, without submitting themselves for re-election. As of the date hereof, the Directors and executive officers of IML, as a group, beneficially owned, directly or indirectly, or exercised control or direction over 2,580,800 Ordinary Shares representing 0.0060% of the voting securities of the Company issued and outstanding on the basis of 427,902,350 Ordinary Shares.
9.2 Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions None of the Directors or executive officers of the Company is, or within the past ten years prior to the date of this AIF has been, a Director, chief executive officer or chief financial officer of any other issuer that: (a) was subject to an order that was issued while the Director or executive officer was acting in the capacity as Director, chief executive officer or chief financial officer; or (b) was subject to an order that was issued after the Director or executive officer ceased to be a Director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as Director, chief executive officer or chief financial officer. To the knowledge of the Company, no Director or executive officer of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially of control of the Company: (c) is, at the date of this AIF, or has been within the 10 years before the date of this AIF, a Director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromise with creditors or has a receiver, receiver manager or trustee appointed to hold its assets; or (d) has, within 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or has a receiver, receiver manager or trustee appointed to hold the assets of the Director, executive officer or shareholder. To the knowledge of the Company, none of the current or proposed Directors or executive officers of the Company has been subject to any penalties or sanctions imposed by a court: (e) relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority; or (f) or regulatory body that would likely be considered important to a reasonable investor deciding whether to vote for a proposed Director or making an investment decision.
9.3 Conflicts of Interest To the best of the Company’s knowledge and other than as disclosed herein, there are no existing or potential conflicts of interest among the Company and its promoters, Directors, officers or other members of management (a “Company Officer”) except that some Company Officers serve as promoters, Directors, officers or other members of management of other public companies and therefore it is possible that a conflict may arise between their duties as a promoter or member of management of such other companies and their duties as a Company Officer. 10. LEGAL PROCEEDINGS AND REGULATORY ACTIONS To the best of the knowledge of the Board of Directors, there are no current or pending legal proceedings or regulatory actions in which the Company or its subsidiaries are a party to which would likely have a material effect on the business or financial position of the Company. 11. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS None of the Company's Directors, executive officers or management, nor any associate of such Director, executive officer or manager, has any interest in any material transaction of the Company other than as follows:
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11.1 Loans to Directors and executives At the Emperor Extraordinary General Meeting held on 29 August 2006, a loan to Mr Brad Gordon to the value of A$400,000 for the purchase of shares in a Company placement was approved by shareholders. The loan is repayable after 60 months. Monthly interest payments are made at the Australian BBS plus 1% and 25% of any gross bonus or incentive payment to be utilised to reduce the outstanding balance of the loan. Interest of A$14,016 was paid by Mr Gordon for the 31 December 2009 financial year (December 2008:$15,755) at an average rate of 4.49% (December 2008: 8.31%). The loan becomes immediately repayable if Mr Gordon’s employment with the Company ceases for any reason other than redundancy. The loan balance as at 31 December 2009 was A$310,662 (December 2008: A$331,250). As at the date of this report the balance was A$238,240. There have been no other loans to Directors or executives. 11.2 Other transactions with Directors and other executives The Canadian Corporate Secretary, Ms Kathleen Skerrett, is a Partner of Gardiner Roberts LLP. Gardiner Roberts LLP Gardiner Roberts LLP has provided legal services to the Company on normal commercial terms. A former Director (retired from Board on 15 May 2009), Mr Dundo is a Partner of Q Legal. Q Q Legal Legal has provided legal services to the Company on normal commercial terms.
12. TRANSFER AGENTS AND REGISTRARS Advanced Share Registry, 150 Stirling Highway, Nedlands, Western Australia 6008 is the share registry for the Company in Australia. Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1 is the registrar and transfer agent for the Company in Canada.
13. MATERIAL CONTRACTS Table 7: Material Contracts of the Company Contracting Execution Date Party Site Contract / Term Details Sets out the commercial terms of the sale of the Casposo asset. IML, INEC, Casposo, Share Purchase Emperor, & 5 May 2009 Purchase consideration of US$22 million, of which US$20 million was Argentina Agreement Troy Resources NL payable upon completion of the sale and the remaining US$2 million is payable six months after the commencement of production at Casposo. 14. INTERESTS OF EXPERTS KPMG, Chartered Accountants (“KPMG”) are the auditors of the Company and such firm has prepared an opinion with respect to the Company’s financial statements for the year ended 31 December 2009. The following people have prepared reports for the Company in compliance with NI 43-101 with respect to the property interests of the Company throughout 2009: - Phillip Hellman (Hellman and Schofield Pty Ltd ); - Rodrigo Marinho (AMEC Americas Limited); - Jonathon Abbott (Hellman and Schofield Pty Ltd); - Ralph Penner (AMEC Americas Limited); - Per Scrimshaw (Creative Mined); - Geoffrey Challiner (AMEC Americas Limited); - Craig Jones (Kadgie Mining); - Todd Wakefield (AMEC Americas Limited); and - Brook Ekers (Intrepid Mines Limited); - William Colquhoun (AMEC Americas Limited). - Don Russell (Intrepid Mines Limited); Mr Ekers holds options to acquire 590,000 IML Ordinary Shares. Mr Russell holds options to acquire 2,000,000 IML Ordinary Shares. Mr Jones’ options lapsed upon completion of his contract in November 2009. Collectively, Messrs Ekers and Russell hold 0.00061% Ordinary Shares in IML.
15. ADDITIONAL INFORMATION Any additional information, including Directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities, options to purchase securities and interests of insiders in material transactions, is contained in IML’s Management Information Circular prepared for the Annual General Meeting of Shareholders which was held on 15 May 2009. Additional financial information is contained in the Company’s audited financial statements and Management’s Discussion and
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Analysis, with comparative figures, for the year ended 31 December 2009. This additional information can be found on SEDAR at www.sedar.com , on the ASX website www.asx.com.au , or the Company’s website www.intrepidmines.com .
16. AUDIT AND RISK COMMITTEE DISCLOSURE Attached hereto as Schedule A is the text of the Audit and Risk Committee’s Charter. The Audit and Risk Committee is currently comprised of Mssrs McDonald (Chairman), Jackson and McMaster, all of whom are independent and financially literate as those terms are defined in Multilateral Instrument 52-110. Further to the information provided in section 9.1 the following is a summary of the relevant experience of each member of the Audit and Risk Committee: Robert McDonald Mr McDonald holds a Bachelor of Commerce and a Masters in Business Administration with Honors. Mr McDonald has more than 35 years’ broad mining industry experience. His educational background and operational experience provide him with a full understanding of accounting principles and experience to understand relevant financial issues and appropriate internal controls and procedures. Colin Jackson Mr Jackson holds a Graduate Diploma in Business Administration, has practiced as a financial analyst for 12 years, was a member of the Financial and Taxation committee of the Australian Gold Council and has chaired the audit committees of three ASX listed companies for a collective eight years. His educational background and operational experience provide him with an understanding of accounting principles and experience to understand relevant financial issues and appropriate internal controls and procedures.
Ian McMaster Mr McMaster holds a Masters in Engineering, and was made an Honorary Fellow of the University of Wollongong in 1996. His operational experience required Mr McMaster to develop an understanding of accounting principles and their application as well as the knowledge and experience to review financial statements and understand the relevant financial issues and appropriate internal control procedures. Fees payable to the auditors of the Company, KPMG, for the year ended 31 December 2009 are set out in the table below. Table 8: Fees Paid to Auditors Year Ended Year Ended 31 December 2008 31 December 2009 US$ US$ Audit Fees 89,644 105,815 All Other Fees 29,526 18,721 Total 119,170 124,536
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TUJUH BUKIT PROJECT GOLD EQUIVALENT STATEMENT Disclosure for Mineral Projects). Dr Hellman is a Fellow of the Australian Institute of Geoscientists. Dr Hellman consents to the Gold equivalence (“AuEq”) for Tujuh Bukit has been calculated based inclusion in the report of the matters based on his information in the on a $650 per ounce gold price and $11 per ounce silver price. form and context in which it appears. Dr Hellman has undertaken Metallurgical testing results achieved recoveries of approximately 87% independent verification sampling and assaying of drill core with a for gold (“Au”) and 80% for silver (“Ag”). The gold equivalent grade close agreement of results with those previously reported. was calculated using the following formula: AuEq = Au + (Ag / 65). The ratio of 65:1 is derived from the relative prices and metallurgical The information in this report that relates to exploration results at recoveries of each metal, or (Au Price x Au Recovery) / (Ag Price x Ag Taviche and Tujuh Bukit is based on information compiled by or Recovery) = (650*0.87)/(11*0.80) = 0.65 (rounded up). under the supervision of Mr Malcolm Norris, who is a member of The Australasian Institute of Mining and Metallurgy. Mr Norris is a It is the Company’s opinion that the gold and silver included in the full-time employee of the Company and has sufficient experience metal equivalent calculation have a reasonable potential to be which is relevant to the style of mineralisation and type of deposit recovered. under consideration and to the activity which he is undertaking to • Cut-off grade of 0.5g/t AuEq applied; qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral • Rounding as required by reporting guidelines may result in Resources and Ore Reserves’ and is a Qualified Person as defined apparent differences between tonnes, grade and contained metal in the Canadian National Instrument 43-101 (standards of content; Disclosure for Mineral Projects). Mr Norris consents to the inclusion • Tonnage and grade measurements are in metric units; in the report of the matters based on his information in the form and • Gold ounces are reported as troy ounces; and context in which it appears. • The resource estimates were prepared by P. Hellman, an The information in this report that relates to exploration results, Independent Consultant to the Company and a Qualified Person. data quality, geological interpretations and potential for eventual economic extraction for the Paulsens mineral resources, is based TAVICHE PROJECT EQUIVALENT STATEMENT on information compiled by or under the supervision of Mr Brook Silver and gold equivalent calculations for the purposes of the Taviche Ekers (Member of the Australian Institute of Geoscientists) who is a drilling program use metal prices of $600 per ounce for gold and $10 full-time employee of the Company. Mr Ekers has sufficient per ounce for silver. Silver and gold equivalent calculations reflect experience which is relevant to the style of mineralisation and type gross metal content and have not been adjusted for metallurgical of deposit under consideration and to the activity which he is recoveries. The silver equivalent ratio is 60:1 (Ag:Au). It is the undertaking to qualify as a Competent Person as defined in the Company's opinion that all the elements included in the metal 2004 edition of the ‘Australasian Code for Reporting of Exploration equivalents calculation have a reasonable potential to be recovered. Results, Mineral Resources and Ore Reserves’ and is a Qualified Person as defined in the Canadian National Instrument 43-101 FORESTRY ACTIVITIES (standards of Disclosure for Mineral Projects). Mr Ekers consents to the inclusion in this announcement of the matters based on his The Indonesian Forestry Law restricts non forestry activities within information in the form and context in which it appears. protected forests and prohibits mining using an open pit method in protected forest areas. The Zone A, Zone B and Zone C resources fall The information in this report that relates mineral resource within a protected forest area. the Company’s Alliance partner, PT estimation for Paulsens is based on information compiled by or IMN, is working with relevant Indonesian authorities regarding a under the supervision of Mr Jonathon Abbott who is a full time potential review of forest land status. While similar reviews have employee of Hellman and Schofield Pty Ltd and a member of the recently led to the granting of reclassifications, there is no assurance Australasian Institute of Mining and Metallurgy. Hellman & that the forestry reclassification will take place in this instance. Schofield were not required to review the quality of the sampling data, or geological interpretation as the Company are accepting QUALIFIED PERSON responsibility for these aspects of the estimates. Mr Abbott has sufficient experience which is relevant to the style of mineralisation Information that relates to mineral resources at Tujuh Bukit is based and type of deposit under consideration and to the activity which he on information compiled by or under the supervision of Dr Phillip is undertaking to qualify as a Competent Person as defined in the Hellman, who is an independent consultant of Hellman and Schofield 2004 edition of the “Australasian Code for Reporting of Exploration Pty Ltd to the Company. Dr Hellman has sufficient experience which is Results, Mineral Resources and Ore Reserves” and is a Qualified relevant to the style of mineralisation and type of deposit under Person as defined in the Canadian National Instrument 43-101 consideration and to the activity which he is undertaking to qualify as (standards of Disclosure for Mineral Projects). Mr Abbott consents an Independent Competent Person as defined in the 2004 edition of to the inclusion in the report of the matters based on his information the ‘Australasian Code for Reporting of Exploration Results, Mineral in the form and context in which it appears. Resources and Ore Reserves’ and an Independent Qualified Person as defined in the Canadian National Instrument 43-101 (standards of
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SCHEDULE A INTREPID MINES LIMITED AUDIT & RISK COMMITTEE CHARTER The Board of Directors (the “Board”) of Intrepid Mines Limited (the “Company” or “Intrepid”) has established the Audit and Risk Committee (the “Committee”) in accordance with regulation 73.1 of the Company’s Constitution. This Charter sets out the Committee’s overall purpose, authority, organisation and roles and responsibility. 1. Overall purpose and objectives The Committee will assist the Board in fulfilling its oversight responsibilities. The Committee will review the financial reporting information of the Company and its 100% owned subsidiaries (the “Group”) for release to shareholders and public. It will also review the system of internal control and management of financial risks, the audit process, and the Company’s process for monitoring compliance with laws and regulations and its own code of conduct. In performing its duties, the committee will maintain effective working relationships with the Board, management, and the external auditors. 2. Authority The Board authorises the Committee, within the scope of its responsibilities, to: • Seek any information it requires from any employee (and all employees are directed to co-operate with any request made by the Committee) and external parties; • Obtain outside legal or other professional advice; and • Ensure the attendance of Company officers at meetings as appropriate. 3. Roles and Responsibilities The Board and external auditors are accountable to shareholders. The Committee is accountable to the Board. To fulfil its responsibilities the Committee shall action the following: Charter • Review and, if appropriate, update this Charter at least annually. Financial Reporting and Internal Control • Review with management and the external auditors the Group’s financial statements, stock exchange and media releases in respect of each half year and full year; • Review with management and the external auditors the accounting policies and practices adopted by the Company and their compliance with accounting standards, stock exchange listing rules and relevant legislation; • Gain an understanding of whether recommendations made by external auditors have been implemented by management; • Review the regular reports prepared by the internal auditor including the effectiveness of the Groups internal financial controls; • Consider with the external auditors any fraud, illegal acts, deficiencies in internal control or other similar issues; • Ask management and the external auditors about significant risks and exposures and the plans to minimise such risks; and • Review any legal matters which could significantly impact the financial statements. External Auditor • Review and recommend to the Board the external auditors to be proposed to shareholders, following a commercial tender process if deemed necessary; • Review with the auditors the planned scope of their audit and subsequently their audit findings including any internal control recommendations; • Periodically consult with the external auditors out of the presence of management about the quality of the Group’s accounting principles, material judgements and any other matters that the Committee deems appropriate; • Periodically review the performance of the external auditors and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements;
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• Review and approve any non-audit work and related fees to be carried out by the external auditors; • Ensure that external auditors submit a written statement outlining all of their professional relationships with the Group including the provision of services that may affect their objectivity or independence; • Review and discuss with the external auditors all significant relationships they have with the Company to determine their independence. Internal Audit • Consider and monitor the need for an internal audit function to review the activities and organisational structure of the Company; • Review the qualifications of internal audit personnel and concur in the appointment, replacement, reassignment or dismissal of such personnel; • Review the effectiveness of the internal audit function; • Meet separately with internal audit personnel to discuss any matters that the Committee or auditors believe should be discussed privately; • Ensure that significant findings and recommendations made by the internal auditors are received and discussed on a timely basis; • Ensure that management responds to recommendations by the internal auditors; and • Review the plans for internal audit and external audit, to make sure the external audit role does not duplicate effort and makes full use of the work performed by internal audit, to the extent possible. Risk Management • Review and evaluate the internal processes for determining and managing key risk areas; • Ensure the Board is aware of matters which may significantly impact the financial condition or affairs of the business; • Evaluate the process the Company has in place for assessing and continuously improving internal controls, particularly those related to areas of material risks; and • To provide oversight to the Company’s risk identification and risk review process. Other Responsibilities The Committee shall also perform any other activities consistent with this Charter that the Committee or Boards deem appropriate. This will include but not be limited to: • Evaluate the Committee’s own performance on a regular basis; • Review the Group’s tax planning and compliance; and • Review the Groups insurance cover. 4. Organisation Membership • The Committee will comprise not less than three members, all of whom will be Non-executive Directors and a majority of whom should be independent Directors; • Each member should be independent of management and capable of making a valuable contribution to the Committee; • At least one member of the Committee should have a finance background; • The Chairman of the Committee shall be an independent Director nominated by the Board and not the Chairman of the Board; • Members will be appointed for a three year term of office subject to review at any time by the Board: • A quorum for any meeting will be two members; and • The secretary of the Committee will be the Company Secretary, or such other person as nominated by the Board. Attendance of Meetings • The Committee may invite such other persons (e.g. the CEO, CFO, Financial Controller) to its meetings, as it deems necessary; • The external auditors should be invited to make presentations to the Committee as appropriate; • Meetings shall be convened at least three times per year or more frequently as circumstances require; and • The proceedings of all meetings will be minuted and the minutes should be presented to the next Board meeting after each Committee meeting.
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