CREATING A LEADING DIVERSIFIED MINING COMPANY ANNUAL REPORT 2015 OUR MISSION Our Mission statements are: • Engaging our people through development of their capabilities, and recognition of their contributions to our future. • Encouraging innovation to drive efficiency. • Achieving sustainable growth through high returns from diverse assets. • Creating a strong sense of purpose by fostering a culture of ownership across the business. WORKING TOGETHER TO ACHIEVE SHARED GOALS “We are intent on creating value for our stakeholders in a safe and sustainable way.” Graham Burns Registered Manager Jaguar Operations JAGUAR HIGH MARGIN ASSETS WE WILL BE A DIVERSIFIED MINING COMPANY DELIVERING SUPERIOR RETURNS FOR ALL STAKEHOLDERS. OUR VALUES We will build an organisation that reflects: SUSTAINABILITY Putting health and safety first, being environmentally responsible, and supporting our communities. ACCOUNTABILITY Taking ownership for what we do and responsibility for others. TEAMWORK Working together to achieve shared goals. INTEGRITY Doing what is right and doing what we say we will do. DILIGENCE Careful and persistent effort. RESPECT Valuing the views of others and accepting people for who they are. Annual Report 2015 1 PRODUCING VALUED COMMODITIES “We produce nickel, copper, zinc, silver, gold in ore and concentrates. Tropicana produces gold. These metals are used in many ways by many people.” Amanda Wilson Mill Trainer Jaguar Operations 2 Independence Group NL CONTENTS FY2015 Scorecard 6 Company Highlights 10 Board Profile 22 Chairman’s Review 24 Managing Director’s Report 26 Operations 29 Regional Exploration 50 Mineral Resources and Ore Reserves 59 Financial Report 65 Additional ASX Information 159 Glossary of Terms 160 2015 Sustainability Report With the issue of this 2015 annual report, Independence Group NL (IGO) has also published a Sustainability Report. Shareholders are referred to IGO’s 2015 Sustainability Report for the first time. It includes sections on community development, our Code of Conduct and disclosure on sustainability and community matters that were reported in previous annual reports. 2015 Corporate Governance Statement and Appendix 4G disclosures IGO has published its 2015 Corporate Governance Statement and the disclosures required by Appendix 4G of the ASX Listing Rules in the Governance Section of its website: http://www.igo.com.au/irm/content/governance.aspx?RID=295. Shareholders are encouraged to read the Corporate Governance Statement and Appendix 4G disclosures. All monetary amounts are in Australian dollars unless otherwise noted. Statistics related to hours worked as presented in this report include both permanent full-time and part-time IGO employees and contractors. Glossary of Terms Readers are encouraged to refer to the Glossary of Terms of this report for further explanation of various terms set out in this Annual Report. Annual Report 2015 3 DELIVERING SUPERIOR RETURNS IGO WILL CONTINUE TO ACHIEVE SUSTAINABLE GROWTH THROUGH THE TARGETING OF PROJECTS THAT HAVE SCALE, HIGH MARGIN AND LONG-LIFE POTENTIAL. NOVEMBER 2010 Tropicana Project development decision MARKET CAP $1 billion AUGUST 2005 Tropicana discovery hole MARKET CAP $175 million SEPTEMBER 2002 Long Operation acquisition completed with production starting October 2002 JANUARY 2002 MARKET CAP $23 million Listed on ASX raising $4 million (ASX:IGO) MARKET CAP $9 million Tropicana Joint Venture agreed MARKET CAP $13 million 4 Independence Group NL SEPTEMBER 2015 Acquisition of Sirius completed IGO MARKET CAP $1.6 billion SEPTEMBER 2013 First Gold production from Tropicana MARKET CAP $926 million JUNE 2011 Jabiru Metals takeover completed (Jaguar Operation) MARKET CAP $1.2 billion LONG-LIFE HIGH MARGIN ASSETS Annual Report 2015 5 FY2015 SCORECARD SAFETY There has been a significant improvement over the past two years in the Company’s safety performance. The total recordable injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR) expressed in number of injuries per million hours worked significantly improved over the past two years. This is a credit to our people. 16 50 45 14 40 12 35 10 30 8 25 LTIFR 20 TRIFR 6 15 4 10 12 Mthly Rolling LTIFR(1) 2 TRIFR(2) 5 0 0 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 (1) LTIFR is lost time injury frequency rate expressed in number of injuries per million hours worked. (2) TRIFR is total recordable injury frequency rate expressed in number of injuries per million hours worked. FY2015 SCORECARD – CORE METRICS Metric Target(1) Achieved Score Tropicana Gold production (oz) 141,000 – 147,000 148,923 Cash cost ($/oz) 590 – 630 568 Long Nickel production (t) 9,000 – 10,000 10,198 Cash cost ($/lb) 4.30 – 4.70 4.01 Jaguar Zinc production (t) 40,000 – 43,000 44,999 Copper production (t) 5,800 – 6,500 7,380 Cash cost ($/lb) 0.40 – 0.60 0.43 (1) Original FY2015 guidance published on 28 July 2014. 6 Independence Group NL FY2015 SCORECARD – STRATEGIC METRICS Achieved Objective $ million Score $26M Brownfields exploration 25.7 $27M Sustaining capex 24.4 $11M Development capex 11.4 • (1) $11M Greenfields exploration 11.5 • (2) $3M Stockman development 0.8 Supplement exploration portfolio with mature projects WIP* • (3) Advance Stockman through permitting to decision WIP* • (4) Consider project acquisition or JV Sirius (1) Committed to additional work to accelerate vertical development and develop drill drive at Jaguar (2) Committed to additional work at Salt Creek JV (3) Reduced long list of prospective areas to short list, now doing detailed assessments (4) Key approval from Minister for Planning obtained, now doing detailed permitting and licencing * WIP means work in progress FY2015 SCORECARD – A HISTORY OF GROWING REVENUE AND CASH FLOW 600 Annual Revenue ($M) 500 400 $M 300 200 100 - 03 04 05 06 07 08 09 10 11 12 13 14 15 Year 250 Annual Net Cash Flow from Operating Activities ($M) 200 150 $M 100 50 - 03 04 05 06 07 08 09 10 11 12 13 14 15 Year Annual Report 2015 7 SIRIUS RESOURCES NL (SIRIUS) TRANSACTION HIGHLIGHTS • Acquisition has created a leading Australian diversified mining company. • Strong strategic rationale for transaction. • Acquisition of Sirius is consistent with IGO’s clearly defined growth strategy. • Delivers shareholders exposure to both Tropicana and Nova. • Combines near term development Nova Project with IGO’s strong current cash flows. • Portfolio of high quality assets (margin, mine life, jurisdiction and relevancy). • Transaction was well supported by Sirius shareholders with 98% of shares voted and 97% of shareholders voting, voted for the transaction. • Consideration shares issued on the Implementation Date, 22 September 2015. • Mark Bennett and Neil Warburton from Sirius appointed to IGO Board in October 2015. A SUMMARY OF IGO’S ASSETS FOLLOWING THE ACQUISITION OF SIRIUS Tropicana Long Jaguar Nova Stockman Ownership 30% 100% 100% 100% 100% Location WA WA WA WA Vic Stage Production Production Production Construction Permitting Mine type Open Pit Underground Underground Underground Underground Commodity Au Ni Zn/Cu Ni/Cu Cu/Zn Resources(1) (2) 115.7Mt @ 1.89g/t 1.4Mt @ 4.8% Ni 4.5Mt @ 1.5% Cu 14.3Mt @ 2.3% Ni 14Mt @ 2.1% Cu Au for 7.04 Moz Au for 66.4 kt Ni 6.5% Zn for 67.0 kt 0.9% Cu for 325 kt 4.3% Zn for 293.7 kt Cu and 289.7 kt Zn Ni and 134 kt Cu Cu and 598.4 kt Zn Reserves(1) (2) 48.5Mt @ 1.93g/t 0.61Mt @ 3.6% Ni 1.2Mt @ 1.7% Cu 13.1Mt @ 2.1% Ni 9Mt @ 2.1% Cu Au for 3.01 Moz Au for 22.0 kt Ni 7.6% Zn for 19.7 kt 0.9% Cu for 273 kt 4.5% Zn for 189.0 kt Cu and 87.8 kt Zn Ni and 112 kt Cu Cu and 407.8 kt Zn Mine life (years) 9 3 3 10 8 FY2015 production 148,923 10.2kt Ni 45kt Zn + 7.4kt Cu NA NA FY2015 cash costs(3) $568/oz $4.01/lb Ni $0.43/lb Zn NA NA Start-up capex NA NA NA $443M(4) $202M(5) (1) See Mineral Resources and Ore Reserves in this report and IGO’s Mineral Resources and Ore Reserves update released to ASX on 28 October 2015 for further detail. (2) Tropicana Resources & Reserves are stated on a 100% basis. (3) FY2015 cash costs are expressed as per ounce of gold produced and per payable pound of nickel or zinc produced, net of by-product credits and royalties. (4) $138M spent as at 30 September 2015. (5) Capex decision not yet made on Stockman. PLANNING FOR SUCCESS “We want our people to be safe. This is a team effort.” Ted Moir Shift Boss Long Operation 8 Independence Group NL Annual Report 2015 9 COMPANY HIGHLIGHTS SAFETY • The total recordable injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR) expressed in number of injuries per million hours worked significantly improved over the past two years. • The number of lost time injuries (LTI) during FY2015 was four (FY2014: seven). FINANCIAL HIGHLIGHTS • Revenue increased to $499 million (FY2014: $399 million) primarily due to a full 12 months of revenue from Tropicana. • Underlying EBITDA1 increased to $213 million (FY2014: $148 million). • The Company realised a $77 million Net Profit After Tax in FY2015 (FY2014: $49 million). • Net cash flows from operating activities increased to $202 million (FY2014: $129 million). • At 30 June 2015, the Company had cash and cash equivalents of $121 million (2014: $57 million) and debt of less than $1 million (2014: $29 million). • The Company announced a fully franked FY2015 Final Dividend of 2.5 cents per share (FY2014: 5 cents). • Total fully franked dividends paid during FY2015 were 11 cents per share (FY2014: 4 cents).