More annual reports from IGO:
2023 ReportPeers and competitors of IGO:
Silver Bull Resources, Inc.A N N U A L R E P O R T
2014 TROPICANA GOLD MINE
P R O D U C T I O N R A M P U P C O M P L E T E D
Joint Venture with
AngloGold Ashanti
Scoping Study
commenced
2001
2002
2005
2006
2007
Tenement
Application
Lodged
Discovery Hole
Pre-feasibility
Study commenced
Bankable Feasibility
Study commences
Construction
Completed and first
gold poured (Sept 2013)
2009
2010
2013
Project Approved by
Joint Venture Partners
2014
Production
Ramp-up to
nameplate
capacity
completed
(March 2014)
ANNUAL REPORT 2014 1
CONTENTS
Company Highlights
Board Profile
Chairman’s Review
Managing Director’s Report
Operations and Projects
Regional Exploration
Community Development and Assistance Programs
Mineral Resources and Ore Reserves
Corporate Governance Statement
Financial Report
Additional ASX Information
Glossary of Terms
COMPANY DIRECTORY
7
13
14
16
19
41
45
47
53
65
136
137
Directors
Perth Office
Peter Bilbe
(Chairman and Non-Executive Director)
Peter Bradford
(Managing Director)
Kelly Ross
(Non-Executive Director)
Rod Marston
(Non-Executive Director)
Geoffrey Clifford
(Non-Executive Director)
Peter Buck
(Non-Executive Director)
Management
Peter Bradford
(Managing Director)
Brett Hartmann
(Group Operations Manager)
Tony Walsh
(Company Secretary & General
Manager Corporate)
Suite 4, Level 5
South Shore Centre
85 South Perth Esplanade
South Perth WA 6151
Postal: PO Box 496
South Perth WA 6951
Telephone: +61 8 9238 8300
Facsimile: +61 8 9238 8399
Email: contact@igo.com.au
Website: www.igo.com.au
Share Registry
Computershare Investor Services Pty
Limited
Level 2, 45 St Georges Terrace
Perth WA 6000
Telephone: 1300 850 505 (within
Australia),
+61 3 9415 4000 (outside Australia)
Fax: +61 3 9473 2500
Email: www.investorcentre.com/contact
Web: www.computershare.com
Matt Dusci
(General Manager New Business)
Shares
Listed on Australian Securities
Exchange [ASX]
ASX code: IGO
Shares on issue: 234,256,573 ordinary
shares
Scott Steinkrug
(Chief Financial Officer)
Sam Retallack
(Human Resources Manager)
Auditor
BDO Audit (WA) Pty Ltd
128 Hay Street
Subiaco WA 6008
Telephone: +61 8 9380 8400
2 INDEPENDENCE GROUP NL
T O B U I L D A D I V E R S I F I E D
R E S O U R C E S G R O U P D E L I V E R I N G
S U P E R I O R R E T U R N S
ANNUAL REPORT 2014 3
OUR VISION
“To build a diversified resources group delivering superior returns”
OUR MISSION
•
•
•
Engaging our people through development of their capabilities and recognition of their contributions to our future
Encouraging innovation to drive efficiency and growth
Achieving measured and sustainable growth through high returns from diverse, low cost, long life assets
• Committing to the wellbeing of all stakeholders
OUR VALUES
We will build an organisation that reflects the following values:
•
•
•
Integrity: Working as a whole (undivided) and with honesty and strong moral principles
Teamwork: Working together to achieve shared goals
Accountability: Taking ownership for what we do and responsibility for others
• Diligence: Careful (safe) and persistent effort
•
Respect :Valuing the views of others and accepting people for who they are
4 INDEPENDENCE GROUP NL
Darlot JV (Cu-Zn-Ag)
IGO earning 70-80%
Karlawinda (Au)
IGO 100%
Bryah Basin JV (Cu)
IGO earning 70-80%
JAGUAR MINE (Zn-Cu-Ag)
IGO 100%
LONG MINE (Ni)
IGO 100%
Rebecca JV (Ni-Cu-PGE)
IGO earning 70%
Empress Springs (Au)
IGO earning 100%
Lake Mackay JV (Au)
IGO earning 70%
TROPICANA JV (Au)
IGO 30%
Stockman (Cu-Zn-Ag-Au)
IGO 100%
Gold Projects
Mines
De Beers Diamond Database sample locations
Base Metal Projects
Development Projects
Figure 1: Independence Group NL (“IGO” or the “Company”): Mining operations and project locations
ANNUAL REPORT 2014 5
W O R K I N G A S A W H O L E
( U N D I V I D E D ) A N D W I T H H O N E S T Y
A N D S T R O N G M O R A L P R I N C I P L E S
Integrity
6 INDEPENDENCE GROUP NL
COMPANY HIGHLIGHTS
FINANCIAL HIGHLIGHTS
•
The Company realised a $46.6 million Net Profit After Tax in the 2014 Financial Year (FY2014) (FY2013: $18.3 million), which
included an abnormal non-cash impairment of $17 million.
• Underlying EBITDA1 increased to $174.8 million (FY2013: $56.8 million).
•
Revenue increased to $399.0 million (FY2013: $225.9 million) primarily due to the addition of revenue from Tropicana.
• Net cash flows from operating activities increased to $153.6 million (FY2013: $67.5 million).
•
•
•
At 30 June 2014 the Company had cash and cash equivalents of $57.0 million (2013: $27.2 million) and debt of $29.0
million (2013: $20.0 million), a net increase of $14.8 million since 30 June 2013 which is inclusive of the Tropicana project
construction spend.
The Company announced a fully franked Final Dividend of 5.0 cents per share (FY2013: 1.0 cent).
Total fully franked dividends paid during FY2014 were 4.0 cents per share (FY2013: 2.0 cents).
OPERATIONAL SUMMARY
•
•
•
Tropicana Gold Mine (TGM) [IGO 30%]: Ramp up to nameplate capacity is now complete following commissioning and first
gold pour in September 2013. Targeted production from Tropicana in FY2015 is expected to be in the range of 470,000 to
490,000 ounces (oz) (100% basis), with cash costs2 expected to be in the range of $590 to $630 per ounce of gold
(A$/oz Au).
Long Operation [IGO 100%]: Annual production was 10,909 tonnes (t) of contained nickel metal in FY2014 (FY2013: 11,180t)
9% above the upper range of guidance. Cash costs including royalties and by-product credits for the year were $3.78 per
payable pound of nickel (FY2013: $4.34), 12.1% below the lower end of guidance.
Jaguar Operation [IGO 100%]: Production for FY2014 was 41,162 tonnes of contained zinc metal (FY2013: 33,809t), 7,692
tonnes of contained copper metal (FY2013: 4,992t) and 1,657,161 oz of contained silver metal (FY2013: 1,376,804 oz). The
payable cash costs including royalties and by-product credits were $0.31 per pound zinc (FY2013: $0.49 per pound zinc),
being 22.5% below the lower end of market guidance. Production of copper was 28.2% above the higher end of guidance
and zinc production was 1.6% above the upper range of guidance.
JAGUAR (Zn-Cu-Ag)
IGO 100%
TROPICANA JV (Au)
IGO 30%
LONG MINE (Ni)
IGO 100%
Gold Projects
Base Metal Projects
Mines
1 See JORC Code (2012) Competent Persons’ Statements and Forward-looking statements in Section 8 for a definition of Underlying EBITDA.
2 See JORC Code (2012) Competent Persons’ Statements and Forward-looking statements in Section 8 for a definition of cash costs.
ANNUAL REPORT 2014 7
FY2014 Under lying EBITDA 3 Analysis
$85M
$2.3M
$4.6M
$4.3M
$12.9M
$53M
$61M
Long
Jaguar
Tropicana MTM Hedging(1) PRP(2)
Exploration
Corporate
Year on Ye ar NPAT Analysis
$9.6M
$0.7M $6.2M
$4.2M
$1.3M $18.4M
$1.2M
$0.8M $1.5M $4.5M
$46.6M
$19.0M
$35.2M
$18.3M
$M
$250
$200
$150
$100
$50
$0
$M
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
FY13
Tropicana U nderlying E BIT
Revenue (Volu m e variance)
Revenue (Price variance)
C ost of production
D & A
C orporate
M T M H edging
Exploration Im pairm ent
Exploration Expense
FY14
P R P
M T M Investm ents
N et Finance C ost
Notes
(1) MTM is mark to market.
(2) PRP is the non-cash charge for the Company’s employee performance rights plan.
3 See JORC Code (2012) Competent Persons’ Statements and Forward-looking statements in Section 8 for a definition of Underlying EBITDA.
FINANCIAL SUMMARY
Financial Year Ended 30 June
2014
2013
Increase
Total Revenue
Underlying EBITDA4
Profit Before Tax
Profit After Tax
Net Cash Flow From Operating Activities
Total Assets
Total Liabilities
Shareholders’ Equity
Net tangible assets per share
$399.0M
$225.9M
$174.8M
$56.8M
$67.8M
$27.8M
$46.6M
$18.3M
$153.6M
$67.5M
$891.3M
$822.0M
$204.4M
$172.5M
$686.9M
$649.5M
$2.94
$2.79
77%
208%
144%
155%
128%
8%
18%
6%
5%
4 See JORC Code (2012) Competent Persons’ Statements and Forward-looking statements in Section 8 for a definition of Underlying EBITDA.
8 INDEPENDENCE GROUP NL
PROJECT AT FEASIBILITY STUDY STAGE
Stockman project [IGO 100%]
The Stockman Project’s Environmental Effects Statement (EES) permitting documentation for the State of Victoria (also accredited
with the Federal EPBC Act) was completed and lodged during FY2014, with permitting expected to be received in the first half of
FY2015.
The Enhanced Feasibility Study (EFS) was progressed in parallel with the approvals process. The Company expects to complete
the EFS work in the first half of FY2015. This will allow an accurate project timeline and the approval conditions to be properly
assessed and integrated into the final investment assessment expected to be considered by the Board in the December 2014
Quarter.
EXPLORATION PROJECTS
Tropicana Gold Mine [IGO 30%] – Near Mine Exploration
Work on the Havana Deeps Pre-Feasibility study included the design, permitting and site preparation for the 3D seismic survey
targeting depth extensions to the Tropicana and Havana mineralisation. The survey was completed early in the September 2014
Quarter and will be used to help define drill targets below the current mineral resource pit shells.
Tropicana Project – Beachcomber Joint Venture (IGO Earning 70%)
During FY2014, the Company entered into a joint venture with AngloGold Ashanti Australia Pty Ltd (AngloGold Ashanti) on five
tenements at the southern end of the Tropicana footprint whereby the Company has the right to increase its interest in these
tenements from 30% to 70% by spending $3M over 4 years. The Company has identified Electromagnetic (EM) conductors co-
incident with copper geochemical anomalism defined in previous aircore drilling, which warrant drill testing. Drill testing is planned
for FY2015.
Jaguar Regional Exploration - Darlot JV (IGO Manager And Earning 70% - 80%)
During FY2014, the Company entered into a joint venture on the Darlot Project, held by Enterprise Metals Limited (ASX: ENT). The
Company is earning a 70%-80% interest in the project which covers some 740 square kilometres of tenure approximately 60km
north and along-strike from IGO’s Jaguar Project. The Project, which covers similar volcanic stratigraphy to the Jaguar Project, has
strategic value to the Company as any base metals discoveries are potentially within economically viable trucking distance of its
Jaguar processing facility.
Lake Mackay Exploration Alliance (IGO Has Potential To Earn Up To 70%)
During FY2014, the Company entered into an exploration alliance with ABM Resources NL (ASX: ABU) under which the Company
could earn up to 70% of a portfolio of tenements in the Lake Mackay region in the Northern Territory. The Lake Mackay Project
is located 400km northwest of Alice Springs, adjacent to the Western Australian border, and includes 7,200 square kilometres of
exploration licences and 5,000 square kilometres of exploration licence applications. The project area is considered prospective
for gold, base metals and nickel sulphide mineralisation.
Bryah Basin Joint Venture (JV) (IGO Manager And Earning 70% - 80%)
During FY2014, the Company entered into an exploration alliance with Alchemy Resources Limited (ASX: ALY) under which the
Company could earn up to a 70% interest in ALY’s Bryah Basin portfolio of tenements. The Bryah Basin JV tenure is situated
approximately 40km west along strike from the DeGrussa Cu-Au VMS deposit currently being mined by Sandfire Resources
Ltd (ASX: SFR) and covers the same prospective Narracoota Volcanic host stratigraphy. The Company intends to apply the
exploration techniques developed at these projects together with its in-house geophysical expertise in the exploration of the Bryah
Basin JV Project.
ANNUAL REPORT 2014 9
OUTLOOK
A major focus for IGO in the 2015 financial year (FY2015) will be working with its joint
venture partner, AngloGold Ashanti, on gaining additional operating efficiencies at
the TGM. IGO’s attributable gold production from this project in FY2015 is expected
to be in the range of 141,000 to 147,000 ounces at a cash cost plus royalties in the
range of $590 to $630/oz Au. IGO’s attributable share of production from TGM is
expected to provide substantial cash flows and profits to IGO during FY2015 and
beyond.
Production guidance for the Long Operation for FY2015 is 230,000 to 270,000 ore
tonnes for production of between 9,000 and 10,000 tonnes of contained nickel.
Payable cash costs plus royalties for FY2015 are forecast at $4.30 to $4.70 per
payable pound of nickel, net of copper credits. Exploration at Long over the next 12
months will continue to test for extensions to existing deposits and for new deposits in
the tenement area.
Production guidance for the Jaguar Operation for FY2015 is 420,000 to 440,000
ore tonnes for production of 5,800 to 6,500 tonnes of copper metal, 40,000 to
43,000 tonnes of zinc metal and 1,000,000 to 1,100,000 ounces of silver metal in
concentrate. Cash costs for FY2015 are forecast at A$0.40 to A$0.60 per payable
pound of zinc, including royalty costs and net of copper and silver credits. Drilling
over the next 12 months will focus on increasing the confidence in existing indicated
and inferred resources and looking for new deposits.
At the Stockman Project in Victoria, work to complete the EES permitting and EFS is
expected to conclude in the first half of FY2015. The Company expects to spend in
the order of $3 million to complete this process.
IGO is expecting to spend in the order of $11 million on greenfields exploration
and $26 million on brownfields exploration during FY2015. There has been a
reduction in the total cost of the greenfields exploration program, compared with
the previous year, due to a change in the nature of IGO’s priorities during FY2015
and an emphasis on brownfields exploration, permitting at the Stockman Project
and identifying new, more advanced assets that will enhance the Company’s project
pipeline.
A major focus for IGO in the 2015 financial year (FY2015) will be working
with its joint venture partner, AngloGold Ashanti, on gaining additional
operating efficiencies at the TGM.
10 INDEPENDENCE GROUP NL
ANNUAL REPORT 2014 11
Left to right: Rod Marston, Geoffrey Clifford, Peter Bradford, Peter Bilbe, Kelly Ross, Peter Buck.
Peter Bilbe (64)
B.Eng. (Mining) (Hons), MAusIMM
Peter Bradford (56)
B.AppSc., FAusIMM, MSMME
Rod Marston (71)
B.Sc. (Hons), Ph.D., MAIG, MSEG
Non-Executive Chairman
Managing Director
Non-Executive Director
Dr. Marston is a geologist with over
40 years’ experience in the mineral
exploration and mining industry, both
in Australia and internationally. He
has held senior positions with the
Geological Survey of Western Australia
and several mineral resource consulting
groups. He compiled landmark mineral
resource bulletins on copper and nickel
mineralisation in Western Australia when
at the Survey. Dr. Marston played a
key role in the discovery, development
and management of the multi-million
ounce Damang Gold Mine in Ghana,
West Africa. Dr. Marston was previously
a director of Ranger Minerals Ltd (now
merged with Perilya Ltd) and is also a
director of Kasbah Resources Limited.
Mr. Bilbe is a mining engineer with
40 years Australian and international
mining experience in gold, base
metals and iron ore at the operational,
managerial and board levels. Mr. Bilbe
has held senior positions at Mount
Gibson Iron Limited, Aztec Resources
Limited, Portman Limited, Aurora Gold
Limited and Kalgoorlie Consolidated
Gold Mines Pty Ltd. Mr. Bilbe’s most
recent executive position was Managing
Director of Aztec Resources Limited,
which successfully developed the
Koolan Island iron ore project from
exploration to production. Mr. Bilbe is
also a past member of the Executive
Council of Chamber of Minerals and
Energy. Mr Bilbe is currently a director
of Northern Iron Limited. Mr Bilbe holds
a Bachelor of Engineering (Mining)
degree from the University of New South
Wales and is a member of the AusIMM.
Mr. Bradford is a senior executive and
a qualified metallurgist with over 35
years’ experience in gold and base
metals mining operations, exploration
and development and has held senior
positions internationally and within
Australia. Mr. Bradford graduated as a
metallurgist at the Western Australian
School of Mines and commenced his
career with various gold, nickel and
mineral sands operations in Western
Australia. Mr. Bradford was resident
manager at both Gidgee and Plutonic
Gold Mines during the development and
early operational phases. Internationally,
Mr. Bradford has held senior and chief
executive roles with Ashanti Goldfields
(and Golden Shamrock Mines),
Golden Star Resources, Anvil Mining,
Copperbelt Minerals and PMI Gold,
providing leadership in the development
of strategy and growth for many of these
companies. More recently, Mr. Bradford
successfully oversaw the merger of
PMI Gold with TSX listed, Asanko Gold,
which was completed in February 2014.
Mr. Bradford is a non-executive director
of Asanko Gold, Inc., a fellow of the
AusIMM and a member of the Society of
Mining Engineers.
12 INDEPENDENCE GROUP NL
BOARD OF DIRECTORS
Kelly Ross (52)
B.Bus., CPA, ACIS, ACSA
Geoffrey Clifford (64)
B.Bus., FCPA, FCIS, FAICD
Peter Buck (65)
M.Sc. (Geology), M.AusIMM
Non-Executive Director
Non-Executive Director
Non-Executive Director
Mrs. Kelly Ross is an accountant with
over 25 years’ experience in the mineral
exploration and mining industry. Mrs.
Ross was with the Resolute group
from 1987 to 2000, during which time
Resolute grew from being a small
exploration company to become a
major multi-national gold producer.
Mrs. Ross has held positions with
National Resources Exploration Pty
Ltd, the Kimseed Group, Murchison
United NL and the Department of
Mineral & Petroleum Resources. Mrs.
Ross was the Company Secretary
of Independence Group NL until 23
August 2011. Mrs. Ross is currently a
director of Musgrave Minerals Limited.
From 2007 until 2011 Mr. Clifford was
a Non-Executive Director of Atlas Iron
Limited, Centaurus Metals Limited
and Fox Resources Limited. From
December 2008 to July 2011, he was
Non-Executive Chairman of Atlas Iron
Limited. During that time Mr. Clifford
presided over a period of exceptional
growth in production and shareholder
wealth. From 2005 to 2007, Mr. Clifford
was a Non-Executive Director of, and
consultant to, Aztec Resources Limited
and, prior to his time at Aztec, he was
General Manager Administration and
Company Secretary of Portman Limited
for 8 years.
Mr. Clifford holds a Bachelor of
Business degree from Curtin University
and undertook post graduate studies
in Administrative and Secretarial
Practice. Mr. Clifford has more than 35
years’ experience in senior accounting,
finance, administration and company
secretarial roles in the mining, retail
and wholesale industries. Mr. Clifford
was admitted as a Fellow of the
Australian Society of Certified Practising
Accountants in 1989 and as a Fellow
of the Institute of Chartered Secretaries
and Administrators in 1995. Mr. Clifford
was also admitted as a Fellow of
the Australian Institute of Company
Directors in March 2011.
Mr. Peter Buck was appointed as a
Non-Executive Director of the Company
in October 2014. Mr. Buck is a geologist
with over 35 years’ experience in the
mineral exploration and mining industry
who is associated with the discovery
and development of a number of
mineral deposits in Australia and Brazil.
Mr. Buck commenced his career and
spent 23 years with WMC Resources. In
1994, Mr. Buck joined Forrestania Gold
as exploration manager and, following
Forrestania Gold’s acquisition by
LionOre Mining International, became
director of exploration and geology
with LionOre Mining International until
2006. Mr. Buck played a key role in
progressing the Maggie Hays, Emily
Ann, Waterloo, Amorac and Thunderbox
deposits from discovery through to
production. Mr. Buck was managing
director of Breakaway Resources from
2006 to 2009 and has been a non-
executive director of Gallery Gold Ltd
and PMI Gold Corporation. Mr. Buck
is currently a non-executive director of
Antipa Minerals Ltd.
Mr. Buck holds a Bachelor of Science
(Geology) degree from Macquarie
University, a Master of Science degree
from the University of Manitoba, Canada
and is a member of the Australian
Institute of Mining and Metallurgy.
Mr. Buck is a Board member of the
Centre for Exploration Targeting at the
University of Western Australia and
Curtin University and formerly was a
Vice President of the Association of
Mining and Exploration Companies.
ANNUAL REPORT 2014 13
Teamwork
W O R K I N G T O G E T H E R T O
A C H I E V E S H A R E D G O A L S
CHAIRMAN’S REVIEW
Dear Shareholders
Following the decision by the joint
venture partners in late 2010 to
proceed with the development of
the Tropicana Gold Mine (TGM), the
commissioning, first gold production
and ramp up to nameplate capacity of
the TGM represents a very significant
milestone in the history of the Company
and consequently has substantially
enhanced the Company’s revenue and
profitability. Our base metals operations
at Long (nickel) and Jaguar (zinc,
copper, silver) continue to perform
strongly and represent important
sources of free cash flow. As envisaged,
the Company has now become a
diversified resources group.
As I mentioned at the 2013 Annual
General Meeting, it was with regret
that in November 2013 the Company
accepted the resignation of Chris
Bonwick as Managing Director after a
period of ill-health. The Board wishes
to express its thanks to Chris for his
service to the Company which spanned
the founding of Independence, its listing
on the ASX, the acquisition and restart
of the Long Nickel mine, the discovery
and development of the Tropicana
Gold Project deposits and the takeover
of Jabiru Metals Limited, which has
culminated in Independence Group
becoming an ASX 200 multi-commodity
mining and exploration company.
I thank Chris for his dedication,
leadership, incredible exploration talent
and hard work over the last 13 years.
As envisaged, the Company
has now become a diversified
resources group.
14 INDEPENDENCE GROUP NL
Following the retirement of Chris
Bonwick, the Company was pleased
to announce, after an extensive
executive search, the appointment
of Peter Bradford in March 2014, an
experienced mining industry executive,
as its Managing Director and Chief
Executive Officer. Peter Bradford has
over 35 years experience in Australia
and internationally across all aspects
of the industry including exploration,
development and mining operations.
Peter graduated as a metallurgist from
the Western Australian School of Mines
and then worked in a number of roles
in Western Australia in various gold,
nickel and mineral sands operations,
including resident manager of the
Gidgee and Plutonic Gold Mines during
the development and early operational
phases. Since then, Peter has worked
internationally in senior and chief
executive roles for Ashanti Goldfields
(and Golden Shamrock Mines),
Golden Star Resources, Anvil Mining,
Copperbelt Minerals and PMI Gold,
providing leadership in the development
of strategy and the growth of many of
these companies. More recently, Peter
successfully oversaw the merger of
PMI Gold with TSX listed Asanko Gold,
which was completed in February
2014. Peter is a fellow of the AusIMM
and member of the Society of Mining
Engineers.
The Board sought to find an
experienced mining professional who
is a recognised leader of listed mining
companies and in Peter Bradford, the
Board believes it has found a high
calibre and well proven leader for
the Company with a demonstrated
track record at chief executive level in
mining operations, finance, commercial
transactions and development of
strategy. Since joining the Company,
Peter and the Management team have
taken substantial steps in developing
strategies to grow shareholder value
and to continue to build a diversified
resources group. The Board is delighted
with the appointment and has strong
confidence in Peter’s ability to lead
the Company and deliver growth in
shareholder value.
The Company continues to investigate
opportunities both in Australia and
overseas. In the light of the economic
and legislative risks associated with
some countries, the Board believes
that any overseas opportunity needs
to be rigorously assessed against the
Company’s investment criteria prior to
consideration.
Commodity markets, particularly
nickel prices and foreign exchange
rates, again fluctuated this year
and, despite some financial risk
management strategies such as
hedging, most of these external
conditions remain beyond our control.
What remains constant is the Board
and Management’s continued focus on
creating value for shareholders through
cost control, innovation, discovery and
development. A prudent approach to
any decision on the development of
the Stockman Project and a sustained
focus on costs at existing operations
has continued to improve net cash flow
from operating activities and Underlying
EBITDA (5).
The Company’s improved profit and
cashflow performance in FY2014, low
debt and strong financial position has
enabled it to increase the dividends
payment for FY2014 despite the
considerable capital investment made
in the TGM in the first half of FY2014.
FY2015 will be the first full financial
year of revenue and cashflows from the
TGM. The Board expects FY2015 to be
an exciting year as the Company sees
gold sales from TGM representing circa
60% of total revenue and cashflows,
Long and Jaguar continue robust
operational performance, progression
at its Stockman Project and ongoing
investment in exploration.
It is with great sadness I advise
shareholders that, after 14 years of
service, founding director and former
chairman, Dr Rod Marston is retiring as
a director effective from the close of the
2014 Annual General Meeting.
I would like to acknowledge Rod’s
tremendous contribution to the
Company on so many levels and,
on behalf of the Company and its
shareholders, I thank Rod for his
outstanding dedication and service.
We wish Rod all the best in his well-
deserved retirement.
The Board recently appointed
respected geologist and mining
executive, Mr Peter Buck, as Dr
Marston’s replacement. Peter Buck has
been associated with the discovery and
development of a number of mineral
deposits in Australia and Brazil and,
during his career, has worked with
WMC Resources, Forrestania Gold,
LionOre Mining International, following
its acquisition of Forrestania Gold, and
was managing director of Breakaway
Resources. I would like to welcome
Peter to the Company and look forward
to his contribution in the coming years.
In particular, I would like to
acknowledge and thank our employees
for their hard work and achievements
during the year in which so much has
been accomplished.
On behalf of the Board, Management
and all the Company’s employees, I
thank you, our shareholders, for your
continued support.
Peter Bilbe
Chairman
Retiring director, Dr Rod Marston at a recent
Tropicana Gold Mine gold pour
5 See JORC Code (2012) Competent Persons’ Statements and Forward-looking statements in Section 8 for a definition of Underlying EBITDA.
ANNUAL REPORT 2014 15
Accountability
TA K I N G O W N E R S H I P F O R W H AT
W E D O A N D R E S P O N S I B I L I T Y
F O R O T H E R S
MANAGING DIRECTOR’S REPORT
Dear Shareholders,
It is my great pleasure to report to you
on the growth and progress of the
Company during FY2014.
Early in FY2014 the Company made
a significant step towards creating
sustainable value for shareholders
with the commissioning and first gold
pour at the Tropicana Gold Mine (TGM)
(IGO 30%, AngloGold Ashanti 70%) in
September 2013. The Company has
now developed from a nickel production
company into a diversified resources
group producing gold, nickel, copper,
zinc and silver from three separate
operations.
The commissioning and completion
of the ramp-up of the TGM is a
very important achievement for the
Company. The Company’s 30% share
of gold production is expected to
represent circa 60% of the Company’s
revenue in FY2015. Because TGM will
be one of the lowest cash cost gold
producers in Australia, the increase in
the Company’s earnings is expected
to be significant. I would like to thank
our joint venture partner and project
manager, AngloGold Ashanti for their
hard work in commissioning and
ramping-up the TGM.
Independence Group, thanks to
AngloGold Ashanti, now has an interest
in a world class gold project that was
completed safely, on budget and ahead
of schedule.
The Long Operation continues to be an
important source of free cashflow for
the Company. The mine’s nickel metal
production was greater than FY2014
guidance by 9%. Cash costs per pound
of payable nickel were again kept at
a low level through some cost control
measures instigated at the start of
FY2014. Cash costs were 12% below
the lower end of FY2014 guidance.
The Jaguar Operation has had an
excellent FY2014 and, despite two
unplanned shutdowns at the mill, metal
production in concentrate of zinc,
copper and silver increased during the
year and was ahead of guidance. The
Jaguar mill has shown during FY2014
that it can support additional throughput
beyond just one source of ore, currently
being the Bentley deposit.
The Company has during FY2014,
continued to place significant emphasis
on exploration. The Company continues
to see great potential at Tropicana, Long
and Jaguar as well as the prospects at
joint venture tenements.
The commissioning and completion
of the ramp-up of the TGM is a
very important achievement for the
Company.
16 INDEPENDENCE GROUP NL
Our Jaguar Regional Exploration Project
covers a 50 kilometre long corridor,
along which ten Volcanogenic Massive
Sulphide (VMS) alteration zones have
been defined, indicating potential for
other base metal discoveries. During
the latter half of FY2014, the Company’s
brownfields and greenfields exploration
teams have identified the Flying
Spur lens and Triumph mineralisation
respectively. Subsequent to the year
end, the Company reported a mineral
resource for Flying Spur, an extension to
the Bentley deposit. Additional drilling
is already underway at Triumph with
the objective of assessing the potential
of this prospect. During the next 12
months, we will continue to focus on
exploring for high grade massive zinc-
copper sulphides associated with those
anomalies in this highly prospective
VMS camp.
At Long, the Company has a history
of successful discoveries over the
last seven years. In the second half
of FY2014 four underground diamond
drill holes for 1,514m and one surface
diamond drill hole for 1,072m were
completed at the McLeay South
prospect. Nickel sulphide mineralisation
was intersected by both the
underground and surface drill holes.
The surface drill hole intersected nickel
mineralisation 450m south of current
mine development. Exploration over
the next twelve months will continue
to test for extensions at McLeay South
and Long North and new deposits in
Moran South. The capital development
is focusing on the development of
the Moran South exploration drilling
platform with the first platform expected
to be completed in the first half of
FY2015.
You will recall that the Company had
loan facilities with National Australia
Bank Limited (NAB) totalling A$170
million. These loan facilities gave the
Company the financial flexibility needed
to complete the development of the
TGM and to provide support to further
the Company’s growth strategy. During
FY2014 the Company started to repay
this debt facility with a view to becoming
debt free during FY2015. At 30 June
2014, the Company had net cash of $28
million.
During the last quarter of FY2014 the
Management team recommended,
and the Board approved, new Vision
and Mission statements as well as best
practice values. Our Vision is “To build
a diversified resources group delivering
superior returns”.
One the most important aspects of our
Mission is “Achieving measured and
sustainable growth through high returns
from diverse, low cost, long life assets”.
I thank all shareholders for welcoming
me as Managing Director and I look
forward to your continued support in
FY2015. The Company’s employees and
I are striving to achieve measured and
sustainable growth.
Peter Bradford
Managing Director
ANNUAL REPORT 2014 17
18 INDEPENDENCE GROUP NL
TGM construction was within
budget and production
commenced in September 2013,
ahead of schedule.
OPERATIONS AND PROJECTS
TROPICANA GOLD PROJECT, WESTERN AUSTRALIA
(IGO 30%, ANGLOGOLD ASHANTI 70% AND MANAGER)
Background
The Tropicana Gold Project comprises
approximately 9,200 square kilometres
of tenements stretching over more than
350 kilometres in strike length along
the Yilgarn Craton and Fraser Range
Mobile Belt Collision Zone (Figures 1
and 4). The Company targeted and
pegged the area containing the current
gold reserves in 2001. AngloGold
Ashanti farmed into the project in
2002, discovering Tropicana, Havana
and Boston Shaker Gold Deposits
respectively in 2005, 2006 and 2010.
The gold deposits occur over a 5km
strike length with gold mineralisation
intersected over 1km vertically beneath
the natural surface.
The decision by the Tropicana Joint
Venture (TJV) partners to develop
the Tropicana Gold Mine (TGM) was
announced to the market in November
2010 following a positive Bankable
Feasibility Study (BFS) assessment.
In early 2011, construction of the 220km
access road commenced, followed
by development of site infrastructure
such as an aerodrome, accommodation
village, borefields and processing
plant. Mining of the Havana deposit
commenced in 2012.
In FY2014, activity has centred
around commissioning activities for
first gold production in September
2013. Commissioning and ramp up to
nameplate capacity was completed in
March 2014.
Annual gold production is anticipated
to average between 470,000 – 490,000
ounces in the first three years. This
translates to IGO’s attributable gold
production averaging in the range of
141,000 ounces to 147,000 ounces
per annum during the first three years
of production. Average cash costs
over the first 3 years of production are
expected to be in the range of A$590 –
A$630/oz Au.
ANNUAL REPORT 2014 19
FY2014 Production
TGM construction was within budget and production commenced in September 2013, ahead of schedule.
During FY2014, ore was predominantly sourced from the Havana pit with smaller amounts sourced from the Tropicana pit. Run of
mine (ROM) grades for the total ore mined averaged 2.48g/t Au over this period. Total material movement, inclusive of ore, was
44.4 million tonnes (Mt). Pre-strip mining in the Tropicana open cut continued during the FY2014.
The ramp-up to processing plant design capacity was achieved in March 2014 and this was sustained during the June 2014
Quarter. In FY2015, the Company expects the manager to focus on process improvements to access efficiency opportunities in an
attempt to push mill throughput beyond nameplate capacity.
IGO was pleased to report that its attributable gold production for FY2014 was 104,542 ounces with 100,167 ounces of gold sold.
Average cash costs per ounce were $552/oz Au.
FY2015 Guidance
IGO expects approximately 6Mt of ore to be processed during FY2015. The Company’s attributable gold production during FY2015
is expected to be in the range of 141,000 to 147,000 ounces with cash costs plus royalties in the range of $590 to $630/oz Au.
IGO’s share of exploration is expected to be approximately $6 million on an annualised spend rate basis until December 2014,
with an expected increase in spend in the calendar year 2015 (CY2015). IGO’s share of sustaining capital is expected to be
approximately $9 million.
Havana Deeps Pre-Feasibility Study
The Havana Deeps Pre-Feasibility Study (PFS) examined development options for extracting the Havana resource below the
Havana Pit BFS design. Options reviewed included expansion of the BFS final Havana Pit and/or underground extraction. Work on
the PFS was suspended in FY2014 and a decision to do additional exploration work, including a 3D seismic survey, which started
in July 2014, was agreed as part of an enhanced PFS.
Design, permitting and site preparation for the 3D seismic survey, targeting depth extensions to the high grade shoots at Tropicana
and Havana, were completed in FY2014. The results of the survey, completed in early in FY2015, will be used to refine deep drill
targets.
Gas Pipeline Project
In July 2014, AngloGold Ashanti, on behalf of the TJV, entered into agreements with APA Group (APA) for the transportation of
natural gas to the TGM. Under the agreements APA will construct a new 292km gas pipeline which will connect TGM to APA’s
Goldfields Gas Pipeline and Murrin Murrin lateral. TGM power generation costs are expected to reduce by 12 to 15% which will
result in a reduction in cash costs of about $25 to $30/oz Au.
20 INDEPENDENCE GROUP NL
Figure 2 – Proposed gas pipeline construction (in orange)
ANNUAL REPORT 2014 21
June 2014 A$1,249/oz Au
Open Cut Reserve Pit Design
HAVANA SOUTH
OPEN PIT
HAVANA OPEN PIT
TROPICANA OPEN PIT
Open
Open
BOSTON SHAKER
OPEN PIT
Open
June 2014 A$1,500/oz Au
Mineral Resource Pit Shell
Open
Havana Deeps
Underground
Target
Open
Figure 3:Tropicana Gold Project - Boston Shaker, Tropicana, Havana and Havana South open pit outlines
Image source:
Tropicana-Havana Near-Mine Exploration
A total of 417 aircore (AC) holes (12,998m), 27 reverse circulation (RC) holes (4,250m) and one diamond hole (184m) were
completed in FY2014 exploring for additional mineralisation within trucking distance of the TGM. During the year, encouraging
results from this work were received at the Phoenix and Tumbleweed Prospects.
Regional Exploration
Regional exploration continued identifying and testing numerous prospects throughout the year. In total 1,433 AC holes (70,997m),
20 RC holes (3,075m) and seven diamond holes (1,309m) were completed.
Encouraging gold assay results from AC drilling at the Lichini Prospect located 90km southwest of Tropicana and at Madras, 25km
south of Tropicana, were received. AC drilling at Beetle Juice, located 20km south of Tropicana, returned a significant Ni-Cu-PGE-
Au intercept. Though follow-up drilling returned only low level anomalism, the results do highlight the base metal potential of the
area. Airborne electromagnetic surveys tested selected areas for conductors possibly representing base metals mineralisation.
A ground EM survey commenced in late June 2014 to better define a conductor identified in the airborne survey, the Belvedere
Prospect. Results are expected in FY2015 and will be modelled to determine whether follow up drilling is justified.
Beachcomber Joint Venture (BJV)
The Company has entered into a joint venture with AngloGold Ashanti on five tenements at the southern end of the TJV footprint
whereby the Company has the right to increase its interest in these tenements from 30% to 70% by spending $3 million over 4
years. The area is considered to have potential for base metal mineralisation which has not been the focus of previous exploration.
A total of 200 line Km of Moving Loop Electromagnetic (MLEM) surveying has been completed over BJV tenements testing a
number of target areas. This work has identified EM conductors, some coincident with previous aircore geochemical anomalism,
which are planned to be drill tested in the second half of FY2015.
22 INDEPENDENCE GROUP NL
600,000mE
700,000mE
Map
Coverage
N
m
0
0
0
,
0
0
8
,
6
N
m
0
0
0
,
0
0
7
,
6
N
m
0
0
0
,
0
0
6
,
6
Tumbleweed
Tropicana/Havana
Open Cut
Monsoon East
Seahorse
Lichini
Mad Hatter
High Ball
Belvedere
Madras
MAA267 - 14.0m @ 0.8 g/t Au
Sanpan
SPA020 - 4.0m @ 1.8 g/t Au
Cobra
N
0
25km
Tropicana Tenements
2014 Q4 Significant Au
Intercepts
>6ppb
5ppb
3ppb
2ppb
Geochemical (Au)
Image Legend
Note: Widths quoted are down hole widths.
600,000mE
700,000mE
N
m
0
0
0
,
0
0
8
,
6
N
m
0
0
0
,
0
0
7
,
6
N
m
0
0
0
,
0
0
6
,
6
Figure 4: Tropicana Joint Venture tenure (IGO – 30%)
See June 2014 Quarterly Report released to ASX on 28 July 2014
ANNUAL REPORT 2014 23
24 INDEPENDENCE GROUP NL
LONG OPERATION, WESTERN AUSTRALIA IGO 100%
Background
The Company acquired the Long Operation in Kambalda, WA, from BHP Billiton Nickel West Pty Ltd (BHPB) (formerly WMC
Resources Ltd) in September 2002. The mine was successfully re-commissioned in October 2002 and has been operating
successfully and safely since then (Figures 5 and 6).
Since October 2002, the Company has produced over 2Mt of nickel ore, producing approximately 100,000 contained nickel metal
tonnes. A commitment to brownfields exploration has seen the discovery of the McLeay (2005) and Moran (2008) ore bodies and
has enabled the operation to develop a reserve base to support a 3 to 4 year life until at least 2017/18, at a nominal production
rate of 9,000 to 10,000 tonnes of contained nickel metal per annum.
OTTER
JUAN
(260,000t Ni)
DURKIN
(100,000t Ni)
L
F
e
f
a
r
u
o
l
y
t
552000mN
100% IGO
Long North
Target
LONG
Kambalda
Dome
VICTOR SOUTH
McLEAY
McLeay Extension
Target
FISHER
548000mN
MORAN
Moran
Extension
Target
Gold Fields
Royalty Area
LUNNON
(130,000t Ni)
1km
E
m
0
0
0
2
7
3
Nickel shoots
544000mN
Figure 5: Long Operation - Regional geology, tenure, nickel shoots and targets.
ANNUAL REPORT 2014 25
Offtake Agreement
The Company has an agreement with BHPB whereby the ore produced from the mine is delivered to the adjacent BHPB Kambalda
Nickel Concentrator for toll treatment and production of nickel concentrate. This offtake agreement expires in 2019.
Safety
The Company is committed to continual improvement and targeting zero injuries at the Long Operation. We also recognise that
our safety objectives cannot be attained without equal input from all our employees and contractors, so we continue to actively
engage and consult all employees and contractors to revise safe work practices. Four Lost Time Injuries (“LTIs”) occurred at Long
during FY2014. The 12 month LTIFR at 30 June 2014 was 11.8.
The occupational health and safety regime is based on the belief that profits can be made without compromising safety. It is
Management’s conviction that a positive attitude towards safety is the key to any safety program. Hazard identification, accident/
incident investigation, competency training, safe work procedures, competency reassessment and regular workplace inspections
and task observations are carried out with the input of our employees.
There continues to be a strong focus on emergency preparedness, with the application of risk mitigation and emergency
management procedures throughout the year.
Long Operation Seismicity
Shareholders will be familiar with the fact that mining-induced and regional seismicity is an inherent risk at the Long Operation.
The Long Operation ore bodies are, to a varying degree, disrupted by a swarm of cross-cutting porphyries, some of which are
stressed. When mining the discrete ore blocks within the Long Operation, procedures to manage these conditions are built into the
operating standards and are well understood by our mining team.
To ensure continued safety of our people, as well as regulatory compliance, the Company undertakes regular internal audits
on its geotechnical systems and ground control practices. In addition, geotechnical professionals are also utilised to undertake
external independent geotechnical audits. This constant feedback forms part of our continued focus on safety as well as ensuring
regulatory compliance.
Mine Production
The Long Operation continues to use various mining methods ranging from mechanised cut and fill, long-hole open stoping, long-
stoping with backfill and non-mechanised methods. Safety and the practicalities of the ore body dictate which extraction method is
utilised.
The majority of production in FY2014 came from mining of the high grade Moran ore body. Production achieved (Table 1) was
268,162 tonnes (FY2013: 291,195t) at an average head grade of 4.07% nickel (FY2013: 3.84%) for 10,909 tonnes of contained
nickel metal (FY2013: 11,180t), 9% above the upper range of FY2014 guidance.
Payable cash costs for the year including royalties and by-product credits were $3.78 per pound nickel (FY2013 $4.34), which was
12% below the lower end of FY2014 guidance.
Table 1: Long Nickel Operation – FY2014 Ore Production
Orebody
Ore Tonnes
Ni %
Ni Tonnes
Long (mechanised and hand-held)
Victor South (mechanised)
McLeay (mechanised and hand-held)
Moran (mechanised)
TOTAL
14,523
8,790
35,707
209,142
268,162
2.5
3.1
3.3
4.4
4.1
363
270
1,185
9,091
10,909
26 INDEPENDENCE GROUP NL
Quarterly Mine Production and Cash Cost performance in last 8 quarters
Contained Nickel (t)
Production Guidance
Cash Cost ($/lb Ni)
Cost Guidance
FY2015 Production Guidance
Production guidance for the Long Operation for FY2015 is 230,000 to 270,000 ore tonnes for production of between 9,000 and
10,000 tonnes of contained nickel. Payable cash costs plus royalties for FY2015 are forecast at $4.30 to $4.70 per payable
pound of nickel, net of copper credits. Exploration at Long over the next 12 months will continue to test for extensions to existing
ore bodies at McLeay, Moran South and Long North, and for new deposits in the tenement area. Approximately $12 million is
budgeted for exploration in FY2015 of which around 45% is budgeted on development for exploration access. Sustaining capital
expenditure is forecast to be approximately $8 million during FY2015.
Figure 6: Long Operation - Longitudinal Projection showing target areas, TEM conductors and significant intercepts. See June 2014 Quarterly Report
released to ASX on 28 July 2014.
ANNUAL REPORT 2014 27
Development
During FY2014, a total of 2,784m was advanced by jumbo development, of which 1,264m was booked as capital development
and 1,520m as operational. FY2015 capital development is focusing on the development of the Moran South exploration drilling
platform, with the first platform expected to be completed in the first half of FY2015.
Near Mine Exploration
The Company maintained a strong focus on exploration over the course of the year to find extensions to existing orebodies and
to identify new ore bodies in order to extend the mine life of the Long Operation. A total of 17,150m of drilling tested targets at
McLeay South, Moran South and Long North.
At McLeay South, nine underground diamond drill holes for 1,660m and one surface diamond drill hole for 1,072m were
completed. Drilling intersected nickel sulphide mineralisation in both the underground and surface drill holes with the best results
reported in the following drill holes:
•
LNSD-063W2 with 4.9m @ 5.4% Ni from 997.5m (True width 4.4m);
• MDU-687A with 2.2m @ 7.6% Ni from 235m (True width 1.6m); and
• MDU-688 with 2.2m @ 5.0% Ni from 306m (True width 2.0m).
The intercept in surface drill hole LNSD-063W2 is located some 450m south of current mine development (Figures 6 and 7) and
provides strong encouragement for the extension of this ore body further to the south . The hole was part funded through the
“Western Australia Government Exploration Incentive Scheme Co-funded Drilling” program (see Table 5 in Appendix 4 of June
2014 Quarterly Report for further details). A surface drill hole targeting 60m north of drill hole LNSD-063W2 is planned for FY2015.
At Long North, 33 underground diamond drill holes for 6,197m were completed. Drilling targeting a down-hole electromagnetic
(DHEM) conductor, referred to as the “Spanner Plate”, intersected disseminated, matrix and massive nickel sulphide mineralisation
with the best result from drill hole LG16-387 which returned 2.50m @ 4.16% Ni from 99.8m (true width 1.7m) (Refer to Table 6 in
Appendix 4 of June 2014 Quarterly Report for further details). The intercept is coincidental with a DHEM target approximately 40m
by 35m in size and located 240m north of the 2013 Long resource boundary (Figure 6). Further drill testing is planned for Long
North in FY2015.
McLeay South Long Section
(Kambalda Nickel Operations Grid)
N
MDU-688
2.2m @ 5.0% Ni
MDU-653
10.5m @ 1.2% Ni
MDU-400
1.6m @ 5.2% Ni
LNSD-063W2
4.9m @ 5.4% Ni
McLeay
McLeay South
Victor South
Moran
Fault
I n t e r p r e t e d C h a n n e l
i o n
t
P o s i
MDU-641
0.2m @ 12.4% Ni
Fault
MDU-642
4.2m @ 5.5% Ni
MDU-687A
2.2m @ 7.6% Ni
MDU-653
9.7m @ 4.0% Ni
MDU-667
0.8m @ 8.7% Ni
MDU-685
0.5m @ 8.9% Ni
0
250m
n
s iti o
e l P o
n
n
a
C h
d
e t e
r
p
r
I n t e
2014 June Qtr drilling
Pre 2014 June Qtr drilling
Significant drill hole intercepts >1% Ni
(drill intercepts are quoted as down hole width,
not true width)
Porphyry - drill intercept
Nickel Sulphide Surfaces
Interpreted Mineralisation Outline
Mine Development
Figure 7: Long Operation – Longitudinal Projection showing McLeay South Target areas, TEM conductors and significant intercepts. See June 2014
Quarterly Report released to ASX on 28 July 2014
28 INDEPENDENCE GROUP NL
ANNUAL REPORT 2014 29
JAGUAR OPERATION, WESTERN AUSTRALIA IGO 100%
Background
The Jaguar Operation, located 60km north of Leonora in Western Australia (Figure 13), was acquired by the Company in 2011.
The Jaguar Operation has significant exploration potential along 50km of prospective tenure.
The Operation originally comprised the Jaguar and Bentley zinc-copper-silver-gold underground mines and processing facility.
The Jaguar deposit was discovered in 2002 approximately 4km south of the historic Teutonic Bore open cut and underground
zinc-copper-silver mine. Bentley was discovered in 2008 and brought into production in 2011 when development intersected the
top of the ore body. Ore is processed at the Jaguar concentrator which produces a copper and a zinc concentrate. The copper
concentrate also contains significant silver and gold credits. The concentrates are trucked to the port of Geraldton where they are
shipped to our customers.
During FY2014, mining was completed at Jaguar and, as a result, all FY2015 mill production ore is expected to be sourced from
the Bentley deposit.
Figure 8: Jaguar Operation - Bentley Mine - 3D isometric projection showing mineralised envelopes, drilling and planned development. See June
2014 Quarterly Report released to ASX on 28 July 2014
30 INDEPENDENCE GROUP NL
Jaguar Operation – Processing plant at sunrise.
Safety
Two LTIs occurred during FY2014. The 12 month LTIFR at 30 June 2014 was 3.4. The Company is dedicated to improving its
safety performance and targeting zero injuries at the Jaguar operation. The Company believes that profits can be made without
compromising safety. Safety remains our highest priority with the key being engagement of management, employees and
contractors. Proactive safety standards, hazard identification, competency training, continual reviewing of safe work procedures,
competency reassessment and regular workplace inspections all play a large role in our safety culture and commitment.
In FY2015, some of our objectives in safety include standardising systems and practices, benchmarking and ongoing process
improvements.
Mine Production
A total of 431,362t of ore was mined during FY2014 predominantly from the Bentley underground mine, with a minor contribution
from the Jaguar underground mine (Table 2). Mining at the Jaguar underground mine ceased during FY2014.
Table 2: Jaguar Operation – FY2014 Ore Production
Ore Tonnes
11,302
420,060
431,362
Cu%
2.8
2.0
2.0
Zn%
0.5
11.5
11.2
Ag g/t
19
153
150
Jaguar
Bentley
TOTAL
Mill Production
A total of 441,867 tonnes of ore at an average grade of 10.65% Zn, 1.97% Cu and 145g/t Ag (FY2013: 392,125t @ 10.1% Zn,
1.63% Cu and 143g/t Ag) was milled. Metal production in concentrate was 41,162 tonnes of contained zinc metal (FY2013:
33,809t), 7,692 tonnes of contained copper metal (FY2013: 4,992t) and 1,657,461 ounces of contained silver metal (FY2013:
1,376,804oz). Production of copper was 28% above the higher end of guidance. Zinc production exceeded the higher end of
guidance by 1.6%. The payable cash costs plus royalties was $0.31 per pound payable zinc net of by-product (FY2013: $0.49 per
pound), 22.5% below the lower end of FY2014 guidance.
FY2015 Production Guidance
Production guidance for the Jaguar Operation for FY2015 is 420,000 to 440,000t of ore for production of 5,800 to 6,500t of copper
metal and 40,000 to 43,000t of zinc metal in concentrate. Cash costs for FY2015 are forecast at $0.40 to $0.60 per pound of zinc,
including royalty and net of by-product credits.
Sustaining capital, development and exploration expenditure are forecast to be approximately $10 million, $11 million and $8
million respectively during FY2015.
ANNUAL REPORT 2014 31
Figure 9 : Jaguar Operation: Bentley Composite Long Section showing location of Flying Spur and Bentley Deeps drill holes. Down
hole widths are true widths. Note: North is to the left in the diagram. See June 2014 Quarterly Report released to ASX on 28 July 2014
and ASX release dated 22 September 2014
Figure 10: Cross Section of Bentley deposit showing location of Arnage and Flying Spur lenses, intercept pierce points and planned
follow-up drilling pierce points (see ASX release dated 22 September 2014)
32 INDEPENDENCE GROUP NL
Near Mine Exploration
Early in 2014, the Flying Spur lens, located at the down dip extremity and in the hanging wall to the main Arnage lens at Bentley
(see Figure 9), was identified and a drilling program was initiated.
The defined extent of Flying Spur at the end of June 2014 was 290m of strike and 350m of dip. The lens remains open down
plunge and along strike. Further drill testing is planned on the Flying Spur lens in early FY2015. All significant underground
exploration drill hole intercepts from drilling at Flying Spur were reported in the March and June 2014 Quarterly Reports. An
Inferred Resource estimate of 449,000t @ 12.6% Zn, 0.6% Cu, 209g/t Ag and 1.7g/t Au has been delineated to date for the Flying
Spur lens (for full details see Mineral Resource and Ore Reserve update released to ASX on 28 August 2014).
Subsequent to year end the Company announced significant new results from diamond drilling programs recently completed
proximal to the Bentley Mine. A two-hole drilling program testing deep target positions beneath the Bentley resource was
undertaken from surface. The drill result below the Arnage Lens indicates the potential to define significant mineralisation more
than 250m below the current Resource (see ASX release dated 22 September 2014 for full details).
Regional Exploration
The Jaguar Project covers 50km of strike prospective for the discovery of Volcanogenic Massive Sulphides (VMS) deposits
(Figure 14). It encompasses three known high grade zinc-copper-silver-gold deposits: Teutonic Bore (inactive), Jaguar (recently
completed) and Bentley (in production). Fertile VMS belts generally contain numerous deposits and accordingly the Teutonic Bore
belt has high potential for the discovery of additional ore lenses. Deep drilling outside the resource envelope of the known deposits
has been limited to date and much of it has been directed at gold exploration rather than base metals exploration.
Unlike most other major VMS belts elsewhere around the globe, the surface geophysical and geochemical expression of buried
deposits in Western Australia is generally subtle to non-existent due to a very strong weathering profile. The relatively short
strike length of deposits, combined with the complex interplay of post-mineralising structures and intrusives, further complicates
exploration. Accordingly, successful targeting within the Jaguar Project requires the careful integration of multidisciplinary
datasets including regolith geochemistry, geophysics (IP and EM), spectral, stratigraphic and structural interpretation followed by
aggressive multi-phase drilling programs.
Ongoing exploration has identified a number of high priority areas including Wilson, the Daimler–Triumph–Lagonda trend, Jensen
and South Bentley areas, which exhibit the signatures of mineralised hydrothermal centres and are being systematically assessed.
Exploration activities during the second half of FY2014 focused on the Triumph Prospect approximately 5km north of the Jaguar
processing plant. Previous work at Triumph had defined an extensive geochemical anomaly with associated hydrothermally altered
rocks at the prospective Bentley/Jaguar/Teutonic Bore ore position. During early 2014, a comprehensive geological review of
Triumph identified a high priority target that was tested by a program of nine diamond drill holes for a total of 4,777m of drilling.
This drilling intersected a significant zone of hydrothermally altered rocks containing varying thicknesses of VMS style massive to
semi-massive pyrite-sphalerite rich mineralisation and underlying stringer style pyrite-chalcopyrite-sphalerite mineralisation. At 30
June 2014, results had been received for five holes including the best intercept of 2.7m (true width) @ 14.8% Zn, 1,115/t Ag and
1.8g/t Au from 456.95m in 14TRDD006.
The mineralised system has a strike length of over 450m and remains open up and down-plunge. The down-plunge extent is
trending towards the Daimler prospect and is approximately 900m north of the Daimler VMS style stringer mineralisation. The area
between Triumph and Daimler remains largely untested by previous drilling.
Work during FY2015 at Triumph will focus on interpreting the geometry of the Triumph hydrothermal system, delineating the higher
grade parts of the system and developing drill targets within the untested area. Also planned is a comprehensive geological
review and re-modelling of the Daimler prospect where a stringer style copper zone has been defined. The work aims to discover
potential massive sulphide lenses associated with Daimler stringer mineralisation and the relationship with the newly discovered
Triumph mineralisation. A long section showing drill hole pierce points into the Triumph target is provided in Figure 12. All
significant intercepts received at 30 June 2014 from drilling at Triumph were reported in the June 2014 Quarterly Report.
Subsequent to year end the Company announced a significant new result from diamond drilling programs recently completed
at the Triumph Prospect. Recent 3D geological modelling and re-logging of an historic drill hole JHDD0003 in the prospect area
identified that an additional target horizon may have been present beyond the end of the hole. Consequently, the hole was
re-entered and extended from 764.4m to a final depth of 936.8m. Within 6m of the commencement of drilling, the extension
intersected significant zones of light to heavy semi-massive sulphide mineralisation within a volcaniclastic sediment package
which extended over a thickness of 50m. This mineralisation included a best intercept of 8.4m (true width) @ 9.7% Zn, 0.1% Cu,
44g/t Ag and 0.3g/t Au between 788.0m and 799.1m at a vertical depth of 650m (an extension of JHDD0003 originally drilled in
2008). The intercept remains open in all directions and confirms the exploration potential of the Triumph Prospect. Results for the
Triumph Prospect continue to provide evidence that this prospect could host a VMS style base metal deposit (see ASX release
dated 22 September 2014 for full details).
ANNUAL REPORT 2014 33
Figure 11: Jaguar Operation – Tenure, Regional Geology, Mines and Significant Prospect Locations 50km long corridor surrounding three known
mines with ten Zn-Cu-Ag alteration anomalies under cover
Figure 12: Jaguar Operation Regional Exploration - Long-section of Triumph Prospect showing location of the intercept in JHDD0003 extension
relative to other drilling at the prospect. See June 2014 Quarterly Report released to ASX on 28 July 2014 and ASX release dated 22 September 2014
34 INDEPENDENCE GROUP NL
Approx 16km untested strike
Wilson Crk
Wilson
Lagonda
Triumph
Daimler
TB South
Jensen
Teutonic Bore
(closed)
Jaguar
(closed)
N
Warramboo Gossan
Bentley
(incl Flying Spur)
0
5km
Felsic Volcanic
Granitic Gneiss
Monzonite
Mafic/Intermediate package
Ultramafic/mafic package
Ultramafic
Mine / prospect
Prospective Stratigraphy
Tenement Outline
Approx 6km untested strike
Figure 13: Jaguar Operation Regional Exploration targets
Sth Bentley
Pumping Station
Charlie Chicks
Possie Well
ANNUAL REPORT 2014 35
Darlot JV (IGO Manager and Earning 70% - 80%)
During the year the Company entered into a joint venture on the Darlot Project, held by Enterprise Metals Limited (ASX: ENT). The
Company is earning a 70%-80% interest in the project which covers some 740 square kilometres of tenure approximately 60km
north and along-strike from IGO’s Jaguar Project. The Project, which covers similar volcanic stratigraphy to the Jaguar Project, has
strategic value to the Company as any base metals discoveries are potentially within economically viable trucking distance of its
Jaguar processing facility.
During FY2014, an AC drilling program comprising 111 holes (4,732m) tested six prospect areas. The drilling was designed to
identify geochemical anomalism and alteration signatures potentially representing VMS mineralisation at depth. Interpretation of
the drilling results will be completed once assay results have been received.
FY2015 Jaguar Operation Exploration
Drilling over the next twelve months will continue to focus on defining high grade massive zinc-copper sulphides. The Company is
expecting to spend approximately $8 million on exploration during FY2015 for ongoing work at Flying Spur, Triumph and elsewhere
on the Jaguar concession and on Darlot JV tenements.
300,000mE
350,000mE
N
m
0
0
0
,
0
5
9
,
6
N
m
0
0
0
,
0
0
9
,
6
N
m
0
0
0
,
0
5
8
,
6
N
0
20km
Darlot JV
(IGO earning 70 - 80% )
Jaguar Project
(IGO 100%)
Gold Deposit
Base Metals Deposit
Prospect (Base Metals)
Mafic - Felsic Contact
Waterloo (Ni)
Thunderbox
Teutonic Bore
Jaguar
Bentley
Spring Well
Felsic Complex
Darlot
Prospective Contact
Teutonic Bore
Felsic Complex
Lagonda
Triumph
Daimler
N
m
0
0
0
,
0
5
9
,
6
N
m
0
0
0
,
0
0
9
,
6
N
m
0
0
0
,
0
5
8
,
6
Figure 14: Jaguar Operation and Darlot Joint Venture – Tenure, Regional Geology, Mines and Significant
300,000mE
350,000mE
Prospect Locations
36 INDEPENDENCE GROUP NL
ANNUAL REPORT 2014 37
STOCKMAN PROJECT, VICTORIA IGO 100%
Background
The Stockman Project is located in Eastern Victoria, 460km by road north-east of Melbourne. The project encompasses two
copper-zinc-lead-silver-gold deposits, Wilga and Currawong, which were discovered in 1978 and 1979. The larger Currawong
deposit is fully intact, whilst a core of copper-rich ore from the Wilga deposit was mined and processed onsite between 1992 and
1996.
The Wilga and Currawong VMS deposits are hosted within the Lachlan Fold Belt that are known to contain VMS deposits. Both
massive sulphide deposits are approximately 350m in strike and dip extent, dip shallowly to the north (local grid) and are located
some 100m below the surface. The Currawong deposit comprises five massive sulphide lenses and associated stringer style
mineralisation stacked by a series of post-mineralisation faults. Located approximately 4km to the south, Wilga comprises a single
massive sulphide lens with an extensive halo of stringer style mineralisation. The sulphide mineralogy is predominantly pyrite,
sphalerite, chalcopyrite and galena.
The Currawong massive sulphide lenses contain copper-rich domains that in part reflect primary hydrothermal fluid pathways
controlled by original structural trends. The structural complexity of the larger landholding is being interpreted with a view to
greater understanding of the potential for additional host stratigraphy under barren cover in the vicinity of the two deposits, as well
as regionally.
The scope of the project encompasses concurrent development of the two underground deposits to feed a central 1.0Mtpa
differential flotation concentrator that could produce approximately 150,000tpa of copper and zinc concentrates over a project life
of approximately nine years. The concentrate products would be exported to customer smelters in the southern Asia region.
The existing modern Tailings Storage Facility (TSF) would be expanded for use by the project, whilst additional water would
be sourced from the Benambra plains, some 30km from the project site. Other key infrastructure would include a site gas-fired
power station, an accommodation village for the drive-in drive-out regional workforce and re-commissioning of a nearby Telstra
communications tower.
Following the completion of the FY2013 Feasibility Study (FS) substantial additional work has been undertaken during FY2014 on
an Enhanced Feasibility Study (EFS) including:
•
•
•
•
•
the opportunities identified in the FS;
a review of proposed capital and operating expenditure;
assessing opportunities to enhance revenue;
updating and optimisation of key technical and economic parameters; and
reduction of technical risk.
The EFS will be finalised in the first half of FY2015 to coincide with expected permitting milestones.
Permitting
An Environment Effects Statement (EES), which is the overarching permitting instrument for Stockman under the Victorian
Environment Effects Act 1978, was submitted during FY2014. The EES describes all aspects of the Stockman project. In total,
some 26 separate studies have been completed and reported, covering biophysical, social and economic impacts and benefits
from the project. The EES also addresses matters raised by the Commonwealth through the Environmental Biodiversity and
Conservation Act 1999. The Company has worked with a wide range of stakeholders during the EES process to ensure robust
consultation, and the resultant community support for the project is strong and based on in-depth understanding of project
components.
38 INDEPENDENCE GROUP NL
Submission to government of the Stockman EES included exhibition for public comment in the June 2014 Quarter, and a formal
Inquiry Panel undertaken by Planning Panels Victoria in June 2014. The Inquiry Panel delivered its report to the Minister for
Planning during the September 2014 Quarter, allowing the Minister to then commence production of his Assessment Report for the
licencing agencies.
While it is anticipated that the Minister will release his Assessment Report before the end of 2014, it must be noted that there are no
statutory timelines mandating this timing.
FY2015
Approximately $3 million is expected to be spent in FY2015 on evaluation, permitting and targeting new mineralised zones at site.
Shareholders should note that this budget is likely to be revised once the outcomes of the EES assessment are known.
Figure 15: Artist’s impression of proposed Stockman concentrator and administration areas
ANNUAL REPORT 2014 39
Diligence
C A R E F U L ( S A F E ) A N D
P E R S I S T E N T E F F O R T
40 INDEPENDENCE GROUP NL
REGIONAL EXPLORATION
OVERVIEW
Exploration in FY2014 has focused on target refinement and drill testing at the Jaguar and Karlawinda Gold Projects as well as four
new exploration joint ventures.
Target generation activities continued in Australia, South America and Scandinavia, boosted by the application of the Global
Lithospheric Architecture Mapping (GLAM) database. These targeting initiatives, together with the ongoing De Beers generative
work and the current market downturn, are expected to continue to create a number of new exploration opportunities in FY2015.
With its high calibre exploration team and robust exploration budget, the Company is confident of adding value, through ongoing
exploration success.
KARLAWINDA GOLD PROJECT (IGO 100%)
The Company has determined that the Karlawinda Gold Project is unlikely to meet its size and economic thresholds for
development and accordingly is seeking expressions of interest from parties regarding a potential divestment.
LAKE MACKAY EXPLORATION ALLIANCE (IGO HAS POTENTIAL TO EARN UP TO 70%)
500,000 mE
550,000 mE
600,000 mE
650,000 mE
WILBRUNGA RANGE
y
r
a
d
n
u
o
B
e
t
a
t
S
A
W
/
T
N
N
m
0
0
0
,
0
0
6
,
7
N
m
0
0
0
,
0
5
5
,
7
N
m
0
0
0
,
0
0
5
,
7
N
0
25km
Granted Tenements
Application Tenements
2013
Approved Work Areas
2013 Au Anomalies
Historic Au Intercepts
Dodger Prospect
Rock chips to 10.8 g/t Au
Drill Intercepts include:
3m @ 2.3 g/t Au
MC EWIN HILLS
VAM HILL
Dodger
Dodger
Whakatipu
Whakatipu
Tekapo
Tekapo
MOUNT NICKER
Manapouri
Manapouri
Te Anau
Te Anau
MOUNT CAREY
NIRRIPPI
Ohau
Ohau
Taupo Prospect
Rock chips to 1.2 g/t Au
Soils 15 samples > 100 ppb Au
Taupo
Taupo
MOUNT MORRIS
Tekapo Prospect
Rock chips to 32.6 g/t Au
Drill Intercepts include:
16m @ 3.4 g/t Au
18m @ 3.05 g/t Au
(includes 4m @ 2.67% Cu)
26m @ 2.2 g/t Au
CAMPBELL RANGE
Manapouri-Te Anau
Lag sample to 74 ppb Au
N
m
0
0
0
,
0
0
6
,
7
N
m
0
0
0
,
0
5
5
,
7
N
m
0
0
0
,
0
0
5
,
7
500,000 mE
550,000 mE
600,000 mE
650,000 mE
Figure 16 – Lake Mackay tenure with aeromagnetic underlay
ANNUAL REPORT 2014 41
Early in FY2014, the Company entered into an exploration alliance with ABM Resources NL (ASX: ABU) under which the Company
could earn up to 70% of a portfolio of tenements in the Lake Mackay region in the Northern Territory.
The Lake Mackay Project is located 400km northwest of Alice Springs, adjacent to the Western Australian border, and includes
7,200 square kilometres of exploration licences and 5,000 square kilometres of exploration licence applications. The project area
comprises poorly explored Proterozoic age metasediments intruded by granitic and mafic rocks beneath varying thickness of
aeolian sand cover and is considered prospective for gold, base metals and nickel sulphide mineralisation.
The exploration approach being taken by IGO is to initially blanket the project area with high quality surface geochemical
sampling to identify large gold bearing mineralised systems. During FY2014, IGO collected 8,716 soil samples, consisting of 4,094
reconnaissance samples and 4,622 in-fill samples over soil anomalies identified from the reconnaissance sampling.
Results were received for 6,587 samples which have refined known targets and highlighted a number of new target areas. Once
the current phase of sampling is completed it is planned to test the highest priority targets by a program of AC drilling in FY2015.
The Central Land Council conducted an additional heritage survey in June 2014 to allow access to the highly prospective, and
presently un-sampled, south western block of the Lake Mackay Project.
BRYAH BASIN JOINT VENTURE (JV) (IGO MANAGER AND EARNING 70% - 80%)
In the second half of FY2014, the Company entered into an exploration alliance with Alchemy Resources Limited (ASX: ALY)
under which the Company could earn up to a 70% interest in ALY’s Bryah Basin portfolio of tenements. The Bryah Basin JV tenure
is situated approximately 40km west along strike from the DeGrussa Cu-Au VMS deposit currently being mined by Sandfire
Resources Ltd (ASX: SFR) and covers the same prospective Narracoota Volcanic host stratigraphy. The IGO exploration team has
extensive VMS exploration and discovery experience through its Jaguar and Stockman projects. The Company intends to apply
the exploration techniques developed at these projects together with its in-house geophysical expertise in the exploration of the
Bryah Basin JV Project.
In the second half of FY2014, the Company undertook a comprehensive data review in order to prioritise target areas. A ground
EM survey, followed by an AC drilling program, will be undertaken in early FY2015 as a preliminary test of the target areas
identified.
42 INDEPENDENCE GROUP NL
675,000mN
700,000mN
725,000mN
750,000mN
Fiddler
Fiddler
Fiddler South
Fiddler South
Bullgullan Bore
Bullgullan Bore
Horseshoe Lights
Jubilee
Peak Hill
Harmony
DeGrussa
Reefer Well
Reefer Well
Henry
Henry
Jones
Jones
Central Bore
Central Bore
St Crispin
St Crispin
Seaborg
Seaborg
Halloween
Halloween
Old Highway
Old Highway
Mount Pleasant
Wilgeena
Wilgeena
Magnus
Magnus
Neptune
Neptune
Churchill
Churchill
N
m
0
0
0
,
0
0
2
,
7
N
m
0
0
0
,
5
7
1
,
7
N
m
0
0
0
,
0
5
1
,
7
N
m
0
0
0
,
0
0
2
,
7
N
m
0
0
0
,
5
7
1
,
7
N
m
0
0
0
,
0
5
1
,
7
N
Bryah Basin JV
IGO Active
Bangemall Group
Padbury Group
Peak Hill Schist
Granite
0
10km
GDA94 MGA Zone 50
Au Mine/Prospect
Bryah Group
Cu-Au Mine/Prospect
Prospective Stratigraphy
675,000mN
700,000mN
725,000mN
750,000mN
Figure 17 – Bryah Basin joint venture tenure
REBECCA JV (IGO MANAGER AND EARNING 70%)
Early in the second half of FY2014, the Company entered into an exploration alliance with Apollo Consolidated Limited (ASX:
AOP) under which the Company could earn up to 70% in AOP’s Rebecca Project tenements. The Rebecca Project is located
approximately 145km east of Kalgoorlie and covers ultramafic volcanic stratigraphy on the eastern margin of the Norsemen Wiluna
Greenstone Belt, considered to be prospective for massive Ni-Cu-PGE sulphide mineralisation.
A MLEM survey has been completed over 28 strike kilometres of ultramafic stratigraphy considered to have the highest potential.
This work has delineated a number of conductors in five separate prospect areas. The conductors in three of these areas, East,
Addis and North are interpreted to represent sulphide mineralisation. A two hole RC drill program in the second half of FY2014 has
downgraded the East prospect with no further work planned.
Further work, including surface geochemical sampling, is being completed at the Addis and North prospects to determine if drill
testing of these targets is warranted.
FY2015 REGIONAL EXPLORATION
IGO has budgeted $11 million for greenfields and generative exploration in FY2015. This is in addition to funds committed to
ongoing brownfields and regional exploration at the Tropicana Gold Project and the Company’s in-mine programs and regional
exploration at Long and Jaguar discussed in previous sections of this Annual Report.
A number of new gold and base metal exploration projects are currently being evaluated and a budget has been set aside
to commence exploration on one or more of these in the coming 12 months. There will be a continued strong focus on target
generation including ongoing evaluation of the De Beers database.
ANNUAL REPORT 2014 43
Respe ct
V A L U I N G T H E V I E W S O F
O T H E R S A N D A C C E P T I N G
P E O P L E F O R W H O T H E Y A R E
44 INDEPENDENCE GROUP NL
COMMUNITY DEVELOPMENT
AND ASSISTANCE PROGRAMS
The Company works closely with
these organisations during the
The Company has a structured and
targeted Community Development and
Assistance Program (CDAP) in place.
The Kambalda West District High
School Youth Leadership Program
entire program cycle to help them
achieve the planned and potentially
sustainable outcomes.
The CDAP provides targeted
assistance to a range of community-
based programs with an emphasis
on education and capacity building
for Indigenous and non-Indigenous
groups across urban, regional and
disadvantaged communities.
The Company identifies appropriate
opportunities and participates in the
programs in consultation with the
relevant organisations. The Company
works closely with these organisations
during the entire program cycle to
help them achieve the planned and
potentially sustainable outcomes. The
Company is focused on establishing
and maintaining programs in Leonora,
Kambalda and Boulder, regions in
which the Company has its mining
operations.
Structured programs to which the
Company contributed during FY2014
under its CDAP are as follows:
Leonora District High School “Young
Leaders in the Field” Program
This program invites a number of
students aged between 9 and 16 years
to participate in a Leadership Program
as a means of developing their skills to
become major contributors and leaders
within the Leonora school environment.
All students involved are elected by
their peers to participate in the program.
The program focuses on the importance
of leadership, the critical role of good
communication and the ability to act on
the students’ leadership aspirations.
The Company is providing funding to
support the Youth Leadership Program
at Kambalda West District High
School which encourages students to
engage in leadership training and skill
development. The program promotes
school attendance and achievement,
and encourages students to explore
their vocational options. The program
also supports the liaison with community
groups and local council to plan
community improvement projects and
social events.
Teach, Learn, Grow
Teach, Learn, Grow is a volunteer based
tutoring program that sees university
students give up their vacation time to
spend one week, twice a year, in rural
and remote schools throughout WA.
The Company sponsors the Teach,
Learn, Grow team to work with primary
school students in Coolgardie and
Boulder Primary Schools and CAPS
Kurrawang Aboriginal Independent
School as part of its CDAP in the
Goldfields. The tutors engage in pre-
service training and work in teams to
provide assistance to both teachers and
students. The Company has received
positive feedback from all parties
involved in the program.
ANNUAL REPORT 2014 45
Challis Primary School: Independence Group Human Resources Manager, Sam Retallack officially launching the playground construction program
The Challis Primary School
Challis Primary School, located in
Armadale, Perth, is in a disadvantaged
area experiencing a range of social
issues. The Company supports various
programs at the school which aim
to encourage social and scholastic
development in the crucial early years
of a child’s education. The programs
include a focus on early childhood
development through the construction
of a nature playground and the
development of a youth leadership
program to encourage leadership skills
and effective decision making in the
older primary students.
Leonora District High School “Young Leaders
in the Field” Program (Camping beneath
Mt Ballard)
Leonora District High School “Young Leaders
Mt Lawley Senior High School students
in the Field” Program (Evening campfire
attending Reconciliation Week services at
marshmallow roast)
Kings Park, Perth, Western Australia
The Aboriginal Student Scholarship
Program with Mt Lawley Senior High
School
This program has been designed
to provide Aboriginal students with
a sound academic aptitude the
opportunity to attend a premier high
school in Perth. Participating students
receive strong encouragement from
teachers to reach graduation and
continue on to tertiary education or
vocational outcomes. The program
provides individual learning plans,
homework classes, university student
mentors, access to the adjoining
facilities at Edith Cowan University,
cultural excursions and completion
of a relevant research assignment as
part of the program. The Company is
providing scholarships to a number
of students in 2014. Mt Lawley SHS’s
Aboriginal Excellence Program (AEP)
students have been strong supporters
of Reconciliation Week Services at the
Kings Park War Memorial since the
program commenced in 2011. AEP
students laid a wreath at the site of the
Eternal Flame as a sign of their respect
for the fallen soldiers. This special
service required the involvement of
all the armed services, the Returned
Services League, Department of
Veterans’ Affairs, Honouring Indigenous
War Graves Inc. and affiliated Aboriginal
organisations.
46 INDEPENDENCE GROUP NL
MINERAL RESOURCES
AND ORE RESERVES
Table 1: Tropicana Gold Mine – 100% Project (IGO Share 30%) – 30 June 2014 Resources (and 2013 comparison)
Mineral Resource – 31 December 20131
Mineral Resource – 30 June 2014
Classification
Tonnes
(Mt)
Au g/t
Contained
Au (M Oz)
Tonnes
(Mt)
Au g/t
Contained
Au (M Oz)
Open Pit
Underground
Stockpiles
Total Tropicana
GRAND TOTAL
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Measured
Indicated
Inferred
28.6
74.0
5.8
108.4
-
2.4
6.1
8.5
28.6
76.4
11.9
116.8
2.06
1.88
2.57
1.97
-
3.58
3.07
3.21
2.06
1.94
2.83
2.06
1.89
4.48
0.48
6.85
-
0.27
0.60
0.87
1.89
4.75
1.08
7.72
22.8
73.7
5.8
102.4
-
2.4
6.1
8.5
4.9
27.7
76.1
11.9
115.7
2.11
1.89
2.57
1.97
-
3.58
3.07
3.21
1.04
1.92
1.94
2.83
2.03
1.56
4.47
0.48
6.50
-
0.27
0.60
0.87
0.16
1.72
4.74
1.08
7.54
Notes:
1. As reported by Independence Group to the ASX on 28 February 2014.
2. For the Open Pit Mineral Resource estimate, mineralisation in the Havana, Havana South, Tropicana and Boston Shaker areas was calculated
within a US$1,550/oz pit optimisation at an AUD:USD exchange rate of $1.03 (A$1,500/oz).
3. The Open Pit Mineral Resources have been estimated using the geostatistical technique of Uniform Conditioning, using cut-off grades of 0.3g/t
Au for Transported and Saprolite material, 0.4g/t Au for Transitional and Fresh material.
4. The Havana Deeps Underground Mineral Resource estimate has been reported outside the US$1,550/oz pit optimisation at a cut-off grade of
1.73g/t Au, which was calculated using a gold price of US$2,000/oz (AUD:USD 1.05) (A$1,896/oz).
5. The Havana Deeps Underground Mineral Resource was estimated using the geostatistical technique of Ordinary Kriging using average drill hole
intercepts.
6. Mining depletion as at 30 June 2014 has been removed from the 2014 resource estimate.
7. Resources are inclusive of Reserves.
8. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
9. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
Table 2: Tropicana Gold Mine – 100% Project (IGO Share 30%) – 30 June 2014 Reserves (and December 2013 comparison)
Classification
Proved
Probable
Stockpiles
Open Pit
GRAND TOTAL
Ore Reserve – 31 December 20131
Ore Reserve – 30 June 2014
Tonnes
(Mt)
22.2
29.9
2.6
54.8
Au g/t
2.29
2.02
2.04
2.13
Contained
Au (M Oz)
Tonnes
(Mt)
1.64
1.95
0.17
3.76
20.2
29.7
3.3
53.3
Au g/t
2.29
2.02
1.27
2.08
Contained
Au (M Oz)
1.49
1.94
0.13
3.56
Notes:
1. As reported by Independence Group to the ASX on 28 February 2014.
2. The Proved and Probable Ore Reserve (30 June 2014) is reported above economic break-even gold cut-off grades of 0.4 g/t for Transported/
Upper Saprolite material, 0.5 g/t for Lower Saprolite material, 0.6g/t for Sap-Rock (Transitional) material and 0.7g/t for Fresh material at nominated
gold price US$1,100/oz and exchange rate 0.88 AUD:USD (equivalent to A$1,249/oz Au).
3. The 30 June 2014 Reserve estimate is updated using the end of June 2014 surveyed surface topography and end of June 2014 stockpile
balances. The final pit designs, cut-off grades and the Resource model used are unchanged from the December 2013 estimate.
4. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
5. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
ANNUAL REPORT 2014 47
Table 3: Long Nickel Operation – June 2014 Resources (and 2013 comparison)
Mineral Resource - 30 June 2013
Mineral Resource - 30 June 2014
Ni %
Ni Tonnes
Classification
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Long
Victor South
McLeay
Moran
Stockpiles
GRAND TOTAL
Tonnes
61,000
213,000
116,000
390,000
-
212,000
28,000
240,000
79,000
164,000
75,000
318,000
181,000
241,000
11,000
433,000
1,381,000
5.4
5.2
5.1
5.2
-
2.4
1.4
2.3
6.7
5.7
4.5
5.6
6.7
7.4
4.5
7.0
5.4
3,300
11,100
5,900
20,300
-
5,000
400
5,400
5,300
9,300
3,400
18,000
12,200
17,700
500
30,400
Tonnes
70,000
270,000
138,000
478,000
-
188,000
28,000
216,000
74,000
85,000
75,000
234,000
285,000
90,000
86,000
461,000
3,000
74,100
1,392,000
Ni %
Ni Tonnes
5.5
5.5
5.4
5.5
-
2.0
1.6
1.9
6.7
4.8
4.6
5.3
7.3
6.9
4.0
6.6
3.3
5.3
3,900
15,000
7,400
26,300
-
3,700
400
4,100
4,900
4,100
3,400
12,400
20,800
6,300
3,500
30,600
100
73,400
Notes:
1. Mineral Resources are reported using a 1% Ni Cut-off grade except for the Victor South disseminated Mineral Resource which is reported using
a cut-off grade of 0.6% Ni.
2. Mining depletion as at 30 June 2014 has been removed from the 2014 resource estimate.
3. Resources are inclusive of Reserves.
4. Ore tonnes have been rounded to the nearest thousand tonnes and nickel tonnes have been rounded to the nearest hundred tonnes. This may
result in slight rounding differences in the total values in the table above.
5. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
6. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
Table 4: Long Nickel Operation – June 2014 Reserves (and 2013 comparison)
Ore Reserve - 30 June 2013
Ore Reserve - 30 June 2014
Classification
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
Long
Victor South
McLeay
Moran
Stockpiles
GRAND TOTAL
Tonnes
45,000
66,000
111,000
-
20,000
20,000
46,000
70,000
116,000
229,000
405,000
634,000
881,000
Ni %
Ni Tonnes
3.1
2.9
3.0
-
3.9
3.9
3.0
3.6
3.3
4.5
3.9
4.1
3.8
1,400
1,900
3,300
-
800
800
1,400
2,500
3,900
10,300
15,600
25,900
33,900
Tonnes
50,000
56,000
106,000
5,000
8,000
13,000
49,000
3,000
52,000
449,000
120,000
569,000
3,000
743,000
Ni %
Ni Tonnes
3.8
3.1
3.4
3.7
3.2
3.4
4.1
3.3
3.9
4.5
3.1
4.2
3.3
4.0
1,900
1,700
3,600
200
200
400
1,900
100
2,000
20,200
3,600
23,800
100
29,900
Notes:
1. Ore Reserves are reported above an economic Ni Cut-off value as at 30 June.
2. A Net Smelter Return (NSR) value of $214 per ore tonne has been used in the evaluation of the 2014 reserve.
3. Mining depletion as at 30 June 2014 has been removed from the 2014 reserve estimate.
4. Ore tonnes have been rounded to the nearest thousand tonnes and nickel tonnes have been rounded to the nearest hundred tonnes.
5. Revenue factor inputs (US$): Ni $14,508/t, Cu $6,820/t. Exchange rate AU$1.00 : US$0.90.
6. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
7. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
48 INDEPENDENCE GROUP NL
Table 5: Jaguar Operation – June 2014 Resources (and 2013 comparison)
Mineral Resource - 30 June 2013
Mineral Resource - 30 June 2014
Jaguar
Bentley
Tonnes
Classification
264,000
Measured
181,000
Indicated
30,000
Inferred
475,000
Sub-Total
Measured
453,000
Indicated 1,442,000
849,000
Inferred
Stockpiles
27,000
Sub-Total 2,771,000
Cu %
2.4
1.8
2.6
2.2
1.6
1.7
2.4
1.3
1.9
Zn % Ag g/t
47
28
42
39
212
103
161
135
139
3.4
2.0
2.7
2.8
17.1
7.9
8.4
11.0
9.6
Au g/t
Tonnes Cu %
Zn %
-
-
-
-
1.0
0.6
1.0
0.4
0.8
-
-
-
-
706,000
1,502,000
631,000
16,000
2,855,000
-
-
-
-
2.2
1.5
1.2
1.8
1.6
-
-
-
-
12.3
8.0
6.1
11.7
8.7
Ag g/t Au g/t
-
-
-
-
172
123
101
166
130
-
-
-
-
0.8
0.7
0.6
0.8
0.7
Mineral Resource - August 2009
Mineral Resource - August 2009
Teutonic Bore
Measured
Indicated
Inferred
-
946,000
608,000
Sub-Total 1,554,000
GRAND TOTAL
4,800,000
-
1.7
1.4
1.6
1.8
-
3.6
0.7
2.5
6.6
-
65
25
49
100
-
-
-
-
-
-
946,000
608,000
1,554,000
4,409,000
-
1.7
1.4
1.6
1.6
-
3.6
0.7
2.5
6.5
-
65
25
49
102
-
-
-
-
-
Notes:
1. Mineral Resources include massive sulphide and stringer sulphide mineralisation. Massive sulphide resources are geologically defined; stringer
sulphide resources for 2014 are reported above cut-off grades of 0.6% Cu for Bentley and 0.7% Cu for Teutonic Bore.
2. Block modelling mainly used ordinary kriging grade interpolation methods within wireframes for all elements and density. The Flying Spur lens,
part of the Bentley deposit, was estimated using the Inverse Distance Squared Weighting method (IDW2). The Flying Spur addition to Mineral
Resources this year comprised 449,000t @ 12.6% Zn, 0.6% Cu, 209g/t Ag and 1.7g/t Au (Inferred).
3. Mining depletion as at 30 June 2014 has been removed from the 2014 resource estimate for Bentley. Historic mining has been removed from the
2009 resource estimate for Teutonic Bore.
4. Resources are inclusive of Reserves.
5. Mining of the Jaguar deposit was completed on 29 February 2014. Economic evaluation of remaining resources has shown that they are not
economic at foreseeable metal prices within a reasonable timeframe and have been removed from the 2014 inventory.
6. The Teutonic Bore resource estimate is now reported in compliance with JORC Code 2012 reporting guidelines. The model is unchanged from
the 2009 model.
7. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
8. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
Table 6: Jaguar Operation – June 2014 Reserves (and 2013 comparison)
Ore Reserve - 30 June 2013
Ore Reserve - 30 June 2014
Classification
Tonnes
Cu % Zn % Ag g/t
Au g/t
Tonnes
Cu %
Zn % Ag g/t
Au g/t
Jaguar
Bentley
20,000
Proved
3,000
Probable
23,000
Sub-Total
431,000
Proved
Probable
830,000
Sub-Total 1,261,000
1.7
1.8
1.7
1.3
1.8
1.6
0.4
0.3
0.4
13.4
7.7
9.6
15
11
14
163
107
126
Stockpiles
Proved
-
-
-
-
-
-
499,000
0.8
0.6
771,000
0.7 1,270,000
16,000
GRAND TOTAL
1,284,000
1.6
9.4
124
- 1,286,000
-
-
-
2.1
1.6
1.8
1.8
1.8
-
-
-
12.1
8.8
10.1
11.7
10.1
-
-
-
168
144
154
166
154
-
-
-
0.8
0.8
0.8
0.8
0.8
Notes:
1. Cut-off values were based on Net Smelter Return (NSR) values of $180 per ore tonne for direct mill feed and $100 per ore tonne for marginal
feed.
2. Revenue factor inputs (US$): Cu $6,820/t, Zn $2,070/t, Ag $19.50/troy oz, Au $1,248/troy oz. Exchange rate AU$1.00 : US$0.90.
3. Metallurgical recoveries – 82% Cu, 53% Ag, and 43% Au in Cu concentrate; 83% Zn and 22% Ag in Zn concentrate.
4. Longitudinal sub-level long hole stoping is used at Bentley.
5. All Measured Resource and associated dilution was classified as Proved Reserve. All Indicated Resource and associated dilution was classified
as Probable Reserve. No Inferred Resource has been converted to Reserve.
6. Mining of the Jaguar deposit was completed on 29 February 2014. All remaining in situ mineralisation was evaluated and deemed inappropriate
for Reserve conversion. The Jaguar underground mine was subsequently closed.
7. Mining depletion as at 30 June 2014 has been removed from the 2014 reserve estimate.
8. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
9. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
ANNUAL REPORT 2014 49
Table 7: Stockman Project – June 2014 Resources (and 2013 comparison)
Mineral Resource - 30 June 2013
Mineral Resource - 30 June 2014
Tonnes
Cu %
Zn % Ag g/t
Au g/t
Tonnes
Cu %
Zn % Ag g/t Au g/t
Currawong
Wilga
Inferred
Measured
-
Indicated 9,548,000
781,000
Sub-Total 10,329,000
Measured
-
Indicated 2,987,000
670,000
3,657,000
Inferred
Sub-Total
GRAND TOTAL
13,986,000
-
2.0
1.4
2.0
-
2.0
3.7
2.3
2.1
-
4.2
2.2
4.0
-
4.8
5.5
4.9
4.3
-
42
23
40
-
31
34
32
38
-
-
9,548,000
1.2
781,000
0.5
1.1 10,329,000
-
2,987,000
670,000
3,657,000
-
0.5
0.4
0.53
1.03 13,986,000
-
2.0
1.4
2.0
-
2.0
3.7
2.3
2.1
-
4.2
2.2
4.0
-
4.8
5.5
4.9
4.3
-
42
23
40
-
31
34
32
38
-
1.2
0.5
1.1
-
0.5
0.4
0.53
1.03
Notes:
1. All Resources tonnes have been rounded to the nearest one thousand tonnes and grade to the nearest 1/10th percentage/gram per tonne.
2. Mineral Resources include massive sulphide and stringer sulphide mineralisation. Massive sulphide resources are geologically defined; stringer
sulphide resources are reported above cut-off grades of 0.5% Cu.
3. Au grades for Wilga are all inferred due to paucity of Au data in historic drilling.
4. Block modelling used ordinary kriging grade interpolation methods within wireframes for all elements and density.
5. Mining depletion as at end of historic mine life (1996) has been removed from the Resource estimate for Wilga.
6. The Mineral Resource estimate is unchanged since 2012.
7. Resources are inclusive of Reserves.
8. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
9. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
Table 8: Stockman Project – June 2014 Reserves (and 2013 comparison)
Ore Reserve - 30 June 2013
Ore Reserve - 30 June 2014
Tonnes
(Mt)
-
7.3
7.3
-
1.1
1.1
8.4
Cu %
Zn %
Ag g/t
Au g/t
-
2.2
2.2
-
2.5
2.5
2.3
-
4.1
4.1
-
5.3
5.3
4.3
-
40
40
-
30
30
39
-
1.2
1.2
-
0.53
0.53
1.13
Tonnes
(Mt)
-
7.3
7.3
-
1.1
1.1
8.4
Cu %
Zn %
Ag g/t
Au g/t
-
2.2
2.2
-
2.5
2.5
2.3
-
4.1
4.1
-
5.3
5.3
4.3
-
40
40
-
30
30
39
-
1.2
1.2
-
0.53
0.53
1.13
Currawong
Wilga
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
GRAND TOTAL
Notes:
1. All Reserves tonnes have been rounded to the nearest one hundred thousand tonnes and grade to the nearest 1/10th percentage/gram per
tonne.
2. The Ore Reserve is unchanged since 2013.
3. Gold (Au) grades are Inferred at Wilga due to a paucity of gold assays in historic drilling. Revenue from gold in the Wilga ore was included in the
estimation of the Ore Reserve. The contribution to Revenue of this gold was estimated to be $3.84 per gram of gold in situ. This inclusion was
not material to the value of the mining envelopes considered and did not warrant downgrading of any portion of the Ore Reserve attributable to
Wilga. The contribution from Wilga represents 13% of the Total Ore Reserve.
4. Historic mining depletion for Wilga has been removed from the Reserve estimate.
5. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
6. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
50 INDEPENDENCE GROUP NL
Table 9: Karlawinda Gold Project – Bibra Prospect - June 2014 Resources (and 2013 comparison)
Mineral Resource - 30 June 2013
Mineral Resource - 30 June 2014
Tonnes
(Mt)
-
-
18.0
18.0
Au g/t
-
-
1.1
1.1
Contained
Au (Oz)
Tonnes
(Mt)
-
-
650,800
650,800
-
-
18.0
18.0
Au g/t
-
-
1.1
1.1
Contained
Au (Oz)
-
-
650,800
650,800
Classification
Measured
Indicated
Inferred
GRAND TOTAL
Notes:
1. The Mineral Resource estimate was estimated within a conceptual A$1,600/oz Au pit optimisation shell completed in 2012 and for the area of drill
coverage at 100m x 50m spacing or less. Contained gold (oz) figures have been rounded to the nearest one hundred ounces.
2. The Mineral Resource is unchanged since 2013.
3. Mostly RC drilling with 1m cone split samples analysed for Au by 50g fire assay.
4. Mineralisation was wireframed at a cut-off grade of 0.3g/t Au and Mineral Resources were reported above a cut-off grade of 0.5g/t Au.
5. Block modelling used ordinary kriging grade interpolation methods for composites that were top-cut to 10g/t Au in the supergene zone and 16g/t
Au for the remaining mineralisation. Top-cuts are not severe, trimming no greater than 0.5% of the samples.
6. There are no Ore Reserves for Karlawinda.
7. The Competent Persons statement is incorporated in the JORC Code and Forward-Looking Statements section of this report.
8. See IGO’s ASX Release of 28 August 2014 for JORC Code (2012) Table 1 Parameters.
JORC Code (2012) Competent Persons’ Statements and Forward-looking Statements
General
The information in this report that relates to Exploration Results is based on information compiled by Mr Tim Kennedy. Mr Kennedy is a full-time
employee and security holder of the Company and is a member of The Australasian Institute of Mining and Metallurgy. Mr Kennedy has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves’ (the JORC Code) and consents to the inclusion in the report of the matters based on his information in the form and context in which it
appears.
Tropicana Gold Mine (TGM) Resources and Reserves
The information that relates to TGM Mineral Resources was based on information compiled by Mr Mark Kent, a full-time employee and security
holder of AngloGold Ashanti Australia Limited, who is a member of The Australasian Institute of Mining and Metallurgy. Mr Kent has sufficient
experience relevant to the type and style of mineral deposits under consideration, and to the activity which has been undertaken, to qualify as a
Competent Person as defined in the 2012 edition of the JORC Code. Mr Kent consented to the release of the Mineral Resource estimate, based on
the information in the form and context in which it appears. The information that relates to TGM Ore Reserves was based on information compiled by
Dr Salih Ramazan, a full-time employee and security holder of AngloGold Ashanti Australia Limited, who is a member of The Australasian Institute of
Mining and Metallurgy. Dr Ramazan has sufficient experience relevant to the type and style of mineral deposit under consideration, and to the activity
which has been undertaken, to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Dr Ramazan consented to the
release of the Ore Reserve estimate, based on his information, in the form and context in which it appears.
Long Operation Resources and Reserves
The information in this report that relates to the Long Operation’s Mineral Resources is based on information compiled by Ms Somealy Sheppard. The
information in this report that relates to the Long Operation’s Ore Reserves is based on information compiled by Mr Brett Hartmann. Ms Sheppard
is a full-time employee and security holder of the Company and is a member of the Australian Institute of Geoscientists. Mr Hartmann is a full-
time employee and security holder of the Company and is a member of The Australasian Institute of Mining and Metallurgy. Ms Sheppard and Mr
Hartmann have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which
they are undertaking to qualify as Competent Persons as defined in the 2012 edition of the JORC Code, and consent to the inclusion in the report of
the matters based on their information in the form and context in which it appears.
Jaguar Operation: Bentley / Teutonic Bore Resources and Reserves
The information in this report that relates to the Bentley Mineral Resources is based on information compiled by Ms Michelle Wild. The information
in this report that relates to the Teutonic Bore Mineral Resources is based on information compiled by Mr Graham Sweetman. The information in this
report that relates to the Bentley Ore Reserves is based on information compiled by Mr Brett Hartmann. Ms Wild, Mr Sweetman and Mr Hartmann
are full-time employees and security holders of the Company and are members of The Australasian Institute of Mining and Metallurgy. Ms Wild, Mr
Sweetman and Mr Hartmann have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to
the activity which they have undertaken to qualify as Competent Persons as defined in the 2012 edition of the JORC Code. Ms Wild, Mr Sweetman
and Mr Hartmann consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.
Stockman project: Currawong and Wilga Resources and Reserves
The information in this report that relates to the Stockman Mineral Resources is based on information compiled by Mr Bruce Kendall. Mr Kendall
is a full-time employee and security holder of the Company and is a member of the Australian Institute of Geoscientists. Mr Kendall has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration, and the activity which he is undertaking, to qualify
as a Competent Person as defined in the 2012 edition of the JORC Code. Mr Kendall consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.
ANNUAL REPORT 2014 51
The information in this report that relates to the Stockman Ore Reserves is based on information compiled by Mr Geoff Davidson who is a member
of The Australasian Institute of Mining and Metallurgy. Mr Davidson is a consultant working for Mining and Cost Engineering Pty Ltd and is not a
security holder of the Company. Mr Davidson has sufficient experience which is relevant to the style of mineralisation and type of deposit under
consideration, and the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Mr
Davidson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Karlawinda Resources
The information in this report that relates to the Bibra Prospect Mineral Resources is based on information compiled by Ms Michelle Wild. Ms
Wild is a full-time employee and security holder of the Company and is a member of The Australasian Institute of Mining and Metallurgy. Ms Wild
has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is
undertaking to qualify as a Competent Person as defined in the 2012 edition of the JORC Code. Ms Wild consents to the inclusion in the report of the
matters based on her information in the form and context in which it appears.
Annual Report Mineral Resource and Ore Reserve Statement
The information in this report that relates to the Independence Group Annual Report Mineral Resources and Ore Reserves Statement as a whole
is based on information compiled by Ms Michelle Wild who is a member of The Australasian Institute of Mining and Metallurgy and is a full-time
employee and security holder of the Company. The Annual Report Mineral Resources and Ore Reserves Statement is based on, and fairly
represents, information and supporting documentation prepared by the above-named Competent Persons. The Annual Report Mineral Resources
and Ore Reserves Statement has been issued with the prior written consent of Ms Wild, in the form and context in which it appears in the Annual
Report.
Mineral Resource and Ore Reserve Governance
Governance of the Independence Group Mineral Resources and Ore Reserves estimation and development is a major responsibility of the Resources
& Reserves Committee (the Committee). The Committee was established in 2013 and oversees the governance arrangements and internal controls
for verifying the Estimates and Estimation processes for Mineral Resources and Ore Reserves. The Committee is comprised key technical personnel
and currently includes an appropriately qualified Board representative who is an independent non-executive director. The Committee meets at least
twice a year and reports to the Board on its activities.
The Committee is responsible for:
•
Adopting annual Board approved metal prices and foreign exchange assumptions for use in Estimates
• Monitoring the planning, progress, estimation and reporting of Mineral Resources and Ore Reserves across the Group
•
•
•
•
•
•
•
The framework of quality control protocols from drilling, sampling, sample preparation, analysis, sample and assay security, to data collection
and storage
Provision of standards, procedures and guidelines
JORC Code compliant reporting
Company procedures for public reporting aligned with current regulatory requirements
Annual reporting to ASX of Mineral Resource and Ore Reserve Estimates accounting for mining depletion for operating mines owned by the
Company. Prior to this reporting, a reconciliation of performance metrics is completed to validate Ore Reserves Estimates for each operating
mine owned by the Company
Internal peer assessment of process compliance and data veracity
Periodic external review of process, data, Estimates and reports for new or materially changed Estimates.
Independence Group NL reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) 2012 Edition. Mineral Resources are quoted inclusive of
Ore Reserves.
Competent Persons named by Independence Group NL are Members or Fellows of the Australasian Institute of Mining and Metallurgy and/or the
Australian Institute of Geoscientists, and qualify as Competent Persons as defined in the JORC Code.
Forward-looking statements
This document may include Forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning IGO’s
planned production and planned exploration program and other statements that are not historical facts. When used in this document, the words such
as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions are Forward-looking statements. Although IGO
believes that its expectations reflected in these Forward-looking statements are reasonable, such statements involve risks and uncertainties and no
assurance can be given that actual results will be consistent with these Forward-looking statements.
Cash Costs
All cash costs quoted include royalties and net of by-product credits unless otherwise stated.
Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for FY2014
Underlying EBITDA is a non-IFRS measure and comprises $67.8M profit before tax (FY2013:$27.8M) less $5.1M interest income net of finance costs
(FY2013: $1.2M), $69.8M depreciation & amortisation expense (FY2013: $24.4M) and $32.0M exploration impairment expenses (FY2013: $5.8M).
Currency
All currency amounts in this report are Australian Dollars unless otherwise stated.
52 INDEPENDENCE GROUP NL
CORPORATE GOVERNANCE STATEMENT
The Board of Directors has a clear understanding that it is responsible for the Company’s corporate governance and recognises
the importance of its corporate governance framework in establishing accountabilities, guiding and regulating activities, monitoring
and managing risks and optimising the Company’s performance. The Board also recognises the need to review regularly its
system of corporate governance as best practice evolves over time. This Statement outlines the Company’s current corporate
governance framework, by reference to the Corporate Governance, Principles and Recommendations (“CGC Principles and
Recommendations”) of the ASX Corporate Governance Council.
The CGC Principles and Recommendations presently consist of recommendations relating to eight Principles. The ASX Corporate
Governance Council recognises that not all Recommendations are appropriate for all companies and acknowledges that a
company should only adopt those Recommendations that are suitable for its circumstances. The Board believes that the corporate
governance policies and procedures in place as at the date of this Statement follow all Recommendations.
During the second half of FY2014 the Board reviewed all of the Company’s Corporate Governance Codes, Charters, Policies and
Guidelines. A new Risk Committee Charter and a new Privacy Policy were approved by the Board. The following new and updated
Corporate Governance Codes, Charters, Policies and Guidelines have been put on the Company’s website and presented to staff
on all sites:
1. Code of Conduct;
2. Guidelines for Dealing in Securities;
3. Continuous Disclosure and Communication Policy;
4. Board Charter;
5. Audit Committee Charter;
6. Risk Committee Charter;
7. Remuneration Committee Charter;
8. Nomination Committee Charter;
9. Diversity and Equal Opportunity Policy;
10. Privacy Policy; and
11. Legal, Environmental and Social Policy.
An annual review process for all of the Company’s Corporate Governance Codes, Charters, Policies and Guidelines has now
been put in place to ensure all of the Company’s Corporate Governance Codes, Charters, Policies and Guidelines are reviewed
annually, kept up to date and are in line with best practice.
The third edition of the CGC Principles and Recommendations was published by the ASX Corporate Governance Council on 27
March 2014. ASX introduced the requirement to publish the information set out in Appendix 4G - Key to Disclosures Corporate
Governance Council Principles and Recommendations.
As part of the review process, and in preparation for compliance with the third edition of the CGC Principles and
Recommendations in next year’s annual report (FY2015), the Company has assessed itself against the criteria set out in Appendix
4G of the ASX Listing Rules. These are set out below:
ANNUAL REPORT 2014 53
Third edition of the cgc principles and recommendations
Principle 1 – lay solid foundations for management and oversight
Recommendation
Status/Document - Location
1.1
A listed entity should disclose:
(a)
(b)
the respective roles and responsibilities of its
board and management; and
Board Charter – IGO website
those matters expressly reserved to the board and
those delegated to management.
Board Charter - IGO website
1.2
A listed entity should:
(a)
undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election, as a director; and
(b) provide security holders with all material information
in its possession relevant to a decision on whether or
not to elect or re-elect a director.
Nominations Committee Charter - IGO website
Nominations Committee Charter - IGO website
2014 Notice of AGM - IGO website
1.3
1.4
A listed entity should have a written agreement with each
director and senior executive setting out the terms of their
appointment.
Comply
The company secretary of a listed entity should be
accountable directly to the board, through the chair, on all
matters to do with the proper functioning of the board.
Board Charter - IGO website
1.5
A listed entity should:
(a)
have a diversity policy which includes requirements
for the board or a relevant committee of the board
to set measurable objectives for achieving gender
diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
Diversity and Equal Opportunity Policy - IGO website
Summary of Diversity and Equal Opportunity Policy in
Annual Report - IGO website
(c) disclose as at the end of each reporting period the
Annual Report - IGO website
measurable objectives for achieving gender diversity
set by the board or a relevant committee of the board
in accordance with the entity’s diversity policy and its
progress towards achieving them and either:
(1)
(2)
the respective proportions of men and women
on the board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
1.6
A listed entity should:
(a)
have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
Board Charter and Nominations Committee Charter
- IGO website
(b) disclose, in relation to each reporting period, whether
a performance evaluation was undertaken in the
reporting period in accordance with that process.
A performance evaluation of the Board was completed
in June 2014
1.7
A listed entity should:
(a)
have and disclose a process for periodically
evaluating the performance of its senior executives;
and
(b) disclose, in relation to each reporting period, whether
a performance evaluation was undertaken in the
reporting period in accordance with that process.
Each year a performance review and improvement plan
is completed
A performance evaluation for FY2014 was completed
in August 2014
54 INDEPENDENCE GROUP NL
Principle 2 - structure the board to add value
Recommendation
Status/Document - Location
2.1
The board of a listed entity should:
(a)
have a nomination committee which:
Comply
(1)
has at least three members, a majority of whom
are independent directors; and
Six members (all of the Board)
(2)
is chaired by an independent director,
Yes
and disclose:
(3)
the charter of the committee;
Nominations Committee Charter - IGO website
(4)
the members of the committee; and
Disclosed in Annual Report – IGO Website
(5)
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; OR
Disclosed in Annual Report – IGO Website
(b)
if it does not have a nomination committee, disclose
that fact and the processes it employs to address
board succession issues and to ensure that the board
has the appropriate balance of skills, knowledge,
experience, independence and diversity to enable it
to discharge its duties and responsibilities effectively.
n/a
2.2
A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
2.3
A listed entity should disclose:
Disclosed in Annual Report – IGO Website
(a)
(b)
the names of the directors considered by the board to
be independent directors;
Disclosed in Annual Report – IGO Website
if a director has an interest, position, association or
relationship of the type described in Box 2.3 but the
board is of the opinion that it does not compromise
the independence of the director, the nature of
the interest, position, association or relationship in
question and an explanation of why the board is of
that opinion; and
Disclosed in Annual Report – IGO Website
(c)
the length of service of each director.
Disclosed in Annual Report – IGO Website
2.4
2.5
2.6
A majority of the board of a listed entity should be
independent directors.
The chair of the board of a listed entity should be an
independent director and, in particular, should not be the
same person as the CEO of the entity.
A listed entity should have a program for inducting
new directors and provide appropriate professional
development opportunities for directors to develop and
maintain the skills and knowledge needed to perform their
role as directors effectively.
Comply: Disclosed in Annual Report – IGO Website
Comply: Disclosed in Annual Report – IGO Website
An updated version of the exiting induction process was
reviewed and approved by the Board subsequent to year
end as referred to in the Board Charter and Nominations
Committee Charter - IGO website
Principle 3 – act ethically and responsibly
Recommendation
3.1
A listed entity should:
Status/Document - Location
(a)
have a code of conduct for its directors, senior
executives and employees; and
Comply: Code of Conduct – IGO Website
(b) disclose that code or a summary of it.
Summary of Code of Conduct in Annual Report - IGO website
ANNUAL REPORT 2014 55
Principle 4 – safeguard integrity in corporate reporting
Recommendation
Status/Document - Location
4.1
The board of a listed entity should:
(a)
have an audit committee which:
(1)
has at least three members, all of whom are
non-executive directors and a majority of whom
are independent directors; and
Comply
Comply
(2)
is chaired by an independent director, who is
not the chair of the board,
Comply
and disclose:
(3)
the charter of the committee;
Audit Committee Charter - IGO website
(4)
(5)
the relevant qualifications and experience of
the members of the committee; and
in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; OR
Disclosed in Annual Report – IGO Website
Disclosed in Annual Report – IGO Website
(b)
if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity of its
corporate reporting, including the processes for the
appointment and removal of the external auditor and
the rotation of the audit engagement partner.
n/a
4.2
The board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive
from its CEO and CFO a declaration that, in their opinion,
the financial records of the entity have been properly
maintained and that the financial statements comply with
the appropriate accounting standards and give a true and
fair view of the financial position and performance of the
entity and that the opinion has been formed on the basis
of a sound system of risk management and internal control
which is operating effectively.
4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
Complied for
1. FY2013 Annual Accounts sign-off;
2. H1 FY2014 Half Year Accounts sign-off; and
3. FY2014 Annual Accounts sign-off.
Complied for 2013 AGM
2014 Notice of AGM discloses external auditor will
attend 2014 AGM
Principle 5 – make timely and balanced disclosure
Recommendation
5.1
A listed entity should:
Status/Document - Location
(a)
have a written policy for complying with its
continuous disclosure obligations under the Listing
Rules; and
Continuous Disclosure and Information Policy – IGO Website
(b) disclose that policy or a summary of it.
Disclosed in Annual Report – IGO Website
56 INDEPENDENCE GROUP NL
6.1
6.2
6.3
6.4
Principle 6 – respect the rights of security holders
Recommendation
A listed entity should provide information about itself and its
governance to investors via its website.
A listed entity should design and implement an investor
relations program to facilitate effective two-way
communication with investors.
A listed entity should disclose the policies and processes
it has in place to facilitate and encourage participation at
meetings of security holders.
Status/Document - Location
Comply – IGO Website
Comply
Comply
Continuous Disclosure and Information Policy – IGO Website
A listed entity should give security holders the option to
receive communications from, and send communications
to, the entity and its security registry electronically.
Comply
Principle 7 – recognise and manage risk
Recommendation
Status/Document - Location
7.1
The board of a listed entity should:
(a)
have a committee or committees to oversee risk,
each of which:
Comply – appointed in March 2014
(1)
has at least three members, a majority of whom
are independent directors; and
Comply – appointed in March 2014
(2)
is chaired by an independent director,
Yes – appointed in March 2014
and disclose:
(3)
the charter of the committee;
Risk Committee Charter - IGO website
(4)
the members of the committee; and
Disclosed in Annual Report – IGO Website
(5)
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; OR
Disclosed in Annual Report – IGO Website
(b)
if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
n/a
7.2
The board or a committee of the board should:
(a)
review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound; and
Comply
(b) disclose, in relation to each reporting period, whether
such a review has taken place.
Disclosed in Annual Report – IGO Website
The last review was completed in June 2014.
7.3
A listed entity should disclose:
(a)
(b)
if it has an internal audit function, how the function is
structured and what role it performs; OR
if it does not have an internal audit function, that fact
and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
7.4
A listed entity should disclose whether it has any
material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or
intends to manage those risks.
The Company does not have an internal audit function
The Company does not have an internal audit function.
However, it does have
1. Regular monthly reports presented to the Board.
2. Regular risk management reviews.
3. The results of risk management reviews are presented to the
Risk Committee and Board
Disclosed in Annual Report – IGO Website
ANNUAL REPORT 2014 57
Principle 8 – remunerate fairly and responsibly
Recommendation
Status/Document - Location
8.1
The board of a listed entity should:
(a)
have a remuneration committee which:
Comply
(1)
has at least three members, a majority of whom
are independent directors; and
Comply
(2)
is chaired by an independent director,
Yes
and disclose:
(3)
the charter of the committee;
Remuneration Committee Charter - IGO website
(4)
the members of the committee; and
Disclosed in Annual Report – IGO Website
(5)
as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of the
members at those meetings; OR
Disclosed in Annual Report – IGO Website
(b)
if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration for
directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
n/a
8.2
A listed entity should separately disclose its policies and
practices regarding the remuneration of non-executive
directors and the remuneration of executive directors and
other senior executives.
8.3
A listed entity which has an equity-based remuneration
scheme should:
(a)
have a policy on whether participants are permitted
to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk
of participating in the scheme; and
Disclosed in Annual Report – IGO Website
(see Remuneration Report)
Comply
Dealing in Securities Guidelines – IGO Website
(b) disclose that policy or a summary of it.
Disclosed in Annual Report – IGO Website
Prior to the publication of the third edition of the CGC Principles and Recommendations by the ASX Corporate Governance Council
on 27 March 2014 the Company was required to consider the second edition of the CGC Principles and Recommendations. The
second edition of the CGC Principles and Recommendations was followed throughout the entire financial year and up to the date
of this Statement.
As mentioned above, in the second half of FY2014 the Board reviewed all of the Company’s Corporate Governance Codes,
Charters, Policies and Guidelines. A new Risk Committee Charter and a new Privacy Policy were approved by the Board.
Principle 1: Lay solid foundations for management and oversight
The matters reserved to the Board are set out in the Board Charter in the Corporate Governance section of the Company’s website.
In summary, the Board is responsible for delegating powers to Management for the day to day management of the Company,
approving long term corporate strategy, reviewing and approving business plans and annual budgets, approving material capital
expenditure, approving and monitoring the adherence to Company policies, developing and promoting corporate governance,
and approval of financial statements. The Board is also responsible for monitoring compliance with the Code of Conduct,
monitoring the Company’s performance, overseeing risk management and internal controls, and the assessment, appointment and
removal of the Managing Director, Company Secretary and other senior management.
58 INDEPENDENCE GROUP NL
The Board has delegated the following functions to the Managing Director and the other senior executives:
•
•
•
•
•
•
•
the effective leadership of IGO;
the preparation and implementation of development and operational plans to achieve the strategic, operational and financial
objectives of IGO as determined by the Board;
the management of the day to day affairs of IGO, including its people, processes, policies and systems;
the conduct of commercial negotiations with other entities;
the development and maintenance of effective relationships with IGO’s employees, shareholders, joint venture partners,
governments at all levels and government agencies, suppliers and customers and local landowners;
reporting to the Board and providing prompt and full information regarding the conduct of the business of IGO; and
ensuring all material matters that affect IGO are brought to the Board’s attention.
The process for evaluating the performance of senior executives is carried out within the framework of the Remuneration
Policy and delegations set out in the Remuneration Committee Charter which is set out in the Corporate Governance section
of the Company’s website. Evaluations are conducted annually. The evaluations of the Managing Director are conducted by
the Remuneration Committee. Their most recent evaluation was carried out in August 2014. The evaluations of the other senior
executives are conducted by the Managing Director, through a structured interview process. The most recent evaluations were
carried out in August 2014. All evaluations were carried out in accordance with the process disclosed.
Principle 2: Structure the Board to add value
The Board currently consists of one executive director (the Managing Director) and five non-executive directors (including the
Chairman). The Board considers that four of the six directors are independent: Mr Peter Bilbe (Chairman), Dr Rod Marston, Mr
Geoff Clifford and Mr Peter Buck.
The Board considers that Mrs Kelly Ross is not independent because she was an executive director of the Company for
approximately 10 years until 2011 when she became a non-executive director. In making these assessments of independence the
Board has followed the evaluation criteria of the Board’s Guidelines on Director Independence which is set out in the Board Charter
available in the Corporate Governance section of the Company’s website. These guidelines are in conformity with the guidelines
of the ASX Corporate Governance Council and requires the satisfaction of all of the items on a list of criteria, the most significant of
which are:
•
•
•
•
•
The director must be in a non-executive role where any fees payable by the Company could not be considered to make the
director reliant on such remuneration;
The director must have no other material contractual relationship with the Company other than as a director of the Company;
The director is not a substantial shareholder of the Company;
The director has not been employed in an executive capacity by the Company and has not been a principal of a material
adviser or consultant to the Company within the last 3 years; and
The director is free from any interest which could reasonably be perceived to materially interfere with the director’s ability to
act in the best interests of the Company.
The Board considers that Dr Rod Marston is independent despite he being a director of the Company for more than 14 years.
Information pertaining to the relevant skills, experience and expertise of the directors of the Company as at the date of this
Statement is included at the front of this 2014 Annual Report. As at that date the period in office of each of those directors was as
follows:
• Mr Peter Bilbe: 5 years
• Mr Peter Bradford: less than 1 year (appointed 17 March 2014)
• Dr Rod Marston: 14 years
• Mrs Kelly Ross: 12 years
• Mr Geoff Clifford: 22 months
• Mr Peter Buck: less than 1 month
The Board has established a Nomination Committee pursuant to the Nomination Committee Charter and the policies included
therein. Given that the current total number of directors is six, the Board considers it appropriate that all of the directors should be
members of that Nomination Committee. It is chaired by an independent director, the Board’s Chairman, Mr Peter Bilbe.
In accordance with the Nomination Committee Charter and the Diversity Policy, the Board seeks to achieve in its membership
persons with demonstrable skills, capability, experience and ability to question and debate with other Board members, the ability
to operate as part of a team, the ability to contribute outstanding performance and have a track record of impeccable ethics and
values. The Board seeks to have a mix of age, skills, knowledge, experience and expertise in its ranks. The current mix of skills
and experience on the Board is as follows:
ANNUAL REPORT 2014 59
Board Skills Matrix
Skills and Experience
Board
Audit
Committee
Risk Committee
Remuneration
Committee
Nomination
Committee
4 directors
1 director
4 directors
2 directors
4 directors
Mining and
Processing
Exploration and
Geology
3 directors
Financial Acumen
3 directors
Capital Projects
Governance
Strategy
Remuneration
5 directors
5 directors
5 directors
6 directors
Executive Leadership
6 directors
Sustainability
ECM and M&A
3 directors
6 directors
1 director
2 directors
2 directors
3 directors
2 directors
3 directors
3 directors
1 director
3 directors
3 directors
3 directors
5 directors
5 directors
5 directors
6 directors
6 directors
3 directors
6 directors
1 director
1 director
2 directors
3 directors
2 directors
3 directors
3 directors
2 directors
3 directors
3 directors
3 directors
5 directors
5 directors
5 directors
6 directors
6 directors
3 directors
6 directors
In considering new appointments the Board will have regard to the need to augment the skills, knowledge, experience and
capabilities of the current members and to meet its future needs, the Company’s sustainable growth ambitions and diversity
aspirations. In doing so, the Board recognises the unique skills, experience and outlook that different genders can bring to the
group.
The process, which has been adopted by the Board, for evaluating the performance of the Board, its Committees and non-
executive directors is that every third year the Board engages the services of an independent facilitator with expertise in this field
to guide the Board through a comprehensive evaluation process. In the other years, the Board carries out an internal evaluation. A
comprehensive evaluation with the assistance of an independent consultant was carried out in June 2013. In June 2014, the Board
carried out an internal evaluation of the experience, performance and composition of the Board. The results of this evaluation are
currently being implemented. The process for evaluating the performance of the only executive director, the Managing Director,
was referred to above in the section relating to Principle 1.
Board members have the right to seek independent professional advice at the Company’s expense in the furtherance of their
duties as directors.
Principle 3: Promote ethical and responsible decision making
The Company aims to maintain the highest standard of ethical behaviour in business dealings and to behave with integrity in all its
dealings with customers, clients, shareholders, government, employees, suppliers and the community. Directors and employees
are expected to perform their duties in a professional manner and act with the utmost integrity and objectivity, striving at all times
to enhance the reputation and performance of the Company.
The Board has a clear understanding that it is responsible for setting the tone of legal, ethical and moral conduct to ensure
that the Company is considered reputable by the industry and other outside entities. This involves considering the impact of
the Company’s decisions on the industry, its colleagues and the general community. With this in mind the Board reviewed and
approved an updated and best practice Code of Conduct that has now been presented to staff at all sites. In summary, the Code
of Conduct adopted by the Company and set out in the Corporate Governance section of the Company’s website requires that all
employees and directors:
•
•
•
•
•
•
•
•
•
act in accordance with occupational health and safety legislation, regulations and policies applicable to their respective
organisations and to use security and safety equipment provided;
act with honesty and integrity;
respect the law and act accordingly;
respect confidentiality and not misuse information;
value and maintain professionalism;
avoid conflicts of interest;
act in accordance with the Company’s policies procedures and guidelines;
strive to be good corporate citizens on responsibilities such as sustainable development, health, safety, environment and
community; and
have respect for each other, including by embracing diversity, openness, sharing, mutual trust and teamwork.
60 INDEPENDENCE GROUP NL
The Code of Conduct imposes a responsibility on individuals to report breaches of the Code to executive management or to a
director so that appropriate remedial action can be taken.
In March 2014, the Company has reviewed and updated its Diversity and Equal Employment Opportunity (EEO) Policy. The
Board recognises that corporate performance is enhanced when a company has an appropriate and diverse mix of skills and
experience. The policy aims to ensure fair and unbiased remuneration between the genders, recruitment and retention campaigns
that encourage diversity, no gender bias when considering senior executive and Board positions and that no discrimination on the
basis of gender or race takes place within the Company. The Board will monitor compliance with the Diversity and EEO Policy and
to ensure that there is annual reporting of the achievement of performance measures contained in that Policy.
The following measurable objectives were set early in June 2013 and reviewed in March 2014:
Measurable objectives and progress towards achievement
A. All persons with appropriate experience and qualifications are to be considered equally when new employees or directors are
being recruited. All recruitment is being carried out on this basis. The Company’s Human Resources Manager, who oversees
recruitment processes, is a female who is sensitive to the importance of the Board’s Diversity and EEO Policy.
B. All persons with appropriate experience and qualifications are to be considered equally when opportunities for promotion or
advancement arise. All such opportunities are being carried out on this basis.
C. There is to be at least one female representative of the Company involved in the selection process for all new senior
executives and directors. This procedure is being followed.
D. Promotion of equality in remuneration levels: A review of gender remuneration parity is required to be carried out at least once
each year, taking into account relative performance, experience, location and job nature and a report is to be provided to the
Board. This objective was set in June 2013.
The key statistics relating to gender diversity within the Company statistics are as follows:
(a) Proportion of women employees in the Group at 30 June 2014: 18% (2013: 17%).
(b) Proportion of women in senior executive roles in the Group at 30 June 2014: 21% (2013: 20%).
(c) Proportion of women on the Board of the Company at 30 June 2014: 20% (2013: 20%).
For the purposes of (b) above, senior executives are categorised as those who hold a senior manager or senior executive role.
Principle 4: Safeguarding integrity in financial reporting
The Board has an Audit Committee, structured in accordance with the CGC Principles and Recommendations. The Board’s Audit
Committee’s Charter, which was reviewed and updated for best practice during FY2014, is set out in the Corporate Governance
section of the Company’s website.
The Chairman of the Audit Committee is Mr Geoff Clifford, a non-executive director who is not the Chairman of the Board. Mr
Clifford was appointed to the Audit Committee in December 2012. The other members of the Audit Committee are non-executive
directors Dr Rod Marston and Mrs Kelly Ross. The majority of the members are independent directors. Mr Clifford and Mrs Ross
are qualified accountants/chartered secretaries with considerable financial and managerial experience. Dr Marston is an economic
geologist with considerable corporate experience. There were two meetings of the Audit Committee held during FY2014. Details of
attendance are disclosed in the Directors’ Report.
The Audit Committee reports to the Board and in summary is responsible for the following:
•
•
•
overseeing the Group’s relationship with the external auditor and the external audit function generally as set out in the External
Audit Policy (set out in Attachment 1 of the Audit Committee Charter);
overseeing the adequacy of the control processes in place in relation to the preparation of financial statements and reports;
and
overseeing the adequacy of the Group’s financial controls.
The Audit Committee has specific functions on audit and is required to review and report to the Board on certain matters set out in
the Audit Committee Charter.
Principle 5: Make timely and balanced disclosure
The Company has established policies and procedures, set out in its Continuous Disclosure and Information Policy, relating to the
disclosure of information to interested parties. During FY2014 the Company reviewed and updated its Continuous Disclosure and
Information Policy for best practice and incorporated various changes to the law and regulations. A copy of the Policy is in the
Corporate Governance section of the Company’s website.
The Company Secretary is responsible for ensuring the Company complies with ASX Listing Rules and is responsible for
communicating with the ASX.
ANNUAL REPORT 2014 61
Principle 6: Respect the rights of shareholders
The Company has established a Continuous Disclosure and Information Policy which is designed to ensure that the Company
communicates effectively with its shareholders and the investment community and that information is released and made available
in an equitable manner.
It is the policy of the Company to communicate effectively with its shareholders by giving them ready access to balanced and
understandable information about the Company and making it easier for them to participate in general meetings.
All shareholders receive a copy of the Company’s annual report unless they have elected not to receive a copy. Copies of the
Company’s quarterly and half yearly reports are provided to the ASX and placed on the website. Copies of these reports are sent
to any shareholder or interested party requesting a copy.
Notices of meetings are mailed to all shareholders unless they have elected not to receive a copy and are also placed on the
Company’s website. Notices of meeting are to be as easily read and understandable as possible, however they must comply with
the legal requirements contained in the Corporations Act and the ASX Listing Rules.
All information disclosed to the ASX is placed on the Company’s website as soon as it is disclosed to and acknowledged by the
ASX. When analysts are briefed on the Company’s activities, any information provided in the presentation (if material and not
previously released) is released to the ASX and placed on the Company’s website.
As part of the Company’s efforts to ensure that it communicates effectively with its shareholders and the investment community,
the Company’s analyst briefing and presentation for the June 2014 Quarterly Report was webcast live on the Company’s website.
A link to this webcast was released to ASX to allow shareholders to either listen live or at a later date. Webcasts are available for a
substantial period after the live webcast.
Principle 7: Recognise and manage risk
The Board is responsible for the identification of significant areas of business risk, implementing procedures to manage such risks
and developing policies regarding the establishment and maintenance of appropriate ethical standards to:
•
ensure compliance in legal, statutory and ethical matters;
• monitor the business environment;
•
•
identify business risk areas;
identify business opportunities; and
• monitor systemlished to ensure prompt and appropriate responses to shareholder complaints and enquiries.
During FY2014, the Board approved a Risk Committee Charter and formally established a Risk Committee to review the Company’s
risk management systems and procedures. The Board’s Risk Management Policy is set out in the Company’s new Risk Committee
Charter as disclosed in the Corporate Governance section of the Company’s website.
Management has put in place a risk management system which requires regular risk reviews and requires all identified risks to
be entered into a risk register. Any controls implemented to mitigate these risks are then linked to the risks to produce a mitigated
risk register. The Board discusses with senior management periodically at Board Meetings the subject of risk management. The
Risk Committee meets at least annually with senior management to interrogate the risk register and to ensure that all reasonable
procedures have been put in place to mitigate the Company’s risks. The last Risk Committee review was held in June 2014. At that
Meeting the Risk Committee carried out the above-mentioned procedures and senior management reported on the effectiveness of
the Company’s management of its material business risks.
The Company’s risk management program is designed to ensure that the Company identifies, documents, communicates and
proactively manages material risks in a systematic way. This ensures that risk management is embedded within the culture of the
business. This structure enables consideration of both the long term interests of the business as well as the day to day operations.
It also ensures focus is given to those unlikely events with potentially catastrophic impacts to our business.
The Managing Director and Chief Financial Officer provided a declaration in accordance with Section 295A of the Corporations
Act most recently on 27 August 2014 for the FY2014 annual accounts and assured the Board that the declaration is founded on a
sound system of risk management and internal controls and that the systems are operating effectively and efficiently in all material
respects. The Managing Director and Chief Financial Officer also provided a similar declaration during FY2014 in relation to
accounts for the half-year ended 31 December 2013 and the annual accounts for FY2013.
62 INDEPENDENCE GROUP NL
Material exposure to economic, environmental and social sustainability risks
The Company does have material exposure to economic, environmental and social sustainability risks, including exposure to
commodity and foreign exchange market fluctuations and changes in environmental regulatory legislation.
To assist with management of its exposure to commodity and foreign exchange market fluctuations, the Company has established
a Financial Risk Management Policy which is overseen by the Hedging Committee (discussed below).
The Company employs suitably qualified personnel to assist with the management of its exposure to environmental and social
sustainability risks including appropriate health and safety personnel as well as heritage and environmental experts.
Hedging Committee
The Company has a Hedging Committee to make recommendations to the Board on hedging policies, consider relevant financial
risk management strategies and to maintain the hedging portfolio. The members of the Hedging Committee at the date of this
Statement are director, Mr Geoff Clifford, director, Mrs Kelly Ross, Managing Director, Mr Peter Bradford and Chief Financial Officer,
Mr Scott Steinkrug.
Dealing in Securities Guidelines (Share Trading Policy)
The Company has put in place guidelines to ensure that directors, officers and employees do not trade in the Company’s shares
if they are aware of non-public information that could be expected to have a material effect on the market price of the Company’s
shares. The Company has also put in place a restriction on any employee or director securing Company’s shares by way of margin
loans and other derivative trading methods. Executive directors and employees are prohibited from entering into transactions or
arrangements which limit the risk of participating in unvested employee entitlements (i.e. hedging arrangements). A copy of the
recently reviewed and updated Dealing in Securities Guidelines is set out in the Corporate Governance section of the Company’s
website.
Principle 8: Remunerate fairly and responsibly
The Board has a Remuneration Committee, structured in accordance with the CGC Principles and Recommendations. The
Chairman of the Committee is Dr Rod Marston. The other two members are Mr Geoff Clifford and Mr Peter Bilbe. All three are
independent directors. The Board’s Remuneration Policy, as set out in the Remuneration Report, was reviewed in August 2014.
During FY2014, the Board reviewed and approved an updated Remuneration Committee Charter. This updated Remuneration
Committee Charter is disclosed in the Corporate Governance section of the Company’s website.
The Company has clearly distinguished the remuneration structures of the non-executive directors from that of executive directors
and executives. The full details of the remuneration of these persons during the year ended 30 June 2014 is set out in the
Remuneration Report within the Directors’ Report in this 2014 Annual Report.
Non-executive directors are not entitled to retirement benefits other than statutory superannuation or other statutory required
benefits.
Legal and Environmental Policy
The Company has a Legal and Environmental Policy which requires that all employees comply with the laws and environmental
regulations in force in the region in which work is undertaken. The Company is committed to dealing fairly and equitably with
interested parties relating to community matters, environmental issues, such as landholders, governmental agencies and native
title claimants.
Sustainability Report
The Long Operation, acquired by the Company in 2002, is one of the oldest operating mines in the Kambalda Nickel field. Despite
there being limited scope to change the mine’s environmental footprint, mine management continue to work with an internal and
external environmentalist teams who undertake regular review and development improvement plans. These plans are being
implemented and will continue to be implemented as areas become available and are no longer required for mining operations.
Regular internal and external audits are performed to ensure and advise on compliance and best practice.
At the Jaguar Operation, an in-house environmental officer has been employed for a number of years. The environmental officer’s
skills and local knowledge base are supplemented by regular site visits by external environmental consultants and specialists. An
operational environmental plan is in place to minimise the future environmental footprint and to continually monitor and rehabilitate
previously disturbed areas.
ANNUAL REPORT 2014 63
At both the Long Operation and the Jaguar Operation external specialists are employed to undertake annual environmental audits.
These audits focus on all areas of environmental responsibility and feedback into the operational planning phase. This process
also forms the basis of, and assists with, the Company’s annual regulatory compliance reporting.
The National Greenhouse and Energy Reporting Act 2007 (NGER Act) creates registration and reporting obligations for controlling
corporations whose greenhouse gas emissions, energy consumption and energy production reach certain thresholds.The
Company is registered with the Clean Energy Regulator (CER) and has been disclosing its greenhouse gas emissions under the
NGER Act since 2008. The Company will next be reporting in October 2014.
The Company is currently in the process of refreshing its Environmental Management Plan to align it across all operations. This
document sets minimum acceptable environmental standards for all Company sites and is supported by specific policies and
procedures to ensure that the Company is able to comply with the laws and regulations. These standards, policies and procedures
are periodically reviewed as part of the Company’s Risk Management system and, as required, are updated to ensure compliance
in all the jurisdictions in which the Company operates.
Policies and Procedures on the Company’s website
The following codes, policies, guidelines and charters are contained in the Corporate Governance section of the Company’s
website www.igo.com.au:
1. Code of Conduct;
2. Guidelines for Dealing in Securities;
3. Continuous Disclosure and Communication Policy;
4. Board Charter;
5. Audit Committee Charter;
6. Risk Committee Charter;
7. Remuneration Committee Charter;
8. Nomination Committee Charter;
9. Diversity and Equal Opportunity Policy;
10. Privacy Policy; and
11. Legal, Environmental and Social Policy.
64 INDEPENDENCE GROUP NL
FINANCIAL REPORT 2014
Contents
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement Of Cash Flows
Consolidated Statement Of Changes In Equity
Notes To The Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information For Listed Public Companies
66
82
83
84
85
86
87
133
134
136
ANNUAL REPORT 2014 65
DIRECTORS’ REPORT
Directors’ Report
DIRECTORS’ REPORT
Your Directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Independence Group
NL (referred to hereafter as the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2014.
Directors
The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, unless
otherwise noted:
Peter Bradford (Managing Director)
Peter Bilbe (Non-executive Chairman)
Geoffrey Clifford (Non-executive Director)
Rod Marston (Non-executive Director)
Kelly Ross (Non-executive Director)
Peter Bradford was appointed Managing Director effective 17 March 2014. Christopher Bonwick was Managing Director from the
beginning of the financial year until his resignation on 15 November 2013.
Principal activities
The principal activities of the Group during the financial year were non-operator gold mining from the Company’s 30% interest in the
Tropicana gold mine, nickel mining at the Long nickel mine, zinc and by-product mining at the Jaguar Operations and ongoing mineral
exploration.
Dividends – Independence Group NL
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2013 of 1 cent (2012: 1 cent) per fully
paid share paid on 27 September 2013
Interim ordinary dividend for the year ended 30 June 2014 of 3 cents (2013: 1 cent) per
fully paid share paid on 28 March 2014
2014
$000
2,333
7,000
9,333
2013
$000
2,329
2,329
4,658
In addition to the above dividends, since the end of the financial year the Directors have announced the payment of a final ordinary
dividend of $11,713,000 (5 cents per fully paid share) to be paid on 30 September 2014.
Operating and financial review
Independence Group NL is a company listed on the Australian Securities Exchange (ASX:IGO). The Group currently has operations
in the production phase in Western Australia comprising:
The Long nickel mine located near Kambalda – 100% owned,
The Jaguar zinc, copper and silver mine and processing operations north of Leonora – 100% owned, and
The Tropicana gold operation (IGO: Non-operator joint venturer; 30% owned) located 330km east northeast of Kalgoorlie.
The Group is also an active explorer for base and precious metals within and outside of Australia. Active search areas within
Australia include the Stockman Project (copper, zinc, silver, gold) located in Victoria and numerous tenement holdings at or near the
above mines, as well as other remote areas.
This review should be read in conjunction with the financial statements and the accompanying notes.
The objective and strategy of the Group is to create long-term shareholder value through the discovery, development and acquisition
of low cost and high grade projects. Since incorporation in 2002, the Company is proud of its achievement of returning to
shareholders in excess of $108 million by way of a combination of $98.3 million fully franked dividends and a $9.7 million share buy
back in 2009. The Company currently has 234,256,573 shares outstanding.
The Group’s future prospects are dependent on a number of external factors that are summarised towards the end of this report.
At the end of the financial year, the Group had cash and cash equivalents of $57.0 million (2013: $27.2 million). A milestone
achievement for the Company was the commencement of commissioning of the Tropicana Operations by joint venture partner and
project operator AngloGold Ashanti Australia Limited during the September 2013 quarter. Consequently, gold sales have largely
driven the Group’s cash inflows during financial year 2014. The cash increase of $29.8 million includes $138.4 million in gold sales
receipts, which represented 35% of the Group’s customer receipts for the year. Other receipts came from nickel sales ($113.4
million) with the remaining $140.2 million sales coming from the Jaguar Operation. During the financial year, the Company paid
Tropicana joint venture contributions totalling $110.2 million (2013: $165.1 million). These contributions provided for funding of the
Company’s share of construction capital expenditure completion, ongoing funding of its share of the mine’s operational expenditure
and ongoing sustaining and non-sustaining capital expenditure and exploration expenditure. Joint venture contributions to the
operator will be ongoing over the life of the mine whereas gold sales receipts will be credited to each individual venturer’s metal
account held with the gold refiner.
66 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
3
DIRECTORS’ REPORT
Directors’ Report
Operating and financial review (continued)
Other significant cash flows during the year include payments to suppliers and employees of $258 million (2013: $173 million); the
higher payments arising due to operating cost payments for the Tropicana mine. Total exploration and evaluation expenditure was
$38.7 million with the significant expenditure including $14 million at Long, $6 million for Jaguar regional activity, $4 million at
Tropicana, $5 million at the Company's Stockman project and $14 million on the Group’s remaining and varied exploration tenements.
A number of new joint venture exploration projects were entered into during the year including the Lake MacKay JV in the Northern
Territory where the Company is targeting large gold deposits in a prospective but underexplored tenure package, the Darlot JV where
the Company is exploring for satellite VMS deposits within trucking distance of the Jaguar Project and the Bryah Basin JV along strike
to the west of the DeGrussa copper & gold mine, where the Company is targeting DeGrussa style deposits. Significant results during
the year include identification of possible extensions to the McLeay and Long North deposits at the Long Operation, identification of
the Flying Spur lens at the Jaguar Operation and the discovery of a zone of potentially significant mineralisation at the Triumph
Prospect located 5km to the north of the Jaguar processing plant.
Total development and construction capital expenditure was $76 million of which $57 million was for plant construction and mine open
pit waste stripping at Tropicana. $16.6 million was for Jaguar underground mine development and the balance was for Long
underground development.
Financing activities of the Group included $47 million in corporate facility borrowings between July and September 2013 whilst
Tropicana was in the construction phase and facility repayments of $32 million between March 2014 and June 2014. In addition,
there were $6 million in equipment finance debt repayments and $9.3 million in fully franked dividends.
During discussions of the operating results of its business, the Group’s Board and management often refer to a measure known as
Underlying EBITDA. The Board considers this measure to be important to the Group and investors alike, as it represents a useful
proxy to measuring an operation’s cash generating capabilities. Underlying EBITDA is calculated as profit after tax adjusted for
income tax expense, finance costs, interest income, asset impairments, depreciation and amortisation. Underlying EBITDA increased
relative to the previous financial year as can be seen in the following chart:
Net profit after tax (NPAT) for the year of $46.6 million compares favourably with the 2013 financial year NPAT of $18.3 million.
Below is a reconciliation of Underlying EBITDA to NPAT.
Depreciation & amortisation expense of $69.8 million includes $36.6 million relating to Tropicana assets, $22 million to Long, $9.4
million to Jaguar Operations and the balance to corporate assets. Exploration and evaluation asset impairments during the 2014
financial year of $32 million include a $17.0 million write-down of the Karlawinda Gold Project as the Company considers that the
Project no longer meets internal metrics for development.
Independence Group NL – Financial Report 30 June 2014
4
ANNUAL REPORT 2014 67
DIRECTORS’ REPORT
Directors’ Report
Operating and financial review (continued)
Operations
Long Operation
The Long Operation was acquired from Western Mining Corporation in 2002 and is located adjacent to Kambalda. The mine has
entered into a long term ore tolling agreement with BHP Billiton Nickel West Pty Ltd whereby the Group is paid for the nickel metal
contained in the ore mined, less applicable ore toll charges. Revenue from nickel sales is priced on a quotational period of three
months after the month of production. 70% of the sales receipt is provisionally paid based on the average London Metals Exchange
(LME) price for the month of delivery; a balancing adjustment is paid in the fourth month after delivery based on the average LME
price of the third month after delivery. The mine produced 10,909 tonnes of contained nickel during the year at payable cash costs
including royalties (net of copper credits) of A$3.78 per pound (2013: A$4.34 per pound).
The Long Operation constitutes an operating segment as disclosed in the Financial Report. During the year a total of 268,162 tonnes
of ore was mined, with all four underground ore bodies (Long, Victor South, McLeay and Moran) contributing. The majority of ore was
won via long hole stoping with lesser amounts coming from other mechanised mining methods and non-mechanised methods.
Segment revenue was $118.9 million in 2014, a decrease of 7% from $127.7 million in 2013. This was the result of a combination of
lower realised nickel prices (~5%), and lower payable nickel sold as outlined in the table below. Net operating profit before income tax
fell 9% from $40.1 million in 2013 to $36.3 million in the current year, due to revenue factors outlined above, offset by lower cash
costs during the year.
Based on current ore reserves, the mine currently has a life of approximately four years.
Table 1 highlights the key operational statistics during the current and prior year.
Table 1
Long Operation
Ore mined
Nickel grade
Copper grade
Tonnes milled
Nickel delivered
Copper delivered
Metal payable (IGO share)
- Nickel
- Copper
Tonnes
Head %
Head %
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
C1 Ni cash costs & royalties *
A$ payable metal pound
*C1 cash costs include credits for copper
Jaguar Operation
2014
268,162
4.07
0.29
268,162
10,909
769
6,589
312
3.78
2013
291,196
3.84
0.28
291,196
11,180
821
6,754
332
4.34
The Jaguar Operation was acquired by the Company from Jabiru Metals Limited in 2011. The Operation is located 60km north of
Leonora and 250km north of Kalgoorlie. Active mining is currently underway in the Bentley underground mine. In addition, both near
mine and greenfields exploration targets continue to be investigated for potential to add mine life to the operation.
The Bentley mine performed well during the year; copper and zinc grades mined increased year on year by 33% and 8% respectively.
Ore mined is beneficiated at the Jaguar processing facility to produce zinc and copper concentrates.
These concentrates are trucked to the Geraldton port for shipping to customers primarily in Asia. The copper concentrate contains
significant levels of silver and gold as by-products, which attract precious metal credits that contribute significantly to the Group’s
cash flows and revenue. The zinc concentrate has minor amounts of silver in its concentrate.
Similar to nickel sales, copper and zinc concentrate sales are paid on a quotational period that varies between one and three months
with generally 90% of the sales receipt payable by the customer shortly after shipment. The one month or three month average LME
copper and zinc price ultimately determines the final price paid by the customer.
Based on current ore reserves, the Bentley mine is currently anticipated to have a life of approximately four years.
68 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
5
DIRECTORS’ REPORT
Directors’ Report
Operating and financial review (continued)
Jaguar Operation (continued)
Table 2
Jaguar Operation
Ore mined
Copper grade
Zinc grade
Silver grade
Ore milled
Concentrate produced
- Copper
- Zinc
Metal payable (IGO share)
- Copper
- Zinc
- Silver
- Gold
Tonnes
%
%
g/t
2014
431,362
2.0
10.6
145
2013
446,584
1.5
9.8
139
Tonnes
441,867
392,125
Tonnes
Tonnes
Tonnes
Tonnes
Ounces
Ounces
29,574
86,296
7,396
34,258
1,233,972
4,467
20,010
71,138
4,792
28,118
982,313
2,938
Zinc C1 cash costs & royalties *
A$/lb Total Zn Metal Produced
0.31
0.49
*C1 cash costs include credits for copper, silver and gold
The Jaguar Operation also constitutes an operating segment. Segment revenue increased to $141.8 million from $91.8 million in the
previous year. Zinc revenue increased 33% due to a combination of 22% higher payable zinc and 9% higher realised prices. Copper
revenue increased 105% due to both 54% higher payable copper and 33% higher realised prices. Segment profit before income tax
was $42.7 million during the 2014 financial year (2013: $7.0 million).
Tropicana Gold Project
The Tropicana Gold Project segment comprises the Tropicana Gold Mine and exploration activities. The Project is located
approximately 330km east northeast of Kalgoorlie in Western Australia and has a combined tenement holding of approximately 9,200
km2. The Tropicana Gold Mine is operated as an unincorporated joint venture. Joint operators of the venture are AngloGold Ashanti
Australia Limited (70% share and manager) and Independence Group NL (30% share). The mine commenced commissioning during
the September 2013 quarter and by financial year end produced 348,371 ounces. MacMahon Mining Contractors undertake the
mining using conventional open cut mining methods. A total of 32.1Mt of material was mined this financial year following
commencement of the first full month of commissioning. Since September 2013, 4.0Mt of ore was processed, with the processing
plant achieving name plant capacity (5.8Mt/yr) in March 2014.
Power on site is currently generated via diesel-fired generators. During the year the feasibility of piping gas to site and generating
power from gas-fired generators was studied. In July 2014 a decision to proceed with this project was approved.
The Tropicana Gold Mine is currently expected to have a life in excess of 10 years. Segment revenue for the financial year was
$137.9 million. Segment profit was $42.5 million.
Table 3
Tropicana Gold Mine
Gold ore mined (>0.6g/t Au)
Gold ore mined (>0.4 and <0.6g/t Au)
Waste mined
Gold grade mined (>0.6g/t Au)
Ore milled
Gold grade milled
Metallurgical recovery
Gold recovered
Gold produced
Gold refined and sold (IGO share)
Cash Costs
All-in Sustaining Costs (“AISC”) **
‘000 wmt
‘000 wmt
‘000 wmt
g/t
‘000 wmt
g/t
%
Ounces
Ounces
2014 *
5,721
1,088
25,251
2.22
4,043
3.02
89.4
350,743
348,371
Ounces
100,167
$ per ounce produced
$ per ounce sold
552
740
* 2014 refers to the period October 2013 to June 2014 being the period when the first full month of commissioning commenced.
** All-in Sustaining costs is a measure derived by the World Gold Council. On 27 June 2013, the Council released a publication
outlining definitions of both Cash Costs and All-in Sustaining Costs.
ANNUAL REPORT 2014 69
Independence Group NL – Financial Report 30 June 2014
6
DIRECTORS’ REPORT
Directors’ Report
Operating and financial review (continued)
External factors affecting the Group’s results
The Group operates in an uncertain economic environment and its performance is dependent upon the result of inexact and
incomplete information. As a consequence, the Group’s Board and management monitor these uncertainties and mitigate the
associated risk of adverse outcomes where possible. The following external factors are all capable of having a material adverse
effect on the business and will affect the prospects of the Group for future financial years.
Commodity prices
The Group’s operating revenues are sourced from the sale of commodities and precious metals that are priced by the London Metals
Exchange (LME). The Group is not a price maker with respect to the commodities it sells and it is, and will remain, susceptible to
adverse price movements. By way of example, average cash seller and settlement LME nickel prices rose 30% from June 2013 to
June 2014 (compared to a fall of 15% during the previous corresponding period). Zinc and copper cash seller and settlement LME
prices rose 16% and fell 3% over the June 2014 financial year respectively. The Group’s Board and management regularly review
commodity prices in light of forecast trends and give consideration to hedging between 0% and 50% of payable production.
Exchange rates
The Group is exposed to exchange rate risk on sales denominated in United States dollars whilst its Australian dollar functional
currency is the currency of payment to the majority of its suppliers and employees. The monthly average AUD/USD currency pair
strengthened from 0.9138 for the month of June 2013 to 0.9420 in June 2014. A strengthening AUD implies a lower AUD receipt of
sales denominated in USD. The Group’s policy is to mitigate adverse foreign exchange risk by transacting commodity hedges in AUD
equivalent terms where possible.
Downstream processing markets
The price of sea freight, smelting and refining charges are market driven and vary throughout the year. These also impact on the
Group’s overall profitability.
Interest rates
Interest rate movements affect both returns on funds on deposit as well as the cost of borrowings. Furthermore, AUD and USD
interest rate differentials are intimately related to movements in the AUD/USD exchange rate.
Native Title
With regard to tenements in which the Group has an existing interest in, or will acquire an interest in the future, it is the case that
there are areas over which common law Native Title rights exist, or may be found to exist, which may preclude or delay exploration,
development or production activities. Specifically, at our Long Operation, a Federal Court judgment has recently determined that
certain tenements are invalid insofar as they are inconsistent with the exercise of the Native Title rights of the Aboriginal Native Title
holders. The Company is currently assessing the implications of this judgment however final Orders have not yet been made by the
Court. The Company will continue to monitor the matter, including any right of appeal, in conjunction with other affected parties.
Other external factors and risks
The Group is subject to many other external factors and risks, including the following:
Operational performance including uncertain mine grades, seismicity ground support conditions, grade control, in fill resource
drilling, mill performance and experience of the workforce;
o Contained metal (tonnes and grades) are estimated annually and published in resource and reserve statements, however
actual production in terms of tonnes and grade often vary as the ore body can be complex and inconsistent.
o Active underground mining operations can be subjected to varying degrees of seismicity. This natural occurrence can
represent significant safety, operational and financial risk. To mitigate this risk substantial amounts of resources and
technology are used in an attempt to predict and control seismicity.
Exploration success or otherwise;
o Due to the nature of an ever depleting reserve/resource base, the ability to continually find or replace reserves/resources
presents a significant operational risk. Drill sites need to be continually mined (for underground drilling) to enable effective
exploration drilling.
Operating costs including labour markets and productivity;
o Labour is one of the main cost drivers in the business and as such can materially impact the profitability of an operation.
Changes in market supply and demand of products;
o Any change in the supply or demand impacts on the ability to generate revenues and hence the profitability of an operation.
Changes in government taxation legislation;
Changes in health, safety and environmental regulations;
Environmental issues and social expectations; and
Assumption of estimates that impact on reported asset and liability values.
Shareholders are also encouraged to read notes 3 and 4 in the Financial Report.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the year.
70 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
7
DIRECTORS’ REPORT
Directors’ Report
Significant events after the reporting date
On 27 August 2014, the Company announced that a final dividend for the year ended 30 June 2014 would be paid on 30 September
2014. The dividend is 5 cents per share and will be fully franked.
Other than the above, there has been no other transaction or event of a material and unusual nature likely, in the opinion of the
Directors, to significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in
future financial years.
Environmental regulation and performance
The Group’s operations are subject to significant environmental regulation under the laws of the Commonwealth and various States of
Australia. During the year there were no non-compliance incidents.
The Group is subject to the reporting obligations of the National Greenhouse and Energy Reporting Act 2007, under which the Group
reports its greenhouse emissions, energy consumption and production. Systems have been put in place to comply with these
reporting requirements. The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007
which requires entities to report annual greenhouse gas emissions and energy use.
The Environmental Policy is available in the Corporate Governance section of the Company’s website.
Information on Directors
Peter Bilbe
Qualifications
Tenure
Special Responsibilities
Other Directorships
Peter Bradford
Qualifications
Tenure
Special Responsibilities
Other Directorships
Geoffrey Clifford
Qualifications
Tenure
Special Responsibilities
Other Directorships
Rod Marston
Qualifications
Tenure
Special Responsibilities
Other Directorships
Kelly Ross
Qualifications
Tenure
Special Responsibilities
Other Directorships
Christopher Bonwick
Qualifications
Tenure
Special Responsibilities
Other Directorships
Chairman and Non-executive Director. Age 64
BEng (Mining) (Hons), MAusIMM
Board member since 31 March 2009 and Chairman since 29 July 2011.
Mr Bilbe is a member of the Remuneration and Risk Committees.
Mr Bilbe is currently a director of Northern Iron Limited. He was also a director of Sihayo Gold
Limited until November 2013 and Norseman Gold plc until December 2011.
Managing Director and Chief Executive Officer from 17 March 2014. Age 56
BAppSc (Extractive Metallurgy), FAusIMM, MSMME
Managing Director and Board member since his appointment on 17 March 2014.
Mr Bradford is the executive in charge of the day to day management of the Group’s activities,
including operations, risk management and corporate development. He is also a member of the
Risk Committee.
Mr Bradford was previously a director of PMI Gold Corporation until February 2014.
Non-Executive Director. Age 64
BBus, FCPA, FCIS, FAICD
Board member since 2012.
Mr Clifford is a member of the Remuneration, Audit, Hedging and Risk Committees.
Mr Clifford is currently a director of Saracen Mineral Holdings Limited (from 1 October 2013). Mr
Clifford was also previously a director of Atlas Iron Limited (until July 2011), Centaurus Metals
Limited (until August 2011) and Fox Resources Limited (until September 2011).
Non-executive Director. Age 71
BSc (Hons), PhD, MAIG, MSEG
Board member since 2001.
Dr Marston is a member of the Remuneration, Audit and Risk Committees.
Dr Marston has been a director of Kasbah Resources Limited since November 2006.
Non-Executive Director. Age 52
BBus, CPA, ACSA
Board member since 2002.
Mrs Ross is a member of the Hedging , Audit and Risk Committees.
Mrs Ross is currently a director of Musgrave Minerals Limited.
Managing Director until 15 November 2013. Age 55
BSc (Hons), MAusIMM
Managing Director and Board member until his resignation on 15 November 2013.
Mr Bonwick was the executive in charge of the day to day management of the Group’s activities,
including operations, risk management and corporate development.
None.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 71
8
DIRECTORS’ REPORT
Directors’ Report
Company Secretary qualifications
Mr Tony Walsh was appointed Company Secretary effective 17 July 2013. Mr Walsh, who is also employed as the Company’s
General Manager Corporate, was previously Company Secretary of ASX listed iron ore producer Atlas Iron Limited for seven years
from July 2006. Mr Walsh has over 25 years’ experience in dealing with listed companies, ASX, ASIC and corporate transactions,
including four years as a director of Shaw River Manganese Limited and 14 years with the ASX Limited in Perth where he acted as
ASX liaison with the JORC Committee. Mr Walsh is currently a member of the West Australian State Council of Chartered
Secretaries Australia and a member of Newman College school council. Prior to his role at the ASX, he worked with Ernst & Young
for over 5 years in an audit and compliance capacity. Mr Walsh is also a Fellow of Chartered Secretaries Australia and the Institute of
Chartered Accountants in Australia.
Mr Adrian Di Carlo was the interim Company Secretary from 11 February 2013 until 2 August 2013. Mr Di Carlo is a member of
Chartered Secretaries Australia.
Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June
2014, and the numbers of meetings attended by each Director were:
Meetings of Committees
Director
Peter Bilbe
Christopher Bonwick1
Peter Bradford2
Geoffrey Clifford
Rod Marston
Kelly Ross
Eligible to
attend
11
4
3
11
11
11
Directors’ meetings
Remuneration
Committee
Eligible to
Attended
attend Attended
attend Attended
Audit Committee Hedging Committee Risk Committee
Eligible to
Eligible to
Eligible to
attend
Attended
11
2
3
11
11
10
1
-
-
1
1
-
1
-
-
1
1
-
-
-
-
2
2
2
-
-
-
2
2
1
-
-
-
1
-
1
-
-
-
1
-
1
attend Attended
1
-
1
1
1
1
1
-
1
1
1
1
1. Mr Bonwick resigned with effect from 15 November 2013.
2. Mr Bradford was appointed Managing Director with effect from 17 March 2014.
Interests in shares and share rights of the Company
At the date of this report, the interests of the Directors in the shares and share rights of Independence Group NL were as follows:
Peter Bilbe
Peter Bradford
Geoffrey Clifford
Rod Marston
Kelly Ross
Total
Ordinary Fully Paid
Shares
Share Rights
-
-
-
1,321,917
345,000
1,666,917
-
-
-
-
-
-
72 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
9
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT
The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.
Remuneration policy and procedures
The Company has established a Remuneration Committee to oversee the remuneration of senior executives and executive directors.
At the date of this report, the Committee members were Rod Marston (Chairman), Geoffrey Clifford and Peter Bilbe, each of which
are independent non-executive directors.
The Committee reviews executive directors’ and senior management’s remuneration and other terms of employment annually, having
regard to the skills, experience, the relative industry remuneration levels and performance of both the Group and the individuals
themselves. No director may be involved in setting their own remuneration or terms and conditions.
The remuneration of non-executive directors is determined by the Board within the maximum amount approved by shareholders in
general meeting. Non-executive directors are not entitled to retirement benefits other than statutory superannuation or other statutory
required benefits. Non-executive directors do not participate in share or bonus schemes designed for executive directors or
employees. The remuneration of non-executive directors is fixed to encourage impartiality, high ethical standards and independence
on the Board. The available non-executive directors’ fees pool is $600,000 which was approved by shareholders at the Annual
General Meeting on 24 November 2010, of which $490,000 was being utilised at 30 June 2014 (2013: $440,000).
Non-executive directors may provide additional consulting services to the Group, at a rate approved by the Board. During the current
year, the Board approved an additional one-off payment of $20,000 to Mr Bilbe (Chairman) for the extra services he provided to the
Company during the current year.
Performance evaluations of the Board are undertaken with a view to comparing the performance of the Board and directors to the
performance and growth of companies of similar size and complexity within the mining industry. The current base remuneration was
reviewed during the current financial year and was amended accordingly.
Bonuses may be given to senior managers where the Committee believes their performance, experience and skills have provided the
Group with ongoing and enduring benefits that align with shareholder interests. Other performance-based rewards, including short
term incentives, are given where the Committee believes performance of an individual senior manager compares favourably with their
peers within the industry and is at the discretion of the Committee. The objectives of the rewards are to both reinforce the short and
long term goals of the Group and to provide a common interest between management and shareholders. The following summarises
the performance of the Group over the last 5 financial years:
Revenue ($millions)
Net profit (loss) after income tax ($millions)
Share price at year end ($/share)
Dividends paid (cents/share)
2010
20111
116.7
28.7
4.72
5
163.6
5.5
5.63
7
2012
216.6
(285.3)2
3.16
5
2013
2014
225.9
18.3
2.26
2
399.1
46.6
4.35
4
1. Includes results and performance of Jabiru Metals Limited from 4 April 2011.
2. Includes after tax non-cash asset impairments of $288 million.
Company performance based remuneration
Short term incentive (STI)
The objective of STI’s is to link the creation of shareholder wealth in the short term with the remuneration of those employees who are
charged with the management of the Group and are primarily responsible for its performance. The total potential STI available is set
annually at a level to provide sufficient incentive to executive directors and senior managers to achieve operational targets at a cost to
the Group that is reasonable in the circumstances.
Managing Director’s STI
The Board introduced performance based criteria in 2010 to incentivise the former Managing Director, based on achievement versus
target key performance indicators (KPI’s). The target KPI’s relate to matters such as mine production, safety, mine development and
costs, as well as exploration success, corporate growth, environmental activity and risk management actions. The total available to
be paid in 2014 as an STI for the Managing Director’s performance in the 2013 financial year was $300,000 (2013: $300,000). STI
payments are normally delivered as a yearly cash bonus payable in the subsequent financial year. During the year, the former
Managing Director, Mr Bonwick, was allocated 72% of the total bonus available ($216,000) for his performance in the 2013 financial
year.
Long term incentive (LTI) – Executives and other employees
The LTI component of the remuneration package is to reward executive directors, senior managers and other invited employees of
the Group in a manner which aligns a proportion of their remuneration package with the creation of shareholder wealth over a longer
period than the STI.
The Independence Group NL Employee Performance Rights Plan (PRP) was approved by shareholders at the Annual General
Meeting in November 2011. Under the PRP, participants are granted share rights which will only vest if certain performance
conditions are met and the employees are still employed by the Group at the end of the vesting period. Participation in the PRP is at
the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
Independence Group NL – Financial Report 30 June 2014
10
ANNUAL REPORT 2014 73
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Long term incentive (LTI) – Executives and other employees (continued)
Vesting of the performance rights to executive directors and executives is subject to a combination of the Company’s shareholder
return and return on equity. The performance rights will vest if over the three year measurement period the following performance
hurdles are achieved:
Shareholder Return
The vesting of 75% of the performance rights at the end of the third year will be based on measuring the actual shareholder return
over the three year period compared with the change in the S&P ASX 300 Metals and Mining Index (Index) over that same period.
The portion of performance rights (75% of the total) that will vest based on the comparative shareholder return will be:
Shareholder return
100% of the Index
Level of vesting
25%
Between 100% and 115% of the Index
Pro-rata straight line percentage
115% of the Index or greater
100%
Return on equity
The vesting of the remaining 25% of the performance rights at the end of the third year will be based on the average return on equity
over the three year period compared with the average target return on equity as set by the Board for the same period.
Return on equity (ROE) for each year will be calculated in accordance with the following formula:
ROE = Net profit after tax / Total shareholders’ equity
The target ROE will be set each year by the Board as part of the budget approval process for the following year. The target ROE for
the financial year ending 30 June 2014 was 10% (2013: 10%). The portion of performance rights (25% of the total) that will vest
based on the comparative return on equity will be:
Actual ROE
100% of average target ROE
Level of vesting
25%
Between 100% and 115% of average target ROE
Pro-rata straight line percentage
115% of average target ROE or greater
100%
The performance rights will not be subject to any further escrow restrictions once they have vested to the employees.
Share trading policy
The trading of shares issued to participants under the PRP is subject to, and conditional upon, compliance with the Company’s
employee share trading policy.
Long term incentives (LTI) – Non-executive directors
The PRP permits non-executive directors to be eligible employees and therefore to participate in the plan. It is not currently intended
that non-executive directors will be issued with performance rights under the PRP and any such issue would be subject to all
necessary shareholder approvals.
Voting and comments made at the Company’s 2013 Annual General Meeting (AGM)
Independence Group NL received more than 97% of “yes” votes (with another 1.6% abstaining or at the Chairman’s discretion) on its
remuneration report for the 2013 financial year. The Company did not receive any specific feedback at the AGM or throughout the
year on its remuneration practices.
Use of independent remuneration consultants
During the current financial year, the Board authorised the engagement of Aon Hewitt McDonald as independent remuneration
consultants. Aon Hewitt McDonald were engaged to prepare a report examining the competitiveness of remuneration for directors
and officers employed by the Company in the context of a group of a peer companies. An amount of $8,500 was paid for the report
and the Board is satisfied that the recommendations in the report were made free from undue influence from any members of the key
management personnel.
Key Management Personnel
The Directors who held office during the financial year were Peter Bilbe (Non-executive Director and Chairman), Christopher Bonwick
(Managing Director until his resignation on 15 November 2013), Peter Bradford (Managing Director and Chief Executive Officer
following his appointment on 17 March 2014), Geoffrey Clifford (Non-executive Director), Rod Marston (Non-executive Director) and
Kelly Ross (Non-executive Director). The Directors held office during the entire financial year unless otherwise stated.
The only other persons who qualified as key management personnel during the financial year, and to whom this Remuneration
Report also relates, are as follows:
Andrew Eddowes – Business Development Manager
Brett Hartmann – Group Operations Manager (and Acting Chief Executive Officer from 16 October 2013 until 17 March 2014)
Rodney Jacobs – Development Manager
Tim Kennedy – Exploration Manager
Scott Steinkrug – Chief Financial Officer
Tony Walsh – Company Secretary and General Manager Corporate (following his appointment on 17 July 2013).
Independence Group NL – Financial Report 30 June 2014
74 INDEPENDENCE GROUP NL
11
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Employment contracts
Terms and conditions of employment contracts of key management personnel in effect during the year ended 30 June 2014 were as
follows:
Non-executive directors do not have employment contracts with the Company. The current base fees for non-executive
i)
directors are as follows:
Base fees
Chairman
Non-executive directors
From 1 January 2014
$
From 1 July 2013 to 31
December 2013
$
190,000
100,000
170,000
90,000
ii)
The current Managing Director, Peter Bradford, is employed under a contract which does not have a defined term. The contract
includes provision for a maximum termination benefit payable of up to 12 months of average annual base salary should the Company
terminate the employment contract without cause, but only if such payment would not breach ASX Listing Rules. A termination
benefit of three months’ remuneration is payable to the Managing Director should the Company terminate the employment contract
due to illness, injury or incapacity. In all other circumstances the contract can be terminated by either party after provision of six
months’ notice. The Company may pay the executive in lieu of notice. The current employment contract for Mr Bradford as at 30
June 2014 provides for total fixed remuneration of $750,000. Mr Bradford commenced his position with the Company effective 17
March 2014.
Mr Bradford is also entitled to short term incentives to a maximum of 40% of total fixed remuneration. This amount is currently set at
$300,000 and is normally paid in cash in the subsequent financial year. The short term incentive is based on achievement versus
target KPI’s relating to such matters such as mine production, safety, mine development and costs, as well as exploration success,
corporate growth, environmental activity and risk management actions.
Mr Bradford is also entitled to participate in the PRP. The maximum amount he may be awarded under the PRP is 100% of total fixed
remuneration ($750,000). The granting of such performance rights are subject to the necessary shareholder approvals.
iii)
The key management personnel Andrew Eddowes is employed under a contract which does not have a defined term and can
be terminated by either party after provision of one month’s notice, in which case only accrued leave and other accrued remuneration
is payable. The current employment contract provides for total remuneration of $327,750 per annum (2013: $261,600 per annum).
Mr Eddowes may also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses
are approved by the Board. Mr Eddowes is also entitled to participate in the PRP.
iv)
The key management personnel Brett Hartmann is employed under a contract which does not have a defined term and can be
terminated by either party after provision of one month’s notice, in which case only accrued leave and other accrued remuneration is
payable. The current employment contract provides for total remuneration of $447,925 per annum (2013: $408,205 per annum). Mr
Hartmann may also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses
are approved by the Board. Mr Hartmann is also entitled to participate in the PRP.
v)
The key management personnel Rodney Jacobs is employed under a contract which does not have a defined term and can be
terminated by either party after provision of one month’s notice, in which case only accrued leave and other accrued remuneration is
payable. The current employment contract provides for total remuneration of $366,741 per annum (2013: $356,975 per annum). Mr
Jacobs may also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses are
approved by the Board. Mr Jacobs is also entitled to participate in the PRP.
vi)
The key management personnel Tim Kennedy is employed under a contract which does not have a defined term and can be
terminated by either party after provision of one month’s notice, in which case only accrued leave and other accrued remuneration is
payable. The current employment contract provides for total remuneration of $345,230 per annum (2013: $317,462 per annum). Mr
Kennedy may also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses are
approved by the Board. Mr Kennedy is also entitled to participate in the PRP.
vii) The key management personnel Scott Steinkrug is employed under a contract which does not have a defined term and can be
terminated by either party after provision of one month’s notice, in which case only accrued leave and other accrued remuneration is
payable. The current employment contract provides for total remuneration of $391,039 per annum (2013: $378,775 per annum). Mr
Steinkrug may also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses are
approved by the Board. Mr Steinkrug is also entitled to participate in the PRP.
viii) The key management personnel Tony Walsh is employed under a contract which does not have a defined term. The contract
can be terminated by the Company with the provision of six months’ notice, other than in the event of redundancy where the
termination benefit is the greater of six months’ salary or four weeks salary per year of service. Mr Walsh can terminate the contract
with three months’ notice. The current employment contract provides for total remuneration of $381,501 per annum. Mr Walsh may
also receive performance based bonuses should the Remuneration Committee so recommend and those bonuses are approved by
the Board. Mr Walsh is also entitled to participate in the PRP.
The former managing director, Christopher Bonwick, was employed under a contract which did not have a defined term. The
ix)
contract included provision for termination benefits of one month’s remuneration for every year of service should the Company
terminate the employment contract without cause. A termination benefit of 12 months remuneration was payable to Mr Bonwick
should the Company terminate the employment contract due to a takeover event, but only if such payment would not breach ASX
Listing Rules. In all other circumstances the contract could be terminated by either party after provision of one month’s notice, in
which case only accrued leave and other accrued remuneration was payable. The employment contract for Mr Bonwick provided for
total fixed remuneration of $750,000. Mr Bonwick resigned from his position with the Company effective 15 November 2013. Mr
Bonwick was also entitled to receive short term cash bonuses and was entitled to participate in the PRP.
Independence Group NL – Financial Report 30 June 2014
12
ANNUAL REPORT 2014 75
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Details of remuneration
The following tables show details of the remuneration received by the Directors and key management personnel of the Group for the
current and previous financial year:
Short-term benefits
Cash salary
& fees1
$
Cash
bonus
$
Post-employment
benefits
Other
$
Superannuation
$
Long-term
benefits
Long service
leave2
$
Share-based
payments
Share rights3
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,851
8,444
8,444
8,444
17,371
24,067
25,000
45,489
25,000
25,000
25,000
25,000
255,110
14,037
3,096
4,187
7,431
7,431
-
-
-
-
-
-
-
-
740
1,083
-
257,509
19,939
15,469
12,618
11,009
8,797
1,248
70,903
-
-
-
-
-
49,455
130,351
114,042
101,381
120,940
29,587
803,265
-
-
-
-
-
210,833
99,728
99,728
99,728
236,169
755,041
396,538
693,273
485,365
466,098
535,017
406,820
4,484,338
170,000
37,500
50,713
90,000
90,000
25,000
17,795
224,937
991,343
2014
Non-executive Directors
Peter Bilbe4
Geoffrey Clifford
Rod Marston
Kelly Ross
Executive Directors
Peter Bradford5
Christopher Bonwick6
Other key management
personnel
Andrew Eddowes
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Scott Steinkrug
Tony Walsh7
192,982
91,284
91,284
91,284
-
-
-
-
218,058
256,382
-
216,000
277,144
461,964
333,705
303,708
355,280
350,985
25,000
40,000
-
25,000
25,000
-
Total remuneration
3,024,060
331,000
-
-
-
-
-
-
2013
Non-executive Directors
Peter Bilbe
John Christie8
Geoffrey Clifford9
Rod Marston
Kelly Ross
Executive Directors
Christopher Bonwick
Other key management
personnel
Terry Bourke10
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Scott Steinkrug
Drew Totterdell11
Andrew Eddowes12
155,963
34,404
46,526
82,569
82,569
723,611
183,758
382,054
312,042
289,135
360,394
159,676
177,059
-
20,000
15,000
10,000
15,000
-
15,000
27,273
-
-
-
-
-
-
19,076
36,994
25,350
25,000
25,000
5,963
16,988
(817)
12,810
8,397
9,732
6,041
(6,564)
10,957
58,351
(12,701)
67,259
58,852
52,312
62,401
(10,999)
47,402
216,589
519,117
419,641
386,179
468,836
148,076
267,406
489,463
3,855,400
Total remuneration
2,989,760
75,000
27,273
215,553
1
2
3
4
5
6
Cash salary and fees includes movements in annual leave provision during the year.
Long service leave relates to movements in long service leave provision during the year.
Rights to shares granted under the PRP are expensed over the performance period, which includes the vesting period of the rights, in
accordance with AASB 2 Share-based Payment. Negative amounts reflect share rights lapsed during the year which have been
reversed. Refer to note 31 for details of the valuation techniques used for the PRP.
In addition to his base fee for the year, the Board approved that Mr Bilbe be paid an additional once off payment of $20,000 for the
extra services provided by him during the current year for the benefit of the Company.
Mr Bradford commenced employment as Managing Director effective 17 March 2014.
Mr Bonwick resigned from his position as Managing Director effective 15 November 2013. Amounts accrued for annual leave
($25,210) and long service leave ($161,279) were paid out on termination, these amounts have been offset against the movement in
the provisions for the year.
Mr Walsh commenced employment as Company Secretary and General Manager Corporate on 17 July 2013.
Mr Christie resigned from his position as a Non-executive Director effective 21 November 2012.
Mr Clifford commenced employment as a Non-executive Director on 10 December 2012.
7
8
9
10 Mr Bourke ceased employment effective 8 February 2013. Other short-term benefits relate to a living away from home allowance paid
to Mr Bourke.
11 Mr Totterdell resigned from his position as Business Development Manager effective 30 September 2012. An amount accrued for
annual leave of $53,223 was paid out on termination, this amount has been offset against the movement in the provision for the 2013
year.
12 Mr Eddowes was appointed to the position of Business Development Manager effective 1 October 2012. Remuneration has been
included from the date of his appointment as a key management personnel.
76 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
13
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Details of remuneration (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Non-executive Directors
Peter Bilbe
Geoffrey Clifford
Rod Marston
Kelly Ross
John Christie
Executive Directors
Peter Bradford2
Christopher Bonwick
Other key management personnel
Andrew Eddowes
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Scott Steinkrug
Tony Walsh
Terry Bourke
Drew Totterdell
Fixed Remuneration1
At risk - STI
At Risk – LTI
2014
%
2013
%
2014
%
2013
%
2014
%
2013
%
100.0
100.0
100.0
100.0
-
100.0
37.3
81.2
75.4
76.5
72.9
72.7
92.7
-
-
100.0
100.0
100.0
100.0
100.0
-
77.3
76.7
83.2
82.4
83.9
83.5
-
100.0
100.0
-
-
-
-
-
-
28.6
6.3
5.8
-
5.4
4.7
-
-
-
-
-
-
-
-
-
-
5.6
3.8
3.6
2.6
3.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34.1
22.7
12.5
18.8
23.5
21.7
22.6
7.3
-
-
17.7
13.0
14.0
13.5
13.3
-
-
-
1.
2
Fixed remuneration paid is not based upon any measurable performance indicators. Non-performance based remuneration is based
on relative industry remuneration levels and is set at a level designed to retain the services of the director or senior executive.
Mr Bradford commenced employment with the Company on 17 March 2014. Eligibility for short term and long term incentives was not
assessed at 30 June 2014, therefore 100% of Mr Bradford’s remuneration was considered fixed for the current year.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 77
14
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Share-based payments
A reference to share rights is a reference to share rights granted under the PRP.
The details of each grant of share rights affecting remuneration in the current or future reporting period are as follows:
Name
Date of
grant
Number of
share rights
granted
Executive Directors
Christopher Bonwick4
21/11/2012
183,824
Christopher Bonwick4
23/11/2011
159,235
Other key management personnel
Andrew Eddowes
Andrew Eddowes
Andrew Eddowes
Brett Hartmann
Brett Hartmann
Brett Hartmann
Rodney Jacobs
Rodney Jacobs
Rodney Jacobs
Tim Kennedy
Tim Kennedy
Tim Kennedy
Scott Steinkrug
Scott Steinkrug
Scott Steinkrug
Tony Walsh
28/02/2014
28/02/2013
13/03/2012
28/02/2014
28/02/2013
13/03/2012
28/02/2014
28/02/2013
13/03/2012
28/02/2014
28/02/2013
13/03/2012
28/02/2014
28/02/2013
13/03/2012
28/02/2014
45,771
34,597
17,125
71,421
67,324
58,318
62,458
58,908
51,028
55,544
52,363
45,358
66,272
62,461
54,106
66,596
Fair value
of share
right at date
of grant
$
Fair value
of share
rights at
grant date1
$
Vesting
date3
Unamortised
total value of
grant yet to
vest2
$
2.00
2.14
2.14
2.06
3.64
2.14
2.06
1.69
2.14
2.06
1.69
2.14
2.06
1.69
2.14
2.06
1.69
2.14
368,179
341,559
1/07/2015
1/07/2014
97,756
71,245
62,370
152,537
138,643
98,848
133,395
121,311
86,492
118,630
107,382
76,880
141,542
128,626
91,708
142,233
1/07/2016
1/07/2015
1/07/2013
1/07/2016
1/07/2015
1/07/2014
1/07/2016
1/07/2015
1/07/2014
1/07/2016
1/07/2015
1/07/2014
1/07/2016
1/07/2015
1/07/2014
1/07/2016
-
-
77,421
29,120
-
120,807
56,668
-
105,647
49,584
-
93,953
44,075
-
112,099
52,574
-
112,647
1. The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB
2 Share-based Payment. Refer to note 31 for details of the valuation techniques used for the PRP.
2. Unamortised total value of grant yet to vest comprises the total fair value of the award at the date of grant less amounts
expensed to date.
3. Share rights only vest if performance targets are achieved.
4. Following Mr Bonwick’s resignation from the Company on 15 November 2013, the Board resolved to allocate the share rights
previously granted to him on a period of service pro-rata basis in the relevant performance period. This resulted in the
cancellation of a total of 132,746 share rights previously granted to Mr Bonwick. Refer to the following table for further
information.
78 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
15
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Share-based payments (continued)
The number and percentage of share rights that vested in the financial year and the number and percentage of share rights
that were forfeited during the financial year are set out below.
Name
Date of
grant
Vesting
date
Number
of share
rights
granted
% of
share
rights
vested
during
the year
%
Number
of share
rights
vested
during
the year
Value of
share
rights at
vesting
date
$
% of
share
rights
forfeited
during
the year
%
Number
of share
rights
forfeited
during
the year
Value of
share
rights
forfeited
$
Executive Directors
Christopher
Bonwick1
Christopher
Bonwick1
21/11/2012
1/07/2015
183,824
23/11/2011
1/07/2014
159,235
Other key management personnel
Andrew Eddowes
28/02/2014
1/07/2016
Andrew Eddowes
28/02/2013
1/07/2015
Andrew Eddowes
13/03/2012
1/07/2013
Brett Hartmann
28/02/2014
1/07/2016
Brett Hartmann
28/02/2013
1/07/2015
Brett Hartmann
13/03/2012
1/07/2014
Rodney Jacobs
28/02/2014
1/07/2016
Rodney Jacobs
28/02/2013
1/07/2015
Rodney Jacobs
13/03/2012
1/07/2014
Tim Kennedy
28/02/2014
1/07/2016
Tim Kennedy
28/02/2013
1/07/2015
Tim Kennedy
13/03/2012
1/07/2014
Scott Steinkrug
28/02/2014
1/07/2016
Scott Steinkrug
28/02/2013
1/07/2015
Scott Steinkrug
13/03/2012
1/07/2014
Tony Walsh
28/02/2014
1/07/2016
45,771
34,597
17,125
71,421
67,324
58,318
62,458
58,908
51,028
55,544
52,363
45,358
66,272
62,461
54,106
66,596
-
-
-
-
-
-
-
-
54.2
99,572
366,425
20.8
33,174
122,080
-
-
-
-
-
-
-
-
60.0
10,275
25,821
40.0
6,850
17,214
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Following Mr Bonwick’s resignation from the Company on 15 November 2013, the Board resolved to allocate the share rights
previously granted to him on a period of service pro-rata basis in the relevant performance period. This resulted in the
cancellation of a total of 132,746 share rights previously granted to Mr Bonwick.
Independence Group NL – Financial Report 30 June 2014
16
ANNUAL REPORT 2014 79
DIRECTORS’ REPORT
Directors’ Report
AUDITED REMUNERATION REPORT (continued)
Shareholdings and share rights of key management personnel
The number of shares in the Company and share rights for ordinary shares in the Company held by each director and other key
management personnel, including their personally related entities, are set out below.
Shareholdings in the Company
2014
Directors of Independence Group NL
Peter Bilbe
Christopher Bonwick1
Peter Bradford
Geoffrey Clifford
Rod Marston
Kelly Ross
Other key management personnel
Andrew Eddowes
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Scott Steinkrug
Tony Walsh2
Total
Balance
1 July 2013
Granted as
remuneration3
Net other
changes during
the year
Balance
30 June 2014
-
2,057,500
-
-
1,321,917
345,000
75,500
40,000
-
50,000
2,000
-
-
-
-
-
-
-
10,275
-
-
-
-
-
-
(2,057,500)
-
-
-
-
-
-
-
-
-
10,000
-
-
-
-
1,321,917
345,000
85,775
40,000
-
50,000
2,000
10,000
3,891,917
10,275
(2,047,500)
1,854,692
1. Shareholdings are reversed to show a zero balance at 30 June 2014 on resignation as a director or key management personnel.
2. Other changes during the year include opening balances on becoming a key management personnel for the first time during the year.
3. Shares granted as remuneration relate to the vesting of share rights under the PRP.
Share rights in the Company
2014
Balance
1 July 2013
Granted
during the
year
Vested as
shares
during the
year
Lapsed
during the
year
Other
changes
during the
year
Balance
30 June 2014
Directors of Independence Group NL
Peter Bradford
-
Christopher Bonwick1
343,059
Other key management personnel
Andrew Eddowes
51,722
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Scott Steinkrug
Tony Walsh
Total
125,642
109,936
97,721
116,567
-
-
-
45,771
71,421
62,458
55,544
66,272
66,596
-
-
-
-
(132,746)
(210,313)
(10,275)
(6,850)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,368
197,063
172,394
153,265
182,839
66,596
852,525
844,647
368,062
(10,275)
(139,596)
(210,313)
1. Following Mr Bonwick’s resignation from the Company on 13 November 2013, the Board resolved to allocate the share rights previously
granted to him on a period of service pro-rata basis based in the relevant performance period. This resulted in the cancellation of a total
of 132,746 share rights previously granted to Mr Bonwick. Mr Bonwick’s share rights are reversed to show a zero balance at 30 June
2014 following his resignation as Managing Director.
The share rights relate to the key management personnel’s participation in the PRP. The share rights represent the maximum
number of share rights that the key management personnel are entitled to. They are subject to certain performance conditions being
met, including the ongoing employment of the key management personnel at the end of the vesting period.
Other transactions and balances with key management personnel and their related parties
Consulting fees have been paid to Virtual Genius Pty Ltd, a company to which former Managing Director Mr Bonwick is related. The
fees were based on normal commercial terms and conditions. Fees paid to Virtual Genius Pty Ltd during the year totalled $3,000
(2013: $4,000).
80 INDEPENDENCE GROUP NL
End of Audited Remuneration Report
Independence Group NL – Financial Report 30 June 2014
17
DIRECTORS’ REPORT
Directors’ Report
Share options
At the reporting date, there were no unissued ordinary shares under options, nor were there any ordinary shares issued during the
year ended 30 June 2014 on the exercise of options.
Insurance of officers
During the financial year, the Company paid an insurance premium in respect of a contract insuring the Directors and executive
officers of the Company and of any related body corporate against a liability incurred as such a Director or executive officer to the
extent permitted by the Corporations Law. The contract of insurance prohibits disclosure of the nature of the liability and the amount
of the premium.
The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify an officer of the
Company or of any related body corporate against a liability incurred by such an officer.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for non-audit services provided during the year are set
out below.
The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The nature and the scope of each type of non-audit service provided means that
auditor independence was not compromised.
BDO received or are due to receive the following amounts for the provision of non-audit services during the year:
Other services
Auditor independence
$
2,350
2,350
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 19.
This declaration forms part of the Directors’ Report.
82
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission,
relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in
accordance with that Class order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Signed in accordance with a resolution of the Board of Directors.
Peter Bilbe
Chairman
Perth, Western Australia
Dated this 27th day of August 2014
Independence Group NL – Financial Report 30 June 2014
18
ANNUAL REPORT 2014 81
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
38 Station Street
DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF INDEPENDENCE GROUP
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
NL
Australia
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
As lead auditor of Independence Group NL for the year ended 30 June 2014, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF INDEPENDENCE GROUP
2. No contraventions of any applicable code of professional conduct in relation to the audit.
NL
This declaration is in respect of Independence Group NL and the entities it controlled during the
As lead auditor of Independence Group NL for the year ended 30 June 2014, I declare that, to the best
period.
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Independence Group NL and the entities it controlled during the
Brad McVeigh
period.
Director
BDO Audit (WA) Pty Ltd
Perth, 27 August 2014
Brad McVeigh
Director
BDO Audit (WA) Pty Ltd
Perth, 27 August 2014
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
82 INDEPENDENCE GROUP NL
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2014
Revenue from continuing operations
Other income
Mining, development and processing costs
Employee benefits expense
Share-based payments expense
Fair value movement of financial investments
Depreciation and amortisation expense
Rehabilitation and restoration borrowing costs
Exploration costs expensed
Royalty expense
Ore tolling expense
Shipping and wharfage costs
Net losses on fair value financial liabilities
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Other expenses
Profit from continuing operations before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Items that will be reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges, net of tax
Other comprehensive loss, net of tax
Total comprehensive income
Notes
6
7
19
9
2014
$000
399,059
-
(100,310)
(61,196)
(4,632)
(2)
2013
$000
225,871
690
(63,156)
(54,659)
(3,874)
(2,196)
(69,840)
(24,450)
(565)
(4,334)
(14,309)
(11,973)
(17,551)
-
(5,138)
(32,045)
(9,355)
67,809
(21,253)
46,556
(268)
(2,667)
(8,029)
(11,978)
(12,464)
(345)
(1,356)
(5,762)
(7,530)
27,827
(9,539)
18,288
(4,435)
(4,435)
42,121
(10,160)
(10,160)
8,128
Profit attributable to the members of Independence Group NL
46,556
18,288
Total comprehensive income attributable to the members of Independence
Group NL
42,121
8,128
Cents
Cents
Earnings per share for profit attributable to the ordinary equity holders of the
Company
Basic earnings per share
Diluted earnings per share
11
11
19.95
19.78
7.85
7.79
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 83
20
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2014
Consolidated Balance Sheet
As at 30 June 2014
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Inventories
Property, plant and equipment
Mine properties
Exploration and evaluation expenditure
Deferred tax assets
Intangible assets
Derivative financial instruments
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
2014
$000
2013
$000
12
13
14
15
24
16
14
17
18
19
9
20
24
21
25
24
22
25
23
9
26
27
27
56,972
30,070
40,567
858
2,519
130,986
57
8,803
47,230
364,443
186,784
152,339
-
658
760,314
891,300
27,215
24,159
22,760
1,092
6,946
82,172
604
-
36,278
349,115
199,392
152,261
179
1,981
739,810
821,982
46,855
53,599
3,508
6,381
2,557
6,030
1,910
2,446
59,301
63,985
24,854
25,545
94,711
145,110
204,411
686,889
735,060
13,476
(61,647)
686,889
11,524
21,724
75,280
108,528
172,513
649,469
734,007
14,332
(98,870)
649,469
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
84 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
21
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest and other costs of finance paid
Interest received
Exploration expenditure
Receipts from other operating activities
Notes
2014
$000
$000
418,790
(258,318)
160,472
(4,177)
563
(4,194)
959
Net cash flows from operating activities
28
153,623
Cash flows from investing activities
Dividends received
Payments for purchase of listed and unlisted investments
Proceeds from sale of property, plant and equipment and
other investments
Payments for property, plant and equipment
Payments for development expenditure
Payments for exploration and evaluation expenditure
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Transaction costs associated with borrowings
Repayment of finance lease liabilities
Payment of dividends
Net cash flows used in financing activities
Net increase (decrease) in cash held
Cash and cash equivalents at the beginning of the financial
year
Cash and cash equivalents at the end of the financial year
12
5
(75)
377
(8,935)
(76,101)
(38,692)
(123,421)
47,000
(32,000)
(82)
(6,030)
(9,333)
(445)
29,757
27,215
56,972
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2013
$000
$000
241,164
(173,355)
67,809
(1,314)
3,547
(2,824)
301
67,519
-
(183)
1,258
(7,634)
(170,558)
(37,980)
(215,097)
10,000
(7,382)
(2,045)
(13,800)
(4,658)
(17,885)
(165,463)
192,678
27,215
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 85
22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
Issued capital
Accumulated
losses
$000
$000
Hedging
reserve
$000
At 1 July 2012
734,007
(112,500)
12,557
Share-based
payments
reserve
$000
4,919
Acquisition
reserve
$000
3,142
Profit for the year
Other comprehensive
income
Effective portion of changes
in fair value of cash flow
hedges, net of tax
Total comprehensive
income (loss) for the year
Transactions with owners
in their capacity as owners
Dividends paid
Share-based payments
-
-
-
-
-
18,288
-
-
(10,160)
18,288
(10,160)
(4,658)
-
-
-
At 30 June 2013
734,007
(98,870)
2,397
-
-
-
-
3,874
8,793
-
-
-
-
-
3,142
Total equity
$000
642,125
18,288
(10,160)
8,128
(4,658)
3,874
649,469
At 1 July 2013
734,007
(98,870)
2,397
8,793
3,142
649,469
Profit for the year
Other comprehensive
income
Effective portion of changes
in fair value of cash flow
hedges, net of tax
Total comprehensive
income (loss) for the year
Transactions with owners
in their capacity as owners
Dividends paid
Share-based payments, net
of tax
Issue of shares – Employee
Performance Rights Plan
At 30 June 2014
-
-
-
-
-
1,053
735,060
46,556
-
-
(4,435)
46,556
(4,435)
(9,333)
-
-
-
-
-
(61,647)
(2,038)
-
-
-
-
4,632
(1,053)
12,372
-
-
-
-
-
-
46,556
(4,435)
42,121
(9,333)
4,632
-
3,142
686,889
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
86 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements
For the year ended 30 June 2014
1.
CORPORATE INFORMATION
The financial report of Independence Group NL (the Company) and its subsidiaries (collectively, the Group) for the year ended 30
June 2014 was authorised for issue in accordance with a resolution of the Directors on 27 August 2014.
Independence Group NL is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on
the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
Group consisting of Independence Group NL and its subsidiaries.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. The Company is a for-profit
entity for the purpose of preparing the financial statements.
(i)
Compliance with IFRS
The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
AASB 10 Consolidated Financial Statements
The Group has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when the reporting entity is
exposed, or has the rights, to variable returns from its involvement with another entity and has the ability to affect those returns
through its 'power' over that other entity. A reporting entity has power when it has rights that give it the current ability to direct the
activities that significantly affect the investee's returns. The Group not only has to consider its holdings and rights but also the
holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes.
AASB 11 Joint Arrangements
The Group has applied AASB 11 from 1 July 2013. The standard defines which entities qualify as joint arrangements and removes
the option to account for joint ventures using proportional consolidation. Joint ventures, where the parties to the agreement have the
rights to the net assets, are accounted for using the equity method. Joint operations, where the parties to the agreements have the
rights to the assets and obligations for the liabilities, will account for its share of the assets, liabilities, revenues and expenses
separately under the appropriate classifications.
AASB 12 Disclosure of Interests in Other Entities
The Group has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure requirement associated with other
entities, being subsidiaries, associates, joint arrangements (joint operations and joint ventures) and unconsolidated structured entities.
The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127
Consolidated and Separate Financial Statements, AASB 128 Investments in Associates, AASB 131 Interests in Joint Ventures and
Interpretation 112 Consolidation - Special Purpose Entities.
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
The Group has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a single robust
measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and provides guidance on
measuring fair value when a market becomes less active. The 'highest and best use' approach is used to measure non-financial
assets whereas liabilities are based on transfer value. The standard requires increased disclosures where fair value is used.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure
Requirement
The Group has applied AASB 2011-4 from 1 July 2013, which amends AASB 124 Related Party Disclosures by removing the
disclosure requirements for individual key management personnel. Corporations and Related Legislation Amendment Regulations
2013 and Corporations and Australian Securities and Investments Commission Amendment Regulation 2013 (No.1) now specify the
KMP disclosure requirements to be included within the Directors' Report.
Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine
The Group has applied Interpretation 20 from 1 July 2013. Interpretation 20 applies to waste removal (stripping) costs that are
incurred in surface mining activity during the production phase of the mine. The Interpretation clarifies that the costs of removing
mine waste materials (overburden or deferred stripping) to gain access to mineral ore deposits during the production phase of a
surface mine must be capitalised as inventories under AASB 102 Inventories if the benefits from the stripping activity is realised in
the form of inventory produced. If, however, the stripping activity provides improved access to the ore, and recognition criteria are
met, then the stripping costs must be capitalised as non-current mine properties (as an addition to, or enhancement of, an existing
asset). Refer to note 2(o).
(iii) Early adoption of standards
The Group has not elected to early adopt any new accounting standards.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-
sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss and certain
classes of property, plant and equipment.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 87
24
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
(v) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.
(b) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Independence Group NL (Company
or parent entity) as at 30 June 2014 and the results of all subsidiaries for the year then ended. Independence Group NL and its
subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally
accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
The Group recognises its direct right to the assets, liabilities, revenues and expenses of the Tropicana Gold Project and its share of
any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements
under the appropriate headings.
The acquisition method of accounting is used to account for business combinations by the Group (refer to note (2)(e)).
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss
and other comprehensive income, statement of changes in equity and balance sheet respectively.
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of
accounting, after initially being recognised at cost.
(iii)
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The
classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint
arrangement. The Group’s interests in joint venture entities, if any, are brought to account at cost using the equity method of
accounting in the financial statements, after initially being recognised at cost in the balance sheet.
(c) Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating
results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the
segment and assess its performance and for which discrete financial information is available. This includes start up operations which
are yet to earn revenues.
Operating segments have been identified based on the information provided to the chief operating decision makers – identified as
being the Board of Independence Group NL.
Operating segments that meet the quantitative criteria as described by AASB 8 Operating Segments are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the
segment would be useful to users of the financial statements.
(d) Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian
dollars ($), which is the Group’s functional and presentation currency.
(ii)
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at
the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at
the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
88 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair
value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at
fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(f)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the assets’ carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and the asset’s value-in-use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other than
goodwill that become impaired are tested for possible reversal of the impairment whenever events or changes in circumstances
indicate that the impairment may have reversed.
(g) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.
(h) Trade and other receivables
Trade receivables are generally received up to four months after the shipment date. The receivables are initially recognised at fair
value.
Trade receivables are subsequently revalued by the marking-to-market of open sales. The Group determines mark-to-market prices
using forward prices at each period end for copper and zinc concentrates and nickel ore.
Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off
when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the
receivable. Financial difficulties of the debtor or default payments are considered objective evidence of impairment. The amount of
the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the
original effective interest rate.
(i)
Inventories
(i) Ore, concentrate and gold inventories
Inventories, including gold, copper and zinc in concentrate, gold dore, gold in circuit and ore stockpiles, are valued at the lower of
weighted average cost and net realisable value. Costs include fixed direct costs, variable direct costs and an appropriate portion of
fixed overhead costs. A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory.
(ii) Stores and fuel
Inventories of consumable supplies and spare parts are valued at the lower of cost and net realisable value. Cost is assigned on a
weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of
completion, and the estimated costs necessary to make the sale.
The recoverable amount of surplus items is assessed regularly on an ongoing basis and written down to its net realisable value when
an impairment indicator is present.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 89
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
(j)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative financial instruments
The Group uses derivative financial instruments to manage its risks associated with metals price and foreign currency fluctuations.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently remeasured to fair value at the end of each reporting period.
The Group uses derivative financial instruments such as foreign currency contracts and commodity contracts to hedge its risks
associated with gold, nickel, copper and zinc prices and foreign currency fluctuations. Such derivative financial instruments are
recognised at fair value.
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. The fair value of commodity contracts is determined by reference to market values for similar instruments.
For the purposes of hedge accounting, hedges are classified as cash flow hedges where they hedge exposure to variability in cash
flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction.
In relation to cash flow hedges (forward foreign currency contracts and commodity contracts) to hedge firm commitments which meet
the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective
hedge is recognised directly in other comprehensive income and the ineffective portion is recognised in the profit or loss. If the hedge
accounting conditions are not met, movements in fair value are recognised in the profit or loss.
Amounts accumulated in equity are recycled in the statement of profit or loss and other comprehensive income in the periods when
the hedged item will affect profit or loss, for instance when the forecast sale that is hedged takes place. The gain or loss relating to
the effective portion of forward foreign exchange contracts and forward commodity contracts is recognised in the profit or loss within
sales.
(k)
Investments and other financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and
receivables and available-for-sale financial assets. The classification depends on the purpose for which the investments were
acquired. Management determines the classification of its investments at initial recognition.
Financial assets are initially recognised at cost, being the fair value of the consideration given and including acquisition charges
associated with the investment.
After initial recognition, financial assets which are classified as held for trading are measured at fair value. Gains or losses on
investments held for trading are recognised in the profit or loss. The Group has investments in listed entities which are considered to
be tradeable by the Board and which the Company expects to sell for cash in the future.
For investments carried at amortised cost, gains and losses are recognised in the statement of profit or loss and other comprehensive
income when the investments are de-recognised or impaired, as well as through the amortisation process.
Fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active (eg. unlisted securities),
a valuation technique is applied and if this is deemed unsuitable, they are held at initial cost.
(l)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items. It also includes the direct cost of
bringing the asset to the location and condition necessary for first use and the estimated future cost of rehabilitation, where
applicable. The assets are subsequently measured at cost less accumulated depreciation and any accumulated impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs
and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using either units-of-production or straight-line depreciation as
follows:
Depreciation periods are primarily:
Buildings
Mining plant and equipment
Motor vehicles
Furniture and fittings
Leased assets
5 – 10 years
2 – 5 years
3 – 8 years
3 – 10 years
3 – 4 years
Depreciation is expensed as incurred, unless it relates to an asset or operation in the construction phase, in which case it is
capitalised.
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 2(f)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
90 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Exploration and evaluation expenditure
Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest.
Such costs are only carried forward to the extent that they are expected to be recouped through the successful development of the
area of interest (or alternatively by its sale), or where activities in the area have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active operations are continuing.
Accumulated costs in relation to an abandoned area are written off to profit or loss in the period in which the decision to abandon the
area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest. An impairment exists when the carrying value of expenditure exceeds its estimated recoverable
amount. The area of interest is then written down to its recoverable amount and the impairment losses are recognised in profit or
loss.
Exploration and evaluation assets acquired in a business combination are initially recognised at fair value. They are subsequently
measured at cost less any accumulated impairment.
(n) Mine properties
(i) Mine properties in development
When technical feasibility and commercial viability of extracting a mineral resource have been demonstrated, then any subsequent
expenditure in that area of interest is classified as mine properties in development. These costs are not amortised but the carrying
value is assessed for impairment whenever facts and circumstances suggest that the carrying amount of the asset may exceed its
recoverable amount.
(ii) Mine properties in production
Mine properties in production represent the accumulation of all acquisition, exploration, evaluation and development expenditure
incurred by or on behalf of the Group in relation to areas of interest in which mining of the mineral resource has commenced. When
further development expenditure, including waste development and stripping, is incurred in respect of a mine property after the
commencement of production, such expenditure is carried forward as part of the cost of that mine property only when substantial
future economic benefits are established, otherwise such expenditure is classified as part of the cost of production.
Amortisation is provided on a units-of-production basis, with separate calculations being made for each mineral resource. The units-
of-production method results in an amortisation charge proportional to the depletion of the economically recoverable mineral
resources (comprising proven and probable reserves).
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest. An impairment exists when the carrying value of expenditure not yet amortised exceeds its estimated
recoverable amount. The asset is then written down to its recoverable amount and the impairment losses are recognised in profit or
loss.
(o) Deferred stripping
Stripping activity costs incurred in the development phase of a mine are capitalised as part of the cost of constructing the mine and
subsequently amortised over the life of the mine on a units-of-production basis.
Stripping activity incurred during the production phase of a mine is assessed as to whether the benefit accruing from that activity is to
provide access to ore that can be used to produce ore inventory, or whether it in addition provides improved access to ore that will be
mined in future periods.
To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the Group accounts for those
stripping activity costs in accordance with AASB102 Inventories. A stripping activity asset is brought to account if it is probable that
future economic benefits (improved access to the ore body) will flow to the Group, the component of the ore body for which access
has been improved can be identified and costs relating to the stripping activity can be measured reliably.
The amount of stripping activity costs that are capitalised is determined based on a comparison of the stripping ratio in the relevant
period with the life of mine stripping ratio. To the extent that there is a period of sustained stripping that exceeds the average life of
mine stripping ratio, mine waste stripping costs are capitalised to the stripping activity asset. Such capitalised costs are amortised
over the life of that mine on a units-of-production basis. The life of mine ratio is based on economically recoverable reserves of the
mine. Changes to the life of mine are accounted for prospectively.
Deferred stripping costs are included in Mine Properties in the balance sheet. These form part of the total investment in the relevant
cash generating units, which are reviewed for impairment if events or changes of circumstances indicate that the carrying value may
not be recoverable.
(p) Rehabilitation, restoration and environmental costs
Long-term environmental obligations are based on the Group’s environmental management plans, in compliance with current
environmental and regulatory requirements.
Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance that has
occurred up to the reporting date. To the extent that future economic benefits are expected to arise, these costs are capitalised and
amortised over the remaining lives of the mines.
Annual increases in the provision relating to the change in the net present value of the provision are recognised as finance costs. The
estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other
circumstances. Cost estimates are not reduced by the potential proceeds from the sale of assets or from plant clean-up at closure.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 91
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Intangible assets
(i) Goodwill
Goodwill is measured as described in note 2(e). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on
acquisitions of associates is included in investments in associates. Goodwill is not amortised but it is tested for impairment annually,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose,
identified according to operating segments.
(ii) Other
Other intangible assets relate to a database for research purposes, which is carried at fair value at the date of acquisition less
accumulated amortisation. Amortisation is calculated based on the time it will take to complete the research on the database which is
currently four years.
(r)
Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are
classified as finance leases (refer note 25). Finance leases are capitalised at the lease’s inception at the fair value of the leased
property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in current and non-current borrowings. Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the
asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or
loss on a straight-line basis over the period of the lease.
(s) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value
and subsequently measured at amortised cost using the effective interest rate method.
(t) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit or loss over
the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
(u) Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to
complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
(v) Financial liabilities
The Group designates certain liabilities at fair value through profit or loss. Financial liabilities are initially measured at cost, being the
fair value of the amounts received. After initial recognition, financial liabilities are measured at fair value, with gains or losses
recognised in the profit or loss.
(w) Employee benefits
(i)
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for
annual leave is recognised in trade and other payables.
(ii)
Long service leave
The liability for long service leave is recognised and measured as the present value of expected future payments to be made in
respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the
reporting date on national Government bonds with terms to maturity and currencies that match, as closely as possible, the estimated
future cash outflows.
92 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) Share-based payment transactions
Equity-settled transactions
The Company provides benefits to employees (including directors) of the Group in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
There is currently a plan in place to provide these benefits, the Employee Performance Rights Plan (PRP), which provides benefits to
executive directors and other employees.
The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair
value is determined in conjunction with an external valuation consultant using a trinomial tree which has been adopted by the Boyle
and Law (1994) node alignment algorithm to improve accuracy. In valuing equity-settled transactions, no account is taken of any
performance conditions, other than conditions linked to the price of the shares of Independence Group NL (market conditions).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting
date).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately
vest. This opinion is formed based on the best available information at the reporting date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted, the cancelled and new award is treated as if it was a modification of the original
award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share.
(y) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
(z) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that
the economic benefits will flow to the Group and revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
(i)
Sale of goods
Revenue from the sale of goods is recognised when there is persuasive evidence indicating that there has been a transfer of risks
and rewards to the customer.
Sales revenue comprises gross revenue earned, net of treatment and refining charges where applicable, from the provision of product
to customers, and includes hedging gains and losses. Sales are initially recognised at estimated sales value when the product is
delivered. Adjustments are made for variations in metals price, assay, weight and currency between the time of delivery and the time
of final settlement of sales proceeds.
(ii)
Interest revenue
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
(aa)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 93
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(aa)
Income tax (continued)
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and
the carry-forward of unused tax credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting
date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Tax consolidation legislation
Independence Group NL and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income, directly in equity or as a result of a business combination. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
(ab) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(ac) Earnings per share
Basic earnings per share is calculated as net profit or loss attributable to shareholders, adjusted to exclude any costs of servicing
equity, divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit or loss attributable to shareholders, adjusted for:
cost of servicing equity;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.
(ad) Comparatives
Where appropriate, comparatives have been reclassified to be consistent with the current year presentation. The reclassification
does not have an impact on the results presented.
94 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2014 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Application
date for
Independence
Group NL
1 July 2017
Application
date of
standard
Annual
reporting
periods
beginning on
or after 1
January 2017
Impact on Independence Group
NL’s financial statements
Adoption of AASB 9 is only
mandatory for the year ending 30
June 2018. This standard is not
expected to impact the Group as
financial assets are currently
classified as fair value through
profit or loss.
AASB
Standard
affected
Financial
Instruments
AASB
reference
AASB 9
(issued
December
2009 and
amended
December
2010)
Nature of change
Amends the requirements for
classification and measurement
of financial assets. The available-
for-sale and held-to-maturity
categories of financial assets in
AASB 139 have been eliminated.
Under AASB 9, there are three
categories of financial assets:
Amortised cost
Fair value through profit or loss
Fair value through other
comprehensive income.
AASB 9 requires that gains or
losses on financial liabilities
measured at fair value are
recognised in profit or loss,
except that the effects of changes
in the liability’s credit risk are
recognised in other
comprehensive income.
AASB 2012-6
(issued
September
2012)
AASB 2013-4
(issued July
2013)
Amendments
to Australian
Accounting
Standards -
Mandatory
Effective Date
of AASB 9 and
Transition
Disclosures
Amendments
to Australian
Accounting
Standards –
Novation of
Derivatives
and
Continuation
of Hedge
Accounting
(AASB 139)
Defers the effective date of AASB
9 to 1 January 2015. Entities are
no longer required to restate
comparatives on first time
adoption. Instead, additional
disclosures on the effects of
transition are required.
Annual
reporting
periods
beginning on
or after 1
January 2015
1 January
2014
Clarifies treatment of novated
hedging instruments and
continuation of hedge accounting
where entities are required to
replace the original party with a
central counterparty as a
consequence of laws or
regulations or the introduction of
laws and regulation.
1 July 2015
1 July 2014
As comparatives are no longer
required to be restated, there will
be no impact on amounts
recognised in the financial
statements. However, additional
disclosures will be required on
transition, including the quantitative
effects of reclassifying financial
assets on transition.
There will be no impact on first-time
adoption of this amendment as the
Group does not account for
proposed changes in taxation
legislation until the relevant Bill has
passed through both Houses of
Parliament, which is consistent with
the views expressed by the
Australian Accounting Standards
Board in their agenda decision of
December 2012.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 95
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ae) New accounting standards and interpretations (continued)
Application
date of
standard
Annual
reporting
periods
beginning on
or after 1
January 2017
Impact on Independence Group
NL’s financial statements
The Group currently applies hedge
accounting. It is expected that the
application of the new amendments
will not have an impact on the
Group’s financial statements.
Application
date for
Independence
Group NL
1 July 2017
AASB
reference
AASB 2013-9
(issued
December
2013)
AASB
Standard
affected
–
Amendments
to Australian
Accounting
Standards
Conceptual
Framework,
Materiality and
Financial
Instruments
Nature of change
Makes three amendments to
AASB 9:
Adding the new hedge
accounting requirements into
AASB 9
Deferring the effective date of
AASB 9 from 1 January 2015
to 1 January 2017, and
Making available for early
adoption the presentation of
changes in ‘own credit’ in
other comprehensive income
(OCI) for financial liabilities
under the fair value option
without early applying the
other AASB 9 requirements.
Under the new hedge accounting
requirements:
The 80-125% highly effective
threshold has been removed
Risk components of non-
financial items can qualify for
hedge accounting provided
that the risk component is
separately identifiable and
reliably measurable
An aggregated position (i.e.
combination of a derivative
and a non-derivative) can
qualify for hedge accounting
provided that it is managed
as one risk exposure
When entities designate the
intrinsic value of options, the
initial time value is deferred in
OCI and subsequent changes
in time value are recognised
in OCI
When entities designate only the
spot element of a forward
contract, the forward points
can be deferred in OCI and
subsequent changes in
forward points are recognised
in OCI. Initial foreign currency
basis spread can also be
deferred in OCI with
subsequent changes be
recognised in OCI
Net foreign exchange cash flow
positions can qualify for hedge
accounting.
Independence Group NL – Financial Report 30 June 2014
33
96 INDEPENDENCE GROUP NL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ae) New accounting standards and interpretations (continued)
AASB
reference
AASB 2013-5
(issued
August 2013)
AASB
Standard
affected
Amendments
to Australian
Accounting
Standards -
Investment
Entities
AASB 2013-3
(issued June
2013)
Amendments
to AASB 136 –
Recoverable
Amount
Disclosures
for Non-
Financial
Assets
AASB 2014-1
Amendments
to Australian
Accounting
Standards
[Operative
dates: Parts
A-C – 1 Jul
2014;
Part D – 1 Jan
2016; Part E –
1 Jan 2015]
Improvements
to IFRSs
(issued
December
2013)
Annual
Improvements
2011-2013
Cycle (IFRS13
& IAS 40)
Nature of change
The amendment defines an
‘investment entity’ and requires a
parent that is an investment entity
to measure its investments in
particular subsidiaries at fair
value through profit or loss in its
consolidated and separate
financial statements.
The amendment prescribes three
criteria that must be met in order
for an entity to be defined as an
investment entity, as well as four
‘typical characteristics’ to consider
in assessing the criteria.
The amendment also introduces
disclosure requirements for
investment entities into AASB 12
Disclosure of Interests in Other
Entities and amends AASB 127
Separate Financial Statements.
Clarifies the disclosure
requirements for cash-generating
units (CGUs) with significant
amounts of goodwill and
intangibles with indefinite useful
lives and also adds additional
disclosures when recoverable
amount is determined based on
fair value less costs to sell.
Application
date of
standard
1 January
2014
Impact on Independence Group
NL’s financial statements
As the Group does not meet the
definition of an investment entity, it
will continue to consolidate its
investments in subsidiaries in
accordance with AASB 10
Consolidated Financial Statements.
Application
date for
Independence
Group NL
1 July 2014
1 January
2014
1 July 2014
As this standard amends disclosure
requirements only, there will be no
impact on amounts recognised in
the financial statements. The
recoverable amount for CGUs with
significant amounts of goodwill and
intangibles with indefinite lives will
only be required to be disclosed
where an impairment loss has been
recognised. However, there will be
additional disclosures about the
level of the fair value hierarchy
where recoverable amount for a
CGU is determined based on fair
value less costs to sell.
Non-urgent but necessary
changes to standards arising from
Annual Improvements to IFRSs
2010–2012 Cycle and Annual
Improvements to IFRSs 2011–
2013 Cycle.
1 July 2014,
1 January
2016, 1
January
There will be no impact on the
financial statements when these
amendments are first adopted
because they apply prospectively or
are disclosure impacts only.
1 July 2014, 1
July 2015, 1 July
2016
1 July 2014
There will be no impact on the
financial statements when these
amendments are first adopted.
1 July 2014
Non-urgent but necessary
changes to standards
IFRS13 – Clarifies portfolio
exception in relation to
contracts under IAS 39
IAS 40 – Clarifies
interrelationship between IFRS
3 & IAS 40 when classifying the
acquisition of property as
investment or owner occupied
Independence Group NL – Financial Report 30 June 2014
34
ANNUAL REPORT 2014 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ae) New accounting standards and interpretations (continued)
AASB
Standard
affected
Levies
AASB
reference
Interpretation
21 (issued
June 2013)
IFRS 15
(issued June
2014)
Revenue from
contracts with
customers
Nature of change
Clarifies the circumstances under
which a liability to pay a levy
imposed by a government should
be recognised, and whether that
liability should be recognised in
full at a specific date or
progressively over a period of
time.
An entity will recognise revenue
to depict the transfer of promised
good or services to customers in
an amount that reflects the
consideration to which the entity
expects to be entitled in
exchange for those goods or
services. This means that
revenue will be recognised when
control of goods or services is
transferred, rather than on
transfer of risks and rewards as
is currently the case under IAS
18 Revenue.
Application
date for
Independence
Group NL
1 July 2014
Application
date of
standard
1 January
2014
Impact on Independence Group
NL’s financial statements
The Group is liable to pay royalties.
The royalties are payable quarterly
and are calculated based on
revenue generated in the previous
quarter and only become payable in
the following quarter of operations.
The new standard is not expected to
impact on the recognition of royalties
in the Group accounts.
Annual
reporting
periods
beginning on
or after 1
January 2017
Due to the recent release of this
standard, the Group has not yet
made a detailed assessment of the
impact of this standard.
1 July 2017
(af) Parent entity financial information
The financial information for the parent entity, Independence Group NL, disclosed in note 35 has been prepared on the same basis as
the consolidated financial statements, except as set out below.
(i)
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of
Independence Group NL. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
(ii)
Tax consolidation legislation
Independence Group NL and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Independence Group NL, and the controlled entities in the tax consolidated group account for their own current and
deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone
taxpayer in its own right.
In addition to its own current and deferred tax amounts, Independence Group NL also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Independence
Group NL for any current tax payable assumed and are compensated by Independence Group NL for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Independence Group NL under the tax
consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’
financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under the tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax consolidated entities.
Independence Group NL – Financial Report 30 June 2014
35
98 INDEPENDENCE GROUP NL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s activities expose it to a variety of financial risks; market risk (including currency risk, interest rate risk, equity price risk
and commodity price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
derivative financial instruments such as foreign exchange contracts, forward commodity contracts and collar arrangements to hedge
certain risk exposures.
Risk management relating to commodity and foreign exchange risk is overseen by the Hedging Committee under policies approved
by the Board of Directors. The Board identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as
mitigating foreign exchange, commodity price, interest rate and credit risks, use of derivative financial instruments and investing
excess liquidity.
Risk exposures and responses
Foreign currency risk
As 100% of the Group’s sales revenues for nickel, copper, zinc and silver are denominated in US dollars and the majority of operating
costs are denominated in Australian dollars, the Group’s cash flow is significantly exposed to movements in the A$:US$ exchange
rate. The Group mitigates this risk through the use of derivative instruments, including but not limited to forward contracts and the
purchase of Australian dollar call options.
The financial instruments denominated in US dollars and then converted into the functional currency (i.e. A$) were as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Net financial assets
2014
$000
17,923
25,054
1,809
44,786
6,381
6,381
38,405
2013
$000
3,319
14,801
5,263
23,383
1,910
1,910
21,473
The cash balance above only represents the cash held in the US dollar bank accounts at the reporting date and converted into
Australian dollars at the 30 June 2014 A$:US$ exchange rate of $0.9420 (2013: $0.9138). The remainder of the cash balance of
$39,049,000 (2013: $23,896,000) was held in Australian dollars and therefore not exposed to foreign currency risk.
The trade and other receivables amounts represent the US dollar denominated trade debtors. All other trade and other receivables
were denominated in Australian dollars at the reporting date.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 99
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Foreign currency risk (continued)
The following table summarises the Group’s sensitivity of financial instruments held at 30 June 2014 to movements in the A$:US$
exchange rate, with all other variables held constant. Sensitivity analysis is calculated using a reasonable possible change of 1.5%
(2013: 1.5%) in the foreign rate in both directions based on the exposure period of the trade receivables, a 5.0% (2013: 5.0%)
variation for derivative contracts and a 3.0% (2013: 9.0%) variation for USD cash balances in both directions.
Sensitivity of financial instruments to foreign
currency movements
Impact on profit after tax
Impact on other components of
equity
2014
$000
2013
$000
2014
$000
2013
$000
Financial assets
Cash and cash equivalents
Increase 3.0% (2013: 9.0%)
Decrease 3.0% (2013: 9.0%)
Trade receivables
Increase 1.5% (2013: 1.5%)
Decrease 1.5% (2013: 1.5%)
Derivative financial instruments
Increase 5.0% (2013: 5.0%)
Decrease 5.0% (2013: 5.0%)
Financial liabilities
Derivative financial instruments
Increase 5.0% (2013: 5.0%)
Decrease 5.0% (2013: 5.0%)
Net sensitivity to foreign currency movements
Commodity price risk
(365)
388
(176)
222
361
(399)
31
50
(55)
(5)
26
(211)
258
(153)
158
-
-
52
-
-
-
52
-
-
-
-
1,444
(1,596)
(152)
163
(180)
(17)
(169)
-
-
-
-
(175)
194
19
679
(751)
(72)
(53)
The Group’s sales revenues are generated from the sale of nickel, copper, zinc, silver and gold. Accordingly, the Group’s revenues,
derivatives and trade receivables are exposed to commodity price risk fluctuations, primarily nickel, copper, zinc, silver and gold.
Nickel
Nickel ore sales have an average price finalisation period of three months until the sale is finalised with the customer.
It is the Board’s policy to hedge between 0% and 50% of total nickel production tonnes. All of the hedges qualify as “highly probable”
forecast transactions for hedge accounting purposes.
Copper and zinc
Copper and zinc concentrate sales have an average price finalisation period of up to four months from shipment date.
It is the Board’s policy to hedge between 0% and 50% of total copper and zinc production tonnes.
Gold
It is the Board’s policy to hedge between 0% and 50% of forecast gold production from the Company’s 30% interest in the Tropicana
Gold Mine.
The markets for nickel, copper, zinc, silver and gold are freely traded and can be volatile. As a relatively small producer, the Group
has no ability to influence commodity prices. The Group mitigates this risk through derivative instruments, including, but not limited
to, quotational period pricing, forward contracts and collar arrangements.
100 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Commodity price risk (continued)
At the reporting date, the carrying value of the financial instruments exposed to commodity price movements were as follows:
Financial instruments exposed to commodity price movements
Financial assets
Trade and other receivables
Derivative financial instruments – commodity hedging contracts
Financial liabilities
Derivative financial instruments – commodity hedging contracts
Net exposure
2014
$000
19,853
1,777
21,630
6,381
6,381
15,249
2013
$000
12,839
8,927
21,766
-
-
21,766
The following table summarises the sensitivity of financial instruments held at 30 June 2014 to movements in the nickel price, with all
other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2013: 1.5%) which is based upon the
three month forward commodity rate as there is a three month lag time between delivery and final nickel price received. A 20.0%
(2013: 20.0%) sensitivity rate is used to value derivative contracts held and is based on reasonable assessment of the possible
changes.
Sensitivity of financial instruments to nickel price
movements
Financial assets
Trade receivables
Increase 1.5% (2013: 1.5%)
Decrease 1.5% (2013: 1.5%)
Derivative financial instruments – commodity hedging
contracts
Increase 20.0% (2013: 20.0%)
Decrease 20.0% (2013: 20.0%)
Impact on profit after tax
Impact on other components of
equity
2014
$000
2013
$000
2014
$000
2013
$000
217
(217)
(1,346)
1,353
7
298
(298)
-
-
-
-
-
(3,949)
3,946
(3)
-
-
(2,117)
2,117
-
The following table summarises the sensitivity of financial instruments held at 30 June 2014 to movements in the copper price, with all
other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2013: 1.5%) which is based upon the
three month forward commodity rate as there is a three month lag time between delivery and final copper price received. A 20.0%
(2013: 20.0%) sensitivity rate is used to value derivative contracts held and is based on reasonable assessment of the possible
changes.
Sensitivity of financial instruments to copper price
movements
Financial assets
Trade receivables
Increase 1.5% (2013: 1.5%)
Decrease 1.5% (2013: 1.5%)
Derivative financial instruments – commodity hedging
contracts
Increase 20.0% (2013: 20.0%)
Decrease 20.0% (2013: 20.0%)
Impact on profit after tax
Impact on other components of
equity
2014
$000
2013
$000
2014
$000
2013
$000
11
(11)
(960)
957
(3)
124
(124)
-
-
-
-
-
(1,323)
1,317
(6)
-
-
-
-
-
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 101
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Commodity price risk (continued)
The following table summarises the sensitivity of financial instruments held at 30 June 2014 to movements in the gold price, with all
other variables held constant. A 20.0% (2013: 20.0%) sensitivity rate is used to value derivative contracts held and is based on
reasonable assessment of the possible changes.
Sensitivity of financial instruments to gold price movements
Financial assets
Derivative financial instruments – commodity hedging contracts
Increase 20.0% (2013: 20.0%)
Decrease 20.0% (2013: 20.0%)
Impact on profit after tax
2013
2014
$000
$000
(4,280)
1,581
(2,699)
(6,569)
1,287
(5,282)
There were no financial instruments held at 30 June 2014 relating to zinc that were affected by movements in the zinc price. The
following table summarises the sensitivity of financial instruments held at 30 June 2013 to movements in the zinc price, with all other
variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% in the previous financial year which is based
upon the three month forward commodity rate as there is a four month lag time between delivery and final zinc price received.
Sensitivity of financial instruments to zinc price movements
Financial assets
Trade receivables
Increase 0.0% (2013: 1.5%)
Decrease 0.0% (2013: 1.5%)
Equity price risk sensitivity analysis
Impact on profit after tax
2013
2014
$000
$000
-
-
-
94
(94)
-
The following sensitivity analysis has been determined based on the exposure to equity price risks at the reporting date. Each equity
instrument is assessed on its individual price movements with the sensitivity rate based on a reasonably possible change of 45%
(2013: 45%). At reporting date, if the equity prices had been higher or lower, net profit for the year would have increased or
decreased by $254,000 (2013: $328,000).
Cash flow and fair value interest rate risk
The Group’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market
interest rates. At the reporting date, the Group had the following exposure to interest rate risk on financial instruments:
Financial assets
Cash and cash equivalents
Financial liabilities
Bank loans
Net exposure
Weighted
average
interest rate
2014
%
Balance
2014
$000
Weighted
average
interest rate
2013
%
1.3%
4.9%
56,972
56,972
25,000
25,000
31,972
3.0%
5.0%
Balance
2013
$000
27,215
27,215
10,000
10,000
17,215
102 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Cash flow and fair value interest rate risk (continued)
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and the stipulated
change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point
increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s
assessment of the possible change in interest rates.
Sensitivity of interest revenue and expense to interest rate movements
Revenue
Interest revenue
Increase 1.0% (2013: 1.0%)
Decrease 1.0% (2013: 1.0%)
Expense
Interest expense
Increase 1.0% (2013: 1.0%)
Decrease 1.0% (2013: 1.0%)
Impact on profit after tax
2013
2014
$000
$000
243
(243)
-
(175)
175
-
57
(57)
-
(70)
70
-
The interest rate on the outstanding lease liabilities is fixed for the term of the lease, therefore there is no exposure to movements in
interest rates.
Credit risk
Nickel sales
The Group has a concentration of credit risk in that it depends on BHP Billiton Nickel West Pty Ltd for a significant volume of
revenue. During the year ended 30 June 2014 all nickel sales revenue was sourced from this company. The risk is mitigated in that
the agreement relating to sales revenue contains provision for the Group to seek alternative revenue providers in the event that BHP
Billiton Nickel West Pty Ltd is unable to accept supply of the Group’s product due to a force majeure event. The risk is further
mitigated by the receipt of 70% of the value of any months’ sale within a month of that sale occurring. The Group has policies in
place to ensure that sales of products are made to customers with an appropriate credit history.
Copper and zinc sales
Credit risk arising from sales to customers is managed by contracts that stipulate a provisional payment of at least 90% of the
estimated value of each sale. This is generally paid promptly after vessel loading. Title to the concentrate does not pass to the buyer
until this provisional payment is received by the Group.
Due to the large size of concentrate shipments, there are a relatively small number of transactions each month and therefore each
transaction and receivable balance is actively managed on an ongoing basis with attention to timing of customer payments and
imposed credit limits. The resulting exposure to bad debts is not considered significant.
Gold sales
Credit risk arising from the sale of gold to customers is low as customers have short contractual payment terms (commonly within 2
days) and customers are considered to be reliable.
Other
In respect of financial assets and derivative financial instruments, the Group’s exposure to credit risk arises from potential default of
the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Exposure at the reporting date is
addressed below. The Group does not hold any credit derivatives to offset its credit exposure.
Derivative counterparties and cash transactions are restricted to high credit quality financial institutions.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 103
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Other (continued)
The maximum exposure to credit risk at the reporting date was as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other receivables
Financial assets
Derivative financial instruments
Total exposure
2014
$000
56,972
24,828
2,456
858
3,177
88,291
2013
$000
27,215
22,463
525
1,092
8,927
60,222
On analysis of trade and other receivables, none are past due or impaired for either 30 June 2014 or 30 June 2013.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group’s approach to
managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Board
monitors liquidity levels on an ongoing basis.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables are based
on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
2014
Trade and other payables
Lease liabilities
Bank loans
2013
Trade and other payables
Lease liabilities
Bank loans
Contractual maturities
Less than 6
months
$000
6 - 12 months
$000
Between
1 and 5 years
$000
42,982
2,300
-
45,282
49,798
3,694
-
53,492
-
1,371
-
1,371
-
2,910
-
2,910
-
522
25,000
25,522
-
4,193
10,000
14,193
Contractual
value
Carrying
value
A$
$000
42,982
4,193
25,000
72,175
49,798
10,797
10,000
70,595
A$
$000
42,982
4,018
24,344
71,344
49,798
10,048
7,506
67,352
The following table details the Group’s liquidity analysis for its derivative financial instruments. The table is based on the
undiscounted net cash inflows/(outflows) on the derivative instrument that settles on a net basis. When the net amount payable is not
fixed, the amount disclosed has been determined by reference to the projected forward curves existing at the reporting date.
Contractual maturities
6 - 12 months
Less than 6
months
$000
$000
Between 1
and 5 years
$000
Contractual
value
Carrying
value
A$
$000
A$
$000
2014
Net settled
Commodity hedging contracts
2013
Net settled
Foreign currency contracts
hedging contracts
3,013
3,013
3,368
3,368
-
-
1,910
1,910
-
-
-
-
6,381
6,381
6,381
6,381
1,910
1,910
1,910
1,910
104 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Fair values
a)
Fair value hierarchy
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
(c)
The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2014 and 30 June
2013 on a recurring basis.
At 30 June 2014
Financial assets
Derivative instruments
Commodity hedging contracts
Foreign currency hedging contracts
Listed and unlisted investments
Financial liabilities
Derivative instruments
Commodity hedging contracts
At 30 June 2013
Financial assets
Derivative instruments
Commodity hedging contracts
Listed and unlisted investments
Financial liabilities
Derivative instruments
Commodity hedging contracts
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
-
-
808
808
-
-
-
1,042
1,042
-
-
1,777
1,400
-
3,177
6,381
6,381
8,927
-
8,927
1,910
1,910
-
-
50
50
-
-
-
50
50
-
-
1,777
1,400
858
4,035
6,381
6,381
8,927
1,092
10,019
1,910
1,910
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2014 and
did not transfer any fair value amounts between the fair value hierarchy levels during the year ended 30 June 2014.
b)
Valuation techniques used to derive level 1 values
The fair value of financial instruments traded in active markets (such as publicly traded derivatives and trading and available-for-sale
securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets
held by the Group is the current bid price. These instruments are included in level 1.
c)
Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as
little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument
is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
The use of quoted market prices or dealer quotes for similar instruments.
The fair value of commodity and forward foreign exchange contracts is determined using forward commodity and exchange
rates at the balance sheet date.
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial
instruments.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities which are included in level 3.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 105
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Fair values (continued)
d)
Fair value of other financial instruments
The Group also has a number of financial instruments which are not measured at fair value in the balance sheet. These instruments
had the following fair value at the reporting date.
At 30 June 2014
Current assets
Cash and cash equivalents
Current liabilities
Lease liabilities
Non-current liabilities
Bank loans
Lease liabilities
At 30 June 2013
Current assets
Cash and cash equivalents
Current liabilities
Lease liabilities
Non-current liabilities
Bank loans
Lease liabilities
Carrying amount
$000
Fair value
$000
56,972
56,972
3,508
3,508
24,344
510
24,854
27,215
27,215
6,030
6,030
7,506
4,018
11,524
56,972
56,972
3,671
3,671
25,000
522
25,522
27,215
27,215
6,604
6,604
10,000
4,193
14,193
106 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below:
Trade receivables
The Group estimates the value of trade receivables in accordance with the accounting policy disclosed in note 2(h).
Impairment of assets
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are made regarding the present
value of future cash flows using asset-specific discount rates.
Reserve estimates
Estimates of recoverable quantities of proven and probable reserves include assumptions regarding commodity prices, exchange
rates, discount rates, production and transportation costs for future cash flows. It also requires interpretation of complex and difficult
geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reserves and their
anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period.
Changes in reported reserves can impact asset carrying values, the provision for restoration and the recognition of deferred tax
assets, due to changes in expected future cash flows. Reserves are integral to the amount of depreciation, depletion and
amortisation charged to the profit or loss and the calculation of inventory. The Group prepares reserve estimates in accordance with
the JORC Code 2012, guidelines prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
Rehabilitation and restoration provisions
The provision for rehabilitation and restoration costs is based on the net present value of the estimated cost of restoring the
environmental disturbance that has occurred up to the reporting date. Significant estimates and assumptions are made in
determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These
factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases
as compared to the inflation rates and changes in discount rates. These uncertainties may result in future actual expenditure differing
from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of
the future rehabilitation costs required.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined with the assistance of an external valuer using a trinomial tree. The
related assumptions are detailed in note 31. The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may
impact expenses and equity.
5. OPERATING SEGMENTS
Identification of reportable segments
Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic
decisions. The Group operates in predominantly only one geographic segment (ie. Australia) and has identified four operating
segments, being the Long Nickel Operation which is disclosed under the nickel mining segment, the Jaguar Operation which is
disclosed under the copper and zinc mining segment, the Tropicana Gold Project, and other regional exploration, scoping studies and
feasibility which are disclosed under feasibility and regional exploration activities.
The Long Nickel Operation produces primarily nickel, together with copper, from which its revenue is derived. Revenue derived by
the Long Nickel Operation is received from one customer, being BHP Billiton Nickel West Pty Ltd. The Registered Manager of the
Long Nickel Operation is responsible for the budgets and expenditure of the operation, which includes exploration activities on the
mine’s tenure. The Long Nickel Operation and exploration properties are owned by the Group’s wholly owned subsidiary Lightning
Nickel Pty Ltd.
The Jaguar Operation primarily produces copper and zinc concentrate. Revenue is derived from a number of different customers.
The Registered Manager of the Jaguar Operation is responsible for the budgets and expenditure of the operation, responsibility for
ore concentrate sales rests with corporate management. The Jaguar Operation and exploration properties are owned by the Group’s
wholly owned subsidiary Jabiru Metals Limited.
The Tropicana Gold Project represents the Group’s 30% joint venture interest in the Tropicana Joint Venture. AngloGold Ashanti
Australia Limited is the manager of the project and holds the remaining 70% interest. Programs and budgets are provided by
AngloGold Ashanti Australia Limited and are considered for approval by the Independence Group NL Board. The project comprises
regional and brownfields exploration tenements covering in excess of 9,200 square kilometres, together with the Tropicana gold mine
which had its maiden gold pour in late September 2013. The Project is allocated its own segment.
The Group’s Exploration Manager and its Development Manager are responsible for budgets and expenditure relating to the Group’s
regional exploration, scoping studies and feasibility studies. The feasibility and regional exploration division does not normally derive
any income. Should a project generated by the feasibility and regional exploration division commence generating income or lead to
the construction or acquisition of a mining operation, that operation would then be disaggregated from feasibility and regional
exploration and become reportable as a separate segment.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 107
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
5. OPERATING SEGMENTS (continued)
Year ended 30 June 2014
Revenue
Sales to external customers
Other revenue
Total segment revenue
Nickel mining
$000
Copper and
zinc mining
$000
Tropicana
gold project
$000
Feasibility
and regional
exploration
activities
$000
Total
$000
118,648
140,963
137,918
211
832
-
118,859
141,795
137,918
-
55
55
397,529
1,098
398,627
Segment net operating profit (loss) before
income tax
36,330
42,703
42,466
(30,984)
90,515
Segment assets
Segment liabilities
114,151
102,828
495,407
167,498
879,884
29,960
30,535
29,705
30,879
121,079
Acquisition of property, plant and equipment
Impairment loss before tax
1,076
2,736
5,358
1,993
-
-
2,598
26,711
Depreciation and amortisation expense
22,019
9,744
36,600
Other non-cash expenses
36
233
296
Year ended 30 June 2013
Revenue
Sales to external customers
Other revenue
Total segment revenue
127,175
486
127,661
91,579
233
91,812
3,664
-
3,664
-
-
-
4
4
8,427
32,045
68,363
565
222,418
723
223,141
Segment net operating profit (loss) before
income tax
40,140
6,986
1,596
(5,879)
42,843
Segment assets
Segment liabilities
Acquisition of property, plant and equipment
Impairment loss before tax
Depreciation and amortisation expense
Other non-cash expenses
103,126
107,053
336,303
174,254
720,736
22,490
40,404
22,872
64,408
150,174
8,503
2,572
17,039
45
1,364
2,119
58
12,044
-
6,209
223
-
3,190
185
-
-
-
5,762
23,433
268
108 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
5. OPERATING SEGMENTS (continued)
(i) Reconciliation of segment revenue to total revenue
A reconciliation of reportable segment revenue to total revenue is as follows:
Total segment revenue
Other revenue from continuing operations
Total revenue
2014
$000
398,627
432
399,059
2013
$000
223,141
2,730
225,871
Revenues for the nickel mining segment are all derived from a single customer, being BHP Billiton Nickel West Pty Ltd. Revenues for
the copper and zinc mining segment were derived from various customers during the year.
Revenues for the Tropicana gold project were derived from a single customer, being The Perth Mint.
(ii) Reconciliation of segment net profit (loss) before tax to operating profit before tax
A reconciliation of reportable segment net profit before income tax to net profit before income tax is as follows:
Segment net profit before tax
Interest revenue on corporate cash balances and other unallocated revenue
Unrealised losses on financial assets
Share-based payments expense
Other corporate costs
Net losses on silver hedge financing
Borrowing and finance costs
Total net profit before tax
(iii) Segment assets reconciliation to the balance sheet
A reconciliation of reportable segment assets to total assets is as follows:
Total assets for reportable segments
Intersegment eliminations
Unallocated assets
Deferred tax assets
Listed equity securities
Cash and receivables held by the parent entity
Office and general plant and equipment
Total assets as per the balance sheet
(iv) Segment liabilities reconciliation to the balance sheet
A reconciliation of reportable segment liabilities to total liabilities is as follows:
Total liabilities for reportable segments
Intersegment eliminations
Unallocated liabilities
Deferred tax liabilities
Creditors and accruals
Provision for employee entitlements
Bank loans
Total liabilities as per the balance sheet
2014
$000
90,515
433
(2)
(4,632)
(13,961)
-
(4,544)
67,809
2014
$000
879,884
(163,841)
152,339
808
19,224
2,886
891,300
2014
$000
121,079
(44,489)
94,711
7,598
1,168
24,344
204,411
2013
$000
42,843
2,730
(2,196)
(3,874)
(11,331)
(345)
-
27,827
2013
$000
720,736
(60,304)
152,261
1,042
5,452
2,795
821,982
2013
$000
150,174
(75,047)
75,280
13,398
1,202
7,506
172,513
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 109
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
6.
REVENUE
Sales revenue
Sale of goods
Other revenue
Interest received
Other revenue
Total revenue
7. OTHER INCOME
Net gain on disposal of property, plant and equipment and other investments
Net gain on disposal of tenements
Total other income
8.
EXPENSES AND LOSSES
Profit before income tax includes the following specific items:
Cost of sale of goods
Share-based payments expense
Employee benefits expense
Exploration costs expensed
Rental expense relating to operating leases
Rehabilitation and restoration borrowing costs
Amortisation expense
Depreciation expense
Less : Amounts capitalised
Depreciation expensed
Borrowing and finance costs
Borrowing and finance costs – other entities
Amortisation of borrowing costs
Less: Amounts capitalised
Borrowing and finance costs expensed
Impairment of exploration and evaluation expenditure
Net loss on sale of property, plant and equipment and other investments
2014
$000
397,529
397,529
566
964
1,530
399,059
2014
$000
-
-
-
2014
$000
199,138
4,632
61,196
4,334
1,291
565
54,839
15,369
(368)
15,001
3,919
1,763
(544)
5,138
32,045
60
2013
$000
222,418
222,418
3,218
235
3,453
225,871
2013
$000
42
648
690
2013
$000
144,672
3,874
54,659
2,667
1,190
268
11,466
13,847
(863)
12,984
1,338
90
(72)
1,356
5,762
-
110 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
9.
INCOME TAX
(a) Income tax expense
The major components of income tax expense are:
Deferred income tax expense
Income tax expense
Deferred tax income (expense) included in income tax expense comprises:
Increase (decrease) in deferred tax assets
(Increase) decrease in deferred tax liabilities
(b) Amount charged or credited directly to equity
Deferred income tax income (expense) related to items charged or credited to other
comprehensive income
Recognition of hedge contracts
Income tax expense reported in equity
(c) Numerical reconciliation of income tax expense and tax expense calculated per the
statutory income tax rate
Profit before tax from continuing operations
At the Group’s statutory income tax rate of 30% (2013: 30%)
Capital losses not brought to account
Other non-deductible items
Adjustments for current tax of prior periods
Aggregate income tax expense
2014
$000
2013
$000
(21,253)
(21,253)
841
(22,094)
(21,253)
(9,539)
(9,539)
(359)
(9,180)
(9,539)
1,900
1,900
4,354
4,354
67,809
(20,343)
(357)
(1,184)
631
(21,253)
27,827
(8,348)
-
(1,197)
6
(9,539)
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 111
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
9.
INCOME TAX (continued)
(d) Deferred tax assets and liabilities
Balance Sheet
Profit or loss
Equity
2014
$000
2013
$000
2014
$000
2013
$000
2014
$000
2013
$000
Deferred tax liabilities
Capitalised exploration, pre-production and
acquisition costs
(48,834)
(57,877)
(9,043)
Capitalised development expenditure
(40,802)
(11,654)
29,148
Deferred gains and losses on hedging
contracts
Trade debtors
Consumable inventories
Other
(900)
(2,885)
(1,259)
(31)
(2,678)
(1,497)
(1,162)
(412)
885
1,388
97
(381)
1,909
7,844
(153)
(984)
-
564
-
-
-
-
(2,663)
(4,354)
-
-
-
-
-
-
Gross deferred tax liabilities
(94,711)
(75,280)
22,094
9,180
(2,663)
(4,354)
Deferred tax assets
Property, plant and equipment
24,019
26,668
2,649
4,834
-
Deferred losses on hedged commodity
contracts
Capitalised development expenditure
Concentrate inventories
Business-related capital allowances
Provision for employee entitlements
Provision for rehabilitation
Mining information
Carry forward tax losses
Other
1,862
-
32
1,402
2,387
7,205
2,680
110,243
2,509
1,884
2,312
566
2,598
1,917
6,208
11,376
97,257
1,475
Gross deferred tax assets
152,339
152,261
(741)
(1,713)
763
2,312
534
1,196
(470)
(997)
8,696
9,723
172
1,382
(198)
(2,295)
-
(12,986)
(11,596)
(1,034)
(841)
50
359
-
-
-
-
-
-
-
-
763
-
-
-
-
-
-
-
-
-
-
-
Deferred tax expense (income)
57,628
76,981
21,253
9,539
(1,900)
(4,354)
(e) Tax losses
In addition to the above recognised tax losses, the Group also has the following tax losses for which no deferred tax asset has been
recognised:
Unrecognised capital tax losses
Potential tax benefit at 30% (2013: 30%)
(f)
Tax consolidation
2014
$000
2,576
773
2013
$000
1,388
416
(i) Members of the tax consolidated group and the tax sharing arrangement
Independence Group NL and its wholly owned subsidiaries formed a tax consolidated group with effect from 1 July 2002.
Independence Group NL is the head entity of the tax consolidated group. Tax expense/income, deferred tax liabilities and deferred
tax assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial
statements of the members of the tax consolidated group using the “separate tax payer within group” approach. Current tax liabilities
and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax consolidated group are
recognised by the Company, as head entity in the tax consolidated group.
Due to the existence of a tax funding arrangement between entities in the tax consolidated group, amounts are recognised as payable
to or receivable by the Company and each member of the Group in relation to the tax contribution amounts paid or payable between
the parent entity and the other members of the tax consolidated group in accordance with the arrangement.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments.
112 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
10. DIVIDENDS PAID AND PROPOSED
(a) Ordinary shares
Final dividend for the year ended 30 June 2013 of 1 cent (2012: 1 cent) per fully paid share
Interim dividend for the year ended 30 June 2014 of 3 cents (2013: 1 cent) per fully paid share
Total dividends paid during the financial year
(b) Unrecognised amounts
2014
$000
2013
$000
2,333
7,000
9,333
2,329
2,329
4,658
In addition to the above dividends, since year end the Directors have recommended the
payment of a final dividend of 5 cents (2013: 1 cent) per fully paid share, fully franked based on
tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 30
September 2014 out of retained earnings at 30 June 2014, but not recognised as a liability at
year end is:
11,713
2,333
(c) Franked dividends
The franked portions of the final dividends recommended after 30 June 2014 will be franked out
of existing franking credits or out of franking credits arising from the payment of income tax in the
year ending 30 June 2015.
Franking credits available for subsequent financial year based on a tax rate of 30% (2013: 30%)
58,888
2014
$000
2013
$000
62,884
The above amounts represent the balance of the franking account at the end of the reporting period, adjusted for:
(a)
(b)
(c)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend recommended by the Directors since the end of the reporting period, but not
recognised as a liability at the reporting date, will be a reduction in the franking account of $5,020,000 (2013: $1,000,000).
11. EARNINGS PER SHARE
The following reflects the income used in the basic and diluted earnings per share computations:
(a) Earnings used in calculating earnings per share
Profit used in calculating basic and diluted earnings per share attributable to ordinary equity holders of the parent is $46,556,000
(2013: $18,288,000).
(b) Weighted average number of shares
Weighted average number of ordinary shares for basic earnings per share
233,318,721
232,882,535
Effect of dilution:
Share rights
Weighted average number of ordinary shares adjusted for the effect of dilution
1,991,871
235,310,592
1,902,035
234,784,570
2014
Number of shares
2013
Number of shares
(c)
Information on the classification of securities
Share rights
There are share rights included in the calculation of diluted earnings per share that could potentially dilute basic earnings per share in
the future.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 113
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
12. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Deposits at call
2014
$000
32,021
24,951
56,972
2013
$000
26,039
1,176
27,215
The Group has cash balances of $1,268,000 (2013: $12,887,000) not generally available for use as the balances are held by
Tropicana Joint Venture and may only be used in relation to joint venture expenditure. In the previous financial year, the Group also
had amounts of $469,000 in cash balances not generally available for use as they were subject to security with respect to government
performance bonds and other guarantees issued by a financier.
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 3.
13. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Trade receivables
GST receivable
Sundry debtors
Prepayments
2014
$000
24,828
1,112
1,314
2,816
30,070
2013
$000
12,839
5,117
4,507
1,696
24,159
No balances within trade and other receivables contain impaired assets nor are past due. It is expected that these balances will be
received when due.
The Group’s exposure to credit risk, foreign exchange and commodity price risk in relation to trade receivables is disclosed in note 3.
14.
INVENTORIES
Current
Mine spares and stores – at cost
ROM inventory – at cost
Concentrate inventory – at cost
Concentrate inventory – at net realisable value
Work in progress – gold in process
Gold in circuit
Gold dore
Non-current
ROM inventory – at cost
2014
$000
2013
$000
14,965
3,834
4,441
11,661
499
1,566
3,601
40,567
8,803
8,803
9,664
1,632
5,361
6,103
-
-
-
22,760
-
-
Inventory classified as non-current relates to 0.6 to 1.2 g/t grade gold ore stockpiles which are not intended to be utilised in the next
12 months but will be utilised over the life of the mine.
There were no impairment charges to inventories recognised as an expense for the year ended 30 June 2014 (2013: $nil).
15. CURRENT ASSETS – FINANCIAL ASSETS
Shares in Australian listed and unlisted companies - at fair value through profit or loss
2014
$000
858
858
2013
$000
1,092
1,092
The shares in Australian listed companies are valued at fair value through profit or loss and are all held for trading. Changes in the
fair values of these financial assets are recognised in the profit or loss and are valued using market prices at year end.
The Group’s exposure to price risk and a sensitivity analysis for financial assets are disclosed in note 3.
114 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
16. NON-CURRENT ASSETS – RECEIVABLES
Term deposits
Prepayments
2014
$000
30
27
57
2013
$000
525
79
604
The term deposit is interest-bearing and is used by way of security for government performance bonds issued by a financier.
17. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Buildings - at cost
Accumulated depreciation and impairment
Net carrying amount
Mining plant under construction - at cost
Net carrying amount
Mining plant and equipment - at cost
Accumulated depreciation and impairment
Net carrying amount
Motor vehicles - at cost
Accumulated depreciation and impairment
Net carrying amount
Furniture, fittings and other equipment - at cost
Accumulated depreciation and impairment
Net carrying amount
Leased assets
Accumulated depreciation and impairment
Net carrying amount
Total net carrying amount
2014
$000
35,994
(12,570)
23,424
407
407
92,223
(79,039)
13,184
18,205
(14,331)
3,874
7,396
(4,787)
2,609
18,746
(15,014)
3,732
2013
$000
17,577
(9,786)
7,791
2,362
2,362
88,602
(75,159)
13,443
14,033
(12,303)
1,730
6,590
(3,322)
3,268
20,266
(12,582)
7,684
47,230
36,278
(a) Reconciliation of the carrying amounts at the beginning and end of the period
Reconciliations of the carrying amount for each class of property, plant and equipment at the beginning and end of the financial
year are as follows:
Buildings
Carrying amount at beginning of financial year
Additions
Transfers
Depreciation expense
Carrying amount at end of financial year
Mining plant under construction
Carrying amount at beginning of financial year
Additions
Transfers
Carrying amount at end of financial year
Independence Group NL – Financial Report 30 June 2014
7,791
684
18,030
(3,081)
23,424
2,362
279
(2,234)
407
9,627
-
146
(1,982)
7,791
2,102
2,136
(1,876)
2,362
ANNUAL REPORT 2014 115
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
17. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
(b) Reconciliation of the carrying amounts at the beginning and end of the period (continued)
2014
$000
2013
$000
Mining plant and equipment
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end of financial year
Motor vehicles
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end of financial year
Furniture, fittings and other equipment
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end of financial year
Leased assets
Carrying amount at beginning of financial year
Additions
Disposals
Depreciation expense
Carrying amount at end of financial year
Total property, plant and equipment
Carrying amount at beginning of financial year
Additions
Transfers from mine properties in development
Transfers to mine properties in production
Disposals
Depreciation expense
Carrying amount at end of financial year
13,443
3,865
2,003
(50)
(6,077)
13,184
1,730
3,274
(146)
-
(984)
3,874
3,268
1,113
(438)
(59)
(1,275)
2,609
7,684
-
-
(3,952)
3,732
36,278
9,215
17,215
-
(109)
(15,369)
47,230
14,804
3,903
852
-
(6,116)
13,443
1,144
965
478
(25)
(832)
1,730
1,822
1,861
762
(7)
(1,170)
3,268
7,674
3,762
(5)
(3,747)
7,684
37,173
12,627
1,095
(733)
(37)
(13,847)
36,278
(c) Non-current assets pledged as security
Refer to note 25 for information on non-current assets pledged as security by the Group.
116 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
18. NON-CURRENT ASSETS – MINE PROPERTIES
Mine properties in development
Mine properties in production
Reconciliations of the carrying amounts at the beginning and end of the financial year are as follows:
Mine properties in development
Carrying amount at beginning of financial year
Additions
Transfers from exploration and evaluation expenditure
Transfers to property, plant and equipment
Transfers to mine properties in production
Borrowing costs capitalised
Depreciation expense capitalised
Carrying amount at end of financial year
Mine properties in production
Carrying amount at beginning of financial year
Additions
Transfers from exploration and evaluation expenditure
Transfers from mine properties in development
Transfers from property, plant and equipment
Transfers to inventories
Disposals
Amortisation expense
Carrying amount at end of financial year
19. NON-CURRENT ASSETS – EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation costs
Reconciliations of the carrying amounts at the beginning and end of the financial year are as follows:
Carrying amount at beginning of financial year
Additions
Transfers to mine properties in production
Transfers to mine properties in development
Impairment charge
Disposals
2014
$000
-
364,443
364,443
258,778
28,587
228
(17,215)
(271,095)
544
173
-
90,337
47,589
19,601
271,095
-
(9,519)
-
(54,660)
364,443
2014
$000
186,784
186,784
199,392
39,266
(19,601)
(228)
(32,045)
-
2013
$000
258,778
90,337
349,115
59,609
167,484
32,708
(1,095)
-
72
-
258,778
63,665
34,162
3,061
-
733
-
(93)
(11,191)
90,337
2013
$000
199,392
199,392
203,371
37,759
(3,061)
(32,708)
(5,762)
(207)
Carrying amount at end of financial year
186,784
199,392
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 117
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
19. NON-CURRENT ASSETS – EXPLORATION AND EVALUATION EXPENDITURE (continued)
Impairment of exploration and evaluation expenditure
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount. Management regularly evaluates the recoverability of
exploration and evaluation assets. The Group has impaired the following capitalised exploration and evaluation costs:
Jaguar regional exploration costs
Karlawinda exploration and feasibility costs1
Other exploration costs
2014
$000
5,797
16,992
9,256
32,045
2013
$000
677
-
5,085
5,762
1.
During the current financial year, the Company determined that the Karlawinda Gold Project is unlikely to meet its size and
economic thresholds for development, resulting in an impairment of $16,992,000 (2013: $nil).
20. NON-CURRENT ASSETS – INTANGIBLE ASSETS
Goodwill
$000
Database
$000
Total
$000
At 1 July 2012
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2013
Opening net book amount
Amortisation expense
Closing net book amount
At 30 June 2013
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2014
Opening net book amount
Amortisation expense
Closing net book amount
At 30 June 2014
Cost
Accumulated amortisation and impairment
Net book amount
21. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade payables
Other payables
Employee entitlements
The Group’s exposure to liquidity risk in disclosed in note 3.
91,065
(91,065)
-
-
-
-
91,065
(91,065)
-
-
-
-
91,065
(91,065)
-
1,378
(924)
454
454
(275)
179
1,378
(1,199)
179
179
(179)
-
1,378
(1,378)
-
2014
$000
7,706
35,276
3,873
46,855
92,443
(91,989)
454
454
(275)
179
92,443
(92,264)
179
179
(179)
-
92,443
(92,443)
-
2013
$000
7,368
42,430
3,801
53,599
118 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
22. CURRENT LIABILITIES – PROVISIONS
Provision for employee entitlements
23. NON-CURRENT LIABILITIES – PROVISIONS
Provision for employee entitlements
Provision for rehabilitation costs (i)
(i) Movements in the provision for rehabilitation costs during the year are as follows:
Carrying amount at beginning of financial year
Additional provision
Rehabilitation and restoration borrowing costs expense
Payments during the period
Carrying amount at end of financial year
Rehabilitation provision
2014
$000
2,557
2,557
2014
$000
1,527
24,018
25,545
20,694
2,889
565
(130)
2013
$000
2,446
2,446
2013
$000
1,030
20,694
21,724
13,045
7,381
268
-
24,018
20,694
A provision for restoration is recognised in relation to mining activities for such costs as reclamation, site closure, plant closure and
other costs associated with the restoration of the mining sites.
24. DERIVATIVE FINANCIAL INSTRUMENTS
Current assets
Commodity hedging contracts – cash flow hedges
Foreign currency contracts – at fair value through profit or loss
Foreign currency contracts – cash flow hedges
Current liabilities
Commodity hedging contracts – at fair value through profit or loss
Commodity hedging contracts – cash flow hedges
Foreign currency contracts – cash flow hedges
Non-current assets
Commodity hedging contracts – cash flow hedges
(a)
Instruments used by the Group
2014
$000
2013
$000
1,119
29
1,371
2,519
1,489
4,892
-
6,381
658
658
6,946
-
-
6,946
-
-
1,910
1,910
1,981
1,981
Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in
foreign exchange rates and commodity prices.
The fair value of the derivative instruments at the reporting date is reflected in current and non-current assets and liabilities in the
balance sheet and is calculated by comparing the contracted rate to the market rates for derivatives with the same length of maturity.
Refer to note 3 and below for details of the foreign currency and commodity prices risk being mitigated by the Group’s derivative
instruments as at 30 June 2014 and 30 June 2013.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 119
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
24. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Cash flow hedges
Nickel
At 30 June 2014, the Group held various nickel commodity contracts designated as hedges of expected future nickel sales. These
hedge contracts are in US dollars. Foreign exchange contracts are also held which match the terms of the commodity contracts.
These contracts are all designated as cash flow hedges and are used to reduce the exposure to a future decrease in the Australian
dollar market value of nickel sales.
The outstanding contracts held by the Group at 30 June 2014 are as follows:
Year of delivery
Sell (Nickel tonnes)
USD/tonne
Exchange rate
AUD/tonne
2014/15
Total
2,400
2,400
16,608
16,608
0.9163
0.9163
18,126
18,126
The hedge contracts are to be settled at the rate of 200 tonnes per month from July 2014 to June 2015. The hedge contracts have
been marked to market as at 30 June 2014 and the resulting surplus/deficit compared to market value (net of tax) is reflected in the
hedging reserve in the balance sheet. The portion of the gain or loss on the hedging instrument that is determined to be an effective
hedge is recognised directly in equity. When the cash flows occur, the Group adjusts the initial measurement of the component
recognised in the profit or loss by the related amount deferred in equity.
The forecast transactions are expected to occur three months prior to the maturity of its respective commodity and foreign exchange
contracts.
The following table details the forward foreign currency contracts outstanding at the reporting date:
Sell USD forward
0 – 3 months
3 – 6 months
6 – 12 months
Total
Copper
Notional amounts (US$)
2014
$000
10,174
10,005
19,681
39,860
2013
$000
-
-
18,676
18,676
Weighted average
A$:US$ exchange rate
2014
2013
0.9368
0.9212
0.9036
0.9163
-
-
0.9881
0.9881
Fair value
2014
$000
29
140
493
662
2013
$000
-
-
(1,910)
(1,910)
At 30 June 2014, the Group held various copper commodity contracts designated as hedges of expected future copper sales. These
hedge contracts are in US dollars. Foreign exchange contracts are also held which match the terms of the commodity contracts.
These contracts are all designated as cash flow hedges and are used to reduce the exposure to a future decrease in the Australian
dollar market value of copper sales.
The outstanding contracts held by the Group at 30 June 2014 are as follows:
Year of delivery
Sell (Copper tonnes)
USD/tonne
Exchange rate
AUD/tonne
2014/15
Total
1,500
1,500
7,257
7,257
0.8720
0.8720
8,322
8,322
The hedge contracts are to be settled at the varying rates per month from September 2014 to June 2015. The hedge contracts have
been marked to market as at 30 June 2014 and the resulting surplus/deficit compared to market value (net of tax) is reflected in the
hedging reserve in the balance sheet. The portion of the gain or loss on the hedging instrument that is determined to be an effective
hedge is recognised directly in equity. When the cash flows occur, the Group adjusts the initial measurement of the component
recognised in the profit or loss by the related amount deferred in equity.
The forecast transactions are expected to occur three months prior to the maturity of its respective commodity and foreign exchange
contracts.
The following table details the forward foreign currency contracts outstanding at the reporting date:
Sell USD forward
0 – 3 months
3 – 6 months
6 – 12 months
Total
120 INDEPENDENCE GROUP NL
Notional amounts (US$)
2014
$000
-
3,948
6,938
10,886
2013
$000
-
-
-
-
Weighted average
A$:US$ exchange rate
2014
2013
-
0.8783
0.8591
0.8720
-
-
-
-
Fair value
2014
$000
-
195
543
738
2013
$000
-
-
-
-
Independence Group NL – Financial Report 30 June 2014
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
24. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Cash flow hedges (continued)
Gold
Gold collar structures (i.e. purchased put and sold call) have been designated as hedges of expected future gold sales and have been
designated as cash flow hedges. These comprise:
0 – 6 months
Gold put options purchased
Gold call options sold
6 – 12 months
Gold put options purchased
Gold call options sold
12 – 18 months
Gold put options purchased
Gold call options sold
Total/weighted average strike
price
Gold put options purchased
Gold call options sold
Ounces of metal
2014
2013
Weighted average price
(A$/ounce)
2014
2013
33,000
33,000
29,000
29,000
23,500
23,500
-
-
33,000
33,000
33,000
33,000
85,500
85,500
66,000
66,000
1,300
1,803
1,316
1,719
1,350
1,744
1,319
1,758
-
-
1,300
1,728
1,300
1,803
1,300
1,766
Fair value
2014
$000
2013
$000
237
(14)
803
(316)
1,175
(517)
-
-
2,339
(657)
3,274
(1,293)
2,215
(847)
5,613
(1,950)
The fair value of the gold collars outstanding at balance date is comprised exclusively of the extrinsic value (time value) of the options.
Derivatives at fair value through profit or loss
In addition to the above, the Group also had a commodity derivative financial instrument outstanding which was designated as a
derivative at fair value through profit or loss. This contract did not qualify as a cash flow hedge and therefore the fair value marked to
market adjustments on the contract were recorded directly in the profit or loss for the period. Details of commodity derivatives at fair
value through profit or loss outstanding as at the reporting date are summarised below.
Copper
US dollar forward copper sales contracts – at fair value through profit or loss at the reporting date were as follows:
Tonnes of metal
2014
2013
Weighted average price
(US$/metric tonne)
2013
2014
0 – 6 months
1,200
1,200
-
-
6,889
6,889
-
-
Fair value
2014
$000
(175)
(175)
2013
$000
-
-
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 121
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
25. BORROWINGS
Current
Secured
Lease liability (note 32)
Non–current
Secured
Bank loans (a)
Lease liability (note 32)
2014
$000
2013
$000
3,508
3,508
24,344
510
24,854
6,030
6,030
7,506
4,018
11,524
(a) Corporate loan facility
On 1 March 2013, the Company entered into a Corporate Loan Facility (Facility) with National Australia Bank. The Facility comprises
a corporate debt facility of $130,000,000, an asset finance facility of $20,000,000 and a contingent instrument facility of $20,000,000.
Total capitalised transaction costs to 30 June 2014 are $2,377,000 (2013: $2,504,000). Transaction costs are accounted for under
the effective interest rate method. These costs are incremental costs that are directly attributable to the loan and include loan
origination fees, commitment fees and legal fees. The balance of unamortised transaction costs of $656,000 (2013: $2,494,000)
have been offset against the bank loans contractual liability of $25,000,000 (2013: $10,000,000).
Borrowing costs of $544,000 (2013: $72,000) relate to a qualifying asset (Tropicana Gold Project) and have been capitalised in
accordance with AASB 123 Borrowing Costs. Refer to note 18.
The Facility has certain financial covenants that the Company has to comply with. All such financial covenants have been complied
with in accordance with the Facility.
In addition to the above Facility, the Group has an additional asset finance facility with ANZ of $420,000 (2013: $20,000,000). This
facility was cancelled during the year and will expire once the outstanding lease contracts have been repaid in full.
(b)
Interest rate, foreign exchange and liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk are disclosed in note 3.
(c) Assets pledged as security
The carrying amount of assets pledged as security for non-current borrowings is $25,000,000 (2013: $10,000,000). The security is
provided under a General Security Agreement (GSA) and is on arm’s length commercial terms with the financier.
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in
the event of default.
In addition to the above, $15,950,000 (2013: $15,249,000) is pledged as security in relation to the contingent instrument facility.
122 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
25. BORROWINGS (continued)
(d) Financing arrangements
The Group had access to the following financing arrangements at the reporting date:
Total facilities
Corporate debt facility
Asset finance facility
Contingent instrument facility1
Facilities used as at reporting date
Corporate debt facility
Asset finance facility
Contingent instrument facility
Facilities unused as at reporting date
Corporate debt facility
Asset finance facility
Contingent instrument facility
2014
$000
130,000
20,420
20,000
170,420
25,000
3,826
15,950
44,776
105,000
16,594
4,050
125,644
2013
$000
130,000
40,000
20,000
190,000
10,000
9,691
15,249
34,940
120,000
30,309
4,751
155,060
1. This facility provides financial backing in relation to non-performance of third party guarantee requirements.
26. CONTRIBUTED EQUITY
Fully paid issued capital
2014
$000
2013
$000
735,060
734,007
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held. Every holder of ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one vote.
Movements in shares on issue
2014
No. of shares
2014
$000
2013
No. of shares
2013
$000
Balance at beginning of financial year
232,882,535
734,007
232,882,535
734,007
Issued during the year:
- issue of shares under the Employee
Performance Rights Plan
Balance at end of financial year
Capital management
441,370
233,323,905
1,053
735,060
-
-
232,882,535
734,007
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business.
The capital structure of the Group consists of debt, which includes the borrowings, cash and cash equivalents and equity, comprising
issued capital, reserves and retained earnings.
Operating cash flows are used to maintain and expand the Group’s operating and exploration assets, as well as to make dividend
payments. The Board and management assess various financial ratios to determine the Group’s debt levels and capital structure
prior to making any major investment or expansion decisions.
None of the Group’s entities are currently subject to externally imposed capital requirements.
There were no changes in the Group’s approach to capital management during the year.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 123
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
27. RESERVES AND RETAINED EARNINGS
(a) Reserves
Share-based payments reserve
Hedging reserve
Acquisition reserve
Movements
Share-based payments reserve
Balance at beginning of financial year
Share-based payments expense
Issue of shares under the Employee Performance Rights Plan
Balance at end of financial year
Hedging reserve
Balance at beginning of financial year
Revaluation – gross
Deferred tax
Transfer to net profit – gross
Deferred tax
Balance at end of financial year
Acquisition reserve
Balance at beginning of financial year
Balance at end of financial year
(b) Accumulated losses
Balance at beginning of financial year
Net profit for the year
Dividends paid during the year
Balance at end of financial year
(c) Nature and purpose of reserves
Share-based payments reserve
2014
$000
12,372
(2,038)
3,142
13,476
8,793
4,632
(1,053)
12,372
2,397
(7,894)
2,368
1,559
(468)
(2,038)
2013
$000
8,793
2,397
3,142
14,332
4,919
3,874
-
8,793
12,557
(4,250)
1,275
(10,264)
3,079
2,397
3,142
3,142
3,142
3,142
(98,870)
46,556
(9,333)
(61,647)
(112,500)
18,288
(4,658)
(98,870)
The share-based payments reserve is used to record the value of share-based payments provided to employees, including key
management personnel, as part of their remuneration. Refer to note 31 for further details of these plans.
Hedging reserve
The hedging reserve is used to record gains or losses on a hedged instrument in a cash flow hedge that are recognised directly in
equity. Amounts are recognised in profit or loss when the associated hedged item occurs.
Acquisition reserve
The acquisition reserve is used to record differences between the carrying value of non-controlling interests and the fair value of the
shares issued, where there has been a transaction involving non-controlling interests that do not result in a loss of control. The
reserve is attributable to the equity of the parent.
124 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
28. CASH FLOW STATEMENT RECONCILIATION
Net profit for the year
Adjustments for:
Depreciation and amortisation
Impairment of exploration and evaluation expenditure
(Gain) loss on disposal of property, plant and equipment and other investments
Devaluation of investments in listed entities
Dividend income
Employee share-based payment expenses
Unrealised gains on financial liabilities
Unrealised loss on changes in fair value of derivative financial instruments
Amortisation of borrowing costs
Amortisation of lease incentive liability
Changes in operating assets and liabilities
(Increase)/decrease in trade debtors
(Increase)/decrease in other debtors and prepayments
(Increase)/decrease in inventories
(Increase)/decrease in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in deferred tax liability
Increase/(decrease) in provisions
Net cash flows from operating activities
Non-cash investing and financing activities
Acquisition of plant and equipment by means of finance leases
2014
$000
46,556
69,840
32,045
60
2
(5)
4,632
-
3,886
1,280
(55)
(11,989)
2,602
(26,610)
(78)
9,083
21,331
1,043
153,623
2013
$000
18,288
24,450
5,762
(690)
2,196
-
3,874
345
1,849
-
(38)
17,680
(3,662)
(5,974)
359
(6,881)
9,181
780
67,519
-
-
5,230
5,230
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 125
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
29. RELATED PARTIES DISCLOSURE
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 2(b):
Equity interest
Name of Entity
Independence Long Pty Ltd*
Independence Newsearch Pty Ltd
Independence Karlawinda Pty Ltd
Independence Jaguar Limited*
Independence ESP Pty Ltd
Independence Jaguar Exploration Parent Pty Ltd
Independence Jaguar Exploration Pty Ltd
Independence Stockman Parent Pty Ltd
Independence Stockman Project Pty Ltd
Independence Jaguar Project Parent Pty Ltd
Independence Jaguar Project Pty Ltd
Independence CM Pty Ltd
Independence BBS Pty Ltd
Independence Projects Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of share
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Independence Europe Pty Ltd
Australia
Ordinary
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
* These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418
issued by the Australian Securities and Investments Commission. Refer to note 36 for further information.
(b) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 30.
(c) Transactions with related parties
During the financial year, a wholly-owned entity paid dividends of $20,000,000 (2013: $63,000,000) to Independence Group NL. This
amount has been eliminated on consolidation for the purposes of calculating the profit of the Group for the financial year.
Loans were made between Independence Group NL and certain entities in the wholly-owned group. The loans receivable from
controlled entities are interest-free and repayable on demand.
30. KEY MANAGEMENT PERSONNEL
(a) Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share-based payments
31. SHARE-BASED PAYMENT PLANS
Employee Performance Rights Plan
2014
$
2013
$
3,355,060
3,092,033
255,110
70,903
803,265
215,553
58,351
489,463
4,484,338
3,855,400
The Independence Group NL Employee Performance Rights Plan (PRP) was approved by shareholders at the Annual General
Meeting of the Company in November 2011. Under the PRP, participants are granted share rights which will only vest if certain
performance conditions are met and the employees are still employed by the Group at the end of the vesting period. Participation in
the PRP is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed
benefits.
126 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
31. SHARE-BASED PAYMENT PLANS (continued)
Employee Performance Rights Plan (continued)
The following table illustrates the maximum number and weighted average fair value of, and movements in, share rights during the
year:
Outstanding at the beginning of the year
Rights issued during the year
Rights vested during the year
Rights lapsed during the year
Rights cancelled during the year
Outstanding at the end of the year
2014
2013
Weighted
average fair
value
$
Number of share
rights
Weighted
average fair
value
$
2.66
3.29
3.93
3.62
2.04
2.99
1,608,837
2,042,423
-
(411,980)
-
3,239,280
2.58
2.68
-
2.39
-
2.66
Number of
share rights
3,239,280
1,821,215
(441,370)
(1,231,204)
(132,746)
3,255,175
The fair value of the share rights granted under the PRP is estimated at the grant date using a trinomial tree which has been adopted
by the Boyle and Law (1994) node alignment algorithm to improve accuracy.
The following table lists the inputs to the models used.
Grant date
Performance
hurdle
Dividend
yield
Expected
stock
volatility
Expected
index
volatility
Risk free
rate
Expected
life
28/02/2014
28/02/2014
28/02/2014
21/11/2012
21/11/2012
28/02/2013
28/02/2013
28/02/2013
23/11/2011
23/11/2011
13/03/2012
13/03/2012
13/03/2012
TSR
TSR
ROE
TSR
ROE
TSR
TSR
ROE
TSR
ROE
TSR
TSR
ROE
%
1.45
1.45
-
0.47
-
0.45
0.45
-
1.07
-
0.72
0.72
-
%
48
43
-
41
-
40
40
-
54
-
46
46
-
%
22
24
-
24
-
22
23
-
30
-
29
29
-
%
2.70
2.95
-
2.64
-
2.67
2.72
-
3.09
-
3.56
3.56
-
Years
0.3
2.3
-
2.6
-
0.3
2.3
-
2.6
-
0.3
2.3
-
Weighted
average
share price
at grant
date
$
4.13
4.13
-
4.29
-
4.47
4.47
-
4.69
-
4.17
4.17
-
Probability
ROE
exceeding
target
%
-
-
<50
-
<50
-
-
<50
-
<50
-
-
<50
The share-based payments expense included in profit or loss for the year totalled $4,632,000 (2013: $3,874,000).
Executive directors and other executives
Vesting of the performance rights to executive directors and other executives of the Company is subject to a combination of the
Company’s shareholder return and return on equity. The performance rights will vest if over the three year measurement period the
following performance hurdles are achieved:
Shareholder return
The vesting of 75% of the performance rights at the end of the third year will be based on measuring the actual shareholder return
over the three year period compared with the change in the S&P ASX 300 Metals and Mining Index (Index) over that same period:
The portion of performance rights (75% of the total) that will vest based on the comparative shareholder return will be:
Shareholder return
100% of the Index
Between 100% and 115% of the Index
115% of the Index or greater
Level of vesting
25%
Pro-rata straight line percentage
100%
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 127
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
31. SHARE-BASED PAYMENT PLANS (continued)
Employee Performance Rights Plan (continued)
Return on equity
The vesting of the remaining 25% of the performance rights at the end of the third year will be based on the average return on equity
over the three year period compared with the average target return on equity as set by the Board for the same period.
Return on equity (ROE) for each year will be calculated in accordance with the following formula:
ROE = Net profit after tax / Total shareholders’ equity
The target ROE will be set each year by the Board as part of the budget approval process for the following year. The target ROE for
the financial year ending 30 June 2014 is 10% (2013: 10%). The portion of performance rights (25% of the total) that will vest based
on the comparative return on equity will be:
Actual ROE
100% of average target ROE
Between 100% and 115% of average target ROE
115% of average target ROE or greater
Level of vesting
25%
Pro-rata straight line percentage
100%
Other employees
Vesting of the performance rights to all other employees of the Company is subject to a combination of the personal performance of
the individual and the Company’s shareholder return over the measurement period, being one year. The performance rights will vest
one year after measurement period on the following basis:
Personal performance
The vesting of between 60-90% of the performance rights at the end of the second year will be based on the personal performance of
the individual employee. The personal performance of the participant will be determined solely at the discretion of the Company and
is determined as a result of the annual performance review of each participant. The portion of performance rights (ranging between
60-90% of the total) that will vest based on the personal performance return will be:
Performance standard criteria
Unsatisfactory work performance
Improvement in performance standard required
Developing contributor
Consistent contributor
Solid contributor
Outstanding contributor
Shareholder return
Level of vesting
0%
0%
40%
60%
80%
100%
The vesting of between 10-40% of the performance rights at the end of the second year will be based on measuring the actual
shareholder return at the end of the measurement period of one year compared with the change in the S&P ASX 300 Metals and
Mining Index (Index) over that same period. The portion of performance rights (ranging between 10-40% of the total) that will vest
based on the comparative shareholder return will be:
Shareholder return
100% of the Index
Between 100% and 115% of the Index
115% of the Index or greater
Level of vesting
25%
Pro-rata straight line percentage
100%
The performance rights will not be subject to any further escrow restrictions once they have vested to the employees.
Share trading policy
The trading of shares issued to participants under the Company’s PRP is subject to, and conditional upon, compliance with the
Company’s employee share trading policy.
Non-executive directors
The PRP permits non-executive directors to be eligible employees and therefore to participate in the plan. It is not currently intended
that non-executive directors will be issued with performance rights under the PRP and any such issue would be subject to all
necessary shareholder approvals.
128 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
32. COMMITMENTS AND CONTINGENCIES
(a) Commitments
(i)
Leasing commitments
Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases at 30 June are as follows:
Within one year
After one year but no more than five years
After more than five years
Total minimum lease payments
Finance lease and hire purchase commitments
2014
$000
2013
$000
1,374
6,768
1,242
9,384
1,361
6,620
2,689
10,670
Future minimum lease payments under lease contracts with the present value of net minimum lease payments are as follows:
Within one year
After one year but not more than five years
Total minimum lease payments
Less amount representing finance charges
Present value of minimum lease payments
Current borrowings (note 25)
Non-current borrowings (note 25)
Total included in borrowings
3,671
522
4,193
(175)
4,018
3,508
510
4,018
6,604
4,193
10,797
(749)
10,048
6,030
4,018
10,048
(ii)
Property, plant and equipment commitments
The Group had no specific contractual obligations to purchase plant and equipment at the reporting date (2013: $nil).
(b) Contingencies
The Group had guarantees outstanding at 30 June 2014 totalling $15,950,000 (2013: $15,249,000) which have been granted in favour
of various third parties. The guarantees primarily relate to environmental and rehabilitation bonds at the various mine sites.
33. EVENTS AFTER THE REPORTING DATE
On 27 August 2014, the Company announced a fully franked final dividend of 5 cents per share to be paid on 30 September 2014.
Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial
years, other than as stated elsewhere in the financial report.
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 129
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
34. AUDITOR’S REMUNERATION
The auditor of Independence Group NL is BDO Audit (WA) Pty Ltd
Amounts received or due and receivable by BDO for:
An audit or review of the financial report of the entity and any other entity in the
consolidated Group
Other services in relation to the entity and any other entity in the consolidated
Group
2014
$
2013
$
261,200
213,351
2,350
263,550
23,165
236,516
35. PARENT ENTITY INFORMATION
a)
Summary financial information
The following information relates to the parent entity, Independence Group NL, at 30 June. The information presented here has been
prepared using consistent accounting policies as presented in note 2.
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Contributed equity
Reserves
Accumulated losses
Total equity
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
2014
$000
38,136
712,562
750,698
26,013
67,850
93,863
2013
$000
27,421
680,643
708,064
28,297
33,952
62,249
656,835
645,815
735,060
15,514
(93,739)
656,835
15,721
-
15,721
734,007
11,935
(100,127)
645,815
6,680
-
6,680
b) Guarantees entered into by the parent entity
The parent entity has given unsecured guarantees in respect of finance leases of subsidiaries amounting to $3,406,000 (2013:
$7,050,000).
There are cross guarantees given by the Independence Group NL, Independence Long Pty Ltd and Independence Jaguar Limited as
described in note 36. No deficiencies of assets exist in any of these companies.
c)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2014 or 30 June 2013.
d) Contractual commitments for the acquisition of property, plant and equipment
The parent entity did not have any outstanding contractual commitments for the acquisition of property, plant and equipment at 30
June 2014 or 30 June 2013.
130 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
36. DEED OF CROSS GUARANTEE
Independence Group NL, Independence Long Pty Ltd and Independence Jaguar Limited are parties to a deed of cross guarantee
under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been
relieved from the requirement to prepare a financial report and Directors’ Report under Class Order 98/1418 (as amended) issued by
the Australian Securities and Investments Commission.
(a) Consolidated statement of profit or loss and other comprehensive income and summary of movements in
consolidated accumulated losses
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the deed of
cross guarantee that are controlled by Independence Group NL, they also represent the ‘extended closed group’.
Set out below is a consolidated statement of profit or loss and other comprehensive income and a summary of movements in
consolidated accumulated losses for the year ended 30 June 2014 and 30 June 2013 of the closed group consisting of Independence
Group NL, Independence Long Pty Ltd and Independence Jaguar Limited.
Statement of profit or loss and other comprehensive income
Revenue from continuing operations
Other income
Mining and development costs
Employee benefits expense
Share-based payments expense
Fair value movement of financial investments
Depreciation and amortisation expense
Rehabilitation and restoration borrowing costs
Exploration costs expensed
Royalty expense
Ore tolling expense
Shipping and wharfage expense
Net losses on fair value financial liabilities
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Impairment of loans to subsidiaries
Other expenses
Profit from continuing operations before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges, net of tax
Other comprehensive loss, net of tax
Total comprehensive income
Summary of movements in consolidated retained earnings (accumulated losses)
Accumulated losses at the beginning of the financial year
Profit for the year
Dividends paid
Retained earnings (accumulated losses) at the end of the financial year
2014
$000
399,004
-
(100,310)
(61,196)
(4,632)
(2)
(67,923)
(269)
(4,334)
(14,309)
(11,973)
(17,551)
-
(5,138)
(11,602)
(12,518)
(9,362)
77,885
(12,920)
64,965
(4,435)
(4,435)
60,530
(36,302)
64,965
(9,333)
19,330
2013
$000
225,867
715
(63,156)
(54,659)
(3,874)
(2,196)
(24,265)
(268)
(2,667)
(8,029)
(11,978)
(12,464)
(345)
(1,356)
(5,672)
-
(5,645)
30,008
(10,170)
19,838
(10,160)
(10,160)
9,678
(51,482)
19,838
(4,658)
(36,302)
Independence Group NL – Financial Report 30 June 2014
ANNUAL REPORT 2014 131
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2014
36. DEED OF CROSS GUARANTEE (continued)
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June of the closed group consisting of Independence Group NL,
Independence Long Pty Ltd and Independence Jaguar Limited.
2014
$000
2013
$000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets at fair value through profit or loss
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Exploration and evaluation expenditure
Mine properties
Deferred tax assets
Investments in controlled entities
Investments in joint ventures
Intangible assets
Derivative financial instruments
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings (accumulated losses)
TOTAL EQUITY
55,603
27,637
26,935
808
2,519
113,502
3,475
25,030
26,138
96,779
151,443
139,276
316,546
-
658
759,345
872,847
28,372
3,508
6,381
2,557
40,818
24,854
13,540
25,769
64,163
104,981
767,866
735,060
13,476
19,330
767,866
14,327
18,185
22,193
1,042
6,946
62,693
49,489
30,638
22,655
88,774
152,255
139,276
292,561
179
1,981
777,808
840,501
37,907
6,030
1,910
2,446
48,293
11,524
12,904
55,743
80,171
128,464
712,037
734,007
14,332
(36,302)
712,037
132 INDEPENDENCE GROUP NL
Independence Group NL – Financial Report 30 June 2014
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014
DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 20 to 69 are in accordance with the Corporations Act 2001, including:
83 132
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for
the financial year ended on that date, and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
identified in note 36 will be able to meet any obligation or liabilities to which they are, or may become, subject by virtue of the
deed of cross guarantee described in note 36.
Note 2(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the Board
Peter Bradford
Managing Director
Perth, Western Australia
Dated this 27th day of August 2014
Independence Group NL – Financial Report 30 June 2014
70
ANNUAL REPORT 2014 133
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the members of Independence Group NL
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Report on the Financial Report
INDEPENDENT AUDITOR’S REPORT
We have audited the accompanying financial report of Independence Group NL, which comprises the
consolidated balance sheet as at 30 June 2014, the consolidated statement of profit or loss and other
To the members of Independence Group NL
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the consolidated entity
Report on the Financial Report
comprising the company and the entities it controlled at the year’s end or from time to time during the
financial year.
We have audited the accompanying financial report of Independence Group NL, which comprises the
consolidated balance sheet as at 30 June 2014, the consolidated statement of profit or loss and other
Directors’ Responsibility for the Financial Report
comprehensive income, the consolidated statement of changes in equity and the consolidated
The directors of the company are responsible for the preparation of the financial report that gives a
statement of cash flows for the year then ended, notes comprising a summary of significant accounting
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
policies and other explanatory information, and the directors’ declaration of the consolidated entity
and for such internal control as the directors determine is necessary to enable the preparation of the
comprising the company and the entities it controlled at the year’s end or from time to time during the
financial report that gives a true and fair view and is free from material misstatement, whether due to
financial year.
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
Directors’ Responsibility for the Financial Report
101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
Auditor’s Responsibility
and for such internal control as the directors determine is necessary to enable the preparation of the
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
financial report that gives a true and fair view and is free from material misstatement, whether due to
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
101 Presentation of Financial Statements, that the financial statements comply with International
reasonable assurance about whether the financial report is free from material misstatement.
Financial Reporting Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
Auditor’s Responsibility
the financial report. The procedures selected depend on the auditor’s judgement, including the
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
In making those risk assessments, the auditor considers internal control relevant to the company’s
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
preparation of the financial report that gives a true and fair view in order to design audit procedures
reasonable assurance about whether the financial report is free from material misstatement.
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
the financial report. The procedures selected depend on the auditor’s judgement, including the
well as evaluating the overall presentation of the financial report.
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
preparation of the financial report that gives a true and fair view in order to design audit procedures
for our audit opinion.
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
71
134 INDEPENDENCE GROUP NL
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the
acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
71
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Independence Group NL, would be in the same terms if given to the
directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of Independence Group NL is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2(a)(i).
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Independence Group NL for the year ended 30 June 2014
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Brad McVeigh
Director
Perth, 27 August 2014
ANNUAL REPORT 2014 135
72
ADDITIONAL ASX INFORMATION
The following additional information not shown elsewhere in this report is required by ASX Limited in respect of listed companies
only. This information is current as at 30 September 2014.
1.
Shareholding
a. Distribution of shareholders
Holding range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
No of holders
2,353
2,258
601
589
70
5,871
Fully paid ordinary shares
1,062,341
5,671,407
4,441,155
14,715,655
208,366,015
234,256,573
Number of holders
0.45%
2.42%
1.90%
6.28%
88.95%
100.00%
b. The number of shareholders holding less than a marketable parcel of fully paid ordinary shares is 362.
c. The Company has received the following notices of substantial shareholding (“Notice”):
Substantial shareholder
Commonwealth Bank of Australia
FIL Limited
Relevant Interest per the Notice - Number of shares
17,841,661
15,399,951
2.
3.
4.
5.
6.
7.
d. Voting rights: The voting rights of the fully paid ordinary shares are one vote per share held.
The name of the Company Secretary is Mr Tony Walsh B.Com, MBA, FCA, FCIS. Mr Walsh is a fellow of Governance
Institute of Australia (formerly called Chartered Secretaries Australia) and fellow of the Institute of Chartered Accountants in
Australia. Mr Walsh has over 20 years’ experience in dealing with ASX listed companies. ASIC, the Corporations Act
and ASX listing rules. Prior to joining the Company in July 2013, Mr Walsh worked for Atlas Iron Limited in a similar role for
7 years, ASX Limited for over 14 years and Ernst & Young for over 5 years.
The address of the registered office and principal administrative office in Australia is Suite 4, Level 5, South Shore Centre,
85 South Perth Esplanade, South Perth, Western Australia, telephone (08) 9238 8300.
The register of securities is held at Computershare Investor Services Pty Limited, Level 2, 45 St Georges Terrace,
Perth WA 6000, Australia.
No on-market share buy-back is current.
Stock Exchange Listing: Quotation has been granted for 234,256,573 ordinary shares of the Company on the Australian
Securities Exchange (ASX).
Unquoted securities: There are currently no securities outstanding which have been issued by the Company and not quoted
on the ASX.
8.
Twenty largest holders of ordinary shares
Ordinary Shareholders
No. of Shares held
Percentage Held
J P Morgan Nominees Australia Limited
National Nominees Limited
HSBC Custody Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
AMP Life Limited
HSBC Custody Nominees Australia Pty Limited
Amalgamated Dairies Limited
RBC Investor Services Australia Nominees Pty Limited
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