CREATING A LEADING
DIVERSIFIED MINING
COMPANY
ANNUAL REPORT 2015
OUR MISSION
Our Mission statements are:
•
•
•
•
Engaging our people through development of their
capabilities, and recognition of their contributions to
our future.
Encouraging innovation to drive efficiency.
Achieving sustainable growth through high returns
from diverse assets.
Creating a strong sense of purpose by fostering a
culture of ownership across the business.
WORKING TOGETHER TO
ACHIEVE SHARED GOALS
“We are intent on creating value
for our stakeholders in a safe and
sustainable way.”
Graham Burns
Registered Manager
Jaguar Operations
JAGUAR
HIGH MARGIN ASSETS
WE WILL BE A DIVERSIFIED MINING COMPANY
DELIVERING SUPERIOR RETURNS FOR ALL STAKEHOLDERS.
OUR VALUES
We will build an organisation that reflects:
SUSTAINABILITY
Putting health and safety first, being environmentally responsible,
and supporting our communities.
ACCOUNTABILITY
Taking ownership for what we do and responsibility for others.
TEAMWORK
Working together to achieve shared goals.
INTEGRITY
Doing what is right and doing what we say we will do.
DILIGENCE
Careful and persistent effort.
RESPECT
Valuing the views of others and accepting people for who they are.
Annual Report 2015 1
PRODUCING VALUED COMMODITIES
“We produce nickel, copper, zinc, silver, gold in ore and concentrates. Tropicana
produces gold. These metals are used in many ways by many people.”
Amanda Wilson
Mill Trainer
Jaguar Operations
2 Independence Group NL
CONTENTS
FY2015 Scorecard
Company Highlights
Board Profile
Chairman’s Review
Managing Director’s Report
Operations
Regional Exploration
Mineral Resources and Ore Reserves
Financial Report
Additional ASX Information
Glossary of Terms
6
10
22
24
26
29
50
59
65
159
160
2015 Sustainability Report
With the issue of this 2015 annual report, Independence Group NL (IGO) has
also published a Sustainability Report. Shareholders are referred to IGO’s 2015
Sustainability Report for the first time. It includes sections on community
development, our Code of Conduct and disclosure on sustainability and community
matters that were reported in previous annual reports.
2015 Corporate Governance Statement and Appendix 4G disclosures
IGO has published its 2015 Corporate Governance Statement and the disclosures
required by Appendix 4G of the ASX Listing Rules in the Governance Section of its
website: http://www.igo.com.au/irm/content/governance.aspx?RID=295.
Shareholders are encouraged to read the Corporate Governance Statement and
Appendix 4G disclosures.
All monetary amounts are in Australian dollars unless otherwise noted.
Statistics related to hours worked as presented in this report include both
permanent full-time and part-time IGO employees and contractors.
Glossary of Terms
Readers are encouraged to refer to the Glossary of Terms of this report for further
explanation of various terms set out in this Annual Report.
Annual Report 2015 3
DELIVERING SUPERIOR RETURNS
IGO WILL CONTINUE TO ACHIEVE SUSTAINABLE GROWTH
THROUGH THE TARGETING OF PROJECTS THAT HAVE SCALE,
HIGH MARGIN AND LONG-LIFE POTENTIAL.
NOVEMBER 2010
Tropicana Project
development decision
MARKET CAP $1 billion
AUGUST 2005
Tropicana discovery hole
MARKET CAP $175 million
SEPTEMBER 2002
Long Operation acquisition
completed with production
starting October 2002
MARKET CAP $23 million
JANUARY 2002
Listed on ASX raising
$4 million (ASX:IGO)
MARKET CAP $9 million
Tropicana Joint Venture agreed
MARKET CAP $13 million
4 Independence Group NL
SEPTEMBER 2015
Acquisition of Sirius completed
IGO MARKET CAP $1.6 billion
SEPTEMBER 2013
First Gold production from
Tropicana
MARKET CAP $926 million
JUNE 2011
Jabiru Metals
takeover completed
(Jaguar Operation)
MARKET CAP $1.2 billion
LONG-LIFE HIGH MARGIN ASSETS
Annual Report 2015 5
FY2015 SCORECARD
SAFETY
There has been a significant improvement over the past two years in the Company’s safety performance. The total recordable
injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR) expressed in number of injuries per million hours worked
significantly improved over the past two years. This is a credit to our people.
16
14
12
10
8
6
4
2
0
12 Mthly Rolling LTIFR(1)
TRIFR(2)
50
45
40
35
30
25
20
15
10
5
0
R
F
R
T
I
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
Jan 15
Apr 15
Jul 15
LTIFR is lost time injury frequency rate expressed in number of injuries per million hours worked.
TRIFR is total recordable injury frequency rate expressed in number of injuries per million hours worked.
R
F
T
L
I
(1)
(2)
FY2015 SCORECARD – CORE METRICS
Metric
Tropicana
Gold production (oz)
Cash cost ($/oz)
Long
Nickel production (t)
Cash cost ($/lb)
Jaguar
Zinc production (t)
Copper production (t)
Cash cost ($/lb)
(1) Original FY2015 guidance published on 28 July 2014.
6 Independence Group NL
Target(1)
Achieved
Score
141,000 – 147,000
148,923
590 – 630
568
9,000 – 10,000
4.30 – 4.70
10,198
4.01
40,000 – 43,000
44,999
5,800 – 6,500
0.40 – 0.60
7,380
0.43
FY2015 SCORECARD – STRATEGIC METRICS
Objective
$26M Brownfields exploration
$27M Sustaining capex
$11M Development capex
$11M Greenfields exploration
$3M Stockman development
Supplement exploration portfolio with mature projects
Advance Stockman through permitting to decision
Consider project acquisition or JV
(1)
(2)
(3)
(4)
*
Committed to additional work to accelerate vertical development and develop drill drive at Jaguar
Committed to additional work at Salt Creek JV
Reduced long list of prospective areas to short list, now doing detailed assessments
Key approval from Minister for Planning obtained, now doing detailed permitting and licencing
WIP means work in progress
FY2015 SCORECARD – A HISTORY OF GROWING REVENUE AND CASH FLOW
Achieved
$ million
Score
25.7
24.4
11.4
11.5
0.8
WIP*
WIP*
Sirius
• (1)
• (2)
• (3)
• (4)
Annual Revenue ($M)
03
04
05
06
07
08
09
10
11
12
13
14
15
Year
Annual Net Cash Flow from Operating Activities ($M)
$M
$M
600
500
400
300
200
100
-
250
200
150
100
50
-
03
04
05
06
07
08
09
10
11
12
13
14
15
Year
Annual Report 2015 7
SIRIUS RESOURCES NL (SIRIUS) TRANSACTION HIGHLIGHTS
•
•
•
•
•
•
•
•
Acquisition has created a leading Australian diversified mining company.
Strong strategic rationale for transaction.
Acquisition of Sirius is consistent with IGO’s clearly defined growth strategy.
Delivers shareholders exposure to both Tropicana and Nova.
Combines near term development Nova Project with IGO’s strong current cash flows.
Portfolio of high quality assets (margin, mine life, jurisdiction and relevancy).
Transaction was well supported by Sirius shareholders with 98% of shares voted and 97% of shareholders voting,
voted for the transaction.
Consideration shares issued on the Implementation Date, 22 September 2015.
• Mark Bennett and Neil Warburton from Sirius appointed to IGO Board in October 2015.
A SUMMARY OF IGO’S ASSETS FOLLOWING THE ACQUISITION OF SIRIUS
Ownership
Location
Stage
Mine type
Commodity
Resources(1) (2)
Tropicana
30%
WA
Long
100%
WA
Jaguar
100%
WA
Nova
100%
WA
Stockman
100%
Vic
Production
Production
Production
Construction
Permitting
Open Pit
Underground
Underground
Underground
Underground
Au
Ni
Zn/Cu
Ni/Cu
Cu/Zn
115.7Mt @ 1.89g/t
Au for 7.04 Moz Au
1.4Mt @ 4.8% Ni
for 66.4 kt Ni
Reserves(1) (2)
48.5Mt @ 1.93g/t
Au for 3.01 Moz Au
0.61Mt @ 3.6% Ni
for 22.0 kt Ni
4.5Mt @ 1.5% Cu
6.5% Zn for 67.0 kt
Cu and 289.7 kt Zn
14.3Mt @ 2.3% Ni
0.9% Cu for 325 kt
Ni and 134 kt Cu
14Mt @ 2.1% Cu
4.3% Zn for 293.7 kt
Cu and 598.4 kt Zn
1.2Mt @ 1.7% Cu
7.6% Zn for 19.7 kt
Cu and 87.8 kt Zn
13.1Mt @ 2.1% Ni
0.9% Cu for 273 kt
Ni and 112 kt Cu
9Mt @ 2.1% Cu
4.5% Zn for 189.0 kt
Cu and 407.8 kt Zn
Mine life (years)
9
3
3
FY2015 production
148,923
10.2kt Ni
45kt Zn + 7.4kt Cu
FY2015 cash costs(3)
$568/oz
$4.01/lb Ni
$0.43/lb Zn
10
NA
NA
8
NA
NA
Start-up capex
NA
NA
NA
$443M(4)
$202M(5)
(1) See Mineral Resources and Ore Reserves in this report and IGO’s Mineral Resources and Ore Reserves update released to ASX on
28 October 2015 for further detail.
(2) Tropicana Resources & Reserves are stated on a 100% basis.
(3) FY2015 cash costs are expressed as per ounce of gold produced and per payable pound of nickel or zinc produced,
net of by-product credits and royalties.
(4) $138M spent as at 30 September 2015.
(5) Capex decision not yet made on Stockman.
PLANNING FOR SUCCESS
“We want our people to be safe.
This is a team effort.”
Ted Moir
Shift Boss
Long Operation
8 Independence Group NL
Annual Report 2015 9
COMPANY
HIGHLIGHTS
SAFETY
•
•
The total recordable injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR) expressed in number of injuries
per million hours worked significantly improved over the past two years.
The number of lost time injuries (LTI) during FY2015 was four (FY2014: seven).
FINANCIAL HIGHLIGHTS
•
•
•
•
•
•
•
Revenue increased to $499 million (FY2014: $399 million) primarily due to a full 12 months of revenue from Tropicana.
Underlying EBITDA1 increased to $213 million (FY2014: $148 million).
The Company realised a $77 million Net Profit After Tax in FY2015 (FY2014: $49 million).
Net cash flows from operating activities increased to $202 million (FY2014: $129 million).
At 30 June 2015, the Company had cash and cash equivalents of $121 million (2014: $57 million) and debt of less than
$1 million (2014: $29 million).
The Company announced a fully franked FY2015 Final Dividend of 2.5 cents per share (FY2014: 5 cents).
Total fully franked dividends paid during FY2015 were 11 cents per share (FY2014: 4 cents).
1 See Glossary of Terms for a definition of Underlying EBITDA.
OPERATIONAL SUMMARY
Tropicana Gold Mine (IGO 30%): Tropicana in FY2015 poured 496,004 oz (100% basis), with cash costs of $568/oz Au. The
following table outlines the key operational statistics for FY2015.
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)
Ore milled
Gold grade milled
Metallurgical recovery
Gold recovered
Gold produced
Gold refined and sold (IGO share)
Cash costs
All-in sustaining costs (“AISC”)
10 Independence Group NL
‘000 wmt
‘000 wmt
‘000 wmt
g/t
‘000 t
g/t
%
oz
oz
oz
$ per oz produced
$ per oz sold
2015
10,763
1,601
42,761
2.06
5,826
2.92
90.2
492,780
496,413
150,836
568
795
2014
5,721
1,088
25,251
2.22
4,043
3.02
89.4
350,743
348,371
100,167
552
740
Long Operation (IGO 100%): Annual production was 10,198t of contained nickel metal in FY2015 (FY2014: 10,909t), 2% above the
upper range of guidance payable cash costs including royalties and by-product credits of $4.01 /Ib Ni. The following table outlines
the key operational statistics for FY2015.
Long Operation
Ore mined
Nickel grade
Copper grade
Tonnes milled
Nickel delivered
Copper delivered
Metal payable
•
•
Nickel
Copper
t
%
%
t
t
t
t
t
Ni cash costs and royalties
$ payable metal/lb
2015
258,634
3.94
0.28
258,634
10,198
723
6,151
293
4.01
2014
268,162
4.07
0.29
268,162
10,909
769
6,589
312
3.78
Jaguar Operation (IGO 100%): Production for FY2015 was 45,000t of contained zinc metal, 7,380t of contained copper metal and
1,876,384oz of contained silver metal at payable cash costs, including royalties and by-product credits, of $0.43/Ib Zn.
The following table outlines the key operational statistics for FY2015.
Jaguar Operation
Ore mined
Copper grade
Zinc grade
Silver grade
Gold grade
Ore milled
Metal in concentrate
•
•
•
•
Copper
Zinc
Silver
Gold
Metal payable
•
•
•
•
Copper
Zinc
Silver
Gold
t
%
%
g/t
g/t
t
t
t
oz
oz
t
t
oz
oz
Zinc cash costs and royalties
$/lb total Zn
metal produced
2015
485,302
2014
431,362
1.8
10.6
156
0.7
2.0
10.6
145
0.7
488,466
441,867
7,380
44,999
7,692
41,162
1,876,384
1,657,461
4,439
4,834
7,090
37,551
7,396
34,258
1,293,858
1,233,972
4,110
0.43
4,467
0.31
Annual Report 2015 11
RESULT FOR THE YEAR ENDED 30 JUNE 2015
Financial Summary
Highlights
Total revenue1
Underlying EBITDA2
Profit after tax
Net cash flow from operating activities
Free cash flow3
Total assets
Cash
Marketables securities
Total liabilities
Shareholders’ equity
Net tangible assets per share ($ per share)
1 Includes other income of $3.3M (FY2014: $0.96M)
2 See Glossary of Terms for a definition of Underlying EBITDA.
FY2015
$millions
FY2014
$millions
Change
%
499
213
77
202
116
820
121
16
155
666
$2.84
399
148
49
129
30
781
57
1
171
610
$2.62
25%
44%
58%
57%
283%
5%
113%
1,716%
(10)%
9%
8%
3 Free cash flow comprises net cash flow from operating activities and net cash flow from investing activities.
Full details on IGO’s financial results for FY2015 and IGO’s financial position at 30 June 2015 are set out the audited financial
statements and notes included in section 9 of this Annual Report.
Underlying EBITDA(1) By Mining Operation On A Quarter By Quarter Basis Since 1 July 2013
Underlying EBITDA ($’M)
Tropicana
Long
Jaguar
80
70
60
50
40
30
20
10
0
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15
Q4FY15
(1) See Glossary of Terms for a definition of Underlying EBITDA.
Dividends
During FY2015, IGO adopted a dividend policy which states that, subject to the satisfaction of the test set out in section 254T
of the Corporations Act 2001, IGO intends to maintain a minimum dividend payment payout ratio of 30% of net profit after tax,
rounded to the nearest whole cent. Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2014 of 5 cents (2013: 1 cent)
per fully paid share
Interim ordinary dividend for the year ended 30 June 2015 of 6 cents (2014: 3 cents)
per fully paid share
2015
$’000
11,713
14,055
25,768
2014
$’000
2,333
7,000
9,333
On 22 September 2015, IGO announced a fully franked final dividend of 2.5 cents per share (FY2014: 5.0 cents).
12 Independence Group NL
Figure 1: IGO Project Locations
Stockman
(Cu-Zn-Ag-Au)
IGO 100%
Western
Australia
Kalgoorlie
Esperance
Albany
Tropicana*
(Au)
Nova (Ni-Cu-Co)
Jaguar
(Zn-Cu-Ag-Au)
Geraldton
Perth
Long (Ni)
Legend
Operating mines
Mine in construction
Project in approval phase
0
750
kilometres
*
IGO owns 100% of each project with the exception
of Tropicana (IGO – 30%)
Annual Report 2015 13
PROJECT AT PERMITTING STAGE
Stockman Project (IGO 100%)
The results of the Stockman Optimisation Study were released in November 2014 (see IGO’s ASX release dated 28 November
2014 for full details). The Stockman Project’s Environmental Effects Statement permitting approval from the State of Victoria and
the Commonwealth (under the Federal Environment Protection and Biodiversity Conservation Act 1999) was received in the first
half of FY2015. Detailed permitting is currently in progress.
EXPLORATION PROJECTS
Tropicana Gold Mine (IGO 30%) – Near Mine Exploration
A 3D seismic program completed during FY2015 identified a number of potential targets down dip and along strike of known
resources. A total of 187 aircore (AC) holes (7,034m), 49 reverse circulation (RC) holes (6,822m) and 44 diamond holes (11,009) was
completed in FY2015 targeting down dip extensions to mineralisation at Tropicana, Havana North and Havana South.
Tropicana Project – Salt Creek Joint Venture
During FY2015, IGO entered into a joint venture (JV) with AngloGold Ashanti Australia Pty Ltd (AngloGold Ashanti) on a series of
tenements on the eastern flank of the Tropicana JV project whereby IGO has the right to increase its interest in these tenements
from 30% to 70% by spending $3 million over four years. The Salt Creek JV tenements cover a significant area of the Salt Creek
Complex, a Proterozoic mafic/ultramafic intrusive package considered to have potential for magmatic nickel-copper sulphide
mineralisation.
Jaguar Regional Exploration
Exploration at Jaguar focused on delineation of the Triumph discovery, 6km north of the Jaguar processing plant. An initial
resource drilling program commenced at Triumph late in FY2015. Diamond drilling was undertaken to test a newly identified
target position at Daimler and test the Charlie Chicks and Possie Well South Prospects. AC drilling programs were completed on
the southern and northern extremities of the project area as well as on the Darlot JV.
Lake Mackay Exploration Alliance (IGO Manager, Has Potential To Earn Up To 70%)
IGO has an exploration alliance with ABM Resources NL (ASX: ABU) under which IGO can earn up to 70% in the Lake Mackay
Project located 400km northwest of Alice Springs. The project comprises 7,200km2 of exploration licences and 12,130km2 of
exploration licence applications. During FY2015, first pass and infill surface geochemistry sampling was completed and initial
AC drill testing of anomalies commenced.
Bryah Basin Joint Venture (IGO Manager And Earning 70% – 80%)
IGO has an exploration alliance with Alchemy Resources Limited (ASX: ALY) under which IGO can earn up to a 70% – 80% interest
(non-iron ore) in ALY’s Bryah Basin portfolio of tenements. The project is situated approximately 40km west of and along strike
from the DeGrussa Cu-Au VMS deposit covering the same prospective Narracoota Volcanic host stratigraphy. During FY2015, IGO
delineated a strong multi-element geochemical anomaly and semi-coincident Moving Loop EM (MLEM) conductors potentially
representing VMS-style mineralisation at the Neptune prospect. A program of RC and diamond drilling to test Neptune
commenced late in FY2015.
INVESTMENTS
During the second half of FY2015, IGO acquired approximately 33.8 million shares in ASX listed gold exploration development
company, Gold Road Resources Limited (ASX: GOR), for a total consideration of $13.1 million.
The total value of IGO’s holdings in marketable securities at 30 June 2015 was $15.5 million.
14 Independence Group NL
OUTLOOK
FY2016 Guidance Range is as follows:
Business Segment
Tropicana (IGO 30%)
Gold produced (100% basis)
Gold (IGO’s 30% share)
Cash cost
All-in sustaining costs
Sustaining capex (IGO’s 30% share)
Exploration expenditure (IGO’s 30% share)
Long
Nickel (contained metal)
Cash cost
Sustaining capex
Exploration expenditure
Jaguar
Zinc in concentrate
Copper in concentrate
Cash cost
Sustaining capex
Development capex
Exploration expenditure
Greenfields and generative
Units
oz
oz
$/oz Au
$/oz Au
$M
$M
t
$/Ib Ni
$M
$M
t
t
$/Ib Zn
$M
$M
$M
$M
FY2016
Guidance Range
430,000 – 470,000
129,000 – 141,000
$640 – $710
$820 – $910
$8M – $10M
$9M – $11M
8,500 – 9,000
$3.50 – $4.00
$3M – $5M
$13M – $15M
35,000 – 40,000
7,500 – 8,500
$0.40 – $0.60
$4M – $5M
$12M – $14M
$10M – $12M
$10M – $12M
Annual Report 2015 15
ACQUISITION OF SIRIUS RESOURCES NL (SIRIUS)
The objective and strategy of IGO is to create long-term shareholder value through the discovery, development and acquisition
of low cost and high grade projects.
Criteria For Targeting Opportunities
Following a review of strategy during FY2015, IGO set criteria for acquiring a production, near-production or development asset.
The primary criteria are indicated in the table below.
Five Primary Targeting Criteria
High Margin
Scale
Long Mine Life
Low Risk Jurisdictions
Commodity Agnostic
•
•
•
•
•
•
•
•
•
Sirius Resources NL
Transaction
Bottom third cost curve
Equivalent, or bigger, in scale to IGO’s 30% interest in Tropicana
Circa 150,000oz/year Au, 15,000tpa Ni, or 30,000tpa Cu
Reserve life of minimum seven years for group
Significant opportunity for exploration potential
Low risk jurisdiction
Proximity of assets providing business simplicity
Base metals and precious metals
Focus on money mines = long-life and high margin
On 25 May 2015, IGO and Sirius announced the execution of a binding Scheme Implementation Deed under which IGO would
acquire all the issued capital of Sirius by way of an Acquisition Scheme of Arrangement (the Acquisition Scheme). Under the
Acquisition Scheme, Sirius shareholders received 0.66 IGO shares and 52 cents cash for each Sirius share. Sirius shareholders also
participated pro-rata in the demerger of Sirius’ Polar Bear and Scandinavian exploration assets.
The transaction created a leading diversified Australian mining company with a strong portfolio of high margin, long-life mining
assets, across a range of base and precious metals. The combination of the two companies has a clear strategic rationale that
is consistent with IGO’s clearly defined growth strategy and will generate significant value for shareholders. The acquisition has
brought the world-class Nova Project into the IGO portfolio.
The transaction was approved on 3 September 2015 and IGO completed the issue and payment of the Acquisition Scheme
consideration on 22 September 2015.
Financing
IGO has entered into a syndicated facility agreement (Debt Agreement) with National Australia Bank Limited, Australia and New
Zealand Banking Group Limited and Commonwealth Bank of Australia Limited for a $550 million committed term finance facility
on an unsecured basis. The Debt Agreement comprises:
•
•
A five-year $350 million amortising term loan facility that will be used to refinance the existing Nova project finance facility,
and provide funds for the continued development, construction and operation of the Nova Project.
A five-year $200 million revolving loan facility that will be used to partially fund the payment of the cash component of the
Acquisition Scheme and transaction costs, in addition to providing funding for general corporate purposes.
Overview of the Merged Group
The Transaction has created a leading diversified Australian mining company with a strong portfolio of long-life mining assets,
across a range of base and precious metals, including:
•
•
•
•
•
A 30% interest in the Tropicana Gold Mine
The 100% owned Nova Project, currently in development
The 100% owned Long nickel operation
The 100% owned Jaguar zinc-copper-silver operation
The 100% owned Stockman copper-zinc-silver development project
16 Independence Group NL
Nova Project
Background
The Nova Project is located in the Fraser Range, approximately 120km east of Norseman and approximately 700km east of Perth
in Western Australia.
In July 2012 the Nova Deposit, a magmatic nickel sulphide deposit, was discovered. In February 2013 the Bollinger Deposit, a
dominantly flat lying ore body located immediately to the east of the Nova Deposit, was discovered and connected to the Nova
Deposit by an interpreted feeder zone.
IGO owns 100% of the EL 28/1724 and ML 28/376 tenements which host the Nova Deposit and Bollinger Deposit, comprising the
Nova Project. Mr Mark Creasy, the previous owner of a 30% interest in these tenements, retains a 0.5% net smelter royalty on
any future discoveries made within the boundaries of EL 28/1724 but which fall outside of ML 28/376. No royalty is payable to Mr
Creasy for any production from the Nova Project or any other future production from elsewhere within ML 28/376.
Definitive Feasibility Study
A Definitive Feasibility Study (DFS) relating to the Nova Project was completed in July 2014. The Mineral Resource was updated
as part of the DFS and a maiden Ore Reserve for the Nova Project was established, both in accordance with the JORC Code.
The Mineral Resource estimate comprises 14.3Mt grading 2.3% nickel, 0.9% copper and 0.08% cobalt for a contained 325,000t of
nickel, 134,000t of copper and 11,000t of cobalt.
The Ore Reserve estimate comprises 13.1Mt grading 2.1% nickel, 0.9% copper and 0.07% cobalt for a contained 273,000t of nickel,
112,000t of copper and 9,000t of cobalt.
The Probable Ore Reserve, together with a small proportion (1Mt of ore) of additional mining inventory material, together
constituting the life of mine plan, will underpin an initial mine life of 10 years following a two-year development period. Average
production following project ramp-up will be 26,000tpa of nickel and 850tpa of cobalt in a nickel concentrate and 11,500tpa
copper in a separate copper concentrate.
The planned mine is based on a 1.5Mtpa underground operation with decline access. The principal stoping method will be sub-
level open stoping with paste fill to maximise extraction. Approximately 83% of the planned production will be from sub-level
open stoping with the remaining 17% of production from the longhole echelon retreat stoping method.
Metallurgical testwork results indicate that the ore is amenable to the production of two separate sulphide concentrates via
crushing, grinding and conventional froth flotation, specifically:
•
•
copper concentrate – 95% recovery to produce a 29% copper concentrate with silver by-product
nickel concentrate – 89% recovery to produce a 13.5% nickel concentrate with cobalt by-product
The processing plant will have a 1.5Mtpa nameplate capacity and will comprise conventional crushing, grinding by open circuit
SAG mill followed by a ball mill in closed circuit, and sulphide flotation to produce separate copper and nickel concentrates.
Flotation will comprise open circuit roughing, cleaning and cleaner scavenging. Regrinding on particular streams will be used to
increase liberation and recovery for both circuits.
Power for the site will be generated from an onsite 16 megawatt predominantly diesel-fired power station with solar via a 6.7
megawatt power plant provided by a specialist power generation contractor.
In August 2014, the Nova Mining Agreement was signed with the Ngadju People and shortly thereafter the Nova Mining Lease
was granted by the Western Australian Department of Minerals and Petroleum.
Annual Report 2015 17
Development
In January 2015, following the receipt of all permits for mining, excavation of the boxcut commenced, along with construction of
the accommodation village and aerodrome.
Underground hard-rock mining contractor, Barminco Ltd, was awarded a three-year contract to excavate the boxcut, complete
the decline to access the ore body, and undertake initial mining. The boxcut has been completed and the decline is advancing
ahead of schedule. The Nova Deposit orebody is expected to be reached in the second quarter of 2016.
A 492-person accommodation village has been completed and the initial 192-person construction camp has been
decommissioned.
Foundation earthworks for a 2km long, all-weather, sealed airstrip have been completed. The airstrip is able to accommodate jet
aircraft such as the Fokker F100 or BAE146 and became operational in August 2015.
A 38km long, all-weather, sealed access road connecting the Eyre Highway with the Nova Project site is expected to be
completed in 2015.
The tailings dam is complete. The dam spans approximately 1,000m x 600m and construction of its bund wall (which averages
13m in height) and plastic lining is now complete.
In June 2015, GR Engineering Services Limited was awarded the $114 million Engineering, Procurement and Construction (EP&C)
contract for the design and installation of the mineral processing and paste fill plants for the Nova Project. Design work on the
plant is underway and the plant is expected to be completed in late 2016.
First concentrate production from the Nova Project is expected in December 2016 ahead of a ramp-up in 2017 to full production.
Offtake
Offtake agreements for 100% of the nickel sulphide concentrate produced from the Nova Project for the first three years
of operations have been signed with BHP Billiton Nickel West Pty Ltd and Glencore International AG. The offtake terms are
confidential, but reflect the anticipated exceptionally high quality of the Nova Deposit nickel concentrate, which is anticipated to
have very low deleterious elements and an extremely high Fe:MgO ratio of approximately 62.
A contract with commodity trading group, Trafigura Beheer BV, to sell all of the copper sulphide concentrate from the Nova
Project for the first three years of production has also been signed. The commercial terms of the offtake agreement are
confidential, but highlight the anticipated superior quality of the Nova Deposit copper sulphide concentrate, which has very
marginal levels of impurities and is expected to average 29% copper. These characteristics make the product highly desirable to
smelters and trading firms.
Near Mine Exploration
IGO has a 100% interest in various tenements covering 306km2 including the mining lease containing the Nova Project. These
tenements also include the Talbot and Southern Hills soil anomalies and the Buningonia intrusion. All of these are located in the
Fraser Complex the geographical domain prospective for mafic-ultramafic intrusion-hosted magmatic nickel-copper-platinum
group metal and chromite deposits.
Around the Nova Project, a high powered Samson deep penetration electromagnetic survey (DPEM) was completed which was
successful in identifying 16 electromagnetic conductors. Twelve of these conductors remain to be drill tested.
18 Independence Group NL
Figure 2: Fraser Range (IGO: 100%) Nova Project tenure
Annual Report 2015 19
Figure 3: Fraser Range Joint Venture (IGO: 70%) tenure
Regional Exploration
Fraser Range Joint Venture (IGO: 70%)
The Fraser Range Joint Venture (IGO: 70%: Creasy group: 30%) covers an area of over 895km2 and includes over 100km of strike
length of the Proterozoic Albany-Fraser mobile belt on the south-east margin of the Yilgarn Craton, which contains the new
Nova Project nickel belt and the extensions of the Tropicana gold belt.
Exploration for additional nickel-copper sulphide mineralisation is continuing throughout the joint venture area. Several
promising early stage prospects are actively being explored. The Crux and Centauri area 60km southwest of the Nova Project
is of significant interest with preliminary systematic drilling confirming the presence of prospective mafic/ultramafic intrusions,
nickel copper sulphide mineralisation and outlining anomalous zones of copper and nickel at shallow levels.
Reconnaissance diamond drilling is ongoing to test areas of the Crux and Centauri intrusions.
Further afield in the Fraser Range Joint Venture area, reconnaissance-style exploration, using a combination of ground
geophysical methods and regional soil geochemical programs, will continue with the aim of defining anomalies for follow-up
drilling.
20 Independence Group NL
Figure 4: IGO interests in the Fraser Range – Tropicana Belts
N
400,000mE
IGO Tenure
600,000mE
Limestone
Granitic Gneiss
Tropicana JV Tenure
Biranup Zone
Northern Foreland
Salt Creek JV Tenure
Yilgarn Granites
Paterson Formation
Fraser Range Tenure
Fraser Complex
Mafic
Felsic Volcanic
Leonora
Leonora
Jaguar
(Zn-Cu)
Tropicana JV
(Au)
Kalgoorlie
Kalgoorlie
Long
(Ni)
Nova Project
(Ni-Cu)
Norseman
Norseman
0
100
kilometres
MGA Zone 51 (GDA94)
Albany-Fraser
Orogeny
400,000mE
600,000mE
Location Map
0
500
kilometres
WA
Tropicana JV
Geraldton
Kalgoorlie
Perth
Nova Project
N
m
0
0
0
,
0
0
8
,
6
N
m
0
0
0
,
0
0
6
,
6
N
m
0
0
0
,
0
0
4
,
6
N
m
0
0
0
,
0
0
8
,
6
N
m
0
0
0
,
0
0
6
,
6
N
m
0
0
0
,
0
0
4
,
6
Consolidation of Fraser Range and Tropicana Belts
IGO now has a dominant land position on the Fraser Range and Tropicana Belts which will allow a more focused and efficient
exploration effort. Both provinces are under-explored and have significant exploration potential.
IGO shareholders will now be exposed to the unrealised exploration potential of both the Fraser Range and the Tropicana belts.
Capital structure and ownership post-completion of Sirius acquisition
Share capital
As at 23 September 2015, post the Sirius acquisition, IGO’s share capital structure is 511,422,871 Ordinary shares
fully paid.
Significant shareholdings following completion of the Acquisition of Sirius
Following implementation of the Acquisition Scheme, the Creasy Group (controlled by Mark Creasy) has a Relevant Interest in
18.88% of the IGO shares on issue.
Annual Report 2015 21
Left to right: Geoffrey Clifford,
Peter Buck, Peter Bradford, Peter Bilbe,
Keith Spence and Neil Warburton.
(Mark Bennett away at time of photo).
BOARD PROFILE
Peter Bilbe (65)
B.Eng. (Mining) (Hons), MAusIMM
Peter Bradford (57)
B.AppSc., FAusIMM, MSMME
Keith Spence (61)
BSc (Geophysics) (Hons)
Non-Executive Chairman
Managing Director
Non-Executive Director
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. He
has held senior positions at Mount
Gibson Iron Limited, Aztec Resources
Limited, Portman Limited, Aurora Gold
Limited and Kalgoorlie Consolidated
Gold Mines Pty Ltd. His most recent
executive position was Managing
Director of Aztec Resources Limited,
which successfully developed the
Koolan Island iron ore project from
exploration to production. He 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. He holds a Bachelor of
Engineering (Mining) degree from the
University of New South Wales and is a
Member of the Australasian Institute of
Mining and Metallurgy (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. He 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. He has worked as 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. He is a Fellow of the
AusIMM and a Member of the Society
of Mining Engineers.
Mr. Spence has over 30 years’
experience in the oil and gas industry,
including 18 years with Shell and has
a broad knowledge of the resources
sector. He retired from Woodside in
2008 after a 14-year tenure in top
executive positions in that company,
including Chief Operating Officer and
Acting Chief Executive Officer.
Mr. Spence chairs the Board of the
National Offshore Petroleum Safety and
Environmental Management Authority
and the Industry Advisory Board of
the Australian Centre for Energy and
Process Training. He is Non-Executive
Chairman of Geodynamics Limited
and Base Resources Limited and a
Non-Executive Director of Oil Search
Limited. He joined the board of the
then listed company Clough Limited in
August 2008 and was Chairman from
2010 until its acquisition via scheme of
arrangement by Murray and Roberts
in 2013.
22 Independence Group NL
Geoffrey Clifford (65)
B.Bus., FCPA, FCIS, FAICD
Peter Buck (66)
M.Sc. (Geology),
MAusIMM
Mark Bennett (54)
BSc. (Geology), PhD,
MAICD, MAusIMM
Neil Warburton (59)
Assoc. MinEng WASM,
MAusIMM, FAICD
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
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
value. 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 eight 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
(AICD) in March 2011.
Mr. Peter Buck was appointed
as a Non-Executive Director
of IGO in October 2014. He
is a geologist with over
40 years’ experience in
the mineral exploration
and mining industry and 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 Ltd. 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.
Here, he 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 Non-
Executive Chairman of 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 AusIMM
and a Fellow of the Australian
Institute of Geoscientists. Mr.
Buck is also 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.
Dr. Bennett was the founding
Managing Director and CEO of
Sirius and was appointed as a
Non-Executive Director of IGO
in October 2015 on completion
of the acquisition of Sirius. He
is a geologist with 25 years’
experience in gold, nickel and
base metal exploration and
mining. He has worked in
Australia, West Africa, Canada
and Europe, predominantly for
LionOre Mining International
Limited and WMC Resources
Limited at locations such
as Kalgoorlie, Kambalda, St.
Ives, LionOre’s nickel and
gold mines throughout
Western Australia, Wiluna
and most recently Nova,
the Fraser Range and Polar
Bear. Positions held include
various technical, operational,
executive and board positions
including Managing Director,
Chief Executive Officer,
Executive Director, Exploration
Manager and Chief Geologist.
Dr. Bennett has twice won
the Association of Mining
and Exploration Companies
“Prospector Award” for his
discoveries which include the
Thunderbox gold deposit, the
Waterloo nickel deposit and
most recently the world class
Nova nickel-copper deposit.
In addition to his technical
expertise, Dr. Bennett is very
experienced in corporate
affairs, equity capital markets,
investor relations and
community engagement and
led Sirius from concept to
discovery of Nova all the way
through feasibility, financing,
permitting and construction.
He holds a BSc in Mining
Geology from the University
of Leicester and a PhD from
the University of Leeds and
is a Member of the AusIMM,
a Fellow of the Geological
Society of London, a Fellow
of the Australian Institute of
Geoscientists and a Member
of the AICD.
Mr. Neil Warburton was a
Non-Executive Director of
Sirius and was appointed
as a Non-Executive Director
of IGO in October 2015 on
completion of the acquisition
of Sirius. Until March 2012,
he was the Chief Executive
Officer of Barminco Limited,
one of Australia’s largest
underground mining
contractors. Mr. Warburton
successfully guided and
led the company and
strengthened its presence
within Australia and Africa
more than doubling revenues
during his tenure. Prior to
Barminco, he was Managing
Director of Coolgardie Gold.
He is also a Non-Executive
Director of ASX -listed Red
Mountain Mining Limited,
Australian Mines Limited,
Nambian Copper Limited and
Peninsular Energy Limited.
Mr. Warburton graduated
from the Western Australia
School of Mines with an
Associate Degree in Mining
Engineering and spent the
formative years of his career
as a mining engineer at
Western Mining Corporation’s
Kambalda Nickel Mines. He
is a Fellow of the AICD and a
Member of the AusIMM.
Annual Report 2015 23
CHAIRMAN’S REVIEW
IGO will continue to
investigate opportunities
both in Australia and
overseas.
$77
million
Net Profit After Tax
24 Independence Group NL
Dear Shareholders
The 2015 financial year has been
an active and potentially “company
making” year for IGO with operations at
Long, Tropicana and Jaguar providing
significant cash flows and the Company
announcing its first material transaction
since 2011.
As I mentioned in my letter to
shareholders last year, your Board
appointed Peter Bradford as Managing
Director and CEO in March 2014.
Since joining IGO, Peter and the re-
structured management team have
taken substantial steps to develop
strategies to grow shareholder value
in a meaningful and sustainable way
and to continue to build a market
leading diversified resources group.
The implementation of these initiatives
culminated in the announcement in
May of this year of the agreement
to acquire Sirius Resources NL
which includes the world class Nova
project located in Western Australia.
This transaction was completed in
September and has the potential
to deliver substantial value for
shareholders over the medium to long
term. The Board is also very optimistic
regarding the potential generation of
additional value from the Nova project
and from the exploration upside within
the combined regional land holdings.
To continue to build a sustainable
business and recognising the finite
nature of the geological resources we
extract, IGO will continue to identify
opportunities for investment in
exploration and advanced projects both
in Australia, which is our primary focus,
and overseas. As I have mentioned in
the past, in the light of the social and
legislative risks associated with some
countries, any overseas opportunity
will be rigorously assessed against
IGO’s investment criteria prior to
consideration.
The Company’s production and cost
performance during the year was
highly commendable. Metal production
and unit cost forecast guidance was
achieved or bettered at all operations.
FY 2015 was the first full year of
production from the Tropicana gold
project and combined with strong
performances from Long and Jaguar
resulted in record revenues, record
net cash flow and net profit after tax
of $77million. IGO’s profit and cash
flow performance, negligible debt
and strong financial position at year
end enabled an increase in dividends
in FY2015 following the considerable
capital investment made in the
Tropicana gold project in the first half
of FY2014.
Financial and commodity markets
generally and, in particular, USD
base metal prices have deteriorated
significantly in recent months
highlighting the cyclical nature of
the natural resources industry.
Despite risk mitigation strategies
such as hedging, these external
conditions remain largely beyond
our control. What remains constant
is the Board and management’s
continued focus on creating value for
shareholders through cost control,
improvements in productivity, resource
optimisation, innovation, discovery and
development.
IGO has for the first time published a
Sustainability Report which reflects
positively upon the organisational
capability and growing maturity of the
Company. Of note is the significant
improvement over the past two years
in the Company’s safety performance. I
commend the report to shareholders.
On 24 December 2014, Kelly Ross
announced her retirement as a director
after 13 years of dedicated service. Kelly
played an important role in the listing
of the Company in 2002 and
management of the Company up to
2011 as an executive director and then
non-executive director. I would like to
acknowledge and thank Kelly for her
significant contribution to IGO and wish
her all the best in a well-deserved
retirement.
I also wish to acknowledge our most
important asset, our people. 2015 has
been a year of considerable change
and achievement which has only been
possible with the focus and hard work
of our employees, contractors and joint
venture partners. I thank you all.
On behalf of the Board, management
and employees, I also thank you,
our shareholders, for your continued
support.
Your Board of Directors is looking
forward to the coming years with
optimism, enthusiasm and a real
sense of purpose.
Peter Bilbe
Chairman
In December 2014, the Board appointed
respected resources executive and
geophysicist, Keith Spence, as a director.
Keith has a broad range of experience
in the natural resources industry in
Australia and internationally including
senior executive roles at Woodside and
Shell. This experience adds considerable
diversity to the Board and I would
like to welcome Keith to IGO and look
forward to his contribution in the
coming years.
Following completion of the Sirius
acquisition, former Sirius directors,
Mark Bennett and Neil Warburton
have joined the Board. Mark and Neil
are, respectively, very experienced
exploration and mining executives
and directors with track records of
considerable achievement and I
welcome their active involvement.
Annual Report 2015 25
MANAGING DIRECTOR’S REPORT
Dear Shareholders
It is my great pleasure to report to you
on the growth and progress of the
Company during FY2015.
FY2015 is the first full year of revenue
from the Tropicana Gold Mine (IGO 30%,
AngloGold Ashanti Australia 70%) and
this revenue has added significantly to
the record $499 million of revenue IGO
reported for FY2015.
During FY2016, the Tropicana Joint
Venture partners plan to focus on
optimising mill throughput rates. A
mill optimisation study is underway
to identify opportunities to increase
throughput from the nameplate
capacity of 5.8Mtpa. This will partially
offset the planned reduction in grade
when we discontinue our grade
streaming strategy at Tropicana
whereby we have been mining more
ore than required for the processing
plant, thereby allowing the lower grade
portion to be stockpiled and the higher
grade portion preferentially fed to the
processing plant. This strategy which
has been used over the first years of
the project has maximised the early
return of capital to the joint venture
partners. Additional throughput could
be achieved with modest capital
investment. A systematic replacement
and upgrade program is underway
on conveyor and pump drives. We are
also upgrading conveyor feeders and
rollers that in the past have caused
unplanned downtime.
The Company continues
to see great potential
at Tropicana, Long and
Jaguar as well as the
prospects at the Nova
Project which is fully
financed, in construction
and scheduled to produce
first concentrates in
December 2016.
26 Independence Group NL
THE SIRIUS TRANSACTION HAS CREATED A LEADING
DIVERSIFIED AUSTRALIAN MINING COMPANY WITH A STRONG
PORTFOLIO OF MINING ASSETS.
We also expect to expand the carbon-
in-leach circuit to maintain residence
time and therefore gold recovery levels
at the expected higher thoughput rate.
Post FY2016, we expect the processing
plant throughput rate to be about
7Mtpa, which, at the average reserve
grade of 2 g/t, is expected to deliver
average annual gold production of
approximately 400,000 ounces.
The Long Operation continues to be an
important source of free cash flow for
the Company. The mine’s nickel metal
production was greater than the top
end of the original FY2015 guidance
range by 2%. Cash costs were again
kept at a low level through cost control
measures. Cash costs were ~5% below
the lower end of the FY2015 guidance
range provided in July 2014.
Post year end, IGO announced that
it has implemented a number of
changes to the mining plan at its
Long Operation, which unfortunately
included 28 redundancies. The changes
have been made in response to the
current weakness in nickel prices
to ensure that the Long Operation
remains profitable and sustainable.
Future mining activities at the Long
Operation will focus on longhole
stoping, supported by twin boom
jumbo development. The revised
mining plan will result in a reduction in
operating costs for the Long Operation
of approximately 12% and a reduction
in contained nickel tonnes produced by
approximately 8%.
We deeply regret the impact that these
changes will have on our people and
it is a decision that has not been taken
lightly. IGO remains committed to the
Kambalda community and the broader
Goldfields community.
The Jaguar Operation has had an
excellent FY2015 and, despite a
planned shutdown at the processing
plant to change out the SAG mill, metal
production in concentrate of zinc,
copper and silver increased during
FY2015 and was ahead of the FY2015
guidance range provided in July 2014.
The Jaguar processing plant has
demonstrated during FY2015 that it
can maintain higher production rates
than historically achieved. Recognising
this, we have been working to improve
productivity and therefore production
from the Bentley underground mine.
Production rates improved significantly
in FY2015 and we have made good
progress towards our goal of mining
and processing 500,000tpa of ore.
We continued to place significant
emphasis on exploration during FY2015,
spending $37 million on brownfields
and greenfields exploration. The
Company continues to see excellent
potential at Tropicana, Long and
Jaguar as well as the prospects at joint
venture tenements.
Of note during FY2015, drilling at
Moran South at the Long Operation
intersected nickel mineralisation. At the
Jaguar Operation, drilling has outlined
a new discovery at Triumph, which is
located 6km north of the processing
plant, and intersected massive sulphide
mineralisation at depth below the
Bentley resource wire frame. At
Tropicana, 3D seismic studies have
identified the potential for continued,
near surface mineralisation to the
south-east of the Boston Shaker pit.
On 25 May 2015, IGO and Sirius
Resources NL announced the execution
of a binding Scheme Implementation
Deed under which it was agreed
that IGO would acquire all the
issued capital of Sirius by way of an
Acquisition Scheme of Arrangement
(the “Acquisition Scheme”). Under
the Acquisition Scheme, which was
completed in September 2015, Sirius
shareholders received 0.66 IGO shares
and 52 cents cash for each Sirius share.
Sirius shareholders also participated
pro-rata in the demerger of the Polar
Bear and Scandinavian exploration
assets.
The transaction has created a leading
diversified Australian mining company
with a strong portfolio of high margin/
long-life mining assets, across a range
of base and precious metals.
The combination of the two companies
has a clear strategic rationale and
will generate significant value for
the shareholders of both companies.
Shareholders will continue to
have exposure to IGO’s portfolio
of production, development and
exploration projects but will also
benefit from the growth potential of
the world-class Nova Project, which is
fully financed, under construction and
expected to produce first concentrates
in late 2016.
The development of the Nova Project
to create continued shareholder value
is a key focus for IGO. This will be
achieved through the delivery of the
Nova Optimisation Study in December
2015 and further de-risking of the
commissioning and operational phases
of the project in 2016. Furthermore,
and with the backing of IGO’s cash
generating projects, we are very
optimistic about the opportunity
to realise the potential of our land
holdings on the under-explored
Fraser Range and Tropicana belts. This
underexplored province has delivered
two of Australia’s best gold and base
metals discoveries in the last 15 years
and we are confident that more
discoveries are ahead of us.
We welcome our new shareholders,
employees and contractors that have
joined us from Sirius. I am particularly
delighted that Rob Dennis, most
recently Chief Operating Officer of
Sirius, has joined the IGO management
team as General Manager Project
Development, accountable to me
for the delivery of the Nova Project
through to production. It is especially
encouraging that the majority of the
Nova Project team have continued
with IGO and the Nova Project.
The Nova Optimisation Study, which will
be to a bankable feasibility study level,
commenced during the Acquisition
Scheme process with the primary
objective of capturing additional value
not identified as part of the original
Nova Definitive Feasibility Study (DFS).
Annual Report 2015 27
The Nova Optimisation Study, which
aims to improve the project’s net
present value and rate of return, is
focused on a number of value drivers
including:
•
•
•
•
accelerated development rates
and ramp-up
adjustments to the mine design
and scheduling to prioritise higher-
value ore in the early years of the
mine life
deferral of some underground
capital expenditure to later years,
when needed
capturing current contracted and
industry costs structures into the
modelling.
The Nova Optimisation Study is
expected to be completed in December
2015.
In parallel with the completion of
the Nova Optimisation Study, we are
conducting a review and re-targeting
exercise over our land holdings on the
Fraser Range and Tropicana belts to
develop a strategy for their systematic
exploration.
We are now well-positioned to
leverage off our increased scale to
deliver efficiencies in areas including
procurement and off-take as a result
of an enhanced bargaining position, as
well as having the potential to reduce
corporate costs compared to IGO and
Sirius as standalone entities. This is
expected to include the elimination of
duplication in compliance and listing
costs and an overall reduction in the
aggregate number of employees.
Our strong financial position will also
give us the capacity to pursue further
value-accretive growth opportunities.
You will recall that IGO had loan
facilities with National Australia Bank
Limited totalling $170 million. Since
announcing the Sirius acquisition, IGO
has terminated these loan facilities
and has entered into a syndicated
facility agreement with National
Australia Bank Limited, Australia and
New Zealand Banking Group Limited
and Commonwealth Bank of Australia
Limited for a $550 million committed
term finance facility on an unsecured
basis on competitive terms. This has
allowed us to also terminate the
$440 million project finance facility
that Sirius had put in place. Our new
facilities deliver an overall improvement
in present value.
During FY2015, Management
recommended, and the Board
approved, our updated Vision and
Mission statements as well as best
practice values. Our Vision is that
“We will be a diversified mining
company delivering superior returns
for all stakeholders”. One of the most
important aspects of our Mission is
“Achieving measured and sustainable
growth through high returns from
diverse, low cost, long-life assets”. The
addition of the Nova Project to our
portfolio of assets is very much aligned
with this mission. The Nova Project is
a high margin, long-life project with
significant exploration upside and
promises to be our flagship project for
some time to come.
I thank all shareholders for welcoming
me as Managing Director and I look
forward to your continued support in
FY2016. The Company’s employees and
I are striving to achieve measured and
sustainable growth.
Peter Bradford
Managing Director
28 Independence Group NL
OPERATIONS
TROPICANA GOLD MINE, WESTERN AUSTRALIA (TGM)
(IGO 30%, ANGLOGOLD ASHANTI 70% AND MANAGER)
•
•
•
•
•
One of the best virgin Australian gold discoveries since 2000
Located 370km north-east of Kalgoorlie
Low cost mine
• 3.0Moz Ore Reserves, 7.0Moz Resources
• Open Pit mining with average life of mine strip ratio of 5.4 : 1
• 5.8Mtpa processing plant (with potential to go to 7.0 – 7.5Mtpa)
Exploration upside near mine and regionally
Ni-Cu prospectivity with IGO earning 70% for $3 million over four years
12.4 million
tonnes of ore was
mined during FY2015
492,780
ounces of gold (100%
basis) was produced
during FY2015
Background
The Tropicana and Salt Creek joint
venture concession packages comprise
approximately 3,200km2 and
2,300km2 of tenements respectively
stretching over more than 250km in
strike length along the Yilgarn Craton
and Fraser Range. IGO 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 JV
partners to develop the 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
that included an aerodrome,
accommodation village, borefields and
processing plant. Mining of the Havana
deposit commenced in 2012 with the
first gold being produced in September
2013.
In FY2015, activity has centred around
debottlenecking the processing plant
and gaining efficiencies from the
processing plant.
Annual gold production in FY2016 is
anticipated to be between 430,000
– 470,000oz. This translates to IGO’s
attributable gold production being
in the range of 129,000 – 141,000oz/
year. Post FY2016, subject to the
mill throughput being between 7.0
– 7.5Mtpa, annual gold production is
anticipated to average ~400,000oz/
year.
TROPICANA
TIER 1 GOLD MINE
Annual Report 2015 29
FY2015 Scorecard
FY2015 gold production and cash costs were better than original guidance and the mine delivered consistent performance across most metrics
over all quarters.
Total Mined (Mt)
Mill Throughput (Mt)
Actual
Guidance
2.0
1.5
1.0
0.5
0.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Milled Grade (g/t)
Actual
Guidance
Gold Recovery (%)
Actual
Guidance Midpoint
100
80
60
40
20
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Gold Production (koz)
Actual
Guidance
Cash Costs ($/oz)
Actual
Guidance Midpoint
800
600
400
200
0
16
14
12
10
8
6
4
2
0
4.0
3.0
2.0
1.0
0.0
150
100
50
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
30 Independence Group NL
FY2015 GOLD PRODUCTION AND CASH COSTS WERE BETTER
THAN ORIGINAL GUIDANCE AND THE MINE DELIVERED
CONSISTENT PERFORMANCE ACROSS MOST METRICS OVER
ALL QUARTERS.
FY2015 Production
During FY2015 the TGM mined a total of 23M bank cubic metres (BCM) which was in line with the budget of 23.6M BCM. Of this
material there were 12.4Mt of ore (10.8Mt of Full Ore (>0.6g/t) and 1.6Mt of Marginal Ore (>0.4g/t to <0.6g/t)) and 46Mt of waste
mined.
Ore was sourced from the Havana pit (6.8Mt) and the Tropicana pit (5.6Mt). Average grades for the full ore mined was 2.06g/t
Au over this period. Pre-strip mining in the Boston Shaker open pit commenced late in the June 2015 quarter.
The processing plant achieved a throughput of 5.83Mt at an average feed grade of 2.92g/t. Gold recoveries were as expected
at 90.2% for recovered gold of 496,004oz. The focus is now on system improvements to access efficiency opportunities in an
attempt to push mill throughput beyond nameplate capacity.
IGO is pleased to report that its attributable gold production for FY2015 was 148,923oz with 150,836oz of gold sold. Average cash
costs in FY2015 were $568/oz Au produced.
Figure 5: Tropicana production and cost performance over the previous two years
Cash costs ($/oz)
Production guidance
Cash costs guidance
Gold produced
)
z
o
k
(
n
o
i
t
c
u
d
o
r
p
d
o
G
l
140
120
100
80
60
40
20
-
$700
$600
$500
$400
$300
$200
$100
$0
)
u
A
z
o
/
$
(
s
t
s
o
c
h
s
a
C
Sep 13 Dec 13 Mar 14
Jun 14
Sep 14 Dec 14 Mar 15
Jun 15
FY2016 Guidance and Initial Grade Streaming Strategy
The initial grade streaming strategy at Tropicana, which the joint venture partners adopted to deliver early project returns,
is expected to come to an end during the second half of FY2016 (H2 FY2016). The grade streaming strategy has involved an
accelerated mining profile and associated stockpiling strategy. This has resulted in more ore being mined than required for
the processing plant, thereby allowing the higher grade portion to be processed and the progressive build-up of a low grade
stockpile.
As a result of the cessation of grade streaming, gold production in H2 FY2016 will be lower and costs higher, resulting in full year
gold production for FY2016 at Tropicana of 430,000 to 470,000oz (100% basis) at a cash cost of $640 to $710/oz Au produced.
IGO expects its attributable gold production during FY2016 to be in the range of 129,000 to 141,000oz with cash costs plus
royalties being in the range of $640 to $710/oz Au. IGO’s share of exploration expenditure is expected to be approximately $9 –
$11 million and IGO’s share of sustaining capital is expected to be approximately $8 – $10 million.
From H2 FY2016, the average grade processed at Tropicana is expected to be at the average reserve grade of about ~2 g/t Au,
which will be maintained over the next few years.
Annual Report 2015 31
Processing Plant Debottlenecking to 7.0 – 7.5 Mtpa
In parallel with the cessation of grade streaming, AngloGold Ashanti is pursuing opportunities to debottleneck the processing
plant throughput from its nameplate capacity of 5.8Mtpa to a throughput in the range of 7.0 – 7.5Mtpa. The debottlenecking
will involve ongoing work to reduce planned maintenance downtime by improving the design of high wear areas, speeding up
conveyors and pumps and potentially supplementing the existing leach tank capacity.
AngloGold Ashanti has already demonstrated that the processing plant can operate at a rate of 6.6Mtpa over periods of a
month at a time and has achieved throughput rates of about 7Mtpa over shorter periods. Therefore, the goal of 7.0 – 7.5Mtpa on
a sustainable basis is considered highly achievable with minimal incremental capital expenditure.
The higher throughput rates are achievable due to the inherent overdesign of key equipment items such as the primary crusher,
high pressure grinding rolls (HPGR), and ball mill. The HPGR has performed extremely well and is operating at ~60% of capacity
with wear rates on the HPGR surface being about half that expected. AngloGold Ashanti expected the wear life for the HPGR to
be about 7,000 hours, however the first change-out was at 14,000 hours delivering a significant benefit in reduced downtime
and reduced cost.
At these higher processing plant throughput rates and average reserve grade, the sustainable gold production rate is expected
to be about 400,000 oz/year from 2016.
The current low grade stockpile Reserve at Tropicana, which is currently estimated to be approximately 8.4Mt at an average
grade of 1.09 g/t Au, and which is expected to grow to about 10Mt by the end of the grade streaming period, will be processed
at the end of mine life, as contemplated in the BFS.
Conceptual Mining Study
As part of a conceptual mining study, the joint venture partners are evaluating the depth and strike extensions of the Tropicana
mineralised system. The study is also considering opportunities to use larger scale equipment and alternative mining methods,
such as strip mining and in-pit waste disposal. This would potentially deliver substantially lower mining costs than traditional
open cut methods, which were the basis of the mining options in the Havana Deeps study.
If the concept can be demonstrated, mine life would be significantly extended. The joint venture partners expect to carry out
a substantial drilling program, utilising data generated by last year’s 3D seismic survey to test for extensions to the Tropicana,
Boston Shaker and Havana South mineralisation. Subject to positive results from this mine-life extension study and the resource
drilling, it is expected that the work would progress to a feasibility study in 2016.
32 Independence Group NL
Figure 6: Tropicana Gold Mine
N
m
0
0
0
,
4
6
7
,
6
N
m
0
0
0
,
2
6
7
,
6
N
m
0
0
0
,
0
6
7
,
6
Tropicana Gold JV
Outline
Map Coverage
650,000mE
652,000mE
N
Boston Shaker
Tropicana
0
50
kilometres
Tropicana
Extensions
TPRC217D
5.0m @ 5.25 g/t Au
Havana
Havana
North
Havana South/
Crouching Tiger
HSD006
8.0m @ 3.48 g/t Au
Gram x metre
> 120
90-120
50 - 90
20 - 50
10 - 20
5 - 10
2 - 5
Fault
Shear/Dyke
Pit Outlines (as at June 2015)
Drilling June 2015 Qtr
0
500
metres
MGA Zone 51 (GDA94)
N
m
0
0
0
,
4
6
7
,
6
N
m
0
0
0
,
2
6
7
,
6
N
m
0
0
0
,
0
6
7
,
6
Note: See June 2015 Quarterly Report released to ASX on 29 July 2015
650,000mE
652,000mE
Near-Mine Exploration
A 3D seismic program completed during FY2015 identified a number of potential targets down dip and along strike of known
resources. A total of 187 AC holes (7,034m), 49 RC holes (6,822m) and 44 diamond holes (11,009m) was completed in FY2015
targeting down dip extensions to mineralisation at Tropicana, Havana North and Havana South. Better results include 12m @
1.79g/t Au and 5m @ 5.25g/t Au at Havana North, 8m @ 3.48g/t Au at Crouching Tiger and 19m @ 1.19g/t Au in the Tropicana
Extensions area.
Annual Report 2015 33
Gas Pipeline Project
In July 2014, AngloGold Ashanti, on behalf of the joint venture partners, 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. Construction of the 292km long gas pipeline remains on target to
be completed by the end of 2015 with first delivery of gas to Tropicana scheduled for early 2016.
Figure 7: Tropicana Gold Mine – Boston Shaker, Tropicana, Havana and Havana South open pit outlines
HAVANA OPEN PIT
TROPICANA OPEN PIT
June 2014 A$1,249/oz Au
Open Cut Reserve Pit Design
HAVANA SOUTH
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
Image source:
AS PART OF A CONCEPTUAL MINING STUDY, THE JOINT
VENTURE PARTNERS ARE EVALUATING THE DEPTH AND STRIKE
EXTENSIONS OF THE TROPICANA MINERALISED SYSTEM.
34 Independence Group NL
Regional Exploration
Regional exploration continued, identifying and testing numerous prospects throughout FY2015. A systematic strategy of
dropping non-prospective ground has been employed by the joint venture. AngloGold Ashanti is prioritising geological and
structural targets in prospective domains and rock packages to ensure targeted exploration. In total, 774 AC holes (46,514m),
65 RC holes (7,465m) and eight diamond holes (1,312m) were completed in FY2015.
During FY2015, drilling at the Madras prospect, 25km to the south of Tropicana discovered a zone of supergene mineralisation
with a number of highly encouraging intercepts including 15m @ 5.1g/t Au, 25m @ 2.5g/t Au and 17m @ 4.2g/t Au. Encouraging
results were returned at other targets including 4m @ 1.0g/t Au at Scarecrow and 8m @ 0.8g/t Au at Sanpan.
Figure 8: Tropicana Joint Venture tenure
600,000mE
700,000mE
N
Location Map
0
500
kilometres
WA
Tropicana JV
Geraldton
Kalgoorlie
Perth
Tropicana Gold Mine
Madras/Masala
10.4m @ 1.7 g/t Au
m @ 2.1 g/t Au
m @ 1.6 g/t Au
m @ 1.5 g/t Au
m @ 1.1 g/t Au
m @ 1.2 g/t Au
m @ 1.2 g/t Au
m @ 3.5 g/t Au
4.0
2.0
18.0
4.0
6.0
6.0
2.0
(DD)
(DD)
(RC)
(RC)
(RC)
(RC)
(RC)
(RC)
Tropicana JV
Salt Creek JV
SCJV AC Drilling
>6ppb
5ppb
3ppb
2ppb
Geochemical (Au)
Image Legend
Note: Widths quoted are down hole widths.
0
25
kilometres
MGA Zone 51 (GDA94)
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
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
Note: See June 2015 Quarterly Report released to ASX on 29 July 2015
Annual Report 2015 35
LONG OPERATION, WESTERN AUSTRALIA IGO 100%
•
•
•
•
•
•
•
•
Located in Kambalda, 60km south of Kalgoorlie
High grade underground nickel (3.6% average reserve grade)
35-year operating history
Consistent track record
• Production and costs
• Positive reserve call factor
• Replacing production with new reserves
Largely residential (Kalgoorlie and Kambalda)
Owner mining
Toll treat ore at BHPB Concentrator
Concentrate offtake agreement with BHPB
36 Independence Group NL
258,634
tonnes of ore was
mined during FY2015
10,198
nickel tonnes
delivered during 2015
Background
Safety
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.
Since October 2002, IGO has produced
over 2.9Mt of nickel ore, producing
approximately 116,000t of contained
nickel metal. A commitment to
brownfields exploration has seen the
discovery of the McLeay (2005) and
Moran (2008) ore bodies and has
enabled the operation to maintain a
reserve base over time to support a
two to three year life.
Offtake Agreement
IGO 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.
IGO 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. One LTI occurred at Long
Operation during FY2015. During FY2015
the 12-month LTIFR has improved from
11.8 to 3.1 injuries per million hours
worked, a very credible effort by the
Long team.
The occupational health and safety
regime is based on the belief that
safety comes first and 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 is a strong focus
on emergency preparedness, with
the application of risk mitigation and
emergency management procedures
throughout FY2015.
Annual Report 2015 37
Figure 9: Long Operation – Regional geology, tenure, nickel shoots and targets
Long Operation Seismicity
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, IGO 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.
38 Independence Group NL
FY2015 Scorecard
80
60
40
20
0
5
4
3
2
1
0
3,000
2,500
2,000
1,500
1,000
500
0
Ore Mined (kt)
Ore Mined
Guidance
Cash Costs $/lb Ni Payable
Actual
Guidance Midpoint
5
4
3
2
1
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Ni Grade (%)
Ni Grade
Guidance
Development (metres)
900
800
700
600
500
400
300
200
100
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Ni Produced (t)
% of Ore from Outside Reserves
Actual
Guidance Midpoint
60
50
40
30
20
10
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Annual Report 2015 39
FY2015 Production
The Long Operation currently focuses on longhole stoping, supported by twin boom jumbo development. Safety and the
practicalities of the ore body dictate which extraction method is utilised.
The majority of production in FY2015 came from mining of the high grade Moran ore body. Production achieved (Table 1) was
258,634t (FY2014: 268,162t ) at an average grade of 3.94% nickel (FY2014: 4.07%) for 10,198t of contained nickel metal (FY2014:
10,909t), 2% above the upper range of FY2015 guidance.
Payable cash costs for FY2015 including royalties and by-product credits were $4.01/Ib Ni (FY2014: $3.78), which was 6% below
the lower end of FY2015 guidance.
Long Operation – FY2015 Ore Production
Orebody
Ore Tonnes
Ni %
Ni Tonnes
Long (mechanised and hand-held)
Victor South (mechanised)
McLeay (mechanised and hand-held)
Moran (mechanised)
TOTAL
37,955
13,128
31,340
176,211
258,634
3.0
2.1
2.8
4.5
3.9
1,148
275
866
7,909
10,198
Source of Ore
Tonnes as %
14.8
5.0
12.1
68.1
100.0%
Figure 10: Quarterly Mine Production and Cash Cost performance in last eight quarters
Contained Nickel (t)
Cash costs ($/lb Ni)
Production Guidance
Cost Guidance
3,500
3,000
2,500
2,000
1,500
1,000
500
-
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
)
I
N
b
l
/
$
(
s
t
s
o
C
h
s
a
C
)
t
(
l
i
e
k
c
N
d
e
n
a
t
n
o
C
i
Sep 13 Dec 13 Mar 14
Jun 14
Sep 14 Dec 14 Mar 15
Jun 15
Figure 11: Quarterly tonnes mined versus resources depletion at Long in last eight quarters
Mined
Reserve Depletion
s
e
n
n
o
t
e
r
O
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
40 Independence Group NL
Development
During FY2015, a total of 2,318m was advanced by jumbo development, of which 632m was booked as capital development
and 1,686m as operational. FY2015 capital development is focusing on the development of the Moran South exploration drilling
platform, with drilling to be staged as development progresses.
FY2016 Guidance
Production guidance for the Long Operation for FY2016 is between 8,500 and 9,000 tonnes of contained nickel. Payable cash
costs plus royalties for FY2016 are forecast at $3.50 – $4.00/Ib Ni, net of copper credits.
Exploration at the Long Operation over the next 12 months will continue to test for extensions to existing ore bodies at McLeay
South, Moran South and Long North, and for new deposits in the tenement area. $13 – $15 million is expected for exploration
in FY2016 including expenditure on development for exploration access. Sustaining capital expenditure is forecast to be $3 – $5
million during FY2016.
Near Mine Exploration
A combination of diamond underground and surface drilling totalling 104 drill holes for 20,457 metres was undertaken to explore
Long North, Victor South, McLeay, McLeay South and Moran South nickel targets.
McLeay South
At McLeay South, two surface diamond hole wedges for 3,455m were completed targeting mineralisation up to 80m north of
the previously reported intercept (LNSD-063W2 with 4.9m @5.4% Ni). The best results were reported in the following drill holes:
•
•
LNSD-065W3 with 1.1m @ 3.53% Ni from 977m (True width 0.8m)
LNSD-065W4 with 4.2m @ 4.94% Ni from 1011m (True width 3.5m).
Follow up underground diamond drilling is planned from the McLeay South drill drive.
The McLeay South drill drive commenced in the December 2014 quarter. The drill drive will provide a platform for underground
drilling to better define the McLeay South mineralisation. At 30 June 2015, a total of 405m of development, including three
stockpiles, remain to be completed. The first drilling position is expected to be available in FY2016.
Figure 12: Long Operation – Longitudinal Projection showing target areas, TEM conductors and significant intercepts
GOLD FIELDS
ML 15/1515
ROYALTY AREA
MDU-710 - 4.7m @ 5.2% Ni
MDU-718 - 1.9m @ 6.4% Ni
MDU-724 - 3.6m @ 2.9% Ni
MDU-726 - 3.9m @ 7.6% Ni
McLeay
Southern Extension
Target
VICTOR
SOUTH
McLEAY
MORAN
N
500
0
metres
LONG
LSU-510
0.6m @ 10.7% Ni
Moran East Fault
Long North
Target
Moran South
Target
Targets
DHem conductor
Note: See June 2015 Quarterly Report released to ASX on 29 July 2015
Significant drill hole intercepts
(drill intercepts are quoted as down hole width,
not true width)
Note: Widths quoted are down-hole widths.
Annual Report 2015 41
McLeay
At McLeay, 18 underground diamond drill holes for 2,292m were completed to test extensions of the McLeay Surface 6. Drilling
defined an open contact komatiite channel position 60m wide down-dip and 300m down-plunge. Mineralisation extends to the
north and south of current mine development with the best results reported in the following drill holes:
• MDU-722 with 4.5m @ 2.38%Ni from 72m ( True width 2.3m)
• MDU-724 with 3.55m @ 2.87%Ni from 90m (True width 1.2m)
• MDU-726 with 3.9m @ 7.57%Ni from 128m (True width 3.5m).
Moran South
At Moran South, 12 underground diamond drill holes for 3,160m were completed defining a nickel mineralised envelope (>1%
nickel). The mineralisation is defined by six drill intercepts and is 320m x 60m in size. There are also eight coincident DHEM
conductors with the largest conductor being 65m x 45m in size. The Moran South Drill Drive is being developed in the footwall
basalt, to the west of the known mineralisation to develop a platform for further drill testing. Drill testing of the mineralised
zone, as well as step out drilling to the south, has commenced in FY2016.
Figure 13: Long Operation – Longitudinal Projection showing target areas and significant intercepts.
Recent 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
3.6m @ 2.9% Ni
0.6m @ 3.3% Ni
3.9m @ 7.6% Ni
0.9m @ 4.0% Ni
0.7m @ 1.2% Ni
0.6m @ 6.0% Ni
4.5m @ 2.4% Ni
Mine Development
0.4m @ 5.2% Ni
1.9m @ 6.4% Ni
0.5m @ 10.0% Ni
N
0
250
metres
Long Nickel Operation Grid
Victor South
0.5m @ 10.0% Ni
1.1m @ 3.5% Ni
McLeay
South
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
4.2m @ 4.9% Ni
I n t e r p r e t e d C h a n n e l P o s i t i o n
McLeay
1.4m @ 5.4% Ni
Fault
Moran
Proposed
Drill Drives
Resource
Drilling
Exploration
Drilling
Moran
South
2.5m @ 5.4% Ni
0.2m @ 6.0% Ni
0.2m @ 2.9% Ni
5.4m @ 12.4% Ni
0.6m @ 3.3% Ni
0.3m @ 1.7% Ni
L
R
m
0
5
2
-
L
R
m
0
0
5
-
L
R
m
0
5
7
-
L
R
m
0
0
0
,
1
-
546,500mN
546,750mN
547,000mN
547,250mN
547,500mN
Note: See June 2015 Quarterly Report released to ASX on 29 July 2015, March 2015 Quarterly Report released to ASX on
21 April 2015 and September 2014 Quarterly Report released to ASX on 22 September 2014
42 Independence Group NL
JAGUAR OPERATION, WESTERN AUSTRALIA IGO 100%
•
•
•
•
•
•
•
•
Located 300km north of Kalgoorlie
High grade underground Zn/Cu VMS deposit
Significant improvement in operation over last 1-2 years
Fly in – fly out from Perth
• Some drive in drive out from Kalgoorlie
Owner mining
~500 ktpa processing plant
• Producing zinc concentrate and copper concentrate
Export to Asian markets through Geraldton
Significant exploration upside: in mine, near mine and regionally
Annual Report 2015 43
Figure 14: Jaguar Operation tenure, mines and prospects
300,000mE
N
320,000mE
Approx 16km
untested strike length
Location Map
500
kilometres
0
WA
Jaguar
Kalgoorlie
Wilson Creek
Geraldton
Perth
Triumph
Daimler
Charlie Chicks
South Possie
Well
Kent Bore
Approx 6km
untested strike length
0
5
kilometres
MGA Zone 51 (GDA94)
N
m
0
0
0
,
0
6
8
,
6
N
m
0
0
0
,
0
4
8
,
6
N
m
0
0
0
,
0
6
8
,
6
N
m
0
0
0
,
0
4
8
,
6
Teutonic Bore
Jaguar
Bentley
(incl Flying Spur)
Felsic Volcanic
Granitic Gneiss
Monzonite
Mafic/Intermediate package
Ultramafic/mafic package
Ultramafic
Mine / prospect
Prospective Stratigraphy
Tenement Outline
300,000mE
320,000mE
Background
The Jaguar Operation, located 60km north of Leonora in Western Australia (Figure
14), was acquired by IGO in 2011. The Jaguar Operation has significant exploration
potential along 50km of prospective tenure.
The Jaguar 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 was
brought into production as an underground zinc-copper-silver mine in 2007. Bentley
was discovered in 2008 and brought into production in 2011. Ore is processed at the
Jaguar concentrator which produces a copper concentrate 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, the Jaguar underground mine was closed and all mining for FY2015
was sourced from the Bentley underground mine.
44 Independence Group NL
485,302
tonnes of ore was
mined during FY2015
45,000
tonnes of zinc in
concentrate and
7,380
tonnes of copper in
concentrate produced
during FY2015
Figure 15: Jaguar Operation – Bentley Mine – 3D isometric projection showing mineralised envelopes, drilling and planned
development.
N
Bentley Decline
Current Development
Planned Development
~190m to Surface
Reserves
(not including Flying Spur)
Reserve Drilling
in Progress
m
0
5
6
0
100
metres
Flying Spur
Open down-plunge
Safety
Two LTIs occurred during FY2015. The 12-month LTIFR at 30 June 2015 was 3.3 down from 3.4 at 30 June 2014. IGO remains
focused to continually improving its safety performance and targeting zero injuries at the Jaguar Operation. IGO believes that
safety comes first and 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 FY2016, some of our objectives in safety include standardising systems and practices, benchmarking, and ongoing process
improvements.
IGO HAS A HISTORY OF GROWING REVENUE AND CASH FLOW
Annual Report 2015 45
FY2015 Scorecard
Annual zinc and copper production and cash costs better than original FY2015 guidance
Ore Mined and Ore Milled (kt)
Cu Production in Concentrate (t)
Ore Mined
Ore Milled
Guidance
Actual
Guidance Midpoint
3,000
2,500
2,000
1,500
1,000
500
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Grade (%)
Zn Grade
Guidance
Cu Grade
Cu Guidance
Cash Costs $/lb Zn Payable
Actual
Guidance Midpoint
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Zn Production in Concentrate (t)
Development (metres)
Actual
Guidance Midpoint
1,400
1,200
1,000
800
600
400
200
0
150
100
50
0
12.5
10.5
9.0
7.5
6.0
4.5
3.0
1.5
0.0
15,000
12,000
9,000
6,000
3,000
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
46 Independence Group NL
FY2015 Production
A total of 485,302t of ore was mined during FY2015 from the Bentley underground mine.
A total of 488,466t of ore at an average grade of 10.55% Zn, 1.75% Cu and 156g/t Ag (FY2014: 441,867t @ 10.65% Zn, 1.97% Cu
and 145g/t Ag) was milled. Metal production in concentrate was 45,000t of contained zinc metal (FY2014: 41,162), 7,380t of
contained copper metal (FY2014: 7,692t) and 1,876,381oz of contained silver metal (FY2014: 1,657,461oz). Production of both zinc
and copper was in line with improved FY2015 guidance released in February 2015. The payable cash costs plus royalties was
$0.43/Ib payable zinc, net of by-product (FY2014: $0.31/Ib).
Figure 16: Quarterly mine production and cash cost performance at Jaguar in last eight quarters
Zinc (t)
Copper (t)
Cash Costs ($/lb Zn)
Zinc Guidance
Cost Guidance
Copper Guidance
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
)
n
Z
b
l
/
$
(
s
t
s
o
C
h
s
a
C
Sep 13 Dec 13 Mar 14
Jun 14
Sep 14 Dec 14 Mar 15
Jun 15
Figure 17: Quarterly tonnes mined versus Reserve depletion at Jaguar in last eight quarters
Mined
Reserve Depletion
)
t
(
l
a
t
e
M
d
e
n
a
t
n
o
C
i
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
140,000
120,000
100,000
s
e
n
n
o
t
e
r
O
80,000
60,000
40,000
20,000
0
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Annual Report 2015 47
FY2016 Guidance
Production guidance for the Jaguar Operation for FY2016 is for production of 7,500 – 8,500t of copper metal and 35,000 –
40,000t of zinc metal in concentrate. Cash costs for FY2016 are forecast at $0.40 – $0.60/Ib Zn, including royalty and net of
by-product credits.
Sustaining capital, development and exploration expenditure are forecast to be $4 – $5 million, $12 – $14 million and $10 – $12
million respectively during FY2016.
Near Mine Exploration
In April 2015, IGO commenced development of a drill drive in the hanging wall of the Bentley mine to provide a platform to
enable infill drilling to convert the Bentley Inferred Resource to Indicated category. It will also serve as a platform to test for
depth extensions of the Arnage and Flying Spur lenses. The drill drive was completed in June 2015 and drilling commenced in
July 2015.
A detailed structural study of the Bentley Deeps area was completed during FY2015. The study aimed to determine the
structural controls on mineralisation that may provide vectors to potential depth extensions to the Arnage and Flying Spur
lenses. A key outcome of the study was the determination that there are no major late structural dislocations of mineralisation
in the down plunge position. It is interpreted that the highest potential for additional proximal mineralisation lies along the
sub-horizontal early growth/feeder fault in the footwall rhyolite – volcaniclastic interface, immediately down-dip of Arnage. Drill
testing of this target area is planned for FY2016.
Figure 18: Jaguar Operation: Bentley Composite Long Section showing location of Flying Spur and Bentley Deeps drill holes.
Down hole widths are true widths.
L
R
0
5
2
4
L
R
0
0
0
4
L
R
0
5
7
3
L
R
0
0
5
3
L
R
0
5
2
3
Mulsanne
Comet
Arnage
N
0
200m
Jaguar Mine Grid
Looking East
Recent Drilling
Previous Drilling
Planned Drilling
O p e n
Brooklands
10BTDD012
13BUDD139
10BTDD016
13BUDD138
14BUDD016
2.9m @ 22.4% Zn, 0.5% Cu, 257 g/t Ag, 2.6 g/t Au
Flying Spur
n
e
p
O
13BUDD136
13BUDD145
14BUDD014
1.28m @ 22.8% Zn, 1.5% Cu, 356 g/t Ag, 2.4 g/t Au
14BUDD015
1.8m @ 0.5% Zn, 347 g/t Ag, 3.9 g/t Au
14BTDD001W1
6.2m @ 2.6% Zn, 0.1% Cu, 45 g/t Ag, 1.6 g/t Au
13BUDD143
250m
14BUDD012
0.6m @ 8.6% Zn, 63 g/t Ag, 0.1 g/t Au
14BTDD001W1
7.8m @ 10.1% Zn, 2.5% Cu, 99 g/t Ag, 1.1 g/t Au
Open
14BTDD001
0.4m @ 8.1% Zn, 0.2% Cu, 13 g/t Ag, 0.2 g/t Au
51750mN
51500mN
51250mN
51000mN
50750mN
Note: widths quoted are true widths.
Note: North is to the left in the diagram. See ASX release dated 22 September 2014
48 Independence Group NL
Figure 19: Isometric view of Bentley deposit showing location of Arnage and Flying Spur lenses, intercept pierce points and
planned follow-up drilling
Bentley Decline
N
Exploration Drill Drive
Resource
Drilling
Exploration
Drilling
Arnage
Arnage
m
0
5
6
14BTDD001W1 (Flying Spur Horizon)
6.2m @ 2.6% Zn, 0.1% Cu, 45 g/t Ag, 1.6 g/t Au
14BTDD001W1 (Arnage Horizon)
7.8m @ 10.1% Zn, 2.5% Cu, 99 g/t Ag, 1.1g/t Au
Flying Spur
Flying Spur
Exploration
Target Zone
Annual Report 2015 49
Regional Exploration
The Jaguar Project covers 50km of strike prospective for the discovery of Volcanogenic Massive Sulphides (VMS) deposits.
It encompasses three known high grade zinc-copper-silver-gold deposits: Teutonic Bore (inactive), Jaguar (mining recently
completed) and Bentley (in production).
During FY2015 exploration was focused on detailed evaluation of the Triumph Prospect and target generation at Daimler, as
well as the identification of potential hydrothermal signatures along the prospective contact in the less explored southern and
northern extremities of the project tenure.
Exploration during FY2015 has confirmed the discovery of a significant new VMS mineralised system at Triumph in the same
stratigraphic position as the other VMS deposits in the belt. Drilling has intersected Zn-Cu-Ag-Au mineralisation from a
vertical depth of 200m extending over a strike length of approximately 400m with a steep-dip and a shallow south-plunge.
Mineralisation forms a broad, thin, low to moderate grade envelope around a linear, elongate high grade core of variable
thickness (2-25m) and dip extent (40-80m). Mineralisation remains open both up-and down-plunge. Intercepts from within the
higher grade core include:
•
•
•
25.3m (true width) @ 13.0% Zn, 0.7% Cu, 128g/t Ag and 0.3g/t Au from 305.6m in hole 15TRDD010 including:
• 8.0m (true width) @ 14.8% Zn, 1.2% Cu, 150g/t Ag and 0.6g/t Au from 323.0m
•
10.4m (true width) @ 0.1% Zn, 3.0% Cu, 57g/t Ag and 0.2g/t Au from 335.0m.
7.4m (true width) @ 10.1% Zn, 0.1%Cu, 200g/t Ag and 0.4g/t Au from 376.4m in hole 15TRDD007
3m (true width) @ 9.6% Zn, 0.5%Cu, 147g/t Ag and 1.6g/t Au from 287.5m in hole 15TRDD006.
Ongoing drilling at Triumph aims to infill and test the immediate up-and down-plunge extents on an 80m x 40m spacing. It is
anticipated that this work will enable the estimation of an initial Inferred Resource in FY2016.
In late 2014, IGO commenced an internal review of all of the existing drill-holes and data from the Daimler prospect. This included
the re-logging and re-sampling of diamond and RC holes as well as re-interpretation and integration of all various data sets.
The outcome of this work was a new geological model that generated a new target area for massive sulphide mineralisation
at Daimler which included the definition of a basin present between the Daimler stringer mineralisation and the Teutonic Bore
deposit.
Figure 20: Jaguar Operation – Regional Exploration – Triumph Long Section
15TRDD006
6.0m @ 6.6% Zn, 0.4% Cu, 100 g/t Ag, 1.1 g/t Au
Surface
Base of weathering
14TRDD002
15TMDD004
15TRDD008
15TMDD003
15TMDD008
11.2m @ 11.7% Zn, 0.2% Cu, 134g/t Ag, 0.5g/t Au
15TMDD019
14TRDD004
14TRDD010
14TRDD008
15TMDD013
+
15TMDD005
+
+
+15TMDD009
14TRDD006
2.1m @ 17.9% Zn, 0.1% Cu, 1363 g/t Ag, 2.2 g/t Au
14TRDD011+
14TRDD009 +
15TMDD023
14TRDD003
+
15TMDD016
15TRDD011
+
15TRDD011
+
Target Zone
15TMDD012
12TRRC006
+
+
15TMDD001
+
12TRDD011
+
15TMDD010
15TMDD020
15TMDD018
15TMDD017
15TMDD014
5.9m @ 6.6% Zn, 0.2% Cu, 81 g/t Ag, 0.5 g/t Au
15TRDD010
23.6m @ 13.0% Zn, 0.7% Cu, 128 g/t Ag, 0.3 g/t Au
3.3m @ 7.7% Zn, 1.2% Pb, 98 g/t Ag, 0.2 g/t Au
+
12TRDD006
15TRDD012
+14TRDD005
+
12TRDD012
15TRDD007
6.9m @ 10.1% Zn, 0.1% Cu, 201 g/t Ag, 0.4 g/t Au
15TMDD022
15TMDD007
15TMDD021
15TMDD024
14TRDD013 +
JHDD0003W1
+
n
e
p
O
15TMDD006
5.4m @ 9.6% Zn, 0.2% Cu, 79g/t Ag
15TRDD009
3.7m @ 13.5% Zn, 0.5% Cu, 29 g/t Ag
O
p
e
n
JHDD0003W3
+
+14TRDD012
15TMDD015
15TRDD004
+
14TRDD007
JHDD0003
12.8m @ 7.4% Zn, 0.1% Cu, 49 g/t Ag, 0.4 g/t Au
Note: Widths quoted are true width.
0
N
200m
Jaguar Mine Grid
Looking West
Significant Results
Massive Sulphide
Semi-Massive Sulphide
Stringer
Pending Assays
+
No Significant Intercept
(<2m & <2% Zn)
L
R
m
0
0
4
4
L
R
m
0
0
2
4
L
R
m
0
0
0
4
L
R
m
0
0
8
3
L
R
m
0
0
6
3
L
R
m
0
0
4
4
L
R
m
0
0
2
4
L
R
m
0
0
0
4
L
R
m
0
0
8
3
L
R
m
0
0
6
3
61600mN
61800mN
62000mN
62200mN
62400mN
62600mN
62800mN
63000mN
Note: See September 2015 Quarterly Report released to ASX on 29 October 2015
50 Independence Group NL
Three diamond drill-holes were drilled to test the geological model proposed in the Daimler review. The target was a fault
bounded thickened volcaniclastic sediment package that hydrothermal fluids associated with the Daimler stringer mineralisation
may have intersected and replaced with semi-massive massive-sulphide mineralisation. Drilling confirmed the geological model
and intersected zones of semi-massive sulphides which were highly anomalous in VMS pathfinder elements. The levels of
anomalism in each hole suggest a close proximity to massive sulphide mineralisation. Further work on the prospect will be
progressed following a full interpretation of results.
Diamond drilling programs testing geochemical anomalism at the Possie Well and Charlie Chicks prospects towards the south
of the project area, confirmed anomalism but did not identify extensive hydrothermal alteration in the footwall indicative of a
strong VMS system. Aircore drilling was completed in the Kent Bore area at the far south end of the project area to define the
prospective contact position and test auger geochemical anomalism. Several holes returned low-level Zn anomalism. A review
of the prospectivity of these prospects is currently being undertaken.
Late in FY2015 an AC drilling program tested the interpreted prospective contact in the far north of the project area at the Wilson
Creek Prospect. Further work on the prospect will be considered following a full interpretation of results.
Figure 21: Jaguar Operation – Triumph location
300,000mE
N
320,000mE
Approx 16km
untested strike length
Location Map
500
kilometres
0
WA
Jaguar
Kalgoorlie
Wilson Creek
Geraldton
Perth
N
m
0
0
0
,
0
6
8
,
6
N
m
0
0
0
,
0
4
8
,
6
Processing Plant
Jaguar
Bentley
(incl Flying Spur)
Felsic Volcanic
Granitic Gneiss
Monzonite
Mafic/Intermediate package
Ultramafic/mafic package
Ultramafic
Mine / prospect
Prospective Stratigraphy
Tenement Outline
N
m
0
0
0
,
0
6
8
,
6
N
m
0
0
0
,
0
4
8
,
6
m
k
5
Triumph
Daimler
Teutonic Bore
Charlie Chicks
South Possie
Well
Kent Bore
Approx 6km
untested strike length
0
5
kilometres
MGA Zone 51 (GDA94)
300,000mE
320,000mE
Annual Report 2015 51
Figure 22: Jaguar Operation and Darlot Joint Venture – Tenure, regional geology, mines and significant prospect locations
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
300,000mE
350,000mE
Location Map
0
500
kilometres
WA
Darlot JV
Kalgoorlie
Geraldton
Spring Well
Felsic Complex
Perth
Darlot (Au)
Waterloo (Ni)
Thunderbox (Au)
Prospective Contact
Teutonic Bore
Felsic Complex
Lagonda
Triumph
Daimler
Teutonic Bore
Jaguar
Bentley
Charlie Chicks
South Possie
Well
Kent Bore
300,000mE
350,000mE
Darlot JV
(IGO earning 70 - 80% )
Jaguar Project
(IGO 100%)
Mine
Prospect (Base Metals)
Mafic - Felsic Contact
Yilgarn granites
Granodiorite
Ultramafic
Mafic
Felsic Volcanic
0
10
kilometres
MGA Zone 51 (GDA94)
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
Late in FY2015 an AC program comprising 106 holes for 4,968m tested the Jarrah Well and 20 foot prospects. Earlier wide-
spaced AC drilling at these prospects in FY2014 outlined anomalous base metals and VMS pathfinder geochemical responses
associated with black shale horizons. The current program was designed to infill and extend previous drilling to generate targets
for follow-up deeper RC and diamond drill testing.
FY2016 Jaguar Operation Exploration
Drilling in FY2016 will continue to focus on defining high-grade massive zinc-copper sulphides. IGO is expecting to spend
approximately $10 – $12 million on exploration during FY2016 for ongoing work at Flying Spur, Triumph and elsewhere on the
Jaguar concession and on the Darlot JV tenements.
52 Independence Group NL
REGIONAL EXPLORATION
AND DEVELOPMENT
OVERVIEW
Greenfields exploration in FY2015 has
focused on target generation, definition
and drill testing at the Beachcomber
and Salt Creek JV’s, formerly part of the
Tropicana JV, Bryah Basin (VMS) project,
and Lake Mackay (Gold and Base
metals) project. IGO has two projects in
Sweden under a targeting alliance with
Mawson Resources Ltd (nickel-copper).
Target generation activities continued
in Australia, South America and West
Africa using an in-house prospectivity
mapping process incorporating the
Global Lithospheric Architecture
Mapping (GLAM) database. This
initiative highlighted a number of areas
of interest that are being evaluated
and additionally provides a useful
first pass screening process when
reviewing opportunities in these
jurisdictions.
The Company will
continue to investigate
opportunities both in
Australia and overseas.
$11.5million
was spent on greenfields
exploration during FY2015
Annual Report 2015 53
Figure 23: Lake Mackay tenure with aeromagnetic underlay
500,000 mE
N
600,000 mE
N
m
0
0
0
,
0
0
6
,
7
y
r
a
d
n
u
o
B
e
t
a
t
S
A
W
/
T
N
N
m
0
0
0
,
0
0
5
,
7
Rocklands
Tekapo
Dartmouth
Victoria
Cairn
Reeve
Manapouri Sth
Waranga
Eildon
Makoan
Curran
King
Windermere
Albacutya
Taupo Sth
Du Faur
0
25
kilometres
MGA Zone 52 (GDA94)
700,000 mE
Location Map
250
0
kilometres
Darwin
NT
Lake Mackay JV
Alice
Springs
Granted Tenements
Application Tenements
Prospect
Au percentile
100
0
N
m
0
0
0
,
0
0
6
,
7
N
m
0
0
0
,
0
0
5
,
7
500,000 mE
600,000 mE
700,000 mE
Lake Mackay Exploration Alliance (IGO has potential to earn up to 70%)
IGO has an exploration alliance with ABM Resources NL (ASX: ABU) under which it can earn a 70% interest in 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
7,200km2 of exploration licences and 12,130 km2 of exploration licence applications, including recent applications in the Du Faur
area. The area includes sparsely 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 is to initially blanket the project area with systematic high quality, low detection limit surface sampling
to identify the geochemical signature potentially caused by large mineralised systems beneath shallow cover. During FY2015, IGO
collected 5,128 first pass reconnaissance samples and 3,505 infill samples, which together with sampling undertaken in FY2014,
completes the geochemical coverage of the project area.
In the December 2014 quarter, 15 low-level surface sample geochemical anomalies were tested by an AC drilling program
comprising 145 holes for 12,277m. The strongest results from this program came from the Tekapo Prospect and included
intercepts of 8m @ 1.57g/t Au, 22m @ 0.25g/t Au and 16m @ 0.48% copper in 14LMAC058.
Surface sampling in the March 2015 quarter, on EL24915 identified an area of nickel-cobalt anomalism on the margins of a
large gabbro-noritic intrusive body. Rock chip samples returned up to 1.60% nickel, 1.61% cobalt and 38.5% manganese from
a lateritic outcrop while nearby soil sampling produced a 7km x 5km nickel-in-soil anomaly with peak value of 1,300 parts per
million. Gabbro-norites are prospective for magmatic nickel-copper sulphide mineralisation and this potential is currently being
evaluated.
Late in the June 2015 quarter, an AC program comprising approximately 100 holes (8,000m) commenced in the southern part of
the project testing six gold and multi-element surface sample anomalies located on EL24915 and one gold target (Windermere
South) located on EL27780.
54 Independence Group NL
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
700,000mE
725,000mE
750,000mE
Horseshoe Lights
Bryah Basin JV
Bangemall Group
N
Fiddler
Fiddler South
Bullgullan Bore
IGO Active
Mine
Au Mine/Prospect
Cu-Au Mine/Prospect
Padbury Group
Bryah Group
Prospective Stratigraphy
Peak Hill Schist
Granite
DeGrussa
Reefer Well
Henry
Jones
Figure 24: Bryah Basin Joint Venture tenure
675,000mE
Location Map
0
500
kilometres
WA
Bryah JV
Geraldton
Perth
Kalgoorlie
Jubilee
Peak Hill
Harmony
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
Mount Pleasant
Neptune
Halloween
Central Bore
Old Highway
Churchill
Wilgeena
St Crispin
Seaborg
Magnus
0
10
kilometres
MGA Zone 50 (GDA94)
675,000mE
700,000mE
725,000mE
750,000mE
Bryah Basin Joint Venture (IGO Manager and Earning 70% – 80%)
The Company has an exploration alliance with Alchemy Resources Limited (ASX: ALY) under which IGO can earn a 70% – 80%
interest (excluding iron ore) 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 – Karaluni Formation host stratigraphy. The IGO exploration team
has extensive VMS exploration and discovery experience through its Jaguar and Stockman projects and is applying similar
exploration techniques developed at these projects to the exploration of the Bryah Basin JV Project.
A full data review was completed with a specific focus on determining those areas along the prospective contact that had not
been fully or effectively tested by past exploration. Following this review, MLEM and broad spaced AC geochemical programs
were completed across priority areas to identify conductors and geochemical responses potentially representing buried massive
sulphide mineralisation. This work highlighted the Neptune prospect, comprising a strong multi-element (Au-Cu-Ag) geochemical
anomaly with semi-coincident MLEM conductors as a high priority for follow-up.
Late in FY2015, IGO commenced a drilling program comprising five RC holes and three RC/diamond tail holes on five sections
nominally 500m apart to test 2km of strike of the prospective Narracoota basal contact. The diamond drilling component of this
program was part funded by the Western Australian Governments Exploration Incentive Scheme.
Annual Report 2015 55
Salt Creek Joint Venture
During FY2015, IGO entered into a joint venture with AngloGold Ashanti on a series of tenements on the eastern flank of the
Tropicana JV whereby the Company has the right to increase its interest in these tenements from 30% to 70% by spending
$3 million over four years. The Salt Creek Joint Venture tenements cover a significant area of the Salt Creek Complex, a
Proterozoic mafic/ultramafic intrusive complex considered to have potential for magmatic nickel-copper sulphide mineralisation.
The Salt Creek Joint Venture comprises a northern group and southern group of tenements. The southern group contains
a number of discrete magnetic features potentially representing mafic/ultramafic intrusions. These have been tested by a
program of MLEM which has identified a conductor that is planned to be followed-up with Fixed-Loop EM (FLEM) to determine if
a drill test is warranted.
The northern group covers a broad area with a complex magnetic signature, interpreted to represent multiple intrusive events.
Detailed gravity surveying followed by broad scale AC drilling is being undertaken to highlight geochemical signatures indicative
of fertile lithologies. First pass AC drilling, which is not yet completed, has identified a number of areas of elevated nickel-copper
geochemistry that are planned to be followed up with closer spaced AC drilling.
Figure 25: Salt Creek Joint Venture tenure
600,000mE
650,000mE
700,000mE
Tropicana JV
Tenure
Map Coverage
N
Salt Creek JV
Tenure
Tropicana
Operation
Beetle Juice
N
m
0
0
0
,
0
5
7
,
6
N
m
0
0
0
,
0
0
7
,
6
N
m
0
0
0
,
0
5
6
,
6
N
m
0
0
0
,
0
5
7
,
6
N
m
0
0
0
,
0
0
7
,
6
N
m
0
0
0
,
0
5
6
,
6
Salt Creek JV Tenure
Tropicana JV Tenure
IGO Drilling
Anomaly Areas
Tropicana JV Drilling
0
20
kilometres
MGA Zone 51 (GDA94)
600,000mE
650,000mE
700,000mE
56 Independence Group NL
Beachcomber Joint Venture
In the Beachcomber Joint Venture with Anglo Gold Ashanti, IGO had the right to increase its interest from 30% to 70% via
exploration expenditure in a number of tenements previously forming part of the Tropicana JV. IGO has withdrawn from the
Beachcomber Joint Venture and the tenements have since reverted back to the Tropicana JV (IGO: 30%).
Darlot Joint Venture (IGO Manager and Earning 70% – 80%)
IGO is earning a 70% – 80% interest in the Darlot project located approximately 60km north and along-strike from IGO’s Jaguar
Operation, covering similar volcanic stratigraphy to the Jaguar Project. The Darlot Project has strategic value to IGO as any base
metals discoveries are potentially within economically viable trucking distance of its Jaguar processing facility.
Scandinavia Nickel Targets Joint Venture (IGO 51%, can earn up to 75%)
IGO has an exploration alliance with Mawson Resources (TSX: MAW) under which it can earn a 75% interest in a portfolio of
targets in Fennoscandia. The JV partners currently have tenements covering two targets in Sweden, in the Karesuando and
Pessinki areas.
Three Exploration Permits totalling 259km2 cover the Karesuando project. A series of ultramafic to mafic intrusives are located
proximal to an Archaean-Proterozoic boundary zone, a similar setting to a number of major nickel deposits. A nickel deposit
is located about 10km north of the tenure, over the border in Finland, supporting the prospectivity of the region. Previous
exploration has recorded Ni mineralisation in boulders to 0.98% Ni, multi-element (Ni, Cu, Cr, Co, Ag) geochemical anomalies in
peat sampling and very limited modern exploration within the IGO project tenements. A heli-EM survey covering part of the
project area has been planned for H1 FY2016.
The Pessinki project consists of three Exploration Permits covering 134km2. The area has had no documented previous mineral
exploration. The tenements cover part of a major gravity feature, and a coincident multi-element geochemical anomaly in very
broadly spaced regional till sampling by the Swedish Geological Survey (SGU). Outcrop through the area is generally sparse, but
cover depth is likely to be shallow. A small check till sampling has confirmed the original geochemical responses in the areas
tested, and extended the original area of anomalism. The initial target was a large mafic-hosted Ni-Cu sulphide deposit, but
initial geochemical sampling has also suggested there may also be potential for other types of mineralisation. Infill geochemical
and gravity surveys are planned, and have been scheduled to take local stakeholder issues into account. Additional work will be
dependent on results from these exploration programs.
FY2016 Regional Exploration
IGO has budgeted $11 million for greenfields and generative exploration in FY2016. This is in addition to funds committed to
ongoing brownfields and regional exploration on the Tropicana Joint Venture and IGO’s in-mine and regional exploration
programs at Long and Jaguar discussed in previous sections of this Annual Report.
New gold and base metal exploration projects are constantly being evaluated and a budget has been set aside to commence
exploration on one or more of these in the coming 12 months should a suitable opportunity be identified. There will be a
continued strong focus on target generation including ongoing evaluation of the De Beers database as a second stage filter to
our prospectivity mapping program.
Stockman Project, Victoria IGO 100%
The Stockman Project is located in Eastern Victoria, 460km by road north-east of Melbourne. The proposed project is on mining
tenements approximately 19km east-south-east of Benambra in the East Gippsland region. The project encompasses two
copper-zinc-lead-silver-gold VMS deposits, Wilga and Currawong, which were discovered in 1978 and 1979. The larger Currawong
deposit is intact, whilst a core of copper-rich ore from the Wilga deposit was mined and processed on-site between 1992 and
1996.
Annual Report 2015 57
Project Background
The scope of the Stockman 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 10 years. The proposed development includes recommissioning the Wilga underground mine, a new
Currawong underground mine and construction of a process plant and infrastructure.
The existing tailings storage facility will be expanded for use by the project, while water will be sourced from either local on-site
sources or, if required, off-site.
Optimisation Study
During FY2015, IGO completed an optimisation study on the Stockman Project which included an updated Ore Reserve estimate
for the project.
IGO is committed to advancing the Stockman Project through the licensing phase, which is expected to be completed in FY2016.
As a result of the acquisition of Sirius, IGO’s near-term development focus will be the Nova Project. It is anticipated that IGO will
only make a decision on whether or not to proceed with EP&C of the Stockman Project after completing the development of the
Nova Project, and subject to securing the critical licences for the Stockman Project. Any development decision will be made by
IGO in the context of the markets and IGO’s other operations at the relevant time.
Permitting
The Stockman Project’s Environmental Effects Statement (EES) permitting approval from the State of Victoria and the
Commonwealth (under the Federal EPBC Act 1999) was received in the first half of FY2015. Detailed permitting currently in
progress will allow an accurate project timeline to be prepared and the approval conditions to be properly assessed and
integrated into the final investment assessment.
58 Independence Group NL
MINERAL RESOURCES & ORE RESERVES
Table 1: Nova Project Mineral Resource estimate
Nova Project Mineral Resource – 30 June 2015
Classification
Tonnes (Mt)
Ni %
Cu %
Co %
Indicated
Inferred
Sub-total
Indicated
Inferred
Sub-total
Indicated
Inferred
9.1
1.0
10.1
2.4
1.8
4.2
11.5
2.8
GRAND TOTAL
14.3
2.5
1.4
2.4
2.7
1.0
2.0
2.6
1.1
2.3
1.0
0.6
1.0
1.1
0.4
0.8
1.0
0.5
0.9
0.08
0.05
0.08
0.11
0.04
0.08
0.09
0.04
0.08
Contained Metal
Nickel
(kt)
Copper
(kt)
Cobalt
(kt)
230
14
244
64
17
82
294
31
325
94
6
100
26
8
34
120
14
134
7.3
0.5
7.7
2.6
0.7
3.3
9.8
1.2
11.0
Deposit
Nova
Bollinger
Total
Notes:
1.
Sirius Resources NL owned until IGO acquisition transaction completed on 22 September 2015.
2. Mineral Resources are reported above a 0.6% NiEq Cut-off grade. NiEq% = ((Cu % x 0.95) x ($7,655/$16,408)) + (Ni % x 0.89).
3. Resources are inclusive of Reserves.
4. No depletion has occurred during the period.
5. Ore tonnes have been rounded to the nearest hundred thousand tonnes.
6. Contained metal tonnes have been rounded to the nearest thousand tonnes for Ni, Cu and the nearest hundred tonnes for Co.
This may result in slight rounding differences in the total values in the table above.
7.
8.
The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Table 2: Nova Project Ore Reserve estimate
Nova Project Ore Reserve – 30 June 2015
Classification
Probable
Probable
GRAND TOTAL
Tonnes
(Mt)
10.3
2.8
13.1
Ni %
2.1
2.0
2.1
Cu %
0.9
0.8
0.9
Co %
0.07
0.08
0.07
Contained Metal
Nickel
(kt)
Copper
(kt)
Cobalt
(kt)
218
55
273
90
22
112
7.0
2.0
9.0
Deposit
Nova
Bollinger
Notes:
1.
Sirius Resources NL owned until IGO acquisition transaction completed on 22 September 2015.
2. Ore tonnes have been rounded to the nearest hundred thousand tonnes.
3. Contained metal tonnes have been rounded to the nearest thousand tonnes for Ni and Cu.
This may result in slight rounding differences in the total values in the table above.
4. A Net Smelter Return (NSR) cut-off value of $105 per stope ore tonne has been used in the evaluation of the Ore Reserve.
5. No depletion has occurred during the period.
6. Revenue factor inputs (US$): Ni $16,408/t, Cu $7,655/t, Co $26,417/t. Exchange rate AU$1.00 : US$0.90.
7. Metallurgical recoveries – 89% Ni in Ni concentrate with Co; 95% Cu in Cu concentrate with Ag.
8. Sub-level open-stoping with paste backfill is the primary method of mining to be used at Nova.
9. The Ore Reserve has been estimated as part of the Definitive Feasibility Study completed by Sirius in July 2014.
The Probable Ore Reserve underpins the Life of Mine (LOM) plan announced in the ASX release by Sirius on 14 July 2014.
10. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
11.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Annual Report 2015 59
Table 3: Tropicana Gold Mine – 100% basis (IGO Share 30%) – 30 June 2015 Mineral Resources (and 2014 comparison)
Mineral Resource – 30 June 2014
Mineral Resource – 30 June 2015
Classification
Tonnes (Mt)
Au g/t
Contained Au
(Moz)
Tonnes (Mt)
Au g/t
Contained Au
(Moz)
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Measured
Indicated
Inferred
Open Pit
Underground
Stockpiles
Total Tropicana
GRAND TOTAL
Notes:
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
12.8
75.3
5.8
93.9
-
2.4
5.8
8.2
13.6
26.4
77.7
11.7
115.7
2.09
1.85
2.54
1.92
-
3.58
3.14
3.26
0.87
1.46
1.90
2.84
1.89
0.86
4.47
0.48
5.80
-
0.27
0.59
0.86
0.38
1.24
4.74
1.06
7.04
1.
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 ($1,500/oz).
2. The Open Pit Mineral Resources have been estimated using the geostatistical technique of Uniform Conditioning, using a cut-off grade of
0.3g/t Au for all material types.
3. The Havana Deeps Underground Mineral Resource estimate has been reported outside the US$1,550/oz pit optimisation at a cut-off grade of
2.0g/t Au, which was calculated using a gold price of US$1,600/oz (AUD:USD 1.02) ($1,566/oz).
4. The Havana Deeps Underground Mineral Resource was estimated using the geostatistical technique of Ordinary Kriging using average drill
hole intercepts.
5. The Mineral Resource is estimated from the 2012 Mineral Resource model and stockpile volumes at 30 June 2015. Mining as at 30 June 2015
has been removed from the 2015 Resource estimate.
6. Resources are inclusive of Reserves.
7.
8.
The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Table 4: Tropicana Gold Mine – 100% basis (IGO Share 30%) – 30 June 2015 Ore Reserves (and 2014 comparison)
Ore Reserve – 30 June 2014
Ore Reserve – 30 June 2015
Classification
Tonnes (Mt)
Au g/t
Contained Au
(Moz)
Tonnes (Mt)
Au g/t
Contained Au
(Moz)
Proved
Probable
Stockpiles
20.2
29.7
3.3
53.3
2.29
2.02
1.27
2.08
1.49
1.94
0.13
3.56
11.1
29.0
8.4
48.5
2.27
2.05
1.09
1.93
0.81
1.91
0.29
3.01
Open Pit
GRAND TOTAL
Notes:
1.
The Proved and Probable Ore Reserve (30 June 2015) is reported above economic break-even gold cut-off grades for each material type at
nominated gold price US$1,100/oz and exchange rate 0.87 AUD:USD (equivalent to $1,261/oz Au).
2. The 30 June 2015 Reserve estimate is updated using the end of June 2015 surveyed surface topography and end of June 2015 stockpile
balances. The final pit designs, cut-off grades and the Resource model used are unchanged from the December 2014 estimate reported by
AngloGold Ashanti (ASX:AGG) on their website (2014 Mineral Resource and Ore Reserve Report). The cut-off grades reported were 0.5g/t Au
for oxide material and 0.7g/t Au for transitional and fresh material.
3. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
4.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
60 Independence Group NL
Table 5: Long Operation – June 2015 Mineral Resources (and 2014 comparison)
Mineral Resource – 30 June 2014
Mineral Resource – 30 June 2015
Ni %
Contained Ni
Tonnes
Classification
Long
Victor South
McLeay
Moran
Stockpiles
GRAND TOTAL
Notes:
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
Indicated
Inferred
Sub-Total
Measured
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
1,392,000
Classification
Long
Victor South
McLeay
Moran
Stockpiles
GRAND TOTAL
Notes:
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Proved
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
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
1,900
1,700
3,600
200
200
400
1,900
100
2,000
20,200
3,600
23,800
100
Tonnes
65,000
287,000
355,000
707,000
-
147,000
33,000
180,000
63,000
71,000
21,000
155,000
234,000
51,000
52,000
337,000
-
Tonnes
28,000
94,000
122,000
7,000
15,000
22,000
22,000
24,000
46,000
380,000
38,000
418,000
-
Ni %
Contained Ni
Tonnes
5.4
5.1
4.7
4.9
-
2.1
1.5
2.0
6.3
4.9
6.7
5.7
6.6
3.3
3.7
5.7
-
4.8
3,500
14,600
16,700
34,800
-
3,100
500
3,600
4,000
3,500
1,400
8,900
15,500
1,700
1,900
19,100
-
66,400
Ni %
3.6
2.8
3.0
3.0
2.2
2.5
3.5
3.1
3.3
4.0
3.0
3.9
-
3.6
Contained Ni
Tonnes
1,000
2,600
3,600
200
300
500
800
700
1,500
15,200
1,200
16,400
-
22,000
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
3.8
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
73,400
1,379,000
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 as at 30 June 2015 has been removed from the 2015 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 (2012) Competent Persons Statements section of this report.
6.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Table 6: Long Operation – June 2015 Ore Reserves (and 2014 comparison)
Ore Reserve – 30 June 2014
Ore Reserve – 30 June 2015
Ni %
Contained Ni
Tonnes
29,900
608,000
1. Ore Reserves are reported above an economic Ni cut-off value as at 30 June.
2. A Net Smelter Return (NSR) value of $169 per ore tonne has been used in the evaluation of the 2015 Reserve.
3. Mining as at 30 June 2015 has been removed from the 2015 Reserve estimate.
4. Ore tonnes have been rounded to the nearest thousand tonnes and nickel tonnes have been rounded to the nearest hundred tonnes.
5. Revenue factor inputs (US$): Ni $19,678/t, Cu $6,323/t. Exchange rate AU$1.00 : US$0.77.
6. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
7.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Annual Report 2015 61
Table 7: Jaguar Operation – June 2015 Mineral Resources (and 2014 comparison)
Classification
Tonnes
Cu %
Zn % Ag g/t Au g/t
Tonnes
Cu %
Zn % Ag g/t Au g/t
Mineral Resource – 30 June 2014
Mineral Resource – 30 June 2015
Bentley
Measured
706,000
2.2
12.3
Indicated
1,502,000
Inferred
Stockpiles
631,000
16,000
Sub-Total
2,855,000
1.5
1.2
1.8
1.6
8.0
6.1
11.7
8.7
172
123
101
166
130
0.8
0.7
0.6
0.8
0.7
529,000
1,252,000
1,113,000
13,000
2,907,000
2.1
1.6
1.0
1.1
1.5
11.5
7.3
8.8
9.2
8.6
159
118
149
121
138
Teutonic Bore Measured
-
Indicated
946,000
Inferred
608,000
Sub-Total
1,554,000
GRAND TOTAL
4,409,000
Notes:
Mineral Resource – August 2009
Mineral Resource – August 2009
-
1.7
1.4
1.6
1.6
-
3.6
0.7
2.5
6.5
-
65
25
49
102
-
-
-
-
-
-
946,000
608,000
1,554,000
4,461,000
-
1.7
1.4
1.6
1.5
-
3.6
0.7
2.5
6.5
-
65
25
49
107
0.8
0.8
1.1
0.6
0.9
-
-
-
-
-
1. Mineral Resources include massive sulphide and stringer sulphide mineralisation. Massive sulphide Resources are geologically defined;
stringer sulphide Resources for 2015 are reported above a cut-off grade of 0.7% Cu.
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).
3. Mining as at 30 June 2015 has been removed from the 2015 Resource estimate for Bentley. Historic mining has been removed from the
2009 Resource estimate for Teutonic Bore.
4. Resources are inclusive of Reserves.
5. The Teutonic Bore Resource estimate is reported in compliance with JORC Code 2012 reporting guidelines. The model is unchanged from the
2009 model.
6. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
7.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Table 8: Jaguar Operation – June 2015 Ore Reserves (and 2014 comparison)
Classification
Tonnes
Cu %
Zn % Ag g/t Au g/t
Tonnes
Cu %
Zn %
Ag g/t Au g/t
Ore Reserve – 30 June 2014
Ore Reserve – 30 June 2015
Bentley
Proved
Probable
499,000
771,000
Sub-Total
1,270,000
Stockpiles
Proved
16,000
GRAND TOTAL
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
323,000
821,000
1,144,000
13,000
1,157,000
2.0
1.6
1.7
1.1
1.7
10.8
6.3
7.6
9.2
7.6
155
115
126
121
126
0.8
0.7
0.7
0.6
0.7
Notes:
1.
Cut-off values were based on Net Smelter Return (NSR) values of $163 per ore tonne for direct mill feed and $80 per ore tonne for marginal
feed.
2. Revenue factor inputs (US$): Cu $6,417/t, Zn $2,686/t, Ag $18.00/troy oz, Au $1,225/troy oz. Exchange rate AU$1.00 : US$0.77.
3. Metallurgical recoveries – 86% Cu, 57% Ag, and 40% Au in Cu concentrate; 86% Zn and 20% Ag in Zn concentrate.
4. Longitudinal sub-level long hole stoping is the primary method of mining 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 into Reserve.
6. Mining as at 30 June 2015 has been removed from the 2015 Reserve estimate.
7.
8.
The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
62 Independence Group NL
Table 9: Stockman Project – June 2015 Mineral Resources (and 2014 comparison)
Mineral Resource – 30 June 2014
Mineral Resource – 30 June 2015
Tonnes (Mt)
Cu %
Zn % Ag g/t Au g/t
Tonnes (Mt)
Cu %
Zn % Ag g/t Au g/t
-
9.5
0.8
10.3
-
3.0
0.7
3.7
14.0
-
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
-
0.54
0.4
0.54
1.04
-
9.5
0.8
10.3
-
3.0
0.7
3.7
-
2.0
1.4
10.3
-
2.0
3.7
3.7
14.0
14.0
-
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
-
0.54
0.4
0.54
1.04
Currawong
Measured
Indicated
Inferred
Sub-Total
Wilga
Measured
Indicated
Inferred
Sub-Total
GRAND TOTAL
Notes:
1. All Resource tonnes have been rounded to the nearest one hundred thousand tonnes and grade to the nearest 1/10th percentage/gram
per tonne.
2. The Mineral Resource estimate is unchanged since 2012.
3. 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.
4. Au grades for Wilga are all Inferred due to paucity of Au data in historic drilling.
5. Block modelling used ordinary kriging grade interpolation methods within wireframes for all elements and density.
6. Mining as at end of historic mine life (1996) has been removed from the Resource estimate for Wilga.
7. Resources are inclusive of Reserves.
8. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
9.
JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Table 10: Stockman Project – June 2015 Ore Reserves (and 2014 comparison)
Classification
Tonnes (Mt)
Cu %
Zn % Ag g/t Au g/t
Tonnes (Mt)
Cu %
Zn % Ag g/t Au g/t
Ore Reserve – 30 June 2014
Ore Reserve – 30 June 2015
Currawong
Proved
Probable
Sub-Total
Proved
Probable
Sub-Total
Wilga
GRAND TOTAL
Notes:
-
7.3
7.3
-
1.1
1.1
8.4
-
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
-
0.52
0.52
1.12
-
7.4
7.4
-
1.6
1.6
9.0
-
2.1
2.1
-
2.1
2.1
2.1
-
4.3
4.3
-
5.6
5.6
4.5
-
40
40
-
31
31
39
-
1.2
1.2
-
0.52
0.52
1.12
1. All Reserve tonnes have been rounded to the nearest one hundred thousand tonnes and grade to the nearest 1/10th percentage/gram per
tonne.
2. 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 $8.65 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 18% of the Total Ore Reserve.
3. The Ore Reserve was estimated using the Net Smelter Return (NSR) method. The NSR value represents unit revenue per tonne net of all
off-site costs. These off-site costs included road transport, sea transport, treatment charges, refining costs and state royalties. The NSR value
did not include site costs such as mining, geology, processing and site administration. These site costs were applied in the form of an NSR
cut-off, used to guide the limits of a practical and economic mining envelope. For 2015, the Currawong NSR cut-off was $97/t and for Wilga it
was $105/t.
4. Revenue factor inputs (US$): Cu $6,591/t, Zn $2,979/t, Ag $20.17/troy oz, Au $1,146/troy oz. Exchange rate AU$1.00 : US$0.84.
5. Metallurgical recoveries – 81.5% Cu, 40.7% Ag, and 20.4% Au in Cu concentrate; 76.4% Zn and 18.5% Ag in Zn concentrate.
6. Long hole open stoping with cemented paste backfill is the primary method of mining proposed at Stockman.
7. Historic mining at Wilga has been removed from the Reserve estimate.
8. The Ore Reserve estimate includes Inferred and unclassified material in the form of mining dilution estimated to be approximately 780,000t
at 0.31 Cu%, 1.0 Zn%, 5.2g/t Ag and 0.1g/t Au.
9. The Competent Persons statement is incorporated in the JORC Code (2012) Competent Persons Statements section of this report.
10. JORC Code (2012) Table 1 Parameters are in IGO’s ASX release of 28 October 2015.
Annual Report 2015 63
JORC CODE (2012) COMPETENT PERSONS 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 AusIMM. 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.
Nova Project Resources and Reserves
The information that relates to the Nova Project Mineral Resources is based on information compiled by Mr Mark Drabble, a full-time employee
of consultancy group Optiro Pty Ltd and a member of The Australasian Institute of Mining and Metallurgy. Mr Drabble 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 ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the
JORC Code). Mr Drabble is not a security holder of the Company. Mr Drabble consented to the release of the Mineral Resource estimate, based
on his information in the form and context in which it appears.
The information that relates to the Nova Project Ore Reserves is based on information compiled by Mr Shane McLeay who is a Fellow of The
Australasian Institute of Mining and Metallurgy. Mr McLeay is a full-time employee of Entech Pty Ltd and is not a security holder of the Company.
Mr McLeay has sufficient experience which is relevant to style of mineralisation and type of 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. Mr McLeay consented to the
release of the Ore Reserve estimate, 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 is 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 is based on information compiled by Ms Diana Greenup, a full-time employee and security
holder of AngloGold Ashanti Australia Limited, who is a member of The Australasian Institute of Mining and Metallurgy. Ms Greenup 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. Ms Greenup consented to the release of the Ore Reserve
estimate, based on her 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 AusIMM. 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 AusIMM. 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.
The information in this report that relates to the Stockman Ore Reserves is based on information compiled by Mr. Geoff Davidson who is a
Fellow of AusIMM. 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.
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 AusIMM 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
Adopting annual Board approved metal prices and foreign exchange assumptions for use in estimates
In estimating Mineral Resources and Ore Reserves the Competent Person(s) for each estimate is (are) responsible for:
•
• Monitoring the planning, progress, estimation and reporting of Mineral Resources and Ore Reserves to meet IGO standards and timelines
•
•
•
JORC Code compliant reporting
Periodic internal review of process, data, estimates and reports
Periodic external review of 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 AusIMM and/or the Australian Institute of Geoscientists,
and qualify as Competent Persons as defined in the JORC Code.
64 Independence Group NL
FINANCIAL REPORT 2015
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement Of Changes In Equity
Consolidated Statement Of Cash Flows
Notes To The Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information For Listed Public Companies
66
90
91
92
93
95
96
156
157
159
Annual Report 2015 65
Your Directors present
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 2015.
Directors
The following persons held office as Directors of Independence Group NL during the whole of the financial year and up
to the date of this report, unless otherwise noted:
Directors' report
30 June 2015
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Rod Marston
Kelly Ross
Keith Spence
Peter Buck and Keith Spence were appointed as Non-executive Directors on 3 October 2014 and 17 December 2014
respectively and continue in office at the date of this report.
Rod Marston was a Non-executive Director from the beginning of the financial year until his retirement on 20 November
2014.
Kelly Ross was a Non-executive Director from the beginning of the financial year until her retirement on 24 December
2014.
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 Operation, 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 2014 of 5 cents (2013: 1 cent) per
fully paid share
Interim ordinary dividend for the year ended 30 June 2015 of 6 cents (2014: 3 cents)
per fully paid share
2015
$'000
11,713
14,055
25,768
2014
$'000
2,333
7,000
9,333
In addition to the above dividends, since the end of the financial year the Company has announced the establishment of
a final dividend pool of $13,000,000. The record date for this final dividend is expected to be no later than 30 September
2015. The final dividend will be fully franked.
Operating and financial review
Independence Group NL is a company listed on the Australian Securities Exchange (ASX:IGO). The Company has
been listed on the ASX since 17 January 2002, having traded as Independence Gold NL from 17 January 2002 to 19
December 2003.
Independence Group NL
66 Independence Group NL
1
DIRECTORS’ REPORT Operating and financial review (continued)
Directors' report
30 June 2015
The Group currently has operations in the production phase in Western Australia comprising:
•
The Tropicana gold operation (IGO: Non-operator joint venturer; 30% owned) located 330km east northeast of
Kalgoorlie. The operation comprises approximately 3,000km2 of tenements (excluding the Beachcomber and Salt
Creek joint venture tenure) stretching over more than 275km in strike length along the Yilgarn Craton and Fraser
Range Mobile Belt Collision Zone. The Company targeted and pegged the area containing the current Ore
Reserves in 2001. AngloGold Ashanti farmed into the project in 2002, discovering Tropicana, Havana and the
Boston Shaker gold deposits in 2005, 2006 and 2010 respectively. The gold deposits occur over a 5km strike length
with gold mineralisation intersected to a depth of 1km vertically beneath the natural surface. The decision by the
Tropicana Joint Venture partners to develop the Tropicana Gold Mine was announced in November 2010 following
a positive bankable feasibility study assessment. In early 2011, construction commenced with the site access road,
followed by key site infrastructure including an aerodrome, accommodation village, borefields and processing plant.
Mining of the Havana deposit commenced in 2012.
•
Commissioning of the processing plant occurred in 2013, with the first gold poured in September 2013. Nameplate
capacity of the processing plant, 5.8Mtpa, was achieved in March 2014.
Independence Group NL
2
Annual Report 2015 67
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
•
•
The Jaguar zinc, copper and silver mine and processing operations, located 60km north of Leonora in Western
Australia - 100% owned. The Jaguar Operation consists of the Bentley underground mine, the Jaguar processing
facility and administration infrastructure and the accommodation village. These assets are situated on tenure that
hosts a 50km long corridor of prospective stratigraphy.
The prospective corridor has hosted three economically viable volcanogenic massive sulphides ("VMS") ore bodies.
The first deposit discovered was Teutonic Bore in 1976. The Jaguar deposit was discovered in 2002, approximately
4km south of Teutonic Bore and the most recent discovery, the Bentley deposit located another 4km south of
Jaguar, was discovered in 2008.
All ore is processed at the Jaguar concentrator, which produces both 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
for export; and
The Long nickel mine located near Kambalda - 100% owned. The Company acquired the Long Operation in
Kambalda, Western Australia, from BHP Billiton Nickel West Pty Ltd ("BHPB Nickel West") in September 2002. The
mine was successfully re-commissioned in October 2002 and has been operating successfully and safely since
then.
Since recommissioning, and through to 30 June 2015, the Long Operation has mined 2.9 million ore tonnes for
116,215 tonnes of contained metal and has achieved exploration success with the discovery of the McLeay (2005)
and Moran (2008) ore bodies. At the time of purchasing the Long Operation, the Group entered into an offtake
agreement with BHPB Nickel West whereby the ore produced from the mine is delivered to the adjacent BHPB
Nickel West Kambalda Nickel Concentrator for toll treatment and production of nickel concentrate. The current
offtake agreement with BHPB Nickel West expires in February 2019.
Sirius Resources NL transaction - On 25 May 2015, the Company and Sirius Resources NL (“Sirius”) announced the
execution of a binding Scheme Implementation Deed (“SID”) under which the Company will acquire all the issued
capital of Sirius by way of an Acquisition Scheme of Arrangement (the “Acquisition Scheme”).
Under the Acquisition Scheme, Sirius shareholders will receive 0.66 IGO shares and 52 cents cash for each Sirius
share. Sirius shareholders will also participate pro-rata in the demerger of the Polar Bear and Scandinavian exploration
assets.
The transaction is intended to create a leading diversified Australian mining company with a strong portfolio of
high-margin/long-life mining assets, across a range of base and precious metals. The combination of the two companies
has a strategic rationale of generating significant value for the shareholders of both companies. A successful acquisition
will bring the world-class Nova Project
into the IGO Group portfolio. The Boards of both IGO and Sirius have
unanimously recommended that all Sirius shareholders vote in favour of the Acquisition Scheme.
The transaction remains on track with Sirius shareholders expected to approve the scheme in early September 2015
and the Company expected to complete the issue of the Share Scheme consideration in mid-September 2015.
The Group is also an active explorer for base and precious metals within and outside of Australia. Active search areas
within Australia include:
•
•
Tropicana (Havana) Near-mine Exploration - A total of 187 aircore ("AC") holes (7,034m), 49 reverse circulation
("RC") holes (6,822m) and 44 diamond holes (11,009) were completed in FY2015 targeting down dip extensions to
mineralisation at Tropicana, Havana North and Havana South. Better results include 12m @ 1.79g/t Au and 5m @
5.25g/t Au at Havana North, 8m @ 3.48g/t Au at Crouching Tiger and 19m @ 1.19g/t in the Tropicana Extensions
area.
A high resolution 3D seismic survey was completed over the immediate down dip projection of the Tropicana ore
body. This work has highlighted a number of high priority structural targets which are currently being drill tested.
Regional exploration continues to identify and test numerous prospects. In total 774 AC holes (46,514m), 65 RC
holes (7,465m) and eight diamond holes (1,312m) were completed. Encouraging gold assay results were returned
from several prospects. The most significant came from Madras, located 25km south of Tropicana. Drilling will
continue throughout calendar 2015 to define the extent of mineralisation at Madras.
Independence Group NL
68 Independence Group NL
3
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
•
Beachcomber and Salt Creek Joint Ventures - During FY2015, the Company entered into two joint ventures with
AngloGold Ashanti whereby it has the right to increase its interest in certain tenements from 30% to 70% by
spending an aggregate of $6 million over 4 years. The Beachcomber JV comprises five tenements at the southern
end of the Tropicana JV footprint covering approximately 140km2 and the Salt Creek JV covers eleven tenements
on the eastern margin of the Tropicana JV footprint covering approximately 2,300km2. The Company withdrew from
the Beachcomber JV on 25 June 2015 and the tenements reverted back to the Tropicana JV.
The Salt Creek JV is targeting mafic intrusive related magmatic nickel-copper sulphides, which is a similar style of
mineralisation to Sirius' Nova-Bollinger. The initial exploration work programme will continue through the remainder
of calendar 2015.
•
Jaguar Operation Exploration - Exploration activities at the Jaguar Operation focused on in-mine, near-mine and
regional exploration.
The Jaguar Operation is currently focusing its in-mine exploration activity on seeking additional resources at depth
at Bentley and near-processing plant deposits. At Bentley work is also focused on in-fill drilling on the Arnage and
Flying Spur lens in order to enhance resource definition with a view to achieving incremental increases in mine life
at the Bentley deposit.
In terms of regional exploration, the Jaguar Operation covers 50km of strike prospective for the discovery of VMS
deposits. It encompasses three known high grade zinc-copper-silver-gold deposits: Teutonic Bore (inactive), Jaguar
(mining completed in FY2014) and Bentley (in production). Ongoing exploration has identified a number of high
priority areas and exploration activities during FY2015 have been focused on the Triumph Prospect, approximately
5km north of the Jaguar processing plant. Drilling at Triumph has identified disseminated, stringer, semi-massive
and massive base metal sulphide mineralisation with a shallow southerly plunge which extends over a strike of at
least 450m. Drilling to define the continuity and extent of mineralisation is ongoing.
•
•
•
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. The Company is earning a 70%-80% interest in the project which
covers some 740km2 of tenure approximately 60km north and along-strike from the Group’s Jaguar Operation. The
Darlot Project, which covers similar volcanic stratigraphy to the Jaguar Operation, has strategic value to the Group
as any base metals discoveries are potentially within economically viable trucking distance of its Jaguar processing
facility. Late in FY2015, an aircore program comprising 106 holes for 4,968m tested the Jarrah Well and 20ft
prospects. Earlier wide-spaced aircore drilling at these prospects last year outlined anomalous base metals and
VMS pathfinder geochemical responses associated with black shale horizons. The current program was designed
to infill and extend previous drilling to generate targets for follow-up deeper RC and diamond drill testing. Results
are in the process of being evaluated.
Long Operation Exploration - During the financial year, exploration activities at the Long Operation have focused on
in-mine exploration with a view to growing the resource base and extending mine life. The Long Operation is
currently focusing its in-mine exploration activity on Moran South and McLeay South.
Stockman Project - 100% owned - The Stockman Project is located in Eastern Victoria, 460km by road north-east of
Melbourne. The proposed project is on mining tenements approximately 19km east-south-east of Benambra in the
East Gippsland region. The project encompasses two copper-zinc-lead-silver-gold VMS deposits, Wilga and
Currawong, which were discovered in 1978 and 1979. The larger Currawong deposit is intact, whilst a core of
copper-rich ore from the Wilga deposit was mined and processed onsite between 1992 and 1996.
The scope of the Stockman 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 ten years. The development includes recommissioning the Wilga
underground mine, a new Currawong underground mine and construction of a process plant and infrastructure.
The existing tailings storage facility will be expanded for use by the project, whilst water will be sourced from either
local onsite sources or, if required, off-site.
On 28 November 2014, the Company announced the results of an optimisation study on the Stockman Project that,
among other things, included an updated Ore Reserve estimate for the project.
This review should be read in conjunction with the financial statements and the accompanying notes.
Independence Group NL
4
Annual Report 2015 69
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
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, and including the current financial year,
the Company has returned to shareholders in excess of $119 million by way of a combination of $110.0 million fully
franked dividends and a $9.7 million share buy back in 2009. The Company currently has 235,580,187 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 $121.3 million (2014: $57.0 million).
Cash flows from operating activities achieved a record for the Group of $201.7 million (an increase of 57% during the
year). Contributing to this result was a full year contribution of gold sales from Tropicana as against nine months
production in 2014. Segment contribution increases arose from both Tropicana (37%) and the Jaguar Operations (54%)
with a reduction of 4% from the Long Operation. Payments for exploration expenditure fell by 15% to $25.7 million.
Cash flows from investing activities fell 12% during the year. This fall was primarily due to higher construction and
development spend at Tropicana during its final pre-operating financial year; development capital expenditure fell by
73% to $44.1 million. Other movements comprised a $7.7 million increase in property plant and equipment expenditure
to $16.6 million (primarily at Jaguar), and the acquisition of approximately 33.8 million shares in Gold Road Resources
Limited (ASX: GOR) for a total consideration of $13.1 million in the second half of FY2015.
Cash flows from financing activities during the financial year rose significantly from “neutral” in 2014 to an outflow of
$54.4 million in FY2015. Significant movements include the repayment of $25.0 million in debt from the Company’s
corporate finance facility with National Australia Bank ($47.0 million debt was drawn from the facility in FY2014), and
higher dividends paid of $25.8 million (2014: $9.3 million). The finance facility matures in December 2015 and as at 30
June 2015 was fully repaid. The facility currently is undrawn. On 16 July 2015, the Company entered into a new
syndicated facility agreement ("Debt Agreement') with National Australia Bank Limited, Australia and New Zealand
Banking Group Limited and Commonwealth Bank of Australia Limited for a $550 million committed term finance facility
on an unsecured basis. The Debt Agreement comprises a five year $350 million amortising term loan facility that will be
used to refinance Sirius' existing Nova Project finance facility, and provide funds for the continued development,
construction and operation of the Nova Project; and a five year $200 million revolving loan facility that will be used to
partially fund the payment of the cash component of the Acquisition Scheme and transaction costs, in addition to
providing funding for general corporate purposes.
During discussions of the operating results of its business, the Group’s Board and management monitor 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:
Independence Group NL
70 Independence Group NL
5
DIRECTORS’ REPORT Operating and financial review (continued)
Directors' report
30 June 2015
Net profit after tax ("NPAT") for the year of $76.8 million outperformed the 2014 financial year NPAT of $48.6 million.
The chart below outlines the key drivers of the results for FY2015 compared to the corresponding year. 90% of the
volume variance is driven by a full year’s gold production from Tropicana. In addition, zinc contributed 21%, with falls in
output
from Long (10%). The cost of production increase and depreciation and amortisation charge also relates
primarily to Tropicana’s full year of operations.
During the year, the Group adopted a voluntary change in accounting policy whereby exploration and evaluation
expenditure that is incurred is capitalised only if it is anticipated that future economic benefits are more likely than not to
be generated as a result of the expenditures. Otherwise, exploration and evaluation expenditure will be expensed. The
change in accounting policy has been adopted retrospectively, and hence prior year’s reported figures in this financial
report may differ from figures reported in last years’ financial report.
Independence Group NL
6
Annual Report 2015 71
DIRECTORS’ REPORT Operating and financial review (continued)
Below is a reconciliation of Underlying EBITDA to NPAT for FY2015:
Directors' report
30 June 2015
Depreciation and amortisation expense (“D&A”) of $98.6 million includes $55.9 million relating to Tropicana, $21.9
million to Long Operations, $19.7 million to Jaguar Operations and the balance to corporate assets. Jaguar’s D&A
increased by 108% during the year, primarily as a result of increased amortisation from a higher proportion of ore
sourced from reserves compared to the previous year, together with additional depreciation charges following the
replenishment of the underground haulage and production fleet.
Operations
Tropicana Gold Project
The table below outlines the key results and operational statistics during the current and prior year.
Tropicana Gold Mine
Total revenue
Segment operating profit before tax
Total segment assets
Total segment liabilities
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)
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
$'000
$'000
$'000
'000 wmt
'000 wmt
'000 wmt
g/t
'000 wmt
g/t
%
Ounces
Ounces
Ounces
$ per ounce produced
$ per ounce sold
2015
218,966
76,117
645,071
31,748
10,763
1,601
42,761
2.06
5,826
2.92
90.2
492,780
496,413
150,836
568
795
2014*
137,918
48,332
440,585
29,705
5,721
1,088
25,251
2.22
4,043
3.02
89.4
350,743
348,371
100,167
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.
Independence Group NL
72 Independence Group NL
7
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
Operations(continued)
TropicanaGoldProject(continued)
Total revenue increased by 59% as a result of a full year’s production, post commissioning. Total segment assets
increased by 46% due to ongoing contributions by the Company to the operation by way of cash calls paid to the joint
venture manager. Cash calls paid during the year totalled $142.5 million (2014: $110.2 million). Another significant
contribution to total assets includes capitalised inventories (increase of 97% to $43.8 million). This is the outcome of the
current mining strategy to mine and process higher grade ore in the initial three years of production. At year end, the
capitalised run of mine stockpile comprised ore > 0.6g/t and totalled 8.9 million tonnes grading an average of 1.09g/t
(2014: 3.2 million tonnes at 1.22g/t).
Based on current ore reserves, the mine currently has a life of approximately eight years.
LongOperation
Independence Long Pty Ltd has entered into a long term ore tolling agreement with BHPB Nickel West 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 10,198 tonnes of contained nickel during the year at payable cash costs including royalties (net of
copper credits) of $4.01 per pound (2014: $3.78 per pound).
The Long Operation constitutes an operating segment as disclosed in the Financial Report. During the year a total of
258,634 tonnes of ore was mined, sourced from Moran - 68%, Long Lower - 15%, McLeay - 12% and Victor South - 5%.
The majority of ore continued to be mined from long hole stoping (70%) with lesser amounts coming from other
mechanised mining methods and non-mechanised methods.
Total segment revenue decreased by 6% during 2015; a result which is volume driven with 6% lower payable nickel
sold. Net operating profit before income tax fell 12% during 2015 due to lower nickel tonnage sold together with 6%
higher cash costs during the year.
Based on current ore reserves, the mine currently has a life of approximately two and a half years.
The table below highlights the key results and operational statistics during the current and prior year.
Long Nickel Mine
Total revenue
Segment operating profit before tax
Total segment assets
Total segment liabilities
Ore mined
Nickel grade
Copper grade
Tonnes milled
Nickel delivered
Copper delivered
Metal payable (IGO share)
- Nickel
- Copper
Ni cash costs and royalties
* Cash costs include credits for copper
$'000
$'000
$'000
$'000
Tonnes
Head%
Head%
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
A$payablemetalperpound
2015
111,423
32,180
92,546
36,180
258,634
3.94
0.28
258,634
10,198
723
6,151
293
4.01
2014
118,859
37,233
111,854
29,960
268,162
4.07
0.29
268,162
10,909
769
6,589
312
3.78
Independence Group NL
8
Annual Report 2015 73
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
Operations(continued)
JaguarOperation
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 located 6km south of the Jaguar processing facility which is used to beneficiate the ore mined 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.
In addition, both near mine and greenfields exploration targets continue to be investigated for potential to add mine life
to the operation. Two potential areas are projects known as the ‘Bentley deeps', beneath the existing Bentley
underground mine, and Triumph, located 6km north of the Jaguar processing facility. Both projects are being targeted in
the 2016 financial year for drilling, once completed they will be further evaluated.
As it did last financial year, the performance of the Bentley underground mine continued to outperform the previous
year; ore mined increased by 13% and ore milled increased by 11%. Copper grade fell 10% to 1.8% while zinc grades
mined were constant at 10.6%. This variation in run of mine grades is an outcome of mine scheduling and is not as a
result of resource reconciliation as both reserve and reserves are reconciling well. Similar to nickel sales, copper and
zinc concentrate sales are paid on a quotational period that varies between one and four months, with generally 90% of
the sales receipt payable by the customer shortly after shipment. The one month or four month average LME copper
and zinc price ultimately determines the final price paid by the customer.
Based on current ore reserves, the Bentley underground mine is currently anticipated to have a life of approximately two
and a half years.
The table below outlines the key results and operational statistics during the current and prior year.
Jaguar Operation
Total revenue
Segment operating profit before tax
Total segment assets
Total segment liabilities
Ore mined
Copper grade
Zinc grade
Silver grade
Gold grade
Ore milled
Metal in concentrate
- Copper
- Zinc
- Silver
- Gold
Metal payable (IGO share)
- Copper
- Zinc
- Silver
- Gold
Zinc cash costs and royalties*
$'000
$'000
$'000
$'000
Tonnes
%
%
g/t
g/t
Tonnes
%
Tonnes
Tonnes
Ounces
Ounces
Tonnes
Tonnes
Ounces
Ounces
A$/lbTotalZnMetalProduced
2015
164,016
47,665
134,569
24,374
485,302
1.8
10.6
156
0.7
488,466
7,380
44,999
1,876,384
4,439
7,090
37,551
1,293,858
4,110
0.43
2014
141,795
42,703
102,828
30,535
431,362
2.0
10.6
145
0.7
441,867
7,692
41,162
1,657,461
4,834
7,396
34,258
1,233,972
4,467
0.31
*Cash costs include credits for copper, silver and gold
The Jaguar Operation also constitutes an operating segment. Segment revenue increased by 16% during FY2015. The
main drivers of this result were an increase in zinc revenue of 48%, due to a combination of 30% higher payable zinc
sold and 18% higher realised prices. Copper revenue decreased 10% due to lower realised prices.
Independence Group NL
74 Independence Group NL
9
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
ExternalfactorsaffectingtheGroup'sresults
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
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, the average cash seller and settlement LME prices of zinc, copper and
nickel decreased by 10%, 18% and 21% respectively between July 2014 and June 2015. Between July 2013 and June
2014, these metals increased (decreased) by 16%, (1%) and 0% 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.
Exchangerates
The Group is exposed to exchange rate risk on sales denominated in United States dollars ("USD") whilst its Australian
dollar ("AUD") functional currency is the currency of payment to the majority of its suppliers and employees. The
monthly average AUD/USD currency pair weakened from 0.9392 for the month of July 2014 to 0.7680 in June 2015. A
weaker AUD implies a higher 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.
Downstreamprocessingmarkets
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.
Interestrates
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.
NativeTitle
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
judgement 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. An appeal on this determination has been heard by the Full Bench of
the Federal Court and the parties are awaiting release of the judgement. The Company will continue to monitor the
matter, in conjunction with other affected parties.
Otherexternalfactorsandrisks
• Operational performance including uncertain mine grades, seismicity ground support conditions, grade control, in fill
resource drilling, mill performance and experience of the workforce;
•
•
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.
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;
•
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;
•
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;
Independence Group NL
10
Annual Report 2015 75
DIRECTORS’ REPORT Directors' report
30 June 2015
Operating and financial review (continued)
ExternalfactorsaffectingtheGroup'sresults(continued)
Otherexternalfactorsandrisks(continued)
•
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 4 and 5 in the Financial Report.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
On 25 May 2015, the Company and Sirius announced the execution of a binding SID under which the Company will
acquire all the issued capital of Sirius by way of an Acquisition Scheme. In addition, Sirius will also undertake a
demerger of its Polar Bear and Scandinavian exploration assets via a Demerger Scheme of Arrangement ("Demerger
Scheme"), whereby the assets will be held in a new listed vehicle called S2 Resources Ltd.
The transaction will be implemented via two inter-conditional Schemes of Arrangement (the Acquisition Scheme and the
Demerger Scheme), and a capital reduction to effect the demerger. In exchange for their shares, Sirius shareholders
will receive:
• 0.66 Independence Group shares for each Sirius share held;
• Cash consideration of 52 cents cash for each Sirius share held; and
• Circa one S2 share for every 2.5 Sirius shares held.
The Federal Court of Australia has given orders to Sirius approving the issue of the Acquisition Scheme and Demerger
Scheme Booklets in relation to the proposed transaction. These Booklets were provided to Sirius shareholders in early
August 2015, and will be followed by meetings of shareholders of Sirius to approve the Schemes to be held on 3
September 2015.
The Board of Sirius have unanimously recommended that, in the absence of a superior proposal, all Sirius shareholders
vote in favour of the Acquisition Scheme.
There have been no other significant changes in the state of affairs of the Group during the year.
Events since the end of the financial year
On 21 August 2015, the Company announced the establishment of a final dividend pool for the year ended 30 June
2015 of $13,000,000. The record date for this final dividend is expected to be no later than 30 September 2015. The
dividend will be fully franked.
In July 2015, the Company entered into a syndicated facility agreement ("Debt Agreement") with National Australia
Bank Limited, Australia and New Zealand Banking Group Limited and Commonwealth Bank of Australia Limited for a
$550 million unsecured committed term finance facility. The Debt Agreement comprises:
• A five year $350 million amortising term loan facility that will be used to refinance the existing Nova Project finance
facility, and provide funds for the continued development, construction and operation of the Nova Project; and
• A five year $200 million revolving loan facility that will be used to partially fund the payment of the cash component
of the Acquisition Scheme for Sirius (as discussed above) and transaction costs, in addition to providing funding for
general corporate purposes.
The Debt Agreement has been entered into to assist the Company in meeting its obligations under the relevant
acquisition documents that pertain to the acquisition of Sirius by the Company. The Debt Agreement is intended to
provide the Company with funds required for the ongoing construction and development of Sirius’ Nova Project, as well
as general corporate purposes. The Debt Agreement is conditional upon the successful acquisition of Sirius, to be
determined by a court hearing for approval of the Acquisition Scheme in early September 2015.
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.
Independence Group NL
76 Independence Group NL
11
DIRECTORS’ REPORT Directors' report
30 June 2015
Environmental regulation
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 - Chairman and Independent Non-executive Director.
Qualifications
BEng (Mining) (Hons), MAusIMM
Tenure
Board member since March 2009 and Chairman since July 2011.
Special responsibilities
Mr Bilbe is a member of the Remuneration, Audit and Sustainability and Risk Committees.
Other directorships
Mr Bilbe is currently a director of Northern Iron Limited. He was also a director of Sihayo
Gold Limited until November 2013.
Peter Bradford - Managing Director and Chief Executive Officer.
Qualifications
BAppSc (Extractive Metallurgy), FAusIMM, MSMME
Tenure
Managing Director and Board member since March 2014.
Special responsibilities
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 Sustainability and Risk Committee.
Other directorships
Mr Bradford was previously a director of PMI Gold Corporation until February 2014.
Peter Buck - Independent Non-executive Director from 3 October 2014.
Qualifications
M.Sc. (Geology), M.AusIMM
Tenure
Board member since his appointment on 3 October 2014.
Special responsibilities
Mr Buck is a member of the Remuneration, Audit and Sustainability and Risk Committees.
Other directorships
Mr Buck is currently a non-executive director of Antipa Minerals Ltd.
Geoffrey Clifford - Independent Non-executive Director.
Qualifications
BBus, FCPA, FCIS, FAICD
Tenure
Board member since 2012.
Special responsibilities
Mr Clifford is a member of the Remuneration, Audit, Sustainability and Risk Committees.
Other directorships
Mr Clifford is currently a director of Saracen Mineral Holdings Limited (from 1 October
2013).
Independence Group NL
12
Annual Report 2015 77
DIRECTORS’ REPORT Directors' report
30 June 2015
Information on directors (continued)
Keith Spence - Independent Non-executive Director from 17 December 2014.
Qualifications
BSc (Geophysics) (Hons)
Tenure
Board member since his appointment on 17 December 2014.
Special responsibilities
Mr Spence is a member of
Committees.
the Remuneration, Audit and Sustainability and Risk
Other directorships
Mr Spence is currently the non-executive Chairman of Geodynamics Limited and Base
Resources Limited and a non-executive director of Oil Search Limited. Mr Spence was also
on the board of Clough Limited from August 2008 (and Chairman from 2010) until
December 2013.
Company secretary
Mr Tony Walsh was appointed to the position of Company secretary in 2013. Mr Walsh, who is also employed as the
Company’s General Manager, Corporate, has over 25 years’ experience in dealing with listed companies, ASX, ASIC
and corporate transactions. Mr Walsh is currently a member of the West Australian State Council of Chartered
Secretaries Australia and is also a Fellow of Chartered Secretaries Australia and the Institute of Chartered Accountants
in 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 2015, and the numbers of meetings attended by each Director were:
Full meetings
of directors
A
16
16
12
16
6
7
9
B
16
16
12
16
6
7
9
Remuneration
Committee
B
A
1
1
**
**
-
1
1
**
-
-
1
1
**
-
Meetings of committees
Audit Committee
Sustainability and
Risk Committee
A
3
**
3
4
1
1
3
B
3
**
3
4
1
1
3
A
3
3
2
3
1
1
2
B
3
3
2
3
1
1
2
Peter Bilbe
Peter Bradford
Peter Buck (appointed 3
October 2014)
Geoffrey Clifford
Rod Marston (retired 20
November 2014)
Kelly Ross (retired 24
December 2014)
Keith Spence (appointed
17 December 2014)
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
** = Not a member of the relevant committee
Directors 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:
Ordinary fully paid shares
Share rights
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Keith Spence
Total
20,000
350,480
4,700
-
-
375,180
-
175,365
-
-
-
175,365
Independence Group NL
78 Independence Group NL
13
DIRECTORS’ REPORT Remuneration report
The Directors present the Independence Group NL 2015 remuneration report, outlining key aspects of the Company's
remuneration policy and framework, and remuneration awarded this year.
Directors' report
30 June 2015
The report is structured as follows:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Key management personnel (KMP) covered in this report
Remuneration policy and link to performance
Elements of remuneration
Link between remuneration and performance
Remuneration expenses for executive KMP
Contractual arrangements for executive KMP
Non-executive director arrangements
Other statutory information
(a) Keymanagement personnelcoveredinthisreport
Non-executiveandexecutiveDirectors(seepages12to13fordetailsabouteachDirector)
Peter Bilbe
Peter Bradford
Peter Buck (from 3 October 2014)
Geoffrey Clifford
Rod Marston (until 20 November 2014)
Kelly Ross (until 24 December 2014)
Keith Spence (from 17 December 2014)
Otherkeymanagement personnel
Name
Matt Dusci (from 27 July 2014)
Brett Hartmann
Scott Steinkrug
Tony Walsh
Keith Ashby (from 7 April 2015)
Sam Retallack
Position
General Manager, New Business
General Manager, Operations
Chief Financial Officer
Company Secretary and General Manager, Corporate
Sustainability Manager
Human Resources Manager
Following a review of the organisational structure, and to coincide with the 2015 financial year budget, a number of
changes were made in early July 2014, effective 1 July 2014. This included changes to the structure of the Exploration
Department and the appointment of Matt Dusci to the position of General Manager, New Business. As a result of this
change in structure, Tim Kennedy, Rodney Jacobs and Andrew Eddowes were no longer considered KMP's, effective 1
July 2014. Further to this, Sam Retallack also became a direct report to the Managing Director and became a KMP
effective 1 July 2014.
(b) Remunerationpolicyandlinktoperformance
The Company's Remuneration Committee ("Committee") is made up of independent non-executive directors. The
Committee reviews and determines the Company's remuneration policy and structure annually to ensure it remains
aligned to business needs, and meets the Company's remuneration principles. From time to time, the Committee also
engages external remuneration consultants to assist with this review, see page 23 for further information. In particular,
the Board aims to ensure that remuneration practices are:
•
•
•
competitive and reasonable, enabling the company to attract and retain key talent;
aligned to the company's strategic and business objectives and the creation of shareholder value; and
transparent and easily understood.
The remuneration framework of the Group is summarised as follows:
Independence Group NL
14
Annual Report 2015 79
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(b) Remunerationpolicyandlinktoperformance(continued)
Element
Purpose
Total fixed remuneration
(TFR)
STI
LTI
Provides competitive
market salary,
including
superannuation
Reward for in-year
performance
Alignment to
long-term
shareholder value
(c) Elementsofremuneration
Performance
metrics
Nil
Potential value
Positioned at median
market rate
Changes for FY
2016
Reviewed in line with
market positioning
annually
Individual key
performance
indicators aligned to
the Group's overall
Strategic Plan
3 year relative TSR
performance
CEO: 40% of TFR
Executives: 15-25%
of TFR
CEO: 100% of TFR
Executives: 20-55%
of TFR
Nil
Nil
(i) Total fixed remuneration
Executives receive their total fixed remuneration ("TFR") as cash and statutory superannuation. TFR is reviewed
annually, or on promotion. It is benchmarked against market data for comparable roles in companies in a similar
industry and with similar market capitalisation. The Committee aims to position executives at or near the median, with
flexibility to take into account capability, experience, value to the organisation and performance of the individual.
(ii) Short-term incentives
The short term incentive ("STI") aims to align individual's performance with achieving the overall Strategic Plan of the
Group. Key performance indicators are set annually for executives and comprise a combination of the following metrics:
Sustainability;
People and performance;
Processes and outputs;
Company growth; and
•
•
•
•
• Quality and communications.
The Managing Director can currently earn 40% of his TFR as an STI, while all other executives can earn between
15-25% of their TFR as an STI.
The STI's are awarded in cash following assessment of actual performance against the performance metrics.
The payment of STI's is subject to Board approval. The Board has the discretion to adjust remuneration outcomes up or
down to prevent any inappropriate reward outcomes, including reducing (down to zero, if appropriate) any STI.
(iii) Long-term incentives
The long term incentive ("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 that 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.
The Managing Director has the opportunity to earn 100% of his TFR as an LTI. All other executives have the opportunity
to earn between 20-55% of their TFR as an LTI.
Sharerightsgrantedafter1July2014
Vesting of the performance rights granted to executive directors and executives after 1 July 2014 is based on a total
shareholder return ("TSR") scorecard. The TSR scorecard for the three year measurement period will be determined
based on a percentile ranking of the Company's TSR results relative to the TSR of each of the companies in the peer
group over the same three year measurement period.
Independence Group NL
80 Independence Group NL
15
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(c) Elementsofremuneration(continued)
(iii) Long-term incentives (continued)
Sharerightsgrantedafter1July2014(continued)
The peer group is to comprise the constituents of the S&P ASX 300 Metals and Mining Index who are engaged in gold
and/or base metals mining in Australia and have the closest market capitalisation to the Company.
The vesting schedule of the performance rights subject to relative TSR testing is as follows:
Relative TSR performance
Less than 50th percentile
Between 50th and 75th percentile
75th percentile or better
Level of vesting
Zero
Pro-rata straight line percentage between 50% and 100%
100%
The Company's TSR performance for share rights issued during the current financial year will be assessed against the
following 22 peer group companies:
* Aditya Birla Minerals Ltd
* Alacer Gold Corp.
* Beadell Resources Ltd
* Cudeco Ltd
* Evolution Mining Limited
* Kingsgate Consolidated Limited
* Medusa Mining Ltd
* Metals X Limited
* Mincor Resources NL
* Northern Star Resources Limited
* Oceana Gold Limited
Sharerightsgrantedpriorto30June2014
Peer companies
* Oz Minerals Ltd
* PanAust Ltd
* Panoramic Resources Ltd
* Perseus Mining Limited
* Regis Resources Limited
* Resolute Mining Limited
* Saracen Mineral Holdings Limited
* Sandfire Resources Ltd
* Silver Lake Resources Limited
* Sirius Resources NL
* Western Areas Ltd
Vesting of the performance rights granted to executive directors and executives prior to 30 June 2014 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:
Shareholderreturn
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%
Returnonequity
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 used in previous financial years was 10%. The portion of performance rights (25% of the total) that will vest
based on the comparative return on equity will be:
Independence Group NL
16
Annual Report 2015 81
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(c) Elementsofremuneration(continued)
(iii) Long-term incentives (continued)
Returnonequity(continued)
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%
Longtermincentive-Non-executivedirectors
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.
Sharetradingpolicy
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.
(d) Linkbetweenremunerationandperformance
Statutory performance indicators
The Company aims to align its executive remuneration to the strategic and business objectives of the Group and the
creation of shareholder value. The table below shows measures of the Group's financial performance over the last five
years as required by the Corporations Act 2001. These measures are not necessarily consistent with the measures
used in determining the variable amounts of remuneration to be awarded to KMPs as other internal measures are used
to drive these results.
Revenue ($millions)
Profit for the year attributable to owners of ($millions)
Share price at year end ($/share)
Dividends paid (cents/share)
2015
495.3
76.8
4.17
11.0
2014
399.1
48.6
4.35
7.0
2013
225.9
18.3
2.26
5.0
2012**
216.6
(285.3)
3.16
2.0
2011*
163.6
5.5
5.63
4.0
* Includes results and performance of Jabiru Metals Limited from 4 April 2011.
** Includes after tax non-cash asset impairments of $288 million.
Independence Group NL
82 Independence Group NL
17
DIRECTORS’ REPORT Remuneration report (continued)
(e) RemunerationexpensesforKMP's
The following tables show details of the remuneration received by the Group's key management personnel for the
current and previous financial year.
Directors' report
30 June 2015
Short-term employee
benefits
Post-
employment
benefits
Cash
salary and
fees1
$
Cash
bonus
$
Super-
annuation
$
Long-
term
benefits
Long
service
leave2
$
Share based
payments
Share
rights3
$
Total
$
195,914
81,398
102,312
35,645
50,220
59,162
757,217
77,013
348,730
429,856
204,351
378,608
351,860
-
-
-
-
-
-
-
18,615
7,732
9,721
3,392
4,773
5,620
-
-
-
-
-
-
-
-
-
-
-
-
214,529
89,130
112,033
39,037
54,993
64,782
35,000
5,869
165,311
963,397
-
-
45,662
18,265
38,356
38,356
6,805
28,524
36,575
21,237
30,000
35,000
263
1,246
14,489
5,070
9,414
3,950
-
27,469
149,036
45,865
136,016
83,716
84,081
405,969
675,618
294,788
592,394
512,882
3,072,286
140,639
242,994
40,301
607,413
4,103,633
82
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
-
17,851
8,444
8,444
8,444
17,371
24,067
25,000
45,489
25,000
25,000
25,000
25,000
-
-
-
-
-
-
-
-
210,833
99,728
99,728
99,728
740
1,083
-
257,509
236,169
755,041
19,939
15,469
12,618
11,009
8,797
1,248
49,455
130,351
114,042
101,381
120,940
29,587
396,538
693,273
485,365
466,098
535,017
406,820
3,024,060
331,000
255,110
70,903
803,265
4,484,338
Name
2015
Non-executive Directors
Peter Bilbe
Peter Buck4
Geoffrey Clifford
Rod Marston5
Kelly Ross6
Keith Spence7
Executive Directors
Peter Bradford
Other key management personnel
Keith Ashby8
Matt Dusci9
Brett Hartmann
Sam Retallack10
Scott Steinkrug
Tony Walsh
Total key management personnel
compensation
2014
Non-executive Directors
Peter Bilbe11
Geoffrey Clifford
Rod Marston
Kelly Ross
Executive Directors
Peter Bradford12
Christopher Bonwick13
Other key management personnel
Andrew Eddowes14
Brett Hartmann
Rodney Jacobs14
Tim Kennedy14
Scott Steinkrug
Tony Walsh
Total key management personnel
compensation
Independence Group NL
18
Annual Report 2015 83
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(e) Remuneration expenses for KMP's (continued)
1 Cash salary and fees includes movements in annual leave provision during the year.
2 Long service leave relates to movements in long service leave provision during the year.
3 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. Refer to note 31 for details of the valuation techniques used for the PRP.
4 Mr Buck was appointed a Non-executive Director effective 3 October 2014.
5 Mr Marston retired as a Non-executive Director effective 20 November 2014.
6 Mrs Ross retired as a Non-executive Director effective 24 December 2014.
7 Mr Spence was appointed a Non-executive Director effective 17 December 2014.
8 Mr Ashby commenced employment as Sustainability Manager with the Company on 7 April 2015.
9 Mr Dusci commenced employment as General Manager, New Business with the Company on 27 July 2014.
10 Following a review of the organisational structure, Mrs Retallack (Human Resources Manager) became a KMP effective 1 July 2014.
11 In addition to his base fee for the previous financial 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 that year for the benefit of the Company.
12 Mr Bradford commenced employment with the Company effective 17 March 2014.
13 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 previous financial year.
14 Following a review of the organisational structure and the appointment of Matt Dusci as General Manager, New Business in July
2014, Andrew Eddowes, Rodney Jacobs and Tim Kennedy were no longer considered KMP's of the Group from 1 July 2014.
(f) Contractual arrangements with executive KMPs
Remuneration and other terms of employment for the executives are formalised in service agreements. The service
agreements specify the components of remuneration, benefits and notice periods. Participation in the STI and LTI plans
is subject to the Board's discretion. Other major provisions of the agreements relating to remuneration are set out below.
Name
Peter Bradford
Managing Director
Matt Dusci
General Manager, New Business (from 27
July 2014)
Brett Hartmann
General Manager, Operations
Sam Retallack
Human Resources Manager
Scott Steinkrug
Chief Financial Officer
Tony Walsh
Company Secretary and General Manager,
Corporate
Keith Ashby (from 7 April 2015)
Sustainability Manager
Term of agreement and
notice period
No fixed term
6 months
Base salary including
superannuation
Termination
payments
$750,000
6 months *
No fixed term
3 months
No fixed term
3 months
No fixed term
3 months
No fixed term
3 months
No fixed term
3 months
No fixed term
3 months
$390,000
6 months
$455,000
6 months
$223,963
6 months
$390,000
6 months
$390,000
6 months
$333,213
6 months
* In addition to the above, Mr Bradford is entitled to 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 month's remuneration is payable to Mr
Bradford should the Company terminate the employment contract due to illness, injury or incapacity.
Independence Group NL
84 Independence Group NL
19
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(g) Non-executivedirectorremunerationpolicy
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 $1,000,000 which was approved by shareholders at
the Annual General Meeting on 24 November 2014, of which $590,000 was being utilised at 30 June 2015 (2014:
$490,000).
Non-executive directors may provide additional consulting services to the Group, at a rate approved by the Board. No
such amounts were paid to Directors during the current year.
Base fees
Chairman
Other non-executive directors
(h) Additionalstatutoryinformation
From 1
September 2014
$
From 1 January
2014 to 30
September 2014
$
230,000
120,000
190,000
100,000
(i) Relativeproportionsoffixedvsvariableremunerationexpense
The following table shows the relative proportions of remuneration that are linked to performance and those that are
fixed, based on the amounts disclosed as statutory remuneration expense:
Fixed remuneration1
2014
%
At risk - STI
2015
%
2014
%
At risk - LTI
2015
%
2014
%
Name
Executive Directors of
Independence Group NL
Peter Bradford2
Christopher Bonwick
Other key management personnel
of the group
Keith Ashby
Matt Dusci
Andrew Eddowes
Brett Hartmann
Rodney Jacobs
Tim Kennedy
Sam Retallack
Scott Steinkrug
Tony Walsh
2015
%
83
-
100
93
-
71
-
-
78
71
76
100
37
-
-
81
75
77
73
-
73
93
-
-
-
-
-
7
-
-
6
6
8
-
29
-
-
6
6
-
5
-
5
-
17
-
-
7
-
22
-
-
16
23
16
-
34
-
-
13
19
23
22
-
22
7
1. 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.
2. 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 previous year.
(ii) Performancebasedremunerationgrantedandforfeitedduringtheyear
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:
Independence Group NL
20
Annual Report 2015 85
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(h) Additionalstatutoryinformation(continued)
(ii) Performancebasedremunerationgrantedandforfeitedduringtheyear(continued)
Date of grant
Number of
share rights
granted
Fair value of
share right at
grant date
Peter Bradford
Matt Dusci
Brett Hartmann
Sam Retallack
Scott Steinkrug
Tony Walsh
20/11/2014
09/01/2015
09/01/2015
28/02/2014
28/02/2013
13/03/2012
09/01/2015
28/02/2014
28/02/2013
09/01/2015
28/02/2014
28/02/2013
13/03/2012
09/01/2015
28/02/2014
$
175,365
50,154
58,513
71,421
67,324
58,318
10,473
16,347
8,656
50,154
66,272
62,461
54,106
50,154
66,596
2.84
2.55
2.55
2.14
2.06
1.69
2.55
3.45
3.61
2.55
2.14
2.06
1.69
2.55
2.14
Fair value of
share rights at
grant date
$
497,295
Vesting date
01/07/2017
127,868
01/07/2017
127,868
152,537
138,643
98,848
26,702
56,446
31,235
127,868
141,542
128,626
91,708
127,868
142,233
01/07/2017
01/07/2016
01/07/2015
01/07/2014
01/07/2017
01/07/2015
01/07/2014
01/07/2017
01/07/2016
01/07/2015
01/07/2014
01/07/2017
01/07/2016
Unamortised total
value of grant yet
to vest
$
331,984
100,399
117,132
60,486
-
-
17,826
-
-
100,399
56,126
-
-
100,399
56,401
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-basedPayment. 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.
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.
Date of grant Vesting date
Vested during the
year
Share
rights
granted
Value of
share
rights at
vesting
date
Share rights
forfeited during
the year
Value of
share
rights
forfeited
Peter Bradford
20/11/2014
01/07/2017
Number %
-
175,365
Matt Dusci
09/01/2015
01/07/2017
50,154
-
Brett Hartmann
Sam Retallack
Scott Steinkrug
Tony Walsh
09/01/2015
28/02/2014
28/02/2013
13/03/2012
09/01/2015
28/02/2014
28/02/2013
09/01/2015
28/02/2014
28/02/2013
13/03/2012
09/01/2015
28/02/2014
01/07/2017
01/07/2016
01/07/2015
01/07/2014
01/07/2017
01/07/2015
01/07/2014
01/07/2017
01/07/2016
01/07/2015
01/07/2014
01/07/2017
01/07/2016
58,513
71,421
67,324
58,318
10,473
16,347
8,656
50,154
66,272
62,461
54,106
50,154
66,596
-
-
-
75
-
-
86
-
-
-
75
-
-
Number
-
-
$ %
-
-
-
-
-
-
-
-
-
-
43,738 191,572
-
-
7,443
-
-
32,600
-
-
-
-
-
-
40,579 177,736
-
-
-
-
-
-
-
25
-
-
14
-
-
-
25
-
-
Number
-
-
-
-
-
14,580
-
-
1,213
-
-
-
13,527
-
-
$
-
-
-
-
-
63,860
-
-
5,313
-
-
-
59,248
-
-
Independence Group NL
86 Independence Group NL
21
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(h) Additionalstatutoryinformation(continued)
(iii) ReconciliationofordinarysharesandsharerightssharesheldbyKMP
(i) Shareholdings and share rights of key management personnel
The number of ordinary shares and share rights 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
2015
Name
Directors of Independence Group NL
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Rod Marston1
Kelly Ross1
Keith Spence
HEADER
Other key management personnel
Keith Ashby
Matt Dusci
Andrew Eddowes1
Brett Hartmann
Rodney Jacobs1
Tim Kennedy1
Sam Retallack
Scott Steinkrug
Tony Walsh
Balance at the
start of the
year
Received on
vesting of
share rights
Other changes
during the
year2
Balance at the
end of the
year
-
-
-
-
1,321,917
345,000
-
-
-
85,775
40,000
-
50,000
-
2,000
10,000
-
-
-
-
-
-
-
20,000
250,000
4,700
-
(1,321,917)
(345,000)
-
-
-
-
43,738
-
-
7,443
40,579
-
-
9,900
(85,775)
(43,738)
-
(50,000)
-
(42,579)
(10,000)
20,000
250,000
4,700
-
-
-
-
-
9,900
-
40,000
-
-
7,443
-
-
Total
1,854,692
91,760
(1,614,409)
332,043
1. Shareholdings are reversed to show a zero balance at 30 June 2015 on resignation as a director or ceasing to be a KMP.
2. Other changes during the year include opening balances on becoming a KMP for the first time during the year.
Independence Group NL
22
Annual Report 2015 87
DIRECTORS’ REPORT Directors' report
30 June 2015
Remuneration report (continued)
(h) Additionalstatutoryinformation(continued)
(iii) ReconciliationofordinarysharesandsharerightssharesheldbyKMP(continued)
Share rights in the Company
2015
Name
Directors of
Independence
Group NL
Peter Bradford
SPACE
Other key
management
personnel
Keith Ashby
Matt Dusci
Andrew Eddowes1
Brett Hartmann
Rodney Jacobs1
Tim Kennedy1
Sam Retallack
Scott Steinkrug
Tony Walsh
Total
Balance at the
start of the
year
Granted
during the
year
Vested as
shares during
the year
Lapsed during
the year
Other changes
during the
year
Balance at the
end of the
year
-
175,365
-
-
-
175,365
-
-
87,218
197,063
172,394
153,265
25,003
182,839
66,596
884,378
-
50,154
-
58,513
-
-
10,473
50,154
50,154
-
-
-
(43,738)
-
-
(7,443)
(40,579)
-
-
-
-
(14,580)
-
-
(1,213)
(13,527)
-
-
-
(87,218)
-
(172,394)
(153,265)
-
-
-
394,813
(91,760)
(29,320)
(412,877)
-
50,154
-
197,258
-
-
26,820
178,887
116,750
745,234
1. Shareholdings are reversed to show a zero balance at 30 June 2015 on resignation as a director or ceasing to be a KMP.
The share rights relate to the KMP’s participation in the PRP. The share rights represent the maximum number of share
rights that the KMP are entitled to. They are subject to certain performance conditions being met, including the ongoing
employment of the KMP at the end of the vesting period.
(iv) Othertransactionswithkeymanagement personnel
During the current financial year, there were no other transactions with key management personnel or their related
parties.
(v) Relianceonexternalremunerationconsultants
During the current financial year, the Board authorised the engagement of Gerard Daniels to prepare a report examining
the competitiveness of remuneration for directors and officers employed by the Company in the context of a group of
peer companies. An amount of $12,500 was paid for the report.
The Company also utilised data provided by Aon Hewitt McDonald and AusREM regarding salaries and benefits across
the organisation, with amounts paid for the data of $4,750 and $4,500 respectively.
The Board is satisfied that the recommendations provided in the various reports were made free from undue influence
from any members of the key management personnel.
(vi) Votingofshareholdersatlastyear'sannualgeneralmeeting
Independence Group NL received more than 99% of “yes” votes on its remuneration report for the 2014 financial year.
The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Shares under option
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 2015 on the exercise of options.
Independence Group NL
88 Independence Group NL
23
DIRECTORS’ REPORT Directors' report
30 June 2015
Insurance of officers and indemnities
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 to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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 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 the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act
2001 nor the principles set out in APES110 Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
Other services
BDO Audit (WA) Pty Ltd firm:
Other services in relation to the entity and any other entity in the consolidated
Group
Total remuneration for non-audit services
Auditor's independence declaration
2015
$
2014
$
35,913
35,913
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 90.
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.
This report is made in accordance with a resolution of Directors.
Peter Bilbe
Chairman
Perth, Western Australia
Dated this 21st day of August 2015
Independence Group NL
24
Annual Report 2015 89
DIRECTORS’ REPORT 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
DECLARATION OF INDEPENDENCE BY IAN SKELTON TO THE DIRECTORS OF INDEPENDENCE GROUP NL
As lead auditor of Independence Group NL for the year ended 30 June 2015, I declare that, to the best
of my knowledge and belief, there have been:
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
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
DECLARATION OF INDEPENDENCE BY IAN SKELTON TO THE DIRECTORS OF INDEPENDENCE GROUP NL
period.
As lead auditor of Independence Group NL for the year ended 30 June 2015, 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
2. No contraventions of any applicable code of professional conduct in relation to the audit.
Ian Skelton
This declaration is in respect of Independence Group NL and the entities it controlled during the
period.
Director
BDO Audit (WA) Pty Ltd
Perth, 21 August 2015
Ian Skelton
Director
BDO Audit (WA) Pty Ltd
Perth, 21 August 2015
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
90 Independence Group NL
25
25
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
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2015
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 expense
Exploration costs expensed
Royalty expense
Ore tolling expense
Shipping and wharfage costs
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Itemsthatwillbereclassifiedtoprofitorloss
Effective portion of changes in fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Notes
7
8
20
10
2015
$'000
495,326
3,268
(135,352)
(63,841)
(2,949)
1,467
(98,551)
(590)
(25,263)
(15,647)
(12,297)
(19,539)
(1,566)
(3,461)
(11,044)
109,961
(33,182)
76,779
Restated*
2014
$'000
399,059
-
(100,494)
(61,196)
(4,632)
(2)
(65,938)
(565)
(31,129)
(14,309)
(11,973)
(17,551)
(5,138)
(6,079)
(9,355)
70,698
(22,119)
48,579
2,038
(8)
2,030
(4,435)
-
(4,435)
78,809
44,144
Profit for the year attributable to the members of Independence Group
NL
76,779
48,579
Total comprehensive income for the year attributable to the members of
Independence Group NL
Earnings per share for profit attributable to the ordinary equity holders of
the Company:
Basic earnings per share
Diluted earnings per share
12
12
* Refer to note 3 for details about restatements for the voluntary change in accounting policy.
78,809
44,144
Cents
Cents
32.78
32.47
20.82
20.64
Theaboveconsolidatedstatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwith
theaccompanyingnotes.
Independence Group NL
27
Annual Report 2015 91
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2015
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
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
Derivative financial instruments
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated balance sheet
As at 30 June 2015
Notes
2015
$'000
Restated*
2014
$'000
Restated*
1 July
2013
$'000
27,215
24,159
22,760
1,092
6,946
82,172
604
-
36,278
319,690
115,379
152,261
179
1,981
626,372
56,972
30,070
40,383
858
2,519
130,802
57
8,803
47,230
329,279
111,583
152,395
-
658
650,005
780,807
708,544
46,855
3,508
6,381
2,557
59,301
24,854
-
25,545
61,602
112,001
53,599
6,030
1,910
2,446
63,985
11,524
-
21,724
41,249
74,497
171,302
138,482
609,505
570,062
121,296
22,086
40,298
15,574
4,981
204,235
18
24,979
47,244
303,300
109,930
130,517
-
-
615,988
820,223
45,091
510
2,384
2,659
50,644
-
717
29,387
73,980
104,084
154,728
665,495
13
14
15
16
25
17
15
18
19
20
10
21
25
22
26
25
23
26
25
24
10
27
28
28
737,324
16,191
(88,020)
665,495
735,060
13,476
(139,031)
609,505
734,007
14,332
(178,277)
570,062
* Refer to note 3 for details about restatements for the voluntary change in accounting policy.
Theaboveconsolidatedbalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.
Independence Group NL
92 Independence Group NL
28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated statement of changes in equity
For the year ended 30 June 2015
Issued
capital
$'000
Accumulated
losses
$'000
Hedging
reserve
$'000
Share-
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Acquisition
reserve
$'000
At 1 July 2013
734,007
(98,870)
2,397
8,793
3,142
Change in accounting
policy (note 3(b))
Restated total equity at 1
July 2013
Profit for the year as
reported in the 2014
financial statements
Change in accounting
policy (note 3(b))
Restated profit for the year
Other comprehensive income
Effective portion of
changes in fair value of
cash flow hedges, net of
tax
Total comprehensive
income for the year
Transactions with
owners in their capacity
as owners:
Dividends paid
Share-based payments
expense
Issue of shares - Employee
Performance Rights Plan
-
(79,407)
-
-
-
734,007
(178,277)
2,397
8,793
3,142
-
-
-
-
-
-
-
1,053
46,556
2,023
48,579
-
-
-
-
(4,435)
48,579
(4,435)
(9,333)
-
-
-
-
-
-
-
-
-
-
-
4,632
(1,053)
-
-
-
-
-
-
-
-
Balance at 30 June 2014
735,060
(139,031)
(2,038)
12,372
3,142
-
-
-
-
-
-
-
-
-
-
-
-
Total
equity
$'000
649,469
(79,407)
570,062
46,556
2,023
48,579
(4,435)
44,144
(9,333)
4,632
-
609,505
Theaboveconsolidatedstatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.
Independence Group NL
29
Annual Report 2015 93
Total
equity
$'000
609,505
76,779
2,038
-
-
-
(8)
(8)
(8)
78,809
-
-
-
(25,768)
2,949
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated statement of changes in equity
For the year ended 30 June 2015
Issued
capital
$'000
Accumulated
losses
$'000
Hedging
reserve
$'000
Share-
based
payments
$'000
Acquisition
reserve
$'000
Foreign
currency
translation
reserve
$'000
At 1 July 2014
Profit for the year
735,060
-
(139,031)
76,779
(2,038)
-
12,372
-
3,142
-
Other comprehensive income
Effective portion of
changes in fair value of
cash flow hedges, net of
tax
Currency translation
differences - current period
Total comprehensive
income for the year
Transactions with
owners in their capacity
as owners:
Dividends paid
Share-based payments
expense
Issue of shares - Employee
Performance Rights Plan
-
-
-
-
-
2,264
-
-
2,038
-
76,779
2,038
(25,768)
-
-
-
-
-
-
-
-
-
-
2,949
(2,264)
-
-
-
-
-
-
Balance at 30 June 2015
737,324
(88,020)
13,057
3,142
(8) 665,495
* Refer to note 3 for details about restatements for the voluntary change in accounting policy.
Theaboveconsolidatedstatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.
Independence Group NL
94 Independence Group NL
30
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated statement of cash flows
For the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Notes
Interest and other costs of finance paid
Interest received
Exploration expenditure
Receipts from other operating activities
Net cash inflow from operating activities
29(a)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Dividends received
Payments for purchase of listed and unlisted investments
Payments for development expenditure
Payments for exploration and evaluation expenditure
Net cash (outflow) from 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 (outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
11
13
2015
$'000
527,425
(300,592)
226,833
(1,054)
1,351
(25,742)
325
201,713
(16,602)
336
-
(13,085)
(44,118)
(12,417)
(85,886)
-
(25,000)
(142)
(3,497)
(25,768)
(54,407)
61,420
56,972
2,904
121,296
Restated*
2014
$'000
418,790
(257,100)
161,690
(4,177)
563
(30,415)
959
128,620
(8,935)
377
5
(75)
(76,101)
(12,471)
(97,200)
47,000
(32,000)
(82)
(6,030)
(9,333)
(445)
30,975
27,215
(1,218)
56,972
* Refer to note 3 for details about restatements for the voluntary change in accounting policy.
Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.
Independence Group NL
31
Annual Report 2015 95
CONTENTS OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
Corporate information
2 Summary of significant accounting policies
3 Voluntary change in accounting policy
4 Financial risk management
5 Critical accounting estimates and judgements
6 Segment information
7 Revenue
8 Other income
9 Expenses and losses
10 Income tax expense
11 Dividends paid and proposed
12 Earnings per share
13 Current assets - Cash and cash equivalents
14 Current assets - Trade and other receivables
15 Inventories
16 Current assets - Financial assets at fair value through profit or loss
17 Non-current assets - Receivables
18 Non-current assets - Property, plant and equipment
19 Non-current assets - Mine properties
20 Non-current assets - Exploration and evaluation expenditure
21 Intangible assets
22 Current liabilities - Trade and other payables
23 Current liabilities - Provisions
24 Non-current liabilities - Provisions
25 Derivative financial instruments
26 Borrowings
27 Equity
28 Reserves and retained earnings
29 Cash flow statement reconciliation
30 Related party transactions
31 Share-based payments
32 Commitments and contingencies
33 Events occurring after the reporting period
34 Remuneration of auditors
35 Parent entity financial information
36 Deed of cross guarantee
96 Independence Group NL
97
97
113
116
124
125
128
128
129
130
132
133
133
133
134
134
134
135
137
137
138
138
139
139
139
142
143
144
146
147
148
151
151
152
153
154
Notes to the consolidated financial statements
30 June 2015
1
Corporate information
The financial report of Independence Group NL (the Company) and its subsidiaries (collectively, the Group) for the year
ended 30 June 2015 was authorised for issue in accordance with a resolution of the Directors on 21 August 2015.
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
This note provides a list of all significant accounting policies adopted in the preparation of these consolidated financial
statements. 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 CorporationsAct2001. Independence
Group NL 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) Historical cost convention
These financial statements have been prepared under the historical cost basis, 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.
(iii) New and amended standards adopted by the Group
The Group has applied the following standards and amendments for first
commencing 1 July 2014:
time in their annual reporting period
•
AASB 2013-3 Amendments toAASB136-RecoverableAmountDisclosuresforNon-FinancialAssets
The Group has not elected to early adopt any new accounting standards.
(iv) 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 5.
(b) Principles 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 2015 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.
Independence Group NL
33
Annual Report 2015 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
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 asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
the impairment of
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements 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. This is generally
the case where the Group holds 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
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
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.
Independence Group NL
98 Independence Group NL
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(d) Foreign currency translation (continued)
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
•
•
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet;
income and expenses for each consolidated statement of profit or loss and other comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial
instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
(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;
liabilities incurred to the former owners of the acquired business;
equity interests issued by the Group;
fair value of any asset or liability resulting from a contingent consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
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. The Group recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
•
•
•
consideration transferred;
amount of any non-controlling interest in the acquired entity; and
acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value 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, 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) Revenue recognition
Revenue is 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:
Independence Group NL
35
Annual Report 2015 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(f) Revenue recognition (continued)
(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 income
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.
(g)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
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.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in foreign operations where the company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
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 or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Independence Group NL
100 Independence Group NL
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(h)
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 asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less costs to sell and 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 groups of assets (cash-generating units).
Non-financial assets other than goodwill
the
impairment at the end of each reporting period.
that suffered an impairment are reviewed for possible reversal of
(i) 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.
(j) Trade 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.
(k)
Inventories
(i) Ore, concentrate and gold inventories
Inventories, comprising 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.
(l) Derivatives and hedging activities
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.
Independence Group NL
37
Annual Report 2015 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(l) Derivatives and hedging activities (continued)
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
forecast transaction.
In relation to cash flow hedges (ie 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.
(m) 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.
(n) 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:
Independence Group NL
102 Independence Group NL
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(n) Property, plant and equipment (continued)
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 and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount (note 2(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit or loss.
(o) Exploration and evaluation expenditure
Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained
legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability
of extracting the mineral resource.
Exploration and evaluation expenditure is expensed to the profit or
circumstances in which case the expenditure may be capitalised:
• The existence of a commercially viable mineral deposit has been established and it is anticipated that future economic
benefits are more likely than not to be generated as a result of the expenditure; and
• The exploration and evaluation activity is within an area of interest which was acquired as an asset acquisition or in a
business combination and measured at fair value on acquisition.
loss as incurred except
in the following
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.
(p) 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
the
resource. The units-of-production method results in an amortisation charge proportional
economically recoverable mineral resources (comprising proven and probable reserves).
to the depletion of
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.
Independence Group NL
39
Annual Report 2015 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(q) 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.
(r) 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.
(s)
Intangible assets
(i) Goodwill
Goodwill is measured as described in note 2(e). Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill
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.
is not amortised but
it
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.
(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.
(t) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of 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 method.
Independence Group NL
104 Independence Group NL
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(u) 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. 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 other current and non-current borrowings. Each lease payment is allocated between
the liability and finance cost. The finance cost is charged to 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 (note 32). 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.
(v) Borrowings
Borrowings are initially recognised at
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
fair value, net of
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.
(w) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their
intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
(x) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are 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
leave is recognised in trade and other
expected to be paid when the liabilities are settled. The liability for annual
payables presented as current employee benefit obligations in the balance sheet.
(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.
(y) 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.
Independence Group NL
41
Annual Report 2015 105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(y) Share-based payment transactions (continued)
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 with the assistance of a valuation software 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 share rights is reflected as additional share dilution in the computation of
diluted earnings per share.
(z) 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.
(aa) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares;
and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(ab) Goods and Services Tax ("GST")
Revenues, expenses and assets are recognised net of the amount of associated 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 consolidated
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.
Independence Group NL
106 Independence Group NL
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(ab) Goods and Services Tax ("GST") (continued)
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(ac) 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 financial statements. Amounts in the financial statements
have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the
nearest dollar.
(ad) 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 venture entities
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 when its
right to receive the dividend is established.
(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 stand alone 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 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.
(ae) 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.
Independence Group NL
43
Annual Report 2015 107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
2
Summary of significant accounting policies (continued)
(af) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below.
Title
standard
of
9
AASB
Financial
Instruments
(issued
December
2014)
Nature of change
Impact
Mandatory application
date/ Date of adoption
by group
Adoption of AASB 9 is only
mandatory for the year ending
30 June 2019.
Mandatory for
financial
years commencing on or
after 1 January 2018.
This standard is not expected to
impact
the Group as financial
assets are currently classified
through profit or loss.
date
of
Expected
adoption by the group: 1
July 2018.
entity
currently
the application of
applies
The
hedge accounting. It is expected
that
the new
amendments will not have an
impact on the entity’s financial
statements.
The new impairment model is an
("ECL")
expected credit
in the
model which may result
earlier
credit
of
losses.
recognition
loss
9
in
investments
amendments
Classification and measurement
AASB
the
classification and measurement of
financial assets:
• Financial assets will either be
measured at amortised cost,
fair
value through other comprehensive
income ("FVTOCI") or
fair value
through profit or loss ("FVTPL").
• Financial assets are measured at
amortised cost or FVTOCI if certain
restrictive conditions are met. All
other financial assets are measured
at FVTPL.
equity
All
•
instruments will be measured at fair
value. For
those investments in
equity instruments that are not held
for trading, there is an irrevocable
election to present gains and losses
be
Dividends
in
recognised in profit or loss.
The following requirements have
generally been carried forward
unchanged
139
Instruments: Recognition
Financial
and Measurement into AASB 9:
• Classification and measurement
of financial liabilities, and
• Derecognition requirements for
financial assets and liabilities.
However, AASB 9 requires that
gains
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.
from AASB
losses
OCI.
will
on
or
Impairment
in
The new impairment model
AASB 9 is now based on an
‘expected loss’ model rather than
an ‘incurred loss’ model.
three stage model
A complex
instruments at
applies
fair value
amortised cost or at
through
comprehensive
income for recognising impairment
losses.
to debt
other
Independence Group NL
108 Independence Group NL
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 2
Summary of significant accounting policies (continued)
(af) New standards and interpretations not yet adopted (continued)
Notes to the consolidated financial statements
30 June 2015
Title
standard
of
9
AASB
Financial
Instruments
(issued
December
2014)
(continued)
Nature of change
Impact
Mandatory application
date/ Date of adoption
by group
A simplified
impairment model
applies to trade receivables and
lease receivables with maturities
that are less than 12 months.
For
trade receivables and lease
receivables with maturity longer
than 12 months, entities have a
choice of applying the complex
three stage model or the simplified
model.
can
can
qualify
Hedge accounting
Under the new hedge accounting
requirements:
• The 80-125% highly effective
threshold has been removed.
• Risk components of non-financial
hedge
items
for
qualify
the risk
accounting provided that
component is separately identifiable
and reliably measurable.
• An aggregated position (i.e.
combination of a derivative and a
for
non-derivative)
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.
foreign currency basis
spread can also be deferred in OCI
with
be
subsequent
recognised in OCI.
• Net
foreign exchange cash flow
positions can qualify for hedge
accounting.
changes
Initial
Independence Group NL
45
Annual Report 2015 109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 2
Summary of significant accounting policies (continued)
(af) New standards and interpretations not yet adopted (continued)
Notes to the consolidated financial statements
30 June 2015
Title
standard
of
AASB 15
Revenue
from
Contracts
with
Customers
(issued
December
2014)
AASB
2014-9
(issued
December
2014)
Amend-
ments to
Australian
Accounting
Standards -
Equity
Method in
Separate
Financial
Statements
AASB
2014-4
(issued
August
2014)
Amendments
to Australian
Accounting
Standards -
Clarification
of
Acceptable
Methods of
Depreciation
and
Amortisation
Nature of change
Impact
Mandatory application
date/ Date of adoption
by group
Adoption of AASB 15 is only
mandatory for the year ending
30 June 2019.
Mandatory for
financial
years commencing on or
after 1 January 2018.
Due to the recent release of this
standard, the entity has not yet
made a detailed assessment of
the impact of this standard.
date
Expected
of
adoption by the Group: 1
July 2018
It
the
is not anticipated that
changes will have any material
impact on the Group's financial
statements.
Mandatory for
financial
years commencing on or
after 1 January 2016.
date
of
Expected
adoption by the Group: 1
July 2016
The Standard will not have an
impact on the Group's financial
statements as it does not use
any revenue-based methods for
calculating
and
amortisation.
depreciation
Mandatory for
financial
years commencing on or
after 1 January 2016.
date
Expected
of
adoption by the Group: 1
July 2016
reflects
amount
An entity will recognise revenue to
depict
the transfer of promised
goods or services to customers in
the
that
an
consideration to which the entity
expects to be entitled in exchange
for those goods or services. This
means
be
recognised when control of goods
rather
or services is transferred,
than on transfer of
risks and
rewards as is currently the case
under IAS 18 Revenue.
revenue will
that
investments
Currently,
in
subsidiaries, associates and joint
ventures are accounted for
in
separate financial statements at
fair value under AASB
cost or at
139/AASB 9. These amendments
provide an additional option to
investments
account
these
using
as
128
described
InvestmentsinAssociatesandJoint
Ventures.
equity method
in
AASB
the
for
of
by
activity
consumption
Clarifies that use of revenue-based
methods
calculating
for
depreciation and amortisation is not
because
revenue
appropriate
generated
that
an
includes the use of an asset
generally reflects factors other than
the
economic
benefits embodied in the asset.
This assumption is rebuttable for
intangible assets and can be
overcome in limited circumstances,
for example, where revenue is
established as the predominant
limiting factor in the contract, such
as a concession to explore and
from a gold mine that
extract
expires when
cumulative
revenue from extraction of gold
reaches a certain dollar threshold.
total
Independence Group NL
110 Independence Group NL
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 2
Summary of significant accounting policies (continued)
(af) New standards and interpretations not yet adopted (continued)
Notes to the consolidated financial statements
30 June 2015
Mandatory application
date/ Date of adoption
by group
Mandatory for
financial
years commencing on or
after 1 January 2016.
date
Expected
of
adoption by the Group: 1
July 2016
Title
standard
of
AASB
2014-3
(issued
August
2014)
Amendments
to Australian
Accounting
Standards -
Accounting
for
Acquisitions
of Interests
in Joint
Ventures
Nature of change
Impact
There will be no impact on the
financial statements when these
amendments are first adopted
apply
because
prospectively to acquisitions of
interests in joint operations.
they
When an entity acquires an interest
in a joint operation whose activities
meet the definition of a ‘business’ in
AASB 3 Business Combinations, to
the extent of
its share of assets,
liabilities, revenues and expenses
as specified in the contractual
arrangement, the entity must apply
the principles for business
all of
combination accounting in AASB 3,
and other IFRSs, to the extent that
they do not conflict with AASB 11
Joint Arrangements.This means
all
it
that
acquisition-related
and
recognise its share, according to
the contractual arrangements, of:
• Fair value of
identifiable assets
and liabilities, unless fair value
exceptions included in AASB 3 or
other IFRSs, and
• Deferred tax assets and liabilities
that arise from the initial recognition
of an asset or liability as required
by AASB 3 and AASB 112 Income
Taxes.
expense
costs
will
Goodwill will then be recognised as
the excess consideration over the
fair value of net identifiable assets
acquired.
Independence Group NL
47
Annual Report 2015 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 2
Summary of significant accounting policies (continued)
(af) New standards and interpretations not yet adopted (continued)
Notes to the consolidated financial statements
30 June 2015
Mandatory application
date/ Date of adoption
by group
Mandatory for
financial
years commencing on or
after 1 January 2016.
date
Expected
of
adoption by the Group: 1
July 2016
Title
standard
of
AASB
2014-10
(issued
December
2014)
Amendments
to
Australian
Accounting
Standards -
Sale or
Contribution
of Assets
between
An Investor
and its
Associate
or Joint
Venture
Nature of change
Impact
There will be no impact on the
financial statements when these
amendments are first adopted
because they apply prospectively
to sales or contributions of assets
occurring after
the application
date.
in
the
accounting
Removes
inconsistency
between AASB 10 Consolidated
FinancialStatements and AASB 128
Investments in Associates and Joint
for
Ventures
transactions where a parent loses
control over a subsidiary that is not
a business under AASB 3 Business
Combinations, by selling part of its
interest
joint
venture, or by selling down part of
its interest so that
the remaining
investment becomes an associate
or joint venture. Requires that:
to an associate or
• Gain or loss from measuring the
retained interest
in the former
subsidiary at fair value, as well as
gains or losses to be reclassified
from other comprehensive income
to profit or loss, only be recognised
to the extent of
the unrelated
investor’s interest in that associate
or joint venture, and
• Remaining gains or losses to be
eliminated against the investment in
associate or joint venture.
There are no other standards that are not yet effective and that would be expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable future transactions.
Independence Group NL
112 Independence Group NL
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
3
Voluntary change in accounting policy
(a) Exploration and evaluation accounting policy
The financial report has been prepared on the basis of a retrospective application of a voluntary change in accounting
policy relating to exploration and evaluation expenditure.
The new exploration and evaluation expenditure accounting policy is to capitalise exploration and evaluation
expenditure only if it is anticipated that future economic benefits are more likely than not to be generated as a result of
the expenditure. All other exploration and evaluation expenditure will be expensed against the profit and loss as
incurred. Acquisition costs and expenditure incurred after a decision to proceed to development will continue to be
capitalised as an asset.
The previous accounting policy was to capitalise exploration and evaluation expenditure incurred and carry forward as
an asset when rights to tenure of the area of interest were current and costs were expected to be recouped through the
successful development of the area of interest (or alternatively by its sale), or where activities in the area had not yet
reached a stage which permitted a reasonable assessment of the existence or otherwise of economically recoverable
reserves and active operations were continuing.
Management judges that the change in policy will result in more relevant and reliable information in the financial report.
Recognition criteria of exploration and evaluation assets are inherently uncertain and expensing as incurred results in a
more transparent balance sheet and profit or loss. Furthermore, the change in policy aids in accountability of line
management’s expenditures and the newly adopted policy is consistent with those of many mining companies.
(b)
Impact on financial statements
(i) Impact on prior years
As a result of the change in the accounting policy for exploration and evaluation expenditure, prior year financial
statements had to be restated. The amounts disclosed for the 2014 reporting period and in the balance sheets as at 1
July 2013 and 30 June 2014 are after the change in accounting policy for exploration and evaluation expenditure.
Independence Group NL
49
Annual Report 2015 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 3
Voluntary change in accounting policy (continued)
(b)
Impact on financial statements (continued)
Consolidated statement of profit or loss and other
comprehensive income
Revenue from continuing operations
Mining, development and processing costs
Employee benefits expense
Share-based payments expense
Fair value of movements of financial investments
Depreciation and amortisation expense
Rehabilitation and restoration borrowing costs
Exploration costs expensed
Royalty expense
Ore tolling expense
Shipping and wharfage costs
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Notes to the consolidated financial statements
30 June 2015
Prior year restatement
2014
(Previously
stated)
$'000
399,059
Profit
Increase/
(Decrease)
$'000
2014
(Restated)
$'000
-
399,059
(100,310)
(61,196)
(4,632)
(2)
(69,840)
(565)
(4,334)
(14,309)
(11,973)
(17,551)
(5,138)
(32,045)
(9,355)
67,809
(21,253)
46,556
(184)
-
-
-
3,902
-
(26,795)
-
-
-
-
25,966
-
2,889
(866)
2,023
(100,494)
(61,196)
(4,632)
(2)
(65,938)
(565)
(31,129)
(14,309)
(11,973)
(17,551)
(5,138)
(6,079)
(9,355)
70,698
(22,119)
48,579
Other comprehensive income
Itemsthatwillbereclassifiedtoprofitorloss
Effective portion of changes in fair value of cash flow hedges, net of
tax
Other comprehensive loss for the year, net of tax
(4,435)
(4,435)
-
-
(4,435)
(4,435)
Total comprehensive income for the year
42,121
2,023
44,144
Profit for the year attributable to the members of Independence
Group NL
46,556
2,023
48,579
Total comprehensive income for the year attributable to the
members of Independence Group NL
42,121
2,023
44,144
Earnings per share for profit attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
Cents
Cents
Cents
19.95
19.78
0.87
0.86
20.82
20.64
Independence Group NL
114 Independence Group NL
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 3
Voluntary change in accounting policy (continued)
(b)
Impact on financial statements (continued)
Notes to the consolidated financial statements
30 June 2015
Balance sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets at fair value through
profit or loss
Derivative financial instruments
Prior years restatement
30 June
2014
(Previously
stated)
$'000
In-
crease/
(Decrease)
$'000
30 June
2014
(Restated)
$'000
1 July 2013
(Previously
stated)
$'000
In-
crease/
(Decrease)
$'000
1 July 2013
(Restated)
$'000
56,972
30,070
40,567
858
2,519
-
-
(184)
-
-
56,972
30,070
40,383
858
2,519
27,215
24,159
22,760
1,092
6,946
-
-
-
-
-
-
Total current assets
130,986
(184)
130,802
82,172
Non-current assets
Receivables
Inventories
Property, plant and equipment
Mine properties
Exploration and evaluation expenditure
Deferred tax assets
Intangible assets
Derivative financial instruments
57
8,803
47,230
364,443
186,784
152,339
-
658
-
-
-
(35,164)
(75,201)
56
-
-
57
8,803
47,230
329,279
111,583
152,395
-
658
604
-
36,278
349,115
199,392
152,261
179
1,981
-
-
-
(29,425)
(84,013)
-
-
-
Total non-current assets
760,314
(110,309)
650,005
739,810
(113,438)
626,372
891,300
(110,493)
780,807
821,982
(113,438)
708,544
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
46,855
3,508
6,381
2,557
59,301
-
-
-
-
-
46,855
3,508
6,381
2,557
59,301
53,599
6,030
1,910
2,446
63,985
-
-
-
-
-
24,854
25,545
94,711
-
-
(33,109)
24,854
25,545
61,602
11,524
21,724
75,280
-
-
(34,031)
27,215
24,159
22,760
1,092
6,946
82,172
604
-
36,278
319,690
115,379
152,261
179
1,981
53,599
6,030
1,910
2,446
63,985
11,524
21,724
41,249
74,497
Total non-current liabilities
145,110
(33,109)
112,001
108,528
(34,031)
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Independence Group NL
204,411
(33,109)
171,302
172,513
(34,031)
138,482
686,889
(77,384)
609,505
649,469
(79,407)
570,062
735,060
13,476
(61,647)
-
-
(77,384)
735,060
13,476
(139,031)
734,007
14,332
(98,870)
-
-
(79,407)
734,007
14,332
(178,277)
686,889
(77,384)
609,505
649,469
(79,407)
570,062
51
Annual Report 2015 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
3
Voluntary change in accounting policy (continued)
(b)
Impact on financial statements (continued)
Consolidated statement of cash flows
Exploration and evaluation expenditure that is expensed is included as part of cash flows from operating activities
whereas exploration and evaluation expenditure that is capitalised is included as part of cash flows from investing
activities. This has resulted in additional cash outflows from operating activities of $26,221,000 for the year ended 30
June 2014. This has also resulted in a corresponding reduction of $26,221,000 being reflected in the net cash outflows
from investing activities for the same reporting period.
4
Financial risk management
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 management, 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.
(a) Risk exposures and responses
(i) Foreign currency risk
As the Group’s sales revenues for nickel, copper, zinc, gold and silver are denominated in US dollars ("USD") and the
majority of operating costs are denominated in Australian dollars ("AUD"), the Group’s cash flow is significantly exposed
to movements in the AUD:USD exchange rate. The Group mitigates this risk through the use of derivative instruments,
including, but not limited to, forward contracts and the purchase of AUD call options.
The financial
follows:
instruments denominated in USD and then converted into the functional currency (i.e. AUD) were as
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Net financial assets
2015
$'000
16,971
15,506
4,981
37,458
1,622
1,622
35,836
2014
$'000
17,923
25,054
1,809
44,786
6,381
6,381
38,405
The cash balance above only represents the cash held in the USD bank accounts at the reporting date and converted
into AUD at the 30 June 2015 AUD:USD exchange rate of $0.7680 (2014: $0.9420). The remainder of the cash balance
of $104,325,000 (2014: $39,049,000) was held in AUD and therefore not exposed to foreign currency risk.
The trade and other receivables amounts represent the USD denominated trade debtors. All other trade and other
receivables were denominated in AUD at the reporting date.
The following table summarises the Group’s sensitivity of financial instruments held at 30 June 2015 to movements in
the AUD:USD exchange rate, with all other variables held constant. Sensitivity analysis is calculated using a reasonable
possible change of 1.5% (2014: 1.5%) in the foreign rate in both directions based on the exposure period of the trade
receivables, a 5.0% (2014: 5.0%) variation for derivative contracts and an 18.0% (2014: 3.0%) variation for USD cash
balances in both directions.
Independence Group NL
116 Independence Group NL
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(a) Risk exposures and responses (continued)
Sensitivity of financial instruments to
foreign currency movements
Financial assets
Cash and cash equivalents
Increase 18.0% (2014: 3.0%)
Decrease 18.0% (2014: 3.0%)
Trade receivables
Increase 1.5% (2014: 1.5%)
Decrease 1.5% (2014: 1.5%)
Derivative financial instruments
Increase 5.0% (2014: 5.0%)
Decrease 5.0% (2014: 5.0%)
Financial liabilities
Derivative financial instruments
Increase 5.0% (2014: 5.0%)
Decrease 5.0% (2014: 5.0%)
Net sensitivity to foreign currency
movements
Impact on post-tax profit
Impact on other components of
equity
2015
$'000
(1,812)
2,608
(120)
140
(166)
183
833
693
(766)
(73)
760
2014
$'000
(365)
388
(176)
222
361
(399)
31
50
(55)
(5)
26
2015
$'000
2014
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,444
(1,596)
(152)
163
(180)
(17)
(169)
(ii) Commodity price risk
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.
At the reporting date, the carrying value of the financial instruments exposed to commodity price movements were as
follows:
Independence Group NL
53
Annual Report 2015 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(a) Risk exposures and responses (continued)
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
2015
$'000
10,702
4,981
15,683
1,479
1,479
14,204
2014
$'000
19,853
1,777
21,630
6,381
6,381
15,249
The following table summarises the sensitivity of financial instruments held at 30 June 2015 to movements in the nickel
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2014: 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% (2014: 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% (2014: 1.5%)
Decrease 1.5% (2014: 1.5%)
Derivative financial instruments - commodity
hedging contracts
Increase 20.0% (2014: 20.0%)
Decrease 20.0% (2014: 20.0%)
Net sensitivity to nickel price movements
Impact on post-tax profit
Impact on other components of
equity
2015
$'000
117
(117)
(1,634)
1,634
-
2014
$'000
217
(217)
(1,346)
1,353
7
2015
$'000
-
-
-
-
-
2014
$'000
-
-
(3,949)
3,946
(3)
The following table summarises the sensitivity of financial instruments held at 30 June 2015 to movements in the copper
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2014: 1.5%)
which is based upon the three month forward commodity rate as there is generally a four month lag time between
delivery and final copper price received. A 20.0% (2014: 20.0%) sensitivity rate is used to value derivative contracts
held and is based on reasonable assessment of the possible changes.
Independence Group NL
118 Independence Group NL
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(a) Risk exposures and responses (continued)
Sensitivity of financial instruments to
copper price movements
Financial assets
Trade receivables
Increase 1.5% (2014: 1.5%)
Decrease 1.5% (2014: 1.5%)
Derivative financial instruments - commodity
hedging contracts
Increase 20.0% (2014: 20.0%)
Decrease 20.0% (2014: 20.0%)
Net sensitivity to copper price movements
Impact on post-tax profit
Impact on other components of
equity
2015
$'000
6
(6)
(578)
578
-
2014
$'000
11
(11)
(960)
957
(3)
2015
$'000
-
-
-
-
-
2014
$'000
-
-
(1,323)
1,317
(6)
The following table summarises the sensitivity of financial instruments held at 30 June 2015 to movements in the gold
price, with all other variables held constant. A 20.0% (2014: 20.0%) sensitivity rate is used to value derivative contracts
held and is based on reasonable assessment of the possible changes.
Impact on post-tax profit
Impact on other components of
equity
Sensitivity of financial instruments to
gold price movements
Financial assets
Derivative financial instruments - commodity
hedging contracts
Increase 20.0% (2014: 20.0%)
Decrease 20.0% (2014: 20.0%)
Net sensitivity to gold price movements
2015
$'000
(432)
959
527
2014
$'000
2015
$'000
2014
$'000
(4,280)
1,581
(2,699)
(6,158)
4,366
(1,792)
-
-
-
The following table summarises the sensitivity of financial instruments held at 30 June 2015 to movements in the zinc
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2014: 1.5%)
which is based upon the three month forward commodity rate as there is a generally 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 1.5% (2014: 0%)
Decrease 1.5% (2014: 0%)
Net sensitivity to zinc price movements
Impact on post-tax profit
2015
$'000
108
(108)
-
2014
$'000
-
-
-
(iii) Equity price risk sensitivity analysis
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% (2014: 45%). At reporting date, if the equity prices had been higher or lower, net profit for the
year would have increased or decreased by $4,890,000 (2014: $254,000).
Independence Group NL
55
Annual Report 2015 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(a) Risk exposures and responses (continued)
(iv) Cash flow and fair value interest rate risk
instrument’s value will fluctuate as a result of
The Group’s exposure to interest rate risk is the risk that a financial
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
30 June 2015
Weighted
average
interest rate
%
Balance
$'000
30 June 2014
Weighted
average
interest rate
%
1.6%
1.6%
121,296
121,296
-
-
-
-
1.6%
121,296
1.3%
1.3%
4.9%
4.9%
(3.6)%
Balance
$'000
56,972
56,972
25,000
25,000
31,972
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.
Impact on post-tax profit
Sensitivity of interest revenue and expense to interest rate movements
Revenue
Interest revenue
Increase 1.0% (2014: 1.0%)
Decrease 1.0% (2014: 1.0%)
Expense
Interest expense
Increase 0% (2014: 1.0%)
Decrease 0% (2014: 1.0%)
2015
$'000
293
(293)
-
-
-
-
2014
$'000
243
(243)
-
(175)
175
-
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.
(b) Credit risk
Nickel ore 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 2015 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.
Independence Group NL
120 Independence Group NL
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(b) Credit risk (continued)
Copper and zinc concentrate 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 bullion sales
Credit risk arising from the sale of gold bullion to the Company's customer is low as the payment by the customer (being
The Perth Mint Australia) is guaranteed under statute by the Western Australian State Government.
The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit
history.
Other
instruments, the Group's exposure to credit risk arises from
In respect of financial assets and derivative financial
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.
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
2015
$'000
121,296
13,481
5,384
15,574
4,981
160,716
2014
$'000
56,972
24,828
2,456
858
3,177
88,291
On analysis of trade and other receivables, none are past due or impaired for either 30 June 2015 or 30 June 2014.
(c) 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. Management and the Board monitors liquidity levels on an ongoing basis.
Maturities of financial liabilities
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.
Independence Group NL
57
Annual Report 2015 121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 4
Financial risk management (continued)
(c) Liquidity risk (continued)
Contractual maturities of financial liabilities
At 30 June 2015
Trade and other payables
Finance lease liabilities
At 30 June 2014
Trade and other payables
Finance lease liabilities
Bank loans
Notes to the consolidated financial statements
30 June 2015
Between
1 and 5
years
Total
contractual
cash
flows
Carrying
amount
6 - 12
months
$'000
$'000
$'000
$'000
Less than
6 months
$'000
40,476
458
40,934
42,982
2,300
-
45,282
-
64
64
-
-
-
40,476
522
40,998
40,476
510
40,986
-
1,371
-
1,371
-
522
25,000
25,522
42,982
4,193
25,000
72,175
42,982
4,018
24,344
71,344
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.
At 30 June 2015
Commodity hedging contracts
Foreign currency hedging contracts
At 30 June 2014
Commodity hedging contracts
Between
1 and 5
years
Total
contractual
cash
flows
Carrying
amount
6 - 12
months
$'000
$'000
$'000
$'000
Less than
6 months
$'000
100
1,622
1,722
662
-
662
717
-
717
1,479
1,622
3,101
1,479
1,622
3,101
3,013
3,013
3,368
3,368
-
-
6,381
6,381
6,381
6,381
(d) Recognised fair value measurements
(i) 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 2015
and 30 June 2014 on a recurring basis.
Independence Group NL
122 Independence Group NL
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 4
Financial risk management (continued)
(d) Recognised fair value measurements (continued)
At 30 June 2015
Financial assets
Listed and unlisted investments
Derivative instruments
Commodity hedging contracts
Financial liabilities
Derivative instruments
Commodity hedging contracts
Foreign currency hedging contracts
At 30 June 2014
Financial assets
Listed and unlisted investments
Derivative instruments
Foreign currency hedging contracts
Commodity hedging contracts
Financial liabilities
Derivative instruments
Commodity hedging contracts
Notes to the consolidated financial statements
30 June 2015
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
15,524
-
15,524
-
-
-
-
4,981
4,981
1,479
1,622
3,101
50
-
50
-
-
-
Level 1
$'000
Level 2
$'000
Level 3
$'000
808
-
-
808
-
-
-
1,400
1,777
3,177
6,381
6,381
50
-
-
50
-
-
15,574
4,981
20,555
1,479
1,622
3,101
Total
$'000
858
1,400
1,777
4,035
6,381
6,381
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30
June 2015 and did not transfer any fair value amounts between the fair value hierarchy levels during the year ended 30
June 2015.
(ii) Valuation techniques used to determine level 1 fair 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.
(iii) Valuation techniques used to determine 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 reporting 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
59
Annual Report 2015 123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
4
Financial risk management (continued)
(d) Recognised fair value measurements (continued)
(iv) 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 2015
Current assets
Cash and cash equivalents
Current liabilities
Lease liabilities
At 30 June 2014
Current assets
Cash and cash equivalents
Current liabilities
Lease liabilities
Non-current liabilities
Bank loans
Lease liabilities
Carrying
amount
$'000
Fair value
$'000
121,296
121,296
121,296
121,296
510
510
Carrying
amount
$'000
522
522
Fair value
$'000
56,972
56,972
3,508
3,508
24,344
510
24,854
56,972
56,972
3,671
3,671
25,000
522
25,522
5
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.
(i) Trade receivables
The Group estimates the value of trade receivables in accordance with the accounting policy disclosed in note 2(j).
Independence Group NL
124 Independence Group NL
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
5
Critical accounting estimates and judgements (continued)
Critical accounting estimates and assumptions (continued)
(ii) 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.
(iii) 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.
(iv) 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 a valuation
software using a trinomial tree method. 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.
6
Segment information
(a)
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 Tropicana Gold Project, 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,
and other regional exploration, scoping studies and feasibility which are disclosed under feasibility and regional
exploration activities.
The Tropicana Gold Project represents the Group’s 30% joint venture interest in the Tropicana Gold Mine. 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 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 Independence Long 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 the General Manager, Operations. The Jaguar Operation
and exploration properties are owned by the Group’s wholly owned subsidiary Independence Jaguar Limited.
The Group’s General Manager, New Business is responsible for budgets and expenditure relating to the Group’s
regional exploration, scoping studies, feasibility studies and new business development. 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
61
Annual Report 2015 125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 6
Segment information (continued)
(b) Segment results
Year ended 30 June 2015
Total segment revenue
Other revenue
Revenue from external customers
Segment net operating profit (loss) before income tax
SPACE
Total segment assets
SPACE
Total segment liabilities
SPACE
Acquisition of property, plant and equipment
SPACE
Impairment loss before tax
SPACE
Depreciation and amortisation
SPACE
Other non-cash expenses
Year ended 30 June 2014 (Restated)
Total segment revenue
Other revenue
Revenue from external customers
Segment net operating profit (loss) before income tax
SPACE
Total segment assets
SPACE
Total segment liabilities
SPACE
Acquisition of property, plant and equipment
SPACE
Impairment loss before tax
SPACE
Depreciation and amortisation
SPACE
Other non-cash expenses
Notes to the consolidated financial statements
30 June 2015
Tropicana
gold
project
$'000
Nickel
mining
$'000
Copper
and
zinc
mining
$'000
Feasibility
and
regional
exploration
activities
$'000
Total
$'000
218,966
-
110,834
589
163,675
341
218,966
111,423
164,016
-
28
28
493,475
958
494,433
76,117
32,180
47,665
(27,603) 128,359
645,071
92,546
134,569
112,424
984,610
31,748
36,180
24,374
33,914
126,216
1,652
4,622
8,256
5
14,535
-
1,229
-
2,232
3,461
55,931
21,949
19,671
97
97,648
319
32
239
-
590
Tropicana
gold
project
$'000
Nickel
mining
$'000
Copper
and zinc
mining
$'000
137,918
-
118,648
211
140,963
832
137,918
118,859
141,795
Feasibility
and
regional
exploration
activities
$'000
-
55
55
Total
$'000
397,529
1,098
398,627
48,332
37,233
42,703
(34,864)
93,404
440,585
111,854
102,828
114,123
769,390
29,705
29,960
30,535
30,879
121,079
1,993
1,076
5,358
-
8,427
-
2,283
-
3,796
6,079
33,886
21,569
9,474
296
36
233
-
-
64,929
565
Independence Group NL
126 Independence Group NL
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
6
Segment information (continued)
(c) Segment revenue
A reconciliation of reportable segment revenue to total revenue is as follows:
Total segment revenue
Other revenue from continuing operations
Total revenue
2015
$'000
494,433
893
495,326
2014
$'000
398,627
432
399,059
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 Australia.
(d) Segment net profit (loss) before income tax
A reconciliation of reportable segment net profit before income tax to net profit before income tax is as follows:
Segment net operating profit before income tax
Interest revenue on corporate cash balances and other unallocated revenue
Unrealised losses on financial assets
Share-based payments expense
Other corporate costs
Borrowing and finance costs
Total net profit before tax
(e) Segment assets
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
2015
$'000
128,359
893
1,467
(2,949)
(16,424)
(1,385)
109,961
2015
$'000
984,610
(389,508)
130,517
15,524
75,812
3,268
820,223
Restated*
2014
$'000
93,404
432
(2)
(4,632)
(13,960)
(4,544)
70,698
Restated*
2014
$'000
769,390
(163,896)
152,395
808
19,224
2,886
780,807
Independence Group NL
63
Annual Report 2015 127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
6
Segment information (continued)
(f) Segment liabilities
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
7
Revenue
Sales revenue
Sale of goods
Other revenue
Interest revenue
Other revenue
Total revenue
8 Other income
Net gain on disposal of property, plant and equipment
Net foreign exchange gains
Net gain on disposal of tenements
2015
$'000
126,216
(55,005)
73,980
8,225
1,312
-
154,728
2015
$'000
493,475
493,475
1,396
455
1,851
Restated*
2014
$'000
121,079
(44,489)
61,602
7,598
1,168
24,344
171,302
2014
$'000
397,529
397,529
566
964
1,530
495,326
399,059
2015
$'000
211
2,892
165
3,268
2014
$'000
-
-
-
-
Independence Group NL
128 Independence Group NL
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
9
Expenses and losses
Cost of sale of goods
Employee benefits expenses
Share-based payments expense
Exploration costs expensed
Rental expense relating to operating leases
Rehabilitation and restoration borrowing costs
Impairment of exploration and evaluation expenditure
Net loss of sale of property, plant and equipment and other investments
Amortisation
Depreciation
Depreciation expense
Less : amounts capitalised
Depreciation expensed
Borrowingandfinancecosts
Borrowing and finance costs - other entities
Amortisation of borrowing costs
Less: amounts capitalised
Finance costs expensed
2015
$'000
239,745
63,841
2,949
25,263
1,273
590
3,461
-
81,911
16,640
-
16,640
857
709
-
1,566
Restated*
2014
$'000
199,138
61,196
4,632
31,129
1,291
565
6,079
60
50,937
15,369
(368)
15,001
3,919
1,763
(544)
5,138
Independence Group NL
65
Annual Report 2015 129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
10 Income tax expense
(a)
Income tax expense
The major components of income tax expense are:
Deferred income tax
Income tax expense
Deferredincometaxrevenue(expense)includedinincometaxexpensecomprises:
Decrease (increase) in deferred tax assets
Increase in deferred tax liabilities
Income tax expense
(b) Amounts recognised directly in equity
Deferred income tax revenue (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 to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2014: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Share-based payments
Other non-deductible items
Capital losses not brought to account
Previously unrecognised capital losses brought to account
Difference in overseas tax rates
Overseas tax losses not brought to account
Adjustments for current tax of prior periods
Income tax expense
2015
$'000
33,182
33,182
22,068
11,114
33,182
2015
$'000
1,074
1,074
Restated*
2014
$'000
22,119
22,119
(897)
23,016
22,119
2014
$'000
(1,900)
(1,900)
2015
$'000
109,961
32,988
Restated*
2014
$'000
70,698
21,209
(318)
296
-
(52)
42
116
110
1,074
110
357
-
-
-
(631)
33,182
22,119
(143,143)
(92,817)
Independence Group NL
130 Independence Group NL
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 10 Income tax expense (continued)
(d) Deferred tax assets and liabilities
Deferred tax liabilities
Capitalised exploration, pre-production and
acquisition costs
Capitalised development expenditure
Deferred gains and losses on hedging contracts
Trade debtors
Consumable inventories
Other
Gross deferred tax liabilities
Deferred tax assets
Property, plant and equipment
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
Gross deferred tax assets
Notes to the consolidated financial statements
30 June 2015
Balance Sheet
Profit or loss
Equity
Restated*
2014
$'000
2015
$'000
Restated*
2014
$'000
2015
$'000
Restated*
2014
$'000
2015
$'000
(24,914)
(44,443)
(1,467)
(1,377)
(1,748)
(31)
(73,980)
(30,935)
(25,592)
(900)
(2,885)
(1,259)
(31)
(61,602)
20,640
904
-
398
908
2,700
8,298
1,392
92,958
2,319
130,517
24,019
1,862
-
32
1,402
2,387
7,205
2,680
110,299
2,509
152,395
(6,021)
18,851
(697)
(1,508)
489
-
11,114
3,379
1,148
-
(366)
494
(313)
(1,093)
1,288
17,341
190
22,068
(568)
21,595
885
1,388
97
(381)
23,016
2,649
(741)
2,312
534
1,196
(470)
(997)
8,696
(13,042)
(1,034)
(897)
-
-
1,264
-
-
-
1,264
-
(190)
-
-
-
-
-
-
-
-
(190)
-
-
(2,663)
-
-
-
(2,663)
-
763
-
-
-
-
-
-
-
-
763
Deferred tax expense (income)
56,537
90,793
33,182
22,119
1,074
(1,900)
(e) Tax losses
In addition to the above recognised tax losses, the Group also has the following capital tax losses for which no deferred
tax asset has been recognised:
Unrecognised capital tax losses
Potential tax benefit @ 30% (2014: 30%)
(f) Tax consolidation
2015
$'000
2,403
721
2014
$'000
2,576
773
Membersofthetaxconsolidatedgroupandthetaxsharingarrangement
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.
Independence Group NL
67
Annual Report 2015 131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
10 Income tax expense (continued)
(f) Tax consolidation (continued)
Due to the existence of a tax funding arrangement between entities in the tax consolidated group, amounts are
the Group in relation to the tax
recognised as payable to or receivable by the Company and each member of
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.
11 Dividends paid and proposed
(a) Ordinary shares
Final ordinary dividend for the year ended 30 June 2014 of 5 cents (2013: 1 cent) per
fully paid share
Interim dividend for the year ended 30 June 2015 of 6 cents (2014: 3 cents) per fully
paid share
Total dividends paid during the financial year
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since year end the Directors have established a
final dividend pool of $13,000,000 (2014: 5 cents per fully paid ordinary share), fully
franked based on tax paid at 30%. The aggregate amount of the proposed dividend
pool expected to be paid out of retained earnings at 30 June 2015, but not recognised
as a liability at year end, is
2015
$'000
11,713
14,055
25,768
2015
$'000
2014
$'000
2,333
7,000
9,333
2014
$'000
13,000
11,713
(c) Franked dividends
The franked portions of the final dividends recommended after 30 June 2015 will be franked out of existing franking
credits or out of franking credits arising from the payment of income tax in the year ended 30 June 2016.
Franking credits available for subsequent reporting periods based on a tax rate of 30%
(2014: 30%)
2015
$'000
2014
$'000
47,845
58,888
The above amounts are calculated from the balance of the franking account as 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 pool established by the Company 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 up to
$5,571,000 (2014: $5,020,000).
Independence Group NL
132 Independence Group NL
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
12 Earnings per share
(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
$76,779,000 (2014: $48,579,000).
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Share rights
Weighted average number of ordinary and potential ordinary shares used as the
denominator in calculating diluted earnings per share
2015
Number
2014
Number
234,248,549
233,318,721
2,183,588
1,991,871
236,432,137
235,310,592
(c)
Information concerning the classification of securities
Share rights
Share rights granted to executives and employees under the Company's Employee Performance Rights Plan are
included in the calculation of diluted earnings per share. The rights are not included in the determination of basic
earnings per share. Further information about the share rights is provided in note 31.
13 Current assets - Cash and cash equivalents
Cash at bank and in hand
Deposits at call
2015
$'000
121,247
49
121,296
2014
$'000
32,021
24,951
56,972
The Group has cash balances of $2,226,000 (2014: $1,268,000) not generally available for use as the balances are
held by the Tropicana Joint Venture and may only be used in relation to joint venture expenditure.
The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
note 4.
14 Current assets - Trade and other receivables
Trade receivables
GST Receivable
Sundry debtors
Prepayments
2015
$'000
13,481
1,924
3,442
3,239
22,086
2014
$'000
24,828
1,112
1,314
2,816
30,070
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.
Information about the Group’s exposure to credit risk, foreign exchange and commodity price risk in relation to trade
receivables is provided in note 4.
Independence Group NL
69
Annual Report 2015 133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 15 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
Notes to the consolidated financial statements
30 June 2015
2015
$'000
16,103
9,670
4,726
5,696
881
798
2,424
40,298
Restated*
2014
$'000
14,965
3,834
4,441
11,661
499
1,510
3,473
40,383
24,979
24,979
8,803
8,803
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.
16 Current assets - Financial assets at fair value through profit or loss
Shares in Australian listed and unlisted companies - at fair value through profit or loss
2015
$'000
15,574
15,574
2014
$'000
858
858
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 4.
During the current year, the changes in fair values of financial assets resulted in a gain to the profit or loss of
$1,467,000 (2014: $2,000 loss). Changes in fair values of financial assets at fair value through profit or loss are
recorded in fair value of financial investments in the profit or loss.
17 Non-current assets - Receivables
Prepayments
Term and other deposits
2015
$'000
-
18
18
2014
$'000
27
30
57
Independence Group NL
134 Independence Group NL
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 18 Non-current assets - Property, plant and equipment
Notes to the consolidated financial statements
30 June 2015
Buildings
Buildings - at cost
Accumulated depreciation and impairment
Mining plant under construction
Mining plant under construction - at cost
Mining plant and equipment
Mining plant and equipment - at cost
Accumulated depreciation
Motor vehicles
Motor vehicles - at cost
Accumulated depreciation and impairment
Furniture, fittings and other equipment
Furniture, fitting and other equipment - at cost
Accumulated depreciation and impairment
Leased assets
Leased asset - at cost
Accumulated depreciation and impairment
2015
$'000
36,176
(16,135)
20,041
3,431
3,431
124,050
(104,443)
19,607
4,440
(3,221)
1,219
8,490
(6,023)
2,467
3,903
(3,424)
479
47,244
2014
$'000
35,994
(12,570)
23,424
407
407
92,223
(79,039)
13,184
18,260
(14,386)
3,874
7,396
(4,787)
2,609
18,746
(15,014)
3,732
47,230
(i) 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
Net carrying amount at end of financial year
Mining plant under construction
Carrying amount at beginning of financial year
Additions
Transfers
Net carrying amount at end of financial year
2015
$'000
23,424
112
70
(3,565)
20,041
407
3,338
(314)
3,431
2014
$'000
7,791
684
18,030
(3,081)
23,424
2,362
279
(2,234)
407
Independence Group NL
71
Annual Report 2015 135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 18 Non-current assets - Property, plant and equipment (continued)
Notes to the consolidated financial statements
30 June 2015
Mining plant and equipment
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Net carrying amount at end of financial year
Motor vehicles
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Net carrying amount at end of financial year
Furniture, fittings and other equipment
Carrying amount at beginning of financial year
Additions
Transfers
Disposals
Depreciation expense
Net carrying amount at end of financial year
Leased assets
Carrying amount at beginning of financial year
Disposals
Depreciation expense
Net 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
Disposals
Depreciation expense
Net carrying amount at end of financial year
(ii) Non-current assets pledged as security
Refer to note 26 for information on non-current assets pledged as security by the Group.
Independence Group NL
136 Independence Group NL
2015
$'000
13,184
11,009
3,628
(60)
(8,154)
19,607
3,874
383
(2,536)
(20)
(482)
1,219
2,609
926
185
-
(1,253)
2,467
3,732
(67)
(3,186)
479
47,230
15,768
1,033
(147)
(16,640)
47,244
2014
$'000
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
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
19 Non-current assets - Mine properties
Mine properties in production
2015
$'000
303,300
303,300
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 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 to property, plant and equipment
Transfers from mine properties in development
Transfers to inventories
Amortisation expense
Carrying amount at end of financial year
20 Non-current assets - Exploration and evaluation expenditure
Exploration and evaluation costs
2015
$'000
-
-
-
-
-
-
-
329,279
46,356
10,609
(1,033)
-
-
(81,911)
303,300
2015
$'000
109,930
109,930
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
Impairment charge
Carrying amount at end of financial year
2015
$'000
111,583
12,417
(10,609)
(3,461)
109,930
Restated*
2014
$'000
329,279
329,279
Restated*
2014
$'000
230,628
28,587
(17,215)
(242,717)
544
173
-
89,062
47,589
10,188
-
242,717
(9,519)
(50,758)
329,279
Restated*
2014
$'000
111,583
111,583
Restated*
2014
$'000
115,379
12,471
(10,188)
(6,079)
111,583
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 during the reporting period:
Independence Group NL
73
Annual Report 2015 137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
20 Non-current assets - Exploration and evaluation expenditure (continued)
Impairment charge
Jaguar regional exploration costs
Karlawinda exploration and feasibility costs
Other regional exploration costs
21 Intangible assets
At 1 July 2013
Cost
Accumulation amortisation
Net book amount
Year ended 30 June 2014
Opening net book amount
Amortisation charge
At 30 June 2014
Cost
Accumulation amortisation
At 30 June 2015
Cost
Accumulated amortisation
22 Current liabilities - Trade and other payables
Current liabilities
Trade payables
Other payables
Employee entitlements
The Group’s exposure to liquidity risk in disclosed in note 4.
Independence Group NL
138 Independence Group NL
2015
$'000
2,232
-
1,229
3,461
Database
$'000
1,378
(1,199)
179
179
(179)
-
1,378
(1,378)
-
1,378
(1,378)
-
2015
$'000
8,918
31,558
4,615
45,091
Restated*
2014
$'000
774
3,022
2,283
6,079
Total
$'000
1,378
(1,199)
179
179
(179)
-
1,378
(1,378)
-
1,378
(1,378)
-
2014
$'000
7,706
35,276
3,873
46,855
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
23 Current liabilities - Provisions
Provision for employee entitlements
24 Non-current liabilities - Provisions
Provision for employee entitlements
Provision for rehabilitation costs
(a) Movements in provisions
Movements in the provision for rehabilitation costs during the financial year are set out below:
Carrying amount at beginning of financial year
Additional provision
Rehabilitation and restoration borrowing costs expense
Payments during the period
Rehabilitation provision
2015
$'000
2,659
2,659
2015
$'000
1,727
27,660
29,387
2015
$'000
24,018
3,120
590
(68)
27,660
2014
$'000
2,557
2,557
2014
$'000
1,527
24,018
25,545
2014
$'000
20,694
2,889
565
(130)
24,018
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.
25 Derivative financial instruments
Current assets
Commodity hedging contracts - held for trading
Commodity hedging contracts - cash flow hedges
Foreign currency contracts - held for trading
Foreign currency contracts - cash flow hedges
Non-current assets
Commodity hedging contracts - cash flow hedges
Current liabilities
Commodity hedging contracts - held for trading
Commodity hedging contracts - cash flow hedges
Foreign currency contracts - held for trading
Non-current liabilities
Commodity hedging contracts - cash flow hedges
Independence Group NL
2015
$'000
4,981
-
-
-
4,981
-
-
-
762
1,622
2,384
717
717
2014
$'000
-
1,119
29
1,371
2,519
658
658
1,489
4,892
-
6,381
-
-
75
Annual Report 2015 139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
25 Derivative financial instruments (continued)
(i) Instruments used by the Group
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 derivative financial instruments are classified as held for trading and accounted for at fair value through profit or
loss unless they are designated as cash flow hedges. The Group's accounting policy for its cash flow hedges is set out
in note 2(l).
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 4 and below for details of the foreign currency and commodity prices risk being mitigated by the Group’s
derivative instruments as at 30 June 2015 and 30 June 2014.
Nickel
At 30 June 2015, the Group held various nickel commodity contracts denominated in US dollars ("USD"). Foreign
exchange contracts are also held which match the terms of the commodity contracts. These contracts are used to
reduce the exposure to a future decrease in the Australian dollar ("AUD") market value of nickel sales.
The outstanding nickel contracts held by the Group at 30 June 2015 are as follows:
Tonnes of metal
Weighted average price
(USD/metric tonne)
2015
750
-
750
2014
1,200
1,200
2,400
2015
16,711
-
16,711
2014
16,816
16,401
16,608
Fair value
2015
$'000
4,626
-
4,626
2014
$'000
(2,838)
(3,368)
(6,206)
0 - 6 months
6 - 12 months
Total
The following table details the forward foreign currency contracts outstanding at the reporting date:
Notional amounts (USD)
Weighted average
AUD:USD exchange rate
2015
$'000
12,534
-
-
12,534
2014
$'000
10,174
10,005
19,681
39,860
2015
0.8482
-
-
0.8482
2014
0.9368
0.9212
0.9036
0.9163
Sell USD forward
0 - 3 months
3 - 6 months
6 - 12 months
Total
Fair value
2015
$'000
(1,533)
-
-
(1,533)
2014
$'000
29
140
493
662
Copper
At 30 June 2015,
the Group held various copper commodity contracts denominated in USD. Foreign exchange
contracts are also held which match the terms of the commodity contracts. These contracts are used to reduce the
exposure to a future decrease in the AUD market value of copper sales.
The outstanding copper contracts held by the Group at 30 June 2015 are as follows:
Tonnes of metal
Weighted average price
(USD/metric tonne)
2015
550
-
-
550
2014
1,200
550
950
2,700
2015
6,261
-
-
6,261
2014
6,889
7,178
7,303
7,093
Fair value
2015
$'000
355
-
-
355
0 - 3 months
3 - 6 months
6 - 12 months
Total
Independence Group NL
140 Independence Group NL
2014
$'000
(175)
96
313
234
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
25 Derivative financial instruments (continued)
The following table details the forward foreign currency contracts outstanding at the reporting date:
Notional amounts (USD)
Weighted average
AUD:USD exchange rate
2015
$'000
3,444
-
-
3,444
2014
$'000
-
3,948
6,938
10,886
2015
0.7825
-
-
0.7825
2014
-
0.8783
0.8591
0.8720
Sell USD forward
0 - 3 months
3 - 6 months
6 - 12 months
Total
Fair value
2015
$'000
(89)
-
-
(89)
2014
$'000
-
195
543
738
Gold
Gold collar structures (i.e. purchased put and sold call) have been designated as hedges of future gold sales and have
been designated as cash flow hedges. These comprise:
Ounces of metal
Weighted average price
(AUD/ounce)
2015
2014
23,500
23,500
15,000
15,000
12,500
12,500
33,000
33,000
29,000
29,000
23,500
23,500
51,000
51,000
85,500
85,500
2015
1,350
1,744
1,330
1,560
1,330
1,593
1,339
1,653
2014
1,300
1,803
1,316
1,719
1,350
1,744
1,319
1,758
Fair value
2015
$'000
137
(101)
314
(1,112)
460
(1,177)
911
(2,390)
2014
$'000
237
(14)
803
(316)
1,175
(517)
2,215
(847)
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
The fair value of the gold collars outstanding at the reporting date is comprised exclusively of the extrinsic value (time
value) of the options.
Independence Group NL
77
Annual Report 2015 141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 26 Borrowings
Current
Secured
Lease liabilities
Total secured current borrowings
Non-current
Secured
Bank loans
Lease liabilities
Total secured non-current borrowings
(a) Corporate loan facility
Notes to the consolidated financial statements
30 June 2015
2015
$'000
510
510
2015
$'000
-
-
-
2014
$'000
3,508
3,508
2014
$'000
24,344
510
24,854
On 1 March 2013, the Company entered into a Corporate Loan Facility (Facility) with National Australia Bank. The
Facility comprised a corporate debt facility of $130,000,000 (of which $110,000,000 was cancelled during the year,
leaving an available facility of $20,000,000), an asset finance facility of $20,000,000 and a contingent instrument facility
of $20,000,000.
Total capitalised transaction costs to 30 June 2015 are $nil (2014: $2,377,000). 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. There are no unamortised transaction costs at 30 June
2015. At 30 June 2014, a balance of unamortised transaction costs of $656,000 was offset against the bank loans
contractual liability of $25,000,000.
No borrowing costs were capitalised in the current year. In the prior year, borrowing costs of $544,000 related to a
qualifying asset (Tropicana Gold Project) and were capitalised in accordance with AASB 123 BorrowingCosts. Refer to
note 19.
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 had an additional asset finance facility with Australia and New Zealand
Banking Group Limited in the prior year of $420,000. This facility expired during the year and all outstanding lease
contracts were repaid in full.
Refer to note 33 for details of a new financing facility entered into by the Company in July 2015.
(b)
Interest rate, foreign exchange and liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk are disclosed in note 4.
(c) Assets pledged as security
There are no assets pledged as security for non-current borrowings at 30 June 2015. The carrying amount of assets
pledged as security for non-current borrowings at 30 June 2014 was $25,000,000. The security is provided under a
General Security Agreement 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, $1,315,000 (2014: $15,950,000) is pledged as security in relation to the contingent instrument
facility.
Independence Group NL
142 Independence Group NL
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
26 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 facility1
Contingent instrument facility
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
2015
$'000
20,000
20,000
20,000
60,000
-
510
1,315
1,825
20,000
19,490
18,685
58,175
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
1. This facility provides financial backing in relation to non-performance of third party guarantee requirements.
27 Equity
(a) Contributed equity
Fully paid issued capital
2015
$'000
2014
$'000
737,324
735,060
(i) Movements in ordinary share capital
Details
2015
Number of shares
2015
$'000
2014
Number of shares
2014
$'000
Balance at beginning of financial year
Issue of share under the Employee
Performance Rights Plan
Balance at end of financial year
233,323,905
735,060
232,882,535
734,007
932,668
234,256,573
2,264
737,324
441,370
233,323,905
1,053
735,060
(ii) Ordinary shares
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.
Independence Group NL
79
Annual Report 2015 143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
27 Equity (continued)
(a) Contributed equity (continued)
(iii) Capital management
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.
28 Reserves and retained earnings
(a) Reserves
Hedging reserve
Share-based payments reserve
Foreign currency translation
Acquisition reserve
The movements in each of the reserves is as follows:
Hedgingreserve
Balance at beginning of financial year
Revaluation - gross
Deferred tax
Transfer to net profit - gross
Deferred tax
Balance at end of financial year
Share-basedpaymentsreserve
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
Foreigncurrencytranslationreserve
Balance at beginning of financial year
Currency translation differences arising during the year
Balance at end of financial year
Acquisitionreserve
Balance at beginning of financial year
Balance at end of financial year
Independence Group NL
144 Independence Group NL
2015
$'000
-
13,057
(8)
3,142
16,191
2015
$'000
(2,038)
4,349
(1,305)
(1,237)
231
-
12,372
2,949
(2,264)
13,057
-
(8)
(8)
3,142
3,142
2014
$'000
(2,038)
12,372
-
3,142
13,476
2014
$'000
2,397
(7,894)
2,368
1,559
(468)
(2,038)
8,793
4,632
(1,053)
12,372
-
-
-
3,142
3,142
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
28 Reserves and retained earnings (continued)
(b) Nature and purpose of reserves
Hedging reserve
The hedging reserve is used to record gains or losses on derivatives that are designated and qualify as cash flow
hedges and that are recognised in other comprehensive income, as described in note 2(l). Amounts are reclassified to
profit or loss when the associated hedged transaction affects profit or loss.
As at the reporting date, cash flow hedges comprise only gold collar structures as set out in note 25(i). The fair value of
the gold collars outstanding at the reporting date is comprised exclusively of the extrinsic value (time value) of the
options and hence no amount of gains or losses are recorded in the hedging reserve at 30 June 2015.
Share-based payments reserve
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.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income as described in note 2(d) and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
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.
(c) Accumulated losses
Balance at beginning of financial year
Net profit for the period
Dividends paid during the year
Balance at end of financial year
Notes
11
2015
$'000
(139,031)
76,779
(25,768)
(88,020)
Restated*
2014
$'000
(178,277)
48,579
(9,333)
(139,031)
Independence Group NL
81
Annual Report 2015 145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 29 Cash flow statement reconciliation
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
Notes to the consolidated financial statements
30 June 2015
Profit for the year
Depreciation and amortisation
Impairment of exploration and evaluation expenditure
Net (gain) loss on sale of non-current assets
Fair value of movement of financial investments
Non-cash employee benefits expense - share-based payments
Dividend and interest income
Fair value adjustment to derivatives
Amortisation of borrowing expenses
Amortisation of lease incentive
Foreign exchange gains (losses) on cash balances
Change in operating assets and liabilities:
(Increase) decrease in trade receivables
(Increase) in inventories
(Increase) decrease in deferred tax assets
(Increase) decrease in other operating receivables and prepayments
(Decrease) increase in trade and other payables
(Decrease) increase in deferred tax liabilities
(Decrease) increase in other provisions
Net cash inflow from operating activities
(b) Non-cash investing and financing activities
There were no non-cash investing and financing activities during the current or previous year.
2015
$'000
76,779
98,551
3,461
(376)
(1,467)
2,949
-
(1,971)
709
(55)
(2,904)
11,348
(16,091)
21,878
(686)
(2,539)
11,304
823
201,713
Restated*
2014
$'000
48,579
65,938
6,079
60
2
4,632
(5)
3,886
1,280
(55)
1,218
(11,989)
(26,426)
(134)
2,602
9,657
22,253
1,043
128,620
Independence Group NL
146 Independence Group NL
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
30 Related party transactions
(a) Subsidiaries
Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal subsidiaries
in accordance with the accounting policy described in note 2(b):
Name of entity
incorporation Class of shares
Equity holding *
Country of
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
Independence Europe Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2015
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2014
%
100
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. For further
information refer to note 36.
(b) Transactions with other related parties
During the financial year, a wholly-owned entity paid dividends of $48,000,000 (2014: $20,000,000) 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.
(c) Key management personnel
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2015
$
3,212,925
242,994
40,301
607,413
4,103,633
2014
$
3,355,060
255,110
70,903
803,265
4,484,338
Detailed remuneration disclosures are provided in the remuneration report on pages 14 to 23.
Independence Group NL
83
Annual Report 2015 147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
31 Share-based payments
(a) Employee Performance Rights Plan
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.
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
2015
2014
Number of
share rights
3,255,175
509,480
(932,668)
(518,230)
-
2,313,757
Weighted
average fair
value
2.99
2.65
3.00
3.23
-
2.85
Number of
share rights
3,239,280
1,821,215
(441,370)
(1,231,204)
(132,746)
3,255,175
Weighted
average fair
value
2.66
3.29
3.93
3.62
2.04
2.99
Fair value of share rights granted
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
peer
group/
index
volatility*
%
Risk free
rate
Effective
life
Weighted
average
share price at
grant date
Probability
ROE
exceeding
target
%
Years
$
%
09/01/2015
21/11/2014
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
TSR
TSR
ROE
TSR
ROE
TSR
TSR
ROE
TSR
ROE
TSR
TSR
ROE
2.17
2.40
1.45
1.45
-
0.47
-
0.45
0.45
-
1.07
-
0.72
0.72
-
42
44
48
43
-
41
-
40
40
-
54
-
46
46
-
63
62
22
24
-
24
-
22
23
-
30
-
29
29
-
2.15
2.56
2.70
2.95
-
2.64
-
2.67
2.72
-
3.09
-
3.56
3.56
-
2.5
2.6
0.3
2.3
-
2.6
-
0.3
2.3
-
2.6
-
0.3
2.3
-
4.60
4.16
4.13
4.13
-
4.29
-
4.47
4.47
-
4.69
-
4.17
4.17
-
1. The peer group volatility is calculated as the average volatility of the 22 peer group companies.
The share-based payments expense included in profit or loss for the year totalled $2,949,000 (2014: $4,632,000).
Independence Group NL
148 Independence Group NL
-
-
-
-
<50
-
<50
-
-
<50
-
<50
-
-
<50
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
31 Share-based payments (continued)
Employee share scheme
Sharerightsgrantedafter1July2014
Vesting of the performance rights granted to executive directors and executives after 1 July 2014 is based on a total
shareholder return ("TSR") scorecard. The TSR scorecard for the three year measurement period will be determined
based on a percentile ranking of the Company's TSR results relative to the TSR of each of the companies in the peer
group over the same three year measurement period.
The peer group is to comprise the constituents of the S&P ASX 300 Metals and Mining Index who are engaged in gold
and/or based metals mining in Australia and have the closest market capitalisation to the Company.
The vesting schedule of the performance rights subject to relative TSR testing is as follows:
Relative TSR performance
Less than 50th percentile
Between 50th and 75th percentile
75th percentile or better
Level of vesting
Zero
Pro-rata straight line percentage between 50% and 100%
100%
The Company's TSR performance for share rights issued during the current financial year will be assessed against the
following 22 peer group companies:
* Aditya Birla Minerals Ltd
* Alacer Gold Corp.
* Beadell Resources Ltd
* Cudeco Ltd
* Evolution Mining Limited
* Kingsgate Consolidated Limited
* Medusa Mining Ltd
* Metals X Limited
* Mincor Resources NL
* Northern Star Resources Limited
* Oceana Gold Limited
Peer companies
* Oz Minerals Ltd
* PanAust Ltd
* Panoramic Resources Ltd
* Perseus Mining Limited
* Regis Resources Limited
* Resolute Mining Limited
* Saracen Mineral Holdings Limited
* Sandfire Resources Ltd
* Silver Lake Resources Limited
* Sirius Resources NL
* Western Areas Ltd
Share rights granted prior to 30 June 2014
Vesting of the performance rights granted to executive directors and other executives of the Company prior to 30 June
2014 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%
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
Independence Group NL
85
Annual Report 2015 149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
31 Share-based payments (continued)
Employee share scheme (continued)
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 used in previous financial years was 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 number of 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
Level of vesting
0%
0%
40%
60%
80%
100%
Shareholder return
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.
Independence Group NL
150 Independence Group NL
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
32 Commitments and contingencies
(a) Commitments
(i) Leasing commitments
Operatingleasecommitments
Commitments for minimum lease payments in relation to non-cancellable operating
leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Total minimum lease payments
Financeleaseandhirepurchasecommitments
Future minimum lease payments under lease contracts with the present value of net
minimum lease payments are as follows:
Within one year
Later than one year but not later than five years
Total minimum lease payments
Future finance charges
Present value of minimum lease payments
Current
Non-current
Total included in borrowings
2015
$'000
2014
$'000
1,275
5,516
1,242
8,033
2015
$'000
522
-
522
(12)
510
510
-
510
1,374
6,768
1,242
9,384
2014
$'000
3,671
522
4,193
(175)
4,018
3,508
510
4,018
(ii) Property, plant and equipment commitments
The Group had no specific contractual obligations to purchase plant and equipment at the reporting date (2014: $nil).
(b) Contingencies
The Group had guarantees outstanding at 30 June 2015 totalling $1,315,000 (2014: $15,950,000) 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 occurring after the reporting period
On 21 August 2015, the Company announced the establishment of a final dividend pool of $13,000,000. The record
date for this final dividend is expected to be no later than 30 September 2015. The final dividend will be fully franked.
On 25 May 2015, the Company and Sirius Resources NL ("Sirius") announced the execution of a binding Scheme
Implementation Deed ("SID") under which the Company will acquire all the issued capital of Sirius by way of an
Acquisition Scheme of Arrangement (the "Acquisition Scheme"). In addition, Sirius will also undertake a demerger of its
Polar Bear and Scandinavian exploration assets via a Demerger Scheme of Arrangement ("Demerger Scheme"),
whereby the assets will be held in a new listed vehicle called S2 Resources Ltd.
If successful, the transaction will be implemented via two inter-conditional Schemes of Arrangement (the Acquisition
Scheme and the Demerger Scheme), and a capital reduction to effect the demerger. In exchange for their shares, Sirius
shareholders will receive:
• 0.66 Independence Group shares for each Sirius share held;
• Cash consideration of 52 cents cash for each Sirius share held; and
• Circa one S2 share for every 2.5 Sirius shares held.
Independence Group NL
87
Annual Report 2015 151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
33 Events occurring after the reporting period (continued)
The Federal Court of Australia has given orders to Sirius approving the issue of the Acquisition Scheme and Demerger
Scheme Booklets in relation to the proposed transaction. These Booklets were provided to Sirius shareholders in early
August 2015, and will be followed by meetings of shareholders of Sirius to approve the Schemes to be held on 3
September 2015.
The Board of Sirius have unanimously recommended that, in the absence of a superior proposal, all Sirius shareholders
vote in favour of the Acquisition Scheme.
In July 2015, the Company entered into a syndicated facility agreement ("Debt Agreement") with National Australia
Bank Limited, Australia and New Zealand Banking Group Limited and Commonwealth Bank of Australia Limited for a
$550 million unsecured committed term finance facility. The Debt Agreement comprises:
• A five year $350 million amortising term loan facility that will be used to refinance the existing Nova Project finance
facility, and provide funds for the continued development, construction and operation of the Nova Project; and
• A five year $200 million revolving loan facility that will be used to partially fund the payment of the cash component
of the Acquisition Scheme for Sirius (as discussed above) and transaction costs, in addition to providing funding for
general corporate purposes.
The Debt Agreement has been entered into to assist the Company in meeting its obligations under the relevant
acquisition documents that pertain to the acquisition of Sirius by the Company. The Debt Agreement is intended to
provide the Company with funds required for the ongoing construction and development of Sirius’ Nova Project, as well
as general corporate purposes. The Debt Agreement is conditional upon the successful acquisition of Sirius, to be
determined by a court hearing for approval of the Scheme of Arrangement in September 2015.
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 Director 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.
34 Remuneration of auditors
The auditor of Independence Group NL is BDO Audit (WA) Pty Ltd.
AmountsreceivedordueandreceivablebyBDOAudit(WA)PtyLtdfor:
Audit and review of financial statements
Other services in relation to the entity and any other entity in the consolidated
Group
2015
$
220,500
35,913
256,413
2014
$
261,200
2,350
263,550
Independence Group NL
152 Independence Group NL
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
35 Parent entity financial 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
Issued capital
Reserves
Acquisition reserve
Hedging reserve
Share-based payments reserve
Accumulated losses
Total equity
Profit or loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
(b) Guarantees entered into by the parent entity
2015
$'000
115,225
614,930
730,155
24,717
38,914
63,631
Restated*
2014
$'000
37,952
653,904
691,856
26,013
50,236
76,249
666,524
615,607
(666,524)
(615,607)
737,324
735,060
3,142
-
13,057
(86,999)
666,524
2015
$'000
73,736
-
73,736
3,142
(2,038)
12,372
(134,967)
613,569
2014
$'000
14,405
-
14,405
The parent entity has given unsecured guarantees in respect of finance leases of subsidiaries amounting to $510,000
(2014: $3,406,000).
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 2015 or 30 June 2014.
(d) Contractual commitments for the acquisition of property, plant or equipment
The parent entity did not have any outstanding contractual commitments for the acquisition of property, plant and
equipment at 30 June 2015 or 30 June 2014.
Independence Group NL
89
Annual Report 2015 153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
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 retained earnings
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 retained earnings for the year ended 30 June 2015 of the closed group consisting of
Independence Group NL, Independence Long Pty Ltd and Independence Jaguar Limited.
Consolidated statement of profit or loss and other comprehensive income
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 expense
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Impairment of loans to subsidiaries
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Itemsthatmaybereclassifiedtoprofitorloss
Effective portion of changes in fair value of cash flow hedges, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
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
Independence Group NL
154 Independence Group NL
2015
$'000
495,298
3,327
(135,352)
(63,841)
(2,949)
1,467
(95,959)
(271)
(21,184)
(15,647)
(12,297)
(19,539)
(1,566)
(3,461)
(4,278)
(11,004)
112,744
(35,142)
77,602
2,038
2,038
79,640
2015
$'000
(16,282)
77,602
(25,768)
35,552
Restated*
2014
$'000
399,004
-
(100,494)
(61,196)
(4,632)
(2)
(66,521)
(269)
(22,930)
(14,309)
(11,973)
(17,551)
(5,138)
(3,057)
(12,518)
(9,362)
69,052
(25,382)
43,670
(4,435)
(4,435)
39,235
Restated*
2014
$'000
(50,619)
43,670
(9,333)
(16,282)
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 Notes to the consolidated financial statements
30 June 2015
36 Deed of cross guarantee (continued)
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2015 of the closed group consisting of Independence
Group NL, Independence Long Pty Ltd and Independence Jaguar Limited.
2015
$'000
Restated*
2014
$'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
Mine properties
Exploration and evaluation expenditure
Deferred tax assets
Investments in controlled entities
Investments in joint ventures
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
Derivative financial instruments
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Other reserves
Retained earnings
TOTAL EQUITY
Independence Group NL
119,009
19,179
21,511
15,524
4,981
180,204
8
25,353
82,935
8,235
130,725
139,333
316,150
-
702,739
882,943
52,389
510
2,384
2,659
57,942
-
717
13,942
21,267
35,926
93,868
789,075
737,324
16,199
35,552
789,075
55,603
27,637
26,935
808
2,519
113,502
54
25,030
87,917
9,888
151,498
139,276
312,373
658
726,694
840,196
38,866
3,508
6,381
2,557
51,312
24,854
-
13,540
18,236
56,630
107,942
732,254
735,060
13,476
(16,282)
732,254
91
Annual Report 2015 155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 DIRECTORS’ DECLARATION
Directors' declaration
30 June 2015
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 91 to 155 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Accounting Standards,
professional reporting requirements, and
the Corporations Regulations 2001 and other mandatory
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its
performance for the 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 obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 36.
This declaration is made in accordance with a resolution of Directors.
Peter Bradford
Managing Director
Perth, Western Australia
Dated this 21st day of August 2015
Independence Group NL
156 Independence Group NL
92
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
INDEPENDENT AUDITOR’S REPORT
To the members of Independence Group NL
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Report
We have audited the accompanying financial report of Independence Group NL, which comprises the
To the members of Independence Group NL
consolidated balance sheet as at 30 June 2015, the consolidated statement of profit or loss and other
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
Report on the Financial Report
policies and other explanatory information, and the directors’ declaration of the consolidated entity
We have audited the accompanying financial report of Independence Group NL, which comprises the
comprising the company and the entities it controlled at the year’s end or from time to time during the
consolidated balance sheet as at 30 June 2015, the consolidated statement of profit or loss and other
financial year.
comprehensive income, the consolidated statement of changes in equity and the consolidated
Directors’ Responsibility for the Financial Report
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
The directors of the company are responsible for the preparation of the financial report that gives a
comprising the company and the entities it controlled at the year’s end or from time to time during the
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
financial year.
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
Directors’ Responsibility for the Financial Report
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
The directors of the company are responsible for the preparation of the financial report that gives a
101 Presentation of Financial Statements, that the financial statements comply with International
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
Financial Reporting Standards.
and for such internal control as the directors determine is necessary to enable the preparation of the
Auditor’s Responsibility
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
101 Presentation of Financial Statements, that the financial statements comply with International
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
Financial Reporting Standards.
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
Auditor’s Responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
the financial report. The procedures selected depend on the auditor’s judgement, including the
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
In making those risk assessments, the auditor considers internal control relevant to the company’s
reasonable assurance about whether the financial report is free from material misstatement.
preparation of the financial report that gives a true and fair view in order to design audit procedures
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
the financial report. The procedures selected depend on the auditor’s judgement, including the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
In making those risk assessments, the auditor considers internal control relevant to the company’s
well as evaluating the overall presentation of the financial report.
preparation of the financial report that gives a true and fair view in order to design audit procedures
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
for our audit opinion.
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
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
93
93
INDEPENDENT AUDITOR’S REPORT
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
INDEPENDENT AUDITOR’S REPORT
To the members of Independence Group NL
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Report
We have audited the accompanying financial report of Independence Group NL, which comprises the
To the members of Independence Group NL
consolidated balance sheet as at 30 June 2015, the consolidated statement of profit or loss and other
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
Report on the Financial Report
policies and other explanatory information, and the directors’ declaration of the consolidated entity
We have audited the accompanying financial report of Independence Group NL, which comprises the
comprising the company and the entities it controlled at the year’s end or from time to time during the
consolidated balance sheet as at 30 June 2015, the consolidated statement of profit or loss and other
financial year.
comprehensive income, the consolidated statement of changes in equity and the consolidated
Directors’ Responsibility for the Financial Report
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
The directors of the company are responsible for the preparation of the financial report that gives a
comprising the company and the entities it controlled at the year’s end or from time to time during the
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
financial year.
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
Directors’ Responsibility for the Financial Report
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
The directors of the company are responsible for the preparation of the financial report that gives a
101 Presentation of Financial Statements, that the financial statements comply with International
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
Financial Reporting Standards.
and for such internal control as the directors determine is necessary to enable the preparation of the
Auditor’s Responsibility
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2(a)(i), the directors also state, in accordance with Accounting Standard AASB
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
101 Presentation of Financial Statements, that the financial statements comply with International
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
Financial Reporting Standards.
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
Auditor’s Responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
the financial report. The procedures selected depend on the auditor’s judgement, including the
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
In making those risk assessments, the auditor considers internal control relevant to the company’s
reasonable assurance about whether the financial report is free from material misstatement.
preparation of the financial report that gives a true and fair view in order to design audit procedures
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
the financial report. The procedures selected depend on the auditor’s judgement, including the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
In making those risk assessments, the auditor considers internal control relevant to the company’s
well as evaluating the overall presentation of the financial report.
preparation of the financial report that gives a true and fair view in order to design audit procedures
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
for our audit opinion.
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
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
93
93
Annual Report 2015 157
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 2015
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
2015. 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 2015
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Ian Skelton
Director
Perth, 21 August 2015
158 Independence Group NL
94
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 24 September 2015.
1.
Shareholding
a. Distribution of shareholders
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
TOTAL
Total holders
4,520
3,676
1,086
1,200
184
10,666
Units
1,738,353
9,123,585
7,997,132
32,685,914
459,877,887
511,422,871
% of Issued Capital
0.34
1.78
1.56
6.39
89.93
100
b. The number of shareholders holding less than a marketable parcel of fully paid ordinary shares is 1,652.
c. The Company has received the following notices of substantial shareholding (“Notice”):
Substantial shareholder
Relevant Interest per the Notice - Number of shares
Mark Creasy and Creasy Group entities
96,552,917
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 25 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 511,422,871 ordinary shares of the Company on the Australian
Securities Exchange (ASX).
2.
3.
4.
5.
6.
7.
Unquoted securities: IGO has the following performance rights on issue:
Number
368,059
509,480
Class
Performance Rights vesting not earlier than 1 July 2016*.
Performance Rights vesting not earlier than 1 July 2017*.
Note 1 – Updated to reflect vesting of shares issued under this Appendix 3B. The remaining shares are still subject to
vesting conditions.
* Subject to vesting conditions.
There are currently no other securities outstanding which have been issued by the Company and not quoted on the ASX.
Annual Report 2015 159
8.
Twenty largest holders of ordinary shares
Ordinary Shareholders
No. of Shares held
Percentage Held
Free Ci Pty Ltd
Fraserx Pty Ltd
Ponton Minerals Pty Ltd
Lake Rivers Gold Pty Ltd
National Nominees Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
J P Morgan Nominees Australia Limited
Yandal Investments Pty Ltd
HSBC Custody Nominees Pty Ltd
1
2
3
4
5
6
7
8
9
10
11
12
13 Warbont Nominees Pty Ltd
14
15
16
17
18
19
20
HSBC Custody Nominees Pty Ltd
HSBC Custody Nominees Pty Ltd
CS Fourth Nominees Pty Ltd
Yandal Investments Pty Ltd
UBS Nominees Pty Ltd
AMP Life Limited
Morgan Stanley Australia Securities Pty Ltd
Citicorp Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
92,596,315
69,649,959
52,409,965
41,929,135
32,994,873
13,678,188
13,006,650
10,964,532
10,964,531
10,964,531
8,317,337
5,969,813
5,420,162
4,804,310
4,620,000
4,420,688
4,169,183
3,663,088
3,565,654
2,991,705
397,100,619
18.11
13.62
10.25
8.2
6.45
2.67
2.54
2.14
2.14
2.14
1.63
1.17
1.06
0.94
0.9
0.86
0.82
0.72
0.7
0.58
77.65
GLOSSARY OF TERMS
AC – means air core usually in the context of drilling or drill holes.
AngloGold Ashanti – means AngloGold Ashanti Australia Pty Ltd.
Ag – means silver.
Au – means Gold.
BCM – means bulk cubic metres.
Cu – means Copper.
EM – means electromagnetic.
EM conductors – means electromagnetic conductors returned from EM surveys.
FLEM – means Fixed-Loop electromagnetic.
LTIFR – means lost time injury frequency rate per million hours worked.
MLEM – means moving-loop electromagnetic surveys.
Mt – means million metric tonnes.
Ni – means Nickel.
oz – means ounce.
RC drilling – means reverse circulation drilling.
t – means metric tonnes.
TGM – means the Tropicana Gold Mine that is 30% owned by the Company and 70% owed by AngloGold Ashanti under the TJV agreement.
TJV – means the Tropicana Joint Venture that is 30% owned by the Company and 70% owed by AngloGold Ashanti.
Zn – means Zinc.
$ – means Australian dollars. All currency amounts in this report are Australian Dollars unless otherwise stated.
$M – means million Australian dollars.
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)
Underlying EBITDA is a non-IFRS measure and comprises of profit before tax less interest income net of finance costs, depreciation &
amortisation expense and exploration impairment expenses .
Currency
All currency amounts in this report are Australian Dollars unless otherwise stated.
All-in Sustaining Costs (AISC) per ounce of gold
IGO reports All-in Sustaining Costs (AISC) per ounce of gold in AUD for its 30% interest in the Tropicana Gold Mine using the World Gold
Council guidelines for AISC. The World Gold Council guidelines publication was released via press release on 27th June 2013 and is available
from the World Gold Council’s website.
160 Independence Group NL
COMPANY DIRECTORY
Directors
Peter Bilbe
Non-Executive Chairman
Peter Bradford
Managing Director
Peter Buck
Non-Executive Director
Geoffrey Clifford
Non-Executive Director
Keith Spence
Non-Executive Director
Mark Bennett
Non-Executive Director
Neil Warburton
Non-Executive Director
Management
Peter Bradford
Managing Director and CEO
Brett Hartmann
General Manager Operations
Scott Steinkrug
Chief Financial Officer & Joint Company Secretary
Matt Dusci
General Manager New Business
Rob Dennis
General Manager Projects
Sam Retallack
Organisational Capability Manager
Keith Ashby
Sustainability Manager
Joanne McDonald
Company Secretary
Cautionary Notes and Disclaimer
Perth Office
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
Auditor
BDO Audit (WA) Pty Ltd
128 Hay Street
Subiaco WA 6008
Telephone: +61 8 9380 8400
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
Shares
Listed on Australian Securities Exchange (ASX)
ASX code: IGO
Shares on issue: 511,422,871
ordinary shares
This annual report has been prepared by Independence Group NL (“IGO”) (ABN 46 092 786 304). It should not be considered as an offer or invitation to
subscribe for or purchase any securities in IGO or as an inducement to make an offer or invitation with respect to those securities in any jurisdiction. This
annual report contains general summary information about IGO. The information, opinions or conclusions expressed in the course of this presentation
should be read in conjunction with IGO’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX),
which are available on the IGO website. No representation or warranty, express or implied, is made in relation to the fairness, accuracy or completeness
of the information, opinions and conclusions expressed in this presentation.
This annual report includes forward looking information regarding future events, conditions, circumstances and the future financial performance of
IGO. Often, but not always, forward looking statements can be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”,
“plan”, “estimate”, “anticipate”, “continue” and “guidance”, or other similar words and may include statements regarding plans, strategies and objectives of
management, anticipated production or construction commencement dates and expected costs or production outputs. Such forecasts, projections and
information are not a guarantee of future performance and involve unknown risks and uncertainties, many of which are beyond IGO’s control, which may
cause actual results and developments to differ materially from those expressed or implied. Further details of these risks are set out below. All references to
future production and production guidance made in relation to IGO are subject to the completion of all necessary feasibility studies, permit applications and
approvals, construction, financing arrangements and access to the necessary infrastructure. Where such a reference is made, it should be read subject to
this paragraph and in conjunction with further information about the Mineral Resources and Ore Reserves, as well as any Competent Persons’ Statements
included in periodic and continuous disclosure announcements lodged with the ASX. Forward looking statements in this presentation only apply at the
date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information IGO
does not undertake any obligation to publically update or revise any of the forward looking statements or to advise of any change in events, conditions or
circumstances on which any such statement is based.
There are a number of risks specific to IGO and of a general nature which may affect the future operating and financial performance of IGO and the value
of an investment in IGO including and not limited to economic conditions, stock market fluctuations, commodity demand and price movements, access to
infrastructure, timing of environmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve and resource estimations, native title
and title risks, foreign currency fluctuations and mining development, construction and commissioning risk. The production guidance in this presentation is
subject to risks specific to IGO and of a general nature which may affect the future operating and financial performance of IGO.
Any references to Mineral Resource and Ore Reserve estimates should be read in conjunction with IGO’s 2015 Mineral Resource and Ore Reserve
announcement dated 28 October 2015, and lodged with the ASX, which are available on the IGO website. Any references to Mineral Resource and Ore
Reserve estimates for Sirius Resources NL (“Sirius” or “SIR”) should be read in conjunction with SIR’s ASX announcement dated 14 July 2014.
www.igo.com.au
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