ANNUAL
REPORT
2018
We believe in a world
where people power makes
amazing things happen.
WHO WE ARE
Independence Group NL (‘IGO’ or ‘the
Company’) is a leading ASX-listed mining
and exploration company. Our strategic
focus is on high quality assets of scale
and longevity and an evolving strategy
to align the business to the structural shift
to energy storage. The Company’s focus
is on its 100% owned, world class Nova
nickel-copper-cobalt operation, its 30%
interest in the Tropicana Operation, a Joint
Venture with AngloGold Ashanti Australia Ltd,
and its portfolio of belt-scale exploration
projects in Western Australia and the
Northern Territory.
THE IGO PURPOSE
Making a difference.
We believe in a world where people power
makes amazing things happen. Where
technology opens up new horizons and
clean energy makes the planet a better
place for every generation to come.
We are bold, passionate, fearless and
fun – a smarter, kinder, more innovative
company. Our work is making fundamental
changes to the way communities all over the
world grow, prosper and stay sustainable.
Our teams are finding and producing the
specialist metals that will make energy
storage mobile, efficient and effective
enough to make long-term improvements
to the lifestyle of hundreds of millions
of people across the globe.
How? New battery storage technology
is finally unleashing the full potential
of renewable energy by allowing power
produced from sun, wind and other sources
to be stored and used when and where
it’s needed. This technology will impact
future generations in ways we cannot yet
imagine, improving people’s quality of life
and changing the way we live. We believe
in a green energy future and by delivering
the metals needed for new age batteries,
we are making it happen.
This is the IGO Difference.
ABOUT THIS REPORT
This annual report is a summary of IGO
and its subsidiary companies’ operations,
activities and financial position as at
30 June 2018.
All dollar figures are expressed in Australian
dollars unless otherwise stated.
CONTENTS
Who We Are
2018 Snapshot
Chairman & CEO Message
Our People
Safety
Sustainability & Community
FY19 Guidance and FY18 Scorecard / IGO Assets
Nova Operation
Tropicana Operation
Regional Exploration and Development
Mineral Resources & Ore Reserves
Corporate Governance
IGO Board
Directors’ Report and Remuneration Report
FY18 Financial Statements
Additional ASX Information
Corporate Directory
01
02
04
06
10
12
14
16
18
20
23
29
30
32
65
132
135
IGO ANNUAL REPORT 2018 — 01
2018 SNAPSHOT
The 2018 financial year was a successful year
for IGO with record revenue and underlying
EBITDA as a result of the delivery of the first
year of commercial production at Nova, strong
operational performance at Tropicana and
a rationalisation of our portfolio.
KEY ACHIEVEMENTS
FOR THE YEAR
Nova’s first year of commercial
production delivered 22,258t
and 9,545t of nickel and
copper respectively
Tropicana reached two million
ounces of production in early
January 2018
Portfolio rationalisation,
with Stockman and Jaguar
divestments successfully
completed
Balance sheet continued
to strengthen with net debt
reduced from $164M to $4M
during FY18
Total interim and final fully
franked dividends of 3 cents
for FY18
Nova downstream
processing metallurgical
testwork demonstrated
proof of concept
Completed Australia’s largest
ever hard-rock 3D seismic
survey
02 — IGO ANNUAL REPORT 2018
Overall contained nickel and copper
production for Nova for the 2018 financial
year (FY18) was 22,258 tonnes and 9,545
tonnes respectively. This fell slightly short
of guidance. Tropicana production for FY18
was slightly better than the mid-point
of the guidance range, with improved
mill feed grades attributed to the grade-
streaming strategy adopted late in FY18.
This grade-streaming is expected
to continue in FY19.
At year end, our Long Operation had
commenced care and maintenance after
delivering nickel production better than
the mid-point of guidance. During the
year, IGO announced the divestment
of the Jaguar Operation to CopperChem
Pty Limited (CopperChem), a wholly owned
subsidiary of Washington H. Soul Pattinson
and Company Limited. This transaction
was completed on 31 May 2018, for total
consideration of $73 million. IGO also
completed the divestment of the Stockman
Project to CopperChem in December
2017 for proceeds of $32 million and
a net smelter return royalty.
FY18 was an exciting year for exploration
and growth, with further consolidation
of tenure on the Fraser Range.
This was coupled with extensive regional
exploration activities across the Fraser
Range and at Lake Mackay, and entry
into two new early stage projects. Total
exploration and growth spend, including
acquisitions in mineral interests and
investments in growth opportunities,
was $55 million.
Our balance sheet was further
strengthened throughout FY18, finishing
the year with a cash balance of $139 million.
Net debt at 30 June 2018 was $4 million.
In addition, IGO renegotiated its debt
facilities, resulting in improved terms
and the cancellation of the Company’s
$200 million revolving credit facility.
IGO is well placed for a strong
FY19, with both Nova and Tropicana
poised to deliver improved productivity
and value. In addition, IGO continues
to make good progress with the major
value enhancement projects including
downstream processing of Nova nickel
concentrate to produce nickel and
cobalt sulphates, and the Boston
Shaker underground study at Tropicana.
FY18 FINANCIAL SUMMARY
HIGHLIGHTS
Total revenue and other income
Underlying EBITDA1
Profit (Loss) after tax
Net cash flow from operating activities
Underlying Free cash flow1
Total assets
Cash
Marketable securities
Total liabilities
Shareholders’ equity
Net tangible assets per share ($ per share)
Dividends per share paid – fully franked (cents)
1 See Notes to Glossary of Terms for definitions
FY18
$M
FY17
$M
FY16
$M
781
339
53
278
138
422
151
17
78
(113)
2,175
2,208
139
24
396
1,779
$3.03
2.0
36
15
476
1,733
$2.95
3.0
417
138
(59)
102
(328)
2,007
46
5
552
1,456
$2.85
2.5
IGO HISTORICAL PAYABLE METAL
NICKEL (t)
GOLD (oz)
COPPER (t)
ZINC (t)
20,000
17,500
15,000
12,500
10,000
7,500
5,000
2,500
-
FY
14
15
16
17
18
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
FY
14
15
16
17
18
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
FY
14
15
16
17
18
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
FY
14
15
16
17
18
SHARE PRICE PERFORMANCE1
A$/SHARE
MAX:
A$5.60
VOLUME (M)
MIN:
A$3.00
6.00
5.00
4.00
3.00
2.00
1.00
–
14.00
12.00
10.00
8.00
6.00
4.00
2.00
–
Share Price
Volume
JUL
17
AUG
17
SEP
17
OCT
17
NOV
17
DEC
17
JAN
18
FEB
18
MAR
18
APR
18
MAY
18
JUN
18
JUL
18
AUG
18
SHARE OWNERSHIP1
SUBSTANTIAL
HOLDERS1
INSTITUTIONAL
OWNERSHIP1
INSTITUTIONAL
SHAREHOLDING2
31%
INSTITUTIONAL VS.
RETAIL (AND OTHER)2
23%
Australian Insto’s
Row Insto’s
Institutional
Retail & Other
69%
77%
Australia
USA
69%
23%
Mark Creasy 16%
FIL
9%
UK & Europe 5%
T Rowe Price 8%
ROW
3%
CBA
Ausbil
6%
5%
1 As at market close
20 Aug 2018
2 As at 30 Jul 2018
IGO ANNUAL REPORT 2018 — 03
CHAIRMAN &
CEO MESSAGE
PETER BRADFORD
MANAGING DIRECTOR
& CHIEF EXECUTIVE OFFICER
PETER BILBE
CHAIRMAN
Ladies and gentlemen, it is our
joint pleasure to summarise the
progress of our Company during
the 2018 financial year.
A continuous and evolving
strategy to reshape IGO
Over the past few years we have
pursued a strategy to reshape
Independence Group, or IGO
as we like to call ourselves, to
focus on high quality projects
of longer life and larger scale.
This journey began with the
commencement of gold
production at Tropicana
Operation in late 2013 and
was followed in 2015 by the
acquisition of Nova and its
construction and development
through to commercial
production on 1 July 2017.
In parallel, we have reshaped
our exploration team and
strategy to focus on belt-scale
exploration opportunities that
have the potential to deliver
multiple tier one discoveries.
These collective changes
have culminated in a record
year across multiple production
and financial metrics as set out
in the body of this annual report.
IGO’s transformation is a tribute
to our people who come to work
every day to make a difference.
They are bold, passionate,
fearless and fun. They make
IGO a smarter, kinder, more
innovative company.
Doing what is right –
because we care
Our strategy has also focused
on the environmental, social
and governance (ESG) aspects
of the business. This focus has
resulted in stronger systems
and processes to support the
business as well as a structured
approach to our interactions
with all stakeholders to better
demonstrate how we care.
This approach has included
consistent interactions with
community stakeholders
to keep them informed about
the business. We also have
a structured corporate giving
program to support initiatives
that strengthen the communities
within which we operate.
Diversity and inclusion are
important to us and we are
proud of our progress during
the past year to improve both
gender and indigenous diversity.
At 30 June 2018, 31% of IGO’s
employees were female and
3.27% of direct employees
were Indigenous.
To improve our safety metrics
and to ensure that our people
are not hurt while at work,
we have focused on changing
the way our leaders within the
business interact with people
about safety – what we call
‘visual safety leadership’. We
have also introduced health
and wellbeing programs, which
include stretch exercises at the
start of each working shift
to minimise the strains and
sprains that are historically our
single biggest cause of injury.
Our ESG progress is covered
in more detail in our fourth
annual sustainability report
which will be released
in October 2018.
Creating a strong
culture, the IGO Way
At IGO we recognise that
a strong culture underpins
successful strategies and
companies. We therefore work
with our employees to create
both a positive culture and the
programs we need to actively
shape our culture. In 2018, 97%
of IGO employees participated
in our engagement survey and
we had an engagement score
of 55%, which is the upper end
of the benchmark for metals
and mining companies.
04 — IGO ANNUAL REPORT 2018
We are finding and producing the
specialist metals that will make energy
storage mobile, efficient and effective.
We divested our Jaguar and
Stockman assets during the
year and transitioned Long into
care and maintenance. Whilst
these portfolio changes were
necessary, we acknowledge
that they do have an impact
on our people. We therefore take
this opportunity to thank the
many women and men at Jaguar,
Long and Stockman who made
outstanding achievements
to those projects and to IGO
over many years. We wish you
well in your future careers.
We also thank our stakeholders,
our host communities, our
suppliers and contractors,
our industry associates and
our regulators.
Lastly, we thank our shareholders,
which includes our employees
who are all owners of the
business, for your continuing
support and trust in the Board
and management team.
Aligning IGO’s purpose with
employee expectations
New battery storage technology
unleashes the full potential
of renewable energy by allowing
power produced from sun, wind
and other sources to be stored
and used when and where it is
needed. This includes the use
of energy storage in electric
vehicles. Clean renewable
energy combined with electric
vehicles can reduce fossil
fuel usage and emissions,
resulting in better air quality
and improved quality of life –
not just for today, but for
future generations.
At IGO, our people are finding
and producing the specialist
metals that make energy storage
mobile, efficient and effective
enough to make long-term
improvements to the lifestyle
of hundreds of millions of
people across the globe.
Our strategy for the future
Our strategy is to become
a globally relevant, premium
producer of energy storage
and distribution minerals.
We will achieve this by continuing
to focus on high quality assets
of increasing scale and mine
life, assets like our Nova nickel-
copper-cobalt operation.
In addition, we will look for
opportunities to add greater
value to the commodities that
we produce, including the
opportunity for downstream
processing of our nickel
concentrate to produce nickel
and cobalt sulphates for delivery
to electric vehicle battery
manufacturers.
In parallel, our exploration team
will investigate new exploration
opportunities for nickel, copper
and cobalt as well as for other
metals and minerals important
to the energy storage and
electric vehicle industry.
We believe in a green energy
future and by delivering the
metals needed for new age
batteries we are making
it happen. This is the IGO
Difference.
Thank you
The continued strengthening
and evolution of IGO is made
possible by the many skilled,
experienced and dedicated
people in the business. We
therefore take this opportunity
to thank each and every
one of these people for the
contributions that they make
every day to IGO.
IGO ANNUAL REPORT 2018 — 05
OUR
PEOPLE
IGO remains a proud Western
Australian employer with
a total direct workforce of
approximately 244 employees
across our business. We strive
to be a partner and employer
of choice to all our stakeholders,
including current and potential
employees, shareholders,
Traditional Owners, government
and the local communities.
The great team of people
at IGO is made up of a diverse
range of technical professionals
and operations and support
roles including geologists,
geophysicists, business
analysts, mining engineers,
metallurgists, miners, process
operators, field teams, machine
operators, administration, IT,
health, safety and environment,
human resources, finance, legal
and corporate affairs.
Our purpose is to make a
difference, and we do this
every day by maximising and
optimising the value generated
by the business over both the
short-term and the long-term.
The Company recorded
an employee response rate
of 97% for this year’s survey,
an outstanding result and
one that demonstrates we have
established a culture where the
workforce wants to be actively
involved in shaping the business
as we continue to evolve.
This year IGO’s overall
engagement score was
55%, which was a significant
improvement from 2016 and
one that puts IGO at the upper
end of scores achieved by other
metals and mining companies
surveyed by Aon Hewitt.
These results, along with the
specific feedback received
from employees, demonstrate
a significant improvement
across our business, reflecting
the concerted effort of many
over the past year, culminating
in the following improvements:
• future vision up 18%
• people focus up 16%
• learning and development
up 15%
EMPLOYEE ENGAGEMENT
• business excellence up 12%
Our second annual company-
wide employee engagement
survey was conducted in FY18
generating positive results.
• career opportunities up 12%
• communication up 12%
We believe that
supporting our
people to be the best
that they can be is
key to our success.
06 — IGO ANNUAL REPORT 2018
However, we aspire to really
make a difference to the
engagement and connection
that our people have with each
other so there is always room
for improvement and still much
to be done. In FY19, we will
complete additional programs
of work on employee reward and
recognition; talent and staffing,
performance management
processes and the continued
promotion of internal career
opportunities.
A shared purpose
In FY18 we began a program
of work, through consultative
focus groups from a cross
section of roles and levels in the
business, to collectively discover
and create our shared purpose.
We want to make a difference
to the satisfaction and connection
that our employees derive from
their work and what we collectively
achieve as a team in the communities
in which we work.
While strategy directs our path,
our shared purpose explains our
fundamental reason for being and
doing the work we do. It is what
links all of us to each other, to our
customers and to the communities
where we work and live.
In FY19, our purpose will
be reflected in our internal
communications and programs
as well as in our external marketing
because we know that connected,
purpose-driven people build value
through engagement in a common
reason for being.
Employees as owners
We believe all employees should
have the opportunity to be owners
of the IGO business and share
in the collective wealth that
we create for our shareholders.
Further to our other programs
that build employee share
ownership reported in previous
years, in FY18 IGO rolled out a
program to provide IGO employees
with the opportunity to salary
sacrifice up to $5,000 of their pre-
tax income for the purchase of IGO
shares along with a 1 for 2 matching
contribution up to an additional
$2,500 worth of IGO shares by the
Company.
We believe that this program
will fundamentally make a
difference to the connection
that our employees have to the
business and the achievement
of our strategic objectives.
Fitness for life
At IGO we believe that wellness
is more than just being ‘fit
for work’. In FY18 we expanded
our wellness program across the
business to include; proactive
health monitoring to identify
early indicators and intervention
for chronic illness, skin cancer
prevention, sleep awareness,
ergonomic reviews of work stations,
fitness challenges, flu vaccinations,
anti-smoking campaigns and
injury prevention through
pre-work warmups.
Employee feedback has been
extremely positive and our
preventative focus has become
a valued component of our extended
employee value proposition.
DIVERSITY
IGO is committed to equality
across our business and promoting
an inclusive and diverse workforce.
We strive to apply fair and
equitable employment practices
and provide a working environment
that encourages all employees
to reach their full potential. We
recognise the value of diversity and
the impact it has on our business
culture and performance, ensuring
we have the capabilities to grow
and continue to deliver sustainable
shareholder value. Diversity is no
longer seen as a gender issue
or a ‘nice to have’, but rather a ‘must
have’ to maximise competitiveness,
productivity, organisational culture
and job satisfaction.
IGO actively supports improvements
to the industry’s gender ratio by
finding innovative ways to attract
and retain increased female
representation into mining and
within our business. In FY18,
IGO achieved improved diversity
metrics, including a year-end
gender ratio improvement with 31%
of our total workforce now female,
which is above the industry average.
Our leadership teams have also
been strengthened with 28%
of senior managerial positions
held by females.
IGO ANNUAL REPORT 2018 — 07
students with exposure to, and
practical experience in their
chosen discipline.
In FY18, we employed people
who are studying Geology, Mining
Engineering and Metallurgy. Of
that group, 62% of our graduates
and 83% of our vacation students
were female.
Our Graduate and Vacation
Programs are also aimed at
supporting and building the future
of the industry in which we work.
We are concerned with the low
number of students graduating
in mining related disciplines
and, more broadly, with the
community’s misconceptions
about the employment
opportunities and other benefits
provided by the industry. We have
and will always need passionate
people who want to make a
difference, and mining in one form
or another will always be central
to a prosperous society. To this
end our support for a number
of industry programs to promote
career opportunities in the
industry strengthened in FY18
and we continue to support
a collective approach.
To continue to build our pipeline
of diverse and talented people,
during FY18, IGO has continued
with and added new programs
specifically designed to further
the evolution of a truly diverse
workforce. These programs include:
Paid parental leave
IGO is committed to supporting
both parents when they give birth
to, or adopt, a child. We believe
that parents should not have to
choose between career and family.
Our Paid Parental Leave plan is an
important initiative to encourage
parents to balance their work and
family life at a very important time.
Key features of IGO’s Paid Parental
Leave program include:
• 16 weeks of paid parental leave
(or 32 weeks at half pay) for
primary carers and two weeks
paid leave (or four weeks at half
pay) for the secondary carer;
• return to work assistance
payment - four additional
weeks of salary paid six months
after the employee returns
to work to provide additional
support; and
• superannuation on paid and
unpaid periods of parental
leave – to ensure that no parent
is disadvantaged at retirement
due to their decision to have
a family.
Working flexibly
IGO employees can request
flexible working arrangements
such as part-time, working
remotely and job sharing – an
important initiative to enable our
people to blend their work, family
and lifestyle preferences to suit
their own individual circumstances.
Whilst the effort is not without
its challenges for those on FIFO
rosters, we believe that with energy
and imagination, all roles can
be flexible. We want more people
to understand that the mining
sector values their contribution
and that they do not have to
choose between a career and
family to participate in site
and head office roles.
Graduate and vacation
programs
IGO’s Graduate Program
offers university graduates a
2-3 year program commencing
in January each year with the
aim of supporting them in their
transition from study to career. Our
program is designed to support,
challenge and reward graduates in
a work environment that will foster
and develop them into future
leaders and technical experts.
The IGO Vacation Program offers
both undergraduate and post
graduate students the opportunity
to participate in a 12-week paid
program held over the Australian
summer break. Our program
is specifically designed to provide
08 — IGO ANNUAL REPORT 2018
WA Mining Club scholarships
IGO is very proud to support a
number of initiatives to encourage
and foster the development of the
next generation of leaders within
our mining sector. In FY18, IGO
once again co-sponsored two
WA Mining Club scholarships for
Geology and Indigenous students.
Our 2018 recipients were both
female and we are proud
of the fact that several of the
past recipients and finalists are
now working within our business,
including our first Aboriginal
apprentice at our Nova Operation.
Aboriginal employment
In FY18, we continued to actively
support the employment of both
Aboriginal people and others from
culturally and linguistically diverse
backgrounds. We are proud to note
that, during FY18, IGO has:
• sponsored the first Ngadju
student in preparation to
commence university study
in Geology;
• supported a number of Ngadju
apprenticeships;
• employed our first female,
Aboriginal apprentice
at Nova; and
• introduced Ngadju cultural
competency workshops at Nova.
We know, from the results that
we have achieved in the last year,
that continued improvement
is possible through deliberate
efforts to proactively include all
employees in robust, transparent
communications; leadership
development and modelling;
participatory work processes;
cross-functional work experiences;
and a focus on employee
engagement on matters
of diversity.
In FY19, the Company will place
additional emphasis on increasing
the participation of the groups that
continue to be under represented
within the mining industry to
create a fairer, more inclusive
and more successful IGO.
Further information on Diversity at
IGO can be found in our Corporate
Governance Statement on our
website at www.igo.com.au.
DEVELOPING OUR PEOPLE
We believe that supporting
our people to be the best
that they can be is key to our
success. Beyond just compliance
training during the year,
we pursued two key programs
to strengthen our team:
Learning for leaders
In FY18, we continued our
Leadership Development
Program with the Certificate IV in
Leadership & Management courses
and also introduced a mini-MBA
course for mid-level managers
run by the Australian Institute of
Management in Perth. Further,
many of our leaders participated
in an Unconscious Bias course
to raise awareness of both
conscious and unconscious bias
in both the recruitment process
and our daily interactions.
Feedback from the courses has
been very positive with robust and
open conversation on this topic
and its impact in the workplace.
This structured learning has
helped our people to understand
how they can make a difference
to their own and others work
environments.
Celebrating success
In FY18, greater focus was given
to celebrating individual and team
success across the business. All
business units made recognition
and celebration of the behaviours
and achievements that drive the
success of our business a priority.
Each year the annual IGO Awards
are a culmination of this recognition,
designed to celebrate outstanding
contributions by our people
across the business. Awards
include Excellence in Geoscience,
Metallurgy, Technical Services,
and Business Support along with
awards for Safety and Diversity
Champions, Business Innovation
and the CEO’s Emerging Leader.
IGO ANNUAL REPORT 2018 — 09
SAFETY
Results
IGO had no fatalities or serious
disabling injuries during FY18.
However, there were 35 injuries
requiring medical treatment
or resulting in people being
assigned to alternate duties
(FY17: 32). The Lost Time Injury
Frequency Rate (LTIFR) for
FY18 was 2.39 injuries per million
hours and Total Recordable
Injury Frequency Rate (TRIFR)
of 19.14. Tropicana Operation’s
LTIFR, which is not included
in IGO’s statistics, for FY18
was 0.47.
IGO’s LTI results for FY18
compare favorably to the most
recently published averages for
the Western Australian nickel
mining sector and metalliferous
underground mining sector
of 3.9 and 2.9 respectively.
In addition to actual safety
outcomes, IGO is focused on the
potential outcomes; the ‘near-
misses’. In FY18, there were 13
incidents where there was the
credible potential for a fatality.
Whilst each of these events
resulted in either no injury or
a minor injury, the potential
outcomes were acknowledged,
and adjustments made to our
business practices to mitigate
risks and minimise exposure
to the hazards involved in the
future. Reducing these potential
incidents will continue to be
a key focus in FY19.
Often injuries and ‘near-miss’
incidents can have a wider
impact causing distress not
only to the affected individual,
but also to their families and
workmates. In response to this,
IGO will continue its ongoing
program to improve safety
behaviours, our systems of work
and our workplaces with the goal
of minimising the risk of harm
to our employees in FY19.
IGO’s Philosophy: The need
for intellectual honesty
when it comes to safety
We all take risks. Business
is based on taking considered
risk. At IGO, it is our intention
that we, as a business, and
as individuals, only take risks
in a considered way. At IGO
we will not accept any risk
where there is an elevated
potential for serious harm
or fatality. However, we cannot
offer a completely hazard
free work environment; no
organisation can. We maintain
an expectation of continuous
improvement and expect to
be held accountable for our
performance. Consequently,
we can and will always pursue
efforts to make our work places
safer and promote a culture
in which the welfare of our
people is a central value.
10 — IGO ANNUAL REPORT 2018
IGO will continue to pursue
improvements in this area
during FY19, including increased
internal communications among
our employees, suppliers
and contractors to continue
to build awareness and
influence behaviours.
For further information on IGO’s
safety performance and visual
safety leadership improvement
programs, please refer to the 2018
Sustainability Report, which will
be released in October 2018.
IGO accepts our moral
responsibility to provide a safe
place of work, a safe system
of work and a positive safety
culture. A safe place of work
is a place where the hazards
are recognised and the risks
posed by these hazards are
managed. A safe system of
work encompasses the policies,
standards, processes and
procedures that provide direction
and guidance on how the work
is to be done. A positive safety
culture is, put simply, the way
employees respond to hazards
and associated risks when the
‘boss is not watching’.
A positive safety culture
is achieved when our people:
• believe their manager
or supervisor is concerned
about their safety and wellbeing;
• proactively look out for others
and feel concern for their safety
and wellbeing;
• participate in the development
of our safety standards,
processes and procedures;
• adhere to IGO’s safety principles
on the understanding that they
will assist in keeping them and
their workmates safe but are
not a substitute for thinking
for one’s self; and
• have the courage to speak
up or intervene in unsafe
situations or if someone
is at risk.
At IGO, we are actively creating
a positive safety culture. This
effort is informed by the belief
that culture is the product of
the attitudes and behaviours
demonstrated by IGO leaders;
from the front-line supervisor
to the CEO. IGO’s safety program
is known as Visual Safety
Leadership.
The purpose of the program
is to educate and guide our
leaders, at all levels, so they:
• understand both IGO’s safety
philosophy and their statutory
safety obligations;
• allocate time for the sole
purpose of checking on or
promoting workplace safety
and employee welfare; and
• follow up on concerns raised
by employees or identified
hazards and provide feedback
to their people on how they’ve
responded.
Safety leadership must be visual.
It must be seen. It must be felt.
If we do this well, it is our firm
conviction that we will create
a better workplace.
Over the past 12 months,
we have begun tracking the
number of visual safety leadership
interactions completed by all
of our leaders. More than a simple
count, we are also completing
work to monitor the quality
of these interactions.
IGO ANNUAL REPORT 2018 — 11
SUSTAINABILITY
& COMMUNITY
In addition, many IGO employees
volunteered their own time
to support various organisations
and causes.
Under IGO’s Corporate Giving
Standard, IGO will provide up
to two day’s paid leave per annum
to any employee wishing to donate
their time to a Targeted Beneficiary
as approved by the IGO Corporate
Giving Committee. Within the
constraints of the approved IGO
Corporate Giving budget, IGO will
also match, dollar-for-dollar, all
funds raised by IGO employees
for the benefit of beneficiaries
approved by the IGO Corporate
Giving Committee.
In June 2018, IGO launched
its workplace giving program
through an online platform
managed by Good2Give, that
enables employees to make
pre-tax donations from their pay
direct to a charity. IGO will match
employee donations up to a group
wide $10,000 cap per annum and
pay all the administrative costs
so that 100% of employee
donations go directly to the charity.
IGO is proud of its Corporate
Giving program and, as the
budget for the program is based
on 0.06% of the previous year’s
total revenue, we look forward
to increasing the program and
the support it gives as the
Company grows.
At IGO we value our social license
to operate and in FY18, we have
worked hard to understand
the matters that are material
to our community stakeholders.
When it comes to community
engagement, we pride ourselves
on being both proactive
in anticipating the information
that our stakeholders need
and working collaboratively
in exploring how we might add
value within our host communities.
IGO is proud of its Corporate
Giving program and the
contributions of our people.
In FY18, our community
consultation and engagement
efforts focused on public
meetings, a survey of key
stakeholders and numerous one-
on-one meetings between IGO
representatives and members
of the community. Public meetings
or engagement activities were
completed in Esperance,
Norseman, Kambalda and
Leonora in Western Australia
and Omeo in Victoria.
As in previous years, IGO has
participated in ongoing programs
to engage the Ngadju people,
the native title holders of the land
on which our Nova Operation
sits and a key area of focus
for our exploration activities.
The establishment of the Nova
Operation was, and remains,
dependent on the effective
operation of a land access
agreement between IGO and
the Ngadju’s representative
entity, the Ngadju Native Title
Aboriginal Corporation (NNTAC).
IGO is pleased to note that in FY18,
we commenced production royalty
payments to the NNTAC.
In FY18, IGO also concluded
Exploration Deeds with the Central
Land Council, the representative
body for the Traditional Owners
of the land in the southern part
of the Northern Territory.
Consequently, access to that
tenure has now been granted
enabling the commencement
of exploration activities.
We are committed to doing
better. In FY19, IGO will complete
various works in accordance
with our Community Engagement
Plan. One element of this plan
is building community engagement
capacity in our people on the
frontline. As is true of any company
completing exploration work in
‘greenfield’ areas, our front-line
exploration staff are often the
primary source of contact with
individual members of our host
communities and hence their
skill and approach can set the
tone for the ongoing relationship.
Mindful of this, in FY19, all IGO’s
exploration staff will receive
training in cultural awareness and
general community engagement.
CORPORATE GIVING
In FY18, over 48 organisations
or projects benefited from IGO’s
Corporate Giving program. IGO’s
total corporate giving spend for
FY18 was $252,385.
In FY18, IGO supported
a diverse range of organisations
and programs including:
• Teach Learn Grow
• Norseman District High School
• Esperance District High School
• Goldfields Girls
• Girls Academy
• Ronald McDonald House, Perth
12 — IGO ANNUAL REPORT 2018
ENVIRONMENTAL
MANAGEMENT
In FY18, IGO had no material
environmental incidents.
As foreshadowed in last
year’s annual report, in FY18,
IGO introduced a set of
Environmental Standards. These
standards define a performance
expectation that is more than
simple compliance with the law.
Over time, and with ongoing
effort, these standards will
provide a framework for cultural
change within our business.
The standards address:
• Rehabilitation and mine closure
• Social and environmental
impact assessment
• Mineral waste management
• Water management
• Land use and biodiversity
management
IGO’s Environmental Standards
have been developed based
on feedback from both our
workforce and our host
communities and in accordance
with accepted best practice
as documented in the Leading
Practice Sustainable Development
Program (LPSDP) for the Mining
Industry (Department of Industry,
Innovation & Resources), and
various publications produced by
the Minerals Council of Australia,
and the International Council on
Mining & Metals. In FY19, IGO will
complete a range of activities
arising from the application
of these standards including
a communications program.
This program will be targeted
to both our workforce and host
communities to provide insight
into the standards to which we
will hold ourselves accountable.
At IGO, we endeavor to plan for
the full life cycle of our mines.
In FY18, work continued on the
clean-up of historic mining areas
at our Jaguar Operation. Several
hundred tonnes of scrap steel
and general waste was removed,
with the steel being sent for
recycling. The single largest
ongoing challenge faced by the
Jaguar Operation is the clean-up
and rehabilitation of the historic
Teutonic Bore mine site.
As Jaguar is a legacy mine,
responsibility for clean-up and
rehabilitation is split between
the owner and the Western
Australian Government. In FY18,
IGO worked collaboratively with
the state to advance planning
for these works. In effecting the
sale of the Jaguar Operation to
CopperChem Ltd, IGO completed
a comprehensive disclosure of all
known environmental liabilities,
closure planning commitments
and IGO’s estimate of mine
closure costs.
Our Long Operation ceased
mining and was placed in care
and maintenance in June 2018.
In anticipation of this event,
IGO completed a year-long
consultation process with our
workforce, our host community
in Kambalda and the State
Government. The key goal
of our care and maintenance
program is to preserve the
inherent value associated with
the mine by preventing flooding
and maintaining safe access.
Additionally, IGO continues
a program of progressive mine
site rehabilitation works which
include the reshaping of two small
historic tailings storage facilities,
remedial works on the waste rock
dump, general removal of waste
and the recycling of scrap steel.
IGO continues to evaluate options
for Long’s future.
In FY18, we continued refinement
of the mine closure plan for the
Nova Operation and completed
a comprehensive triennial
review of the estimated mine
closure cost.
IGO’s largest ongoing
environmental impact is the
land clearing associated with
our exploration activity in the
Fraser Range. IGO has planned
and funded the necessary
rehabilitation works which will
be completed progressively as
exploration works are completed.
Further information on these
matters will be provided in IGO’s
2018 Sustainability Report to be
released in October 2018. This
report will be available on our
website at www.igo.com.au
IGO ANNUAL REPORT 2018 — 13
OPERATIONAL
SCORECARD
AND OUTLOOK
Mining
Operation
Units
FY18
Guidance Range
FY18
Actual
FY19
Guidance Range
NOVA
Nickel in concentrate
Copper in concentrate
Cobalt in concentrate
Cash cost (payable)
Sustaining & improvement capex
Development capex
t
t
t
A$/Ib Ni
A$M
A$M
23,000 to 27,000
10,000 to 12,000
800 to 1,050
1.90 to 2.50
9 to 13
40 to 44
TROPICANA OPERATION (IGO 30%)
Gold produced (100% basis)
Gold sold (IGO’s 30% share)
Cash cost
All-in Sustaining Costs
Sustaining & improvement capex (30%)
Capitalised waste stripping (30%)
oz
oz
A$/oz Au
A$/oz Au
A$M
A$M
440,000 to 490,000
132,000 to 147,000
680 to 750
1,060 to 1,170
20 to 24
44 to 55
EXPLORATION EXPENDITURE
22,258
9,545
740
2.78
5.7
53.9
467,139
138,748
713
1,061
14.3
43.4
27,000 to 30,000
11,000 to 12,500
850 to 950
1.65 to 2.00
21 to 24
25 to 28
500,000 to 550,000
150,000 to 165,000
635 to 705
890 to 980
21 to 24
32 to 36
Total Exploration Expenditure
A$M
45 to 55
45.4
47 to 54
Metric
Units
FY18
Guidance(1)
JAGUAR
Zinc in concentrate
Copper in concentrate
Cash cost (payable)
Sustaining capex
Development capex
Exploration expenditure
LONG
Contained nickel produced
Cash cost (payable)
Sustaining capex
Development capex
Exploration expenditure
t
t
A$/Ib Zn
A$M
A$M
A$M
t
A$/lb Ni
A$M
A$M
A$M
26,583 to 30,250
2,383 to 2,750
0.85 to 1.05
7 to 8
9 to 10
3 to 5
5,400 to 6,000
4.40 to 4.90
0.5 to 1.0
0.5 to 1.0
1 to 2
1)
Jaguar production summary is up to 31 May 2018 only
FY18(1)
26,159
1,695
1.25
8.4
11.6
4.6
5,855
4.87
0.6
0.0
0.3
14 — IGO ANNUAL REPORT 2018
KEY OPERATIONS
AND PROJECTS
RAPTOR
IGO 100%
LAKE MACKAY JV
IGO EARNING 70%
TROPICANA JV (Au)
IGO 30%
JAGUAR (Zn-Cu-Ag)
(Divested on 31 May 2018)
LONG (Ni)
IGO 100% (under care and maintenance)
HEAD OFFICE
Perth
NOVA (Ni-Cu-Co)
IGO 100%
FRASER RANGE
IGO 70-100%
OPERATIONS
EXPLORATION
ACTIVITIES
LONG OPERATION –
NICKEL – 100% IGO
In June 2018, mining at Long
ceased and the operation
transitioned into care and
maintenance.
Production
In FY18, production came from
the Moran, Long and McLeay
deposits. Total ore mined was
181,822 tonnes (FY17: 205,372
tonnes) at an average grade
of 3.22% Ni for 5,855 tonnes
of contained nickel.
Long successfully achieved better
than the mid-point of guidance
and this is testament to the hard
work and dedication of all those
who worked at Long.
Care and Maintenance
The Long Operation transitioned
into care and maintenance
in June 2018. A comprehensive
plan to prepare the site was
implemented in advance
of that date with many of the key
activities successfully executed.
These included the successful
exploitation of nearly all remaining
Ore Reserves, retention and
redundancy of Long personnel and
safeguarding activities to protect
the asset and ensure public safety
is maintained. IGO also initiated
a site wide clean-up program and
is currently executing progressive
rehabilitation of historic mining
landforms and infrastructure
to mitigate environmental impacts
during care and maintenance.
IGO is committed to continuing
to dewater and ventilate the
underground mine as part of the
care and maintenance plan to
preserve the integrity of the asset
and keep key infrastructure in
operating condition. To execute
this work program, IGO has
appointed a local contractor
to manage the site during care
and maintenance.
JAGUAR OPERATION –
ZINC – COPPER – SILVER
On 31 May 2018, IGO completed the
divestment of the Jaguar Operation
to CopperChem Pty Limited
(CopperChem), a wholly owned
subsidiary of Washington H. Soul
Pattinson and Company Limited
for a total consideration of $73
million cash. This comprised of
$25 million at completion and an
additional $48 million in deferred
cash payments.
The decision to divest Jaguar
reflects IGO’s strategic focus
on high-quality assets of scale
and longevity aligned to energy
storage. This decision was made
at the completion of a review of the
value enhancement opportunities
at Jaguar which did not meet IGO’s
strategic metrics.
Production
A total of 414,582 tonnes
(FY17: 444,700 tonnes) ore at 7.1%
Zn, 0.6% Cu, 125 grams per tonne
Ag and 0.47 grams per tonne
Au was mined from the Bentley
underground mine during the
eleven months ending 31 May 2018.
IGO ANNUAL REPORT 2018 — 15
NOVA
OPERATION
NICKEL-COPPER-COBALT
IGO 100%
LOCATION
140 road-km east of Norseman, Western Australia
(Fraser Range)
PRODUCT
Nickel (Ni), copper (Cu), cobalt (Co)
MINING
Underground contract mining and owner operated
processing plant
PROCESSING METHOD
Conventional crushing, grinding, flotation
and filtration
SALES
100% nickel sulphide concentrate to BHP Billiton
Nickel West Pty Ltd and Glencore International AG.
Current offtake agreements expire in FY20.
100% copper sulphide concentrate to Trafigura
Pte Ltd. Contract expires in FY20
FY18 PRODUCTION
22,258t Ni
9,545t Cu
740t Co
FY18 PAYABLE CASH COSTS
A$2.78/lb Ni
RESOURCES1
268,000t Ni
109,000t Cu
9,000t Co
RESERVES1
216,000t Ni
89,000t Cu
7,000t Co
ESTIMATED REMAINING MINE LIFE
8+ years
GROWTH POTENTIAL
Discovery of new magmatic nickel deposits on
the Nova mining lease and within IGO’s extensive
tenements position in the Fraser Range. Processing
of Nova’s nickel concentrate into nickel and cobalt
sulphates for the energy storage market
1
See Resources and Reserves section on pages 23 to 28
of this report.
16 — IGO ANNUAL REPORT 2018
NOVA OPERATION
OVERVIEW
Nova is located in the
Great Western Woodland,
approximately 140km east north
east of Norseman. The Ngadju
are the Traditional Owners and
custodians of this area and
their native title was recognised
by the Federal Court on
21 November 2014.
The Nova deposit was discovered
in July 2012 and development
of the site commenced in January
2015. Commercial production
commenced in July 2017 and the
operation reached nameplate
production in the September
2017 quarter.
PROJECT DEVELOPMENT
Since the commencement of the
Nova decline, our contractor,
Barminco, has completed 26.4
kilometres of underground
development. The mine has
been in commercial production
since 1 July 2017 with the
mine and processing plant
achieving production rates at
or above nameplate capacity
in the second half of FY18. All
construction activities have
now been completed.
FY18 PRODUCTION
Nova production for FY18 fell
just short of full year guidance.
By the end of FY18 the mine
had demonstrated steady state
production above nameplate
and the ability to outpace the
processing plant.
Capital development is now
largely complete with some
sustaining capital development
remaining over the life of the
mine.
We continue to progress options
to increase throughput beyond
the nameplate capacity of 1.5
million tonnes per annum.
MINING
Grade control drilling at Nova
and Bollinger was completed
in July 2018 which has enabled
the upgrade of the Mineral
Resource and Ore Reserve JORC
classifications to the highest
level of confidence and derisking
the Life of Mine plan.
PROCESSING
The processing plant has
performed well in FY18 and
during the June 2018 quarter
extended trials at an above
nameplate processing rate
were carried out to identify
bottlenecks to achieve higher
production rates on an ongoing
basis. As a result of the trials
a capital works program
to address these bottlenecks
is planned for FY19.
The tailings storage facility
continues to be used as a water
storage dam, and both bore
field expansions and water use
efficiency projects have been
completed to reach a buffer
of 100% more raw water
availability than required
for current operations.
Electric power continues
to be provided by Zenith
Pacific’s 20 mega watt power
station. Plans to construct
a 6.7 mega watt solar power
station are well advanced
and a decision to proceed
is expected in FY19.
NEAR-MINE EXPLORATION
The majority of the focus during
FY18 has been on the completion
of underground grade control
drilling with limited near-mine
exploratory drilling.
In FY19, further exploration
drilling from underground will
target resource extensions and
new areas of mineralisation
outside the existing resource
envelope.
A 3D seismic survey of 58 square
kilometres was completed
by HiSeis Pty Ltd with the
interpreted models due in early
FY19. A budgeted 20,000 metres
of diamond drilling is planned for
FY19 to test targets identified by
the seismic survey.
DOWNSTREAM
PROCESSING
During FY18, IGO commenced
a project to understand the
downstream processing
potential to directly produce
nickel and cobalt sulphate using
a hydrometallurgical process
rather than producing nickel
metal via conventional smelting
and refining.
A scoping study demonstrated
that, subject to metallurgical
testwork, the process would
be financially feasible. This was
then followed by metallurgical
testwork using Wood Mining
and Minerals Australia (Wood)
and SGS Australia, this testwork
successfully produced nickel
sulphate hexahydrate crystals
and demonstrated that the
process was technically feasible.
A pre-feasibility study has
been commenced.
IGO ANNUAL REPORT 2018 — 17
TROPICANA
OPERATION
GOLD
IGO 30%
LOCATION
330km northeast of Kalgoorlie, Western Australia
PRODUCT
Gold (Au)
MINING
Open pit contract mining with production from
up to four contiguous pits extending some 5km
in strike length
PROCESSING METHOD
Conventional crushing, grinding and CIL
(carbon-in-leach) recovery
SALES
To a combination of the Perth Mint and IGO’s
banking partners via forward sales contracts
FY18 PRODUCTION
467,139oz (100% basis); 140,142oz (IGO share)
FY18 CASH COSTS AND ALL IN SUSTAINING COSTS
$713/oz produced and $1,061/oz sold respectively
RESOURCES1
7.29Moz Au (100%)
RESERVES1
3.95Moz Au (100%)
ESTIMATED MINE LIFE
10 years
GROWTH POTENTIAL
Grade streaming continuing in FY19
Boston Shaker underground studies and
development decision
Continued optimisation of the Tropicana
Mineral Resource
Regional exploration upside
1
See Resources and Reserves section on pages 23 to 28
of this report.
18 — IGO ANNUAL REPORT 2018
TROPICANA OPERATION
OVERVIEW
The Tropicana Operation is
located on the western edge
of the Great Victoria Desert of
which the traditional owners and
custodians emanate from the
Wongatha and Spinifex peoples.
It is a Joint Venture of which IGO
owns 30% and AngloGold Ashanti
holds 70% and is the manager.
IGO targeted and pegged
the area containing the current
ore reserves in 2001. AngloGold
Ashanti farmed into the project
in 2002, discovering the
Tropicana Operation, Havana
and Boston Shaker gold deposits
respectively in 2005, 2006 and
2010. The decision to develop
the Tropicana Operation
was announced in November
2010 following completion
of a positive Bankable
Feasibility Study.
Mining of the Havana deposit
commenced in 2012 with the
first gold being produced
in September 2013. In January
2018, the Tropicana Operation
achieved its two million ounce
milestone.
FY18 PRODUCTION
Tropicana Operation gold
production for FY18 was
consistent, resulting in delivery
better than the midpoint of the
guidance range.
During the year, a total of 87.0
million tonnes of material was
mined and hauled ex-pit. This
material comprised of 9.6 million
tonnes of full grade ore (>0.6
grams per tonne), 0.9 million
tonnes of marginal ore (grading
between 0.4 & 0.6 grams per
tonne Au) and 76.5 million tonnes
of waste material. Full grade ore
sources were from all four pits,
being the Havana and Havana
South pit, the Boston Shaker pit
and the Tropicana Operation pit
with the average run-of-mine
grade for full grade ore (>0.6
grams per tonne Au) being 1.88
grams per tonne Au for the year.
MINING
Open pit mining operations
achieved a 6% increase in tonnes
mined over the previous year
with 87.0 million tonnes, equating
to 33.7 million bank cubic metres
for the year. The ramp-up
in mining rates is aligned to the
Long Island Mining Strategy
which was approved during
FY18. The strategy involves
using a strip-mining approach
that minimises waste haulage
distances by using in-pit
waste dumping along with
the implementation of a CAT
6060 (600 tonnes class)
hydraulic shovel.
PROCESSING
The mill throughput rates
increased in the second half
of FY18 to an average of
931 tonnes per hour, with
the optimisation excellence
project producing sustainable
throughput increases achieving
7.8 million tonnes per annum for
the year.
Construction on the second
6 mega watt ball mill progressed
during the year, with the
expected installation to be
completed by December 2018
and operational from January
2019. The new mill will enable
processing throughput rate
to be increased to approximately
8.2 million tonnes per annum
and gold recovery to be
improved by up to 3%
to approximately 92%.
BOSTON SHAKER
UNDERGROUND
A Prefeasibility Study on the
underground development
of Boston Shaker mineralisation
is scheduled for completion by
December 2018. As part of this
study a 100 metres x 100 metres
drilling program to define the
geometry of the high-grade
mineralisation has continued
to extend mineralisation down-
dip to approximately 700 metres.
Mineralisation remains open.
NEAR-MINE EXPLORATION
Greenfields exploration
drilling completed on several
Tropicana tenements in FY18
mapped basement geology and
explored potential mineralised
corridors identified in regional
interpretation work. The FY18
(100%) spend was $10.3 million.
The JV exploration plan for
FY19 is to focus on near-
mine resource and reserve
development support and
greenfields discovery work.
IGO ANNUAL REPORT 2018 — 19
REGIONAL
EXPLORATION
AND DEVELOPMENT
PROJECTS/EXPLORATION OPPORTUNITIES
FRASER RANGE
PROJECT
(Ni, Cu & Co)
(70 - 100%)
Regional geochemical sampling,
geophysical surveying and
drilling.
Aircore drilling and geophysical
programs have identified
numerous anomalous results
requiring additional exploration.
LAKE MACKAY JV
(Cu, Au, Ni
& Co) (70%)
Unlocking a new underexplored
mineral province in the Northern
Territory.
Regional geochemical sampling,
airborne electromagnetic
surveys, prospect mapping
and rock sampling has further
confirmed project potential.
RAPTOR PROJECT
(Ni, Cu & Co)
(100%)
New belt-scale project targeting
the Willowra Gravity Ridge in the
Northern Territory.
FRONTIER PROJECT,
GREENLAND
(Cu & Co)
(up to 80%)
DE BEERS DATABASE
(100%)
Regional aeromagnetic and
radiometric surveys planned.
New Option/joint venture
on belt-scale project targeting
Zambian-style copper.
Regional reconnaissance
mapping and sampling planned.
Unique sample database.
New multifaceted project
generation initiative
to unlock value.
20 — IGO ANNUAL REPORT 2018
REGIONAL
EXPLORATION
AND DEVELOPMENT
Step-change growth through
exploration discoveries
FRASER RANGE PROJECT - WESTERN AUSTRALIA
Exploration and discovery is core to the IGO DNA
and is a key platform for our growth in value strategy.
Base Metals Project
(IGO various ownership levels)
During FY18, we continued to build our exploration
team and realigned our exploration strategy with the
Company’s new strategic focus on energy storage and
transmission metals. Our primary commodities are nickel,
copper and cobalt; however, we remain interested and
open to other commodity opportunities, including other
battery minerals and metals and gold.
IGO has further consolidated the largest ground position
of any company in the prospective Fraser Range, east
of Kalgoorlie in Western Australia. IGO currently holds
approximately 15,000 square kilometres of tenure (not
including Tropicana). The Fraser Range remains under-
explored and highly prospective for nickel, copper and
cobalt sulphide mineralisation.
During FY18, we also further transformed our
exploration project portfolio with the consolidation of
an extensive brownfields ground position in the highly
prospective Fraser Range to take advantage of our major
infrastructure investment and advancing geological
understanding at Nova.
Our discovery portfolio also includes belt-scale
greenfield opportunities in the Northern Territory
at the expanded Lake Mackay Project and the new
100%-owned Raptor Project, and at the Frontier
Project in Eastern Greenland.
IGO is in the fortunate position to be able to leverage
off the Nova capital infrastructure, as well as an improving
understanding of the geology, geochemistry and
geophysics of the Nova-Bollinger mineral deposit.
Specifically, Nova-Bollinger is a natural laboratory
and our in-mine and near-mine geoscience work and
research initiatives are helping us to explore for new
deposits, both immediately around Nova-Bollinger
and more broadly across the Fraser Range.
IGO ANNUAL REPORT 2018 — 21
Exploration activities
increased during FY18,
including extensive regional
airborne electromagnetic (EM)
surveys across the Fraser Range
utilising SpectremAir, the world’s
most powerful airborne EM
system, and the completion
of Australia’s largest ever hard-
rock 3D seismic survey, which
has imaged 300 cubic kilometres
of geology around the Nova-
Bollinger deposit. Other key
exploration activities include
extensive regional aircore
drilling, to map the geology
under cover and for detecting
geochemical anomalies, regional
ground gravity surveys, an
audiomagetotelluric survey,
and extensive ground moving
loop EM surveys. Recently
IGO initiated the use of Low-
Temperature SQUID EM, which
is a superior deep-penetrating
ground EM system.
Numerous moving loop EM
conductors and combined drill
hole geology and geochemistry
anomalies require follow-up drill
testing in FY19, both proximal
to Nova and elsewhere in the
Fraser Range.
Diamond drilling was also
completed on a number
of targets including Andromeda
(formerly called Pygmy) and
Phoenix prospects, the latter
of which is immediately west
of Nova. Downhole EM was
completed in all diamond drill
holes. Follow-up drilling is
required on both Andromeda
and Phoenix.
At Andromeda, significant
copper and zinc mineralisation
was intersected in the first
holes drilled to test a strong
EM anomaly. The second hole,
18AFRD0041, intersected 29.9
metres grading 1.36% copper,
2.51% zinc, 0.35 grams per tonne
gold, 19.9 grams per tonne silver
(the true width is unknown at
this early stage). A third hole
tested a stronger part of the
EM conductor, approximately
100 metres north of the above
intersection, with final assay
results pending.
Another highlight was the
identification of several
magmatic nickel-copper
sulphide prospects on the Nova
mining lease that require follow-
up downhole EM surveys and
diamond drill testing.
LAKE MACKAY JOINT
VENTURE - NORTHERN
TERRITORY
Base Metals-Gold Project
(IGO Manager and Option
to Earn 70%)
The Lake Mackay Joint Venture
with Prodigy Gold (formerly
ABM Resources) is located 400
kilometres northwest of Alice
Springs.
The JV has approximately
7,600 square kilometres of
granted exploration licences
and a further, approximately,
5,200 square kilometres of
licence applications over an
unexplored Proterozoic terrane,
characterised by polymetallic
base and precious metal
mineral systems.
Exploration is at an early stage
and, until recently, has been
limited to a single tenement.
Work programs during FY18
included diamond drilling at the
Grapple Prospect, where reverse
circulation drilling in FY17 led
to the discovery of copper-
gold (zinc-lead-silver-cobalt)
mineralisation. The diamond
drilling in FY18 intersected the
best mineralisation discovered
to-date, with a highlight
being hole 17GRDD0012:
• 11.4 metres grading 7.9 grams
per tonne gold, 21 grams per
tonne silver, 0.8% copper, 1.1%
zinc, 0.5% lead and 0.1% cobalt
from 284.9 metres;
• including 3.5 metres grading
18.3 grams per tonne gold,
14 grams per tonne silver,
1.1% copper, 0.3% zinc and
0.2% lead from 288.8 metres;
• 14.4 metres grading 1.8 grams
per tonne gold, 6 grams per
tonne silver, 1.1% copper, 0.3%
zinc, 0.1% lead and 0.03% Co
from 348 metres;
• including 2 metres grading
7.2 grams per tonne gold,
1 gram per tonne silver, 0.2%
copper and 0.1% zinc from
348 metres.
Elsewhere on the project,
ongoing regional soil sampling
is delivering encouraging
polymetallic geochemical
anomalies that require follow-
up in FY19. In addition, ongoing
regional Spectrem airborne EM
surveys are delivering anomalies
for ground EM follow-up and
drilling.
1 See ASX Release – 2018 Mineral
Resources and Ore Reserves
Update dated 26 July 2018.
2 See ASX Release - Lake Mackay
JV – Grapple Prospect Drilling
Update dated 18 September 2017.
22 — IGO ANNUAL REPORT 2018
MINERAL RESOURCES
AND ORE RESERVES
IGO’s Mineral Resource and Ore Reserve estimates
as at 30 June 2018 and 30 June 2017 are listed on the
following pages of this report. The Mineral Resource
estimates are reported inclusive of Ore Reserve
estimates. The totals and average of some reports
may appear inconsistent with the parts, but this is due
to rounding of values to levels of reporting precision
commensurate with the confidence in the respective
estimates.
The complete JORC Code reports, including JORC
Code Table 1 checklists, which detail the material
assumptions and technical parameters for each
estimate, can be found at www.igo.com.au under
the menu ‘Our Business – Mineral Resources and
Ore Reserves'. The JORC Code Competent Person
statements for the 30 June 2018 estimates are
included on page 28 of this annual report.
IGO’s public reporting governance includes a chain
of assurance measures. Firstly, IGO ensures that the
Competent Persons responsible for public reporting:
• are current members of a professional organisation
that is recognised in the JORC Code framework;
• have sufficient mining industry experience that
is relevant to the style of mineralisation and
reporting activity, to be considered a Competent
Person as defined in the JORC Code;
• have provided IGO with a written sign-off on the
results and estimates that are reported, stating that
the report agrees with supporting documentation
regarding the results or estimates prepared by each
Competent Person; and
• have prepared supporting documentation for results
and estimates to a level consistent with normal
industry practices – including the JORC Code Table 1
Checklists for any results and/or estimates reported.
IGO ANNUAL REPORT 2018 — 23
IGO
TOTAL
TABLE 1 — 30 June 2017 and 30 June 2018
IGO TOTAL — MINERAL RESOURCES
Grades estimates
In situ metal estimates
30 June
Project or
Operation
Mass
(Mt)
2017
Nova
Long
Tropicana Operation 30%
Jaguar
Stockman
30 June 2017
2018
Nova
Long
Tropicana Operation 30%
Jaguar
Stockman
11.4
1.2
42.4
6.5
14.0
75.5
13.1
0.8
41.9
-
-
Ni
(%)
2.4
4.6
-
-
-
Cu
(%)
Co
(%)
1.0
0.08
-
-
0.9
2.1
-
-
-
-
Zn
(%)
-
-
-
5.6
4.3
Ag
(g/t)
Au
(g/t)
-
-
-
85
38
-
-
1.7
0.4
1.0
Grades for totals are not additive
2.0
4.2
-
-
-
0.8
0.07
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.62
-
-
Ni
(kt)
271
54
-
-
-
325
268
32
-
-
-
Cu
(kt)
113
-
-
55
287
455
109
-
-
-
-
30 June 2018
55.8
Grades for totals are not additive
300
109
TABLE 2 — 30 June 2017 and 30 June 2018
Co
(kt)
Zn
(kt)
Ag
(Moz)
Au
(koz)
9
-
-
-
-
9
9
-
-
-
-
9
-
-
-
364
599
963
-
-
-
-
-
-
-
-
-
-
- 2,322
18
17
90
437
35 2,849
-
-
-
-
-
-
-
-
2,187
-
-
2,187
30 June
Project or
Operation
2017
Nova
Long
Tropicana Operation 30%
Jaguar
Stockman
30 June 2017
2018
Nova
Long
Tropicana Operation 30%
Jaguar
Stockman
IGO TOTAL — ORE RESERVES
Grades estimates
In situ metal estimates
Mass
(Mt)
Ni
(%)
Cu
(%)
Co
(%)
Zn
(%)
Ag
(g/t)
Au
(g/t)
Ni
(kt)
Cu
(kt)
Co
(kt)
Zn
(kt)
Ag
(Moz)
Au
(koz)
13.3
0.2
17.1
2.4
9.0
41.9
11.7
-
19.5
-
-
2.06
3.64
-
-
-
0.83
0.07
-
-
0.66
2.10
-
-
-
-
-
-
-
-
-
-
6.71
4.53
100
39
-
-
1.94
0.47
1.08
Grades for totals are not additive
1.86
0.76
0.06
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.89
-
-
274
110
6
-
-
-
280
216
-
-
-
-
-
-
16
189
315
89
-
-
-
-
9
-
-
-
-
9
7
-
-
-
-
7
-
-
-
161
408
568
-
-
-
-
-
-
-
-
-
-
- 1,067
8
11
36
311
19 1,414
-
-
-
-
-
-
-
1,185
-
-
- 1,185
30 June 2018
31.2
Grades for totals are not additive
216
89
24 — IGO ANNUAL REPORT 2018
NOVA
OPERATION
TABLE 3 — 30 June 2017 and 30 June 2018
Source
JORC Code
Class
Underground Measured
Indicated
Inferred
5.2
4.5
1.7
Subtotal
11.4
Stockpiles
Measured
Total
Measured
Indicated
Inferred
-
5.2
4.5
1.7
Nova Operation Total
11.4
TABLE 4 — 30 June 2017 and 30 June 2018
NOVA OPERATION — MINERAL RESOURCES
30 June 2017
Copper
(kt)
(%)
Mass
(Mt)
Cobalt
Nickel
(kt)
(kt)
(%)
(%)
Mass
(Mt)
30 June 2018
Nickel
(%)
(kt)
Copper
(kt)
(%)
Cobalt
(%)
(kt)
2.63
2.50
1.3
2.4
-
2.63
2.50
1.3
2.4
137
112
22
271
-
137
112
22
271
1.10
1.02
0.6
1.0
-
1.10
1.02
0.6
1.0
57
45
10
0.08
0.09
0.05
113
0.08
-
57
45
10
-
0.08
0.09
0.05
113
0.08
4
4
1
9
-
4
4
1
9
11.9
1.1
0.1
13.0
0.1
12.0
1.1
0.1
13.1
2.15
0.88
0.6
2.0
1.66
2.15
0.88
0.6
2.0
256
10
0.4
266
2
258
10
0.4
268
0.88
0.39
0.2
0.8
0.68
0.87
0.39
0.2
0.8
104
4
0.1
0.07
0.04
0.02
109
0.07
1
105
4
0.1
0.07
0.07
0.04
0.02
109
0.07
9
0.4
0.02
9
0.1
9
0.4
0.02
9
Source
JORC Code
Class
Underground Proved
Probable
Subtotal
Stockpiles
Total
Proved
Proved
Probable
Nova Operation Total
NOVA OPERATION — ORE RESERVES
30 June 2017
Copper
(kt)
(%)
Cobalt
Nickel
(kt)
(kt)
(%)
(%)
Mass
(Mt)
30 June 2018
Mass
(Mt)
Nickel
(%)
(kt)
Copper
(kt)
(%)
Cobalt
(%)
(kt)
-
13.3
13.3
-
-
-
2.06
2.06
-
-
-
274
274
-
-
-
0.83
0.83
-
-
13.3
13.3
2.06
2.06
274
274
0.83
0.83
-
110
110
-
-
110
110
-
0.07
0.07
-
-
0.07
0.07
-
9
9
-
-
9
9
10.2
1.3
1.93
1.34
11.6
1.86
0.1
10.2
1.3
1.66
1.93
1.34
197
18
215
2
198
18
0.79
0.57
0.76
0.68
0.79
0.57
80
8
88
1
81
8
0.07
0.04
0.07
0.07
0.07
0.04
11.7
1.86
216
0.76
89
0.06
7
1
7
0.1
7
1
7
IGO ANNUAL REPORT 2018 — 25
TROPICANA
OPERATION
TABLE 5 — 30 June 2017 and 30 June 2018
TROPICANA OPERATION — 100% MINERAL RESOURCES
Estimate
JORC Code Class
Open pit
Underground
Stockpiles
Total
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Measured
Indicated
Inferred
Mass
(Mt)
6.1
79.1
22.3
Subtotal
107.5
Subtotal
-
6.8
11.9
18.6
15.2
21.3
85.8
34.2
Subtotal
141.3
30 June 2017
Gold
(g/t)
1.94
1.61
1.32
1.56
-
3.38
3.15
3.23
0.82
1.14
1.74
1.95
1.70
(koz)
380
4,080
940
5,400
-
730
1,210
1,940
400
780
4,810
2,150
7,740
TABLE 6 — 30 June 2017 and 30 June 2018
TROPICANA OPERATION — ORE RESERVES
30 June 2017
Estimate
JORC Code Class
Open pit
Underground
Stockpiles
Total
Proved
Probable
Proved
Probable
Proved
Proved
Probable
Subtotal
Subtotal
Tropicana Operation Total
Mass
(Mt)
4.4
43.0
47.4
-
-
-
9.5
14.0
43.0
57.0
Gold
(koz)
330
2,950
3,280
-
-
-
290
620
2,950
3,560
(g/t)
2.31
2.13
2.15
-
-
-
0.93
1.37
2.13
1.94
26 — IGO ANNUAL REPORT 2018
30 June 2018
Gold
(g/t)
1.34
1.58
1.17
1.53
-
3.57
3.20
3.44
0.74
0.92
1.80
1.95
1.62
(koz)
390
4,290
350
5,020
-
1,160
580
1,740
520
910
5,450
930
7,290
30 June 2018
Gold
(g/t)
1.80
2.13
2.10
-
-
-
0.96
1.23
2.13
1.89
(koz)
330
3,260
3,590
-
-
-
360
690
3,260
3,950
Mass
(Mt)
8.8
84.1
9.2
102.1
-
10.1
5.7
15.7
21.9
30.7
94.2
14.9
139.7
Mass
(Mt)
5.7
47.5
53.2
-
-
-
11.7
17.4
47.5
64.9
LONG
OPERATION
TABLE 7 — 30 June 2017 and 30 June 2018
LONG OPERATION — MINERAL RESOURCES
30 June 2017
30 June 2018
Deposit
JORC Code Class
Long
McLeay + Victor South
Moran
Total
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Subtotal
Subtotal
Subtotal
Long Operation Total
Mass
(Mt)
0.10
0.30
0.40
0.70
0.10
0.20
0.10
0.30
0.10
0.04
0.10
0.20
0.20
0.50
0.50
1.20
Ni
(%)
5.39
5.11
4.7
4.9
6.35
3.01
3.5
3.70
7.99
3.38
3.7
5.28
6.59
4.11
4.5
4.6
Ni
(kt)
Mass
(Mt)
3
14
17
33
4
7
2
12
5
1
2
8
12
22
20
54
-
0.13
0.24
0.37
-
0.24
0.05
0.29
-
0.04
0.05
0.09
-
0.40
0.35
0.75
Ni
(%)
-
5.34
4.8
5.0
-
3.35
3.5
3.4
-
3.75
3.6
3.7
-
4.01
4.4
4.2
Ni
(kt)
-
7
12
18
-
8
2
10
-
2
2
3
-
16
15
32
1.
No Ore Reserves are reported for the Long Operation at 30 June 2018 as the mine has been placed on care and maintenance and all Ore Reserves have been
reclassified to Mineral Resources.
IGO ANNUAL REPORT 2018 — 27
COMPETENT PERSON
STATEMENTS
Information in this report that relates to Exploration Targets,
Exploration Results, Mineral Resources or Ore Reserves
is based on the information compiled by the Competent
Persons listed in Table 8 below, which includes details of their
respective professional memberships, their relationships
to IGO and details of the reporting activity for which each
Competent Person is taking responsibility.
All the Competent Persons listed below have provided IGO
with written confirmation that they have sufficient experience
that is relevant to the style of mineralisation and type of
deposit under their consideration, and to the reporting
activity being undertaken, to quality 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. They have also provided
IGO with a written consent to the inclusion in this report
of the respective matters based on each Competent Person’s
information in the form and context in which they appear
in this report, and that there are no issues that could be
perceived as material conflicts of interest in this public
report to the ASX.
TABLE 8 — 30 June 2017 and 30 June 2018
IGO COMPETENT PERSONS FOR 30 JUNE 2018 ESTIMATES AND RESULTS
Professional Association
Activity
Competent
Person
Membership
Number
IGO Relationship
Responsibility Activity
Exploration Results
Ian Sandl
MAIG/RPGeo
2388
IGO General Manager Exploration
IGO greenfield results
Damon Elder
MAusIMM
208240
Manager Mine Geology - Tropicana
AngloGold Ashanti Australia
Tropicana Operation results
Mineral Resources
Mark Murphy
MAIG/RPGeo
2157
IGO Resource Geology Manager
Long Operation estimate
Paul Hetherington
MAusIMM
209805
IGO Senior Resource Geologist
Nova Operation
Nova Operation estimate
Damon Elder
MAusIMM
208240
Manager Mine Geology - Tropicana
AngloGold Ashanti Australia
Tropicana Operation estimate
Ore Reserves
Greg Laing
MAusIMM
206228
IGO Superintendent Planning
Nova Operation
Nova Operation estimate
Andrew Bridges
MAusIMM
300976
Manager Open Pit Strategy - Tropicana
AngloGold Ashanti Australia
Tropicana Operation estimate
Annual Report
30 June 2018
Mark Murphy
MAIG/RPGeo
2157
IGO Resource Geology Manager
Annual report compilation
28 — IGO ANNUAL REPORT 2018
CORPORATE
GOVERNANCE
At IGO, our approach to corporate
governance is more than just compliance.
We believe that excellence in corporate
governance is essential for the long-term
sustainability of the business and
is paramount to protect the interests
of all our stakeholders.
Whilst the Board of Directors is responsible
for the Company’s corporate governance
we do not see governance as just a matter
for the Board. We believe good governance
is about ‘doing the right thing’ and this
is the responsibility for all those who
work at IGO and this ethos is embedded
throughout the organisation.
Our governance framework supports
our people to deliver our strategy and
provides an integral role for effective and
responsible decision making at IGO.
The Board is responsible for promoting
the success of the Group in a way which
ensures that the interests of shareholders
and stakeholders are promoted and
protected. Its key functions are setting
the long-term corporate strategy,
reviewing and approving business plans
and annual budgets, approving material
capital expenditure, approving financial
statements, approving and monitoring
the adherence to Company policies,
developing and promoting corporate
governance, and demonstrating,
promoting and endorsing an ethical
culture.
To assist the board to discharge
its responsibilities, the Board has
established the following committees:
• Audit
• Sustainability & Risk
• People & Performance
• Nomination & Governance
Details of relevant qualifications and
experience for all Committee members
can be found on pages 30 and 31 of this
annual report.
Further information about the Committees
can be found in the 2018 Corporate
Governance Statement.
The Company regularly reviews its
governance arrangements and corporate
governance policies to reflect the growth
of the Company, current legislation and
best practice. Further information about
governance at IGO can be found in the
Governance section of our website
at www.igo.com.au as well as copies
of our Corporate Governance Standards.
2018 Corporate
Governance Statement
The Company’s Corporate Governance
Statement outlines the Company’s
current corporate governance framework,
by reference to the Corporate Governance
Principles and Recommendations
contained in the ASX Corporate
Governance Council’s 3rd Edition
of its Corporate Governance
Principles and Recommendations
(ASX Recommendations). During FY18,
the Company’s corporate governance
practices complied with all relevant ASX
Recommendations.
The Corporate Governance Statement
is current as at 29 August 2018 and
has been approved by the Board.
This statement can be found in the
Governance section of IGO’s website
at http://www.igo.com.au/irm/content/
governance.aspx?RID=295, along with
the ASX Appendix 4G, a checklist cross-
referencing the ASX Recommendations
to disclosures in the Corporate Governance
Statement, the 2018 Annual Report and the
Company website.
IGO ANNUAL REPORT 2018 — 29
BOARD
PROFILE
30 — IGO ANNUAL REPORT 2018
PETER
BILBE
PETER
BRADFORD
DEBRA
BAKKER
NON-EXECUTIVE CHAIRMAN
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
NON-EXECUTIVE DIRECTOR
Age 68
B.Eng. (Mining) (Hons), MAusIMM
Age 60
B.AppSc., FAusIMM, Metallurgy
Age 52
MAppFin., BBus. (FinAcc), GradDip FINSIA,
GAICD
TERM OF OFFICE
TERM OF OFFICE
TERM OF OFFICE
Mr. Bradford was appointed
as Managing Director and
Chief Executive Officer
in March 2014.
BOARD COMMITTEES
Nomination & Governance
Sustainability & Risk
EXPERIENCE
Mr. Bradford has 40 years’
experience in gold and
base metals across mining
operations, exploration and
development activities in
Australia and internationally
at an executive management
and Board level. Mr. Bradford
therefore brings a broad
knowledge base to the
Board. He is a strong
advocate of the industry
and the need to excite the
next generation of industry
practitioners and leaders to
the mining sector, as well as
the need to promote greater
diversity and inclusion. Mr.
Bradford is a Vice President
of the Association of Mining
and Exploration Companies
Inc, a Committee member
of the Western Australian
Mining Club, and Chairman
of the Curtin University
Alumni Scholarship
campaign.
OTHER CURRENT DIRECTORSHIPS
None.
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
None.
Ms. Bakker was appointed
as a Non-executive Director
in December 2016.
BOARD COMMITTEES
Audit (Chair)
Nomination & Governance
People & Performance
Sustainability & Risk
EXPERIENCE
Ms. Bakker is an experienced
financier and investment
banker to the resources
industry, with 10 years
working in London, Chicago
and New York in senior
roles with Barclays Capital
and Standard Bank London
Group. Subsequently, Ms.
Bakker established the
natural resources team for
Commonwealth Bank of
Australia and held a number
of senior roles over a 10-
year period culminating as
Head of Mining and Metals
Origination. Ms. Bakker
is currently the Western
Australian Representative
for Auramet Trading LLC,
a New York based metals
trading firm.
OTHER CURRENT DIRECTORSHIPS
Capricorn Metals Ltd,
Azumah Resources Ltd,
Access Housing Australia and
Lishman Health Foundation
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
None.
Mr. Bilbe was appointed
as Non-executive Director
in March 2009 and Non-
executive Chairman in July
2011.
BOARD COMMITTEES
Audit
Nomination & Governance
People & Performance
Sustainability & Risk
EXPERIENCE
Mr. Bilbe is a mining
engineer with over 40
years’ experience in the
Australian and international
mining industry (gold,
base metals and iron ore)
in operational, managerial
and board positions
with various companies
including Northern Iron,
Aztec Resources, Portman
Iron, Aurora Gold, Thiess
Contractors and Kalgoorlie
Consolidated Gold Mines.
Mr. Bilbe has gained
extensive knowledge
in strategy development,
mining project development
and operations across
culturally diverse
environments. He has
significant experience in
contractor mining services,
risk management, project
funding, mergers and
acquisitions, corporate
governance and investor
relations and company and
board leadership.
OTHER CURRENT DIRECTORSHIPS
Non-executive Chairman -
Intermin Resources Limited
and Adriatic Metals Plc.
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
Northern Iron Limited.
PETER
BUCK
GEOFFREY
CLIFFORD
KEITH
SPENCE
NEIL
WARBURTON
NON-EXECUTIVE DIRECTOR
NON-EXECUTIVE DIRECTOR
NON-EXECUTIVE DIRECTOR
NON-EXECUTIVE DIRECTOR
Age 69
M.Sc. (Geology), MAusIMM
Age 68
B.Bus., FCPA, FGIA, FAICD
Age 64
BSc. (Geophysics) (Hons)
Age 62
Assoc. MinEng WASM, MAusIMM, FAICD
TERM OF OFFICE
TERM OF OFFICE
TERM OF OFFICE
TERM OF OFFICE
Mr. Buck was appointed
as Non-executive Director
in October 2014.
Mr. Clifford was appointed
as Non-executive Director
in December 2012.
Mr. Spence was appointed
as Non-executive Director
in December 2014.
Mr. Warburton was appointed
as Non-executive Director
in October 2015.
BOARD COMMITTEES
BOARD COMMITTEES
BOARD COMMITTEES
BOARD COMMITTEES
Audit
Audit
Audit
Nomination & Governance
Nomination & Governance
People & Performance
Sustainability & Risk (Chair)
EXPERIENCE
Mr. Buck is a geologist with
over 40 years’ experience
in the mineral exploration
and mining industry and
was directly involved with
the discovery, development
and mining of a number of
nickel, gold and base metal
deposits in Australia, Africa
and Brazil. Mr Buck has
worked with WMC Resources,
Forrestania Gold and LionOre
in executive management
and director positions and
was managing director
of Breakaway Resources.
He has been a non-executive
director of Gallery Gold Ltd
and PMI Gold. Mr. Buck was
also a board member of
the Centre for Exploration
Targeting at the University
of Western Australia and
Curtin University and is a life
member of the Association
of Mining and Exploration
Companies.
OTHER CURRENT DIRECTORSHIPS
Antipa Minerals Limited.
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
None.
Nomination & Governance
(Chair)
People & Performance
Sustainability & Risk
EXPERIENCE
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
has held non-executive
directorships at Centaurus
Metals, Fox Resources, Aztec
Resources, and Atlas Iron.
From 2008 until 2011 he was
Non-Executive Chairman
of Atlas Iron.
In respect to the skills Mr
Clifford brings to the IGO
Board, he has significant
experience in corporate
governance and ASX/ASIC
compliance, mergers and
acquisitions, financial
reporting, treasury, fx/
commodity hedging and
strategic planning.
OTHER CURRENT DIRECTORSHIPS
Non-executive chairman -
Saracen Mineral Holdings
Limited and Tyranna
Resources Limited
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
None.
Nomination & Governance
People & Performance
People & Performance (Chair)
Sustainability & Risk
EXPERIENCE
Mr. Warburton is a
qualified mining engineer
with more than 38 years’
experience in gold and
nickel development and
mining. He was previously
the Chief Executive Officer
of Barminco Limited and
Managing Director of
Coolgardie Gold. Neil
Warburton is also a Member
of the WA School of Mines
Alumni Council.
Mr Warburton brings a
strong underground mining
expertise to the Board and is
associated with Mark Creasy
(IGO’s largest shareholder).
OTHER CURRENT DIRECTORSHIPS
Non-Executive Chairman of
Flinders Mines Limited and
Coolgardie Minerals Limited.
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
Australian Mines Limited,
Sirius Resources NL,
Peninsular Energy Limited,
Namibian Copper Limited
and Red Mountain Mining Ltd
(non-executive chairman).
Sustainability & Risk
EXPERIENCE
Mr Spence has over 40 years’
experience in the oil and
gas industry in Australia and
internationally, including 18
years with Shell and 14 years
with Woodside where he held
executive positions including
Chief Operating Officer
and Acting Chief Executive
Officer. He has experience
in exploration and appraisal,
development, project
construction, operations
and marketing.
He has served as a non-
executive director and
chair for listed companies
since 2008, working
in energy, oil and gas,
mining, and engineering
and construction services
and renewable energy. He
chaired the board of the
National Offshore Petroleum
Safety and Environmental
Management Authority
for seven years.
OTHER CURRENT DIRECTORSHIPS
Non-executive chairman
– Santos Limited and Base
Resources Limited and non-
executive director - Murray
& Roberts Holdings Limited.
FORMER DIRECTORSHIPS
IN THE LAST 3 YEARS
Oil Search Limited.
IGO ANNUAL REPORT 2018 — 31
DIRECTORS’
REPORT
30 JUNE 2018
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 2018.
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:
Peter Bilbe
Peter Bradford
Debra Bakker
Peter Buck
Geoffrey Clifford
Keith Spence
Neil Warburton
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year were nickel, copper and cobalt mining and processing at the
Nova Operation, non-operator gold mining from the Company’s 30% interest in the Tropicana Operation, nickel mining at the
Long Operation, zinc, copper and silver mining at the Jaguar Operation and ongoing mineral exploration.
DIVIDENDS
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2017 of 1.0 cent (2016: 2.0 cents) per fully paid share
Interim ordinary dividend for the year ended 30 June 2018 of 1.0 cent (2017: 1.0 cent) per fully paid share
2018
$’000
5,868
5,868
11,736
2017
$’000
11,734
5,867
17,601
In addition to the above dividends, since the end of the financial year the Company has announced the payment of a final
ordinary dividend of $11,807,000 (2 cents per fully paid share, fully franked) to be paid on 27 September 2018.
32 — IGO ANNUAL REPORT 2018
OPERATING AND FINANCIAL REVIEW
This review should be read in conjunction with the financial statements and the accompanying notes.
Independence Group NL is a company listed on the Australian Securities Exchange (ASX:IGO). The Company has been listed on
the ASX since 17 January 2002, having traded as Independence Gold NL from 17 January 2002 to 19 December 2003.
SUMMARY OF OPERATIONS
The Group currently has the following operations in the production phase in Western Australia:
• The Nova Operation, 100% owned, was acquired as a development stage project via the acquisition of Sirius Resources NL
(Sirius) in September 2015. The Nova Operation is located in the Fraser Range, approximately 160km east-northeast of
Norseman, 360km southeast of Kalgoorlie and 380km from the Port of Esperance in Western Australia. The Ngadju People
are the Traditional Owners of the land.
The Nova Operation comprises an underground mine consisting of two orebodies, Nova and Bollinger, as well as a processing
facility with a nameplate production capacity of 1.5 million tonnes per annum that produces a nickel concentrate and a copper
concentrate, and associated infrastructure.
Commercial production was declared at the Nova Operation on 1 July 2017, with nameplate production capacity reached
shortly thereafter. In late FY18, a higher than nameplate rate of 1.8 million tonnes per annum was trialled, and the initial results
have been positive. Learnings from this trial will be utilised to make future mining and process plant changes to enable
continuous operations at 1.8 million tonnes per annum.
• The Tropicana Operation (IGO: Non-operator joint venturer; 30% owned) is located 330km east northeast of Kalgoorlie. The
gold deposits occur over a 5km strike length with gold mineralisation intersected to a depth of 1km vertically beneath the
natural surface.
The original designed nameplate capacity of the processing plant of 5.8 million tonnes per annum was achieved in March 2014. In
2016 and early 2017, the processing plant went through a re-design and optimisation project to increase the throughput capacity to
7.5 million tonnes per annum, a rate at which the Tropicana Operation was able to demonstrate in the second half of FY17. In FY18,
the Tropicana Operation announced the construction of a second 6 mega watts ball mill, with the installation of the mill expected
to be completed by December 2018. The second ball mill will enable processing throughput rate to be increased by about 5% to
8.2 million tonnes per annum and gold recovery to be increased by up to 3% to approximately 92%.
During FY18, a pre-feasibility study investigating underground mining under the Boston Shaker pit commenced. Encouraging
results have been received from 100m x 100m framework drilling. A program of 50m x 25m spaced infill drilling commenced
to support underground/open-pit interface studies and will be incorporated into the Mineral Resource estimate to be
completed as part of the Underground Prefeasibility Study. This study is confirming underground mining potential at Boston
Shaker, extending mineralisation to ~700m down dip from Long Island pit designs, with mineralisation remaining open at
depth. The study is expected to be completed in the December 2018 quarter.
Other Group activities during the year included:
• A decision to divest the Jaguar Operation. On 28 May 2018, the Company announced the divestment of the Jaguar Operation
to CopperChem Pty Limited (CopperChem), a wholly owned subsidiary of Washington H. Soul Pattinson and Company Limited.
Completion of the transaction occurred on 31 May 2018, when IGO received a cash payment of $25 million. Three future annual
cash payments of $16.1 million are scheduled, which will make up the total consideration of $73.2 million.
• Placing the Long Operation into care and maintenance in June 2018.
IGO is actively maintaining the Long Operation during care and maintenance to ensure it remains in a state of readiness for a
number of options, including recommencement of mining, exploration and/or rehabilitation. Whilst in care and maintenance,
the Company will continue to dewater the underground mine, maintain surface and underground infrastructure, and
undertake earthworks to ensure public safety and minimise environmental impacts.
IGO is also taking this opportunity to progressively rehabilitate some of the legacy landforms on the site including the old
tailings storage facilities and waste (mullock) rock dump.
• IGO successfully produced nickel sulphate hexahydrate crystals as part of a prefeasibility metallurgical testwork program.
The testwork has demonstrated the technical feasibility (proof of concept) for the proposed hydrometallurgical process to
produce nickel sulphate directly from nickel concentrate. The prefeasibility study has commenced.
IGO ANNUAL REPORT 2018 — 33
DIRECTORS’ REPORT 30 JUNE 2018 EXPLORATION OVERVIEW
The Company is committed to transformational value creation through exploration discovery. During FY18, the Group has
continued to build and develop its unique portfolio of highly prospective brownfields opportunities and belt scale greenfield
projects. Key work activities completed during this period include:
BROWNFIELDS EXPLORATION
• Regional brownfields exploration based out of the Tropicana Operation comprised of aircore drilling to the south of the existing
mine in E39/1989 and E39/1990, and aircore drilling to the north in E38/3192 and E38/1464 around the Purple Haze prospect.
These aircore programs seek to understand basement geology and explore potential mineralised corridors identified in regional
structural interpretation work. Results of these programs were being processed at the end of the financial year.
Regional exploration drilling was completed at Hidden Dragon, Madras, Seahorse and New Zebra located south of the
existing operations during the year, with results from these programs still pending at year-end.
• Nova Operation - Underground grade control drilling of the Nova-Bollinger orebodies continued during FY18 and was completed
in July 2018 (273 kilometres drilled project to date). Two diamond drill rigs were demobilised during the year, leaving one drill rig to
commence underground drilling of exploration targets. This includes drilling of the Phoenix targets in early FY19.
A 58 square kilometre, high-resolution 3D seismic survey contracted to HiSeis Pty Ltd was completed in April 2018. This
seismic survey is the largest high-resolution 3D hard rock seismic survey ever undertaken in Australia. The processing of this
data was completed and delivered to the Company in August 2018.
• Long Operation - Reprocessing and reinterpretation of 3D seismic data has resulted in the development of a number of
exploration targets at Long. These targets will be tested as part of the planned FY19 exploration program.
GREENFIELDS EXPLORATION
• Fraser Range - During FY18, the Company continued to consolidate prospective tenement packages over the Fraser Range
for total holdings of approximately 15,000 square kilometres. Extensive regional exploration activities continued across the
Fraser Range including 25,051 line kilometres of airborne EM surveys by SpectremAir completed in FY18 before moving the
SpectremAir plane to the Company’s Lake Mackay project in June 2018. SpectremAir returned to the Fraser Range in August
2018.
Aircore drilling and diamond drilling continued in FY18 with further drilling planned for FY19.
• Lake Mackay - Extensive regional exploration activities continued at Lake Mackay during FY18. SpectremAir was selected
to undertake a large regional airborne EM survey across large parts of the project, and by the end of the financial year
approximately half of the survey had been flown. Two of the areas flown were co-funded by the Northern Territory
Government under their Geophysics and Drilling Collaborations Program, which formed part of the Creating Opportunities for
Resource Exploration initiative that, among other things, aimed to improve the quality and coverage of regional exploration
geophysics across prospective areas of the Northern Territory. The airborne EM survey will continue in FY19.
During the year, results were received from infill soil sampling of anomalous areas of residual soil surrounding EL24915. Several
significant anomalies were confirmed north and northeast of the Grapple prospect in a broad area known as the Blaze prospect.
The anomalous metals include copper, gold, cobalt, silver, zinc and lead , which is a similar response to the Grapple Prospect.
Elsewhere on the project, prospect-scale geological mapping, soil sampling and rock chip sampling was completed at
various existing prospects to better understand the local geology associated with each of the mineralised areas. This
included the Grimlock prospect (previously known as Du Faur), where previous rock sampling returned anomalous nickel and
cobalt associated with manganese-rich ‘ironstone duricrust’.
34 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 FINANCIAL OVERVIEW
The objective and strategy of the Group is to create long-term shareholder value through the discovery, acquisition, development
and operation of low cost and high grade gold and base metals projects, with an emphasis on the production of metals and
minerals that will link IGO into the energy storage supply chain. Since incorporation in 2002, and including the current financial
year, the Company has returned to shareholders in excess of $176.0 million by way of a combination of $166.2 million fully franked
dividends and a $9.7 million share buy back in 2009. The Company currently has 590,330,693 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 $138.7 million and marketable securities of $24.3 million
(2017: $35.8 million and $15.3 million respectively).
Cash flows from operating activities for the Group were $277.8 million, compared to the FY17 year of $77.7 million. This was
predominantly a result of the Nova Operation achieving commercial production from 1 July 2017, combined with strong operational
cash flows from the Tropicana Operation, Long and Jaguar operations. Nova Operation generated $146.7 million cash flows from
operating activities, which was a result of 14,074 tonnes of payable nickel sold, 8,455 tonnes of payable copper and 217 tonnes of
payable cobalt sold during the year. Tropicana Operation generated cash from operating activities of $134.8 million off the back of
138,748 ounces of gold refined and sold. Cash flow from operating activities from Long Operation and Jaguar Operation were $19.9
million and $39.8 million respectively.
Lastly, cashflow from operating activities include payments for exploration and growth expenditure and net borrowing costs
amounting to $40.7 million and $7.2 million respectively.
IGO ANNUAL REPORT 2018 — 35
DIRECTORS’ REPORT 30 JUNE 2018 Cash outflows from investing activities decreased to $105.0 million for the year, compared to $273.3 million in FY17. This was
primarily a result of the construction of the Nova Operation being largely completed in FY17, with commercial production being
declared from 1 July 2017. The Company spent $114.5 million on development expenditure, with the majority of that being waste
stripping at the Tropicana Operation ($54.4 million) and underground mine development at the Nova Operation ($47.9 million).
During the year, IGO divested the Jaguar Operation to CopperChem, with the Company receiving the first cash payment
of $25.0 million. Total consideration was $73.2 million, with three future cash payments of $16.1 million scheduled for the
anniversaries of the completion date.
During the year, IGO became a substantial shareholder in Orion Minerals NL (Orion) via a $5.0 million share placement to secure
preferential rights to joint venture or purchase Orion’s nickel projects in the highly prospective Areachap Belt located in the
Northern Cape, South Africa.
Cash flows from financing activities during the financial year included two semi-annual repayments of borrowings totalling
$57.1 million, and dividends paid totalling $11.7 million. As at 30 June 2018, the Company’s outstanding debt was $142.9 million.
During the financial year, the Company renegotiated its syndicated debt facilities, resulting in the Company’s $200 million
revolving credit facility being voluntarily cancelled.
During discussions of the operating results of its business, the Group’s Board and management monitor a measure commonly
understood 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 before tax adjusted for finance costs, interest income, asset impairments, gain on sale of subsidiaries, retention and
redundancy costs, depreciation and amortisation. Underlying EBITDA increased relative to the previous financial year to a record
level as can be seen in the following chart:
141
106
196
200
M
$
150
100
50
0
-50
FY18 $339M
FY17 $151M
50
32
27
24
(41)
(24)
(17)
(17)
4
0
(3)
(1)
12
Nova
Operation
Tropicana
Operation
Long
Operation
Jaguar
Operation
Exploration
& Growth
expense
Corporate
expenses
Gain on sale
of royalty
Investment
revaluation
Share-based
payment
expense
(non-cash)
36 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 Net profit after tax (NPAT) for the year was $52.7 million, compared to $17.0 million in the previous financial year. The primary
driver for this is the inclusion of the Nova Operation in results, following declaration of commercial production on 1 July 2017.
In addition, current year NPAT includes a gain in respect of an agreement with Dacian Gold Limited for the sale of the Jupiter
mine royalty for consideration of $11.5 million.
NPAT VARIANCE FY18 VS FY17
196
(49)
47
7
(162)
0
(2)
(17)
25
4
(4)
5
(11)
14
(17)
53
17
7
8
g E B I T D A F Y 1
o l u m e v
N P A T F Y 1
a U ’l y i n
V
a
c
n
r i a
P r i c
e
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n
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e
e V
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r i a
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a
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n
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c
u
d
o
s
a
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-
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r
a
h
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e
t
a
t
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o
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e
r
a
p
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e
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e
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e
e
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s
7
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n
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c
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n
s
o
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7
v
t
s i n F Y 1
f i n
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s
e
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n
o
L
s
t
n
g C & M C o
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s
t
a
p
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s
n
e
8
e
N P A T F Y 1
s
n
s
t
a
I n
c
n
c
s
o
e c
o m e t
M
$
250
200
150
100
50
0
v
N o
Below is a reconciliation of Underlying EBITDA to NPAT for FY18:
M
$
350
300
250
200
150
100
50
0
339
(10)
(252)
2
(26)
53
Underlying
EBITDA
Net finance
costs
Depreciation
& amortisation
Gain on sale
of subsidiary
Income tax
expense
Net profit after
tax
Depreciation and amortisation expense of $252.1 million was significantly higher than the previous financial year of $89.8 million
due to the inclusion of depreciation and amortisation from the Nova Operation into the results for the year.
IGO ANNUAL REPORT 2018 — 37
DIRECTORS’ REPORT 30 JUNE 2018 NOVA OPERATION
The Nova Operation commenced commercial production on 1 July 2017, five years following discovery, with a significant portion
of underground development completed at the Nova and Bollinger ore bodies. The mining activities and processing plant at the
Nova Operation reached its nameplate 1.5 million tonnes per annum mining rate in early FY18 and finished the year strongly with
a record mining rate of 1.8 million tonnes per annum, 20% above nameplate being achieved for a trial period. This was achieved
underground through the improved availability of mining fronts, which included significant contribution of tonnes from the
Bollinger ore body. Nickel metallurgical recoveries in the processing plant generally performed in line with modelled recoveries.
Contained nickel and copper in concentrate produced for the period were 22,258 tonnes and 9,545 tonnes respectively.
Nova revenue for the period was $348.8 million which was derived from nickel, copper and cobalt sales. Concentrate for the
period was sold to Glencore International AG (Glencore), Trafigura Pte Ltd (Trafigura) and BHP Billiton Nickel West Pty Ltd
(BHPB Nickel West), with sales amounting to 14,074 tonnes of payable nickel, 8,455 tonnes of payable copper and 217 tonnes
of payable cobalt. Nickel cash costs per pound produced, which comprises the costs of producing nickel at the mine site and
includes credit adjustments for copper and cobalt sales, were $2.78 per pound.
NOVA OPERATION
Total revenue
Segment operating profit before tax
Total segment assets
Total segment liabilities
Ore mined
Nickel grade
Copper grade
Cobalt grade
Ore milled
Metal in concentrate
- Nickel
- Copper
- Cobalt
Metal payable
- Nickel
- Copper
- Cobalt
$'000
$'000
$'000
$'000
tonnes
%
%
%
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
Nickel cash costs and royalties*
A$/lb total Ni metal payable
* Includes credits for copper and cobalt
2018
348,792
35,623
1,374,188
747,011
1,511,920
1.83
0.75
0.06
1,427,072
22,258
9,545
740
15,586
8,666
238
2.78
38 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 TROPICANA OPERATION
Revenue from the Tropicana Operation for the period was $240.4 million, up 13% on the previous year result of $211.9 million as
a result of higher AUD dollar gold prices and more gold sold. The average AUD gold price achieved throughout the period was
$1,729 per ounce, an increase of $79 per ounce compared to the previous period. The Company’s share of gold refined and sold
was 138,748 ounces, up 8% on the prior year. The drivers for the higher gold sold include higher ore milled, and improved mill
feed grades attributed to the grade streaming strategy commenced towards the end of the financial year. The grade streaming
is expected to continue in FY19.
Cash costs per ounce produced, which comprises the costs of producing gold at the mine site and includes credit adjustments
for waste stripping costs and inventory build and draw costs, were $713 per ounce, while All-in Sustaining Costs (AISC) per
ounce sold were $1,061 per ounce. AISC comprises of cash costs and capitalised sustaining deferred waste stripping costs,
sustaining exploration costs, sustaining capital and non-cash rehabilitation accretion costs. AISC excludes improvement capital
expenditure and greenfields exploration expenditure.
Total Tropicana Operation assets increased by 22.5% due to ongoing contributions by the Company to the operation by way of
cash calls paid to the joint venture manager ($166.2 million for the year). Tropicana Operation liabilities largely remained steady,
increasing by $2.4 million to $36.5 million.
During the year, a total of 9.6 million tonnes of full grade ore (>0.6 grams per tonne), 0.9 million tonnes of marginal ore (grading
between 0.4 & 0.6 grams per tonne Au) and 76.5 million tonnes of waste material was mined, with the average run-of-mine grade for
full grade ore (>0.6 grams per tonne Au) being 1.88 grams per tonne Au for the year. Ore milled was 7.8 million tonnes, which was up
7% on the prior year as a result of improved mill feed grades, while grade milled was 2.11 grams per tonne for FY18.
At year end, the capitalised run of mine stockpile totalled 11.3 million tonnes grading an average of 0.92 grams per tonne
(2017: 9.5 million tonnes at 0.93 grams per tonne).
During the year, an underground concept study in the Boston Shaker open pit was undertaken. Following successful initial results, the
study was progressed through to a Pre-feasibility Study, which is expected to be completed by the December 2018 quarter.
The table below outlines the key results and operational statistics during the current and prior year.
TROPICANA OPERATION
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 tonnes
‘000 tonnes
‘000 tonnes
g/t
‘000 tonnes
g/t
%
ounces
ounces
ounces
$ per ounce produced
$ per ounce sold
2018
240,377
86,292
2017
211,915
58,300
1,270,549
1,037,257
36,486
9,568
884
76,544
1.88
7,781
2.11
88.9
469,071
467,139
138,748
713
1,061
34,071
7,900
975
73,249
2.05
7,326
2.07
89.1
431,005
431,625
128,601
817
1,162
* 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.
IGO ANNUAL REPORT 2018 — 39
DIRECTORS’ REPORT 30 JUNE 2018 LONG OPERATION
Long nickel production was within guidance and the Operation has successfully transitioned to care and maintenance in June 2018.
Up to the point of transition to care and maintenance, the Long Operation continued to supply ore to BHPB Nickel West under its
ore tolling agreement, whereby the Group is paid for the nickel metal contained in the ore mined, less applicable ore toll charges
and payability discounts.
Total revenue decreased by 8% during FY18, due to decreasing mining activities. During the year a total of 181,822 tonnes of ore
was mined, sourced from Moran (40%), Long (32%) and McLeay (28%), with the majority of ore continuing to be mined from long
hole stoping. Payable cash costs including royalties (net of copper credits) were higher at $4.87 per payable pound of nickel
(2017: $3.28 per payable pound of nickel).
The table below highlights the key results and operational statistics during the current and prior year.
LONG OPERATION
Total revenue
Segment operating profit before tax
Total segment assets
Total segment liabilities
Ore mined
Nickel grade
Copper grade
Tonnes milled
Nickel delivered (contained)
Copper delivered (contained)
Metal payable (IGO share)
- Nickel
- Copper
Ni cash costs and royalties*
* Cash costs include credits for copper.
JAGUAR OPERATION
$'000
$'000
$'000
$'000
tonnes
head %
head %
tonnes
tonnes
tonnes
tonnes
tonnes
A$ per pound of payable metal
2018
64,782
1,368
22,194
26,725
2017
70,475
716
38,693
40,402
181,822
205,372
3.22
0.22
4.11
0.29
181,822
205,372
5,855
394
3,497
160
4.87
8,433
592
5,098
240
3.28
FY18 financial and operational statistics provided below are for the period ending 31 May 2018, being the completion date for
the divestment of the Jaguar Operation.
Jaguar revenue for the period was $112.1 million, lower than the previous year result of $137.5 million due to lower zinc and copper
production, combined with results for only 11 months of the year. This was partially offset by higher AUD dollar zinc and copper
metal prices compared to the previous year. Segment operating profit before tax decreased by $20.6 million over the prior year
predominately due to lower segment revenue, partially offset by higher general administration costs. Other production costs were
in line with the previous financial year.
Production from the Bentley underground mine was lower than the prior period predominantly due to the divestment at the end
of May 2018, missing out on the final month of production. Higher grade stopes became available late FY18 which led to a strong
finish to the year with ore mined for the month of May 2018 reaching a record production rate of 50,849 tonnes. Ore mined was
414,582 tonnes, at a zinc grade of 7.1% and copper grade of 0.6%.
Processing plant performance was generally constrained by the availability of ore from the Bentley underground mine with
411,219 tonnes milled for the period ending May 2018.
40 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 The table below outlines the key results and operational statistics during the current year (11 months only) 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
- Copper
- Zinc
- Silver
- Gold
$'000
$'000
$'000
$'000
tonnes
%
%
g/t
g/t
tonnes
tonnes
tonnes
ounces
ounces
tonnes
tonnes
ounces
ounces
Zinc cash costs and royalties**
A$/lb total Zn metal payable
* Nil at end of FY18 due to divestment.
** Cash costs include credits for copper, silver and gold.
EXTERNAL FACTORS AFFECTING THE GROUP’S RESULTS
2018
112,136
12,893
-
-
2017
137,470
33,534
175,917
25,665
414,582
444,700
0.6
7.1
125
0.47
1.3
8.3
134
0.52
411,219
443,485
1,695
26,159
4,565
32,638
1,067,400
1,376,521
1,226
2,532
1,625
21,747
736,249
1,136
1.25
4,377
27,067
951,182
2,328
0.76
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, where possible,
mitigate the associated risk of adverse outcomes. 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 base metals and precious metals that are priced by the London
Metals Exchange and, as the Group is not a price maker with respect to the metals it sells, it is, and will remain, susceptible to
adverse price movements. The Group mitigates its exposure to commodity prices through a financial risk management policy in
which a percentage of anticipated usage can be hedged. To this end, gold hedging in FY19 represents approximately 30% of the
Group’s share of forecast annual gold production.
The Company has also initiated diesel hedging in order to protect against increases in oil prices, and as at year end, the Company
had hedged approximately 16% of anticipated usage for FY19.
EXCHANGE RATES
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 daily average AUD/USD currency
pairs’ strengthened over the FY18 year. A stronger AUD implies a lower AUD receipt of sales denominated in USD. The Group’s
policy is to mitigate adverse foreign exchange risk by transacting commodity hedges in AUD equivalent terms where possible.
DOWNSTREAM PROCESSING MARKETS
The price of sea freight, smelting and refining charges are market driven and vary throughout the year. These also impact on the
Group’s overall profitability.
IGO ANNUAL REPORT 2018 — 41
DIRECTORS’ REPORT 30 JUNE 2018 INTEREST RATES
Interest rate movements affect both returns on funds on deposit as well as the cost of borrowings. Furthermore, AUD and USD
interest rate differentials are intimately related to movements in the AUD/USD exchange rate.
NATIVE TITLE AND HERITAGE SITES
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 Native Title rights exist, or may be found to exist, which may preclude or delay exploration, development
or production activities. The comparable, albeit lesser risk, arises from the potential presence of archaeological and ethnographic
sites.
The Company engages suitably qualified personnel to assist with the management of its exposure to native title and heritage
risks, including appropriate legal and community relations experts. These risks are discussed in more detail in the Company’s
Sustainability Report which can be found on the Company’s website.
EXPOSURE TO ECONOMIC, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY RISKS
The Group has material exposure to economic, environmental and social sustainability risks, including changes in environmental
regulatory legislation.
The Group employs suitably qualified personnel to assist with the management of its exposure to environmental and social
sustainability risks, including appropriate health and safety personnel and environmental professionals. These risks are discussed
in more detail in the Company’s Sustainability Report which can be found on the Company’s website.
OTHER EXTERNAL FACTORS AND RISKS
• Operational performance including uncertain mine grades, seismicity, ground support conditions, grade control, in fill
resource drilling, mill performance, access to water 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 orebodies 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 find or replace reserves/resources presents a
significant operational risk.
• 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;
- Any change in supply or demand impacts on the ability to generate revenues and hence the profitability of an operation.
• Changes in the technological advancement of the energy storage market, and the discovery and adoption of alternate
product streams;
• Changes in government taxation legislation;
• Changes in health and safety regulations;
• Environmental issues and social expectations; and
• Assumption of estimates that impact on reported asset and liability values.
42 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the current year, the Company completed the divestment of the Stockman Project to CopperChem Limited
(CopperChem), a subsidiary of Washington H. Soul Pattinson and Company Limited.
The Company entered into an agreement to sell its Stockman Project in north-east Victoria to CopperChem on 14 June 2017
for total proceeds of up to $47.2 million, comprising $32.2 million in cash payments and a 1.5% net smelter return royalty with
provisional value of up to $15.0 million. Completion of the transaction was subject to the satisfaction of certain conditions
relating to the Stockman Project. All sales conditions were satisfied and completion of the sale occurred in December 2017.
Partial proceeds of $22.2 million have been received to 30 June 2018, with the balance of $10.0 million due to be received in the
first half of FY19.
On 25 May 2018, the Company announced that it had entered into an agreement with CopperChem to divest the Jaguar
Operation for a total consideration of $73.2 million. The consideration comprised $25.0 million in cash on completion of the
transaction and an additional $48.2 million in deferred cash payments. The transaction was completed on 31 May 2018, with the
Company receiving a cash payment of $25.0 million, with three future cash payments of $16.1 million to be received on each of
the three anniversaries of the completion date.
The Company also restructured its existing banking facilities during the period, with the cancellation of the outstanding
$200.0 million revolving loan facility expiring in September 2020.
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 29 August 2018, the Company announced that a final dividend for the year ended 30 June 2018 would be paid on
27 September 2018. The dividend is 2 cents per share and will be fully franked.
On 3 July 2018, the Company announced that it had entered into tenement purchase and joint venture agreements (the JV
Agreements) with three entities owned and controlled by Mark Creasy (Creasy Group). The group of tenements, to be called the
Southern Hills tenements, are contiguous to the Nova Mining Lease and cover approximately 1,100 square kilometres of highly
prospective Fraser Range geology over the primary gravity ridge west and southwest of Nova.
Following the execution of and pursuant to the JV Agreements, the Company paid the Creasy Group $21.0 million in July 2018
to earn a 70% managing interest in the Southern Hills tenements. The $21.0 million purchase price comprised a cash payment
of $5.3 million and the issue of $15.7 million in shares in Independence Group NL at an issue price equal to the 20-day volume
weighted average price to 28 June 2018.
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.
COMPANY SECRETARY
Ms. Joanne McDonald was appointed to the position of Company Secretary on 5 October 2015. Ms. McDonald is a qualified
Chartered Secretary with over 14 years’ experience working for listed companies in multiple jurisdictions. Ms. McDonald was
previously Assistant Company Secretary with Paladin Energy Ltd and, during her eight years at Paladin, she also held the role of
Company Secretary of Summit Resources Ltd. Ms. McDonald is a Fellow of the Governance Institute Australia and a Graduate of
the Australian Institute of Company Directors.
IGO ANNUAL REPORT 2018 — 43
DIRECTORS’ REPORT 30 JUNE 2018 MEETINGS OF DIRECTORS
The numbers of meetings of the Directors and of each Board Committee held during the year ended 30 June 2018, and the
numbers of meetings attended by each Director were:
Full meetings
of directors
People & Performance
Committee
Audit
Committee
Nomination &
Governance Committee
Sustainability &
Risk Committee
Meetings of committees
Name
Debra Bakker
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Keith Spence
Neil Warburton
A
8
8
8
8
7
8
8
B
8
8
8
8
8
8
8
A
3
3
**
3
2
3
3
B
3
3
**
3
3
3
3
A
6
6
**
6
5
6
**
B
6
6
**
6
6
6
**
A
3
3
3
3
2
3
3
B
3
3
3
3
3
3
3
A
4
5
5
5
4
5
5
B
5
5
5
5
5
5
5
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 INTEREST IN SHARES AND SHARE RIGHTS OF THE COMPANY
At the date of this report, the interests of the Directors in the shares, share rights and service rights of Independence Group NL
were as follows:
Name
Debra Bakker
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Keith Spence
Neil Warburton
Total
Ordinary fully paid shares
Share rights
Service rights
11,085
40,000
940,000
22,200
15,000
22,125
106,034
1,156,444
-
-
401,667
-
-
-
-
-
-
49,858
-
-
-
-
401,667
49,858
44 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT 30 JUNE 2018 LETTER FROM CHAIR OF
PEOPLE & PERFORMANCE COMMITTEE
DEAR SHAREHOLDER
On behalf of the People & Performance Committee, I am pleased to share with you our FY18
Remuneration Report.
During 2018, we have seen upward pressure on remuneration, as the resource sector’s activities and
competition for skilled people have increased. Consistent with IGO’s Total Rewards Philosophy, which
is in its second year since implementation, the Company’s remuneration response has been holistic,
considering not only salary but also issues such as work/life balance and opportunity for development. Many
improvements have been achieved, such as more flexible work options, broadening of the Company’s equity
offering to all employees, introducing a paid parental leave program, improving operational rosters and
strengthening and extending the Company wide investment in learning, development and training.
This year, changes have also been made to the Remuneration Report in order to enhance the visibility of the
connection between Executive remuneration and the creation of shareholder value.
SHORT TERM INCENTIVE FOR FY18
This was a significant year for IGO with the first full year of production at Nova, the transition of the Long
Operation into care and maintenance and the expansion of the Company’s footprint and activities in the
Fraser Range and Northern Territory. A demanding set of Short Term Incentive performance measures
were set by the Board to reflect this as follows:
1. Production and Financial – delivering strong capital expenditure, operating expenditure and production
performance from the Company’s operated assets, particularly at Nova in its first full year of production.
2. Reserves Growth – growing the Company’s reserves base (excluding Tropicana) net of depletion due to
mining. This is a relevant measure, given the significant tonnes extracted from Nova.
3. Growth – delivering a suite of strategic growth initiatives that support the Company’s overall strategy.
As with the Reserves Growth metric, this is important to growing shareholder value.
4. People and Culture – improvement across a suite of objectives that create a motivated and highly-
engaged workforce. This includes specific targets for increasing diversity and shaping culture.
5. Health, Safety and Environmental performance – delivering sustained, improved HS&E performance
across all facets of the business. This metric goes directly to efficiently and effectively managing the
risks inherent in all the Company’s operations.
Further details on how the above performance measures were delivered as well as details of the long-
term incentive program can be found in the Remuneration Report.
EXECUTIVE REMUNERATION AND REWARD REVIEW
In FY19, a significant review is planned of both the fixed and “at risk” remuneration structures in preparation
for the next three-year cycle. The goal is to ensure that the Company remains a competitive employer of
choice, where Executive remuneration remains closely linked to a common effort that drives our achievement
of strategic objectives and maximises the alignment of remuneration with the interests of shareholders for
the period.
I trust that shareholders will find the 2018 report clearly explains our current remuneration philosophy
and Executive outcomes for the period and welcome your feedback in our endeavour to provide ongoing
clarity and transparency.
KEITH SPENCE
CHAIR – PEOPLE & PERFORMANCE COMMITTEE
IGO ANNUAL REPORT 2018 — 45
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 REMUNERATION
REPORT (AUDITED)
The Remuneration Report for the year ended 30 June 2018 outlines the Director and Executive remuneration arrangements of the
Company in accordance with the requirements of the Corporations Act 2001 and its regulations.
Key Management Personnel (KMP) of the Group (also referred to as Executive Management) are detailed in the table below and
are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the
Group, directly or indirectly, including any Director, whether executive or otherwise of the Company.
SECTION 1
FY18 OVERVIEW
Details organisational developments and outcomes for FY18.
SECTION 2
REMUNERATION AT IGO
Provides an overview of key elements of the Company’s remuneration
governance and philosophy.
SECTION 3
EXECUTIVE REMUNERATION
IN FY18
SECTION 4
NON-EXECUTIVE DIRECTOR
REMUNERATION
SECTION 5
PLANNED REMUNERATION
CHANGES
SECTION 6
STATUTORY REMUNERATION
DISCLOSURES
Details remuneration arrangements in FY18 for the following executives:
Keith Ashby - Head of SHEQ & Risk
Peter Bradford - Managing Director and CEO
Matt Dusci - Chief Operating Officer
Andrew Eddowes - Head of Corporate Development
Sam Retallack - Head of People & Culture
Ian Sandl - General Manager Exploration
Scott Steinkrug – Chief Financial Officer
Details remuneration and benefits for the Company’s Non-executive
directors (see pages 30 to 31 for details about each Director) including:
Peter Bilbe - Non-executive Chairman
Debra Bakker - Non-executive Director
Peter Buck - Non-executive Director
Geoffrey Clifford - Non-executive Director
Keith Spence - Non-executive Director
Neil Warburton - Non-executive Director
Provides an overview of the planned changes in remuneration and
reward in FY19 for the Executives and the wider organisation.
Provides an update for all relevant statutory remuneration disclosures
as required by the Corporations Act 2001.
46 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 SECTION 1.
2018 OVERVIEW AND DEVELOPMENTS
FY18 has been an important year for the Company with the first full year of production at Nova, the divestment of Stockman and
Jaguar, the transition of the Long Operation into care and maintenance and the expansion of our footprint and activities in the
Fraser Range and Northern Territory.
The achievement of these results has required a significant investment in our people, to build the capability of our teams and to
invest in additional individual capacity across the business.
FY18 was also the second full year since the implementation of the Company’s Total Rewards Philosophy. This philosophy
recognises that remuneration and reward is not just about the payment of salary, rather a view of benefits that reward and develop
our people to create a holistic value proposition. A competitive Employee Value Proposition (EVP) is a growing point of difference
for employee attraction and retention. Although remuneration is an important component of the EVP, trending suggests work/life
balance and opportunity for development is higher on the list of multi-generational workforces.
To this end, along with Company-wide salary benchmarking and the award of a group wide CPI increment (or consideration of)
for all roles, the following initiatives were implemented for all employees in FY18:
• Improved flexible work options to recognise the importance that the ability to successfully blend work and family
commitments has on employee engagement;
• Broadening of the Company’s equity offering to all employees with the implementation of a salary sacrifice share plan,
including a Company sponsored contribution of up to $2,500 to encourage all employees to share in ownership of the
Company and the connection that drives;
• Introduction of a Paid Parental Leave program to increase engagement, retention and to facilitate the combination of work
and family responsibilities;
• Further consultative work on operational rosters to ensure the Company maximises operational productivity and individual
employee flexibility; and
• Strengthening and extending of the Company-wide investment in learning, development and training.
At a Board and Executive level, the following changes were made:
• the Chief Growth Officer was appointed as Chief Operating Officer effective 1 February 2018;
• Andrew Eddowes, Head of Corporate Development and Ian Sandl, General Manager Exploration, were appointed to the
Executive Committee effective 1 February 2018;
• increases in total fixed remuneration (TFR) for KMPs in line with market benchmarking to ensure that Executive fixed
remuneration remained competitive within the comparator and broader industry groups for similar roles; and
• an increase in LTI award for the Managing Director from 70% to 110%. Similarly, for the Chief Operating Officer and Chief
Financial Officer roles, the LTI component was increased from 40% to 80% of TFR.
No changes were made to:
• the TFR of the Managing Director;
• Chairman and Non-executive director remuneration (for the third year in a row); and
• the STI component of KMP remuneration.
IGO ANNUAL REPORT 2018 — 47
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 SECTION 2.
REMUNERATION AT IGO
2.1 REMUNERATION GOVERNANCE OVERVIEW
The Board recognises that the success of the business depends upon the quality and engagement of its people. To ensure the
Company continues to succeed and grow, it must attract, motivate and retain highly skilled Directors, Executives and employees
and as such has an active People & Performance Committee to ensure that people and performance are a priority.
The Committee, chaired by Keith Spence, held three meetings during FY18. Ms Bakker and Messrs Bilbe, Buck, Clifford,
and Warburton are also Committee members. The Managing Director was invited to attend all meetings which consider the
remuneration strategy of the Group and recommendations in relation to Executives. The structure of the relationship between
the Board, Committee and remuneration principles is explained in the following table.
BOARD
The Board delegates responsibility in relation to remuneration
to the People & Performance Committee (Committee)
which operates in accordance with the Company’s People &
Performance Committee Charter and the requirements of the
Corporations Act 2001 and its regulations.
PEOPLE & PERFORMANCE COMMITTEE
IGO REMUNERATION PRINCIPLES
The Committee is made up entirely of non-executive directors,
the majority of whom are independent. The Committee is
charged with assisting the Board by reviewing, on an annual
basis, and making appropriate recommendations on the
following:
• the Company’s remuneration policy and structure, to ensure
that it remains aligned to business needs and meets the
Company’s remuneration principles;
• Executive remuneration policy for KMP;
• equity based remuneration plans for KMP and other
employees;
• diversity and culture strategy, policy, practices and
performance;
Remuneration policy is transparent with information
communicated to all employees to create a high level of
understanding of the link between pay, performance and
delivery against Company objectives and values.
“At Risk” components are designed to motivate and
incentivise for high performance and are aligned with the
Company’s strategic and business objectives to create
short and long-term shareholder value.
Learning and development is a quantifiable and
essential component of all roles.
Career planning is a valued component of the total reward
philosophy and forms part of all development plans.
• superannuation arrangements for the organisation; and
• remuneration equity for all employees across the company.
Work/life programs aim to provide balance and
additional value for people at all levels of the organisation.
Equity in the business is important for all employees
and prioritised when setting and reviewing remuneration
policy and practice.
EXTERNAL ADVICE AND BENCHMARKING
The Committee undertakes a broad review of data derived from
remuneration consultants who track industry levels to ensure it is
fully informed when making remuneration decisions.
During the year ended 30 June 2018, no remuneration
recommendations, as defined by the Corporations Act 2001, were
provided by remuneration consultants. However, the Committee
did utilise data provided by AON Hewitt McDonald ($5,533),
Mercer Consulting ($5,050) and BDO Reward (WA) Pty Limited
($795) regarding salaries and benefits across the organisation.
Further information on the Committee’s role, responsibilities and membership can be found at www.igo.com.au.
48 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018
SECTION 3.
KMP REMUNERATION
COMPONENTS OF EXECUTIVE REMUNERATION AT IGO
Executive remuneration at IGO is comprised of fixed and at risk components, as an integrated package, the purpose of which
is to align executive reward with shareholder outcomes, executive performance and the retention of key talent. TFR and at risk
remuneration is benchmarked annually by the People & Performance Committee.
The table below provides an overview of the different remuneration components within the IGO framework.
OBJECTIVE
Attract and retain
the best talent
Reward current year
performance
Reward long-term
sustainable performance
Performance related remuneration (at risk)
REMUNERATION
COMPONENT
Total Fixed Remuneration
(TFR) – includes salary and
superannuation
Short-term incentive (STI) –
paid as cash and service rights
Long-term incentive (LTI) –
paid as performance rights
PURPOSE
TFR provides competitive
‘guaranteed’ remuneration with
reference to;
• size and complexity
of the role
• individual responsibilities and
performance; and
• experience and skills
The STI ensures appropriate
differentiation of pay for
performance, for achievement
of a combination of Company
and Individual KPIs to drive
achievement of near-term
strategic objectives and
retention.
The LTI is focused on the
achievement of mid to
long-term shareholder return
through the Company’s
long-term strategic objectives
and retention.
IGO ANNUAL REPORT 2018 — 49
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018
TOTAL REALISED EARNINGS FOR KMP IN FY18
The following pages provide detail of the actual remuneration earned during FY18 for KMP. Amounts include:
• Total fixed remuneration received;
• The cash component of the STI earned as a result of business and individual performance for FY18;
• Ordinary shares received as a component of the STI service rights that vested during the year; and
• Performance Rights that vested during the year.
Peter Bradford
TFR – $800,000
STI – $182,000
Keith Ashby
TFR – $350,000
STI – $39,078
Rob Dennis1
TFR – $416,667
SR – $99,488
Matt Dusci
TFR – $500,000
STI – $79,750
Andrew Eddowes2
TFR – $152,150
STI – $41,154
Sam Retallack
TFR – $350,000
STI – $38,343
Ian Sandl2
TFR – $152,500
STI – $34,830
Scott Steinkrug
TFR – $450,000
STI – $70,425
1.
2.
Mr. Dennis resigned from the Company effective 30 April 2018. The Board approved the vesting of his service rights, these were issued on 18 May 2018 at a
market price of $4.85.
Mr. Eddowes and Mr. Sandl were appointed to the Executive Committee on 1 February 2018. Realised earnings include amounts from that date.
KMP AT RISK REMUNERATION IN FY18
The Company believes that at risk components are important elements of remuneration for all employees in the business to
drive the achievement of key strategic initiatives and maintain alignment between employees and creation of sustainable
shareholder value.
The mix of fixed and at risk remuneration varies depending on the role and reward grading of Executives. It also depends on the
performance of both the Company and the individual.
The following is an overview of the total mix of fixed and at risk remuneration for Executive KMP in FY18:
Managing Director
and CEO
Chief Operating
Officer and Chief
Financial Officer
TFR – 36%
TFR – 43%
Other executive KMP
TFR – 54%
CLAWBACK PROVISION
STI – 25%
LTI – 39%
STI – 22%
LTI – 35%
STI – 19%
LTI – 27%
In FY17, IGO introduced a clawback provision for any unvested STI and LTI awards in the case of fraud, dishonesty, gross
misconduct or a material misstatement of the financial statements and subject to Board discretion.
50 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 IGO STIP OUTLINE
An outline of the key elements of the Short Term Incentive Program (STIP) as it relates to the Company’s KMP is provided below:
STIP
OPPORTUNITY
The STIP opportunity offered to each Executive as a percentage of TFR is defined by the individual’s role and reward grade.
The STIP opportunity is market benchmarked and reviewed by the Board annually.
STIP payments are awarded 50% cash and 50% equity (service rights) on above threshold performance against a range of
business objectives Company KPI and individual performance objectives Individual KPI.
PERFORMANCE
TARGETS
The payment of a short-term incentive to KMP is an at risk component of the individual’s total remuneration given that a set of
performance targets must be met prior to payment. These targets are based on metrics that are measurable, transparent and
achievable, designed to motivate and incentivise the recipient to achieve high performance aligned with Company objectives
and near-term shareholder value creation.
PERFORMANCE
ASSESSMENT
The Company employs a system of continuous performance feedback to drive performance throughout the year, however a
final performance assessment occurs annually following the completion of the financial year for each Executive. Executives
are assessed on their contribution to the achievement of Company KPIs (80%), individual KPIs (20%) and their demonstrated
support for the Company’s values.
MEASUREMENT
PERIOD
STIP DEFERRAL
COMPONENT
The STIP program is an annual program and operates from 1 July to 30 June each year.
The service rights component of the STI vest in two tranches, with the first tranche of 50% vesting on the 12 month
anniversary of the STI award date, and the second tranche of 50% on the 24 month anniversary of the STI award date.
Vesting of the service rights component of the STI granted to Executive KMP is based on a continuous service condition being
met and is designed to act as a driver of retention and medium-term value creation.
CESSATION OF
EMPLOYMENT
In the event that the Executive’s employment with IGO terminates prior to the vesting of all service rights, outstanding
unvested rights will be reviewed by the Board and may or may not vest depending on the circumstances of the Executive’s
cessation of employment.
BOARD
DISCRETION
The payments of all STIs are subject to Board approval. The Board has the discretion to adjust remuneration outcomes higher
or lower to prevent any inappropriate reward outcomes, including reducing (down to zero, if appropriate) any STI payment.
HOW PERFORMANCE WAS LINKED TO STIP OUTCOMES IN FY18
As part of the annual business planning process the Board determines the KPIs to reflect targets for the key strategic drivers of
the business for the following year. The KPIs and performance achieved against them for FY18 are listed in the table below:
Key
Result Area
FY18 KRA
Measure
Rationale for
inclusion
Opportunity
%
Achievement
and commentary
PRODUCTION
AND FINANCIAL
Achieve consolidated capex, operating,
expenditure and production stretch targets for
Nova, Jaguar and Long.
Delivering strong production
and financial performance is
a key enabler to funding the
achievement of the Company’s
strategic plan.
48%
RESERVES
Deliver year-on-year improvement on a ‘like for
like’ basis in Group Reserves (excluding Tropicana)
by nominated amount net of depletion.
Identifies the Company’s
performance in achieving the
organic growth of current assets.
8%
GROWTH
Complete nominated number of agreed
strategic priorities.
PEOPLE AND
CULTURE
Deliver year-on-year improvement in an
agreed range of people, engagement and
diversity metrics including turnover, gender
balance, Aboriginal employment, employee
availability and engagement.
16%
Outlines performance achieved
to deliver a suite of strategic
initiatives, brownfields/
greenfields opportunities and
M&A projects important to
growing shareholder value.
Focuses achievement on key
strategic people enablers.
4%
26.4%
Cost targets partially
achieved, Long production
achieved and Nova &
Jaguar production targets
not achieved.
0%
KPI not achieved as
reserves decreased.
16%*
Successful completion
of Stockman & Jaguar
divestments and delivery
of additional belt-scale
exploration tenure.
1.6%
Targets for the reduction in
turnover and engagement
score improvement
missed targeted levels.
Good progress made on
employee availability.
IGO ANNUAL REPORT 2018 — 51
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 HSE
Deliver a year-on-year weighted average
improvement in an agreed range of HS&E
performance, on a range of backward and forward-
looking measures, including risk assessments, visual
safety leadership interactions, introduction of health
and wellness strategy and environmental standards.
Highlights performance on
metrics that go directly and
indirectly to efficiently and
effectively managing the risks
inherent in the Company’s
operations.
4%
2.4%
Good progress made
with the Visual Safety
Leadership program .
INDIVIDUAL
KPI’S/PERSONAL
PERFORMANCE
Assessed for each individual and designed to
more specifically focus individual Executives
on key performance elements that align to the
Company’s strategic plan and profitability drivers
that are within the Executive’s control.
Assessed for each individual
relative to 5-10 KPI’s.
20%
16-19%
*Due to the sensitive nature of some corporate KPIs the full detail on measures and achievement is confidential.
GATING RELATING TO PAYMENT OF STI’S FOR FY18
COMPANY SCORECARD GATING
• No production and financial component in the event of Company NPAT being negative before abnormals;
• No reserves or growth component in the event of a material downward restatement of the previous year’s Reserves; and
• No people or HSE component in the event of a fatality, permanent disabling injury or material environmental breach.
INDIVIDUAL KPI GATING
No individual component in the event of a material breach of the Company’s Code of Conduct by the individual.
FY18 STIP OUTCOMES
Name
Position
Peter Bradford
Managing Director
Keith Ashby
Head of SHEQ and Risk
Rob Dennis
Chief Transformation Officer
Matt Dusci
Chief Operating Officer
Andrew Eddowes5
Head of Corporate Development
Sam Retallack
Head of People and Culture
Ian Sandl6
General Manager Exploration
Scott Steinkrug
Chief Financial Officer
FY18 Potential
STI %1
FY18 Declared
$2
FY17 Potential
STI %
FY17 Awarded
$3
70
35
50
65
35
35
35
50
364,000
78,155
-
159,500
82,307
76,685
69,659
140,850
70
35
50
50
-
35
-
50
350,000
74,000
144,000
200,000 4
-
74,000
-
132,000
1.
2.
3.
4.
5.
6.
% of TFR.
To be paid in September 2018 - 50% in cash and 50% in service rights (vesting in equal parts in September 2019 and September 2020).
Awarded in September 2017 - 50% in cash and 50% in service rights (vesting in equal parts in September 2018 and September 2019).
Amount includes FY17 STI of $139,000 plus an additional special bonus of $61,000 for extraordinary contribution on special projects during the year.
Mr. Eddowes was appointed to the Executive Committee effective 1 February 2018.
Mr. Sandl commenced employment with the Company on 4 September 2017 and his FY18 STI is a pro-rata entitlement.
52 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 IGO LTIP OUTLINE
An outline of the key elements of the Company’s Long-Term Incentive Program (LTIP), as it relates to the Company’s KMP, is
provided below:
LTIP OPPORTUNITY
The LTIP opportunity is determined by the Executive’s role within the business and is awarded by the offer of a number
of performance rights based on a percentage of TFR. The LTIP opportunity for each individual KMP is outlined on page 57.
PERFORMANCE
HURDLES
For performance rights issued in FY17 there was one performance hurdle, relative total shareholder return (TSR).
In FY18 and going forward, the Company introduced the use of two equally weighted performance hurdles utilising the
following measures:
1. relative TSR; and
2. absolute TSR.
VESTING OF
PERFORMANCE
RIGHTS
Vesting of the performance rights granted to Executive KMP is based on a continuous service condition and
performance conditions as detailed below.
SERVICE CONDITIONS Performance rights are subject to a service condition. This condition is met if the KMP’s employment with IGO is
continuous for three years commencing on or around the grant date and is aimed at the retention of key personnel.
PERFORMANCE
CONDITIONS
Relative TSR
The TSR scorecard for the three year measurement period is 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 Board considers that relative TSR is an appropriate performance hurdle because it ensures that a proportion of
each participant’s remuneration is linked to the comparative return received by shareholders from holding shares in a
company in the peer group for the same period.
Absolute TSR
The increase in the Company’s absolute TSR will be measured over a three year period.
The Board considers that absolute TSR is an appropriate performance hurdle because it ensures KMP performance is
rewarded when a year-on-year improvement in shareholder value is achieved.
VESTING
SCHEDULE
Relative TSR
The vesting schedule of the performance rights subject to relative TSR testing is as follows:
Relative TSR performance
Less than 50th percentile
Level of vesting
Zero
Between 50th and 75th percentile
Pro-rata straight line percentage between 50% and 100%
75th percentile or better
100%
Absolute TSR
The vesting schedule of the performance rights subject to absolute TSR testing is as follows:
Absolute TSR performance
10% per annum return
% of Performance Rights that will vest
33%
Above 10% per annum and below 20% per annum return
Straight line pro-rata between 33% and 100%
Above 20% per annum return
100%
Testing occurs three years from 1 July of the relevant financial year.
In the event that the KMP’s employment with IGO terminates prior to the vesting of all performance rights, outstanding
unvested rights will be reviewed by the Board and may or may not vest depending on the circumstances of the
cessation of employment.
MEASUREMENT
PERIOD
CESSATION OF
EMPLOYMENT
BOARD DISCRETION
The Board has absolute discretion to adjust the LTI vesting if, on assessment, absolute TSR is negative over the
performance period.
PEER GROUP
The Company’s TSR performance for performance rights issued during FY18 will be assessed against a peer group
comprised of members of the S&P ASX 300 Metals and Mining Index.
LTI - NON-EXECUTIVE
DIRECTORS
The overarching Employee Incentive Plan 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 share rights under
the Employee Incentive Plan and any such issue would be subject to all necessary shareholder approvals.
IGO ANNUAL REPORT 2018 — 53
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 FY18 LTIP OUTCOMES
Name
Position
Peter Bradford
Managing Director
Keith Ashby
Head of SHEQ and Risk
Rob Dennis
Chief Transformation Officer
Matt Dusci
Chief Operating Officer
Andrew Eddowes5
Head of Corporate Development
Sam Retallack
Head of People and Culture
Ian Sandl5
General Manager Exploration
Scott Steinkrug
Chief Financial Officer
Number of share rights
issued in FY18 period1
Number of share rights
issued in FY17 period2
266,6673
53,031
121,213
121,213
22,131
53,031
22,182
109,091
135,000
17,000
49,000
41,000
-
17,000
-
41,000
1.
2.
3.
4.
5.
Share rights awarded at 20 day VWAP to 25 August 2017 of $3.30.
Share rights awarded at 20 day VWAP to 26 August 2016 of $4.15.
Approved by shareholders at the 2017 Annual General Meeting.
Following Mr. Dennis’ resignation on 30 April 2018, 93,196 share rights issued during FY18 and 19,063 share rights issued during FY17 were subsequently cancelled.
Mr. Eddowes and Mr. Sandl were appointed to the Executive Committee effective 1 February 2018. Share rights reflect total number issued for FY18.
APPROVED BY SHAREHOLDERS AT THE 2016 ANNUAL GENERAL MEETING
The Independence Group NL Employee Incentive Plan (EIP) was approved by shareholders at the Annual General Meeting in
November 2016.
The number of eligible equity products able to be issued under the EIP is limited to 5% of the issued capital of the Company. The
5% limit includes grants under all plans made in the previous three years (with certain exclusions under the Corporations Act 2001).
At the end of FY18 this percentage stands at 0.74%. There are no voting or dividend rights attached to the share rights.
54 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 SECTION 4.
NON-EXECUTIVE DIRECTOR REMUNERATION
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.
TOTAL REALISED EARNINGS
Name
Debra Bakker1
Peter Bilbe
Peter Buck
Geoffrey Clifford
Keith Spence
Neil Warburton
Total non-executive director remuneration
Year
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Cash fees
$
Superannuation
$
115,297
59,776
215,373
219,178
123,288
123,288
121,385
123,288
123,288
123,288
109,589
109,589
808,220
758,407
10,953
5,679
20,460
20,822
11,712
11,712
11,532
11,712
11,712
11,712
10,411
10,411
76,780
72,048
Total
$
126,250
65,455
235,833
240,000
135,000
135,000
132,917
135,000
135,000
135,000
120,000
120,000
885,000
830,455
1.
Ms. Bakker was appointed a Non-executive Director effective 14 December 2016.
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 $1,500,000 which was approved by shareholders at the Annual
General Meeting on 16 December 2015, of which $885,000 was being utilised at 30 June 2018 (2017: $885,000).
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.
The Board resolved, for a third consecutive year, not to increase Non-executive Directors’ fees. There was market evidence to
support an increase to the remuneration for the Chairman for FY19, however the Board resolved not to make any adjustment to
the Chairman’s remuneration for FY19
Details of Non-executive Director fees are as follows:
Non Executive Director base fees
Board Chairman
Board Member
Board Member Committee Fees
Chair Audit Committee
Chair Remuneration Committee
Chair Sustainability and Risk Committee
Chair Nomination Committee
Committee Members
Approved
2019
230,000
120,000
15,000
15,000
15,000
10,000
Nil
30 June
2018
230,000
120,000
15,000
15,000
15,000
10,000
Nil
30 June
2017
230,000
120,000
15,000
15,000
15,000
10,000
Nil
IGO ANNUAL REPORT 2018 — 55
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 SECTION 5.
PLANNED CHANGES FOR FY19
The Board and Executive team appreciate the importance of competitive remuneration in a market where the competition for
talent in FY19 is anticipated to continue to increase for a number of key roles. The Company also acknowledges the competition
for talent at graduate level, particularly for mining engineering and geology students, and will continue to promote and support
graduate development in FY19 to build the talent pipeline for IGO and the industry more broadly.
Looking forward, automation and digital technology will change the way talent is recruited and managed within the business,
requiring changes to attraction and retention strategies and the redesign of work and development activities for our people at a
local and global level.
The Company reviews all remuneration practices annually. As a result of the review conducted in FY18, a number of changes will
be implemented for FY19, with effect from 1 July 2018.
Completed changes and/or progress towards remuneration objectives will be reported in more detail in the 2019 Remuneration
Report, however a summary of the key elements of the proposed FY19 program are provided below:
GROUP-WIDE
REMUNERATION
• review of group-wide remuneration benchmarking and award of a group-wide CPI increment
(or consideration of) for all roles was awarded in August 2018;
• no group-wide change in STI or LTI programs or opportunities for FY19;
• a continued focus on operational rosters to ensure the Company maximises operational productivity
while focused on individually flexible work options;
• continued strengthening and extension of the Company-wide investment in learning, development
and training; and
• the introduction of a new program to focus on current and future financial wellness for employees.
KMP TFR
• the TFR for Managing Director will be increased by 7.5% from $800,000 to $860,000 to reflect market
movement in comparator CEO fixed remuneration;
• the TFR for the COO will increase from $500,000 to $530,000; and
• other increases in TFR for Executive KMPs in line with market benchmarking and are structured to
ensure that Executive fixed remuneration remains competitive within the comparator and broader
industry groups for similar roles (see page 57).
SHORT TERM
INCENTIVE
LONG TERM
INCENTIVE
• there will be no change to STI levels (see page 57) other than those individuals who have become
KMP in FY18.
• minor increases in LTI levels for KMP (see page 57) will be actioned for FY19 to achieve better market
competitiveness and an improved connection between long-term value creation and weighting of
at-risk reward in favour of LTI for the Executive team.
REVIEW OF INCENTIVE
ARRANGEMENTS AND
COMPARATOR GROUP
Following the completion of the three-year cycle since the implementation of the Company’s current
Total Rewards Program, a comprehensive review of the Company’s at risk remuneration structure and
comparator group is planned for FY19 to inform any changes made to the remuneration structure going
forward from FY20.
56 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 The following table reflects remuneration changes available to Executives for FY19 effective 1 July 2018:
Name
Position
TFR FY19
TFR FY18
TFR $
STI %
LTI %
TFR $
STI %
LTI %
Peter Bradford
Managing Director
Keith Ashby
Head of SHEQ and Risk
Matt Dusci
Chief Operating Officer
860,000
360,000
530,000
Andrew Eddowes
Head of Corporate Development
370,000
Sam Retallack
Head of People & Culture
360,000
Ian Sandl
General Manager Exploration
370,000
Scott Steinkrug
Chief Financial Officer
450,000
70
35
50
35
35
35
50
110
800,000
55
90
55
55
55
80
350,000
500,000
365,160
350,000
366,000
450,000
70
35
50
35
35
35
50
110
50
80
20
50
20
80
COMPANY PERFORMANCE
A key and continued focus for the Board and Company is to align Executive remuneration to the achievement of strategic and
business objectives of the Group and the creation of shareholder value. The table below illustrates a summary of the Group’s
financial performance over the last five years as required by the Corporations Act 2001.
Revenue ($ millions)
Profit (loss) for the year attributable to owners ($ milions)
Dividend payments (cents per share)
Share price at year end ($ per share)
2018
777.9
52.7
2.0
4.17
2017
421.9
17.0
3.0
3.15
2016
413.2
(58.8)
2.5
3.28
2015
495.3
76.8
11.0
4.17
2014
399.1
48.6
7.0
4.35
IGO ANNUAL REPORT 2018 — 57
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 SECTION 6.
STATUTORY REMUNERATION DISCLOSURES
EXECUTIVE CONTRACTS
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
Position
Term of
agreement
TFR at 1 July 2018
$ Value
Notice
period
Termination
Benefit
Peter Bradford
Managing Director/CEO
No fixed term
860,000
6 months
6 months1
Keith Ashby
Head of Governance and Risk
No fixed term
360,000
3 months
6 months
Matt Dusci
Chief Operating Officer
No fixed term
530,000
3 months
6 months
Andrew Eddowes
Head of Corporate Development
No fixed term
370,000
3 months
6 months
Sam Retallack
Head of People and Culture
No fixed term
360,000
3 months
6 months
Ian Sandl
General Manager Exploration
No fixed term
370,000
3 months
6 months
Scott Steinkrug
Chief Financial Officer
No fixed term
450,000
3 months
6 months
1.
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
months remuneration is payable to Mr. Bradford should the Company terminate the employment contract due to illness, injury or incapacity.
(I) REMUNERATION EXPENSES FOR EXECUTIVE KMP
The following table shows the value of earnings realised by executive KMP during FY18. The cash value of earnings realised
includes cash salary, superannuation and cash bonuses earned during the year and the intrinsic value of service rights and LTI
vesting during the financial year.
This is in addition and different to the disclosures required by the Corporations Act and Accounting Standards, particularly in
relation to share rights. As a general principle, the Accounting Standards require a value to be placed on share rights based on
probabilistic calculations at the time of grant, which may be reflected in the Remuneration Report even if ultimately the share
rights do not vest because performance and service hurdles are not met. By contrast, this table discloses the intrinsic value
of share rights, which represents only those share rights which actually vest and result in shares issued to a KMP. The intrinsic
value is the Company’s closing share price on the date of vesting.
Remuneration earned during the period
Name
TFR $1
STI Cash
Component
$ Value2
STI Vested Service
Rights Component
$ Value
LTI Vested Share
Rights Component
$ Value
Total Actual
Remuneration
Peter Bradford
800,000
182,000
-
-
982,000
Keith Ashby
Rob Dennis 3
Matt Dusci
350,000
39,078
-
-
389,078
416,667
-
99,488
516,155
500,000
79,750
-
-
579,750
Andrew Eddowes 4
152,150
41,154
-
-
193,304
Sam Retallack
350,000
38,343
-
-
388,343
Ian Sandl 5
152,500
34,830
-
-
187,330
Scott Steinkrug
450,000
70,425
-
-
520,425
1.
2.
3.
4.
5.
Includes base salary and superannuation.
Represents the amounts to be paid in September 2018 for performance in FY18.
Mr. Dennis resigned from the Company effective 30 April 2018. The Board approved the vesting of his outstanding service rights, these were issued on
18 May 2018 at a market price of $4.85.
Mr. Eddowes was appointed to the Executive Committee on 1 February 2018. Realised earnings include amounts from this date.
Mr. Sandl commenced employment with the Company on 4 September 2017 and his STI is a pro-rata entitlement. He was appointed to the Executive Committee
on 1 February 2018 and realised earnings include amounts from that date.
58 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018
The following table shows details of the remuneration expense recognised for the Group’s Executive management personnel for
the current and previous financial year measured in accordance with the requirements of the Accounting Standards.
Name
Year
Cash salary
and fees1
$
Cash
bonus2
$
Super-
annuation
$
Long service
leave3
$
Share
rights4
$
Total Performance
Related
$
Executive Directors
Peter Bradford
2018
2017
Other key management personnel
768,158
182,000
25,000
22,113
595,593
1,592,864
788,668
175,000
35,000
18,395
378,464
1,395,527
Keith Ashby
Rob Dennis5
Matt Dusci
2018
2017
2018
2017
2018
2017
332,682
39,078
25,000
8,092
80,028
484,880
308,520
37,000
34,180
4,838
18,105
402,643
406,077
-
20,833
(23,779)
209,694
612,825
499,253
72,000
35,000
11,060
69,966
687,279
486,057
79,750
25,000
15,123
184,288
790,218
400,344
130,500
30,000
7,633
101,134
669,611
Andrew Eddowes6
2018
135,362
41,154
10,417
3,495
27,180
217,608
Joanne McDonald7
Sam Retallack
Ian Sandl8
Scott Steinkrug
Total executive
directors and
other KMPs
Total NED
remuneration
(see page 55)
Total KMP
remuneration
expensed
2017
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
-
-
-
-
-
-
262,617
34,247
27,546
2,625
12,370
339,405
335,173
38,343
25,000
13,392
80,028
491,936
306,173
37,000
34,180
9,161
28,573
415,087
150,163
34,830
12,506
-
-
-
515
-
5,820
203,834
-
-
428,457
70,425
25,000
23,082
174,412
721,376
402,699
66,000
35,000
16,484
101,134
621,317
3,042,129
485,580
168,756
62,033
1,357,043
5,115,541
2,968,274
551,747
230,906
70,196
709,746
4,530,869
808,220
-
76,780
-
758,407
-
72,048
-
-
-
885,000
830,455
3,850,349
485,580
245,536
62,033
1,357,043
6,000,541
3,726,681
551,747
302,954
70,196
709,746
5,361,324
%
49
40
25
14
34
21
33
35
31
-
14
24
16
22
-
34
27
1.
2.
3.
4.
5.
6.
7.
8.
Cash salary and fees includes movements in annual leave provision during the year.
Cash bonus represents bonuses that were awarded to each KMP in relation to FY18 performance and will be paid in September 2018 (2017: Related to FY17
performance and paid in September 2017). Cash bonus excludes superannuation contribution component of STI which is shown in Post-employment benefits.
Long service leave relates to movements in long service leave provision during the year.
Rights to shares granted under the EIP are expensed over the performance period, which includes the vesting period of the rights, in accordance with AASB2
Share-based Payment. Refer to note 26 for details of the valuation techniques used for the EIP.
Mr. Dennis was appointed Chief Transformation Officer on 1 February 2018, prior to that he was Chief Operating Officer. Mr. Dennis resigned effective
30 April 2018. An amount of $91,270 accrued for annual leave was paid out on termination, this amount has been offset against the movement in the provision
for the 2018 financial year.
Mr. Eddowes was appointed to the Executive Committee on 1 February 2018. Remuneration has been included from the date of his appointment as a KMP.
Ms. McDonald ceased as a KMP as at 30 June 2017.
Mr. Sandl commenced employment with the Company on 4 September 2017 and was appointed to the Executive Committee on 1 February 2018. Remuneration
has been included from the date of his appointment as a KMP and his STI is a pro-rata entitlement based on his commencement date with the Company.
IGO ANNUAL REPORT 2018 — 59
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 ADDITIONAL STATUTORY INFORMATION
(II) PERFORMANCE BASED REMUNERATION GRANTED AND FORFEITED DURING THE YEAR
The table below shows for each KMP how much of their STI cash bonus was awarded and how much was forfeited. It also shows
the value of share rights that were granted, vested and forfeited during FY18. The number of share rights and percentages
vested/forfeited for each grant are disclosed in the table on page 61.
Total STI bonus (cash and service rights)
LTI share rights
Total
opportunity
$
Awarded
$
Awarded
%
Forfeited
%
Value
granted1
$
Value
vested2
$
Value
forfeited2
$
2018
Executive Directors
Peter Bradford
560,000
364,000
Keith Ashby
Rob Dennis
Matt Dusci
Andrew Eddowes
Sam Retallack
Ian Sandl3
122,500
78,155
250,000
-
250,000
159,500
127,806
122,500
128,100
82,307
76,685
69,659
Scott Steinkrug
225,000
140,850
65
64
-
64
64
63
66
63
35
36
-
36
36
37
34
37
837,288
121,200
64,031
277,026
-
121,200
-
249,322
-
-
-
-
-
-
-
-
497,295
23,186
-
127,867
-
26,701
-
127,867
1.
2.
3.
The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2 Share-based Payment.
Refer to note 26 for details of the valuation techniques used for the EIP.
Value of shares vested and forfeited is based on the value of the share right at grant date.
Pro-rata entitlements based on commencement date of 4 September 2017.
(III) TERMS AND CONDITIONS OF THE SHARE-BASED PAYMENT ARRANGEMENTS
Share rights under the Company’s EIP
Share rights under the Company’s EIP are granted annually. The shares vest after three years from the start of the financial year.
On vesting, each right automatically converts into one ordinary share. The Executives do not receive any dividends and are not
entitled to vote in relation to the rights during the vesting period. If an Executive ceases employment before the rights vest, the
rights will be forfeited, except in certain circumstances that are approved by the Board.
The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2
Share-based Payment. Refer to note 26 for details of the valuation techniques used for the EIP.
Grant date
Vesting date
Grant date value
Performance achieved
% Vested
24 November 2017
29 September 2017
22 May 2017
24 November 2016
18 November 2016
22 January 2016
16 December 2015
9 January 2015
20 November 2014
1 July 2020
1 July 2020
1 July 2019
1 July 2019
1 July 2019
1 July 2018
1 July 2018
1 July 2017
1 July 2017
$3.14
$2.29
$2.30
$2.26
$2.21
$1.20
$1.56
$2.55
$2.84
To be determined
To be determined
To be determined
To be determined
To be determined
Between 50th and 75th percentile
Between 50th and 75th percentile
<50th percentile
<50th percentile
n/a
n/a
n/a
n/a
n/a
50.6
50.6
-
-
1.
The additional grant dates during the year are due to subsequent grants to capture new employees.
60 — IGO ANNUAL REPORT 2018
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 Rights to service rights
Rights to service rights issued under the EIP are granted following the determination of the STI for the performance year. The service
rights component of the STI vest in two tranches, with the first tranche of 50% vesting on the 12 month anniversary of the STI award
date, and the second tranche of 50% vesting on the 24 month anniversary of the STI award date. The Executives do not receive any
dividends and are not entitled to vote in relation to the rights during the vesting period. If an Executive ceases employment before
the rights vest, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
The fair value of the rights is determined based on the 5 day VWAP of the Company’s shares after release of the IGO financial statements.
Grant date
% Vesting
Vesting date
Grant date value
9 October 2017
9 October 2017
50%
50%
3 September 2018
1 September 2019
$3.51
$3.51
(IV)
RECONCILIATION OF LTI SHARE RIGHTS, SERVICE RIGHTS AND ORDINARY SHARES HELD BY KMP
Share rights
The table below shows the number of LTI share rights that were granted, vested and forfeited during the year.
Balance
at start of
the year
Granted
during
the year
Vested during
the year
Forfeited during
the year1
Balance at the
end of the year
(unvested)
Maximum
value yet
to vest
2018
Name and
grant dates
Year
granted
Number
Number
Number
%
Number
Peter Bradford
2018
-
266,667
Keith Ashby
Matt Dusci
Rob Dennis2
2017
2016
2015
2018
2017
2016
2018
2017
2016
2015
2018
2017
2016
135,000
217,391
175,365
-
-
-
-
53,031
17,000
19,361
-
-
-
121,213
41,000
62,174
50,154
-
-
-
-
121,213
49,000
78,116
-
-
Andrew Eddowes
2018
-
22,131
Sam Retallack
Ian Sandl
Scott Steinkrug
2017
2016
2015
2018
2017
2016
2015
2018
2018
2017
2016
2015
16,000
19,043
15,327
-
-
-
-
53,031
17,000
19,361
10,473
-
-
-
-
-
22,182
109,091
41,000
62,174
50,154
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
175,365
100
-
-
-
-
-
-
50,154
93,196
19,063
4,348
-
-
-
-
-
-
-
-
-
100
-
-
-
-
-
-
15,327
100
-
-
-
-
-
-
10,473
100
-
-
-
-
-
-
-
-
50,154
100
Number
266,667
135,000
217,391
-
53,031
17,000
19,361
121,213
41,000
62,174
-
28,017
29,937
73,768
22,131
16,000
19,043
-
53,031
17,000
19,361
-
22,182
109,091
41,000
62,174
-
$
558,956
99,668
-
-
87,116
14,715
-
199,121
35,489
-
-
-
-
-
36,355
13,849
-
-
87,116
14,715
-
-
36,439
179,208
35,489
-
-
1.
2.
The Company achieved shareholder return over the 3 year period to 30 June 2017 of less than the 50th percentile of the comparator group and as such all
share rights lapsed and were cancelled.
Following Mr. Dennis’ resignation on 30 April 2018, the Board resolved to allocate the share rights previously granted to him on a period of service pro-rata
basis in the relevant performance period. This resulted in the cancellation of a total of 116,607 share rights previously granted to Mr. Dennis.
Note: The relative TSR performance condition of the share rights granted in FY16 (which were due to vest on 1 July 2018) was tested post 30 June 2018, and resulted
in a relative TSR performance for the period 1 July 2015 to 30 June 2018 of 50.6% and as such 50.6% of the outstanding 2015 Series Performance Rights vested and
ordinary shares were issued and the remaining performance rights lapsed and were cancelled. This will be accounted for in the FY19 Remuneration Report.
IGO ANNUAL REPORT 2018 — 61
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 Service rights
The table below shows the number of service rights that were granted, vested and forfeited during the year.
Name
Peter Bradford
Keith Ashby
Matt Dusci
Rob Dennis1
Andrew Eddowes
Sam Retallack
Ian Sandl
Scott Steinkrug
Year
granted
2018
2018
2018
2018
2018
2018
2018
2018
Balance
at start of
the year
Granted
during
the year
Vested during
the year
Forfeited during
the year
Balance at the
end of the year
(unvested)
Maximum
value yet
to vest
Number
Number Number
% Number
-
-
-
-
-
-
-
-
49,858
10,542
19,801
20,513
14,112
10,542
-
18,804
-
-
-
-
-
-
20,513
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
Number
49,858
10,542
19,801
-
14,112
10,542
-
18,804
$
70,712
14,951
28,083
-
20,015
14,951
-
26,669
1.
2.
Following Mr. Dennis’ resignation on 30 April 2018, the Board resolved to fully allocate his outstanding service rights.
Mr. Sandl commenced employment with the Company on 4 September 2017, therefore was not entitled to service rights relating to FY17 performance.
Shareholdings of KMP
The number of ordinary shares in the Company held by each Director and other KMP, including their personally related entities,
are set out below.
2018
Name
Directors
Debra Bakker
Peter Bilbe
Peter Bradford
Peter Buck
Geoffrey Clifford
Keith Spence
Neil Warburton
Other key management personnel
Keith Ashby
Rob Dennis2
Matt Dusci
Andrew Eddowes
Sam Retallack
Ian Sandl
Scott Steinkrug
Total
Balance at start
of the year
Received on vesting
of share rights
Other changes
during the period1
Balance at the end
of the year
5,200
32,000
800,000
22,200
10,000
22,125
106,034
-
16,644
9,900
-
19,865
-
78,549
1,122,517
-
-
-
-
-
-
-
-
20,513
-
-
-
-
-
20,513
5,885
8,000
30,000
-
5,000
-
-
-
(37,157)
-
101,447
-
-
-
113,175
11,085
40,000
830,000
22,200
15,000
22,125
106,034
-
-
9,900
101,447
19,865
-
78,549
1,256,205
1.
2.
Other changes during the year include opening balances on becoming a KMP for the first time during the year.
Shareholdings are reversed to show a zero balance at 30 June 2018 after ceasing to be a KMP during the year.
Whilst IGO does not have a written policy stating a minimum shareholding in IGO shares for Directors, a written guideline
on this subject was adopted by the Company in FY18. The guideline states, that in order to achieve a greater alignment with
shareholder interests, Non-executive directors are encouraged to hold shares in the Company. IGO is committed to achieving
greater diversity throughout the business and this includes the membership of the Board of Directors. To this end, the Board of
Directors acknowledges that each current or future Non-executive Director may have different personal circumstances. As such,
no minimum shareholding requirement has been set in order to maximise the Company’s opportunity to achieve the broadest
range of diversity of directors on the Board.
Accordingly, Non-executive Directors are encouraged to acquire and hold shares in IGO commensurate with their personal
circumstances.
(V) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
During the current financial year, there were no other transactions with key management personnel or their related parties.
(VI)
VOTING OF SHAREHOLDERS AT LAST YEAR’S ANNUAL GENERAL MEETING
Independence Group NL received more than 98% of “yes” votes on its remuneration report for the 2017 financial year. The
Company sought feedback throughout the year on its remuneration practices through communications with key shareholders
and proxy advisors. This feedback included advice on continuing to ensure greater transparency within the Remuneration
Report and ensure remuneration across the business reflects the strategic direction of the Company. Following feedback
in FY17, this year saw the Company introduce an additional performance condition for the LTIP.
62 — IGO ANNUAL REPORT 2018
END OF AUDITED REMUNERATION REPORT
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018 DIRECTORS’ REPORT
30 JUNE 2017 (continued)
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 2018 on the exercise of options.
Directors' report
30 June 2017
(continued)
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
Insurance of officers and indemnities
officers of the Company and of any related body corporate against a liability incurred as such a Director or executive officer to
During the financial year, the Company paid an insurance premium in respect of a contract insuring the Directors and
the extent permitted by the Corporations Law. The contract of insurance prohibits disclosure of the nature of the liability and the
executive officers of the Company and of any related body corporate against a liability incurred as such a Director or
amount of the premium.
executive officer to the extent permitted by the Corporations Law. The contract of insurance prohibits disclosure of the
The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify any officer of
nature of the liability and the amount of the premium.
the Company or of any related body corporate against a liability incurred by such an officer.
The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify any
officer of the Company or of any related body corporate against a liability incurred by such an officer.
PROCEEDINGS ON BEHALF OF THE COMPANY
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
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 for all or part of those proceedings.
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.
The Company was not a party to any such proceedings during the year.
NON-AUDIT SERVICES
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
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.
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
Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for non-audit services provided during
are set out below.
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
The Directors are satisfied that the provision of the non-audit services is compatible with the general standard of
for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
auditor did not compromise the auditor independence requirements of the Corporations Act 2001 nor the principles set out in
non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act
APES110 Code of Ethics for Professional Accountants.
2001 nor the principles set out in APES110 Code of Ethics for Professional Accountants.
During the period the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its
During the period the following fees were paid or payable for non-audit services provided by the auditor of the parent
related practices and non-related audit firms:
entity, its related practices and non-related audit firms:
2017
$
2018
$
2016
2017
$
$
20,500
37,338
20,500
37,338
37,338
37,338
38,158
38,158
Other services
Other services
BDO Audit (WA) Pty Ltd firm:
BDO Audit (WA) Pty Ltd firm:
Other services in relation to the entity and any other entity in the consolidated Group
Other services in relation to the entity and any other entity in the consolidated
Group
Total remuneration for non-audit services
AUDITOR’S INDEPENDENCE DECLARATION
Auditor's independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 64.
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 63.
ROUNDING OF AMOUNTS
Rounding of amounts
The Company is of a kind referred to in ASIC Corporation Legislative Instrument 2016/191, issued by the Australian Securities and
The Company is of a kind referred to in ASIC Corporation Legislative Instrument 2016/191, issued by the Australian
Investments Commission, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been
Securities and Investments Commission, relating to the 'rounding off' of amounts in the directors' report. Amounts in the
rounded off in accordance with that Legislative Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.
directors' report have been rounded off in accordance with that Legislative Instrument to the nearest thousand dollars,
or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of Directors.
This report is made in accordance with a resolution of Directors.
PETER BRADFORD
Peter Bradford
Managing Director
MANAGING DIRECTOR
Perth, Western Australia
Perth, Western Australia
Dated this 28th day of August 2018
Dated this 29th day of August 2017
Independence Group NL
IGO ANNUAL REPORT 2018 — 63
31
62 — IGO ANNUAL REPORT 2017
DIRECTORS’ REPORT — REMUNERATION REPORT30 JUNE 2018
AUDITOR’S INDEPENDENCE 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
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF INDEPENDENCE GROUP
NL
As lead auditor of Independence Group NL for the year ended 30 June 2018, 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.
This declaration is in respect of Independence Group NL and the entities it controlled during the year.
Glyn O'Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 28 August 2018
64 — IGO ANNUAL REPORT 2018
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
Independence Group NL ABN 46 092 786 304
FINANCIAL
Financial report - 30 June 2018
REPORT
Contents
Financial statements
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
68
66
67
Consolidated Statement Of Profit Or Loss
And Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement Of Changes In Equity
Page
2
3
4
6
8
62
70
71
Consolidated Statement Of Cash Flows
Notes To The Consolidated Financial Statements
126 Directors’ Declaration
127
Independent Auditor’s Report
132 Additional ASX Information
Independence Group NL
1
IGO ANNUAL REPORT 2018 — 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
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
Exploration and growth costs
Royalty expense
Ore tolling expense
Shipping and wharfage costs
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Impairment of other assets
Acquisition and other integration costs
Other expenses
Profit before income tax
Income tax expense
Profit after income tax for the period
Other comprehensive income
Items that may be reclassified to profit or loss
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 period, net of tax
Total comprehensive income for the period
Profit for the period attributable to the members of Independence Group NL
Notes
2
3
15
5
2018
$'000
777,946
2,689
(241,302)
(88,795)
(3,267)
231
(252,133)
(38,926)
(30,489)
(8,776)
(19,787)
(10,699)
-
-
-
(7,626)
79,066
(26,380)
52,686
1,784
42
1,826
54,512
52,686
2017
$'000
421,926
-
(146,135)
(64,740)
(1,147)
4,343
(89,773)
(21,244)
(14,391)
(9,606)
(12,092)
(1,258)
(24,891)
(135)
(3,910)
(10,530)
26,417
(9,406)
17,011
241
4
245
17,256
17,011
Total comprehensive income for the period attributable to the members of
Independence Group NL
54,512
17,256
Earnings per share for profit attributable to the ordinary equity holders of the
Company:
Basic earnings per share
Diluted earnings per share
6
6
Cents
Cents
8.98
8.94
2.93
2.92
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Independence Group NL
2
66 — IGO ANNUAL REPORT 2018
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2018
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets at fair value through profit or loss
Derivative financial instruments
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Inventories
Property, plant and equipment
Mine properties
Exploration and evaluation expenditure
Deferred tax assets
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 2018
Notes
2018
$'000
2017
$'000
7
8
9
10
20
22
8
9
13
14
15
5
11
16
20
12
16
20
12
5
138,688
94,093
82,487
24,294
1,990
-
341,552
29,495
33,012
35,417
1,457,688
70,493
207,271
1,833,376
35,763
59,383
63,158
15,348
657
31,745
206,054
14
20,077
44,922
1,612,919
73,068
251,429
2,002,429
2,174,928
2,208,483
56,586
56,226
-
4,894
49,052
56,226
965
15,259
117,706
121,502
84,589
-
62,168
131,638
278,395
140,815
251
73,228
139,903
354,197
396,101
475,699
1,778,827
1,732,784
17
18
18(c)
1,879,094
14,771
(115,038)
1,778,827
1,878,469
13,445
(159,130)
1,732,784
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Independence Group NL
3
IGO ANNUAL REPORT 2018 — 67
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
Contributed
equity
$'000
Accumulated
losses
$'000
Hedging
reserve
$'000
Share-
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Acquisition
reserve
$'000
Total
equity
$'000
Balance at 1 July 2016
1,601,458
(158,540)
(632)
10,371
3,142
(8)
1,455,791
Profit for the period
Other comprehensive income
Currency translation
differences - current period
Effective portion of changes in
fair value of cash flow hedges,
net of tax
Total comprehensive income
for the period
Transactions with owners in
their capacity as owners:
Dividends paid
Share-based payments
expense
Issue of shares - Employee
Incentive Plan
Shares issued on capital
raising
Costs associated with capital
raising (net of tax)
-
-
-
-
-
-
820
281,459
(5,268)
17,011
-
-
17,011
(17,601)
-
-
-
-
-
-
241
241
-
-
-
-
-
-
-
-
-
-
1,147
(820)
-
-
-
-
-
-
-
-
-
-
-
-
4
-
4
-
-
-
-
-
17,011
4
241
17,256
(17,601)
1,147
-
281,459
(5,268)
Balance at 30 June 2017
1,878,469
(159,130)
(391)
10,698
3,142
(4)
1,732,784
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Independence Group NL
4
68 — IGO ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
(continued)
Contributed
equity
$'000
Accumulated
losses
$'000
Hedging
reserve
$'000
Share-
based
payments
reserve
$'000
Foreign
currency
translation
reserve
$'000
Acquisition
reserve
$'000
Total
equity
$'000
Balance at 1 July 2017
Profit for the period
1,878,469
-
(159,130)
52,686
(391)
-
10,698
-
3,142
-
(4)
-
1,732,784
52,686
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 period
Transactions with owners in
their capacity as owners:
Dividends paid
Share-based payments
expense
Issue of shares - Employee
Incentive Plan
Transfer acquisition reserve to
accumulated losses
-
-
-
-
-
625
-
-
-
1,784
-
52,686
1,784
(11,736)
-
-
3,142
-
-
-
-
-
-
-
-
3,267
(625)
-
-
-
-
-
-
-
(3,142)
-
42
42
-
-
-
-
1,784
42
54,512
(11,736)
3,267
-
-
Balance at 30 June 2018
1,879,094
(115,038)
1,393
13,340
-
38
1,778,827
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Independence Group NL
5
IGO ANNUAL REPORT 2018 — 69
CONSOLIDATED STATEMENT OF CASH FLOWS
30 JUNE 2018
Consolidated statement of cash flows
For the year ended 30 June 2018
Notes
2018
$'000
2017
$'000
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)
Interest and other costs of finance paid
Interest received
Payments for exploration and growth activities
Receipts from other operating activities
Net cash inflow from operating activities
Cash flows from investing activities
Interest and other costs of finance paid
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment and other investments
Payments for purchase of listed investments
Payments for development expenditure
Payments for capitalised exploration and evaluation expenditure
Payment for acquisition of subsidiary, net of cash acquired
Net proceeds on sale Jaguar Operation
Net proceeds on sale of Stockman Project
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Share issue transaction costs
Repayment of borrowings
Payment of dividends
Net cash (outflow) inflow from financing activities
7(a)
17(b)
16
19
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the period
7
783,395
(457,652)
325,743
(7,896)
659
(40,729)
28
277,805
(1,008)
(20,498)
198
(8,919)
(114,536)
(5,162)
-
23,140
21,782
(105,003)
-
-
(57,142)
(11,736)
(68,878)
103,924
35,763
(999)
138,688
416,375
(319,667)
96,708
-
2,201
(21,771)
540
77,678
(13,431)
(14,564)
2,418
(5,994)
(220,481)
(3,662)
(17,574)
-
-
(273,288)
281,459
(7,526)
(71,000)
(17,601)
185,332
(10,278)
46,264
(223)
35,763
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Independence Group NL
6
70 — IGO ANNUAL REPORT 2018
About this report
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.
The financial report of Independence Group NL (the Company) and its subsidiaries (collectively, the Group) for the year
ended 30 June 2018 was authorised for issue in accordance with a resolution of the Directors on 24 August 2018.
Basis of preparation
This financial report is a general purpose financial report, prepared by a for-profit entity, which:
•
•
•
•
•
•
Has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards
the Australian Accounting Standards Board (AASB) and International
and other authoritative pronouncements of
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);
Has been prepared on a 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;
Is presented in Australian dollars with values rounded to the nearest thousand dollars or in certain cases, the nearest
dollar,
in accordance with the Australian Securities and Investments Commission 'ASIC Corporation Legislative
Instrument 2016/191';
Presents comparative information where required for consistency with the current year's presentation;
Adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the
operations of the Group and effective for reporting periods beginning on or after 1 July 2017 as disclosed in note 31; and
Does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet
effective, with the exception of AASB 9 Financial Instruments (December 2010) as amended by 2013-0 (AASB 9 (2013))
which was adopted in the year ended 30 June 2016.
Key estimates and judgements
In the process of applying the Group's accounting policies, management has made a number of judgements and applied
estimates of future events. 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 the following notes:
Note 5
Note 9
Note 12
Note 13
Note 14
Note 15
Note 26
Income tax
Inventories
Provisions
Property, plant and equipment
Mine properties
Exploration and evaluation expenditure
Share-based payments
Basis of consolidation
The consolidated financial statements comprise the financial statements of
(subsidiaries) at year end is contained in note 23.
the Group. A list of controlled entities
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent
accounting policies.
In preparing the consolidated financial statements, all inter-company balances and transactions, income and expenses and
profit or losses resulting from intra-Group transactions have been eliminated. Subsidiaries are consolidated from the date on
which control is obtained to the date on which control is disposed. The acquisition of subsidiaries is accounted for using the
acquisition method of accounting.
Independence Group NL
7
IGO ANNUAL REPORT 2018 — 71
Notes to the consolidated financial statements
30 June 2018
CONTENTS OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Contents of the notes to the consolidated financial statements
FINANCIAL PERFORMANCE
Segment information
1
Financial Performance
Revenue
2
1
Segment information
3 Other income
Revenue
2
Expenses and losses
4
Other income
3
Income tax
5
Expenses and losses
4
Earnings per share
6
Income tax
5
Earnings per share
6
Working Capital Provisions
WORKING CAPITAL PROVISIONS
Cash and cash equivalents
7
Cash and cash equivalents
7
Trade and other receivables
8
Trade and other receivables
8
Inventories
9
Inventories
9
10
Financial assets at fair value through profit or loss
10 Financial assets at fair value through profit or loss
11
Trade and other payables
11 Trade and other payables
12
Provisions
12 Provisions
Invested capital
Property, plant and equipment
13
14
Mine properties
INVESTED CAPITAL
15
Exploration and evaluation
13 Property, plant and equipment
Capital structure and financing activities
14 Mine properties
16
Borrowings
15 Exploration and evaluation
Contributed equity
17
18
Reserves and accumulated losses
CAPITAL STRUCTURE AND FINANCING ACTIVITIES
Dividends paid and proposed
19
Risk
16 Borrowings
20
17 Contributed equity
21
18 Reserves and accumulated losses
Group structure
19 Dividends paid and proposed
22
23
RISK
Unrecognised items
20 Derivatives
24
21 Financial risk management
25
Commitments and contingencies
Events occurring after the reporting period
Derivatives
Financial risk management
Assets held for sale
Subsidiaries
Share-based payments
Related party transactions
Parent entity financial information
Deed of cross guarantee
Remuneration of auditors
Summary of significant accounting policies
Other information
26
GROUP STRUCTURE
27
22 Assets held for sale
28
23 Subsidiaries
29
30
31
UNRECOGNISED ITEMS
24 Commitments and contingencies
25 Events occurring after the reporting period
OTHER INFORMATION
26 Share-based payments
Independence Group NL
27 Related party transactions
28 Parent entity financial information
29 Deed of cross guarantee
30 Remuneration of auditors
31 Summary of significant accounting policies
72 — IGO ANNUAL REPORT 2018
PAGE
73
Page
73
76
77
77
78
81
9
9
12
13
13
14
17
18
18
19
20
21
21
21
24
24
26
28
30
30
31
33
34
36
36
38
47
47
47
49
49
50
50
50
54
55
56
59
59
8
82
82
83
84
85
85
85
88
88
90
92
94
94
95
97
98
100
100
102
111
111
111
113
113
114
114
114
118
119
120
123
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Financial Performance
This section of the notes includes segment information and provides further information on key line items relevant to
financial performance that
including accounting policies, key judgements and
estimates relevant to understanding these items.
the Directors consider most relevant,
1
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). During the year, the
following segments were in operation: The Nova Operation, the Tropicana Operation, the Jaguar Operation, the Long
Operation and New Business and Regional Exploration Activities (New Business).
The Nova Operation primarily produces nickel, copper and cobalt concentrate. Revenue is derived from multiple customers.
The General Manager of the Nova Project is responsible for the budgets and expenditure of the Operation. The Nova
Operation and exploration properties are owned by the Group's wholly owned subsidiary Independence Nova Pty Ltd.
The Tropicana Operation represents the Group’s 30% joint venture interest in the Tropicana Gold Mine. AngloGold Ashanti
Australia Limited (AngloGold Ashanti) is the manager of the project and holds the remaining 70% interest. Programs and
budgets are provided by AngloGold Ashanti and are considered for approval by the Company's Board.
The Jaguar Operation primarily produced zinc and copper concentrate. The Jaguar Operation was sold effective 31 May
2018. The General Manager of the Jaguar Operation was responsible for the budgets and expenditure of the operation. The
Jaguar Operation and exploration properties were owned by the Group’s wholly owned subsidiary Independence Jaguar Pty
Ltd.
The Long Operation produces primarily nickel, together with copper, from which its revenue is derived. Revenue derived by
the Long Operation is received from one customer, being BHP Billiton Nickel West Pty Ltd. The Registered Manager of the
Long Operation is responsible for the budgets and expenditure of the Operation, which includes exploration activities on the
mine’s tenure. The Long Operation and exploration properties are owned by the Group’s wholly owned subsidiary
Independence Long Pty Ltd. The Long Operation was placed in care and maintenance during June 2018.
The Group’s General Manager Exploration is responsible for budgets and expenditure relating to the Group’s regional
exploration, scoping studies, feasibility studies and new business development. The New Business division does not
normally derive any income. Should a project generated by the New Business division commence generating income or lead
to the construction or acquisition of a mining operation, that operation would then be disaggregated from New Business and
become reportable in a different segment.
Independence Group NL
9
IGO ANNUAL REPORT 2018 — 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
1
Segment information (continued)
(b) Segment results
Year ended 30 June 2018
Nova
Project
$'000
Tropicana
Operation
$'000
Jaguar
Operation
$'000
Long
Operation
$'000
New
Business
and
Regional
Exploration
Activities
$'000
Total
$'000
Revenue from external customers
Other revenue
348,551
241
240,377
-
112,049
87
Total segment revenue
348,792
240,377
112,136
64,710
72
64,782
-
11
11
765,687
411
766,098
Segment net operating profit (loss) before
income tax
SPACE
Total segment assets
SPACE
Total segment liabilities
SPACE
Acquisition of property, plant and equipment
SPACE
SPACE
Depreciation and amortisation
SPACE
Other non-cash expenses
Year ended 30 June 2017
Revenue from external customers
Other revenue
Total segment revenue
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
35,623
86,292
12,893
1,368
(42,390)
93,786
1,374,188
1,270,549
747,011
36,486
-
-
22,194
103,869 2,770,800
26,725
38,381
848,603
6,106
4,229
8,283
547
-
19,165
159,777
54,532
13,826
22,835
55
251,025
827
396
276
110
-
1,609
-
-
-
211,915
-
137,349
121
69,905
570
211,915
137,470
70,475
Total
-
65
65
419,169
756
419,925
(752)
58,300
33,534
716
(48,950)
42,848
1,398,182 1,037,257
175,917
38,693
110,712 2,760,761
823,010
34,071
25,665
40,402
37,689
960,837
2,092
2,479
7,525
788
-
12,884
-
-
-
-
-
25,026
25,026
47,575
16,502
24,463
621
254
256
101
94
-
88,634
1,232
Independence Group NL
10
74 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
1
Segment information (continued)
(c) Segment revenue
A reconciliation of reportable segment revenue to total revenue is as follows:
Revenue from external customers
Other revenue from continuing operations
Total revenue
2018
$'000
766,098
11,848
777,946
2017
$'000
419,925
2,001
421,926
Revenues for the Nova Operation were received from BHP Billiton Nickel West Pty Ltd (BHP Billiton Nickel West), Glencore
International AG and Trafigura Pte Ltd.
Revenues for the Jaguar Operation were received from Glencore International AG and Trafigura Pte Ltd.
Revenues for the Tropicana Operation were received from The Perth Mint, Australia and the Company's financiers via
forward sales contracts.
Revenues for the Long Operation are all derived from a single customer, being BHP Billiton Nickel West.
(d) Segment net profit 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
Fair value movement of corporate financial investments
Share-based payments expense
Other corporate costs and unallocated other income
Borrowing and finance costs
Acquisition and other integration costs
Depreciation expense on corporate assets
Net gain on disposal of subsidiary and other assets
Total net profit before income 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
2018
$'000
93,786
11,848
(587)
(3,267)
(15,055)
(9,089)
-
(1,108)
2,538
79,066
2017
$'000
42,848
2,001
4,362
(1,147)
(16,570)
(26)
(3,910)
(1,141)
-
26,417
2018
$'000
2017
$'000
2,770,800
(989,296)
2,760,761
(847,104)
207,271
22,376
159,595
4,182
251,429
15,339
24,171
3,887
2,174,928
2,208,483
Independence Group NL
11
IGO ANNUAL REPORT 2018 — 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
1
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 of the parent entity
Provision for employee entitlements of the parent entity
Bank loans
Total liabilities as per the balance sheet
2 Revenue
Sales revenue
Sale of goods
Other revenue
Interest revenue
Other revenue
Total revenue
2018
$'000
848,603
(733,072)
131,638
5,103
3,014
140,815
396,101
2017
$'000
960,837
(828,456)
139,903
3,854
2,520
197,041
475,699
2018
$'000
2017
$'000
765,687
765,687
419,169
419,169
731
11,528
12,259
2,217
540
2,757
777,946
421,926
(a) Recognition and measurement
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:
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 products to customers, and includes hedging gains and losses. Sales are initially recognised at estimated sales value
when the product is sold. Adjustments are made for variations in metals price, assay, weight and currency between the time
of sale and the time of final settlement of sales proceeds.
Interest revenue
Interest revenue 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.
Independence Group NL
12
76 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 3 Other income
Net gain on disposal of property, plant and equipment
Net gain on sale of tenements
Net gain on sale of subsidiary
4
Expenses and losses
Cost of sale of goods
Employee benefits expenses
Share-based payments expense
Exploration and growth costs
Rental expense relating to operating leases
Impairment of exploration and evaluation expenditure
Impairment of assets
Net loss of sale of property, plant and equipment
Net foreign exchange losses
Amortisation expense
Depreciation
Depreciation expense
Less : amounts capitalised
Depreciation expensed
Borrowing and finance costs
Rehabilitation and restoration borrowing costs
Borrowing and finance costs - other entities
Amortisation of borrowing costs
Less: amounts capitalised
Finance costs expensed
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
$'000
135
13
2,541
2,689
2018
$'000
373,725
88,795
3,267
38,926
1,872
-
-
-
582
237,993
14,140
-
14,140
1,609
8,174
916
-
10,699
2017
$'000
-
-
-
-
2017
$'000
235,134
64,740
1,147
20,139
1,597
24,891
135
613
570
76,652
14,427
(1,306)
13,121
1,232
8,706
4,099
(12,779)
1,258
Independence Group NL
13
IGO ANNUAL REPORT 2018 — 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
5
Income tax
(a)
Income tax expense
The major components of income tax expense are:
Deferred income tax expense
Current income tax expense
Income tax expense
Deferred income tax revenue (expense) included in income tax expense comprises:
Decrease (increase) in deferred tax assets
Increase in deferred tax liabilities
Deferred income tax expense
(b) Amounts recognised directly in equity
Deferred income tax benefit (expense) related to items charged or credited to other
comprehensive income or directly to equity:
Recognition of hedge contracts
Business-related capital allowances
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 expense at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Share-based payments
Non-deductible costs associated with acquisition of subsidiary
Other non-deductible items
Adjustment to tax cost base of asset on acquisition of subsidiary
Impairment of tax losses previously recognised
Non-assessable gain on disposal of subsidiary
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
Independence Group NL
78 — IGO ANNUAL REPORT 2018
2018
$'000
26,380
-
26,380
23,039
3,341
26,380
2018
$'000
765
-
765
2018
$'000
79,066
23,720
897
-
1
(11,038)
14,032
(1,341)
-
(86)
46
126
23
26,380
2017
$'000
9,406
-
9,406
(29,247)
38,653
9,406
2017
$'000
104
(2,258)
(2,154)
2017
$'000
26,417
7,925
51
1,173
-
-
-
-
84
-
46
126
1
9,406
14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
5
Income tax (continued)
(d) Reconciliation of carry forward tax losses and income tax paid
Tax effected balances at 30%
Carry forward tax losses at the beginning of the year
Tax losses arising (recouped) from current year
Income tax paid during the year
Impairment of tax losses
Carry forward tax losses at the end of the year
2018
$'000
198,571
(3,844)
-
(14,032)
180,695
2017
$'000
166,506
32,065
-
-
198,571
Effective income tax rate based on income tax paid
-%
-%
(e) Deferred tax assets and liabilities
Balance Sheet
Profit or loss
Equity
2018
$'000
2017
$'000
2018
$'000
2017
$'000
2018
$'000
2017
$'000
Disposal of
Subsidiary
2018
$'000
2017
$'000
Deferred tax liabilities
Capitalised exploration
expenditure
Mine properties
Deferred gains and losses on
hedging contracts
Trade debtors
Consumable inventories
Other
(3,915)
(121,034)
(13,285)
(115,721)
(8,729)
14,212
(7,108)
42,451
(597)
(2,606)
(1,905)
(1,581)
(197)
(6,906)
(2,514)
(1,280)
-
(3,226)
750
334
(1,544)
2,974
814
1,066
Gross deferred tax liabilities
(131,638)
(139,903)
3,341
38,653
-
-
400
-
-
-
400
-
-
301
-
-
-
301
(641)
(8,899)
-
(1,074)
(1,359)
(33)
(12,006)
Deferred tax assets
Property, plant and equipment
Deferred losses on hedged
commodity contracts
Business-related capital
allowances
Provision for employee
entitlements
Provision for rehabilitation
Mining information
Carry forward tax losses
Other
514
17,965
2,766
3,405
-
-
14,685
-
365
-
1,543
365
(197)
3,593
5,509
1,916
2,056
1,738
18,380
-
180,695
2,351
4,740
21,813
715
198,571
1,751
1,851
(391)
172
17,876
(1,151)
(2,086)
(1,905)
307
(32,065)
(502)
-
-
-
-
-
-
(2,258)
-
-
-
-
-
-
-
1,151
3,824
543
-
551
Gross deferred tax assets
207,271
251,429
23,039
(29,247)
365
(2,455)
20,754
Deferred tax expense (benefit)
75,633
111,526
26,380
9,406
765
(2,154)
8,748
Independence Group NL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
IGO ANNUAL REPORT 2018 — 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
5
Income tax (continued)
(f) Tax losses
In addition to the above recognised tax losses, the Group also has the following revenue and capital tax losses for which no
deferred tax asset has been recognised:
Unrecognised revenue tax losses
Potential tax benefit @ 30.0% (2017: 30%)
Unrecognised capital tax losses
Potential tax benefit @ 30% (2017: 30%)
(g) Recognition and measurement
2018
$'000
46,775
14,032
85,304
25,591
2017
$'000
-
-
280
84
Current taxes
The income tax expense or benefit 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 taxes
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.
Offsetting deferred tax balances
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.
Independence Group NL
16
80 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
5
Income tax (continued)
(h) Significant estimates
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is
required in determining deferred tax assets and liabilities. There are many transactions and calculations during the ordinary
course of business for which the ultimate tax determination is uncertain.
In addition, deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future forecast taxable profits are available to utilise those temporary differences and losses, and the tax
losses continue to be available having regard to the relevant tax legislation associated with their recoupment.
The Australian consolidated tax group has recognised a deferred tax asset relating to carry forward tax losses of
$180,695,000 at 30 June 2018 (2017: $198,571,000). The utilisation of this deferred tax asset amount depends upon future
taxable amounts in excess of profits arising from the reversal of temporary differences. The Group believes this amount to
be recoverable based on taxable income projections.
6
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
$52,686,000 (2017: $17,011,000).
(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
(c)
Information concerning the classification of securities
2018
Number
2017
Number
586,808,843
580,422,734
2,261,529
1,333,910
589,070,372
581,756,644
Share rights
Share rights granted to Executives and employees under the Company's Employee Incentive Plan and any outstanding
service rights are included in the calculation of diluted earnings per share as they could potentially dilute basic earnings per
share in the future. The share rights are not included in the determination of basic earnings per share. Further information
about the share rights is provided in note 26.
(d) Calculation of 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.
Independence Group NL
17
IGO ANNUAL REPORT 2018 — 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Working Capital Provisions
This section of the notes provides further information about the Group's working capital and provisions, including accounting
policies and key judgements and estimates relevant to understanding these items.
7 Cash and cash equivalents
Cash at bank and in hand
Deposits at call
2018
$'000
138,658
30
138,688
2017
$'000
35,733
30
35,763
The Group has cash balances of $1,864,000 (2017: $108,000) 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
21.
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the period
Depreciation and amortisation
Impairment of exploration and evaluation expenditure
Impairment of assets
Net (gain) loss on sale of non-current assets
Fair value of movement of financial investments
Non-cash employee benefits expense - share-based payments
Gain on disposal of subsidiary
Amortisation of borrowing expenses
Amortisation of lease incentive
Foreign exchange losses on cash balances
Change in operating assets and liabilities:
(Increase) decrease in trade receivables
(Increase) decrease in inventories
(Increase) decrease in deferred tax assets
(Increase) decrease in other operating receivables and prepayments
(Increase) decrease in derivative financial instruments
(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.
2018
$'000
52,686
252,133
-
-
(148)
(231)
3,267
(2,541)
916
(78)
999
(26,912)
(49,692)
23,404
(8,152)
(29)
34,135
2,976
(4,928)
277,805
2017
$'000
17,011
89,773
24,891
135
613
(4,343)
1,147
-
-
(78)
223
(10,425)
635
(29,445)
(955)
-
(58,517)
38,850
8,163
77,678
Independence Group NL
18
82 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
7 Cash and cash equivalents (continued)
(c) Recognition and measurement
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.
8
Trade and other receivables
Current
Trade receivables
GST Receivable
Sundry debtors
Prepayments
Non-current
Other receivables
2018
$'000
50,858
738
40,563
1,934
94,093
2018
$'000
29,495
29,495
2017
$'000
50,047
4,372
2,139
2,825
59,383
2017
$'000
14
14
(a) Recognition and measurement
(i) Trade receivables
Trade receivables are generally received in the current month, or 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.
(ii) Other receivables
Other receivables include amounts outstanding on the sale of the Jaguar Operation. The discounted values (using a
discount rate of 3.5%) of the outstanding cash proceeds of $15,520,000 and $29,480,000 are shown in current and
non-current receivables respectively. Refer further information at Note 23(b).
(iii)
Impairment of trade receivables
Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are
written off when identified. An allowance is made for doubtful debts based on credit losses expected over the life of the trade
receivable taking into account
further economic
conditions. On confirmation that the trade receivable will not be collectible, the gross carrying value of the asset is written off
against the associated provision.
information about past events, current conditions and forecasts of
Independence Group NL
19
IGO ANNUAL REPORT 2018 — 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 9
Inventories
Current
Mine spares and stores - at cost
ROM inventory - at cost
Concentrate inventory - at cost
Gold in circuit
Gold dore
Non-current
ROM inventory - at cost
(a) Classification of inventory
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
$'000
15,996
37,778
23,258
1,585
3,870
82,487
2017
$'000
20,447
29,516
10,078
882
2,235
63,158
33,012
33,012
20,077
20,077
Inventory classified as non-current relates to 0.6g/t to 1.2g/t grade gold ore stockpiles which are not intended to be utilised
within the next 12 months but are anticipated to be utilised beyond that period.
(b) Recognition and measurement
(i) Ore, concentrate and gold inventories
Inventories, comprising nickel, copper and cobalt 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.
(c) Key estimates and judgements
The Group reviews the carrying value of inventories regularly to ensure that their cost does not exceed net realisable value.
In determining net realisable value various factors are taken into account, including estimated future sales price of the
product based on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring
the product to sale.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the amount of
contained metal based on assay data, and the estimated recovery percentage based on the expected processing method.
Independence Group NL
20
84 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 10 Financial assets at fair value through profit or loss
Shares in Australian listed companies - at fair value through profit or loss
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
$'000
24,294
24,294
2017
$'000
15,348
15,348
(a) Amounts recognised in profit or loss
During the current year, the changes in fair values of financial assets resulted in a gain to the profit or loss of $231,000
(2017: $4,343,000). Changes in fair values of financial assets at fair value through profit or loss are recorded in fair value
movement of financial investments in the profit or loss.
(b) Recognition and measurement
The Group classifies financial assets at fair value through profit or loss if they are acquired principally for the purpose of
selling in the short term, ie are held for trading. They are presented as current assets if they are expected to be sold within
12 months after the end of the reporting period; otherwise they are presented as non-current assets.
11 Trade and other payables
Current liabilities
Trade payables
Other payables
(a) Recognition and measurement
2018
$'000
14,447
42,139
56,586
2017
$'000
6,401
42,651
49,052
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.
12 Provisions
Current
Provision for employee entitlements
Provision for restructuring costs
Provision for rehabilitation costs
2018
$'000
4,322
572
-
4,894
2017
$'000
7,647
6,374
1,238
15,259
Independence Group NL
21
IGO ANNUAL REPORT 2018 — 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
12 Provisions (continued)
Non-current
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
Disposal of subsidiary
Carrying amount at end of financial year
(b) Recognition and measurement
2018
$'000
901
61,267
62,168
2018
$'000
72,687
86
1,609
(369)
(12,746)
61,267
2017
$'000
1,779
71,449
73,228
2017
$'000
66,359
5,119
1,232
(23)
-
72,687
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as rehabilitation and restoration borrowing expense in the profit or loss.
(i) Rehabilitation and restoration
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 (and disclosed as Rehabilitation and restoration borrowing 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.
(ii) Employee benefits
The provision for employee benefits represents annual leave and long service leave entitlements accrued by employees.
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 expected to be
paid when the liabilities are settled. The amounts are presented as current employee entitlements in the balance sheet.
Independence Group NL
22
86 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
12 Provisions (continued)
(b) Recognition and measurement (continued)
(ii) Employee benefits (continued)
Other long-term employee benefit obligations
The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service are measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period. 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 end of the reporting period of government bonds with terms and
the estimated future cash outflows. Remeasurements as a result of
currencies that match, as closely as possible,
experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the consolidated balance sheet
if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual
settlement is expected to occur.
(c) Key estimates and judgements
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.
Long service leave
Long service leave is measured at the present value of benefits accumulated up to the end of the reporting period. The
liability is discounted using an appropriate discount rate. Management requires judgement to determine key assumptions
used in the calculation, including future increases in salaries and wages, future on-costs rates and future settlement dates of
employees' departures.
Independence Group NL
23
IGO ANNUAL REPORT 2018 — 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Invested Capital
This section of the notes provides further information about property, plant and equipment, mine properties and exploration
and evaluation expenditure and the carrying amount of these non-financial assets, including accounting policies, key
judgements and estimates relevant to understanding these items.
13 Property, plant and equipment
Land and
buildings
$'000
Mining plant
and
equipment
$'000
Furniture,
fittings and
other
equipment
$'000
Motor
vehicles
$'000
Assets under
construction
$'000
Total
$'000
24,257
62,710
12,483
5,583
4,061
109,094
(11,594)
(49,162)
12,663
13,548
(8,351)
4,132
(4,570)
1,013
-
(73,677)
4,061
35,417
14,622
1,202
1,262
-
(2,851)
(1,572)
12,663
20,301
8,714
1,868
(52)
(8,521)
(8,762)
13,548
3,783
1,951
269
-
(1,617)
(254)
4,132
2,227
911
153
(16)
(1,151)
(1,111)
1,013
3,989
7,847
(3,552)
-
-
(4,223)
4,061
44,922
20,625
-
(68)
(14,140)
(15,922)
35,417
37,652
140,391
13,137
7,008
3,989
202,177
(23,030)
(120,090)
14,622
20,301
(9,354)
3,783
(4,781)
2,227
-
(157,255)
3,989
44,922
19,095
-
290
(996)
-
(1,024)
(2,608)
(135)
14,622
19,514
-
7,338
-
3,127
(509)
(9,169)
-
20,301
4,069
44
1,130
(17)
185
(14)
(1,614)
-
3,783
2,097
120
1,046
-
-
-
(1,036)
-
2,227
2,534
-
3,763
-
(2,308)
-
-
-
3,989
47,309
164
13,567
(1,013)
1,004
(1,547)
(14,427)
(135)
44,922
24
Year ended 30 June 2018
Cost
Accumulated depreciation and
impairment
Net book amount
Movements
Opening net book amount
Additions
Transfers
Disposals
Depreciation charge
Sale of subsidiary
Closing net book amount
Year ended 30 June 2017
Cost
Accumulated depreciation and
impairment
Net book amount
Movements
Opening net book amount
Acquisition of subsidiary
Additions
Assets included in a disposal
group classified as held for sale
and other disposals
Transfers
Disposals
Depreciation charge
Impairment loss
Closing net book amount
Independence Group NL
88 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
13 Property, plant and equipment (continued)
(a) Non-current assets pledged as security
Refer to note 16 for information on non-current assets pledged as security by the Group.
(b) Recognition and measurement
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.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using either units-of-production or straight-line
depreciation as follows:
Depreciation periods are primarily:
Buildings
Mining plant and equipment
Motor vehicles
Furniture and fittings
Leased assets
5 - 10 years
2 - 10 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.
Derecognition
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is
expected to bring no future economic benefits. Any gain or loss from derecognising the asset (being the difference between
the proceeds of disposal and the carrying amount of the asset) is included in the profit or loss in the period the item is
derecognised.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
(c) Key estimates and judgements
The estimations of useful lives, residual values and depreciation methods require significant management judgements and
are regularly reviewed. If they need to be modified, the depreciation and amortisation expense is accounted for prospectively
from the date of the assessment until the end of the revised useful life (for both the current and future years).
Independence Group NL
25
IGO ANNUAL REPORT 2018 — 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 14 Mine properties
Year ended 30 June 2018
Cost
Accumulated amortisation and impairment
Net book amount
Movements
Carrying amount at beginning of the period
Additions
Transfers to exploration and evaluation expenditure
Transfers
Amortisation expense
Disposal of subsidiary
Notes to the consolidated financial statements
30 June 2018
(continued)
Mine
properties in
development
$'000
Mine
properties in
production
$'000
Deferred
stripping
$'000
Total mine
properties
$'000
-
-
-
1,831,083
(439,940)
1,391,143
161,975
(95,430)
1,993,058
(535,370)
66,545
1,457,688
1,355,722
-
-
(1,355,722)
-
-
202,282
74,734
(1,473)
1,355,722
(206,227)
(33,895)
54,915
43,396
-
-
(31,766)
-
1,612,919
118,130
(1,473)
-
(237,993)
(33,895)
Closing net book amount
-
1,391,143
66,545
1,457,688
Year ended 30 June 2017
Cost
Accumulated amortisation and impairment
Net book amount
Movements
Carrying amount at beginning of the period
Additions
Transfers from exploration and evaluation expenditure
Transfers to property, plant and equipment
Amortisation expense
Borrowing costs capitalised
Depreciation expense capitalised
Closing net book amount
(a) Recognition and measurement
1,355,722
-
1,355,722
627,098
(424,816)
202,282
118,579
(63,664)
2,101,399
(488,480)
54,915
1,612,919
1,197,011
144,626
-
-
-
12,779
1,306
1,355,722
239,076
20,766
327
(1,004)
(56,883)
-
-
202,282
34,764
39,920
-
-
(19,769)
-
-
1,470,851
205,312
327
(1,004)
(76,652)
12,779
1,306
54,915
1,612,919
(i) Mine properties in development
Mine properties in development represent the expenditure incurred when technical feasibility and commercial viability of
extracting a mineral resource have been demonstrated, and includes the costs incurred up until such time as the asset is
capable of being operated in a manner intended by management. 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.
Independence Group NL
26
90 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
14 Mine properties (continued)
(a) Recognition and measurement (continued)
(ii) Mine properties in production
Mine properties in production represent
the accumulation of all acquisition, exploration, evaluation and development
expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of the mineral resource has
commenced. When further development expenditure, including waste development and stripping, is incurred in respect of a
mine property after the commencement of production, such expenditure is carried forward as part of the cost of that mine
property only when substantial future economic benefits are established, otherwise such expenditure is classified as part of
the cost of production.
Amortisation is provided on a units-of-production basis, with separate calculations being made for each mineral resource.
The units-of-production method results in an amortisation charge proportional
the 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 mine properties 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.
(iii) 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 ore reserves of
the mine. Changes to the life of mine are accounted for prospectively.
(b) Key estimates and judgements
(i) Proved and probable ore reserves
The Group uses the concept of life of mine as an accounting value to determine the amortisation of mine properties. In
determining life of mine, the Group prepares ore 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. The estimate of these proved and probable ore reserves, by their very
nature, require judgements, estimates and assumptions.
Where the proved and probable reserve estimates need to be modified,
prospectively from the date of the assessment until the end of the revised mine life (for both the current and future years).
the amortisation expense is accounted for
(ii) Deferred stripping
The Group defers advanced stripping costs incurred during the production stage of its operations. This calculation requires
the use of judgements and estimates, such as estimates of tonnes of waste to be removed over the life of the mining area
and economically recoverable reserves extracted as a result. Changes in a mine's life and design may result in changes to
the expected stripping ratio (waste to mineral reserves ratio). Any resulting changes are accounted for prospectively.
Independence Group NL
27
IGO ANNUAL REPORT 2018 — 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
15 Exploration and evaluation
Jaguar
Operation
$'000
Long
Operation
$'000
Nova Project
$'000
Stockman
Project
$'000
Windward
$'000
Other
$'000
Total
$'000
Year ended 30
June 2018
Opening net book
amount
Additions
Transfer from (to)
mine properties in
production
Disposal of
subsidiary
Closing net book
amount
Year ended 30
June 2017
Opening net book
amount
Acquisition of
subsidiary
Additions
Assets included in
a disposal group
classified as held
for sale and other
disposals
Impairment loss
Transfer from (to)
mine properties in
production
Closing net book
amount
(a)
Impairment
5,250
2,486
1,473
(9,209)
-
5,250
-
216
-
-
-
-
-
-
-
603
-
-
-
(492)
(216)
(111)
34,100
-
13,052
-
17,823
-
2,843
2,675
73,068
5,161
-
-
-
-
-
-
-
-
1,473
(9,209)
34,100
13,052
17,823
5,518
70,493
34,100
68,183
-
-
107,533
-
-
-
-
-
-
-
17,823
-
-
2,843
17,823
3,662
(30,732)
(24,399)
-
-
-
-
-
-
-
(30,732)
(24,891)
(327)
5,250
-
34,100
13,052
17,823
2,843
73,068
The Group did not recognise any impairment charges during the current reporting period (2017: $24,891,000).
In the previous financial year, an impairment charge of $24,399,000 related to the Stockman Project, which was an
exploration asset
reported within the New Business and Regional Exploration Activities segment. The recognised
impairment charge was determined with reference to the recoverable amount of the asset being assessed based on its fair
value less costs of disposal.
The recoverable amount was determined in relation to the announcement to the ASX on 14 June 2017 titled “Agreement to
Divest Stockman Project”, which references to an executed sale agreement of the Stockman Project's assets between
Independence Stockman Project Pty Ltd, a wholly owned subsidiary of the Company, and CopperChem Limited, a wholly
owned subsidiary of Washington H Soul Pattinson and Company Limited.
Independence Group NL
28
92 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
15 Exploration and evaluation (continued)
(a)
Impairment (continued)
Terms of the sale agreement include a deferred cash consideration component of $31,600,000, and a net smelter return
royalty for which the Company determined a value. Key assumptions included a pre-tax real discount rate of 10.5%, and five
year average commodity prices as follows: Copper: USD5,808 per tonne, Zinc: USD2,520 per tonne, Silver: USD17.86 per
ounce and foreign exchange: USD:AUD 0.74.
(b) Recognition and measurement
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 loss as incurred except in the following 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.
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.
Upon approval for the commercial development of an area of interest, exploration and evaluation assets are tested for
impairment and transferred to 'Mine properties in development'. No amortisation is charged during the exploration and
evaluation phase.
(c) Key estimates and judgements
The recoverability of
development and commercial exploitation, or alternatively, sale of the respective area of interest.
the carrying amount of
the exploration and evaluation assets is dependent on the successful
The Group reviews the carrying value of exploration and evaluation expenditure on a regular basis to determine whether
economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned
to support continued carry forward of capitalised costs. This assessment requires judgement as to the status of the
individual projects and their estimated recoverable amount.
Independence Group NL
29
IGO ANNUAL REPORT 2018 — 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Capital structure and financing activities
Notes to the consolidated financial statements
30 June 2018
(continued)
This section of
accumulated losses and dividends, including accounting policies relevant to understanding these items.
the notes provides further information about
the Group's borrowings, contributed equity, reserves,
16 Borrowings
Current
Unsecured
Bank loans
Total current borrowings
Non-current
Unsecured
Bank loans
Total non-current borrowings
(a) Corporate loan facility
2018
$'000
2017
$'000
56,226
56,226
2018
$'000
56,226
56,226
2017
$'000
84,589
84,589
140,815
140,815
On 16 July 2015, the Company entered into a Syndicated Facility Agreement (Facility Agreement) with National Australia
Bank Limited, Australia and New Zealand Banking Group Limited and Commonwealth Bank of Australia Limited for a
$550,000,000 unsecured committed term finance facility. The Facility Agreement comprised:
•
•
A $350,000,000 amortising term loan facility expiring in September 2020; and
A $200,000,000 revolving loan facility expiring in September 2020.
In October 2016, Company repaid $71,000,000 of the amortising term loan facility and also cancelled a further $79,000,000
of the same facility. During 2018, the Company repaid further amounts of $57,142,000 of the amortising term loan facility in
accordance with the repayment schedule. The Company undertook a further restructure of the facility in June 2018, with the
cancellation of the $200,000,000 revolving loan facility.
Following the above repayments and restructures, the Company's amortising loan facility is $142,858,000.
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. At 30 June 2018, a
balance of unamortised transaction costs of $2,043,000 (2017: $2,959,000) was offset against the bank loans contractual
liability of $142,858,000 (2017: $200,000,000). Total capitalised transaction costs to 30 June 2018 are $5,495,000 (2017:
$5,495,000).
Borrowing costs incurred during the previous financial year of $12,779,000 related to a qualifying asset (Nova Project) and
were capitalised in accordance with AASB 123 Borrowing Costs. Refer to note 14.
The Facility Agreement has certain financial covenants that the Company has to comply with. All such financial covenants
have been complied with in accordance with the Facility Agreement.
(b) Assets pledged as security
There were no assets pledged as security at 30 June 2018 (2017: $nil).
Independence Group NL
30
94 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
16 Borrowings (continued)
(c) Financing arrangements
The Group had access to the following financing arrangements at the reporting date:
Total facilities
Corporate debt facility
Contingent instrument facility1
Facilities used as at reporting date
Corporate debt facility
Contingent instrument facility
Facilities unused as at reporting date
Corporate debt facility
2018
$'000
142,858
1,311
144,169
142,858
1,311
144,169
2017
$'000
400,000
1,281
401,281
200,000
1,281
201,281
-
-
200,000
200,000
1. This facility provides financial backing in relation to non-performance of third party guarantee requirements.
(d) Recognition and measurement
(i) Borrowings
Borrowings are initially recognised at fair value, net of 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.
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 and
amortised over the period of the remaining facility.
(ii) 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.
17 Contributed equity
(a) Share capital
Fully paid issued capital
2018
$'000
2017
$'000
1,879,094
1,878,469
Independence Group NL
31
IGO ANNUAL REPORT 2018 — 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
17 Contributed equity (continued)
(a) Share capital (continued)
(b) Movements in ordinary share capital
Details
Balance at beginning of financial year
Issue of shares under the Employee Incentive
Plan
Share placement and share purchase plan
issues
Less: Transaction costs arising on share issue
(net of tax)
2018
Number of shares
2018
$'000
2017
Number of shares
2017
$'000
586,747,023
1,878,469
511,422,871
1,601,458
176,012
625
268,796
820
-
-
-
-
75,055,356
281,459
-
(5,268)
Balance at end of financial year
586,923,035
1,879,094
586,747,023
1,878,469
(c) Capital management
The Board’s policy is to preserve a strong balance sheet so as to maintain investor, creditor and market confidence, and to
sustain ongoing and future development of the business. Demonstrating the Company's balance sheet strength are various
financing and liquidity ratios, supported by strong EBITDA margins:
Current ratio (times)
Debt to equity
Underlying EBITDA margin
2018
2.9
8%
44%
2017
1.7
12%
36%
The Group's capital comprises equity,
including reserves, and net debt/(cash). As at 30 June 2018 this totalled
$1,782,997,000 (2017: $1,897,021,000), a decrease of 6% over 2017. Contributing to this decrease was the reduction in
debt as a result of debt repayments of $57,142,000 during the year.
The Company's capital management framework aims to respond to a dynamic commodity and investment cycle. To this end,
the goals of the framework are to:
•
•
•
•
Ensure that the Company's operations are able to generate cash flows safely, at appropriate margins, and according to
plan;
Provide a buffer from future potential adverse price movements as a result of the Company operating in a cyclical
commodity price environment;
Raise and repay debt and invest in growth and replenish and acquire new assets; and
Raise capital and to repay capital to shareholders by way of dividends or capital returns. Dividend payments target a
minimum 30% of net profit after tax, after excluding non-recurring items.
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.
(d) Recognition and measurement
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. 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
32
96 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 18 Reserves and accumulated losses
Hedging reserve
Share-based payments reserve
Foreign currency translation reserve
Acquisition reserve
(a) Movements in reserves
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
$'000
1,393
13,340
38
-
14,771
2017
$'000
(391)
10,698
(4)
3,142
13,445
The following table shows a breakdown of the movements in these reserves during the year. A description of the nature and
purpose of each reserve is provided below the table.
Balance at 1 July 2017
Revaluation - gross
Deferred tax
Transfer to profit or loss - gross
Deferred tax
Transfer to accumulated losses
Currency translation differences -
current period
Share-based payment expenses
Issue of shares under the Employee
Incentive Plan
Balance at 30 June 2018
Balance at 1 July 2016
Revaluation - gross
Deferred tax
Transfer to profit or loss - gross
Deferred tax
Currency translation differences -
current period
Share-based payment expenses
Issue of shares under the Employee
Incentive Plan
Hedging
reserve
$'000
Share- based
payments
reserve
$'000
Acquisition
reserve
$'000
Foreign
currency
translation
reserve
$'000
(391)
3,140
(942)
(591)
177
-
-
-
-
1,393
(632)
676
(203)
(331)
99
-
-
-
10,698
-
-
-
-
-
-
3,267
(625)
13,340
10,371
-
-
-
-
-
1,147
(820)
3,142
-
-
-
-
(3,142)
-
-
-
-
3,142
-
-
-
-
-
-
-
(4)
-
-
-
-
-
42
-
-
38
(8)
-
-
-
-
4
-
-
Total
$'000
13,445
3,140
(942)
(591)
177
(3,142)
42
3,267
(625)
14,771
12,873
676
(203)
(331)
99
4
1,147
(820)
Balance at 30 June 2017
(391)
10,698
3,142
(4)
13,445
Independence Group NL
33
IGO ANNUAL REPORT 2018 — 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
18 Reserves and accumulated losses (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. Amounts are reclassified to profit or loss when the associated
hedged transaction affects profit or loss.
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 26 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
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
Movements in accumulated losses were as follows:
Balance at beginning of financial year
Net profit for the period
Dividends paid during the period
Transfer from acquisition reserve
Balance at end of financial year
19 Dividends paid and proposed
(a) Ordinary shares
Notes
19
2018
$'000
(159,130)
52,686
(11,736)
3,142
(115,038)
2017
$'000
(158,540)
17,011
(17,601)
-
(159,130)
Final ordinary dividend for the year ended 30 June 2017 of 1 cent (2016: 2 cents) per fully
paid share
Interim dividend for the year ended 30 June 2018 of 1 cent (2017: 1 cent) per fully paid
share
Total dividends paid during the financial year
2018
$'000
5,868
5,868
11,736
2017
$'000
11,734
5,867
17,601
Independence Group NL
34
98 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
19 Dividends paid and proposed (continued)
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since year end the Directors have recommended the
payment of a final dividend of 2 cents (2017: 1 cent) per fully paid ordinary share, fully
franked based on tax paid at 30%. The aggregate amount of the proposed dividend
expected to be paid on 27 September 2018 out of retained earnings at 30 June 2018, but
not recognised as a liability at year end, is:
(c) Franked dividends
Franking credits available for subsequent reporting periods based on a tax rate of 30%
(2017: 30%)
2018
$'000
2017
$'000
11,807
5,867
2018
$'000
2017
$'000
29,799
34,829
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 recommended by the Directors since the end of the reporting period, but
not recognised as a liability at
the reporting date, will be a reduction in the franking account of $5,060,000 (2017:
$2,515,000).
(d) Recognition and measurement
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of
the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. A provision for
dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or
before the reporting date.
Independence Group NL
35
IGO ANNUAL REPORT 2018 — 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Risk
This section of the notes includes information on the Group's exposure to various risks and shows how these could affect
the Group's financial position and performance.
20 Derivatives
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives
do not meet the hedging criteria, they are classified as ‘held for trading’ for accounting purposes below. The Group has the
following derivative financial instruments:
Current assets
Diesel hedging contracts - cash flow hedges
Foreign currency contracts - cash flow hedges
Current liabilities
Commodity hedging contracts - cash flow hedges
Diesel hedging contracts - cash flow hedges
Non-current liabilities
Diesel hedging contracts - cash flow hedges
(a)
Instruments used by the Group
2018
$'000
1,990
-
1,990
-
-
-
-
-
2017
$'000
-
657
657
910
55
965
251
251
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, commodity prices and diesel 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 below.
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 21 and below for details of the foreign currency, commodity prices and diesel fuel risk being mitigated by the
Group’s derivative instruments as at 30 June 2018 and 30 June 2017.
Diesel
The Group held various diesel fuel hedging contracts at 30 June 2018 and 30 June 2017 to reduce the exposure to future
increases in the price of the Singapore gasoil component of diesel fuel.
The following table details the diesel fuel hedging contracts outstanding at the reporting date:
Independence Group NL
36
100 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
20 Derivatives (continued)
Diesel (continued)
Litres of oil ('000)
Weighted average price
(AUD/litre)
2018
5,400
2,700
-
8,100
2017
16,464
16,560
8,640
41,664
2018
0.51
0.51
-
0.51
2017
0.48
0.49
0.51
0.49
Fair value
2018
$'000
1,342
648
-
1,990
2017
$'000
36
(91)
(251)
(306)
0 - 6 months
6 -12 months
1 - 2 years
Total
Copper
There were no copper commodity contracts, or foreign exchange contracts which matched the terms of the commodity
contracts, held by the Group at 30 June 2018. The table below details the outstanding copper commodity contracts which
were outstanding at 30 June 2017:
Tonnes of metal
Weighted average price
(USD/metric tonne)
2018
-
-
-
2017
1,020
1,020
2,040
2018
-
-
-
2017
5,613
5,613
5,613
0 - 6 months
6 - 12 months
Total
The following table details the forward foreign currency contracts outstanding at the reporting date:
Notional amounts (USD)
2018
$'000
-
-
-
2017
$'000
5,725
5,726
11,451
Sell USD forward
0 - 6 months
6 - 12 months
Total
(b) Recognition and measurement
Weighted
average
AUD:USD
exchange rate
2018
2017
-
-
-
0.7353
0.7336
0.7345
-
-
-
Fair value
2018
$'000
-
-
-
Fair value
2018
$'000
2017
$'000
(435)
(475)
(910)
2017
$'000
330
327
657
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as either:
•
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or
hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable
forecast transactions (cash flow hedges).
Independence Group NL
37
IGO ANNUAL REPORT 2018 — 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
20 Derivatives (continued)
(b) Recognition and measurement (continued)
The Group documents, at the inception of the hedging transaction, the relationship between hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used
in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of
hedged items.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months. Trading derivatives are classified as a current asset or liability. Movements in the hedging
reserve in shareholder's equity are shown in note 18.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in the hedging reserve in equity, limited to the cumulative change in the fair value of the hedged item on a
present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.
The gain or loss relating to the effective portion of forward foreign exchange contracts hedging export sales is recognised in
profit or loss within 'sales'.
The changes in the time value component of options that relate to hedged items are recognised with other comprehensive
income in the hedging reserve within equity. The cumulative changes accumulated in the hedge reserve are reclassified to
the profit or loss when the hedged item affects profit or loss.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss.
(iii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for hedge accounting are recognised immediately in profit or loss.
21 Financial risk management
This note explains the Group's exposure to financial risks and how these risks could affect the Group's future financial
performance.
Financial instruments are held by the Group for various purposes, including:
• Operational: Activities of the Group generate financial
instruments which include cash, trade receivables and trade
payables;
•
Financing: The Company may enter into debt instruments in order to finance both internal growth opportunities and
acquire assets. Types of instruments used include syndicated and other bank loans and hire purchase agreements.
Surplus funds are held either at call or as short-term deposits; and
Independence Group NL
38
102 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
21 Financial risk management (continued)
•
Risk management: The Group is exposed to commodity and foreign exchange risk which is overseen by management,
under policies approved by the Board of Directors. Management identifies, evaluates and hedges financial risks in close
co-operation with the Group’s operating units. Financial instruments used by the Group to mitigate these risks include
forward exchange contracts, commodity swaps and forward sales agreements.
By holding these financial instruments, the Group exposes itself to risk. The Board reviews and agrees the Group's policies
for managing each of these risks, which are summarised below:
(a) Risk exposures and responses
(i) Foreign currency risk
As the Group’s sales revenues for base and precious metals are denominated in United States 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 denominated in AUD.
Financial instruments, including derivative instruments, denominated in USD and then converted into the functional currency
(i.e. AUD) were as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Net financial assets
2018
$'000
11,578
50,858
-
62,436
-
-
2017
$'000
8,162
50,047
657
58,866
910
910
62,436
57,956
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 2018 AUD:USD exchange rate of 0.7391 (2017: 0.7692). The remainder of the cash balance of
$127,110,000 (2017: $27,601,000) was held in AUD and therefore not exposed to foreign currency risk.
The trade and other receivables amounts represent
receivables were denominated in AUD at the reporting date.
the USD denominated trade debtors. All other trade and other
The following table summarises the Group’s sensitivity of financial instruments held at 30 June 2018 to movements in the
AUD:USD exchange rate, with all other variables held constant.
Impact on post-tax profit
Impact on other components of
equity
Sensitivity of financial instruments to
foreign currency movements
Increase/decrease in foreign exchange rate
Increase 5.0%
Decrease 5.0%
2018
$'000
(2,605)
2,879
2017
$'000
(1,934)
2,138
2018
$'000
-
-
Independence Group NL
2017
$'000
494
(546)
39
IGO ANNUAL REPORT 2018 — 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
21 Financial risk management (continued)
(a) Risk exposures and responses (continued)
(ii) Commodity price risk
The Group’s sales revenues are generated from the sale of nickel, copper, zinc, gold, cobalt and silver. Accordingly, the
Group’s revenues, derivatives and trade receivables are exposed to commodity price risk fluctuations, primarily nickel,
copper, zinc, gold, cobalt and silver.
Nickel
Nickel concentrate sales have an average price finalisation period of two to 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.
Copper and zinc
Copper and zinc concentrate sales during the year had an average price finalisation period of up to three 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.
Diesel fuel
It is the Board's policy to hedge up to 75% of forecast diesel fuel usage. Diesel fuel price comprises a number of
components, including Singapore gasoil and various other costs such as shipping and insurance. The total of all costs
represents the wholesale or Terminal Gate Price (TGP) of diesel. The Group only hedges the Singapore gasoil component
of the diesel TGP, which represents approximately 40% of the total diesel price.
The markets for base and precious metals 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 hedging, forward contracts and collar arrangements.
At the reporting date, the carrying value of the financial
follows:
instruments exposed to commodity price movements were as
Financial instruments exposed to commodity price movements
Financial assets
Trade and other receivables
Derivative financial instruments - diesel hedging contracts
Financial liabilities
Derivative financial instruments - commodity hedging contracts
Derivative financial instruments - diesel hedging contracts
Net exposure
2018
$'000
46,277
1,990
48,267
-
-
-
48,267
2017
$'000
46,742
-
46,742
910
306
1,216
45,526
The following table summarises the sensitivity of financial instruments held at 30 June 2018 to movements in the nickel
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 5.0% (2017: 1.5%) and
a 20.0% (2017: 20.0%) sensitivity rate is used to value derivative contracts.
Independence Group NL
40
104 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
21 Financial risk management (continued)
(a) Risk exposures and responses (continued)
(ii) Commodity price risk (continued)
Sensitivity of financial instruments to nickel price movements
Increase/decrease in nickel prices
Increase
Decrease
Impact on post-tax profit
2018
$'000
3,326
(3,326)
2017
$'000
465
(465)
The following table summarises the sensitivity of financial instruments held at 30 June 2018 to movements in the copper
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 5% (2017: 1.5%) and a
20.0% (2017: 20.0%) sensitivity rate is used to value derivative contracts.
Sensitivity of financial instruments to
copper price movements
Increase/decrease in copper price
Increase
Decrease
Impact on post-tax profit
Impact on other components of
equity
2018
$'000
1,250
(1,250)
2017
$'000
9
(9)
2018
$'000
-
-
2017
$'000
(2,157)
2,157
The following table summarises the sensitivity of financial instruments held at 30 June 2018 to movements in the zinc price,
with all other variables held constant.
Sensitivity of financial instruments to zinc price movements
Increase/decrease in zinc price
Increase 1.5% (2017: 1.5%)
Decrease 1.5% (2017: 1.5%)
Impact on post-tax profit
2018
$'000
-
-
2017
$'000
148
(148)
The following table summarises the sensitivity of financial instruments held at 30 June 2018 to movements in the Singapore
gasoil price, with all other variables held constant.
Sensitivity of financial instruments to Singapore gasoil price movements
Increase/decrease in Singapore gasoil price
Increase 20% (2017: 20%)
Decrease 20% (2017: 20%)
Impact on other components of
equity
2018
$'000
852
(852)
2017
$'000
2,793
(2,793)
(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 20% (2017: 20%). At reporting date, if the equity prices had been higher or lower, net profit for the year
would have increased or decreased by $3,389,000 (2017: $2,149,000).
Independence Group NL
41
IGO ANNUAL REPORT 2018 — 105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 21 Financial risk management (continued)
(a) Risk exposures and responses (continued)
Notes to the consolidated financial statements
30 June 2018
(continued)
(iv) Cash flow and fair value interest rate risk
The Group’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in
the Group had the following exposure to interest rate risk on financial
market
instruments:
the reporting date,
interest rates. At
Financial assets
Cash and cash equivalents
Financial liabilities
Bank loans
30 June 2018
30 June 2017
Weighted
average
interest rate
%
1.5%
1.5%
3.8%
3.8%
Weighted
average
interest rate
%
2.1%
2.1%
3.9%
3.9%
Balance
$'000
138,688
138,688
142,858
142,858
Balance
$'000
35,763
35,763
200,000
200,000
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.
Sensitivity of interest revenue and expense to interest rate movements
Interest revenue
Increase 1.0% (2017: 1.0%)
Decrease 1.0% (2017: 1.0%)
Interest expense
Increase 1.0% (2017: 1.0%)
Decrease 1.0% (2017: 1.0%)
(b) Credit risk
Impact on post-tax profit
2018
$'000
957
(957)
(1,000)
1,000
2017
$'000
192
(192)
(1,400)
1,400
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. In addition, sales are made
to high credit quality financial institutions, hence credit risk arising from these transactions is considered to be low.
Nickel, copper and zinc concentrate sales
Credit risk arising from sales to customers is managed by contracts that stipulate a provisional payment of between 90%
and 100% of the estimated value of each sale. Provisional payments are made via an unconditional and irrevocable letter of
credit, governed by the laws of Western Australia, and are expected to be received within a few business days. Title to the
concentrate does not pass to the buyer until this provisional payment is received by the Group. Final payment is dependent
on the quotation period of the respective purchase contract, and is also made via an irrevocable letter of credit.
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.
Independence Group NL
42
106 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
21 Financial risk management (continued)
(b) Credit risk (continued)
Nickel ore sales
The Group has a concentration of credit risk in that it depends on BHP Billiton Nickel West Pty Ltd (BHPB Nickel West) for
sales revenue from the Long Operation. During the year ended 30 June 2018, all nickel ore 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 BHPB Nickel West is unable to accept supply of the Group’s product due to a
force majeure event. This has been further de-risked as the Nova Operation could accept ore from the Long Operation for
processing and concentrate production. The risk is also further mitigated by the receipt of 70% of the value of any months’
sale within a month of that sale occurring. The Long Operation was placed under care and maintenance in June 2018.
The Group has policies in place to ensure that sales of products are made to customers with an appropriate credit history.
Other
In respect of financial assets and derivative financial instruments, the Group's exposure to credit risk arises from potential
default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Exposure at the
reporting date is addressed below. The Group does not hold any credit derivatives to offset its credit exposure.
Derivative counterparties and cash transactions are restricted to high credit quality financial institutions.
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
(c) Liquidity risk
2018
$'000
2017
$'000
138,688
50,858
70,796
24,294
1,990
286,626
35,763
50,047
6,525
15,348
657
108,340
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
43
IGO ANNUAL REPORT 2018 — 107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 21 Financial risk management (continued)
(c) Liquidity risk (continued)
Maturities of financial liabilities (continued)
Contractual maturities of financial liabilities
At 30 June 2018
Trade and other payables
Bank loans*
At 30 June 2017
Trade and other payables
Bank loans*
* Includes estimated interest payments.
Notes to the consolidated financial statements
30 June 2018
(continued)
Less than 6
months
$'000
6 - 12
months
$'000
Between
1 and 5
years
$'000
Total
contractual
cash
flows
$'000
Carrying
amount
$'000
56,586
29,652
86,238
49,052
30,234
79,286
-
31,544
31,544
-
88,163
88,163
56,586
149,359
56,586
140,815
205,945
197,401
-
33,283
33,283
-
149,821
149,821
49,052
213,338
49,052
197,041
262,390
246,093
There were no derivative financial instruments outstanding at 30 June 2018. The following table details the Group’s liquidity
analysis for its derivative financial instruments for 30 June 2017, 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 2017
Commodity hedging contracts
Less than 6
months
$'000
6 - 12
months
$'000
Between
1 and 5
years
$'000
Total
contractual
cash
flows
$'000
Carrying
amount
$'000
399
399
566
566
251
251
1,216
1,216
1,216
1,216
(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)
(b)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
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 2018 and
30 June 2017 on a recurring basis.
Independence Group NL
44
108 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 21 Financial risk management (continued)
(d) Recognised fair value measurements (continued)
(i) Fair value hierarchy (continued)
At 30 June 2018
Financial assets
Listed investments
Derivative instruments
Diesel hedging contracts
At 30 June 2017
Financial assets
Listed investments
Derivative instruments
Foreign currency hedging contracts
Financial liabilities
Derivative instruments
Commodity hedging contracts
Diesel hedging contracts
Notes to the consolidated financial statements
30 June 2018
(continued)
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
24,294
-
24,294
Level 1
$'000
15,348
-
15,348
-
-
-
-
1,990
1,990
-
-
-
24,294
1,990
26,284
Level 2
$'000
Level 3
$'000
Total
$'000
-
657
657
910
306
1,216
-
-
-
-
-
-
15,348
657
16,005
910
306
1,216
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June
2018 and did not transfer any fair value amounts between the fair value hierarchy levels during the year ended 30 June
2018.
(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.
Independence Group NL
45
IGO ANNUAL REPORT 2018 — 109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
21 Financial risk management (continued)
(d) Recognised fair value measurements (continued)
(iii) Valuation techniques used to determine level 2 and level 3 fair values (continued)
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities which are included in level
3.
(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.
Current assets
Cash and cash equivalents
Current liabilities
Bank loans
Non-current liabilities
Bank loans
30 June 2018
30 June 2017
Carrying
amount
$'000
138,688
138,688
56,226
56,226
84,589
84,589
Fair value
$'000
138,688
138,688
57,142
57,142
85,716
85,716
Carrying
amount
$'000
35,763
35,763
56,226
56,226
Fair value
$'000
35,763
35,763
57,142
57,142
140,815
140,815
142,858
142,858
Independence Group NL
46
110 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Group structure
This section of the notes provides information which will help users understand how the group structure affects the financial
position and performance of the Group.
22 Assets held for sale
On 14 June 2017, the Company announced its intention to divest of the Stockman Project, which was owned by the Group's
wholly owned subsidiary Independence Stockman Project Pty Ltd. The associated assets were consequently presented as
held for sale in the 2017 financial statements.
(a) Assets and liabilities classified as held for sale
The following assets were reclassified as held for sale as at 30 June 2018:
Assets classified as held for sale
Exploration and evaluation expenditure
Property, plant and equipment
Total assets
2018
$'000
-
-
-
2017
$'000
30,732
1,013
31,745
The sale of the Stockman Project was completed in December 2017. Partial proceeds of $22,262,000 have been received
during the current financial year, offset by costs of sale of $480,000. The net proceeds are disclosed as Net proceeds on
sale of Stockman Project in the consolidated statement of cash flows.
(b) Recognition and measurement
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured
at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and investment property that are carried at fair value.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised
by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are
classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for
sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance sheet.
23 Subsidiaries
(a) Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Independence Group NL and the
subsidiaries listed in the following table:
Independence Group NL
47
IGO ANNUAL REPORT 2018 — 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 23 Subsidiaries (continued)
(a) Significant investments in subsidiaries (continued)
Name of entity
Independence Long Pty Ltd
Independence Newsearch Pty Ltd
Independence Jaguar Pty Ltd
Independence Stockman Parent Pty Ltd
Independence Stockman Project Pty Ltd
Independence Jaguar Project Parent Pty Ltd
Independence Jaguar Project Pty Ltd
Independence Windward Pty Ltd
Independence Europe Pty Ltd
Independence Nova Holdings Pty Ltd
Independence Nova Pty Ltd
Independence Group Europe AB
Flinders Prospecting Pty Ltd
Notes to the consolidated financial statements
30 June 2018
(continued)
Note
(a)
(a),(b)
(b)
(b)
(a)
(a)
(c)
Country of
incorporation
Equity holding
2018
%
2017
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Sweden
Australia
100
100
-
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a)
(b)
(c)
These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments
Commission. For further information refer to note 29.
Subsidiaries disposed of on 31 May 2018.
Independence Karlawinda Pty Ltd changed its name to Flinders Prospecting Pty Ltd during the year.
(b) Sale of Independence Jaguar Pty Ltd
On 25 May 2018, the Company announced that it had entered into an agreement with CopperChem Limited (CopperChem)
to divest the Jaguar Operation for a total consideration of $73,200,000. The consideration comprised $25,000,000 in cash
on completion of the transaction and an additional $48,200,000 in deferred cash payments.
The transaction was completed on 31 May 2018, with the Company receiving a cash payment of $25,000,000, with three
future cash payments of $16,100,000 receivable on each of the three anniversaries following the completion date.
The discounted values (using a discount rate of 3.5%) of the outstanding cash proceeds of $15,520,000 and $29,480,000
are shown in current and non-current receivables respectively.
The sale of the Jaguar Operation resulted in a net gain on sale before tax of $2,541,000, which is included in Other income
in profit or loss. Cash proceeds of $25,000,000 and costs associated with the sale of the subsidiary of $1,860,000 are shown
as Net cash proceeds on sale of Jaguar Operation in investing activities in the Statement of cash flows.
(c) Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entities. Subsidiaries are fully consolidated from the date
on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer to note 31(c)(i)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Independence Group NL
48
112 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
Unrecognised items
This section of the notes provides information about items that are not recognised in the financial statements as they do not
yet satisfy the recognition criteria but could potentially have an impact on the Group's financial position and performance.
24 Commitments and contingencies
(a) Capital commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Mine properties in development
(b) Commitments
(i) Leasing commitments
Operating lease commitments
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
Total minimum lease payments
2018
$'000
-
-
2017
$'000
1,667
1,667
2018
$'000
2017
$'000
1,848
3,557
5,405
1,599
4,859
6,458
(c) Gold delivery commitments
Within one year
Later than one but not later than five years
Total
Gold for
physical
delivery
oz
47,988
43,200
91,188
Average
contracted
sale price
A$/oz
1,859
1,788
1,825
Value of
committed
sales
$'000
89,200
77,220
166,420
The physical gold delivery contracts are settled by the physical delivery of gold as per the contract terms. The contracts are
accounted for as sales contracts with revenue recognised once gold has been delivered to the counterparties. The physical
gold delivery contracts are considered to sell a non-financial item and therefore do not fall within the scope of AASB 139
Financial Instruments: Recognition and Measurement. Hence, no derivatives have been recognised in respect of these
contracts.
(d) Contingencies
The Group had guarantees outstanding at 30 June 2018 totalling $1,311,000 (2017: $1,281,000) which have been granted
in favour of various third parties. The guarantees primarily relate to environmental and rehabilitation bonds at the various
mine sites.
Independence Group NL
49
IGO ANNUAL REPORT 2018 — 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
25 Events occurring after the reporting period
On 29 August 2018, the Company announced a fully franked final dividend of 2 cents per share to be paid on 27 September
2018.
On 3 July 2018, the Company announced that it had entered into tenement purchase and joint venture agreements (the JV
Agreements) with three entities owned and controlled by Mark Creasy (Creasy Group). The group of tenements, to be called
the Southern Hills tenements, are contiguous to the Nova Mining Lease and cover approximately 1,100km2 of highly
prospective Fraser Range geology over the primary gravity ridge west and southwest of Nova.
Following the execution of and pursuant to the JV Agreements, the Company paid the Creasy Group $21,000,000 in July
2018 to earn a 70% managing interest in the Southern Hills tenements. The $21,000,000 purchase price comprised a cash
payment of $5,275,000 and the issue of $15,725,000 in shares in Independence Group NL at an issue price equal to the
20-day volume weighted average price to 28 June 2018.
Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to
affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the
consolidated entity, in future financial years, other than as stated elsewhere in the financial report.
Other information
This section of the notes includes other information that must be disclosed to comply with the accounting standards and
other pronouncements, but are not considered critical in understanding the financial performance or position of the Group.
26 Share-based payments
The Group provides benefits to employees (including executive directors) of the Group through share-based incentives.
Information relating to these schemes is set out below.
(a) Employee Incentive Plan
The Independence Group NL Employee Incentive Plan (EIP) was approved by shareholders at the Annual General Meeting
of the Company in November 2016. The EIP incorporates both broad based equity participation for eligible employees as
well as key executive incentive schemes designed to provide long-term incentives to senior management (including
executive directors) to deliver long-term shareholder returns.
The EIP comprised the following schemes during the current financial year:
•
•
•
Long-term incentive (LTI) - performance rights;
Service rights; and
Employee share ownership award.
LTI - Performance Rights
Under the LTI scheme, 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 LTI scheme is at the
Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
Equity settled awards outstanding
Set out below are summaries of share rights granted under the LTI scheme:
Independence Group NL
50
114 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 26 Share-based payments (continued)
Equity settled awards outstanding (continued)
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
Fair value of share rights granted
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
2017
Weighted
average fair
value at grant
date
2.00
2.46
-
2.34
2.22
2.14
Weighted
average fair
value at grant
date
1.91
2.26
2.14
2.14
-
2.00
Number of
share rights
1,352,123
589,967
(220,353)
(73,452)
-
1,648,285
Number of
share rights
1,648,285
1,246,722
-
(622,637)
(229,751)
2,042,619
The fair value of the share rights granted during the year ended 30 June 2018 are determined using a trinomial tree which
has been adopted by the Boyle and Law (1994) node alignment algorithm to improve accuracy, with the following inputs:
Fair value inputs
CEO
Senior management
Other employees
Grant date
Vesting date
Share price at grant date
Fair value estimate at grant date
Expected share price volatility (%)
Expected dividend yield (%)
Expected risk-free rate (%)
24 November 2017
1 July 2020
4.40
3.09
52
1.14
1.90
29 September 2017
1 July 2020
3.46
2.41
52
1.45
2.12
29 September 2017
1 July 2020
3.46
2.41
52
1.45
2.12
The share-based payments expense included in profit or loss for the year totalled $3,266,876 (2017: $1,147,168).
Vesting of share rights
Vesting of the performance rights granted to executive directors and executives during the year is based on two equally
weighted performance hurdles as follows:
•
•
Relative TSR; and
Absolute TSR.
Relative TSR
The relative 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.
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%
Independence Group NL
51
IGO ANNUAL REPORT 2018 — 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
26 Share-based payments (continued)
Vesting of share rights (continued)
The Company's TSR performance for share rights issued during the current financial year will be assessed against the
following members of the S&P ASX 300 Metals and Mining Index:
Peer companies
* Beadell Resources Ltd
* Alacer Gold Corp
* MACA Ltd
* Orocobre Ltd
* Saracen Mineral Holdings Ltd
* St Barbara Ltd
* Dacian Gold Ltd
* BHP Billiton Ltd
* Western Areas Ltd
* Rio Tinto Ltd
* Newcrest Mining Ltd
* Iluka Resources Ltd
* Syrah Resources Ltd
* Sandfire Resources Ltd
* OZ Minerals Ltd
* Northern Star Resources Ltd
* Metals X Ltd
* BlueScope Steel Ltd
* Mineral Resources Ltd
Absolute TSR
* Silver Lake Resources Ltd
* Ausdrill Ltd
* Regis Resources Ltd
* Resolute Mining Ltd
* Westgold Resources Ltd
* Galaxy Resources Ltd
* OceanaGold Corp
* Pilbara Minerals Ltd
* Alumina Ltd
* Evolution Mining Ltd
* Sims Metals Management Ltd
* Magnis Resources Ltd
* Lynas Corp Ltd
* Fortescue Metals Group Ltd
* Perseus Mining Ltd
* Gold Road Resources Ltd
* South32 Ltd
* Doray Minerals Ltd
The absolute TSR scorecard for the three year measurement period will be determined based on an increase in absolute
TSR of the Company over the three year measurement period.
The vesting schedule of the performance rights subject to absolute TSR testing is as follows:
Absolute TSR performance
10% per annum return
Above 10% per annum and below 20% per annum return
Above 20% per annum return
Level of vesting
3%
Straight line pro-rata between 33% and 100%
10%
Service rights - short-term incentive scheme
Under the Group's short-term incentive (STI) scheme, Executives and selected employees receive 50% of the annual STI
achieved in cash and 50% in the form of rights to deferred shares in Independence Group NL (referred to as service rights).
The service rights are granted following the determination of the STI for the performance year and vest in two equal
tranches. The first tranche of 50% vests on the 12 month anniversary of the STI award date, and the second tranche of 50%
vests on the 24 month anniversary of the STI award date.
The service rights automatically convert into one ordinary share each on vesting at an exercise price of nil. The Executives
and employees do not receive any dividends and are not entitled to vote in relation to the service rights during the vesting
period. If an Executive or employee ceases to be employed by the Group within the vesting period, the service rights will be
forfeited, except in circumstances that are approved by the Board on a case-by-case basis.
The number of rights to be granted is determined based on the 5 day VWAP of the Company's shares after release of the
Independence Group NL financial statements.
Set out below are summaries of movements in service rights during the year:
Independence Group NL
52
116 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 26 Share-based payments (continued)
Vesting of share rights (continued)
Service rights - short-term incentive scheme (continued)
Outstanding at the beginning of the year
Rights issued during the year
Rights vested during the year
Rights lapsed during the year
Outstanding at the end of the year
Employee Share Ownership Award
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
Number of
share rights
Weighted
average fair
value
-
423,357
(99,560)
(33,595)
290,202
-
3.51
3.51
3.51
3.51
In accordance with the terms of the EIP, the Employee Share Ownership Award (ESOA) provides for shares to be issued by
the Company to employees for no cash consideration. All employees (excluding executive directors, senior management
and other employees entitled to participate in the LTI scheme and non-executive directors) who have been continuously
employed by the Group for a period of at least three months prior to 1 July are eligible to participate in the ESOA.
Under the ESOA, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in Independence
Group NL annually for no cash consideration. The number of shares issued to participants in the scheme is the offer amount
divided by the weighted average price at which the Company's shares are traded on the Australian Securities Exchange for
the 20 days up to and including the date of grant.
Number of shares issued under the plan to participating employees
2018
Number
76,452
2017
Number
48,443
Each participant was issued with shares worth $1,000 based on the weighted average market price of $3.61 (2017: $3.97).
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 EIP is subject to, and conditional upon, compliance with
the Company’s employee share trading policy.
Non-executive Directors
The EIP 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 EIP and any such issue would be
subject to all necessary shareholder approvals.
(b) Recognition and measurement
Equity-settled transactions
The fair values of equity settled awards are recognised in share-based payments expense, together with a corresponding
increase in share-based payments reserve within 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 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).
Independence Group NL
53
IGO ANNUAL REPORT 2018 — 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
26 Share-based payments (continued)
(b) Recognition and measurement (continued)
Equity-settled transactions (continued)
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.
Upon the settlement of equity settled share awards, the balance of the share-based payments reserve relating to those
rights and awards is transferred to share capital. The dilutive effect, if any, of outstanding rights is reflected as additional
share dilution in the computation of diluted earnings per share.
27 Related party transactions
(a) Transactions with other related parties
No dividends were paid by wholly-owned subsidiaries to Independence Group NL during the year (2017: $33,000,000). Any
such amounts are 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.
(b) Key management personnel
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2018
$
4,335,929
245,536
62,033
1,357,043
6,000,541
2017
$
4,278,428
302,954
70,196
709,746
5,361,324
Detailed remuneration disclosures are provided in the remuneration report on pages 46 to 62.
Independence Group NL
54
118 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
28 Parent entity financial information
(a) Summary financial information
The following information relates to the parent entity, Independence Group NL, at 30 June.
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Acquisition reserve
Hedging reserve
Share-based payments reserve
Accumulated losses
Total equity
Profit for the year
Other comprehensive income for the period
Total comprehensive income for the year
(b) Guarantees entered into by the parent entity
2018
$'000
2017
$'000
183,409
1,900,297
2,083,706
80,027
153,744
233,771
82,428
2,005,009
2,087,437
75,790
204,385
280,175
1,849,935
1,807,262
(1,849,935)
(1,807,262)
1,879,094
1,878,469
-
464
13,340
(42,963)
3,142
(66)
10,698
(84,981)
1,849,935
1,807,262
2018
$'000
50,612
531
51,143
2017
$'000
45,598
1,256
46,854
The parent entity has no unsecured guarantees in respect of finance leases of subsidiaries (2017: $nil).
There are cross guarantees given by Independence Group NL, Independence Long Pty Ltd, Independence Nova Holdings
Pty Ltd and Independence Nova Pty Ltd as described in note 29. 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 2018 or 30 June 2017.
(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 2018 or 30 June 2017.
Independence Group NL
55
IGO ANNUAL REPORT 2018 — 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
28 Parent entity financial information (continued)
(e) Recognition and measurement
The financial
statements, except as set out below.
information for the parent entity has been prepared on the same basis as the consolidated financial
(i)
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries entities are accounted for at cost in the financial statements of Independence Group NL.
(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.
29 Deed of cross guarantee
Independence Group NL, Independence Long Pty Ltd, Independence Nova Holdings Pty Ltd and Independence Nova Pty
Ltd 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 ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (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 Legislative Instrument, 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 2018 of the closed group consisting of Independence Group
NL, Independence Long Pty Ltd, Independence Jaguar Pty Ltd, Independence Nova Holdings Pty Ltd and Independence
Nova Pty Ltd.
Independence Group NL
56
120 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
29 Deed of cross guarantee (continued)
(a) Consolidated statement of profit or loss and other comprehensive income (continued)
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
Exploration costs expensed
Royalty expense
Ore tolling expense
Shipping and wharfage expense
Borrowing and finance costs
Impairment of exploration and evaluation expenditure
Impairment and forgiveness of loans to subsidiaries
Acquisition and other integration costs
Other expenses
Profit before income tax
Income tax expense
Profit after income tax for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Effective portion of changes in fair value of cash flow hedges, net of tax
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Summary of movements in consolidated retained earnings
Retained earnings (accumulated losses) at the beginning of the financial year
Profit for the year
Dividends paid
Transfer from acquisition reserve
Retained earnings at the end of the financial year
(b) Consolidated balance sheet
2018
$'000
777,935
2,600
(241,302)
(88,795)
(3,267)
(587)
(234,845)
(22,695)
(30,489)
(8,776)
(19,787)
(10,302)
-
(21,718)
-
(9,465)
88,507
(36,711)
51,796
1,784
1,784
53,580
2018
$'000
5,846
51,796
(11,736)
3,142
49,048
2017
$'000
421,861
-
(146,135)
(64,740)
(1,147)
4,362
(85,740)
(17,155)
(14,391)
(9,606)
(12,092)
(1,005)
(492)
793
(3,910)
(11,037)
59,566
(18,802)
40,764
241
241
41,005
2017
$'000
(17,317)
40,764
(17,601)
-
5,846
Set out below is a consolidated balance sheet as at 30 June 2018 of the closed group consisting of Independence Group
NL, Independence Long Pty Ltd, Independence Nova Holdings Pty Ltd and Independence Nova Pty Ltd.
Independence Group NL
57
IGO ANNUAL REPORT 2018 — 121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 29 Deed of cross guarantee (continued)
(b) Consolidated balance sheet (continued)
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
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
Notes to the consolidated financial statements
30 June 2018
(continued)
2018
$'000
2017
$'000
136,276
81,238
45,247
22,376
1,990
287,127
29,485
14,140
1,250,298
34,600
203,995
161,581
343,416
2,037,515
35,215
56,354
22,900
15,339
657
130,465
4
22,726
1,409,430
39,850
247,576
161,581
311,457
2,192,624
2,324,642
2,323,089
107,284
56,226
-
5,324
168,834
84,589
-
41,528
86,816
212,933
66,495
56,226
965
15,259
138,945
140,815
251
52,916
92,398
286,380
381,767
425,325
1,942,875
1,897,764
1,879,094
14,733
49,048
1,942,875
1,878,469
13,449
5,846
1,897,764
Independence Group NL
58
122 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
30 Remuneration of auditors
The auditor of Independence Group NL is BDO Audit (WA) Pty Ltd.
Amounts received or due and receivable by BDO Audit (WA) Pty Ltd for:
Audit and review of financial statements
Other services in relation to the entity and any other entity in the consolidated Group
2018
$
2017
$
189,500
20,500
210,000
165,500
37,338
202,838
31 Summary of significant accounting policies
(a) New and amended standards and interpretations adopted by the Group
A number of new or amended standards became applicable for the current reporting period, however, the Group did not
have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
The Group has not elected to early adopt any new standards or amendments during the current financial year.
(b) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2018
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.
Mandatory application
date/ Date of adoption by
group
Mandatory for financial
years commencing on or
after 1 January 2018, but
available for early adoption
Expected date of adoption
by the group: 1 January
2018.
Title of
standard
AASB 15
Revenue from
Contracts with
Customers
Nature of change
Impact
This standard is not expected to have a
material impact on the Group's financial
statements and disclosures.
The AASB has issued a
new standard for the
recognition of revenue. This
will replace AASB 118
which covers revenue
arising from the sale of
goods and the rendering of
services and AASB 111
which covers construction
contracts.
The new standard is based
on the principle that
revenue is recognised
when control of a good or
service transfers to a
customer.
The standard permits either
a full retrospective or a
modified retrospective
approach for the adoption.
Independence Group NL
59
IGO ANNUAL REPORT 2018 — 123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 31 Summary of significant accounting policies (continued)
(b) New standards and interpretations not yet adopted (continued)
Notes to the consolidated financial statements
30 June 2018
(continued)
AASB 16
(issued
February 2016)
Leases
AASB 16 eliminates the
operating and finance lease
classifications for lessees
currently accounted for
under AASB 117 Leases. It
instead requires an entity to
bring most leases into its
statement of financial
position in a similar way to
how existing finance leases
are treated under AASB
117. An entity will be
required to recognise a
lease liability and a right of
use asset in its statement of
financial position for most
leases.
There are some optional
exemptions for leases with
a period of 12 months or
less and for low value
leases.
Lessor accounting remains
largely unchanged from
AASB 117.
To the extent that the entity, as lessee,
has significant leases outstanding at the
date of initial application, 1 July 2019,
right-of-use assets will be recognised
for the amount of the unamortised
portion of the useful life, and lease
liabilities will be recognised at the
present value of the outstanding lease
payments.
Mandatory for financial
years commencing on or
after 1 January 2019, but
available for early adoption
Expected date of adoption
by the group: 1 January
2019.
Thereafter, earnings before interest,
depreciation, amortisation and tax
(EBITDA) will increase because lease
expenses currently included in EBITDA
will be recognised instead as
amortisation of the right-of-use asset,
and interest expense on the lease
liability. However, there will be an
overall reduction in net profit before tax
in the early years of a lease because
the amortisation and interest charges
will exceed the current straight-line
expense incurred under AASB 117
Leases. This trend will reverse in the
later years.
Operating cash flow and free cash flow
will likely increase due to the lease
repayments being classified as finance
cash flows.
There will be no change to the
accounting treatment for short-term
leases less than 12 months and leases
of low value items, which will continue
to be expensed on a straight-line basis.
The Group is currently assessing the
potential impact of the adoption of this
standard. Work undertaken to date in
preparedness for compliance with the
new standard has commenced and
includes the identification and analysis
of the many potential contracts that are
likely to contain a lease (as newly
defined). The range of relevant
contracts will potentially include mining
services, drill rig hire, logistics, power
generation and property leases.
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
60
124 — IGO ANNUAL REPORT 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 Notes to the consolidated financial statements
30 June 2018
(continued)
31 Summary of significant accounting policies (continued)
(c) Other significant accounting policies
(i) 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
value of
liabilities incurred and the equity interests issued by the Group. The consideration
transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary.
the assets transferred,
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.
(ii)
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
the carrying amount may not be
tested for impairment whenever events or changes in circumstances indicate that
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 that suffered an impairment are reviewed for possible reversal of the impairment at
the end of each reporting period.
Independence Group NL
61
IGO ANNUAL REPORT 2018 — 125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2018 DIRECTORS’ DECLARATION
30 JUNE 2018
Directors' declaration
30 June 2018
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 66 to 125 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 2018 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 29 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 29.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Peter Bradford
Managing Director
Perth, Western Australia
Dated this 28th day of August 2018
Independence Group NL
62
126 — IGO ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR'S REPORT
To the members of Independence Group NL
To the members of Independence Group NL
Report on the Audit of the Financial Report
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Independence Group NL (the Company) and its subsidiaries (the
Opinion
Group), which comprises the consolidated balance sheet as at 30 June 2018, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
We have audited the financial report of Independence Group NL (the Company) and its subsidiaries (the
equity and the consolidated statement of cash flows for the year then ended, and notes to the
Group), which comprises the consolidated balance sheet as at 30 June 2018, the consolidated
financial report, including a summary of significant accounting policies and the directors’ declaration.
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, and notes to the
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
financial report, including a summary of significant accounting policies and the directors’ declaration.
Act 2001, including:
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
(i)
Act 2001, including:
financial performance for the year ended on that date; and
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
financial performance for the year ended on that date; and
Basis for opinion
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
(ii)
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Basis for opinion
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
Report section of our report. We are independent of the Group in accordance with the Corporations
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
with the Code.
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
We confirm that the independence declaration required by the Corporations Act 2001, which has been
with the Code.
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
time of this auditor’s report.
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key audit matters
for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in
Key audit matters
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
Key audit matters are those matters that, in our professional judgement, were of most significance in
a separate opinion on these matters.
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
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
IGO ANNUAL REPORT 2018 — 127
the acts or omissions of financial services licensees
INDEPENDENT AUDITOR’S REPORT
Carrying Value of Mine Properties
Key audit matter
How the matter was addressed in our audit
Refer to Note 14 of the financial statements,
for disclosure over the mine properties asset.
Our work included, but was not limited, to the
following procedures:
The carrying value of mine properties is
impacted by various key estimates and
judgements in particular:
(cid:120) Ore Reserves and estimates;
(cid:120)
(cid:120)
(cid:120)
Amortisation rates;
Capitalisation and attribution of mining
costs; and
Life of mine average stripping ratio.
The Group is also required to assess for
indicators of impairment at each reporting
period. The assessment of impairment
indicators in relation to the mine assets
requires management to make significant
accounting judgements and estimates which
includes discount rates, commodity price and
Ore reserve estimates.
This is a key audit matter due to the quantum
of the asset and the significant judgement
involved in management’s assessment of the
carrying value of mine properties.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Reviewing management’s amortisation
models, including agreeing key inputs to
supporting information;
Assessing the competency and objectivity of,
and work performed by, management’s
experts in respect of the ore reserve
estimates;
Assessing management’s judgements over
capitalisation of development costs of
underground mining at Nova, and whether
the recognition of the deferred stripping
assets was consistent with the requirements
of IFRIC 20 for Tropicana;
Evaluating and challenging management’s
assessment of indicators of impairment under
the Australian Accounting Standards for the
mining assets by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Comparing the carrying amount of the
Group’s net assets against the
market capitalisation, both as at 30
June 2018, and subsequent movements;
Considering commodity price
assumptions at 30 June 2018, including
forecasts;
Reviewing board and sub-committee
meeting minutes, and holding discussions
with key management, including non-
finance personnel; and
Assessing economic indicators for
impacts on appropriate discount rates.
We also assessed the adequacy of related
disclosures in Note 14 to the financial statements.
128 — IGO ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Valuation of Inventory
Key audit matter
How the matter was addressed in our audit
We consider accounting for inventory to be a key
audit matter because of the:
Our work included but was not limited to the
following procedures:
(cid:120) Quantitative significance of the inventory
balance;
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Complexity involved in determining
inventory quantities on hand due the
assumptions used such as grades, volumes
and densities;
Significant judgement in applying an
appropriate costing methodology in
accordance with the Group’s accounting
policy and estimates for calculating
stockpiles and concentrate on hand;
Judgemental aspect of the carrying amount
of the non-current stockpile at Tropicana;
and
Significant judgements made in determining
net realisable value, including estimating
the future sales price of commodities, less
any estimated costs to complete production.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Testing the controls over the appropriate
allocation of costs to ensure that they are
absorbed into inventory accurately;
Reconciling ore stockpile and concentrate
inventory balances held at 30 June 2018 to
supporting documentation;
Verifying the physical inputs included in the
cost models as at 30 June 2018 to stockpile
survey and technical reports;
Assessing the competence and objectivity of
the experts used by management in the
preparation of stockpile surveys;
Assessing the methodology applied by
management to record all appropriate costs
into the calculation of inventories on hand;
and
Testing the net realisable value by assessing
management’s calculation including:
Refer to Note 9 for the detailed disclosures which
include the related accounting policies, including
a description of the major estimates management
are required to make.
(cid:120)
(cid:120)
(cid:120)
Future commodity pricing;
Expected cost to complete; and
In the case of the non-current stockpile
at Tropicana, a review of
management’s plans to blend the low
grade stockpile with future high grade
production over several years.
We also assessed the adequacy of related
disclosures in Note 9 to the financial
statements.
IGO ANNUAL REPORT 2018 — 129
INDEPENDENT AUDITOR’S REPORT
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
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
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 46 to 62 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Independence Group NL, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
130 — IGO ANNUAL REPORT 2018
Responsibilities
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.
BDO Audit (WA) Pty Ltd
Glyn O'Brien
Director
Perth, 28 August 2018
IGO ANNUAL REPORT 2018 — 131
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 10 August 2018.
1. SHAREHOLDING
a. Distribution of shareholders
RANGE
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – Over
Total
TOTAL HOLDERS
UNITS
% OF ISSUED CAPITAL
3,624
2,904
1,013
997
126
8,664
1,326,881
7,553,086
7,625,774
25,445,362
548,379,590
590,330,693
0.22
1.28
1.29
4.31
92.89
100
b. The number of shareholders holding less that a marketable parcel of fully paid ordinary shares is 1,155.
c. The Company has received the following notices of substantial shareholding (Notice):
SUBSTANTIAL SHAREHOLDER
Ausbil Investment Management Limited
Commonwealth Bank of Australia
T. Rowe Price Associates, Inc.
FIL Limited
Mark Creasy and Creasy Group entities
RELEVANT INTEREST PER THE NOTICE – NUMBER OF SHARES
30,311,742
35,735,668
48,341,790
50,715,214
95,562,917
d. Voting rights: The voting rights of the fully paid ordinary shares are one vote per share held.
2. TWENTY LARGEST HOLDERS OF ORDINARY SHARES
ORDINARY SHAREHOLDERS
NO. OF SHARES HELD
PERCENTAGE HELD
1
J P MORGAN NOMINEES AUSTRALIA LIMITED
2 HSBC CUSTODY NOMINEES LIMITED
3 NATIONAL NOMINEES LIMITED
4 CITICORP NOMINEES PTY LIMITED
5 YANDAL INVESTMENTS PTY LTD
6
FRASERX PTY LTD
7 BNP PARIBAS NOMINEES PTY LTD
8 YANDAL INVESTMENTS PTY LTD
9 PONTON MINERALS PTY LTD
10 FREE CI PTY LTD
10 LAKE RIVERS GOLD PTY LTD
12 BNP PARIBAS NOMS PTY LTD
13 HSBC CUSTODY NOMINEES LIMITED
14 PERTH SELECT SEAFOODS PTY LTD
15 CITICORP NOMINEES PTY LIMITED
16 UBS NOMINEES PTY LTD
17 PERTH SELECT SEAFOODS PTY LTD
18 XNI PTY LTD
19 UBS NOMINEES PTY LTD
20 MR KENNETH JOSEPH HALL
Top 20 holders of Independence Ordinary Share Class (Total)
Total Remaining Holders Balance
3. UNQUOTED SECURITIES
151,222,403
137,807,620
46,724,222
43,580,087
30,966,218
13,415,188
13,046,455
12,500,000
12,046,611
10,964,531
10,964,531
8,820,257
5,103,994
2,837,200
2,405,097
2,360,655
2,166,800
2,013,329
1,881,464
1,847,830
512,674,492
77,656,201
25.62
23.34
7.91
7.38
5.25
2.27
2.21
2.12
2.04
1.86
1.86
1.49
0.86
0.48
0.41
0.40
0.37
0.34
0.32
0.31
86.85
13.15
IGO has 1,481,734 performance rights and 284,678 service rights on issue. The number of beneficial holders of performance
rights and service rights are 64 and 28 respectively.
132 — IGO ANNUAL REPORT 2018
ADDITIONAL ASX INFORMATION SHAREHOLDER REPORTING TIMETABLE
IMPORTANT DATES
Please note that the dates below are subject to change.
Please check the IGO website nearer the time to confirm dates.
2018
29 October 2018
September Quarterly Activities Report
29 October 2018
Investor Webcast
23 November 2018
Annual General Meeting to be held in Perth, Western Australia
2019
31 January 2019
December Quarterly Activities Report
31 January 2019
Investor Webcast
18 February 2019
Half Yearly Financial Statements
18 February 2019
Investor Webcast
29 April 2019
29 April 2019
31 July 2019
31 July 2019
March Quarterly Activities Report
Investor Webcast
June Quarterly Activities Report
Investor Webcast
IGO ANNUAL REPORT 2018 — 133
GLOSSARY OF TERMS
GLOSSARY OF TERMS
AC
AGAA
Ag
Au
BCM
Co
Cu
EBITDA
EM
air core usually in the context of drilling or drill holes
AngloGold Ashanti Australia
silver
gold
bulk cubic metres
cobalt
copper
Underlying Earnings Before Interest, Tax, Depreciation and Amortisation
electromagnetic
EM conductors
electromagnetic conductors returned from EM surveys
FLEM
HPGR
HPM
IGO
LTIFR
MLEM
Mt
Mtpa
NPAT
Ni
oz
Fixed-Loop electromagnetic
High Pressure Grinding Rolls
high precious metal
Independence Group NL
lost time injury frequency rate per million hours worked
moving-loop electromagnetic surveys
million metric tonnes
million tonnes per annum
Net Profit After Tax
nickel
ounce
RC drilling
reverse circulation drilling
t
metric tonnes
Tropicana Operation
Tropicana Gold Mine that is 30% owned by the Company and 70% owed by AngloGold Ashanti under the TJV agreement
TJV
Zn
$
$M
Tropicana Joint Venture that is 30% owned by the Company and 70% owed by AngloGold Ashanti
zinc
Australian dollars. All currency amounts in this report are Australian Dollars unless otherwise stated
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 EBITDA is a non-IFRS measure and comprises net profit or loss after tax, adjusted to exclude tax expense, finance
costs, interest income, asset impairments, gain on sale of subsidiary, redundancy and restructuring costs, depreciation and
amortisation, and once-off transaction costs.
CURRENCY
All currency amounts in this report are Australian Dollars unless otherwise stated.
ALL-IN SUSTAINING COSTS (AISC) PER OUNCE OF GOLD SOLD
IGO reports All-in Sustaining Costs (AISC) per ounce of gold sold 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.
134 — IGO ANNUAL REPORT 2018
COMPANY DIRECTORY
DIRECTORS
PETER BILBE
Non-Executive Chairman
PETER BRADFORD
Managing Director and CEO
DEBRA BAKKER
Non-Executive Director
PETER BUCK
Non-Executive Director
GEOFFREY CLIFFORD
Non-Executive Director
KEITH SPENCE
Non-Executive Director
NEIL WARBURTON
Non-Executive Director
MANAGEMENT
PETER BRADFORD
Managing Director and CEO
KEITH ASHBY
Head of SHEQ & Risk
KATE BARKER
Legal Counsel
MATT DUSCI
Chief Operating Officer
ANDREW EDDOWES
Head of Corporate Development
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
Website
contact@igo.com.au
www.igo.com.au
EXTERNAL AUDITOR
BDO AUDIT (WA) PTY LTD
38 Station Street
Subiaco, WA 6008
AUSTRALIA
Office +61 8 6382 4600
SHARE REGISTRY
COMPUTERSHARE INVESTOR SERVICES PTY LIMITED
Level 11,
172 St Georges Terrace
Perth WA 6000
Telephone 1300 850 505 (within Australia),
+61 3 9415 4000 (outside Australia)
Facsimile +61 3 9473 2500
Email
Web
www.investorcentre.com/contact
www.computershare.com
JOANNE MCDONALD
Company Secretary & Head of Corporate Affairs
SHARES
SAM RETALLACK
Head of People & Culture
IAN SANDL
General Manager Exploration
SCOTT STEINKRUG
Chief Financial Officer & Joint Company Secretary
LISTED ON AUSTRALIAN SECURITIES EXCHANGE (ASX)
ASX code: IGO
Shares on issue: 590,330,693 ordinary shares
WEBSITE
Through the use of the internet, we have ensured that our
corporate reporting is timely, complete and available at
minimum cost to the Company. All ASX releases, investor
presentations, financial statements and other information are
available on our website.
www.igo.com.au
IGO ANNUAL REPORT 2018 — 135
CAUTIONARY NOTES AND DISCLAIMER
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 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 publicly 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.
The information in this annual report that relates to Exploration Results is extracted from the ASX announcements released on 26 July 2018 entitled ‘2018
Mineral Resources and Ore Reserves Update’ and 18 September 2017 entitled ‘Lake Mackay JV – Grapple Prospect Drilling Update’ and for which Competent
Person’s consents were obtained. The Competent Person’s consents remain in place for subsequent releases by the Company of the same information in the
same form and context, until the consent is withdrawn or replaced by a subsequent report and accompanying consent.
The information in this annual report that relates to Mineral Resources or Ore Reserves is extracted from the Mineral Resource and Ore Reserve Statement
released to the Australian Securities Exchange on 26 July 2018 and for which Competent Person’s consents were obtained. The Competent Person’s consents
remain in place for subsequent releases by the Company of the same information in the same form and context, until the consent is withdrawn or replaced by
a subsequent report and accompanying consent.
The Company confirms that it is not aware of any new information or data that materially affects the information included in the original ASX announcements
released on 26 July 2018 and 18 September 2017 and, in the case of estimates or Mineral Resources or Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the original ASX announcement continue to apply and have not materially changed. The Company confirms that the
form and context in which the Competent Person’s findings are presented have not been materially modified from the original ASX announcement.
136 — IGO ANNUAL REPORT 2018
igo.com.au