IGO Interactive Annual Report 2019

DIRECTORS’ REPORT 30 JUNE 2019 throughput capacity to 7.5 million tonnes per annum by the second half of FY17. In FY18, the Tropicana Joint Venture partners announced the construction of a second 6 mega- watt ball mill. Installation and commissioning of the mill was completed on time and on budget in December 2018, increasing throughput capacity to 8.2 million tonnes per annum in FY19. In March 2019, the Tropicana Joint Venture announced the commitment to the development of the Boston Shaker Underground mine following the successful completion of the Feasibility Study (FS). The FS assessed an underground operation with a mining rate of approximately 1.1Mtpa at estimated grades of 3.5g/t Au to produce approximately 100,000 ounces of gold per annum over a period of seven years based on three years production from Ore Reserves and a further four years from Inferred Mineral Resources. Underground material will displace lower grade open pit material, resulting in an improved gold production profile. Underground development commenced in May 2019 and first gold production is expected during the September 2020 quarter. During the year, the Long Operation located near Kambalda, 60km south of Kalgoorlie, was divested to Mincor Resources NL (Mincor). IGO acquired the Long Operation in 2002 from WMC Resources Ltd. Under IGO’s ownership, the Long Operation remained in continuous production from 2002 until mid-2018 when it was placed on care and maintenance following production of more than 135kt of nickel in ore. Completion of the sale transaction occurred on 31 May 2019. On 2 April 2019, IGO released an update to the work completed to date on the Downstream Nickel Sulphate Study (the Study) to produce high-quality nickel sulphate from nickel sulphide concentrate. This is a new process in respect of which IGO has lodged a patent application (The IGO Process™). Highlights from the work included: • Metal recoveries from bench scale and pilot scale testwork of the Nova nickel-cobalt sulphide concentrate are extremely high, achieving extraction rates exceeding 97% of both the nickel and cobalt. • Based on work completed to date, The IGO Process™ is low cost and well within the lowest quartile of the cost-curve for the integrated production of nickel sulphate. • The IGO Process™ has less impact on the environment compared to the traditional production methods for nickel sulphate, with lower emissions, lower power consumption and less waste generation. Since the initial release, all optimisation workstreams have been initiated and confidence in The IGO Process™ to produce high-quality nickel sulphate from nickel sulphide concentrate has continued to strengthen with further testwork successes. IGO continues to engage with potential partners both in Australia and overseas, including off-take agreements, market sensing and reagent supply opportunities. In addition to its mining operations, the Company is pursuing aggressive growth through its portfolio of high quality belt scale exploration projects across Australia and overseas that prioritise nickel and copper exploration and discovery. EXPLORATION OVERVIEW Exploration and discovery are core to the IGO DNA and a key pillar of our Company growth strategy. To this end, 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 • Tropicana Operation – Exploration drilling during the year concentrated on the Tropicana mining lease (M39/1096) with the focus on extensions to the Mineral Resource, specifically scoping the underground potential at Boston Shaker, Tropicana, Havana North and Havana South. In- pit resource definition drilling was also completed at the Boston Shaker, Havana and Havana South pits. Regional exploration drilling of a number of targets was progressed. • Nova Operation – The exploration drilling program around the Nova Operation continued to test historical and new targets generated from the high-resolution 3D seismic survey that was completed during FY18. Drilling targets included 3D seismic features, interpreted to be mafic-ultramafic (M-UM) intrusions up to 5km from known mineralisation, as well as extensions of sulphide mineralisation within the Nova-Bollinger footprint. During FY19, the Company completed its deepest recorded drill hole at 2,506m at the ‘Hercules’ prospect to test an interpreted M-UM intrusive complex from seismic data. A complex network of interconnected intrusives is being unravelled on the Nova Mining Lease with intrusions such as ‘Elara’ and ‘Hercules’ having many textural and compositional similarities to the Nova Upper Intrusion. The FY19 Nova near-mine exploration program revealed that the Nova orebody is part of a much larger magmatic nickel system than previously apparent. In addition, the Company also continued to screen the tenements adjacent to the Nova Operation for mineralisation using aircore drilling and Low-Temperature SQUID Moving Loop Electromagnetic (MLEM) surveys. Both methods are generating new drill targets. GREENFIELDS EXPLORATION • Fraser Range - The Company strengthened its position in the prospective Fraser Range, through joint venture agreements, tenement applications and relinquishment of non-core tenements and at year-end had total tenement holdings of approximately 14,000 square kilometres. Extensive regional exploration activities continued across the Fraser Range including the completion of the regional Airborne Electromagnetic (AEM) survey by Spectrem Air, which brought the total area covered by the AEM survey to approximately 46,000 line kilometres. Numerous high- quality EM targets were being methodically assessed at the end of the financial year. IGO ANNUAL REPORT 2019 — 37