IGO Interactive Annual Report 2020

DIRECTORS’ REPORT 30 JUNE 2020 with the Boston Shaker Underground Mine expected to deliver first gold production in the September 2020 quarter. The processing plant, utilising conventional crushing, grinding and CIL (carbon-in-leach) recovery technology, was originally designed with a nameplate capacity of 5.8 million tonnes of fresh ore per annum and this was achieved in March 2014. In 2016 and 2017, an optimisation project increased the 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 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. On 1 November 2019, IGO announced the completion of the Downstream Nickel Sulphate Study (the Study), a prefeasibility study on the technical and financial merits of converting nickel sulphide concentrate into high-quality nickel sulphate. Highlights from the Study included validation of the new and patented process (The IGO Process™), which demonstrated extremely high metal recoveries, an environmentally friendly process and low production costs. While this testwork provided greater confidence that The IGO Process™ has the ability to produce battery grade nickel sulphate for the premium energy storage market, as a parallel workstream the Company was able to deliver materially improved offtake contract terms from the high-quality nickel concentrate produced at Nova Operation. As a result of the improvement in offtake terms, IGO decided not to progress the Study into a detailed feasibility study stage and instead maximised value through entering into traditional concentrate offtake agreements. IGO remains committed to vertical integration aligned to the Company’s strategy and is exploring partnership opportunities both domestically and overseas to leverage the technology it has developed. 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 • Nova Near-mine (nickel-copper-cobalt) – The exploration drilling program around the Nova Operation continued to test targets generated from the high-resolution 3D seismic survey completed during FY18. Drilling targets included 3D seismic features on the mining lease, interpreted to be mafic-ultramafic (M-UM) intrusions up to 30km from the mining lease. Drill targets continue to be generated and several targets will be tested over the first quarter of FY21. • Tropicana Operation (gold) – Exploration drilling during the year focused on resource development drilling at the Havana pit and the Boston Shaker underground. Regional exploration drilling of a number of targets was also progressed. Greenfields Exploration • Fraser Range (nickel-copper-cobalt) - The Company continued to strengthen its position in the prospective Fraser Range through new joint venture agreements, new tenement applications and the relinquishment of non-core tenements, and at year end had total tenement holdings of approximately 11,960km 2 . During the year, aircore (AC) and diamond core drilling continued to systematically advance exploration targets. Geophysics and AC drilling crews shifted focus from systematic regional exploration work punctuated with targeted diamond drilling programs, to more focused exploration programs where infill AC drilling and electromagnetic (EM) surveys are following up coincident geophysical, geochemical and geological anomalies identified over the past 18 months, to generate new diamond drill targets. The EM teams had a particularly successful last quarter of the year, identifying six new targets that will be drill tested during FY21. The Company identified approximately 50 high-priority AC targets characterised by having the combination of the right rock types (i.e. similar in appearance and geochemistry to Nova) and anomalous nickel-copper- cobalt geochemistry. More than 100 other targets are characterised by having either the right rock types or anomalous geochemistry. The Company plans to follow-up these targets with >100,000m of AC drilling in FY21. • Kimberley (nickel-copper-cobalt) – The Kimberley Project is targeting Nova-style nickel-copper-cobalt sulphide mineralisation in the Paleoproterozoic belts of the West and East Kimberley. IGO holds tenure and rights to tenure over 5,166km 2 in various joint ventures where IGO can earn interests ranging from 64% to 85%. IGO also holds 8,081km 2 of tenure on a 100% basis for a total project area of 13,250km 2 . Planned exploration in FY20 was impacted by COVID-19, however as restrictions have eased, airborne geophysical surveys (magnetics and radiometrics) have recommenced. Geological, ground geophysical and drilling programs are planned for FY21, including at the advanced Merlin Prospect, where previous drilling by Buxton Resources Limited intersected massive nickel-copper-cobalt sulphide mineralisation. Approval was also received for EIS funding for RC drill targets generated in the adjoining Quick Shears and Fire Ant target areas. • Lake Mackay (copper-nickel-cobalt, gold) – During the prior year, IGO completed the initial earn-in expenditure component under the terms of a Farm-in and Exploration Joint Venture Agreement to trigger the formation of the unincorporated Lake Mackay Joint Venture (IGO: Manager, 70% interest). The Lake Mackay Project is 400km northwest of Alice Springs and comprises approximately 15,630km 2 of tenements prospective for copper, nickel, cobalt and gold. The 2020 field season and drilling program was postponed due to COVID-19 restrictions. Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of IGO Limited (referred to hereafter as IGO or the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2020. DIRECTORS The following persons held office as Directors of IGO Limited during the whole of the financial year and up to the date of this report, unless otherwise noted: Peter Bilbe Peter Bradford Debra Bakker Kathleen Bozanic* Peter Buck Geoffrey Clifford** Keith Spence Neil Warburton * Kathleen Bozanic was appointed a Non-executive Director on 3 October 2019 and continues in office at the date of this report. ** Geoffrey Clifford was a Non-executive Director from the beginning of the financial year until his retirement on 20 November 2019. 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 and ongoing mineral exploration in Australia and overseas. DIVIDENDS Dividends paid to members during the financial year were as follows: 2020 $’000 2019 $’000 Final ordinary dividend for the year ended 30 June 2019 of 8.0 cents (2018: 2.0 cents) per fully paid share 47,264 11,809 Interim ordinary dividend for the year ended 30 June 2020 of 6.0 cents (2019: 2.0 cents) per fully paid share 35,448 11,810 82,712 23,619 In addition to the above dividends, since the end of the financial year the Company has announced the payment of an unfranked final ordinary dividend of $29,540,000 (5.0 cents per fully paid share) to be paid on 25 September 2020. OPERATING AND FINANCIAL REVIEW This review should be read in conjunction with the financial statements and the accompanying notes. COMPANY OVERVIEW IGO Limited (‘IGO’ or ‘the Company’) is a leading ASX-listed mining and exploration company with a strategic focus on metals that are critical to energy storage and renewable energy. Headquartered in Perth, Western Australia, IGO owns 100% of the Nova nickel-copper-cobalt operation in Western Australia’s Fraser Range region and 30% of the Tropicana Gold Mine, a Joint Venture with AngloGold Ashanti Australia (AGAA) in WA’s goldfields region. IGO has a strong purpose of Making a Difference and is an active participant in the local community. The Company is actively pursuing growth through a combination of exploration – to discover the mines of the future – and disciplined corporate activity to secure opportunities via mergers and acquisitions. The Company listed on the ASX on 17 January 2002, having traded as Independence Gold NL from 17 January 2002 to 19 December 2003 and subsequently Independence Group NL from 19 December 2003 until 17 January 2020. On this date, the Company changed its name to IGO Limited. The Group currently has the following mining and processing operations in production in Western Australia: • The Nova Operation, 100% owned, was acquired as a development stage project via the acquisition of Sirius Resources NL in September 2015. The Nova Operation is located in the Fraser Range, approximately 140km 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. The Nova- Bollinger magmatic nickel-copper deposits are hosted within the lower granulite facies mafic rocks of the Fraser Zone of the Albany-Fraser Orogen. The host rocks of the Nova- Bollinger deposit consist of a suite of meta-gabbroic to meta-picrite cumulates which have been metamorphosed to a high metamorphic grade. These units are interpreted to have been emplaced as a layered sill in an extensional sedimentary basis. The deposit is situated on the north-western side of an eye-like structural feature which is best seen in regional and ground magnetics. In addition, the Nova Operation consists of a processing facility with nameplate production capacity of 1.5 million tonnes per annum that produces a nickel concentrate and a copper/cobalt concentrate, and associated non-processing infrastructure. Commercial production was declared at the Nova Operation on 1 July 2017, and in the subsequent December quarter all process plate nameplate parameters were demonstrated. Nova has since demonstrated steady state production at or above the nameplate 1.5 million tonnes per annum rate throughout FY20 and options to increase throughput consistently beyond the nameplate capacity to maximise production as grade drops over the remaining mine life have progressed. • The Tropicana Operation (IGO 30%; AGAA 70% and operator) 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. Mining is both surface, with production from up to four contiguous open pits extending along the strike length, and more recently underground, Directors’ Report 30 JUNE 2020 42 — IGO ANNUAL REPORT 2020 IGO ANNUAL REPORT 2020— 43