IGO LIMITED — Annual Report 2008

Aug 27, 2008

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28[th] August 2008

Australian Stock Exchange Limited

Company Announcements NO. OF PAGES : (15) Level 10, 20 Bond Street SYDNEY NSW 2000

FINAL DIVIDEND DISTRIBUTION AND PRELIMINARY FINAL RESULTS

FINAL DIVIDEND 2008

Independence Group NL is pleased to announce that a final dividend of 5 cents per share will be paid to shareholders based upon the financial results for the year ending 30 June 2008.

The dividend will be fully franked.

The dividend will be paid on 18[th] September 2008.

The record date to determine dividend entitlements is 8[th] September 2008.

PRELIMINARY FINAL RESULTS

Independence Group NL is pleased to announce a net profit after tax of $51.5million. An estimated and unaudited profit of $51.9 million was provided in the June 2008 Quarterly Report.

Preliminary Final Report information is attached to this announcement.

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CHRISTOPHER BONWICK Managing Director

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HIGHLIGHTS– FINANCIAL YEAR ENDED JUNE 30 2008

• Full-year profit after tax of $51.5 million despite a 35% reduction in realised nickel price & devaluation of listed investments

• Total revenue of $149.1 million reflecting a A$7.61/lb reduction in average spot nickel prices over the year

• 34% decrease on FY’07 ($226.5 million)

• Dividends of 17 cents per share paid during the year (FY’07: 13 cents per share)

• Final ’07 fully franked dividend of 7 cents per share

• One-off ’07 special dividend of 5 cents per share fully franked

• � Interim fully franked FY’08 dividend of 5 cents per share

• Final ’08 fully franked dividend of 5 cents per share announced

• Strong financial position with cash of $145.4 million at year end � 4% decrease on FY’07 ($152.0 million)

• Gross cash flow from operations of $86.6 million � FY’07 ($186.2 million)

• Annual nickel production of 9,275 tonnes at a lower cash operating cost of A$4.12 per payable pound

• FY’07 (9,825 tonnes at A$4.35 per payable pound)

• Initial Tropicana indicated and inferred resources of 4.1 million ounces of gold, which will be updated to include infill and extensional drilling results received since October 2007

Chris Bonwick Managing Director 28 August 2008

Full Year Ended June 30	2008	2007	Inc/(Dec)
Total Revenue	$149.1m	$226.5m	-34%
EBITDA	$72.9m	$158.2m	-54%
Profit Before Tax	$74.2m	$151.1m	-51%
Net Profit After Tax	$51.5m	$105.3m	-51%
Cash Flow From Operating Activities	$45.8m	$162.1m	-72%
Total Assets	$251.8m	$275.6m	-9%
Total Liabilities	$58.9m	$172.7m	-66%
Shareholder’s Equity	$193m	$102.9m	+88%
Return on Equity	27%	102%	-74%
Diluted Earnings Per Share	43.82¢	90.38¢	-52%
Dividend Per Share Paid	17¢	13¢	+31%

T: +61 8 9367 2755

F: +61 8 9367 3288

• E: contact@igo.com.au

W: www.igo.com.au

OPERATIONS

Total production for the year ended June 2008 of 255,988 tonnes (FY’07: 266,442 tonnes) at an average head grade of 3.62% (FY’07: 3.69%) for 9,275 tonnes of nickel metal delivered (FY’07: 9,825 tonnes). Ore was primarily sourced from the Long, McLeay and Victor South orebodies.

Cash costs for the year per payable pound were A$4.12/lb, representing a 5.3% decrease on the previous financial year (FY’07: A$4.35). These costs were tightly controlled during the year despite an escalating capital and operating costs environment that continued to adversely affect the mining industry. A reduction in royalties owing to lower nickel prices also contributed to the reduction in unit cash costs.

Production for the year exceeded budget while cash costs were below budget.

The reserve drillout is ongoing with updated reserves/resources expected to be announced in September 2008. Some ore from the newly discovered Long North 07 Shoot and extension of McLeay Shoot 3 is expected to be included in these estimates.

INCOME STATEMENT

Total revenue for the year decreased by 34% to $149.1 million (FY’07: $226.5 million) due mainly to lower nickel prices over the period.

The 51% decrease in FY’08 net profit to $51.5 million was primarily due to lower spot nickel prices than in FY’07 and a devaluation in the carrying value of listed investments by $5.3 million (FY’07: revaluation of $6.6 million). EBITDA decreased by 54% to $72.9 million (FY’07: $159.5 million).

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The average realised nickel price decreased by 35% to A$11.21/lb in FY’08 from A$17.32/lb in the 2007 fiscal year. This led to an offsetting benefit with the royalty expense declining by 49% to $4.7 million (FY’07: $9.0 million).

Fully diluted earnings per share decreased to 43.8 cents from 90.4 cents in the previous corresponding period.

CASH FLOW STATEMENT

Strong gross cash flow generation from operating activities of $86.6 million prior to interest received and income tax payments, represented a significant decrease over the previous year (FY’07: $186.2 million) mostly due to lower spot nickel prices.

Independence utilised this cash flow to fund:

• dividend distributions of $19.6 million (FY’07: $14.8 million);

• Long and regional exploration of $26.0 million (FY’07: $10.3 million);

• new mining equipment and development expenditure totalling $6.8 million (FY’07: $11 million);

• income tax payment of $51.1 million (FY’07: $27.5 million);

• purchase of mine prospects $4.0 million (FY’07: nil).

The strong cash flow generation and cash balances during the year enabled Independence to earn $10.3 million in interest received (FY’07: $3.1 million).

BALANCE SHEET

Cash and cash equivalents totalled to $145.4 million (FY’07: $152 million) at year-end, with an additional $3.1 million in net receivables, while cash and cash equivalents exceeded interestbearing debt by $144.8 million (FY’07: $150.6 million).

Total interest bearing debt at balance date was $0.6 million, whilst net assets increased to $193.0 million at year-end (FY’07: $102.9 million).

DIVIDEND

During financial year 2008, Independence returned $19.6 million (FY’07: $14.8 million) to shareholders in the form of dividends, comprising:

• final FY’07 fully franked dividend of 7 cents per share (paid September ‘07);

• interim fully franked dividend of 5 cents per share (paid March ‘08); and

• one-off special dividend of 5 cents per share (paid September ‘07).

In addition, Independence today announced a final fully franked dividend for the 2007/8 year of 5 cents per share which will be payable on 18 September 2008 with a record date for determining entitlements of 8 September 2008.

EXPLORATION/DEVELOPMENT

Independence incurred a total of $26 million on exploration and evaluation expenditure during 2007/8. This is the largest annual outlay in the Company’s seven-year history. The majority of this expenditure was directed towards the Long and Tropicana projects.

Ore reserve/resource drilling is continuing at McLeay, Long North and Long, with resource and reserve estimates expected to be released in September 2008.

The discovery during the year of the new Long North 07 Shoot demonstrates the potential of the Long Operation to continue to add to the existing mine life.

The initial open pit mineral resources for the Tropicana Joint Venture (AngloGold Ashanti 70%, IGO 30%) were announced in December 2007 for the Tropicana and Havana zones. Indicated and inferred resources totalled 62.8 million tonnes at 2.01 g/t for 4.1 million ounces of contained gold.

A Pre-feasibility Study is progressing with results anticipated to be announced in the March quarter of 2009 with a base case modelled on a 5.5Mtpa plant for an operation producing in excess of 300,000 ounces of gold per annum over a 9-10 year period.

Ongoing drilling since the resource cut-off date in October 2007 is expected to further increase the project mineral resource base. Numerous other regional targets remain to be tested at the Tropicana project with the aim of defining additional mill feed within an economic trucking distance of the proposed plant site.

A number of other projects where early stage work has returned encouraging exploration results will also be advanced, such as Karlawinda, Holleton, Duketon JV and the Wiluna JV.

OUTLOOK

Independence is focused on continuing to expand the Long nickel mine reserve base and on solid operational performance. Forecast production for financial year 2009 is 230,000 to 250,000 tonnes at 3.8% nickel for production of 8,400 to 8,800 tonnes of contained nickel.

A Pre-feasibility Study at the Tropicana Joint Venture with AngloGold Ashanti Australia Ltd is progressing and is expected to be completed in the March quarter 2009. The Study is focused on open-cut resources at the Tropicana and Havana zones only.

An updated JORC compliant open-cut resource on the Tropicana and Havana Zones is expected to be released with the results of the Pre-feasibility Study. Regional exploration is continuing on the Joint Venture’s 12,500 square kilometre tenement holding.

INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

PRELIMINARY FINAL REPORT INFORMATION – 1 JULY 2007 TO 30 JUNE 2008 LODGED WITH THE ASX UNDER LISTING RULE 4.3A

CONTENTS	PAGE
Key Information – Results for Announcement to the Market ………………..	2
Preliminary Final Report
Review of Operations …………………………………………………………....	3
Consolidated Income Statement ……………………………………………….	4
Consolidated Balance Sheet …………………………………………………...	5
Consolidated Cash Flow Statement …………………………………………....	6
Consolidated Statement of Changes in Equity …………………………………	7
Notes to the Consolidated Financial Statements …………………………………	8

1

INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

PRELIMINARY FINAL REPORT INFORMATION – 1 JULY 2007 TO 30 JUNE 2008 LODGED WITH THE ASX UNDER LISTING RULE 4.3A

Key Information – Results for Announcement to the Market

	$’000	% Increase/(Decrease) over Previous Corresponding Period
Revenue from ordinary activities	149,145	(34%)
Profit from ordinary activities after tax attributable to members	51,538	(51%)
Net profit attributable to members	51,538	(51%)

The previous corresponding period is the year ended 30 June 2007.

	2008	2007
Basic earnings per share (cents)	44.54	92.80
Diluted earnings per share (cents)	43.82	90.38
Net tangible assets per share (cents)	133.08	78.93

The major factor contributing to the above decreases was that spot nickel prices during the 2008 period were significantly lower (by approximately A$16,769/tonne) than in the previous corresponding period.

The Company paid a fully franked interim dividend of 5 cents per share from 2007/8 profits. The Company has announced a fully franked 2007/8 final dividend of 5 cents per share will be paid on 18 September 2008. The record date for determining dividend entitlements is 8 September 2008.

On 8 August 2008 the Company announced an on-market buy-back of up to 11,470,000 of its listed shares.

The Company has a 50% interest in associated company Southstar Diamonds Limited. The investment has been written off in the Company’s financial accounts.

The Company did not gain or lose control over any entity during the period.

The accounts are currently being audited by BDO Kendalls who have advised that the accounts are not likely to be subject to dispute or qualification.

2

Review of Operations

A summary of consolidated revenues and results for the year by significant industry segments is set out below:

below:
Nickel mining Exploration activities Intersegment eliminations Unallocated revenue Unallocated revenue less unallocated expenses Profit from ordinary activities before income tax expense Income tax expense Profit from ordinary activities after income tax expense Loss from extraordinary item after income tax Net profit attributable to members of Independence Group NL	Segment revenues 2008 2007 $’000 $’000 137,665 222,933 - - - - 11,480 3,609	Segment results 2008 2007 $’000 $’000 87,423 160,374 (13,224) (9,259) - - - -
	149,145 226,542	74,199 151,115 - -
		74,199 151,115 (22,661) (45,768)
		51,538 105,347 - -
		51,538 105,347

Comments on the operations and the results of those operations are set out below:

a) Nickel mining

This division consists of Lightning Nickel Pty Ltd’s Kambalda operation, the Long Nickel Mine.

b) Exploration activities

Exploration expenditure is incurred throughout Australia. The exploration activities in the above segment relate to that portion of exploration expenditure incurred on projects for which the company believes no future income is likely to be generated. Expenditure on projects still in the assessment and evaluation stage are capitalised and are not included in this segment.

Profit from ordinary activities before related income tax expense decreased by $76.9 million (50.9%) to $74.2 million.

The major factors contributing to the decrease in profit was that spot nickel prices during the 2008 period were considerably lower (by approximately A$16,769/tonne) than in 2007.

Rounding of amounts to nearest thousand dollars

The company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

3

Consolidated Income Statement For the year ended 30 June 2008

Revenue from operating activities Revenue from outside the operating activities Total revenue Mining and development costs Employee benefits expense Share-based payment expense Revaluation/(devaluation) of listed investments Provision for diminution in loan to associated entity Write off investment in associated entity Depreciation and amortisation expenses Borrowing costs expense Exploration costs expensed Capitalised exploration costs written off Provision for mine rehabilitation Ore tolling costs Royalty expense Other expenses Profit before income tax expense Income tax expense Net profit attributable to members Basic earnings per share Diluted earnings per share	2008 2007 $’000 $’000 137,665 222,933 11,480 3,609
	149,145 226,542 (20,262) (20,714) (18,529) (16,316) (930) (1,336) (5,326) 6,585 (1,325) - (564) - (8,800) (9,956) (106) (226) (1,279) (57) (1,208) (11,360) (417) - (8,913) (8,928) (4,651) (9,040) (2,636) (4,079)
	74,199 151,115 (22,661) (45,768)
	51,538 105,347
	Cents Cents 44.54 92.80 43.82 90.38

The above consolidated income statement should be read in conjunction with the accompanying notes.

4

Consolidated Balance Sheet

As at 30 June 2008

Notes Current assets Cash and cash equivalents Trade and other receivables Inventories Financial assets 3 Total current assets Non-current assets Trade and other receivables Investments in equity accounted investees Property, plant and equipment Exploration and development expenditure 4 Deferred tax assets Mine acquisition and pre-production costs Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Current tax payable Financial liabilities Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital 5 Reserves 6 Retained earnings 6 Total equity	30 June 30 June 2008 2007 $‘000 $‘000 145,384 151,986 22,206 28,130 369 302 18,913 25,456
	186,872 205,874
	25 925 - 564 6,108 8,525 47,501 19,584 9,558 38,243 1,751 1,896
	64,943 69,737
	251,815 275,611
	19,114 15,598 632 1,390 - 31,067 20,722 112,646
	40,468 160,701
	- 521 16,043 9,786 2,347 1,722
	18,390 12,029
	58,858 172,730
	192,957 102,881
	29,481 26,621 (2,156) (57,452) 165,632 133,712
	192,957 102,881

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

5

Consolidated Cash Flow Statement

For the year ended 30 June 2008

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 received Borrowing costs Income tax payment Other income Net cash inflow from operating activities Cash flows from investing activities Payment for purchase of mine prospects Payments for listed investments Proceeds from sale of listed investments Payments for property, plant and equipment Proceeds from sale property, plant and equipment Payments for capitalised development costs Payments for exploration and evaluation expenditure Loans to associated company Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from issues of shares Repayment of borrowings Payment of dividends Net cash (outflow) from financing activities Net increase/(decrease) in cash held Cash and cash equivalents at the beginning of the reporting period Effects of exchange rate changes on cash Cash and cash equivalents at the end of the reporting period	2008 2007 $‘000 $‘000 137,975 240,242 (51,348) (54,035)
	86,627 186,207 10,272 3,082 (106) (226) (51,087) (27,468) 76 527
	45,782 162,122
	(4,000) - (1,140) (855) 3,690 - (2,533) (6,782) 580 - (4,513) (4,231) (26,007) (10,348) (425) (550)
	(34,348) (22,766)
	2,860 2,575 (1,279) (1,296) (19,617) (14,779)
	(18,036) (13,500)
	(6,602) 125,856 151,986 26,130 - -
	145,384 151,986

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

6

Consolidated Statement of Changes in Equity

For the year ended 30 June 2008

CONSOLIDATED	Issued Capital Retained Earnings Other Reserves Total Equity
At 1 July 2006 (Loss) on cashflow hedges Total income and expense for the year recognised directly in equity Profit for the year Total recognised income/expense for the year Cost of share-based payment Exercise of options Issue fully paid shares Equity dividends At 30 June 2007 At 1 July 2007 Profit on cashflow hedges Total income and expense for the year recognised directly in equity Profit for the year Total recognised income/expense for the year Cost of share-based payment Exercise of options Equity dividends At 30 June 2008	$’000 $’000 $’000 $’000 23,076 43,144 (18,291) 47,929 - - (40,497) (40,497)
	- - (40,497) (40,497) - 105,347 - 105,347
	- 105,347 (40,497) 64,850 - 1,336 1,336 2,575 - 2,575 970 - - 970 - (14,779) - (14,779)
	26,621 133,712 (57,452) 102,881
	26,621 133,712 (57,452) 102,881 - - 54,366 54,366
	- - 54,366 54,366 - 51,538 - 51,538
	- 51,538 54,366 105,904 - - 930 930 2,860 - - 2,860 - (19,618) - (19,618)
	29,481 165,632 (2,156) 192,957

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

7

Notes to the Consolidated Financial Statements For the year ended 30 June 2008

Note 1. Segment information

Primary reporting – business segments

Primary reporting – business segments	s	s
Year Nickel mining Exploration activities Inter-segment eliminations/ unallocated Consolidated 2008 $’000 $’000 $’000 $’000 Total segment revenue 137,665 - - 137,665 Unallocated revenue 11,480 Revenue from ordinary activities 149,145 Segment result 87,423 (13,224) - 74,199 Unallocated revenue less unallocated expenses - Profit before income tax expense 74,199 Year 2007 Total segment revenue 222,933 - - 222,933 Unallocated revenue 3,609 Revenue from ordinary activities 226,542 Segment result 160,374 (9,259) - 151,115 Unallocated revenue less unallocated expenses - Profit before income tax expense 151,115 2008 2007 Note 2. Revenue $‘000 $‘000 Revenue from operating activities Sale of goods 137,665 222,933 Revenue from outside operating activities Interest 10,252 3,082 Other revenue 1,228 527 11,480 3,609 Total revenue 149,145 226,542 Note 3. Financial assets Current Foreign exchange gain 9,444 10,352 Investment in Australian listed entities at market value 9,469 15,104 18,913 25,456	Nickel mining Exploration activities Inter-segment eliminations/ unallocated $’000 $’000 $’000 137,665 - -		Consolidated $’000 137,665 11,480
	87,423 (13,224)	-
			149,145
			74,199 -
	222,933 -	-
			74,199
			222,933 3,609
	160,374 (9,259)	-
			226,542
			151,115 -
			151,115
		10,252 3,082 1,228 527
		11,480 3,609
		149,145 226,542
		9,444 10,352 9,469 15,104
		18,913 25,456

8

Notes to the Consolidated Financial Statements

For the year ended 30 June 2008

Note 4. Exploration and development expenditure

Note 4. Exploration and development expenditure
Exploration and evaluation expenditure: Opening balance Current year’s expenditure Written off during the year Amortisation expense Development expenditure: Opening balance Current year’s expenditure Amortisation expense	2008 2007 $‘000 $‘000 12,339 15,753 28,557 11,318 (1,208) (11,360) (2,356) (3,372)
	37,332 12,339
	7,245 4,104 4,512 4,231 (1,588) (1,090)
	10,169 7,245
	47,501 19,584

Note 5. Contributed equity

2008 2007 No. of Shares No. of Shares Issues of ordinary shares during the year ‘000 ‘000 Exercise of options issued under the Independence Group NL Employee Option Plan 931 766 Fully paid shares issued to Goldsearch Ltd - 200 Directors options converted at $1.03 each 650 475 Directors options converted at $1.33 each 375 750 Unlisted options converted at $1.16 each 272 250 Issued and paid up capital Fully paid ordinary shares 116,940 114,712 Partly paid unlisted options - 375 Note 6. Other Information (a) Reconciliation of retained earnings Balance at the beginning of the year Net profit attributable to members of Independence Group NL Total available for appropriation Dividends paid during the year Balance at the end of the year (b) Dividends paid Dividends paid during the year (fully franked) (c) Reserves Share-based payment reserve Hedge reserve	2008 2007 No. of Shares No. of Shares ‘000 ‘000 931 766 - 200 650 475 375 750 272 250	2008 2007 No. of Shares No. of Shares ‘000 ‘000 931 766 - 200 650 475 375 750 272 250	2008 2007 $’000 $’000 1,454 838 - 970 669 489 460 997 316 290
			29,481 26,583 - 38
			29,481 26,621
			2008 2007 $‘000 $‘000 133,712 43,144 51,538 105,347
			185,250 148,491 (19,618) (14,779)
			165,262 133,712
			19,618 14,779
			3,765 2,835 (5,921) (60,287)
			(2,156) (57,452)

9

Notes to the Consolidated Financial Statements For the year ended 30 June 2008

Note 7. Subsequent events

On 29 August 2008 the Company announced a final 2007/8 dividend of 5 cents per share. The dividend will be fully franked and is payable on 18 September 2008. The record date for determining dividend entitlements is 8 September 2008.

On 8 August 2008 the Company announced an on-market buy-back of up to 11,470,000 of its listed shares.

10