IGO LIMITED — Annual Report 2012

Aug 29, 2012

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29 August 2012

No of pages: 18

ASX Company Announcements Australian Securities Exchange

2012 APPENDIX 4E PRELIMINARY FINAL REPORT AND FINAL DIVIDEND DISTRIBUTION

PRELIMINARY FINAL REPORT

In accordance with ASX Listing Rule 4.3A Independence Group NL is providing with this letter its Appendix 4E Preliminary Final Report for the period 1 July 2011 to 30 June 2012.

FINAL DIVIDEND 2012

Independence Group NL announces that a Final Dividend of 1.0 cent per share will be paid to shareholders for the year ended 30 June 2012.

The dividend will be fully franked.

The dividend will be paid on 28 September 2012.

The record date to determine the dividend entitlement is 5:00pm (WST) 18 September 2012.

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Christopher Bonwick Managing Director Independence Group NL

Suite 4 Level 5 South Shore Centre I 85 South Perth Esplanade I South Perth I Western Australia 6151 PO Box 496 I South Perth I Western Australia 6951

Telephone +61 8 9238 8300 I Facsimile +61 8 9238 8399 I Email contact@igo.com.au I Website www.igo.com.au

INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

PRELIMINARY FINAL REPORT INFORMATION – 1 JULY 2011 TO 30 JUNE 2012 LODGED WITH THE ASX UNDER LISTING RULE 4.3A

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|CONTENTS|PAGE|
|Key Information – Results for Announcement to the Market …………………… 2|
|Preliminary Final Report|
|Review of Operations ………………………………………………………….... 3|
|Consolidated Statement of Comprehensive Income …………………………….. 5|
|Consolidated Statement of Financial Position …………………………………... 6|
|Consolidated Statement of Cash Flows ………………………………………..... 7|
|Consolidated Statement of Changes in Equity ………………………………….. 8|
|Notes to the Consolidated Financial Statements ………………………………… 9|

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

PRELIMINARY FINAL REPORT INFORMATION – 1 JULY 2011 TO 30 JUNE 2012 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	216,557	32.4%
Loss from ordinary activities operations after tax attributable to members	(285,292)	(5,256.2)%
Net loss attributable to members	(285,292)	(5,256.2)%

The previous corresponding period is the year ended 30 June 2011.

	2012	2011
Basic (loss) earnings per share (cents)	(130.47)	3.89
Diluted (loss) earnings per share (cents)	(130.47)	3.88
Net tangible assets per share (cents)	275.96	467.71

The major factors contributing to the above variances are as follows:

• Loss after tax impacted by deteriorating commodity prices and economic outlook which resulted in non-cash $288.0 million after tax impairment expenses ($372.4 million before tax). These before tax items comprise the previously announced $157.7 million impairment of Jaguar/Bentley Operations and associated goodwill as at 31 December 2011 together with a further impairment of $98.2 million of Jaguar/Bentley Operations and a $116.5 million impairment of previously capitalised exploration and evaluation costs as at 30 June 2012. In addition, the copper and zinc mining segment contributed $19.46 million loss after tax to the result (2011: $9.37 million loss after tax). The contribution of the Long Nickel Operation was $31.28 million (2011: $44.28 million).

• Higher revenues were achieved as a result of an additional $87.72 million contribution from the Jaguar/Bentley Operation. This has been partially offset by lower nickel prices attained during the year resulting in $18.87 million lower nickel revenues compared to the previous year.

• Further details are available in the Review of Operations section of this Report.

The Company paid a fully franked interim dividend of 2 cents per share in March 2012. The Company has announced a fully franked final dividend of 1 cent per share which will be paid on 28 September 2012. The record date for determining dividend entitlements is 18 September 2012.

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

The accounts are currently being audited by BDO Audit (WA) Pty Ltd which has advised that the accounts are not likely to be subject to dispute or qualification.

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Review of Operations

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

below:
Long Nickel Operation Jaguar/Bentley Copper and Zinc Operation Tropicana Gold Project Feasibility and regional exploration activities Unallocated revenue Unallocated revenue less unallocated expenses (Loss) profit before income tax Income tax benefit (expense) (Loss) profit after income tax Net (loss) profit attributable to members of Independence Group NL	Segment revenues 2012 2011 $’000 $’000 120,873 139,741 87,724 17,507 - - 8 - 7,952 6,320	Segment results 2012 2011 $’000 $’000 44,694 63,250 (283,728) (13,381) (1,736) (815) (118,128) (8,562) - -
	216,557 163,568	(358,898) 40,492 (9,942) (26,207)
		(368,840) 14,285 83,548 (8,752)
		(285,292) 5,533
		(285,292) 5,533

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

a) Long Nickel Operation

This division consists of Lightning Nickel Pty Ltd’s Kambalda operation: the Long Nickel Operation. The mine performed exceptionally well this year with production of 9,995 contained nickel tonnes which exceeded production in any of the previous 10 years. Segment earnings are down on the previous corresponding period as a result of lower realised nickel prices of A$8.98/lb Ni compared to A$10.35/lb Ni in the previous period and higher cash costs of A$4.74/lb Ni compared to A$4.48/lb Ni. Exploration continued to test for new deposits along strike of the Long, Moran and McLeay ore bodies.

b) Jaguar/Bentley Copper and Zinc Operation

This division comprises Jabiru Metals Limited’s operations: the Jaguar/Bentley Operation. Annual production of contained zinc and copper was 16,569 tonnes and 7,257 tonnes respectively. This segment was acquired as a result of the acquisition of Jabiru Metals Limited in April 2011. As previously reported during the December 2011 half, the Jaguar Mine encountered unforeseen geotechnical issues which necessitated a change in ground support methodology and stope sequencing. The revised mining plan postponed the extraction of high grade stope ore and required additional footwall development in waste rock, resulting in lower than budgeted head grades.

Extraction of high grade stopes recommenced in the June 2012 half, combined with sub-level cave ore extraction and development of the Farside ore body east of Jaguar. The second half also saw a higher contribution in high grade zinc and silver ore from Bentley Mine development and the commissioning of the Heavy Media Separator (HMS) resulting in the mine exceeding 2011/12 zinc and silver guidance, with copper production slightly below budget.

The current low commodity prices and strong Australian dollar exchange rate have resulted in a new mining plan being developed, selectively mining higher value blocks at a reduced mining rate compared with the April 2012 target of 600,000 tonnes pa. Lower grade Bentley stringer ore has been removed from the new schedule which focuses on mining more profitable ore blocks which can be either directly milled or upgraded by the HMS. A significant proportion of the lower grade Bentley stringer ore is located in the footwall and will not be sterilised if metal prices rise. Due to the continued low metal prices only currently developed ore in the Jaguar Mainlode and Farside ore bodies are contemplated in the new plan.

The selective mining option which may reduce mine life, together with falling commodity prices and stronger Australian dollar have, in the opinion of management, triggered an impairment review which warranted an assessment of the carrying value of the Jaguar/Bentley Operation’s assets. Impairments during the year and at year end totalled $255.93 million.

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c) Tropicana Gold Project

This division consists of the Group’s interest in the Tropicana Joint Venture. The project is currently in the development and construction phase of a gold mine. The project is managed by AngloGold Ashanti Australia Limited (70%) and the Company has a 30% interest in the project. The 5.8 million tonnes pa Tropicana Gold Plant construction remains on time and on schedule for the first gold pour in the December quarter 2013. The Bankable Feasibility Study (BFS) estimated open pit gold production (100% project) to average 300,000-350,000 ounces Au pa over 10 years with cash costs estimated to be in the range of A$710-730/oz Au. Total gold production over the first 3 years was estimated by the BFS to be between 470,000-490,000 ounces with cash costs between A$580-600/oz Au. Resources currently stand at 6.41 million ounces and reserves at 3.91 million ounces (100% project). The Havana Deeps pre-feasibility underground mining study is expected to be completed in mid-2013. Near mine and regional exploration continues.

d) Feasibility and regional exploration activities

The feasibility and regional exploration activities reflected in this segment relate to exploration expenditure, feasibility studies and scoping studies incurred on projects excluding Tropicana and the Long Nickel Operation. A Feasibility Study is currently being undertaken on the Stockman copperzinc-silver-gold project (100% IGO). An inferred resource of over 674,000 ounces of gold has been estimated on the Karlawinda Gold Project (100% IGO) which is at the Scoping Study stage.

The segment includes in large part values in relation to Jaguar regional exploration and the Stockman Project (100% IGO) determined by an Independent Valuer as at April 2011 following the acquisition of Jabiru Metals Limited. An extensive review of the carrying value of the segment’s exploration and evaluation assets was carried out at balance date, resulting in an impairment of $116.5 million. This amount includes an impairment of $56.4 million of April 2011 capitalised Stockman value, a $38.3 million impairment of combined Jaguar regional exploration costs and April 2011 values, and a $23.2 million impairment of other previously capitalised exploration costs. This impairment review was as a result of a continuing strong A$ and depressed commodity prices. Notwithstanding the impairments, management still considers these areas to be highly prospective.

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.

Comparative information

Comparatives have been reclassified to be consistent with the current year presentation. The reclassifications do not have an impact on the results presented.

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Consolidated Statement of Comprehensive Income For the year ended 30 June 2012

Notes Revenue from continuing operations 2 Other income Mining, processing and development costs Employee benefits expense Share-based payment expense Fair value adjustment of listed investments Depreciation and amortisation expenses Exploration costs expensed Rehabilitation and restoration borrowing costs Ore tolling expense Royalty expense Shipping and wharfage costs Net gains on fair value financial liabilities Borrowing and finance costs Costs associated with the acquisition of subsidiary Impairment of exploration and evaluation expenditure 8 Impairment of goodwill and other assets 8 Other expenses (Loss) profit before income tax Income tax benefit (expense) (Loss) profit for the year Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Other comprehensive income for the year, net of tax Total comprehensive (loss) income for the year (Loss) profit for the year attributable to the members of Independence Group NL Total comprehensive (loss) income for the year attributable to the members of Independence Group NL Basic (loss) earnings per share Diluted (loss) earnings per share	Consolidated 2012 2011 $’000 $’000 216,557 163,568 - 463 (74,763) (39,716) (51,636) (28,788) (862) (17) (3,490) 760 (39,231) (27,368) (2,813) (2,416) (375) (109) (11,234) (8,309) (8,028) (7,586) (11,178) (1,053) 1,356 2,509 (1,413) (309) - (21,133) (116,462) (7,186) (255,929) - (9,339) (9,025)	Consolidated 2012 2011 $’000 $’000 216,557 163,568 - 463 (74,763) (39,716) (51,636) (28,788) (862) (17) (3,490) 760 (39,231) (27,368) (2,813) (2,416) (375) (109) (11,234) (8,309) (8,028) (7,586) (11,178) (1,053) 1,356 2,509 (1,413) (309) - (21,133) (116,462) (7,186) (255,929) - (9,339) (9,025)
	(368,840) 83,548	14,285 (8,752)
	(285,292) 7,273	5,533 11,065
	7,273	11,065
	(278,019)	16,598
	(285,292) (278,019) Cents (130.47) (130.47)	5,533 16,598 Cents 3.89 3.88

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

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Consolidated Statement of Financial Position As at 30 June 2012

Notes Current assets Cash and cash equivalents Trade and other receivables Current tax receivable Inventories Financial assets 3 Derivative financial instruments 9 Total current assets Non-current assets Trade and other receivables Property, plant and equipment 4 Exploration and evaluation expenditure 5 Mine properties 6 Deferred tax assets Intangible assets 7 Derivative financial instruments 9 Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Derivative financial instruments 9 Provisions Financial liabilities at fair value through profit or loss Total current liabilities Non-current liabilities Borrowings Provisions Deferred tax liabilities Financial liabilities at fair value through profit or loss Total non-current liabilities Total liabilities Net assets Equity Contributed equity 10 Reserves 11 Retained earnings 11 Total equity	Consolidated 2012 2011 $‘000 $‘000 192,678 228,001 58,797 28,762 - 7,541 16,786 20,908 3,346 6,849 23,950 16,997
	295,557 309,058
	475 1,016 37,173 86,255 203,371 269,333 123,274 163,690 152,620 111,420 454 91,818 - 8,243
	517,367 731,775
	812,924 1,040,833
	60,329 60,994 11,685 5,789 570 15,014 1,260 705 4,818 11,303
	78,662 93,805
	6,934 5,694 14,749 11,402 70,454 110,327 - 5,725
	92,137 133,148
	170,799 226,953
	642,125 813,880
	734,007 617,860 20,618 12,483 (112,500) 183,537
	642,125 813,880

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Consolidated Statement of Cash Flows For the year ended 30 June 2012

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 Income taxes paid Income taxes received Exploration expenditure Receipts from other operating activities Net cash from operating activities Cash flows from investing activities Interest received Payments for purchase of listed investments Proceeds from the sale of property, plant and equipment and other investments Payments for property, plant and equipment Payments for development expenditure Payments for exploration and evaluation expenditure Payments for acquisition of subsidiary, net of cash acquired Net cash used in investing activities Cash flows from financing activities Proceeds from issues of share capital Share issue costs Repayment of finance lease liabilities Repayment of borrowings Payment of dividends Net cash from financing activities Net (decrease) increase in cash held Cash and cash equivalents at the beginning of the reporting period Cash and cash equivalents at the end of the reporting period	Consolidated 2012 2011 $‘000 $‘000 211,390 174,418 (183,087) (109,673)
	28,303 64,745 (1,307) (268) (2,524) (9,805) 10,057 541 (2,813) (2,416) 263 19
	31,979 52,816
	11,422 9,897 - (2,774) 396 581 (19,392) (19,819) (89,492) (33,785) (57,244) (32,023) - (43,048)
	(154,310) (120,971)
	119,902 169,266 (4,397) (6,880) (5,900) (1,222) (11,852) - (10,745) (8,965)
	87,008 152,199
	(35,323) 84,044 228,001 143,957
	192,678 228,001

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

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Consolidated Statement of Changes in Equity For the year ended 30 June 2012

At 1 July 2010 Profit for the period Other comprehensive income Profit on cash flow hedges, net of tax Total comprehensive income for the period Transactions with owners in their capacity as owners Shares issued Transaction costs on shares issued, net of tax Dividends paid Share-based payments Gain on acquisition of non- controlling interest At 30 June 2011 At 1 July 2011 Loss for the period Other comprehensive income Profit on cash flow hedges, net of tax Total comprehensive (loss) income for the period Transactions with owners in their capacity as owners Shares issued Transaction costs on shares issued, net of tax Dividends paid Share-based payments At 30 June 2012	Issued Capital Retained Earnings Share- Based Payments Reserve Hedging Reserve Acquisition Reserve Total Equity $’000 $’000 $’000 $’000 $000 $’000 29,552 186,969 4,040 (5,781) - 214,780 - 5,533 - - - 5,533 - - - 11,065 - 11,065
	- 5,533 - 11,065 - 16,598 593,537 - - - - 593,537 (5,229) - - - - (5,229) - (8,965) - - - (8,965) - - 17 - - 17 - - - - 3,142 3,142
	617,860 183,537 4,057 5,284 3,142 813,880
	617,860 183,537 4,057 5,284 3,142 813,880 - (285,292) - - - (285,292) - - - 7,273 - 7,273
	- (285,292) - 7,273 - (278,019) 119,902 - - - - 119,902 (3,755) - - - - (3,755) - (10,745) - - - (10,745) - - 862 - - 862
	734,007 (112,500) 4,919 12,557 3,142 642,125

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

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 1. Segment information

Description 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 board of directors is the chief operating decision maker of the Group. The Group operates in predominately one geographic segment (ie. Australia) and has identified four operating segments, being the Long Nickel Operation which is disclosed under the Nickel mining segment, the Jaguar/Bentley Operation which is disclosed under the Copper and zinc mining segment, the Tropicana Gold Project, and other regional exploration, scoping studies and feasibility studies which are disclosed under Feasibility and regional exploration activities.

The Long Nickel Operation produces nickel, together with copper, from which its revenue is derived. All revenue derived by the Long Nickel Operation is received from one customer, being BHP Billiton Nickel West Pty Ltd. The Registered Manager of the Long Nickel Operation is responsible for the budgets and expenditure of the mine, which includes exploration activities on the mine’s tenure. The Long Nickel Operation and exploration properties are owned by the Group’s subsidiary Lightning Nickel Pty Ltd.

The Jaguar/Bentley Operation primarily produces copper and zinc concentrate. Revenue is derived from a number of different customers. The Registered Manager of the Jaguar/Bentley Operation is responsible for the budgets and expenditure of the operation, responsibility for ore concentrate sales rests with corporate management. This segment was acquired as a result of the acquisition of Jabiru Metals Limited in April 2011.

The Tropicana Gold Project represents the Group’s 30% interest in the Tropicana Joint Venture. AngloGold Ashanti Australia is the manager of the project and holds the remaining 70% interest. Programmes and budgets are provided by AngloGold Ashanti Australia and are considered for approval by the Independence Group NL board. Construction and development of a gold mine and processing plant has commenced on the joint venture tenure. It is therefore allocated its own segment.

The Group’s Exploration Manager and its Development Manager are responsible for budgets and expenditure relating to the Group’s regional exploration, scoping studies and feasibility studies. The Feasibility and regional exploration division does not normally derive any income. Should a project generated by the Feasibility and regional exploration division commence generating income or lead to the construction or acquisition of a mining operation, that operation would then be disaggregated from Feasibility and regional exploration and become reportable as a separate segment.

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 1. Segment information (continued)

2012 External revenue Reportable segment profit (loss) before income tax Impairment loss (before tax) Reportable segment assets Reportable segment liabilities 2011 External revenue Reportable segment profit (loss) before income tax Impairment loss (before tax) Reportable segment assets Reportable segment liabilities	Nickel mining Copper and zinc mining Tropicana Gold Project Feasibility and regional exploration activities Total $’000 $’000 $’000 $’000 $’000 120,873 87,724 - 8 **208,605 **
	44,694 (283,728) (1,736) (118,128) (358,898)
	(1,139) (255,929) - (115,323) (372,391)
	153,815 104,798 154,715 159,110 572,438
	21,361 48,063 17,522 52,738 **139,684 **
	139,741 17,507 - - 157,248
	63,250 (13,381) (815) (8,562) 40,492
	(1,041) - - (6,145) (7,186)
	206,538 293,233 51,830 236,100 787,701
	31,156 41,269 3,980 32,849 109,254

The amounts provided to the board with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

A reconciliation of reportable segment profit (loss) to operating (loss) profit before income tax is provided as follows:

Total (loss) profit for reportable segments Interest revenue on corporate cash balances and other unallocated revenue Unrealised (losses) gains on financial assets Share-based payments expense Other corporate costs Costs associated with the acquisition of subsidiary Net gains on silver loan financing (Loss) profit before income tax from continuing operations	Consolidated 2012 2011 $‘000 $‘000 (358,898) 40,492 7,952 6,320 (3,490) 760 (862) (17) (14,898) (14,646) - (21,133) 1,356 2,509
	(368,840) 14,285

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 1. Segment information (continued)

A reconciliation of reportable segment assets to total assets is as follows:

Total assets for reportable segments Inter segment eliminations Unallocated assets Deferred tax assets Listed equity securities Current tax assets Cash and receivables held by the parent entity Office and general plant and equipment Goodwill Total assets as per the statement of financial position A reconciliation of reportable segment liabilities to total liabilities is as follows: Total liabilities for reportable segments Inter segment eliminations Unallocated liabilities Deferred tax liabilities Creditors and accruals Financial liabilities at fair value through profit or loss Provision for employee entitlements Total liabilities as per the statement of financial position Note 2. Revenue	Consolidated 2012 2011 $’000 $’000 572,438 787,701 (65,000) (98,303) 152,620 111,420 3,346 6,849 - 7,541 146,559 132,776 2,961 1,784 - 91,065
	812,924 1,040,833
	139,684 109,254 (59,601) (30,164) 70,454 110,327 14,390 19,212 4,818 17,028 1,054 1,296
	170,799 226,953

Revenue from continuing operations Sale of goods Other revenue Interest income Other revenue Note 3. Financial assets Investments in Australian listed entities at market value	Consolidated 2012 2011 $’000 $’000 206,705 151,933 9,574 11,617 278 18
	216,557 163,568
	Consolidated 2012 2011 $’000 $’000 3,346 6,849
	3,346 6,849

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 4. Property, plant and equipment

Note 4. Property, plant and equipment
Property, plant and equipment Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the financial year are as follows: Opening balance Additions Acquisition of subsidiary Transfers to mine properties in production Transfers to mine properties in development Disposals Impairment charge Depreciation expense Note 5. Exploration and evaluation expenditure Exploration and evaluation expenditure Reconciliations of the carrying amounts of exploration and evaluation expenditure at the beginning and end of the financial year are as follows: Opening balance Current year’s expenditure Acquisition of subsidiary Transfers to mine properties in production Transfers to mine properties in development Impairment charge Disposals	Consolidated 2012 2011 $‘000 $‘000 37,173 86,255
	86,255 5,070 30,720 26,541 - 66,045 (2,278) - - (3,904) (1,118) (116) (57,048) - (19,358) (7,381)
	37,173 86,255
	Consolidated 2012 2011 $‘000 $‘000 203,371 269,333
	269,333 49,302 55,216 31,781 - 199,718 (4,716) (2,294) - (988) (116,462) (7,186) - (1,000)
	203,371 269,333

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 6. Mine properties

Note 6. Mine properties
Mine properties in development (a) Mine properties in production (b) Mine acquisition costs Reconciliations of the carrying amounts of mine properties at the beginning and end of the financial year are as follows: (a) Mine properties in development Opening balance Current year’s expenditure Acquisition of subsidiary Transfer from property, plant and equipment Transfers from exploration and evaluation Transfer to mine properties in production (b) Mine properties in production Opening balance Current year’s expenditure Acquisition of subsidiary Transfer from exploration and evaluation expenditure Transfer from mine properties in development Transfer from property, plant and equipment Transfer from mine acquisition costs Amortisation expense Impairment charge Note 7. Intangible Assets Intangible assets Reconciliations of the carrying amounts of intangible assets at the beginning and end of the financial year are as follows: Opening balance Acquisition of subsidiary Amortisation expense Goodwill impairment charge	Consolidated 2012 2011 $‘000 $‘000 59,609 89,770 63,665 73,920 - -
	123,274 163,690
	89,770 - 51,747 12,875 - 72,003 - 3,904 - 988 (81,908) -
	59,609 89,770
	73,920 37,064 28,417 21,532 - 32,066 4,716 2,294 81,908 - 2,278 - - 240 (19,758) (19,276) (107,816) -
	63,665 73,920
	Consolidated 2012 2011 $‘000 $‘000 454 91,818
	91,818 1,006 - 91,065 (299) (253) (91,065) -
	454 91,818

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 8. Impairments

Goodwill and other assets

Goodwill is tested for impairment annually and when circumstances indicate the carrying value may be impaired. Goodwill is allocated to the Company’s cash generating units (CGUs) for impairment testing purposes. The Jaguar Bentley copper and zinc mine was attributed all of the goodwill that was acquired in the acquisition of Jabiru Metals Limited in April 2011. The process of impairment testing requires management to consider critical accounting estimates and judgements. As at 31 December 2011, management considered that triggers for the impairment of goodwill existed which warranted an impairment test of the Jaguar/ Bentley CGU and its allocated goodwill. At balance date, management have considered that indicators of impairment continue to exist.

In assessing whether impairment losses are required to be booked, the carrying value of a CGU’s assets are compared to the recoverable amount of those assets. The recoverable amount is the higher of fair value less costs to sell of the CGU and its value in use. During the financial year, the Company impaired the Jaguar Bentley CGU at 31 December 2011 “December impairment”. The Company further impaired that CGU at balance date “June impairment” based on a revision of estimates applicable to the impairment calculations at the time. In both cases, the Company has determined that value in use provides the higher estimation of recoverable amount of the CGU. Management has determined that impairment losses as outlined below have been required to be recorded in the statement of comprehensive income of the Group during the financial year. The following table outlines the total impairment expense booked to the accounts, and classes of assets affected:

Mine properties Property, plant and equipment Goodwill	31 December 2011 30 June 2012 Total FY 2012 $’000 $’000 $’000 43,086 64,730 107,816 23,593 33,455 57,048 91,065 - 91,065
	157,744 98,185 255,929

Value in use of the CGU has been determined with reference to discounted cash flows. In determining value in use, it has been necessary to make certain assumptions in order to estimate future cash flows. These include future sales prices, inflation, foreign exchange rates, costs of production, physical quantities of ore mined, processed, recovered and sold. External consensus data has been sourced to determine applicable forecast commodity prices, foreign exchange and inflation rates. The Company’s most recent life of mine plan approved by management has been used to determine production quantities and costs. In relation to the December impairment, this plan extended over a period of 6 to 7 years which management considered appropriate given the amount of estimated recoverable reserves and resources of the mine which were based on forecast future commodity prices at that time. At balance date, and as a result of ongoing adverse commodity prices and strengthening AUD forecasts, management has determined an applicable period for the processing of ores of 5-6 years. The discount rate used was and continues to be based on the Company’s estimated weighted average cost of capital. This figure includes market estimates of the risk free rate, a market premium and cost of debt. The nominal pre-tax discount rates used in the December and June impairment’s value in use calculations ranged between 8 and 10%.

Exploration and evaluation expenditure

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Management regularly evaluates the recoverability of exploration and evaluation assets. Consistent with the triggers that led to the impairment of goodwill and other assets (including unfavourable commodity prices and foreign exchange rates), the Company has impaired the following capitalised exploration and evaluation costs:

Jaguar regional exploration costs Stockman exploration costs Other exploration costs	2012 2011 $’000 $’000 36,829 994 56,402 - 23,231 6,192
	116,462 7,186

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 9. Derivative financial instruments

Note 9. Derivative financial instruments	Note 9. Derivative financial instruments
Current assets Commodity hedging contracts – at fair value through profit or loss Commodity hedging contracts – cash flow hedges Foreign currency contracts – at fair value through profit or loss Foreign currency contracts – cash flow hedges Current liabilities Commodity hedging contracts – at fair value through profit or loss Commodity hedging contracts – cash flow hedges Non-current assets Commodity hedging contracts – cash flow hedges Foreign currency contracts – cash flow hedges Note 10. Contributed equity Fully paid issued capital Movements in shares on issue 2012 2012 No. of Shares $’000 Balance at beginning of financial year 202,907,135 617,860 Issued during the year: - share placement and rights issue 29,975,400 119,902 - transaction costs, net of tax - (3,755) - conversion of options - - - shares issued for acquisition of subsidiary - - Balance at end of financial year 232,882,535 734,007			Consolidated 2012 2011 $‘000 $‘000 3,815 114 11,250 - 2,398 9,643 6,487 7,240
			23,950 16,997
			570 6,879 - 8,135
			570 15,014
			- 36 - 8,207
			- 8,243
			Consolidated 2012 2011 $‘000 $‘000 734,007 617,860
			2011 2011 No. of Shares $’000 113,813,539 29,552 24,713,766 164,347 - (5,229) 1,087,500 4,920 63,292,330 424,270
	232,882,535 734,007		202,907,135 617,860

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 11. Retained earnings and reserves

(a) Retained earnings A reconciliation of retained earnings for the financial year is as follows: Balance at the beginning of the year Net (loss) profit attributable to members of Independence Group NL Dividends paid during the year Balance at the end of the year (b) Reserves Share-based payments reserve Hedge reserve Acquisition reserve	Consolidated 2012 2011 $‘000 $‘000 183,537 186,969 (285,292) 5,533 (10,745) (8,965)
	(112,500) 183,537
	4,919 4,057 12,557 5,284 3,142 3,142
	20,618 12,483

Note 12. Dividends paid and proposed

(a) Dividends paid Final dividend for the year ended 30 June 2011 of 3 cents (2010: 3 cents) per fully paid share Interim dividend for the year ended 30 June 2012 of 2 cents (2011: 4 cents) per fully paid share Total dividends paid during the year (b) Unrecognised amounts	Consolidated 2012 2011 $‘000 $‘000 6,087 3,414 4,658 5,551
	10,745 8,965

In addition to the above dividends, since year end the Directors have recommended the payment of a final dividend of 1 cent (2011: 3 cents) per fully paid share, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 28 September 2012, but not recognised as a liability at 30 June 2012 is: 2,329 6,087

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INDEPENDENCE GROUP NL AND CONTROLLED ENTITIES ABN 46 092 786 304

Notes to the Consolidated Financial Statements For the year ended 30 June 2012

Note 13. Business combinations

Acquisition accounting for the acquisition of Jabiru Metals Limited was finalised during the year ended 30 June 2012. The assets and liabilities recognised as a result of the acquisition of Jabiru Metals Limited reflect the finalised accounting values. Finalisation of the acquisition accounting resulted in fair value adjustments of $25,697,000 increase in net assets and a corresponding decrease in goodwill. The adjustments to assets and liabilities on finalisation of the acquisition are summarised as follows:

Exploration and evaluation expenditure Deferred tax assets Deferred tax liabilities Goodwill	Consolidated Provisional accounting Fair value adjustments Final accounting 30 June 2011 30 June 2011 30 June 2011 $‘000 $‘000 $‘000 186,618 13,100 199,718 51,329 11,691 63,020 (37,347) 906 (36,441) 116,762 (25,697) 91,065
	317,362 - 317,362

Note 14. Subsequent events

On 29 August 2012 the Company announced a fully franked final dividend of 1 cent per share payable on 28 September 2012. The record date for determining dividend entitlements is 18 September 2012.

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