IGO LIMITED — Interim / Quarterly Report 2017

Feb 20, 2017

INDEPENDENCE GROUP NL

Half Year Results Presentation 1H17

Peter Bradford, Managing Director and CEO

21 February 2017

Cautionary statements & disclaimer

• This presentation 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 presentation 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 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 presentation 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 in this presentation 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 publically 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.
• Any references to IGO Mineral Resource and Ore Reserve estimates, except the Tropicana Mineral Resource and Ore Reserve should be read in conjunction with IGO's 2016 Mineral Resource and Ore Reserve announcement dated 14 October 2016 and lodged with the ASX, which are available on the IGO website.
• References to Mineral Resource and Ore Reserve estimates at Tropicana should be read in conjunction with IGO's Tropicana Gold Mine Value Enhancement Update, dated 15 December 2016 and lodged with the ASX, and is available on the IGO website.
• All currency amounts in Australian Dollars unless otherwise noted.
• Cash Costs are reported inclusive of Royalties and after by-product credits on per unit of payable metal basis, unless otherwise stated
• IGO reports All-in Sustaining Costs (AISC) per ounce of gold 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 27 June 2013 and is available from the World Gold Council's website.
• 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, depreciation and amortisation, and once-off transaction costs.
• Underlying NPAT comprises net profit (loss) after tax adjusted for; post tax effect of acquisition and integration costs, and impairments.

First Half highlights

Strong First Half with significant milestones achieved

Continued improvement in safety record with LTIFR at 1.2

Gold and base metals prices generally stronger YoY

Tropicana and Long production and cash costs beat guidance

Tropicana value enhancement delivers +75% NPV uplift – more to come

Jaguar results mixed – work to increase scale and mine life underway

Nova first concentrate produced and shipped

Earnings stronger and 1 cent per share interim dividend declared

Financial results

Group results relative to corresponding period

A\$M	Revenue	Underlying EBITDA(2)	NPAT	Net cash flow from operations	Underlying FCF(3)	Cash	Debt
1H16	218.8	68.1	(77.8)	50.1	(43.6)	58.9	200.1
1H17	223.1	81.8	20.2	25.6	(49.3)	109.2	200.0
Change %	2%	20%	n/a	(49%)	(13%)	85%	0%

Results drivers relative to previous corresponding period

• Realised metal prices: nickel ↑20%, zinc ↑44%, copper ↓9% and gold ↑5%
• Metal production: nickel ↓6%, zinc ↓10%, copper ↓4% and gold ↓10%
• Cash costs: Long ↓19%, Jaguar ↑15% and Tropicana ↑31%
• Exploration expenditure reduced by 54%
• 1H17 one off costs for stamp duty taxes of A\$58M and Windward acquisition of A\$17M(1)
• All surface infrastructure complete at Nova

¹⁾ A\$21.1M in cash consideration, less cash of A\$4.5M acquired as part of the transaction

²⁾ Underlying EBITDA is a non-IFRS measure (refer to Disclaimer page)

³⁾ Underlying Free Cash Flow comprises Net Cash Flow from Operating Activities and Net Cash Flow from Investing Activities. Underlying adjustments exclude proceeds from investment sales and payments for investments. They also exclude net payment for the acquisition of Sirius Resources NL and transaction costs

1H17 cash flow components

One off factors include stamp duty payments, investments in mineral properties, equity raise and debt repayment

1H17 EBITDA components

Underlying EBITDA improved 20% YoY

Earnings summary

Higher overall metal prices deliver improved earnings

Cash flow summary

Strong balance sheet with net debt of A\$91M

1) Free Cash Flow comprises Net Cash Flow from Operating Activities and Net Cash Flow from Investing Activities. Underlying adjustments exclude proceeds from investment sales and payments for investments. They also exclude net payment for the acquisition of Sirius Resources NL and transaction costs

2) Funds raised through completion of institutional placement and share purchase plan, net of costs totalled A\$274.3M see ASX releases dated 28 July 2016 and 26 August 2016

Segment financial results

Higher base metals prices drive improved results

Operation	Metric	1H17 (A\$M)	1H16 (A\$M)	Inc/(Dec) (A\$M)	Inc/(Dec) (%)
	Revenue	106.6	118.2	(11.6)	(10%)
Tropicana	Underlying EBITDA	52.8	69.9	(17.1)	(24%)
	Free Cash Flow	30.9	46.6	(15.7)	(34%)
	Revenue	38.5	33.8	4.7	14%
Long	Underlying EBITDA	20.5	8.5	12.0	141%
	Free Cash Flow	16.7	6.0	10.7	178%
	Revenue	76.5	65.8	10.7	16%
Jaguar	Underlying EBITDA	27.9	13.7	14.2	104%
	Free Cash Flow	27.6	10.0	17.6	176%

Segment drivers relative to previous corresponding period

• Cessation of grade streaming at Tropicana in December 2015 and increased expansion capital plus higher waste stripping negatively impacted earnings and cash flow. Positively, cash mining costs per tonne reduced by 16%.
• Lower costs at Long due to restructuring and new mining plan coupled with improving nickel prices has resulted in improved earnings and cash flow
• Jaguar cash flow has benefited from improved realised zinc prices which have increased 44% on the previous corresponding period

¹⁾ Underlying EBITDA is a non-IFRS measure (refer to Disclaimer page).

²⁾ Free Cash Flow comprises Net Cash Flow from Operating Activities and Net Cash Flow from Investing Activities. Underlying adjustments exclude proceeds from investment sales and payments for investments. It also excludes net payment for the acquisition of Sirius Resources NL

Tropicana

First Half operational scorecard

Metric	Units	Pro-rata Guidance	1H17	1H16	Inc/(Dec)
Gold produced (100% basis)	oz	195,000 to 215,000	221,232	251,945	(12)%
Gold sold (IGO's 30% share)	oz	58,500 to 64,500	65,361	76,055	(14)%
Cash cost	A\$/oz Au	850 to 950	821	625	31%
All-in Sustaining Costs	A\$/oz Au	1,150 to 1,250	1,070	801	34%
Sustaining and improvement capex	A\$M	6 to 8	6.4	4.9	31%
Capitalised waste stripping	A\$M	14 to 18	13.9	6.7	107%
Exploration expenditure	A\$M	3 to 4	3.4	3.9	(13)%

1H17 drivers

• Better than guidance production, cash costs and AISC primarily due to better than budget throughput
• Value enhancement initiatives delivered a more than 75% increase in NPV which includes partial results from the Long Island Study that has unlocked a 58% increase to Ore Reserves and increased life of mine to date(1)

Outlook

• No change to full year guidance
• Ongoing programs as part of Long Island Study to deliver further Mineral Resource growth in 2H17
• Potential to further expand process plant throughput to 7.7-7.9Mtpa in CY17

Long

First Half operational scorecard

Metric	Units	Pro-rata guidance	1H17	1H16	Inc/(Dec)
Nickel (contained metal)	t	3,700 to 4,100	4,229	4,508	(6)%
Cash cost (payable)	A\$/Ib Ni	3.50 to 3.90	3.21	3.97	(19)%
Sustaining capex	A\$M	0.5	0.7	1.4	(50)%
Development capex	A\$M	N/A	0.2	0.3	(33)%
Exploration expenditure	A\$M	1.0 to 1.5	0.4	7.1	(94)%

1H17 drivers

• Production and cash costs both better than guidance
• Realised nickel price ↑20% on previous corresponding period
• Majority of ore sourced from Moran orebody

Outlook

• No change to full year guidance
• Ongoing in mine exploration to test targets near existing mine development
• Reprocessing of 3D seismic collected in 2008 with latest technology to identify new exploration targets

Jaguar

First Half operational scorecard

Metric	Units	Pro-rata guidance	1H17	1H16	Inc/(Dec)
Zinc in concentrate	t	19,500 to 21,500	18,641	20,721	(10)%
Copper in concentrate	t	2,300 to 2,550	2,756	2,876	(4)%
Cash cost (payable)	A\$/Ib Zn	0.70 to 0.80	0.77	0.67	15%
Sustaining capex	A\$M	4 to 5	4.8	1.1	336%
Development capex	A\$M	6 to 7	4.8	7.1	(32)%
Exploration expenditure	A\$M	1 to 2	0.8	7.1	(89)%

1H17 drivers

• Lower zinc payable metal production due to lack of stope availability in 2Q17
• Realised Zinc price ↑ 44% on previous corresponding period
• Full year guidance remains unchanged

Outlook

• No change to full year guidance
• Bentley in mine exploration targeting down plunge mineralisation below current Ore Reserves in 2H17
• Triumph maiden Mineral Resource and PFS by mid CY17
• Process plant study to investigate potential for High Precious Metals concentrate by mid CY17

Nova Project

First Half scorecard

1H17 drivers

• Process plant construction completed and commissioning commenced in October 2016
• First nickel and copper concentrates announced six weeks ahead of schedule on 26 October 2016
• First nickel concentrate delivered to BHP Nickel West early December 2016
• All surface infrastructure completed and operational except commissioning of paste plant in April 2017
• Underground development currently behind plan resulting in potential delay to ore production ramp up and delivery of FY17 production and cash costs guidance

Nova Project

Proactive improvements implemented with Barminco

Development rate slipped in Dec 2016 qtr

• Barminco, underground contractor, committed to getting back to planned development rate
• Barminco has strengthened site management, strengthened site manning, mobilised additional equipment and upgraded stores and maintenance systems on site
• IGO and Barminco working collaboratively to investigate opportunities to increase development rate
• Conductor 5, located adjacent to the Bollinger decline, is being drilled as a potential additional source of ore in early months of the Nova operation

Guidance

• Too early to update guidance
• Original FY17 guidance for Nova unlikely to be met and metal output in FY17 may be up to 50% lower than originally envisaged
• Guidance to be updated in April 2017 once Barminco improvements implemented and updated schedule completed

Concluding comments

Strong first half with significant milestones achieved

Continued improvement in safety record with LTIFR at 1.2

Gold and base metals prices generally stronger YoY

Tropicana and Long production and cash costs beat guidance

Tropicana value enhancement delivers +75% NPV uplift – more to come

Jaguar results mixed – work to increase scale and mine life underway

Nova first concentrate produced and shipped

Earnings stronger and 1 cent per share interim dividend declared

Concluding comments

Outlook and catalysts for value recognition

Nova ramp up delayed with half of 2H17 production deferred to FY18

Nova in-mine drilling results through CY17

Tropicana Long Island Study to be completed around mid CY17

Jaguar recovery in 2H17

Jaguar maiden resource and PFS for Triumph prospect around mid CY17

Regional exploration at Fraser Range and Lake Mackay