SCIDEV LTD — AGM Information 2003

Nov 25, 2003

Superior and Sustainable Metals Production

Gordon Chiu Building J01 Department of Chemical Engineering Maze Crescent University of Sydney NSW 2006 Australia

Telephone: +612-9351-6741 Facsimile: +612-9351-7180 Email: mail@intec.com.au Website: www.intec.com.au

Managing Director / Chief Executive Officer's Presentation to the 2003 Annual General Meeting of Intec Ltd held at 5.30pm on Wednesday 26 November 2003

at Lecture Theatre 2, Department of Chemical Engineering, University of Sydney.

Good afternoon Ladies and Gentlemen

Welcome to shareholders

The directors and executives of Intec greatly enjoy interacting with our shareholders (many of whom are personal family and friends) and thus look forward to each year's Annual General Meeting. I would therefore like to join our Chairman Ken Severs in welcoming everybody here this afternoon and in thanking them for making the effort to attend. I also thank those who are not able to attend, inevitably including most of our overseas shareholders, but who have taken the trouble to submit their proxy voting forms. In the current era of intense scrutiny of corporate governance issues, Intec seeks, as far as is practically feasible, to provide the maximum information to, and encourage the fullest participation by, you as the shareholders and owners of the Company.

Department of Chemical Engineering, University of Sydney

I also thank the Department of Chemical Engineering here at the University of Sydney for again making this lecture theatre available for our AGM and, more broadly, for the consistently helpful attitude displayed by all of the Department's staff towards Intec's office, laboratory and pilot facilities here on campus. In this regard, I am pleased that Intec and the Department continue to identify further productive opportunities to co-operate. For example, our new electrowinning cell (see Figure 1), that has been constructed and operated successfully at the far end of this building during 2003, used as many as eight students during the University vacation period and Intec has since employed several of those on a full time basis.

Figure 1: Intec Electrowinning Cell at the Department of Chemical Engineering, University of Sydney

Also, the Federal Government has provided an Australian Research Council Linkage Grant for further joint work by Intec and the Department on the purification circuit in hydrometallurgical zinc processes such as Intec's, using the University's crystalliser apparatus (see Figure 2).

Figure 2: Zinc Precipitation Crystalliser at the Department of Chemical Engineering, University of Sydney

Intec is also active in the Department's Major Industrial Project Placement Scholarship program and has given and attended numerous presentations to the Department of Chemical Engineering Foundation, AusIMM and other professional bodies. We are also developing a close working relationship with the AJ Parker Centre in Perth, Australia's leading Co-operative Research Centre (CRC) in hydrometallurgy.

CORPORATE DEVELOPMENTS

Entitlements Issue

Intec recently successfully raised A\$2.62 million via a renounceable Entitlements Issue which was 92% subscribed and fully jointly underwritten by Taylor Collison and Grange Securities. This capital raising was achieved expeditiously and in a cost-effective manner due in large part to the excellent services of our underwriters and other professional advisers including Oakhill Hamilton, Allens Arthur Robinson, Griffith Hack and PricewaterhouseCoopers. As a result of the net funds

raised from the Entitlements Issue. Intec holds A\$2.495 million cash on hand as at 31 October 2003.

Ivanhoe Mines Ltd

The priority sub-underwriter in the Entitlements Issue was the Ivanhoe Mines Ltd., now listed on the Toronto, Australian and NASDAQ stock exchanges. Through its wholly-owned subsidiary Orian Holding Corp., Ivanhoe Mines now holds 23.2% of Intec's issued shares. Intec is therefore pleased to welcome to our board of directors Mr Ian Ross. Ian, whose election earlier this year has just been ratified by this meeting, is a director of, and with executive responsibilities for, a number of operating subsidiaries in the Ivanhoe group. His senior executive roles with Ivanhoe Capital Corporation have included several vears resident in China as the Ivanhoe group's director and as Vice Chairman of Shanghai Land Corporation. Also, I am pleased that many of you will have the opportunity today to meet for the first time another of our Ivanhoe directors, Mr Gordon Toll, Deputy Chairman of Ivanhoe Mines.

Ivanhoe Mines, of which Robert Friedland is Chairman and major shareholder, is capitalised at over A\$3 billion and is principally focussed on development of its very large Mongolian copper/gold resource in the Gobi Desert known as Oyu Tolgoi, that I have visited. Intec has just recently received Oyu Tolgoi copper/gold concentrates for preliminary laboratory testwork here at Sydney University.

China Focus

It is anticipated that Oyu Tolgoi will supply the rapidly growing Chinese market to its immediate south and Ivanhoe Mines is presently very active in China. For example, this year Ivanhoe Mines entered into a strategic alliance with China International Trust & Investment Corporation (CITIC) (see Figure 3), including a commitment to introduce into China "advanced processing technology", specifically exemplified by the Intec Processes.

Wang Jun, Chairman of CITIC, and Robert Friedland, Chairman of Ivanhoe Mines. Figure 3: form the CITIC – Ivanhoe Strategic Alliance on 23 April 2003

Just this week, Ivanhoe organised the visit to Intec here in Sydney of a delegation from the China Nonferrous Metal Mining & Construction Co., Ltd. (CNMC) (See Figure 4). CNMC will be sending to us a sample refractory gold concentrate for testwork here in Sydney and have invited Intec to discuss further plans in Beijing early next year.

Figure 4: CNMC – Intec Meeting at Intec's office in Sydney on 25 November 2003

Cash Position

With a base case cash 'burn' rate of about A\$235,000 per month, Intec must be mindful of its bank balance through 2004. There are specific funding proposals in hand from industry sources, notably via testwork fees and a A\$1.4 million R&D Start Grant has been applied for from the Federal Government for the Intec Gold Process pilot plant. There is also scope for a share placement into the corporate and/or financial sectors on the back of projects currently being developed.

Share Price Performance

Most of you would be well aware that until recently the worldwide stock market environment has placed low values on technology stocks that lack regular income. Until the last six months, there had also been little interest in the mining and minerals processing sector generally, which had endured years of sustained and ongoing low metals prices. Consequently, for much of the last twelve months, the INL share price has performed poorly as shown in Figure 5.

Figure 5: Intec share price and trading volume over the last 12 months

Figure 5 also appears to show however that there is light at the end of the tunnel: there has been a significant proportionate share price rise (admittedly from a very low base) since the underwritten Entitlements Issue was announced in mid-2003, coupled with greatly increased trading volume and liquidity. At today's closing market price of A\$0.062, Intec is capitalised at approximately A\$15 million, so there is considerable room on the upside once Intec makes a success of its first projects.

Intec's recent improving share price performance largely reflects the more favourable environment worldwide for base and precious metals prices and mining stocks (see Figures 6, 7 and 8). From our point of view, this 'tailwind' benefits the Company in many ways; increased interest in bringing new projects on stream, greater profitability and fundraising capability of the industry players who are our 'clients' and even the beginnings of a long-awaited rise in minerals processing charges (in the case of copper, for example, see Figure 9).

Figure 6: LME Prices for Cu, Pb, Zn and Ni

Figure 8: ASX Resource Indices

(Source: Macquarie Bank Limited)

Technical Developments

On pages 2, 3 and 4 of the 2003 Annual Report, you will find quite a detailed discussion of the technical developments of the Intec Processes over the past year. I do not propose to go over these again here, but would emphasise the following key achievements:

re-design and successful testing at full scale of the newly patented copper cathode and a) wiping mechanism in the electrowinning cell (see Figures 10, 11 and 12) In this regard I would like to single out our Senior Process Engineer Joe Lam for particular mention. It was Joe who invented the now-patented cathode design and who spent innumerable hours with his team getting the whole project to work;

Figure 10: Copper dendrites growing on cathode

Figure 11: Cathode wiped clean of dendrites

Figure 12: Copper dendrites being removed from cell by conveyor belt

$b)$ successful production of value-added oxygen-free copper wirerod from Intec's compacted dendrite product (Figure 13) at Rautomead International's plant in Dundee, Scotland (see Figures 14 and 15) It is now proposed that Intec/Rautomead's wirerod be drawn into magnetic wire at the Phelps Dodge operation at Norwich, CT, USA and I would particularly like to thank Sir Michael Nairn and his colleagues at Rautomead for their highly professional support to date.

Figure 14: Rautomead pilot plant upwardly vertically casting wirerod from compacted Intec dendrites

$\overline{\text{Figure 15}}$ : Value-added oxygen-free copper wirerod produced by Rautomead from Intec dendrites

• $c)$ invention and development of the Intec Gold Process (IGP) for refractory gold ores and concentrates (here I would like to thank in particular Intec's Technical Director John Moyes and Chief Operating Officer Jean-Louis Huens); and
• $d$ development of the Intec Nickel and Polymetallic Processes for extraction principally of nickel, copper, zinc, lead, gold, cobalt, platinum and palladium (these were the brainchildren of our Process Development Manager Frank Houllis).

As a non-technical person, I continue to be impressed anew by the scope and flexibility of the Intec Processes using chloride hydrometallurgy. Recently, for example, we have had some exciting results in the atmospheric chloride leaching of nickel laterite ores. Although we are constrained from exploring the full potential of our technology due to our limited resources, it remains evident to me that Intec is the world leader in this specialised (but exciting) technical sphere.

Intec Gold Process (IGP) Plant

As previously announced, Intec has entered into an IGP licence agreement with Ivanhoe Mines on favourable terms, in consideration of Ivanhoe funding the construction and commissioning of the IGP pilot plant. Construction of this plant is virtually complete (see Figure 16) and commissioning will commence in early December 2003. Funding drawdowns have proceeded smoothly, thanks in large part to the assistance and support of Gordon Toll and Ian Ross within the Ivanhoe organization. The plant is located at Metcon Laboratories in Brookvale in northern Sydney, which is wholly-owned by Ammtec Limited. Ammtec is one of the world's largest metallurgical and mineral testing consultancies, with whom we are continuing to build an excellent professional relationship.

Figure 16: IGP Pilot Plant under construction

The IGP pilot plant will be commissioned on feedstock from the Hellyer tailings dam (see the Hellyer mill in Figure 17 below). This will be followed by a campaign on concentrate from Ivanhoe's Bakyrchik gold mine in Kazakhstan, which Intec visited during the year (see Figure 18). It is then proposed that campaigns will be conducted for gold producer clients on a fee-paying basis.

Figure 17: Hellyer Mill and Tailings Dam

Figure 18: Kieran Rodgers, Philip Wood and John Moyes at Bakyrchik

Commercial Projects

Due to their technical merits in what has been a difficult environment, the Intec Processes are now making steady progress along the hard road towards commercialisation.

The minerals processing industry requires investment of very large capital sums which would dwarf Intec's present balance sheet and indeed its stand-alone capital raising capabilities. Intec must therefore persuade industry players (be they mining companies, metal fabricators, engineering firms, equipment providers, government agencies, financial institutions and so on) to adopt and/or support its technology and this is inevitably a lengthy exercise. Without a functioning Intec demonstration plant ((a defect shortly to be remedied by the IGP pilot plant) the technical risk perceived by industry is probably greater that the reality.

However the main barrier to immediate commercialisation of the Intec Process has until recently been the state of the minerals/metals industry itself. The large mining companies with discretionary cashflow income have been broadly speaking, satisfied with the status quo and, with numerous recent high profile failures of plants using new (and old) minerals processing technologies, they have been understandably unwilling to take the risk of being first mover with a new technology. The smaller more adventurous mining companies lacked access to the necessary capital funds during the long period of low metals and share prices.

Even more importantly, low metal prices led to production cutbacks at many mines, which in turn reduced base metals concentrates supplies to the world's smelters (ie Intec's competitors). Because capital had already been 'sunk' for these smelters and their operating economics are best at maximum production rates, they have been bidding aggressively to secure copper concentrates in particular, which are presently in limited supply on world markets. This has resulted in a recent collapse in spot smelting charges (TC/RC's) applied to copper concentrates (as shown earlier in Figure 4) thus making it more difficult for any new plant (including an Intec plant) to compete, as any new plant must also amortise its capital investment.

The effect of this adverse competitive environment was to decrease the economic outcomes and to increase the risk of proceeding with the regional concentrates producer custom models previously envisaged in our IPO Prospectus. These proved to be 'hard entry' projects, necessitating the future raising of significant project capital, identifying and resolving particular site and infrastructure issues and ascertaining concentrates supply sources and copper product purchasers. Intec therefore decided not to proceed with these projects for the time being, and this remains the case.

In response to refentless economic pressures, smelters around the world have begun to close. Intecis now being presented with a number of distressed projects emerging from the depressed period for mining and minerals processing. These projects potentially offer major opportunities to use our innovative technology where valuable resources and infrastructure already exist, to create significant new value. In the cases of some of these projects, I am prevented by confidentiality agreements from speaking publicly about them for the time being.

Hellver Metals Project

This constraint does not apply in relation to the Hellyer Metals Project owned by Western Metals Limited (Receivers and Managers Appointed) which is described in detail on page 7 of our 2003 Annual Report (see earlier Figure 17). Just today the Receivers have advised Intec that the consortium of four ASX-listed companies that we are leading has been short-listed in the bidding process. We will be conducting due diligence in Tasmania next week, with a view to a binding offer for the Project being accepted prior to Christmas 2003.

Intec is thus beginning to pursue 'soft entries' into the minerals processing industry, both by exploiting the niche advantages of particular locations, solving existing metallurgical problems and also by becoming more involved in the 'downstream' product fabrication business (as evidenced by our work with Rautomead).

Ladies and Gentlemen, Intec is your company and we would therefore now welcome questions from the floor, following which we will adjourn for refreshments in our office next door.

Before doing so, and speaking now as an individual Intec shareholder, I would like finally to convey my sincere gratitude to all of the Intec team, be they directors, staff members, key consultants or professional advisers, for the tremendous effort they have continued to make on the Company's behalf over the past year. The business that we are in poses great challenges, but if anybody is going to succeed it will be this Company, its leading technologies and the highly talented and dedicated group of people who serve it.

Thank you Philip R Wood Managing Director Chief Executive Officer