Thire Had

ASX Code: INL ABN 25 001 150 849

Superior and Sustainable Metals Production

Annual Report 2005

Letter from the Chairman and Managing Director & Chief Executive Officer
Review of operations	2
Directors' report	9
Auditors independence declaration	14
Statements of financial performance	15
Statements of financial position	16
Statements of cash flows	17
Notes to the financial statements	18
Directors' declaration	41
Independent audit report	42
Australian Stock Exchange information	45
Corporate governance	46
Corporate directory	Inside back cover

Photo Front Cover: Hellyer tailings being fed for the first time into the Intec Hellyer Metals Demonstration Plant at Burnie in August 2005. This marked the end of the 'water commissioning' phase (essentially mechanical) and the commencement of hydrometallurgy at the demonstration plant. A front end loader lifts the tailings from a 15-tonne skip, supervised by (standing on the floor) Justin Resta (seconded from Ammtec Ltd as Demonstration Plant Manager) and (standing on the stairs) Jean-Louis Huens, Intec's Chief Operating Officer and General Manager, Intec Hellyer Metals Demonstration Plant.

Intec Ltd

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: [email protected] Website: www.intec.com.au

30 September 2005

Dear Shareholders

Letter from the Chairman and Managing Director & Chief Executive Officer

This is Intec Ltd's fourth Annual Report since listing on the Australian Stock Exchange and includes its financial statements for the year to 30 June 2005.

During the last financial year all of the Company's stakeholders have worked together very effectively to make decisive progress on our wholly-owned Hellyer Metals Project. Its essence is to maximise economic recovery (projected to be around 80%) of the A\$1.8 billion in-situ value of zinc, lead, silver, gold and copper

contained in the Hellyer tailings dam. This is a metallurgical challenge that only achievable via is. Intec's proprietary and technology $i$ s symbolised in $\alpha$ _III internally-designed logo (at right) for Intec's 100% subsidiary Intec Hellyer Metals Pty Ltd.

In the December quarter of 2005 Intec Ltd raised A\$12 million at 6.9 cents per share through an institutional placement and

underwritten share purchase plan. The principal application of these funds has since been the design, construction and commissioning of the Intec Hellyer Metals demonstration plant in Burnie, Tasmania.

This plant was officially opened on 15 September 2005 in front of over 100 invited guests by the Hon. Bryan Green MHA, Tasmanian Minister for Infrastructure, Energy and Resources, who unveiled the plaque appearing on this page.

'Steady state' operations at the demonstration plant are anticipated during the final quarter of 2005, generating data that will be fed into the design of the commercial scale plant at Hellver by H.G. Engineering of Toronto, Yours faithfully

Richard H Jenkins Chairman

Canada as part of the Bankable Feasibility Study (BFS) being managed by WorleyParsons Limited.

The BFS is expected to be completed during the March quarter of 2006 and will form the basis of the Hellyer Metals Project financing to be led by Macquarie Bank Limited (MBL). MBL is now an Intec shareholder and is providing working capital towards completion of the BFS.

Early in 2005 the Hellyer exploration tenements were

vended into Resource Finance and Investments Limited (RFI). On 29 September RFI closed its $\overline{AS3.5}$ million initial public offering early, and substantially oversubscribed. having received strong support from Intec shareholders under a priority offer and brokers and institutions. RFI will list on ASX in mid October with Intec retaining a 22.1% interest. RFI. has negotiated

guaranteed access to Intec's Hellyer Mill, a major minerals processing asset dominating the northern portion of the mineralogically prolific Mt Read Volcanics Zone and for which Intec is actively investigating toll treatment opportunities with other regional producers.

Although Intec's broader portfolio of chloride-based technologies hold great promise, our limited resources necessitate focussing on our own project at this critical juncture. In this regard we have met all of our timetabled milestones and are confident that we will continue to do so through to completion of the Hellver Metals Project. by which time the Company's shareholders will be sharing fully in the rewards of its efforts.

Philip R. Wood

Philip R Wood Managing Director & Chief Executive Officer

Review of Operations

Introduction

The principal activities of the Company during the last financial year were:

The continued development of the Company's 1. wholly-owned Hellyer Metals Project;
The implementation of strategies to realise value 2. from non-core assets at Hellyer; and
1. Continued development of the Intec Gold Process in association with domestic and international gold industry participants.

Development of the Hellyer Metals Project

Background

The Hellyer Metals Project was acquired in January 2004 by the Company's wholly-owned subsidiary Intec Hellyer Metals Pty Ltd and resulted in ownership of the following assets:

$\mathbf{1}$ . The Burnie Research Laboratory;
$2.$ The Hellyer tailings dam;
1. The 1.5mta Hellyer mill and associated infrastructure:
$\overline{4}$ . A portfolio of mining and exploration tenements; and
1. Various items of intellectual property.

Immediately following completion of the acquisition, the Burnie Research Laboratory was transferred to Ammtec Ltd, Australia's largest metallurgical and minerals testing consultancy for a pre-agreed Subsequently the Burnie Research consideration. Laboratory has become a key provider of labour and technical services to the Hellyer Metals Project.

The principal purpose of the acquisition was to apply the Intec Process to the re-treatment of Hellyer tailings and other zinc-bearing residues in order to recover in saleable form the contained base and precious metals (Hellyer Metals Project). The Hellyer tailings dam contains some 10.9mt tonnes of material with grades and contained metal as shown below in Table 1.

- Blement I Craig		Contained Metal
Gold	$2.6 \text{ g}/t$	911,000 ounces
Zinc	2.80%	305,0000 tonnes
Lead.	3.00%	327,000 tonnes
Silver	88.0 g/t	30,839,000 ounces
Copper	0.16%	$17,400$ tonnes

Table 1: Grade and Contained Metal of Hellyer Tailings Dam

Figure 1: The Hellyer Tailings Dam

The last financial year and the period since have seen significant progress in the development of the Hellyer Metals Project. Development activities have included:

$\mathbf{1}$ . Completion of pilot plant operations in Sydney;
$2.5$ Completion of a Pre-Feasibility Study by H.G. Engineering of Toronto, Canada;
$3.$ Construction, commissioning and initial operation of a demonstration plant in Burnie, Tasmania; and
The engagement of WorleyParsons to undertake $\overline{4}$ a A\$2.7 million Bankable Feasibility Study.

Figure 2 below is an aerial photograph of the Hellyer Metals Project site in northwestern Tasmania on which are identified some key assets of the Company and relevant aspects of the Hellyer site.

1.55 ha tailings dam

80km road & rail access to Burnie (deepwater port) 3. Hellyer mine adit (plugged) 4. 1.5 mtpa Hellyer Mill 5. Former Que River mine site 6. Electricity grid 7. Proposed site for re-treatment tailings dam 8. Shale pit for toll treatment residues

Figure 2: Aerial photograph of Hellyer Metals Project site

Completion of Pilot Plant Operations

Throughout 2004 the Company operated a pilot plant at the Sydney facilities of Ammtec Ltd. The pilot plant, funded in part by Ivanhoe Mines Ltd. (Intec's largest shareholder) and the Australian Government via the R&D Start Program, was originally designed to pilot the Intec Gold Process. However, following the Company's acquisition of the Hellyer Metals Project, the pilot plant was reconfigured in certain aspects in order to conduct leach trials on Hellyer tailings (which include gold) and other zinc-bearing residues.

Approximately four tonnes of Hellyer tailings were processed through the pilot plant during a multi-part programme that was completed in the second half of 2004. The programme included three campaigns solely on Hellyer tailings and two campaigns on a blend of Hellyer tailings and zinc-bearing Electric Arc Furnace (EAF) dust.

The purposes of the pilot plant campaigns were:

piloting of the leach and purification circuits of the proposed flowsheet for the Hellyer Metals Project:
optimisation оf leach circuit extraction efficiencies, in particular those involving the cotreatment of Hellyer tailings and EAF dust; and
the gathering of engineering design data for input into the Pre-Feasibility Study for the Hellyer Metals Project.

The pilot plant campaigns solely on Hellyer tailings achieved high leach extractions on all metals with the exception of gold as is shown in Table 2.

Llement	Average ² /0 Extraction over Three Campaigns	Average ⁰ /6 Extraction in Single Campaign
Lead	99.0	99.6
$Z$ inc	98.8	99.0
Copper	93.5	97.0
Silver	91.2	94.8
Gold	32.8	49.3

Table 2: Results of Pilot Plant Campaigns on Hellyer Tailings

The metal extractions achieved during the pilot plant campaigns solely on Hellyer tailings corresponded to an average of 77.3% of in-situ metal extraction over the three pilot plant campaigns and 83.2% of in-situ metal extraction in the best-performing pilot plant campaign. These aggregate extraction percentages were calculated using \$US metal prices and the US\$/A\$ exchange rate prevailing in August/ September 2004.

While it is technically possible for the Intec Process to achieve high gold extraction efficiencies from Hellyer tailings, the economics of doing so are prohibitive due to the highly refractory nature of the material and the low grade of gold in the tailings.

In addition, the following pilot plant results were achieved in two campaigns involving the co-treatment of Hellyer tailings and EAF dust (grading 30-35% zinc) supplied by Smorgon Steel Group Limited (Smorgon Steel) and OneSteel Limited (OneSteel):

Metal extractions from Hellyer tailings were consistent with the extractions described above; and
Extractions of zinc contained in EAF dust (typically 30 to 35%) varied from 85-95%.

Completion of Pre-Feasibility Study

H.G. Engineering (HGE) of Toronto, Canada completed a Pre-Feasibility Study for the Hellyer Metals Project during the September quarter of 2004.

The Pre-Feasibility Study determined the engineering design and capital and operating costs for two project cases:

$1₁$ A 'Base Case' that provided for the treatment of solely Hellyer tailings at the annual rate of 1.0 mtpa for an eleven year project life; and
$2.$ An 'Enhanced Case' that provided for the cotreatment of Hellyer tailings and zinc-bearing residues such as EAF dust. The throughput rates for the 'Enhanced Case' assumed the treatment of 0.5 mtpa of Hellyer tailings and the treatment of 0.1 mpta of zinc-bearing residues.

The Company used the cost parameters established and described in HGE's study to evaluate the project's indicative financial performance. The indicative financial analysis was undertaken in real terms, assumed 100% equity funding and employed metal prices and the US\$/A\$ exchange rate prevailing at 6 September 2004 to generate revenue forecasts. Summaries of the respective financial analyses for both cases are shown in Table 3.

Parameter Market School Kabupatèn B	Base lease.	Enhanced TOARE.
Project Life	11 years	21 years
Capital Cost	A\$153 m	A\$137 m
Annual Sales Revenue	A\$103 m	A\$85 m
Annual Operating Cost	$A$ \$35 $m$	A\$28 m
Net Annual Cash Flow	A\$67 m	A\$56 m
Net Present Value: Pre-Tax *	A\$258 m	A\$317 m
Net Present Value: Post-Tax *	A\$165 m	A\$205 m
Internal Rate of Return: Pre-Tax	38.6%	36.6%
Internal Rate of Return: Post Tax	30.1%	29.3%

* 10% discount rate

Table 3: Summary of Hellyer Metals Project Indicative Financial Analysis from Pre-Feasibility Study

The analyses indicated that the Hellyer Metals Project would generate attractive economic returns and it was on this basis that the Company proceeded to

undertake a A\$12 million capital raising during the December quarter of 2004 in order to progress development of the Hellyer Metals Project through the undertaking of a demonstration plant programme and the completion of a bankable feasibility study.

Hellyer Metals Project Demonstration Plant

Following the successful A\$12 million capital raising in late 2004, construction of an A\$5 million demonstration plant at Burnie, Tasmania commenced on a site adjacent to Ammtec's Burnie Research Laboratory and was substantially completed early in the September quarter of 2005. The demonstration plant was designed with the capacity to treat 4 tonnes of Hellyer tailings per day or a blend of Hellyer tailings and other zinc-bearing residues such as EAF dust. The demonstration plant contains all elements of the process flowsheet developed for the Hellyer Metals Project and will produce on a continuous basis all proposed commercially saleable metal products. The demonstration plant will be operated under technical operating conditions specified in the Pre-Feasibility Study. Its successful operation will provide engineering design data required for the completion of a bankable feasibility study and a platform for financing the commercial-scale Hellyer Metals Project.

Figure 3: Demonstration plant site at 20 River Road, Burnie, shortly after the Company took possession of the site in early 2005.

Figure 4: Demonstration plant in June 2005 prior to commencement of water commissioning.

By industry standards the construction period was short for a hydrometallurgical plant recovering

saleable products comprising five different metals. The rapid construction of the demonstration plant (Figures 3 and 4) was assisted by the relocation of the Company's key technical personnel to Tasmania, the sourcing of labour and technical services from Ammtec's Burnie Research Laboratory and the high quality of Tasmanian-based service providers and equipment suppliers.

During construction of the demonstration plant the Company optimised the commercial-scale zinc electrowinning cell at its laboratories in the Department of Chemical Engineering at the. University of Sydney (see Figure 5). This programme concluded upon was successfully repeatedly demonstrating that the cell could produce smooth metallic zinc cathode under operating conditions specified in the Pre-Feasibility Study. This outcome represented a significant technical achievement during which the Company was assisted by Umicore Zinc Smelting, the world leader in zinc cell tankhouse design.

Figure 5: Production of metallic zinc cathode at the Company's University of Sydney based laboratories.

Following the completion of operations in Sydney, the zinc electrowinning cell was transported to Burnie and installed in the demonstration plant, while work was also undertaken to assess the melting and casting characteristics of the zinc cathode (see Figure 6).

Figure 6: Molten zinc produced by the Company's commercial scale zinc electrowinning cell being cast into ingots.

demonstration Commissioning of the plant commenced in the first half of the September quarter 2005 following the employment in June of 18 operating personnel by Ammtec's Burnie Research Laboratory under a labour supply contract. At the date of this report all process unit operations are installed and in operation.

Thus on 15 September 2005 the demonstration plant was officially opened by the Hon. Bryan Green, MHA Tasmanian Minister for Infrastructure, Energy and Resources at a function attended by governmental representatives, financial supporters, equipment suppliers and service providers (see Figures $7 - 9$ ).

Figure 7: Philip Wood, Managing Director and Chief Executive Officer of Intec (left), and the Hon. Bryan Green MHA, Tasmanian Minister for Infrastructure, Energy and Resources unveiling the plaque at the Intec Hellyer Metals Demonstration Plant official opening on 15 September 2005.

Figure 8: A portion of attendees at the official opening of the Intec Hellyer Metals Demonstration Plant.

Figure 9: The Hon. Bryan Green MHA, is guided around the demonstration plant by Intec's Technical Director John Moyes.

Following achievement of 'steady-state' operations on Hellyer tailings it is proposed to immediately commence a campaign on the co-treatment of Hellyer tailings and EAF dust during the remainder of 2005.

The co-treatment of Hellyer tailings and zinc-bearing residues forms the 'Base-Case' for the Hellyer Metals Project's bankable feasibility study (see later section). To support the demonstration plant co-treatment campaign, tonnages of EAF dust have been shipped to Burnie by both Smorgon Steel and OneSteel. In particular, the supply of EAF dust to the demonstration plant by Smorgon Steel represents its continuing support for the Hellyer Metals Project in line with its previously publicised Letter of Understanding in October 2004.

Bankable Feasibility Study (BFS)

On 21 June 2005 the Company appointed WorleyParsons to undertake an A\$2.7 million BFS for the Hellyer Metals Project, which amount is exclusive of Burnie demonstration plant operations.

The preliminary draft of the BFS is scheduled to be made available early in the first quarter of 2006, with the completed document expected towards the end of the first quarter of calendar 2006. The BFS will provide the necessary platform for the project

financing of the Hellyer Metals Project. With this in mind, and as the BFS progresses, WorleyParsons will work closely with an independent technical expert to be nominated by the Metals and Energy Capital Division of Macquarie Bank Limited the intending project financiers (see later discussion).

In discussion with the Company, WorleyParsons has engaged the following sub-consultants responsible for developing specific aspects of the BFS:

Hellyer tailings resource confirmation - AMC Consultants Pty Ltd

New retreatment tailings disposal dam - GHD Pty Ltd

Environmental Caloundra Assessment Environmental (assisted by Golders, Katestone & PEC, Earth Systems and Environmental Chemistry)

Burnie Demonstration Plant report - Ammtec's Burnie Research Laboratory

Process Plant design - HG Engineering (Toronto, Canada)

Conceptual Zinc Tankhouse Design - Umicore Zinc Smelting (Balen, Belgium)

Plant Instrumentation and Control - Honeywell Process Systems

In addition to its Owner's Responsibilities, the Company will be responsible for on-site plant infrastructure (jointly with WorleyParsons) and secondary feedstocks resource identification.

In addition to WorleyParsons's overall responsibility for the BFS, it will provide specialised input for secondary feedstock off-site recovery and transport, detailed design of the zinc cell tankhouse, on-site plant infrastructure (jointly with the Company), offsite infrastructure, socio-economic assessment, project implementation and control, project economics and occupational health and safety.

Realisation of Non-Core Assets

As previously noted the acquisition of the Hellyerrelated assets included some which are not integral to the development of the Hellyer Metals Project. The Company has nonetheless implemented strategies in order to realise the full potential value of these assets.

Burnie Research Laboratory

The Burnie Research Laboratory was transferred immediately upon completion of the Hellyer Metals Project to Ammtec. The Burnie Research Laboratory is playing a key support role in the demonstration plant programme through the provision of labour and technical services.

Figure $10:$ Hellyer exploration and mining tenements

All of the above tenements (shown in Figure 10), with the exception of Hellyer CML 103M/1987, were transferred in March 2005 to Resource Finance and Investments Limited (RFI). In the case of Hellyer CML 103M/1987 the Company entered into a sublease agreement with RFI in March 2005. The sublease provides the right for RFI to undertake mineral exploration on this mining lease while the Company retains ownership of all assets integral to the development of the Hellyer Metals Project (i.e. the tailings dam and associated infrastructure).

Pursuant to the tenement sale and sub-lease agreements the Company received shares and options in RFI equating to a shareholding of 43.8% on an undiluted basis and the Company nominated Mr Kieran Rodgers to the RFI Board.

$RFI's$ well-credentialled management team subsequently proceeded to acquire largest the exploration tenement portfolio in highly the prospective Mt Read Volcanics Belt of northwestern Additionally, RFI has entered into key Tasmania. strategic alliances with Zinifex Limited (Zinifex) and Geoinformatics Exploration Inc (Geoinformatics). Zinifex, the operator of the nearby Rosebery base metal mine, has committed to contribute A\$1.0

million to explore and generate new targets on the Hellyer leases, as part of its corporate strategy to increase its ore reserve base.

RFI's alliance with Geoinformatics provides for it to utilise its proven propriety data validation, processing and target generation technology on all of RFI's tenements in the Mt Read Volcanics Belt. The Geoinformatics alliance will enable RFI to efficiently evaluate its large ground position and commence exploration quickly.

The Company has granted RFI priority access to its modern and well maintained 1.5 mtpa Hellyer Mill. Access to the Hellyer Mill has the effect of significantly enhancing the project value of any discovery by RFI, and its alliance partners, by dramatically reducing the costs of achieving commercial production.

Subsequent to entering into all of the arrangements above, RFI lodged a prospectus on 16 August 2005 to raise A\$3.5 million through the issue of Shares and Options and list on the Australian Stock Exchange (ASX). Shareholders of the Company were granted a priority right to apply for Shares and Options in RFI.

The RFI prospectus was closed early on 29 September 2005 having been substantially over-subscribed support Intec following very strong from shareholders, brokers and institutions. RFI is expected to commence trading on ASX in mid-October at which time the Company will have a 22.1% undiluted interest.

Figure 11: Mr Mike Rosenstreich, Managing Director of RFI presenting during the Hellyer Mine Site visit on 15 September 2005 following the Burnie demonstration plant's official opening.

Hellyer Mill

The Hellyer Mill is a 1.5 mtpa crushing, grinding and flotation facility that dominates the northern part of the Mt Read Volcanics Belt. Although the significant components of the Hellyer Mill are not required for the Hellyer Metals Project, the Company is presently maintaining all components of the Mill under a comprehensive care and maintenance programme while management explore value realisation opportunities.

The principal focus of realising value from the Hellyer Mill has been the investigation of toll treatment opportunities with current and prospective regional producers, an example of which is the agreement entered into with RFI. Additionally, in June 2005 a preliminary test programme was conducted using one of the Hellyer tower mills to grind nickeliferous ore from Allegiance Mining's Avebury project located approximately 90km south of the Hellyer Mill. Subsequently, discussions between Allegiance Mining and the Company have been directed towards a larger trial testing a more conventional ball mill and flotation circuit within the Hellyer Mill as the precursor to possible commercial production of saleable nickel concentrates.

Intellectual Property

This comprises the Mt Gordon Copper and related processes which have either been divested and/or external parties sought to fund development activities.

Intec Gold Process (IGP)

Technical and commercial development activities continued during the year, albeit at a reduced level, on the IGP. Principal activities in this regard included the following:

A successful five-week pilot plant campaign on refractory gold material supplied by Barrick Gold (the world's third largest gold producer);
Laboratory testwork and desktop economic studies for a number of companies including Placer Dome and Rio Tinto; and
The mandating of Argonaut Capital, a West Australian-based financial institution, to link the IGP with one or more refractory gold projects.

While the principal focus of the Company is rightly on the Hellyer Metals Project, resources have been applied to the technical and commercial development of the IGP because of its inherent environmental and economic advantages by comparison with competing process. The successful operation of the Burnie demonstration plant, which incorporates an IGP circuit, will provide a platform for the more rapid technical and commercial development of the IGP.

Other Intec Process Developments

Although afforded a lower priority than the Hellyer Metals Project and the IGP, technical development has continued on certain other applications of the Intec Process, in particular the Intec Copper Process (ICP), Intec Zinc Process (IZP) and the Intec Nickel Laterite Process (INLP). The decision to allocate

limited resources to the technical development of the ICP, IZP and INLP was based on an assessment of the commercial opportunities available and the potential synergies with the operation of the Burnie demonstration plant.

Finance and Corporate Matters

Board Changes

On 16 December 2004 Mr Gordon Toll resigned as a Non-executive Director of the Company and became the Alternate Director to Mr Ian Ross until ceasing to be so on 27 September 2005.

Mr Toll made a significant contribution as a Director, in particular his assistance in the development of the Intec Gold Process and his involvement in the funding of both the Company and the IGP pilot plant through his executive role with Ivanhoe Mines Ltd.

Also, Mr Philip Evans resigned as a Non-executive Director of the Company on 1 April 2005. Over the last ten years, Mr Evans has led the continuing close involvement with the Intec Process of H.G. Engineering, from which he recently stepped down as President. As Non-executive Director of Intec for the past four years, Mr Evans has availed the Company of his tremendous expertise, based on over 40 years experience in the operation and design of hydrometallurgical plants, particularly in relation to the IGP pilot plant and the Hellyer Metals Project. Mr Evans will retain an ongoing involvement with Intec through his involvement as a consultant to the Company in relation to the Burnie demonstration plant and BFS.

Finances

In early January 2005, the Company successfully completed an aggregate A\$12 million capital raising at 6.9 cents per share, comprising an A\$7 million

institutional placement lead managed by Grange Securities and RFC Corporate Finance and an A\$5 million Shareholder Purchase Plan underwritten by Grange Securities.

These funds have been principally being directed towards the demonstration plant programme, the completion of the BFS and general working capital requirements.

On 22 June 2005 the Metals and Energy Capital Division of Macquarie Bank Limited (MBL) committed to provide a secured A\$2,500,000 standby working capital facility to the Company while also taking a placement of A\$500,000 worth of shares at 6.9 cents per share. This placement was completed on 23 September 2005 following the execution of documentation for the A\$2.5 million Working Capital Facility. At the date of this report no drawdowns of funds under the facility have occurred.

As part of this transaction, Intec has agreed to mandate MBL to lead arrange the debt financing and associated hedging facilities for development of the Hellyer Metals Project. Additionally, MBL has submitted an Indicative Letter of Offer expressing its interest in financing possible additional project developments at Hellyer, either by extending the Facility amount or providing an additional Project Specifically, MBL will consider Debt Facility. providing finance for the proposed refurbishment and operation of the Hellyer Mill to enable processing of base metal ores from regional producers (see above).

At 30 June 2005, Intec Ltd group cash reserves were \$4,544,757 (2004 \$1, 104,495).

Directors' report

Your Directors present their report on the consolidated entity, consisting of Intec Ltd (Intec or the Company) and the entities which it controlled at the end of, or during, the year ended 30 June 2005.

Information on Directors

The names and details of the Directors of the Company in office during the financial year and on the date of this report are set out below. All were Directors for the whole of the financial year and they continue in office at the date of this report except Mr Evans who resigned on 1 April 2005 and Mr Toll who resigned on 16 December 2004 (refer below).

Richard H Jenkins

Non-executive Chairman

Mr Jenkins was an Executive Director of Macquarie Bank Limited from 1986 to 2001 and eventually coheaded Macquarie Investment Bank. He became a Non-executive Director of Intec on 22 March 2004 and was appointed Chairman on 25 May 2004. Mr Jenkins has not been a director of any other ASXlisted company in the last three years.

Philip R Wood (BA (Syd), LLB (Syd), ASIA) Managing Director and Chief Executive Officer

Mr Wood has qualified and practised as a legal and corporate adviser on local and international financial and commercial transactions in Sydney, New York, London and Hong Kong. He has been a Director of the Company since 1993. He was appointed Managing Director and Chief Executive Officer on 26 March 2001. He is responsible for implementation of corporate, financial and marketing strategies of the consolidated entity. Mr Wood has not been a director of any other ASX-listed company in the last three years.

A John Moyes (BA (Chem) (Macquarie)) Technical Director

Mr Moyes has over 30 years of experience in the mining and metals industry, encompassing minerals analysis, laboratory management, hydrometallurgical and electrochemical research, process development, plant design and project management. He has been a Director of the Company since 1995 and is presently its Technical Director. Mr Moyes has not been a director of any other ASX-listed company in the last three years.

Ian W Ross

Non-executive Director

Mr Ross has extensive corporate finance experience in Europe, North America, Africa, Australasia and Asia.

He was a founding director of a group of mining companies located in the People's Republic of China (PRC) which was acquired by the Ivanhoe group in 1994. His ensuing senior executive roles with Ivanhoe Capital Corporation included several years resident in the PRC as the Ivanhoe group's director and as vice chairman of Shanghai Land Corporation. Mr Ross is now resident in Sydney and was appointed a Nonexecutive Director of the Company on 19 September 2003. Mr Ross is a director of ASX-listed Union Resources Limited and has not been a director of any other ASX-listed company in the last three years.

Kenneth J Severs (BSc, C Eng, P Eng, FI Chem E) Non-executive Director

Mr Severs is a senior chemical engineer with over 40 years of experience in the mining and metals industry. He has worked at all levels of management in extractive metallurgy including research and development, operations, projects, design. consultancy, marketing and executive functions. He has held senior executive positions with a number of large mining companies including nine years (1990-1999) for the Rio Tinto group as Group Metallurgical Executive and 24 years (1964-1988) for the Anglo American Group. Mr Severs was Managing Director of Intec Copper from 1995 to December 1998. He was appointed a Non-executive Director of the Company on 26 March 2001 and was Chairman from 10 October 2001 until 25 May 2004. Mr Severs has not been a director of any other ASX-listed company in the last three years.

J Philip Evans

BSc (Met) (Birmingham UK), MCIMM

Mr Evans was appointed a Non-executive Director of the Company on 26 March 2001. Mr Evans resigned as a Director on 1 April 2005 but remains involved in the Company through the provision of engineering consultancy services to the Hellyer Metals Project. Mr Evans has not been a director of any other ASX-listed company in the last three years.

Gordon L Toll

BE Mining (Hons), MSc, MAusIMM

Mr Toll was a Director of the Company until 1 December 2004 and acted as the Alternate Director for Mr Ian Ross until 27 September 2005. During the past three years Mr Toll was a director of the following listed companies; Fortescue Metals Group Limited, Compass Resources NL, LinQ Capital Limited and Ivanhoe Mines Ltd.

Company Secretary

Mr Robert J Waring BEc, CA, FCIS, ASIA, FAICD Company Secretary

Mr Waring was appointed to the position of Company Secretary in 2001 and has over 33 years experience in financial and corporate roles including 15 years in company secretarial roles for ASX-listed companies and 11 years as a director of an ASX-listed company (including Platsearch NL for the past three years). He is a director of Oakhill Hamilton Pty Ltd, a company which provides secretarial and corporate advisory services to a range of listed and unlisted companies.

Meetings of Directors

The numbers of meetings of the Company's Board of Directors held and attended by each Director during the financial year ended 30 June 2005 were:

Director	Full Meetings of Directors ¹	Meetings attended
Richard H Jenkins ²	4	4
Philip R Wood	4	4
A John Moyes	4	4
J Philip Evans (resigned
01/04/05	3	2
Ian W Ross ²	4	4
Kenneth J Severs ²	4	4
Gordon L Toll (resigned
16/12/04	2

Number of meetings held during the time the $\mathbb{R}^2$ Director held office.
$\rightarrow$ Current members of the Audit Committee. During the financial year ended 30 June 2005, Audit Committee meetings were held on 26 August 2004 and 24 February 2005 and Messrs Jenkins, Ross and Severs attended these meetings. A further Audit Committee meeting was held on 26 August 2005 and recommended that the Board approve the Financial Report for the year ended 30 June 2005. Messrs Jenkins, Ross and Severs are current members of the Remuneration Committee which was established on 19 September 2003, and together with Mr Wood are members of the Corporate Governance Committee, formed on 25 May 2004 and which met on 26 August 2005.

Principal Activities

The principal activities of the consolidated entity during the financial year pertained to the development of the Hellyer Metals Project through application of its patented technology to recover metals out of the Hellyer tailings dam and the realisation of the potential value of other Hellyer-related assets.

Additionally the Company also continued to develop the IGP for the treatment of refractory gold in an economically and environmentally advantageous manner.

Operating Results

The net loss of the consolidated entity after providing for income tax amounted to $$3,560,701$ (2004 – loss $$2,034,064$ .

Dividends

No dividends were paid during the year and no recommendation is made as to payment of dividends.

Review of Operations

A review of the operations of the Company during the financial year and the results of those operations are contained in pages 2 to 8 in this report.

Earnings per share

	2005	-2004 -
	Cents:	Cents
Basic earnings per share (loss)	(1.02)	(0.92)
Diluted earnings per share (loss)	(1.02)	(0.92)

Likely Developments and Expected Results of Operations

The consolidated entity will continue to focus efforts on development of the Hellyer Metals Project with particular emphasis on the Burnie demonstration plant and the ensuing BFS.

Significant Changes in the State of Affairs

In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year not otherwise disclosed in this report or the financial report.

Matters Subsequent to the End of the Financial Year

On 23 September 2005, the Metals and Energy Capital Division of MBL and the Company and Intec Hellyer Metals Pty Ltd formally executed a secured A\$2,500,000 Working Capital Facility Agreement (the Agreement).

In consideration of MBL entering into the Agreement, the Company issued call options to MBL for the purchase of 15,000,000 Intec shares at 8 cents per share, expiring 30 June 2008.

A further issue of 10,000,000 options, on the same terms, will be made to MBL on first drawdown under the Agreement.

Additionally, MBL invested A\$500,000 to purchase 7,246,377 Intec shares, issued to MBL at 6.9 cents per share. These shares were allotted on 23 September 2005.

No other matters or circumstances have arisen since 30 June 2005 that have significantly affected or may significantly affect the consolidated entity's operations in future financial years, the results of those operations in future financial years or the consolidated entity's state of affairs in future financial years

Environmental Regulation

The consolidated entity's operations are presently subject to environmental regulation under the laws of the Commonwealth of Australia, the State of New South Wales and the State of Tasmania

Intec is licensed to operate under Section 55 of the Protection of the Environment Operations Act 1997 (NSW Environment Protection Authority) and the associated Protection of the Environment Operations (General) Regulation 1998. Intec Hellyer Metals Pty Ltd is licensed to operate premises in Tasmania under Section 25(5) of the Environmental Management and Pollution Control Act 1994 (Tas). The consolidated entity is at all times in full environmental compliance with the conditions of its licence.

Remuneration Report

The remuneration report is set out under the following main headings:

Board policy for determining the nature and $(a)$ amount of remuneration;
Details of remuneration; and (b)
$(c)$ Share-based compensation.
(a) Board policy for determining the nature and amount of remuneration

Executives

The objective of the Company's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria:

competitiveness and reasonableness;
acceptability to shareholders;
performance linkage/alignment of executive compensation;
transparency; and

capital management.

The Company has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation.

Alignment to shareholders' interests:

has economic profit in the medium term as a core component of plan design;
focuses on sustained growth in shareholder wealth, consisting of growth in share price, and maximising return on presently available assets; and
attracts and retains high calibre executives.

Alignment to programme participants' interests:

rewards capability and experience;
reflects competitive reward for contribution to growth in shareholder wealth;
provides a clear structure for earning rewards; and
provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of "at risk" rewards.

Non-executive Directors

Fees and payments to Non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-executive Directors' fees and payments are reviewed annually by The Chairman's fees are determined the Board. independently to the fees of Non-executive Directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration.

Directors' fees

The current base remuneration was last reviewed with effect from 1 January 2005.

Non-executive Directors' fees are determined within an aggregate Non-executive Directors' fee pool limit, which is periodically recommended for approval by The maximum currently stands at shareholders. \$200,000 per year in aggregate.

(b) Details of remuneration

Details of the nature and amount of each element of the emoluments of each of the Directors of Intec and each of the five senior executives of the Company and the consolidated entity who received the highest emoluments during the year ended 30 June 2005 are set out in the following tables.

Directors of Intec	Directors' Fees	Primary Cash Salaries	Consulting Fees	Post Employment Superannuation Options ¹ Contributions	Equity	Total
	\$	\$	\$		\$
Richard H Jenkins	43,349			3,901		47,250
Philip R Wood		245,924		21,357		267,281
A John Moyes		130,104		78,135		208,239
J Philip Evans
(resigned $01/04/05$ )	28,125		2,510			30,635
Kenneth J Severs	39,375		1,971			41,346
Gordon L Toll
(resigned $16/12/04$ )	17,389					17,389
Ian W Ross	8,601			20,462		29,063
			Primary	Post Employment	Equity
Other senior executives of the		Cash	Consulting	Superannuation Options ¹		Total
consolidated entity		Salaries	Fees	Contributions
		\$	\$	S	\$	\$
Kieran G Rodgers		184,463		16,050	33,568	234,081
Frank Houllis ²		148,270		13,172	31,832	193,274
Chung Ho Lam		145,863		12,891	26,705	185,459
Jean-Louis Huens		135,039		11,766	21,579	168,384
Andrew M Platts		128,119		16,294	15,375	159,788

An ASIC guidance release has clarified the treatment of options for inclusion in Directors' and Executives' remuneration. In accordance with this release the amounts disclosed above for remuneration relating to options are the assessed fair value of options at the date they were granted. Fair values have been assessed using the Black and Scholes option valuation methodology which takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the nontradeable nature of the options, the current price and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The total fair value is allocated to this reporting period since the options vest immediately on grant date. This amount has not been expensed in the profit and loss account.
$\bar{2}$ Mr Houllis left the Company in August 2005 and his options are now forfeited.

(c) Share Options

At 30 June 2005 the Company had granted options over 1,275,000 unissued shares to former Directors and a former employee with an exercise price of \$0.49625 payable in full on or before 30 June 2009. These options were issued in 1999 and 2000.

At 30 June 2005 the Company had granted 7,057,122 options to employees, certain key consultants and Directors which are exercisable at any time until expiry on 16 July 2007 at an option exercise price of \$0.24625.

As at 30 June 2005 the Company had granted $4,626,008$ options to employees, certain key consultants and Directors which are exercisable at any time until expiry on 26 November 2008 at an option exercise price of \$0.10.

On 5 April 2005 the Company granted 6,087,213 options to employees and certain key consultants which are exercisable at any time until expiry on 24 February 2010 at an option exercise price of \$0.069.

The Directors have reviewed the value of the options issued during the financial year using the Black and Scholes option valuation methodology. On this basis the \$0.069 options had a value of approximately \$0.0363 each at 5 April 2005. Accordingly the total of these options values are included in the remuneration of senior executives as set out in this Remuneration Report.

The following options will be granted to Directors if approved at the 2005 Annual General Meeting:

Richard Jenkins, Chairman	318,419
Philip R Wood, Managing Director & Chief
Executive Officer	1,014,590
A John Moyes, Technical Director	804,832
J Philip Evans, Non-executive Director	329,783
Ian W Ross, Non-executive Director	329,783
Kenneth J Severs, Non-executive Director	335,535
Gordon L Toll, Non-executive Director	329,783

The proposed options will be exercisable at any time until expiry on 24 February 2010 at an option exercise price of \$0.069.

No options were exercised during or since the end of the financial year.

Further information on remuneration of directors is set out in notes 6 and 30 to the financial statements Further information on remuneration of executives is set out in notes 6 and 27 to the financial statements.

Auditor's Remuneration

Non-audit services

The Company may decide to employ the auditor on assignments additional to its statutory audit duties where the auditor's expertise and experience with the Company and/or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out below. The Directors have considered the position and, in accordance with the advice received from the Audit. Committee is satisfied that the provision of the nonaudit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001.

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 14.

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

Assurance services

Audit services

PricewaterhouseCoopers Australian firm:

	Consolidated
	2005 -	- 2004
	£	\$
Audit and review of financial reports and other audit work under
the Corporations Act 2001		52,100 39,500
Audit of R&D Start Grant	5,000	- 2,500

Taxation services

PricewaterhouseCoopers Australian firm:

	Consolidated
		2005 2004
	Ж
Tax compliance services, including review of Company income tax
returns	17,795 12,193

Directors' Interests

The relevant interest of each Director (including their associates) in the share capital of the Company as at 30 June 2005 are set out in note 30 to the financial statements.

Insurance of Officers

The Company has, by Deed of Access, Indemnity and Insurance, paid a premium to insure the Directors and Company Secretary of the consolidated entity in respect of certain legal liabilities, including costs and expenses in successfully defending legal proceedings, whilst they remain as Directors and for seven years thereafter. The insurance contract prohibits the disclosure of the total amount of the premiums and a summary of the nature of the liabilities.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

Signed on 30 September 2005 in accordance with a resolution of the Board of Directors.

Philip R. Wood

Philip R Wood Managing Director & Chief Executive Officer

PRICEWATERHOUSE COPERS @

PricewaterhouseCoopers ABN 52 780 433 757

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

Auditors' Independence Declaration

As lead auditor for the audit of Intec Ltd for the year ended 30 June 2005, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Intec Ltd during the period.

Michelle Chrang

MW Chiang Partner PricewaterhouseCoopers

30 September 2005

Statements of financial performance for the year ended 30 June 2005

		Consolidated			Intec Ltd
	Note	2005	2004	2005	2004
		\$	\$	S	S
Revenue from ordinary activities	3	2,214,857	1,868,559	1,260,953	4,195,090
Equity share of losses of associated entities		(120, 680)
Administration expense		(443, 322)	(425, 154)	(423, 877)	(417, 636)
Depreciation and amortisation expenses		(208, 949)	(122, 515)	(144, 765)	(89,983)
Employee benefits expenses		(2,749,007)	(2,278,461)	(1,617,642)	(2, 278, 370)
Engineering and other consultants expenses		(21, 727)	(159, 783)	(8, 428)	(159, 783)
Hellyer mill costs		(741, 177)	(227, 323)
Occupancy expense		(214, 447)	(219, 247)	(214, 447)	(219, 247)
Marketing expense		(153, 052)	(180, 549)	(153, 052)	(180, 549)
Provision against advances to controlled
entity				(1,405,574)	(2,303,429)
Provision against investments in controlled
entity					11,030
Research and development expenses		(377, 134)	(428, 274)	(366, 671)	(428, 273)
Other expenses from ordinary activities		(746, 063)	(406, 273)	(375, 597)	(319, 304)
Loss from ordinary activities before
income tax expense	4	(3,560,701)	(2,579,020)	(3,449,100)	(2,190,454)
Income tax (expense) benefit relating to ordinary activities	5		544,956		156,390

Net loss attributable to members of Intec
Ltd	24	(3,560,701)	(2,034,064)	(3,449,100)	(2,034,064)
Basic and diluted earnings (loss) per
share (cents per share)	8	(1.02)	(0.92)

The above statements of financial performance should be read in conjunction with the accompanying notes.

Statements of financial position as at 30 June 2005

			Consolidated	Intec Ltd
	Note	2005	2004	2005	2004
		\$	\$	\$	S
Current assets
Cash assets	9	4,544,757	1,104,495	4,189,323	1,071,481
Receivables	10	204,226	67,624	36,132	47,266
Other current assets	11	13,115	9,509	13,115	9,509
Total current assets		4,762,098	1,181,628	4,238,570	1,128,256
Non-current assets
Receivables	12	243,020	239,500	6,104,858	1,467,046
Investments	13			15,770	15,770
Investments in associates accounted for using
the equity method	15	1,079,320
Exploration and evaluation cost	16		30,000		30,000
Property, plant and equipment	17	5,784,516	1,688,435	560,195	432,994
Intangible assets	18	10,000	10,000		10,000
Total non-current assets		7,116,856	1,967,935	6,680,823	1,955,810
Total assets		11,878,954	3,149,563	10,919,392	3,084,066
Current liabilities
Payables	19	1,316,167	515,902	310,534	450,405
Provisions	20	151,542	101,034	130,345	101,034
Total current liabilities		1,467,709	616,936	440,879	551,439
Non-current liabilities
Provisions	21	105,911	64,646	61,579	64,646
Total non-current liabilities		105,911	64,646	61,579	64,646
Total liabilities		1,573,620	681,582	502,458	616,085
Net assets		10,305,334	2,467,981	10,416,935	2,467,981
Equity
Contributed equity	22	45,242,213	33,844,159	45,242,213	33,844,159
Accumulated losses	24	(34, 936, 879)	(31, 376, 178)	(34, 825, 278)	(31, 376, 178)
Total equity		10,305,334	2,467,981	10,416,935	2,467,981

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

Statements of cash flows for the year ended 30 June 2005

		Consolidated			Intec Ltd
	Note	2005	2004	2005	2004
		\$	S	\$	S
Cash flows from operating activities
Receipts from customers (inclusive of GST)		74,306	54,384	53,851	39,255
Payments to suppliers and employees
(inclusive of GST)		(5,164,880)	(4, 151, 145)	(4,335,973)	(3,873,056)
Interest received		296,887	72,099	290,915	70,253
Income Tax refund			544,956		156,390
Shareholder contributions received			875,000		875,000
Government grants received		648,560	870,929	648,560	860,022
Other Receipts			1,042
Net cash (outflow) from operating activities $31(c)$		(4, 145, 127)	(1,732,735)	(3,342,647)	(1,872,136)
Cash flows from investing activities
Payments for property, plant and equipment		(3,806,199)	(1,709,776)	(271,966)	(421, 805)
Payments for tenement security deposits		(3,520)	(239, 500)
Payments to controlled entities				(4,665,599)	(1, 416, 346)
Payments for exploration cost		(2,946)	(30,000)		(30,000)
Payments for intangible assets			(10,000)		(10,000)
Net cash (outflow) from investing activities		(3,812,665)	(1,989,276)	(4,937,565)	(1,878,151)

Cash flows from financing activities
Proceeds from share issues		11,959,381	4,278,705	11,959,381	4,278,705
Share issue costs		(561, 327)	(185,790)	(561, 327)	(185,790)
Net cash inflow (outflow) from financing
activities		11,398,054	4,092,915	11,398,054	4,092,915
Net increase (decrease) in cash held		3,440,262	370,904	3,117,842	342,628
Cash at the beginning of the financial year		1,104,495	733,591	1,071,481	728,853
Cash at the end of the financial year	31(a)	4,544,757	1,104,495	4,189,323	1,071,481

Non-cash financing and investing activities	31(b)
Financing arrangements	31(d)

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

Notes to the financial statements for the year cinded 30 June 2005

$1.$ Statement of significant accounting policies

Financial reporting framework

The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards. Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the consolidated entity of Intec Ltd (the Company or parent entity) and its controlled entities, and Intec Ltd as the parent entity. Intec Ltd is an ASX listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and, except where stated, does not take into account changing money values or current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

The Company and controlled entities generated operating losses of \$3,560,701 and cash outflows from operations of \$4,145,127 in the year ended 30 June 2005 as the Company continues to work towards the commercialisation of the Intec Processes. As of balance date, the Company and controlled entities had net assets of \$10,305,334 and cash balances of \$4,544,757. The continuing viability of the consolidated entity and its ability to continue as going concerns and meet their debts as they fall due in future years are dependent upon:

the Company being successful in negotiating and $\langle i \rangle$ obtaining additional funding;
$(ii)$ the Company successfully implementing its business plan and in particular progressing the commercialisation of the Intec Processes; and
(iii) the Company achieving success in effecting commercial transactions with industry participants.

As a result of these matters, there is significant uncertainty as to whether the Company and its controlled entities will continue as going concerns, and therefore, whether assets will be realised and liabilities and commitments settled in the normal course of business and at the amounts stated in the financial report.

However, the Directors believe that the consolidated entity will be successful in the above matters and,

accordingly, have prepared the financial report on a going concern basis. The Directors regularly monitor the Company's cash position and on an on-going basis consider a number of strategic and operational plans and initiatives to ensure that adequate funding continues to be available for the Company to meet its business objectives.

At this time, the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at 30 June 2005. Provisions have been made in the financial report relating to the recoverability of the asset carrying amounts, including the Company's investment in, and amount receivable from, its controlled entities, Intec Copper Pty Ltd and Intec Hellyer Metals Pty Ltd (refer notes 12 and 13). No other adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern.

Significant accounting policies

Accounting policies are selected and applied in a manner which ensures that the resultant financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions and other events is reported.

The Company has adopted relevant new and revised accounting standards and pronouncements with no material impact.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Accounts payable

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services. The amounts are unsecured and are normally repayable within 30 days of recognition.

(b) Acquisition of assets

Assets acquired are recorded at the cost of acquisition, being the fair value of assets given up, shares issued or liabilities undertaken, determined as at the date of acquisition plus costs incidental to the acquisition.

for the year ended 30 June 2005

Statement of significant accounting $\frac{3}{2}$ , $\frac{3}{2}$ ndicies (contined)

In the event that settlement of all or part of the cash consideration given in the acquisition of an asset is deferred, the fair value of the purchase consideration is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

$(c)$ Cash

For the purpose of the statement of cash flows, cash includes:

cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and
investments in money market instruments with less than 60 days to maturity.

(d) Comparative figures

Where required comparative figures have been adjusted to conform with changes in presentation for the current financial year.

(e) Depreciation

Depreciation is provided on plant and equipment.

Depreciation provided on plant and equipment is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life. The following estimated useful lives are used in the calculation of depreciation:

Computer equipment	-2-3 years
Office furniture and equipment	3-8 years
Plant and equipment	4-7 years

(f) Employee entitlements

Provision is made for the consolidated entity's liability for employee entitlements, including on-costs, in respect of wages and salaries, annual leave and long service leave arising from service rendered by employees to balance date.

Provisions made in respect of wages and salaries, annual leave, and long service leave expected to be settled within 12 months, are measured at the amounts expected to be paid when the liability is settled.

Provisions made in respect of other employee entitlements which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date and take into account the expected future wages, experience of departures, periods of service and market yields.

Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.

The Company operates an informal ownership based remuneration plan, details of which are provided in note 27 to the financial statements. No accounting entries are made in relation to the Intec Option Plan until options are exercised at which time the amounts receivable are recognised in the statement of financial position as share capital.

(g) Exploration and Development Cost

Exploration, evaluation and development cost incurred are accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet. reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

(h) Foreign currency

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the financial year in which the exchange rates change.

(i) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

for the year ended 30 June 2005

1. Sutema of significant accounting policies (confinned)
(a) Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
(b) For receivables and payables which are recognised inclusive of GST.

The gross amounts of GST recoverable from, or payable to, the taxation authority are included as part of receivables or payables.

(i) Income tax

The economic entity adopts the income statement liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax, or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received, or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

The amount of benefits which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the tax legislation.

(k) Intangible assets

Intellectual property $(i)$

Costs incurred in respect of intellectual property are capitalised to the extent that it is expected that the asset may be realised in the future.

(ii) Research and development

Costs incurred on research and development are written off in the year in which they are incurred.

No value has been attributed to the Company's patents or the Company's underlying proprietary technologies, because their values are presently difficult to quantify.

(I) Investments

Non-current investments in controlled entities are measured on the cost basis. The carrying amount of non-current investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the underlying net assets for other non-listed investments. The expected net cash flows from investments have not been discounted to their present value in determining the recoverable amounts.

(m) Loss per share

Basic and diluted loss per share are determined by dividing the net loss after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted number of ordinary shares outstanding during the financial year. No adjustment has been made to the basic loss per share for any options issued by the Company as outlined in note 8 as they are not considered potential ordinary shares at reporting date and are not therefore dilutive.

(n) Principles of consolidation

The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the consolidated entity, being the Company (the parent entity) and its controlled entities as defined in Accounting Standard AASB 1024 'Consolidated Accounts'. A list of controlled entities appears in note 14 to the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

The consolidated financial statements include the information and results of each controlled entity from the date on which the Company obtains control and until such time as the Company ceases to control such entity. Investments in associates are accounted for in the consolidated financial statements using the equity method. Associates are those entities over which the consolidated entity exercises significant influence, but not control.

for the year ended 30 june 2005

Statement of significant $\mathbb{R}^n$ – acuming policies (continued)

In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the consolidated entity, are eliminated in full.

(o) Receivables

Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts as they are due for settlement no more than 30 days from recognition.

(p) Recoverable amount of non-current assets

The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

The carrying amounts of non-current assets are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower value.

In assessing recoverable amounts of non-current assets the relevant cash flows have not been discounted to their present value, except where specifically stated.

Revenue recognition $\left( q\right)$

Sale of Goods and Disposal of Assets $(i)$

Revenue from the sale of goods and disposal of other assets is recognised when the consolidated entity has passed control of the goods or other assets to the buyer.

(ii) Interest Income

Interest income is recognised on an accrual basis, taking into account the interest rates applicable to financial assets.

(iii) Management Fees

Management fees are charged to controlled entities on a cost basis for services provided.

(iv) Consulting services

Revenue from consulting services are recognised using the percentage-of-completion method for fixedfee arrangements or as the services are provided for time-and-materials arrangements.

(v) General

All revenue is stated net of goods and services tax $(GST)$ .

2. Segment information

The consolidated entity operates in one business segment and one geographical segment only being research, development and commercialisation of its hydrometallurgical technology in Australia

			Consolidated		Intec Ltd
		2005	2004	2005	2004
		\$	S	\$	\$
3.	Revenue
	Revenue from operating activities
	Management fees - controlled entity			272,523	2,354,129
	Consulting fees	48,955	49,489	48,955	35,686
		48,955	49,489	321,478	2,389,815
	Revenue from outside the operating activities
	Interest – other entities	296,887	72,099	290,915	70,253
	Government grants received	648,560	870,929	648,560	860,022
	Shareholder contributions received		875,000		875,000
	Proceeds from sale of tenements	1,200,000
	Other income	20,455	1,042
		2,165,902	1,819,070	939,475	1,805,275
	Total revenue from ordinary activities	2,214,857	1,868,559	1,260,953	4,195,090

Notes to the financial statements for the year chiled 30 June 2005

$\overline{4}$ . Loss from ordinary activities

Loss from ordinary activities before income tax has been determined after charging/(crediting) the following net gains or expenses:

Expenses

	Consolidated		Intec Ltd
	2005	2004	2005	2004
	\$	\$	S	S
Depreciation of non-current assets:
Computer equipment	26,393	33,103	26,393	33,103
Office furniture and equipment	338	436	338	436
Plant and equipment	182,218	88,976	118,034	56,444
Total Depreciation	208,949	122,515	144,765	89,983
Transfers to (from) provisions:
Annual leave	50,508	11,816	50,508	11,816
Long service leave	41,265	21,684	41,265	21,684
Advances to controlled entities			1,405,574	2,303,429
Diminution of investments				(11,030)
Operating lease rental expenses	214,447	213,881	214,447	213,881
Research and development	633,814	428,274	366,671	428,273
Net gains
Net gain (loss) from disposal of tenements	1,167,054

5. Income tax

(a) The prima facie income tax on pre-tax operating loss reconciles to the income tax expense/benefit in the financial statements as follows:

Loss from ordinary activities before income tax	(3,560,701)	(2,579,022)	(3, 449, 100)	(2,190,454)
Prima facie income tax benefit calculated at $30\%$ (2003 – 30%) of operating loss Tax effect of permanent differences:	(1,068,210)	(773, 707)	(1,034,730)	(657, 136)
Provision for diminution of investments				(3,309)
Other non allowable items	3,397	1,727	3,397	1,727
Future income tax benefits not recognised	1,064,813	771,980	1,031,333	658,718
Refund of R&D tax offset		544,956	$\blacksquare$	156,390
Income tax benefit attributable to operating
loss		544,956		156,390

(b) Future income tax benefit not recognised

The potential future income tax benefit calculated at $30\%$ (2004 – $30\%$ ) arising from tax losses and timing differences has not been recognised as an asset because recoverability is not virtually certain.

Revenue tax losses	10,127,858	8.969.816	2.053.546	1.389.025
Timing differences (net)	339.766	282.023	4,901,543	4,320,888
Total	10,467,624	9.251.839	6,955,089	5,709,913

for the year caded 30 June 2005

Income tax (continued) Š.

The taxation benefits of tax losses and timing differences not brought to account will only be obtained if:

the Company and the consolidated entity derive further assessable income of a nature and of an $\hat{U}$ amount sufficient to enable the benefit from the deductions to be realised;
the Company and the consolidated entity continue to comply with the conditions for deductibility $\overrightarrow{11}$ imposed by the tax legislation; and
no changes in tax legislation adversely affect the Company's and the consolidated entity's ability in $\overline{m}$ realising the benefit from the deductions for the losses.

Tax consolidation legislation

At the date of the report, the Directors have not yet made a formal decision to adopt the tax consolidation legislation.

While the company has carried forward tax losses, no future income tax benefit has been recognised in relation to those losses. No adjustment is therefore required as a result of the mandatory provisions of the tax consolidation legislation. Should the company not elect to adopt the legislation, the future income tax benefit in respect of tax losses not bought to account will only be obtained if the company itself derives future assessable income to recoup these losses, continues to comply with the conditions for deductibility imposed by tax legislation and no changes in tax legislation adversely affect the company in realising the benefit.

Remuneration of Directors and executive officers 6.

(a) Principles used to determine the nature and amount of remuneration

competitiveness and reasonableness;
acceptability to shareholders;
performance linkage/alignment of executive compensation;
transparency; and
capital management.

The Company has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation.

Alignment to shareholders' interests:

has economic profit as a core component of plan design;
focuses on sustained growth in shareholder wealth, consisting of growth in share price, and delivering constant return on assets as well as focusing the executive on key non-financial drivers of value; and
attracts and retains high calibre executives.

Alignment to programme participants' interests:

rewards capability and experience; ٠
reflects competitive reward for contribution to growth in shareholder wealth;
provides a clear structure for earning rewards; and ٠
provides recognition for contribution.

Notes to the financial statements for the year ended 30 June 2005

Ó. Remuneration of Diractors and executive officers (continued)

Non-executive Directors

Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-executive Directors' fees and payments are reviewed annually by the Board. The Chairman's fees are determined independently to the fees of Non-executive Directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration.

Directors' fees

The current base remuneration was last reviewed with effect from 1 January 2005.

Non-executive Directors' fees are determined within an aggregate Non-executive Directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at \$200,000 per year in aggregate.

(b) Directors

	Consolidated		Intec Ltd
	2005	2004	2005	2004.
			$\sim$ $\sim$
The aggregate of income, including superannuation and

retirement benefits, paid or payable, or otherwise made available,

in respect of the financial year, to all Directors, of each entity in

the consolidated entity, directly or indirectly, by the entities in $\mathbf{L} \cdot \mathbf{L} = \mathbf{L}$ $11.00 - 1.00$ $\mathbf{L}$

which they are directors or by any related party				657,602 641,203	641,203	657,602
	Cash Salary	Primary Director's Fees	Consulting Fees	Post Employment Superannuation Contributions	Equity Options	Total
2005	S	S	\$	Ŝ	\$	S
Mr RH Jenkins
Chairman		43,349		3,901		47,250
Mr KJ Severs
Non-executive Director		39,375	1,971			41,346
Mr PR Wood Managing Director
Chief Executive Officer	245,924			21,357		267,281
Mr AJ Moyes
Technical Director	130,104			78,135		208,239
Mr JP Evans Non-executive Director (resigned $01/04/2005$ )		28,125	2,510			30,635
Mr GL Toll
Non-executive Director (resigned $16/12/2004$ ) Mr IW Ross		17,389				17,389
Non-executive Director		8,601		20,462		29,063
	376.028	136.839	4.481	123.855		641.203

Intec Ltd

2004

691,846

2005

940,986

Notes to the financial statements

for the year ended 30 june 2005

$\widehat{\mathbb{G}}$ . Remineration of Directors and executive officers (continued)

	Cash Salaries	Primary Director's Fees	Consulting Fees	Post Employment Superannuation Contributions	Equity Options	Total
2004	\$	\$	\$	\$	S	S
Mr RH Jenkins
Chairman		10,217		920.	$\overline{\phantom{0}}$	11,137
Mr KJ Severs
Non-executive Director		44,180	16,380		3,465	64,025
Mr PR Wood
Managing Director
Chief Executive Officer	215,490			19,394	14,085	248,969
Mr AJ Moyes
Technical Director	115,750			75,000	18,612	209,362
Mr JP Evans
Non-executive Director		37,500	5,925		2,842	46,267
Mr GL Toll
Non-executive Director		37,500			2,842	40,342
Mr IW Ross
Non-executive Director		34,404		3,096		37,500
	331,240	163,801	22,305	98,410	41,846	657,602

Consolidated

$\mathbb{S}$

2004

691,846

2005

940,986

(b) Executive officers

The aggregate of income paid or payable, or
otherwise made available, in respect of the financial
year, to each of the five named executive officers of
the Company having the greatest authority for the
strategic direction and management of the Company,
directly or indirectly, by the Company or by any
related party.

	Primary		Equity
2005	Salary S	Superannuation Contributions S	Options \$	Total \$
Mr KG Rodgers
Chief Financial Officer	184,463	16,050	33,568	234,081
Mr F Houllis ¹
Process Development Manager	148,270	13,172	31,832	193,274
Mr CH Lam
Senior Process Engineer IT Manager	145,863	12,891	26,705	185,459
Mr JL Huens
Chief Operating Officer	135,039	11.766	21.579	168,384
Mr AM Platts
General Manager, Hellyer Metals Project	128,119	16,294	15,375	159,788
	741.754	70,173	129,059	940.986

All of the above persons were specified executives for the whole of the financial year ended 30 June 2005.

Mr Houllis left the Company in August 2005 and his options are now forfeited. $\mathbf 1$

for the year ended 30 June 2005

Remuneration of Diractors and executive officers (continued) $\mathcal{E}_{\rm R}$ .

	Primary Salary	Consulting Fees	Superannuation Contributions	Equity Options	Total
2004	\$	Š,	S	\$	\$
Mr KG Rodgers
Chief Financial Officer	160,000		14,400	10,627	185,027
Mr CH Lam
Senior Process Engineer
IT Manager	125,000		11,250	16,575	152,825
Mr JL Huens
Chief Operating Officer	125,000		11,250	12,847	149,097
Mr F Houllis ¹
Process Development
Manager	125,000		11,250	10,858	147,108
Mr RJ Waring
Company Secretary		55,160		2,629	57,789
	535,000	55,160	48,150	53,536	691,846

Mr Houllis left the Company in August 2005 and his options are now forfeited.

(c) Service agreements

Remuneration and other terms of employment for the Managing Director and Chief Executive Officer, Technical Director and the specified executives are formalised in either service agreements or letters of employment. Each of these service agreements and letters of employment provide for the provision of long service leave to accrue at a rate of 0.87 weeks per year up to 10 years' service and 2 weeks per year for each additional year of service, and participation in the Intec Option Plan.

Each service agreement and letter of employment provides the remuneration rate to be paid to the employee. All salaries are paid monthly by direct bank deposit. Full details of remuneration paid are included in the table in part (b) of this note. Other major provisions relating to remuneration are set out below.

Directors

Philip R Wood

Mr Wood's service agreement provides for 12 months written notice with termination payment of 12 months salary by the Company or six months written notice by Mr Wood.

A John Moyes

Mr Moyes' service agreement provides for 12 months written notice with termination payment of 12 months salary by the Company or six months written notice by Mr Moyes.

Executives

Kieran G Rodgers

Mr Rodgers' letter of employment includes a termination requirement by either party of one month's written notice with 16 weeks severance pay if made redundant within five years and a further two weeks pay for each successive year of service.

Chung Ho Lam

Mr Lam's letter of employment includes a termination requirement by either party of one month's written notice with 16 weeks severance pay if made redundant within five years and a further two weeks pay for each successive year of service.

for the year ended 30 June 2005

Ĝ. Remnacration of Directors and executive officuts (continued)

Jean-Louis Huens

Mr Huens' letter of employment includes a termination requirement by either party of one month's written notice with four weeks severance pay if made redundant within two years and a further two weeks pay for each successive year of service.

Andrew M Platts

Mr Platts' letter of employment includes a termination requirement of one month's written notice with four weeks severance pay if made redundant within two years and a further two weeks pay for each successive year of service.

Frank Houllis

Mr Houllis resigned on 14 August 2005.

(d) Share-based compensation

Options are granted to Directors and executive officers under the Intec Option Plan details of which are included in note 27.

As at 30 June 2005 the Company had granted 4,626,008 options to employees, certain key consultants and Directors which are exercisable at any time until expiry on 26 November 2008 at an option exercise price of \$0.10.

No options were granted to Directors during the year ended 30 June 2005. Details of Director shareholdings and options held are set out in note 30. Details of shareholdings and options granted to Executives are set out in note 27. Further details on all options granted are disclosed in note 23.

The Directors have reviewed the value of the options issued during the financial year using the Black and Scholes option valuation methodology. On this basis the \$0.069 options have a value of approximately \$0.0363 each at 5 April 2005. Accordingly the total of these options values are included in the remuneration of senior executives as set out in this Note.

The following options will be granted to Directors if approved at the 2005 Annual General Meeting:

Richard Jenkins, Chairman	318,419
Philip R Wood, Managing Director & Chief Executive Officer	1,014,590
A John Moyes, Technical Director	804,832
J Philip Evans, Non-executive Director	329,783
Ian W Ross, Non-executive Director	329,783
Kenneth J Severs, Non-executive Director	335,535
Gordon L Toll, Non-executive Director	329.783

The proposed options will be exercisable at any time until expiry on 24 February 2010 at an option exercise price of \$0.069.

No options were exercised during or since the end of the financial year.

for the year ended 30 June 2005

		Consolidated			Intec Ltd
		2005	2004	2005	2004.
		\$	S	\$	S.
7.	Remuneration of auditors
	Remuneration of the auditor of the parent
	entity for PricewaterhouseCoopers - Australian
	firm – audit or review of the financial reports	52,100	39,500	52,100	39,500
	Non audit services
	Taxation services	17,795	12,193	17,795	12,193
	Audit of R&D Start Grant	5,000	2,500	5,000	2,500
		74,895	54,193	74,895	54,193
8.	Loss per share
		2005	2004
	Basic and diluted earnings (loss) per share
	(cents per share)	(1.02)	(0.92)
	Weighted average number of ordinary shares
	outstanding during the year used in calculation
	of basic and diluted earnings (loss) per share	349,602,479	221,713,953
	The options outlined in note 23 are not considered potential ordinary shares at reporting date and are not therefore dilutive.
	Loss used in calculation of basic and diluted
	loss per share is the net loss for the financial
	year:	(3,560,701)	(2,034,064)
9,	Cash assets
	Cash at bank and on hand	427,483	335,177	72,049	302,164
	Bank accepted bills and deposits at call	4,117,274	769,318	4,117,274	769,317
		4,544,757	1,104,495	4,189,323	1,071,481
10.	Current receivables
	GST receivables	183,127	46,124	15,132
	Other receivables	21,099	21,500	21,000	25,766 21,500
		204,226	67,624	36,132	47,266

11.	Other current assets
	Prepayments	13,115	9,509	13,115	9,509
		13,115	9,509	13,115	9,509
12.	Non-current receivables
	Amount due from wholly owned controlled
	entities			15,356,577	9,313,191
	Provision for diminution in value (refer note
	30)			(9,251,719)	(7, 846, 145)
	Tenement securities deposits	243,020	239,500
		243,020	239,500	6,104,858	1,467,046

for the year ended 30 June 2005

		Consolidated		Intec Ltd
	2005	2004	2005	2004
	S	S	\$	S
13. Non-current investments
Unlisted investments - at cost
Shares in controlled entities (refer note 14)			6,035,504	6,035,504
Provision for diminution in value (refer note 30)	$\blacksquare$		(6,019,734)	(6,019,734)
			15,770	15,770

14. Investments in controlled entities

			Ownership	Ownership
	Country of	Class of	interest	interest
Name of controlled entity	incorporation	shares	$2005 (^{\circ}\%)$	$2004$ (%)
Intec Copper Pty Ltd	Australia	Ordinary	100	100.
Intec Hellyer Metals Pty Ltd	Australia	Ordinary	100	100.

15. Investment in associates accounted for using the equity method

(a) Details of associate:

			Ownership interest		Carrying amount
	Name of Associate	Principal Activities	2005	2004	2005	2004
			$\frac{0}{4}$	$\frac{0}{a}$	\$	\$
	Resource Finance and	General Exploration and
	Investments Limited	evaluation	43.8356		1,079,320
					Carrying amount
					2005	2004
					\$	\$
(b)		Share of reserves attributable to associates:
		Share of associates' profits taken up in the consolidated financial statements
	Operating profit (loss) before tax				(120, 680)
	Income tax expense
		Net operating profit after income tax as shown in the Statement of Financial
	Performance				(120, 680)
		Retained earnings at beginning of period
	Retained earnings at end of period				(120, 680)
(c)		Movement in equity accounted investment
		Carrying amount of investment at beginning of financial year
		Share of associates' current year losses after tax (refer (b))			(120, 680)
	Acquisition of investment				1,200,000
		Carrying amount of investment at end of financial year			1,079,320
		Summary of financial position of associated entity:
	Current assets				543,737
	Current liabilities				(70, 488)
	Non-current assets				1,553,504
					2,026,753

for the year ended 30 June 2005

Consolidated		Intec Ltd
2005	2004	2005	2004
\$	S	\$	S

	30,000		30,000

30,000		30,000
(32, 946)
		(30,000)
2,946
	30,000		30,000

At 30 June 2004 this expenditure related to mining and exploration properties associated with the Hellyer Metals Project. These properties were sold to Resource Finance and Investments Limited (RFI) during the year for a consideration of 8 million RFI shares at an issue price of 15 cents per share and 2 million RFI options exercisable at 25 cents per share on or before 31 July 2007 (note 15a).

	Consolidated		Intec Ltd
	2005	2004	2005	2004
	\$	\$	\$	S
17. Property, plant and equipment
Computer equipment
at cost	138,837	122,594	138,837	122,595
accumulated depreciation	(107, 903)	(81, 510)	(107, 903)	(81,510)
	30,934	41,084	30,934	41,085
Office furniture and equipment
at cost	13,887	13,887	13,887	13,887
accumulated depreciation	(12, 301)	(11, 963)	(12,301)	(11,963)
	1,586	1,924	1,586	1,924
Plant and equipment
at cost	2,058,508	1,802,785	770,535	514,811
accumulated depreciation	(339, 576)	(157, 358)	(242, 860)	(124, 826)
	1,718,932	1,645,427	527,675	389,985
Plant and equipment in the course of
construction	4,033,064
Total property, plant and equipment	5,784,516	1,688,435	560,195	432,994

for the year ended 30 june 2005

18.

19.

17. Property, plant and equipment (continued)

Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and previous financial years are set out below:

	equipment	Office Computer furniture and equipment	equipment	Plant and equipment in Plant and the course of construction	Total
2005	\$	\$	\$	\$	\$
Consolidated
Balance at 30 June 2004	41,085	1,924	1,645,427		1,688,436
Additions	16,242		255,723	4,033,064	4,305,029
Depreciation Expense Disposals	(26, 393)	(338)	(182, 218)		(208, 949)
Balance at 30 June 2005	30,934	1,586	1,718,932	4,033,064	5,784,516
Intec Ltd
Balance at 30 June 2004	41,085	1,924	389,985		432,994
Additions	16,242		255,724		271,966
Depreciation Expense Disposals	(26, 393)	(338)	(118, 034)		(144, 765)
Balance at 30 June 2005	30,934	1,586	527,675	$\overline{\phantom{a}}$	560,195
2004
Consolidated
Balance at 30 June 2003	45,788	2,360	53,026		101,174
Additions	28,399		1,681,377		1,709,776
Depreciation Expense	(33, 103)	(436)	(88,976)		(122, 515)
Disposals
Balance at 30 June 2004	41,084	1,924	1,645,427	$\overline{\phantom{a}}$	1,688,435
Intec Ltd
Balance at 30 June 2003	45,788	2,360	53,026		101,174
Additions	28,400		393,403		421,803
Depreciation Expense Disposals	(33, 103)	(436)	(56, 444)		(89, 983)
Balance at 30 June 2004	41,085	1,924	389,985		432,994
			Consolidated		Intec Ltd
		2005	2004	2005	2004
		\$		S.	S
Intangible assets
Intellectual property		10,000	10,000		10,000
Current payables
Unsecured:
Trade payables		567,904	224,033	111,151	183,811
Other creditors		738,168	289,414	189,288	264,136
Unearned interest		10,095	2,455	10,095	2,458
		1,316,167	515,902	310,534	450,405

for the year ended 30 June 2005

	Consolidated			Intec Ltd
	2005	2004	2005	2004
	\$	\$	\$	S
20. Current provisions
Employee benefits (refer note 27)	151,542	101.034	130,345	101,034
21. Non-current provisions
Employee benefits (refer note 27)	105,911	64,646	61,579	64,646
22. Contributed equity
fully 424,679,602 ordinary shares paid $(2004 - 248, 662, 632)$	45,242,213	33.844.159	45,242,213	33,844,159

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Movement in ordinary share capital

Balance at beginning of year	33,844,159	29,751,244	33,844,159	29,751,244
Shares issued during year
119,304,652 (2004 - 15,000,000) issued in
placements to institutional and other
investors at 6.9 cents per share	8,232,021	1,650,000	8,232,021	1,650,000
56,712,318 (2004 - nil) issued pursuant to a
shareholder purchase plan at 6.9 cents per
share	3,913,150		3,913,150
Nil $(2004 - 87,623,490)$ issued pursuant to
a three for five rights issue at 3 cents per
share		2,628,705		2,628,705
Transaction costs relating to share issues
during the year.	(747, 117)	(185,790)	(747, 117)	(185,790)
Balance at end of year	45,242,213	33,844,159	45,242,213	33,844,159

23. Options

Consolidated and parent entity

2005

Issue Date	Exercise Price	Number on issue $30$ June 2004	Granted during vear	during year	Lapsed Exercised during vear	Number on issue 30 June 2005
16.07.2002 16.07.2007	\$0.24625	2,775,175			$\overline{\phantom{a}}$	2,775,175
20.11.2002 16.07.2007	\$0.24625	4,281,947		$\overline{\phantom{0}}$	-	4,281,947
26.11.2003 26.11.2008	\$0.10	4,626,008			$\overline{\phantom{0}}$	4,626,008
1999 to 2000 30.06.2009	\$0.49625	1,275,000			-	1,275,000
05.04.2005 24.02.2010	\$0.069	$\overline{\phantom{a}}$	6,087,213			6,087,213
Total Options on issue		12,958,130	6,087,213			19,045,343

Notes to the financial statements for the year ended 30 fune 2005

23. Options (nontinued)

2004

Issue Date	Expiry Date	Exercise Price	Number on issue 30 June 2003	Granted during year	during year	Lapsed Exercised during year	Number on issue 30 June 2004
16.07.2002	16.07.2007	\$0.24625	3,020,009	$\overline{\phantom{a}}$	244,834	$\overline{\phantom{a}}$	2,775,175
20.11.2002	16.07.2007	\$0.24625	4,281,947		$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	4,281,947
26.11.2003	26.11.2008	\$0.10	$\overline{\phantom{0}}$	4,626,008	$\qquad \qquad -$	÷	4,626,008
1999 to 2000 -	30.06.2009	\$0.49625	1,275,000				1,275,000
Total Options on issue			8,576,956	4,626,008	244,834		12,958,130

The options expiring in 2007, 2008 and 2010 have been issued pursuant to the Intec Option Plan (Refer note 27).

The options expiring in 2009 were issued pursuant to specific contracts with former Directors and a former employee.

	Consolidated			Intec Ltd
	2005	2004	2005	2004
	\$	S	S	S.
Accumulated losses
Accumulated losses at beginning of financial
year	(31,376,178)	(29, 342, 114)	(31, 376, 178)	(29, 342, 114)
Net loss for year	(3,560,701)	(2,034,064)	(3,449,100)	(2,034,064)
Accumulated losses at end of financial year	(34,936,879)	(31,376,178)	(34,825,278)	(31,376,178)

25. Commitments for expenditure

(a) Capital expenditure commitments

Commitments for expenditure on Intec Hellyer Metals demonstration plant payable within 12 months $$279,150 (2004 - Nil)$

There are no other capital commitments at the end of the financial year.

(b) Tenement commitments

The minimum expenditures required to maintain the Company's exploration tenements in good standing are:

Exploration Tenements	1.46	.46.

26. Contingent liabilities

Patents

The Company has an agreement with Intec Copper Pty Ltd, a wholly owned subsidiary, to pay half the ongoing international patent costs associated with the Intec Copper Process. The consolidated entity's liability for patent costs is expected to be in the vicinity of \$225,000 each year for the next two years.

Notes to the financial statements for the year ended 30 June 2005

26. Contingent liabilities (continued)

R&D Start Grant repayable component

The consolidated entity has received an R&D Start grant from the Federal Government which is partly repayable contingent upon the successful commercialisation of the technology for which the R&D Start grant was made. The contingent liability that may be repaid is \$1,832,085. The repayment rate is set at 30% of the revenues generated from the technology annually until the repayable component has been repaid. Interest is currently accruing on this amount, and the current contingent liability including interest is \$2,539,129.

	Consolidated		Intec Ltd
	2005	2004	2005	2004

27. Employee benefits

Employee benefit and related on cost liabilities

Included in current provisions (note $20$ )	151,542	101,034	130,345	101.034
Included in non-current provisions (note 21)	105.911	64.646	61.579	64.646
Aggregate employee benefit and related on cost liabilities	257,453	165.680	191.924	165.680

Employee numbers

The economic entity had 22 employees at year end - average $21$ (2004 - 20 employees at year end $-$ average 16.)

Intec Option Plan

The establishment of the Intec Option Plan was approved by shareholders at the 1999 Annual General Meeting. All employees, Directors and key consultants are eligible to participate in the plan.

Options are issued under the plan for no consideration. Options issued have a five year exercise period and vest immediately.

Options issued under the plan carry no dividend or voting rights.

When exercisable, each option is converted into one ordinary share.

The exercise price of options is based on the weighted average price at which the Company's shares are traded on the Australian Stock Exchange during the five trading days immediately before the options are issued or at a higher exercise price if so determined by the Directors.

Amounts receivable on the exercise of options are recognised as share capital.

Details of options issued and exercised during the year are shown in note 23.

Details of options held by Directors is shown in Note 30.

Details of shares and options held by specified executives is shown below.

	KG Rodgers	Houllis	CН Lam	L Huens
Fully paid ordinary shares
At 30 June 2004	371,000	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$
Acquired during the year	144,928	$\overline{\phantom{0}}$	-	$\overline{\phantom{a}}$
At 30 June 2005	515,928	$\blacksquare$		$\blacksquare$

for the year caded 30 June 2005

27. Inter Option Plan (continued)

	KG Rodgers	F Houllis	СH Lam	JL. Huens	AM Platts
Intec Option Plan
Options expiring 16 July 2007
At 30 June 2004	573,590	412,025	451,174
Issued during the year
At 30 June 2005	573,590	412,025	451,174
Options expiring 16 July 2008
At 30 June 2004	427,520	436,812	666,812	516,812
Issued during the year
At 30 June 2005	427,520	436,812	666,812	516,812
Options expiring 24 February 2010
At 30 June 2004
Issued during the year on 5 April 2005
with an exercise price of \$0.069	925,673	877,794	736,434	595,074	423,980
At 30 June 2005	925,673	877,794	736,434	595,074	423,980
Total options issued	1,926,783	1,726,631	1,854,420	1,111,886	423,980

28. Events subsequent to reporting date

On 23 September 2005, the Metals and Energy Capital Division of Macquarie Bank Limited (MBL) and the Company and Intec Hellyer Metals Pty Ltd formally executed a secured A\$2,500,000 Working Capital Facility Agreement (the Agreement). In consideration of MBL entering into the Agreement, the Company issued call options to MBL for the purchase of 15,000,000 Intec shares at 8 cents per share, expiring 30 June 2008. A further issue of 10,000,000 options, on the same terms, will be made to MBL on first drawdown under the Agreement. Additionally, MBL invested A\$500,000 to purchase 7,246,377 Intec shares, issued to MBL at 6.9 cents per share. These shares were allotted on 23 September 2005.

No other matter or circumstances have arisen since 30 June 2005 that have significantly affected or may significantly affect the consolidated entity's operations in future financial years, or the results of those operations in future financial years, or the consolidated entity's state of affairs in future financial years.

29. Financial instruments

(a) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

(b) Interest rate risk

The consolidated entity has not entered into interest rate hedging transactions. The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

Notes to the financial statements for the year ended 30 June 2005

29. Financial instruments (continued)

		Weighted average interest	Floating	Fixed interest interest Maturing in	Non- interest
2005	Note	rates		rates 1 year or less	bearing	Total
Financial assets
Cash	9	5.4%	427,483	4,117,274		4,544,757
Receivables	10,12				447,246	447,246
Total assets			427,483	4,117,274		447,246 4,992,003
Financial liabilities
Payables	19				1,316,167	1,316,167
Provisions	27				257,453	257,453
Total liabilities					1,573,620	1,573,620
Net financial assets (liabilities)			427,483	4,117,274	(1, 126, 374)	3,418,383
2004
Financial assets
Cash	9	5.3%	335,177	769,318		1,104,495
Receivables	10,12				307,124	307,124
Total assets			335,177	769,318	307,124	1,411,619
Financial liabilities
Payables	19				515,902	515,902
Provisions	27				165,680	165,680
Total liabilities			$\blacksquare$		681,582	681,582
Net financial assets (liabilities)			335,177	769,318	(374, 458)	730,037

(c) Foreign exchange risk

Given the minimal exposure to foreign currencies, it is the current policy of the consolidated entity not to hedge foreign exchange risk.

(d) Credit risk

There is negligible credit risk on financial assets, excluding investments, of the consolidated entity since there is no exposure to individual customers or countries and the economic entity's exposure is limited to the amount of cash, short term deposits and receivables which have been recognised in the balance sheet and is minimised by using recognised financial intermediaries as counterparties.

(e) Net fair value of financial instruments

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. The carrying amounts of cash, accounts receivable, accounts payable approximate net fair value.

The net fair value of investments in unlisted shares in controlled entities is determined by reference to the underlying net assets of the respective corporations.

30. Related party disclosures

(a) Directors

The Directors of Intec Ltd during the year were Richard H Jenkins, Kenneth J Severs, Philip R Wood, A John Moyes, J Philip Evans (resigned 1 April 2005), Ian W Ross and Gordon L Toll (resigned 16 December 2004).

for the year ended 30 June 2005

Related party disclosures (continued)

(b) Directors' remuneration

Details of Directors' remuneration are disclosed in note 6 to the financial statements.

(c) Directors' interests in shares and share options

The relevant interests of Directors and their Director-related entities in shares and share options of the Company as at 30 June 2005 were:

	Ordinary Shares	Options
Richard H Jenkins	(1)
Philip R Wood		1,231,076 2,617,298
A John Moyes		1,404,578 2,510,286
Ian W Ross	172.464
Kenneth J Severs	1.399.463	435.475

$(1)$ Mr Jenkins is the Managing Director of Kizoz Pty Ltd, trustee of a superannuation fund which has a relevant interest in 20,706,243 shares in Intec Ltd.

	RH	PR	AJ	IW	KJ
	Jenkins ¹	Wood	Moyes	Ross	Severs
Fully paid ordinary shares
At 30 June 2004		875,013	1,332,114	100,000	1,326,999
Acquired during the year		240,120	72,464	72,464	72,464
At 30 June 2005		1,231,076	1,404,578	172,464	1,399,463
Intec Option Plan
Options expiring 16 July 2007
At 30 June 2004		2,047,035	1,756,749		295,173
Issued during the year
At 30 June 2005		2,047,035	1,756,749		295,173
Options expiring 16 July 2008
At 30 June 2004		570,263	753,537		140,302
Issued during the year
At 30 June 2005		570,263	753,537		140,302
Total options issued		2,617,298	2,510,286		435,475

Consolidated
2005	2004
Ъ	S

164,352 24,033

(d) Other transactions with Directors and Director-related entities

Consulting fees

Amounts paid to H. G. Engineering Ltd, a metallurgical engineering firm of Toronto, Canada, of which Mr | Philip Evans was a director, for consulting engineering design work based on normal commercial terms and conditions. These amounts have been excluded from remuneration of Directors.

Directors loan

During the previous year Mr Ian Ross provided the Company with a non-interest bearing loan of \$100,000. This was fully repaid by the Company prior to 30 June 2004.

(e) Equity interests in controlled entities

Details of the percentage of ordinary shares held in controlled entities are disclosed in note 14 to the financial statements.

for the year ended 30 June 2005

Related party disclosures (continued)

			Intec Ltd
		2005 \$	2004 S
$\rm(f)$	Transactions within wholly-owned group
	Management fees
	Intec Ltd on charged certain expenses to its controlled entities. - The amounts charged were determined on the basis of an allocation of costs to projects specifically concerned with the activities of those controlled entities.	1,403,317	2,354,129
$\left( g \right)$	Aggregate amounts receivable from controlled entities
	Receivables - Non-Current Provision for doubtful debts	15,356,577 (9,251,719)	9,313,191 (7, 846, 145)
		6,104,858	1,467,046

The amount due from controlled entities at balance date relates to consulting and other services provided by Intec Ltd to Intec Copper Pty Ltd and Intec Hellyer Metals Pty Ltd. The Directors have made a provision for the amount due from Intec Copper Pty Ltd and Intec Hellyer Metals Pty Ltd, and also against its investment in the controlled entities, to reflect the fact that the commercialisation of a new technology is uncertain and has risks. The parent entity has therefore made sufficient provisions to reduce its total investment and loans to the controlled entities to equate to the net tangible assets of those controlled entities.

(h) Aggregate amounts included in the determination of loss from ordinary activities before income tax that resulted from transactions with entities in the wholly-owned group

Write down of receivables	$1,405,574$ $2,303,429$
Write down of investments (written back)	(11,030)

31. Notes to statements of cash flows

(a) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled in the related items in the statement of financial position as follows:

		Consolidated		Intec Ltd
	2005	2004	2005	2004

Cash	427,483	335,177	72,049	302,164
Short term deposits	4, 117, 274	769,318	4,117,274	769,318
	4,544,757	1.104.495	4, 189, 323	1,071,482

(b) Non-cash financing and investing activities

Sale of exploration tenements to RFI	1,200,000

for the year ended 30 June 2005

Nones to statements of cash flows (continued)

(c) Reconciliation of operating loss after income tax to net cash outflow from operating activities

Operating loss after income tax Non cash items and non operating cash flows included in profit and loss	(3,560,701)	(2,034,064)	(3,449,100)	(2,034,064)
Depreciation and amortisation	208,949	122,515	144,765	89,983
Diminution - investments				(11,030)
Diminution - loans to controlled entities			1,405,574	2,303,429
Expense recovery from controlled entity			(1,403,316)	(2,354,129)
Net (profit) loss on sale of tenements	(1,167,054)
Equity share of losses of associated entities	120,680
	(4,398,126)	(1,911,549)	(3,302,077)	(2,005,811)
Changes in assets and liabilities
Decrease/(increase) in receivables	(86,719)	(22,716)	11,134	(2,358)
Decrease/(increase) in prepayments	(3,606)	(5, 945)	(3,606)	(5, 945)
Increase/(decrease) in trade creditors	(204, 843)	173,975	(72, 660)	108,478
Increase/(decrease) in other creditors	456,394		(67,211)
Increase/(decrease) in employee entitlements	91,773	33,500	91,773	33,500
Net cash (outflow) from operating activities	(4, 145, 127)	(1,732,735)	(3,342,647)	(1, 872, 136)

(d) Financing arrangements

The Company and its controlled entities do not have any financing arrangements in place.

32. Implementation of AIFRS

The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. The AASB will issue Australian equivalents to IFRS, and the Urgent Issues Group will issue abstracts corresponding to International Accounting Standards Board (IASB) interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee.

The adoption of Australian equivalents to IFRS will be first reflected in the consolidated entity's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 July 2005.

The consolidated entity's management has analysed most of the Australian equivalents to IFRS and has identified a number of accounting policy changes that will be required. In some cases choices of accounting policies are available, including elective exemptions under Pending Accounting Standard AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. Some of these choices are still being analysed to determine the most appropriate accounting policy for the consolidated entity.

The known or reliably estimable impacts on the financial report for the year ended 30 June 2005 had it been prepared using AIFRS are set out below. The expected financial effects of adoption AIFRS are shown for each key area.

Although the adjustments disclosed in this note are based on management's best knowledge of expected standards and interpretations, and current facts and circumstances, these may change due to:

for the year ended 30 June 2005

1. Implementation of AIFRS (nominated)
1. Amended or additional standards or interpretations may be issued by the AASB and the IASB
1. Emerging accepted practice in the interpretation and application of AIFRS and Urgent Issues Group (UIG) Interpretations

Therefore, until the consolidated entity prepares its full AIFRS financial statements, the possibility cannot be excluded that the major changes shown below may have to be adjusted.

Income tax $\langle i \rangle$

Under the Australian equivalent to AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet method which calculates temporary differences based on the carrying amounts of an entity's assets and liabilities in the statement of financial position and their associated tax bases. In addition, current and deferred taxes attributable to amounts recognised directly in equity are also recognised directly in equity.

This will result in a change to the current accounting policy, under which deferred tax balances are determined using the income statement method, items are only tax-effected if they are included in the determination of pretax accounting profit or loss and/or taxable income or loss and current and deferred taxes cannot be recognised directly in equity.

It is not expected that there will be a financial impact as a result of the change in accounting policy.

(ii) Equity-based compensation benefits

The consolidated entity has elected to adopt the exemption under AASB 1 First time adoption of Australian equivalents to International Financial Reporting Standards and has not valued options issued to employees after 7 November 2002 which vested before 1 January 2005. Under AASB2 Share-based Payment, equity-based compensation to employees that were granted after 1 January 2005 will be recognised as an expense in respect of the services received. This will result in a change to the current accounting policy, under which no expense is recognised for equity-based compensation.

Management have estimated an expense of \$220,742 will be required to be recognised in the income statement. for the year ended 30 June 2005 with a corresponding credit made to the option reserve in equity for comparative purposes.

(iii) Impairment of Assets

The standard AASB 136 Impairment of Assets will require a change in accounting policy to determine if impairment indicators exist, and if they do exist then the company will perform an impairment assessment to determine whether any assets need to be written down. Whilst a full assessment has not yet been performed management do not believe that any assets were impaired on transition or at 30 June 2005

(iv) Presentation of Financial Statements

There will be presentation impact as required under various standards.

The above should not be regarded as a complete list of changes in accounting policies that will result from the transition to Australian equivalents to IFRS, as not all standards have been analysed as yet, and some decisions have not yet been made where choices of accounting policies are available. For these reasons it is not yet possible to quantify the impact of the transition to Australian equivalents to IFRS on the consolidated entity's financial position and reported results.

Directors' declaration

The Directors declare that:

the attached financial statements and notes thereto comply with Accounting Standards, the $\langle a \rangle$ Corporations Regulations 2001 and other mandatory professional reporting requirements, and
the attached financial statements and notes thereto give a true and fair view of the financial position as $(b)$ at 30 June 2005 and performance for the financial year ended on that date of the Company and the consolidated entity.

In the Directors' opinion,

$(c)$ the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; and
$(d)$ with reference to Note $1(a)$ , there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations by the Managing Director and Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors and on their behalf.

Philip R. Wood

Philip R Wood Managing Director & Chief Executive Officer

Sydney 30 September 2005

PRICEWATERHOUSE COPERS

Independent audit report to the members of Intec Ltd

Audit opinion

In our opinion:

1. the financial report of Intec Ltd:
gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position Intec Ltd and the Intec Ltd Group (defined below) as at 30 June 2005, and of their performance for the year ended on that date,
is presented in accordance with the Corporations Act $200I$ , Accounting Standards and other mandatory financial reporting requirements in Australia, and the Corporations Regulations 2001; and
1. the remuneration disclosures that are contained under the heading of "Remuneration Report" in the Directors' Report comply with Accounting Standard AASB 1046 Director and Executive Disclosures by Disclosing Entities (AASB 1046) and the Corporations Regulations 2001.

This opinion must be read in conjunction with the rest of our audit report.

Inherent Uncertainty Regarding Continuation as Going Concerns

Without qualification to the opinion expressed above, attention is drawn to the following matter.

As a result of the matter described in note $1(a)$ to the financial statements, there is significant uncertainty whether Intec Ltd and the Intec Ltd Group will be able to continue as going concerns and therefore whether they will realise their assets and settle their liabilities and commitments in the normal course of business and at the amounts stated in the financial report.

Scope

The financial report, remuneration disclosures and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both Intee Ltd (the company) and Intee Ltd Group (the consolidated entity), for the year ended 30 June 2005. The consolidated entity comprises both the company and the entities it controlled during that year.

The company has disclosed information about the remuneration of directors and executives (remuneration disclosures) as required by AASB 1046, under the heading "Remuneration Report" in the Directors' Report, as permitted by the Corporations Regulations 2001.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for

PrinawatarhouseConners ABN 52 780 433 757

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. The directors are also responsible for the remuneration disclosures contained in the directors' report.

Audit approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement and the remuneration disclosures comply with AASB 1046 and the Corporations Regulations 2001. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows. We also performed procedures to assess whether the remuneration disclosures comply with AASB 1046 and the Corporations Regulations 2001.

We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report and remuneration disclosures, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Pricewaterhouseloopers

PricewaterhouseCoopers

Michelle Chiang

MW Chiang Partner

Sydney 30 September 2005

Stock Exchange information

This	information 26 September 2005.	was	applicable	аs	аt
	Substantial Shareholder (extracts from Substantial Shareholder Register)			Shareholding
	Ivanhoe Mines Ltd. Group (Orian Holding Corp.)			54,141,586

Distribution of		Number of Ordinary
Shareholders		Holders Exception
	Number of ordinary	Shares Shares	a a cara a cara a cara a tetrago . .
shares held
1	$-1,000$	17	7,494
1,001	$-5,000$	52	204,398
5,001	$-10,000$	143	1,307,793
10,001	$-100,000$	717	32,693,877
100,001	- and over	413	397,712,417
Total Shares		1,342	431,925,979

At the prevailing market price of shares (\$0.079), there were
81 shareholders with less than a marketable parcel of \$500 (being 6,329 shares).

Top 20 Shareholders as at 26 September 2005	Shares	% Shares Issued
Orian Holding Corp	54,141,586	12.535%
Kizoz Pty Ltd	20,706,243	4.794%
Invia Custodian Pty Limited	15,283,720	3.539%
Ariki Investments Pty Limited	15,206,002	3.521%
Excel Coal Limited	13,633,752	$3.157\%$
National Nominees Limited	12,076,077	2.796%
Mosheva Pty Ltd	10,736,200	2.486%
Mr Peter Kenneth Everett	9,770,000	2.262%
UBS Nominees Pty Ltd	8,711,000	2.017%
Armada Trading Pty Limited	8,485,463	1.965%
Macquarie Bank Limited	7,246,377	1.678%
Wuudee Australia Pty Limited	5,736,000	1.328%
Reach Out Pty Ltd	5,572,460	1.290%
Mr William E Conway	5,000,973	1.158%
]] Bronson Jacobs Pty Ltd	4,000,000	0.926%
Mr Michael John McKenzie	4,000,000	0.926%
Mr Peter Colin Taylor	4,000,000	0.926%
Grizzly Holdings Pty Ltd	3,840,236	0.889%
Smacer Pty Ltd	3,820,125	0.884%
Wendelini Pty Limited	3,234,583	0.749%
Total of Top 20 share holdings	215,200,797	49.824%
Other shareholders	216,725,182	50.176%
Total ordinary shares	431,925,979	100.000%

Summary of options issued

	Rood	$N\sigma$ of		Options % Options
	options	holders	held	Issued
Options expiring 30 June 2007 with an exercise price of \$0.24625	7,301,956
Option holders with more than 20% of class
Philip Ronald Wood			2,047,035	28.03%
Anthony John Moyes			1,756,749	24.06%
Options expiring 26 November 2008 with an exercise price of
\$0.10	4,626,008
Option holders with more than 20% of class			Nil
Options expiring 30 June 2009 with an exercise price of \$0.49625	1,275,000
Option holders with more than 20% of class
Steven Joseph Koroknay			400,000	31.37%
Denis Michael Hanley			400,000	31.37%
Options expiring 24 February 2010 with an exercise price of
\$0.069	6,087,213	17
Option holders with more than 20% of class			Nil

Stock Exchange information (continued)

Voting rights

There are no restrictions on voting rights. On a show of hands every member present or by proxy shall have one vote and upon a poll each share shall have one vote. Option holders have no voting rights until the options are exercised.

Corporate governance statement

The Directors are responsible to the shareholders for the performance of the Company in both the short and the longer term and seek to balance these sometime competing objectives in the best interests of the Company as a whole. Their principal focus is to enhance the interests of shareholders and to ensure that the Company, including its controlled entities, is properly managed. The Board draws on relevant best practice principles, particularly those issued by the ASX Corporate Governance Council. At its September 2003, May and August 2005 meetings the Board examined the Company's corporate governance practices compared to the best practice principles proposed by the ASX Corporate Governance Council. While the Company will align itself with the principles proposed by ASX, it is mindful that there may be some instances where compliance is not practicable for a company of Intec's current small size. The Corporate Governance Committee, made up of Messrs Jenkins, Severs, Wood and Ross, met in August 2005 to review and amend this statement.

For a number of years the Company, the Board and senior management, have taken a pro-active role to corporate governance matters. In many areas the Company has adopted corporate governance measures which are more comprehensive than those required by statutory legislation.

In March 2003, the Australian Stock Exchange Corporate Governance Council published 'Principles of Good Corporate Governance and Best Practice Recommendations'. This document is for guidance purposes, however all listed companies are required to disclose the extent to which they have followed the recommendations; to identify any recommendations that have not been followed; and reasons for not doing so.

The Company's Board of Directors has reviewed the recommendations. In many cases the Company was already achieving the standard required. In other

cases the Company will have to consider new arrangements to enable compliance.

In a limited number of instances, the Company may determine not to meet the standard set out in the recommendations, largely due to the recommendation being considered by the Board to be unduly onerous for a company of this size.

The following paragraphs set out the Company's position relative to each of the 10 principles contained in the ASX Corporate Governance Council's report.

Principle 1: Lay solid foundations for management and oversight

The Company has not yet formalised and disclosed the functions reserved to the Board and those delegated to management. However, the Company has a small Board (three Non-executive Directors plus the Managing Director and Chief Executive Officer and Technical Director) and a small management team, so roles and functions have to be flexible to meet specific requirements.

Principle 2: Structure the Board to add value

Company complies with most of the The recommendations within this area as the Chairman is independent; separate from the Managing Director and Chief Executive Officer. The Company may not comply with the recommendation that a majority of Directors should be independent. The Company does not have a Board nomination committee.

Three of the Company's five Directors are Nonexecutives, and none have undertaken 'material' consultancy work for the Company within the past three years.

Minor consultancy work has been undertaken on normal commercial terms by Mr Severs and payments are disclosed within the Quarterly Reports and the Directors³ Reports. The use of a non-executive Director for consultancy work reflects his expertise and knowledge. In the absence of this Director, the Company would have to use 'external' consultants, which may result in increased costs.

Mr Severs has been a Director of the Company and or Intec Copper Pty Ltd since 1995, a period of time, which in the words of the ASX document, 'could be perceived to materially interfere with 'his' ability to act in the best interests of the Company'. Mr Severs acts in a part-time capacity as the Company's marketing representative for Europe.

The Board does not believe that the consultancy work undertaken by Mr Severs, nor Mr Severs' period of tenure as a Director, compromise his independence.

Corporate governance statement (continued)

Each Director of the Company has the right to seek independent professional advice at the expense of the Company. Prior approval of the Chairman is required, but this will not be unreasonably withheld.

Principle 3: Promote ethical and responsible decision-making

The Company has a policy concerning trading in its securities by Directors, management, staff and significant consultants which is set out in the Annual Report.

The Company has adopted a formal code of conduct, one which reflects the Company's size and the close interaction of individuals throughout the organisation.

Principle 4: Safeguard integrity in financial reporting

The Company regularly reviews its procedures to ensure compliance with the recommendations set out under this principle. Senior management confirms that the financial reports represent a true and fair view and are in accordance with relevant accounting The Managing Director and Chief standards. Executive Officer and the Chief Financial Officer state in writing to the Board that the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and its controlled entities and are in accordance with relevant accounting standards.

The Company has an Audit Committee with a formal charter, which has been approved by the Board. The Audit Committee consists of the three non-executive Directors Messrs Ross (Chairman), Jenkins and Severs.

The Company's auditor, PricewaterhouseCoopers (PwC) was appointed in 1999. PwC's policy is to rotate the engagement partner every seven years.

Principle 5: Make timely and balanced disclosure

The Company, its Directors and staff are acutely aware of the ASX's continuous disclosure requirements and operate in an environment where strong emphasis is placed on full and appropriate disclosure to the market. The Company has adopted formal written policies regarding disclosure, it uses strong informal systems underpinned by experienced individuals.

Principle $6:$ Respect the rights of shareholders

All information disclosed to the ASX is posted on the Company's website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group's operations, the material used in the presentation is released to the ASX and posted on the Procedures have also been Company's website. established for reviewing whether any price sensitive information has been inadvertently disclosed, and if so, this information is also immediately released to the market.

Whilst the Company does not have a communications strategy to promote effective communication with shareholders, as it believes this is excessive for small companies, the Company does communicate regularly with shareholders.

For many years the Company has requested the external auditor to attend general meetings and this has been supported by the Company's audit partners at PwC.

Principle 7: Recognise and manage risk

The Company is a relatively small company and does not believe that there is significant need for formal policies on risk oversight and management of risk.

Risk management arrangements are the responsibility of the Board of Directors and senior management collectively and this matter is a standing agenda item at Board meetings.

Principle 8-Encourage enhanced performance

The Company has established a Remuneration Committee, to meet as and when required, to review performance matters. There has been no formal performance evaluation of the Board during the past financial year, but this will be carried out in the 2005-06 financial year.

The Directors work closely with management and have full access to all the Company's files and records.

Principle 9: Remunerate fairly and responsibly

A Remuneration Committee was set up in September 2003. The Committee will seek independent external advice and market comparisons as necessary.

In accordance with Corporations Act requirements, the Company discloses the fees or salaries paid to all Directors, plus the five highest paid officers.

Corporate governance statement (continued)

The Company has an Employee Share Option Plan (Intec Option Plan), which was introduced in May 2000.

Principle $10:$ Recognise the legitimate interests of stakeholders

The Company has adopted a formal code of conduct to guide compliance with legal and other obligations.

The Board of Directors continues to review the situation to determine if its code is the most appropriate and effective operational procedures.

Functions of the Board

The functions of the Board include:

review and approval of corporate strategies, the annual budget and financial and business plans;
overseeing and monitoring organisational performance and the achievement of the Company's strategic goals and objectives;
monitoring financial performance, including approval of the annual and half-year financial reports and liaison with the Company's auditor;
appointment of, and assessment of the performance of, the Managing Director and Chief Executive Officer and the other members of the senior management team. The Board's Remuneration Committee is made up of three non-executive Directors who oversee this function:
ensuring that there are effective management ٠ processes in place and approving major corporate initiatives;
enhancing and protecting the reputation of the Company;
ensuring that the significant risks facing the Company and its controlled entities have been identified and appropriate and adequate control, monitoring and reporting mechanisms are in place; and
ensuring that shareholders are appropriately informed of the progress of the Company.

Securities Trading and Trading Windows Policy

Directors, employees and key consultants may only deal in the Company's shares during 'window periods' nominated for this purpose from time to time by the Managing Director and Chief Executive Officer, or failing him the Chairman. However, Directors, employees and key consultants are prohibited from buying or selling Intec shares at any time if they are aware of price sensitive information that has not been made public.

This policy is also available on Intec's website at

www.intec.com.au/html/Corporate_Information/Cor porate Governance.shtm.

\$ means Australian dollars, except where other currencies are indicated.

Corporate directory

Directors

Richard H lenkins (Non-executive Chairman) Philip R Wood (Managing Director & Chief Executive Officer) A John Moves (Technical Director) Ian W Ross (Non-executive Director) Kenneth I Severs (Non-executive Director)

Company Secretary

Robert J Waring

Senior Management

Jean-Louis Huens (Chief Operating Officer) Chung Ho Lam (Senior Process Engineer & IT Manager) Andrew M Platts (General Manager, Hellyer Metals Project) Kieran G Rodgers (Chief Financial Officer & Business Development Manager) Andrew R Tong (Senior Research Metallurgist and Laboratory Manager)

Registered Office and Laboratory

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

Telephone: (+61 2) 9351 6741 Facsimile: (+61 2) 9351 7180 Email: [email protected] Website www inter com au

Intec Hellyer Metals Pty Ltd

PO Box 952 39 River Road Burnie TAS 7320 Australia

Telephone: (+61.3) 6431 6333 Facsimile: (+61 3) 6431 6896

Intec Hellyer Metals Demonstration Plant

20 River Road Burnie TAS 7320 Australia

Telephone: (+61.3) 6432 4063 Facsimile: (+61 3) 6432 3594

The Hellver Mine

Cradle Mountain Link Road Wynyard Waratah Council District TAS 7321 Australia

Telephone: (+61 3) 6439 1155 Facsimile: (+61 3) 6439 1405

32 Charles Street Georgetown, Ontario, L7G 2Z3 Canada

Telephone and Facsimile: (+1 905) 873 4985

European Representative Office

'Appletree' Frith Road, Aldington Frith Kent TN25 7HI United Kingdom

Telephone and Facsimile: (+44 1233) 721 328

Share Registry

Registries Limited Level 2, 28 Margaret Street Sydney NSW 2000 Australia

PO Box R67 Royal Exchange Sydney NSW 1223 Australia

Telephone: (+61 2) 9290 9600 Facsimile: (+61 2) 9279 0664 Email: [email protected] Website: www.registriesltd.com.au

Legal Adviser

Allens Arthur Robinson Level 23, The Chifley Tower 2 Chifley Square Sydney NSW 2000 Australia

Patent Attorney

Griffith Hack 100 Miller Street North Sydney NSW 2060 Australia

Auditor

PricewaterhouseCoopers Darling Park Tower 2, 201 Sussex Street Sydney NSW 1171 Australia

Australian Stock Exchange Listing

Intec Ltd shares are listed on the Australian Stock Exchange under the code INL. The home branch is Sydney.

www.intec.com.au

an di Kabupatén Timur Kabupatén Timur Kabupatén Timur Kabupatén Timur Kabupatén Timur Kabupatén Timur Kabupaté

View of Tellyer Millelining show event.

Aera New of Lamba Hellyar Milland associated inizasiename menginyeoremie sorgesie je administration britaings and read and rathacess.

Aeral view columns south of the Heliver mine site and surrounding mining and exploration tenements in North Western Tasmania.

In the cante of the photograph is the Heliver Mill and associated RYSKS RIGHTS

The deared area in the middle distance is the former Que River mine site and the location of the existing Que River S lens. Further to the south is located Mt Charter. Both the S lens and Mt Charter are priorly exploration largets for Resource linance and Investments ran 1110 (1410)
1271 (1414 1546 155
Boundard Color

In the lower left is the site of the mine adit (now plugged) which provided access forhieldings deliver underground mine

ASX Code INU ABN 25 001 150 349

Superior and Sustainable Metals Production

AI assistant

SCIDEV LTD — Annual Report 2005

65761_rns_2005-09-29_f2e0f4b6-dc6a-4374-9983-799f5b986401.pdf

Thire Had

ASX Code: INL ABN 25 001 150 849

Superior and Sustainable Metals Production

Annual Report 2005

Contents

Intec Ltd

Superior and Sustainable Metals Production

Letter from the Chairman and Managing Director & Chief Executive Officer

Review of Operations

Introduction

Development of the Hellyer Metals Project

Background

Figure 1: The Hellyer Tailings Dam

Completion of Pilot Plant Operations

Table 2: Results of Pilot Plant Campaigns on Hellyer Tailings

Completion of Pre-Feasibility Study

Table 3: Summary of Hellyer Metals Project Indicative Financial Analysis from Pre-Feasibility Study

Hellyer Metals Project Demonstration Plant

Bankable Feasibility Study (BFS)

Realisation of Non-Core Assets

Burnie Research Laboratory

Hellyer Mill

Intellectual Property

Intec Gold Process (IGP)

Other Intec Process Developments

Finance and Corporate Matters

Board Changes

Finances

Directors' report

Information on Directors

Richard H Jenkins

Ian W Ross

J Philip Evans

Gordon L Toll

Company Secretary

Mr Robert J Waring BEc, CA, FCIS, ASIA, FAICD Company Secretary

Meetings of Directors

Principal Activities

Operating Results

Dividends

Review of Operations

Earnings per share

Likely Developments and Expected Results of Operations

Significant Changes in the State of Affairs

Matters Subsequent to the End of the Financial Year

Environmental Regulation

Remuneration Report

Executives

Non-executive Directors

Directors' fees

(b) Details of remuneration

(c) Share Options

Auditor's Remuneration

Non-audit services

Assurance services

Audit services

Taxation services

Directors' Interests

Insurance of Officers

Proceedings on behalf of the Company

Auditor

PRICEWATERHOUSE COPERS @

PricewaterhouseCoopers ABN 52 780 433 757

Auditors' Independence Declaration

Statements of financial performance for the year ended 30 June 2005

Statements of financial position as at 30 June 2005

Statements of cash flows for the year ended 30 June 2005

Notes to the financial statements for the year cinded 30 June 2005

$1.$ Statement of significant accounting policies

Financial reporting framework

Significant accounting policies

(a) Accounts payable

(b) Acquisition of assets

$(c)$ Cash

(d) Comparative figures

(e) Depreciation

(f) Employee entitlements

SCIDEV LTD Annual Report 2005