SCIDEV LTD — Capital/Financing Update 2006

Apr 4, 2006

ABN 25 001 150 849

Superior and Sustainable Metals Production

Gordon Chiu Building [0] Department of Chemical Engineering Maze Crescent University of Sydney NSW 2006 Australia

Phone: 02-9351-6741 Fax: 02-9351-7180 Email: mail@intec.com.au Website: www.intec.com.au ASX code: INL

5 April 2006

Companies Announcements Office Australian Stock Exchange Limited

Bulk zinc/lead/silver concentrate joint venture with Polymetals

Intec Ltd (ASX code: INL) announces that it has entered into a Conditional Letter Agreement (CLA) with Polymetals Mining Services Pty Ltd (PMS) for the retreatment of the Hellyer tailings through the 1.5 mtpa Hellyer grinding and flotation mill (the Mill) to produce saleable bulk zinc/lead/silver concentrate (the Project). The CLA is subject to finalisation of documentation and the Project will be subject to regulatory approvals.

INL's wholly-owned subsidiary Intec Hellyer Metals Pty Ltd (IHM) is uniquely positioned to commence zinc production cheaply $(\sim A\$ {34} million 'Start Up Costs') and quickly (during the September 2006 quarter) because its already granted mining lease at Hellyer (See Figure 1) comprises its substantial above ground zinc-bearing tailings resource (See Figure 2) in immediate proximity to its modern large-scale Mill, which is both well-maintained and available. The Hellyer Mill Complex is a 1.5 mtpa facility comprising a primary crusher, SAG mill, ball mill (See Figure 3), three tower mills, differential flotation circuits (See Figure 4), filtration and all other necessary infrastructure to support the production of base metal concentrates such as concentrate storage and loading facilities (See Figure 5). Along with Mt Lyell in the south and Rosebery/Renison in the centre, the Mill dominates ore processing capability in the northern section of the Mt Read Volcanics Belt in northwestern Tasmania.

• 1.55 ha tailings dam
• 1. 80km road $\&$ rail access to Burnie (deepwater port)
• 1. Hellyer mine adit (plugged)
• 1. 1.5 mtpa Hellyer Mill
• 1. Former Que River mine site
• 1. Electricity grid
• 1. Shale pit for initial retreatment residues

Figure 1 Aerial photograph of Hellyer Metals Project site

Figure 2 The Hellyer Tailings Dam

Figure 3 The ball mill in the Hellyer Mill Complex

Figure 4 A partial view of the Hellyer flotation circuit

Figure 5 Concentrates storage and loading facilities

The 10.9 million tonnes Hellyer tailings dam resource contains (along with lead, silver, gold and copper) 305,000 tonnes of zinc at an average grade of 2.8%, which alone at today's US\$/A\$ exchange rate and LME zinc price has an in-situ metal value of over A\$1.1 billion.

IHM owns the intellectual property comprised in the 1999 Pre-Feasibility Study (PFS) by Bateman Engineering for Dominion Mining Limited and Western Metals Limited on the retreatment of the Hellyer tailings. The PFS included exhaustive metallurgical testwork demonstrating that, after a regrind to $\sim$ 20 microns (the tailings presently have a p80 of $\sim$ 45 microns) and flotation, 65% zinc recovery from the tailings into a bulk zinc $(43\%)$ lead $(9.5\%)$ silver $(170\text{gpt})$ concentrate is achievable.

The retreatment proposal considered in the PFS did not eventuate due largely to much lower metals prices at that time. Today however, INL's and PMS's discussions with potential ISF smelter endcustomers and commodities trading houses indicate clearly that in the current environment of worldwide tightness in supply of zinc-bearing feedstocks, this product is readily saleable on financially attractive terms.

Thus, based on an assumed zinc price in the near-to-medium term of US\$0.90/lb (presently US\$1.25/lb), a US\$0.74/A\$ exchange rate (presently US\$0.72/A\$), a tailings throughput rate of 1.5 mtpa, projected operating costs, including indicative smelter and shipping terms, amounting to approximately A\$50 million per annum, the Project would generate a profit before interest, tax, depreciation and amortization of approximately A\$19 million per annum, split equally between the JV parties. It is expected that production will commence towards the end of the September 2006 quarter.

The CLA provides for an unincorporated joint venture (JV) owned equally by IHM and PMS. PMS will operate the Project and sole-fund the 'Start Up Costs' in an amount of A\$4 million or such larger amount as is required in order to achieve 'Steady State', being an annualised tailings throughput of 1.5 million tonnes and producing concentrate grading >35% zinc. After Steady State has been achieved for a continuous 21 day period, the JV will commence to bear the Project operating costs for a period of two years, with an option to renew the Project yearly for a further two years. Four years after commencement of Steady State, IHM will have the right to acquire PMS's 50% interest in the JV for A\$1.

The JV is projected initially to produce about 63,000 tonnes of concentrate per annum, though it is intended over time to significantly increase this amount by expanding the tailings throughput capacity of the Mill to above 2 mtpa. INL has commenced technical investigation of the opportunity to blend EAF dust (grading $\sim$ 30% zinc) into the concentrate product.

It is important to note that:

• 1) all Hellyer assets, the refurbishments of which will be depreciable capital improvements, remain the property of IHM at all times;
• 2) the refurbished Mill will be made available as much as practically possible to treat ores from regional miners (notably including Bass Metals Ltd (ASX code: BSM) which is 22.1% owned by INL):
• 3) the retreatment residues from the Mill will be returned to the tailings dam where, though depleted of two thirds of their contained zinc value (and of 17% and 10% of their lead and silver values respectively), they will be available for treatment yet again via Intec's Hellver Metals Project technology, after being augmented with high grade zinc secondary residues such as EAF dust, lead smelter slags and primary leach residues; and
• 4) the effect of (3) above is that the JV's Project (under PMS's operational management) will in no way cut across the overall Intec Hellyer Metals Project, whose Burnie Demonstration Plant is now achieving its required technical outcomes and will very shortly be the subject of a separate ASX announcement.

PMS is a privately owned mining company which operates the Nimbus Silver Mine near Kalgoorlie in WA and the Mt Boppy Gold Mine near Cobar in NSW. Nimbus is the only primary silver producer (130,000 oz per month) in Australia, while Mt Boppy has produced around 70,000 oz gold since PMS converted it from underground to open cut operations in 2002.

PMS enjoys the reputation of being a small and dynamic company with low overheads. Its experienced senior management team has an enviable track record of exploiting projects that larger companies are unable to develop. Its 'hands-on' ability to design, construct and operate its own operations makes PMS an ideal JV partner with the INL Group at Hellyer.

Yours sincerely

Philip R. Wood

Philip R Wood Managing Director and Chief Executive Officer Intec Ltd