SCIDEV LTD — Capital/Financing Update 2008

Nov 26, 2008

ABN 25 001 150 849

Gordon Chiu Building J01 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

Companies Announcements Office 27 November 2008 Australian Securities Exchange

Activities Update

On behalf of Intec Ltd (ASX code: INL, or the Company), and following lodgement of the Appendix 4C September 2008 Quarterly Cashflows Report, I now attached a more detailed activities update.

Highlights

• Intec has signed an agreement with Delta EMD Australia Pty Ltd for the intended purchase of Delta's integrated minerals processing plant at Newcastle, including land, buildings, plant and equipment.
• The purchase of the processing plant represents a significant acceleration and expansion of the Intec Metals Recycling Project, enabling the short-term implementation of individual business units at a very competitive capital cost for the generation of early cash flows and profitability.
• With manifest advantages in location, lowest-possible technical risk, and shortest-possible implementation times, this deal secures the optimum platform for implementing the Intec Metals Recycling Project.
• The Delta plant, originally built by BHP Billiton in 1989, features a hydrometallurgical unit suited to operating the Intec Process at full commercial scale, as well as a refractory unit to be brought quickly into operation for profitable recycling of Intec's stockpile of Electric Arc Furnace (EAF) dust.
• Due to persisting adverse economic conditions notably including the low zinc price and rising production costs across the board, operations at the Hellyer Zinc Concentrate Project were suspended in September 2008.
• The Hellyer assets have now been made available for orderly sale by tender. 19.9% of Intec's 23.2% shareholding in Bass Metals has been sold for approximately $1.85 million.
• Intec has this month signed an agreement for a Phase III detailed laboratory programme for the use of the Intec Process for lead processing in the Browns Sulphide Project. This programme will optimise, develop and verify design criteria from Intec's earlier testwork as an expected prelude to progressing to pilot and demonstration trials at Intec's Burnie Research Facility.
• Successful Phase I testwork on the Heberton Project owned by North Queensland Metals yielded 98-99% extraction of target copper, indium, silver and bismuth from an intermediate copper concentrate.

Intec Metals Recycling Project

During and following the September 2008 Quarter, Intec's focus has been on the development and

implementation of the deal announced this week for the acquisition of the major hydrometallurgical facility at Newcastle.

Intec has signed an agreement with Delta EMD Australia Pty Ltd (see www.deltaemd.com) for the intended purchase of Delta's integrated minerals processing plant at Newcastle, including land, buildings, plant and equipment (see Figures 1 & 2) for a total of A$20 million.

The purchase of the processing plant represents a significant acceleration and expansion of the Intec Metals Recycling Project, enabling early generation of strong cash flows and profitability.

"We have persevered over many months to secure this unique opportunity for Intec," says Philip Wood, its Managing Director and CEO. "There is more quality equipment on this site than we would have considered putting into our first commercial project, and it is contractually available to us at a fraction of the cost. So now we have every opportunity to really prove what Intec can do."

The Delta plant, originally built by BHP Billiton in 1987, features a hydrometallurgical unit suited to operating the Intec Process at full commercial scale, as well as a refractory unit to be brought quickly into operation for profitable recycling of Intec's stockpile of Electric Arc Furnace (EAF) dust.

Figure 1: Plant location (marked with a red circle)

Figure 2: Aerial view of the plant location, showing the Hunter River and Kooragang Island to the north

Mr Wood said "Economic modelling shows that operation of the refractory unit for EAF dust recycling alone fully justifies the capital costs for the acquisition of the site, while providing an attractive return on investment for Intec's shareholders".

The plant was originally constructed in 1987 (at a capital cost of over A$160 million) and operated by BHP until being transferred to Delta in 1998 and is estimated to have a replacement cost of up to A$500 million in today's terms.

It produced electrolytic manganese dioxide (EMD) for battery use until March 2008, when it was decommissioned due to low EMD prices worldwide. Intec is perhaps better placed than any other Australian company to unlock the value of, and to utilise, this extensive plant infrastructure.

The Intec Process can profitably treat 'orphan' or 'stranded' intermediate feedstocks that miners would otherwise dispose of to tailings, without those miners interrupting existing high-grade concentrate supply agreements to smelter customers.

The Hydrometallurgical Unit will have the capacity to produce up to 15,000 tonnes per year of high-grade copper and lead metals, as well as 10,000 tonnes per year in valuable zinc intermediates and silver, indium and other by-products.

In anticipation of this, Intec has been actively discussing project participation and/or mineral feedstock supply with a range of established Australian mining companies, and has already received strong levels of interest.

The site is very well situated alongside the Hunter River across from Kooragang Island, in immediate proximity to port loading and unloading facilities, and with excellent rail and road access. The coastal mainland location also improves accessibility for delivery of copper, lead, zinc, silver and other metal feedstocks, which will be treated on either a project-participant or tolltreatment basis.

Importantly, the existing Newcastle facility offers significant additional capacity to that previously envisaged for the Intec Metals Recycling Project. It comprises a number of equipment units yielding both short-term and long-term opportunities for integrated but individually-operated profit centres as follows:

• the 'Refractory Unit', consisting of a crusher, ball mill, rotary kiln, cyclone and off-gas control equipment and baghouse;
• the 'Hydrometallurgical Unit', consisting of the leaching, filtration, purification and electrowinning operations – the basis for Intec's original interest in the Newcastle site, which is readily suitable (including its materials of construction) to commercial-scale implementation of the Intec Process;
• the 'Pilot Plant', which is very well-equipped and will be very useful in the medium- to long-term for Intec Process projects progressing through the development pipeline;
• the 'Wastewater Unit', including tanks, pumps, and trace metals removal units, which is intended for immediate separate business utilisation;
• the 'Ancillary Units', such as a concentrate/feedstock storage shed, product handling area, office buildings, high-quality laboratory space, stores and mechanical workshop.

The Wastewater Unit and Pilot Plant both offer exciting profit opportunities, and the site is wellsupported by a comprehensive range of Ancillary Units, some of which will be transferrable to the other profit centres, and the surplus remainder of which can be sold in an orderly and targeted manner for near-term cash receipts to offset in part the site capital cost.

Under the terms of the Call Option Deed, Intec has paid a non-refundable option premium of A$300,000 (plus GST). The Contract for Sale of the Site is due to be executed, and the 10% deposit (A$2.0 million, less the option premium) paid by 20 February 2009, with completion due on 31 March 2009. Intec now enters into a five-month due diligence period, during which the initial capital costs for the site purchase, Refractory Unit and Wastewater Unit start-ups, and working capital will be secured.

Hellyer Zinc Concentrate Project (HZCP)

The Intec Hellyer Mill achieved record zinc recovery of 82% during dredging of high-grade tailings during the month of July 2008. As expected, however, this recovery rate dropped as the dredge was moved to a lower-grade zone of the tailings dam in accordance with the site mining plan.

Given the predicted decrease in production associated with the dredging of the lower-grade tailings, the persisting adverse economic conditions and the rising costs of production, Polymetals and Intec elected to dissolve their joint venture for the operation of the Intec Hellyer Mill. On 1 August 2008 Intec assumed full ownership and control of the Hellyer Zinc Concentrate Project for a total settlement of $700,000.

Intec immediately implemented steps to augment the contained zinc and lead in the concentrate product during the period of low production, successfully bringing this online on 12 August. The company also pursued negotiations with key stakeholders as every effort was made to stand behind the operations during this economically difficult period. However, despite the support of the Tasmanian Government, the combination of the economic conditions, the rising costs, and the inability to reach a mutually acceptable agreement with an important stakeholder related to the HZCP left the Intec board with no alternative but to suspend operations as of 8 September 2008.

Following the decision, an orderly sequence of actions was initiated to place the Intec Hellyer Mill on care and maintenance. Flotation operations within the Mill were finalised, yielding a total of approximately 8,000 tonnes of concentrate for a final shipment.

The Hellyer Zinc Concentrate Project has the advantage of low costs and infrastructure requirements associated with the dredging of the Hellyer tailings (which are however of variably low grade) for processing at the Intec Hellyer Mill. It can thus be operated as a 'swing producer' to take advantage of favourable periods within global metals cycles, without having to bear the burden to shareholders of operating during unfavourable periods.

The Intec Hellyer Mill has been placed on care and maintenance, and as presaged in the 2008 Annual Report, Intec has commenced an orderly realisation of the Hellyer assets. Further, given that it is unlikely that we will see a resumption in competitive zinc and lead prices in any hurry, Intec has engaged Royal Bank of Canada to initiate the orderly sale by tender of the Hellyer mill, tailings dam and associated infrastructure.

Bass Metals Ltd (ASX code: BSM)

Bass Metals Ltd announced its first JORC mineral resource for the Hellyer Mine Project (consisting of the Fossey zone and the Hellyer remnants) at the end of September 2008. Metallurgical testwork on 12 samples of Fossey zone material was conducted at Burnie Research Laboratories, an independent facility which has a long involvement with and has significant expertise in the metallurgy and operation of the Intec Hellyer Mill.

Based on this preliminary work, Bass Metals' preferred processing route is the sequential flotation of copper, lead and zinc to form separate concentrates, in similar fashion to the original design of the Intec Hellyer Mill, which produced these three types of concentrate plus a bulk zinc/ lead product.

Despite the positive exploration and mining results achieved by Bass Metals, the proposed low-cost acquisition of the Newcastle facility for the Intec Metals Recycling Project, and the suspension of Intec's bulk zinc concentrate operations at Hellyer, have altered Intec's position with regard to its Hellyer assets. As a result, all of the Hellyer assets (including both the shareholding in Bass Metals and the Hellyer mill) have become non-core to Intec's primary strategy of implementing the first commercial application of the Intec Process technology. On 18 November 2008, Intec announced the sale of 19.9% of its 23.2% stake in Bass Metals for a payment of approximately $1.85 million.

Browns Sulphide Project

Throughout the September Quarter, Intec continued to progress its contribution to the Browns Sulphide Project being developed as a 50-50 joint venture by Compass Resources Ltd and Hunan Nonferrous Metals Corporation.

Compass has initiated, and Hunan is funding, a definitive feasibility study for the Project. The prefeasibility phase of the study for the processing of 4 Mtpa of polymetallic ore will be completed at the end of December 2008. From the Compass September 2008 Quarterly Report: "The Pre-Feasibility Study has moved to the engineering and estimate stage with this work progressing satisfactorily." A resource estimate was provided in a recent Compass Resources presentation (Figure 3). As noted in this presentation, the "Preferred process uses innovative Australian technology."

Figure 3: Slide from Compass Resources NL Presentation to Mining the Territory Conference, 12 October 2008

Compass subsequently published a process flowsheet (Figure 4), in which the 'Lead Recovery' section utilises the Intec Process. In this context, the ore would first be upgraded via conventional grinding and flotation, then subject to an Intec Process leach for selective lead extraction and recovery, with the leach residue passed through to a conventional pressure oxidation step for recovery of other metals: nickel, cobalt, copper, zinc, and silver.

Figure 4: Process Flowsheet from Compass Resources NL September 2008 Quarterly Report

Intec has this month signed an agreement for a Phase III detailed laboratory programme for the use of the Intec Process for lead processing in the Browns Sulphide Project. This programme will optimise, develop and verify design criteria from Intec's earlier testwork as an expected prelude to progressing to pilot and demonstration trials at Intec's Burnie Research Facility. The results of these trials are due to be presented to Compass by the end of the March 2009 Quarter. Importantly, however, the work has already uncovered a previously-unsuspected stability region for lead in highbromide Intec Process electrolytes that is expected to yield significant capital cost savings for the Browns Sulphide Project and other future applications of the Intec process.

Russian Project

During the September 2008 Quarter, Intec successfully completed the US$150,000 Phase II Engineering Study for the use of the Intec Process for 300,000 tpa of a sulphide complex concentrate to be produced by Ural Mining and Metallurgical Company (UMMC) of Russia. The study included a range of engineering work, including heat and mass balances, process flow diagrams, equipment sizing and layout of plant and facilities, concluding with ±50% capital and operating cost estimates.

UMMC is currently translating the data put forward by Intec and adjusting where necessary to suit a Russian project context. The recent technology developments for the Browns Sulphide Project are also of potential interest to UMMC, with similar capital cost benefits, and Intec hopes to shortly progress to detailed testwork following up on the Phase II study.

North Queensland Metals

Intec successfully completed Phase I laboratory trials for concentrate samples provided by North Queensland Metals for its 100%-owned metallurgically complex Baal Gammon copper ore located at Heberton near Cloncurry, Queensland. Based on reinterpretation of earlier drilling results, the orebody contains ~3.1 Mt grading 1.0% Cu, 0.2% Sn, 34g/t Ag, 30g/t In. The feasibility study for the mining project has been completed, and the project received regulatory approval to proceed in May 2008. North Queensland Metals is pursuing a strategy of developing several mines in the Herberton area to feed ore to a central milling facility.

Testwork has shown that NQM can substantially increase the ore-to-concentrate metal recoveries by producing an intermediate copper concentrate that is very well suited as a feedstock for the Intec Metals Recycling Project, in which the Intec Process extracts 98-99% of all target metals (Cu, Ag, In, and Bi) and is indifferent to any penalty elements. Including higher recoveries and increased byproduct returns, tailoring its production to the Intec Process offers NQM the opportunity to significantly enhance the overall Heberton Project economics.

Yours faithfully Intec Ltd

Philip R Wood Managing Director and Chief Executive Officer

Rule 4.7B Appendix 4C Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity

Intec Ltd
ABN	Quarter ended ("current quarter")
25 001 150 849	30 September 2008

Consolidated statement of cash flows

Cash flows related to operating activities	Currentquarter$A'000	Year to date(3 months)$A'000
1.1 Receipts from product sales and related debtors	5,648	5,648
1.2 Payments for
(a) advertising and marketing	(4)	(4)
(b) hydrometallurgical process development	(417)	(417)
(c) HZCP joint venture costs	(4,518)	(4,518)
(d) administration costs and corporate overheads	(2,148)	(2,148)
1.3 Dividends received	-	-
1.4 Interest and other items of a similar nature received	40	40
1.5 Interest and other costs of finance paid	(121)	(121)
1.6 Income tax rebate received	-	-
1.7 Other income	160	160
Net Operating Cash Flows	(1,360)	(1,360)
Net Operating Cash Flows (brought forward)	(1,360)	(1,360)
Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects	-	-
(b) equity investments	-	-
(c) other fixed assets	(736)	(736)
1.9 Proceeds from sale of:
(a) prospects	-	-
(b) equity investments	-	-
(c) other fixed assets	-	-
1.10 Loans to other entities	(11)	(11)
1.11 Loans repaid by other entities
1.12 Other (provide details if material) - security deposits	(756)	(756)
Other (provide details if material) - security deposits repaid
Net investing cash flows	(1,503)	(1,503)
1.13 Total operating and investing cash flows	(2,863)	(2,863)

Cash flows related to financing activities	Currentquarter$A'000	Year to date(3 months)$A'000
1.14 Proceeds from issues of shares, options, etc.	86	86
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings
1.17 Repayment of borrowings
1.18 Dividends paid
1.19 Other (provide details if material)- share issue costs	(394)	(394)
Net financing cash flows	(308)	(308)
Net increase (decrease) in cash held	(3,171)	(3,171)
1.20 Cash at beginning of quarter/year	5,215	5,215
1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter/year	2,044	2,044

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 Aggregate amount of payments to the parties included in item 1.2	314
1.24 Aggregate amount of loans to the parties included in item 1.10	-

1.25 Explanation necessary for an understanding of the transactions

Salaries, Directors fees and consultancy fees at normal commercial rates.
---------------------------------------------------------------------------	--

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a
material effect on consolidated assets and liabilities but
did not involve cash flows	Nil

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Nil

Financing facilities available

Add notes as necessary for an understanding of the position.

available used $A'000 $A'000 3.1 Loan facilities 5,000 5,000 3.2 Credit standby arrangements Nil Nil

Amount Amount

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the	Current	Previous
consolidated statement of cash flows) to the related items in the	quarter	quarter
accounts is as follows.	$A'000	$A'000
5.1 Cash on hand and at bank	2,044	5,215
Deposits at call	-	-
Bank overdraft	-	-
Other - 30 day bank bills	-	-
Total: cash at end of quarter (item 1.22)	2,044	5,215

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.
• 2 This statement does/does not give a true and fair view of the matters disclosed.

(Director/Company Secretary)

Sign here: Date: 30 October 2008

Print name: Philip R Wood

Notes

• 1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• 1. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.
  • 6.2 reconciliation of cash flows arising from operating activities to operating profit or loss
  • 9.2 itemised disclosure relating to acquisitions
  • 9.4 itemised disclosure relating to disposals
  • 12.1(a) policy for classification of cash items
  • 12.3 disclosure of restrictions on use of cash
  • 13.1 comparative information
• 1. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.