SCIDEV LTD — Interim / Quarterly Report 2008

Aug 28, 2008

ABN 25 001 150 849

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

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

Companies Announcements Office 29 August 2008 Australian Securities Exchange

Preliminary 2008 Financial Report (Appendix 4E)

In its 2008 Annual Report to be lodged with the ASX by mid-September, Intec Ltd (ASX code: INL) will be providing a comprehensive description of all its activities up to that time.

In the meantime, I attach INL’s Preliminary Final Report in accordance with Appendix 4E for the financial year ended 30 June 2008.

As a result of the significant fall in the global zinc price and current adverse market conditions, capitalised exploration costs of approximately $2.7 million have been written down against the investment in Intec Zeehan Residues Pty Ltd and Intec’s equity accounted investment in Bass Metals Ltd was also written down to fair market value at 30 June, 2008, resulting in an additional impairment expense of $1.2 million.

Thus, although the Intec Group reported a modest operating profit after tax of $1.1 million, it incurred a loss of $2.8 million after these impairment adjustments.

INL’s strategic and operational plans continue to focus on sustaining shareholder value during these present difficult market conditions.

Yours faithfully, Intec Ltd

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Philip R Wood Managing Director & Chief Executive Officer

Intec Ltd ABN 25 001 150 849

Preliminary Final Report in accordance with Appendix 4E

Financial year ended 30 June 2008

Results for announcement to the market

	2008		2007
	$A’000		$A’000
Revenues and other income from continuing
operations	Up 99% to 27,202	from	13,645
Loss from ordinary activities after tax attributable
to members	Down 141% to (2,826)	from	(1,172)
Net loss for the period attributable to members	Down 141% to (2,826)	from	(1,172)

	Amount per	Franked amount
Dividends	security	per security
Final dividend	Nil ¢	Nil ¢
Previous corresponding period	Nil ¢	Nil ¢
Record date for determining entitlements to the dividend		Not applicable

Record date for determining entitlements to the dividend

Brief explanation of any of the figures reported above and short details of any bonus or cash issue or other item(s) of importance not previously released to the market:

During the year to 30 June 2008, the Group participated in the Hellyer Zinc Concentrate Project (HZCP) via a 50/50 joint venture with Polymetals (Hellyer) Pty Ltd, which produces a bulk zinc concentrate by recovering tailings from the Hellyer tailings dam for re-treatment in the Intec Hellyer Mill.

Due to the significant fall in the global zinc price and current market conditions, the Directors recognised an impairment expense of approximately $2.7 million against the recoverability of the investment in Intec Zeehan Residues Pty Ltd. Similarly, the equity accounted investment of Bass Metals Ltd was written down to its fair market value at 30 June, 2008 resulting in an impairment expense of $1.2 million. Therefore, before impairment adjustments, the Group reported an operating profit after tax of $1.1 million and after adjustments reported a loss of $2.8 million.

The Group continues to generate income through its participation in HZCP, over which it has now assumed full ownership and operational control for nominal consideration and subject to reconciliation of joint venture financial accounts at the 1 August, 2008 change over date . Final reconciliation may or may not result in the Group making a payment to Polymetals (Hellyer) Pty Ltd.

The HZCP produced 52,788 tonnes of concentrate during the twelve (12) months to 30 June, 2008. The Group also continued commercialisation of the Intec Processes, including the operation of the Burnie demonstration plant and completion of related studies.

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Intec Ltd

Consolidated income statement

Consolidated income statement
Revenue from continuing operations Other income Inventories used and changes in inventories of zinc concentrate and work in progress Administration expense Demonstration plant expenses Depreciation and amortisation expense Engineering and other consultants expenses Employee benefits expense Finance costs Occupancy expense Research and development expenses Other expenses Exploration expenditure written off Diminution in the value of investments in associates Share of net profits/(losses) of associates accounted for using the equity method Loss before income tax Income tax (expense)/benefit Loss attributable to members of Intec Ltd Loss per share attributable to the ordinary equity holders of the company: Basic (loss) per share Diluted (loss) per share	30 June 2008 $A'000	30 June 2007 $A'000
	27,202 - (15,917) (1,569) (1,034) (775) (1,211) (4,007) (252) (612) (436) (715) (2,698) (1,205) 403	9,564 4,081 (4,346) (1,102) (3,949) (1,498) (209) (3,464) (339) (337) (300) (577) - - (268)
	(2,826)	(2,744)
	-	1,572
	(2,826)	(1,172)
	Cents (0.51) (0.51)	Cents (0.21) (0.21)

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Intec Ltd

Consolidated balance sheet

nsolidated balance sheet
ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Prepayments Total current assets Non-current assets Receivables Investment accounted for using the equity method Plant and equipment Exploration expenditure Intangible assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Deferred revenue Total current liabilities Non-current liabilities Deferred revenue Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Total equity	30 June 2008 $A'000	30 June 2007 $A'000
	5,215 1,329 3,230 - 65	2,971 5,230 3,434 301 -
	9,839	11,936
	1,134 4,069 33,825 146 10	1,211 3,202 31,402 2,854 10
	39,184	38,679
	49,023	50,615
	4,023 1,350 2,520	2,513 - 8,289
	7,893	10,802
	2,090 1,990	3,174 2,241
	4,080	5,415
	11,973	16,217
	37,050	34,398
	64,475 16,190 (43,615)	59,423 15,764 (40,789)
	37,050	34,398

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Intec Ltd

Consolidated statement of changes in equity

Total equity at the beginning of the financial year Gain on revaluation of Hellyer plant and equipment Employee share options expense Share of associates’ reserves Share of associates’ capital raising costs Net income recognised directly in equity Profit/(loss) for the year Total recognised income and expense for the year Transactions with equity holders in their capacity as equity holders Contributions of equity, net of transaction costs Rights to acquire additional shares granted on acquisition of Intec Zeehan Residues Pty Ltd (formerly Encore Metals NL) Amount transferred to equity on exercise of options Options issued to Macquarie Bank Limited in consideration for entering into a financing facility recognised in share based payments reserve Total equity at the end of the financial year	Year ended 30 June 2008 $A'000	Year ended 30 June 2007 $A'000
	34,398 - 402 24 (63)	31,505 - 865 7 (156)
	363	716
	(2,826)	(1,172)
	(2,463)	(456)
	5,115 - - -	2,898 395 (127) 183
	5,115	3,349
	37,050	34,398

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Intec Ltd

Consolidated cash flow statement

nsolidated cash flow statement
Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest paid Interest received Other receipts Net cash (outflow) inflow from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for tenement security deposits Payments for investments in listed companies Proceeds from Sale of Property, Plant & Equipment Proceeds from sale of investments in listed companies Contribution from JV Party Net cash (outflow) inflow from investing activities Cash flows from financing activities Proceeds from issues of shares Proceeds from borrowings Repayment of borrowings Net cash inflow (outflow) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at end of year	Year ended 30 June 2008 $A'000	Year ended 30 June 2007 $A'000
	23,757 (20,853) (151) 262 83	9,601 (12,026) (156) 186 90
	3,098	(2,305)
	(6,016) - (1,708) 10 - -	(3,709) (1,021) (6,767) - 8,161 1,771
	(7,714)	(1,565)
	5,510 1,719 (369)	348 4,481 (4,481)
	6,860	348
	2,244 2,971	(3,522) 6,493
	5,215	2,971

Non-cash financing and investing activities

Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows.

Acquisition of Zeehan Residues Pty Ltd(formerly Encore Metals NL) Assets acquired on entering into Hellyer Zinc Concentrate Joint Venture Recognition of provision for rehabilitation Reconciliation of cash Reconciliation of cash at the end of the year (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Cash on hand and at bank Other - bank accepted bills of exchange Total cash at end of year	30 June 2008 $A'000	30 June 2007 $A'000
	-	2,795
	-	4,263
	-	1,990
	Year ended 30 June 2008 $A'000	Year ended 30 June 2007 $A'000
	5,215 -	2,971 -
	5,215	2,971

Intec Ltd

5

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

rating activities
Operating loss after income tax Non cash items and non operating cash flows included in profit and loss Depreciation and amortisation Depreciation as part of cost of sales Exploration expenditure written-off Inventory impairment expense Employee share options expense Net (profit)/loss on sale of non-current assets Net (profit) on sale of investments Equity share of (profit)/losses of associated entities Diminution in value of investment in associate Changes in assets and liabilities Decrease/(increase) in receivables Decrease/(increase) in inventories Decrease/(increase) in derivative asset Increase/(decrease) in creditors Increase/(decrease) in exploration expenditure Increase/(decrease) in deferred revenue Increase/(decrease) in provisions Increase/(decrease) in deferred tax liability recognised in income statement Net cash inflow (outflow) from operating activities	Year ended 30 June 2008 $A'000	Year ended 30 June 2007 $A'000
	(2,826) 775 2,312 2,698 114 402 (3) - (403) 1,205	(1,172) 1,498 1,277 - - 1,048 280 (4,081) 268
	4,274 3,913 204 301 1,510 - (6,853) (251) -	(882) (4,958) (3,434) (301) 1,516 (59) 7,223 162 (1,572)
	3,098	(2,305)

Dividends

Date the dividend is payable Not applicable Record date to determine entitlements to the dividend Not applicable No final dividend has been declared.

Dividend Reinvestment Plans

There are no dividend reinvestment plans in operation.

Consolidated Accumulated Losses

	Accumulated losses at the beginning of the financial year Net loss attributable to members Accumulated losses at end of financial year	Year ended 30 June 2008 $A'000	Year ended 30 June 2007 $A'000
		(40,789) (2,826)	(39,617) (1,172)
		(43,615)	(40,789)

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Intec Ltd

Control gained or loss of control over entities having material effect

Control gained over entities having material effect Name of entity (or group of entities) Consolidated profit/(loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control was acquired. Date from which such profit/(loss) has been calculated Profit/(loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period. Loss of control of entities having material effect Name of entity (or group of entities) Consolidated profit/(loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) to the date of loss of control. Date to which such profit/(loss) has been calculated Consolidated profit/(loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period. Contribution to consolidated profit/(loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control.
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable

Details of associates and joint venture entities

Details of associates and joint venture entities	Details of associates and joint venture entities	Details of associates and joint venture entities	Details of associates and joint venture entities	Details of associates and joint venture entities
Investment in associates accounted for using the equity method (a) Details of associate:
Name of Associate Principal Activities Intec Exploration Pty Ltd Mineral Exploration Bass Metals Ltd Mineral Exploration	Ownership interest		Carrying amount
	2008 %	2007 %	2008 $,000	2007 $,000
	50.00 23.16	- 23.25	- 4,069	- 3,202

(b) Share of reserves attributable to associates: Share of associate’s profits/(losses) taken up in the consolidated financial statements Operating Profit (Loss) before tax 403 Income tax expense - Net operating profit/(loss) after income tax as shown in the Income Statement 403 Accumulated losses at beginning of period (484) Retained earnings at end of period 81 (c) Movement in equity accounted investment Carrying amount of investment at beginning of financial year 3,202 Share of associate’s current year profits/(losses) after tax (refer (b)) 403 Share of associate’s increase in reserves 24 Share of associate’s capital raising costs (63) Acquisition of investment 1,708 Impairment of Investment (1,205) Carrying amount of investment at end of financial year 4,069 Summary of financial position of associated entities: Current assets 11,147 Current liabilities (3,865) Non-current assets 15,004 Non-current liabilities (3) 22,283	(b) Share of reserves attributable to associates: Share of associate’s profits/(losses) taken up in the consolidated financial statements Operating Profit (Loss) before tax 403 Income tax expense - Net operating profit/(loss) after income tax as shown in the Income Statement 403 Accumulated losses at beginning of period (484) Retained earnings at end of period 81 (c) Movement in equity accounted investment Carrying amount of investment at beginning of financial year 3,202 Share of associate’s current year profits/(losses) after tax (refer (b)) 403 Share of associate’s increase in reserves 24 Share of associate’s capital raising costs (63) Acquisition of investment 1,708 Impairment of Investment (1,205) Carrying amount of investment at end of financial year 4,069 Summary of financial position of associated entities: Current assets 11,147 Current liabilities (3,865) Non-current assets 15,004 Non-current liabilities (3) 22,283
	403 -	(268) -
	403 (484)	(268) (216)
	81	(484)
	3,202 403 24 (63) 1,708 (1,205)	932 (268) 7 (156) 2,687 -
	4,069	3,202
	11,147 (3,865) 15,004 (3)	5,416 (738) 9,112 (94)
	22,283	13,696

Intec Ltd

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Other notes to the condensed financial statements Ratios

Loss before tax / revenue and other income Consolidated loss from continuing operations before tax as a percentage of revenue and other income Loss after tax / equity interests Consolidated net loss after tax attributable to members as a percentage of equity (similarly attributable) at the end of the year TA Backing Net tangible assets per ordinary share	Year ended 30 June 2008	Year ended 30 June 2007
	(10.39)	(20.11)
	(7.63)	(3.41)
	5.52 cents	6.15 cents

NTA Backing

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with AASB 133: Earnings Per Share are as follows.

Basic loss per share (cents) Diluted loss per share (cents) Weighted average number of ordinary shares outstanding during the period used in calculating the basic and diluted loss per share.	Year ended 30 June 2008	Year ended 30 June 2007
	(0.51)	(0.21)
	(0.51)	(0.21)
	549,703,762	549,397,131

2008 Audit

The financial report is based on accounts which are in the process of being audited.

Basis of preparation

The financial report 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 has been prepared on an accruals basis and is based on historical costs except as modified by revaluation of certain non-current assets 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 after income tax of $2.826 million and net cash inflows from operations of $2.244 million in the year ended 30 June 2008. As of balance date, the Company and controlled entities had net assets of $37.050 million and cash balances of $5.215 million.

The Group continues to generate income through its participation in HZCP, over which it has now assumed full ownership and operational control for nominal consideration and subject to reconciliation of joint venture financial accounts at the 1 August, 2008 change over date . 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. Accordingly, the Directors have prepared the financial report on a going concern basis.

The global zinc price has fallen significantly in the past year. Should global zinc prices continue to decline, the Company may be forced to either suspend or shut down the HZCP. This may have a consequential impact on the carrying value of assets and may result in additional liabilities being incurred. The financial statements do not include adjustment for these potential impacts.

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Intec Ltd

Accounting Policies

The Appendix 4E does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report.

The Appendix 4E should be read in conjunction with the Half-year Financial Report of Intec as at 31 December 2007 and the Annual Financial Report of Intec, due to be released in September 2008, for the year ended 30 June 2008. It is also recommended that the Appendix 4E be considered together with any public announcements made by Intec during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

Accounting policies adopted during the year:

Revenue recognition

Sale of zinc concentrate

Sales are priced on a cost insurance and freight (c.i.f.) basis where all of the risks associated with the product remain with the seller until the product has been delivered to the port of discharge, when title passes to the purchaser.

Group production of zinc concentrate is sold under medium to long term contracts, but sales revenue is only recognised on individual sales when persuasive evidence exists that all of the following criteria are met:

• the significant risks and rewards of ownership of the product have been transferred to the buyer;

• neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold, has been retained ;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the sale will flow to the Group; and

• the costs incurred or to be incurred in respect of the sale can be measured reliably.

The conditions are generally satisfied when title passes to the customer. Sales revenue is recognised when the product is delivered to the destination specified by the customer, which is, the port of discharge.

The price of zinc concentrate is determined on a provisional basis at the date of despatch. Adjustments to the sales price occurs based on movements in quoted market prices up to the date of final pricing. The period between provisional invoicing and final pricing is typically between 60 and 120 days. Revenue on provisionally priced concentrate is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative.

At each reporting date provisionally priced zinc is marked to market based on the forward selling price for the quotational period stipulated in the contract. For this purpose, the selling price can be measured reliably for zinc, for which there exists an active and freely traded commodity market such as the London Metals Exchange and the value of product sold by the Group is directly linked to the form in which it is traded on that market.

The marking to market of provisionally priced sales contracts is treated as an embedded derivative with changes in value recorded as an adjustment to sales revenue.

Royalty income

Royalty income is recognised progressively over the term of the Hellyer Zinc Concentrate Joint Venture at rates specified in the Joint Venture Agreement.

Exploration expenditure

Exploration and evaluation expenditure comprises costs which are directly contributed to:

• researching and analysing existing exploration data;

• conducting geological studies, exploratory drilling and sampling;

• examining and testing extraction and treatment methods; and/or

• compiling pre-feasibility and feasibility studies.

Intec Ltd

Exploration and evaluation expenditure also includes costs incurred in acquiring mineral rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects.

Exploration and evaluation expenditures in relation to separate areas of interest are capitalised in the year in which they are incurred and are carried at cost less accumulated impairment losses where the following conditions are satisfied:

• (i) the rights to tenure of the area of interest are current; and

• (ii) at least one of the following conditions are also met:

• the exploration and evaluation expenditures are expected to be recouped through successful development and production from the area of interest, or alternatively, by its sale, or

• exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to the area of interest, are continuing.

Capitalised exploration and evaluation expenditure is reviewed for impairment at each balance sheet date.

Subsequent recovery of the resulting carrying value depends on successful development of the area of interest or sale of the project. If a project does not prove viable, all irrecoverable costs associated with the project and any related impairment provisions are written off.

Where a decision is made to proceed with development, accumulated expenditure is tested for impairment, and transferred to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced.

Inventories

Zinc concentrate is valued at the lower of cost and net realisable value. Cost is comprised of materials, labour and an appropriate proportion of fixed and variable overheads, on an absorption costing basis. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The methods used to assign costs to inventories are actual invoiced costs.

Joint Ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control such that significant operation and financial decisions require the unanimous consent of the parties sharing control. The Group has one joint venture.

Jointly controlled operations (‘JCO’s): a JCO is a joint venture in which the venturers have joint control over the operations of the joint venture contributed to or acquired for the purposes of the joint venture. JCO’s do not involve the establishment of a corporation, partnership or other entity. Each participant derives benefit from the joint activity through a share of production, rather than by receiving a share of the results of trading. The Group’s proportionate interest in the assets, liabilities, revenues, expenses and cash flows of JCO’s are incorporated into the Group’s financial statements under the appropriate headings.

Where necessary, adjustments are made to the results of joint ventures to bring their accounting policies into line with those used by the Group.

Provision for closedown and restoration and for environmental clean-up costs

Close down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbances occurs, whether this occurs during the mine development or during the production phase, based on the net present value of estimated future costs. Provisions for close down and restoration costs do not include any additional obligations which are expected to arise on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments e.g. updated cost estimates and revisions to the estimated lives of operations, and are subject to formal review at regular intervals.

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Intec Ltd

Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is incurred at the end of the life of the mine. Although the actual cost to be incurred is uncertain, the Group’s businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and techniques.

The amortisation or ‘unwinding’ of the discount applied in establishing the net present value is charged to the income statement in each accounting period. The amortisation of the discount is shown as a financing cost, rather than as an operating cost. The initial closure provision together with other movements in the provisions for close down and restoration costs, including those resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of the assets to which they relate.

As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected timing of expenditure can also change, for example in response to changes in ore reserves or production rates. As a result there could be significant adjustments to the provision for close down and restoration and environmental clean up, which would affect future financial results.

Financial instruments

Fair Value

Where financial instruments are accounted for at fair value, this is the amount at which they could be exchanged in an arm’s length transaction between informed and willing parties. Where available, market values have been used to determine fair values. In other cases, fair values have been calculated using quotations from independent financial institutions, or by discounting expected cash flows at prevailing market rates. The fair values of the Group’s cash, short term borrowings and loans to jointly controlled entities and associates approximate to their carrying values, as a result of their short maturity or because they carry floating rates of interest. A further description of the accounting for each class of financial instruments is given below.

Financial assets

All financial assets are initially recorded at fair value. The Group has certain investments in companies that are not subsidiaries, associates or jointly controlled entities. These investments are not classed as ‘available for sale’. Such investments are subsequently measured at fair value with unrealised gains and losses recognised directly in the income statement. Other financial assets that the Group has the expressed intent and ability to hold to maturity together with loans and receivables are measured at amortised cost less any impairment charges.

Financial liabilities

Borrowings and other financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost. Any difference between the amounts originally received (net of transaction costs) and the redemption value is recognised in the income statement over the period to maturity using the effective interest method.

Derivative financial instruments - Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to their host contracts. Derivative assets and liabilities are virtually recognised at fair value.

Financial assets at fair value through profit or loss

Financial assets subject to fair value calculation are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in profit or loss.

Available-for-sale financial assets

Gains and losses arising from changes in fair value of investments designated as “available for sale” are recognised directly in the available-for-sale reserve within equity, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in the availablefor-sale revaluation reserve is included in profit or loss for the period.

11

Intec Ltd

Plant and equipment

The Hellyer Mine plant and equipment is shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Increases in the carrying amounts arising on revaluation of land and buildings are credited, net of tax, to other reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the income statement.

Material factors affecting the revenues and expenses of the economic entity for the current year.

Participation in the HZCP, operation of the Burnie demonstration plant and completion of related studies.

A description of each event since the end of the current period which has had a material effect and which is not already reported elsewhere in this Appendix or in attachments, with financial effect quantified (if possible).

On 1 August, 2008, Intec Ltd assumed full ownership and operational control of the HZCP for nominal consideration and subject to reconciliation of joint venture financial accounts at the change over date. Final reconciliation may or may not result in the Group making a payment to Polymetals (Hellyer) Pty Ltd.

No other matters or circumstances have arisen since 30 June 2008 that have significantly affected or may significantly affect the Group’s operations in future financial years, or the results of those operations in future financial years, or the Group’s state of affairs in future financial years.

A discussion of trends in performance

Intec’s corporate strategy is to acquire interests in minerals projects where its technology creates additional value. In addition, the Company seeks to realise value from its existing assets as appropriate in order to take advantage of market conditions, such as its participation in the HZCP.

There are no franking credits available.

The Company is not expected to declare a dividend in the short term.

Compliance statement

This report gives a true and fair view of the matters disclosed and is based on accounts which are in the process of being audited.

The entity has a formally constituted audit committee.

Sign here:

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Date: 29 August 2008

Managing Director & Chief Executive Officer

Print name: Philip R Wood

12

Intec Ltd