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INDEPENDENCE GROUP NL Sydney Mining Club Presentation April 2005 The Past, The Present, & The Future THE PAST Approximately 300,000 years ago mankind commenced exploration for rocks with specific characteristics to make tools. Mining was the 1st embryonic science? Evolution of this science has continued throughout history and still continues. MINING HISTORY Gold mining commenced approx. 8,000 years ago. Copper was smelted at least 6,200 years ago. Early exploration involved finding alluvial deposits or outcropping ore bodies in stream head waters. MINING HISTORY In Roman times mineral deposits were mined to depths of up to 200m using slaves, fire and dewatering techniques. Gold at this time was valued at ~US$2,000/oz. The decline of the Roman Empire coincided with the diminishing mining reserves and the ability to pay the Legionnaires. Roman dewatering wheel Rio Tinto Mine, Spain EXPLORATION HISTORY The exploration techniques developed by the ancients were the mainstay of exploration up to the industrial era. Significant advances in exploration & exploration technology has occurred over the last 5 decades. Technological advances still continue. WORLD GOLD SECTOR – PAST CONSOLIDATION .. WHAT NEXT? WORLD BASE METAL SECTOR – FUTURE CONSOLIDATION? ASX 300 GOLD & BASE METAL MINING COMPANIES – SHARE PRICE EXECUTIVE SUMMARY Low cost nickel producer - Dec Qtr A$2.65/lb payable Ni. Expanded production profile to 9,000t Ni pa. Strong cash reserves and cash generation potential – Dec 2004 $23.8M cash + receivables net creditors. Paying fully franked dividends - 5c Dec 04, 3c Apr 05. Exploring for gold, nickel and copper in Australia. Strategy to increase shareholder returns by becoming a highly profitable diversified mining house. P/E 5.1 INDEPENDENCE CORPORATE GOALS To increase shareholder wealth by becoming a highly profitable, mid-cap, multi commodity Australian mining company Focus on share price and dividend increases. (as opposed to market capitalisation). Growth through exploration and acquisition. Under promise, over deliver. Maintain a conservative balance sheet. SHARE STRUCTURE ASX Code - Shares IGO A$1.32 (01.04.05) IGO average turnover (last 6 months) = 485,000 shares/day Ordinary shares 107.0M Contributing shares 3.1M Unlisted options 7.4M TOTAL 117.5M Undiluted market capitalisation = $142M ASX 300 Company TOP TEN SHAREHOLDERS Ordinary Shares as at 11.03.05 Equity Trustees 6.5M 6.1% ANZ Nominees 4.1M 3.9% Forbar Custodians 3.5M 3.3% Virtual Genius 3.4M 3.2% National Nominees 3.1M 2.9% Queensland Investments 2.9M 2.8% Westpac Custodian Nominees 2.6M 2.4% Yarandi Investments 2.3M 2.1% JP Morgan Nominees 2.1M 2.0% RBC Global Services 1.8M 1.7% 32.3M 30.4% 5 British institutions on IGO register IGO PROFITABILITY 2003/4 2004/5 1st half Mine Revenue A$66.7M A$44.9M Mine cash flow (pre tax)* A$29.4M A$22.2M Group profit (after tax) A$17.3M A$12.5M Earnings per share A24c A15 c (undiluted) Earnings per share A18c A12 c (diluted) Dividends (fully franked) A5c A3c * Excludes capital, depreciation, amortisation and exploration IGO CASH 31 Dec 04 Cash: A$12.4M Receivables: A$19.7M Creditors: (A$8.3M) Total: A$23.8M Debt: A$8.9M LONG NICKEL MINE (100% IGO) TARGET: New nickel discovery to raise production from 9,000t Ni pa to 15,000t Ni pa in bottom 3rd of nickel production cash costs LONG NICKEL MINE GEOLOGICAL SETTING WMC Production 1979-1999: 5.43M t 3.7% Ni 203,184 Ni t IGO Production 2002-Dec04: 370,167 t 3.9 % Ni 14,557 Ni t 2004/2005 Reserves: 1.185M t 4.1 % Ni 48,300 Ni t LONG PRODUCTION HISTORY Long purchase price A$15M. 2002 – Dec 04 pre-tax free cash = $60.2M LONG MINE PERSONNEL Owner operator with 108 salaried employees. Very experienced team. Turnover extremely low. Gain share bonus. Skilled personnel waiting list. Only 2 LTI’s since commencement. 2003/4 & 2004/5 PRODUCTION IGO Ni t Tonnes % Ni Ni t Share 2003/2004 168,991 4.1 6,843 4,063 2005 1st half 114,012 4.1 4,705 2,798 Nickel mined outside or in excess of reserves: Dec 04 Qtr = 27% Ni t. Project to date = 32% Ni t. DEC O4 Qtr PRODUCTION STATS Tonnes % Ni Ni t Long 33,923 2.6 895 Gibb South 4,674 6.6 307 Victor South 23,156 5.6 1,285 TOTAL 61,753 4.6 2,487 A$/lb Payable Ni Payable sales revenue (incl. hedging): 6.96 Cash mining / development costs: 1.59 Milling & other cash costs: 1.06 TOTAL 2.65 Deprec. / amort. / rehab: 0.74 2004/2005 PRODUCTION BUDGET Budget: 222,000 t @ 4.0% Ni (8,900t Ni) 2004/5 Cash costs to date A$3.10/lb (payable nickel metal) LONG - 5 YR MINING SCHEDULE LONG EXPLORATION TARGETS IGO AUSTRALIAN REGIONAL EXPLORATION STRATEGY: Targeting new, high profit mines by - Exploring under cover and in lightly or unexplored terrains. Using empirical, conceptual targeting & new innovative exploration technology. Turning ground over quickly and efficiently. REGIONAL BUDGET: 2004/2005 - A $4M SIGNIFICANT PROJECTS: 7 Nickel 9 Gold 1 Copper 1 Mineral Sands INNOVATIONS – GEOPHYSICAL SEEING DEEPER IN SALINE CONDITIONS LOW TEMP SQUID TEM SENSOR MAG TEM SENSOR Anglo American JV INNOVATIONS - GEOCHEMISTRY USING CHROMITES TO FIND NiS Chromites are a common mineral in many rock types. Diamond explorers collect and analyse chromites to identify those sourced from diamond bearing intrusives. Independence can use this data to recognise chromites that occur in massive nickel sulphide. Nickel sulphide face Chromite grains NICKEL GEOCHEM & TEM ANOMALY TARGET: Low cost nickel mining camp Anomalous values and TEM conductor Nickel geochemical image over magnetics NICKEL GEOCHEM & TEM ANOMALY TARGET: Low cost nickel mining camp Aeromagnetic image & Nickel geochemical image TEM anomaly NICKEL SULPHIDE GOSSAN Nickel sulphide gossan Primary nickel sulphide TROPICANA GOLD JV TARGET: new gold camps TROPICANA CROSS-SECTION 14320mN FRANCIS FURNESS OPTION TARGET: +1,000oz PVM @ +15g/t Au (UG) MERTONDALE OPTION TARGET: +250,000oz @ +4g/t Au (OC) DALWALLINU PROJECT (100% IGO) TARGET: New gold camp Gold Arsenic Bismuth Geochemistry Image Geochemistry Image Geochemistry Image MT ISDELL Cu-Zn-Au (100% IGO) TARGET: New Cu-Zn mining camp MT ISDELL Cu-Zn-Au (100% IGO) Zinc Geochemistry Image Lead Geochemistry Image Copper Geochemistry Image Gold Geochemistry Image MINERAL SANDS PROJECT (100% IGO) TARGET: High-grade zircon mineral sands MINERAL SANDS PROJECT (100% IGO) IGO INVESTMENT CRITERIA Acquisition / Merger Investment Tenets: Production cash costs in the lowest 3rd of world- wide costs. Long-term mine-life. Appropriate capital cost and cash generation timing. Significant exploration upside. MATRIX METALS LIMITED Independence Group is now the largest shareholder (18.9%). Copper oxides Potential low-cost SX/EW Australian copper metal producer (99.99% Cu). Copper oxide resources: 21Mt @ 1.1% Cu (230,000t Cu). Resource - predominantly low acid consumer. MATRIX METALS LIMITED - A SNAPSHOT Listed on the Australian Stock Exchange ASX code – MRX. Ordinary shares 575.4M Unlisted Options 12.0M MRX cash as at 31.12.04 A$16.8M Tax losses A$24.0M Market Cap as at 01.04.05 A$50.6M (undiluted) (quoted at 8.8c) Matrix Enterprise value A$28.4M (undiluted) MT CUTHBERT SX/EW PLANT Proven dump leach SX/EW in-house expertise. MATRIX METALS PROJECT LOCATIONS & RESOURCES Stage 1 White Range Project 15,000 t Cu over +6 yrs. Stage 2 Mt Watson Project 15,000 t Cu over +6 yrs. COPPER OXIDE EXPLORATION UPSIDE Numerous untested CuO prospects within economic trucking distance to White Range and Mt Watson. Numerous other CuO prospects. Exploration focused on testing old workings. Regional exploration in its infancy. PRIMARY COPPER SULPHIDE POTENTIAL Potential for economic primary copper Copper sulphides sulphide ore bodies beneath surface oxide deposits eg. Mt Watson: MWRCD 130: 38m @ 2.18% Cu (including 20m @ 3.03% Cu) Mt McCabe: MRXRD 001: 28m @ 2.93% Cu (including 4m @ 7.4% Cu) IGO CURRENT STATUS LONG MINE EXPLORATION MATRIX ? A$40M pa A$4M budget A$20M pa ? Exploring Targeting Under for new Ni due diligence high-grade Au Ni deposits Cu A$2M expl. Zn A$4M decline Mn M.S. LONG-TERM GROWTH STRATEGY Targeting +A$100M profit per annum LONG MINE EXPLORATION ACQUISITON 1 9,000t Ni pa LONG MINE EXPLORATION NEW DISCOVERY ACQUISITON 2 MINE 1 15,000t Ni pa EXPLORATION MATRIX ? ACQUISITON 3 MINE 2 ASX 300 GOLD & BASE METAL MINING COMPANIES – MKT CAP ASX 300 GOLD & BASE METAL MINING COMPANIES – PE ASX 300 GOLD & BASE METAL MINING COMPANIES – EARNINGS/SHARE ASX 300 GOLD & BASE METAL MINING COMPANIES – SHARE PRICE/EPS SUMMARY +5 year mine life with low cash costs. Strong cash position. Significant cash flow available for growth and fully franked dividends. Exposure to exploration upside at Long and on regional nickel and gold plays. A$6M exploration budget plus Long South decline. Acquisitions must be value accretive.
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