IGO LIMITED This presentation has been prepared by Independence Group NL ('IGO') (ABN 46 092 786 304). It should not be considered as an offer or invitation to subscribe for or purchase any securities in IGO or as an inducement to make an offer or invitation with respect to those securities in any jurisdiction.
This presentation contains general summary information about IGO. The information, opinions or conclusions expressed in the course of this presentation should be read in conjunction with IGO's other periodic and continuous disclosure announcements lodged with the ASX, which are available on the IGO website. No representation or warranty, express or implied, is made in relation to the fairness, accuracy or completeness of the information, opinions and conclusions expressed in this presentation.
This presentation includes forward looking information regarding future events, conditions, circumstances and the future financial performance of IGO. Often, but not always, forward looking statements can be identified by the use of forward looking words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'continue' and 'guidance', or other similar words and may include statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Such forecasts, projections and information are not a guarantee of future performance and involve unknown risks and uncertainties, many of which are beyond IGO's control, which may cause actual results and developments to differ materially from those expressed or implied. Further details of these risks are set out below. All references to future production and production guidance made in relation to IGO are subject to the completion of all necessary feasibility studies, permit applications and approvals, construction, financing arrangements and access to the necessary infrastructure. Where such a reference is made, it should be read subject to this paragraph and in conjunction with further information about the Mineral Resources and Ore Reserves, as well as any Competent Persons' Statements included in periodic and continuous disclosure announcements lodged with the ASX. Forward looking statements in this presentation only apply at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information IGO does not undertake any obligation to publically update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.
There are a number of risks specific to IGO and of a general nature which may affect the future operating and financial performance of IGO and the value of an investment in IGO including and not limited to economic conditions, stock market fluctuations, commodity demand and price movements, access to infrastructure, timing of environmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve and resource estimations, native title and title risks, foreign currency fluctuations and mining development, construction and commissioning risk. The production guidance in this presentation is subject to risks specific to IGO and of a general nature which may affect the future operating and financial performance of IGO.
Any references to Mineral Resource and Ore Reserve estimates should be read in conjunction with IGO's 2014 Mineral Resource and Ore Reserve announcement dated 28 August 2014 (excluding Stockman Ore Reserves) and Stockman Optimisation Study announcement dated 28 November 2014 (updated Stockman Ore Reserves), and lodged with the ASX, which are available on the IGO website.
All currency amounts in Australian Dollars unless otherwise noted.
Cash Costs are reported inclusive of Royalties and after by-product credits on per unit of payable metal basis, unless otherwise stated
IGO reports All-in Sustaining Costs (AISC) per ounce of gold for its 30% interest in the Tropicana Gold Mine using the World Gold Council guidelines for AISC. The
World Gold Council guidelines publication was released via press release on 27th June 2013 and is available from the World Gold Council's website.
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June Quarter Highlights Solid quarter to end FY15 with production and cash costs for all three mines at or better than guidance for the year
Record revenue and net cash flow from operating activities achieved in FY15
No lost time injuries across the Company in the quarter resulting in a year-on-year improvement to the LTIFR from 7.7 to 2.9
Announced and progressed an agreement to acquire
Sirius Resources NL via a scheme of arrangement
Documented $550M of corporate finance facilities to fund the development of Sirius' Nova Project, Sirius acquisition costs and general corporate purposes
Acquired 4.9% stake in Gold Road Resources
Brownfields exploration progressed at Long, Jaguar and Tropicana with positive results
Good greenfields progress at Salt Creek JV, Bryah
Basin and Lake Mackay
600
500
400
300
200
100
-
250
200
150
100
50
-
Annual IGO Revenue ($M)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annual IGO Operating Cash flow ($M)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(1) LTIFR is lost time injury frequency rate expressed in number of injuries per million man-hours worked
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Highlights | June 15 Qtr | June 14 Qtr |
Revenue | $118.7M | $106.8M |
EBITDA(1) | $38.0M | $47.6M |
Profit after tax | $7.5M | $14.7M |
Net Cash Flow From Operating Activities | $47.3M | $48.1M |
Free Cash Flow | $18.4M | $30.0M |
Cash and bullion (at end of Quarter)(2) Marketable Securities (at end of Quarter) | $121.5M $15.5M | $57.0M $0.8M |
Debt (at end of Quarter) | $0.5M | $29.0M |
Tropicana
o Underlying EBITDA unchanged from March 2015 Quarter despite lower gold production
o Lower gold production resulted from lower mill throughput as a result of planned maintenance activities
Long
o Underlying EBITDA impacted by lower payable Nickel volumes and lower average Nickel price
o Lower payable nickel volumes resulted from lower mined grade offset by higher mined volume
Jaguar
o Underlying EBITDA impacted by lower copper concentrate sales (3,200wmt) compared to March quarter (7,800wmt) and $3.0M of revenue adjustments
o Lower concentrate sales were attributed to lower grades and timing of shipments
Corporate
o Underlying EBITDA impacted by higher exploration expenses (+$3.9M) and project acquisition expenses (+$2.3M) partially offset by M2M gold hedging gains of $3.7M
(1) Underlying EBITDA is a non-IFRS measure and comprises net profit or loss after tax, adjusted to exclude tax expense, finance costs, interest income, asset impairments, depreciation and amortisation
(2) Includes refined gold bullion at 30 June 2015 of $0.2M and 30 June 2014 of NIL
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Unaudited FY2015 ResultsHighlights FY2015 FY2014
Tropicana
Revenue $498.6M $399.1M EBITDA(1)$212.7M $147.8M Profit after tax $76.8M $48.6M Net Cash Flow From Operating Activities $201.7M $127.4M
Free Cash Flow $115.8M $30.2M Cash and bullion (at end of year)(2)$121.5M$57.0MMarketable Securities (at end of year) $15.5M$0.8MDebt (at end of year) $0.5M$29.0M
o Gold production of 496,413oz (IGO share = 148,923oz) above mid-point of guidance
oCash costs at $568/oz Au produced(3)better than low end of guidance range
oAISC at $795/oz Au sold(4)at low end of guidance range
Long
oProduction of 10,198t Ni above mid-point of guidance range and cash costs of $4.01/lb Ni(3)- better than guidance range
Jaguar
o Production within guidance range at 44,999t Zn and 7,380t Cu
oCash costs at $0.43/lb Zn(3)at mid-point of guidance range
(1) Underlying EBITDA is a non-IFRS measure and comprises net profit or loss after tax, adjusted to exclude tax expense, finance costs, interest income, asset impairments, depreciation and amortisation
(2) Includes refined gold bullion at 30 June 2015 of $0.2M and 30 June 2014 of NIL
(3) Cash costs are inclusive of royalties and by product credits and are reported per unit of payable metal produced
(4) IGO uses the World Gold Council's All In Sustaining Cost (AISC) metric - refer to the World Gold Council's website for further details
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Mine Underlying EBITDA(1)80
70
60
50
40
30
20
10
0
Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Tropicana Long Jaguar
(1) Underlying EBITDA is a non-IFRS measure and comprises net profit or loss after tax, adjusted to exclude tax expense, finance costs, interest income, asset impairments, depreciation and amortisation
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Incident Frequency Significant improvement over the past 1-2 years is a credit to our people16 50
45
14
40
12
35
10
30
8 25
20
6
15
4
12 Mthly Rolling LTIFR 12 Mthly Rolling TRIFR 10
2
5
0 0
Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15
(1) LTIFR is lost time injury frequency rate expressed in number of injuries per million man-hours worked
(2) TRIFR is total recordable injury frequency rate expressed in number of injuries per million man-hours worked
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Sirius Acquisition On 25 May 2015, IGO and Sirius Resources NL (SIR) announced(1)an agreement whereby IGO would acquire SIR by scheme of arrangemento SIR Shareholders will receive 0.66 IGO shares and $0.52 cash for each SIR share
o SIR shareholders also receive pro-rata holding in the demerger of S2 Resources
Transaction will bring the world class Nova project and the SIR Fraser Range exploration properties into IGO
o Clear strategic rationale for transaction
o Creates a leading Australian diversified mining company
Expect to finalise scheme booklet in the next week
o Expect SIR Shareholder meeting in early September 2015
New IGO $550M corporate finance facilities to support transaction and development of the Nova Project
o Five year, $200M unsecured revolving credit facility to fund acquisition costs and general corporate purposes
o Five year, $350M unsecured amortising term debt facility to refinance the SIR project finance facility and fund the continuing development of the Nova project
o New facilities provide IGO with significantly better operational and financial flexibility
(1) Refer joint IGO and SIR ASX announcement dated 25 May 2015
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Tropicana - in line with planNo lost time incidents for the quarter bringing the
12-month LTIFR to 1.0(1)
Tropicana Statistics(1)Units June 15
Qtr
60
June 14
Qtr 40
Gold Produced Production Guidance
$300
$200
Mining
Total Material Mt 11.3 9.9
ROM Ore (>0.6g/t Au) Mt 2.9 1.8
ROM Ore Grade g/t Au 1.97 2.48
Cash costs
($/oz)
20
-
Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec-14 Mar-15 Jun-15
$100
$0
Processing
Mininga and
e
(1) Lost time injuries per million man-hours worked
(2) Cash Costs are reported inclusive of Royalties and after by-product credits
completed - roll life and liner life have bettered expectation
(3) Refer to World Gold Council methodology for All In Sustaining Costs (AISC) published by the Council on 27 June 2013 and available on the Council's website
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Tropicana - improved mining rate Gold production impacted by lower mill throughputo Mill throughput lower due to planned maintenance activities for reliability upgrades
Cash costs impacted by lower gold production and higher mining and processing costso Mining costs impacted by higher volumes resulting from increased contractor productivity
o Processing costs impacted by planned maintenance activities costs
140,000
Gold Production Variance
Q3 top Q4 (ounces)
122,319 9,127
800
700
Cash Cost(1)Variance
Q3 to Q4 ($/oz Au produced)
23 57
120,000
320 313 3,416 116,600
114
11 1 648
100,000
80,000
600
500
26
530
60,000
400
300
40,000
200
20,000
100
0
March Qtr Throughput Grade Recovery Inventory June Qtr
0
March
Quarter
Gold
Production
Mining Cost Processing
Cost
Inventory
Movement
Other Costs Byproduct
Credits
June
Quarter
(1) Cash costs are inclusive of royalties and by product credits and are reported per unit of payable metal produced
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Tropicana - Resource Extension Work progressing at Tropicana, Havana North, and Havana South (Crouching Tiger)
Encouraging results include:
o 12m @ 1.8g/t at Havana North
o 5m @ 5.2g/t at Havana North
o 8m @ 3.5g/t at Crouching Tiger
o 19m @ 1.2g/t at Tropicana
Conceptual study underway
o Will consider alternative low cost opportunities to mine the down dip extensions at Havana and Tropicana (and extensions North and South)
o Incorporates mine planning studies and substantive resource definition program
Resource definition drilling spend expected to expected to increase from July 2015
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