IGO Interactive Annual Report 2019

DIRECTORS’ REPORT 30 JUNE 2019 Aircore drilling and diamond drilling programs continued in FY19 and at year-end the Company had eight active drill rigs across the region with four full-time geophysics teams on board testing geophysical, geochemical and geological targets generated by the Spectrem Air AEM and aircore drilling programs completed in FY18 and FY19. • Lake Mackay – During FY19, the Company completed the initial earn-in expenditure component under the terms of a Farm- in and Exploration Joint Venture Agreement for the Lake Mackay Project to trigger the formation of the unincorporated Lake Mackay Joint Venture (IGO: Manager, 70% interest). The Lake Mackay Project is 400 kilometres northwest of Alice Springs and comprises approximately 18,700 square kilometres of tenements. The Spectrem Air AEM survey which commenced in the prior year was completed in FY19 with a total of approximately 15,000 line kilometres covered. This included several areas that were co-funded by the Northern Territory Government under the Geophysics & Drilling Collaboration Program. Ground moving-loop EM was conducted over several anomalies detected by the AEM survey with results being processed at the end of the financial year. RC drilling of EM targets, the ‘Grimlock’ laterite nickel-cobalt prospect and a gold soil anomaly was undertaken during the year. The drilling program intersected minor sulphides (mainly pyrrhotite) at all EM targets. • Raptor –The Raptor Project is 100%-owned by the Company, targeting geology interpreted to be prospective for Nova-style nickel-copper-cobalt mineralisation along the Willowra Gravity Ridge covering 14,450 square kilometres of tenements. An application for collaborative Northern Territory Geological Survey (NTGS) funding of a regional 100 metre-spaced aeromagnetic-radiometric survey was successful. FINANCIAL OVERVIEW FY19 was a strong year for the Group from both an operational and financial perspective. The Group generated total revenue and other income of $792.9 million, a 2% increase on the prior year result of $780.6 million. This was predominantly due to increased product revenue from the Nova Operation, as it outperformed from a production perspective in its second year since declaring commercial production and exceeded its production guidance for the FY19 year. Tropicana production and revenue was also up on the previous year, driven by higher throughput, grade and a higher realised gold price. The increased revenue for FY19 was achieved despite the absence of the Jaguar Operation, after it was divested to Round Oak Minerals (CopperChem) in FY18, and the Long Operation, which was placed into care and maintenance in June 2018. The Long Operation was subsequently sold to Mincor in May 2019. From a financial performance perspective, the Group’s Board and management monitor Underlying EBITDA (calculated as profit before tax adjusted for finance costs, interest income, asset impairments, gain on sale of subsidiaries, retention and redundancy costs, depreciation and amortisation). This measure represents a useful proxy for measuring an operation’s cash generating capabilities. Underlying EBITDA increased relative to the previous financial year to a record level, as can be seen in the following chart: 300 250 200 150 100 50 0 -50 -100 A$M FY19 $341M FY18 $339M Nova Operation Tropicana Operation Long Operation Jaguar Operation Exploration and evaluation expense Corporate and other expenses Investment revaluation Gain on sale of royalty Share-based payment expense (non-cash) 256 196 173 141 (1) 24 27 (58) (41) (19) (17) 12 (7) 0 (3) (3) 38 — IGO ANNUAL REPORT 2019