2021 Annual Report

Notes to the consolidated financial statements 30 June 2021 (continued) 28 Share-based payments (continued) Vesting conditions of performance rights granted (continued) Reserve growth per share The reserve growth per share performance condition will be determined as managed ore reserve growth in excess of depletion over the three-year measurement period. Baseline ore reserves means the Group's managed nickel equivalent ore reserves at the start of the performance period as determined by the Board. The vesting schedule for the 25% of the performance rights subject to reserve growth per share testing is as follows: Reserve growth Level of vesting <90% of Baseline Ore Reserves 0% 90% of Baseline Ore Reserves 33% Above 90% of Baseline Ore Reserves and below 100% Straight line pro-rata between 33% and 66% 100% of Baseline Ore Reserves 66% Above 100% of Baseline Ore Reserves and below 120% Straight line pro-rata between 66% and 100% 120% and above of Baseline Ore Reserves 100% EBITDA average margin The EBITDA average margin will be measured over the three-year measurement period. The vesting schedule for the 25% of the performance rights subject to EBITDA average margin testing is as follows: Group EBITDA margin Level of vesting <20% 0% ≥ 20% 33% ≥ 30% 66% ≥ 40% 100% Service rights - STI scheme Under the Group's short-term incentive (STI) scheme, Executives and selected employees receive 50% of the annual STI achieved in cash and 50% in the form of rights to deferred shares in IGO Limited (referred to as service rights). The service rights are granted following the determination of the STI for the performance year and vest in two equal tranches. The first tranche of 50% vests on the 12 month anniversary of the STI award date, and the second tranche of 50% vests on the 24 month anniversary of the STI award date. The service rights automatically convert into one ordinary share each on vesting at an exercise price of nil. The Executives and employees do not receive any dividends and are not entitled to vote in relation to the service rights during the vesting period. If an Executive or employee ceases to be employed by the Group within the vesting period, the service rights will be forfeited, except in circumstances that are approved by the Board on a case-by-case basis. The number of rights to be granted is determined based on the 5 day VWAP of the Company's shares after the release of IGO Limited's financial statements. Set out below are summaries of movements in service rights during the year: 2021 2020 Number of share rights Weighted average fair value Number of share rights Weighted average fair value Outstanding at the beginning of the year 476,088 5.36 437,686 4.01 Rights issued during the year 536,496 4.46 338,175 5.88 Rights vested during the year (305,157) 5.08 (279,978) 3.90 Rights lapsed during the year (58,155) 4.81 (19,795) 4.77 Outstanding at the end of the year 649,272 4.79 476,088 5.36 The share-based payments expense relating to service rights included in profit or loss for the year totalled $1,989,887 (2020: $1,614,857). IGO Limited 58 Notes to The Consolidated Financial Statements 30 June 2021 126 — IGO ANNUAL REPORT 2021