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DIRECTORS’ REPORT
Annual Report 2015 73
Directors' report
30 June 2015
Operating and financial review (continued)
Operations (continued)
Tropicana Gold Project (continued)
Total revenue increased by 59% as a result of a full year’s production, post commissioning. Total segment assets
increased by 46% due to ongoing contributions by the Company to the operation by way of cash calls paid to the joint
venture manager. Cash calls paid during the year totalled $142.5 million (2014: $110.2 million). Another significant
contribution to total assets includes capitalised inventories (increase of 97% to $43.8 million). This is the outcome of the
current mining strategy to mine and process higher grade ore in the initial three years of production. At year end, the
capitalised run of mine stockpile comprised ore > 0.6g/t and totalled 8.9 million tonnes grading an average of 1.09g/t
(2014: 3.2 million tonnes at 1.22g/t).
Based on current ore reserves, the mine currently has a life of approximately eight years.
Long Operation
Independence Long Pty Ltd has entered into a long term ore tolling agreement with BHPB Nickel West whereby the
Group is paid for the nickel metal contained in the ore mined, less applicable ore toll charges. Revenue from nickel
sales is priced on a quotational period of three months after the month of production. 70% of the sales receipt is
provisionally paid based on the average London Metals Exchange ("LME") price for the month of delivery; a balancing
adjustment is paid in the fourth month after delivery based on the average LME price of the third month after delivery.
The mine produced 10,198 tonnes of contained nickel during the year at payable cash costs including royalties (net of
copper credits) of $4.01 per pound (2014: $3.78 per pound).
The Long Operation constitutes an operating segment as disclosed in the Financial Report. During the year a total of
258,634 tonnes of ore was mined, sourced from Moran - 68%, Long Lower - 15%, McLeay - 12% and Victor South - 5%.
The majority of ore continued to be mined from long hole stoping (70%) with lesser amounts coming from other
mechanised mining methods and non-mechanised methods.
Total segment revenue decreased by 6% during 2015; a result which is volume driven with 6% lower payable nickel
sold. Net operating profit before income tax fell 12% during 2015 due to lower nickel tonnage sold together with 6%
higher cash costs during the year.
Based on current ore reserves, the mine currently has a life of approximately two and a half years.
The table below highlights the key results and operational statistics during the current and prior year.
Long Nickel Mine
2015
2014
Total revenue
$'000
111,423
118,859
Segment operating profit before tax
$'000
32,180
37,233
Total segment assets
$'000
92,546
111,854
Total segment liabilities
$'000
36,180
29,960
Ore mined
Tonnes
258,634
268,162
Nickel grade
Head %
3.94
4.07
Copper grade
Head %
0.28
0.29
Tonnes milled
Tonnes
258,634
268,162
Nickel delivered
Tonnes
10,198
10,909
Copper delivered
Tonnes
723
769
Metal payable (IGO share)
- Nickel
Tonnes
6,151
6,589
- Copper
Tonnes
293
312
Ni cash costs and royalties
A$ payable metal per pound
4.01
3.78
* Cash costs include credits for copper
Independence Group NL
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