Dear Shareholders,

Your Company had a successful financial year ended 30 June 2010 with a solid after tax profit of $29 million and cash and receivables at the end of the financial year of $144 million.

The main drivers of this solid result were:

• The return to more robust commodity prices
• Our operations at the Long Nickel Mine continued to operate at above budget production and below industry average cash costs
• Significant investment in mine site development and exploration
• A stable and motivated workforce

From the time of purchasing the Long Nickel Mine your board and management have had a strong focus on extending the life of the mine's resources so that shareholders and employees could be assured that the Company had a long term future.

To demonstrate this strong focus the board committed to an intensive development and exploration strategy at the mine and has spent $41 million on development and $47 million on mine site exploration since acquiring the mine. We have now extended our expected mine life to about 6 years which ensures that our shareholders and employees have confidence in the long term future of the Company.

Unfortunately, having survived the global financial crisis by taking strong action to manage costs and keep people employed, the Company and our employees were placed in a period of extreme uncertainty when the Federal Government proposed a retrospective 40% Resources Super Profits Tax which would have seen a significant reduction in the funds we would have had available to extend the mine life at Long. Whilst the Government proposal, after a significant reaction by the mining industry, was subsequently modified to a Minerals Resources Rent Tax and now excludes minerals other than mined iron ore and coal, it has severely damaged the country in the eyes of overseas investors in the mining sector.

It is important that all of our stakeholders understand that we, as a mining company, have paid far more in Government taxes and royalties ($207 million) than we have paid in dividends to shareholders ($64 million) and wages to our employees ($106 million). The Government's argument that the mining industry does not pay its fair share of taxes and that our profits are being sent overseas to "rich foreign investors" simply doesn't reflect reality. Please see Chart 1 for further expenditure details.

Since inception the Company has sought to grow by investing significant funds each year into exploration, which is a high risk investment that demands the potential for high rewards to be a worthwhile and sustainable strategy. The Mining Tax increases risks and limits the potential for high rewards and therefore renders exploration in Australia a much less attractive investment option and will inevitably see these critical funds directed to more favorable jurisdictions. This is not good for the long term sustainability of Australia's mineral industry.

Following the outcome of the Federal election, we believe that the mining industry should not be complacent about this matter and we will continue to express our concerns about any future Government proposals that would have an impact on our ability to provide long term employment
to our employees and a stable and competitive investment platform for our shareholders.

IGO's regional exploration activities during the year have been extremely successful with positive and promising results from the Karlawinda, Holleton and Duketon Projects. The Board has approved a substantial exploration budget for the 2010/2011 financial year which we believe will enable the exploration team to add significant value to these projects in the near term.

The Company will continue its policy of funding regional exploration for gold, nickel and other metals in Australia with a commitment to discovering a significant resource that will lead to additional mine developments for the Company.

The Tropicana Project team has, through a major effort by all involved, progressed the feasibility study to the stage where we expect it to be completed by the end of October 2010 and the joint venture owners are expected to make the final development approval decision in November 2010.

Apart from the extensive work on the Tropicana Project feasibility study, the Company's business development activities continued during the year, with a number of projects and companies assessed for investment opportunities that would add value to the Company. Although there have not been any investment opportunities that we believe would have added value to your Company in the longer term, either via realistic pricing or exploration upside, it is still the intention to continue assessing further opportunities as they are presented.

For further details of operations and exploration please refer to the Managing Director's Operations Report.

There is ongoing debate surrounding the question of carbon emissions and carbon reduction schemes. The Company is already registered for reporting carbon emissions under the National Greenhouse and Energy Reporting Act with the first report lodged on 31 October 2009. The impact on the Company of any of the mooted carbon trading schemes is still unclear but there is expected to be a cost in due course. The Board will continue to maintain close scrutiny of the issue and its potential impact on the Company.

The strong results this financial year have to a large extent been a result of our employees' outstanding contributions to all of our mining and exploration operations and I wish to congratulate them all for their consistent efforts over the course of the year. I also compliment the management, administration, exploration and mining teams for their co-operation and successful implementation of plans and strategies that have kept the Company performing strongly during the year.

I also wish to once again express our appreciation for the support we receive from our shareholders, contractors and suppliers.

Oscar Aamodt
Chairman

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