Strategy

Independence Group (IGO) continues to place a high priority on the discovery and development of high-value ore bodies to achieve its long term growth objectives. While the focus is on gold, nickel and copper deposits, other target types such as strategic metals are being assessed as part of the De Beers database initiative. IGO recognises that exploration is inherently high risk and that most of the well known mining areas in Australia have been thoroughly explored. However, IGO believes that there are many more ore bodies yet to be discovered, in less explored areas including those beneath cover and in previously unrecognised mineralised belts, through the application of new ideas, good science
and carefully considered exploration programs. Australia is currently the preferred destination, however a number of overseas jurisdictions are becoming increasingly attractive and exploration and mining opportunities in these countries are being actively considered. The following proven tactical approach is being applied to maximise our chance of success:

• Application of leading edge geoscientific techniques by a small, highly motivated and well resourced team with a track record of exploration success
• Investment in technical innovation, particularly in the development of geophysical tools and geochemical techniques to assist in the identification of buried deposits beneath thick cover
• Application of new technologies in established and emerging mineral belts to discover deposits missed by historical exploration methods
• Acquisition of major land positions in "frontier" belts not recognised as prospective by previous explorers, classic examples being the Tropicana and Karlawinda Projects
• Acquisition of historic geochemical databases providing exclusive access to previously unanalysed samples covering many prospective and underexplored regions
• Efficient assessment and farm-out or relinquishment of projects not meeting internal technical milestones

Exploration success requires focus and perseverance and IGO has the financial and technical resources to achieve this goal.

Exploration Technology and Techniques

An important component of IGO's exploration strategy is the development and application of new and improved exploration tools to generate new projects, unlock value in existing projects and provide competitive advantage. Since its inception IGO, through technical and research relationships, has assisted in the development of or gained access to technologies that provide significant advantages in mine-site and greenfields exploration. These technologies have included:

• High-Powered TEM Transmitter, which is significantly more powerful than commercially available systems, enabling surface TEM surveys to test deeper under cover and DHTEM surveys to test a greater distance around drill-holes both in-mine and on regional programs
• EM Torch System for use in-mine to identify new and remnant ore positions overlooked by traditional mine exploration techniques
• Down-hole magnetic TEM ("DHTEM") systems and processing software that can be used to identify and model in 3D, mineralised systems intersected or closely missed in drilling programs
• Surface moving loop TEM systems that can be used to identify bodies of conductive nickel sulphides in the highly-conductive regolith and salty groundwater environments of Western Australia, including beneath extensive salt lake cover where conventional EM systems are ineffective
• Low Temperature SQUID ("LTS") technology via agreement with Anglo American Exploration (Australia) Pty Ltd ("AAE"), IGO has had access to AAE's LTS to explore for nickel in specified areas of the Yilgarn in Western Australia considered to be highly prospective for nickel sulphides.
• 3 D Seismic. IGO together with Curtin University have completed an extensive 3D seismic survey in the immediate vicinity of the Long Complex. IGO was one of the first adopters of this technology, originally developed for use in the petroleum industry, in nickel sulphide exploration. This survey has resulted in a greater understanding of the geological framework at Long and has aided in the identification of a number of interesting target positions.
• Chromite trace element geochemical "finger-printing" from regional geochemical heavy mineral concentrate databases as a vector to fertile ultramafic belts.
• Collaborative R&D programs with CSIRO and other bodies examining the application of bio-geochemical and hydro-geochemical sampling in regional exploration.

Exploration Overview

The past 12 months has been a watershed year for IGO and some of its JV partners with significant exploration success at a number of key projects.

Continued exploration at Tropicana has extended the Tropicana-Havana deposit along strike to the north (Boston Shaker) and south (Havana South) and a deep drilling program has confirmed the down-dip continuity of high-grade shoots providing substantial scope for potential underground mining beyond the currently planned open cut.

At the Duketon JV a significant high-grade Ni- Cu-PGE discovery has been made at the Rosie Prospect and further drilling at the nearby C2 prospect has increased the down-dip extent of disseminated mineralisation.

Drilling programs at the Karlawinda Gold project south of Newman, have confirmed the continuity and extent of low to moderate grade oxide gold mineralisation at the Bibra Prospect up-dip of several shallowly dipping primary gold mineralised shoots. Studies have commenced to assess the economic viability of a modest but low strip ratio oxide resource, whilst exploration drilling to discover large higher grade primary deposits continues.

At Holleton several prospects within shallowly covered greenstone are being tested, including Syme's Find where first-pass aircore testing of a 1.3km long surface geochemical anomaly has returned intercepts up to 8m @ 2.6 g/t Au.

With its aggressive exploration budget and very strong pipeline of quality projects across a range of commodities, IGO is confident of further exploration success in the 2011 financial year.

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