Intrepid Mines Limited
TSX : IAU
ASX : IAU

Intrepid Mines Limited

May 15, 2009 05:26 ET

Intrepid Mines Limited AGM Chairman's Address

BRISBANE, AUSTRALIA--(Marketwire - May 15, 2009) - Intrepid Mines Limited ("Intrepid") (TSX:IAU)(ASX:IAU) - With Governments around the world printing paper currency, like there is no tomorrow, this is an excellent time to be in gold and a producer. The urgency to fund stimulus packages, many of which have only a momentary benefit, will have a day of reckoning when inflation returns and re-emerges as the number one threat to world growth.

The associated uncertainty and anxiety has already manifested itself in significant increases in demand for gold coins and ingots, and in the growing popularity of precious metal ETFs where the underlying gold backing has grown from 27 M ounces to 46 M ounces since our last Annual General Meeting. Gold has definitely returned to favour as an asset class accelerated by the disappointments in real estate and equity markets.

This is not to say that the gold price won't however exhibit price volatility. Our best counter to this is high grades and long mine life. We have high grades at Paulsens and the potential of long mine life at Tujuh Bukit.

We are one third through calendar 2009 and in excellent shape. We reported our first quarterly profit, US$3.83 million, or A$5 million at current exchange rates, for the first three months of the year. The driver was performance at the 100 percent owned Paulsens mine where earnings before interest, tax, depreciation and amortisation was US$12.2 million and even after sustaining and investment capital, the operational surplus was still US$ 9.9 million or A$13 million at current exchange rates. When this surplus is compared with the current written down Paulsens book value of $ 12.1 million, it is clear the asset value is considerably greater, as would be the replacement value.

The higher grades achieved resulted in a site cash cost of US$312 per ounce, one of the lowest for pure gold producers anywhere in the world. It is however, important that we have a realistic view of this mine. In a fortnight's time, the operation will celebrate its fourth anniversary. With production throughput nearly 30% above initial name plate capacity it has already exceeded the original expectations. We recognise the need to extend mine life. After all, the asset is paid for, and any extension goes straight to the bottom line. We are confident of mine life extensions - the decline has already advanced to 50 metres vertically below our deepest stope and we have grade intersections a further 200 metres below this. Our challenge is to quantify this potential. More recently, our deeper drilling has seen greater geological complexity which will require much closer spaced drilling before we can ultimately declare increased reserves. I would certainly caution however any undue pessimism as 10% of the March quarter's production came from outside resource boundaries.

Refinements to the geological model continue to generate new targets, as is the case, currently at 600 metres depth, still relatively shallow by underground mining standards.

In addition to the record underground drill metres, drilling from surface will also recommence for the first time in three years. Also recommencing, for the first time in a decade, is regional drilling, with five surface targets to be drilled in the next three months.

Recently, and in some respect, reluctantly we sold the Casposo project in Argentina. The reserves and permitted status attracted a number of keenly interested parties. Despite our enthusiasm for gold a degree of measured caution is still appropriate whilst there is still dislocation in the banking system.

In essence, the net effect of the Casposo sale on the balance sheet rather than its development in the next eighteen months to two years, is in excess of US$100 million, being the proceeds, US$22 million plus the cost of development at over US$80 million. In addition, the Board was also mindful that the Company focus on assets that will make a sustained difference to our business.

Despite the sale of Casposo and depletion at Paulsens the Company's attributable inventory of gold has grown substantially due to advances at the Tujuh Bukit project in Indonesia. During the last twelve months, exploration at Zones A and C has delivered 2.57 million gold equivalent oxide ounces into the Inferred category.

These ounces, being near surface, will require the execution of a Forestry reclassification before mining by open pit methods is permitted. Our exploration on this oxide cap is on-going with Zone B showing higher overall grades. The strike length of the deposit is now an impressive 3km. The reclassification process, managed by our Indonesian partners is with a multi disciplined and jurisdictional party preparing the necessary documents to be presented to the Minister for Forestry. Below the oxide cap is a copper-gold porphyry, the dimensions of which has extended with each drill hole. The Company continues to review the best approach to its advancement, including joint venture.

The Company balance sheet is in good order. Cash on hand today is US$ 38.2 million following receipt of US$20 million in Casposo sale proceeds (a further US$2 million is due six month after the commencement of production). This gives the organisation great flexibility should an investment opportunity arise. At today's exchange rate this cash position is approximately 40% of the current market capitalisation.

Moving now to the retirement from the Board of Kevin Dundo.

Kevin is our longest serving Director, having been appointed in April 2002, His guidance - legal, commercial, strategic and plain common sense has navigated the Company through a formative period which included defeating a hostile takeover and shepherding us through two mergers.

This record is even more impressive when you consider that Intrepid, known as Taipan Resources when Kevin was appointed, was owned 88% by a parent which itself was not financially robust, had at that time $17million in debt, and the Paulsens project as conceived which was seriously challenged technically and financially. Kevin's counsel, positive can-do attitude and unrelenting commitment to the Company has seen the business transformed into the financially strong and exciting company we are today.

Kevin I thank you on behalf of the Chair, your fellow Directors and shareholders. The remaining Board members will all need to step up to maintain the momentum.

Colin G Jackson, Chairman

Intrepid Mines Limited

ABN: 11 060 156 452

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