news out..letter to shareholders, page-3

Dear Intec Shareholder
Capturing strong zinc price now
Figure 1 shows how the zinc metal price has risen extraordinarily over the past twelve months from US$1,250
(A$1,700) to its present level of US$3,450 (A$4,480) per tonne – a 176% increase! Given continuing strong
global demand (especially from China), inadequacy of new zinc mining projects already ‘in the pipeline’ and
rapidly depleting stockpiles, we expect strong zinc prices to continue for several years yet.
Figure 1: US$ zinc metal price chart (July 2003 – present)
In these circumstances, Intec is uniquely fortunate in owning a large above-ground and readily treatable zinc
resource in the Hellyer tailings dam (containing 305,000 tonnes of zinc with an in-situ current value of
A$1,366,400,000, among other base and precious metals – see Figure 2). This is immediately adjacent to our
own well-maintained and available 1.5 million tonnes per annum mill for regrinding and flotation
(see Figures 3 and 4). We are thus able to activate this processing facility to treat our own resource by
conventional means to produce a saleable bulk zinc concentrate at much shorter notice than is the case for
other zinc projects, in order to take advantage of current high zinc prices (which we will shortly be locking in
based on these attractive levels for forward zinc sales over the next few years).
ABN 25 001 150 849
Intec Ltd Share Purchase Plan
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Figure 2: The Hellyer tailings dam
Figure 3: The 1.5mtpa SAG mill at Hellyer
Figure 4: The flotation plant at Hellyer
Our joint venture partner Polymetals Mining Services Pty Ltd is an experienced operator that will be
providing all of the start-up capital (not less than A$4 million) for the bulk zinc concentrate project, which is
anticipated to be in production by end-September this year. We thus expect to be strongly cash-flow positive
before the end of calendar 2006 and for further details you are referred to Intec’s ASX announcement of
5 April 2006.
Intec Hellyer Metals Project
The treatment of our tailings resource via the Intec Hellyer Mill to produce a bulk zinc concentrate over the
next few years does not detract from our longer term Hellyer Metals Project to recover all five payable metals
(zinc, lead, silver, gold and copper) from the tailings and zinc-bearing secondary residues (such as electric arc
furnace dust (EAFD)), using our own Intec Polymetallic Process. This Process is currently being successfully
demonstrated and optimised on these blended feeds in our plant in Burnie, Tasmania (see Figure 5 and ASX
announcement of 27 April 2006) as part of the Bankable Feasibility Study to be completed by WorleyParsons
later this year.
Intec Ltd Share Purchase Plan
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Figure 5: Purification section of the Intec Hellyer Metals Demonstration Plant at Burnie, Tasmania
We have also recently acquired a large stockpile of EAFD (grading around 30% zinc) from Smorgon Steel,
from which we expect to recover over 90% of the zinc for sale in the near term (see ASX announcement on
3 April 2006). Already our Burnie plant is treating EAFD to produce zinc metal cathode (see Figures 6 and 7)
for use by Smorgon in its galvanising operations.
Figure 6: Commercial scale Prime
Western Grade zinc cathode produced
in Burnie demonstration plant.
Figure 7: Molten zinc cathode from the Burnie
demonstration plant being cast into saleable ingot form.
A$10 million capital raising
On 28 April 2006 Intec announced details of a capital raising of up to A$10 million comprising a placement of
A$6.05 million (undertaken at 11 cents per share), and a A$3.95 million Share Purchase Plan Offer (SPP
Offer), also at 11 cents per share, to all of the Company’s existing shareholders.
The A$6.05 million placement to ‘sophisticated investor’ clients of stockbroking firms has already been
completed with all funds received, and I now set out details of Intec's SPP Offer to you at the same price
below. Please read the remainder of this letter carefully and if you wish to participate in the SPP Offer, I
suggest that you act promptly and follow the instructions provided.
Intec Ltd Share Purchase Plan
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Invitation to participate in the SPP Offer
The SPP Offer is designed to enable all shareholders in the Company, irrespective of the size of their
shareholding, to purchase up to A$5,000 worth of Intec shares at 11 cents per share (i.e. at the same price as
‘sophisticated investors’ have already subscribed). The SPP Offer does not entail the significant time delays
and costs of lodging a prospectus and enables existing shareholders to purchase Intec shares free from stamp
duty and brokerage. Intec shareholders (currently numbering approximately 1,500) who were recorded on our
share register at 5.00 p.m. on 5 May 2006 (the Record Date) are now entitled to participate in the SPP Offer.
Each Intec Director intends to take up his maximum allocation of A$5,000 worth of shares under the SPP
Offer, both in respect of himself and all family-related persons and entities.
Funds received under the SPP Offer will be capped at a maximum aggregate of A$3.95 million and, in the
event that the SPP Offer is oversubscribed, applications will be dealt with on a ‘first-come, first-served’ basis.
Use of Funds
The funds to be raised through the A$6.05 million Placement and the SPP Offer (assuming full subscription to
the maximum aggregate amount of A$3.95 million) will bring the Company’s cash at bank (net of trade
creditors and capital raising costs) to approximately A$11.3 million. These monies will be used to:
(a) retire all bank debt totalling A$4.8 million;
(b) complete operations of Burnie demonstration plant through to at least 30 June 2006;
(c) complete the WorleyParsons bankable feasibility study for the Hellyer Metals Project;
(d) progress the Hellyer Metals Project financing with Macquarie Bank; and
(e) provide working capital for the Company’s Sydney- and Tasmania-based operations through to
substantial positive cash flow before end-2006 from the Polymetals bulk zinc concentrate joint
venture.
How to participate
If you would like to participate in the SPP Offer, please return your completed Application Form (attached),
together with your cheque or credit card details representing the purchase price for the number of shares
applied for. If you are paying by credit card, you may either fax (fax number +612-9351-7180) or mail your
completed Application Form. Your Application Form must be received or the envelope postmarked on or
before the closing date of 26 May 2006.
Please note that the maximum investment under the SPP Offer per shareholder is A$5,000 (representing
45,455 shares at a purchase price of 11 cents per share). The minimum number that can be applied for is
4,545 shares at a total cost of A$500. Shareholders may apply for the number of shares between the
maximum and the minimum as set out on the attached Application Form.
The shares subscribed for will be issued, and quotation of the shares on ASX applied for, on or before
2 June 2006.
A full copy of the Terms of the SPP Offer is available in PDF format on the Company’s website. If you have
any questions, please call Registries Limited on +612-9290-9600 or the Company’s office on
+612-9351-6741.
Your Directors believe the SPP Offer provides all shareholders with an excellent opportunity to buy additional
shares in the Company at 11 cents, which is the same entry price as ‘sophisticated investors’ and compares
favourably with the ASX market price over recent weeks. We look forward to your participation in the SPP
Offer at this exciting time for the Company and its Hellyer-related project activities.
Yours sincerely
Intec Ltd
Philip R Wood
Managing Director & Chief Executive Officer