to buy or not to buy, page-101

Hi Veeone and All Intec Shareholders.

This long answer regarding the SPP has been posted on Intec's Forum site.
Response from Dave Sammut, Intec Ltd

To all of our shareholders,

With today's letter to shareholders, we have tried to outline the opportunities and challenges in front of Intec, the reasons for this SPP and the uses to which the money will be put. However, if it is helpful, we are happy to try to restate the publicly-available information in alternate ways.

Let's start with the situation. Like every company, we are challenged by a global financial situation that limits access to capital, has caused massive cuts across the minerals industry, and has stalled projects across the world. This, in combination with the related cuts in the steel industry, has made the financing of the Newcastle opportunity and the development of our other minerals project opportunities very difficult.

Now, when faced with a challenge that interferes with our business plan, we have two choices: give up, or change our approach to accommodate the changing situation. The choice is obvious. So we made the tough choices. We sold assets, and cut costs. We broadened our approach to the IMRP at Newcastle to help make it a success. And we addressed the pause in the development of new projects in the minerals industry by targeting some smaller, but lower hurdle opportunities in the waste industry that can be implemented over the near term.

Over the long term, there are viable businesses in both the waste industry and minerals processing industry, and in the grey area in between both. However, while we all wait for the negative effects of the global financial crisis to wash through, the goal has to be preserving the company, maintaining our IP and technical capabilities, and quickly implementing sufficient income-generating business opportunities to allow the company to become self-sustaining.

As we said in the SPP letter to shareholders, that's how we want to use the funds from this capital raising. The commercial ACL recycling doesn't require a specific capital injection, nor will any comparable commercial contracts at Burnie that can be put in place in the near term. However, when you do business, you outlay the expenses and you get paid the revenue at a later date. During this period, you require working capital, and the more business you do, the more working capital you require.

Similarly, we indicated that the GB Galvanizing project doesn't require a capital injection from Intec, but again it will require working capital. More business activity = more working capital required. Now, we indicated that (subject to partial funding by the Victorian government), this programme of works will cost a total of approximately $2 million, the lion share of these funds will come to Intec as income (with some associated expenditure) - testwork fees, operating fees for the trials at the Burnie Demonstration Plant, and engineering fees for management, reporting and design of the commercial plant.

As a guide, much of the income from the GB Galvanizing project will come in tranches over the first year, followed by a construction phase, and then ongoing revenues from the long-term operation of the facility. We will probably develop further facilities in this industry in parallel, but as a guide we would suggest that such facilities would be closer to the end of 2010 than the beginning.

There are additional waste opportunities under development, some of which may become announceable within the SPP timeframe, but possibly not (and possibly not at all, that's the nature of a project pipeline). Over the near term, none of these will alone be 'company makers', but collectively they offer the opportunity to enable the company to become self-sustaining, preserving our technology and capabilities so that we are ready to act when the global situation improves.

With respect to Ausmelt, we acknowledge that there are a number of unknowns - hence the due diligence period. Our discussions with Ausmelt to date have indicated a viable opportunity to recycle our EAF dust stockpiles (which currently represent a liability to the company), and to treat EAF dust and possibly other feedstocks on an ongoing basis. But we need the due diligence period to quantify the requirements, the costs, and the timeframes for implementation. As it stands, we would hope that we could commence recycling during 2009, but we'll know better after the due diligence. This work requires operating capital, which can't be avoided.

Depending on the deal that we negotiate with Ausmelt, the further capital required for implementation could vary. At this stage, we expect that this will be less than that which would otherwise have been required for the same outcome at Newcastle.

Overall, Philip Wood has provided a good summary: "The SPP is intended to provide working capital while the company develops its various projects. The capital requirements of these projects will vary from nil to significant, but these will be addressed at the relevant time (most likely from outside sources rather than INL shareholders) when quantified. Money raised now is anticipated to be both operationally well-used and cheap relative to historic and prospective share prices."

And the summary of the timeframes:
* ACL - already underway
* Further commercial contracts at Burnie - 2009 and hopefully ongoing
* GB Galvanizing - programme covering 2009 & 2010. Project income very near term (subject to partial government funding)
* Other commercial galvanising industry projects - 2010 and/or later
* Other waste programme opportunities - 2009, 2010 and hopefully ongoing
* Ausmelt - Due diligence for three months. Hopefully implementation in 2009

Now, some shareholders continue to ask about Directors' intentions for their own participation in the SPP. The directors regard 1.5 cents as an attractive entry price and will individually invest to the maximum extent possible, bearing in mind their personal financial capacity to do so and normal prudential considerations regarding balanced risk-weighted portfolio investment.

It is worth noting that we extended the opportunity for eligible shareholders to purchase up to 1 million shares ($15,000), but certainly not the obligation to do so. The minimum participation is only 40,000 shares ($600). We are pleased that so many shareholders have contacted the company to express their support, and in many cases their intention to participate fully in the SPP.

This response has become very long. We hope that those shareholders who have the means will participate appropriately in the SPP, and we understand that there will be a percentage of shareholders who are unable or unwilling. We offer our best wishes to all.

Mango's sign-off is Cheers.