hello intec sharehlder friends revisited

well guys are we still all friends or on chuppa chuppas?

Hello Intec shareholder friends in Australasia,

You would by now be well aware that Intec is currently raising A$5.6 million (before costs) via a rights issue, about which I set out below my informal views for the many of you who are longstanding shareholders in Intec. I have already written separately to our overseas shareholders.

I attach our ASX announcement of 28 May 2008 and my posted letter of 30 May 2008 to all shareholders (which you should by now have received), while the full terms of the registered prospectus can be viewed on our website at http://www.intec.com.au/docs/asx/08/2008%20May%2028%20-%20Rights%20Issue%20Prospectus.pdf. You should now also have received the printed (hardcopy) prospectus, together with your personalised Entitlement and Acceptance Form and Additional Share Application Form.

THIS IS A ONE-FOR-FIVE FULLY UNDERWRITTEN RENOUNCEABLE RIGHTS ISSUE AT 5 CENTS PER INL SHARE WITH A FREE ATTACHED OPTION. I STRONGLY RECOMMEND THAT, REGARDLESS OF YOUR LONG TERM INVESTMENT INTENTIONS, ALL INTEC SHAREHOLDERS FULLY SUBSCRIBE FOR THEIR RIGHTS AND, IF YOUR FINANCIAL CIRCUMSTANCES PERMIT, SEEK TO OVERSUBSCRIBE AT THIS HISTORICALLY LOW COST ENTRY LEVEL.

By way of example, your holding of say 1,000,000 INL shares was worth $73,000 at the 7.3 cents pre-offer share price. You are now entitled to 200,000 rights which, at 5 cents each, will cost you $10,000 to subscribe for, after which you will own 1,200,000 INL listed shares and 200,000 INL listed options expiring on 31 December 2009 and exercisable at any time before then at 8 cents per share. The easiest way to calculate the cost of taking up your Entitlement is to divide your current shareholding by 100 and put a '$' sign in front of it.

The reasons for the rights issue are set out in the attachments and prospectus, so I will not repeat them here. There are no doubt numerous reasons for INL's share price weakness over the past 18 months (see chart below), but the most important of them is the relentless decline in the A$ zinc price over that period (from around A$5,000 per tonne in December 2006 to around A$2,000 per tonne today). I do not pretend to be a metals price guru, but zinc has been the poorest performing of the base metals during this much-vaunted 'resources boom' due to short term factors which will not persist beyond calendar 2009. The current zinc price is below the marginal cost of production of the world's more expensive producers and this should provide a floor around current levels. The zinc price outlook is more bullish in the longer term, by which time we expect to be producing saleable zinc (and other metals) products from EAF dust at Hellyer. Of course, Intec's technology applies to a wide range of additional base and precious metals, and there are quite a few projects hatching both in Australia and overseas, but these have a longer incubation period and can't be covered here.

Intec has recently listed on the OTCQX in the US (as well as some time ago the Deutsche Boerse in Germany), though we have not yet begun active OTCQX trading (expected in the northern hemisphere fall season), and the first US research report by Dutton Associates is attached.

The A$ zinc price's softness has continued during the period of the rights issue, but Veritas Securities Limited (the lead underwriter) and its sub-underwriters remain fully supportive of the rights issue.

The INL share price has dropped from the pre-offer level of ~ 7 cents to ~ 5 cents (the rights price). It is common during rights issues for the share price to come down to the rights offer price as people sell their shares in order to take up the cheaper rights which include a free option. During the rights trading period 2 June to 17 June 2008, a total of approximately 15.5 million rights changed hands between 0.1and 2.0 cents each. The closing price for rights trading was 0.4 cents and it is reasonable to expect that effectively all of the traded rights will be exercised before the 5.00 pm (AEST) Tuesday 24 June 2008 Closing Date. Thus, for example, at the close of INL rights trading, people were prepared to pay 5.4 cents for exercised rights whereas you get yours for 5 cents. Not a huge difference, but still useful given that the INL share and option prices should increase post-capital raising.

The new options attached to the rights commenced trading on a deferred-settlement basis on 18 June 2008. So far, there has been a strong ‘buy-side’ interest, with over 34 million options currently bid up to 1.0 cent and as yet no sellers have appeared.

Australian resident shareholders can readily subscribe by BPAY, cheque or credit card (Visa and Mastercard - probably easiest for New Zealanders) on the personalised Entitlement and Acceptance Form and the Additional Share Application Form. Incidentally, I have been pleased to note that over and above Entitlements Acceptances so far received by Registries Ltd, an average extra 40% of additional rights have been applied for.

Once again to you all, my thanks (also from the directors, each of whom is fully subscribing) for your continuing support. Please feel welcome to contact me with any questions
Kind regards, Philip