ACN 009 165 066
ASX
SHAREHOLDERS
REPORT
Enquiries regarding this report
may be directed to:
Annual Report 2003
Attached is the Company’s Annual Report for 2003.
Alan Rule
Company Secretary
27 October 2003
(08) 9476 5555
+61 8 9476 5555
Stephen W. Miller
Executive Chairman
Telephone
Overseas
or
Colin G. Jackson
Investor Relations
Telephone
0417 929 107
St Barbara Mines Limited
Level 2, 16 Ord Street
West Perth
Western Australia 6005
Telephone
Overseas
(08) 9476 5555
+61 8 9476 5555
Dollar values in this report are
Australian dollars unless
otherwise stated.
2003
Annual Report
to Shareholders
CORPORATE PROFILE
St Barbara Mines Limited is listed on both the Australian Stock
Exchange and the AIM (London Stock Exchange) with over
12,000 shareholders.
The Company is the 100 percent owner and operator of the
Meekatharra gold operations in the Murchison gold field of
Western Australia. Production has averaged 100,000 ounces
per annum for the last two years. The company has no gold
hedge positions.
Development plans for the high grade underground orebodies
at Paddys Flat (Meekatharra) and at Paulsens (Ashburton)
continue to be advanced.
The Company objective is to be a 500,000 ounce producer.
Dollar values in this report are Australian Dollars
unless otherwise stated.
CONTENTS
Executive Chairman’s Review............................1
Management Discussion and Analysis
Financial Review ..........................................4
Meekatharra Operations ................................6
Paddys Flat Development ..............................8
Paulsens Project ..........................................10
Exploration..................................................12
Resources ....................................................14
Occupational Health, Safety, Welfare
and the Environment ..................................15
Corporate Governance ....................................16
5 Year Summary..............................................17
Directors’ Report ............................................18
Financial Statements ......................................25
Statement of Shareholders ..............................62
“In a difficult year for the Company,
the positives include the Paddys Flat
acquisition, a preliminary resource
at Mulla Mulla, a 19 percent overall
increase in resource ounces, exploration
expenditures by joint venture partners
exceeded $1.25 million, sustainable
profitable operations by year end
and an unhedged position
in an improving market.”
Stephen Miller
Executive Chairman
St Barbara Mines Limited 2003 Annual Report
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Executive Chairman’s Review
Financial year 2003 can only be described as difficult and
disappointing for the Company, Directors, management,
shareholders and stakeholders alike.
Financial year 2003 can only be described as difficult and disappointing for the Company, Directors,
management, shareholders and stakeholders alike.
The financial result was dominated by continuing difficulties at the two underground mines, Great
Northern Highway and Gibraltar. Difficult ground conditions persisted and ultimately necessitated
significant changes to the mining method. Additional roof support and cable bolting were introduced
and substantial strategic pillars were left as permanent support, sterilising ore reserves. Continued
ground movements threatened the integrity of both underground ramps and ultimately lead to early
closure decisions. Write-downs totalling $10.1 million were recorded in the accounts.
The financial impact curtailed progress on the Paulsens development and on exploration of the large
Meekatharra landbank. With a weakened balance sheet, and the substantial initial capital required
to develop Paulsens as a large open cut, debt financing was not available at acceptable cost.
The 130,000 metre aircore programme around the Norie Pluton at Meekatharra is fifty percent
complete, with our knowledge of the prospectivity significantly advanced. Follow-up RC drilling has
resulted in a preliminary inferred resource of 65,000 ounces at Mulla Mulla.
The strategy to capture higher valuations accorded in the North American gold market and, to access
deeper financial markets, was announced in January 2003. The strategy formed an integral component
of my pledge in last year’s Annual Report to grow the business to a sustainable 500,000 ounces
per annum. The agreed merger of three companies to form a business with initial production in excess
of 300,000 ounces per annum was revised in April 2003 due to an unusual gold equities market.
This limited the magnitude of the parallel capital raise which in turn threatened the listing on the
Toronto Stock Exchange.
This series of events in the first nine months of the year tested the loyalty of many of our shareholders.
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St Barbara Mines Limited 2003 Annual Report
Importantly, the operations at Meekatharra have achieved sustainable production for the last six months
based on the low grade stockpiles acquired with the Paddys Flat tenements late January 2003. Unit
costs through the year fell by 35 percent contributing to improved net cash costs, $416 per ounce in
the June 2003 quarter (vs $541 per ounce in the December 2002 quarter) and improved net operating
costs, $433 per ounce (vs $743 per ounce).
Planning for the development of the higher grade Paddys Flat underground orebodies is advanced.
A recent hole at Prohibition extended two known shoots (4 metres at 4.9 g/t and 6 metres at 7.5 g/t)
and indicates the presence of an additional shoot (6 metres at 8.1 g/t).
Paulsens Project has been totally re-engineered. The capital intensive large open pit has been superseded
by a smaller tonnage, higher grade shallow underground mine. The capital required to first gold pour
has been reduced from an estimated $40 million to a more achievable $13 million. Maximum negative
cash flow has also been reduced from $58 million to $14 million.
Gold Fields completed 475 drill holes (28,300 metres) in a four month period on the Tough Go and
Turn-of-the-Tide mineralised line within the Reedys area. Whilst they advised of their withdrawal
from the joint venture effective November 2003, having spent $760,000 for no interest, they
significantly advanced a number of targets which our Company will prioritise.
Post year end, $5 million of short term debt was repaid and a proposal will be put to shareholders
at the annual general meeting for the remaining secured debt of $7.3 million to be extinguished in
a debt for equity swap.
In summary, whilst we continue to pursue the
North American strategy, our focus on managing and
growing our existing asset base remains paramount.
Stephen W. Miller
Executive Chairman
30 September 2003
St Barbara Mines Limited 2003 Annual Report
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Financial Review
“The loss included $9.9 million due to accounting
policy changes and $18.4 million non-cash charges included
accelerated write-down of underground operations.”
Alan Rule - Chief Financial Officer
Financial Statement
Gold revenue from operations at $56.1 million
was $1.6 million higher than the previous year,
consequent upon a higher realised gold price
of $572 per ounce (2002 - $515 per ounce)
offset by lower gold sales of 98,080 ounces
(2002 – 105,844 oz).
Gold was delivered into remaining hedge contracts
(33,124 oz at a net realised weighted average
$579 per ounce) and the balance into spot achieving
an overall average of $572 per ounce, identical to the
spot average for the year. There are no outstanding hedge
contracts at the year end.
Other revenue, in the corresponding twelve month
period, was dominated by the sale of the shareholding
in Goldfields Limited for $26.7 million, and a net profit
of $9.2 million.
Earnings before interest, tax, depreciation and amortisation
of $3.7 million was determined after state royalties
($1.7 million) and before an accounting charge of
$9.9 million ($4.4 million relating to prior year capitalised
exploration expenditures) associated with reconciliation
to Canadian GAAP to achieve alignment with proposed
Toronto listed merger partner Defiance Mining Corporation.
Higher interest costs reflect an increase in Resource Capital
Fund loan drawdown and associated extension fees.
Accelerated amortisation of underground mine
development costs due to early closure and sterilisation
of ore reserves recorded charges of $10.1 million against
Gibraltar and Great Northern Highway.
Cash Flow Statement
Available cash (net of security bonds) decreased to
$0.6 million.
Capital allocations included Great Northern Highway and
Gibraltar underground mine development ($3.9 million)
and Mulla Mulla and regional exploration ($1.9 million).
Additional security bonds ($1.7 million) previously
secured by guarantee were cash backed during the period.
Loan and finance repayments, principally the Taipan
convertible note ($7.4 million) was financed from cash
and a further drawdown of the Resource Capital Fund loan.
Financial Position
Total shareholders’ equity decreased by $22.1 million,
reflecting the change in accounting policy and accelerated
amortisation of underground mine development.
Current assets include the investment in Dioro Exploration
NL at cost ($4.9 million). Working capital at year end was
negative $7.4 million.
Interest bearing debt at balance date was $24.0 million.
This comprises the fully drawn Resource Capital Fund
$12.0 million loan (10% interest per annum which was
satisfied by the issue of shares), the Ocean Resource Capital
Holdings convertible loan ($7.3 million with accrued
interest at a rate of 12% per annum or exchangeable into
shares at 8 cents per share) and lease commitments.
Three placements of shares ($7.24 million net of
expenses) were made for working capital principally
to UK institutions.
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Simplified Statement of Financial Performance
($’000)
Simplified Cash Flow Statement
($’000)
for the year ended 30 June
Gold revenue from operations
Other revenue
Earnings before interest, tax,
depreciation and amortisation
and change in accounting policy
Change in accounting policy
Earnings before interest, tax,
depreciation and amortisation
Depreciation
Amortisation and write-down
of mine development
Earning/(loss) before
interest and tax
Interest (expense)/income
Income tax expense
Outside equity interests
2003
56,111
1,493
3,717
(9,897)
(6,180)
(2,750)
2002
54,516
31,977
16,112
-
16,112
(2,044)
(15,641)
(28,176)
(24,571)
(14,108)
(5,449)
(2,965)
(252)
(3,941)
-
(155)
International Accounting Standards
A reconciliation of Australian Generally Accepted
Accounting Principles to International Accounting
Standards identified no material impact on net profit
or net assets of the consolidated entity with respect
to Accounting for Income Taxes and Accounting for
Rehabilitation and Restoration Costs. Under IAS 39
"Financial Instruments Recognition and Measurement"
there were no changes with respect to the classification
of investments in securities, nor accounting for
derivative instruments.
Net profit/(loss)
(32,733)
(17,894)
Restricted cash (bonds)
for the year ended 30 June
2003
2002
Operating Activities
Cash receipts
63,043
59,968
Payments – suppliers/employees
(63,256)
(81,280)
Other (net)
Net cash flow
Investing Activities
Payments – exploration/
evaluation/development
Payments – listed investments
Investment sold
Sale –property/plant/
equipment (net)
Net cash flow
Financing Activities
Loan and finance repayments
Repayment of convertible loan
Proceeds from borrowings
Issue of securities
Share buy-back
Net cash flow
Cash – beginning of period
Net change in cash
(341)
(554)
(1,709)
(23,021)
(13,050)
(10,558)
(365)
-
777
(12,638)
(2,263)
(7,372)
(1,736)
8,493
7,635
-
4,757
9,032
(8,435)
(4,526)
26,736
2,551
14,203
(14,295)
-
-
9,653
19,088
(1,066)
13,380
4,470
4,562
Cash – end of period
597
9,032
Simplified Statement of Financial Position
($’000)
As at 30 June 2003
2003
2002
Assets
Current
Non-current
Total
Liabilities
Current
Non-current
Total
Net assets
19,164
58,128
77,292
26,610
12,709
39,319
37,973
24,384
77,654
102,038
29,868
12,062
41,930
60,108
Share capital & reserves
Accumulated losses
Outside equity interests
129,493
118,643
(91,520)
(58,787)
-
252
Total shareholders’ equity
37,973
60,108
St Barbara Mines Limited 2003 Annual Report
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Meekatharra Operations
"Sustainable production was achieved in the second half of the
year, with treatment of the low grade Paddys Flat stockpiles
reaching a throughput rate of 3 million tonnes per annum."
Overview
Mining and processing activity underwent
significant transition during the year. Three
mines, Caledonian open pit, Great Northern
Highway underground and Gibraltar
underground were completed during
the year, in September 2002, October 2002
and February 2003 respectively.
Stockpiled ore supplemented by various low grade
stockpiles were processed during March 2003 after which
activity was dominated by trucking and processing the
large low grade stockpiles on the Paddys Flat tenements.
Mining
Caledonian (3rd phase) open pit was completed one month
later than the original forecast, delivering a positive
reconciliation against budget of 86,907 tonnes (up 22%)
and 9,646 ounces (up 29%).
A proposal to further exploit Caledonian from
underground was completed. Investment criteria return
thresholds were not achieved.
Great Northern Highway underground mine ceased
production on a month earlier than forecast following
ground movement which threatened the integrity of
the ramp. Resources (revised) remaining at the time
of the closure were less than 1,500 ounces.
Gibraltar underground mine ceased production in
February 2003. Records show a total of 371,201 tonnes
was mined for 35,397 recovered ounces over a fifteen
month life.
Although the operation achieved an annual rate of
production of 505,000 tonnes in the September 2002
quarter, ground conditions were less than ideal. Operations
were suspended for a total of 25 days in October 2002
whilst equipment monitored ongoing ground movement
of a shear structure in the ramp access.
Paul Richardson - Operations Manager
A modified mine design was introduced, stoping smaller
high grade blocks with substantial strategic pillars left as
permanent support. Several minor stope failures were
recorded and cable bolting of ore drives and intersections
was introduced as standard procedure. Persistent hanging
wall movement continued.
The adverse impact of additional mine site direct costs
(ground support and monitoring) and the higher effective
unit capital cost due to the recovery of fewer ounces due
to reserve sterilisation resulted in significant cash and
accounting losses.
The North of Alliance (NOA) line of lode, 35 km from
the treatment plant was evaluated. Resource-reserve drilling
at NOA 7 & 8 was completed, with the results assessed in
conjunction with the small but high grade NOA 2 deposit.
Further evaluation was deferred following acquisitions
of the Paddys Flat tenements which have greater overall
potential and are closer to the treatment plant.
Trucking of Paddys Flat low grade southern (#1) stockpile
material commenced in March 2003. A new road was
established, via the old Magazine haul road, to allow triple
and quadruple dog road trains to move 50 – 60,000
tonnes per week. Trucking from the larger central
(#2) stockpile commenced in June 2003.
Treatment Plant
Mill throughput totalled 2.28 million tonnes, a 21 percent
increase on the previous year. Ore was derived from the
Caledonian open pit (12%), Great Northern Highway
underground (2%), Gibraltar underground (11%) and
the balance, low grade stockpiles.
Throughput reached a rate of 3.0 million tonnes per
annum in the last quarter of the year, as Paddys Flat
No. 1 and No. 2 stockpiles dominated the mill feed.
The plant circuit flow sheet was optimised with the
contract scats crusher taken out of the circuit and the
secondary cone crusher by passed.
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Unit milling costs fell 35 per cent through the year to
$5.90 per tonne.
Capital expenditure during the year was minimal following
significant expenditure in the previous year. No major
capital expenditures, including tailings retention dams,
are envisaged in the immediate future. Preliminary
planning for the treatment of Paddys Flat underground ore
may see a contract tertiary crusher replace the SAG mill.
Cost of Production
Mine site cash costs were significantly lower
(by $221 per ounce) than the previous year which
included the establishment of the two underground mines.
The net operating cost, which includes an accounting
adjustment to normalise development expenditure against the
life of mine plan, at $575 per ounce, was a 4 percent increase.
Production Forecast
Production for the first eight months of 2003/04 financial
year will be dominated by the processing of Paddys Flat
No. 2 and No. 3 low grade stockpiles at a throughput rate
of approximately 3.0 million tonnes per annum to deliver
40,000 ounces. Evaluation of several small nearby shallow
oxide pit possibilities continues.
The production schedule for the balance of the year
includes Bluebird low grade stockpiles (0.46 Mt) and
Batavia open pit (0.12 Mt) for an additional recovered
20,000 ounces.
Detailed evaluation of the higher grade underground
Vivians, Consols, Prohibition and Mickey Doolan deposits
at Paddys Flat is ongoing.
The priority is Prohibition where the orebody has
reasonable width and is hosted in a competent banded
iron formation. A decline development is planned to
commence in January 2004, with the first ore deliveries
early in 2004/05 financial year.
Production and Sales Statistics
Period 12 months to 30 June
Ore mined (tonnes)
Ore milled (tonnes)
Grade milled (g/t)
Recovery (%)
2003
2002
483,041
1,386,084
2,284,599
1,888,829
1.47
89.7
1.84
92.3
Gold produced (ounces)
96,611
103,246
Gold sold (ounces)
98,080
105,844
Production Cost Statement ($/oz)
Modified Gold Institute Standard
Period 12 months to 30 June
2003
2002
Mine site cash costs
State royalties
Net Cash Cost
Mine development capital
cost amortisation
Inventory movements
Net Operating Cost
Realised Gold Price
Spot Price Average
448
17
465
103
7
575
572
572
669
13
682
(127)
2
553
515
552
St Barbara calculates cost of production using a modified Gold
Institute Standard. The modification is designed to clearly identify
the actual cash cost incurred, which is then normalised depending
upon over or under development against the life-of-mine plan. The
resultant ‘net operating cost’ per ounce is equivalent to the GI ‘total
cash cost’ per ounce.
Bluebird Treatment Plant.
Bluebird Treatment Plant.
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Paddys Flat Development
“Mineralisation of the main region extends over a strike
length of 4 km, further extending dominance of the
Murchison Greenstone Belt to 100 contiguous km plus.”
Paul Richardson - Project Manager
The current plan is to develop a 5 metre by 4.5 metre
decline for an initial 2,100 metres to a vertical depth
of 300 metres. The decline route is designed to intersect
the upper levels of the Vivians orebody six months after
commencement, followed by Prohibition, then Prohibition
and Vivians concurrently and finally Consols. The mining
rate is projected at 30,000 tonnes per month, recovering
approximately 165,000 ounces over three years.
Current activity on Prohibition includes a three hole drill
programme to provide geotechnical data and samples for
metallurgical testwork to provide data for the design of a
partial refractory flowsheet. The first hole indicated
orebody depth extensions.
The overall schedule also incorporates the development of
the lower grade but larger tonnage Mickey Doolan open pit
position approximately three months after commencement
of the Prohibition portal. A production rate of up to
60,000 tonnes per month is envisaged. Mickey Doolan
ore is also partially refractory.
The Paddys Flat tenements, located 15 km from
the treatment plant, were effectively acquired
from Barrick Gold on 31 January 2003.
The tenements comprise granted mining leases,
and a series of open pit and underground workings,
and a significant tonnage of low grade stockpiles.
Mining activity ceased in 1994 after almost one hundred
years. Mining ceased partly due to the previous owners’
financial position and the need to significantly modify the
treatment plant to handle the increasing tonnages of fresh
rock. At the time, resources (pre-advent of the Joint Ore
Reserves Committee Code) totaled 938,000 ounces.
Development Strategy
The development team immediately identified the higher
grade areas of the near three million tonnes of low grade
stockpiles, and completed planning and permitting
documentation to allow trucking to commence. This
occurred in February 2003 and in the first six months
of operations a total of 1.44 million tonnes at an average
grade of 0.9 g/t was profitably milled.
The development team then proceeded to assemble and
review all existing data. The previous owner had
commenced an exploration decline towards Vivians and
Consols lodes, central to the Paddys Flat lodes, reaching
120 metres before mining ceased. The lodes, whilst high
grade, tend to be complex with grade enrichment at spur
vein intersections. An exploration drive was chosen over
drilling to reach resource/reserve status. The lodes are
immediately along-strike of Fenians Lode, which was
mined to a depth of nearly 400 metres with reported
production over one million tonnes grading 16.8 g/t.
A detailed assessment was made as to the practicality and
desirability of rehabilitating the decline and recommencing
the original programme. After considerable review, a
decision was taken to establish an underground mine to
initially exploit the Prohibition resource. The advantage
was the reduced risk of developing a mine in the more
readily defined and competent banded iron formation
host of the Prohibition orebody.
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P R O H I B I T I O N
( u n d e r g r o u n d p o s i t i o n )
V I V I A N S
( u n d e r g r o u n d p o s i t i o n )
C O N S O L S
( u n d e r g r o u n d p o s i t i o n )
M I C K E Y D O O L A N
( o p e n p i t p o s i t i o n )
Paddys Flat tenements.
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Paulsens Project
“The project has been re-assessed as a smaller tonnage
higher grade underground mine”
Chris Davis - Project Manager
The first drill programme to commence immediately on
project commitment is designed to confirm stope design
for a bulk sample of approximately 50,000 tonnes from
the upper zone and lower zone orebodies at approximately
100 to 125 metres below surface.
The second programme is designed to increase drill
density between 200 and 300 metres below surface,
where previous drilling was limited (22 holes) and
scattered due to a low priority under the original open cut
design. The programme is targeting an increase in ounces
per vertical metre from less than the current 300 to
approximately 2,100. This target estimate is based on the
2,880 ounces per vertical metre (143 drill holes) between
100 and 200 metres below surface, and factors in a slightly
lower grade and a steepening orebody. The drill pattern,
costed at $1.4 million, would approximate 25 metres by
25 metres for stope design and elevate the resource from
inferred to measured and indicated.
Decline development would commence three months
after project commitment, and mining of the bulk sample
nine months later.
The bulk sample ore would be processed at a toll facility
to determine metallurgical parameters for flow sheet design
with the proceeds from the recovered gold estimated to
offset nearly 50 percent of the costs incurred to this point.
Post this evaluation, mining would commence proper
above 1,000mRL, which is 200 metres below the surface.
The Paulsens deposit is located 180 km west of
Paraburdoo approximately 1,000 km north of
Perth, in the Ashburton gold district of Western
Australia. The deposit is covered by mining
leases M08/099 and M08/196.
Paulsens is owned 100 percent by Taipan Resources NL,
an 88.3 percent subsidiary of the Company. St Barbara has
a 5 percent gross royalty over production, purchased last year
from one of the earlier owners, Rio Tinto Exploration Pty Ltd.
During the year Native Title was signed with the Puutu
Kunti Kurrama and Pinikura Peoples.
The project as originally conceived, envisaged an initial
large open pit with a waste to ore volume strip ratio of
16:1, followed by an underground mine. The relatively
low technical risk was outweighed by the initial capital
required to first gold pour and subsequent working capital
required during the first two years of production to
complete the waste removal programme before the
project became cashflow positive.
As a consequence, the project has been re-assessed as
a smaller tonnage, higher grade underground mine.
Processing options include either toll milling or the use
of a mobile contract crushing and processing plant
which would be ideally suited to the lower throughput.
The overall outcome is a potential $26 million reduction
in initial capital and a project which achieves positive
cashflow sixteen months earlier.
The mine design is based on an initial revised resource
estimate of 675,000 tonnes at 15.7 g/t, using a
4 g/t cut-off. Whilst the conventional wireframe resource
model correlates well with the Golder and Associates
conditional simulation model, the resource under the
prescribed JORC Code is only classified as inferred.
Accordingly, the development concept incorporates two
drill programmes and the mining of a bulk sample. The
objective of these programmes is to improve knowledge
of the structural geology and spatial relationship of the
high grade and confirm the mining method and key
controls, including dilution, recovery and ground support.
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The road to Paulsens.
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Exploration
“Joint venture parties spent in excess of $1.25 million
on Company tenements in the Meekatharra district.”
Exploration expenditure totaled $6.9 million, of
which 51 percent was committed to the mine
environs and the balance to Paulsens and the
Ashburton district.
Exploration Programme
The year saw a continuation of the 130,000 metre aircore
programme commenced in March 2002 to focus on a
substantial area of transported alluvial covered terrain,
approximately 30 km by 10 km, around a major granitoid
intrusive known as Norie Pluton. Extensive cover had
precluded prior systematic exploration of a highly prospective
area just 15 km south of the treatment plant. The targets
are million ounce orebodies similar to Paddys Flat
(north of the project area) and Bluebird/South Junction.
A further 2,650 line km of high resolution airborne
geophysical (magnetic and radiometric) data was acquired
over the Norie Pluton domain regional area to assist in
on-going targeting and assessment.
A systematic approach to target generation for the balance
of the landbank outlined 40 additional targets with no or
limited prior soil or RAB drilling. The targets range from
conceptual to potentially advanced, (Bottle Dump North
400 metre plus strike of stratabound horizon included an
intersection of 2 metres at 18.6 g/t from 7 metres).
Graham Miller - Group Exploration Manager
Results
An additional 45 RC drillholes further tested the Eastern
Trend of the Mulla Mulla transported alluvium covered target
zone, where gold mineralisation is mainly contained in
multiple northerly trending, steeply dipping zones of
quartz-pyrite (limonite) veining at depths of 30 to 180
metres through felsic volcanics, which can be weathered to
depths of 100 metres or more. There is also some potentially
significant saprolite (upper oxide) zone, sub-horizontal
mineralisation at a depth of 30-45 metres.
A total of seventy RC or RC/core holes (11,276 metres)
has now tested this target on a 40 x 40 metre pattern,
with 56 percent recording potentially significant intercepts,
many of which are open in one or more directions.
Notwithstanding that approximately 15-20 additional
holes will be necessary to completely test the target at
40 x 40 metres, an initial block model inferred resource
estimate was determined at approximately 1.8 million tonnes
at 1.2 g/t (66,000 oz).
Further RC drill testing is also planned for the 1,200 x 200-
400 metre Western Trend of mineralisation at Mulla Mulla –
where so far 18 RC have been completed.
The regional component of the aircore drill programme
continued to assess the gold mineralisation potential
of transported alluvium-covered terrain extending for
approximately 20 km south of Mulla Mulla around
the eastern margin of part of the Norie Pluton.
An additional 500 holes (31,400 metres) were drilled,
taking the programme to approximately 50 percent complete.
This work has advanced the 4 km x 500 metre Bluebush-
Mingah target area, 20 km south of Mulla Mulla, towards
RC drill testing status. It also identified a number of target
zones in the 8 km of regional strike immediately south of
Mulla Mulla, including Kanji and Miniritchie.
Outside the major programme a 40 hole (1,840 metre)
aircore drilling programme was also carried out at Stakewell
to further evaluate three sub-parallel, quartz vein systems up
to 250 metres long to the east of the Kohinoor deposit,
40 km SSW of Bluebird. RC drill testing is planned.
12
St Barbara Mines Limited 2003 Annual Report
M A N A G E M E N T D I
S C U S
S
I O N S
A N D A N A L Y S
I
S
Meekatharra District
Active exploration was conducted by three joint venture
partners at Reedys, Chesterfield and Cue.
At Reedys, an agreement was executed in February 2003
with Gold Fields Australasia giving it right to farm into
206 sq km of tenements in the Reedys area.
In the four months to July 2003, a 475 hole (28,300 metre)
RAB drilling programme to further assess the central 2 km
of the known Tough Go mineralised area and the strike
extensions of known mineralisation on the Turn-of-the-Tide
mineralised line was completed. Expenditure exceeded
$760,000.
Although Gold Fields defined three sub-parallel, largely
continuous 5-50 metres wide and up to 1,200 metres long,
low-grade mineralised zones with potential to host a number
of steeply plunging high grade shoots. They withdrew from
the JV, effective 1 November 2003, because of the perceived
limited size of the targets. No interest was earned.
St Barbara will now look at other options for advancing
Tough Go, and also the 3 km plus long Reedys mineralised
line, which has produced more than 500,000 ounces of
gold (including 820,000 tonnes at an average grade of
12 g/t from underground). There has been very limited
drill-testing to depths of more than 200 metres. Unclosed
gold intercepts including 3 metres at 17.92 g/t, 4 metres
at 12.99 g/t, 12 metres at 10.8 g/t and 20 metres at
3.85 g/t require further evaluation.
At Chesterfield, joint venture partner Independence Gold NL,
earned a 51 percent interest by completing an expenditure
commitment of $500,000. Three RC drill programmes
totaling 76 holes (5,153 metres) at Dorothy and Margueritta
targets followed up previous high grade intersections with
only limited encouragement to extend the current shallow
high grade but small deposits. An agreement was reached
post period whereby Aurex NL can earn a 60 percent interest.
At Cue, Cougar Metals NL earned a 49 percent interest by
completing 11,000 metres of RC drilling which further
assessed 22 quartz vein gold target areas, with encouragement
for the discovery of small but high grade deposits.
Ashburton Exploration
The Company has an extensive (1,780 km2) tenement
package in the Ashburton district, in which the potential
to identify satellite ore feed for the Paulsens development
is considered high.
One such potential satellite is Mt Clement, 35 km south of
Paulsens. The previous owner’s estimate of 818,000 tonnes
at 2.7 g/t (71,000 oz) has been revised down to 554,000
tonnes at 2.3 g/t (41,000 oz). This is a non JORC compliant
resource estimate due to technical shortcomings and the
lack of documentation on previous drill programmes,
some of which date back more than 20 years. The resource
is estimated to a maximum depth of 100 metres, with
most shallower than 50 metres.
A metallurgical testwork programme is required to
determine overall gold recoveries as oxide mineralisation
is thought to represent only 50 to 75 percent of the total.
A 4,500 metre RC and core drill programme would be
required to achieve JORC compliant status.
Interpretation of the second high resolution airborne
geophysical survey – covering 75 km2 of area underlain
by calcareous stratigraphy at Miningee Bore, 45 km
east-south-east of Paulsens and along regional strike from
encouraging gold mineralisation reports by other explorers
in the Cheela Plains area was completed. Follow-up
geological mapping and soil sampling/RAB drilling of
a number of resulting target areas is planned.
St Barbara commenced its earn-in commitment on the
Pelican Resources Limited JV tenements south and east
of Paulsens in late 2002. The Company can earn a
51 percent interest by spending $600,000 over 3 years,
with a minimum commitment of $100,000 in the first year.
The tenements lie within a 40 x 5 km block along the
southern flank of the Wyloo Dome, a major structural
feature of the area, and are largely within a 200 km plus
long and 15 km wide WNW-ESE trending structural
corridor (the "Paraburdoo Hinge Zone") through the
central and southern part of the Dome that contains
Paulsens and numerous other gold and base metal
occurrences, including "Carlin-Style" gold mineralisation
being explored for by Newcrest to the east of the Pelican
tenements and Sipa’s Mt Olympus and Waugh gold
deposits further east.
The work has so far comprised project scale and semi-
regional geological mapping, with the aid of satellite
imagery and aerial photography. The geochemical sampling
work has concentrated on the Pipeline, Monster East and
West de Courcy areas of E 08/853 and the Jeerinah-
Fuschite-Three Corner Bore area of E 08/854 and its
easterly strike continuation.
Additional target areas have been delineated on both
lithological and structural criteria.
St Barbara Mines Limited 2003 Annual Report
13
M A N A G E M E N T D I
S C U S
S
I O N S
A N D A N A L Y S
I
S
Resources
The total resource (measured, indicated and
inferred) position comprises the
100 percent owned Meekatharra tenements
and an attributable 88.3 percent of Paulsens.
The Meekatharra total resources (measured, indicated
and inferred) have increased to 21.2 million tonnes at
2.12 g/t for 1.44 million ounces.
The 37 percent increase in contained ounces is
predominantly influenced by the Paddys Flat tenements
acquisition during the year with revised (post JORC
compliant analysis and economic considerations)
total resources of 562,300 ounces.
This addition, plus the new Mulla Mulla resource
(65,000 oz) more than offset orebody depletion
(Great Northern Highway, Caledonian and Gibraltar),
a downgrade of NOA 7 and 8, and the elimination
of a number of smaller deposits due to significance.
The Paulsens total resource (measured, indicated and
inferred) has been revised from a 0.5 g/t cut-off
(633,135 ounces) which was applicable for the original
open-pit design, to a 1.0 g/t cut-off (576,752 ounces)
applicable for the current underground design.
Overall, total resources have increased 19 percent to
1.92 million ounces.
Measured
(including resources
modified to produce
proven reserves)
Indicated
(including resources
modified to produce
probable reserves)
Measured + Indicated
Inferred
Project Name
Tonnes Grade
(‘000)
g/t
Tonnes Grade
(‘000)
g/t
oz
Tonnes Grade
(‘000)
g/t
Tonnes Grade
(‘000)
g/t
oz
oz
oz
151
1,002
839
Paddys Flat
Bluebird
NOA Line
Reedy Line
Reedy North Line
Stakewell
MEEKATHARRA TOTAL 1,992
1,103
Paulsens
2,966
COMPANY TOTAL 1
3.1 15,000
3.3 107,600
2.7 73,600
2,505
4,729
2.7
1.5
217,300
225,400
708
5.3
120,800
2,505
4,880
1,002
1,547
2.7
1.5
3.3
3.9
217,300
240,400
107,600
194,400
33
7,975
196,200
182,900
2,334
357,700 10,036
33
9,900
9.3
9,967
573,400
2.2
4.4
3,437
328,700
2.7 863,600 13,002
3.1
5.2
3.8
9,900
9.3
769,600 10,852
2.4
4.6
532
511,700
2.9 1,221,300 11,322
6,357
3,875
216
130
267
345,000
1.7
184,100
1.5
37,500
5.4
20,900
5.0
48,500
5.6
2,300
7 10.2
638,300
1.8
3.8
65,700
1.9 696,300
Notes:
Note 1 - includes 88.3 percent of Paulsens.
Disclosure
Information in this report relating to mineral resources or mineralisation conforms to the reporting requirements of the Australasian Code for
Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code). It is based on information compiled by Mr Graham Miller, FAusIMM,
a Competent Person as defined by the Code. It is included in this report with his consent.
14
St Barbara Mines Limited 2003 Annual Report
M A N A G E M E N T D I
S C U S
S
I O N S
A N D A N A L Y S
I
S
Occupational Health, Safety, Welfare
and the Environment
Promoting and maintaining high standards of
safe work practice, and a safe and healthy work
environment are integral to the business.
Commitment
The Company is committed to the concept of sustainable
development which requires economic growth to be balanced
with good stewardship and the protection of human health
and the environment.
Maintenance of a system of safe work practices, a pro-active
approach to control and management of hazards, and the
development and improvement of management and
performance standards are integral to the approach.
Injury Frequency
There were two lost time injuries at Meekatharra Operations
compared with eleven in the previous year. As a consequence,
the lost time injury frequency rate improved significantly
through the year. The average 16.6 (rolling twelve months)
last year improved to 8.1 during the part of the year when
the two underground mines were in operation and improved
further to 4.7 when operations comprised trucking and
processing of Paddys Flat stockpiles.
Occupational Health, Safety and Welfare
The focus on development and implementation of continuous
improvement, by way of providing effective training for all
employees, supervisors, managers and contractors in Risk
Assessment, Hazard Identification, and Emergency Response
Planning progressed.
Specifically, training undertaken included: accident
and incident investigation, hazard identification, fitness for
work awareness, site wide emergency evacuation, emergency
response team-self contained breathing apparatus,
emergency response – first responder, and occupational
health and safety for supervisors.
Environmental Management
The Company recognises that gold mining operations should
be developed and managed on the basis of sustainable criteria
and must contribute to the benefit of all stakeholders.
Environmental management initiatives commenced or
completed during the year included:
• on going implementation of a Site Waste Management
Plan with the initial focus on waste grease disposal. One
hundred and sixty drums were collected, redrummed and
sent to the DEP Approved disposal facility at Port Hedland;
• development of environmental awareness, training
requirements and implementation of self audits;
•
•
continuing progressive rehabilitation at new mines with
the target of completing all rehabilitation works within
three months of a mine closure; and
seeding in excess of 190 ha of mine disturbed land
using local Meekatharra community groups.
Rehabilitation
Mine site rehabilitation objectives are directed towards
ensuring that the physical structures that remain after
mine closure do not impose a long term hazard to public
safety or the environment and that the mined area achieves
the nominated post mining land use. During the past year
continued significant progress was made toward fulfilling these
rehabilitation objectives.Work was undertaken across a range
of sites which included rehabilitation earthworks programs,
making safe historic mine workings, waste dump slope
profiling, capping with topsoil/oxide material and deep ripping
on contour.This program resulted in the rehabilitation of
162 hectares of mine disturbed land during the twelve months.
Drill site rehabilitation standards were also reviewed and
are included in all new drilling contracts. Rehabilitation
of drill holes resulted in a total of 2,554 holes capped.
Compliance Issues
One reportable incident occurred during the year, which
resulted from the discharge of approximately 250 kilolitres
of near potable quality mine water into an adjoining natural
drainage system. No impact on the vegetation in the area of
the discharge was expected, and no impact has been observed.
In addition, three minor hydrocarbon spillage incidents were
reported involving small volumes of diesel fuel or waste oil.
Each of these incidents has been remediated by site
personnel responsible for the areas concerned.
St Barbara Mines Limited 2003 Annual Report
15
Corporate Governance
Practice and Disclosure
The Company supports the detail and sentiment reflected
in the ASX Corporate Governance Council "Principles of
Good Corporate Governance and Best Practice
Recommendations" release of March 2003.
The Company has adhered to these best practice guidelines
for many years and will report against key performance
indicators for the next reporting period.
Board of Directors
The Board is accountable to shareholders and responsible
to other stakeholders, including employees and the
community.
The Board comprises one executive and three non-
executive Directors. Members have a balance and diversity
of expertise and skills particular to the Company business.
There is no nomination committee.
Directors are expected to participate in all Board meetings,
unless prior permission has been granted for leave of
absence.
The Board oversees the strategic direction of the Company,
monitors management performance and ensures that
sound practices are adopted.
It is responsible for the maintenance of high ethical
standards and monitoring compliance with the
Constitution, ASX Listing Rules, the Corporations Act 2001
and various Mining Acts. The Board regularly monitors
operational, financial, occupational, health, safety and
welfare, and environmental performance against budget
and key performance indicators.
The Board supports a continuous improvement
philosophy and seeks to identify areas for enhancement
on an ongoing basis.
Board Remuneration
Non-executive Directors receive fees within the
shareholder approved aggregate amount. Executive
Directors do not receive fees.
The Remuneration Committee comprises two members,
currently Mr G. B. Speechly and Mr K. A. Dundo who may
seek external advice on market conditions as appropriate.
The Committee recommends on fees and remuneration
for non executive Directors, the Executive Chairman,
senior executives and all Company employees.
Shareholders
The Company aims to ensure that all shareholders are
informed of major developments through regular
shareholder communications. These include the annual
report, ASX activities (quarterly) reports, ASX financial
reports and ASX Continuous Disclosure reports detailing
significant events. Appropriate documents are also lodged
with AIM.
In addition, the Company website, www.stbarbara.com.au,
has a self-registration email facility designed to give instant
and equal access to all announcements made.
Shareholders are encouraged to exercise their right to
vote, either by attending shareholder meetings or by
lodging a proxy.
Audit Committee
The audit committee operates within terms of reference
approved by the Board.
Members are appointed by the Board exclusively from
the non-executive Directors, each of whom is independent
of management and free from any business or other
relationship which could materially interfere with the
exercise of their independent judgement.
At the date of this report, the audit committee comprises
Mr K. A. Dundo and Mr H. G. Tuten.
Each member retires on the third anniversary of
appointment, unless otherwise re-appointed to fill a
casual vacancy.
Meetings shall be held not less than twice a year, attended
by a representative of the external auditors, and executive
directors by invitation to discuss and provide information
relative to the agenda.
The Committee has direct and unrestricted access to
management, employees and the Company’s external
auditors, and is authorised by the Board to obtain
independent professional advice and to secure the
services of external advisors.
In general, the function of the audit committee is to consider
how the Board should apply the Company’s financial
reporting and internal control principles and maintain an
appropriate relationship with the Company’s auditors.
16
St Barbara Mines Limited 2003 Annual Report
5 Year Summary
Financial Results
Gold revenue
Other income
Amortisation & depreciation
Consolidated profit/(loss) before tax
Income tax (expense)/benefit
Consolidated profit/(loss) after tax
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total shareholders’ equity
Shares on issue
Mine Statistics
Ore mined
Ore milled
Head grade
Recovery
Gold produced
Total production cost
Gold in reserves
Gold in resources
Sales and Hedging
Sales
Realised gold price
Average spot gold price
Hedge position
Hedge weighted price
Hedge book value
Expenditure
Exploration
Meekatharra operating capital
Paulsens project
2003
2002
2001
2000
1999
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
($’000)
(‘000)
(‘000 t)
(‘000 t)
(g/t)
(%)
(oz)
($/oz)
(‘000 oz)
(‘000 oz)
(oz)
($/oz)
($/oz)
(oz)
($/oz)
($’000)
($’000)
($’000)
($’000)
56,111
1,493
18,391
(29,768)
(2,965)
(32,733)
19,164
58,128
26,610
12,708
37,973
415,553
483
2,285
1.47
89.7
96,611
575
nil
1,917
98,080
572
572
nil
-
-
3,496
135
4,599
54,516
31,977
30,220
(17,894)
-
(17,894)
24,384
77,654
29,868
12,062
60,108
319,758
1,386
1,888
1.84
92.2
103,217
553
208
1,610
71,217
17,264
20,883
7,650
1,704
9,354
36,211
56,831
26,467
8,870
57,705
216,507
1,700
2,789
1.80
91.0
147,063
371
372
1,466
38,534
28,477
5,217
2,377
1,260
3,637
17,795
47,511
16,263
2,696
46,347
209,770
209
3,221
0.93
90.2
86,798
321
372
2,002
105,844
515
554
4,221
518
(176)
147,063
497
504
100,000
513
(2,450)
86,798
443
451
123,200
495
(590)
37,386
17,749
4,521
6,725
-
6,725
29,460
35,020
19,519
2,251
42,710
209,770
42
3,016
0.90
91.7
80,260
298
502
2,508
80,260
456
449
55,000
624
(58)
3,381
5,914
7,177
4,350
2,000
-
1,900
800
-
2,491
298
-
St Barbara Mines Limited 2003 Annual Report
17
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
D I R E C T O R S R E P O RT
Your Directors present their report on the consolidated entity
consisting of St Barbara Mines Limited ("Company",
"St Barbara" or "parent entity") and the entities it controlled
("consolidated entity") at the end of, or during, the financial
year ended 30 June 2003 and the Audit Report thereon.
D I R E C T O R S
The names of Directors who held office during the
financial year or up to the date of this report:
Stephen W. Miller (aged 43) - Executive Chairman
CA, BBus FAICD
Appointed Director on 12 March 1999
Mr Miller is a chartered accountant by profession with over
twenty years’ experience in the corporate and financial arena.
Since 1992, Mr Miller has specialised in the mineral
resources sector and has been executive director and founder
of a number of resource companies, including Western
Metals Limited, East Africa Gold Corporation and Hargraves
Resources NL. Mr Miller is also chairman of Strata Mining
Corporation Limited, St Barbara’s major shareholder.
Mr Miller brings valuable management, corporate and
financing experience to the Board of St Barbara. Mr Miller
is also executive chairman of Taipan Resources NL, a director
of Defiance Mining Corporation and a board member of the
Australian Gold Council.
G. Brian Speechly (aged 70) - Non-Executive Director
FAusIMM
Appointed Director on 9 July 1997
Member of Remuneration Committee
Mr Speechly is a consultant with over forty years of
experience in the mining industry. He spent more than
24 years in technical and managerial roles with major
international mining companies. For the past eighteen years,
Mr Speechly has provided consulting services to a wide
range of clients.
Over the course of his career, Mr Speechly has been involved
in several hundred mining projects and is recognised in
Australia and overseas as an expert in both underground and
open cut mining and design, equipment selection and
practical, workable, low cost mining methods. Mr Speechly
is also a director of Centamin Egypt Limited.
Kevin A. Dundo (aged 51) - Non-Executive Director
LLB, B.Com, FCPA
Appointed Director on 26 March 2002
Chairman of Audit Committee and Remuneration Committee
Mr Dundo is a corporate lawyer and practices in the
commercial and corporate areas and has considerable
experience in the mining area and the financial services
industry. Mr Dundo has played a major role in providing
advice in the corporate law area to mining companies and
is also a director of Taipan Resources NL, Defiance Mining
Corporation and Midas Gold plc.
Henderson (Hank) G. Tuten (aged 55) - Non-Executive
Director
B.A. (Econ)
Appointed Director on 26 March 2002
Member of the Audit Committee
Mr Tuten is actively involved in a consolidated entity of
private equity funds as a founding partner. These are the
Resource Capital Funds, the e-Century Capital Fund and the
CIP Fund. He spent over fifteen years with the
N.M. Rothschild and Sons consolidated entity. During that
period, he was the chief executive officer of Rothschild
Australia Limited, Rothschild North America Inc. and
Continuation Investments N.V., the private equity vehicle for
Rothschild Continuation Holdings A.G. consolidated entity.
Prior to that, he was a commercial banker with the
Philadelphia National Bank. Mr Tuten serves on several boards
in connection with his investment activities. He graduated
from the University of Virginia with a B.A. in Economics.
Mr James T. McClements was an alternate director to
Mr H.G. Tuten from the beginning of the financial year until
his resignation on 10 July 2003.
P R I N C I PA L A C T I V I T I E S
The principal activities of St Barbara and entities controlled
by it (collectively known as the consolidated entity) during
the financial year ended 30 June 2003, were gold
production, gold, oil and mineral exploration, pastoral
activities, and investment.
R E S U LT S O F O P E R AT I O N S
The consolidated operating loss after tax for the year ended
30 June 2003 attributable to members of the Company was
$32,733,000 (2002: $17,894,000 loss).
The current year loss includes the impact of a change in
accounting policy effective 1 July 2002 to write off a total
of $9,897,000 in current and previous exploration and
evaluation expenditure. See Note 1(d) for further details.
Commentary on the operations and the results of those
operations are set out below:
Production and Sales Statistics
Ore mined
Ore milled
Head grade
Recovery
Gold produced
Gold sold
Cash cost
tonnes
tonnes
g/t
%
ounces
ounces
$/ounce
12 months
to
30 June 2003
483,041
2,284,599
1.47
89.7
96,611
98,080
465
12 months
to
30 June 2002
1,386,084
1,888,829
1.84
92.2
103,217
105,844
553
Mining activity at Meekatharra underwent significant
transition during the year. Following completion of mining
at Caledonian (September 2002), Great Northern Highway
(October 2002) and Gibraltar (February 2003), the current
focus has turned to evaluation of the underground potential
of the Paddys Flat tenement area. Current mill feed is from
low grade stockpiles at Paddys Flat.
18
St Barbara Mines Limited 2003 Annual Report
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
D I V I D E N D S
The Directors do not recommend the payment of a dividend.
S I G N I F I C A N T C H A N G E S I N T H E S TAT E O F
A F F A I R S
Significant changes in the state of affairs of the consolidated
entity during the financial year were as follows:
•
•
•
•
•
•
•
•
•
•
•
On 8 July 2002, the Company listed on the
Alternative Investment Market (AIM) of the London
Stock Exchange.
On 15 July 2002, the Company issued 774,588 options
with an average exercise price of $0.2122 and an expiry
date of 15 July 2005 in satisfaction of the Resource
Capital Fund II L.P. (“RCF”) monthly facility fee.
On 15 July 2002, the Company issued 1,406,614 fully
paid ordinary shares at prices ranging from $0.2125
to $0.2263 in satisfaction of the RCF interest and
standby fee.
On 15 July 2002, the Company issued 1,846,628 fully
paid ordinary shares to Grimwood Davies Pty Ltd at a
price of $0.2143 per share in satisfaction of drilling
services provided.
On 13 August 2002, the Company issued 800,408
options with an average exercise price of $0.2122 and
an expiry date of 13 August 2005 in satisfaction of the
RCF monthly facility fee.
On 21 August 2002, the Company issued 34,333,332
fully paid ordinary shares at $0.165 per share to raise
$5.6 million (before issue expenses). In addition one
listed option was issued for each new share issued. The
options have an exercise price of $0.30 per option and
expire on 29 February 2004.
On 6 September 2002, the Company issued 800,408
options with an average exercise price of $0.2122 and
an expiry date of 6 September 2005 in satisfaction of
the RCF monthly facility fee.
On 6 September 2002, the Company issued 5,000,000
options with an exercise price of $0.30 and an expiry
date of 29 February 2004 as a placement facility fee.
On 8 October 2002, the Company announced that it
had entered into an agreement to acquire the Paddys
Flat mining area from a subsidiary of Barrick Gold for
$4.5 million plus a royalty of $10 per ounce on
production exceeding 50,000 ounces.
On 2 December 2002, the Company announced that
the convertible notes due on 30 November 2002 by
Taipan Resources NL (“Taipan”), were redeemed in
full on 29 November 2002. The redemption by Taipan
was funded by an increase in the existing loan from
the Company.
On 9 January 2003, the Company announced a
proposed business combination between the Company
and Geomaque Explorations Ltd (which will include
Midas Gold plc) to create a new growth oriented,
•
•
•
•
•
•
•
•
•
international gold mining and exploration company to
be named Defiance Mining Corporation and
incorporated in Canada.
On 31 January 2003, the Company issued 15,000,000
fully paid ordinary shares at a price of $0.11 per share
to raise $1.65 million (before issue expenses) to assist
in the acquisition of the Paddys Flat area of interest.
On 31 January 2003 the Company made the
first payment for $1.4 million for the Paddys Flat
acquisition.
On 17 February 2003, the Company announced that it
had signed a joint venture agreement with Gold Fields
Australasia Pty Limited covering the Reedys area.
Gold Fields Australasia Pty Limited can earn 51%
interest by spending $3.5 million over three years.
On 17 February 2003, the Company issued 5,600,000
fully paid ordinary shares at $0.11 per share in relation
to the Paulsens native title agreement.
On 20 February 2003, the Company issued 1,000,000
unlisted options with an exercise price of $0.11 and an
expiry date of 31 December 2005 to RCF in satisfaction
of the corporate debt facility extension fee.
On 27 February 2003, the Company announced that it
had entered into two agreements with Ocean Resources
Capital Holdings Limited (“Ocean”) to raise $8.4 million
by way of the Company issuing $2.8 million of unsecured
convertible notes and $5.6 million through an unsecured
convertible loan. The funds raised will be used to fund
the Paddys Flat acquisition and general working capital.
The repayment date for the convertible notes and the
convertible loan is 31 December 2007 and both
facilities carry interest at 12%.
On 28 February 2003, the Company announced that
Mr Peter McIntyre had resigned as Chief Operating
Officer with effect from 31 March 2003.
On 3 April 2003, the Company announced a revision
to the proposed business combination between the
Company and Geomaque Explorations Ltd. The revised
proposal will see a sequential, rather than concurrent
process, with Geomaque Explorations Ltd acquiring
Midas Gold plc to create Defiance Mining Corporation,
followed, subject to agreement on merger terms, by the
merger of the Company and Defiance Mining
Corporation.
On 27 June 2003, the Company announced the
placement of 15,000,000 shares to a UK institution
at a price of $0.667 to raise a net $1.0 million.
In addition Ocean exercised early, at a price of
$0.13 per share, 15 million shares pursuant to the
convertible note issued February 2003 (and convertible
up to 31 December 2007). These shares were transferred
by Ocean to the UK institution for no consideration.
Shares allotted pursuant to this exercise were approved
by shareholders at the 6 June 2003 General Meeting.
St Barbara Mines Limited 2003 Annual Report
19
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
L I K E LY D E V E L O P M E N T S
In the opinion of the Directors, likely developments in the
operations of the consolidated entity and the expected results
of those operations, known at the dates of this report, have
been covered in the Review of Operations and Events
Subsequent to 30 June 2003 in this report. Likely
developments which may prejudice the Company by
disclosure have not been disclosed.
E V E N T S S U B S E Q U E N T T O 3 0 J U N E 2 0 0 3
Since 30 June 2003 the following has occurred:
•
•
•
•
•
•
On 3 July 2003, the Company sold all of its
44,400,000 shares held in Dioro Exploration NL,
receiving net proceeds of $4,984,000 resulting in a
profit on sale of $93,000. As a result of the sale of the
shares, the proceeds were used to reduce the debt
facility with RCF by $5 million.
On 7 July 2003, the Company issued 15,910,922 fully
paid ordinary shares at $0.0374 per share to RCF in
satisfaction of interest on the debt facility.
On 7 July 2003, the Company issued the following
options with an expiry date of 7 January 2007 to RCF
in satisfaction of the monthly facility fee:
•
•
•
•
5,834,004 options exercisable at $0.2125;
594,308 options exercisable at $0.2086;
2,918,376 options exercisable at $0.2124; and
17,430,243 options exercisable at $0.1138.
On 10 July 2003, the Company announced that the
convertible note and convertible loan held by Ocean
had been restructured effective 19 June 2003. Under
the new arrangement, the existing convertible note and
convertible loan are replaced with a convertible loan
with a face value of $7.2 million and a new conversion
price of $0.08 and repayable on 19 December 2005.
The financial effect of this transaction has been brought
to account at 30 June 2003.
On 10 July 2003, the Company announced that
Mr James McClements had resigned as alternate director
to Mr Hank Tuten due to other work commitments.
On 22 September 2003, the Company announced
that RCF had agreed to convert its remaining debt
($7.0 million) into equity at $0.08 per share, thereby
extinguishing all secured debt from the Company’s
balance sheet. The debt to equity swap by RCF,
including a modification fee of 4.5 million shares,
will result in the issue to RCF of 92 million shares at
$0.08 per share, taking its shareholding from 7.9% to
approximately 23% of an enlarged capital base. The
transaction is subject to shareholder approval at the
Annual General Meeting. The transaction is also subject
to RCF obtaining various approvals including the
Foreign Investment Review Board. In addition, the
Company will restructure the Board to consist of five
Board members; to include two nominees of RCF and a
new non-executive Chairman. Should this transaction
be approved by shareholders at the Annual General
•
•
Meeting, the consolidated entity’s current liabilities will
reduce by $7.0 million. Should the transaction not be
approved by shareholders the $7.0 million owing to
RCF will be repayable on 30 November 2003.
On 25 September 2003, the Company announced the
placement of up to 12 million fully paid ordinary
shares at $0.08 per share for working capital to raise
$960,000 before expenses.
On 30 September 2003, Taipan Resources NL
(“Taipan”) entered into an unsecured convertible note
with Claymore Capital Pty Ltd for $1.0 million. The
note is convertible into fully paid ordinary shares of
either the Company at $0.08 per share or of Taipan at
$0.065 per share. The note is repayable on or before
30 September 2004 and bears interest at 13.5%.
Other than the matters discussed above, there has not arisen
in the interval between the end of the financial year and the
date of this report any item, transaction or event of a
material and unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity,
in future financial years.
M E E T I N G S O F D I R E C T O R S
The meetings of the Company’s Board of Directors and each
Board committee held during the year ended 30 June 2003,
and the numbers of meetings attended by each Director
were:
Board
Audit
Remuneration
A
6
5
6
6
B
6
6
6
6
A
*
*
3
3
B
*
*
3
3
A
*
1
1
*
B
*
1
1
*
S.W. Miller
G.B. Speechly
K.A. Dundo
H.G. Tuten
A = Number of meetings attended
B = Number of meetings held during the time that the
Director held office or was a member of the committee
during the year
* = Not a member of the relevant committee
In addition there were 28 circular resolutions approved by
the Board during the year.
20
St Barbara Mines Limited 2003 Annual Report
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
D I R E C T O R S ’ I N T E R E S T S I N S H A R E S A N D O P T I O N S
Particulars of Directors’ interests and of persons connected with them (within the meaning of section 34b of the Corporations
Act 2001) in shares of the Company as at the date of this report are as follows:
Directors
S.W. Miller (1)
G.B. Speechly
K.A. Dundo
H.G. Tuten (2)
Connected Persons:
Strata Mining Corporation Limited (1)
RCF (2)
No. of Shares
Nil
20,000
100,000
Nil
32,200,000
34,057,085
(1) Mr Miller is a Director of Strata Mining Corporation Limited
(2) Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF
Particulars of Directors’ interests and of persons connected with them (within the meaning of section 34b of the Corporations
Act 2001) in options of the Company as at the date of this report are as follows:
Directors
S.W. Miller
G.B. Speechly
K.A. Dundo
H.G. Tuten (1)
Connected Persons
RCF (1)
Date of Grant
23 December 1999
23 December 1999
23 December 1999
30 November 2001
30 November 2001
Nil
Nil
12 February 2002
5 March 2002
2 April 2002
17 May 2002
17 May 2002
4 June 2002
4 June 2002
4 June 2002
15 July 2002
15 July 2002
15 July 2002
13 August 2002
13 August 2002
13 August 2002
6 September 2002
6 September 2002
6 September 2002
15 October 2002
15 October 2002
15 October 2002
20 February 2003
7 January 2003
7 January 2003
7 January 2003
7 January 2003
7 July 2003
7 July 2003
7 July 2003
7 July 2003
Shares under
option
2,500,000
2,500,000
2,500,000
10,000,000
17,500,000
500,000
Nil
Nil
157,938
373,893
449,638
470,589
36,118
499,597
50,894
88,680
483,482
49,252
241,854
499,597
50,894
249,917
499,597
50,894
249,917
483,482
49,252
241,854
1,000,000
1,482,677
151,040
741,686
3,177,890
5,834,004
594,308
2,918,376
17,430,243
38,607,563
Exercise Price
$0.25
$0.35
$0.45
$0.40
$0.40
Nil
Nil
$0.2125
$0.2125
$0.2125
$0.2125
$0.2086
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.1100
$0.2125
$0.2086
$0.2124
$0.1138
$0.2125
$0.2086
$0.2124
$0.1138
Expiry
Date
23 December 2004
23 December 2004
23 December 2004
31 December 2004
31 December 2004
Nil
Nil
7 February 2005
5 March 2005
2 April 2005
20 May 2005
20 May 2005
3 June 2005
3 June 2005
3 June 2005
15 July 2005
15 July 2005
15 July 2005
13 August 2005
13 August 2005
13 August 2005
6 September 2005
6 September 2005
6 September 2005
15 October 2005
15 October 2005
15 October 2005
31 December 2005
7 July 2006
7 July 2006
7 July 2006
7 July 2006
7 January 2007
7 January 2007
7 January 2007
7 January 2007
(1) Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF
St Barbara Mines Limited 2003 Annual Report
21
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
D I R E C T O R S ’ A N D E X E C U T I V E S ’ E M O L U M E N T S
Previously the Company has adopted a consultative approach
to setting remuneration levels. This process involved the
Board being regularly advised of industry remuneration
standards through consultation with external agents and
senior executives.
Currently, remuneration is based on industry standards and
set to attract qualified and experienced directors and senior
executives. Recommendations are made to the Board on
salary levels, packaging options, employee benefits and
conditions.
Non-executive Directors of St Barbara Mines Limited:
The Company formed a Remuneration Committee in
April 2002 to consider recommendations regarding the
overall remuneration structure, packaging strategies,
remuneration policy and developed a formal performance
based annual review system. This committee meets annually
to review directors’ fees, senior executive salary packages
and salary ranges for the organisation.
Details of the nature and amount of each element of the
emoluments of each director of St Barbara Mines Limited
and each of the five most highly remunerated executive
officers of the Company and the consolidated entity
receiving the highest emoluments during the year ended
30 June 2003 are set out on the following tables:
G.B. Speechly
K.A. Dundo (i)
H.G. Tuten
(i) Mr Dundo’s remuneration includes $50,785 received from Taipan.
-
Directors’ Fee
$
50,000
94,320
Superannuation
$
4,500
8,488
-
Total
$
54,500
102,808
-
Options Issued
$
-
-
-
Executive Directors of St Barbara Mines Limited:
S.W. Miller
Salary
$
400,000
Motor Vehicle
$
-
Superannuation
$
80,000
Other Benefits
$
70,069
Total
$
550,069
Options Issued
$
-
Other executives of St Barbara Mines Limited and group:
R.T. Calnan
C.W. Davis
P.T. McIntyre
P.J. Richardson
A.D. Rule
Salary
$
169,000
145,391
154,596
149,375
190,000
Motor Vehicle
$
5,883
5,194
20,504
-
-
Superannuation Retirement Benefits
$
62,600
21,809
33,006
14,938
28,500
$
-
-
165,506
-
-
Total
$
237,483
172,394
373,612
164,313
218,500
Options Issued
$
-
-
-
14,824 (i)
27,796 (i)
(1)
The fair value of options issued to executives during the year is estimated at $0.037 per option. These options were
issued on 17 January 2003 with an expiry date of 15 January 2008 and an exercise price of $0.35 per share. This value
has been calculated using a Black-Scholes option pricing model after considering the following factors, amongst others,
the share price on grant date of $0.12, expiry date of 17 January 2008, exercise price of $0.35, the term of the option,
a risk free interest rate of 5% and using share price volatility of 100%. This value has not been included in the Statement
of Financial Performance.
22
St Barbara Mines Limited 2003 Annual Report
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
O P T I O N S
Options over ordinary shares of the Company are as follows:
Listed share options – see Note 20(b)
Unlisted share options – see Note 20(c)
As at 30 June 2003
44,329,772
44,905,632
As at the date
of this report
44,329,772
71,682,563 (1)
(1)
The following unlisted share options have been issued since the end of the financial year end as follows:
Recipient
Date of Options
Expiry Date
Exercise Price
RCF
RCF
RCF
RCF
7 July 2003
7 July 2003
7 July 2003
7 July 2003
7 January 2007
7 January 2007
7 January 2007
7 January 2007
$0.2125
$0.2086
$0.2124
$0.1138
Number of
Options
5,834,004
594,308
2,918,376
17,430,243
26,776,931
No options were exercised during or since the end of the financial year.
No options over unissued ordinary shares of the Company were granted during or since the end of the financial year to any of
the Directors of the Company and the consolidated entity.
Options over unissued ordinary shares of the Company granted during or since the end of the financial year to the five most
highly remunerated executive officers of the Company and the consolidated entity as part of their remuneration were as follows:
Date Options Granted
Expiry Date
Exercise Price
A.D. Rule
P.J. Richardson
17 January 2003
17 January 2003
17 January 2008
17 January 2008
$0.35
$0.35
Number of
Options
750,000
400,000
O F F I C E R S ’ I N D E M N I T I E S A N D I N S U R A N C E
The Company has agreed to indemnify the following current
directors and officers of the Company, Mr S. Miller,
Mr B. Speechly, Mr K. Dundo, Mr H. Tuten and Mr A. Rule,
against all liabilities to another person and the Company that
may arise from their position as directors and officers of the
Company and its controlled entities, except where the
liability arises out of conduct involving a wilful breach
of duty. The agreement stipulates that the Company will
meet the full amount of such liabilities including costs
and expenses.
The Company has paid or agreed to pay a premium in
respect of a contract insuring directors and officers of the
Company. That contract of insurance prohibits the Company
disclosing the nature of the liability insured against and the
amount of the premium paid therefore.
E N V I R O N M E N TA L R E G U L AT I O N S A N D
P E R F O R M A N C E
The Company remains committed to the concept of
sustainable development which requires balancing the
need for economic growth with good stewardship and the
protection of human health and the environment.
Mine site rehabilitation objectives are directed towards
ensuring that the physical structures that remain after mine
closure do not impose a long term hazard to public safety
or the environment and that the mined area achieves the
nominated post mining land use. During the past year
continued significant progress was made toward fulfilling
these rehabilitation objectives. Work was undertaken across
a range of sites which included rehabilitation earthworks
programmes, making safe historic mine workings, waste
dump slope profiling, capping with topsoil/oxide material
and deep ripping on contour. This programme resulted in
the rehabilitation of 162 hectares of mine disturbed land
during the twelve months.
Drill site rehabilitation standards were also reviewed and are
included in all new drilling contracts. Rehabilitation of drill
holes resulted in a total of 2,554 holes capped.
In addition to statutory monitoring requirements, regular
self-audits were conducted throughout the year to monitor
progress and to identify areas which required further
management focus. One reportable incident occurred during
the year, which resulted from the discharge of approximately
250 kilolitres of near potable quality mine water into an
adjoining natural drainage system. No impact on the
vegetation in the area of the discharge was expected, and
no impact has been observed. In addition, three minor
hydrocarbon spillage incidents were reported involving small
volumes of diesel fuel or waste oil. Each of these incidents
has been remediated by site personnel responsible for the
areas concerned.
St Barbara Mines Limited 2003 Annual Report
23
R O U N D I N G O F A M O U N T S
The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 and in accordance with that
Class Order, amounts in the Financial Report and Directors'
Report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
AU D I T O R
PricewaterhouseCoopers continues in office in accordance
with section 327 of the Corporations Act 2001.
Signed in accordance with a resolution of the Board
of Directors.
STEPHEN W. MILLER
Executive Chairman
Dated at Perth this 30th day of September 2003
D I R E C T O R S ’ R E P O RT
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
E N V I R O N M E N TA L R E G U L AT I O N S A N D
P E R F O R M A N C E c o n t i n u e d
Environmental management initiatives commenced or
completed during the year included:
•
•
•
•
on going implementation of a Site Waste Management
Plan with the initial focus on waste grease disposal.
One hundred and sixty drums were collected,
redrummed and sent to the DEP Approved disposal
facility at Port Hedland;
development of environmental awareness, training
requirements and implementation of self audits;
continuing progressive rehabilitation at new mines
with the target of completing all rehabilitation works
within three months of a mine closure; and
seeding in excess of 190 hectares of mine disturbed
land using local Meekatharra community groups.
O C C U PAT I O N A L , H E A LT H , S A F E T Y A N D
W E L F A R E
This year Meekatharra Gold Operations reported two Lost
Time Injuries for the twelve months to 30 June 2003,
compared to eleven Lost Time Injuries sustained during the
previous year. This significant improvement resulted in the
reduction of the Lost Time Injury Frequency Rate from
16.6 (rolling twelve month average) down to 8.1,
while underground mining was still being conducted
and a further reduction to 4.7, by the end of June 2003.
Occupational Health and Safety training continued to focus
on Risk Assessment, Hazard Identification and Emergency
Response Planning.
Training undertaken included:
•
•
•
•
•
•
•
Accident and Incident Investigation
Hazard Identification
Fitness for Work Awareness
Site Wide Emergency Evacuation
Emergency Response Team Self Contained Breathing
Apparatus
Emergency Response – First Responder
OH & S for Supervisors
Further work continued to develop the Site Safety
Management Plan and Site Hazard Register.
The workforce commitment to safety performance will focus
on the continuous review and improvement of safety systems
and awareness which will target the maintenance of the
LTIFR at or below the industry average.
24
St Barbara Mines Limited 2003 Annual Report
S TAT E M E N T S O F F I N A N C I A L P E R F O R M A N C E
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Notes
3
3
1(d)
1(d)
1(d)
4
4
4
4
5
21
Revenue from sale of gold
Other revenues from outside operating activities
Total revenue from ordinary activities
Changes in inventories of finished goods
Raw materials and consumables used
Cost of investments sold
Cost of property, plant and equipment sold
Cost of tenements sold
Contract mining, cartage, milling, maintenance,
labour and consultants
Tenement rent and rates
Royalty
Employee expenses
Exploration drilling and assay expenditure
Exploration consultant expenditure
Cumulative effect of exploration write off
prior to 1 July 2002
Shares issued for native title
AIM admission costs
Provision for diminution in investment in
controlled entities
Other expenses from ordinary activities
Earnings/(loss) before interest, tax,
depreciation and amortisation (EBITDA)
Amortisation of mining development expenses
Write down of mining development expenses
Depreciation and amortisation expenses
Earnings/(loss) before interest and tax (EBIT)
Borrowing costs
(Loss) from ordinary activities before income tax
Income tax expense
Net (loss) after income tax
Net (loss) attributable to outside equity interests
Net (loss) attributable to members of the Company
Total changes in equity attributable to members
of the Company other than those resulting
from transactions with owners as owners
Consolidated
Company
30 June
2003
$’000
56,111
1,493
57,604
(999)
(12,263)
-
(184)
-
(22,195)
(1,110)
(1,728)
(8,626)
(1,803)
(1,447)
(4,422)
(616)
-
-
(8,391)
(6,180)
(15,641)
-
(2,750)
(24,571)
(5,449)
(30,020)
(2,965)
(32,985)
(252)
(32,733)
30 June
2002
$’000
54,516
31,977
86,493
(278)
(13,425)
(17,506)
(1,964)
(186)
(19,744)
(1,224)
(1,386)
(10,788)
-
-
-
-
(1,214)
-
(2,666)
16,112
(22,426)
(5,750)
(2,044)
(14,108)
(3,941)
(18,049)
-
(18,049)
(155)
(17,894)
30 June
2003
$’000
56,111
2,411
58,522
(999)
(12,263)
-
(184)
-
(22,195)
(1,110)
(1,728)
(8,576)
(1,319)
(477)
(750)
-
-
(4,081)
(6,385)
(1,545)
(15,641)
-
(2,706)
(19,892)
(5,078)
(24,970)
(2,965)
(27,935)
-
(27,935)
30 June
2002
$’000
54,516
22,780
77,296
(278)
(13,425)
(11,960)
(1,964)
(186)
(19,744)
(1,224)
(1,386)
(10,650)
-
-
-
-
(1,214)
-
(2,380)
12,885
(22,426)
(5,750)
(1,884)
(17,175)
(3,272)
(20,447)
-
(20,447)
-
(20,447)
(32,733)
(17,894)
(27,935)
(20,447)
Basic and diluted (loss) per share (cents per share)
35
(8.00)
(7.83)
The above Statements of Financial Performance should be read in conjunction with the accompanying notes.
St Barbara Mines Limited 2003 Annual Report
25
S TAT E M E N T S O F F I N A N C I A L P O S I T I O N
A S A T 3 0 J U N E 2 0 0 3
ASSETS
Current assets
Cash assets
Restricted cash
Receivables
Other financial assets
Inventories
Assets held for resale
Other
Non-current assets
Restricted cash
Receivables
Other financial assets
Property, plant and equipment
Other
Deferred tax assets
Mining properties
Total Assets
LIABILITIES
Current liabilities
Payables
Interest bearing liabilities
Provisions
Non-current liabilities
Payables
Interest bearing liabilities
Provisions
Total Liabilities
Net Assets
Equity
Contributed equity
Option reserve
Accumulated losses
Parent entity interest
Outside equity interest
Total Equity
Notes
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
6
7
8
15
9
10
11
7
8
15
12
11
13
14
16
17
18
16
17
18
597
280
3,688
4,891
4,264
4,194
1,250
9,032
-
3,287
-
5,151
5,409
1,505
595
280
3,688
4,891
4,264
4,094
1,219
9,031
-
2,939
-
5,151
5,229
1,447
19,164
24,384
19,031
23,797
3,293
-
-
8,380
83
-
46,372
58,128
77,292
10,561
15,151
898
26,610
-
8,833
3,876
12,709
39,319
1,837
-
4,526
9,906
232
2,965
58,188
77,654
102,038
15,905
12,926
1,037
29,868
-
9,393
2,669
12,062
41,930
3,293
18,240
16,635
7,253
83
-
19,224
64,728
83,759
10,555
15,151
898
26,604
11,484
8,833
3,876
24,193
50,797
1,837
6,229
25,239
8,739
232
2,965
27,370
72,611
96,408
15,892
5,857
1,037
22,786
11,513
9,393
2,669
23,575
46,361
37,973
60,108
32,962
50,047
19
20(a)
21
22
127,534
1,959
(91,520)
37,973
-
37,973
118,213
430
(58,787)
59,856
252
60,108
127,534
1,959
(96,531)
32,962
-
32,962
118,213
430
(68,596)
50,047
-
50,047
The above Statements of Financial Position should be read in conjunction with the accompanying notes.
26
St Barbara Mines Limited 2003 Annual Report
S TAT E M E N T S O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Cash Flows from Operating Activities
Cash receipts in the course of operations
(inclusive of goods and services tax)
Payments to suppliers and employees
(inclusive of goods and services tax)
Other cash receipts
Interest received
Borrowing costs paid and gold lease fees
Finance charges - finance leases
- hire purchase agreements
Net cash flows (used in) operating
activities
Cash Flows from Investing Activities
Payments in respect of exploration,
evaluation and development
Payments for property, plant and equipment
Cash received from investments sold
Payments for investment in listed securities
Net funds from controlled entities
Cash received from sale of property,
plant and equipment
Net cash flows provided by /
(used in) investing activities
Cash Flows from Financing Activities
Principal repayments under secured loans
Repayment of convertible loan
Restricted cash
Share buy back
Proceeds from borrowings
Net proceeds from issue of securities
Principal repayments - finance leases
- hire purchase agreements
Notes
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
63,043
59,968
62,802
59,968
(63,256)
(81,280)
(63,268)
(80,221)
-
292
(68)
(340)
(225)
405
124
(1,842)
(270)
(126)
-
292
-
(340)
(225)
37
123
(1,842)
(270)
(126)
33
(554)
(23,021)
(739)
(22,331)
(13,050)
(205)
-
(365)
-
(10,558)
(1,749)
26,736
(4,526)
-
(9,984)
(205)
-
(365)
(10,254)
(7,076)
(1,749)
17,669
(4,526)
4,894
982
4,300
982
4,300
(12,638)
14,203
(19,826)
13,512
-
(7,372)
(1,736)
-
8,493
7,635
(1,204)
(1,059)
(12,700)
-
-
(1,066)
9,653
19,088
(1,078)
(517)
-
-
(1,736)
-
8,493
7,635
(1,204)
(1,059)
(12,700)
-
-
(1,066)
9,653
19,088
(1,078)
(517)
Net cash flows provided by financing activities
4,757
13,380
12,129
13,380
Net increase / (decrease) in cash
Cash at the beginning of the financial year
Cash at the end of the financial year
Non-cash financing and investing activities
Financing facilities
6
33
34
(8,435)
9,032
597
4,562
4,470
9,032
(8,436)
9,031
595
4,561
4,470
9,031
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
St Barbara Mines Limited 2003 Annual Report
27
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
1 . S U M M A RY O F S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
This general purpose financial report has been prepared in
accordance with Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards
Board, Urgent Issues Group Consensus Views and the
Corporations Act 2001.
It is prepared in accordance with the historical cost
convention, except for certain assets which, as noted, are not
at valuation. Unless otherwise stated, the accounting policies
adopted are consistent with those of the previous year.
These consolidated financial statements have been prepared
on a going concern basis. At 30 June 2003, the consolidated
entity’s current liabilities exceeded its current assets by
$7.4 million after recording a loss for the twelve months of
$32.7 million.
Note 36 to these financial statements sets out in more detail
the financing arrangements that have been put in place since
30 June 2003. The Company will be seeking approval from
shareholders at the Annual General Meeting to be held in late
November 2003 for the following:
•
•
conversion of the remaining RCF debt of $7 million
together with the extension fee into 92,000,000 fully
paid ordinary shares of the Company at $0.08 per
share; and
conversion of the Ocean $7.2 million convertible loan
into 90,000,000 fully paid ordinary shares at $0.08 per
share as set out in Note 17(4).
Should either or both approvals not be forthcoming
from shareholders at the Annual General Meeting, these
amounts will become due and payable.
In the short term, given the current operations, the
consolidated entity’s ability to continue operating and its
ability to generate a positive cashflow is dependent on a
significant increase in production through development of
Paddys Flat and Paulsens which will require additional debt
and equity funding and the sale of assets held for resale.
The Directors are of the view that shareholders will approve
the RCF debt for equity conversion at the Annual General
Meeting and, based on past experience, that the consolidated
entity will be able to secure such additional debt and equity
funding as is necessary; and/or sell such assets as are
necessary to provide the required funding to enable the
Company and its operations to continue as a going concern.
However, should this not occur there is significant
uncertainty whether the consolidated entity will be able to
continue as a going concern and realise its assets at the
amounts stated in the financial statements. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset and liability
amounts that might be necessary should the entity not
continue to be a going concern.
The following accounting policies have been used by the
consolidated entity for the periods presented:
(a) Principles of Consolidation
The consolidated financial statements incorporate the
assets and liabilities of all entities controlled by
the Company as at 30 June 2003 and the results of all
controlled entities together are referred to in this
financial report as the consolidated entity.
The effects of all transactions between entities in the
consolidated entity are eliminated in full. Outside
equity interests in the results and equity of controlled
entities are shown separately in the consolidated
statement of financial performance and statement
of financial position respectively.
Where control of an entity is obtained during a
financial year, its results are included in the consolidated
statement of financial performance from the date on
which control commences. Where control of an entity
ceases during a financial year its results are included for
that part of the year during which control existed.
(b) Acquisition of Assets
The purchase method of accounting is used for all
acquisitions of assets regardless of whether equity
instruments or other assets are acquired. Cost is
measured as the fair value of the assets given up, shares
issued or liabilities undertaken at the date of acquisition
plus incidental costs directly attributable to the
acquisition. Where equity instruments are issued in an
acquisition the value of the instruments is their market
price as at the acquisition date, unless the notional
price at which they could be placed in the market is a
better indicator of fair value. Transaction costs arising
on the issue of equity instruments are recognised
directly in equity.
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are
discounted to their present value as at the date of the
acquisition. The discount rate used is the incremental
borrowing rate, being the rate at which similar
borrowing could be obtained from an independent
financier under comparable terms and conditions.
(c) Recoverable Amount of Non-current Assets
The recoverable amount of an asset is the net amount
expected to be recovered through the cash inflows
and outflows arising from its continued use and
subsequent disposal.
Where the carrying amount of a non-current asset is
greater than its recoverable amount, the asset is written
down to its recoverable amount. Where net cash
inflows are derived from a group of assets working
together, recoverable amount is determined on the
basis of the relevant group of assets. The decrement in
the carrying amount is recognised as an expense in net
profit or loss in the reporting period in which the
recoverable amount write-down occurs. The expected
net cash flows included in determining the recoverable
amounts of non current assets are not discounted.
(d) Change in accounting policy for treatment of
Mining Properties
With effect from 1 July 2002 all exploration and
evaluation expenditure incurred by or on behalf of the
Company up to the decision by the Board to proceed
with development of a mining property, will be
28
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
expensed as incurred. Acquired exploration assets are not
written down below acquisition cost until such time as
the acquisition cost is not expected to be recovered.
Mining properties now consists only of acquired
exploration assets together with related mine
development costs and capital assets. The cost of
mineral properties includes the cash consideration
and/or the fair value of shares issued
on the date the property is acquired.
The recoverability of amounts shown for mining
properties is dependent upon the existence of
economically recoverable reserves; the acquisition and
maintenance of appropriate permits, licenses and
rights; the ability of the Company to obtain financing
to complete the development of the properties where
necessary and upon future profitable production; or,
alternatively, upon the Company’s ability to recover its
spent costs through a disposition of its interests.
Mine development costs relating to mineral properties
are deferred until the properties are brought into
commercial production, at which time they are
amortised over the estimated useful life of the related
property or on a unit-of-production basis over proven
and probable reserves. Pre-production credits, including
the value of marketable metals extracted during mine
development, are credited against costs incurred.
The above policy was adopted with effect from
1 July 2002 to align the accounting policies of the
Company with those of entities involved in the
proposed Defiance Mining Corporation business
combination with Geomaque Explorations Limited
(a Canadian listed company).
The following adjustment was made on the statement of financial performance as a result of this change in accounting policy:
Cumulative effect of write off of exploration expenditure
incurred prior to 1 July 2002
Current period exploration expenditure written off
Exploration drilling and assay expenditure
-
Exploration consultant expenditure
-
Other exploration expenditure items
-
Consolidated
$’000
Company
$’000
4,422
1,803
1,447
2,225
9,897
750
1,319
477
-
2,546
The previous accounting policy was to carry forward exploration and evaluation expenditure to the extent that such activities in
the area of interest had not yet reached a stage which permitted a reasonable assessment of the existence or otherwise of
recoverable mineral resources.
The restatements of consolidated and parent entity accumulated losses and non current assets exploration, evaluation and
development set out below show the information that would have been disclosed had the new accounting policy always applied.
Notes
Consolidated
Company
30 June
2003
$’000
(Restated)
30 June
2002
$’000
(Restated)
30 June
2003
$’000
(Restated)
30 June
2002
$’000
(Restated)
Restatement of consolidated statement
of financial performance (extract)
Loss from ordinary activities before
income tax expense
Change in accounting policy
Income tax expense
Net loss after tax
Restatement of mining properties
Previously reported carrying amount
Adjustment for change in accounting policy
Restated carrying amount
Restatement of Accumulated Losses
Previously reported carrying amount
Adjustment for change in accounting policy
Restated carrying amount
St Barbara Mines Limited 2003 Annual Report
(20,122)
(5,476)
(2,965)
(28,563)
(18,049)
(4,422)
-
(22,471)
(22,424)
(1,796)
(2,965)
(27,185)
(20,447)
(750)
-
(21,197)
46,372
-
46,372
58,188
(4,422)
53,766
19,224
-
19,224
27,370
(750)
26,620
(91,520)
-
(91,520)
(58,787)
(4,422)
(63,209)
(92,450)
-
(92,450)
(68,596)
(750)
(69,346)
29
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(e) Depreciation and Amortisation of Property, Plant
(j) Maintenance and Repairs
and Equipment
The Directors have considered the economic life of
mine buildings, machinery and equipment with due
regard to both the physical life limitations, assessments
of economically recoverable reserves of the mine
property at which the items are located, and to possible
future variations in those assessments. The estimated
remaining useful life for all such assets is reviewed
regularly with annual reassessments being made for
major items.
The majority of mine buildings, plant and equipment
(other than freehold land) is written off over its
expected economic life.
The total net carrying values of mine buildings,
machinery and equipment at the mine property are
reviewed regularly and, to the extent by which these
values exceed their recoverable amounts, that excess is
fully provided against in the financial year in which this
is determined.
Profits and losses on disposal of property, plant and
equipment are taken into account in determining the
result for the year.
(f) Depreciation and Amortisation of Assets Held
for Resale
Plant and equipment which is currently surplus to
requirements and not used is not depreciated. When
those assets are used, they are depreciated on an hourly
basis. The total carrying value of these assets is not in
excess of estimated market value.
(g) Accounting for Income Tax
Income tax has been brought to account using the
liability method of tax effect accounting. Future
income tax benefits relating to tax losses are only
recognised and brought to account to the extent
that their realisation is virtually certain.
Income tax on cumulative timing differences is set
aside to the deferred income tax or the future income
tax benefit accounts at the rates which are expected
to apply when those timing differences reverse.
(h) Investments
Investments in listed and unlisted securities, other than
controlled entities, are stated at cost unless, in the
opinion of the Directors, a provision for diminution in
value is considered necessary. Income from investments
is brought to account by the consolidated entity when
dividends are received. Controlled entities are
accounted for as set out in Note 1(a).
(i) Inventories
Inventories are valued at the lower of cost and net
realisable value. The cost of ore stockpiles and gold
stocks includes direct material, direct labour,
transportation costs, and variable and fixed overhead
costs relating to mining activities.
Costs have been assigned to inventory quantities on
hand at balance date using the weighted average basis.
Plant of the consolidated entity is required to be
overhauled on a regular basis. This is managed
as part of an ongoing major cyclical maintenance
programme. The costs of this maintenance are charged
as expenses as incurred, except where they relate to the
replacement of a component of an asset, in which case
the costs are capitalised and depreciated in accordance
with note 1 (e). Other routine operating maintenance,
repair and minor renewal costs are also charged as
expenses as incurred.
(k) Employee Benefits
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries and annual leave
are recognised, and measured as the amount
unpaid at the reporting date at the amounts
expected to be paid when the liabilities are settled.
Liabilities for non-accumulating sick leave are
recognised when the leave is taken and measured
at the rates paid or payable.
(ii) Long service leave
The liability for long service leave expected to be
settled within twelve months of the reporting date
is recognised in the provisions for employee
entitlements and is measured in accordance with
(i) above. The liability for long service leave
expected to be settled more than twelve months
from the reporting date is recognised in the
provisions for employee entitlements and measured
as the present value of expected future payments to
be made in respect of services provided by employees
up to the reporting date. Consideration is given to the
length of service and the probability of achievement
of long service leave anniversary dates.
(iii) Ownership-based remuneration schemes
Ownership-based remuneration is provided
to employees via the Employee Option Plan.
Information relating to this scheme is set out
in Note 30(e).
No accounting entries are made in relation to the
Employee Option Plan until options are exercised,
at which time the amounts receivable from
employees are recognised in the statement of
financial position as share capital. The amounts
disclosed for remuneration of Directors and
executives in Notes 24 and 26 do not include the
assessed fair values of options at the date they
were granted.
(l) Leased Assets
Assets acquired under finance leases are included as
property, plant and equipment in the statement of
financial position. Finance leases effectively transfer
from the lessor to the lessee substantially all the risks
and benefits incidental to ownership of the leased
property. Where assets are acquired by means of finance
leases, the present value of the minimum lease payments
is recognised as an asset at the beginning of the lease
30
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
term and amortised on a straight line basis over the
expected useful life of the leased asset. A corresponding
liability is also established and each lease payment is
allocated between the liability and finance charge.
Other leases under which all the risks and benefits of
ownership are effectively retained by the lessor are
classified as operating leases. Operating lease payments
are charged to expense over the year of expected benefit.
(r) Rehabilitation and Restoration Costs
Provision is made on a straight line basis for the
consolidated entity’s estimated liability under specific
legislative requirements and the conditions of its
mining leases for future costs expected to be incurred
in restoring areas of interest. The estimated liability is
based on the restoration work required, using existing
technology, as a result of activities to date.
(m) Receivables
(s) Borrowing Costs
A provision is raised for any doubtful debts based on
a review of all outstanding amounts at year end. Bad
debts are written off during the year in which they
are identified.
(n) Revenue
Sales revenue represents revenue earned from the
sale of gold and is recognised when title passes at
the delivery point.
Revenue on sale of investments and tenements is
recognised at disposal.
Interest revenue is recognised when it accrues taking
into account interest rates applicable to financial assets.
Borrowing costs are recognised as expenses in the year in
which they are incurred. Borrowing costs include
interest on bank overdrafts, short-term and long-term
borrowings, finance lease charges, the fair value of equity
securities issued in satisfaction of interest and facility fees
and amortisation of establishment costs and facility fees
in connection with the arrangement of borrowings.
(t)
Interest Bearing Liabilities
Loans are carried at their principal amounts which
represent the present value of future cash flows
associated with servicing the debt. Interest is accrued
over the year it becomes due and is recorded as part
of other creditors.
(o) Cash Flows
(u) Rounding of Amounts
For the purpose of the statements of cash flows, cash
includes cash on hand, deposits held at call which are
readily convertible to cash on hand and which are used
in the cash management function on a day-to-day basis,
net of outstanding bank overdrafts.
(p) Foreign Currency
Transactions denominated in a foreign currency are
converted at the exchange rate at the date of the
transaction. Foreign currency receivables and payables
at balance date are translated at exchange rates at
balance date. Exchange gains and losses are brought
to account in determining the statement of financial
performance for the year.
Exchange gains and losses and hedging costs arising
on forward foreign exchange contracts entered into as
hedges of specific commitments are deferred on the
statement of financial position and included in the
determination of the amounts at which the transactions
are brought to account. All exchange gains and losses
relating to other hedge transactions are brought to
account in the statement of financial performance in the
same year as the exchange differences on the items
covered by the hedge transactions.
Gains and losses on foreign currency transactions that
are not accounted for as specific hedges, if any, are
brought to account as they arise and disclosed as
speculative gains or losses.
The Company is of a kind referred to in Class Order
98/0100, issued by the Australian Securities and
Investments Commission, relating to the "rounding off"
of amounts in the financial report. Amounts in the
report have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
(v) Earnings per Share
(i)
Basic earnings per share
Basic earnings per share is determined by dividing
net profit after income tax attributable to members
of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding
during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used
in the determination of basic earnings per share to
take into account the after income tax effect of
interest and other financing costs associated with
dilutive potential ordinary shares and the
weighted average number of shares assumed to
have been issued for no consideration in relation
to dilutive potential ordinary shares.
(q) Trade and Other Creditors
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to
the end of the financial year and which are unpaid.
The amounts are unsecured and are usually paid
within sixty days of recognition.
2 .
S E G M E N T I N F O R M AT I O N
The consolidated entity operates predominantly in the gold
mining industry in Australia.
The consolidated entity’s head office is in Australia.
St Barbara Mines Limited 2003 Annual Report
31
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 . R E V E N U E
Revenue from operating activities
Revenue from sale of gold
Revenue from non-operating activities
Proceeds on sale of investments
Proceeds on sale of tenements
Proceeds on sale of property, plant and equipment
Interest received
Other
Total revenue from ordinary activities
( L O S S ) F R O M O R D I N A RY A C T I V I T I E S
4 .
(Loss) from ordinary activities before
income tax expense includes the following
specific net gains and expenses:
Net Gains
Net gain on disposal of:
- Investments
- Property, plant and equipment
- Tenements
Expenses
Cost of gold sales
Amortisation of mining expenses
Write down of mining development expenses
Write-down of exploration tenements
Depreciation:
- Buildings
- Plant and equipment
Borrowing cost expensed:
- Interest paid
- Convertible Note borrowing cost
- Finance charges relating to:
- finance leases
- hire purchase
Rental of premises
Royalties
Provision for:
- Employee entitlements
- Rehabilitation
- Inventories
Cost/adjustments associated with
surplus office space
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
56,111
54,516
56,111
54,516
17
35
982
292
167
57,604
26,727
210
4,300
124
616
86,493
-
-
982
1,429
-
58,522
17,669
10
4,300
353
448
77,296
17
798
-
60,764
15,641
-
-
178
2,572
2,750
3,547
1,337
340
225
5,449
418
1,728
832
598
96
9,221
2,336
24
59,839
22,426
5,750
3,381
177
1,867
2,044
3,545
-
270
126
3,941
303
1,386
772
595
22
-
798
-
60,764
15,641
-
-
178
2,528
2,706
3,176
1,337
340
225
5,078
418
1,728
832
598
96
5,709
2,336
(176)
59,839
22,426
5,750
3,381
177
1,707
1,884
2,876
-
270
126
3,272
261
1,386
772
595
22
(13)
(283)
(13)
(283)
32
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
I N C O M E TA X
5 .
(a) Tax Expense
The amount of income tax expense for the
financial year differs from the amount calculated
on the loss. The differences are reconciled as follows:
Loss from ordinary activities before income tax expense
(30,020)
(18,049)
(24,970)
(20,447)
Income tax calculated at 30% (2002 - 30%)
9,006
5,415
7,491
6,134
Tax effect of permanent differences:
- Provision for diminution in investments
- Legal and other capital expenditure
- Sundry items
Income tax adjusted for permanent differences
Net future income tax benefit not brought to account
Future income tax benefits previously recognised,
now written off
Income tax (expense)
(b) Unbooked future income tax benefit
Future income tax benefit attributable to operating losses
Less: offset to provision for deferred income tax
Future income tax benefit attributable to timing
differences not brought to account
Future income tax benefit not brought to account
These benefits will only be obtained if:
-
(132)
(20)
(152)
8,854
(8,854)
(2,965)
(2,965)
26,401
(4,248)
22,153
1,615
23,768
-
(370)
(2)
(372)
5,043
(5,043)
-
-
16,595
(8,592)
8,003
1,496
9,499
(1,224)
(127)
(20)
(1,371)
6,120
(6,120)
(2,965)
(2,965)
21,617
(3,870)
17,747
1,615
16,132
-
(351)
(2)
(353)
5,781
(5,781)
-
-
15,775
(8,592)
7,183
1,496
8,679
(i)
the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the loss to be realised; or
(ii) the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses.
(c) Tax consolidation legislation
The Company and its wholly-owned Australian subsidiaries have not yet decided to implement the tax consolidated legislation.
The decision will be made prior to 30 June 2004. Accordingly the financial effect of the implementation of the legislation has
not been recognised in the financial statements for the year ended 30 June 2003.
6 . C A S H A S S E T S
Current
Current cash on hand
Cash on call
1
596
597
1
9,031
9,032
1
594
595
1
9,030
9,031
St Barbara Mines Limited 2003 Annual Report
33
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
7 . R E S T R I C T E D C A S H
Current
Term deposit (i)
Non-Current
Term deposit (i)
Term deposit (ii)
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
280
-
280
-
-
3,293
3,293
280
1,557
1,837
-
3,293
3,293
280
1,557
1,837
(i)
(ii)
Funds placed on security deposit for lease rental. The lease expires on 31 December 2003.
Funds placed on security deposit with Macquarie Bank Limited as security for performance bonds issued by Macquarie
Bank Limited to Department of Minerals and Petroleum.
8 . R E C E I VA B L E S
Current
Trade debtors
Other debtors
Non-Current
Non-trade receivables from controlled entities
Less: provision for non-recovery
9 . I N V E N T O R I E S
Current
Consumables and spares - at cost
Less: provision for obsolescence
Ore stockpiles – at cost
Less: provision for diminution
Gold in circuit – at cost
1 0 . A S S E T S H E L D F O R R E S A L E
Current
Plant and equipment
- Under finance lease
- Accumulated amortisation
Plant and equipment owned
- At cost
- Accumulated depreciation
2,318
1,370
3,688
3,287
-
3,287
2,318
1,370
3,688
2,939
-
2,939
-
-
-
-
-
-
19,600
(1,360)
18,240
7,498
(1,269)
6,229
1,749
(334)
1,415
1,009
-
1,009
1,840
4,264
5,261
(1,261)
4,000
2,342
(2,148)
194
4,194
2,320
(238)
2,082
1,336
(826)
510
2,559
5,151
5,261
(365)
4,896
3,559
(3,046)
513
5,409
1,749
(334)
1,415
1,009
-
1,009
1,840
4,264
5,261
(1,261)
4,000
2,019
(1,925)
94
4,094
2,320
(238)
2,082
1,336
(826)
510
2,559
5,151
5,261
(365)
4,896
3,235
(2,902)
333
5,229
34
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
1 1 . O T H E R A S S E T S
Current
Prepayments
Unexpired hire purchase charges
Other
Non-Current
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
1,101
149
-
1,250
1,223
225
57
1,505
1,070
149
-
1,219
1,222
225
-
1,447
Unexpired hire purchase charges
83
232
83
232
1 2 . P R O P E RT Y, P L A N T A N D E Q U I P M E N T
Non-Current
Property, plant and equipment – at cost
Land
Buildings
Less: Accumulated depreciation
Plant and equipment
Less: Accumulated depreciation and
provision for diminution
Assets under construction
Written down value of plant and equipment
Reconciliations of the carrying amounts for each class
of property, plant and equipment are set out below:
Land
Carrying amount at the beginning of year
Disposals
Transfer to / (from) land
Carrying amount at the end of the year
Buildings
Carrying amount at the beginning of year
Disposals
Depreciation
Transfer to/(from) buildings
Carrying amount at the end of the year
Plant and equipment
Carrying amount at the beginning of year
Additions
Disposals
Depreciation
Under construction
Transfer to / (from) plant and equipment
Carrying amount at the end of the year
1,249
4,683
(4,300)
383
1,255
4,743
(4,204)
539
140
4,683
(4,300)
383
146
4,743
(4,204)
539
59,319
59,277
59,136
59,094
(52,571)
-
(51,177)
12
(52,406)
-
(51,052)
12
6,748
8,380
8,112
9,906
6,730
7,253
8,054
8,739
1,255
(6)
-
1,249
539
-
(178)
22
383
8,112
205
(47)
(1,674)
-
152
6,748
8,380
456
-
799
1,255
739
(6)
(177)
(17)
539
7,562
5,908
(1,958)
(1,867)
12
(1,545)
8,112
9,906
146
(6)
-
140
539
-
(178)
22
383
8,054
205
(47)
(1,634)
-
152
6,730
7,253
216
-
(70)
146
739
(6)
(177)
(17)
539
7,165
5,908
(2,828)
(1,707)
12
(496)
8,054
8,739
St Barbara Mines Limited 2003 Annual Report
35
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
1 3 . D E F E R R E D TA X A S S E T S
Future income tax benefit (relating to tax losses)
-
2,965
-
2,965
1 4 . M I N I N G P R O P E RT I E S
Non-Current
Opening balance
Direct expenditure
Acquired tenements
Tenement disposal
Provision for diminution
Amortisation charge for the year
Write down due to change in
accounting policy (see Note 1(d))
Closing balance
Mining properties by area of interest:
Areas of interest in the exploration / evaluation stage:
- at cost
- write down due to change in
accounting policy (see Note 1(d))
Areas of interest in the development and production phase
- at cost
- accumulated amortisation
- write down due to change in
accounting policy (see Note 1(d))
- provision for diminution
58,188
10,558
3,164
-
-
(15,641)
45,071
44,511
-
(186)
(3,381)
(27,827)
27,370
6,877
3,164
-
-
(15,641)
17,736
41,028
-
(186)
(3,381)
(27,827)
(9,897)
46,372
-
58,188
(2,546)
19,224
-
27,370
48,734
34,513
14,234
3,695
(7,352)
-
-
-
41,382
34,513
14,234
3,695
109,962
(59,075)
109,538
(42,512)
109,962
(59,075)
109,538
(42,512)
(2,546)
(43,351)
4,990
46,372
-
(43,351)
23,675
58,188
(2,546)
(43,351)
4,990
19,224
-
(43,351)
23,675
27,370
During the year the Company has reclassified $10.5 million of previously acquired exploration expenditure from areas of
interest in the development and production phase to areas of interest in the exploration phase.
36
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
1 5 . O T H E R F I N A N C I A L A S S E T S
Current
Investments in other entities:
- Listed securities (at cost) (1)
Non-Current
Investments in other entities:
- Listed securities (at cost) (1)
Investments in controlled entities:
- Unlisted securities (at cost)
- Listed securities (at cost) (2)
Provision for diminution
Listed securities in other entities – market value
The aggregate market value at balance date
of investments in other entities listed on a
prescribed stock exchange is:
Current:
- Listed securities (1)
Non-Current:
- Listed securities (1)
Listed securities in controlled entities – market value
The aggregate market value at balance date
of investments in controlled entities listed on a
prescribed stock exchange is:
Non current:
- Listed securities (2)
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
4,891
-
4,891
-
-
-
-
-
-
4,526
-
-
-
4,526
-
4,526
179
20,537
(4,081)
16,635
179
20,534
-
25,239
4,662
-
4,662
-
-
-
5,810
-
5,810
-
4,768
15,450
Due to losses carried forward, the amount of tax that would have been paid if these assets were to be sold at market value at
balance date is nil.
At balance date, securities were held in the following listed entities:
(1)
(2)
Dioro Exploration NL, a gold exploration company. The consolidated entity held 44,400,000 shares in Dioro Exploration
NL at 30 June 2003 (2002: 41,500,000). All of the 44,400,000 shares were sold on 3 July 2003 realising net proceeds
of $4,984,000.
Taipan Resources NL. The consolidated entity held 190,719,338 fully paid ordinary shares (2002:190,719,338) and
nil partly paid shares (2002: 196,142,209). All of the partly paid shares in Taipan were cancelled in February 2003.
St Barbara Mines Limited 2003 Annual Report
37
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
1 6 . PAYA B L E S
Current
Trade creditors and accruals
Non-Current
Loans from controlled entities - unsecured
1 7 . I N T E R E S T B E A R I N G L I A B I L I T I E S
Current
Lease liability – secured (1)
Hire purchase liability – secured
Convertible notes – secured (2)
Other loans - secured (3)
Non Current
Hire purchase liability – secured
Other loans – secured (3)
Convertible loan - unsecured (4)
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
10,561
15,905
10,555
15,892
-
-
11,484
11,513
2,018
1,133
-
12,000
15,151
1,528
-
7,305
8,833
3,072
1,285
7,069
1,500
12,926
2,893
6,500
-
9,393
2,018
1,133
-
12,000
15,151
1,528
-
7,305
8,833
3,072
1,285
-
1,500
5,857
2,893
6,500
-
9,393
(1)
(2)
(3)
Secured by a fixed charge over the item of plant and equipment purchased by the funds advanced. The lease liability
is payable monthly with the last payment due in November 2004, however, the entire liability is disclosed as a current
liability as it relates to one of the assets held for resale which is disclosed as a current asset with a carrying value of
$4 million at 30 June 2003.
These convertible notes were repaid in full on 30 November 2002.
On 8 January 2002, RCF and the Company, Silkwest Holdings Pty Ltd and St Barbara Pastoral Co. Pty Ltd entered into
a financing facility of $20 million ("RCF Facility"). Each of these companies entered into deeds of fixed and floating
charges with RCF to secure their obligations under the RCF Facility. In addition, the Company granted RCF a share
mortgage. Silkwest Holdings Pty Ltd and St Barbara Pastoral Co. Pty Ltd have entered into deeds of guarantee and
indemnity with RCF.
The security provided to RCF constitutes a first ranking security to RCF over any assets of the parent entity acquired by
utilising funds drawn down under the RCF Facility and a second ranking charge over the parent entity assets generally. This
second ranking security is subordinated to the existing Macquarie Bank Limited security under a deed of priority.
Interest of 10% per annum calculated daily pursuant to the RCF Facility is payable.
The RCF Facility provides that, at the election of the Company, the Company may satisfy a payment obligation for interest
by the issue of ordinary shares based on the weighted average sell price on ASX of the Ordinary Shares on the date the
payment obligation falls due, pursuant to an agreed formula. The Company elected to pay the interest payment obligation
due 30 June 2003 by the issue of Ordinary Shares. 15,910,922 ordinary shares were issued by the Company to RCF on
7 July 2003.
The RCF Facility provides RCF with an entitlement to be issued options. The Company must, at the end of June and
December of each period during the term, issue options to RCF calculated with reference to the funding portion which
remains outstanding on each day. The term of each option will be 42 months from the date of issue. The options issued
under the RCF Facility are not listed for trading on ASX.
The RCF Facility was modified and extended on 14 February 2003 such that the facility of $20 million reduced to $12 million.
$5 million was repaid to RCF on 9 July 2003 on receipt of the proceeds of the sale of the shares in Dioro Exploration NL.
Consequently the RCF Facility was reduced to $7 million as at that date.
Subject to shareholder approval at a General Meeting, the balance owing of $7 million will be converted at $0.08 per
share into fully paid ordinary shares in the Company. Note 36 – Events Subsequent to 30 June 2003 sets out details of the
agreement entered into between the Company and RCF on 22 September 2003.
38
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(4)
On 27 February 2003, the Company announced that it had entered into an agreement to raise $2,800,000 by way of
St Barbara issuing $2,800,000 of unsecured convertible notes to Ocean Resources Capital Holdings Limited (“Ocean”).
The funds were raised to fund the Paddys Flat acquisition and general working capital. The repayment date for the
convertible notes was 31 December 2007 and carried interest at 12%. The convertible note was convertible, at the option
of Ocean, into 21,538,462 fully paid ordinary shares in the Company at $0.13 per share. Shares to be issued pursuant to
this convertible note were approved by shareholders at the 6 June 2003 General Meeting.
On 27 June 2003, the Company announced that Ocean had exercised early, at a price of $0.13 per share, 15,000,000
shares pursuant to the convertible note. These shares were transferred to a UK institution by Ocean for consideration in
conjunction with the placement on 26 June 2003.
On 27 February 2003, the Company announced that it had entered into an agreement to raise $5,600,000 through an
unsecured convertible loan from Ocean. The funds were raised to fund the Paddys Flat acquisition and general working
capital. The repayment date for the convertible loan is 31 December 2007 and carries interest at 12%. The convertible
note is convertible, at the option of Ocean, into 43,076,923 fully paid ordinary shares in St Barbara at $0.13 per share.
Shares to be issued pursuant to this convertible loan were approved by shareholders at the 6 June 2003 General Meeting.
On 10 July 2003, the Company announced that the existing convertible note and convertible loan dated 27 February 2003
had been cancelled and a new convertible loan had been entered into with Ocean effective 19 June 2003. The face value of
the new unsecured convertible loan from Ocean is $7,200,000, the repayment date is 19 December 2005 and carries interest
at 12%. The convertible loan is convertible, at the option of Ocean, into 90,000,000 fully paid ordinary shares in the
Company at $0.08 per share. Any shares to be issued pursuant to this convertible loan will require approval by shareholders
at a General Meeting. On seven business days after shareholder approval at a General Meeting, $2, 800,000 of the total face
value shall automatically be converted into 35,000,000 fully paid ordinary shares in the Company at $0.08 per share. The
remaining face value owing will then reduce to $4,400,000. In the event the Company fails to obtain shareholder approval at
a General Meeting within twelve months of the Issue Date then Ocean may, on no less than sixty business days’ notice,
require repayment of the total face value. As at 30 June 2003, $1,370,000 of the convertible loan had not yet been received
(see Note 8) but was received in August 2003.
Assets pledged as security
The carrying amounts of assets pledged as security are:
First Mortgage
- Property, plant and equipment
- Other financial assets
Finance Lease
- Plant and equipment under finance lease
Floating Charge
- Cash and restricted cash
Receivables
Total assets pledged as security
1 8 . P R O V I S I O N S
Current
Employee benefits
Directors’ retirement benefits
Surplus leased space
Non-Current
Employee benefits
Rehabilitation
Surplus leased space
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
8,380
4,891
4,000
4,170
3,688
25,129
771
98
29
898
180
3,696
-
3,876
10,419
4,526
7,253
25,607
9,072
25,239
4,896
4,000
4,896
10,869
3,287
33,997
4,168
3,688
44,716
10,868
2,939
53,014
902
98
37
1,037
108
2,543
18
2,669
771
98
29
898
180
3,696
-
3,876
902
98
37
1,037
108
2,543
18
2,669
St Barbara Mines Limited 2003 Annual Report
39
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Movements in Provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Consolidated and Company
Current
Carrying amount at start of the year
Payments made
Transfer from non-current
Carrying amount at end of the year
Non-Current
Carrying amount at start of the year
Provision acquired
Additional provision made
Transfer to current
Carrying amount at end of the year
1 9 . C O N T R I B U T E D E Q U I T Y
Ordinary Share Capital
Issued and paid up
Directors’
retirement
benefits
$’000
98
-
-
98
Rehabilitation
$’ 000
2,543
598
555
-
3,696
Surplus
leased
space
$’000
37
(26)
18
29
Surplus
leased
space
$’ 000
18
-
-
(18)
-
Total
$’000
135
(26)
18
127
Total
$’ 000
2,561
598
555
(18)
3,696
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
127,534
118,213
127,534
118,213
These shares have no par value and are fully paid ordinary shares. Ordinary shares entitle the holder to participate in dividends
and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a
show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
40
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Movements in Ordinary Share Capital:
Date
Details
Notes
30 June 01
22 Jan 02
13 Feb 02
9 Apr 02
27 May 02
5 June 02
30 June 02
15 July 02
15 July 02
15 July 02
21 Aug 02
17 Oct 02
2 Dec 02
31 Dec 02
31 Dec 02
31 Dec 02
31 Jan 03
17 Feb 03
14 Mar 03
26 June 03
26 June 03
30 June 03
Opening balance
Share buy back
Share issue
Placement
Share issue expenses
Share issue
Placement
Share issue expenses
Placement
Share issue expenses
Balance
Share issue
Share issue
Share issue
Placement
Share issue expenses
Share issue
Share issue
Share issue
Share issue
Share issue
Share issue
Share issue expenses
Share issue
Correction
Share issue
Share issue
Closing Balance
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(7)
(9)
(9)
(8)
(7)
(7)
(7)
(7)
(10)
(11)
(12)
(13)
Number
of shares
216,506,706
(4,568,756)
2,352,403
10,909,090
-
7,058,824
60,000,000
-
27,500,000
-
319,758,267
1,210,052
196,562
1,846,628
34,333,332
-
280,140
1,562,000
1,067,616
4,261,200
437,006
15,000,000
-
5,600,000
500
15,000,000
15,000,000
415,553,303
Issue
price
$0.2125
$0.2200
-
$0.2125
$0.2000
-
$0.2100
-
$0.2037
$0.2263
$0.2143
$0.1650
-
$0.1973
$0.0960
$0.0843
$0.1021
$0.1136
$0.1100
-
$0.1100
-
-
$0.0667
$’000
98,191
(1,066)
500
2,400
(113)
1,500
12,000
(732)
5,775
(242)
118,213
246
44
396
5,665
(993)
55
150
90
435
50
1,650
(83)
616
-
-
1,000
127,534
(1)
During October and November 2001 the Company purchased and cancelled 4,568,756 fully paid shares on-market being
2% of ordinary share capital. The buy-back decision was made by the Company on the Board’s belief that the share prices
at the time did not reflect the underlying value of the Company’s share capital. The total cost of $1,066,000 was deducted
from ordinary share capital. There is no current on-market buy-back.
(2)
Share issue to RCF for RCF Facility establishment fee.
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
Placement to raise working capital.
Share issue to RCF for the balance of the RCF Facility establishment fee.
Placement to raise working capital.
Placement to raise working capital.
Share issue to RCF for Facility interest and fees.
Share issue in accordance with an agreement with Grimwood Davies Pty Ltd for conducting a drilling programme in the
Meekatharra area.
Placement to raise working capital.
Placement to raise working capital.
Share issue on finalisation of Paulsens Native Title agreement.
Share issue on part conversion of convertible note. See note 17(4)
Placement to raise working capital.
St Barbara Mines Limited 2003 Annual Report
41
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
2 0 . O P T I O N S
(a) Option Reserve
Option reserve at the beginning of the financial period
Options issued during the financial period
Option reserve at the end of the financial period
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
430
1,529
1,959
-
430
430
430
1,529
1,959
-
430
430
This option reserve arises from 9,703,285 unlisted and 22,166,666 listed options being issued during the course of the year.
The fair value of each option issued has been valued using the Black-Scholes option pricing model after considering factors
such as the term of the option, the risk free interest rate and the volatility of the share price.
(b) Listed Share Options
The consolidated entity had the following listed share options on issue at 30 June 2003.
Date
30 June 2002
21 Aug 2002
6 Sept 2002
30 June 2003
Details
Balance
Placement
Financing
Balance
Notes
Number of Options
Exercise Price
Expiry Date
(1)
(2)
22,163,106
17,166,666
5,000,000
44,329,772
$0.30
$0.30
$0.30
$0.30
29 February 2004
29 February 2004
29 February 2004
29 February 2004
(1)
(2)
These options were issued pursuant to the placement of 34,333,332 fully paid ordinary shares. These options enable the
holder of each option to subscribe for one fully paid ordinary share in the Company for every option held.
These options were issued in satisfaction of a financing fee.
(c) Unlisted Share Options
At 30 June 2003, the consolidated entity had 44,905,632 unlisted share options on issue.
On 20 October 1995, shareholders at a general meeting approved the Employee Share Option Plan (ESOP). The purpose of the
ESOP is to provide an incentive to executive officers on the Company. No new options will be issued in future under this ESOP.
On 28 November 2001, shareholders at a general meeting approved a new Employee Option Plan.
Each unlisted share option entitles the holder to subscribe for one ordinary share on, substantially, the following terms:
(i) each unlisted option entitles the holder to subscribe for one ordinary share at the exercise prices set out below;
(ii) the unlisted options are exercisable at any time up to 5.00pm Perth, Western Australia time on the dates set out
below by completing an option exercise form and delivering it together with the required payment for the relevant
number of ordinary shares in respect of which the unlisted options are exercised to the registered office of the
Company. Any unlisted options not exercised by that time will lapse.
The unlisted options are not admitted to the official list of ASX.
42
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(iii) Expiry Date
Exercise Price
23 Dec 04
23 Dec 04
23 Dec 04
31 Dec 04
31 Dec 04
26 Apr 07
17 Jan 08
7 Feb 05
5 Mar 05
2 Apr 05
20 May 05
20 May 05
3 June 05
3 June 05
3 June 05
15 July 05
15 July 05
15 July 05
13 Aug 05
13 Aug 05
13 Aug 05
6 Sept 05
6 Sept 05
6 Sept 05
15 Oct 05
15 Oct 05
15 Oct 05
31 Dec 05
7 July 06
7 July 06
7 July 06
7 July 06
$0.45
$0.35
$0.25
$0.40
$0.40
$0.35
$0.35
$0.2125
$0.2125
$0.2125
$0.2125
$0.2086
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.2125
$0.2086
$0.2124
$0.1100
$0.2125
$0.2086
$0.2124
$0.1138
Total
2 1 . A C C U M U L AT E D L O S S E S
Accumulated losses at the beginning of the
financial period
Net loss attributable to members of the Company
Accumulated losses at the end of the financial period
Number of Unlisted
Options
5,000,000
5,000,000
5,000,000
500,000
10,000,000
6,000,000
1,575,000
157,938
373,893
449,638
470,589
36,118
499,597
50,894
88,680
483,482
49,252
241,854
499,597
50,894
249,917
499,597
50,894
249,917
483,482
49,252
241,854
1,000,000
1,482,677
151,040
741,686
3,177,890
44,905,632
Issue Basis
Shareholder Approved
Shareholder Approved
Shareholder Approved
Shareholder Approved
Shareholder Approved
Employee Option Plan
Employee Option Plan
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
RCF Facility and shareholder ratified
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
(58,787)
(32,733)
(91,520)
(40,893)
(17,894)
(58,787)
(68,596)
(27,935)
(96,531)
(48,149)
(20,447)
(68,596)
St Barbara Mines Limited 2003 Annual Report
43
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
2 2 . O U T S I D E E Q U I T Y I N T E R E S T
Outside equity interest in:
- contributed equity
- accumulated losses opening balance
- retained loss current period
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
2,403
(2,151)
(252)
-
2,403
(1,996)
(155)
252
-
-
-
-
-
-
-
-
The outside equity interest arises from the Company’s 88.3% interest in Taipan.
2 3 . F I N A N C I A L I N S T R U M E N T S
(a) Commodity Contracts
At the end of each financial period, the consolidated entity had committed to the following gold hedging contracts:
Consolidated
30 June
2003
30 June
2002
Company
30 June
2003
30 June
2002
Forwards
- ounces hedged
- average price per ounce
- contract type
Hedging was historically undertaken in order to avoid or minimise possible adverse financial effects of movements in the price
of gold. Gold from production is delivered into forward contracts. The gains and costs of entering these contracts and any
realised or unrealised gains and losses are deferred until the underlying cash flow occurs.
The unrealised losses deferred at the reporting date and the year to which they relate are set out below:
4,221
$518
Forward
4,221
$518
Forward
-
-
-
-
-
-
Less than a year
Consolidated
Company
30 June
2003
$’000
-
30 June
2002
$’000
176
30 June
2003
$’000
-
30 June
2002
$’000
176
These unrealised losses are measured by comparing the contracted price to the spot gold price at balance date. The amounts
disclosed above are only indicative of the amounts which may ultimately be realised.
(b) Credit Risk Exposures
The credit risk on financial assets of the consolidated entity which have been recognised, other than investments in shares,
is generally the carrying amount, net of any provisions for doubtful debts.
(c) Interest Rate Risk Exposures
The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods
is set out in the following tables. Exposures arise predominantly from assets and liabilities bearing variable interest rates as
the consolidated entity intends to hold fixed rate assets and liabilities to maturity.
44
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(c) Interest Rate Risk Exposures continued
30 June 2003
Financial assets
Cash
Restricted cash
Receivables
Investments
Weighted average interest rate
Financial liabilities
Trade and other creditors
Lease liability
Other loans
Floating
Interest rate
$’000
596
3,573
-
-
4,169
4.60%
Fixed interest maturing in:
Over 1 to
5 years
$’000
Non-interest
bearing
$’000
1 year
or less
$’000
Total
$’000
597
3,573
3,688
4,891
1
-
3,688
4,891
8,580
12,749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,242)
(13,133)
-
(776)
(8,833)
(10,561)
-
-
(10,561)
(2,018)
(21,966)
(14,375)
(9,609)
(10,561)
(34,545)
Weighted average interest rate
Net financial assets/(liabilities)
-
4,169
9.93%
(14,375)
11.18%
(9,609)
-
(1,981)
-
(21,796)
30 June 2002
Financial assets
Cash
Restricted cash
Receivables
Investments
Weighted average interest rate
Financial liabilities
Trade and other creditors
Lease liability
Other loans
9,031
1,837
-
-
10,868
3.88%
-
-
-
-
-
-
-
-
-
-
-
-
1
-
3,287
4,526
7,814
-
9,032
1,837
3,287
4,526
18,682
-
-
-
-
-
-
(1,055)
(9,854)
-
(2,017)
(9,393)
(15,905)
-
-
(15,905)
(3,072)
(19,247)
(10,909)
(11,410)
(15,905)
(38,224)
Weighted average interest rate
Net financial assets/(liabilities)
-
10,868
11.13%
(10,909)
9.94%
(11,410)
-
(8,091)
-
(19,542)
St Barbara Mines Limited 2003 Annual Report
45
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(c) Interest Rate Risk Exposures continued
Reconciliation of Net Financial Assets to Net Assets
Net financial assets above
Non-financial assets and liabilities
- Inventories
- Assets held for resale
- Property, plant and equipment
- Other assets
- Provisions
- Deferred tax assets
- Exploration, evaluation and development
Net assets per statement of financial position
(d) Net Fair Value of Financial Assets and Liabilities
(i) On-Balance Sheet
2003
$’000
(21,796)
4,264
4,194
8,380
1,333
(4,774)
-
46,372
37,973
2002
$’000
(19,542)
5,151
5,409
9,906
1,737
(3,706)
2,965
58,188
60,108
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities
of the consolidated entity approximates their carrying value. The net fair value of other monetary financial assets and
financial liabilities is based upon market prices.
(ii) Off-Balance Sheet
For forward exchange and commodity contracts, the net fair value is taken to be the unrealised gain or loss at balance date
calculated by reference to the current forward rates for contracts with similar maturity profiles.
The consolidated entity has potential financial liabilities that may arise from certain contingencies disclosed in Note 28.
As explained in that note, no material losses are anticipated in respect of any of those contingencies and the net fair value
disclosed is the Directors’ estimate of amounts which would be payable by the consolidated entity as consideration for the
assumption of those contingencies by another party.
The carrying amounts and the net fair values of financial assets and liabilities at balance date are:
On balance sheet financial instruments
Financial assets
- Cash and restricted cash
- Receivables
- Traded investments
Financial liabilities
- Payables
- Lease liability
- Other loans
Off balance sheet financial instruments
Financial liabilities
- Gold forwards loss
2003
Carrying
Amount
$’000
Net Fair
Value
$’000
2002
Carrying
Amount
$’000
Net Fair
Value
$’000
4,170
3,688
4,891
12,749
10,561
2,018
21,966
34,545
4,170
3,688
4,662
12,520
10,561
2,018
21,966
34,545
10,869
3,287
4,526
18,682
15,905
3,072
19,247
38,224
10,869
3,287
5,810
19,966
15,905
3,072
19,247
38,224
-
-
-
176
46
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
2 4 . R E M U N E R AT I O N O F D I R E C T O R S
Income paid or payable, or otherwise made available,
to Directors by entities in the consolidated entity and
related parties in connection with the management of
affairs of the Company or its controlled entities
Consolidated
Company
30 June
2003
$
30 June
2002
$
30 June
2003
$
30 June
2002
$
719,049
764,269
656,592
601,861
The 2003 consolidated remuneration includes Directors’ remuneration for Directors of Taipan totalling $62,457 (2002: $162,408).
No options were granted to Directors during the year ended 30 June 2003. The amounts disclosed for remuneration of
Directors does not include the assessed fair values of options granted to Directors during the year ended 30 June 2002.
The number of the Company’s Directors whose total income from the Company or related parties was within the specified
bands are as follows:
$0- $9,999
$10,000- $19,999
$50,000- $59,999
$100,000- $109,999
$260,000- $269,999
$270,000- $279,999
$550,000- $559,999
30 June 2003
Number
1
-
1
1
-
-
1
30 June 2002
Number
1
1
1
-
1
1
-
2 5 . R E T I R E M E N T B E N E F I T S O F D I R E C T O R S
No benefits have been paid to Directors in connection with their retirement as a Director of St Barbara. The Company has made
a provision for Non-Executive Directors’ retirement benefits based on the last three years of Directors’ fees paid (see Note 18).
2 6 . R E M U N E R AT I O N O F E X E C U T I V E S
Remuneration received, or due and receivable, from
entities in the consolidated entity and related parties by
Australian-based executive officers (including executive
directors) whose remuneration was at least $100,000
Consolidated
Company
30 June
2003
$
30 June
2002
$
30 June
2003
$
30 June
2002
$
2,187,084
1,650,263
2,187,084
1,525,655
Executive remuneration for the year ended 30 June 2003 includes executive officers’ remuneration of Taipan totalling $nil
(2002 : $124,608).
The amounts disclosed for remuneration of executive officers does not include the assessed fair values of options granted to
executive officers during the year ended 30 June 2002 or the year ended 30 June 2003. Details of options issued to executives
are set out in the Directors’ Report.
The number of executive officers of the consolidated entity and related parties included in these figures are shown below in
their relevant income bands:
Consolidated and Company
$100,000 to $109,999
$120,000 to $129,999
$140,000 to $149,999
$150,000 to $159,999
$160,000 to $169,999
$170,000 to $179,999
$190,000 to $199,999
$210,000 to $219,999
$230,000 to $239,999
$240,000 to $249,999
$260,000 to $269,999
$270,000 to $279,999
$370,000 to $379,999
$550,000 to $559,999
30 June 2003
-
-
1
1
2
1
-
1
1
-
-
-
1
1
30 June 2002
1
1
-
-
2
-
1
-
-
1
1
1
-
-
St Barbara Mines Limited 2003 Annual Report
47
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
2 7 . R E M U N E R AT I O N O F AU D I T O R S
Consolidated
Company
30 June
2003
$
30 June
2002
$
30 June
2003
$
30 June
2002
$
82,000
58,000
76,000
52,000
11,800
-
93,800
65,029
181,150
304,179
11,800
-
87,800
65,029
181,150
304,179
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
3,262
1,492
3,262
1,492
30
333
30
218
During the year the auditor of the Company,
and its related practices earned the following remuneration:
PricewaterhouseCoopers
Remuneration for audit or review of the financial reports
of the Company or any entity in the consolidated entity
Remuneration for other services:
- Taxation service and general advice
- AIM Listing
2 8 . C O N T I N G E N T L I A B I L I T I E S
Details and estimated maximum amounts of
contingent liabilities, for which no provisions
are included in the accounts, are as follows:
(a) Guarantees and Undertakings
(i) The Company has given undertakings to two
of its controlled entities that it intends to provide
the necessary financial or other support to enable
them to meet their obligations as and when they fall due
(ii) Indemnity to the Company’s bankers in respect of
guarantees provided by the bankers to the
Western Australian Department of Minerals and Energy –
see Note 7
(iii)Security guarantees given to the Western Australian
Department of Minerals and Energy
(b) Native Title
It is possible that Native Title, as defined in the
Native Title Act 1993, may be established over land in
which the consolidated entity has an interest. The
consolidated entity has received several claims from
interested parties to this effect. It is impossible at this
stage to quantify the impact (if any) these, or any future
claims, may have on the operations of the consolidated
entity. The outstanding claims remained unresolved at
balance date, and negotiations are continuing.
48
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(c) Litigation
(i) Westgold
In late September 2000, a demand was made
against the Company by Westgold Resources NL
("Westgold") alleging a loss and damage in the
sum of $7,581,768. A Writ of Summons was
issued by Westgold against the Company in the
Supreme Court of Western Australia in CIV 2427
of 2000 on 20 October 2000.
The alleged claim by Westgold arose from a
series of share transactions in the Company shares
which took place between May and August 1997
as follows:
•
•
On 12 May 1997, Westgold purchased
10,350,000 St Barbara shares at $0.72 per
share from Mr Woss who was a director of
the Company at the time ("Woss Shares").
This share purchase took the total shares
owned in the Company by Westgold
to 23,898,951 (approximately 13%
of the Company equity at the time)
at a total cost of $18.4 million.
On 9 July 1997, Westgold sold all of its
shareholding in the Company (which
included the Woss Shares) to Montleigh
Investments Pty Ltd, a company associated
with Mr Ross Atkins who was a director
of the Company at the time. The total sale
consideration was $19.1 million.
Approximately $8.4 million of the sale
consideration was due to be paid by
30 June 1998. During 1998, Montleigh
Investments Pty Ltd defaulted on payment
of the deferred consideration and Westgold
recovered $1.6 million of the deferred
consideration.
In these proceedings Westgold has sought to recover the
balance of the deferred consideration plus interest from
the Company and Mr Woss.
The main components of Westgold’s statement of claim
against the Company in this Supreme Court Action are
as follows:
•
•
An alleged breach of section 1001A(2) of the
Corporations Act in that the Company allegedly
contravened the ASX Listing Rules by failing to
notify the ASX of information alleged to have been
known to it on or before 30 April 1997 (being
a date prior to Westgold’s purchase of the Woss
Shares). It is Westgold’s contention that certain
information, if published, was information that
a reasonable person would expect to have
a material effect on the price or value of the
Company’s shares.
An alleged contravention of the previous section
995(2) of the Corporations Law (being a
misleading or deceptive statement made in
relation to securities in the legislation prior to the
current Corporations Act) which Westgold allege
to have occurred by public releases made on or
about 30 April 1997. Westgold allege that these
public releases represented that, save for certain
matters, the Company’s operations were
proceeding satisfactorily and with record levels
of gold production in the ordinary course of
operations and that there were no further adverse
factors affecting or likely to affect the Company’s
operations or financial position. Westgold’s
contention is that this was misleading and
deceptive in that, in its contention:
-
-
-
-
the Company’s operations were not
proceeding satisfactorily and the Company
had not overcome and was not overcoming
operational and financial difficulties from
which it had suffered;
there were many adverse factors affecting and
likely to affect the Company’s operations and
financial position;
the record production level in the
relevant quarter was the result of an
abnormal occurrence;
the Company was aware of a reason or
factor which likely would preclude the
establishment of a viable mining operation
at certain of the Company’s tenements and
which likely would require revision of
the Company’s published gold reserves for
those tenements.
All of these allegations are denied by St Barbara and
the claim is being robustly defended. St Barbara
have joined all of the directors who were directors
of St Barbara at the time to the action.
An important issue concerns the Company’s insurance
arrangements. The Company was insured during the
relevant period for directors’ and officers’ liability of
the nature in respect of which the Westgold
proceedings have been issued, however, uncertainties
currently exist as to whether or not this insurance cover
will be available to the Company in the event that it is
unsuccessful in this litigation as the insurer is denying
policy liability.
The best case scenario for the Company is to be wholly
successful in its defence and thereby have no liability.
The maximum possible liability for the Company
(without any contribution from former directors,
insurers or insurance brokers) would be for the entire
loss alleged by Westgold (being approximately
$7.5 million plus interest to the date of judgement
calculated at 8%, together with legal costs).
The Company intends, as part of its defence, to argue
that should it be found liable (which it denies) then
certain contribution orders should be made in relation
to third parties and that, in addition, the Company is
of the view that Westgold must, in any event, apportion
any loss it incurred as between the sale of the Woss
Share and other St Barbara shares held by Westgold
St Barbara Mines Limited 2003 Annual Report
49
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
which were sold simultaneously with the Woss Shares.
An unsuccessful party will usually also be liable for its
own and the other party’s legal costs.
The matter is yet to be entered for trial.
The Company has incurred legal costs to date in the
order of $600,000. It is possible that the Westgold
litigation may not proceed to trial for a further
twelve months, in which case, the Company in
defending this action may incur further legal costs in
the order of $750,000 to $1 million, which costs could
escalate in the event that costs were awarded against the
Company or the trial judge’s decision were to be
appealed. It should be emphasised that none of the
current directors of the Company were directors of the
Company at the time that the above share transactions
took place.
(ii) Kingstream
On 2 July 2002, Kingstream Steel Limited (Subject to
Deed of Company Arrangement) commenced
proceedings in the Supreme Court of Western Australia
against the Company and Zygot Ltd. Kingstream alleges
it has a claim against the Company and Zygot Ltd
arising from the withdrawal of three mining lease
applications, which applications are alleged to be part
of the subject matter of an Option Deed between the
Company and Kingstream dated 26 March 1997 as
supplemented by a Deed dated 20 January 1998 and
a letter dated 29 January 1999 from the Company’s
lawyers to Kingstream. Kingstream exercised the
option in February 1999.
Kingstream alleges in essence that the Company and
Zygot Ltd breached the express or implied terms of
the Option Deed by causing or allowing the MLA’s
to be withdrawn.
The proceedings are at an early stage and have been,
and will continue to be, defended. However, on the
basis of expert advice received the Company considers
its potential exposure in relation to this claim to have
a value (including costs) of less than $200,000.
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
2 9 . C O M M I T M E N T S F O R E X P E N D I T U R E
(a) Exploration
In order to maintain rights of tenure to mining tenements,
the consolidated entity is required to outlay in 2003/04
for tenement rentals and minimum exploration expenditure
requirements of the Western Australian Department of
Minerals and Energy. This commitment in 2003/04
will continue for future years with the amount dependent
upon tenement holdings
(b) Hire Purchase Commitments
Analysis of hire purchase commitments:
- Payable not later than one year (refer Note 17)
- Payable later than one year,
not later than five years (refer Note 17)
9,361
9,181
8,114
7,855
1,133
1,285
1,133
1,285
1,528
2,661
2,893
4,178
1,528
2,661
2,893
4,178
These commitments relate to plant and equipment and are based on the cost of the vehicles and are payable over a period of up
to 48 months.
(c) Finance Lease Commitments
Analysis of finance lease commitments:
Payable not later than one year
Payable later than one year, not later than five years
Deduct future charges on finance leases
Provide for as a liability
1,368
855
(205)
2,018
1,395
2,299
(622)
3,702
1,368
855
(205)
2,018
1,395
2,299
(622)
3,702
50
St Barbara Mines Limited 2003 Annual Report
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F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Representing lease liabilities:
Current (refer Note 17)
Lease payments are based on the cost of the equipment.
At 30 June 2003, the Company has the option to
purchase the equipment upon a residual payment of $440,000.
Analysis of Non-Cancellable Operating Lease Commitments
Payable not later than one year
Payable later than one year, not later than two years
Payable later than two years, not later than five years
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
2,018
3,072
2,018
3,072
371
-
-
-
371
408
204
-
612
371
-
-
-
371
408
204
-
612
The non-cancellable operating lease commitments are the net rental payments associated with rental properties. A provision for
excess lease space, refer to Note 18, has been recognised on the statement of financial position.
3 0 . E M P L OY E E S
(a) Employment Benefit Liabilities
Provision for employee benefits and directors’
benefits and related on-cost liabilities
- Current (Note 18)
- Non-current (Note 18)
869
180
1,049
1,000
108
1,108
869
180
1,049
1,000
108
1,108
Number
2003
Number
2002
Number
2003
Number
2002
(b) Number of Employees
Number of employees at financial year end
66
116
66
116
(c) Superannuation
The Company participates in an "accumulation"
superannuation plan under which all employees are
entitled to lump sum benefits on retirement, disability
or death. The Company contributes various percentages
of wages and salaries to the plan. The contributions
made are legally enforceable. No actuarial assessment
of the plan has been made as such assessments are
inappropriate to an "accumulation" plan. The assets
of the plan are sufficient to satisfy all benefits that have
vested under the plan in the event of its termination,
or in the event of voluntary or compulsory termination,
of the employment of each employee.
(d) Employee Share Option Plan
Shareholders approved an Employee Share Option Plan
on 20 October 1995 ("ESOP"). This ESOP entitles
management who meet incentive objectives to apply
for options to purchase shares in the Company. There
is no vesting period for these options and accordingly
employees can exercise these options at any time after
they have been issued. These options are automatically
cancelled when the employee leaves the Company.
Details of options on issue under this ESOP are set
out in Note 20(c) (iii). No new options will be
issued under this ESOP.
(e) Employee Option Plan
Shareholders approved an Employee Option Plan on
November 2001. A total of 1,775,000 options were
issued under this plan on 17 January 2003 to
eleven employees. There is no vesting period for these
options and accordingly employees can exercise these
options at any time after they have been issued. These
options are automatically cancelled when the employee
leaves the Company. Details of the options on issue at
30 June 2003 under this plan are set out in
Note 20 (c) (iii).
St Barbara Mines Limited 2003 Annual Report
51
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 1 . R E L AT E D PA RT I E S
(a) Directors
The names of persons who were Directors of the Company at any time during each year are as follows:
S. W. Miller
G. B. Speechly
H. G. Tuten
K. A. Dundo
Mr J.T. McClements resigned as an alternative director to Mr H.G. Tuten on 10 July 2003.
(b) Remuneration and Retirement Benefits
Information on remuneration and retirement benefits of Directors is disclosed in Notes 24 and 25 respectively.
(c) Loans to Directors and Director-Related Entities
There were no loans to Directors of entities in the consolidated entity and their Director-related entities during each of the
years ended 30 June 2003 (2002: nil)
(d) Other Transactions with Directors of the Company and their Director-Related Entities
The aggregate amounts brought to account in respect of the following types of transactions with Directors of entities in the
consolidated entities and their Director related entities were:
S. W. Miller
G.B. Speechly
K.A. Dundo
H.G. Tuten
Notes
(1)
(2)
Consolidated and Company
30 June 2002
30 June 2003
$
$
-
-
212,493
3,249,142
-
-
887,227
2,291,918
(1)
(2)
Paid to Clayton Utz for legal services. Mr Dundo was a partner of Clayton Utz.
Paid to RCF by way of issuance of shares and options as required under the RCF Facility.
Mr Tuten is the Chairman of RCF Management L.L.C. the management company of RCF.
(e) Transactions of Directors and Director-Related Entities Concerning Shares or Share Options
Relevant interests in shares and options of the Company held by Directors of the Company and consolidated entity or their
Director-related entities in the Company:
Ordinary Shares – fully paid
Directors:
S. W. Miller (1)
G. B. Speechly
K. A. Dundo
H. G. Tuten (2)
Connected Persons:
Strata Mining Corporation Limited (1)
RCF (2)
Consolidated and Company
30 June 2002
30 June 2003
$
$
Number
Number
-
20,000
100,000
-
-
20,000
100,000
-
32,200,000
18,146,163
36,200,000
9,411,227
(1) Mr S.W. Miller is a director and shareholder of Strata Mining Corporation Limited which holds a relevant interest in
the ordinary share capital of St Barbara.
(2) Mr H.G Tuten is the Chairman of RCF Management L.L.C., the management company of RCF.
52
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
OPTIONS
Directors:
S.W. Miller
G.B. Speechly
K.A. Dundo
H.G. Tuten (1)
Connected Persons:
RCF (1)
Date of
Grant
23 Dec 1999
30 Nov 2001
-
-
12 Feb 2002
5 Mar 2002
2 April 2002
17 May 2002
17 May 2002
4 June 2002
4 June 2002
4 June 2002
15 July 2002
15 July 2002
15 July 2002
13 Aug 2002
13 Aug 2002
13 Aug 2002
6 Sept 2002
6 Sept 2002
6 Sept 2002
15 Oct 2002
15 Oct 2002
15 Oct 2002
20 Feb 2003
7 Jan 2003
7 Jan 2003
7 Jan 2003
7 Jan 2003
Shares under
Option
2,500,000
2,500,000
2,500,000
10,000,000
17,500,000
500,000
-
-
157,938
373,893
449,638
470,589
36,118
499,597
50,894
88,680
483,482
49,252
241,854
499,597
50,894
249,917
499,597
50,894
249,917
483,482
49,252
241,854
1,000,000
1,482,677
151,040
741,686
3,177,890
11,830,632
Exercise
Price ($)
Expiry
$0.25 23 Dec 2004
$0.35 23 Dec 2004
$0.45 23 Dec 2004
$0.40 31 Dec 2004
$0.40 31 Dec 2004
-
-
-
-
7 Feb 2005
$0.2125
5 Mar 2005
$0.2125
$0.2125 2 April 2005
$0.2125 20 May 2005
$0.2086 20 May 2005
$0.2125 3 June 2005
$0.2086 3 June 2005
$0.2124 3 June 2005
$0.2125 15 July 2005
$0.2086 15 July 2005
$0.2124 15 July 2005
$0.2125 13 Aug 2005
$0.2086 13 Aug 2005
$0.2124 13 Aug 2005
6 Sep 2005
$0.2125
6 Sep 2005
$0.2086
$0.2124
6 Sep 2005
$0.2125 15 Oct 2005
$0.2086 15 Oct 2005
$0.2124 15 Oct 2005
$0.1100 31 Dec 2005
7 July 2006
$0.2125
7 July 2006
$0.2086
7 July 2006
$0.2124
7 July 2006
$0.1138
(1) Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF.
The options granted to RCF were in consideration for facility fees. All other options were granted for no consideration
by the Company. There are no voting, conversion or dividend rights related to these options.
(f) Transactions with entities in the wholly owned group
St Barbara Mines Limited is the parent entity in the wholly owned group comprising the Company and its wholly owned
subsidiaries.
During the year the Company advanced loans of $229,776 (2002: $709,530) to entities in the wholly owned group.
Repayments and advances were received of $99,000 (2002: $9,243,788) from entities in the wholly owned group.
The Company provided accounting and administrative assistance free of charge to all its wholly owned subsidiaries.
Loans payable to and advanced from wholly owned subsidiaries to the Company are interest free.
St Barbara Mines Limited 2003 Annual Report
53
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
(g) Transactions with non-wholly owned entities in the consolidated entity
The Company provides funding to Taipan Resources NL, a controlled entity but not wholly owned, as follows:
Balance at beginning of financial year
- net funding advanced for exploration and all
other activities on normal commercial terms
- cost of shares issued by the Company to
PKKP for Native Title Agreement
- funding advanced for repayment of convertible note
- interest
30 June
2003
$’000
4,877
30 June
2002
$’000
-
2,842
4,647
616
7,372
1,141
16,848
-
-
230
4,877
The amount owing by Taipan is secured, and bears interest at 10% per annum.
(h) Amounts receivable from and payable to entities in the wholly owned group and controlled entities
Aggregate amounts receivable at balance date from:
Non-current:
Controlled entities
Entities in the wholly owned group
Less provision for doubtful receivables
Aggregate amounts payable at balance date to:
Non-current:
Entities in the wholly owned group
(i) Amounts receivable from Director Related entities
Consolidated
30 June
2003
$’000
30 June
2002
$’000
16,848
2,752
(1,360)
18,240
4,877
2,621
(1,269)
6,229
11,484
11,513
At 30 June 2003, the Company had a receivable of $1,067,000 (2002: nil) owing by Defiance Mining Corporation.
Mr S. Miller and Mr K. Dundo were appointed Directors of Defiance Mining Corporation on 25 June 2003. All of these
funds were received after 30 June 2003.
3 2 . I N V E S T M E N T S I N C O N T R O L L E D E N T I T I E S
The consolidated entity consists of the Company and its wholly owned controlled entities as follows.
Australian Eagle Oil Co. NL
St Barbara Pastoral Co. Pty Ltd
Capvern Pty Ltd
Eagle Group Management Pty Ltd
Murchison Gold Pty Ltd
Kingkara Pty Ltd
Oakjade Pty Ltd
Regalkey Holdings Pty Ltd
Silkwest Holdings Pty Ltd
Sixteenth Ossa Pty Ltd
Vafitu Pty Ltd
Zygot Limited
Taipan Resources NL
Bushsun Pty Ltd*
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding
June 2003
%
100
100
100
100
100
100
100
100
100
100
100
100
88.3
88.3
June 2002
%
100
100
100
100
100
100
100
100
100
100
100
100
88.3
88.3
Cost of Company’s Investment
June 2002
$’000
179
-
-
-
-
-
-
-
-
-
-
-
20,537
-
20,716
June 2003
$’000
179
-
-
-
-
-
-
-
-
-
-
-
20,537
-
20,716
*100% subsidiary of Taipan Resources NL
– Each company in the consolidated entity was incorporated in Australia.
54
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 3 . R E C O N C I L I AT I O N O F L O S S A F T E R
I N C O M E TA X T O N E T C A S H O U T F L O W
F R O M O P E R AT I N G A C T I V I T I E S
Operating loss after income tax
Write down FITB
Depreciation and amortisation
Development mining expenses
Mining properties change in
accounting policies
Amortisation and write down of
mining expenses
Provision for diminution in investments
Write down of exploration tenements
(Profit)/loss on sale of tenements
Write down of feasibility studies
(Profit) on sale of property,
plant and equipment
(Profit)/loss on sale of shares
Borrowing expenses paid with shares
Convertible note borrowing cost
Interest on Taipan loan account
Convertible note interest
Issuance of options in lieu facility fees
Changes in assets and liabilities:
- (Increase)/decrease in trade and other debtors
- Decrease/(increase) in inventories
- Decrease/(increase) in other assets
- Increase in trade and other creditors,
employee entitlements and provisions
Net cash inflow from operating activities
Consolidated
Company
30 June
2003
$’000
30 June
2002
$’000
30 June
2003
$’000
30 June
2002
$’000
(32,985)
2,965
2,750
-
(18,049)
-
2,044
(35,201)
(27,935)
2,965
2,706
-
(20,447)
-
1,884
(35,401)
9,897
15,641
-
-
-
-
(798)
-
1,015
1,337
-
303
1,529
969
887
172
-
2,546
-
28,176
-
3,381
(24)
924
(2,336)
(9,221)
1,000
-
-
669
430
(1,185)
1,159
377
15,641
4,081
-
-
-
(798)
-
1,015
1,337
(1,141)
-
1,529
621
887
145
28,176
-
3,381
176
924
(2,336)
(5,709)
1,000
-
(230)
-
430
(952)
1,159
377
(4,236)
(554)
4,835
(23,021)
(4,338)
(739)
5,237
(22,331)
NON-CASH FINANCING AND INVESTING ACTIVITIES
The following transactions occurred which affected assets and liabilities which are not reflected in the Statements of Cash Flows.
Year ended 30 June 2002
The issue of 9,411,227 fully paid ordinary shares at $0.2125 per share to RCF in satisfaction of the RCF Facility fee.
Year ended 30 June 2003
The issue of 8,734,436 fully paid ordinary shares at various prices ranging from $0.2263 to $0.0843 to RCF in satisfaction of
the RCF Facility fee and interest. See Note 21.
3 4 . F I N A N C I N G F A C I L I T I E S
Other than as set out in Note 17(iii) regarding the RCF Facility, neither the Company nor the consolidated entity have access to
lines of credit that were unutilised.
St Barbara Mines Limited 2003 Annual Report
55
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 5 . E A R N I N G S P E R S H A R E
Basic and diluted loss per share
Retained (loss) for the year used in the calculation
of basic earnings per share
Weighted average number of fully paid ordinary
shares on issue during the year used in the
calculation of basic earnings per share
Consolidated
30 June
2003
cents/share
30 June
2002
cents/share
(8.00)
$’000
(7.83)
$’000
(32,773)
(17,894)
Number
Number
409,326,900 228,375,474
56
St Barbara Mines Limited 2003 Annual Report
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 6 . E V E N T S S U B S E Q U E N T T O 3 0 J U N E 2 0 0 3
•
Since 30 June 2003 the following has occurred:
•
•
•
•
•
On 3 July 2003, the Company sold all of its
44,400,000 shares held in Dioro Exploration NL,
receiving net proceeds of $4,984,000 resulting in
a profit on sale of $93,000. As a result of the sale of
the shares, the proceeds were used to reduce the debt
facility with RCF by $5,000,000.
On 7 July 2003, the Company issued 15,910,922
fully paid ordinary shares at $0.0374 per share to RCF
in satisfaction of interest on the debt facility.
On 7 July 2003, the Company issued the following
options with an expiry date of 7 January 2007 to
RCF in satisfaction of the monthly facility fee:
- 5,834,004 options exercisable at $0.2125;
- 594,308 options exercisable at $0.2086;
- 2,918,376 options exercisable at $0.2124; and
- 17,430,243 options exercisable at $0.1138.
On 10 July 2003, the Company announced that the
convertible note and convertible loan held by
Ocean Resources Capital Holdings Limited had been
restructured effective 19 June 2003. Under the new
arrangement, the existing convertible note and
convertible loan are replaced with a convertible loan
with a face value of $7.2 million and a new conversion
price of $0.08. The financial effect of this transaction
has been brought to account at 30 June 2003.
On 10 July 2003, the Company announced that
Mr James McClements had resigned as alternate director
to Mr Hank Tuten due to other work commitments.
On 22 September 2003, the Company announced
that RCF has agreed to convert its remaining debt
($7.0 million) into equity at $0.08 per share, thereby
extinguishing all secured debt from the Company’s
balance sheet. The debt to equity swap by RCF,
including a modification fee of 4.5 million shares,
will result in the issue to RCF of 92 million shares at
$0.08 per share, taking its shareholding from 7.9% to
approximately 23% of an enlarged capital base. The
transaction is subject to shareholder approval at the
Annual General Meeting. The transaction is also subject
to RCF obtaining various approvals including the
Foreign Investment Review Board. In addition, the
Company will restructure the Board to consist of five
Board members; to include two nominees of RCF and
a new non-executive Chairman. Should this transaction
be approved by shareholders at the Annual General
Meeting, the consolidated entity’s current liabilities will
reduce by $7.0 million. Should the transaction not be
approved by shareholders the $7.0 million owing to
RCF will be repayable on 30 November 2003.
On 25 September 2003, the Company announced the
placement of up to 12 million fully paid ordinary
shares at $0.08 per share for working capital to raise
up to $960,000 before expenses.
On 30 September 2003, the Taipan entered into an
unsecured convertible note with Claymore Capital Pty
Ltd for $1.0 million. The note is convertible into fully
paid ordinary shares of either the Company at $0.08
per share or of Taipan at $0.065 per share. The note is
repayable on or before 30 September 2004 and bears
interest at 13.5%.
•
•
Unless stated otherwise, the financial effects of the above
transactions have not been brought to account at
30 June 2003.
St Barbara Mines Limited 2003 Annual Report
57
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
3 7 . R E C O N C I L I AT I O N O F AU S T R A L I A N G E N E R A L LY A C C E P T E D A C C O U N T I N G
P R I N C I P L E S T O I N T E R N AT I O N A L A C C O U N T I N G S TA N DA R D S
The financial statements are prepared in accordance with Australian Generally Accepted Accounting Principles ("GAAP"), which
differs in certain respects from International Accounting Standards ("IAS"). The approximate effect of applying IAS for the two
years ended 30 June 2003, where IAS are materially different to GAAP, is set out below.
Net (loss) attributable to members of
the Company under GAAP
Adjustments required under IAS
Net (loss) according to IAS
Equity under GAAP
Accounting for impairments of assets
Accounting for investments in available-for-sale securities
Accounting for derivative instruments
Equity under IAS
Accounting for income taxes
Under IAS 36 "Impairment of Assets" the consolidated entity is
required to record an impairment loss whenever the carrying
amount of an asset exceeds its recoverable amount.
Recoverable amount is measured as the higher of the net
selling price and value in use. Net selling price is the amount
obtainable from the sale of an asset in an arm’s length
transaction and value in use is the present value of estimated
future cash flows expected to arise from continued use and
disposal at the end of its useful life. As a result of this treatment
the consolidated entity is required to take an after tax write
down of $8.6 million for the year ended 30 June 2003.
Accounting for income taxes
Under IAS deferred tax balances are calculated based on
the difference between the tax base of the asset and the
carrying amount of the asset. As a result of this treatment, at
30 June 2003, a deferred tax liability of $7.2 million
(2002: $11.4 million) would be recognised in relation to
the carrying value of exploration, evaluation and
development expenditure acquired in the Taipan acquisition
which has no tax base. This would also result in an increase
of $7.2 million (2002: $11.4 million) in exploration,
evaluation and development expenditure acquired. This
adjustment has no impact on net profit or net assets of the
consolidated entity.
Accounting for investments in available for sale securities
Under IAS 39 "Financial Instruments: Recognition and
Measurement" the consolidated entity is required to classify
Consolidated
30 June
2003
$’000
(32,733)
(8,571)
(41,304)
37,973
(8,571)
(229)
-
29,173
30 June
2002
$’000
(17,894)
-
(17,894)
82,900
-
1,284
(200)
83,984
investments in securities as "held to maturity", "held for
trading" and "available-for-sale". The investments held by
the consolidated entity are classified as available-for-sale and
carried at fair value with unrealised gains and losses reported
in equity and recycled to the Statement of Financial
Performance when sold or impaired.
Accounting for derivative instruments
With the adoption of IAS 39 "Financial Instruments:
Recognition and Measurement" on 1 July 2001, the
consolidated entity is required to measure its financial
instruments at fair value. As the consolidated entity’s
financial instruments are hedges, the changes in fair value
would be deferred through equity until the hedged
transaction occurs and subsequently released to the
Statement of Financial Performance. There is no impact for
the year ended 30 June 2003 for this accounting treatment
(2002: $0.2 million). This adjustment has no impact on
the net profit of the consolidated entity.
Accounting for rehabilitation and restoration costs
Under IAS rehabilitation and restoration costs incurred
during production and after production stops, should be
accrued when the liability is incurred. As a result of this
treatment no additional provision for rehabilitation would
be recognised at 30 June 2003 (2002: $450,000). In 2003
this would have resulted in a corresponding increase in
deferred development expenditure in the production phase.
This adjustment has no material impact on net profit or net
assets of the consolidated entity.
58
St Barbara Mines Limited 2003 Annual Report
D I R E C T O R S ’ D E C L A R AT I O N
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
D I R E C T O R S ' D E C L A R AT I O N
In the opinion of the Directors of St Barbara Mines Limited:
1.
the financial statements and notes as set out on pages 27 to 60 are in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the financial position of the Company and the consolidated entity’s financial position
as at 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows,
for the financial year ended on that date; and
(b) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
2.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
This declaration is made and signed in accordance with a Resolution of Directors and is signed for and on behalf of the
Directors by:
STEPHEN W. MILLER
Executive Chairman
Dated at Perth this 30th day of September 2003
St Barbara Mines Limited 2003 Annual Report
59
AU D I T O R S ’ R E P O RT
F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
I N D E P E N D E N T AU D I T R E P O RT T O T H E M E M B E R S O F
S T B A R B A R A M I N E S L I M I T E D
Audit opinion
In our opinion, the financial report of St Barbara Mines Limited:
•
•
gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of St Barbara
Mines Limited and the St Barbara Mines Limited Group (defined below) as at 30 June 2003, and of their performance for
the year ended on that date, and
is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting
requirements in Australia, and the Corporations Regulations 2001.
Accounting principles generally accepted in Australia vary in certain respects from international accounting standards. An
explanation of the major differences between principles generally accepted in Australia and international accounting standards is
presented in note 37 on page 60 to the financial statements. The application of the international accounting standards would
have affected the determination of consolidated net profit for the year ended 30 June 2002 and consolidated equity as at
30 June 2003 to the extent summarised in note 37.
This opinion must be read in conjunction with the rest of our audit report.
Inherent uncertainty regarding continuation as a going concern
Without qualification to the opinion expressed above, attention is drawn to the following matter.
As a result of matters described in note 1, there is significant uncertainty whether St Barbara Mines Limited will be able to
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of
business and at the amounts stated in the financial report.
Scope
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows,
accompanying notes to the financial statements, and the directors’ declaration for both St Barbara Mines Limited (the company)
and the St Barbara Mines Limited Group (the consolidated entity), for the year ended 30 June 2003. The consolidated entity
comprises both the company and the entities it controlled during that year.
The directors of the company are responsible for the preparation and true and fair presentation of the financial report in
accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records
and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting
estimates inherent in the financial report.
60
St Barbara Mines Limited 2003 Annual Report
AU D I T O R S ’ R E P O RT
F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 3
Audit approach
We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted
in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is
free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement,
selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence.
Therefore, an audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the
Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which
is consistent with our understanding of the company’s and the consolidated entity’s financial position, and of their performance
as represented by the results of their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
•
•
examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial
report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant
accounting estimates made by the directors.
When this audit report is included in an Annual Report, our procedures include reading the other information in the Annual
Report to determine whether it contains any material inconsistencies with the financial report.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature
and extent of our procedures, our audit was not designed to provide assurance on internal controls.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements
and the Corporations Act 2001.
PricewaterhouseCoopers
David J Smith
Partner
Perth
30 September 2003
Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)
St Barbara Mines Limited 2003 Annual Report
61
S TAT E M E N T O F S H A R E H O L D E R S
A S A T 3 0 S E P T E M B E R 2 0 0 3
Twenty Largest Shareholders
1. Westpac Custodian Nominees Limited
2. National Nominees Limited
Resource Capital Fund II LP
3.
Strata Mining Corporation Limited
4.
Toto Capital Inc
5.
ANZ Nominees Limited
6.
JP Morgan Nominees Australia Limited
7.
8.
Yamatji Marlpa Barna Baba Maaja Aboriginal Corporation
9. HSBC Custody Nominees (Australia) Limited
10. Tricom Nominees Pty Limited
11. Miroma Investment Inc
12. Citicorp Nominees Pty Limited
13. Balcony Developments Pty Ltd
14. Mr Ritesh Mistry
15. Ofex Register
16. Mr Keith William Sheppard
17. Kanaird Investments Pty Ltd
18. Wuudee Australia Pty Ltd
19. Mr Koichi Sugimura
20. Mr Yoshihito Koguchi
Substantial Shareholders
RAB Europe Fund Ltd
St James’s Place Recovery Unit Trust
Resource Capital Fund II LP
Strata Mining Corporation Limited
Distribution of Shareholdings
Number held
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
Number of
shareholders
3,620
3,836
1,352
2,425
344
11,577
Number of
Shares
2,188,577
9,930,372
11,260,031
86,833,820
321,251,425
431,464,225
Shares
held
61,658,409
47,109,430
34,057,085
32,200,000
14,000,000
13,189,081
7,524,540
5,600,000
4,774,274
3,510,000
2,737,449
2,550,359
1,948,400
1,720,000
1,682,497
1,550,000
1,230,000
1,200,000
1,200,000
1,102,439
240,543,963
Shares
held
45,000,000
40,430,000
34,057,085
32,200,000
% of
total
14.290
10.918
7.893
7.462
3.244
3.056
1.743
1.297
1.106
0.813
0.634
0.591
0.451
0.398
0.389
0.359
0.285
0.278
0.278
0.255
55.73%
% of
total
10.430
9.370
7.893
7.462
The number of shareholders holding less than a marketable parcel was 7,568.
Directors’ Interests
As at the date of the Directors’ Report, the direct or indirect interest of each Director of the Company in the issued securities of
the Company, or in a related corporation, was as follows:
S. W. Miller
K. A. Dundo
G. B. Speechly
H. G. Tuten
62
Shares held
32,200,000
100,000
20,000
34,057,085
St Barbara Mines Limited 2003 Annual Report
N O T E S
St Barbara Mines Limited 2003 Annual Report
63
N O T E S
64
St Barbara Mines Limited 2003 Annual Report
SHAREHOLDER ENQUIRIES
Matters related to shares held, change of
address and tax file numbers should
be directed to:
Australia:
Advanced Share Registry Services
Level 7, 200 Adelaide Terrace
Perth WA 6000
Telephone: ............+61 8 9221 7288
Facsimile:
............+61 8 9221 7869
United Kingdom:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Telephone: ............+44 870 702 0002
Facsimile:
............+44 870 703 6101
ADR Depositary
The Bank of New York
ADR Division
101 Barclay Street
New York NY10286 USA
Telephone: ........+1 212 815 2218
Auditors
PricewaterhouseCoopers
Level 19, QV1
250 St George's Terrace
Perth, Western Australia, 6000
Solicitors
Tottle Partners
Level 1
181 St George's Terrace
Perth, Western Australia, 6000
Bankers
Commonwealth Bank of Australia
150 St George's Terrace
Perth, Western Australia, 6000
ST BARBARA MINES LIMITED
ABN 36 009 165 066
Board of Directors and Executive Management
S. W. Miller
K. A. Dundo
G. B. Speechly
H. G. Tuten
A. D. Rule
Registered Office
Level 2, 16 Ord Street
West Perth
Western Australia 6005
Telephone:
Facsimile:
Email:
Website:
Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer
and Company Secretary
+61 8 9476 5555
+61 8 9476 5500
perth@stbarbara.com.au
www.stbarbara.com.au