St Barbara Ltd Annual Report 2006

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FY2006 Annual Report · St Barbara Ltd

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2006 Annual Report

St Barbara Limited

Kununurra

Broome

Pt Hedland

Newman

Carnarvon

200km

Mercator
(SBM 20.6%)

Meekatharra

Geraldton

Hill 50

Leonora

Plutonic

Scorpion-Scorpayle

Jundee

Wiluna

Bronzewing

Thunderbox

Mt Keith

Cosmos
Leinster

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Lake Wells

Laverton
Granny Smith
Sunrise Dam

Saracen
(SBM 19.9%)

Southern Cross

Kanowna Belle
Kalgoorlie
Kambalda
St Ives

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PERTH

Forrestania

Norseman

Bunbury

Ravensthorpe

Esperance

SBM Land Holding
Gold Deposit
Nickel Deposit

Albany

Table of
Contents

Chairman’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Managing Director’s Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Reserves & Resources Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Safety and Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Declaration of Auditor Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Income Statements for the year ended 30 June 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Balance Sheets as at 30 June 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Statements of Changes of Equity for the year ended 30 June 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Cash Flow Statements for the year ended 30 June 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Notes to the Financial Statements for the year ended 30 June 2006 . . . . . . . . . . . . . . . . . . . . . . . . . 46

Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Independent Audit Report to the Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Statement of Shareholders as at 13 September 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Chairman’s
Letter

Colin Wise
Chairman

Dear Shareholder

The resurgence of St Barbara continued during the 2006
ﬁnancial year. At year-end, the Company was in a sound
ﬁnancial position, had an expanded management team in
place or in the course of being recruited, was producing
gold from Southern Cross Operations at the annual rate of
165,000 ounces, and held a strong land position on which
to base future exploration – both in the vicinity of Company
operations, and greenﬁelds.

The development of Company activities has led to growth
of the management team, in number and depth. St Barbara
is actively engaging with government, local communities,
indigenous groups and land owners in relation to these
activities and future planning. All levels of the organisation
from the Board of Directors down, maintain a vital interest in
the safety of all employees and contractors and in enhancing
the environment in which the Company is operating.

The former Sons of Gwalia gold assets have been rejuvenated,
with the Company advancing its objective of establishing
long-life mines for Gwalia Deeps at Leonora and Marvel Loch
at Southern Cross. The resource at Tarmoola is also in the
feasibility phase.

The rising gold price enhanced the Company’s progress. The
average price received during the year was A$694/oz. Cash
ﬂows generated by Southern Cross gold production funded
exploration activities and mine development at Gwalia
Deeps. Strong market conditions provided an opportunity
to divest the Meekatharra and South Laverton projects on
favourable terms.

Finance for the March 2005 purchase of the Sons of Gwalia
gold division (provided by a A$7 million convertible note
issued to Resource Capital Fund III LP), was converted to
equity in March 2006, enabling the Company to retire all
secured borrowings.

In May 2006, with the gold price rising to A$924/oz, and with
strong demand for our shares, a placement of 99 million
shares was made at 60¢/share, raising a net A$57 million.
A number of signiﬁcant international and local institutions are
now shareholders. Their presence on the register represents
an important recognition of St Barbara’s improved standing
as a mid-sized gold mining company. The Company is now
included in Standard & Poors ASX300 Index.

The improvement in the Company’s standing and the current
opportunities for growth, reﬂect well on the hard work and
achievements of Eduard Eshuys, his management team and
St Barbara’s workforce. Particular mention is made of the
successful integration into the new St Barbara culture of
Sons of Gwalia personnel who joined the Company last year.

During 2006 the composition of the Board is undergoing
change. In February we welcomed Doug Bailey as a
non-executive director. In August Mark Wheatley resigned as
a non-executive director to take up a CEO role with another
resources company. In September Richard Knight announced
his retirement as a Director, to take effect in December 2006.
We thank Mark and Richard for their contributions and wish
them well. Replacement non executive directors are now
being sought.

History demonstrates that buoyant gold price environments
do not last indeﬁnitely. The strong ﬁnancial position of
the Company provides a springboard for our planned
acceleration of the development of two potentially long life
gold operations – Gwalia Deeps at Leonora and Marvel Loch
at Southern Cross. We also plan to spend A$20.2 million
on exploration during the 2007 ﬁnancial year - a signiﬁcant
amount for a company of St Barbara’s current size.

We have commenced the 2007 year with continued energy
and commitment to develop St Barbara into a signiﬁcant
Australian gold producer and explorer.

Colin Wise
Chairman

29 September 2006

Managing
Director’s
Review

St Barbara has successfully integrated the gold assets
acquired from Sons of Gwalia in 2005, and reﬁnanced
the Company through the timely sale of assets and equity
raisings.

As a consequence, St Barbara has re-established itself as a
gold producer and is well placed to look to the future and
pursue success in its operations, development, exploration
and corporate activities.

Success during the year was achieved by:

Generating a proﬁt after tax of A$6 million.

Gold operations producing 166,000 ounces at a cash
cost of A$443/oz and generating a cash surplus of
A$66.4 million before capital and exploration expenses.

Divestment of Meekatharra and South Laverton assets at a
combined proﬁt of A$19.6 million, with the Company now
holding a 19.9% interest in Saracen Mineral Holdings Ltd
and 20.6% interest in Mercator Gold plc with a combined
market value of A$30 million.

Reducing environmental bonds by A$12.2 million.

Increasing reserves by 1 million ounces and replacing the
production during the year with increases at both Gwalia
Deeps at Leonora and at Southern Cross.

Raising A$67.2 million of new capital from the exercise of
options and a placement of 99 million shares at 60¢.

Introducing institutional investors on to the share register
through the sell down of Resource Capital Fund’s holding
to 22.4%.

experienced

Recruiting
ﬁnancial
professionals to support the operations, development and
exploration activities. An emphasis on recruitment of
graduates has also occurred.

technical

and

Improving safety performance during the course of the
year with 120 LTI free days as at 30 June 2006. This
improved performance has continued into the current
year.

Eduard Eshuys
Managing Director & CEO

Improving environmental and rehabilitation management
and
introducing a comprehensive data base and
management system.

Establishing a land management system to assist access
to additional land at Southern Cross, Leonora and other
areas of interest.

Establishing the BigGold Study to identify world-class gold
deposits in areas adjacent to highly endowed gold geology
and gold production districts in Australia.

Safety
The All Injuries Frequency Rate for the Company of 12.5
compares with an Industry average of 11.6 and requires
improvement. Safety initiatives are concentrating on
observing behaviours and increasing managerial inspections
of work areas to raise the proﬁle of safe production.
Competency based training is also targeting improvement in
the areas of manual handling, hazard identiﬁcation and job
safety analysis and incident investigation.

Environment
Re-establishing local fauna where practicable is an important
element in rehabilitating former mining sites inherited as
part of the purchase of the Sons of Gwalia gold assets.

Other ongoing environmental activities
include water
sampling, fauna surveys, energy generation and efﬁciency
programs, pollution prevention, community liaison and
environmental education.

Community
The Company is reconnecting with local communities in the
Leonora and Southern Cross regions, to provide a deeper
understanding of the Company’s plans, listen to issues of
community interest, and promote community interaction.

Meetings have taken place during the year with local
indigenous groups, shire councils and members of the local
community.

Strategy for Growth
Our principal objective is to establish St Barbara as a
1 million ounces per annum producer with a cash cost margin
of at least A$200/oz, and have reserves of 10 million ounces
by mid 2010, or four years from now.

Managing
Director’s
Review cont

Eduard Eshuys and Shane McLeay inspecting Raise Bore machine, 375 level Gwalia Deeps

Achieving this growth and time frame will require focus on:

exploration success at Leonora and Southern Cross;

continued conversion of resources to reserves;

increase

in gold production to approximately
An
220,000- 230,000 ounces per annum (and an improvement
to related operating costs) at Marvel Loch Underground
and open pits at the Southern Cross Operations;

Development of Gwalia Deeps to commence production
during 2008 at a rate of 150,000 ounces per annum;

Acquisitions with a gold bias of corporates or assets which
are either producing 150,000 ounces per annum or the
equivalent, or have the potential to do so, with cash
margins in excess of A$200/oz; and

A large-scale grass roots discovery either within the
Company’s existing
in
Australia.

land holdings or elsewhere

Our interim objective of producing 450,000 ounces per
annum at a cash cost of A$465/oz commencing during 2008,
or two years from now, will include the following:

Geologists and mining engineers are dedicated to validating
and seeking to extend existing resources at Leonora and
Southern Cross to develop open pit reserves.

Leonora and Southern Cross land holdings of the
Company have total historical production and existing
resources of 13 million ounces and 12 million ounces
respectively. Analysis of past exploration activity shows
that exploration over the past three decades by previous
owners has only been 30% effective largely due to the
past drilling generally being too shallow, and an apparent
lack of understanding of the regolith and geology.

Improvements in production at Southern Cross are likely
to come from expanding underground production at
Marvel Loch (which was 315,000 tonnes for 2005/06) up to
800,000 tonnes per annum over the next two to three years.
Results to date suggest that Reserves may extend below
the current depth of 500m below surface. Development of
a possible ﬁve-year mine plan is in progress.

Gwalia Deeps Hoover Decline is now at a vertical depth of
500m below surface, on its way to the top of the Deeps at
1,100m below surface. This high-speed development of
the decline advance (approximately 2,400m per year for
a single heading) should enable the decline to reach the
Deeps towards the end of 2007.

Steady state production at Gwalia Deeps is projected
to be approximately 500,000 tonnes per annum
which at the reserve grade of 9.0g/t will produce
145,000-150,000 ounces per annum, subject to
conﬁrmation in the Final Feasibility Study.

Future production at Tarmoola is being assessed and remains
subject to conﬁrmation in the Final Feasibility Study.

A number of potential acquisition opportunities have been
identiﬁed and are being analysed. These contemplate
additional annual production of 150,000 ounces or the
equivalent, with a cash margin in excess of A$200/oz, and
may include merger or takeover of corporates, purchase of
assets or joint ventures.

The BigGold Study, designed to lead to the discovery of world
class gold deposits undercover in Australia, has identiﬁed
some 49 target areas on which research of past exploration
activity is being conducted. Areas are being ranked based
on depth of cover preferably less than 200m, mineral
endowment of adjacent districts with historical production
and evidence of favourable geological settings.

Conclusion
Considerable progress has been achieved in rebuilding the
Company during the year and a solid platform for establishing
long life gold operations at Leonora and Southern Cross has
been established. This could not have been achieved without
the dedicated and disciplined effort by all the Company’s
employees and contractors who were very ably lead by
senior management.

Eduard Eshuys
Managing Director & CEO

29 September 2006

Reserves &
Resources
Statements

Proven & Probable Reserves Statement at 30 June 2006

REGION

Southern Cross

Marvel Loch

Hercules

Other

Total Southern Cross

Leonora

Gwalia

PROVEN

PROBABLE

TOTAL

kTonnes

Au g/t

koz

kTonnes

Au g/t

koz

kTonnes

Au g/t

Koz

190

290

5.1

1.9

2.9

1,300

830

1,400

3,600

3,100

6,700

4.0

3.1

0.8

2.6

9.0

5.5

175

300

885

1,200

1,400

830

1,600

3,900

3,100

6,000

4.2

3.1

0.9

2.6

9.0

5.4

190

320

885

1,200

TOTAL ALL AREAS

290

2.9

Notes – Southern Cross:
1) Information in this report that relates to Southern Cross Ore Reserves is based on information compiled by Mr Sam Larritt (Marvel Loch) and

Mr Allan Blair (Hercules) who are Members or Fellows of the Australasian Institute of Mining and Metallurgy. Mr Larritt is a full-time employee

of the Company and Mr Blair is employed by Snowden Mining Industry Consultants. Mr Larritt and Mr Blair have sufﬁcient experience relevant

to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as Competent Persons as

deﬁned by the 2004 edition of the ‘ Australasian Code for Reporting of Mineral Resources and Ore Reserves’. Mr Larritt and Mr Blair consent

to the inclusion in the report of the matters based on their information in the form and context in which it appears.

2) A gold price of A$550/oz and cut-off grade of 1.1g/t has been used for the Reserve estimation.

3) Estimated processing recovery for Southern Cross is 90%.

4) All data is rounded to two signiﬁcant digits. Discrepancies in summations will occur due to rounding.

Notes – Leonora:
1) The information in this report that relates to Gwalia Deeps Ore Reserve is based on information compiled by Messrs Stephen Miller

and Martin Reed, who are members of the Australasian Institute of Mining and Metallurgy. Messrs Miller and Reed are consultants to

St Barbara Limited and have sufﬁcient experience relevant to the style of mineralisation and type of deposit under consideration and to

the activity which they are undertaking to qualify as a Competent Persons as deﬁned in the 2004 Edition of the “Australasian Code for

Reporting of Mineral Resources and Ore Reserves”. Messrs Miller and Reed consent to the inclusion in the report of the matters based on

the information in the form and context in which it appears.

2) The mining reserve includes dilution of 10% to 15% at 0.0g/t Au depending on stope size. Dilution is applied by factoring the ﬁnal design

stope shape volume and tonnes but not increasing contained metal.

3) A mining recovery factor of 95% after dilution is applied.

4) A cut-off grade of 4g/t Au has been applied.

5) A gold price of A$650/ounce has been used for the Reserve estimation.

6) For planning purposes a processing recovery of 95% has been used.

7) All data is rounded to two signiﬁcant digits. Discrepancies in summations will occur due to rounding.

Mineral Resource (including Reserves) Statement at 30 June 2006

MEASURED

INDICATED

INFERRED

TOTAL

kTonnes Au g/t koz

kTonnes Au g/t Koz

kTonnes Au g/t

koz

560

5.4

2,500

190

750

1.8

4.6

110

390

1,500

4,600

8,900

4.1

6.6

2.8

2.4

3.1

330

130

350

890

980

1,100

4,700

6,800

5.1

3.2

2.9

3.3

160

110

440

710

4000

1,500

9,500

4.6

3.9

2.8

2.6

590

190

130

800

16,000

3.2 1,700

12,000

1,000

13,000

0.9

1.1

350

380

490

3,900

8.9 1,100

6,400

6.8 1,400

10,000

8.1 2,600

46,000

1.2 1,800

5,100

1,200

1.2

1.8

200

58,000

1.1 2,100

6,600

2.4

500

13,000

1,200

1.7

1.8

700

56,000

1.8 3,200

13,000

4.5 1,900

82,000

2.1 5,500

65,000

2.0 4,100

20,000

4.0 2,600

99,000

2.3 7,200

REGION

Southern Cross

Marvel Loch

Yilgarn Star

Hercules

Other

Leonora

Gwalia

Tarmoola

Other

Celtic/Wonder4

TOTAL ALL AREAS

14,000

Notes:

1) The information contained in this report relating to Mineral Resources has been compiled by Ms Jane Bateman and Mr Peter Thompson.

Ms Bateman and Mr Thompson are Members of the Australasian Institute of Mining and Metallurgy and are full time employees of the company.

Ms Bateman and Mr Thompson have sufﬁcient experience relevant to the style of mineralisation, type of deposit under consideration and

to the activity being undertaken to qualify as Competent Persons as deﬁned in the 2004 edition of the ‘Australasian Code for Reporting of

Mineral Resources and Ore Reserves’. Ms Bateman and Mr Thompson consent to the inclusion in the report of the matters based on their
information in the form and context in which it appears.

2) All data have been rounded to two signiﬁcant ﬁgures.

3) Discrepancies in summations will occur due to rounding.

4) The Celtic and Wonder Prospects were sold to Terrain Minerals Ltd on 14 July 2006.

Operations

The Company’s strategic focus has been to sustain and
extend the life of the Southern Cross Operations, develop
new operations at Leonora, and explore for gold, nickel
and copper in Australia.

Southern Cross Operations
The Southern Cross Operations are centred at Marvel Loch,
30km south of the town of Southern Cross and 360km east
of Perth, Western Australia. Current operations are based
on the Marvel Loch underground mine and the Hercules
open pit.

Marvel Loch
The Marvel Loch underground mine is adjacent to the
processing plant. Gold mineralisation extends over a 1.3km
strike length and has been deﬁned to depths of over 500m.

The lodes being mined include:

Sherwood and Undaunted at the North;
Firelight and Exhibition at the Centre; and
East and New at the South.

Mining methods include uphole benching and open stoping
with rock ﬁll, where necessary.

The underground mine is scheduled to deliver 0.4 million
tonnes during the 2006-07 year. The production rate is
expected to rise in subsequent years as the mine is further
developed.

A drilling program from underground has the objective of
outlining extensions to reserves to 650m below surface.

Hercules
Open pit mining at Hercules, 12km south of the Marvel Loch
Processing Plant is in progress.

Other
Other mineral resources currently being reviewed include
Transvaal and Parbo-Nevoria. These resources may be
drilled with a view to including any resultant reserves in the
mining schedule for Southern Cross in the 2007/08 period.
Meanwhile, there are sufﬁcient low grade stockpiles to
blend with the underground ore to continue operating the
processing plant at full capacity until mid 2008, as part of
the three year mine plan.

The processing plant located at Marvel Loch treated a total
of 2.4 million tonnes for the 12 months to June 2006 at a
grade of 2.4g/t.

Production Details

Open Pit

Grade

Underground

Grade

Million t

g/t

Million t

g/t

Stockpiles Processed

Million t

Grade

Ore Milled

Grade

Recovery

g/t

Million t

g/t

Gold Shipped

Million ozs

30 June
2006

30 June
2005

1.33

2.10

0.32

5.70

0.71

1.30

2.35

2.40

91.00

0.17

0.54

3.00

0.12

7.02

0.32

1.22

0.98

3.05

93.00

0.08

Cash Cost

$/oz

443.00

341.00

Gold production for 2006 was derived from a full year of
Southern Cross Operations. For 2005, gold production
commenced as from 1 April 2005 and was derived from both
Southern Cross and South Laverton Operations.

Southern Cross Tenements

Development

Gwalia Deeps
The Sons of Gwalia gold mine has one of the longest
operating histories and largest gold production records of
all the Archaean lode-gold mines outside Kalgoorlie. Historic
production and current resources total over 6 million
ounces.

Hoover Decline development to extend Gwalia Deeps from
375m below surface recommenced during December 2005
quarter and is scheduled to reach 1,100m below surface
during the March 2008 quarter. This development will allow
stoping of Gwalia Deeps.

A Final Feasibility Study is in progress and is addressing all
aspects of the planned operation including ventilation, haulage,
backﬁll, power supply and geotechnical considerations.

The processing plant located at the Gwalia site was in
operation until 2003 and is under care and maintenance. An
assessment of the feasibility of refurbishing this plant and
treating the ore from the underground mine is in progress.

Tarmoola
Tarmoola is located 30km northwest of the town of Leonora
and the Gwalia Mine.

Mining was suspended in 2004. In July 2005 St Barbara
commenced a detailed drilling program which resulted in
an upgrade of the resource. A Final Feasibility Study is in
progress, which is assessing the viability of recommencing
operations at a scale of 5 million tonnes per annum. This
would require an upgrade of the Tarmoola plant which is
currently on care and maintenance.

Leonora Tenements

Preparing the face for next advance of Hoover Decline, 5.8m high by 6.0m wide

Exploration

The strategy for exploration has been to re-establish
reserves, expand the resource base of the Company, as
well as to make new discoveries.

Outcomes from the exploration activities from the 2005/06
year included:

Historically, 3.95 million ounces of gold was mined at Gwalia
down to a vertical depth of 1,100m, with mineralisation dipping
at 40 degrees. Drilling by the Company using up to four surface
diamond drill rigs and directional drilling technology has
extended this mineralisation at depth, with resources below
the old workings now totalling 7.5 million tonnes at 8.3g/t for
2 million ounces.

establishment of a Probable Ore Reserve for Gwalia Deeps
of 3.1 million tonnes at 9.0g/t for 885,000 ounces of
gold;

increase in Marvel Loch Underground Reserves from
Probable Ore Reserves of 240,000 tonnes at 6.0g/t for
46,000 ounces at 30 June 2005 to 1.4 million tonnes at
4.2g/t for 190,000 ounces of gold at 30 June 2006; and

upgrading of Tarmoola Inferred Resources to Measured
and Indicated.

In addition, regional exploration teams, focussing on surface
deposits, have been established at both Southern Cross and
Leonora.

A BigGold Study has been initiated to identify targets for
world scale gold deposits within Australia.

Gwalia Deeps
During 2005 St Barbara conducted an extensive drilling
campaign at Gwalia Deeps, utilising up to four surface
diamond drill rigs at any one time, to allow ore reserves
to be estimated. The current Mineral Resource estimate at
Gwalia (Deeps and Intermediates) is 10 million tonnes at
8.1g/t for 2.6 million ounces of gold, including the newly
established Probable Ore Reserve of 3.1 million tonnes at
9.0g/t containing 885,000 ounces of gold (all of this Reserve
is within the Gwalia Deeps).

The Gwalia Deeps Probable Reserves occur within an Indicated
and Inferred mineral resource estimate of 2 million ounces,
representing a conversion rate of 44.3 per cent to date.

885,000 ounces of Reserves have been established below the
current workings (“Gwalia Deeps”) in the Main and South
West Branch lodes down to a vertical depth of 1,550m, and
deeper drilling has extended known mineralisation down to
1,900m vertically.

The mineralisation occurs within discrete sheet-like quartz
vein lodes, plunging shallowly towards the south east and
varies in width from 2m to 26m. There is considerable history
and knowledge of mining this orebody from past operations
which will assist in mine planning and bringing the mine back
into operation.

Leonora Gold
Gold endowment in the Leonora region is extensive, with the
ﬁve largest known deposits historically producing a total of
13.5 million ounces of gold. The Company inherited a large
database of drillhole, geophysical and geochemical data
through the acquisition of the Sons of Gwalia gold division
and has now completed a detailed assessment of the data,
the effectiveness of previous drilling and sampling, the
known deposit styles, and their geological controls.

This study has generated a signiﬁcant number of targets
for possible further large, standalone deposits within
the Company’s tenure, and an exploration team will
systematically test these targets in the year ahead. Gravity
data is recognised as a crucial component in the detailed
targeting process for all major deposits at Leonora, and
expanded ground-based gravity surveys have been completed
and the results are being assessed.

Gwalia Deeps

West

East

Exploration cont

Southern Cross
Exploration activity has been intensiﬁed at Southern Cross,
with the establishment of two teams, one focusing on known
deposits for open cut opportunities, the other seeking
new discoveries. The Company controls the majority of
the Southern Cross-Forrestania greenstone belt, over a
length of some 200km, which has a known historical gold
endowment of over 12 million ounces including 12 deposits
of over 300,000 ounces. A comprehensive study of deposit
styles, structural associations, the effectiveness of previous
exploration and targeting was completed, producing some
51 gold targets within Company tenure. These targets have
been ranked and further assessed. Access to most targets has
been negotiated and exploration for new, standalone targets
is underway.

in progress

Marvel Loch Deeps
A program of diamond drilling from within the current
since
underground workings has been
September 2005, with the aim of establishing Indicated
Resources from 500 metres below surface (mbs) to 1,000mbs.
This in turn is anticipated to identify mineable inventory
below 500mbs, to support a planned ﬁve-year expanded
production proﬁle. Ore lodes at Marvel Loch are steeply
plunging, continuous quartz veined shoots, each with a
length of 30-70m and the Undaunted, Sherlock, Exhibition
and New Lodes are being extended down plunge with this
drill program.

BigGold Study
A team of geologists and specialist consultants has been
established to identify targets for potential world-scale
deposits of gold, nickel and copper within Australia. Initial
outcomes from this team effort include a detailed review
of new aeromagnetic and gravity data from the Yeenena
(Ashburton) region, host to the Nifty (copper) and Telfer
(gold) deposits. Targeting faulted antiforms analogous
to the Telfer dome resulted in the application for four
new exploration licences, covering some 780sqkm. These
licences are expected to be granted in the coming year, with
work programs planned.

Elsewhere in Australia, the Company is at an advanced stage
of targeting new gold and copper-gold deposits. Detailed
target assessment and ranking of these targets will lead to
ground acquisition early in the 2006/07 year.

Base Metals
Dedicated base metal programs are being implemented
on the Company’s Leonora and Southern Cross/Forrestania
tenements. Previous operators have historically focused on
gold exploration on these tenements, despite the strong
nickel sulphide endowment and recent nickel discoveries
along strike. Over 300km of komatiite stratigraphy is present
on this tenure, including channel-facies prospective for
accumulation of Kambalda-style massive sulphide deposits.

Base metal programs to be conducted this year will include
loop electro magnetic surveys,
high-powered moving
mapping and gossan search, surface geochemistry and follow
up drilling of anomalies.

The focus for the 2007 ﬁnancial year, with forecast exploration
expenditure of A$20 million, is to:

further add to the Gwalia Deeps reserve base;

identify surface deposits in proximity to Southern Cross
and Leonora operations, to augment existing and planned
production plans; and

make further standalone discoveries.

Marvel Loch Mine, the cornerstone of Southern Cross

Environment

Management of the environment is an important aspect of
St Barbara’s business, with consideration and management of
environmental aspects being incorporated into all activities
from exploration onwards.

The mining activity at the Hercules Open pit continued
to dump waste rock on top of a former tailings dam
resulting in a long-term stable structure that, when
ﬁnished, will be contoured, ripped and revegetated.

Environmental activities undertaken include water sampling,
fauna & ﬂora surveys, energy generation and efﬁciency
programs, pollution prevention, community liaison, education
and training and rehabilitation.

Over the past 12 months, as part of our rebuilding for a
better future, St Barbara has focused on improving its
environmental performance. The Company’s Environmental
Policy was updated, outstanding rehabilitation activities
at historic mining locations situated close to towns were
completed, hydrocarbon management across the operations
were improved and good environmental standards were
incorporated for sites being considered for re-opening.

Compliance
Compliance with regulatory requirements is a minimum
standard and where possible the Company sets its internal
standards at a higher level. During the year work began
on the development of a Company-based Environmental
Management System. This is a signiﬁcant process and is to
be progressed over the next two years. The development
of a Company-Wide Environmental Obligation Register
has commenced. This aims to streamline the compliance
process by ensuring all management and staff are aware of
their obligations.

Rehabilitation
The Company continued its program of rehabilitation and
clean-up of former mining sites inherited as part of the
purchase of the Sons of Gwalia gold assets in 2005. The
focus was on areas close to Southern Cross and Bullﬁnch and
potentially higher-risk areas.

At Frasers, located next to the town of Southern Cross, the
former operations area was cleaned up, with rubbish, old
buildings and scrap removed. Waste dumps were contoured to
a more stable landform and some tailings were relocated.

At the Star Mill site, 13km south east of Marvel Loch, the
processing plant was dismantled and removed with most of
the materials that could be recycled sold to metal traders.
In addition, polyethylene pipe was recovered and sold to
recyclers. The site was cleaned of other rubbish.

At Transvaal certain reactive wastes were covered and
stabilised by an innovative technique that had been trialled
last year.

On other sites, including Bullﬁnch, Cornishman and Southern
Star, surplus and disused materials such as powerlines,
polyethylene pipe and scrap metals were collected and
either reused onsite or sold to recyclers.

The Company has continued to consult with government
on its rehabilitation plans and has developed its plans in
consultation with the relevant ofﬁcers.

Water
Water is a scarce resource. The Company constantly reviews
its water usage and, where possible, has instituted recyling
and the use of lower-grade water resources for industrial
purposes.

At the Leonora township, reverse osmosis is used to upgrade
the town’s drinking water supply and the reject water is
being sent to waste.

The Company is arranging for the reject water to be
redirected to its operation for use as industrial water.

Training and Education
The Company has appointed a Manager Environment and
Rehabilitation to manage its commitments and to assist
employees and contractors with their obligations. In addition,
environmental staff and contractors are employed at its
sites to provide advice and training as part of site induction
processes and on-going environmental awareness programs.

Greenhouse Challenge Plus
St Barbara has become a member of the Greenhouse
Challenge Plus program. This program is administered by
the Australian Greenhouse Ofﬁce of the Department of
Environment and Heritage. The next stage in this program
will see the establishment of an agreement that records the
Company’s commitment to manage and reduce greenhouse
gas emissions. The agreement also reﬂects the Australian
Government’s commitment to recognise and reward
achievements. It is envisaged that this agreement will be
ﬁnalised during the 2007 reporting period.

Drilling at Gwalia

Safety and
Community

A safe workplace is fundamental to the wellbeing of
employees, contractors, consultants and visitors and to
the success of the Company.

St Barbara is committed to achieving high standards,
continuous
improvement and the principle that all
occupational injuries and illnesses are preventable.

As a result, the Company has focussed on the provision
of lifting and manual handling training for our workforce
and increasing the number of personnel trained in hazard
identiﬁcation and job safety analysis. Through training we
will continue to increase the skill levels of our workforce and
an incident investigation to improve our ability to accurately
identify the causes of incidents and accidents.

There is a strong safety culture throughout all levels of the
Company which is promoted at employment interviews,
inductions, on-going safety meetings and training. Risk
assessments are carried out prior to the implantation of new
tasks and commencing routine activities.

General and site-speciﬁc inductions are held for all
personnel, including contractors, at our operations and
work areas. In addition, safety brieﬁngs are conducted at
the commencement of each shift and formal weekly safety
meetings are conducted by our employees and contractors.

Safety Health Advisory Committees have been established at
each site, drawing members from across all aspects of the
operations. The Committees’ safety and health initiatives
result from the contributions of these representatives from
the workforce.

In addition to providing a safe working environment, the
Company also focuses on its preparedness and ability to
respond in case of an emergency. The Emergency Response
teams at our operations are trained and capable of
responding to the variety of emergency scenarios that may
be encountered in our operational areas.

While the Company Disabling Injury Frequency Rate (DIFR)
of 6.2 was lower than the 2004/05 WA Gold Industry Rate
of 7.7, the Lost Time Injury Frequency Rate (LTIFR) was
6.2 compared to the 2004/05 WA Gold Industry Rate of
3.9. This performance is not acceptable and was due to six
consecutive lost-time injuries from October to March 2006.
Of the injuries sustained, three were lower back cumulative
strain injuries.

At the end of the ﬁnancial year the Company had achieved
120 days without any time being lost to injury.

Local Community Consultation
The Company recognises that members of local communities
where it operates and interacts are important stakeholders.
St Barbara is committed to building and maintaining mutually
beneﬁcial and sustainable relationships with the local
communities, particularly at Southern Cross and Leonora,
the location of its operations.

Community involvement and support during the year included:

In April 2006 senior management conducted an open brieﬁng
at Gwalia House in Leonora to update the Leonora community
of its plans for the Tarmoola and Gwalia Deeps projects. A
large number of members of the local community attended.

In addition, the Company met with indigenous groups at
Southern Cross and Leonora. The focus of these meetings
was to explain the Company’s plans for the Southern Cross
and Leonora operations, in particular the employment and
contracting opportunities that exist for the groups. As a
result of these meetings, dialogue between the groups and
the Company is continuing.

Local Government Consultation
The Company regularly meets with the Southern Cross and
Leonora Shires to update them of the Company’s progress
and answer questions in relation to community issues and
opportunities.

Gwalia Historical Society
The Company is represented on the board of the Leonora
Gwalia Historical Museum Ltd (LGHM) which was established
in 1972 to preserve the heritage of the Gwalia gold mine and
associated infrastructure. The preservation of this heritage is
important to St Barbara and it is an active member of the LGHM.

Belinda Bastow, Manager Environment & Rehabilitation, presenting to Leonora community

Financial
Review

The net proﬁt after tax for the year of $6,019,000
(2005: $6,831,000) was underpinned by a full year of
gold production from Southern Cross Operations in
Western Australia.

Signiﬁcantly, the underlying proﬁt for the year, as disclosed
in the ASX Appendix 4E Financial Results release, improved
from a loss in 2005 of $6,800,000 to a proﬁt in 2006 of
$4,300,000; an improvement of $11,200,000.

As at 30 June 2006, the Company is ﬁnancially well placed
to pursue its strategic objectives, with cash at bank of
$79,336,000 (2005: $16,273,000), investments of $29,569,000
(2005: $6,104,000) and minimal secured debt of $644,000.

Proﬁt and Performance
The proﬁt for 2006 of $6,019,000 was after expensing
exploration expenditure of $16,831,000 (2005: $6,107,000)
(excluding salaries, rents and rates) and mine development
expenses of $8,908,000 (2005: $7,287,000).

Key contributors to the results were a $250/oz cash operating
margin (average selling price $694/oz less cash operating cost
$443/oz) from operations for $41,500,000 before amortisation
and depreciation, proﬁt on the divestment of Meekatharra
of $10,500,000 and proﬁt on divestment of South Laverton
of $9,300,000.

The comparative result for the year ended 30 June 2005
under AGAAP was reported as a loss of $6,697,000. With the
introduction of Australian International Financial Reporting
Standards (AIFRS) this result is restated to a proﬁt of
$6,831,000 due to two non-cash items:

Gain on deconsolidation of subsidiary

$14,192,000

Share based payments expense

Net increase in proﬁt

($664,000)

$13,528,000

The gain on deconsolidation of subsidiary relates to NuStar
Mining Corporation Limited (NuStar) and represents a
difference between accounting treatments under AGAAP
and AIFRS. Under AIFRS, the carrying value of NuStar assets
was written down for the consolidated entity in the 2004
ﬁnancial year by $14,192,000. In the 2005 year, the gain on
deconsolidation of NuStar is increased by an equal amount.
There is no cash ﬂow or net tax effect as a consequence of
these AIFRS adjustments.

Gold production for the year was 166,000 ounces at a
cash cost of $443/oz. The Company beneﬁted from rising
gold prices with an average price received for gold sold of
$694/oz. Included in this total are 31,000 ounces sold
under hedge commitments at approximately $770/oz. The
remaining ounces were sold at spot.

Financing and
establishment fees) related primarily to:

interest costs of $960,000 (including

$7,000,000 convertible note, which was converted into
equity on 27 March 2006
$29,000,000 Environmental Bond Facility (Environmental
Bonds at 30 June 2006: $20,646,000)
$10,000,000 General Purpose Loan Facility

Hedging
As at 30 June 2006 the Company had 126,000 ounces
of committed and hedged gold positions comprising
115,000 ounces of bought put options and sold call options,
and 11,000 ounces of gold forward sales.

The bought put options are exercisable at A$700/oz, the
sold call options are exercisable at A$770/oz and the gold
forward sales are priced at A$774/oz.

Based on a spot gold price at 30 June 2006 of A$810/oz, the
mark-to-market value of the 126,000 ounces was negative
$9,371,000. This unrealised loss is allocated $5,029,000
(before tax) to the Gold Hedge Reserve (representing market
value movement) and $4,342,000 expensed to the Income
Statement (representing the time and volatility value
movement).

Taxation
Under AIFRS, deferred tax is brought to account for
movements in reserves, resulting in a deferred income tax
beneﬁt for the year of $1,428,000 (2005: $Nil).

Equity
On 18 May 2006 the Company raised net $57,022,000 from
the issue of 99,000,000 shares at 60¢ each to offshore and
local institutions and some professional investors.

A $7,000,000 convertible note was converted, on terms
previously approved by shareholders, to 100,000,000 shares
on 27 March 2006.

A total of $8,633,000 was received from exercise of
unlisted options, including $7,118,000 from the exercise of
49,712,000 options previously held by Resource Capital Fund II LP.

Pursuant to an on-market share buy-back program announced
on 26 July 2005, to 30 June 2006 the company had bought
back a total of 9,805,000 shares for $4,008,000 at an average
price of 41¢/share.

Investments
The Company’s investment portfolio has resulted primarily
from the divestment of South Laverton, Meekatharra and
non-core assets. As at 30 June 2006, the Company held the
following interests in public listed companies:

Mercator Gold plc
Saracen Mineral Holdings Ltd
Terrain Minerals Limited

20.6%
19.9%
17.1%

All of the Saracen and Mercator shares and most of the
Terrain shares are held in escrow. For accounting purposes,
investments in listed securities are valued at the market
price, except for shares held in escrow which are valued at
market price less 8% discount.

As at 30 June 2006, the carrying value of investments was
$29,510,000.

Finance Facilities and Debt
As noted above, a $7,000,000 convertible loan was converted
into equity as at 27 March 2006.

Through project divestment and rehabilitation programs, the
Environmental Bond Facility as at 30 June 2006 had reduced
to $20,646,000, secured by $20,000,000 bank guarantees
and cash backing.

Following the successful equity raising in May 2006, the
$10,000,000 General Purpose Loan Facility, which had not
been used, was cancelled without pre-payment penalty.
Establishment fees totalling $435,000 were expensed during
the current ﬁnancial year, in respect of this facility and the
Environmental Bond Facility.

As at 30 June 2006 the Company had $644,000 of secured debt
representing hire purchase and ﬁnance lease commitments.

Cash Flows
Cash at bank at 30 June 2006 was $79,336,000 (30 June 2005:
$16,273,000).

Cash inﬂows for the year included:

Net proceeds from issue of shares

Proceeds from divestment of property, plant and
equipment including sale of Meekatharra and
South Laverton

Proceeds on sale of investments

Release of cash from reduced restricted cash

Cash outﬂows for the year included:

Mine development costs

On-market share buy-back

$’000

65,660

16,783

5,984

11,648

100,075

$,000

23,770

4,008

27,778

Subsequent Events
On 25 July 2006, the Company announced Probable Reserves
for Gwalia Deeps at Leonora of 3,100,000 tonnes at 9.0g/t of
gold for 885,000 ounces. A Final Feasibility Study is currently
underway and is due to be completed in January 2007.

Corporate
Governance
Review

Corporate governance is the process by which companies are
directed and managed. It inﬂuences how the objectives of
the Company are set and achieved, how risk is monitored
and assessed, and how performance is optimised.

Rewards are also needed to attract the skills required
to achieve the performance expected by shareholders
(Principle 9). The impact of company actions and decisions
is increasingly diverse and good governance recognises
the legitimate interest of all stakeholders (Principle 10).

Good corporate governance structures encourage companies
to create sustainable value (particularly through the exercise
of integrity at all levels, entrepreneurism, innovation,
development and exploration) and provide accountability
and control systems commensurate with the risks involved.

St Barbara has in place key corporate governance structures.
As the Company grows the suitability of these structures is
reviewed and updated on a regular basis.

St Barbara is committed to the principles of Good Corporate
Governance and Best Practice Recommendations, as
published by the ASX Corporate Governance Council in
March 2003:

Fundamental to any corporate governance structure
is establishing the roles of management and the Board
(Principle 1), with a balance of skills, experience and
independence on the Board appropriate to the nature and
extent of company operations (Principle 2). There is a
basic need for integrity among those who can inﬂuence a
company’s strategy and ﬁnancial performance, together
with responsible and ethical decision-making (Principle 3).

Meeting the information needs of a modern investment
community is also paramount in terms of accountability
and attracting capital. Presenting a company’s ﬁnancial
and non-ﬁnancial position requires processes that
safeguard, both internally and externally, the integrity
of company reporting (Principle 4), and provide a timely
and balanced picture of all material matters (Principle 5).
The rights of company shareholders need to be clearly
recognised and upheld (Principle 6).

Every business decision has an element of uncertainty and
carries a risk that can be managed through effective oversight
and internal control (Principle 7). Keeping pace with the
modern risks of business and other aspects of governance
requires formal mechanisms that encourage enhanced
board and management effectiveness (Principle 8).

Each principle is of equal importance.

St Barbara’s corporate governance practices align with these
principles and are summarised below.

Shareholders
Directors and management recognise that shareholders, as
the ultimate owners of the Company, are entitled to receive
timely and relevant high-quality information about the
Company’s performance, strategies and plans. Similarly,
investors considering buying or selling shares in the Company
are entitled to be able to make informed investment
decisions when considering the purchase or sale of shares in
the Company.

To communicate effectively with shareholders and provide
ready access to balanced and understandable information
about the Company and its strategies, the Company:

ensures that published ﬁnancial and other statutory
reports meet or exceed statutory requirements;

discloses full and timely information about Company
activities and strategies in accordance with the general
and continuous disclosure principles in the ASX Listing
Rules and the Corporations Act;

publicly presents a detailed view of the Company’s
achievements and strategies at least twice a year, and
reports from the Chairman and Managing Director and
Chief Executive Ofﬁcer (CEO) at the Company’s Annual
General Meeting (AGM);

places all material information released to the market
(including notices of meeting and explanatory materials)
on the Company’s website as soon as practicable following
public release;

strives to ensure that all public announcements including
annual reports, notices of meeting and other shareholder
communications are drafted clearly and concisely.

Structure and Operation of the Board
The Company has operated during the year with a ﬁve to
six-member Board, all of whom, aside from the Managing
Director and CEO, are non-executive directors. Mr Tuten is a
Partner of RCF Management LLC, the management company
of the Company’s substantial shareholders, Resource Capital
Fund II and II LP. Mr Tuten abstains from voting on any Board
matters relating to either of these entities. Aside from
Mr Tuten, all other non executive directors, including the
Chairman, are considered to be independent.

The role of the Board is to provide a strategic direction for
the Company, effective oversight of management and a sound
base for maintaining a culture of good corporate governance
within the Company. Given the size of the Company, the
function of a nomination committee is performed by the
Board.

The Board has adopted a formal Board Charter which sets
out the principles under which the Board operates.

The following Board committees are active:
- Audit Committee; and
- Remuneration Committee.

Each of these committees has an independent non-executive
director as chairperson, as well as a Board-approved charter.

None of the directors has a trading relationship with
the Company nor a conﬂict of interest in any business or
relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act in
the best interests of the Company, noting that Mr Tuten is
associated with major shareholders, Resource Capital Funds
II and III LP, and abstains from voting on any Board matters
relating to either of these entities.

Risk
The Board
is responsible for the establishment and
maintenance of a framework of internal control, policies
and procedures designed to safeguard Company assets and
to maintain the integrity of ﬁnancial reporting. In respect
to safeguarding Company assets, and risk more generally,
management is charged with the responsibility of identifying
and managing operational, ﬁnancial and corporate risks with
regular reports to the Board.

An Audit Committee has been established to assist the Board
in maintaining the integrity of ﬁnancial reporting.

The Audit Committee at the date of this report comprises:
D W Bailey, Chairman
H G Tuten
S J C Wise

The primary role of the Audit Committee is to provide an
independent and objective review of ﬁnancial and other
information prepared by management, in particular that
to be provided to members and/or ﬁled with regulators,
including:

overseeing the Group’s discharge of its responsibilities
with respect to:

the ﬁnancial statements, ﬁnancial report and annual
report; and
ﬁnancial risk management systems

overseeing the Group’s relationship with external auditors;
and

determining the independence of the external auditors.

The Audit Committee:

meets and receives regular reports from its external
auditors concerning matters that arise in connection with
their audit; and

is also responsible for review of performance and
nomination of the external auditors.

The external auditor, PricewaterhouseCoopers, has conﬁrmed
its independence to the Board. The current engagement
partner has conducted the audit since 2001. The external
auditor is required to attend the Annual General Meeting
and will be available to respond to speciﬁc questions from
shareholders.

Disclosure of Information
St Barbara has obligations under the Corporations Act,
and ASX Listing Rules to keep the market fully informed of
information which may have a material effect on the price or
value of St Barbara’s securities and to correct any material
mistake or misinformation in the market.

Corporate
Governance
Review cont

The Company has adopted a Continuous Disclosure Policy to
provide a disciplined framework for complying with these
requirements.

Remuneration
The Remuneration Committee, as at the date of this report
comprises:

Ethics
The Board Charter provides that, in performing its role, the
Board should act at all times:

in recognition of its overriding responsibility to act
honestly, fairly and in accordance with the law in serving
the interests of the Company, its shareholders, employees,
and other stakeholders
with integrity and objectivity and consistently with the
ethical, professional and other standards set out in the
Company’s corporate governance policies.

Dealing in Company shares by Directors, Ofﬁcers and
Employees is governed by a ‘Dealings in Securities’ Policy.
This policy allows for a 30-day trading window following
signiﬁcant public announcements, provided the Company
is not then in possession of undisclosed potentially price
sensitive information.

Company policies on Occupational Health and Safety and
Environment acknowledge the Company’s fundamental
commitment to providing a safe workplace, and the
Company’s and employee responsibilities to the environment
and local communities with whom we interact. Having regard
to the Company’s size and scale of operations, a formal Code
of Conduct is not considered necessary.

Issues of substance are considered by the Board with external
advice from its professional advisers as required. The Board’s
individual members can seek independent professional advice
at the Company’s expense in carrying out their duties. Prior
written approval of the Chairman is required, but may not be
unreasonably withheld.

R Knight, Chairman
D W Bailey
E Eshuys
S J C Wise

The duties of the Remuneration Committee include:

to commission and consider independent advice on
remuneration, and to propose appropriate remuneration
policies for Board approval,

to provide guidance to the CEO on the appointment of
senior executives and their remuneration,

to approve the overall percentage increase in ﬁxed annual
remuneration for employees,

to establish with the CEO the criteria to be applied as the
basis for performance management within the Company,
to monitor performance against those criteria, and to
approve any incentive payments that my result.

to review and develop, as required, plans for orderly
management development and succession.

The Principles used to determine the nature and amount of
remuneration are set out in the Remuneration section of the
Directors Report set out on pages 28 to 37.

Evolving Practices
The Company recognises that corporate governance practices
will continue to evolve as the Company continues to grow
and develop.

Ruth Stephenson, Mine Geologist, Hoover Decline, Gwalia Deeps

Directors’
Report

The Directors present their report on the consolidated entity
consisting of St Barbara Limited and the entities it controlled
at the end of, or during, the ﬁnancial year ended 30 June 2006.

Directors
The following persons were Directors of St Barbara Limited
during the whole of the year and up to the date of this
report:

Name
S J C Wise
E Eshuys
R Knight
H G Tuten

Period of Directorship
Appointed 20 July 2004
Appointed 20 July 2004
Appointed 25 May 2005
Appointed 26 March 2002

D W Bailey was appointed a Director on 17 January 2006 and
continues in ofﬁce at the date of this report.

M K Wheatley was a Director throughout the ﬁnancial year,
but resigned on 2 August 2006 following his appointment as
chief executive of another company.

Principal activities
During the year the principal activities of the consolidated
entity consisted of gold production, gold and mineral
exploration.

There were no signiﬁcant changes in the nature of activities
of the consolidated entity during the year.

Dividends
There were no dividends paid to members during the ﬁnancial
year.

Operations overview
Refer to page 8 for the Operations Review.

Consolidated revenues and results
Consolidated revenues and results are summarised as follows:

Sale of gold

2006
$’000

115,263

Proﬁt after income tax beneﬁt

6,019

2005
$’000

46,553

6,831

The proﬁt for the year ended 30 June 2006 of $6,019,000 is
after expensing exploration expenditure, excluding salaries,
rents and rates, of $16,831,000 and depreciation and
amortisation charges amounting to $9,540,000.

The comparative result for 2005 under AGAAP was reported
as a loss of $6,697,000. With the introduction of Australian
International Financial Reporting Standards (AIFRS) this
result is restated to a proﬁt of $6,831,000 due to two non-
cash items:

Gain on deconsolidation of subsidiary

$14,192,000

Share based payments expense

Net increase in proﬁt in 2005

($664,000)

$13,528,000

Signiﬁcant changes in the state of affairs
a) Divestment of Projects
On 14 October 2005, the Company announced the sale of its
South Laverton project to Saracen Mineral Holdings Limited
(Saracen) for consideration of:

Cash payment

Replacement of South Laverton environmental
performance bonds

Issue of shares by Saracen, value

Cash payment for additional bond reductions

$’000)

4,000)

9,200)

3,500)

16,700)

2,700)

19,400)

On 28 October 2005, the Company announced the sale of its
Meekatharra project to Mercator Gold plc for consideration of:

Cash payment

Replacement of Meekatharra
environmental performance bonds

Issue of shares by Mercator, value

b) Changes in issued capital

Shares on issue 1 July 2005

Add exercise of Options

$’000)

5,000)

3,000)

13,000)

21,000)

Number of
shares

566,533,352)

63,662,275)

Conversion of Resource Capital Fund III LP
$7 million loan

100,000,000

Equity raising May 2006 at 60 cents per
share

Less on-market buy-back of shares

Shares on issue 30 June 2006

99,000,000)

(9,805,060)

819,390,567)

c) Sale of investments
On 27 July 2005, the Company sold its remaining 63,325,359
shares in NuStar for $3,166,000 and 15,412,082 shares in
Sedimentary Holdings Limited for $2,851,000; yielding total
consideration of $6,017,000.

As a consequence of the extension to operations at Southern
Cross as described above, forecast gold production for the
ﬁnancial year 2006/07 is 165,000 ounces at an estimated
cash cost of $465/oz.

Regulatory environment
The Company’s mining activities are all in Western Australia,
and are governed by the Mines Act Western Australia, the
Mines Safety and Inspection Act and other mining related
legislation. The consolidated entity is subject to signiﬁcant
environmental regulation and safety compliance in respect
of its mining and exploration activities.

Information on Directors
S J Colin Wise LL.B, FAICD, FAusIMM
Chairman – non-executive Age 60
Mr Wise is an experienced corporate lawyer and consultant
with signiﬁcant expertise in the mining and exploration
industry and corporate section. He spent 24 years with WMC
Limited, 10 of which as General Counsel and subsequently,
4 years as Counsel to a New York law ﬁrm. He has had extensive
practical experience in Australia and internationally with a
wide range of corporate, operational and legal matters.

He is a Fellow of both the Australian Institute of Company
Directors and of the Australasian Institute of Mining and
Metallurgy. He is a non-executive director of Southern
Health, the largest health care service in Melbourne and
Chair of its Quality Committee.

Matters subsequent to the end
of the ﬁnancial year
On 25 July 2006 the Company announced Probable Reserves
for Gwalia Deeps at Leonora of 3,100,000 tonnes at 9.0g/t of
gold for 885,000 ounces.

Other current public company directorships
Nil

Former public company directorships in last 3 years
Nil

Likely developments and
expected results of operations
Likely developments in the operations of the consolidated
entity constituted by St Barbara Limited and the entities it
controls at the date of this report included:

Special responsibilities
Chairman of the Board
Member of the Audit Committee
Member of the Remuneration Committee

Interest in shares and options
Mr Wise has a beneﬁcial interest in 3,681,709, fully paid
ordinary shares of the Company.

Directors’
Report cont

Eduard Eshuys B.Sc, FAICD, FAusIMM
Managing Director and Chief Executive Ofﬁcer Age 61
Mr Eshuys is a geologist with 37 years of experience in mineral
exploration, development and operation of gold and nickel
mines in Australia. He has a record of success in exploration
having led the exploration teams that discovered several
major gold deposits, including Plutonic, Bronzewing and
Jundee. He brought Bronzewing and Jundee as well as the
Cawse Nickel mine into production. Mr Eshuys was awarded
the Geological Society of Australia’s Joe Harms medal for
distinction in exploration success and project development
in 1996. He is a Fellow of both the Australian Institute of
Company Directors and the Australian Institute of Mining and
Metallurgy.

Other current public company directorships
Nil

Former public company directorships in last 3 years
Nil

Special responsibilities
Member of the Remuneration Committee

Interest in shares and options
Mr Eshuys has a beneﬁcial interest in 5,100,000 fully paid
ordinary shares and holds 25,000,000 executive options to
acquire fully paid ordinary shares as detailed later in this Report.

Douglas W Bailey, BBus (Acc), CPA, ACIS
Non Executive Director Age 53
Mr Bailey was the Chief Financial Ofﬁcer of Woodside
Petroleum Ltd between 2002 and 2004 and previously, was
an Executive Director of Ashton Mining Limited from 1990 to
2000, including the last 3 years as Chief Executive Ofﬁcer.
He also was a Non-Executive Director of Aurora Gold Ltd for
the period 1993-2000.

Other current public company directorships
Nil

Former public company directorships in last 3 years
Nil

Special responsibilities
Chairman of the Audit Committee – appointed 17 January 2006

Interest in shares and options
Mr Bailey has a beneﬁcial interest in 100,000 fully paid
ordinary shares of the Company.

Richard Knight MSc(Eng), DIC, BSc(Eng), ARSM, FAICD, C.Eng
Non Executive Director Age 65
Mr Knight is a mining engineer with some 40 years experience,
both in Australia and internationally. He is a Director of
Zinifex Limited and Northern Orion Resources Inc, Chairman
of Heuris Partners, a Melbourne-based advisory and strategic
planning practice and Senior Advisor to Inco Limited. He has
previously been CEO of Energy Resources Australia Limited,
an Executive Director of North Limited and Managing Director
of Inco Australia Management Pty Ltd.

Other current public company directorships
Zinifex Limited
Northern Orion Resources Inc

Former public company directorships in last 3 years
Portman Limited
Asia Paciﬁc Resources Limited

Special responsibilities
Chairman of the Remuneration Committee

Interest in shares and options
Mr Knight has a beneﬁcial interest in 2,505,095 fully paid
ordinary shares of the Company.

Henderson (Hank) G Tuten, B.A. (Econ)
Non Executive Director Age 59
Mr Tuten is actively involved in a consolidated entity of
private equity funds as a founding partner. These are the
Resource Capital Funds (“RCF”), the e-Century Capital
Fund and the CIP Fund. He is a Partner in RCF Management
LLC, the management company of RCF. He spent over
15 years with the NM 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 NV, the private equity
vehicle for Rothschild Continuation Holdings AG 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 BA in Economics.

Other current public company directorships
Nil

Former public company directorships in last 3 years
Nil

Special responsibilities
Member of the Audit Committee

Interest in shares and options
Mr Tuten has a beneﬁcial interest in shares and options held by
Resource Capital Funds II and III LP of 183,662,230 shares.

Mark K Wheatley B.E.((Chem) Hons 1), MBA
Non Executive Director Age 45
Mr Wheatley has 26 years resource industry experience
within Australia and overseas. In his 17 years with BHP until
1996, he was involved in engineering, research, business
development and commercial roles within the steel,
minerals and corporate business groups. He then joined BT
and became a Senior Vice President within the Global Metals
and Mining Group where he was involved in project ﬁnance
and corporate advisory activities over the next 3 years.

He moved to the gold industry in 1999 where, as General
Manager Corporate Development with Goldﬁelds/Aurion
Gold Limited and a period as Acting Managing Director of
Goldﬁelds, he completed a number of successful mergers
and acquisitions before it was taken over by Placer Dome
Inc. in 2002. Mr Wheatley served as Chairman and CEO of
Southern Cross Resources Inc up until the completion of the
merger with Aﬂease on 27 December 2005 and is now a Non
Executive Director of the new merged company called SXR
Uranium One Inc, a company which is listed on the Toronto
Stock Exchange.

Other current public company directorships
SXR Uranium One Inc

Former public company directorships in last 3 years
Southern Cross Resource Inc

Special responsibilities
Member of the Audit Committee (Chairman until 17 January 2006)
Member of the Remuneration Committee

Interest in shares and options
Mr Wheatley holds 700,000 shares

Mr Wheatley resigned as a Director on 2 August 2006.

Company Secretary
Ross Kennedy BComm, Grad.Dip – Company Secretarial
Practice, ACA, FTIA, MAusIMM, FAICD, ACIS
Chief Financial Ofﬁcer and Company Secretary Age 46
Mr Kennedy has more than 20 years’ experience as a public
company secretary and has held a number of public company
directorships in resources and technology companies. He has
extensive experience in corporate management, including
risk management, ethical standards, ﬁnance, accounting,
commercial negotiations,
legal contracts,
statutory compliance and public reporting.

takeovers,

Directors’
Report cont

Meetings of Directors
The number of meetings of the Company’s Board of Directors
and of each Board committee held during the year ended
30 June 2006, and the numbers of meetings attended by
each Director were:

Full meetings
of Directors

Meetings of
Audit Committee

S J C Wise

E Eshuys *

H G Tuten

M K Wheatley

R Knight

D W Bailey

A = Number of meetings attended
B = Number of meetings held during the time the Director
held ofﬁce or was a member of the committee during
the year

* = Managing Director and CEO

The Remuneration Committee met informally on a
number of occasions and the outcome of the Committee’s
deliberations were considered and approved by the
Board.

Retirement, election and continuation
in ofﬁce of Directors
D W Bailey was appointed a Director on 17 January 2006. In
accordance with the Constitution, he will retire as a Director
at the annual general meeting and, being eligible, will offer
himself for election.

H G Tuten is the Director who will be retiring by rotation
and, being eligible, will offer himself for re-election.

Remuneration Report
The remuneration report is set out under the following main
headings:
A Principles used to determine the nature and amount of

remuneration

B Details of remuneration
C Service agreements
D Share based compensation
E Additional information

The information provided under headings A - D includes
remuneration disclosures that are required under Accounting
Standard AASB 124 Related Party Disclosures. These
disclosures have been transferred from the ﬁnancial report
and have been audited. The disclosures under heading E are
additional disclosures required by the Corporations Act 2001
and the Corporations Regulations 2001, which have not been
audited.

The Remuneration Committee, as at the date of this report
comprises:

R Knight, Chairman
D W Bailey
E Eshuys
S J C Wise

The duties of the Remuneration Committee include:

to commission and consider independent advice on
remuneration, and to propose appropriate remuneration
policies for Board approval,

to provide guidance to the CEO on the appointment of
senior executives and their remuneration,

to approve the overall percentage increase in ﬁxed annual
remuneration for employees,

to review and develop, as required, plans for orderly
management development and succession.

A Principles used to determine the nature and amount of

remuneration (audited)

In consultation with external remuneration consultants, the
Group has structured an executive remuneration framework
that is market competitive and complementary to the reward
strategy of the organisation.

The objective of the Group’s executive reward framework
is to ensure that reward for performance is competitive
and appropriate for the results delivered. The framework
aligns executive reward with achievement of operating
and strategic objectives and the creation of value for
shareholders, and conforms with market best practice
for delivery of reward. The Board ensures that executive
reward satisﬁes the following key criteria for good reward
governance practices:

reasonableness and competitiveness
alignment with shareholders’ interests
performance linkage / alignment of executive
compensation
transparency

Alignment to shareholders’ interests is structured through:

for achieving pre-determined performance

reward
targets
attracting and retaining high calibre executives.

Alignment to executives’ interests is structured through:

rewarding capability and experience
recognising contribution to growth in shareholder wealth
providing a clear structure for earning rewards

The framework provides a mix of ﬁxed and variable pay, and
a blend of short and long term incentives.

Non executive Directors fees
Non executive Directors’ fees are determined within an
aggregate Directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The maximum
currently stands at $750,000 per annum in aggregate
(approved in 2005).

Fees and payments to non executive Directors reﬂect the
demands which are made on, and the responsibilities of,
the Directors. Non executive Directors’ fees and payments
are reviewed annually by the Board, guided by the advice of
independent remuneration consultants to ensure fees and
payments are appropriate for the duties performed and in
line with the market.

The Chairman’s fees are determined independently to
the fees of non executive Directors based on comparative
roles in the external market. The Chairman is not present
at any discussions relating to determination of his own
remuneration.

Non executive Directors do not receive share options. Non
executive Directors may, commencing 1 October 2005, elect
to receive all or part of their remuneration (with a 20%
minimum) in St Barbara Limited shares, which are acquired
on market pursuant to a Non Executive Director Share Plan.
Such elections can be made, varied, or cancelled prior to the
commencement of each calendar quarter.

The current fee levels were last reviewed with effect
from 1 July 2005. Directors’ remuneration is inclusive of
committee fees.

Retirement allowances for Directors
Non executive Directors are not entitled to retirement
allowances.

Executive pay
The executive pay and reward framework has four
components:

base pay and beneﬁts
short term performance incentives
long term incentives through participation in Executive
Options or the St Barbara Limited Employee Option Plan,
and
other remuneration such as superannuation.

The combination of these comprise the executive’s total
remuneration.

Directors’
Report cont

Base pay
Executives are offered a competitive ﬁxed annual
remuneration that comprises the ﬁxed component of pay
and rewards. External remuneration consultants provide
analysis and advice to ensure base pay is set to reﬂect the
market for a comparable role. Fixed annual remuneration is
structured as a total employment cost package which may be
delivered as a combination of cash and prescribed beneﬁts
as nominated by each executive.

Base pay for senior executives is reviewed annually to ensure
the executive’s pay is competitive with the market. An
executive’s pay is also reviewed on promotion.

Beneﬁts
Executives receive beneﬁts including living away from
home allowances, and/or payment for certain professional
memberships.

Superannuation
In addition to statutory superannuation contributions,
employees may also elect to salary sacriﬁce.

B Details of remuneration (audited)
Amounts of remuneration
Details of the remuneration of the Directors and the key
management personnel (as deﬁned in AASB 124 Related Party
Disclosures) of St Barbara Limited and the St Barbara Limited
Group are set out in the following tables. The remuneration
for Directors and executives is reviewed annually. Cash
bonuses are directly related to performance.

The Directors of St Barbara Limited at 30 June 2006 were:

Colin Wise – Chairman
Eduard Eshuys – Managing Director & CEO
Doug Bailey – Non Executive Director
Richard Knight – Non Executive Director
Hank Tuten – Non Executive Director
Mark Wheatley – Non Executive Director

Short term incentives
Key Performance Indicators (KPIs) require performance in
improving operational effectiveness as well as other key,
strategic ﬁnancial and non-ﬁnancial measures linked to
the drivers of performance in current and future reporting
periods.

The key management personnel of the Group are those
executives who have authority and responsibility for planning,
directing and controlling the activities of the Company.
This includes the ﬁve group executives who received the
highest remuneration for the year ended 30 June 2006. The
executives are:

Ross Kennedy – CFO & Company Secretary
Robert Klug – General Manager Business Development
Martin Reed – General Manager Development
Peter Thompson – General Manager Exploration
George Viska – General Manager Commercial

The Remuneration Committee is responsible for assessing
the extent to which the KPIs have been met. To help make
this assessment, the Committee receives a variety of
detailed reports and presentations on every aspect of the
performance of the business from management, and external
remuneration consultants as required.

Long term incentives
Mr Eshuys has been issued Executive Options pursuant to
terms approved by shareholders.

All other employee options have been issued pursuant to the
St Barbara Limited Employee Option Plan.

Information on the St Barbara Limited Employee Option Plan
is set out in Note 37 to the attached Financial Statements.

Key management personnel of St Barbara Limited

2006

Name

Short term beneﬁts

Post employment
beneﬁts

Share-
based
payment

Cash
salary and
fees
$

Non-
monetary
beneﬁts
$

Cash
bonus
$

Super-
annuation
$

Retire-
ment
beneﬁts
$

Options
$

Total
$

Non-executive Directors

S J C Wise (Chairman) (1)

D W Bailey

R Knight (1)

H G Tuten

M K Wheatley

110,092

64,220

Sub total non executive Directors

238,532

9,908

29,880

5,780

51,348

Executive Directors

E Eshuys

Other key management personnel

R Kennedy

R Klug

M Reed

P Thompson

G Viska

Totals

274,413

177,000

50,000

100,587

184,183

141,552

353,342

189,440

190,630

40,000

19,240

20,000

20,800

16,577

12,740

20,560

10,303

1,572,092

237,000

90,040

212,115

120,000

29,880

70,000

289,880

415,201

1,017,201

260,000

102,265

256,557

353,342

230,000

93,832

315,565

611,298 2,722,545

Notes
1 S J C Wise and R Knight elected in lieu of receiving Directors fees as salary to participate in the Non Executive Directors

Share Plan for part of the ﬁnancial year.

Directors’
Report cont

Key management personnel of St Barbara Limited (continued)

2005

Name

Short term employee
beneﬁts

Post employment
beneﬁts

Share-
based
payment

Cash
salary and
fees
$

Non-
monetary
beneﬁts
$

Cash
bonus
$

Super-
annuation
$

Retire-
ment
beneﬁts
$

Options
$

Total
$

7,840

423

6,571

14,834

8,652

7,543

94,954

5,124

79,578

179,656

914,614(3)

1,489,444

245,616

290,875

Non executive Directors

S J C Wise

R Knight

H G Tuten

M K Wheatley

87,114

4,701

73,007

Sub total non executive Directors

164,822

Executive Directors

E Eshuys

S W Miller

Other key management personnel

R Kennedy

M Reed

P Thompson

G Viska

Totals

276,178(1)

250,000(2)

40,000

37,716

148,292(1)

227,788(5)

71,499

131,500

8,333

10,916

6,885

46,276(4)

47,949(4)

213,817

227,788

126,333

131,500

1,057,795

250,000

48,333

48,830

245,616 1,008,839

2,659,413

Notes
1 Includes consulting fees paid prior to employment.
2 Provision for bonus included in the 2005 ﬁnancial year results, and paid subsequent to balance date.
3 During the 2005 ﬁnancial year, E Eshuys was issued executive options, with the approval of shareholders at the 2004 Annual

General Meeting.

4 Employee options issued on commencement of employment valued at grant date.
5 Executive engaged as a contractor during the year and in receipt of consulting fees.

C Service agreements (audited)
Remuneration and other terms of employment for the Managing Director and the other key management personnel are
formalised in service agreements. Each of these agreements provide for the provision of performance related cash bonuses,
other beneﬁts including allowances and participation, when eligible, in the St Barbara Limited Employee Option Plan. Other
major provisions of the agreements relating to remuneration are set out below.
All contracts with executives may be terminated early by either party with three months notice, except where noted below
and subject to termination payments as detailed.
E Eshuys – Managing Director & CEO

Term of agreement – permanent employee commencing 20 July 2004.
Base salary, inclusive of superannuation, for the year ended 30 June 2006 of $375,000, to be reviewed annually by the
Remuneration Committee.
The Company may terminate the contract by providing three months notice and at the end of the notice period paying
Mr Eshuys nine months salary other than for gross misconduct. Mr Eshuys may terminate the contract by giving four months
notice.

R Kennedy CFO/Company Secretary

Term of agreement – permanent employee commencement 29 September 2004.
Base salary, inclusive of superannuation, for the year ending 30 June 2006 of $220,000, to be reviewed annually by the
Remuneration Committee.
Payment of a termination beneﬁt on early termination by the Company, other than for gross misconduct, more than 1 years
service but not more than 3 years service equal to 4.5 months of base salary and superannuation, more than 3 years service
equal to 6 months base salary and superannuation.

R Klug, General Manager Business Development

Term of agreement – permanent employee commencement 17 October 2005.
Base salary, inclusive of superannuation, for the year ended 30 June 2006 of $218,000, to be reviewed annually by the
Remuneration Committee.
Payment of a termination beneﬁt on early termination by the Company, other than for gross misconduct, 4 weeks of base
salary and superannuation,

M Reed, General Manager Development
Term of agreement – contractor.
Engaged as a contractor at $1,650 per day plus business expenses.
Termination by one months notice by either party.

P Thompson, General Manager Exploration

Term of agreement – permanent employee commencement 24 January 2005.
Base salary inclusive of superannuation for the year ending 30 June 2006 of $210,000, to be reviewed annually by the
Remuneration Committee.
Payment of a termination beneﬁt on early termination by the Company, other than for gross misconduct, more than 1 years
service but not more than 3 years service equal to 2 weeks of base salary and superannuation, more than 3 years but not
more than 5 years service equal to 3 weeks of base salary and superannuation, more than 5 years services 4 weeks of base
salary and superannuation

G Viska, General Manager Commercial

Term of agreement – permanent employee commencement 1 August 2005
Base salary, inclusive of superannuation and living away from home allowance for the year ended 30 June 2006 of $240,000,
to be reviewed annually by the Remuneration Committee.
Payment of a termination beneﬁt on early termination by the Company, other than for gross misconduct, one month of base
salary and superannuation plus an additional 1 week’s payment of base salary and superannuation after 2 years service.

Directors’
Report cont

D Share based compensation (audited)
Options
Options other than those issued to Mr Eshuys were granted under the St Barbara Limited Employee Option Plan which was
approved by shareholders at the 2001 annual general meeting. All full time employees are eligible to participate in the plan.

Options are granted under the plan for no consideration, and for a three or ﬁve year term. Options granted for three years
vest ordinarily on granting. Options granted for ﬁve years vest 50% on the ﬁrst anniversary of employment and the remaining
50% on the second anniversary of employment.

The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods are
as follows:

Mr Eshuys:

Grant date

23 Dec 04

Number

5,000,000

Exercise price

0.0472

0.1500

Expiry

23 Dec 09

23 Dec 08

23 Dec 09

23 Dec 10

23 Dec 11

Vesting

On grant

21 Jul 05

21 Jul 06

14 Sep 05

14 Sep 06

14 Sep 07

14 Sep 08

Vesting condition

Nil

Vested

1 = vesting condition is continued employment as Managing Director

For statutory purposes, E Eshuys’ options are valued as at grant date being the date of shareholder approval in November 2004
and apportioned on a pro-rata basis for the period of service to vesting dates. The valuation assumes that all options granted
will vest. The pricing of the exercise terms of these options was agreed at prior dates;
- 21 July 2004 15,000,000 options exercisable at $0.0472 (being the volume weighted average share price for the month after

Mr Eshuys was ﬁrst appointed a Director)

- 14 September 2004 20,000,000 options exercisable at $0.15 (closing market price of $0.044)

The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date
to vesting date, and the amount is included in the remuneration tables below. Fair values at grant date are independently
determined using a Black Scholes option pricing model that takes into account the exercise price (ordinarily linked to the
average closing market price for the 5 business days immediately preceding the grant date), the term of the option, the share
price at grant date and expected price volatility of the underlying share, no expected dividend yield and the risk free interest
rate for the term of the option. Options issued pursuant to the St Barbara Limited Employee Option Plan are granted for no
monetary consideration.

Name

Grant
date

Expiry
date

Exercise
price

Value per
option at
grant date

Number of
options issued
on grant date

Date exercisable

Eduard Eshuys

23 Dec 2004

Various

Ross Kennedy

2 Dec 2004

2 Dec 2007

Robert Klug

12 Sep 2005 12 Sep 2010

Peter Thompson

16 Dec 2004 16 Dec 2007

George Viska

2 Aug 2005

2 Aug 2008

$0.0472
and $0.15

$0.08

$0.23

$0.08

$0.135

$0.046

35,000,000 Refer vesting conditions above

$0.046

$0.171

$0.048

$0.094

1,000,000 Anytime from grant date

1,000,000 50% after 12 months, balance after

24 months

1,000,000 Anytime from grant date

Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share.

Details of options over ordinary shares in the Company provided as remuneration to each Director of St Barbara Limited and
each of the key management personnel of the Group are set out below. Further information on the options is set out in
Note 37 to the ﬁnancial statements.

Name

Number of options granted
during the year

Number of options vested
during the year

2006

2005

2006

2005

Directors of St Barbara Limited

E Eshuys

Other key management personnel of the Group

35,000,000

10,000,000

5,000,000

R Kennedy

R Klug

P Thompson

G Viska

1,000,000

2,000,000

1,000,000

37,000,000

1,000,000

11,000,000

1,000,000

7,000,000

Directors’
Report cont

Shares provided on exercise of remuneration options
Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to each Director of
St Barbara Limited and other key management personnel of the Group are set out below.

Name

Directors of St Barbara Limited

E Eshuys

Other key management personnel of the Group

P Thompson

G Viska

E Additional information – unaudited

Further details relating to options are set out below:

Date of exercise of options

Number of ordinary shares issued
on exercise of options during the year

($ per share paid)

2006

2005

22 Nov 2005 ($0.0472)

23 Nov 2005 ($0.1500)

4 May 2006 ($0.1500)

4 May 2006 ($0.0472)

22 Dec 2005 ($0.0800)

17 Nov 2005 ($0.1350)

2,100,000

1,300,000

3,700,000

2,900,000

10,000,000

1,000,000

2,000,000

Name

E Eshuys

R Kennedy

R Klug

M Reed

P Thompson

G Viska

A
Remuneration
consisting of options

B
Value at grant date
$

C
Value at exercise date
$

D
Total of columns B C
$

52.6%

29.7%

171,028

93,832

239,521

333,353

A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B

for options that were granted in the current year.

B = The value at grant date calculated in accordance with AASB 2 Share Based Payment of options granted during the year as

part of remuneration for options that were granted in the current year.

C = The value at exercise date of options that were granted as part of remuneration in the current year and that were

exercised during the current year.

No options that were granted as part of remuneration lapsed during the year.

Managing Director & CEO KPIs
In respect of the 2006 ﬁnancial year, E Eshuys achieved 88.5% of his short-term incentive target for the year, based on the Key
Performance Indicators agreed with the Board 12 months ago.

The key performance indicators relevant to determination of the bonus for the 2006 ﬁnancial year encompassed the following
categories:
- Corporate
- Finance and administration
- Exploration and development
- Business development
- Human resources / environment / community

Loans to Directors and executives
There were no loans to Directors or executives during the year.

Auditor Independence
A copy of the auditor’s independence declaration required under sector 307C of the Corporations Act 2001 is set out on page 40.

Indemniﬁcation and Insurance of Ofﬁcers
The Company indemniﬁes all Directors of the Company named in this report and current and former executive ofﬁcers of the
Company and its controlled entities against all liabilities to persons (other than the Company or a related body corporate)
which arise out of the performance of their normal duties as Director or executive ofﬁcer unless the liability relates to conduct
involving bad faith. The Company also has a policy to indemnify the Directors and executive ofﬁcers against all costs and
expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments.

During the year the Company has paid a premium in respect of Directors’ and executive ofﬁcers’ insurance. The contract
contains a prohibition on disclosure of the amount of the premium and the nature of the liabilities under the policy.

Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the
Corporations Act 2001.

Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided
during the year are set out below.

Directors’
Report cont

The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee is
satisﬁed that the provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The Directors are satisﬁed that the provision of non-audit services by the auditor, as set out
below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
fees paid to external auditors for non-audit services for the 2005 year were considered to be commercial realistic; and
none of the services undermine the general principles relating to auditor independence as set out in Professional Statement
F1, including reviewing or auditing the auditor’s own work, acting in a management or a decision making capacity for the
Company, acting as advocate for the Company or jointly sharing economic risk and rewards.

During the year the following fees were paid or payable for services provided by the auditor of
the parent entity, its related practices and non-related audit ﬁrms:
(a) Assurance Services
Audit Services
PricewaterhouseCoopers Australian ﬁrm:
Audit and review of ﬁnancial reports and other audit work under the Corporations Act 2001(1)

(b) Taxation Services

PricewaterhouseCoopers Australian ﬁrm:
Tax compliance services, including review of Company income tax returns

Consolidated
2005
$

2006
$

179,190 144,632

93,245

108,726

(1) included in audit fees paid to PwC Australia are amounts of $20,000 (2005: $5,000) for the consolidated entity and for the

parent entity for the transition to Australian equivalents of International Financial Reporting Standards.

Change of name
At the Annual General Meeting held on 16 November 2005, the shareholders approved the change of Company name from
St Barbara Mines Limited to St Barbara Limited. The effective date of this change was 20 December 2005.

Rounding of Amounts
St Barbara Limited is a Company of the kind referred to in Class Order 98/0100 approved by the Australian Securities and
Investments Commission, relating to the “rounding up” of amounts in the Directors’ Report and Financial Report. All amounts
have been rounded off to the nearest thousand dollars, unless otherwise noted.

Subsequent Events
Events subsequent to 30 June 2006 are set out in Error! Reference source not found. to the attached ﬁnancial statements.

Auditor
PricewaterhouseCoopers continues in ofﬁce in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors.

For and on behalf of the Board
Dated at Perth this 8th day of September 2006

E Eshuys
Managing Director & CEO

INCOME STATEMENTS
For the year ended 30 June 2006

Consolidated

Parent Entity

30 June 06

30 June 05

30 June 06

30 June 05

Notes

$’000

Revenue

Other income

Changes in inventories of ﬁ nished goods and work

in progress

Raw materials and consumables used

Contract mining, cartage, milling, maintenance,

labour and consultants, equipment hire

Exploration expenditure

Write down of mining exploration tenements

Employee beneﬁ ts expenses

Share of net loss of associate accounted for using

the equity method

Depreciation and amortisation

Provision for diminution in investments

Finance costs

Unrealised loss on gold derivatives

Royalty

Legal

Insurance

Other expenses

Proﬁ t/(loss) before income tax

Income tax beneﬁ t

Proﬁ t/(loss) for the year

116,777

22,933

1,689

(19,405)

(60,101)

(16,831)

(15,981)

(9,540)

(960)

(4,342)

(3,881)

(1,764)

(1,247)

(2,756)

4,591

1,428

6,019

46,950

19,893

(687)

(6,640)

(20,558)

(6,107)

(775)

(7,920)

(577)

(8,093)

(773)

(524)

(1,265)

(851)

(839)

(4,403)

6,831

116,777

22,933

1,689

(19,405)

(60,101)

(16,831)

(15,981)

(9,540)

(960)

(4,342)

(3,881)

(1,764)

(1,247)

(2,575)

4,772

1,428

6,200

46,950

5,457

(687)

(6,640)

(20,558)

(6,107)

(775)

(7,920)

(8,093)

(773)

(524)

(1,265)

(851)

(839)

(3,598)

(6,223)

Earnings per share for proﬁ t attributable to the

ordinary equity holders of the Company:

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

0.95

0.92

1.06

The above Income Statements should be read in conjunction with the accompanying notes.

BALANCE SHEETS
As at 30 June 2006

Consolidated

Parent Entity

30 June 06

30 June 05

30 June 06

30 June 05

Notes

$’000

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Derivative ﬁ nancial assets

Deferred mining costs

Non-current assets classiﬁ ed as held for sale

Total current assets

Non-current assets

Restricted cash and cash equivalents

9(d)

Receivables

Available for sale ﬁ nancial assets

Property, plant and equipment

Deferred mining costs

Exploration and evaluation

Mine properties

Other ﬁ nancial assets

Total non-current assets

Total assets

Liabilities

Current liabilities

Trade and other payables

Interest bearing liabilities

Derivative ﬁ nancial liabilities

Total current liabilities

Non-current liabilities

Payables

Interest bearing liabilities

Provisions

Total non-current liabilities

Total liabilities

Net Assets

Equity

Contributed equity

Reserves

Accumulated losses

Total equity

79,336

7,296

6,137

11,488

104,316

647

29,510

9,991

3,744

1,916

16,928

62,736

167,052

28,692

1,600

9,372

39,664

298

28,003

28,301

67,965

99,087

16,273

6,631

4,448

27,352

21,072

48,424

11,801

8,996

9,067

5,781

35,645

84,069

16,344

1,541

17,885

7,000

39,111

46,111

63,996

20,073

79,336

8,072

6,137

11,488

105,092

647

29,510

9,132

3,744

1,916

16,928

178

62,055

167,147

40,093

1,600

9,372

51,065

298

28,003

28,301

79,366

87,781

16,273

6,631

4,448

27,352

21,072

48,424

11,801

595

8,137

9,067

5,781

179

35,560

83,984

16,344

1,541

17,885

11,402

7,000

39,111

57,513

75,398

8,586

26(a)

26(b)

205,815

5,365

135,053

3,107

205,815

5,365

135,053

3,107

(112,093)

(118,087)

(123,399)

(129,574)

99,087

20,073

87,781

8,586

The above Balance Sheets should be read in conjunction with the accompanying notes.

STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 June 2006

Consolidated

Parent Entity

30 June 06

30 June 05

30 June 06

30 June 05

Notes

$’000

Total equity at the beginning of the ﬁ nancial year

20,073

30,660

8,586

13,383

Adjustment on adoption of AASB 132 and 139, net

of tax, to:

Investment fair value reserve

RCF Convertible liability reserve

Restated total equity at the beginning of the

ﬁ nancial year

887

407

887

407

21,367

30,660

9,880

13,383

Changes for fair value of available for sale of

ﬁ nancial assets, net of tax

Changes for fair value of cash ﬂ ow hedge, net of tax

Net income recognised directly in equity

26(a)

Proﬁ t/(loss) for the year

Total recognised income and expense for the year

Transaction with equity holders in their capacity as

equity holders:

Decrease of minority interest on deconsolidation of

subsidiary

Contributions of equity

Share buy backs

Share swap buy back

Employee share options

(share based payment reserve)

Total equity at the end of the year

25(b)

37(b)

5,907

(3,521)

2,386

6,019

8,405

72,327

(4,008)

996

69,315

99,087

6,831

(18,844)

9,276

(8,514)

664

(17,418)

20,073

5,907

(3,521)

2,386

6,200

8,586

72,327

(4,008)

(6,223)

9,276

(8,514)

996

69,315

87,781

664

1,426

8,586

The above Statements of Changes of Equity should be read in conjunction with the accompanying notes.

CASH FLOW STATEMENTS
For the year ended 30 June 2006

Consolidated

Parent Entity

30 June 06

30 June 05

30 June 06

30 June 05

Notes

$’000

Cashﬂ ows From Operating Activities:

Receipts from customers (inclusive of GST)

116,182

44,508

116,182

44,508

(123,697)

(44,939)

(123,516)

(40,348)

Payments to suppliers and employees

(inclusive of GST)

Interest received

Interest paid

Finance charges - hire purchase agreements

Borrowing costs paid and gold lease fees

Net cash (outﬂ ow) inﬂ ow from operating activities

Cashﬂ ows From Investing Activities:

Proceeds from sale of property,

plant and equipment

Proceeds from sale of tenements

Proceeds on sale of available for sale

ﬁ nancial assets

Payment for property, plant and equipment

Payments for investments in available for sale

ﬁ nancial assets

Payments for development of mining properties

Payments for investments in investments

Payments for exploration interests

Payments for acquisition of business combination,

including associated expenses

Reduction in cash on disposal of controlled entity

Net funds from controlled entities

1,514

(409)

(44)

(6,454)

16,783

225

5,984

(1,247)

(200)

(23,770)

(1,916)

Net cash (outﬂ ow) inﬂ ow from investing activities

(4,140)

Cashﬂ ows From Financing Activities:

Net proceeds from issue of shares

Proceeds from borrowings: premium funding/hire

purchases

Share buy backs

Movement in restricted cash and cash equivalents

Principal repayments under secured loans

Principal repayments - hire purchase agreements

- insurance premium funding

Loans to subsidiaries

Net cash inﬂ ow (outﬂ ow) from ﬁ nancing activities

Net increase in cash & cash equivalents

Cash and cash equivalents at the beginning of the year

Cash & cash equivalents at the end of the year

65,660

2,605

(4,008)

11,648

(365)

(1,883)

73,657

63,063

16,273

79,336

301

(98)

(239)

(467)

4,706

9,862

(202)

(458)

(2,874)

(5,168)

5,908

4,051

9,035

(10,430)

(3,500)

(183)

(990)

(2,017)

3,424

12,849

16,273

1,514

(409)

(44)

(6,273)

16,783

225

5,984

(1,247)

(200)

(23,770)

(1,916)

301

(98)

(239)

4,124

5,733

9,862

(40)

(458)

(2,874)

545

(4,140)

12,810

65,660

4,051

2,605

(4,008)

11,648

(365)

(1,883)

(181)

73,476

63,063

16,273

79,336

8,853

(8,940)

(3,500)

(183)

(943)

(662)

16,272

16,273

The above Cash Flow Statements should be read in conjunction with the accompanying notes.

NOTES TO THE FINANCIAL STATEMENTS
Table of Contents

Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

Note 7

Note 8

Note 9

Summary of signiﬁ cant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Financial risk management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Critical accounting estimates and judgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Income tax beneﬁ t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Current assets - cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Note 10

Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Note 11

Current assets - inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Note 12

Derivative ﬁ nancial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Note 13

Deferred mining costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Note 14 Non-current assets classiﬁ ed as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Note 15 Non current assets available for sale ﬁ nancial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Note 16

Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Note 17 Non current assets - property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Note 18 Non-current assets - mine properties/exploration and evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Note 19 Non-current assets – other ﬁ nancial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Note 20

Current liabilities - trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Note 21

Current liabilities – interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Note 22 Non-current liabilities – payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Note 23 Non current liabilities – interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Note 24 Non current liabilities – provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Note 25

Contributed equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Note 26

Reserves and retained proﬁ ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Note 27

Remuneration of auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Note 28

Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Note 29

Commitments for expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Note 30

Related party transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Note 31

Controlled entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Note 32

Interests in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Note 33

Events occurring after the balance sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Note 34

Reconciliation of proﬁ t/(loss) after income tax to net cash inﬂ ow from operating activities. . . . . . . . . . . . . . . . . . . . . . . . . 79

Note 35 Non cash investing and ﬁ nancing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Note 36

Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Note 37

Share based payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Note 38

Business combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Note 39

Key management personnel disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Note 40

Explanation of transition to Australian equivalents IFRSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

This ﬁ nancial report covers both St Barbara Limited (formerly St Barbara Mines Limited) as an individual entity and the consolidated entity
consisting of St Barbara Limited and its subsidiaries. The ﬁ nancial report is presented in the Australian currency.

St Barbara Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered ofﬁ ce and principal place of

business is 1205 Hay Street, West Perth WA 6005.

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and

activities in the directors’ report, which is not part of this ﬁ nancial report.

The ﬁ nancial report was authorised for issue by the directors on 8 September 2006. The Company has the power to amend and reissue the
ﬁ nancial report.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies

The principal accounting policies adopted in the preparation of the ﬁ nancial report are set out below. These policies have been consistently

applied to all the years presented, unless otherwise stated. The ﬁ nancial report includes separate ﬁ nancial statements for St Barbara Limited

as an individual entity and the consolidated entity consisting of St Barbara Limited and its subsidiaries.

(a) Basis of preparation

This general purpose ﬁ nancial report has been prepared in accordance with Australian equivalents to International Financial Reporting

Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and

the Corporations Act 2001.

Compliance with AIFRS

Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the consolidated ﬁ nancial statements and notes of

St Barbara Limited comply with International Financial Reporting Standards (IFRS). The parent entity ﬁ nancial statements and notes also

comply with IFRSs except that it has elected to apply the relief provided to parent entities in respect of certain disclosure requirements
contained in AASB 132 Financial Instruments: Presentation and Disclosure.

Application of AASB 1 First time Adoption of Australian Equivalents to International Financial Reporting Standards.

These ﬁ nancial statements are the ﬁ rst St Barbara Limited ﬁ nancial statements to be prepared in accordance with AIFRS. AASB 1 First time

Adoption of Australian Equivalents to International Financial Reporting Standards has been applied in preparing these ﬁ nancial statements.

Financial statements of St Barbara Limited until 30 June 2005 had been prepared in accordance with previous Australian Generally Accepted

Accounting Principles (AGAAP). AGAAP differs in certain respects from AIFRS. When preparing St Barbara Limited 2006 ﬁ nancial statements,

management has amended certain accounting, valuation and consolidation methods applied in the AGAAP ﬁ nancial statements to comply with

AIFRS. With the exception of ﬁ nancial instruments, the comparative ﬁ gures in respect of 2005 were restated to reﬂ ect these adjustments.

The Group has taken the exemption available under AASB 1 to only apply AASB 132 Financial Instruments: Disclosure and Presentation and

AASB 139 Financial Instruments: Recognition and Measurement from 1 July 2005.

Reconciliations and descriptions of the effect of transition from previous AGAAP to AIFRSs on the Group’s equity and its net income are given

in Note 40.

Early adoption of standards

Recently issued or amended Australian Accounting Standards not yet effective and not adopted for the year ended 30 June 2006, are not

expected to result in signiﬁ cant accounting policy changes or have a material ﬁ nancial impact on the Group or parent entity.

Historical cost convention

These ﬁ nancial statements have been prepared under the historical cost convention, as modiﬁ ed by the revaluation of available for sale

ﬁ nancial assets, and ﬁ nancial assets and liabilities (including derivative instruments) at fair value through proﬁ t or loss.

Critical accounting estimates

The preparation of ﬁ nancial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of

judgement or complexity, or areas where assumptions and estimates are signiﬁ cant to the ﬁ nancial statements, are disclosed in Note 3.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated ﬁ nancial statements incorporate the assets and liabilities of all subsidiaries of St Barbara Limited (‘’Company’’ or ‘’parent

entity’’) as at 30 June 2006 and the results of all subsidiaries for the year then ended. St Barbara Limited and its subsidiaries together are

referred to in this ﬁ nancial report as the Group or the consolidated entity.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the ﬁ nancial and operating
policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights

that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de consolidated from the date that
control ceases.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also

eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the individual ﬁ nancial statements of St Barbara Limited.

(ii) Joint ventures – jointly controlled assets

Details of joint ventures are set out in Note 32.

Where material, the proportionate interests in the assets, liabilities and expenses of a joint venture activity are incorporated in the ﬁ nancial

statements under the appropriate headings.

(c) Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are

different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic

environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Foreign currency translation

(i) Functional and presentation currency

The consolidated ﬁ nancial statements are presented in Australian dollars, which is St Barbara Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of

monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as

qualifying cash ﬂ ow hedges and qualifying net investment hedges.

Translation differences on non monetary ﬁ nancial assets and liabilities are reported as part of the fair value gain or loss. Translation differences

on non monetary ﬁ nancial assets and liabilities such as equities held at fair value through proﬁ t or loss are recognised in proﬁ t or loss as part

of the fair value gain or loss. Translation differences on non monetary ﬁ nancial assets such as equities classiﬁ ed as available for sale ﬁ nancial

assets are included in the fair value reserve in equity.

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of amounts collected

on behalf of third parties. Revenue is recognised for the major business activities as follows:

(i) Product sales

Amounts are recognised as sales revenue when there has been a passing of risk to a customer, and:

the product is in a form suitable for delivery and no further processing is required by, or on behalf of, the consolidated entity;
the quantity, quality and selling price of the product can be determined with reasonable accuracy; and
the product has been despatched to the metals reﬁ nery and is no longer under the physical control of the consolidated entity or the metals
reﬁ nery has formally acknowledged legal ownership of the product including all inherent risks.

Gains and losses, including premiums paid or received, in respect of forward sales, options and other deferred delivery arrangements which

hedge anticipated revenues from future production, are deferred and included in sales revenue when the hedged proceeds are received.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

(ii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Group reduces

the carrying amount to its recoverable amount, being the estimated future cash ﬂ ow discounted at the original effective interest rate of the

instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original

effective interest rate.

(iii) Dividends

Dividends are recognised as revenue when the right to receive payment is established.

(f) Exploration and evaluation/mine properties

(i) Exploration and evaluation

All exploration and evaluation expenditure incurred up to establishment of reserves is expensed as incurred. From the point in time

when reserves are established, exploration and evaluation expenditure is capitalised and carried forward in the ﬁ nancial statements, in
respect of areas of interest for which the rights of tenure are current and where such costs are expected to be recouped through successful

development and exploitation of the area of interest, or alternatively, by its sale.

(ii) Mine properties

Mine properties represent the acquisition cost and/or accumulated exploration, evaluation and development expenditure in respect of

areas of interest in which mining has commenced.

When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure

is carried forward as part of the mine property only when substantial future economic beneﬁ ts are thereby established, otherwise such

expenditure is classiﬁ ed as part of production.

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 mineable reserves.

The calculation of amortisation takes into account future costs which will be incurred to develop all the proven and probable reserves.

Pre-production credits, including the value of marketable metals extracted during mine development, are credited against costs incurred.

Changes to mineable reserves are applied from the beginning of the report period.

(g) Deferred mining

Certain mining costs, principally those that relate to the stripping of waste and which relate to the future economically recoverable ore to be

mined, have been capitalised and included in the balance sheet as deferred mining. These costs are deferred or taken to the production costs

as the case may be, so that each ounce of ore produced bears the same average cost of waste removal per ounce of ore, as determined by the

waste to ore ratio derived from the current mine plan. The waste to ore ratio and the remaining life of the mine are regularly assessed by the

Directors and management to ensure the carrying value and the rate of deferral is appropriate.

(h) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax

rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases

of assets and liabilities and their carrying amounts in the ﬁ nancial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered

or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are

applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception

is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is

recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the

transaction did not affect either accounting proﬁ t or taxable proﬁ t or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in

controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the

differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

The Company and its wholly owned Australian entities have elected not to implement the tax consolidation legislation.

(i) Leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classiﬁ ed as ﬁ nance

leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the

minimum lease payments. The corresponding rental obligations, net of ﬁ nance charges, are included in other long term payables. Each lease

payment is allocated between the liability and ﬁ nance charges so as to achieve a constant rate on the ﬁ nance balance outstanding. The interest
element of the ﬁ nance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on

the remaining balance of the liability for each period. The property, plant and equipment acquired under ﬁ nance leases is depreciated over

the shorter of the asset’s useful life and the lease term.

Leases in which a signiﬁ cant portion of the risks and rewards of ownership are retained by the lessor are classiﬁ ed as operating leases. Payments

made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over

the period of the lease.

(j) Business combinations
The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether
equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or
assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the
value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that
the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a
more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identiﬁ able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the
Group’s share of the identiﬁ able net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identiﬁ cation
and measurement of the net assets acquired.

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 exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be
obtained from an independent ﬁ nancier under comparable terms and conditions.

(k) Impairment of assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identiﬁ able cash inﬂ ows which are largely independent of the cash inﬂ ows from other assets
or groups of assets (cash-generating units). Non-ﬁ nancial assets that suffered an impairment are reviewed for possible impairment at each
reporting date.

(l) Cash and cash equivalents
For cash ﬂ ow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with ﬁ nancial institutions,
other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of
cash and which are subject to an insigniﬁ cant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in

current liabilities on the balance sheet.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

(m) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade

receivables are usually due for settlement no more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for

doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to

the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of

estimated future cash ﬂ ows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

(n) Inventories

Raw materials and stores, ore stock piles and gold stocks are stated at the lower of cost and net realisable value.

Cost comprises direct materials, direct labour and an appropriate proportion of variable and ﬁ xed overhead expenditure relating to mining
activities, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis

of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of

completion and the estimated costs necessary to make the sale.

(o) Non current assets (or disposal groups) held for sale

Non current assets (or disposal groups) are classiﬁ ed as held for sale and stated at the lower of their carrying amount and fair value less costs

to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell. A gain

is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative

impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non current asset (or disposal

group) is recognised at the date of derecognition.

Non current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classiﬁ ed as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classiﬁ ed as held for sale continue to be recognised.

Non current assets classiﬁ ed as held for sale and the assets of a disposal group classiﬁ ed as held for sale are presented separately from the

other assets in the balance sheet. The liabilities of a disposal group classiﬁ ed as held for sale are presented separately from other liabilities

in the balance sheet.

(p) Investments and other ﬁ nancial assets
From 1 July 2004 to 30 June 2005
The Group has taken the exemption available under AASB 1 to apply AASB 132 and AASB 139 only from 1 July 2005. The Group has applied
previous AGAAP to the comparative information on ﬁ nancial instruments within the scope of AASB 132 and AASB 139.
Under previous AGAAP, interests in listed and unlisted securities, other than subsidiaries and associates, were brought to account at cost and
dividend income was recognised in the income statement when receivable. Transaction costs were excluded from the carrying amounts.

Adjustments on transition date: 1 July 2005
The nature of the main adjustments to make this information comply with AASB 132 and AASB 139 are that, with the exception of held to
maturity investments and loans and receivables which are measured at amortised cost (refer below), fair value is the measurement basis by
reference to the closing market price for investments. Fair value is inclusive of transaction costs. Changes in fair value are either taken to
the income statement or an equity reserve (refer below). At the date of transition (1 July 2005) changes to carrying amounts are taken to
retained earnings or reserves.

For further information concerning the adjustments on transition date reference should be made to the following notes:

Available-for-sale ﬁ nancial assets – Note 15
Reserves and retained proﬁ ts – Note 26
Explanation of transition to AIFRS – [Note 40: section 5 of this note discloses the adjustment to each line item in the ﬁ nancial statements
on transition date]

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

From 1 July 2005

The Group classiﬁ es its investments in the following categories: ﬁ nancial assets at fair value through proﬁ t or loss, loans and receivables,

held to maturity investments, and available for sale ﬁ nancial assets. The classiﬁ cation depends on the purpose for which the investments

were acquired. Management determines the classiﬁ cation of its investments at initial recognition and re evaluates this designation at each

reporting date.

(i) Financial assets at fair value through proﬁ t or loss

Financial assets at fair value through proﬁ t or loss are ﬁ nancial assets held for trading which are acquired principally for the purpose of selling

in the short term with the intention of making a proﬁ t. Derivatives are also categorised as held for trading unless they are designated as

hedges.

(ii) Loans and receivables

Loans and receivables are non derivative ﬁ nancial assets with ﬁ xed or determinable payments that are not quoted in an active market. They
arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in

current assets, except for those with maturities greater than 12 months after the balance sheet date which are classiﬁ ed as non current assets.

Loans and receivables are included in receivables in the balance sheet and are shown in Note 10.

(iii) Available for sale ﬁ nancial assets

Available for sale ﬁ nancial assets, comprising principally marketable equity securities, are non derivatives that are either designated in this

category or not classiﬁ ed in any of the other categories. They are included in non current assets unless management intends to dispose of the

investment within 12 months of the balance sheet date.

Regular purchases and sales of investments are recognised on trade date to the date on which the Group commits to purchase or sell the asset.

Investments are initially recognised at fair value plus transaction costs for all ﬁ nancial assets not carried at fair value through proﬁ t or loss.

Fair value is determined by reference to closing market prices as at the end of the ﬁ nancial period. Fair value for securities held in escrow is

determined by discounting the closing market price.

(q) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair

value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging

instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either; (1) hedges of the fair value of

recognised assets or liabilities or a ﬁ rm commitment (fair value hedge); or (2) hedges of the cash ﬂ ows of recognised assets and liabilities and

highly probable forecast transactions (cash ﬂ ow hedges).

The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well

as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at

hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be

highly effective in offsetting changes in fair values or cash ﬂ ows of hedged items.

The fair values of various derivative ﬁ nancial instruments used for hedging purposes are disclosed in Note 12. Movements in the hedging

reserve in shareholders’ equity are shown in Note 26.

(i) Cash ﬂ ow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash ﬂ ow hedges is recognised in equity
in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within other

income or other expense.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect proﬁ t or loss

(for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging

variable rate borrowings is recognised in the income statement within ‘ﬁ nance costs’. The gain or loss relating to the effective portion of

forward foreign exchange contracts hedging export sales is recognised in the income statement within ‘sales’. However, when the forecast

transaction that is hedged results in the recognition of a non ﬁ nancial asset (for example, inventory) or a non ﬁ nancial liability, the gains and

losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the

asset or liability.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative

gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the

income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is

immediately transferred to the income statement.

(ii) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify

for hedge accounting are recognised immediately in the income statement and are included in other income or other expenses.

(r) Fair value estimation

The fair value of ﬁ nancial assets and ﬁ nancial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of ﬁ nancial instruments traded in active markets (such as publicly traded derivatives, and trading and available for sale

securities) is based on quoted market prices at the balance sheet date. The quoted market price used for ﬁ nancial assets held by the Group is

the current bid price; the appropriate quoted market price for ﬁ nancial liabilities is the current ask price.

The fair value of ﬁ nancial instruments that are not traded in an active market (for example, over the counter derivatives) is determined using

valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each

balance date.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair

value of ﬁ nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash ﬂ ows at the current market interest

rate that is available to the Group for similar ﬁ nancial instruments.

(s) Property, plant and equipment

Buildings, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable

to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash ﬂ ow hedges of foreign

currency purchases of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that

future economic beneﬁ ts associated with the item will ﬂ ow to the Group and the cost of the item can be measured reliably. All other repairs

and maintenance are charged to the income statement during the ﬁ nancial period in which they are incurred.

Depreciation of assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over

their estimated useful lives, as follows:

Buildings

10 years

Plant and equipment

3 - 13 1/3 years

Where the carrying value of an asset is less than its estimated residual value, no depreciation is charged. The assets’ residual values and useful

lives are reviewed, and adjusted if appropriate, at each balance sheet date.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated

recoverable amount (Note 1(k)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

(t) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of ﬁ nancial year which are unpaid. The

amounts are unsecured and are usually paid within 30 days from end of month of recognition.

(u) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.

Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the

period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not incremental
costs relating to the actual draw down of the facility, are recognised as prepayments and amortised on a straight line basis over the term of

the facility.

The fair value of the liability portion of convertible debt is determined using a market interest rate for an equivalent non convertible debt.

This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the debt. The remainder of the

proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.

Borrowings are classiﬁ ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least

12 months after the balance sheet date.

(v) Borrowing costs

Borrowing costs incurred in establishing ﬁ nance facilities are capitalised and amortised over the term of the ﬁ nance facility or ﬁ ve years;

whichever is the shorter.

(w) Provisions

Provisions for legal claims and rehabilitation and restoration costs are recognised when the Group has a present legal or constructive obligation

as a result of past events, it is more likely than not that an outﬂ ow of resources will be required to settle the obligation, and the amount has

been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outﬂ ow will be required in settlement is determined by considering

the class of obligations as a whole. A provision is recognised even if the likelihood of an outﬂ ow with respect to any one item included in the

same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the
balance sheet date. The discount rate used to determine the present value reﬂ ects current market assessments of the time value of money
and the risks speciﬁ c to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(x) Employee beneﬁ ts
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non monetary beneﬁ ts, annual leave and accumulating sick leave expected to be settled within
12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured
at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave
The liability for long service leave is recognised in the provision for employee beneﬁ ts 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 expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outﬂ ows.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont
(iii) Share based payments
Share based compensation beneﬁ ts are provided to employees via the St Barbara Limited Employees’ Option Plan and shareholder approved
executive options. Information relating to these schemes is set out in Note 37.

Shares options granted before 7 November 2002 and/or vested before 1 January 2005
No expense is recognised in respect of these options or shares issued to employees for nil consideration. The shares are recognised when the
options are exercised and the proceeds received allocated to share capital.

Shares options granted after 7 November 2002 and vested after 1 January 2005
The fair value of Executive Options and options granted under the St Barbara Limited Employees’ Option Plan are recognised as an employee
beneﬁ t expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which
the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black Scholes option pricing model that takes into account the exercise price,
the term of the option, the vesting and performance criteria, the impact of dilution, the non tradeable nature of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the option.

Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share capital.

(iv) Retirement beneﬁ t obligations
Contributions to deﬁ ned contribution funds are recognised as an expense as they become payable. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in future payments is available.

(v) Executive bonuses
Senior executives may be eligible for annual bonuses subject to achievement of Key Performance Indicators, as recommended by the
Remuneration Committee and approved by the Board of Directors from time to time.

(y) Contributed equity
Ordinary shares are classiﬁ ed as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the
acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, eg as the result of a share buy-back, those instruments are deducted from equity and the
associated shares are cancelled. No gain or loss is recognised in the proﬁ t or loss and the consideration paid including any directly attributable
incremental costs (net of income taxes) is recognised directly in equity.

(z) Dividends
Provision is made for the amount of any dividend declared on or before the end of the ﬁ nancial year but not distributed at balance date.

(aa) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the proﬁ t attributable to equity holders of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the half year, adjusted for bonus
elements in ordinary shares issued during the half year.

(ii) Diluted earnings per share
Diluted earnings per share adjusts the ﬁ gures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other ﬁ nancing 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.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 1 - Summary of signiﬁ cant accounting policies cont

(ab) Restricted cash and cash equivalents

Funds placed on deposit with ﬁ nancial institutions to secure performance bonds are classiﬁ ed as Non-Current Restricted Cash and Cash

Equivalents.

(ac) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation

authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable

to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash ﬂ ows are presented on a gross basis. The GST components of cash ﬂ ows arising from investing or ﬁ nancing activities which are recoverable

from, or payable to the taxation authority, are presented as operating cash ﬂ ow.

(ad) Rehabilitation and mine closure costs

The consolidated entity has obligations to dismantle, remove, restore and rehabilitate certain items of property, plant and equipment.

Under AASB 116 Property, Plant and Equipment, the cost of an asset must include any estimated costs of dismantling and removing the asset

and restoring the site on which it is located. The capitalised rehabilitation and mine closure costs are depreciated (along with the other costs

included in the asset) over the asset’s useful life. The depreciation expense is included in the cost of sales goods.

AASB 137 Provisions, Contingent Liabilities and Contingent Assets requires a provision to be raised for the present value of the estimated cost

of settling the rehabilitation and restoration obligations existing at balance date. The estimated costs are discounted using a pre-tax discount

rate that reﬂ ects the time value of money. The discount rate must not reﬂ ect risks for which future cash ﬂ ow estimates have been adjusted.

A discount rate of 7.0% has been used in calculating the rehabilitation and restoration provisions of the consolidated entity.

As the value of the provision represents the discounted value of the present obligation to restore, dismantle and rehabilitate, the increase in

the provision due to the passage of time is recognised as a borrowing cost. This borrowing cost is excluded from the cost of sales of goods.

(ae) Financial instrument transaction costs

The consolidated entity has taken exemption available under AASB 1 to apply AASB 132 and AASB 139 from 1 July 2005. The consolidated

entity has applied previous AGAAP in the comparative information on ﬁ nancial instruments within the scope of AASB 132 and AASB 139. Under

previous AGAAP, transaction costs were excluded from the amounts disclosed in the ﬁ nancial statements. Under AIFRS, such costs are included

in the carrying amounts. At the date of transition to AASB 132 and AASB 139 the adjustment to carrying amounts for the consolidated entity

was immaterial.

(af) Rounding of amounts

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 ﬁ nancial report. Amounts in the ﬁ nancial report have been rounded off in accordance with that Class Order

to the nearest thousand dollars, or in certain cases, the nearest dollar.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 2 - Financial risk management

The Group’s activities expose it to a variety of ﬁ nancial risk, market risk (especially gold price and option volatility risk), credit risk, liquidity

risk and cash ﬂ ow interest rate risk. The Group’s overall risk management program focuses on the unpredictability of commodity markets and

seeks to minimise potential adverse effects on the ﬁ nancial performance of the Group. The Group uses derivative instruments as appropriate

to hedge certain risk exposures.

Risk management is carried out by management under policies approved by the Board of Directors.

(a) Market risk

(i) Commodity price risk

The Group is exposed to Australian gold price risk. This arises through sales of the Group’s main commodity, gold. The commodity price risk

may be hedged using derivative instruments, to secure cash ﬂ ows from mining operations.

(ii) Equity securities price risk

The Group is exposed to equity securities price risk. This arises from investments held by the Group and classiﬁ ed on the balance sheet either
as available for sale or at fair value through proﬁ t or loss.

(iii) Fair value interest rate risk

Refer to (d) below.

(b) Credit risk

The Group has no signiﬁ cant concentrations of credit risk with revenues primarily derived from gold sales direct to reﬁ ners or hedge counter

parties. Derivative counterparties and cash transactions are limited to high credit quality ﬁ nancial institutions.

Prudent liquidity risk management implies maintaining sufﬁ cient cash and marketable securities, the availability of funding through an adequate

amount of committed credit facilities and the ability to close out market positions.

(d) Cash ﬂ ow and fair value interest rate risk

The Group has signiﬁ cant interest bearing assets however, as these assets are short dated (90 days or less) the Group’s income and operating

cash ﬂ ows are not materially exposed to changes in market interest rates.

Note 3 - Critical Accounting Estimates And Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future

events that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by deﬁ nition, seldom

equal the related actual results. The estimates and assumptions that have a signiﬁ cant risk of causing a material adjustment to the carrying

amounts of assets and liabilities within the next ﬁ nancial year are discussed below:

(i) Impairment of assets

The recoverable amount of each Cash Generating Unit (CGU) is determined as the higher of value-in-use and fair value less costs to sell, in

accordance with accounting policy 1(k). These calculations require the use of estimates, which have been outlined in accounting policy 1(k).

Given the nature of the consolidated entity’s mining activities, future changes in long term assumptions upon which these estimates are based,

may give rise to material adjustment to the carrying value of the CGU. This could lead to the recognition of impairment losses in the future. The

inter-relationships of the signiﬁ cant assumptions upon which estimated future cash ﬂ ows are based, however, are such that it is impracticable

to disclose the extent of the possible effects of a change in a key assumption in isolation.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 3 - Critical Accounting Estimates And Judgements cont

The key sources of estimation uncertainty are set out below:

estimates of future Australian gold prices;
future capital and operating costs for Southern Cross gold operations for which additional information will progressively become available
in the next ﬁ nancial year; and
extent of economically recoverable reserves for Southern Cross and Leonora gold operations.

(ii) Mining and development costs

Expenditure for the Gwalia Deeps project at Leonora which does not form part of the Cash Generating Units assessed for impairment has been

carried forward in accordance with policy 1(f) on the basis of the existence of sufﬁ ciently economically recoverable reserves, or the Company’s

ability through a disposition of its interests to recover its spent costs.

(iii) Rehabilitation and mine closure provisions

As set out in Note 1(ad), the value of these provisions represents the discounted value of the present obligation to restore, dismantle and
rehabilitate certain items of property, plant and equipment. The discounted value reﬂ ects a combination of management’s assessment of the

cost of performing the work required, the timing of the cash ﬂ ows and the discount rate of 7%.

A change in any, or a combination, of the three key assumptions used to determine the provisions could have a material impact to the carrying

value of the provision (refer to Note 24).

(iv) Available for sale ﬁ nancial assets

Non-derivative investments in marketable securities are valued using fair value accounting principles. The ultimate value achievable for those

assets depends on the market value at the time of divestments less transaction costs.

(v) Income tax

The consolidated entity is subject to income taxes in Australia. Signiﬁ cant judgement is required in determining the provision for income

taxes. There are many transactions and calculations for which the ultimate determination is not ﬁ nalised until statutory tax returns are lodged

with the appropriate authorities. Where the ﬁ nal tax outcome of these matters is different from the amounts that were initially recorded,

such differences will impact the current and deferred tax provisions in the period in which such determination is made which is usually the

subsequent ﬁ nancial year.

The key assumptions made regarding the income tax expense for the current year are the deductibility for tax purposes of all exploration

expenditures and the level of capital gains on asset disposals that can be shielded by available capital losses.

(b) Critical judgements in applying the entity’s accounting policies

(i) Derivative ﬁ nancial instruments

Gold hedge contracts with an aggregate mark-to-market value of negative $9,372,000 have been designated as effective hedges and accounted

for in accordance with Note 1(q). Management’s assessment is that the derivatives have been highly effective in offsetting changes in the fair

value of the future cash ﬂ ows against which they have been designated and, as such, movements in the intrinsic fair value (before tax) of

$5,029,000 that would otherwise have been recorded directly in the Income Statement have been deferred in the Hedging Reserve.

(ii) Recovery of deferred tax assets

Net deferred tax assets of $19,634,000, including tax losses are not recognised. Management has assessed that it is not yet probable that these

tax losses will be recoverable against future taxable proﬁ ts.

Note 4 - Segment Information

The consolidated entity operates predominantly in the minerals exploration and mining industry in Australia.

The consolidated entity’s head ofﬁ ce is in Australia.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 5 - Revenue

Sales revenue

Sale of gold

Other revenue

Interest

Total revenue

Note 6 - Other Income

Proﬁ t on sale of assets

Gain on subsidiary becoming an associate

Other

Note 7 - Expenses

Proﬁ t/(loss) before income tax includes the following speciﬁ c expenses:

Depreciation

Buildings

Plant and equipment

Total depreciation

Amortisation

Mine development costs

Plant/equipment ﬁ nance leases

Total amortisation

Finance costs

Interest and ﬁ nance charges paid/payable

Finance costs expensed

Rental expense relating to operating leases

Lease payments

Total rental expense relating to operating leases

Note 8 - Income tax beneﬁ t

(a) Income tax beneﬁ t

Deferred income tax beneﬁ t

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

115,263

46,553

115,263

1,514

397

1,514

2005

$’000

46,553

397

116,777

46,950

116,777

46,950

22,796

137

5,809

13,920

164

22,796

5,293

137

164

22,933

19,893

22,933

5,457

583

632

8,641

267

8,908

773

365

736

806

7,287

524

188

583

632

8,641

267

8,908

773

365

736

806

7,287

524

188

1,428

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 8 - Income tax beneﬁ t cont

(b) Numerical reconciliation of income tax expense to prima facie tax payable

Proﬁ t/(loss) before income tax beneﬁ t

Tax at the Australian tax rate of 30% (2005 – 30%)

Tax effect of amounts which are not deductible (taxable) in calculating taxable income

Legal and other capital expenditure

Share based payments

Information technology costs

Share issue costs

Sundry items

(Prior year tax losses not recognised now recouped)/tax losses not recognised

Income tax beneﬁ t

Refer to Note 8(c) for details of the deferred tax beneﬁ t.

Deferred tax liabilities

Investment fair value reserve (i)

Depreciation

Accrued income

Mining properties – exploration

Mining properties – development

Prepayments

Inventory

Total

Tax effect @ 30%

Deferred tax assets

Tax losses

Unrealised Gold Hedging revaluation reserve (i)

Unrealised loss on gold derivative

Provisions and accruals

Depreciation

Total

Tax effect @ 30%

Net deferred tax asset (unbooked)

Consolidated

Parent entity

2006

$’000

4,591

1,377

106

299

176

(143)

(3,276)

(1,428)

9,790

260

486

1,916

10,029

22,481

6,744

49,074

5,029

4,342

29,481

87,926

26,378

19,634

2005

$’000

6,831

2,049

448

199

310

(3,006)

2006

$’000

4,772

1,432

106

299

176

(143)

(3,331)

(1,428)

9,790

260

486

2005

$’000

(6,223)

(1,867)

448

199

235

985

9,066

1,916

9,066

10,029

1,864

2,637

13,570

4,071

22,481

6,744

1,864

2,637

13,570

4,071

4,267

49,074

4,267

5,948

9,201

19,416

5,825

1,754

5,029

4,342

29,481

87,926

26,378

19,634

5,948

9,201

19,416

5,825

1,754

(i) These deferred tax balances have initially been recognised via equity. As the deferred tax asset recognised via equity is less than the

deferred tax liability recognised via equity this has resulted in an income tax beneﬁ t for the year of $1,428,000 (2005: $nil).

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 9 - Current assets - Cash and cash equivalents

Cash at bank and on hand

Deposits at call

Consolidated

Parent entity

2006

$’000

75,361

3,975

79,336

2005

$’000

1,454

14,819

16,273

2006

$’000

75,361

3,975

79,336

2005

$’000

1,454

14,819

16,273

(a) Cash at bank and on hand

Cash at bank at 30 June 2006 invested “at call” was earning interest of approximately 4.75% pa calculated daily.

(b) Deposits

The deposits at 30 June 2006 invested at call were earning 5.65% and deposits invested for 60 days maturing 6 August 2006 at an interest rate

of 5.85% per annum.

Term deposits

647

11,801

647

11,801

Restricted cash is cash placed on deposit to secure bank guarantees in respect of obligations entered into for ofﬁ ce rental obligations and

environmental performance bonds issued in favour of the Western Australian Department of Industry and Resources.

Note 10 - Trade and other receivables

Current assets

Trade receivables

Provision for doubtful receivables

Sub-total

Subsidiary loans

Less provision for non-recovery

Other receivables

Prepayments

Total

Non-current assets

Subsidiary loans

Less provision for non-recovery

Total

(a) Other receivables

3,057

2,561

3,057

(56)

2,505

2,624

1,615

7,296

2,262

1,864

6,631

3,057

1,896

(1,120)

776

2,624

1,615

8,072

2,561

(56)

2,505

2,262

1,864

6,631

2,225

(1,630)

595

These amounts generally arise from transactions outside the usual operating activities of the Group. Collateral is not normally obtained.

(b) Effective interest rates and credit risk

Information concerning the effective interest rate and credit risk of both current and non current receivables is set out in Note 16.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 11 - Current assets - Inventories

Consumables

Less: provision for obsolescence

Ore stockpiles

Gold in circuit

Note 12 - Derivative ﬁ nancial instruments

Current assets

Listed options at fair market value

Current liabilities

Commodity hedge contracts

(a) Transition to AASB 132 and AASB 139

Consolidated

Parent entity

2006

$’000

2,476

2,774

887

6,137

9,372

2005

$’000

2,635

(130)

1,943

4,448

2006

$’000

2,476

2,774

887

6,137

9,372

2005

$’000

2,635

(130)

1943

4,448

The Group has taken the exemption available under AASB 1 First time Adoption of Australian Equivalents to International Financial Reporting

Standards to apply AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement

from 1 July 2005. At the date of transition to these standards of 1 July 2005 listed options held for trading had no signiﬁ cant value.

(b) Instruments used by the Group

The Group is party to derivative ﬁ nancial instruments in the normal course of business in order to hedge exposure to ﬂ uctuations in the

Australian price of gold in accordance with the Group’s ﬁ nancial risk management policies (refer to Note 1(q)).

(i) Gold commodity hedges

On 6 January 2006, the Company entered into a collar hedge comprising 176,000 ounces bought put options at AUD700 per ounce ﬁ nanced by

176,000 sold call options exercisable at AUD770/oz.

As at 30 June 2006, 126,000 ounces of committed and hedged ounces remained, comprising 115,000 ounces of bought put options and sold call

options, and 11,000 ounces of gold forward sales at approximately $774 per ounce derived from the exercise of June 2006 sold call options,

with a mark-to-market valuation as at that date of negative ($9,371,000) for both the Group and parent entity. Of this sum, $4,342,000

was recognised as an expense in the Income Statement, and $5,029,000 was recognised as a cash ﬂ ow hedge (Gold Hedge Reserve)

reduction to equity.

Refer to Note 16 for the Group’s exposure to interest rate risk.

(d) Commodity Price Risk

The consolidated entity is exposed to Australian dollar gold commodity price risk in the normal course of its business.

The consolidated entity managed this risk in the ﬁ nancial year by hedging approximately 60% to 70% of forecast gold production through to

June 2007. The current hedge facility was entered into in January, 2006. It comprised the purchase of 176,000 put options at A$700 per ounce

ﬁ nanced by selling 176,000 call options at A$770 per ounce.

The following table shows the remainder of those hedged ounces undelivered (if called) as at 30th June, 2006. The committed total includes

11,000 ounces, resulting from the exercise of June 2006 sold call options, which will be delivered during July and August 2006.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 12 - Derivative ﬁ nancial instruments cont

In compliance with the Company’s accounting policy (Refer Note 1), the hedged commitment of 126,000 ounces has been valued at negative

($9,371,000) as at 30th June, 2006 of which $4,342,000 (time and volatility value movement) is charged to the Income Statement as an expense

while the remaining $5,029,000 (market value movement) is debited to Gold Hedge Reserve.

Hedged Ounces as at 30 June 2006

Expiry

27 Jul 06

29 Aug 06

27 Sep 06

27 Oct 06

28 Nov 06

22 Dec 06

29 Jan 07

26 Feb 07

28 Mar 07

26 Apr 07

29 May 07

27 Jun 07

31 Jul 07

Total ozs

Volume (ozs)

Committed

Sold Calls/

(ozs)

Bought Puts

if Called

10,000

12,000

10,000

12,000

14,000

12,000

8,000

5,000

11,000

10,000

12,000

10,000

12,000

14,000

12,000

8,000

5,000

115,000

126,000

Note 13 - Deferred mining costs

Current

Deferred mining costs

Non-current

Deferred mining costs

Note 14 - Non-current assets classiﬁ ed as held for sale

Current

Investments

- At cost

- Provision for diminution

Property, plant and equipment owned

- At cost

- At fair value

- Accumulated depreciation

Consolidated

Parent entity

2006

$’000

11,488

3,744

2005

$’000

9,173

(3,069)

6,104

14,968

21,072

2006

$’000

11,488

3,744

2005

$’000

9,173

(3,069)

6,104

14,968

21,072

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 15 - Non current assets - available for sale ﬁ nancial assets

At beginning of year

Adjustment on adoption of AASB 132 and AASB 139

Additions

Disposals

Revaluation surplus transferred to equity

At end of year

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

3,420

19,779

(3,420)

9,731

29,510

3,420

19,779

(3,420)

9,731

29,510

(a) Transition to AASB 132 and AASB 139
The Group has taken the exemption available under AASB 1 First time Adoption of Australian Equivalents to International Financial Reporting

Standards to apply AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and

Measurement from 1 July 2005. At the date of transition to these standards of 1 July 2005:

equity securities with a carrying amount of $2,533,000 that were classiﬁ ed in the balance sheet under previous AGAAP as other ﬁ nancial
assets were designated and re classiﬁ ed as available for sale ﬁ nancial assets; and
an adjustment of $887,000 was recognised. This represented an initial gain on remeasurement to fair value of assets that under previous
AGAAP had been measured at cost.

For further information refer to section 5 of Note 40.

(b) Listed securities

Listed securities include shares listed on Australian or recognised overseas exchanges.

Investments in listed securities during the 2006 year largely arose by receiving shares as part consideration for the sale of strategic assets.

These investments include:

Shares from the sale of Meekatharra:

Name: Mercator Gold plc

Number: 11,017,000

Valuation @ 30 June 2006: 17,897,000 (including 8% discount to market)

Shares from the sale of South Laverton:

Name: Saracen Minerals Limited

Number: 23,821,000

Valuation @ 30 June 2006: 9,643,000 (including 8% discount to market)

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 16 - Financial Instruments

(a) Credit Risk Exposures

The credit risk on ﬁ nancial 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.

(b) 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 ﬁ xed rate assets and liabilities to maturity.

Fixed interest maturing in: 30 June 2006

Financial assets

Cash and cash equivalents

Restricted cash and cash equivalents

Receivables

Available for sale ﬁ nancial assets

Weighted average interest rate

Financial liabilities

Trade and other creditors

Lease liabilities

Other loans

Weighted average interest rate

Net ﬁ nancial assets/(liabilities)

Non-

interest

bearing

$’000

5,681

29,510

35,191

Total

$’000

79,336

647

5,681

29,510

115,174

(28,692)

(298)

(644)

(1,254)

(298)

(28,692)

(30,590)

Floating

1 year or

Over 1 to

interest

less

5 years

rate $’000

$’000

24,336

55,000

399

55,399

5.85%

(346)

(1,254)

(1,600)

248

24,584

5.42%

24,584

7.97%

53,799

8.17%

(298)

6,499

84,584

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Fixed interest maturing in: 30 June 2005

Note 16 - Financial Instruments cont

Financial assets

Cash and cash equivalents

Restricted cash and cash equivalents

Receivables

Investments

Weighted average interest rate

Financial liabilities

Trade and other creditors

Other loans

Weighted average interest rate

Net ﬁ nancial assets/(liabilities)

Floating

1 year or

Over 1 to

interest

less

5 years

rate $’000

$’000

16,273

11,801

28,074

5.12%

28,074

(1,541)

7.00%

(1,541)

(7,000)

8.00%

Non-

interest

bearing

$’000

6,631

6,104

Total

$’000

16,273

11,801

6,631

6,104

12,735

40,809

(16,344)

(8,541)

(16,344)

(24,885)

(7,000)

(3,609)

(15,924)

(i) On-Balance Sheet

The net fair value of cash and cash equivalents and non-interest bearing monetary ﬁ nancial assets and ﬁ nancial liabilities of the consolidated entity

approximates their carrying value. The net fair value of other monetary ﬁ nancial assets and ﬁ nancial liabilities is based upon market prices.

(ii) Off-Balance Sheet

The consolidated entity has potential ﬁ nancial 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.

(iii) Fair values

The carrying amounts and the net fair values of ﬁ nancial assets and liabilities at balance date are:

On balance sheet ﬁ nancial instruments

Financial assets

- Cash and restricted cash

- Receivables

- Available for sale ﬁ nancial assets

- Non-current assets classiﬁ ed as held for sale

Financial liabilities

- Payables

- Other loans

2006

2005

Carrying

Net fair

Carrying

Net fair

amount

$’000

value

$’000

amount

$’000

value

$’000

79,983

5,681

29,510

115,174

28,692

1,898

30,590

28,074

6,631

6,104

40,809

16,344

8,541

24,885

28,074

6,631

6,104

40,809

16,344

8,541

24,885

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 17 - Non current assets - property, plant and equipment

Land

Buildings

Less accumulated depreciation

Housing & site buildings

Plant and equipment

Less accumulated depreciation

Total

Reconciliation 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

Write off of assets

Provision for diminution

Carrying amount at the end of year

Buildings

Carrying amount at the beginning of year

Disposals

Depreciation

Write off of assets

Carrying amount at the end of year

Housing & site buildings

Carrying amount at the beginning of year

Transferred from plant & equipment

Carrying amount at the end of year

Plant and equipment

Carrying amount at the beginning of year

Transfer from assets held for resale

Additions

Disposals

Depreciation

Transferred to inventory

Transferred to housing & site buildings

Carrying amount at the end of year

(a) Non current assets pledged as security

Consolidated

Parent entity

2006

$’000

859

1,500

8,215

2005

$’000

2006

$’000

2005

$’000

972

4,069

(3,964)

63,167

1,500

8,215

113

4,069

(3,964)

63,167

(583)

(55,248)

(583)

(55,248)

9,991

8,996

9,132

8,137

972

(5)

(108)

859

105

(55)

(49)

(1)

1,500

1,244

(21)

(251)

972

196

(21)

(70)

105

7,919

3,507

818

(14,967)

1,247

20,200

(583)

(269)

(1,500)

7,632

9,991

(85)

(736)

7,919

8,996

113

(5)

(108)

105

(55)

(49)

(1)

1,500

7,919

818

1,247

(583)

(269)

(1,500)

7,632

9,132

135

(22)

113

196

(21)

(70)

105

3,490

(14,967)

20,200

(68)

(736)

7,919

8,137

Refer to Note 23 for information on non current assets pledged as security by the parent entity and its controlled entities.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 18 - Non-current assets - mine properties/exploration and evaluation

Mine properties - development

Opening balance

Direct expenditure

Acquired tenements

New rehabilitation obligations

Amortisation for the year

Disposals

Closing balance

Exploration and evaluation

Opening balance

Acquired tenements

Expenditure for period

Provision for diminution

Deconsolidation adjustment

Disposals

Closing balance

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

5,781

23,770

120

2005

$’000

3,696

13,068

5,781

23,770

120

(12,743)

(7,287)

(12,743)

(3,696)

16,928

5,781

16,928

3,696

13,068

(7,287)

(3,696)

5,781

9,067

135

1,781

38,705

(775)

(28,863)

9,067

135

1,781

38,705

(775)

(28,863)

(9,067)

1,916

9,067

1,916

9,067

Note 19 - Non-current assets – other ﬁ nancial assets

Other ﬁ nancial assets

178

179

Other ﬁ nancial assets represents the Parent entity’s investment in wholly owned subsidiaries.

Refer Note 31 for further detail.

Note 20 - Current liabilities - trade and other payables

Trade payables

Other payables

27,000

1,692

28,692

16,225

119

16,344

38,401

1,692

40,093

16,225

119

16,344

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 21 - Current liabilities – interest bearing liabilities

Secured

Lease liabilities (Note 29)

Unsecured

Insurance premium funding

Total current borrowings

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

346

1,254

1,600

1,465

1,541

1,254

1,600

1,465

1,541

(a) Insurance premium funding

The Company ﬁ nances its annual insurance premiums using unsecured premium funding.

(b) Interest rate risk exposures

Details of the Group’s exposure to interest rate changes on borrowings are set out in the Financial Instruments Note.

Note 22 - Non-current liabilities – payables

Loans from controlled entities

Note 23 - Non current liabilities – interest bearing liabilities

Secured

Lease liabilities (Note 29)

Other loans (Note 23b)

Total secured non current borrowings

298

7,000

11,402

298

7,000

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 23 - Non current liabilities – interest bearing liabilities cont

Consolidated

Parent entity

(a) Total secured liabilities

Carrying amounts of assets pledged as security for current and non current borrowings are:

2006

$’000

2005

$’000

2006

$’000

2005

$’000

Current

Floating charge

Cash and cash equivalents

Receivables

Inventories

Non-current assets held for sale

Derivative ﬁ nancial assets

Deferred mining costs

79,336

16,273

79,336

16,273

7,296

6,137

11,488

6,631

4,448

21,072

8,072

6,137

11,488

6,631

4,448

21,072

Total current assets pledged as security

104,316

48,424

105,092

48,424

Non current

First mortgage

Restricted cash

Mine properties/exploration and evaluation

Deferred mining costs

Finance lease

Plant and equipment

Floating charge

Receivables non current

Available for sale ﬁ nancial assets

Freehold land and buildings

Plant and equipment

647

18,844

3,744

23,235

634

29,510

1,500

7,857

38,867

11,801

14,848

26,649

1,077

7,919

8,996

647

18,844

3,744

23,235

11,801

14,848

26,649

634

29,688

1,500

6,998

38,186

595

179

218

7,919

8,911

Total non current assets pledged as security

58,992

35,645

62,055

35,560

Total assets pledged as security

167,052

84,069

167,147

83,984

As at 30 June 2006, assets pledged as security comprised secured lease liabilities amounting to $644,000 and an environmental performance

bond facility amounting to $20,647,000.

(b) Convertible notes

On 29 March 2005, the Company drew down a $7,000,000 convertible note from a bridge loan facility provided by Resource Capital Funds III LP

(“RCFIII”) to assist in ﬁ nancing the acquisition of the gold division of Sons of Gwalia Ltd (Administrators Appointed) (“SGWGD”).

Interest is payable on funds drawn at the rate of 8% per annum, payable six monthly in arrears, and with the Company to absorb withholding
taxes (currently 10% of gross interest).

The $7,000,000 convertible loan was converted to equity on 27 March 2006, on conversion terms approved by shareholders at the Annual
General Meeting held on 16 November 2005, being 100,000,000 shares at 7 cents each.

(c) Set off of assets and liabilities
The parent entity has established a legal right of set off with a ﬁ nancial institution over cash on deposit to secure the issue of environmental

performance bonds issued in excess of $20,000,000. At 30 June 2006 restricted cash for this purpose amounted to $647,000 (2005: $11,801,000).

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 24 - Non current liabilities – provisions

Provision for rehabilitation

Employee beneﬁ ts - long service leave

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

27,951

39,111

27,951

39,111

28,003

39,111

28,003

39,111

Movements in provisions

Movements in each class of provision during the ﬁ nancial year, other than employee beneﬁ ts, are set out below:

Non-current

Rehabilitation

Balance at start of year

Additional provision made on acquisition

Additional provision for new activities

Reduction related to disposal of tenements

Unwinding of discount

Payments made

Adjustment on re-estimation

Balance at end of year

Note 25 - Contributed equity

(a) Share capital

Ordinary shares

Fully paid

39,111

120

(10,913)

784

(791)

(360)

4,191

34,920

(791)

39,111

120

(10,913)

784

(360)

4,191

34,920

27,951

39,111

27,951

39,111

Parent entity

2006

2005

2006

$’000

2005

$’000

819,390,567

566,533,352

205,815

135,053

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 25 - Contributed equity cont

(b) Movements in ordinary share capital:

Date

Details

Notes

Issue price

$,000

Number of

1 July 2004

Opening balance

Debt conversion

Share issue

Share placement

Share issue costs

Share placement

Share issue

Share buy-back

1 July 2005

Opening balance

Plus

Share issues

(i)

(ii)

(iii)

(iv)

(v)

(vi)

574,149,157

55,000,000

17,480,547

42,050,000

26,591,453

21,554,172

(170,291,977)

566,533,352

Exercise of options

Placement of new shares

Transaction costs arising on share issue

Share buybacks

Conversion of convertible note

Transfer of Option Reserve on conversion of options

(viii), (ix), (x)

63,662,275

(f)

(vii)

23(b)

99,000,000

(9,805,060)

100,000,000

819,390,567

Less

Plus

30 June 2006

$0.08

$0.05

$0.04

$0.05

$0.06

$0.05

$0.13

$0.60

$0.41

139,400

4,400

804

1,682

(33)

1,223

1,200

(13,623)

135,053

8,638

59,400

(2,378)

(4,008)

6,667

2,443

205,815

(i) Ocean Resources Capital Holdings Limited (“Ocean”) converted a convertible note for $4,400,000 into 55,000,000 fully paid ordinary

shares at 8¢ each.

(ii) Ocean accepted the issue of 17,480,547 fully paid ordinary shares in satisfaction of interest of $804,105 at 4.6¢ per share.

(iii) Share issue costs of $33,000 were offset against issued capital as allowed by Australian Accounting Standards.

(iv) Resource Capital Funds II LP (“RCFII”) accepted a placement of 26,591,453 fully paid ordinary shares at 4.6¢ per share to raise

$1,223,207 for working capital.

(v)

In July 2004, RCFII advanced the Company $1,200,000 which was converted into 21,554,172 fully paid ordinary shares, following

shareholder approval.

(vi)

In the December 2004/January 2005 period the Company conducted a share swap buy back of shares, whereby 1.25 NuStar shares owned

by the Company were offered for every 1 St Barbara Limited share bought back. A total of 170,291,977 St Barbara Limited shares,

representing 23% of share capital at that time, were bought back in exchange for 212,864,971 NuStar shares. As a result of the buy back,

the excess of the market value over book value of NuStar shares of $5,109,000 has been applied to accumulated losses.

(vii) On-market buy back of shares

(viii) Shares issued on exercise of unlisted options held by Resource Capital Funds LP II

(ix) Shares issued on exercise of unlisted options held by executives and employees

(x) Shares issued on exercise of unlisted options held by SCSH Investments Pty Ltd (previously held by Resource Capital Funds LP II)

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.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 25 - Contributed equity cont

(d) Options

Information relating to the St Barbara Employee Option Plan and Executive Options, including details of options issued, exercised and lapsed

during the ﬁ nancial year and options outstanding at the end of the ﬁ nancial year, is set out in Note 37.

(e) Share buy back

The Company announced an on-market buy-back of shares on 26 July 2005. Pursuant to this buy-back, during the ﬁ nancial period, a total of

9,805,060 shares were bought back at a cost of $4,008,000.

(f) Share placement

On 18 May 2006 the Company placed 99,000,000 shares at 60 cents each to raise $59,400,000 before transaction costs of $2,378,000.

Note 26 - Reserves and retained proﬁ ts

(a) Reserves

Reserves

Option reserve

Share based payment reserve

Investment fair value reserve

Convertible liability reserve

Gold hedge reserve

Movements

Option reserve

Balance at start of year

Options exercised

Balance at end of year

Share based payment reserve

Balance at start of year

Option expense

Balance at end of year

Investments fair value reserve

Balance at start of year

Adjustment on adoption of AASB 132 and AASB 139

Transfer on disposal

Fair value adjustments

Tax effect of fair value adjustment @ 30%

Balance at end of year

RCF Convertible liability reserve

Balance at start of year

Adjustment on adoption of AASB 132 and AASB 139

Balance at end of year

Gold hedge reserve

Balance at start of year

Fair value adjustment

Tax effect of fair value adjustment @ 30%

Balance at end of year

Consolidated

Parent entity

2006

$’000

1,660

6,794

432

(3,521)

2005

$’000

2,443

664

2006

$’000

1,660

6,794

432

(3,521)

2005

$’000

2,443

664

5,365

3,107

5,365

3,107

2,443

(2,443)

664

996

1,660

887

(887)

9,731

(2,937)

6,794

432

(5,029)

1,508

(3,521)

1,959

484

2,443

664

2,443

(2,443)

664

996

1,660

887

(887)

9,731

(2,937)

6,794

432

(5,029)

1,508

(3,521)

1,959

484

2,443

664

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 26 - Reserves and retained proﬁ ts cont

(b) Accumulated losses

Movements in accumulated losses were as follows:

Balance at start of year

Adjustment on adoption of AASB132 and AASB139

Proﬁ t/(loss) attributable to members of St Barbara Limited

Share swap/buy back

Balance at end of year

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

(118,087)

(130,027)

(129,574)

(128,460)

(25)

6,019

6,831

5,109

(25)

6,200

(6,223)

5,109

(112,093)

(118,087)

(123,399)

(129,574)

Changes in the fair value and exchange differences arising on translation of investments, such as equities, classiﬁ ed as available for sale
ﬁ nancial assets, are taken to the available for sale investments revaluation reserve, as described in Note 1(p). Amounts are recognised in proﬁ t

and loss when the associated assets are sold or impaired.

(d) Gold hedge reserve

The hedging reserve is used to record gains or losses on a hedging instrument in a commodity hedge that are recognised directly in equity,

as described in Note 1(q). Amounts are recognised in proﬁ t and loss when the associated hedged transaction affects proﬁ t and loss.

(e) Share based payments reserve

The share based payments reserve is used to recognise the fair value of options issued to executives and employees but not exercised.

Note 27 - Remuneration of auditors

During the year the following fees were paid or payable for services provided by the

auditor of the parent entity, its related practices and non related audit ﬁ rms:

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

(a) Assurance services

Audit services

PricewaterhouseCoopers Australian ﬁ rm:

Audit & review of ﬁ nancial reports & other audit work under the Corporations Act 2001

Total remuneration for audit services

(b) Taxation Services

PricewaterhouseCoopers Australian ﬁ rm:

Tax compliance services, including review of Company income tax returns

Total remuneration for taxation services

179

145

109

179

145

109

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’

expertise and experience with the Group are important. These assignments are principally tax advice.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 28 - Contingencies
(a) Contingent liabilities
A summary of current litigation is as follows:

(i) Westgold
In late September 2000, a demand was made against the Company by Westgold Resources NL (“Westgold”) alleging loss and damages in the
sum of approximately $6,230,000. 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 claim by Westgold arises from a series of share transactions in the Company’s shares which took place between May and August 1997 as
follows:

On 12 May 1997, Westgold purchased 10,350,000 St Barbara Limited 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 approximately $18,400,000.
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 $19,100,000.
Approximately $8,400,000 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 only $991,931 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 principal causes of action in Westgold’s statement of claim against the Company 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.
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 alleges to have been made in public releases made
on or about 30 April 1997. Westgold alleges that the Company represented that, save for certain matters, the Company’s operations were
proceeding satisfactorily and that there were no further adverse factors affecting or likely to affect the Company’s operations or ﬁ nancial
position when in fact such was not the case.

The allegations are denied by the Company, the claim is being robustly defended and the Company is preparing for the matter to go to trial.
The Company has joined one of the Directors, who was a Director of the Company at the time, to the action and in the event that the Company
is found liable (which is denied) it will seek contribution from such Director.

The matter has been listed for trial between 6 November and 17 November 2006 inclusive.

None of the current Directors of the Company were directors of the Company at the time that the above share transactions took place in 1997.

(ii) Kingstream
On 2 July 2002, Kingstream Steel Limited (Subject to Deed of Company Arrangement) (“Kingstream”) commenced proceedings in the Supreme
Court of Western Australia against the Company and its 100% owned subsidiary, Zygot Ltd (“Zygot”). In early 2005, Kingstream obtained the
leave of the Court to substitute the trustees of Kingstream Steel’s Creditors Trust as plaintiffs in these proceedings, namely Bryan Kevin Hughes
and Vincent Anthony Smith.

Kingstream’s claim against the Company and Zygot arises from the withdrawal by Zygot of three mining lease applications (“MLAs”). Kingstream
alleges that these applications were 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 is seeking rectiﬁ cation of the supplementary Deed to include the MLAs on the basis that this was the common intention of the
parties. The Company denies that such was the common intention and further denies that rectiﬁ cation is available. Kingstream is also seeking
damages from the Company and Zygot for breach of contract and breach of duty of care. In early 2006, Kingstream provided its quantiﬁ cation
of the damages that it claims. Such quantiﬁ cation is based on two reports by Snowden Mining Industry Consultants Pty Ltd.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 28 - Contingencies cont

Kingstream’s particulars of alleged loss include a claim for the value of the MLAs at the time of withdrawal ($500,000), alternatively the value

of the lost opportunity of acquiring the MLAs ($13,070,000), and alternatively the diminution in value of the other tenements acquired by

Kingstream under the Option Deed ($14,200,000).

The proceedings are still at the interlocutory stage and have been, and will continue to be, defended.

None of the current Directors of the Company were directors at the time the relevant activities took place.

Note 29 - Commitments for Expenditure

Exploration

In order to maintain rights of tenure to mining tenements, the consolidated entity

is required to outlay for tenement rentals and minimum exploration expenditure

requirements of the Western Australian Department of Industry and Resources.

This requirement will continue for future years with the amount dependent upon

tenement holdings

Finance Lease Commitments

Analysis of ﬁ nance lease (hire purchase) commitments:

- Payable not later than one year (refer Note 21)

- Payable later than one year, not later than ﬁ ve years (refer Note 23)

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.

Analysis of non-cancellable operating lease commitments

Payable not later than one year

Payable later than one year, not later than ﬁ ve years

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

9,111

13,746

9,111

13,746

346

298

644

358

1,475

1,833

154

346

298

644

358

1,475

1,833

154

The non-cancellable operating lease commitments are the net rental payments associated with rental properties

Note 30 - Related party transactions

a) Directors and speciﬁ ed executives

Disclosures relating to Directors and speciﬁ ed executives are set out in Note 39.

(b) Transactions with entities in the wholly-owned group

St Barbara Limited is the parent entity in the wholly-owned group comprising the Company and its wholly-owned subsidiaries.

During the year the Company advanced an additional sum of $181,000 (2005: $nil) to entities in the wholly owned group. Total receivables

from subsidiaries amounted to $776,000 (2005: $595,000). 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.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 30 - Related party transactions cont

The Company provided funding to NuStar, a controlled entity but not wholly

Company

2006

$’000

2005

$’000

owned, for part of the 2005 year as follows:

Balance at beginning of ﬁ nancial year

Net funding advanced for exploration and all other activities on normal

commercial terms

Administration service fee

Repayment

(216)

(119)

120

215

The loan was repaid in full during the 2005 year. NuStar is no longer a controlled entity, and no further loans will be provided.

(d) Amounts receivable from and payable to entities in the

wholly-owned group and controlled entities

Aggregate amounts receivable at balance date from:

Non-current:

Entities in the wholly-owned group

Less provision for doubtful receivables

Aggregate amounts payable at balance date to:

Current:

Controlled entities

Non-current:

Company

2006

$’000

2005

$’000

1,896

2,225

(1,120)

(1,630)

776

595

Entities in the wholly-owned group

11,401

(e) Guarantees

Subsidiary companies have guaranteed the parent entity’s obligations under the Environmental Bond Facility provided by Commonwealth

Bank of Australia.

(f) Terms and conditions

Outstanding balances are unsecured, interest free and are repayable in cash.

(g) Amounts receivable from Director related entities

At 30 June 2006, there were no amounts receivable from Director related entities.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 30 - Related party transactions cont

(h) 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:

Director

K A Dundo

H G Tuten

Consolidated and

Parent Entity

2006

2005

2,030

698,380

262,323

Notes

1 K A Dundo was a non-executive Director of the Company up to the date of his resignation on 18 July 2004. K A Dundo is also a partner of

the legal ﬁ rm, Q Legal. For the month of July 2004, Q Legal invoiced the Company for legal services provided at normal commercial rates,
amounting to $2,030 plus GST and disbursements.

2 Payments to Resource Capital Fund III LP in respect of ﬁ nance facilities received, comprising a $7M Convertible Note and a $21M bank

guarantee facility to secure Environmental performance bonds for the acquisition of the gold division of Sons of Gwalia Limited. H G Tuten

is a Partner of RCF Management LLC the management company of Resource Capital Fund III LP.

Note 31 - Controlled entities

The consolidated entity consists of the Company and its wholly-owned controlled entities as follows.

Equity holding

Cost of Company’s investment

June 2006

June 2005

June 2006

June 2005

Name of entity

Class of Shares

Australian Eagle Oil Co Pty Ltd

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

Vaﬁ tu Pty Ltd

Zygot Pty Ltd

Ordinary

100

Each company in the consolidated entity was incorporated in Australia.

100

$’000

178

$’000

179

178

179

The Company ceased consolidating Nustar on 30 September 2004 when it reduced its equity position to 44.7%. This equity position was

progressively reduced through the ﬁ nancial year ended 30 June 2005 to 6.4%. The remaining investment was disposed of in the current ﬁ nancial

year. Refer to Note 40 for further details in respect of the gain on deconsolidation for the year ended 30 June 2005.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 32 - Interests in joint ventures

(a) Jointly controlled assets

St Barbara Limited joint venture interests as at 30 June 2006:

Joint venture

Current SBM equity number

Joint venturers

WESTERN AUSTRALIA

Leonora Region

Mount Newman - Victory

Sandy Soak

Melita

Weebo

McEast/Pipeline

Southern Cross Region

Cornishman Exploration

Cornishman Mining

Silver Phantom

South Rankin

Copperhead

Cheritons Find

Southern Cross

Kalgoorlie Region

New Mexico

NORTHERN TERRITORY

Alcoota

SOUTH AUSTRALIA

Coober Pedy

87%

91%

60%

20%

80%

51%

70%

75%

51%

90%

Astro Diamond Mines N.L.

Hunter Resources Pty Ltd

Dalrymple Resources N.L.

Plutonic Operations Limited

Cheperon Gold Partnership

Troy Resources NL

Bellriver Pty Ltd

Comet Resources Limited

Troy Resources NL

Audax Resources NL

earning 60%

Troy Resources NL, Aminta Pty Ltd

40%

Tasman Exploration Pty Ltd

farming out 100%

Tanami Exploration NL

12.60%

Newmont Exploration Pty Ltd, Sabatica Pty Ltd

As at 30 June 2006, there were no joint venture assets recorded in the balance sheet (2005: $nil).

Note 33 - Events occurring after the balance sheet date

On 25 July 2006, the Company announced Probable Reserves for Gwalia Deeps at Leonora of 3,100,000 tonnes at 9.0g/t of gold for

885,000 ounces.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 34 - Reconciliation of proﬁ t/(loss) after income tax to

Notes

net cash inﬂ ow from operating activities

Proﬁ t/(loss) for the year

Depreciation and amortisation

Proﬁ t on sale of assets

Consolidated

Parent entity

2006

$’000

6,019

9,540

2005

$’000

6,831

8,093

2006

$’000

6,200

9,540

2005

$’000

(6,223)

8,093

(22,796)

(5,809)

(22,796)

(5,293)

Tax impact of deferred tax balances relating to reserves

(1,428)

Share of net loss of associate

Provision for diminution in investments and assets

Gain on subsidiary becoming an associate

Provision for rehabilitation

Provision for doubtful debts

Unrealised gain on options revaluation

Unrealised loss on derivative ﬁ nancial instruments

Write down of exploration tenements

Write off of assets

Share-based payments

Change in operating assets and liabilities:

Increase in receivables

(Increase)/decrease in inventories

(Increase) in other assets

Increase in trade creditors and payables

(Decrease)/increase in employee entitlements and

provisions

Increase in other liabilities

Net (outﬂ ow)/inﬂ ow cash from operating activities

(59)

4,342

109

996

577

1,023

(13,920)

(34)

775

664

(1,428)

(59)

4,342

109

996

773

(34)

775

664

(665)

(3,100)

(665)

(4,450)

(1,689)

(3,283)

12,348

1,059

(1,689)

(850)

(3,283)

12,348

1,059

(881)

(11,108)

4,146

(11,108)

9,563

1,220

(6,454)

1,220

(467)

(6,273)

4,124

Note 35 - Non cash investing and ﬁ nancing activities

Acquisition of vehicles and equipment through hire purchase or

ﬁ nance leases

Conversion of debt to equity

Share swap buy-back

Sale of assets for part equity consideration and assumption of liabilities

644

6,667

28,700

5,600

13,623

644

6,667

28,700

5,600

13,623

Notes

1. Conversion of debt to equity

On 27 March 2006, Resource Capital Fund III LP, in accordance with terms approved by shareholders, converted a $7,000,000 convertible

note into 100,000,000 fully paid ordinary shares.

On 15 July 2004, Ocean Resources Capital Holdings plc converted a $4,400,000 convertible note into 55,000,000 fully paid ordinary shares.

On 1 December 2004, Resource Capital Fund II LP converted an unsecured advance of $1,200,000 into 21,554,172 fully paid ordinary shares.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 35 - Non cash investing and ﬁ nancing activities cont

2. Share swap buy-back

In December 2004 to January 2005 the Company conducted a share swap buy-back whereby 170,291, 971 Company shares were bought back

in exchange for 212,864,971 NuStar shares. As a consequence, the excess of market value over book value of NuStar shares of $5,109,000

was applied to accumulated losses.

3. Sale of assets for part equity consideration

On 14 October 2005, the Company announced the sale of its South Laverton project to Saracen Mineral Holdings Limited (Saracen) including

non-cash consideration of shares in Saracen with an issue value of $3,500,000 and assumption of environmental performance bond liabilities

of $9,200,000.

On 28 October 2005, the Company announced the sale of its Meekatharra project to Mercator Gold plc (Mercator) including non-cash

consideration of shares in Mercator with an issue value of $13,000,000 and assumption of environmental performance bond liabilities of

$3,000,000.

Note 36 - Earnings per share

(a) Basic earnings per share

Proﬁ t attributable to the ordinary equity holders of the Company

(b) Diluted earnings per share

Proﬁ t attributable to the ordinary equity holders of the Company

Basic and diluted earnings per share

Proﬁ t for the year

(d) Weighted average number of shares used as the denominator

Weighted average number of ordinary shares used as the denominator in

Consolidated

2006

Cents

0.95

0.92

Consolidated

2006

$’000

2005

Cents

1.06

2005

$’000

6,019

6,831

Consolidated

2006

Number

2005

Number

calculating basic earnings per share

633,472,702

644,018,641

Weighted average number of ordinary shares and potential ordinary shares

used as the denominator in calculating diluted earnings per share

652,061,008

644,018,641

(e) Information concerning the classiﬁ cation of securities
(i) Options
Executive Options and Options granted to employees under the St Barbara Limited Employee Option Plan are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options
have not been included in the determination of basic earnings per share. Details relating to the options are set out in Note 37.

Note 37 - Share based payments
(a) Employee Option Plan
The establishment of the St Barbara Limited Employee Option Plan was approved by shareholders at the 2001 annual general meeting. Options
are granted under the plan for no consideration. Options are granted for a three to ﬁ ve year period, and ordinarily 50% of each new tranche
vests and is exercisable after each of the ﬁ rst two anniversaries of the date of grant.

Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 37 - Share based payments cont

Set out below are summaries of options granted to employees under the St Barbara Limited Employee Option Plan and Executive Options

approved by shareholders:

Consolidated and parent entity - 2006

Grant Date

Expiry Date

Exercise Price

26-Apr-02

17-Jan-03

2-Dec-04

23-Dec-04

2-Aug-05

17-Jan-06

12-Sep-05

30-Sep-05

26-Apr-07

17-Jan-08

2-Dec-07

23-Dec-09

23-Dec-10

23-Dec-11

2-Aug-08

17-Jan-09

12-Sep-10

30-Sep-10

$0.3500

$0.0800

$0.0472

$0.1500

$0.1350

$0.4900

$0.2300

$0.3300

Balance at start

Granted during

Exercised

Expired during

Balance at end

Exercisable at

of the year

the year

during the year

the year

of the year

end of the year

Number

75,000

750,000

100,000

75,000

1,000,000

5,000,000

25,000

1,000,000

25,000

1,000,000

500,000

250,000

500,000

Number

75,000

750,000

100,000

75,000

1,000,000

5,000,000

Number

75,000

750,000

100,000

75,000

1,000,000

5,000,000

1,000,000

500,000

250,000

500,000

250,000

500,000

Total

27,075,000

7,325,000

1,075,000

Weighted average exercise price

0.12

0.31

0.14

0.00

33,325,000

0.16

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 37 - Share based payments cont

Consolidated and parent entity - 2005

Grant Date

Expiry Date

Exercise Price

Balance at start

of the year

Number

Granted during

the year Number

Exercised

Expired during

Balance at end

Exercisable at

during the year

Number

the year

Number

of the year

end of the year

Number

26-Apr-02

15-Jul-02

6-Aug-02

13-Sep-02

15-Oct-02

7-Jan-03

31-Aug-05

31-Oct-05

26-Apr-07

15-Jul-05

13-Aug-05

6-Sep-05

15-Oct-05

7-Jul-06

17-Jan-03

17-Jan-08

7-Jul-03

28-Nov-03

2-Dec-04

16-Dec-04

23-Dec-04

28-Jan-05

7-Jan-07

24-May-08

2-Dec-07

16-Dec-07

23-Dec-08

23-Dec-09

23-Dec-10

23-Dec-11

31-Dec-05

Total

Weighted average exercise price

$0.3500

$0.2086

$0.2124

$0.2125

$0.2086

$0.2124

$0.2125

$0.2086

$0.2124

$0.2125

$0.2086

$0.2124

$0.2125

$0.1138

$0.2086

$0.2124

$0.2125

$0.3500

$0.1138

$0.2086

$0.2124

$0.2125

$0.1138

$0.2086

$0.2124

$0.2125

$0.0800

$0.1500

$0.0472

$0.1500

$0.1100

100,000

400,000

75,000

100,000

500,000

100,000

75,000

750,000

100,000

75,000

49,252

241,854

483,482

50,894

249,917

499,597

50,894

249,917

499,597

49,252

241,854

483,482

3,177,890

151,040

741,686

1,482,677

75,000

17,430,243

594,308

2,918,376

5,834,004

14,252,357

485,953

2,386,296

257,857

1,000,000

5,000,000

1,000,000

93,212,679

0.14

100,000

400,000

75,000

100,000

500,000

49,252

241,854

483,482

50,894

249,917

499,597

50,894

249,917

499,597

100,000

49,252

241,854

483,482

3,177,890

151,040

741,686

1,482,677

17,430,243

594,308

2,918,376

5,834,004

14,252,357

485,953

2,386,296

257,857

1,000,000

5,000,000

1,000,000

75,000

750,000

100,000

75,000

750,000

100,000

75,000

1,000,000

5,000,000

0.00

62,587,275

3,550,404

27,075,000

0.13

0.26

0.12

No options were forfeited during the periods covered by the above tables.
The weighted average remaining contractual life of share options outstanding at the end of the period was 3.9 years (2005 – 4.9 years).

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 37 - Share based payments cont

Fair value of options granted

The assessed fair value at grant date of options granted during the year ended 30 June 2006 was calculated for each issue of options. The fair

value at grant date is independently determined using a Black Scholes option pricing model that takes into account the exercise price, the term

of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend

yield and the risk free interest rate for the term of the option.

The model inputs for options granted during the year ended 30 June 2006 included:

(a) Options are granted for no consideration, in certain cases, options vested on the grant date, but generally 50% of each tranche vests after

each of the ﬁ rst two anniversaries of the date of grant.

(b) Exercise price: ordinarily the closing market price on the grant date.

(d) Expiry date: normally 5 years from grant date.

(e) Share price at grant date: varied with each issue and ranged from $0.14 per share to $0.49.
(f) Price volatility of the Company’s shares as at the grant date: varied with each issue, and ranged from 92.6% to 105.5%.

(g) Risk-free interest rate at grant date: based on bond rates for a similar term as for the options.

(b) Expenses arising from share based payment transactions

Total expenses arising from share based payment transactions recognised during the period as part of employee beneﬁ t expense were as follows:

Consolidated

Parent entity

2006

$’000

2005

$’000

2006

$’000

2005

$’000

Options issued under employee option plan

996

664

996

664

Note 38 - Business combination

On 28 March 2005, the Company acquired the Gold Division of Sons of Gwalia Ltd (Administrators Appointed) for consideration consisting of a

cash payment of $2,285,000, the replacement of existing bank guaranteed environmental performance bonds totalling $30,000,000 and the

assumption of additional performance bonds of up to $5,700,000. The fair value of net identiﬁ able assets acquired was $2,925,000. Direct

transaction costs of $640,000 were also incurred.

Details of the assets and liabilities arising from the acquisition are as follows:

Property, plant and equipment

Inventories

Prepayments

Mining properties

Provision for rehabilitation

Net identiﬁ able assets acquired

$’000

19,762

4,730

285

13,068

(34,920)

2,925

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 39 - Key management personnel disclosures

(a) Directors

The following persons were Directors of St Barbara Limited during the ﬁ nancial year:

Non-executive Chairman

S J C Wise

Managing Director & CEO

E Eshuys

Non-executive Directors

D W Bailey (appointed 17 January 2006)

R Knight

H G Tuten

M K Wheatley

Mr Wheatley resigned from the position of non-executive Director on 2 August 2006.

(b) Other key management personnel disclosures

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or

indirectly, during the ﬁ nancial year:

Name

Position

Ross Kennedy

Chief Financial Ofﬁ cer/Company Secretary

Robert Klug

General Manager, Business Development (appointed 17 October 2005)

Martin Reed

General Manager, Development

Peter Thompson

General Manager, Exploration

George Viska

Acting Chief Operations Ofﬁ cer, General Manager, Commercial

Short term employee beneﬁ ts

Post employment beneﬁ ts

Retirement beneﬁ ts

Share-based payments

Consolidated

Parent entity

2006

2005

2006

2005

1,899,132

1,356,128

1,899,132

1,356,128

212,115

48,830

212,115

48,830

245,616

611,298

1,008,839

611,298

1,008,839

2,722,545

2,659,413

2,722,545

2,659,413

The Company has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures

to the Directors’ Report. The relevant information can be found on pages 28 to 37.

(d) Equity Instrument Disclosures Relating to Key Management Personnel

(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the

options, can be found in Section D of the remuneration report on pages 34 to 36.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 39 - Key management personnel disclosures cont

(ii) Option holdings

The numbers of options over ordinary shares in the Company held during the ﬁ nancial year by each Director of St Barbara Limited and other

key management personnel of the Group, including their personally related parties, are set out below:

Balance

at the

start of

Granted

during the

year as

the year

compensation

35,000,000

1,000,000

Exercised

during the

year

10,000,000

1,000,000

35,000,000

1,000,000

Other

changes

during

the year

Vested and

Balance at

exercisable

the end

of the year

at the end

of the year

25,000,000

5,000,000

1,000,000

35,000,000

5,000,000

1,000,000

Balance at the

Conversion of

start of the

Exercise of

convertible

Balance at the

year

options

note

Bought

Sold

end of the year

2,800,000

1,250,000

10,000,000

177,887,642

774,588

100,000,000

1,000,000

881,709

6,150,000

100,000

2,505,095

3,681,709

5,100,000

100,000

2,505,095

95,000,000

183,662,230

300,000

700,000

20,000

1,000,000

500,000

Name

2006

Directors

E Eshuys

Other key management

personnel

R Kennedy

R Klug

P Thompson

G Viska

2005

Directors

E Eshuys

Other key management

personnel

R Kennedy

P Thompson

(iii) Share holdings

Name

Directors

Colin Wise

Eduard Eshuys

Doug Bailey

Richard Knight

Hank Tuten

Mark Wheatley

Other key management

personnel

Ross Kennedy

Peter Thompson

Martin Reed

George Viska

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs

(1) Reconciliation of equity reported under previous Australian Generally Accepted Accounting Principles (AGAAP) to equity under

Australian equivalents to IFRSs (AIFRS).

(a) At the date of transition to AIFRS: 1 July 2004

Notes

Consolidated

Effect of transition

Parent Entity

Effect of

AGAAP

$’000

to AIFRS

AIFRS

Previous AGAAP

transition to AIFRS

$’000

Assets

Current assets

Cash and cash equivalents

Receivables

Inventories

Other ﬁ nancial assets

Other - Prepayments

Sub total

Assets classiﬁ ed as held for sale

Total current assets

Non-current assets

Restricted cash and cash equivalents

Receivables

Property, plant and equipment

Mining properties

- Exploration

Mining properties

- Development

Other ﬁ nancial assets

Total non-current assets

Total Assets

Liabilities

Current liabilities

Payables

Interest bearing liabilities

Provisions

Total current liabilities

Non-current liabilities

Payables

Interest bearing liabilities

Provisions

Total non-current liabilities

Total Liabilities

Net Assets

Equity

Contributed equity

Reserves

Accumulated losses

Parent entity interest

Minority interest

Total Equity

4(c)

(c)

(a),(g)

(g)

(d)

12,849

1,512

777

188

630

15,956

16,014

3,108

4,947

42,401

50,456

66,470

6,691

9,832

751

17,274

4,269

4,344

21,618

44,852

630

(630)

(42,401)

12,849

2,142

777

188

15,956

16,014

3,108

4,947

25,110

3,099

(14,192)

751

(751)

(14,192)

3,099

36,264

52,278

7,442

9,832

17,274

4,269

4,344

21,618

30,660

374

777

21,888

599

23,639

23,697

2,765

1,140

3,821

13,538

21,264

44,961

6,067

8,932

751

15,750

11,484

4,269

15,828

31,578

13,383

139,400

2,443

139,400

2,443

139,400

2,443

(h)

(115,835)

(14,192)

(130,027)

(128,460)

26,008

18,844

44,852

(14,192)

11,816

18,844

30,660

13,383

AIFRS

$’000

973

777

21,709

23,460

23,518

2,765

1,140

3,821

599

(179)

(599)

(179)

(13,538)

13,538

179

751

(751)

179

21,443

44,961

6,818

8,932

15,750

11,484

4,269

15,828

31,578

13,383

139,400

2,443

(128,460)

13,383

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

(b) At the end of the last reporting period under previous AGAAP: 30 June 2005

Notes

Consolidated 30-Jun-05

Parent Entity 30-Jun-05

Effect of

transition to

AGAAP

$’000

AIFRS

$’000

AIFRS

$’000

AGAAP

$’000

AIFRS

$’000

AIFRS

$’000

Assets

Current assets

Cash and cash equivalents

Receivables

Inventories

Other ﬁ nancial assets

Other – Prepayments

Sub total

Assets classiﬁ ed as held for sale

Total current assets

Non-current assets

Restricted cash and cash equivalents

Receivables

Property, plant and equipment

Mining properties

Mining properties – Exploration

Mining properties – Development

Other ﬁ nancial assets

Total non-current assets

Total Assets

Liabilities

Current liabilities

Payables

Interest bearing liabilities

Provisions

Total current liabilities

Non-current liabilities

Payables

Interest bearing liabilities

Provisions

Total non-current liabilities

Total Liabilities

Net Assets

Equity

Contributed equity

Reserves

Accumulated losses

Total Equity

4(c)

(c)

(g)

(d)

16,273

4,767

4,448

1,864

27,352

21,072

48,424

11,801

8,996

14,848

35,645

84,069

16,225

1,541

119

17,885

7,000

39,111

46,111

63,996

20,073

(b)

(h)

135,053

2,443

(117,423)

20,073

16,273

1,864

(1,864)

(14,848)

9,067

5,781

119

(119)

6,631

4,448

27,352

21,072

48,424

11,801

8,996

9,067

5,781

35,645

84,069

16,344

1,541

17,885

7,000

39,111

46,111

63,996

20,073

4,767

4,448

179

1,864

27,531

21,072

48,603

11,801

595

8,137

14,848

35,381

83,984

16,225

1,541

119

17,885

11,402

7,000

39,111

57,513

75,398

8,586

135,053

1,864

(179)

(1,864)

(179)

(14,848)

9,067

5,781

179

119

(119)

664

3,107

2,443

664

6,631

4,448

27,352

21,072

48,424

11,801

595

8,137

9,067

5,781

179

35,560

83,984

16,344

1,541

17,885

11,402

7,000

39,111

57,513

75,398

8,586

135,053

3,107

(644)

(118,087)

(128,910)

(664)

(129,574)

20,073

8,586

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

(2) Reconciliation of loss under previous AGAAP to proﬁ t under Australian equivalents to IFRSs (AIFRS)

(a) Reconciliation of proﬁ t/(loss) for the year ended 30 June 2005:

Consolidated

Effect of

transition to

Note

AGAAP

$’000

AIFRS

$’000

AIFRS

$’000

Parent Entity

Effect of

transition

AGAAP

to AIFRS

$’000

AIFRS

$’000

Revenue

Other income

(f)

(a),(e),(f)

46,553

20,948

397

(1,055)

46,950

19,893

46,553

20,395

397

(14,938)

46,950

5,457

Changes in inventories of ﬁ nished

goods

Raw materials and consumables used

Carrying values of net assets and non-

current assets sold

(687)

(6,640)

(687)

(6,640)

(687)

(6,640)

(687)

(6,640)

(e)

(14,578)

14,578

(14,541)

14,541

Contract mining, cartage, milling,

maintenance, labour and consultants

Employee beneﬁ ts expenses

Exploration and tenement expenditure

Loss on subsidiary becoming an

associate

(b)

(a)

Share of net loss of associate

Provision for diminution in value of

investments

Write down of mining exploration

tenements

Depreciation and amortisation

Finance costs

Other expenses

(Loss)/proﬁ t before income tax

Income tax expenses

(Loss)/proﬁ t for the year

(20,558)

(7,256)

(6,107)

(272)

(577)

(773)

(775)

(8,093)

(524)

(7,358)

(6,697)

(20,558)

(664)

(7,920)

(6,107)

(7,256)

(6,107)

272

(577)

(773)

(775)

(8,093)

(524)

(7,358)

13,528

6,831

(775)

(8,093)

(524)

(6,553)

(5,559)

(664)

(7,920)

(6,107)

(773)

(775)

(8,093)

(524)

(6,553)

(6,223)

(6,697)

13,528

6,831

(5,559)

(664)

(6,223)

(3) Reconciliation of cash ﬂ ow statement for the year ended 30 June 2005

The adoption of AIFRSs has not resulted in any material adjustments to the cash ﬂ ow statement.

(4) Notes to the reconciliations

(a) Impairment

Under previous GAAP, the carrying amounts of non-current assets valued on a cost basis were reviewed at each reporting date to determine

whether they are in excess of their recoverable amount. When this assessment was made under previous GAAP, the recoverable amount was

estimated on an undiscounted basis. This basis did not indicate any impairment in respect of the assets of subsidiary Nustar.

On a discount cash ﬂ ow basis, an impairment of $14,192,000 was calculated on transition in respect of Nustar’s assets. Nustar was deconsolidated

during the half year ended 31 December 2004, and therefore the provision for impairment reversed at that time.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

(i) At 1 July 2004

For the Group there has been an increase in accumulated losses of $14,192,000 and a corresponding decrease in mining properties. There

was no impact for the parent entity.

(ii) At 30 June 2005

At 30 June 2005 there is no impact, as the assets for which the impairment related were no longer consolidated. There was no impact on the

parent entity

(iii) For the year ended 30 June 2005

Further group loss on a subsidiary becoming an associate of $272,000 becomes a proﬁ t of $13,920,000. The difference of $14,192,000 is as

a result of the impact from the previous ﬁ nancial year’s cumulative impairment losses that would have been incurred under AIFRS policies.

There was no impact on the parent entity.

(b) Share based payments

Under AASB 2 Share based Payment from 1 July 2004 the Group is required to recognise an expense for those options that were issued to

employees under the St Barbara Limited Option Plan after 7 November 2002 but that had not vested by 1 January 2005. The effect of this is:

(i) At 1 July 2004

There is no effect on the Group or the parent entity.

(ii) At 30 June 2005

For the Group and parent entity there has been an increase in accumulated losses of $664,000 and a corresponding increase in reserves.

(iii) For the year ended 30 June 2005

For the Group and parent entity there has been an increase in employee beneﬁ ts expense of $664,000.

Under previous AGAAP, prepayments were classiﬁ ed as other assets. The effect of this is:

(i) At 1 July 2004

For the Group, receivables have increased and other assets have decreased by $630,000. For the parent entity, receivables have increased

and other assets have decreased by $599,000.

(ii) At 30 June 2005

For the Group, receivables have increased and other assets have decreased by $1,864,000. For the parent entity, receivables have increased

and other assets have decreased by $1,864,000.

(iii) For the year ended 30 June 2005

There is no effect on the Group or parent entity.

(d) Provision for Employee Entitlements

Under previous AGAAP, the liability for annual leave entitlements was classiﬁ ed as a provision. The effect of this is:

(i) At 1 July 2004

For the Group, other payables have increased and provisions have decreased by $751,000. For the parent entity, other payables have

increased and provisions have decreased by $751,000.

(ii) At 30 June 2005

For the Group, other payables have increased and provisions have decreased by $119,000. For the parent entity, other payables have

increased and provisions have decreased by $119,000.

(iii) For the year ended 30 June 2005

There is no effect on the Group or parent entity.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

(e) Net gain on disposal of Property Plant and Equipment

Under previous AGAAP, proceeds from the sale of non-current assets were included in revenue and the book value of the assets sold was

included in other expense. Under AIFRS, net gains on the value of assets are presented in other income and net losses in other expense.

The effect of this is:

(i) At 1 July 2004 and 30 June 2005

There is no effect on the Group or parent entity.

(ii) For the year ended 30 June 2005

For the Group, other income and other expenses have decreased by $14,578,000 and for the parent entity, other income and other expenses

have decreased by $14,541,000.

(f)

Interest

Under AGAAP, interest revenue was classiﬁ ed as other income. Under AIFRS, interest revenue is included in Revenue.
For the year ended 30 June 2005, interest received amounted to $397,000.

(g) Mining properties

Under AGAAP, mining properties included both development and exploration assets. Under AIFRS these assets are separately classiﬁ ed.

(h) Accumulated losses

The effect on accumulated losses of the changes set out above are as follows:

Impairment of mining properties

Loss on subsidiary becoming an associate

Share based payments

Total adjustment

Notes

(a)

(b)

Consolidated

Parent Entity

1 July

30 June

1 July

30 June

2004

$’000

2005

$’000

2004

$’000

2005

$’000

(14,192)

14,192

(14,192)

(664)

(5) Adjustments on transition to AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments:

Recognition and Measurement: 1 July 2005

The consolidated entity has taken the exemption available under AASB 1 to apply AASB 132 Financial Instruments: Disclosure and Presentation

and AASB 139 Financial Instruments: Recognition and Measurement from 1 July 2005. The Group has applied previous AGAAP in the comparative

information on ﬁ nancial instruments within the scope of AASB 132 and AASB 139.

The balance sheet below reﬂ ects the adjustments as at 1 July 2005 as a result of applying AASB 132 and AASB 139.

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

Consolidated

Parent Entity

30 June 05

Adjust

1 July 05

30 June 05

Adjust

1 July 05

Notes

$’000

Assets

Current assets

Cash and cash equivalents

Receivables

Inventories

Assets classiﬁ ed as held for sale

(a)

Total current assets

Non current assets

Restricted cash and cash equivalents

Receivables

Available for sale ﬁ nancial assets

(a)

Property, plant and equipment

Mining properties – Development

Mining properties – Exploration

Other ﬁ nancial assets

Total non current assets

Total assets

Liabilities

Current liabilities

Payables

Interest bearing liabilities

Total current liabilities

Non current liabilities

Payables

Interest bearing liabilities

(b)

Provisions

Total non current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Accumulated losses

Total equity

16,273

6,631

4,448

27,352

21,072

48,424

11,801

8,996

5,781

9,067

35,645

84,069

16,344

1,541

17,885

7,000

39,111

46,111

63,996

20,073

16,273

6,631

4,448

27,352

18,539

45,891

16,273

6,631

4,448

21,072

48,424

11,801

(2,533)

3,420

8,996

5,781

9,067

3,420

887

39,065

84,956

(407)

1,294

16,344

1,541

17,885

6,593

39,111

45,704

63,589

21,367

595

8,137

5,781

9,067

179

35,560

83,984

16,344

1,541

17,885

11,402

7,000

39,111

57,513

75,398

8,586

(2,533)

3,420

887

(407)

1,294

16,273

6,631

4,448

18,539

45,891

11,801

595

3,420

8,137

5,781

9,067

179

38,980

84,871

16,344

1,541

17,885

11,402

6,593

39,111

57,106

74,991

9,880

(a), (b)

135,053

3,107

135,053

1,319

4,426

3,107

1,319

4,426

(b)

(118,087)

(25)

(118,112)

(129,574)

(25)

(129,599)

20,073

1,294

21,367

8,586

1,294

9,880

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

Note 40 - Explanation of transition to Australian equivalents IFRSs cont

(a) Available for sale ﬁ nancial assets

The Group and Parent Entity have investments in traded equity securities. Under AASB 139 these assets are classiﬁ ed as available for sale, and

measured at fair value. Changes in fair value are recognised in equity until the underlying asset is sold or impaired. The effect of AASB 139

on available for sale ﬁ nancial assets is as follows:

(i) At 1 July 2005

There is an increase for the Group and parent entity in the investment fair value reserve of $887,000, and an increase in available for sale

ﬁ nancial assets of $887,000. Assets classiﬁ ed as held for sale of $2,553,000 are also reclassiﬁ ed to available for sale ﬁ nancial assets.

(b) Convertible debt

On 29 March 2005, the Company drew down $7,000,000 from a bridge loan facility provided by Resource Capital Funds III LP (“RCFIIII”). The

loan has a maturity of 31 December 2008 and may, at RCFIII’s election, subject to shareholder approval be converted into 100,000,000 shares

in the Company at 7c each. Shareholder approval was obtained on 16 November 2005.

In accordance with AASB 132, the issuer of a compound instrument is required to classify the debt and equity components separately. The fair

value of the liability portion of this convertible debt is determined using a market interest rate for an equivalent non convertible debt. This

amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the debt. The remainder of the

proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.

(i) At 1 July 2005

Interest bearing liabilities for the Group and parent entity are decreased by $407,000, with an increase in the Conversion option reserve of

$432,000. Accumulated losses will increase by $25,000.

Directors’ declaration
In the Directors’ opinion:

(a) the ﬁ nancial statements and notes set out on pages 41 to 92 are in accordance with the Corporations Act 2001, including:

i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements and

ii) giving a true and fair view of the Company’s and consolidated entity’s ﬁ nancial position as at 30 June 2006 and of its performance, as

represented by the results of their operations, changes in equity and their cash ﬂ ows, for the ﬁ nancial year ended on that date; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable4; and

(c) the audited remuneration disclosures set out on pages 28 to 37 of the Directors’ report comply with Accounting Standards AASB 124 Related

Party Disclosures and the Corporations Regulations 2001; and

The Directors have been given the declarations by the chief executive ofﬁ cer and chief ﬁ nancial ofﬁ cer required by section 295A of the

Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors.

Eduard Eshuys

Managing Director and CEO

Perth

8 September 2006

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2006

STATEMENT OF SHAREHOLDERS
as at 13 September 2006

Twenty Largest Shareholders

Shares Held

% of Total

130,275,792

100,000,000

83,662,230

82,273,559

79,265,766

35,419,979

15,401,714

14,384,000

9,784,379

8,000,000

7,076,369

5,600,000

5,500,000

4,968,276

4,600,000

4,591,864

3,300,000

3,123,597

2,639,294

2,457,000

15.87

12.18

10.19

10.02

9.66

4.31

1.88

1.75

1.19

0.97

0.86

0.68

0.67

0.61

0.56

0.40

0.38

0.32

0.30

Shares Held

% of Total

183,662,230

22.38

Westpac Custodian Nominees Limited

Resource Capital Fund III LP

Resource Capital Fund II LP

JP Morgan Nominees Australia Limited

ANZ Nominees Limited (Cash Income A/C)

National Nominees Limited

AMP Life Limited

Merrill Lynch (Australia) Nominees Pty Limited (Berndale A/C)

UBS Nominees Pty Ltd

Citicorp Nominees Pty Limited (CFS Future Leaders Fund A/C)

Queensland Investment Corporation

Northwest Accounting Pty Ltd

Gee Nominees Pty Ltd

UBS Wealth Management Australia Nominees Pty Ltd

Mr Eduard Eshuys

Citicorp Nominees Pty Limited

Colin Wise Consulting Pty Ltd

Cogent Nominees Pty Limited (SMP Accounts)

Miroma Investment Inc

Perpetual Trustee Company Limited

Substantial Shareholders

Resource Capital Funds II and III LP

Distribution of Shareholdings

Number Held

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 - and over

Number of

Shareholders

587

1,599

1,386

2,124

387

6,083

399,093

5,183,619

11,510,559

74,501,972

728,795,324

820,390,567

The number of shareholders holding less than a marketable parcel was 592.

Directors’ Interests

As at the date of the Directors’ Report, the director 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 J C Wise

E Eshuys

D W Bailey

R Knight
H G Tuten

Shares Held

3,681,709

5,100,000

100,000

2,505,095
183,662,230

STATEMENT OF SHAREHOLDERS
as at 13 September 2006

Share Price

The Company shares were listed on the Australian Stock Exchange throughout the 2005/06 year. The closing share price on 30 June 2006 and

on 13 September 2006 was 57 cents and 48 cents respectively.

On-Market Share Buy-Back

In August 2006 the Company announced a continuation of its on-market share buy-back program.

The maximum number of shares to be bought back is 56,653,335. Since the inception of the on-market buy back in August 2005, a total of

9,805,060 shares have been bought back for an outlay of $4,008,000 at an average cost of $0.41 per share.

Announcements

The Company makes both statutory announcements (activities or quarterly reports, ﬁ nancial reports, Appendix 5B cash statements, changes

to Directors’ interest) and speciﬁ c announcements under Continuous Disclosure provisions on a timely basis.

Investor Relations

This Annual Report has been produced with the objective of ensuring that shareholders and interested parties are informed about Company

strategy and performance to assist in deciding whether or not to make or retain an investment in the Company.

Announcements, statutory reports and the latest information on the Company’s projects are available on the St Barbara Mines Limited

website: www.stbarbara.com.au.

Financial institutions, stockbrokers and other non-shareholder entities requiring copies of this report, activities reports and other corporate

information should contact the Company Secretary at:

1205 Hay Street

West Perth WA 6005

Telephone: +61 8 9476 5555

Facsimile: +61 8 9476 5500

E-mail:

perth@stbarbara.com.au

Web site: www.stbarbara.com.au

Shareholder Enquiries

Enquiries relating to shareholding, tax ﬁ le number and notiﬁ cation of change of address should be directed to:

Advanced Share Registry Services

110 Stirling Hwy

Nedlands WA 6009

Telephone: +61 8 9389 8033

Facsimile: +61 8 9389 7871

98
98

INTENTIONALLY BLANK

99
99

CORPORATE DIRECTORY

Board of Directors

Colin Wise (Non Executive Chairman)

Eduard Eshuys (Managing Director and CEO)

Douglas Bailey (Non Executive Director)

Richard Knight (Non Executive Director)

Hank Tuten (Non Executive Director)

Company Secretary

Ross Kennedy

Registered Ofﬁ ce

1205 Hay Street

West Perth WA 6005

Telephone: +61 8 9476 5555
Facsimile: +61 8 9476 5500

E-mail:

perth@stbarbara.com.au

Web site: www.stbarbara.com.au

Share Registry

Advanced Share Registry Services

100

110 Stirling Hwy

Nedlands WA 6009

Telephone: +61 8 9389 8033

Facsimile: +61 8 9389 7871

Auditors

PricewaterhouseCoopers

QV1 Building

250 St George’s Terrace

Perth WA 6000

Stock Exchange Listing

Shares in St Barbara Limited are quoted on the Australian Stock Exchange

Ticker symbol: SBM

Inspecting the underground pump station, Gwalia

www.stbarbara.com.au

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