Building
St Barbara Limited
Annual Report 2007
Vision
St Barbara’s vision is to be producing 1 million ounces of gold
and have reserves of 10 million ounces by the end of 2010.
Contents
3 Chairman’s Letter
4 Managing Director’s Review
6 Operations & Development
10 Reserves & Resources
12 Exploration
16 Finance
18 Management
20 Environment, Safety & Community
22 Corporate Governance
26 Directors’ Report
43 Financial Report
94 Details of Shareholders
96 Corporate Directory
We are
building
‘a big future’
Environment
Environmental responsibility is demonstrated
through rehabilitating legacy sites and designing
the new Gwalia village to recycle water
and utilise solar energy.
Community
At Southern Cross over 24 % of our workforce is
drawn from local people. This allows St Barbara to
work at building a stronger community to grow
with as mine life is extended.
Safety
The safety, health and well being of employees
and contractors is of paramount importance to
all at St Barbara.
2007 Achievements
• Doubled our reserves at Gwalia and Southern Cross
to a combined total of 2.3 million ounces of gold
• Achieved our forecast output with the production
of 171,000 ounces of gold for the year
• Kept the Hoover Decline at Gwalia on track, reaching a depth below
surface of 770 metres at the end of June 2007 and 80% complete
• Purchased put options covering 1.4 million ounces to underwrite
the revenue from Gwalia for nine years at A$700/oz and for
Southern Cross for the 2008 financial year at A$760/oz
• EBITDA from Southern Cross operations up 12% to $45.7 million
• Raised A$100 million in convertible notes to fund development
We are
building
‘a big future’
Immediate Objectives
• Produce 175,000 ounces of gold in the 2008 financial year
• Hoover Decline to reach the top of the reserves by March 2008
• Commence Gwalia production in the September 2008 Quarter
• Establish reserves at Tower Hill and start mining
• Expand open pit reserves at Southern Cross
St Barbara Limited Annual Report 2007
During the year, St Barbara’s landbank more than doubled
to 8,000 square kilometres. The move beyond the
Company’s existing land position was driven by the
BigGold study to find the next generation of world-class
discoveries. The Company believes many areas have not
been explored adequately at depth and new discoveries
are most likely to be found under cover.
St BarBara limited
St Barbara Land Holdings
St Barbara Mine Sites
Corporate Locations
Darwin
Leonora
Southern Cross
Perth
Laverton
Gwalia
Kalgoorlie
Marvel Loch
Esperance
2
Building
Brisbane
Adelaide
Sydney
Canberra
Melbourne
Colin Wise, Chairman
“ The momentum built in the 2006 and 2007
financial years... has provided an
excellent start to the current year.”
Chairman’s Letter
Dear Shareholder,
It is pleasing to report that St Barbara met its 2007 financial year forecast targets of producing more than 170,000 ounces of gold from
Southern Cross operations, substantially expanding the reserves and resources at Southern Cross and Gwalia, and advancing development
at Gwalia, ready to commence gold production in the September 2008 quarter.
Established reserves are the life-line of a mining company - in the past year, St Barbara more than doubled reserves to 2.3 million ounces of
gold. It is worth noting that when St Barbara acquired the Southern Cross operations, they were due to close in late 2005. Since then, more
than 330,000 ounces have been produced and successful exploration is now expected to significantly extend mining operations until at least 2012.
At Gwalia, with historical gold production and current resources exceeding eight million ounces, the Company owns a world -class ore
body that remains open at depth. Development remains on time and budget, with the Hoover Decline expected to reach the top of the ore
body by March 2008. While Gwalia promises an attractive return at current prices, the Board considered it prudent to underwrite a floor
price for the first nine years of mine life, through the purchase of put options. The options do not represent a firm delivery commitment of
gold, nor are they a risk for the Company – they provide St Barbara with open exposure to gold price increases but an ability to sell gold at
a minimum A$700 per ounce should the spot price fall below this level. Similarly, put option contracts were signed to underpin the 2008
Southern Cross production at a strike price of A$760 per ounce.
Exploration initiative and success have become distinguishing features of St Barbara. Results are not measured solely by increasing reserves.
During the year and especially in recent months, a re-evaluation of established mining areas near the Gwalia and Marvel Loch gold treatment
plants identified extensive mineralisation which has the capability to significantly increase the Company’s resource and reserve position.
St Barbara now has a substantial landbank including 5,000 highly prospective square kilometres in close proximity to established Company
- owned treatment plants and related infrastructure. The Company is well placed in pursuit of its targeted annual gold production rate of one
million ounces by the end of 2010 to be underpinned by ten million ounces of reserves.
The establishment of a new corporate office in Melbourne earlier this year placed the Company in closer contact with its institutional
shareholder base and related broking and funding sources. An expanded senior management team led by Mr. Eduard Eshuys provides a
strong framework for St Barbara to grow. The Company’s management now has the capacity to provide the skills we need to plan for and
run larger operations and grow our workforce from within.
During the year, Mr. Phil Lockyer and Ms Barbara Gibson were welcome additions to the Board. A Board Health & Safety Committee
was established and Directors visited the operations on a number of occasions. St Barbara has an appropriate governance structure for the
current stage of the Company’s business.
In July 2007, St Barbara’s largest shareholder reduced its holding to under 10%, enabling a wider spread of Australian and offshore
institutional investors to join the register. It is gratifying to note such strong levels of support. The consequential improvement in liquidity
of our shares should benefit all shareholders.
Although the recent turbulence in the share market has seen increased general investor uncertainty, it has not affected the underlying value
of Company assets or the development of our operations. The Company is fully exposed to increases in the gold price, while protected by a
floor price on the downside.
The momentum built in the 2006 and 2007 financial years by the management and employees of St Barbara has provided an excellent
start to the current year. The Tower Hill discovery has created tremendous excitement, and all at St Barbara are focused on delivering
our targets for this year and the continuing development of our objective of becoming a substantial and highly regarded Australian gold
producer and explorer.
Colin Wise, Chairman
1 October 2007
St Barbara Limited Annual Report 2007
Brisbane
Eduard Eshuys
“ We continue to generate exciting new
opportunities like Tower Hill .”
Manageing
Directors
Review
Managing
Director’s
Review
Meeting the objectives we set ourselves is important in delivering
long-term value for shareholders and building credibility with all
stakeholder groups. It is a credit to the efforts of our employees and
contractors to report a number of achievements in the past year.
2007 Overview
St Barbara produced 171,000 ounces of gold from its
Southern Cross operations.
Reserves increased by over 1 million ounces to 2.3 million
ounces of gold. Mine life at both Gwalia and Southern Cross
has been extended significantly.
The Hoover Decline at Gwalia was 80% complete and is on
schedule to reach the top of the ore body by March 2008.
Put options were purchased to underwrite the future revenues
of the operations. For Gwalia, we purchased put options over
nine years covering 1.4 million ounces at a price of A$700/oz,
while at Southern Cross, we purchased put options to cover
174,000 ounces at A$760/oz for the 2008 financial year.
The net loss after tax was $2.9 million but EBITDA from our
operations rose to $45.7 million.
Apart from the success in increasing reserves, our exploration
team undertook initial drilling for nickel that has found
encouraging evidence for high -grade massive nickel sulphides, and
acquired tenements throughout Australia in the search for the next
generation of discoveries.
In June, the Company raised A$100 million before costs in
convertible notes with an 8% coupon, which are listed on the
Singapore Exchange. The conversion price of 73c per share
was at a 35% premium to the then current price and limits the
potential dilution for shareholders.
The corporate office moved to Melbourne and has expanded,
providing St Barbara with the depth of management it needs to
achieve growth objectives.
Since the end of the year, an exciting development has been
exploration drilling which has intersected significant gold
mineralisation at Tower Hill, two kilometres from the Gwalia
plant at Leonora.
Growth and Opportunities. Our vision remains for St Barbara to be
a producer at the rate of 1 million ounces per year with a reserve of
10 million ounces of gold by the end of 2010.
The achievements listed have been an important step on that
development path. However, to achieve these goals there are some
key further steps we need to take:
n Convert promising exploration results at Southern Cross into
open pit reserves. There are almost 20 targets within trucking
distance of the Marvel Loch mill and we have prioritized and
examined each target. Many of them were old mines which closed
when gold was less than A$400 an ounce and they were being
exploited by small high-cost plants. We are confident former open
pits at GVG and Nevoria will yield reserves that will enable a
substantial expansion of production and extension of mine
life at Southern Cross.
n Follow-up exploration work at Tower Hill and develop
reserves to support higher throughput for the Gwalia mill.
The results at Tower Hill show great potential not only for open
cut reserves but also for underground reserves. As the mill at
Gwalia, which is only two kilometres away, has considerable
additional capacity, ore can be processed at an early date at a low
incremental cost.
n Increase mining production at Southern Cross to about
220,000 ounces per year. Now that Marvel Loch underground
is close to its optimum output level, development of Nevoria,
where new reserves were recently established, is a priority.
This, combined with higher-grade production such as the
recent Bronco East discovery, will facilitate achievement
of production targets.
n Complete the Hoover Decline by the March quarter 2008 and
the additional development and plant refurbishment required to
allow Gwalia production to start in the September 2008 quarter.
It has been a significant challenge to keep the decline on track,
and after reaching the top of the ore body, we will press hard to
complete all the development to allow a measured increase in
gold production from the initial 100,000 ounces per year to
around 220,000 ounces per year within two years.
Building
In addition, ancillary infrastructure such as refrigeration plants,
the expansion of the gold treatment plant, and accommodation and
related facilities must be either upgraded or installed. Plans are
underway to recruit the skilled workforce needed to operate the
modern operation we are building. Supplementing this effort, the
Company is constantly examining opportunities for future growth
through acquisitions and greenfield discoveries. These include:
n The BigGold study, which has been responsible for the acquisition
of 9,000 square kilometres of additional tenements or tenement
applications. The study focuses on looking at targets in under
explored areas under surface cover. Land has been acquired in
Victoria, New South Wales and South Australia. Although gold is
the main target, base metal opportunities are also considered.
n The acquisition of gold assets (either separately or in a corporate
structure) which have the potential to add more than 150,000
ounces of gold per year to the Company’s total production base.
n As part of our strategy of building options, the Company
acquired 10% of Bendigo Mining Limited during the year.
Bendigo has had to reassess its strategy after initial mining
results disappointed and St Barbara believes the potential for
the goldfield remains attractive, and is prepared to wait to see
how events unfold.
Apart from our very strong gold focus, St Barbara’s land position
in Western Australia is also prospective for other minerals.
Our tenements are on the edge of major nickel belts and have not
been explored to the depth which is normally required to intersect
nickel sulphide mineralisation. Initial drilling at Sullivans has yielded
encouraging results and further drilling is planned.
Similarly, sections of the Leonora tenements are on the geological
trend which contains a number of copper/ zinc discoveries, also at
depth. As a result, we are embarking on an active exploration
programme targeting potential base metal ore bodies and expect
to start exploration in the 2008 fiscal year.
Carrying out our plans requires skills, funding and support.
The past year has seen the Company invest in increasing the number
and range of skills among our senior team so we are better able to
assess internal and external opportunities. Support functions such
as human resources and information technology also need to be
expanded to give managers and employees the information and
skills to carry out their responsibilities.
Building the structure to fund our ambitions has taken a
considerable part of the year, supported by the A$100 million
convertible note issue. A robust reporting and capital allocation
system has been established to ensure we allocate resources to the
most appropriate opportunities.
Environment. During the year, the Company continued with the
environmental rehabilitation of old areas it had acquired with the
2005 purchase of the Sons of Gwalia gold assets. Apart from the
usual work involved in environmental monitoring and control, the
Company has added several beneficial environmental features to
the new accommodation it is building at Leonora for the Gwalia
mine. This includes recycling water, utilising solar energy and
possibly, solar water heating.
Community. As the potential life of our operations increases, the
Company is building stronger links into our local communities
by taking time to understand the community and respond to its
needs. At Leonora, discussions with the local school have led
the Company to support installation of more computers to
increase the skills development of the children. At Southern
Cross and Leonora, a portion of the workforce is drawn from
the local community as opposed to all being fly-in/fly-out.
This reduces employee turnover and allows for better local skill
development. This residential focus at Leonora has also seen
the Company taking steps to better understand the needs and
employment potential of local indigenous groups.
Safety. Safety is an integral part of the workplace throughout
the Company and fundamental to the wellbeing of all who work
for or with St Barbara. Continuous improvement is encouraged
throughout all levels of the Company, based on the belief that all
occupational injuries and illnesses are preventable.
Outlook. We have three key targets for this time next year - the
production of 175,000 ounces of gold from our Southern Cross
operations, the completion of development and preparations for
production from Gwalia and, subject to the finalisation of the
drilling and feasibility study, the commencement of open pit
production from Tower Hill. This will be supported by vigorous
activity to build a framework for long-term profitable operations
across the Company. Exploration remains a key driver for
St Barbara and efforts to extend our open pit reserves and look at
the base metal potential of our tenements will give the Company
more options to fulfil its growth plans.
Eduard Eshuys
Managing Director & CEO
1 October 2007
St Barbara Limited Annual Report 2007
“07 forecasts achieved”
Operations &
Development
The objective is to be producing at the
annual rate of 450,000 ounces of gold
per annum from Southern Cross and
Leonora in the December quarter of 2008.
Strategic
Southern Cross operations produced 171,000 ounces of gold for
the 2007 financial year, meeting the forecast.
The immediate strategic focus is to sustain and extend the life of
the Southern Cross operations and develop production at Gwalia
and Tower Hill.
The objective is to be producing at the annual rate of 450,000
ounces of gold per annum from Southern Cross and Leonora in
the December quarter of 2008.
Southern Cross operations produced 199,000 tonnes of
underground ore from Marvel Loch for the June 2007 quarter,
clearly demonstrating the capability of long-term Marvel Loch
underground production of 800,000 tonnes per annum; an
important component of the Company’s total gold
production target rate.
Gwalia’s development has remained on schedule. The Hoover
Decline is planned to reach the top of the ore body by March 2008.
Successful on-time commissioning of mining by September 2008
is also a key component to achieve the target rate of gold production.
Safety
Safety is an integral part of the workplace throughout the
Company and fundamental to the wellbeing of all who work
for, or with, St Barbara.
Building
Training and awareness-raising is ingrained into most daily
procedures, ranging from safety meetings at the beginning of each
shift to formal inductions, safety advisory committees and a
‘fit for work’ policy. It also involves ‘risk assessment’ at the
commencement of new tasks and activities.
The company-wide Lost Time Injury Frequency rate fell from 6.2
in the previous year to 4.7 this year. While an improvement, this
rate is still above the WA Gold Industry average for 2005/06 of 4.4
and above the level for which the Company aims.
Production Details
Total
2006/07
Total
2005/06
Open Pit Ore Mined ( t)
Grade (g/t)
903,000
2.7
1,329,046
2.1
Underground Ore Mined (t)
Grade (g/t)
Ore Milled (t)
Grade (g/t)
Recovery (%)
603,000
4.0
315,112
5.7
2,228,000
2.6
92
2,351,369
2.4
91
Gold Production
171,182
166,000
Cash Operating Cost A$/oz
508
443
“07 forecasts achieved”
SOuthern crOSS OperatiOnS
Current operations comprise the Marvel Loch gold treatment
plant, Marvel Loch underground mine and open pits at Hercules
and GVG.
Gold Production. The treatment plant processed 2.4 million
tonnes in the financial year at a grade of 2.4g/t, with both
utilisation and recovery rates above budget. Notwithstanding
the age of the plant, the standard of performance remains high.
In the 2008 financial year, over A$9 million will be spent on
upgrading the water supplies, tailings facilities, mills, technical
support equipment and other plant facilities.
Marvel Loch Underground. The Marvel Loch underground mine
is adjacent to the treatment plant. Gold mineralisation extends
over a 1.3km strike length and has been identified to depths of over
800 metres below surface. The ore body comprises multiple lodes.
Those currently 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. Gold production
from Marvel Loch underground mine for the year was 75,000
ounces compared to reserves for the same mining areas of 37,000
ounces; a positive reconciliation of 204%. This provides support
for both the geological model and the mining plan.
During the year there was significant capital expenditure to
improve the productivity of the mining and processing operations.
Underground, new electrical transformers and cabling provided
a 130% increase in electricity reticulation. A new underground
pumping station gave a 70% increase in dewatering capacity and
improvements to the ventilation system yielded a 45% improvement
in underground ventilation capacity. In total, development rates
improved by 25% and stope production rates were up by 85%.
New trucks have also begun to be delivered as part of a fleet
replacement program providing further productivity
improvements. An upgraded drilling jumbo fleet will increase
development rates. The underground mine is scheduled to deliver
800,000 tonnes during the 2008 year. This is double the scheduled
production rate for the 2007 year, but in line with underground
production for the June 2007 quarter.
Open Pit Operations. Hercules, 12km south of the Marvel Loch
treatment plant, was a major source of open pit feed for the plant
in the past year. Hercules and Hercules Central open pits produced
85,000 ounces of gold for the year, compared to reserves for the
same mining areas of 81,000 ounces; a positive reconciliation of
5%. The small Hercules Central lode was discovered during the
year and quickly incorporated in the mine plan. This illustrates the
flexibility of the current arrangements and potential for incremental
feed from a wide range of sources at Southern Cross. During the
year, additional open pit production came from the GVG
Cutback, historic GVG leach pads and other associated stockpiles.
Leonora operations: St Barbara’s tenements are shown on a background derived
from magnetic surveys. It shows some of the Company’s numerous gold targets
and the structural trend that is associated with many of the nickel sulphide
deposits in the region.
Southern Cross operations: St Barbara’s tenements are shown on a background
derived from magnetic surveys. Highlighted are some of the 20 plus old open pits
that are being re-evaluated for additional reserves.
St Barbara Limited Annual Report 2007
7
“Building assets for the future”
Operations & Development continued
GVG is close to the Hercules open pit infrastructure, including
workshops and haul roads. In the current year, the GVG area, with
historical production of 335,000 ounces, will become a much
more important source of open pit feed. The GVG area was
initially developed in the 1980s as a series of small pits over a
7 kilometre strike length to depths of 50-80 metres. This was
based on a small, high-cost plant and a gold price of around
A$400 per ounce. St Barbara’s drilling around and beneath the
existing small pits has identified new ore. At the Great Victoria
Mine, St Barbara has removed the old engineering facilities,
accessing previously sterilised ground and allowing a substantial
cutback to the old pit. At GVG, there are low-grade stockpiles
which can be blended with the underground ore, delivering both
feed to the treatment plant over the next 18 months and the
rehabilitation of the stockpile area to the appropriate standard.
At the same time waste from the GVG cutback will be used to
rehabilitate a legacy tailings dam.
Forecast. Southern Cross operations are
forecast to produce 175,000 ounces of gold
for the 2008 financial year at a forecast
cash operating cost of A$505 per ounce.
Forecast costs are lower than the previous
year due to improved grade and tonnes
from open pits and increased production
from Marvel Loch Underground.
The decline remains on schedule and on budget to reach the top of
the Gwalia mining area during the March 2008 quarter. This will
allow development for mining to commence with the
intention of starting gold production in the September 2008 quarter.
Mining will be within the depth interval of 1,030 metres below surface
to 1,640 metres below surface. Gwalia underground ore production
is scheduled initially at 500,000 - 600,000 tonnes per annum.
Surface Development. The development of the 820 metre deep,
5.5 metre diameter Main Ventilation Shaft began in the June 2007
quarter. The pilot hole for the Main Ventilation Shaft has reached
the target depth ahead of schedule. The ventilation shaft is
forecast to be completed during the March 2008 quarter.
Other surface infrastructure needed for the mine includes a
refrigeration plant for cooling underground air temperatures
to levels suitable for a healthy environment and a paste fill plant.
Supporting the whole operation requires a new gas- fired power
generation facility and a substantial upgrade to the accommodation
facilities at Leonora. Refurbishment of the Gwalia treatment plant
has commenced and when completed, the plant will have a capacity
of approximately 1.2 million tonnes per year of hard rock and up to
1.8 million tonnes per year, when softer open pit material is blended.
St Barbara spent A$38 million on Gwalia’s development during the
2007 financial year and will spend another A$110 million during
the 2008 financial year. Life of mine cash costs for the project are
forecast at A$405 per ounce. This will place the Gwalia mine in
the bottom half of the cost curve for Australian producers.
The current Gwalia reserves will sustain production for at least 10
years. Gold production will be at the initial rate of 100,000 ounces
per annum in the 2009 financial year building up to 150,000
ounces per year during the 2010 financial year.
leOnOra OperatiOnS
Gwalia Approval. The Gwalia gold mine has one of the longest
operating histories and largest gold production records in
Australia. It is a world-class ore body with historical production
and current resources exceeding 8 million ounces of gold.
The Board approved the development and mining of Gwalia in
February 2007 based on a detailed feasibility study completed in
December 2006. In May 2007, the detailed budget review
process for 2007/08 confirmed the November 2006 Gwalia
feasibility study costs and schedules.
Hoover Decline. At the end of August 2007, the Hoover Decline
reached a vertical depth of more than 815 metres below surface
and is now over 80% complete. Ground conditions remained
favourable with little sign of increasing stress with increased depth.
develOpment
Drilling for potential open pit reserves at Southern Cross and
Leonora operations is continuing, to complement the long-
term underground reserves which have been established, and
provide optimum treatment plant throughputs and lower unit
production costs.
Leonora. The addition of open pit ore to the Gwalia mill would
significantly reduce the unit cost of A$29 per tonne milling and
administration charge used in the Gwalia feasibility study, and
increase cash flow.
Tower Hill, which is two kilometres from the Gwalia plant,
has been identified as a potential open pit and/or underground
opportunity and recent good results have seen a pre-feasibility
study accelerated to consider the development options.
8
Building
“Building assets for the future”
Marvel Loch plant, where $9 million will be spent in the coming year
to increase efficiency and availability.
Kailis, which was previously mined in the 1990s, 10 kilometres
north of Gwalia, and several other targets are also being
re-evaluated as potential sources of open pit ore.
Southern Cross. Open pit mining at Southern Cross will continue
at Hercules Central and the GVG cutback. Recent drilling results
at Nevoria, 11 kilometres south-east of Marvel Loch, complement
previously estimated reserves of 90,000 ounces and form the basis
for a potentially longer-term operation comprising open pit and
underground mining activities. The new discovery of Bronco East
will also be evaluated as a source of open pit feed during the year.
Transvaal, which was previously mined in the 1990s, 35
kilometres north of the Marvel Loch plant, is currently being
re-evaluated as a potential open pit or underground opportunity.
St Barbara Limited Annual Report 2007
Reserves & Resources
Proven & Probable Reserves Statement at 30 June 2007
Region
Southern Cross
Marvel Loch
Nevoria
Hercules
GVG
Other
Sub total
Leonora
Gwalia
Proven
Probable
Total
kTonnes
Au g/t
koz
kTonnes
Au g/t
koz
kTonnes
Au g/t
950
4.0
120
110
1,100
1.9
3.7
7
130
2,200
670
450
530
1,300
5,100
5,600
4.1
4.1
2.4
1.6
0.8
2.9
9.4
6.3
290
90
34
27
34
480
3,100
670
450
530
1,400
6,200
1,700
2,200
5,600
12,000
4.1
4.1
2.4
1.6
0.9
3.0
9.4
6.0
koz
410
90
34
27
41
600
1,700
2,300
Total in all areas
1,100
3.7
130
11,000
Notes – Southern Cross:
1) Information in this report that relates to Southern Cross Ore Reserves is based on information compiled by Mr. Jacobus Kirsten and Mr. Sam Larritt who are
Members of the Australasian Institute of Mining and Metallurgy. Both Mr. Kirsten and Mr. Larritt are full-time employees of the Company. Mr. Kirsten and Mr. Larritt
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. Kirsten and Mr. Larritt consent to the
inclusion in the report of the matters based on their information in the form and context in which it appears.
2) The ore reserve estimates for Hercules and GVG used a gold price of A$750/oz. The gold price is based on put options bought by the Company, exercisable at
A$760 each, for the twelve months within which these reserves are expected to be mined. A cut-off grade of 0.9g/t, dilution of 5% and mining recovery of 97.5% were
applied. Metallurgical recovery is 93%.
3) The ore reserve estimate for Nevoria used a gold price of A$700/oz and a cut-off grade of 3.0g/t. A dilution of 10% and mining recovery of 75% were applied
to all lodes. Metallurgical recovery is 93%.
4) The ore reserve estimate for Marvel Loch used a gold price of A$700/oz and a cut-off grade of 3.0g/t. A dilution of 30% and mining recovery of 85% were
applied to Undaunted lode, a dilution of 12% and mining recovery of 90 % were applied to Sherwood lode, a dilution of 5% and mining recovery of 95% were
applied to Exhibition lode, New lode and East lode, a dilution of 20% and mining recovery of 95 % were applied to Firelight lode. Metallurgical recovery is 93%.
5) All data is rounded to two significant figures. Discrepancies in summations will occur due to rounding.
Notes – Leonora:
1) The information in this report that relates to Gwalia Deeps Ore Reserves is based on information compiled by Mr. Per Scrimshaw and Mr. Daniel Donald, who
are members of the Australasian Institute of Mining and Metallurgy. Mr. Scrimshaw is a consultant to, and Mr. Donald an employee of, St Barbara Limited and both
have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr. Scrimshaw and Mr. Donald
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 ore reserve estimate for Gwalia Deeps used a gold price of A$700/oz and a cut-off grade of 5.0g/t. The gold price is based on put options bought by the
Company, exercisable at A$700 per ounce, corresponding to the period of time within which these reserves are expected to be mined. Dilution factors between 8%
and 20% at 0.2g/t Au were applied based on stope width. Mining recovery factors are based on geotechnical studies and vary from 85% to 50% depending on depth
of mining. Metallurgical recovery is 95%.
3) All data is rounded to two significant figures. Discrepancies in summations will occur due to rounding.
0
Building
“Extending mine life”
Mineral Resource (including Reserves) Statement at 30 June 2007
Region
Southern Cross
Marvel Loch
Nevoria
GVG/Hercules
Other
Sub total
Leonora
Gwalia
Gwalia (above 1040 mbs)
Tarmoola
Other
Sub total
Total in all areas
Measured
Indicated
Inferred
Total
kTonnes Au g/t
koz
kTonnes Au g/t
koz
kTonnes Au g/t
koz
kTonnes Au g/t
koz
1,520
-
-
110
1,630
-
-
12,000
990
12,990
14,620
4.6
-
-
2.0
4.4
-
-
0.9
1.0
0.9
1.3
224
-
-
7
231
-
-
347
33
380
611
3,420
1,080
2,690
2,690
9,880
10,440
-
46,000
4,830
61,270
71,150
4.5
4.6
2.1
2.4
3.3
8.4
-
1.2
1.5
2.5
2.6
498
161
185
206
1,050
2,835
-
1,775
230
4,840
5,890
600
260
210
2,030
3,100
1,930
2,400
-
3,920
8,250
11,350
4.2
4.4
1.5
2.8
3.1
11.6
6.5
-
2.7
5.9
5.1
81
37
10
180
308
720
502
-
336
5,540
1,340
2,900
4,830
14,610
12,370
2,400
58,000
9,740
1,558
82,510
1,886
97,120
4.5
4.6
2.1
2.5
3.4
8.9
6.5
1.1
1.9
2.6
2.7
803
198
195
393
1,589
3,555
502
2,122
599
6,778
8,367
1) The information contained in this report has been compiled by Mr Alex Hatch, Mr Peter Thompson and Mr Paul Payne. Messrs Hatch and Thompson are
Members of the Australasian Institute of Mining and Metallurgy and full-time employees of the Company. Mr Payne is a Member of the Australasian Institute of
Mining and Metallurgy and a contractor to the Company. Messrs Hatch, Thompson and Payne 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’. Messrs Hatch, Thompson and Payne consent to the inclusion in the report of the matters based on their
information in the form and context in which it appears.
2) Data has been rounded to the nearest 10,000 tonnes, 1000 ounces and 2 significant figures for the grade. Discrepancies in summations will occur due to rounding.
St Barbara Limited Annual Report 2007
“Driving new ideas”
Exploration
During the year, the Company’s
resource and reserve base expanded
substantially and it established a
prospective landbank of 18,000
square kilometres around Australia.
Subsequent to year end, a significant discovery was made at
Tower Hill and further high-grade mineralisation has been
identified at Nevoria and GVG. The emphasis in the coming
year will focus on converting these promising discoveries into
open pit reserves. Significant achievements from exploration
activity in the 2007 financial year include:
n Total Company gold reserves more than doubled to 2.3 million
ounces at year end, after allowing for mining depletion.
n Resources, including reserves, now total 8.4 million ounces.
n Reserves at Gwalia increased from 885,000 ounces as
at 30 June 2006 to 1.7 million ounces.
n Reserves at Marvel Loch Underground increased from
116,000 ounces, after mining depletion, to 410,000 ounces.
n Gwalia’s total resources (including reserves) increased
by 1.4 million ounces from June 2006 to 4 million ounces and
Marvel Loch total resources increased to 800,000 ounces.
n Geological interpretation and analysis of existing deposits
within the Leonora and Southern Cross tenement areas provided
the basis for the Company’s planned expansion of production.
n A base metals exploration group was established, with
significant research backup, and identification of key nickel
and copper-zinc targets.
n Successful targeting and acquisition of priority targets for gold
and copper-gold in South Australia, NSW and Victoria.
Gwalia. In general the Gwalia deposit, from 1,040 metres to 1,800
metres below surface, has an average resource endowment of
5,000 ounces per vertical metre, reaching a maximum of 10,000
ounces/vertical metre at a depth of 1,500 metres below surface.
The deposit is strongly mineralized and open-ended at depth
but adequate drilling density, and therefore resources, are only
available to 1,730 metres below surface.
The deepest two holes in the dominant lode, the Southwest
Branch, down to 1,900 metres below surface, reported true widths
of 20.6 metres at 21.4g/t (hole GWDD12C) and 12 metres at
35.7g/t (hole GWDD12D). These holes demonstrate the
opportunity for significant extensions of mineralisation
beyond the current resource.
Leonora Gold Exploration. Tower Hill lies 2 kilometres north
of the Company’s Gwalia gold treatment plant. Previous open
pit mining at Tower Hill ceased in 1989 and recovered
approximately 176,000 ounces to a depth of 80 metres.
The gold mineralisation at Tower Hill is quartz-hosted, with
many similarities to Gwalia.
Tower Hill has a one kilometre strike length, dipping at 40
degrees to the east. Previous drilling showed continuity of
mineralisation to vertical depths of 200 metres.
Recent reverse circulation and diamond drilling has extended
the mineralisation to at least 350 metres depth and achieved true
width intersections of 40 metres at 6.0g/t, 30 metres at 7.2g/t,
50 metres at 3.7 g/t, 33 metres at 4.2g/t and 10 metres at 10.7 g/t
2
Building
“Driving new ideas”
at depths of 250-300 metres which indicates an apparent
improvement in gold grades with depth. Drilling is now
underway with the objective of proving reserves by early 2008.
There remain a number of attractive potential targets for open pit
mineralisation in the Leonora region, with the emphasis on the
granite-greenstone contact which hosts most of the significant
deposits in this belt. Other projects of interest include Harbour
Lights, Forrest, Poker, Trump and Kailis.
Marvel Loch. A substantial drilling programme, involving two
surface drill rigs and up to three underground rigs, has increased
the underground resources at Marvel Loch to 5.5 million tonnes
at 4.5g/t for 800,000 ounces. Drilling at average spacings of 20
metres by 40 metres was used. This deposit comprises a number
of steeply-plunging cylindrical-shaped quartz-veined lodes, with
ore thicknesses from 4 to 30 metres wide. Vertical continuity of
deposits is strong. There is considerable potential for increasing
resources further at depth. Two short exploration drill drives are
being developed in the north and central parts of the mine to allow
further resource extension drilling in the year ahead.
Southern Cross New Mine Exploration. Site-based exploration
teams were formed during the year to explore systematically for
new mining opportunities in proximity to the Marvel Loch plant.
This has involved the compilation, validation, ranking and testing
of various targets, with an emphasis on accurate interpretation of
orebody controls. Successful drilling campaigns have expanded
known mineralisation and, in the coming year, are expected to
increase the reserves for several deposits including Nevoria and GVG.
Above: The raise bored shaft of 820 metres is the longest 5.5 metre
diameter shaft in Australia. It will provide underground ventilation
for the Gwalia mine.
St Barbara Limited Annual Report 2007
Base Metals. St Barbara’s base metal
exploration programmes have gained
momentum over the past year.
The Company’s extensive tenement
position means it can target nickel
sulphide mineralisation along strike
from the well-endowed Leinster and
Forrestania operations and copper-zinc
mineralisation along strike from the
high-grade Teutonic Bore-Jaguar volcanic
hosted metal sulphide deposits.
Results from initial reverse circulation and diamond drilling at
Leonora have been encouraging. Cumulate ultramafic rocks are
present, reflecting an energetic magmatic environment.
A sulphidic sediment is also intermittently developed along the
basal contact, providing a potential source for sulphur saturation.
Recent intersections of disseminated to blebby sulphides have
confirmed the prospectivity of the ultramafic units. At the Sullivans
North Prospect, diamond drill hole SUDD0003 returned 0.35m @
1.45% nickel and 0.13% copper from 331m depth. Further targets
are being defined through surface and down-hole electromagnetic
surveys, and ongoing mapping and gossan search programmes.
Electromagnetic and induced polarisation surveys have also been
completed along strike from the Teutonic Bore and Jaguar copper
-zinc deposits. Several anomalies have been defined for drill
testing. A data review has highlighted historical intersections
of copper-zinc sulphide mineralisation and associated zones of
alteration at the Gravel Pit and WTB-45 Prospects, on
gwalia
Building
BigGold Study. The focus of the Company’s BigGold study is to
identify the next generation of mineral discoveries. Targeting and
acquisition of priority targets for gold and copper-gold in South
Australia, NT and Victoria continued, with the total portfolio
now comprising 9,000 square kilometres and 45 targets. The
Company’s applications for tenements are now being granted and
work has commenced on the first phase of exploration. Most of
the targets are buried under ‘cover’ rocks and require geophysical
surveying, mostly ground-based gravity and airborne magnetic
surveys, as first-pass tools.
Exploration
St Barbara’s tenements to the north of Teutonic Bore. Drilling has
also been planned to target extensions to these systems.
At Southern Cross, drill core is being relogged and sampled to
prioritise the ultramafic units on which to focus further nickel
sulphide exploration. Preliminary results show some similarities
to the Western Belt at Forrestania, which hosts the Flying Fox
deposit. This evaluation is being supported by a cutting edge
scientific research initiative which St Barbara has sponsored
through the CSIRO and the University of Western Australia.
The copper-zinc potential of the Southern Cross district is also
being evaluated. Some regions show anomalous base metal
concentrations, with up to 14.3% zinc, 115 g/t silver, 4.6%
copper 2.1% lead from historical drill core from one prospect
area. Previous studies suggest these metals may have been
hydrothermally remobilised from a volcanic hosted metal
sulphide deposit. Follow-up geophysical surveys will be
undertaken to test for a potential source.
The focus of the Company’s BigGold
study is to identify the next generation
of mineral discoveries. Targeting and
acquisition of priority targets for gold
and copper-gold in South Australia,
NSW and Victoria continued, with the
total portfolio now comprising 9,000
square kilometres and 45 targets.
marvel lOch, the cOrnerStOne Of SOuthern crOSS
St Barbara Limited Annual Report 2007
“Raised capital”
Finance
During the year, the Company established reporting systems and financial controls
appropriate for the continuing growth of operations and projects.
Gold revenue was generated from the sale of 167,065 ounces of gold
produced by the Southern Cross operations at an average gold price
of A$780 per ounce, up from A$694 per ounce the previous year.
Gold revenue was generated from the sale of 167,065 ounces of
gold produced by the Southern Cross operations at an average
gold price of A$780 per ounce, up from A$694 per ounce the
previous year. The spot gold price during the year was stronger
than in the previous year at an average of A$811 per ounce,
however St Barbara received slightly less due to previous hedging
commitments which have now expired.
Other income was mainly derived from $11.1 million from the
sale of investments, in particular Saracen Mineral Holdings Ltd
and Mercator Gold plc. Other income of $3.5 million included
interest earned of $3.2 million. In accordance with accounting
standards, the unrealised fair value movements in the carrying
value of listed investments held as at 30 June 2007, principally
Bendigo Mining Limited, were recognised in the balance sheet.
EBITDA from Southern Cross operations increased to $45.7
million (2006: $40.9 million) due to consistent production and the
higher gold price. The reported EBITDA for the Company was
$28.4 million, which included corporate costs, exploration
expense, realised and unrealised gains on gold derivatives and
profit on the sale of investments and fixed assets.
Underlying EBITDA of $10.6 million included corporate costs
and exploration, but excluded realised and unrealised gains on
gold derivatives of $6.7 million and profit on sale of investments
and fixed assets of $11.1 million.
Total exploration expenditure during the year was $23.7 million,
of which $18.1 million was capitalised as an asset in the balance
sheet, due to the success in increasing reserves at Marvel Loch
and Gwalia. The balance of exploration expenditure charged to
the income statement and included in reported and underlying
EBITDA amounted to $5.6 million.
Depreciation and amortisation of $30.0 million for the year
comprised mainly depreciation of mine assets and amortisation
of mine development at Southern Cross operations.
The depreciation and amortisation charge for the year was $175
per ounce of production, which reflects the impact of increased
capital expenditure during the year at Marvel Loch and Hercules.
Capital development at Marvel Loch will benefit the longer-term
mine plan. Gwalia depreciation and amortisation will commence
in fiscal 2009, which will increase the charge recognised in the
income statement from 2009 onwards.
A net loss after tax of $2.9 million was reported for the year,
compared with a net profit of $6.0 million in the previous year.
The underlying net loss after tax, excluding realised and
unrealised gains on gold derivatives and profit on the sale
of investments and fixed assets, was $20.7 million.
Finance and Tax. Finance costs totalled $2.7 million for the year,
which comprised mainly the effect of unwinding the discount on
the provision for rehabilitation. Interest expense in relation to the
convertible notes is being capitalised to Gwalia pre-production
capital expenditure until production commences. Interest earned
in the year was $3.2 million.
The tax expense reported in the current year of $1.8 million
represented the tax effect of movements in the gold hedge and
investment fair value reserves. The Company did not pay tax in
the year and is not expected to be in a tax paying position in the
next two financial years.
Building
“Put options secure cash flows”
Gold sales revenue
2003 2004 2005 2006 2007
highlightS aS at 30 June 2007
n EBITDA from Southern Cross operations up 11.7% to $45.7 million
n Average achieved gold price of A$780 per ounce, up from A$694/oz
in the previous year
n Put options over 173,600 ounces at a strike price of A$760/oz to protect
Southern Cross 2008 cash flows
n Put options over 1,328,400 ounces at a strike price of A$700/oz
to cover future Gwalia production for 9 years
n Convertible notes issue raised $100 million, before costs
n Cash at bank was $95.5 million
140
120
100
80
60
40
20
M
$
A
e
u
n
e
v
e
R
s
e
l
a
S
Cash flow. During the year the Company invested substantial cash in the
following major areas to underpin its operations and prepare for future growth:
n Gwalia development -$38 million
n Mine development at Southern Cross - $50 million
n Exploration – $24 million
n Purchase of property, plant and equipment - $5 million.
In addition, the Company made new investments in listed shares of $18.9 million,
which included a 10% interest in Bendigo Mining Limited for $17.2 million.
The funds required for investments during the year were sourced mainly from
available cash at the beginning of the year of $80 million, cash from operating
activities of $26.4 million and proceeds from the sale of investments of $31
million. In June 2007 the Company raised $96.7 million after costs from a
convertible notes issue with a five year term. The proceeds from this convertible
notes issue is to be used mainly for completing the development of Gwalia.
Cash at bank as at 30 June 2007 was $95.5 million.
Protecting Revenue. During the year the Company purchased put options to protect
Southern Cross cash flows in fiscal year 2008 and to cover 1,328,400 ounces of
future Gwalia production over 9 years. Put options secure a minimum gold price
with unlimited upside exposure to an increase in the gold price. It does not commit
the Company to firm deliveries, but underwrites a minimum price for the sale of gold.
Revenue
Gold Sales Revenue
Other revenue and income
EBITDA
EBIT
Net profit/(loss) after tax
30 June 2007
$’000
130,371
15,145
145,516
28,364
(1,616)
(2,894)
30 June 2006
$’000
114,941
24,769
139,710
13,577
4,037
6,019
Bought Put Options
Ounces Price/oz
Maturity Cost
$M
Market Value
30 June 07
$M
173,600
A$760 Jul 07-Jun 08
1,328,400
A$700 Jul 08-Apr 17
1,502,000
2.8
8.0
10.8
2.5
10.5
13.0
St Barbara Limited Annual Report 2007
7
Jenni O’Brien
BBus (HR & IR)
GM Human Resources
Jenni recently joined St Barbara and her role plays a key part in
helping guide, and develop, strategic Human Resources initiatives.
These include policies, programmes, and practices across the busi-
ness to deliver superior sustainable performance.
A key focus will be to develop the framework to facilitate the
recruitment, development and retention of employees and to
position St Barbara to be an ‘employer of choice’ in the mining
industry. Jenni was previously at National Leisure and Gaming
where she was the National HR Manager and prior to this at a
number of organisations, including Foster’s Group.
Wayne Groeneveld
GM Land and Indigenous Affairs
Wayne joined St Barbara in mid
2006 and is responsible across our
18,000 sq km of tenements for land
acquisition, maintaining access for
exploration activities, compliance
with legislative obligations and
liaison with
community stakeholders.
He promotes our policies and
ensures sustainable relationships
are maintained with the
indigenous communities with
whom we operate.
Management
Group
George Viska
GM Commercial
The Commercial team provides support to
operations, including negotiation and
procurement, cost and variance analysis,
as well as assisting in budgeting and forecasting.
In addition, the team provides modelling
and strategic input into special projects
and new developments.
George is also responsible for
overseeing surface infrastructure
works at Gwalia, ahead
of re-commencement
of production.
Garth Campbell-Cowan
B.Com, Dip-Applied Finance & Investments
Chief Financial Officer
Garth was appointed in September 200 and
is responsible for finance, treasury, taxation,
reporting and business analysis, corporate
planning and capital management.
He has repositioned the finance team to focus
on developing financial reporting systems
and controls to assist with the Company’s
growth. He has also established a
treasury function.
Prior to joining St Barbara, he was
Director of Corporate Accounting
at Telstra and has held finance
leadership roles with WMC
and Newcrest Mining.
Peter Card
BEng(Metallurgical) Post Grad(Business)
GM Business Evaluation
Peter joined St Barbara in mid 2007 and works with
the sites to assess ways of increasing cash margins
and production from operations, and assists the
exploration and executive management team to
evaluate alternatives for organic development.
He leads the evaluation of M&A opportunities.
Peter was recruited from BHP Billiton where
he co-founded Business Evaluation in 2001.
Ian Bird
BEng
Chief Operating Officer
Ian joined St Barbara in March 2007 and is
responsible for operations across the group.
The role involves both growing existing production
and ensuring development of future production
opportunities is achieved. This involves a close
focus on margins and capital budgets.
Previously, Ian was the GM of the Tanami
Operation with Newmont. He has had
senior operational management
positions in both open cut and
underground mining operations
across Australia.
Ross Kennedy
BComm., Grad.Dip-Company Secretarial Practice.
GM Corporate Services & Company Secretary
Ross has been with St Barbara since 2004. The role of GM Corporate
Services is to provide leadership on corporate standards and promote business
improvement through HR initiatives and business intelligence systems.
Corporate Services comprises a team of specialists to support the business
across Human Resources, Information Technology and Communications,
Legal and Contracts, Insurance and Risk Management.
The Company Secretariat is responsible for statutory compliance with
company law and stock exchange listing rules, in Australia and overseas,
as well as organisation of Board related matters.
Peter Thompson
BSc MSc
GM- Exploration
Peter has been with St Barbara since late 2004. His role is to advance the
Company’s resource and reserve base by the application of leading edge
technology to our project areas. Working with a team of 18 geologists, the focus
is to make new and extensional discoveries and to allow sustained improved gold
production. Emphasis is given to new exploration opportunities, which includes the
Company’s base metal potential, research angles and the recruitment of top quality
geologists, which will give St Barbara a competitive edge. Peter worked previously
at WMC, Anaconda Nickel and Jubilee Mines.
Environment, Safety
& Community
People. St Barbara continues to successfully recruit high calibre, team focused personnel.
As Gwalia comes into production the Company will be recruiting a significant number of
new employees, to supplement the existing skill base. A positive workplace culture is being
nurtured and human resources systems and procedures established to meet these objectives.
This will include implementing systems to monitor employee attitudes and constantly
reviewing policies and benefits to keep ahead of employment and remuneration trends
within the industry.
The proximity of Company operations to established towns has led to programmes to
encourage and incentivise employees to live in local communities, in preference to fly-in/
fly-out, in an effort to reduce employee turnover and in recognition of the company’s long
term commitment to the communities with whom we interact. Developing our people by
providing appropriate leadership training for front level supervisors and working with
indigenous communities to build skills, are other initiatives being pursued.
Environment. Addressing any effects from its activities on the environment is an important
aspect of St Barbara’s business, with management of environmental aspects incorporated
into all exploration and operational activities. An example of this has been the new
accommodation facilities being constructed at Leonora. The design of these facilities
incorporates water recycling and solar energy usage, as well as a number of other energy
saving features. The past 12 months has also seen rehabilitation activities at historic
mining areas continued, hydrocarbon management practices improved and permitting for
re-opening of previously mined areas successfully completed. During the current year,
a Strategic Environmental Plan will be refined to define key challenges and
opportunities and develop action plans for the Company to implement.
Rehabilitation. The focus of rehabilitation
activities during the year shifted from the
Bullfinch area at Southern Cross to the
Burbidge area south of Marvel Loch.
Rehabilitation was completed at
Transvaal, Corinthia and Nevoria.
In particular, the rehabilitation of the
Great Victoria Gold Tailings Storage
Facility 4 was advanced.
Waste material mined from the Hercules
open pit was utilised for the rehabilitation
of this decommissioned tailings dam
using an innovative rehabilitation design.
At Leonora, rehabilitation efforts were
concentrated on the Ulysses and
McGraths waste dumps, and
areas to the north and south of the
Leonora township.
The Company has continued to consult
with State Government, shire councils,
local communities and other
stakeholders on its rehabilitation plans.
During the current year, a Strategic Environmental
Plan will be refined to define key challenges
and opportunities and develop action plans for
the Company to implement.
St Barbara assisted with funding
for the completion of a computer
network and provision of computers
at the Leonora District School.
20
Building
“Securing & developing people”
Energy. St Barbara is a signatory to the Australian Greenhouse
Offices’ Greenhouse Challenge Plus Programme and the Energy
Efficiency Opportunities Programme.
Identification of initiatives to reduce the Company’s greenhouse
gas emissions was completed as part of the Greenhouse
Challenge Plus Programme. During the current year, a baseline
energy audit will be undertaken to identify further greenhouse
gas emission opportunities and related cost savings.
Development of programmes to meet
the intent of the Energy Efficiencies
Opportunities Programme will be
further developed and implemented
during the current year. This will assist
with identification of further cost-saving
opportunities through the reduction of
energy consumption by the Company.
Water. The usage of water by St Barbara is of key importance to
the Company and is constantly reviewed. The current year will
see evaluation and development of water recycling and water
efficiency measures.
Community Activities and Consultation. The Company
contributed funds to the Leonora Distict School to allow the
completion of a computer network and provision of computers.
This assists children in Leonora, where the company is establishing
a long term presence, to develop skills relevant to today’s workforce.
St Barbara is also a sponsor of the Songroom initiative at the
same school, to stimulate creativity and enhance learning and
self-esteem, thereby encouraging greater participation in the school
and community. This is expected to strengthen the community
where the Company operates. See www.songroom.org.au
An initial annual liaison meeting was held in April 2007 involving
all key stakeholders with interests in the Company’s activities at
Leonora, with particular focus on the re-commissioning of the
Gwalia underground mine. In addition, a number of meetings
were held with native title claimants in the area regarding the
Company’s exploration activities.
St Barbara Limited Annual Report 2007
2
Corporate Governance
Corporate Governance is the process
by which companies are directed and
managed. St Barbara strives to create
sustainable value for shareholders by
implementing an effective programme
of governance.
The Board and Management regularly review the Company’s
policies and practices to ensure that St Barbara continues to
maintain and improve its governance standards consistent with
the ASX Corporate Governance Council Principles of Good
Corporate Governance and Best Practice Recommendations
(ASX Recommendations). Relevant principles are described
below. Charters for the Board and all Board Committees can be
found on St Barbara’s website at www.stbarbara.com.au
principle 1
Lay solid foundations for management and oversight.
The role of the Board is to represent shareholders, provide
strategic guidance to and effective oversight of management,
foster a culture of good governance, and promote a safe and
healthy working environment within the Company.
In performing its role, the Board at all times will endeavour to act:
i) in a manner designed to create and continue to build sustainable
value for shareholders;
ii) 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, as appropriate,
other stakeholders;
iii) in accordance with the duties and obligations imposed upon
Directors by the Company’s Constitution and applicable law; and
iv) with integrity and objectivity, consistent with ‘best practice’
ethical, professional and related standards.
The specific responsibilities of the Board are described in the
Board charter.
principle 2
Structure the Board to add value. The Board has established a
number of Board Committees to facilitate the execution of its
responsibilities. The Committees provide a forum for a more
detailed analysis of key issues and interaction with management.
Each Committee reports its deliberations to the following month’s
Board meeting. The current Committees are:
Remuneration Committee.
Members: Barbara Gibson (Chairman), Doug Bailey, Eduard
Eshuys, Phil Lockyer, Colin Wise
22
Building
“Responsible management”
Function: The Committee assists and advises the Board in relation
to the remuneration of the Managing Director / CEO, his senior
executive direct reports, employees of the Company, consultants/
contractors who are engaged to perform management or executive
responsibilities, and Non-Executive Directors.
Audit Committee.
Members: Doug Bailey (Chairman), Hank Tuten, Colin Wise
Function: The Committee assists and advises the Board in discharg-
ing its responsibilities in relation to financial reporting, financial risk
management, evaluating the effectiveness of the financial control
environment and oversight of the external audit function. Matters
relating to the assessment and supervision of non-financial business
risks and compliance are covered.
Health and Safety Committee.
Members: Phil Lockyer (Chairman), Eduard Eshuys,
Barbara Gibson, Colin Wise
Function: The Committee assists and advises the Board in
relation to safety and health issues, including in particular:
nin conjunction with Management, the promotion of a safety
conscious culture throughout the Company;
noverseeing the function and effectiveness of the Health and
Safety Management Committee; and
nrecommending to the Board outcomes on H&S policy, plans,
compliance and issues.
Details of the number of meetings of the Board and each
Committee during the year, and each Director’s attendance at
those meetings, are set out on page 33 of this report.
Composition. St Barbara’s Board currently comprises six
Directors - the Managing Director and five Non-Executive Directors.
The nomination of all new Directors including the Managing
Director are considered by the full Board. The Board assesses
the nominees against a range of specific criteria, including their
experience, professional skills, potential conflicts of interest, the
requirement for independence and the existing collective skill sets
of the Board.
Details of each Director’s skills, experience and relevant expertise
are set out in pages 31-32.
The Company’s Constitution requires one-third of the Directors
(or the next lowest number) to retire by rotation at each annual
general meeting (AGM). The Directors to retire at each AGM are
those who have been longest in office since their last election as
well as those Directors appointed to the Board since the last AGM.
A Director must retire in any event at the third AGM since he or
she was last elected or re-elected. Retiring Directors may offer
themselves for re-election.
The Managing Director is not subject to retirement by rotation and
is not to be taken into account in determining the number of
Directors required to retire by rotation.
St Barbara Limited Annual Report 2007
2
Corporate Governance continued
Independence. It is Board policy that a majority of Non-Executive
Directors, including the Chairman, should be independent and
free of any relationship that may conflict with the interests of
the Company. Other than Mr Tuten, each of the Non-Executive
Directors is independent. The Board defines ‘independence’ in
accordance with the ASX Recommendations. In order to ensure
that any interest of a Director in a matter to be considered by the
Board is known, each Director has contracted with the Company
to disclose any relationships, duties or interests held that may give
rise to a potential conflict.
Directors are required to adhere strictly to constraints on their
participation and voting in relation to any matters in which they
have or may have a conflict of interest.
Mr Tuten has no relevant interest in fully paid ordinary shares of
the Company. However, Mr Tuten is a partner in, and member of,
the investment committee of RCF Management LLC (RCF), the
management company of each of Resource Capital Fund II LP
and Resource Capital Fund III LP, which are collectively
St Barbara Limited’s largest shareholder. Mr Tuten is also an
investor in Resource Capital Fund II LP and Resource Capital
Fund III LP. Consequently, Mr Tuten is an associate of a
substantial shareholder of the Company and cannot be classified
as ‘independent’ within the meaning given to that term in the
ASX Recommendations. Save for this association, Mr Tuten
is in all other material respects, independent.
Directors visiting Gwalia
Director participation. Directors visit St Barbara’s mining
operations and meet with management on a regular basis to gain
a better understanding of the Company’s business.
Independent professional advice and access to Company
information. Directors have right of access to all relevant
Company information and to the Company’s executives and,
subject to prior consultation with the Chairman, may seek
independent advice from a suitably qualified adviser at
St Barbara’s expense.
principle 3
Promote ethical and responsible decision making.
The Board and the Company’s employees are expected to uphold
the highest levels of integrity and professional behaviour in their
relationships with all the Company’s stakeholders. Below is a
summary of St Barbara’s core codes and policies that apply to
Directors and employees. These policies are available on the
Company’s website: www.stbarbara.com.au.
Trading in St Barbara shares. To safeguard against insider
trading, St Barbara’s Dealing in Securities Policy prohibits
Directors and employees from trading St Barbara securities if they
are aware of any information that would be expected to have a
material effect on the price of Company securities. This policy
allows for a 30-day trading window commencing from the
business day following significant public announcements,
provided the Company is not then in possession of undisclosed
potentially price sensitive information.
St Barbara discloses to the ASX any transaction conducted
by the Directors in St Barbara securities, in accordance with
ASX Listing Rules.
principle 4
Safeguard integrity in financial reporting.
The Managing Director and Chief Financial Officer have each
declared in writing to the Board that the financial records of the
Company for the financial year have been properly maintained
and present a true and fair view of the Company’s financial
condition and operating results, in accordance with the
Corporations Act and the relevant accounting standards.
The Audit Committee is governed by its own Charter, which is
available on the Company’s website.
2
Building
“Platform for growth”
principle 5
Make timely and balanced disclosure.
St Barbara seeks to provide relevant up-to-date information to its
shareholders and the broader investment community in accordance
with the continuous disclosure requirements under the
ASX Listing Rules.
The Board has implemented a Continuous Disclosure Policy to
ensure that information considered material by the Company is
immediately lodged with the ASX. Other relevant information,
including Company presentations and updates by senior
management, are also disclosed to the ASX and through
the Company’s website.
principle 6
Respect the rights of shareholders.
The Board, in adopting a Continuous Disclosure Policy, ensures
that shareholders are provided with up-to-date Company
information. Communication to shareholders is facilitated by
the publication of the Annual Report, Quarterly Reports, other
announcements and the posting of ASX releases on St Barbara’s
website immediately after their disclosure on the ASX.
In addition, all shareholders are encouraged to attend the Annual
General Meeting of Shareholders and use the opportunity to ask
questions. The external auditor attends the meeting and is
available to answer questions on the Financial Report.
principle 7
Recognise and manage risk.
The Board believes that risk management and compliance are
fundamental to sound management and that oversight of such
matters is an important responsibility of the Board.
The Company is developing its risk and opportunity management
strategies, including comprehensive reporting and control
mechanisms, which are designed to ensure that strategic,
operational, legal, reputational and financial risks and
opportunities are identified, assessed and managed.
The reporting and control mechanisms support the annual written
certifications given by the Managing Director and the Chief
Financial Officer to the Board that the Company’s financial reports
are based on a sound system of risk management and internal control.
principle 8
Encouraging enhanced performance.
St Barbara has in place a performance appraisal system for the
Managing Director and senior managers, designed to enhance
performance. This is also linked to remuneration.
Further details in relation to Executive performance are set out in
the Remuneration Report on pages 34 to 41.
principle 9
Remunerate fairly and responsibly.
Board remuneration. The total annual remuneration paid to
Non-Executive Directors may not exceed the limit set by the
shareholders at the Annual General Meeting (currently
A$750,000). The remuneration of the Non-Executive Directors is
fixed rather than variable.
Executive remuneration. The Remuneration Committee
provides recommendations and direction for the Company’s
remuneration practices. The Committee ensures that a significant
proportion of each senior manager’s remuneration is linked to his
or her performance and the Company’s performance.
Performance reviews are conducted at least annually to determine
the proportion of remuneration that will be ‘at risk’ for the
upcoming year. St Barbara executives participate in employee
incentive schemes that are linked to St Barbara’s performance.
Further details in relation to Director and Executive remuneration
are set out in the Remuneration Report on pages 34 to 41.
principle 10
Recognise legitimate interests of stakeholders.
St Barbara has a number of formal policies that address the
interests of all stakeholders in relation to issues of ethical
behaviour, environment and health and safety. St Barbara has
adopted policies such as the Occupational Health and Safety
Policy, an equal opportunity policy and environment policy
to ensure all stakeholder interests are recognised.
St Barbara Limited Annual Report 2007
2
“Developing assets
for shareholder value”
Directors’ Report
Chairman
Managing Director & CEO
directOrS
The following persons were Directors of St Barbara Limited at any time
during the year and up to the date of this report:
S J C Wise
E Eshuys
D W Bailey Non-executive director
B J Gibson Non-executive director
P C Lockyer Non-executive director
R Knight
Non-executive director
Non-executive director
H G Tuten
M K Wheatley Non-executive director
Appointed 10 April 2007
Appointed 19 December 2006
Retired 19 December 2006
Resigned 2 August 2006
principal activitieS
During the year the principal activities of the consolidated entity were
mining and the sale of gold, mineral exploration, development and
investments. There were no significant changes in the nature of
activities of the consolidated entity during the year.
dividendS
There were no dividends paid or declared during the financial year.
reSultS Of OperatiOnS
The result reported by the consolidated entity for the year ended 30 June
2007 was a net loss after tax of $2,894,000 (2006: net profit of $6,019,000).
The result for the year was after the benefit from realised
and unrealised gains on gold derivatives of $6,688,000 and gains from
the sale of available for sale assets and fixed assets totaling $11,071,000.
The consolidated revenues and result for the year are summarised as follows:
Sales revenue
Profit on sale of available for sale
financial assets & fixed assets
Interest earned
Other
Total revenue
EBITDA from operations
Profit from operations after
depreciation & amortisation
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to members
of the Company for the year
30 June 07
$’000
130,911
30 June 06
$’000
115,263
11,071
3,213
321
145,516
45,705
18,326
(1,053)
(1,841)
(2,894)
22,796
1,514
137
139,710
40,914
32,845
4,591
1,428
6,019
The Directors present
their report on the
consolidated entity
(St Barbara Group),
consisting of St Barbara
Limited and the entities
it controlled at the end
of, or during, the financial
year ended 30 June 2007.
2
Building
“Developing assets
for shareholder value”
St BarBara’S BOard Of directOrS
From left:
Colin Wise,
Eduard Eshuys,
Doug Bailey,
Barbara Gibson,
Phil Lockyer,
Hank Tuten
The increase in revenue from sales in the
current year was attributable to a higher
average achieved gold price.
The profit on the sale of investments and
assets during the year comprised profit
on sale of the Company’s investment in
Mercator Gold plc ($6,013,000) and
Saracen Mineral Holdings Limited
($2,382,000), and profit on the sale of
other listed investments and fixed assets.
review Of OperatiOnS
The Company’s strategic focus during the year was on achieving
consistent production and the extension of the mine life at the
Southern Cross operations, to develop new operations at Gwalia
and to explore for gold and nickel in Australia.
Financial performance. Total sales revenue of $130,911,000
was generated from gold sales of 167,065 ounces at the Southern
Cross operations. Production at Southern Cross totalled 171,182
ounces and was mainly from the Marvel Loch underground mine
and Hercules open pit. A summary of the production performance
for the year ended 30 June 2007 is provided in the table on page 29.
St Barbara Limited Annual Report 2007
27
Directors’ Report Continued
The production from Marvel Loch increased compared with the
prior year, to replace lower production from Hercules. Low grade
stockpiles provided 675,301 tonnes of ore for processing during
the year, compared with 707,211 tonnes in the prior year.
Total gold sales revenue of $130,371,000 was generated from gold
sales of 167,065 ounces (2006: 168,266 ounces), at an average
achieved gold price of A$780 per ounce (2006: A$694 per ounce).
Other revenue of $3,495,000 (2006: $1,514,000) comprised
mainly interest earned during the year of $3,213,000
(2006: $1,514,000).
Other income for the year of $11,110,000 (2006: $22,933,000)
was mainly attributable to profit on the sale of available for sale
financial assets ($9,993,000) and profit on the sale of fixed
assets ($1,078,000).
Total cash operating costs and per unit cash operating costs at
Southern Cross operations were higher in the year compared to
the prior year, due to the increased cost of mining at Marvel Loch
and Hercules.
Total cash operating costs were $84,647,000 (2006: $73,121,000).
Exploration expensed in the income statement in the year totalled
$5,609,000 (2006:$14,323,000), with total exploration expenditure
in the year amounting to $23,718,000 (2006: $18,612,000).
The Company policy in relation to accounting for exploration
expenditure supports capitalisation of expenditure where it
results in an increase in economically recoverable reserves.
Capitalised exploration expenditure during the year related
mainly to Gwalia and Marvel Loch.
The higher level of exploration expenditure during the year, compared
to the prior year, was due to the focus on increasing reserves to
underpin long term production at Southern Cross and Leonora.
Employee costs increased during the year to $22,460,000 (2006:
$15,981,000). The increase in employee costs reflected the impact
of normal wage inflation and growth in the Company’s permanent
labour force. The increase in employee numbers during the year is
associated with activities related to the completion of the
feasibility study to develop and mine Gwalia and the recruitment
of employees with appropriate skills to position the Company for
future growth. The increase in the number of permanent employees
resulted in lower contract labour costs in the year.
Depreciation and amortisation of fixed assets and capitalised mine
development totalled $29,980,000 (2006: $9,540,000) for the
year. The higher depreciation and amortisation charge in the year
was attributable to increased mine development at Marvel Loch
and Hercules waste stripping.
Net finance costs increased to $2,650,000 (2006: $960,000) in the
year due mainly to the unwinding of the discount on the provision
for rehabilitation and higher interest expense associated with
finance leases. During the year interest of $570,000 was capitalised
to mines under construction.
Gains on gold derivatives comprised $4,342,000 of realised gains
on hedging and $2,346,000 of unrealised gains on purchased put
options (2006: unreaslised loss of $4,342,000). The realised gain
represents the fair value expensed in the prior year in relation to
gold hedging that matured during the current year. The unrealised
gain on the purchased put options represents movement in the fair
value calculated as at 30 June 2007.
The production from Marvel Loch
increased compared with the prior
year, to replace lower production
from Hercules. Low grade stockpiles
provided 675,301 tonnes of ore
for processing during the year,
compared with 707,211 tonnes
in the prior year.
28
Building
Safety training at Southern Cross
Other expenses of $15,618,000 (2006: $12,156,000) included
tenement costs, royalties, legal and insurance costs and lease rentals.
The income tax expense for the year was $1,841,000 (2006:
income tax benefit of $1,428,000), which represents mainly the
tax effect of movements in the gold hedge and investment fair
value reserves. The Company did not pay any tax during the
year (2006: Nil).
Financial position. As at 30 June 2007 net current assets
increased to $89,440,000 (2006: $65,299,000) due mainly
to a higher cash balance and the benefit of a reduction in
derivative financial liabilities, partially offset by higher
trade and other payables.
Total non current assets increased by $70,490,000 during the
year to $132,579,000 (2006: $62,089,000). The increase in
non current assets was attributable to capitalised development
expenditure at Southern Cross and Gwalia, capitalised exploration
expenditure, an increase in property, plant and equipment and
the fair value of premiums on purchased put options. Available
for sale financial assets decreased during the year as a result of
the divestment of the Company’s holding in Mercator Gold Plc
and Saracen Mineral Holdings Ltd. The Company acquired a
10 percent interest in the shares of Bendigo Mining Limited for
$17,200,000 during the year.
Non current liabilities increased to $127,018,000 (2006:
$28,301,000) during the year due to the issue of convertible notes
with a five year term. The non current convertible note liability
comprises the principal amount of $100 million less transaction
costs associated with the issue of $3,519,000.
Cash flows Cash flow from operating activities for the year was
$26,445,000 (2006: $10,737,000). An increase in receipts from
customers reflects the benefit of a higher average achieved gold
price during the year. Payments to suppliers and employees were
in line with the prior year. Interest received of $2,979,000
(2006: $1,514,000) was higher than in the prior year due to the
strong cash balance during the year.
Cash flow used in investing activities amounted to $110,719,000
(2006: $20,837,000) and was mainly in the following major areas:
< Gwalia development expenditure - $37,851,000
< Mine development expenditure at Southern Cross - $50,424,000
< Purchase of property, plant and equipment - $5,362,000
< Exploration expenditure - $23,718,000.
Included in cash flow from investing activities was proceeds from
the sale of available for sale financial assets and other fixed assets
and tenements totalling $30,965,000 (2006: $22,992,000).
Cash flow from financing activities totalled $99,775,000
(2006: $62,009,000), which included net proceeds from the issue
of convertible notes of $96,702,000. In the prior year the cash flow
from financing activities included net proceeds from the issue of
shares of $61,652,000 (net of share buy backs).
Details of Production Performance
Open Pit Ore Mined (t)
Grade (g/t)
Underground Ore Mined (t)
Grade (g/t)
Ore Milled (t)
Grade (g/t)
Recovery (%)
Gold Production (oz)
Cash Operating Cost (A$/oz)
June 07
March 07 December 06 September 06 Total 2006/07 Total 2005/06
213,000
1.7
199,000
4.3
580,000
2.6
91.3
43,710
558
156,000
3.4
149,000
3.4
559,000
2.3
92.2
37,914
532
220,000
3.7
130,000
4.3
539,000
3.1
93.1
49,485
474
314,000
2.2
125,000
4.0
550,000
2.5
90.0
40,073
472
903,000
2.7
603,000
4.0
2,228,000
2.6
92
1,329,046
2.1
315,112
5.7
2,351,369
2.4
91
171,182
166,000
508
443
St Barbara Limited Annual Report 2007
2
Directors’ Report Continued
Significant changeS in the State Of affairS
The significant changes in the state of affairs of the Company
during the financial year are as follows:
Approval of Gwalia development. The Board approved the
development and mining of Gwalia on 7 February 2007. Current
reserves at Gwalia amount to 1.7 million ounces. Pre-production
capital expenditure is estimated at approximately $110 million,
which will be incurred during the 2007/08 financial year. As at
30 June 2007 capital expenditure recorded in the balance sheet in
relation to Gwalia was $44,515,000. The development of Gwalia
is on schedule and budget as at the date of this report.
Issue of convertible notes. During the financial year the
Company completed a $100 million convertible notes issue,
mainly to fund completion of the development of Gwalia.
The convertible notes are recorded in the balance sheet as
non current borrowings.
Sale and purchase of investments. On 10 November 2006, the
Company announced the sale of its shareholding in Mercator Gold
Plc (“Mercator”) for total proceeds of $19,018,000. The shares
were originally issued to the Company as part consideration for
the sale of the Meekatharra project in October 2005.
On 27 March 2007, the Company announced the sale of its
shareholding in Saracen Mineral Holdings Ltd (“Saracen”) for
total proceeds of $7,100,000. The shares were originally issued
to the Company as part consideration for the sale of the South
Laverton project in October 2005.
On 12 January 2007, the Company acquired ten percent of the share
capital of Bendigo Mining Limited for $17,200,000. The acquisition
is consistent with the Company’s stated objective of acquiring interests
in Australian gold assets which have the potential for development of
long life, low cost gold operations.
Changes in issued capital. The movement in the share capital of the
Company during the year is set out below.
Shares on issue 30 June 2006
Add exercise of options
Less on-market buy-back of shares
Number of shares
819,390,567
18,665,000
(1,500,000)
Shares on issue 30 June 2007
836,555,567
likely develOpmentS and expected reSultS
Of OperatiOnS
The increase in reserves at the Southern Cross operations and at
Gwalia subsequent to the end of the financial year will underpin long
term production at these operations. Exploration drilling for potential
open pit reserves at both locations is continuing to complement the
long term underground reserves.
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.
0
Building
Left: New underground pumping station at Marvel Loch
increased dewatering capacity by 70%
infOrmatiOn On directOrS
S J Colin Wise, LL.B, FAICD, FAusIMM
Chairman – Non Executive
Mr Wise is an experienced corporate lawyer, consultant and
company director with significant expertise in the mining and
exploration industry and corporate sector. 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 the Australasian Institute of Mining and Metallurgy.
He is a Non Executive Director of Southern Health, the largest
health care service in Victoria, Chair of its Quality Committee and
a member of the Audit Committee, and a member of the Monash
University Medical Research Advisory Board.
Other current public company directorships.
Nil.
Former public company directorships in last 3 years.
Nil.
Special responsibilities.
Chairman of the Board.
Member of the Remuneration (Chairman until 24 July 2007).
Audit and Health & Safety Committees.
Interest in shares and options.
Mr Wise has a relevant interest in 4,199,403 fully paid ordinary
shares of the Company.
Eduard Eshuys, B.Sc, FAICD, FAusIMM
Managing Director and Chief Executive Officer
Mr Eshuys is a geologist with 38 years of experience in mineral
exploration, development and operation of gold and nickel mines
in Australia. He has a credible record 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 and Health & Safety Committees.
Interest in shares and options.
Mr Eshuys has a relevant interest in 20,100,000 fully paid
ordinary shares and holds 10,000,000 executive options to acquire
fully paid ordinary shares as detailed later in this Report.
Douglas W Bailey, BBus (Acc), CPA, ACIS
Non Executive Director
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
Member of the Remuneration Committee
Interest in shares and options.
Mr Bailey has a relevant interest in 100,000 fully paid ordinary
shares of the Company.
Barbara J Gibson, B.Sc, FTSE, MAICD
Non Executive Director
Ms Gibson possesses a broad range of business management
experience. Ms Gibson was formerly the General Manager
Chemicals Group of Orica Limited, a member of the Orica Group
Executive and a Director of Incitec Pivot Limited. She is a Fellow
of the Australian Academy of Technical Sciences and Engineering,
and is a recipient of the Australian Centenary Medal in 2001 for
service to Australian society in medical technology.
Other current public company directorships.
Director, Biota Holdings Limited
Director, Penrice Soda Holdings Limited
Former public company directorships in last 3 years.
Director, Incitec Pivot Limited
Special responsibilities.
Chair of the Remuneration Committee (from 25 July 2007)
Member of the Health & Safety Committee
Interest in shares and options.
Ms Gibson has no relevant interest in fully paid ordinary
shares of the Company.
St Barbara Limited Annual Report 2007
Directors’ Report Continued
Phil Lockyer, M.Sc, AWASM, DipMETALL
Non Executive Director
Mr Lockyer is an experienced mining engineer and metallurgist
with over 40 years experience in the mineral industry with an
emphasis on gold and nickel, in both underground and open pit
operations. Mr Lockyer was employed by WMC Resources for
20 years and as General Manager for WA was responsible for that
Company’s nickel division and gold operations. Mr Lockyer also
held the position of Director Operations for Dominion Mining
Limited and Resolute Limited.
Other current public company directorships.
Perilya Limited.
Jubilee Mines NL.
Focus Minerals Limited.
Ammtec Limited.
Former public company directorships in last 3 years.
Nil
Special responsibilities.
Chairman of the Health & Safety Committee
Member of the Remuneration Committee
Interest in shares and options.
Mr Lockyer has a relevant interest in 30,000 fully paid ordinary
shares of the Company.
Henderson (Hank) G Tuten, B.A. (Econ)
Non Executive Director
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.
Ausenco Limited
Australian Solomons Gold Limited
Former public company directorships in last 3 years.
Nil
Special responsibilities.
Member of the Audit Committee
Interest in shares and options.
Mr Tuten has no relevant interest in fully paid ordinary shares of
the Company. However, Mr Tuten is a partner in and member of
the investment committee of RCF Management LLC (“RCF”),
the management company of each of Resource Capital Fund II LP
and Resource Capital Fund III LP, which are collectively St Barbara
Limited’s largest shareholder. Mr Tuten is also an investor in
Resource Capital Fund II LP and Resource Capital Fund III.
2
Building
Logging drill core
at Marvel Loch
Qualifications and experience of the company secretary.
Ross Kennedy, BComm Grad.Dip – Company Secretarial Practice, ACA, FTIA, MAusIMM,
FAICD, ACIS
Company Secretary
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, takeovers, legal contracts, statutory
compliance and public reporting.
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 2007, and the numbers of meetings attended by each
Director were:
Board
S J C Wise
E Eshuys
D W Bailey
B J Gibson
P C Lockyer
R Knight
H G Tuten
M K Wheatley
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
Remuneration
Committee
B
A
6
6
6
6
5
5
4
4
5
5
1
1
-
-
1
1
Health & Safety
Committee
A
B
1
1
1
1
-
-
1
1
1
1
-
-
-
-
-
-
Audit
Committee
B
A
4
4
-
-
4
4
-
-
-
-
1
1
3
4
-
-
A
14
14
14
5
9
5
14
1
B
14
14
14
5
9
5
11
1
St Barbara Limited Annual Report 2007
Directors’ Report Continued
remuneratiOn repOrt
The remuneration report is part of the Directors’ Report set out
under the following main headings:
A. Principles used to determine the nature and amount
of remuneration.
B. Details of remuneration.
C. Share based compensation.
D. Service agreements.
This report for the year ended 30 June 2007 was prepared by the
Directors in accordance with the Corporations Act 2001 for the
Company and the consolidated entity. Under Australian
accounting standard AASB 124, “Related Party Disclosures”, the
remuneration details of the Company’s and consolidated entity’s
“key management personnel” (KMP) is required. In this report the
key management personnel, excluding Non Executive Directors,
will be collectively referred to as senior executives.
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.
Additional disclosures provided in headings A – D, required by
the Corporations Act 2001 and the Corporations Regulations
2001, have not been audited as indicated.
The members of the Remuneration Committee as at the date of
this report are:
B J Gibson
D W Bailey
E Eshuys
P C Lockyer
S J C Wise
Chair, Non Executive Director
Non Executive Director
Managing Director & Chief Executive Officer
Non Executive Director
Non Executive Director
The duties of the Remuneration Committee are to review and
make recommendations to the Board as appropriate with
respect to:
< The remuneration of Non Executive Directors, including the
Chair of the Board;
< Every aspect of the remuneration package for the Managing
Director/CEO, including total remuneration, its fixed and
variable components, short-term and long-term incentives and
the determination of Key Performance Indicators (KPIs);
< The Managing Director & CEO’s recommendation in relation
to the annual salary review, in per cent and total amount, for
the Company as a whole;
< The recommendations of the Managing Director & CEO on
the remuneration of the senior executives reporting to him,
the fixed and variable components of that remuneration, the
participation of these executives in short- and long-term
incentive schemes and in the determination of their Key
Performance Indicators (KPIs);
< Managing Director & CEO’s recommendations on the
appointment or termination of senior executives reporting
directly to him;
< Any matters relating to employment and remuneration
policies brought forward by the Managing Director & CEO;
< The operation and effectiveness of the Company’s Employee
Option Plan; and
< The Company’s obligations in relation to employee benefits
(including superannuation) and employee entitlements
in general.
A. Principles used to determine the nature and amount
of remuneration
(i) Summary of principles (unaudited) Remuneration is set by
reference to independent data, external professional advice,
the Company’s circumstances and the requirement to attract
and retain high calibre, non executive directors, senior
executive management and staff.
Set out in the table below is an overview of the elements of
remuneration. A more detailed discussion of each element is
contained in this report.
Elements of remuneration
Fees
Salary
Superannuation
Other benefits
Short term incentives
Long term incentives
Termination payments
Non executive directors
✓
✕
✓
✕
Senior executives
✕
✓
✓
✓
✕
✕
✕
✓
✓
✓
Discussion in report
Page 35
Pages 35-36
Page 36
Page 36
Page 36
Page36
pages 40-41
Fixed remuneration
At risk remuneration
Post Employment
Building
In consultation with external
remuneration consultants, the
Company has structured an executive
remuneration framework that is market
competitive and complementary to the
reward strategy of the organisation.
The objective of the Company’s senior executive reward frame-
work is to ensure that reward for performance is competitive and
appropriate for the results delivered. The framework aligns senior
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 senior 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:
< rewarding the achievement of pre-determined
performance targets
< attracting and retaining high calibre senior executives
Alignment to senior executives’ interests is structured through:
< ensuring that remuneration is competitive in order to attract
and retain talent
< 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 remuneration,
and a blend of short and long term incentives.
(ii) 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 fees payable to Non Executive Directors
are currently $750,000 per annum in aggregate
(approved by shareholders in November 2005).
Fees paid to Non Executive Directors are set at levels which
reflect both the responsibilities of, and the time commitments
required from, each Non Executive Director to discharge his or
her duties. Non Executive Directors’ fees are reviewed annually
by the Board, guided by the advice of independent remuneration
consultants to ensure fees are appropriate for the duties performed
and in line with the market.
The fees paid to Non Executive Directors are not linked to
the performance of the Company in order to maintain their inde-
pendence and impartiality. Directors’ remuneration is inclusive of
committee fees.
The Chairman’s fee is determined independently based on com-
parative roles and responsibilities in the external
market for companies comparable with St Barbara Limited. The
Chairman is not present at any discussions relating to the determi-
nation of his own remuneration.
Non Executive Directors do not receive share options. Since 1
October 2005 Non Executive Directors are able to 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.
(iii) Retirement allowances for Directors
Non Executive Directors are not entitled to retirement allowances.
(iv) Senior executive remuneration
Senior executive remuneration comprises both a fixed component
and an at risk component, which is intended to remunerate senior
executives for increasing shareholder value and for achieving
financial targets and business strategies.
It is also designed to attract and retain high calibre executives.
The remuneration of senior executives has three components:
< fixed remuneration, comprising base salary, superannuation
and benefits
< short term performance incentives
< long term incentives, including participation in the Executive
Option Plan or the St Barbara Limited Employee Option Plan
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 the senior executive. The
aggregate of the three components comprises a senior executive’s
total remuneration.
St Barbara Limited Annual Report 2007
Directors’ Report Continued
(a) Fixed remuneration
(i) Base salary. The base salary is influenced by the scope of the role and the knowledge, skills
and experience required for the position. External remuneration consultants provide analysis and
advice to ensure the base salary is competitive for a comparable role.
Base salary for senior executives is reviewed annually as part of the Company’s overall
remuneration review process and is assessed against the Company’s and the individual’s
performance. A senior executive’s salary is also reviewed on promotion.
(ii) Superannuation. In addition to statutory superannuation contributions, senior executives may
elect to contribute additional amounts, subject to legislative requirements.
(iii) Benefits. Senior executives receive benefits, including car parking, living away from home
allowances, and payment for certain professional memberships.
(c) 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.
Refer page 39 for further
information.
(b) Short term incentives (STI)
The STI is an annual “at risk” component of remuneration for the senior executives and is payable
in cash. The objective of the STI is to encourage senior executives to meet annual business targets
and their own individual performance targets. The STI payment to senior executives is based on
achievements measured against key performance indicators (KPIs). The maximum STI opportunity
varies according to the role. KPIs require performance in improving operational effectiveness
and the achievement of strategic financial and non-financial measures, linked to the drivers of
performance in current and future reporting periods.
The Remuneration Committee is responsible for assessing the extent to which the KPIs have been
achieved. To assist in making this assessment, the Committee receives detailed reports and
presentations on every aspect of the performance of the business from the Managing Director/CEO
and external remuneration consultants as required. The Remuneration Committee recommends
for Board approval the STI to be paid to the Managing Director and CEO.
Chairman
Managing Director & CEO
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
B Details of remuneration
(i) Remuneration paid. Details of the remuneration of the Directors and the senior executives of the Company and the Group are set out
in the following tables. The Directors of the Company and the Group during the year ended 30 June 2007 were:
S J C Wise
E Eshuys
D W Bailey
B J Gibson
P C Lockyer
R Knight
H G Tuten
M K Wheatley
The senior executives with the authority and responsibility for planning, directing and controlling the activities of the Company and the
Group during the year ended 30 June 2007, were:
Eduard Eshuys
Ian Bird
Garth Campbell-Cowan
Ross Kennedy
Martin Reed
Peter Thompson
George Viska
Managing Director & CEO
Chief Operating Officer
Chief Financial Officer
General Manager Corporate Services/Company Secretary
Acting Chief Operating Officer
General Manager Exploration
General Manager Gwalia Surface Development
Appointed 10 April 2007
Appointed 19 December 2006
Retired 19 December 2006
Appointed 26 March 2007
Appointed 11 September 2006
Resigned 2 August 2006
Resigned 27 April 2007
Building
cash,
salary
& fees
$
115,046
64,220
14,408
34,354
32,110
-
5,704
265,842
Name
Non Executives Directors
S.J.C Wise (Chairman)(1)
D W Bailey
B Gibson
P C Lockyer
R. Knight
H.G Tuten (2)
M.K Wheatley
Total Non Executive Directors
Executive Director
E Eshuys
Other key management personnel
I Bird
G Campbell Cowan
R Kennedy
M Reed
P Thompson
G Viska
Total Senior Executives
2007
Short-term benefits
Non-
monetary
benefits
$
Cash bonus
$
Post- employment benefits
Share based
payments:
Options(3)
$
Long
service
Leave(6)
$
Other
$
Super
annuation
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,954
5,780
1,297
3,092
3,372
-
481
18,976
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Proportion
of total
performance
related
Value of
options
as %of
total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
120,000
70,000
15,705
37,446
35,482
-
6,185
284,818
520,945
255,000
2,574
25,000(5)
12,684
16,751
159,644
992,598
25.7%
16.1%
97,753
251,348
191,877
270,600
201,835
270,102
1,804,460
26,250
105,000
60,000
-
55,000
-
501,205
544
1,346
1,559
618
1,559
1,080
9,280
140,000(4)
-
15,000(5)
-
-
20,800(5)
200,800
3,372
10,220
17,269
24,354
18,165
12,659
98,723
4,449
3,874
6,628
-
6,630
4,261
42,593
86,278
468,233
-
-
-
-
714,155
358,646
840,021
292,333
295,572
283,189
308,902
3,371,261
7.3%
12.5%
20.5%
-
19.4%
-
24.1%
55.7%
-
-
-
-
(1) S J C Wise elected in lieu of receiving Directors fees as salary to participate in the Non-executive Directors’ Share Plan from 1 July 2006 to and including 31 December 2006.
(2) HG Tuten elects not to receive directors’ fees. (3) The value of options disclosed as remuneration is the portion of the fair value of the options recognised in the reporting
period. (4) Represents a sign-on bonus. (5) Living away from home allowance. For E Eshuys and R Kennedy, these payments ceased 31 December 2006. (6) Represents the long
service leave expense accrued for the period.
2006
Name
Non Executives Directors
S.J.C Wise (Chairman)(1)
D W Bailey
R. Knight (1)
H.G Tuten (2)
M.K Wheatley
Total Non Executive Directors
Executive Director
E Eshuys
Other key management personnel
R Kennedy
M Reed
P Thompson
G Viska
cash,
salary
& fees
$
110,092
-
64,220
-
64,220
238,532
Short-term benefits
Cash
bonus(6)
$
Non-
monetary
benefits
$
Post- employment benefits
Share based
payments:
Options(3)
$
Long
service
Leave (5)
$
Other
$
Super
annuation
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,908
29,880
5,780
-
5,780
51,348
-
-
-
-
-
-
-
-
-
-
-
-
Proportion
of total
performance
related
Value of
options
as % of
total
-
-
-
-
-
-
-
-
-
-
Total
$
120,000
29,880
70,000
-
70,000
289,880
274,413
177,000
1,023
50,000 (4)
100,587
13,826
415,201
1,032,050
17.2%
40.2%
184,183
353,342
189,440
190,630
31,240
-
31,240
35,240
1,023
-
1,023
936
4,005
19,240 (4)
-
-
20,800 (4)
16,577
-
20,560
10,303
4,744
-
4,742
2,950
-
-
-
93,832
257,007
353,342
247,005
354,691
12.2%
-
12.6%
9.9%
-
-
-
26.5%
90,040
148,027
26,262
509,033
2,244,095
Total Senior Executives
1,192,008
274,720
(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.
(2) HG Tuten elects not to receive directors’ fees. (3) The value of options disclosed as remuneration is the portion of the fair value of the options recognised in this
reporting period. (4) Living away from home allowance. (5) Represents the long service leave expense accrued for the period. (6) Cash bonus paid in September 2006
relating to 2006 performance.
St Barbara Limited Annual Report 2007
7
Directors’ Report Continued
(ii) Cash bonuses included in remuneration (short term incentive)
The table below provides the percentage of fixed remuneration which senior executives
may earn under the short term incentive (STI) if relevant performance measures are met.
2007
Maximum
Potential STI
Actual STI
Included in
Remuneration
% of maxi-
mum tier 1
performance
earned
% of
maximum
potential
STI earned
% of
maximum
potential
STI forfeited
Tier 1
Target
$
Tier 2
Target
$
E Eshuys
I Bird (1)
G Campbell-Cowan
R Kennedy
P Thompson
240,000
30,000
120,000
60,000
60,000
350,000
37,500
150,000
75,000
75,000
$
255,000
26,250
105,000
60,000
55,000
85
88
88
100
92
43
39
39
44
41
57
61
61
56
59
(1) Mr Bird’s STI payment and entitlement for the year was calculated on a pro rata basis for the
period of employment.
Tier 1 target performance represents challenging but achievable levels of performance.
The performance measures vary depending on the individual executive’s position, and
include both financial and non financial measures.
Tier 2 target performance requires significant performance above and beyond normal
expectations and if achieved will result in substantial improvement in key operational
areas and financial results.
Amounts included in remuneration as actual cash STI for the financial year represent the
amounts accrued in relation to the 2007 financial year, based on achievement of personal
goals and satisfaction of specified performance criteria. No additional amounts vest in
future years in respect of the bonus schemes for the 2007 financial year.
(iii) Performance of St Barbara Limited (unaudited)
In considering the Group’s performance and improvement in shareholder wealth,
consideration is given to the following measures in respect of the current financial
year and the previous four financial years:
The table below provides the share price
performance of the Company’s shares in
the 2007 financial year and the previous
four financial years. The Company’s share
price has experienced significant growth
over this period.
2007 2006 2005 2004 2003
Earnings
2007
$
2006
$
2005
$
2004
$
2003
$
49
57
10
54
40
7
5
7
4
11
Sales Revenue
130,911,000
115,263,00
46,553,000
21,972,000
56,111,000
EBITDA
28,364,000
13,577,000
15,051,000
(23,004,000)
(6,472,000)
Net profir/(loss) after tax (1)
(2,894,000)
6,019,000
6,831,000
(24,315,000)
(32,733,000)
Shareholder
Wealth
Period end
share price
(cents per share)
Average share
price for the year
(cents per share)
(1) Net profit amounts for years 2003 to 2005 were calculated in accordance with previous Australian Generally
Accepted Accounting Principles. Net profit amounts for 2006 and 2007 were calculated in accordance with the
Australian equivalents of International Financial Reporting Standards (A-IFRS) adopted by the Australian
Accounting Standards Board. The comparatives for the year ended 30 June 2005 were restated.
Based on the results provided in the table above, the Company has experienced consistent
growth in sales revenue and earnings before interest, tax and depreciation and amortisation.
The net profit/(loss) after tax for the past three years demonstrates management’s attention
to improving profitability despite significant exploration expenditure and increased
operating costs to prepare the Company for growth.
During the 2007 financial year, the
Company’s share price traded in a range
of 43 to 64 cents per share (2006: 10 to 75
cents per share).
8
Building
C Share based compensation
(i) Options. Executive Options issued to Mr Eshuys were approved by shareholders at the 2004
Annual General Meeting. All other options were granted under the St Barbara Limited Employee
Option Plan, which was approved by shareholders at the 2001 Annual General Meeting of
shareholders. All full time employees are eligible to participate in the plan.
Details on options over ordinary shares in the Company that were granted as compensation to each senior
executive during the financial year and details of options that vested in the financial year are as follows:
2007
Number of
options
granted dur-
ing 2007
Grant date Fair value per
option at grant
date (cents per
share)
E Eshuys
I Bird
G Campbell-Cowan
R Kennedy
P Thompson
G Viska
-
2,000,000 1
2,000,000 2
-
-
-
-
26 Mar 2007
11 Sept 2006
-
-
-
-
39.4
39.0
-
-
-
Expiry date
Number of
options Vested
during 2007
Exercise
price per
option
(cents per
share)
-
-
52.1 26 Mar 2012
52.8 11 Sept 2011
-
-
-
-
-
-
10,000,000
-
-
-
-
-
(ii) Exercise of options granted
During the financial year the
following shares were issued on
the exercise of options previously
granted as compensation:
2007
number
of shares
E Eshuys
E Eshuys
R Kennedy
10,000,000
5,000,000
1,000,000
2006
number
of shares
10,000,000
E Eshuys
E Eshuys
5,000,000
P Thompson 1,000,000
1,000,000
G Viska
amount
paid
cents per
share
4.72
15.0
8.0
amount
paid
cents per
share
4.72
15.0
8.0
13.5
1 50% of options are exercisable on the second anniversary of employment, and 50% on the third anniversary of employment
2 50% of options are exercisable on the first anniversary of employment, and 50% on the second anniversary of employment
2006
E Eshuys
R Kennedy
P Thompson
G Viska
Number of
options
granted dur-
ing 2007
Grant date Fair value per
option at grant
date (cents per
share)
-
-
-
1,000,0001
-
-
-
2 Aug 2005
-
-
-
9.4
Exercise
price per
option
(cents per
share)
-
-
-
13.5
Expiry date
Number of
options Vested
during 2006
-
-
-
2 Aug 2008
10,000,000
-
-
1,000,000
1 Options exercisable at grant date
No options have been granted since the end of the financial year. The options were provided at no cost
to the senior executives. The vesting of options is subject to a continuing service condition as at each
vesting date.
All options expire on the earlier of their expiry date, thirty days after resignation or twelve months
after retirement or retrenchment.
Options granted under the plan carry no dividend or voting rights. When exercisable, each option is
convertible into one ordinary share.
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 in
section B. 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.
Further information on the options is set out in Note 89 to the Financial Statements.
(iii) Analysis of movements in options
2007
A
B
C
Granted in year
$
Exersised in year
$
Lapsed in year
$
Total option value in year
$
E Eshuys
G Campbell-Cowan
I Bird
-
780,388
787,288
7,350,000
-
-
-
-
-
-
780,388
787,288
A. The value of options granted in the year is the fair value of the optio’ns calculated at grant date using a binominal
option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
B. The value of options exercised during the year is calculated as the market price of shares of the Company on the
Australian Securities Exchange as at close of trading on the day the options were exercised after deducting the price paid
to exercise the option.
C. The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the
option lapsed using a binominal option-pricing model.
St Barbara Limited Annual Report 2007
Directors’ Report Continued
(iv) Analysis of options granted as compensation (unaudited)
Options Granted
Number
Date % vested in year
% forfeited
in year
financial years
grant vests
Minimuum (A)
$
Maximum (B)
$
Value Yet to Vest
E Eshuys
I Bird
G Campbell-Cowan
R Kennedy
M Reed
P Thompson
G Viska
5,000,000
5,000,000
5,000,000
5,000,000
1,000,000
1,000,000
1,000,000
1,000,000
23 Dec 2004
23 Dec 2004
23 Dec 2004
23 Dec 2004
26 Mar 2007
26 Mar 2007
11 Sept 2006
11 Sept 2006
-
-
-
-
-
-
-
-
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2008
30 June 2009
30 June 2009
30 June 2010
30 June 2008
30 June 2009
-
-
-
-
-
-
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
-
-
-
15,037
69,211
341,877
359,133
78,039
234,116
-
-
-
-
A. The minimum value of options yet to vest is $nil as the performance of a service criteria may not be met and consequently the option may not vest.
B. The maximum value of the options yet to vest represents the amount of the grant date fair value of the options that is still to be expensed in the income statement.
D Service agreements. Remuneration and other terms of employment
for the Managing Director and CEO and the senior executives are
formalised in service agreements. These agreements provide,
where applicable, for the provision of performance related cash
bonuses, other benefits including allowances, and participation in
the St Barbara Limited Executive Option and Employee Option
Plans. Other major provisions of the agreements relating to
remuneration are set out below.
All contracts with senior executives may be terminated early by
either party giving the required notice and subject to termination
payments as detailed below.
E Eshuys – Managing Director & CEO
Term of agreement – permanent employee commencement
20 July 2004.
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.
I Bird – Chief Operating Officer
Term of agreement – permanent employee commencement
26 March 2007.
Payment of a termination benefit on early termination by the
Company, other than for gross misconduct, 4 weeks of base salary
and superannuation, plus an additional 1 week’s payment of base
salary and superannuation if Mr Bird is over 45 years of age and
has completed 2 years of continuous service.
G Campbell-Cowan – Chief Financial Officer
Term of agreement – permanent employee commencement
11 September 2006.
Payment of a termination benefit on early termination by the
Company, other than for gross misconduct, 4 weeks of base salary
and superannuation, plus an additional 1 week’s payment of base
salary and superannuation if Mr Campbell-Cowan is over 45 years
of age and has completed 2 years of continuous service.
R Kennedy – General Manager of
Corporate Services/Company Secretary
Term of agreement – permanent employee commencement 29
September 2004.
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.
P Thompson, General Manager Exploration
Term of agreement – permanent employee commencement 24
January 2005.
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
0
Building
G Viska, General Manager Commercial
Term of agreement – permanent employee commencement
1 August 2005.
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.
Sign on payments. A payment of $140,000 was paid to the Chief
Operating Officer on the completion of three months of service
with the Company. The payment was made to compensate the
Chief Operating Officer for bonuses forfeited from his previous
employer on agreeing to take up employment with the Company.
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 42.
During the year additional accounting advice services were
provided by KPMG (refer Note 24 to the financial statements).
The Directors are satisfied that the provision of these services
did not impair the auditor’s independence.
indemnificatiOn and inSurance Of OfficerS
The Company indemnifies all Directors of the Company named
in this report, and a number of former Directors (including Mr
Richard Knight and Mr Mark Wheatley), 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 paid an insurance premium for
the policy. The contract of insurance prohibits disclosure of the
amount of the premium and the nature of the liabilities insured
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
During the year the Company did employ the auditor on assignments
additional to their statutory audit duties. Details of the amounts
paid or payable to the auditor, KPMG (2006: Pricewaterhouse-
Coopers), for audit and non-audit services provided during the
year are set out in Note 24 to the financial statements.
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 during the year 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 in
note 24 to the financial statements, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the
following reasons:
All non-audit services have been reviewed by the Audit
Committee to ensure they do not impact the impartiality and
objectivity of the auditor;
None of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants; and
The Audit Committee submits annually to the Board a formal
written report detailing the nature and amount of any non-audit
services rendered by KPMG during the most recent financial
year and an explanation of why the provision of these services is
compatible with auditor independence. If applicable, the Audit
Committee recommends that the Board take appropriate action
in response to the Audit Committee’s report to satisfy itself of the
independence of KPMG.
eventS Occurring after the end Of the financial year
The Directors are not aware of any matter or circumstance that has
arisen since the end of the financial year that, in their opinion, has
significantly affected or may significantly affect in future years the
Company’s operations, the results of those operations or the state
of affairs.
rOunding Of amOuntS
St Barbara Limited is a Company of the kind referred to in Class
Order 98/100 approved by the Australian Securities and
Investments Commission and issued pursuant to section 341(1) of
the Corporations Act 2001. As a result, amounts in this Directors’
Report and the accompanying Financial Report have been rounded
to the nearest thousand dollars, except where otherwise indicated.
This report is made in accordance with a resolution of Directors.
For and on behalf of the Board
Dated at Melbourne this 29th day of August 2007
Eduard Eshuys
Managing Director & CEO
St Barbara Limited Annual Report 2007
2
Building
Financial Report
for The year ended 30 june 2007
Table of ConTenTs
Income Statements
Balance Sheets
Statements of Recognised Income and Expense
Cash Flow Statements
Notes to The Financial Statements
Directors’ Declaration
Independent Audit Report
44
45
46
47
48
91
92
This financial 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 financial report is presented in the Australian currency.
St Barbara Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office is:
St Barbara Limited
Level 2, 0 Collins St
Melbourne VIC 3000
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 financial report.
The financial report was authorised for issue by the directors on 29 August 2007. The Company has the power to amend and reissue the financial report.
St Barbara Limited Annual Report 2007
Consolidated
Parent Entity
2007
$’000
134,406
11,110
2,632
(27,142)
(52,430)
(5,609)
(22,460)
(29,980)
(2,650)
(2,195)
2,346
4,342
(5,431)
(2,757)
(1,509)
(865)
(2,861)
(1,053)
(1,841)
(2,894)
2007
$’000
134,406
11,110
2,632
(27,142)
(52,430)
(5,609)
(22,460)
(29,980)
(2,650)
(2,195)
2,346
4,342
(5,431)
(2,757)
(1,509)
(865)
(2,861)
(1,053)
(1,841)
(2,894)
2006
$’000
116,777
22,933
1,689
(19,405)
(60,101)
(14,323)
(15,981)
(9,540)
(960)
(2,508)
(4,342)
-
(3,881)
(1,764)
(1,247)
(628)
(1,947)
4,772
1,428
6,200
2006
$’000
116,777
22,933
1,689
(19,405)
(60,101)
(14,323)
(15,981)
(9,540)
(960)
(2,508)
(4,342)
-
(3,881)
(1,764)
(1,247)
(628)
(2,128)
4,591
1,428
6,019
0.95
0.92
Income Statements
for The year ended 30 june 2007
Revenue
Other income
Changes in inventories of finished
goods and work in progress
Raw materials and consumables used
Contract mining, cartage, milling, maintenance,
labour and consultants, equipment hire
Exploration expenditure
Employee expenses
Depreciation and amortisation
Finance costs
Tenement costs
Unrealised gain/(loss) on fair value
movements of gold derivatives
Realised gain on gold derivatives
Royalty payments
Legal
Insurance
Lease rental
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) for the year
Notes
5
6
11
7
7
8
Earnings per share for profit attributable to
the ordinary equity holders of the Company:
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
The above Income Statements should be read in conjunction with the accompanying notes.
33
33
(0.35)
(0.34)
Building
Balance Sheets
as aT 30 june 2007
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial assets
Deferred mining costs
Total current assets
Non-current assets
Available for sale financial assets
Property, plant and equipment
Deferred mining costs
Exploration and evaluation
Mine properties
Derivative financial assets
Other financial assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Derivative financial liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
9
10
11
12
13
14
16
13
17
17
12
18
19
20
21
12
20
21
Consolidated
Parent Entity
2007
$’000
95,484
8,599
7,551
2,511
23,267
2006
$’000
79,983
7,296
6,137
59
11,488
2007
$’000
95,484
9,375
7,551
2,511
23,267
2006
$’000
79,983
8,072
6,137
59
11,488
137,412
104,963
138,188
105,739
17,381
16,006
-
18,188
70,365
10,639
-
132,579
269,991
44,551
2,149
1,272
-
47,972
97,662
29,356
127,018
174,990
95,001
29,510
9,991
3,744
1,916
16,928
-
-
62,089
167,052
28,090
1,600
602
9,372
39,664
298
28,003
28,301
67,965
99,087
17,381
15,147
-
18,188
70,365
10,639
178
131,898
270,086
55,952
2,149
1,272
-
59,373
97,662
29,356
127,018
186,391
83,695
29,510
9,132
3,744
1,916
16,928
-
178
61,408
167,147
39,491
1,600
602
9,372
51,065
298
28,003
28,301
79,366
87,781
22
23(a)
23(b)
208,231
1,757
(114,987)
95,001
205,815
5,365
(112,093)
208,231
1,757
(126,293)
205,815
5,365
(123,399)
99,087
83,695
87,781
The above Balance Sheets should be read in conjunction with the accompanying notes.
St Barbara Limited Annual Report 2007
Statements of Recognised Income & Expense
for The year ended 30 june 2007
Changes in fair value of available for
sale financial assets, net of tax
Changes in fair value of cash flow hedges, net of tax
Income and expense recognised directly in equity
Profit/(loss) for the year
Total recognised income and expense for the year
Attributable to equity holders of the Company
Consolidated
Parent Entity
2007
$’000
(7,799)
3,521
(4,278)
(2,894)
(7,172)
(7,172)
2006
$’000
6,794
(3,521)
3,273
6,019
9,292
9,292
2007
$’000
(7,799)
3,521
(4,278)
(2,894)
(7,172)
(7,172)
2006
$’000
6,794
(3,521)
3,273
6,200
9,473
9,473
The above Statements of Recognised Income and Expense should be read in conjunction with the accompanying notes.
Building
Cash Flow Statements
for The year ended 30 june 2007
Notes
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
130,438
116,182
130,438
116,182
Cashflows From Operating Activities:
Receipts from customers (inclusive of GST)
Payments to suppliers and
employees (inclusive of GST)
Interest received
Interest paid
Finance charges - hire purchase agreements
Borrowing costs paid
Net cash inflow from operating activities
31
Cashflows From Investing Activities:
Proceeds from sale of property, plant and equipment
Proceeds from sale of tenements
Proceeds from sale of options in listed securities
Proceeds on sale of available for sale financial assets
Payment for land
Payments for property, plant and equipment
Payments for investments in available for
sale financial assets
Payments for development of mining properties
Payments for mines under construction
Payments for tenements
Payments for exploration
Payment for option premiums
Net cash outflow from investing activities
Cashflows From Financing Activities:
Net proceeds from issue of shares
Proceeds from insurance premium
funding/hire purchases
Proceeds from issue of convertible notes
Payments for convertible notes transaction costs
Share buy backs
Proceeds in dividend settlement account
Loans to subsidiaries
Principal repayments
- hire purchase agreements
- insurance premium funding
Net cash inflow from financing 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
9
(106,335)
2,979
-
(163)
(474)
26,445
1,089
-
330
29,546
(507)
(5,362)
(18,922)
(50,424)
(37,851)
(79)
(23,718)
(4,821)
(110,719)
2,098
3,718
100,000
(3,298)
(874)
581
-
(656)
(1,794)
99,775
15,501
79,983
95,484
(106,506)
1,514
(409)
(44)
-
10,737
16,783
225
-
5,984
-
(1,247)
(200)
(17,676)
(6,094)
-
(18,612)
-
(20,837)
65,660
2,605
-
-
(4,008)
-
-
(365)
(1,883)
62,009
51,909
28,074
79,983
(106,335)
2,979
-
(163)
(474)
26,445
1,089
-
330
29,546
(507)
(5,362)
(18,922)
(50,424)
(37,851)
(79)
(23,718)
(4,821)
(110,719)
2,098
3,718
100,000
(3,298)
(874)
581
-
(656)
(1,794)
99,775
15,501
79,983
95,484
(106,325)
1,514
(409)
(44)
-
10,918
16,783
225
-
5,984
-
(1,247)
(200)
(17,676)
(6,094)
-
(18,612)
-
(20,837)
65,660
2,605
-
-
(4,008)
-
(181)
(365)
(1,883)
61,828
51,909
28,074
79,983
The above Cash Flow Statements should be read in conjunction with the accompanying notes.
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
Table of ConTenTs
Summary of significant accounting policies
Financial risk management
Critical accounting estimates and judgements
Segment information
Revenue
Other income
Expenses
Income tax expense
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Deferred mining costs
Available for sale financial assets
Financial instruments
Property, plant and equipment
Mine properties/Exploration and evaluation
Other financial assets
Trade and other payables
Interest bearing liabilities
Provisions
Contributed equity
Reserves and retained profits
Remuneration of auditors
Contingencies
Commitments for expenditure
Related party transactions
Controlled entities
Interests in joint ventures
Events occurring after the balance sheet date
Reconciliation of profit/(loss) after income tax to net cash inflow from operating activities
Non cash investing and financing activities
Earnings per share
Share based payments
Key management personnel disclosures
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Note 28
Note 29
Note 30
Note 31
Note 32
Note 33
Note 34
Note 35
8 Building
49
58
58
60
61
61
62
63
65
65
66
66
67
68
68
71
72
72
73
73
74
75
76
78
79
80
81
82
83
84
84
85
85
86
88
Notes to the Financial Statements
30 june 2007
noTe 1 - summary of signifiCanT aCCounTing poliCies
(b) Principles of consolidation
The principal accounting policies adopted in the preparation
of the financial report are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated. The financial report includes separate
financial 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
Statement of compliance
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards (AASBs) (including Australian Interpretations)
adopted by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001. The consolidated financial
report of the Group also complies with International Financial
Reporting Standards (IFRSs) and interpretations adopted by the
International Accounting Standards Board. The parent entity
financial 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: Disclosure and Presentation.
Early adoption of standards
The Group has elected to apply the following pronouncement
to the annual reporting period beginning 1 July 2006:
• Revised AASB 101 Presentation of Financial Statements
(issued October 2006).
No adjustments to any of the financial statements were required
for the above pronouncement.
Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
available for sale financial assets, and financial assets and
liabilities (including derivative instruments) held at fair value
through profit or loss.
Critical accounting estimates
The preparation of financial statements in conformity with
AASBs 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 significant to the financial
statements, are disclosed in Note 3.
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of St Barbara Limited
(‘’Company’’ or ‘’parent entity’’) as at 30 June 2007 and the
results of all subsidiaries for the year then ended. St Barbara
Limited and its subsidiaries together are referred to in this
financial 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
financial 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 consolidated from the date on which control
commences until the date control ceases.
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 financial statements of St Barbara Limited.
(ii) Associates and joint ventures
Associates are all entities over which the group has significant
influence but not control, generally accompanying a
shareholding of between 20% and 50% of voting rights. An
interest in an associate and a joint venture entity is accounted
for in the consolidated statements using the equity method and
is carried at cost by the parent entity. Under the equity method,
the share of the profits or losses of the partnership is recognised
in the income statement, and the share of movements in
reserves is recognised in reserves in the balance sheet.
Profits or losses on transactions establishing the joint venture
entity and transactions with the joint venture are eliminated
to the extent of the Group’s ownership interest until such time
as they are realised by the joint venture entity on consumption
or sale, unless they relate to an unrealised loss that provides
evidence of the impairment of an asset transferred.
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
(iii) Jointly controlled operations and assets
Details of unincorporated joint ventures and jointly controlled
assets are set out in Note 29.
Where material, the proportionate interests in the assets,
liabilities and expenses of a joint venture activity are
incorporated in the financial 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 financial 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 flow hedges and qualifying net investment hedges.
Translation differences on non monetary financial assets and
liabilities are reported as part of the fair value gain or loss.
Translation differences on non monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in the income statement as part of the fair
value gain or loss. Translation differences on non monetary
financial assets, such as equities classified as available for sale
financial 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. The Group
recognises revenue when the significant risks and rewards of
ownership are have been transferred to the buyer, the amount
of revenue can be reliably measured and it is probable that
future economic benefits will flow to the Group. Revenue is
recognised for the major business activities as follows:
(i) Product sales
Amounts are recognised as sales revenue when there has been
a transfer 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 refinery and
is no longer under the physical control of the consolidated
entity, or the metals refinery 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.
(ii) Interest income
Interest income is recognised on a time proportion basis using
the effective interest method.
(iii) Dividends
Dividends are recognised as revenue when the right to receive
payment is established.
(iv) Gains on disposal of available-for-sale financial assets
Revenue is recognised when the risks and rewards of
ownership have been transferred, which is usually considered
to occur on settlement.
(f) Exploration and evaluation/Mine properties
(i) Exploration, evaluation and feasibility expenditure
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 financial 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.
Exploration and evaluation expenditure consists of an
0 Building
Notes to the Financial Statements
30 june 2007
accumulation of acquisition costs and direct exploration
and evaluation costs incurred, together with an allocation of
directly related overhead expenditure.
Feasibility expenditure represents costs related to the preparation
and completion of a feasibility study to enable a development
decision to be made in relation to that area of interest.
Exploration and evaluation assets are assessed for impairment
if (i) sufficient data exists to determine technical feasibility and
commercial viability, and (ii) facts and circumstances suggest
that the carrying amount exceeds the recoverable amount (see
impairment policy, Note 1(k)). For the purpose of impairment
testing, exploration and evaluation assets are allocated to cash-
generating units to which the exploration activity relates.
of the reporting period and the amortisation charge is adjusted
from the beginning of the period.
(g) Deferred mining expenditure
Certain mining costs, principally those that relate to the
stripping of waste and which provide access so that future
economically recoverable ore can be mined, are deferred in the
balance sheet as deferred mining. These costs are deferred or
taken to 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 to ensure
the carrying value and the rate of deferral is appropriate.
When an area of interest is abandoned, or the Directors
determine it is not commercial, accumulated costs in respect of
that area are written off in the period the decision is made.
(h) Taxes
(i) Income tax
(ii) Mines under construction
Mine development expenditure is accumulated separately
for each area of interest in which economically recoverable
reserves have been identified. This expenditure includes direct
costs of construction, an appropriate allocation of overheads
and borrowing costs capitalised during construction. Once
a development decision has been taken, all past and future
exploration, evaluation and feasibility expenditure in respect for
the area of interest is aggregated with the costs of construction
and classified under non-current assets as mine development.
(iii) Mine development
Mine development represents 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 development after the commencement of
production, such expenditure is carried forward as part of the
mine development only when substantial future economic
benefits are thereby established, otherwise such expenditure is
classified as part of production and expensed as incurred.
Mine development costs are deferred until commercial
production commences, at which time they are amortised
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 mineable reserves.
Changes to mineable reserves are applied from the beginning
The income tax expense or revenue for the year is the tax
payable on the current period’s taxable income using the
income tax rate applicable at the reporting date 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 financial
statements, and by changes to unused tax losses.
Deferred tax assets are recognised for deductible temporary
differences and carry forward unused tax losses only if it is
probable that future taxable amounts will be available to utilise
those temporary differences and losses.
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
not yet elected to implement the tax consolidation legislation.
(ii) 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.
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
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
identifiable 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
identification 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 financier under comparable terms and conditions.
(k) Impairment of assets
The carrying value of all assets are reviewed half yearly to
determine whether there is an indication of impairment. Where
an indicator of impairment exists, a formal estimate of the
recoverable amount is made. 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.
In assessing value in use, the estimated future cash flows are
discounted to their present value using pre-tax discount rates
that reflect current market assessments of the time value of
money and the risks specific to the asset. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows, largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units).
(l) Cash and cash equivalents
For cash flow statement presentation purposes, cash and
cash equivalents include cash on hand, deposits held at call
with financial 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 insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the
taxation authority, are presented as operating cash flow.
(i) Leases
Leases of property, plant and equipment where the Group
has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised
at inception of the lease at the lower of the fair value of the
leased property and the present value of the minimum future
lease payments. The corresponding rental obligations, net of
finance charges, are included in other long term payables. Each
lease payment is allocated between the liability and finance
charges so as to achieve a constant rate on the finance balance
outstanding. The interest element of the finance 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 finance leases is depreciated over the shorter of
the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified 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.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
2 Building
Notes to the Financial Statements
30 june 2007
(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
flows, discounted at the effective interest rate. The amount of the
provision is recognised in the income statement.
(n) Inventories
Raw materials and stores, ore stockpiles and gold stocks are
valued at the lower of cost and net realisable value.
Cost comprises direct materials, direct labour and an
appropriate proportion of variable and fixed 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 held for sale
Non current assets are classified as held for sale and stated at
the lower of their carrying amount and fair value, less costs
to sell, if their carrying amount is to 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 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, 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 is recognised at the date of derecognition.
Non current assets are not depreciated or amortised while they
are classified as held for sale.
Non current assets classified as held for sale are presented
separately from the other assets in the balance sheet.
(p) Investments and other financial assets
The Group classifies its investments and other financial
assets in the following categories: financial assets at fair
value through profit or loss, loans and receivables, held to
maturity investments, and available for sale financial assets.
The classification depends on the purpose for which the
investments were acquired. Management determines the
classification of its investments at initial recognition and
re evaluates this designation at each reporting date.
Investments and other financial assets are recognised initially
at fair value plus, for assets not at fair value through profit
and loss, any directly attributable transaction costs, excepted
as described below. Subsequent to initial recognition,
investments and other financial assets are measured as
described below.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial
assets held for trading, which were acquired principally for
the purpose of selling in the short term with the intention of
making a profit. Derivatives are also categorised as held for
trading, unless they are designated as hedges. Financial assets
at fair value through profit or loss are measured at fair value
and changes therein are recognised in the income statement.
Upon initial recognition, attributable transaction costs are
recognised in the income statement when incurred.
(ii) Loans and receivables
Loans and receivables are non derivative financial assets with
fixed 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 classified as non current assets. Loans and
receivables are included in receivables in the balance sheet and
are shown in Note 10.
Loans and receivables are measured at amortised cost using the
effective interest method, less any impairment losses.
(iii) Available for sale financial assets
Available for sale financial assets, comprising principally
marketable equity securities, are non derivatives that are either
designated in this category or not classified 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.
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
Subsequent to initial recognition, available-for-sale financial
assets are measured at fair value and changes therein, other than
impairment losses, are recognised as a separate component of
equity. When an asset is derecognised the cumulative gain or
loss in equity is transferred to the income statement.
(q) Derivatives
The Group holds derivative financial instruments to hedge
its Australian dollar gold price risk exposures. Derivatives
are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured to 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 firm commitment (fair value hedge); or (2)
hedges of the cash flows of recognised assets and liabilities and
highly probable forecast transactions (cash flow 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
flows of hedged items.
The fair values of various derivative financial instruments used
for hedging purposes are disclosed in Note 12. Movements in
the hedging reserve in shareholders’ equity are shown in Note 23.
(i) Cash flow hedge
The fair value of option contracts comprises intrinsic value,
that is, the extent to which the option is in the money due to
spot prices falling below the option strike price, and time value.
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is recognised
in equity in the hedging reserve. The gain or loss relating to the
ineffective portion and time value is recognised immediately in
the income statement within other income or other expenses.
Amounts accumulated in equity are recycled in the income
statement in the periods when the hedged item will affect profit
or loss (for instance, when the forecast sale that is hedged takes
place). The gain or loss relating to the effective portion of the
financial instrument hedging Australian dollar gold sales is
recognised in the income statement within ‘gold sales revenue’.
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) Compound financial instruments
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to share capital at the
option of the holder, and the number of shares to be issued does
not vary with changes in their fair value.
The liability component of a compound financial instrument
is recognised initially at the fair value of a similar liability
that does not have an equity conversion option. The equity
component is recognised initially at the difference between
the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any
directly attributable transaction costs are allocated to the
liability and equity components in proportion to their initial
carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost
using the effective interest method, unless it is designated at
fair value through profit and loss. The equity component of a
compound financial instrument is not remeasured subsequent
to initial recognition.
(s) Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and trading and
Building
Notes to the Financial Statements
30 june 2007
available for sale securities) is based on quoted market prices
at the balance sheet date. The quoted market price used for
financial assets held by the Group is the current bid price; the
appropriate quoted market price for financial liabilities is the
current ask price.
The fair value of financial 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 financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to
the Group for similar financial instruments.
(t) 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 flow 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 benefits associated with the
item will flow 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 financial 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 3-10 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.
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.
(u) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid
within 30 days from the end of the month of recognition.
(v) Borrowings
Borrowings, including the liability component of the Group’s
convertible debt, 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 classified 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.
(w) Borrowing costs
Borrowing costs incurred for the construction of any qualifying
asset are capitalised during the period of time that it is required
to complete and prepare the asset for its intended use or sale.
Other borrowing costs are recognised as expenses in the period
in which they are incurred.
(x) 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 outflow of resources will be required to
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
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 outflow 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 outflow 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 reflects current market
assessments of the time value of money and the risks specific
to the liability. The increase in the provision due to the passage
of time is recognised as interest expense.
(y) Employee benefits
(i) Wages and salaries, and annual leave
Liabilities for wages and salaries, including non monetary
benefits and annual leave expected to be paid 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, including
expected on-costs, when the liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision
for employee benefits and measured as the present value of
expected future payments to be made, plus expected on-costs,
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 outflows.
(iii) Share based payments
Share based compensation benefits 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 34.
The fair value of Executive Options and options granted under
the St Barbara Limited Employees’ Option Plan is recognised
as an employee benefit 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 amount
recognised is adjusted at each reporting date to reflect the
actual number of share options not expected to vest.
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 benefit obligations
Contributions to defined contribution funds are recognised
as an expense as they due and become payable. Prepaid
contributions are recognised as an asset to the extent that a cash
refund or a reduction in future payments is available.
The Group has no obligations in respect of defined benefit funds.
(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. The Group recognises a liability
and an expense for bonuses in the reporting period used to
calculate the value of the bonuses.
(z) Contributed equity
Ordinary shares are classified 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, e.g. 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 income statement and the consideration
paid including any directly attributable incremental costs (net
of income taxes) is recognised directly in equity.
Building
Notes to the Financial Statements
30 june 2007
(aa) Earnings per share
(ad) Rounding of amounts
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit
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 reporting period, adjusted for bonus elements in
ordinary shares issued during the reporting period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(ab) Restricted cash and cash equivalents
Funds placed on deposit with financial institutions to secure
performance bonds are classified as Current Restricted Cash
and Cash Equivalents.
(ac) 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 of 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 reflects the time
value of money. The discount rate must not reflect risks for
which future cash flow estimates have been adjusted.
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.
The company is of a kind referred to in Class Order 98/0100,
issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the
financial report. Amounts in the financial report have been
rounded off in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have
been published that are not mandatory for 30 June 2007
reporting periods. The Group’s and the parent entity’s
assessment of the impact of these new standards and
interpretations is set out below:
(i) AASB 7 Financial Instruments: Disclosures and AASB
2005-10 Amendments to Australian Accounting Standards
[AASB 2, AASB 0, AASB , AASB 7, AASB , AASB
139, AASB 1, AASB 4, AASB 1023 & AASB 1038]
AASB 7 and AASB 2005-10 are applicable to annual reporting
periods beginning on or after 1 January 2007. The Group
has not adopted the standards early. Adoption of the
standards will not affect any of the amounts recognised in the
financial statements, but will impact the type of information
disclosed in relation to the Group’s and the parent entity’s
financial instruments.
(ii) Interpretation 10 Interim Financial Reporting and Impairment
Interpretation 10 is applicable to reporting periods
commencing on or after 1 November 2006. The Group has
not recognised an impairment loss in relation to goodwill,
investments or equity instruments or financial assets carried
at cost in a previous interim reporting period. Therefore,
application of the standard will have no impact on the Group’s
or the parent entity’s financial statements.
(iii) AASB 8 Operating Segments and AASB 2007-3
Amendments to Australian Accounting Standards arising from
AASB 8 [AASB , AASB , AASB 02, AASB 07, AASB ,
AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038]
AASB 8 replaces the presentation requirements of segment
reporting in AASB 114 Segment Reporting, and is applicable
for annual reporting periods beginning on or after 1 January
2009. AASB 8 is not expected to have any impact on the
financial results of the Company and the Group as the standard
is only concerned with disclosures.
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
(iv) Interpretation 11 AASB 2 Share-based Payment
– Group and Treasury Share transactions and AASB 2007-1
Amendments to Australian Accounting Standards arising from
AASB Interpretation 11 [AASB 2]
Interpretation 11 addresses the classification of a share-based
payment transaction (as equity or cash settled), in which
equity instruments of the parent or another group entity are
transferred, in the financial statements of the entity receiving
the services. Interpretation 11 will become mandatory for the
Group’s 2008 financial report. It is not expected to have any
impact on the financial statements of the Group or parent entity.
(c) Liquidity risk
Prudent liquidity risk management requires maintaining
sufficient 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 flow and fair value interest rate risk
The Group has significant interest bearing assets however,
as these assets are short dated (60 days or less) the Group’s
income and operating cash flows are not materially exposed to
changes in market interest rates.
noTe 2 - finanCial risk managemenT
The Group’s activities expose it to a variety of financial risk,
market risk (especially gold price and option volatility risk),
credit risk, liquidity risk and cash flow 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 financial 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 dollar 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 flows 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 classified on the
balance sheet either as available for sale or at fair value through
profit or loss.
iii) Fair value interest rate risk
Refer to (d) below.
(b) Credit risk
The Group has no significant concentrations of credit
risk with revenues primarily derived from gold sales direct
to refiners or hedge counterparties. Derivative counterparties
and cash transactions are limited to high credit quality
financial institutions.
noTe 3 - CriTiCal aCCounTing esTimaTes
and judgemenTs
The preparation of financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results
may differ from these estimates under different assumptions
and conditions. Estimates and judgements are continually
evaluated and are based on historical experience and on various
other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Revisions to
accounting estimates are recognised in the period in which the
estimate is changed and in any future periods affected.
The Company has identified the following critical accounting
policies under which significant judgements, estimates
and assumptions are made, and where actual results may
differ from these estimates under different assumptions and
conditions that could materially affect financial results or
financial position reported in future periods.
(i) Ore reserve estimates
Reserves are estimates of the amount of gold product that
can be economically extracted from the consolidated entity’s
properties. In order to calculate reserves, estimates and
assumptions are required about a range of geological, technical
and economic factors, including quantities, grades, production
techniques, recovery rates, production costs, future capital
requirements, commodity prices and exchange rates.
Estimating the quantity and/or grade of reserves requires the size,
shape and depth of ore bodies to be determined by analysing
geological data. This process may require complex and difficult
geological judgements and calculations to interpret the data.
8 Building
Notes to the Financial Statements
30 june 2007
The consolidated entity determines and reports ore reserves
under the Australasian Code for Reporting of Mineral
Resource and Ore Reserves September 1999, known as the
JORC Code. The JORC Code requires the use of reasonable
investment assumptions to calculate reserves. Due to the fact
that economic assumptions used to estimate reserves change
from period to period, and geological data is generated during
the course of operations, estimates of reserves may change
from period to period. Changes in reported reserves may affect
the consolidated entity’s financial results and financial position
in a number of ways, including:
• Asset carrying values may be affected due to changes in
estimated future cash flows.
• Depreciation and amortisation charged in the income
statement may change where such charges are calculated
using the units of production basis.
• Waste stripping costs recorded on the balance sheet or
charged in the income statement may change due to a revision
in stripping ratios.
• Decommissioning, site restoration and environmental
provisions may change where changes in estimated reserves
affect expectations about the timing or cost of these activities.
(ii) Units of production method of amortisation
The consolidated entity applies the units of production method
for amortisation of its life of mine specific assets, which
results in an amortisation charge proportional to the depletion
of the anticipated remaining life of mine production. These
calculations require the use of estimates and assumptions;
changes to these will impact the amortisation charge in the
income statement and asset carrying values.
(iii) 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). Value-in-use is generally
determined as the present value of the estimated future cash
flows. Present values are determined using a risk adjusted pre-
tax discount rate appropriate to the risks inherent in the asset.
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 a 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 significant assumptions upon which
estimated future cash flows 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.
Future cash flow estimates are based on expected production
volumes, the short and long term forecasts of the Australian
dollar gold price, ore reserves, operating costs, future
capital expenditure and restoration and rehabilitation
costs. Management is required to make these estimates and
assumptions, which are subject to risk and uncertainty. As a
result there is a possibility that changes in circumstances will
alter these projections, which could impact on the recoverable
amount of the assets. In such circumstances some or all of the
carrying value of the assets may be impaired, giving rise to an
impairment charge in the income statement.
(iv) Exploration and evaluation expenditure
As set out in Note 1(f) exploration and evaluation expenditure
is capitalised for an area of interest where it is considered likely
to be recoverable from future exploitation or sale, or where
the activities have reached a stage which permits a reasonable
assessment of the existence of ore reserves. The accounting
policy requires management to make certain estimates and
assumptions as to future events and circumstances,
in particular whether an economically viable extraction
operation can be established. These estimates and assumptions
may change as new information becomes available. If, after
having capitalised the expenditure under the accounting policy,
a judgement is made that recovery of the expenditure is
unlikely, the relevant capitalised amount will be written off to
the income statement.
(v) Rehabilitation and mine closure provisions
As set out in Note 1(x), the value of these provisions represents
the discounted value of the present obligation to restore,
dismantle and rehabilitate each site. Significant judgement is
required in determining the provisions for mine rehabilitation
and closure as there are many transactions and other factors
that will affect the ultimate costs necessary to rehabilitate the
mine sites. The discounted value reflects a combination of
management’s best estimate of the cost of performing the work
required, the timing of the cash flows and the discount rate.
A change in any, or a combination of, the key assumptions used
to determine the provisions could have a material impact to the
carrying value of the provisions (refer to Note 21).
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
The provision recognised for each site is reviewed at
each reporting date and updated based on the facts and
circumstances available at the time. Changes to the estimated
future costs for operating sites are recognised in the balance
sheet by adjusting both the restoration and rehabilitation asset
and provision.
(vi) Derivative financial instruments
The consolidated entity assesses the fair value of its purchased
gold put options at each reporting date. Premiums for
purchased gold put option contracts with an aggregate fair
value of $13,150,000 as at 30 June 2007 have been designated
as effective hedges and accounted for in accordance with Note
1(q). As at 30 June 2007, the put options had no intrinsic value.
Movements in time value of $2,346,000 have been recorded as
a fair value adjustment directly in the income statement.
Fair values have been determined based on market observable
data at the reporting date, and with the assistance of an
external valuation consultant. These calculations require the
use of estimates and assumptions. Changes in assumptions in
relation to gold prices and volatilities could have a material
impact on the fair valuation attributed to the gold put options
at reporting date. When these assumptions change in the future
the differences will impact the hedging reserve and/or income
statement in the period in which the change occurs.
(vii) Share based payments
The consolidated entity measures the fair value of options
issued to certain employees at the date they are granted. The
fair value is determined by an external valuation expert using a
Black Scholes option valuation model, using the assumptions
detailed in Note 34 to the financial statements.
(viii) Deferred tax
The consolidated entity has not recognised a net deferred tax
asset of $21,288,000 as at 30 June 2007 on the basis that the
ability to utilise the temporary differences and tax losses
is not probable.
noTe 4 - segmenT informaTion
The consolidated entity operates predominantly in the minerals
exploration and mining industry in Australia.
The consolidated entity’s head office is in Australia.
0 Building
Notes to the Financial Statements
30 june 2007
noTe 5 - revenue
Sales revenue
Sale of gold
Sale of silver
Other revenue
Interest
Sub-lease rental
Royalty revenue
Total revenue
noTe 6 - oTher inCome
Profit on sale of assets
Profit on sale of available for sale financial assets
Other
Consolidated
Parent entity
2007
$’000
130,371
540
130,911
3,213
101
181
3,495
2006
$’000
114,941
322
115,263
1,514
-
-
1,514
2007
$’000
130,371
540
130,911
3,213
101
181
3,495
2006
$’000
114,941
322
115,263
1,514
-
-
1,514
134,406
116,777
134,406
116,777
Consolidated
Parent entity
2007
$’000
1,078
9,993
39
11,110
2006
$’000
22,796
-
137
22,933
2007
$’000
1,078
9,993
39
11,110
2006
$’000
22,796
-
137
22,933
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
noTe 7 - expenses
Profit/(loss) before income tax includes the
following specific expenses:
Depreciation
Buildings
Plant and equipment
Amortisation
Mine development costs
Deferred waste stripping
Plant/equipment finance leases
Interest expense
Interest paid/payable
Provisions: unwinding of discount
Interest capitalised
Employee expenses
Wages and salaries
Contributions to defined contribution superannuation funds
Share-based payments expense
Rental expense relating to operating leases
Lease payments
Litigation settlement relating to Westgold Resources NL(1)
Consolidated
Parent entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
-
542
542
15,999
12,920
519
29,438
733
2,013
(570)
2,176
19,172
1,569
1,719
22,460
865
700
49
583
632
8,641
-
267
8,908
176
784
-
960
13,888
1,097
996
15,981
365
-
-
542
542
15,999
12,920
519
29,438
733
2,013
(570)
2,176
19,172
1,569
1,719
22,460
865
700
49
583
632
8,641
-
267
8,908
176
784
-
960
13,888
1,097
996
15,981
365
-
(1) During the year, the Group settled in the Western Australia Supreme Court proceedings initiated by Westgold Resources NL against the Company. This action was
settled for the sum of $700,000.
2 Building
Notes to the Financial Statements
30 june 2007
noTe 8 - inCome Tax expense
(a) Income tax expense/(benefit)
Deferred income tax expense/(benefit)
Consolidated
Parent Entity
2007
$’000
1,841
2006
$’000
(1,428)
2007
$’000
1,841
2006
$’000
(1,428)
(b) Numerical reconciliation of income tax expense/(benefit) to prima facie tax payable
Consolidated
Parent Entity
Profit/(loss) before income tax
Tax at the Australian tax rate of 30%
Tax effect of amounts not deductible/(taxable) in
calculating taxable income:
Legal and other capital expenditure
Share based payments
Information technology costs
Share issue costs
Sundry items
Tax losses not recognised/(prior year tax losses
not recognised now recouped)
Income tax expense/(benefit)
Refer to Note 8(c) for details of the deferred tax benefit.
2007
$’000
(1,053)
(316)
765
516
137
(143)
-
882
1,841
2006
$’000
4,591
1,377
106
299
176
(143)
33
(3,276)
(1,428)
2007
$’000
(1,053)
(316)
765
516
137
(143)
-
882
1,841
2006
$’000
4,772
1,432
106
299
176
(143)
33
(3,331)
(1,428)
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
(c) Unrecognised deferred tax balance
Consolidated
Parent Entity
Deferred tax liabilities:
Investment fair value reserve (1)
Depreciation
Accrued income
Mining properties – exploration
Mining properties – development
Consumables
Option premium
Convertible note
Total
Tax effect @ 30%
Deferred tax assets:
Tax losses
Unrealised gold cash flow hedge reserve (1)
Unrealised loss on gold derivative
Provisions and accruals
Investment fair value reserve (1)
Tax assets without a carrying amount
Depreciation
Total
Tax effect @ 30%
Net deferred tax asset (unbooked)(2)
2007
$’000
-
-
749
16,776
28,783
2,327
2,345
235
51,215
15,365
86,878
13
-
31,640
1,436
1,451
758
122,176
36,653
21,288
2006
$’000
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
2007
$’000
-
-
749
16,776
28,783
2,327
2,345
235
51,215
15,365
86,878
13
-
31,640
1,436
1,451
758
122,176
36,653
21,288
2006
$’000
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
(1) These deferred tax balances have initially been recognised in equity. In 2006, as the deferred tax asset recognised in equity was less than the deferred tax liability
recognised in equity, an income tax benefit of $1,428,000 was recognised. In 2007, the hedge contracts have matured, and the investments were sold or revalued,
resulting in a reversal of the income tax benefit, and an income tax expense for the year of $1,841,000 (includes the tax effect of listed investments revalued).
(2) The net deferred tax asset has not been recognised because it is not probable that future taxable profit will be available against which the Group can utilise the
benefits therefrom.
Building
Notes to the Financial Statements
30 june 2007
noTe 9 - Cash and Cash equivalenTs
Cash at bank and on hand
Deposits at call
Restricted cash
Consolidated
Parent entity
2007
$’000
26,620
60,749
8,115
95,484
2006
$’000
75,361
3,975
647
79,983
2007
$’000
26,620
60,749
8,115
95,484
2006
$’000
75,361
3,975
647
79,983
(a) Cash at bank and on hand
Cash at bank at 30 June 2007 invested “at call” was earning interest at a rate of 6.21% per annum.
(b) Deposits
The deposits at 30 June 2007 invested at call were earning interest at rates of between 6.32% and 6.35% per annum.
(c) Restricted cash
Restricted cash is cash placed on deposit to secure bank guarantees in respect of obligations entered into for office 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
Subsidiary loans
Provision for non-recovery
Other receivables
Prepayments
Consolidated
Parent entity
2007
$’000
3,449
-
-
-
3,273
1,877
8,599
2006
$’000
3,057
-
-
-
2,624
1,615
7,296
2007
$’000
3,449
1,896
(1,120)
776
3,273
1,877
9,375
2006
$’000
3,057
1,896
(1,120)
776
2,624
1,615
8,072
(a) Effective interest rates and credit risk
Information concerning the effective interest rate and credit risk of receivables is set out in Note 15.
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
noTe 11 - invenTories
Consumables(1)
Ore stockpiles
Gold in circuit
Consolidated
Parent entity
2007
$’000
2,334
1,194
4,023
7,551
2006
$’000
2,476
2,774
887
6,137
2007
$’000
2,334
1,194
4,023
7,551
2006
$’000
2,476
2,774
887
6,137
(1) $1,218,000 of insurance spares classified as consumables in 2006 have been transferred to Property, Plant and Equipment in 2007 (Note 16).
(a) Lower of cost and net realisable value
Ore stockpiles of $1,194,000 at 30 June 2007 are valued at fair value less costs to sell.
noTe 12 - derivaTive finanCial insTrumenTs
Current assets
Fair value of gold option premiums
Listed options at fair market value
Non-current assets
Fair value of gold option premiums
Current liabilities
Commodity hedge contracts
(a) Instruments used by the Group
Consolidated
Parent entity
2007
$’000
2,511
-
2,511
10,639
2006
$’000
-
59
59
-
2007
$’000
2,511
-
2,511
10,639
2006
$’000
-
59
59
-
-
9,372
-
9,372
The Group is party to derivative financial instruments in the normal course of business in order to protect future segment revenue from
gold operations from a significant fall in the Australian dollar gold price, in accordance with the Group’s financial risk management
policies (refer to Notes 1 and 2).
During March and May 2007, the Company entered into put option contracts at a strike price of AUD700 per ounce for 1,328,400 ounces
of future production at Gwalia at a total cost of $8,004,000, with maturity dates between July 2008 and June 2017. These contracts do
not constitute a commitment, but provides the Company with the ability to sell 1,328,400 ounces of gold to the respective counterparties
at AUD700 per ounce should the spot gold price fall below this level. At 30 June 2007, the fair value of these contracts was $10,639,000.
During June 2007, the Company entered into similar put option contracts at a strike price of AUD760 per ounce for 173,600 ounces
of production at Southern Cross for fiscal 2008 at a total cost of $2,800,000. At 30 June 2007, the fair value of these contracts was
$2,511,000.
Building
Notes to the Financial Statements
30 june 2007
noTe 12 - derivaTive finanCial insTrumenTs (ConT.)
The maturity profile of the put option contracts is provided in the table below.
Strike Price
Total
ounces
6 months or less
ounces
6 – 12 months
ounces
1 – 2 years
ounces
2 – 5 years
ounces
More than 5 years
ounces
A$700/oz
A$760/oz
1,328,400
173,600
-
89,800
-
83,800
94,800
-
652,800
580,800
-
-
(b) Interest rate risk exposures
Refer to Note 15 for the Group’s exposure to interest rate risk.
(c) 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 manages this risk by using gold put options to guarantee a minimum Australian dollar gold price as described in
(a) above.
noTe 13 - deferred mining CosTs
Current
Deferred waste
Amortisation of deferred waste
Deferred operating development
Non-current
Deferred waste
Consolidated
Parent entity
2007
$’000
20,306
(12,920)
7,386
15,881
23,267
2006
$’000
11,488
-
11,488
-
11,488
2007
$’000
20,306
(12,920)
7,386
15,881
23,267
2006
$’000
11,488
-
11,488
-
11,488
-
3,744
-
3,744
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
noTe 14 - available for sale finanCial asseTs
Non-current
At beginning of year
Adjustment on adoption of AASB 132 and AASB 139
Additions
Disposals
Revaluation surplus transferred (from)/to equity
At end of year
(a) Listed securities
Consolidated
Parent entity
2007
$’000
29,510
-
18,922
(29,546)
(1,505)
17,381
2006
$’000
-
3,420
19,779
(3,420)
9,731
29,510
2007
$’000
29,510
-
18,922
(29,546)
(1,505)
17,381
2006
$’000
-
3,420
19,779
(3,420)
9,731
29,510
Listed securities include shares listed on Australian or recognised overseas exchanges.
Investments in listed securities during fiscal 2007 largely arose by purchasing shares on active markets.
All investments held at 30 June 2007 are in companies listed on the Australian Securities Exchange.
noTe 15 - finanCial insTrumenTs
(a) Credit Risk Exposures
Credit risk arises from the potential failure of counterparties to meet their obligations under respective contracts at maturity. This arises
with amounts receivable from unrealised gains on derivative financial instruments. At balance date, the fair value of gold put options
contracts receivable by the Group was $13,150,000.
Management has an established credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Transactions
involving derivatives are with counterparties that have sound credit ratings.
At balance date, there were no significant concentrations of credit risk and the maximum exposure to credit risk is represented by the
carrying amount of each financial asset, including derivatives.
(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 fixed rate assets and liabilities to maturity.
8 Building
Notes to the Financial Statements
30 june 2007
noTe 15 - finanCial insTrumenTs (ConT.)
Financial assets
Cash and cash equivalents
Restricted cash
Receivables
Available for sale financial assets
Fair value of gold option premiums
Weighted average interest rate
Financial liabilities
Trade and other creditors
Lease liabilities
Convertible notes
Other loans
Weighted average interest rate
Floating
Interest rate
$’000
26,620
-
-
-
-
26,620
6.21%
-
-
-
-
-
-
Fixed Interest Maturing in 2007
Over
1 to 5 years
$’000
Non- interest
bearing
$’000
1 year
or less
$’000
60,749
8,115
-
-
-
68,864
6.32%
-
493
-
1,620
2,113
8.44%
-
-
-
-
-
-
-
-
1,053
100,000
-
101,053
8.00%
-
-
6,722
17,381
13,150
37,253
-
44,551
164
-
-
44,715
-
Total
$’000
87,369
8,115
6,722
17,381
13,150
132,737
44,551
1,710
100,000
1,620
147,881
Net financial assets/(liabilities)
26,620
66,751
(101,053)
(7,462)
(15,144)
Financial assets
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables
Available for sale financial assets
Weighted average interest rate
Financial liabilities
Trade and other creditors
Lease liabilities
Commodity hedge contracts
Other loans
Weighted average interest rate
Floating
Interest rate
$’000
24,336
248
-
-
24,584
5.42%
-
-
-
-
-
-
Fixed Interest Maturing in 2006
Over
1 to 5 years
$’000
Non- interest
bearing
$’000
1 year
or less
$’000
55,000
399
-
-
55,399
5.85%
-
346
-
1,254
1,600
7.97%
-
-
-
-
-
-
-
298
-
-
298
8.17%
-
-
5,681
29,510
35,191
-
28,090
-
9,372
-
37,462
-
Net financial assets/(liabilities)
24,584
53,799
(298)
(2,271)
Total
$’000
79,336
647
5,681
29,510
115,174
28,090
644
9,372
1,254
39,360
-
75,814
St Barbara Limited Annual Report 2007
Notes to the Financial Statements
30 june 2007
noTe 15 - finanCial insTrumenTs (ConT.)
(c) Net Fair Value of Financial Assets and Liabilities
(i) On-Balance Sheet
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the
consolidated entity approximates their carrying values. The net fair value of other monetary financial assets and financial liabilities is
based upon market prices.
(ii) Off-Balance Sheet
The consolidated entity has potential financial liabilities that may arise from certain contingencies disclosed in Note 25. 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 financial assets and liabilities at balance date are:
On balance sheet financial instruments
Financial assets
- Cash and restricted cash
- Receivables
- Available for sale financial assets
- Gold put option premiums
- Listed options
Financial liabilities
- Payables
- Convertible notes
- Forward contracts
- Other loans
2007
2006
Carrying
Amount
$’000
Net Fair
Value
$’000
Carrying
Amount
$’000
Net Fair
Value
$’000
95,484
6,722
17,381
13,150
-
95,484
6,722
17,381
13,150
-
79,983
5,681
29,510
-
59
79,983
5,681
29,510
-
59
132,737
132,737
115,233
115,233
44,551
100,000
-
3,330
147,881
44,551
100,000
-
3,330
147,881
28,090
-
9,372
1,898
39,360
28,090
-
9,372
1,898
39,360
70 Building
Notes to the Financial Statements
30 june 2007
noTe 16 - properTy, planT and equipmenT
Consolidated
Parent entity
Non-current
Land
Housing & Site Buildings
Plant and equipment
Less accumulated depreciation
2007
$’000
1,366
1,500
15,175
(2,035)
16,006
2006
$’000
859
1,500
8,215
(583)
9,991
Reconciliation of the carrying amounts for each class of property, plant and equipment are set out below:
Land
At the beginning of the year
Additions
Disposals
Write off of assets
At the end of the year
Housing & Site Buildings
At the beginning of the year
Transferred from plant & equipment
At the end of the year
Plant and equipment
At the beginning of the year
Transfer from assets held for resale
Transfer from inventory
Additions
Disposals
Depreciation
Transferred to inventory
Transferred to Housing & Site Buildings
At the end of the year
859
507
-
-
1,366
1,500
-
1,500
7,632
-
1,218
5,362
(11)
(1,061)
-
-
13,140
16,006
972
-
(5)
(108)
859
-
1,500
1,500
7,919
818
-
1,247
-
(583)
(269)
(1,500)
7,632
9,991
2007
$’000
507
1,500
15,175
(2,035)
15,147
-
507
-
-
507
1,500
-
1,500
7,632
-
1,218
5,362
(11)
(1,061)
-
-
13,140
15,147
2006
$’000
-
1,500
8,215
(583)
9,132
113
-
(5)
(108)
-
-
1,500
1,500
7,919
818
-
1,247
-
(583)
(269)
(1,500)
7,632
9,132
(a) Security
As at 30 June 2007, plant and equipment with a carrying value of $1,500,000 is held as security for finance leases (Note 20).
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
noTe 17 - mine properTies/exploraTion and evaluaTion
Non-current
Mine development
At beginning of the year
Direct expenditure
Transferred from exploration and evaluation
New rehabilitation obligations
Adjustment to rehabilitation provision
Amortisation for the year
At end of the year
Mines under construction(1)
At beginning of the year
Direct expenditure
Borrowing costs capitalised
At end of the year
(1) Mines under construction represents pre-production expenditure at Gwalia.
Non-current
Exploration and evaluation
At beginning of the year
Acquired tenements
Tenements written off
Expenditure capitalised in the year
Transferred to mine properties
Disposals
At end of the year
noTe 18 - oTher finanCial asseTs
Non-current
Other financial assets
Consolidated
Parent Entity
2007
$’000
10,834
29,469
1,781
-
(235)
(15,999)
25,850
6,094
37,851
570
44,515
70,365
2006
$’000
5,781
17,676
-
120
-
(12,743)
10,834
-
6,094
-
6,094
16,928
2007
$’000
10,834
29,469
1,781
-
(235)
(15,999)
25,850
6,094
37,851
570
44,515
70,365
2006
$’000
5,781
17,676
-
120
-
(12,743)
10,834
-
6,094
-
6,094
16,928
Consolidated
Parent Entity
2007
$’000
1,916
79
(135)
18,109
(1,781)
-
18,188
2006
$’000
9,067
135
-
1,781
-
(9,067)
1,916
2007
$’000
1,916
79
(135)
18,109
(1,781)
-
18,188
2006
$’000
9,067
135
-
1,781
-
(9,067)
1,916
Consolidated
Parent entity
2007
$’000
-
2006
$’000
-
2007
$’000
178
2006
$’000
178
(a) Other financial assets represents the Parent entity’s investment in wholly owned subsidiaries. Refer Note 28 for further detail.
72 Building
Notes to the Financial Statements
30 june 2007
noTe 19 - Trade and oTher payables
Current
Trade payables
Loans from subsidiaries
Other payables
noTe 20 - inTeresT bearing liabiliTies
Current
Secured
Lease liabilities (Note 26)
Unsecured
Insurance premium funding
Non-current
Secured
Lease liabilities (Note 26)
Unsecured
Convertible notes
Convertible notes transaction costs
Consolidated
Parent entity
2007
$’000
35,929
-
8,622
44,551
2006
$’000
27,000
-
1,090
28,090
2007
$’000
35,929
11,401
8,622
55,952
2006
$’000
27,000
11,401
1,090
39,491
Consolidated
Parent entity
2007
$’000
529
1,620
2,149
1,181
100,000
(3,519)
97,662
2006
$’000
346
1,254
1,600
298
-
-
298
2007
$’000
529
1,620
2,149
1,181
100,000
(3,519)
97,662
2006
$’000
346
1,254
1,600
298
-
-
298
(a) Insurance premium funding
The Company finances 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 Note 15.
(c) Convertible notes
On 4 June 2007, the Company issued $100,000,000 of convertible notes at a coupon rate of 8% payable 6 monthly in arrears. Unless
previously redeemed, converted, or purchased and cancelled, the notes will be redeemed on 4 June 2012 at 100% of their principal
amount. Holders of the convertible notes are able to redeem all or some of the notes at the principal amount together with any accrued
interest on the third anniversary of issue. The issue of the convertible notes was ratified at an Extraordinary General Meeting of
shareholders held on 26 June 2007.
A $7,000,000 convertible loan from Resource Capital Funds III LP 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.
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
noTe 20 - inTeresT bearing liabiliTies (ConT.)
(d) Set off of assets and liabilities
The parent entity has established a legal right of set off with a financial institution over cash on deposit to secure the issue of bank
guarantees for the purpose of environmental performance bonds and rental obligations. At 30 June 2007 restricted cash for this purpose
amounted to $8,115,000 (2006: $647,000).
Consolidated
Parent entity
2007
$’000
1,209
63
1,272
28,900
456
29,356
2006
$’000
602
-
602
27,951
52
28,003
2007
$’000
1,209
63
1,272
28,900
456
29,356
2006
$’000
602
-
602
27,951
52
28,003
Consolidated
Parent Entity
2007
$’000
27,951
-
-
2,013
(829)
(235)
28,900
2006
$’000
39,111
120
(10,913)
784
(791)
(360)
27,951
2007
$’000
27,951
-
-
2,013
(829)
(235)
28,900
2006
$’000
39,111
120
(10,913)
784
(791)
(360)
27,951
noTe 21 - provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Non-current
Provision for rehabilitation
Employee benefits – long service leave
Movements in provisions
Non-current
Rehabilitation
Balance at beginning of year
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
7 Building
Notes to the Financial Statements
30 june 2007
noTe 22 - ConTribuTed equiTy
(a) Share capital
Ordinary shares
Fully paid
Parent entity
Parent entity
2007
Shares
2006
Shares
2007
$’000
2006
$’000
836,555,567
819,390,567
208,231
205,815
(b) Movements in ordinary share capital:
Date
Details
Notes
Number of
shares
566,533,352
Issue price
(cents/ share)
1 July 2005
Plus
Less
Less
Plus
Plus
1 July 2006
Plus
Plus
Less
30 June 2007
Opening balance
Share issues
• 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
Opening balance
Shares issued on exercise of options
Transfer of Option Reserve on
conversion of options
Share buybacks
(i), (ii), (iii)
(iv)
63,662,275
99,000,000
(v)
(vi)
(ii)
(v)
(9,805,060)
100,000,000
819,390,567
18,665,000
(1,500,000)
836,555,567
13
60
41
11
45
$’000
135,053
8,638
59,400
(2,378)
(4,008)
6,667
2,443
205,815
2,098
986
(668)
208,231
(i) Shares issued on exercise of unlisted options held by Resource Capital Funds LP II
(ii) Shares issued on exercise of unlisted options held by executives and employees
(iii) Shares issued on exercise of unlisted options held by SCSH Investments Pty Ltd (previously held by Resource Capital Funds LP II)
(iv) Share placement on 18 May 2006
(v) On market buyback of shares
(vi) Conversion of $7,000,000 convertible loan on 27 March 2006 by Resource Capital Funds III LP.
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll
each share is entitled to one vote.
(d) Options
Information relating to the St Barbara Employee Option Plan and Executive Options, including details of options issued, exercised and
lapsed during the financial year and options outstanding at the end of the financial year, is set out in Note 34.
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
noTe 23 - reserves and reTained profiTs
(a) Reserves
Consolidated
Parent Entity
Reserves
Share based payments reserve
Investment fair value reserve
Convertible liability reserve
Gold cash flow hedge reserve
Share based payment reserve:
Balance at beginning of year
Options expense
Options exercised
Options expired
Balance at end of year
Investments fair value reserve:
Balance at beginning 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
Convertible liability reserve:
Balance at beginning of year
Adjustment on adoption of AASB 132 and AASB 139
Balance at end of year
Gold cash flow hedge reserve:
Balance at beginning of year
Transfer to net profit on maturity – gross
Tax effect of fair value adjustment @ 30%
Balance at end of year
2007
$’000
2,330
(1,005)
432
-
1,757
1,660
1,719
(986)
(63)
2,330
6,794
-
(9,644)
(1,505)
3,350
(1,005)
432
-
432
(3,521)
5,030
(1,509)
-
2006
$’000
1,660
6,794
432
(3,521)
5,365
664
996
-
-
1,660
-
887
(887)
9,731
(2,937)
6,794
-
432
432
-
(5,029)
1,508
(3,521)
2007
$’000
2,330
(1,005)
432
-
1,757
1,660
1,719
(986)
(63)
2,330
6,794
-
(9,644)
(1,505)
3,350
(1,005)
432
-
432
(3,521)
5,030
(1,509)
-
2006
$’000
1,660
6,794
432
(3,521)
5,365
664
996
-
-
1,660
-
887
(887)
9,731
(2,937)
6,794
-
432
432
-
(5,029)
1,508
(3,521)
7 Building
Notes to the Financial Statements
30 june 2007
noTe 23 - reserves and reTained profiTs (ConT.)
(b) Accumulated losses
Movements in accumulated losses were as follows:
Balance at beginning of year
Adjustment on adoption of AASB132 and AASB139
Profit / (loss) attributable to members of St Barbara Limited
Balance at end of year
Consolidated
Parent Entity
2007
$’000
(112,093)
-
(2,894)
(114,987)
2006
$’000
(118,087)
(25)
6,019
2007
$’000
(123,399)
-
(2,894)
(112,093)
(126,293)
2006
$’000
(129,574)
(25)
6,200
(123,399)
(c) Investment fair value reserve
Changes in the fair value and exchange differences arising on translation of investments, such as equities, classified as available for
sale financial assets, are taken to the investment fair value reserve, as described in Note 1(p). Amounts are recognised in the income
statement when the associated assets are sold or impaired.
(d) Gold hedge reserve – cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly
in equity, as described in Note 1(q). Amounts are recognised in the income statement when the associated hedged transaction affects
profit 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.
(f) Convertible liability reserve
The convertible liability reserve represents an AIFRS transitional adjustment on the conversion of the RCF convertible note.
St Barbara Limited Annual Report 2007
77
Notes to the Financial Statements
30 june 2007
noTe 24 - 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 firms:
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
(a) Assurance services
Audit services
KPMG Australian firm(1)
Audit and review of financial reports and other audit
work under the Corporations Act 2001
PricewaterhouseCoopers Australian firm
Audit and review of financial reports and other audit
work under the Corporations Act 2001
Total remuneration for audit services
(b) Non-audit services
KPMG Australian firm
Comfort letter for issue of convertible notes
Other accounting advice
Total remuneration for non-audit services
(c) Taxation Services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of
Company income tax returns
Total remuneration for taxation services
180
-
180
50
15
65
55
55
-
180
-
179(2)
179
-
-
-
93
93
180
50
15
65
55
55
179(2)
179
-
-
-
93
93
(1) KPMG was appointed as auditor at the Annual General Meeting held on 16 November 2006.
(2) Included is an amount of $20,000 for the consolidated entity and for the parent entity for the transition to Australian equivalents of International
Financial Reporting Standards.
78 Building
Notes to the Financial Statements
30 june 2007
noTe 25 - ConTingenCies
(a) Contingent liabilities
The parent entity and Group have a contingent liability at 30 June 2007 in respect of the following legal claim:
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 rectification of the Supplementary Deed to include the MLAs on the basis that this was the common intention
of the parties. The Company denies that this was the common intention and further denies that rectification 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 quantification of the damages that it claims. Such quantification is based on two reports by Snowden Mining Industry
Consultants Pty Ltd.
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.
(b) Bank guarantees
The Group has negotiated bank guarantees in favour of various government authorities and service providers. The total of these
guarantees at 30 June 2007 was $20,115,000 (2006: $20,646,000).
St Barbara Limited Annual Report 2007
7
Notes to the Financial Statements
30 june 2007
noTe 26 - CommiTmenTs for expendiTure
Exploration
In order to maintain rights of tenure to mining tenements,
the consolidated entity is committed to tenement rentals
and minimum exploration expenditure in terms of the
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
Payable not later than one year
Payable later than one year, not later than five years
Future finance charges
Recognised as a liability
Lease incentives on non-cancellable operating
leases included in lease liabilities
Total lease liabilities
Current (Note 20)
Non-current (Note 20)
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
8,267
9,111
8,267
9,111
Consolidated
Parent Entity
2007
$’000
596
1,156
1,752
(206)
1,546
164
1,710
529
1,181
1,710
2006
$’000
405
296
701
(57)
644
-
644
346
298
644
2007
$’000
596
1,156
1,752
(206)
1,546
164
1,710
529
1,181
1,710
2006
$’000
405
296
701
(57)
644
-
644
346
298
644
These commitments relate to plant and equipment, and are based on the cost of the assets 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 five years
Consolidated
Parent Entity
2007
$’000
773
2,629
3,402
2006
$’000
358
1,475
1,833
2007
$’000
773
2,629
3,402
2006
$’000
358
1,475
1,833
The non-cancellable operating lease commitments are the net rental payments associated with rental properties. At 30 June 2007,
$164,000 (2006: nil) was recognised as a liability for a lease incentive received.
80 Building
Notes to the Financial Statements
30 june 2007
noTe 26 - CommiTmenTs for expendiTure (ConT.)
Analysis of non-cancellable operating sub-lease receipts
Receivable not later than one year
Receivable later than one year, not later than five years
Consolidated
Parent Entity
2007
$’000
182
540
722
2006
$’000
-
-
-
2007
$’000
182
540
722
2006
$’000
-
-
-
Sub-lease rental is associated with the sub-letting of premises rented by the Company.
noTe 27 - relaTed parTy TransaCTions
(a) Directors and specified executives
Disclosures relating to Directors and specified executives are set out in Note 35.
(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 did not transact with any entities in the wholly-owned group (2006: $181,000 was advanced to entities
in the wholly owned group). Net receivables from subsidiaries amounted to $776,000 (2006: $776,000). The Company provided
accounting and administrative assistance free of charge to all of its wholly-owned subsidiaries.
Loans payable to and advanced from wholly-owned subsidiaries to the Company are interest free, and payable on demand.
(c) Amounts receivable from and payable to entities in the wholly-owned group and controlled entities
Aggregate amounts receivable at balance date from:
Entities in the wholly-owned group
Less provision for doubtful receivables
Aggregate amounts payable at balance date to:
Entities in the wholly-owned group
Parent Entity
2007
$’000
1,896
(1,120)
776
2006
$’000
1,896
(1,120)
776
11,401
11,401
(d) Guarantees
Subsidiary companies have guaranteed the parent entity’s obligations under the Environmental Bond Facility provided by
Commonwealth Bank of Australia.
(e) Terms and conditions
Outstanding balances are unsecured, interest free and are repayable in cash on demand.
(f) Amounts receivable from Director related entities
At 30 June 2007, there were no amounts receivable from Director related entities.
St Barbara Limited Annual Report 2007
8
Notes to the Financial Statements
30 june 2007
noTe 27 - relaTed parTy TransaCTions (ConT.)
(g) 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
entity and their Director related entities were:
Director
H G Tuten(1)
Consolidated and Parent Entity
2007
$
2006
$
-
698,380
(1) Payments to Resource Capital Fund III LP in respect of finance facilities received, comprising a $7,000,000 Convertible Note and a $21,000,000 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 28 - ConTrolled enTiTies
The consolidated entity consists of the Company and its wholly-owned controlled entities as follows:
Name of entity
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
Vafitu Pty Ltd
Zygot Pty Ltd
Equity Holding
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2007
%
100
100
100
100
100
100
100
100
100
100
100
100
2006
%
100
100
100
100
100
100
100
100
100
100
100
100
Each company in the consolidated entity was incorporated in Australia.
Cost of Company’s
Investment
2007
$’000
2006
$’000
178
-
-
-
-
-
-
-
-
-
-
-
178
178
-
-
-
-
-
-
-
-
-
-
-
178
82 Building
Notes to the Financial Statements
30 june 2007
noTe 29 - inTeresTs in joinT venTures
Jointly controlled assets
2007
Equity %
2006
Equity %
Joint Venture
Joint Venturers
Western Australia
Leonora Region
Mount Newman - Victory
Sandy Soak
Melita
Weebo
McEast/Pipeline
Mt George
Black Cat
Southern Cross Region
Cornishman Exploration
Cornishman Mining
Silver Phantom
South Rankin
Copperhead
Cheritons Find
Southern Cross
Kalgoorlie Region
New Mexico
Golden Mile South(1)
Murchinson Region
Cue
Northern Territory
Alcoota
South Australia
Coober Pedy
87%
91%
60%
20%
80%
51%
100%, diluting to 40%
87%
91%
60%
20%
80%
-
-
Astro Diamond Mines N.L.
Hunter Resources Pty Ltd
Dalrymple Resources N.L.
Plutonic Operations Limited
Cheperon Gold Partnership
Trevor John Dixon
Terrain Minerals Ltd
51%
51%
70%
75%
51%
90%
earning 60%
51%
51%
70%
75%
51%
90%
earning 60%
Troy Resources NL
Troy Resources NL
Bellriver Pty Ltd
Comet Resources Limited
Troy Resources NL
Audax Resources NL
Troy Resources NL, Aminta Pty Ltd
40%
earning 51%
40%
-
Tasman Exploration Pty Ltd
Golden Mile South Pty Ltd
20%
-
Cougar Metals NL
-
farming out 100%
Tanami Exploration NL
12.61%
12.61%
Newmont Exploration Pty Ltd,
Sabatica Pty Ltd
(1) To earn 51%, the Group is required to spend $3,000,000 over the next three years to March 2010.
As at 30 June 2007, there were no joint venture assets recorded in the balance sheet (2006: $nil).
St Barbara Limited Annual Report 2007
8
Notes to the Financial Statements
30 june 2007
noTe 30 - evenTs oCCurring afTer The balanCe sheeT daTe
The Directors are not aware of any matter or circumstance that has arisen since the end of the financial year that, in their opinion,
has significantly affected or may significantly affect in future years the Company’s operations, the results of those operations or the state
of affairs.
noTe 31 - reConCiliaTion of profiT/(loss) afTer inCome Tax To neT Cash inflow from operaTing aCTiviTies
Profit/(loss) for the year
Depreciation and amortisation
Profit on sale of assets
Profit on sale of available for sale financial assets
Tax impact of deferred tax balances relating to reserves
Options revaluation
Unrealised (gain)/loss on derivative financial instruments
Realised gain on derivative financial instruments
Write down of exploration tenements
Write off of assets
Exploration expense
Share-based payments
Change in operating assets and liabilities:
(Increase)/decrease in receivables and prepayments
(Increase)/decrease in inventories
(Increase)/decrease in other assets
Increase/(decrease) in trade creditors and payables
Increase/(decrease) in non-current provisions
Increase/(decrease) in other liabilities
Net cash flow from operating activities
Consolidated
Parent Entity
2007
$’000
(2,894)
29,980
(1,078)
(9,993)
1,841
59
(2,346)
(4,342)
135
-
5,609
1,719
(1,303)
(2,632)
191
8,929
1,353
1,217
26,445
2006
$’000
6,019
9,540
(22,796)
-
(1,428)
(59)
4,342
-
-
109
16,831
996
(665)
(1,689)
(2,923)
12,348
(11,108)
1,220
10,737
2007
$’000
(2,894)
29,980
(1,078)
(9,993)
1,841
59
(2,346)
(4,342)
135
-
5,609
1,719
(1,303)
(2,632)
191
8,929
1,353
1,217
26,445
2006
$’000
6,200
9,540
(22,796)
-
(1,428)
(59)
4,342
-
-
109
16,831
996
(665)
(1,689)
(2,923)
12,348
(11,108)
1,220
10,918
8 Building
Notes to the Financial Statements
30 june 2007
noTe 32 - non Cash invesTing and finanCing aCTiviTies
Acquisition of vehicles and equipment
through hire purchase or finance leases
Conversion of debt to equity(1)
Sale of assets for part equity consideration
and assumption of liabilities(2)
Consolidated
Parent entity
2007
$’000
1,218
-
2006
$’000
644
6,667
2007
$’000
1,218
-
2006
$’000
644
6,667
-
28,700
-
28,700
(1) 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.
(2) 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 33 - earnings per share
(a) Basic (loss)/earnings per share
Profit /(loss)attributable to the ordinary equity holders of the Company
(b) Diluted (loss)/earnings per share
Profit/(loss) attributable to the ordinary equity holders of the Company
(c) Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit/(loss) for the year
(d) Weighted average number of shares
Weighted average number of ordinary shares used as
the denominator in calculating basic earnings per share
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per share
Consolidated
2007
Cents
(0.35)
(0.34)
2006
Cents
0.95
0.92
Consolidated
2007
$’000
(2,894)
2006
$’000
6,019
Consolidated
2007
Number
2006
Number
820,920,975
633,472,702
844,073,859
652,061,008
St Barbara Limited Annual Report 2007
8
Notes to the Financial Statements
30 june 2007
noTe 33 - earnings per share (ConT.)
(e) Information concerning the classification of securities
(i) Options
Executive Options and Options granted to employees under the St Barbara Limited Executive Option and Employee Option Plans 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 34.
(ii) Convertible Notes
On 4 June 2007, the Company issued $100,000,000 of convertible notes at a coupon rate of 8% payable 6 monthly in arrears. Unless
previously redeemed, converted, or purchased and cancelled, the notes will be redeemed on 4 June 2012 at 100% of their principal amount.
The convertible notes have been included in the determination of diluted earnings per share to the extent to which they are dilutive.
noTe 34 - 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 five year period. Ordinarily, 50%
of each new tranche vests and is exercisable after each of the first 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.
Mr Eshuys, the Managing Director and Chief Executive Officer, has been issued options under the Executive Option Plan.
Set out below are summaries of options granted to employees under the St Barbara Limited Employee Option Plan and Executive
Option Plan approved by shareholders:
Grant Date
Expiry Date
Exercise Price
Balance at
start of the year
Number
Granted
during the year
Number
Exercised
during the year
Number
Expired
during the year
Number
Balance at
end of the year
Number
Exercisable at
end of the year
Number
Consolidated and parent entity – 2007
26-Apr-02
17-Jan-03
2-Dec-04
23-Dec-04
23-Dec-04
23-Dec-04
23-Dec-04
17-Jan-06
12-Sep-05
30-Sep-05
1-Jul-06
11-Sep-06
1-Dec-06
26-Mar-07
Total
26-Apr-07
17-Jan-08
2-Dec-07
23-Dec-09
23-Dec-09
23-Dec-09
23-Dec-09
17-Jan-09
12-Sep-10
30-Sep-10
30-Jun-11
11-Sep-11
1-Dec-11
26-Mar-12
Weighted average exercise price
$0.3500
$0.3500
$0.0800
$0.0472
$0.1500
$0.1500
$0.1500
$0.4900
$0.2300
$0.3300
$0.5230
$0.5280
$0.5810
$0.5210
1,000,000
75,000
1,000,000
10,000,000
5,000,000
5,000,000
5,000,000
1,000,000
1,000,000
4,250,000
-
-
-
-
33,325,000
0.16
-
-
-
-
-
-
-
-
-
-
3,250,000
3,000,000
500,000
2,000,000
8,750,000
0.53
825,000
-
1,000,000
10,000,000
5,000,000
-
-
-
1,000,000
840,000
-
-
-
-
18,665,000
0.11
175,000
75,000
-
-
-
-
-
1,000,000
-
500,000
1,500,000
-
-
-
3,250,000
0.47
-
-
-
-
-
5,000,000(1)
5,000,000(2)
-
-
2,910,000
1,750,000
3,000,000
500,000
2,000,000(3)
20,160,000
0.31
-
-
-
-
-
-
-
-
-
1,285,000
-
-
-
-
1,285,000
0.33
(1) Options vest on 14 September 2007 (2) Options vest on 14 September 2008 (3) 50% of options vest on 26 March 2009, 50% vest on 26 March 2010
8 Building
Notes to the Financial Statements
30 june 2007
noTe 34 - share based paymenTs (ConT.)
Grant Date
Expiry Date
Exercise Price
Balance at
start of the year
Number
Granted
during the year
Number
Exercised
during the year
Number
Expired
during the year
Number
Balance at
end of the year
Number
Exercisable at
end of the year
Number
Consolidated and parent entity – 2006
26-Apr-02
17-Jan-03
2-Dec-04
23-Dec-04
23-Dec-04
23-Dec-04
23-Dec-04
2-Aug-05
17-Jan-06
12-Sep-05
30-Sep-05
Total
26-Apr-07
17-Jan-08
2-Dec-07
23-Dec-09
23-Dec-09
23-Dec-10
23-Dec-11
2-Aug-08
17-Jan-09
12-Sep-10
30-Sep-10
Weighted average exercise price
$0.3500
$0.3500
$0.0800
$0.0472
$0.1500
$0.1500
$0.1500
$0.1350
$0.4900
$0.2300
$0.3300
1,000,000
75,000
1,000,000
10,000,000
5,000,000
5,000,000
5,000,000
-
-
-
-
27,075,000
0.12
-
-
-
-
-
-
-
1,075,000
1,000,000
1,000,000
4,250,000
7,325,00
0.31
-
-
-
-
-
-
-
1,075,000
-
-
-
1,075,000
0.14
-
-
-
-
-
-
-
-
-
-
-
0.00
1,000,000
75,000
1,000,000
10,000,000
5,000,000
5,000,000
5,000,000
-
1,000,000
1,000,000
4,250,000
33,325,000
0.16
1,000,000
75,000
1,000,000
5,000,000
-
-
-
-
-
-
-
7,075,000
0.16
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 year was 4.0 years (2006 – 3.9 years).
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2007 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 2007 included:
(a) Options are granted for no consideration, and 50% of each tranche vests after each of the first two anniversaries of the date of grant. As
noted in the table above, the options issued on 26 March 2007 vest after each of the second and third anniversaries of the date of grant.
(b) Exercise price is ordinarily the closing market price on the grant date.
(c) Grant date varies with each issue.
(d) Expiry date is usually 5 years from grant date.
(e) Share price at grant date varies with each issue and ranged from $0.50 per share to $0.60.
(f) Price volatility of the Company’s shares as at the grant date varied with each issue, and ranged from 101.6% to 103.0%.
(g) Risk-free interest rate at grant date is 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 year as part of the employee expenses were as follows:
Options issued under employee option plan
Consolidated
Parent entity
2007
$’000
1,719
2006
$’000
996
2007
$’000
1,719
2006
$’000
996
St Barbara Limited Annual Report 2007
87
Notes to the Financial Statements
30 june 2007
noTe 35 - key managemenT personnel disClosures
(a) Directors
The following persons were Directors of St Barbara Limited during the financial year:
S J C Wise
E Eshuys
D W Bailey
B J Gibson
P C Lockyer
R Knight
H G Tuten
M K Wheatley
Chairman
Managing Director & CEO
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Appointed 10 April 2007
Appointed 19 December 2006
Retired 19 December 2006
Resigned 2 August 2006
(b) Other key management personnel disclosures
The following persons had authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly, during the financial year:
Ian Bird
Garth Campbell-Cowan
Ross Kennedy
Martin Reed
Peter Thompson
George Viska
Chief Operating Officer
Chief Financial Officer
General Manager Corporate Services/
Company Secretary
Acting Chief Operating Officer
General Manager Exploration
General Manager Gwalia Surface Development
Appointed 26 March 2007
Appointed 11 September 2006
Resigned 27 April 2007
(c) Key management personnel compensation
Short term employee benefits
Post employment benefits
Long Service Leave
Share-based payments
Consolidated
Parent entity
2007
$
2,515,790
98,723
42,593
714,155
2006
$
1,560,773
148,027
26,262
509,033
2007
$
2,515,790
98,723
42,593
714,155
2006
$
1,560,773
148,027
26,262
509,033
3,371,261
2,244,095
3,371,261
2,244,095
The Company has taken advantage of the relief provided by Corporations Regulations 2M.3.03 and 2M.6.04 and has transferred the
detailed remuneration disclosures to the Directors’ Report. The relevant information can be found on pages 34 to 41
(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 C of the remuneration report on pages 39 to 40
88 Building
2007
Name
Directors
E Eshuys
2006
Name
Directors
E Eshuys
Notes to the Financial Statements
30 june 2007
noTe 35 - key managemenT personnel disClosures (ConT.)
(ii) Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each Director of St Barbara Limited and
other key management personnel of the Group, including their related parties, are set out below:
Balance at the
start of the year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at
the end of the
year
25,000,000
-
15,000,000
Other key management personnel
I Bird
G Campbell-Cowan
R Kennedy
M Reed
P Thompson
G Viska
-
-
1,000,000
-
-
-
2,000,000
2,000,000
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
-
-
10,000,000
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
Balance at the
start of the year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at
the end of the
year
35,000,000
-
10,000,000
Other key management personnel
R Kennedy
P Thompson
G Viska
1,000,000
1,000,000
-
-
-
1,000,000
-
1,000,000
1,000,000
-
-
-
-
25,000,000
5,000,000
1,000,000
-
-
1,000,000
-
-
(iii) Share holdings
The numbers of shares in the Company held during the year by each Director of St Barbara Limited and other key management
personnel of the Group, including their related parties, are set out below. There were no shares granted during the year as compensation.
St Barbara Limited Annual Report 2007
8
Notes to the Financial Statements
30 june 2007
noTe 35 - key managemenT personnel disClosures (ConT.)
2007
Name
Directors
S J C Wise(3)
E Eshuys
D W Bailey
B J Gibson
P C Lockyer
R Knight
H G Tuten(2)
M K Wheatley
Balance at the
start of the year
Excercise of
options
Other
changes
Purchased
Sold
Balance at the
end of the year
3,681,709
5,100,000
100,000
-
-
2,505,095
-
700,000
-
15,000,000
-
-
-
-
-
-
-
-
-
-
-
(2,505,095)(1)
-
(700,000)(1)
117,694
-
-
-
30,000
-
-
-
-
-
-
-
-
-
-
-
3,799,403
20,100,000
100,000
-
30,000
-
-
-
(1) Derecognition of shareholdings due to resignation or retirement during the year.
(2) Mr Tuten has no relevant interest in fully paid ordinary shares of the Company. However, Mr Tuten is a partner in and member of the investment committee of
RCF Management LLC (“RCF”), the management company of each of Resource Capital Fund II LP and Resource Capital Fund III LP, which are collectively St
Barbara Limited’s largest shareholder. Mr Tuten is also an investor in Resource Capital Fund II LP and Resource Capital Fund III.
(3) Subsequent to the year end, Mr Wise purchased 400,000 shares.
2007
Name
Balance at the
start of the year
Excercise of
options
Other
changes
Purchased
Sold
Balance at the
end of the year
Other key management personnel
I Bird
G Campbell-Cowan
R Kennedy
M Reed
P Thompson
G Viska
-
-
20,000
-
1,000,00
500,000
-
-
1,000,000
-
-
-
-
-
-
-
-
-
2006
Name
Directors
S J C Wise
E Eshuys
D W Bailey
R Knight
H G Tuten
M K Wheatley
Balance at the
start of the year
Excercise of
options
Other
changes
2,800,000
1,250,000
-
-
-
-
-
10,000,000
-
-
-
1,000,000
-
-
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
Other key management personnel
R Kennedy
M Reed
P Thompson
G Viska
-
-
-
-
0 Building
-
-
-
-
-
-
Purchased
881,709
-
100,000
2,505,095
-
-
20,000
-
-
-
-
-
200,000
-
-
-
-
-
820,000
-
1,000,000
500,000
Sold
Balance at the
end of the year
-
6,150,000
-
-
-
300,000
-
-
-
500,000
3,681,709
5,100,000
100,000
2,505,095
-
700,000
20,000
-
1,000,000
500,000
Directors’ Declaration
30 june 2007
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 43 to 90 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 financial position as at 30 June 2007 and of its
performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year
ended on that date; and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
and
the audited remuneration disclosures set out on pages 43 to 41 of the Directors’ report comply with Accounting Standards AASB
124 Related Party Disclosures and the Corporations Regulations 2001.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer 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 Chief Executive Officer
Melbourne
29 August 2007
St Barbara Limited Annual Report 2007
2
Building
St Barbara Limited Annual Report 2007
Details of Shareholders
as aT 20 sepTember 2007
TwenTy largesT regisTered shareholders
Shares Held
136,943,769
99,887,729
89,692,972
85,186,505
47,500,000
31,162,230
20,000,000
19,600,000
16,132,926
15,044,376
5,900,000
5,600,000
4,354,321
4,169,437
3,999,000
3,577,721
3,300,000
2,745,933
2,662,095
2,483,040
Shares Held
78,662,230
41,631,000
ANZ Nominees Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Resource Capital Fund III LP
Resource Capital Fund II LP
Darley Pty Limited
Mr Eduard Eshuys
Citicorp Nominees Pty Limited
1
2
3
4
5
6
7
8
9
10 AMP Life Limited
11 Gee Nominees Pty Ltd
12 Northwest Accounting Pty Ltd
13
14 HSBC Custody Nominees (Australia) Limited
15 UBS Wealth Management Australia Nominees Pty Ltd
16 Merrill Lynch (Australia) Nominees Pty Limited
17
18
19
20 Miroma Investment Inc
Colin Wise Consulting Pty Ltd
Cogent Nominees Pty Limited
Perpetual Trustee Company Limited
Citicorp Nomninees Pty Limited
Substantial Shareholders
Resource Capital Fund II LP
JPMorgan Chase & Co.
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
662
2,091
1,910
2,630
382
7,675
% of Total
16.37
11.94
10.72
10.18
5.68
3.73
2.39
2.34
1.93
1.80
0.71
0.67
0.52
0.50
0.48
0.43
0.39
0.33
0.32
0.30
% of Total
9.4
5.0
Number of Shares
468,166
6,708,178
16,177,807
88,455,355
724,746,061
836,555,567
The number of shareholders holding less than a marketable parcel was 672.
direCTors’ inTeresTs
As at the date of the Directors’ Report, the direct or indirect interest of each Director of the Company in the issued securities of the
Company, or in a related corporation, was as follows:
S J C Wise
E Eshuys
D W Bailey
B J Gibson
P C Lockyer
H G Tuten
Building
Shares Held
4,199,403
20,934,466
100,000
-
30,000
78,662,230
share priCe
The Company’s shares were listed on the Australian Stock Exchange during the 2006/07 year. The closing share price on 30 June
2007 and on 20 September 2007 was 49 cents and 58 cents respectively.
announCemenTs
The Company makes both statutory announcements (activities or quarterly reports, financial reports, changes to Director’s interests)
and specific 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 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:
Level 21, 90 Collins Street
Melbourne VIC 3000
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
E-mail: melbourne@stbarbara.com.au
Web site: www.stbarbara.com.au
Shareholder Enquiries
Enquiries relating to shareholding, tax file number and notification of change of address should be directed to:
Computershare Limited
GPO Box 2975
Melbourne VIC 3001
Telephone: +1300 653 935
+61 3 9415 4356
Facsimile: +61 3 9415 2500
St Barbara Limited Annual Report 2007
Corporate Directory
(Non-Executive Chairman)
Board of Directors
Colin Wise
Eduard Eshuys (Managing Director and CEO)
Douglas Bailey (Non-Executive Director)
Barbara Gibson (Non-Executive Director)
Phillip Lockyer (Non-Executive Director)
(Non-Executive Director)
Hank Tuten
Company Secretary
Ross Kennedy
Registered Office
Level 21, 90 Collins Street
Melbourne VIC 3000
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
E-mail: melbourne@stbarbara.com.au
Web site: www.stbarbara.com.au
Share Registry
Computershare Limited
GPO Box 2975
Melbourne VIC 3001
Telephone: +1300 653 935
+61 3 9415 4356
Facsimile: +61 3 9415 2500
Banker
Commonwealth Bank of Australia
150 St George’s Terrace, Perth WA 6000
Auditor
KPMG
147 Collins Street, Melbourne VIC 3000
Solicitor
Freehills
QV1 Building
250 St George’s Terrace, Perth WA 6000
Stock Exchange Listing
Shares in St Barbara Limited are quoted on the Australian Securities Exchange Limited
Ticker symbol: SBM
Convertible notes are listed on Singapore Exchange Securities Trading Limited
Australian Business Number
ABN 36 009 165 066
Building
Concept, design and production Max.Creative. www.maxcreative.com.au
www.stbarbara.com.au
St Barbara Limited
Annual Report 2007