Annual Report 2012
Contents
Introduction
01
04 Chairman and Managing Director & CEO’s Joint Report
06 Operations Report
08 Discovery and Growth
09 Chief Financial Offi cer’s Review
10 People, Environment, Safety & Social Responsibility
11 Board of Directors
12 Executives
13 Ore Reserves and Mineral Resources Statements
18 Corporate Governance
21
Financial Statements
Highlights
Gold Production
338,879 ounces –
31%
Revenue
$541 million –
50%
2012
2011
2010
2009
2008
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
0
150,000
300,000
450,000
600,000
NPAT
$130 million –
90%
EPS
40 cents per share (1) –
90%
2012
2011
2010
2009
2008
-90
-60
-30
0
30
60
90
120
150
-40
-20
0
20
40
(1) Shares adjusted for 6:1 consolidation in November 2010
2012
2011
2010
2009
2008
2012
2011
2010
2009
2008
Introduction
2012 was an historic year for St Barbara. The Company delivered record
production, profit and cash flow. On 7 September 2012, St Barbara acquired
100% of Allied Gold Mining Plc by way of a Scheme of Arrangement.
The acquisition adds the Simberi Operation and surrounding exploration
areas in Papua New Guinea, and the Gold Ridge Operation, also with
surrounding exploration areas, in the Solomon Islands to St Barbara’s
operating and exploration portfolio.
Combined Potential
St Barbara’s acquisition of Allied Gold has created
a leading ASX listed mid-tier gold company. The
internationally diversified group operates three long life
mines and three treatment plants located in Australia,
Papua New Guinea and the Solomon Islands.
The operations have significant production growth
potential and the new exploration areas in the
South West Pacific add sizeable attractive targets
to St Barbara’s existing exploration suite.
Diversifi cation
Growth
St Barbara now has a diversified asset portfolio
by location and mine type. No asset represents more
than approximately 35% of the Ore Reserve base
or contributes more than approximately 40% of
pro-forma production for the 2013 financial year.
A number of immediate organic growth opportunities
have been identified including increased gold
production at Simberi and Gold Ridge, expansion
of known ore bodies and exploration opportunities
in proximity to current mining operations, as well
as new greenfields prospects.
Combined Reserves(1) – 5.7 Moz
Combined FY13F Production(2) – Approx 435 koz
20%
36%
3%
34%
23%
42%
17%
13%
5%
2%
5%
Gwalia
Tower Hill
King of the Hills
Southern Cross
Simberi
Gold Ridge
(1) As at 30 June 2012 for Australian assets and as at 31 December 2011 for South West Pacific assets.
(2) Based on internal life of mine plans assuming no change in production as a result of the acquisition,
subject to risks set out in the corresponding ASX announcement dated 29 June 2012.
Annual Report 2012
01
Introduction cont.
Tabar-Tatau
(cid:129) Exploration potential
(cid:129) Multiple drilling targets
on both islands
Simberi
(cid:129) Open pit mine and processing plant
(cid:129) Plant expansion underway
(cid:129) FY13F production: 70 – 80koz(2)
(cid:129) 9+ year mine life
(cid:129) Near mine targets for exploration
(cid:129) Sulphide potential
Gold Ridge
(cid:129) Open pit mine and processing plant
(cid:129) Mine plan and plant being enhanced
(cid:129) FY13F production: 95–105koz(2)
(cid:129) 9+ year mine life
(cid:129) Near mine targets for exploration
Combined group forecast to generate approximately
435,000 (2) ounces of gold in FY13
Leonora
(cid:129) Gwalia high grade underground mine
(cid:129) 9+ year mine life
(cid:129) King of the Hills underground mine
(cid:129) Gwalia processing plant (1.2Mtpa)
(cid:129) FY13F production: 230–250koz
(cid:129) Regional exploration potential
Southern Cross
(cid:129) Underground mine and
processing plant
(cid:129) FY13F production: 20–25koz(1)
(cid:129) Exploration targets in area
East Lachlan
(cid:129) Prospective exploration area
(cid:129) Targeted for copper-gold porphyry
mineralisation
(1) Reflecting anticipated cessation of mining activities in October 2012
(2) Full year figures, approx. 80% of Simberi and Gold Ridge production attributable to St Barbara
02
The financial strength of the Australian operations has ensured
that the new group has only moderate levels of debt, low gearing
and significant upside exposure to the gold price. St Barbara has
absorbed Allied Gold’s gold loan, and established robust new debt
facilities with quality international lenders. As a larger, diversified
company, St Barbara should enjoy increased investor interest,
a higher stock market profile and improved share market liquidity.
Central to successful operations in Papua New Guinea and the
Solomon Islands is maintaining the relationship between each
operation, and national and provincial governments and local
communities. St Barbara will work hard to ensure there
is effective stakeholder engagement at all levels.
The Company has a strong pipeline of gold projects. These
span from greenfields exploration, to the extension of existing
ore reserves, to increasing gold production, to strong stable
production. The Gwalia mine is expected to generate strong
cash flows and assist funding the optimisation of Simberi
and Gold Ridge, as well as exploration opportunities.
A focus on lifting operations capabilities and systems has
translated into reliable and improving operating performance
at St Barbara’s Australian assets. Through the implementation
of improved mine planning methodology, operating systems
and cost management frameworks, the Company expects to
achieve improved production reliability and unit cost reductions
for Simberi and Gold Ridge.
Each of these assets has an expected mine life in excess of
nine years, with significant potential for mine life extensions.
At the same time that operations at the Pacific assets are being
improved, the dedicated Discovery and Growth team will be
evaluating the greatly enlarged exploration portfolio to
assess near mine opportunities, and targets on the highly
prospective Pacific tenements.
Project Pipeline
Tabar – Tatau
Simberi Near Mine
Gold Ridge
Near Mine
Sullivan’s Creek
Yilgarn Targets
Gwalia Region
Southern Cross
Simberi Oxides
Gold Ridge
Southern Cross
King of the Hills
East Lachlan
Tower Hill
Simberi Sulphides
Simberi Oxide
Expansion (3.5Mt)
Gwalia
Exploration
Scoping/Concept
Feasibility
Construction
Producing
Western Australia
Papua New Guinea
Solomon Islands
Annual Report 2012
03
Chairman and Managing Director & CEO’s Joint Report
The Company’s strong operating performance
in the 2012 financial year represents the culmination
of a long period of focus on building capability
across all the operating and support functions
of the Company.
The combination of the Company’s
strong operating performance and cash
generation, coupled with the recently
acquired Allied Gold Mining Plc (Allied
Gold) long life gold projects and exciting
development opportunities, provides
an outstanding platform for long term
growth as a leading mid tier ASX
gold company.
Strategy to grow
shareholder value
The Company’s Western Australian
operations at Leonora are profitable
and generating strong cash flows.
For the 2012 financial year, a return on
shareholder funds of 26% was achieved.
This has provided a solid foundation
for the Company to execute its stated
strategy of growth through the acquisition
of value accretive, long life gold assets.
The acquisition of Allied Gold is the
culmination of a thorough two year
evaluation of gold assets in Australasia,
South East Asia and the South Western
Pacific Rim, with our management team
rating Allied Gold as one of the best
value targets, and located in a highly
geologically attractive yet underexplored
region. Following a thorough due diligence
process, the Company determined that
the acquisition of Allied Gold would be
significantly value accretive for St Barbara
shareholders. The Company’s offer was
announced on 29 June 2012, and the
acquisition was completed on
7 September 2012.
We remain confident that the Allied Gold
operations will significantly improve in
performance and that these improvements
will progressively be reflected in the
Company’s share price. Moreover, the
extensive, yet under-explored land
holdings along the highly prospective
Pacific Rim, will be a key focus for
exploration activities, with the objective
of adding further significant value.
Strong operating capability
All three Western Australian gold
operations performed at, or above
expectations for the year, including King
of the Hills in its first full year of operation.
Strong performance is expected from
the Gwalia mine for the foreseeable
future. The majority of ore mined is from
the high grade South West Branch, which
has a reserve grade estimated at 9.1 g/t
Au. The mine is operating at its current
design potential, with multiple working
faces established and significant
underground infrastructure.
04
At Southern Cross Operations, the
Marvel Loch mine is nearing the end
of its economic life after many years of
continuous operation, including 7½ years
under St Barbara control. Following a
strong year of performance to guidance
in the 2012 financial year, Southern Cross
Operations is expected to go on to care and
maintenance in the December 2012 quarter.
Translating production
into profitability
Strong operating capabilities have been
reflected in record gold production, net
profit after tax, cash flow and earnings
per share in the 2012 fiscal year.
Net cash flows from operations (before
capital expenditure) increased by 115%
to $222 million. Net cash flows from
operations after funding capital
expenditure was positive $122 million
in the 2012 financial year.
During the year, cash on deposit
increased by $106 million to $185 million
as at 30 June 2012. Total interest bearing
debt at balance date was less than
$4 million.
Net profit after tax for the year of
$130.2 million was 90% higher than
the previous year profit of $68.6 million.
Earnings per share increased from
21 cents per share to 40 cents per share.
Licence to operate
The Company’s values and performance
based culture is attracting high calibre
employees to the Company. Remuneration
strategies are designed to align employee
performance and rewards with growing
shareholder value through a combination
of short term and long term incentives.
Company initiatives during the year
received recognition, including a Federal
Government Award for promoting
opportunities for women in the
workplace and a Western Australian
Government “Waterwise Business
Gold Award” for water conservation
at Southern Cross Operations.
The Company has worked closely with
Leonora aboriginal communities to
facilitate improved trustee arrangements
for royalty entitlements.
Extensive environmental monitoring
takes place to minimise disturbance to
areas surrounding mining operations.
A number of legacy mine sites on the
Company’s tenements have been
successfully rehabilitated.
A focus on safety leadership in the
workplace, designed to identify and
resolve risks before accidents occur,
has helped underpin a significant
improvement in safety performance.
Southern Cross Operations in particular,
achieved outstanding safety performance
for the year with the Total Recordable
Injury Frequency Rate for the Company
reducing from 12.5 at the start of the
year to 9.0 at the end of the year.
Careful attention to these important
business foundations helps underpin
effective relationships with the workforce,
communities and government; all essential
for long term profitable operations.
Significant opportunities
to grow the business
The establishment of strong performing
operations now enables management
teams to focus on a number of business
improvement opportunities. As noted in
the opening pages of this Annual Report,
a range of business improvement initiatives
are planned for the Simberi and Gold
Ridge Operations. There are also plans
to improve truck haulage efficiencies and
costs in the Gwalia mine using innovative
truck haulage technology, improving stope
cycle times and evaluating potential
sources of further ore.
Significant shareholder value can be
created through the discovery of new
gold deposits. Prospective opportunities
have already been identified in proximity
to the Simberi and Gold Ridge gold
mines. There are also significant targets
on current land holdings elsewhere along
the Pacific Rim, in the East Lachlan district
of New South Wales and the Leonora
region of Western Australia.
The strong cash flow from operations,
in particular at Leonora, provides capacity
for increased exploration activities and
for follow up work should a discovery
be made.
People are central
to creating a
successful company
We acknowledge the significant efforts
of the executive team, employees,
contractors and our fellow Directors
throughout the year. These efforts are
demonstrably translating into growing
profitability, cash flow generation,
significant returns on shareholder funds,
creation of long term opportunities and
development of a sustainable culture
of excellence.
The year ahead
We will be applying established operating
capabilities and systems to the new
Simberi and Gold Ridge operations to lift
production performance, lower operating
costs and increase margins. We also look
forward to drilling a number of targets
on highly prospective, yet under-explored
ground in nearby areas.
St Barbara is now not only one of
Australia’s most profitable ASX listed
gold companies, but one of the largest
gold producers in the region with
a pipeline of development and
exploration opportunities.
Colin Wise
Chairman
Tim Lehany
Managing Director & CEO
Annual Report 2012
05
Operations Report
Continued improvement
in operational performance
and reliability at our three
underground mines and
two processing plants
in Western Australia saw
gold production increase
by 31% for the year
to 338,879 ounces.
Production Summary
Production
Leonora Operations
Gwalia
King of the Hills
Southern Cross Operations
Marvel Loch
Consolidated
Milled Grade
Gwalia
King of the Hills
Marvel Loch
Total Cash Operating Costs
Gwalia
King of the Hills
Southern Cross
2012
2011
oz
oz
oz
oz
184,534
56,953
97,392
338,879
131,133
7,066
120,275
258,474
g/t Au
g/t Au
g/t Au
$/oz
$/oz
$/oz
8.3
4.2
1.9
646
753
1,199
6.3
4.6
3.4
765
699
890
Production from the high grade Gwalia
mine increased by 41% to 184,534
ounces of gold and the mine is expected
to maintain gold production at 175,000 to
190,000 ounces in the 2013 financial year.
The King of the Hills satellite mining
operation at Leonora produced 56,953
ounces of gold in its first full year
of production.
Southern Cross Operations, with the
majority of ore sourced from the Marvel
Loch mine, achieved production of
97,392 ounces of gold.
Leonora Operations
The Leonora Operations comprise the
Gwalia and King of the Hills underground
mines, and a processing plant at Gwalia.
Gwalia
The Gwalia mine at Leonora is St Barbara’s
cornerstone asset. The Gwalia deposit has
an Ore Reserve grade of 8.7 g/t Au, an
expected mine life of at least nine years,
and remains open at depth with some
parallel lodes not yet fully drilled.
06
The mining method at Gwalia includes
long hole stoping and cement paste back
fill, trucking ore and waste to the surface.
Geotechnical stress measurements
are amongst the lowest recorded at
corresponding depths in the surrounding
Yilgarn district of Western Australia.
As at 30 June 2012, the mine was
developed down to 1,420 metres below
surface, with vertical advance rates
expected of 60 to 80 metres per annum
for the next three years.
During the current financial year ore will
continue to be sourced principally from
the high grade South West Branch lode.
Net of production depletion, Gwalia Ore
Reserves reduced by 48,000 ounces
of contained gold to 6.9 million tonnes
at 8.7 g/t Au for 1.9 million ounces
of contained gold as at 30 June 2012,
and now extends to 1,800 metres
below surface.
A haulage optimisation study was
completed during the year, including
consideration of a hoisting shaft.
Optimising truck haulage has been
identified as the most efficient and
cost effective outcome.
A new mining contract was awarded
at the Gwalia mine to Byrnecut Mining
Pty Ltd, commencing 1 September
2012, which will introduce innovative
new trucking technology to the
operation that offers significant
efficiency improvements over the
current haulage trucks.
King of the Hills
The King of the Hills underground mine
is located at the site of the historical
Tarmoola open pit. Gold production
commenced in May 2011. The mine is
expected to produce at the rate of 55,000
to 60,000 ounces of gold per annum for
at least another two and a half years.
Ore mined is trucked 42 kilometres to the
Gwalia processing plant for treatment to
utilise the available processing capacity.
Revenue from King of the Hills is protected
by put and call options providing a price
collar of between A$1,425 and A$1,615
per ounce.
Gwalia Processing Plant
The processing plant performed consistently
achieving an average recovery rate of
97% for the year for Gwalia ore.
Southern Cross Operations
At Southern Cross Operations, ore was
principally sourced from the Marvel Loch
underground mine supplemented by
low grade ore from stockpiles at former
satellite deposits.
In the 2011 financial year, deep drilling
of the Marvel Loch ore body identified
thick, non-gold bearing pegmatite
intrusions that cut the base lodes of the
mine, and diminishing grades at depth
in the northern lodes of the mine. As
a consequence, underground mining
operations at Marvel Loch are expected
to cease in October 2012. The 2.2 million
tonne per annum plant will then be
placed in care and maintenance.
Outlook for Continuing Australian Operations
Forward Guidance FY13
Gwalia
King
of the Hills
Total
Leonora
Gold production
koz
175–190
55–60
230–250
Cash operating cost
$/oz
670–700
840–870
710–745
Capital expenditure
$M
45–50
20–25
65–75
Annual Report 2012
07
Discovery and Growth
During the 2012 financial year, exploration focussed
on drilling along the Gwalia Mine trend, extending
the Gwalia Deeps ore body at Leonora, and drill
testing near-mine targets in both Leonora and
Southern Cross provinces as potential sources of
material for the Gwalia and Marvel Loch plants.
Elsewhere, new prospective areas were
identified using advanced geophysical
techniques and three dimensional
geological modelling in the Yilgarn
province, Western Australia, and in the
East Lachlan province, New South Wales.
Systematic economic review, ranking,
drilling and turning over of prospects
continued throughout the year across
the Company’s 5,000 km² portfolio
of tenements.
Discovery & Growth expenditure for the
year was over $20 million. Almost half the
expenditure was spent on drilling and just
over a third of this was spent on Gwalia
Deeps drilling. A total of 40,350 metres
of drilling was completed during the year.
08
Leonora
Gwalia Deeps
A third phase of deep drilling successfully
extended Gwalia Mine lodes along the
northern and southern margins at depth
within the current mine interval, utilising
directional drilling from previous drill
holes. This drill program has successfully
increased the Mineral Resources and
converted a substantial proportion of
existing Inferred Resources to Indicated
Resources and to Ore Reserves. The
updated Gwalia Deeps resource estimate
is shown in Table 1 on page 15. The
Gwalia deposit remains open at depth.
Gwalia Mine trend
Detailed geological studies and three
dimensional modelling along the Gwalia
mine trend generated a series of targets
previously untested for Gwalia-style
mineralisation. Following resolution of
land access issues, a first phase program
of 12 deep holes has been completed
north and south of Gwalia mine. These
drill holes have not intersected significant
mineralisation and results are being
compiled as the basis for an improved
target model and second phase drill
Chief Financial Officer’s Review
Financial highlights
Sales revenue
EBITDA (including significant items)
EBIT (including significant items)
Statutory Profit(1) after tax for the year
Total net significant items
EBITDA (excluding significant items)
EBIT (excluding significant items)
Underlying net profit after tax(2) for the year
30 June 2012
$’000
30 June 2011
$’000
541,189
204,034
106,811
130,230
(552)
218,963
128,094
130,782
359,575
125,538
67,058
68,629
14,198
111,340
52,860
54,431
(1) Statutory Profit is net profit after tax attributable to owners of the parent.
(2) Underlying net profit is net profit after income tax (“Statutory Profit”) excluding significant items.
St Barbara reported a strong performance
with net profit after tax for the year ended
30 June 2012 increasing by 90% to
$130.2 million. Increased gold production,
rigorous cost management and higher
gold prices drove underlying net profit
after tax up by 140% to $130.8 million.
Earnings per share increased from $0.21
to $0.40 in financial year 2012.
Cash flow from operations more than
doubled compared to the previous year
to $221.8 million. Capital expenditure
was lower than the previous year at
$100.2 million, as major projects such
as the development of King of the Hills
were completed. Capital expenditure
for the Australian operations will fall
further in the 2013 financial year.
For the 2012 financial year a return on
shareholder funds of 26% was achieved.
The company is in a strong financial
position with cash at balance date of
$185.2 million and total interest bearing
debt of only $4.3 million. This strong
financial position has enabled the
Company to fund the cash component
of the consideration for Allied Gold
from cash reserves and a four year
term loan from NAB and Barclays.
The introduction of the Carbon Tax is
anticipated to contribute to an increase
in cash operating costs for Australian
testing. Geochemical drilling was
completed on another four areas in the
Leonora province to generate targets
for drill testing in the current year.
Southern Cross
Drilling programs were completed on
the Copperhead, Corinthia, Cornishman,
Nevoria and Frasers projects along trend
from the Marvel Loch mine. At Frasers,
drilling extended a series of lodes
plunging south of the previous open pit
mine, and successfully delineated an
Inferred Mineral Resource Estimate of
2.1 Mt @ 5.2 g/t Au containing 355,000
ounces gold (based on a 2.5 g/t Au
cut-off grade).
However, insufficient mineral resources
with potential to be converted into ore
reserves have been identified, to provide
the quantum of ore required to sustain
continuing production at Southern
Cross Operations.
Further studies are being completed on
Copperhead and Frasers to determine
if additional drilling is justified.
East Lachlan,
New South Wales
Following an initial drill program
in the 2011 financial year targeting
intrusive-related porphyry copper-gold
mineralisation within a large volcanic
complex, situated under younger cover
rocks on the edge of the Great Artesian
Basin, detailed geophysical gravity surveys
and a helicopter-borne electromagnetic
(EM) survey were completed to assist
delineation of new drill targets. A second
drilling program was largely completed,
which intersected the targeted intrusions
under cover. Although not all assay results
have been received, no significant zone
of mineralisation appears to have been
intersected at this time.
Gawler, SA
Work on Exploration Licence EL4420
is still suspended due to the Federal
Government moratorium placed on
accessing the Woomera Protected Area,
and it is unlikely to be lifted until at least
the end of calendar year 2012. Targeting
activities in other parts of the Gawler
Block continued.
operations of approximately $11 per
ounce of production. Substantial focus
remains on business improvement
initiatives and cost efficiencies and this
will be extended to Simberi and Gold
Ridge in the coming year. Achieving
reliable production and substantially
lower operating costs at Simberi and
Gold Ridge will deliver significant
shareholder value in the medium term.
Garth Campbell-Cowan
Chief Financial Officer
Simberi Island, PNG and
Gold Ridge, Solomon Islands
The successful acquisition of Allied Gold
will be followed up in FY 2013 with
extensional drilling of the known ore
bodies at Simberi and Gold Ridge and
evaluating the exploration potential
of near-mine targets at each site.
Growth
The Discovery and Growth team continue
to actively review and monitor other gold
discoveries and projects in Australia and
South East Asia. Evaluation of a number
of potentially interesting projects was
completed during the year, located both
in Australia and offshore. In Australia,
additional areas have been acquired
in the Yilgarn province, WA and are likely
to be a focus of continuing work in the
2013 financial year.
Completing detailed due diligence on the
mineral resources and operating assets of
Allied Gold located on Simberi Island, PNG
and Guadalcanal, Solomon Islands was
also a key focus during the year.
Annual Report 2012
09
People, Environment, Safety & Social Responsibility
Rehabilitation priorities during the
2013 financial year for Southern Cross
Operations will include continuing work
on open pit legacy sites. Continuing work
on waste dumps and the tailings dam at
the Tarmoola mine site and the waste
dumps at Kailis are the priorities for
Leonora Operations.
Unconditional Environmental Performance
Bonds of $18 million had been lodged
with the Western Australian government
as at 30 June 2012. The Western Australian
government has passed legislation whereby,
with effect from 1 July 2013, the requirement
for rehabilitation bonds will be replaced
with a rehabilitation contribution scheme,
whereby contributions are made to a
government fund.
Community & Social
Responsibility
St Barbara continues to support the
local communities where we operate.
Community briefings are held from time
to time as well as regular meetings with
Local Government representatives to keep
local communities informed of St Barbara’s
activities and plans. The Company
continues to recognise the traditional
ownership of the lands on which we
operate, and regularly meets with
Aboriginal Groups associated with our
areas of operation. Aboriginal heritage
protection surveys were undertaken
during the year with representatives of
local Aboriginal groups at nine proposed
exploration areas around Leonora.
St Barbara was a Gold Sponsor for the
annual Leonora Community “Golden Gift”
weekend as well as providing in-kind
support. The Company supported the
Leonora District High School and
Kalgoorlie South Primary School with
sponsorships of the “You Can Do It”
program and also sponsored the “Step
Up” program event in Kalgoorlie involving
students from regional high schools.
People
The Company’s workforce as at 30 June
2012 comprised 275 employees and
644 contractors, predominately based in
Western Australia. St Barbara continues
to build a reputation for being a values
based, people focused business, with
strong accountabilities for performance.
The five strategic priorities are to:
(cid:129) ensure the Company has the
appropriate talent to reliably deliver
its business strategy;
(cid:129) ensure the Company maintains
productive and direct relations with
our people;
(cid:129) build capable leadership at all levels
in the Company;
(cid:129) continue to develop integrated human
resource systems; and
(cid:129) support the right work being done
well at every level of the organisation.
Supporting these strategic priorities has
required continuing development of our
people systems.
A comprehensive Talent Management
Framework has been implemented that
strengthens our capacity to attract,
motivate and retain capable people.
Close attention is paid to employment
conditions such as competitive
remuneration, quality village
accommodation and industry benchmarked
work rosters to assist in attracting and
retaining a high performing workforce.
Remuneration strategies are carefully
designed to align employee performance
with growing shareholder value.
Considerable effort is being put into gender
diversity to promote the advancement of
women in the workplace and make the
Company an employer of choice for
women. Board endorsed diversity objectives
are published in the Corporate Governance
Statement. In November 2011 these efforts
were recognised with St Barbara being
awarded the Directors Award for an
Organisation in the Federal Government’s
Equal Opportunity for Women in the
Workplace Agency (EOWA) Business
Achievement Awards.
Safety
St Barbara requires everyone to “start
safe, stay safe” as part of its strong
commitment to safety. We strive for
constant awareness and continual safety
improvements through numerous
initiatives, including the daily application
of the Positive Attitude Safety System
(PASS™), Visual Leadership by managers
and safety “Rules to Live By”. These
10
programs require everyone to proactively
identify potential hazards and reduce risk
taking behaviour.
During the year, the Company released
a revised set of Health, Safety and
Environment standards as part of its vision
which includes a desire for safe production
and environmental sustainability.
Safety performance at St Barbara improved
during the 2012 financial year. The Company
measures safety performance using a
rolling 12-month average of the Total
Recordable Injury Frequency Rate (TRIFR).
The 12 month rolling average of the TRIFR
was 9.0 at the end of June 2012, down
from 12.5 at the start of the financial year.
Whilst this improvement in safety
performance is most gratifying, we will
not rest in our efforts to eliminate work
place injuries. This intent is given effect
in the workplace by the ongoing
reinforcement of existing programs and
the implementation of new initiatives that
support further injury reduction targets
in the current year.
Environment & Sustainability
Minimising the Company’s environmental
impacts and maximising efficiencies in
water and energy use remain a continuing
Company focus. These efforts were
rewarded during the reporting year, when
the Company achieved a Gold Award
for Water Efficiency at our Southern
Cross Operations.
Further improvement in the Company’s
performance will be assisted by the
implementation of an Environmental
Management System by the end
of the year.
During the reporting period, the Clean
Energy Regulator routinely audited
St Barbara’s National Greenhouse and
Energy Reports and confirmed the
Company’s compliance. St Barbara is liable
for payment of the carbon tax as a result
of its power generation at Gwalia.
Rehabilitation
At Leonora Operations, rehabilitation
of waste dumps at Tarmoola continued
with a total of 95 hectares completed
during the financial year. Capping of the
southern cell of the old Tarmoola Tailings
Storage Facility 4 was also commenced
with approximately 85% completed by
the end of June. Rehabilitation activities
at Southern Cross Operations included
76 hectares being completed at GVG,
Bronco and Treasury. Rehabilitation
expenditure for the 2012 financial
year totalled $3.7 million.
Board of Directors
S J Colin Wise
LL.B, FAICD, FAusIMM
Chairman – Non Executive
Appointed July 2004
Mr Wise is an experienced corporate lawyer,
consultant and company director with
significant expertise in the mining and
exploration industry and resources, energy
and corporate sectors. 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
extensive practical experience in Australia
and internationally with a wide range of
corporate, operational and legal matters.
He has been Chairman of St Barbara since
mid 2004, and is a Fellow of both the
Australian Institute of Company Directors
and the Australasian Institute of Mining
and Metallurgy.
Timothy J Lehany
B.E., MBA, MAusIMM
Managing Director and
Chief Executive Officer
Appointed March 2009
Mr Lehany is a Mining Executive with extensive
operating experience over the past 24 years in
Australia and South East Asia with a number
of mining companies, including Newcrest
Mining Limited and WMC Ltd. He is a
mining engineer, having held operating,
and executive roles in gold, base metal
and nickel mining. Tim held the position
of Executive General Manager Operations
with Newcrest Mining Limited prior to
joining St Barbara.
Douglas W Bailey
B.Bus (Acc), CPA, ACIS
Non Executive Director
Appointed January 2006
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 was also a
Non Executive Director of Aurora Gold Ltd
for the period 1993-2000.
Elizabeth A (Betsy) Donaghey
B.Sc (Eng) M.S
Phillip C Lockyer
M.Sc, AWASM, DipMETALL
Non Executive Director
Appointed April 2011
Non Executive Director
Appointed December 2006
Robert K Rae
B.Com (Hons), FAICD
Non Executive Director
Appointed April 2008
Ms Donaghey is a civil engineer with
extensive oil & gas industry and corporate
experience. This included roles with BHP
Billiton for 19 years in gas marketing,
reservoir engineering and business
planning and analysis.
More recently, Ms Donaghey spent 9 years
with Woodside Energy in various senior
gas business and strategic planning roles,
culminating in Ms Donaghey’s executive
leadership of Woodside Energy’s Australian
business unit and subsequently the Browse
business unit.
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.
Mr Rae is a Director and Partner of
McClintock Associates, a private investment
bank and advisory firm and has extensive
industry and corporate experience. Mr Rae
has held previous directorships within the
mining industry, including Plutonic Resources
Limited, Ashton Mining Limited, WA
Diamond Trust and Centralian Minerals
Limited. Mr Rae is also a member of
the Salvation Army Advisory Board.
Annual Report 2012
11
Executives
Timothy J Lehany
B.E., MBA, MAusIMM
Managing Director and
Chief Executive Officer
Tim was appointed in March 2009. He is a
Mining Executive with extensive operating
experience over the past 24 years in Australia
and South East Asia with a number of
mining companies, including Newcrest
Mining Limited and WMC Ltd. He is a
mining engineer, having held operating,
and executive roles in gold, base metal
and nickel mining. Tim held the position
of Executive General Manager Operations
with Newcrest Mining Limited prior to
joining St Barbara.
Garth Campbell-Cowan
B.Com, Dip-Applied Finance & Investments, FCA
Alistair Croll
B.Sc Mining Engineering, GDE Mineral Economics
Chief Financial Officer
Chief Operating Officer
Garth is a Chartered Accountant with
over 25 years of experience in finance
and management positions across a number
of different industries. He was appointed
to the position of Chief Financial Officer
in September 2006 and is responsible
for the Company’s Finance function,
covering financial reporting and accounting,
treasury, taxation, business analysis, capital
management, procurement and information
technology. Garth also co-ordinates
St Barbara’s strategy and planning activities.
Prior to joining St Barbara, he was Director
of Corporate Accounting at Telstra and has
held senior finance leadership roles with
WMC, Newcrest Mining and ANZ.
Alistair joined St Barbara as COO in 2012,
and has extensive experience in all aspects
of mining operations, including technical,
project and general management roles up
to Managing Director. Alistair is equally
comfortable in open pit and underground
operations, with experience in gold,
platinum, diamond, manganese, chrome
and nickel.
Alistair has held senior roles with Kimberley
Diamond Company, Blina Minerals and
Consolidated Minerals in Australia, and
in South Africa with Anglo Platinum and
17 years with the De Beers Group.
Ross Kennedy
B.Com, Grad. Dip-Company Secretarial Practice, ACA,
FTIA, FAICD, MAusIMM, ACIS
Executive General Manager Corporate
Services and Company Secretary
Ross is a Chartered Secretary and has been
with St Barbara since 2004. He has 25 years
of experience in corporate administration,
including 12 years in the minerals and
resources sector, and 10 years of experience
as a management consultant. Ross leads the
Corporate Services team. Key responsibilities
include designing and executing plans for
investor relations, legal and compliance, risk
management and ensuring that Company
Secretariat functions continue to develop
to support the Company’s growth.
Phil Uttley
B.Sc. Hons. (Geol. & Mineral.), FAusIMM
Executive General Manager Discovery
and Growth
Phil is an experienced exploration
executive with over 35 years of industry
experience having held senior positions
in Sino Gold, SRK Consulting and Renison
Goldfields Consolidated (formerly Gold
Fields). He has a B.Sc Hons. (Geol. & Mineral)
from University of Queensland and is an
experienced exploration geologist, with
a demonstrated track record in gold
discoveries and establishment of resources
for gold production. Phil commenced with
St Barbara in September 2009.
12
Ore Reserves and Mineral Resources Statements
30 June 2012
Overview as at 30 June 2012:
(cid:129) Gwalia Ore Reserves are estimated at 6.9 million tonnes (Mt)
@ 8.7 grams per tonne of gold (g/t Au) for 1.93 million
ounces (Moz) of contained gold (previously 1.97 Moz);
representing an indicative mine life of 9 or more years.
(cid:129) Gwalia Deeps Mineral Resources as at 30 June 2012
remained essentially unchanged at 15.3 Mt @ 8.0 g/t Au
for 3.9 Moz of contained gold, and Indicated Resources
increased from 2.3 Moz to 2.7 Moz. Surface drilling added
approximately 240,000 oz to Mineral Resources.
(cid:129) The Gwalia ore body remains open at depth, particularly
South West Branch lode, with potential within the planned
mining interval to add to Mineral Resources and Ore Reserves
in both the South Gwalia Series and Main Lodes.
(cid:129) Ore Reserves at King of the Hills and Marvel Loch have
fallen in line with mining depletion and new mine plans.
Mineral Resources have been added at Frasers project
at Southern Cross.
COMPANY SUMMARY
(cid:129) Total Ore Reserves at 30 June 2012 are estimated
at 12.0 million tonnes @ 6.6 g/t Au for 2.5 Moz of
contained gold.
(cid:129) Total Mineral Resources at 30 June 2012 are estimated
at 47.3 million tonnes @ 5.0 g/t Au for 7.6 Moz of
contained gold.
Details of Ore Reserves and Mineral Resources as at
30 June 2012 follow.
Mineral Resources Statement as at
30 June 2012
The Company’s total Measured, Indicated and Inferred Mineral
Resources as at 30 June 2012 are 47.31 million tonnes
@ 5.0 grams per tonne of gold (g/t Au) containing
7.61 million ounces (Moz) of gold (Table 1). The previous
publicly reported Mineral Resources estimate at 30 June 2011
totalled 46.85 million tonnes @ 5.1 g/t Au containing 7.64 Moz
of gold. This represents a small decrease in the total Mineral
Resource Inventory of 24,000 oz (<1%).
Compilation of the 2012 Mineral Resource Report is complete
with work having been performed on the following projects
during the 2012 financial year (FY12):
(cid:129) Gwalia Deeps;
(cid:129) Gwalia Intermediates;
(cid:129) King of the Hills;
(cid:129) Marvel Loch;
(cid:129) Frasers;
(cid:129) Nevoria;
(cid:129) Edwards Find.
Each of the projects that has a revised or new estimate of
Mineral Resources has been compiled in accordance with
St Barbara’s Mineral Resource Estimation System. This system
provides a framework for the timely and reliable estimation and
reporting of St Barbara’s Mineral Resources in accordance with
the JORC Code. St Barbara’s Mineral Resources are inclusive of
Ore Reserves.
Mineral Resource Estimate revisions have been completed for
Gwalia Deeps, Gwalia Intermediates, King of The Hills, Marvel
Loch, Nevoria, Frasers and Edwards Find over the year, and have
resulted in additions to Mineral Resources for Gwalia Deeps,
Frasers and Edwards Find that have effectively balanced out
Mineral Resource reductions due primarily to mining and
non-recoverable Mineral Resource depletion (Figure 1). The
Frasers Mineral Resource update is a new resource since FY11
following the completion of a three-phase diamond drill program.
Figure 1: Major variances to Mineral Resource Inventory
between FY11 and FY12
8000
7500
7000
6500
6000
7,637
327
355
16
7,613
22
151
240
315
6
FY 11
Mining D epletion
SX Stockpiles
G w alia Interm ediates
Sterilisation
N evoria
G w alia D eeps
Frasers
Ed w ards Find
FY 12
Annual Report 2012
13
Ore Reserves and Mineral Resources Statements cont.
30 June 2012
LEONORA
(cid:129) Gwalia Mineral Resources
The following drill programs were completed over the year:
(cid:129) Surface drilling of the Gwalia Lode system, targeting
extensions to South West Branch (SWB) and South Gwalia
Series (SGS) between approximately 1600 and 1800
vertical metres below surface (mbs); and
(cid:129) Grade control drilling targeting SWB and SGS between
approximately 1260mbs and 1420mbs, and Main Lode
(ML) between 1160mbs and 1300mbs.
This drilling resulted in a number of key changes to the
Gwalia geological model:
1. Gwalia Deeps
Surface drilling of the Gwalia Lode system, targeting
extensions to South West Branch (SWB) and South Gwalia
Series (SGS) between approximately 1600 and 1800mbs,
and grade control drilling targeting SWB and SGS between
approximately 1260mbs and 1420mbs and ML between
1160mbs and 1300mbs was completed over the year. This
drilling resulted in a number of key changes to the Gwalia
geological model, which are summarised below. The surface
drilling is estimated to have added approximately 240,000 oz
to the Mineral Resource inventory and upgraded approximately
390,000 oz from Inferred to Indicated Resource, resulting in
a total Mineral Resource estimate of 15.25 Mt @ 8.0 g/t Au
containing 3.93 Moz Au (refer to Table 1).
2. SWB Hanging-wall position (South)
As a result of Grade Control (GC) drilling, the hanging-wall
position of the southern portion of SWB was revised to be
further west than previously modelled and resulted in a
reduction of the Mineral Resource in this area of 94,000 oz.
The initial estimate was based on widely spaced (>100m)
drilling on the southern margins of the lode and highlights
the importance of infill resource definition drilling well
ahead of grade control drilling.
3. Revision of SWB and SGS Model below 1600mbs
The previous Mineral Resource update completed for FY11
resulted in modelling of an additional South Gwalia Series
lode (SG3). The further surface drilling completed this year
has shown that this lode is actually part of SWB rather than
an additional SGS lode. The geological model has been
revised accordingly and has resulted in a reduction to the
Inferred SGS Mineral Resource, but an overall increase in the
SWB Indicated Resource. The surface drilling also identified
some small Mineral Resource extensions at the southern
margins of SGS, which remain open and will need to be
closed out by underground drilling.
4. Main Lode Mineral Resource extensions
Surface and GC drilling have contributed to a revised
interpretation of ML, extending this lode further south than
previously modelled, and an increase in this Mineral Resource.
5. Gwalia Intermediates
The locations of remnant pillars that form the basis for
reporting of the Gwalia Intermediates Mineral Resource were
reviewed. A number of remnant pillars particularly toward
the base of old workings were identified as being covered by
the Gwalia Deeps model, or to have been tested with grade
control drilling. These have been removed from the mineral
inventory and have resulted in a reduction of this Mineral
Resource of 135,000 oz.
Depletion due to mining further reduced the Gwalia Mineral
Resource by 184,000 oz.
As a result of the geological model changes, Mineral Resource
extensions and mining depletion the Gwalia Mineral Resource
Inventory has been reduced by 9,000 oz (-0.3%).
SOUTHERN CROSS
(cid:129) Marvel Loch Underground
The Marvel Loch Mineral Resource was updated during the
year following the completion of fifty five grade control and
resource definition holes. Small down dip Mineral Resource
extensions were identified for the Firelight, Exhibition and
Main Lode Mineral Resources, contributing approximately
52,000 oz. Overall, however the Mineral Resource has been
reduced by 173,000 oz primarily due to mining or
non-recoverable depletion.
(cid:129) Nevoria
The Mineral Resource for the Nevoria Project was updated in
February following the completion of eleven holes aimed at
improving confidence in the Mineral Resource below the Silver
and Nevoria East open pits. This model was subsequently
optimised and a two stage pit design completed. The 2012
Mineral Resource consists of an open pit Mineral Resource
constrained by the design pit at a 0.6 g/t Au cut-off and an
underground resource at a 2.0 g/t Au cut-off below the
design pit allowing for a 20 metre sill pillar at the base of
the design pit.
The drilling resulted in an upgrade in Mineral Resource
classification from Inferred to Indicated for a portion of the
Nevoria Deposit and overall the total Mineral Resource has
increased by 6,000 oz primarily due to the lower cut-off used
in reporting the open pit portion of the resource.
(cid:129) Frasers
The Frasers Mineral Resource estimate was compiled in May
2012 following the completion of three phases of diamond
drilling testing the down-plunge and southern strike extensions
to the mineralisation. This is the first Mineral Resource estimate
for Frasers since mining was suspended in 1997, and added
a total of 355,000 ounces to the Company’s Mineral Resources.
The Frasers Mineral Resource is open down plunge and
at depth and is awaiting a review of mining options.
(cid:129) Edwards Find
The previous Edwards Find Mineral Resource was estimated
in 2008. The model was updated in March 2012 inclusive of
drilling completed subsequent to the previous estimate. This
has resulted in a small increase in the total Mineral Resource
of 16,000 oz.
14
DEPLETION
(cid:129) Mining Depletion
A total of 327,000 oz of gold have been depleted from the
Company’s Operations – 184,000 oz from Gwalia, 60,000 oz
from King of the Hills and 83,000 oz from Marvel Loch.
(cid:129) Non-Recoverable Depletion
Non-recoverable Mineral Resource depletion has accounted
for a reduction of 151,000 oz of gold, primarily from the
Marvel Loch Mine (142,000 oz). The depletion has been
defined collaboratively by the Marvel Loch Geology and
Technical Services Teams and is due largely to greater
sterilisation applied around East Lode & Mazza Lode
in the southern portion of the mine.
(cid:129) Southern Cross Stockpiles
A total of 22,000 oz of gold have been depleted from a
number of stockpiles in and around the Marvel Loch Mine
following the cessation of mining activities.
Table 1: Mineral Resource Summary June 2012
Category
Measured
Indicated
Inferred
Total
Region
Project
Leonora
Gwalia Deeps
Gwalia Intermediates & West Lode
King of The Hills
Tower Hill
Harbour Lights
Other (4)
Total Leonora
Southern
Cross
Marvel Loch
Nevoria
Transvaal
Jaccoletti
Axehandle
Cornishman
Edwards Find, EFN & Tamarin
Frasers
Yilgarn Star
Other (8)
Total Southern Cross
Total All Regions
Tonnes
(k)
Au
g/t
4,684
0
0
0
0
991
5,675
287
0
0
0
0
0
0
0
0
367
654
5.6
0.0
0.0
0.0
0.0
1.0
4.8
3.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.0
1.9
koz
842
0
0
0
0
33
875
29
0
0
0
0
0
0
0
0
12
41
Tonnes
(k)
Au
g/t
koz
Tonnes
(k)
Au
g/t
8,965
9.5 2,727
1,601
14
1,530
2,779
0
2,277
4.4
5.5
4.6
0.0
1.0
2
273
411
0
70
15,565
7.0 3,483
2,929
3,732
1,634
0.0
0
119
381
336
385
1,605
3.2
3.4
4.7
4.6
0.0
4.4
3.1
5.5
6.6
2.7
299
407
249
0.0
0
17
38
59
82
140
557
480
207
2,580
49
5,474
1,400
328
1,802
715
2,082
0
363
1,786
0
345
7.0
6.4
4.8
3.9
3.3
0.6
4.8
2.5
4.0
4.9
5.5
2.0
0.0
2.6
5.2
0.0
4.5
Tonnes
(k)
Au
g/t
koz
15,250
8.0 3,930
571
2,010
2,986
2,580
3,317
6.3
5.4
4.6
3.3
1.0
116
347
437
274
104
26,714
6.1 5,208
4,616
4,060
3,436
715
2,082
119
744
2,122
385
2,317
3.0
3.4
4.8
5.5
2.0
4.4
2.8
5.2
6.6
2.7
440
449
535
126
131
17
68
355
82
202
koz
360
114
74
26
274
1
849
112
42
286
126
131
0
30
296
0
50
11,121
3.6 1,291
8,821
3.8 1,073
20,596
3.6 2,405
6,329
4.5
916
26,686
5.6 4,774
14,295
4.2 1,922
47,310
5.0 7,613
(1) Mineral Resources are reported inclusive of Ore Reserves.
(2) Cut-off Grades Leonora: Gwalia Deeps (2.5 g/t Au), King of The Hills (3.0 g/t Au), Tower Hill (3.2 g/t Au), Harbour Lights (2.0 g/t Au).
(3) Gwalia Intermediates & West Lode: For this combined Mineral Resource the Gwalia Intermediates Mineral Resource is constrained to remnant pillars
and accounts for 93% of Mineral Resource ounces. West Lode cut-off = 1.0 g/t Au.
(4) Leonora Other is comprised of McGraths (23%), Rainbow (36%), Royal Arthur Bore (12%), Tarmoola Low Grade Stockpile (28%), Tower Hill Low Grade
Stockpile (1%) by Mineral Resource ounces.
(5) Cut-off Grades Southern Cross: Marvel Loch (2.1 g/t Au), Jaccoletti (2.6 g/t Au), Axehandle ( 0.7 g/t Au), Cornishman (0.8 g/t Au), Edwards Find Group
(0.7 g/t Au & 0.8 g/t Au), Frasers (2.5 g/t Au), Yilgarn Star (4.0 g/t Au).
(6) Southern Cross (Nevoria): Cut-off Grade for open pit and underground Mineral Resources are 0.6 g/t and 2.0 g/t respectively. 58% of Nevoria Mineral
Resource ounces are open pit and 42% are underground.
(7) Southern Cross (Transvaal): Cut-off grades for open pit Mineral Resources are variable (1.0 g/t Au to 1.7 g/t Au) dependent on lode and material type.
Underground Mineral Resources are reported at a 2.6 g/t Au cut-off and account for 98% of the Transvaal Mineral Resource ounces.
(8) Southern Cross Other is comprised of GVG Sulphide (49%), GVG Open Pit (6%), New Zealand Gully (12%), Ruapehu (27%), Stockpiles (6%)
by Mineral Resource ounces.
(9) Data is rounded to thousands of tonnes and thousands of ounces. Discrepancies in totals may occur due to rounding.
Annual Report 2012
15
Ore Reserves and Mineral Resources Statements cont.
30 June 2012
Competent Persons Statement:
The information in this report that relates to Mineral Resources
is based on information compiled by Mr. Phillip Uttley, who is a
Fellow of The Australasian Institute of Mining and Metallurgy.
Phillip Uttley is a full-time employee of St Barbara Ltd and has
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
Exploration Results, Mineral Resources and Ore Reserves”
(JORC Code).
Mr. Uttley consents to the inclusion in the statement of the
matters based on his information in the form and context in
which it appears.
ORE RESERVES STATEMENT AS AT 30 JUNE 2012
The Company’s Total Ore Reserves estimates as at 30 June 2012
totalled 11.97 million tonnes at 6.6 grams per tonne of gold
(g/t Au), containing 2.53 million ounces (Moz) (2011 Reserve:
14.68 million tonnes @ 5.8 g/t Au containing 2.76 Moz). Ore
Reserves are located at Gwalia, King of the Hills, Tower Hill and
the Southern Cross Region. These Ore Reserves are tabulated
in Table 2.
The 2012 Ore Reserve estimates are based on the
following assumptions:
(cid:129) A gold price of A$1,250 per ounce has been used for Gwalia,
King of the Hills and Tower Hill. An average of A$1,400 has
been used for Marvel Loch Underground. Residual surface
stockpiles at Southern Cross have been estimated at a
historical price of A$1,075 per ounce.
(cid:129) Gwalia and King of the Hills have had updated Life of Mine
plans which have been used in this estimate.
(cid:129) Tower Hill has been carried over from the 2011 estimate.
(cid:129) Marvel Loch’s estimate is based on the remaining Life of
Mine with current Ore Reserves to be depleted before end
of 2012 calendar year.
(cid:129) Nevoria has been subject to further studies and its Ore
Reserve status has been confirmed.
The net depletion for the 2012 financial year of 229 koz, in the
context of gold production for the fiscal year of 339 koz, is
attributable to:
(cid:129) 353 koz from mining activities (184 koz at Gwalia, 60 koz
at King of the Hills and 83 koz at Southern Cross, with an
additional 26 koz from stockpiles).
(cid:129) 152 koz of additions at Gwalia and King of the Hills as an
outcome of additional Ore Resource and remodelling.
(cid:129) 20 koz depletion at King of the Hills due to redesign of pillars
associated with the open pit exclusion zone.
(cid:129) 30 koz additional depletion at Southern Cross in response
to changed mining plans.
GWALIA
The overall Gwalia Ore Reserve estimate as at 30 June 2012
has reduced by a net 48 koz, after 184 koz of gold production.
The Ore Reserve grade has reduced slightly to 8.7 g/t Au (2011:
8.9 g/t Au). Increased confidence in reconciliation and modelling
work has been used to update extraction and grade factor, which
have been applied to the 2012 Mineral Resource model to estimate
Ore Reserves. The Ore Reserve estimate comprises a depleted
Grade Control model to 1,420 metres below surface (mbs), with
the 2012 model from 1,420 to 1,800mbs (2011: 1,780mbs).
As at 30 June 2012, based on Ore Reserves and the Life of Mine
plan, the Gwalia mine is expected to have a 9+ year mine life.
KING OF THE HILLS
The Definitive Mining Study for the King of the Hills mine has
been reviewed and updated in response to infill drilling in both
the Eastern and Western Flank Ore bodies. This revised mine
plan includes a 20 koz depletion for pillars associated with the
exclusion zone beneath the historical open pit as well as an
additional 16 koz arising from infill drilling conducted during
the period under review.
TABLE 2: SUMMARY OF PROVED AND PROBABLE ORE RESERVES AS AT 30 JUNE 2012
Category
Region
Leonora
Project
Gwalia Deeps
Tower Hill*
King of the Hills
Proved
Probable
Total
Tonnes (k)
Au g/t
koz Tonnes (k)
Au g/t
koz Tonnes (k)
Au g/t
1,279
8.5
348
5,601
2,699
955
9,255
349
713
1,062
8.8
3.8
5.0
6.9
2.4
4.0
3.1
6.5
1,577
329
153
6,880
2,699
955
2,060
10,534
26
80
355
713
367
107
1,435
2,166
11,969
8.7
3.8
5.0
7.1
2.4
3.5
1.0
2.6
6.6
koz
1,925
329
153
2,407
27
80
12
120
2,527
Total Leonora
Southern Cross
Marvel Loch
Nevoria Underground*
Other (SXO Stock Piles)
Total Southern Cross
Total All Regions
1,279
6
367
373
1,652
8.5
4.9
1.0
1.1
6.8
348
1
12
13
361
10,317
Notes:
(1) Ore Reserves are based on a gold price of A$1,250/oz for Gwalia, King of the Hills, Tower Hill and Nevoria; A$1,400 average for Marvel Loch
Underground.
(2) Mineral Resources are reported as inclusive of Ore Reserves.
(3) All data is rounded to two significant figures. Discrepancies in summations will occur due to rounding.
(4) Other relates to surface stockpiles valued at A$1,075/oz.
(5) * Items in Italics are carried forward from June 2011 Ore Reserve.
16
Competent Persons Statement:
The information in this report that relates to Ore Reserves is based on information compiled by Mr. John de Vries, who is a Member of
The Australasian Institute of Mining and Metallurgy. Mr. de Vries is a full-time employee of St Barbara Ltd and has 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 Exploration Results, Mineral Resources
and Ore Reserves” (JORC Code). Mr. de Vries consents to the inclusion in the statement of the matters based on his information in the
form and context in which it appears.
TABLE 3: ORE RESERVE CHANGES FROM 2011 TO 2012
LEONORA
Gwalia Deeps
1,973
-184
136
2011
koz
Depletion
koz
Addition
koz
2012
koz
1,925
Tower Hill
King of the Hills
329
221
Total Leonora
SOUTHERN
CROSS
Marvel Loch
Nevoria
Underground
Other
Total Southern Cross
Total All Regions
2,523
119
80
34
233
2,756
-184
0
-80
-60
-20
-264
-93
-83
-10
0
-26
-119
-383
136
0
12
12
148
0
0
4
4
2,407
27
80
12
120
152
2,526
Variance
koz Comment
-48 Mining Depletion was partially offset
by ounces added to the Reserve during
the year.
-184 Mining depletion.
136 Re modelling Gwalia deeps from
additional drilling 1420–1800mbs.
329
153
0 No Change carried forward
-68 Mining depletion and revised
mine design.
-60 Mining depletion.
-20 Revised mining plan resulting in
sterilisation of Eastern Flank Crown Pit
Pillar by mining activities completed.
12 Additions from design revision based
on new drilling.
-116
-93 Mining depletion and depletion
of reserve beyond Mine life.
-83 Mining depletion.
-10 Uneconomic depletion of reserve
beyond Mine life.
0 No Change carried forward.
-22 Marvel Loch Open Pit surface stockpile.
-115
-231
Annual Report 2012
17
Corporate Governance
30 June 2012
The Board and Management of St Barbara are committed to
maintaining high standards of ethics, integrity and statutory
compliance in all Company dealings.
This report describes the Corporate Governance framework
in place that underpins the delivery of these objectives, and the
Company’s conformance with the ASX Corporate Governance
Principles and Recommendations (2nd Edition) (“the ASX
Principles and Recommendations”), by reference to each
of the stated principles.
In addition, important governance information including details
on the composition of the Board and Executive Management,
Board related charters, and significant Company policies are
available on the Company’s website at www.stbarbara.com.au.
Principle 1: Lay solid foundations for
management and oversight
The role of the Board is to protect and enhance shareholder
value, approve the Company’s strategic direction, provide
Management with guidance and oversight and foster a culture
of good governance.
In performing its role, the Board at all times endeavours to act:
a. in a manner designed to achieve business success and create
and continue to build long term value for shareholders;
b. recognising its overriding responsibility to act honestly,
fairly and ethically in serving the interests of the Company,
its shareholders, employees, and as appropriate, other
stakeholders; and
c. in accordance with the duties and obligations imposed upon
Directors by the Board Charter and the Company’s
Constitution and applicable law.
The responsibilities of the Board are described in the Board
Charter. Management is responsible for the day to day operation
of the Company which it undertakes within a framework of
specific delegated authority and approval limits.
The performance of each senior executive is formally assessed
each year under the Company’s performance appraisal system
and reviewed by the Board. Further details, including the linkage
to remuneration, are contained in the Remuneration Report.
Principle 2: Structure the Board to add value
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.
Each Director is required to provide advance notice of any actual
or potential conflict of interest relating to business planned
to be considered by the Board. Directors who have declared
a potential or real conflict of interest on a particular issue may
be excluded from all relevant Board deliberations, and from
voting on that issue.
In assessing the independence of Directors, the Board considers
the materiality of any transactions during the year relative to
both the Company and any third party with which a Director
is associated. Whilst Mr Lockyer has advised the Company that
he is also a Non-Executive Director of Swick Mining Services, a
provider of drilling services to the Company, Mr Lockyer abstains
from any Board discussions relating to Swick Mining Services
and is considered by the Board to be independent.
All current Non Executive Directors, including the Chairman,
are considered to be independent. The Managing Director
and CEO is the only Executive Director on the Board.
18
COMPOSITION OF THE BOARD OF DIRECTORS
The Board periodically reviews its own composition, skill set
and capability. The Board considers that the size, nature, scope
and location of the Company’s operations requires a mix of skills
broadly technical, financial and commercial in nature and with
a focus on natural resources. Specifically those skills should
include governance, capital management and capital markets,
mining and exploration, health, safety and environment,
remuneration and policy and strategic planning. In seeking
to ensure that the Board composition reflects and meets those
needs, a broad diversity among directors is also sought based
on age, gender and professional background qualifications
and experience.
Having regard to the importance and relative infrequency of
Board changes, there is no Nomination Committee as such but
rather, the Board retains the nomination responsibility for itself.
When a need to appoint a Director to the Board arises, the Board
reviews its skill sets and needs, and engages an independent
search firm to assist and advise the Board in identifying and
selecting the best candidate for the given vacancy. The assessment
process includes interviews by at least a majority of, if not all,
Board members.
The Board assesses candidates against a range of specific criteria,
including their experience, background, qualifications and
professional skills, potential conflicts of interest, the requirement
for independence and the existing collective skill sets of the Board.
BOARD PERFORMANCE REVIEW
The Board undertook a formal review of its own performance
during the 2011–12 financial year. This followed similar reviews
in the preceding two years. The review was co-ordinated by the
Chairman based on a formal questionnaire to all directors and
senior executives and one on one interviews addressing board,
committee and individual director performance. The outcomes
were formally considered by directors who concluded that the
Board and its committees are functioning well and that there were
no Board performance issues which required any remedial action.
BOARD STRUCTURE
The Board currently comprises Colin Wise (Chairman), Doug Bailey,
Betsy Donaghey, Tim Lehany (Managing Director & CEO),
Phil Lockyer and Robert Rae.
Details of each current Director’s skills, qualifications,
experience, relevant expertise and date of appointment are set
out in the Directors’ Report.
The Board has established a number of standing Board Committees
to provide a forum for a more detailed analysis of key issues
and interaction with Management. Each Committee reports
its recommendations to the next Board meeting. The current
Committees are:
(cid:129) Remuneration Committee;
(cid:129) Audit Committee; and
(cid:129) Health and Safety Committee.
The charter for each committee is available on the Company
website at www.stbarbara.com.au.
In addition, a special purpose Board Committee may be
established for a particular set of circumstances, as appropriate.
REMUNERATION COMMITTEE
The role of the Remuneration Committee is to assist and advise
the Board on matters relating to:
a. The overall remuneration strategies and policies of the
Company; and
b. The remuneration of the Managing Director & CEO, his
senior executive direct reports, employees of the Company,
and Non Executive Directors.
The members of the Remuneration Committee at the date of
this report are Robert Rae (Chair), Doug Bailey, Betsy Donaghey
and Colin Wise.
AUDIT COMMITTEE
The role of the Audit Committee is to assist and advise the
Board on matters relating to:
a. Financial reporting;
b. Financial risk management;
c. Evaluation of the effectiveness of the financial control
environment;
d. Review of the internal and external audit functions; and
e. Review of the Mineral Resource and Ore Reserve estimation
processes.
The members of the Audit Committee at the date of this report
are Doug Bailey (Chair), Phil Lockyer, Robert Rae and Colin Wise.
HEALTH AND SAFETY COMMITTEE
The role of the Health and Safety Committee is to assist and
advise the Board on matters relating to:
a. Promoting a safety conscious culture throughout the Company;
b. Reviewing Health and Safety policies;
c. Reviewing Health and Safety objectives, strategies and
plans; and
d. Monitoring compliance with Health and Safety
regulatory requirements.
The members of the Health and Safety Committee at the date of
this report are Phil Lockyer (Chair), Betsy Donaghey and Colin Wise.
ATTENDANCE AT MEETINGS AND ENGAGEMENT WITH
THE BUSINESS
Details of the number of meetings of the Board and each standing
Committee during the year, and each Director’s attendance at
those meetings, are set out in the Directors Report. Every Director
has a standing invitation to attend any committee meeting and
to receive committee papers.
All Directors visit St Barbara’s mining operations periodically and
meet with Management regularly to gain a better understanding
of the Company’s business.
INDEPENDENT PROFESSIONAL ADVICE AND ACCESS
TO COMPANY INFORMATION.
As specified in the Board Charter and individual letters of
appointment, Directors have the right of access to all Company
information and to the Company’s Management. Subject to prior
consultation with the Chairman, Directors may seek independent
advice on any issue of particular concern from a suitably qualified
adviser, at the Company’s expense.
Principle 3: Promote ethical and responsible
decision making
The Company has implemented a formal set of behavioural
values designed to uphold high standards of integrity and work
performance for the Board, Management, employees, and other
members of the work force. The Company vision and the values
underpinning it are disclosed on the Company’s website.
Employees are accountable for their conduct under a range
of Company policies and procedures, including safety, environment,
equal opportunity, continuous disclosure and trading in Company
securities. Employees and contractors are also made aware of
acceptable behaviour through induction programs, on-going
training and development and contact with senior staff who
are encouraged to lead by example.
Procedures are in place to record and publicly report each
Director’s shareholdings in the Company.
The Company Secretary is responsible for investigating any reports
of unethical practices and reporting the outcomes to the Managing
Director & CEO or the Board, as appropriate.
The Company has not enshrined its values into a formal code
of ethics at this time as it considers that all matters describing,
prescribing and underpinning ethical behaviour are contained
in the values and key policies outlined above.
DIVERSITY
The Company implemented a Diversity Policy during the 2011
financial year which is available on the Company’s website
at www.stbarbara.com.au. The Policy was reviewed by the
Board during the year to ensure it remains appropriate and
is operating effectively.
The measurable gender diversity objectives endorsed by
the Board for the year, and the progress made against those
objectives during the year, are as follows:
1. Increase the proportion of women employed by St Barbara
from 17% to 19%, by 31 July 2014. During the year the
number of women employed at St Barbara increased
from 44 to 54. This resulted in the proportion of women
increasing to 19.6 percent by 30 June 2012.
2. Reduce the Overall Pay Equity Gap at St Barbara to 20%,
by 31 July 2014. During the year the median pay for women
increased and the Overall Pay Equity Gap reduced to 17.7 percent.
3. Increase the percentage of women who return to work after
a period of Maternity Leave to at least 66.6%, by 31 July 2014.
Positive progress has been made with the only woman taking
a period of Parental Leave over the review period, returning
to work after nine months of Parental Leave. Furthermore,
the three women who are currently taking a period of Parental
Leave in 2012 have all expressed a desire to return to work,
therefore it is highly likely the target of 66.67% will be
achieved or exceeded.
4. By 30 June 2012, develop and implement a Talent Taskforce
for the purposes of attracting and retaining a talented and
diverse workforce.
A Talent Taskforce was established during the year to support
executives in:
(cid:129) understanding the talent-related issues the Company
is facing and is likely to face in the future;
(cid:129) identifying and ranking options to best position St Barbara for
accessing the necessary talent to deliver our business strategy;
Annual Report 2012
19
Corporate Governance cont.
30 June 2012
The following table shows the number of men and women on the Board, in Executive roles and in the workforce:
St Barbara Limited Gender Statistics Financial Year 12
Board
Senior Executives
Whole Organisation
Total
No. of Men
% Men
No. of Women
% Women
5
5
275
4
5
221
80%
100%
80%
1
0
54
20%
0%
20%
Notes:
(1) Gender Statistics are as at 30 June 2012.
(2) The Board excludes the role of Managing Director & CEO.
(3) Senior Executives includes the role of Managing Director & CEO and the four most senior executives.
(4) Whole Organisation includes the Managing Director & CEO but does not include other Board members.
Principle 4: Safeguard integrity
in financial reporting
The function of the Audit Committee includes responsibility
on behalf of the Board for reviewing the integrity of financial
reporting. The Audit Committee reviews the principles governing
the Company’s relationship with its external auditor. The
Board considers that the external auditor’s process of partner
rotation is sufficient to maintain independence of the external
audit function.
The Company has also initiated an internal audit function to
review, independently of the external auditor, key financial
controls and systems. That function is managed by an independent
accounting firm which reports directly to the Audit Committee.
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
of the ASX Listing Rules and Corporations Act 2001 (Cth).
The Company has implemented, and periodically updates,
a Continuous Disclosure and External Communication Policy
to ensure that information considered material to the share price
is lodged with the ASX as soon as practicable and within ASX
Listing Rule timelines.
Other relevant information, including Company presentations,
are also subject to a structured process of internal review, disclosed
to the ASX and posted on the Company’s website.
Principle 6: Respect the rights of shareholders
The Company has a practice of regular engagement with
shareholders in Australia and overseas and conducts regular
analyst briefings. These activities are supported by the publication
of the Annual Report, Quarterly Reports, public announcements
and the posting of ASX releases on the Company website
immediately after their disclosure on the ASX. Shareholders
can elect to receive email notification of announcements.
Shareholders are encouraged to attend the Annual General
Meeting and any other meetings of shareholders, to use the
opportunity to ask questions and personally vote on shareholder
resolutions. The external auditor attends the Annual General
Meeting and is available to answer questions in relation to the
audit of the financial statements.
Principle 7: Recognise and manage risk
Risk assessment and management are central to how the Company
conducts its business through an enterprise wide risk management
framework which delivers enhanced risk reporting and control
mechanisms designed to ensure that strategic, operational,
legal, reputational, financial and other risks are identified,
assessed and managed.
The financial reporting and control mechanisms are reviewed
during the year by Management, the Audit Committee, the
internal audit function and the external auditor. The Board
receives an annual declaration from the Managing Director
and the Chief Financial Officer in accordance with section 295A
of the Corporations Act 2001 (Cth) that the Company’s financial
statements are founded on a sound system of risk management
and internal control and that the system is operating effectively
in all material respects in relation to financial reporting risks.
The Company has policies to manage risk in the areas of Health
and Safety, Environment and Equal Employment Opportunity.
The Board regularly reviews the high level risks within the
business and the effectiveness of the Company’s management
of those risks.
Principle 8: Remunerate fairly and responsibly
The Remuneration Committee provides recommendations
to the Board on the remuneration of the Managing Director
& CEO, other senior executives and Non-Executive Directors.
The Committee also reviews and approves all remuneration
consultancy contracts for key management personnel
remuneration and receives any remuneration recommendations.
NON-EXECUTIVE REMUNERATION
The remuneration of the Non Executive Directors is in the form
of fixed fees consistent with their independence and impartiality.
There are no retirement benefits paid to Non Executive Directors.
Independent expert remuneration advice is considered from
time to time in determining remuneration for the Chairman
and Non-Executive Directors, respectively.
EXECUTIVE REMUNERATION
The Remuneration Committee provides recommendations to the
Board on all aspects of executive remuneration including fixed
remuneration, short term incentives and long term incentives.
It utilises independent expert advice and surveys as appropriate
to benchmark remuneration against contemporary resources
industry data.
Further details of Director and Executive Management remuneration
for the 2012 financial year are set out in the Directors’ Report.
20
Financial Statements
22 Directors’ Report
47 Consolidated Cash Flow Statement
41 Auditor’s Independence Declaration
48 Notes to the Consolidated Financial Statements
43 Consolidated Income Statement
87 Directors’ Declaration
44 Consolidated Statement of Comprehensive Income
88 Independent Audit Report
45 Consolidated Statement of Financial Position
90 Shareholder Information
46 Consolidated Statement of Changes In Equity
92 Corporate Directory
Annual Report 2012
21
Directors’ Report
The Directors present their report on the Group “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 2012.
Directors
The following persons were Directors of St Barbara Limited at any time during the year and up to the date of this report:
(cid:129) S J C Wise
Chairman
(cid:129) T J Lehany
Managing Director & CEO
(cid:129) D W Bailey
Non-executive director
(cid:129) E A Donaghey Non-executive director
(cid:129) P C Lockyer
Non-executive director
(cid:129) R K Rae
Non-executive director
The qualifications, experience and special responsibilities of the Directors are presented on pages 27 to 28.
Principal activities
During the year the principal activities of the Group were mining and the sale of gold, mineral exploration and development. There
were no significant changes in the nature of activities of the Group during the year.
Dividends
There were no dividends paid or declared during the financial year.
Overview of Results
St Barbara completed the 2012 financial year in a strong financial position, reporting a Statutory Profit of $130,230,000
(2011: $68,629,000) for the year ended 30 June 2012, which included significant items amounting to a net loss of $552,000
(2011: net gain of $14,198,000), cash on hand at 30 June 2012 of $185,242,000 (2011: $79,485,000) and total interest bearing
borrowings of $4,256,000 (2011: $12,072,000).
The underlying net profit after tax for the year was $130,782,000 (2011: $54,431,000). The consolidated result for the year
is summarised as follows:
Sales revenue
EBITDA (3) (including significant items)
EBIT(2) (including significant items)
Statutory Profit(1) after tax for the year
Total net significant items
EBITDA (3) – excluding significant items
EBIT(2) – excluding significant items
Underlying net profit after tax(4) for the year
30 June 12
$’000
30 June 11
$’000
541,189
204,034
106,811
130,230
(552)
218,963
128,094
130,782
359,575
125,538
67,058
68,629
14,198
111,340
52,860
54,431
(1) Statutory Profit is net profit after tax attributable to owners of the parent.
(2) EBIT is earnings before interest revenue, finance costs and income tax expense.
(3) EBITDA is EBIT before depreciation and amortisation.
(4) Underlying net profit after tax is net profit after income tax (“Statutory Profit”) excluding significant items.
(5) EBIT, EBITDA and underlying net profit after tax are non-IFRS financial measures, which have not been subject to review or audit by the Group’s external
auditors. These measures are presented to enable understanding of the underlying performance of the Group.
The significant items in the year ended 30 June 2012 comprised a net realised/unrealised loss on gold put and call options of $5,400,000,
expenses associated with the Allied Gold acquisition of $5,664,000, an impairment write off of Southern Cross assets of $10,219,000,
and an income tax benefit of $20,731,000.
22
Details of significant items included in the Statutory Profit for the year are as follows:
Unrealised (loss)/gain on gold options (1)
Realised gain on gold options (1)
Expenses associated with acquisitions(2)
Asset impairment write-down (3)
Profit on sale of Tarmoola processing plant
Proceeds from sale of tenement rights
Native Title accrual
Significant items before tax
Income tax benefit(4)
30 June 12
$’000
30 June 11
$’000
(6,102)
702
(5,664)
(10,219)
–
–
–
(21,283)
20,731
12,946
525
–
–
1,164
1,963
(2,400)
14,198
–
Total significant items – net (loss)/profit after tax
(552)
14,198
(1) At 30 June 2012 the mark-to-market value of the Company’s gold put and call options (collar structure) was negative $16,290,000 (June 2011: negative
$8,101,000). The put and call options at 30 June 2012 represent price protection for 175,000 ounces of King of the Hills production, and 20,000 ounces
for Southern Cross production (June 2011: King of the Hills: 238,000 ounces; Southern Cross: nil ounces). In accordance with accounting standards the
net unrealised loss, representing the movement in the time value of the gold options during the year, amounting to $6,102,000, was recognised in the
income statement (2011: unrealised gain of $12,946,000). The net realised gain of $702,000 represents the unwinding of the unrealised mark-to-market
loss previously recognised for gold options that were exercised or expired during the year (2011: realised gain of $525,000). The unrealised loss related to
the movement in the intrinsic value of the gold options in the year of $3,054,000 (2011: gain of $17,102,000) was recognised in the gold cash flow hedge
reserve in equity, with a realised gain of $264,000 recognised in the reserve for options that were exercised or expired during the year. Over time,
unrealised losses on the gold options recognised in the income statement will reverse either through a change in the mark-to-market value of the options
or maturity of the contracts.
(2) During the year, the Company engaged various consultants to assist with completing the due diligence and in making an offer for Allied Gold (refer Note
33 of the Financial Statements for further details of the Allied Gold transaction).
(3) Based on an assessment of the Southern Cross operations cash generating unit (“CGU”) at 30 June 2012, an impairment write down was taken against
assets of the CGU. While the Southern Cross operations are expected to generate positive net cash flows in the remaining period to closure, the cash flow
estimates no longer support the full recovery of the carrying value of the Southern Cross CGU assets, including deferred mine operating development
expenditure ($3,865,000), capitalised mine development ($1,723,000), plant and equipment ($3,901,000) and capitalised exploration and evaluation
expenditure ($730,000).
(4) At 30 June 2011, the Group had unbooked tax losses of $182,258,000 (before tax effect) – these losses were not booked as it was not probable at that
time that future taxable profits would be generated to utilise these losses. At 30 June 2012, based on current operational forecasts, it is now probable that
future taxable profits will be generated to utilise the Group’s tax losses. The credit of $20,731,000 recognised as an income tax benefit represents the
booking of the tax effect of remaining losses at 30 June 2012 which were not previously booked.
Discussion and Analysis of Operating Results and the Income Statement
For the year ended 30 June 2012 St Barbara reported an underlying profit after income tax of $130,782,000 (2011: $54,431,000),
representing a substantial improvement on the previous year. The significant improvement compared with the prior year was the result
of increased gold sales from Gwalia and King of the Hills, with 2012 being the first full year of operations at King of the Hills, and a
stronger gold price.
The Group’s focus during the year continued to be increasing production at the Gwalia and King of the Hills underground mines at
Leonora, achievement of profitable production at the Southern Cross operations and exploration for gold close to existing operations
at Leonora and Southern Cross.
Annual Report 2012
23
Directors’ Report cont.
Financial performance
Total sales revenue of $541,189,000 (2011: $359,575,000) was generated from gold sales of 335,787 ounces (2011: 257,653 ounces)
at an average achieved gold price of A$1,603 per ounce (2011: A$1,387 per ounce). Total production for the period was 338,879
ounces (2011: 258,474 ounces), with Leonora operations contributing 241,487 ounces (2011: 138,199 ounces) and Southern Cross
operations 97,392 ounces (2011: 120,275 ounces). A summary of the production performance for the year ended 30 June 2012 is
provided in the table below.
DETAILS OF 2012 PRODUCTION PERFORMANCE
Underground Ore Mined t
Grade
Ore Milled
Grade
Recovery
Gold Production
Cash Cost(1)
Total Cost(1)
(1) Before significant items
g/t
t
g/t
%
oz
A$/oz
A$/oz
Southern Cross
Gwalia
King of the Hills
2011/12
892,365
2.9
2010/11
1,161,078
3.2
2011/12
662,300
8.8
2010/11
647,546
6.3
2011/12
457,375
4.1
1,842,820
1,199,627
716,640
648,212
452,941
1.9
89
97,392
1,199
1,482
3.4
92
8.3
97
6.3
96
120,275
184,534
131,133
890
1,060
646
882
765
1,020
4.1
94
56,953
753
1,051
2010/11
65,819
4.5
50,105
4.6
95
7,066
699
997
GWALIA
SOUTHERN CROSS
Gold production from the Gwalia underground mine in the year
was 187,023 ounces (2011: 131,133 ounces), which was a
significant increase on the prior year. As the mine reached its
long term sustainable production rate, the higher production
was due mainly to an increase in the average grade of ore
mined as ore sources moved into the higher grade South West
Branch. The South West Branch is expected to be the principal
ore source for the foreseeable future. The Leonora processing
plant continued to perform well during the year and achieved
average recoveries of 97%. A small quantity of low grade ore
from Tower Hill stockpiles and Gwalia mineralised waste were
treated during the year to capitalise on plant capacity. Gwalia unit
cash costs for the year were $646 per ounce (2011: $765 per
ounce), reflecting the benefit of higher production. Total Cash
Operating Costs at Gwalia (1) of $119,158,000 were higher
compared with the prior year (2011: $100,373,000), due
mainly to increased mining activity and higher production.
KING OF THE HILLS
After commencing production in April 2011, the King of the Hills
mine produced 60,235 contained ounces in the year ended
30 June 2012. During the year, 452,941 tonnes of King of the
Hills ore was processed through the Gwalia processing plant
producing 56,953 ounces. The King of the Hills unit cash costs
for the year were $753 per ounce, which was in line with
expectations. Total Cash Operating Costs at King of the Hills
were $42,870,000 (2011: $4,941,000), reflecting the fact that
the 2012 financial year was the first full year of production.
(1) Cash Operating Costs are mine operating costs including government
royalties, and after by-product credits. This non-IFRS financial
information is presented to provide meaningful information to assist
management, investors and analysts in understanding the results of the
operations. Cash Operating Costs are calculated according to common
mining industry practice using The Gold Institute (USA) Production Cost
Standard (1999 revision).
Southern Cross operations generated positive cash flows as the
Marvel Loch mine approaches the end of its mine life. For the
year ended 30 June 2012, Southern Cross operations generated
positive net cash flows of $22,852,000. The Marvel Loch
underground mine produced 82,346 ounces (2011: 120,275
ounces) in the year. The lower production compared with the
prior year was due to lower tonnes mined from Marvel Loch
at a lower grade. To offset the lower production from Marvel
Loch underground the operations processed 944,237 tonnes
of existing low grade stockpiles from satellite mine sites, which
reduced the overall milled grade to 1.9 grams per tonne for the
year (2011: 3.4 grams per tonne). The Southern Cross Operations
unit cash costs for the year were $1,199 per ounce before
significant items (2011: $890 per ounce), reflecting the impact
of the lower production and grade. Total Cash Operating Costs
were $116,819,000 (2011: $107,081,000) for the year, with
the higher costs compared with prior year attributable to the
increase in ore milled.
As at 30 June 2012 an impairment write off of $10,219,000
(before income tax) was taken against the assets of the Southern
Cross operations cash generating unit (“CGU”). The remaining
life of the Marvel Loch underground mine is expected to end in
October 2012 and the processing plant will be placed on care
and maintenance in November 2012. While the operations are
expected to generate positive net cash flows in the remaining
period to closure, the cash flow estimates no longer support
the full recovery of the carrying value of the assets.
CORPORATE AND DISCOVERY & GROWTH
Exploration and evaluation expenditure in the year amounted
to $20,821,000 (2011: $22,147,000), of which $16,246,000
(2011: $13,284,000) was expensed in the income statement.
Capitalised exploration in the year was in relation to the deep
drilling program at the Gwalia mine.
24
During the year, the Company incurred $5,664,000 in costs
associated with the Allied Gold acquisition. The majority of the
expenditure in the year relates to legal, financial and technical
consultants engaged to assist with due diligence.
Discussion and Analysis of the Cash Flow
Statement
OPERATING ACTIVITIES
Corporate administration costs for the year of $13,732,000
(2011: $13,819,000) comprised mainly expenses relating
to the corporate office and compliance costs.
Royalty expenses for the year were $22,078,000 (2011:
$13,693,000), reflecting the impact of higher gold sales revenue
from increased production and a higher average achieved gold
price. This expense represents gold royalties paid to the Western
Australian Government and a third party corporate royalty,
which equated to a charge of $66 per ounce sold.
Other revenue of $6,779,000 (2011: $9,382,000) comprised
mainly interest earned during the year of $6,442,000 (2011:
$5,611,000). The prior year included third party toll treatment
revenue of $3,422,000.
Other income for the year of $922,000 (2011: $4,449,000)
included $550,000 representing the recovery of legal costs in
relation to the Eshuys litigation. Other income in the prior year
included the sale of the Tarmoola plant; the sale of excess
tenements in the Leonora region; and the recovery of legal costs
in relation to the Kingstream litigation.
Depreciation and amortisation of fixed assets and capitalised
mine development and exploration amounted to $97,223,000
(2011: $58,480,000) for the year. Depreciation and amortisation
attributable to Gwalia was $45,200,000 (2011: $35,092,000),
King of the Hills was $17,168,000 (2011: $2,107,000), and
Southern Cross was $33,824,000 (2011: $20,443,000), with
the balance associated with corporate and exploration activities.
The higher depreciation and amortisation charge in the year
at Gwalia and King of the Hills was attributable to the higher
production compared with the prior year. Included within the
Southern Cross depreciation and amortisation expense was an
impairment write off of $6,354,000. The remaining increase
in the Southern Cross depreciation and amortisation expense
reflected the increase in mine development amortisation as
the mine nears the end of its life.
Net finance costs in the year were $3,754,000 (2011: $4,040,000),
representing the unwinding of the discount on the rehabilitation
provision of $2,890,000, and interest expenses on finance
leases and the bank guarantee facility for environmental bonds.
A net realised/unrealised loss of $5,400,000 (2011: gain of
$13,471,000) was recognised in the income statement for
the year, representing the movement in the mark-to-market
valuation of the Company’s gold put and call options (collar
structure). The collar structure is a cash flow hedge, which as
at 30 June 2012 provides price protection for 175,000 ounces
of King of the Hills production to June 2015 and 20,000 ounces
of Southern Cross production to September 2012. Accounting
standards require movements in the time value of the collar
structure to be recognised in the income statement at each
reporting date.
Cash flows from operating activities for the year were
$221,827,000 (2011: $103,073,000), representing a significant
increase compared to the prior year. Increased operating cash
flows were attributable to higher receipts from customers,
reflecting the benefit of higher gold sales. Payments to suppliers
and employees were higher than the prior year at $320,465,000
(2011: $241,716,000) due mainly to increased production at
Gwalia and a full year of production at King of the Hills.
Payments for exploration expensed in the year amounted to
$16,246,000 (2011: $13,284,000), with the higher amount
expensed attributable to a lower level of capitalised expenditure
compared with the prior year. Interest received of $5,555,000
(2011: $5,122,000) was higher than in the prior year due to the
increased level of cash on hand during the year. Interest paid in
the year was $65,000 (2011: $37,000).
INVESTING ACTIVITIES
Net cash flows used in investing activities amounted to
$104,971,000 (2011: $122,382,000) for the year. Lower
expenditure in the year was attributable to the reduction in
development expenditure at Gwalia and Southern Cross, and
the fact that the King of the Hills mine was developed and
commissioned in the prior year. Exploration and evaluation
expenditure capitalised of $4,575,000 (2011: $8,863,000)
largely represented drilling to extend resources at the Gwalia
mine. Investing expenditure during the year was in the following
major areas:
(cid:129) Underground mine development and infrastructure at Gwalia:
$44,059,000 (2011: $49,302,000);
(cid:129) Underground mine development and infrastructure at Marvel
Loch: $13,987,000 (2011: $23,383,000);
(cid:129) Underground mine development and infrastructure at King
of the Hills: $22,711,000 (2011: $33,598,000);
(cid:129) Purchase of property, plant and equipment at the operations:
$19,457,000 (2011: $12,207,000); and
(cid:129) Exploration and evaluation capitalised: $4,575,000
(2011: $8,863,000).
FINANCING ACTIVITIES
Net cash flows from financing activities were an outflow
of $11,099,000 (2011: outflow of $3,363,000), with major
movements in cash flows including:
(cid:129) Payments for share buy-backs in February and March 2012
of $2,239,000 (2011: Nil);
(cid:129) Scheduled repayments of insurance premiums, leasing and
equipment financing facilities amounting to $4,452,000
(2011: $7,005,000);
(cid:129) Repayment of the outstanding balance of an asset financing
facility of $6,963,000 (2011: Nil); and
(cid:129) Proceeds for funding asset purchases and insurance
premiums totalling $3,227,000 (2011: $4,299,000).
Annual Report 2012
25
Directors’ Report cont.
Discussion and Analysis of the Statement
of Financial Position
NET ASSETS AND TOTAL EQUITY
St Barbara’s net assets and total equity increased during the year
by $127,486,000 to $563,833,000, due mainly to the net profit
after tax earned in the year of $130,230,000.
The available cash balance at 30 June 2012 was $185,242,000
(2011: $79,485,000).
A net deferred tax asset of $22,215,000 was recognised at
30 June 2012 (2011: Nil). The recognition of the net deferred
tax asset is largely attributable to the booking of previously
unrecognised tax losses. These losses have been booked on
the basis that current operational forecasts indicate that is it
probable that future taxable losses will be generated to utilise
the tax losses booked.
Property, plant and equipment, mine properties and
capitalised exploration had a combined value at 30 June 2012
of $409,049,000 (2011: $401,370,000). The increase of
$7,679,000 was due mainly to mine development expenditure
at Leonora and capitalised exploration.
Trade and other payables increased to $55,542,000 at
30 June 2012 (2011: $49,366,000) reflecting the higher
level of expenditure, mainly at Leonora.
Derivative financial liabilities increased to $16,377,000 at
30 June 2012 (2011: $10,468,000) reflecting the change in the
net fair value of the gold put and call options. These derivative
financial liabilities will reverse over time as the options mature.
NET DEBT
Net debt, comprising total borrowings less cash on hand, was
net cash of $180,986,000 at 30 June 2012 (2011: net cash of
$67,413,000). As at 30 June 2012 total interest bearing
borrowings amounted to $4,256,000 (30 June 2011:
$12,072,000), including lease facilities of $2,016,000 and
insurance premium funding of $1,976,000. The decrease in
interest bearing borrowings in the 2012 financial year represents
the repayment of the GE asset financing facility in August 2011.
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:
A) NET PROFIT FOR THE YEAR
The Group reported a net profit after tax for the year of
$130,230,000, which reduced the accumulated losses of the
Group to $48,977,000 at 30 June 2012.
B)
IMPAIRMENT WRITE OFF
At 30 June 2012 the Group recognised an impairment write off
in relation to plant and equipment, deferred mine operating
development expenditure, capitalised mine development
expenditure and capitalised exploration and evaluation expenditure
at Southern Cross amounting to $10,219,000 before income tax.
C)
INCREASE IN NET ASSETS
The Group’s net assets increased by $127,486,000 during the
year due mainly to net profit after tax and a reduction in the
26
gold cash flow hedge reserve. At 30 June 2012, the Company
booked a net deferred tax asset of $22,215,000 relating to tax
losses which had previously not been recognised.
D) CHANGES IN ISSUED CAPITAL
During February and March 2012, the Company bought back
995,000 shares at an average price of $2.25 per share, reducing
share capital by $2,239,000.
Likely developments and expected results
of operations
The Company will continue to focus on achieving profitable
production with an emphasis on value adding growth. The
current remaining mine life of the Southern Cross operations
is four months with the processing plant expected to be placed
on care and maintenance in November 2012. The Leonora
operations will continue as a high margin, long life production
centre for the Company.
On 29 June 2012, it was announced that St Barbara and Allied
Gold Mining Plc (“Allied Gold”) had reached agreement to
combine the two companies through a scheme of arrangement.
Under the terms of the offer, St Barbara will acquire the entire
issued and to be issued ordinary share capital of Allied Gold for
$1.025 in cash, and 0.8 St Barbara shares for each Allied Gold
share. Based on the closing price of St Barbara shares on the
Australian Securities Exchange on 28 June 2012, being the last
trading day before the announcement, the offer values Allied
Gold at $556 million.
Funding the cash component of the offer, amounting to
approximately $209 million, will be from St Barbara’s existing
available cash reserves and a $120 million four year term facility
from National Australia Bank and Barclays Bank Plc.
On 14 August 2012, the shareholders of Allied Gold voted in
favour of the scheme of arrangement. The court hearing in the
UK to sanction the scheme is to be held on 30 August 2012.
The effective date of the combination, subject to court approval,
is expected to be by 7 September 2012.
Management will review the Allied Gold operations after the
combination is approved to determine the expected financial
results of the operations and likely developments.
Further information about anticipated developments in the
operations of St Barbara and the anticipated results of those
operations in future financial years have not been included
in this report because there is insufficient certainty to
warrant disclosure.
Regulatory environment
The Company’s mining activities are all in Western Australia
and are governed by Western Australian legislation, including
the Mining Act 1978, the Mines Safety and Inspection Act 1994,
Dangerous Goods Safety Act 2004 and other mining related
and subsidiary legislation. The Group is subject to significant
environmental regulation, including, inter alia, the Western
Australian Environmental Protection Act 1986, Contaminated
Sites Act 2003, Wildlife Conservation Act 1950, Aboriginal Heritage
Act 1972 and the Commonwealth Environmental Protection and
Biodiversity Conservation Act 1999, as well as safety compliance
in respect of its mining and exploration activities.
The Company is registered pursuant to the National Greenhouse
and Energy Reporting Act 2007 under which it is required to
report energy consumption and greenhouse gas emissions for
its operations for the twelve months ending 30 June. St Barbara
also reports to Government pursuant to both the Energy Efficiency
Opportunities Act 2006 and the National Environmental Protection
(National Pollutant Inventory) Measure (subsidiary legislation to
the National Environmental Protection Measures (Implementation)
Act 1998). The Company has established data collection
systems and processes to meet these reporting obligations.
In addition, the Company’s Australian operations will be
required to comply with the Australian Federal Government’s
Clean Energy Act 2011, which has been enacted as at the date
of this report to apply from 1 July 2012.
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 resources, energy and corporate
sectors. 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 extensive practical experience in
Australia and internationally with a wide range of corporate,
operational and legal matters.
He has been Chairman of St Barbara since mid 2004, and is
a Fellow of both the Australian Institute of Company Directors
and the Australasian Institute of Mining and Metallurgy. Until
recently he was a member of the Advisory Board to the Dean
of Medicine, Nursing and Health Sciences at Monash University
and was a Non Executive Director for 5 years of Southern
Health, the largest health care service in Victoria, Chair of its
Quality Committee, and a member of the Audit Committee.
Other current public company directorships
Straits Resources Limited
Former public company directorships in last 3 years
Nil
Special responsibilities
Chairman of the Board
Member of the Remuneration, Audit and Health & Safety
Committees
Interest in shares and options
Mr Wise has a relevant interest in 1,139,389 fully paid ordinary
shares of the Company.
TIMOTHY J LEHANY B.E., MBA, MAusIMM
Managing Director and Chief Executive Officer
Mr Lehany is a mining engineer with extensive operating
experience over the past twenty years with a number of mining
companies, including Newcrest Mining Ltd and WMC Ltd.
His roles covered gold, base metal and nickel mines.
Special responsibilities
Nil
Interest in shares and options
Mr Lehany has a relevant interest in 167,822 fully paid ordinary
shares and holds 976,220 unlisted options to acquire fully paid
ordinary shares, subject to performance hurdles, and holds
1,217,440 performance rights that will convert into shares
subject to performance hurdles. The details of the unlisted
options and performance rights are provided 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 was also a
Non Executive Director of Aurora Gold Ltd for the period
1993–2000.
Other current public company directorships
Tap Oil Limited
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 30,247 fully paid ordinary shares.
ELIZABETH A (BETSY) DONAGHEY B.Sc(Eng) M.S
Non Executive Director
Ms Donaghey is a civil engineer with extensive oil & gas industry
and corporate experience. This included roles with BHP Billiton
for 19 years in gas marketing, reservoir engineering and
business planning and analysis.
Ms Donaghey also spent 9 years with Woodside Energy
in various senior gas business and strategic planning roles,
culminating in Ms Donaghey’s executive leadership of Woodside
Energy’s Australian business unit, with assets generating annual
revenue exceeding $1 billion and new projects with $1.5 billion
capital investment and, subsequently, the business unit
developing the Browse LNG project.
Ms Donaghey is a member of the Board of the Australian
Renewable Energy Agency, an independent statutory authority
established by the Commonwealth Government.
Other current public company directorships
Imdex Limited
Former public company directorships in last 3 years
Nil
Special responsibilities
Member of the Remuneration and Health & Safety Committees
Other current public company directorships
Interest in shares and options
Nil
Former public company directorships in last 3 years
Nil
Ms Donaghey has a relevant interest in 40,000 fully paid
ordinary shares of the Company.
Annual Report 2012
27
Directors’ Report cont.
PHILLIP C LOCKYER M.Sc, AWASM, DipMETALL
Non Executive Director
Other current public company directorships
McClintock Associates Securities Limited
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
Focus Minerals Limited
Western Desert Resources Limited
Swick Mining Services Limited
CGA Mining Limited
Former public company directorships in last 3 years
Nil
Special responsibilities
Chairman of the Health & Safety Committee
Member of the Audit Committee
Interest in shares and options
Mr Lockyer has a relevant interest in 20,631 fully paid ordinary
shares of the Company.
ROBERT K RAE B.Com (Hons), FAICD
Non Executive Director
Mr Rae is a Director and Partner of McClintock Associates, a
private investment bank and advisory firm and has extensive
industry and corporate experience. Mr Rae has held previous
directorships within the mining industry, including Plutonic
Resources Limited, Ashton Mining Limited, WA Diamond Trust
and Centralian Minerals Limited. Mr Rae is also a member of
the Salvation Army Advisory Board.
SCEGGS Darlinghurst Limited
SHEM Limited
Former public company directorships in last 3 years
Nil
Special responsibilities
Chairman of the Remuneration Committee
Member of the Audit Committee
Interest in shares and options
Mr Rae has a relevant interest in 48,976 fully paid ordinary
shares of the Company.
Qualifications and experience of the
company secretary
ROSS J KENNEDY BComm, Grad.Dip – Company Secretarial
Practice, ACA, FTIA, MAusIMM, FAICD, ACIS
Company Secretary
Mr Kennedy has more than 25 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, corporate governance, finance, accounting,
commercial negotiations, takeovers, legal contracts, land
management, human resources, statutory compliance and
public reporting.
Meetings of Directors
The number of meetings of Directors (including meetings
of Committees of Directors), and the numbers of meetings
attended by each of the Directors of the Company during
the financial year was:
S J C Wise
T J Lehany
D W Bailey
P C Lockyer
R Rae
E A Donaghey
Board
Audit Committee
Remuneration
Committee
Health & Safety
Committee
A
10
11
11
11
11
11
B
11
11
11
11
11
11
A
3
–
3
3
3
–
B
3
–
3
3
3
–
A
5
–
5
–
5
5
B
5
–
5
–
5
5
A
3
–
–
3
–
3
B
3
–
–
3
–
3
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
28
Remuneration report (Audited)
INTRODUCTION
This Remuneration Report forms part of the Directors Report
for the year ended 30 June 2012. It describes the alignment
of remuneration strategies with Company strategies for value
creation, remuneration related decision making authorities
within the Company and the remuneration principles that
applied for the 2012 financial year. The Report also provides
details of remuneration paid for the 2012 financial year to
Directors and senior executives; collectively referred to as
Key Management Personnel.
OVERVIEW OF CONTENTS
1. Strategy and industry context;
2. Decision making authorities for remuneration at St Barbara;
3. Principles applied in determining the structure and amount
of remuneration;
4. Company performance;
5. Details of remuneration paid; and
6. Summaries of service agreements for Executive Key
Management Personnel.
1. Strategy and Industry Context
COMPANY STRATEGY
The Company’s strategies for the 2012 financial year have been
to build on existing organisational capabilities and business
systems to reliably underpin sustained long term profitability
and cash generation from the Company’s existing gold assets,
and to create opportunities for further growing value per share.
In particular:
(cid:129) Delivering consistent and reliable operational performance;
(cid:129) Creating and sustaining a safe working environment;
(cid:129) Maintaining effective community relations;
(cid:129) Delivering superior returns on assets;
(cid:129) Optimising cash flow from operations including driving
Gwalia cash operating costs lower to improve margins;
July
(cid:129) Pursuing organic growth through mine life extension for the
Gwalia mine;
(cid:129) Pursuing growth through acquisition of value accretive gold
mineral resources, ore reserves, prospective exploration land
prospects, and/or production capacity in the Australasian region;
(cid:129) Pursuing exploration discoveries with potential for more than
1 million ounces of gold; and
(cid:129) Continuing to develop organisation capability as a core
competency for competitive advantage.
INDUSTRY CONTEXT
The Company is a gold producer with revenue for the 2012
financial year of $541,189,000 and operates predominantly
in Western Australia with three operating underground mines
and two processing plants. As at 30 June 2012, the Company
workforce was comprised of 275 employees and 644
contractors. The Company competes for labour within the
broader Australian resources sector and benchmarks its
remuneration systems and levels against comparable
companies in Australia.
REMUNERATION STRATEGY
The objectives of the Remuneration strategy for the 2012
financial year, consistent with the Company Strategy, were
to ensure that:
(cid:129) total remuneration for senior executives and each level
of the workforce was market competitive;
(cid:129) key employees were retained;
(cid:129) total remuneration for executives and managers comprised
an appropriate proportion of fixed remuneration and
remuneration at risk;
(cid:129) remuneration “at risk” encouraged and rewarded high
performance aligned with value creation for shareholders,
through an appropriate mix of short and long term
incentives;
(cid:129) the integrity of the remuneration review processes delivered
fair and equitable outcomes; and
(cid:129) remuneration for Non Executive Directors preserved their
independence by being in the form of fixed fees.
The remuneration strategy, policy and structure are essentially
unchanged from the previous reporting period and are directly
linked to the development of strategies and budgets in the
Company’s annual planning cycle:
Month
Financial/Strategy
Remuneration
October
Annual strategy update
January
February
Half Year Financial Report
April
Budget setting framework
Review STI & LTI
design framework
Agree
Remuneration
Review
Framework
Agree STI Targets
for following
financial year
Measure STI
outcomes and
determine award
Award LTI grants
Shareholder
approval of LTI
Grant
August
Annual Financial Report
October
Annual Report
November Annual General Meeting
KEY DEVELOPMENTS
On 29 June 2012, the Company announced that agreement
had been reached with Allied Gold Mining Plc to combine the
two companies through a scheme of arrangement on terms
considered to be value enhancing for shareholders of both
companies. Under the terms of the Offer, St Barbara will acquire
the issued capital of Allied Gold Mining Plc for consideration of
0.8 St Barbara shares plus A$1.025 cash for each Allied Gold
Mining Plc share.
Annual Report 2012
29
Directors’ Report cont.
On 14 August 2012, the shareholders of Allied Gold Mining Plc
voted in favour of the scheme of arrangement. The scheme is
due to be sanctioned by a UK court on 30 August 2012. Subject
to this approval, St Barbara anticipates the combination will be
effective by 7 September 2012. Further information is available
on the Company’s website at www.stbarbara.com.au
The King of the Hills mine at Leonora, which commenced gold
production in May 2011, achieved sustainable long term gold
production rates in the 2012 financial year. The Gwalia mine,
also at Leonora, achieved a significant increase in the grade of
ore mined, as production was sourced entirely from the higher
grade South West Branch lode. This resulted in lower unit costs
per ounce of gold produced, increased margins and increased
cash flow from operations.
Further details are set out in the discussion and analysis
of operating results on page 23.
2. Decision making authorities for
remuneration at St Barbara
Remuneration strategy and policies are approved by the Board.
They are aligned with, and underpin, the corporate strategy as
set out in Section 1 of this Remuneration Report. On behalf of
the Board, the Remuneration Committee oversees and reviews
the effectiveness of the remuneration strategy, policies and
practices to ensure that the interests of the Company,
shareholders and employees are properly taken into account.
The charter for the Remuneration Committee is approved by
the Board and is available on the Company’s web site at
www.stbarbara.com.au
The Remuneration Committee is responsible for making
recommendations to the Board on all aspects of remuneration
arrangements for the five Non Executive Directors, the
Managing Director and CEO, and the Executive General
Managers with the authority and responsibility for planning,
directing and controlling the activities of the Company;
collectively referred to as the Key Management Personnel.
In addition, the Remuneration Committee oversees and reviews
proposed levels of annual organisation remuneration increases
and key employee related policies. It also receives reports on
organisation capability and effectiveness, skills, training and
development and succession planning for key roles.
Organisational
Capability and
Scenario Planning
Key Workforce Policies
- Equal Opportunity
- Diversity
Remuneration
Committee
Oversight and Design
Remuneration Design
- Fixed vs Variable
Remuneration levels
for Key Management
Personnel
30
The members of the Remuneration Committee are all independent,
Non Executive Directors and as at the date of this report comprised:
R K Rae
– Chair, Non Executive Director
D W Bailey
– Non Executive Director
E A Donaghey – Non Executive Director
S J C Wise
– Non Executive Director
In forming remuneration recommendations, the Remuneration
Committee obtains and considers each year industry specific
independent data and professional advice as appropriate.
All reports and professional advice relating to the Managing
Director and CEO’s remuneration are commissioned and received
directly by the Committee. The Committee reviews all other
contracts with remuneration consultants and directly receives
the reports of those consultants.
The Remuneration Committee has delegated authority to
the Managing Director and CEO for approving remuneration
recommendations for employees other than Executive Key
Management Personnel, within the parameters of approved
Companywide remuneration levels and structures.
3. Principles applied in determining the
structure and amount of remuneration
The Company’s remuneration strategy recognises that it needs
to attract, reward and retain high calibre, high performing,
and team orientated individuals capable of delivering and being
incentivised to deliver the Company Strategy. The remuneration
policy and related employment policies and practices are aligned
with this strategy.
The Company operates a performance based remuneration
system through which the remuneration of Executive Key
Management Personnel is linked to the financial and non-
financial performance of the Company and its share price.
Under the remuneration system the amount of at risk
remuneration relative to an employee’s total remuneration
increases in line with the seniority of the role of that employee.
This reinforces the linkage between personal and company
performance and achievement of the Company’s business
strategy and creation of shareholder wealth.
(A) NON EXECUTIVE DIRECTORS’ FEES
Non Executive Directors’ fees are reviewed annually by the Board
to ensure fees are appropriate to reflect the responsibilities and
time commitments required of Non Executive Directors and
to ensure that the Company continues to attract and retain
Non Executive Directors of a high calibre. The Board seeks the
advice of, and is guided by, specialist independent remuneration
consultants in this process. Currently Non Executive Directors’
fees are targeted between the median and the 75th percentile
of comparatively sized companies.
In order to maintain their independence and impartiality,
the fees paid to Non Executive Directors are not linked to the
performance of the Company. Non Executive Directors have no
involvement in the day to day management of the Company.
Superannuation contributions, in accordance with legislation,
are included as part of each Director’s total remuneration.
Directors may elect to increase the proportion of their
remuneration taken as superannuation subject to legislative
limits. Non Executive Directors are not entitled to retirement
benefits, bonuses or equity based incentives.
The total amount that can be paid to all Non Executive Directors
is set by shareholders. This is currently $750,000 per annum
in aggregate (approved by shareholders in November 2005).
Within that amount, the basis and level of fees paid to
Non Executive Directors is set by the Board, and reported
to shareholders each year, as detailed in Section 5 of this
Remuneration Report.
(B) EXECUTIVE REMUNERATION
The reward structures for the Company’s executives are strongly
aligned with shareholders’ interests by:
(cid:129) recognising the contribution of each senior executive to the
achievement of the Company’s strategy and business objectives;
(cid:129) rewarding high individual performance;
(cid:129) being market competitive to attract and retain high
calibre individuals;
(cid:129) ensuring that equity based remuneration through the long
term incentive plan is based on achieving superior total
shareholder return over a three year period.
To achieve these objectives, remuneration for executives is
comprised of fixed remuneration and variable or at risk
remuneration. The at risk component is comprised of separate
short term and long term incentives in which the former are
linked to specific personal and corporate/business unit objectives
and the latter are linked to medium term strategic corporate
objectives. Both provide a direct connection between achievement
of targets which drive Company performance and shareholder
wealth, with personal remuneration. The mix of fixed and at risk
remuneration varies according to the role of each executive,
with the highest level of at risk remuneration applied to those
roles that have the greatest potential to influence and deliver
Company outcomes and drive shareholder wealth.
The mix of fixed and at risk remuneration for executives is as
follows:
Fixed
remun-
eration
STI (1)
LTI (2)
Total
remun-
eration
40%
20%
40%
100%
50%
57%
20%
17%
30%
26%
100%
100%
Seniority
Level 6
(CEO)
Level 5
(Exec GM)
Level 4 (GM)
(1) The STI value shown is at “target” performance. Target is the mid-point
in a range of 0–200% for the rated performance of each individual.
Less than target performance will result in less than the target
allocation, potentially down to zero, and out performance can
theoretically lead to two times the target allocation
(2) The LTI allocation is fixed at grant, but the proportion of the grant that
vests, if any, is subject to performance measurement under the relevant
LTI plan. See details below.
(i) Fixed Remuneration
(a) Base salary
Total Fixed Remuneration = Base Salary + Superannuation
+ Benefits
The base salary for each executive is influenced by the nature
and responsibilities of the role, the knowledge, skills and
experience required for the position, and the Company’s need
to compete in the market place to attract and retain the right
person for the role.
Each senior executive undergoes an annual performance review
as part of the Company’s work performance system, in which
individual and company performance is assessed in detail
against pre-determined measures. The performance appraisal
for each senior executive is assessed by the Managing Director
and CEO and reported to the Remuneration Committee and
later, the Board for review, including recommended remuneration
outcomes that flow from that appraisal. For the Managing
Director and CEO the performance appraisal is undertaken by
the Chairman, is also reported to the Remuneration Committee
and later, the Board, for review.
(ii) Fixed Remuneration – Superannuation
In addition to statutory superannuation contributions, senior
executives may elect to contribute additional amounts, subject
to legislative limits.
(iii) Fixed Remuneration – Benefits
Executives may receive benefits, including car parking
and payment for certain professional memberships.
Total Fixed Remuneration for each executive role is benchmarked
against the 75th percentile of prevailing comparable market
rates, to ensure that the Company is able to attract and retain
a talented and capable workforce appropriate to meet its
current and anticipated needs.
(iv) Variable Remuneration – Short term incentives (STI)
The STI is an annual “at risk” component of remuneration for
executives. It is payable based on performance against key
performance indicators (KPIs) set at the beginning of the
financial year. STIs are structured to remunerate senior
executives for achieving annual Company targets as well as their
own individual performance targets designed to favourably
impact the business, which are weighted on an equal (50:50)
basis at Target. Company and individual targets are established
by reference to the Company Strategy (refer Section 1). The net
amount of any STI after allowing for applicable taxation, is
payable in cash.
For each KPI there are defined “threshold”, “target” and
“stretch” measures which are capable of objective assessment.
Threshold performance typically requires achievement of the full
year budget for quantifiable measures such as safety, profitability,
cash generation, as well as the achievement of criteria set as
near term goals linked to the annual strategy review.
Target performance represents challenging but achievable levels
of performance beyond achievement of budget measures.
For example, the Corporate NPAT STI at Target was set at 10%
above budget NPAT for the year. Stretch performance requires
significant performance above and beyond normal expectations
and if achieved is anticipated to result in a substantial improvement
in key strategic outcomes, operational or financial results, and/
or the business performance of the Company.
The Remuneration Committee is responsible for recommending
to the Board executive STIs and then later assessing the extent
to which the Company STI measures and the individual KPIs of
the senior executives have been achieved, and the amount to be
paid to each executive. To assist in making this assessment, the
Committee receives detailed reports and presentations on the
performance of the business from the Managing Director & CEO
and independent remuneration consultants as required.
Annual Report 2012
31
Directors’ Report cont.
(v) Variable Remuneration – Long term incentives (LTI)
LTIs are structured to reward executives for the long term
performance of the Company relative to its peers and,
commencing with the 2011 financial year, were granted in the
form of Performance Rights. Previously, LTIs were granted in
the form of unlisted employee options.
In considering the LTI awards for the 2012 financial year, the
Board considered the trend towards deferring a portion of the
award. Unlike other industries where matching revenues and
expenses may have long lead times, the gold industry is such
that gold produced is sold at arm’s length within a matter of
days from production. Revenue and expenses are then recorded.
The industry characteristics supporting a look back testing of
prior year performance awards do not carry the same weight
in our industry.
Vesting conditions
The vesting of performance rights granted in respect of the
2012 financial year is subject to continuing employment as at
the vesting date, and the Company achieving a Relative Total
Shareholder Return (“TSR”) at the 50th percentile or better,
for the period from the performance rights pricing date to
30 June 2014.
In view of the elevated levels of corporate takeovers and mergers
over the last two years involving ASX listed gold companies,
and the difficulty in maintaining a stable TSR comparator group,
for performance rights to be issued in respect of future years,
it is envisaged that multiple performance vesting conditions
will apply, linked to the Company’s strategic plan.
For FY13 performance rights the vesting performance conditions
will comprise:
(cid:129) Relative Total Shareholder Returns;
(cid:129) A measure of net growth in Ore Reserves as a proxy
for increasing mine life; and
(cid:129) Return on assets as a measure of capital efficiency
and generation of shareholder value.
No performance rights have been granted since the end of the
2012 financial year.
The Relative Total Shareholder Return (Relative TSR) is measured
against a defined peer group of companies which the Board
considers compete with the Company for the same investment
capital, both in Australia and overseas, and which by the nature
of their business are influenced by commodity prices and other
external factors similar to those that impact on the TSR
performance of the Company.
The LTI measurement methodology for Total Shareholder
Returns for comparator companies is as follows:
a. The TSR performance is calculated for each of the
comparator companies that continue to be listed on
ASX for the duration of the vesting period (“continuing
company”); and
b. The TSR performance of a comparator company that
ceases to be listed on ASX during the vesting period as a
consequence of a takeover or merger (“exiting company”)
is measured:
i.
up to the date of that Company ceasing to be listed
on ASX adjusted pro rata (1) for the remainder of the
vesting period; plus
32
ii.
the pro-rata arithmetic average TSR of the continuing
companies (excluding St Barbara) for the remainder
of the vesting period,
c. The TSR performance of a comparator company that
ceased to be listed on ASX during the vesting period
(for any reason other than as a consequence of a takeover
or merger) is measured as the percentage change divided
by the period.
(1) “Pro rata” means the TSR of the exiting company, multiplied by the
number of days from the first day of the LTI measurement period until
the date on which the company ceases to be listed on the ASX, divided
by the total number of days in the vesting period.
Example 1: Company A ceases to exist at end of year 2 on
account of a takeover with 90% TSR and for year 3 the arithmetic
average of the continuing companies is 30%, the deemed TSR
for Company A is (2/3 x 90%) + (1/3 x 30%) = 70%.
Example 2: Company A fails as a company at the end of year 1
and ceases to be listed (whatever the actual TSR) the deemed
TSR for Company A is -33% (being -100% divided by 3 years).
At the discretion of the Board, the composition of the
comparator group of companies may vary from time to time.
The composition of the comparator group pertaining to an LTI
issued in a financial year is listed in the corresponding annual
report. The peer group for the 2012 financial year comprised
the following ASX listed, mid tier gold companies.
Company
Intrepid Mines Limited
Resolute Mining Limited
Ramelius Resources Limited
Silver Lake Resources Limited
Saracen Mineral Holdings Limited Catalpa Resources Limited (2)
Kingsgate Consolidated Limited
Unity Mining Limited
Regis Resources Limited
Oceana Gold Corporation
(2) On 14 October 2011 Catalpa Resources Ltd combined with Conquest
Mining Ltd to form Evolution Mining Ltd.
Under the Plan Rules that apply for FY12 performance rights,
which rely upon a single performance measure of Relative TSR,
the percentage of rights that can vest is in accordance with the
following rules:
Relative TSR Performance Over
Measurement Period
% of Right to Vest
< 50th percentile
50th percentile
>50th & < 75th percentiles
0%
50%
Pro-rata between 50%
& 100%
75th percentile and above
100%
In the event that St Barbara does not achieve the 50th percentile
or better for the vesting period ending 30 June 2014, no
performance rights will vest.
Expiry and other conditions
All performance rights expire on the earlier of their expiry
date, immediately upon the effective resignation date of the
relevant executive or twelve months from the date of
retirement or retrenchment.
Performance rights granted under the plan carry no dividend or
voting rights. On vesting each performance right is convertible
into one ordinary share.
The assessed fair value at the grant date of performance rights
is allocated equally over the period from grant date to vesting
date, and the amount is included in the following table. Fair
values at grant date are based on the prevailing market price
on the date the right is granted.
simulation is then applied to the fair value. For rights issued
during the year ended 30 June 2012, taking into account the
impact of the market condition (as discussed above), the
estimated fair value was, for accounting purposes, $2,073,000.
Further information on performance rights is set out in Notes 37
and 38 to the Financial Statements.
Illustrative example of performance rights calculation
Key Features of
LTI Performance
Rights at a glance
Vesting
conditions
Exercise
Price
10 day VWAP
at start
Executive Total Fixed Remuneration (TFR)
$400,000
LTI award value (60% of TFR)
$240,000
“Other
conditions”
Vesting
Date
30 June 2014
10 day VWAP performance rights price
$1.845 per
performance right
130,082
A Monte Carlo simulation is then performed to determine the
probability of the market conditions associated with the rights
being met. The probability estimated by the Monte Carlo
Performance Rights to be granted
($240,000 ÷ $1.845)
4. Company Performance
In assessing the Company’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. Company revenues have grown strongly each year since
2008, with a significant improvement in profitability.
Earnings
Sales revenue
EBITDA (1)
Statutory Profit/(loss) after tax(1)
Underlying net profit/(loss) after tax(1)
(1) Refer definitions on page 22.
2008
$’000
143,129
12,340
(17,333)
(29,291)
2009
$’000
281,129
39,701
(76,344)
209
2010
$’000
296,760
33,793
(40,188)
14,547
2011
$’000
359,575
125,538
68,629
54,431
2012
$’000
541,189
204,034
130,230
130,782
Sales Revenue ($M)
EBITDA¹ ($M)
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
0
120
240
360
480
600
0
50
100
150
200
250
Statutory Profit/(Loss) After Tax¹ ($M)
Underlying Net Profit/(Loss) After Tax¹ ($M)
2008
2009
2010
2011
2012
-100
-50
0
50
100
150
-50
-10
30
70
110
150
(1) Refer definitions on page 22.
Annual Report 2012
33
Directors’ Report cont.
The table below provides the share price performance of the Company’s shares in the 2012 financial year and the previous four
financial years.
Share price history
Period end share price ($ per share)
Average share price for the year ($ per share)
2008
2.22
3.84
2009
1.38
1.74
2010
2.10
1.68
2011
1.96
2.16
2012
1.77
2.12
During the 2012 financial year, the Company’s daily closing share price traded in a range of $1.77 to $2.52 per share (2011: $1.74 to
$3.00 per share)
Gold Production (koz)
Net Cashflow ($M)
2008
2009
2010
2011
2012
2009
2010
2011
2012
2008
2009
2010
2011
2012
50
100
150
200
250
300
350
400
-100
-50
0
50
100
150
Total Recordable Injury Frequency Rate
(TRIFR) (measured on a 12 month rolling basis)
Return on Equity(1) (%)
2008
2009
2010
2011
2012
0
5
10
15
20
-40
-20
0
20
40
(1) Return on Equity (“ROE”) is Statutory Profit divided by average Total Equity (calculated as the average of the opening and closing balances).
ROE is a non-IFRS financial measure.
The Board has regard to the overall performance of the Company over a number of years in assessing and ensuring proper alignment
of the “at risk” remuneration framework to deliver fair and proper outcomes consistent with the Company’s performance.
34
5. Remuneration paid
Details of the remuneration of Directors and the senior executives of the Company during the year ended 30 June 2012 are set out in
the following tables.
2012
Short-term benefits
Name
Cash salary
& fees
$
STI
payment
$
Non Executive Directors
S J C Wise
(Chairman)
D W Bailey
P C Lockyer
R K Rae
E A Donaghey
Total
Non Executive
Directors
Executive Director
219,225
107,798
107,798
107,798
100,000
642,619
–
–
–
–
–
–
Non-
monetary
benefits(6)
$
15,577(5)
–
–
–
–
15,577
T J Lehany
832,225 675,220
5,810
Other key management personnel
G Campbell-Cowan
434,625
297,151
2,905
Post-
employment
benefits
Long-term benefits
Super-
annuation
$
Other
$
Long
Service
Leave(3)
$
Share-
based
payments(4)
$
Termin-
ation
payments
$
Proportion
of total
perfor-
mance
related
Value of
share
based
payments
as % of
total
Total
$
–
–
–
–
–
–
–
–
15,775
9,702
9,702
9,702
9,000
53,881
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
250,577
117,500
117,500
117,500
– 109,000
–
712,077
–
–
–
–
–
–
–
–
–
–
15,775
72,407 639,020
– 2,240,457
30.1% 28.5%
15,775
20,328
177,468
– 948,252
31.3% 18.7%
A Croll (1)
D Rose (2)
R Kennedy
P Uttley
Total Senior
Executives
224,680 128,503
549 50,000 (7)
264,965
85,763
348,225 236,009
373,625
239,189
2,572
2,905
2,905
–
–
–
6,220
9,202
2,612
36,233
– 448,797
28.6%
8.1%
–
–
330,716
693,218
12.4%
–
15,775
7,957 153,966
– 764,837
30.9% 20.1%
15,775
912
155,855
– 788,261
30.3% 19.8%
2,478,345 1,661,835
17,646
50,000
78,522
104,216 1,162,542
330,716 5,883,822
(1) A Croll commenced employment as Chief Operating Officer on 16 January 2012.
(2) D Rose resigned with effect on 31 January 2012.
(3) For current employees, the amount represents the long service leave expense accrued for the period.
(4) The value of options/performance rights disclosed as remuneration is the portion of the fair value of the options/performance rights recognised
in the reporting period.
(5) Represents car parking, mobile phone, and other administrative benefits.
(6) For the Senior Executives, Non monetary benefits comprise car parking and professional memberships.
(7) Represents a sign-on payment.
Annual Report 2012
35
Directors’ Report cont.
2011
Short-term benefits
Post-
employment
benefits
Long-term benefits
Cash salary
& fees
$
STI
payment
$
Non-
monetary
benefits(6)
$
Super-
annuation
$
Other
$
Long
Service
Leave(3)
$
Share-
based
payments(4)
$
Termin-
ation
payments
$
Name
Non Executive Directors
S J C Wise
(Chairman)
D W Bailey
B J Gibson(1)
P C Lockyer
R K Rae
E A Donaghey (2)
Total
Non Executive
Directors
Executive Director
184,801
100,000
39,716
100,000
98,893
22,392
545,802
–
–
–
–
–
–
–
16,469 (5)
–
–
–
–
–
16,469
T J Lehany
832,801
110,416
7,594
Other key management personnel
G Campbell-Cowan
405,801
D Rose
R Kennedy
P Uttley
Total Senior
Executives
60,519
40,392
40,950
50,050
3,797
1,509
3,797
3,797
454,801
348,801
348,801
2,391,005
302,327
20,494
–
–
–
–
–
–
–
–
–
–
–
–
–
Proportion
of total
perfor-
mance
related
Value of
share
based
payments
as % of
total
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
216,469
109,000
43,290
109,000
107,793
24,407
–
–
–
–
–
–
–
609,959
15,199
9,000
3,574
9,000
8,900
2,015
47,688
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,199
22,878
242,048
– 1,230,936
9.0%
19.7%
15,199
15,199
15,199
15,199
18,771
48,987
6,090
12,696
4,651
85,133
45,883
66,208
–
–
–
–
553,074
10.9%
603,124
467,326
6.7%
8.8%
488,706
10.2%
8.9%
14.1%
9.8%
13.5%
75,995
65,086
488,259
– 3,343,166
(1) B J Gibson retired on 18 November 2010
(2) E A Donaghey was appointed on 4 April 2011.
(3) For current employees, the amount represents the long service leave expense accrued for the period.
(4) The value of options/performance rights disclosed as remuneration is the portion of the fair value of the options/performance rights recognised
in the reporting period.
(5) Represents car parking, mobile phone, and other administrative benefits.
(6) For the Senior Executives, Non monetary benefits comprise car parking and professional memberships.
(A) NON EXECUTIVE DIRECTORS FEES
Non Executive Director fees for the 2012 financial year were determined, both as to their composition (for base fees and committee
work) and overall level, based on advice from Ernst & Young as well as remuneration reports published by McDonald and Company.
They comprised:
(cid:129) Director fees of $92,000;
(cid:129) an allowance for chairing a Board Committee of $17,000; and
(cid:129) a fee for serving as a member of a Board Committee of $8,500.
The Chairman’s fee for the 2012 financial year was set at $235,000 (inclusive of all Board Committee commitments), as well as benefits
in the form of a car park, mobile telephone allowance and other administrative benefits.
This was determined independently, based on roles and responsibilities in the external market for companies comparable with
St Barbara Limited. The Chairman was not present at any discussions relating to the determination of his own remuneration.
(B) EXECUTIVE KEY MANAGEMENT PERSONNEL REMUNERATION
As set out in Section 4 of this Remuneration Report, in respect of the 2012 financial year the Company generated a 26% return
on shareholder funds, which is materially above the Company’s weighted average cost of capital.
36
For the year, Key Management Personnel received market competitive fixed remuneration, and an STI award based on exceeding the
Corporate and Individual targets set by the Board. The LTI performance hurdles applicable to 2009 LTIs issued in the form of employee
options were not met as at 30 June 2012, resulting in no LTIs vesting as at 30 June 2012.
Further details are set out below.
(i) Fixed Remuneration – Base salary
In considering remuneration for Executive Key Management Personnel for the 2012 financial year, the Remuneration Committee
retained Ernst & Young and considered reports from McDonald and Company, as well as industry trend data and other relevant
remuneration information.
(ii) Variable Remuneration – Short term incentives (STI)
The Company STI measures that applied for the 2012 financial year comprised:
(cid:129) improved safety performance – measured in the form of a specified reduction in the Total Recordable Injury Frequency Rate
by 30 June 2012;
(cid:129) the achievement of defined benchmarks:
– in excess of the budgeted underlying net profit after tax for the 2012 financial year; and
– in excess of the budgeted cash position as at 30 June 2012
(in each case, “target” performance was defined as at least 10% above budget.)
(cid:129) a discretionary factor determined by the Board designed to take into account unexpected events and achievements during the year.
The actual gold revenue for determination of STI awards is normalised back to the gold price assumption contained in the budget. In
calculating STI awards, Management does not receive the benefit, nor are they penalised for actual gold price movements away from
the budget underlying assumptions.
For the 2012 financial year, the underlying net profit after tax, adjusted to budgeted gold price assumptions, exceeded STI “target” levels.
The individual performance measures varied according to the individual executive’s responsibilities, and for the 2012 financial year
reflected a range of value accretive and/or risk mitigation achievements aligned with the Company strategy. These included measures
relating to improving safety, lifting production volumes and lowering production costs, achieving exploration discoveries and implementing
business improvement systems. They also included a discretionary factor determined by the Board designed to take into account
unexpected events and achievements during the year.
The tables below describe the Short Term Incentives available to, and achieved by, senior executives during the year.
Maximum potential STI
Target
$
424,000
180,160
109,667(2)
95,333(2)
155,760
145,600
Stretch (1)
$
848,000
360,320
219,333(2)
190,667(2)
311,520
291,200
Actual STI
included in
remuneration
$
675,220
297,151
85,763
128,503
239,189
236,009
% of
maximum
‘Target’ STI
earned
% of
maximum
potential total
STI earned
% of
maximum
potential total
STI foregone
100%
100%
78%
100%
100%
100%
80%
82%
39%
67%
77%
81%
20%
18%
61%
33%
23%
19%
2012
T J Lehany
G Campbell-Cowan
D Rose
A Croll
P Uttley
R Kennedy
(1) Inclusive of STI “Target”
(2) Applied pro-rata for period of employment
Amounts shown as “Actual STI” represent the amounts accrued in relation to the 2012 financial year, based on achievement of the
specified performance criteria. No additional amounts vest in future years in respect of the STI scheme for the 2012 financial year.
(v) Variable Remuneration – Long term incentives (LTI)
None of the LTI options granted in respect of the FY09 year vested as at 30 June 2012, as they did not meet the Relative Total
Shareholder Return criteria. As a result, the following options did not vest and are no longer exercisable:
T J Lehany
251,350
G Campbell-Cowan
201,192
R Kennedy
156,774
Details on options currently issued to Key Management Personnel are set out in Notes 37 and 38 of the Financial Report.
Annual Report 2012
37
Directors’ Report cont.
(A) Analysis of options granted as compensation
2012
Options granted
Number
Date
% vested
in year
% forfeited
in year
Financial year
options vest
T J Lehany
976,220
19 Nov 2009
G Campbell-Cowan
290,670
23 Sep 2009
251,350
6 May 2009
D Rose (1)
P Uttley
R Kennedy
201,192
6 May 2009
329,474
23 Sep 2009
256,258
23 Sep 2009
256,258
23 Sep 2009
156,774
6 May 2009
–
–
–
–
–
–
–
–
–
30 Jun 2013
100
30 Jun 2012
–
30 Jun 2013
100
100
–
–
30 Jun 2012
30 Jun 2013
30 Jun 2013
30 Jun 2013
100
30 Jun 2012
Value yet to vest
Minimum
(A)
$
Maximum
(B)
$
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
114,928
–
31,460
–
–
27,729
27,729
–
(1) D Rose resigned as Chief Operating Officer on 31 January 2012.
A The minimum value of options yet to vest is $nil as the vesting service conditions, which are continuing service conditions and relative Total Shareholder
Returns over a three year period, are still to be satisfied.
B The maximum value of the options yet to vest represents the amount of the grant date fair value of the options that is still to be expensed in the
income statement.
(B) Analysis of movements in the value of options granted and exercised
During the reporting period, no new options were issued and no options vested. 329,474 options issued to D Rose expired thirty days
following the date of his resignation from the Company. In addition, the following options in respect of the FY09 did not vest as at
30 June 2012 and are no longer exercisable:
T J Lehany
251,350
G Campbell-Cowan
201,192
R Kennedy
156,774
(C) Performance Rights issued in the 2012 fiscal year.
Performance Rights Plan
All performance rights were granted under the previously approved St Barbara Limited Performance Rights Plan. Performance rights
issued to Mr Lehany, Managing Director & CEO, were also approved by shareholders at the 2011 Annual General Meeting.
Performance Rights granted
Details on performance rights over ordinary shares in the Company that were granted as remuneration to each senior executive
and details of performance rights that vested in the 2012 financial year are as follows:
Number of
performance
rights granted
during 2012
Issue price
per
performance
right
459,621
152,846
146,472
118,374
126,634
169,106
–
–
–
–
–
–
Grant date
Expiry date
23 Nov 2011
30 Jun 2014
28 Oct 2011
30 Jun 2014
28 Oct 2011
30 Jun 2014
28 Oct 2011
30 Jun 2014
28 Oct 2011
30 Jun 2014
15 Mar 2012
30 Jun 2014
Fair value per
performance
right at grant
date ($ per
share)(1)
Number of
performance
rights vested
during
FY2012
1.10
1.12
1.12
1.12
1.12
1.05
–
–
–
–
–
–
2012
T J Lehany
D Rose (2)
G Campbell-Cowan
R Kennedy
P Uttley
A Croll(3)
(1) The fair value of performance rights at grant date was determined using a Black-Scholes valuation to which a Monte Carlo simulation was applied to
determine the probability of the market conditions associated with the rights being met. This methodology complied with the requirements of Australian
Accounting standard AASB 2 Share Based Payments.
(2) D Rose resigned as Chief Operating Officer on 31 January 2012.
(3) A Croll commenced employment as Chief Operating Office on 16 January 2012.
38
6. Summaries of service agreements for
Executive Key Management Personnel
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 Performance
Rights 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.
All service agreements with senior executives, including with
the Managing Director and CEO comply with the provisions
of Part 2 D.2, Division 2 of the Corporations Act 2001.
T J Lehany – Managing Director and CEO
(cid:129) Term of agreement – permanent employee, commencement
2 March 2009.
(cid:129) Payment of a termination benefit for early termination by the
Company, other than for serious misconduct or serious
breach of duty:
a) Where 6 months notice of termination is given; an
additional 6 months base salary and superannuation
payment, and (at the discretion of the Board), any
entitlement to a ‘stretch performance’ payment plus
an amount equivalent to six months of notional ‘target
performance’ payment; or
b) Where notice of immediate termination is given,
12 months base salary and superannuation, plus (at
the discretion of the Board) an amount equivalent to
12 months of a notional ‘target performance’ payment.
The other Executive Key Management Personnel are all
permanent employees, entitled to payment of a termination
benefit on early termination by the Company, other than for
gross misconduct or for poor performance as judged by the
Company in its absolute discretion, equal to between 6 and
8 months base salary and superannuation.
Loans to Directors and executives
There were no loans to Directors or executives during the
financial year 2012.
This concludes the Remuneration Report.
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 Eduard Eshuys, Ms Barbara Gibson, Mr Richard Knight,
Mr Hank Tuten, 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
Directors and Officers Liability and Statutory Liability policies.
The contract of insurance prohibits disclosure of the amount
of the premium and the nature of the liabilities insured under
the policy.
During the year the Company also paid the premium on a
Personal Accident insurance policy on behalf of Directors,
to insure them for travel while on Company business.
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.
Environmental management
The Company regards compliance with environmental
regulations as the minimum performance standard for its
operations. The Company’s operations in Western Australia are
subject to environmental regulation under both Commonwealth
and State legislation.
Overall, there was a 55% reduction in the number of externally
reportable environmental incidents during the year ended
30 June 2012 compared with the previous year. There were two
non-compliances registered and externally reported for the
Southern Cross operations during the year. At Leonora, there
were eight non-compliances registered and externally reported,
which was a significant decrease in the number of incidents
reported in the previous year. The decrease in incidents reported
was largely due to the work commenced during the year on
capping of the old Tarmoola tailings dam, which reduced the
number of wind generated dust incidents in the second half of
the year. None of the reported incidents were material in that
there was minimal, if any, adverse impact on the environment.
No formal notices relating to any of the environmental incidents
were issued by regulators.
Annual Report 2012
39
Directors’ Report cont.
Non-audit services
During the year the Company employed the auditor on
assignments additional to their statutory audit duties. The
Company engaged KPMG to perform financial due diligence as
part of the Company’s processes for assessing the Allied Gold
acquisition. Details of the amounts paid or payable to the
auditor, KPMG, for non-audit services provided during the 2012
financial year are set out in Note 27 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 27 to the financial statements, did
not compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
(cid:129) All non-audit services were reviewed by the Audit Committee
to ensure they do not impact the impartiality and objectivity
of the auditor;
(cid:129) None of the non-audit services performed in the 2012
financial year undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants; and
(cid:129) The Audit Committee annually informs the Board of the
detail, nature and amount of any non-audit services rendered
by KPMG during the most recent financial year, giving 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.
Auditor independence
A copy of the Auditor’s Independence Declaration required
under section 307C of the Corporations Act 2001 is set out on
page 41 and forms part of this Director’s Report. The Directors
are satisfied that the provision of these services did not impair
the auditor’s independence.
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, except for the following:
(cid:129) On 29 June 2012, the Company announced a proposal to
acquire all the share of Allied Gold Mining Plc (“Allied Gold”)
via a scheme of arrangement. Under the terms of the
recommended offer, St Barbara will acquire the entire issued
and to be issued ordinary share capital of Allied Gold for
A$1.025 in cash and 0.8 St Barbara shares for each Allied
Gold share (the “Offer”). Based on the closing price of
St Barbara shares on the Australian Securities Exchange on
28 June 2012, being the last trading day before the
announcement, the offer values Allied Gold at $556 million.
(cid:129) The cash consideration payable under the terms of the Offer
will be funded from St Barbara’s existing cash resources and
additionally by using a A$120 million term loan facility.
Following implementation of the Offer, Allied Gold will
become a wholly owned subsidiary of St Barbara.
(cid:129) On 14 August 2012, the shareholders of Allied Gold voted in
favour of the scheme of arrangement. The court hearing in
the UK to sanction the scheme is to be held on 30 August
2012. The effective date of the combination, subject to court
approval, is expected to be by 7 September 2012.
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 23rd day of August 2012
Timothy J Lehany
Managing Director and CEO
40
Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of St Barbara Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 June 2012 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to
the audit.
KPMG
Tony Romeo
Partner
Melbourne
23 August 2012
Annual Report 2012
41
Financial Report
This financial report covers St Barbara Limited (the Group) 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 10, 432 St Kilda Rd
Melbourne VIC 3004
A description of the nature of the Group’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 23 August 2012. The Company has the power to amend and reissue
the financial report.
42
Consolidated Income Statement
For the year ended 30 June 2012
Revenue from continuing operations
Mine operating costs
Gross profit
Other revenue
Other income
Exploration expensed
Corporate and support costs
Royalties
Depreciation and amortisation
Expenses associated with acquisitions
Other expenditure
Operating profit
Finance costs
Net realised/unrealised (losses)/gains on derivatives
Profit before income tax
Income tax benefit
Profit after income tax for the year
Earnings per share for profit attributable to the ordinary equity holders
of the Company:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Notes
Consolidated
2012
$’000
2011
$’000
541,189
359,575
(268,877)
(208,021)
272,312
151,554
6,779
922
(16,246)
(13,732)
(22,078)
(97,223)
(5,664)
(6,417)
118,653
(3,754)
(5,400)
109,499
20,731
130,230
9,382
4,449
(13,284)
(13,819)
(13,693)
(58,480)
(681)
(6,230)
59,198
(4,040)
13,471
68,629
–
68,629
40.04
39.60
21.05
20.94
6
9
6
7
8, 9
9
8
9
9, 10
36
36
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
Annual Report 2012
43
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
Notes
Consolidated
Profit for the year
Other comprehensive income
Changes in fair value of available for sale financial assets
Changes in fair value of cash flow hedges taken to reserves
25(a)
25(a)
Income tax on other comprehensive income
Other comprehensive (loss)/income net of tax(1)
Total comprehensive profit attributable to equity holders of the company
2012
$’000
130,230
(96)
(2,790)
1,484
(1,402)
128,828
2011
$’000
68,629
–
17,102
–
17,102
85,731
(1) Other comprehensive income comprises items of income and expense that are recognised directly in reserves or equity. These items are not recognised in
the Income Statement in accordance with the requirements of the relevant accounting standards. Total comprehensive profit comprises the result for the
year adjusted for the other comprehensive income.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
44
Consolidated Statement of Financial Position
As at 30 June 2012
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial assets
Available for sale financial assets
Deferred mining costs
Total current assets
Non-current assets
Property, plant and equipment
Deferred mining costs
Mine properties
Exploration and evaluation
Derivative financial assets
Net deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing borrowings
Derivative financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing borrowings
Derivative financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
Consolidated
2012
$’000
2011
$’000
11
12
13
22
15
14
17
14
18
19
22
10
20
21
22
23
21
22
23
185,242
13,795
21,867
87
154
23,789
244,934
103,928
5,917
289,647
15,474
–
22,215
437,181
682,115
55,542
3,043
2,830
10,824
72,239
1,213
13,547
31,283
46,043
118,282
563,833
79,485
24,140
17,858
2,085
–
12,934
136,502
105,750
10,230
283,991
11,629
282
–
411,882
548,384
49,366
10,491
–
7,982
67,839
1,581
10,468
32,149
44,198
112,037
436,347
24
25(a)
25(b)
613,275
(465)
615,521
1,049
(48,977)
(180,223)
563,833
436,347
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Annual Report 2012
45
Consolidated Statement of Changes In Equity
For the year ended 30 June 2012
Contributed
Equity
$’000
Share Based
Payments
Reserve
$’000
Gold Cash
Flow Hedge
Reserve
$’000
Investment
Fair Value
Reserve
$’000
Note
Balance at
1 July 2011
Share buy back
24
615,521
(2,246)
3,108
–
1,828
(924)
(1,016)
(2,059)
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
Earnings
$’000
Total
$’000
(180,223)
436,347
–
–
–
(2,246)
1,828
(924)
1,016
–
–
(1,335)
(67)
130,230
128,828
613,275
2,996
(3,394)
(67)
(48,977)
563,833
Contributed
Equity
$’000
Share Based
Payments
Reserve
$’000
Gold Cash Flow
Hedge Reserve
$’000
Investment Fair
Value Reserve
$’000
Retained
Earnings
$’000
Total
$’000
614,997
2,484
(19,161)
–
–
524
–
973
(104)
(245)
–
–
–
–
17,102
615,521
3,108
(2,059)
–
–
–
–
–
–
(248,852)
349,468
–
–
–
973
(104)
279
68,629
85,731
(180,223)
436,347
25(a)
25(a)
25(a)
Note
25(a)
25(a)
24(b)
Share-based payments
expense
Unlisted options not
vested
Unlisted options
expired
Comprehensive
income for the year
Balance at
30 June 2012
Balance at
1 July 2010
Share-based payments
expense
Unlisted options
expired
Unlisted options
exercised
Comprehensive
income for the year
Balance at
30 June 2011
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
46
Consolidated Cash Flow Statement
For the year ended 30 June 2012
Cash Flows From Operating Activities:
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Payments for exploration
Finance charges – finance leases
Borrowing costs
Notes
Consolidated
2012
$’000
2011
$’000
Restated
553,847
354,397
(320,465)
(241,716) (1)
5,555
(65)
5,122
(37)
(16,246)
(13,284)
(278)
(521)
(962)
(447)
Net cash inflow from operating activities
34
221,827
103,073
Cash Flows From Investing Activities:
Proceeds from sale of property, plant and equipment
Transaction costs on sale of property, plant and equipment
Proceeds from sale of tenements
Payments for available for sale financial assets
Payments for property, plant and equipment
Payments for development of mining properties
Exploration and evaluation expenditure – capitalised
Net cash outflow from investing activities
Cash Flows From Financing Activities:
Proceeds from issue of shares on conversion of options
Proceeds from borrowings: – finance leases
– insurance premium funding
Buy back and redemption of convertible notes
Payments for share buy backs
Share buy back transaction costs
Movement in restricted cash
Movement in unclaimed monies
Principal repayments
– finance leases
– equipment financing facility
– insurance premium funding
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
68
–
–
(250)
3,016
(45)
2,000
–
(19,457)
(12,207)
(80,757)
(106,283) (1)
(4,575)
(8,863)
(104,971)
(122,382)
–
491
2,736
–
(2,239)
(7)
–
(665)
(1,011)
(7,860)
(2,544)
(11,099)
105,757
79,485
185,242
279
1,552
2,747
(1,200)
–
–
264
–
(982)
(5,061)
(962)
(3,363)
(22,672)
102,157
79,485
11
(1) During the year, the Group reclassified expenditures relating to deferred mining from investing to operating cash flows. This classification better reflects
the nature of this expenditure which is amortised to operating costs on a level by level basis.
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
Annual Report 2012
47
Notes to the Consolidated Financial Statements
For the year ended 30 June 2012
Note 1 Summary of significant accounting
policies
St Barbara Limited (the “Company”) is a company domiciled
in Australia. The consolidated financial statements of the Company
as at and for the year ended 30 June 2012 comprise the Company
and its subsidiaries (together referred to as the “Group”), and
the Group’s interest in associates and jointly controlled entities.
The Group is a for-profit entity primarily involved in the exploration
for, and mining of, gold.
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.
(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. Where required by accounting standards
comparative figures have been adjusted to conform to changes
in presentation in the current year. The consolidated financial
report of the Group complies with International Financial
Reporting Standards (IFRSs) and interpretations issued
by the International Accounting Standards Board.
The financial statements were approved by the Board
of Directors on 23 August 2012.
Basis of measurement
The consolidated financial statements have been prepared on
the historical cost basis, except for the following material items:
(cid:129) Derivative financial instruments are measured at fair value
(cid:129) Share based payment arrangements are measured at fair value
(cid:129) Available for sale assets are measured at fair value
(cid:129) Rehabilitation provision is measured at net present value
(cid:129) Long service leave provision is measured at net present value
Critical accounting estimates
The preparation of financial statements in conformity with
AASB and IFRS requires management to make judgements,
estimates and assumptions that affect the application of
accounting policies and the reported amount of assets,
liabilities, income and expenses. Actual results may differ from
these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised
and in any future periods affected. 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 4.
(B) PRINCIPLES OF CONSOLIDATION
(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 2012 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.
Subsidiaries are all those entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies so as to obtain benefits from
its activities, 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 within the
Parent Entity disclosures at Note 26.
(ii) Associates and jointly controlled entities
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 jointly controlled entity is
accounted for in the consolidated financial statements using
the equity method and is carried at cost by the parent entity.
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.
(iii) Jointly controlled operations and assets
Details of unincorporated joint ventures and jointly controlled
assets are set out in Note 32.
Where material, the proportionate interests in the assets, liabilities
and expenses of a joint venture activity are incorporated in the
financial statements under the appropriate headings.
(C) SEGMENT REPORTING
A reportable segment is a component of the Group that
engages in business activities from which it may earn revenues
or incur expenses, including revenues and expenses that relate
to transactions with any of the Group’s other components.
The operating results of all reportable segments are regularly
reviewed by the Group’s Executive Leadership Team (“ELT”) to
make decisions about resources to be allocated to the segment
and assess its performance, and for which financial information
is available.
Segment results that are reported to the ELT include items directly
attributable to a segment and those that can be allocated on a
reasonable basis. Unallocated items comprise mainly corporate
assets and related depreciation, and corporate expenses.
Segment capital expenditure represents the total cost incurred
during the year for mine development and acquisitions of
property, plant and equipment.
48
Note 1 Summary of significant accounting
policies cont.
(D) FOREIGN CURRENCY TRANSLATION
(i) Functional and presentation currency
The consolidated financial statements are presented in Australian
dollars, which is also St Barbara Limited’s functional 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 from the sale of goods in the course of ordinary
activities 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 have been transferred to the buyer, the amount of
revenue can be reliably measured and the associated costs can
be estimated reliably, 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 and rewards to a customer and selling prices
are known or can be reasonably estimated.
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
and property, plant and equipment
Revenue is recognised when the risks and rewards of
ownership have been transferred, which is usually considered
to occur on settlement.
(v) Third party toll treatment revenue
Toll treatment revenue represents revenue earned for processing
third party ore through the Group’s processing facilities. Revenue
is recognised when the third party’s product is in a form suitable
for delivery, and no further processing is required by the Group,
and there has been a transfer of risk to the third party.
(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
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. Feasibility expenditures are expensed as incurred until
a decision has been made to develop the 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(j)). For the purpose of impairment
testing, exploration and evaluation assets are allocated to
cash-generating units to which the exploration activity relates.
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.
(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 capitalised exploration,
evaluation and feasibility expenditure in respect of 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 expenditure 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, 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.
Annual Report 2012
49
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 1 Summary of significant accounting
policies cont.
(F) EXPLORATION AND EVALUATION/MINE PROPERTIES cont
(iii) Mine development cont
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 of the
reporting period and the amortisation charge is adjusted
prospectively from the beginning of the period.
(G) DEFERRED MINING EXPENDITURE
Certain mining costs, principally those that relate to the
stripping of waste and operating development in underground
operations, which provide access so that future economically
recoverable ore can be mined, are deferred in the statement
of financial position as deferred mining costs.
(i) Underground operations
In underground operations mining occurs progressively
on a level-by-level basis. In these operations an estimate
is made of the life of level average underground mining cost
per recoverable ounce to expense underground costs in the
income statement. Underground mining costs in the period
are deferred based on the metres developed for a particular
level. Previously deferred underground mining costs are released
to the income statement based on the recoverable ounces
produced in a level multiplied by the life of level cost per
recoverable ounce rate.
In the production stage of some operations further development
of the mine requires a phase of unusually high overburden removal
activity that is similar in nature to pre-production mine development.
The costs of such unusually high overburden removal are
deferred and charged against earnings in subsequent periods
on a unit-of-production basis.
(H) TAXES
(i)
Income tax
Income tax expense comprises current and deferred tax. Current
tax and deferred tax is recognised in the income statement except
to the extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable
profit or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax
payable in respect of previous years. Current tax payable also
includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
(cid:129) Temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
(cid:129) Temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future;
(cid:129) Taxable temporary differences arising on the initial
recognition of goodwill.
Grade control drilling is deferred to the statement of financial
position on a level-by-level basis. These amounts are released to
the income statement as ounces are produced from the related
mining levels.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, based
on the laws that have been enacted of substantively enacted
by the reporting date.
(ii) Open pit operations
The amount of mining costs deferred is based on the ratio
obtained by dividing the waste tonnes mined by the quantity
of gold ounces contained in the ore. Mining costs incurred in
the period are deferred to the extent that the current period
waste to contained gold ounce ratio exceeds the life of mine
waste to ore ratio.
Deferred mining costs are then charged against reported
earnings to the extent that, in subsequent periods, the ratio falls
below the life of mine ratio. The life of mine ratio is based on
economically recoverable reserves of the operation.
The life of mine ratio is a function of an individual mine’s design
and therefore changes to that design will generally result in
changes to the ratio. Changes in other technical or economic
parameters may impact reserves, which will then impact the life
of mine ratio. Changes to the life of mine ratio are accounted
for prospectively.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on
the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that
it is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Additional income tax expenses that arise from the distribution
of cash dividends are recognised at the same time that the
liability to pay the related dividend is recognised. The Group does
not distribute non-cash assets as dividends to its shareholders.
50
Note 1 Summary of significant accounting
policies cont.
(H) TAXES cont.
(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.
Cash flows are included in the statement of cash flows on
a gross basis. The GST component of cash flows arising from
investing or financing activities, which are recoverable from,
or payable to, the taxation authority are classified as part of
operating cash flows.
(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 are 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)
IMPAIRMENT OF ASSETS
All asset values are reviewed at each reporting date to
determine whether there have been any events or changes in
circumstances that indicate that the carrying value may not be
recoverable. Where an indicator of impairment exists, a formal
estimate of the recoverable amount is made. 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 a pre-tax
discount rate which reflects 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).
An impairment loss is recognised for the amount by which the
carrying amount of an asset or a cash generating unit exceeds
the recoverable amount. Impairment losses are recognised in
the income statement.
(K) 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
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.
(L) 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. Cash placed
on deposit with a financial institution to secure bank guarantee
facilities and restricted from use within the business is disclosed
as trade and other receivables.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectable 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.
(M) INVENTORIES
Raw materials and stores, ore stockpiles, work-in-progress and
finished 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.
(N) 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, 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, except as
described below. Subsequent to initial recognition, investments
and other financial assets are measured as described below.
Annual Report 2012
51
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 1 Summary of significant accounting
policies cont.
(N) INVESTMENTS AND OTHER FINANCIAL ASSETS cont
(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.
Attributable transaction costs are recognised in the income
statement when incurred.
(ii) Available-for-sale financial assets
Available for sale financial assets, comprising principally
marketable equity securities, are non derivative financial assets
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 and can dispose of the
investment within 12 months of the balance sheet date.
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 net of attributable tax. When an asset is
de-recognised the cumulative gain or loss in equity is transferred
to the income statement.
(O) DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments may be held to protect
against the Group’s 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 22. Movements in
the gold cash flow hedge reserve in shareholders’ equity are
shown in Note 25.
(i) Cash flow hedge
The fair value of gold option contracts comprises intrinsic value,
that is, the extent to which the components of an option collar
are in the money due to a gold forward price falling below or
rising above the option strike prices, and time value.
The effective portion of changes in the intrinsic value of
derivatives that are designated and qualify as cash flow hedges
is recognised in equity in the gold cash flow hedge reserve. The
gain or loss relating to the ineffective portion and time value is
recognised immediately in the income statement.
Amounts accumulated in equity are recycled through the
income statement in the periods when the hedged item affects
profit or loss (for instance, when the forecast gold 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 ‘net
realised gains on derivatives’.
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.
(P) 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 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 generally accepted 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.
52
Note 1 Summary of significant accounting
policies cont.
(Q) PROPERTY, PLANT AND EQUIPMENT
Buildings, plant and equipment are stated at historical cost less
accumulated 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 the cost or revalued amounts, net of residual
values, over their estimated useful lives, as follows:
– Buildings
10 – 15 years
– Plant and equipment
3 – 10 years
– Fixtures and fittings
10 – 15 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(j)).
Gains and losses on disposal are determined by comparing
proceeds with carrying amount. These gains and losses are
included in the income statement when realised.
(R) TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year,
which remains unpaid as at reporting date. The amounts are
unsecured and are usually paid within 30 days from the end
of the month of recognition.
(S) BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount
is recognised in the income statement over the period of the
borrowings using the effective interest method. Fees paid on
the establishment of loan facilities, which are not incremental
costs relating to the actual draw down of the facility, are
recognised as prepayments and amortised on a straight line
basis over the term of the facility.
The fair value of the liability portion of convertible debt is
determined using a market interest rate for an equivalent
non-convertible debt. This amount is recorded as a liability
on an amortised cost basis until extinguished on conversion
or maturity of the debt. The remainder of the proceeds is
allocated to the conversion option. This is recognised and
included in shareholders’ equity, net of income tax effects.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
(T) BORROWING COSTS
Borrowing costs incurred for the construction of any qualifying
asset are capitalised during the period of time 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.
(U) PROVISIONS
Provisions, including those 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 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.
A provision for restructuring is recognised when the Group has
approved a detailed and formal restructuring plan, and the
restructuring has commenced or has been announced publicly.
Future operating costs are not provided for.
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.
(V) 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 the expected future wage and
salary levels, experience of employee departures and periods of
service. Expected future payments are discounted with reference
to market yields on national government bonds with terms to
maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Annual Report 2012
53
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 1 Summary of significant accounting
policies cont.
(V) EMPLOYEE BENEFITS cont
(iii) Share-based payments
Share-based compensation benefits are provided to employees
via the St Barbara Limited Employees’ Option Plan and the
Performance Rights Plan. Information relating to these schemes
is set out in Note 37.
The fair value of options granted under the St Barbara Limited
Employees’ Option Plan or rights granted under the Performance
Rights 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 or
rights. The amount recognised is adjusted to reflect the actual
number of share options not expected to vest, based on
expectations of performance related conditions. Adjustments
to the amount recognised at each reporting date are taken
through the Income Statement.
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 or rights, 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 are 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 incentives
Senior executives may be eligible for Short Term Incentive
payments (“STI”) subject to achievement of Key Performance
Indicators, as recommended by the Remuneration Committee
and approved by the Board of Directors. The Group recognises
a liability and an expense for STIs in the reporting period during
which the service is provided by the employee.
(vi) Termination benefits
Termination benefits are recognised as an expense when the
Group is demonstrably committed, without realistic possibility of
withdrawal, to a formal detailed plan to terminate employment.
(W) CONTRIBUTED EQUITY
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.
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, is recognised
directly in equity.
(X) EARNINGS PER SHARE
(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.
(Y) REHABILITATION AND MINE CLOSURE
The Group has obligations to dismantle, remove, restore and
rehabilitate certain items of property, plant and equipment
and areas of disturbance during mining operations.
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.
AASB 137 Provisions, Contingent Liabilities and Contingent
Assets requires a provision to be made for the estimated cost of
rehabilitation and restoration of areas disturbed during mining
operations up to reporting date but not yet rehabilitated.
Management judgments and estimates in relation to the
rehabilitation provision are provided at Note 4(v). Provision has
been made in full for all the disturbed areas at the reporting
date based on current estimates of costs to rehabilitate such
areas, discounted to their present value based on expected
future cash flows. The estimated cost of rehabilitation includes
the current cost of contouring, topsoiling and re-vegetation to
meet legislative requirements. Changes in estimates are dealt
with on a prospective basis as they arise.
54
Note 1 Summary of significant accounting
policies cont.
(Y) REHABILITATION AND MINE CLOSURE cont
There is some uncertainty as to the amount of rehabilitation
obligations that will be incurred due to the impact of changes
in environmental legislation and many other factors, including
future developments, changes in technology and price increases.
At each reporting date the rehabilitation liability is remeasured
in line with changes in the timing and/or amounts of the costs
to be incurred and discount rates. The liability is adjusted for
changes in estimates. Adjustments to the estimated amount
and timing of future rehabilitation and restoration cash flows
are a normal occurrence in light of the significant judgments
and estimates involved.
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.
(Z) ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/0100,
issued by the Australian Securities and Investments Commission,
relating to the “rounding off” of amounts in the 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.
(AA) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
NOT YET ADOPTED
A number of new standards, amendments to standards and
interpretations are available for early adoption for annual
periods beginning after 1 July 2011, and have not been applied
in preparing these consolidated financial statements. None of
these are expected to have a significant effect on the
consolidated financial statements of the Group.
Note 2 New Standards adopted
The Company has adopted the following new and/or revised
Standards, Amendments and Interpretations from 1 July 2011:
(cid:129) AASB 2010-4: Amendments to Australian Accounting
Standards – Annual Improvements Project (2010)
(cid:129) AASB 2011-1: Amendments to Australian Accounting
Standards arising from the Trans-Tasman Convergence Project
(cid:129) AASB 1054: Australian Additional Disclosures
(cid:129) AASB 124: Related Party Disclosures
(cid:129) AASB 2010-6: Amendments to Australian Accounting
Standards – Disclosures on Transfers of Financial Assets
Adoption of the above Standards, Amendments and
Interpretations did not have any effect on the financial position
or performance of the Group.
Note 3 Financial risk management
This note presents information about each of the financial risks
that the Group is exposed to, the policies and processes for
measuring and managing financial risk, and the management of
capital. Further quantitative disclosures are included throughout
this financial report.
The Group’s activities expose it to a variety of financial risk,
being: market risk (especially gold price and exchange rate 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 may use derivative instruments as
appropriate to manage certain risk exposures.
Risk management in relation to financial risk is carried out by
a centralised treasury function in accordance with policies
approved by the Board of Directors.
(A) MARKET RISK
Market risk is the risk that changes in market prices, such as
commodity prices, foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its
holdings of financial instruments, cash flows and financial
position. The Group may enter into derivatives, and also incur
financial liabilities, in order to manage market risks. All such
transactions are carried out within guidelines set by the Board.
(i) Commodity price risk
The Group is exposed to Australian dollar gold price risk.
This risk arises through the sale of gold.
The Group is managing commodity price risk in relation to
the King of the Hills and Southern Cross operations by using a
combination of gold put options and gold call options to create
zero-cost option collar structures as described in (b) below.
(ii) Currency risk
The Group is exposed to currency risk on gold sales where
the Australian dollar spot gold price is quoted as a function
of US dollars and the prevailing exchange rate. The Group may
from time to time use Australian dollar derivatives to manage
the risks associated with the gold price and currency rates.
The Group’s main interest rate risk arises from long-term
borrowings. Borrowings issued at variable rates expose the
Group to cash flow interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest rate risk.
The Group’s interest rate policy does not require a fixed and
pre-determined proportion of its interest rate exposure to be
hedged. Any decision to hedge interest rate risk will be assessed
at the inception of each floating rate debt facility in relation to
the overall Group exposure, the prevailing interest rate market,
and any funding counterparty requirements.
Annual Report 2012
55
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 3 Financial risk management cont.
(B) CASH FLOW HEDGES
The Group may from time to time be party to derivative financial instruments in the normal course of business to protect future
revenue from gold operations from a significant fall in the Australian dollar price of gold, in accordance with the Group’s financial risk
management policies.
(i) King of the Hills
During June 2010, the Company entered into a zero cost collar hedging facility for 250,000 ounces of gold over a five year period to
manage Australian dollar gold price risk associated with the estimated production from the King of the Hills mine. The facility was fully
drawn down by purchasing put options and selling call options over 250,000 ounces of gold (collar structure) with the following strikes:
(cid:129) Bought put options at A$1,425/oz
(cid:129) Sold call options at A$1,615/oz
During financial year 2012, 30,000 ounces of call options and 4,000 ounces of put options were exercised (2011: Call options – Nil
exercised; Put options – 12,000 ounces exercised). 33,000 ounces of call options and 59,000 ounces of put options expired.
(ii) Southern Cross
In September 2011, the Company entered into a zero cost collar hedging facility for 100,000 ounces of gold over a twelve month
period to manage Australian dollar gold price risk associated with the estimated production from the Southern Cross mine. The facility
was fully drawn down by purchasing put options and selling call options over 100,000 ounces of gold (collar structure) with the
following strikes:
(cid:129) Bought put options at A$1,550/oz
(cid:129) Sold call options at A$1,610/oz
During financial year 2012, 48,000 ounces of call options were exercised (2011: Nil). 80,000 ounces of put options and 32,000 ounces
of call options expired.
The maturity profile of the put and call option contracts remaining as at 30 June 2012 is provided in the table below.
Strike Price
King of the Hills
Put: A$1,425/oz
Call: A$1,615/oz
Southern Cross
Put: A$1,550/oz
Call: A$1,610/oz
Total ounces
175,000
175,000
20,000
20,000
6 months
or less
ounces
31,750
31,750
20,000
20,000
6 – 12
months
ounces
32,502
32,502
–
–
1 – 2 years
ounces
2 – 5 years
ounces
75,999
75,999
34,749
34,749
–
–
–
–
At the date of entering into each of the collar structures, the net fair value of the put and call options was zero dollars. At 30 June 2012,
the fair value of all remaining put and call option contracts was negative $16,290,000 (June 2011: negative $8,101,000). $11,442,000
(June 2011: $6,042,000) of this negative fair value represents an unrealised loss related to time value of the 195,000 ounces outstanding
at 30 June 2012 (June 2011: 238,000 ounces). A loss of $5,400,000 for the year ended 30 June 2012 was recognised in the income
statement (2011: gain of $13,471,000). Included in this loss was a net realised gain of $702,000 (2011: gain of $525,000) which
represented the unwinding of the unrealised mark-to-market loss previously recognised for options that were exercised or expired
during the year (refer to note 1(o)). Unrealised losses of $3,054,000 relating to the intrinsic value of the options was recognised in
the gold cash flow hedge reserve in equity during the year (2011: gains of $17,102,000), with a realised gain of $264,000 recognised
in the reserve for options that were exercised or expired during the year.
The relationship between currencies, spot gold price and volatilities is complex and changes in the spot gold price can influence
volatility, and vice versa.
56
Note 3 Financial risk management cont.
(B) CASH FLOW HEDGES cont.
The following table summarises the impact of a A$100 change in the Australian dollar gold price (all other variables held constant)
on the valuation of the gold option fair values.
Gold Price Sensitivity
+A$100 change in AUD spot price
–A$100 change in AUD spot price
Impact on post-tax
result(1)
Impact on gold cash
flow hedge reserve
net of tax(2)
2012
$’000
2,018
5,060
2011
$’000
(9,074)
9,074
2012
$’000
(11,532)
4,453
2011
$’000
(8,966)
8,966
(1) Represents the movement in time value (a positive movement represents a gain).
(2) Represents the movement in intrinsic value (a positive movement represents a gain).
(C) CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract. The Group is
exposed to credit risk from its operating activities (primarily customer receivables) and from its financing activities, including deposits
with banks and financial institutions and derivatives.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets, other than available
for sale assets.
Credit risks related to receivables
The Group’s most significant customer accounts for $3,599,000 of the trade receivables carrying amount at 30 June 2012
(2011: $13,770,000), representing receivables owing from gold sales. Settlement of the receivables relating to gold sales occurred
on 3 July 2012. Based on historic rates of default, the Group believes that no impairment has occurred with respect to trade
receivables, and none of the trade receivables at 30 June 2012 were past due.
Credit risks related to cash deposits and derivatives
Credit risk from balances with banks and financial institutions derivative counterparties is managed by the centralised Treasury function
in accordance with Board approved policy. Investments of surplus funds are only made with approved counterparties (minimum
Standard & Poor’s credit rating of “AA-”) and there is a financial limit on funds placed with any single counterparty.
Derivative transactions are only made with approved counterparties (minimum Standard & Poor’s credit rating of “AA-“), and more
than one counterparty is used when tranches of derivatives are entered into. Derivatives transactions cover only a small proportion
of total Group production with maturities occurring over a period of time (refer Note 3(b)).
(D) CAPITAL MANAGEMENT
The Group’s total capital is defined as total shareholders’ funds plus net debt.
Consolidated capital
Total shareholders’ funds
Borrowings
Cash and cash equivalents (1)
Total capital
2012
$’000
2011
$’000
563,833
436,347
4,256
(4,256)
12,072
(12,072)
563,833
436,347
(1) Cash and cash equivalents are included to the extent that the net debt position is nil.
The Group does not have a target debt/equity ratio. There were no changes in the Group’s approach to capital management during
the year.
The Group is not subject to externally imposed capital requirements other than normal banking requirements.
Cash and cash equivalents does not include cash held on deposit with a financial institution as security for a bank guarantee facility
totalling $123,000 (2011: $123,000) at the reporting date.
Annual Report 2012
57
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 3 Financial risk management cont.
(D) CAPITAL MANAGEMENT cont
The Company has a $25,000,000 performance bond facility with the National Australia Bank Limited (NAB) to provide security
for performance obligations incurred in the ordinary course of business. The NAB facility does not require cash backing. Security is
provided in the form of a fixed and floating charge over the Company’s assets and mining tenements held by the Company. Under the
terms of the NAB facility, there are a number of undertakings related to the performance of the Company, and non-compliance with
these undertakings could constitute an event of default. Under the terms of the facility the Company has up to 90 days to remedy or
rectify a non-compliance event in relation to the undertakings. In the year, and as at 30 June 2012, there were no events of default
under the facility.
On 21 August 2009, the Company entered into a A$50,000,000 Equity Line standby facility from US-based investment fund YA
Global. Under the terms of the facility St Barbara may, at its discretion, issue ordinary shares to YA Global at any time over a 60 month
period up to a total of A$50,000,000. There has been no draw down under this facility.
(E) 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.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial
assets and liabilities.
Surplus funds are invested in instruments that are tradeable in highly liquid markets.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
$’000
Finance lease liabilities
Insurance funding liability
Trade and other payables
Derivative financial liabilities (1)
Maturity of financial liabilities – 2012
Less than 6
months
6 – 12 months
Between 1 and
5 years
Over 5 years
597
1,409
55,542
729
58,277
549
604
–
2,101
3,254
1,065
–
–
13,547
14,612
–
–
–
–
–
Total
contractual
cash flows
2,211
2,013
55,542
16,377
76,143
Carrying
amount
2,280
1,976
55,542
16,377
76,175
(1) Represents the mark-to-market valuation of the option collar structure, and does not represent a contractual cash flow. The mark-to-market valuations
at 30 June 2012 will change over time as contracts mature, or with changes in the spot gold price and other option pricing variables.
$’000
Finance lease liabilities
Equipment finance facility
Insurance funding liability
Trade and other payables
Derivative financial liabilities (1)
Maturity of financial liabilities – 2011
Less than 6
months
6 – 12 months
575
8,023
1,215
49,366
–
59,179
550
–
608
–
–
1,158
Between 1 and
5 years
1,722
–
–
–
10,468
12,190
Over 5 years
Total
contractual
cash flows
–
–
–
–
–
–
2,847
8,023
1,823
49,366
10,468
72,527
Carrying
amount
2,541
7,860
1,785
49,366
10,468
72,020
(1) Represents the mark-to-market valuation of the option collar structure, and does not represent a contractual cash flow. The mark-to-market valuations
at 30 June 2011 will change over time as contracts mature, or with changes in the spot gold price and other option pricing variables.
(F) FAIR VALUE ESTIMATION
On-Balance Sheet
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the
Group approximates their carrying value. The net fair value of other monetary financial assets and financial liabilities is based upon
market prices.
The fair value of the gold put and call options is as disclosed in Note 4(vii).
58
Note 3 Financial risk management cont.
(F) FAIR VALUE ESTIMATION cont
Fair values
The carrying amounts and the net fair values of financial assets and liabilities of the Group at balance date are:
Financial assets
– Cash and cash equivalents
– Restricted cash
– Receivables
– Available for sale financial assets
– Gold put and call options (zero cost collar)
Financial liabilities
– Payables
– Equipment financing facility
– Gold put and call options (zero cost collar)
– Other loans
2012
2011
Carrying
Amount
$’000
Net Fair Value
$’000
Carrying
Amount
$’000
Net Fair Value
$’000
185,242
187,448
123
9,967
154
87
123
9,967
154
87
195,573
197,779
55,542
55,542
–
16,377
4,256
76,175
–
16,377
4,256
76,175
79,485
123
20,454
–
2,367
102,429
49,366
7,860
10,468
4,326
72,020
81,083
123
20,454
–
2,367
104,027
49,366
7,847
10,468
4,326
72,007
Note 4 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 Group 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 Group’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, short and
long term 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.
The Group determines and reports ore reserves under the
Australian Code for Reporting of Mineral Resources and Ore
Reserves December 2004, 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 Group’s financial
results and financial position in a number of ways, including:
(cid:129) Asset carrying values may be impacted due to changes
in estimated future cash flows.
(cid:129) Depreciation and amortisation charged in the income
statement may change where such charges are calculated
using the units of production basis.
(cid:129) Underground capital development and waste stripping costs
deferred in the balance sheet or charged in the income
statement may change due to a revision in the development
amortisation rates and stripping ratios.
(cid:129) Decommissioning, site restoration and environmental
provisions may change where changes in estimated reserves
affect expectations about the timing or cost of these activities.
Annual Report 2012
59
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 4 Critical Accounting Estimates and
Judgements cont.
(II) UNITS OF PRODUCTION METHOD OF AMORTISATION
The Group 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 in relation to
reserves and resources, metallurgy and the complexity of future
capital development requirements; changes to these estimates
and assumptions will impact the amortisation charge in the
income statement and asset carrying values.
(III) AMORTISATION OF UNDERGROUND OPERATING
DEVELOPMENT
The Group applies the units of production method for
amortisation of underground operating development.
The amortisation rates are determined on a level-by-level basis.
In underground operations an estimate is made of the life of
level average underground mining cost per recoverable ounce
to expense underground costs in the income statement.
Underground mining costs in the period are deferred based on
the metres developed for a particular level. Previously deferred
underground mining costs are released to the income statement
based on the recoverable ounces produced in a level multiplied
by the life of level cost per recoverable ounce rate.
Grade control drilling is deferred to the statement of financial
position on a level-by-level basis. These amounts are released to
the income statement as ounces are produced from the related
mining levels.
(IV) IMPAIRMENT OF ASSETS
The Group assesses impairment of all assets at each reporting
date by evaluating conditions specific to the Group and to the
particular assets that may lead to impairment. 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(j). These calculations
require the use of estimates, which have been outlined in
accounting policy 1(j). Value-in-use is generally determined as
the present value of the estimated future cash flows. Present
values are determined using a risk adjusted discount rate
appropriate to the risks inherent in the asset.
Given the nature of the Group’s mining activities, future changes
in 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.
With respect to the impairment write off taken against the
Group’s Southern Cross CGU at 30 June 2012, value in use in
relation to this CGU was determined by discounting the future
cash flows generated from the continuing use of the operation
and was based on the following key assumptions:
(cid:129) Cash flows were projected based on the life of mine plan,
which is predominantly based on ore reserves.
(cid:129) Revenue was projected using a forecast gold price, which
takes into consideration the prevailing spot price, and
forward projections as at 30 June 2012.
(cid:129) A pre-tax nominal discount rate of 11.26% based on the
weighted average cost of capital.
The above estimates are particularly sensitive to a change
in the gold price.
(V) EXPLORATION AND EVALUATION EXPENDITURE
As set out in Note 1(f) exploration and evaluation expenditure is
capitalised where reserves have been established for an area of
interest and it is considered likely to be recoverable from future
exploitation or sale. 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.
(VI) REHABILITATION AND MINE CLOSURE PROVISIONS
As set out in Note 1(y), 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 on the
carrying value of the provisions (refer to Note 23). 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.
60
Note 4 Critical Accounting Estimates and
Judgements cont.
(VI) REHABILITATION AND MINE CLOSURE PROVISIONS cont.
In estimating the rehabilitation provision at 30 June 2012,
the following assumptions were made:
(cid:129) Timing of rehabilitation outflows was based on the life of
mine plan of each operation, with the rehabilitation of legacy
areas of disturbance scheduled accordingly.
(cid:129) Mine demolition costs are estimated on the basis of the
expected mine life of each operation. Costs are adjusted
for potential receipts through the sale of scrap metal.
(cid:129) Inflation is not applied to cost estimates.
(cid:129) A pre-tax real discount rate of 8.25% based on the risks
specific to the liability.
(VII) DEFERRED TAX
During the year, $35,432,000 of previously unbooked tax losses
were utilised against taxable profit for the year. At 30 June 2012
the Group recognised $20,731,000 of previously unbooked tax
losses on the basis that it is probable that future taxable profits
will be available against which these losses will be generated.
Estimates of future taxable profits are based on forecast cash
flows from operations.
(VIII) DERIVATIVE FINANCIAL INSTRUMENTS
The Group assesses the fair value of its gold bought put and
sold call options (the “collar structure”) at each reporting date.
At 30 June 2012, the fair value of the collar structure was
negative $16,290,000. Refer to Note 3(b) for details of the
impact fair value movements have on the financial statements.
Fair values have been determined using a ‘Level 2’ valuation
method involving the use of a generally accepted option
valuation model: inputs are based on market observable data
for the asset or liability, either directly (i.e. prices) or indirectly
(i.e. derived from prices), at the reporting date and compared
with valuations provided by the counterparties to the collar
structure. These calculations require the use of estimates and
assumptions. Any changes in assumptions in relation to gold
prices and volatilities could have a material impact on the fair
valuation attributable to the gold collar structure at the reporting
date. When these assumptions change in the future the differences
will impact the gold cash flow hedge reserve and/or income
statement in the period in which the change occurs.
(IX) SHARE BASED PAYMENTS
The Group measures the cost of equity settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair
value is determined by an external valuer using an option
pricing model, using the assumptions detailed in Note 37.
Where the vesting of share based payments contain
market conditions, in estimating the fair value of the equity
instruments issued, the Group assesses the probability of the
market conditions being met, and therefore the probability
of fair value vesting, by undertaking a Monte-Carlo simulation.
The simulation performs sensitivity analysis on key assumptions
in order to determine potential compliance with the market
performance conditions. The simulation specifically performs
sensitivity analysis on share price volatility based on the historical
volatility for St Barbara Limited and the peer group companies.
The results of the Monte-Carlo simulation are not intended to
represent actual results, but are used as an estimation tool by
management to assist in arriving at the judgment of probability.
Note 5 Segment Information
The Group has two operational business units: Leonora
Operations and Southern Cross Operations. The operational
business units are managed separately due to their separate
geographic regions.
The Leonora Operations comprise two reportable segments:
the Gwalia and King of the Hills underground mines. The results
of both mines are reviewed regularly by the Group’s Executive
Leadership Team, in particular production, cost per ounce and
capital expenditures. Additionally, the revenue earned by each
reportable segment exceeds 10 per cent of the Group’s
consolidated revenue. The ore mined at the King of the Hills
underground mine is processed through the Gwalia processing
plant. The mine operating costs reported for King of the Hills
includes an allocation of processing costs based on the tonnes
of ore processed.
The King of the Hills mine was added as a reportable segment
in the year to 30 June 2012 as the Executive Leadership Team
commenced reviewing this as a standalone segment from 1 July
2011 following commencement of production at King of the Hills.
Information regarding the operations of each reportable
segment is included below. Performance is measured based on
segment profit before income tax, as this is deemed to be the
most relevant in assessing performance after taking into account
factors such as cost per ounce of production.
Annual Report 2012
61
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 5 Segment Information cont.
Gwalia
King of the Hills
Southern Cross
Total
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
Revenue
292,197
184,996
92,199
10,207
156,793
167,794
541,189
362,997
Mine operating costs
(110,542)
(98,999)
(41,562)
(4,874)
(116,773)
(104,148)
(268,877)
(208,021)
Gross profit
Royalties
181,655
85,997
50,637
5,333
40,020
63,646
272,312
154,976
(11,841)
(7,075)
(3,684)
(312)
(6,553)
(6,306)
(22,078)
(13,693)
Depreciation and amortisation
(45,200)
(35,092)
(17,168)
(2,107)
(33,824)
(20,443)
(96,192)
(57,642)
Reportable segment profit/
(loss) before income tax
124,614
43,830
29,785
2,914
(357)
36,897
154,042
83,641
Capital expenditure
(54,355)
(54,489)
(28,245)
(33,760)
(14,185)
(29,577)
(96,785)
(117,826)
Reportable segment assets
375,238
352,344
50,699
35,958
22,877
43,664
448,814
431,966
Major Customer
Major customers to whom the Group provides goods that are more than 10% of external revenue are as follows:
Customer A
Customer B
Customer C
Customer D
Customer E
Revenue
% of external revenue
2012
$’000
176,794
137,243
104,529
101,607
21,016
2011
$’000
151,692
76,729
92,009
–
39,145
2012
%
32.6
25.4
19.3
18.8
3.9
2011
%
42.2
21.3
25.6
–
10.9
Reconciliation of reportable segment revenues, profit, assets, and other material items:
Revenues
Total revenue for reportable segments
Other revenue
Consolidated revenue
Profit
Total profit for reportable segments
Other income and revenue
Exploration expensed
Unallocated depreciation and amortisation
Finance costs
Net fair value movements on gold options
Net proceeds from sale of tenement rights
Corporate and support costs
Expenditure associated with acquisitions
Other corporate expenses
Consolidated profit before income tax
62
Consolidated
2012
$’000
2011
$’000
541,189
6,779
547,968
154,042
7,701
362,997
5,960
368,957
83,641
8,446
(16,246)
(13,284)
(1,031)
(3,754)
(5,400)
–
(13,732)
(5,664)
(6,417)
109,499
(838)
(4,040)
13,471
1,963
(13,819)
(681)
(6,230)
68,629
Note 5 Segment Information cont.
Assets
Total assets for reportable segments
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Capitalised borrowing costs
Derivative financial assets
Net deferred tax assets
Other assets
Consolidated total assets
Other material items
Mine operating costs
Depreciation and amortisation
Other material items
Mine operating costs
Depreciation and amortisation
Note 6 Revenue
Sales revenue – continuing operations
Sale of gold
Sale of silver
Other revenue
Interest revenue
Sub-lease rental
Third party revenue – ore processing
Consolidated
2012
$’000
2011
$’000
448,814
185,242
13,795
154
7,172
87
22,215
4,636
431,966
79,485
24,140
–
7,912
2,367
–
2,514
682,115
548,384
Year ended 30 June 2012
Reportable
segment
totals
Unallocated
Consolidated
totals
(268,877)
(96,192)
–
(268,877)
(1,031)
(97,223)
Year ended 30 June 2011
Reportable
segment totals
Unallocated
Consolidated
totals
(208,021)
(57,642)
–
(838)
(208,021)
(58,480)
Consolidated
2012
$’000
2011
$’000
538,411
2,778
541,189
6,442
337
–
6,779
357,484
2,091
359,575
5,611
349
3,422
9,382
Total revenue
547,968
368,957
Annual Report 2012
63
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 7 Other income
Profit on sale of assets
Proceeds from sale of tenement rights
Other
Note 8 Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Impairment write-offs
Amortisation
Mine development costs
Capitalised borrowing costs
Plant/equipment finance leases
Impairment write-offs
Total depreciation & amortisation
Finance Costs
Interest paid/payable
Borrowing costs
Finance lease interest
Provisions: unwinding of discount
Employee related expenses
Contributions to defined contribution superannuation funds
Termination payments
Equity settled share-based payments (note 25(a))
Rental expense relating to operating leases
Lease payments
64
Consolidated
2012
$’000
67
–
855
922
2011
$’000
1,224
1,963
1,262
4,449
Consolidated
2012
$’000
2011
$’000
1,607
15,313
3,901
20,821
1,067
15,213
–
16,280
72,638
41,085
854
457
2,453
76,402
97,223
448
138
278
2,890
3,754
2,985
403
904
4,292
702
413
–
42,200
58,480
378
99
962
2,601
4,040
2,543
420
973
3,936
802
873
Note 9 Significant items
Significant items are those items where their nature or amount is considered material to the financial report. Such items included within
the consolidated results for the year are detailed below.
Consolidated
Included within net realised/unrealised gains/(losses) on derivatives
Net unrealised (loss)/gain on gold cash flow hedges (1)
Realised gain on gold cash flow hedges (1)
Expenses associated with acquisitions(2)
Southern Cross asset write down (3)
Included within mine operating costs – deferred operating development
Included within depreciation and amortisation
Income tax benefit(4)
Included within Other Expenditure
Native title payments
Included within Other Income
Profit on sale of Tarmoola processing plant
Proceeds from sale of tenement rights
2012
$’000
(6,102)
702
(5,400)
(5,664)
(3,865)
(6,354)
(10,219)
20,731
–
–
–
–
–
2011
$’000
12,946
525
13,471
–
–
–
–
–
(2,400)
(2,400)
1,164
1,963
3,127
Total significant items
(552)
14,198
(1) Net realised/unrealised (loss)/gain on gold cash flow hedges
At 30 June 2012 the mark-to-market value of the Company’s gold put and call options (collar structure) was negative $16,290,000 (June 2011: negative
$8,101,000). The put and call options at 30 June 2012 represent price protection for 175,000 ounces of King of the Hills production, and 20,000 ounces
for Southern Cross production (June 2011: King of the Hills: 238,000 ounces; Southern Cross: nil ounces). In accordance with accounting standards the
net unrealised loss, representing the movement in the time value of the gold options during the year, amounting to $6,102,000, was recognised in the
income statement (2011: unrealised gain of $12,946,000). The net realised gain of $702,000 represents the unwinding of the unrealised mark-to-market
loss previously recognised for gold options that were exercised or expired during the year (2011: realised gain of $525,000). The unrealised loss related to
the movement in the intrinsic value of the gold options in the year of $3,054,000 (2011: gain of $17,102,000) was recognised in the gold cash flow hedge
reserve in equity, with a realised gain of $264,000 recognised in the reserve for options that were exercised or expired during the year. Over time, unrealised
losses on the gold options recognised in the income statement will reverse either through a change in the mark-to-market value of the options or maturity
of the contracts.
(2) Expenses associated with acquisitions
During the year, the Company engaged various consultants to assist with completing due diligence and in making an offer for Allied Gold (refer Note 33
for further details of the proposed Allied Gold transaction). In the prior year, these expenses were not reported as a significant item on the basis that the
amount was not material.
(3) Southern Cross asset write-down
Based on an assessment of the Southern Cross operations cash generating unit (”CGU”) at 30 June 2012, an impairment write down was taken against
assets of the CGU. While the Southern Cross operations are expected to generate positive net cash flows in the remaining period to closure, the cash flow
estimates no longer support the full recovery of the carrying value of the Southern Cross CGU assets, including deferred mine operating development
expenditure disclosed in mine operating costs in the Income Statement ($3,865,000); and capitalised mine development expenditure ($1,723,000), plant
and equipment ($3,901,000) and capitalised exploration and evaluation expenditure ($730,000) all disclosed in depreciation and amortisation in the
Income Statement.
(4) Income tax benefit
At 30 June 2011, the Group had unbooked tax losses of $182,258,000 (before tax effect) – these losses were not booked as it was not probable at that
time that future taxable profits would be generated to utilise these losses. At 30 June 2012, based on current operational forecasts, it is now probable that
future taxable profits will be generated to utilise the Group’s tax losses. The credit of $20,731,000 recognised as an income tax benefit represents the
booking of the tax effect of remaining losses at 30 June 2012 which were not previously booked.
Annual Report 2012
65
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 10 Income tax expense
(A) INCOME TAX EXPENSE
Current tax expense
Deferred income tax benefit
Total
Note
Consolidated
2012
$’000
35,432
(56,163)
(20,731)
2011
$’000
20,479
(20,479)
–
9
(B) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE/(BENEFIT) TO PRIMA FACIE TAX PAYABLE
Profit before income tax benefit
Tax at the Australian tax rate of 30%
Tax effect of amounts not deductible/(taxable) in calculating taxable income:
Legal and other capital expenditure
Equity settled share based payments
Transaction costs treated as capital cost base
Sundry items
Utilisation of previously unbooked tax losses
Recognition of previously unbooked tax losses
Change in previously unrecognised temporary differences
Income tax benefit
(C) DEFERRED TAX BALANCE
Deferred tax liabilities
Accrued income
Mining properties – exploration
Mining properties – development
Consumables
Capitalised convertible notes costs
Total
Tax effect @ 30%
Deferred tax assets
Tax losses
Tax losses not booked
Provisions and accruals
Hedges at fair value
Investments at fair value
Tax assets without a carrying amount
Total
Tax effect @ 30%
Net deferred tax asset
66
Consolidated
2012
$’000
109,499
32,850
636
271
1,576
99
(35,432)
(20,731)
2011
$’000
68,629
20,589
(382)
263
–
9
(8,273)
–
–
(12,206)
(20,731)
–
Consolidated
2012
$’000
543
23,470
176,194
10,418
7,172
217,797
65,339
2011
$’000
464
20,529
178,460
9,711
7,911
217,075
65,123
227,897
342,689
–
(182,258)
43,459
16,290
96
4,104
291,846
87,554
22,215
41,416
8,101
–
7,127
217,075
65,123
–
Note 11 Cash and cash equivalents
Cash at bank and on hand
Term deposits
(A) CASH AT BANK AND ON HAND
Consolidated
2012
$’000
23,442
161,800
185,242
2011
$’000
4,485
75,000
79,485
Cash at bank at 30 June 2012 invested “at call” was earning interest at an average rate of 3.82% per annum (2011: 4.90% per annum).
(B) DEPOSITS
The deposits at 30 June 2012 were earning interest at rates of between 4.04% and 5.92% per annum (2011: rates of between 6.00%
and 6.23% per annum). While term deposits are invested for defined periods, all deposits can be immediately accessed. At 30 June 2012,
the average time to maturity was 41 days (2011: 68 days), with $10,000,000 maturing between 90 to 180 days (2011: $36,000,000)
from balance date.
Note 12 Trade and other receivables
Current assets
Trade receivables
Other receivables
Restricted cash (1)
Prepayments
Consolidated
2012
$’000
3,646
6,321
123
3,705
13,795
2011
$’000
15,199
5,255
123
3,563
24,140
(1) Restricted cash at 30 June 2012 is cash placed on deposit to secure five bank guarantees in respect of obligations entered into for environmental
performance bonds issued in favour of the Western Australian Department of Industry and Resources. These deposits earned interest at an average
interest rate of 3.45%.
(A) EFFECTIVE INTEREST RATES AND CREDIT RISK
Information concerning the effective interest rate and credit risk of receivables is set out in Note 3 and Note 16.
Note 13 Inventories
Consumables
Ore stockpiles
Gold in circuit
Bullion on hand
(A) LOWER OF COST AND NET REALISABLE VALUE
At 30 June 2012, all categories of inventory were valued at cost (2011: all categories at cost).
Consolidated
2012
$’000
10,418
760
10,689
–
2011
$’000
9,711
723
6,407
1,017
21,867
17,858
Annual Report 2012
67
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 14 Deferred mining costs
Current
Deferred operating mine development
Non-current
Deferred operating mine development
Note 15 Available-for-sale financial assets
Current
At beginning of year
Additions
Revaluation loss taken to equity
(A) LISTED SECURITIES
Consolidated
2012
$’000
2011
$’000
23,789
12,934
5,917
10,230
Consolidated
2012
$’000
2011
$’000
–
250
(96)
154
–
–
–
–
Available-for-sale financial assets as at 30 June 2012 consisted of companies listed on the Australian Securities Exchange.
Note 16 Financial instruments
(A) CREDIT RISK EXPOSURES
Refer Note 3 for the Group’s exposure to credit risk.
(B) INTEREST RATE RISK EXPOSURES
The Group’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 Group intends to hold
fixed rate assets and liabilities to maturity.
2012
Fixed Interest Maturing in
Floating
Interest rate
$’000
1 year or less
$’000
Over 1 to 5
years
$’000
Non- interest
bearing $’000
Financial assets
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables
Available for sale financial assets
Gold put and call options
Weighted average interest rate
Financial liabilities
Trade and other payables
Finance lease liabilities
Gold put and call options
Insurance premium funding
Weighted average interest rate
Net financial assets/(liabilities)
68
23,442
161,800
123
–
–
–
–
–
–
–
23,565
3.78%
161,800
5.48%
–
–
–
–
–
–
1,024
–
1,976
3,000
5.93%
–
–
–
–
–
–
–
992
–
–
992
7.59%
Total
$’000
185,242
123
9,967
154
87
–
–
9,967
154
87
10,208
195,573
55,542
264
16,377
–
72,183
55,542
2,280
16,377
1,976
76,175
23,565
158,800
(992)
(61,975)
119,398
Note 16 Financial Instruments cont.
(B) INTEREST RATE RISK EXPOSURES cont.
2011
Financial assets
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables
Gold put and call options
Weighted average interest rate
Financial liabilities
Trade and other payables
Finance lease liabilities
Equipment financing facility
Gold put and call options
Insurance premium funding
Weighted average interest rate
Net financial assets/(liabilities)
Floating
Interest rate
$’000
4,485
123
–
–
4,608
4.89%
–
–
7,860
–
–
7,860
7.73%
(3,252)
1 year or less
$’000
75,000
–
–
–
75,000
6.12%
–
954
–
–
1,785
2,739
5.97%
72,261
Note 17 Property, plant and equipment
Non-current
Land
Housing and site buildings
Plant and equipment
Accumulated depreciation and impairment
Fixed Interest Maturing in
Over 1 to 5
years
$’000
Non- interest
bearing $’000
–
–
–
–
–
–
1,581
–
–
–
1,581
7.52%
(1,581)
Total
$’000
79,485
123
20,454
2,367
102,429
49,366
2,541
7,860
10,468
1,785
72,020
–
–
20,454
2,367
22,821
49,366
6
–
10,468
–
59,840
(37,019)
30,409
Consolidated
2012
$’000
2011
$’000
1,093
21,626
145,215
(64,006)
103,928
1,093
17,870
129,520
(42,733)
105,750
Annual Report 2012
69
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 17 Property, plant and equipment cont.
Reconciliation of the carrying amounts for each class of property, plant and equipment is set out below:
Land
Housing and site buildings
At the beginning of the year
Additions
Depreciation
At the end of the year
Plant and equipment
At the beginning of the year
Additions
Disposals
Depreciation
Assets written off
At the end of the year
Total
(A) SECURITY
Consolidated
2012
$’000
1,093
15,163
3,756
(1,607)
17,312
89,494
15,701
(1)
(15,770)
(3,901)
85,523
103,928
2011
$’000
1,093
16,230
–
(1,067)
15,163
94,773
12,176
(1,829)
(15,626)
–
89,494
105,750
As at 30 June 2012, plant and equipment with a carrying value of $1,997,000 (2011: $31,909,000) was pledged as security for finance
leases (Note 21).
In accordance with the security arrangements in relation to commercial banking facilities, all remaining assets of the Group have been
pledged as security to the National Australia Bank Limited and Barclays Bank PLC for performance bond and hedging facilities.
Consolidated
2012
$’000
2011
$’000
283,991
80,757
–
(73,378)
(1,723)
216,530
106,312
2,844
(41,695)
–
289,647
283,991
Note 18 Mine properties
Non-current
Mine Properties – development
At beginning of the year
Direct expenditure
Transferred from exploration and evaluation
Amortisation for the year
Mine development written off
At end of the year
70
Note 19 Exploration and evaluation
Non-current
Exploration and evaluation
At beginning of the year
Tenements written off
Expenditure capitalised for the year
Transferred to mine properties
Exploration and evaluation written off
At end of the year
Note 20 Trade and other payables
Current
Trade payables
Other payables
Note 21 Interest bearing borrowings
Current
Secured
Lease liabilities (Note 29)
Equipment finance facility (Note 29)
Transaction costs
Unsecured
Insurance premium funding
Total current
Non-current
Secured
Lease liabilities (Note 29)
Total non-current
Consolidated
2012
$’000
2011
$’000
11,629
–
4,575
–
(730)
5,735
(125)
8,863
(2,844)
–
15,474
11,629
Consolidated
2012
$’000
54,434
1,108
55,542
2011
$’000
47,397
1,969
49,366
Consolidated
2012
$’000
2011
$’000
1,067
–
–
1,067
1,976
3,043
1,213
1,213
960
7,860
(114)
8,706
1,785
10,491
1,581
1,581
(A) INTEREST RATE RISK EXPOSURES
Details of the Group’s exposure to interest rate changes on borrowings are set out in Note 16.
(B) EQUIPMENT FINANCE FACILITY
In August 2011, the Company repaid the remaining amount owing on the equipment facility held with GE Commercial Finance.
Annual Report 2012
71
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 21 Interest bearing borrowings cont.
(C) 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. At 30 June 2012 restricted cash for this purpose amounted to
$123,000 (2011: $123,000).
Note 22 Derivative financial assets and liabilities
Current assets
Fair value of gold option collar
Non-current assets
Fair value of gold option collar
Current liabilities
Fair value of gold option collar
Non-current liabilities
Fair value of gold option collar
Consolidated
2012
$’000
87
–
2,830
2011
$’000
2,085
282
–
13,547
10,468
(A) INSTRUMENTS USED BY THE GROUP
Refer to Note 3 ‘Financial Risk Management’ for details on instruments used by the Group.
(B) ESTIMATION OF CURRENT AND NON-CURRENT ASSETS AND LIABILITIES
In estimating the fair value of the gold option collars at each reporting date, the Group obtains an independent valuation of each
option tranche within each collar. The valuation is performed using a generally accepted option valuation model where inputs are
based on market observable data for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). Each tranche
is then classified as a current or non-current asset or liability accordingly.
Note 23 Provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Employee benefits – other
Provision for rehabilitation
Other provisions
Non-current
Provision for rehabilitation
Employee benefits – long service leave
72
Consolidated
2012
$’000
2,569
1,583
2,078
3,694
900
10,824
30,071
1,212
31,283
2011
$’000
2,244
1,056
890
3,643
149
7,982
30,888
1,261
32,149
Note 23 Provisions cont.
MOVEMENTS IN PROVISIONS
Rehabilitation
Balance at start of year
Unwinding of discount
Expenditure incurred
Balance at end of year
Note 24 Contributed equity
(A) SHARE CAPITAL
Consolidated
2012
$’000
34,531
2,890
(3,656)
33,765
2011
$’000
32,474
2,601
(544)
34,531
Parent entity
Parent entity
2012
Shares
2011
Shares
2012
$’000
2011
$’000
Ordinary shares – fully paid
324,620,389
325,615,389
613,275
615,521
(B) MOVEMENTS IN ORDINARY SHARE CAPITAL:
Date
Details
1 July 2010
Plus
Shares issued on exercise of options
Transfer of Option Reserve on conversion of options
Shares on issue prior to consolidation
Shares on issue following share consolidation
30 Jun 2011
Less
Share buybacks
Share buyback transaction costs
Notes
Number of
shares
Issue price
($/share)
1,952,668,407
1,000,000
0.28
1,953,668,407
325,615,389
325,615,389
(995,000)
2.25
(i)
(ii)
(iii)
(iv)
30 Jun 2012 Closing balance
324,620,389
$’000
614,997
279
245
–
–
615,521
(2,239)
(7)
613,275
(i) Shares issued on exercise of unlisted options held by executives and employees.
(ii) Transfer of the fair value in the Share Based Payment Reserve relating to the options exercised at (i).
(iii) On 18 November 2010 shareholders approved a share consolidation of six existing shares for one new share of the Company’s issued capital.
(iv) Pursuant to the on-market share buy-back facility announced on 21 December 2011, the Company bought back 995,000 shares during February
and March 2012.
(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 AND PERFORMANCE RIGHTS
Information relating to the St Barbara Employee Option Plan and Performance Rights Plan, including details of options and rights
issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in Note 37.
Annual Report 2012
73
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 25 Reserves and accumulated losses
(A) RESERVES
Reserves
Share based payments reserve
Investment fair value reserve
Gold cash flow hedge reserve
Share based payments reserve
Balance at start of year
Option/performance rights expense
Options exercised
Options expired and transferred to retained earnings
Options not vesting
Balance at end of year
Investments fair value reserve
Balance at start of year
Fair value adjustment
Tax effect of fair value adjustments
Balance at end of year
Gold cash flow hedge reserve
Balance at start of year
Options exercised/expired
Fair value adjustments
Tax effect of fair value movements
Balance at end of year
(B) ACCUMULATED LOSSES
Movements in accumulated losses were as follows:
Balance at start of year
Profit attributable to members of the Company
Transferred from share based payment reserve
Balance at end of year
(C) SHARE BASED PAYMENTS RESERVE
Consolidated
2012
$’000
2,996
(67)
(3,394)
(465)
3,108
1,828
–
(1,016)
(924)
2,996
–
(96)
29
(67)
2011
$’000
3,108
–
(2,059)
1,049
2,484
973
(245)
–
(104)
3,108
–
–
–
–
(2,059)
(19,161)
264
(3,054)
1,455
(3,394)
–
17,102
–
(2,059)
Consolidated
2012
$’000
2011
$’000
(180,223)
(248,852)
130,230
1,016
68,629
–
(48,977)
(180,223)
The share based payments reserve is used to recognise the fair value of options and rights issued to executives and employees but
not exercised.
$1,016,000 previously recognised in the share based payments reserve in respect of 416,668 options, which expired during the year
was transferred to accumulated losses. Accounting standards preclude the reversal through the Income Statement of amounts which
have been booked in the share based payments reserve for options which have previously vested but subsequently expire.
74
Note 25 Reserves and accumulated losses cont.
(D) GOLD CASH FLOW HEDGE RESERVE
At each balance sheet date, a mark-to-market valuation of the Group’s gold bought put options and sold call options (the “collar
structure”) is performed. Where the hedge is effective, changes in fair value relating to the intrinsic portion of the valuation are
recognised in the gold cash flow hedge reserve. If the underlying options expire, the reserve relating to the expired options reverses
against the derivatives liability.
Note 26 Parent Entity disclosures
As at, and throughout, the financial year ended 30 June 2012, the parent company of the Group was St Barbara Limited.
(A) FINANCIAL STATEMENTS
Results of the parent entity
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Other comprehensive income is set out in the Consolidated Statement of Comprehensive Income.
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Share based payments reserve
Investment fair value reserve
Gold cash flow hedge reserve
Accumulated losses
Total equity
Parent Entity
2012
$’000
130,230
(1,402)
128,828
2011
$’000
68,629
17,102
85,731
Parent Entity
2012
$’000
2011
$’000
244,936
682,295
83,640
129,683
613,275
2,996
(67)
(3,394)
136,504
548,564
79,240
123,438
615,521
3,108
–
(2,059)
(60,198)
(191,444)
552,612
425,126
(B) PARENT ENTITY CONTINGENCIES
The parent entity had no contingent liabilities at 30 June 2012.
(C) PARENT ENTITY GUARANTEES
Refer Note 28 for details of bank guarantees issued by the parent entity.
(D) PARENT ENTITY CAPITAL COMMITMENTS FOR ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT
Contracted but not yet provided for and payable
Within one year
Company
2012
$’000
2011
$’000
–
–
Annual Report 2012
75
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 27 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices
and non-related audit firms:
(A) ASSURANCE SERVICES
Audit and audit related services
KPMG Australian firm
Audit and review of financial reports
Audit and review of financial controls
Total remuneration for audit and audit related services
(B) NON-AUDIT SERVICES
KPMG Australian firm
Financial and accounting due diligence services
Total remuneration for non-audit services
Note 28 Contingencies
(A) CONTINGENT LIABILITIES AND ASSETS
Consolidated
2012
$’000
2011
$’000
261
–
261
495
495
245
120
365
–
–
The Company and consolidated entity had no contingent liabilities at 30 June 2012.
(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 2012 was $20,608,000 (2011: $20,716,000). Security is provided to the National Australia Bank Limited (“NAB”)
(refer to Note 17) for $20,485,000 of this amount through a fixed and floating charge over the Group’s assets. Cash held on deposit
with the Commonwealth Bank of Australia secures the remaining $123,000 as at 30 June 2012 (refer to Note 12).
Under the terms of the NAB facility, there are a number of undertakings related to the performance of the Company. Non compliance
with these undertakings could constitute an event of default. In the year, and as at 30 June 2012, there were no events of default
under the facility.
(C) GOLD BOUGHT PUT AND SOLD CALL OPTIONS
In the 2011 financial year, the Company negotiated a 250,000 ounce zero cost collar hedge facility with National Australia Bank Limited
(NAB) and Barclays Bank PLC (“Barclays”) to provide price protection for production from King of the Hills. In August 2011, the Company
negotiated a 100,000 ounce zero cost collar hedge facility with NAB and Barclays to provide price protection for production from
Southern Cross. Refer to Note 3 for details of ounces exercised/expired during the year, and ounces remaining under these facilities.
Security is provided to NAB and Barclays through a fixed and floating charge over the assets of the Group, excluding assets securing
finance leases.
Under the terms of the hedge facility there are a number of undertakings related to the performance of the Company. Non compliance
with these undertakings could constitute an event of default. In the year, and as at 30 June 2012, there were no events of default
under the facility.
Note 29 Commitments for expenditure
EXPLORATION
In order to maintain rights of tenure to mining tenements, the Group is committed to tenement
rentals and minimum exploration expenditure in terms of the requirements of the relevant state
government mining departments in Western Australia, New South Wales and South Australia. This
requirement will continue for future years with the amount dependent upon tenement holdings.
Consolidated
2012
$’000
2011
$’000
9,677
9,580
76
Note 29 Commitments for expenditure cont.
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 21)
Non-current (Note 21)
Consolidated
2012
$’000
1,144
1,065
2,209
(193)
2,016
264
2,280
1,067
1,213
2,280
2011
$’000
1,124
1,722
2,846
(311)
2,535
6
2,541
960
1,581
2,541
These finance lease commitments relate to vehicles and plant and equipment, and are based on the cost of the assets and are payable
over a period of up to 48 months.
Equipment Finance Facility
Payable not later than one year
Future finance charges
Total lease liabilities
Current (Note 21)
Non-current (Note 21)
Analysis of Non-Cancellable Operating Lease Commitments
Payable not later than one year
Payable later than one year, not later than five years
Payable later than five years
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
2012
$’000
–
–
–
–
–
–
2011
$’000
8,023
(163)
7,860
7,860
–
7,860
Consolidated
2012
$’000
916
3,093
85
4,094
2011
$’000
265
1,181
744
2,190
Consolidated
2012
$’000
207
607
814
2011
$’000
199
813
1,012
Annual Report 2012
77
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 30 Related party transactions
A) DIRECTORS AND KEY MANAGEMENT PERSONNEL
Disclosures relating to Directors and key management personnel are set out in Note 38.
(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 (2011: $ Nil). Net receivables from
subsidiaries amounted to $2,000 (2011: $2,000). 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
(D) GUARANTEES
Company
2012
$’000
852
(850)
2
2011
$’000
852
(850)
2
11,401
11,401
Subsidiary companies have guaranteed the parent entity’s obligations under the bank guarantee facilities provided by the National
Australia Bank Limited and 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 2012, there were no amounts receivable from Director related entities (2011: $ Nil).
(G) OTHER TRANSACTIONS WITH DIRECTORS OF THE COMPANY AND THEIR DIRECTOR RELATED ENTITIES
During the year ended 30 June 2012, there were no other transactions with Directors of the Company and their Director related entities.
78
Note 31 Controlled entities
The Group consists of the Company and its wholly-owned controlled entities as follows.
Name of entity
Australian Eagle Oil 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
Carrying value of
Company’s investment
Class of Shares
June 2012
%
June 2011
%
June 2012
$’000
June 2011
$’000
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
178
178
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
178
178
Each company in the Group was incorporated in Australia.
Note 32 Interests in jointly controlled assets
WESTERN AUSTRALIA
Leonora Region
Mount Newman – Victory
Sandy Soak
Melita
McEast/Pipeline
Black Cat
Silver Phantom
South Rankin
June 2012
Equity %
June 2011
Equity %
Joint Venturers
87%
91%
80%
20%
40%
70%
75%
87%
91%
80%
20%
40%
70%
75%
Astro Diamond Mines N.L.
Hunter Resources Pty Ltd
Dalrymple Resources N.L.
Cheperon Gold Partnership
Terrain Minerals Ltd
Bellriver Pty Ltd
Comet Resources Limited
As at 30 June 2012 there was no joint venture assets recorded in the balance sheet (2011: Nil).
Note 33 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, except for the following:
(cid:129) On 29 June 2012, the Company announced a proposal to acquire all the shares of Allied Gold Mining Plc (“Allied Gold”) via a
scheme of arrangement. Under the terms of the recommended offer, St Barbara will acquire the entire issued and to be issued
ordinary share capital of Allied Gold for A$1.025 in cash and 0.8 St Barbara shares for each Allied Gold share (the “Offer”). Based
on the closing price of St Barbara shares on the Australian Securities Exchange on 28 June 2012, being the last trading day before
the announcement, the offer values Allied Gold at $556 million.
The cash consideration payable under the terms of the Offer will be funded from St Barbara’s existing cash resources and additionally
by using a A$120 million term loan facility. Following implementation of the Offer, Allied Gold will become a wholly owned subsidiary
of St Barbara.
On 14 August 2012, the shareholders of Allied Gold voted in favour of the scheme of arrangement. The court hearing in the UK to
sanction the scheme is to be held on 30 August 2012. The effective date of the combination, subject to court approval, is expected
to be by 7 September 2012.
Annual Report 2012
79
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 34 Reconciliation of profit after income tax to net cash flows from operating activities
Consolidated
2012
$’000
130,230
90,869
10,219
(20,731)
(67)
–
5,400
–
904
10,345
(4,009)
2011
$’000
68,629
58,480
–
–
(1,180)
(1,963)
(13,471)
125
869
(8,925)
197
(10,408)
(14,049)
7,037
(866)
2,904
11,217
1,504
1,640
221,827
103,073
Consolidated
2012
$’000
491
2011
$’000
1,552
Consolidated
2012
Cents
40.04
2011
Cents
21.05
Consolidated
2012
Cents
39.60
2011
Cents
20.94
Profit after tax for the year
Depreciation and amortisation
Asset impairment write offs
Recognition of unbooked tax losses
Profit on sale of assets
Gain on sale of tenement rights
Net realised/unrealised loss/(gain) on gold derivative fair value movements
Tenement write-off
Equity settled 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 flows from operating activities
Note 35 Non-cash investing and financing activities
Acquisition of vehicles and equipment through finance leases
Note 36 Earnings per share
(A) BASIC EARNINGS PER SHARE
Profit attributable to the ordinary equity holders of the Company
(B) DILUTED EARNINGS PER SHARE
Profit attributable to the ordinary equity holders of the Company
80
Note 36 Earnings per share cont.
(C) RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Basic and diluted earnings per share:
Profit after tax for the year
(D) WEIGHTED AVERAGE NUMBER OF SHARES
Consolidated
2012
$’000
2011
$’000
130,230
68,629
Consolidated
2012
Number
2011
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
325,285,005
326,031,238
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
328,885,173
327,753,818
(E) INFORMATION CONCERNING THE CLASSIFICATION OF SECURITIES
(i) Options
Executive Options and Options granted to employees under the St Barbara Limited 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 37.
(ii) Performance rights
Performance rights granted to employees under the St Barbara Performance Rights Plan are considered to be potential ordinary shares
and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The rights have not
been included in the determination of basic earnings per share. Details relating to the rights are set out in Note 37.
Note 37 Share-based payments
(A) EMPLOYEE OPTION PLAN
The establishment of the St Barbara Limited Employee Option Plan was approved by shareholders at the 2001 Annual General
Meeting. Options are granted as part of an employee’s total remuneration package. Options are granted for a three to five year period.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share.
Set out below are summaries of options granted to employees under the St Barbara Limited Employee Option Plan approved by shareholders:
Consolidated and parent entity – 2012
Grant Date
11 Sep 06
01 Dec 06
06 May 09
06 May 09
23 Sep 09 (2)
Total
Weighted average exercise price
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
11 Sep 11
$2.863
333,334
01 Dec 11
$3.181
83,334
02 Mar 14
$2.286
251,350
03 Apr 14
$2.466
517,354
23 Sep 14
$1.722
2,284,737
3,470,109
$2.02
–
–
–
–
–
–
–
–
–
–
–
–
333,334 (1)
83,334 (1)
251,350 (3)
517,354 (3)
–
–
–
–
329,474 (4) 1,955,263
1,514,846
1,955,263
$2.40
$1.72
–
–
–
–
–
–
–
(1) Options expired during the year.
(2) Vesting of options granted in September 2009 is subject to performance criteria as discussed below.
(3) Options did not meet performance criteria at 30 June 2012, therefore did not vest.
(4) Expired on termination of employment with the Company.
Annual Report 2012
81
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 37 Share-based payments cont.
(A) EMPLOYEE OPTION PLAN cont.
Consolidated and parent entity – 2011
Grant Date
30 Sep 05
01 Jul 06
11 Sep 06
01 Dec 06
06 May 09 (2)
06 May 09 (2)
23 Sep 09 (2)
Total
Weighted average exercise price
Expiry Date
Exercise
Price
Balance at
start of the
year
Number
Granted
during the
year
Number
30 Sep 10
$1.674
166,667
30 Jun 11
$2.832
83,334
11 Sep 11
$2.863
333,334
01 Dec 11
$3.181
83,334
02 Mar 14
$2.286
251,350
03 Apr 14
$2.466
603,580
23 Sep 14
$1.722
2,407,960
3,929,559
$2.02
–
–
–
–
–
–
–
–
Exercised
during the
year
Number
166,667
–
–
–
–
–
–
Expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable
at end of
the year
Number
–
83,334 (1)
–
–
–
–
–
–
–
333,334
333,334
83,334
83,334
251,350
86,226 (1)
517,354
123,223 (1) 2,284,737
–
–
–
166,667
292,783
3,470,109
416,668
$1.67
$2.26
$2.02
$2.93
(1) Expired on termination of employment with the Company.
(2) Vesting of options granted in May 2009 and September 2009 is subject to performance criteria as discussed below.
The weighted average remaining contractual life of share options outstanding at the end of the year was 2.2 years (2011: 2.8 years).
Fair value of options granted
There were no options granted during the year ending 30 June 2012.
Options are granted for no consideration. The vesting of options granted in 2010 is subject to a continuing services condition as at each
vesting date, and relative Total Shareholder Returns over a three year period measured against a peer group. The Board reserves the
right to make changes to the peer group to allow for changing circumstances (e.g. takeover) for peer group companies.
All options expire on the earlier of their expiry date, thirty days after resignation of the relevant executive 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. 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 performance hurdle (relative Total Shareholder Return) 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.
At each balance date, an assessment is performed with regard to the probability of options vesting with respect to service conditions,
and is subject to management judgement. Refer to Note 4 for further details.
82
Note 37 Share-based payments cont.
(B) EMPLOYEE PERFORMANCE RIGHTS
Set out below are summaries of performance rights granted to employees under the St Barbara Limited Performance Rights Plan
approved by shareholders:
Consolidated and parent entity – 2012
Grant Date
23 Dec 10
21 Jan 11
28 Oct 11
23 Nov 11
15 Mar 12
Total
Expiry Date
30 Jun 13
30 Jun 13
30 Jun 14
30 Jun 14
30 Jun 14
Weighted average exercise price
(1) Expired on termination of employment with the Company.
Consolidated and parent entity – 2011
Grant Date
23 Dec 10
21 Jan 11
Total
Expiry Date
30 Jun 13
30 Jun 13
Price on
issue date
$2.26
$1.81
Weighted average exercise price
(1) Expired on termination of employment with the Company
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
Price on
issue date
$2.26
2,274,252
114,611
–
–
$1.81
$2.23
$2.20
$2.09
–
–
–
1,177,839
459,621
243,496
2,388,863
1,880,956
–
–
–
–
–
–
–
–
364,612(1) 1,909,640
–
114,611
217,724 (1)
960,115
–
–
459,621
243,496
582,336
3,687,483
–
–
–
–
–
–
–
–
–
Balance at
start of the
year
Number
–
–
–
–
Granted
during the
year
Number
2,412,992
114,611
2,527,603
–
Exercised
during the
year
Number
Expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable
at end of
the year
Number
–
–
–
–
138,740 (1) 2,274,252
–
114,611
138,740
2,388,863
–
–
–
–
–
–
The weighted average remaining contractual life of performance rights outstanding at the end of the year was 1.5 years (2011: 2.0 years).
The model inputs for rights granted during the year ended 30 June 2012 included:
i.
Rights are granted for no consideration. The vesting of rights granted in 2012 is subject to a continuing service condition
as at each vesting date, and relative Total Shareholder Returns over a three year period measured against a peer group.
ii. Performance rights do not have an exercise price
iii. Any performance right which does not vest will lapse
iv. Grant date varies with each issue.
The fair value of rights issued was adjusted according to estimates of the likelihood that the market conditions would be met.
A Monte-Carlo simulation was performed using data at grant date to assist management in estimating the probability of the rights
vesting. Refer Note 4 for further details.
As a result of the Monte-Carlo simulation results, the assessed fair value of rights issued during the year was $2,073,000. This outcome
was based on the likelihood of the market condition being met as at the date the rights vest.
(C) EXPENSES ARISING FROM SHARE BASED PAYMENT TRANSACTIONS
Total expenses/(gains) arising from equity settled share based payment transactions recognised during the year as part of the employee
benefit expenses were as follows:
Options/performance rights issued/expired under employee option plan
Consolidated
2012
$’000
904
2011
$’000
624
Annual Report 2012
83
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 38 Key Management Personnel Disclosures
(A) DIRECTORS
The following persons were Directors of St Barbara Limited during the financial year:
(cid:129) S J C Wise
(cid:129) T J Lehany
(cid:129) D W Bailey
(cid:129) E A Donaghey
(cid:129) P C Lockyer
(cid:129) R K Rae
Chairman
Managing Director & CEO
Non-executive director
Non-executive director
Non-executive director
Non-executive director
(B) KEY MANAGEMENT PERSONNEL DISCLOSURES
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, during the financial year:
(cid:129) Tim J Lehany
(cid:129) David Rose
(cid:129) Alistair Croll
(cid:129) Garth Campbell-Cowan Chief Financial Officer
(cid:129) Ross Kennedy
(cid:129) Phil Uttley
Managing Director & CEO
Chief Operating Officer
Chief Operating Officer
Executive General Manager Corporate Services/Company Secretary
Executive General Manager Discovery & Growth
(resigned 31 January 2012)
(appointed 16 January 2012)
(C) KEY MANAGEMENT PERSONNEL COMPENSATION
Short term employee benefits
Post employment benefits
Long Service Leave
Share-based payments
Termination payments
Consolidated
2012
$’000
2011
$’000
4,207,826
2,713,826
78,522
104,216
75,995
65,086
1,162,542
488,259
330,716
–
5,883,822
3,343,166
(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, are disclosed in Note 37.
(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 key management personnel of the Group, including their related parties, are set out below:
2012
Name
Executive Director
T J Lehany
Key management personnel
D Rose
G Campbell-Cowan
R Kennedy
P Uttley
Granted
during the
year as
compen-
sation
Exercised
during the
year
Expired
during the
year
Other
changes
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
–
–
–
–
–
–
–
–
–
–
–
–
(251,350)(1)
976,220
(329,474)(2)
–
(333,334)
(201,192)(1)
290,670
–
–
(156,774)(1)
256,258
–
256,258
–
–
–
–
–
Balance at
the start of
the year
1,227,570
329,474
825,196
413,032
256,258
(1) Options did not vest at 30 June 2012.
(2) Options expired upon termination of employment.
84
Note 38 Key Management Personnel Disclosures cont.
(D) EQUITY INSTRUMENT DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL cont.
(ii) Option holdings cont.
2011
Name
Executive Director
T J Lehany
Key management personnel
D Rose
G Campbell-Cowan
R Kennedy
P Uttley
(iii) Performance rights
Granted
during the
year as
compen-
sation
Exercised
during the
year
Expired
during the
year
Other
changes
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,227,570
329,474
–
–
825,196
333,334
413,032
256,258
–
–
Balance at
the start of
the year
1,227,570
329,474
825,196
413,032
256,258
The numbers of rights over ordinary shares in the Company held during the financial year by each Director of St Barbara Limited
and key management personnel of the Group, including their related parties, are set out below:
2012
Name
Executive Director
T J Lehany
Key management personnel
D Rose
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
(1) Performance rights expired upon termination of employment.
2011
Name
Executive Director
T J Lehany
Key management personnel
D Rose
G Campbell-Cowan
R Kennedy
P Uttley
Granted
during the
year as
compen-
sation
Balance at
the start of
the year
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
757,819
459,621
–
–
1,217,440
252,011
152,846
–
169,106
225,737
146,472
195,174
118,374
195,174
126,634
–
–
–
–
–
(404,857) (1)
–
–
–
–
–
169,106
372,209
313,548
321,808
–
–
–
–
–
–
Granted
during the
year as
compen-
sation
Balance at
the start of
the year
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
–
–
–
–
–
757,819
252,011
225,737
195,174
195,174
–
–
–
–
–
–
–
–
–
–
757,819
252,011
225,737
195,174
195,174
–
–
–
–
–
Annual Report 2012
85
Notes to the Consolidated Financial Statements cont.
For the year ended 30 June 2012
Note 38 Key Management Personnel Disclosures cont.
(D) EQUITY INSTRUMENT DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL cont.
(iv) Share holdings
The numbers of shares in the Company held during the year by each Director of St Barbara Limited and key management personnel
of the Group, including their related parties, are set out below. There were no shares granted during the year as compensation.
Balance at the
start of the
year
1,139,389
167,822
30,247
–
20,631
48,976
–
–
65,218
–
Balance at the
start of the
year
1,139,389
167,822
30,247
–
10,631
42,310
23,334
–
70,885
–
Exercise of
options Other changes
Purchased
Balance at the
end of the year
Sold
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40,000
–
–
–
15,000
9,000
–
–
–
–
–
–
–
–
–
–
–
1,139,389
167,822
30,247
40,000
20,631
48,976
–
15,000
74,218
–
Exercise of
options Other changes
Purchased
Balance at the
end of the year
Sold
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,000
6,666
–
–
–
–
–
–
–
–
–
–
1,139,389
167,822
30,247
–
20,631
48,976
23,334
–
11,000
(16,667)
65,218
–
–
–
2012
Name
Directors
S J C Wise
T J Lehany
D W Bailey
E A Donaghey
P C Lockyer
R K Rae
Key management personnel
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
2011
Name
Directors
S J C Wise
T J Lehany
D W Bailey
E A Donaghey
P C Lockyer
R K Rae
Key management personnel
D Rose
G Campbell-Cowan
R Kennedy
P Uttley
86
Directors’ Declaration
1
In the opinion of the directors of St Barbara Limited (the Company):
(a) the financial statements and notes that are contained in pages 42 to 86 and the Remuneration report in the Directors’ report,
set out on pages 29 to 39, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the financial
year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2
3
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive
officer and chief financial officer for the financial year ended 30 June 2012.
The directors draw attention to Note 1(a) to the financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Timothy J Lehany
Managing Director and CEO
Melbourne
23 August 2012
Annual Report 2012
87
Independent Audit Report
Independent auditor’s report to the members of St Barbara Limited
Report on the financial report
We have audited the accompanying financial report of St Barbara Limited (the Company),
which comprises the consolidated statement of financial position as at 30 June 2012, and
consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated cash flow statement for the year
ended on that date, notes 1 to 38 comprising a summary of significant accounting policies and
other explanatory information and the directors’ declaration of the Group comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material misstatement whether
due to fraud or error. In note 1(a), the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements of the Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation of the financial
report that gives a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the
financial report.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
88
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a
at 30 June 2012 and of its performance for the year ended on that date; and
fair view of
the Group’s
true and
financial position as
complying with Australian Accounting Standards and
Regulations 2001.
the Corporations
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in note 1(a).
Report on the remuneration report
We have audited the Remuneration Report included in pages 29 to 39 of the directors’ report
for the year ended 30 June 2012. The directors of the company are responsible for the
preparation and presentation of the remuneration report in accordance with Section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of St Barbara Limited for the year ended 30 June 2012,
complies with Section 300A of the Corporations Act 2001.
KPMG
Tony Romeo
Partner
Melbourne
23 August 2012
Annual Report 2012
89
Shareholder Information
Twenty Largest Shareholders
ORDINARY FULLY PAID SHARES AS AT 30 SEPTEMBER 2012
Rank Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
CS FOURTH NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
JAYVEE & CO
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED <357206 A/C>
AMP LIFE LIMITED
JAYVEE & CO
WOODROSS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
BNY MELLON NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 3
QIC LIMITED
CHASE NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
THE BANK OF NEW YORK (NOMINEES) LIMITED
Total Top 20 holders of ordinary fully paid shares
Total Remaining Holders Balance
Substantial Shareholders
ORDINARY FULLY PAID SHARES AS AT 14 SEPTEMBER 2012
Name
M&G Investment Management Ltd
Franklin Resources Inc
Van Eck Associates Corporation
125,332,542
98,229,260
87,364,962
19,849,181
12,213,512
7,559,882
6,043,922
6,000,000
4,260,666
3,737,032
3,429,641
2,697,332
2,549,932
2,476,814
2,425,947
2,159,994
2,076,361
2,029,387
2,010,414
1,966,434
394,413,215
93,660,862
25.7
20.1
17.9
4.1
2.5
1.6
1.2
1.2
0.9
0.8
0.7
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.4
80.8
19.2
Shares % of Shares
91,284,142
36,215,568
26,054,948
18.7
7.4
5.3
90
Distribution of Shareholdings
ORDINARY FULLY PAID SHARES AS AT 30 SEPTEMBER 2012
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
UNMARKETABLE PARCELS
Minimum $500 parcel at $2.16 per unit
Total holders
Shares
% of Issued
Capital
4,119
4,341
1,078
1,000
1,783,997
10,744,140
7,990,888
27,565,005
162
439,990,047
10,700
488,074,077
0.0
0.2
0.2
0.5
90.1
100.0
Minimum
Parcel Size
232
Holders
1,268
Shares
109,345
Annual Report 2012
91
Corporate Directory
BOARD OF DIRECTORS
S J C Wise
T J Lehany
Chairman
Managing Director & CEO
D W Bailey
Non-Executive Director
E A Donaghey
Non-Executive Director
P C Lockyer
Non-Executive Director
R K Rae
Non-Executive Director
COMPANY SECRETARY
R J Kennedy
REGISTERED OFFICE
Level 10, 432 St Kilda Road
Melbourne Victoria 3004
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
Email: melbourne@stbarbara.com.au
Website: www.stbarbara.com.au
SHARE REGISTRY
Computershare Limited
GPO Box 2975
Melbourne Victoria 3001
Telephone (within Australia): 1300 653 935
Telephone (international): +61 3 9415 4356
Facsimile: +61 3 9473 2500
BANKER
National Australia Bank
500 Bourke Street
Melbourne VIC 3000
AUDITOR
KPMG
147 Collins Street
Melbourne VIC 3000
SOLICITOR
Ashurst
181 William Street
Melbourne VIC 3000
STOCK EXCHANGE LISTING
Shares in St Barbara Limited are quoted
on the Australian Securities Exchange
Ticker Symbol: SBM
92
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