Annual Report 2013
ST BARBARA LIMITED
30 JUNE 2013
FY13 was a year of transformation, including:
˃ The acquisition of two prospective Pacific Operations: Simberi gold operations in Papua
New Guinea and Gold Ridge gold operations in the Solomon Islands;
˃ The sale of Southern Cross Operations (which had been on care and maintenance);
˃ A significant reduction in the Company’s total recordable injury frequency rate to 6.0
(the lowest on record); and
˃ The issue of US$250 million 5 year senior secured notes to refinance bank debt and provide
working capital.
The Company enters FY14 well positioned, with:
˃ A diversified portfolio of gold operations, with each mine open at depth or along strike;
˃ Strongly performing Australian Operations including significant net cash generation from
˃
the Gwalia mine;
Increasing gold production from the Pacific Operations, expected to be underpinned by
appropriate capital expenditure (largely already incurred) and the implementation of
St Barbara operating capabilities and systems;
˃ The largest ore reserve position, 5.2 million ounces of contained gold, of any mid-tier ASX
listed gold company;
˃ A number of near mine prospective targets at each operation that are planned to be drilled
this year; and
˃ A strong balance sheet sufficient to finance the Company’s strategy and with flexibility to
adapt to different gold price environments.
Gold Production
364,601 ounces 8%
Total Recordable Injury
Frequency Rate 6.0 3.0
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
0
100
200
300
400
0
5
10
15
Page ii
ST BARBARA LIMITED
30 JUNE 2013
St Barbara at a glance
Leonora
Leonora
• High grade underground
Gwalia mine
• Gwalia FY14F production:
180 - 195 koz
• Ore body open at depth
• King of the Hills FY14F
production: 55-60 koz
Simberi
Gold Ridge
Simberi
• Low strip open pit mine
• FY14F production:
85 - 100 koz
• Near mine targets for
exploration
• Sulphide expansion
potential
Gold Ridge
• Low strip open pit mine
• Processing plant upgraded
• FY14F production:
75 - 90 koz
• Near mine targets for
exploration
Ore Reserves as at 30 June 2013
FY14F Production Guidance
Ore Reserves
Mt g/t Au
koz
Leonora, Western Australia
9.6
6.9 2,128
Gold Ridge, Solomon Islands 17.8
1.6
905
Simberi, Papua New Guinea 50.4
1.4 2,205
Total Reserves all Regions
77.8
2.1 5,238
Mineral Resources & Ore Reserves
(Moz)
13.22
7.61
2.53
5.24
FY 12
Mineral Resources
FY 13
Ore Reserves
Gold Ridge
75-90 koz
Simberi
85-100 koz
Gwalia
180-195 koz
King of the Hills
55-60 koz
5.24 Moz Ore Reserves
Leonora
41%
Simberi
42%
Gold Ridge
17%
Page iii
ST BARBARA LIMITED
30 JUNE 2013
Contents
3 Directors’ Report
47 Financial Report
129 Ore Reserves and Mineral Resources Statements
137 Corporate Governance Statement
Page iv
ST BARBARA LIMITED
30 JUNE 2013
Directors’ Report
and
Financial Report
For Year Ended 30 June 2013
Page 1 of 128
ST BARBARA LIMITED
30 JUNE 2013
TABLE OF CONTENTS
DIRECTORS’ REPORT .................................................................................................................. 3
Directors ........................................................................................................................................ 3
Principal activities ......................................................................................................................... 3
Dividends ....................................................................................................................................... 3
Overview of Results....................................................................................................................... 3
Significant changes in the state of affairs ................................................................................... 12
Business strategy and future prospects. ..................................................................................... 13
Regulatory environment ............................................................................................................. 19
Information on Directors ............................................................................................................ 20
Information on Executives .......................................................................................................... 23
Meetings of Directors.................................................................................................................. 24
Remuneration report (Audited) .................................................................................................. 24
Indemnification and insurance of officers .................................................................................. 43
Proceedings on behalf of the company ...................................................................................... 43
Environmental management ...................................................................................................... 43
Non-audit services ...................................................................................................................... 44
Auditor independence ................................................................................................................ 44
Events occurring after the end of the financial year .................................................................. 44
Rounding of amounts .................................................................................................................. 45
Auditor’s Independence Declaration .......................................................................................... 46
FINANCIAL REPORT ................................................................................................................... 47
Page 2 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
The Directors present their report on the “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 2013.
Directors
The following persons were Directors of St Barbara Limited at any time during the year and up to the
date of this report:
S J C Wise
T J Lehany
D W Bailey
R K Rae
Chairman
Managing Director & CEO
Non-executive director
Non-executive director
Non-executive director
Non-executive director
E A Donaghey
P C Lockyer
The qualifications, experience and special responsibilities of the Directors are presented on pages 20 to
22.
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
The Group reported a statutory net loss after tax of $191,854,000 (2012: statutory profit after tax of
$130,230,000) for the year ended 30 June 2013, including Significant Items totaling a net loss after tax
of $221,139,000 (2012: net gain of $9,310,000) which included an asset impairment and write down
charge. Underlying net profit after tax before significant items was $29,285,000 (2012: net profit of
$120,920,000). The full year review of St Barbara’s asset carrying values as a result of the continuing
lower gold price environment and other factors gave rise to the impairment of the carrying value of
the Simberi and Gold Ridge gold mines and write down of assets associated with these operations.
Cash on hand (excluding restricted cash) at 30 June 2013 was $117,383,000 (2012: $185,242,000).
Total interest bearing borrowings were $328,092,000 (2012: $4,256,000).
Page 3 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
The consolidated result for the year is summarised as follows:
Sales revenue (including discontinued operations)7
EBITDA3 (including significant items)
EBIT2 (including significant items)
Profit before tax4
Statutory (Loss)/Profit1 after tax for the year
Sales revenue (excluding discontinued operations)
30 June 13
$’0007
30 June 12
$’000
568,443
(150,628)
(251,630)
(270,711)
(191,854)
511,840
541,189
204,034
106,811
109,499
130,230
384,396
9,310
48,239
181,631
141,051
(221,139)
Total net significant items
EBITDA3 – excluding significant items
EBIT2 – excluding significant items
Profit before tax – excluding significant items4
Underlying net profit after tax5 for the year
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. It includes revenues and expenses associated with discontinued
operations.
3 EBITDA is EBIT before depreciation and amortisation. It includes revenues and expenses associated with discontinued operations.
4 Profit before tax is earnings before income tax expense. It includes revenues and expenses associated with discontinued operations.
5 Underlying net profit after income tax is net profit after income tax (“Statutory Profit”) less significant items as described in Note 9 to the financial
report, and excluding profit or loss from discontinued operations.
6 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 by users.
7 Revenue, EBIT (including significant items), EBITDA (including significant items) and Statutory (Loss)/Profit provided in this table contain information for
continuing and discontinued operations. Sales revenue includes $56,603,000 of revenue from Southern Cross (2012: $156,793,000) and Statutory Profit
for the year includes an after tax loss of $7,875,000 (2012: loss of $357,000) for Southern Cross.
120,920
120,920
118,232
29,285
34,836
Details of significant items included in the Statutory (Loss)/Profit for the year are displayed in the table
below. Descriptions of each item are provided in Note 9 to the financial report.
Unrealised gain/(loss) on gold options
Realised gain on gold options
30 June 13
$’000
30 June 12
$’000
14,205
1,498
(6,102)
702
Asset impairments and write downs
(309,170)
(10,219)
Borrowing costs written off
Redundancy costs
Allied Gold related acquisition costs
Integration costs
Profit on sale of Southern Cross
(5,678)
(2,131)
(7,862)
(7,268)
22,109
-
-
(5,664)
-
-
Operating (loss)/profit from discontinued operations
(11,250)
9,862
Significant items before tax
Significant items after tax
(305,547)
(11,421)
(221,139)
9,310
Page 4 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
Asset impairments and write downs
The full year review of the Group’s asset carrying values in the context of the lower gold price
environment has resulted in the impairment and write down of the carrying value of assets totalling a
loss of $220,913,000 after tax.
Write down of assets
Inventories
Simberi
$’000
Gold Ridge
$’000
Total
$’000
28,546
10,975
39,521
Impairments
Property, plant and equipment
Mining properties
Deferred mining costs
Mineral rights
Goodwill
Total asset impairments and write downs
Tax effect
Total asset impairments and write downs after tax
92,069
690
-
75,808
2,535
199,648
54,649
240
849
41,339
1,470
109,522
146,718
930
849
117,147
4,005
309,170
(88,257)
220,913
Acquisition of Allied Gold Mining Plc
The Group became the sole shareholder of Allied Gold Mining Plc ("Allied Gold") on 7 September 2012
and acquired 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. AASB 3 “Business Combinations” requires the
application of acquisition accounting, which involves recognising and measuring the identifiable assets
acquired, liabilities assumed and the determination of mining rights assets and goodwill. In
accordance with AASB 3, at 30 June 2013, the initial accounting for the acquisition of Allied Gold has
been provisionally determined.
Included in the statutory profit for the year is a net loss before tax of $30,233,000 before the asset
impairment and write down charge, attributable to the Allied operations (“Pacific Operations”) from
the effective date of acquisition to 30 June 2013. As part of the transaction an integration program
was established to bring the two organisations under the single operating model. This has entailed a
number of key activities relating to synergies, organisational design, policies and procedures,
telecommunications and IT systems, planning processes and legal and financial structures. The
implementation plan for the program was completed during the financial year and execution of the
plan is well advanced.
Costs associated with the acquisition of Allied Gold amounted to $7,862,000 and the costs incurred in
relation to the integration program were $7,268,000. In addition, redundancy costs associated with
integration of the two companies were $2,131,000 in the year.
The Pacific Operations did not achieve the level of operational performance planned for the 2013
financial year. The rate of progress towards achieving the expected production performance in the
Pacific Operations is slower than expected and has required more attention than previously planned.
Two key issues impacting production have been the delay in commissioning the Simberi Oxide
Page 5 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
expansion, and materially lower metallurgical recovery at Gold Ridge. The resolution of these two
issues is the immediate focus for the Pacific Operations.
Overview of Operating Results
The statutory loss of $191,854,000 for the year ended 30 June 2013 (2012: statutory profit of
$130,230,000) was impacted by the lower operating profit from Leonora as a result of lower achieved
gold prices during the year, the sale of Southern Cross, the acquisition of Allied Gold PLC, which
resulted in (1) negative contributions from the Simberi and Gold Ridge operations, and (2) increased
corporate costs associated with the acquisition and integration activities, and the asset impairment
and write downs of the Pacific assets.
For the year ended 30 June 2013, the Group reported an underlying profit before tax of $34,836,000
(2012: $120,920,000). The underlying profit removes the impact of significant items, including the
asset impairment and write down charge and result of the Southern Cross operations disclosed as
“discontinued operations” for accounting purposes. Underlying profit after tax was $29,285,000
(2012: $120,920,000).
Group revenue (excluding Southern Cross) increased from $384,396,000 in 2012 to $511,840,000 in
2013. The acquisition of the Pacific Operations resulted in a total increase of $139,684,000 from total
gold sales of 88,262oz at a realised gold price of A$1,564/oz. Revenue from Australian Operations
(consisting of the Gwalia and King of the Hills underground mines) was adversely impacted by lower
average spot gold prices in 2013 compared with 2012.
Revenue from Southern Cross in 2013 was $56,603,000 (2012: $156,793,000).
The table below provides a summary of the contribution before tax from continued operations in
Australia and the Pacific before the asset impairment and write down charge of $309,170,000.
Year ended 30 June 2013
$’000
Revenue
Mine operating costs
Gross Profit
Royalties
Depreciation and Amortisation
Contribution from operations(1)
Australian
Operations(2)
372,156
Pacific
Operations(3)
139,684
Consolidated
511,840
(177,874)
(140,183)
(318,057)
194,282
(14,715)
(64,105)
115,462
(499)
193,783
(3,846)
(25,888)
(30,233)
(18,561)
(89,993)
85,229
(1) Excludes corporate and exploration costs, interest and tax, and discontinued operations. This is non-IFRS financial information,
which has not been subject to review or audit by the Group’s external auditors. This measure is presented to enable understanding
of the underlying performance of the operations.
(2) Comprising the Gwalia and King of the Hills operations. Southern Cross is classified as a discontinued operation.
(3) Comprising the Simberi and Gold Ridge operations.
The contribution from Southern Cross in 2013 was a net loss of $11,250,000 (2012: net loss of
$357,000). The net loss from Southern Cross in 2013 comprised a net profit (before depreciation and
amortisation) from operations of $5,185,000, care and maintenance costs of $8,245,000 and
depreciation and amortisation of $8,190,000 (2012: $33,824,000). Southern Cross Operations
generated positive net cash flows during the year.
Page 6 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
Analysis of Australian Operations
Total sales revenue (excluding discontinued operations) of $372,156,000 (2012: $384,396,000) was
generated from gold sales of 239,667 ounces (2012: 238,307 ounces) in the year at an average
achieved gold price of A$1,543 per ounce (2012: A$1,606 per ounce). Although production was
consistent with the prior year, revenue was adversely impacted by the decline in the spot gold price
during the year.
A summary of production performance for the year ended 30 June 2013 is provided in the table below.
Details of 2013 Production Performance
Southern Cross
Gwalia
King of the Hills
2012/13
2011/12
2012/13
2011/12
2012/13
2011/12
Underground Ore Mined
t
254,748
892,365
696,268
662,300
470,058
457,375
Grade
Ore Milled
Grade
Recovery
Gold Production
Cash Cost(1)
Total Cost(1)
g/t Au
2.2
2.9
8.2
8.8
4.4
4.1
t
800,477
1,842,820
833,771
716,640
439,398
452,941
g/t Au
%
oz
A$/oz
A$/oz
1.4
86
1.9
89
7.1
96
8.3
97
4.4
95
4.1
94
31,468
97,392
183,116
184,534
58,477
56,953
1,440
1,700
1,199
1,482
751
979
646
882
843
1,193
753
1,051
(1) Before significant items
Gwalia
Gold production from the Gwalia underground mine in the year was 183,116 ounces (2012: 184,534
ounces), which was consistent with the prior year. Ore tonnes mined increased from 662,300 tonnes
in 2012 to 696,268 tonnes in 2013, largely due to strong production performance in the final quarter of
the financial year. Ore milled grades declined from 8.3g/t Au in 2012 to 7.1g/t Au in 2013 largely due
to an increase in processing of low grade stockpiles from Tower Hill and Gwalia mineralised waste in
order to capitalise on plant capacity.
Gwalia unit cash operating costs1 for the year were $751 per ounce (2012: $646 per ounce), reflecting
the impact of cost inflation and the result of poor performance in the third quarter arising from drill
and blast execution issues. Total Cash Operating Costs1 at Gwalia of $137,520,000 were higher
compared with the prior year (2012: $119,158,000) due to the increase in mining volumes and cost
inflation.
King of the Hills
Gold production from the King of the Hills underground mine was 58,477 ounces (2012: 56,953
ounces). The average grade increased to 4.4g/t Au in 2013 (2012: 4.1g/t Au) as a result of the
application of selective mining methods in the Western Flank. As priority is given to higher grade
Gwalia ore for processing in the mill, a stockpile of ore was established with an estimated 5,000 ounces
of contained gold at 30 June 2013. The King of the Hills unit cash operating costs for the year were
1 Cash Operating Costs are mine operating costs including government royalties, and after by-product credits. This is a non-IFRS financial
measure which has not been subject to review or audit by the Group’s external auditors. It 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).
Page 7 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
$843 per ounce (2012: $753 per ounce), with the increase due mainly to the higher cost of mining the
Western flank. Total Cash Operating Costs at King of the Hills were $49,296,000 (2012: $42,870,000).
At the end of the June 2013 quarter, a surface diamond drilling program commenced with the aim of
extending the deposit further north. This program will be followed up by an underground drilling
program on potential resource extensions with the objective of extending the mine life.
Southern Cross
Up until the date of sale on 19 April 2013, Southern Cross operations generated positive net cash flows
of $2,670,000 (after care and maintenance costs incurred of $8,245,000). The Marvel Loch
underground mine produced 31,468 ounces (2012: 97,392 ounces) in the period until the operations
were placed on care and maintenance in November 2012. Southern Cross unit cash operating costs for
the period were $1,440 per ounce (2012: $1,199 per ounce), reflecting the impact of the lower
production and processing of low grade stockpiles. Total Cash Operating Costs were $45,314,000
(2012: $116,819,000).
On 19 April 2013, the Southern Cross mine was sold for net cash proceeds of $17,648,000, resulting in
an accounting profit before tax of $22,109,000. The accounting profit included the release of the
rehabilitation provision of $16,852,000.
Analysis of Pacific Operations
Total sales revenue of $139,684,000 was generated from gold sales of 88,262 ounces in the period
since acquisition on 7 September 2012 at an average achieved gold price of A$1,564 per ounce.
Planning for the integration of the Pacific Operations was completed in the period and integrating the
new operations into St Barbara was well progressed at 30 June 2013. A summary of production
performance for the period ended 30 June 2013 is provided in the table below.
Details of 2013 Production Performance
Simberi
Gold Ridge
10 months to 30 Jun 13(1) 10 months to 30 Jun 13(1)
Open Pit Ore Mined
Grade
kt
g/t Au
Ore Milled (including stockpiles)
kt
Grade
Recovery
Gold Production
Cash Cost
Total Cost(2)
g/t Au
%
oz
A$/oz
A$/oz
1,942
1.0
1,471
1.1
88
45,609
1,294
1,621
1,581
1.5
1,437
1.5
65
45,931
1,702
2,111
Production attributable to St Barbara from 7 September 2012
(1)
(2) Does not
Combinations” arising from the acquisition of Allied Gold Plc.
include fair value adjustments posted per AASB 3 “Business
Page 8 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
Simberi
Since the acquisition date, Simberi produced 45,609 ounces at 1.1 grams per tonne for the period.
Production was impacted by mining fleet and processing plant reliability issues. Commissioning of the
oxide plant expansion (from 2.0 million tonnes to 3.5 million tonnes capacity) has been delayed by
government permits taking more time than anticipated. The new mill will improve plant reliability and
realise cost efficiencies from the increased throughput. Unit cash operating costs were $1,294 per
ounce for the period and were negatively impacted by lower mining and processing throughput rates,
coupled with higher maintenance costs. Total Cash Operating Costs were $59,018,000 for the period.
Gold Ridge
After experiencing delays in ore production as a result of a backlog of waste stripping created prior to
the change of control of the assets, production at Gold Ridge steadily increased quarter on quarter, to
achieve production of 45,931 ounces for the period. Unit cash operating costs were $1,702 per ounce
for the period and were negatively impacted by production delays in the first half of the financial year,
mechanical issues in the processing plant and materially lower recoveries as a result of processing
more refractory ore than anticipated. Detailed structural and geochemical analysis has identified a
higher occurrence of arsenopyrite than previously documented, and processing solutions to address
the higher refractory content and lift recovery rates are being investigated. Total Cash Operating Costs
were $78,175,000 for the period.
Corporate and Discovery & Growth
Exploration and evaluation expenditure in the year amounted to $21,144,000 (2012: $20,821,000), of
which was all expensed in the income statement (2012: $16,246,000). Expenditure incurred in
Australia in the year amounted to $12,809,000, while exploration in the Pacific was $8,335,000.
Exploration expenditure during the year focussed on investigating highly prospective near mine-targets
in Simberi and Gold Ridge. Drilling activities in Australia were scaled back towards the end of the year
in response to the fall in the gold price.
Corporate and support costs for the year of $19,253,000 (2012: $13,732,000) comprised mainly
expenses relating to the corporate office and compliance costs. During the year, costs associated with
the Allied Gold corporate office in Brisbane were included in the consolidated corporate costs.
Royalty expenses for the year were $18,561,000 (2012: $15,525,000), reflecting the inclusion of
royalties paid in Papua New Guinea and Solomon Islands from production from the Simberi and Gold
Ridge mines. Royalties paid in Western Australia are 2.5% of gold revenues, plus a corporate royalty of
1.5% of gold revenues. Royalties paid in Papua New Guinea are 2.25% of gold revenues earned from
the Simberi mine. Royalties are paid in Solomon Islands at the rate of 1.5% of gold revenues, plus
excise duties on gold exports of 1.5%, and a corporate royalty of US$15 per ounce produced from the
Gold Ridge mine.
Other revenue of $4,072,000 (2012: $6,779,000) comprised mainly interest earned during the year of
$3,811,000 (2012: $6,442,000). The decrease in interest earned is reflective of lower cash balances
held during 2013 compared with 2012, as well as lower interest rates applied to excess cash balances.
Other income for the year of $3,131,000 (2012: $922,000) included $1,050,000 received for settlement
of a legal case.
Depreciation and amortisation of fixed assets and capitalised mine development (excluding
discontinued operations) amounted to $92,812,000 (2012: $63,399,000) for the year. Depreciation
Page 9 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
and amortisation attributable to the Australian Operations was $64,105,000 (2012: $62,368,000) with
a charge at the Pacific Operations of $16,542,000 (2012: nil) and amortisation of $9,346,000 was
recognised in relation to the fair value of mineral rights acquired in the Allied Gold PLC transaction; the
balance of the expense was associated with corporate and exploration activities. The movement in
depreciation and amortisation was mainly due to an increase in fixed assets and capitalised mine
development as a result of the acquisition of Allied Gold.
Net finance costs in the year were $22,892,000 (2012: $3,754,000). The increase on the prior year was
largely attributable to interest paid and accrued in relation to the US$250,000,000 senior secured
notes issued in March 2013 at an interest rate of 8.875% p.a., and the syndicated debt facility used to
fund the Allied acquisition. During the year, $7,972,000 of borrowing costs relating to the syndicated
debt facilities drawn down in September 2012 and December 2012 was expensed. Fair value
movements during the year on the gold prepayment facility acquired as part of the Allied Gold
acquisition was a credit of $2,083,000 and was included in net finance costs. Finance costs also
included the unwinding of the discount on the rehabilitation provision of $3,545,000.
A net realised/unrealised gain of $15,703,000 (2012: loss of $5,400,000) was recognised in the income
statement for the year, representing the movement in the mark-to-market valuation of the Group’s
gold put and call options (collar structure). The collar structure is a cash flow hedge, which as at 30
June 2013 provided price protection for 110,748 ounces of King of the Hills production to June 2015.
Accounting standards require movements in the time value of the collar structure to be recognised in
the income statement at each reporting date. During July 2013, the remaining King of the Hills collar
was closed out for cash proceeds of $8.5 million.
Costs associated with the acquisition of Allied Gold, integration costs and redundancy payments
totalled $17,261,000 for the year (2012: $5,664,000).
A foreign exchange movements gain of $9,122,000 for the year (2012: nil) represented movements in
foreign currency denominated assets and liabilities. Transactions in the Pacific Operations are
denominated in USD, AUD, Papua New Guinea Kina and Solomon Island Dollars.
Discussion and Analysis of the Cash Flow Statement
Operating activities
Cash flows from operating activities for the year were $71,028,000 (2012: $224,563,000). Receipts
from customers of $584,716,000 (2012: $553,847,000) included receipts from Southern Cross gold
Payments to suppliers of $489,297,000 (2012:
sales of $56,603,000 (2012: $156,793,000).
$317,729,000) increased on the prior year due mainly to the acquisition of the Pacific Operations and
the settlement of accounts payable in respect of Southern Cross suppliers. Payments for exploration
expensed in the year amounted to $21,144,000 (2012: $16,246,000), with the higher amount expensed
due to additional exploration in the Pacific. Interest received of $3,811,000 (2012: $5,555,000) was
lower than in the prior year due to the reduced levels of cash on hand and lower interest rates.
Interest paid in the year was $5,840,000 (2012: $65,000), which included payments on the syndicated
debt facilities drawn down during September and December 2012 (and subsequently restructured with
the US notes issue in March 2013).
Investing activities
Net cash flows used in investing activities amounted to $324,277,000 (2012: $104,480,000) for the
year, which included the cash paid for the acquisition of Allied Gold PLC of $206,623,000. Higher
expenditure on property, plant and equipment of $74,465,000 (2012: $18,966,000) was attributable
mainly to expenditures on the oxide plant expansion at Simberi. Mine development expenditure in the
Page 10 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
year was $60,850,000 (2012: $80,757,000), which was lower than the prior year due to the cessation
of mining activities at Southern Cross in November 2012. No exploration and evaluation expenditure
was capitalised during the year (2012: $4,575,000) due to a focus on exploring prospective targets in
an early stage of development/investigation. Investing expenditure during the year was in the
following major areas:
Underground mine development and infrastructure at Gwalia – $43,200,000 (2012: $49,302,000);
Underground mine development and infrastructure at King of the Hills – $20,231,000 (2012:
$33,598,000);
Simberi oxide expansion and other capital projects - $46,924,000; and
Purchase of property, plant and equipment at the operations – $22,379,000 (2012: $19,457,000)
Net proceeds from the sale of Southern Cross Operations of $17,648,000 was received during the year.
Financing activities
Net cash flows from financing activities were an
$14,326,000), with major movements in cash flows including:
inflow of $180,662,000 (2012: outflow of
Drawdown and repayment of the $150,000,000 syndicated loan facility during the year, with
associated transaction costs of $7,262,000.
US$250,000,000 senior secured notes issue in March 2013, which was translated to A$240,200,000
at the spot exchange rate on the date the notes were issued. Costs associated with the notes were
$11,961,000. The notes have a tenor of 5 years at a fixed interest rate payable bi-annually of
8.875% p.a..
Repayments in relation to the gold prepayment facility of cash equivalents totalling $24,554,000.
The repayment of this facility is by delivery of gold in accordance with a monthly amortisation
schedule, with the final payment due in December 2014.
Scheduled repayments of insurance premiums, leasing and equipment financing facilities amounted
to $6,432,000 (2012: $11,415,000), with the main variance from the prior year attributable to the
final payment of the equipment financing facility in 2012;
Proceeds for funding asset purchases of $2,503,000 (2012: $nil); and
$11,832,000 was reclassified as “restricted cash” during the year. This amount relates to the
rehabilitation performance bond facility which was secured with cash backing at the time of the US
notes issue.
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 $59,394,000 to $623,227,000 as a
result of the acquisition of Allied Gold PLC in September 2012 and after the asset impairment and write
downs.
The available cash balance at 30 June 2013 was $117,383,000 (2012: $185,242,000), with an additional
$11,955,000 held on deposit as restricted cash and reported within trade receivables.
Inventories increased to $63,995,000 (2012: $21,867,000) as a result of the acquisition of the Pacific
Operations. Due to the remote nature of these locations, the Simberi and Gold Ridge mines carry
higher levels of consumables and spares inventory than the Australian operations.
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Property, plant and equipment increased to $339,861,000 (2012: $103,928,000) due to the acquisition
of the Pacific Operations, and significant capital expenditure at Simberi of $37,547,000 to expand the
processing plant’s capacity to process oxide ore.
The mineral rights balance of $209,957,000 represents the amortised balance of the Gold Ridge and
Simberi mineral rights acquired in September 2012.
Trade and other payables increased to $88,658,000 at 30 June 2013 (2012: $55,542,000) reflecting the
net impact of the addition of the Pacific Operations and divestment of Southern Cross operations.
Derivative financial assets of $11,077,000 (2012: net liabilities of $16,290,000) represents the mark-to-
market value of the King of the Hills put and call option collar structure. The change from the prior
year is representative of the low Australian dollar spot gold price and gold forward curve at 30 June
2013, which resulted in the put options being “in-the-money”. The prior year liability reflected the
higher spot gold price, which resulted in the call options being “out-of-the-money”. This structure was
closed out for cash proceeds of $8,500,000 in July 2013.
Interest bearing liabilities increased to $328,092,000 at 30 June 2013 (2012: $4,256,000) with the two
largest components of the year end balance representing the US notes translated at the year end
AUD/USD exchange rate ($262,274,000) and a gold prepayment facility of $53,809,000, which is repaid
monthly with the final payment in December 2014. The gold prepayment facility is recorded at fair
value at each reporting date. The US notes have a maturity date of 15 April 2018 with no repayment
obligations before this date.
Provisions increased to $89,509,000 (2012: $42,107,000). The increase was due mainly to the addition
of rehabilitation provisions arising from the acquisition of the Pacific Operations, offset by the release
of rehabilitation provisions of $16,852,000 as a result of the sale of the Southern Cross operations.
The deferred tax balance is a net asset of $26,355,000 (2012: net asset of $22,215,000). Deferred tax
assets arising from accumulated tax losses in relation to the Pacific Operations of $79,132,000 (tax
effected) have not yet been booked as it is not probable as at 30 June 2013 that future taxable profits
will be generated to utilise the losses.
Significant changes in the state of affairs
The significant changes in the state of affairs of the Group during the financial year are as follows:
a) Net profit/(loss) for the year
The Group reported a net loss after tax for the year of $191,854,000, which increased the
accumulated losses of the Group to $238,013,000 at 30 June 2013. The net loss after tax
included the asset impairment and write down charge of $220,913,000 after tax.
b) Asset impairment and write down charge
At 30 June 2013 the Group recognised an asset impairment and write down charge of
$309,170,000 before tax in relation to goodwill, inventory, plant and equipment, deferred mine
operating development expenditure, mineral rights, capitalised mine development expenditure
and capitalised exploration and evaluation expenditure in relation to Gold Ridge and Simberi.
The after tax charge was $220,913,000.
c) Increase in net assets
The Group’s net assets increased by $59,394,000 during the year mainly as a result of the
acquisition of Allied Gold PLC and further investment in the Pacific Operations during the
period to 30 June 2013, offset by the asset impairment and write down charge. Net assets
acquired in the Allied transaction totalled $483,901,000.
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d) Increase in interest bearing borrowings
Total interest bearing borrowings increased to $328,092,000 during the year with the
movement comprising:
- USD250,000,000 senior secured notes issue in March 2013 to repay the syndicated bank
facility used to support funding of the Allied Gold acquisition (balance at 30 June 2013:
$262,274,000); and
- Gold prepayment facility with a balance of $53,809,000 at 30 June 2013, which was
acquired as part of the Allied Gold acquisition.
e) Changes in issued capital
The Company issued 163,453,688 shares at $1.67 per share as part of the consideration for the
acquisition of Allied Gold PLC.
Business strategy and future prospects
St Barbara’s strategic focus is on mining lower cost gold deposits in Australia and the Pacific. Currently
the Group has a diversified asset portfolio spanning underground and open cut mines, and exploration
projects in Australia, Papua New Guinea and Solomon Islands. St Barbara’s strategy is to generate
shareholder value through the discovery and development of gold deposits and production of gold.
The Group aligns its decisions and activities to this strategy by focusing on three key value drivers:
relative total shareholder returns, growth in gold ore reserves and return on capital employed.
Strategic drivers for the business include:
Optimising cash flow and reducing the cost base: The Group is focused on optimising cash flow
from operations through maximising production and managing costs at its existing operations,
enhancing operating capabilities and incorporating new technologies across St Barbara. The
Group will continue to identify opportunities to enhance efficiency and improve operating
performance. For example, in September 2012, new trucking technology was introduced at the
Gwalia underground mine, which is continuing to deliver efficiency improvements compared to
the previous haulage trucks. The Group has established investment criteria that ensure
approved capital expenditure is appropriate and prioritised, and will deliver an adequate
return.
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Improving productivity: The Group is focused on increasing volumes at the Pacific operations
and reducing operating costs. Since acquiring the Pacific Operations, St Barbara has made a
significant investment to improve infrastructure, mining fleets and capability to ensure
consistent and reliable production.
Growing the ore reserve base through the development of existing Mineral Resources and
exploration activities: A number of potential organic growth opportunities have been
identified, which could increase production and extend the life of the Pacific operations. At
Simberi, a sulphide ore reserve, which has been estimated at 1.4 Moz, provides an opportunity
to create a long life production centre at Simberi. At Gold Ridge, there are possibilities for
expansion of known ore bodies and exploration opportunities in proximity to current mining
operations. In addition the Group is generating and evaluating exploration targets in the Tabar
Island Group in Papua New Guinea and exploring on its Leonora tenement holdings to identify
future ore sources.
Maintaining a conservative financial profile: The Group will continue to maintain prudent
financial management policies with the objective of maintaining the strong cash balance as at
30 June 2013. The Group’s financial management policies are aimed at generating net cash
flows from operations to meet financial commitments, and maintaining sufficient capacity
under its financing arrangements to fund project development, exploration and acquisitions, to
the extent viable and appropriate. The Group’s capital management plan is reviewed and
discussed with the Board on a regular basis.
Continue and strengthen the Group’s commitment to employees and local communities: The
Group considers the capability and wellbeing of its employees as key in delivering the business
strategy. Creating and sustaining a safe work environment and ensuring that operations
conform to applicable environmental and sustainability standards is an important focus for the
Group. The Group invests in the training and development of its employees, talent
management, and succession planning, and views such efforts as an important component of
instilling St Barbara’s values throughout the organisation and retaining continuity in the
workforce. The Group has implemented a comprehensive talent management framework to
strengthen the capacity to attract, motivate and retain capable people. The Group also has an
ongoing commitment to work with local communities to improve infrastructure, particularly in
health and education, support local businesses, and provide venues for leisure activities, and
other opportunities for developing communities in which the Group operates.
In identifying and developing deposits that meet the Group’s investment criteria, the Group has
installed a disciplined approach to assess potential exploration targets. The exploration strategy is
based on a philosophy of turning over projects efficiently within highly prospective provinces, initiating
work on new tenement holdings and to drill test targets with demonstrable value.
The highest value targets are tested through an expected value analysis methodology. The focus of
effort in the near future is to drill and test highly prospective targets around Simberi, including near
mine targets at Sorowar, Botlu, Pigicow, Patan and Samat for oxide and sulphide ore.
At Gold Ridge, exploration effort in the next year is on drilling targets around existing pits to expand
the mine’s mineral resources. In particular, focus will be placed on the Charivunga zone where high
grades have been targeted that could support production at higher grades than currently being mined,
and potentially within a larger scale mining operation.
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Within Australia, the Gwalia underground mine with a current mine life of at least 9 years remains the
flagship asset of the Group, generating strong cash flows to support the exploration and additional
investment in the Pacific Operations to achieve the expected production growth from Gold Ridge and
Simberi.
The table below displays the Group’s current pipeline of projects, and the stage of each, from initial
exploration analysis in the East Lachlan, to concept studies for Simberi sulphides, to producing assets.
The Group’s 2014 financial year budget was developed in the context of a volatile gold market
following a significant decline in the gold price. The Group’s priorities in the 2014 financial year are to
continue consistent production from Leonora, optimise the operations in the Pacific and to reduce
costs and capital expenditure. For the 2014 financial year the Group’s operational and financial
outlook is as follows:
Gold production is expected to be 395,000 to 445,000 ounces.
Cash operating costs is expected to be in the range of $880 per ounce to $940 per ounce.
Capital expenditure is expected to be $91 million to $108 million, with exploration estimated at
$20 million to $25 million.
The Gwalia mine at Leonora remains the Group’s cornerstone asset and after capital expenditure is
expected to generate significant free cash flow in the 2014 financial year. The Pacific operations, while
taking longer and costing more to reach profitable operational performance, remain valuable long
term assets.
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Material business risks
St Barbara prepares its business plan using estimates of production and financial performance based
on a business planning system and a range of assumptions and expectations. There is uncertainty in
these assumptions and expectations, and risk that variation from them could result in actual
performance being different to planned outcomes. The uncertainties arise from a range of factors,
including the Group’s international operating scope, nature of the mining industry and economic
factors. The material business risks faced by the Group that may have an impact on the operating and
financial prospects of the Group as at 30 June 2013 are:
Fluctuations in the United States Dollar (“USD”) spot gold price: T he Group’s revenues are
exposed to fluctuations in the USD spot gold price. During the period from April 2013 to June
2013, the spot gold price fell by approximately USD$350/oz. Due to the fact that the Group’s
operating costs are denominated in local currencies, in the absence of other changes, if the
local currencies strengthen in value relative to the USD then the Group’s financial results are
likely to be adversely affected.
Volatility in the gold price creates revenue uncertainty and requires careful management of
business performance to ensure that operating cash margins are maintained despite a fall in
the spot gold price.
Declining gold prices can also impact operations by requiring a reassessment of the feasibility
of a particular exploration or development project. Even if a project is ultimately determined
to be economically viable, the need to conduct such a reassessment could cause substantial
delays and/or may interrupt operations, which may have a material adverse effect on our
results of operations and financial condition.
In assessing the feasibility of a project for development, the Group may consider whether a
hedging instrument should be put in place in order to guarantee a minimum level of return.
For example the Group put in place a gold collar structure when the King of the Hills project
was commissioned.
The Group has a centralised treasury function that monitors the risk of fluctuations in the USD
gold price and impacts on expenditures from movements in local currencies. Where possible,
the exposure to movements in the USD relative to USD denominated expenditure is offset by
the exposure to the USD gold price (a natural hedge position).
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Source: Reuters
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DIRECTORS’ REPORT
Government regulation: The Group’s mining, processing, development and exploration
activities are subject to various laws and statutory regulations governing prospecting,
development, production, taxes, royalty payments, labour standards and occupational health,
mine safety, toxic substances, land use, water use, communications, land claims of local people
and other matters.
No assurance can be given that new laws, rules and regulations will not be enacted or that
existing laws, rules and regulations will not be applied in a manner which could have an adverse
effect on the Group’s financial position and results of operations. Any such amendments to
current laws, regulations and permits governing operations and activities of mining and
exploration companies, or more stringent implementation thereof, could have a material
adverse impact on the Group. Failure to comply with any applicable laws, regulations or
permitting requirements may result in enforcement actions against the Group, including orders
issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures,
installation of additional
equipment, or remedial actions.
Operating risks and hazards: The Group’s mining operations, consisting of open pit and
underground mines, generally involve a high degree of risk, and these risks are increased when
mining occurs at increased depth. The Group’s operations are subject to all the hazards and
risks normally encountered
in the exploration, development and production of gold.
Processing operations are subject to hazards such as equipment failure, toxic chemical leakage,
loss of power, fast-moving heavy equipment, failure of deep sea tailings disposal pipelines and
retaining dams around tailings containment areas, which may result in environmental pollution
and consequent liability. The impact of these events could lead to disruptions in production
and scheduling, increased costs and loss of facilities, which may have a material adverse impact
on the Group’s results of operations, financial condition and prospects. These risks are
managed by a structured operations risk management framework.
Pacific Operations’ production may not be realised: Since the acquisition of the Pacific
Operations the Simberi and Gold Ridge mines have achieved operational performance well
short of expectations. The benefits the Group expects to result from the acquisition of the
Pacific operations will depend, in part, on St Barbara’s ability to increase production at Simberi
and Gold Ridge while reducing costs, so as to increase net cash flows. Achieving success in
realising these benefits, and the timing of this realisation, are linked to the completion of
various production improvement and expansion projects aimed at improving operational
capabilities, lifting production performance, lowering operating costs and improving the overall
condition of operations. In developing the 2014 financial year budget the Group identified a
number of initiatives to increase gold production and reduce costs at Simberi and Gold Ridge,
and these initiatives are being actively managed.
Exploration and development risk: Although the Group’s activities are primarily directed
towards mining operations and the development of mineral deposits, its activities also include
the exploration for mineral deposits and the possibility of third party arrangements including
joint ventures, partnerships, toll treating arrangements or other third party contracts. An
ability to sustain or increase the current level of production in the longer term is in part
Page 17 of 128
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DIRECTORS’ REPORT
dependent on the success of the Group’s exploration activities and development projects, and
the expansion of existing mining operations.
The exploration for and development of mineral deposits involves significant risks that even a
combination of careful evaluation, experience and knowledge may not eliminate. While the
discovery of an ore body may result in substantial rewards, few properties that are explored
subsequently have economic deposits of gold identified, and even fewer are ultimately
developed into producing mines. Major expenses may be required to locate and establish
mineral reserves, to establish rights to mine the ground, to receive all necessary operating
permits, to develop metallurgical processes and to construct mining and processing facilities at
a particular site. It is impossible to ensure that the exploration or development programs the
Group plans will result in a profitable mining operation.
Whether a mineral deposit will be commercially viable depends on a number of factors.
The Group has a disciplined approach to allocating budget to exploration projects. The Group
also has investment criteria to ensure that development projects are only approved if an
adequate return on the investment is expected.
Political, social and security risks: St Barbara has production and exploration operations in
developing countries that are subject to political, economic and other risks and uncertainties.
The formulation and implementation of government policies in these countries may be
unpredictable. Operating in developing countries also involves managing security risks
associated with the areas where the Group has activities. The Group has established policies
and procedures to assist in managing and monitoring various government relations. The
Group’s operating procedures at its mines in the Pacific include detailed security plans.
Community relations: A failure to adequately manage community and social expectations
within the communities in which the Group operates may lead to local dissatisfactions which, in
turn, could lead to interruptions to production and exploration operations. The Group has an
established stakeholder engagement framework to guide the management of the Group’s
community relations efforts. At each of the operations in the Pacific there is a dedicated
community relations team to work closely with the local communities and government.
Risk management
The Group manages the risks listed above, and other day-to-day risks through an established
enterprise wide risk management framework which conforms to Australian and international
standards and guidance. The Group’s risk reporting and control mechanisms are designed to ensure
strategic, operational, legal, financial, reputational and other risks are identified, assessed and
appropriately 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 Group has policies in place to manage risk in the areas of Health and Safety, Environment and
Equal Employment Opportunity.
The Executive Leadership Team and the Board regularly review the risk portfolio of the business and
the effectiveness of the Group’s management of those risks.
Page 18 of 128
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Regulatory environment
Australia
The Group’s Australian mining activities are in Western Australia and 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 Mining Rehabilitation Fund
Act 2012 takes effect from 1 July 2013. The Mining Rehabilitation Fund will replace unconditional
environmental performance bonds for companies operating under the Mining Act 1978.
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 Group is registered pursuant to the National Greenhouse and Energy Reporting Act 2007 under
which it is required to report annually its energy consumption and greenhouse gas emissions. 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 Group
has established data collection systems and processes to meet these reporting obligations. The
Group’s Australian operations are also required to comply with the Australian Federal Government’s
Clean Energy Act 2011, effective from 1 July 2012.
Papua New Guinea
The primary Papua New Guinea mining legislation is the Mining Act 1992, which governs the granting
and cessation of mining rights. Under the Mining Act, all minerals existing on, in or below the surface
of any land in Papua New Guinea, are the property of the State. The Mining Act establishes a
regulatory regime for the exploration for, and development and production of, minerals and is
administered by the Minerals Resources Authority. Environmental impact is governed by the
Environment Act 2000, administered by the Department of Environment and Conservation.
Solomon Islands
The primary Solomon Islands mining law is the Mines and Minerals Act (“MMA”). The MMA regulates
three stages of mining operations identified as reconnaissance, prospecting and mining, and other
aspects relevant to the minerals sector. The MMA is regulated by the Department of Mines, Energy
and Rural Electrification. Under the MMA and the Solomon Islands Constitution, ownership of all
minerals in or under land vests in the people and the Solomon Islands government. The MMA grants
the Solomon Islands government the sole authority to allocate mineral rights.
The Environment Act 1998 and the MMA contain environmental protection provisions relevant to
companies engaging in mining activities in Solomon Islands, and mining operations require the consent
of the Director of the Environment and Conservation Department. Under the MMA, the Minister for
Mines has enacted regulations requiring mining operations to be performed in a manner which avoids
waste and unnecessary damage and contamination to the environment.
Page 19 of 128
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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. He has been 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
Nil
Former public company directorships in last 3 years
Straits Resources Limited
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 five years
with a number of mining companies, including Newcrest Mining Ltd and WMC Ltd. His roles covered
gold, base metal and nickel mines.
Other current public company directorships
Nil
Former public company directorships in last 3 years
Nil
Special responsibilities
Nil
Interest in shares and options
Mr Lehany has a relevant interest in 200,770 fully paid ordinary shares and holds 897,803 performance
rights that will convert into shares subject to performance hurdles. The details of the performance
rights are provided later in this Report.
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DIRECTORS’ 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 130,247 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
Interest in shares and options
Ms Donaghey has a relevant interest in 75,000 fully paid ordinary shares of the Company.
Page 21 of 128
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DIRECTORS’ REPORT
Phillip C Lockyer M.Sc, AWASM, DipMETALL Non Executive Director
Mr Lockyer is an experienced mining engineer and metallurgist with over 40 years of 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
RTG Mining Inc
Former public company directorships in last 3 years
CGA Mining Limited
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 75,031 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.
Other current public company directorships
McClintock Associates Securities Limited
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 120,000 fully paid ordinary shares of the Company.
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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 of 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.
Information on Executives
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.
Garth Campbell-Cowan B.Com, Dip-Applied Finance & Investments, FCA, Chief Financial Officer
Mr Campbell-Cowan 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 Group’s Finance function, covering
financial reporting and accounting, treasury, taxation, business analysis, capital management,
procurement and information technology. Mr Campbell-Cowan 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 Croll B.Sc Mining Engineering, GDE Mineral Economics, Chief Operating Officer
Mr Croll 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. Mr
Croll is equally comfortable in open pit and underground operations, with experience in gold,
platinum, diamond, manganese, chrome and nickel. Mr Croll 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.
Katie-Jeyn Romeyn B.Mgt (Human Resource Management), Executive General Manager Human
Resources
Ms Romeyn joined St Barbara in 2007 and was appointed Executive General Manager Human
Resources in 2012. In this role Ms Romeyn is a member of the Executive Leadership Team, assists the
Remuneration Committee and leads the Human Resources Division of the Company. With over 10
years’ experience in the mining industry, prior to joining St Barbara, Ms Romeyn worked in a number
of roles in HR with WMC Resources, Rio Tinto and BHP Billiton.
Phil Uttley B.Sc. Hons. (Geol. & Mineral.), FAusIMM, Executive General Manager Discovery and
Growth
Mr Uttley 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). Mr Uttley 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. Mr Uttley commenced with St Barbara in September
2009.
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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:
Board
Audit Committee
A
10
10
10
10
10
10
B
10
10
10
10
10
10
A
5
-
5
-
5
5
B
5
-
5
-
5
5
Remuneration
Committee
B
A
7
7
-
-
7
7
7
7
-
-
7
7
Health & Safety
Committee
B
A
4
4
-
-
-
-
4
4
4
4
-
-
C Wise
T Lehany
D Bailey
E Donaghey
P Lockyer
R Rae
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
Remuneration report (Audited)
Introduction
This Remuneration Report forms part of the Directors’ Report for the year ended 30 June 2013, a year
that has seen significant structural changes within the Group including the acquisition of projects in the
South West Pacific and the divestment of Southern Cross Operations. It describes the alignment of
remuneration strategies with Group strategies for value creation, remuneration related decision
making authorities within the Group and the remuneration principles that applied for the 2013
financial year. The Report also provides details of remuneration paid for the 2013 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. Group performance;
5. Details of remuneration paid; and
6. Summaries of service agreements for Key Management Personnel.
1. Strategy and Industry Context
Group Strategy
The Group’s strategies for the 2013 financial year have focussed on the integration of the Simberi
Operations in Papua New Guinea and the Gold Ridge Operations in the Solomon Islands (together
called the Pacific Operations). The Southern Cross Operations, a higher cost and relatively mature gold
operation in Western Australia, was divested during the year for $18 million in cash proceeds,
consistent with the Group’s focus on longer life and lower cost operations.
In response to the US dollar gold price breaking a ten year upward trend to the down side, the Group
has also taken a number of steps to adapt to a lower gold price environment.
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Remuneration report (Audited) - Continued
Operationally, the focus was to adapt and apply the Group’s strong organisational capabilities and
business systems to the Pacific Operations to reliably underpin sustained long term profitability and
cash generation from these assets. This has required a significant investment in working capital, new
equipment and infrastructure for the two Pacific Operations.
Equally important, attention continues to be paid to “licence to operate” matters such as:
creating and sustaining a safe working environment;
ensuring that operations conform to applicable environmental and sustainability standards;
maintaining effective community and government relations; and
continuing to develop organisational capability as a core competency for competitive
advantage.
Exploration activities have continued with a growing emphasis on exploring for near mine deposits at
each of the Leonora, Simberi and Gold Ridge Operations. In its June 2013 Quarterly Report, the Group
reported that early drilling results from the Pacific Operations enhanced its positive view of the long
term value and upside potential of the Pacific Operations.
Industry context
The Group is a gold producer with revenue for the 2013 financial year of $511,840,000 (from
continuing operations) with gold operations at Leonora in Western Australia, Simberi in Papua New
Guinea and Gold Ridge in the Solomon Islands. The Leonora Operations comprise two underground
mines – Gwalia and King of the Hills and one processing plant at Gwalia. The Simberi and Gold Ridge
Operations are open cut mining operations with processing plants at each site.
As at 30 June 2013, the Group workforce comprised 1,900 employees and 670 contractors. Specialist
mining contractors are used for underground mining and development at Gwalia and King of the Hills.
The Group operates the Pacific Operations as owner-miner.
The Group competes for labour within the broader Australasian-Pacific resources sector and
benchmarks its remuneration systems and levels against comparable Australian companies operating
in Australia and overseas. The Australian Operations predominantly employ staff on fly-in fly-out
(FIFO) arrangements, and compete with other Australian FIFO operations. The Pacific Operations
predominantly employ people locally, with the remainder employed on FIFO arrangements.
Remuneration Strategy
The objectives of the Remuneration strategy for the 2013 financial year, consistent with the Group
strategy, were to ensure that:
total remuneration for senior executives and each level of the workforce was market
competitive;
key employees were retained;
total remuneration for executives and managers comprised an appropriate proportion of fixed
remuneration and remuneration at risk;
remuneration “at risk” encouraged and rewarded high performance aligned with value creation
for shareholders, through an appropriate mix of short and long term incentives;
the integrity of the remuneration review processes delivered fair and equitable outcomes; and
remuneration for Non Executive Directors preserved their independence by being in the form
of fixed fees.
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Remuneration report (Audited) - Continued
The remuneration strategy, policy and structure are essentially unchanged from the previous reporting
period (aside from the expansion of LTI performance measures described later in this report) and are
directly linked to the development of strategies and budgets in the Group’s annual planning cycle:
Annual Planning Timetable
Month
October
January
Strategy & Reporting
Annual strategy update
February
Half Year Financial Report
April
Budget setting framework
July
August
October
Annual Financial Report
Annual Report
Remuneration
Review STI & LTI design framework
Set Remuneration review framework
Set STI targets for following financial year
Measure STI outcomes and determine quantum
Measure LTI outcomes and action any vested
entitlements
November
Annual General Meeting
Shareholder approval of LTI issued to MD&CEO
Key developments
On 7 September 2012, the Group acquired Allied Gold Mining Plc by way of a Scheme of Arrangement,
including the Simberi and Gold Ridge Operations.
The Southern Cross Operations, having produced gold continuously during the Group’s ownership of
them since March 2005, were placed on care and maintenance in December 2012. A sale agreement
for Southern Cross Operations was entered into in January 2013 and completed in April 2013.
In March 2013, the Group issued US$250 million of senior secured notes and used the proceeds to:
repay existing bank debt of A$150 million;
provide cash backing for an existing A$20 million environmental bond facility; and
pay transaction costs and provide general working capital.
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. 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 Group, shareholders and employees are properly taken into account. The
charter for the Remuneration Committee is approved by the Board and is available on the Group’s
website 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 five most senior executives with the authority and responsibility for planning, directing and
controlling the activities of the Group, and these individuals are collectively referred to as the Key
Management Personnel.
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Remuneration report (Audited) - Continued
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
The members of the Remuneration Committee are all independent, Non Executive Directors and as at
the date of this report comprised:
R K Rae
D W Bailey
-
-
Chair, Non Executive Director
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 Key Management Personnel,
within the parameters of approved Group wide remuneration levels and structures.
2. Principles applied in determining the structure and amount of remuneration
The Group’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 Group strategy. The remuneration policy and related employment policies and practices are
aligned with this strategy.
The Group operates a performance based remuneration system through which the remuneration of
Key Management Personnel is linked to the financial and non-financial performance of the Group,
including its share price.
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Remuneration report (Audited) - Continued
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 Group performance and achievement of the Group’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 Group 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 Group. Non Executive Directors have no involvement in the day
to day management of the Group.
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 $1,200,000 per annum in aggregate, approved by shareholders at the Annual General
Meeting in November 2012. 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
report.
Directors have resolved that individual Director fees payable for the 2014 financial year will not
increase and will be frozen at 2013 financial year levels.
(b) Executive Remuneration
The reward structures for the Group’s executives are strongly aligned with shareholders’ interests by:
recognising the contribution of each senior executive to the achievement of the Group’s
strategy and business objectives;
rewarding high individual performance;
being market competitive to attract and retain high calibre individuals; and
ensuring that equity based remuneration through the long term incentive plan is based on a
number of outperformance measures 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 or 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 Group 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 Group outcomes and drive shareholder wealth.
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Remuneration report (Audited) - Continued
The mix of fixed and at risk remuneration for executives is as follows:
Seniority
Level 6 (CEO)
Level 5 (Exec GM)
Level 4 (GM)
Fixed
remuneration
40%
50%
57%
STI(1)
20%
20%
17%
LTI (2)
40%
30%
26%
Total
remuneration
100%
100%
100%
(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 significant outperformance 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.
Fixed remuneration for each executive role is reflected against the 75th percentile of prevailing
comparable market rates, to ensure that the Group is able to attract and retain a talented and capable
workforce appropriate to meet its current and anticipated needs.
For executives, fixed remuneration = base salary + superannuation + benefits.
(i) Fixed Remuneration - Base salary
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 Group’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 appraisal as part of the Group’s work
performance system, in which individual and Group 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. The
performance appraisal for the Managing Director and CEO is undertaken by the Chairman, 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.
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Remuneration report (Audited) - Continued
(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 Group 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. Group and individual targets are established by reference to the Group
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 2013 financial year STI target for net profit after tax from
Australian Operations was set at 10% above the corresponding budget amount. 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 Group.
The Remuneration Committee is responsible for recommending to the Board executive STIs and then
later assessing the extent to which the Group 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.
(v)
Variable Remuneration - Long term incentives (LTI)
LTIs are structured to reward executives for the long term performance of the Group relative to its
peers and, commencing with the 2011 financial year, were granted in the form of Performance Rights.
Prior to the 2011 financial year, LTIs were granted in the form of unlisted employee options.
In considering the LTI awards for the 2013 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.
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Remuneration report (Audited) - Continued
Vesting conditions
The vesting of performance rights granted in respect of the 2013 financial year (“FY13 Performance
Rights”) is subject to continuing employment as at the vesting date of 30 June 2015, and satisfying
performance conditions measured over a three year vesting period ending 30 June 2015 relating to:
Relative Total Shareholder Returns;
Net growth in Ore Reserves, as a proxy for increasing mine life; and
Return on capital employed in excess of the weighted average cost of capital, as a measure of
capital efficiency and generation of shareholder value.
Relative Total Shareholder Returns
The Relative Total Shareholder Return (Relative TSR) is measured against a defined peer group of
companies which the Board considers compete with the Group 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 Group.
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 the 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 rata1 for the
remainder of the vesting period; plus
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 the ASX
during the vesting period (for any reason other than as a consequence of a takeover or
merger) is measured as the TSR percentage change divided by the relevant 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).
[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.
The peer group for the FY13 Performance Rights comprised the following ASX listed, mid tier gold
companies:
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30 JUNE 2013
DIRECTORS’ REPORT
Remuneration report (Audited) - Continued
Company
CGA Mining Limited
OceanaGold Corporation
Evolution Mining Limited
Ramelius Resources Limited
Focus Minerals Limited
Regis Resources Limited
Kingsgate Consolidated Limited
Saracen Mineral Holdings Limited
Kingsrose Mining Limited
Silver Lake Resources Limited
Medusa Mining Limited
Tanami Gold NL
Northern Star Resources Limited
TSR measures the growth for a financial year in the price of shares plus cash distributions notionally
reinvested in shares. Company and comparator TSR performances are measured using the 10 day
VWAP calculation up to, and including, the last business day of the financial period immediately
preceding the period that the performance rights relate to, and in determining the closing TSR
performances at the end of the three year period. Relative TSR performance is calculated at a single
point in time and is not subject to re-testing. To satisfy this measure, the Company’s TSR must be
equal to or greater than the median TSR performance of a comparator group (that is, the Relative TSR).
The proportion of the FY13 Performance Rights that vest will be influenced by the Company’s TSR
relative to the comparator group over the three year vesting period ending on 30 June 2015 as
outlined below:
Relative TSR Performance
% Contribution to Rights to Vest
< 50th percentile
50th percentile
>50th & < 75th percentiles
75th percentile and above
0%
50%
Pro-rata between 50% & 100%
100%
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DIRECTORS’ REPORT
Remuneration report (Audited) - Continued
Increase in Ore Reserves
The proportion of the FY13 Performance Rights that vest will be influenced by the Company’s increase
in Ore Reserves net of production over the three year vesting period ending on 30 June 2015 as
outlined below:
Increase in Ore Reserves (net of production)
% Contribution to Rights to Vest
Negative growth
Depletion replaced
20% increase
0%
50%
100%
Return on Capital Employed (ROCE)
The proportion of the FY 13 Performance Rights that vest will be influenced by the ROCE achieved by
the Company over the three year vesting period ending on 30 June 2015 as outlined below:
Return on Capital Employed (ROCE)
% Contribution to Rights to Vest
Less than or equal to the average annual weighted
average cost of capital (WACC) over the three year
vesting period ending on 30 June 2015
WACC (calculated as above) + 5%
WACC (calculated as above) + 10%
Example Calculation of Rights to Vest
0%
50%
100%
Assuming the following measures over the three year vesting period ending 30 June 2015:
Relative TSR:
ROCE
Increase in Ore Reserves (net of production)
70%
10%
WACC + 6%
then the following proportion of performance rights will vest:
(a)
Relative TSR
Actual score: 70th percentile
Calculation: 50% (for achieving the 50th percentile)
+ ((70% - 50%) (75% - 50%)) x (100% - 50%)
= 90%
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DIRECTORS’ REPORT
Remuneration report (Audited) - Continued
(b)
(c)
Ore Reserves
Actual increase in Ore Reserves net of production: 10%
Calculation:
50% (for achieving replacement of production)
+ (10% 20%) x (100% - 50%)
= 75%
ROCE
Actual ROCE: WACC + 6%
Calculation:
50% (for achieving the 50th percentile)
+ ((6% - 5%) (10% - 5%)) x (100% - 50%)
= 60%
(d)
Combined score
(90% + 75% + 60%)/3 = 75%
Using the example of an executive being issued with 100,000 performance rights based on the
above calculations, hypothetically 75% would vest, which equals 75% x 100,000 = 75,000.
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.
Key Features of FY13 Performance Rights at a glance
Vesting conditions:
Other conditions:
Issue price:
Vesting date:
total shareholder return
growth in ore reserves
return on capital employed
various performance conditions set out above, relating to:
including continuing employment, set out above
10 day VWAP at start, 30 June 2012, $2.09
30 June 2015
The assessed fair value at the grant date of performance rights is allocated equally over the period
from grant date to vesting date. Fair values at grant date are based on the prevailing market price on
the date the performance right is granted.
A Monte Carlo simulation is performed to determine the probability of the market conditions
associated with the performance rights being met. The probability estimated by the Monte Carlo
simulation is then applied to the fair value. For performance rights issued during the year ended
30 June 2013 (FY13 Performance Rights), taking into account the impact of the market condition (as
discussed above), the estimated fair value was, for accounting purposes, $1,442,000.
Further information on performance rights is set out in Notes 37 to the Financial Statements.
Page 34 of 128
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30 JUNE 2013
DIRECTORS’ REPORT
Remuneration report (Audited) - Continued
Illustrative example of performance rights calculation
Executive Total Fixed Remuneration (TFR)
LTI award value (60% of TFR)
Performance rights issue price (10 day VWAP)
$400,000
$240,000
$2.09 each
Performance rights to be granted ($240,000 ÷ $2.09)
114,833
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.
Earnings
Sales revenue
EBITDA1
2009
$’000
2010
$’000
2011
$’000
2012
$’000
2013
$’000
281,129
296,760
359,575
541,189
568,443
39,701
33,793
125,538
204,034
(150,628)
Statutory net profit/(loss) after tax
(76,344)
(40,188)
68,629
130,230
(191,854)
Underlying net profit/(loss) after tax1
209
14,547
54,431
120,920
29,285
$M
600
500
400
300
200
100
0
$M
200
100
0
-100
-200
-300
Sales Revenue
EBITDA1
$M
300
200
100
0
-100
-200
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
Statutory Net Profit/(Loss) After Tax
Underlying Net Profit/(Loss) After Tax1
$M
140
120
100
80
60
40
20
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
1 Underlying net profit after tax is statutory net profit after tax less significant items. EBITDA is earnings before interest revenue, finance costs,
depreciation and amortisation and income tax expense, and includes revenues and expenses associated with discontinued operations. These are non-IFRS
financial measures which have not been subject to review or audit by the Group’s external auditors. These measures are presented to enable
understanding of the underlying performance of the Group by users.
Page 35 of 128
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DIRECTORS’ REPORT
Remuneration report (Audited) - Continued
The table below provides the share price performance of the Company’s shares in the 2013 financial
year and the previous four financial years.
Share price history
2009
2010
2011
2012
2013
Period end share price ($ per share)
1.38
Average share price for the year ($ per share)
1.74
2.10
1.68
1.96
2.16
1.77
2.12
0.45
1.35
During the 2013 financial year, the Company’s daily closing share price ranged between $0.40 to $2.37
per share (2012: $1.77 to $2.52 per share).
Gold Production
koz
400
300
200
100
0
2009
2010
2011
2012
2013
Net Cashflow
2009
2010
2011
2012
2013
Total Recordable Injury Frequency Rate
measured on a 12 month rolling basis
$M
150
100
50
0
-50
-100
20
15
10
5
0
2009
2010
2011
2012
2013
The Company’s primary measure of safety performance is the rolling 12-month average of the Total
Recordable Injury Frequency Rate. As it is difficult to ascertain comparable industry data for TRIFR,
St Barbara’s corresponding Lost Time Injury Frequency Rate (LTIFR) for the year to 30 June 2013 was
1.2. This compares very favourably with published mining industry LTIFR information of 4.7 (Safe Work
Australia, LTIFR for the Mining Industry, 2010-2011 preliminary information, which excludes LTI less
than one working week).
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.
5. Remuneration paid
Details of the remuneration of Directors and the Key Management Personnel of the Company during
the year ended 30 June 2013 are set out in the following tables.
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ST BARBARA LIMITED
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
30 JUNE 2013
2013
Name
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
T J Lehany
Other key management
personnel
G Campbell-Cowan
A Croll
R Kennedy
K Romeyn(1)
P Uttley
Short-term benefits
Post- employm
ent benefits
Long-term benefits
Cash
salary & fees
$
STI
payment
$
231,530
115,596
115,596
115,596
107,339
685,657
-
-
-
-
-
-
Non-
monetary
benefits(5)
$
16,104(4)
-
-
-
-
16,104
899,330
341,719
6,240
Other
$
Super-
annuation
$
Long
Service
Leave(2)
$
Share-based
payments(3)
$
Termination
payments
$
Total
$
Proportion of
total
performance
related
Value of
share based
payments as
% of total
-
-
-
-
-
-
-
16,470
10,404
10,404
10,404
9,661
57,343
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
264,104
126,000
126,000
126,000
117,000
759,104
-
-
-
-
-
-
-
-
-
-
16,470
44,238
273,040
- 1,581,037
21.6%
17.3%
469,930
534,730
369,330
286,275
396,230
207,254
143,308
136,431
88,831
128,162
3,120
3,343
3,120
66,488
3,120
9,000
-
-
-
16,470
16,470
16,470
13,725
16,470
20,950
4,379
11,283
25,897
45,201
51,568
56,747
41,398
24,241
44,286
-
-
-
778,292
758,977
578,032
505,457
633,469
26.6%
18.9%
23.6%
17.6%
20.2%
6.6%
7.5%
7.2%
4.8%
7.0%
Total Senior Executives
2,955,825 1,045,705
85,431
9,000
96,075 151,948
491,280
- 4,835,264
(1) Katie-Jeyn Romeyn was promoted to EGM Human Resources in September 2012.
(2) For current employees, the amount represents the long service leave expense accrued for the period.
(3) The value of performance rights disclosed as remuneration is the portion of the fair value of the performance rights recognised in the reporting period.
(4) Represents car parking, mobile phone, and other administrative benefits.
(5) For the Key Management Personnel, non monetary benefits comprise car parking, professional memberships and relocation expenses.
Page 37 of 128
ST BARBARA LIMITED
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
30 JUNE 2013
2012
Name
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
T J Lehany
Other key management
personnel
G Campbell-Cowan
A Croll (1)
D Rose (2)
R Kennedy
P Uttley
Short-term benefits
Post- employm
ent benefits
Long-term benefits
Cash
salary & fees
$
STI
payment
$
219,225
107,798
107,798
107,798
100,000
642,619
-
-
-
-
-
-
Non-
monetary
benefits(6)
$
15,577(5)
-
-
-
-
15,577
832,225
675,220
5,810
Other
$
Super-
annuation
$
Long
Service
Leave(3)
$
Share-based
payments(4)
$
Termination
payments
$
Total
$
Proportion of
total
performance
related
Value of
share based
payments as
% of 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%
434,625
224,680
264,965
348,225
373,625
297,151
128,503
85,763
236,009
239,189
2,905
549
2,572
2,905
2,905
-
50,000(7)
-
-
-
15,775
6,220
9,202
15,775
15,775
20,328
2,612
-
7,957
912
177,468
36,233
-
153,966
155,855
-
-
330,716
-
-
948,252
448,797
693,218
764,837
788,261
31.3%
28.6%
12.4%
30.9%
30.3%
18.7%
8.1%
-
20.1%
19.8%
Total Senior Executives
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.
Page 38 of 128
ST BARBARA LIMITED
30 JUNE 2013
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
(a) Non Executive Directors Fees
Non Executive Director fees for the 2013 financial year were determined, both as to their composition
(for base fees and committee work) and overall level, based on advice from McDonald and Company.
They comprised:
Director fees of $100,000;
an allowance for chairing a Board Committee of $17,500; and
a fee for serving as a member of a Board Committee of $8,500.
The Chairman’s fee for the 2013 financial year was set at $248,000 (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
(i) Fixed Remuneration - Base salary
In considering remuneration for Executive Key Management Personnel for the 2013 financial year, the
Remuneration Committee 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 target measures for the 2013 financial year were adjusted following the acquisition
of the Pacific Operations during the year and comprised:
STI Target
(a) Improve by 27% the safety performance of the Australian Operations
for the 2013 financial year (measured by Total Recordable Injury
Frequency Rate)
Result
Achieved
(b) Exceed by 10% the budgeted(1) underlying net profit after tax for the
Achieved
Australian Operations for the 2013 financial year
(c) Exceed by 5% the budgeted gold production for the Pacific Operations
Not achieved
for the six months to 30 June 2013
(d) Discretionary factor determined by the Board designed to take into
account unexpected events and achievements during the year
No discretionary
factor applied
(1) Normalised for movements in the gold price relative to gold price assumptions in the budget.
The individual performance measures varied according to the individual executive’s responsibilities,
and for the 2013 financial year reflected a range of achievements aligned with the Company strategy,
including the integration of the Pacific Operations. These included measures relating to improving
safety, specific integration activities, increasing production volumes and lowering production costs,
Page 39 of 128
ST BARBARA LIMITED
30 JUNE 2013
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
achieving exploration discoveries and implementing business improvement systems. There was also
provision for a discretionary factor 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, Key Management
Personnel during the year.
2013
Maximum potential STI
Actual STI
included in
remuneration
% of maximum
‘Target’ STI
earned
% of maximum
potential total
STI earned
% of maximum
potential total
STI foregone
Target
$
457,900
194,560
220,480
154,212
120,000
165,080
T J Lehany
G Campbell-Cowan
A Croll
R Kennedy
K Romeyn (2)
P Uttley
(1) Inclusive of STI “Target”
(2) Katie-Jeyn Romeyn was promoted to EGM Human Resources in September 2012.
75%
100%
65%
88%
74%
78%
$
341,719
207,254
143,308
136,431
88,831
128,162
Stretch(1)
$
915,800
389,120
440,960
308,424
240,000
330,160
37%
53%
32%
44%
37%
39%
63%
47%
68%
56%
63%
61%
Amounts shown as “Actual STI” represent the amounts accrued in relation to the 2013 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 2013 financial year.
(v) Variable Remuneration - Long term incentives (LTI)
None of the remaining LTI options granted in respect of the FY10 year vested as at 30 June 2013, as
they did not meet the Relative Total Shareholder Return criteria. As a result, all options on issue have
now lapsed.
(A) Analysis of options granted as compensation
2013
Options granted
Date
Number
% vested
in year
% forfeited
in year
Financial year
options vest
T J Lehany
G Campbell-Cowan
P Uttley
R Kennedy
A
976,220
290,670
256,258
256,258
19 Nov 2009
23 Sep 2009
23 Sep 2009
23 Sep 2009
-
-
-
-
100
100
100
100
30 Jun 2013
30 Jun 2013
30 Jun 2013
30 Jun 2013
All options have lapsed as the vesting service conditions, which are continuing service conditions and relative Total
Shareholder Returns over a three year period, were not satisfied.
Value yet to vest
Minimum
(A)
$
-
-
-
-
Maximum
(B)
$
-
-
-
-
(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. The following options
in respect of the FY10 year did not vest as at 30 June 2013 and are no longer exercisable:
T J Lehany
976,220
G Campbell-Cowan
290,670
R Kennedy
P Uttley
256,258
256,258
Page 40 of 128
ST BARBARA LIMITED
30 JUNE 2013
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
(C) Performance Rights issued in the 2013 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 2012 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 2013 financial year are as
follows:
2013
Number of
performance
rights granted
during 2013
Issue price
per
performance
right
Grant date
Expiry date
Fair value per
performance
right at grant
date
($ per share)(1)
1.58
1.58
1.58
1.58
1.58
1.58
Number of
performance
rights vested
during
FY2013
-
-
-
-
-
-
T J Lehany
G Campbell-Cowan
A Croll
R Kennedy
K Romeyn
P Uttley
(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.
19 Dec 2012 30 Jun 2015
19 Dec 2012 30 Jun 2015
19 Dec 2012 30 Jun 2015
19 Dec 2012 30 Jun 2015
19 Dec 2012 30 Jun 2015
19 Dec 2012 30 Jun 2015
438,182
139,636
158,239
110,756
103,349
118,478
-
-
-
-
-
-
6. Summaries of service agreements for Executive Key Management Personnel
Remuneration and other terms of employment for the Managing Director and CEO and the Key
Management Personnel 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 Performance Rights Plans. Other major provisions of the
agreements relating to remuneration are set out below.
All contracts with Key Management Personnel may be terminated early by either party giving the
required notice and subject to termination payments as detailed below.
All service agreements with Key Management Personnel, including with the Managing Director and
CEO comply with the provisions of Part 2 D.2, Division 2 of the Corporations Act.
T J Lehany – Managing Director and CEO
1.
2.
Term of agreement – permanent employee, commencement 2 March 2009.
Payment of a termination benefit or 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
Page 41 of 128
ST BARBARA LIMITED
30 JUNE 2013
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
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 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 2013.
Page 42 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ 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. Within the Pacific
Operations, the Company ensures compliance with the relevant National and Provincial legislation for
each sovereignty and where appropriate standards or legislation are not available, St Barbara reverts
to the standard of environmental performance as stipulated in the Western Australian legislation.
Subsequent to the sale of the Southern Cross Operations assets, the rehabilitation liability of the
Company has been substantially reduced in the year ended 30 June 2013 and St Barbara is committed
to the rehabilitation and closure of the remaining Western Australian operations. A range of new
environmental management responsibilities have been acquired with the purchase of the Allied Gold
assets in Gold Ridge and Simberi, and the implementation of a new company wide Environmental
Management System (EMS) is underway to facilitate the effective and responsible management of
environmental issues to the same high standard across all sites.
Overall, the number of externally reportable environmental incidents during the year ended 30 June
2013 was much lower compared with the previous year for Australian Operations. There was one non-
compliance externally reported for the Southern Cross operations during the year. At Leonora, there
were five non-compliances externally reported. Ongoing training, education and the implementation
of new environmental management practices at the Leonora and Southern Cross Operations (prior to
the sale of assets) have resulted in further reductions in the number of environmental incidents, and
increases in the internal compliance rates for audits and inspections.
Since the acquisition of the Simberi and Gold Ridge operations, St Barbara has further encouraged and
supported the reporting, tracking and management of the environmental incidents occurring at these
Page 43 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
implementation of the
operations. Further progress on this will be facilitated through the
Environmental Management System at each site. One formal notice was received from the
Department of Environment and Conservation regarding a breach of Licence Condition W16 for the
TSF3 embankment lift at Gwalia for the release of seepage water into Lake Raeside on two occasions.
None of the reported incidents from all sites resulted in impacts on the environment.
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 procedures in relation to certain financial
information set out in the preliminary and final offering circular in connection with the offer of debt
securities by St Barbara. Details of the amounts paid or payable to the auditor, KPMG, for non-audit
services provided during the 2013 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:
All non-audit services were reviewed by the Audit Committee to ensure they do not impact the
impartiality and objectivity of the auditor;
None of the non-audit services performed in the 2013 financial year undermine the general
principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants; and
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 46 and forms part of this Director’s Report.
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 that on 5 July
2013 the gold put and call options covering future gold production from the King of the Hills mine were
closed out for cash proceeds of $8,500,000.
Page 44 of 128
ST BARBARA LIMITED
30 JUNE 2013
DIRECTORS’ REPORT
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 22nd day of August 2013
Timothy J Lehany
Managing Director and CEO
Page 45 of 128
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 2013 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
22 August 2013
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Financial Report Table of Contents
CONSOLIDATED INCOME STATEMENT ............................................................................................. 48
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................... 49
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................... 50
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................................... 51
CONSOLIDATED CASH FLOW STATEMENT ........................................................................................ 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................................................ 53
DIRECTORS’ DECLARATION ............................................................................................................ 125
INDEPENDENT AUDIT REPORT ....................................................................................................... 126
This financial report covers the St Barbara Group (the Group) consisting of St Barbara Limited and its subsidiaries. The
financial report is presented in the Australian dollar 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 22 August 2013. The Company has the power to amend
and reissue the financial report.
Page 47 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2013
Continuing operations
Revenue
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
Impairment losses and asset writedowns
Operating (loss)/profit
Consolidated
2013
$'000
2012*
$'000
Notes
6
6
7
8
9
511,840
(318,058)
193,782
384,396
(152,104)
232,292
4,072
3,131
6,779
922
(21,144) (16,246)
(19,253) (13,732)
(18,561) (15,525)
(92,812) (63,399)
(17,261) (5,664)
(6,287) (6,417)
4,9
(309,170)
(283,503) 119,010
-
Finance costs
Foreign exchange gain
Net realised/unrealised gain/(loss) on derivatives
8
9
(22,892) (3,754)
9,122
15,703
-
(5,400)
(Loss)/profit before income tax
(281,570) 109,856
Income tax benefit
10
82,517
20,731
(Loss)/Profit from continuing operations (net of tax)
(199,053) 130,587
Profit/(loss) from discontinued operations (net of tax)
38
7,199
(357)
(Loss)/Profit attributable to equity holders of the
company
(191,854)
130,230
Earnings per share for continuing and discontinued
operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Earnings per share for continuing operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
*restated to include comparatives for discontinued operations.
36
36
36
36
(41.92)
(41.62)
40.04
39.60
(43.50)
(43.18)
40.15
39.71
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
Page 48 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2013
(Loss)/Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Consolidated
2013
$'000
2012*
$'000
Notes
(191,854)
130,230
Changes in fair value of available for sale financial assets
Changes in fair value of cash flow hedges taken to reserves
Income tax on other comprehensive income
25(a)
25(a)
25(a)
(124)
(96)
11,665
(2,790)
(4,609)
1,484
Foreign currency translation differences - foreign operations
25(a)
(29,614)
Items that will not be reclassified to profit and loss
-
-
-
Other comprehensive (loss) net of tax(1)
Total comprehensive (loss)/profit attributable to equity holders of
the company
(22,682)
(1,402)
(214,536)
128,828
*restated to include comparatives for discontinued operations.
(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 (loss)/ 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.
Page 49 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2013
Notes
Consolidated
2013
$'000
2012
$'000
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
Mineral rights
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
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
11
12
13
22
15
14
17
14
18
19
18
10
20
21
22
23
21
22
23
10
117,383
23,158
63,995
11,077
88
32,411
248,112
339,861
1,229
288,936
15,036
209,957
27,231
882,250
1,130,362
88,658
42,612
-
16,738
148,008
285,480
-
72,771
876
359,127
507,135
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
623,227
563,833
24
25(a)
25(b)
886,242
(25,002)
(238,013)
623,227
613,275
(465)
(48,977)
563,833
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Page 50 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2013
Share Based
Payments
Reserve
000’s
Gold Cash Flow
Hedge Reserve
000’s
Contributed
Equity
000’s
Investment
Fair Value
Reserve
000’s
Foreign
currency
translation
Reserve
000’s
Retained
Earnings
000’s
Total
000’s
the Company
Balance at 1 July 2011
Transactions with owners’ of
recognised directly in equity:
Share buy back
Share-based payments expense
Unlisted options not vested
Unlisted options expired
Total comprehensive income for the year
Profit attributable to equity holders of the
Company
Other comprehensive income
Balance at 30 June 2012
the Company
Balance at 1 July 2012
Transactions with owners’ of
recognised directly in equity:
Equity issues (net of transaction costs)
Share-based payments expense
Unlisted options expired
Total comprehensive income for the year
Loss attributable to equity holders of the Company
Other comprehensive income/loss
Balance at 30 June 2013
24
25(a)
25(a)
615,521
3,108
(2,059)
(2,246)
-
-
-
-
-
613,275
613,275
272,967
-
-
-
-
886,242
-
1,828
(924)
(1,016)
-
-
2,996
2,996
-
963
(2,818)
-
-
1,141
-
-
-
-
-
(1,335)
(3,394)
(3,394)
-
-
-
-
7,021
3,627
-
-
-
-
-
-
(67)
(67)
(67)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(89)
(156)
-
(29,614)
(29,614)
(180,223)
436,347
-
-
-
1,016
(2,246)
1,828
(924)
-
130,230
130,230
-
(48,977)
(1,402)
563,833
(48,977)
563,833
-
-
2,818
(191,854)
-
(238,013)
272,967
963
-
(191,854)
(22,682)
623,227
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Page 51 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2013
Cash Flows From Operating Activities:
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Payments for exploration and evaluation
Interest received
Interest paid
Finance charges – finance leases
Borrowing costs paid
Notes
Consolidated
2013
$'000
2012 *
$'000
584,716
553,847
(489,297)
(317,729)
(21,144)
(16,246)
3,811
(5,840)
(403)
(815)
5,555
(65)
(278)
(521)
Net cash inflow from operating activities
34
71,028
224,563
Cash Flows From Investing Activities:
Proceeds from sale of property, plant and equipment
Payments for available for sale financial assets
Payments for property, plant and equipment
Payments for development of mining properties
Exploration and evaluation expenditure - capitalised
Proceeds from sale of discontinued operations
Payments for business combination
Net cash outflow from investing activities
Cash Flows From Financing Activities:
Proceeds from borrowings: finance leases
Payments for share buy backs
Share buy back transaction costs
Movement in restricted cash
Gold prepayment facility repayments
Syndicated debt facility - transaction costs
Syndicated debt facility - draw down
Syndicated debt facility – repayment
Secured notes drawdown
Secured notes drawdown - transaction costs
Movement in unclaimed monies
Principal repayments
- finance leases
- equipment financing facility
- insurance premium funding
13
-
(74,465)
(60,850)
-
17,648
(206,623)
68
(250)
(18,966)
(80,757)
(4,575)
-
-
(324,277)
(104,480)
38
40
2,503
-
-
(11,832)
(24,554)
(7,262)
150,000
(150,000)
240,200
(11,961)
-
(4,657)
-
(1,775)
-
(2,239)
(7)
-
-
-
-
-
-
-
(665)
(1,011)
(7,860)
(2,544)
Net cash inflow/(outflow) from financing activities
180,662
(14,326)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Net movement in foreign exchange rates
(72,587)
185,242
4,728
105,757
79,485
-
Cash and cash equivalents at the end of the year
11
117,383
185,242
*Restated to reflect non-cash financing of assets and operating costs per note 35.
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
Page 52 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
Summary of significant accounting policies ......................................................................................... 54
Note 1
New Standards adopted ....................................................................................................................... 70
Note 2
Financial risk management ................................................................................................................... 71
Note 3
Critical Accounting Estimates and Judgements .................................................................................... 78
Note 4
Segment Information............................................................................................................................ 85
Note 5
Revenue ................................................................................................................................................ 89
Note 6
Other income ........................................................................................................................................ 89
Note 7
Expenses ............................................................................................................................................... 90
Note 8
Significant items ................................................................................................................................... 91
Note 9
Income tax ............................................................................................................................................ 92
Note 10
Cash and cash equivalents .................................................................................................................... 94
Note 11
Trade and other receivables ................................................................................................................. 94
Note 12
Inventories ............................................................................................................................................ 95
Note 13
Deferred mining costs .......................................................................................................................... 95
Note 14
Available-for-sale financial assets......................................................................................................... 95
Note 15
Financial instruments ........................................................................................................................... 96
Note 16
Note 17
Property, plant and equipment ............................................................................................................ 97
Note 18 Mine properties .................................................................................................................................... 99
Exploration and evaluation ................................................................................................................... 99
Note 19
Trade and other payables ..................................................................................................................... 99
Note 20
Interest bearing borrowings ............................................................................................................... 100
Note 21
Derivative financial assets and liabilities ............................................................................................ 101
Note 22
Provisions ........................................................................................................................................... 101
Note 23
Contributed equity ............................................................................................................................. 103
Note 24
Reserves and accumulated losses ...................................................................................................... 103
Note 25
Parent Entity disclosures .................................................................................................................... 106
Note 26
Remuneration of auditors .................................................................................................................. 107
Note 27
Contingencies ..................................................................................................................................... 107
Note 28
Commitments for expenditure ........................................................................................................... 108
Note 29
Related party transactions ................................................................................................................. 109
Note 30
Controlled entities .............................................................................................................................. 110
Note 31
Interests in jointly controlled assets ................................................................................................... 111
Note 32
Events occurring after the balance sheet date ................................................................................... 112
Note 33
Reconciliation of (loss)/profit after income tax to net cash flows from operating activities ............. 112
Note 34
Non-cash investing and financing activities........................................................................................ 112
Note 35
Earnings per share .............................................................................................................................. 113
Note 36
Share-based payments ....................................................................................................................... 114
Note 37
Discontinued Operations .................................................................................................................... 116
Note 38
Disposal of subsidiary ......................................................................................................................... 117
Note 39
Business Combinations ....................................................................................................................... 118
Note 40
Goodwill .............................................................................................................................................. 120
Note 41
Key Management Personnel Disclosures ........................................................................................... 121
Note 42
Page 53 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 1
Summary of significant accounting policies
St Barbara Limited (the “Company”) is a company limited by shares incorporated in Australia whose
shares are publicly traded on the Australian Stock Exchange. The consolidated financial statements of
the Company as at and for the year ended 30 June 2013 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.
The financial statements have been presented in Australian dollars and all values are rounded to the
nearest thousand dollars ($000) unless otherwise stated.
1.1 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 22 August 2013.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the
following material items:
Derivative financial instruments are measured at fair value;
Share based payment arrangements are measured at fair value;
Available for sale assets are measured at fair value;
Rehabilitation provision is measured at net present value;
Long service leave provision is measured at net present value; and
Gold prepayment facility is measured at fair 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.
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30 JUNE 2013
FINANCIAL REPORT
1.2 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 2013 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.
A list of controlled entities is presented in Note 31.
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 less any impairment charges within the Parent
Entity disclosures at Note 26.
Non-controlling interests in the results and equity of the entity that is controlled by the Group is shown
separately in the Income Statement, Statement of Comprehensive Income, Statement of Financial
Position and Statement of Changes in Equity respectively.
(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.
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30 JUNE 2013
FINANCIAL REPORT
1.3 Business combinations and goodwill
Acquisitions of businesses are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition date
fair values of assets transferred to the Group, liabilities incurred by the Group to the former owners of
the acquiree and the equity instruments issued by the Group in exchange for control of the acquiree.
Consideration transferred also includes the fair value of any contingent consideration and share-based
payment awards of the acquiree that are replaced as part of the business combination. Transaction
costs that the Group incurs in connection with a business combination, other than those associated
with the issue of debt or equity securities, are expensed as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net fair value of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. After initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s Cash Generating Units (CGU) that are expected to
benefit from the synergies of the combination. Refer to Note 4(iv) on Impairment.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement periods or
additional assets or liabilities are recognised to reflect new information obtained about facts and
circumstances that existed as at the acquisition date that, if known, would have affected the amounts
recognised as of that date.
1.4 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.
1.5 Foreign currency translation
(i)
Functional and presentation currency
Both the functional and presentation currency of St Barbara Limited and its Australian controlled
entities is Australian dollars (AUD). The functional currency of the Group’s foreign operations is US
dollars (USD).
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30 JUNE 2013
FINANCIAL REPORT
(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.
(iii)
Translation of foreign operations
The assets and liabilities of controlled entities incorporated overseas with functional currencies other
than Australian dollars are translated into the presentation currency of St Barbara Limited (Australian
dollars) at the year-end exchange rate and the income statements are translated at the rates
applicable at the transaction date. Exchange differences arising on translation are taken directly to the
foreign currency translation reserve in equity. On consolidation, exchange differences arising from the
translation of net investments in foreign operations and of the borrowings designated as hedges of the
net investment are taken to the foreign currency translation reserve. If the foreign operation is sold,
the proportionate share of exchange differences would be transferred out of equity and recognised in
the income statement.
1.6 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 as it accrues, using the effective interest method.
(iii)
Dividends
Dividends are recognised as revenue when the right to receive payment is established.
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30 JUNE 2013
FINANCIAL REPORT
(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.
1.7 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.
Capitalised costs are deferred until commercial production commences from the relevant area of
interest, at which time they are amortised on a unit of production basis.
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 1.11). 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 commercially viable to
pursue, 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.
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30 JUNE 2013
FINANCIAL REPORT
(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.
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.
1.8 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.
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.
(ii)
Open pit operations
Overburden and other mine waste materials are often removed during the initial development of a
mine site in order to access the mineral deposit. This activity is referred to as Deferred Stripping.
Capitalisation of development stripping costs ceases and the depreciation of costs commences, at the
time that saleable materials begin to be extracted from the mine.
Removal of waste material normally continues throughout the life of a mine. This activity is referred to
as production stripping and commences at the time that saleable materials begin to be extracted from
the mine.
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.
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30 JUNE 2013
FINANCIAL REPORT
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.
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.
1.9 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.
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.
(ii)
Deferred tax
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:
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;
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; and
Taxable temporary differences arising on the initial recognition of goodwill.
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 or substantively enacted by the
reporting date.
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.
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FINANCIAL REPORT
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
recognition at that date, are recognised subsequently
information about facts and
circumstances change.
if new
(iii)
Tax Exposure
In determining the amount of current and deferred tax the Group takes into account the impact of
uncertain tax positions and whether additional taxes and interest may be due. This assessment relies
on estimates and assumptions and may involve a series of judgements about future events. New
information may become available that causes the Group to change its judgement regarding the
adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period
that such a determination is made.
(iv)
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.
1.10 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 interest
bearing liabilities. 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 asset’s useful life, or the lease term if shorter
where there is no reasonable certainty that the Group will obtain ownership by the end of 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.
1.11
Impairment of assets
All asset values are reviewed at each reporting date to determine whether there is objective evidence
that there have been 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. An impairment loss is recognised for the amount by which the carrying amount of an
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30 JUNE 2013
FINANCIAL REPORT
asset or a cash generating unit exceeds the recoverable amount. Impairment losses are recognised in
the income statement. Refer to Note 4 (iv).
1.12 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.
1.13 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
uncollectible are written off. A provision for doubtful receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. The amount of the provision is the difference between the asset’s carrying amount and
the present value of estimated future cash flows, discounted at the effective interest rate. The amount
of the provision is recognised in the income statement.
1.14
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.
1.15
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.
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(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 derecognised the cumulative gain or loss in equity is transferred
to the income statement.
1.16 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 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).
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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.
(iii)
Hedges of Net Investment
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is
accounted for as part of the net investment, are accounted for in a similar way to cash flow hedges.
Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised
directly in equity in the Foreign Currency Translation Reserve, while any gains or losses relating to the
ineffective portion are recognised in the income statement. On disposal of the foreign operation, the
cumulative value of any gains or losses recognised directly in equity is transferred to the income
statement.
1.17 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.
1.18 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
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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 1.11).
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.
1.19 Mineral Rights
Mineral rights comprise identifiable exploration and evaluation assets, mineral resources and ore
reserves, which are acquired as part of a business combination or a joint venture acquisition, and are
recognised at fair value at date of acquisition. Mineral rights are attributable to specific areas of
interest and are amortised when commercial production commences on a unit of production basis
over the estimated economic reserve of the mine to which the rights relate.
1.20 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 remain unpaid as at reporting date. The amounts are unsecured and are
usually paid within 30 days from the end of the month of recognition.
1.21 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost except for the gold prepayment facility which is
subsequently measured at fair value as its amortisation profile changes as a result of the embedded
derivative. 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.
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.
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1.22 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.
1.23 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.
1.24 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.
(iii)
Share-based payments
Share-based compensation benefits are provided to employees through the Performance Rights Plan.
Information relating to this plan is set out in Note 37.
The fair value of 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
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recognised over the period during which the employees become unconditionally entitled to the
options or rights. The amount recognised on issue date is adjusted to reflect the actual number of
performance rights 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 of performance rights at grant date is determined using the market price of the
Company’s shares on the date of grant and taking into account the vesting and performance criteria
and probability of market conditions being met using a Monte Carlo Simulation methodology.
Upon expiry of rights, the balance of the share-based payments reserve is either transferred directly to
retained earnings, where the expiry is due to market conditions not being met, or through the income
statement.
Upon the exercise of rights, the balance of the share-based payments reserve relating to those rights 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.
1.25 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and performance rights 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.
1.26 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.
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(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.
1.27 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(vi). 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 revegetation to meet legislative requirements.
Changes in estimates are dealt with on a prospective basis as they arise.
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. A large proportion of the outflows are expected to occur at the time the respective
mines are closed.
1.28 Assets classified as held for sale
Individual non-current assets or disposal groups comprising assets and liabilities are classified as “held
for sale” if the carrying amount will be recovered principally through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and the
non-current asset is available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within
one year from the date of classification. On initial recognition, assets held for sale are measured at the
lower of their carrying amount and fair value less costs to sell and are no longer depreciated (or
amortised).
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1.29 Government royalties
Royalties under existing regimes are payable on sales revenue, or gold ounces produced and sold, and
are therefore recognised as the sale occurs.
1.30 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.
1.31 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 reporting periods beginning after 1 July 2012, and have not been applied in
preparing these consolidated financial statements. Those new standards, amendments to standards
and interpretations which may be relevant to the Group are set out below. The Group does not plan
to adopt these standards early and is in the process of considering the impact of the changes.
(i) Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine (and related AASB
2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20)
Clarifies the requirements for accounting for stripping costs associated with waste removal in surface
mining, including when production stripping costs should be recognised as an asset, how the asset is
initially recognised, and subsequent measurement. Interpretation 20 applies to annual reporting
periods beginning on or after 1 January 2013. The Group does not expect the impact to be material.
(ii) AASB 9 Financial Instruments (December 2009), AASB 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9, AASB 2012-6 Amendments to Australian Accounting
Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures
AASB 9 (2009) introduces new requirements for the classification and measurement of financial assets.
Under AASB 9, financial assets are classified and measured based on the business model in which they
are held and the characteristics of their contractual cash flows. AASB 9 introduces additions relating to
financial liabilities. The IASB currently has an active project that may result in limited amendments to
the classification and measurement requirements of AASB 9 and add new requirements to address the
impairment of financial assets and hedge accounting. AASB 9 (2010 and 2009) are effective for annual
reporting periods beginning on or after 1 January 2015.
(iii) AASB 10 Consolidated Financial Statements, AASB 2011-7 Amendments to Australian Accounting
Standards arising from the Consolidation and Joint Arrangements Standards
The Standard identifies the principles of control, determines how to identify whether an investor
controls an investee and therefore must consolidate the investee, and sets out the principles for the
preparation of consolidated financial statements. The Standard introduces a single consolidation
model for all entities based on control, irrespective of the nature of the investee (i.e. whether an entity
is controlled through voting rights of investors or through other contractual arrangements as is
common in 'special purpose entities'). As a result, the Group may need to change its consolidation
conclusion in respect of its investees which may change the current accounting treatment of these.
AASB 10 is applicable to annual reporting periods beginning on or after 1 January 2013.
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(iv) AASB 11 Joint Arrangements
Under AASB 11, the structure of the joint arrangement, although still an important consideration, is no
longer the main factor in determining the type of joint arrangement and therefore the subsequent
accounting. The Group will also need to assess the rights the parties have with respect to the assets
and liabilities in the arrangement. The Group may need to reclassify its joint arrangements, which may
lead to changes in current accounting for these interests. AASB 11 is applicable to annual reporting
periods beginning on or after 1 January 2013.
(v) AASB 12 Disclosure of Interests in Other Entities, AASB 2011-7 Amendments to Australian
Accounting Standards arising from the Consolidation and Joint Arrangements Standards
AASB 12 brings together into a single standard all the disclosure requirements about an entity’s
interests in subsidiaries, joint arrangements, and associates and unconsolidated structure entities. The
Group will need to assess the disclosure requirements in comparison with existing disclosures. AASB
12 requires the disclosure of information about the nature, risks and financial effects of these
interests. AASB 12 is applicable to annual reporting periods beginning on or after 1 January 2013.
(vi) AASB 13 Fair Value Measurement and related AASB 2011-8 Amendments to Australian Accounting
Standards arising from AASB 13
AASB 13 replaces the guidance on fair value measurement in existing AASB accounting literature with a
single standard. AASB 13 applies when another AASB requires or permits fair value measurements or
disclosures about fair value measurements (and measurements, such as fair value less costs to sell,
based on fair value or disclosures about those measurements). As a result, the Group may need to
consider its fair value methodologies. AASB 13 is applicable to annual reporting periods beginning on
or after 1 January 2013.
(vii) AASB 119 Employee Benefits (2011), AASB 2011-10 Amendments to Australian Accounting
Standards arising from AASB 119 (2011)
AASB 119 (2011) looks at the classification of employee benefits: the amendments define short term
employee benefits as employee benefits that are "expected to be settled wholly before twelve months
after the end of annual reporting period" in place of currently used "due to be settled". The Group will
need to consider the impact of this change to the current disclosure of employee benefits. AASB 119 is
applicable to annual reporting periods beginning on or after 1 January 2013.
New Standards adopted
Note 2
The Company has adopted the following new and/or revised Standards, Amendments and
Interpretations from 1 July 2012:
AASB 2011-9
Amendments to Australian Accounting Standards – Presentation of Items of
Other Comprehensive Income
Adoption of the above Standards did not have any effect on the financial position or performance of
the Group.
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Financial risk management
Note 3
The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to
withstand significant changes in cash flow at risk scenarios and still meet all financial commitments as
and when they fall due. The Group continually monitors and tests its forecast financial position and
has a detailed planning process that forms the basis of all cash flow forecasting.
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 normal business activities expose it to a variety of financial risk, being: market risk
(especially gold price and foreign exchange risk), credit risk and liquidity risk. 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 Group Treasury function in
accordance with Board approved directives which underpin Group Treasury policies and processes.
The Group’s forecast financial risk position with respect to key financial objectives and compliance
with Treasury policy are regularly reported to the Board.
(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
directives and policies approved by the Board.
(i) Commodity price risk
The Group’s revenue is exposed to spot gold price risk.
The Group has managed commodity price risk from time to time 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 and transactions where the AUD spot rate is
quoted as a function of USD, Papua New Guinea Kina (PGK) and Solomon Island Dollars (SBD) at the
prevailing exchange rate. The USD currency exposure in relation to gold sales is not hedged and the
USD exposure on transactions is managed by selling gold in USD therefore creating a natural hedge.
Currently the PGK and SBD exposure is not hedged.
(iii) Interest rate risk
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 specify a mix of fixed
and floating rate borrowings and 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. As at 30 June 2013, interest rates
on interest bearing liabilities were all fixed as set out in note 16 (b).
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Cash flow hedges
(b)
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 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:
Bought put options at A$1,425/oz
Sold call options at A$1,615/oz
During financial year 2013, 39,252 ounces of call options and 5,417 ounces of put options were
exercised (2012: Call options – 30,000 exercised; Put options – 4,000 ounces exercised). During
financial year 2013, 30,000 ounces of call options and 63,835 ounces of put options expired.
(ii) Southern Cross
In September 2012, 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:
Bought put options at A$1,550/oz
Sold call options at A$1,610/oz
During financial year 2013, 14,000 ounces of call options were exercised (2012: 48,000), and 20,000
ounces of put options and 6,000 ounces of call options expired. As at 30 June 2013, there were no
option contracts still to mature in relation to Southern Cross.
The maturity profile of the put and call option contracts remaining as at 30 June 2013 is provided in
the table below.
Strike Price
King of the Hills
Put: A$1,425/oz
Call: A$1,615/oz
Total
ounces
6 months or
less
ounces
6 – 12
months
ounces
1 – 2 years
ounces
2 – 5 years
ounces
110,748
110,748
37,998
37,998
38,001
38,001
34,749
34,749
-
-
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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 2013, the fair value of all remaining put and call option contracts was
$11,077,128 (June 2012: negative $16,290,000). $4,261,000 (June 2012: $11,442,000) of this fair
value represented an unrealised profit related to time value of the 110,748 ounces outstanding at 30
June 2013 (June 2012: 195,000 ounces). A profit of $15,703,000 for the year ended 30 June 2013 was
recognised in the income statement (2012: loss of $5,400,000), representing mainly the time value
movement. Included in this gain was a net realised gain of $1,498,000 (2012: gain of $702,000), which
represented the unwinding of the unrealised mark-to-market gain previously recognised for options
that were exercised or expired during the year (refer to note 1.16). An unrealised profit of
$13,376,000 relating to the intrinsic value of the options was recognised in the gold cash flow hedge
reserve in equity during the year (2012: losses of $3,054,000), with a realised loss of $1,711,000 (2012:
gain of $264,000) recognised in the reserve for options that were exercised or expired during the year.
(iii) Cash flow hedge sensitivity
The relationship between currencies, spot gold price and volatilities is complex and changes in the
spot gold price can influence volatility, and vice versa.
The following table summarises the impact of an 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)
2013
$’000
(4,771)
7,597
2012
$’000
2,018
5,060
Impact on gold cash
flow hedge reserve
net of tax(2)
2013
$’000
2012
$’000
672
(11,532)
(3,497)
4,453
(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).
(3) The spot gold price as at 30 June 2013 was A$1,349.
(c)
Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or
customer contract, with a maximum exposure equal to the carrying amount of the financial assets as
recorded in the financial statements. 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.
Credit risks related to receivables
The Group’s most significant customer accounts for $2,235,000 of the trade receivables carrying
amount at 30 June 2013 (2012: $3,599,000), representing receivables owing from gold sales.
Settlement of the receivables relating to gold sales occurred on 2 July 2013. 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 2013 were past due.
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Credit risks related to cash deposits and derivatives
Credit risk from balances with banks and financial institutions derivative counterparties is managed by
the centralised Group 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 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)
Currency Risk
The Group is exposed to currency risk on gold sales, purchases and borrowings that are denominated
in a currency other than the Company’s functional currency of the AUD. The currencies in which
transactions primarily are denominated are Australian Dollars (AUD), US Dollars (USD), Papua New
Guinea Kina(PGK) and Solomon Island Dollars (SBD).
Currency risk relating to the Group's USD borrowings is hedged against the net investment in the
foreign operations. Exchange gains and losses upon subsequent revaluation of the USD denominated
borrowings from the historical draw down rate to the reporting period end spot exchange rate are
deferred in equity in the Foreign Currency Translation Reserve, and will be released to the income
statement if the foreign operation is disposed of. As at 30 June 2013, USD borrowings of $262,274,000
(2012: nil) were designated as a net investment in foreign operations. Interest on borrowings is
denominated in the currency of the borrowing. The Group’s USD interest exposure is mitigated
through USD cash flows realised through gold sales, providing a natural currency hedge. In respect of
other monetary assets and liabilities denominated in foreign currencies, the Group buys and sells
foreign currencies at spot rates when necessary.
Exposure to Currency
Cash and cash equivalents
Trade Receivables
Trade payables
Interest bearing liabilities
Net Exposure
USD
$’000
2,741
2,481
(16,774)
(327,459)
(339,011)
PGK
$’000
1,283
1,203
(7,753)
-
(5,267)
SBD
$’000
603
123
(5,960)
-
(5,234)
Note: there are no 30 June 2012 comparatives as all balances were in AUD
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Sensitivity Analysis
The following table details the Group's sensitivity to a 10% movement (i.e. increase or decrease) in the
Australian dollar against the US dollar at the reporting date, with all other variables held constant. The
10% sensitivity is based on reasonably possible changes, over a financial year, using the observed
range of actual historical rates for the preceding five year period:
AUD/USD +10%
AUD/USD -10%
AUD/PGK +10%
AUD/PGK -10%
Impact on Profit After Tax
Higher/(Lower)
2013
000's
(25,927)
31,688
2012
000's
-
-
(479)
585
-
-
AUD/SBD +10%
AUD/SBD -10%
Note: No impact on equity as the foreign currency denominated assets and liabilities represent cash, receivables, payables
and borrowings. There are no derivatives.
(476)
582
-
-
Significant assumptions used in the foreign currency exposure sensitivity analysis above include:
Reasonably possible movements in foreign exchange rates
The translation of the net assets in subsidiaries with a functional currency other than the Australian
dollar has not been included in the sensitivity analysis as part of the equity movement
The net exposure at the reporting date is representative of what the Group is expected to be
exposed to in the next 12 months.
The sensitivity analysis only includes the impact on the balance of financial assets and financial
liabilities at the reporting date.
Capital management
(e)
The Group’s total capital is defined as total shareholders’ funds plus net debt. The Group aims to
maintain an optimal capital structure to reduce the cost of capital and maximise shareholder returns.
The Group has a capital management plan that is reviewed by the Board on a regular basis.
Consolidated capital
Total shareholders’ funds
Borrowings
Cash and cash equivalents(1)
Total capital
2013
$’000
623,227
328,092
(117,383)
833,936
2012
$’000
563,833
4,256
(4,256)
563,833
(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.
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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 financial institutions as security
for bank guarantee facilities totalling $11,955,000 (2012: $123,000) at the reporting date.
The Company has a $20,000,000 performance bond facility with the National Australia Bank Limited
(NAB) to provide security for performance obligations incurred in the ordinary course of business, with
security given through cash backing 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.
(f)
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, which includes interest obligations over the term of the facilities.
$‘000
Less than
6 months
Maturity of financial liabilities - 2013
Total
contractual
cash flows
Between 1
and 5
years
Over 5
years
6 – 12
months
Carrying
amount
Senior Secured Notes(i)
Gold Prepayment Facility(ii)
Finance lease liabilities
Trade and other payables
12,413
21,525
3,017
88,658
125,613
12,143
21,525
2,625
-
36,293
370,786
21,525
8,141
-
400,452
- 395,342
64,575
-
13,783
-
88,658
-
- 562,358
262,274
53,809
12,009
88,658
416,750
i.
ii.
Excluding capitalised transaction costs and discount.
Reflects nominal cash outflows (excludes any derivatives).
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$‘000
Finance lease liabilities
Insurance funding liability
Trade and other payables
Derivative financial liabilities(i)
Maturity of financial liabilities - 2012
Less than
6 months
6 – 12
months
Between 1
and 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
597
1,409
55,542
729
58,277
549
604
-
2,101
3,254
1,065
-
-
13,547
14,612
-
-
-
-
-
2,211
2,013
55,542
16,377
76,143
2,280
1,976
55,542
16,377
76,175
(i) 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.
Fair value estimation
(g)
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 disclosed in Note 4(viii).
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
- Derivative financial asset
Financial liabilities
- Trade and Other Payables
- Gold Prepayment Facility
- Senior Secured Notes1
- Derivative financial liabilities
- Lease liabilities
2013
Carrying
Amount
$’000
Net Fair
Value
$’000
2012
Carrying
Amount
$’000
Net Fair
Value
$’000
117,383
11,955
7,824
88
11,077
148,327
88,658
53,809
273,650
-
12,009
428,126
117,824
11,955
7,824
88
11,077
148,768
88,658
53,809
253,520
-
12,009
407,996
185,242
123
9,967
154
87
195,573
55,542
-
-
16,377
4,256
76,175
187,448
123
9,967
154
87
197,779
55,542
-
-
16,377
4,256
76,175
1. The senior secured note amount excludes $10,218,757 of capitalised transaction costs and $1,157,425 discount on notes.
Page 77 of 128
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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 2012 edition of the Australian Code for
Reporting of Mineral Resources and Ore Reserves, 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:
Asset carrying values may be impacted due to changes in estimated future cash flows.
Depreciation and amortisation charged in the income statement may change where such
charges are calculated using the units of production basis.
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.
Decommissioning, site restoration and environmental provisions may change where changes in
estimated reserves affect expectations about the timing or cost of these activities.
ii. Units of production method of amortisation
The 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.
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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 or fair value less costs to sell
(“Fair Value”), in accordance with significant accounting policy 1.11. These calculations require the use
of estimates, which have been outlined in significant accounting policy 1.11.
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 significant and sustained decline in gold price in the latter part of the 2013 financial year
represented an indicator of possible impairment. For impairment testing, assets are grouped together
into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or cash-generating units (“CGUs”). As a result, the
Group assessed the recoverable amounts of each of its CGUs, including goodwill. The identified CGUs
of the Group are: Leonora (combining the Gwalia and King of the Hills gold mines), Gold Ridge and
Simberi gold mines.
Unless otherwise identified, the following discussion of (a) Impairment testing and (b) Sensitivity
analysis is applicable to the assessment of the value-in-use and Fair Value of the Group’s CGUs,
inclusive of those CGUs in which goodwill is recognised.
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(a)
Impairments testing
i.
Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The
recoverable amount of the Leonora CGU was based on the value-in-use methodology, while the
Simberi and Gold Ridge CGUs were assessed using Fair Value less costs to sell (“Fair value”). The costs
to sell have been estimated by management based on prevailing market conditions.
Value-in-use and Fair Value is determined as the net present value of the estimated future cash flows.
Future cash flows are based on life-of-mine plans using market based commodity price and exchange
assumptions for both Australian Dollar (AUD) and United States Dollar (USD) gold price, estimated
quantities of ore reserves, operating costs and future capital. When life-of-mine plans do not fully
utilise the existing mineral resource for a CGU, and options exist for the future extraction and
processing of all or part of those resources, an estimate of the value of unmined resources, in addition
to an estimate of value of exploration potential, is included in the determination of Fair Value.
Present values are determined using a risk adjusted discount rate appropriate to the risks inherent in
the assets.
Estimates of quantities of recoverable minerals, production levels, operating costs and capital
requirements are sourced from the planning process documents, including life-of-mine plans, three
year business plans and one year budgets.
Significant judgements and assumptions are required in making estimates of value-in-use and Fair
Value. The CGU valuations are subject to variability in key assumptions including, but not limited to:
long-term gold prices, currency exchange rates, discount rates, production and operating costs. An
adverse change in one or more of the assumptions used to estimate value-in-use and Fair Value could
result in a reduction in a CGU’s recoverable value.
ii.
Key Assumptions
The table below summarises the key assumptions used in the 30 June 2013 reporting date carrying
value assessments:
Gold (Real US$ per ounce)
Gold (Real A$ per ounce)
AUD:USD exchange rate
Pre-tax real discount rate (%) – Australia
Pre-tax real discount rate (%) – Pacific
Operations
2014-2018
$1,210/oz - $1,216/oz
$1,332/oz - $1,388/oz
0.90 declining to 0.82
12.42
13.38
Long term
2019+
$1,200/oz
$1,410/oz
0.85
12.42
13.38
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Commodity prices and exchange rates
Commodity prices and foreign exchange rates are estimated with reference to external market
forecasts and updated at least annually. The rates applied for the first five years of the valuation have
regard to observable market data, including spot and forward values. Thereafter the estimate is
interpolated to the long term assumption, which is made with reference to market analysis.
Discount rate
In determining the value-in-use and Fair Value of CGUs, the future cash flows are discounted using
rates based on the Group’s estimated real pre-tax weighted average cost of capital for each functional
currency used in the Group, with an additional premium applied having regard to the geographic
location of the CGU.
Operating and capital costs
Life-of-mine operating and capital cost assumptions are based on the Group’s latest life-of-mine plans.
The projections do not include expected cost improvements reflecting the Group’s objectives to
maximise free cash flow, optimise and reduce activity, apply technology, improve capital and labour
productivity.
Unmined resources and exploration values
Unmined resources may not be included in a CGU’s particular life-of-mine plan for a number of
reasons, including the need to constantly re-assess the economic returns on and timing of specific
production options in the current economic environment. In determining the Fair Value of the Simberi
and Gold Ridge CGUs, the Group has estimated unmined and exploration resources values based on a
risked expected valuation methodology, taking into account a range of factors, including the physical
specifications of the ore, probability of conversion, estimated capital and operating costs, and length
of mine life.
Unmined resources and exploration values are not included in the value-in-use estimate for the
Leonora CGU.
The value of unmined resources and exploration as a percentage of the assessed Fair Value in the
current period for each CGU subject to impairment is as follows:
Unmined resource
Exploration
Simberi
%
4
3
Gold Ridge
%
15
6
Leonora
%
N/A
N/A
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iii.
Impacts
After reflecting the write down of certain assets arising from the Group’s revised operating plans, the
Group has conducted the carrying value analysis and recognised goodwill and non-current assets
impairments giving a total charge of A$220,913,000 million after tax, as summarised in the table below
for Gold Ridge and Simberi. The recoverable amount of Leonora was assessed to exceed its carrying
value.
Write down of assets
Inventories
Simberi
$’000
Gold Ridge
$’000
Total
$’000
28,546
10,975
39,521
Impairments
Property, plant and equipment
Mining properties
Deferred mining costs
Mineral rights
Goodwill
Total asset impairment and writedowns
Tax effect
Total asset impairments and write downs after tax
92,069
690
-
75,808
2,535
199,648
54,649
240
849
41,339
1,470
109,522
146,718
930
849
117,147
4,005
309,170
(88,257)
220,913
The Fair Value of the Simberi and Gold Ridge CGUs has been predominantly impacted by the sharp
decline in short to medium term gold price assumptions since the acquisition of the Pacific Operations,
and to a lesser extent by these operations taking longer and costing more to reach profitable
operational performance.
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(b) Sensitivity Analysis
After recognising the asset impairment and write downs in respect of the Simberi and Gold Ridge
CGUs, the fair value of these assets is assessed as being equal to their carrying amount as at 30 June
2013.
Any variation in the key assumptions used to determine Fair Value will result in a change of the
assessed fair value. If the variation in assumption had a negative impact on Fair Value it could indicate
a requirement for additional impairment of non-current assets.
It is estimated that changes in the key assumptions would have the following approximate impact on
the Fair Value of each CGU in its functional currency that has been subject to impairment in the 2013
statutory accounts:
Decrease in Fair Value resulting from:
US$100/oz decrease in gold price
0.50% increase in discount rate
Simberi
$’000
115,936
13,772
Gold Ridge
$’000
52,842
4,058
The sensitivities above assume that the specific assumption moves in isolation, while all other
assumptions are held constant. In reality, a change in one of the aforementioned assumptions is
usually accompanied with a change in another assumption, which may have an offsetting impact (for
example, the recent decline in the USD gold price was accompanied with a decline in the AUD
compared to the USD). Action is also usually taken to respond to adverse changes in economic
assumptions that may mitigate the impact of any such change.
v. Exploration and evaluation expenditure
As set out in Note 1.7 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 1.27, 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
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FINANCIAL REPORT
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.
In estimating the rehabilitation provision at 30 June 2013, the following assumptions were made:
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.
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.
Inflation is not applied to cost estimates.
A pre-tax real discount rate of 5% based on the risks specific to the liability.
vii. Taxes
At 30 June 2012 the Group recognised $20,731,000 of previously unbooked tax losses on the basis that
it was 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. At 30
June 2013 losses not recognised amounted to $263,772,000 for Solomon Islands, PNG and Australia.
These have not been recognised as it is not probable that the existence of future taxable profits will be
available against which they can be utilised.
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.
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. Gold prepayment facility
This financial liability is influenced by the prevailing gold price which constitutes an embedded
derivative. Changes in the fair value of embedded derivatives are recognised immediately in the
consolidated income statement as part of finance costs. On acquisition of Allied Gold a provision was
recognised for the fact that the counterparty to the Gold Prepayment Facility has the right to purchase
30% of the Simberi and Gold Ridge mines production (over and above the commitment to deliver to
the repayment of the Facility) for five years, and 25% for the next five years, using a spot gold price
selected from the twelve days prior to settlement of the gold sale. This provision was recognised at fair
value at acquisition and will be released to the income statement over the life of the contract.
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x. 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
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.
xi. Purchase Price Allocation
In relation to the acquisition of Allied Gold Plc, the Group allocated the purchase price consideration to
the identifiable assets and liabilities acquired. Identified assets and liabilities were measured at fair
value at acquisition. The fair value of mineral rights acquired were valued using the multi-period
excess earnings methodology (“MEEM”) where the mineral interests are represented by the present
value of the incremental after-tax cash flows attributable only to the mineral interests, after the
deduction of notional charges for contributory assets including property, plant and equipment,
working capital and assembled workforce. Key inputs to the valuation of mineral rights was the gold
price forecast which was based on the gold forward curve in real terms and consensus long term
forecast at acquisition. A real post-tax discount rate of 10.5% was applied.
Note 5
Segment Information
The Group has four operational business units: Leonora Operations, Southern Cross Operations, Gold
Ridge Operations and Simberi 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 gold mines. The Simberi and Gold Ridge open pit gold mines were added as reportable
segments in the current period as a result of the acquisition of Allied Gold Mining Plc from 7
September 2012.
Southern Cross Operations was disposed of during the year and therefore was separately disclosed as
a discontinued operation.
The results of all mines are reviewed regularly by the Group’s Executive Leadership Team, in particular
production, cost per ounce and capital expenditures.
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.
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Note 5
Segment Information (continued)
Revenue
Mine operating costs
Gross profit
Royalties (1)
Impairment losses
Gwalia
King of the Hills
Gold
Ridge
Simberi
Total from
continuing
operations
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2013
$’000
2013
$’000
2012
$’000
Southern Cross
(discontinued
operations)
2013
$’000
2012
$’000
279,627 292,197
(129,221) (110,542)
150,406 181,655
92,529
(48,653)
43,876
92,199
(41,562)
50,637
70,202
(74,995)
(4,793)
69,482
(65,188)
4,294
511,840 384,396
(318,057) (152,104)
193,783 232,292
56,603 156,793
(57,519) (116,773)
40,020
(916)
(11,094)
(11,841)
(3,621)
(3,684)
(2,283)
(1,563)
(18,561)
(15,525)
(2,144)
(6,553)
-
-
-
-
(109,522) (199,648)
(309,170)
-
-
-
Depreciation and amortisation
(43,496)
(45,200)
(20,609)
(17,168)
(10,722)
(15,166)
(89,993)
(62,368)
(8,190)
(33,824)
Reportable segment profit/(loss) before
income tax
95,816
124,614
19,646
29,785
(127,320) (212,083)
(223,941) 154,399
(11,250)
(357)
Capital expenditure
(46,972)
(54,355)
(20,333)
(28,245)
(14,732)
(47,074)
(129,111)
(82,600)
(427)
(14,185)
Reportable segment - assets(3)
Reportable segment - non-current assets
Reportable segment - liabilities(3)
380,093
365,375
9,407
375,238
363,726
9,803
57,836
54,006
8,467
50,699
50,169
8,363
198,746
175,136
47,895
303,207
274,989
53,175
939,882 425,937
869,506 413,895
18,166
118,944
-
-
-
22,877
13,052
19,425
1. Royalties include state and government royalties and corporate royalties
2. Geographical information: Gwalia, King of the Hills and Southern Cross operate in Australia. Gold Ridge operates in the Solomon Islands and Simberi operates in Papua New Guinea
3. Represents the reportable segment balances after the asset impairment and write down charge.
Page 86 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Segment Information (continued)
Note 5
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
2013
$’000
2012
$’000
2013
%
2012
%
114,190
106,099
137,460
74,903
71,330
176,794
137,243
104,529
101,607
21,016
20.5
19.0
24.6
13.4
12.8
32.6
25.4
19.3
18.8
3.9
Reconciliation of reportable segment revenues, profit, assets, and other material items:
Continuing operations
Revenues and other income
Total revenue for reportable segments
Other revenue
Other income
Consolidated
2013
$’000
2012
$’000
511,840
4,072
3,131
384,396
6,779
-
Consolidated revenue and other income – continuing operations
519,043
391,175
Continuing operations
Profit
Total (loss)/profit for reportable segments
(223,941)
154,399
Consolidated
2013
$’000
2012
$’000
Other income and revenue
Exploration expensed
Unallocated depreciation and amortisation
Finance costs
Net fair value movements on gold options
Corporate and support costs
Foreign exchange gain
Expenditure associated with acquisitions
Other corporate expenses
7,203
(21,144)
(2,819)
(22,892)
15,703
(19,253)
9,122
(17,261)
(6,288)
7,701
(16,246)
(1,031)
(3,754)
(5,400)
(13,732)
-
(5,664)
(6,417)
Consolidated (loss)/profit before income tax – continuing operations
(281,570)
109,856
Page 87 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 5
Segment Information (continued)
Assets
Total assets for reportable segments
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Capitalised borrowing costs
Inventories
Property, plant & equipment
Derivative financial assets
Net deferred tax assets
Other assets
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Trade and other payables
Interest bearing liabilities (current)
Derivative financial liabilities (current)
Provisions (current)
Interest bearing liabilities (non-current)
Derivative financial liabilities (non-current)
Provisions (non-current)
Deferred tax liabilities
Consolidated total liabilities
Consolidated
2013
$’000
2012
$’000
939,882
109,446
21,637
88
-
3,077
11,437
11,077
27,231
6,487
448,814
185,242
13,795
154
7,172
-
-
87
22,215
4,636
1,130,362
682,115
Consolidated
2013
$’000
2012
$’000
118,944
53,203
42,612
-
4,989
285,480
-
1,031
876
37,591
55,542
3,043
2,830
4,292
1,213
13,547
224
-
507,135
118,282
Page 88 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 5
Segment Information (continued)
Other material items –
continuing operations
Depreciation and
amortisation
Capital Expenditure
Other material items
Depreciation and
amortisation
Capital Expenditure
Note 6
Revenue
Sales revenue-continuing operations
Sale of gold
Sale of silver
Other revenue
Interest revenue
Sub-lease rental
Revenue from continuing operations
Year ended 30 June 2013
Reportable
segment
totals
Unallocated
Consolidated
totals
(89,993)
(2,819)
(92,812)
(129,111)
(2,581)
(131,692)
Year ended 30 June 2012
Reportable
segment
totals
Unallocated
Consolidated
totals
(62,368)
(1,031)
(63,399)
(82,600)
(1,804)
(84,404)
Consolidated
2013
$'000
2012
$'000
508,695
3,145
511,840
3,811
261
4,072
515,912
381,618
2,778
384,396
6,442
337
6,779
391,175
Revenue from discontinued operations (note 38)
56,603
156,793
Note 7
Other income
Profit on sale of assets
Royalties
Other income
Other income from continuing operations
Page 89 of 128
Consolidated
2013
$'000
14
338
2,779
3,131
2012
$'000
67
-
855
922
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 8
Expenses
(Loss)/Profit before income tax includes the following specific
expenses:
Depreciation
Buildings
Plant and equipment
Amortisation
Mine properties and mine development costs
Other mineral assets
Capitalised borrowing costs
Plant/equipment finance leases
Total depreciation & amortisation – continuing operations
Finance Costs
Interest paid/payable
Borrowing costs
Finance lease interest
Fair value movement in gold prepayment facility
Provisions: unwinding of discount
Employee related expenses
Wages and salaries
Contributions to defined contribution superannuation funds
Equity settled share-based payments (note 25(a))
Consolidated
2013
$'000
2012
$'000
2,952
25,491
28,443
53,597
9,346
682
744
64,369
92,812
13,055
7,972
403
(2,083)
3,545
22,892
70,119
5,520
963
76,602
1,607
8,793
10,400
51,791
-
854
354
52,999
63,399
448
138
278
-
2,890
3,754
32,423
2,985
904
36,312
Rental expense relating to operating leases
Lease payments
1,781
802
Page 90 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Significant items
Note 9
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.
Continuing operations
Impairment losses
Included within net realised/unrealised gains/(losses) on derivatives
Net unrealised gain/(loss) on gold cash flow hedges(1)
Realised gain on gold cash flow hedges(1)
Included within borrowing costs(2)
Borrowing costs written off
Expenses associated with acquisitions(3)
Integration costs
Allied Gold acquisition costs
Redundancy costs
Consolidated
2013
$'000
2012
$'000
(309,170)
-
14,205
1,498
15,703
(6,102)
702
(5,400)
(5,678)
-
(7,268)
(7,862)
(2,131)
(17,261)
-
(5,664)
-
(5,664)
Total significant items for continuing operations – pre tax
(316,406)
(11,064)
Total significant items for continuing operations – post tax
(228,338)
9,667
Discontinued operations
Profit on sale of Southern Cross operations (refer note 38)
Results from Southern Cross operations(4) (refer note 38)
22,109
-
(11,250)
9,862
Southern Cross asset write down
Included within mine operating costs – deferred operating
development
Included within depreciation and amortisation
Total significant items for discontinued operations – pre tax
Total significant items for discontinued operations – post tax
Total significant items – pre tax
Total significant items – post tax(5)
(1) Net realised/unrealised gain/(loss) on gold cash flow hedges
-
-
10,859
7,199
(3,865)
(6,354)
(357)
(357)
(305,547)
(11,421)
(221,139)
9,310
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 2013,
the fair value of all remaining put and call option contracts was $11,077,128 (June 2012: negative $16,290,000). $4,261,000 (June 2012:
$11,442,000) of this fair value represents an unrealised profit related to time value of the 110,748 ounces outstanding at 30 June 2013
(June 2012: 195,000 ounces). A profit of $15,703,000 for the year ended 30 June 2013 was recognised in the income statement (2012:
loss of $5,400,000). Included in this gain was a net realised gain of $1,498,000 (2012: gain of $702,000) which represented the unwinding
of the unrealised mark-to-market gain previously recognised for options that were exercised or expired during the year (refer to note
Page 91 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
1.16). The unrealised profit of $13,376,000 relating to the intrinsic value of the options was recognised in the gold cash flow hedge
reserve in equity during the year (2012: losses of $3,054,000), which was net of a realised loss of $1,711,000 recognised in the reserve for
options that were exercised or expired during the year (2012: gain of $264,000).
(2) Capitalised borrowing cost written off
As a result of the senior secured note refinancing of the syndicated debt facility with NAB/Barclays the borrowing costs associated with
the syndicated facility were written off to the income statement. Costs to establish the senior secured note issue have been capitalised.
(3) Expenses associated with acquisitions
In 2012 the Company engaged various consultants to assist with completing due diligence and in making an offer for Allied Gold (refer
Note 40 for further details of the Allied Gold transaction). In 2013 the expenses relate to completing the acquisition and integration of
Allied Gold. The amount includes advisor, consultant and legal fees associated with the acquisition and integration of Allied Gold’s
operations. The redundancy costs relate to payments to employees made redundant as a result of integrating Allied Gold.
(4) Results from Southern Cross operations
The result from Southern Cross operations in the current year predominantly relates to care and maintenance costs.
(5) Income tax benefit booked in FY 2012
In the prior year, a credit of $20,731,000 was recognised as an income tax benefit as a result of booking tax losses which had not been
previously recognised.
Note 10
Income tax
(a)
Income tax expense/ (benefit)
Current tax expense
Over provision in respect of the prior year
Deferred income tax (benefit)
Total income tax benefit for continued and discontinued
operations
Comprising of:
Income tax (benefit) for continued operations
Income tax expense for discontinued operations
Consolidated
2013
$'000
2012
$'000
32,884
(3,555)
(108,186)
35,432
-
(56,163)
(78,857)
(20,731)
(82,517)
3,660
(20,731)
-
Page 92 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 10 – Income tax (continued)
(b)
Numerical reconciliation of income tax benefit to prima facie tax payable
(Loss)/Profit before income tax benefit – continuing and discontinued
operations
Tax at the Australian tax rate of 30%
Tax effect of amounts not deductible/(taxable) in calculating taxable
income:
Legal and other non-deductible 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 fair value of assets acquired
Research and development incentive (prior year)
Research and development incentive (current year)
Impairment – Goodwill
Current year losses not recognised – offshore entities
Income tax benefit
(c)
Deferred tax balance
Deferred tax assets
Tax losses
Provisions and accruals
Hedges at fair value
Investments at fair value
Tax assets without a carrying amount
Property plant and equipment
Total
Tax effect @ 30%
Deferred tax liabilities
Accrued income
Mine properties – exploration
Mine properties – development
Consumables
Capitalised convertible notes costs
Hedges at fair value
Total
Tax effect @ 30%
Net deferred tax balance
Page 93 of 128
Consolidated
2013
$'000
2012
$'000
(270,711)
109,499
(81,213)
32,850
496
290
2,960
3,508
(36)
(2,519)
(5,637)
(3,555)
(6,792)
1,202
12,439
(78,857)
636
271
1,576
99
(35,432)
(20,731)
-
-
-
-
-
(20,731)
Consolidated
2013
$'000
2012
$'000
214,344
62,139
-
212
12,003
187,359
476,057
142,817
227,897
43,459
16,290
96
4,104
-
291,846
87,554
405
69,730
272,694
16,414
17,866
11,096
388,205
116,462
26,355
543
23,470
176,194
10,418
7,172
-
217,797
65,339
22,215
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 10 – Income Tax (continued)
Comprising of:
Australia – net deferred tax (liabilities)/assets
Pacific Operations – net deferred tax assets
Deferred tax assets have not been recognised in respect of the
following items:
Tax losses – Pacific Operations
Provisions and accruals
Investments at fair value
Tax assets without a carrying amount
Total
Tax effect @ 30%
Note 11 Cash and cash equivalents
Cash at bank and on hand
Term deposits
Consolidated
2013
$'000
(876)
27,231
2012
$'000
22,215
-
263,772
516
51,397
9,909
325,594
97,678
-
-
-
-
-
-
Consolidated
2013
$'000
2012
$'000
25,755
91,628
117,383
23,442
161,800
185,242
(a) Cash at bank and on hand
Cash at bank at 30 June 2013 invested “at call” was earning interest at an average rate of 2% per annum (2012: 4% per annum).
(b) Term Deposits
The deposits at 30 June 2013 were earning interest at rates of between 3.7% and 4.25% per annum (2012: rates of between 4.04% and
5.92% per annum). While term deposits are invested for defined periods, all deposits can be immediately accessed at minimal or no
penalty cost. At 30 June 2013, the average time to maturity was 40 days (2012: 41 days), with $34,583,000 maturing between 90 to 180
days (2012: $10,000,000) from balance date.
Note 12 Trade and other receivables
Current assets
Trade receivables
Other receivables
Restricted cash(1)
Prepayments
Consolidated
2013
$'000
2012
$'000
3,919
3,905
11,955
3,379
23,158
3,646
6,321
123
3,705
13,795
1.Cash held on deposit with the Commonwealth Bank of Australia secures $123,000 for bank guarantees as at 30 June 2013 (2012:
$123,000) and the remaining $11,832,000 (2012: nil) represents security provided to the National Australia Bank for bank guarantees in
favour of various government authorities and service providers.
Information concerning the effective interest rate and credit risk of receivables is set out in Note 3 and Note 16.
Page 94 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 13
Inventories
Consumables
Ore stockpiles
Gold in circuit
Bullion on hand
Consolidated
2013
$'000
2012
$'000
41,972
4,351
7,915
9,757
63,995
10,418
760
10,689
-
21,867
(a)
Lower of cost and net realisable value
At 30 June 2013, ore stockpiles, gold in circuit and consumables are net of impairment losses as
disclosed in Note 4. Bullion on hand of $9,757,000 was valued at net realisable value (2012: all
categories at cost).
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
Effects of movement in exchange rates
(a)
Listed securities
Consolidated
2013
$'000
2012
$'000
32,411
23,789
1,229
5,917
Consolidated
2013
$'000
2012
$'000
154
51
(124)
7
88
-
250
(96)
-
154
Available-for-sale financial assets as at 30 June 2013 consisted of publicly traded shares in companies
listed on the Australian Securities Exchange.
Page 95 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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
applying variable interest rates, as the Group intends to hold fixed rate assets and liabilities to
maturity.
2013
Fixed Interest Maturing in
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 prepayment facility
Senior secured notes
Weighted average interest rate
Net financial assets/(liabilities)
Floating
Interest
rate $’000
1 year or
less
$’000
Over 1 to 5
years
$’000
Non-
interest
bearing
$’000
25,755
-
-
-
-
25,755
1.18%
-
-
-
-
-
n/a
91,628
11,955
-
-
-
103,583
3.98%
-
4,218
38,394
42,612
11.51%
-
-
-
-
-
-
n/a
-
7,791
15,415
262,274
285,480
9.04%
-
-
7,824
88
11,077
18,989
n/a
88,658
-
-
-
88,658
n/a
Total
$’000
117,383
11,955
7,824
88
11,077
148,327
88,658
12,009
53,809
262,274
416,750
25,755
60,971
(285,480)
(69,669)
(268,423)
Page 96 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 16 Financial instruments (continued)
2012
Fixed Interest Maturing in
Over 1 to 5
years
$’000
Non-
interest
bearing
$’000
-
-
-
-
-
-
-
992
-
-
992
7.59%
(992)
Total
$’000
185,242
123
9,967
154
87
195,573
55,542
2,280
16,377
1,976
76,175
-
-
9,967
154
87
10,208
55,542
264
16,377
-
72,183
(61,975)
119,398
Consolidated
2013
$'000
2012
$'000
33,137
306,724
339,861
18,405
85,523
103,928
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)
Floating
Interest
rate $’000
23,442
123
-
-
-
23,565
3.78%
1 year or
less
$’000
161,800
-
-
-
-
161,800
5.48%
-
-
-
-
-
-
1,024
-
1,976
3,000
5.93%
23,565
158,800
Note 17 Property, plant and equipment
Non-current – net written down value
Land and buildings
Plant and equipment
Page 97 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 17
Property, plant and equipment (continued)
Reconciliation of the carrying amounts for each class of property, plant and equipment is set out
below:
Land and buildings
At the beginning of the year
Additions
Additions due to business combination (refer Note 40)
Depreciation
Disposals
Impairment losses and write downs
At the end of the year
Plant and equipment
At the beginning of the year
Additions
Additions due to business combination (refer Note 40)
Disposals
Depreciation
Impairment losses and write downs
Effects of movement in foreign exchange rates
At the end of the year
Total
(a)
Security
Consolidated
2013
$'000
2012
$'000
18,405
802
27,352
(2,952)
(1,295)
(9,175)
33,137
16,256
3,756
-
(1,607)
-
-
18,405
Consolidated
2013
$'000
2012
$'000
85,523
90,525
293,261
(3,735)
(28,085)
(137,544)
6,779
306,724
339,861
89,494
15,701
-
(1)
(15,770)
(3,901)
-
85,523
103,928
As at 30 June 2013, plant and equipment with a carrying value of $11,459,000 (2012: $1,997,000) was pledged
as security for finance leases (Note 21). In accordance with the security arrangements the senior secured notes
are secured by the assets of St Barbara Limited; the security does not include the assets of the Pacific
operations.
Page 98 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 18 Mine properties
Non-current
Mine Properties - development
At beginning of the year
Direct expenditure
Amortisation for the year
Amortisation for discontinued operations
Impairment losses and write downs
At end of the year
Mineral rights
At the beginning of the year
Additions
Additions due to business combination (refer Note 40)
Amortisation
Impairment losses and write downs
At the end of the year
Note 19 Exploration and evaluation
Non-current
Exploration and evaluation
At beginning of the year
Expenditure capitalised for the year
Disposals
Exploration and evaluation written off
At end of the year
Note 20 Trade and other payables
Current
Trade payables
Other payables
Page 99 of 128
Consolidated
2013
$'000
2012
$'000
289,647
60,850
(54,279)
(6,352)
(930)
288,936
283,991
80,757
(50,946)
(22,432)
(1,723)
289,647
-
-
336,450
(9,346)
(117,147)
209,957
-
-
-
-
-
-
Consolidated
2013
$'000
2012
$'000
15,474
-
(438)
-
15,036
11,629
4,575
-
(730)
15,474
Consolidated
2013
$'000
2012
$'000
85,474
3,184
88,658
54,434
1,108
55,542
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 21
Interest bearing borrowings
Current
Secured
Lease liabilities (Note 29)
Gold prepayment facility
Unsecured
Insurance premium funding
Total current
Non-current
Secured
Lease liabilities (Note 29)
Senior secured notes (net of transaction costs)
Gold prepayment facility
Total non-current
Interest rate risk exposures
Consolidated
2013
$'000
2012
$'000
4,218
38,394
42,612
-
42,612
7,791
262,274
15,415
285,480
1,067
-
1,067
1,976
3,043
1,213
-
-
1,213
Details of the Group’s exposure to interest rate changes on borrowings are set out in Note 3 and 16.
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 2013, restricted cash for this purpose amounted to $11,955,000 (2012: $123,000).
Gold prepayment facility
The gold prepayment facility comprises a gold loan and an embedded derivative which are settled
concurrently with each repayment, and therefore disclosed as a single financial liability measured at
fair value. The gold prepayment facility is repaid through the delivery of gold ounces in accordance
with a monthly amortisation profile. Changes in the fair value of the financial liability are separated
between interest cost and the movement in the embedded derivative, which are recognised
immediately in the consolidated income statement as part of finance costs.
Senior secured notes
On 27 March 2013, the Group settled an offering of US$250 million senior secured notes issued in the
United States Rule 144A bond markets and to certain persons outside the United States. The senior
secured notes are due 15 April 2018 with a coupon rate of 8.875%p.a. payable bi-annually. The notes
were issued by St Barbara Limited and are secured by the Company’s Australian assets; the security
does not include the assets of the Pacific Operations. The USD value of the notes outstanding at
reporting date is converted to AUD at the AUD/USD exchange rate as at 30 June 2013. The related
transaction costs capitalised against the borrowings amount to $10,218,757 and will be amortised over
the period to 15 April 2018.
Page 100 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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
2013
$'000
2012
$'000
11,077
-
-
-
87
-
2,830
13,547
(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
Page 101 of 128
Consolidated
2013
$'000
2012
$'000
4,828
1,658
5,689
2,383
2,180
16,738
2,569
1,583
2,078
3,694
900
10,824
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 23 Provisions (continued)
Non-current
Provision for rehabilitation
Employee benefits - long service leave
Other provisions
Movements in Provisions
Rehabilitation
Balance at start of year
Additions due to business combination
Reduction in provision due to Southern Cross disposal
Unwinding of discount
Provisions made during the year
Provisions used during the year
Effects of movements in the foreign exchange rate
Balance at end of year
Consolidated
2013
$'000
2012
$'000
58,713
2,600
11,458
72,771
30,071
1,212
-
31,283
Consolidated
2013
$'000
2012
$'000
33,765
26,544
(16,852)
3,545
13,647
(3,737)
4,184
61,096
34,531
-
-
2,890
(3,656)
-
-
33,765
Other provisions includes recognition of the fact that the counterparty to the Gold Prepayment Facility
has the right to purchase 30% of the Simberi and Gold Ridge mines production (over and above the
commitment to deliver to the repayment of the Facility) for five years, and 25% for the next five years,
using a spot gold price selected from the twelve days prior to settlement of the gold sale. This
provision was booked at fair value on acquisition – refer Note 4 (ix).
Page 102 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 24 Contributed equity
(a)
Share capital
2013
Shares
2012
Shares
2013
$’000
2012
$’000
Ordinary shares - fully paid
488,074,077 324,620,389
886,242
613,275
(b) Movements in ordinary share capital:
Date
1 July 2012
Details
7 Sept 2012
Issue of shares
30 Jun 2013
Closing balance
Notes
Number of
shares
324,620,389
Issue
price
($/share)
$’000
613,275
(i)
163,453,688
1.67
272,967
488,074,077
886,242
(i)
Issue of shares upon acquisition of Allied Gold Limited on 7 September 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 outstanding at
the end of the financial year, is set out in Note 37.
Note 25 Reserves and accumulated losses
(a)
Reserves
Reserves
Share Based payment reserve
Investment Fair Value Reserve
Gold Hedge reserve
Foreign currency translation reserve
Page 103 of 128
Consolidated
2013
$'000
2012
$'000
1,141
(156)
3,627
(29,614)
(25,002)
2,996
(67)
(3,394)
-
(465)
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 25
Reserves and accumulated losses (continued)
Share based payments reserve
Balance at start of year
Option/performance rights expense
Option/performance rights expired and transferred to retained earnings
Option/performance rights 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
Foreign currency translation reserve
Balance at start of year
Movement during the year
Balance at end of year
(b)
Accumulated losses
Movements in accumulated losses were as follows:
Balance at start of year
(Loss)/Profit attributable to members of the Company
Transferred from share based payment reserve
Balance at end of year
Consolidated
2013
$’000
2012
$’000
2,996
963
-
(2,818)
1,141
(67)
(124)
35
(156)
(3,394)
(1,711)
13,376
(4,644)
3,627
-
(29,614)
(29,614)
3,108
1,828
(1,016)
(924)
2,996
-
(96)
29
(67)
(2,059)
264
(3,054)
1,455
(3,394)
-
-
-
Consolidated
2013
$'000
(48,977)
(191,854)
2,818
(238,013)
2012
$'000
(180,223)
130,230
1,016
(48,977)
Page 104 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
(c)
Share based payments reserve
The share based payments reserve is used to recognise the fair value of options and rights issued to
executives and employees but not exercised. During the year, $2,818,000 previously recognised in the
share based payment reserve for 1,955,263 options which expired during the year were transferred as
a gain to accumulated losses (2012: gain of $1,016,000). Accounting standards preclude the reversal
through the income statement of amounts which have been booked in the share based payments
reserve for options and rights which expire due to not having met a market based vesting condition.
(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/asset.
(e)
Investment fair value reserve
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 derecognised the cumulative gain or loss in equity is transferred
to the income statement.
(f)
Foreign currency translation reserve
The assets and liabilities of controlled entities incorporated overseas with functional currencies other
than Australian dollars are translated into the presentation currency of St Barbara Limited (Australian
dollars) at the year-end exchange rate and the revenue and expenses are translated at the rates
applicable at the transaction date. Exchange differences arising on translation are taken directly to the
foreign currency translation reserve in equity.
Page 105 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 26 Parent Entity disclosures
As at, and throughout, the financial year ended 30 June 2013, the parent company of the Group was St
Barbara Limited.
(a)
Financial statements
Results of the parent entity
(Loss)/Profit after tax for the year
Other comprehensive income
Total comprehensive income for the year
Parent Entity
2013
$'000
2012
$'000
(196,307)
11,549
(184,758)
130,230
(1,402)
128,828
Other comprehensive income is set out in the Consolidated Statement of Comprehensive Income.
Parent Entity
2013
$'000
2012
$'000
186,060
986,127
244,936
682,295
64,079
348,950
83,640
129,683
886,242
1,141
(148)
3,627
(253,685)
637,177
613,275
2,996
(67)
(3,394)
(60,198)
552,612
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Share capital
Share based payments reserve
Investment fair value reserve
Gold cash flow hedge reserve
Retained earnings/(Accumulated losses)
Total equity
(b)
Parent entity contingencies
The parent entity had no contingent liabilities at 30 June 2013.
(c)
Parent entity guarantees
Refer Note 28 for details of bank guarantees issued by the parent entity.
Page 106 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 26
Parent Entity disclosures (continued)
(d)
Parent entity capital commitments for acquisition of property, plant and equipment
Contracted but not yet provided for and payable
Within one year
Company
2013
$’000
2012
$’000
-
-
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 and its related practices:
Consolidated
2013
2012
$
$
Assurance services
(a)
Audit and audit related services
KPMG
Audit and review of financial reports
Total remuneration for audit and audit related services
527,500
527,500
261,000
261,000
Non-audit services1
(b)
KPMG
Services relating to the senior secured note issue
Financial and accounting due diligence services
Total remuneration for non-audit services
364,208
-
364,208
-
495,000
495,000
(1) Non audit services of $92,012 were paid to BDO (WA) for services relating to the senior secured note issue.
Note 28 Contingencies
(a)
Contingent liabilities and assets
The Company and consolidated entity had no contingent liabilities or assets at 30 June 2013.
(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 2013 was $11,955,000 (2012: $20,608,000).
Security is provided to the National Australia Bank Limited (“NAB”) (refer to Note 17) for $11,832,000
of this amount in cash deposits. Cash held on deposit with the Commonwealth Bank of Australia
secures the remaining $123,000 as at 30 June 2013 (refer to Note 12).
Page 107 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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.
Finance Lease Commitments
Payable not later than one year
Payable later than one year, not later than five years
Future finance charges
Total lease liabilities
Current (Note 21)
Non-current (Note 21)
Consolidated
2013
$’000
2012
$’000
8,061
9,677
Consolidated
2013
$’000
2012
$’000
5,863
8,141
14,004
(1,995)
12,009
4,218
7,791
12,009
1,408
1,065
2,473
(193)
2,280
1,067
1,213
2,280
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 at which point ownership of the
assets transfers to the Group.
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
Consolidated
2013
$’000
2012
$’000
1,604
5,139
1,194
7,937
916
3,093
85
4,094
Page 108 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 29 Commitments for expenditure (continued)
Analysis of Non-Cancellable Operating Sub-lease receipts
Receivable not later than one year
Receivable later than one year, not later than five years
Note 30 Related party transactions
a)
Directors and key management personnel
Consolidated
2013
$’000
2012
$’000
214
392
606
207
607
814
Disclosures relating to Directors and Key Management Personnel are set out in Note 42.
(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. It is the Group’s policy that transactions are at arm’s length.
During the year the Company charged management fees of $2,509,000 to an entity in the wholly-
owned group (2012: $ nil).
Loans payable to and advanced from wholly-owned subsidiaries to the Company amount to a net
receivable of $123,200,000 (2012: net payable $11,401,000).
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company have been eliminated on consolidation.
(c)
Guarantees
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.
(d)
Terms and conditions
Outstanding balances are unsecured and are repayable in cash on demand.
(e)
Amounts receivable from Director related entities
At 30 June 2013, there were no amounts receivable from Director related entities (2012: $ nil).
(f)
Other Transactions with Directors of the Company and their Director related entities
During the year ended 30 June 2013, there were no other transactions with Directors of the Company
and their Director related entities.
Page 109 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 31 Controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy in Note 1 Principles of Consolidation.
Country of
Incorporation
Ownership Interest
June
2013
%
June
2012
%
Carrying value of
company’s investment
June
2013
$’000
June
2012
$’000
Parent entity
St Barbara Limited
Subsidiaries of St Barbara Limited
Allied Gold Mining Ltd3
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
Australia
UK
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
Subsidiaries of Allied Gold Mining Ltd
Allied Gold Ltd
Australia
100
Subsidiaries of Allied Gold Limited
Advance R&D Pty Ltd 1
AGL (ASG) Pty Ltd
AGL (SGC) Pty Ltd
Allied Gold Finance Pty Ltd
Allied Gold Services Pty Ltd
Allied Tabar Exploration Pty Ltd
Aretrend Pty Ltd 1
Australian Solomons Gold Limited
Nord Pacific Limited
Subsidiaries of AGL (SGC) Pty Ltd
Compania Minera Nord Pacific De Mexico, S.A. DE
C.V. 2
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Mexico
100
100
100
100
100
100
100
100
100
100
1 Non operating.
2
3
49,999 shares held by AGL (SGC) Pty Ltd. 1 share held by AGL (ASG) Pty Ltd.
Formerly Allied Gold Mining Plc.
Page 110 of 128
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
255,638
178
-
-
178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Country of
Incorporation
Ownership Interest
June
2013
%
June
2012
%
Carrying value of
company’s investment
June
2013
$’000
June
2012
$’000
Subsidiaries of Allied Tabar Exploration Pty Ltd
Tabar Exploration Company Ltd
Subsidiaries of Australian Solomons Gold Limited
JU Mine (Australia) Pty Ltd
Subsidiaries of Nord Pacific Limited
Nord Australex Nominees (PNG) Ltd
Simberi Gold Company Limited
Subsidiaries of JV Mine Australia
Solomon Islands International Pty Ltd
Subsidiaries of Solomon Islands International Pty Ltd
ASB Solomon Islands Ltd 4
Australia
PNG
Australia
Australia
Canada
PNG
PNG
Australia
Australia
Australia
100
100
100
100
100
Solomon Islands
100
Subsidiaries of ASG Solomon Islands Ltd
Gold Ridge Mining Ltd 5
Solomon Islands
Solomon Islands
100
Note 32
Interests in jointly controlled assets
-
-
-
-
-
-
-
-
-
-
June 2013
Equity %
June 2012
Equity %
Joint Venturers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
WESTERN AUSTRALIA
Leonora Region
Mount Newman - Victory
Sandy Soak
Melita
McEast/Pipeline
Black Cat
Silver Phantom
South Rankin
92%
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 2013 there was no joint venture assets or liabilities recorded in the balance sheet (2012:
Nil).
As at 30 June 2013 there were no interests in jointly controlled assets in Solomon Islands or Papua
New Guinea.
4 175,762,501 shares held by Solomon Islands International Pty Ltd. 1 share held by JV Mine (Australia)Pty Ltd.
5
175,762,501 shares held by ASG Solomon Island Ltd. 74,443,511 shares held by Australian Solomons Gold Ltd. 1 share held by Solomon Islands
International Pty Ltd.
Page 111 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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 or the Group’s operations, the results of those operations or the state of affairs, except
that on 5 July 2013 the gold put and call options were closed out for cash proceeds of $8,500,000.
Note 34 Reconciliation of (loss)/profit after income tax to net cash flows from operating activities
(Loss)/Profit after tax for the year
Depreciation and amortisation
Impairment losses and write downs
Income tax (benefit)/expense
Net gain on sale of property plant and equipment
Net gain on sale of discontinued operations (refer note 38)
Recognition of unbooked tax losses
Net realised/unrealised loss/(gain) on gold derivative fair value
movements
Unwinding of rehabilitation provision
Net transaction costs paid
Unrealised foreign exchange gain
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
*Restated to reflect non-cash financing of assets and operating costs per note 35.
Note 35 Non-cash investing and financing activities
Proceeds from insurance premium funding
Acquisition of vehicles and equipment through finance leases
Acquisition of software licence
Page 112 of 128
2012*
$’000
Consolidated
2013
$’000
(191,854)
101,002
309,170
(78,857)
(13)
(22,109)
-
(15,703)
130,230
90,869
10,219
-
(67)
-
(20,731)
5,400
3,538
5,764
(9,643)
963
12,894
(24,592)
(283)
(4,609)
(14,640)
-
71,028
-
-
-
904
10,345
(4,009)
(10,408)
7,037
(866)
5,640
224,563
Consolidated
2013
$'000
2012
$'000
-
8,528
1,024
9,552
2,736
491
-
3,227
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 36 Earnings per share
(a)
Basic earnings per share
Continued operations
Continued and discontinued operations
(b)
Diluted earnings per share
Continued operations
Continued and discontinued operations
Consolidated
2013
Cents
(43.50)
(41.92)
(43.18)
(41.62)
2012
Cents
40.15
40.04
39.71
39.60
(c)
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share:
(Loss)/Profit after tax for the year - continuing operations
(Loss)/Profit after tax for the year – including discontinued
operations
(d) Weighted average number of shares
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
Consolidated
2013
$'000
2012
$'000
(199,053)
130,587
(191,854)
130,230
Consolidated
2013
Number
2012
Number
457,622,431
325,285,005
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per
share
460,946,718
328,885,173
(i) 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.
Page 113 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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 were granted as part of an employee’s total remuneration
package. Options were granted for a three to five year period. Commencing with the 2011 financial
year long term incentives were granted in the form of Performance rights.
During the year ended 30 June 2013, $2,818,000 previously recognised in the share based payment
reserve for 1,955,263 options, which expired during the year, were transferred as a gain to
accumulated losses. All options have expired and no new options were granted. Accounting standards
preclude the reversal through the Income Statement for amounts which have been booked in the
share based payments reserve for options which satisfy service conditions but do not vest due to
market conditions.
Consolidated and parent entity – 2013
Grant Date
Expiry Date
Exercise
Price
23 Sep 09
23 Sep 14
$1.722
Balance at
start of the
year
Number
1,955,263
Granted
during the
year
Number
Exercised
during the
year
Number
-
-
Expired
during the
year
Number
(1,955,263)
Balance at
end of the
year
Number
-
Weighted average exercise price
$2.02
$1.72
-
Consolidated and parent entity – 2012
Grant Date
Expiry Date
11 Sep 06
01 Dec 06
06 May 09
06 May 09
23 Sep 09(2)
Total
11 Sep 11
01 Dec 11
02 Mar 14
03 Apr 14
23 Sep 14
Exercise
Price
$2.863
$3.181
$2.286
$2.466
$1.722
Balance at
start of the
year
Number
333,334
83,334
251,350
517,354
2,284,737
3,470,109
Granted
during the
year
Number
Exercised
during the
year
Number
-
-
-
-
-
-
-
-
-
-
-
-
Expired
during the
year
Number
333,334(1)
83,334(1)
251,350(2)
517,354(2)
329,474(3)
1,514,846
Balance at
end of the
year
Number
-
-
-
-
1,955,263
1,955,263
Weighted average exercise price
$2.02
$2.40
$1.72
(1) Options expired during the year.
(2) Options did not meet performance criteria, therefore did not vest.
(3) Expired on termination of employment with the Company.
Exercisable
at end of the
year
Number
-
-
Exercisable
at end of the
year
Number
-
-
-
-
-
-
-
Page 114 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
(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 – 2013
Grant Date
Expiry Date
Price on
issue date
23 Dec 10
21 Jan 11
28 Oct 11
23 Nov 11
15 Mar 12
19 Dec 12
Total
30 Jun 13
30 Jun 13
30 Jun 14
30 Jun 14
30 Jun 14
30 Jun 15
$2.26
$1.81
$2.23
$2.20
$2.09
$2.09
Balance at
start of the
year
Number
1,909,640
114,611
960,115
459,621
243,496
-
3,687,483
Granted
during the
year
Number
-
-
-
-
-
1,573,697
1,573,697
Weighted average exercise price
-
-
(1) Expired due to termination of employment
Consolidated and parent entity – 2012
Grant Date
Expiry Date
Price on
issue date
23 Dec 10
21 Jan 11
28 Oct 11
23 Nov 11
15 Mar 12
Total
30 Jun 13
30 Jun 13
30 Jun 14
30 Jun 14
30 Jun 14
$2.26
$1.81
$2.23
$2.20
$2.09
Balance at
start of the
year
Number
2,274,252
114,611
-
-
-
2,388,863
Granted
during the
year
Number
-
-
1,177,839
459,621
243,496
1,880,956
Weighted average exercise price
-
-
(1) Expired due to termination of employment
Exercised
during the
year
Number
-
-
-
-
-
-
-
-
Expired
during the
year
Number
1,909,640
114,611
225,586(1)
-
-
-
2,249,837
Balance at
end of the
year
Number
-
-
734,529
459,621
243,496
1,573,697
3,011,343
-
-
Exercisable
at end of the
year
Number
-
-
-
-
-
-
-
-
Exercised
during the
year
Number
-
-
-
-
-
-
Expired
during the
year
Number
364,612(1)
-
217,724(1)
-
-
582,336
Balance at
end of the
year
Number
1,909,640
114,611
960,115
459,621
243,496
3,687,483
-
-
Exercisable
at end of the
year
Number
-
-
-
-
-
-
-
The weighted average remaining contractual life of performance rights outstanding at the end of the
year was 1.5 years (2012: 1.5 years). The model inputs for rights granted during the year ended 30
June 2013 included:
i.
ii.
iii.
Rights are granted for no consideration. The vesting of rights granted in 2013 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.
Performance rights do not have an exercise price.
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 will 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 $1,442,000. This outcome was based on the likelihood of the market condition being met as
at the date the rights vest.
Page 115 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
(c)
Expenses arising from share based payment transactions
Total expenses arising from equity settled share based payment transactions recognised during the
year as part of the employee benefit expenses were as follows:
Consolidated
2013
$
2012
$
Options/performance rights issued under
employee option plan
963,000
904,000
Note 38 Discontinued Operations
On 9 January 2013 the Group entered into an agreement with Hanking Gold Mining Pty Ltd, a
subsidiary of China Hanking Holdings Limited, to sell the Southern Cross Operations. The proceeds of
the sale substantially exceeded the carrying amount of the related net assets and, accordingly, no
impairment losses were recognised on the reclassification of these operations as held for sale. The
disposal was completed on 19 April 2013, on which date control passed to the acquirer. Details of the
assets and liabilities disposed of are disclosed in Note 39, and the calculation of the profit on disposal,
is disclosed in Note 38.
The results of the discontinued operations included in the consolidated income statement are set out
below. The comparative profit and cash flows from discontinued operations are shown in the tables
below.
Page 116 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 38 Discontinued operations (continued)
Loss for the period from discontinued operations
Revenue (see note 6)
Expenses
Loss before tax
Attributable income tax benefit (see note 10)
Loss after tax
Gain on disposal of operations (see note 39)
Attributable income tax expense (see note 10)
Profit/(Loss)
the year
operations (attributable to owners of the company)
from discontinued
for
Cash flows from discontinued operations
Net cash inflows from operating activities
inflows/(outflows)
Net cash
activities
Net cash inflows
from
investing
Note 39 Disposal of subsidiary
Consideration received
Consideration received in cash
liabilities over which
Analysis of assets and
control was lost
Current assets
Inventories
Other assets
Non-Current assets
Property plant and equipment
Non-Current liabilities
Provision for rehabilitation
Net liability disposed of
2013
$’000
2012
$’000
56,603
(67,853)
(11,250)
3,375
(7,875)
22,109
(7,035)
15,074
156,793
(157,150)
(357)
-
(357)
-
-
-
-
7,199
(357)
2013
$’000
2012
$’000
10,915
17,221
36,856
(14,185)
28,136
22,671
2013
$’000
17,648
17,648
4,478
1,852
6,061
(16,852)
(4,461)
2012
$’000
-
-
-
-
-
-
-
The gain on disposal is included in the profit for the year from discontinued operations.
Page 117 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 40 Business Combinations
Subsidiaries acquired
On 7 September 2012, the Company acquired 100% of the ordinary share capital of Allied Gold Mining
Plc (“Allied Gold”) in line with its growth strategy to enhance diversification and take advantage of
further exploration opportunities.
Consideration transferred
Cash and cash equivalents
Equity (refer Note 24)
Total consideration
Goodwill arising on acquisition
Consideration transferred
Less: Fair value of
(provisional)
Goodwill arising on acquisition
identifiable net assets acquired
2013
$’000
210,934
272,967
483,901
2013
$’000
483,901
(479,896)
4,005
2012
$’000
-
-
-
2012
$’000
-
-
-
Goodwill arises on acquisition of Allied Gold. None of the goodwill arising on the acquisition is
expected to be deductible for tax purposes
Net cash outflow on acquisition of subsidiaries
Consideration paid in cash
Less: cash and cash equivalent balances acquired
2013
$’000
2012
$’000
210,934
(4,311)
206,623
-
-
-
The initial accounting for the acquisition of Allied Gold has been provisionally determined at 30 June 2013. At
the date of finalisation of this year-end report, the necessary calculations have not been finalised and therefore
the fair value of the assets and liabilities noted above have only been provisionally determined based on the
directors’ best estimate of the likely fair value of the assets and liabilities. The Group has until 7 September 2013
to finalise the estimates.
The legal due diligence process identified various legal matters and open litigation which have been identified
and included in the current provision balance at fair value, representing the best estimate of the known and
likely exposure at the time of the acquisition.
Page 118 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 40
Business Combinations
Current assets
Cash
Trade receivables
Inventories(1)
Available for sale financial assets
Other assets
Total current assets
Non-Current assets
Property plant and equipment(2)
Mineral Rights asset(3)
Goodwill(4)
Total Non-Current assets
Current liabilities
Trade payables(5)
Provisions(6)
Loans and Borrowings
Total Current liabilities
Non-Current liabilities
Provisions(6)
Loans and Borrowings(7)
Deferred tax liability(8)
Total Non-Current liabilities
Fair value of identifiable net assets
Provisional fair
value reported
at 31 Dec 2012
$’000
Adjustments to
provisional fair
value
$’000
Provisional fair
value reported
at 30 Jun 2013
$’000
4,311
5,857
72,013
51
4,582
86,814
365,445
269,795
-
635,240
(48,464)
(12,933)
(46,809)
(108,206)
(40,120)
(30,251)
(59,576)
(129,947)
483,901
-
-
(10,478)
-
-
(10,478)
(44,832)
66,655
4,005
25,828
4,519
(500)
-
4,019
(7,500)
(1,339)
(10,530)
(19,369)
-
4,311
5,857
61,535
51
4,582
76,336
320,613
336,450
4,005
661,068
(43,945)
(13,433)
(46,809)
(104,187)
(47,620)
(31,590)
(70,106)
(149,316)
483,901
(1) Detailed review of inventory balances, including ore stockpiles and gold in circuit, determined that there were certain low grade
stockpiles and other inventories which are not likely to be recovered.
(2) Detailed review and analysis of fixed asset registers and assets under construction determined that there was some duplication of
asset items.
(3) Fair values are provisional due to the complexity of the valuation process, particularly in relation to the mineral rights acquired.
Subsequent to 31 December 2012, management has obtained a final independent valuation of the mineral rights acquired and
adjusted the provisional amount accordingly.
(4) At 31 December 2012, as the valuation of mineral rights was provisional, goodwill was not separated out from this balance.
(5) Detailed review of trade payables determined that there were long outstanding balances in the account which had been paid prior
to acquisition.
(6) Reviews of the rehabilitation estimates subsequent to acquisition resulted in an increase in the provision at acquisition.
(7)
Increase in borrowings represents a change in the fair value of the gold prepayment facility following a review of the fair value
methodology.
(8) The change in deferred taxes is a result of the adjustments listed above, largely driven by the decrease in property, plant and
equipment (which decreased the deferred tax liability), offset by the increase in the mineral rights acquired which increased the
deferred tax liability on acquisition.
Page 119 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Impact of acquisition on the results of the Group
Included in the loss is $30,233,000 loss attributable to Allied Gold. Revenue for the period includes
$279,235,000 in respect of Allied Gold. Had the acquisition of Allied Gold been effected at 1 July 2012, the
revenue of the Group from continuing operations for the period ended 30 June 2013 would have been
$542,335,000 and the loss for the year from continuing operations would have been $213,337,000. The Group
consider these “pro-forma” numbers to represent an approximate measure of the performance of the
combined group on an annual basis and to provide a reference point for comparison in future years.
In determining the “pro-forma” revenue and profit of the Group had Allied Gold been acquired at the beginning
of the current financial year, the Group has calculated depreciation and amortisation of plant and equipment
acquired on the basis of the fair values arising in the initial accounting for the business combination rather than
the carrying amounts recognised in the pre-acquisition financial statements.
Note 41 Goodwill
Cost
Accumulated impairment losses
Cost
Balance at the beginning of the year
Amount recognised from business combinations
(note 40)
Balance at end of year
Accumulated impairment losses
Balance at the beginning of the year
Impairment losses recognised in the year
Balance at end of year
2013
$’000
4,005
(4,005)
-
-
4,005
4,005
-
(4,005)
(4,005)
2012
$’000
-
-
-
-
-
-
-
-
-
Page 120 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Note 42 Key Management Personnel Disclosures
(a)
Directors
The following persons were Directors of St Barbara Limited during and since the end of the financial
year:
S J C Wise
T J Lehany
D W Bailey
P C Lockyer
R K Rae
E A Donaghey
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 and since the end of the financial year:
Managing Director & CEO
Chief Operating Officer
Tim J Lehany
Alistair Croll
Garth Campbell-Cowan Chief Financial Officer
Ross Kennedy
Phil Uttley
Katie-Jeyn Romeyn
Executive General Manager Corporate Services/Company Secretary
Executive General Manager Discovery & Growth
Executive General Manager Human Resources (appointed 1 Sep 2012)
Page 121 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
(c)
Key Management Personnel Compensation
Consolidated
2013
2012
$
$
4,095,961
96,075
151,948
491,280
-
4,207,826
78,522
104,216
1,162,542
330,716
4,835,264
5,883,822
Short term employee benefits
Post-employment benefits
Long Service Leave
Share-based payments
Termination payments
(d)
(i)
Equity Instrument Disclosures Relating to Key Management Personnel
Options provided as remuneration and shares issued on exercise of such options
Details of performance rights provided as remuneration and shares issued on the exercise of options
and performance rights, together with their 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:
2013
Name
Balance at
the start of
the year
Granted during
the year as
compensation
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
Executive Director
T J Lehany
Key management personnel
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
K Romeyn
976,220
-
290,670
256,258
256,258
-
-
-
-
-
-
-
-
-
-
-
-
-
976,220
-
290,670
256,258
256,258
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 122 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
2012
Name
Balance at
the start of
the year
Granted during
the year as
compensation
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
Executive Director
T J Lehany
Key management personnel
D Rose
G Campbell-Cowan
R Kennedy
P Uttley
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
(iii)
Performance rights
-
-
-
-
-
-
(251,350)(1)
976,220
-
(333,334)
-
-
(329,474)(2)
(201,192)(1)
(156,774)(1)
-
-
290,670
256,258
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:
2013
Name
Balance at the
start of the
year
Granted
during the
year as
compensation
Exercised
during the
year
Other changes
during the
year
Balance at the
end of the
year
Vested and
exercisable at
the end of the
year
Executive Director
T J Lehany
Key management personnel
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
K Romeyn(2)
(1) Lapsed during the year
1,217,440
438,182
169,106
372,209
313,548
321,808
168,546
158,239
139,636
110,756
118,478
103,349
-
-
-
-
-
-
(757,819)(1)
-
(225,737)(1)
(195,174)(1)
(195,174)(1)
(100,375)(1)
897,803
327,345
286,108
229,130
245,112
171,520
-
-
-
-
-
-
(2) K Romeyn was not a KMP at the start of the year but the balance has been included to show the movements to the balance at the end of the year.
2012
Name
Balance at the
start of the
year
Granted
during the
year as
compensation
Exercised
during the
year
Other changes
during the
year
Balance at the
end of the
year
Vested and
exercisable at
the end of the
year
Executive Director
T J Lehany
Key management personnel
D Rose
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
(1) Lapsed during the year
757,819
459,621
252,011
-
225,737
195,174
195,174
152,846
169,106
146,472
118,374
126,634
-
-
-
-
-
-
-
1,217,440
(404,857)(1)
-
-
-
-
-
169,106
372,209
313,548
321,808
-
-
-
-
-
-
Page 123 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
(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
end of the
year
1,139,389
200,770
130,247
75,000
75,031
120,000
28,150
15,000
95,378
30,000
-
Balance at the
end of the
year
1,139,389
167,822
30,247
40,000
20,631
48,976
-
15,000
74,218
-
Key management personnel
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
K Romeyn
2013
Name
Directors
S J C Wise
T J Lehany
D W Bailey
E A Donaghey
P C Lockyer
R K Rae
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
Balance at the
start of the
year
Exercise of
options
Other changes
Purchased
Sold
1,139,389
167,822
30,247
40,000
20,631
48,976
-
15,000
74,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,948
100,000
35,000
54,400
71,024
28,150
-
21,160
30,000
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
start of the
year
Exercise of
options
Other changes
Purchased
Sold
1,139,389
167,822
30,247
-
20,631
48,976
-
-
65,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,000
-
-
-
15,000
9,000
-
-
-
-
-
-
-
-
-
-
-
Page 124 of 128
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
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 47 to 124 and the
Remuneration report in the Directors’ report, set out on pages 24 to 42, are in accordance
with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Company’s and the Group’s financial position as at
30 June 2013 and of its performance for the financial year ended on that date; and
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 2013.
The directors draw attention to Note 1.1 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
22 August 2013
Page 125 of 128
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 2013, 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 42 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, 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.
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:
giving
(i)
at 30 June 2013 and of its performance for the year ended on that date; and
fair view of
the Group’s
true
and
financial position
a
as
(ii)
complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in note 1.
Report on the remuneration report
We have audited the Remuneration Report included in pages 24 to 42 of the directors’ report for
the year ended 30 June 2013. 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 2013,
complies with Section 300A of the Corporations Act 2001.
KPMG
Tony Romeo
Partner
Melbourne
22 August 2013
ST BARBARA LIMITED
30 JUNE 2013
FINANCIAL REPORT
Corporate Directory
BOARD OF DIRECTORS
Chairman
S J C Wise
Managing Director & CEO
T J Lehany
D W Bailey
Non-Executive Director
E A Donaghey Non-Executive Director
Non-Executive Director
P C Lockyer
Non-Executive Director
R K Rae
COMPANY SECRETARY
R J Kennedy
REGISTERED OFFICE
Level 10, 432 St Kilda Road
Melbourne Victoria 3004 Australia
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
Email: melbourne@stbarbara.com.au
Website: www.stbarbara.com.au
STOCK EXCHANGE LISTING
Shares in St Barbara Limited are quoted on
the Australian Securities Exchange
Ticker Symbol: SBM
SHARE REGISTRY
Computershare Limited
GPO Box 2975
Melbourne Victoria 3001 Australia
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 Victoria 3000 Australia
AUDITOR
KPMG
147 Collins Street
Melbourne Victoria 3000 Australia
SOLICITOR
Ashurst
181 William Street
Melbourne Victoria 3000 Australia
Page 128 of 128
ST BARBARA LIMITED
30 JUNE 2013
Ore Reserves and Mineral Resources Statements 30 June 2013
Overview
˃ The acquisition of Gold Ridge and Simberi Operations during the year has added significantly to
Ore Reserves and Mineral Resources.
˃ Gwalia Deeps Ore Reserves are estimated at 6.6 million tonnes (Mt) @ 8.3 grams per tonne of
gold (g/t Au) for 1.75 million ounces (Moz) of contained gold (1.93 Moz at June 2012),
representing an indicative mine life of at least 9 years.
˃ Gwalia Deeps Mineral Resources as at 30 June 2013 reduced by 0.14 Moz to be 14.4 Mt @
8.2 g/t Au for 3.79 Moz of contained gold.
˃ 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 in both the South
Gwalia Series and Main Lodes.
Company Summary at 30 June 2013
˃ Total Ore Reserves are estimated at:
77.8 Mt @ 2.1 g/t Au for 5.24 Moz of contained gold,
comprising:
˃ Australian Operations:
9.6 Mt @ 6.9 g/t Au for 2.13 Moz of contained gold
˃ Pacific Operations:
68.2 Mt @ 1.4 g/t Au for 3.11 Moz of contained gold
˃ Total Mineral Resources are estimated at: 268.4 Mt @ 1.5 g/t Au for 13.22 Moz of contained gold,
comprising:
˃ Australian Operations:
22.4 Mt @ 6.8 g/t Au for 4.91 Moz of contained gold
˃ Pacific Operations:
246.0 Mt @ 1.1 g/t Au for 8.31 Moz of contained gold
Details of the Ore Reserves and Mineral Resources Statements as at 30 June 2013 follow.
Page 129
ST BARBARA LIMITED
30 JUNE 2013
Mineral Resources Statement as at 30 June 2013
The Company's total Measured, Indicated and Inferred Mineral Resources as at 30 June 2013 are
268.4 million tonnes (Mt) @ 1.5 grams per tonne of gold (g/t Au) containing 13.22 million ounces
of gold (Moz) (refer Table 1). The previous publicly reported estimate of Mineral Resources was
47.3 Mt @ 5.0 g/t Au containing 7.61 Moz of gold as at 30 June 2012. The increase in the
Company’s Mineral Resource Inventory is primarily due to the inclusion of the Simberi and Gold
Ridge resources for the first time following the acquisition of Allied Gold Mining Plc (Allied Gold) in
September 2012.
During the 2013 financial year the Company finalised the sale of the Southern Cross Operations
and reviewed a number of non-operational projects in the Leonora tenements that, along with
depletion through mining at Gwalia and King of the Hills Mines, resulted in a reduction of the
Mineral Resource inventory of 3.11 Moz of gold.
Resource additions were realised through:
˃
˃
revision of the geological models for King of the Hills Mine and the Kailis project;
revision of the Tower Hill deposit’s cut-off grade; and
˃ addition of the Simberi and Gold Ridge Mineral Resources subsequent to the acquisition of
Allied Gold.
These changes resulted in resource additions of 8.69 Moz of gold, illustrated in Figure 1.
Figure 1: Major sources of variance to Mineral Resource Inventory between FY12 and FY13
+2,062
13,215
+5,031
-210
-477
+84
+188
+114
+1,215
-2,405
koz
14,000
12,000
10,000
8,000
7,613
6,000
4,000
2,000
0
June 2012 Mining
Depletion
(Leonora)
Leonora
Review
Sthn Cross
Sale
Koth
Geology
Revision
Tower Hill
Cut-Off
Grade
Change
Kailis
Simberi
Oxide
Simberi
Sulphide
Gold Ridge June 2013
Page 130
ST BARBARA LIMITED
30 JUNE 2013
˃ Mineral Resource Depletion (Leonora) - A total of 210 thousand ounces (koz) of gold has
been depleted from the Company's Resources, 155 koz from Gwalia and 55 koz from King of
the Hills. The total includes resource additions resulting from grade control and resource
definition drilling.
˃ Leonora Review – The Gwalia Intermediates (resource within the Gwalia Mine), Harbour
Lights, McGraths, Rainbow and Royal Arthur Bore projects are legacy Mineral Resources
that have been carried since the Company acquired the Sons of Gwalia gold assets in 2005.
These projects were reviewed over the year, as part of the Company’s Leonora Province
Plan, which aimed to identify deposits that could provide mill feed to Gwalia in the
eventuality King of the Hills Mine ceases production. Resources for Gwalia Mine West Lode
and stockpiles at Tarmoola and Tower Hill were also reviewed. This review has resulted in
the removal of 477 koz from the mineral inventory, due either to low grade, lack of
treatment options or high risk, high cost and low recovery mining options.
˃ Southern Cross Sale - A total of 2.41 Moz of gold have been deleted from the Company’s
mineral inventory following the sale of the Southern Cross Operation, completed in April
2013.
˃ Gwalia – The Gwalia resource has reduced by 147 koz overall with small resource additions
to the South West Branch and Main Lode helping to offset mining depletion of 155 koz.
˃ King of the Hills Mine Geology Review – Underground mapping, a review of the local
structural geology and infill drilling has resulted in the revision of the controls on high grade
mineralisation at King of the Hills. Previous models have interpreted the orientation of high
grade lodes to follow the granite contact as it plunged to the north-west. However, recent
work has shown that lodes have a shallow south-west dipping orientation. The revised
geological model has resulted in additional 84 koz of gold.
˃ Tower Hill deposit cut-off grade change - The Tower Hill Mineral Resource was reported at
cut-off grade of 3.2 g/t Au in the 2012 statement. This cut-off grade has been dropped to
2.5 g/t Au which is in line with reporting for the Gwalia Mineral Resource estimate. This has
resulted in the addition of 188 koz of gold.
˃ Kailis Project - The Kailis geological model and Mineral Resource estimate has been revised
this year following on from a structural study of the Leonora region and has added
approximately 114 koz.
˃ Simberi Mine Oxide - The Simberi Oxide Mineral Resource is reported for the first time as
part of the Company’s mineral inventory and contributes 1.22 Moz of gold.
˃ Simberi Sulphide - The Simberi Sulphide Mineral Resource is reported for the first time as
part of the Company’s mineral inventory and contributes 5.03 Moz of gold
˃ Gold Ridge Mine - The Gold Ridge Mineral Resource is reported for the first time as part of
the Company’s mineral inventory and contributes 2.06 Moz of gold.
Page 131
ST BARBARA LIMITED
Table 1: Mineral Resource Summary June 2013
Region
Leonora
Category
Project
Gwalia Deeps
King of the Hills
Tower Hill
Kailis
Measured
Tonnes (k)
Au g/t
k oz
Tonnes (k)
5,521
6.1
1,088
-
-
-
-
-
-
-
-
-
7,422
1,390
4,604
1,040
Total Leonora
5,521
6.1
1,088
14,456
Simberi Oxide
Bekou (Oxide)
Botlu (Oxide)
Pigibo (Oxide)
Pigiput (Oxide)
Pigicow (Oxide)
Samat (Oxide)
Sorowar(Oxide)
Total Simberi Oxide
Simberi Sulphide
Bekou (Sulphide)
Botlu ( Sulphide)
Pigibo (Sulphide)
Pigiput (Sulphide)
Pigicow(Sulphide)
Samat (Sulphide)
Sorowar(Sulphide)
Total Simberi Sulphide
Gold Ridge
Valehaichichi
Namachamata
Kupers
Dawsons
Total Gold Ridge
Total All Areas
-
-
-
4,774
-
-
4,994
9,768
-
-
-
201
-
-
2,110
2,311
1,379
283
3,088
1,089
5,839
-
-
-
0.7
-
-
1.0
0.9
-
-
-
1.0
-
-
1.0
1.0
1.2
1.8
1.4
1.3
1.4
-
-
-
106
-
-
161
267
-
-
-
6
-
-
65
71
53
16
140
46
255
45
2,050
5,052
8,574
166
333
13,565
29,785
29
5,276
6,718
38,722
-
4,070
9,137
63,952
8,500
694
9,583
17,339
36,116
30 JUNE 2013
Indicated
Au g/t
k oz
Tonnes (k)
Inferred
Au g/t
k oz
Tonnes (k)
Total
Au g/t
9.9
6.5
3.9
3.2
7.2
1.6
1.1
0.9
0.7
1.5
1.0
0.8
0.8
1.8
1.4
1.1
1.4
-
1.4
1.0
1.3
1.0
1.3
1.1
1.2
1.1
2,362
291
574
108
1,467
453
489
35
3,335
2,444
2
70
145
186
8
10
346
767
1
233
237
1,784
-
186
278
60
451
300
1,138
306
1,153
4,067
7,475
962
11,917
5,077
24,519
2,089
10,843
20,684
2,719
76,091
270
28
329
646
4,680
369
4,185
5,435
1,273
14,669
7.2
5.9
3.3
4.8
6.2
1.1
1.2
0.5
0.7
1.2
0.9
0.7
0.8
1.4
1.0
0.9
0.9
1
1
0.8
0.9
1.1
1.2
1.1
1.2
1.1
341
86
51
6
484
2
17
5
25
11
32
89
181
42
378
138
725
84
315
559
14,410
1,843
5,093
1,075
22,421
105
2,501
5,352
14,486
472
1,486
22,626
47,028
991
17,193
11,795
63,442
2,089
14,913
31,931
2,241
142,354
159
14
152
209
534
14,559
1,346
16,856
23,863
56,624
8.2
6.4
3.8
3.3
6.8
1.2
1.1
0.9
0.7
1.3
0.9
0.8
0.8
1.4
1.1
1.0
1.2
1
1
0.9
1.1
1.0
1.3
1.1
1.2
1.1
k oz
3,791
377
625
114
4,907
4
87
150
317
19
42
596
1,215
43
611
375
2,515
84
501
902
5,031
482
58
621
901
2,062
23,439
2.2
1,681
144,309
1.7
8,094
100,679
1.1
3,440
268,427
1.5
13,215
Page 132
ST BARBARA LIMITED
30 JUNE 2013
ASX Release
Notes to Table 1:
/ 22 August 2013
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 (2.5
g/t Au), Kailis (0.8 g/t Au).
3. Cut-off Grade Simberi Oxide (0.3 g/t Au).
4. Cut-off Grade Simberi Sulphide (0.5 g/t Au).
5. Cut-off Grade Gold Ridge (0.5 g/t Au).
6. Details relating to each of the estimates are contained in the St Barbara Ltd Annual Mineral
Resource Report which is available at www.stbarbara.com.au.
7. Data is rounded to thousands of tonnes and thousands of ounces. Discrepancies in totals may
occur due to rounding.
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. Mr
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 2012 Edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Uttley
consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.
The Competent Persons who have completed work on each of the mines or deposits are as follows:
˃ Gwalia and King of the Hills Mines – Mr Robert Love (FAusIMM)
˃ Kailis and Tower Hill Deposits – Ms Jane Bateman (MAusIMM)
˃ Simberi Mine – Mr Jacek Drzymulski (MAusIMM)
˃ Gold Ridge Mine – Mr Kevin Crossling (MAusIMM)
Page 133
ST BARBARA LIMITED
30 JUNE 2013
Ore Reserves Statement as at 30 June 2013
As at 30 June 2013, the Company’s Proved and Probable Ore Reserves are estimated to be 77.84
million tonnes (Mt) at 2.1 grams per tonne of gold (g/t Au) containing 5.24 million ounces (Moz)
(refer Table 2). The previously reported Reserve in 2012 was 11.97 Mt @ 6.6 g/t Au for 2.53 Moz of
contained gold. Ore Reserves are located at Gwalia, King of the Hills, Tower Hill, Simberi and Gold
Ridge. This represents a net increase of 2.71 Moz over the June 2012 estimate.
The acquisition of Allied Gold has significantly rescaled and reshaped the reportable Reserve
through the addition of large tonnage low grade open pit reserves. This is the first time these
Reserves have been reported by St Barbara.
The sale of Southern Cross Operations was completed in April 2013, after the operations were
placed on care and maintenance in December 2012. Southern Cross Operations produced 1.08
Moz between 2005 and 2012 under St Barbara ownership.
Key events influencing the 2013 estimate are as follows:
˃ A gold price of $A1,250 per ounce has been used for all projects and operations. This is
consistent with last year’s price estimate and peer producers.
˃ Leonora has total Reserves depletion of 279 koz, comprising 249 koz depletion from mining
activities, and a net 30 koz depletion from design and interpretation changes at King of
Hills, Tower Hill and Gwalia.
˃ Southern Cross depletion from mining activities was 36 koz, inclusive of 6 koz for
unclassified material. Reserves at sale were 90 koz, resulting in a net depletion of 120 koz.
˃ Simberi Oxides have been added to Company’s Reserves and are estimated to have a
Proved and Probable Reserve of 756 koz. Oxides were estimated using current operating
parameters, with an updated Life of Mine plan.
˃ Simberi Sulphides are estimated to have a Proved and Probable Reserve of 1.55 Moz. This
estimate is based on a Pre-Feasibility Study (PFS) completed by Allied Gold prior to
acquisition. An updated Life of Mine Plan has been completed to support the study using
existing operating parameters.
˃ Gold Ridge has been added to the Company’s Reserves and has an estimated 905 koz of
Proved and Probable Reserves. Dawson’s deposit holds the majority of Reserves and is
scheduled for development in FY14.
Reserve depletion and addition are illustrated in Figure 2.
Page 134
ST BARBARA LIMITED
Table 2: June 2013 Ore Reserve Summary
30 JUNE 2013
Category
Region
Leonora
Project
Southern Cross
Gwalia Deeps
Tower Hill
King of the Hills
Kt
-
1,670
Proved
Au g/t
Probable
Koz
Kt
Au g/t
Koz
Kt
-
-
8
424
-
4,900
2,572
496
-
8.4
3.7
4.3
-
1,330
-
6,570
306
68
2,572
496
Total
Au g/t
-
8.3
3.7
4.3
koz
-
1,754
306
68
Total Leonora
Simberi
Sorowar
Pigiput
Pigibo
Samat
Botlu
Pigicow
Bekou
Stockpiles
Total Simberi
Gold Ridge
Dawsons
Kupers
Valehaichichi
Namachamata
Stockpiles
Total Gold Ridge
1,670
4,935
3,633
-
-
-
-
-
635
9,203
754
2,101
157
171
528
3,712
7.9
1.1
0.8
-
-
-
-
-
0.8
0.9
2
1.8
2
2
0.8
1.6
424
7,968
6.7
1,704
9,638
6.9
2,128
173
88
-
-
-
-
-
5,129
23,460
7,619
1,665
3,161
142
62
1.3
2.0
1.0
2.0
1.7
2.0
1.8
213
1,174
254
104
173
8
4
16
-
-
-
10,064
27,093
7,619
1,665
3,161
142
62
635
1.2
1.4
1.0
2.0
1.7
1.7
1.8
0.8
386
1,262
254
104
173
8
4
16
276
41,237
1.5
1,929
50,440
1.4
2,205
39
119
8
11
14
8,926
3,916
1,085
119
1.6
1.6
2
1.4
454
203
52
5
-
-
-
9,681
6,017
1,241
290
528
190
14,047
1.6
714
17,758
1.6
1.7
2
2
0.8
1.6
493
322
60
16
14
905
Total All Areas
14,584
1.9
891
63,252
2.1
4,348
77,836
2.1
5,238
Page 135
ST BARBARA LIMITED
Notes to Table 2:
30 JUNE 2013
1. Reserves based on a gold price of A$1,250/oz for Gwalia, King of the Hills, Simberi, Gold Ridge
and Tower Hill.
2. Resources are reported as inclusive of Reserves.
3. All data is rounded to two significant figures. Discrepancies in summations will occur due to
rounding.
4. Details relating to each of the estimates are available as short form reports at
www.stbarbara.com.au.
Figure 2: Major variances to Ore Reserves between FY12 and FY13
koz
5,500
+905
5,238
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
+1,449
+756
2,527
+12
-183
-66
-19
-23
-36
-90
+6
Jun-12
Gwalia
Mining
Depletion
Gwalia
Changes*
KoTH
Mining
Depletion
KoTH
Changes*
Tower Hill
Changes*
Sthn Cross
Mining
Depletion
Sthn Cross
Changes*
Sthn Cross
Sale
Simberi
Oxide
Simberi
Sulphide
Gold
Ridge
Jun-13
* Changes include Geology, Design and Factor Changes
Competent Persons Statement
The Ore Reserves have been estimated and complied under the direction of Mr John de Vries. Mr
de Vries is a Member of The Australasian Institute of Mining and Metallurgy and a full time
employee of St Barbara Limited. Mr de Vries has sufficient experience relevant to the style of
mineralisation, type of deposit under considerations and for the activity being undertaken to
qualify as a Competent Person as defined by the 2012 edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore reserves'. Mr de Vries consents to the
inclusion in the report of the matters based on their information in the form and context in which
it appears.
Page 136
ST BARBARA LIMITED
30 JUNE 2013
Corporate Governance Statement
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 this 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.
Page 137
ST BARBARA LIMITED
30 JUNE 2013
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.
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.
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 review of its own performance during the 2012-13 financial year in
conjunction with an assessment of its own composition and capabilities. This followed formal
performance reviews in the preceding years. The review and assessment were co-ordinated by the
Chairman. Directors concluded that the Board and its Committees are functioning well and there
were no Board performance issues which required any remedial action. A review of the current
Board composition will continue during the 2013-14 financial year.
Board structure
The Board currently comprises Colin Wise (Chairman), Doug Bailey, Betsy Donaghey, Phil Lockyer,
Tim Lehany (Managing Director & CEO) and Robert Rae.
Page 138
ST BARBARA LIMITED
30 JUNE 2013
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:
• Remuneration Committee;
• Audit Committee; and
• 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)
b)
c)
d)
e)
Financial reporting;
Financial risk management;
Evaluation of the effectiveness of the financial control environment;
Review of the internal and external audit functions; and
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)
b)
Promoting a safety conscious culture throughout the Company;
Reviewing Health and Safety policies;
Page 139
ST BARBARA LIMITED
30 JUNE 2013
c)
d)
Reviewing Health and Safety objectives, strategies and plans; and
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.
Page 140
ST BARBARA LIMITED
Diversity
30 JUNE 2013
The Company’s Diversity Policy 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 2013 financial year1,
and the progress made against those objectives during the year, are as follows:
Objective 1.
Increase the proportion of women employed across the Group to 25% by 30 June
2018.
During the year the number of women employed at St Barbara increased from 54 to
58, increasing the proportion of women employed from 20% to 24% at 30 June
2013.
Objective 2. Reduce the Overall Pay Equity Gap to 15%, by 30 June 2018.
Objective 3.
Objective 4.
Whilst ABS data shows that the Overall Pay Equity Gap in Australia has increased
slightly over the reporting period, the Overall Pay Equity Gap at St Barbara has
reduced from 17.7% to 15.1% at 30 June 2013.
Increase the percentage of women who return to work after a period of Maternity
Leave to at least 66.6%, by 30 June 2014.
Positive progress has been made towards this objective during the reporting period.
Two women commenced Parental Leave and at the completion, one returned to
work. The employee who returned to work was later promoted to a Level 3
Manager role which demonstrates that having a family and a career is possible at St
Barbara which is in the spirit of the St Barbara Diversity Policy and Parental Leave
Guideline.
Increase the number of women on the Board2 to 25% by 30 June 2018.
There has been no change with regard to Board composition or membership,
therefore the percentage of women on the Board remains at 20%.
1 The objectives set for financial year 2013 were based on St Barbara’s existing operations as at 30 June 2012. The results shown
compare against these objectives and exclude the Pacific Operations. The objectives for FY14 will include the entire Group.
2 The Board for the purposes of this report does not include the Managing Director and CEO.
Page 141
ST BARBARA LIMITED
30 JUNE 2013
The following tables show the number of men and women on the Board, in Executive roles and in
the workforce:
St Barbara Limited Gender Statistics at 30 June 20134
Total
No. of Men
% Men
No. of Women
% Women
Board1
Senior Executives2
Whole Organisation3
5
6
240
4
5
182
80%
83%
76%
1
1
58
20%
17%
24%
Notes:
1. The Board excludes the role of Managing Director & CEO.
2.
Senior Executives includes the role of Managing Director & CEO and the five most senior executives.
3. Whole Organisation includes the Managing Director & CEO but does not include other Board members.
4. To enable appropriate comparison with the FY13 objectives, which were set prior to the acquisition of the Pacific Operations,
the above table excludes gender statistics of the Pacific Operations
St Barbara Limited Gender Statistics at 30 June 2012
Total
No. of Men
% Men
No. of Women
% Women
Board1
Senior Executives2
Whole Organisation3
5
5
275
4
5
221
80%
100%
80%
1
0
54
20%
0%
20%
Notes:
1. The Board excludes the role of Managing Director & CEO.
Senior Executives includes the role of Managing Director & CEO and the four most senior executives.
2.
3. Whole Organisation includes the Managing Director & CEO but does not include other Board members.
In accordance with the Workplace Gender Equality Act (2012), the Company submitted its annual
public report to the Workplace Gender Equality Agency on 23 May 2013. A copy of the report is
available on the Company website at www.stbarbara.com.au/investors/ announcements/.
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 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.
Page 142
ST BARBARA LIMITED
30 JUNE 2013
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.
Page 143
ST BARBARA LIMITED
30 JUNE 2013
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 2013 financial year
are set out in the Directors’ Report.
Page 144
ST BARBARA LIMITED
30 JUNE 2013
Shareholder Information
Twenty Largest Shareholders
Ordinary fully paid shares as at 30 September 2013
Rank
Name
Units % of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
127,962,533
102,056,621
100,609,563
22,040,992
19,825,892
4,246,269
3,658,274
2,263,075
2,021,204
2,020,175
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
1,270,793
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
SFB INVESTMENTS PTY LIMITED
QIC LIMITED
COLIN WISE CONSULTING PTY LTD
NORTHWEST ACCOUNTING PTY LTD
AMP LIFE LIMITED
MR LAWRENCE ARMSTRONG JOHNSTON + MRS ANNE BRIDGET
JOHNSTON
1,270,657
1,250,430
1,200,000
1,125,866
1,035,875
934,657
824,792
600,000
26.2
20.9
20.6
4.5
4.1
0.9
0.7
0.4
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.1
20.
MR ATTILIO BRUNO LONGO + MRS HELEN ANNE LONGO
Total top 20 holders of ordinary fully paid shares
Total remaining holders balance
600,000
396,369,596
91,704,481
0.1
81.2
18.8
Page 145
ST BARBARA LIMITED
30 JUNE 2013
Distribution of Shareholdings
Ordinary fully paid shares as at 30 September 2013
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Total
Holders
3,988
4,283
1,321
1,488
145
Shares
1,694,562
10,843,549
10,067,541
43,020,403
422,448,022
11,225
488,074,077
% of Issued
Capital
0.3
2.2
2.1
8.8
86.6
100.0
Unmarketable Parcels
Ordinary fully paid shares as at 30 September 2013
Minimum $500 parcel at $0.555 per unit
Total
Holders
3,694
Shares
Minimum
Parcel Size
1,406,597
901
Substantial Shareholders
Ordinary fully paid shares as at 30 September 2013
Name
M&G Investment Management Ltd
Baker Steel Capital
Franklin Resources Inc
Van Eck Associates Corporation
Shares % of Shares
93,372,398
33,419,181
32,521,607
27,099,922
19.1
6.8
6.7
5.6
Page 146
ST BARBARA LIMITED
Corporate Directory
30 September 2013
BOARD OF DIRECTORS
Chairman
S J C Wise
Managing Director & CEO
T J Lehany
D W Bailey
Non-Executive Director
E A Donaghey Non-Executive Director
Non-Executive Director
P C Lockyer
Non-Executive Director
R K Rae
Non-Executive Director
I L Scotland
(appointed 30 Sep 2013)
SHARE REGISTRY
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne Victoria 3001 Australia
Telephone (within Australia): 1300 653 935
Telephone (international): +61 3 9415 4356
Facsimile: +61 3 9473 2500
COMPANY SECRETARY
R J Kennedy
REGISTERED OFFICE
Level 10, 432 St Kilda Road
Melbourne Victoria 3004 Australia
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
Email: melbourne@stbarbara.com.au
Website: www.stbarbara.com.au
STOCK EXCHANGE LISTING
Shares in St Barbara Limited are quoted on
the Australian Securities Exchange
Ticker Symbol: SBM
BANKER
National Australia Bank
500 Bourke Street
Melbourne Victoria 3000 Australia
AUDITOR
KPMG
147 Collins Street
Melbourne Victoria 3000 Australia
SOLICITOR
Ashurst
181 William Street
Melbourne Victoria 3000 Australia
ABN 36 009 165 066