Annual Report 2014
ST BARBARA LIMITED
30 JUNE 2014
St Barbara at a glance
˃ St Barbara has three mining operations:
˃ Leonora Operations in Western Australia
˃ Simberi Operations in Papua New Guinea
˃ Gold Ridge Operations in the Solomon Islands
˃ Leonora Operations comprises the Gwalia and King of the Hills underground mines. The
Gwalia underground mine is St Barbara’s cornerstone asset. The Gwalia deposit has an Ore
Reserve grade of 8.2 g/t Au, an expected mine life of at least nine years, and remains open
at depth. Gwalia compares favourably against other ASX listed gold mines on grade,
reserve size, production and cost per ounce
˃ Simberi Operations has an open pit mine, and a recently completed plant expansion. The
target production run‐rate is 100,000 ounces per year, following completion of identified
post‐commission works which are now underway. Oxide and sulphide Ore Reserves
provide the potential for Simberi to become a long‐term cash generating asset
˃ Gold Ridge Operations remains suspended following torrential rain and floods in April 2014,
and the Company is negotiating to transfer Gold Ridge to the Solomon Islands Government
˃ St Barbara has one of the largest Ore Reserve positions of any mid‐tier ASX listed gold
company, with 5.2 million ounces of contained gold. In FY15:
˃ deep drilling is planned at Gwalia, which remains open at depth
˃ prospective near mine targets are planned to be drilled at Simberi
˃ St Barbara’s primary safety measure, total recordable injury frequency rate, reduced 32% to
4.1 at June 2014, the lowest on record for the Company
Gold Production
374,402 ounces 3%
Total Recordable Injury
Frequency Rate 4.1 32%
2014
2013
2012
2011
2010
2014
2013
2012
2011
2010
0
100
200
300
400
0
5
10
15
Page ii
ST BARBARA LIMITED
30 JUNE 2014
St Barbara at a glance
Leonora
Two underground mines:
•
Gwalia Mine
FY15F production:
180 ‐ 200 koz, estimated
mine life 9+ years based
on reserves
King of the Hills Mine
FY15F production:
60 ‐ 70 koz
•
Simberi
PNG
Gold Ridge
Solomon
Islands
Australia
Leonora
Gawler
East Lachlan
•
•
•
•
•
Simberi
Low strip ratio open pit
mine
Target annualised
production 100 koz
Near mine targets for
exploration
Gold Ridge
Operation suspended
April 2014
Negotiating transfer to
Solomon Islands
Government
3,600 km2 of prospective tenements across Australia, Papua New Guinea and the Solomon Islands
Near mine targets at existing operations at Leonora and Simberi
Prospective greenfields copper‐gold targets at Gawler, SA
Prospective exploration area for copper‐gold porphyry mineralisation at East Lachlan, NSW
FY14 Gold Production 374 koz
Gwalia
214 koz
King of the Hills
71 koz
Simberi
44 koz
Gold Ridge
45 koz
Ore Reserves as at 30 June 2014
Ore Reserves
Mt g/t Au
koz
Leonora, Western Australia
10.3
6.9 2,280
Gold Ridge, Solomon Islands 14.6
1.4
670
Simberi, Papua New Guinea 44.2
1.6 2,210
Total Reserves all Regions
69.1
2.3 5,160
Mineral Resources & Ore Reserves
(Moz)
13.2
13.2
5.2
5.2
7.6
2.5
FY 12
FY 13
FY 14
FY 12 FY 13 FY 14
Mineral Resources
Ore Reserves
Refer to page 110 for Ore Reserves and Mineral Resources Statements
Page iii
ST BARBARA LIMITED
30 JUNE 2014
Contents
3 Directors’ Report
41 Financial Report
110 Ore Reserves and Mineral Resources Statements
118 Corporate Governance Statement
125 Shareholder Information
Page iv
ST BARBARA LIMITED
30 JUNE 2014
Directors’ Report
and
Financial Report
For Year Ended 30 June 2014
Page 1
ST BARBARA LIMITED
30 JUNE 2014
TABLE OF CONTENTS
DIRECTORS’ REPORT .............................................................................................................................................. 3
Directors ......................................................................................................................................................... 3
Principal activities ........................................................................................................................................... 3
Dividends ........................................................................................................................................................ 3
Overview of Results ........................................................................................................................................ 3
Significant changes in the state of affairs ..................................................................................................... 10
Business strategy and future prospects ........................................................................................................ 11
Regulatory environment ............................................................................................................................... 14
Information on Directors .............................................................................................................................. 15
Meetings of Directors ................................................................................................................................... 20
Remuneration report (Audited) .................................................................................................................... 21
Indemnification and insurance of officers .................................................................................................... 38
Proceedings on behalf of the company ........................................................................................................ 38
Environmental management ........................................................................................................................ 38
Non‐audit services ........................................................................................................................................ 39
Auditor independence .................................................................................................................................. 39
Events occurring after the end of the financial year .................................................................................... 39
Rounding of amounts ................................................................................................................................... 39
Auditor’s Independence Declaration ............................................................................................................ 40
FINANCIAL REPORT .............................................................................................................................................. 41
Page 2
ST BARBARA LIMITED
30 JUNE 2014
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 2014.
Directors
The following persons were Directors of St Barbara Limited at any time during the year and up to the date of this report:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
S J C Wise
R S Vassie
T J Lehany
D W Bailey
I Scotland
E A Donaghey
P C Lockyer
R K Rae
T Netscher
Non-executive Chairman
Managing Director & CEO (appointed 1 July 2014)
Managing Director & CEO (resigned 30 June 2014)
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
Non-executive director
(resigned 30 June 2014)
(resigned 31 March 2014)
(resigned 28 February 2014)
(appointed 17 February 2014)
The qualifications, experience and special responsibilities of the Directors are presented on pages 15 to 19.
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 $500,831,000 (2013: statutory net loss after tax of $191,854,000) for
the year ended 30 June 2014, including Significant Items totaling a net loss after tax of $406,872,000 (2013: net loss of
$221,139,000) which included an asset impairment and write down charge. Underlying net loss after tax before significant
items was $93,959,000 (2013: net profit of $29,285,000). The full year review of St Barbara’s asset carrying values, as a
result of the continuing poor performance from the Simberi gold mine and suspension of operations at the Gold Ridge
mine, gave rise to the impairment of the carrying value of these gold mines and write down of assets associated with the
operations.
Cash on hand (excluding restricted cash) at 30 June 2014 was $79,407,000 (2013: $117,383,000). Total interest bearing
borrowings were $339,576,000 (2013: $328,092,000).
Page 3
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
The consolidated result for the year is summarised as follows:
Sales revenue (including discontinued operations)(7)
EBITDA(3)(6) (including significant items)
EBIT(2)(6) (including significant items)
(Loss) before tax(4)
Statutory (Loss)1) after tax for the year
Sales revenue (excluding discontinued operations)
Total net significant items after tax
EBITDA(3)(6) (excluding significant items)
EBIT(2)(6) (excluding significant items)
(Loss)/profit before tax – excluding significant items(4)
Underlying net (Loss)/profit after tax(5)(6) for the year
30 June 14
$’0007
30 June 13
$’0007
533,828
568,443
(331,634)
(150,628)
(440,325)
(251,630)
(483,307)
(500,831)
(270,711)
(191,854)
533,828
511,840
(406,872)
(221,139)
73,019
(35,672)
(78,014)
(93,959)
141,051
48,239
34,836
29,285
(1) Statutory (Loss) is net loss 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) (Loss)/profit before tax is earnings before income tax expense. It includes revenues and expenses associated with discontinued
operations.
(5) Underlying net (loss)/profit after income tax is net (loss) after income tax (“Statutory (Loss)”) 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. In the prior year there was a discontinued operation.
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 on gold options
Realised gain on gold options
30 June 14
$’000
30 June 13
$’000
-
2,832
14,205
1,498
Asset impairments and write downs – 30 June
(368,456)
(309,170)
Asset impairments and write downs – 31 December
Borrowing costs written off
Redundancy costs
Allied Gold related acquisition costs
Integration costs
Additional proceeds in relation to Southern Cross sale
Write back of onerous provision
Operating loss from discontinued operations
Significant items before tax
Significant items after tax
(42,100)
(640)
(5,213)
-
-
1,444
6,840
-
-
(5,678)
(2,131)
(7,862)
(7,268)
22,109
-
(11,250)
(405,293)
(305,547)
(406,872)
(221,139)
Page 4
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Asset impairments and write downs
The review of the Group’s asset carrying values at 30 June 2014 in the context of the lower gold price environment,
reduced operational performance of the Simberi operation, and the cessation of operations at Gold Ridge due to a flood
event in April 2014, has resulted in the impairment and write down of the carrying value of assets totalling a loss of
$368,456,000 after tax. At 31 December 2013, the Group incurred an impairment write-off of $42,100,000 after tax,
bringing the total impairments expensed during the year ended 30 June 2014 to $410,556,000 after tax.
The breakdown of the impairment expense of $410,556,000 booked in the year ended 30 June 2014 is provided in the table
below:
Write down of assets
Inventories
Impairments
Simberi
$’000
Gold Ridge
$’000
Total
$’000
7,594
16,748
24,342
Property, plant and equipment
Deferred mining costs
Mineral rights
Total asset impairment and write-downs
Tax effect
Total asset impairments and write downs after tax
102,846
-
104,850
215,290
100,434
3,032
75,052
195,266
203,280
3,032
179,902
410,556
-
410,556
Overview of Operating Results
The statutory loss of $500,831,000 for the year ended 30 June 2014 (2013: statutory loss of $191,854,000) was impacted by
the lower operating profit from Leonora as a result of lower achieved gold prices during the year, negative contributions
from the Simberi and Gold Ridge operations, and impairment write downs associated with the Pacific Operations.
For the year ended 30 June 2014, the Group reported an underlying loss before tax of $78,014,000 (2013 profit:
$34,836,000). The underlying loss excludes the impact of significant items, including the asset impairment and write down
charges. Underlying loss after tax was $93,959,000 (2013 profit: $29,285,000).
Group revenue (excluding discontinued operations) increased from $511,840,000 in 2013 to $533,828,000 in 2014.
Revenue from Australian Leonora Operations was adversely impacted by lower average spot gold prices in 2014 compared
with 2013.
The table below provides a summary of the contribution before tax from continued operations in Australia and the Pacific
before asset impairment and write down charges of $410,556,000 during the year.
Year ended 30 June 2014
$’000
Revenue
Mine operating costs
Gross Profit
Royalties
Depreciation and Amortisation
Contribution from operations(1)
Australian
Operations(2)
401,820
Pacific
Operations(3)
132,008
Consolidated
533,828
(206,809)
(188,873)
(395,682)
195,011
(15,903)
(80,938)
98,170
(56,865)
(4,296)
(24,625)
(85,786)
138,146
(20,199)
(105,563)
12,384
(1) Excludes corporate and exploration costs, interest and tax. 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 Leonora operations, which includes the Gwalia and King of the Hills underground mines and the Leonora
processing plant.
(3) Comprising the Simberi and Gold Ridge operations.
Page 5
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Analysis of Australian Operations
Total sales revenue of $401,820,000 (2013: $372,156,000) was generated from gold sales of 284,067 ounces (2013: 239,667
ounces) in the year at an average achieved gold price of A$1,406 per ounce (2013: A$1,543 per ounce). Although
production was higher compared with the prior year, revenue was adversely impacted by the decline in the average spot
gold price during the year.
A summary of production performance for the year ended 30 June 2014 is provided in the table below.
Details of 2014 Production Performance
Underground Ore Mined
Grade
kt
g/t Au
Ore Milled (including stockpiles)
kt
Grade
Recovery
Gold Production
Cash Cost(1)
Total Cost
g/t Au
%
oz
A$/oz
A$/oz
Gwalia
King of the Hills
2013/14
2012/13
2013/14
2012/13
811
8.4
851
8.1
96
696
8.2
834
7.1
96
472
4.6
514
4.5
95
470
4.4
440
4.4
95
214,319
183,116
70,711
58,477
688
912
751
979
973
1,422
843
1,193
Gwalia
Ore tonnes mined from the Gwalia underground mine increased from 696,000 tonnes in 2013 to 811,000 tonnes in 2014,
largely due to improved mining methods employed during the year. Ore milled grades increased from 7.1g /t Au in 2013 to
8.1g/t Au in 2014 largely due to a lower blend of low grade development ore. Gold production from the Gwalia
underground mine in the year was 214,319 ounces (2013: 183,116 ounces). The higher production compared with the prior
year was due to increased throughput in the processing plant from improved blending strategies and higher mill availability,
and the higher grades.
Gwalia unit cash operating costs1 for the year were $688 per ounce (2013: $751 per ounce), reflecting the benefit of
increased production. Total Cash Operating Costs1 at Gwalia of $147,451,000 were higher compared with the prior year
(2013: $137,520,000) due to the increase in production volumes.
King of the Hills
Gold production from the King of the Hills underground mine was 70,711 ounces (2013: 58,477ounces). The average grade
was marginally higher than the prior year at 4.6g/t Au (2013: 4.4g /t Au). The increase in ore milled from 440kt in the prior
year to 514kt in the current year was a result of improved blending strategies and higher mill availability. The King of the
Hills unit cash operating costs for the year were $973 per ounce (2013:$843 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 $68,802,000 (2013:
$49,296,000) reflecting the impact of increased milling volumes and higher mining costs.
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 6
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Analysis of Pacific Operations
Total sales revenue of $132,008,000 (10 months to June 2013: $139,684,000) was generated from gold sales of 92,093
ounces (10 months to June 2013: 88,262 ounces) at an average achieved gold price of A$1,426 per ounce (10 months to
June 2013: A$1,564 per ounce). Production in the prior year commenced on 7 September 2012 when the Group acquired
Allied Gold PLC.
A summary of production performance for the year ended 30 June 2014 is provided in the table below.
Details of 2014 Production Performance
Simberi
Gold Ridge
12 months to
30 June 2014
10 months to
30 Jun 13(1)
12 months to
30 June 2014
10 months to
30 Jun 13(1)
Open Pit Ore Mined
Grade
kt
g/t Au
Ore Milled (including stockpiles)
kt
Grade
Recovery
Gold Production
Cash Cost(3)
Total Cost(2)(3)
g/t Au
%
oz
A$/oz
A$/oz
1,886
1.0
1,714
1.0
80
44,251
2,136
2,385
1,942
1.0
1,471
1.1
88
1,425
1.4
1,467
1.4
67
45,609
45,121
1,294
1,621
1,994
2,218
1,581
1.5
1,437
1.5
65
45,931
1,702
2,111
(1) Production attributable to St Barbara from 7 September 2012.
(2) Does not include fair value adjustments posted per AASB 3 “Business Combinations” arising from the acquisition of Allied Gold Plc.
(3) Before significant items.
Simberi
Ore tonnes mined from the Simberi open pit mines decreased from 1,942,000 tonnes for the 10 months to 30 June 2013 to
1,886,000 tonnes for the year ended 30 June 2014. Mining performance in the 2014 financial year was largely due to poor
equipment reliability and availability during most of the year. During the second half of the year, mining rates improved as
a result of the acquisition of low-hour haul trucks, which saw an increase in equipment availability in the June quarter. Ore
milled increased to 1,714,000 tonnes (10 months to June 2013: 1,471,000 tonnes), which reflected the commissioning of
the SAG mill in December 2013, and the processing of ore through both the SAG mill and ball mill in the second half of the
year. Gold production decreased to 44,251 ounces compared with the prior year (10 months to June 2013: 45,609 ounces)
largely due to lower recoveries, which were impacted by carbon management, transitional sulphide ore in the mill feed,
and early commissioning difficulties associated with the SAG mill. The production in the year was well down on
expectations due to the poor mining performance and difficulties in commissioning the new SAG mill.
Simberi unit cash operating costs for the year were $2,136 per ounce (10 months to June 2013: $1,294 per ounce),
reflecting the impact of lower than expected production, higher mining costs from the write off of waste material moved
and higher than planned maintenance costs on the plant. Total Cash Operating Costs at Simberi during the year were
higher than the prior year at $94,520,000 (10 months to June 2013: $59,018,000) due to the twelve month period and
higher operating costs.
Gold Ridge
During April 2014, the Gold Ridge operations were suspended following torrential rain and consequential flooding on
Guadalcanal. With access roads cut off, dwindling stocks of fuel, food and essential supplies and escalating security
concerns, local and expatriate personnel were evacuated from the site. No gold production occurred from early April until
30 June 2014. The timing of the recommencement of any mining activities will be impacted by contributing factors outside
of the Group’s control, which require the active management and involvement of the Solomon Islands Government, namely
the remediation of the Tinahulu Bridge and the removal of several hundred illegal miners camped in the open pit mining
areas.
Page 7
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Gold production up to the date that operations ceased was 45,121 ounces (10 months to June 2013: 45,931 ounces) which
was consistent with prior year. Cash operating costs of $1,994 per ounce (10 months to June 2013: $1,702 per ounce)
increased due to significant plant downtime during the period, and the consequential loss of production. Total Cash
Operating Costs at Gold Ridge during the year were $89,971,000 (10 months to June 2013: $78,175,000).
Included in mine operating costs in the Income Statement is $9,889,000, which relates to expenditure post the cessation of
activities in April 2014 following the floods. This expenditure predominantly represents national and expatriate salaries in
addition to other mine stabilisation expenditures.
Corporate and Discovery & Growth
Exploration and evaluation expenditure in the year amounted to $21,297,000 (2013: $21,144,000), of which all was
expensed in the income statement. Expenditure incurred in Australia in the year amounted to $8,057,000, while
exploration in the Pacific was $13,240,000. Exploration costs in the current year included a redundancy expense of
$842,000. Exploration expenditure during the year focused on investigating highly prospective near mine high grade oxide
targets at Simberi, and near surface mineralisation at Gold Ridge (prior to cessation of operations in April). 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 $23,634,000 (2013: $19,253,000) comprised mainly expenses relating to the
corporate office and compliance costs. Costs in the current year included a redundancy expense of $2,752,000 as a result
of organisational changes to reduce corporate costs.
Royalty expenses for the year were $20,199,000 (2013: $18,561,000), reflecting the higher revenues earned in Australia.
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 $1,906,000 (2013: $4,072,000) comprised mainly interest earned during the year of $1,720,000 (2013:
$3,811,000). The decrease in interest earned is reflective of lower cash balances held during 2014 compared with 2013, as
well as lower interest rates applied to excess cash balances.
Other income for the year of $10,278,000 (2013: $3,131,000) included $6,840,000 for the write back of an onerous
provision relating to the gold prepayment facility that was refinanced in February 2014. Other income also included
royalties earned from tenements held in Australia of $1,565,000, plus $1,444,000 received from Hanking as contingent
consideration from the sale of the Southern Cross operation in the prior year.
Depreciation and amortisation of fixed assets and capitalised mine development amounted to $108,691,000 (2013:
$92,812,000) for the year. Depreciation and amortisation attributable to the Australian Operations was $80,938,000 (2013:
$64,105,000), with the increase due to higher production compared with the prior year. The expense at the Pacific
Operations of $24,625,000 (10 months to June 2013: $16,542,000) was higher than the prior year, mainly due to an
increase in fixed assets at Simberi relating to the commissioning of the SAG mill and the fact that there was a full year of
depreciation and amortisation in the current year. The balance of the depreciation and amortisation expense was
associated with corporate and exploration activities.
Finance costs in the year were $44,702,000 (2013: $22,892,000). 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 loan of US$75,000,000 drawn down with Red Kite to refinance the gold prepayment facility
acquired as part of the Allied Gold acquisition. During the year, $3,575,000 of capitalised borrowing costs relating to the
senior secured notes was expensed to the Income Statement. Fair value movements of $10,800,000 relating to the gold
prepayment facility was expensed to the income statement prior to the loan being refinanced. Finance costs also included
the unwinding of the discount on the rehabilitation provision of $3,021,000.
A foreign exchange movement gain of $1,810,000 was recognised for the year (2013: gain of $9,122,000), which
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.
.
Page 8
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Discussion and Analysis of the Cash Flow Statement
Operating activities
Cash flows from operating activities for the year were $20,260,000 (2013: $71,028,000). Receipts from customers of
$540,050,000 (2013: $584,716,000) were lower than the prior year due to the inclusion of receipts from the discontinued
Southern Cross operations in 2013 of $56,603,000. Payments to suppliers were $472,501,000 (2013: $489,297,000), with
2013 including the settlement of accounts payable in relation to Southern Cross operations. Payments for exploration
expensed in the year amounted to $21,297,000 (2013: $21,144,000). Interest received of $1,720,000 (2013: $3,811,000)
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 $26,565,000 (2013: $5,840,000), reflecting a full twelve months of payments on the senior secured notes drawn
down in March 2013, and higher interest on the increased Red Kite facility.
Investing activities
Net cash flows used in investing activities amounted to $86,412,000 (2013: $324,277,000) for the year, with the prior year
including the cash paid for the acquisition of Allied Gold PLC of $206,623,000. Lower expenditure on property, plant and
equipment of $49,225,000 (2013: $74,465,000) was attributable mainly to reduced expenditures on the oxide plant
expansion at Simberi, which was mostly incurred during 2013. Mine development expenditure in the year was $39,971,000
(2013: $60,850,000), which was lower than the prior year due mainly to lower expenditure at Gwalia and the cessation of
mining activities at Southern Cross in November 2012. No exploration and evaluation expenditure was capitalised during
the year (2013: $Nil) 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:
(cid:120) Underground mine development and infrastructure at Gwalia – $28,921,000 (2013: $43,200,000);
(cid:120) Underground mine development and infrastructure at King of the Hills – $11,050,000 (2013: $20,231,000);
(cid:120) Simberi oxide expansion and other capital projects – $26,973,000 (2013: $46,924,000); and
(cid:120) Purchase of property, plant and equipment at the operations – $19,092,000 (2013: $22,379,000)
Financing activities
Net cash flows from financing activities were a net inflow of $18,679,000 (2013: net inflow of $180,662,000), with major
movements in cash flows including:
(cid:120) Drawdown of a US$75,000,000 (A$83,452,000) debt facility to refinance the existing gold prepayment facility, including
a settlement of $36,132,000 to close out the facility;
(cid:120) Repayments in relation to the gold prepayment facility of cash equivalents totalling $32,399,000. The repayment of this
facility was finalised as a result of the restructuring with Red Kite in February 2014.
(cid:120) Scheduled repayments of insurance premiums, leasing and equipment financing facilities amounted to $9,279,000
(2013: $6,432,000), with the main variance from the prior year attributable to a full twelve months of repayments for
leases entered into midway through 2013 associated with equipment acquired for Gold Ridge;
(cid:120) Proceeds of $8,500,000 from closing out gold options previously held as a hedge of King of the Hills gold production;
and
(cid:120) $10,378,000 was reclassified from “restricted cash” during the year due to the change in the rehabilitation bonding
structure in Western Australia, which resulted in the removal of cash backed bonds and replaced by contributions into a
state rehabilitation fund. In the prior year, $11,832,000 was classified as “restricted cash”.
Page 9
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Discussion and Analysis of the Statement of Financial Position
Net Assets and Total Equity
St Barbara’s net assets and total equity decreased during the year by $491,415,000 to $131,812,000 as a result of asset
impairments and write downs expensed during the year, together with an underlying loss for the year of $93,959,000.
The available cash balance at 30 June 2014 was $79,407,000 (2013: $117,383,000), with an additional $1,577,000 held on
deposit as restricted cash and reported within trade receivables.
Impairment write downs impacted the following balances:
Inventories of $37,416,000 (2013: $63,995,000);
(cid:120)
(cid:120) Property, plant and equipment of $153,893,000 (2013: $339,861,000);
(cid:120) Mineral rights of $25,370,000 (2013: $209,957,000);
(cid:120) Deferred mining costs of $31,980,000 (2013: $33,640,000).
Trade and other payables decreased to $58,951,000 at 30 June 2014 (2013: $88,658,000) reflecting mainly the impact of
the cessation of activities at Gold Ridge.
Interest bearing liabilities increased to $339,576,000 at 30 June 2014 (2013: $328,092,000) with the largest components of
the year end balance representing:
(cid:120) US$250 million senior secured notes translated at the year end AUD/USD exchange rate ($265,100,000), net of
capitalised transaction costs of $9,052,000;
(cid:120) A debt facility of US$75 million drawn down with RK Mine Finance (“Red Kite”) translated at the year end AUD/USD
exchange rate ($79,530,000), net of capitalised transaction costs of $5,841,000. The facility was entered into on 25
February 2014 with a term of 33 months. There are no principal repayments for the first twelve months, with interest
payable quarterly based on a linked reference rate. The current interest rate applied is 8.5%. The facility is secured
under the existing senior secured notes security trust structure and has priority payment status; and
(cid:120) Lease liabilities of $9,839,000.
Provisions decreased to $84,007,000 (2013: $89,509,000) largely due to the derecognition of an onerous provision of
$6,840,000 relating to the preferential sale of production from Gold Ridge, which was cancelled as a result of the
refinancing of the gold prepayment facility with Red Kite.
The deferred tax balance is a net asset of $5,859,000 (2013: net asset of $26,355,000). The decrease is attributable to the
impairment write downs in the Pacific Operations. Deferred tax assets arising from accumulated tax losses in relation to
the Pacific Operations of $150,723,000 (tax effected) have not yet been booked as it is not probable as at 30 June 2014 that
future taxable profits will be generated to utilise these deferred tax assets.
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 $500,831,000, which increased the accumulated losses of
the Group to $737,442,000 at 30 June 2014. The net loss after tax included the asset impairment and write down
charge of $410,556,000 after tax.
b) Asset impairment and write down charge
At 30 June 2014 the Group recognised an asset impairment and write down charge of $368,456,000 before tax in
relation to inventory, plant and equipment, deferred mine operating development expenditure, mineral rights,
and capitalised mine development expenditure at Gold Ridge and Simberi. At 31 December 2013, an asset
impairment and write down charge of $42,100,000 was expensed.
c) Decrease in net assets
The Group’s net assets decreased by $491,415,000 during the year mainly as a result of the asset impairment and
write down charges expensed in relation to the Pacific Operations.
d)
Increase in interest bearing borrowings
At 30 June 2014 the total interest bearing borrowings increased by $11,484,000 compared to the prior year. The
increase was attributable to the restructure of the Red Kite facility.
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ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
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 and Papua New
Guinea. St Barbara is currently reviewing options for the future of the Gold Ridge mine in Solomon Islands, which include
possible sale of the operation, possible joint venture or reducing activities to care and maintenance. The Simberi operation
in PNG has consistently underperformed with optimisation work on the processing plant expansion planned to continue in
the first half of the 2015 financial year to achieve reliable performance. An engineering and maintenance program on the
Simberi processing plant to diagnose issues and to implement a preventative asset management approach is underway.
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:
(cid:120) 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.
(cid:120)
Improving productivity: The Group is focused on increasing volumes at the Simberi operations and reducing operating
costs. St Barbara continues to invest to improve infrastructure, mining fleets and capability to ensure consistent and
reliable production.
(cid:120) 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 Simberi operations. At Simberi, a sulphide ore reserve, which has been estimated at 1.3 Moz, provides an
opportunity to create a long life production centre at Simberi. In addition the Group is generating and evaluating
exploration targets in the Tabar Island Group in Papua New Guinea.
(cid:120) Maintaining a conservative financial profile: The Group will continue to maintain prudent financial management
policies with the objective of maintaining liquidity to ensure appropriate investments in the operations. 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.
(cid:120) 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.
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.
The Group’s 2015 financial year budget was developed in the context of a volatile gold market following a sustained
depression in the gold price. The Group’s priorities in the 2015 financial year are to continue consistent production from
Leonora, optimise the operations in the Pacific and to reduce costs and capital expenditure. For the 2015 financial year the
Group’s operational and financial outlook for Leonora (comprising the Gwalia and King of the Hills underground mines) is as
follows:
(cid:120) Gold production is expected to be 240,000 to 270,000 ounces.
(cid:120)
(cid:120)
Cash operating cost is expected to be in the range of $840 per ounce to $875 per ounce.
Capital expenditure is expected to be $60 million to $69 million.
Guidance for Simberi will be updated following the completion of an engineering and maintenance program on the
processing plant to diagnose operational issues and implement a preventative asset management approach.
Gold Ridge is not expected to resume production in calendar year 2014.
Page 11
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
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 2014 are:
(cid:120)
Fluctuations in the United States Dollar (“USD”) spot gold price: 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).
(cid:120) 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.
The Western Australian government has foreshadowed a possible increase in royalties payable on Western
Australia gold production. Independent research has confirmed any increase in gold royalty rates may result in
mine closures, cutbacks in exploration, and widespread job losses.
(cid:120) 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, rain and seismic events 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.
(cid:120)
Simberi production may not be realised: Since the acquisition of the Pacific Operations the Simberi operation has
achieved operational performance well short of expectations. The benefits the Group expects to result from the
Simberi operation will depend, in part, on St Barbara’s ability to increase production 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 engineering projects aimed at improving operational
capabilities, lifting production performance, lowering operating costs and improving the overall condition of
operations to ensure reliable performance. The addition of equipment to the mining fleet and improved
maintenance strategies is expected to result in higher equipment availability, utilisation and mining performance.
Page 12
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
(cid:120)
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 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.
(cid:120)
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.
The Company is working with the Solomon Islands Government to consider the options for the Gold Ridge
operations in the future.
(cid:120) Restrictions on indebtedness: Under the terms of the US senior secured notes, although there are no operational
covenants, there are certain restrictions on the cumulative amount that can be invested in the Pacific Operations,
and in the amount of additional indebtedness that may be entered into by St Barbara. A breach of these terms
may lead to a default. At 30 June 2014, based on forward projections, there is adequate headroom under these
restrictions. Additionally, the restrictions on investment in the Pacific Operations and new indebtedness may
provide a potential constraint on developing future programs such as expanding production capacity or developing
additional near mine reserves.
(cid:120) Refinancing risk: The Company has debt facilities with external financiers, including a secured loan facility with RK
Mine Finance and senior secured notes. The structure of these facilities has been designed so that the refinancing
obligations are staged over a reasonable period. Although the Company currently generates sufficient cash flows
to secure its debt requirements, no assurance can be given that it will be able to refinance the debt prior to its
expiry on acceptable terms to the Company. If the Company is unable to repay or refinance its external debt in the
future, its financial condition and ability to continue operating may be adversely affected.
(cid:120)
Community relations: A failure to adequately manage community and social expectations within the communities
in which the Group operates may lead to local dissatisfaction 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.
(cid:120) Risk of further impairment: If the gold price continues to decline, or the operations are not expected to meet
future production levels, there may be a potential for future impairment write downs at any of our operations.
Page 13
ST BARBARA LIMITED
Risk management
DIRECTORS’ REPORT
30 JUNE 2014
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.
During July 2014, the Company announced that by operation of its internal reporting mechanisms, the provision of benefits
to a foreign public official that may violate its Anti-Bribery and Anti-Corruption Policy or applicable laws in Australia or in
foreign jurisdictions were identified. The amount of the benefits provided to the foreign public official was not material to
the Company. The Company self-reported the matter to relevant authorities, including the Australian Federal Police, and
the matter is being assessed and investigated. To date, there has been no action taken against the Company, consequently,
the range of potential penalties, if any, cannot be reliable estimated. Should there be any prosecution, potential penalties
if any are governed by laws in various jurisdictions including Criminal Code 1995 (Cth) in Australia and/or the UK Bribery
Act.
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 took effect from 1 July 2013. The Mining Rehabilitation
Fund replaces 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.
Page 14
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
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.
Information on Directors
S J Colin Wise, LL.B, FAICD, FAusIMM Non-Executive Chairman
Appointed as Non-Executive Chairman July 2004
Mr Wise is an experienced corporate lawyer, consultant and company director with significant expertise in the mining and
exploration industry and resources, energy and corporate sectors. He 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 Audit, Remuneration and Health, Safety, Environment and Community Committees
Interest in shares and options
Mr Wise has a relevant interest in 1,139,389 fully paid ordinary shares of the Company.
Robert S (Bob) Vassie, B. Mineral Technology Hons (Mining), AICD Managing Director and Chief Executive Officer
Appointed as a Director 1 July 2014
Mr Vassie joined St Barbara as Managing Director and Chief Executive Officer on 1 July 2014. He is a mining engineer with
29 years international mining industry experience. Prior to joining St Barbara, Mr Vassie was the Managing Director and
CEO at Inova Resources Limited (formerly Ivanhoe Australia Limited) and has 18 years experience in a range of senior
management roles with Rio Tinto. He has particular experience in operations management, resource development
strategy, mine planning, feasibility studies, business improvement, corporate restructuring and strategic procurement.
Other current public company directorships
Nil
Former public company directorships in last 3 years
Inova Resources Limited (formerly Ivanhoe Australia Limited)
Special responsibilities
Nil
Interest in shares and options
Mr Vassie has no relevant interest in shares of the Company.
Page 15
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Douglas W Bailey, BBus (Acc), CPA, ACIS Non-Executive Director
Appointed as a Director January 2006
Mr Bailey was the Chief Financial Officer of Woodside Petroleum Ltd between 2002 and 2004 and previously, was an
Executive Director of Ashton Mining Limited from 1990 to 2000, including the last 3 years as Chief Executive Officer. He
was also a Non-Executive Director of Aurora Gold Ltd for the period 1993-2000.
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 of the Company.
Tim Netscher, BSc (Eng) (Chemical), BCom, MBA, FIChE, CEng, MAICD Non-Executive Director
Appointed as a Director 17 February 2014
Mr Netscher was the Managing Director of Gindalbie Metals Limited from 2011 to 2013, and is currently the Non-Executive
Chairman of Deep Yellow Limited ,a Non-Executive Director of Aquila Resources Limited, and a Non-Executive Director of
Western Areas Limited, all ASX listed companies. A chemical engineer, he is an experienced international mining executive
with extensive operational, project development, and transactional experience and expertise in senior executive
management roles.
Other current public company directorships
Deep Yellow Limited
Aquila Resources Limited
Western Areas Limited
Former public company directorships in last 3 years
Gindalbie Metals Limited
Industrea Limited
Bullabulling Gold Limited
Special responsibilities
Chair of the Health, Safety, Environment and Community Committee (from 1 April 2014)
Member of the Audit Committee
Interest in shares and options
Mr Netscher has no relevant interest in shares of the Company.
Page 16
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Ines Scotland B.Sc Non-Executive Director
Appointed as a Director 30 September 2013
Ms Scotland is an experienced director and senior executive in the resources sector, with particular expertise in building
successful projects in developing countries. She was co-founder in 2007 of Citadel Resource Group Limited. As Managing
Director & CEO, she listed the Company on the ASX through an IPO and managed the successful development of the Jabel
Sayid copper project in Saudi Arabia before the company was acquired by Equinox Minerals in late 2010.
Other current public company directorships
Chair of MetalBank Limited
Former public company directorships in last 3 years
Ivanhoe Australia Limited (most recently as interim Managing Director previously Non-Executive Director)
Citadel Resource Group Limited
Special responsibilities
Chair of the Remuneration Committee (from 1 March 2014)
Member of the Health, Safety, Environment and Community Committee
Interest in shares and options
Ms Scotland has a relevant interest in 16,000 fully paid ordinary shares of the Company.
Elizabeth A (Betsy) Donaghey B.Sc (Eng) M.S Non-Executive Director
Appointed as a Director April 2011. Resigned as a Director 30 June 2014
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 was 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 Environment and Community Committees
Interest in shares and options
Ms Donaghey has a relevant interest in 75,000 fully paid ordinary shares of the Company.
Page 17
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Timothy J Lehany B.E., MBA, MAusIMM Managing Director and Chief Executive Officer (to 30 June 2014)
Appointed as a Director March 2009. Resigned as a Director 30 June 2014
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.
Mr Lehany is a member of the Australian Institute of Company Directors.
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 of the Company.
Phillip C Lockyer M.Sc, AWASM, DipMETALL Non-Executive Director
Appointed as a Director December 2006. Resigned as a Director 31 March 2014
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
Western Desert Resources Limited
Swick Mining Services Limited
RTG Mining Inc
Former public company directorships in last 3 years
CGA Mining Limited
Focus Minerals Limited
Special responsibilities
Chairman of the Health, Safety, Environment and Community Committee (to 31 March 2014)
Member of the Audit Committee (to 31 March 2014)
Interest in shares and options
Mr Lockyer has a relevant interest in 75,031 fully paid ordinary shares of the Company.
Page 18
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Robert K Rae B.Com (Hons), FAICD Non-Executive Director
Appointed as a Director April 2008. Resigned as a Director 28 February 2014
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 (to 28 February 2014)
Member of the Audit Committee (to 28 February 2014)
Interest in shares and options
Mr Rae has a relevant interest in 140,000 fully paid ordinary shares of the Company.
Qualifications and experience of the Company secretary
Rowan Cole, B.Comm, CA, CIA, MBA, Grad. Dip AGC, Dip Inv Rel Company Secretary
Mr Cole joined St Barbara in 2010 as General Manager Corporate Services and was appointed as Deputy Company
Secretary in 2012 and as Company Secretary in 2014.
He has over 25 years’ experience across chartered accounting, retail banking, private and public companies. Mr Cole's
experience includes external, internal and IT audit, risk management, customer service delivery, marketing, strategy
formulation, execution and measurement, process and business improvement, financial and business reporting in senior
roles including general manager, head of risk and compliance, chief audit executive and most recently prior to joining St
Barbara as chief financial and risk officer of an ASX 300 company.
Information on Executives
Robert S (Bob) Vassie, B. Mineral Technology Hons (Mining), AICD Managing Director and Chief Executive Officer
Appointed as a Director 1 July 2014
Mr Vassie joined St Barbara as Managing Director and Chief Executive Officer in July 2014. He is a mining engineer with 29
years international mining industry experience. Prior to joining St Barbara, Mr Vassie was the Managing Director and CEO
at Inova Resources Limited (formerly Ivanhoe Australia Limited) and has 18 years’ experience in a range of senior
management roles with Rio Tinto. He has particular experience in operations management, resource development
strategy, mine planning, feasibility studies, business improvement, corporate restructuring and strategic procurement.
Garth Campbell-Cowan, B.Comm, Dip-Applied Finance & Investments, FCA Chief Financial Officer
Mr Campbell-Cowan is a Chartered Accountant with 30 years of experience in senior management and finance 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, internal audit, capital management, procurement and information technology. Prior to joining St Barbara, he was
Director of Corporate Accounting at Telstra and has held senior leadership roles with WMC, Newcrest Mining and ANZ.
Page 19
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Ross J Kennedy, BComm, Grad.Dip, ACA, FAICD, Chartered Secretary, MAusIMM Executive General Manager Corporate
Services/Company Secretary (to 28 March 2014)
Mr Kennedy has more than 15 years of experience as a senior company executive working with Australian and international
business operations. He has extensive experience as a Company Secretary including skills in governance, compliance, policy
and Board interaction. Mr Kennedy also has significant experience in managing complex corporate transactions as well as a
passion for external relations: including developing an investor relations brand aligned to corporate strategy, and building
strong, sustainable relationships with government leaders in developing countries.
Katie-Jeyn Romeyn, B.Mgt (Human Resource Management) Executive General Manager People and Business Services
Ms Romeyn joined St Barbara in 2007 from which time she has held a number of leadership roles. In March 2014
she was appointed Executive General Manager People & Business Services. In this role Ms Romeyn leads Human
Resources; Company Secretariat; Legal; Health, Safety, Environment and Community; and Risk for the Company.
Ms Romeyn has 15 years’ experience in the mining industry; prior to joining St Barbara, Katie-Jeyn worked for WMC
Resources, Rio Tinto and BHP Billiton.
Timothy J Lehany B.E., MBA, MAusIMM Managing Director and Chief Executive Officer (to 30 June 2014)
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.
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
(Scheduled)
B
A
10
10
10
10
10
10
10
10
7
7
6
6
8
6
5
4
Board
(Supplementary)
Audit Committee
A
3
3
3
3
3
1
1
-
B
3
3
3
3
3
2
2
1
A
4
4
4
-
3
3
-
-
B
4
4
4
-
3
3
-
-
Remuneration
Committee
B
A
5
5
-
-
5
5
5
5
-
-
3
3
4
2
-
-
Health & Safety
Committee
B
A
3
2
-
-
3
3
3
3
2
2
-
-
3
2
2
2
C Wise
T Lehany
D Bailey
E Donaghey
P Lockyer
R Rae
I Scotland
T Netscher
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
Page 20
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Remuneration report (Audited)
Introduction
This Remuneration Report describes the remuneration structure that applied for the 2014 financial year. The Report
provides details of remuneration paid for the 2014 financial year to Directors and the senior executives named in this
report with the authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly, collectively referred to as Key Management Personnel.
Overview of contents
1. Remuneration strategy
2. Response to vote against 2013 Remuneration Report
3. Decision making authorities for remuneration
4. Remuneration structure
5. Group performance
6. Remuneration paid
1. Remuneration Strategy
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 the Group strategy. The remuneration policy and related employment
policies and practices are aligned with this strategy.
The objectives of the Remuneration strategy for the 2014 financial year, consistent with the Group strategy, were to ensure
that:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
total remuneration for senior executives and each level of the workforce was market competitive
key employees were retained
total remuneration for senior executives and managers comprised an appropriate proportion of fixed
remuneration and performance linked at risk remuneration
performance linked at risk remuneration 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
remuneration for Non-Executive Directors preserved their independence by being in the form of fixed fees.
The remuneration strategy, policy and structure are directly linked to the development of strategies and budgets in the
Group’s annual planning cycle shown in the timetable below.
Annual Planning Timetable
Month
October
January
Strategy & Reporting
Annual strategy update
February
Half Year Financial Report
Remuneration
Review STI & LTI design framework
April
Budget setting framework
Set Remuneration review framework
July
August
October
Measure STI outcomes and determine award
Measure LTI outcomes and action any vested entitlements
Annual Financial Report
Set STI targets for following financial year
Annual Report
November
Annual General Meeting
Shareholder approval of LTI to be issued to MD&CEO
Page 21
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
2. Response to vote against 2013 Remuneration Report
DIRECTORS’ REPORT
At the Company’s Annual General Meeting of Shareholders convened on 26 November 2013, 69% of votes were in favour
of adoption of the 2013 Remuneration Report and 31% against.
As the majority required to pass this resolution was 75%, the motion was not carried and the Company received a “First
Strike” against the Remuneration Report.
In these circumstances, the Corporations Act 2001 requires St Barbara to include in this year’s Remuneration Report, an
explanation of the Board’s proposed action in response to that First Strike or, alternatively, if the Board does not propose
any action, the Board’s reason for such inaction.
In response to the First Strike, St Barbara has considered the views of shareholders and proxy advisors expressed to the
Chairman of the Remuneration Committee and senior executives in connection with the 2013 Remuneration Report.
Whilst the majority of shareholders and at least one proxy advisor supported the Report, the principal concern noted was
the payment of short term incentives to senior executives in a year when the Company as a whole did not perform well in
relation to market guidance nor relative to its peer group.
Since the 2013 Annual General Meeting the Board has taken the following steps:
(cid:120)
(cid:120)
(cid:120)
reduced Directors fees by 10% from 1 March 2014
the Short Term Incentive (STI) plan has been amended to include an absolute discretion of the Board to not pay an
STI, where the Company’s performance has been poor. In FY14 the Board applied its discretion not to award an
STI to senior executives.
the aggregate remuneration payable to senior executives has been reduced in three ways:
i)
ii)
the number of current senior executives is half the number at the time of the 2013 AGM, from six to three as
at the date of this report
the fixed component of the Managing Director and CEO’s remuneration was reduced by 10% from 1 March
2014, and the new Managing Director and CEO, Mr Bob Vassie, commenced with the Company on 1 July 2014
on a fixed remuneration of approximately 20% less than his predecessor
iii) the quantum of the allocation of performance rights to the Managing Director and CEO under the FY15 LTI has
been reduced by 25%.
In addition, there was no increase to senior executive remuneration during the 2014 financial year. The Board remains
confident that St Barbara’s remuneration policy and the level and structure of its senior executive remuneration are
suitable for the Group and its shareholders.
Second Strike
In the event that at the 2014 Annual General Meeting, votes against adoption of the 2014 Remuneration Report are 25% or
more, a Second Strike will occur.
Consequences of a Second Strike
Should a Second Strike occur, the Company is required to put a “spill” resolution to the AGM. In particular this requires a
meeting of shareholders either at the same AGM, or at a general meeting of shareholders to be held within 90 days of the
AGM, to vote on the re-election of all Non-Executive Directors. Further details of this process will be included in the 2014
Notice of Annual General Meeting.
Significant Board renewal has occurred in the last year. Of the six Directors in office at 22 August 2013 when the 2013
Remuneration Report was released, only two remain in office at the date of this report.
Page 22
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
DIRECTORS’ REPORT
Directors in office at date of
2013 Remuneration Report
S J C Wise
T J Lehany
Non-Executive Chairman
Managing Director & CEO
D W Bailey
Non-Executive Director
E A Donaghey Non-Executive Director
P C Lockyer
Non-Executive Director
R K Rae
Non-Executive Director
Directors in office at date of
2014 Remuneration Report
S J C Wise
R S Vassie
Non-Executive Chairman
Managing Director & CEO
D W Bailey
Non-Executive Director
I L Scotland
Non-Executive Director
T C Netscher
Non-Executive Director
3. Decision making authorities for remuneration
Remuneration strategy and policies are approved by the Board. They are aligned with, and underpin, the corporate
strategy. 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 Non-Executive Directors, the Managing Director and CEO, and the senior executives named in this report
with the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
collectively referred to as Key Management Personnel.
In addition, the Remuneration Committee oversees and reviews proposed levels of annual organisation remuneration
increases and key employee related policies. It also receives reports on organisation capability and effectiveness, skills,
training and development and succession planning for key roles.
Organisational Capability
and Scenario Planning
Key Workforce Policies
- equal opportunity
- diversity
Remuneration Committee
Oversight and design
Remuneration Design
- fixed vs variable
Remuneration levels for
Key Management Personnel
The members of the Remuneration Committee are all independent, Non-Executive Directors and as at the date of this
report comprised:
I L Scotland
D W Bailey
S J C Wise
-
-
-
Chair of Committee, Non-Executive Director
Non-Executive Director
Non-Executive Chairman
Mr Robert Rae was Chair of the Remuneration Committee until his resignation as a Director on 28 February 2014. Ms Betsy
Donaghey was a member of the Remuneration Committee until her resignation as a Director on 30 June 2014.
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.
Page 23
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
DIRECTORS’ REPORT
4. Remuneration structure
(a) Non-Executive Directors
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 compared with those 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 are not directly involved 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 maximum aggregate amount payable to all Non-Executive Directors is approved 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 6 of this report.
(b) Senior Executive Remuneration
The Group operates a performance based remuneration system through which the remuneration of senior executives is
linked to the financial and non-financial performance of the Group, including its share price.
Under the remuneration system the amount of performance linked 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.
The reward structures for the Group’s senior executives are strongly aligned with shareholders’ interests by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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
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 senior executives is comprised of fixed remuneration and performance
linked 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 senior 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.
The mix of fixed and at risk remuneration for senior executives is as follows:
2015
Seniority
Level 6 (CEO)
Level 5 (Exec GM)
Fixed
remuneration
45%
50%
At risk remuneration
STI(1)
22%
20%
LTI (2)
33%
30%
Total
remuneration
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 in Section 6.
Page 24
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
DIRECTORS’ REPORT
2014
Seniority
Level 6 (CEO)
Level 5 (Exec GM)
Fixed
remuneration
40%
50%
At risk remuneration
STI(1)
20%
20%
LTI (2)
40%
30%
Total
remuneration
100%
100%
(1)
(2)
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.
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 in Section 6.
(i) Fixed Remuneration = Base salary + superannuation + benefits
Fixed remuneration for each senior executive role is reflected against 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 senior executives, fixed remuneration = base salary + superannuation + benefits.
The base salary for each senior 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.
In addition to statutory superannuation contributions, senior executives may elect to contribute additional amounts,
subject to legislative limits.
Senior executives may receive benefits, including car parking and payment for certain professional memberships.
(ii) Performance Linked Remuneration - Short term incentives (STI)
The STI is an annual “at risk” component of remuneration for senior 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. The proportion of the STI earned is calculated
by multiplying the average result of the Group targets with the average result of an individual’s performance targets, where
target performance equals one. Group and individual targets are established by reference to the Group Strategy. The net
amount of any STI after allowing for applicable taxation, is payable in cash.
The calculation of STI earned can be summarised as follows:
STI earned = STI value at risk x (average result of Group STI targets x average result of Individual STI targets), where target
performance = 1.
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 2014 financial year STI target for profitability (as measured by EBITDA) 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 senior 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
Page 25
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
DIRECTORS’ REPORT
amount to be paid to each senior 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. The Board retains overall discretion on whether an STI should be paid in any given year.
Details of the FY14 STI are set out in Section 6 of this report.
(iii) Performance Linked Remuneration - Long term incentives (LTI)
LTIs are structured to reward senior 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. The St Barbara Performance
Rights Plan was approved at the 2010 Annual General Meeting.
In considering the LTI awards for the 2014 financial year (“FY14 Performance Rights”), 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, in the opinion of the Board, the same weight in our industry.
Vesting conditions of the Performance Rights issued vary from year to year as approved by the Board and set out in the
relevant Notice of Annual General Meeting, but over recent years have comprised measures for:
(cid:120)
(cid:120)
(cid:120)
total shareholder return
net growth in ore reserves, as a proxy for increasing mine life
return on capital employed in excess of the weighted average cost of capital, as a measure of capital efficiency and
generation of shareholder value.
Performance rights expire on the earlier of their expiry date, immediately upon the effective resignation date of the
relevant senior 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.
Details of the FY14 Performance Rights are set out in Section 6 of this report.
(iv) Summaries of service agreements for senior executives
Remuneration and other terms of employment for the Managing Director and CEO and the senior executives are formalised
in service agreements. These agreements provide, where applicable, for the provision of performance related cash
payments, other benefits including allowances, and participation in the St Barbara Limited Performance Rights Plan. Other
major provisions of the agreements relating to remuneration are set out below.
All contracts with senior executives may be terminated early by either party giving the required notice and subject to
termination payments as detailed below.
All service agreements with senior executives, including with the Managing Director and CEO comply with the provisions of
Part 2 D.2, Division 2 of the Corporations Act.
T J Lehany – Managing Director and CEO (to 30 June 2014)
1.
2.
Term of agreement – permanent employee, commenced 2 March 2009, ceased as Managing Director and CEO
30 June 2014, completion date 31 August 2014.
A termination settlement amount equivalent to four months total fixed remuneration (plus statutory accrued leave
entitlements) is payable upon completion on 31 August 2014.
R S Vassie – Managing Director and CEO (from 1 July 2014)
1.
2.
Term of agreement – permanent employee, commenced 1 July 2014.
Other than for serious misconduct or serious breach of duty, the Company or Mr Vassie may terminate employment
at any time with 6 months notice.
The other senior executives 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 total fixed remuneration. Each senior executive may terminate
employment at any time with 6 weeks notice.
Page 26
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
5. Group Performance
DIRECTORS’ REPORT
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
EBITDA
2010
$’000
2011
$’000
2012
$’000
2013
$’000
2014
$’000
296,760
359,575
541,189
568,443
533,828
33,793
125,538
204,034
(150,628)
(331,634)
Statutory net profit/(loss) after tax
(40,188)
68,629
130,230
(191,854)
(500,831)
Underlying net profit/(loss) after tax
14,547
54,431
120,920
29,285
(93,959)
$M
600
500
400
300
200
100
0
$M
200
100
0
-100
-200
-300
-400
-500
-600
Sales Revenue
EBITDA1
$M
300
200
100
0
-100
-200
-300
-400
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Statutory Net Profit/(Loss) After Tax
Underlying Net Profit/(Loss) After Tax1
$M
150
100
50
0
-50
-100
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
1 Underlying net profit after tax is statutory net profit after tax less significant items. EBITDA is earnings before interest revenue, finance costs,
depreciation and amortisation and income tax expense, and includes revenues and expenses associated with discontinued operations. These are non-
IFRS financial measures which have not been subject to review or audit by the Group’s external auditors. These measures are presented to enable
understanding of the underlying performance of the Group.
Gold Production
koz
400
300
200
100
0
2010
2011
2012
2013
2014
Page 27
ST BARBARA LIMITED
30 JUNE 2014
Remuneration report (Audited) - Continued
DIRECTORS’ REPORT
The Board has regard to the overall performance of the Company over a number of years in assessing and ensuring proper
alignment of the performance linked “at risk” remuneration framework to deliver fair and proper outcomes consistent with
the Company’s performance.
The table below provides the share price performance of the Company’s shares in the 2014 financial year and the previous
four financial years.
Share price history
2010
2011
2012
2013
2014
Period end share price ($ per share)
Average share price for the year ($ per share)
2.10
1.68
1.96
2.16
1.77
2.12
0.45
1.35
0.115
0.38
During the 2014 financial year, the Company’s daily closing share price ranged between $0.115 to $0.93 per share
(2013: $0.40 to $2.37 per share).
The Company’s primary measure of safety performance is the rolling 12-month average of the Total Recordable Injury
Frequency Rate. The FY14 result compares favourably with published mining industry TRIFR information.
Total Recordable Injury Frequency Rate
measured on a 12 month rolling basis
15
10
5
0
2010
2011
2012
2013
2014
6. Remuneration paid 2014
Details of the remuneration of Key Management Personnel of the Company during the year ended 30 June 2014 are set out
in the following tables.
Page 28
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S
ST BARBARA LIMITED
30 JUNE 2014
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
(a) Non-Executive Directors Fees
Non-Executive Director fees for the 2014 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.
At the start of the financial year they comprised:
(cid:120) Director fees of $100,000
(cid:120)
(cid:120)
an allowance for chairing a Board Committee of $17,500
a fee for serving as a member of a Board Committee of $8,500.
The Chairman’s fee for the 2014 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.
As part of Group wide cash management measures, Non-Executive Directors fees were reduced by 10% effective from
1 March 2014, resulting in the following lower fees:
(cid:120) Director fees of $90,000
(cid:120)
(cid:120)
an allowance for chairing a Board Committee of $15,750
a fee for serving as a member of a Board Committee of $7,650
Chairman’s fee of $223,200 (inclusive of all Board Committee commitments), as well as benefits in the form of a car park,
mobile telephone allowance and other administrative benefits.
For the second successive year, Directors resolved that individual Director fees will not increase for the subsequent
financial year and will remain frozen at the reduced level effective from 1 March 2014. The increase in statutory
superannuation from 1 July 2014 will be absorbed within the existing level of Directors fees.
(b) Senior Executive Remuneration
(i)
Fixed Remuneration - Base salary
In considering remuneration for senior executives for the 2014 financial year, the Remuneration Committee considered
reports from McDonald and Company, as well as industry trend data and other relevant remuneration information. There
was no increase in fixed remuneration for senior executives in the 2014 financial year, and no increase has been approved
for the 2015 financial year.
(ii) Performance Linked Remuneration - Short term incentives (STI)
The Board has discretion whether to pay an STI in any given year, irrespective of whether Company and Individual STI
targets have been achieved. In FY14 the Board applied its discretion not to award an STI to senior executives.
The Company STI target measures for the 2014 financial year were equally weighted and comprised:
STI Target
(a) Improve by 25% the Group-wide safety performance
(measured by Total Recordable Injury Frequency Rate)
Weighting Result
25%
Achieved
(b) Exceed by 10% the budgeted(1) underlying profit
25%
Not achieved
(measured by EBITDA)
(c) Exceed by 30% the budgeted cash flows
25%
Not achieved
(measured by the sum of Cash Flows from Operating
Activities and Cash Flows from Investing Activities)
TRIFR improved 32% from
6.0 to 4.1
Actual EBITDA below
budget EBITDA
Actual cash flow below
budget cash flow
(d) Discretionary factor determined by the Board, designed to
take into account unexpected events and achievements
during the year
25%
Zero
Discretionary factor of
zero applied due to Group
underperformance
(1) Normalised for movements in the gold price relative to gold price assumptions in the budget.
Page 31
ST BARBARA LIMITED
30 JUNE 2014
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
Individual performance measures varied according to the individual senior executive’s responsibilities, and for the 2014
financial year reflected a range of achievements aligned with the Company strategy. These included measures relating to
improving safety, specific integration activities, increasing production volumes and lowering production costs, achieving
exploration discoveries and implementing business improvement systems. There was also provision for a discretionary
factor for individual performance designed to take into account unexpected events and achievements during the year.
The table below describes the Short Term Incentives available to, and achieved by, executive Key Management Personnel
during the year. Amounts shown as “Actual STI” represent the amounts accrued in relation to the 2014 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 2014 financial year.
2014
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
T J Lehany(2)
G Campbell-Cowan
A Croll (3)
R Kennedy (4)
K Romeyn
P Uttley (5)
Target
$
442,637
194,560
128,613
115,659
144,522
96,297
Stretch(1)
$
885,274
389,120
257,226
231,318
289,044
192,593
$
Nil
Nil
Nil
Nil
Nil
Nil
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
(1) Inclusive of STI “Target”
(2) Mr Lehany ceased as MD and CEO 30 June 2014, 10% reduction in TFR from 1 March 2014
(3) Mr Croll ceased as a senior executive on 29 January 2014
(4) Mr Kennedy role as EGM Corporate Services was made redundant on 28 March 2014, and he ceased being a senior executive on that date.
(5) Role made redundant on 7 February 2014
(cid:120)
Performance Linked Remuneration - Long term incentives (LTI)
FY 12 Performance Rights ended 30 June 2014
The vesting period for the FY12 Performance Rights ended on 30 June 2014. The criteria for the FY12 Performance Rights
were published in the Notice of 2011 Annual General Meeting, and comprised a single performance measure of Relative
Total Shareholder Return over the 3 year period from 1 July 2011 to 30 June 2014.
The comparator group of companies for the FY12 Performance Rights comprises:
Company
Catalpa Resources Limited
Intrepid Mines Limited
Regis Resources Limited
Resolute Mining Limited
Kingsgate Consolidated Limited
Saracen Mineral Holdings Limited
OceanaGold Corporation
Ramelius Resources Limited
Silver Lake Resources Limited
Unity Mining Limited
The result of the Relative TSR of the FY12 Performance Rights for the period 1 July 2011 to 30 June 2014 was:
Relative TSR Performance
% of Performance Rights to vest
Result
< 50th percentile
50th percentile
>50th & < 75th percentiles
75th percentile and above
0%
50%
Pro-rata between 50% & 100%
100%
St Barbara achieved below the 50th percentile
RTSR, therefore none of the FY12 Performance
Rights vest
None of the remaining FY12 Performance Rights granted in respect of the FY12 year vested as at 30 June 2014, as they did
not meet the minimum Relative Total Shareholder Return performance criteria.
Page 32
ST BARBARA LIMITED
30 JUNE 2014
Remuneration Report (Audited) - Continued
DIRECTORS’ REPORT
Performance Rights granted as compensation in 2014.
FY14 Performance Rights
Performance rights issued in 2014 (‘FY14 Performance Rights‘) were granted under the St Barbara Limited Performance
Rights Plan approved at the 2010 Annual General Meeting, and details of the performance conditions were set out in the
Notice of 2013 Annual General Meeting. Performance rights issued to Mr Lehany, Managing Director & CEO, were also
approved by shareholders at the 2013 Annual General Meeting.
Key Features of FY14 Performance Rights
Vesting conditions
Performance conditions (equally weighted) for the three year period commencing 1 July 2013 to
30 June 2016 as set out below, relating to:
(cid:120)
(cid:120)
(cid:120)
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.
Other conditions
Issue price
Vesting date
Include continuing employment
10 day VWAP at start, 30 June 2013, $0.49
30 June 2016
Details of FY14 Performance Rights
The vesting of performance rights granted in respect of the FY14 Performance Rights is subject to continuing employment
as at the vesting date of 30 June 2016, and satisfying performance conditions measured over a three year vesting period
from 1 July 2013 to 30 June 2016 as set out below.
(i)
Performance rights pricing
The issue price of the performance rights is based on the 10 day volume weighted average price (VWAP) on the
ASX of the Company’s share price up to, and including, the last business day of the financial period immediately
preceding the period that the performance rights relate to.
FY14 Performance Rights are priced at $0.49 per right, based on the 10 day VWAP up to and including 30 June
2013.
(ii)
Performance conditions
The performance conditions for FY14 Performance Rights will be measured over a three year vesting period ending
on 30 June 2016. Vesting conditions include continuing employment as at the vesting date of 30 June 2016 and
satisfying conditions relating to:
(cid:120) Relative Total Shareholder Returns;
(cid:120) Net Growth in Ore Reserves, as a proxy for increasing mine life; and
(cid:120) Return on Capital Employed in excess of the weighted average cost of capital, as a measure of capital
efficiency and generation of shareholder value.
The above performance conditions are weighted equally.
(iii)
Percentage of relevant total fixed remuneration offered as LTIs for the 2014 financial year
Managing Director and Chief Executive Officer
Executive General Managers
General Managers
100%
60%
45%
The Board has the discretion to vary the relevant percentage each year, having regard to external advice and / or
relevant market benchmarks.
(iv)
An example of how performance rights are calculated for the 2014 financial year (assuming the maximum award
level) is set out below:
Executive Level 5 Total Fixed Remuneration (TFR)
LTI award value 60% of TFR
Performance rights issue price (10 day VWAP)
Performance rights to be granted ($240,000 ÷ $0.49)
$400,000 (for illustration only)
$240,000 (i.e. 60% of TFR)
$0.49
489,796
Page 33
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Remuneration Report (Audited) - Continued
(v)
Relative TSR
The Relative Total Shareholder Return (Relative TSR) is measured against a defined peer group of companies which
the Board considers compete with the Company for the same investment capital, both in Australia and overseas,
and which by the nature of their business are influenced by commodity prices and other external factors similar to
those that impact on the TSR performance of the Company.
The comparator group of companies for FY14 Performance Rights comprises:
Company
Evolution Mining Limited
Focus Minerals Ltd
OceanaGold Corporation
Ramelius Resources Limited
Kingsgate Consolidated Limited
Regis Resources Limited
Kingsrose Mining Limited
Medusa Mining Limited
Saracen Mineral Holdings Limited
Silver Lake Resources Limited
Northern Star Resources Ltd
Tanami Gold NL
At the discretion of the Board, the composition of the comparator group may change from time to time.
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. Where a comparator company
ceases to be listed on the ASX during the vesting period, the corresponding TSR is adjusted, taking into account the
period the ceasing company was listed and the average TSR of the remaining comparator companies.
The proportion of the FY14 Performance Rights that vest will be influenced by the Company’s TSR relative to the
comparator group over the three year vesting period commencing 1 July 2013 and ending 30 June 2016 as outlined
below:
Relative TSR Performance
Below 50th percentile
50th percentile
% Contribution to the Number of
Performance Rights to Vest
0%
50%
Between 50th & 75th percentiles
Pro-rata from 50% to 100%
75th percentile and above
100%
(vi)
Increase in Ore Reserves
The proportion of the FY14 Performance Rights that vest will be influenced by the Company’s increase in Ore
Reserves net of production over the three year vesting period commencing 1 July 2013 and ending 30 June 2016 as
outlined below:
Increase in Ore Reserves (net of production)
% Contribution to the Number of
Performance Rights to Vest
Negative growth
Depletion replaced
20% increase
0%
50%
100%
Ore reserves at the start of the three year vesting period on 1 July 2013 were 77,836,000 tonnes @ 2.1 g/t Au for
5,238,000 ounces of contained gold.
Page 34
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Remuneration Report (Audited) - Continued
(vii)
Return on Capital Employed (ROCE)
The proportion of the FY 14 Performance Rights that vest will be influenced by the ROCE achieved by the Company
over the three year vesting period commencing 1 July 2013 and ending 30 June 2016 as outlined below:
Return on Capital Employed (ROCE)
% Contribution to the Number of
Performance Rights to Vest
Less than or equal to the average annual weighted
average cost of capital (WACC) over the three year
period ending on 30 June 2016
WACC (calculated as above) + 3%
WACC (calculated as above) + 7%
0%
50%
100%
(viii)
Example of calculation of the number of FY14 Performance Rights to vest
Assuming the following measures over the three year vesting period ending 30 June 2016:
(cid:120) Relative TSR:
(cid:120)
(cid:120) ROCE
Increase in Ore Reserves (net of production)
70%
10%
WACC + 4%
then the following proportion of performance rights will vest:
(a)
Relative TSR
Actual score:
Calculation:
70th percentile
50% (for achieving the 50th percentile)
+ ((70% - 50%) (cid:121) (75% - 50%)) x (100% - 50%)
= 90%
(b)
(c)
(d)
Ore Reserves
Actual increase in Ore Reserves net of production:
Calculation:
50% (for achieving replacement of production)
10%
+ (10% (cid:121) 20%) x (100% - 50%)
= 75%
Return on Capital Employed (ROCE)
Actual ROCE:
Calculation:
WACC + 4%
50% (for achieving the 50th percentile)
+ ((4% - 3%) (cid:121) (7% - 3%)) x (100% - 50%)
= 62.5%
Combined score
(90% + 75% + 62.5%) (cid:121) 3 = 75.8%
Using the above example of an senior executive being issued with 489,796 performance rights based on the above
calculations, hypothetically 75.8% would vest, which equals 75.8% x 489,796 = 371,265.
Page 35
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Remuneration Report (Audited) - Continued
Performance Rights granted in 2014
Details on performance rights over ordinary shares in the Company that were granted as remuneration to each key
management person and details of performance rights that vested in the 2014 financial year are as follows:
2014
Number of
performance
rights granted
during 2014
Issue price
per
performance
right
Grant date
Expiry date
T Lehany (2)
G Campbell-Cowan
A Croll (3)
R Kennedy (5)
K Romeyn
P Uttley (4)
1,871,642
597,190
676,537
474,006
442,414
506,945
$0.49
$0.49
$0.49
$0.49
$0.49
$0.49
4 Dec 2013
29 Nov 2013
29 Nov 2013
29 Nov 2013
29 Nov 2013
29 Nov 2013
30 Jun 2016
30 Jun 2016
30 Jun 2016
30 Jun 2016
30 Jun 2016
30 Jun 2016
Fair value per
performance
right at grant
date
($ per share)(1)
nil
nil
nil
nil
nil
nil
Number of
performance
rights vested
during
FY2014
-
-
-
-
-
-
(1) The fair value of performance rights at grant date was determined using a Black-Scholes valuation to which a Monte Carlo simulation was applied to
determine the probability of the market conditions associated with the rights being met. This methodology complied with the requirements of Australian
Accounting standard AASB 2 Share Based Payments.
(2) Mr Lehany resigned as a Director and ceased as MD and CEO on 30 June 2014
(3) Mr Croll ceased as an executive on 29 January 2014
(4) Role made redundant on 7 February 2014
(5) Mr Kennedy’s role as EGM Corporate Services was made redundant on 28 March 2014, and he ceased being a senior executive on that date
Performance Rights On Issue
The numbers of rights over ordinary shares in the Company held directly, indirectly or beneficially during the financial year
by each key management person, including their related parties, are set out below:
2014
T Lehany
G Campbell-Cowan
A Croll
R Kennedy(6)
K Romeyn
P Uttley
Held at
1 July 2013
897,803
286,108
327,345
229,130
171,520
245,112
Granted as
compensation
1,871,642
597,190
676,537
474,006
442,414
506,945
Exercised during
the year
-
-
-
-
-
-
Other changes
during the year
(2,769,445) (1)
(146,472) (4)
(1,003,882) (2)
(118,374) (4)
(68,171) (4)
(752,057) (3)
Held at
30 June 2014 (5)
-
736,826
-
n/a
545,763
-
(1) Mr Lehany resigned as a Director and ceased as MD and CEO on 30 June 2014
(2) Mr Croll ceased as an executive on 29 January 2014
(3) Role made redundant on 7 February 2014
(4) Lapsed during the year
(5) The vesting of performance rights held at 30 June 2014 is subject to future performance conditions
(6) Mr Kennedy’s role as EGM Corporate Services was made redundant on 28 March 2014, and he ceased being a senior executive on that date..
Valuation of Performance Rights
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 2014 (FY14 Performance Rights), taking into account the
impact of the market condition (as discussed above), the estimated fair value was, for accounting purposes, $nil.
Further information on performance rights is set out in Note 37 to the Financial Statements.
Page 36
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Remuneration Report (Audited) - Continued
Share holdings
The numbers of shares in the Company held directly, indirectly or beneficially during the year by each key management
person, including their related parties, are set out below. There were no shares granted during the year as compensation.
Name
Note
Non-Executive Directors
S J C Wise
D W Bailey
E A Donaghey
P C Lockyer
T C Netscher
R K Rae
I L Scotland
(1)
(3)
(4)
(5)
(6)
Executive Director
T J Lehany
Senior Executives
A Croll
G Campbell-Cowan
R Kennedy
P Uttley
K Romeyn
(2)
(7)
(8)
(9)
Balance at the
start of the
year
Performance
rights vested
Purchased
Sold
Other changes
Balance at the
end of the
year
1,139,389
130,247
75,000
75,031
-
120,000
-
200,770
28,150
15,000
95,378
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
16,000
-
-
-
13,411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75,000)
(75,031)
-
(140,000)
-
1,139,389
130,247
n/a
n/a
-
n/a
16,000
(200,770)
n/a
(28,150)
-
(108,789)
(30,000)
-
n/a
15,000
n/a
n/a
-
(1) Resigned as a Director 30 June 2014
(2) Resigned as a Director and ceased as MD&CEO 30 June 2014
(3) Resigned as a Director 31 March 2014
(4) Appointed as a Director 17 February 2014
(5) Resigned as a Director 28 February 2014
(6) Appointed as a Director 30 September 2013
(7) Ceased as Chief Operating Officer 29 January 2014
(8) Role as EGM Corporate Services made redundant on 28 March 2014
(9) Role made redundant 7 February 2014
Loans to Directors and senior executives
There were no loans to Directors or senior executives during the financial year 2014.
Page 37
ST BARBARA LIMITED
30 JUNE 2014
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 2014 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 2014 was much lower
compared with the previous year for Australian Operations. At Leonora, there were two non-compliances externally
reported. Ongoing training, education and the implementation of new environmental management practices at the
Leonora Operations have contributed to further reductions in the number of environmental incidents, and increases in the
internal compliance rates for audits and inspections. None of the reported incidents resulted in adverse impacts on the
environment, penalties imposed by regulators or material costs for remediation.
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 operations. Further progress on this
will be facilitated through the implementation of the Environmental Management System at each site
Page 38
ST BARBARA LIMITED
Non-audit services
DIRECTORS’ REPORT
30 JUNE 2014
During the year the Company did not employ the auditor on any assignments in addition to their statutory audit duties. In
the prior year, 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 2014 financial year are set out in Note 27
to the financial statements.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee,
is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by
the auditor, as set out in Note 27 to the financial statements, did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
(cid:120)
(cid:120)
(cid:120)
All non-audit services were reviewed by the Audit Committee to ensure they do not impact the impartiality and
objectivity of the auditor;
No non-audit services were performed in the 2014 financial year and 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 40 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 as noted in this report.
(cid:120)
(cid:120)
On 10 July 2014; 75% of forecasted Leonora production from October 2014 to June 2015 was hedged using forward
contracts at a strike price A$1,415/oz
On 22 August 2014, the Company announced that it was entering into negotiations for the possible transfer of
ownership of the Gold Ridge mine to the Solomon Islands Government.
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 27th day of August 2014
Bob Vassie
Managing Director and CEO
Page 39
ST BARBARA LIMITED
30 JUNE 2014
DIRECTORS’ REPORT
Auditor’s Independence Declaration
Set text colour to white after inserting the auditor’s independence declaration
Page 40
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Financial Report Table of Contents
CONSOLIDATED INCOME STATEMENT ........................................................................................................................... 42
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................................................ 43
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................................. 44
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................................................. 45
CONSOLIDATED CASH FLOW STATEMENT ..................................................................................................................... 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................................................................. 47
DIRECTORS’ DECLARATION.......................................................................................................................................... 107
INDEPENDENT AUDIT REPORT .................................................................................................................................... 108
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 27 August 2014. The Company has the power to amend
and reissue the financial report.
Page 41
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2014
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
Net loss on disposal of assets
Other expenditure
Impairment losses and asset write-downs
Operating loss
Finance costs
Foreign exchange gain
Net realised/unrealised gain on derivatives
Loss before income tax
Consolidated
2014
$'000
2013
$'000
Notes
6
6
7
8
9
4,9
8
9
533,828
(395,682)
138,146
511,840
(318,058)
193,782
1,906
10,278
(21,297)
(23,634)
(20,199)
(108,691)
-
(791)
(8,409)
(410,556)
(443,247)
4,072
3,131
(21,144)
(19,253)
(18,561)
(92,812)
(17,261)
-
(6,287)
(309,170)
(283,503)
(44,702)
1,810
2,832
(22,892)
9,122
15,703
(483,307)
(281,570)
Income tax (expense)/benefit
10
(17,524)
82,517
Loss from continuing operations (net of tax)
(500,831)
(199,053)
Profit from discontinued operations (net of tax)
38
-
7,199
Loss attributable to equity holders of the Company
(500,831)
(191,854)
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)
36
36
36
36
(102.61)
(102.61)
(41.92)
(41.92)
(102.61)
(102.61)
(43.50)
(43.50)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
Page 42
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2014
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit/(loss):
Changes in fair value of available for sale financial assets
Changes in fair value of cash flow hedges taken to reserves
Gain on closure of cash flow hedge
Income tax on other comprehensive income
Foreign currency translation differences - foreign operations
Consolidated
2014
$'000
2013
$'000
(500,831)
(191,854)
18
(124)
(4,771)
11,665
1,407
722
-
(4,609)
11,342
(29,614)
Notes
25(a)
25(a)
25(a)
25(a)
25(a)
Items that will not be reclassified to the consolidated income statement
-
-
Other comprehensive income/(loss) net of tax(1)
8,718
(22,682)
Total comprehensive loss attributable to equity holders of the Company
(492,113)
(214,536)
(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 consolidated 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 43
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
Notes
Consolidated
2014
$'000
2013
$'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
Provisions
Total current liabilities
Non-current liabilities
Interest bearing borrowings
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
23
21
23
10
79,407
7,878
37,416
-
105
27,745
152,551
153,893
4,235
257,402
15,036
25,370
5,859
461,795
614,346
58,951
24,226
15,138
98,315
315,350
68,869
-
384,219
482,534
131,812
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
623,227
24
25(a)
25(b)
886,242
(16,988)
(737,442)
131,812
886,242
(25,002)
(238,013)
623,227
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Page 44
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T
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2014
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
2014
$'000
2013
$'000
540,050
584,716
(472,501)
(489,297)
(21,297)
(21,144)
1,720
(26,565)
(741)
(406)
3,811
(5,840)
(403)
(815)
Net cash inflow from operating activities
34
20,260
71,028
Cash Flows From Investing Activities:
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
Payments for development of mining properties
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
Proceeds from close out of gold options
Movement in restricted cash
Gold prepayment facility repayments
Gold prepayment facility repayment/settlement
Loans from other entities - drawdown
Loans from other entities – transaction and borrowing costs
Syndicated debt facility - transaction costs
Syndicated debt facility - draw down
Syndicated debt facility – repayment
Secured notes drawdown
Secured notes drawdown - transaction costs
Principal repayments
- finance leases
Net cash inflow from financing activities
- insurance premium funding
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Net movement in foreign exchange rates
1,340
(49,225)
(39,971)
1,444
13
(74,465)
(60,850)
17,648
-
(206,623)
(86,412)
(324,277)
38
40
-
8,500
10,378
(32,399)
(36,132)
83,452
(5,841)
-
-
-
-
-
(4,706)
(4,573)
18,679
(47,473)
117,383
9,497
79,407
2,503
-
(11,832)
(24,554)
-
-
-
(7,262)
150,000
(150,000)
240,200
(11,961)
(4,657)
(1,775)
180,662
(72,587)
185,242
4,728
117,383
Cash and cash equivalents at the end of the year
11
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
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FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
Summary of significant accounting policies ......................................................................................... 48
Note 1
New Standards adopted ....................................................................................................................... 60
Note 2
Financial risk management ................................................................................................................... 62
Note 3
Critical Accounting Estimates and Judgements .................................................................................... 68
Note 4
Segment Information............................................................................................................................ 73
Note 5
Revenue ................................................................................................................................................ 77
Note 6
Other income ........................................................................................................................................ 77
Note 7
Expenses ............................................................................................................................................... 78
Note 8
Significant items ................................................................................................................................... 79
Note 9
Income tax ............................................................................................................................................ 80
Note 10
Cash and cash equivalents .................................................................................................................... 82
Note 11
Trade and other receivables ................................................................................................................. 82
Note 12
Inventories ............................................................................................................................................ 82
Note 13
Deferred mining costs .......................................................................................................................... 82
Note 14
Available-for-sale financial assets......................................................................................................... 83
Note 15
Financial instruments ........................................................................................................................... 83
Note 16
Note 17
Property, plant and equipment ............................................................................................................ 85
Note 18 Mine properties .................................................................................................................................... 86
Exploration and evaluation ................................................................................................................... 86
Note 19
Trade and other payables ..................................................................................................................... 86
Note 20
Interest bearing borrowings ................................................................................................................. 87
Note 21
Derivative financial assets .................................................................................................................... 88
Note 22
Provisions ............................................................................................................................................. 88
Note 23
Contributed equity ............................................................................................................................... 89
Note 24
Reserves and accumulated losses ........................................................................................................ 90
Note 25
Parent Entity disclosures ...................................................................................................................... 92
Note 26
Remuneration of auditors .................................................................................................................... 93
Note 27
Contingencies ....................................................................................................................................... 93
Note 28
Commitments for expenditure ............................................................................................................. 94
Note 29
Related party transactions ................................................................................................................... 95
Note 30
Controlled entities ................................................................................................................................ 96
Note 31
Interests in joint arrangements ............................................................................................................ 97
Note 32
Events occurring after the balance sheet date ..................................................................................... 98
Note 33
Reconciliation of loss after income tax to net cash flows from operating activities ............................ 98
Note 34
Non-cash investing and financing activities.......................................................................................... 98
Note 35
Earnings per share ................................................................................................................................ 99
Note 36
Share-based payments ....................................................................................................................... 100
Note 37
Discontinued Operations .................................................................................................................... 102
Note 38
Disposal of subsidiary ......................................................................................................................... 103
Note 39
Business Combinations ....................................................................................................................... 104
Note 40
Goodwill .............................................................................................................................................. 106
Note 41
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ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 1
Summary of significant accounting policies
St Barbara Limited (the “Company” or “Parent Entity”) 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 2014 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 consolidated 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 Board of Directors approved the financial statements on 27 August 2014.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the following material
items:
(cid:120) Derivative financial instruments are measured at fair value;
(cid:120)
Share based payment arrangements are measured at fair value;
(cid:120) Available for sale assets are measured at fair value;
(cid:120) Rehabilitation provision is measured at net present value;
(cid:120)
Long service leave provision is measured at net present value; and
(cid:120) 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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1.2 Principles of consolidation
(i)
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of St Barbara Limited as at 30
June 2014 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies, and as a result has an exposure or rights to variable returns, 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
Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial
Position and Consolidated 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 is accounted for in the consolidated
financial statements using the equity method and is carried at cost by the Parent Entity.
For joint arrangements in which the Group has rights to the assets, and obligations for the liabilities relating to the
arrangements (joint operations), the proportionate interest in assets, liabilities and expenses are incorporated in the
consolidated financial statements under the appropriate headings.
For those joint arrangements in which the Group has rights to the net assets of the arrangement (joint ventures), the Group
accounts for the investment within the consolidated financial statements using the equity method. Within the separate
financial statements of the parent the investment is carried at cost.
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.
Details of unincorporated joint ventures and joint operations are set out in Note 32.
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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).
(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
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FINANCIAL REPORT
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.
(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.
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
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FINANCIAL REPORT
amount (see impairment policy, Note 1.10). 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.
(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.
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.
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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:
(cid:120)
(cid:120)
(cid:120)
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.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date,
are recognised subsequently if new information about facts and circumstances change.
(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.
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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.
1.9
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.
1.10
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 asset or a cash generating unit exceeds the recoverable amount. Impairment losses are
recognised in the income statement. Refer to Note 4 (iv).
1.11 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.
1.12 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.
1.13
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
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30 JUNE 2014
FINANCIAL REPORT
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.
1.14
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.
(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.
1.15 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). The gain or loss relating to the effective
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FINANCIAL REPORT
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.
1.16 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.
1.17 Property, plant and equipment
Buildings, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any
gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in
which they are incurred.
Depreciation of assets is calculated using the straight line method to allocate the cost or revalued amounts, net of residual
values, over their estimated useful lives, as follows:
- Buildings
10 – 15 years
- Plant and equipment
3 – 10 years
- Fixtures and fittings
10 – 15 years
Where the carrying value of an asset is less than its estimated residual value, no depreciation is charged. The assets’
residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount, if the asset’s carrying amount is greater
than its estimated recoverable amount (Note 1.10).
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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.
1.18 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.
1.19 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.
1.20 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.
1.21 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.
1.22 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.
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1.23 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 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.
1.24 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.
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1.25 Earnings per share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the reporting period, adjusted for bonus elements in ordinary shares issued during the reporting period.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
1.26 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.
1.27 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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1.28 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.
1.29 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.
1.30 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 2013, 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. AASB 9 Financial Instruments (December 2009), AASB 2010-7 and AASB 2009-11, Amendments to Australian Accounting
Standards arising from AASB 9,AASB 2013-9 Amendments to Australian Accounting Standards-Conceptual Framework,
Materiality and Financial instruments (December 2013) Part C; 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 International Accounting
Standard Board 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) is effective for annual reporting periods beginning on or after 1 January 2015.
II. AASB 2012-3 Amendments to Australian Accounting Standards-Offsetting financial assets and financial liabilities
Amendments to AASB 132 clarify when an entity has a legally enforceable right to set off financial assets and liabilities
permitting entities to present balances net on the balance sheet.
Note 2
The Company has adopted the following new and/or revised Standards, Amendments and Interpretations from 1 July 2013:
New Standards adopted
AASB 2011-4
AASB 2011-9
AASB CF 2013-1 and AASB
2013-9
Amendments to Australian Accounting Standards to remove individual key management
personnel disclosure requirements. The standard removes the individual key management
personnel disclosure requirement in AASB 124 ‘Related Party Disclosures’, as a result the
Group only discloses the key management personnel compensation in total and for each of
the categories required in AASB 124.
In the current year the individual key management personnel disclosure previously required
in AASB 124 is now disclosed in the remuneration report due to an amendment to
Corporations Regulations 2001 issued in June 2013.
Amendments to AASB 1048 arising from the withdrawal of Australian Interpretation 1039.
The withdrawal of Australian Interpretation 1039 ‘Substantive enactment of major tax bills
in Australia’ does not have any material impact on the consolidated financial statements.
This amendment has incorporated IASB’s Chapter 1 and 3 Conceptual Framework for
Conceptual Framework for Financial Reporting as an Appendix to the Australian Framework
for the preparation and presentation of financial statements. The adoption of these
amendments does not have a material impact on the consolidated financial statements.
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Note 2
New Standards adopted (continued)
AASB 10
AASB 11
AASB 12
AASB 13 and AASB 2011-8
Consolidated Financial Statements and AASB 2011-7 ‘Amendments to Australian Accounting
Standards arising from the consolidation and Joint Arrangements standards’. AASB 10
introduces a new approach to determining which investees should be consolidated The
adoption of this standard does not have a material impact on the consolidated financial
statements.
Joint Arrangements and AASB 2011-7 ‘Amendments to Australian Accounting Standards
arising from the consolidation and Joint Arrangements standards’. If parties have rights to
and obligations for underlying assets and liabilities, the joint arrangement is considered a
joint operation and partial consolidation is applied. Otherwise the joint arrangement is
considered a joint venture and they must use the equity method of accounting. The
adoption of this standard does not have a material impact on the consolidated financial
statements
Disclosure of Interests in Other Entities and AASB 2011-7 ‘Amendments to Australian
Accounting Standards arising from the consolidation and Joint Arrangements standards’. The
application of this standard has no material impact on the consolidated financial statements.
Fair Value Measurement ‘Amendments to Australian Accounting Standards arising from
AASB 13’. The standard explains how to measure fair value when required by other AASBs.
The impact of the change is listed below.
AASB 119 and AASB 2011-10 Employee Benefits (2011) ‘Amendments to Australian Accounting Standards arising from
AASB 119 (2011)’. Amended focus on but not limited to the accounting for defined benefit
plans. In addition, it changes the definition of short term and long term employee benefits
and some disclosure requirements. The application of these amendments has no material
impact on the consolidated financial statements.
AASB 2012-2
AASB 2012-5
Interpretation 20
Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets
and Financial Liabilities. The application of this amendment has no material impact on the
consolidated financial statements.
Amendments to Australian Accounting Standards arising from Annual Improvements 2009–
2011 Cycle. The application of this amendment has no material impact on the consolidated
financial statements.
Stripping Costs in the Production Phase of a Surface Mine (and related AASB 2011-12
‘Amendments to Australian Accounting Standards arising from Interpretation 20’). The
interpretation clarifies that surface mining companies will capitalise production stripping
costs that benefit future periods if certain criteria are met. The application of this
interpretation had no material impact on the consolidated financial statements.
The Adopted standards with the exception of those noted below have no material impact on the disclosure or the year end
financial report.
(a) Impact of the application of AASB 13 and AASB 2011-8
The Group has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair
value measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value
measurement requirements of AASB 13 apply to both financial instrument items and non-financial instrument items for
which other AASBs require or permit fair value measurements and disclosures about fair value measurements, except for
share-based payment transactions that are within the scope of AASB 2 ‘Share-based Payment’, leasing transactions that are
within the scope of AASB 117 ‘Leases’, and measurements that have some similarities to fair value but are not fair value
(e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).
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Note 2
New Standards adopted (continued)
(a)
Impact of the application of AASB 13 and AASB 2011-8 (continued)
AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair
value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another
valuation technique. Also, AASB 13 includes extensive disclosure requirements. AASB 13 requires prospective application
from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the
disclosure requirements set out in the Standard in comparative information provided for periods before the initial
application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures
required by AASB 13 for the 2013 comparative period, the application of AASB 13 has not had any material impact on the
amounts recognised in the consolidated financial statements.
Note 3
Financial risk management
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 that underpin Group Treasury policies and processes. The Treasury Risk Management
Committee assists and advises the Group Treasury function, Executive Leadership Team, Audit Committee and Board in
discharging their responsibilities in relation to forecasted risk profiles, risk issues, risk mitigation strategies and compliances
with Treasury policy. The Group Treasury regularly reports the findings to the Treasury Risk Management Committee and
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. Based upon sensitivity analysis, a movement in the average spot
price of gold during the year of +AUD$100 per ounce/(-AUD$100 per ounce) would have decreased/(increased) post tax
loss by $16,876,000/($16,876,000) respectively.
The Group has managed commodity price risk from time to time by using a combination of AUD denominated gold put
options and gold call options to create zero-cost option collar structures and gold forward contracts 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.
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Note 3
Financial risk management (continued)
(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 Treasury will manage the interest rate exposures according to the Board approved Treasury policy. Any decision to
hedge interest rate risk will be assessed in relation to the overall Group exposure, the prevailing interest rate market, and
any funding counterparty requirements. As at 30 June 2014, interest rates on interest bearing liabilities were
predominantly fixed as set out in note 16(b).
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:
(cid:120) Bought put options at A$1,425/oz
(cid:120)
Sold call options at A$1,615/oz
During financial year 2014, 6,083 ounces of put options were exercised (2013: call options – 39,252 exercised; put options –
5,417 ounces exercised). During financial year 2014, 6,083 ounces of call options expired (2013: call options – 30,000
ounces expired; put options – 63,835 ounces expired).
In July 2013, the outstanding call options of 104,665 ounces and 104,665 ounces of put options were unwound, with an
amount of $4,771,000 taken to the gold cash flow hedge reserve in the balance sheet to be amortised over the original
maturity profile of the options.
(ii) Leonora
In September 2013, the Company entered into a gold forward contract for 240,000 ounces of gold over a twelve-month
period to manage Australian dollar gold price risk associated with the estimated production from the Leonora mine at a
strike price of A$1,390 per ounce.
During financial year 2014, 174,544 ounces of gold were delivered to the gold forward contracts. As physical delivery of
gold is used to close out forward contracts, it negates the need to measure these contracts at fair value in accordance with
AASB 139.
The maturity profile of the gold forward contracts remaining as at 30 June 2014 is provided in the table below.
Strike Price
Leonora
A$1,390/oz
Total
ounces
6 months or
less
ounces
6 – 12
months
ounces
1 – 2 years
ounces
2 – 5 years
ounces
65,456
65,456
-
-
-
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Note 3
Financial risk management (continued)
(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
Impact on post-tax result(1)
Impact on gold cash flow
hedge reserve
net of tax(2)
+A$100 change in AUD spot price
-A$100 change in AUD spot price
2014
$’000
-
-
2013
$’000
(4,771)
7,597
2014
$’000
-
-
2013
$’000
672
(3,497)
(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 2014 was A$1,407 (2013 - 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 $nil of the trade receivables carrying amount at 30 June 2014 (2013:
$2,235,000), representing receivables owing from gold sales. 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 2014 were past
due.
Credit risks related to cash deposits and derivatives
Credit risk from balances with banks and financial institutions derivative counterparties is managed by the centralised
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 as per the Board approved Treasury Policy.
Derivatives transactions cover major 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.
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Note 3
Financial risk management (continued)
As at 30 June 2014, USD borrowings of US$325,000,000 translated at the year end USD:AUD foreign exchange rate to
$344,630,000 (2013: $273,523,000), excluding capitalised transaction costs of $14,893,000, were designated as a net
investment in foreign operations. Prior to the impairment write down at 30 June 2014, the net investment hedge with the
foreign operations was effective. As a result of the impairment write downs, from 1 July 2014, absent the establishment of
a new hedging relationship, movements due to foreign currency will no longer be recognised in the foreign currency
translation reserve, instead they will be recognised directly in the Income Statement.
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
2014
Cash and cash equivalents
Trade Receivables
Trade payables
Interest bearing liabilities
Net Exposure
Exposure to Currency
2013
Cash and cash equivalents
Trade Receivables
Trade payables
Interest bearing liabilities
Net Exposure
USD
$’000
25,236
653
(4,673)
(325,000)
(303,784)
USD
$’000
2,741
2,481
(16,774)
(327,459)
(339,011)
PGK
$’000
736
1,054
(8,827)
-
(7,037)
PGK
$’000
1,283
1,203
(7,753)
-
(5,267)
SBD
$’000
335
34
(7,576)
-
(7,207)
SBD
$’000
603
123
(5,960)
-
(5,234)
The exchange rates at the close of the period were as follows:
Closing rate as at
30 June 2014
30 June 2013
AUD/USD
0.943
0.914
AUD/PGK
2.243
1.917
AUD/SBD
6.843
6.301
Page 65
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 3
Financial risk management (continued)
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, PNG Kina and Solomon Island 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:
Impact on Loss(1) After Tax
(Decrease Loss)/Increase Loss
2014
000's
(30,377)
30,378
(704)
705
(722)
719
2013
000's
(25,927)
31,688
(479)
585
(476)
582
AUD/USD +10%
AUD/USD -10%
AUD/PGK +10%
AUD/PGK -10%
AUD/SBD +10%
AUD/SBD -10%
Note (1): There is no impact on equity as the foreign currency denominated assets and liabilities represent
cash, receivables, payables and borrowings. There are no derivatives.
Significant assumptions used in the foreign currency exposure sensitivity analysis above include:
(cid:120) Reasonably possible movements in foreign exchange rates.
(cid:120)
(cid:120)
(cid:120)
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.
(e)
Capital management
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
Total capital
2014
$’000
131,812
339,576
(79,407)
391,981
2013
$’000
623,227
328,092
(117,383)
833,936
The Group does not have a target debt/equity ratio. There were no changes in the Group’s approach to capital
management during the year.
The Group is not subject to externally imposed capital requirements other than normal banking requirements.
Cash and cash equivalents does not include cash held on deposit with financial institutions as security for bank guarantee
facilities totalling $1,577,000 (2013: $11,955,000) at the reporting date; the reduction reflected the introduction of the
Mining rehabilitation Fund Act 2012(WA), which reduced the requirement to hold unconditional performance bonds on
deposit.
Page 66
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 3
Financial risk management (continued)
The Company has a $2,000,000 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.
(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. The Group undertakes sensitivity analysis to stress test the operational cash flows, which
are matched with capital commitments to assess liquidity requirements. The capital management plan provides the
analysis and actions required in detail for the next twelve months and longer term. The maturity of non-current liabilities is
monitored within the cash management plan.
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
Senior Secured Notes(1)
Loans from other entities(1)
Finance lease liabilities
Trade and other payables
Maturity of financial liabilities - 2014
Less than
6 months
6 – 12
months
Between 1
and 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
11,764
3,787
2,519
58,951
77,021
11,764
23,374
2,356
-
335,697
64,602
5,492
-
37,494
405,791
-
-
-
-
-
359,225
91,763
10,367
58,951
256,048
73,689
9,839
58,951
520,306
398,527
(1) Excluding amortisation of capitalised transaction costs and discount.
$‘000
Senior Secured Notes(1)
Gold Prepayment Facility(2)
Finance lease liabilities
Trade and other payables
Maturity of financial liabilities - 2013
Less than
6 months
6 – 12
months
Between 1
and 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
12,413
21,525
3,017
88,658
12,143
21,525
2,625
-
370,786
21,525
8,141
-
125,613
36,293
400,452
-
-
-
-
-
395,342
64,575
13,783
88,658
262,274
53,809
12,009
88,658
562,358
416,750
(1) Excluding capitalised transaction costs and discount.
(2) Reflects nominal cash outflows (excludes any derivatives).
Page 67
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 3
Financial risk management (continued)
(g)
Fair value estimation
On-Balance Sheet
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of
the Group approximates their carrying value. The net fair value of other monetary financial assets and financial liabilities is
based upon market prices.
Fair values
The carrying amounts and the net fair values of financial assets and liabilities of the Group at balance date are set out in the
table below:
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 Notes(1)
-
Loans from other entities(2)
-
Lease liabilities
-
2014
Carrying
Amount
$’000
Net Fair
Value
$’000
2013
Carrying
Amount
$’000
Net Fair
Value
$’000
79,407
1,577
3,733
105
-
84,822
58,951
-
265,100
79,530
9,839
413,420
79,407
1,577
3,733
105
-
84,822
58,951
-
219,420
77,573
9,839
365,783
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
(1) The senior secured note amount excludes $8,136,000 of capitalised transaction costs and $916,000 discount on notes.
(2) Loans from other entities exclude $5,841,000 of capitalised transaction costs.
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.
Page 68
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 4
Critical Accounting Estimates and Judgements (continued)
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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.
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.
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 CGU is determined as the higher of
value-in-use or fair value less costs to sell, in accordance with significant accounting policy 1.10. These calculations require
the use of estimates, which have been outlined in significant accounting policy 1.10.
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 continued poor performance from the Simberi operations, the cessation of operations at Gold Ridge due to the
flooding event in April 2014, and the level of market capitalisation compared with the Group’s net assets represented
indicators 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 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 of the Group’s CGUs, inclusive of those CGUs in which goodwill is recognised.
Page 69
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 4
Critical Accounting Estimates and Judgements (continued)
(a)
Impairment testing
i. Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amounts of the
CGUs were based on the value-in-use methodology.
Value-in-use 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.
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. 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, operating costs and future capital expenditure. An adverse change in one or more of the assumptions
used to estimate value-in-use 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 2014 reporting date carrying value assessments:
Gold (Real US$ per ounce)
Gold (Real A$ per ounce)
AUD:USD exchange rate
2015-2019
$1,215/oz - $1,315/oz
$1,397/oz - $1,413/oz
0.93 declining to 0.85
Post-tax real discount rate (%) – Australia
Post-tax real discount rate (%) – Pacific Operations
9.28
11.34
Long term
2020+
$1,200/oz
$1,410/oz
0.85
9.28
11.34
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 of CGUs, the future cash flows are discounted using rates based on the Group’s estimated
real post-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 our determination of value in use, there are no unmined resources and exploration estimates included
within our valuation.
Page 70
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 4
Critical Accounting Estimates and Judgements (continued)
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 identified non-current asset impairments giving a total charge of A$410,556,000 million
after tax (2013: $309,170,000), comprising the charge at 31 December 2013 of $42,100,000 and the charge booked at 30
June 2014 of $368,456,000 (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
Impairments
Property, plant and equipment
Deferred mining costs
Mineral rights
Total asset impairment and write-downs
Tax effect
Total asset impairments and write downs after tax
Simberi
$’000
Gold Ridge
$’000
Total
$’000
7,594
16,748
24,342
102,846
-
104,850
215,290
100,434
3,032
75,052
195,266
203,280
3,032
179,902
410,556
-
410,556
The value-in-use of the Simberi CGU has been predominantly impacted by the operations taking longer and costing more to
reach profitable operational performance, and the removal of value initially attributed to estimated near mine exploration
included when using the fair value less costs to sell methodology in the prior year.
The value-in-use of the Gold Ridge CGU reflects the current suspension of operations and the uncertainty around future
operational capability.
(b)
Sensitivity Analysis
After recognising the asset impairment and write downs in respect of the Simberi and Gold Ridge CGUs, the recoverable
amount of these assets is assessed as being equal to their carrying amount as at 30 June 2014.
Any variation in the key assumptions used to determine recoverable amount may result in a change of the assessed
recoverable amount. If the variation in assumption had a negative impact on recoverable amount 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 recoverable
amount of each CGU in its functional currency that has been subject to impairment in the 2014 statutory accounts:
Decrease in recoverable amount resulting from:
US$100/oz decrease in gold price
0.50% increase in discount rate
Simberi
$’000
52,293
1,304
Gold Ridge(1)
$’000
-
-
(1) Production assumed to be zero, reflecting the current operational environment.
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 decline in the USD gold price could be 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.
Page 71
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 4
Critical Accounting Estimates and Judgements (continued)
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 1.26, the value of these provisions represents the discounted value of the present obligation to restore,
dismantle and rehabilitate each site. Significant judgement is required in determining the provisions for mine rehabilitation
and closure as there are many transactions and other factors that will affect the ultimate costs necessary to rehabilitate the
mine sites. The discounted value reflects a combination of management’s best estimate of the cost of performing the work
required, the timing of the cash flows and the discount rate.
A change in any, or a combination of, the key assumptions used to determine the provisions could have a material impact
on the carrying value of the provisions (refer to Note 23). The provision recognised for each site is reviewed at each
reporting date and updated based on the facts and circumstances available at the time. Changes to the estimated future
costs for operating sites are recognised in the balance sheet by adjusting both the restoration and rehabilitation asset and
provision.
In estimating the rehabilitation provision at 30 June 2014, the following assumptions were made:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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
Estimates of future taxable profits are based on forecast cash flows from operations. At 30 June 2014 losses not recognised
amounted to $150,723,000 (tax effected) relating to Pacific Operations entities in 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
In prior periods, fair value of gold options bought and sold, have been determined using a ‘Level 2’ valuation method
involving the use of a generally accepted option valuation model: inputs were 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 required the use of estimates and
assumptions. Any changes in assumptions in relation to gold prices and volatilities could have had a material impact on the
fair valuation attributable to the gold collar structure in prior periods. 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.
Page 72
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 4
Critical Accounting Estimates and Judgements (continued)
ix. Onerous provision
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 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. During February 2014, the provision balance of $6,840,000 relating to Gold Ridge
production was released to the Income Statement following the refinancing of the Gold Prepayment Facility with RK Mine
Finance, which resulted in the cancellation of the purchase agreement with respect to Gold Ridge. The remaining provision
of $4,602,000 relating to Simberi production will be released to the Income Statement over the life of the contract.
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 three operational business units: Leonora Operations, Gold Ridge Operations and Simberi Operations. The
operational business units are managed separately due to their separate geographic regions.
The Leonora Operations comprise underground gold mining operations in Western Australia, consisting of the Leonora
processing plant, and the Gwalia and King of the Hills mines which were previously reported as separate reportable
segments. Amendments to the operations’ reporting structure in the year has changed the focus of review; reflected in the
segment table below. The Simberi and Gold Ridge open pit gold mines were added as reportable segments in the prior year
as a result of the acquisition of Allied Gold Mining Plc from 7 September 2012.
The Group’s Executive Leadership Team reviews the results of all operations regularly, 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.
Page 73
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ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 5 Segment Information (continued)
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
2014
$’000
60,460
35,279
49,857
264,043
67,665
2013
$’000
114,190
106,099
137,460
74,903
71,330
% of external revenue
2013
2014
%
%
11.3
6.6
9.3
49.5
12.7
20.5
19.0
24.6
13.4
12.8
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 revenue and other income – continuing operations
Continuing operations
Loss
Total loss for reportable segments
Other income and revenue
Exploration expensed
Unallocated depreciation and amortisation
Finance costs
Net fair value movements on gold options
Amortisation of realised gain on settled hedges
Corporate and support costs
Foreign exchange gain
Loss on disposal of assets
Expenditure associated with acquisitions
Other expenses
Consolidated
2014
$’000
2013
$’000
533,828
1,906
10,278
511,840
4,072
3,131
546,012
519,043
Consolidated
2014
$’000
2013
$’000
(398,172)
(223,941)
12,184
(21,297)
(3,128)
(44,702)
-
2,832
(23,634)
1,810
(791)
-
(8,409)
7,203
(21,144)
(2,819)
(22,892)
15,703
-
(19,253)
9,122
-
(17,261)
(6,288)
Consolidated loss before income tax – continuing operations
(483,307)
(281,570)
Page 75
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 5 Segment Information (continued)
Consolidated
Assets
Total assets for reportable segments
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
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)
Provisions (current)
Interest bearing liabilities (non-current)
Provisions (non-current)
Net deferred tax liabilities
Consolidated total liabilities
2014
$’000
511,701
76,888
7,167
105
3
6,857
-
5,859
5,766
2013
$’000
939,882
109,446
21,637
88
3,077
11,437
11,077
27,231
6,487
614,346
1,130,362
Consolidated
2014
$’000
109,087
29,220
24,226
4,106
315,350
545
-
2013
$’000
118,944
53,203
42,612
4,989
285,480
1,031
876
482,534
507,135
Page 76
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 5 Segment Information (continued)
Year ended 30 June 2014
Reportable
segment totals
$’000
Unallocated
$’000
Consolidated
totals
$’000
(105,563)
(3,128)
(108,691)
(86,036)
(3,160)
(89,196)
Year ended 30 June 2013
Reportable
segment totals
$’000
Unallocated
$’000
Consolidated
totals
$’000
(89,993)
(2,819)
(92,812)
(129,111)
(2,581)
(131,692)
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
Consolidated
2014
$'000
530,954
2,874
533,828
1,720
186
1,906
535,734
2013
$'000
508,695
3,145
511,840
3,811
261
4,072
515,912
Revenue from discontinued operations (note 38)
-
56,603
Note 7
Other income
Profit on sale of assets
Royalties
Write back of onerous provision (Note 9)
Contingent consideration received on sale of Southern Cross (Note 9)
Other income
Other income from continuing operations
Consolidated
2014
$'000
49
1,565
6,840
1,444
380
10,278
2013
$'000
14
338
-
-
2,779
3,131
Page 77
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 8
Expenses
Consolidated
(Loss)/Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Amortisation
Mine properties and mine development costs
Deferred waste stripping
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))
2014
$'000
2,632
27,003
29,635
70,783
33
5,232
722
2,286
79,056
108,691
26,565
3,575
741
10,800
3,021
44,702
89,476
6,932
698
97,106
2013
$'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
Rental expense relating to operating leases
Lease payments
2,074
1,781
Page 78
ST BARBARA LIMITED
30 JUNE 2014
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 (Note 4)
Included within net realised/unrealised gains on derivatives
Net unrealised gain on gold cash flow hedges
Realised gain on gold cash flow hedges(1)
Included within borrowing costs(2)
Borrowing costs written off
Expenses associated with acquisitions
Integration costs
Allied Gold acquisition costs
Redundancy costs
Redundancy costs (3)
Within Mine operating costs
Within Exploration expenses
Within Corporate and support costs
Included within other income
Onerous provision written back(4)
Contingent consideration received on sale of Southern Cross(5)
Total significant items for continuing operations – pre tax
Total significant items for continuing operations – post tax
Discontinued operations (see note 38)
Profit on sale of Southern Cross
Results from Southern Cross Operations
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
Consolidated
2014
$'000
2013
$'000
(410,556)
(309,170)
-
2,832
2,832
14,205
1,498
15,703
(640)
(5,678)
-
-
-
-
(7,268)
(7,862)
(2,131)
(17,261)
(1,619)
(842)
(2,752)
(5,213)
6,840
1,444
8,284
-
-
-
-
-
-
-
(405,293)
(316,406)
(406,872)
(228,338)
-
-
-
-
22,109
(11,250)
10,859
7,199
(405,293)
(305,547)
(406,872)
(221,139)
(1) Net realised/unrealised gain from gold cash flow hedges
Represents the amount of the gain from the close out of the gold option collar amortised during the year. The collar was closed out in July 2013 for cash
proceeds of $8.5 million, resulting in a gain of $4.2 million. In accordance with accounting standards, this gain is deferred to an equity reserve and
amortised over the original maturity profile of the collar tranches closed out.
(2) Capitalised borrowing cost written off
In the current year, as a result of the restructuring of the Gold Prepayment Facility, the borrowing costs associated with the Facility were written off to the
Income Statement.
Page 79
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 9
Significant items (continued)
(3) Redundancy costs
During the year, the Group restructured its Simberi operation, and Corporate and Discovery & Growth structures, resulting in redundancy payments.
(4) Onerous provision written back
On acquisition of Allied Gold a provision was raised for an onerous provision relating to the sale of 30% of the production from Simberi and Gold Ridge
with RK Mine Finance, using a spot gold price selected from the twelve days prior to settlement of the gold sale. During February 2014, the provision
relating to Gold Ridge production was released following the refinancing of the Gold Prepayment Facility with RK Mine Finance, which resulted in the
cancellation of the purchase agreement with respect to Gold Ridge.
(5) Southern Cross disposal proceeds
During the year, the Company received $1.5 million (excluding transaction costs) from Hanking Gold Mining Pty Ltd in relation to the sale of the Group’s
Southern Cross operations in the prior financial year. The proceeds were contingent consideration received upon satisfaction of certain undertakings by
the Company.
Note 10
Income tax
(a)
Income tax expense/ (benefit)
Current tax (benefit)/expense
Under/(Over) provision in respect of the prior year
Deferred income tax expense/(benefit)
Total income tax expense/(benefit) for continued and discontinued
operations
Comprising of:
Income tax expense/(benefit) for continued operations
Income tax expense for discontinued operations
(b)
Numerical reconciliation of income tax expense/(benefit) to prima facie tax payable
Consolidated
2014
$'000
2013
$'000
(4,923)
705
21,742
32,884
(3,555)
(108,186)
17,524
(78,857)
17,524
-
(82,517)
3,660
Consolidated
2014
$'000
2013
$'000
(483,307)
(144,992)
(281,570)
(84,471)
270
209
-
(2,116)
-
-
-
-
(9,183)
-
126,644
46,692
17,524
496
290
2,960
3,106
(36)
(2,519)
(5,637)
(3,555)
(6,792)
1,202
-
12,439
(82,517)
Loss before income tax benefit – continuing 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
Non-recognition/reversal of DTAs relating to impairments
Current year losses not recognised and prior year DTAs
Income tax expense/(benefit)
Page 80
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 10
Income tax (continued)
(c)
Deferred tax balance
Deferred tax assets
Tax losses
Provisions and accruals
Cash flow reserve
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
Investments at fair value
Hedges at fair value
Total
Tax effect @ 30%
Net deferred tax balance
Comprising of:
Australia – net deferred tax assets/(liabilities)
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
Property, plant and equipment
Consumables
Other
Total
Tax effect @ 30%
Page 81
Consolidated
2014
$'000
2013
$'000
159,518
39,284
1,407
249
835
7,625
208,918
62,675
346
21,187
139,800
21,721
6,296
37
-
189,387
56,816
5,859
214,344
62,139
-
212
12,003
187,359
476,057
142,817
405
69,730
272,694
16,414
17,866
-
11,096
388,205
116,462
26,355
Consolidated
2014
$'000
2013
$'000
5,859
-
(876)
27,231
502,410
33,348
5,147
6,780
315,650
21,537
2,765
887,637
266,291
263,772
516
51,397
9,909
-
-
-
325,594
97,678
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 11
Cash and cash equivalents
Cash at bank and on hand
Term deposits
Consolidated
2014
$'000
68,985
10,422
79,407
2013
$'000
25,755
91,628
117,383
(a) Cash at bank and on hand
Cash at bank at 30 June 2014 invested “at call” was earning interest at an average rate of 2.7% per annum (2013: 2.0% per annum).
(b) Term Deposits
The deposits at 30 June 2014 were earning interest at rates of between 3.5% and 3.6% per annum (2013: rates of between 3.7% and 4.25% 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 2014, the
average time to maturity was 69 days (2013: 40 days), with $nil maturing between 90 to 180 days (2013: $34,583,000) from balance date.
Note 12
Trade and other receivables
Current assets
Trade receivables
Other receivables
Restricted cash(1)
Prepayments
Consolidated
2014
$'000
661
3,072
1,577
2,568
7,878
2013
$'000
3,919
3,905
11,955
3,379
23,158
(1) Cash held on deposit with the Commonwealth Bank of Australia secures $98,000 for bank guarantees as at 30 June 2014 (2013: $123,000) and the
remaining $1,479,000 (2013: $11,832,000) 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.
Note 13
Inventories
Consumables
Ore stockpiles
Gold in circuit
Bullion on hand
Consolidated
2014
$'000
17,716
1,241
11,141
7,318
37,416
2013
$'000
41,972
4,351
7,915
9,757
63,995
(a)
Lower of cost and net realisable value
At 30 June 2014, ore stockpiles, gold in circuit and consumables are net of impairment losses as disclosed in Note 4. Bullion
on hand of $7,318,000 was valued at net realisable value (2013: $9,757,000).
Note 14
Deferred mining costs
Current
Deferred operating mine development
Non-current
Deferred operating mine development
Page 82
Consolidated
2014
$'000
2013
$'000
27,745
32,411
4,235
1,229
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 15
Available-for-sale financial assets
Current
At beginning of year
Additions
Revaluation gain/(loss) taken to equity
Effects of movement in exchange rates
(a)
Listed securities
Consolidated
2014
$'000
88
-
18
(1)
105
2013
$'000
154
51
(124)
7
88
Available-for-sale financial assets as at 30 June 2014 consisted of publicly traded shares in companies listed on the
Australian Securities Exchange.
Note 16
Financial instruments
(a)
Credit Risk Exposures
Refer Note 3 for the Group’s exposure to credit risk.
(b)
Interest Rate Risk Exposures
The Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in
the following tables. Exposures arise predominantly from assets and liabilities applying variable interest rates, as the Group
intends to hold fixed rate assets and liabilities to maturity.
2014
Fixed Interest Maturing in
Floating
Interest
rate $’000
1 year or
less
$’000
Over 1 to 5
years
$’000
Non-
interest
bearing
$’000
Financial assets
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables
Available for sale financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Finance lease liabilities
Loans from other entities
Senior secured notes
Weighted average interest rate
Net financial assets/(liabilities)
Total
$’000
79,407
1,577
3,733
105
84,822
58,951
9,839
73,689
256,048
398,527
-
-
-
-
-
n/a
-
5,359
-
256,048
261,407
8.83%
-
-
3,733
105
3,838
n/a
58,951
179
-
-
59,130
n/a
(261,407)
(55,292)
(313,705)
68,985
-
-
-
68,985
1.51%
-
-
73,689
-
73,689
8.50%
(4,704)
10,422
1,577
-
-
11,999
3.55%
-
4,301
-
-
4,301
6.71%
7,698
Page 83
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 16
Financial instruments (continued)
(b)
Interest Rate Risk Exposures (continued)
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%
-
-
-
-
-
91,628
11,955
-
-
-
103,583
3.98%
-
4,218
38,394
-
42,612
n/a
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)
The Group determines fair values of various financial assets and financial liabilities as listed below.
a) Fair value of the Group’s financial asset and liabilities that are measured at fair value on a recurring basis:
The Group has financial assets and liabilities measured at fair value at the end of each reporting period. The following table
gives information about how the fair values of these assets are assessed.
Financial
assets/liabilities
Available for
sale financial
assets (shares)
Gold cap/floor
liability
Fair value as at
30/06/14
30/06/13
Fair Value
hierarchy
Valuation technique
and key inputs
Significant
unobservable
input
Relationship of
unobservable
inputs to fair
value
$105,000
$88,000
Level 1
Nil
($5,163,071)
Level 2
Quoted bid price in
an active market
Model based upon
market observable
data
N/A
N/A
N/A
N/A
Gold Forward
asset
The Group has senior secured notes and other loans valued at amortised cost, the fair values of which would be
determined using models based upon market observable data; a level 2 fair valuation methodology under AASB 13.
$12,289,727
Level 2
N/A
Nil
N/A
Model based upon
market observable
data
Page 84
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 17
Property, plant and equipment
Non-current – net written down value
Land and buildings
Plant and equipment
Consolidated
2014
$'000
2013
$'000
19,124
134,769
153,893
33,137
306,724
339,861
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
Asset impairments and write downs
Effects of movement in foreign exchange rates
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
Amortisation of leased assets
Asset impairments and write downs
Effects of movement in foreign exchange rates
At the end of the year
Total
(a)
Security
Consolidated
2014
$'000
2013
$'000
33,137
241
-
(2,632)
-
(11,450)
(172)
19,124
306,724
50,465
-
(2,082)
(27,003)
(2,286)
(191,830)
781
134,769
153,893
18,405
802
27,352
(2,952)
(1,295)
(9,175)
-
33,137
85,523
90,525
293,261
(3,735)
(27,341)
(744)
(137,544)
6,779
306,724
339,861
As at 30 June 2014, plant and equipment with a carrying value of $3,141,000 (2013: $11,459,000) was pledged as security
for finance leases (Note 21). In accordance with the security arrangements the senior secured notes and loans from
RK Mine Finance are secured by the assets of St Barbara Limited; the security does not include the assets of the Pacific
operations.
Page 85
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Consolidated
2014
$'000
288,936
39,971
(71,505)
-
-
257,402
209,957
-
547
(5,232)
(179,902)
25,370
2013
$'000
289,647
60,850
(54,279)
(6,352)
(930)
288,936
-
336,450
-
(9,346)
(117,147)
209,957
Consolidated
2014
$'000
15,036
-
15,036
2013
$'000
15,474
(438)
15,036
Consolidated
2014
$'000
56,597
2,354
58,951
2013
$'000
85,474
3,184
88,658
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 due to business combination (refer Note 40)
Reallocation of purchase price on business combination
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
Disposals
At end of the year
Note 20
Trade and other payables
Current
Trade payables
Other payables
Page 86
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 21
Interest bearing borrowings
Current
Secured
Lease liabilities (Note 29)
Loans from other entities
Gold prepayment facility
Total current
Non-current
Secured
Lease liabilities (Note 29)
Senior secured notes (net of transaction costs)
Loans from other entities
Gold prepayment facility
Total non-current
Total interest bearing liabilities
Interest rate risk exposures
Consolidated
2014
$'000
2013
$'000
4,343
19,883
-
24,226
4,218
-
38,394
42,612
5,496
256,048
53,806
-
315,350
339,576
7,791
262,274
-
15,415
285,480
328,092
Details of the Group’s exposure to interest rate changes on borrowings are set out in Note 3 and Note 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 performance bonds. At 30 June 2014, restricted cash for this purpose amounted to
$1,577,000 (2013: $11,955,000).
Gold prepayment facility
The gold prepayment facility comprised a gold loan and an embedded derivative which were settled concurrently with each
repayment, and therefore disclosed as a single financial liability measured at fair value. The gold prepayment facility was
repaid through the delivery of gold ounces in accordance with a monthly amortisation profile. The gold prepayment facility
was settled in March 2014.
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 2014. The related
transaction costs capitalised against the borrowings amounted to $10,956,151 and are being amortised over the period to
15 April 2018.
Loans from other entities
In March 2014, SBM executed a US$75 million loan facility with RK Mine Finance. The first tranche of US$52,775,000 was
drawn down on 7 March 2014 to settle the Gold Prepayment Facility of US$31,490,000 and to strengthen the cash position
of the Group. The second tranche of US$22,225,000 was drawn down on 30 May 2014. The facility is for 33 months and
capital will be repaid quarterly starting in March 2015. The agreed interest rate for the facility is the 3 month London
Interbank Offered Rate (“LIBOR”) plus 7.5% p.a. The LIBOR has a floor of 1%p.a. The facility is secured by the Group’s
Australian assets under the existing senior secured notes security trust structure and has priority payment status. The
related transaction costs capitalised against the loan amounted to $5,840,563 and are being amortised over the period to
31 December 2016.
Page 87
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 22
Derivative financial assets
Current assets
Fair value of gold option collar
(a)
Instruments used by the Group
Consolidated
2014
$'000
2013
$'000
-
11,077
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, the Group obtained an independent valuation of each option tranche
within each collar. The valuation was performed using a generally accepted option valuation model where inputs were
based on market observable data for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices).
Each tranche was 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
Provision for redundancy payments
Provision for rehabilitation
Other provisions
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
Page 88
Consolidated
2014
$'000
4,153
2,446
1,340
1,015
6,184
15,138
2013
$'000
4,828
1,658
-
2,383
7,869
16,738
Consolidated
2014
$'000
62,857
2,010
4,002
68,869
2013
$'000
58,713
2,600
11,458
72,771
Consolidated
2014
$'000
61,096
-
-
3,021
-
(50)
(195)
63,872
2013
$'000
33,765
26,544
(16,852)
3,545
13,647
(3,737)
4,184
61,096
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 23
Provisions (continued)
Other provisions included a provision booked at fair value on acquisition of Allied Gold Plc in recognition of specific
arrangements for the sale of gold production from the Simberi and Gold Ridge mines under the terms of the Gold
Prepayment Facility. The Gold Prepayment Facility dictated that the counterparty to the this Facility has the right to
purchase 30% of the Simberi and Gold Ridge production (over and above the commitment to deliver to the repayment of
the Facility) for five years, and 25% for the following five years, using a spot gold price selected from the twelve days prior to
settlement of the gold sale. The Gold Prepayment Facility was restructured during the current year, resulting in liquidation
of such right in relation to Gold Ridge production. Consequently, the provision balance of $6,840,000 relating to the Gold
Ridge right was written back to the Income Statement.
Note 24
Contributed equity
(a)
Share capital
2014
Shares
2013
Shares
2014
$’000
2013
$’000
Ordinary shares - fully paid(1)
488,074,077
488,074,077
886,242
886,242
(1) The Company does not have par value in respect of its issued shares. All issued shares are fully paid.
(b)
Movements in ordinary share capital:
Date
1 July 2013
Details
Opening balance
Nil movement during the year
Number of
shares
$’000
488,074,077
886,242
30 Jun 2014
Closing balance
488,074,077
886,242
(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.
Page 89
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 25
Reserves and accumulated losses
(a)
Reserves
Reserves
Share based payment reserve
Investment fair value reserve
Gold hedge and other cash flow reserves
Foreign currency translation reserve
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
Gain on settlement of the hedge
Tax effect of fair value and other 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 attributable to members of the Company
Transferred from share based payment reserve
Balance at end of year
Page 90
Consolidated
2014
$'000
437
(138)
985
(18,272)
(16,988)
2013
$'000
1,141
(156)
3,627
(29,614)
(25,002)
Consolidated
2014
$’000
1,141
698
(1,402)
-
437
(156)
18
-
(138)
3,627
(4,771)
-
1,407
722
985
2013
$’000
2,996
963
-
(2,818)
1,141
(67)
(124)
35
(156)
(3,394)
(1,711)
13,376
-
(4,644)
3,627
(29,614)
11,342
(18,272)
-
(29,614)
(29,614)
Consolidated
2014
$'000
(238,013)
(500,831)
1,402
(737,442)
2013
$'000
(48,977)
(191,854)
2,818
(238,013)
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 25
Reserves and accumulated losses (continued)
(c)
Share based payments reserve
The share based payments reserve is used to recognise the fair value rights issued to executives and employees but not
exercised. During the year, $1,402,000 previously recognised in the share based payment reserve for 1,437,646
performance rights which expired during the year were transferred as a gain to accumulated losses (2013: gain of
$2,818,000 for expired options). 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 reserves
In the prior year, a mark-to-market valuation of the Group’s gold bought put options and sold call options (the “collar
structure”) was performed. Where the hedge was effective, changes in fair value relating to the intrinsic portion of the
valuation were recognised in the gold cash flow hedge reserve. The cashflow reserve balance as at June 2014 represents
the amount of the gain from the close out of the gold option collar unamortised during the year. The collar was closed out
resulting in a gain, which was deferred to an equity reserve and is amortised in accordance with the original maturity
profile of the collar tranches closed out (refer Note 9).
(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 91
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 26
Parent Entity disclosures
As at, and throughout, the financial year ended 30 June 2014, the parent company of the Group was St Barbara Limited.
(a)
Financial statements
Results of the parent entity
Loss after tax for the year
Other comprehensive income
Total comprehensive income for the year
Parent Entity
2014
$'000
2013
$'000
(489,261)
(196,307)
(2,642)
11,549
(491,903)
(184,758)
Other comprehensive income is set out in the Consolidated Statement of Comprehensive Income.
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Share capital
Share based payments reserve
Investment fair value reserve
Gold cash flow hedge reserve
Accumulated losses
Total equity
(b)
Parent entity contingencies
Parent Entity
2014
$'000
2013
$'000
128,833
657,655
186,060
986,127
77,231
515,729
64,079
348,950
886,242
886,242
435
(148)
985
1,141
(148)
3,627
(745,588)
(253,685)
141,926
637,177
Refer to Note 28 for contingent liabilities which may impact the parent entity.
(c)
Parent entity guarantees
Refer Note 28 for details of bank guarantees issued by the parent entity.
(d)
Parent entity capital commitments for acquisition of property, plant and equipment
Contracted but not yet provided for and payable
Within one year
Parent Entity
2014
$’000
2013
$’000
-
-
Page 92
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
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
2014
$
2013
$
Assurance services(1)
(a)
Audit and audit related services
KPMG
Audit and review of financial reports
Total remuneration for audit and audit related services
552,725
552,725
527,500
527,500
(b)
Non-audit services(2)
KPMG
Services relating to the senior secured note issue
Total remuneration for non-audit services
-
-
364,208
364,208
(1) In addition, $37,472 were paid to BDO (WA) for services relating to the audit of certain subsidiaries in 2013.
(2) Non-audit services of $92,012 were paid to BDO (WA) in the prior year for services relating to the senior secured note issue.
Note 28
Contingencies
(a)
Contingent liabilities
During July 2014, the Company announced that by operation of its internal reporting mechanisms, the provision of benefits
to a foreign public official that may violate its Anti-Bribery and Anti-Corruption Policy or applicable laws in Australia or in
foreign jurisdictions were identified. The amount of the benefits provided to the foreign public official was not material to
the Company. The Company self-reported the matter to relevant authorities, including the Australian Federal Police, and
the matter is being assessed and investigated. To date, there has been no action taken against the Company, consequently,
the range of potential penalties, if any, cannot be reliably estimated. Should there be any prosecution, potential penalties
are governed by laws in various jurisdictions including Criminal Code 1995 (Cth) in Australia and/or the UK Bribery Act.
(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 2014 was $1,577,000 (2013: $11,955,000). Security is provided to the National Australia Bank
Limited (“NAB”) (refer to Note 17) for $1,479,000 of this amount in cash deposits. Cash held on deposit with the
Commonwealth Bank of Australia secures the remaining $98,000 as at 30 June 2014 (refer to Note 12).
Page 93
ST BARBARA LIMITED
30 JUNE 2014
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
Payable later than five years
Future finance charges
Total lease liabilities
Current (Note 21)
Non-current (Note 21)
Consolidated
2014
$’000
2013
$’000
5,675
8,061
Consolidated
2014
$’000
5,054
5,492
-
10,546
(707)
9,839
4,343
5,496
9,839
2013
$’000
5,863
8,141
-
14,004
(1,995)
12,009
4,218
7,791
12,009
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.
Consolidated
2014
$’000
2013
$’000
1,651
4,472
203
6,326
1,604
5,139
1,194
7,937
Consolidated
2014
$’000
2013
$’000
222
171
393
214
392
606
Analysis of Non-Cancellable Operating Lease Commitments
Payable not later than one year
Payable later than one year, not later than five years
Payable later than five years
Analysis of Non-Cancellable Operating Sub-lease receipts
Receivable not later than one year
Receivable later than one year, not later than five years
Page 94
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 30
Related party transactions
a)
Directors and key management personnel
Disclosures relating to Directors and Key Management Personnel are now included within the Remuneration Report, with
the exception of the table below.
Short term employee benefits
Post-employment benefits
Leave
Share-based payments
Termination payments
Consolidated
2014
$
2013
$
2,515,844
4,095,961
90,356
242,267
462,370
452,549
96,075
151,948
491,280
-
3,763,386
4,835,264
.
(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 $10,969,000 (2013: $2,509,000), operating lease rents of
$1,464,000 (2013: $711,000), and interest $7,259,000 (2013: $nil) to entities in the wholly-owned group.
Net loans payable to the Company amount to a net receivable of $321,282,000 (2013: net receivable $123,200,000).
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 2014, there were no amounts receivable from Director related entities (2013: $ nil).
(f)
Other Transactions with Directors of the Company and their Director related entities
During the years ended 30 June 2014 and 30 June 2013, there were no other transactions with Directors of the Company
and their Director related entities.
Page 95
ST BARBARA LIMITED
30 JUNE 2014
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
2014
%
June
2013
%
Carrying value of
Company’s investment
June
2014
$’000
June
2013
$’000
Parent entity
St Barbara Limited
Subsidiaries of St Barbara Limited
Allied Gold Mining Ltd(3)
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
100
100
100
100
100
100
100
100
100
100
100
100
Subsidiaries of Allied Gold Mining Ltd
Allied Gold Ltd
Australia
100
100
Subsidiaries of Allied Gold Ltd
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
100
100
100
100
100
100
100
100
100
100
(1) Non operating.
(2) 49,999 shares held by AGL (SGC) Pty Ltd. 1 share held by AGL (ASG) Pty Ltd.
(3) Formerly Allied Gold Mining Plc.
Page 96
78,238
255,638
178
-
178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Country of
Incorporation
Ownership Interest
June
2014
%
June
2013
%
Carrying value of
company’s investment
June
2014
$’000
June
2013
$’000
Subsidiaries of Allied Tabar Exploration Pty Ltd
Tabar Exploration Company Ltd
Subsidiaries of Australian Solomons Gold Limited
JV Mine (Australia) Pty Ltd
Subsidiaries of Nord Pacific Limited
Nord Australex Nominees (PNG) Ltd
Simberi Gold Company Limited
Subsidiaries of JV Mine (Australia) Pty Ltd
Solomon Islands International Pty Ltd
Subsidiaries of Solomon Islands International Pty Ltd
ASG Solomon Islands Ltd(1)
Australia
PNG
Australia
Australia
Canada
PNG
PNG
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
Solomon Islands
100
100
Subsidiaries of ASG Solomon Islands Ltd
Gold Ridge Mining Ltd(2)
Solomon Islands
Solomon Islands
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) 175,762,501 shares held by Solomon Islands International Pty Ltd. 1 share held by JV Mine (Australia)Pty Ltd.
(2) 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.
Note 32
Interests in joint arrangements
June 2014
Equity %
June 2013
Equity %
Joint Venturers
WESTERN AUSTRALIA
Leonora Region
Mount Newman - Victory
Sandy Soak
Melita
McEast/Pipeline2
Black Cat
Silver Phantom3
South Rankin3
93%
91%
60%
0%
40%
0%
0%
92%
91%
80%
20%
40%
70%
75%
Astro Diamond Mines N.L.
Newmont Yandal Operation Pty Ltd1
Dalrymple Resources N.L.
Cheperon Gold Partnership
Terrain Minerals Ltd
Bellriver Pty Ltd
Comet Resources Limited
(1) During the year Hunter Resources Pty Ltd transferred its’ interest to the parent entity, Newmont Yandal Operation Pty Ltd.
(2) Tenement underlying the Interest in McEast/Pipeline expired in the year.
(3) Interests in Silver Phantom and South Rankin were sold as part of the Southern Cross sale.
As at 30 June 2014 there were no joint venture assets or liabilities recorded in the balance sheet (2013: Nil).
As at 30 June 2014 there were no interests in jointly controlled operations in Solomon Islands or Papua New Guinea.
Page 97
ST BARBARA LIMITED
30 JUNE 2014
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 as described in this note:
(cid:120)
(cid:120)
On the 10 July 2014; 75% of forecasted Leonora production from October 2014 to June 2015 was hedged using
forward contracts at AUD $1,415/oz.
On 22 August 2014, the Company announced that it was entering into negotiations for the possible transfer of
ownership of the Gold Ridge mine to the Solomon Islands Government.
Note 34
Reconciliation of loss after income tax to net cash flows from operating activities
Loss after tax for the year
Depreciation and amortisation
Asset impairments and write downs
Income tax expense/(benefit)
Net loss on sale of property, plant and equipment
Net gain on sale of discontinued operations (refer note 38)
Contingent consideration received on sale of Southern Cross
Fair value movement in gold prepayment facility
Net realised/unrealised gain on gold derivative fair value movements
Unwinding of rehabilitation provision
Onerous provision written back
Net finance costs amortised
Unrealised/realised foreign exchange gain
Equity settled share-based payments
Change in operating assets and liabilities
Decrease/(increase) in receivables and prepayments
Decrease/(increase) in inventories
(Increase)/decrease in other assets
(Decrease)/increase in trade creditors and payables
Increase/(Decrease in provisions
Net cash flows from operating activities
Note 35
Non-cash investing and financing activities
Acquisition of vehicles and equipment through finance leases
Acquisition of software licence
Page 98
Consolidated
2014
$’000
2013
$’000
(500,831)
(191,854)
108,691
410,556
17,524
742
-
(1,444)
10,800
(2,832)
3,021
(6,840)
3,169
(1,810)
698
4,902
2,237
(1,405)
(29,707)
2,789
20,260
101,002
309,170
(78,857)
(13)
(22,109)
-
(2,083)
(15,703)
3,538
-
5,764
(9,643)
963
12,894
(24,592)
(283)
(4,609)
(12,557)
71,028
Consolidated
2014
$'000
2013
$'000
2,474
-
2,474
8,528
1,024
9,552
ST BARBARA LIMITED
30 JUNE 2014
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
(c)
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share:
Loss after tax for the year - continuing operations
Consolidated
2014
Cents
(102.61)
(102.61)
(102.61)
(102.61)
2013
Cents
(43.50)
(41.92)
(43.50)
(41.92)
Consolidated
2014
$'000
2013
$'000
(500,831)
(199,053)
Loss after tax for the year – including discontinued operations
(500,831)
(191,854)
(d)
Weighted average number of shares
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
Consolidated
2014
Number
2013
Number
488,074,077
457,622,431
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
488,074,077
457,622,431
(i) Performance rights
Performance rights granted to employees under the St Barbara Performance Rights Plan are considered to be potential
ordinary shares and are included in the determination of diluted earnings per share to the extent to which they are dilutive.
The rights are not included in the determination of basic earnings per share. Details relating to the rights are set out in
Note 37.
Page 99
ST BARBARA LIMITED
30 JUNE 2014
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 2014 no options were granted.
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. 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.
(b) Employee Performance Rights
During the year ended 30 June 2014, $1,402,000 (2013: $nil) previously recognised in the share based payment reserve for
1,437,646 (2013: nil) performance rights, which expired during the year, were transferred as a gain to accumulated losses.
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.
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 – 2014
Grant Date Expiry Date
Price on
issue date
28 Oct 11
23 Nov 11
15 Mar 12
19 Dec 12
29 Nov 13
4 Dec 13
Total
30 Jun 14
30 Jun 14
30 Jun 14
30 Jun 15
30 Jun 16
30 Jun 16
$2.23
$2.20
$2.09
$2.09
$0.49
$0.49
Balance at
start of the
year
Number
734,529
459,621
243,496
1,573,697
-
-
3,011,343
Granted
during the
year
Number
-
-
-
-
6,092,247
1,871,642
7,963,889
Exercised
during the
year
Number
-
-
-
-
-
-
-
Expired
during the
year
Number
734,529 (1)
459,621(1)
243,496(1)
714,899(2)
Balance at
end of the
year
Number
-
-
-
858,798
1,483,150(2) 4,609,097
1,871,642(2)
-
5,467,895
5,507,337
Exercisable
at end of
the year
Number
-
-
-
-
-
-
-
Weighted average exercise price
-
-
-
-
-
-
(1) Includes performance rights, which did not vest due to not meeting performance criteria, or through termination of employment.
(2) Expired due to termination of employment.
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
Granted
during the
year
Number
-
-
-
-
-
- 1,573,697
1,573,697
3,687,483
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
-
-
-
-
-
-
-
Weighted average exercise price
-
-
-
-
-
-
(1) Expired due to termination of employment
Page 100
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
The weighted average remaining contractual life of performance rights outstanding at the end of the year was 1.9 years
(2013: 1.5 years). The model inputs for rights granted during the year ended 30 June 2014 included:
i.
ii.
iii.
iv.
Rights are granted for no consideration. The vesting of rights granted in 2014 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.
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 $nil. This
outcome was based on the likelihood of the market condition being met as at the date the rights vest.
(c)
Expenses arising from share based payment transactions
Total expenses arising from equity settled share based payment transactions recognised during the year as part of the
employee benefit expenses were as follows:
Consolidated
2014
$
2013
$
Options/performance rights issued under employee option
plan
698,000
963,000
Page 101
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
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 prior year amounts in the consolidated income statement are set
out below.
2014
$’000
2013
$’000
-
-
-
-
-
-
-
-
56,603
(67,853)
(11,250)
3,375
(7,875)
22,109
(7,035)
15,074
-
7,199
2014
$’000
-
-
-
2013
$’000
10,915
17,221
28,136
Loss for the period from discontinued operations
Revenue
Expenses
Loss before tax
Attributable income tax benefit
Loss after tax
Gain on disposal of operations
Attributable income tax expense
for
Profit
(attributable to owners of the company)
the year
from discontinued operations
Cash flows from discontinued operations
Net cash inflows from operating activities
Net cash inflows from investing activities
Net cash inflows
Page 102
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 39
Disposal of subsidiary
Consideration received
Consideration received in cash
2014
$’000
1,500
1,500
2013
$’000
17,648
17,648
During the year, the Company received $1.5 million ($1.4 million net of costs) from Hanking Gold Mining Pty Ltd in relation
to the sale of the Group’s Southern Cross operations in the prior financial year. The proceeds were contingent
consideration received upon satisfaction of certain undertakings by the Company.
Analysis of assets and liabilities over which 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
2014
$’000
2013
$’000
-
-
-
-
-
4,478
1,852
6,061
(16,852)
(4,461)
The gain on disposal of $22,109,000 is included in the profit from discontinued operations for the comparative year.
Page 103
ST BARBARA LIMITED
30 JUNE 2014
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
Total consideration
Goodwill arising on acquisition
Consideration transferred
Less: Fair value of identifiable net assets acquired (provisional)
Goodwill arising on acquisition
2014
$’000
-
-
-
2014
$’000
-
-
-
2013
$’000
210,934
272,967
483,901
2013
$’000
483,901
(479,896)
4,005
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
2014
$’000
-
-
-
2013
$’000
210,934
(4,311)
206,623
The initial accounting for the acquisition of Allied Gold was provisionally determined at 30 June 2013. The fair values were
finalised by the end of December 2013, and the updated values are listed on the following page.
Page 104
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 40
Business Combinations (continued)
Current assets
Cash
Trade receivables(1)
Inventories(2)
Available for sale financial assets
Other assets(3)
Total current assets
Non-Current assets
Property, plant and equipment
Mineral rights asset
Goodwill(4)
Total Non-Current assets
Current liabilities
Trade payables
Provisions(5)
Loans and borrowings
Total Current liabilities
Non-Current liabilities
Provisions(5)
Loans and borrowings
Deferred tax liability(6)
Total Non-Current liabilities
Fair value of identifiable net assets
Provisional fair
value reported at
30 Jun 2013
$’000
Adjustments to
provisional fair
value
$’000
Finalised fair
value reported at
30 Jun 2014
$’000(7)
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
-
(74)
(1,951)
-
(75)
(2,100)
-
-
2,069
2,069
-
(856)
-
(856)
-
-
887
887
-
4,311
5,783
59,584
51
4,507
74,236
320,613
336,450
6,074
663,137
(43,945)
(14,289)
(46,809)
(105,043)
(47,620)
(31,590)
(69,219)
(148,429)
483,901
(1) Trade receivables long outstanding at the date of acquisition which are unlikely to be recovered.
(2) Detailed review of inventory spares determined that there were obsolete items whose values were unlikely to be recovered.
(3) Capitalised interest relating to expired finance leases at the date of acquisition.
(4) The final goodwill valuation as a result of finalisation of fair values. As part of the impairment review in June 13, all goodwill on the
acquisition was impaired.
(5) Retention bonus provisions which should have been booked before acquisition.
(6) The change in the deferred taxes is a result of the adjustments listed above.
(7) The fair values reported exclude impairment write downs posted in periods subsequent to the acquisition.
Page 105
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
Note 41
Goodwill
Cost
Accumulated impairment losses
Cost
Balance at the beginning of the year
Amount recognised from business combinations (note 40)
Adjustments to provisional fair value
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
2014
$’000
6,074
(6,074)
-
4,005
-
2,069
6,074
(4,005)
(2,069)
(6,074)
2013
$’000
4,005
(4,005)
-
-
4,005
4,005
-
(4,005)
(4,005)
Page 106
ST BARBARA LIMITED
30 JUNE 2014
FINANCIAL REPORT
DIRECTORS’ DECLARATION
1
In the opinion of the directors of St Barbara Limited (the Company):
(a)
the consolidated financial statements and notes that are contained in pages 41 to 106 and the Remuneration
report in the Directors’ report, set out on pages 21 to 37, are in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2014 and of its performance
for the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2
3
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief
executive officer and chief financial officer for the financial year ended 30 June 2014.
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:
Bob Vassie
Managing Director and CEO
Melbourne
27 August 2014
Page 107
ST BARBARA LIMITED
30 JUNE 2014
INDEPENDENT AUDIT REPORT
Set text colour to white after inserting the audit report
Two pages are required for the audit report
Page 108
ST BARBARA LIMITED
30 JUNE 2014
INDEPENDENT AUDIT REPORT
Set text colour to white after inserting the audit report
Two pages are required for the audit report
Page 109
ST BARBARA LIMITED
30 JUNE 2014
Ore Reserves and Mineral Resources Statements as at 30 June 2014
Overview
˃ Ore Reserves at 30 June 2014 were 69.1 Mt @ 2.3 g/t Au for 5.16 million ounces of contained gold.
˃ Ore Reserves decreased by a net 0.08 million ounces (Moz) from the 30 June 2013 estimate to 5.16 Moz.
˃ Gwalia Ore Reserves increased by a net 0.16 Moz to an estimated 7.3 million tonnes (Mt) @ 8.2 grams per tonne of
gold (g/t Au) for 1.91 Moz of contained gold (1.75 Moz at June 2013), representing an indicative mine life at current
mining rates of at least 9 years.
˃
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 West Lodes.
Company Summary at 30 June 2014
˃
Total Ore Reserves are estimated at:
comprising:
69.1 Mt @ 2.3 g/t Au for 5.16 Moz of contained gold,
˃
˃
Leonora Operations:
10.3 Mt @ 6.9 g/t Au for 2.28 Moz of contained gold
Simberi Operations:
44.2 Mt @ 1.6 g/t Au for 2.21 Moz of contained gold
˃ Gold Ridge Operations:
14.6 Mt @ 1.4 g/t Au for 0.67 Moz of contained gold
˃
Total Mineral Resources are estimated at: 209.4 Mt @ 2.0 g/t Au for 13.16 Moz of contained gold,
comprising:
˃
˃
Leonora Operations:
21.6 Mt @ 6.6 g/t Au for 4.61 Moz of contained gold
Simberi Operations:
123.6 Mt @ 1.4 g/t Au for 5.38 Moz of contained gold
˃ Gold Ridge Operations:
64.2 Mt @ 1.5 g/t Au for 3.18 Moz of contained gold
The 30 June 2014 Ore Reserves and Mineral Resources Statements released to the ASX on 27 August 2014 follow.
Page 110
ST BARBARA LIMITED
30 JUNE 2014
Mineral Resources Statement as at 30 June 2014
The Company's total Measured, Indicated and Inferred Mineral Resources as at 30 June 2014 are 209.4 million tonnes
(Mt) @ 2.0 grams per tonne of gold (g/t Au) containing 13.16 million ounces of gold (Moz) (refer Table 1). The previous
publicly reported estimate of Mineral Resources was 268.4 Mt @ 1.5 g/t Au containing 13.22 Moz of gold as at 30 June
2013.
The primary movements in the Mineral Resource inventory during the 2014 financial year were realised through:
˃
˃
constraining the Simberi and Gold Ridge Mineral Resources with a gold price of A$1,875 per ounce
revision of the geological model resulting in an increase in the Simberi Mineral Resource and further drilling
leading to an increase in the Charivunga (Gold Ridge) Mineral Resource.
Details of these and other changes resulted in a net reduction in Mineral Resources of 0.06 Moz of contained gold,
illustrated in Figure 1 and explained further below.
Figure 1: Major sources of variance to Mineral Resource Inventory between FY13 and FY14
koz
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
13,215
‐289
‐206
‐56
‐68
+1,532
13,161
+1,379
+156
+39
‐2,189
‐352
June
2013
Mining
Depletion
(Leonora)
Sterilisation
(Leonora)
Mining
Depletion
(Simberi)
Mining
Depletion
(Gold Ridge)
A$1875
Gold Price
(Simberi)
A$1875
Gold Price
(Gold Ridge)
Geological
Model
Changes
(Gwalia)
Geological
Model
Changes
(KOTH)
Geological
Model
Changes
(Simberi)
Charivunga
Resources
(Gold Ridge)
June
2014
Page 111
ST BARBARA LIMITED
30 JUNE 2014
Mineral Resources Statement as at 30 June 2014
Mining Depletion (Leonora Ops) ‐ A total of 289,000 ounces of gold has been depleted from the Company's Operations at
Leonora ‐ 219,000 ounces from Gwalia and 70,000 ounces from King of the Hills.
Sterilisation (Leonora Ops) – A total of 206,000 ounces of gold has been depleted from the in situ resources at both
Gwalia (139,000 ounces) and King of the Hills (67,000 ounces) that, due to mining infrastructure, is unlikely to be able to
be recovered. At Gwalia this is largely remnant mineralisation around the margins of mined and paste‐filled stopes, and at
King of the Hills is remnant mineralisation contained in pillars and in the ‘exclusion zone’ between the open pit floor and
the top of underground workings.
Mining Depletion (Simberi & Gold Ridge) – The Simberi mineral inventory has been depleted by 56,000 ounces through
mining and the Gold Ridge inventory by 68,000 ounces.
A$1,875/oz Gold Price (Simberi & Gold Ridge) – The Simberi and Gold Ridge mineral resources were reported
unconstrained in 2013, however the JORC (2012) Code requires a Mineral Resource to have ‘reasonable prospects for
economic extraction’. The Company practice for ensuring that open pit resources are reported in accordance with the
JORC code has been to constrain the resource estimate by an optimal pit shell generated using the same cost and slope
parameters as Ore Reserves, but with a 50% higher gold price. This has proven to be an effective method of removing
discontinuous or deep mineralisation that is unlikely to be mineable.
By constraining the Simberi Mineral Resource within a A$1,875/oz pit shell the oxide resource has been reduced by
109,000 ounces and the sulphide resource by 2,080,000 ounces, for a total reduction of 2,189,000 ounces. The Gold
Ridge resource has been reduced by 352,000 ounces.
Geological Model Changes (Gwalia) – Resource development and grade control drilling completed from the 1440 drill
drive to 1,580 metres below surface has driven minor changes to local geological models on all lodes and has also
identified extensions to the South Gwalia Series and West Lode. In addition the drilling has confirmed the location and
extent of a new lode – South West Branch 2. The net effect of these changes is an increase to the resource of 156,000
ounces.
Geological Model Changes (King of the Hills) ‐ Resource development and grade control drilling coupled with continuous
improvement of the geological model across both the Eastern and Western flanks has added 39,000 ounces to the King of
the Hills resource.
Geological Model Changes (Simberi) ‐ An updated geological model and structural interpretation was completed for
Simberi Island in 2014, based on mapping completed by Dr Sarah Jones and previous staff. This work was the basis for
improvements in the geological models for the Sorowar, Pigiput and Pigibo deposits. A lithological control separating
lower grade intrusive hosted gold mineralisation from higher grade breccia hosted gold mineralisation has been defined,
and estimation search parameters were modified to reflect structural controls identified by the study. In addition,
metallurgical test work found that transitional material, which was previously reported as part of the sulphide resource,
has recoveries of around 75% ‐ closer to oxide recoveries than sulphide. As a consequence transitional material is now
reported as part of the oxide resource.
By constraining gold mineralisation based on lithology and reporting transitional material as part of the oxide resource,
the oxide resource has increased by 641,000 ounces. The inclusion of lithological controls and removal of transitional
material from the sulphide resource resulted in an overall increase of the sulphide resource by 738,000 ounces.
Charivunga Resource (Gold Ridge) – Following the completion of in‐fill resource definition drilling a resource estimate for
the Charivunga deposit was completed in 2014. This has added 1,532,000 ounces to the Gold Ridge mineral inventory.
Page 112
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T
ST BARBARA LIMITED
30 JUNE 2014
Mineral Resources Statement as at 30 June 2014
ASX Release / 22 August 2013
Notes to Table 1:
1. Mineral Resources are reported inclusive of Ore Reserves.
2. Cut‐off Grades Leonora: Gwalia (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 (0.4 g/t Au).
4. Cut‐off Grade Simberi Sulphide (0.6 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 Ms Jane Bateman,
who is a Member of The Australasian Institute of Mining and Metallurgy. Ms Bateman 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 she 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”. Ms Bateman
consents to the inclusion in the report of the matters based on the 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 Wayne Lind (MAusIMM)
˃ Gold Ridge Mine – Mr Kevin Crossling (MAusIMM)
Page 114
ST BARBARA LIMITED
Ore Reserves Statement as at 30 June 2014
30 JUNE 2014
As at 30 June 2014, the Company’s Proved and Probable Ore Reserves are estimated to be 69.09 million tonnes (Mt) at
2.3 grams per tonne of gold (g/t Au) containing 5.16 million ounces (Moz) (refer Table 2). The previously reported
Reserve in 2013 was 77.84 Mt @ 2.1 g/t Au for 5.24 Moz of contained gold. Ore Reserves are located at Gwalia, King of
the Hills, Tower Hill in Western Australia, Simberi in Papua New Guinea and Gold Ridge in Solomon Islands. This
represents a net decrease of 0.08 Moz over the June 2013 estimate.
The 2014 Ore Reserve estimates are based on the following assumptions:
A gold price of A$1,250 per ounce (real) has been applied to all mines, except King of the Hills, where the FY15
gold price estimate of A$1,390/oz has been applied consistent with the current estimated mine life of one year.
Gwalia has an updated Life of Mine plan. This includes updates to the Resource model, geotechnical, ventilation
and paste models, and addresses depletion which has not been resolved since commencing the Deeps project.
King of the Hills Ore Reserve life is one year as at 30 June 2014, and with the deposits open at depth. There is a
high level of confidence in the geological control of the site.
Tower Hill estimates are rolled over from FY13.
Gold Ridge is reported with a general qualification that while the Mineral Resource is economic based on the on‐
going mine plan, Gold Ridge Mining Limited (GRML) issued force majeure notices in April and August 2014 under
the Mining Agreement and operations remain suspended. Two of the contributing factors outside of GRML’s
control require the active management and involvement of the Solomon Islands Government to address. They
are:
o Continuing interruption to properly engineered access to the Tinahulu Bridge on the public site access
road;
o The presence of several hundred illegal miners encamped in the open pit mining areas.
New Resource model for Simberi excludes lower grade material, increasing Reserve grades.
Based on metallurgical test work undertaken as part of the Simberi Sulphide work, Simberi transition material
has been reclassified to leach feed and is now scheduled to be included as part of the oxide campaign.
Simberi Sulphide study work has considered alternative oxidation options, however, it is not yet at a Pre‐
Feasibility level of confidence. Consequently the sulphide Ore Reserve estimates are based on the 2011 Allied
Gold Limited Pre‐Feasibility Study.
Ore Reserve depletion and addition are illustrated in Figure 2.
Figure 2: Major variances to Ore Reserves between FY13 and FY14
koz
5,500
5,238
‐422
‐257
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
+606
5,165
Jun 2013
Net mining activities
Interpretation & design
changes*
Additions
Jun 2014
* Changes include Geology, Design and Factor Changes
Page 115
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ST BARBARA LIMITED
Ore Reserves Statement as at 30 June 2014
Notes to Table 2:
30 JUNE 2014
1. Ore Reserves based on a gold price of A$1,250/oz for Gwalia, Simberi, Gold Ridge and Tower Hill.
2. Ore Reserves based on a gold price of A$1,390/oz for King of the Hills consistent with the current estimated mine
life of one year.
3. Mineral Resources are reported as inclusive of Ore Reserves.
4. All data is rounded to two significant figures. Discrepancies in summations will occur due to rounding.
5. Details relating to each of the estimates are available as short form reports at www.stbarbara.com.au.
Competent Persons Statement
The Ore Reserves have been estimated and compiled 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 consideration 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 the information in the form and context in which it appears. Mr de Vries is entitled to
participate in St Barbara’s long term incentive plan, details of which are included in the 2013 Annual Report and Notice
of 2013 Annual General Meeting released to the ASX on 18 October 2013. Increase in Ore Reserves is one of the
performance measures under that plan.
Page 117
30 JUNE 2014
ST BARBARA LIMITED
Corporate Governance Statement
Contents
Introduction
Principle 1: Lay solid foundations for management and oversight
Principle 2: Structure the Board to add value
Principle 3: Promote ethical and responsible decision making
Principle 4: Safeguard integrity in financial reporting
Principle 5: Make timely and balanced disclosure
Principle 6: Respect the rights of shareholders
Principle 7: Recognise and manage risk
Principle 8: Remunerate fairly and responsibly
Introduction
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. The Company is committed to complying
with the 3rd Edition of the ASX Corporate Governance Principles and Recommendations by 30 June 2015, and has already
taken action towards this.
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)
b)
c)
in a manner designed to achieve business success and create and continue to build long term value for shareholders
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
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 118
ST BARBARA LIMITED
Corporate Governance Statement
30 JUNE 2014
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 a Director, Mr Lockyer had advised the
Company that he was also a Non‐Executive Director of Swick Mining Services, a provider of drilling services to the Company.
Mr Lockyer abstained from any Board discussions relating to Swick Mining Services and was 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, strategic planning, remuneration and policy. 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 informally reviewed its own performance during the 2014 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 2015 financial year.
Board structure
The Directors in office, and the composition of Board Committees, at the date of this report, are:
Director
Board
Audit and Risk
Committee
Health, Safety,
Environment and
Community Committee
Remuneration
Committee
Colin Wise
Bob Vassie
Doug Bailey
Tim Netscher
Ines Scotland
Chairman
MD & CEO
Director
Director
Director
Member
Chair
Member
Member
Member
Chair
Chair
Member
Details of each current Director’s skills, qualifications, experience, relevant expertise and date of appointment are set out in
the Directors’ Report.
Page 119
ST BARBARA LIMITED
Corporate Governance Statement
30 JUNE 2014
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:
Audit and Risk Committee
Health, Safety, Environment and Community Committee
Remuneration 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.
Audit and Risk Committee
In response to the 3rd Edition of the ASX Corporate Governance Principles and Recommendations, the role of the former
Audit Committee was expanded in July 2014 to incorporate the oversight of risk management.
The role of the Audit and Risk Committee is to assist and advise the Board on matters relating to:
Financial reporting
Financial risk management
Evaluation of the effectiveness of the financial control environment
a)
b)
c)
d) Review of the internal and external audit functions
e) Review of the Mineral Resource and Ore Reserve estimation processes
f) Oversight of risk management.
Health, Safety, Environment and Community Committee
The role of the former Health and Safety Committee was expanded in July 2014 to incorporate environment and community
matters.
The role of the Health, Safety, Environment and Community Committee is to assist and advise the Board on matters relating
to:
Promoting a safety conscious culture throughout the Company
a)
b) Reviewing health, safety, environment and community polices, objectives, strategies and plans
c) Monitoring compliance with health, safety, environment and community regulatory requirements.
Remuneration Committee
The role of the Remuneration Committee is to assist and advise the Board on matters relating to:
a)
b)
The overall remuneration strategies and policies of the Company
The remuneration of the Managing Director & CEO, his senior executive direct reports, employees of the Company,
and Non‐Executive Directors.
Attendance at meetings and engagement with the business
Details of the number of scheduled 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.
Page 120
ST BARBARA LIMITED
Corporate Governance Statement
Independent professional advice and access to Company information.
30 JUNE 2014
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 at the Company’s expense on any issue of particular concern from a suitably qualified adviser.
Principle 3: Promote ethical and responsible decision making
The Company has implemented a formal set of behavioural values designed to uphold high standards of integrity and work
performance for the Board, Management, employees, and other members of the work force. The Company vision and the
values underpinning it are disclosed on the Company's website.
Employees are accountable for their conduct under a range of Company policies and procedures, including safety,
environment, equal opportunity, continuous disclosure and trading in Company securities. Employees and contractors are
also made aware of acceptable behaviour through induction programs, on‐going training and development and contact with
senior staff who are encouraged to lead by example.
Procedures are in place to record and publicly report each Director's shareholdings in the Company.
The Company Secretary is responsible for investigating any reports of unethical practices and reporting the outcomes to the
Managing Director & CEO or the Board, as appropriate.
The Company has not enshrined its values into a formal code of ethics at this time as it considers that all matters describing,
prescribing and underpinning ethical behaviour are contained in the values and key policies outlined above.
Diversity
The Company’s Diversity Policy is available on the Company’s website at www.stbarbara.com.au. The Policy is reviewed by
the Board periodically to ensure it remains appropriate and is operating effectively.
The measurable gender diversity objectives endorsed by the Board for the 2014 financial year1, and the progress made
against those objectives during the year, are as follows:
Objective
Description
June 2014
June 2013
Target
Objective 1
Increase the proportion of women employed across the
Group to 30% by 30 June 2018
2018: 30%
25%3
24%
Objective 2
Reduce the Overall Pay Equity Gap to 15%, by 30 June 2018
2018: 15%
18.9%4
Objective 3
Objective 4
Increase the percentage of women who return to work after a
period of Maternity Leave to at least 67%, by 30 June 2014
Increase the number of women on the Board2 to 25% by 30
June 2018
2014: 67%
50%
2018: 25%
20%
11.4%
67%
40%5
1. The objectives set for financial year 2014 are for St Barbara’s Australian Operations and offices.
2. The Board for the purpose of this report does not include the Managing Director and CEO.
3. Reported as 24% in 2013 Corporate Governance Statement (excluded Pacific Operations office).
4. Reported as 15.1% in 2013 Corporate Governance Statement (excluded Pacific Operations office and included Managing
Director and CEO).
5. Ms Donaghey resigned as a Director on 30 June 2014, reducing this result to 25% on 1 July 2014.
Page 121
ST BARBARA LIMITED
Corporate Governance Statement
30 JUNE 2014
The following tables show the number of men and women on the Board, in Executive roles and in the workforce:
Gender Statistics at 30 June 2014
Board1
Senior Executives2
Total
54
4
No. of Men
3
3
% Men
60%4
75%
No. of Women
24
% Women
40%4
1
25%
Whole Organisation3
1. The Board excludes the role of Managing Director & CEO.
2. Senior Executives includes the role of Managing Director & CEO and the three most senior executives.
3. Whole organisation includes the Managing Director & CEO and Board members and does not include Pacific
76%
24%
163
215
52
Operations.
4. Ms Donaghey resigned as a Director on 30 June 2014. At 1 July 2014, the corresponding statistics for the Board
(excluding MD & CEO) were: Total 4, Men 3 (75%), Women 1 (25%).
Gender Statistics at 30 June 20134
Board1
Senior Executives2
Total
No. of Men
% Men
No. of Women
% Women
5
6
4
5
80%
83%
1
1
20%
17%
240
Whole Organisation3
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
24%
76%
182
58
Operations, the above table excludes gender statistics of the Pacific Operations.
In accordance with the Workplace Gender Equality Act (2012), the Company submitted its annual public report to the
Workplace Gender Equality Agency on 13 June 2014. A copy of the report is available on the Company website at
www.stbarbara.com.au/investors/announcements/.
In March 2014 St Barbara won the ‘Outstanding Company Initiative’ award at the fifth annual Chamber of Minerals and
Energy of Western Australia Women in Resources Awards, and in September 2014 St Barbara won the ‘Excellence in
Diversity Programs and Performance’ award in the inaugural Women in Resources National Awards (WIRNA).
Both of these awards recognised St Barbara’s work in 'Eliminating the Pay Equity Gap' which was initiated and led by
Katie‐Jeyn Romeyn, Executive General Manager People & Business Services. The pay‐equity gap at St Barbara has
reduced from 43% in 2007 to 11.4% in 2014 (compared to 23.8% for the mining industry and 18.2% nationally1).
In September 2014, Bob Vassie, Managing Director & CEO, was announced as one of 32 CEO ambassadors of the
Workplace Gender Equality Agency pay equity campaign.
Principle 4: Safeguard integrity in financial reporting
The function of the Audit and Risk Committee includes responsibility on behalf of the Board for reviewing the integrity of
financial reporting. The Audit and Risk 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.
1 WGEA Gender pay gap statistics August 2014, www.wgea.gov.au/sites/default/files/Gender_Pay_Gap_Factsheet.pdf
Page 122
ST BARBARA LIMITED
Corporate Governance Statement
30 JUNE 2014
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 and Risk
Committee.
Principle 5: Make timely and balanced disclosure
St Barbara seeks to provide relevant up‐to‐date information to its shareholders and the broader investment community in
accordance with the continuous disclosure requirements of the ASX Listing Rules and Corporations Act 2001 (Cth).
The Company has implemented, and periodically updates, a Continuous Disclosure 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 engages regularly with shareholders in Australia and overseas and conducts regular analyst briefings which
are simultaneously webcast for key announcements. These activities are supported by the publication of the Annual and
Half Year Reports, 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 and Risk
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. A summary of material business risks is included in the Directors’ Report.
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.
Page 123
ST BARBARA LIMITED
Corporate Governance Statement
Non Executive Remuneration
30 JUNE 2014
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, and performance based at risk short term incentives and long term incentives. The
Committee 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 2014 financial year are set out in the
Directors’ Report.
Page 124
ST BARBARA LIMITED
Shareholder Information
Twenty Largest Shareholders
Ordinary fully paid shares as at 30 September 2014
Rank
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
CS FOURTH NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
UOB KAY HIAN PRIVATE LIMITED
TW INVESTMENTS PTY LTD
MR RAYMOND EDWARD MUNRO + MRS SUSAN ROBERTA MUNRO
CRONEN PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED ‐ A/C 2
SCOTLAND (AUSTRALIA) SUPER PTY LTD
MR SONG YIN
BELL POTTER NOMINEES LTD
MR ANTHONY WOOLLEY
ULTIMATE FIRE PROTECTION PTY LTD
MR GOLSHAN KHAN
Total top 20 holders of ordinary fully paid shares
Total remaining holders balance
30 JUNE 2014
Units % of Units
90,088,672
84,429,162
77,958,374
30,933,304
4,901,234
2,697,413
2,369,385
2,342,044
2,281,253
1,843,500
1,600,000
1,558,000
1,528,000
1,368,814
1,363,600
1,289,411
1,221,887
1,200,000
1,136,120
1,130,000
18.46
17.30
15.97
6.34
1.00
0.55
0.49
0.48
0.47
0.38
0.33
0.32
0.31
0.28
0.28
0.26
0.25
0.25
0.23
0.23
313,240,173
174,833,904
64.18
35.82
Page 125
ST BARBARA LIMITED
Shareholder Information
Distribution of Shareholdings
Ordinary fully paid shares as at 30 September 2014
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
30 JUNE 2014
Total Holders
3,842
3,883
1,275
2,104
359
Shares
1,599,300
9,826,754
9,827,370
69,544,447
397,276,206
% of Issued
Capital
0.33
2.01
2.01
14.25
81.40
11,463
488,074,077
100.00
Unmarketable Parcels
Ordinary fully paid shares as at 30 September 2014
Minimum $500.00 parcel at $0.165 per unit
6,568
6,702,298
3,031
Total Holders
Shares
Minimum
Parcel Size
Substantial Shareholders
Ordinary fully paid shares as at 30 September 2014
Name
Hunter Hall Investment Management Ltd
M&G Investment Management Ltd
Baker Steel Capital Managers LLP
Franklin Resources Inc
Shares
% of Shares
54,515,948
35,460,000
33,419,181
32,521,607
11.17
7.27
6.85
6.66
Page 126
ST BARBARA LIMITED
Corporate Directory
BOARD OF DIRECTORS
S J C Wise
R S Vassie
D W Bailey
T C Netscher
I L Scotland
Non‐Executive Chairman
Managing Director & CEO
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
COMPANY SECRETARY
R R Cole
REGISTERED OFFICE
Level 10, 432 St Kilda Road
Melbourne Victoria 3004 Australia
Telephone: +61 3 8660 1900
Facsimile: +61 3 8660 1999
Email: info@stbarbara.com.au
Website: www.stbarbara.com.au
30 JUNE 2014
SHARE REGISTRY
Computershare Investment 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
AUDITOR
KPMG
147 Collins Street
Melbourne Victoria 3000 Australia
STOCK EXCHANGE LISTING
Shares in St Barbara Limited are quoted on the Australian Securities Exchange, Ticker Symbol: SBM
ABN 36 009 165 066