Annual Report 2016
ST BARBARA LIMITED 2016
Annual Report
St Barbara at a glance
˃
St Barbara was established in 1969 and is an ASX‐200
listed gold mining company (ASX:SBM).
˃
St Barbara has two mining operations:
˃
˃
Leonora Operations in Western Australia
Simberi Operations in Papua New Guinea.
˃
˃
Leonora Operations comprise the Gwalia underground
mine and associated processing plant. The Gwalia
underground mine is St Barbara’s cornerstone asset.
The Gwalia deposit has an Ore Reserve grade of
8.3 g/t Au, a mine plan to FY 2024, and remains open at
depth. Gwalia compares favourably against other ASX
listed gold mines on grade, reserve size, mine life,
annual production and cost per ounce.
Simberi Operations has an open pit mine and
associated processing plant. Simberi has operated at
or above its target production run‐rate of 100,000
ounces per year since March 2015. Oxide and sulphide
Ore Reserves provide the potential for Simberi to
become a long‐term cash generating asset. Simberi is
under strategic review at the date of this report.
˃ At 30 June 2016, St Barbara had Mineral Resources of
9.08 million ounces of contained gold, including Ore
Reserves of 4.01 million ounces of contained gold.
˃ Growth initiatives planned for FY17 include:
˃
further deep drilling at Gwalia targeting a
potential northern extension and below the
existing Ore Reserve (which remains open at
depth) with the objective of increasing Resource
and Reserve, in conjunction with a ventilation
shaft feasibility study
˃ exploration utilising new seismic geophysics at
Gwalia and the Leonora region
˃
in parallel with the Simberi strategic review,
prospective
copper‐gold
sulphide‐oxide and
targets to be drilled on Tatau Island, with drilling
for oxide‐sulphide targets on Simberi Island
˃ drilling at Pinjin in Western Australia
˃ systematic evaluation of sensible, value accretive
inorganic growth opportunities.
˃
St Barbara’s primary safety measure, total recordable
injury frequency rate, was a record low 2.1 for the year
to June 2016, an outstanding result for a mixed
jurisdiction combination of underground and open pit
operations.
FY 16 at a glance
˃ Record safety
˃ Record production
˃ Record profit
˃ Record cash flow
˃ Guidance beaten for three key metrics of:
˃ gold production,
˃ all‐in sustaining cost per ounce, and
˃ capital expenditure.
Record Gold Production
386,564 ounces
400,000
380,000
360,000
340,000
320,000
300,000
1,500
1,000
500
0
10
5
0
2012
2013
2014
2015
2016
Record Low All‐in Sustaining Costs
A$933/oz
2012
2013
2014
2015
2016
Record Low Total Recordable Injury
Frequency Rate 2.1
2012
2013
2014
2015
2016
Annual Report
St Barbara at a glance
Leonora (Gwalia mine)
• Gwalia underground mine
•
FY16 production 267 koz
•
FY17F production
245 ‐ 265 koz
1.8 Moz Ore Reserve
(open at depth)
• Mine plan to 2024
•
•
Growth initiative
Continued deep drilling in
and adjacent to Gwalia
orebody targeting Reserve
and Resource additions in
combination with ventilation
shaft study, together seeking
to extend mine life
PNG
Australia
Leonora
ST BARBARA LIMITED 2016
Simberi
Simberi
• Open pit mine
•
•
FY16 production 110 koz
FY17F production
95 – 105 koz
0.6 Moz oxide and 1.3 Moz
sulphide Ore Reserve
(sulphide open at depth)
•
• Mine plan to 2018
•
•
Growth initiative
Strategic review (inc.
consideration of sulphide
expansion project) due for
completion CY 2016
Exploration of near mine
targets and on adjacent
Tatau Island
FY17 planned exploration
2,200 km2 of prospective tenements across Western Australia and Papua New Guinea
Western Australia
Gwalia deep drilling, adjacent and below
existing Reserve
Gwalia and Leonora region seismic
exploration
Pinjin drilling
Papua New Guinea
Simberi oxide near mine drilling
Tatau Island copper‐gold drilling
Tatau Island oxide and sulphide drilling
Ore Reserves as at 30 June 2016
Ore Reserves
Mt g/t Au Moz
Leonora, Western Australia
9.4
7.0
2.11
Simberi, Papua New Guinea
27.7
2.1
1.90
Total Reserves all Regions
37.0
3.4
4.01
Ore Reserves
(Moz)
Mineral Resources
(Moz)
4.0
2.1
1.9
4.0
1.9
2.1
9.2
5.0
4.2
9.1
4.6
4.5
FY 15
Leonora
Total
FY 16
Simberi
FY 15
Leonora
Total
FY 16
Simberi
Notes: All Ore Reserve and Mineral Resource figures are as at 30 June 2016, refer to pages 72 to 77 for details.
Mineral Resources are reported inclusive of Ore Reserves.
Mine lives based on Ore Reserves at 30 June 2016. FY17 guidance figures per June 2016 Quarterly Report released to ASX on 19 July 2016.
Data is rounded as displayed in charts, discrepancies in totals may occur due to rounding.
Directors’ Report
Contents
Directors’ Report
Directors
Principal activities
Overview of Group Results
Overview of Operating Results
Analysis of Australian Operations
Analysis of Simberi Operations
Discussion and Analysis of the Income Statement
Discussion and Analysis of the Cash Flow Statement
Discussion and Analysis of the Balance Sheet
Business strategy and future prospects
Material business risks
Risk management
Regulatory environment
Information on Directors
Meetings of Directors
Directors’ Interests
Remuneration Report
Indemnification and insurance of officers
Proceedings on behalf of the company
Environmental management
Non‐audit services
Auditor independence
Events occurring after the end of the financial year
Rounding of amounts
Auditor’s independence declaration
Financial Report
Ore Reserves and Mineral Resources Statements
Shareholder Information
Corporate Governance Statement
ST BARBARA LIMITED 2016
Page
Directors’ Report
2
2
2
3
4
5
6
7
8
8
9
10
12
12
13
14
14
15
32
32
32
32
32
32
33
34
35
72
78
Directors
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 2016.
The following persons were Directors of St Barbara Limited at any
time during the year and up to the date of this report:
T C Netscher
Non‐Executive Chairman (appointed 1 July 2015)
Non‐Executive Director (17 February 2014 to 30 June 2015)
R S Vassie
Managing Director & CEO (appointed 1 July 2014)
K J Gleeson
Non‐Executive Director (appointed 18 May 2015)
D E J Moroney
Non‐Executive Director (appointed 16 March 2015)
The qualifications, experience and special responsibilities of the
Directors are presented on page 13.
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.
The Company’s 2016 Corporate Governance Statement was
released to the ASX on 21 October 2016 and is available at
www.stbarbara.com.au/profile/governance/
Page 2
ST BARBARA LIMITED 2016
During the 2016 financial year the Group significantly improved its
financial performance, with key achievements over the year being:
• Record annual production from the Gwalia mine of 267,166
ounces of gold (2015: 248,142 ounces), generating significant
cash
(2015:
$168,695,000).
the year of $223,616,000
flows during
• Successful turnaround of the Simberi operations in Papua New
Guinea, with this operation producing record production of
110,286 ounces (2015: 79,568 ounces), generating positive cash
flows of $33,808,000 for the year (2015: negative $33,000).
The Group reported a statutory net profit after tax of $169,388,000
(2015: $39,682,000) for the year ended 30 June 2016, including
significant items totalling profit after tax of $41,892,000 (2015: net
loss after tax of $2,282,000).
To provide additional clarity
into the performance of the
operations underlying measures for the year are reported, together
Underlying net profit after tax,
with the statutory results.
items, was
representing net profit excluding
$127,496,000 for the year (2015: $41,964,000).
significant
During the year the Group generated cash flows from operations of
$242,788,000
strong
(2015: $113,201,000)
performance of both Gwalia and Simberi.
reflecting
the
Total
Cash on hand at 30 June 2016 was $136,689,000 (2015:
$76,871,000).
interest bearing borrowings were
$226,318,000 (2015: $346,961,000), with a significant reduction in
borrowings during the year possible with the strong cash flows
generated by the operations.
The key shareholder returns for the year are presented in the table
below.
Basic earnings per share
(cents per share)
Return on capital employed
Change in share price
2016
2015
34.21
54%
418%
4.29
21%
396%
Directors’ Report
Overview of Group Results
The consolidated result for the year is summarised as follows:
EBITDA(3)(6)
EBIT(2)(6)
Profit before tax(4)
Statutory profit (1) after tax
Total net significant items after tax
EBITDA (6) (excluding significant
items)
EBIT (6) (excluding significant items)
Profit before tax (excluding
significant items)
Underlying net profit after tax(5)(6)
2016
$’000
2015
$’000
298,106
167,557
217,191
82,486
183,402
40,772
169,388
39,682
41,892
(2,282)
285,500
184,081
204,585
99,010
170,796
57,296
127,496
41,964
Details of significant items included in the Statutory Profit for the
year are displayed in the table below. Descriptions of each item
are provided in Note 3 to the Financial Report.
Asset impairments and write
downs
Increase in rehabilitation
provision
2016
$’000
‐
‐
2015
$’000
(11,425)
(5,896)
Gain on sale of KOTH and Kailis
14,056
‐
Effect of unhedged US borrowings
(7,360)
(47,470)
Unrealised foreign exchange gain
13,809
42,805
Realised foreign exchange loss on
buy back of US borrowings
(7,899)
(13,066)
Net profit from discontinued
operation
Significant items before tax
Income tax
Significant items after tax
‐
18,528
12,606
29,286
41,892
(16,524)
14,242
(2,282)
(1) Statutory profit is net profit after tax attributable to owners of the
parent.
(2) EBIT is earnings before interest revenue, finance costs and income tax
revenues and expenses associated with
expense.
includes
discontinued operations in prior year.
It
(3) EBITDA is EBIT before depreciation and amortisation. It includes
revenues and expenses associated with discontinued operations in
prior year.
(4) Profit before tax is earnings before income tax expense. It includes
revenues and expenses associated with discontinued operations in
prior year.
(5) Underlying net profit after income tax is net profit after income tax
(“Statutory Profit”) excluding significant items as described in Note 3 to
the financial statements, and excluding profit or loss from discontinued
operations in prior year.
(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.
Page 3
Directors’ Report
The table below provides a summary of the underlying profit
before tax from continued operations in Australia and at Simberi.
Year ended 30 June
2016
$’000
Australian
Operations
Simberi
Operations
Group
Revenue
440,333
169,782
610,115
Mine operating costs
(161,117)
(119,810)
(280,927)
Gross Profit
Royalties
Depreciation and
Amortisation
279,216
49,972
329,188
(17,608)
(3,847)
(21,455)
(63,492)
(12,098)
(75,590)
34,027
198,116
Underlying profit
from operations(1)
(1) Excludes impairment losses, net gain on disposal of assets, corporate
costs, interest and tax and is non‐IFRS financial information, which has
not been subject to review or audit by the Group’s external auditors.
The measure is presented to enable an understanding of the underlying
performance of the operations.
232,143
The table below provides a summary of the cash contribution from
continued operations in Australia and at Simberi.
Year ended 30 June
2016
$’000
Operating cash
contribution
Australian
Operations
Simberi
Operations
Group
271,462
43,210
314,672
(9,402)
(9,006)
(36,467)
(27,065)
Capital expenditure –
sustaining
Capital expenditure ‐
growth(2)
Cash contribution(1)
269,199
235,391
(1) Cash contribution is non‐IFRS financial information, which has not been
subject to review by the Group’s external auditors. This measure is
provided to enable an understanding of the cash generating
performance of the operations
33,808
(9,006)
‐
(2) Growth capital at Gwalia represents the deep drilling expenditure.
ST BARBARA LIMITED 2016
Overview of Operating Results
Total production for the Group in the 2016 financial year was
386,564 ounces of gold (2015: 377,387 ounces), and gold sales
amounted to 381,761 ounces (2015: 382,104 ounces) at an average
gold price of A$1,595 per ounce (2015: A$1,439 per ounce). Total
gold production included 9,112 ounces (2015: 49,677 ounces) from
the King of the Hills mine, which ceased production in April 2015
and processed stockpiled material until September 2015.
Consolidated All‐In Sustaining Cost (AISC) for the Group was $933
per ounce in 2016 (2015: $1,007 per ounce), reflecting the benefits
of strong results achieved at Gwalia and improved performance at
Simberi.
Total net cash contribution from operations was $269,199,000
(2015: $185,963,000) as a result of the record performance from
Gwalia and Simberi, which was after capital expenditure and
funding of the deep drilling program.
Page 4
Directors’ Report
Analysis of Australian Operations
Gwalia
ST BARBARA LIMITED 2016
Total sales revenue from the Leonora operations of $440,333,000
(2015: $435,685,000) was generated from gold sales of 276,210
ounces (2015: 302,094 ounces) in the year at an average achieved
gold price of A$1,592 per ounce (2015: A$1,437 per ounce).
During the 2016 year, revenue benefitted from the significantly
higher average gold price. The decrease in gold sales was due to
40,565 ounces lower production from the King of the Hills mine
with its divestment in October 2015. In April 2015 mining
operations at King of the Hills ceased and processing of stockpiles
through the Gwalia mill continued to the end of September 2015.
A summary of production performance for the year ended 30 June
2016 is provided in the table below.
Details of 2016 Production Performance
Gwalia
King of the Hills
2016
2015
2016
924
9.3
951
9.1
96
902
8.9
931
8.6
96
‐
‐
76
3.9
95
2015
457
4.1
392
4.2
95
267,166
248,142
9,112
49,677
609
642
893
1,112
783
841
964
1,103
Underground Ore
Mined (kt)
Grade (g/t)
Ore Milled (kt)
Grade (g/t)
Recovery (%)
Gold Production
(oz)
Cash Cost (1)
(A$/oz)
All‐In Sustaining
Cost (AISC) (2)
(A$/oz)
(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).
(2) All‐In Sustaining Cost (AISC) is based on Cash Operating Costs, and adds
items relevant to sustaining production. It includes some but not all, of
the components identified in World Gold Council’s Guidance Note on
Non‐GAAP Metrics – All‐In Sustaining Costs and All‐In Costs (June 2013),
which is a non‐IFRS financial measure.
Gwalia produced a record 267,166 ounces of gold in 2016 (2015:
248,142 ounces). The record performance at Gwalia was the result
of multiple factors,
in productivity,
successful implementation of innovations in mining and higher
grade.
improvements
including
Ore tonnes mined from the Gwalia underground mine increased
from 902,000 tonnes in 2015 to 924,000 tonnes in 2016, largely
due to productivity improvements achieved during the year,
including the introduction of an ore pass system and continued
underground storage of waste allowing greater truck availability
during critical stope movements.
Ore mined grades increased from 8.9 grams per tonne gold in 2015
to 9.3 grams per tonne gold in 2016 mainly due to reduced dilution,
and high grade shoots present in stopes that cannot be reliably
estimated by production drilling. Ore milled grade increased from
8.6 grams per tonne in 2015 to 9.1 grams per tonne in line with the
higher grade of ore mined. The Gwalia mill continued to perform
strongly in 2016, and throughput increased in line with the higher
ore production; the average recovery was consistent with the prior
year at 96 percent.
Gwalia Gold Production
(koz)
214
185
183
267
248
131
109
83
FY 09
FY 10
FY 11
FY 12
FY 13
FY 14
FY 15
FY 16
Gwalia unit Cash Operating Costs(1) for the year were $609 per
ounce (2015: $642 per ounce), reflecting the benefit of increased
production and higher average grade. The unit All‐In Sustaining
Cost (AISC)(2) for Gwalia was $783 per ounce in 2016, which was
well down on the $841 per ounce reported in the prior year. The
lower AISC in 2016 was due mainly to the lower unit Cash
Operating Cost and reduced sustaining capital expenditure. Total
Cash Operating Costs at Gwalia of $162,704,000 were higher
compared with the prior year (2015: $159,307,000) due to the
increase in production volumes.
In 2016 Gwalia generated net cash flows, after capital and deep
drilling expenditure, of $223,616,000 (2015: $168,695,000).
King of the Hills
Gold production from King of the Hills was 9,112 ounces (2015:
49,677 ounces). The lower production in 2016 was as a result of
mining operations ceasing in April 2015 and only the remaining
stockpile was processed in the first quarter of the 2016 financial
year.
In the remaining months of the operations King of the Hills
generated net cash flows, after capital expenditure, of $11,775,000
(2015: 17,301,000).
Page 5
Directors’ Report
ST BARBARA LIMITED 2016
Analysis of Simberi Operations
Simberi
During 2016, the Simberi operations continued to build on the 2015
successful turnaround. The turnaround has been achieved through
optimising the processing plant to sustain throughput of 3.5 million
tonnes per annum, improving the mining fleet and achieving
productivity improvements in mining operations, increased focus
on the ore delivery system and a commitment to reduce operating
costs.
Total sales revenue from Simberi in 2016 was $169,782,000 (2015:
$112,521,000), generated from gold sales of 105,551 ounces (June
2015: 77,236 ounces) at an average achieved gold price of A$1,604
per ounce (2015: A$1,445 per ounce).
Simberi production of 110,286 ounces of gold was the highest since
the Group acquired the operations in September 2012 (2015:
79,568 ounces).
Ore tonnes mined and total volume of material moved increased
quarter on quarter during 2016. Ore mined in 2016 totalled
3,372,000 tonnes, which was an increase of 63% on the prior year.
The improvement in mining performance in the 2016 financial year
was largely attributable to continuous improvement in mine
planning, upgrading of the mining equipment and improvement in
equipment reliability and availability, and introducing operating
efficiencies across the operations.
A summary of production performance at Simberi for the year
ended 30 June 2016 is provided in the table below.
Ore mined grades were generally in line with the prior year at 1.26
grams per tonne gold (2015: 1.23 grams per tonne).
Details of 2016 Production Performance
Simberi
2016
2015
Open Pit Ore Mined (kt)
Grade (g/t)
Ore Milled (kt)
Grade (g/t)
Recovery (%)
Gold Production (oz)
Cash Cost(1) (A$/oz)
All‐In Sustaining Cost (AISC)(2)
(A$/oz)
3,372
1.26
3,315
1.26
82
110,286
1,143
1,293
2,070
1.23
2,660
1.10
84
79,568
1,337
1,464
(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).
(2) All‐In Sustaining Cost (AISC) is based on Cash Operating Costs, and adds
items relevant to sustaining production. It includes some but not all, of
the components identified in World Gold Council’s Guidance Note on
Non‐GAAP Metrics – All‐In Sustaining Costs and All‐In Costs (June 2013),
which is a non‐IFRS financial measure.
Ore milled increased to 3,315,000 tonnes (2015: 2,660,000 tonnes),
which reflected the benefit of being able to operate both the SAG
and ball mills.
Simberi Gold Production
(koz)
110
80
44
FY 14
FY 15
FY 16
Simberi unit Cash Operating Costs for the year were $1,143 per
ounce (2015: $1,337 per ounce), reflecting the positive impact of
increased production and lower operating costs. The unit All‐In
Sustaining Cost (AISC) for Simberi was $1,293 per ounce in 2016
(2015: $1,464 per ounce). Total Cash Operating Costs at Simberi
during the 2016 year were higher than the prior year at
$126,057,000 (2015: $106,382,000) due to increased production.
In 2016 Simberi generated positive net cash flows, after capital
expenditure, of $33,808,000 (2015: negative $33,000).
Page 6
Directors’ Report
Discussion and Analysis of the Income Statement
Revenue
Other expenditure
ST BARBARA LIMITED 2016
Other expenditure of $1,967,000 (2015: $9,705,000) included
amounts associated with share base payments and charges for
Company projects. The prior year expense included a charge
related to an onerous provision for surplus office lease space.
Net finance costs
Finance costs in the year were $35,749,000 (2015: $43,300,000).
Finance costs comprised interest paid and payable on borrowings
and finance leases of $28,608,000 (2015: $37,179,000), capitalised
borrowing costs relating to the senior secured notes amortised to
the income statement of $5,434,000 (2015: $4,246,000) and the
unwinding of the discount on the rehabilitation provision of
$1,707,000 (2015: $1,875,000).
Foreign currency movements
A net foreign exchange movement gain of $142,000 was recognised
for the year (2015: loss of $15,350,000), which included realised
foreign currency losses of $7,899,000 (2015: $13,066,000) on
repayments of US denominated debt during the year, offset by a
net unrealised currency gain of $6,449,000 (2015: net loss of
$4,665,000) related to Australian and US intercompany loans and
third party balances.
Income tax
An income tax expense of $14,014,000 was recognised for the 2016
year (2015: income tax expense of $1,090,000), which related to
income tax expense of $17,358,000 on Australian taxable income,
less an income tax credit relating to PNG operations of $3,344,000.
Included in the tax expense in 2016 was a benefit of $18,796,000
related to deferred tax assets recognised as part of tax
consolidation of the Australian group, and a benefit of $9,751,000
relating to the derecognition of deferred tax liabilities relating to
unrealised
foreign exchange gains on borrowings between
companies within the tax consolidated group which had previously
been recognised. There was no income tax paid during the 2016
financial year.
revenue
increased
Total
to
$610,115,000 in 2016. Revenue from Leonora and Simberi was
higher than the previous year due to increased production and gold
sales, and the benefit of the significantly higher gold price.
from $548,206,000
in 2015
Revenue from King of the Hills in the year was lower than the prior
year at $13,960,000 (2015: $71,556,000).
Mine operating costs
Mine operating costs in relation in 2016 were $280,927,000
compared to $311,701,000 in the prior year. The decrease in
operating costs was mainly attributable to the cessation of mining
at King of the Hills in April 2015.
Other revenue and income
Other revenue of $1,994,000 (2015: $1,782,000) comprised mainly
interest earned during the year of $1,960,000 (2015: $1,586,000).
The increase in interest earned is reflective of higher cash balances
in 2016.
Other income for the year was $3,564,000 (2015: $79,000).
Exploration
Total exploration expenditure incurred during the 2016 year
amounted to $15,792,000 (2015: $9,932,000), with an amount of
$9,006,000 (2015: $2,241,000) capitalised to exploration and
evaluation, relating to drilling expenditure at Gwalia. Exploration
in the year
expenditure expensed
amounted to $6,786,000 (2015: $7,691,000). Exploration activities
during the year focused on investigating highly prospective near
mine high grade oxide targets at Simberi, undertaking an extensive
deep drilling program at Gwalia and regional exploration in
Western Australia.
income statement
in the
Corporate costs
Corporate costs for the year of $19,184,000 (2015: $20,284,000)
comprised mainly expenses relating to the corporate office and
compliance related costs. Expenditure in 2016 was lower than in
the prior year as a result of a cost reduction program that
commenced in 2014.
Royalties
for
the year were $21,455,000
Royalty expenses
(2015:
$20,231,000). 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. The increase in royalty expenses in
2016 was attributable to increased gold revenue from Leonora and
Simberi.
Depreciation and amortisation
Depreciation and amortisation of fixed assets and capitalised mine
development amounted to $80,915,000 (2015: $85,071,000) for
the year. Depreciation and amortisation attributable to the
Australian Operations was $63,492,000 (2015: $69,837,000), with
the lower charge attributable to the prior year charge including
$15,739,000 associated with King of the Hills. Higher gold
production from Gwalia in the 2016 financial year resulted in an
increase in depreciation and amortisation for this mine. The
expense at Simberi was $12,098,000 (2015: $10,038,000), with the
higher charge due to increased production.
Page 7
Directors’ Report
ST BARBARA LIMITED 2016
Discussion and Analysis of the Cash Flow Statement
Discussion and Analysis of the Balance Sheet
Operating activities
Net Assets and Total Equity
flows
from operating activities
Cash
the year were
$242,788,000 (2015: $113,201,000), reflecting the benefit of higher
receipts from customers and significantly lower payments to
suppliers and employees compared to the prior year.
for
Receipts from customers of $615,244,000 (2015: $555,823,000)
were higher than the prior year due to increased gold sales from
higher gold production, and the benefit of the stronger average
gold price in 2016. Payments to suppliers were $336,805,000
(2015: $407,508,000), with the significant reduction associated
with payments at the Gold Ridge and King of the Hills mines in the
prior year.
Payments for exploration expensed in the year amounted to
$6,786,000 (2015: $7,383,000). Interest paid in the year was
$30,405,000 (2015: $28,682,000), with the higher expense due
mainly to the impact of the weaker Australian dollar on United
States dollar denominated interest payments.
Investing activities
in
flows used
investing activities amounted to
Net cash
$46,122,000 (2015: $50,602,000) for the year. Lower expenditure
(2015:
on property, plant and equipment of $16,057,000
investing
$23,762,000) was
expenditure in the year. Lower expenditure on property, plant and
equipment in 2016 was mainly due to the completion of the plant
expansion at Simberi in the prior year.
the main reason
for reduced
Lower mine development of $21,071,000 (2015: $24,705,000) was
due mainly to reduced expenditure at King of the Hills. Exploration
expenditure capitalised during the year totalled $9,006,000 (2015:
$2,241,000), which related to the deep drilling program at Gwalia.
Investing expenditure during the year was in the following major
areas:
Underground mine development and infrastructure at Gwalia –
$23,285,000 (2015: $30,662,000).
Purchase of property, plant and equipment at the Leonora
operations – $3,780,000 (2015: $3,073,000)
Simberi oxide expansion and other capital projects – $Nil (2015:
$8,412,000).
Purchase of property, plant and equipment at the Simberi
operations – $9,402,000 (2015: $699,000)
Financing activities
Net cash flows related to financing activities in 2016 were a net
outflow of $140,130,000 (2015: net outflow of $71,341,000), due
mainly to the repayment of debt. The main movements in
financing cash flows included:
Partial repayment of the secured notes through repurchases
totalling $37,798,000 (2015: $66,831,000).
Total repayment of the Red Kite loan facility amounting to
$102,073,000 (2015: $Nil).
Repayment of finance leases amounting to $2,225,000 (2015:
$4,003,000).
During the year cash backed banking guarantees was released,
amounting to $1,966,000.
St Barbara’s net assets and total equity increased substantially
during the year by $160,185,000 to $300,614,000 as a result of
higher cash, combined with a reduction in total liabilities with the
full repayment of the Red Kite loan and repurchase of senior
secured notes.
Current trade and other payables decreased to $39,768,000 at 30
June 2016 (2015: $42,895,000), reflecting mainly the impact of the
cessation of activities at King of the Hills.
Provisions decreased to $43,768,000 (2015: $62,597,000) due to
de‐recognition of the King of the Hills rehabilitation provision and
the reversal of the onerous provision for office lease space.
The deferred tax balance was a net asset of $1,098,000 (2015: net
asset of $13,985,000). Deferred tax assets decreased during the
year mainly due to the utilisation of carried forward tax losses.
Debt management and liquidity
The available cash balance at 30 June 2016 was $136,689,000
(2015: $76,871,000), with an additional $118,000
(2015:
$2,084,000) held on deposit as restricted cash and reported within
trade receivables.
Total interest bearing liabilities reduced to $226,318,000 at 30 June
2016 (2015: $346,961,000). The weaker Australian dollar had a
negative impact on the United States dollar denominated debt as
at 30 June 2016 however the repurchase of senior secured notes
and Red Kite loan repayments significantly reduced borrowings.
The largest components of the year end balance were:
US$167,975,000 (2015: US$195,980,000) senior secured notes
rate
transaction costs of
translated at
($225,405,000), net of capitalised
$2,838,000;
the year end AUD/USD exchange
A debt facility at the end June 2015 of US$75,000,000 drawn
down with RK Mine Finance (“Red Kite”) was fully repaid in May
2016.
Lease liabilities of $1,542,000.
The AUD/USD exchange rate as at 30 June 2016 was 0.7452
(30 June 2015: 0.7713).
Page 8
Directors’ Report
Business strategy and future prospects
St Barbara’s strategic focus is on mining lower cost gold deposits in
Australia and at Simberi in Papua New Guinea. Currently the Group
has a diversified asset portfolio spanning underground and open
cut mines, and exploration projects in Australia and Papua New
Guinea. A successful turnaround was completed at the Simberi
operations during the year through the optimisation of the
processing plant, improving the mining fleet, and productivity
improvements in mining operations.
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 key value drivers: relative total shareholder returns,
growth in gold ore reserves, return on capital employed and
exploration success.
During the 2016 financial year the Group achieved a number of
strategic milestones:
Record annual gold production was achieved at Gwalia and
At Gwalia performance was enhanced through
Simberi.
implementation of productivity measures. At Simberi the
turnaround of the operations that commenced in the prior year
was consolidated to achieve consistent production in 2016.
Record safety performance for the Group, reporting a Total
Recordable Injury Frequency Rate (TRIFR) of 2.1 (2015: 5.0).
Through strong cash generation from the operations the Group
reduced
(2015: $70,834,000),
repaying the Red Kite loan facility in full which was twelve
months ahead of schedule.
its debt by $142,096,000
During the year the deep drilling program at Gwalia resulted in
an increase to Mineral Resources and Ore Reserves, and the
exploration programs in Western Australia and Simberi and the
neighbouring islands were advanced.
Strategic drivers for the business include:
Optimising cash flow and reducing the cost base: The Group is
focused on optimising cash flow from operations through
maximising production and managing costs at its existing
operations, enhancing operating capabilities and incorporating
new technologies across St Barbara. The Group will continue to
identify opportunities to enhance productivity and improve
operating performance in a volatile gold market.
Improving productivity: The Group is focused on maintaining
consistent operations at Simberi. St Barbara continues to
invest to improve infrastructure, mining fleets and capability to
ensure consistent and reliable production at its operations.
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
Gwalia and Simberi operations. During 2016 a deep drilling
program continued at Gwalia with the objective to extend the
Gwalia mineral resource and develop the case for mining below
the current reserve. 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 and on its tenements
in regional Western Australia.
Maintaining a conservative financial profile: The Group will
continue to maintain prudent financial management policies
with
to ensure
appropriate investments in the operations. The Group’s
financial management policies are aimed at generating net cash
the objective of maintaining
liquidity
ST BARBARA LIMITED 2016
flows from operations to meet financial commitments, fund
exploration and reduce debt to the extent viable and
appropriate. The Group’s capital management plan is reviewed
and discussed with the Board on a regular basis. During 2016
the Company successfully reduced debt ahead of schedule
using the strong cash flows generated by the operations.
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 are an
important focus for the Group. The Group invests in the
training and development of its employees, talent management
and succession planning.
The Company views such efforts as an important component of
instilling St Barbara’s values throughout the organisation and
retaining continuity
The Group has
in the workforce.
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
infrastructure,
particularly in health and education, support local businesses,
leisure activities, and other
and provide venues
opportunities for developing communities in which the Group
operates.
local communities to
improve
for
Within Australia, the Gwalia underground mine with ore reserves
of 1.8 million ounces remains the flagship asset of the Group,
generating strong cash flows. To optimise the value of ongoing
truck haulage at Gwalia a multi option ventilation study
is
underway; truck haulage with additional ventilation has been
identified as the preferred long term materials movement solution
for the mine, facilitating mining below 1,800 metres below surface.
In parallel the deep drilling program at Gwalia will continue during
the 2017 financial year.
In Papua New Guinea, a prefeasibility study (PFS) for the Simberi
sulphide project was completed during 2016. A strategic review of
the PNG assets, including the Simberi mine, was announced in
February 2016. The purpose of the review is to determine how
best to maximise the value from the PNG assets, and discussions
are in progress with a number of third parties regarding a variety of
options. It is expected that the strategic review will be complete by
the end of calendar 2016.
The Group’s 2017 financial year budget was developed in the
context of a volatile gold market and weakening Australian dollar
against the United States dollar. The Group’s priorities in the 2017
financial year are to continue consistent production from Gwalia
and Simberi, drive productivity improvements at both operations
and contain capital expenditure. For the 2017 financial year the
Group’s operational and financial outlook is as follows:
Gold production is expected to be in the range 340,000 to
370,000 ounces.
All‐In Sustaining Cost is expected to be in the range of $985 per
ounce to $1,075 per ounce.
Capital expenditure is expected to be in the range of $45
million to $53 million.
Exploration expenditure is anticipated to be between $18
million and $22 million.
The focus for the exploration program in 2017 will be to continue
the deep drilling at Gwalia, continued exploration at Pinjin in
Western Australia and to drill targets on the Tatau and Big Tabar
islands in Papa New Guinea.
Page 9
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 2016 are:
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 interrupt
operations, which may have a material adverse effect on the
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, and used gold
forward contracts to secure revenues during the completion of
the turnaround at Simberi.
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).
Government regulation:
statutory
The Group’s mining, processing,
development and exploration activities are subject to various
regulations governing prospecting,
laws and
development, production, taxes, royalty payments,
labour
toxic
standards and occupational health, mine safety,
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
implementation
exploration companies, or more stringent
thereof, could have a material adverse impact on the Group.
Failure to comply with any applicable laws, regulations or
permitting requirements may result in enforcement actions
against the Group, including orders issued by regulatory or
judicial authorities causing operations to cease or be curtailed,
and may
include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial
actions.
Operating risks and hazards: The Group’s mining operations,
consisting of open pit and underground mines, generally
involve a high degree of risk, and these risks increase when
mining occurs at depth. The Group’s operations are subject to
in the
all the hazards and risks normally encountered
ST BARBARA LIMITED 2016
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.
Reliance on transportation facilities and infrastructure: The
Group depends on the availability and affordability of reliable
transportation facilities and infrastructure (e.g. roads, bridges,
airports, power sources and water supply)
to deliver
consumables to site, and final product to market. Interruption
in the provision of such infrastructure (e.g. due to adverse
weather; community or government
interference) could
adversely affect St Barbara's operations, financial condition and
results of operations. The Group’s operating procedures
include business continuity plans which can be enacted in the
event a particular piece of
is temporarily
unavailable.
infrastructure
Production, cost and capital estimates: The Group prepares
estimates of future production, operating costs and capital
expenditure relating to production at its operations. The ability
of the Group to achieve production targets, or meet operating
and capital expenditure estimates on a timely basis cannot be
assured. The assets of the Group, as any others, are subject to
uncertainty with regards to ore tonnes, grade, metallurgical
recovery, ground conditions, operational environment, funding
for development, regulatory changes, accidents and other
unforeseen circumstances such as unplanned mechanical
failure of plant and equipment. Failure to achieve production,
cost or capital estimates, or material increases to costs, could
have an adverse impact on the Group’s future cash flows,
profitability and financial condition. The development of
estimates is managed by the Group using a rigorous budgeting
and forecasting process. Actual results are compared with
forecasts to identify drivers behind discrepancies which may
result in updates to future estimates.
Changes in input costs: Mining operations and facilities are
intensive users of electricity, gas and carbon‐based fuels.
Energy prices can be affected by numerous factors beyond the
Group's control, including global and regional supply and
inflation, political and economic
demand, carbon taxes,
conditions, and applicable regulatory regimes. The prices of
various sources of energy may increase significantly from
current levels.
The Group's production costs are also affected by the prices of
commodities it consumes or uses in its operations, such as
diesel, lime, sodium cyanide and explosives. The prices of such
commodities are influenced by supply and demand trends
affecting the mining industry in general and other factors
outside the Group's control. Increases in the price for materials
consumed in St Barbara's mining and production activities
could materially adversely affect its results of operations and
financial condition.
Certain of the Group's operations use contractors for the bulk
of the mining services at those operations, and some of its
construction projects are conducted by contractors. As a
result, the Group's operations are subject to a number of risks,
including:
Page 10
Directors’ Report
- negotiation and renewal of agreements with contractors on
acceptable terms;
- failure of contractors to perform under their agreements,
failure to comply with safety systems and
including
standards, contractor insolvency and failure to maintain
appropriate insurance;
- failure of contractors to comply with applicable legal and
regulatory requirements; and
- changes in contractors.
In addition, St Barbara may incur liability to third parties as a
result of the actions of its contractors. The occurrence of one or
more of these risks could have a material adverse effect on its
results of operations and financial position.
The Group manages risks associated with input costs through a
centralised procurement function which analyses market
trends, supply environment, and operational demand planning,
to establish appropriate sourcing strategies
for spend
categories.
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.
Ore Reserves and Mineral Resources: The Group's estimates of
Ore Reserves and Mineral Resources are based on different
levels of geological confidence and different degrees of
technical and economic evaluation, and no assurance can be
given that anticipated tonnages and grades will be achieved,
that the indicated level of recovery will be realised or that Ore
Reserves could be mined or processed profitably. The quality
of any Ore Reserve or Mineral Resource estimate is a function
of the quantity of available technical data and of the
assumptions used in engineering and geological interpretation,
and modifying factors affecting economic extraction. Such
estimates are compiled by experienced and appropriately
qualified geoscientists using mapping and sampling data
field observations, and
obtained
from bore holes and
ST BARBARA LIMITED 2016
subsequently reported by Competent Persons under the JORC
Code.
Fluctuation in gold prices, key input costs to production, as well
as the results of additional drilling, and the evaluation of
reconciled production and processing data subsequent to any
estimate may require revision of such estimate.
Actual mineralisation or ore bodies may be different from those
predicted, and any material variation in the estimated Ore
Reserves, including metallurgy, grade, dilution, ore loss, or
stripping ratio at the Group's properties may affect the
economic viability of its properties, and this may have a
material adverse impact on the Group's results of operations,
financial condition and prospects.
There is also a risk that depletion of reserves will not be offset
by discoveries or acquisitions or that divestitures of assets will
lead to a lower reserve base. The reserve base of the Group
may decline
if reserves are mined without adequate
replacement and the Group may not be able to sustain
production beyond current mine
lives, based on current
production rates.
Political, social and security risks: St Barbara has production
and exploration operations in a developing country that is
subject to political, economic and other risks and uncertainties.
The formulation and implementation of government policies in
this country 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 government relations. The Group’s operating
procedures at its mine in Papua New Guinea includes detailed
security plans.
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 the
Group. A breach of these terms may lead to a default. At 30
June 2016, based on forward projections, there is adequate
headroom under these restrictions. However 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.
Refinancing risk:
The Company has debt with external
financiers, being the US senior secured notes. 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.
Foreign exchange:
The Group has an Australian dollar
presentation currency for reporting purposes. However, gold is
sold throughout the world based principally on the U.S. dollar
price, and most of the Group's revenues and interest bearing
liabilities are realised in, or linked to, U.S. dollars. The Group is
also exposed to U.S. dollars and Papua New Guinea Kina in
respect of operations located in Papua New Guinea as certain
of its operating costs are denominated in these currencies.
There is a "natural" (but not perfect) hedge which matches to
some degree U.S. denominated revenue and obligations related
to interest bearing liabilities, which may reduce, but does not
eliminate, foreign exchange risk. The Group is therefore
Page 11
Directors’ Report
exposed to fluctuations in foreign currency exchange rates.
The Group monitors foreign exchange exposure and risk on a
monthly basis through the centralised treasury function and a
Management Treasury Risk Committee.
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 Simberi there is
a dedicated community relations team to work closely with the
local communities and government.
Insurance: The Group maintains insurance to protect against
certain risks. However, the Group’s insurance will not cover all
the potential risks associated with a mining company’s
operations. The Group may also be unable to maintain
insurance to cover these risks at economically feasible
premiums. Insurance coverage may not continue to be
available or may not be adequate to cover any resulting
liability. Moreover, insurance against risks such as loss of title
to mineral property, environmental pollution, or other hazards
as a result of exploration and production is not generally
available to the Group, or to other companies in the mining
industry on acceptable terms. The Group might also become
subject to liability for pollution or other hazards which may not
be insured against, or which it may elect not to insure against
because of premium costs or other reasons. Losses from these
events may cause the Group to incur significant costs that could
have a material adverse effect upon its financial performance
and results of operations.
Weather and climactic conditions: The effects of changes in
rainfall patterns, changing storm patterns and intensities have
from time to time adversely impacted, and may in the future
adversely impact, the cost, production levels and financial
performance of the Group's operations. The Group's mining
operations have been, and may in the future be, subject from
time to time to severe storms and high rainfalls leading to
flooding and associated damage, which has resulted, and may
result in delays to, or loss of production at its mines (e.g. due to
water ingress and flooding at the base of the mine). Seismic
activity is of particular concern to mining operations. The
Simberi mine in Papua New Guinea is in an area known to be
seismically active and is subject to risks of earthquakes and the
related risks of tidal surges and tsunamis.
Risk of impairment: If the gold price suffers a significant
decline, or the operations are not expected to meet future
production levels, there may be the potential for future
impairment write downs at any of the operations.
Risk management
The Group manages the risks listed above, and other day‐to‐day
risks through an established enterprise wide risk management
framework, which conforms to Australian and
international
standards and guidance. The Group’s risk reporting and control
mechanisms are designed to ensure strategic, safety, environment,
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 and Risk Committee, the
internal audit function and the external auditor.
Senior management and the Board regularly review the risk
portfolio of the business and the effectiveness of the Group’s
management of those risks.
ST BARBARA LIMITED 2016
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
in various
jurisdictions including Criminal Code 1995 (Cth) in Australia and/or
the UK Bribery Act.
if any are governed by
laws
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
the Minerals Resources Authority.
Environmental impact is governed by the Environment Act 2000,
administered by the Department of Environment and Conservation.
The PNG government has been reviewing the Mining Act since
2014. There is no public timeframe for completion of the review.
administered by
Page 12
Directors’ Report
Information on Directors
Tim Netscher
BSc (Eng) (Chemical), BCom, MBA, FIChE, CEng, MAICD
Independent Non‐Executive Chairman
Appointed as a Director 17 February 2014
Appointed as Chairman 1 July 2015
Mr Netscher is an experienced international mining executive with
extensive operational, project development, and transactional
experience and expertise in senior executive management roles.
Mr Netscher’s experience covers a wide range of resources
including nickel, coal, iron ore, uranium and gold and regions
including Africa, Asia and Australia.
Other current listed company directorships
Gold Road Resources Limited
Western Areas Limited
Toro Energy Limited
(announced as resigning effective
1 September 2016)
Former listed company directorships in last 3 years
Deep Yellow Limited (resigned December 2015)
Gindalbie Metals Limited (resigned October 2014)
Aquila Resources Limited (resigned July 2014)
Special responsibilities
Chair of the Health, Safety, Environment and Community
Committee
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Robert S (Bob) Vassie
B. Mineral Technology Hons (Mining), GAICD, MAUSIMM
Managing Director and Chief Executive Officer
Appointed as Managing Director & CEO 1 July 2014
Mr Vassie is a mining engineer with 30 years international mining
industry experience 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 listed public company directorships: Nil
Former listed company directorships in last 3 years
Inova Resources Limited (formerly Ivanhoe Australia Limited,
resigned November 2013)
Special responsibilities
Member of the Health, Safety, Environment and Community
Committee
ST BARBARA LIMITED 2016
Kerry J Gleeson
LLB (Hons), FAICD
Independent Non‐Executive Director
Appointed as a Director 18 May 2015
Ms Gleeson is an experienced corporate executive with over 20
years boardroom and senior management experience across
Australia, UK and the US, in a variety of industries including mining,
agriculture, chemicals, logistics and manufacturing. A qualified
lawyer in both UK and Australia, she has significant expertise in
complex corporate finance and transactional matters, and in
corporate
international
businesses. She was a member of the Group Executive at Incitec
Pivot Limited for 10 years until 2013, including as Company
Secretary and General Counsel. Previously, she was a corporate
finance and transactional partner in an English law firm, and also
practised as a senior lawyer at the Australian law firm, Ashurst.
governance
Australian
and
in
Ms Gleeson is a Non‐Executive Director of McAleese Limited, and a
member of its Audit, Business Risk and Compliance Committee.
She is also a Non‐Executive Director of Trinity College, University of
Melbourne.
Other current listed company directorships
McAleese Limited
Former listed company directorships in last 3 years: Nil
Special responsibilities
Chair of Remuneration Committee
Member of the Audit & Risk Committee
Member of the Health, Safety, Environment and Community
Committee
David E J Moroney
BCom, FCA, FCPA, GAICD
Independent Non‐Executive Director
Appointed as a Director 16 March 2015
Mr Moroney is an experienced finance executive with more than 20
years’ experience in senior corporate finance roles, including 15
years in the mining industry, and extensive international work
experience with strong skills
in finance, strategic planning,
governance, risk management and leadership.
Mr Moroney is an independent non‐executive director of non‐ASX
listed Geraldton Fishermen’s Co‐operative Ltd (the southern
hemisphere’s largest exporter of lobster) and chair of its Audit &
Risk Management Committee and member of its Performance and
Nomination Committee. Mr Moroney is also an independent non‐
executive director of WA Super, Western Australia’s largest public
offer superannuation fund (and Chair of the Risk Committee, and a
member of the Compliance & Audit and Human Resources
Committees).
Other current listed company directorships: Nil
Former listed company directorships in last 3 years: Nil
Special responsibilities
Chair of the Audit & Risk Committee
Member of the Health, Safety, Environment and Community
Committee
Member of the Remuneration Committee
Page 13
Directors’ Report
Qualifications and experience of the Company Secretary
Meetings of Directors
ST BARBARA LIMITED 2016
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 30 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 chief financial and
risk officer.
Information on Executives
Robert S (Bob) Vassie
B. Mineral Technology Hons (Mining), GAICD, MAUSIM
Managing Director and Chief Executive Officer
Mr Vassie joined St Barbara as Managing Director & CEO in July
2014. Mr Vassie is a mining engineer with 30 years international
mining industry experience 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
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.
function, covering
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:
d
r
a
o
B
l
)
d
e
u
d
e
h
c
S
(
A
7
8
8
7
H
8
8
8
8
d
r
a
o
B
)
y
r
a
t
n
e
m
e
p
p
u
S
(
l
A
7
7
7
6
H
7
7
7
7
k
s
i
R
&
t
i
d
u
A
e
e
t
t
i
m
m
o
C
A
5
5
5
4
H
5
5
5
5
n
o
i
t
a
r
e
n
u
m
e
R
e
e
t
t
i
m
m
o
C
,
y
t
e
f
a
S
,
h
t
l
a
e
H
&
t
n
e
m
n
o
r
i
v
n
E
y
t
i
n
u
m
m
o
C
e
e
t
t
i
m
m
o
C
A
5
5
5
4
H
5
5
5
5
A
3
4
4
4
H
4
4
4
4
K Gleeson
D Moroney
T Netscher
R Vassie
A = Number of meetings attended
H = Number of meetings held during the time the Director held office or
was a member of the committee during the year
Directors’ Interests
The relevant interest of each Director in the shares and rights over
such instruments issued by the companies within the Group and
other related bodies corporate as notified by the Directors to the
ASX in accordance with S205G(1) of the Corporations Act 2001, as
the date of this report is as follows:
K Gleeson
D Moroney
T Netscher
R Vassie
Ordinary shares
Rights over ordinary
shares
‐
100,000
‐
‐
‐
‐
1,769,053
5,167,174
No Directors have an interest in options over shares issued by
companies within the Group.
Page 14
Directors’ Report
ST BARBARA LIMITED 2016
Remuneration Report (audited)
Remuneration report (Audited)
1. Remuneration Strategy
Introduction
This Remuneration Report describes the remuneration structure
that applied for the 2016 financial year. The Report provides
details of remuneration paid for the 2016 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. Key changes since 2015 Remuneration Report
3. Remuneration governance
4. Remuneration structure
5. Relationship between Group performance and remuneration
6. Remuneration disclosure for 2016
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 2016 financial
year, consistent with the Group strategy, were to ensure that:
total remuneration for senior executives and each level of the
workforce was market competitive
key employees were retained
total remuneration for 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
July
August
October
Budget setting framework
Set Remuneration review framework
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 15
Directors’ Report
2. Key changes since 2015 Remuneration Report
Non‐Executive Director Remuneration
There has been no change in the number of Non‐Executive
Directors or in the Non‐Executive Director fee structure during the
2016 financial year.
Senior Executive Remuneration
There has been no change to the number of senior executives
during the 2016 financial year.
The proportion of Group and individual targets used to determine
Short Term Incentives (STI) changed from 50%:50% in 2015 to 70%
Group targets and 30% individual targets in 2016.
There has been a minor change in the method of calculating Short
Term Incentives, however the quantum is unchanged. This is
explained further under 4(b)(ii) Short Term Incentive.
The St Barbara Rights Plan was updated during the financial year as
published in the Notice of the 2015 Annual General Meeting. Key
features are set out under 4(b)(iii), Performance Linked
Remuneration.
3. Remuneration governance
Remuneration strategy and policies are approved by the Board.
They are aligned with, and underpin, the Group 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.
is
responsible
for making
The Remuneration Committee
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 for the Group. It also receives reports
on organisation capability and effectiveness, skills, training and
development and succession planning for key roles.
The members of the Remuneration Committee are all independent,
Non‐Executive Directors and as at the date of this report
comprised:
K Gleeson
Non‐Executive Director, Chair of the Committee
since 1 July 2015 (and Member of the Committee
since 18 May 2015)
D Moroney
Non‐Executive Director, Member of the Committee
since 16 March 2015
T Netscher
Non‐Executive
Committee since 23 February 2015
Chairman, Member
of
the
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. Godfrey Remuneration Group was engaged by and
ST BARBARA LIMITED 2016
Remuneration Report (audited)
reported directly to the Committee during the financial year
regarding remuneration design. The
information provided by
Godfrey Remuneration Group did not include a remuneration
recommendation as defined in the Corporations Act 2001 (Cth).
The Remuneration Committee has delegated authority to the
remuneration
Managing Director and CEO
recommendations for employees other than Key Management
Personnel, within the parameters of approved Group wide
remuneration levels and structures.
for approving
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
independent remuneration
consultants in this process. Currently Non‐Executive Directors’ fees
are compared with those of comparatively sized companies.
is guided by, specialist
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 amount 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.
The number of Non‐Executive Directors as at the time of release of
the Remuneration Report has reduced over recent years as follows:
2013 Remuneration Report
2014 Remuneration Report
2015 Remuneration Report
2016 Remuneration Report
5
4
3
3
Significant Board renewal occurred in 2014 and 2015, with all
current Directors appointed to the Board in 2014 and 2015.
Directors in office at date of
2016 Remuneration Report
Appointed
T Netscher
Non‐Executive Director
February 2014
Non‐Executive Chairman
R Vassie
Managing Director & CEO
K Gleeson
Non‐Executive Director
July 2015
July 2014
May 2015
D Moroney
Non‐Executive Director
March 2015
Page 16
Directors’ Report
Director fees were last increased on 1 July 2012 and were reduced
by 10% from 1 March 2014. The quantum of Directors fees has
been constant from 1 March 2014 to 30 June 2016.
Following a review of comparable resource industry non‐executive
director remuneration, the Board has resolved to increase Non‐
Executive Directors fees for FY17 as follows:
Director fee
Committee Chair
Committee Member
Chairman
Prior to
March 2014
$100,000
$17,500
$8,500
$248,000
March 2014
to June 2016
$90,000
$15,750
$7,650
$223,200
FY17
$92,000
$16,000
$10,000
$228,000
is
fee
The Chairman’s
inclusive of all Board Committee
commitments. The overall annual increase in Board fees is
The 2017 financial year Non‐Executive
approximately 4%.
Directors’ fees remain below the pre‐ March 2014 level and are
well within the shareholder approved aggregate.
ST BARBARA LIMITED 2016
Remuneration Report (audited)
(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
linkage between personal and Group
performance and achievement of the Group’s business strategy
and creation of shareholder return.
the
The reward structures for the Group’s senior executives are
strongly aligned with shareholders’ interests by:
recognising the contribution of each senior executive to the
achievement of the Group’s strategy and business objectives
rewarding high individual performance
being market competitive to attract and retain high calibre
individuals
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 long term strategic corporate objectives.
Both provide a direct connection between achievement of targets
which drive Group performance and shareholder return, 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 return.
The number of senior executives was reduced significantly in 2014
at the same time as Board renewal was underway. The lean
executive structure, complemented by an experienced senior
management team across operations, exploration and corporate
functions, remained appropriate for 2016.
Remuneration
Report
Senior executives
2013
6
MD & CEO, CFO,
4 Executive General Managers
2014
3
MD & CEO, CFO,
1 Executive General Manager
2015
2016
2
2
MD & CEO, CFO
MD & CEO, CFO
Page 17
Directors’ Report
Composition of Senior Executive Remuneration
The mix of fixed and at risk remuneration for senior executives for 2016 is as follows:
ST BARBARA LIMITED 2016
Remuneration Report (audited)
2016
Level 6 (CEO)
Level 5 (CFO)
Level 4 (GM)
‐ at target (1)
‐ at maximum (2)
‐ at target (1)
‐ at maximum (2)
‐ at target (1)
‐ at maximum (2)
KMP
KMP
Non‐KMP
Fixed
remuneration
53%
36%
59%
42%
65%
49%
At risk remuneration
STI
27%
36%
23%
33%
20%
29%
LTI
20%
28%
18%
25%
15%
22%
Total
remuneration
100%
100%
100%
100%
100%
100%
(1)
(2)
Figures are rounded to nearest whole percent.
For STI, ‘Target’ is the mid‐point of the theoretical maximum STI available 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.
For LTI, ‘Target’ is the mid‐point of the theoretical maximum LTI available. 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 for LTI vested during 2016.
For STI, ‘Maximum’ is the theoretical maximum STI available for the rated performance of each individual. Less than target performance will result in less
than the target allocation, potentially down to zero.
For LTI, ‘Maximum’ is the theoretical maximum LTI available. 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 for LTI vested during 2016.
(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 subsequently to
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
subsequently to the Board, for review.
In addition to statutory superannuation contributions, senior
executives may elect to allocate additional salary towards
superannuation contributions, subject to legislative limits.
Senior executives may receive benefits, including car parking,
payment for certain professional memberships and living away
from home and travel expenses.
(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.
From 2016, the weighting was amended to be 70% Group targets
and 30%
individual targets (previously they were weighted
equally, i.e. 50%:50%). The proportion of the STI earned is
calculated by adding 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.
For 2016, the calculation of STI earned can be summarised as
follows:
STI earned = STI value at risk x [(70% x average result of Group STI
targets) plus (30% 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 material achievement of
is normally more
the full year budget (where the budget
demanding year on year) 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 2016 financial year STI target for gold production for
Leonora was set at 104% of the corresponding internal budget
figure.
Page 18
Directors’ Report
Stretch performance requires significant performance above and
beyond normal expectations and if achieved is anticipated to result
in a substantial
in key strategic outcomes,
operational or financial results, and/or the business performance of
the Group.
improvement
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 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.
The Board is aware of a trend in ASX 100 companies to partially
defer payment of STI to subsequent years as share rights,
notionally to more closely align the STI with a company’s share
price performance, however, deferral of STI is not yet common
amongst the resources companies from which St Barbara competes
for talent, and is considered to be a disincentive to current and
prospective employees. The current weighting between STI and LTI
is considered to provide appropriate alignment with long term
share price performance.
Details of the FY16 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. For 2016, LTIs were
granted in the form of Performance Rights issued under the 2015 St
Barbara Rights Plan.
Vesting conditions of each tranche of Performance Rights issued
are approved by the Board and set out in the relevant Notice of
Annual General Meeting. The vesting conditions of the FY16
Performance Rights comprised measures for:
relative total shareholder return (RTSR)
return on capital employed (ROCE) in excess of the weighted
average cost of capital (WACC), as a measure of capital
efficiency and generation of shareholder value.
Performance rights issued from and including September 2015 also
have positive total shareholder return for the vesting period as a
minimum requirement for vesting.
Performance rights issued up to and including 2014 expire on the
earliest of their expiry date, immediately upon the effective
resignation date of the relevant senior executive or at the
discretion of the Board for ‘good leavers’ from the date of
retirement or retrenchment.
Performance rights issued from and including 2015 expire on the
earliest of the effective resignation date of the relevant senior
executive, their expiry date, or at the discretion of the Board for
retiring or retrenched ‘good leavers’ on a pro‐rata basis calculated
at the expiry date.
Performance rights granted under the plan carry no dividend or
voting rights. On vesting each performance right is convertible into
one ordinary share.
The gold industry tends to be cyclical and the result at the end of a
three year vesting period may be adversely impacted by a short‐
term downturn in the price of gold or in the gold industry. Unlike
other industries where matching revenues and expenses may have
long lead times, in the gold industry gold produced is sold at arm’s
length at the market price (unless it is sold into a hedge) within a
ST BARBARA LIMITED 2016
Remuneration Report (audited)
matter of days from production, with corresponding revenue and
expenses recorded.
These characteristics of the gold industry, and comparison with
long term incentive structures of other resource companies with
which the Company competes for talent, have led to certain
characteristics of the current LTI plan, including retesting. The
Board introduced ‘retesting’ to performance rights issued from
September 2015, and it applies to the FY16 Performance Rights. At
its discretion, the Board may choose to retest the relevant
performance rights for the same performance conditions (i.e.
above 50th percentile RTSR and increase in ore reserves) one year
after the original vesting period (and potentially again one year
later). Performance rights would only vest, with Board discretion, if
there was positive total shareholder return, and minimum
threshold performance for RSTR and ROCE for the extended vesting
period (of four or five years), which should only correspond with a
positive shareholder experience.
Details of the FY16 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.
R S Vassie – Managing Director and CEO
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 executive is a permanent employee, 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 8
months total fixed remuneration. Each senior executive may
terminate employment at any time with 6 weeks’ notice.
Page 19
Directors’ Report
(v) Future developments in remuneration
The Company continuously monitors its remuneration structure,
practices and disclosure in light of market developments to ensure
that collectively they continue to:
attract, reward and retain high performing, team oriented
individuals capable of delivering the Group strategy
encourage and reward
individual and team performance
aligned with value creation for shareholders
appropriately inform shareholders of what remuneration is
paid and why.
ST BARBARA LIMITED 2016
Remuneration Report (audited)
The Company’s market capitalisation grew four‐fold during
financial year 2016, and the Company is aware that the expectation
and scrutiny of its remuneration practices is now greater as a result
of joining the ASX 300 in September 2015 and the ASX 200 in
March 2016.
5. Relationship Between Group Performance and Remuneration
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.
In assessing the Company’s performance and shareholder return, consideration is given to the following measures in respect of the current
financial year and the previous four financial years.
Earnings
Sales revenue
EBITDA(1)
2012
$’000
2013
$’000
2014
$’000
2015
$’000
2016
$’000
541,189
568,443
533,828
552,581
610,115
204,034
(150,628)
(331,634)
167,557
298,106
Statutory net profit/(loss) after tax
130,230
(191,854)
(500,831)
39,682
169,388
Underlying net profit/(loss) after tax(1)
(1) Non‐IFRS financial measures, refer to page 3.
120,920
29,285
(33,526)
41,964
127,496
The table below provides the share price performance of the Company’s shares in the current financial year and the previous four financial
years.
Share price history
Period end share price ($ per share)
Average share price for the year ($ per share)
2012
1.77
2.12
2013
0.45
1.35
2014
0.115
0.38
2015
0.57
0.21
2016
2.95
1.56
the 2016
During
(2015: $0.072 to $0.585 per share).
financial year,
the Company’s daily closing share price
ranged between $0.395
to $3.30 per share
The table below provides the percentage of performance linked remuneration awarded to senior executives in the current financial year and
the previous four financial years.
Performance Linked Remuneration
2012
2013
2014
2015
2016
% of maximum potential STI earned
% of maximum potential LTI earned
92%
0%
40%
0%
0%
0%
66%
0%
99%
67%
Page 20
Directors’ Report
ST BARBARA LIMITED 2016
Remuneration Report (audited)
$M
650
600
550
500
450
$M
300
200
100
0
‐100
‐200
‐300
‐400
‐500
Sales Revenue
EBITDA1
$M
400
300
200
100
0
‐100
‐200
‐300
‐400
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Statutory Net Profit/(Loss) After Tax
Underlying Net Profit/(Loss) After Tax1
$M
150
100
50
0
‐50
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
1 Underlying net profit after tax is statutory net profit after tax excluding 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.
Total Recordable Injury Frequency Rate
measured on a 12 month rolling basis
Gold Production
koz
400
380
360
340
320
300
10
8
6
4
2
0
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
The Company’s primary measure of safety performance is the rolling 12‐
month average of the Total Recordable Injury Frequency Rate. The FY16
result compares favourably with published mining industry TRIFR information.
Page 21
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ST BARBARA LIMITED 2016
Remuneration Report (audited)
(b) Non‐Executive Directors Fees
(i)
Fixed Remuneration ‐ Base salary
In considering remuneration for senior executives for the 2016
financial year, the Remuneration Committee considered reports
from Aon Hewitt McDonald, as well as industry trend data and
other relevant remuneration information. There was no increase
to senior executive base salary during the previous (i.e. 2015)
financial year.
The Managing Director and CEO, Mr Bob Vassie, commenced with
the Company on 1 July 2014 on a fixed remuneration at that time
of approximately 20% less than his predecessor. The quantum of
the allocation of performance rights to the Managing Director and
CEO under the FY15 LTI was reduced by 25% from the prior year.
In accordance with the terms of the Managing Director & CEO’s
initial employment contract, his TFR increased by $100,000 p.a.
from 1 July 2015.
Directors’ Report
(a) Non‐Executive Directors Fees
Non‐Executive Director fees for the 2016 financial year were
determined, both as to their composition (for base fees and
committee work) and overall level, based on information from Aon
Hewitt McDonald.
Non‐Executive Director fees were last increased effective 1 July
2012. As part of Group wide cash management measures, Non‐
Executive Directors fees were reduced by 10% effective from
1 March 2014. The increase in statutory superannuation from 1 July
2014 was absorbed within the existing level of Directors fees.
Director fees for the 2016 financial year were unchanged from the
2015 financial year and comprised:
Director fees of $90,000
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).
fee 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.
The Chairman’s
(b)
Senior Executive Remuneration (continued)
(ii)
Performance Linked Remuneration Five Year History
Performance Linked Remuneration
2012
2013
2014
2015
2016
% of maximum potential STI earned
% of maximum potential LTI earned
92%
0%
40%
0%
0%
0%
66%
0%
99%
67%
(iii) Performance Linked Remuneration ‐ Short term incentives (STI)
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 2016 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 2016 financial year. The Board has
discretion whether to pay an STI in any given year, irrespective of whether Company and Individual STI targets have been achieved. The Board
did not apply discretion to the calculation of the 2016 STI.
2016
Maximum potential STI
Actual STI included in
remuneration
% of maximum
potential total STI
earned
% of maximum
potential total STI
foregone
R S Vassie
G Campbell‐Cowan
(1) Inclusive of STI “Target”
Target
$
375,263
195,292
Stretch(1)
$
750,525
390,584
$
750,525
382,772
100%
98%
0%
2%
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 for senior executives are weighted 70% to Company STI measures and 30% to personal STI
measures.
Page 24
Directors’ Report
ST BARBARA LIMITED 2016
Remuneration Report (audited)
The Company STI measures for the 2016 financial year were equally weighted and comprised the following:
STI Target
Weighting Result
(a) Achieve Total Recordable Injury Frequency Rate of
4.5 and no fatalities
(b) Achieve gold production of 350,000 ounces
(c) Achieve consolidated All In Sustaining Costs of
A$1,055/oz
33⅓%
33⅓%
33⅓%
(d) Discretionary factor determined by the Board,
designed to take into account unexpected events
and achievements during the year
Overall Company STI Performance
‐
TRIFR of 2.1 achieved with no fatalities,
above stretch target (4.0)
386,564 ounces produced,
above stretch target (370,000 oz)
AISC A$933/oz achieved,
better than stretch target (A$995/oz)
Discretion not applied
% of
maximum
achieved
100%
100%
100%
‐
100%
Individual STI performance measures were aligned with the Company strategy and varied according to the individual senior executive’s
responsibilities, and for the 2016 financial year comprised the following:
Executive
Individual STI performance measures
MD & CEO
CFO
Leadership in design and execution of strategy
Development of organic growth opportunities
Active participation in and support of strategy
Generation of value through procurement initiatives
Effective capital management and debt reduction
(iv) Performance Linked Remuneration ‐ Long term incentives (LTI)
Rights Vested and On Issue
% of
maximum
achieved
100%
93%
The number 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, and the number of rights that vested, are set out below:
2016
Grant Date
Held at
1 July 2015
Granted as
compensation
Vested during
the year
Forfeited
during the year
Held at
30 June 2016 (1)
R S Vassie
G Campbell‐Cowan
9 Dec 2014
10 Dec 2015
29 Nov 2013
9 Dec 2014
10 Dec 2015
4,062,500
‐
597,190
2,438,525
‐
‐
1,104,674(2)
‐
‐
575,291
‐
‐
400,117
‐
‐
‐
197,073
‐
‐
4,062,500
1,104,674
‐
2,438,525
575,291
(1) The vesting of rights held at 30 June 2016 is subject to future performance conditions.
(2) Approved by shareholders at the Annual General Meeting held on the 27 November 2015.
Financial year
in which grant
may vest
2017
2018
2016
2017
2018
Rights granted in 2016
Details on rights over ordinary shares in the Company that were granted as remuneration to each key management person in the 2016
financial year are as follows:
2016
R S Vassie
G Campbell‐Cowan
Number of
performance rights
granted during
2016
1,104,674(2)
575,291
Issue price per
performance right
Grant date
Expiry date
$0.5092
$0.5092
10 Dec 2015
10 Dec 2015
30 Jun 2018
30 Jun 2018
Fair value per
performance right
at grant date
($ per share)(1)
$0.94
$0.94
(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) Approved by shareholders at the Annual General Meeting held on the 27 November 2015.
Page 25
Directors’ Report
Valuation of Performance Rights
ST BARBARA LIMITED 2016
Remuneration Report (audited)
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 2016 (FY16 Performance Rights), taking into account the impact of the market condition (as discussed above), the estimated fair
value was, for accounting purposes, $0.94.
Summary of LTI performance right tranches relevant to the 2016 financial year
FY 14 Performance Rights
FY 15 Performance Rights
FY16 Performance Rights
measures
measures
measures
granted as compensation in 2014 and disclosed in the 2014 Remuneration Report
three‐year vesting period ended on 30 June 2016 and assessed below
o
o
o
Relative Total Shareholder Return
Increase in Ore Reserves
Return on Capital Employed
(33⅓%)
(33⅓%)
(33⅓%)
granted as compensation in 2015 and disclosed in the 2015 Remuneration Report
three‐year vesting period ending on 30 June 2017 (to be assessed in the 2017 Remuneration Report)
o
o
Relative Total Shareholder Return
Return on Capital Employed
(67%)
(33%)
granted as compensation in 2016 and disclosed in the 2016 Remuneration Report (below)
three‐year vesting period ending on 30 June 2018 (to be assessed in the 2018 Remuneration Report)
o
o
Relative Total Shareholder Return
Return on Capital Employed
(67%)
(33%)
Details of FY 14 Performance Rights ended 30 June 2016
The vesting period for the FY14 Performance Rights ended on 30 June 2016. The criteria for the FY14 Performance Rights were published in
the Notice of 2013 Annual General Meeting and 2014 Remuneration Report, and comprised of three equally weighted performance measures
over the 3 year period from 1 July 2013 to 30 June 2016 being:
Relative Total Shareholder Return
Increase in Ore Reserves
Return on Capital Employed
Calculation of the number of FY14 Performance Rights vested
(a)
(b)
(c)
(d)
Relative Total Shareholder Return
Weighting:
Actual score:
Calculation:
33⅓%
83rd percentile with a TSR of 489% (details below)
100% (for achieving above the 75th percentile)
Increase in Ore Reserves
33⅓%
Weighting:
negative growth (details below)
Actual score:
0% (for achieving below the 50th percentile)
Calculation:
Return on Capital Employed (ROCE)
Weighting:
Actual ROCE:
Calculation:
33⅓%
25.8% (details below)
100% (for achieving above upper threshold of WACC 13.9% +7% = 20.9%)
Combined score
(100% x 33⅓%) + (0% x 33⅓%) + (100% x 33⅓%) = 67%
As a result, 400,117 (67%) of the 597,190 FY14 Performance Rights available to executive management vested at 30 June 2016 with the
remaining 197,073 (33%) lapsed at 30 June 2016. Details are shown in table earlier in this section titled ‘Rights Vested and On Issue’.
Page 26
Directors’ Report
ST BARBARA LIMITED 2016
Remuneration Report (audited)
The result of the Relative TSR component of the FY14 Performance Rights for the period 1 July 2013 to 30 June 2016 was:
Relative TSR Performance
Below 50th percentile
50th percentile
0%
50%
Percentage of Performance Rights to vest
Result
Between 50th & 75th percentiles
Pro‐rata between 50% & 100%
75th percentile and above
100%
The comparator group of companies for the FY14 Performance Rights comprised:
St Barbara achieved a TSR of 489% for the
period, and ranked at the 83rd percentile for
the period, above the 75th percentile upper
threshold.
As a result, 100% of the Performance Rights
linked to RTSR vested.
Evolution Mining Limited (ASX: EVN)
Medusa Mining Limited (ASX: MNL)
Regis Resources Limited (ASX: RRL)
Focus Minerals Ltd (ASX: FML)
Northern Star Resources Ltd (ASX: NST)
Saracen Mineral Holdings Limited (ASX: SAR)
Kingsgate Consolidated Limited (ASX: KCN)
OceanaGold Corporation (ASX: OGC)
Silver Lake Resources Limited (ASX: SLR)
Kingsrose Mining Limited (ASX: KRM)
Ramelius Resources Limited (ASX: RMS)
Tanami Gold NL (ASX: TAM)
The result of the Increase in Ore Reserves component of the FY14 Performance Rights for the period 1 July 2013 to 30 June 2016 was:
Increase in Ore Reserves (net of production)
Percentage of Performance Rights to vest
Result
Negative growth
Depletion replaced
20% increase
0%
50%
100%
Largely due to the Corporate need to
significantly reduce exploration expenditure
in FY14 and FY15, St Barbara reported
negative growth in Ore Reserves for the
vesting period ending 30 June 2016, below
the ‘depletion replaced’ threshold.
An increase in Ore Reserves has been
reported in the 2016 Ore Reserves and
Mineral Resources Statement issued
concurrently with this report.
The result of the ROCE component over the three year vesting period commencing 1 July 2013 and ending on 30 June 2016 was:
ROCE
Percentage of Performance Rights to vest
Result
Less than or equal to the average annual
weighted average cost of capital (WACC)
over the three year period commencing on
1 July 2013
WACC (calculated as above) + 3%
WACC (calculated as above) + 7%
0%
50%
100%
St Barbara achieved a ROCE for the period
of
25.6% (see calculation below), which is
above the upper threshold of WACC for the
period of 13.9% +7% = 20.9%.
As a result, 100% of the Performance
Rights linked to ROCE vested
Page 27
Directors’ Report
Return on Capital Employed (ROCE)
ST BARBARA LIMITED 2016
Remuneration Report (audited)
Return on Capital Employed (ROCE) is calculated as EBIT before significant items expressed as a percentage of average total capital employed
(net debt and total equity)1.
Measure
EBIT (excluding significant items)
EBIT (discontinued operations) 3
EBIT (sum of above)
Capital employed – opening balance
Total equity
Net debt4
Capital employed – opening balance
Capital employed– closing balance
Total equity
Net debt5
Capital employed– closing balance
Capital employed – average for period
ROCE (EBIT ÷ average total capital employed) for year
ROCE average of the 3 individual years
Weighted average cost of capital (WACC)
2014
2015
2016
19,3542
(47,624)
(28,270)
623,227
210,709
833,936
542,3685
260,169
802,537
818,237
(3.5%)
99,010
18,528
117,538
131,812
260,169
391,981
140,429
270,090
410,519
401,250
29.3%
204,585
_____ ‐
204,585
140,429
270,090
410,519
300,614
89,629
390,243
400,381
51.1%
25.6%
Weighted average cost of capital (WACC) is calculated using the widely available formula of (relative weight of equity x required rate of return)
+ (relative weight of debt x cost of debt)6.
In this instance, WACC is calculated on a pre‐tax basis to match the pre‐tax nature of EBIT. The full calculation of WACC is not disclosed as it is
considered to be commercial in confidence, however, the primary variables include:
reported balance sheet figures for debt and equity
government 10 year bond rate as proxy for risk free premium
ASX All Ordinaries Index as proxy for market portfolio and to determine relative volatility
On this basis, average WACC of the 3 years is 13.9%.
ROCE is not an IFRS measure and is calculated in the table above.
As restated in 2015 Annual Report
EBIT for discontinued operations calculated as profit or loss on discontinued operations before tax excluding impairments
Net debt comprises cash and cash equivalents, interest bearing borrowings – current and interest bearing borrowings – non‐current
Book value $131,813,000 restated to include FY14 impairments of $410,556,000
1
2
3
4
5
6 WACC is not an IFRS measure. The above parameters can be used to calculate WACC using commonly available formula.
Page 28
Directors’ Report
Details of FY 15 Performance Rights granted as compensation in
2015, ending 30 June 2017
Performance rights issued in 2015 (‘FY15 Performance Rights‘)
were granted under the St Barbara Limited Rights Plan (2010), and
details of the performance conditions were set out in the Notice
of 2014 Annual General Meeting and 2015 Remuneration Report.
The vesting period for the FY15 Performance Rights is for three
years from 1 July 2014 to 30 June 2017. The criteria for the FY15
Performance Rights comprised of two performance measures over
the 3 year period from 1 July 2014 to 30 June 2017 being:
Relative Total Shareholder Return (67%)
Return on Capital Employed (33%).
ST BARBARA LIMITED 2016
Remuneration Report (audited)
Relative Total Shareholder Returns (67% weighting);
and
Return on Capital Employed
weighted average cost of capital (33% weighting).
in excess of the
(iii)
Percentage of relevant total fixed remuneration offered
as LTIs for the 2016 financial year
Managing Director and Chief Executive Officer
75%
Executive General Managers
General Managers
60%
45%
The Board has the discretion to vary the relevant percentage each
year, having regard to external advice and / or relevant market
benchmarks.
The outcome of these rights will be reported in the 2017 Annual
report.
(iv)
Details of FY 16 Performance Rights granted as compensation in
2016, ending 30 June 2018
Performance rights issued in 2016 (‘FY16 Performance Rights‘)
were granted under the St Barbara Limited Rights Plan (2015), and
details of the performance conditions were set out in the Notice
of 2015 Annual General Meeting. Performance rights issued to Mr
Vassie, Managing Director & CEO, were also approved by
shareholders at the 2015 Annual General Meeting.
Key Features of FY16 Performance Rights
(v)
Vesting
conditions
Other
conditions
Issue price
Vesting date
Performance conditions for the three year
period commencing 1 July 2015 to 30 June
2018 as set out below, relating to:
Relative Total Shareholder Returns
(67% weighting); and
Return on capital employed in excess of
the weighted average cost of capital
(33% weighting).
Include continuing employment
10 day VWAP at start, 30 June 2015, $0.5092
30 June 2018
Details of FY16 Performance Rights
The vesting of performance rights granted in respect of the FY16
Performance Rights is subject to continuing employment as at the
vesting date of 30 June 2018, and satisfying performance
conditions measured over a three year vesting period from 1 July
2015 to 30 June 2018 as set out below.
(i)
(ii)
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.
FY16 Performance Rights are priced at $0.5092 per right,
based on the 10 day VWAP up to and including 30 June
2015.
Performance conditions
The performance conditions for FY16 Performance
Rights will be measured over a three year vesting period
ending on 30 June 2018. Vesting conditions include
continuing employment as at the vesting date of 30 June
2018 and satisfying conditions relating to:
An example of how performance rights are calculated for
the 2016 financial year (assuming the maximum award
level) is set out below:
Executive Level 5 Total Fixed Remuneration (TFR)
$400,000 (for illustration only)
LTI award value 60% of TFR
$240,000 (i.e. 60% of TFR)
Performance rights issue price (10 day VWAP)
$0.5092
Performance rights to be granted ($240,000 ÷ 0.5092)
471,328 rights
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 FY16 Performance Rights
comprises:
Company
Alacer Gold Corp
(ASX: AQG)
OceanaGold Corporation
(ASX: OGC)
Beadell Resources Limited
(ASX: BDR)
Perseus Mining Limited
(ASX: PRU)
Evolution Mining Limited
(ASX: EVN)
Ramelius Resources Limited
(ASX: RMS)
Focus Minerals Ltd
(ASX: FML)
Regis Resources Limited
(ASX: RRL)
Gryphon Minerals Limited
(ASX: GRY)
Resolute Mining Limited
(ASX: RSG)
Intrepid Mines Limited
(ASX: IAU)
Saracen Mineral Holdings
Limited (ASX: SAR)
Kingsgate Consolidated Limited
(ASX: KCN)
Silver Lake Resources Limited
(ASX: SLR)
Kingsrose Mining Limited
(ASX: KRM)
Tanami Gold NL
(ASX: TAM)
Medusa Mining Limited
(ASX: MNL)
Troy Resources Limited
(ASX: TRY)
Northern Star Resources Ltd
(ASX: NST)
Oz Minerals Limited
(ASX: OZL)
At the discretion of the Board, the composition of the comparator
group may change from time to time.
Page 29
Directors’ Report
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 FY16 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 2015 and
ending 30 June 2018 as outlined below:
Relative TSR Performance
Below 50th percentile
50th percentile
Between 50th & 75th
percentiles
% Contribution to the Number
of
Performance Rights to Vest
0%
50%
Pro‐rata from 50% to 100%
75th percentile and above
100%
Return on Capital Employed (ROCE)
(vi)
The proportion of the FY16 Performance Rights that vest will be
influenced by the ROCE achieved by the Company over the three
year vesting period commencing 1 July 2015 and ending 30 June
2018 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 commencing on 1 July 2015
0%
WACC (calculated as above) + 3%
50%
WACC (calculated as above) +
between 3% and 7%
Pro‐rata from 50% to
100%
WACC (calculated as above) + 7%
100%
ST BARBARA LIMITED 2016
Remuneration Report (audited)
(vii)
the number of FY16
Relative TSR: 70%
ROCE
Example of calculation of
Performance Rights to vest
Assuming the following measures over the three year
vesting period ending 30 June 2018:
then the following proportion of performance rights will
vest:
(a) Relative TSR
Weighting:
Actual score:
Calculation:
WACC + 4%
67%
70th percentile
50% (for achieving the 50th
percentile)
+ ((70% ‐ 50%) (75% ‐ 50%)) x
(100% ‐ 50%)
= 90%
(b) Return on Capital Employed (ROCE)
Weighting:
Actual ROCE:
Calculation:
33%
WACC + 4%
50% (for achieving the 50th
percentile)
+ ((4% ‐ 3%) (7% ‐ 3%)) x (100% ‐
50%)
= 62.5%
(c)
Combined score
(90% + 67%) + (62.5% x 33%) = 80.9%
Using the above example of an senior executive being
issued with 471,328 performance rights based on the
above 80.9% combined score, 381,304 (=80.9% x
471,328) performance rights would vest.
Page 30
Directors’ Report
Share holdings
ST BARBARA LIMITED 2016
Remuneration Report (audited)
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
Balance at the start
of the year
Issued upon
exercised of
performance
rights
Purchased
Sold
Other changes
Balance at the
end of the
year
Non‐Executive Directors
T C Netscher
D Moroney
K Gleeson
Executive Director
R S Vassie
Senior Executives
G Campbell‐Cowan
‐
100,000
‐
1,769,053
15,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
100,000
‐
1,769,053
15,000
Loans to Directors and senior executives
There were no loans to Directors or senior executives during the financial year 2016.
END OF REMUNERATION REPORT
Page 31
Directors’ Report
Indemnification and insurance of officers
The Company’s Constitution provides that, to the extent permitted
by law, the Company must indemnify any person who is, or has
been, an officer of the Company against any liability incurred by
that person including any liability incurred as an officer of the
Company or a subsidiary of the Company and legal costs incurred
by that person in defending an action.
The Constitution further provides that the Company may enter into
an agreement with any person who is, or has been, an officer of the
Company or a subsidiary of the Company to indemnify the person
against such liabilities.
The Company has entered into Deeds of Access, Indemnity and
Insurance with current and former officers. The Deeds address the
matters set out in the Constitution. Pursuant to those deeds, the
Company has paid a premium in respect of a contract insuring
current and former officers of the Company and current and
former officers of its controlled entities against liability for costs
and expenses incurred by them in defending civil or criminal
proceedings involving them as such officers, with some exceptions
where the liability relates to conduct involving lack of good faith.
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.
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
regulatory
instruments as
St Barbara regards compliance with environmental legislation,
regulations and
the minimum
performance standard for its operations. The Group’s operations in
Western Australia are subject to environmental regulation under
both Commonwealth and State legislation. In Papua New Guinea,
the Group ensures compliance with the relevant National and
Provincial
legislation and where appropriate standards or
legislation are not available, the Group reverts to the standard of
environmental performance as stipulated in the Western Australian
legislation.
With the sale of Gold Ridge Mining Limited in the Solomon Islands
in May 2015, the divestment of the King of the Hills mine and Kailis
project and ongoing rehabilitation work undertaken at Leonora
Operations, the rehabilitation liability of the Group has been
substantially reduced in the years ended 30 June 2015 and 2016.
The Group is committed to the rehabilitation of areas at closed
sites previously disturbed by mining and exploration within its
tenements in Western Australia.
to
facilitate
the effective and
A Group‐wide Environmental Management System (EMS) has been
responsible
implemented
management of environmental issues to the same high standard
across all sites in both Australia and Papua New Guinea. Adoption
of the EMS at all operations has contributed to further reductions
in the number of minor environmental
incidents, and an
improvement in internal compliance rates for environmental audits
ST BARBARA LIMITED 2016
inspections.
and
reportable
environmental incidents during the year ended 30 June 2016 at any
of the Group’s Australian and Pacific sites.
There were no
externally
Non‐audit services
During the year the Company did employ the auditor on an
assignment in addition to their statutory audit duties. Details of the
amounts paid or payable to the auditor, KPMG, for non‐audit
services provided during the 2016 financial year are set out in Note
20 to the financial statements.
The Board of Directors has considered the position and, in
accordance with the advice received from the Audit & Risk
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 20 to the financial statements, did
not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
All non‐audit services were reviewed by the Audit & Risk
Committee to ensure they do not impact the impartiality
and objectivity of the auditor; and
The Audit & Risk Committee annually informs the Board of
the detail, nature and amount of any non‐audit services
rendered by KPMG during the financial year, giving an
explanation of why the provision of these services is
compatible with auditor independence. If applicable, the
Audit & Risk Committee recommends that the Board take
appropriate action
in response to the Audit & Risk
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 34
and forms part of this Director’s Report.
Events occurring after the end of the financial year
The Directors are not aware of any matter or circumstance that has
arisen since the end of the financial year that, in their opinion, has
significantly affected or may significantly affect in future years the
Company’s operations, the results of those operations or the state
of affairs, except that on 18 July 2016 the Company repurchased
A$55,531,000 (US$40,280,000) of aggregate principal of its US
144A Senior Secured Notes. The notes were purchased at a 3.3%
premium to par value. Following the repurchase, the principal US
Senior Secured Notes outstanding was US$127,695,000.
Page 32
Directors’ Report
Rounding of amounts
St Barbara Limited is a Company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Report) Instrument
2016/191 issued by the Australian Securities and Investment
Commission (ASIC). As a result, amounts in this Directors’ Report
and the accompanying Financial Report have been rounded to the
nearest thousand dollars, except where otherwise indicated.
This report is made in accordance with a resolution of Directors.
For and on behalf of the Board
Dated at Melbourne this 23rd day of August 2016
Bob Vassie
Managing Director and CEO
ST BARBARA LIMITED 2016
Page 33
Directors’ Report
Auditors Independence Declaration
ST BARBARA LIMITED 2016
Page 34
Financial Report
Contents
Financial Statements
Page
About this report
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
A. Key results
1 Segment information
2 Tax
3 Significant items
4 Earnings per share
B. Mining operations
5 Property, plant and equipment
6 Deferred mining costs
7 Mine properties and mineral rights
8 Exploration and evaluation
9 Rehabilitation provision
C. Capital and risk
10 Working Capital
11 Financial risk management
12 Net debt
13 Contributed equity
D. Business Portfolio
14 Parent entity disclosures
15 Controlled entities
16 Discontinued operations
17 Disposal of subsidiaries
E. Remunerating our people
18 Employee benefit expenses and provisions
19 Share‐based payments
F. Other disclosures
20 Remuneration of auditors
21 Events occurring after the balance sheet date
22 Contingencies
23 Basis of preparation
24 Accounting standards
Signed reports
Directors’ declaration
Independent auditor’s report
ASX information
Corporate directory
35
36
37
38
39
40
41
43
45
46
47
48
49
51
52
53
54
59
61
62
62
63
63
64
66
67
67
67
67
68
69
70
72
ST BARBARA LIMITED 2016
About this report
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 2016 comprise the Company and its
subsidiaries (together referred to as the “Group”). The Group is a
for‐profit entity primarily involved in mining and sale of gold,
mineral exploration and development.
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 consolidated financial statements have been presented in
Australian dollars and all values are rounded to the nearest
thousand dollars ($000) as specified in the ASIC Corporation
Instrument 2016/191 unless otherwise stated.
The Board of Directors approved the financial statements on 23
August 2016.
What’s new in this report
St Barbara’s Directors have included information in this report
that they deem to be material and relevant to the understanding
of the financial statements and the Group. To provide users with
a clearer understanding of what drives financial performance of
the Group, the structure of the financial report has changed from
prior years, in particular:
removing immaterial disclosures that may distract from the
usefulness of the financial report by obscuring important
information; and
reorganising the notes into 6 distinct sections to assist users in
understanding the Group’s performance.
A disclosure has been considered material and relevant where:
the dollar amount is significant in size (quantitative);
the dollar amount is significant in nature (qualitative);
the Group’s result cannot be understood without the specific
disclosure; and
it relates to an aspect of the Group’s operations that is
important to its future performance.
judgements and
Accounting policies and critical accounting
estimates applied to the preparation of the financial statements
have been moved to where the related accounting balance or
financial statement matter is discussed. To assist in identifying
critical accounting judgements and estimates, we have highlighted
them in the following manner:
Accounting judgements and estimates
Page 35
Financial Report
Income statement
for the year ended 30 June 2016
Continuing operations
Revenue
Mine operating costs
Gross profit
Other revenue
Other income
Exploration expensed
Corporate costs
Royalties
Depreciation and amortisation
Other expenses
Net gain on disposal of assets
Rehabilitation provision
Impairment losses and asset write‐downs
Operating profit
Finance costs
Net foreign exchange gain/(loss)
Net realised gain on derivatives
Profit before income tax
Income tax expense
Profit from continuing operations (net of tax)
Profit from discontinued operations (net of tax)
Profit attributable to equity holders of the Company
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)
The above income statement should be read in conjunction with the notes to the financial statements.
ST BARBARA LIMITED 2016
Notes
1
1
1
5
12
CONSOLIDATED
2016
$'000
2015
$'000
610,115
(280,927)
329,188
548,206
(311,701)
236,505
1,994
3,564
(6,786)
(19,184)
(21,455)
(80,915)
(1,967)
14,570
‐
‐
219,009
(35,749)
142
‐
1,782
79
(7,691)
(20,284)
(20,231)
(85,071)
(9,705)
1,424
(5,896)
(11,425)
79,487
(43,300)
(15,350)
1,407
183,402
22,244
2
(14,014)
(1,090)
169,388
21,154
‐
18,528
169,388
39,682
34.21
32.70
34.21
32.70
8.05
7.83
4.29
4.18
4
4
4
4
Page 36
Financial Report
Statement of comprehensive income
for the year ended 30 June 2016
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit:
Changes in fair value of available for sale financial assets
Loss on closure of cash flow hedge
Income tax on other comprehensive income
Foreign currency translation differences ‐ foreign operations
Other comprehensive loss net of tax(1)
Total comprehensive income attributable to equity holders of the Company
ST BARBARA LIMITED 2016
Notes
CONSOLIDATED
2016
$'000
2015
$'000
169,388
39,682
(13)
‐
1,204
(6)
(1,407)
9,386
(11,322)
(40,151)
(10,131)
(32,178)
159,257
7,504
(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 profit comprises the result for
the year adjusted for the other comprehensive income.
The above statement of comprehensive income should be read in conjunction with notes to the financial statements.
Page 37
Financial Report
Balance sheet
as at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Available for sale financial assets
Deferred mining costs
Total current assets
Non‐current assets
Trade and other receivable
Property, plant and equipment
Deferred mining costs
Mine properties
Exploration and evaluation
Mineral rights
Deferred tax assets
Total non‐current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing borrowings
Rehabilitation provision
Other provisions
Total current liabilities
Non‐current liabilities
Interest bearing borrowings
Rehabilitation provision
Deferred tax liabilities
Other provisions
Total non‐current liabilities
Total liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
The above balance sheet should be read in conjunction with notes to the financial statements.
ST BARBARA LIMITED 2016
CONSOLIDATED
2016
$'000
2015
$'000
Notes
12
10
10
6
10
5
6
7
8
7
2
10
12
9
18
12
9
2
18
13
136,689
8,286
58,164
56
4,446
207,641
2,366
162,448
11,271
179,884
25,975
19,785
3,267
404,996
612,637
39,768
3,201
493
10,519
53,981
223,117
28,095
2,169
4,661
258,042
76,871
9,924
52,272
66
12,829
151,962
‐
170,045
4,525
211,989
16,969
23,407
13,985
440,920
592,882
42,895
52,428
2,424
14,589
112,336
294,533
39,663
‐
5,921
340,117
312,023
452,453
300,614
140,429
887,216
(58,639)
(527,963)
887,216
(49,436)
(697,351)
300,614
140,429
Page 38
Financial Report
Statement of changes in equity
for the year ended 30 June 2016
ST BARBARA LIMITED 2016
Balance at 1 July 2014
Transactions with owners’ of the Company recognised directly
in equity:
Share‐based payments expense
Unlisted options expired
Equity Issue (net of transaction costs)
Total comprehensive income for the year
Gain attributable to equity holders of the Company
Other comprehensive loss
Balance at 30 June 2015
Balance at 1 July 2015
Transactions with owners’ of the Company recognised
directly in equity:
Share‐based payments expense
Total comprehensive income for the year
Gain attributable to equity holders of the Company
Other comprehensive loss
Balance at 30 June 2016
Note
19
Contributed
Equity
000’s
886,242
‐
‐
974
Foreign
Currency
Translation
Reserve
000’s
(18,272)
‐
‐
-
‐
‐
887,216
‐
(31,187)
(49,459)
Other
Reserves
000’s
Retained
Earnings
000’s
Total
000’s
1,284
(737,442)
131,812
139
(409)
-
‐
(991)
23
‐
409
-
139
‐
974
39,682
‐
(697,351)
39,682
(32,178)
140,429
887,216
(49,459)
23
(697,351)
140,429
19
‐
‐
‐
‐
887,216
‐
(10,118)
(59,577)
928
‐
(13)
938
‐
928
169,388
‐
(527,963)
169,388
(10,131)
300,614
The above statement of changes in equity should be read in conjunction with notes to the financial statements.
Page 39
Financial Report
Cash flow statement
for the year ended 30 June 2016
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
ST BARBARA LIMITED 2016
Consolidated
2016
$'000
2015
$'000
615,244
555,823
(336,805)
(407,508)
(6,786)
1,910
(7,383)
1,571
(30,405)
(28,682)
(225)
(145)
(471)
(149)
Net cash inflow from operating activities
12
242,788
113,201
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
Payments for exploration and evaluation
Net cash outflow from investing activities
Cash Flows From Financing Activities:
Movement in restricted cash
Red Kite loan repayments
Secured notes repayments
Principal repayments ‐ finance leases
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Net movement in foreign exchange rates
Cash and cash equivalents at the end of the year
12
12
(16,057)
(21,071)
(9,006)
(46,122)
1,966
(102,073)
(37,798)
(2,225)
(140,130)
56,536
76,871
3,282
136,689
106
(23,762)
(24,705)
(2,241)
(50,602)
(507)
‐
(66,831)
(4,003)
(71,341)
(8,742)
79,407
6,206
76,871
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.
The above cash flow statement should be read in conjunction notes to the financial statements.
Page 40
ST BARBARA LIMITED 2016
Notes to the Financial Report
A. Key results
1
Segment information
Gold Revenue
Silver Revenue
Total Revenue
Mine operating costs
Gross profit
Royalties (1)
Impairment losses
Depreciation and amortisation
Other income and expenses
discontinued ops
Rehabilitation expenses
Net gain/(loss) on disposal of
assets
Segment profit/(loss) before
income tax
Capital expenditure
Sustaining
Growth(3)
Total capital expenditure
Segment assets(2)
Segment non‐current assets(2)
Segment liabilities(2)
Leonora
Simberi
2016
$’000
439,593
740
440,333
(161,117)
279,216
2015
$’000
434,189
1,496
435,685
(209,230)
226,455
2016
$’000
169,277
505
169,782
(119,810)
49,972
2015
$’000
112,215
306
112,521
(102,471)
10,050
(17,608)
‐
(63,492)
(17,656)
(11,425)
(69,837)
(3,847)
‐
(12,098)
(2,575)
‐
(10,038)
‐
‐
14,673
‐
(5,896)
‐
‐
‐
(103)
‐
‐
‐
Total continuing
segment
2016
$’000
608,870
1,245
610,115
(280,927)
329,188
(21,455)
‐
(75,590)
‐
‐
14,570
2015
$’000
546,404
1,802
548,206
(311,701)
236,505
(20,231)
(11,425)
(79,875)
‐
(5,896)
‐
212,789
121,641
33,924
(2,563)
246,713
119,078
(27,065)
(9,006)
(36,071)
(38,974)
(2,241)
(41,215)
(9,402)
‐
(9,402)
(9,111)
‐
(9,111)
(36,467)
(9,006)
(45,473)
(48,085)
(2,241)
(50,326)
317,514
285,786
22,670
356,675
334,556
37,689
146,666
101,119
35,428
129,274
99,122
20,424
464,180
386,905
58,098
485,949
433,678
58,113
Total discontinued
segment
2016
$’000
‐
‐
‐
‐
‐
2015
$’000
4,375
‐
4,375
(19,584)
(15,209)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(278)
‐
‐
3,694
‐
‐
(11,793)
‐
‐
‐
‐
‐
‐
(1) Royalties include state and government royalties and corporate royalties
(2) Represents the reportable segment balances after asset impairment and write down charges.
(3) Growth capital at Leonora represents deep drilling expenditure at Gwalia reported as part of exploration.
The Group has two operational business units: Leonora Operations
and Simberi Operations. The operational business units are
managed separately due to their separate geographic regions.
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 (including production, cost per ounce and capital
expenditure) 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.
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.
Segment capital expenditure represents the total cost incurred
during the year for mine development and acquisitions of property,
plant and equipment.
Sales Revenue
Revenue from the sale of gold and silver in the course of ordinary
activities is measured at the fair value of the consideration received
or receivable. 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.
Royalties
Royalties are payable on gold sales revenue, based on gold ounces
produced and sold, and are therefore recognised as the sale occurs.
Major Customers
Major customers to whom the Group provides goods that are
more than 10% of external revenue are as follows:
Revenue
% of external
revenue
2016
$’000
296,399
262,384
2015
$’000
306,990
207,478
2016
%
48.7
43.1
2015
%
56.0
37.8
Customer A
Customer B
Page 41
ST BARBARA LIMITED 2016
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, exploration expense, finance costs
and corporate costs.
Notes to the Financial Report
1 Segment information (continued)
Continuing operations
Consolidated
2016
$’000
2015
$’000
Total profit for reportable segments
246,713
119,078
Other income and revenue
Exploration expensed
Unallocated depreciation and
amortisation
Finance costs
Amortisation of realised gain on settled
hedges
Corporate costs
Net foreign exchange gain/(loss)
Other expenses
Consolidated profit before income tax –
continuing operations
5,558
3,285
(6,786)
(7,691)
(5,325)
(5,196)
(35,749)
(43,300)
‐
1,407
(19,184)
(20,284)
142
(15,350)
(1,967)
(9,705)
183,402
22,244
Assets
Total assets for reportable segments
464,180
485,949
Cash and cash equivalents
134,081
76,871
Trade and other receivables (current)
Trade and other receivables (non‐current)
Available for sale financial assets
Property, plant & equipment
Deferred tax assets
7,500
2,366
56
9,924
‐
66
4,454
6,087
‐
13,985
Consolidated total assets
612,637
592,882
Liabilities
Total liabilities for reportable segments
Trade and other payables
Interest bearing liabilities (current)
Provisions (current)
Interest bearing liabilities (non‐current)
Provisions (non‐current)
Deferred tax liabilities
58,098
16,049
58,113
28,328
3,030
52,428
8,051
13,132
223,117
294,533
1,509
2,169
5,919
‐
Consolidated total liabilities
312,023
452,453
Page 42
Notes to the Financial Report
2 Tax
Income tax expense
Current tax expense/(benefit)
Under/(over) provision in respect of the
prior year
Deferred income tax (benefit)/expense
Total income tax expense for continued and
discontinued operations
Comprising of:
Income tax expense for continued
operations
Consolidated
2016
$'000
41,277
233
2015
$'000
(1,356)
(623)
(27,496)
3,069
14,014
1,090
14,014
1,090
Numerical reconciliation of income tax expense to prima facie tax
payable
Profit before income tax
Tax at the Australian tax rate of 30%
Tax effect of amounts not
deductible/(taxable) in calculating taxable
income:
Legal and other non‐deductible expenditure
Equity settled share based payments
Sundry items
Recognition of previously unbooked
deferred tax assets
Permanent differences on taxable income
Research and development incentive
Reversal of deferred tax assets relating to
Gold Ridge disposal
Use of tax losses not previously recognised
Deferred tax assets recognised as a result of
tax consolidation
Derecognition of deferred tax liabilities
relating to foreign exchange on borrowings
within the tax consolidated group
Income tax expense
2016
$'000
183,402
55,021
2015
$'000
40,772
12,232
‐
279
(129)
(3,344)
(1,162)
(630)
‐
(7,474)
77
42
1,987
(1,321)
882
(2,999)
(9,810)
‐
(18,796)
‐
(9,751)
14,014
‐
1,090
ST BARBARA LIMITED 2016
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.
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.
Tax consolidation
When lodging the 30 June 2015 tax return, the Group elected to
create an Australian tax consolidated group with effect from 1 July
2014. Entities in the tax consolidated group at 30 June 2016
included: St Barbara Ltd (head entity), Allied Gold Mining Ltd,
Allied Gold Pty Ltd, and Allied Gold Finance Pty Ltd. Current and
deferred tax amounts are allocated using the “separate taxpayer
within group” method.
A tax sharing and funding agreement has been established
between the entities in the tax consolidated group. The Company
recognises deferred tax assets arising from the unused tax losses of
the tax consolidated group to the extent that it is probable that
future taxable profits of the tax consolidated group will be available
against which the asset can be utilised.
The creation of the tax consolidated group will enable the group to
reduce compliance costs associated with lodging multiple returns,
while also allowing the company to review and effectively manage
its corporate and legal structure.
Page 43
Notes to the Financial Report
2
Tax (continued)
Deferred tax balances
Deferred tax assets
Tax losses
Provisions and accruals
Investments at fair value
Unrealised foreign exchange losses
Property, plant and equipment
Other
Total
Tax effect @ 30%
Deferred tax liabilities
Accrued income
Mine properties – exploration
Mine properties – development
Consumables
Capitalised convertible notes costs
Unrealised foreign exchange gains
Total
Tax effect @ 30%
Net deferred tax balance
Comprising of:
Australia – net deferred tax
(liabilities)/assets
PNG – net deferred tax assets
Deferred tax assets have not been
recognised in respect of the
following items:
Tax losses – PNG Operations
Investments at fair value
Tax assets without a carrying amount
Property, plant and equipment
Total
Tax effect @ 30%
ST BARBARA LIMITED 2016
Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
Temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
Temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
Taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the
reporting date.
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.
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.
Accounting judgements and estimates
Estimates of future taxable profits are based on forecast cash flows
from operations. At 30 June 2016 tax losses not recognised
amounted to $22,285,000 (tax effected) relating to entities
associated with Simberi operations in PNG and Australia. These tax
losses have not been recognised as it is not deemed probable at
the reporting date that future taxable profits will be available
against which they can be utilised.
Judgement is also required in respect of the application of existing
tax laws in each jurisdiction.
Consolidated
2016
$'000
2015
$'000
41,722
40,169
224
64,560
21,105
3,326
171,106
51,332
229
30,209
81,976
52,123
2,908
‐
167,445
117,988
54,490
257
66,503
9,304
‐
248,542
74,563
295
22,113
108,528
38,804
4,060
28,126
201,926
50,234
60,578
1,098
13,985
(2,169)
13,985
3,267
‐
74,283
265,246
‐
‐
6,293
3,709
192,433
227,300
266,716
502,548
80,015
150,764
Page 44
Notes to the Financial Report
3
Significant items
Significant items are those items where their nature or amount is
considered material to the financial report. Such items included
within the consolidated results for the year are detailed below.
ST BARBARA LIMITED 2016
Continuing operations
Impairment losses
Consolidated
2016
$'000
2015
$'000
(1) Gains on sale of King of the Hills and Kailis
In September 2015, King of the Hills operations was divested, which
resulted in a profit on disposal of $14,056,000, mainly from the
reversal of rehabilitation liabilities.
‐
(11,425)
(2) Effect of unhedged borrowings
Increase in rehabilitation provision related to
King of the Hills
‐
(5,896)
Included within profit on disposal of asset(1)
Gain on sale of King of the Hills and Kailis
14,056
‐
Included within net foreign exchange
gain/(loss)
Effect of unhedged borrowings(2)
Unrealised foreign exchange gains(3)
Foreign exchange loss on the US debt
repayments(4)
(7,360)
13,809
(47,470)
42,805
(7,899)
(1,450)
(13,066)
(17,731)
Total significant items for continuing
operations – pre tax
12,606
(35,052)
Tax Effect
Tax effect of pre‐tax significant items
Tax effect of the impact of tax
consolidation(5)
739
14,242
28,547
‐
Total significant items for continuing
operations – post tax
41,892
(20,810)
Discontinued operations
Profit on sale of Gold Ridge
Results from Gold Ridge Mining operations
Total significant items for discontinued
operations – pre tax
Total significant items for discontinuing
operations – post tax
‐
‐
‐
‐
29,554
(11,026)
18,528
18,528
Total significant items – pre tax
Total significant items – post tax
12,606
(16,524)
41,892
(2,282)
The group hedges the foreign exchange exposure of its US dollar
functional currency Simberi assets against
its US dollar
denominated borrowings. Per AASB 121 the ineffective component
of the hedge must be recognised in the Consolidated Income
Statement. Additionally,
foreign exchange
movement on the US dollar denominated borrowings not in a
hedging relationship is recognised in the Consolidated Income
Statement.
the unrealised
(3) Unrealised foreign exchange gains
The movement represent the unrealised gains on Australian and US
denominated
loans and third party balances
reflected within the Consolidated Income Statement in accordance
with Australian accounting standards AASB 121.
intercompany
(4) Foreign exchange loss on the US notes buy back
Represents the realised foreign exchange loss on the buy back of
US notes and repayment of the Red Kite loan during the 2016
financial
previously
translated at 30 June 2015 year end (A$133,547,000), reflecting the
devaluation of the Australian dollar against the US dollar in the
year.
(US$103,005,000/A$141,446,000),
year
(5) Tax Consolidation
During the year, the Company
formed an Australian tax
consolidation group to reduce compliance costs, and to enable the
Group to review and effectively manage its corporate and legal
structure. The impact of tax consolidation was the recognition of a
benefit of $28,547,000 comprising $18,796,000 related to deferred
tax assets recognised as part of tax consolidation of the Australian
group, and a further benefit of $9,751,000 for the derecognition of
deferred tax liabilities relating to unrealised foreign exchange gains
on borrowings between companies within the tax consolidated
group which had previously been recognised.
Page 45
Notes to the Financial Report
4
Earnings per share
Basic earnings per share
Continued operations
Discontinued operations
Continued and discontinued operations
Diluted earnings per share
Continued operations
Discontinued operations
Continued and discontinued operations
ST BARBARA LIMITED 2016
Consolidated
2016
Cents
2015
Cents
34.21
‐
34.21
32.70
‐
32.70
4.29
3.76
8.05
4.18
3.65
7.83
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.
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.
Reconciliation of earnings used in calculating earnings per share
Diluted earnings per share
Consolidated
2016
$'000
2015
$'000
169,388
21,154
169,388
39,682
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.
Basic and diluted earnings per share:
Profit after tax for the year ‐ continuing
operations
Profit after tax for the year – including
discontinued operations
Weighted average number of shares
Weighted average number of ordinary
shares used as the denominator in
calculating basic earnings per share
Weighted average number of ordinary
shares and potential ordinary shares
used as the denominator in calculating
diluted earnings per share
Consolidated
2016
Number
2015
Number
495,102,525
492,700,478
519,136,813
506,563,634
Page 46
Notes to the Financial Report
B. Mining operations
5 Property, plant and equipment
ST BARBARA LIMITED 2016
Consolidated
2016
$'000
2015
$'000
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.
Land and buildings
At the beginning of the year
Additions
Depreciation (average 10‐15 years)
Effects of movement
exchange rates
At the end of the year
in
foreign
Plant and equipment
At the beginning of the year
Additions
Disposals
Depreciation (average 3‐10 years)
Effects of movement
exchange rates
At the end of the year
Total
in
foreign
18,100
1,529
(1,937)
172
17,864
151,945
14,687
(1,703)
(22,180)
1,835
144,584
162,448
19,124
140
(1,829)
665
18,100
134,769
24,179
(617)
(20,160)
13,774
151,945
170,045
Security
As at 30 June 2016, plant and equipment with a carrying value of
$1,542,000 (2015: $2,701,000) was pledged as security for finance
leases. In accordance with the security arrangements the senior
secured notes are secured by the assets of St Barbara Limited; the
security does not include the assets of the Simberi operations.
Reconciliation of depreciation and amortisation to income
statement
Depreciation
Land and buildings
Plant and equipment
Amortisation
Mine properties
Mineral rights
Total
Consolidated
2016
$'000
2015
$'000
(1,937)
(22,180)
(1,829)
(20,160)
(53,176)
(3,622)
(80,915)
(61,119)
(1,963)
(85,071)
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.
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.
Gains and
losses on disposal are determined by comparing
proceeds with the carrying amount. These gains and losses are
included in the income statement when realised.
Page 47
Notes to the Financial Report
6 Deferred mining costs
ST BARBARA LIMITED 2016
Current
Deferred operating mine development
Consolidated
2016
$'000
2015
$'000
4,446
12,829
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.
Non‐current
Deferred operating mine development
11,271
4,525
Underground operations
In underground operations mining occurs progressively on a level‐
by‐level basis. Underground mining costs in the period are
deferred based on the metres developed for a particular level.
Previously deferred underground mining costs are amortised to the
income statement based on the recoverable ounces produced over
the life mine recoverable ounces. Deferred costs are released to
the income statement as ounces are produced from the related
mining levels.
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 and deferred. This activity is referred to as
Deferred Stripping.
Removal of waste material normally continues throughout the life
of an open pit mine. This activity is referred to as production
stripping.
The Group has no deferred waste costs at 30 June 2016.
Accounting judgements and estimates
The Group applies the units of production method for amortisation
of underground operating development. The amortisation rates
are determined on a
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.
level‐by‐level basis.
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.
Page 48
Notes to the Financial Report
7 Mine properties and mineral rights
Mine properties
At beginning of the year
Direct expenditure
Amortisation for the year
Impairment losses and write downs
At end of the year
Consolidated
2016
$'000
211,989
21,071
(53,176)
‐
179,884
2015
$'000
257,402
24,706
(61,119)
(9,000)
211,989
ST BARBARA LIMITED 2016
Mine properties
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.
Accounting judgements and estimates
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.
Mineral rights
At the beginning of the year
Amortisation
At the end of the year
Consolidated
2016
$'000
23,407
2015
$'000
25,370
(3,622)
19,785
(1,963)
23,407
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 the date of acquisition. Mineral
interest and are
rights are attributable to specific areas of
amortised when commercial production commences on a unit of
production basis over the estimated economic reserve of the mine
to which the rights relate.
Page 49
Notes to the Financial Report
7. Mine properties and mineral rights
(continued)
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
An
impairment loss is recognised for the amount by which the carrying
amount of an asset or a cash generating unit (‘CGU’) exceeds the
recoverable amount. Impairment losses are recognised in the
income statement.
is made.
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 identified CGUs of the Group are: Leonora and Simberi. The
carrying value of the Leonora and Simberi CGU are assessed using
fair value less cost to sell (‘Fair Value’).
Fair Value is determined as the net present value of the estimated
future cash flows. Future cash flows are based on life‐of‐mine
plans using market based commodity price and exchange
assumptions for both Australian Dollar (AUD) and United States
Dollar (USD) gold price, estimated quantities of ore reserves,
operating costs and future capital. Costs to sell have been
estimated by management
Accounting judgements and estimates‐ Impairment
Significant judgements and assumptions are required in making
estimates of Fair Value. The CGU valuations are subject to
variability in key assumptions including, but not limited to: long‐
term gold prices, currency exchange rates, discount rates,
production, operating costs and future capital expenditure. An
adverse change in one or more of the assumptions used to
estimate Fair Value could result in a reduction in a CGU’s
recoverable value.
lead to the recognition of
impairment losses in the future. The inter‐relationship of the
significant accounting assumptions upon which estimated future
cash flows are based, however, are such that it is impractical to
disclose the extent of the possible effects of a change in a key
assumption in isolation.
This could
2017‐2021
Long term
2022+
ST BARBARA LIMITED 2016
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
improvements reflecting the Group’s
include expected cost
objectives to maximise free cash flow, optimise and reduce activity,
apply technology, improve capital and labour productivity.
Unmined resources and exploration values
Unmined resources are not included in a CGU’s 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 Fair
Value, there are no unmined resources or exploration estimates
included within valuation.
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.
Accounting judgements and estimates– Ore Reserves
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
rates,
production costs, future capital requirements, short and long term
commodity prices and exchange rates.
techniques,
recovery
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.
Gold (Real US$ per ounce)
$1,258/oz ‐ $1,314/oz $1,250/oz
Gold (Real A$ per ounce)
$1,737/oz ‐ $1,774/oz $1,785/oz
Changes in reported reserves may affect the Group’s financial
results and financial position in a number of ways, including:
AUD:USD exchange rate
0.74 to 0.72
Post‐tax real discount rate
(%) – Australia
Post‐tax real discount rate
(%) – PNG
8.2
10.6
0.70
8.2
10.6
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 Fair Value of CGUs, the future cash flows are
discounted using rates based on the Group’s estimated real post‐
Asset carrying values may be impacted due to changes in
estimated future cash flows.
Depreciation and amortisation charged
income
statement may change where such charges are calculated using
the units of production basis.
the
in
Underground capital development deferred in the balance
sheet or charged in the income statement may change due to a
revision in the development amortisation rates.
Decommissioning,
environmental
provisions may change where changes in estimated reserves
affect expectations about the timing or cost of these activities.
restoration
and
site
Page 50
Notes to the Financial Report
8
Exploration and evaluation
Non‐current
At beginning of the year
Additions
Disposals
At end of the year
Commitments for exploration
to
tenement
tenements,
the Group
Exploration
In order to maintain rights of tenure to
mining
is
committed
rentals and
in
minimum exploration expenditure
terms of the requirements of the relevant
state government mining departments in
Western Australia. This requirement will
continue for future years with the amount
dependent upon tenement holdings.
Consolidated
2016
$'000
16,969
9,006
‐
25,975
2015
$'000
15,036
2,241
(308)
16,969
Consolidated
2016
$’000
2015
$’000
4,898
4,984
ST BARBARA LIMITED 2016
All exploration and evaluation expenditure
incurred up to
establishment of reserves is expensed as incurred. From the point
in time when reserves are established, or where there is a
reasonable expectation for reserves, 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 expenditures represents costs related to the preparation
and completion of a feasibility study to enable a development
decision to be made in relation to that area of interest. Feasibility
expenditures are expensed as incurred until a decision has been
made to develop the area of interest.
Exploration and evaluation assets are assessed for impairment if (i)
sufficient data exists to determine technical feasibility and
commercial viability, and (ii) facts and circumstances suggest that
the carrying amount exceeds the recoverable amount. 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.
Accounting judgements and estimates
Exploration and evaluation expenditure
is capitalised where
reserves have been established for an area of interest, or where
there is a reasonable expectation for reserves, and it is considered
likely to be recoverable from future exploitation or sale. The
accounting policy requires management to make certain estimates
in
and assumptions as to future events and circumstances,
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.
Page 51
Notes to the Financial Report
9 Rehabilitation provision
Current
Provision for rehabilitation
Non‐current
Provision for rehabilitation
ST BARBARA LIMITED 2016
Consolidated
2016
$'000
2015
$'000
493
2,424
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.
28,095
28,588
39,663
42,087
The Group has obligations to dismantle, remove, restore and
rehabilitate certain items of property, plant and equipment and
areas of disturbance during mining operations.
Movements in Provisions
Rehabilitation
Balance at start of year
Unwinding of discount
Reduction in net provisions made during
the year (1)
Provisions used during the year
Effects of movements in the foreign
exchange rate
Balance at end of year
42,087
1,707
(14,008)
‐
(1,198)
63,872
1,875
(23,584)
(92)
16
28,588
42,087
(1) Represents the elimination of the King of the Hills rehabilitation provision
($14,008,000) on sale of the tenements to Saracen Metals Pty Ltd in
October 2015, the reduction prior year represents the elimination of Gold
Ridge rehabilitation provision.
A provision is made for the estimated cost of rehabilitation and
restoration of areas disturbed during mining operations up to
reporting date but not yet rehabilitated. The provision also
includes estimated costs of dismantling and removing the assets
and restoring the site on which they are located. The provision is
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
in estimates are dealt with on a
requirements.
prospective basis as they arise.
Changes
As 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), the
rehabilitation liability is remeasured at each reporting date 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.
Page 52
Notes to the Financial Report
C. Capital and risk
10 Working Capital
Trade and other receivables
Current
Trade receivables
Other receivables
Restricted cash(1)
Prepayments
Non current
Other Receivables
Total
Consolidated
2016
$'000
2015
$'000
1,932
2,392
118
3,844
8,286
2,366
3,683
2,217
2,084
1,940
9,924
‐
10,652
9,924
(1) Cash held on deposit with the Commonwealth Bank of Australia
secures $98,000 for bank guarantees as at 30 June 2016 (2015:
$98,000) and the remaining $20,000 (2015: $1,986,000) represents
security provided to the National Australia Bank for bank guarantees
in favour of various government authorities and service providers.
ST BARBARA LIMITED 2016
initially at fair value and
Trade receivables are recognised
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.
Amounts receivable from Director related entities
At 30 June 2016, there were no amounts receivable from Director
related entities (2015: $ nil).
Inventories
Consumables
Ore stockpiles
Gold in circuit
Bullion on hand
Consolidated
2016
$'000
2015
$'000
Raw materials and stores, ore stockpiles, work‐in‐progress and
finished gold stocks are valued at the lower of cost and net
realisable value.
42,148
649
9,565
5,802
58,164
31,952
8,369
8,517
3,434
52,272
Cost comprises direct materials, direct labour and an appropriate
proportion of variable and fixed overhead expenditure relating to
mining activities, the latter being allocated on the basis of normal
operating capacity. Costs are assigned to individual items of
inventory on the basis of weighted average costs. Net realisable
value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated
costs necessary to make the sale.
Lower of cost and net realisable value
Bullion on hand of $5,802,000 was valued at cost (2015:
$3,434,000).
Trade and other payables
Current
Trade payables
Other payables
Consolidated
2016
$'000
2015
$'000
39,346
422
39,768
41,157
1,738
42,895
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.
Page 53
Notes to the Financial Report
11 Financial risk management
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.
The Group's normal business activities expose it to a variety of
financial risk, being: market risk (especially gold price and foreign
currency 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 and Risk Committee and Board
in discharging their
responsibilities in relation to forecasted risk profiles, risk issues, risk
mitigation strategies and compliance with Treasury policy. 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.
(b) 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 presentation currency of Australian dollars. The
currencies in which transactions primarily are denominated are
Australian Dollars (AUD), US Dollars (USD) and Papua New Guinea
Kina (PGK).
Currency risk relating to the net investment in foreign operations is
hedged against the Group's USD borrowings. Exchange gains and
losses upon subsequent revaluation of the designated USD
denominated borrowings from the historical draw down rate to the
reporting period end spot exchange rate are deferred in equity in
the Foreign Currency Translation Reserve, and will be released to
the income statement if the foreign operation is disposed of.
As at 30 June 2016, a portion of the total USD borrowings of
US$167,975,000 (2015: US$270,980,000), translated at the year
end USD:AUD foreign exchange rate to $225,405,000 (2015:
$351,326,000), excluding
costs of
$2,838,000, were designated as a hedging instrument against the
Group’s net investment in foreign operations.
transaction
capitalised
Interest on borrowings is denominated in the currency of the
borrowing. The Group’s USD interest exposure is mitigated through
USD cash flows realised from 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.
ST BARBARA LIMITED 2016
The exchange rates at the close of the period were as follows:
Closing rate as at
30 June 2016
30 June 2015
AUD/USD
0.7452
0.7713
AUD/PGK
2.3216
2.0654
2016
2015
Exposure to currency
USD
$’000
PGK
$’000
USD
$’000
PGK
$’000
Cash and cash equivalents
Trade Receivables
Trade payables
Interest bearing liabilities
Net Exposure
58,625
216
(6,054)
(168,102)
(115,315)
4,747
288
(5,415)
‐
887
2,205
(4,650)
(270,980)
(380) (272,358)
‐
1,179
(6,025)
‐
(4,846)
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 and PNG Kina 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 Profit After Tax
(Increase profit)/decrease
profit
2016
$'000
11,522
(11,522)
2015
$'000
27,253
(27,253)
AUD/USD +10%
AUD/USD ‐10%
PGK against the AUD has been reviewed and considered an immaterial
currency risk.
Significant assumptions used in the foreign currency exposure
sensitivity analysis above include:
Reasonably possible movements in foreign exchange rates.
The translation of the net assets
in subsidiaries with a
functional currency other than the Australian dollar has not
been included in the sensitivity analysis as part of the equity
movement.
The net exposure at the reporting date is representative of
what the Group is expected to be exposed to in the next 12
months.
The sensitivity analysis only includes the impact on the balance
of financial assets and financial liabilities at the reporting date.
Page 54
Notes to the Financial Report
11 Financial risk management (continued)
(c) 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
2016
$’000
300,614
226,318
(136,689)
390,243
2015
$’000
140,429
346,961
(76,871)
410,519
The Group does not have a target net debt/equity ratio. There
were no changes in the Group’s approach to capital management
during the year, with the focus been on the reduction
in
borrowings using surplus cash flows.
The Group
requirements other than normal banking requirements.
is not subject
to externally
imposed capital
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
and loss, loans and receivables, and available‐for‐sale financial
assets. The classification depends on the purpose for which the
the
investments were acquired. Management determines
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.
(d)
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.
ST BARBARA LIMITED 2016
total Group production, with maturities occurring over a relatively
short period of time.
(e)
Cash flow hedges
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 and all other factors
remaining constant, would have change post tax profit by
$15,935,000.
In accordance with the Group’s financial risk management policies,
the Group has managed commodity price risk from time to time
using a combination of gold put options and gold call options to
create zero‐cost option collar structures and gold forward contracts
as described below.
In February 2016, the Company entered into a zero cost collar with
Goldman Sachs for 40,000 ounces of gold over the four‐month
period to June 2016 at a put price of US$1,187 and call price of
US$1,287 per ounce. This hedge was entered into to manage US
dollar gold price risk associated with repaying the Red Kite debt
facility.
In March 2016, the Company entered into gold forward contracts
for 50,000 ounces of gold at US$1,260 per ounce over a six month
period from July 2016 to December 2016. Gold forward contracts
for a further 50,000 ounces at US$1,338 per ounce from January
2017 to June 2017 were entered into during July 2016. These
contracts were entered into to reduce the US dollar gold price risk
associated with the future repayment of the remaining US Senior
Secured Notes.
As physical delivery of gold is used to close out forward contracts,
the standard provides an own use exemption under which the
Group is not subject to the requirements of AASB 139 for these
contracts.
The maturity profile of the gold forward contracts remaining as at
30 June 2016 is provided in the table below.
Strike
Price
Total
ounces
6
months
or less
ounces
6 – 12
months
ounces
1 – 2
years
ounces
2 – 5
years
ounces
US$1,260/oz 50,000
50,000
‐
‐
‐
Credit risks related to receivables
Cash flow hedge sensitivity
The Group’s most significant customer accounts for $1,714,000 of
the trade receivables carrying amount at 30 June 2016 (2015:
$3,342,000), 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 2016 were past due.
Credit risks related to cash deposits and derivatives
Credit risk from balances with banks, financial institutions and
derivative counterparties is managed by the centralised Group
Treasury function in accordance with the Board approved policy.
Investments of surplus funds are only made with approved
counterparties with a minimum Standard & Poor’s credit rating,
and there is a financial limit on funds placed with any single
counterparty.
The relationship between currencies, spot gold price and
volatilities is complex and changes in the spot gold price can
influence volatility, and vice versa.
At 30 June 2016, the Group did not hold any gold options to
hedge against movements in the gold price, however this is
reviewed by the Board as part of the risk management
framework.
transactions
Derivative
approved
counterparties in accordance with the Board approved Treasury
Policy. Derivative transactions do not cover a major proportion of
are only made with
Page 55
Notes to the Financial Report
11
(f)
Financial risk management (continued)
Interest rate risk exposures
interest rate risk arises from
long‐term
The Group’s main
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 manages the interest rate exposures according to the
Board approved Treasury policy. Any decision to hedge interest
rate risk is assessed in relation to the overall Group exposure, the
prevailing interest rate market, and any funding counterparty
requirements. As at 30 June 2016, interest rates on interest
bearing liabilities were fixed.
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.
(g)
Fair value estimation
The fair value of cash and cash equivalents and non‐interest
bearing monetary financial assets and financial liabilities of the
Group approximates carrying value. The fair value of other
monetary financial assets and financial liabilities is based upon
market prices.
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.
ST BARBARA LIMITED 2016
Page 56
Notes to the Financial Report
11 Financial risk management (continued)
Fixed Interest Maturing in 2016
ST BARBARA LIMITED 2016
Non‐
interest
bearing
$’000
‐
‐
6,690
56
6,746
Total
$’000
136,689
118
6,690
56
143,553
Fair value
136,689
118
6,690
56
143,553
Floating
Interest rate
$’000
1 year or
less
$’000
Over 1 to 5
years
$’000
101,689
‐
‐
‐
101,689
0.63%
35,000
118
‐
‐
35,118
‐
‐
‐
‐
‐
2.84%
n/a
n/a
‐
‐
‐
‐
‐
‐
992
2,209
‐
3,201
‐
550
‐
222,567
223,117
39,768
‐
‐
‐
39,768
39,768
1,542
2,209
222,567
266,086
39,768
1,542
2,209
228,227
271,746
n/a
4.99%
8.87%
n/a
101,689
31,917
(223,117)
(33,022)
(122,533)
(128,193)
18,871
‐
‐
‐
18,871
2.39%
‐
‐
93,081
‐
93,081
8.50%
58,000
2,084
‐
‐
60,084
2.84%
‐
3,809
‐
‐
3,809
‐
‐
‐
‐
‐
n/a
‐
1,450
‐
248,621
250,071
‐
‐
5,900
66
5,966
n/a
42,895
‐
‐
‐
42,895
76,871
2,084
5,900
66
84,921
76,871
2,084
5,900
66
84,921
42,895
5,259
93,081
248,621
389,856
42,895
5,259
94,593
252,620
395,367
6.63%
8.86%
n/a
(74,210)
56,275
(250,071)
(36,929)
(304,935)
(310,699)
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
Premium insurance funding
Senior secured notes(1)
Weighted average interest rate
Net financial assets/(liabilities)
Fixed Interest Maturing in 2015
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(2)
Senior secured notes(1)
Weighted average interest rate
Net financial assets/(liabilities)
(1) Senior secured notes amount excludes $2,551,000 (2015: $4,920,000) of capitalised transaction cost and $287,000 (2015: $547,000) discount on notes.
(2) Loans from other entities at 30 June 2015 exclude $4,157,000 of capitalised transactions costs.
Page 57
Notes to the Financial Report
11 Financial risk management (continued)
(h)
Liquidity risk
ST BARBARA LIMITED 2016
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.
Maturity of financial liabilities – 2016
Senior Secured Notes(1)
Loans from other entities
Premium insurance funding
Finance lease liabilities
Trade and other payables
Maturity of financial liabilities – 2015
Senior Secured Notes(1)
Loans from other entities
Finance lease liabilities
Trade and other payables
(1)
Excluding amortisation of capitalised transaction costs and discount.
Less than
12 months
$‘000
Between 1
and 5 years
$‘000
Over 5
years
$‘000
Total
contractual
cash flows
$‘000
Carrying
amount
$‘000
20,004
‐
2,297
1,059
39,768
63,128
245,410
‐
‐
565
‐
245,975
22,550
56,108
4,339
42,895
299,189
51,496
1,444
‐
125,892
352,129
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
265,414
‐
2,297
1,624
39,768
309,103
222,567
‐
2,209
1,542
39,768
266,086
321,739
107,604
5,783
42,895
478,021
248,621
93,081
5,259
42,895
389,856
Page 58
Notes to the Financial Report
12 Net debt
Cash and cash equivalents
Cash at bank and on hand
Term deposits
Consolidated
2016
$'000
101,689
35,000
136,689
2015
$'000
18,871
58,000
76,871
Interest bearing liabilities
Current
Secured
Lease liabilities
Loans from other entities
Insurance premium funding
Total current
Non‐current
Secured
Lease liabilities
Senior secured notes (net of transaction
costs)
Loans from other entities
Total non‐current
Total interest bearing liabilities
Consolidated
2016
$'000
2015
$'000
992
‐
2,209
3,201
3,809
48,619
‐
52,428
550
222,567
1,450
248,621
‐
223,117
226,318
44,462
294,533
346,961
Profit before income tax includes the following specific expenses:
Finance Costs
Interest paid/payable
Borrowing costs
Finance lease interest
Provisions: unwinding of discount
Consolidated
2016
$'000
2015
$'000
28,383
5,434
225
1,707
35,749
36,708
4,246
471
1,875
43,300
Rental expense relating to operating leases
Lease payments
Expense from discontinued ops
1,253
‐
3,830
6,018
ST BARBARA LIMITED 2016
Cash and cash equivalents includes 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.
Cash at bank and on hand
Cash at bank at 30 June 2016 invested “at call” was earning interest
at an average rate of 0.63% per annum (2015: 2.39% per annum).
Term Deposits
The deposits at 30 June 2016 were earning interest at rates of
between 1.83% and 3.00% per annum (2015: rates of between
2.35% and 2.97% per annum). At 30 June 2016, the average time to
maturity was 31 days (2015: 50 days), with $nil maturing between
90 to 180 days (2015: $nil) from balance date.
Borrowings are initially recognised at fair value, net of transaction
costs
incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in the
income statement over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities, which are not incremental costs relating to the actual
draw down of the facility, are recognised as prepayments and
amortised on a straight line basis over the term of the facility.
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
market 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 Group’s Australian assets; the
security does not include the assets of the Simberi Operations.
During the year ended 30 June 2016, Notes with a face value of
US$28,005,000 were bought back (2015: US$54,020,000). A
further US$40,280,000 Notes at face value was bought back in July
2016. The USD value of the notes outstanding at reporting date is
converted to AUD at the AUD/USD exchange rate as at 30 June
2016. The related unamortised transaction costs capitalised at 30
June 2016 against the borrowings amounted to $2,838,000 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 increase the cash position of the Group. The
second tranche of US$22,225,000 was drawn down on 30 May
2014. The facility was fully repaid during the year ended 30 June
2016.
Page 59
ST BARBARA LIMITED 2016
Reconciliation of profit from ordinary activities after income tax
to net cash flows from operating activities
Profit after tax for the year
Depreciation and amortisation
Rehabilitation provision
Asset impairments and write downs
Income tax expense
Net loss on sale of plant and equipment
Discontinued operations non‐cash expenses
Net realised/unrealised gain on gold
derivative fair value movements
Unwinding of rehabilitation provision
Net finance costs amortised
Unrealised/realised foreign exchange gain
Equity settled share‐based payments
Change in operating assets and liabilities
Consolidated
2016
$'000
2015
$'000
169,388
39,682
80,915
85,071
‐
5,896
‐
14,014
‐
‐
‐
1,707
5,289
142
928
11,425
1,090
513
(14,611)
(1,407)
1,875
6,915
15,350
139
Receivables and prepayments
(728)
(1,539)
Inventories
Other assets
Trade creditors and payables
Provisions
(5,892)
(14,856)
(1,019)
14,933
(3,127)
(16,056)
(18,829)
(21,219)
Net cash flows from operating activities
242,788
113,201
Notes to the Financial Report
12 Net debt (continued)
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.
Commitments for leases
The finance lease commitments displayed in the table below relate
to vehicles and plant and equipment, 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
Finance Lease Commitments
Payable not later than one year
Payable between one year and five years
Future finance charges
Total lease liabilities
Current
Non‐current
Analysis of Non‐Cancellable Operating
Lease Commitments
Payable not later than one year
Payable between one year and five years
2016
$'000
1,059
565
1,624
(82)
1,542
992
550
1,542
396
899
1,295
2015
$'000
4,476
1,444
5,920
(661)
5,259
3,809
1,450
5,259
837
1,094
1,931
Page 60
Notes to the Financial Report
13 Contributed equity
Date
Details
Number of
shares
$'000
1 July 2015
Opening balance
495,102,525
887,216
30 June 2016 Closing balance
495,102,525
887,216
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.
ST BARBARA LIMITED 2016
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.
Page 61
Notes to the Financial Report
D. Business portfolio
ST BARBARA LIMITED 2016
14 Parent entity disclosures
15 Controlled entities
As at, and throughout, the financial year ended 30 June 2016, the
parent company of the Group was St Barbara Limited.
Financial statements
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries in accordance
with the accounting policy on consolidation.
All subsidiaries are 100% owned at 30 June 2016 and 30 June 2015
and are incorporated in Australia unless otherwise stated.
Results of the parent entity
Profit/(loss) after tax for the year
Other comprehensive loss
Total comprehensive income/(loss) for
the year
Parent Entity
2016
$'000
2015
$'000
65,702
(40,650)
(2,821)
(924)
62,881
(41,574)
Other comprehensive income is set out in the Consolidated
Statement of Comprehensive Income.
Parent Entity
2016
$'000
2015
$'000
Parent entity
St Barbara Limited
Subsidiaries of St Barbara Limited
Allied Gold Mining Ltd
Subsidiaries of Allied Gold Mining Ltd
Allied Gold Pty Ltd(2)
Subsidiaries of Allied Gold Pty Ltd
Advance R&D Pty Ltd(1)
AGL (ASG) Pty Ltd
AGL (SGC) Pty Ltd
Allied Gold Finance Pty Ltd
Financial position of the parent entity
at year end
Current assets
Total assets
Current liabilities
Total liabilities
173,591
104,813
Allied Gold Services Pty Ltd
442,357
537,272
Allied Tabar Exploration Pty Ltd
Aretrend Pty Ltd(1)
38,548
42,815
Nord Pacific Limited
276,582
437,199
Subsidiaries of AGL (SGC) Pty Ltd
Country of
Incorporation
Australia
UK
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Compania Minera Nord Pacific De Mexico, S.A. DE
C.V.(3)
Mexico
Subsidiaries of Allied Tabar Exploration Pty Ltd
Tabar Exploration Company Ltd
Subsidiaries of Nord Pacific Limited
Nord Australex Nominees (PNG) Ltd
Simberi Gold Company Limited
PNG
PNG
PNG
(1) Non operating.
(2) Converted from Allied Gold Ltd to Allied Gold Pty Ltd on 1 August 2014.
(3) 49,999 shares held by AGL (SGC) Pty Ltd. 1 share held by AGL (ASG) Pty
Ltd. The entity was deregistered on the 22 October 15.
Total equity of the parent entity
comprising:
Share capital
Reserve
Accumulated losses
Total equity
887,216
887,216
2,840
19
(724,281)
(787,162)
165,775
100,073
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
$4,717,000 (2015: $8,095,000), operating lease rents of $969,000
(2015: $969,000), and interest of $25,889,000 (2015: $15,921,000)
to entities in the wholly‐owned group.
Net loans payable to the Company amount to a net receivable of
$242,446,000 (2015: net receivable $319,914,000).
Balances and transactions between the Company and
its
subsidiaries, which are related parties of the Company, have been
eliminated on consolidation.
Page 62
Notes to the Financial Report
16 Discontinued operations
17 Disposal of subsidiaries
On the 6 May 2015 the Group completed the sale of Australian
Solomons Gold Limited and its subsidiary companies to a Solomon
Islands company associated with local landowners for a nominal
purchase price. Australian Solomons Gold Limited was the parent
entity of Gold Ridge Mining Limited, which holds the Gold Ridge
assets.
The parties also signed a Deed of Indemnity and Release as part of
the sale in favour of the remaining St Barbara Group companies in
respect of the Gold Ridge project.
Consideration received/(paid)
Foreign exchange
Costs of disposal
The results of the discontinued operations included in the prior
year amounts in the consolidated income statement are set out
below.
Analysis of assets and liabilities over
which control was lost
Provision for rehabilitation
Net liability disposed of
ST BARBARA LIMITED 2016
Consolidated
2016
$'000
‐
‐
‐
‐
‐
2015
$'000
(2,724)
(2,796)
(5,520)
(35,074)
(35,074)
for
Profit /(Loss)
discontinued operations
Revenue
the period
Other income
Expenses
Operating loss before tax
Foreign exchange gains
Loss after tax and foreign exchange
Gain on disposal of operations
Profit for the year from discontinued
operations (attributable to owners of the
company)
Consolidated
2016
$'000
2015
$'000
from
‐
‐
‐
‐
‐
‐
‐
‐
4,375
3,694
(19,862)
(11,793)
767
(11,026)
29,554
29,554
‐
18,528
2016
$'000
2015
$'000
Cash flows from discontinued operations
Net cash outflows from operating activities
‐
(13,575)
The Company received a nominal amount from a Solomon Islands
company associated with local landowners for the sale of the
Australian Solomons Gold Limited and its subsidiary companies.
The gain on disposal of $29,554,000 was included in the profit from
discontinued operations for the financial year ended 30 June 2015.
Page 63
Notes to the Financial Report
E. Remunerating our people
18 Employee benefit expenses and provisions
Expenses
Employee related expenses
Wages and salaries
Contributions to defined contribution
superannuation funds
Equity settled share‐based payments
Consolidated
2016
$'000
2015
$'000
62,396
59,291
4,904
928
68,228
4,066
139
63,496
ST BARBARA LIMITED 2016
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.
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.
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.
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.
Consolidated
Directors and key management personnel
2016
$
2015
$
Short term employee benefits
2,404,260
2,188,054
Post‐employment benefits
Leave
Share‐based payments
Termination payments
38,616
103,011
511,888
51,654
114,213
83,625
‐
456,227
3,057,775
2,893,773
Disclosures relating to Directors and Key Management Personnel
are included within the Remuneration Report, with the exception
of the table opposite.
Page 64
Notes to the Financial Report
18 Employee benefit expenses and provisions
(continued)
Provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Provision for redundancy payments
Other provisions
Non‐current
Employee benefits ‐ long service leave
Other provisions
Consolidated
2016
$'000
2015
$'000
3,486
2,392
‐
4,641
10,519
3,144
2,232
194
9,019
14,589
1,859
2,802
4,661
1,452
4,469
5,921
ST BARBARA LIMITED 2016
Employee related and other provisions 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.
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.
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.
Page 65
ST BARBARA LIMITED 2016
Notes to the Financial Report
19 Share‐based payments
Employee Performance Rights
During the year ended 30 June 2016, there was no amount transferred as a gain for performance rights that expired during the year (2015:
409,000). Accounting standards preclude the reversal through the Income Statement for amounts which have been booked in the share based
payments reserve for performance rights 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 2016
Grant Date
Expiry Date
29 Nov 2013 30 Jun 2016
30 Jun 2017
5 Dec 2014
10 Dec 2015
30 Jun 2018
Total
Price on
issue date
$0.49
$0.12
$0.51
Balance at
start of the
year
Number
2,908,469
17,151,202
‐
20,059,671
Granted
during the
year
Number
‐
‐
3,974,617
3,974,617
Vested
during the
year
Number
(1,809,209)
(419,361)
‐
(2,228,570)
Expired
during the
year
Number(1)
(1,099,260)
(778,813)
‐
(1,878,073)
Balance at
end of the
year
Number
‐
15,953,028
3,974,617
19,927,645
Consolidated and parent entity 2015
30 Jun 2015
19 Dec 2012
29 Nov 2013 30 Jun 2016
5 Dec 2014
30 Jun 2017
Total
$2.09
$0.49
$0.12
858,798
4,609,097
‐
5,467,895
‐
‐
18,186,232
18,186,232
‐
‐
‐
‐
(858,798)
(1,700,628)
(1,035,030)
(3,594,456)
‐
2,908,469
17,151,202
20,059,671
Exercisable
at end of the
year
Number
‐
‐
‐
‐
‐
‐
‐
‐
(1) Includes performance rights, which did not vest due to not meeting performance criteria, or through termination of employment.
The weighted average remaining contractual life of performance
rights outstanding at the end of the year was 1.3 years (2015: 1.9
years). The model inputs for rights granted during the year ended
30 June 2016 included:
i.
Rights are granted for no consideration. The vesting of rights
granted in 2016 is subject to a continuing service condition as
at the vesting date, Return on Capital Employed over a three
year period, and relative Total Shareholder Return over a
three year period measured against a peer group.
ii.
iii.
iv.
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.
As a result of the Monte‐Carlo simulation results, the assessed fair
value of rights issued during the year was $5,246,000. This
outcome was based on the likelihood of the market condition being
met as at the date the rights vest.
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:
Performance rights issued under
performance rights plan
Consolidated
2016
$
2015
$
928,000
139,000
Accounting judgements and estimates
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.
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.
Page 66
Notes to the Financial Report
F. Other disclosures
20 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
2016
$
2015
$
Assurance services
Audit and audit related services
KPMG
Audit and review of financial reports
Non statutory assurance review
Total remuneration for audit and non
audit related services
358,500
95,000
453,500
508,925
‐
508,925
21 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:
On 18 July 2016, the Group announced the repurchase of an
additional A$55,531,000 (US$40,280,000) of aggregate principal of
its US 144A Senior Secured Notes. The notes were purchased at a
3.3% premium to par value. Following the repurchase, the
outstanding was
principal US
US$127,695,000.
Secured Notes
Senior
22 Contingencies
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.
As a result of the Australian Taxation Office’s (ATO) program of
routine and regular tax reviews and audits, the Group anticipates
that ATO reviews and audits may occur in the future. The ultimate
outcome of any future reviews and audits cannot be determined
with an acceptable degree of reliability at this time. Nevertheless,
the Group believes it is making adequate provision for its tax
liabilities, including amounts shown as deferred tax liabilities, and
takes reasonable steps to address potentially contentious issues
with the ATO.
ST BARBARA LIMITED 2016
23 Basis of preparation
Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis, except for the following material items:
Derivative financial instruments are measured at fair value;
Share based payment arrangements are measured at fair value;
Available for sale assets are measured at fair value;
Rehabilitation provision is measured at net present value;
Long service leave provision is measured at net present value.
Principles of consolidation ‐ Subsidiaries
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of St Barbara Limited as at 30 June 2016
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.
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.
Foreign currency translation
Both the functional and presentation currency of St Barbara
Limited and its Australian controlled entities are Australian dollars
(AUD). The functional currency of the Group’s foreign operations is
US dollars (USD).
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies, are recognised in the income statement,
except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
Translation differences on non‐monetary financial assets and
liabilities are reported as part of the fair value gain or loss.
Translation differences on non‐monetary financial assets and
liabilities, such as equities held at fair value through profit or loss,
are recognised in the income statement as part of the fair value
gain or loss. Translation differences on non‐monetary financial
assets, such as equities classified as available for sale financial
assets, are included in the fair value reserve in equity.
liabilities of controlled entities
The assets and
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 67
ST BARBARA LIMITED 2016
Notes to the Financial Report
23 Basis of preparation (continued)
Critical accounting judgement and 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.
24 Accounting standards
New Standards adopted
The Company has adopted the following new and/or revised Standards, Amendments and Interpretations from 1 July 2015:
Reference
AASB 2014‐4 Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 116 and AASB 138).
AASB 2015‐1 Amendments to Australian Accounting Standards‐Annual improvements to Australian Accounting Standards 2012‐2014
Cycle.
AASB 2015‐2 Amendments to Australian Accounting Standards‐Disclosure Initiative: Amendments to AASB 101.
ASB 2015‐3 Amendments to Australian Accounting Standard arising from the Withdrawal of AASB 1031 Materiality
The adopted standards have no material impact on the recognition, measurement and disclosure of the yearend financial report.
New accounting standards not yet adopted
Reference
AASB 16 Leases
AASB 15 Revenue from Contracts with Customers which supersedes AASB 111 Construction contracts, AASB 118
Revenue, interpretation 12 Customer loyalty programmes, Interpretation 15 Agreements for the construction of Real
Estate, Interpretation 18 Transfer of Assets from Customers, interpretation 131 Revenue‐Barter transactions involving
Advertising services and Interpretation 1042 Subscriber Acquisition Costs in the Telecommunications Industry.
AASB 2014‐10 (2015‐101) Amendments to Australian Accounting Standards‐Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture.
AASB 2016‐1 Amendments to Australian Accounting Standards –Recognition of Deferred Tax Asset for Unrealised Losses.
AASB 2016‐2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
Application of
Standard
1 January 2019
1 January 2018
1 January 2018
1 January 2017
1 January 2017
After a detail review of the above accounting standards the company has assessed that there will be no material impact on the recognition,
measurement and disclosure of the financial report.
Page 68
Financial Report
Directors’ declaration
ST BARBARA LIMITED 2016
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 35 to 68 and the Remuneration report in the
Directors’ report, set out on pages 15 to 31, 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 2016 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.
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 2016.
The directors draw attention to page 35 of the financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
2
3
Signed in accordance with a resolution of the directors:
Bob Vassie
Managing Director and CEO
Melbourne
23 August 2016
Page 69
Financial Report
Independent auditor’s report
Independent auditor’s report page 1
ST BARBARA LIMITED 2016
Page 70
Financial Report
Independent auditor’s report page 2
ST BARBARA LIMITED 2016
Page 71
ST BARBARA LIMITED 2016
Ore Reserves and Mineral Resources Statement as at 30 June 2016
Overview
˃
˃
Successful drilling program extended Gwalia Ore Reserves below 1,800 metres below surface for the first time
Total Ore Reserves maintained at 4.01 Moz of contained gold, despite production of 377 koz and sale of King of the Hills mine and Kailis
resource during FY16
Successful drilling at Gwalia targeting orebody extensions below 1,800 metres below surface has created significant new resources and
reserves which have increased mine life at Gwalia. The gross additions from deep drilling and design changes at Gwalia amounted to 490 koz
to Ore Reserves and 938 koz to Mineral Resources. The extent of this addition to reserves has offset depletion across the group and reductions
through the divestment of King of the Hills and Kailis, resulting in reserves being maintained at 4.01 Moz.
Company Summary at 30 June 2016
˃
Total Ore Reserves are estimated at:
37.0 Mt @ 3.4 g/t Au for
4.01 Moz of contained gold, comprising:
˃
˃
Leonora Operations:
Simberi Operations:
9.4 Mt @ 7.0 g/t Au for
2.11 Moz of contained gold
27.7 Mt @ 2.1 g/t Au for
1.90 Moz of contained gold
˃
Total Mineral Resources1 are estimated at:
119.7 Mt @ 2.4 g/t Au for
9.08 Moz of contained gold, comprising:
˃
˃
Leonora Operations:
22.4 Mt @ 6.3 g/t Au for
4.52 Moz of contained gold
Simberi Operations:
97.3 Mt @ 1.5 g/t Au for
4.56 Moz of contained gold
The 30 June 2016 Ore Reserves and Mineral Resources Statements released to the ASX on 23 August 2016 follow.
1 Mineral Resources are reported inclusive of Ore Reserves
Page 72
Ore Reserves and Mineral Resources Statement as at 30 June 2016
ST BARBARA LIMITED 2016
St Barbara's Mineral Resource and Ore Reserve position as at 30 June 2016 is summarised and compared with the 2015 statement in Table 1.
Project
Gwalia (WA)
Tower Hill (WA)
Total Leonora
Simberi (Oxide)
Simberi (Sulphide)
Total Simberi
Grand Total
Project
Gwalia (WA)
Tower Hill (WA)
King of the Hills (WA)
Kailis (WA)
Total Leonora
Simberi (Oxide)
Simberi (Sulphide)
Total Simberi
Grand Total
Tonnes
(‘000)
2015 Ore Reserves
Grade
(g/t)
Ounces
(‘000)
FY16
Production
Ounces
(‘000)
Tonnes
(‘000)
2016 Ore Reserves
Grade
(g/t)
Ounces
(‘000)
5,290
2,572
7,862
19,117
19,882
38,999
46,861
9.4
3.7
7.5
1.3
2.0
1.7
2.7
1,594
306
1,900
818
1,285
2,103
4,003
267
‐
267
110
110
377
6,795
2,572
9,367
14,094
13,556
27,650
37,017
8.3
3.7
7.0
1.3
3.0
2.1
3.4
1,808
306
2,114
576
1,321
1,897
4,011
2015 Mineral Resources
Grade
(g/t)
Tonnes
(‘000)
Ounces
(‘000)
2016 Mineral Resources
Grade
(g/t)
Tonnes
(‘000)
Ounces
(‘000)
12,929
5,093
870
1,027
19,919
43,979
76,914
120,893
140,812
7.9
3.8
6.1
3.1
6.6
1.0
1.5
1.3
2.0
3,304
625
170
104
4,203
1,413
3,607
5,020
9,223
17,294
5,093
‐
‐
22,387
29,428
67,850
97,278
119,665
7.0
3.8
‐
‐
6.3
1.0
1.7
1.5
2.4
3,896
625
‐
‐
4,521
951
3,607
4,558
9,079
Table 1: St Barbara 2015 and 2016 Ore Reserves and Mineral Resources Summary
The Company’s Ore Reserves are effectively unchanged as an increase in the Gwalia Ore Reserves resulting from successful surface drilling
targeting mineralisation extensions below the 1800 has offset depletion from production (Figure 1).
The successful drilling at Gwalia has offset reductions in the Company’s Mineral Resources inventory due to:
˃
˃
Production,
Sterilisation of non‐recoverable resources at Gwalia,
˃ Divestment of the King of the Hills and Kailis Projects, and
˃
Revised optimal pit shell from US$1,875 to US$1,800 per ounce at Simberi (Figure 2).
Page 73
Ore Reserves and Mineral Resources Statement as at 30 June 2016
Figure 1: Summary Movement in Ore Reserve between FY15 and FY16
ST BARBARA LIMITED 2016
Major variance to Ore Reserves FY15 to FY16
+297
+193
‐110
‐96
‐277
koz
4,500
4,000
3,500
3,000
2,500
2,000
4,003
4,011
1,500
1,000
500
0
June
2015
Gwalia
Mining
Gwalia Depth
Extension
Design changes
(Gwaila)
Simberi mining
Mining cost
increase
June
2016
Figure 2: Summary Movement in Mineral Resource between FY15 and FY16
koz
10,000
8,000
6,000
4,000
2,000
0
Major variance to Mineral Resources FY15 to FY16
+938
‐104
‐170
‐346
‐151
‐213
‐98
9,223
9,079
June
2015
Kailis
Divestment
KoTH
Divestment
Deeps Drilling
Gwalia
Depletion &
Sterilsation
Simberi
Depletion
Simberi
material type
changes
June
2016
Revised
geological
models for
Simberi
Operations
Page 74
Ore Reserves and Mineral Resources Statement as at 30 June 2016
Mineral Resource Revisions
Ore Reserve Revisions
Gwalia (+592,000 ounces (net))
Gwalia (+214,000 ounces (net))
ST BARBARA LIMITED 2016
The previous publicly reported Proved and Probable Ore Reserve
Estimate reported at 30 June 2015 was 5,290 kt @ 9.4 g/t Au
containing 1,594 koz of gold. This has increased by a net 214 koz
of gold to 6,795 kt @ 8.3 g/t Au containing 1,808 koz of gold.
Variances between the two estimates are primarily due to:
˃ Depletion due to mining,
˃ Depth extension to the Mineral Resource as a
consequence of surface drilling targeting resource
extensions below 1800 mbs,
˃ Design changes as a consequence of the revised Mineral
Resource estimate, and
Removal of the ‘mine call factor’.
˃
A mine call factor has previously been applied to South West
Branch (SWB) stopes greater than 8.0 g/t Au to address concerns
that the Mineral Resource and, as a consequence, the Ore Reserve
over‐estimated grade in areas of limited or no grade control
drilling. A review of factored areas subsequent to grade control
drilling has shown that the un‐factored grade is a more reliable
estimate of grade.
Simberi (oxide and sulphide combined: ‐206,000 ounces)
The previous publicly reported Proved and Probable Ore Reserve
Estimate reported at 30 June 2015 was 38,999 kt @ 1.7 g/t Au
containing 2,103 koz of gold. This has reduced by 206 koz of gold
to 27,650 kt @ 2.1 g/t Au containing 1,897 koz of gold. The
Simberi reserve combines the oxide reserve with 14,094 kt @ 1.3
g/t Au containing 576 koz of gold and the sulphide reserve with
13,556 kt @ 3.0 g/t Au containing 1,321 koz of gold.
The Simberi sulphide reserve profile variance from previous years
predominately relates to changes in the sulphide resource model
and an update to modifying factors as defined through the
updated pre‐feasibility study for sulphide treatment at Simberi.
The Gwalia Mineral Resource has been updated following the
completion of a surface drilling program targeting mineralisation
below 1800 mbs and underground grade control and resource
definition drilling completed from the 1540 level platform. The
previous publicly reported Measured, Indicated and Inferred
Mineral Resource Estimate reported at 30 June 2015 was 12,929
kt @ 7.9 g/t Au containing 3,304 koz of gold. This has increased by
a net 592 koz of gold to 17,294 kt @ 7.0 g/t Au containing 3,896
koz of gold. Variances between the two estimates are primarily
due to:
˃ Depletion due to mining and sterilisation of non‐
˃
recoverable resources, and
Resource extensions below 1800 mbs and changes to
local geological models as a result of drilling.
King of the Hills (‐170,000 ounces)
The King of the Hills Project was sold in October 2015 to Saracen
Metals Pty Ltd. The Company announced the sale of the King of
the Hills mine and Kailis resource on 20 August 2015, refer to the
corresponding ASX announcement for details.
Kailis (‐104,000 ounces)
The Kailis Project was sold in October 2015 to Saracen Metals Pty
Ltd. The Company announced the sale of the King of the Hills
mine and Kailis resource on 20 August 2015, refer to the
corresponding ASX announcement for details.
Simberi Oxide (‐462,000 ounces)
A revised Mineral Resource estimate was completed for Simberi
Oxide incorporating an updated base of oxidation model, based on
sulphur assays and geological logging data. Previous models did
not account for sulphur content. In addition, material that was
previously classified as ‘transitional’ (partly oxidised) and reported
as part of the oxide resource is now reported as part of the
sulphide resource. The previous publicly reported Measured,
Indicated and Inferred Oxide Mineral Resource Estimate reported
at 30 June 2015 was 43,979 kt @ 1.0 g/t Au containing 1,413 koz
of gold. This has decreased by 462 koz of gold to 29,428 kt @ 1.0
g/t Au containing 951 koz of gold. Variances between the two
estimates are primarily due to depletion through mining and
removal of transitional ore.
Simberi Sulphide (0 ounces)
The Simberi Sulphide Mineral Resource estimate was updated
incorporating a revised base of oxidation model and additional
attributes necessary for the Simberi sulphide pre‐feasibility study.
The previous publicly reported Measured, Indicated and Inferred
sulphide Mineral Resource Estimate reported at 30 June 2015 was
76,914 kt @ 1.5 g/t Au containing 3,607 koz of gold. The revised
model shows no net change in contained ounces and is now
67,850 kt @ 1.7 g/t Au containing 3,607 koz of gold. Variances
between
the
reclassification of transitional material as sulphide, depletion
through mining and a change in gold price (from US$1,875 to
US$1,800 per ounce) used to constrain the reporting of the
sulphide Mineral Resource.
two estimates are primarily due
the
to
Page 75
Ore Reserves and Mineral Resources Statement as at 30 June 2016
Ore Reserves Statement as at 30 June 2016
ST BARBARA LIMITED 2016
Project
Gwalia (WA)
Tower Hill (WA)
Simberi Oxide (PNG)
Simberi Sulphide (PNG)
Tonnes
(‘000)
2,286
‐
4,687
154
Proved
Gold
(g/t)
9.6
‐
1.3
3.0
Ounces
(‘000)
Tonnes
(‘000)
Probable
Gold
(g/t)
702
‐
194
14
4,510
2,572
9,407
13,402
7.6
3.7
1.3
3.0
Ounces
(‘000)
Tonnes
(‘000)
1,105
306
381
6,795
2,572
14,094
1,307
13,556
Total
Gold
(g/t)
Ounces
(‘000)
8.3
3.7
1.3
3.0
1,808
306
576
1,321
Total All Projects
7,127
4.0
910
29,891
3.2
3,099
37,017
3.4
4,011
Notes
1. Ore Reserves are based on a gold price of: Gwalia (A$1,350/oz), Tower Hill (A$1,250/oz), Simberi (US$1,200/oz).
2. Mineral Resources are reported inclusive of Ore Reserves.
3. Data is rounded to thousands of tonnes and thousands of ounces. Discrepancies in totals may occur due to rounding.
4. Details relating to each of the estimates are contained in the 2016 Annual Mineral Resource and Ore Reserve Report at
www.stbarbara.com.au/exploration/Ore‐Reserves‐mineral‐resources/
JORC Code Compliance Statement
The information in this report that relates to Ore Reserves is based on information compiled by Mr. Glen Carthew and Mr. Tim Richards, who
are Members of the Australasian Institute of Mining and Metallurgy. Glen Carthew and Tim Richards are full‐time employees of St Barbara Ltd
and have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they
are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”.
Competent Person Mr Tim Richards is entitled to participate in St Barbara’s long term incentive plan, details of which are most included in the
2016 Financial Report released to the ASX on 23 August 2016. Increase in Ore Reserves was one of the performance measures under that plan
until 30 June 2016. No incentive was paid in financial year 2016 under this performance measure.
Glen Carthew and Tim Richards consent to the inclusion in the statement of the matters based on their information in the form and context in
which it appears.
Page 76
Ore Reserves and Mineral Resources Statement as at 30 June 2016
Mineral Resources Statement as at 30 June 2016
ST BARBARA LIMITED 2016
Measured
Indicated
Inferred
Project
Tonnes
(‘000)
Gold
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Gold
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Gold
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Gwalia
Tower Hill
Simberi Oxide
Simberi Sulphide
4,951
7.7
1,232
11,773
‐
6,817
1,583
‐
1.1
1.2
‐
4,604
232
16,686
58
46,382
6.8
3.9
1.0
1.7
2,584
574
532
570
489
5,925
2,543
19,885
4.4
3.3
1.0
1.6
80
51
17,294
5,093
187
29,428
1,003
67,850
Total
Gold
(g/t)
7.0
3.8
1.0
1.7
Ounces
(‘000)
3,896
625
951
3,607
Total All Projects
13,351
3.5
1,522
79,445
2.4
6,233
26,869
1.5
1,321 119,665
2.4
9,079
Notes
1. Mineral Resources are reported inclusive of Ore Reserves
2. Cut‐off Grades Leonora: Gwalia Deeps (2.5 g/t Au), Tower Hill (2.5 g/t Au), Simberi Oxide (0.4 g/t Au), Simberi Sulphide (0.6 g/t Au).
3.
Simberi Mineral Resources are reported constrained by a $US1,800 per ounce pit shell.
4. Data is rounded to thousands of tonnes and thousands of ounces. Discrepancies in totals may occur due to rounding.
5. Details relating to each of the estimates are contained in the 2016 Annual Mineral Resource and Ore Reserve Report at
www.stbarbara.com.au/exploration/Ore‐Reserves‐mineral‐resources/
JORC Code Compliance Statement
The information in this report that relates to Mineral Resources is based on information compiled by Ms. Jane Bateman and Mr Robert Love
who are Fellows of the Australasian Institute of Mining and Metallurgy. Jane Bateman and Robert Love are full‐time employees of St Barbara
Ltd and have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they
are undertaking to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”.
Jane Bateman and Robert Love consent to the inclusion in the statement of the matters based on their information in the form and context in
which it appears.
Page 77
Shareholder Information
Twenty Largest Shareholders
Ordinary fully paid shares as at 30 September 2016
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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
CS FOURTH NOMINEES PTY LIMITED
SANDHURST TRUSTEES LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED ‐ A/C 2
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED‐GSCO ECA
UBS NOMINEES PTY LTD
NORTHCLIFFE HOLDINGS PTY LTD
AMP LIFE LIMITED
MRS CAROLINE JOY VASSIE
NORTHWEST ACCOUNTING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED ‐ A/C 3
MR ROBERT SCOTT VASSIE
MR JOHN DANCKERT + MRS NADIA DANCKERT
SHARE DIRECT NOMINEES PTY LTD <10015 A/C>
Total top 20 holders of ordinary fully paid shares
Total remaining holders
Total
ST BARBARA LIMITED 2016
Shares
% of Issued
Capital
140,134,122
125,118,011
105,146,447
28,984,964
6,398,744
4,632,097
2,598,131
2,452,999
1,763,988
1,628,423
1,457,268
1,347,024
1,150,000
1,145,383
935,720
934,657
835,911
833,333
681,770
651,647
28.18
25.16
21.14
5.83
1.29
0.93
0.52
0.49
0.35
0.33
0.29
0.27
0.23
0.23
0.19
0.19
0.17
0.17
0.14
0.13
428,830,639
68,500,456
497,331,095
86.23
13.77
100.00
Page 78
Shareholder Information
Distribution of Shareholdings
Ordinary fully paid shares as at 30 September 2016
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable Parcels
Ordinary fully paid shares as at 30 September 2016
Minimum $500.00 parcel at $3.19 per unit
Substantial Shareholders
Ordinary fully paid shares as at 30 September 2016
Name
Van Eck Associates Corporation
M&G Investment Management Ltd
Hunter Hall Investment Management Ltd
Vinva Investment Management
ST BARBARA LIMITED 2016
Total Holders
Shares
4,219
3,702
885
967
127
1,809,107
9,123,768
6,685,733
27,916,488
451,795,999
9,900
497,331,095
% of Issued
Capital
0.36
1.83
1.34
5.61
90.84
100.00
Total Holders
1,040
Shares
48,334
Minimum
Parcel Size
157
Shares
% of Issued
Capital
86,380,825
41,350,000
28,841,458
25,862,522
17.4%
8.4%
5.8%
5.2%
Page 79
ABN 36 009 165 066
BOARD OF DIRECTORS
T C Netscher
R S Vassie
K J Gleeson
D E J Moroney
Non‐Executive Chairman
Managing Director & CEO
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
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