24 March 2016 Asia Pacific/Australia Equity Research Precious Metals

St Barbara Mining (SBM.AX / SBM AU) Rating NEUTRAL Price (23-Mar,A$) 2.19 INITIATION Target Price (A$) 2.15 Target price ESG risk (%) 0.0 Market cap (A$mn) 1,084.3 Good company but fully priced Yr avg. mthly trading (A$mn) 78.1 Projected return: ■ St Barbara operates the high grade, high margin Gwalia underground Capital gain (%) -1.8 mine (Leonora, WA) and the historically marginal but now cash generative Dividend yield (net %) 0.0 open pit mine, Simberi (PNG). A significant turnaround in production, Total return (%) -1.8 cash flow and outlook has been delivered under the leadership of MD *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Bob Vassie. Value has been created through: simple operational [V] = Stock Considered Volatile (see Disclosure Appendix) improvements at Gwalia; achievement of design capacity utilisation at Research Analysts Simberi; divestment of the loss making Gold Ridge (Solomons) operation and Michael Slifirski 61 3 9280 1845 debt reduction from strong cash flow. [email protected] ■ With organic growth absent, continued operational improvements and Nick Herbert, CFA mine life extension will be key value drivers. We expect existing 61 3 9280 1754 [email protected] operations will continue to generate strong free cash for remaining mine life, and assume conceptual implementation of an alternative haulage system at Gwalia will facilitate production growth and extend mine life by conceptually adding 1.2Moz to reserves at depth. ■ Aside from alternative haulage, growth options appear to be early stage concepts and exploration success dependent. A sulphide project at Simberi which could extend mine life by 7+ years appears viable, but a default use of capital (absent other opportunities) rather than a compelling investment. Exploration of near mine prospects is immature. Demonstrated management capability is not yet matched with opportunity suggesting an acquisition strategy may be pursued. ■ Our $2.15/share target price assumes capital investment in an alternative haulage system at Gwalia to utilise mill capacity and extend mining to 2,000m depth, conceptually adding ~1.2Moz to reserves. We include value for Simberi sulphide but expect this to be realised through divestment as a ready development opportunity. Risks include gold price and exchange rate risk. Total return forecast in perspective Financial and valuation metrics 143% Year 6/15A 6/16E 6/17E 6/18E 93% Revenue (A$ mn) 550 602 655 668 EBITDA (A$ mn) 149 262 273 284 43% EBIT (A$ mn) 64 183 194 206 - 7% Net Income (Adj.) (A$ mn) 21 112 124 139 - 57% EPS (Adj.) (Ac) 4.30 22.64 25.04 28.07 - 107% Change from previous EPS (%) n.a. 12mth 52 Week Hi- *Target EPS growth (%) n.m 426.2 10.6 12.1 Volatility Lo return Consensus EPS (Ac) 8.40 27.60 37.10 41.00 Share Price CS Target Rtn Mean P/E (x) 50.9 9.7 8.7 7.8 Source: Company data, Thomson Reuters, IBES, Credit Dividends (Ac) 0.00 0.00 0.00 0.00 Suisse estimates Dividend yield (%) 0.0 0.0 0.0 0.0

Performance 1M 3M 12M Price/Book (x) 7.7 4.6 3.0 2.2 Absolute (%) 26.63 52.86 872.7 Net debt/EBITDA (x) 1.8 0.5 0.1 0.2

Relative (%) 23.36 54.11 886.6 Source: Company data, Thomson Reuters, Credit Suisse estimates

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access

24 March 2016

St Barbara Mining (SBM.AX / SBM AU) Price (23 Mar 2016): A$2.19; Rating: NEUTRAL; Target Price: A$2.15 Income Statement 6/15A 6/16E 6/17E 6/18E Earnings 6/15A 6/16E 6/17E 6/18E Revenue 550 602 655 668 Equiv. FPO (period avg) 492 495 495 495 EBITDA 149 262 273 284 (mn)EPS (CS adj.) (c) 4.3 22.6 25.0 28.1 Depr. & Amort. (85) (79) (79) (77) EPS growth (%) 108.4 426.2 10.6 12.1 EBIT 64 183 194 206 DPS (c) 0.0 0.0 0.0 0.0 Associates - - - - Dividend Payout (%) 0.0 0.0 0.0 0.0 Net interest exp. (42) (32) (17) (8) Free CFPS (c) 18.6 37.6 38.2 40.3 Other 0 0 0 0 Valuation 6/15A 6/16E 6/17E 6/18E Profit before tax 22 150 177 199 P/E (CS) (x) 50.9 9.7 8.7 7.8 Income tax (1) (38) (53) (60) PEG (x) 0.5 0.0 0.8 0.6 Profit after tax 21 112 124 139 EV/EBIT (x) 21.2 6.7 5.8 5.5 Minorities -0 -0 -0 -0 EV/EBITDA (x) 9.1 4.7 4.1 4.0 Preferred dividends - - - - Dividend Yield (%) 0.0 0.0 0.0 0.0 Associates & Other 0 0 0 0 FCF Yield (%) 8.5 17.2 17.4 18.4 Normalised NPAT 21 112 124 139 Price to book (x) 7.7 4.6 3.0 2.2 Unusual item after tax 19 0 0 0 Net profit (Reported) 40 112 124 139 Returns 6/15A 6/16E 6/17E 6/18E Return on Equity (%) 15.1 47.3 34.3 27.8 Balance Sheet 6/15A 6/16E 6/17E 6/18E Profit Margin (%) 3.8 18.6 18.9 20.8 Cash & equivalents 90 120 70 33 Asset Turnover (x) 0.9 1.0 1.1 1.0 Inventories 52 49 60 60 Equity Multiplier (x) 4.2 2.4 1.6 1.4 Receivables 10 11 13 13 Return on Assets (%) 3.6 19.3 21.4 20.0 Other current assets 13 12 12 12 Return on Invested Cap. 14.8 36.7 33.8 26.2 Current assets 152 180 143 107 Gearing(%) 6/15A 6/16E 6/17E 6/18E Property, plant & equip. 382 351 386 536 Intangibles 0 0 0 0 ND/ND+E (%) 65.8 36.0 10.2 9.3 Other non-current assets 59 48 50 51 Net Debt to EBITDA (x) 1.8 0.5 0.1 0.2 Non-current assets 441 400 436 588 Int Cover (EBITDA) (x) 3.6 8.2 16.0 36.5 Total assets 593 579 579 694 Int Cover (EBIT) (x) 1.5 5.7 11.4 26.6 Payables 43 34 40 40 Capex to Sales (%) 9.2 7.7 17.4 34.0 Interest bearing debt 347 242 99 72 Capex to Depr (%) 59.6 58.7 144.1 294.3 Other liabilities 63 66 79 81 Total liabilities 452 342 218 194 MSCI IVA Rating Net assets 140 237 361 500 TP ESG Risk (%): 0.00 Ordinary equity 140 237 361 500 7 C TP Risk Comment: SBM's key asset (Gwalia) is Minority interests 0 0 0 0 C L located in Australia which is a low risk and well Preferred capital - - - - 6 understood mining jurisdiction. Their secondary L G asset (Simberi) is located in PNG which is Total shareholder funds 140 237 361 500 5 C Net Debt 270 133 41 51 G exposed to greater geopolitical and associated 4 risks. Supported by track record, we view SBM Cash Flow 6/15A 6/16E 6/17E 6/18E G L as being well managed from an ESG EBIT 64 183 194 206 3 perspective and accordingly do not factor any ESG valuation impact into our TP. Net Interest (28) (29) (17) (7) 2 Depr & Amort 85 79 79 77 MSCI IVA Risk: Positive 1 MSCI IVA Risk Comment: SBM is not rated by Tax Paid 0 0 (40) (58) MSCI. Change in Working capital (33) (6) (8) (0) 0 Other cash and non-cash items 25 (23) (1) (1) Operating cashflow 113 204 206 217 Environment Social Governance Capex (51) (46) (114) (227) Global Local Country

Capex - expansionary (29) (29) (97) (210) Capex - Maintenance (22) (18) (18) (18) Share price performance Acquisitions & Invest 0 1 0 0 Asset sale proceeds 0 0 0 0 Other - - - - Investing cashflow (51) (46) (114) (227) Dividends paid 0 0 0 0 Equity raised 0 0 0 0 Net borrowings 0 0 0 0 Other financing cash in/(outflows) (71) (129) (143) (27) Financing cashflow (71) (129) (143) (27) Total cashflow (9) 30 (50) (37) Adjustments 6 2 0 0

Movement in cash/equivalents (3) 32 (50) (37)

On 23-Mar-2016 the S&P ASX 200 Index closed at 5142.266 On 23-Mar-2016 the spot exchange rate was A$1.33/US$1

Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 2 24 March 2016

Table of contents

Valuation 4

Investment Thesis 8

SWOT Analysis 13

Gwalia Mine – Leonora Operations, WA 15

Detailed overview 16 Mine history ...... 16 Project Metrics ...... 16 Mining operations ...... 17 Milling operations ...... 20 Reserve upside ...... 20 Expansion ...... 23

Simberi, PNG 26

Detailed overview 27 Mine History ...... 27 Project Metrics ...... 27 Mining operations ...... 28 Milling operations ...... 29 Sulphide Project ...... 30 Exploration ...... 31

Key risks 33

Financial 34

Board & Management 37

Environmental, Social Governance 38

Valuation 42 NPV scenarios ...... 44 NPV sensitivities ...... 45 EV per Reserve/Resource ...... 46 NPV premiums ...... 48 Peer Group AISC Margin and Cost Comparison ...... 51 Price Earnings Ratios ...... 51 HOLT® ...... 55

St Barbara Mining (SBM.AX / SBM AU) 3 24 March 2016

Valuation Our target price of $2.15/share is based on NPV analysis. While multiple valuation methods for St Barbara have been considered, consistent with our Australian gold coverage, we use a discounted cash flow method to underpin our net present value estimate upon which our $2.15/share target price is based. We apply no premium to our NPV, seeing this as a peer-relative, subjective, investor decision as to what price to pay relative to our underlying projected cash flow valuation and company specific risk factors. We note that almost all gold stocks under CS coverage are currently priced at premiums to our NPVs, typically implying negative discount rates on a spot gold assumption or a gold price of ~US$1,450/oz at a 5% discount rate. Our valuation assumes long-term gold of $1,200/oz at FX $0.75 and a 5% discount rate. We have observed gold equities priced at between 80% and 250% of spot NPV, subject to investor sentiment towards gold and company specific risk factors. Sentiment to gold and SBM management is currently positive. SBM's premium to value appears modest compared to many of its local and international peers and would be neutralised by a gold price assumption of US$1,300/oz, holding all other assumptions unchanged. SBM is priced at an 11.6% premium to our assessed spot in-perpetuity NPV of $2.37/share. We initiate coverage with a NEUTRAL rating on an absolute valuation metric, but do view the company's premium to our valuation as modest compared to many other gold equities.

■ St Barbara trades at a ~20% premium to our NPV target price of $2.15, and is fully priced according to our valuation and company analysis. ■ We assume significant life extension (five years) at Gwalia at a tenor consistent with the current mining area. We note that this assumption appears favourable compared to recent exploration results which indicate a significant thinning of the South West branch compared to currently mined levels and reserves. ■ Management's capability has been demonstrated by the multi-faceted turnaround delivered and opportunities for life extension now being pursued. However, management capability is not currently matched with internal opportunity, with no new organic growth options currently present in the portfolio. While current management has demonstrated good judgement and execution with divestments, we note that prior management destroyed considerable value through a flawed acquisition strategy. ■ The Simberi (PNG) operation requires recapitalisation to extend life beyond current ~3 years. Investing scarce shareholder capital into a technically more complex and lower return project in PNG may not be aligned with management's investment strategy or shareholders’ desire. This suggests to us that selling the project to release capital might be a more probable outcome than proceeding with development. ■ Current elevated prices for gold assets (before consideration of acquisition premiums to achieve a deal), suggests that the recent window for extracting value through low cost acquisitions is currently closed. Potential divestment of Simberi could further accelerate debt repayment, reducing balance sheet risk, but could leave SBM as a single asset producer dependent on a depleting asset. However, the Gwalia asset has broad corporate appeal to a range of scale-seeking Australian gold producers. ■ There is uncertainty around gold price, with Credit Suisse assumptions a little below spot.

St Barbara Mining (SBM.AX / SBM AU) 4 24 March 2016

Figure 1: NPV DCF Attributable NPV Operational A$mn A$/sh Risk Weighting A$mn A$/sh Gw alia 1204 2.43 100% 1204 2.43 Simberi 168 0.34 100% 168 0.34 Sub-Total 1373 2.77 1373 2.77

DCF Attributable NPV Non-Operational A$m A$/sh Risk Weighting A$mn A$/sh Net cash/(debt) as at 31 Dec-15 -193 -0.39 100% -193 -0.39 Corporate -123 -0.25 100% -123 -0.25 Hedging 6.4 0.01 100% 6 0.01 Sub-Total -309 -1 -309 -0.62

Net Present Value 1064 2.15 1064 2.15 Source: Company data, Credit Suisse estimates

Our NPV, as shown in Figure 1 also assumes the following:

■ Credit Suisse house commodity and FX assumptions: applied to both of St Barbara's projects. Credit Suisse long-term gold price is US$1,200/oz and long-term AUD/USD exchange rate is US$0.75. This data was most recently updated on 15 December 2015. Refer to Figure 2 for our commodity and FX forecast summary. ■ Real discount rate of 5%: consistent with Credit Suisse global gold coverage ■ Net debt of ~A$192.7mn as at 31 Dec 2015 ■ Shares on issue 495.1mn as at the most recent ASX Appendix 3B (10 Dec, 2015) ■ Gwalia NPV assumes the following: o 9.4g/t consistent grade from South West Branch (800ktpa–1Mtpa) plus 6.0g/t from West Lode (200ktpa) post implementation of an alternative haulage strategy. o 96% consistent gold recovery. o 900ktpa mill utilisation rate for 2H16, 950ktpa utilisation rate for 1H FY17 and 1Mtpa utilisation rate from 2H FY17 maintained until alternative haulage is assumed to be implemented in FY19. We incrementally increase the mill utilisation rate over the next 12 months to reflect increased haulage capacity realised through in-mine waste management initiatives. As more waste is stored underground, more haulage capacity will be released for ore haulage. 1Mtpa is expected to be sustainable under the current ventilation constraints. o $200mn capital investment (spread equally across six quarters) from FY17 MarQ for alternative haulage. We expect alternative haulage to:  Achieve a $6/t decrease in mining costs from FY19 SepQ  Enable the 1.2Mtpa (hard-rock) plant capacity to be utilised.  Provide an increase in reserves of 1.2Moz attributed to mining to 2,000m from current 1,800m reserve boundary. o 10-year mine life based on current reserves and additional ounces accredited to mining between 1,800m and 2,000m at an expanded production rate of ~327koz/year. We recognise that there is risk to our valuation due to multiple conceptual estimates, predominantly associated with the implementation of an alternative haulage system and assumption of yet to be proven reserve endowment that may prove aggressive. Despite valuation risk based on unsubstantiated estimates, we apply no discount factor against incremental NPV attributed to alternative haulage at Gwalia. We recognise that our $200mn capital assumption is the likely upper end of the capital investment required. More recent investigation of a lower capital cost ventilation upgrade (new shafts) to facilitate

St Barbara Mining (SBM.AX / SBM AU) 5 24 March 2016

continued trucking would not deliver the unit cost saving that we assume, but would reduce the capital spend significantly.

■ Simberi NPV assumes the following: o 1.3g/t consistent oxide grade. o 84% recovery. o 3.2Mtpa throughput (800kt/qtr). We recognise that there is ~3.5Mtpa milling capacity for hard rock with the operation of both the Ball and SAG mills, however we reduce our rate to 800kt/qtr (3.2Mtpa) in recognition of past reliability challenges. o 3.5 year mine life (processing oxide reserves only). o 7-year mine life for sulphide project beyond the oxide project life (processing sulphide reserves only). o Grade on sulphide only ore increases to 2.0g/t (RSV grade), but milled grade will be higher to achieve projected mine production at the suggested 2Mtpa mill rate (~139koz p.a. for seven years). ■ Hedging: Valued at the NPV of the net cash flow stream from hedge commitments less our gold price and FX assumptions for the same period. ■ Corporate: Valued at the NPV of the annual corporate overhead. We assume corporate costs to be a flat A$16mn per year distributed to assets on an ounces of production basis and held through to 2025, the terminal year of our production assumptions. ■ Exploration: Guidance for total FY16 exploration is A$15mn. 70% is allocated to Gwalia and 30% is allocated to Simberi. Our model spreads this cost evenly over FY16 quarters.

Figure 2: CS commodity and FX assumptions FY14A FY15A FY16F FY17F FY18F FY19F FY20F Gold US$/oz 1299 1224 1130 1169 1188 1200 1200 AUDUSD x 0.926 0.840 0.714 0.705 0.715 0.725 0.730 Gold A$/oz 1403 1458 1583 1658 1661 1655 1644 Source: Credit Suisse

St Barbara Mining (SBM.AX / SBM AU) 6 24 March 2016

Figure 3: Detailed earnings metrics

FY15A FY16F FY17F FY18F FY19F FY20F Gwalia revenue A$mn 365 402 469 482 542 538 Simberi revenue A$mn 118 171 186 187 186 228 Other revenue (includes A$mn 67 30 - - - - hedging gain/loss) Total Revenue A$mn 550 602 655 668 728 766

Gwalia EBITDA A$mn 205 232 255 265 297 295 Simberi EBITDA A$mn 12 37 48 48 47 63 Other EBITDA A$mn 21 31 - - - -

Corporate, exploration & other A$mn -89 -40 -30 -30 -30 -30

EBITDA A$mn 149 262 273 284 315 328 Depreciation & Amortisation A$mn -85 -79 -79 -77 -101 -119 EBIT A$mn 64 183 194 206 214 209 Net Interest A$mn -42 -32 -17 -8 -6 -2 NPBT A$mn 22 150 177 199 208 207 Taxation A$mn -1 -38 -53 -60 -63 -62 NPAT (operating) A$mn 21 112 124 139 146 145 EPS (operating) A¢ 0.04 0.23 0.25 0.28 0.29 0.29

Abnormal items (after tax) A$mn 19 - - - - - NPAT (post abnormal items) A$mn 40 112 124 139 146 145 EPS (post abnormal items) A¢ 0.08 0.23 0.25 0.28 0.29 0.29 Source: Company data, Credit Suisse estimates

Figure 4: EBITDA and margin Figure 5: NPAT and margin

EBITDA and margin NPAT and margin 400 50% 200 50% 139 146 145 40% 124 300 112 35% 30% 100 200 315 328 20% 21 20% 262 273 284 100 10% 0 149 5% 0 0% -103 -10%

-100 -10% -100 (%) Margin NPAT

EBITDA (%) EBITDA Margin NPAT (A$mn)NPAT

EBITDA EBITDA (A$mn) -20% -25% -200 -30% -200 -40% -300 -40% -253 -400 -50% -300 -55% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020

EBITDA EBITDA margin (%) (RHS) NPAT NPAT margin (%) (RHS)

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 7 24 March 2016

Investment Thesis We assess St Barbara to be fully valued relative to our NPV valuation which assumes:

■ Addition of 1.2M ounces to Gwalia reserves attributed to mining between 1,800m and 2,000m. Recent exploration results make this look ambitious. ■ An alternative haulage system at Gwalia that would support mining to at least 2,000m and free up truck haulage capacity, such that installed mill capacity throughput rate of 1.2Mtpa could be achieved from FY19. Currently, mill utilisation is limited to 900– 1,000ktpa by haulage capacity. 100% of the incremental value contributed by alternative haulage is included in our valuation. ■ Mining at Simberi is restricted to 3.5-years’ mine life oxide from oxide reserves, transitioning via a ~$140mn recapitalisation to sulphide production. We are not yet convinced on the risk-reward metrics for further investment in Simberi and see this asset as a potential future divestment. Newcrest is a logical owner of the asset because of proximity to Lihir and potentially available autoclave capacity to treat the proposed production of a sulphide gold concentrate for third-party treatment and gold recovery. Fundamental value drivers

■ Operational improvement focused on reaching throughput capacity and minimising haulage restraints that limit production at Gwalia. ■ Mine life extension to be achieved by capital investment in an alternative haulage system at Gwalia that could increase reserve life and production by ~55koz per year. Major operational improvements at the Simberi mine have provided convincing production results. St Barbara has delivered a significant turnaround in the past 18 months under the leadership of CEO and Managing Director, Bob Vassie. Simberi doubled production in 2H FY15 to a rate equivalent to ~100koz per year and generated strong cash flow. We expect that a throughput of 3.2Mtpa will be sustained for the remaining oxide mine life (3.5-years). Operations are led by a new, experienced expatriate team that were employed in 2014 and have demonstrated a strong shift away from a 'break-fix' mentality that seemed to be an issue in the past that delivered low plant capacity utilisation. ■ We do not expect the causes of Simberi's past few years of unsteady production (e.g. maintenance issues) to be a problem during the mine's remaining life. This is largely due to the implementation of an ongoing engineering and maintenance program in 2014 and stabilisation of the expanded plant. ■ The sulphide project pre-feasibility study (due in April 2016) will determine the economic feasibility of mining sulphide reserves which could extend mine life by ~7 years or more. Our valuation includes $84mn or 17cps for the Simberi sulphide option based on high level assumptions that are subject to potentially significant revision. We do not expect management to commit to the development. We see it as a likely divestment with the established site presence reducing the development hurdle for a future owner. With gold equities trading well above NPV we assume that the asset can be sold for NPV. Despite high trucking costs and haulage constraints, Gwalia remains the company's key value driving asset. The current truck haulage system and ventilation infrastructure restricts mine production and thus mill utilisation, which has led the company to consider alternative haulage. An alternative haulage system is expected to increase mine production from plant's current 900ktpa throughput rate to its hard rock processing capacity of 1.2Mtpa from FY19, and facilitate access to an additional 1.2M ounces of conceptual reserves by mining between 1,800-2,000m (currently mining at 1560m and above).

St Barbara Mining (SBM.AX / SBM AU) 8 24 March 2016

■ An alternative haulage system could reduce costly truck haulage, free-up truck haulage capacity for mining at higher levels, and enable the company to mine to at least 2,000m. We expect mining costs to be reduced by $6/t once an alternative haulage system is in operation. ■ Note, we have assumed a high capital shaft solution but recognise that this is one of multiple options being reviewed. Additional ventilation and faster trucks could also be implemented at materially lower capital cost but without our assumed unit cost reduction. ■ An investment decision is expected to be made in DecQ FY16. Possible alternative haulage options will be presented to the board for consideration. The options that are being explored include shafts, conveying, and slurry pumping, which will all be compared to ongoing trucking with and without additional ventilation. ■ We expect that the company has capacity to internally fund capex required for this expansion project, subject to restructuring of the current debt amortisation schedule, but not if the company commits to the ~$140mn Simberi sulphide project. Divesting Simberi at NPV appears a lower risk strategy than gearing up and proceeding with a higher risk, lower return project, albeit with an attractive mine life. Our base valuation assumes A$200mn capital expenditure for Gwalia's alternative haulage, with the investment spread equally over six quarters from 3Q FY17. ■ For capital expenditure ranging between A$50mn–$200mn our model produces a net present value range for Gwalia of between ~A$1,204mn ($200mn capex per base case) to A$1,323mn ($50mn capex). ■ This valuation assumes the same cost base and production levels for capital expenditure between $50mn–$200mn. In reality it is unlikely that a significantly cheaper alternative haulage option will achieve the same level of savings. We recognise that there is risk that this project will not be advanced and this will affect our valuation. Recent drilling revealed that depth extension of the ore zone is high grade, but thinner than the zones currently being mined and thinner than remaining ore in reserves. Follow up drilling is required to identify whether this reflects a zonation of the orebody with variable widths (as has been mined at higher levels), or a more continuous narrowing. We see this as a risk to our valuation. Figure 6: Alternative haulage – indicative timeline

Source: Company data

St Barbara Mining (SBM.AX / SBM AU) 9 24 March 2016

Risk of becoming a single asset company Gwalia contributes 88% of our estimated NPV, with high gold recovery and high grade driving strong positive cash flows. It is conceivable and even likely that the company could sell Simberi and become a single asset producer with a reduction in asset and geographic diversity changing its risk profile. We consider the following factors to be risks that may contribute to St Barbara becoming a single asset gold producer in the future:

■ Simberi's short oxide mine life and chance that the asset be divested (while generating free cash flow from remaining oxides) rather than gearing up to progress the $140mn sulphide project. Near-term divestments would allow a new owner to progress the design and development of the sulphide project ■ Limited, early stage exploration at Simberi and Tabar Islands. It seems there is high exploration prospectivity but very limited growth opportunities at present. ■ Limited capacity to expand Gwalia's operations to nearby resources (Tower Hill and West Lode), at least not until alternative haulage is in place. ■ Recent divestment of King of the Hills and Gold Ridge assets in 2015. Simberi sulphide project remains uncertain Our valuation includes potential upside from mining and processing sulphide reserves at Simberi to produce a sulphide gold concentrate for third-party treatment. The upcoming pre-feasibility study (due in April 2016) will determine the economic viability of recapitalising the site ($140mn initial capital) to process sulphide ore which is currently being treated as waste (expensed and dumped) when mined with the overlaying oxide orebody. ■ Upside: potential positive outcomes of this project include extension of mine life adding 7+ years and capacity to mine the entire oxide reserve (currently only part of the oxide reserve can be mined without processing sulphide). We estimate the net present value of the Simberi asset to double to A$168mn (compared to A$84mn on remaining oxide life with no capital), an increase of $84mn or 17cps should the sulphide project be progressed by SBM or another owner. An NPV uplift of only $84mn on a spend of $140mn (assumed to be +/- 25%) appears skinny and perhaps not be best use of capital. ■ This conceptual value is based on: o Indicative capex of $140mn. o AISC US$930–US$990/oz including concentrate freight but not smelter charges equivalent to assumed 90% payability. o Seven-year average annual production of 140koz including production from sulphide ore from 2020. o 2Mtpa plant capacity and 83% recovery implies that ore grade treated will average 2.6g/t, materially above the 2g/t RSV grade. o Production of a 30+ g/t gold concentrate for third-party treatment (Lihir autoclave or Chinese smelter). o Gold payability from a smelter customer is unlikely to exceed 90% suggesting a 10% revenue reduction, assumed to be equivalent to an AISC of US$1,033/oz– $1,100/oz on a payable gold basis. ■ Uncertainty: In addition to uncertainty around capital costs of the project, our central concern is whether St Barbara will be able to source a willing buyer of the gold concentrate that it would produce, at acceptable terms. The company must also be able to sell to this 'buyer' at a price that justifies capital expenditure on the project. Newcrest's nearby asset Lihir is the obvious home for the concentrate, but might not have available autoclave capacity for many years to treat third-party concentrates.

St Barbara Mining (SBM.AX / SBM AU) 10 24 March 2016

Reducing debt levels at current rate and future capital expansion could be mutually exclusive St Barbara does not have a target debt/equity ratio. However, the company's leadership team has demonstrated its commitment to reducing debt levels. ■ Between June and December 2015 debt was reduced by US$109mn, made up of $70mn reduction of Notes and US$39mn of Red Kite Mine Finance Facility. The company effectively made US$9mn quarterly repayments for FY16 DecQ, MarQ and JunQ in advance. ■ We note that repayment of debt and subsequent risk reduction is the preferred use of the company's strong cash flows. ■ Outstanding debt as at 31 Dec 2015: o US$36mn of Red Kite Facility. Management has advised its intention repay this facility in full by FY16. o US$180mn Senior Secured Notes. Note that US$12mn of Notes was bought back in February 2016. ■ Closing cash balance was ~A$100mn at the end of DecQ16 (31 Dec 15) for net debt ~A$192.7mn including lease liabilities. St Barbara's growth strategy will have to accommodate the objective of debt reduction, while funding life extension at Gwalia, potential reinvestment in Simberi, and external growth/asset replacement strategies. If gold prices remain elevated, this is possible. However, it is our view that Simberi is more likely to be divested than recapitalised, contributing to debt reduction. Management's prudent use of hedging to ensure cash flow to cover the Red Kite amortisation period is logical and may indicate a conservative approach to banking the gold price rather than assuming that elevated cash flows are sustainable. ■ We expect that the company will continue to produce strong cash flow that support repayment of debt and capital expansion assuming our commodity assumptions hold true. ■ We assume that the company will continue to make regular debt repayments, but recognise that there risk to our debt repayment forecasts if: o St Barbara's management decides to refinance outstanding debt at its due date. o Capital expenditure is funded by alternatives to operating cash, including retaining some debt, increasing debt, undertaking an equity raising or by selling assets (potentially Simberi). A capital raising to remove balance sheet risk and provide investment flexibility has been resisted to date, but with SBM and its peer group trading at a premium to stretch valuations at spot gold, the probability must now be higher. Figure 7: NPV Breakup (A$mn) by assets Figure 8: NPV Breakup % by assets NPV value (A$mn) NPV value (%)

168 12%

1204 88%

Gwalia Simberi Gwalia Simberi

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 11 24 March 2016

Figure 9: P&P reserves (June 30, 2015) Figure 10: M&I Resources (June 30, 2015)

P&P Reserves (koz) M&I Resources (koz) 306 574 818 1594 1160 2945

Gwalia Simberi Tower Hill

Gwalia Simberi Tower Hill

Source: Company data Source: Company data

St Barbara Mining (SBM.AX / SBM AU) 12 24 March 2016

SWOT Analysis Strengths

■ Experienced Managing Director and Chief Executive Officer with 30 years’ international mining experience and has turned a near insolvent company with underperforming assets to a strong cash generator, albeit with a little gold price help. ■ Strong cash flows generated from Gwalia's high ore grades and the recent achievement of positive cash flows generated from Simberi is confirmation of a significant turnaround in operations. ■ Progression in capital projects at Gwalia including a mine cooling plant and power upgrade expected to provide cost savings and facilitate deeper mining. ■ Successful operational initiatives being implemented at Gwalia. This includes increasing mine development waste placement underground to fill stopes from 15% to 50% in FY15. This process will save filling costs, reduce stope cycle time and free up a portion of the 200ktpa of haulage capacity currently dedicated to waste rock removal – all positives for increased production and cost savings. ■ Infrastructure at Simberi is now operating at capacity. Past equipment unreliability and failures appear to have been addressed following systematic review and the introduction of an extensive engineering and maintenance program. ■ Entirely new expatriate management team employed at Simberi from January 2014 with significant third world mining experience. ■ Strong corporate appeal from the high quality Gwalia operation – a desired core asset by the peer group. Weaknesses

■ Cost of mining at Gwalia is likely to increase over time without an alternative haulage system as truck haulage cycle times and cost will increase with depth, constraining production. ■ Current haulage constraints at Gwalia prevent milling from operating at capacity, thereby reducing potential gold production. ■ Without a sulphide project, Simberi operations have a 3.5-year mine life and a significant portion of current oxide reserves will not be mined. ■ Net debt of A$270mn as at 30 June FY15 and ~A$193mn at the end of the 1HFY16. ■ 31 December 2015 debt outstanding includes US$36mn and US$180mn on the Red Kite Facility and US Senior Secured Notes, respectively. A subsequent repurchase of US$12mn on the secured notes in February 2016 has further reduced outstanding note balance to US$168mn. ■ No new organic growth option in the portfolio. ■ Exploration portfolio is immature and lacks depth. Opportunities

■ 1.2Moz of conceptual extrapolated additional reserve may be unlocked at Gwalia should an alternative haulage system be implemented such that mining can continue between 1,800m–2,000m, subject to gold endowment consistent with the current mining horizon. ■ An alternative (shaft) haulage system could provide cost savings of ~ A$6/t and enable upper levels to be mined with the current trucking fleet. The alternative haulage system will essentially remove the current haulage constraint and as a result the mill is likely to run at its 1.2Mtpa capacity.

St Barbara Mining (SBM.AX / SBM AU) 13 24 March 2016

■ Simberi mine life has the potential to increase by 7+ years if the sulphide project is undertaken. ■ Exploration opportunities exist at Gwalia, Tower Hill, Simberi and Big Tabar Island and in time there could be potential to expand the company's asset portfolio or provide supplementary satellite feed. Threats

■ St Barbara is vulnerable to gold price reduction. ■ Gwalia represents 88% of our valuation and any future production interruptions or limitations could significantly affect company value. ■ Recent Gwalia deep drill results appear to have been less positive than expected, suggesting a significant narrowing of the orebody below the reserves. This could imply a reduced gold endowment, challenging medium term sustainability of current gold production and cash flow ■ Simberi sulphide preliminary results are uninspiring and could de-rate the company if it was to transition to single asset production. ■ Inability to progress Gwalia's alternative haulage system or Simberi's sulphide project will limit the company's long-term growth potential of existing assets. ■ Other than capital investment in existing projects (e.g. alternative haulage) and early- stage exploration at existing operational sites, near-term and longer-term growth prospects are currently limited and acquisition opportunities are strongly competitively bid in the current market. ■ Risk of becoming a single-asset producer exposed to more concentrated operational risk. ■ If debt is not paid off, relatively high debt levels may limit St Barbara's ability to draw on more debt for future project investments and exploration. If the company becomes more leveraged to fund capital projects, there is a chance that it could default on debt re-payments.

St Barbara Mining (SBM.AX / SBM AU) 14 24 March 2016

Gwalia Mine – Leonora Operations, WA Figure 11: Gwalia – location

Source: Company data

Figure 12: Reserves and resources

P&P Reserves M&I Resources M,I & I Resources Contained Contained Contained Tonnes Grade Tonnes Grade Tonnes Grade Gold Gold Gold Kt g/t koz Kt g/t koz Kt g/t koz Gw alia 5,290 9.37 1,594 10,893 8.41 2,945 12,929 7.95 3,304 Tow er Hill 2,572 3.70 306 4,604 3.90 574 5,093 3.80 625 Total Leonara 7,862 7.50 1,900 15,497 7.06 3,519 18,022 6.78 3,929

Source: Company data

St Barbara Mining (SBM.AX / SBM AU) 15 24 March 2016

Detailed overview The Gwalia Underground gold mine is located 3km south of the town of Leonora (WA) and is St Barbara's cornerstone asset. It generates strong free cash flow from elevated grades, and has a robust 5.5-year reserve life and an orebody that remains open at depth with high probability of delivering life extension. Mine history

■ The mine has a long history, having been mined as an underground operation for 67 years between 1896 and 1963. 2.5Moz was produced during this first mining period. ■ Sons of Gwalia reopened the mine as an open pit in 1984, mining the lower grade halo and feeding the 1.2Mtpa plant. Open pit mining continued until 1999 when the mine transitioned back to an underground operation from the Hoover Decline. In 2002 it was placed into care and maintenance. 1.3Moz was produced during this second mining phase. ■ Initial mining by Sons of Gwalia encountered stress issues at a time when the open pit and underground mine were being mined simultaneously. A significant seismic event perpetuated the belief that the mine's future and depth potential would be constrained by stress challenges that would increase with depth. To date the geotechnical environment has been well within design parameters. ■ St Barbara acquired the Gwalia mine in 2005 from the administrators of Sons of Gwalia. In this third mining phase, the operation produced 1.25Moz. ■ The King of the Hills mine is also located at Leonora, and was in production from June 2011 to April 2015. Project Metrics Reserves and production Reserves at June 30 2015 were 5.3Mt @ 9.4g/t gold for 1.6Moz, a sub-set of a resource of 12,929Mt @ 7.9g/t for 3.3Moz. The operation has mined 4Moz to date and the mine sequence has been demonstrated to continue below the defined resource.

■ The deepest part of the mine is now 1,560m and there have only been very minor seismic events that haven't caused any damage to date. ■ Drilling to date has demonstrated that the ore zone and mine sequence continues to at least 2,000m. ■ Stress modelling has been undertaken to 2,000m depth and found to be benign. FY15 achieved record production of 248koz exceeding guidance of 235–240koz which was based on the then reserve grade of 8.2g/t. FY15 mined grade averaged 8.9g/t. DecQ of FY16 achieved production of 63.5koz which supports the likely achievement of 245–260koz FY16 guidance. The stronger-than-expected DecQ was achieved from better-than-projected tonnage from Gwalia at expected grades. 7.9g/t mined was lower than reserve grade, an expected consequence of the stoping sequence which progresses from the higher grade core to the lower grade periphery. This results in a repeating grade cycle, with quarterly production and grade variability depending on the timing of extraction. Reconciliation by level is generally within 5% of model projections but by stope can be more variable. The DecQ also benefited from processing surface stockpiles, which cannot provide the same production contribution in 2H FY16.

St Barbara Mining (SBM.AX / SBM AU) 16 24 March 2016

All-in sustaining costs AISC were A$841/oz in FY15. Similar production levels of 220–250koz with AISC of $875– $950/oz have been forecasted for FY16.

■ Mining cost: excluding operating development (captured in capitalised mine and operating development) is ~$100/t, or $123.5/t including operating development. ■ Processing cost: ~$28/t based on the FY15 year at constrained throughput. ■ Administration: costs for site totalled ~A$11mn in FY15 and A$3.2mn in 2Q FY16. ■ Corporate costs: run at $16mn/yr and is allocated to the mine sites on a per ounce basis. ■ Royalties: corporate royalty of 1.5% is paid in addition to standard government gold royalty of 2.5% of Gwalia revenues. Capex FY16 capex guidance of $30mn–$35mn is all sustaining capex and is included in AISC. DecQ total capex was A$10.3mn. ■ FY16 guidance for exploration expenditure for Gwalia is ~A$10.5mn. This is a significant increase from guidance reported in the SepQ report, which was A$5.5mn. The increase reflects a greater and more immediate focus on Gwalia deep drilling in order to obtain adequate information to make an informed investment decision on alternative haulage. ■ Based on the current life-of-mine, a capex range of $30mn–$35mn/yr is regarded as a reasonable assumption for future years, excluding any project capital for the haulage options. The last capital project was a new absorption chiller plant for mine air cooling and a fourth underground pump station providing capacity for some years. The next capital project is likely to be an alternate ore haulage system by shaft or pumping. 400ktpa/50koz/yr ore feed from the King of the Hills satellite mine ceased in 2016. Debottlenecking of the Gwalia deeps mine should see an increase in high grade feed largely offsetting the loss of the satellite ore feed, but incrementally shortening mine life. Mine life is expected to be extended by mining to 200m beyond the current 1,800m reserve limit. There is potential that 1.2Moz could be added to reserves accounting for extra depth between 1,800m–2,000m. Mining operations FY15 record production of 248koz was a reflection of continuous improvement initiatives which more than offset the adverse impact on cost and productivity of increased depth. Haulage The deepest part of the mine is now 1,560m, with a typical vertical advance of one 40m level per year. Mining utilises a fleet which includes seven to eight operational trucks, five drill rigs and four loaders, and is undertaken by the Byrne Cut under an alliance agreement established in September 2013.

■ Ore is hauled to surface by 60t trucks loaded to ~54t to avoid spillage. Trucks are required to travel up a 6mx6m decline and dump ore at the portal for haulage. ■ Ore is delivered by larger capacity surface trucks to the ROM where it is placed in one of 6 fingers, defined by grade, for blending for the mill. ■ Two Sandvik trucks with Volvo engines are currently being trialled for their lower particulate emission engines. Innovation is improving particulate emissions, potentially assisting with emissions guidelines that define cubic metres of air per unit of engine power.

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Cost of mining increases with depth due to: ■ High trucking costs (currently A$10–$13/t) due to increasing in haulage distance. ■ Increased ground support intensity required to manage incremental stress with depth. ■ Increased refrigeration costs to sustain working conditions against a rising geothermal gradient and additional heat load for air compression at depth. Stope Cycle Time Limitations

■ The maximum number of stopes 'in cycle' is four (on three levels), with two stopes in production at all times. This means that a maximum of eight stopes can be mined per year.

■ Stope level interval has been increased from 20m to 40m (but ~52mn vertically from floor to back) with a two lift stoping sequence used to manage the hanging wall in order to minimise dilution risk. This also increases the proportion of free bogging, reducing remote bogging and improving productivity. Stope paste fill placement rate currently restricts stope cycle time and thus mining rate. Placing waste in stope voids reduces the required volume of paste fill. In FY15 waste placement underground increased from 15% to 50% of the 200ktpa of waste generated from development undertaken outside the orebody. As more waste is stored underground, more haulage capacity will be released for ore haulage. The co-disposal of development waste in stope voids (Figure 16), rather than hauling to surface, will increase over time from 50% targeted in FY16 to 90% longer term. This is expected to:

■ Save fill costs ■ Reduce filling time and stope cycle time ■ Free up haulage capacity. Figure 13: Underground ore haulage truck Figure 14: Underground drilling

Source: Credit Suisse Source: Credit Suisse

St Barbara Mining (SBM.AX / SBM AU) 18 24 March 2016

Figure 15: Fired stope showing hanging wall Figure 16: Underground waste storage initiative exposure – concurrent stope filling

Source: Credit Suisse Source: Company data Capital Projects Progressing– Mine cooling and power upgrade Absorption chiller plant The new absorption chiller plant is the first to utilise this technology in mining globally. The A$5.5mn capital project is forecast to save $2.7mn in power annually.

■ The existing mine air cooling system utilised a standard refrigeration system to produce chilled water. This water would then cool the mine intake air at the BAC. ■ The mine air cooling system has been upgraded to utilise the heat from the gas fired power station generator exhaust gasses. ■ The heat is used as a source of energy to reduce the temperature of the chilled water through an absorption process which can be further reduced by the refrigeration if required. The new system increased cooling capacity by 130% from 3.2 MW to 7.5 MW for only a 26% increase in power consumption. Deep HV Cable A deep HV Cable drop to 1,400m vertical will be the longest cable drop in the Southern hemisphere. This project is expected to duplicate power supply to support mining at greater depths. Figure 17: Bulk Air Cooler (BAC) Figure 18: New refrigeration plant

Source: Credit Suisse Source: Credit Suisse

St Barbara Mining (SBM.AX / SBM AU) 19 24 March 2016

Figure 19: Power station Figure 20: Cooling towers

Source: Credit Suisse Source: Credit Suisse Milling operations The processing plant is a conventional CIP circuit with a nominal capacity of 1.2Mtpa of hard rock and up to 1.8Mtpa when softer ore is blended. With the April 2015 cessation of mining of King of the Hills satellite mine, a 400ktpa supplementary ore feed to the Gwalia mill will be lost post depletion of accumulated stockpiles. The operation has subsequently been sold. FY16 mill throughput will be scaled back to accommodate available Deep Gwalia ore until alternative satellite ore feed or additional underground production enabled by alternative haulage can be defined and fed to the mill.

■ The implied milling rate falls from 1.2Mtpa to 850-950ktpa based on feed availability. This rate is incorporated in guidance costs and appears to have only a marginal impact on unit costs. Reserve upside Management is equally focused on long-term planning to enable the mine to continue beyond its current reserve life. There is potential to add 1.2Moz of gold inventory between 1,800m and 2,000m depth. This is based on assumed consistent endowment of 6,000oz per vertical metre and a vertical advance of 40m per year. Grade control drilling is maintained at three years’ production. ■ Deep drilling of 2km holes is required to confirm that the mineralisation continues beyond the current 1,800m reserve limit. Continuity of mineralised veins must be demonstrated to justify the proposed A$100mn–$200mn shaft to improve the economics and productivity of deeper mining. ■ DecQ drilling confirmed high grade mineralisation continues as expected. However, based on the limited six intersections achieved in the high grade South West Branch, widths have been considerably narrower than in the zone currently being mined. Follow up drilling is required and with only six holes drilled to date, it is premature to judge the endowment over the 200m vertical block (although six holes confirming grade and width continuity would have been a preferable outcome). ■ Management has suggested that gold endowment appears more similar to the area mined between 1,100mbs and 1,300mbs than the wider and higher grade area currently being mined, but the plunge of the orebody appears to dip to the south and requires follow up drilling. ■ The area between 1,100mbs and 1,300mbs was mined predominantly between FY10 and FY11. FY10 ore grade average 5.7g/t and FY11 6.3g/t before rising to 8.8g/t in FY12 as ore was mined from below 1,300mn.

St Barbara Mining (SBM.AX / SBM AU) 20 24 March 2016

Figure 21: Gwalia stoping sequence between 1,110mbs and 1,300mbs Figure 22: Gwalia SWB grade profile

Source: Company data Source: Company data

■ Geotechnical modelling, deep drill hole examination for feathering and core examination for disking to confirm that stress is not a challenge is required. Geotechnical studies have indicated that mining can continue to 2,200m, but ore must be confirmed first. ■ Alternative ore haulage infrastructure options to offset declining truck haulage productivity, increasing capacity constraints and rising costs with increasing depth are being considered. Figure 23: Gwalia Deeps extension drilling shows continuity

Source: Company data Alternative haulage Alternative haulage is required if St Barbara is to extend mining to ~400m below current level (1560m). An alternative haulage system is expected to free up trucking capacity for mining and extraction on the upper levels, while the lower levels could be mined and hauled independently.

■ Management plans to have the three options defined sufficiently to take to the Board in January 2016 along with the additional reserve or resource expectation between 1,800m and 2,000m. Drilling will also target an additional 2,000m to 2,200m block to better inform management's decision.

St Barbara Mining (SBM.AX / SBM AU) 21 24 March 2016

■ A decision on the direction will ideally be advanced towards an investment decision around December 2016. Current haulage infrastructure is constrained by ventilation Truck technology is adequate to economically extract the reserve to its 1,800m depth. However, it will restrict reserve extension beyond 5.5-year mine life. The current constraint is ventilation. At increasing depth and longer truck cycle times (currently two hours from ~1,500m), more trucks would be needed, which in turn would require an impractical level of ventilation to meet the particulate dilution guidelines. Cost will also continue to rise. Management notes that the ventilation constraint on truck haulage is a guideline that the company follows and is not a legislated requirement. It is possible that if ventilation was resolved, which could potentially be achieved with the instalment of an additional vent shaft and relatively modest cost, mining by the existing trucking fleet could continue to deeper levels. This option would need to be compared to alternative haulage options and existing infrastructure. A ventilation upgrade would require lower capital expenditure, but higher operational expenditure longer term. It could also be the most constraining option in terms of production and ultimate depth mined. Alternative haulage options: Three alternative haulage options and a ventilation upgrade are being examined to extract the projected resource below 1,800m:

■ Conventional shaft with skip haulage, which would entail approximately two years of development time and is estimated to cost $200mn.

■ A 1,500m single pass raise bored shaft equipped with an alternate ore conveying technology. This would be less sophisticated, leading to incrementally higher operating costs, but lower capital input of perhaps $100mn.

■ Underground crushing to a size amenable to pumping to surface by either three-stage centrifugal pumping or a single displacement pump.

■ Ventilation upgrade which would require lower capex, but could potentially limit production and ultimate depth mined. The alternate haulage option would not only enable mining below 1,800m, but by freeing up trucking capacity it would enable the lower grade and narrower parallel West Lode reefs to be mined simultaneously, utilising available mill capacity of up to 1.2Mtpa of hard-rock. Stress is not an issue Stress modelling has been undertaken to 2,000m depth and has been found to be benign. No geotechnical "show stoppers" have been identified. However, stress normally increases with depth so with increasing stoping depth there may or may not be some changes to the ground support regime and or stope dimensions.

■ Dilution of ore with waste is not expected to be an issue. Currently a 15% dilution assumption is taken in production planning, but better performance is often achieved. ■ The deepest part of the mine is now 1,560m and there have only been very minor seismic events that barely register and have not caused any damage to date. Drilling to 2,000m shows no change in stress regime with no disking of recovered core evident. ■ The mine sequence remains extremely consistent and the host rock (basalt) remains robust. There is very little evidence of faulting or shearing.

St Barbara Mining (SBM.AX / SBM AU) 22 24 March 2016

Figure 24: Robust ground support regime – bolts, mesh and shotcrete

Source: Credit Suisse

Geotechnical environment favourable The evolution of cable bolting, fibrecrete, bolting and meshing and stope sequencing to create stress shadows has largely eliminated stress related challenges. The stress gradient is far lower than prevails in other regional mines. The mine does experience minor seismic events, but at a trivial scale that does not cause damage or disrupt production. When a new void is opened on a new level, a period is allowed for stress redistribution before re- entering the area. Geotechnical performance has been modelled to a depth of 2,300m and was shown to be comfortably and economically manageable. Stress modelling indicates that stress levels projected at 2,000m may be similar to those typically prevailing at 700m to 800m elsewhere in the Yilgarn. The lack of structure and the high strength of the basalt host rock mean that the Gwalia mine enjoys a double advantage of high strength rock able to carry higher stress levels, but a lower stress regime. This has favourable implications for:

■ Future ground support requirements

■ Reduced dilution risk from hanging wall failures

■ Economic mining depth

■ Mining productivity

■ Safety expansion Expansion West Lode expected to provide supplementary ore feed West Lode is one of the four major lode structures within the Gwalia mine sequence, located ~80m to the west of the main orebody, South West Branch. It currently contributes only 122koz to the current Ore Reserve. Drilling has identified a zone of higher grades than previously recognised in West lode where the historic grade has been modelled at ~6g/t. Intersections reported with the SepQ report included: 2.3m @ 8g/t, 1.9m @ 41.5g/t, 4.2m @ 12.8g/t and 1.2m @ 32.1g/t. These holes will be incorporated into the resource model and mine plan, and are likely to support updated reserves and feed into the materials handling study for Board

St Barbara Mining (SBM.AX / SBM AU) 23 24 March 2016

consideration. Drilling at West Lode is expected to be a continued focus as more information is required for long-term planning purposes, particularly when considering alternative haulage at Gwalia.

■ The West Lode opportunity might also exist at higher levels in the mine, conceptually offering a future independent trucking option for supplementary ore feed to the mill, if an alternate haulage solution is implemented for deeper ore extraction. ■ Given the current West Lode Ore Reserve contains ~500oz per vertical metre, stand- alone production rate would be ~20–25koz pa. Figure 25: West Lode Plan view

Source: Company data

Figure 26: South West Branch – Remaining Resource Figure 27: West Lode – Remaining Resource

Source: Company data Source: Company data

■ There are parts of West Lode which are ‘skinny’, but attention is focused to areas which are in excess of 3m wide and can be recovered with minimal waste dilution.

St Barbara Mining (SBM.AX / SBM AU) 24 24 March 2016

■ The reserve cut off grade is 4.3 g/t for South West Branch and 6.0 g/t for West lode. The cut-off grade differential reflects the different mining methods with West Lode estimated to have a more expensive mining cost due to geometry and narrower width. Tower Hill's current grade and establishment costs could prove to be challenging Tower Hill, 2km from the Gwalia plant, is a potential underground opportunity with a 306koz reserve comprising 2.6Mt @ 3.7g/t. Further work is being undertaken to understand the geological controls over the high gold grade domains and the potential for extending the mineralisation. Gold mineralisation at Tower Hill is hosted within quartz veins in ultramafic rocks overlying the Raeside Batholith. Significant intersections at shallow depths of ~135-250m below surface have been achieved, including 18m @ 4.2 g/t from 147m, 7.9m @ 8.2 g/t from 157m, and 6m @ 8.5 from 239m. Irregularities in the granite-greenstone contact appear to strongly influence the grade distribution and development of veining. The 3.7g/t underground reserve at Tower Hill is a component of St Barbara’s Reserve and provides an opportunity to supplement the ore feed from Gwalia. ■ At current grade and estimated establishment cost it looks challenging. ■ Management plans to undertake additional drilling to establish whether there might be higher grade pods that can be selectively mined underground as a supplementary future ore feed. Figure 28: Tower Hill has a higher grade hanging wall zone

Source: Company data

Production from Tower Hill could augment the gold output from Gwalia, whereas West Lode could not, at least while there is a haulage constraint. Expanding the haulage capacity from Gwalia may allow valuable opportunities like West Lode to be unlocked. If not, then West Lode would be likely to be recovered at the end of mine life when it does not compete with the higher grade South West Branch ore. It is anticipated that the modelling of West Lode, incorporating the results of recent drilling, will result in an increase to the Indicated and Inferred Resource. These results are key to future mine plans, and relevant to shaft studies. This increase could potentially occur within the next year, given the company's recent focus on this area of Gwalia.

St Barbara Mining (SBM.AX / SBM AU) 25 24 March 2016

Simberi, PNG Figure 29: Simberi – location

Source: Company data

Figure 30: Reserves and resources

P&P Reserves M&I Resources M,I & I Resources Contained Contained Contained Tonnes Grade Tonnes Grade Tonnes Grade Gold Gold Gold Kt g/t koz Kt g/t koz Kt g/t koz Simberi Oxide 19,117 1.30 818 36,051 1.00 1,160 43,979 1.00 1,413 Simberi Sulphide 19,882 2.00 1,285 50,803 1.58 2,579 76,914 1.50 3,607 Total Simberi 38,999 1.68 2,103 86,854 1.34 3,739 120,893 1.29 5,020

Source: Company data

St Barbara Mining (SBM.AX / SBM AU) 26 24 March 2016

Detailed overview Simberi is an open pit gold mine located on Simberi Island, 900km North East of Port Moresby, Papua New Guinea. There are currently seven known gold prospects located on the eastern half of Simberi Island. The mine comprises oxide and sulphide reserves. Current operations are focused on mining overlaying oxide, with sulphide treated as waste. Oxide reserves at Sorowar, Pigiput and Pigibo are currently being mined. A pre- feasibility study is underway to access the economic viability of mining the sulphide orebody and selling a marketable concentrate. The sulphide project has the potential to extend mine life to ~15 years or more. Under the ownership of Allied Gold and St Barbara, operations on Simberi faced numerous challenges associated with a 'break-fix' mentality. Operations have experienced a significant turnaround under the leadership of CEO and Managing Director, Bob Vassie, who commenced his current role in June 2014. Mine History

■ The Tabar Joint Venture was made up of Kennecott, Nord Resources and Niugini Mining. The JV formed in 1982 in order to commence gold exploration on Simberi. Nord acquired all interests in 1993 and undertook an exploration and feasibility study up until 1997 when the project was put on hold due a decrease in gold prices. ■ In 2004 Allied Gold resumed feasibility studies and commenced construction of the mine and mill in 2006. Ore was first processed in 2008. ■ Allied Gold, inclusive of its Simberi operations, was acquired by St Barbara in 2012. Project Metrics Reserves and Production Reserves at June 30 2015, for the Simberi Oxide project and Simberi Sulphide project, were 19.1Mt @1.3 g/t gold for 0.8Moz and 19.8Mt @ 2.0g/t gold for 1.2Moz, respectively. Current oxide operations have a short 3.5-year mine life as the sulphide orebody underlying the oxide reserves is treated as waste. Without a sulphide circuit, it is not possible to mine the complete oxide reserve due to the increasing interaction between oxide and transition and sulphide ore as mining progresses towards the end of oxide project's mine life. FY15 achieved production 79,658 ounces of gold (highest since Simberi was acquired in 2012) and 28,379 ounces in DecQ of FY16 (site record). Results for the September quarter delivered a strong start showing promise of comfortably reaching the 100–110koz FY16 gold production guidance, while guidance was maintained following release of results for the December quarter (31 Dec 2015). FY15 full year AISC was A$1,007/oz. The FY16 DecQ AISC was A$1,319/oz. DecQ costs were higher than the prior quarter (A$1,252 per ounce). ■ FY16 guidance for AISC is A$1,350/oz–$1,430/oz. This guidance implies a weaker FY16 2H, both in terms of lower production and higher costs, however this might not be the case due to investment in additional excavators and trucks. ■ The AISC guidance range increased to A$1,350/oz–$1,430/oz from A$1275/oz to A$1400/oz, which was reported in the previous quarter. This was attributed to investment in two low hour excavators and foreign exchange changes. ■ Changes to the guidance range for AISC and narrowing of guidance range for capital expenditure, are largely due to exposure to foreign currency changes. 80% of costs are effectively denominated in USD, 40% are directly USD denominated costs and 40% PNG Kina denominated (which follows the USD). Only 20% of costs are in AUD.

St Barbara Mining (SBM.AX / SBM AU) 27 24 March 2016

Capex FY15 capital expenditure was $9.1mn, significantly lower than FY14 $32.3mn. FY16 guidance of A$10mn–$12mn (revised from A$8mn–$12mn in DecQ of FY16) is all sustaining capex and is included in AISC.

■ Capital expenditure for the sulphide project is estimated to be approximately A$140mn should the project be considered economically viable following pre-feasibility study results due in March 2016. Mining operations FY15 production achievement of 80koz was largely attributed to the commitment of an entirely new site management team under the leadership of Bob Vassie. This represents a significant turnaround following a few years of various equipment failures and multiple infrastructure setbacks which led to interrupted and disappointing levels of gold production. Over the past year, following Bob Vassie's appointment in June 2014, an extensive on-site review of Simberi operations has been undertaken. An engineering and maintenance program was initiated and has been conducted since Sep 2014. This program focuses particularly on the aerial rope conveyor (Ropecon) and ore delivery system which failed in previous periods. The program demonstrates a strong movement away from the 'break-fix' mentality and 'maintenance deficit' that stunted production. Ore from pits is delivered by a contracted trucking fleet to a ROM Pad (Sorrowar feeder), which recently had the angle of its feeder-breaker teeth changed to improve throughput, effectiveness and reliability. In MarQ 2015, a mobile crusher was hired to supplement the feeder-breaker. Ore is delivered to the SAG Apron feeder and processing plant via a 2.7km long Aerial Rope Conveyor (ROPECON). This is a low-cost, energy efficient delivery transport method.

■ Ore conveyor is operational for c.20 hrs per day which allows for regular maintenance. ■ Downhill trucking by a contractor costs $4.50 per ton in comparison to the $0.50 per ton cost of operating the Ropecon. ■ Improved ore delivery in the FY16 SepQ was credited to increased trucking, however the company remains focused on maximising operational efficiencies by transporting greater volumes via the rope conveyor delivery system. Redesigned chutes and air-blades are planned for instalment in the FY16 MarQ, and are expected to enhance ore delivery system operations. In the FY16 DecQ two low hour excavators (model DX1200) were purchased for US$2mn. The excavators will contribute to a more productive, lower cost loading fleet. Four low hour mining trucks were purchased during the MarQ for ~US$1.2mn. Excavators and trucks are expected to arrive in February. The addition of this fleet should contribute to increased production and lower unit costs.

St Barbara Mining (SBM.AX / SBM AU) 28 24 March 2016

Figure 31: Simberi ore delivery system

Source: Company data

Figure 32: Aerial Rope Conveyor (ROPECON) Figure 33: Ore haulage truck

Source: Company data Source: Company data Milling operations Simberi has achieved significant improvements in throughput since the FY15 DecQ, when the SAG mill and refurbished ball mill began operating together. FY16 DecQ accomplished 832kt of throughput, approximately equivalent to the annualised target of 3.5Mtpa. ■ The new SAG mill was acquired in September 2012, but installation experienced significant delays and the mill wasn't commissioned until December 2013. Further maintenance and engineering improvements were conducted in March 2014, and the performance of the mill was considered to be adequate for the first time in late 2014. ■ The old ball mill (capacity of c. 1.4Mtpa) was refurbished with the purpose to have it operate in parallel with the new SAG mill, in order to achieve the throughput originally expected from the standalone SAG Mill. The Mill became operational in December 2014 and in the FY15 DecQ the highest quarterly production since acquisition of Simberi was achieved. 17,294 ounces of gold was produced with the SAG Mill and Ball mill in operation.

St Barbara Mining (SBM.AX / SBM AU) 29 24 March 2016

■ In the FY16 DecQ report, management noted that plant improvements had been made to address 1H challenges that were experienced when processing both sticky clay ore and hard rock. Sulphide Project The oxide blanket that overlays an extensive sulphide orebody is currently being mined. Over time there will be an increasing interaction between oxide and sulphide, limiting extraction of the complete oxide reserve in the absence of a sulphide circuit. At present, any sulphide ore mined concurrently with oxide ore is being expensed as waste. The strip ratio is currently 2:1 but should average 2.5:1 long term. Mining costs will rise as this strip ratio is achieved and averaged, but with 70% of the costs fixed and 30% variable, the cost impact should not be significant. Pre-Feasibility Study expected in April2016 The results of the pre-feasibility study for a potential sulphide project, which would enable mining of remaining oxide reserve in addition to utilising the sulphide orebody, is due in March 2016. The sulphide project is expected to require capital expenditure of ~$140mn to increased gold production to ~140koz per year due to higher grade (>2g/t), but lower throughput as a consequence of the harder ore. Flotation would be added to the existing plant to produce a gold concentrate at a grade of 30-35 g/t from the 2g/t in-situ grade. The sulphide project has the potential to extend mine life by 7+ years. Initial parameters are: ■ Indicative capex of $140mn ■ AISC US$930 – US$990/oz. ■ Seven-year average annual production of 140koz including production from oxide ore. ■ 2Mtpa plant capacity and 83% recovery. ■ Production of a 30+ g/t gold concentrate for third party treatment (Lihir autoclave or Chinese smelter) Sale of concentrate – plausibility largely unknown Concentrate produced at Simberi is likely to be sold to a Chinese smelter or to Lihir (Newcrest's operation only 70 km away from Simberi Island) for processing. Sale of concentrate to Lihir would be the optimal solution subject to capacity availability and commercial terms. However, we assume that Newcrest's strategy will be to fully utilise its own autoclave capacity with Lihir material before purchasing third-party concentrates for treatment. ■ At this stage, the reactivity of the theoretical Simberi sulphide concentrate and autoclave capacity required for its processing are unknown. ■ Newcrest is currently trialling a new autoclave operating strategy to increase autoclave throughput and gold production. However capacity and utilisation at this time are not known. ■ Alternatively the concentrate could be shipped to a smelter for sale incurring additional freight costs and treatment charges. Gold concentrate smelters are not common so payment terms are generally unattractive, but more viable than additional capital cost of an on-site sulphide treatment circuit for gold recovery. The Simberi sulphide project is not considered to be sufficiently high enough grade to support an autoclave, roaster or other sulphide treatment infrastructure.

St Barbara Mining (SBM.AX / SBM AU) 30 24 March 2016

Figure 34: Simberi mine schematic of theoretical oxide/sulphide mine design

Source: Company data Exploration The exploration program on Simberi Island focuses on identifying near mine oxide reserves which could extend oxide mine life. A total of 33 trenches and 415 samples were completed by the end of the FY16 SepQ. Significant trench sampling results included 20m @1.1g/t Au and 50m @1.3g/t Au, including 10m @ 2.6g/t Au at trench location SIMTR932, Pigibo North. Another seven diamond drill holes were completed at Pigibo North and eight holes were completed at Patan during the December quarter. These also returned encouraging results. Western Simberi Surface sampling is currently being undertaken on West Simberi, however, by the end of the FY16 DecQ no significant results had been returned from soil and trench samples. There was no updated information on reconnaissance mapping and surface sampling that was set to continue in the December quarter according to the Sep quarterly report. Big Tabar Island Exploration at Banesa Au-Cu prospect continued in the DecQ. During the quarter 19 creek channels and trenches were completed contributing to a total of 124 completed to date. Mapping and surface sampling at the Fotombar prospect could commence in the MarQ, subject to access.

St Barbara Mining (SBM.AX / SBM AU) 31 24 March 2016

Figure 35: Pigibo North Exploration Figure 36: Banesa Porphyry Aui-Cu Project

Source: Company data Source: Company data

St Barbara Mining (SBM.AX / SBM AU) 32 24 March 2016

Key risks

■ Gold price risk: St Barbara is exposed to gold price risk. Our model assumes a long term gold price of US$1,200. If gold was to experience a sustained fall in price, it would have a negative impact on our valuation. ■ Exchange rate risk: St Barbara is exposed to exchange rate risk where gold sales and transactions are quoted in USD (or Papua New Guinea Kina). Interest is denominated in the currency of the borrowing, which is USD for a large proportion of St Barbara's debt. This risk is mitigated by a natural hedge that is created as gold sales are in USD. ■ Balance sheet risk: Management has aggressively paid down debt and built cash from strong operating cash flow. However, debt remains elevated and may constrain near-term strategies or incentivise a capital raising to reduce this risk. ■ Expansion and exploration risk: Expansion and exploration may take longer than anticipated, and orebody and metallurgical results might fail to achieve projections. If for example, an alternative haulage project is not progressed, gold production, cost savings and mine life extension will fall short, undermining our valuation and earnings projection. ■ Operation risk: Adverse events that impede production and impact operating costs are likely to affect the accuracy of our valuation. Operational events that may impact production and costs could include environmental hazards, unexpected weather conditions, technical issues and equipment failures. ■ Single asset risk: Approximately 88% of St Barbara's net present value is derived from Gwalia's operations. This means that changes in the regulatory environment or an adverse event at the mine are likely to have a more significant impact on earnings than they might at a company with a greater number of assets located across various regions. ■ Management risk: St Barbara may lose management personnel that cannot be easily replaced by qualified individuals in a competitive mining market. The company's performance has been strongly linked to new management. ■ Equity dilution risk: In the event of future capital raisings, shareholders must recognise that share dilution could occur. ■ Acquisition risk: As an essentially single asset company, management may seek to acquire operational diversity. The old management team and board destroyed significant value through poor corporate judgement. The new team remain untested in acquisitions, but have executed decisively and well on divestments.

St Barbara Mining (SBM.AX / SBM AU) 33 24 March 2016

Financial Funding

■ US$250mn senior secured notes issued by St Barbara, settled in March 2013 and due in April 2018 with a coupon rate of 8.875% p.a. paid bi-annually. Notes are secured by the Group's Australian assets. o Balance at 31 Dec 2015 was US180mn. o Note that US$10mn of Notes was bought back on 9 February, 2016. ■ US$75mn loan facility with Red Kite Mine Finance executed in March 2014. Two tranches, ~US$52.7mn and ~US$22.2mn, drawn down in March 2014 with the facility to be repaid quarterly from September 2015. o Balance at 31 Dec 2015 was US$36mn. o Management has indicated its intent to fully repay the facility by the end of FY16. ■ As at June 30, FY15 net debt was ~A$270mn (June 30 FY14 ~A$260mn). We calculate net debt to be ~A$192.7mn at the end of 1H FY16, with approximately US$293mn debt outstanding including lease liabilities. ■ Lease commitment liabilities at 31 Dec 2015 were A$3mn in total. ■ Closing cash balance of ~A$100mn at the end of the FY16 DecQ. ■ There are restrictions on the cumulative amount that can be invested in Pacific Islands and amount of additional indebtedness under the terms of the US senior secured notes may limit St Barbara's ability to invest in projects that expand production. Between June and December 2015, debt was reduced by US$109mn made up of $70mn reduction of Notes and US$39mn of Red Kite Mine Finance Facility. The company effectively paid US$9mn quarterly repayments for FY16 DecQ, MarQ and JunQ in advance. We note that repayment of debt and subsequent risk reduction is the preferred use of the company's strong cash flows Our model assumes the Red Kite facility is fully repaid in 2HFY16 as per management guidance. With respect to the US Senior Secured Notes, in our modelling we assume regular and equal repayments of outstanding debt (US$180mn at 31 Dec 2015) due date April 2018. We expect that the company will be capable of meeting this due date, however refinancing an acceptable level of outstanding debt could also be an option. There is uncertainty around what this 'acceptable' amount could be.

St Barbara Mining (SBM.AX / SBM AU) 34 24 March 2016

Figure 37: Repayment of debt under Credit Suisse assumptions Operating cash flow and gross debt profile 300 300

200 200

100 100 0 - -100 (100)

-200

Cash flow (A$mn) flow Cash Net(debt) cash($Amn) /

-300 (200)

-400 (300) 2014 2015 2016 2017 2018 2019 2020

Operating cash flow Gross debt Net cash position (RHS)

Source: Company data, Credit Suisse estimates

Capital expenditure on alternative haulage could be funded in a number of ways including drawing from the cash balance, retaining some debt, increasing debt, completing an equity raising or by selling assets (potentially Simberi). ■ Our cash flow forecasts indicate that it could be possible for St Barbara to use operating cash flow to fund alternative haulage, while still repaying existing debt. ■ We expect that the company will continue to repay its debt from operating cash flow, albeit at a potentially slower rate due to capital expenditure on the alternative haulage system. Figure 38: Cash flow projections under Credit Suisse Assumptions

Cash flow and net cash / (debt) profile 300 300 250 250 200 200 150 150 100 100 50 50 0 - -50 (50)

-100 (100) Cash flow (A$mn) flow Cash -150 (150) ($Amn)(debt) / Netcash -200 (200) -250 (250) -300 (300) 2014 2015 2016 2017 2018 2019 2020

Operating cash flow Net investing cash flow Net cash position (RHS)

Source: Company data, Credit Suisse estimates Capital structure and ownership There are currently just over 495mn ordinary shares on issue, giving the company a market capitalisation of ~A$1.2Bn.

St Barbara Mining (SBM.AX / SBM AU) 35 24 March 2016

Figure 39: SBM Top 10 shareholders as at 21/03/2016

Shareholder name Number of shares % held Hunter Hall Investments 68,851,332 13.91% M&G Investments Management Ltd 56,940,337 11.50% Bakers Steel Capital Mangers LLP 38,520,000 7.78% VAN ECK Associates Corporation 37,373,746 7.55% Franklin Resources 27,553,393 5.57% USAA Investment Management Co 14,746,000 2.98% Oppenheimer Funds Inc 10,710,958 2.16% US Global Investors Incorporated 5,900,000 1.19% Dimensional Fund Advisors L P 5,527,662 1.12% Ruffer Investment Management Ltd 5,303,877 1.07% Source: the BLOOMBERG PROFESSIONAL™ service Taxation We apply a 30% company tax rate, and assume that cash tax will be paid from 1H FY17 onwards. Corporate and administration expenses We assume that total corporate costs will remain flat at A$16mn from FY16 to FY25. This total cost will be allocated to the Gwalia and Simberi assets by ounces of production. Costs are expected to remain flat at this level following the cost reduction program that was implemented in 2014 under management of Bob Vassie. We assume that production at Gwalia incrementally increases up until FY19, after which they remain flat. These increases are attributed to increased haulage capacity as a result of a greater proportion of waste storage underground. Therefore we assume that administration expenses at Gwalia remain flat at ~A$3.5mn for remaining mine life. Exploration expenditure Guidance for total FY16 exploration is A$15mn. 70% is allocated to Gwalia and 30% is allocated to Simberi. Our model spreads this cost evenly over FY16 quarters. Our model assumes that this expenditure remains flat over remaining mine life. Royalties We assume that royalties paid in Western Australia (Gwalia) remain at 2.5% of gold revenue, plus a corporate royalty of 1.5%. We also assume that the 2.25% royalty paid in Papua New Guinea (Simberi) remains constant going forward. Depreciation Depreciation is calculated on a units of production basis. We calculate depreciation to be equal to production as a percentage of remaining ounces, multiplied by segment assets and capital expenditure. Depreciation increases in FY19 as additional capex for alternative haulage is added when production from the capital investment commences.

St Barbara Mining (SBM.AX / SBM AU) 36 24 March 2016

Board & Management Bob Vassie – Managing Director and Chief Executive Officer

■ Mining engineer with 30 years’ international experience ■ Formerly Managing Director and CEO at Inova Resources limited ■ 18 years’ of experience at Rio Tinto in a range of senior management roles

Tim Netscher – Non-executive Chairman

■ Chemical engineering background and international experience as a mining executive ■ Current directorships include Toro Energy, Gold Road Resources Limited, Western Areas Limited and Deep Yellow Limited ■ Previously held position as Managing Director of Gindalbie Metals Limited (2011-2013)

Kerry Gleeson – Non-executive Director

■ More than 20 years of boardroom and senior management experience across Australia, UK and US in mining, agriculture, chemicals, logistics and manufacturing ■ Previously Company Secretary and member of the General Counsel at Pivot Limited (10 years until the end of 2013) ■ Practiced as a senior lawyer at the Australian law firm Ashurst ■ Directorship held at McAleese Limited

David E J Moroney – Non-executive Director

■ More than 20 years of experience in senior corporate finance roles, inclusive of 15 years working in the mining industry ■ Prior executive career experience includes Chief Financial Officer at Co-operative Bulk Handling Ltd, First Quantum Minerals Ltd, Wesfarmers CSBP Ltd and Aurora Gold Ltd ■ Directorships held at Geraldton Fisherman's Co-operate Ltd and WA Super

Rowan Cole – Company Secretary

■ Experience across chartered accounting, retail banking, private and public companies ■ Previously held position in senior roles including general manager, head of risk and compliance and chief audit executive prior to joining St Barbara

Garth Campbell-Cowan – Chief Financial Officer

■ Previously held position of Director of Corporate Accounting at Telstra and senior leadership roles with WMC, Newcrest Mining and ANZ. ■ Experience across a number of industries in senior management and finance positions.

St Barbara Mining (SBM.AX / SBM AU) 37 24 March 2016

Environmental, Social Governance Summary

■ St Barbara has implemented an Environmental Management System and engaged GHD to develop mine closure and rehabilitation plans. ■ The 12-month rolling average Company-wide Total Recordable Injury Frequency was 3.4 as at 31 December 2015 (record low). However, there have been two fatalities in the past three years post which a review into the incidence and work practices were undertaken but results not made public. ■ A number of chemical spills occurred during the 2013–14 reporting period, however, in each case a thorough clean-up was undertaken and records kept. ■ The Board is comprised of four members (three non-executive) with a diverse range of skills and experience. However, we recognise that a relatively new board does mean that some corporate memory has been lost. ■ MSCI does not report on St Barbara. Environment issues

■ Key issues for this sector include toxic emissions, waste releases, water stress, biodiversity and land use.

■ St Barbara's rehabilitation provision is discounted at a pre-tax discount rate of 5%. The Rehabilitation liability is re-measured at each reporting date. The total balance for rehabilitation provisions at 30 June 2015 was A$42mn.

■ GHD has been employed to prepare mine closure and rehabilitation plans along with subsequent closure cost estimates for St Barbara. This includes tailings stored and waste rock facilities.

■ A Group-wide Environmental Management System has been implemented and there were no externally reportable environmental incidents during FY15.

■ St Barbara has been granted exemption from reporting environmental effects of mine dewater discharge to Lake Raeside as water from dewatering has been discharged into the Tower Hill Pit instead.

■ No spills or leaks from pipelines occurred during the 2013-14 reporting period.

■ A number of chemical spills occurred during the 2013-14 reporting period, however, in each case a thorough clean-up was undertaken and records kept.

■ St Barbara received some negative attention related to its now divested Gold Ridge asset. It appears that the company's efforts to mitigate environmental risk associated with a tailings dam that was nearly-overflowing were not approved by the Solomon Islands government. This is believed to have been resolved and St Barbara funded a water treatment plant to address this issue. The Gold Ridge asset was sold May 2015 with no further liabilities with respect to that asset / site held.

St Barbara Mining (SBM.AX / SBM AU) 38 24 March 2016

Figure 40: Layout of Gwalia mine site

Source: Company data

■ St Barbara has developed a Strategic Environmental Improvement Plan and submits an Annual Environmental Report to the Department of Mines and Petroleum and to the Department of Environmental Conservation each year for its Leonora operations.

■ St Barbara has been recognised for significantly improving water efficiency between 35-50% by the Water Corporation at the 2013/2014 Business Awards, and received a certificate of merit for environmental excellence for its Gwalia Chiller project.

■ MSCI does not currently report on St Barbara Limited. Social issues

■ Key issues in this sector include management of health and safety risks including fatalities and injury rates. Labour management, corruption and political instability are also considered to be potential social issues.

■ There is potential corruption and political instability risks associated with operations in Papua New Guinea. Although this has not been an issue to date, the Group has policies and procedures in place to assist with management and monitoring of various government relations, as well as detailed security plans for mines in the Pacific region.

■ Two deaths have been reported over the past three years. Detailed investigations were conducted into the incidents, the first of which involved the rope conveyor and the second a local contractor conducting tree clearing on site. No details were made publically available on the outcome of the investigations.

■ 12-month rolling average Company-wide Total Recordable Injury Frequency was 3.4 as at 31 December 2015. This is a record low.

■ St Barbara was the overall winner in the CME (WA) 2015 Underground Mine Emergency Response Competition. Also the winner of four categories at PNG National Mine Rescue Challenge in 2015.

St Barbara Mining (SBM.AX / SBM AU) 39 24 March 2016

Figure 41: TFIFR profile

Source: Company data Governance issues Figure 42: Board composition

Committee Membership Health, Safety, SBM.AX Director Tenure on Board Gender Independent Position Nominations and Environment & Risk and Audit Remuneration Governence Community 1 Tim Netscher Feb-14 2.1 Male  Chairman Chair Chair   2 Bob Vassie Jul-14 1.7 Male  CEO and MD  3 Kerry Gleeson May-15 0.9 Female  Director   Chair 4 David Moroney Mar-15 1.1 Male  Director  Chair  Source: Company data

■ The Board is comprised of four members with a diverse range of skills and experience, including international and senior management experience. There is one female representative and 75% of the board are non-executive directors.

■ Average tenure is 1.3 years, reflective of the progressive replacement of the entire board from 2014 when the company was performing poorly. Since the appointment of Bob Vassie, the company has experience significant turnaround. However, we recognise that a relatively new board does mean that some corporate memory has been lost. Remuneration The $1,200,000 maximum aggregate amount payable to all Non-Executive Directors was approved by shareholders at the Nov 2012 AGM. ■ In order to maintain independence, remuneration is not linked to the performance of the Group. In FY15 the CEO's remuneration was 45% fixed, 22% short term incentives and 33% long term incentives. In FY15 Bob Vassie (MD and CEO) received $631,217 in cash salary and fees. He holds 1,769,053 ordinary shares and 4,062,500 rights over ordinary shares. ■ The target STI was $325,000 and stretch (maximum) was $650,000 (100% of base). Achievement of total recordable injury rate frequency rate of 4.5 had a 33% weighting for STI. ■ In FY15, 66% of the maximum potential STI was earned (compared to 0% in FY14). We attribute this to the significant turnaround in operations throughout the 2014/2015 period.

St Barbara Mining (SBM.AX / SBM AU) 40 24 March 2016

■ LTI's were granted in the form of Performance Rights in FY15, based on total shareholder return and return on capital employed. CEO Vassie was awarded 4,062,500 performance rights during 2015 at issue price $0.12 and expiry date 30 June 2017. Vesting of the performance rights is contingent on satisfying conditions relating to: o Relative Total Shareholder Returns (67% weighting) measured against TSR of peer comparative group of companies where below 50th percentile will result in nil vested performance rights, 50th percentile 50% vesting, 50-75th percentiles pro- rata 50-100% vesting, and 75th percentile and above 100% of rights vested. o Return on Capital Employed in excess of the weighted average cost of capital (33% weighting). A ROCE less than or equal to WACC will deliver nil vested performance rights. ROCE of WACC + 3% will result in 50% vesting and WACC + 7% will result in 100% vesting of performance rights. Valuation Impact

■ The company's key asset is favourably located in Australia, and there has been suitable management of risks associated with PNG operations. SBM is well operated from an environment and social perspective, and operations are overseen by a capable and experienced management team. In consideration of these factors, we do not include an ESG impact in our valuation for St Barbara.

St Barbara Mining (SBM.AX / SBM AU) 41 24 March 2016

Valuation Our target price of $2.15 is based on NPV analysis. While multiple valuation methods for St Barbara have been considered, consistent with our Australian gold coverage, we use a discounted cash flow method to underpin our net present value estimate upon which our $2.15/share target price is based. We apply no premium to our NPV, seeing this as a peer-relative, subjective, investor decision as to what price to pay relative to our underlying projected cash flow valuation and company specific risk factors. We note that almost all gold stocks under CS coverage are currently priced at premiums to our NPVs, typically implying negative discount rates on a spot gold assumption or a gold price of ~US$1,450/oz at a 5% discount rate. Our valuation assumes long-term gold of $1,200/oz at FX $0.75 and a 5% discount rate. We have observed gold equities priced at between 80% and 250% of spot NPV, subject to investor sentiment towards gold and company specific risk factors. Sentiment to gold and SBM management is currently positive. SBM's premium to value appears modest compared to many of its local and international peers and would be neutralised by a gold price assumption of US$1,300/oz, holding all other assumptions unchanged. SBM is priced at an 11.6% premium to our assessed spot in-perpetuity NPV of $2.37/share. We initiate coverage with an NEUTRAL rating on an absolute valuation metric, but do view the company's premium to our valuation as modest compared to many other gold equities. Figure 43: NPV DCF Attributable NPV Operational A$mn A$/sh Risk Weighting A$mn A$/sh Gw alia 1204 2.43 100% 1204 2.43 Simberi 168 0.34 100% 168 0.34 Sub-Total 1373 2.77 1373 2.77

DCF Attributable NPV Non-Operational A$m A$/sh Risk Weighting A$mn A$/sh Net cash/(debt) as at 31 Dec-15 -193 -0.39 100% -193 -0.39 Corporate -123 -0.25 100% -123 -0.25 Hedging 6.4 0.01 100% 6 0.01 Sub-Total -309 -1 -309 -0.62

Net Present Value 1064 2.15 1064 2.15 Source: Company data, Credit Suisse estimates

Our NPV, as shown in Figure 43 , assumes the following:

■ Credit Suisse house commodity and FX assumptions: applied to both of St Barbara's projects. Credit Suisse long-term gold price is US$1,200/oz and long-term AUD/USD exchange rate is US$0.75. This data was most recently updated on 15 December 2015. Refer to Figure 44 for our commodity and FX forecast summary. ■ Real discount rate of 5%: consistent with Credit Suisse global gold coverage. ■ Net debt of ~A$192.7mn as of 31 Dec 2015. ■ Shares on issue 495.1mn as at the most recent ASX Appendix 3B (10 Dec, 2015). ■ Gwalia NPV assumes the following: o 9.4g/t consistent grade from South West Branch (800ktpa–1Mtpa) plus 6.0g/t from West Lode (200ktpa) post implementation of an alternative haulage strategy. o 96% consistent gold recovery.

St Barbara Mining (SBM.AX / SBM AU) 42 24 March 2016

o 900ktpa mill utilisation rate for 2H16, 950ktpa utilisation rate for 1H FY17 and 1Mtpa utilisation rate from 2H FY17 maintained until alternative haulage is assumed to be implemented in FY19. We incrementally increase the mill utilisation rate over the next 12 months to reflect increased haulage capacity realised through in-mine waste management initiatives. As more waste is stored underground, more haulage capacity will be released for ore haulage. 1Mtpa is expected to be sustainable under the current ventilation constraints. o $200mn capital investment (spread equally across six quarters) from FY17 MarQ for alternative haulage. We expect alternative haulage to: . Achieve a $6/t decrease in mining costs from FY19 SepQ . Enable the 1.2Mtpa (hard-rock) plant capacity to be utilised. . Provide an increase in reserves of 1.2Moz attributed to mining to 2,000m from current 1,800m reserve boundary. o 10-year mine life based on current reserves and additional ounces accredited to mining between 1,800 and 2,000m at an expanded production rate of ~327koz/year. We recognise that there is risk to our valuation due to multiple conceptual estimates, predominantly associated with the implementation of an alternative haulage system and assumption of yet to be proven reserve endowment that may prove aggressive. Despite valuation risk based on unsubstantiated estimates, we apply no discount factor against incremental NPV attributed to alternative haulage at Gwalia. We recognise that our $200mn capital assumption is the likely upper end of the capital investment required. More recent investigation of a lower capital cost ventilation upgrade (new shafts) to facilitate continued trucking would not deliver the unit cost saving that we assume, but would reduce the capital spend significantly. ■ Simberi NPV assumes the following: o 1.3g/t consistent oxide grade. o 84% recovery. o 3.2Mtpa throughput (800kt/qtr). We recognise that there is ~3.5Mtpa milling capacity for hard rock with the operation of both the Ball and SAG mills, however we reduce our rate to 800kt/qtr (3.2Mtpa) in recognition of past reliability challenges. o 3.5-year mine life (processing oxide reserves only) o Seven-year mine life for sulphide project beyond the oxide project life (processing sulphide reserves only). o Grade on sulphide only ore increases to 2.0g/t (Rsv grade), mill rate reduced to 2.6Mtpa delivering ~139koz pa for seven years. ■ Hedging: Valued at the NPV of the net cash flow stream from hedge commitments less our gold price and FX assumptions for the same period. ■ Corporate: Valued at the NPV of the annual corporate overhead. We assume corporate costs to be a flat A$16mn per year distributed to assets on an ounces of production basis and held through to 2025, the terminal year of our production assumptions. ■ Exploration: Guidance for total FY16 exploration is A$15mn. 70% is allocated to Gwalia and 30% is allocated to Simberi. Our model spreads this cost evenly over FY16 quarters.

St Barbara Mining (SBM.AX / SBM AU) 43 24 March 2016

Figure 44: CS commodity and FX assumptions FY 14A FY 15A FY 16F FY 17F FY 18F FY 19F FY 20F Gold US$/oz 1299 1224 1130 1169 1188 1200 1200 AUDUSD x 0.926 0.840 0.714 0.705 0.715 0.725 0.730 Gold A$/oz 1403 1458 1583 1658 1661 1655 1644 Source: Credit Suisse NPV scenarios Figure 45: NPV scenarios – gold bull, base, conservative, bear, gold bear

1,800 3 $2.66 1,600 $2.15 2.5 1,400 $1.73 1,200 2

1,000 $1.16 1.5

800 A$/share $0.54 600 1

Net Present Net Present Value (A$mn) 400 0.5 200

0 0 Gold bull case Base case Conservative case Bear Case Gold bear case

Gwalia NPV Simberi NPV NPV/share (RHS)

Source: Company data, Credit Suisse estimates

■ Base case – NPV $2.15/sh. Assumes Gwalia Deeps and Simberi Sulphide progress with no discount applied to either project. Whilst entirely plausible, we consider our base case to be fully valued. ■ Conservative case – NPV $1.73/sh. Applies a 70% risk weight to our NPV for Gwalia Deeps to account for potential risk factors associated with the project (realised timing, capex, production) and no development of Simberi sulphides. This scenario also attributes no value realised from the potential sale of Simberi sulphide project if it is not progressed by SBM which could be considered punitive. ■ Bear case – NPV $1.16/sh. Assumes neither Gwalia Deeps or Simberi Sulphide projects progress. Again, this also excludes any potential proceeds from the sale of Simberi sulphides, and no extension at depth of Gwalia. In a less robust gold equity market, we would expect a discount to be priced on the early stage Simberi sulphide project and on the conceptual reserve extension and alternative ore haulage at Gwalia which would lower the conceptual value realised on these projects under a sale process if not developed. ■ Blue Sky gold bull case (on Base case operating assumptions) – NPV $2.66/sh. Assumes a gold price of US$1,300/oz with all other operating assumptions consistent with our base case. From a trading perspective, if the gold price was to rise to US$1,300/oz, we would expect gold equities to at least sustain current premiums to NPV, so a higher share price outcome than indicated by our NPV would be considered likely. We also note that under such a scenario, index rebalancing considerations could see further support from additional investor buying if the stock was potentially included in a larger investor universe.

St Barbara Mining (SBM.AX / SBM AU) 44 24 March 2016

■ Grey sky gold bear case (on Bear case operating assumptions) – NPV $0.54/sh. Assumes a gold price of US$1,000/oz with all other operating assumptions consistent with our bear case. If gold were to fall to US$1,000/oz, the anticipated impact on the share price could be more severe than predicted by our NPV. US$1,000/oz would likely precipitate significant market capitalisation contraction from gold fund redemptions that could see unfavourable index rebalancing and exclusion from the S&P/ASX 200. SBM was added to the S&P/ASX 200 index after market close on March 18. Our valuation assumes that any additional haulage capacity following implementation of an alternative haulage system will be used to introduce parallel mining of the lower grade (6g/t) West Lode. As West Lode is a narrower ore zone, it could only support a low mining rate in comparison to South West Branch. If West Lode was to be mined on its own post depletion of South West Branch, it would be high cost. The mill would be required to operate at an assumed ~200-300ktpa rate, subject to the number of horizons mined simultaneously. If additional haulage capacity was used to mine at a higher rate at South West Branch alone, production could increase by ~26koz/year and generate another ~A$43mn/year in revenue. NPV sensitivities Running spot gold and FX through the entire model generates an NPV of $2.17/sh based on spot gold of US$1222/oz at FX $0.755. Figure 46: Spot NPV scenario (spot prices - US$1,222/oz Au, FX $0.755) DCF Attributable NPV Operational A$mn A$/sh Risk Weighting A$mn A$/sh Gw alia 1216 2.46 100% 1216 2.46 Simberi 170 0.34 100% 170 0.34 Sub-Total 1385 2.80 1385 2.80

DCF Attributable NPV Non-Operational A$m A$/sh Risk Weighting A$mn A$/sh Net cash/(debt) as at 31 Dec-15 -193 -0.39 100% -193 -0.39 Corporate -123 -0.25 100% -123 -0.25 Hedging 1.8 0.00 100% 2 0.00 Sub-Total -314 -1 -314 -0.63

Net Present Value 1072 2.17 1072 2.17 Source: Company data, Credit Suisse estimates, US$1,255/oz, AUDUSD 0.758

St Barbara Mining (SBM.AX / SBM AU) 45 24 March 2016

Changes in gold price assumptions St Barbara's NPV is heavily impacted by changes in gold price assumptions. NPV/share ranges between A$0.30 and A$2.96 for gold prices from A$1,200/oz to A$1,800/oz (spot NPV $2.17 at A$1,618/oz). Figure 47: NPV sensitivities

NPV/share sensitivity to A$ gold price $3.50 2.96 $3.00

$2.50 2.07 $2.00

$1.50 1.19

$1.00

$0.50 0.30

$0.00 1200 1400 1600 1800 NPV/share ($A)

Source: Company data, Credit Suisse estimates

EV per Reserve/Resource EV per Reserve/Resource is one of the most crude valuation metrics that can be used to value a company because it does not recognise future grades and costs. However, it is a popular tool as it can be applied to both producers and non-producers alike. We have run a comparison against Australian listed gold companies although we are somewhat limited for a full data set as we do not have cash cost data for some Australian gold companies. Figure 48: EV / Reserves (US$/oz) Figure 49: EV / Resources (US$/oz)

EV / Reserve (US$/oz) EV / Resource (US$/oz) 1,200 600 1,041 487 1,000 500 881

800 400 355

573 600 300 443 221 214 391 377 400 200 158 296 136 117 184 100 200 100 71 37 30 13 0 0 NST IGO OGC RRL EVN SAR SBM NCM AQG PRU IGO NST OGC EVN SBM RRL NCM SAR AQG PRU

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 46 24 March 2016

Figure 50: Cash Cost adjusted EV /Reserves Figure 51: Cash Cost adjusted EV /Resources (US$/oz) (US$/oz)

Cash cost adjusted EV/Rsv (US$/oz) Cash cost adjusted EV/Rsc (US$/oz) 2,000 1,200 1,800 1,729 1,043 994 1,600 1,000 882 863 1,387 839 827 1,400 813 1,188 800 745 1,200 1,104 1,017 991 639 951 566 1,000 881 600 812 800 600 600 400

400 200 200

0 0 NST IGO RRL SAR EVN OGC SBM PRU NCM AQG NST IGO RRL PRU EVN SAR SBM NCM OGC AQG

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

EV/Reserve analysis: ■ St Barbara's cash cost adjusted EV/Reserve is ~US$951/oz, and EV/Reserve is US$296/oz. ■ Comparable Australian gold peers trade at an average cash cost adjusted EV/Reserve of ~US$1,066/oz, and EV/Reserve of $429/oz. ■ St Barbara reserves were 4,003koz at 30/06/2015. ■ Application of sector average EV/Reserve implies an EV of ~US$1,717mn ahead of current EV ~US$1,184mn. ■ We obtain a company valuation of ~A$1,064mn after deducting net debt of A$193mn (EV A$1,257mn). Our valuation equates to EV/Reserve of US$236/oz at FX $0.75. ■ With approximately 495mn shares on issue this gives a valuation of $2.15 per share and suggests the stock is potentially undervalued versus peers. EV/Resource analysis: ■ St Barbara's cash cost adjusted EV/Resource is ~US$158/oz, and EV/Resource is US$813/oz. ■ Comparable Australian gold peers trade at an average cash cost adjusted EV/Resource of ~US$821/oz, and EV/Resource of $184/oz. ■ St Barbara resources were 9,223koz at 30/06/2015. ■ Application of sector average EV/Resource implies an EV of US$1,697mn ahead of current EV ~US$1,184mn. ■ We obtain a company valuation of ~A$1,064mn after deducting net debt of A$193mn (EV A$1,257mn). Our valuation equates to EV/Resource of US$102/oz at FX $0.75. ■ With approximately 495mn shares on issue this gives a valuation of $2.15 per share and suggests the stock is potentially undervalued versus peers. St Barbara trades below the midpoint multiple of its peers, suggesting it is potentially undervalued. However, given the significant variation in EV/Reserves and EV/Resources across Australian gold stocks (even when cash cost adjusted), we do not consider either of these valuation outcomes to be accurate in determining a target price. We do however view the peer multiples as supportive of our valuation.

St Barbara Mining (SBM.AX / SBM AU) 47 24 March 2016

NPV premiums We note the Australian (and global) gold sectors are currently pricing stocks at material premiums to NPV. SBM is trading at 2% premium to our NPV, below some of their larger multi-asset peers which appears reasonable (on current market multiple pricing). Figure 52: Share price trading (discount/premium) versus CS target prices Discount / Premium Discount / Premium Share price Target price to TP ($/sh) to TP (%) NCM 16.61 11.30 5.31 47.0% OGC 3.60 2.75 0.85 30.9% RRL 2.41 2.00 0.41 20.5% SBM 2.19 2.15 0.04 1.9% EVN 1.59 1.65 - 0.06 -3.9% AQG 2.57 3.75 - 1.18 -31.5% PRU 0.40 0.60 - 0.20 -33.3% Source: Company data, Credit Suisse estimates. Prices valid as at 22/03/2016

Figure 53: Share price trading (discount/premium) versus CS target prices

Share price discount / premium to TP (%) 60% 50% 47% 40% 31% 30% 21% 20%

10% 2% 0% -10% PRU AQG EVN SBM RRL OGC NCM -4% -20% -30% -40% -33% -31%

Source: Company data, Credit Suisse estimates, IBES

St Barbara Mining (SBM.AX / SBM AU) 48

St BarbaraMining (SBM.AX Figure 54: EV/Reserves (oz) & Cash Cost adjusted EV/Reserves (oz) – Gold Only

EV / Reserves (oz) & Cash Cost adjusted EV /Reserves (oz) (Gold Only)

1,800

/SBM AU) 1,600

1,400

1,200

1,000 US$/oz US$/oz

800

600

400

200

0

Banro

Roxgold

McEwen

IAMGold

Romarco

Ramelius Gold PMI

Centamin

Red 5 Ltd 5 Red

Polymetal Gold New

Wesdome

Veris Gold Veris

DRDGOLD

Gold Fields Gold

G Resource G

Golden Star Golden

Norton Gold Norton Gold Polyus Ming Amara

Dacian Gold Dacian

Alamos Gold Alamos Gold Tanami

Hecla Mining Hecla Gold Midway

Gold One Intl One Gold Gold Guyana

Coeur Mining Coeur

Goldcorp Inc. Goldcorp Gold Lingbao

Phoenix Gold Phoenix

Kirkland Lake Kirkland Corp. B2Gold

SEMAFO Inc. SEMAFO

Yamana Gold Yamana Gold Teranga

Timmins Gold Timmins

Zhongjin Gold Zhongjin Gold Orezone

Petropavlovsk Mining Avocet

Eldorado Gold Eldorado

China Gold Intl Gold China

Doray Minerals Doray Mining Primero

Hochschild Min Hochschild Mining Medusa

Perseus Mining Perseus

Shandong Gold Shandong

Troy Resources Troy

KGL Resources KGL

Richmont Mines Richmont

Resolute Mining Resolute

LakeShore Gold LakeShore

Saracen Mineral Saracen

Newcrest Mining Newcrest

Newmont Mining Newmont

AuRico Gold Inc. Gold AuRico

Dundee Precious Dundee

AngloGold Ashnti AngloGold

Beadell Resource Beadell

Barrick Gold Corp Gold Barrick Corp. Gold Alacer

Eldorado Gold YT Gold Eldorado

Highland Gold Mn Gold Highland

Centerra Gold Inc. Gold Centerra

St Barbara Limited Barbara St

Nevsun Resources Nevsun Corp. Gold Kinross

Harmony Gold Mng Gold Harmony

Randgold Resources Randgold

Silver Wheaton Corp. Wheaton Silver

Silver Lake Resources Lake Silver

Kingsgate Consolidated Kingsgate

Evolution Mining Limited Mining Evolution

Detour Gold Corporation Gold Detour

Independence Group NL Group Independence

Regis Resources Limited Resources Regis

OceanaGold Corporation OceanaGold

Gryphon Minerals Limited Minerals Gryphon

NovaGold Resources Inc. Resources NovaGold

Pan American Silver Corp. Silver American Pan

Zijin Mining Group Co., Ltd Co., Group Mining Zijin Inc. Resources Gold Torex

Agnico Eagle Mines Limited Mines Eagle Agnico Corporation Nevada Franco

Northern Star Resources Ltd Resources Star Northern Ev/Rsv CC adj EV/Rsv Silver Standard Resources Inc. Resources Standard Silver

Au Au only 24 2016March

Compania de Minas Buenaventura Minas de Compania Source: Company data, Credit Suisse estimates

49

St BarbaraMining (SBM.AX Figure 55: EV/Resources (oz) & Cash Cost adjusted EV/Resources (oz) – Gold Only

EV / Resources (oz) & Cash Cost adjusted EV /Resources (oz) (Gold Only)

1,000

/SBM AU)

800

600 US$/oz US$/oz

400

200

0

Banro

Roxgold

McEwen

IAMGold

Romarco

Ramelius Gold PMI

Centamin

Red 5 Ltd 5 Red Gold Pilot

Polymetal Gold New

Wesdome

Seabridge

Veris Gold Veris

Orbis Gold Orbis

Gold Fields Gold

Rainy River Rainy

G Resource G

Golden Star Golden

Polyus Gold Polyus Gold Norton Ming Amara

Dacian Gold Dacian

Rubicon Min Rubicon

Alamos Gold Alamos Gold Tanami

Hecla Mining Hecla

Guyana Gold Guyana Intl One Gold

Coeur Mining Coeur Gold Sulliden

Goldcorp Inc. Goldcorp Gold Lingbao

Phoenix Gold Phoenix

Kirkland Lake Kirkland Corp. B2Gold

SEMAFO Inc. SEMAFO

Yamana Gold Yamana MacPhersons Gold Teranga

Timmins Gold Timmins

Zhongjin Gold Zhongjin Gold Orezone

Petropavlovsk Mining Osisko

Eldorado Gold Eldorado

LionGold Corp LionGold

China Gold Intl Gold China

Doray Minerals Doray Mining Primero

Medusa Mining Medusa Min Hochschild Minerals Focus

Perseus Mining Perseus

Shandong Gold Shandong

KGL Resources KGL

Richmont Mines Richmont

Resolute Mining Resolute

ABM Resources ABM

LakeShore Gold LakeShore

Saracen Mineral Saracen Mining Sun Belo

Newcrest Mining Newcrest

Newmont Mining Newmont

AuRico Gold Inc. Gold AuRico

Dundee Precious Dundee

AngloGold Ashnti AngloGold

Beadell Resource Beadell Mining Goldgroup

Barrick Gold Corp Gold Barrick Corp. Gold Alacer

Eldorado Gold YT Gold Eldorado

Highland Gold Mn Gold Highland

Premier Gold Mns Gold Premier

Centerra Gold Inc. Gold Centerra

St Barbara Limited Barbara St

Nevsun Resources Nevsun Corp. Gold Kinross

Harmony Gold Mng Gold Harmony

Randgold Resources Randgold

Silver Lake Resources Lake Silver

Kingsgate Consolidated Kingsgate

Evolution Mining Limited Mining Evolution

Detour Gold Corporation Gold Detour

Independence Group NL Group Independence

Regis Resources Limited Resources Regis

OceanaGold Corporation OceanaGold

NovaGold Resources Inc. Resources NovaGold

Pan American Silver Corp. Silver American Pan

Zijin Mining Group Co., Ltd Co., Group Mining Zijin Inc. Resources Gold Torex

Agnico Eagle Mines Limited Mines Eagle Agnico Corporation Nevada Franco Northern Star Resources Ltd Resources Star Northern

Ev/Rsc Inc. Resources Standard Silver CC adj EV/Rsc

Au Au only 24 2016March Compania de Minas Buenaventura Minas de Compania Source: Company data, Credit Suisse estimates

50

24 March 2016

Peer Group AISC Margin and Cost Comparison Figure 56: FY15 AISC margin (A$/oz) Figure 57: FY15 Cash Costs margin (A$/oz)

FY15 AISC margin (A$/oz) FY15 Cash Costs margin (A$/oz) 700 1,000 623 900 892 568 600 787 535 533 514 800 494 714 698 500 453 432 408 603 597 596 589 388 600 566 400

300 400

200 200 100

0 0 AQG OGC PRU NCM IGO RRL EVN SBM SAR NST AQG OGC IGO NCM EVN SAR RRL NST SBM PRU

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Figure 58: Gold miners AISC costs ($/oz) Figure 59: FY15 production and costs

Gold miners AISC costs (A$/oz) 1,200 1,139 Koz Production and costs A$/oz 2,423 1,065 2,500 1,200 1,036 1,049 994 1,007 1,000 941 951 870 2,000 1,000 769 800 1,500 800

600 1,000 600

400 573 419 438 500 310 377 400 168 212 205 200 149 0 200 IGO SAR PRU AQG RRL SBM OGC EVN NST NCM 0 AQG OGC NCM IGO RRL SBM EVN PRU NST SAR Production (Koz) AISC costs (A$/oz) RHS C1 costs (A$/oz) RHS

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Price Earnings Ratios We forecast FY2016 EPS of $0.23. At the current share price this equates to a forward P/E of ~ 10.6x which is relatively evenly priced against global peers and comfortably below anticipated mine life. In comparison to a number of its peers, St Barbara trades on a low 12-month forward PE multiple relative to its implied remaining mine life. For the purpose of this comparison implied mine life is based on FY15 reserves divided by FY15 production. St Barbara is cheap relative to its peers when compared on this basis. This indicates that St Barbara could experience a PE re-rating if the company's performance continues to be strong and if mine life is extended with implementation of alternative haulage. Newcrest also trades at PER discount to mine life, but not as great as that of SBM, reflecting, in our view, the market applying a time discount to Newcrest’s implied 30-year life and recognising that a portion of Newcrest’s reserves require substantial capital investment to be brought to production.

St Barbara Mining (SBM.AX / SBM AU) 51 24 March 2016

Figure 60: 12mF PER, implied life of mine. Bubble size represents proportionate EV

35 NCM.AX

30 IGO.AX

25 mF - 31 20 10 3 8 15 RRL.AX 6 Consensus12 PER SAR.AX 11 10 9 EVN.AX NST.AX SBM.AX 5

0 0 5 10 15 20 25 30 35 Life of mine (yrs)

Source: Company data, Credit Suisse estimates, IBES

Figure 61: PER bands Date Period End Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 EPS A$ -0.43 -0.51 0.04 0.23 0.25 0.28 0.29 0.29

Earnings multiples 6.0 x -2.61 -3.09 0.26 1.36 1.50 1.68 1.78 1.75 8.0 x -3.48 -4.12 0.34 1.81 2.00 2.25 2.37 2.34 10.0 x -4.35 -5.14 0.43 2.26 2.50 2.81 2.97 2.92 12.0 x -5.22 -6.17 0.52 2.72 3.00 3.37 3.56 3.51 14.0 x -6.09 -7.20 0.60 3.17 3.51 3.93 4.15 4.09 16.0 x -6.96 -8.23 0.69 3.62 4.01 4.49 4.74 4.68 Source: Company data, Credit Suisse estimates, IBES

St Barbara Mining (SBM.AX / SBM AU) 52 24 March 2016

Figure 62: PER price bands

SBM PER implied valuation

$5.00

$4.00

$3.00

$2.00 2.15

$1.00

$0.00

-$1.00

-$2.00

-$3.00 30/06/14 30/06/15 30/06/16 30/06/17 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x Share price Target price

Source: Company data, Credit Suisse estimates

SBM has traded around 10x PER but recent share gains has it currently trading in excess of this multiple at ~11x our CSf FY16 eps of $0.23. Our $2.15/sh target price represents 9.5x our CSf FY16 earnings.

Figure 63: Peer PER bands

60.0 56.0 52.0 48.0 44.0 40.0 36.0 32.0

28.0 PER (X) PER 24.0 20.0 16.0 12.0 8.0 4.0

0.0

Roxgold

McEwen

Ramelius

Centamin

Red 5 Ltd 5 Red

Wesdome

DRDGOLD

Gold Fields Gold

Guyana Gold Guyana

B2Gold Corp. B2Gold Lake Kirkland

SEMAFO Inc. SEMAFO

Teranga Gold Teranga

China Gold Intl Gold China

Doray Minerals Doray

Primero Mining Primero

Medusa Mining Medusa

Richmont Mines Richmont Mining Resolute

LakeShore Gold LakeShore

Saracen Mineral Saracen

Newcrest Mining Newcrest

Newmont Mining Newmont

AuRico Gold Inc. Gold AuRico

AngloGold Ashnti AngloGold

Beadell Resource Beadell

Alacer Gold Corp. Gold Alacer

Highland Gold Mn Gold Highland

Premier Gold Mns Gold Premier

Centerra Gold Inc. Gold Centerra

St Barbara Limited Barbara St

Harmony Gold Mng Gold Harmony

Randgold Resources Randgold

Silver Wheaton Corp. Wheaton Silver

Zhaojin Mining Limited Mining Zhaojin Resources Lake Silver

Kingsgate Consolidated Kingsgate

Evolution Mining Limited Mining Evolution

Detour Gold Corporation Gold Detour

Independence Group NL Group Independence

Regis Resources Limited Resources Regis

OceanaGold Corporation OceanaGold

Saudi Arabian Mining Co. Mining Arabian Saudi

Torex Gold Resources Inc. Resources Gold Torex Ltd Co., Group Mining Zijin Northern Star Resources Ltd Resources Star Northern 12mF 24mF

Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 53 24 March 2016

Figure 64: Peer EV/EBITDA multiples

24.0

22.0

20.0

18.0

16.0

14.0

12.0

10.0 EV / EBITDA (X) / EBITDAEV 8.0

6.0

4.0

2.0

0.0

Roxgold

IAMGold

Ramelius

Centamin

Red 5 Ltd 5 Red

New Gold New

Wesdome

DRDGOLD

Gold Fields Gold

Alamos Gold Alamos

Hecla Mining Hecla

Goldcorp Inc. Goldcorp

B2Gold Corp. B2Gold Lake Kirkland

SEMAFO Inc. SEMAFO

Yamana Gold Yamana Gold Teranga

Timmins Gold Timmins

Petropavlovsk

Eldorado Gold Eldorado

Doray Minerals Doray Mining Primero

Hochschild Min Hochschild Mining Medusa

Perseus Mining Perseus

Shandong Gold Shandong

Richmont Mines Richmont

Resolute Mining Resolute

Saracen Mineral Saracen

Newcrest Mining Newcrest

Newmont Mining Newmont

AngloGold Ashnti AngloGold

Beadell Resource Beadell

Alacer Gold Corp. Gold Alacer Corp Gold Barrick

Highland Gold Mn Gold Highland

Centerra Gold Inc. Gold Centerra

St Barbara Limited Barbara St

Nevsun Resources Nevsun Corp. Gold Kinross

Harmony Gold Mng Gold Harmony

Compania de Minas… de Compania

Randgold Resources Randgold

Silver Wheaton Corp. Wheaton Silver

Zhaojin Mining Limited Mining Zhaojin Resources Lake Silver

Kingsgate Consolidated Kingsgate

Evolution Mining Limited Mining Evolution

Detour Gold Corporation Gold Detour

Independence Group NL Group Independence

Regis Resources Limited Resources Regis

OceanaGold Corporation OceanaGold

Saudi Arabian Mining Co. Mining Arabian Saudi

Pan American Silver Corp. Silver American Pan

Zijin Mining Group Co., Ltd Co., Group Mining Zijin Inc. Resources Gold Torex

Franco Nevada Corporation Nevada Franco Limited Mines Eagle Agnico 12mF 24mF Ltd Resources Star Northern Silver Standard Resources Inc. Resources Standard Silver Source: Company data, Credit Suisse estimates

St Barbara Mining (SBM.AX / SBM AU) 54 24 March 2016

HOLT® Applying key Credit Suisse Research analyst estimates through our HOLT® framework results in a A$2.37 valuation. This valuation initially uses five years of key analyst estimates to drive CFROI® forecasts, before proprietary algorithms determine the “rate of fade” towards the long-run average CFROI (6%). Credit Suisse's HOLT® platform analyses companies based on their cash generating ability and overall potential for value creation. CS HOLT® calculates company's cash flow- based return metric, CFROI®, to measure its return on investment then charts it against the firm’s cost of capital. Returns that exceed their cost of capital create value. Link to HOLT Lens scenario: https://holtlens.credit-suisse.com/dal/Tzu3gm5R1LaqgCR

Figure 65: HOLT® Relative Wealth Chart, Valuation, Risks and Momentum

Source: Company data, Credit Suisse HOLT®

St Barbara Mining (SBM.AX / SBM AU) 55 24 March 2016

Figure 66: HOLT® Sales, Margins and Turns Figure 67: HOLT® Valuation breakdown

Source: Company data, Credit Suisse HOLT® Source: Company data, Credit Suisse HOLT®

St Barbara Mining (SBM.AX / SBM AU) 56

24 March 2016 Reference Appendix Our new “Total return forecast in perspective” chart helps visualize Credit Suisse and consensus views of a company’s 12-month return within the context of forecasting risks and its historical trading pattern: 12mth Volatility is calculated as the annualised standard deviation of weekly total return series over the past 12 months. It illustrates variability of stock returns; in other words, risk. The way to think about it is that one would rather take 10% forecast return from a stock that has 20% volatility, than from the stock that has 40% volatility. The shaded area shows the one standard deviation range based on past 12 months volatility. In statistical terms, once you make a number of brave assumptions, there is a 68% probability that the share price will end up inside that range in 12 months’ time. 52wk Hi-Lo is maximum and minimum daily closing price over the past 52 weeks. It is often handy to know the price momentum especially when the stock is trading close to its highs and lows: Is the stock trading close to its peak? Is the momentum against the stock? *Consensus is IBES consensus supplied by Thomson Reuters. IBES is a survey of sell side research analysts, collecting a few dozen data points such as EPS, DPS, Sales, Target Price, ROE and so on. *Mean is the average of target returns, while the shaded area around the mean represents the range of estimates from the lowest to the highest estimate. This aids visualisation of a number of important factors such as: the range of analyst estimates; where Credit Suisse’s estimates on this stock sit relative to consensus; and where the share price is relative to consensus mean and consensus range target. Target return is calculated as capital gain plus forecast dividend yield (net) over the next 12 months. For "CS tgt" we have used Credit Suisse’s target price and Credit Suisse forecast for 12-month forward dividend, grossed up for franking. For the consensus mean and range, we have used consensus target price and consensus dividend forecasts for 12 month forward.

St Barbara Mining (SBM.AX / SBM AU) 57

24 March 2016

Companies Mentioned (Price as of 23-Mar-2016) ABM Resources (ABU.AX, A$0.047) Alacer Gold Corp. (AQG.AX, A$2.57) AngloGold Ashanti (ANGJ.J, R201.36) AuRico Gold Inc. (AUQ.N, $2.86) Avocet Mining (AVM.L, 4.325p) B2Gold Corp. (BTO.TO, C$2.04) Banro (BAA.TO, C$0.37) Barrick Gold Corp (ABX.N, $13.27) Beadell Resource (BDR.AX, A$0.28) Centamin (CEY.L, 85.9p) Centerra Gold Inc. (CG.TO, C$5.83) Chesapeake Gold (CKG.V, C$2.0) Coeur San Miguel (PZG.TO, C$1.52) Compania de Minas Buenaventura (BVN.N, $6.24) DRDGOLD (DRDJ.J, R6.29) Dacian Gold (DCN.AX, A$1.75) Detour Gold Corporation (DGC.TO, C$18.86) Doray Minerals (DRM.AX, A$0.805) Dundee Precious (DPM.TO, C$2.15) Eldorado Gold (EGO.N, $3.14) Eldorado Gold YT (EGU.TO^C12, C$13.08) Endeavour Mining (EVR.AX, A$7.42) Evolution Mining Limited (EVN.AX, A$1.585) Exeter Resource (XRC.TO, C$0.82) Focus Minerals (FML.AX, A$0.37) Franco Nevada Corporation (FNV.N, $60.7) Gabriel (GBU.TO, C$0.21) Gold Fields (GFIJ.J, R56.1) Gold One Intl (GDO.AX^A14, A$0.3) Goldcorp Inc. (GG.N, $15.41) Golden Star (GSS.A, $0.43) Goldgroup Mining (GGA.TO, C$0.08) Gryphon Minerals Limited (GRY.AX, A$0.081) Guyana (GUY.TO, C$4.78) Harmony Gold (HARJ.J, R57.93) Highland Gold Mn (HGM.L, 66.0p) Hochschild Min (HOCM.L, 90.0p) IAMGold (IAG.N, $2.02) Independence Group NL (IGO.AX, A$2.96) KGL Resources (KGL.AX, A$0.1) Kingsgate Consol (KCN.AX, A$0.385) Kinross Gold Corp. (KGC.N, $2.94) Kirkland Lake (KGI.TO, C$8.4) Kula Gold (KGD.AX, A$0.031) LakeShore Gold (LSG.TO, C$2.01) Lingbao Gold (3330.HK, HK$1.55) MacPhersons (MRP.AX, A$0.1) Medusa Mining (MML.AX, A$0.71) Nevsun Resources (NSU.TO, C$4.42) New Gold (NGD.A, $3.46) Newcrest Mining (NCM.AX, A$16.61) Newmont Mining (NEM.N, $24.98) Northern Star Resources Ltd (NST.AX, A$3.61) Norton Gold (NGF.AX, A$0.25) NovaGold Resources Inc. (NG.TO, C$6.54) OceanaGold Corporation (OGC.AX, A$3.6) Orbis Gold (OBS.AX, A$0.7) Osisko Mining Corporation (OSK.TO^F14, C$8.64) PMI Gold (PVM.AX^B14, A$0.365) Pan American Silver Corp. (PAA.TO, C$13.52) Perseus Mining (PRU.AX, A$0.4) Petropavlovsk (POG.L, 7.25p) Phoenix Gold (PXG.AX, A$0.15) Pilot Gold (PLG.TO, C$0.47) Polymetal (PMTLq.L^C12, $17.5) Polyus Gold (PLZLq.L^A12, $16.26) Premier Gold Mns (PG.TO, C$3.1) Primero Mining (P.TO, C$2.38) Ramelius (RMS.AX, A$0.355) Randgold Resources (RRS.L, 6390.0p) Red 5 Ltd (RED.AX, A$0.08) Regis Resources Limited (RRL.AX, A$2.41) Resolute Mining (RSG.AX, A$0.565) Richmont Mines (RIC.TO, C$6.92) Romarco (R.TO, C$0.46) Roxgold (ROG.V, C$0.88) Rubicon Min (RMX.TO, C$0.07) SEMAFO Inc. (SMF.TO, C$4.37) Sabina Gold (SBB.TO, C$0.92) Saracen Mineral (SAR.AX, A$0.97) Seabridge (SEA.TO, C$13.52) Shandong Gold (600547.SS, Rmb27.05) Silver Lake Res (SLR.AX, A$0.32) Silver Standard Resources Inc. (SSO.TO, C$7.03) Silver Wheaton Corp. (SLW.TO, C$22.65) St Barbara Mining (SBM.AX, A$2.19, NEUTRAL[V], TP A$2.15) Sulliden Gold (SUE.TO, C$1.47)

St Barbara Mining (SBM.AX / SBM AU) 58

24 March 2016 Tanami Gold (TAM.AX, A$0.042) Teranga Gold (TGZ.TO, C$0.63) Timmins Gold (TMM.TO, C$0.3) Torex Gold Resources Inc. (TXG.TO, C$1.62) Troy Resources (TRY.AX, A$0.52) Volta Resources (VTR.TO^L13, C$0.33) Wesdome (WDO.TO, C$1.68) Wits Gold (WGRJ.J, R11.4) Yamana Gold (AUY.N, $2.89) Zhongjin Gold (600489.SS, Rmb11.11) Zijin Mining Group Co., Ltd (2899.HK, HK$2.42)

Disclosure Appendix Important Global Disclosures I, Michael Slifirski, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior t o 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 1 2-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral ma y be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors. Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 57% (39% banking clients) Neutral/Hold* 31% (26% banking clients) Underperform/Sell* 11% (45% banking clients) Restricted 1% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock r atings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors. Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and- analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

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Target Price and Rating Valuation Methodology and Risks: (12 months) for St Barbara Mining (SBM.AX) Method: Our $2.15/sh target price of St Barbara is set using DCF analysis. Our NPV is underpinned by Credit Suisse house commodity and FX assumptions which include a gold price of US$1,150/oz for CY16, US$1,175/oz for CY17, US$1,200/oz for CY18 and US$1,200/oz long term. Our long term FX assumption is USDAUD $0.75. We apply a 5% discount rate which is consistent with all our Australian gold (operating) exposures. Our Neutral rating is set in accordance with Credit Suisse guidelines and reflects our expectation of negligible capital returns to shareholders on a 12-month view based on our NPV-driven target price versus the prevailing share price. Our rating also reflects commodity price risk inherent in gold companies. Running the spot gold price (US$1222/oz at FX $0.755) through our model generates a similar NPV to our base case, therefore on balance, we view a Neutral rating as appropriate noting both up and downside risk exists to our forecasts depending on directional gold price moves. Risk: The risks to St Barbara achieving our $2.15/sh target price and Neutral rating include but are not limited to: Gold price risk, cost inflation risk, mine life risk, operating risk, construction risk, exchange rate risk and geopolitical risk. We also note that implicit in our base case valuation and target price is the development of Gwalia deeps and the Simberi Sulphide project. There is risk to our forecasts for SBM if these projects to do progress to development and perform as per our modelled expectations.

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