Annual Report 2014 ST BARBARA LIMITED 30 JUNE 2014 St Barbara at a glance ˃ St Barbara has three mining operations: ˃ Leonora Operations in Western Australia ˃ Simberi Operations in Papua New Guinea ˃ Gold Ridge Operations in the Solomon Islands ˃ Leonora Operations comprises the Gwalia and King of the Hills underground mines. The Gwalia underground mine is St Barbara’s cornerstone asset. The Gwalia deposit has an Ore Reserve grade of 8.2 g/t Au, an expected mine life of at least nine years, and remains open at depth. Gwalia compares favourably against other ASX listed gold mines on grade, reserve size, production and cost per ounce ˃ Simberi Operations has an open pit mine, and a recently completed plant expansion. The target production run‐rate is 100,000 ounces per year, following completion of identified post‐commission works which are now underway. Oxide and sulphide Ore Reserves provide the potential for Simberi to become a long‐term cash generating asset ˃ Gold Ridge Operations remains suspended following torrential rain and floods in April 2014, and the Company is negotiating to transfer Gold Ridge to the Solomon Islands Government ˃ St Barbara has one of the largest Ore Reserve positions of any mid‐tier ASX listed gold company, with 5.2 million ounces of contained gold. In FY15: ˃ deep drilling is planned at Gwalia, which remains open at depth ˃ prospective near mine targets are planned to be drilled at Simberi ˃ St Barbara’s primary safety measure, total recordable injury frequency rate, reduced 32% to 4.1 at June 2014, the lowest on record for the Company Gold Production Total Recordable Injury 374,402 ounces 3% Frequency Rate 4.1 32% 2014 2014 2013 2013 2012 2012 2011 2011 2010 2010 0 100 200 300 400 0 5 10 15 Page ii ST BARBARA LIMITED 30 JUNE 2014 St Barbara at a glance Simberi Simberi PNG • Low strip ratio open pit mine Gold Ridge Leonora • Target annualised Solomon production 100 koz Two underground mines: Islands • Near mine targets for • Gwalia Mine exploration FY15F production: 180 ‐ 200 koz, estimated Australia mine life 9+ years based Gold Ridge on reserves East Lachlan • King of the Hills Mine Leonora Gawler • Operation suspended FY15F production: April 2014 60 ‐ 70 koz • Negotiating transfer to Solomon Islands Government 3,600 km2 of prospective tenements across Australia, Papua New Guinea and the Solomon Islands Near mine targets at existing operations at Leonora and Simberi Prospective greenfields copper‐gold targets at Gawler, SA Prospective exploration area for copper‐gold porphyry mineralisation at East Lachlan, NSW FY14 Gold Production 374 koz King of the Hills 71 koz Gwalia Simberi 214 koz 44 koz Gold Ridge 45 koz Ore Reserves as at 30 June 2014 Mineral Resources & Ore Reserves (Moz) Ore Reserves Mt g/t Au koz 13.2 13.2 5.2 5.2 Leonora, Western Australia 10.3 6.9 2,280 7.6 2.5 Gold Ridge, Solomon Islands 14.6 1.4 670 Simberi, Papua New Guinea 44.2 1.6 2,210 FY 12 FY 13 FY 14 FY 12 FY 13 FY 14 Total Reserves all Regions 69.1 2.3 5,160 Mineral Resources Ore Reserves Refer to page 110 for Ore Reserves and Mineral Resources Statements Page iii ST BARBARA LIMITED 30 JUNE 2014 Contents 3 Directors’ Report 41 Financial Report 110 Ore Reserves and Mineral Resources Statements 118 Corporate Governance Statement 125 Shareholder Information Page iv ST BARBARA LIMITED 30 JUNE 2014 Directors’ Report and Financial Report For Year Ended 30 June 2014 Page 1 ST BARBARA LIMITED 30 JUNE 2014 TABLE OF CONTENTS DIRECTORS’ REPORT .............................................................................................................................................. 3 Directors ......................................................................................................................................................... 3 Principal activities ........................................................................................................................................... 3 Dividends ........................................................................................................................................................ 3 Overview of Results ........................................................................................................................................ 3 Significant changes in the state of affairs ..................................................................................................... 10 Business strategy and future prospects ........................................................................................................ 11 Regulatory environment ............................................................................................................................... 14 Information on Directors .............................................................................................................................. 15 Meetings of Directors ................................................................................................................................... 20 Remuneration report (Audited) .................................................................................................................... 21 Indemnification and insurance of officers .................................................................................................... 38 Proceedings on behalf of the company ........................................................................................................ 38 Environmental management ........................................................................................................................ 38 Non‐audit services ........................................................................................................................................ 39 Auditor independence .................................................................................................................................. 39 Events occurring after the end of the financial year .................................................................................... 39 Rounding of amounts ................................................................................................................................... 39 Auditor’s Independence Declaration ............................................................................................................ 40 FINANCIAL REPORT .............................................................................................................................................. 41 Page 2 ST BARBARA LIMITED 30 JUNE 2014 DIRECTORS’ REPORT The Directors present their report on the “St Barbara Group”, consisting of St Barbara Limited and the entities it controlled at the end of, or during, the financial year ended 30 June 2014. Directors The following persons were Directors of St Barbara Limited at any time during the year and up to the date of this report: x S J C Wise Non-executive Chairman x R S Vassie Managing Director & CEO (appointed 1 July 2014) x T J Lehany Managing Director & CEO (resigned 30 June 2014) x D W Bailey Non-executive director x I Scotland Non-executive director x E A Donaghey Non-executive director (resigned 30 June 2014) x P C Lockyer Non-executive director (resigned 31 March 2014) x R K Rae Non-executive director (resigned 28 February 2014) x T Netscher Non-executive director (appointed 17 February 2014) The qualifications, experience and special responsibilities of the Directors are presented on pages 15 to 19. Principal activities During the year the principal activities of the Group were mining and the sale of gold, mineral exploration and development. There were no significant changes in the nature of activities of the Group during the year. Dividends There were no dividends paid or declared during the financial year. Overview of Results The Group reported a statutory net loss after tax of $500,831,000 (2013: statutory net loss after tax of $191,854,000) for the year ended 30 June 2014, including Significant Items totaling a net loss after tax of $406,872,000 (2013: net loss of $221,139,000) which included an asset impairment and write down charge. Underlying net loss after tax before significant items was $93,959,000 (2013: net profit of $29,285,000). The full year review of St Barbara’s asset carrying values, as a result of the continuing poor performance from the Simberi gold mine and suspension of operations at the Gold Ridge mine, gave rise to the impairment of the carrying value of these gold mines and write down of assets associated with the operations. Cash on hand (excluding restricted cash) at 30 June 2014 was $79,407,000 (2013: $117,383,000). Total interest bearing borrowings were $339,576,000 (2013: $328,092,000). Page 3 ST BARBARA LIMITED 30 JUNE 2014 DIRECTORS’ REPORT The consolidated result for the year is summarised as follows: 30 June 14 30 June 13 $’0007 $’0007 Sales revenue (including discontinued operations)(7) 533,828 568,443 EBITDA(3)(6) (including significant items) (331,634) (150,628) EBIT(2)(6) (including significant items) (440,325) (251,630) (Loss) before tax(4) (483,307) (270,711) Statutory (Loss)1) after tax for the year (500,831) (191,854) Sales revenue (excluding discontinued operations) 533,828 511,840 Total net significant items after tax (406,872) (221,139) EBITDA(3)(6) (excluding significant items) 73,019 141,051 EBIT(2)(6) (excluding significant items) (35,672) 48,239 (Loss)/profit before tax – excluding significant items(4) (78,014) 34,836 Underlying net (Loss)/profit after tax(5)(6) for