ST BARBARA LIMITED — Annual Report 2003

Sep 11, 2003

ACN 009 165 066

ASX SHAREHOLDERS REPORT

Enquiries regarding this report may be directed to:

Stephen W. Miller

Executive Chairman Telephone $(08)$ 9476 5555 Overseas $+61894765555$ $\alpha$ Colin G. Jackson Investor Relations Telephone 0417 929 107

St Barbara Mines Limited Level 2, 16 Ord Street West Perth Western Australia 6005 $(08)$ 9476 5555 Telephone Overseas +61 8 9476 5555

Dollar values in this report are Australian Dollars unless otherwise stated.

Comparatives are twelve months to 30 June 2003.

St Barbara is a dedicated gold company listed on both the Australian Stock Exchange and the AIM (London Stock Exchange) - ticker symbol SBM $-$ with over 12.000 shareholders.

Preliminary Final Result 2002/03 and Outlook

Preliminary Final Result

• Earnings before interest, tax, depreciation, amortisation and change in accounting policy \$3.7 million
• Gold sales 98,080 ounces (down 7 percent)
• realised gold price \$572 per ounce (up \$57/oz)
• net cash cost \$465 per ounce (down \$217/oz)
• Net loss after tax \$32.7 million after charging:
• change in accounting policy \$9.9 million
• non-cash charges of \$18.4 million (including \$10 million in accelerated write-down of underground operations)
• The Company remains unhedged

Outlook

• Finance first two months of 2004 financial year
• Short term debt reduced \$5.0 million
• Production 11,380 ounces at net cash cost of \$438 per ounce, and realised price \$537 per ounce
• Production Schedule
• Paddys Flat No. 2 and No. 3 low grade stockpiles to provide 1.8 million tonnes of mill feed supplemented by Bluebird low grade stockpiles
• Development plans for Paddys Flat high grade orebodies particularly Prohibition well advanced
• Paulsens Project
• Revised development plan to examine smaller tonnage - higher grade underground mine.

Stephen W. Miller

Executive Chairman

12 September 2003

Financial details in the form of Appendix 4E are attached.

ACN 009 165 066

The Company recorded a consolidated net loss of \$32.7 million (of which \$28.3 million were non-cash charges), with higher gold sales revenue offset by accelerated mine development writedown of underground operations and a change in accounting policy.

Financial Performance

Gold revenue from operations was \$1.6 million higher (up 3 percent). A higher realised price (\$572 per ounce, up 11 percent) off-set lower sales (98.080 ounces, down 7 percent). The higher realised price reflected an improved spot gold price and 66 percent of sales at spot (previous year nil). There were no outstanding hedge positions at the year end.

The net operating cost of production (equivalent to the Gold Institute total cash cost) at \$575 per ounce reflected difficulties with both underground mines. In the last three months of the year costs were significantly lower at \$433 per ounce based on high throughput of Paddys Flat low grade stockpiles.

Production and Sales Statistics
Period 12 months to 30 June	2003	2002
Ore mined (tonnes)	483.041	1.386.084
Ore milled (tonnes)	2,284,599	1,888,829
Grade milled (g/t)	1.47	1.84
Recovery (%)	89.7	92.3
Gold produced (ounces)	96,611	103,246
Gold sold (ounces)	98.080	105.844

Production Cost Statement (\$/oz) Modified Gold Institute Standard

Period 12 months to 30 June	2003	2002
Mine site cash costs	448	669
State royalties	17	13
Net Cash Cost	465	682.
Mine development capital cost
amortisation	103	(127)
Inventory movements	7	2
Net Operating Cost	575	553
Realised Gold Price	572	515
Spot Price Average	572	552

St Barbara calculates cost of production using a modified Gold Institute Standard. The modification is designed to clearly identify the actual cash cost incurred, which is then normalised depending upon over or under development against the life-of-mine plan. The resultant 'net operating cost' per ounce is equivalent to the GI 'total cash cost' per ounce.

Simplified Statement of Financial Performance re maas

12 UVUJ
for the year ended 30 June	2003	2002
Gold revenue from operations	56,110	54,516
Other revenue	1.494	31.977
Earnings before interest, tax,
depreciation and amortisation and
change in accounting policy	3,717	16,112
Change in accounting policy	(9.897)
Earnings before interest, tax,
depreciation and amortisation	(6.180)	16,112
Depreciation	(2.750)	(2,044)
Amortisation and write-down of mine
development	(15,641)	(28, 176)
Earning/(loss) before interest and tax	(24, 571)	(14, 108)
Interest (expense)	(5.449)	(3.941)
Income tax expense	(2,965)	$\overline{\phantom{a}}$
Outside equity interests	252	155
Net profit/(loss)	(32.733)	(17.894)

Segmental Analysis

or the year ended 30 June	2003	2002
Results from Operations	2.899	9.150
Amortisation and depreciation	(8.319)	(24.470)
Profit on sale of shares and property, plant and equipment Change in accounting policy	818 (9.897)	11,557 $\theta$
Write-downs
Mine development costs	(10.072)	(5,750)
Exploration expenditure		(3,381)
AIM listing costs		(1,214)
Earnings/(loss) before interest and tax	(24.571)	(14.108)

Prepared in accordance with

Australian Generally Accepted Accounting Principles.

Other revenue, in the corresponding twelve month period, was dominated by the sale of the shareholding in Goldfields Limited for \$26.7 million, and a net profit of \$9.2 million.

Earnings before interest, tax, depreciation and amortisation of \$3.7 million was determined after state royalties (\$1.7 million) and before an accounting charge of \$9.9 million (\$4.4 million relating to prior year capitalised exploration expenditures) associated with reconciliation to Canadían GAAP to achieve alignment with proposed merger partner Defiance Mining Corporation.

ACN 009 165 066

Financial Performance (continued)

Higher interest costs reflect an increase in RCF loan drawdown and associated extension fees.

Accelerated amortisation of underground mine development costs due to early closure and sterilisation of ore reserves recorded charges of \$7.6 million against Gibraltar and \$2.6 million against Great Northern Highway.

Cash Flow Statement

Available cash (net of security bonds) decreased to \$0.6 million.

Capital allocations included Great Northern Highway and Gibraltar underground mine development (\$3.9 million) and Mulla Mulla and regional exploration (\$1.9 million).

Additional security bonds (\$1.7 million) previously secured by guarantee were cash backed during the period.

Loan and finance repayments, principally the Taipan convertible note (\$7.4 million) was financed from cash and a further drawdown of the RCF loan.

Financial Position

Total shareholders' equity decreased by \$22.1 million, reflecting the change in accounting policy and accelerated amortisation of underground mine development. Current assets include the investment in Dioro Exploration NL at cost (\$4.9 million). Working capital at year end was negative \$7.4 million. Interest bearing debt at balance date was \$24.0 million. This comprises the fully drawn RCF \$12.0 million loan (10 percent interest per annum which was satisfied by the issue of shares), the Ocean Resource Capital Holdings convertible loan (\$7.3 million with accrued interest at a rate of 12 percent per annum or exchangeable into shares at 8 cents per share) and lease commitments. The RCF loan was reduced by \$5.0 million in July 2003 on receipt of the proceeds on sale of the Dioro shares.

Three placements of shares (64.3 million) were made for working capital principally to UK institutions. Ocean Resource Capital Holdings part exercised their convertible note (15.0 million).

Simplified Cash Flow Statement
(\$'000)
for the year ended 30 June	2003	2002
Operating Activities
Cash receipts	63.043	59,968
Payments - suppliers/employees	(64, 593)	(81, 280)
Other (net)	(341)	(1,709)
Net cash flow	(1.891)	(23,021)
Investing Activities
Payments –
exploration/evaluation/development	(13,050)	(10, 558)
Payments - listed investments	(365)	(4,526)
Investment sold		26,736
Sale --property/plant/equipment (net).	777	2,551
Net cash flow	(12, 638)	14.203
Financing Activities
Loan and finance repayments	(2.263)	(14, 295)
Repayment of convertible loan	(7, 372)	w
Restricted cash (bonds)	(1,736)
Proceeds from borrowings	9.830	9.653
Issue of securities	7,635	19,088
Share buy-back		(1.066)
Net cash flow	6.094	13,380
Cash - beginning of period	9.032	4,470
Net change in cash	(8,435)	4.562
Cash - end of period	597	9,032

Simplified Statement of Financial Position
(\$7000)
As at 30 June 2003	2003	2002
Assets
Current	19.164	24,384
Non-current	58.128	77.654
Tota!	77,292	102.038
Liabilities
Current	26,610	29,868
Non-current	12.709	12.062
Total	39,319	41,930
Net assets	37.973	60.108
Share capital & reserves	129,493	118,643
Accumulated losses	(91,520)	(58, 787)
Outside equity interests		252
Total shareholders' equity	37.973	60.108

ACN 009 165 066

Financial Result 2002/03 and Outlook

OUTLOOK Financial Position

The financial position was improved immediately post the year end with a \$5 million repayment of the interest bearing RCF loan (leaving an outstanding \$7 million). This was financed by the sale of the Dioro Exploration investment.

Meekatharra Production

Production for the first eight months of 2003/04 financial year will be dominated by the processing of Paddys Flat No. 2 and No. 3 low grade stockpiles at a throughput rate of approximately 3.0 million tonnes per annum to deliver 40,000 ounces. Evaluation of several small nearby shallow oxide pit possibilities continues.

The production schedule for the balance of the year includes Bluebird low grade stockpiles (0.46 Mt) and Batavia open pit (0.12 Mt) for an additional recovered 20,000 ounces.

Detailed evaluation of the higher grade underground Vivians, Consols, Prohibition and Mickey Doolan deposits at Paddys Flat is ongoing. The priority is Prohibition where the orebody has reasonable width and is hosted in a competent banded iron formation. Subject to board approval, decline development is planned to commence in the first quarter of 2004, with the first ore deliveries early in 2004/05 financial year.

Meekatharra Exploration

Gold Fields have completed their minimum expenditure of \$0.75 million and withdrawn from the JV. Upgraded targets will be scheduled for further exploration.

Paulsens Development

A revised mine development plan (smaller tonnage-higher grade underground mine with either toll or contract processing) with substantial reductions in start-up capital nears completion.

Defiance Merger Proposal

The merger between St Barbara and the now listed Defiance Mining Corporation remains on the agenda notwithstanding advancement of their Tasiast Project and recent equity raisings.

CORPORATE INFORMATION

Board of Directors and Executive
Management
S. W. Miller Executive Chairman

• K. A. Dundo ........ Non-Executive Director
• G. B. Speechly..... Non-Executive Director
• H. G. Tuten .......... Non-Executive Director
• A. D. Rule .............. Chief Financial Officer and Company Secretary

Registered Office

Level 2, 16 Ord Street West Perth WA 6005

Telephone: +61 8 9476 5555
Facsimile: +61 8 9476 5500
Email: perth@stbarbara.com.au
Website:

Stock Exchange Listings

Australian Stock Exchange AIM Board of London Stock Exchange SBM Ticker Symbol:

Issued Capital

As at the date of this report, issued capital is 431,464,225 shares.

There were 44,329,772 listed options, exercisable at 30 cents up until 29 February 2004 and 71,682,563 unlisted options exercisable at various prices between 11 cents and 40 cents up to 17 January 2008.

Major Shareholders

National Nominees..........................11.16% Westpac Custodians ......................... 10.64% Resource Capital Fund II LP .............7.89% Strata Mining Corporation Ltd.........7.46% ANZ Nominees ...................................

Substantial Shareholders

RAB Europe Fund Ltd...................... 10.43% GAM International Growth Fund .... 9.41% Resource Capital Fund II LP .............7.89% Strata Mining Corporation Ltd.........7.46%

Shareholder Enquiries

Matters related to shares held, change of address and tax file numbers should be directed to:

Australia:

Advanced Share Registry Services Level 7, 200 Adelaide Terrace Perth WA 6000 Telephone: .................................... Facsimile: .............................. +61 8 9221 7869

United Kingdom:

Computershare Investor Services PLC PO Box 435. Owen House 8 Bankhead Crossway North Edinburgh EH11 4BR Telephone: ......................... +44 870 703 6088 Facsimile: .......................... +44 870 703 6142

ADR Depositary

The Bank of New York 101 Barclay Street New York NY10286 USA Telephone: ........................... +1 212 815 2218

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E

Financial year ended 30 June 2003

This preliminary final report presents consolidated financial information relating to St Barbara Mines Limited and its controlled entities for the year ended 30 June 2003. The comparative information is for the year ended 30 June 2002.

Results for announcement to the market

		$\%$		5000
Revenues from ordinary activities	down	33	to	57,604
Loss from ordinary activities after tax attributable to members	down	82	tο	32,733
Net loss for the period attributable to members	down	82	to	32,733
Dividends	Amount per security		Franked amount per security
Final dividend	Nil		Nil
Previous corresponding period	Nil		Nil
Record date for determining entitlements to the dividend			Not applicable

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E

Financial year ended 30 June 2003

STATEMENT OF FINANCIAL PERFORMANCE

	30 June 2003 A\$'000	30 June 2002 A\$'000
Revenue from sale of gold	56,111	54,516
Other revenues from outside operating activities	1,493	31,977
Total revenue from ordinary activities	57,604	86,493
Changes in inventories of finished goods	(2,453)	(278)
Raw materials and consumables used	(11, 543)	(13, 425)
Cost of investments sold		(17,506)
Cost of property, plant and equipment sold	(184)	(1,964)
Cost of tenements sold		(186)
Contract mining expense	(11, 442)	(9,146)
Contract cartage	(4,845)	(3,036)
Contract milling	(2,616)	(2,483)
Contract maintenance	(1,163)	(1,473)
Contract labour and consultants	(1,396)	(3,606)
Tenement rent and rates	(1,110)	(1,224)
Royalty	(1,728)	(1,386)
Employee expenses	(8,626)	(10,788)
Exploration drilling and assay expenditure	(1,803)
Exploration consultant expenditure	(1, 447)
Cumulative effect of exploration write off prior to 1 July 2002	(4, 422)
Shares issued for native title	(616)
AIM admission costs		(1,214)
Other expenses from ordinary activities	(8,390)	(2,666)
Earnings/(loss) before interest, tax, depreciation and amortisation (EBITDA)	(6,180)	16,112
Amortisation of mining development expenses	(15, 641)	(22, 426)
Write down of mining development expenses		(5,750)
Depreciation and amortisation expenses	(2,750)	(2,044)
Earnings/(loss) before interest and tax (EBIT)	(24, 571)	(14, 108)
Borrowing costs	(5, 449)	(3,941)
(Loss) from ordinary activities before income tax	(30,020)	(18,049)
Income tax expense	(2,965)
Net (loss) after income tax	(32,985)	(18,049)
Net (loss) attributable to outside equity interests	252	155
Net (loss) attributable to members of the Company	(32, 733)	(17, 894)

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E

Financial year ended 30 June 2003

STATEMENT OF FINANCIAL POSITION

	30 June 2003 A\$'000	30 June 2002 A\$'000
Assets
Current assets
Cash assets	597	9,032
Restricted cash	280
Receivables	3,688	3,287
Other financial assets	4,891
Inventories	4,264	5,151
Assets held for resale	4,194	5,409
Other	1,250	1,505
	19,164	24,384
Non-current assets
Restricted cash	3,293	1,837
Other financial assets		4,526
Property, plant and equipment	8,380	9,906
Other	83	232
Deferred tax assets		2,965
Mining properties	46,372	58,188
	58,128	77,654
	Total Assets 77,292	102,038
Liabilities
Current liabilities
Payables	10,561	15,905
Interest bearing liabilities	15,151	12,926
Provisions	898	1,037
	26,610	29,868
Non-current liabilities
Interest bearing liabilities	8,833	9,393
Provisions	3,876	2,669
	12,709	12,062
	Total Liabilities 39,319	41,930
	Net Assets 37,973	60,108
Equity
Contributed equity	127,534	118,213
Option reserve	1,959	430
Accumulated losses	(91, 520)	(58, 787)
Parent entity interest	37,973	59,856
Outside equity interest		252
	Total Equity 37,973	60,108

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E Financial year ended 30 June 2003

STATEMENT OF CASH FLOWS

	30 June 2003 A\$'000	30 June 2002 A\$'000
Cash Flows from Operating Activities
Cash receipts in the course of operations	63,043	59,968
(inclusive of goods and services tax)
Payments to suppliers and employees	(64, 593)	(81,280)
(inclusive of goods and services tax)
Other cash receipts		405
Interest received	292	124
Borrowing costs paid and gold lease fees	(68)	(1,842)
Finance charges - finance leases	(340)	(270)
hire purchase agreements	(225)	(126)
Net cash flows (used in) operating activities operating	(1,891)	(23, 021)
Cash Flows from Investing Activities
Payments in respect of exploration, evaluation and development	(13,050)	(10, 558)
Payments for property, plant and equipment	(205)	(1,749)
Cash received from investments sold		26,736
Payments for investment in listed securities	(365)	(4,526)
Cash received from sale of property, plant and equipment	982	4,300
Net cash flows provided by / (used in) investing activities	(12, 638)	14,203
Cash Flows from Financing Activities
Principal repayments under secured loans		(12,700)
Repayment of convertible loan	(7, 372)
Restricted cash	(1,736)
Share buy back		(1,066)
Proceeds from borrowings	9,830	9,653
Net proceeds from issue of securities	7,635	19,088
Principal repayments - finance leases	(1,204)	(1,078)
hire purchase agreements	(1,059)	(517)
Net cash flows provided by financing activities	6,094	13,380
Net increase / (decrease) in cash	(8, 435)	4,562
Cash at the beginning of the financial year	9,032	4,470
Cash at the end of the financial year	597	9,032

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E Financial year ended 30 June 2003

Reconciliation of loss after income tax to net cash outflow from operating activities is as follows:

	30 June 2003 A\$'000	30 June 2002 A\$'000
Operating loss after income tax	(32,985)	(18,049)
Write down FITB	2,965
Depreciation and amortisation	2,828	2,044
Development mining expenses		(35,201)
Mining properties change in accounting policies	9,897
Amortisation and write down of mining expenses	15,641	28,176
Write down of exploration tenements		3,381
(Profit)/loss on sale of tenements		(24)
Write down of feasibility studies		924
(Profit) on sale of property, plant and equipment	(818)	(2,336)
(Profit)/loss on sale of shares		(9,221)
Borrowing expenses paid with shares	1,015	1,000
Convertible note interest	303	669
Issuance of options in lieu facility fees	1,529	430
Changes in assets and liabilities:
(Increase)/decrease in trade & other debtors $\overline{\phantom{a}}$	969	(1,185)
Decrease/(increase) in inventories $\overline{\phantom{a}}$	887	1.159
Decrease/(increase) in other assets ٠	172	377
Increase in trade & other creditors, employee entitlements ä, and provisions	(4, 294)	4,835
Net cash inflow from operating activities	(1,891)	(23,021)

ABN 36 009 165 066

Preliminary Final Report - Appendix 4E Financial year ended 30 June 2003

DIVIDENDS

No dividend has been declared.

STATEMENT OF ACCUMULATED LOSSES

	30 June 2003 A\$'000	30 June 2002 A\$'000
Accumulated losses at the beginning of the financial period	(58.787)	(40.893)
Net profit attributable to members of the Company	(32.733)	(17.894)
Accumulated losses at the end of the financial period	(91,520)	(58,787)

NET TANGIBLE ASSETS PER SHARE

		30 June 2003	30 June 2002
Net tangible assets	A\$'000	-77.292	99.073
Fully paid ordinary shares on issues		415,553,303	319,758,267
Net tangible asset per share	AS	0.186	0.309

CONTROLLED ENTITIES

No controlled entities were acquired or disposed of during the period.

COMMENTARY ON RESULTS

The commentary on the results and activities is set out on the attached announcement.

EARNINGS PER SHARE

	30 June 2003 cents/share	30 June 2002 cents/share
Basic and diluted earnings per share	(0.08)	(0.08)
	A\$'000	A\$'000
Retained (loss) for the year used in the calculation of basic earnings per share	(32,733)	(17, 894)
	Number	Number
Weighted average number of fully paid ordinary shares on issue during the year used in the calculation of basic earnings per share	409,326,900	228,375,474

SEGMENT REPORTING

The consolidated entity operates predominantly in the gold mining industry in Australia.

The consolidated entity's head office is in Australia.

AUDIT REPORT

This report is based on accounts which are in the process of being audited.