ST BARBARA MINES LIMITED

ACN 009 165 066

ASX SHAREHOLDERS REPORT

Enquiries regarding this report may be directed to:

Eduard Eshuys

Managing Director Telephone $(08)$ 9476 5555 Overseas +61 8 9476 5555

St Barbara Mines Limited ACN 009 165 066 Level 2, 16 Ord Street West Perth Western Australia 6005 Telephone (08) 9476 5555 Overseas +61 8 9476 5555

Financial Report for 30 June 2004

Attached please find St Barbara Mines Limited's Financial Report for the period ending 30 June 2004.

Regards

Eduard Eshuys Managing Director & CEO

30 September 2004

ST BARBARA MINES LIMITED

ABN 36 009 165 066

and its controlled entities

FINANCIAL REPORT 30 JUNE 2004

TABLE OF CONTENTS	Page N°
DIRECTORS' REPORT
STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004	11
STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2004	12
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004	13
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004	14
DIRECTORS' DECLARATION	52
INDEPENDENT AUDIT REPORT TO THE MEMBERS	53

This financial report covers both St Barbara Mines Limited as an individual entity and the consolidated entity consisting of St Barbara Mines Limited and its controlled entity.

St Barbara Mines Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

St Barbara Mines Limited Level 2, 16 Ord Street West Perth WA 6005

A description of the nature of the consolidated entity's operations and its principal activities is included in the review of operations and activities in the directors report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the company. All press releases, financial reports and other information are available on our website: www.stbarbara.com.au.

DIRECTORS' REPORT

Your Directors present their report on the consolidated entity consisting of St Barbara Mines Limited ("Company", "St Barbara" or "parent entity") and the entities it controlled ("consolidated entity") at the end of, or during, the financial year ended 30 June 2004 and the Audit Report thereon.

DIRECTORS

The names of Directors who held office during the financial year or up to the date of this report (unless otherwise stated) are:

S J Colin Wise (aged 58) - Non-Executive Chairman LL.B. FAICD, FAusIMM Appointed Director on 20 July 2004 Member of the Audit Committee Member of the Remuneration Committee

Mr Wise is an experienced corporate lawyer and consultant with significant expertise in the mining and exploration industry and corporate sector. He spent 24 years with WMC Limited, 10 of which as General Counsel and subsequently, 4 years as Counsel to the New York law firm of Howard, Smith and Levin LLP. He has had extensive practical experience in Australia and internationally with a wide range of corporate, operational and legal matters. He is a Fellow of both the Australian Institute of Company Directors and of the Australasian Institute of Mining and Metallurgy. He is a non-executive director of Southern Health, the largest health service in Melbourne.

Eduard Eshuys (aged 59) - Managing Director and Chief Executive Officer

B.Sc, FAICD, FAusIMM Appointed Director on 20 July 2004 Member of the Remuneration Committee

Mr Eshuys is a geologist with 36 years of experience in mineral exploration, development and operation of gold and nickel mines in Australia. He has a credible record in exploration having led the exploration teams that discovered several major gold deposits, including Plutonic, Bronzewing and Jundee. He brought Bronzewing and Jundee as well as the Cawse Nickel mine into production. Mr Eshuys was awarded the Geological Society of Australia's Joe Harms medal for distinction in exploration success and project development in 1996. He is a Fellow of both the Australian Institute of Company Directors and the Australian Institute of Mining and Metallurgy.

Henderson (Hank) G Tuten (aged 56) - Non-Executive Director

B.A. (Econ) Appointed Director on 26 March 2002 Chairman of the Audit Committee

Mr Tuten is actively involved in a consolidated entity of private equity funds as a founding partner. These are the Resource Capital Funds, the e-Century Capital Fund and the CIP Fund. He spent over fifteen years with the N.M. Rothschild and Sons consolidated entity. During that period, he was the chief executive officer of Rothschild Australia Limited, Rothschild North America Inc. and Continuation Investments N.V., the private equity vehicle for Rothschild Continuation Holdings A.G. consolidated entity. Prior to that, he was a commercial banker with the Philadelphia National Bank. Mr Tuten serves on several boards in connection with his investment activities. He graduated from the University of Virginia with a B.A. in Economics.

DIRECTORS' REPORT

Mark K Wheatley (aged 43) - Non-Executive Director

B.E.((Chem) Hons 1), MBA Appointed Director on 28 November 2003 Chairman of the Remuneration Committee

Mr Wheatley has 25 years resource industry experience within Australia and overseas. In his 17 years with BHP until 1996, he was involved in engineering, research, business development and commercial roles within the steel, minerals and corporate business groups. He then joined BT and became a Senior Vice President within the Global Metals and Mining Group where he was involved in project finance and corporate advisory activities over the next 3 years. He moved to the gold industry in 1999 where, as General Manager Corporate Development with Goldfields/Aurion Gold Limited and a period as Acting Managing Director of Goldfields, he completed a number of mergers and acquisitions that underpinned the company's ten fold increase in market capitalisation before it was taken over by Placer Dome Inc. in 2002. Mr Wheatley is currently Executive Chairman of Southern Cross Resources Inc., a company which is listed on the Toronto Stock Exchange.

Stephen W Miller Appointed Director on 12 March 1999	Removed on 20 July 2004
Kevin A Dundo Appointed Director on 26 March 2002	Resigned on 18 July 2004
G Brian Speechly Appointed Director on 9 July 1997	Resigned on 28 November 2003
James T McClements Appointed alternate director for H G Tuten	Resigned on 10 July 2003

PRINCIPAL ACTIVITIES

The principal activities of St Barbara Mines Limited and entities controlled by it (collectively known as the consolidated entity) during the financial year ended 30 June 2004, were gold production, gold and mineral exploration, pastoral activities, and investment.

RESULTS OF OPERATIONS

The consolidated operating loss after tax for the year ended 30 June 2004 attributable to members of the Company was \$24,315,000 (2003: \$32,733,000 loss).

Commentary on the operations and the results of those operations are set out below:

		12 months to 30 June 2004	12 months to 30 June 2003
Ore mined	tonnes	$\overline{\phantom{a}}$	483.041
Ore milled	tonnes	1,711,300	2,284,599
Head grade	g/t	0.84	1.47
Recovery	%	82.2	89.7
Gold produced	ounces	37,985	96,611
Gold sold	ounces	40,232	98.080
Cash cost	\$/ounce	559	465

Mining activity at Meekatharra was solely focussed on treatment of the Paddys Flat low grade stockpiles. These resources were depleted by mid-May. Mining and haulage operations ceased in April and by the end of June the process plant operations were suspended and prepared for a 6 - 12 month program of general maintenance and re-configuration.

DIRECTORS' REPORT

A pre-feasibility evaluation of the Paddys Flat Underground Project was completed, with all necessary approvals received, allowing this project to proceed once further reserves have been established. A review of all previous exploration activitites and evaluations are required prior to any substantial capital expenditure.

DIVIDENDS

The Directors do not recommend the payment of a dividend.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:

On 7 July 2003, the Company issued 15,910,922 fully paid ordinary shares to Resource Capital Funds $\bullet$ II L.P. (RCF) at price of \$0.0374 per share in satisfaction of interest of \$595,068.
On 7 July 2003, the Company issued the following options, with an expiry date of 7 January 2007, to RCF in satisfaction of the corporate debt facility fee:
$\circ$ 5,834,004 options exercisable at \$0.2125;
594,308 options exercisable at \$0.2086; $\ddot{\circ}$
2,918,376 options exercisable at \$0.2124; and $\circ$
17,430,243 options exercisable at \$0,1138. $\circ$
On 22 September 2003, the Company issued 12,000,000 fully paid ordinary shares at \$0.08 per share to raise \$960,000 (before issue expenses) for working capital.
On 31 October 2003, the Company announced that its subsidiary. Taipan Resources NL (now NuStar Mining Corporation Limited or "NuStar") had received commitments to finance the Paulsens Project. This was facilitated by the Company accepting equity of 352 million NuStar shares at \$0.05 cents per share in full satisfaction of the \$17.6 million intercompany loan between the Company and NuStar. together with the placement of an additional 420 million NuStar shares at \$0.05 per share to raise \$21 million of equity capital. The Company's equity position in NuStar after these transactions was 54.8% (previously 88.3%).
On 28 November 2003, the Company issued 95,684,932 fully paid ordinary shares to RCF funds at a price of \$0.08 per share in satisfaction of a corporate debt of \$7 million and interest of \$654,795.
On 28 November 2003, the Company issued the following options with an expiry date of 24 May 2008 to RCF in satisfaction of the corporate debt facility fee:
o 257,857 options exercisable at \$0.2125;
o 485,953 options exercisable at \$0.2086;
2,386,296 options exercisable at \$0.2124; and $\circ$
14,252,357 options exercisable at \$0.1138. $\Omega$
On 5 December 2003, the Company issued 35,000,000 fully paid ordinary shares to Ocean Resources Capital Holdings Limited at a price of \$0.08 per share to satisfy unsecured convertible notes totalling \$2.8 million.
On 17 March 2004, the Company announced the sale of a Demag Komatsu large face shovel. This resulted in net proceeds of \$2.1 million, which was to be used for working capital.

LIKELY DEVELOPMENTS

Likely developments in the operations of the consolidated entity include NuStar Mining Corporation Limited developing the Paulsens Project and the Company evaluating and conducting limited exploration at Meekatharra. Otherwise likely developments are described in the following section, Events Subsequent to 30 June 2004 in this report.

EVENTS SUBSEQUENT TO 30 JUNE 2004

Since 30 June 2004 the following has occurred:

On 15 July 2004, the Company announced the conversion by Ocean Resources Capital Holdings plc of the face value of its convertible note of \$4.4 million into 55,000,000 ordinary shares at \$0.08.

DIRECTORS' REPORT

On 19 July 2004, the Company announced the resignation of Kevin Dundo as a Director with effect $\bullet$ from 18 July 2004.
On 20 July 2004, a General Meeting of the shareholders of the Company was held and the following resolutions were carried:
$\circ$ Mr Eduard Eshuys was elected as a Director:
$\circ$ Mr Colin Wise was elected as a Director: and
$\circ$ Mr Stephen Miller was removed as a Director.
On 20 July 2004, the Company issued 42,050,000 fully paid ordinary shares at \$0.04 per share to raise \$1,682,000 for working capital.
On 20 July 2004, the Company issued 17,480,547 fully paid ordinary shares to Ocean Resources Capital Holdings Limited at \$0.046 per share in satisfaction of interest of \$804,105.
On 23 July 2004, the Company issued 26,591,453 fully paid ordinary shares to Resource Capital Fund II L.P. at \$0.046 per share to raise \$1,223,207 for working capital.
On 23 July 2004, the Company announced that Mr Eduard Eshuys was appointed as Managing Director and Mr Colin Wise was appointed as Non-Executive Chairman. The new Board appointed Deloitte to conduct a review of the Company, including the terms of employment of the former Executive Chairman.
On 12 August 2004, the Company announced that following the completion of the initial review by Deloitte, agreement was reached with the former Executive Chairman, Mr Stephen Miller, for his employment to end with effect from 4 August 2004. This resulted in a termination payment of \$257,543 inclusive of all statutory entitlements (less applicable taxes). Mr Miller then resigned from the Boards of all wholly owned subsidiaries of the Company and from the Boards of NuStar and its subsidiary.
On 24 August 2004, NuStar announced that a detailed mining plan had established a Mining Reserve of 1,202,000 tonnes at $10.66$ g/t - containing 412,100 ounces of gold.
On 20 September 2004, NuStar announced that an agreement was reached in principle to acquire a royalty over the Paulsens Gold Project and an interest in the Wyloo Joint Venture - both held by the Company.
On 20 September 2004, the new Board announced that it had completed a review of the financial position and operations of the Company and had decided to divest a substantial part of the Company's shareholding in NuStar with the following four separate but interrelated transactions:
an initial sale of 100 million NuStar shares to third parties at not less than \$0.04 per share within $(a)$ seven business days;
the sale of the Paulsens 5% royalty owned by the Company to NuStar for not less than $(b)$ \$5.1 million and the sale of the Company's interest in the Pelican Joint Venture (adjacent to Paulsens) to NuStar:
the grant of an option to Claymore Capital Pty Limited (as arranger of these transactions) to $(c)$ purchase 100 million NuStar shares at \$0.05 per share at any time up to three months after the initial sale; and
$(d)$ a Share Swap of NuStar shares for Company shares on the basis of 1.25 NuStar shares for each Company share. The Company intends to offer a maximum of 240 million NuStar shares and to cancel the Company shares received through the Share Swap by way of a capital reduction. Should more shareholders wish to accept the Share Swap than the number of NuStar shares available, then shareholder acceptances will be scaled back on a pro rata basis.

The transactions described in (b) and (d) are subject to shareholder approval and the completion of an independent expert's report. Shareholders will be asked to approve these transactions at the company's AGM to be held in late November 2004 subject to all necessary statutory procedures being completed within this time.

DIRECTORS' REPORT

As a consequence of the above transactions, the Company will:

immediately retire an existing secured debt of \$3.5 million; $\cap$
have cash of approximately \$8 million after payments to creditors and other liabilities: $\circ$
retain approximately 102 million NuStar shares or just over 10% of the issued capital; and $\cap$
have reduced the issued capital of the Company from 715 million shares to 523 million shares. $\circ$ . should the maximum of 240 million NuStar shares be swapped.

In addition to the above transactions, the Company has:

commenced a comprehensive review and data compilation of the Paddy's Flat tenements (100% owned) in the Meekatharra region:
reviewed the Aurogenic and Elara joint ventures which require the joint venture partners to $\sim$ spend approximately \$6.5 million during the coming twelve months: and
$\circ$ entered into negotiations with a third party for the use of the Blue Bird plant at Meekatharra which will at least cover the care and maintenance costs, while the operations are suspended.

Other than the matters above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years.

MEETINGS OF DIRECTORS

The meetings of the Company's Board of Directors and each Board committee held during the year ended 30 June 2004, and the numbers of meetings attended by each Director were:

	Board			Audit		Remuneration
	А	в	А	в	А	в
K A Dundo (resigned 18 July 2004)	9	9	3	3	0	0
S W Miller (removed 20 July 2004)	9	9		$\star$	$\star$	$\star$
G B Speechly (resigned 28 November 2003)	Ω	5	申		0	0
H G Tuten	6	9	2	3
M K Wheatley (appointed 28 November 2003)	4	4	Ŵ	ŵ	0	0
JT McClements (alternate for H G Tuten resigned	0	O			∗	$\star$

10 July 2003)

$A =$ Number of meetings attended

$B =$ Number of meetings held during the time that the Director held office or was a member of the committee during the year

$*$ = Not a member of the relevant committee

In addition there were 16 written resolutions approved by the Board during the year.

DIRECTORS' REPORT

DIRECTORS' INTERESTS IN SHARES AND OPTIONS

Particulars of Directors' interests and of persons connected with them (within the meaning of section 34b of the Corporations Act 2001) in shares of the Company as at the date of this report are as follows:

Directors	No. of Shares
S J C Wise	Nìl
E Eshuys	Nìl
H G Tuten $(1)$	Nil
M K Wheatley	Nil
Connected Persons:
RCF ⁽¹⁾	156,333,470

$\left( 1\right)$ Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF

Particulars of Directors' interests and of persons connected with them (within the meaning of section 34b of the Corporations Act 2001) in options of the Company as at the date of this report are as follows:

Directors	Date of Grant	Shares under option	Exercise Price	Expiry Date
S C J Wise	Nil	Nil	Nil	Nil
E Eshuys	Nil	Nil	Nil	Nil
H G Tuten $(1)$	Nil	Nil	Nil	Nil
M K Wheatley $^{(2)}$ 20 February 2003 Connected Persons		1,000,000	\$0.11	31 December 2005
RCF ⁽¹⁾ 12 February 2002		157,938	\$0.2125	7 February 2005
	5 March 2002	373,893	\$0.2125	5 March 2005
	2 April 2002	449,638	\$0.2125	2 April 2005
	17 May 2002	470,589	\$0.2125	20 May 2005
	17 May 2002	36,118	\$0.2086	20 May 2005
	4 June 2002	499,597	\$0.2125	3 June 2005
	4 June 2002	50,894	\$0.2086	3 June 2005
	4 June 2002	88,680	\$0.2124	3 June 2005
	15 July 2002	483,482	\$0.2125	15 July 2005
	15 July 2002	49,252	\$0.2086	15 July 2005
	15 July 2002	241,854	\$0.2124	15 July 2005
13 August 2002		499,597	\$0.2125	13 August 2005
13 August 2002		50,894	\$0.2086	13 August 2005
13 August 2002		249,917 499,597	\$0.2124 \$0.2125	13 August 2005
6 September 2002 6 September 2002		50,894	\$0.2086	6 September 2005 6 September 2005
6 September 2002		249,917	\$0.2124	6 September 2005
15 October 2002		483,482	\$0.2125	15 October 2005
15 October 2002		49,252	\$0.2086	15 October 2005
15 October 2002		241,854	\$0.2124	15 October 2005
20 February 2003		1,000,000 1,482,677	\$0.1100 \$0.2125	31 December 2005 7 July 2006
7 January 2003 7 January 2003		151,040	\$0.2086	7 July 2006
7 January 2003		741,686	\$0.2124	7 July 2006
7 January 2003		3.177,890	\$0.1138	7 July 2006
	7 July 2003	5,834,004	\$0.2125	7 January 2007
	7 July 2003	594,308	\$0.2086	7 January 2007
	7 July 2003	2,918,376	\$0.2124	7 January 2007
28 November 2003	7 July 2003	17,430,243 14,252,357	\$0.1138 \$0.1138	7 January 2007 24 May 2008
28 November 2003		485,953	\$0.2086	24 May 2008
28 November 2003		2,386,296	\$0.2124	24 May 2008
28 November 2003		257,857	\$0.2125	24 May 2008
		55,990,026

$(1)$ Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF $(2)$

RCF has agreed with Mr Wheatley to transfer up to 1,000,000 options exercisable at \$0.11 which expire on 31 December 2005. 500,000 were vested when he was appointed as a director, 250,000 after 6 months service on the Board and 250,000 after 12 months on the Board.

DIRECTORS' REPORT

DIRECTORS' AND EXECUTIVES' EMOLUMENTS

Remuneration is based on industry standards and set to attract qualified and experienced directors and senior executives. Recommendations are made to the Board on salary levels, packaging options, employee benefits and conditions. Remuneration of directors and executives is not linked to the performance of the Company.

The Remuneration Committee meets annually to review directors' fees, senior executive salary packages and salary ranges for the organisation.

Details of the nature and amount of each element of the emoluments of each director of St Barbara Mines Limited and each of the five specified executive officers of the Company and the consolidated entity during the year ended 30 June 2004 are set out on the following tables:

Non-Executive Directors of St Barbara Mines Limited

		Primary			Post - employment	Equity
	Cash. salary & fees	Cash. bonus	Non monetary benefits	Super- annuation	Retirement benefits	Options issued	Total
	\$	\$	\$	\$	\$	\$	\$
$K A$ Dundo (i)	100,000	$\omega$	$\mathbf{u}$	9.000	$\overline{\phantom{a}}$	$\mathbf{u}$	109.000
$H G$ Tuten (ii)		$\mathbf{w}$	u.	w	$\overline{\phantom{a}}$	$\mathbf{a}$
M K Wheatley	27,135	$\mathbf{w}$	u.	2.446	$\overline{\phantom{a}}$	$\blacksquare$	29,581
G B Speechly (resigned 28/11/03)	20,833	$\omega$	w	1,875	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	22,708

Mr Dundo's remuneration includes \$50,000 fees and \$4,500 superannuation recovered from NuStar $(i)$ Mining Corporation Limited.
Mr Tuten has declined to receive directors fees $(ii)$

Executive Directors of St Barbara Mines Limited

	Primary				Post - employment	Equity
	Cash. salary & fees	Cash. bonus	Non monetary benefits	Super- annuation	Retirement benefits	Options issued	Total
	S	\$	S	\$	\$	\$	S
S W Miller Executive $\Delta$ is a form of $\Delta$	400,000	$\omega$	11.324	80,000	$\blacksquare$	$\mathbf{m}$	491,324

Execut Chairman

DIRECTORS' REPORT

Other executives of St Barbara Mines Limited and group

	Primary			Post - employment	Equity
	Cash, salary & fees	Cash Bonus	Non monetary benefits	Super- annuation	Retirement benefits	Options issued	Total
Company	\$	\$	\$	\$	\$	\$	\$
R T Calnan Gen Mgr - Project & Business Development	169,000		11,446	62,600	×.		243,046
P J Richardson Manager- Meekatharra Gold Operations	150,000		10,789	15,000			175,789
G C Miller Group Manager - Exploration	145,000		3,320	21,750			170,070
C W Davis Manager - Paulsens Project	142,622		9,048	21,393			173,063
E L Boyd ⁽ⁱ⁾ Manager - Corporate & Commercial, Company Secretary	120,698		214	9,511			130,423
A D Rule ⁽ⁱ⁾ Chief Financial Officer, Coy Secretary	87,796		3320	11,875	71,250		174,241
Consolidated
B Lambert ⁽ⁱⁱⁱ⁾ General Manager- NuStar Mining Corporation Limited	88,375		713	8,838		8,167	106,093

(i) Mr Boyd was appointed on 15 December 2003.

(ii) Mr Rule terminated employment as Chief Financial Officer on 30 November 2003 and resigned as Company Secretary on 15 December 2003.

(iii) Mr Lambert commenced with NuStar on 21 January 2004.

OPTIONS

Options over ordinary shares of St Barbara Mines Limited are as follows:

	As at 30 June 2004	As at the date of this report
Listed share options - see Note 19(b)	Nil	Nil
Unlisted share options - see Note 19(c)	84.840.026	84.840.026

No options were exercised during or since the end of the financial year.

DIRECTORS' REPORT

No options over unissued ordinary shares of St Barbara Mines Limited were granted during or since the end of the financial year to any of the Directors of the Company and the consolidated entity. However, 44.159.394 options over unissued ordinary shares were granted to RCF, an organisation connected to Mr H Tuten, as follows:

Date of Grant	Shares Under Option	Exercise Price	Expiry Date
7 July 2003	5,834,004	\$0.2125	7 January 2007
7 July 2003	594,308	\$0.2086	7 January 2007
7 July 2003	2,918,376	\$0.2124	7 January 2007
7 July 2003	17,430,243	\$0.1138	7 January 2007
28 November 2003	14,252,357	\$0.1138	24 May 2008
28 November 2003	485,953	\$0,2086	24 May 2008
28 November 2003	2,386,296	\$0.2124	24 May 2008
28 November 2003	257,857	\$0.2125	24 May 2008

No options over unissued ordinary shares of St Barbara Mines Limited were granted during or since the end of the financial year to the executive officers of the Company and the consolidated entity.

OFFICERS' INDEMNITIES AND INSURANCE

The Company has agreed to indemnify the following directors and officers of the Company, Mr S J C Wise, Mr E Eshuys, Mr H G Tuten, Mr M K Wheatley and Mr E L Boyd, against all liabilities to another person and the Company that may arise from their position as directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a wilful breach of duty. The agreement stipulates that the Company will meet the full amount of such liabilities including costs and expenses.

The Company has paid or agreed to pay a premium in respect of a contract insuring directors and officers of the Company. That contract of insurance prohibits the Company disclosing the nature of the liability insured against and the amount of the premium paid therefore.

OCCUPATIONAL HEALTH, SAFETY, WELFARE AND THE ENVIRONMENT

Promoting and maintaining high standards of safe work practice and a safe and healthy workplace are integral to our business.

Commitment

The Company is committed to the concept of sustainable development which requires economic growth to be balanced by good stewardship and the protection of human health and the environment in which we live and work.

Maintenance of a system of safe work practices, a pro-active approach to control and management of hazards, and the development and improvement of management performance standards are integral to this approach.

Injury Frequency

This year Meekatharra Gold Operations reported 5 Lost Time Injuries (LTI) for the twelve months to 30 June 2004. The Lost Time Injury Frequency Rate (LTIFR) for the operation was 19.4 (rolling twelve month average), compared with the industry average of 5.

This represents a reduced performance compared to the previous year.

Incident investigations showed that 3 of the 5 Lost Time Incidents related to work conducted in contract drilling and contract demobilization tasks. These investigations highlighted the requirement for changes to the systems of work in these areas, which have been implemented.

DIRECTORS' REPORT

Occupational Health, Safety and Welfare

Programs over the year focussed on the continuous improvement in participation of all employees in occupational health and safety issues management and decision making. This was supported by training in the areas of Hazard Identification and Emergency Response Planning, together with site OH&S Representative training, in particular targeting improved communications at all levels.

The workforce commitment to safety performance will continue to focus on improvement of safety systems and awareness which will target the reduction of the LTIFR to or below the industry average.

Environmental Management

The Company recognises that gold mining operations should be developed and managed on the basis of sustainable criteria and must contribute to the benefit of all stakeholders.

Environmental programs conducted during the year included:

Continued focus on site waste management, in particular management and disposal of hydrocarbon $\circ$ products.
In addition to statutory monitoring requirements, regular self-audits were conducted throughout the year $\Omega$ to monitor progress and to identify areas which required further management focus.
Progressive rehabilitation earthworks were completed on most recently mined areas, with further work $\Omega$ conducted on historical mining areas.

Rehabilitation

Mine site rehabilitation objectives are directed towards ensuring that the physical structures that remain after mine closure do not impose a long term hazard to public safety or the environment and that the mined area achieves the nominated post mining land use.

During the past year continued significant progress was made toward fulfilling these rehabilitation objectives. Work was undertaken across a range of sites which included rehabilitation earthworks programs at the three Paddys Flat low grade stockpile sites, making safe historic mine workings, waste dump slope profiling, capping with topsoil/oxide material and deep ripping in particular at the South Junction site.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the Financial Report and Directors' Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

AUDITOR

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

Signed in accordance with a resolution of the Board of Directors.

E ESHUYS MANAGING DIRECTOR & CEO

Dated at Perth this 30th day of September 2004

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated		Company
	Notes	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Revenue from sale of gold	3	21,972	56,111	21,972	56,111
Other revenues from outside operating activities	3	10,460	1,493	10,871	2,411
Total revenue from ordinary activities		32,432	57,604	32,843	58,522
Changes in inventories of finished goods		(3,691)	(999)	(3,691)	(999)
Raw materials and consumables used		(9,359)	(12, 263)	(9,359)	(12, 263)
Carrying value of net assets and non-current assets sold		(6, 849)	(184)	(6, 849)	(184)
Contract mining, cartage, milling, maintenance, labour and consultants		(8,685)	(22, 195)	(8,000)	(22, 195)
Tenement rent and rates		(1,329)	(1, 110)	(1,329)	(1, 110)
Royalty cost expenses		(671)	(1,728)	(671)	(1,728)
Employee benefits expenses		(6, 165)	(8,626)	(5,876)	(8,576)
Exploration drilling and assay expenditure		(4,360)	(3,250)	(1,566)	(1,796)
Cumulative effect of exploration write off prior to 1 July 2002			(4, 422)		(750)
Shares issued for native title			(616)
Provision for diminution in investment in controlled entities				(12, 348)	(4,081)
Write down of mining development expenses	4	(6, 497)		(6, 497)
Write down of exploration tenements	4	(318)		(318)
Depreciation and amortisation expenses	4	(2,726)	(18, 391)	(2,721)	(18, 347)
Other expenses from ordinary activities		(2,930)	(8,391)	(1,806)	(6,385)
Earnings / (loss) before interest and tax (EBIT)		(21, 148)	(24, 571)	(28, 188)	(19, 892)
Borrowing cost expense	4	(4,080)	(5, 449)	(3,741)	(5,078)
Loss from ordinary activities before related income tax expense		(25, 228)	(30, 020)	(31, 929)	(24, 970)
Income tax expense	5		(2,965)		(2,965)
Loss from ordinary activities after related income tax expense		(25, 228)	(32, 985)	(31, 929)	(27, 935)
Net loss attributable to outside equity interests	21	913	252
Net loss attributable to members of the Company	20	(24, 315)	(32, 733)	(31, 929)	(27, 935)
Total changes in equity attributable to members of the Company other than those resulting from transactions with owners as owners		(24, 315)	(32, 733)	(31, 929)	(27, 935)
Basic and diluted (loss) per share (cents per share)	32	(4.70)	(8.00)

The above Statements of Financial Performance should be read in conjunction with the accompanying notes.

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2004

		Consolidated			Company
	Notes	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Assets
Current assets
Cash assets	6	12,849	597	1	595
Restricted cash	7		280		280
Receivables	8	1,512	3,688	374	3,688
Other financial assets	14	188	4,891	21,888	4,891
Inventories	9	777	4,264	777	4,264
Assets held for resale	10	58	4,194	58	4,094
Other	11	630	1,250	599	1,219
		16,014	19,164	23,697	19,031
Non-current assets
Restricted cash	7	3,108	3,293	2,765	3,293
Receivables	8			1,140	18,240
Other financial assets	14				16,635
Property, plant and equipment	12	4,947	8,380	3,821	7,253
Other	11		83		83
Mining properties	13	42,401	46,372	13,538	19,224
		50,456	58,128	21,264	64,728
Total Assets		66,470	77,292	44,961	83,759
Liabilities
Current liabilities
Payables	15	6,691	10,561	6,067	10,555
Interest bearing liabilities	16	9,832	15,151	8,932	15,151
Provisions	17	751	898	751	898
		17,274	26,610	15,750	26,604
Non-current liabilities
Payables	15			11,484	11,484
Interest bearing liabilities Provisions	16	75	8,833	75	8,833
	17	4,269	3,876	4,269	3,876
		4,344	12,709	15,828	24,193
Total Liabilities		21,618	39,319	31,578	50,797
Net Assets		44,852	37,973	13,383	32,962
Equity
Contributed equity	18	139,400	127,534	139,400	127,534
Option reserve	19(a)	2,443	1,959	2,443	1,959
Accumulated losses	20	(115, 835)	(91, 520)	(128, 460)	(96, 531)
Parent entity interest		26,008	37,973	13,383	32,962
Outside equity interest	21	18,844
Total Equity		44,852	37,973	13,383	32,962

The above Statements of Financial Position should be read in conjunction with the accompanying notes.

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated			Company
	Notes	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Cash Flows from Operating Activities
Cash receipts in the course of operations		24,684	63,043	24,507	62,802
(inclusive of goods and services tax)
Payments to suppliers and employees		(31, 712)	(63,256)	(27, 799)	(63, 268)
(inclusive of goods and services tax)
Interest received		1,343	292	1,056	292
Borrowing costs paid and gold lease fees		(2,662)	(68)	(1,732)
Finance charges - finance leases		(162)	(340)	(162)	(340)
hire purchase agreements		(133)	(225)	(133)	(225)
Net cash flows provided by / (used in) operating activities	30	(8, 642)	(554)	(4, 263)	(739)
Cash Flows from Investing Activities
Payments in respect of exploration, evaluation and development		(5,043)	(13,050)	(3,327)	(9,984)
Payments for property, plant and equipment		(42)	(205)	(38)	(205)
Cash received from tenements sold		1,020		1,000
Cash received from investments sold		4,984		4,984
Payments for investment in listed securities		(500)	(365)		(365)
Net funds from controlled entities				490	(10, 254)
Proceeds from sale of property, plant and equipment		3,584	982	3,483	982
Net cash flows provided by / (used in) investing activities		4,003	(12, 638)	6,592	(19, 826)
Cash Flows from Financing Activities
Principal repayments under secured loans		(5,000)		(5,000)
Repayment of convertible loan			(7, 372)
Movement in restricted cash		465	(1,736)	808	(1,736)
Proceeds from borrowings		4,500	8,493	3,500	8,493
Proceeds from issue of shares and other equity securities		20,017	7,635	860	7,635
Principal repayments - finance leases		(2,315)	(1,204)	(2,315)	(1,204)
hire purchase agreements		(776)	(1,059)	(776)	(1,059)
Net cash flows provided by / (used in) financing activities		16,891	4,757	(2,923)	12,129
Net increase / (decrease) in cash		12,252	(8, 435)	(594)	(8, 436)
Cash at the beginning of the financial year		597	9,032	595	9,031
Cash at the end of the financial year	6	12,849	597	1	595
Non-cash financing and investing activities	30
Financing facilities	31

The above Statements of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the financial statements for the year ended 30 June 2004

$\mathbf{1}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

It is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.

The following accounting policies have been used by the consolidated entity for the periods presented:

$(a)$ Going Concern

The consolidated financial statements have been prepared on a going concern basis. At 30 June 2004 the consolidated entity's current liabilities exceeded its current assets by \$1.26 million.

Further, cash assets on consolidation of \$12.85 million at 30 June 2004 were held substantially by the 54% owned NuStar Mining Corporation Limited ("NuStar") (formerly Taipan Resources NL) and are not available to meet the debts and commitments of other members of the consolidated entity.

The controlled entity, NuStar, has sufficient cash funds to meet its commitments and subsequent to balance date, announced on 29 September 2004 procurement of a \$30.3 million project financing facility to fund the development of the Paulsens project as well as to provide working capital.

The ability of the Company and its wholly owned controlled entities to continue as a going concern is dependent upon raising funds from the sale of assets and/or equity raisings as well as the repayment or rescheduling of short term secured debts.

Subsequent to balance date, a number of favourable transactions occurred during July 2004 as follows:

o placement of 86,122,000 shares which raised a net \$3.7 million;
conversion of a \$4.4 million interest bearing convertible note to shares at a strike price of $\circ$ \$0.08 per share; and
receipt of \$1.2 million advance against future equity raisings. Ō.

In addition, on 20 September 2004 the Company announced it had appointed Claymore Capital Pty Ltd ("Claymore") to assist the company with a number of transactions, including:

an initial sale of 100 million NuStar shares to third parties at not less that \$0.04 per share; $(i)$
$(ii)$ the sale of the Paulsens 5% royalty owned by the Company to NuStar for not less than \$5.1 million and the sale of the Company's interest in the Pelican Joint Venture (adjacent to Paulsens) to NuStar; and
$(iii)$ the grant of an option to Claymore (or its nominees) to purchase 100 million NuStar shares at \$0.05 per share at any time up to three months after the initial sale.

The transaction escribed in (ii) is subject to shareholder approval and the completion of an independent expert's report. Shareholders will be asked to approve this transaction at the company's AGM to be held in late November 2004 subject to all necessary statutory procedures being completed within this time.

The anticipated outcomes of these transactions being completed are:

enable the company to repay its short term secured debt of \$3.5 million; and $\circ$
provide sufficient net cash flow (subject to shareholder approval being obtained as required) to $\circ$ meet current obligations and future operating costs for the ensuing twelve months.

Notes to the financial statements for the year ended 30 June 2004

Should one or more of the asset sales announced on 20 September 2004 not proceed. Directors are confident of realising proceeds from the sale of all or part of the Company's substantial shareholding in NuStar to meet its funding requirements during this period.

In addition to the above transactions, the Company has:

commenced a comprehensive review and data compilation of the Paddy's Flat tenements (100% $\circ$ owned) in the Meekatharra region with a view to exploration or divestment;
reviewed the Aurogenic and Elara joint ventures which require the joint venture partners to spend $\circ$ approximately \$6.5 million during the coming twelve months: and
entered into negotiations with a third party for the use of the Bluebird plant at Meekatharra which $\triangle$ will at least cover the care and maintenance costs while the operations are suspended.

However, should insufficient funds be derived from the transactions described above or should such transactions be delayed, there is significant uncertainty as to whether the Company and its wholly owned controlled entities will be able to continue as a going concern and, therefore, whether they will realise their assets and settle their liabilities and commitments in the normal course of business. At this time the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report. Accordingly, the financial report does not include any adjustments relating to the recoverability and classification of the asset carrying amounts or the classification of liability amounts that might be necessary should the entity not continue as a going concern.

Principles of Consolidation $(b)$

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by St Barbara Mines Limited as at 30 June 2004 and the results of all controlled entities for the year ended. St Barbara Mined Limited and its controlled entities are together referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full. Outside equity interests in the results and equity of controlled entities are shown separately in the consolidated statement of financial performance and statement of financial position respectively.

Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of financial performance from the date on which control commences. Where control of an entity ceases during a financial year its results are included for that part of the year during which control existed.

Acquisition of Assets $(c)$

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition the value of the instruments is their market price as at the acquisition date, unless the notional price at which they could be placed in the market is a better indicator of fair value. Transaction costs arising from the issue of equity instruments are charged directly against the equity raised.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of the acquisition. The discount rate used is the incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

$(d)$ Recoverable Amount of Non-Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs. The expected net cash flows included in determining the recoverable amounts of non current assets are not discounted.

Notes to the financial statements for the year ended 30 June 2004

Treatment of Mining Properties $(e)$

All exploration and evaluation expenditure incurred by or on behalf of the Company up to the decision by the Board to proceed with development of a mining property, is expensed as incurred. Acquired exploration assets are not written down below acquisition cost until such time as the acquisition cost is not expected to be recovered.

Mining properties consists only of acquired exploration assets together with related mine development costs and capital assets. The cost of mineral properties includes the cash consideration and/or the fair value of shares issued on the date the property is acquired.

The recoverability of amounts shown for mining properties is dependent upon the existence of economically recoverable reserves: the acquisition and maintenance of appropriate permits. licenses and rights; the ability of the Company to obtain financing to complete the development of the properties where necessary and upon future profitable production; or, alternatively, upon the Company's ability to recover its spent costs through a disposition of its interests.

Mine development costs relating to mineral properties are deferred until the properties are brought into commercial production, at which time they are amortised over the estimated useful life of the related property or on a unit-of-production basis over proven and probable reserves. Pre-production credits, including the value of marketable metals extracted during mine development, are credited against costs incurred.

$(f)$ Depreciation and Amortisation of Property, Plant and Equipment

The Directors have considered the economic life of mine buildings, machinery and equipment with due regard to both the physical life limitations, assessments of economically recoverable reserves of the mine property at which the items are located, and to possible future variations in those assessments. The estimated remaining useful life for all such assets is reviewed regularly with annual reassessments being made for major items.

The majority of mine buildings, plant and equipment (other than freehold land) are written off over their expected economic life. The expected useful lives are as follows:

Buildings 10 years Plant and Equipment 3 to 131/₃ years

The total net carrying values of mine buildings, machinery and equipment at the mine property are reviewed regularly and, to the extent by which these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined.

Profits and losses on disposal of property, plant and equipment are taken into account in determining the result for the year.

Depreciation and Amortisation of Assets Held for Resale $(q)$

Plant and equipment which is currently surplus to requirements and not used is not depreciated. When those assets are used, they are depreciated on an hourly basis. The total carrying value of these assets is not in excess of estimated market value.

$(h)$ Accounting for Income Tax

Income tax has been brought to account using the liability method of tax effect accounting. Future income tax benefits relating to tax losses are only recognised and brought to account to the extent that their realisation is virtually certain.

Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.

No provision is made for additional taxes which could become payable if certain reserves of the foreign controlled entity were to be distributed as it is not expected that any substantial amount will be distributed from those reserves in the foreseeable future.

Notes to the financial statements for the year ended 30 June 2004

Tax consolidation legislation

The Company and its wholly-owned Australian controlled entities have decided to implement the tax consolidation legislation as of 1 July 2003. The Australian Taxation Office has not yet been notified of this decision.

As a consequence, the Company, as the head entity in the tax consolidated group, recognises current and deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or pavable under an accounting tax sharing agreement with the tax consolidated entities are recognised separately as tax-related amounts receivable or payable. Expenses and revenues arising under the tax sharing agreement are recognised as a component of income tax expense/(revenue).

The deferred tax balances recognised by the parent entity in relation to wholly-owned entities joining the tax consolidated group are measured based on their carrying amounts at the level of the tax consolidated group before the implementation of the tax consolidation regime.

$\left( i\right)$ Investments

Investments in listed and unlisted securities, other than controlled entities, are stated at cost unless, in the opinion of the Directors, a provision for diminution in value is considered necessary. Income from investments is brought to account by the consolidated entity when dividends are received. Controlled entities are accounted for as set out in Note 1(b).

$\ddot{\theta}$ Inventories

Inventories are valued at the lower of cost and net realisable value. The cost of ore stockpiles and gold stocks includes direct material, direct labour, transportation costs, and variable and fixed overhead costs relating to mining activities.

Costs have been assigned to inventory quantities on hand at balance date using the weighted average basis.

$(k)$ Maintenance and Repairs

Plant of the consolidated entity is required to be overhauled on a regular basis. This is managed as part of an ongoing major cyclical maintenance programme. The costs of this maintenance are charged as expenses as incurred, except where they relate to the replacement of a component of an asset, in which case the costs are capitalised and depreciated in accordance with note 1(f). Other routine operating maintenance, repair and minor renewal costs are also charged as expenses as incurred.

$\left( l\right)$ Employee Benefits

$(i)$ Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries and annual leave are recognised, and measured as the amount unpaid at the reporting date at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

$(ii)$ Long service leave

The liability for long service leave expected to be settled within twelve months of the reporting date is recognised in the provisions for employee entitlements and is measured in accordance with (i) above. The liability for long service leave expected to be settled more than twelve months from the reporting date is recognised in the provisions for employee entitlements and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to the length of service and the probability of achievement of long service leave anniversary dates.

Notes to the financial statements for the year ended 30 June 2004

$(iii)$ Ownership-based remuneration schemes

Ownership-based remuneration is provided to employees via the Employee Option Plan. Information relating to this scheme is set out in Note 27(d).

No accounting entries are made in relation to the Employee Option Plan until options are exercised, at which time the amounts receivable from employees are recognised in the statement of financial position as share capital. The amounts disclosed for remuneration of Directors and executives in Note 23 include the assessed fair values of options at the date they were granted.

$(m)$ Leased Assets

Assets acquired under finance leases are included as property, plant and equipment in the statement of financial position. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of the leased property. Where assets are acquired by means of finance leases, the present value of the minimum lease payments is recognised as an asset at the beginning of the lease term and amortised on a straight line basis over the expected useful life of the leased asset. A corresponding liability is also established and each lease payment is allocated between the liability and finance charge.

Other leases under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to expense over the period of expected benefit.

Receivables $(n)$

A provision is raised for any doubtful debts based on a review of all outstanding amounts at year end. Bad debts are written off during the year in which they are identified.

$(o)$ Revenue

Sales revenue represents revenue earned from the sale of gold and is recognised when title passes at the delivery point.

Revenue on sale of investments and tenements is recognised at disposal.

Interest revenue is recognised when it accrues taking into account interest rates applicable to financial assets.

$(p)$ Cash Flows

For the purpose of the statements of cash flows, cash includes cash on hand, deposits held at call which are readily convertible to cash on hand and which are used in the cash management function on a day-to-day basis, net of outstanding bank overdrafts.

Foreign Currency $(q)$

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables at balance date are translated at exchange rates at balance date. Exchange gains and losses are brought to account in determining the profit or loss for the year.

Exchange gains and losses and hedging costs arising on forward foreign exchange contracts entered into as hedges of specific commitments are deferred on the statement of financial position and included in the determination of the amounts at which the hedged transactions are brought to account. All exchange gains and losses relating to other hedge transactions are brought to account in the statement of financial performance in the same year as the exchange differences on the items covered by the hedge transactions.

Gains and losses on foreign currency transactions that are not accounted for as specific hedges, if any, are brought to account as they arise and disclosed as speculative gains or losses.

Notes to the financial statements for the year ended 30 June 2004

$(r)$ Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. These amounts are unsecured.

Rehabilitation and Restoration Costs $(s)$

Provision is made on a straight line basis for the consolidated entity's estimated liability under specific legislative requirements and the conditions of its mining leases for future costs expected to be incurred in restoring areas of interest. The estimated liability is based on the restoration work required, using existing technology, as a result of activities to date.

$(t)$ Borrowing Costs

Borrowing costs are recognised as expenses in the year in which they are incurred. Borrowing costs include interest on bank overdrafts, short-term and long-term borrowings, finance lease charges, the fair value of equity securities issued in satisfaction of interest and facility fees and amortisation of establishment costs and facility fees in connection with the arrangement of borrowings.

Interest Bearing Liabilities $(u)$

Loans are carried at their principal amounts which represent the present value of future cash flows associated with servicing the debt. Interest is accrued over the period it becomes due and is recorded as part of other creditors.

Rounding of Amounts $(v)$

The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Earnings per Share $(w)$

$(iv)$ Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

$(V)$ Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Notes to the financial statements for the year ended 30 June 2004

International Financial Reporting Standards (IFRS) $(x)$

The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to IFRS, and the Urgent Issues Group will issue interpretations corresponding to IASB interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of Australian equivalents to IFRS will be first reflected in the consolidated entity's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.

Included in note 34 to the financial statements is a reconciliation of Australian Generally Accepted Accounting Principles (GAAP) to IFRS, which details significant differences between the two as they relate to the consolidated entity, based on IFRS which are currently applicable. This reconciliation is included as part of the requirements of the company's secondary listing on the Alternative Investment Market on the London Stock Exchange.

In addition to the differences included in note 34, the adoption of IFRS on or after 1 January 2005 may result in further differences as new IFRS become applicable. Major changes identified as a result of the new IFRS and the consolidated entity's current accounting policies include:

Equity-based compensation benefits

Under AASB 2 Share based Payment, equity-based compensation to employees will be recognised as an expense in respect of the services received. This will result in a change to the current accounting policy, under which no expense is recognised for equity-based compensation.

The reconciliation between AGAAP and IAS detailed at note 34 and the above should not be regarded as a complete list of changes in accounting policies that will result from the transition to Australian equivalents to IFRS, as not all standards have been analysed as yet, and some decisions have not yet been made where choices of accounting policies are available. For these reasons, it is not yet possible to quantify the impact of the transition to Australian equivalents to IFRS on the consolidated entity's financial position and reported results.

$2.$ SEGMENT INFORMATION

The Consolidated Entity operates predominantly in the gold mining and exploration industry in Australia.

The Consolidated Entity's head office is in Australia.

Notes to the financial statements for the year ended 30 June 2004

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
3. REVENUE
Revenue from operating activities
Revenue from sale of gold	21,972	56,111	21,972	56,111
Revenue from non-operating activities
Proceeds on sale of investments	5,063	17	4,984
Proceeds on sale of tenements	1,020	35	1,000
Proceeds on sale of property, plant and equipment	3,486	982	3,483	982
Interest received	502	292	1,056	1,429
Other	389	167	348
Total revenue from ordinary activities	32,432	57,604	32,843	58,522
(LOSS) FROM ORDINARY ACTIVITIES 4.
(Loss) from ordinary activities before income tax expense includes the following specific net gains and expenses:
Net Gains
Net gain on disposal of:
Investments	172	17	93
Property, plant and equipment		798		798
Tenements	1,020		1,000
Expenses
Cost of gold sales	21,165	60,764	21,165	60,764
Amortisation:
Mining expenses	1,200	15,641	1,200	15,641
Write down of mining development expenses	1,241		1,241
Write-down of exploration tenements	318		318
Loss on disposal of property, plant and equipment	2,462		2,462
Depreciation:
Buildings	102	178	102	178
Plant and equipment	1,424	2,572	1,419	2,528
	1,526	2,750	1,521	2,706
Borrowing cost expensed:
Interest paid Convertible Note borrowing cost	1,523 2,262	3,547 1,337	1,434 2,012	3,176 1,337
Finance charges relating to:
finance leases w	162	340	162	340
hire purchase	133	225	133	225
	4,080	5,449	3,741	5,078
Rental of premises	274	418	274	418
Royalties	671	1,728	671	1,728
Provision for:
Rehabilitation	495	598	495	598
Inventories	(204)	96	(204)	96
Diminution of exploration tenements	5,256		5,256

Notes to the financial statements for the year ended 30 June 2004

		Consolidated		Company
		30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
	Cost/adjustments associated with surplus office space		(13)		(13)
5.	INCOME TAX
(a)	Tax Expense
	The amount of income tax expense for the financial year differs from the amount calculated on the loss. The differences are reconciled as follows:
expense	Loss from ordinary activities before income tax	(25, 228)	(30,020)	(31,929)	(24, 970)
	Income tax calculated at 30% (2003 - 30%)	7,568	9,006	9,579	7,491
	Tax effect of permanent differences:
	Provision for diminution in investments	(90)		(3,720)	(1, 224)
	Legal and other capital expenditure	(91)	(132)	(91)	(127)
	Sundry items	(3)	(20)	(3)	(20)
		(184)	(152)	(3, 814)	(1, 371)
	Income tax adjusted for permanent differences	7,384	8,854	5,765	6,120
	Net future income tax benefit not brought to account	(7, 384)	(8, 854)	(5,765)	(6, 120)
	Future income tax benefits previously recognised, now written off		(2,965)		(2,965)
	Income tax (expense)		(2,965)		(2,965)
(b)	Unbooked future income tax benefit
losses	Future income tax benefit attributable to operating	33,263	26,401	25,809	21,617
	Less: offset to provision for deferred income tax	(1, 357)	(4, 248)	(834)	(3,870)
		31,906	22,153	24,975	17,747
	Future income tax benefit attributable to timing differences not brought to account	1,674	1,615	1,602	1,615
	Future income tax benefit not brought to account	33,580	23,768	26,577	19,362

These benefits will only be obtained if:

the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the $(i)$ benefit from the deductions for the loss to be realised; or

the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and $(ii)$

$(iii)$ no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses.

$(c)$ Tax consolidation legislation

The Company and its wholly-owned Australian subsidiaries have decided to implement tax consolidation in respect of the year ended 30 June 2004. The Australian Taxation Office has not yet been notified of this decision. The accounting policy on implementation of the legislation is set out in note 1(h). As the company and consolidated entity are in a carried forward tax loss position and do not currently recognise deferred tax balances in the financial statements, there has not been a material impact on company or consolidated assets, liabilities and results from implementation of the legislation.

Notes to the financial statements for the year ended 30 June 2004

		Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
6. CASH ASSETS
Current
Current cash on hand	1	1	1	$\ddagger$
Cash on call	12,848	596		594
	12,849	597	1	595
RESTRICTED CASH 7.
Current
Term deposit ⁽ⁱ⁾		280		280
Non-Current
Term deposit ⁽ⁱ⁾	40		40
Term deposit ⁽ⁱⁱ⁾	3,068	3,293	2,725	3,293
	3,108	3,293	2,765	3,293

$\begin{array}{c} \text{(i)} \ \text{(ii)} \end{array}$ Funds placed on security deposit for lease rental. The current lease expires on 31 January 2006.

Funds placed on security deposit with Macquarie Bank Limited as security for performance bonds issued by Macquarie Bank Limited to WA Department of Minerals and Petroleum.

8. RECEIVABLES

	Trade debtors	576	2,318	382	2,318
	Provision for doubtful debts	(222)		(222)
	Other debtors ⁽ⁱ⁾	1,158	1,370	214	1,370
		1,512	3,688	374	3,688
(i)	Other debtors in the consolidated entity includes a GST receivable of \$580,811 and funds held by Claymore Capital on behalf of NuStar of \$362,466.
	Non-Current
	Non-trade receivables from controlled entities			2,770	19,600
	Less: provision for non-recovery			(1,630)	(1,360)
				1,140	18,240
9.	INVENTORIES
	Current
	Consumables and spares - at cost	870	1,749	870	1,749
	Less: provision for obsolescence	(130)	(334)	(130)	(334)
		740	1,415	740	1,415
	Ore stockpiles - at cost		1,009		1,009
	Gold in circuit - at cost	37	1,840	37	1,840

Notes to the financial statements for the year ended 30 June 2004

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
	777	4,264	777	4,264
ASSETS HELD FOR RESALE 10.
Current
Plant and equipment
Under finance lease w		5,261		5,261
Accumulated amortisation w		(1,261)		(1,261)
		4,000		4,000
Plant and equipment owned
At cost w.	1,587	2,342	1,587	2,019
Accumulated depreciation	(1,529)	(2, 148)	(1,529)	(1,925)
	58	194	58	94
	58	4,194	58	4,094
11. OTHER ASSETS
Current
Prepayments	630	1,101	599	1,070
Unexpired hire purchase charges	u.	149		149
	630	1,250	599	1,219
Non-Current
Unexpired hire purchase charges		83		83

Notes to the financial statements for the year ended 30 June 2004

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
12. PROPERTY, PLANT AND EQUIPMENT
Non-Current
Property, plant and equipment - at cost
Land	1,244	1,249	135	140.
Buildings	4,434	4,683	4,434	4,683
Less: Accumulated depreciation	(4,238)	(4,300)	(4,238)	(4,300)
	196	383	196	383
Plant and equipment Less: Accumulated depreciation and provision for	55,457	59,319	55,270	59,136
diminution	(51,950)	(52, 571)	(51,780)	(52, 406)
Written down value of plant and equipment	3,507	6.748	3,490	6,730
	4,947	8,380	3,821	7,253
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
Land
Carrying amount at the beginning of year	1,249	1,255	140	146
Disposals	(5)	(6)	(5)	(6)
Carrying amount at the end of the year	1,244	1,249	135	140
Buildings
Carrying amount at the beginning of year	383	539	383	539
Disposals	(85)		(85)
Depreciation Transfer to / (from) buildings	(102)	(178) 22	(102)	(178) 22
Carrying amount at the end of the year	196	383	196	383

Plant and equipment
Carrying amount at the beginning of year	6,748	8,112	6,730	8,054
Additions	42	205	38	205
Disposals	(1,859)	(47)	(1, 859)	(47)
Depreciation	(1,424)	(1,674)	(1, 419)	(1,634)
Under construction
Transfer to / (from) plant and equipment		152		152
Carrying amount at the end of the year	3,507	6,748	3,490	6,730
	4,947	8,380	3,821	7,253

Notes to the financial statements for the year ended 30 June 2004

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
13. MINING PROPERTIES
Non-Current
Opening balance	46,372	58,188	19,224	27,370
Direct expenditure	4,383	10,558	2,668	6,877
Acquired tenements		3,164		3,164
Provision for diminution	(6, 497)		(6, 497)
Amortisation charge for the year	(1,539)	(15, 641)	(1,539)	(15, 641)
Write down as per Director's recommendation	(318)		(318)
Write down due to change in accounting policy (see Note 1(e))		(9, 897)		(2,546)
Closing balance	42,401	46,372	13,538	19,224
Mining properties
Areas of interest in the exploration / evaluation stage:
at cost ⁽ⁱ⁾	52,228	48,734	16,013	14,234
provision for diminution w	(5,256)		(5,256)
write down as per Director's recommendation	(318)		(318)
write down due to change in accounting policy (see Note 1(e))	(7, 352)	(7, 352)
	39,302	41,382	10,439	14,234
Areas of interest in the development and production phase
at cost	110,851	109,962	110,851	109,962
accumulated amortisation	(60, 614)	(59,075)	(60, 614)	(59,075)
writedown as per Directors' recommendation $\ddot{\phantom{0}}$	(1, 241)		(1, 241)
write down due to change in accounting policy w (see Note 1(e))	(2,546)	(2,546)	(2,546)	(2,546)
provision for diminution	(43, 351)	(43, 351)	(43, 351)	(43, 351)
	3,099	4,990	3,099	4,990
	42,401	46,372	13,538	19,224

(i) Certain exploration interests are subject to farm-in agreements, which may result in the establishment of joint ventures in the future.

Notes to the financial statements for the year ended 30 June 2004

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
OTHER FINANCIAL ASSETS 14.
Current
Investments in other entities:
Listed securities - at cost		4,891		4,891
Investments in controlled entities:
Unlisted securities (at cost) w			179
Listed securities (at cost) ⁽²⁾⁽³⁾ $\omega$	500		38,138
Provision for diminution	(312)		(16, 429)
Market value	188		21,709
	188	4,891	21,888	4,891
Non-Current
Investments in controlled entities:
Unlisted securities (at cost)				179
Listed securities (at cost) $(2)$ w				20,537
Provision for diminution				(4,081)
Market value	$\overline{\phantom{a}}$	u.		16,456
				16,635
Listed securities in other entities - market value
The aggregate market value at balance date of investments in other entities listed on a prescribed stock exchange is:
Current:
Listed securities ⁽¹⁾		4,662		4,662
Non-Current:
Listed securities $(1)$
Listed securities in controlled entities - market value
The aggregate market value at balance date of investments in controlled entities listed on a prescribed stock exchange is:
Current:
Listed securities ⁽²⁾			18,452	4,768

Due to losses carried forward, the amount of tax that would have been paid if these assets were to be sold at market value at balance date is nil.

At balance date, securities were held in the following listed entities:

$(1)$ The consolidated entity held nil shares in Dioro Exploration NL at 30 June 2004 (2003: 44,400,000). All of the 44,400,000 shares were sold on 3 July 2003 realising net proceeds of \$4,984,000.
$\left( 2\right)$ NuStar Mining Corporation Limited. The consolidated entity held 542,719,338 fully paid ordinary shares (2003:190,719,338).
$(3)$ The consolidated entity held 15,650,000 shares in Strata Mining Corporation Ltd ("Strata"), a listed entity (2003: nil). At 30 June 2004 the investment was written down to market value. Mr S W Miller was a director of Strata during the financial year.

Notes to the financial statements for the year ended 30 June 2004

		Company
30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000


6,691	10,561	5,851	10,555
		216
6,691	10,561	6,067	10,555

		11,484	11,484


	2,018		2,018
188	1,133	188	1,133
6,144		5,244
3,500	12,000	3,500	12,000
9,832	15,151	8,932	15,151

75	1,528	75	1,528
	7,305		7,305
75	8,833	75	8,833
		Consolidated

Secured by a fixed charge over the item of plant and equipment purchased by the funds advanced. The lease $1$ liability was paid out in April 2004

2) On 10 July 2003, the Company announced that the existing convertible note loan dated 27 February 2003 had been cancelled and a new convertible loan for \$7.2 million had been entered into with Ocean Resources Capital Holdings Limited ("Ocean") effective 19 June 2003. The new unsecured convertible loan repayment date was 19 December 2005 and carried an interest rate of 12%. The loan was convertible, at the option of Ocean, into 90,000,000 fully paid ordinary shares in the Company at \$0.08 per share. Shares issued pursuant to the convertible note loan were approved at the 25 November 2003 General Meeting.

On 5 December 2003, the Company issued 35 million fully paid ordinary shares at \$0.08 per share for \$2.8 million to partly satisfy the convertible note loan. This resulted in the remaining face value owing being reduced to \$4.4 million.

On 15 July 2004, the Company announced the conversion by Ocean of the face value of its convertible note of \$4.4 million into 55 million ordinary shares at \$0.08 per share. Interest due on the convertible note loan was also satisfied by the issue of 17,480,547 fully paid ordinary shares at \$0.046 per share.

Notes to the financial statements for the year ended 30 June 2004

On 30 September 2003, NuStar entered into an unsecured convertible note with Claymore Capital Pty Ltd $3¹$ ("Claymore"), arranger of this transaction, for up to \$1.5 million. During the year \$1.0 million was drawn down on this facility. The convertible note is repayable on or before 30 September 2004 and bears interest at 13.5%. The convertible note is convertible at the option of Claymore into either:
fully paid ordinary shares of NuStar using the following formula: a)
- up to 30 June 2004 at \$0.05 per NuStar Share; and ï)
- after 30 June 2004 but before 30 September 2004, the lower of: ii)
- \$0.065 per NuStar share; and $\uparrow$ .
- 85% of the volume weighted average price of the NuStar shares on ASX during the 30 day period $2.$ prior to the Conversion Date provided that the minimum strike price calculable is \$0.05; or
fully paid ordinary shares of the Company at \$0.08 per share. b)

At the Annual General Meeting of NuStar held on 12 December 2003, shareholders approved the issue of shares to Claymore should Claymore elect to convert the convertible note into fully paid shares in NuStar. Following this, Claymore converted \$100,000 of the convertible note into 2,000,000 shares in NuStar which were issued on 23 December 2003.

4) On 9 July 2003, \$5 million of the RCF Facility was repaid on receipt of the proceeds of the sale of the shares in Dioro Exploration NL.

On 28 November 2003, the balance of the \$7 million RCF Facility was converted at \$0.08 per share into 87,500,000 fully paid ordinary shares. Interest and fees due were also converted at \$0.08 into 8,184,932 fully paid ordinary shares

5) On 8 May 2004, the Company entered into a margin lending facility with Galviston Pty Limited for \$3,500,000. The amount is secured over the investment in NuStar. The market value of NuStar at 30 June 2004 was \$18.4 million.

		Consolidated	Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Assets pledged as security
The carrying amounts of assets pledged as security are:
Secured Ioan
Market value of listed securities u.	18,452		18,452
First Mortgage
Property, plant and equipment u.		8.380		7,253
Other financial assets $\blacksquare$		4,891		25,607
Finance Lease
Plant and equipment under finance lease ۰.	759	4.000	759	4.000
Floating Charge
Cash and restricted cash u.	3,067	4,170	2,725	4,168
Receivables		3,688		3,688
Total assets pledged as security	22,278	25,129	21,936	44,716

Notes to the financial statements for the year ended 30 June 2004

	Consolidated			Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
PROVISIONS 17.
Current
Employee benefits	751	771	751	771
Directors' retirement benefits	$\overline{\phantom{a}}$	98	$\tilde{\phantom{a}}$	98
Surplus leased space	٠	29	$\blacksquare$	29
	751	898	751	898
Non-Current
Employee benefits	78	180	78	180
Rehabilitation	4,191	3,696	4,191	3,696
	4,269	3,876	4,269	3,876

Movements in Provisions

Movements in each class of provision during the financial year, other than employee benefits, are set out below:

	Directors' retirement benefits \$'000	Surplus leased space \$'000	Total \$'000
Consolidated and Company
Current
Carrying amount at start of the year	98	29	127
Payments made	٠	(29)	(127)
Written off	(98)
Carrying amount at end of the year
		Rehabilitation \$'000	Total \$'000
Non-Current
Carrying amount at start of the year		3,696	3,696
Additional provision made		495	495
Carrying amount at end of the year		4,191	4,191

ST BARBARA MINES LIMITED AND ITS CONTROLLED ENTITIES Notes to the financial statements for the year ended 30 June 2004

			Consolidated		Company
		30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
18.	CONTRIBUTED EQUITY
	Ordinary Share Capital
	Issued and paid up	139.400	127,534	139.400	127.534

These shares have no par value and are fully paid ordinary shares. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Movements in Ordinary Share Capital

Date	Details	Notes	Number of shares	issue price	\$'000
30 June 02	Opening Balance		319,758,267		118,213
15 July 02	Share issue	(1)	1,210,052	\$0.2037	246
15 July 02	Share issue	(1)	196,562	\$0.2263	44
15 July 02	Share issue	(2)	1,846,628	\$0.2143	396
21 Aug 02	Placement	(2)	34,333,332	\$0.1650	5,665
	Share issue expenses				(993)
17 Oct 02	Share issue	(3)	280,140	\$0.1973	55
2 Dec 02	Share issue	(1)	1,562,000	\$0.0960	150
31 Dec 02	Share issue	(1)	1,067,616	\$0.0843	90
31 Dec 02	Share issue	(1)	4,261,200	\$0.1021	435
31 Dec 02	Share issue	(1)	437,006	\$0.1136	50
31 Jan 03	Share issue	(4)	15,000,000	\$0.1100	1,650
	Share issue expenses				(83)
17 Feb 03	Share issue	(5)	5,600,000	\$0.1100	616
14 Mar 03	Correction		500
26 June 03	Share issue	(6)	15,000,000
26 June 03	Share issue	(7)	15,000,000	\$0.0667	1,000
30 June 03	Balance		415,553,303		127,534
7 July 03	Share issue	(8)	15,910,922	\$0.0374	595
22 Sept 03	Share issue	(9)	12,000,000	\$0.08	960
	Share issue expenses				(144)
28 Nov 03	Share issue	(10)	95,684,932	\$0.08	7,655
5 Dec 03	Share issue	(11)	35,000,000	\$0.08	2,800
30 June 04	Closing Balance		574,149,157		139,400

$(1)$ Share issue to RCF for Facility interest and fees.

$(2)$ Placement to raise working capital.

$(3)$ Share issue in accordance with an agreement with Grimwood Davies Pty Ltd for conducting a drilling programme in the Meekatharra area.

$(4)$ Placement to raise working capital.

$(5)$ Share issue on finalisation of Paulsens Native Title agreement.

$\langle 6 \rangle$ Share issue on part conversion of convertible note - see Note 17 (4).
$(7)$ Placement to raise working capital.

$\langle 8 \rangle$ Share issue to RCF for facility interest.

$(9)$ Placement to raise working capital.

$(10)$ Share issue to RCF for corporate debt and interest.
$(11)$ Share issue on conversion of unsecured convertible notes.

Notes to the financial statements for the year ended 30 June 2004

19. OPTIONS

$(a)$ Option Reserve

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Option reserve at the beginning of the financial period	1.959	430	1.959	430
Options issued during the financial period	484	1.529	484	1,529
Option reserve at the end of the financial period	2.443	1.959	2.443	1.959

This option reserve arises from 44,159,394 unlisted being issued during the course of the year.

The fair value of each option issued has been valued using the Black-Scholes option pricing model after considering factors such as the term of the option, the risk free interest rate and the volatility of the share price.

$(b)$ Listed Share Options

A total of 44,329,106 listed share options expired on 29 February 2004. The consolidated entity had no listed share options on issue at 30 June 2004.

Movements in Listed Options

Date	Details	Number of Options	Exercise price	Issue Date	Expiry Date
30 Jun 02	Opening Balance	22,163,106
21 Aug 02	Placement	17,166,000	\$0.30	21 Aug 02	29 Feb 04
6 Sep 02	Toto Capital	5.000.000	\$0.30	6 Sep 02	29 Feb 04
30 Jun 03	Balance	44.329.106
	NuStar Mining (formerly
29 Feb 04	Taipan) - expired	(20.913, 106)		1 May 01	29 Feb 04
29 Feb 04	Tricom Equities Ltd	(1,250,000)		2 Apr 02	29 Feb 04
29 Feb 04	Placement - expired	(17, 166, 000)	\$0.30	21 Aug 02	29 Feb 04
29 Feb 04	Toto Capital - expired	(5,000,000)	\$0.30	6 Sep 02	29 Feb 04
30 Jun 04	Closing Balance	O

Unlisted Share Options $(c)$

At 30 June 2004, the consolidated entity had 84,840,026 unlisted share options on issue.

On 20 October 1995, shareholders at a general meeting approved the Employee Share Option Plan (ESOP). The purpose of the ESOP is to provide an incentive to executive officers on the Company. No new options will be issued in the future under this ESOP.

On 28 November 2001, shareholders at a general meeting approved a new Employee Option Plan.

Each unlisted share option entitles the holder to subscribe for one ordinary share on, substantially, the following terms:

each unlisted option entitles the holder to subscribe for one ordinary share at the exercise prices set out ${i}$ below:
$(ii)$ the unlisted options are exercisable at any time up to 5.00pm Perth, Western Australia time on the dates set out below by completing an option exercise form and delivering it together with the required payment for the relevant number of ordinary shares in respect of which the unlisted options are exercised to the registered office of the Company. Any unlisted options not exercised by that time will lapse.

Notes to the financial statements for the year ended 30 June 2004

Movements in Unlisted Options

Unlisted options are not admitted to the official list of ASX.

Date	Details	Number of Options	Exercise Price	Íssue Date	Expiry Date
30 Jun 02	Opening Balance	36,077,347
15 Jul 02	RCF Facility	49,252	\$0.2086	15 Jul 02	15 Jul 05
15 Jul 02	RCF Facility	241,854	\$0.2124	15 Jul 02	15 Jul 05
15 Jul 02	RCF Facility	483,482	\$0.2125	15 Jul 02	15 Jul 05
6 Aug 02	RCF Facility	50,894	\$0.2086	6 Aug 02	15 Aug 05
6 Aug 02	RCF Facility	249,917	\$0.2124	6 Aug 02	15 Aug 05
6 Aug 02	RCF Facility	499,597	\$0.2125	6 Aug 02	15 Aug 05
13 Sep 02	RCF Facility	50,894	\$0.2086	13 Sep 02	6 Sep 05
13 Sep 02	RCF Facility	249,917	\$0.2124	13 Sep 02	6 Sep 05
13 Sep 02	RCF Facility	499,597	\$0.2125	13 Sep 02	6 Sep 05
15 Oct 02	RCF Facility	49,252	\$0.2086	15 Oct 02	15 Oct 05
15 Oct 02	RCF Facility	241,854	\$0.2124	15 Oct 02	15 Oct 05
15 Oct 02	RCF Facility	483,482	\$0.2125	15 Oct 02	15 Oct 05
7 Jan 03	RCF Facility	3,177,890	\$0.1138	7 Jan 03	7 Jul 06
7 Jan 03	RCF Facility	151,040	\$0.2086	7 Jan 03	7 Jul 06
7 Jan 03 7 Jan 03	RCF Facility RCF Facility	741,686	\$0.2124 \$0.2125	7 Jan 03 7 Jan 03	7 Jul 06 7 Jul 06
17 Jan 03	Employee Option Plan 2001	1,482,677 1,775,000	\$0.3500	17 Jan 03	17 Jan 08
17 Jan 03	Employee Option Plan 2001 - cancelled	(1,425,000)	\$0.3500	26 Apr 02	26 Apr 07
20 Feb 03	RCF Facility	1,000,000	\$0.1100	20 Feb 03	31 Dec 05
31 Mar 03	Employee Option Plan 2001 - cancelled	(525,000)	\$0.3500	26 Apr 02	26 Apr 07
31 Mar 03	Employee Option Plan 2001 - cancelled	(200,000)	\$0.3500	17 Jan 03	17 Jan 08
31 Mar 03	Employee Share Plan 1995 - expired	(250,000)	\$0.2500	2 Mar 00	31 Mar 03
31 Mar 03	Employee Share Plan 1995 - expired	(250,000)	\$0.3500	2 Mar 00	31 Mar 03
30 Jun 03	Balance	44,905,632
7 Jul 03	RCF Facility	11,555,962	\$0.1138	7 Jul 03	7 Jan 07
7 Jul 03	RCF Facility	394,016	\$0.2086	7 Jul 03	7 Jan 07
7 Jul 03	RCF Facility	1,934,835	\$0.2124	7 Jul 03	7 Jan 07
7 Jul 03	RCF Facility	3,867,849	\$0.2125	7 Jul 03	7 Jan 07
7 Jul 03	RCF Facility	5,874,281	\$0.1138	7 Jul 03	7 Jan 07
7 Jul 03	RCF Facility	200,292	\$0.2086	7 Jul 03	7 Jan 07
7 Jul 03 7 Jul 03	RCF Facility RCF Facility	983,541 1,966,155	\$0.2124 \$0.2125	7 Jul 03 7 Jul 03	7 Jan 07 7 Jan 07
13 Jul 03	Employee Option Plan 2001 - cancelled	-75,000	\$0.3500	26 Apr 02	26 Apr 07
26 Nov 03	RCF Facility	14,252357	\$0.1138	26 Nov 03	24 May
26 Nov 03	RCF Facility	485,953	\$0.2086	26 Nov 03	24 May
26 Nov 03	RCF Facility	2,386,296	\$0.2124	26 Nov 03	24 May
26 Nov 03	RCF Facility	257,857	\$0.2125	26 Nov 03	24 May
3 Dec 03	Employee Option Plan 2001 - cancelled	(1,550,000)	\$0.3500	26 Apr 02	26 Apr 07
3 Dec 03	Employee Option Plan 2001 - cancelled	(750,000)	\$0.3500	17 Jan 03	17 Jan 08
3 Dec 03	B Speechly	(500,000)	\$0.4000	30 Nov 01	31 Dec 04
29 Feb 04	Employee Option Plan 2001 - cancelled	(275,000)	\$0.3500	26 Apr 02	26 Apr 07
29 Feb 04	Employee Option Plan 2001 - cancelled	(225,000)	\$0.3500	17 Jan 03	17 Jan 08
15 Jun 04	Employee Option Plan 2001 -	50,000	\$0.3500	26 Apr 02	26 Apr 07
30 Jun 04	Employee Option Plan 2001 - cancelled	(775,000)	\$0.3500	26 Apr 02	26 Apr 07
30 Jun 04	Employee Option Plan 2001 - cancelled	(125,000)	\$0.3500	17 Jan 03	17 Jan 08
30 Jun 04	Closing Balance	84,840,026

Notes to the financial statements for the year ended 30 June 2004

ACCUMULATED LOSSES 20.

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Accumulated losses at the beginning of the financial period	(91, 520)	(58, 787)	(96, 531)	(68, 596)
Net profit attributable to members of the Company	(24, 315)	(32, 733)	(31.929)	(27,935)
Accumulated losses at the end of the financial period	(115.835)	(91, 520)	(128, 460)	(96, 531)
OUTSIDE EQUITY INTEREST 21.
Outside equity interest in:
contributed equity a.	22.160	2.403

$\mathbf{a}$	accumulated losses opening balance	(2.403)	(2, 151)	$\overline{\phantom{a}}$
$\blacksquare$	retained loss current period	(913)	:252)	$\bullet$
		18.844	$\overline{\phantom{a}}$	$\overline{a}$

The outside equity interest arises from the Company's 54.8% interest in NuStar which reduced from 88.3% during the financial year. Refer to Note 29 for further details.

22. FINANCIAL INSTRUMENTS

$(a)$ Credit Risk Exposures

The credit risk on financial assets of the consolidated entity which have been recognised, other than investments in shares, is generally the carrying amount, net of any provisions for doubtful debts.

$(b)$ Interest Rate Risk Exposures

The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in the following tables. Exposures arise predominantly from assets and liabilities bearing variable interest rates as the consolidated entity intends to hold fixed rate assets and liabilities to maturity.

		Fixed interest maturing in:
	Floating Interest rate \$'000	1 year or less \$'000	Over 1 to 5 years \$'000	Non- interest bearing \$'000	Total \$'000
30 June 2004
Financial assets
Cash	12,849	$\overline{\phantom{a}}$	$\blacksquare$	u.	12,849
Restricted cash	3,108	$\blacksquare$	$\blacksquare$	u.	3,108
Receivables	$\overline{\phantom{a}}$	$\mathbf{m}$	$\overline{\phantom{a}}$	1.512	1,512
Investments	$\blacksquare$	$\blacksquare$	$\blacksquare$	188	188
	15,957	$\overline{\phantom{a}}$	$\blacksquare$	1,700	17,657
Weighted average interest rate	4.72%

Notes to the financial statements for the year ended 30 June 2004

	Fixed interest maturing in:
	Floating Interest rate \$'000	1 year or less \$'000	Over 1 to 5 years \$'000	Non- interest bearing \$'000	Total \$'000
Financial liabilities
Trade and other creditors				(6,691)	(6,691)
Lease liability
Other Ioans		(9,832)	(75)		(9,907)
	w.	(9, 832)	(75)	(6,691)	(16, 598)
Weighted average interest rate		12.08%	7.63%
Net financial assets / (liabilities)	15,957	(9, 832)	(75)	(4,991)	(1,059)
30 June 2003
Financial assets
Cash	596			1	597
Restricted cash	3,573				3,573
Receivables				3,688	3,688
Investments				4,891	4,891
	4,169			8,580	12,749
Weighted average interest rate	4.6%
Financial liabilities
Trade and other creditors				(10, 561)	(10, 561)
Lease liability		(1, 242)	(776)		(2,018)
Other Ioans		(13, 133)	(8, 833)		(21,966)
	u,	(14, 375)	(9,609)	(10, 561)	(34, 545)
Weighted average interest rate		9.93%	11.18%
Net financial assets / (liabilities)	4,169	(14, 375)	(9,609)	(1,981)	(21, 796)

$(c)$ Net Fair Value of Financial Assets and Liabilities

$\left( i\right)$ On-Balance Sheet

The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the consolidated entity approximates their carrying value. The net fair value of other monetary financial assets and financial liabilities is based upon market prices.

$(ii)$ Off-Balance Sheet

For forward exchange and commodity contracts, the net fair value is taken to be the unrealised gain or loss at balance date calculated by reference to the current forward rates for contracts with similar maturity profiles.

The consolidated entity has potential financial liabilities that may arise from certain contingencies disclosed in Note 25. As explained in that note, no material losses are anticipated in respect of any of those contingencies and the net fair value disclosed is the Directors' estimate of amounts which would be payable by the consolidated entity as consideration for the assumption of those contingencies by another party.

Notes to the financial statements for the year ended 30 June 2004

		2004	2003
	Carrying Amount \$'000	Net Fair Value \$'000	Carrying Amount \$'000	Net Fair Value \$'000
On balance sheet financial instruments
Financial assets
Cash and restricted cash.	15,957	15,957	4,170	4.170
Receivables	1.512	1.512	3,688	3,688
Traded investments	188	188	4.891	4,662
	17,657	17.657	12.749	12,520
Financial liabilities
Payables	10.191	10,191	10,561	10,561
Lease liability $\overline{\phantom{a}}$			2.018	2.018
Other Ioans	6.407	6.407	21.966	21,966
	16,598	16,598	34,545	34,545

The carrying amounts and the net fair values of financial assets and liabilities at balance date are:

23. DIRECTORS AND EXECUTIVE DISCLOSURES

Directors

The following persons were directors of St Barbara Mines Limited during the financial year...

Executive Chairman

S W Miller (Mr Miller was removed as director and chairman on 20 July 2004)

Non-Execeutive Directors

K A Dundo

G B Speechly (from 1 July 2003 to 28 November 2003)
H G Tuten

M K Wheatley (from 28 November 2003 to 30 June 2004)

Executives (other than directors) with the greatest authority for strategic direction and management The following persons were the executives with the greatest authority for the strategic direction and management of the consolidated entity ("specified executives") during the financial year...

Name	Position	Employer
E L Boyd	Company Secretary and Commercial Manager	St Barbara Mines Limited
R T Calnan	General Manager, Project & Business Development	St Barbara Mines Limited
C W Davis	Manager, Paulsens Project	St Barbara Mines Limited
B T Lambert	General Manager, NuStar	NuStar Mining Corporation Limited
G C Miller	Group Exploration Manager	St Barbara Mines Limited
P J Richardson	Manager, Meekatharra Gold Operations	St Barbara Mines Limited
A D Rule	CFO & Company Secretary	St Barbara Mines Limited

Mr Boyd was appointed on 15 December 2003

Mr Lambert was appointed on 21 January 2004

Mr Rule terminated his employment as Chief Financial Officer on 30 November 2003 and resigned as Company Secretary on 15 December 2003.

Messrs Calnan, Davis, Miller and Richardson were also specified executives during the year ended 30 June 2003.

Remuneration of directors and executives

Directors pay

Currently, remuneration is based on industry standards and set to attract qualified and experienced directors. The Board takes advice on industry remuneration standards through consultation with external agents. Non-executive directors' fees are determined within an aggregate directors' fee pool limit approved by shareholders, which currently stands at \$215,000. Remuneration of directors is not linked to the Company's performance. All fees paid are inclusive of Board committee fees.

Notes to the financial statements for the year ended 30 June 2004

Executive Pay

Executive remuneration is based on industry standards and set to attract qualified and experienced executives. The Board takes advice on industry remuneration standards through consultation with external agents The executive pay has three components:

Base pay and benefits $\alpha$
Short and long term performance incentives through participation in the St Barbara Employee Option plan $\ddot{\circ}$
Other remuneration such as superannuation $\bar{\rm \scriptscriptstyle C}$

The incentive component of specified executive's remuneration is linked to the Company's performance.

The Remuneration Committee meets annually to review directors' fees, senior executive salary packages and salary ranges for the organisation

Details of the nature and amount of each element of the emoluments of each director of St Barbara and the executive officers of the Company and of the consolidated entity receiving them are set out in the following tables:

Non-Executive Directors of St Barbara Mines Limited

	Primary	Post - employment	Equity
	Cash, salary & fees \$	Super- annuation \$	Options issued \$	Total \$
K A Dundo (i)	100,000	9.000		109,000
H G Tuten (ii)	w	w	$\overline{\phantom{a}}$
M K Wheatley (iii)	27,135	2.446	×	29.581
G B Speechly	20,833	1,875	٠	22,708

(resigned 28/11/03)

Mr Dundo is also a director of subsidiary company NuStar Mining Corporation Limited and his remuneration includes ${i}$ \$50,000 fees and \$4,500 superannuation recovered from NuStar. Mr Dundo resigned as a director of St Barbara Mines Limited on 18 July 2004.

$(ii)$ Mr Tuten has declined to receive directors' fees or other remuneration.

(iii) Mr Wheatley was appointed on 28 November 2003.

In accordance with the Company's constitution, Mr Wheatley is due for re-election at the 2004 Annual General Meeting.

There is no agreement with individual non-executive directors specifying a term on engagement.

There were no loans to directors of entities in the consolidated entity during the year to 30 June 2004.

Executive Directors of St Barbara Mines Limited

	Primary		Post - employment		Equity
	Cash. salary & fees	Non monetary benefits	Super- annuation	Retirement benefits	Options issued	Total
	\$	\$	\$	\$	\$	\$
S W Miller Executive Chairman	400,000	11.324	80.000		$\overline{\phantom{a}}$	491.324

Notes to the financial statements for the year ended 30 June 2004

Specified executives of St Barbara Mines Limited and group

	Primary		Post - employment		Equity
	Cash, salary & fees	Non monetary benefits		Retirement benefits	Options issued	Total
	\$	\$	\$	\$	\$	\$
Company
R T Calnan Gen Mar - Project & Business Development	169,000	11,446	62,600			243,046
P J Richardson Manager- Meekatharra Gold Operations	150,000	10,789	15,000			175,789
G C Miller Group Manager - Exploration	145,000	3,320	21,750			170,070
C W Davis Manager - Paulsens Project	142,622	9.048	21,393			173,063
E L Boyd (i) Manager - Corporate & Commercial, Company Secretary	120,698	214	9,511			130,423
A D Rule (ii) Chief Financial Officer, Coy Secretary	87.796	3320	11,875	71,250		174,241
Consolidated
B Lambert (iii) General Manager- NuStar Minino	88,375	713	8,838		$8,167$ (iv)	97.926

Corporation Limited

Mr Boyd commenced on 15 December 2003 $\left( i\right)$

Mr Rule terminated employment as Chief Financial Office on 30 November 2003 and resigned as Company $(i)$ Secretary on 15 December 2003.

Mr Lambert commenced with NuStar Mining Corporation Limited on 21 January 2004, and on 1 May 2004 he $(iii)$ entered into a 3 year executive employment contract.

On 1 May 2004 NuStar Mining Corporation Limited granted Mr Lambert 5,000,000 options over ordinary NuStar $(iv)$ shares, exercisable at a price of \$0.05 each, under the NuStar Employee Option Scheme approved by NuStar shareholders on 12 December 2003. Valuation of these options is based on the Black-Scholes method utilising
share price at grant date, interest of 5.75% and volatility of 35%. As the options vest on achievement of certain performance criteria in the future, the value has been attributed over the intervening period and proportioned from grant date to 30 June 2004

Options provided as remuneration

The details and value of options provided to executives are shown above.

Notes to the financial statements for the year ended 30 June 2004

Shareholding

Relevant interests in shares of the Company held by directors of the Company and consolidated entity or their directorrelated entities in the Company:

Ordinary Shares - fully paid	Balance at start of year	Movements during the year	Balance at end of year
Directors
S W Miller ⁽¹⁾
G B Speechly	20,000		20,000
K A Dundo	100,000		100.000
H G Tuten $(2)$	$\mathbf{a}$
M K Wheatley	$\overline{\phantom{a}}$
Connected Persons
Strata Mining Corporation Limited ⁽³⁾	32,200,000		32,200,000
RCF ⁽²⁾	18,146,163	111.595.854	129,742,017

$\left( 3\right)$ Mr S W Miller is a director and shareholder of Strata Mining Corporation Limited which holds a relevant interest in the ordinary share capital of St Barbara.

$(2)$ Mr H G Tuten is the Chairman of RCF Management L.L.C., the management company of RCF.

Options

Relevant interests in options of the Company held by directors of the Company and consolidated entity or their directorrelated entities in the Company:

	Balance at start	Movements	Balance at end of
Directors	of year	during the year	vear
S W Miller	17,500,000	$\tilde{\phantom{a}}$	17.500.000
G B Speechly	500,000	(500.000)
K A Dundo		$\blacksquare$	$\overline{\phantom{a}}$
H G Tuten $(1)$	$\mathbf{w}$	$\overline{\phantom{a}}$
M K Wheatley $(2)$		750.000	750.000
Connected Persons
RCF ⁽¹⁾	11,830,632	44,159,394	55,990,026

$(1)$ Mr Tuten is the Chairman of RCF Management L.L.C., the management company of RCF

$(2)$ RCF has agreed with Mr Wheatley to transfer up to 1,000,000 options exercisable at \$0.11 which expire on 31 December 2005. 500,000 were vested when he was appointed as a director, 250,000 vested after 6 months service on the Board and 250,000 after 12 months on the Board. As at 30 June 2004 Mr Wheatley, therefore, has a beneficial interest in 750,000 options registered in the name of RCF

The options granted to RCF were in consideration for facility fees. All other options were granted for no consideration by the Company. There are no voting, conversion or dividend rights related to these options.

Notes to the financial statements for the year ended 30 June 2004

$24.$ REMUNERATION OF AUDITORS

			Consolidated		Company
			30 June 2004 \$	30 June 2003 \$	30 June 2004 \$	30 June 2003 \$
	remuneration:	During the year the auditor of the Company, and its related practices earned the following
		PricewaterhouseCoopers
		Remuneration for audit or review of the financial reports of the Company or any entity in the consolidated entity	117,786	82,000	74,486	76,000
		Remuneration for other services:
		Taxation service and general advice	29,200	11,800	17,200	11,800
			146,986	93.800	91,686	87,800
25.		CONTINGENT LIABILITIES
			Consolidated		Company
			30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
		Details and estimated maximum amounts of contingent liabilities, for which no provisions are included in the accounts, are as follows:
(a)		Guarantees and Undertakings
	(i)	The Company has given undertakings to two of its controlled entities that it intends to provide the necessary financial or other support to enable them to meet their obligations as and when they fall due
	(ii)	Indemnity to the Company's bankers in respect of guarantees provided by the bankers to the Western Australian Department of Minerals and Energy - see Note 7	3,068	3,262	2,725	3,262
	(iii)	Security guarantees given to the Western Australian Department of Minerals and Energy		30		30

Native Title $(b)$

It is possible that Native Title, as defined in the Native Title Act 1993, may be established over land in which the consolidated entity has an interest. The Company is not currently engaged in any negotiations.

Notes to the financial statements for the year ended 30 June 2004

$(c)$ Litigation

Westgold $(i)$

In late September 2000, a demand was made against the Company by Westgold Resources NL ("Westgold") alleging loss and damages in the sum of \$6,229,921. A Writ of Summons was issued by Westgold against the Company in the Supreme Court of Western Australia in CIV 2427 of 2000 on 20 October 2000.

The alleged claim by Westgold arose from a series of share transactions in the Company shares which took place between May and August 1997 as follows:

On 12 May 1997, Westgold purchased 10,350,000 St Barbara shares at \$0.72 per share from Mr Woss who was a director of the Company at the time ("Woss Shares"). This share purchase took the total shares owned in the Company by Westgold to 23,898,951 (approximately 13% of the Company equity at the time) at a total cost of \$18.4 million.
On 9 July 1997, Westgold sold all of its shareholding in the Company (which included the Woss Shares) to Montleigh Investments Pty Ltd, a company associated with Mr Ross Atkins who was a director of the Company at the time. The total sale consideration was \$19.1 million. Approximately \$8.4 million of the sale consideration was due to be paid by 30 June 1998. During 1998, Montleigh Investments Pty Ltd defaulted on payment of the deferred consideration and Westgold recovered \$1.6 million of the deferred consideration.

In these proceedings Westgold has sought to recover the balance of the deferred consideration plus interest from the Company and Mr Woss.

The main components of Westgold's statement of claim against the Company in this Supreme Court Action are as follows:

An alleged breach of section 1001A(2) of the Corporations Act in that the Company allegedly contravened the ASX Listing Rules by failing to notify the ASX of information alleged to have been known to it on or before 30 April 1997 (being a date prior to Westgold's purchase of the Woss Shares). It is Westgold's contention that certain information, if published, was information that a reasonable person would expect to have a material effect on the price or value of the Company's shares.
An alleged contravention of the previous section 995(2) of the Corporations Law (being a misleading or deceptive statement made in relation to securities in the legislation prior to the current Corporations Act) which Westgold allege to have occurred by public releases made on or about 30 April 1997. Westgold allege that these public releases represented that, save for certain matters, the Company's operations were proceeding satisfactorily and with record levels of gold production in the ordinary course of operations and that there were no further adverse factors affecting or likely to affect the Company's operations or financial position. Westgold's contention is that this was misleading and deceptive in that, in its contention:
the Company's operations were not proceeding satisfactorily and the Company had not overcome and was not overcoming operational and financial difficulties from which it had suffered;
there were many adverse factors affecting and likely to affect the Company's operations and financial position;
the record production level in the relevant quarter was the result of an abnormal occurrence;
the Company was aware of a reason or factor which likely would preclude the establishment of a viable mining operation at certain of the Company's tenements and which likely would require revision of the Company's published gold reserves for those tenements.

All of these allegations are denied by St Barbara and the claim is being robustly defended. St Barbara has joined two the directors who were directors of the Company at the time to the action.

An important issue concerns the Company's insurance arrangements. The Company was insured during the relevant period for directors' and officers' liability of the nature in respect of which the Westgold proceedings have been issued, however, uncertainties currently exist as to whether or not this insurance cover will be available to the Company in the event that it is unsuccessful in this litigation as the insurer is denying policy liability.

The best case scenario for the Company is to be wholly successful in its defence and thereby have no liability. The maximum possible liability for the Company (without any contribution from former directors, insurers or insurance brokers) would be for the entire loss alleged by Westgold (being approximately \$7.5 million plus interest to the date of judgement calculated at 8%, together with legal costs). The Company intends, as part of its defence, to argue that should it be found liable (which it denies) then certain contribution orders should be made in relation to third parties and that, in addition, the Company is of the view that Westgold must, in any event, apportion any loss it incurred as between the sale of the Woss Share and other St Barbara shares held by Westgold which were sold simultaneously with the Woss Shares. An unsuccessful party will usually also be liable for its own and the other party's legal costs.

Notes to the financial statements for the year ended 30 June 2004

The application has been listed for hearing on 3 December 2004. In the meantime, the Company has applied to the Supreme Court to strike out part of Westgold's statement of claim which the Company contends discloses no reasonable course of action against the Company. A hearing date for this application has not yet been fixed.

The Company has incurred legal costs to date in the order of \$720,000. It is possible that the Westgold litigation may not proceed to trial for a further 12 months, in which case, the Company in defending this action may incur further legal costs in the order of \$750,000 to \$1 million, which costs could escalate in the event that costs were awarded against the Company or the trial judge's decision were to be appealed. It should be emphasised that none of the current directors of the Company were directors of the Company at the time that the above share transactions took place.

$(ii)$ Kingstream

On 2 July 2002, Kingstream Steel Limited (Subject to Deed of Company Arrangement) commenced proceedings in the Supreme Court of Western Australia against the Company and its 100% owned subsidiary, Zygot Ltd. Kingstream alleges it has a claim against the Company and Zygot Ltd arising from the withdrawal of three mining lease applications ("MLA's"), which applications are alleged to be part of the subject matter of an Option Deed between the Company and Kingstream dated 26 March 1997 as supplemented by a Deed dated 20 January 1998 and a letter dated 29 January 1999 from the Company's lawyers to Kingstream. Kingstream exercised the option in February 1999.

Kingstream alleges in essence that the Company and Zygot Ltd breached the express or implied terms of the Option Deed by causing or allowing the MLA's to be withdrawn.

The proceedings are at an early stage and have been, and will continue to be, defended. However, on the basis of expert advice received the Company considers its potential exposure in relation to this claim to have a value (including costs) of less than \$200,000.

Notes to the financial statements for the year ended 30 June 2004

$26.$ COMMITMENTS FOR EXPENDITURE

		Consolidated		Company
		30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
(a)	Exploration
	In order to maintain rights of tenure to mining tenements, the consolidated entity is required to outlay in 2003/04 for tenement rentals and minimum exploration expenditure requirements of the Western Australian Department of Minerals and Energy. This commitment in 2004/05 will continue for future years with the amount dependent upon tenement holdings	2,669	9,361	1,762	8,114
(b)	Hire Purchase Commitments
	Analysis of hire purchase commitments:
	Payable not later than one year (refer Note 16)	188	1,133	188	1,133
	Payable later than one year, not later than	75	1,528	75
	five years (refer Note 16)	263	2,661	263	1,528 2,661
	These commitments relate to plant and equipment and are based on the cost of the vehicles and are payable over a period of up to 48 months.
(c)	Finance Lease Commitments
	Analysis of finance lease commitments:
	Payable not later than one year		1,368		1,368
	Payable later than one year, not later than five years		855		855
	Deduct future charges on finance leases		(205)		(205)
	Provide for as a liability		2,018		2,018
	Representing lease liabilities:
	Current (refer Note 16)		2,018		2,018
	Analysis of Non-Cancellable Operating Lease Commitments		371		371
	Payable not later than one year	239		239
	Payable later than one year, not later than two years	147		147
	Payable later than two years, not later than five years
		386	371	386	371
	The non-cancellable operating lease

commitments are the net rental payments
associated with rental properties

Notes to the financial statements for the year ended 30 June 2004

27. EMPLOYEES

Employment Benefit Liabilities $(a)$

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Provision for employee benefits and directors' benefits and related on-cost liabilities
Current (Note 17)	751	869	751	869
Non-current (Note 17) w.	78	180	78	180
	829	1.049	829	1.049
	Number 2004	Number 2003	Number 2004	Number 2003
Number of Employees
Number of employees at financial year end	41	66	36	66

$(c)$ Superannuation

$(b)$

The Company participates in an "accumulation" superannuation plan under which all employees are entitled to lump sum benefits on retirement, disability or death. The Company contributes various percentages of wages and salaries to the plan. The contributions made are legally enforceable. No actuarial assessment of the plan has been made as such assessments are inappropriate to an "accumulation" plan. The assets of the plan are sufficient to satisfy all benefits that have vested under the plan in the event of its termination, or in the event of voluntary or compulsory termination, of the employment of each employee.

Employee Share Option Plan $(d)$

Shareholders approved an Employee Share Option Plan on 20 October 1995 ("ESOP"). This ESOP entitles management who meet incentive objectives to apply for options to purchase shares in the Company. There is no vesting period for these options and accordingly employees can exercise these options at any time after they have been issued. These options are automatically cancelled when the employee leaves the Company. There are no voting rights and no dividend rights attached to these options. No new options will be issued under this ESOP. No options issued under this plan were exercised during the year ended 30 June 2004. There are no longer any options in existence under this plan.

$(e)$ Employee Option Plan

Shareholders approved an Employee Option Plan on November 2001. There is no vesting period for options issued under this plan and accordingly employees can exercise them at any time after they have been issued. No options were issued under the plan during the year to 30 June 2004. These options are automatically cancelled when the employee leaves the Company. A total of 3,725,000 options previously issued under the plan were cancelled due to employees leaving the Company. There are no voting rights and no dividend rights attached to these options. No options issued under this plan were exercised during the year to 30 June 2004. Details of the options on issue under this plan as at 30 June 2004 are:

Number of Options 3,375,000	Expiry Date 26 April 2007
475,000	17 January 2008
3,850,000

Notes to the financial statements for the year ended 30 June 2004

28. RELATED PARTIES

$(a)$ Directors and specified executives

Disclosures relating to directors and specified executive are set out in Note 23.

Transactions with entities in the wholly-owned group $(b)$

St Barbara Mines Limited is the parent entity in the wholly-owned group comprising the Company and its whollyowned subsidiaries.

During the year the Company advanced loans of \$61,733 (2003; \$229,776) to entities in the wholly-owned group, Repayments and advances were received of \$nil (2003: \$99,000) from entities in the wholly-owned group. The Company provided accounting and administrative assistance free of charge to all its wholly-owned subsidiaries.

Loans payable to and advanced from wholly-owned subsidiaries to the Company are interest free.

$(c)$ Transactions with non-wholly owned entities in the consolidated entity

The Company provided funding to NuStar, a controlled entity but not wholly owned, for part of the year as follows:

	30 June 2004 \$'000	30 June 2003 \$'000
Balance at beginning of financial year	16.848	4,877
net funding advanced for exploration and all other activities $\blacksquare$ on normal commercial terms	(1,703)	2,842
shares issued in satisfaction of debt $\blacksquare$	(17,600)
administration service fee $\blacksquare$	1.398
cost of shares issued by the Company to PKKP for Native u, Title Agreement		616
funding advanced for repayment of convertible note $\blacksquare$		7.372
interest	841	1.141
	(216)	16,848

The loan was secured by way of a fixed and floating charge over substantially all of the assets and undertakings of NuStar. The loan bears interest at 10% per annum compounded monthly and expires on 1 January 2005 at which time the loan becomes repayable in full. Pursuant to a resolution by NuStar shareholders at the Annual General Meeting held on 12 December 2003, the Company converted \$17.6 million of the amount owing by NuStar to the Company into fully paid ordinary shares in NuStar. Accordingly, 352,000,000 fully paid ordinary shares in NuStar were issued to the Company in full satisfaction of the debt of \$17.6 million owing. Subsequently, the security of the fixed and floating charge over substantially all of the assets and undertakings of NuStar was released in full.

During the year, Bushsun a wholly owned subsidiary of NuStar acquired 15,650,000 shares in Strata Mining Corporation Ltd, a listed entity. Refer Note 14. Mr S W Miller was a director of Strata during the financial year.

Notes to the financial statements for the year ended 30 June 2004

Amounts receivable from and payable to entities in the wholly-owned group and controlled $(d)$ entities

	Company
	30 June 2004 \$'000	30 June 2003 \$'000
Aggregate amounts receivable at balance date from: Non-current:
Controlled entities		16,848
Entities in the wholly-owned group	2.770	2,752
Less provision for doubtful receivables	(1,630)	(1,360)
	1.140	18,240
Aggregate amounts payable at balance date to: Current:
Controlled entities	216
Non-current: Entities in the wholly-owned group	11,484	11,484

Amounts receivable from Director related entities $(e)$

At 30 June 2004, the Company had a receivable of nil (2003: \$1,067,000) owing by Defiance Mining Corporation. Mr S Miller and Mr K Dundo were appointed Directors of Defiance Mining Corporation on 25 June 2003.

Other Transactions with Directors of the company and their Director related entities $(f)$

The aggregate amounts brough to account in respect of the following types of transactions with Directos of entities in the consolidated entities and their Director related entities were:

		Consolidated and Company
Director	Notes	30 June 2004 \$	30 June 2003 \$
S W Miller
G B Speechly (resigned 28/11/03)
K A Dundo	$\langle 1 \rangle$	4.243	212.493
H G Tuten	(2)	8.249.863	3.249.142
M K Wheatly (appointed 28/11/03)		$\overline{\phantom{a}}$

$(1)$ Paid to Q Legal for legal services. Mr Dundo is a partner of Q Legal. During prior years Mr Dundo was a partner of Clayton Utz.

$(2)$ Paid to RCF by way of issuance of shares and options as required under the RCF Facility. Mr Tuten is the Chairman of RCF Management LLC the management company of RCF.

Notes to the financial statements for the year ended 30 June 2004

29. INVESTMENTS IN CONTROLLED ENTITIES

The consolidated entity consists of the Company and its wholly-owned controlled entities as follows.

Equity holding		Cost of Company's investment
Name of entity	Class of Shares	June 2004 %	June 2003 %	June 2004 \$'000	June 2003 \$'000
Australian Eagle Oil Co. NL	Ordinary	100	100	179	179
St Barbara Pastoral Co. Pty Ltd	Ordinary	100	100	A.
Capvern Pty Ltd	Ordinary	100	100	×,
Eagle Group Management Pty Ltd	Ordinary	100	100	$\blacksquare$
Murchison Gold Pty Ltd	Ordinary	100	100
Kingkara Pty Ltd	Ordinary	100	100	×.
Oakjade Pty Ltd	Ordinary	100	100	×.
Regalkey Holdings Pty Ltd	Ordinary	100	100	a.
Silkwest Holdings Pty Ltd	Ordinary	100	100	A.
Sixteenth Ossa Pty Ltd	Ordinary	100	100
Vafitu Pty Ltd	Ordinary	100	100
Zygot Ltd	Ordinary	100	100
NuStar Mining Corporation Limited (1)	Ordinary	54.8	88.3	38,138	20,537
Bushsun Pty Ltd* (1)	Ordinary	54.8	88.3
				38,138	20,716

* 100% subsidiary of NuStar

Each company in the consolidated entity was incorporated in Australia.

(1) The Company's equity position in Nustar reduced from 88.3% to 54.8% after accepting equity of 352 million NuStar shares at \$0.05 cents per share in full satisfaction of the \$17.6 million intercompany loan between the Company and NuStar.

Notes to the financial statements for the year ended 30 June 2004

$30.$ RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

	Consolidated		Company
	30 June 2004 \$'000	30 June 2003 \$'000	30 June 2004 \$'000	30 June 2003 \$'000
Operating loss after income tax	(25, 228)	(32,985)	(31, 929)	(27, 935)
Write down FITB		2,965		2,965
Depreciation and amortisation	2,726	18,391	2,721	18,347
Mining properties change in accounting policies		9,897		2,546
Provision for diminution in investments	312		12,348	4,081
Write down of exploration tenements	318		318
Provision for diminution of exploration tenements	5,256		5,256
Loss/ (profit) on sale of property, plant and equipment	2,462	(798)	2,462	(798)
Profit on sale of shares	(93)		(93)
Borrowing expenses paid with shares	1,707	1,015	1.707	1,015
Convertible note borrowing cost	739	1,640	739	1,337
Interest on NuStar Ioan account			(841)	(1, 141)
NuStar administration service fee			(182)
Provision for non-recovery of subsidiary loan			270
Issuance of options in lieu facility fees		1,529		1,529
Changes in assets and liabilities:
Decrease in trade and other debtors $\tilde{\phantom{a}}$	2.676	969	3.314	621
Decrease in inventories $\tilde{\phantom{a}}$	3.487	887	3,487	887
Decrease in other assets	620	172	620	145
Increase in trade and other creditors, employee entitlements and provisions	(3,624)	(4,236)	(4,460)	(4,338)
Net cash inflow from operating activities	(8,642)	(554)	(4,263)	(739)

Non-Cash Financing and Investing Activities

The following transactions occurred which affected assets and liabilities which are not reflected in the Statements of Cash Flows.

Year ended 30 June 2004

During the half year the following transactions occurred which affected assets and liabilities and did not result in cash flows:

The issue of 111,595,854 fully paid ordinary shares to RCF in satisfaction of the RCF interest and facility fees ö. and the debt for equity swap approved by shareholders at the Annual General Meeting on 25 November 2003. The value ascribed to this issue is \$8,249,863.
Pursuant to a resolution by shareholders at the NuStar Mining Corporation Limited ("NuStar") Annual General $\circ$ Meeting held on 12 December 2003, the Company converted \$17.6 million owing by NuStar to the Company into 352,000,000 fully paid ordinary shares in NuStar.
Pursuant to a resolution by shareholders at the NuStar Annual General Meeting held on 12 December 2003, $\circ$ Claymore Capital converted \$0.1 million owing by NuStar to Claymore Capital by way of a convertible note into 2,000,000 fully paid ordinary shares in NuStar.

Notes to the financial statements for the year ended 30 June 2004

Year ended 30 June 2003

The issue of 8,734,436 fully paid ordinary shares at various prices ranging from \$0.2263 to \$0.0843 to RCF in satisfaction of the RCF Facility fee and interest. See Note 18.

$31.$ FINANCING FACILITIES

Other than as set out in Note 16(iii) regarding the RCF Facility, neither the Company nor the consolidated entity have access to lines of credit that were unutilised.

$32.$ EARNINGS PER SHARE

	Consolidated
	30 June 2004 cents/share	30 June 2003 cents/share
Basic and diluted loss per share	4.70	8.00
	\$'000	\$'000
Retained loss for the year used in the calculation of basic earnings per share	(24, 315)	(32, 733)
	Number	Number
Weighted average number of fully paid ordinary shares on issue during the year used in the calculation of basic earnings per share	517,843,596	409.326.900

33. EVENTS OCCURRING AFTER BALANCE DATE

Since 30 June 2004 the following has occurred:

On 15 July 2004, the Company announced the conversion by Ocean Resources Capital Holdings plc of the face value of its convertible note of \$4.4 million into 55,000,000 ordinary shares at \$0.08.
On 19 July 2004, the Company announced the resignation of Kevin Dundo as a Director with effect from 18 July 2004.
On 20 July 2004, a General Meeting of the shareholders of the Company was held and the following resolutions were carried:
Mr Eduard Eshuys was elected as a Director; Ö.
Mr Colin Wise was elected as a Director; and $\circ$
Mr Stephen Miller was removed as a Director. ö
On 20 July 2004, the Company issued 42,050,000 fully paid ordinary shares at \$0.04 per share to raise \$1,682,000 for working capital.
On 20 July 2004, the Company issued 17,480,547 fully paid ordinary shares to Ocean Resource Capital Holdings Limited at \$0.046 per share in satisfaction of interest of \$804,105.
On 23 July 2004, the Company issued 26,591,453 fully paid shares to Ocean Resources Capital Holdings Limited at \$0.046 per share to raise \$1,223,207 for working capital.
On 23 July 2004, the Company announced that Mr Eduard Eshuys was appointed as Managing Director and Mr Colin Wise was appointed as Non-Executive Chairman. The new Board appointed Deloitte to conduct a review of the Company, including the terms of employment of the former Executive Chairman.
On 23 July 2004, the Company issued 26,591,453 fully paid ordinary shares to Resource Capital Fund II L.P. \$0.046 per share to raise \$1,223,207 for working capital.

Notes to the financial statements for the year ended 30 June 2004

On 12 August 2004, the Company announced that following the completion of the initial review by Deloitte, agreement was reached with the former Executive Chairman, Mr Stephen Miller, for his employment to end with effect from 4 August 2004. This resulted in a termination payment of \$257,543 inclusive of all statutory entitlements (less applicable taxes). Mr Miller then resigned from the Boards of all wholly owned subsidiaries of the Company and from the Boards of NuStar and its subsidiary.
On 24 August 2004, NuStar announced that a detailed mining plan had established a Mining Reserve of 1,202,000 tonnes at 10.66g/t - containing 412,100 ounces of gold.
On 20 September 2004, NuStar announced that an agreement was reached in principle to acquire a royalty over the Paulsens Gold Project and an interest in the Wyloo Joint Venture - both held by the Company.
On 20 September 2004, the new Board announced that it had completed a review of the financial position and operations of the Company and had decided to divest a substantial part of its shareholding in NuStar with the following four separate but interrelated transactions:
an initial sale of 100 million NuStar shares to third parties at not less than \$0.04 per share within seven (a) business days:
the sale of the Paulsens 5% royalty owned by the Company to NuStar for not less than \$5.1 million and the $(b)$ sale of the Company's interest in the Pelican Joint Venture (adjacent to Paulsens) to NuStar;
the grant of an option to Claymore (as arranger of these transactions) to purchase 100 million NuStar shares $(c)$ at \$0.05 per share at any time up to three months after the initial sale; and
a Share Swap of NuStar shares for Company shares on the basis of 1.25 NuStar shares for each Company $(d)$ share. The Company intends to offer a maximum of 240 million NuStar shares and to cancel the Company shares received through the Share Swap by way of a capital reduction. Should more shareholders wish to accept the Share Swap than the number of NuStar shares available, then shareholder acceptances will be scaled back on a pro rata basis.

As a consequence of the above transactions, the Company will:

immediately retire an existing secured debt of \$3.5 million; Ö.
have cash of approximately \$8 million after payments to creditors and other liabilities; ö
retain approximately 102 million NuStar shares or just over 10% of the issued capital; and O.
have reduced the issued capital of the Company from 715 million shares to 523 million shares, should the $\circ$ maximum of 240 million NuStar shares be swapped.

In addition to the above transactions, the Company has:

commenced a comprehensive review and data compilation of the Paddy's Flat tenements (100% owned) in the Meekatharra region:
reviewed the Aurogenic and Elara joint ventures which require the joint venture partners to spend approximately $\circ$ \$6.5 million during the coming twelve months; and
entered into negotiations with a third party for the use of the Blue Bird plant at Meekatharra which will at least $\Omega$ cover the care and maintenance costs, while the operations are suspended.

Notes to the financial statements for the year ended 30 June 2004

RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO 34. INTERNATIONAL ACCOUNTING STANDARDS

The financial statements are prepared in accordance with Australian Generally Accepted Accounting Principles ("GAAP"), which differs in certain respects from International Financial Reporting Standards ("IFRS"). The approximate effect of applying IFRS for the two years ended 30 June 2004 and 30 June 2003, where IFRS are materially different to GAAP, is set out below.

	Consolidated
	30 June 2004 \$'000	30 June 2003 \$'000
Net (loss) attributable to members of the Company under GAAP	(24, 315)	(32, 733)
Accounting for impairment of assets	(5,621)	(8,571)
Net (loss) attributable to outside equity interests	6,369
Net (loss) attributable to members of the Company under IFRS	(23, 567)	(41, 304)
Total equity under GAAP	44.852	37,973
Accounting for impairment of assets	(14, 192)	(8,571)
Accounting for investments in available for sale securities		(229)
Total equity under IFRS	30.660	29,173

Accounting for impairment of assets

Under IAS 36 "Impairment of Assets" the consolidated entity is required to record an impairment loss whenever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is measured as the higher of the net selling price and value in use. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction and value in use is the present value of estimated future cash flows expected to arise from continued use and disposal at the end of its useful life. As a result of this treatment the consolidated entity is required to take an after tax write down of \$5.6 million for the year ended 30 June 2004 (2003 \$8.6 million). Impairment of assets attributable to the outside equity interest in the current year is \$2.5 million. Under GAAP, recoverable amount write-downs or impairments are determined using undiscounted cash flows.

Accounting for income taxes

Under IFRS deferred tax balances are calculated based on the difference between the tax base of the asset and the carrying amount of the asset. As a result of this treatment, at 30 June 2004, a deferred tax liability of \$5.3 million (2003: \$7.7 million) would be recognised in relation to the carrying amount of exploration, evaluation and development expenditure acquired in the NuStar acquisition which has no tax base. This would also result in an increase of \$5.3 million (2003: \$7.7 million) in exploration, evaluation and development expenditure acquired. This adjustment has no impact on net profit or net assets of the consolidated entity. Under GAAP deferred tax balances reflect differences arising from the timing of recognition of revenue and expenses for accounting and tax.

Accounting for investments in available for sale securities

Under IAS 39 "Financial Instruments: Recognition and Measurement" the consolidated entity is required to classify investments in securities as, "held for trading" or "available-for-sale". The investments held by the consolidated entity are classified as available-for-sale and carried at fair value with unrealised gains and losses reported in equity and recycled to the Statement of Financial Performance when sold or impaired. Under GAAP investments are carried at cost with a provision recognised for any diminution in value considered to be permanent

Accounting for rehabilitation and restoration costs

Under IFRS rehabilitation and restoration costs incurred during production and after production stops, should be accrued when the liability is incurred. As a result of this treatment no additional provision for rehabilitation would be recognised at 30 June 2004 (2003: \$0).

Net (loss) attributable to outside equity interests

During the year NuStar Mining Corporation Limited ("NuStar") a subsidiary of the Company, raised \$19.8 million by the issue of 420 million shares to outside investors to fund the Paulsens project. Simultaneously, the Company converted its loan of \$17.6 million to NuStar to equity through the receipt of 352 million shares. As a result of this transaction, the Company diluted its interest in NuStar from 88% to 54%. Under IFRS the transfer of value from the outside equity interest to the parent entity interest is \$3.4 million compared to a transfer under GAAP from the parent entity interest to the outside equity interest of \$0.4 million. This transfer of value has no impact on the net assets of the consolidated entity.

DIRECTORS' DECLARATION

The directors declare that the financial statements and notes set out on pages 7 to 48:

$a)$ comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
give a true and fair view of the company's and consolidated entity's financial position as at b} 30 June 2004 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the directors' opinion:

the financial statements and notes are in accordance with the Corporations Regulations 2001; and $a)$
b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable, on the basis of the matters disclosed in Note 1(a).

This declaration is made in accordance with a resolution of the directors.

E ESHUYS MANAGING DIRECTOR & CEO

Dated at Perth this 30th day of September 2004

Independent audit report to the members of St Barbara Mines Limited

Audit opinion

In our opinion, the financial report of St Barbara Mines Limited:

gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of St Barbara Mines Limited and the St Barbara Mines Group (defined below) as at 30 June 2004, and of their performance for the year ended on that date, and
is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, and the Corporations Regulations 2001.

Accounting principles generally accepted in Australia vary in certain respects from international financial reporting standards. An explanation of the major differences between principles generally accepted in Australia and international financial reporting standards is presented in note 34 to the financial statements. The application of the international financial reporting standards would have affected the determination of consolidated net loss for the year ended 30 June 2004 and consolidated equity as at 30 June 2004 to the extent summarised in note 34.

This opinion must be read in conjunction with the rest of our audit report.

Inherent uncertainty regarding continuation as a going concern

Without qualification to the opinion expressed above, attention is drawn to the following matter. As a result of matters described in note 1(a), there is significant uncertainty whether St Barbara Mines Limited will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both St Barbara Mines Limited (the company) and the St Barbara Mines Group (the consolidated entity), for the year ended 30 June 2004. The consolidated entity comprises both the company and the entities it controlled during that year.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

PricewaterhouseCoopers ABN 52 780 433 757

QVI 250 St Georges Terrace PERTH WA 6000 GPO Box D198 PERTH WA 6840 DX 77 Perth Australia www.pwc.com/au Telephone +61 8 9238 3000 Facsimile +61 8 9238 3999

Audit approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive. evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

When this audit report is included in an Annual Report, our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Vicewaterhouse (organ

PricewaterhouseCoopers

Javid J. L.C.K

David J Smith Partner

Perth 30 September 2004

AI assistant

ST BARBARA LIMITED — Annual Report 2004

65749_rns_2004-09-29_fadd1800-8146-406d-a599-8afab4038afb.pdf

ST BARBARA MINES LIMITED

ASX SHAREHOLDERS REPORT

Eduard Eshuys

Financial Report for 30 June 2004

ST BARBARA MINES LIMITED

ABN 36 009 165 066

FINANCIAL REPORT 30 JUNE 2004

DIRECTORS' REPORT

DIRECTORS

Eduard Eshuys (aged 59) - Managing Director and Chief Executive Officer

Henderson (Hank) G Tuten (aged 56) - Non-Executive Director

DIRECTORS' REPORT

Mark K Wheatley (aged 43) - Non-Executive Director

PRINCIPAL ACTIVITIES

RESULTS OF OPERATIONS

DIRECTORS' REPORT

DIVIDENDS

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

LIKELY DEVELOPMENTS

EVENTS SUBSEQUENT TO 30 JUNE 2004

DIRECTORS' REPORT

DIRECTORS' REPORT

MEETINGS OF DIRECTORS

DIRECTORS' REPORT

DIRECTORS' INTERESTS IN SHARES AND OPTIONS

DIRECTORS' REPORT

DIRECTORS' AND EXECUTIVES' EMOLUMENTS

Non-Executive Directors of St Barbara Mines Limited

Executive Directors of St Barbara Mines Limited

DIRECTORS' REPORT

Other executives of St Barbara Mines Limited and group

OPTIONS

DIRECTORS' REPORT

OFFICERS' INDEMNITIES AND INSURANCE

OCCUPATIONAL HEALTH, SAFETY, WELFARE AND THE ENVIRONMENT

Commitment

Injury Frequency

DIRECTORS' REPORT

Occupational Health, Safety and Welfare

Environmental Management

Rehabilitation

ROUNDING OF AMOUNTS

AUDITOR

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2004

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004

Notes to the financial statements for the year ended 30 June 2004

$\mathbf{1}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

$(a)$ Going Concern

Notes to the financial statements for the year ended 30 June 2004

Principles of Consolidation $(b)$

Acquisition of Assets $(c)$

$(d)$ Recoverable Amount of Non-Current Assets

Notes to the financial statements for the year ended 30 June 2004

Treatment of Mining Properties $(e)$

$(f)$ Depreciation and Amortisation of Property, Plant and Equipment

Depreciation and Amortisation of Assets Held for Resale $(q)$

$(h)$ Accounting for Income Tax

Notes to the financial statements for the year ended 30 June 2004

Tax consolidation legislation

$\left( i\right)$ Investments

$\ddot{\theta}$ Inventories

$(k)$ Maintenance and Repairs

$\left( l\right)$ Employee Benefits

$(i)$ Wages and salaries, annual leave and sick leave

$(ii)$ Long service leave

Notes to the financial statements for the year ended 30 June 2004

$(iii)$ Ownership-based remuneration schemes

$(m)$ Leased Assets

Receivables $(n)$

$(o)$ Revenue

$(p)$ Cash Flows

Foreign Currency $(q)$

Notes to the financial statements for the year ended 30 June 2004

$(r)$ Trade and Other Creditors

Rehabilitation and Restoration Costs $(s)$

$(t)$ Borrowing Costs

ST BARBARA LIMITED Annual Report 2004