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ST BARBARA LIMITED — Annual Report 2017
Oct 19, 2017
65749_rns_2017-10-19_83620a5a-7e2f-4f90-9f39-d71c5e9400b9.pdf
Annual Report
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ASX Release / 20 October 2017
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2017 Annual Report and Notice of Annual General Meeting
The 2017 Annual General Meeting of St Barbara Limited will be held at 11:00 am Melbourne time (UTC + 11 hours) on Wednesday 29 November 2017, in the Royce Conference Room, Royce Hotel, 379 St Kilda Road, Melbourne.
The 2017 Annual Report, Notice of Annual General Meeting and sample Proxy Form are attached, as distributed to shareholders today.
A live audio webcast of the Annual General Meeting will be available at St Barbara’s website at www.stbarbara.com.au/investors/webcast, or by clicking here. The audio webcast is ‘listen only’ and does not enable questions. The audio webcast will subsequently be made available on the website.
Investor Relations Mr Alistair Reid Manager Investor Relations +61 3 8660 1959 Media Relations Mr Tim Duncan Hinton & Associates +61 3 9600 1979
St Barbara Limited Level 10, 432 St Kilda Road, Melbourne VIC 3004 ACN 009 165 066 Locked Bag 9, Collins Street East, Melbourne VIC 8003
T +61 3 8660 1900 F +61 3 8660 1999 W www.stbarbara.com.au
Annual�Report�2017�
ST�BARBARA�LIMITED�2017�
Annual�Report�
St�Barbara�at�a�glance
- St�Barbara�was�established�in�1969�and�is�an�ASX�200� listed�gold�mining�company�(ASX:SBM).�
FY�17�at�a�glance
- Record�operational�performance�
- Record�safety�
-
St�Barbara�has�two�mining�operations:�
-
Leonora �Operations�in�Western�Australia,�and�
-
Simberi �Operations�in�Papua�New�Guinea.�
-
Leonora �Operations�comprise�the� Gwalia �underground� mine�and�associated�processing�plant.�The� Gwalia underground�mine�is�St�Barbara’s�cornerstone�asset.�� The� Gwalia �deposit�has�an�average�Ore�Reserve�grade�of� 7.8�g/t�Au�down�to�2,140�metres�below�surface,�a�mine� plan�to�at�least�FY�24,�and�remains�open�at�depth.� Gwalia �compares�favourably�against�other�ASX�listed� gold�mines�on�grade,�reserve�size,�mine�life,�annual� production�and�cost�per�ounce.�
-
Simberi �Operations�has�an�open�pit�mine�and�associated� processing�plant.�Simberi�produced�116�koz�of�gold�in� FY�17�with�the�remaining�oxide�project�life�extended�to� FY�20.��Existing�sulphide�reserves�and�exploration�on�the� neighbouring�Tabar�Islands�provide�the�potential�for� Simberi�Operations�to�extend�mine�life.�
-
At�30�June�2017,�St�Barbara�had� Mineral�Resources �of� 9.63�million�ounces�of�contained�gold,�including� Ore� Reserves �of�4.31�million�ounces�of�contained�gold.�
-
Growth�initiatives� planned�for�FY�18�include:�
-
The �Gwalia�Extension�Project� will�extend�mining�at� Gwalia�to�at�least�2,000�mbs.�The�Project�has�an� overall�budget�of�A$100�million�and�is�expected�to� take�two�and�a�half�to�three�years�to�construct.�The� project�consists�of�two�main�components;�a� ventilation�upgrade�and�paste�aggregate�fill.
-
Deep�drilling�at� Gwalia �below�the�existing�Ore� Reserves�(which�remain�open�at�depth)�with�the� objective�of�increasing�Resources�and�Reserves.�
-
Exploration�utilising�new�seismic�geophysics�at� Gwalia�and�the�Leonora�region.�
-
Drilling�of�prospective�sulphide�oxide�and�copper� gold�targets�on�Tatau�and�Big�Tabar�Islands,�near� Simberi �Operations�in�PNG,�and�drilling�for�oxide� sulphide�targets�on� Simberi �Island.�
-
Drilling�at� Pinjin �in�Western�Australia,�and�
-
Systematic�evaluation�of�sensible,�value�accretive� inorganic�growth�opportunities.�
-
St�Barbara’s�primary�safety�measure,�total�recordable� injury�frequency�rate,�was�a�record�low�1.2�for�the�year� to�June�2017,�an�excellent�result�for�a�mixed�jurisdiction� combination�of�underground�and�open�pit�operations.
-
Record�production�from�continuing�operations�
-
Record�low�All�In�Sustaining�Cost�(AISC)�
-
Achieved�or�exceeded�guidance�at�both�operations�
-
Record�financial�results�
-
Record�underlying�profit�
-
Record�cash�flow�from�operating�activities�
-
US$�senior�secured�debt�repaid�in�full�
-
Positive�growth�outcomes�
-
A$100M�Gwalia�extension�project�commenced�
-
Reserves�and�Resources�increased�at�Gwalia�
-
Simberi�oxide�mine�life�extended�
-
$0.06�per�share�fully�franked�dividend�for�year
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Record�Production�from�continuing�operations
381,101�ounces
400,000
300,000
200,000
100,000
0
2013 2014 2015 2016 2017
Gwalia Simberi
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Record�Low�All�in�Sustaining�Cost
A$907/oz
1,500
1,000
500
0
2013 2014 2015 2016 2017
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Record�Low�Total�Recordable�Injury� Frequency�Rate�1.2
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6
4
2
0
2013 2014 2015 2016 2017
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i�
ST�BARBARA�LIMITED�2017�
Annual�Report�
St�Barbara�at�a�glance
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Leonora�(Gwalia�mine) Simberi� Simberi
PNG • Open�pit�mine
• Gwalia�underground�mine� • FY17�production�116�koz�
• FY17�production�265�koz� • FY18F�production��
• FY18F�production�� 105�–�115�koz�
245���260�koz� • 0.5�Moz�oxide�and�1.4�Moz�
• 2.1�Moz�Ore�Reserve� sulphide�Ore�Reserve�
(open�at�depth)� (sulphide�open�at�depth)�
• Mine�plan�to�FY24� • Mine�life�extended�to�mid�
Australia
FY20�
Growth�initiatives
• $100�million�Gwalia� Growth�initiatives
Extension�Project�to�extend� Leonora� • Exploration�of�near�mine�
mining�to�at�least�2,000mbs� targets�and�on�adjacent�
• Deep�drilling�targeting� Tatau�and�Big�Tabar�Islands�
Reserve�and�Resource� • Copper�gold�porphyry�
additions�to�extend�mine�life� exploration�with�Newcrest�
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FY18�planned�exploration��
2,250�km[2] �of�prospective�tenements�across�Western�Australia�and�Papua�New�Guinea
-
Western�Australia
-
Gwalia�deep�drilling,�adjacent�and�below� existing�Reserves�
-
Gwalia�and�Leonora�region�seismic�exploration�
Papua�New�Guinea�
-
Simberi�oxide�near�mine�drilling�
-
Tatau�and�Big�Tabar�Islands�copper�gold�drilling�
-
Tatau�Island�oxide�and�sulphide�drilling�
-
Pinjin�drilling�
| OreReservesasat30June OreReserves Mt |
OreReservesasat30June OreReserves Mt |
2017 g/tAu |
Moz |
|---|---|---|---|
| Leonora,WesternAustralia | |||
| � Gwalia |
8.6 | 7.8 | 2.1 |
| � TowerHill |
2.5 | 3.7 | 0.3 |
| Simberi,PapuaNewGuinea | |||
| � Oxide � Sulphide |
10.9 12.5 |
1.3 3.5 |
0.5 1.4 |
| TotalReservesallRegions | 34.6 | 3.9 | 4.3 |
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Ore�Reserves Mineral�Resources
(Moz)� (Moz)�
9.6
9.1
3.9
4.6
4.3
4.0
1.9
1.9 5.7
4.5
2.1 2.4
FY�16 FY�17 FY�16 FY�17
Leonora Simberi Leonora Simberi
Total
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Notes:�All�in�Sustaining�Cost�is�a�non�IFRS�measure,�refer�page�5.��Total�Recordable�Injury�Frequency�Rate�is�measured�for�each�million�hours�worked�on�a�12�month�rolling� basis.�All�Ore�Reserves�and�Mineral�Resources�figures�are�as�at�30�June�2017,�refer�to�pages�74�to�80�for�details.��Mineral�Resources�are�reported�inclusive�of�Ore� Reserves.��Mine�lives�based�on�Ore�Reserves�at�30�June�2017.��FY18�guidance�figures�per�June�2017�Quarterly�Report�released�to�ASX�on�26�July�2017.��Data�is�rounded� as�displayed�in�charts,�discrepancies�in�totals�may�occur�due�to�rounding.�
ii�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
| Contents | Page |
|---|---|
| Directors’Report | 2 |
| Directors | 2 |
| Principalactivities | 2 |
| Overviewofgroupresults | 3 |
| Overviewofoperatingresults | 4 |
| AnalysisofAustralianoperations | 5 |
| AnalysisofSimberioperations | 6 |
| Discussionandanalysisoftheincomestatement | 7 |
| Discussionandanalysisofthecashflowstatement | 8 |
| Discussionandanalysisofthebalancesheet | 8 |
| Businessstrategyandfutureprospects | 9 |
| Materialbusinessrisks | 10 |
| Riskmanagement | 12 |
| Regulatoryenvironment | 12 |
| InformationonDirectors | 13 |
| MeetingsofDirectors | 14 |
| Directors’Interests | 14 |
| Remunerationreport | 15 |
| Indemnificationandinsuranceofofficers | 35 |
| Proceedingsonbehalfofthecompany | 35 |
| Environmentalmanagement | 35 |
| Non�auditservices | 35 |
| Auditorindependence | 35 |
| Eventsoccurringaftertheendofthefinancialyear | 35 |
| Roundingofamounts | 36 |
| Auditor’sindependencedeclaration | 37 |
| FinancialReport | 38 |
| OreReservesandMineralResourcesStatement | 74 |
| ShareholderInformation | 81 |
Corporate�Governance�Statement�
The�Company’s�2017�Corporate�Governance�Statement�was� released�to�the�ASX�on�20�October�2017�and�is�available�at� www.stbarbara.com.au/profile/governance�
Directors’�Report
Directors��
The�Directors�present�their�report�on�the�“St�Barbara�Group”,� consisting�of�St�Barbara�Limited�and�the�entities�it�controlled�at�the� end�of,�or�during,�the�financial�year�ended�30�June�2017.�
The�following�persons�were�Directors�of�St�Barbara�Limited�at�any� time�during�the�year�and�up�to�the�date�of�this�report:�
-
T�C�Netscher� Non�Executive�Chairman��
-
R�S�Vassie� Managing�Director�&�CEO��
-
K�J�Gleeson� Non�Executive�Director�
-
D�E�J�Moroney� Non�Executive�Director��
The�qualifications,�experience�and�special�responsibilities�of�the� Directors�are�presented�on�page�13.�
Principal�activities�
During�the�year�the�principal�activities�of�the�Group�were�mining� and�the�sale�of�gold,�mineral�exploration�and�development.�There� were�no�significant�changes�in�the�nature�of�activities�of�the�Group� during�the�year.��
Dividends�
There�were�no�dividends�paid�or�declared�during�the�financial�year.�
Subsequent�to�year�end,�the�Board�declared�a�fully�franked�dividend� of�6�cents�per�ordinary�share.�
Sustainability�Report�
The�Company’s�2017�Sustainability�Report�was�released�to�the� ASX� on� 20� October� 2017� and� is� available� at� www.stbarbara.com.au/sustainability
Page�2�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Overview�of�group�results�
The�consolidated�result�for�the�year�is�summarised�as�follows:��
| 2017 | 2016 | ||
|---|---|---|---|
| $’000 | $’000 | ||
| EBITDA(3)(6) | 293,302 | 298,106 | |
| EBIT(2)(6) | 207,719 | 217,191 | |
| Profitbeforetax(4) | 189,706 | 183,402 | |
| Statutoryprofit(1)aftertax | 157,572 | 169,388 | |
| Totalnetsignificantitemsafter | (2,794) | 42,031 | |
| tax | |||
| EBITDA(6)(excludingsignificant | 320,575 | 284,050 | |
| items) | |||
| EBIT(6)(excludingsignificant | 234,992 | 203,135 | |
| items) | |||
| Profitbeforetax(excluding | 216,979 | 169,346 | |
| significantitems) | |||
| Underlyingnetprofitaftertax(5)(6) | 160,366 | 127,357 |
Details�of�significant�items�included�in�the�statutory�profit�for�the� year�are�reported�in�the�table�below.��Descriptions�of�each�item�are� provided�in�Note�3�to�the�Financial�Report.�
| 2017 | 2016 | |
|---|---|---|
| $’000 | $’000 | |
| Assetimpairmentsandwrite | (27,273) | � |
| downs | ||
| GainonsaleofKOTHandKailis | � | 14,056 |
| Significantitemsbeforetax | (27,273) | 14,056 |
| Incometax | 24,479 | 27,975 |
| Significantitemsaftertax | (2,794) | 42,031 |
(1) Statutory�profit�is�net�profit�after�tax�attributable�to�owners�of�the� parent.�
(2) EBIT�is�earnings�before�interest�revenue,�finance�costs�and�income�tax� expense.�
(3) EBITDA�is�EBIT�before�depreciation�and�amortisation.��
(4) Profit�before�tax�is�earnings�before�income�tax�expense.�
(5) Underlying�net�profit�after�income�tax�is�net�profit�after�income�tax� (“statutory�profit”)�excluding�significant�items�as�described�in�Note�3�to� the�financial�statements.���
(6) EBIT,�EBITDA�and�underlying�net�profit�after�tax�are�non�IFRS�financial� measures,�which�have�not�been�subject�to�review�or�audit�by�the�Group’s� external�auditors.�These�measures�are�presented�to�enable� understanding�of�the�underlying�performance�of�the�Group�by�users.�
During�the�2017�financial�year�the�Group�recorded�another�year�of� strong�financial�performance,�with�key�achievements�over�the�year� being:�
-
•� Statutory�net�profit�after�tax�of�$157,572,000�(2016:� $169,388,000)�for�the�year�ended�30�June�2017.�
-
Repayment�of�the�U.S.�debt�that�commenced�in�June�2015� resulted�in�a�significant�reduction�in�interest�paid.�Total�finance� costs�of�$19,961,000�(2016:�$35,749,000)�reflected�the�benefit� of�the�lower�interest�expense.�
-
Cash� flows� from� operations� of� $301,314,000� (2016:� $269,199,000)�reflecting�the�strong�performance�of�both�Gwalia� and�Simberi.�
-
•� Full�repayment�of�the�U.S.�senior�secured�notes�and�other� facilities� totalling� $228,564,000� (2016:� $142,096,000),� strengthening�the�Group’s�balance�sheet.�
To�provide�additional�clarity�into�the�performance�of�the�operations� underlying�measures�for�the�year�are�reported,�together�with�the� statutory�results.��Underlying�net�profit�after�tax,�representing�net� profit�excluding�significant�items,�was�$160,366,000�for�the�year� (2016:�$127,357,000).�
Cash�on�hand�at�30�June�2017�was�$160,909,000�(2016:� $136,689,000).�Total�interest�bearing�borrowings�were�$547,000� (2016:�$226,318,000).�US$167,975,000�US�senior�secured�notes�at� 30�June�2016�were�repaid�during�the�year,�with�the�final�principal� repayment�made�on�15�March�2017.�
The�key�shareholder�returns�for�the�year�are�presented�in�the�table� below.�
| below. | ||
|---|---|---|
| 2017 | 2016 | |
| Basicearningspershare | ||
| (centspershare) | 31.71 | 34.21 |
| Returnoncapitalemployed | 55% | 49% |
| Changeinclosingshareprice | (1)% | 418% |
Underlying�shareholder�returns�for�the�year�are�presented�in�the� table�below.�
| tablebelow. | ||
|---|---|---|
| 2017 | 2016 | |
| Basicearningspershare | 32.27 | 25.72 |
| (centspershare) | ||
| Returnoncapitalemployed | 61% | 48% |
Page�3�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
The�table�below�provides�a�summary�of�the�underlying�profit�before� tax�from�operations�in�Australia�and�at�Simberi.�
| Yearended30June | Australian | Simberi | |
|---|---|---|---|
| 2017 | Operations | Operations | Group |
| $’000 | |||
| Revenue | 441,947 | 199,755 | 641,702 |
| Mineoperatingcosts | (143,107) | (124,137) | (267,244) |
| GrossProfit | 298,840 | 75,618 | 374,458 |
| Royalties | (17,303) | (4,471) | (21,774) |
| Depreciationand | (61,903) | (19,838) | (81,741) |
| amortisation | |||
| Underlyingprofit | 219,634 | 51,309 | 270,943 |
| fromoperations(1) |
(1) Excludes�impairment�losses,�corporate�costs,�exploration�expenses,� interest�and�tax�and�is�non�IFRS�financial�information,�which�has�not� been�subject�to�review�or�audit�by�the�Group’s�external�auditors.�The� measure�is�presented�to�enable�an�understanding�of�the�underlying� performance�of�the�operations.�
The�table�below�provides�a�summary�of�the�cash�contribution�from� operations�in�Australia�and�at�Simberi.�
Overview�of�operating�results�
During�the�2017�financial�year�the�Group’s�operations�continued�to� achieve�record�production,�cost�and�safety�performance.�
Safety�of�people�working�across�the�Group�is�of�paramount� importance�and�this�focus�has�been�demonstrated�through�the� improvement�in�the�total�recordable�injury�frequency�rate�(TRIFR)�to� a�new�record�of�1.2�as�at�30�June�2017�(2016:�2.1),�calculated�as�a� rolling�12�month�average.�
Total�production�for�the�Group�in�the�2017�financial�year�was� 381,101�ounces�of�gold�(2016:�386,564�ounces),�and�gold�sales� amounted�to�380,173�ounces�(2016:�381,761�ounces)�at�an�average� gold�price�of�$1,685�per�ounce�(2016:�$1,595�per�ounce).�The�prior� year�gold�production�and�sales�included�9,112�ounces�from�King�of� the�Hills�which�was�disposed�of�in�October�2015.��
Consolidated�All�In�Sustaining�Cost�(AISC)�for�the�Group�was�$907� per�ounce�in�2017�(2016:�$933�per�ounce),�reflecting�the�benefits�of� strong�results�achieved�at�Gwalia�and�Simberi.�
Total�net�cash�contribution�from�the�operations�was�$301,314,000� (2016:�$269,199,000)�as�a�result�of�the�record�performance�from� Gwalia�and�Simberi,�which�was�after�capital�expenditure�and�funding� of�growth�capital�related�to�the�extension�project�and�deep�drilling� program�at�Gwalia.�
| Yearended30June | Australian | Simberi | |
|---|---|---|---|
| 2017 | Operations | Operations | Group |
| $’000 | |||
| Operatingcash | 279,040 | 73,454 | 352,494 |
| contribution | |||
| Capitalexpenditure– | (30,206) | (3,711) | (33,917) |
| sustaining | |||
| Capitalexpenditure� | (9,402) | � | (9,402) |
| growth(2) | |||
| Capitalexpenditure– | (7,861) | � | (7,861) |
| GwaliaExtension | |||
| Project | |||
| Cashcontribution(1) | 231,571 | 69,743 | 301,314 |
(1) Cash�contribution�is�non�IFRS�financial�information,�which�has�not�been� subject�to�audit�by�the�Group’s�external�auditors.�This�measure�is� provided�to�enable�an�understanding�of�the�cash�generating� performance�of�the�operations.��
(2) Growth�capital�at�Gwalia�represents�deep�drilling�expenditure.�
Page�4�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Analysis�of�Australian�operations
Total�sales�revenue�from�the�Leonora�operations�of�$441,947,000� (2016:�$440,333,000)�was�generated�from�gold�sales�of�260,828� ounces�(2016:�276,210�ounces)�in�the�year�at�an�average�achieved� gold�price�of�$1,692�per�ounce�(2016:�$1,592�per�ounce).���During�the� 2017�year,�revenue�benefitted�from�the�significantly�higher�average� gold�price.�The�decrease�in�gold�ounces�sold�was�mainly�attributable� to�the�King�of�the�Hills�mine,�which�contributed�9,112�ounces�in�the� prior�year�before�its�divestment�in�October�2015.�
A�summary�of�production�performance�for�the�year�ended�30�June� 2017�is�provided�in�the�table�below.�
Details�of�2017�production�performance�
| Gwalia | Gwalia | KingoftheHills | KingoftheHills | |
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Undergroundore mined(kt) |
790 | 924 | � | � � 76 3.9 95 9,112 893 964 |
| Grade(g/t) | 10.7 | 9.3 | � | |
| Oremilled(kt) | 828 | 951 | � | |
| Grade(g/t) | 10.3 | 9.1 | � | |
| Recovery(%) | 97 | 96 | � | |
| Goldproduction (oz) |
265,057 | 267,166 | � | |
| Cashcost(1) (A$/oz) |
592 | 609 | � | |
| All�InSustaining Cost(AISC)(2) (A$/oz) |
785 | 783 | � |
(1)�Cash�operating�costs�are�mine�operating�costs�including�government� royalties,�and�after�by�product�credits.��This�is�a�non�IFRS�financial� measure�which�has�not�been�subject�to�review�or�audit�by�the�Group’s� external�auditors.��It�is�presented�to�provide�meaningful�information�to� assist�management,�investors�and�analysts�in�understanding�the�results� of�the�operations.��Cash�operating�costs�are�calculated�according�to� common�mining�industry�practice�using�The�Gold�Institute�(USA)� Production�Cost�Standard�(1999�revision).�
- (2)�All�In�Sustaining�Cost�(AISC)�is�based�on�cash�operating�costs,�and�adds� items�relevant�to�sustaining�production.�It�includes�some�but�not�all,�of� the�components�identified�in�World�Gold�Council’s�Guidance�Note�on� Non�GAAP�Metrics�–�All�In�Sustaining�Costs�and�All�In�Costs�(June�2013),� which�is�a�non�IFRS�financial�measure.�
Gwalia�
Gwalia�produced�265,057�ounces�of�gold�in�2017�(2016:�267,166� ounces).��The�consistent�high�performance�at�Gwalia�reflects�the� positive�impact�of�improvements�in�productivity�and�successful� implementation�of�innovations�in�mining�achieved�since�2015.���
Ore�tonnes�mined�from�the�Gwalia�underground�mine�decreased�to� 790,000�tonnes�in�2017�from�924,000�tonnes�in�2016,�largely�due�to� mine�sequencing�issues�and�weather�related�delays�in�the�March� 2017�quarter.�
Ore�mined�grades�increased�from�9.3�grams�per�tonne�in�2016�to� 10.7�grams�per�tonne�in�2017,�mainly�due�to�reduced�dilution�and� high�grade�shoots�present�in�stopes�that�cannot�be�reliably� estimated�by�production�drilling.��Ore�milled�grade�increased�from� 9.1�grams�per�tonne�in�2016�to�10.3�grams�per�tonne�in�line�with�the� higher�grade�of�ore�mined.��The�Gwalia�mill�continued�to�perform� strongly�in�2017,�with�the�average�recovery�improving�to�97%�(2016:� 96%).�
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Gwalia�gold�production
(koz)
267 265
248
214
185 183
131
109
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
----- End of picture text -----
Gwalia�unit�cash�operating�costs[(1)�] for�the�year�were�$592�per�ounce� (2016:�$609�per�ounce),�reflecting�the�benefit�of�higher�average� grade�and�sustained�production�efficiencies�through�innovations.�� The�unit�All�In�Sustaining�Cost�(AISC)[(2)] �for�Gwalia�was�$785�per� ounce�in�2017�(2016:�$783�per�ounce).�Total�cash�operating�costs�at� Gwalia�of�$156,914,000�were�lower�compared�with�the�prior�year� (2016:�$162,704,000)�due�mainly�to�the�lower�production�volumes.�
In�2017�Gwalia�generated�net�cash�flows,�after�capital�and�deep� drilling�expenditure,�of�$231,571,000�(2016:�$223,616,000).�The� deep�drilling�program�in�2017�targeted�extensions�to�the�Gwalia�lode� system�below�2,000�metres�below�surface�with�expenditure�in�the� year�totalling�$9,402,000�(2016:�$9,006,000�–�targeted�extensions� down�to�2,000�metres�below�surface).�
During�the�year�the�Board�approved�capital�expenditure�relating�to� the�Gwalia�extension�project.�The�project�will�enable�underground� mining�at�Gwalia�to�extend�to�at�least�2,000�metres�below�surface,� as�well�as�providing�the�foundation�for�potential�further�extensions.� The�project�has�an�overall�budget�of�$100,000,000�and�will�take�two� and�a�half�to�three�years�to�construct.�Expenditure�incurred�during� the�year�totalled�$7,861,000�(2016:�$Nil)�
Page�5�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Analysis�of�Simberi�operation
During�2017�the�Simberi�operation�continued�to�build�on�the� successful�turnaround�achieved�in�2016.�Total�sales�revenue�from� Simberi�in�2017�was�$199,755,000�(2016:�$169,782,000),�generated� from�gold�sales�of�119,345�ounces�(2016:�105,551�ounces)�at�an� average�achieved�gold�price�of�A$1,669�per�ounce�(2016:�A$1,604� per�ounce).�
A�summary�of�production�performance�at�Simberi�for�the�year�ended� 30�June�2017�is�provided�in�the�table�below.�
Simberi�
Simberi�production�of�116,044�ounces�of�gold�was�the�highest�since� the�Group�acquired�the�operations�in�September�2012�(2016:� 110,286�ounces).���
Ore�tonnes�mined�and�total�volume�of�material�moved�has�increased� significantly�since�2015.��Ore�mined�in�2017�totalled�4,020,000� tonnes,�which�was�an�increase�of�19%�on�the�prior�year.��The�increase� in�mining�performance�in�the�2017�financial�year�was�largely� attributable�to�continuous�improvements�introduced�during�the� prior�year�and�further�operating�efficiencies�across�the�operations.�
Details�of�2017�production�performance
| Simberi | Simberi | |
|---|---|---|
| 2017 | 2016 | |
| Openpitoremined(kt) | 4,020 | 3,372 |
| Grade(g/t) | 1.13 | 1.26 |
| Oremilled(kt) | 3,690 | 3,315 |
| Grade(g/t) | 1.19 | 1.26 |
| Recovery(%) | 82 | 82 |
| Goldproduction(oz) | 116,044 | 110,286 |
| Cashcost(1)(A$/oz) | 1,092 | 1,143 |
| All�InSustainingCost(AISC)(2) (A$/oz) |
1,187 | 1,293 |
(1)�Cash�operating�costs�are�mine�operating�costs�including�government� royalties,�and�after�by�product�credits.��This�is�a�non�IFRS�financial� measure�which�has�not�been�subject�to�review�or�audit�by�the�Group’s� external�auditors.��It�is�presented�to�provide�meaningful�information�to� assist�management,�investors�and�analysts�in�understanding�the�results� of�the�operations.��Cash�operating�costs�are�calculated�according�to� common�mining�industry�practice�using�The�Gold�Institute�(USA)� Production�Cost�Standard�(1999�revision).�
- (2)�All�In�Sustaining�Cost�(AISC)�is�based�on�cash�operating�costs,�and�adds� items�relevant�to�sustaining�production.�It�includes�some�but�not�all,�of� the�components�identified�in�World�Gold�Council’s�Guidance�Note�on� Non�GAAP�Metrics�–�All�In�Sustaining�Costs�and�All�In�Costs�(June�2013),� which�is�a�non�IFRS�financial�measure.�
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----- Start of picture text -----
Simberi�annual�total�material�moved
(kt)
----- End of picture text -----
==> picture [210 x 76] intentionally omitted <==
----- Start of picture text -----
14,335
9,899
6,294
4,151
FY14 FY15 FY16 FY17
----- End of picture text -----
Ore�mined�grades�were�generally�lower�than�the�prior�year�at�1.13� grams�per�tonne�gold�(2016:�1.26�grams�per�tonne).�The�overall� grade�in�2017�was�impacted�by�the�new�Pigibo�pit�in�the�first�quarter� of�the�year,�where�the�upper�area�of�the�pit�comprised�ore�with�low� density.�Ore�mined�grades�over�the�remainder�of�2017�improved�as� waste�stripping�efforts�successfully�exposed�higher�grade�ore�areas.�
Ore�milled�increased�to�3,690,000�tonnes�(2016:�3,315,000�tonnes),� reflecting�improvements�in�both�Aerial�Rope�Conveyor�and�mill� throughput.��
==> picture [212 x 120] intentionally omitted <==
----- Start of picture text -----
Simberi�gold�production
(koz)
116
110
80
44
FY14 FY15 FY16 FY17
----- End of picture text -----
Simberi�unit�cash�operating�costs�for�the�year�were�$1,092�per�ounce� (2016:�$1,143�per�ounce),�reflecting�the�positive�impact�of�increased� production�and�lower�operating�costs.��The�unit�All�In�Sustaining�Cost� (AISC)�for�Simberi�for�the�year�was�$1,187�per�ounce�(2016:�$1,293� per�ounce).��Total�cash�operating�costs�at�Simberi�during�the�2017� year�were�consistent�with�prior�year�at�$126,720,000�(2016:� $126,057,000)�despite�the�significant�increase�in�mining�activity�and� ore�milled.�
In�2017�Simberi�generated�positive�net�cash�flows,�after�capital� expenditure,�of�$69,743,000�(2016:�$33,808,000).���
Page�6�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Discussion�and�analysis�of�the�income�statement
Revenue�
Total�revenue�increased�from�$610,115,000�in�2016�to�$641,702,000� in�2017.��Revenue�from�Leonora�and�Simberi�was�higher�than�the� previous�year�due�to�the�higher�average�gold�price�and�an�increase� in�ounces�sold�at�Simberi.�
Mine�operating�costs�
Mine�operating�costs�in�2017�were�$267,244,000�compared�with� $280,927,000�in�the�prior�year.��The�decrease�in�operating�costs�was� mainly�due�to�lower�mining�volumes�at�Gwalia,�together�with�the� fact�that�the�prior�year�included�some�costs�related�to�King�of�the� Hills.�
Other�revenue�and�income�
Interest�revenue�was�$1,948,000�(2016:�$1,960,000),�earned�on�cash� held.�
Other�income�for�the�year�was�$86,000�(2016:�$3,564,000).�
Exploration�
Total�exploration�expenditure�incurred�during�the�2017�year� amounted�to�$20,083,000�(2016:�$15,792,000),�with�an�amount�of� $9,436,000�(2016:�$9,006,000)�capitalised,�relating�to�drilling� expenditure�at�Gwalia.��Exploration�expenditure�expensed�in�the� income�statement�in�the�year�was�$10,647,000�(2016:�$6,786,000).�� Exploration�activities�during�the�year�focused�on�investigating�highly� prospective�near�mine�high�grade�oxide�targets�at�Simberi,� undertaking�an�extensive�deep�drilling�program�at�Gwalia,�3D� Seismic�programs�at�Gwalia�and�regional�exploration�in�Western� Australia.�
Corporate�costs�
Corporate�costs�for�the�year�of�$20,977,000�(2016:�$19,184,000)� comprised�mainly�expenses�relating�to�the�corporate�office�and� compliance�related�costs.��Expenditure�in�2017�was�marginally�higher� than�in�the�prior�year�as�a�result�of�increased�business�development� activities.�
Royalties�
Royalty�expenses�for�the�year�were�$21,774,000�(2016:� $21,455,000).��Royalties�paid�in�Western�Australia�are�2.5%�of�gold� revenues,�plus�a�corporate�royalty�of�1.5%�of�gold�revenues.�� Royalties�paid�in�Papua�New�Guinea�are�2.25%�of�gold�revenues� earned�from�the�Simberi�mine.��The�increase�in�royalty�expenses�in� 2017�was�attributable�to�increased�gold�revenue�from�Leonora�and� Simberi.�
Impairment�losses�and�asset�write�downs�
At�31�December�2016,�an�impairment�loss�of�$27,273,000�was� recognised�against�the�Group’s�Simberi�cash�generating�unit�(2016:� $Nil)�and�further�information�is�provided�in�Note�7�to�the�financial� statements.���
Other�expenses�
Other�expenditure�of�$3,608,000�(2016:�$1,967,000)�included� amounts�associated�with�share�based�payments�and�charges�for� Company�projects.���
Net�finance�costs�
Finance�costs�in�the�year�were�$19,961,000�(2016:�$35,749,000).�� Finance�costs�comprised�interest�paid�and�payable�on�borrowings� and�finance�leases�of�$7,444,000�(2016:�$28,608,000),�borrowing� costs�relating�to�the�senior�secured�notes�amortised�and�premium� paid�for�early�repayment�of�$10,859,000�(2016:�$5,434,000)�and�the� unwinding�of�the�discount�on�the�rehabilitation�provision�of� $1,658,000�(2016:�$1,707,000).��
Net�foreign�exchange�gain�
A�net�foreign�exchange�gain�of�$3,037,000�was�recognised�for�the� year�(2016:�net�gain�of�$142,000),�which�included�a�realised�foreign� currency�gain�of�$2,125,000�(2016:�loss�of�$7,899,000)�on� repayments�of�US�denominated�debt�during�the�year�and�a�net� realised/unrealised�currency�gain�of�$1,390,000�(2016:�net�gain�of� $7,993,000)�related�to�Australian�and�US�intercompany�loans�and� third�party�balances.�
Income�tax�
An�income�tax�expense�of�$32,134,000�was�recognised�for�the�2017� year�(2016:�income�tax�expense�of�$14,014,000).�Income�tax� expense�of�$58,905,000�on�Australian�taxable�income�included�a� provision�of�$10,478,000�for�research�and�development�credits� previously�recognised�by�the�Company�for�projects�which� AusIndustry�reviewed�during�the�year�and�assessed�as�ineligible�in� accordance� with� research� and� development� legislation.�� Management�maintain�that�the�projects�are�eligible�and�have� requested�a�review�of�AusIndustry’s�findings.��The�matter�is�currently� following�the�statutory�review�process.�
A�tax�credit�of�$26,775,000�has�been�booked�relating�to�previously� unrecognised�PNG�deferred�tax�assets.�This�amount�has�been� booked�based�on�the�current�life�of�mine�plan�for�the�Simberi� operations.�
Depreciation�and�amortisation�
Depreciation�and�amortisation�of�fixed�assets�and�capitalised�mine� development�amounted�to�$85,583,000�(2016:�$80,915,000)�for�the� year.��Depreciation�and�amortisation�attributable�to�the�Australian� operations�was�$61,903,000�(2016:�$63,492,000).�The�expense�at� Simberi�was�$19,838,000�(2015:�$12,098,000),�with�the�higher� charge�due�to�increased�production�and�alignment�of�remaining� asset�lives�with�the�current�life�of�mine�following�the�completion�of� the�strategic�review�during�the�year.�
Page�7�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Discussion�and�analysis�of�the�cash�flow�statement
Operating�activities�
Cash�flows�from�operating�activities�for�the�year�were�$303,226,000� (2016:�$242,788,000),�reflecting�the�benefit�of�higher�receipts�from� customers�and�significantly�lower�payments�to�suppliers�and� employees�compared�to�the�prior�year.���
Receipts�from�customers�of�$640,354,000�(2016:�$615,244,000)� reflected�the�higher�achieved�gold�price�in�2017�and�increased�gold� sales�from�Simberi.�Payments�to�suppliers�were�$309,097,000�(2016:� $336,805,000),�with�the�reduction�mainly�attributable�to�lower� mining�volumes�at�Gwalia.���
Payments�for�exploration�expensed�in�the�year�amounted�to� $10,647,000�(2016:�$6,786,000).��Interest�paid�in�the�year�was� $11,304,000�(2016:�$30,405,000),�with�the�lower�expense�due�to� repayment�of�the�US�senior�secured�notes.��Borrowing�costs�of� $8,017,000�in�the�year�(2016:�$145,000)�related�to�the�premiums� paid�to�retire�the�US�senior�secured�notes�prior�to�the�15�April�2018� maturity�date.�
Investing�activities�
Net�cash�flows�used�in�investing�activities�amounted�to�$53,108,000� (2016:�$46,122,000)�for�the�year.��Higher�mine�development� expenditure� of� $32,036,000� (2016:� $21,071,000)� included� expenditure�related�to�the�extension�project�at�Gwalia.��
Lower�expenditure�on�property,�plant�and�equipment�of�$9,796,000� in�2017�(2016:�$16,057,000)�was�mainly�due�to�lower�expenditure�at� Simberi.���
Exploration�expenditure�capitalised�during�the�year�totalled� $9,436,000�(2016:�$9,006,000),�which�related�to�the�deep�drilling� program�at�Gwalia.���
Investing�expenditure�during�the�year�was�in�the�following�major� areas:�
-
Underground�mine�development�and�infrastructure�at�Gwalia�–� $24,175,000�(2016:�$23,285,000)�
-
Gwalia�extension�project�–�$7,861,000�(2016:�$Nil)�
-
Purchase�of�property,�plant�and�equipment�at�Gwalia�–� $5,554,000�(2016:�$3,780,000)�
-
Purchase�of�property,�plant�and�equipment�at�Simberi�–� $3,711,000�(2016:�$9,402,000)�
-
Investments�in�Catalyst�Metals�Limited�and�Peel�Mining�Limited� shares�totalling�$4,540,000�(2016:�$Nil)�
-
During�the�2017�year�the�deferred�proceeds�related�to�the�sale� of�King�of�the�Hills�amounting�to�$2,700,000�was�received�
Financing�activities�
Net�cash�flows�related�to�financing�activities�in�2017�were�a�net� outflow�of�$228,446,000�(2016:�net�outflow�of�$140,130,000).��The� main�movements�in�financing�cash�flows�included:�
Discussion�and�analysis�of�the�balance�sheet
Net�assets�and�total�equity�
St�Barbara’s�net�assets�and�total�equity�increased�substantially� during�the�year�by�$160,513,000�to�$461,127,000�as�a�result�of�the� strong�profit�result�and�significant�reduction�in�total�liabilities�with� the�full�repayment�of�the�US�senior�secured�notes�in�2017.�
Non�current�assets�decreased�during�the�year�by�$32,508,000�mainly� due�to�the�impairment�and�asset�write�down�at�Simberi�at�31� December�2016,�together�with�depreciation�and�amortisation�during� the�year.�
Current�trade�and�other�payables�decreased�to�$36,480,000�at�30� June�2017�(2016:�$39,768,000),�reflecting�the�reduction�in� operational�expenditure�during�the�year.�
The�deferred�tax�balance�was�a�net�liability�of�$1,822,000�(2016:�net� asset�of�$1,098,000).��A�current�provision�for�tax�payable�of� $29,692,000�was�recognised�at�30�June�2017�(2016:�$Nil).��
Debt�management�and�liquidity�
The�available�cash�balance�at�30�June�2017�was�$160,909,000�(2016:� $136,689,000),�with�no�amounts�held�on�deposit�as�restricted�cash� and�reported�within�trade�receivables�(2016:�$118,000).�
Total�interest�bearing�liabilities�reduced�to�$547,000�at�30�June�2017� (2016:�$226,318,000)�representing�lease�liabilities.�������
The�AUD/USD�exchange�rate�as�at�30�June�2017�was�0.7695�(30�June� 2016:�0.7452).�
==> picture [249 x 248] intentionally omitted <==
----- Start of picture text -----
Cash�and�debt
(A$M)
200
161
100 137
79 77
�
(1)
(100)
(200) (226)
(300) (340) (347)
(400)
2014 2015 2016 2017
Cash Debt
----- End of picture text -----
-
Full�repayment�of�the�US�senior�secured�notes�of�$225,409,000� (2016:�$37,798,000).���
-
Premium�funding�payments�of�$2,209,000�(2016:�$Nil).�
-
Repayment�of�finance�leases�amounting�to�$946,000�(2016:� $2,225,000).�
-
In�the�prior�year�the�Red�Kite�facility�was�fully�repaid�giving�rise� to�a�cash�outflow�of�$102,073,000.�
During�the�year�cash�backed�banking�guarantees�of�$118,000�were� released�(2016:�$1,966,000).�
Page�8�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Business�strategy�and�future�prospects�
St�Barbara’s�strategic�focus�is�on�mining�lower�cost�gold�deposits�in� Australia�and�at�Simberi�in�Papua�New�Guinea.��Currently�the�Group� has�a�diversified�asset�portfolio�spanning�underground�and�open�cut� mines,�and�exploration�projects�in�Australia�and�Papua�New�Guinea.�� A�successful�turnaround�was�completed�at�the�Simberi�operations� during�the�prior�year�through�optimisation�of�the�processing�plant,� improving�the�mining�fleet,�and�productivity�improvements�in� mining�operations,�which�has�continued�in�the�2017�year.�
St�Barbara’s�strategy�is�to�generate�shareholder�value�through�the� discovery�and�development�of�gold�deposits�and�production�of�gold.�� The�Group�aligns�its�decisions�and�activities�to�this�strategy�by� focusing�on�key�value�drivers:�relative�total�shareholder�returns,� growth�in�gold�ore�reserves,�return�on�capital�employed�and� exploration�success.�
During�the�2017�financial�year�the�Group�achieved�a�number�of� strategic�milestones:�
-
Record�annual�gold�production�was�achieved�at�Simberi,�and� Gwalia�continued�its�consistent�strong�performance.��At�Gwalia� performance�was�broadly�in�line�with�the�prior�year’s�record� production.��At�Simberi�the�turnaround�of�the�operations�that� commenced�in�the�prior�year�was�further�consolidated�in�2017.�
-
Record�safety�performance�for�the�Group,�reporting�a�Total� Recordable�Injury�Frequency�Rate�(TRIFR)�of�1.2�(2016:�2.1).�
-
Through�strong�cash�generation�from�the�operations�the�Group� reduced�its�debt�by�$228,564,000�(2016:�$142,096,000),� repaying�the�US�senior�secured�notes�in�full,�twelve�months� ahead�of�schedule.�
-
During�the�year�the�deep�drilling�program�at�Gwalia�resulted�in� an�increase�to�Mineral�Resources�and�Ore�Reserves,�and�the� exploration�programs�in�Western�Australia�and�Simberi�on�the� neighbouring�islands�were�advanced.�
-
Subsequent�to�year�end�the�Board�declared�a�fully�franked� dividend�of�6�cents�per�ordinary�share�to�be�paid�on�28� September�2017.�
Strategic�drivers�for�the�business�include:�
-
Optimising�cash�flow�and�reducing�the�cost�base: ��The�Group�is� focused�on�optimising�cash�flow�from�operations�through� maximising�production�and�managing�costs�at�its�existing� operations,�enhancing�operating�capabilities�and�incorporating� new�technologies�across�St�Barbara.��The�Group�will�continue�to� identify�opportunities�to�enhance�productivity�and�improve� operating�performance�in�a�volatile�gold�market.���
-
Improving�productivity :��The�Group�is�focused�on�maintaining� consistent�operations�at�Gwalia�and�Simberi.��St�Barbara� continues�to�invest�to�improve�infrastructure,�mining�fleets�and� capability�to�ensure�consistent�and�reliable�production�at�its� operations.�
-
Growing�the�ore�reserve�base�through�the�development�of� existing�Mineral�Resources�and�exploration�activities: ��A�number� of�potential�organic�growth�opportunities�have�been�identified,� which�could�increase�production�and�extend�the�life�of�the� Gwalia�and�Simberi�operations.��During�2017�a�deep�drilling� program�continued�at�Gwalia�with�the�objective�to�extend�the� Gwalia�mineral�resource�and�develop�the�case�for�mining�below� the�current�reserve.��At�Simberi,�a�sulphide�ore�reserve,�which� has�been�estimated�at�1.4�Moz,�provides�an�opportunity�to� create�a�long�life�production�centre�at�Simberi,�while�incremental� extensions�to�the�oxide�mine�life�at�Simberi�is�also�a�focus.��In� addition�the�Group�is�generating�and�evaluating�exploration� targets�in�the�Tabar�Island�Group�in�Papua�New�Guinea�and�on� its�tenements�in�regional�Western�Australia.�
-
Maintaining�a�conservative�financial�profile: ��The�Group�will� continue�to�maintain�prudent�financial�management�policies� with�the�objective�of�maintaining�liquidity�to�ensure�appropriate� investments�in�the�operations.��The�Group’s�financial� management�policies�are�aimed�at�generating�net�cash�flows� from�operations�to�meet�financial�commitments�and�fund� exploration�to�the�extent�viable�and�appropriate.��The�Group’s� capital�management�plan�is�reviewed�and�discussed�with�the� Board�on�a�regular�basis.��During�2017�the�Company�successfully� repaid�all�of�its�US�debt�ahead�of�schedule�using�the�strong�cash� flows�generated�by�the�operations.�
-
Continue�and�strengthen�the�Group’s�commitment�to�employees� and�local�communities:�� The�Group�considers�the�capability�and� wellbeing�of�its�employees�as�key�in�delivering�the�business� strategy.��Creating�and�sustaining�a�safe�work�environment�and� ensuring�that�operations�conform�to�applicable�environmental� and�sustainability�standards�are�an�important�focus�for�the� Group.��The�Group�invests�in�the�training�and�development�of�its� employees,�talent�management�and�succession�planning.�
The�Company�views�such�efforts�as�an�important�component�of� instilling�St�Barbara’s�values�throughout�the�organisation�and� retaining�continuity�in�the�workforce.��The�Group�has� implemented�a�comprehensive�talent�management�framework� to�strengthen�the�capacity�to�attract,�motivate�and�retain� capable�people.��The�Group�also�has�an�ongoing�commitment�to� work�with�local�communities�to�improve�infrastructure,� particularly�in�health�and�education,�support�local�businesses,� and�provide�venues�for�leisure�activities,�and�other�opportunities� for�developing�communities�in�which�the�Group�operates.
Within�Australia,�the�Gwalia�underground�mine�with�ore�reserves�of� 2.1�million�ounces�remains�the�flagship�asset�of�the�Group,� generating�strong�cash�flows.��To�optimise�the�value�of�ongoing�truck� haulage�at�Gwalia�the�extension�project�was�approved�by�the�Board� in�March�2017�with�a�budget�of�$100�million;�truck�haulage�with� additional�ventilation�was�identified�as�the�preferred�long�term� materials�movement�solution�for�the�mine.��The�Project�consists�of� two�main�components,�a�ventilation�upgrade�and�paste�aggregate�fill� involving�mixing�paste�from�surface�with�waste�crushed� underground�to�fill�stope�cavities.�
In�Papua�New�Guinea,�a�prefeasibility�study�(PFS)�for�the�Simberi� sulphide�project�was�completed�during�2016.��A�strategic�review�of� the�PNG�assets,�including�the�Simberi�mine,�was�completed�in� September�2016.��As�a�result�of�the�review�it�was�decided�that�St� Barbara�would�retain�ownership�and�continue�to�operate�the� Simberi�mine.��In�addition�the�St�Barbara�Group�entered�into�an� Option�and�Farm�in�Agreement�with�Newcrest�PNG�Exploration� Limited�for�copper�gold�porphyry�exploration�on�the�tenements�on� the�Tatau�and�Big�Tabar�Islands.�
The�Group’s�2018�financial�year�budget�was�developed�in�the� context�of�a�volatile�gold�market�and�strengthening�Australian�dollar� against�the�United�States�dollar.��The�Group’s�priorities�in�the�2018� financial�year�are�to�continue�consistent�production�from�Gwalia�and� Simberi,�drive�productivity�improvements�at�both�operations�and� contain�capital�expenditure.��For�the�2018�financial�year�the�Group’s� operational�and�financial�outlook�is�as�follows:�
-
Gold�production�is�expected�to�be�in�the�range�350,000�to� 375,000�ounces.�
-
All�In�Sustaining�Cost�is�expected�to�be�in�the�range�of�$970�per� ounce�to�$1,035�per�ounce.�
-
Sustaining�capital�expenditure�is�expected�to�be�in�the�range�of� $40�million�to�$45�million.�
-
Growth�capital�at�Gwalia�is�anticipated�to�be�between�$50� million�to�$55�million.�
Page�9�
ST�BARBARA�LIMITED�2017�
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- Exploration�expenditure�is�anticipated�to�be�between�$16�million� and�$20�million.�
The�focus�for�the�exploration�program�in�2018�will�be�to�continue�the� deep�drilling�at�Gwalia,�continued�exploration�at�Pinjin�in�Western� Australia�and�to�drill�targets�on�the�Tatau�and�Big�Tabar�islands�in� Papa�New�Guinea.�
Material�business�risks
St�Barbara�prepares�its�business�plan�using�estimates�of�production� and�financial�performance�based�on�a�business�planning�system�and� a�range�of�assumptions�and�expectations.��There�is�uncertainty�in� these�assumptions�and�expectations,�and�risk�that�variation�from� them�could�result�in�actual�performance�being�different�to�planned� outcomes.��The�uncertainties�arise�from�a�range�of�factors,�including� the�Group’s�international�operating�scope,�nature�of�the�mining� industry�and�economic�factors.���The�material�business�risks�faced�by� the�Group�that�may�have�an�impact�on�the�operating�and�financial� prospects�of�the�Group�as�at�30�June�2017�are:�
- Fluctuations�in�the�United�States�Dollar�(“USD”)�spot�gold�price: Volatility�in�the�gold�price�creates�revenue�uncertainty�and� requires�careful�management�of�business�performance�to� ensure�that�operating�cash�margins�are�maintained�despite�a�fall� in�the�spot�gold�price.�
Declining�gold�prices�can�also�impact�operations�by�requiring�a� reassessment�of�the�feasibility�of�a�particular�exploration�or� development�project.��Even�if�a�project�is�ultimately�determined� to�be�economically�viable,�the�need�to�conduct�such�a� reassessment�could�cause�substantial�delays�and/or�interrupt� operations,�which�may�have�a�material�adverse�effect�on�the� results�of�operations�and�financial�condition.�
In�assessing�the�feasibility�of�a�project�for�development,�the� Group�may�consider�whether�a�hedging�instrument�should�be� put�in�place�in�order�to�guarantee�a�minimum�level�of�return.��For� example,�the�Group�put�in�place�a�gold�collar�structure�when�the� King�of�the�Hills�project�was�commissioned,�and�used�gold� forward�contracts�to�secure�revenues�during�the�completion�of� the�turnaround�at�Simberi.�
The�Group�has�a�centralised�treasury�function�that�monitors�the� risk�of�fluctuations�in�the�USD�gold�price�and�impacts�on� expenditures�from�movements�in�local�currencies.��Where� possible,�the�exposure�to�movements�in�the�USD�relative�to�USD� denominated�expenditure�is�offset�by�the�exposure�to�the�USD� gold�price�(a�natural�hedge�position).��
- Government�regulation:�� The�Group’s�mining,�processing,� development�and�exploration�activities�are�subject�to�various� laws� and� statutory� regulations� governing� prospecting,� development,�production,�taxes,�royalty�payments,�labour� standards�and�occupational�health,�mine�safety,�toxic� substances,�land�use,�water�use,�communications,�land�claims�of� local�people�and�other�matters.��
No�assurance�can�be�given�that�new�laws,�rules�and�regulations� will�not�be�enacted�or�that�existing�laws,�rules�and�regulations� will�not�be�applied�in�a�manner�which�could�have�an�adverse� effect�on�the�Group’s�financial�position�and�results�of�operations.� Any�such�amendments�to�current�laws,�regulations�and�permits� governing�operations�and�activities�of�mining�and�exploration� companies,�or�more�stringent�implementation�thereof,�could� have�a�material�adverse�impact�on�the�Group.��Failure�to�comply� with�any�applicable�laws,�regulations�or�permitting�requirements� may�result�in�enforcement�actions�against�the�Group,�including� orders�issued�by�regulatory�or�judicial�authorities�causing� operations�to�cease�or�be�curtailed,�and�may�include�corrective�
measures�requiring�capital�expenditures,�installation�of� additional�equipment,�or�remedial�actions.��
-
Operating�risks�and�hazards:�� The�Group’s�mining�operations,� consisting�of�open�pit�and�underground�mines,�generally�involve� a�high�degree�of�risk,�and�these�risks�increase�when�mining� occurs�at�depth.��The�Group’s�operations�are�subject�to�all�the� hazards�and�risks�normally�encountered�in�the�exploration,� development�and�production�of�gold.���Processing�operations�are� subject�to�hazards�such�as�equipment�failure,�toxic�chemical� leakage,�loss�of�power,�fast�moving�heavy�equipment,�failure�of� deep�sea�tailings�disposal�pipelines�and�retaining�dams�around� tailings�containment�areas,�rain�and�seismic�events�which�may� result�in�environmental�pollution�and�consequent�liability.��The� impact�of�these�events�could�lead�to�disruptions�in�production� and�scheduling,�increased�costs�and�loss�of�facilities,�which�may� have�a�material�adverse�impact�on�the�Group’s�results�of� operations,�financial�condition�and�prospects.��These�risks�are� managed�by�a�structured�operations�risk�management� framework.
-
Reliance�on�transportation�facilities�and�infrastructure: ��The� Group�depends�on�the�availability�and�affordability�of�reliable� transportation�facilities�and�infrastructure�(e.g.�roads,�bridges,� airports,�power�sources�and�water�supply)�to�deliver� consumables�to�site,�and�final�product�to�market.��Interruption� in�the�provision�of�such�infrastructure�(e.g.�due�to�adverse� weather;�community�or�government�interference)�could� adversely�affect�St�Barbara's�operations,�financial�condition�and� results�of�operations.��The�Group’s�operating�procedures�include� business�continuity�plans�which�can�be�enacted�in�the�event�a� particular�piece�of�infrastructure�is�temporarily�unavailable.�
-
Production,�cost�and�capital�estimates:�� The�Group�prepares� estimates�of�future�production,�operating�costs�and�capital� expenditure�relating�to�production�at�its�operations.��The�ability� of�the�Group�to�achieve�production�targets,�or�meet�operating� and�capital�expenditure�estimates�on�a�timely�basis�cannot�be� assured.��The�assets�of�the�Group�are�subject�to�uncertainty�with� regards�to�ore�tonnes,�grade,�metallurgical�recovery,�ground� conditions,�operational�environment,�funding�for�development,� regulatory� changes,� accidents� and� other� unforeseen� circumstances�such�as�unplanned�mechanical�failure�of�plant�and� equipment.��Failure�to�achieve�production,�cost�or�capital� estimates,�or�material�increases�to�costs,�could�have�an�adverse� impact�on�the�Group’s�future�cash�flows,�profitability�and� financial�condition.��The�development�of�estimates�is�managed� by�the�Group�using�a�rigorous�budgeting�and�forecasting�process.�� Actual�results�are�compared�with�forecasts�to�identify�drivers� behind�discrepancies�which�may�result�in�updates�to�future� estimates.�
-
Gwalia�Extension�Project:� �The�project�to�install�an�underground� paste�aggregate�fill�plant�and�ventilation�upgrade�are�critical�to� enabling�mining�at�depth.�Any�material�delays�in�completing�the� project,�or�material�defects�in�the�design�or�construction�of�the� project,�may�have�an�adverse�impact�on�the�productivity�of�the� mine�due�to�ineffective�handling�of�waste,�or�prevent�mining�at� depth�due�to�inadequate�ventilation.�The�Group�is�managing� these�risks�through�the�establishment�and�oversight�of�a� dedicated�project�team,�thorough�procurement�processes�to� ensure�appropriate�qualified�and�expert�suppliers�are�engaged� to�design�and�construct�each�component,�and�regular�reviews�by� senior�management�of�project�progress�on�critical�path� elements.�
-
Changes�in�input�costs:�� Mining�operations�and�facilities�are� intensive�users�of�electricity,�gas�and�carbon�based�fuels.��Energy� prices�can�be�affected�by�numerous�factors�beyond�the�Group's�
Page�10�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
control,�including�global�and�regional�supply�and�demand,� carbon�taxes,�inflation,�political�and�economic�conditions,�and� applicable�regulatory�regimes.��The�prices�of�various�sources�of� energy�may�increase�significantly�from�current�levels.���
The�Group's�production�costs�are�also�affected�by�the�prices�of� commodities�it�consumes�or�uses�in�its�operations,�such�as� diesel,�lime,�sodium�cyanide�and�explosives.��The�prices�of�such� commodities�are�influenced�by�supply�and�demand�trends� affecting�the�mining�industry�in�general�and�other�factors�outside� the�Group's�control.��Increases�in�the�price�for�materials� consumed�in�St�Barbara's�mining�and�production�activities�could� materially�adversely�affect�its�results�of�operations�and�financial� condition.�
Certain�of�the�Group's�operations�use�contractors�for�the�bulk�of� the�mining�services�at�those�operations,�and�some�of�its� construction�projects�are�conducted�by�contractors.��As�a�result,� the�Group's�operations�are�subject�to�a�number�of�risks,� including:��
-
negotiation�and�renewal�of�agreements�with�contractors�on� acceptable�terms;�
-
failure�of�contractors�to�perform�under�their�agreements,� including�failure�to�comply�with�safety�systems�and�standards,� contractor�insolvency�and�failure�to�maintain�appropriate� insurance;�
-
failure�of�contractors�to�comply�with�applicable�legal�and� regulatory�requirements;�and�
-
changes�in�contractors.�
�������In�addition,�St�Barbara�may�incur�liability�to�third�parties�as�a� result�of�the�actions�of�its�contractors.�The�occurrence�of�one�or� more�of�these�risks�could�have�a�material�adverse�effect�on�its� results�of�operations�and�financial�position.�
������The�Group�manages�risks�associated�with�input�costs�through�a� centralised�procurement�function�which�analyses�market�trends,� supply�environment,�and�operational�demand�planning,�to� establish�appropriate�sourcing�strategies�for�spend�categories.�
-
Exploration�and�development�risk: ��Although�the�Group’s� activities�are�primarily�directed�towards�mining�operations�and� the�development�of�mineral�deposits,�its�activities�also�include� the�exploration�for�mineral�deposits�and�the�possibility�of�third� party�arrangements�including�joint�ventures,�partnerships,�toll� treating�arrangements�or�other�third�party�contracts.��An�ability� to�sustain�or�increase�the�current�level�of�production�in�the� longer�term�is�in�part�dependent�on�the�success�of�the�Group’s� exploration�activities�and�development�projects,�and�the� expansion�of�existing�mining�operations.�
-
�������The�exploration�for�and�development�of�mineral�deposits� involves�significant�risks�that�even�a�combination�of�careful� evaluation,�experience�and�knowledge�may�not�eliminate.�While� the�discovery�of�an�ore�body�may�result�in�substantial�rewards,� few�properties�that�are�explored�subsequently�have�economic� deposits�of�gold�identified,�and�even�fewer�are�ultimately� developed�into�producing�mines.�Major�expenses�may�be� required�to�locate�and�establish�mineral�reserves,�to�establish� rights�to�mine�the�ground,�to�receive�all�necessary�operating� permits,�to�develop�metallurgical�processes�and�to�construct� mining�and�processing�facilities�at�a�particular�site.�It�is� impossible�to�ensure�that�the�exploration�or�development� programs�the�Group�plans�will�result�in�a�profitable�mining� operation.�
-
������Whether�a�mineral�deposit�will�be�commercially�viable�depends� on�a�number�of�factors.�
������The�Group�has�a�disciplined�approach�to�allocating�budget�to� exploration�projects.��The�Group�also�has�investment�criteria�to� ensure�that�development�projects�are�only�approved�if�an� adequate�return�on�the�investment�is�expected.�
- Ore�Reserves�and�Mineral�Resources:�� The�Group's�estimates�of� Ore�Reserves�and�Mineral�Resources�are�based�on�different� levels�of�geological�confidence�and�different�degrees�of�technical� and�economic�evaluation,�and�no�assurance�can�be�given�that� anticipated�tonnages�and�grades�will�be�achieved,�that�the� indicated�level�of�recovery�will�be�realised�or�that�Ore�Reserves� could�be�mined�or�processed�profitably.��The�quality�of�any�Ore� Reserve�or�Mineral�Resource�estimate�is�a�function�of�the� quantity�of�available�technical�data�and�of�the�assumptions�used� in�engineering�and�geological�interpretation,�and�modifying� factors�affecting�economic�extraction.��Such�estimates�are� compiled� by� experienced� and� appropriately� qualified� geoscientists�using�mapping�and�sampling�data�obtained�from� bore�holes�and�field�observations,�and�subsequently�reported�by� Competent�Persons�under�the�JORC�Code.���
Fluctuation�in�gold�prices,�key�input�costs�to�production,�as�well� as�the�results�of�additional�drilling,�and�the�evaluation�of� reconciled�production�and�processing�data�subsequent�to�any� estimate�may�require�revision�of�such�estimate.��
Actual�mineralisation�or�ore�bodies�may�be�different�from�those� predicted,�and�any�material�variation�in�the�estimated�Ore� Reserves,�including�metallurgy,�grade,�dilution,�ore�loss,�or� stripping�ratio�at�the�Group's�properties�may�affect�the�economic� viability�of�its�properties,�and�this�may�have�a�material�adverse� impact�on�the�Group's�results�of�operations,�financial�condition� and�prospects.��
There�is�also�a�risk�that�depletion�of�reserves�will�not�be�offset� by�discoveries�or�acquisitions�or�that�divestitures�of�assets�will� lead�to�a�lower�reserve�base.�The�reserve�base�of�the�Group�may� decline�if�reserves�are�mined�without�adequate�replacement�and� the�Group�may�not�be�able�to�sustain�production�beyond�current� mine�lives,�based�on�current�production�rates.�
-
Political,�social�and�security�risks: ��St�Barbara�has�production�and� exploration�operations�in�a�developing�country�that�is�subject�to� political,�economic�and�other�risks�and�uncertainties.��The� formulation�and�implementation�of�government�policies�in�this� country�may�be�unpredictable.��Operating�in�developing� countries�also�involves�managing�security�risks�associated�with� the�areas�where�the�Group�has�activities.��The�Group�has� established�policies�and�procedures�to�assist�in�managing�and� monitoring�government�relations.��The�Group’s�operating� procedures�at�its�mine�in�Papua�New�Guinea�includes�detailed� security�plans.�
-
Foreign�exchange: �The�Group�has�an�Australian�dollar� presentation�currency�for�reporting�purposes.��However,�gold�is� sold�throughout�the�world�based�principally�on�the�U.S.�dollar� price,�and�most�of�the�Group's�revenues�are�realised�in,�or�linked� to,�U.S.�dollars.��The�Group�is�also�exposed�to�U.S.�dollars�and� Papua�New�Guinea�Kina�in�respect�of�operations�located�in� Papua�New�Guinea�as�certain�of�its�operating�costs�are� denominated�in�these�currencies.��There�is�a�"natural"�(but�not� perfect)�hedge�which�matches�to�some�degree�U.S.�denominated� revenue�and�obligations�related�to�U.S.�dollar�expenditure.��The� Group�is�therefore�exposed�to�fluctuations�in�foreign�currency� exchange�rates.��The�Group�monitors�foreign�exchange�exposure� and�risk�on�a�monthly�basis�through�the�centralised�treasury� function�and�a�Management�Treasury�Risk�Committee.�
Page�11�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
-
Community�relations :��A�failure�to�adequately�manage� community�and�social�expectations�within�the�communities�in� which�the�Group�operates�may�lead�to�local�dissatisfaction� which,�in�turn,�could�lead�to�interruptions�to�production�and� exploration�operations.��The�Group�has�an�established� stakeholder�engagement�framework�to�guide�the�management� of�the�Group’s�community�relations�efforts.��At�Simberi�there�is� a�dedicated�community�relations�team�to�work�closely�with�the� local�communities�and�government.���
-
Insurance:�� The�Group�maintains�insurance�to�protect�against� certain�risks.��However,�the�Group’s�insurance�will�not�cover�all� the�potential�risks�associated�with�a�mining�company’s� operations.��The�Group�may�also�be�unable�to�maintain�insurance� to�cover�these�risks�at�economically�feasible�premiums.�� Insurance�coverage�may�not�continue�to�be�available�or�may�not� be�adequate�to�cover�any�resulting�liability.��Moreover,�insurance� against�risks�such�as�loss�of�title�to�mineral�property,� environmental�pollution,�or�other�hazards�as�a�result�of� exploration�and�production�is�not�generally�available�to�the� Group,�or�to�other�companies�in�the�mining�industry�on� acceptable�terms.��The�Group�might�also�become�subject�to� liability�for�pollution�or�other�hazards�which�may�not�be�insured� against,�or�which�it�may�elect�not�to�insure�against�because�of� premium�costs�or�other�reasons.��Losses�from�these�events�may� cause�the�Group�to�incur�significant�costs�that�could�have�a� material�adverse�effect�upon�its�financial�performance�and� results�of�operations.�
-
Weather�and�climactic�conditions:�� The�effects�of�changes�in� rainfall�patterns,�changing�storm�patterns�and�intensities�have� from�time�to�time�adversely�impacted,�and�may�in�the�future� adversely�impact,�the�cost,�production�levels�and�financial� performance�of�the�Group's�operations.��The�Group's�mining� operations�have�been,�and�may�in�the�future�be,�subject�from� time�to�time�to�severe�storms�and�high�rainfalls�leading�to� flooding�and�associated�damage,�which�has�resulted,�and�may� result�in�delays�to,�or�loss�of�production�at�its�mines�(e.g.�due�to� water�ingress�and�flooding�at�the�base�of�the�mine).��Seismic� activity�is�of�particular�concern�to�mining�operations.��The� Simberi�mine�in�Papua�New�Guinea�is�in�an�area�known�to�be� seismically�active�and�is�subject�to�risks�of�earthquakes�and�the� related�risks�of�tidal�surges�and�tsunamis.�
-
Risk�of�impairment : If�the�gold�price�suffers�a�significant�decline,� or�the�operations�are�not�expected�to�meet�future�production� levels,�there�may�be�the�potential�for�future�impairment�write� downs�at�any�of�the�operations.�
Risk�management
The�Group�manages�the�risks�listed�above,�and�other�day�to�day�risks� through�an�established�enterprise�wide�risk�management� framework,�which�conforms�to�Australian�and�international� standards�and�guidance.��The�Group’s�risk�reporting�and�control� mechanisms�are�designed�to�ensure�strategic,�safety,�environment,� operational,�legal,�financial,�reputational�and�other�risks�are� identified,�assessed�and�appropriately�managed.���
identified.��The�amount�of�the�benefits�provided�to�the�foreign�public� official�was�not�material�to�the�Company.��The�Company�self� reported�the�matter�to�relevant�authorities,�including�the�Australian� Federal�Police,�and�the�matter�is�being�assessed�and�investigated.��To� date,�there�has�been�no�action�taken�against�the�Company,� consequently,�the�range�of�potential�penalties,�if�any,�cannot�be� reliable�estimated.��Should�there�be�any�prosecution,�potential� penalties�if�any�are�governed�by�laws�in�various�jurisdictions� including� Criminal�Code�1995�(Cth)� in�Australia�and/or�the�UK� Bribery� Act.�
Regulatory�environment�
Australia�
The�Group’s�Australian�mining�activities�are�in�Western�Australia�and� governed�by�Western�Australian�legislation,�including�the�Mining�Act� 1978,�the�Mines�Safety�and�Inspection�Act�1994,�Dangerous�Goods� Safety�Act�2004�and�other�mining�related�and�subsidiary�legislation.�� The�Mining�Rehabilitation�Fund�Act�2012�took�effect�from�1�July� 2013.��The�Mining�Rehabilitation�Fund�replaces�unconditional� environmental�performance�bonds�for�companies�operating�under� the�Mining�Act�1978.���
The�Group�is�subject�to�significant�environmental�regulation,� including,�inter�alia,�the�Western�Australian�Environmental� Protection�Act�1986,�Contaminated�Sites�Act�2003,�Wildlife� Conservation�Act�1950,�Aboriginal�Heritage�Act�1972�and�the� Commonwealth� Environmental� Protection� and� Biodiversity� Conservation�Act�1999,�as�well�as�safety�compliance�in�respect�of�its� mining�and�exploration�activities.�
The�Group�is�registered�pursuant�to�the�National�Greenhouse�and� Energy�Reporting�Act�2007�under�which�it�is�required�to�report� annually�its�energy�consumption�and�greenhouse�gas�emissions.��St� Barbara�also�reports�to�Government�pursuant�to�both�the�Energy� Efficiency�Opportunities�Act�2006�and�the�National�Environmental� Protection�(National�Pollutant�Inventory)�Measure�(subsidiary� legislation�to�the�National�Environmental�Protection�Measures� (Implementation)�Act�1998).��The�Group�has�established�data� collection�systems�and�processes�to�meet�these�reporting� obligations.��The�Group’s�Australian�operations�are�also�required�to� comply�with�the�Australian�Federal�Government’s�Clean�Energy�Act� 2011,�effective�from�1�July�2012.�
Papua�New�Guinea
The�primary�Papua�New�Guinea�mining�legislation�is�the�Mining�Act� 1992,�which�governs�the�granting�and�cessation�of�mining�rights.�� Under�the�Mining�Act,�all�minerals�existing�on,�in�or�below�the� surface�of�any�land�in�Papua�New�Guinea,�are�the�property�of�the� State.��The�Mining�Act�establishes�a�regulatory�regime�for�the� exploration�for,�and�development�and�production�of,�minerals�and�is� administered�by�the�Minerals�Resources�Authority.��Environmental� impact�is�governed�by�the�Environment�Act�2000,�administered�by� the�Department�of�Environment�and�Conservation.�The�PNG� government�has�been�reviewing�the�Mining�Act�since�2014.�There�is� no�public�timeframe�for�completion�of�the�review.�
The�financial�reporting�and�control�mechanisms�are�reviewed�during� the�year�by�management,�the�Audit�and�Risk�Committee,�the�internal� audit�function�and�the�external�auditor.�
Senior�management�and�the�Board�regularly�review�the�risk�portfolio� of�the�business�and�the�effectiveness�of�the�Group’s�management�of� those�risks.�
During�July�2014,�the�Company�announced�that�by�operation�of�its� internal�reporting�mechanisms,�the�provision�of�benefits�to�a�foreign� public�official�that�may�violate�its�Anti�Bribery�and�Anti�Corruption� Policy�or�applicable�laws�in�Australia�or�in�foreign�jurisdictions�were�
Page�12�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Information�on�Directors�
Kerry�J�Gleeson� LLB�(Hons),�FAICD��
Tim�C�Netscher��
BSc�(Eng)�(Chemical),�BCom,�MBA,�FIChE,�CEng,�MAICD
Independent�Non�Executive�Director�
Appointed�as�a�Director�18�May�2015�
Independent�Non�Executive�Chairman�
Appointed�as�a�Director�17�February�2014� Appointed�as�Chairman�1�July�2015�
Mr�Netscher�is�an�experienced�international�mining�executive�with� extensive�operational,�project�development,�and�transactional� experience�and�expertise�in�senior�executive�management�roles.�� Mr�Netscher’s�experience�covers�a�wide�range�of�resources�including� nickel,�coal,�iron�ore,�uranium�and�gold�and�regions�including�Africa,� Asia�and�Australia.�
Other�current�listed�company�directorships:�
-
Gold�Road�Resources�Limited�
-
Western�Areas�Limited�
Former�listed�company�directorships�in�last�3�years:�
-
Toro�Energy�Limited�(resigned�September�2016)�
-
Deep�Yellow�Limited�(resigned�December�2015)�
-
Gindalbie�Metals�Limited�(resigned�October�2014)�
-
Aquila�Resources�Limited�(resigned�July�2014)�
Special�responsibilities:�
-
Chair�of�the�Health,�Safety,�Environment�and�Community� Committee��
-
Member�of�the�Audit�and�Risk�Committee�
-
Member�of�the�Remuneration�Committee�
Robert�S�(Bob)�Vassie��
B.�Mineral�Technology�Hons�(Mining),�GAICD,�MAUSIMM
Managing�Director�and�Chief�Executive�Officer��
Appointed�as�Managing�Director�and�CEO�1�July�2014�
Mr�Vassie�is�a�mining�engineer�with�over�30�years’�international� mining�industry�experience�and�has�18�years’�experience�in�a�range� of�senior�management�roles�with�Rio�Tinto.�He�has�particular� experience�in�operations�management,�resource�development� strategy,�mine�planning,�feasibility�studies,�business�improvement,� corporate�restructuring�and�strategic�procurement.�
Other�current�listed�public�company�directorships:��
- Tawana�Resources�NL�(appointed�1�August�2017)�
Former�listed�company�directorships�in�last�3�years:� Nil
Special�responsibilities:�
- Member�of�the�Health,�Safety,�Environment�and�Community� Committee�
Ms�Gleeson�is�an�experienced�corporate�executive�with�over�20� years’�boardroom�and�senior�management�experience�across� Australia,�UK�and�the�US,�in�a�variety�of�industries�including�mining,� agriculture,�chemicals,�logistics�and�manufacturing.��A�qualified� lawyer�in�both�UK�and�Australia,�she�has�significant�expertise�in� complex�corporate�finance�and�transactional�matters,�and�in� corporate� governance� in� Australian� and� international� businesses.��She�was�a�member�of�the�Group�Executive�at�Incitec� Pivot�Limited�for�10�years�until�2013,�including�as�Company�Secretary� and�General�Counsel.��Previously,�she�was�a�corporate�finance�and� transactional�partner�in�an�English�law�firm,�and�practised�as�a�senior� lawyer�at�the�Australian�law�firm,�Ashurst.���
Ms�Gleeson�is�a�Non�Executive�Director�of�Trinity�College,�University� of�Melbourne.��
Other�current�listed�company�directorships:�Nil�
Former�listed�company�directorships�in�last�3�years:��
- McAleese�Limited�(resigned�September�2016)�
Special�responsibilities:�
-
Chair�of�Remuneration�Committee��
-
Member�of�the�Audit�and�Risk�Committee�
-
Member�of�the�Health,�Safety,�Environment�and�Community� Committee�
David�E�J�Moroney�
BCom,�FCA,�FCPA,�GAICD
Independent�Non�Executive�Director�
Appointed�as�a�Director�16�March�2015�
Mr�Moroney�is�an�experienced�finance�executive�with�more�than�20� years’�experience�in�senior�corporate�finance�roles,�including�15� years�in�the�mining�industry,�and�extensive�international�work� experience�with�strong�skills�in�finance,�strategic�planning,� governance,�risk�management�and�leadership.��
Mr�Moroney�is�an�independent�non�executive�director�of�non�ASX� listed�Geraldton�Fishermen’s�Co�operative�Ltd�(the�southern� hemisphere’s�largest�exporter�of�lobster)�and�chair�of�its�Audit�and� Risk�Management�Committee�and�member�of�its�Performance�and� Nomination�Committee.�Mr�Moroney�is�also�an�independent�non� executive�director�of�WA�Super,�Western�Australia’s�largest�public� offer�superannuation�fund�(and�Chair�of�the�Risk�Committee,�and�a� member�of�the�Compliance�&�Audit�and�Human�Resources� Committees).�Mr�Moroney�is�also�an�independent�non�executive� finance�director�of�Hockey�Australia�Ltd,�the�peak�national�sporting� body�for�hockey�in�Australia,�and�Chair�of�its�Finance,�Audit�and�Risk� Management�Committee.�
Other�current�listed�company�directorships:� Nil
Former�listed�company�directorships�in�last�3�years:� Nil
Special�responsibilities:�
-
Chair�of�the�Audit�and�Risk�Committee�
-
Member�of�the�Health,�Safety,�Environment�and�Community� Committee��
-
Member�of�the�Remuneration�Committee�
Page�13�
ST�BARBARA�LIMITED�2017�
Remuneration�Report�(audited)�
Directors’�Report�
Qualifications�and�experience�of�the�Company�Secretary�
Rowan�Cole�
B.Comm,�CA,�CIA,�MBA,�GAICD,�Grad.�Dip�AGC,�Dip�Inv�Rel� Company�Secretary
Mr�Cole�joined�St�Barbara�in�2010�as�General�Manager�Corporate� Services�and�was�appointed�as�Deputy�Company�Secretary�in�2012� and�as�Company�Secretary�in�2014.��
He�has�over�30�years’�experience�across�chartered�accounting,�retail� banking,�private�and�public�companies.��Mr�Cole's�experience� includes�external,�internal�and�IT�audit,�risk�management,�customer� service�delivery,�marketing,�strategy�formulation,�execution�and� measurement,�process�and�business�improvement,�financial�and� business�reporting�in�senior�roles�including�general�manager,�head� of�risk�and�compliance,�chief�audit�executive�and�chief�financial�and� risk�officer.���
Information�on�Executives��
Robert�S�(Bob)�Vassie�
B.�Mineral�Technology�Hons�(Mining),�GAICD,�MAUSIM Managing�Director�and�Chief�Executive�Officer
Mr�Vassie�joined�St�Barbara�as�Managing�Director�and�CEO�in�July� 2014.��Mr�Vassie�is�a�mining�engineer�with�over�30�years’� international�mining�industry�experience�and�has�18�years’� experience�in�a�range�of�senior�management�roles�with�Rio�Tinto.�He� has�particular�experience�in�operations�management,�resource� development�strategy,�mine�planning,�feasibility�studies,�business� improvement,�corporate�restructuring�and�strategic�procurement.�
Garth�Campbell�Cowan
B.Comm,�Dip�Applied�Finance�&�Investments,�FCA� Chief�Financial�Officer
Mr�Campbell�Cowan�is�a�Chartered�Accountant�with�over�30�years’� experience�in�senior�management�and�finance�positions�across�a� number�of�different�industries.�He�was�appointed�to�the�position�of� Chief�Financial�Officer�in�September�2006�and�is�responsible�for�the� Group’s�Finance�function,�covering�financial�reporting�and� accounting,�treasury,�taxation,�internal�audit,�capital�management,� procurement�and�information�technology.�Mr�Campbell�Cowan�also� has�executive�responsibility�for�business�development.��Prior�to� joining�the�Group,�he�was�Director�of�Corporate�Accounting�at� Telstra�and�has�held�senior�leadership�roles�with�WMC,�Newcrest� Mining�and�ANZ.�
Meetings�of�Directors�
The�number�of�meetings�of�Directors�(including�meetings�of� Committees�of�Directors),�and�the�numbers�of�meetings�attended� by�each�of�the�Directors�of�the�Company�during�the�financial�year� was:�
| BoardMeetings | BoardMeetings | BoardCommittees | BoardCommittees | BoardCommittees | |
|---|---|---|---|---|---|
| Scheduled | Supplementary | Audit&Risk | Remuneration | Health,Safety, Environment& Community |
|
| A H |
A H |
A H |
A H |
A H |
|
| KGleeson DMoroney TNetscher RVassie |
9 9 8 9 9 9 9 9 |
5 5 5 5 5 5 5 5 |
5 5 5 5 5 5 5 5 |
5 5 5 5 5 5 5 5 |
5 5 5 5 5 5 5 5 |
-
A�=��Number�of�meetings�attended�
-
H�=��Number�of�meetings�held�during�the�time�the�Director�held� office�or�was�a�member�of�the�committee�during�the�year�
Directors’�interests��
The�relevant�interest�of�each�Director�in�the�shares�and�rights�over� such�instruments�issued�by�the�companies�within�the�Group�and� other�related�bodies�corporate�as�notified�by�the�Directors�to�the� ASX�in�accordance�with�S205G(1)�of�the�Corporations�Act�2001,�as� the�date�of�this�report�is�as�follows:�
| Ordinaryshares | Rightsover ordinaryshares |
|
|---|---|---|
| KGleeson DMoroney TNetscher RVassie |
8,333 100,000 22,000 1,769,053 |
� � � 4,062,500(1) 1,301,382(2) |
- (1) These�rights�were�determined�by�the�Board�on�23�August�2017�to�have� vested�as�at�30�June�2017�and�are�pending�issue�as�shares�as�at�the�date� of�this�report.�
(2) The�vesting�of�these�rights�is�subject�to�future�performance�conditions� as�described�in�the�Remuneration�Report.�
No�Directors�have�an�interest�in�options�over�shares�issued�by� companies�within�the�Group.��
Page�14�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
Remuneration�Report�(Audited)�
- 2.1� Key�remuneration�outcomes�for�the�2017�financial�year� (details�in�Section�7)�
Contents�
-
Introduction�and�Key�Management�Personnel�
-
2017�Remuneration�Summary�
-
Executive�Remuneration�Strategy�
STI[1] �Outcomes� The�average�STI�outcome�for�Executives�was�90% of�the�maximum�potential�STI�based�on�an assessment�of�Group�and�individual�measures. This�reflects�the�Group’s�record�safety,�operating and�financial�performance�during�2017.�
-
Remuneration�Governance�
-
Remuneration�Structure��
-
Relationship�between�Group�Performance�and�Remuneration�
-
Remuneration� Disclosure� and� Executive� Remuneration� Outcomes�
-
Non�Executive�Director�Remuneration�
-
Additional�Statutory�Information�
-
LTI[2] �Outcomes� 100%�of�the�3�year�LTI�performance�rights assessed�at�30�June�2017�vested.�This�is consistent�with�the�operational�and�strategic turnaround�during�the�corresponding�3�year period�which�resulted�in�total�shareholder returns�of�2,308%,�well�above�the�return�of�any of�its�comparator�companies�and�the�ASX�Gold Index�for�the�same�period.�
1. Introduction�and�Key�Management�Personnel�
This�Remuneration�Report�describes�the�remuneration�strategy�and� practices�that�applied�for�the�2017�financial�year.��The�report� provides�details�of�remuneration�paid�for�the�2017�financial�year�to� Non�Executive�Directors�and�the�Executives�named�in�this�report� with�the�authority�and�responsibility�for�planning,�directing�and� controlling�the�activities�of�the�Group,�collectively�referred�to�as�Key� Management�Personnel�(KMP).��
Key�Management�Personnel�during�2017�
| Non�ExecutiveDirectors | |
|---|---|
| TimNetscher | IndependentNon�ExecutiveChairman |
| KerryGleeson | IndependentNon�ExecutiveDirector |
| DavidMoroney | IndependentNon�ExecutiveDirector |
| Executives | |
| Robert(Bob)Vassie | ManagingDirector&ChiefExecutive |
| Officer | |
| GarthCampbell�Cowan | ChiefFinancialOfficer |
2. 2017�Remuneration�Summary�
The�Group’s�record�operational�and�financial�performance�for�the� 2017�financial�year�is�reflected�in�the�STI[1] �outcomes�awarded�to� Executives.�
The�Group’s�outstanding�transformation�over�the�last�three�years�is� clearly�demonstrated�by�a�corresponding�total�shareholder�return�of� 2,308%,�which�is�many�times�the�return�of�its�comparator�companies� and�the�ASX�Gold�Index�for�the�same�period.��During�this�time,�the� Group’s�market�capitalisation�increased�from�$56�million�to� $1.4�billion,�and�the�closing�share�price�increased�from�$0.115�at� 30�June�2014�to�$2.91�at�30�June�2017.����
The�Board�considers�that�the�Executive�remuneration�structure�in� place�during�this�period�has�been�appropriate�and�aligned�with� increasing�shareholder�wealth,�and�that�Executives�have�justifiably� earned�the�at�risk�incentives�awarded�this�year.�
| Executive | Executivefixedremunerationincreasedbyan |
|---|---|
| Remuneration | averageof1%from2016to2017. |
| NED | OverallNEDfeesincreasedby1%from2016 |
| Remuneration | to2017. |
- 2.2��Changes�in�the�Executive�remuneration�framework�during�the� 2017�financial�year�(details�in�Section�5)�
STI�Composition� The�proportion�of�at�risk�remuneration�for� Level�5�(CFO)�was�increased�at�target�level� from�40%�in�2016�to�45%�in�2017.�
- 2.3��Changes�to�Executive�remuneration�for�the�2018�financial�year� (details�in�Section�5)�
STI�Composition� The�mix�of�Group�and�Individual�STI�targets�is� proposed�to�change�weighting�from�70%� Group�targets�and�30%�Individual�targets�in� 2017,�to�80%�Group�targets�and�20%� Individual�targets�in�2018.� Executive�fixed� Following�a�review�of�relevant�market� remuneration� remuneration�data,�the�Board�has�approved� increases�in�Executive�fixed�remuneration�of� between�2.5%�and�10%�for�the�2018�financial� year.�
- 2.4� Changes�to�Non�Executive�Director�Remuneration�for�the�2018� financial�year�(details�in�Section�8)�
Non�Executive� Following�a�review�of�comparable�resource� Directors�fees� industry�remuneration�levels�for�Non� Executive�Directors,�the�Board�resolved�to� increase�Non�Executive�Directors�fees�by�an� average�10%�for�2018.�
The�Board�actively�monitors�market�practices�and�recommendations� from�industry�participants�on�remuneration�structure�and� disclosure,�and�may�amend�the�remuneration�framework� accordingly�at�any�time.��The�Board�needs�to�ensure�that�the�
1�� Short�term�incentive� 2�� Long�term�incentive�
Page�15�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
remuneration�framework�attracts,�retains�and�encourages�high� performance�by�its�key�employees,�whilst�remaining�aligned�with� shareholder�experience.��
3. Executive�Remuneration�Strategy��
The�Group’s�Executive�remuneration�strategy�is�designed�to�attract,� reward�and�retain�high�calibre,�high�performing,�and�team� orientated�individuals�capable�of�delivering�the�Group�strategy.��The� remuneration�strategy�and�related�employment�policies�and� practices�are�aligned�with�the�Group�strategy.��
The�objectives�of�the�remuneration�strategy�for�the�2017�financial� year�were�to�ensure�that:�
-
total�remuneration�for�Executives�and�each�level�of�the� workforce�was�market�competitive;�
-
key�employees�were�retained;�
-
total�remuneration�for�Executives�and�managers�comprised�an� appropriate� proportion� of� fixed� remuneration� and� performance�linked�at�risk�remuneration;�
-
performance�linked�at�risk�remuneration�encouraged�and� rewarded�high�performance�aligned�with�value�creation�for� shareholders,�through�an�appropriate�mix�of�short�and�long� term�incentives;�
-
the�integrity�of�the�remuneration�review�processes�delivered� fair�and�equitable�outcomes.
The�Group’s�remuneration�strategy�and�practices�are�influenced�by� the�Australian�gold�mining�industry�and�the�peer�companies�with� which�it�competes�for�talent.�
The�gold�price�is�the�primary�determinant�of�the�share�price�of�gold� companies,�including�St�Barbara.�The�gold�price�is�volatile,�as� illustrated�by�the�chart�below.�The�ASX�all�ordinaries�gold�index� (ASX:XGD)�was�4.5�times�more�volatile�(measured�by�standard� deviation)�than�the�ASX�200�(ASX:XJO)�over�the�previous�5�years.���
The�nature�of�the�industry�and�the�share�price�volatility�has�resulted� in�certain�key�features�of�the�Group’s�performance�linked�at�risk� remuneration,�in�the�form�of�the�annual�short�term�incentive�( STI )� and�the�long�term�incentive�( LTI )�which�measures�performance�over� three�financial�years.�
Executive�remuneration�outcomes�are�aligned�with�shareholder� experience,�as�the�STI�and�LTI�link�personal�remuneration�outcomes� with�the�achievement�of�targets�which�drive�Group�performance�and� shareholder�return.�The�mix�of�fixed�and�at�risk�remuneration�varies� according�to�the�role�of�each�Executive,�with�the�highest�level�of�at� risk�remuneration�applied�to�those�roles�that�have�the�greatest� potential�to�influence�and�deliver�Group�outcomes�and�drive� shareholder�return.�
The�criteria�used�to�assess�the�STI�include�production,�costs�and� safety���key�elements�that�are�within�management’s�control�and� underpin�the�overall�financial�result�of�the�Group.��The�Board�is�
aware�of�a�trend�in�some�larger�ASX�companies�to�partially�defer� payment�of�STI�to�subsequent�years�as�share�rights,�notionally�to� more�closely�align�the�STI�with�a�company’s�share�price� performance.�The�Board�has�determined�no�deferral�of�STI�is� appropriate�as�deferral�of�STI�is�extremely�rare�amongst�the� resources�companies�with�which�St�Barbara�competes�for�talent,�and� is�considered�to�be�a�disincentive�to�current�and�prospective� employees.�In�addition,�the�corresponding�LTI�is�closely�aligned�with� the�Company’s�share�price�performance,�and�also�provides�a� significant�retention�incentive.���
The�LTI�aligns�Executive�remuneration�with�shareholder�experience.�� The�vesting�conditions�for�the�LTI�comprise�two�measures,�relative� total�shareholder�return�(RTSR),�and�return�on�capital�employed� (ROCE)�in�excess�of�the�weighted�average�cost�of�capital.��The�LTI� allows�retesting�at�the�Board’s�discretion�which�is�consistent�with�the� volatile�character�of�the�gold�industry,�that�tends�to�be�cyclical�and� the�result�at�the�end�of�a�three�year�vesting�period�may�be�adversely� impacted�by�a�short�term�downturn�in�the�price�of�gold�or�in�the�gold� industry.�Rights�would�only�vest�under�retesting�if�there�is�a�positive� total�shareholder�return�and�the�performance�conditions�are�met� over�the�extended�term.��
RTSR�was�first�adopted�as�an�LTI�measure�at�the�2010�Annual�General� Meeting,�with�ROCE�first�adopted�at�the�2012�Annual�General� Meeting.��These�two�metrics�were�selected,�and�have�been�retained,� as�the�most�appropriate�measures�to�reflect�management’s� influence�on�shareholder�wealth.��RTSR�eliminates�the�impact�of� fluctuations�in�gold�price�to�illustrate�how�effective�management� have�been�in�creating�value�from�the�Group’s�gold�assets�compared� against�industry�peers.��ROCE�measures�the�efficiency�with�which� management�uses�capital�in�seeking�to�increase�shareholder�value.�� The�LTI�performance�measures�are�reviewed�annually�for�their� continued�relevance�and�consistency�against�peer�company�LTI� metrics.��
==> picture [250 x 166] intentionally omitted <==
----- Start of picture text -----
A$/oz A$�gold�vs�SBM�share�price ASX:SBM
$1,800 $4
$1,700
$3
$1,600
$2
$1,500
$1
$1,400
$1,300 $0
Jun�2012 Jun�2013 Jun�2014 Jun�2015 Jun�2016 Jun�2017
Gold�A$/oz�(LHS) SBM�(RHS)
Source:�IRESS�(5�year�weekly�data)
----- End of picture text -----
The�remuneration�strategy�and�structure�are�directly�linked�to�the� development�of�strategies�and�budgets�in�the�Group’s�annual� planning�cycle�shown�in�the�timetable�below.�
Page�16�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
Annual�Planning�Timetable�
| Month | Strategy&Reporting | Remuneration |
|---|---|---|
| October | Annualstrategyupdate | |
| January | ReviewSTI<Idesignframework | |
| February | HalfYearFinancialReport | |
| ApriltoJune | Budgetsettingframework | Setremunerationreviewframework |
| July | MeasureSTIoutcomesanddetermineaward | |
| August | AnnualFinancialReport | MeasureLTIoutcomes(inconjunctionwithauditedfinancial |
| report)andactionanyvestedentitlements | ||
| SetSTItargetsforfollowingfinancialyear | ||
| October | AnnualReport | |
| November | AnnualGeneralMeeting | ShareholderapprovalofLTItobeissuedtoMD&CEO |
4. Remuneration�Governance�
Remuneration�strategy�and�policies�are�approved�by�the�Board.�They� are�aligned�with,�and�underpin,�the�Group�strategy.��On�behalf�of�the� Board,�the�Remuneration�Committee�oversees�and�reviews�the� effectiveness�of�the�remuneration�strategy,�policies�and�practices�to� ensure�that�the�interests�of�the�Group,�shareholders�and�employees� are�taken�into�account.�The�charter�for�the�Remuneration� Committee�is�approved�by�the�Board�and�is�available�on�the�Group’s� website�at www.stbarbara.com.au.�
The� Remuneration� Committee� is� responsible� for� making� recommendations�to�the�Board�on�all�aspects�of�remuneration� arrangements�for�Key�Management�Personnel.��
In�addition,�the�Remuneration�Committee�oversees�and�reviews� proposed�levels�of�annual�remuneration�for�the�Group�as�a�whole�as� well�as�other�key�employee�related�policies�for�the�Group.�It�also� receives�reports�on�organisation�capability�and�effectiveness,�skills,� training�and�development�and�succession�planning�for�key�roles.�
The�members�of�the�Remuneration�Committee�are�all�independent,� Non�Executive�Directors�and�as�at�the�date�of�this�report�comprised:�
In�forming�remuneration�recommendations,�each�year�the� Remuneration�Committee�obtains�and�considers�industry�specific� independent�data�and�professional�advice�as�appropriate.�All�reports� and�professional�advice�relating�to�the�Managing�Director�and�CEO’s� remuneration�are�commissioned�and�received�directly�by�the� Remuneration�Committee.��The�Remuneration�Committee�reviews� all�other�contracts�with�remuneration�consultants�and�directly� receives�the�reports�of�those�consultants.�Information�was�received� directly�by�the�Committee�from�Godfrey�Remuneration�Group� during�the�financial�year�regarding�aspects�of�remuneration�design� and�equity�plans.�The�information�provided�by�Godfrey� Remuneration� Group� did� not� include� a� remuneration� recommendation�as�defined�in�the� Corporations�Act�2001�(Cth) .�
The�Remuneration�Committee�has�delegated�authority�to�the� Managing�Director�and�CEO�for�approving�remuneration� recommendations�for�employees�other�than�Key�Management� Personnel,�within�the�parameters�of�approved�Group�wide� remuneration�levels�and�structures.�
K�Gleeson� Non�Executive�Director� Chair�of�the�Committee�since�1�July�2015�� Member�of�the�Committee�since�18�May�2015� D�Moroney� Non�Executive�Director� Member�of�the�Committee�since�16�March�2015� T�Netscher� Non�Executive�Chairman� Member�of�the�Committee�since�23�February�2015�
Page�17�
ST�BARBARA�LIMITED�2017�
Remuneration�Report�(audited)�
Directors’�Report�
5. Remuneration�Structure�
Executive�remuneration�comprises:�
-
Fixed�remuneration�
-
A�performance�linked�at�risk�short�term�incentive�(STI)�
-
A�performance�linked�at�risk�long�term�incentive�(LTI).�
Each�of�these�components�is�considered�in�more�detail�below. Composition�of�Executive�Remuneration�
The�mix�of�fixed�and�at�risk�remuneration�for�Executives�for�2017�is�as�follows:��
==> picture [529 x 172] intentionally omitted <==
----- Start of picture text -----
Fixed�Remuneration STI�(at�risk) LTI�(at�risk) Total
Level�6�(CEO)���at�target 53% 27% 20% 100%
Level�6�(CEO)���at�maximum 36% 36% 27% 100%
Level�5�(CFO)���at�target 57% 26% 17% 100%
Level�5�(CFO)���at�maximum 40% 36% 24% 100%
0% 20% 40% 60% 80% 100%
----- End of picture text -----
Figures�are�rounded�to�nearest�whole�percent�and�may�not�add.��
-
(1)� STI �as�a�%�of�Fixed�Remuneration�at�‘target’�is:�Level�6�(CEO)�50%,�Level�5�(CFO)�45%.�STI�at�‘maximum’�=�2�x�‘target’.��The�proportion�of�at�risk�remuneration� for�Level�5�(CFO)�was�increased�at�target�level�from�40%�in�2016�to�45%�in�2017.�
-
‘Target’�is�the�mid�point�(50%)�of�the�‘maximum’�(100%)�STI�available�for�the�rated�performance�of�each�individual.�Less�than�target�performance�will�result�in� less�than�the�target�allocation,�potentially�down�to�zero,�and�significant�outperformance�can�lead�to�achieving�‘maximum’�(100%)�of�the�STI.���
-
See� Section�7.4 �for�STI�earned�in�2017.�
-
(2)� LTI �as�a�%�of�Fixed�Remuneration�at�‘target’�is:�Level�6�(CEO)�37.5%,�Level�5�(CFO)�30%.�LTI�at�‘maximum’�=�2�x�‘target’.�
-
‘Target’�is�the�mid�point�(50%)�of�the�maximum�(100%)�LTI�available.�The�LTI�allocation�is�fixed�at�grant,�but�the�proportion�of�the�grant�that�ultimately�vests,� if�any,�is�subject�to�performance�measurement�under�the�relevant�LTI�plan.��
See� Section�7.5� for�LTI�vested�during�2017.�
The�relationship�between�‘target’�and�‘maximum’�remuneration�of�the�CEO�for�2017�is�as�follows:��
==> picture [529 x 83] intentionally omitted <==
----- Start of picture text -----
Fixed�Remuneration STI�(at�risk) LTI�(at�risk) Total
Level�6�(CEO)���at�target 53% 27% 20% 100%
Level�6�(CEO)���at�maximum 53% 53% 40% 147%
0% 20% 40% 60% 80% 100% 120% 140%
----- End of picture text -----
Figures�are�rounded�to�nearest�whole�percent�and�may�not�add.��
Page�18�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
Payment�profile�of�Executive�Remuneration�
The�timing�of�payments�of�Executive�remuneration�for�2017�is�as�follows�(illustrated�using�Level�6�(CEO)�at�target):
==> picture [525 x 170] intentionally omitted <==
----- Start of picture text -----
LTI�(at�risk)
20% FY17�LTI�measurement�period��3�yrs�from�1�Jul 2016�to�30�Jul�2019 20%
FY17�STI�
STI�(at�risk) 27% measurement�period 27%
Fixed�remuneration
(FR) 53% 53%
Level�6�(CEO)���at�target FY�2017 FY�2018 FY�2019 FY�2020
(for�illustration) (FY17�FR�paid) (FY17�STI�paid) (FY17�LTI�vested)
----- End of picture text -----
Fixed�remuneration�for�2017�was�paid�during�2017.�
STI�performance�is�assessed�as�part�of�this�report�after�the�end�of�the�2017�financial�year�and�is�paid�in�the�2018�financial�year.�
LTI�performance�is�assessed�after�the�end�of�the�3�year�performance�period�(1�July�2016�to�30�June�2019)�and,�if�determined�to�have�vested,�the�corresponding� performance�rights�vest�in�2020.�
5.1��Fixed�Remuneration�=�Base�salary�+�superannuation�+�benefits�
Fixed�remuneration�is�paid�in�cash,�superannuation�and�benefits� during�the�financial�year.�
The�base�salary�for�each�Executive�is�influenced�by�the�nature�and� responsibilities�of�the�role,�the�knowledge,�skills�and�experience� required�for�the�position,�and�the�Group’s�need�to�compete�in�the� market�place�to�attract�and�retain�the�right�person�for�the�role.�
Each�Executive�undergoes�an�annual�performance�appraisal�as�part� of�the�Group’s�work�performance�system,�in�which�individual�and� Group�performance�is�assessed�in�detail�against�their�respective�pre� determined�measures.�The�performance�appraisal�for�the�Chief� Financial�Officer�is�assessed�by�the�Managing�Director�and�CEO�and� reported�to�the�Remuneration�Committee�and�subsequently�to�the� Board�for�review,�including�recommended�remuneration�outcomes� that�flow�from�that�appraisal.�The�performance�appraisal�for�the� Managing�Director�and�CEO�is�undertaken�by�the�Chairman,�reported� to�the�Remuneration�Committee�and�subsequently�to�the�Board,�for� review.��
Benefits�vary�between�Executives�and�include�car�parking,�certain� professional�memberships�and�living�away�from�home�and�travel� expenses,�plus�any�associated�fringe�benefits�tax.��
In�considering�remuneration�for�Executives�for�the�2017�financial� year,�the�Remuneration�Committee�considered�reports�from�Aon� Hewitt,�as�well�as�industry�trend�data�and�other�relevant� remuneration�information.���
5.2���Performance�Linked�Remuneration�–�STI�
The�STI�is�linked�to�specific�personal�and�corporate�objectives�over� the�financial�year.��Performance�of�the�STI�objectives�is�assessed� subsequent�to�the�end�of�the�financial�year,�with�the�amount� determined�to�be�achieved�paid�in�cash�or�shares.�
The�Remuneration�Committee�is�responsible�for�recommending�to� the�Board�Executive�STIs�and�then�later�assessing�the�extent�to�which� the�Group�STI�measures�and�the�individual�KPIs�of�the�Executives� have�been�achieved,�and�the�amount�to�be�paid�to�each�Executive.� To�assist�in�making�this�assessment,�the�Committee�receives�detailed� reports�and�presentations�on�the�performance�of�the�business�from�
the�Managing�Director�&�CEO.�The�Board�retains�overall�discretion� on�whether�a�STI�should�be�paid�in�any�given�year.�
As�noted�earlier�in�this�report,�deferral�of�STI�is�extremely�rare� amongst�the�resources�companies�with�which�the�Group�competes� for�talent,�and�is�considered�to�be�a�disincentive�to�current�and� prospective�employees.��The�current�weighting�between�STI�and�LTI� is�considered�to�provide�appropriate�alignment�with�long�term�share� price�performance�and�retention�of�Executives.��
The�STI�is�an�annual�“at�risk”�component�of�remuneration�for� Executives.�It�is�payable�based�on�performance�against�key� performance�indicators�( KPI )�set�at�the�beginning�of�the�financial� year.��
For�each�KPI�there�are�defined�“threshold”,�“target”�and�“stretch”� measures�which�are�capable�of�objective�assessment:�
| Threshold | representstheminimumlevelofacceptable |
|---|---|
| performance | performanceacknowledgingextrinsicrisks |
| assumedinachievementofthefullyearbudget | |
| (wherethebudgetisnormallymoredemanding | |
| yearonyear)forquantifiablemeasureswhich | |
| arewithinthecontrolofSTIparticipantssuchas | |
| safety,productionandall�insustainingcost(as | |
| proxiesforprofitabilityandcashgeneration),as | |
| wellastheachievementofneartermgoals | |
| linkedtotheannualstrategy. | |
| Target | representschallengingbutachievablelevelsof |
| performance | performancebeyondachievementofbudget |
| measures. | |
| Stretch | requiressignificantperformanceaboveand |
| (ormaximum) | beyondnormalexpectationsandifachievedis |
| performance | anticipated to result in a substantial |
| improvementinkeystrategicoutcomes, | |
| operationalorfinancialresults,and/orthe | |
| businessperformanceoftheGroup. |
Page�19�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
STIs�are�structured�to�remunerate�Executives�for�achieving�annual� Group�targets�as�well�as�their�own�individual�performance�targets� designed�to�favourably�impact�the�business.��The�proportion�of�the� STI�earned�is�calculated�by�adding�the�average�result�of�the�Group� targets�with�the�average�result�of�an�individual’s�performance� targets,�where�target�performance�equals�one.��For�the�FY17�STI,�the� results�are�weighted�to�70%�Group�targets�and�30%�individual� targets.��Group�and�individual�targets�are�established�by�reference� to�the�Group�Strategy.�The�net�amount�of�any�STI�after�allowing�for� applicable�taxation,�is�payable�in�cash.���
All�service�agreements�with�Executives�comply�with�the�provisions�of� Part�2�D.2,�Division�2�of�the�Corporations�Act.�
These�service�agreements�may�be�terminated�early�by�either�party� giving�the�required�notice�and�subject�to�termination�payments� detailed�in�the�agreement.�Other�major�provisions�of�the� agreements�relating�to�remuneration�are�set�out�below.�
R�S�Vassie�–�Managing�Director�and�CEO��
- Term�of�agreement�–�permanent�employee,�commenced�1�July� 2014.�
The�calculation�of�STI�earned�can�be�summarised�as�follows:��
STI�earned�=�STI�value�at�risk�x�[(70%�x�average�result�of�Group�STI� targets)�plus�(30%�x�average�result�of�Individual�STI�targets)],�where� target�performance�=�1.�
- Other�than�for�serious�misconduct�or�serious�breach�of�duty,� the�Company�or�Mr�Vassie�may�terminate�employment�at�any� time�with�6�months’�notice.�
G�Campbell�Cowan�–�Chief�Financial�Officer�
Details�of�the�2017�financial�year�STI�are�set�out�in� Section�7.4� of�this� report.�
- Term�of�agreement�–�permanent�employee,�commenced�1� September�2006.�
5.3� Performance�Linked�Remuneration�–�LTI��
LTIs�are�structured�to�remunerate�Executives�for�the�long�term� performance�of�the�Group�relative�to�its�peers.�The�LTIs�involve�the� granting�of�rights�which�only�vest�upon�achievement�of�performance� measures�over�a�three�year�period.�Performance�rights�on�issue�carry� no�dividend�or�voting�rights.�On�vesting�each�performance�right�is� convertible�into�one�ordinary�share.�
- Other�than�for�gross�misconduct�or�for�poor�performance�as� judged�by�the�Company�in�its�absolute�discretion,�the�Company� may�terminate�the�employment�at�any�time�with�payment�of�a� termination�benefit�equal�to�8�months’�notice.�Mr�Campbell� Cowan�may�terminate�employment�at�any�time�with�6�weeks’� notice.��
5.5����Future�Developments�in�Remuneration�
As�noted�earlier,�the�gold�industry�is�much�more�volatile�than�the� economy�in�general.��The�gold�industry�tends�to�be�cyclical�and�the� result�at�the�end�of�a�three�year�vesting�period�may�be�adversely� impacted�by�a�short�term�downturn�in�the�price�of�gold�or�in�the�gold� industry.��Unlike�other�industries�where�matching�revenues�and� expenses�may�have�long�lead�times,�in�the�gold�industry�gold� produced�is�sold�at�arm’s�length�at�the�market�price�(unless�it�is�sold� into�a�hedge)�within�a�matter�of�days�from�production,�with� corresponding�revenue�and�expenses�recorded.��The�primary�LTI� performance�measure�of�relative�total�shareholder�return�means� that�LTI�awards�will�not�increase�merely�due�to�an�increase�in�gold� price,�but�only�on�better�than�average�industry�performance.���
These�characteristics�of�the�gold�industry,�and�comparison�with�long� term�incentive�structures�of�other�resource�companies�with�which� the�Group�competes�for�talent,�have�led�to�certain�characteristics�of� the�current�LTI�plan,�including�retesting.�The�Board�introduced� ‘retesting’�to�performance�rights�issued�from�September�2015.�� Should�no�rights�from�a�tranche�vest�at�the�conclusion�of�a� measurement�period,�at�its�discretion,�the�Board�may�choose�to� retest�the�relevant�performance�rights�for�the�same�performance� conditions�(e.g.�above�50[th] �percentile�Relative�Total�Shareholder� Return)�one�year�after�the�original�vesting�period�(and�potentially� again�one�year�later).��Performance�rights�would�only�vest,�with� Board�discretion,�if�there�was�positive�total�shareholder�return,�and� minimum�threshold�performance�achieved�for�Relative�Total� Shareholder�Return�and�Return�on�Capital�Employed�for�the� extended�vesting�period�(of�four�or�five�years),�which�should�only� correspond�with�a�positive�shareholder�experience.��
Vesting�conditions�of�each�tranche�of�performance�rights�issued�are� approved�by�the�Board�and�set�out�in�the�relevant�Notice�of�Annual� General�Meeting.��Details�of�the�LTI�relevant�to�the�2017�financial� year�are�set�out�in� Section�7.5� of�this�report.�
5.4�����Summaries�of�service�agreements�for�Executives�
Remuneration�and�other�terms�of�employment�for�the�Managing� Director�and�CEO�and�the�Chief�Financial�Officer�are�formalised�in� service�agreements.��These�agreements�provide,�where�applicable,� for�the�provision�of�performance�related�cash�payments,�other� benefits�including�allowances,�and�participation�in�the�St�Barbara� Limited�Performance�Rights�Plan.���
The�Group�continuously�monitors�its�remuneration�structure,� practices�and�disclosure�in�light�of�market�developments�to�ensure� that�collectively�they�continue�to:�
-
attract,�reward�and�retain�high�performing,�team�oriented� individuals�capable�of�delivering�the�Group�strategy;�
-
encourage�and�reward�individual�and�team�performance�aligned� with�value�creation�for�shareholders;�
-
appropriately�inform�shareholders�of�what�remuneration�is�paid� and�why.�
Almost�exclusively,�the�Group�competes�with�Australian�gold� industry�peer�companies�to�attract�and�retain�the�individuals� necessary�to�maintain�its�success.��This�drives�the�need�to�closely� monitor�and�respond�to�the�remuneration�practices�of�its�peers,�and� offer�a�competitive�and�comparable�remuneration�packages.��This� means�the�Group’s�remuneration�practices�are�consistent�with�the� Australian�gold�mining�industry�and�the�peer�companies�with�which� it�competes�for�talent,�rather�than�practices�that�may�be�used�by� broader�industrial�companies.�
There�are�no�planned�changes�to�the�remuneration�structure�for� Executives�at�the�time�of�this�report,�other�than�for�the�mix�of�Group� and�Individual�STI�targets,�which�is�proposed�to�change�the�weighting� from�70%�Group�targets�and�30%�Individual�targets�in�2017,�to�80%� Group�targets�and�20%�Individual�targets�in�2018.�
Following�a�review�of�various�resource�industry�market� remuneration�data�from�a�number�of�sources,�for�the�2018�financial� year�the�Board�has�approved�a�10%�increase�in�total�fixed� remuneration�for�the�MD�&�CEO�and�a�2.5%�increase�for�the�CFO.���
The�Board�identified�that�the�CEO’s�fixed�remuneration�was�not� commensurate�with�the�market.��The�Board�noted�that�the�market� capitalisation�of�the�Group�had�increased�over�20�times�(and�the� Group�had�re�joined�the�ASX�300�and�ASX�200)�in�the�three�years� since�the�CEO�was�appointed�on�1�July�2014.�
The�FY18�total�fixed�remuneration�of�both�Executives�is�between�P50� and�P75�of�the�benchmark�data,�which�is�consistent�with�the� Company’s�remuneration�strategy.
Page�20�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
6. Relationship�between�Group�Performance�and�Remuneration����past�five�years�
The�Board�has�regard�to�the�overall�performance�of�the�Group�over�a�number�of�years�in�assessing�and�ensuring�proper�alignment�of�the� performance�linked�“at�risk”�remuneration�framework�to�deliver�fair�and�proper�outcomes�consistent�with�the�Group’s�performance.��
Full�details�of�the�Group’s�operational�and�financial�performance�are�set�out�in�the�Directors’�Report�immediately�preceding�the�Remuneration� Report,�and�in�the�Financial�Report,�immediately�following�the�Remuneration�Report.��For�convenience,�a�summary�of�key�operating�and�financial� measures�is�reproduced�in�the�Remuneration�Report.���
In�assessing�the�Group’s�performance�and�shareholder�return,�consideration�is�given�to�the�following�measures�in�respect�of�the�current�financial� year�and�the�previous�four�financial�years.��
| Earnings | 2013 $’000 |
2014 $’000 |
2015 $’000 |
2016 $’000 |
2017 $’000 |
|---|---|---|---|---|---|
| Salesrevenue EBITDA(1) Statutorynetprofit/(loss)aftertax |
568,443 (150,628) (191,854) |
533,828 (331,634) (500,831) |
552,581 167,557 39,682 |
610,115 298,106 169,388 |
641,702 293,302 157,572 160,366 |
| Underlyingnetprofit/(loss)aftertax(1) | 29,285 | (33,526) | 41,964 | 127,357 |
(1) Non�IFRS�financial�measures,�refer�to�page�3.�
The�table�below�provides�the�share�price�performance�of�the�Group’s�shares�in�the�current�financial�year�and�the�previous�four�financial�years.�
| Sharepricehistory | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Periodendshareprice($pershare) | 0.45 | 0.115 | 0.57 | 2.95 | 2.91 2.71 |
| Averagesharepricefortheyear($pershare) | 1.35 | 0.38 | 0.21 | 1.56 |
During�the�2017�financial�year,�the�Group’s�daily�closing�share�price�ranged�between�$1.77�to�$3.69�per�share�(2016:�$0.395�to�$3.30�per�share).�
The�table�below�provides�the�percentage�of�performance�linked�remuneration�awarded�to�Executives�in�the�current�financial�year�and�the� previous�four�financial�years.�
| PerformanceLinkedRemuneration | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| %ofmaximumpotentialSTIearned | 40% | 0% | 66% | 99% | 90% 100% |
| %ofmaximumpotentialLTIearned | 0% | 0% | 0% | 67% |
Executive�Performance�Linked�Remuneration�
Five�Year�History
==> picture [255 x 195] intentionally omitted <==
----- Start of picture text -----
$2.71�
Average�share�price
$1.56�
$1.35�
$0.38� $0.21�
%�STI�/�LTI�
earned 99% 100%
100% 90%
75% 67%
50% 40%
25%
0% 0% 0%
0%
2013 2014 2015 2016 2017
STI LTI
----- End of picture text -----
Page�21�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
5�Year�Group�Performance���
Sales�Revenue
==> picture [249 x 150] intentionally omitted <==
----- Start of picture text -----
$M
700
600
500
400
300
200
100
0
2013 2014 2015 2016 2017
----- End of picture text -----
EBITDA[1]
==> picture [250 x 149] intentionally omitted <==
----- Start of picture text -----
$M
400
300
200
100
0
�100
�200
�300
�400
2013 2014 2015 2016 2017
----- End of picture text -----
Statutory�Net�Profit/(Loss)�After�Tax
==> picture [250 x 150] intentionally omitted <==
----- Start of picture text -----
$M
300
200
100
0
�100
�200
�300
�400
�500
2013 2014 2015 2016 2017
----- End of picture text -----
Underlying�Net�Profit/(Loss)�After�Tax[1]
==> picture [249 x 150] intentionally omitted <==
----- Start of picture text -----
$M
200
150
100
50
0
�50
2013 2014 2015 2016 2017
----- End of picture text -----
Gold�Production
==> picture [247 x 159] intentionally omitted <==
----- Start of picture text -----
koz
450
400
350
300
250
200
150
100
50
0
2013 2014 2015 2016 2017
Gwalia KOTH Southern�Cross Simberi Gold�Ridge
----- End of picture text -----
Total�Recordable�Injury�Frequency�Rate[2] measured�on�a�12�month�rolling�basis
==> picture [239 x 131] intentionally omitted <==
----- Start of picture text -----
7
6
5
4
3
2
1
0
2013 2014 2015 2016 2017
----- End of picture text -----
-
Underlying�net�profit�after�tax�is�statutory�net�profit�after�tax�excluding�significant�items.��EBITDA�is�earnings�before�interest�revenue,�finance�costs,� depreciation�and�amortisation�and�income�tax�expense,�and�includes�revenues�and�expenses�associated�with�discontinued�operations.��These�are�non� IFRS�financial�measures�which�have�not�been�subject�to�review�or�audit�by�the�Group’s�external�auditors.��These�measures�are�presented�to�enable� understanding�of�the�underlying�performance�of�the�Group.�����
-
Total�recordable�injury�frequency�rate�for�each�million�hours�worked�on�a�12�month�rolling�basis.�
Page�22�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
7. Remuneration�Disclosure�and�Executive�Remuneration�Outcomes��
7.1 STI�
The�STI�was�assessed�for�the�financial�year�ended�30�June�2017.���
Highlights�of�the�Group’s�achievements�in�2017�include:�
| Records | � | Recordsafetyperformanceof1.2TRIFR1,wellbelowthecomparableindustryrateof2.52 |
|---|---|---|
| � | Recordannualproductionfromcontinuingoperationsof381,101oz(2016:377,452oz) | |
| � | RecordannualproductionfromtheSimberimineof116,044oz(2016:110,286oz) | |
| � | RecordlowAISC3ofA$907perounce(2016:A$933perounce)4 | |
| SafetyandPeople | � | Inadditiontorecordsafetyperformancenotedabove: WGEAEmployerofChoiceforGenderEqualityforthe3rdyearrunning |
| � | WinneroftheCompanyDiversityProgramintheVictorianWomeninResourcesAwards | |
| � | WinnersCMEWAUndergroundMineEmergencyResponseTeamCompetition | |
| � | WinnerofDiggeroftheyearaward | |
| � | LeonoraOperationsemployeeturnoverof5.5%(comparedtoWesternAustralianaverageof15.3%5) | |
| Operations | � | Outperformedoriginal(andsubsequentlyamended)FY17marketguidanceforallpublishedmetrics: Production achieved381koz,initialguidance340�370koz |
| � | All�InSustainingCost achievedA$907/oz,initialguidanceA$985/oz–A$1,075/oz |
|
| � | Capitalexpenditure achievedA$43million,initialguidanceA$45�53million(sustainingandgrowthcapex) |
|
| Financial | � | Increaseunderlyingnetprofitaftertaxandcashflowfromoperations |
| � | EarlyrepaymentoftheremainingA$225millionofUSs144ASeniorSecuredNotessimultaneouslywith | |
| cashatbankincreasedto$161million(2016:$137million) | ||
| � | $0.06persharefullyfrankeddividedinrespectoffullfinancialyearannounced(firstdividendsince1995) | |
| Strategy | � | $100millionGwaliaExpansionProjectapprovedinMarch2017.Theprojectconsistsoftwomaincomponents, aventilationupgradeandpasteaggregatefillandwilltaketwoandahalftothreeyearstocomplete.This |
| projectextendsminingatGwaliatoatleast2,000mbsinFY2024 | ||
| � | Simberistrategicreviewconcluded,productionandcashflowincreasedyearonyear,togetherwithanoption | |
| andfarm�inagreementestablishedwithNewcrestMiningLimited6forcopper�goldporphyryexploration | ||
| � | StrategicinvestmentsinhighlyprospectiveexplorersCatalystMetalsLtd(ASX:CYL)andPeelMiningLtd | |
| (ASX:PEX) | ||
| OreReservesand | � | 599kozofcontainedgoldaddedtoOreReservesatGwalia7 |
| MineralResources | � | 1,467kozofcontainedgoldaddedtoMineralResourcesatGwalia6 |
The�two�Executives�were�awarded�an�average�90%�of�available�STIs�in�2017,�as�a�result�of�the�Group’s�operational�and�financial�performance,� and�an�assessment�against�their�respective�Group�and�individual�STI�objectives.�Refer�to� Section�7.4 �of�this�report�for�details.�
7.2 LTI�
The�three�year�performance�period�for�the�FY15�Performance�Rights�ended�on�30�June�2017.���
The�last�three�years�have�been�transformational�period�for�the�Group,�with�outstanding�performance�in�share�price�growth,�return�on�capital� employed�and�total�shareholder�returns�of�2,308%.��Market�capitalisation�increased�from�$56�million�to�$1.4�billion�over�the�three�year�period� and�the�closing�share�price�increased�from�$0.115�at�30�June�2014�to�$2.91�at�30�June�2017.����
Consistent�with�the�outstanding�performance�of�the�Group�over�the�last�three�years,�and�an�assessment�against�the�performance�measures,� 100%�of�the�rights�held�by�Executives�under�the�FY15�LTI�that�matured�on�30�June�2017�were�assessed�to�have�vested.�Refer�to� Section�7.5 �of� this�report�for�details.�
1�� Total�Recordable�Injury�Frequency�Rate�calculated�on�a�rolling�12�month�average�
2�� Gold�mining�industry�TRIFR�data�per�the�Department�of�Mines�and�Petroleum�report�titled�‘Safety�Performance�in�the�Western�Australian�Mineral�Industry’� for�2014�2015�FY,�available�at:�www.dmp.wa.gov.au/Documents/Safety/MSH_Stats_Posters_SafetyPerfWA_1415.pdf���
3�� All�In�Sustaining�Cost�is�a�Non�IFRS�financial�measure,�refer�to�page�3�
4�� AISC�for�continuing�operations�
5�� Mackie�Resources�Industry�Turnover�Analysis�www.mesolutions.com.au�
6����Option�and�Farm�in�Agreement�between�the�St�Barbara�group�(through�its�wholly�owned�PNG�subsidiary�Nord�Australex�Nominees�(PNG)�Ltd)�and�Newcrest� PNG�Exploration�Limited�(a�wholly�owned�subsidiary�of�Newcrest�Mining�Limited).�
7�� Refer�Ore�Reserves�and�Mineral�Resources�Statements�as�at�30�June�2017�released�23�August�2017�
Page�23�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
Selected�highlights�of�the�Group’s�performance�during�the�3�year�performance�period�from�1�July�2014�to�30�June�2017�are�set�out�below:
| 30June20141 | 30June2017 | Change | Change(%) | ||
|---|---|---|---|---|---|
| Shareprice(10dayVWAP) | $ | $0.12 | $2.89 | +$2.77 | +2,308%increase |
| Netprofit/(loss)aftertax(underlying) | $M | $(34)M | $160M | +$194M | turnaround |
| Debt | $M | $374M | � | �$374M | 100%reduction |
| Dividendforfinancialyear | cents | Nil | $0.062 | +$0.06 | new |
| Safety | TRIFR1 | 4.1 | 1.2 | �2.9 | 71%improvement |
Additional�highlights�of�the�Group’s�achievements�during�the�three�year�FY15�Performance�Rights�vesting�period�include:�
-
Year�on�year�record�safety�performance��
-
Sustained�increased�production�from�the�Gwalia�mine��
-
Year�on�year�record�production�from�the�Simberi�mine��
-
Gwalia�extension�project�approved,�extends�life�of�mine�to�2024�
-
Deep�drilling�intersected�the�Gwalia�mine�sequence�at�2200�metres�below�surface�
-
Simberi�strategic�review�concluded,�option�and�farm�in�agreement�established�with�Newcrest��
-
Increase�in�mineral�resources�at�Gwalia�by�2,405,000�ounces�before�depletion,�and�increase�in�ore�reserves�at�Gwalia�by�1,089,000� before�depletion.�
-
Early�repayment�of�A$374�million�debt�
-
Divestment�of�the�closed�King�of�the�Hills�mine�in�Western�Australia�
-
Divestment�of�the�suspended�Gold�Ridge�Project�in�the�Solomon�Islands�
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----- Start of picture text -----
Absolute�performance�over�
FY15�LTI�vesting�period
�$4.00 6000
5000
�$3.00
4000
�$2.00 3000
2000
�$1.00
1000
�$� 0
2014 2015 2016 2017
ASX:XGD Gold�Price SBM
(A$/oz) (10�day�VWAP)
Source:�IRESS�(5�year�weekly�data)
----- End of picture text -----
==> picture [257 x 172] intentionally omitted <==
----- Start of picture text -----
Relative�performance�over�
FY15�LTI�vesting�period
2,500% +2,308%
2,000%
1,500%
1,000%
500% XGD +86%
0% 100% A$/oz +15%
2014 2015 2016 2017
SBM ASX:XGD Gold�Price
(10�day�VWAP) (A$/oz)
Source:�IRESS�(5�year�weekly�data)
----- End of picture text -----
==> picture [517 x 172] intentionally omitted <==
----- Start of picture text -----
A$M Market�cap�over� ASX:�SBM
FY15�LTI�vesting�period
2,000
$4.00
+$1,391M $3.50 FY15�LTI�vesting�period
1,500 $3.00
$2.50
1,000 $2.00
$1.50
500 $1.00
$0.50
0 $0.00
2014 2015 2016 2017 increase Jun�2012 Jun�2013 Jun�2014 Jun�2015 Jun�2016 Jun�2017
2014�to
M'Cap 2017 SBM
Source:�IRESS�(5�year�weekly�data)
----- End of picture text -----
1�� 30�June�2014�figures�used�to�illustrate�‘starting’�balances�for�the�3�year�LTI�performance�period�from�1�July�2014�to�30�June�2017�(e.g.�from�the�corresponding� Notice�of�2014�Annual�General�Meeting,�total�shareholder�return�for�the�period�is�calculated�from�‘the�10�day�VWAP�calculation�up�to,�and�including,�the�last� business�day�of�the�financial�period�immediately�preceding�the�period�that�the�performance�rights�relate�to’.�
2�� Dividend�announced�7�August�2017�in�respect�of�the�full�2017�financial�year.�
Page�24�
| (1)Leaveincludeslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpensesincludingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 208,384 � � 19,616 � � � 228,000 n/a KJGleeson 116,895 � � 11,105 � � � 128,000 n/a DEJMoroney 116,895 � � 11,105 � � � 128,000 n/a TotalNon�ExecutiveDirectors 442,174 � � 41,826 � � � 484,000 n/a ExecutiveDirector RSVassie 746,234 689,265 56,548 19,616 68,083 495,822 � 2,075,568 57% Executives GCampbell�Cowan 478,694 399,146 6,303 19,616 41,571 285,183 � 1,230,513 56% TotalExecutives 1,224,928 1,088,411 62,851 39,232 109,654 781,005 � 3,306,081 57% |
(1)Leaveincludeslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpensesincludingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 208,384 � � 19,616 � � � 228,000 n/a KJGleeson 116,895 � � 11,105 � � � 128,000 n/a DEJMoroney 116,895 � � 11,105 � � � 128,000 n/a TotalNon�ExecutiveDirectors 442,174 � � 41,826 � � � 484,000 n/a ExecutiveDirector RSVassie 746,234 689,265 56,548 19,616 68,083 495,822 � 2,075,568 57% Executives GCampbell�Cowan 478,694 399,146 6,303 19,616 41,571 285,183 � 1,230,513 56% TotalExecutives 1,224,928 1,088,411 62,851 39,232 109,654 781,005 � 3,306,081 57% |
(1)Leaveincludeslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpensesincludingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 208,384 � � 19,616 � � � 228,000 n/a KJGleeson 116,895 � � 11,105 � � � 128,000 n/a DEJMoroney 116,895 � � 11,105 � � � 128,000 n/a TotalNon�ExecutiveDirectors 442,174 � � 41,826 � � � 484,000 n/a ExecutiveDirector RSVassie 746,234 689,265 56,548 19,616 68,083 495,822 � 2,075,568 57% Executives GCampbell�Cowan 478,694 399,146 6,303 19,616 41,571 285,183 � 1,230,513 56% TotalExecutives 1,224,928 1,088,411 62,851 39,232 109,654 781,005 � 3,306,081 57% |
(1)Leaveincludeslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpensesincludingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 208,384 � � 19,616 � � � 228,000 n/a KJGleeson 116,895 � � 11,105 � � � 128,000 n/a DEJMoroney 116,895 � � 11,105 � � � 128,000 n/a TotalNon�ExecutiveDirectors 442,174 � � 41,826 � � � 484,000 n/a ExecutiveDirector RSVassie 746,234 689,265 56,548 19,616 68,083 495,822 � 2,075,568 57% Executives GCampbell�Cowan 478,694 399,146 6,303 19,616 41,571 285,183 � 1,230,513 56% TotalExecutives 1,224,928 1,088,411 62,851 39,232 109,654 781,005 � 3,306,081 57% |
(1)Leaveincludeslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpensesincludingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 208,384 � � 19,616 � � � 228,000 n/a KJGleeson 116,895 � � 11,105 � � � 128,000 n/a DEJMoroney 116,895 � � 11,105 � � � 128,000 n/a TotalNon�ExecutiveDirectors 442,174 � � 41,826 � � � 484,000 n/a ExecutiveDirector RSVassie 746,234 689,265 56,548 19,616 68,083 495,822 � 2,075,568 57% Executives GCampbell�Cowan 478,694 399,146 6,303 19,616 41,571 285,183 � 1,230,513 56% TotalExecutives 1,224,928 1,088,411 62,851 39,232 109,654 781,005 � 3,306,081 57% |
|
|---|---|---|---|---|---|
| Proportionof total performance related(4) |
n/a n/a n/a |
n/a | 57% 56% |
57% | |
| Total $ |
228,000 128,000 128,000 |
484,000 | 2,075,568 1,230,513 |
3,306,081 | |
| Long�termbenefits | Termination payments $ |
� � � |
� | � � |
� |
| Share�based payments(2) $ |
� � � |
� | 495,822 285,183 |
781,005 | |
| Leave(1) $ |
� � � |
� | 68,083 41,571 |
109,654 | |
| Post� employment benefits |
Super� annuation $ |
19,616 11,105 11,105 |
41,826 | 19,616 19,616 |
39,232 |
| Short�termbenefits | Non� monetary benefits(3) $ |
� � � |
� | 56,548 6,303 |
62,851 |
| STI payment $ |
� � � |
� | 689,265 399,146 |
1,088,411 | |
| Cash salary&fees $ |
208,384 116,895 116,895 |
442,174 | 746,234 478,694 |
1,224,928 | |
| 2017 | Name | Non�ExecutiveDirectors TCNetscher(Chairman) KJGleeson DEJMoroney |
TotalNon�ExecutiveDirectors | ExecutiveDirector RSVassie Executives GCampbell�Cowan |
TotalExecutives |
| (1)Theamountrepresentslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpenses.Includingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 204,392 � � 19,308 � � � 223,700 n/a KJGleeson 110,548 � � 10,502 � � � 121,050 n/a DEJMoroney 110,548 � � 10,502 � � � 121,050 n/a TotalNon�ExecutiveDirectors 425,488 � � 40,312 � � � 465,800 n/a ExecutiveDirector RSVassie 731,217 750,525 54,771 19,308 63,298 294,240 � 1,913,359 55% Executives GCampbell�Cowan 478,687 382,772 6,288 19,308 39,713 217,648 � 1,144,416 52% TotalExecutives 1,209,904 1,133,297 61,059 38,616 103,011 511,888 � 3,057,775 54% |
(1)Theamountrepresentslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpenses.Includingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 204,392 � � 19,308 � � � 223,700 n/a KJGleeson 110,548 � � 10,502 � � � 121,050 n/a DEJMoroney 110,548 � � 10,502 � � � 121,050 n/a TotalNon�ExecutiveDirectors 425,488 � � 40,312 � � � 465,800 n/a ExecutiveDirector RSVassie 731,217 750,525 54,771 19,308 63,298 294,240 � 1,913,359 55% Executives GCampbell�Cowan 478,687 382,772 6,288 19,308 39,713 217,648 � 1,144,416 52% TotalExecutives 1,209,904 1,133,297 61,059 38,616 103,011 511,888 � 3,057,775 54% |
(1)Theamountrepresentslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpenses.Includingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 204,392 � � 19,308 � � � 223,700 n/a KJGleeson 110,548 � � 10,502 � � � 121,050 n/a DEJMoroney 110,548 � � 10,502 � � � 121,050 n/a TotalNon�ExecutiveDirectors 425,488 � � 40,312 � � � 465,800 n/a ExecutiveDirector RSVassie 731,217 750,525 54,771 19,308 63,298 294,240 � 1,913,359 55% Executives GCampbell�Cowan 478,687 382,772 6,288 19,308 39,713 217,648 � 1,144,416 52% TotalExecutives 1,209,904 1,133,297 61,059 38,616 103,011 511,888 � 3,057,775 54% |
(1)Theamountrepresentslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpenses.Includingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 204,392 � � 19,308 � � � 223,700 n/a KJGleeson 110,548 � � 10,502 � � � 121,050 n/a DEJMoroney 110,548 � � 10,502 � � � 121,050 n/a TotalNon�ExecutiveDirectors 425,488 � � 40,312 � � � 465,800 n/a ExecutiveDirector RSVassie 731,217 750,525 54,771 19,308 63,298 294,240 � 1,913,359 55% Executives GCampbell�Cowan 478,687 382,772 6,288 19,308 39,713 217,648 � 1,144,416 52% TotalExecutives 1,209,904 1,133,297 61,059 38,616 103,011 511,888 � 3,057,775 54% |
(1)Theamountrepresentslongserviceleaveandannualleaveentitlements. (2)ThevalueofperformancerightsdisclosedasremunerationistheportionofthefairvalueoftheperformancerightsrecognisedinthereportingperiodinaccordancewiththeCorporationsAct2001andrelevant AustralianAccountingStandards.Thisvaluemaynotalwaysreflectwhatanexecutivehasreceivedinthereportingperiod. (3)Non�monetarybenefitsforExecutivescomprisecarparking,professionalmembershipsand,forMrVassie,livingawayfromhometravelexpenses.Includingassociatedfringebenefitstax. (4)Calculatedas‘STIpayment’plus‘Share�basedpayments’dividedby‘Total’remuneration. Name Cash salary&fees STI payment Non� monetary benefits(3) Super� annuation Leave(1) Share�based payments(2) Termination payments Total Proportionof total performance $ $ $ $ $ $ $ $ related(4) Non�ExecutiveDirectors TCNetscher(Chairman) 204,392 � � 19,308 � � � 223,700 n/a KJGleeson 110,548 � � 10,502 � � � 121,050 n/a DEJMoroney 110,548 � � 10,502 � � � 121,050 n/a TotalNon�ExecutiveDirectors 425,488 � � 40,312 � � � 465,800 n/a ExecutiveDirector RSVassie 731,217 750,525 54,771 19,308 63,298 294,240 � 1,913,359 55% Executives GCampbell�Cowan 478,687 382,772 6,288 19,308 39,713 217,648 � 1,144,416 52% TotalExecutives 1,209,904 1,133,297 61,059 38,616 103,011 511,888 � 3,057,775 54% |
|
|---|---|---|---|---|---|
| Proportionof total performance related(4) |
n/a n/a n/a |
n/a | 55% 52% |
54% | |
| Total $ |
223,700 121,050 121,050 |
465,800 | 1,913,359 1,144,416 |
3,057,775 | |
| Long�termbenefits | Termination payments $ |
� � � |
� | � � |
� |
| Share�based payments(2) $ |
� � � |
� | 294,240 217,648 |
511,888 | |
| Leave(1) $ |
� � � |
� | 63,298 39,713 |
103,011 | |
| Post� employment benefits |
Super� annuation $ |
19,308 10,502 10,502 |
40,312 | 19,308 19,308 |
38,616 |
| Short�termbenefits | Non� monetary benefits(3) $ |
� � � |
� | 54,771 6,288 |
61,059 |
| STI payment $ |
� � � |
� | 750,525 382,772 |
1,133,297 | |
| Cash salary&fees $ |
204,392 110,548 110,548 |
425,488 | 731,217 478,687 |
1,209,904 | |
| 2016 | Name | Non�ExecutiveDirectors TCNetscher(Chairman) KJGleeson DEJMoroney |
TotalNon�ExecutiveDirectors | ExecutiveDirector RSVassie Executives GCampbell�Cowan |
TotalExecutives |
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
7.4 Performance�Linked�Remuneration���STI�
The�table�below�describes�the�STIs�available�to,�and�achieved�by,�Executives�during�the�year.�Amounts�shown�as�“Actual�STI”�represent�the� amounts�accrued�in�relation�to�the�2017�financial�year,�based�on�achievement�of�the�specified�performance�criteria.��No�additional�amounts�vest� in�future�years�in�respect�of�the�STI�plan�for�the�2017�financial�year.��The�Board�has�discretion�whether�to�pay�the�STI�in�any�given�year,�irrespective� of�whether�Company�and�individual�STI�targets�have�been�achieved.��The�Board�also�has�discretion�to�pay�the�STI�in�cash�or�shares.��The�Board� did�not�apply�discretion�to�the�calculation�of�the�2017�STI.��The�Board�last�applied�discretion�to�the�STI�calculation�in�2014,�when�it�applied�its� discretion�not�to�award�an�STI�to�Executives�due�to�financial�underperformance,�even�though�one�of�the�targets�had�been�achieved�at�maximum.��
| 2017 | MaximumpotentialSTI | MaximumpotentialSTI | ActualSTIincludedin | %ofmaximum | %ofmaximum |
|---|---|---|---|---|---|
| remuneration | potentialtotalSTI | potentialtotalSTI | |||
| earned(2) | foregone | ||||
| Target $ |
Stretch(1) $ |
$ | % | % | |
| RSVassie GCampbell�Cowan |
382,925 224,240 |
765,850 448,480 |
689,265 399,146 |
90% 89% |
10% 11% |
(1)�Inclusive�of�STI�“Target”.�
(2)�The�total�STI�%�comprises�70%�Group�STI�measures�plus�30%�Individual�STI�measures.�
The�Group’s�STI�measures�for�the�2017�financial�year�were�equally�weighted�and�comprised�the�following:�
| STIMeasure Target Weighting Result %of max. achieved (a) TotalRecordable InjuryFrequency Rate 2.2andno fatalities 33�% TRIFRof1.2achievedwith nofatalities, betweentarget(2.2)and maximum(1.0) 92% (b) Goldproduction 367,000 ounces 33�% 381,101ouncesproduced, betweentarget(367,000 oz)andmaximum (390,000oz) 81% (c) AllInSustaining Costs A$1,001/oz 33�% AISCA$907/ozachieved, outperformedmaximum (A$947/oz) 100% (d) Boarddiscretion (1) n/a � Discretionnotapplied � OverallGroupSTIPerformance 91% |
Threshold Target Maximum |
|---|---|
(1)� Discretionary�factor�determined�by�the�Board,�designed�to�take�into�account�unexpected�events�and�achievements�during�the�year.�
Individual�STI�performance�measures�were�aligned�with�the�Group�strategy�and�varied�according�to�the�individual�Executive’s�responsibilities,� and�for�the�2017�financial�year�are�set�out�below.��STI�performance�for�Executives�is�assessed�by�the�Board�against�objective�and�subjective� measures.��Some�of�the�detailed�measures�and�outcomes�are�commercially�sensitive�and�are�described�in�general�terms�only.�
| Executive | IndividualSTIperformancemeasures | IndividualSTIperformancemeasures | SummaryofperformanceassessedbyBoard | SummaryofperformanceassessedbyBoard | %of |
|---|---|---|---|---|---|
| maximum | |||||
| achieved | |||||
| MD&CEO | � | Leadershipindesignandexecutionof strategyandkeystrategicprojects |
SuccessfulexecutionagainstBoardapprovedstrategic plan,including: |
88% | |
| � | Leadershipoforganicandinorganicgrowth | � | Gwaliaextensionprojectapproved | ||
| opportunities | � | SuccessfulSimberistrategicreviewprocessand | |||
| outcome | |||||
| � | Additionstoresourcesandreserves | ||||
| � | Organicandinorganicgrowthoptions,including | ||||
| optionandfarminagreementwithNewcrest | |||||
| CFO | � | Effectivecapitalmanagementanddebt reduction |
� | JudiciousearlyrepaymentofA$225millionin principalofUSSeniorSecuredNotes,reducing |
85% |
| � | Leadbusinessdevelopmentstrategyand | interestexpenseforyearbyA$13million | |||
| execution | � | Creationofanappropriatelyresourcedandfocussed | |||
| � | Leadfinancial,procurementandproject | businessdevelopmentfunction | |||
| governanceofGwaliaextensionproject | � | SuccessfulSimberistrategicreviewprocessanda | |||
| numberofbusinessdevelopmentoutcomes | |||||
| � | SuccessfulgovernanceofGwaliaextensionproject | ||||
| andrealisationofprocurementbenefits |
Page�27�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
7.5 Performance�Linked�Remuneration���LTI�
There�are�three�LTI�tranches�relevant�to�the�2017�financial�year,�which�are�summarised�below:��
| Grantyear/ | Description | Performance | Performance | Performance | Status |
|---|---|---|---|---|---|
| tranchename | Conditions&Weighting | Period | |||
| FY15PerformanceRights | GrantedasLTIremunerationin | RTSR | 67% | 1July2014 | Performanceperiod |
| 2015anddisclosedinthe | ROCE | 33% | to30June2017 | completedandresults | |
| 2015RemunerationReport | reportedbelow | ||||
| FY16PerformanceRights | GrantedasLTIremunerationin | RTSR | 67% | 1July2015 | Tobeassessedand |
| 2016anddisclosedinthe | ROCE | 33% | to30June2018 | reportedinthe | |
| 2016RemunerationReport | 2018RemunerationReport | ||||
| FY17PerformanceRights | GrantedasLTIremunerationin | RTSR | 67% | 1July2016 | Tobeassessedand |
| 2017anddisclosedinthe | ROCE | 33% | to30June2019 | reportedinthe | |
| 2017RemunerationReport | 2019RemunerationReport |
The�three�LTI�tranches�can�be�illustrated�on�a�timeline�as�below:�
| ThethreeLTItranchescanbeillustratedonatimelineasbelow: | ThethreeLTItranchescanbeillustratedonatimelineasbelow: | ThethreeLTItranchescanbeillustratedonatimelineasbelow: | ThethreeLTItranchescanbeillustratedonatimelineasbelow: |
|---|---|---|---|
| Financialyear FY15 FY16 FY17 FY18 FY19 FY15PerformanceRights IssuedinFY15 3yrvestingperiod TestedJune2017 FY16PerformanceRights IssuedinFY16 3yrvestingperiod TobetestedJune2018 FY17PerformanceRights IssuedinFY17 3yrvestingperiod TobetestedJune2019 |
|||
| FY16 | FY17 FY18 FY19 |
||
| IssuedinFY15 | 3yrvestingperiod | _TestedJune2017 _ | |
| IssuedinFY16 | 3yrvestingperiod TobetestedJune2018 |
||
| IssuedinFY17 3yrvestingperiod TobetestedJune2019 |
7.6 Rights�Vested�and�On�Issue�
The�number�of�rights�over�ordinary�shares�in�the�Company�held�directly,�indirectly�or�beneficially�during�the�financial�year�by�each�Executive,� including�their�related�parties,�and�the�number�of�rights�that�vested,�are�set�out�below:�
| 2017 | Grantyear /tranche name |
Grant | Priceon issuedate |
Heldat 1July2016 |
Grantedas | Vested duringthe year(3) |
Forfeited duringthe year |
Heldat | Financial yearin which grantmay vest |
|---|---|---|---|---|---|---|---|---|---|
| Date | compensation | 30June | |||||||
| 2017(1) | |||||||||
| RSVassie | FY15 FY16 FY17 |
9Dec14 10Dec15 12Dec16 |
$0.12 $0.51 $2.92 |
4,062,500 1,104,674 � |
� � 196,708(2) |
4,062,500 � � |
� � � |
� 1,104,674 196,708 |
2017 2018 2019 |
| GCampbell�Cowan | FY15 FY16 |
5Dec14 10Dec15 |
$0.12 $0.51 |
2,438,525 575,291 |
� 575,291 |
2,438,525 � |
� � |
� 575,291 |
2017 2018 2019 |
| FY17 | 21Oct16 | $2.92 | � | 102,392 | � | � | 102,392 |
(1)�The�vesting�of�rights�held�at�30�June�2017�is�subject�to�future�performance�conditions.�
(2)�Approved�by�shareholders�at�the�Annual�General�Meeting�held�on�the�30�November�2016.�
(3)�These�rights�were�determined�by�the�Board�on�23�August�2017�to�have�vested�as�at�30�June�2017�and�are�pending�issue�as�shares�as�at�the�date�of�this�report.�
7.7 Rights�granted�in�2017�
Details�on�rights�over�ordinary�shares�in�the�Company�that�were�granted�as�remuneration�to�each�Executive�in�the�2017�financial�year�are�as� follows:�
| 2017 | Grantyear/ tranche identifier |
Grantdate | Numberof performance rightsgranted during2017 |
Issuepriceper performance right |
Expirydate | Fairvalueper performance rightatgrant date ($pershare)(1) |
|---|---|---|---|---|---|---|
| RSVassie | FY17 | 12Dec2016 | 196,708(2) | $2.92 | 30Jun2019 | $2.64 $2.64 |
| GCampbell�Cowan | FY17 | 21Oct2016 | 102,392 | $2.92 | 30Jun2019 |
(1)�For�accounting�purposes,�the�estimated�fair�value�of�performance�rights�at�grant�date�was�determined�using�a�Black�Scholes�valuation�to�which�a�Monte�Carlo� simulation�was�applied�to�determine�the�probability�of�the�market�conditions�associated�with�the�rights�being�met.��Fair�values�at�grant�date�are�based�on�the� prevailing�market�price�on�the�date�the�performance�right�is�granted.��The�assessed�fair�value�at�the�grant�date�of�performance�rights�is�allocated�equally�over�the� period�from�grant�date�to�vesting�date.��This�methodology�complied�with�the�requirements�of�Australian�Accounting�standard�AASB�2� Share�based�Payments.
(2)�Approved�by�shareholders�at�the�Annual�General�Meeting�held�on�the�30�November�2016.�
Page�28�
ST�BARBARA�LIMITED�2017�
Remuneration�Report�(audited)�
Directors’�Report�
7.8 Calculation�of�the�number�of�FY15�Performance�Rights�vested�in�2017�
6,501,025�(100%)�of�the�6,501,025�FY15�Performance�Rights�available�to�Executives�vested�at�30�June�2017.��No�FY15�Performance�Rights�lapsed� at�30�June�2017.��The�Performance�Rights�vested�represent�1.3%�of�total�shares�on�issue�at�30�June�2017,�and�1.3%�of�the�increase�in�market� capitalisation�over�the�corresponding�three�year�measurement�period.��The�FY15�rights�were�issued�in�December�2014�at�a�10�day�VWAP�price� calculated�under�the�Rights�Plan�Rules�and�Notice�of�2014�Annual�General�Meeting�of�$0.12�each,�representing�an�at�risk�value�of�$780,123�for� the�aggregate�FY15�Executive�remuneration.��
| TheFY15PerformanceRightswereassessedasfollows: | TheFY15PerformanceRightswereassessedasfollows: | TheFY15PerformanceRightswereassessedasfollows: | TheFY15PerformanceRightswereassessedasfollows: |
|---|---|---|---|
| (a) | RTSR | ||
| Weighting: | 67% | ||
| Actualscore: | highestrecordedTSRofcomparator | ||
| groupof2,308%(100thpercentile) | |||
| (detailsbelow) | |||
| Calculation: | 100%(forachievingabovethe75th | ||
| percentile) | |||
| (b) | ROCE | ||
| Weighting: | 33% | ||
| ActualROCE: | 45.2%(detailsbelow) | ||
| Calculation: | 100%(forachievingaboveupper | ||
| thresholdofWACC7.6%+7%=14.6% | |||
| (c) | Combinedscore | ||
| (100%x67%) | |||
| + | (100%x33%) | ||
| = | 100% |
| Proportionofrightstovest | ||
|---|---|---|
| Min | Max | |
| (50%) | (100%) | |
RTSR�Calculation�for�FY15�Performance�Rights�
The�result�of�the�RTSR�component�of�the�FY15�Performance�Rights�for�the�period�1�July�2014�to�30�June�2017�was:�
| RelativeTSRPerformance | PercentageofPerformanceRightstovest | Result |
|---|---|---|
| Below50thpercentile | 0% | StBarbaraachievedaTSRof2,308%forthe |
| period,andrankedatthe100thpercentileof | ||
| 50thpercentile | 50% | thecomparatorgroupofcompaniesforthe |
| Between50th&75thpercentiles | Pro�ratafrom50%to100% | period,abovethe75thpercentileupper threshold. |
| 75thpercentileandabove | 100% | Asaresult,100%ofthePerformanceRights linkedtoRTSRvested. |
TSR�over�LTI�vesting�period
==> picture [239 x 147] intentionally omitted <==
----- Start of picture text -----
2,500%
75th�percentile
2,000%
1,500%
1,000%
500%
0%
�500%
Co.�A Co.�B Co.�C Co.�D Co.�E Co.�F Co.�G Co.�H Co.�I Co.�J Co.�K Co.�L Co.�M Co.�N Co.�O Co.�P Co.�Q Co.�R Co.�S St�Barbara
----- End of picture text -----
Chart�of�TSR�results�for�comparator�companies�(table�next�page)��
ROCE�over�LTI�vesting�period
==> picture [238 x 139] intentionally omitted <==
----- Start of picture text -----
60%
51%
55%
50%
45%
40%
29%
30%
20%
15%
10%
0%
FY15 FY16 FY17
ROCE�(1�yr) ROCE�(3�yr) 100%�threshold
----- End of picture text -----
Chart�of�ROCE�(calculated�on�the�next�page)�
Page�29�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
The�comparator�group�of�companies�for�FY15�Performance�Rights�comprised:�
Alacer�Gold�Corp.�(ASX:�AQG)� Kingsrose�Mining�Limited�(ASX:�KRM)[1] Beadell�Resources�Limited�(ASX:�BDR)� Medusa�Mining�Limited�(ASX:�MML)� Evolution�Mining�Limited�(ASX:�EVN)� Northern�Star�Resources�Ltd�(ASX:�NST)� Focus�Minerals�Ltd�(ASX:�FML)� OceanaGold�Corporation�(ASX:�OGC)� Gryphon�Minerals�Limited�(ASX:�GRY)[2] Perseus�Mining�Limited�(ASX:�PRU)� Intrepid�Mines�Limited�(ASX:�IAU)� Ramelius�Resources�Limited�(ASX:�RMS)� Kingsgate�Consolidated�Limited�(ASX:�KCN)� Regis�Resources�Limited�(ASX:�RRL)�
Resolute�Mining�Limited�(ASX:�RSG)� Saracen�Mineral�Holdings�Limited�(ASX:�SAR)� Silver�Lake�Resources�Limited�(ASX:�SLR)� Tanami�Gold�NL�(ASX:�TAM)� Troy�Resources�Limited�(ASX:�TRY)�
ROCE�Calculation�for�FY15�Performance�Rights�
The�result�of�the�ROCE�component�over�the�three�year�vesting�period�commencing�1�July�2014�and�ending�on�30�June�2017�was:
| ROCE | PercentageofPerformanceRights | Result |
|---|---|---|
| tovest | ||
| LessthanorequaltotheaverageannualWACC | StBarbaraachievedaROCEfortheperiodof | |
| overthethreeyearperiodcommencingon1July | 45.2%(seecalculationbelow),whichisabove | |
| 2014 | 0% | theupperthresholdofWACCfortheperiod |
| WACC(calculatedasabove)+3% | 50% | of7.6%+7%=14.6%. |
| WACC(calculatedasabove)+between3%and7% | Pro�ratafrom50%to100% | Asaresult,100%ofthePerformanceRights |
| WACC(calculatedasabove)+7% | 100% | linkedtoROCEvested |
ROCE�is�calculated�as�EBIT�before�significant�items�expressed�as�a�percentage�of�average�total�capital�employed�(net�debt�and�total�equity)[3] .�
| Measure | 2015 | 20164 | 2017 | |||
|---|---|---|---|---|---|---|
| EBIT(excludingsignificantitems) EBIT(discontinuedoperations)5 EBIT(sumofabove) |
99,010 18,528 117,538 |
204,585 _____� 204,585 |
234,992 _____� 234,992 |
|||
| Capitalemployed–openingbalance Totalequity Netdebt6 Capitalemployed–openingbalance |
131,812 260,169 391,981 |
140,429 270,090 410,519 |
300,614 89,629 390,243 |
|||
| Capitalemployed–closingbalance Totalequity Netdebt6 Capitalemployed–closingbalance |
140,429 270,090 410,519 |
300,614 89,629 390,243 |
461,127 � 461,127 |
|||
| Capitalemployed–averageforperiod | 401,250 | 400,381 | 425,685 | |||
| ROCE(EBIT÷averagetotalcapitalemployed)foryear | 29.3% | 51.1% | 55.2% | |||
| ROCEaverageofthe3yearsinthevestingperiod | n/a | 25.6% | 45.2% | |||
| WACCaverageofthe3yearsinthevestingperiod | n/a | 13.9% | 7.6% |
WACC�is�calculated�using�the�widely�available�formula�of�(relative�weight�of�equity�x�required�rate�of�return)�+�(relative�weight�of�debt�x�cost�of� debt)[7] .��In�this�instance,�WACC�is�calculated�on�a�pre�tax�basis�to�match�the�pre�tax�nature�of�EBIT.��The�full�calculation�of�WACC�is�not�disclosed� as�it�is�considered�to�be�commercial�in�confidence,�however,�the�primary�variables�include:�
-
reported�balance�sheet�figures�for�debt�and�equity.�
-
government�10�year�bond�rate�as�proxy�for�risk�free�premium.�
-
ASX�All�Ordinaries�Index�as�proxy�for�market�portfolio�and�to�determine�relative�volatility.�
On�this�basis,�average�WACC�of�the�3�years�commencing�1�July�2014�and�ending�on�30�June�2017�is�7.6%�(2016:�13.9%).��The�reason�for�the� reduction�in�WACC�is�primarily�due�to�the�lower�proportion�of�debt�in�FY17,�and�lower�market�returns�over�the�3�year�period.�
- 1�� Kingsrose�Mining�Limited�went�into�trading�halt�on�12�December�2016,�was�suspended�from�trading�on�13�December�2016,�and�appointed�a�voluntary� administrator�on�28�December�2016.��The�RTSR�assessment�incorporates�a�pro�rata�calculation�of�Kingsrose�TSR�to�the�last�day�of�trade,�9�December�2016.�
2�� Gryphon�Minerals�Limited�was�acquired�by�Teranga�Gold�Corporation�(TSX:�TGZ,�ASX:�TGZ)�under�a�scheme�of�arrangement�and�was�suspended�from�quotation� at�close�of�trade�on�29�September�2016�and�subsequently�delisted�from�the�ASX�on�13�October�2016.��The�RTSR�assessment�incorporates�a�pro�rata�calculation� comprising�Gryphon�TSR�to�the�last�day�of�trade,�29�September�2016,�and�the�arithmetic�average�of�the�remaining�comparator�companies�(excluding�Kingsrose)� for�the�remainder�of�the�vesting�period.�
-
3�� ROCE�is�not�an�IFRS�measure�and�is�calculated�in�the�table�above.��
-
4�� 2016�calculation�as�reported�in�2016�Remuneration�Report.���
-
5�� EBIT�for�discontinued�operations�calculated�as�profit�or�loss�on�discontinued�operations�before�tax�excluding�impairments.�
-
6�� Net�debt�comprises�cash�and�cash�equivalents,�interest�bearing�borrowings�–�current�and�interest�bearing�borrowings�–�non�current.��The�minimum�net�debt� figure�applied�to�the�calculation�is�nil�(i.e.�where�the�Company�is�in�a�net�cash�position).�
-
7�� WACC�is�not�an�IFRS�measure.��The�above�parameters�can�be�used�to�calculate�WACC�using�commonly�available�formula.�
Page�30�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
7.9 Details�of�FY16�Performance�Rights�granted�during�2016�
FY16�Performance�Rights�were�granted�under�the�St�Barbara�Limited� Rights�Plan�(2015),�and�details�of�the�performance�conditions�were� set�out�in�the�Notice�of�2015�Annual�General�Meeting�and�2016� Remuneration�Report.��Performance�rights�issued�to�Mr�Vassie,� Managing�Director�and�CEO,�were�also�approved�by�shareholders�at� the�2015�Annual�General�Meeting.���
Key�Features�of�FY16�Performance�Rights��
| Performance | RelativeTotalShareholderReturns | RelativeTotalShareholderReturns | RelativeTotalShareholderReturns | (67% |
|---|---|---|---|---|
| conditions | weighting); | |||
| Returnoncapitalemployedin | excessofthe | |||
| weighted average cost |
of | capital | (33% | |
| weighting). | ||||
| Other | Includecontinuingemployment | |||
| conditions | ||||
| Issueprice | 10dayVWAPatstart,30June2015,$0.5092 | |||
| Measurement | 1July2015to30June2018 | |||
| period | ||||
| Vestingdate | 30June2018 |
The�proportion�of�the�FY16�Performance�Rights�that�vest�will�be� influenced�by�the�Company’s�TSR�relative�to�the�comparator�group� over�the�three�year�vesting�period�commencing�1�July�2015�and� ending�30�June�2018�as�outlined�below:�
| RelativeTSRPerformance | %Contributiontothe |
|---|---|
| Numberof | |
| PerformanceRightstoVest | |
| Below50thpercentile | 0% |
| 50thpercentile | 50% |
| Between50th&75thpercentiles | Pro�ratafrom50%to100% |
| 75thpercentileandabove | 100% |
(ii) ROCE�
The�proportion�of�FY16�Performance�Rights�that�vest�will�be� influenced�by�the�ROCE�achieved�by�the�Company�over�the�three� year�vesting�period�commencing�1�July�2015�and�ending�30�June� 2018.�
(i) RTSR��
RTSR�is�measured�against�a�defined�peer�group�of�companies�which� the�Board�considers�compete�with�the�Company�for�the�same� investment�capital,�both�in�Australia�and�overseas,�and�which�by�the� nature�of�their�business�are�influenced�by�commodity�prices�and� other�external�factors�similar�to�those�that�impact�on�the�TSR� performance�of�the�Company.�At�the�discretion�of�the�Board,�the� composition�of�the�comparator�group�may�change�from�time�to� time.��
The�comparator�group�of�companies�for�FY16�Performance�Rights� comprises:��
| AlacerGoldCorp | OceanaGoldCorporation |
|---|---|
| (ASX:AQG) | (ASX:OGC) |
| BeadellResourcesLimited | PerseusMiningLimited |
| (ASX:BDR) | (ASX:PRU) |
| EvolutionMiningLimited | RameliusResourcesLimited |
| (ASX:EVN) | (ASX:RMS) |
| FocusMineralsLtd | RegisResourcesLimited |
| (ASX:FML) | (ASX:RRL) |
| GryphonMineralsLimited | ResoluteMiningLimited |
| (ASX:GRY) | (ASX:RSG) |
| IntrepidMinesLimited | SaracenMineralHoldings |
| (ASX:IAU) | Limited(ASX:SAR) |
| KingsgateConsolidated | SilverLakeResourcesLimited |
| Limited(ASX:KCN) | (ASX:SLR) |
| KingsroseMiningLimited | TanamiGoldNL |
| (ASX:KRM) | (ASX:TAM) |
| MedusaMiningLimited | TroyResourcesLimited |
| (ASX:MNL) | (ASX:TRY) |
| NorthernStarResourcesLtd | OzMineralsLimited |
| (ASX:NST) | (ASX:OZL) |
| ReturnonCapitalEmployed | %Contributiontothe |
|---|---|
| (ROCE) | Numberof |
| PerformanceRightsto | |
| Vest | |
| Lessthanorequaltotheaverage | 0% |
| annualweightedaveragecostof | |
| capital(WACC)overthethreeyear | |
| periodcommencingon1July2015 | |
| WACC(calculatedasabove)+3% | 50% |
| WACC(calculatedasabove)+ | Pro�ratafrom50%to |
| between3%and7% | 100% |
| WACC(calculatedasabove)+7% | 100% |
The�outcome�of�FY16�Performance�Rights�will�be�reported�in�the� 2018�Remuneration�Report.�
Page�31�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
7.10 Details�of�FY17�Performance�Rights�granted�during�2017�
FY17�Performance�Rights�were�granted�under�the�St�Barbara�Limited� Rights�Plan�(2015),�and�details�of�the�performance�conditions�were� set�out�in�the�Notice�of�2016�Annual�General�Meeting.��Performance� rights�issued�to�Mr�Vassie,�Managing�Director�and�CEO,�were�also� approved�by�shareholders�at�the�2016�Annual�General�Meeting.�����
Key�Features�of�FY17�Performance�Rights��
| Performance | RelativeTotalShareholderReturns | RelativeTotalShareholderReturns | RelativeTotalShareholderReturns | (67% |
|---|---|---|---|---|
| conditions | weighting); | |||
| Returnoncapitalemployedin | excessofthe | |||
| weighted average cost |
of | capital | (33% | |
| weighting). | ||||
| Other | Includecontinuingemployment | |||
| conditions | ||||
| Issueprice | 10dayVWAPatstart,30June2016,$2.92 | |||
| Measurement | 1July2016to30June2019 | |||
| period | ||||
| Vestingdate | 30June2019 |
(i) RTSR�
RTSR�is�measured�against�a�defined�peer�group�of�companies�which� the�Board�considers�compete�with�the�Company�for�the�same� investment�capital,�both�in�Australia�and�overseas,�and�which�by�the� nature�of�their�business�are�influenced�by�commodity�prices�and� other�external�factors�similar�to�those�that�impact�on�the�TSR� performance�of�the�Company.��At�the�discretion�of�the�Board,�the� composition�of�the�comparator�group�may�change�from�time�to� time.�
The�comparator�group�of�companies�for�FY17�Performance�Rights� comprises:��
| AlacerGoldCorp | OceanaGoldCorporation |
|---|---|
| (ASX:AQG) | (ASX:OGC) |
| BeadellResourcesLimited | PerseusMiningLimited |
| (ASX:BDR) | (ASX:PRU) |
| EvolutionMiningLimited | RameliusResourcesLimited |
| (ASX:EVN) | (ASX:RMS) |
| FocusMineralsLtd | RegisResourcesLimited |
| (ASX:FML) | (ASX:RRL) |
| GryphonMineralsLimited | ResoluteMiningLimited |
| (ASX:GRY) | (ASX:RSG) |
| IntrepidMinesLimited | SaracenMineralHoldings |
| (ASX:IAU) | Limited(ASX:SAR) |
| KingsgateConsolidated | SilverLakeResourcesLimited |
| Limited(ASX:KCN) | (ASX:SLR) |
| KingsroseMiningLimited | TanamiGoldNL |
| (ASX:KRM) | (ASX:TAM) |
| MedusaMiningLimited | TroyResourcesLimited |
| (ASX:MNL) | (ASX:TRY) |
| NorthernStarResources | OzMineralsLimited |
| Ltd(ASX:NST) | (ASX:OZL) |
The�proportion�of�the�FY17�Performance�Rights�that�vest�will�be� influenced�by�the�Company’s�TSR�relative�to�the�comparator�group� over�the�three�year�vesting�period�commencing�1�July�2016�and� ending�30�June�2019�as�outlined�below:�
| RelativeTSRPerformance | %Contributiontothe |
|---|---|
| Numberof | |
| PerformanceRightstoVest | |
| Below50thpercentile | 0% |
| 50thpercentile | 50% |
| Between50th&75thpercentiles | Pro�ratafrom50%to100% |
| 75thpercentileandabove | 100% |
(ii) ROCE�
The�proportion�of�FY17�Performance�Rights�that�vest�will�be� influenced�by�the�ROCE�achieved�by�the�Company�over�the�three� year�vesting�period�commencing�1�July�2016�and�ending�30�June� 2019.�
| ReturnonCapitalEmployed | %Contributiontothe |
|---|---|
| (ROCE) | Numberof |
| PerformanceRightsto | |
| Vest | |
| Lessthanorequaltotheaverage | 0% |
| annualweightedaveragecostof | |
| capital(WACC)overthethreeyear | |
| periodcommencingon1July2016 | |
| WACC(calculatedasabove)+3% | 50% |
| WACC(calculatedasabove)+ | Pro�ratafrom50%to |
| between3%and7% | 100% |
| WACC(calculatedasabove)+7% | 100% |
The�outcome�of�FY17�Performance�Rights�will�be�reported�in�the� 2019�Remuneration�Report.
Page�32�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
8. Non�Executive�Director�Remuneration�
Non�Executive�Directors’�fees�are�reviewed�annually�by�the�Board�to� ensure�fees�are�appropriate�to�reflect�the�responsibilities�and�time� commitments�required�of�Non�Executive�Directors�and�is�consistent� with�the�market�to�ensure�that�the�Group�continues�to�attract�and� retain�Non�Executive�Directors�of�a�high�calibre.���
The�level�of�fees�paid�to�Non�Executive�Directors�is�set�by�the�Board,� within�the�aggregate�pool�approved�by�shareholders�(which�is� $1,200,000�per�annum�in�aggregate,�approved�by�shareholders�at� the�Annual�General�Meeting�in�November�2012)�and�reported�to� shareholders�in�this�report�each�year.��
Separate�fees�are�paid�for�the�following�roles:�
-
Chair�of�the�Board�(this�fee�is�inclusive�of�all�Board� Committee�commitments)�
-
Member�of�the�Board�
-
Chair�of�a�Board�Committee�
-
Member�of�a�Board�Committee�
In�order�to�maintain�their�independence�and�impartiality,�the�fees� paid�to�Non�Executive�Directors�are�not�linked�to�the�performance� of�the�Group.�
Superannuation�contributions,�in�accordance�with�legislation,�are� included�as�part�of�each�Director’s�total�remuneration.�Directors�may� elect�to�increase�the�proportion�of�their�remuneration�taken�as� superannuation�subject�to�legislative�limits.�Non�Executive�Directors� are�not�entitled�to�retirement�benefits,�bonuses�or�equity�based� incentives.�
The�Chairman’s�fee�was�determined�independently,�based�on�roles� and�responsibilities�in�the�external�market�for�companies� comparable�with�St�Barbara�Limited.��The�Chairman�was�not�present� at�any�discussions�relating�to�the�determination�of�his�own� remuneration.�
The�estimated�aggregate�Non�Executive�Directors’�fees�for�2018�is� well�within�the�shareholder�approved�aggregate�of�$1,200,000�per� annum.�
Following�a�review�of�comparable�resource�industry�remuneration�levels�for�non�executive�directors,�the�Board�resolved�to�increase�Non� Executive�Directors�fees�for�2018�as�follows:��
| July2012toFeb2014 | March2014toJune2016 | 2017 | 2018 | |||
|---|---|---|---|---|---|---|
| Directorfee | $ | 100,000 | 90,000 | 92,000 | 101,200 | |
| CommitteeChair | $ | 17,500 | 15,750 | 16,000 | 20,000 | |
| CommitteeMember | $ | 8,500 | 7,650 | 10,000 | 10,000 | |
| Chairman1 | $ | 248,000 | 223,200 | 228,000 | 250,800 | |
| 2015 | 2016 | 2017 | 2018 | |||
| Annualaggregatefees | $ | 594,945 | 465,800 | 484,000 | est.533,200 | 2 |
(1) The�Chairman’s�fee�is�inclusive�of�all�Board�Committee�commitments.���
(2) Aggregate�fees�for�2018�is�estimated�on�the�number�of�Directors�and�composition�of�Board�Committees�at�the�date�of�this�report.�
The�Directors�in�office�and�the�composition�of�Board�Committees�at�the�date�of�this�report�are:�
| Director | Appointed | Lengthof | Board | Audit&Risk | Health,Safety, | Remuneration |
|---|---|---|---|---|---|---|
| service2 | Committee | Environment& | Committee | |||
| Community | ||||||
| Committee | ||||||
| TCNetscher | 17Feb20141 | 3years | Chairman | Member | Chair | Member |
| RSVassie | 1Jul2014 | 3years | MD&CEO | � | Member | � |
| DEJMoroney | 16Mar2015 | 2years | Director | Chair | Member | Member |
| KJGleeson | 18May2015 | 2years | Director | Member | Member | Chair |
(1) Appointed�as�Director�17�February�2014,�appointed�as�Chairman�1�July�2015.�
(2) Whole�years�to�30�June�2017.�
Page�33�
ST�BARBARA�LIMITED�2017� Remuneration�Report�(audited)�
Directors’�Report�
9. Additional�Statutory�Information�
Key�Management�Personnel�Shareholdings�
The�numbers�of�shares�in�the�Company�held�directly,�indirectly�or�beneficially�during�the�year�by�each�Key�Management�Personnel,�including� their�related�parties,�are�set�out�below.��There�were�no�shares�granted�during�the�year�as�compensation.�
| Name Note |
Balanceatthestart oftheyear |
Issuedupon exercisedof performance rights |
Purchased | Sold | Otherchanges | Balanceatthe endofthe year |
|---|---|---|---|---|---|---|
| Non�ExecutiveDirectors TCNetscher DEJMoroney KJGleeson ExecutiveDirector RSVassie Executives GCampbell�Cowan |
� 100,000 � 1,769,053 15,000 |
� � � � 400,117 |
22,000 � 8,333 � � |
� � � � � |
� � � � � |
22,000 100,000 8,333 1,769,0531 415,1172 |
(1) In�addition,�4,062,500�employee�rights�were�determined�by�the�Board�on�23�August�2017�to�have�vested�as�at�30�June�2017�and�are�pending�issue�as�shares� as�at�the�date�of�this�report.�
(2) In�addition,�2,438,525�employee�rights�were�determined�by�the�Board�on�23�August�2017�to�have�vested�as�at�30�June�2017�and�are�pending�issue�as�shares� as�at�the�date�of�this�report.�
Shareholding�guidelines�for�Non�Executive�Directors�and�Executives�
The�Group�encourages�Non�Executive�Directors,�Executives�and�employees�to�own�shares�(subject�to�the�Group’s�Securities�Dealing�Policy).�
The�Group�does�not�specify�target�volumes�for�such�shareholdings,�as�it�does�not�know�the�personal�preferences�and�objectives,�financial�situation� or�risk�profile�of�individuals.�The�Group�acknowledges�that�gold�mining�equities�would�normally�only�comprise�a�small�proportion�of�an�individual’s� balanced�investment�portfolio,�and�that�gold�mining�equities�are�generally�considered�to�be�volatile�and�counter�cyclical�to�economic�cycles.��The� Group�has�not�identified�any�of�its�key�peers�with�which�it�competes�for�talent�to�have�shareholding�guidelines.��
Loans�to�Directors�and�Executives�
There�were�no�loans�to�Directors�or�Executives�during�the�financial�year�2017.�
END�OF�REMUNERATION�REPORT
Page�34�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Indemnification�and�insurance�of�officers�
The�Company’s�Constitution�provides�that,�to�the�extent�permitted� by�law,�the�Company�must�indemnify�any�person�who�is,�or�has�been,� an�officer�of�the�Company�against�any�liability�incurred�by�that� person�including�any�liability�incurred�as�an�officer�of�the�Company� or�a�subsidiary�of�the�Company�and�legal�costs�incurred�by�that� person�in�defending�an�action.�
The�Constitution�further�provides�that�the�Company�may�enter�into� an�agreement�with�any�person�who�is,�or�has�been,�an�officer�of�the� Company�or�a�subsidiary�of�the�Company�to�indemnify�the�person� against�such�liabilities.�
The�Company�has�entered�into�Deeds�of�Access,�Indemnity�and� Insurance�with�current�and�former�officers.�The�Deeds�address�the� matters�set�out�in�the�Constitution.�Pursuant�to�those�deeds,�the� Company�has�paid�a�premium�in�respect�of�a�contract�insuring� current�and�former�officers�of�the�Company�and�current�and�former� officers�of�its�controlled�entities�against�liability�for�costs�and� expenses�incurred�by�them�in�defending�civil�or�criminal�proceedings� involving�them�as�such�officers,�with�some�exceptions�where�the� liability�relates�to�conduct�involving�lack�of�good�faith.�
During�the�year�the�Company�paid�an�insurance�premium�for� Directors’�and�Officers’�Liability�and�Statutory�Liability�policies.�The� contract�of�insurance�prohibits�disclosure�of�the�amount�of�the� premium�and�the�nature�of�the�liabilities�insured�under�the�policy.��
Non�audit�services�
During�the�year�the�Company�did�employ�the�auditor�to�provide� services�in�addition�to�their�statutory�audit�duties.�Details�of�the� amounts�paid�or�payable�to�the�auditor,�PricewaterhouseCoopers,� for�non�audit�services�provided�during�the�2017�financial�year�are�set� out�in�Note�18�to�the�financial�statements.�
The�Board�of�Directors�has�considered�the�position�and,�in� accordance�with�the�advice�received�from�the�Audit�&�Risk� Committee,�is�satisfied�that�the�provision�of�non�audit�services� during�the�year�as�set�out�in�Note�18�did�not�compromise�the�auditor� independence�requirements�of�the�Corporations�Act�2001�for�the� following�reasons:�
-
All�non�audit�services�were�reviewed�by�the�Audit�&�Risk� Committee�to�ensure�they�do�not�impact�the�impartiality�and� objectivity�of�the�auditor;�and�
-
The�Audit�&�Risk�Committee�annually�informs�the�Board�of�the� detail,�nature�and�amount�of�any�non�audit�services�rendered�by� PricewaterhouseCoopers�during�the�financial�year,�giving�an� explanation�of�why�the�provision�of�these�services�is�compatible� with�auditor�independence.��If�applicable,�the�Audit�&�Risk� Committee�recommends�that�the�Board�take�appropriate�action� in�response�to�the�Audit�&�Risk�Committee’s�report�to�satisfy� itself�of�the�independence�of�PricewaterhouseCoopers.�
Auditor�independence�
Proceedings�on�behalf�of�the�company�
No�person�has�applied�to�the�Court�under�section�237�of�the� Corporations�Act�2001�for�leave�to�bring�proceedings�on�behalf�of� the�Company,�or�to�intervene�in�any�proceedings�to�which�the� Company�is�a�party,�for�the�purpose�of�taking�responsibility�on�behalf� of�the�Company�for�all�or�part�of�those�proceedings.�
No�proceedings�have�been�brought�or�intervened�in�on�behalf�of�the� Company�with�leave�of�the�Court�under�section�237�of�the� Corporations�Act�2001.�
A�copy�of�the�Auditor’s�Independence�Declaration�required�under� section�307C�of�the�Corporations�Act�2001�is�set�out�on�page�37�and� forms�part�of�this�Directors’�Report.���
Events�occurring�after�the�end�of�the�financial�year�
Subsequent�to�year�end,�the�directors�have�declared�a�fully�franked� final�dividend�of�6�cents�per�ordinary�share�to�be�paid�on�the�28� September�2017.�A�provision�for�this�dividend�has�not�been� recognised�in�the�30�June�2017�financial�statements.�
Environmental�management
St�Barbara�regards�compliance�with�environmental�legislation,� regulations� and� regulatory� instruments� as� the� minimum� performance�standard�for�its�operations.��The�Group’s�operations�in� Western�Australia�are�subject�to�environmental�regulation�under� both�Commonwealth�and�State�legislation.��In�Papua�New�Guinea,� the�Group�ensures�compliance�with�the�relevant�National�and� Provincial�legislation�and�where�appropriate�standards�or�legislation� are�not�available,�the�Group�reverts�to�the�standard�of� environmental�performance�as�stipulated�in�the�Western�Australian� legislation.�
A�Group�wide�Environmental�Management�System�(EMS)�has�been� implemented� to� facilitate� the� effective� and� responsible� management�of�environmental�issues�to�the�same�high�standard� across�all�sites�in�both�Australia�and�Papua�New�Guinea.��Adoption� of�the�EMS�at�all�operations�has�contributed�to�further�reductions�in� the�number�of�minor�environmental�incidents,�and�an�improvement� in�internal�compliance�rates�for�environmental�audits�and� inspections.�There�were�no�externally�reportable�environmental� incidents�during�the�year�ended�30�June�2017�at�any�of�the�Group’s� Australian�and�Pacific�sites.�
Page�35�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Rounding�of�amounts�
St�Barbara�Limited�is�a�Company�of�the�kind�referred�to�in�ASIC� Corporations�(Rounding�in�Financial/Directors’�Report)�Instrument� 2016/191�issued�by�the�Australian�Securities�and�Investment� Commission�(ASIC).�As�a�result,�amounts�in�this�Directors’�Report�and� the�accompanying�Financial�Report�have�been�rounded�to�the� nearest�thousand�dollars,�except�where�otherwise�indicated.�
This�report�is�made�in�accordance�with�a�resolution�of�Directors.�
For�and�on�behalf�of�the�Board�
Dated�at�Melbourne�this�23[rd] �day�of�August�2017�
==> picture [91 x 38] intentionally omitted <==
Bob�Vassie�
Managing�Director�and�CEO�
Page�36�
ST�BARBARA�LIMITED�2017�
Directors’�Report�
Auditors�Independence�Declaration�
==> picture [526 x 150] intentionally omitted <==
==> picture [526 x 149] intentionally omitted <==
Page�37�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Contents�
| ontents | |
|---|---|
| FinancialStatements | Page |
| Aboutthisreport | 38 |
| Incomestatement | 39 |
| Statementofcomprehensiveincome | 40 |
| Balancesheet | 41 |
| Statementofchangesinequity | 42 |
| Cashflowstatement | 43 |
| Notestothefinancialstatements | |
| A.Keyresults | |
| 1Segmentinformation | 44 |
| 2Tax | 46 |
| 3Significantitems | 48 |
| 4Earningspershare | 48 |
| B.Miningoperations | |
| 5Property,plantandequipment | 49 |
| 6Deferredminingcosts | 50 |
| 7Minepropertiesandmineralrights | 51 |
| 8Explorationandevaluation | 54 |
| 9Rehabilitationprovision | 55 |
| C.Capitalandrisk | |
| 10Workingcapital | 56 |
| 11Financialriskmanagement | 57 |
| 12Netdebt | 61 |
| 13Contributedequity | 62 |
| D.BusinessPortfolio | |
| 14Parententitydisclosures | 63 |
| 15Controlledentities | 63 |
| E.Remuneratingourpeople | |
| 16Employeebenefitexpensesandprovisions | 64 |
| 17Share�basedpayments | 65 |
| F.Otherdisclosures | |
| 18Remunerationofauditors | 66 |
| 19Eventsoccurringafterthebalancesheetdate | 66 |
| 20Contingencies | 66 |
| 21Basisofpreparation | 66 |
| 22Accountingstandards | 67 |
| Signedreports | |
| Directors’declaration | 68 |
| Independentauditor’sreport | 69 |
About�this�report�
St�Barbara�Limited�(the�“Company”�or�“Parent�Entity”)�is�a�company� limited�by�shares�incorporated�in�Australia�whose�shares�are� publicly�traded�on�the�Australian�Stock�Exchange.��The�consolidated� financial�statements�of�the�Company�as�at�and�for�the�year�ended� 30�June�2017�comprise�the�Company�and�its�subsidiaries�(together� referred�to�as�the�“Group”).��The�Group�is�a�for�profit�entity� primarily�involved�in�mining�and�sale�of�gold,�mineral�exploration� and�development.
The�financial�report�is�a�general�purpose�financial�report,�which�has� been�prepared�in�accordance�with�Australian�Accounting�Standards� (AASBs)�(including�Australian�Interpretations)�adopted�by�the� Australian� Accounting� Standards� Board� (AASB)� and� the� Corporations�Act�2001.�Where�required�by�accounting�standards� comparative�figures�have�been�adjusted�to�conform�to�changes�in� presentation�in�the�current�year.��The�consolidated�financial�report� of�the�Group�complies�with�International�Financial�Reporting� Standards�(IFRSs)�and�interpretations�issued�by�the�International� Accounting�Standards�Board.�
The�consolidated�financial�statements�have�been�presented�in� Australian�dollars�and�all�values�are�rounded�to�the�nearest� thousand�dollars�($000)�as�specified�in�the�ASIC�Corporation� Instrument�2016/191�unless�otherwise�stated.�
The�Board�of�Directors�approved�the�financial�statements�on�23� August�2017.�
What’s�in�this�report�
St�Barbara’s�Directors�have�included�information�in�this�report�that� they�deem�to�be�material�and�relevant�to�the�understanding�of�the� financial�statements�and�the�Group.���
A�disclosure�has�been�considered�material�and�relevant�where:�
-
the�dollar�amount�is�significant�in�size�(quantitative);�
-
the�dollar�amount�is�significant�in�nature�(qualitative);�
-
the�Group’s�result�cannot�be�understood�without�the�specific� disclosure;�and�
-
it�relates�to�an�aspect�of�the�Group’s�operations�that�is� important�to�its�future�performance.�
Accounting�policies�and�critical�accounting�judgements�and� estimates�applied�to�the�preparation�of�the�financial�statements�are� represented�where�the�related�accounting�balance�or�financial� statement�matter�is�discussed.��To�assist�in�identifying�critical� accounting�judgements�and�estimates,�we�have�highlighted�them�in� the�following�manner:�
Accounting�judgements�and�estimates�
Page�38�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Income�statement�
for�the�year�ended�30�June�2017�
| CONSOLIDATED | CONSOLIDATED | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Notes | $'000 | $'000 | |
| Operations | |||
| Revenue | 1 | 641,702 | 610,115 |
| Mineoperatingcosts | 1 | (267,244) | (280,927) |
| Grossprofit | 374,458 | 329,188 | |
| Interestrevenue | 1,948 | 1,960 | |
| Otherrevenue | � | 34 | |
| Otherincome | 86 | 3,564 | |
| Explorationexpensed | (10,647) | (6,786) | |
| Corporatecosts | (20,977) | (19,184) | |
| Royalties | 1 | (21,774) | (21,455) |
| Depreciationandamortisation | 5 | (85,583) | (80,915) |
| Otherexpenses | (3,608) | (1,967) | |
| Netgainondisposalofassets | � | 14,570 | |
| Impairmentlossesandassetwrite�downs | 3 | (27,273) | � |
| Operatingprofit | 206,630 | 219,009 | |
| Financecosts | 12 | (19,961) | (35,749) |
| Netforeignexchangegain | 3,037 | 142 | |
| Profitbeforeincometax | 189,706 | 183,402 | |
| Incometaxexpense | 2 | (32,134) | (14,014) |
| Profitfromoperations | 157,572 | 169,388 | |
| ProfitattributabletoequityholdersoftheCompany | 157,572 | 169,388 | |
| Earningspershareforoperations: | |||
| Basicearningspershare(centspershare) | 4 | 31.71 | 34.21 |
| Dilutedearningspershare(centspershare) | 4 | 30.42 | 32.70 |
The�above�income�statement�should�be�read�in�conjunction�with�the�notes�to�the�financial�statements.�
Page�39�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Statement�of�comprehensive�income�
for�the�year�ended�30�June�2017�
| CONSOLIDATED | CONSOLIDATED | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Notes | $'000 | $'000 | |
| Profitfortheyear | 157,572 | 169,388 | |
| Othercomprehensiveincome | |||
| Itemsthatmaybereclassifiedsubsequentlytoprofit: | |||
| Changesinfairvalueofavailableforsalefinancialassets | (8) | (13) | |
| Incometaxonothercomprehensiveincome | � | 1,204 | |
| Foreigncurrencytranslationdifferences�foreignoperations | 904 | (11,322) | |
| Othercomprehensiveprofit/(loss)netoftax(1) | 896 | (10,131) | |
| TotalcomprehensiveincomeattributabletoequityholdersoftheCompany | 158,468 | 159,257 |
(1)�Other�comprehensive�income�comprises�items�of�income�and�expense�that�are�recognised�directly�in�reserves�or�equity.��These�items�are�not�recognised�in�the� consolidated�income�statement�in�accordance�with�the�requirements�of�the�relevant�accounting�standards.��Total�comprehensive�profit�comprises�the�result�for� the�year�adjusted�for�the�other�comprehensive�income.�
The�above�statement�of�comprehensive�income�should�be�read�in�conjunction�with�notes�to�the�financial�statements.�
Page�40�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Balance�sheet�
as�at�30�June�2017�
| CONSOLIDATED | CONSOLIDATED | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Notes | $'000 | $'000 | |
| Assets | |||
| Currentassets | |||
| Cashandcashequivalents | 12 | 160,909 | 136,689 |
| Tradeandotherreceivables | 10 | 9,270 | 8,286 |
| Inventories | 10 | 55,340 | 58,164 |
| Deferredminingcosts | 6 | 5,608 | 4,446 |
| Totalcurrentassets | 231,127 | 207,585 | |
| Non�currentassets | |||
| Tradeandotherreceivables | 10 | � | 2,366 |
| Property,plantandequipment | 5 | 126,493 | 162,448 |
| Financialassets | 4,569 | 56 | |
| Deferredminingcosts | 6 | 9,253 | 11,271 |
| Mineproperties | 7 | 159,859 | 179,884 |
| Explorationandevaluation | 8 | 35,411 | 25,975 |
| Mineralrights | 7 | 7,560 | 19,785 |
| Deferredtaxassets | 2 | 29,399 | 3,267 |
| Totalnon�currentassets | 372,544 | 405,052 | |
| Totalassets | 603,671 | 612,637 | |
| Liabilities | |||
| Currentliabilities | |||
| Tradeandotherpayables | 10 | 36,480 | 39,768 |
| Interestbearingborrowings | 12 | 507 | 3,201 |
| Rehabilitationprovision | 9 | 488 | 493 |
| Otherprovisions | 16 | 12,154 | 10,519 |
| Currenttaxliability | 2 | 29,692 | � |
| Totalcurrentliabilities | 79,321 | 53,981 | |
| Non�currentliabilities | |||
| Interestbearingborrowings | 12 | 40 | 223,117 |
| Rehabilitationprovision | 9 | 27,750 | 28,095 |
| Deferredtaxliabilities | 2 | 31,221 | 2,169 |
| Otherprovisions | 16 | 4,212 | 4,661 |
| Totalnon�currentliabilities | 63,223 | 258,042 | |
| Totalliabilities | 142,544 | 312,023 | |
| NetAssets | 461,127 | 300,614 | |
| Equity | |||
| Contributedequity | 13 | 887,254 | 887,216 |
| Reserves | (55,736) | (58,639) | |
| Accumulatedlosses | (370,391) | (527,963) | |
| Totalequity | 461,127 | 300,614 |
The�above�balance�sheet�should�be�read�in�conjunction�with�notes�to�the�financial�statements.�
Page�41�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Statement�of�changes�in�equity�
for�the�year�ended�30�June�2017�
| CONSOLIDATED | CONSOLIDATED | |||||
|---|---|---|---|---|---|---|
| Contributed | Foreign | Other | Accumulated | Total | ||
| Equity | Currency | Reserves | Losses | $'000 | ||
| $'000 | Translation | $'000 | $'000 | |||
| Reserve | ||||||
| Note | $'000 | |||||
| Balanceat1July2015 | 887,216 | (49,459) | 23 | (697,351) | 140,429 | |
| TransactionswithownersoftheCompanyrecogniseddirectly | ||||||
| inequity: | ||||||
| Share�basedpaymentsexpense | 17 | � | � | 928 | � | 928 |
| Totalcomprehensiveincomefortheyear | ||||||
| ProfitattributabletoequityholdersoftheCompany | � | � | � | 169,388 | 169,388 | |
| Othercomprehensiveloss | � | (10,118) | (13) | � | (10,131) | |
| Balanceat30June2016 | 887,216 | (59,577) | 938 | (527,963) | 300,614 | |
| TransactionswithownersoftheCompanyrecogniseddirectly | ||||||
| inequity: | ||||||
| Share�basedpaymentsexpense | 17 | 38 | � | 2,007 | � | 2,045 |
| Totalcomprehensiveincomefortheyear | ||||||
| ProfitattributabletoequityholdersoftheCompany | � | � | � | 157,572 | 157,572 | |
| Othercomprehensivegain/(loss) | � | 904 | (8) | � | 896 | |
| Balanceat30June2017 | 887,254 | (58,673) | 2,937 | (370,391) | 461,127 |
The�above�statement�of�changes�in�equity�should�be�read�in�conjunction�with�notes�to�the�financial�statements.�
Page�42�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Cash�flow�statement�
for�the�year�ended�30�June�2017�
| Consolidated | Consolidated | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Notes | $'000 | $'000 | |
| CashFlowsFromOperatingActivities: | |||
| Receiptsfromcustomers(inclusiveofGST) | 640,354 | 615,244 | |
| Paymentstosuppliersandemployees(inclusiveofGST) | (309,097) | (336,805) | |
| Paymentsforexplorationandevaluation | (10,647) | (6,786) | |
| Interestreceived | 1,948 | 1,910 | |
| Interestpaid | (11,304) | (30,405) | |
| Financecharges–financeleases | (11) | (225) | |
| Borrowingcostspaid | (8,017) | (145) | |
| Netcashinflowfromoperatingactivities | 12 | 303,226 | 242,788 |
| CashFlowsFromInvestingActivities: | |||
| Proceedsfromsaleofproperty,plantandequipment | � | 12 | |
| Proceedsfromdeferredsettlementrelatingtosaleofasset | 2,700 | � | |
| Paymentsforproperty,plantandequipment | (9,796) | (16,057) | |
| Paymentsfordevelopmentofminingproperties | (32,036) | (21,071) | |
| Paymentsforexplorationandevaluation | (9,436) | (9,006) | |
| Investmentsinshares | (4,540) | � | |
| Netcashoutflowusedininvestingactivities | (53,108) | (46,122) | |
| CashFlowsFromFinancingActivities: | |||
| Movementinrestrictedcash | 118 | 1,966 | |
| Premiumfundingrepayments | (2,209) | � | |
| RedKiteloanrepayments | � | (102,073) | |
| USseniorsecurednotesrepayments | (225,409) | (37,798) | |
| Principalrepayments�financeleases | (946) | (2,225) | |
| Netcashoutflowusedinfinancingactivities | (228,446) | (140,130) | |
| Netincreaseincashandcashequivalents | 21,672 | 56,536 | |
| Cashandcashequivalentsatthebeginningoftheyear | 136,689 | 76,871 | |
| Netmovementinforeignexchangerates | 2,548 | 3,282 | |
| Cashandcashequivalentsattheendoftheyear | 12 | 160,909 | 136,689 |
Cash�flows�are�included�in�the�statement�of�cash�flows�on�a�gross�basis.��The�GST�component�of�cash�flows�arising�from�investing�or�financing�activities,�which� are�recoverable�from,�or�payable�to,�the�taxation�authority�are�classified�as�part�of�operating�cash�flows.�
The�above�cash�flow�statement�should�be�read�in�conjunction�notes�to�the�financial�statements.�
Page�43�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
A.����Key�results�
1 Segment�information�
| 1 Segmentinformation |
||||||
|---|---|---|---|---|---|---|
| Leonora | Simberi | Totalsegment | ||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |
| GoldRevenue | 441,394 | 439,593 | 199,319 | 169,277 | 640,713 | 608,870 |
| SilverRevenue | 553 | 740 | 436 | 505 | 989 | 1,245 |
| TotalRevenue | 441,947 | 440,333 | 199,755 | 169,782 | 641,702 | 610,115 |
| Mineoperatingcosts | (143,107) | (161,117) | (124,137) | (119,810) | (267,244) | (280,927) |
| Grossprofit | 298,840 | 279,216 | 75,618 | 49,972 | 374,458 | 329,188 |
| Royalties(1) | (17,303) | (17,608) | (4,471) | (3,847) | (21,774) | (21,455) |
| Impairmentlossesandassetwritedowns | � | � | (27,273) | � | (27,273) | � |
| Depreciationandamortisation | (61,903) | (63,492) | (19,838) | (12,098) | (81,741) | (75,590) |
| Netgain/(loss)ondisposalofassets | � | 14,673 | � | (103) | � | 14,570 |
| Segmentprofitbeforeincometax | 219,634 | 212,789 | 24,036 | 33,924 | 243,670 | 246,713 |
| Capitalexpenditure | ||||||
| Sustaining | (30,206) | (27,065) | (3,711) | (9,402) | (33,917) | (36,467) |
| Growth(3) | (9,402) | (9,006) | � | � | (9,402) | (9,006) |
| GwaliaExtensionProject | (7,861) | � | � | � | (7,861) | � |
| Totalcapitalexpenditure | (47,469) | (36,071) | (3,711) | (9,402) | (51,180) | (45,473) |
| Segmentassets(2) | 304,904 | 317,514 | 123,963 | 146,666 | 428,867 | 464,180 |
| Segmentnon�currentassets(2) | 279,276 | 285,786 | 86,148 | 101,119 | 365,424 | 386,905 |
| Segmentliabilities(2) | 26,130 | 22,670 | 29,775 | 35,428 | 55,905 | 58,098 |
�(1)�Royalties�include�state�and�government�royalties�and�corporate�royalties.
(2)�Represents�the�reportable�segment�balances�after�impairment�and�asset�write�down�charges.�
(3)�Growth�capital�at�Gwalia�represents�deep�drilling�expenditure�reported�as�part�of�exploration.�
The�Group�has�two�operational�business�units:��Leonora�operations� and�Simberi�Operations.�The�operational�business�units�are�managed� separately�due�to�their�separate�geographic�regions.�
A�reportable�segment�is�a�component�of�the�Group�that�engages�in� business�activities�from�which�it�may�earn�revenues�or�incur� expenses,�including�revenues�and�expenses�that�relate�to� transactions�with�any�of�the�Group’s�other�components.�The� operating�results�(including�production,�cost�per�ounce�and�capital� expenditure)�of�all�reportable�segments�are�regularly�reviewed�by� the�Group’s�Executive�Leadership�Team�(“ELT”)�to�make�decisions� about�resources�to�be�allocated�to�the�segment�and�assess�its� performance.��
Performance�is�measured�based�on�segment�profit�before�income� tax,�as�this�is�deemed�to�be�the�most�relevant�in�assessing� performance,�after�taking�into�account�factors�such�as�cost�per� ounce�of�production.�
Segment�capital�expenditure�represents�the�total�cost�incurred� during�the�year�for�mine�development�and�acquisitions�of�property,� plant�and�equipment.�Growth�capital�at�Gwalia�represents�deep� drilling�exploration�expenditure�to�extend�mineral�resources.��
Sales�revenue��
Revenue�from�the�sale�of�gold�and�silver�in�the�course�of�ordinary� activities�is�measured�at�the�fair�value�of�the�consideration�received� or�receivable.�The�Group�recognises�revenue�when�the�significant� risks�and�rewards�of�ownership�have�been�transferred�to�the�buyer,� the�amount�of�revenue�can�be�reliably�measured�and�the�associated� costs�can�be�estimated�reliably,�and�it�is�probable�that�future� economic�benefits�will�flow�to�the�Group.���
Royalties�
Royalties�are�payable�on�gold�sales�revenue,�based�on�gold�ounces� produced�and�sold,�and�are�therefore�recognised�as�the�sale�occurs.
Major�Customers�
Major�customers�to�whom�the�Group�provides�goods�that�are� more�than�10%�of�external�revenue�are�as�follows:�
| Revenue | Revenue | %ofexternal | %ofexternal | |
|---|---|---|---|---|
| revenue | ||||
| 2017 | 2016 | 2017 | 2016 | |
| $’000 | $’000 | % | % | |
| CustomerA | 217,305 | 296,399 | 33.9 | 48.7 |
| CustomerB | 250,736 | 262,384 | 39.2 | 43.1 |
| CustomerC | 106,774 | � | 16.7 | � |
Page�44�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
1������Segment�information�(continued)
| Consolidated | Consolidated | |
|---|---|---|
| Operations | 2017 $’000 |
2016 $’000 |
| Totalprofitforreportablesegments | 243,670 | 246,713 |
| Otherincomeandrevenue | 2,034 | 5,558 |
| Explorationexpensed | (10,647) | (6,786) |
| Unallocateddepreciationand amortisation |
(3,842) | (5,325) |
| Financecosts | (19,961) | (35,749) |
| Corporatecosts | (20,977) | (19,184) |
| Netforeignexchangegain | 3,037 | 142 |
| Otherexpenses | (3,608) | (1,967) |
| Consolidatedprofitbeforeincometax | 189,706 | 183,402 |
| Assets | ||
| Totalassetsforreportablesegments | 428,867 | 464,180 |
| Cashandcashequivalents | 160,106 | 134,081 |
| Tradeandotherreceivables(current) | 7,578 | 7,500 |
| Tradeandotherreceivables(non�current) | � | 2,366 |
| Financialassets | 4,569 | 56 |
| Property,plant&equipment | 2,551 | 4,454 |
| Consolidatedtotalassets | 603,671 | 612,637 |
Segment�results�that�are�reported�to�the�ELT�include�items�directly� attributable�to�a�segment�and�those�that�can�be�allocated�on�a� reasonable�basis.�Unallocated�items�comprise�mainly�corporate� assets�and�related�depreciation,�exploration�expense,�finance�costs� and�corporate�costs.�
| Liabilities | ||
|---|---|---|
| Totalliabilitiesforreportablesegments | 55,905 | 58,098 |
| Tradeandotherpayables | 14,542 | 16,049 |
| Interestbearingliabilities(current) | 436 | 3,030 |
| Provisions(current) | 9,125 | 8,051 |
| Interestbearingliabilities(non�current) | 11 | 223,117 |
| Provisions(non�current) | 1,612 | 1,509 |
| Currenttaxliability | 29,692 | � |
| Deferredtaxliabilities | 31,221 | 2,169 |
| Consolidatedtotalliabilities | 142,544 | 312,023 |
Page�45�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
2 Tax�
Income�tax�expense�
| 2 Tax Incometaxexpense |
||
|---|---|---|
| Consolidated | ||
| 2017 $'000 |
2016 $'000 |
|
| Currenttaxexpense | 47,424 | 41,277 |
| Under/(over)provisioninrespectofthe | (2,474) | 233 |
| prioryear Deferredincometaxbenefit Totalincometaxexpense |
(12,816) 32,134 |
(27,496) 14,014 |
Numerical�reconciliation�of�income�tax�expense�to�prima�facie�tax� payable�
| payable | ||
|---|---|---|
| 2017 | 2016 | |
| $'000 | $'000 | |
| Profitbeforeincometax | 189,706 | 183,402 |
| TaxattheAustraliantaxrateof30% | 56,912 | 55,021 |
| Taxeffectofamountsnot | ||
| deductible/(taxable)incalculatingtaxable | ||
| income: | ||
| Equitysettledsharebasedpayments | 613 | 279 |
| Sundryitems Recognitionofpreviouslyunbooked deferredtaxassetsinPNG Permanentdifferencesontaxableincome |
281 (26,775) (361) |
(129) (3,344) (1,162) |
| Researchanddevelopmentincentive Useoftaxlossesnotpreviouslyrecognised Interestexpensepreviouslytreatedasnon deductible Deferredtaxassetsrecognisedasaresult oftaxconsolidation Permanentdifferencesarisingfromforeign |
(580) (3,341) (2,289) � |
(630) (7,474) � (18,796) |
| exchangewithinthetaxconsolidated | ||
| group ProvisionforR&Dtaxcreditspreviously recognised Incometaxexpense |
(2,804) 10,478 32,134 |
(9,751) � 14,014 |
Income�tax�
Income�tax�expense�comprises�current�and�deferred�tax.��Current�tax� and�deferred�tax�is�recognised�in�the�income�statement,�except�to� the�extent�that�it�relates�to�a�business�combination,�or�items� recognised�directly�in�equity�or�in�other�comprehensive�income.�
Current�tax�is�the�expected�tax�payable�or�receivable�on�the�taxable� profit�for�the�year,�using�tax�rates�enacted�or�substantively�enacted� at�the�reporting�date,�and�any�adjustment�to�tax�payable�in�respect� of�previous�years.���
Tax�exposure�
In�determining�the�amount�of�current�and�deferred�tax�the�Group� takes�into�account�the�impact�of�uncertain�tax�positions�and�whether� additional�taxes�and�interest�may�be�due.��This�assessment�relies�on� estimates�and�assumptions�and�may�involve�a�series�of�judgements� about�future�events.��New�information�may�become�available�that� causes�the�Group�to�change�its�judgement�regarding�the�adequacy� of�existing�tax�liabilities;�such�changes�to�tax�liabilities�will�impact�tax� expense�in�the�period�that�such�a�determination�is�made.�
Tax�consolidation�
Entities�in�the�tax�consolidated�group�at�30�June�2017�included:�� St�Barbara�Ltd�(head�entity),�Allied�Gold�Mining�Ltd,�Allied�Gold�Pty� Ltd,�and�Allied�Gold�Finance�Pty�Ltd.��Current�and�deferred�tax� amounts�are�allocated�using�the�“separate�taxpayer�within�group”� method.���
A�tax�sharing�and�funding�agreement�has�been�established�between� the�entities�in�the�tax�consolidated�group.��The�Company�recognises� deferred�tax�assets�arising�from�the�unused�tax�losses�of�the�tax� consolidated�group�to�the�extent�that�it�is�probable�that�future� taxable�profits�of�the�tax�consolidated�group�will�be�available�against� which�the�asset�can�be�utilised.�
Current�tax�liability�
As�at�30�June�2017�the�Company�recognised�a�current�tax�liability�of� $29,692,000�(2016:�$Nil)�which�included�the�provision�for�R&D�tax� credits.�
Accounting�judgements�and�estimates�
During�the�year,�AusIndustry�performed�a�review�of�certain�research� and�development�projects�previously�claimed�by�the�Company�in� relation�to�the�research�and�development�tax�credit�benefit�scheme.� Following�their�review,�AusIndustry�deemed�the�projects�to�be� ineligible�in�accordance�with�research�and�development�tax� legislation.�While�the�Company�believes�the�projects�are�eligible,�and� has�requested�an�independent�review�of�the�AusIndustry�findings,�a� provision�has�been�raised�to�reflect�the�impact�of�the�projects� potentially�being�finally�disallowed�as�research�and�development,� and�the�ATO�issuing�an�amended�assessment�as�a�result.�
Page�46�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
2� Tax�(continued)�
Deferred�tax�balances�
| 2 Tax(continued) Deferredtaxbalances |
||
|---|---|---|
| Consolidated | ||
| 2017 $'000 |
2016 $'000 |
|
| Deferredtaxassets | ||
| Taxlosses | � | 41,722 |
| Provisionsandaccruals Investmentsatfairvalue |
41,699 � |
40,169 224 |
| Unrealisedforeignexchangelosses | � | 64,560 |
| Property,plantandequipment | 113,384 | 21,105 |
| Other | 630 | 3,326 |
| Total | 155,713 | 171,106 |
| Taxeffect@30% | 46,714 | 51,332 |
| Deferredtaxliabilities | ||
| Accruedincome | 255 | 229 |
| Mineproperties–exploration | 38,595 | 30,209 |
| Mineproperties–development | 57,131 | 81,976 |
| Consumables | 46,033 | 52,123 |
| Capitalisedconvertiblenotescosts | 3,347 | 2,908 |
| Unrealisedforeignexchangegains | 16,426 | � |
| Total Taxeffect@30% |
161,787 48,536 |
167,445 50,234 |
| Netdeferredtaxbalance | (1,822) | 1,098 |
Comprising�of:�
| Australia–netdeferredtaxliabilities PNG–netdeferredtaxassets Deferredtaxassetshavenotbeen recognisedinrespectofthe followingitems: Taxlosses–PNGOperations Property,plantandequipment–PNG Operations |
(31,221) (2,169) 29,399 3,267 53,079 74,283 48,159 192,433 |
|---|---|
| Total | 101,238 266,716 |
| Taxeffect@30% | 30,371 80,015 |
Deferred�tax�
Deferred�tax�is�recognised�in�respect�of�temporary�differences� between�the�carrying�amounts�of�assets�and�liabilities�for�financial� reporting�purposes�and�the�amounts�used�for�taxation�purposes.�� Deferred�tax�is�not�recognised�for:�
-
Temporary�differences�on�the�initial�recognition�of�assets�or� liabilities�in�a�transaction�that�is�not�a�business�combination�and� that�affects�neither�accounting�nor�taxable�profit�or�loss;�
-
Temporary�differences�related�to�investments�in�subsidiaries� and�jointly�controlled�entities�to�the�extent�that�it�is�probable� that�they�will�not�reverse�in�the�foreseeable�future;�and�
-
Taxable�temporary�differences�arising�on�the�initial�recognition� of�goodwill.�
Deferred�tax�is�measured�at�the�tax�rates�that�are�expected�to�be� applied�to�temporary�differences�when�they�reverse,�based�on�the� laws�that�have�been�enacted�or�substantively�enacted�by�the� reporting�date.�
A�deferred�tax�asset�is�recognised�for�unused�tax�losses,�tax�credits� and�deductible�temporary�differences,�to�the�extent�that�it�is� probable�that�future�taxable�profits�will�be�available�against�which� they�can�be�utilised.��Deferred�tax�assets�are�reviewed�at�each� reporting�date�and�are�reduced�to�the�extent�that�it�is�no�longer� probable�that�the�related�tax�benefit�will�be�realised.�
Tax�benefits�acquired�as�part�of�a�business�combination,�but�not� satisfying�the�criteria�for�separate�recognition�at�that�date,�are� recognised�subsequently�if�new�information�about�facts�and� circumstances�change.�
Deferred�tax�assets�and�liabilities�are�offset�if�there�is�a�legally� enforceable�right�to�offset�current�tax�liabilities�and�assets,�and�they� relate�to�income�taxes�levied�by�the�same�tax�authority�on�the�same� taxable�entity,�or�on�different�tax�entities,�but�they�intend�to�settle� current�tax�liabilities�and�assets�on�a�net�basis�or�their�tax�assets�and� liabilities�will�be�realised�simultaneously.�
Accounting�judgements�and�estimates�
At�each�reporting�date,�the�Group�performs�a�review�of�the�probable� future�taxable�profit�in�each�jurisdiction.�The�assessments�are�based� on�the�latest�life�of�mine�plans�relevant�to�each�jurisdiction�and�the� application�of�appropriate�economic�assumptions�such�as�gold�price� and�operating�costs.�Any�resulting�recognition�of�deferred�tax�assets� is�categorised�by�type�(e.g.�tax�losses�or�temporary�differences)�and� recognised�based�on�which�would�be�utilised�first�according�to�that� particular�jurisdiction’s�legislation.�
At�30�June�2017�tax�losses�not�recognised�amounted�to�$15,924,000� (tax�effected)�relating�to�entities�associated�with�Simberi�operations� in�PNG�and�Australia.��These�tax�losses�have�not�been�recognised�as� it�is�not�deemed�probable�at�the�reporting�date�that�future�taxable� profits�will�be�available�against�which�they�can�be�utilised.�Deferred� tax�balances�recognised�are�based�on�taxable�profit�forecasts�from� current�life�of�mine�models.�
Page�47�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
3 Significant�items�
Significant�items�are�those�items�where�their�nature�or�amount�is� considered�material�to�the�financial�report.��Such�items�included� within�the�consolidated�results�for�the�year�are�detailed�below.�
| Consolidated | Consolidated | |
|---|---|---|
| 2017 $'000 |
2016 $'000 |
|
| Includedwithinprofitondisposalof | ||
| asset | ||
| GainonsaleofKingoftheHillsand Kailis |
� | 14,056 |
| Impairmentlosses(1) | (27,273) | � |
| Totalsignificantitems–pretax | (27,273) | 14,056 |
| TaxEffect Taxeffectofpre�taxsignificantitems |
8,182 | (3,839) |
| Taxeffectoftheimpactoftax | ||
| consolidation PNGdeferredtaxassetrecognised(2) ProvisionforR&Dtaxcredits(3) |
� 26,775 (10,478) |
28,547 3,267 � |
| Totalsignificantitems–posttax | (2,794) | 42,031 |
(1)�Impairment�losses�
Represents�the�impairment�loss�booked�at�31�December�2016�in� relation�to�the�Simberi�cash�generating�unit.�Refer�to�note�7�for� further�information.��
(2)�PNG�deferred�tax�asset�recognised�
Prior�to�30�June�2016,�there�had�been�no�deferred�tax�asset� recognised�in�relation�to�the�PNG�jurisdiction,�as�it�had�been� previously�determined�that�it�was�not�probable�that�the�Simberi� operation�would�generate�future�taxable�profits.��At�30�June�2016,� following�the�successful�completion�of�the�turnaround�in� performance�of�the�Simberi�operation,�a�net�deferred�tax�asset�was� recognised�of�$3,267,000.��At�30�June�2017�a�further�$26,775,000� was�recognised�as�a�deferred�tax�asset�based�on�the�current�life�of� mine�plan.���
(3)�Provision�for�R&D�tax�credits�
Provision�arising�from�AusIndustry�review�of�certain�rereseach�and� development�projects�as�discussed�in�Note�2.��
4 Earnings�per�share�
| Consolidated | ||
|---|---|---|
| 2017 | 2016 | |
| Cents | Cents | |
| Basicearningspershare | 31.71 | 34.21 |
| Dilutedearningspershare | 30.42 | 32.70 |
Reconciliation�of�earnings�used�in�calculating�earnings�per�share�
| Consolidated 2017 2016 $'000 $'000 |
Consolidated 2017 2016 $'000 $'000 |
Consolidated 2017 2016 $'000 $'000 |
|
|---|---|---|---|
| Basicanddilutedearningspershare: | |||
| Profitaftertaxfortheyearfrom | |||
| operations | 157,572 | 169,388 |
Weighted�average�number�of�shares�
| Weightedaveragenumberofordinary | Consolidated 2017 2016 Number Number |
Consolidated 2017 2016 Number Number |
Consolidated 2017 2016 Number Number |
|---|---|---|---|
| sharesusedincalculatingbasicearnings | |||
| pershare | 496,990,112 | 495,102,525 | |
| Weightedaveragenumberofordinary | |||
| sharesandpotentialordinaryshares | |||
| usedincalculatingdilutedearningsper | |||
| share | 517,994,473 | 519,136,813 |
Performance�rights�
Performance�rights�granted�to�employees�under�the�St�Barbara� Performance�Rights�Plan�are�considered�to�be�potential�ordinary� shares�and�are�included�in�the�determination�of�diluted�earnings�per� share�to�the�extent�to�which�they�are�dilutive.��The�rights�are�not� included�in�the�determination�of�basic�earnings�per�share.���
Basic�earnings�per�share�
Basic�earnings�per�share�is�calculated�by�dividing�the�profit� attributable�to�equity�holders�of�the�Company,�excluding�any�costs� of�servicing�equity�other�than�ordinary�shares,�by�the�weighted� average�number�of�ordinary�shares�outstanding�during�the�reporting� period,�adjusted�for�bonus�elements�in�ordinary�shares�issued�during� the�reporting�period.
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.�
Page�48�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
B.����Mining�operations�
5 Property,�plant�and�equipment�
| Consolidated | Consolidated | |||
|---|---|---|---|---|
| 2017 | 2016 | |||
| $'000 | $'000 | |||
| Landandbuildings Atthebeginningoftheyear Additions Depreciation(average3�15years) Disposals Effects of movement in foreign exchangerates |
17,864 746 (4,899) (507) (126) |
18,100 1,529 (1,937) � 172 |
||
| Attheendoftheyear | 13,078 | 17,864 | ||
| Plantandequipment | ||||
| Atthebeginningoftheyear | 144,584 | 151,945 | ||
| Additions | 9,557 | 14,687 | ||
| Disposals | (342) | (1,703) | ||
| Depreciation(average3�10years) | (20,180) | (22,180) | ||
| Assetimpairmentandwritedowns(1) | (19,750) | � | ||
| Effects of movement |
in | foreign | ||
| exchangerates | (454) | 1,835 | ||
| Attheendoftheyear | 113,415 | 144,584 | ||
| Total | 126,493 | 162,448 |
(1) Refer�to�Note�7�
Buildings,�plant�and�equipment�are�stated�at�historical�cost�less� accumulated�depreciation.�Historical�cost�includes�expenditure�that� is�directly�attributable�to�the�acquisition�of�the�items.��
Subsequent�costs�are�included�in�the�asset’s�carrying�amount�or� recognised�as�a�separate�asset,�as�appropriate,�only�when�it�is� probable�that�future�economic�benefits�associated�with�the�item�will� flow�to�the�Group�and�the�cost�of�the�item�can�be�measured�reliably.� All�other�repairs�and�maintenance�are�charged�to�the�income� statement�during�the�financial�period�in�which�they�are�incurred.�
Depreciation�of�assets�is�calculated�using�the�straight�line�method�to� allocate�the�cost�or�revalued�amounts,�net�of�residual�values,�over� their�estimated�useful�lives.�
Where�the�carrying�value�of�an�asset�is�less�than�its�estimated� residual�value,�no�depreciation�is�charged.��The�assets’�residual� values�and�useful�lives�are�reviewed,�and�adjusted�if�appropriate,�at� each�balance�sheet�date.
An�asset’s�carrying�amount�is�written�down�immediately�to�its� recoverable�amount,�if�the�asset’s�carrying�amount�is�greater�than� its�estimated�recoverable�amount.
Gains�and�losses�on�disposal�are�determined�by�comparing�proceeds� with�the�carrying�amount.�These�gains�and�losses�are�included�in�the� income�statement�when�realised.�
Security�
As�at�30�June�2017,�plant�and�equipment�with�a�carrying�value�of� $547,000�(2016:�$1,542,000)�was�pledged�as�security�for�finance� leases.���
Reconciliation�of�depreciation�and�amortisation�to�income� statement
| statement | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Depreciation | ||
| Landandbuildings | (4,899) | (1,937) |
| Plantandequipment | (20,180) | (22,180) |
| Amortisation(Note7) | ||
| Mineproperties | (52,061) | (53,176) |
| Mineralrights | (8,443) | (3,622) |
| Total | (85,583) | (80,915) |
Capital�commitments�
| Capitalcommitments | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $’000 | $’000 | |
| GwaliaExtensionProject | ||
| Purchaseordersraisedoncontracted | ||
| capitalexpenditure. | 5,316 | � |
Page�49�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
6 Deferred�mining�costs�
| 6 Deferredminingcosts |
||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Current | ||
| Deferredoperatingminedevelopment | 5,608 | 4,446 |
| Non�current | ||
| Deferredoperatingminedevelopment | 9,253 | 11,271 |
Certain�mining�costs,�principally�those�that�relate�to�the�stripping�of� waste�and�operating�development�in�underground�operations,� which�provide�access�so�that�future�economically�recoverable�ore� can�be�mined,�are�deferred�in�the�balance�sheet�as�deferred�mining� costs.�
Underground�operations�
In�underground�operations�mining�occurs�progressively�on�a�level� by�level�basis.��Underground�mining�costs�in�the�period�are�deferred� based�on�the�metres�developed�for�a�particular�level.��Previously� deferred�underground�mining�costs�are�amortised�to�the�income� statement�based�on�the�recoverable�ounces�produced�over�the�life� of�mine�recoverable�ounces.�Deferred�costs�are�released�to�the� income�statement�as�ounces�are�produced�from�the�related�mining� levels.�
Open�pit�operations�
Overburden�and�other�mine�waste�materials�are�often�removed� during�the�initial�development�of�a�mine�site�in�order�to�access�the� mineral�deposit�and�deferred.�This�activity�is�referred�to�as�deferred� stripping.���
Removal�of�waste�material�normally�continues�throughout�the�life�of� an�open�pit�mine.��This�activity�is�referred�to�as�production�stripping.�
The�Group�has�no�deferred�waste�costs�associated�with�open�pit� operations�at�30�June�2017.�
Accounting�judgements�and�estimates�
The�Group�applies�the�units�of�production�method�for�amortisation� of�underground�operating�development.��The�amortisation�rates�are� determined�on�a�level�by�level�basis.��In�underground�operations�an� estimate�is�made�of�the�life�of�level�average�underground�mining�cost� per�recoverable�ounce�to�expense�underground�costs�in�the�income� statement.��Underground�mining�costs�in�the�period�are�deferred� based�on�the�metres�developed�for�a�particular�level.���
Grade�control�drilling�is�deferred�to�the�statement�of�financial� position�on�a�level�by�level�basis.��These�amounts�are�released�to�the� income�statement�as�ounces�are�produced�from�the�related�mining� levels.�
Page�50�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
7 Mine�properties�and�mineral�rights�
| Consolidated | Consolidated | |
|---|---|---|
| 2017 | 2016 | |
| Mineproperties Atbeginningoftheyear |
$'000 179,884 |
$'000 211,989 |
| Directexpenditure | 32,036 | 21,071 |
| Amortisationfortheyear Atendoftheyear |
(52,061) 159,859 |
(53,176) 179,884 |
Mine�properties�
Mine�development�expenditure�represents�the�acquisition�cost� and/or�accumulated�exploration,�evaluation�and�development� expenditure�in�respect�of�areas�of�interest�in�which�mining�has� commenced.�
When�further�development�expenditure�is�incurred�in�respect�of�a� mine,�after�the�commencement�of�production,�such�expenditure�is� carried�forward�as�part�of�the�mine�development�only�when� substantial�future�economic�benefits�are�thereby�established,� otherwise�such�expenditure�is�classified�as�part�of�production�and� expensed�as�incurred.�
Mine�development�costs�are�deferred�until�commercial�production� commences,�at�which�time�they�are�amortised�on�a�unit�of� production�basis�over�mineable�reserves.�The�calculation�of� amortisation�takes�into�account�future�costs�which�will�be�incurred� to�develop�all�the�mineable�reserves.��Changes�to�mineable�reserves� are�applied�from�the�beginning�of�the�reporting�period�and�the� amortisation�charge�is�adjusted�prospectively�from�the�beginning�of� the�period.�
Accounting�judgements�and�estimates�
The�Group�applies�the�units�of�production�method�for�amortisation� of�its�life�of�mine�specific�assets,�which�results�in�an�amortisation� charge�proportional�to�the�depletion�of�the�anticipated�remaining� life�of�mine�production.�These�calculations�require�the�use�of� estimates�and�assumptions�in�relation�to�reserves�and�resources,� metallurgy�and�the�complexity�of�future�capital�development� requirements;�changes�to�these�estimates�and�assumptions�will� impact�the�amortisation�charge�in�the�income�statement�and�asset� carrying�values.�
| Consolidated | Consolidated | |
|---|---|---|
| Mineralrights | 2017 $'000 |
2016 $'000 |
| Atthebeginningoftheyear | 19,785 | 23,407 |
| Amortisation | (8,443) | (3,622) |
| Impairmentlossesandwritedowns Attheendoftheyear |
(3,782) 7,560 |
� 19,785 |
Mineral�rights
Mineral�rights�comprise�identifiable�exploration�and�evaluation� assets,�mineral�resources�and�ore�reserves,�which�are�acquired�as� part�of�a�business�combination�or�a�joint�venture�acquisition,�and�are� recognised�at�fair�value�at�the�date�of�acquisition.��Mineral�rights�are� attributable�to�specific�areas�of�interest�and�are�amortised�when� commercial�production�commences�on�a�unit�of�production�basis� over�the�estimated�economic�reserves�of�the�mine�to�which�the� rights�relate.�
The�Group’s�mineral�rights�are�associated�with�the�Simberi� operations�and�PNG�interests.�The�assets�impairment�and�write� down�recognised�at�31�December�2016�included�a�write�down�of� mineral�rights.�
Page�51�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
7.�Mine�properties�and�mineral�rights���� (continued)�
Impairment�of�assets�
All�asset�values�are�reviewed�at�each�reporting�date�to�determine� whether�there�is�objective�evidence�that�there�have�been�events�or� changes�in�circumstances�that�indicate�that�the�carrying�value�may� not�be�recoverable.��Where�an�indicator�of�impairment�exists,�a� formal�estimate�of�the�recoverable�amount�is�made.��An�impairment� loss�is�recognised�for�the�amount�by�which�the�carrying�amount�of� an�asset�or�a�cash�generating�unit�(‘CGU’)�exceeds�the�recoverable� amount.��Impairment�losses�are�recognised�in�the�income�statement.��
The�Group�assesses�impairment�of�all�assets�at�each�reporting�date� by�evaluating�conditions�specific�to�the�Group�and�to�the�particular� assets�that�may�lead�to�impairment.���
The�identified�CGUs�of�the�Group�are:��Leonora�and�Simberi.��The� carrying�value�of�the�Leonora�and�Simberi�CGUs�are�assessed�using� fair�value�less�costs�of�disposal�(‘Fair�Value’).���
Fair�Value�is�determined�as�the�net�present�value�of�the�estimated� future�cash�flows.��Future�cash�flows�are�based�on�life�of�mine�plans� using�market�based�commodity�price�and�exchange�assumptions�for� both�Australian�Dollar�(AUD)�and�United�States�Dollar�(USD)�gold� price,�estimated�quantities�of�ore�reserves,�operating�costs�and� future�capital�expenditure.�Costs�to�sell�have�been�estimated�by� management.��
Accounting�judgements�and�estimates��Impairment�
At�30�June�2017,�the�Group�determined�that�there�were�no� indicators�of�impairment�for�either�the�Leonora�or�Simberi�cash� operating�units�due�to�strong�spot�and�forward�gold�prices�at�30�June� 2017�and�increases�in�mine�life�at�both�operations.��Although�gold� prices�were�stronger,�and�there�was�an�extension�to�mine�life�at� Simberi,�taking�all�factors�into�consideration�there�were�no� indicators�to�reverse�prior�impairments�booked.�
At�31�December�2016,�the�Group�determined�that�there�were� indicators�of�impairment�for�the�Simberi�CGU�given�its�sensitivity�to� gold�price�and�the�weakening�of�the�USD�spot�gold�price�from�30� June�2016�to�31�December�2016.��The�Group�conducted�the�carrying� value�analysis�of�the�Simberi�CGU�resulting�in�an�impairment�charge� of�$19,091,000�after�tax�at�the�31�December�2016�half�year�reporting� date,�as�summarised�in�the�table�below.�
| goldpriceandtheweakeningoftheUSDspotgoldpricefrom30 June2016to31December2016.TheGroupconductedthecarrying valueanalysisoftheSimberiCGUresultinginanimpairmentcharge of$19,091,000aftertaxatthe31December2016halfyearreporting date,assummarisedinthetablebelow. |
goldpriceandtheweakeningoftheUSDspotgoldpricefrom30 June2016to31December2016.TheGroupconductedthecarrying valueanalysisoftheSimberiCGUresultinginanimpairmentcharge of$19,091,000aftertaxatthe31December2016halfyearreporting date,assummarisedinthetablebelow. |
|---|---|
| Simberi | |
| $’000 | |
| Writedownofassets | |
| Inventories | 3,741 |
| Impairments | |
| Propertyplantandequipment | 19,750 |
| Mineralrights | 3,782 |
| Totalimpairmentandassetwritedowns | 27,273 |
| Taxeffect | (8,182) |
| Totalimpairmentandassetwritedownsaftertax | 19,091 |
Significant�judgements�and�assumptions�are�required�in�making� estimates�of�Fair�Value.�The�CGU�valuations�are�subject�to�variability� in�key�assumptions�including,�but�not�limited�to:�long�term�gold� prices,�currency�exchange�rates,�discount�rates,�production,� operating�costs�and�future�capital�expenditure.��An�adverse�change� in�one�or�more�of�the�assumptions�used�to�estimate�Fair�Value�could� result�in�a�reduction�in�a�CGU’s�recoverable�value.��This�could�lead�to� the�recognition�of�impairment�losses�in�the�future.��The�inter� relationship�of�the�significant�accounting�assumptions�upon�which� estimated�future�cash�flows�are�based,�however,�are�such�that�it�is�
impractical�to�disclose�the�extent�of�the�possible�effects�of�a�change� in�a�key�assumption�in�isolation.���
The�assumptions�used�for�the�impairment�of�the�Simberi�CGU�at�31� December�2016�were:�
| December2016were: | ||
|---|---|---|
| 2017�2022 | ||
| Gold(RealUS$perounce) | $1,098/oz�$1,335/oz | |
| AUD:USDexchangerate | 0.74 | |
| Post�taxrealdiscountrate(%)–PNG | 10.2 | |
| Commoditypricesandexchangerates |
Commodity�prices�and�foreign�exchange�rates�are�estimated�with� reference�to�external�market�forecasts�and�updated�at�least� annually.�The�rates�applied�to�the�valuation�have�regard�to� observable�market�data,�including�spot�and�forward�values.��
Discount�rate
In�determining�the�Fair�Value�of�CGUs,�the�future�cash�flows�are� discounted�using�rates�based�on�the�Group’s�estimated�real�post��tax� weighted�average�cost�of�capital�for�each�functional�currency�used� in�the�Group,�with�an�additional�premium�applied�having�regard�to� the�geographic�location�of�the�CGU.�
Operating�and�capital�costs
Life�of�mine�operating�and�capital�cost�assumptions�are�based�on� the�Group’s�latest�life�of�mine�plans.��The�projections�do�not�include� expected�cost�improvements�reflecting�the�Group’s�objectives�to� maximise�free�cash�flow,�optimise�and�reduce�activity,�apply� technology,�improve�capital�and�labour�productivity.�� Unmined�resources�and�exploration�values�
Unmined�resources�are�not�included�in�a�CGU’s�life�of�mine�plan�for� a�number�of�reasons,�including�the�need�to�constantly�re�assess�the� economic�returns�on�and�timing�of�specific�production�options�in�the� current�economic�environment.��In�our�determination�of�Fair�Value,� there�are�no�unmined�resources�or�exploration�estimates�included� within�the�valuation.��
Any�variation�in�the�key�assumptions�used�to�determine�Fair�Value� will�result�in�a�change�of�the�assessed�fair�value.�If�the�variation�in� assumption�had�a�negative�impact�on�Fair�Value�it�could�indicate�a� requirement�for�additional�impairment�of�non�current�assets�in�the� future.�
It�is�estimated�that�changes�in�the�key�assumptions�would�have�the� following�approximate�impact�on�the�Fair�Value�of�the�CGU�in�its� functional�currency�that�was�subject�to�impairment�as�at�31� December�2016:�
Simberi� Decrease�in�Fair�Value�resulting�from:� $’000� US$100/oz�decrease�in�gold�price� 17,112� 0.50%�increase�in�discount�rate� 280� The�sensitivities�above�assume�that�the�specific�assumption�moves� in�isolation,�while�all�other�assumptions�are�held�constant.��In�reality,� a�change�in�one�of�the�aforementioned�assumptions�is�usually� accompanied�with�a�change�in�another�assumption,�which�may�have� an�offsetting�impact�(for�example,�a�decline�in�the�USD�gold�price� could�be�accompanied�by�a�decline�in�the�AUD�compared�to�the� USD).��Action�is�also�usually�taken�to�respond�to�adverse�changes�in� economic�assumptions�that�may�mitigate�the�financial�impact�of�any� such�change.�
Page�52�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
Ore�Reserves
The�Group�determines�and�reports�Ore�Reserves�under�the�2012� edition�of�the�Australian�Code�for�Reporting�of�Mineral�Resources� and�Ore�Reserves,�known�as�the�JORC�Code.�The�JORC�Code�requires� the�use�of�reasonable�investment�assumptions�to�calculate�reserves.� Due�to�the�fact�that�economic�assumptions�used�to�estimate� reserves�change�from�period�to�period,�and�geological�data�is� generated�during�the�course�of�operations,�estimates�of�reserves� may�change�from�period�to�period.�
Accounting�judgements�and�estimates–�Ore�Reserves�
Reserves�are�estimates�of�the�amount�of�gold�product�that�can�be� economically�extracted�from�the�Group’s�properties.�In�order�to� calculate�reserves,�estimates�and�assumptions�are�required�about�a� range�of�geological,�technical�and�economic�factors,�including� quantities,� grades,� production� techniques,� recovery� rates,� production�costs,�future�capital�requirements,�short�and�long�term� commodity�prices�and�exchange�rates.�
Estimating�the�quantity�and/or�grade�of�reserves�requires�the�size,� shape�and�depth�of�ore�bodies�to�be�determined�by�analysing� geological�data.�This�process�may�require�complex�and�difficult� geological�judgements�and�calculations�to�interpret�the�data.�
Changes�in�reported�reserves�may�affect�the�Group’s�financial�results� and�financial�position�in�a�number�of�ways,�including:�
-
Asset�carrying�values�may�be�impacted�due�to�changes�in� estimated�future�cash�flows.�
-
The�recognition�of�deferred�tax�assets.�
-
Depreciation�and�amortisation�charged�in�the�income�statement� may�change�where�such�charges�are�calculated�using�the�units�of� production�basis.�
-
Underground�capital�development�deferred�in�the�balance�sheet� or�charged�in�the�income�statement�may�change�due�to�a� revision�in�the�development�amortisation�rates.�
-
Decommissioning,�site�restoration�and�environmental�provisions� may�change�where�changes�in�estimated�reserves�affect� expectations�about�the�timing�or�cost�of�these�activities.�
Page�53�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
8 Exploration�and�evaluation�
| 8 Explorationandevaluation |
||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| Non�current Atbeginningoftheyear Additions Disposals |
$'000 25,975 9,436 � |
$'000 16,969 9,006 � |
| Atendoftheyear | 35,411 | 25,975 |
Commitments�for�exploration�
| Commitmentsforexploration | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $’000 | $’000 | |
| Exploration | ||
| Inordertomaintainrightsoftenureto | ||
| miningtenements,theGroupiscommitted | ||
| to tenement rentals and minimum |
||
| explorationexpenditureintermsofthe | ||
| requirements of the relevant state |
||
| government mining departments in |
||
| WesternAustralia.Thisrequirementwill continueforfutureyearswiththeamount |
||
| dependentupontenementholdings. | 4,779 | 4,898 |
All�exploration�and�evaluation�expenditure�incurred�up�to� establishment�of�resources�is�expensed�as�incurred.��From�the�point� in�time�when�reserves�are�established,�or�where�there�is�a� reasonable�expectation�for�reserves,�exploration�and�evaluation� expenditure�is�capitalised�and�carried�forward�in�the�financial� statements,�in�respect�of�areas�of�interest�for�which�the�rights�of� tenure�are�current�and�where�such�costs�are�expected�to�be� recouped�through�successful�development�and�exploitation�of�the� area�of�interest,�or�alternatively,�by�its�sale.�Capitalised�costs�are� deferred�until�commercial�production�commences�from�the�relevant� area�of�interest,�at�which�time�they�are�amortised�on�a�unit�of� production�basis.�
Exploration�and�evaluation�expenditure�consists�of�an�accumulation� of�acquisition�costs�and�direct�exploration�and�evaluation�costs� incurred,�together�with�an�allocation�of�directly�related�overhead� expenditure.�
Feasibility�expenditures�represents�costs�related�to�the�preparation� and�completion�of�a�feasibility�study�to�enable�a�development� decision�to�be�made�in�relation�to�that�area�of�interest.��Feasibility� expenditures�are�expensed�as�incurred�until�a�decision�has�been� made�to�develop�the�area�of�interest.���
Exploration�and�evaluation�assets�are�assessed�for�impairment�if�(i)� sufficient�data�exists�to�determine�technical�feasibility�and� commercial�viability,�and�(ii)�facts�and�circumstances�suggest�that� the�carrying�amount�exceeds�the�recoverable�amount.��For�the� purpose�of�impairment�testing,�exploration�and�evaluation�assets� are�allocated�to�cash�generating�units�to�which�the�exploration� activity�relates.�
When�an�area�of�interest�is�abandoned,�or�the�Directors�determine� it�is�not�commercially�viable�to�pursue,�accumulated�costs�in�respect� of�that�area�are�written�off�in�the�period�the�decision�is�made.�
Accounting�judgements�and�estimates�
Exploration�and�evaluation�expenditure�is�capitalised�where�reserves� have�been�established�for�an�area�of�interest,�or�where�there�is�a� reasonable�expectation�for�reserves,�and�it�is�considered�likely�to�be� recoverable�from�future�exploitation�or�sale.��The�accounting�policy� requires�management�to�make�certain�estimates�and�assumptions� as�to�future�events�and�circumstances,�in�particular�whether�an� economically�viable�extraction�operation�is�likely.��These�estimates� and�assumptions�may�change�as�new�information�becomes� available.��If,�after�having�capitalised�the�expenditure�under�the� accounting�policy,�a�judgement�is�made�that�recovery�of�the� expenditure�is�unlikely,�the�relevant�capitalised�amount�will�be� written�off�to�the�income�statement.�
Page�54�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
9 Rehabilitation�provision��
| 9 Rehabilitationprovision |
||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Current | ||
| Provisionforrehabilitation | 488 | 493 |
| Non�current Provisionforrehabilitation |
27,750 28,238 |
28,095 28,588 |
| MovementsinProvisions | ||
| Rehabilitation | ||
| Balanceatstartofyear | 28,588 | 42,087 |
| Unwindingofdiscount | 1,658 | 1,707 |
| Reductioninnetprovisionsmadeduring | � | (14,008) |
| theyear(1) | ||
| Effectsofmovementsintheforeign | (2,008) | (1,198) |
| exchangerate | ||
| Balanceatendofyear | 28,238 | 28,588 |
(1) Represents�the�elimination�of�the�King�of�the�Hills�rehabilitation�provision� ($14,008,000)�on�sale�of�the�tenements�to�Saracen�Metals�Pty�Ltd�in� October�2015.�
Provisions,�including�those�for�legal�claims�and�rehabilitation�and� restoration�costs,�are�recognised�when�the�Group�has�a�present�legal� or�constructive�obligation�as�a�result�of�past�events,�it�is�more�likely� than�not�that�an�outflow�of�resources�will�be�required�to�settle�the� obligation,�and�the�amount�has�been�reliably�estimated.�Provisions� are�not�recognised�for�future�operating�losses.�
The�Group�has�obligations�to�dismantle,�remove,�restore�and� rehabilitate�certain�items�of�property,�plant�and�equipment�and� areas�of�disturbance�during�mining�operations.�
A�provision�is�made�for�the�estimated�cost�of�rehabilitation�and� restoration�of�areas�disturbed�during�mining�operations�up�to� reporting�date�but�not�yet�rehabilitated.��The�provision�also�includes� estimated�costs�of�dismantling�and�removing�the�assets�and� restoring�the�site�on�which�they�are�located.��The�provision�is�based� on�current�estimates�of�costs�to�rehabilitate�such�areas,�discounted� to�their�present�value�based�on�expected�future�cash�flows.��The� estimated�cost�of�rehabilitation�includes�the�current�cost�of� contouring,�topsoiling�and�revegetation�to�meet�legislative� requirements.��Changes�in�estimates�are�dealt�with�on�a�prospective� basis�as�they�arise.�
As�there�is�some�uncertainty�as�to�the�amount�of�rehabilitation� obligations�that�will�be�incurred�due�to�the�impact�of�changes�in� environmental�legislation�and�many�other�factors�(including�future� developments,�changes�in�technology�and�price�increases),�the� rehabilitation�liability�is�remeasured�at�each�reporting�date�in�line� with�changes�in�the�timing�and�/or�amounts�of�the�costs�to�be� incurred�and�discount�rates.��The�liability�is�adjusted�for�changes�in� estimates.��Adjustments�to�the�estimated�amount�and�timing�of� future�rehabilitation�and�restoration�cash�flows�are�a�normal� occurrence�in�light�of�the�significant�judgments�and�estimates� involved.��
As�the�value�of�the�provision�represents�the�discounted�value�of�the� present�obligation�to�restore,�dismantle�and�rehabilitate,�the� increase�in�the�provision�due�to�the�passage�of�time�is�recognised�as� a�borrowing�cost.��A�large�proportion�of�the�outflows�are�expected� to�occur�at�the�time�the�respective�mines�are�closed.�
Accounting�judgements�and�estimates�
Mine�rehabilitation�provision�requires�significant�estimates�and� assumptions�as�there�are�many�transactions�and�other�factors�that� will�ultimately�affect�liability�payable�to�rehabilitate�the�mine�sites.� Factors�that�will�affect�this�liability�include�changes�in�regulations,� prices�fluctuations,�changes�in�technology,�changes�in�timing�of�cash� flows�which�are�based�on�life�of�mine�plans�and�changes�to�discount� rates.�When�these�factors�change�or�are�known�in�the�future,�such� difference�will�impact�the�mine�rehabilitation�provision�in�the�period� in�which�it�becomes�known.�
Page�55�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
C.�����Capital�and�risk�
10 Working�capital�
Trade�and�other�receivables��
| 10 Workingcapital Tradeandotherreceivables |
|||
|---|---|---|---|
| Consolidated | |||
| 2017 | 2016 | ||
| $'000 | $'000 | ||
| Current | |||
| Tradereceivables | 3,676 | 1,932 | |
| Otherreceivables | 2,119 | 2,392 | |
| Restrictedcash | � | 118 | |
| Prepayments | 3,475 9,270 |
3,844 8,286 |
|
| Noncurrent OtherReceivables |
� | 2,366 | |
| Total | 9,270 | 10,652 |
Trade�receivables�are�recognised�initially�at�fair�value�and� subsequently�measured�at�amortised�cost,�less�provision�for� doubtful�debts.�Trade�receivables�are�usually�due�for�settlement�no� more�than�30�days�from�the�date�of�recognition.��Cash�placed�on� deposit�with�a�financial�institution�to�secure�bank�guarantee�facilities� and�restricted�from�use�(‘restricted�cash’)�within�the�business�is� disclosed�as�part�of�trade�and�other�receivables.�
Collectability�of�trade�receivables�is�reviewed�on�an�ongoing�basis.� Debts�which�are�known�to�be�uncollectible�are�written�off.�A� provision�for�doubtful�receivables�is�established�when�there�is� objective�evidence�that�the�Group�will�not�be�able�to�collect�all� amounts�due�according�to�the�original�terms�of�receivables.�The� amount�of�the�provision�is�the�difference�between�the�asset’s� carrying�amount�and�the�present�value�of�estimated�future�cash� flows,�discounted�at�the�effective�interest�rate.�The�amount�of�the� provision�is�recognised�in�the�income�statement.�
Amounts�receivable�from�Director�related�entities� At�30�June�2017,�there�were�no�amounts�receivable�from�Director� related�entities�(2016:�$Nil).�
Inventories�
| Consolidated | Consolidated | |
|---|---|---|
| 2017 | 2016 | |
| $'000 | $'000 | |
| Consumables Orestockpiles Goldincircuit Bulliononhand |
37,418 1,467 10,594 5,861 55,340 |
42,148 649 9,565 5,802 58,164 |
Raw�materials�and�stores,�ore�stockpiles,�work�in�progress�and� finished�gold�stocks�are�valued�at�the�lower�of�cost�and�net�realisable� value.��
Cost�comprises�direct�materials,�direct�labour�and�an�appropriate� proportion�of�variable�and�fixed�overhead�expenditure�relating�to� mining�activities,�the�latter�being�allocated�on�the�basis�of�normal� operating�capacity.�Costs�are�assigned�to�individual�items�of� inventory�on�the�basis�of�weighted�average�costs.�Net�realisable� value�is�the�estimated�selling�price�in�the�ordinary�course�of�business,� less�the�estimated�costs�of�completion�and�the�estimated�costs� necessary�to�make�the�sale.�
Accounting�judgements�and�estimates�
The�calculation�of�net�realisable�value�(NRV)�for�ore�stockpiles,�gold� in�circuit�and�bullion�on�hand�involves�significant�judgement�and� estimate�in�relation�to�timing�and�cost�of�processing,�gold�prices,� exchange�rates�and�recoveries.�A�change�in�any�of�these�assumptions� will�alter�the�estimated�NRV�and�therefore�impact�the�carrying�value� of�inventories.
Trade�and�other�payables�
| Tradeandotherpayables | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Current | ||
| Tradepayables | 35,411 | 39,346 |
| Otherpayables | 1,069 | 422 |
| 36,480 | 39,768 |
These�amounts�represent�liabilities�for�goods�and�services�provided� to�the�Group�prior�to�the�end�of�the�financial�year,�which�remain� unpaid�as�at�reporting�date.�The�amounts�are�unsecured�and�are� usually�paid�within�30�days�from�the�end�of�the�month�of�recognition.�
Page�56�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
11 Financial�risk�management�
Financial�risk�management�
The�Group’s�management�of�financial�risk�is�aimed�at�ensuring�net� cash�flows�are�sufficient�to�withstand�significant�changes�in�cash�flow� under�certain�risk�scenarios�and�still�meet�all�financial�commitments� as�and�when�they�fall�due.��The�Group�continually�monitors�and�tests� its�forecast�financial�position�and�has�a�detailed�planning�process� that�forms�the�basis�of�all�cash�flow�forecasting.�
The�Group's�normal�business�activities�expose�it�to�a�variety�of� financial�risk,�being:�market�risk�(especially�gold�price�and�foreign� currency�risk),�credit�risk�and�liquidity�risk.��The�Group�may�use� derivative�instruments�as�appropriate�to�manage�certain�risk� exposures.�
Risk�management�in�relation�to�financial�risk�is�carried�out�by�a� centralised�Group�Treasury�function�in�accordance�with�Board� approved�directives�that�underpin�Group�Treasury�policies�and� processes.���The�Treasury�Risk�Management�Committee�assists�and� advises�the�Group�Treasury�function,�Executive�Leadership�Team,� Audit�and�Risk�Committee�and�Board�in�discharging�their� responsibilities�in�relation�to�forecasted�risk�profiles,�risk�issues,�risk� mitigation�strategies�and�compliance�with�Treasury�policy.��Group� Treasury�regularly�reports�the�findings�to�the�Treasury�Risk� Management�Committee�and�the�Board.�
(a) Market�risk�
Market�risk�is�the�risk�that�changes�in�market�prices,�such�as� commodity�prices,�foreign�exchange�rates,�interest�rates�and�equity� prices�will�affect�the�Group’s�income�or�the�value�of�its�holdings�of� financial�instruments,�cash�flows�and�financial�position.��The�Group� may�enter�into�derivatives,�and�also�incur�financial�liabilities,�in�order� to�manage�market�risks.��All�such�transactions�are�carried�out�within� directives�and�policies�approved�by�the�Board.�
(b) Currency�risk�
The�Group�is�exposed�to�currency�risk�on�gold�sales,�purchases�and� borrowings�that�are�denominated�in�a�currency�other�than�the� Company’s�presentation�currency�of�Australian�dollars.�The� currencies�in�which�transactions�primarily�are�denominated�are� Australian�Dollars�(AUD),�US�Dollars�(USD)�and�Papua�New�Guinea� Kina�(PGK).�
The�exchange�rates�at�the�year�end�were�as�follows:�
| Closingrateasat | AUD/USD | AUD/USD | AUD/PGK | AUD/PGK | ||
|---|---|---|---|---|---|---|
| 30June2017 | 0.7695 | 2.3788 | ||||
| 30June2016 | 0.7452 | 2.3216 | ||||
| 2017 | 2016 | |||||
| Exposuretocurrency | USD | PGK | USD | PGK | ||
| $’000 | $’000 | $’000 | $’000 | |||
| Cashandcashequivalents | 8,606 | 1,637 | 58,625 | 4,747 | ||
| Tradereceivables | 356 | 297 | 216 | 288 | ||
| Tradepayables | (4,095) | (7,805) | (6,054) | (5,415) | ||
| Interestbearingliabilities | (77) | � | (168,102) | � | ||
| Netexposure | 4,790 | (5,871) | (115,315) | (380) |
Sensitivity�analysis:�
The�following�table�details�the�Group's�sensitivity�to�a�10%� movement�(i.e.�increase�or�decrease)�in�the�Australian�dollar�against� the�US�dollar�and�PNG�Kina�at�the�reporting�date,�with�all�other� variables�held�constant.�The�10%�sensitivity�is�based�on�reasonably� possible�changes,�over�a�financial�year,�using�the�observed�range�of� actual�historical�rates�for�the�preceding�five�year�period:�
| ImpactonProfitAfterTax (Increaseprofit)/decrease profit 2017 2016 |
|
|---|---|
| $'000 $'000 |
|
| AUD/USD+10% AUD/USD�10% |
(487) 11,522 487 (11,522) |
PGK�against�the�AUD�has�been�reviewed�and�considered�an�immaterial� currency�risk .�
Significant�assumptions�used�in�the�foreign�currency�exposure� sensitivity�analysis�above�include:�
-
Reasonably�possible�movements�in�foreign�exchange�rates.�
-
The�translation�of�the�net�assets�in�subsidiaries�with�a�functional� currency�other�than�the�Australian�dollar�has�not�been�included� in�the�sensitivity�analysis�as�part�of�the�equity�movement.�
-
The�net�exposure�at�the�reporting�date�is�representative�of�what� the�Group�is�expected�to�be�exposed�to�in�the�next�12�months.�
-
The�sensitivity�analysis�only�includes�the�impact�on�the�balance� of�financial�assets�and�financial�liabilities�at�the�reporting�date.�
(c) Interest�rate�risk�exposures�
The�Group’s�main�interest�rate�risk�arises�from�long�term� borrowings.��Borrowings�issued�at�variable�rates�expose�the�Group� to�cash�flow�interest�rate�risk.��Borrowings�issued�at�fixed�rates� expose�the�Group�to�fair�value�interest�rate�risk.��The�Group�Treasury� manages�the�interest�rate�exposures�according�to�the�Board� approved�Treasury�policy.��Any�decision�to�hedge�interest�rate�risk�is� assessed�in�relation�to�the�overall�Group�exposure,�the�prevailing� interest�rate�market,�and�any�funding�counterparty�requirements.�� As�at�30�June�2017,�interest�rates�on�interest�bearing�liabilities�were� fixed.�
The�Group’s�exposure�to�interest�rate�risk�and�the�effective�weighted� average�interest�rate�by�maturity�periods�is�set�out�in�the�following� tables.��Exposures�arise�predominantly�from�assets�and�liabilities� applying�variable�interest�rates,�as�the�Group�intends�to�hold�fixed� rate�assets�and�liabilities�to�maturity.�
Page�57�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
11�Financial�risk�management�(continued)
(d) Capital�management�
The�Group’s�total�capital�is�defined�as�total�shareholders’�funds�plus� net�debt.��The�Group�aims�to�maintain�an�optimal�capital�structure� to�reduce�the�cost�of�capital�and�maximise�shareholder�returns.��The� Group�has�a�capital�management�plan�that�is�reviewed�by�the�Board� on�a�regular�basis.�
| onaregularbasis. | ||
|---|---|---|
| Consolidatedcapital | 2017 $’000 |
2016 $’000 |
| Totalshareholders’funds Borrowings Cashandcashequivalents(1) Totalcapital |
461,127 547 (547) 461,127 |
300,614 226,318 (136,689) 390,243 |
(1) Cash�and�cash�equivalents�are�included�to�the�extent�that�the�net�debt� position�is�nil.�
The�Group�does�not�have�a�target�net�debt/equity�ratio.��There�were� no�changes�in�the�Group’s�approach�to�capital�management�during� the�year,�with�the�focus�on�the�reduction�in�borrowings�using�surplus� cash�flows.�
The�Group�is�not�subject�to�externally�imposed�capital�requirements� other�than�normal�banking�requirements.�
Investments�and�other�financial�assets�
The�Group�classifies�its�investments�and�other�financial�assets�in�the� following�categories:�financial�assets�at�fair�value�through�profit�and� loss,�loans�and�receivables,�and�available�for�sale�financial�assets.� The�classification�depends�on�the�purpose�for�which�the�investments� were�acquired.�Management�determines�the�classification�of�its� investments�at�initial�recognition�and�re�evaluates�this�designation� at�each�reporting�date.�
Investments�and�other�financial�assets�are�recognised�initially�at�fair� value�plus,�for�assets�not�at�fair�value�through�profit�and�loss,�any� directly�attributable�transaction�costs.�
(e) Credit�risk�
Credit�risk�is�the�risk�that�a�counter�party�will�not�meet�its�obligations� under�a�financial�instrument�or�customer�contract,�with�a�maximum� exposure�equal�to�the�carrying�amount�of�the�financial�assets�as� recorded�in�the�financial�statements.��The�Group�is�exposed�to�credit� risk�from�its�operating�activities�(primarily�customer�receivables)�and� from�its�financing�activities,�including�deposits�with�banks�and� financial�institutions�and�derivatives.�
Credit�risks�related�to�receivables
The�Group’s�most�significant�customer�accounts�for�$2,586,000�of� the�trade�receivables�carrying�amount�at�30�June�2017�(2016:� $1,714,000),�representing�receivables�owing�from�gold�sales.��Based� on�historic�rates�of�default,�the�Group�believes�that�no�impairment� has�occurred�with�respect�to�trade�receivables,�and�none�of�the�trade� receivables�at�30�June�2017�were�past�due.�
counterparties�with�a�minimum�Standard�&�Poor’s�credit�rating,�and� there�is�a�financial�limit�on�funds�placed�with�any�single� counterparty.�
Derivative�transactions�are�only�made�with�approved�counterparties� in�accordance�with�the�Board�approved�Treasury�Policy.��Derivative� transactions�do�not�cover�a�major�proportion�of�total�Group� production,�with�maturities�occurring�over�a�relatively�short�period� of�time.�
(f) Cash�flow�hedges�
The�Group’s�revenue�is�exposed�to�spot�gold�price�risk.��Based�upon� sensitivity�analysis,�a�movement�in�the�average�spot�price�of�gold� during�the�year�of�$100�per�ounce�and�all�other�factors�remaining� constant,�would�have�changed�post�tax�profit�by�$26,612,000.�
In�accordance�with�the�Group’s�financial�risk�management�policies,� the�Group�has�managed�commodity�price�risk�from�time�to�time� using�gold�forward�contracts�as�described�below.���
In�April�2017,�the�Company�entered�into�gold�forward�contracts�for� 50,000�ounces�of�gold�at�$1,725�per�ounce�with�maturity�over�a� twelve�month�period�from�July�2017�to�June�2018.��
In�June�2017,�the�Company�entered�into�further�gold�forward� contracts�for�50,000�ounces�of�gold�at�$1,730�per�ounce�with� maturity�over�a�twelve�month�period�from�July�2017�to�June�2018.� The�forward�contracts�protect�Simberi�operating�margins.�
As�physical�delivery�of�gold�is�used�to�close�out�forward�contracts,� the�standard�provides�an�own�use�exemption�under�which�the�Group� is�not�subject�to�the�requirements�of�AASB�139�for�these�contracts.�
�The�maturity�profile�of�the�gold�forward�contracts�remaining�as�at� 30�June�2017�is�provided�in�the�table�below.�
| 6 | ||||||
|---|---|---|---|---|---|---|
| months | 6–12 | 1–2 | 2–5 | |||
| Strike | Total | orless | months | years | years | |
| Price | ounces | ounces | ounces | ounces | ounces | |
| $1,725/oz | 50,000 | 24,000 | 26,000 | � | � | |
| $1,730/oz | 50,000 | 24,000 | 26,000 | � | � |
Cash�flow�hedge�sensitivity�
The�relationship�between�currencies,�spot�gold�price�and� volatilities�is�complex�and�changes�in�the�spot�gold�price�can� influence�volatility,�and�vice�versa.�
At�30�June�2017,�the�Group�did�not�hold�any�gold�options�to� hedge�against�movements�in�the�gold�price,�however�this�is� reviewed�by�the�Board�as�part�of�the�risk�management� framework.�
Credit�risks�related�to�cash�deposits�and�derivatives�
Credit�risk�from�balances�with�banks,�financial�institutions�and� derivative�counterparties�is�managed�by�the�centralised�Group� Treasury�function�in�accordance�with�the�Board�approved�policy.�� Investments�of�surplus�funds�are�only�made�with�approved�
Page�58�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
11� Financial�risk�management�(continued)
(g) Fair�value�estimation�
The�fair�value�of�cash�and�cash�equivalents�and�non�interest�bearing�monetary�financial�assets�and�financial�liabilities�of�the�Group�approximates� carrying�value.��The�fair�value�of�other�monetary�financial�assets�and�financial�liabilities�is�based�upon�market�prices.�
The�fair�value�of�financial�assets�and�financial�liabilities�must�be�estimated�for�recognition�and�measurement,�or�for�disclosure�purposes.�
The�fair�value�of�financial�instruments�traded�in�active�markets�(such�as�publicly�traded�derivatives,�and�trading�and�available�for�sale�securities)� is�based�on�quoted�market�prices�at�the�balance�sheet�date.��The�quoted�market�price�used�for�financial�assets�held�by�the�Group�is�the�current� bid�price;�the�appropriate�quoted�market�price�for�financial�liabilities�is�the�current�ask�price.�
The�fair�value�of�financial�instruments�that�are�not�traded�in�an�active�market�(for�example,�over�the�counter�derivatives)�is�determined�using� generally�accepted�valuation�techniques.��The�Group�uses�a�variety�of�methods�and�makes�assumptions�that�are�based�on�market�conditions� existing�at�each�balance�date.���
The�nominal�value�less�estimated�credit�adjustments�of�trade�receivables�and�payables�are�assumed�to�approximate�their�fair�values.��The�fair� value�of�financial�liabilities�for�disclosure�purposes�is�estimated�by�discounting�the�future�contractual�cash�flows�at�the�current�market�interest� rate�that�is�available�to�the�Group�for�similar�financial�instruments.�
| FixedInterestMaturingin2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non� | |||||||||
| Floating | 1yearor | Over1to5 | interest | ||||||
| Financialassets | Interestrate $’000 |
less $’000 |
years $’000 |
bearing $’000 |
Total $’000 |
Fairvalue | |||
| Cashandcashequivalents | 40,909 | 120,000 | � | � | 160,909 | 160,909 | |||
| Receivables | � | � | � | 5,795 | 5,795 | 5,795 | |||
| Availableforsalefinancialassets(1) | � | � | � | 4,569 | 4,569 | 4,569 | |||
| 40,909 | 120,000 | � | 10,364 | 171,273 | 171,273 | ||||
| Weightedaverageinterestrate | 1.06% | 2.48% | n/a | n/a | |||||
| Financialliabilities | |||||||||
| Tradeandotherpayables | � | � | � | 36,480 | 36,480 | 36,480 | |||
| Financeleaseliabilities | � | 507 | 40 | � | 547 | 547 | |||
| � | 507 | 40 | 36,480 | 37,027 | 37,027 | ||||
| Weightedaverageinterestrate | n/a | 6.49% | 8.00% | n/a | |||||
| Netfinancialassets/(liabilities) | 40,909 | 119,493 | (40) | (26,116) | 134,246 | 134,246 |
| FixedInterestMaturingin2016 | ||||||
|---|---|---|---|---|---|---|
| Financialassets | ||||||
| Cashandcashequivalents | 101,689 | 35,000 | � | � | 136,689 | 136,689 |
| Restrictedcashandcashequivalents | � | 118 | � | � | 118 | 118 |
| Receivables | � | � | � | 6,690 | 6,690 | 6,690 |
| Availableforsalefinancialassets | � | � | � | 56 | 56 | 56 |
| 101,689 | 35,118 | � | 6,746 | 143,553 | 143,553 | |
| Weightedaverageinterestrate | 0.63% | 2.84% | n/a | n/a | ||
| Financialliabilities | ||||||
| Tradeandotherpayables | � | � | � | 39,768 | 39,768 | 39,768 |
| Financeleaseliabilities | � | 992 | 550 | � | 1,542 | 1,542 |
| Loansfromotherentities | � | 2,209 | � | � | 2,209 | 2,209 |
| Seniorsecurednotes(2) | � | � | 222,567 | � | 222,567 | 228,227 |
| � | 3,201 | 223,117 | 39,768 | 266,086 | 271,746 | |
| Weightedaverageinterestrate | n/a | 4.99% | 8.87% | n/a | ||
| Netfinancialassets/(liabilities) | 101,689 | 31,917 | (223,117) | (33,022) | (122,533) | (128,193) |
(1)��Fair�value�is�determined�based�on�Level�1�inputs�as�the�balance�represents�investments�in�listed�securities.�
(2)��Senior�secured�notes�amount�excludes�$2,551,000�of�capitalised�transaction�cost�and�$287,000�discount�on�notes�in�2016.�
Page�59�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
11� Financial�risk�management�(continued)
(h)���� Liquidity�risk�
Prudent�liquidity�risk�management�requires�maintaining�sufficient�cash�and�marketable�securities,�the�availability�of�funding�through�an�adequate� amount�of�committed�credit�facilities�and�the�ability�to�close�out�market�positions.�During�the�financial�year�the�primary�objective�was�to�fully� repay�the�senior�secured�notes�and�to�maintain�sufficient�cash�to�provide�financial�flexibility.�
The�Group�manages�liquidity�risk�by�continuously�monitoring�forecast�and�actual�cash�flows,�and�matching�maturity�profiles�of�financial�assets� and�liabilities.��The�Group�undertakes�sensitivity�analysis�to�stress�test�the�operational�cash�flows,�which�are�matched�with�capital�commitments� to�assess�liquidity�requirements.��The�capital�management�plan�provides�the�analysis�and�actions�required�in�detail�for�the�next�twelve�months� and�longer�term.��The�maturity�of�non�current�liabilities�is�monitored�within�the�cash�management�plan.�
Surplus�funds�are�invested�in�instruments�that�are�tradeable�in�highly�liquid�markets.�
Maturities�of�financial�liabilities
The�table�below�analyses�the�Group’s�financial�liabilities.��The�amounts�disclosed�in�the�table�are�the�contractual�undiscounted�cash�flows,�which� includes�interest�obligations�over�the�term�of�the�facilities.�
| Total | ||||||||
|---|---|---|---|---|---|---|---|---|
| Lessthan 12months |
Between1 and5years |
Over5 years |
contractual cashflows |
Carrying amount |
||||
| Maturityoffinancialliabilities–2017 | $‘000 | $‘000 | $‘000 | $‘000 | $‘000 | |||
| Financeleaseliabilities | 521 | 41 | � | 562 | 547 | |||
| Tradeandotherpayables | 36,480 | � | � | 36,480 | 36,480 | |||
| 37,001 | 41 | � | 37,042 | 37,027 | ||||
| Maturityoffinancialliabilities–2016 | ||||||||
| SeniorSecuredNotes(1) | 20,004 | 245,410 | � | 265,414 | 222,567 | |||
| Premiuminsurancefunding | 2,297 | � | � | 2,297 | 2,209 | |||
| Financeleaseliabilities | 1,059 | 565 | � | 1,624 | 1,542 | |||
| Tradeandotherpayables | 39,768 | � | � | 39,768 | 39,768 | |||
| 63,128 | 245,975 | � | 309,103 | 266,086 |
(1) Excluding�amortisation�of�capitalised�transaction�costs�and�discount.�
Page�60�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
12 Net�debt�
Cash�and�cash�equivalents�
| 12 Netdebt Cashandcashequivalents |
||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Cashatbankandonhand | 40,909 | 101,689 |
| Termdeposits | 120,000 | 35,000 |
| 160,909 | 136,689 |
Cash�and�cash�equivalents�includes�cash�on�hand,�deposits�and�cash� at�call�held�at�with�financial�institutions,�other�short�term,�highly� liquid�investments�that�are�readily�convertible�to�known�amounts�of� cash�and�which�are�subject�to�an�insignificant�risk�of�changes�in� value.���
Cash�at�bank�and�on�hand�
Cash�at�bank�at�30�June�2017�invested�“at�call”�was�earning�interest� at�an�average�rate�of�1.06%�per�annum�(2016:�0.63%�per�annum).�
Term�Deposits�
The�deposits�at�30�June�2017�were�earning�interest�at�rates�of� between�2.22%�and�2.80%�per�annum�(2016:�rates�of�between� 1.83%�and�3.00%�per�annum).�At�30�June�2017,�the�average�time�to� maturity�was�46�days�(2016:�31�days)�from�balance�date.�
Interest�bearing�liabilities�
| Interestbearingliabilities | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Current | ||
| Secured | ||
| Leaseliabilities | 507 | 992 |
| Insurancepremiumfunding | � | 2,209 |
| Totalcurrent | 507 | 3,201 |
| Non�current | ||
| Secured | ||
| Leaseliabilities | 40 | 550 |
| Seniorsecurednotes(netoftransaction | � | 222,567 |
| costs) | ||
| Totalnon�current | 40 | 223,117 |
| Totalinterestbearingliabilities | 547 | 226,318 |
Borrowings�are�initially�recognised�at�fair�value,�net�of�transaction� costs�incurred.�Borrowings�are�subsequently�measured�at�amortised� cost.��Any�difference�between�the�proceeds�(net�of�transaction�costs)� and�the�redemption�amount�is�recognised�in�the�income�statement� over�the�period�of�the�borrowings�using�the�effective�interest� method.��Fees�paid�on�the�establishment�of�loan�facilities,�which�are� not�incremental�costs�relating�to�the�actual�draw�down�of�the�facility,� are�recognised�as�prepayments�and�amortised�on�a�straight�line�basis� over�the�term�of�the�facility.�
Senior�secured�notes�
On�27�March�2013,�the�Group�settled�an�offering�of�US$250�million� senior�secured�notes�issued�in�the�United�States�Rule�144A�bond� market�and�to�certain�persons�outside�the�United�States�with�a� maturity�of�15�April�2018.�The�facility�was�fully�repaid�on�15�March� 2017.�
Profit�before�income�tax�includes�the�following�specific�expenses:�
| Consolidated | Consolidated | |
|---|---|---|
| 2017 | 2016 | |
| $'000 | $'000 | |
| FinanceCosts | ||
| Interestpaid/payable | 7,433 | 28,383 |
| Borrowingcosts | 10,859 | 5,434 |
| Financeleaseinterest | 11 | 225 |
| Provisions:unwindingofdiscount | 1,658 | 1,707 |
| 19,961 | 35,749 | |
| Rentalexpenserelatingtooperatingleases | ||
| Leasepayments | 598 | 1,253 |
Page�61�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
12�Net�debt�(continued)
Leases�
Leases�of�property,�plant�and�equipment,�where�the�Group�has� substantially�all�the�risks�and�rewards�of�ownership,�are�classified�as� finance�leases.��Finance�leases�are�capitalised�at�inception�of�the� lease�at�the�lower�of�the�fair�value�of�the�leased�property�and�the� present�value�of�the�minimum�future�lease�payments.�The� corresponding�rental�obligations,�net�of�finance�charges,�are� included�in�interest�bearing�liabilities.�Each�lease�payment�is� allocated�between�the�liability�and�finance�charges�so�as�to�achieve� a�constant�rate�on�the�finance�balance�outstanding.�The�interest� element�of�the�finance�cost�is�charged�to�the�income�statement�over� the�lease�period�so�as�to�produce�a�constant�periodic�rate�of�interest� on�the�remaining�balance�of�the�liability�for�each�period.��
The�property,�plant�and�equipment�acquired�under�finance�leases� are�depreciated�over�the�asset’s�useful�life,�or�the�lease�term�if� shorter�where�there�is�no�reasonable�certainty�that�the�Group�will� obtain�ownership�by�the�end�of�the�lease�term.�
Leases�in�which�a�significant�portion�of�the�risks�and�rewards�of� ownership�are�retained�by�the�lessor�are�classified�as�operating� leases.��Payments�made�under�operating�leases�(net�of�any� incentives�received�from�the�lessor)�are�charged�to�the�income� statement�on�a�straight�line�basis�over�the�period�of�the�lease.�
Commitments�for�leases
The�finance�lease�commitments�displayed�in�the�table�below�relate� to�vehicles�and�plant�and�equipment,�are�based�on�the�cost�of�the� assets�and�are�payable�over�a�period�of�up�to�48�months�at�which� point�ownership�of�the�assets�transfers�to�the�Group.�
| Consolidated | Consolidated | |||
|---|---|---|---|---|
| FinanceLeaseCommitments | 2017 $'000 |
2016 $'000 |
||
| Payablenotlaterthanoneyear | 521 | 1,059 | ||
| Payable between one |
year | and | 41 | 565 |
| fiveyears | 562 | 1,624 | ||
| Futurefinancecharges | (15) | (82) | ||
| Totalleaseliabilities | 547 | 1,542 | ||
| Current Non�current |
507 40 |
992 550 |
||
| 547 | 1,542 | |||
| AnalysisofNon�CancellableOperating | ||||
| LeaseCommitments | ||||
| Payablenotlaterthanoneyear | 405 | 396 | ||
| Payablebetweenoneyearandfive | 846 | 899 | ||
| years | 1,251 | 1,295 |
Reconciliation�of�profit�from�ordinary�activities�after�income�tax� to�net�cash�flows�from�operating�activities�
| tonetcashflowsfromoperatingactivities | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Profitaftertaxfortheyear | 157,572 | 169,388 |
| Depreciationandamortisation | 85,583 | 80,915 |
| Assetimpairmentsandwritedowns | 27,273 | � |
| Incometaxexpense Unwindingofrehabilitationprovision |
32,134 1,658 |
14,014 1,707 |
| Netfinancecostsamortised | 2,842 | 5,289 |
| Unrealised/realisedforeignexchangegain | 3,037 | 142 |
| Equitysettledshare�basedpayments | 2,045 | 928 |
| Changeinoperatingassetsandliabilities | ||
| Receivablesandprepayments | (1,436) | (728) |
| Inventories | (916) | (5,892) |
| Otherassets | (1,145) | (1,019) |
| Tradecreditorsandpayables | (3,288) | (3,127) |
| Provisionsandotherliabilities | (2,133) | (18,829) |
| Netcashflowsfromoperatingactivities | 303,226 | 242,788 |
13 Contributed�equity�
| Numberof | ||
|---|---|---|
| Details | shares | $'000 |
| Openingbalance1July2016 | 495,102,525 | 887,216 |
| Vestedperformancerights | 2,228,570 | 38 |
| Closingbalance30June2017 | 497,331,095 | 887,254 |
Contributed�equity�
Ordinary�shares�are�classified�as�equity.��Incremental�costs�directly� attributable�to�the�issue�of�ordinary�shares�and�performance�rights�are� recognised�as�a�deduction�from�equity,�net�of�any�tax�effects.
Ordinary�shares�
Ordinary�shares�entitle�the�holder�to�participate�in�dividends�and�the� proceeds�on�winding�up�of�the�Company�in�proportion�to�the�number� of�and�amounts�paid�on�the�shares�held.���
On�a�show�of�hands�every�holder�of�ordinary�shares�present�at�a� meeting�in�person�or�by�proxy,�is�entitled�to�one�vote,�and�upon�a�poll� each�share�is�entitled�to�one�vote.�
Page�62�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
D.����Business�portfolio�
15 Controlled�entities�
14 Parent�entity�disclosures�
The�consolidated�financial�statements�incorporate�the�assets,� liabilities�and�results�of�the�following�subsidiaries�in�accordance� with�the�accounting�policy�on�consolidation.��
As�at,�and�throughout,�the�financial�year�ended�30�June�2017,�the� parent�company�of�the�Group�was�St�Barbara�Limited.
All�subsidiaries�are�100%�owned�at�30�June�2017�and�30�June�2016� and�are�incorporated�in�Australia�unless�otherwise�stated.�
Financial�statements�
| ParentEntity 2017 2016 $'000 $'000 Resultsoftheparententity Profitaftertaxfortheyear 134,430 65,702 Othercomprehensiveloss (147) (2,821) Totalcomprehensiveincomeforthe year 134,283 62,881 OthercomprehensiveincomeissetoutintheConsolidated StatementofComprehensiveIncome. ParentEntity 2017 2016 Financialpositionoftheparententity atyearend $'000 $'000 Currentassets 204,213 173,591 Totalassets 423,046 442,357 Currentliabilities 67,051 38,548 Totalliabilities 122,803 276,582 Totalequityoftheparententity comprising: Sharecapital 887,254 887,216 Reserves 2,987 2,840 Accumulatedlosses (589,998) (724,281) |
ParentEntity 2017 2016 $'000 $'000 Resultsoftheparententity Profitaftertaxfortheyear 134,430 65,702 Othercomprehensiveloss (147) (2,821) Totalcomprehensiveincomeforthe year 134,283 62,881 OthercomprehensiveincomeissetoutintheConsolidated StatementofComprehensiveIncome. ParentEntity 2017 2016 Financialpositionoftheparententity atyearend $'000 $'000 Currentassets 204,213 173,591 Totalassets 423,046 442,357 Currentliabilities 67,051 38,548 Totalliabilities 122,803 276,582 Totalequityoftheparententity comprising: Sharecapital 887,254 887,216 Reserves 2,987 2,840 Accumulatedlosses (589,998) (724,281) |
Countryof Incorporation Parententity StBarbaraLimited Australia SubsidiariesofStBarbaraLimited AlliedGoldMiningLtd UK SubsidiariesofAlliedGoldMiningLtd AlliedGoldPtyLtd(1) Australia SubsidiariesofAlliedGoldPtyLtd AdvanceR&DPtyLtd Australia AGL(ASG)PtyLtd Australia AGL(SGC)PtyLtd Australia AlliedGoldFinancePtyLtd Australia AlliedGoldServicesPtyLtd Australia AlliedTabarExplorationPtyLtd Australia AretrendPtyLtd Australia NordPacificLimited Canada SubsidiariesofAGL(SGC)PtyLtd SubsidiariesofAlliedTabarExplorationPtyLtd TabarExplorationCompanyLtd PNG SubsidiariesofNordPacificLimited NordAustralexNominees(PNG)Ltd PNG SimberiGoldCompanyLimited PNG |
|---|---|---|
| ParentEntity 2017 2016 Financialpositionoftheparententity atyearend $'000 $'000 |
||
| Currentassets 204,213 173,591 Totalassets 423,046 442,357 Currentliabilities 67,051 38,548 Totalliabilities 122,803 276,582 Totalequityoftheparententity comprising: |
||
| Sharecapital 887,254 887,216 Reserves 2,987 2,840 Accumulatedlosses (589,998) (724,281) |
||
| Totalequity 300,243 165,775 |
| ParentEntity | ParentEntity | |
|---|---|---|
| 2017 | 2016 | |
| Financialpositionoftheparententity | $'000 | $'000 |
| atyearend | ||
| Currentassets | 204,213 | 173,591 |
| Totalassets | 423,046 | 442,357 |
| Currentliabilities | 67,051 | 38,548 |
| Totalliabilities | 122,803 | 276,582 |
| Totalequityoftheparententity | ||
| comprising: | ||
| Sharecapital | 887,254 | 887,216 |
| Reserves Accumulatedlosses Totalequity |
2,987 (589,998) 300,243 |
2,840 (724,281) 165,775 |
(1)�Converted�from�Allied�Gold�Ltd�to�Allied�Gold�Pty�Ltd�on�1�August�2014.�
Transactions�with�entities�in�the�wholly�owned�group�
St�Barbara�Limited�is�the�parent�entity�in�the�wholly�owned�group� comprising�the�Company�and�its�wholly�owned�subsidiaries.�It�is�the� Group’s�policy�that�transactions�are�at�arm’s�length.��
During�the�year�the�Company�charged�management�fees�of� $4,893,000�(2016:�$4,717,000),�operating�lease�rents�of�$375,000� (2016:�$969,000),�and�interest�of�$14,182,000�(2016:�$25,889,000)� to�entities�in�the�wholly�owned�group.�
Net�loans�payable�to�the�Company�amount�to�a�net�receivable�of� $204,781,000�(2016:�net�receivable�$242,446,000).��
Balances�and�transactions�between�the�Company�and�its� subsidiaries,�which�are�related�parties�of�the�Company,�have�been� eliminated�on�consolidation.��
Page�63�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
E.����Remunerating�our�people�
16 Employee�benefit�expenses�and�provisions�
Expenses�
| Expenses | ||
|---|---|---|
| Consolidated 2017 2016 $'000 $'000 |
||
| Employeerelatedexpenses Wagesandsalaries Contributionstodefinedcontribution superannuationfunds Equitysettledshare�basedpayments |
69,875 5,288 2,045 77,208 |
62,396 4,904 928 68,228 |
Wages�and�salaries,�and�annual�leave�
Liabilities�for�wages�and�salaries,�including�non�monetary�benefits� and�annual�leave�expected�to�be�paid�within�12�months�of�the� reporting�date,�are�recognised�in�other�payables�in�respect�of� employees'�services�up�to�the�reporting�date�and�are�measured�at� the�amounts�expected�to�be�paid,�including�expected�on�costs,�when� the�liabilities�are�settled.��
Retirement�benefit�obligations�
Contributions�to�defined�contribution�funds�are�recognised�as�an� expense�as�they�are�due�and�become�payable.��Prepaid�contributions� are�recognised�as�an�asset�to�the�extent�that�a�cash�refund�or�a� reduction�in�future�payments�is�available.��The�Group�has�no� obligations�in�respect�of�defined�benefit�funds.�
Executive�incentives�
Senior�executives�may�be�eligible�for�short�term�incentive�payments� (“STI”)�subject�to�achievement�of�key�performance�indicators,�as� recommended�by�the�Remuneration�Committee�and�approved�by� the�Board�of�Directors.�The�Group�recognises�a�liability�and�an� expense�for�STIs�in�the�reporting�period�during�which�the�service�is� provided�by�the�employee.�
Directors�and�key�management�personnel�
| Directorsandkeymanagementpersonnel | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Shorttermemployeebenefits | 2,376 | 2,404 |
| Post�employmentbenefits | 39 | 39 |
| Leave | 110 | 103 |
| Share�basedpayments | 781 | 512 |
| 3,306 | 3,058 |
Disclosures�relating�to�Directors�and�key�management�personnel�are� included�within�the�Remuneration�Report,�with�the�exception�of�the� table�opposite.
Provisions
| Provisions | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016 | |
| $'000 | $'000 | |
| Current | ||
| Employeebenefits–annualleave | 4,063 | 3,486 |
| Employeebenefits–longserviceleave Otherprovisions |
3,014 5,077 |
2,392 4,641 |
| 12,154 | 10,519 | |
| Non�current | ||
| Employeebenefits�longserviceleave | 2,010 | 1,859 |
| Otherprovisions | 2,202 | 2,802 |
| 4,212 | 4,661 |
Employee�related�and�other�provisions�are�recognised�when�the� Group�has�a�present�legal�or�constructive�obligation�as�a�result�of� past�events,�it�is�more�likely�than�not�that�an�outflow�of�resources� will�be�required�to�settle�the�obligation,�and�the�amount�has�been� reliably�estimated.���
Where�there�are�a�number�of�similar�obligations,�the�likelihood�that� an�outflow�will�be�required�in�settlement�is�determined�by� considering�the�class�of�obligations�as�a�whole.�A�provision�is� recognised�even�if�the�likelihood�of�an�outflow�with�respect�to�any� one�item�included�in�the�same�class�of�obligations�may�be�small.�
Wages�and�salaries,�and�annual�leave�
Liabilities�for�wages�and�salaries,�including�non�monetary�benefits� and�annual�leave�expected�to�be�paid�within�12�months�of�the� reporting�date,�are�recognised�in�other�payables�in�respect�of� employees'�services�up�to�the�reporting�date�and�are�measured�at� the�amounts�expected�to�be�paid,�including�expected�on�costs,�when� the�liabilities�are�settled.��
Long�service�leave�
The�liability�for�long�service�leave�is�recognised�in�the�provision�for� employee�benefits�and�measured�as�the�present�value�of�expected� future�payments�to�be�made,�plus�expected�on�costs,�in�respect�of� services�provided�by�employees�up�to�the�reporting�date.� Consideration�is�given�to�the�expected�future�wage�and�salary�levels,� experience�of�employee�departures�and�periods�of�service.�Expected� future�payments�are�discounted�with�reference�to�market�yields�on� corporate�bonds�with�terms�to�maturity�and�currency�that�match,�as� closely�as�possible,�the�estimated�future�cash�outflows.
Page�64�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
17 Share�based�payments�
Employee�Performance�Rights�
During�the�year�ended�30�June�2017,�there�was�no�amount�transferred�as�a�gain�for�performance�rights�that�expired�during�the�year�(2016:�$Nil).� Accounting�standards�preclude�the�reversal�through�the�income�statement�for�amounts,�which�have�been�booked�in�the�share�based�payments� reserve�for�performance�rights�and�satisfy�service�conditions�but�do�not�vest�due�to�market�conditions.�
Set�out�below�are�summaries�of�performance�rights�granted�to�employees�under�the�St�Barbara�Limited�Performance�Rights�Plan�approved�by� shareholders:�
| Consolidatedandparententity2017 | Consolidatedandparententity2017 | Consolidatedandparententity2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| Balanceat | Granted | Expired | Balanceat | Exercisable | ||||
| GrantDate | ExpiryDate | Issueprice | startofthe year |
duringthe year |
Vestedduring theyear |
duringthe year |
endofthe year |
atendofthe year |
| Number | Number | Number | Number | Number | Number | |||
| � | � | |||||||
| 5Dec2014 | 30Jun2017 | $0.12 | 15,953,028 | � | (15,953,028) | � | � | � |
| 10Dec2015 | 30Jun2018 | $0.51 | 3,974,617 | � | � | � | 3,974,617 | � |
| 21Oct2016 | 30Jun2019 | $2.92 | � | 837,568 | � | � | 837,568 | � |
| 12Dec2016 | 30Jun2019 | $2.92 | � | 196,708 | � | � | 196,708 | � |
| 31Mar2017 | 30Jun2019 | $2.92 | � | 42,440 | � | � | 42,440 | � |
| Total | 19,927,645 | 1,076,716 | (15,953,028) | � | 5,051,333 | � | ||
| Consolidatedandparententity2016 | ||||||||
| 29Nov2013 | 30Jun2016 | $0.49 | 2,908,469 | � | (1,809,209) | (1,099,260) | � | � |
| 5Dec2014 | 30Jun2017 | $0.12 | 17,151,202 | � | (419,361) | (778,813) | 15,953,028 | � |
| 10Dec2015 | 30Jun2018 | $0.51 | � | 3,974,617 | � | � | 3,974,617 | � |
| Total | 20,059,671 | 3,974,617 | (2,228,570) | (1,878,073) | 19,927,645 | � |
The�weighted�average�remaining�contractual�life�of�performance� rights�outstanding�at�the�end�of�the�year�was�1.2�years�(2016:�1.3� years).��Conditions�associated�with�rights�granted�during�the�year� ended�30�June�2017�included:�
-
i. Rights�are�granted�for�no�consideration.��The�vesting�of�rights� granted�in�FY2017�is�subject�to�a�continuing�service�condition� as�at�the�vesting�date,�Return�on�Capital�Employed�over�a�three� year�period,�and�relative�Total�Shareholder�Return�over�a�three� year�period�measured�against�a�peer�group.�
-
ii. Performance�rights�do�not�have�an�exercise�price.�
-
iii. Any�performance�right�which�does�not�vest�will�lapse.�
-
iv. Grant�date�varies�with�each�issue.�
The�fair�value�of�rights�issued�was�adjusted�according�to�estimates� of�the�likelihood�that�the�market�conditions�will�be�met.��A�Monte� Carlo�simulation�was�performed�using�data�at�grant�date�to�assist� management�in�estimating�the�probability�of�the�rights�vesting.���
As�a�result�of�the�Monte�Carlo�simulation�results,�the�assessed�fair� value�of�rights�issued�during�the�year�was�$2,846,000.��This�outcome� was�based�on�the�likelihood�of�the�market�condition�being�met�as�at� the�date�the�rights�vest.�
Expenses�arising�from�share�based�payment�transactions�
Total�expenses�arising�from�equity�settled�share�based�payment� transactions�recognised�during�the�year�as�part�of�the�employee� benefit�expenses�were�as�follows:
| Consolidated | Consolidated | |
|---|---|---|
| 2017 | 2016 | |
| $ | $ | |
| Performancerightsissuedunder | ||
| performancerightsplan | 2,045,000 | 928,000 |
Accounting�judgements�and�estimates�
The�Group�measures�the�cost�of�equity�settled�transactions�with� employees�by�reference�to�the�fair�value�of�the�equity�instruments� at�the�date�at�which�they�are�granted.�
Where�the�vesting�of�share�based�payments�contain�market� conditions,�in�estimating�the�fair�value�of�the�equity�instruments� issued,�the�Group�assesses�the�probability�of�the�market�conditions� being�met,�and�therefore�the�probability�of�fair�value�vesting,�by� undertaking�a�Monte�Carlo�simulation.��The�simulation�performs� sensitivity�analysis�on�key�assumptions�in�order�to�determine� potential�compliance�with�the�market�performance�conditions.��The� simulation�specifically�performs�sensitivity�analysis�on�share�price� volatility�based�on�the�historical�volatility�for�St�Barbara�Limited�and� the�peer�group�companies.��The�results�of�the�Monte�Carlo� simulation�are�not�intended�to�represent�actual�results,�but�are�used� as�an�estimation�tool�by�management�to�assist�in�arriving�at�the� judgment�of�probability.
Page�65�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
F.����Other�disclosures�
18 Remuneration�of�auditors�
During�the�year�the�following�fees�were�paid�or�payable�for�services� provided�by�PricewaterhouseCoopers,�the�auditor�of�the�parent� entity,�and�its�related�practices:�
| entity,anditsrelatedpractices: | ||
|---|---|---|
| Consolidated | ||
| 2017 | 2016(1) | |
| $ | $ | |
| Auditandreviewoffinancialreports | 295,000 | 358,500 |
| Non�auditservices | ||
| Taxadvisoryandassuranceservices(2) | 211,196 | � |
| TaxadviceinrelationtoAusIndustry | 337,772 | � |
| review(2) | ||
| Accountingadviceandotherassurance | � | 95,000 |
| relatedservices | ||
| Totalremunerationforauditandnon | 843,968 | 453,500 |
| auditrelatedservices |
(1) KPMG�were�the�appointed�auditors�for�the�Group�for�the�year�ended�30�June�2016�
(2) $409,772�of�the�total�tax�advisory�fees�related�to�non�recurring�services�
19 Events�occurring�after�the�balance�sheet�date�
The�Directors�are�not�aware�of�any�matter�or�circumstance�that�has� arisen�since�the�end�of�the�financial�year�that,�in�their�opinion,�has� significantly�affected�or�may�significantly�affect�in�future�years�the� Company’s�or�the�Group’s�operations,�the�results�of�those� operations�or�the�state�of�affairs,�except�as�described�in�this�note:�
Subsequent�to�year�end,�the�directors�have�declared�a�fully�franked� final�dividend�in�relation�to�the�2017�financial�year�of�6�cents�per� ordinary�share,�to�be�paid�on�28�September�2017.�A�provision�for�this� dividend�has�not�been�recognised�in�the�30�June�2017�financial� statements.�
20 Contingencies�
During�July�2014,�the�Company�announced�that�by�operation�of�its� internal�reporting�mechanisms,�the�provision�of�benefits�to�a�foreign� public�official�that�may�violate�its�Anti�Bribery�and�Anti�Corruption� Policy�or�applicable�laws�in�Australia�or�in�foreign�jurisdictions�were� identified.��The�amount�of�the�benefits�provided�to�the�foreign�public� official�was�not�material�to�the�Company.��The�Company�self� reported�the�matter�to�relevant�authorities,�including�the�Australian� Federal�Police,�and�the�matter�is�being�assessed�and�investigated.��To� date,�there�has�been�no�action�taken�against�the�Company,� consequently,�the�range�of�potential�penalties,�if�any,�cannot�be� reliably�estimated.��Should�there�be�any�prosecution,�potential� penalties�are�governed�by�laws�in�various�jurisdictions�including� Criminal�Code�1995�(Cth)� in�Australia�and/or�the�UK� Bribery�Act .���
As�a�result�of�the�Australian�Taxation�Office’s�(ATO)�program�of� routine�and�regular�tax�reviews�and�audits,�the�Group�anticipates� that�ATO�reviews�and�audits�may�occur�in�the�future.��The�ultimate� outcome�of�any�future�reviews�and�audits�cannot�be�determined� with�an�acceptable�degree�of�reliability�at�this�time.��Nevertheless,� the�Group�believes�it�is�making�adequate�provision�for�its�tax� liabilities,�including�amounts�shown�as�deferred�tax�liabilities,�and� takes�reasonable�steps�to�address�potentially�contentious�issues� with�the�ATO.�
21 Basis�of�preparation�
Basis�of�measurement
The�consolidated�financial�statements�have�been�prepared�on�the� historical�cost�basis,�except�for�the�following�material�items:�
-
Derivative�financial�instruments�are�measured�at�fair�value;
-
Share�based�payment�arrangements�are�measured�at�fair�value;
-
Available�for�sale�assets�are�measured�at�fair�value;
-
Rehabilitation�provision�is�measured�at�net�present�value;
-
Long�service�leave�provision�is�measured�at�net�present�value.��
Principles�of�consolidation���Subsidiaries�
The�consolidated�financial�statements�incorporate�the�assets�and� liabilities�of�all�subsidiaries�of�St�Barbara�Limited�as�at�30�June�2017� and�the�results�of�all�subsidiaries�for�the�year�then�ended.�
Subsidiaries�are�all�those�entities�(including�special�purpose�entities)� over�which�the�Group�has�the�power�to�govern�the�financial�and� operating�policies,�and�as�a�result�has�an�exposure�or�rights�to� variable�returns,�generally�accompanying�a�shareholding�of�more� than�one�half�of�the�voting�rights.�The�existence�and�effect�of� potential�voting�rights�that�are�currently�exercisable�or�convertible� are�considered�when�assessing�whether�the�Group�controls�another� entity.�Subsidiaries�are�consolidated�from�the�date�on�which�control� commences�until�the�date�control�ceases.��
Intercompany�transactions,�balances�and�unrealised�gains�on� transactions�between�Group�companies�are�eliminated.�Unrealised� losses�are�also�eliminated�unless�the�transaction�provides�evidence� of�the�impairment�of�the�asset�transferred.�Accounting�policies�of� subsidiaries�have�been�changed�where�necessary�to�ensure� consistency�with�the�policies�adopted�by�the�Group.�
Foreign�currency�translation�
Both�the�functional�and�presentation�currency�of�St�Barbara�Limited� and�its�Australian�controlled�entities�are�Australian�dollars�(AUD).�� The�functional�currency�of�the�Group’s�foreign�operations�is�US� dollars�(USD).
Foreign�currency�transactions�are�translated�into�the�functional� currency�using�the�exchange�rates�prevailing�at�the�dates�of�the� transactions.��Foreign�exchange�gains�and�losses�resulting�from�the� settlement�of�such�transactions,�and�from�the�translation�at�year�end� exchange�rates�of�monetary�assets�and�liabilities�denominated�in� foreign�currencies,�are�recognised�in�the�income�statement,�except� when�deferred�in�equity�as�qualifying�cash�flow�hedges�and� qualifying�net�investment�hedges.
Translation�differences�on�non�monetary�financial�assets�and� liabilities�are�reported�as�part�of�the�fair�value�gain�or�loss.�� Translation�differences�on�non�monetary�financial�assets�and� liabilities,�such�as�equities�held�at�fair�value�through�profit�or�loss,� are�recognised�in�the�income�statement�as�part�of�the�fair�value�gain� or�loss.�Translation�differences�on�non�monetary�financial�assets,� such�as�equities�classified�as�available�for�sale�financial�assets,�are� included�in�the�fair�value�reserve�in�equity.��
The�assets�and�liabilities�of�controlled�entities�incorporated�overseas� with�functional�currencies�other�than�Australian�dollars�are� translated�into�the�presentation�currency�of�St�Barbara�Limited� (Australian�dollars)�at�the�year�end�exchange�rate�and�the�revenue� and�expenses�are�translated�at�the�rates�applicable�at�the� transaction�date.��Exchange�differences�arising�on�translation�are� taken�directly�to�the�foreign�currency�translation�reserve�in�equity.���
Page�66�
ST�BARBARA�LIMITED�2017�
Notes�to�the�Financial�Report�
21�Basis�of�preparation�(continued)
Critical�accounting�judgement�and�estimates
The�preparation�of�financial�statements�in�conformity�with�AASB�and� IFRS�requires�management�to�make�judgements,�estimates�and� assumptions�that�affect�the�application�of�accounting�policies�and� the�reported�amount�of�assets,�liabilities,�income�and�expenses.� Actual�results�may�differ�from�these�estimates.�The�estimates�and� underlying�assumptions�are�reviewed�on�an�ongoing�basis.�Revisions� to�accounting�estimates�are�recognised�in�the�period�in�which�the� estimate�is�revised�and�in�any�future�periods�affected.��
22 Accounting�standards�
New�Standards�adopted�
The�accounting�policies�applied�by�the�Group�in�this�30�June�2017�consolidated�financial�report�are�the�same�as�those�applied�by�the�Group�in�its� consolidated�financial�report�as�at�and�for�the�year�ended�30�June�2016.��These�accounting�policies�are�consistent�with�Australian�Accounting� Standards.�
Accounting�policies�are�applied�consistently�by�each�entity�in�the�Group.�
New�accounting�standards�not�yet�adopted�
| Newaccountingstandardsnotyetadopted | |
|---|---|
| Applicationof | |
| Reference | Standard |
| AASB9FinancialInstruments(December2014)andAASB 2009�11 Amendments to Australian AccountingStandards | 1 January 2018 |
| arisingfromAASB9 | |
| AASB16Leases | 1 January 2019 |
| AASB15RevenuefromContractswithCustomerswhichsupersedes AASB 111 Construction contracts, AASB118Revenue, | 1 January 2018 |
| interpretation12Customerloyaltyprogrammes,Interpretation15AgreementsfortheconstructionofRealEstate, | |
| Interpretation18TransferofAssetsfromCustomers,interpretation131Revenue�BartertransactionsinvolvingAdvertising | |
| servicesandInterpretation1042SubscriberAcquisitionCostsintheTelecommunicationsIndustry. | |
| AASB2014�10(2015�101)Amendments toAustralianAccounting Standards�Sale or Contribution of Assetsbetweenan | 1January2018 |
| InvestoranditsAssociateorJointVenture. | |
| AASB2016�1AmendmentstoAustralian AccountingStandards –Recognition of Deferred Tax Asset for UnrealisedLosses. | 1January2017 |
| AASB2016�2AmendmentstoAustralian AccountingStandards – Disclosure Initiative: Amendments to AASB107 | 1January2017 |
After�a�review�of�the�above�accounting�standards�the�company�has�assessed�that�there�is�unlikely�to�be�a�material�impact�on�the�recognition,� measurement�and�disclosure�of�the�financial�report.�
Page�67�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Directors’�declaration�
-
1� In�the�opinion�of�the�directors�of�St�Barbara�Limited�(the�Company):�
-
(a)� the�consolidated�financial�statements�and�notes�that�are�contained�in�pages�38�to�67�and�the�remuneration�report�in�the� Directors’�report,�set�out�on�pages�15�to�34,�are�in�accordance�with�the�Corporations�Act�2001,�including:�
-
(i)� giving�a�true�and�fair�view�of�the�Group’s�financial�position�as�at�30�June�2017�and�of�its�performance�for�the�financial� year�ended�on�that�date;�and�
-
(ii)� complying�with�Australian�Accounting�Standards�and�the�Corporations�Regulations�2001;�and�
-
-
(b)� there�are�reasonable�grounds�to�believe�that�the�Company�will�be�able�to�pay�its�debts�as�and�when�they�become�due�and� payable.��
-
2� The�directors�have�been�given�the�declarations�required�by�Section�295A�of�the�Corporations�Act�2001�from�the�chief�executive�officer� and�chief�financial�officer�for�the�financial�year�ended�30�June�2017.�
-
3� The�directors�draw�attention�to�page�38�of�the�financial�statements,�which�includes�a�statement�of�compliance�with�International� Financial�Reporting�Standards.�
Signed�in�accordance�with�a�resolution�of�the�Directors:�
==> picture [97 x 41] intentionally omitted <==
Bob�Vassie�
Managing�Director�and�CEO�
Melbourne� 23�August�2017�
Page�68�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Independent�auditor’s�report� Independent�auditor’s�report�page�1�
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Page�69�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Independent�auditor’s�report�page�2�
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Page�70�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Independent�auditor’s�report�page�3�
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Page�71�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Independent�auditor’s�report�page�4�
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Page�72�
ST�BARBARA�LIMITED�2017�
Financial�Report�
Independent�auditor’s�report�page�5�
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Page�73�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Overview�
-
Successful�drilling�program�extended�Gwalia�Ore�Reserves�to�2,140�metres�below�surface�(mbs)�and�Mineral�Resources�to�2,200�mbs�
-
Additional�reserves�at�Simberi�offset�depletion�allowing�mine�life�to�extend�a�further�year�
-
Group�Ore�Reserves�increased�from�4.01�Moz�of�contained�gold�to�4.31�Moz,�net�after�depletion���
Company�Summary�at�30�June�2017�
-
Total�Ore�Reserves�are�estimated�at:�
- 34.6�Mt�@�3.9�g/t�Au�for�� 4.31�Moz�of�contained�gold,�comprising:�
-
Leonora�Operations:�� 11.1�Mt�@�6.8�g/t�Au�for�� 2.44�Moz�of�contained�gold�
-
� Simberi�Operations:�� 23.4�Mt�@�2.5�g/t�Au�for�� 1.90�Moz�of�contained�gold�
-
Total�Mineral�Resources[1] �are�estimated�at:�104.6�Mt�@�2.9�g/t�Au�for��
-
9.63�Moz�of�contained�gold,�comprising:�
-
Leonora�Operations:�� 28.8�Mt�@�6.2�g/t�Au�for�� 5.71�Moz�of�contained�gold�
-
� Simberi�Operations:�� 75.8�Mt�@�1.6�g/t�Au�for�� 3.92�Moz�of�contained�gold�
The�30�June�2017�Ore�Reserves�and�Mineral�Resources�Statements�released�to�the�ASX�on�23�August�2017�follow.�
1 Mineral�Resources�are�reported�inclusive�of�Ore�Reserves
Page�74�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
St�Barbara's�Mineral�Resources�and�Ore�Reserves�position�as�at�30�June�2017�is�summarised�and�compared�with�the�2016�statement�in�Table�1.��
Table�1:��St�Barbara�2016�and�2017�Ore�Reserves�and�Mineral�Resources�Summary�
| Project | 2016OreReserves | 2016OreReserves | 2016OreReserves | 2017Production | 2017OreReserves | 2017OreReserves | 2017OreReserves |
|---|---|---|---|---|---|---|---|
| Tonnes(‘000) | Grade (g/t) |
Ounces(‘000) | Ounces(‘000) | Tonnes(‘000) | Grade (g/t) |
Ounces(‘000) | |
| Gwalia(WA) | 6,795 | 8.3 | 1,808 | 265 | 8,556 | 7.8 | 2,133 |
| TowerHill(WA) | 2,572 | 3.7 | 306 | � | 2,572 | 3.7 | 306 |
| TotalLeonora | 9,367 | 7.0 | 2,114 | 265 | 11,128 | 6.8 | 2,439 |
| Simberi(Oxide) | 14,094 | 1.3 | 576 | 116 | 10,907 | 1.3 | 472 |
| Simberi(Sulphide) | 13,556 | 3.0 | 1,321 | � | 12,537 | 3.5 | 1,402 |
| TotalSimberi | 27,650 | 2.1 | 1,897 | 116 | 23,444 | 2.5 | 1,873 |
| GrandTotal | 37,017 | 3.4 | 4,011 | 381 | 34,572 | 3.9 | 4,312 |
| 2016MineralResources | 2017MineralResources | ||||||
| Tonnes(‘000) | Grade (g/t) |
Ounces(‘000) | Tonnes (‘000) |
Grade (g/t) |
Ounces(‘000) | ||
| Gwalia(WA) | 17,294 | 7.0 | 3,896 | 23,753 | 6.7 | 5,087 | |
| TowerHill(WA) | 5,093 | 3.8 | 625 | 5,093 | 3.8 | 625 | |
| TotalLeonora | 22,387 | 6.3 | 4,521 | 28,846 | 6.2 | 5,712 | |
| Simberi(Oxide) | 29,428 | 1.0 | 951 | 21,288 | 1.1 | 744 | |
| Simberi(Sulphide) | 67,850 | 1.7 | 3,607 | 54,517 | 1.8 | 3,179 | |
| TotalSimberi | 97,278 | 1.5 | 4,558 | 75,805 | 1.6 | 3,923 | |
| GrandTotal | 119,665 | 2.4 | 9,079 | 104,651 | 2.9 | 9,635 |
Data�is�rounded�to�thousands�of�tonnes�and�thousands�of�ounces.�Discrepancies�in�totals�may�occur�due�to�rounding.
The�Company’s�Ore�Reserves�and�Mineral�Resources�have�increased�above�net�depletion�primarily�as�a�consequence�of�resource�extension� drilling�at�Gwalia�(Figures�2�&�3).�Extension�drilling�is�continuing�and�the�additional�reserves�will�be�included�in�an�updated�Life�of�Mine�plan�that� is�anticipated�to�increase�mine�life�past�2024.�The�outcome�of�this�planning�work�will�be�available�in�FY18�Q2.�At�Simberi,�Ore�Reserves�have� reduced�marginally�after�mining�depletion,�however,�a�reduction�in�operating�costs�benefitted�reserve�estimation�for�this�cycle.�The�additional� oxide�reserves�allow�Simberi’s�oxide�operation�to�extend�a�further�year.�A�review�of�the�Simberi�geology�model�has�resulted�in�an�overall� reduction�of�Mineral�Resources�for�this�operation,�but�this�has�largely�impacted�Inferred�sulphide�resources.�
Page�75�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Figure�1:�Ore�Reserves�and�Mineral�Resource�FY16�and�FY17�
==> picture [497 x 218] intentionally omitted <==
----- Start of picture text -----
Mineral�Resources� Ore�Reserves
(Moz) (Moz)
9.6
9.1
3.2
3.6
0.7
4.3
1.0 0.6 Simberi�Sulphide 4.0
0.6 1.4
Simberi�Oxide 1.3
0.5
5.1 Tower�Hill 0.6 0.3 0.3
3.9
Gwalia 1.8 2.1
total
FY16 FY17 FY16 FY17
----- End of picture text -----
Figure�2:�Summary�Movement�in�Ore�Reserves�between�FY16�and�FY17
==> picture [497 x 230] intentionally omitted <==
Page�76�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Figure�3:�Summary�Movement�in�Mineral�Resources�between�FY16�and�FY17
==> picture [497 x 246] intentionally omitted <==
Mineral�Resources�Revisions�
Gwalia�(+1,191,000�ounces)�
The�Gwalia�Mineral�Resource�has�been�updated�following�the�completion�of�a�surface�drilling�program�targeting�extensions�to�all�lodes�down�to� 2,200�mbs�and�underground�grade�control�and�resource�definition�drilling�targeting�mineralisation�between�1,420�mbs�and�1,800�mbs.�The� previous�Measured,�Indicated�and�Inferred�Mineral�Resource�Estimate�reported�at�30�June�2016�was�17,294�kt�@�7.0�g/t�Au�containing�3,896�koz� of�gold.�This�has�increased�by�1,191�koz�of�gold�to�23,753�kt�@�6.7�g/t�Au�containing�5,087�koz�of�gold;�the�increase�before�depletion�and� sterilisation�was�1,467�koz.�Variances�between�the�two�estimates�are�primarily�due�to:�
-
Resource�extensions�down�to�2,200�mbs�due�to�surface�drilling�and�changes�to�local�geological�models�as�a�result�of�underground� drilling;�and�
-
Depletion�through�mining�and�sterilisation�of�non�recoverable�resources.�
Simberi�Oxide�(�207,000�ounces)�
A�revised�Mineral�Resource�estimate�was�completed�for�Simberi�Oxide�using�improved�geological�models�that�incorporated�grade�control�drilling� and�mapping�data.�The�previous�publicly�reported�Measured,�Indicated�and�Inferred�Oxide�Mineral�Resource�Estimate�reported�at�30�June�2016� was�29,428�kt�@�1.0�g/t�Au�containing�951�koz�of�gold.�This�has�decreased�by�207�koz�of�gold�to�21,288�kt�@�1.1�g/t�Au�containing�744�koz�of� gold.�Variances�between�the�two�estimates�are�primarily�due�to�depletion�through�mining�and�changes�to�geological�models.�
Simberi�Sulphide�(�428,000�ounces)�
The�Simberi�Sulphide�Mineral�Resource�estimate�was�updated�with�revised�geological�models.�The�previous�Measured,�Indicated�and�Inferred� Sulphide�Mineral�Resource�Estimate�reported�at�30�June�2016�was�67,850�kt�@�1.7�g/t�Au�containing�3,607�koz�of�gold.�This�has�decreased�by� 428�koz�of�gold�to�54,517�kt�@�1.8�g/t�Au�containing�3,179�koz�of�gold.�The�changes�to�geological�models�have�primarily�impacted�Inferred�Mineral� Resources.�
Page�77�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Ore�Reserve�Revisions�
Gwalia�(+325,000�ounces)�
The�previous�Proved�and�Probable�Ore�Reserve�Estimate�reported�at�30�June�2016�was�6,795�kt�@�8.3�g/t�Au�containing�1,808�koz�of�gold.�This� has�increased�by�a�net�325�koz�of�gold�to�8,556�kt�@�7.8�g/t�Au�containing�2,133�koz�of�gold.�Variances�between�the�two�estimates�are�due�to:�
-
Depletion�through�mining�(274�koz);�
-
Reserve�extensions�down�to�2,140�mbs�as�a�result�of�surface�drilling�(316�koz�of�reserves),�and�Geology�and�design�changes�primarily� driven�by�additional�drill�hole�data�which�increased�the�existing�Mineral�Resources�between�1,660�mbs�and�1,940�mbs�(+268�koz�in� reserves);�and�
-
15�koz�modifying�factors�(dilution).�
Gwalia�Reserve�grade�has�decreased�from�8.3�g/t�Au�at�30�June�2016�to�7.8�g/t�Au�at�30�June�2017,�due�to�FY17�mined�grade�averaging�10.3�g/t� Au,�and�reserves�added�from�depth�extension�below�1,940�mbs�averaging�less�than�the�30�June�2016�Reserve�grade.�
Figure�4:�Gwalia�Ore�Reserve�grade�variance�between�FY16�and�FY17�
==> picture [485 x 215] intentionally omitted <==
==> picture [485 x 108] intentionally omitted <==
Data�is�rounded�to�the�nearest�0.1�g/t�Au.�Discrepancies�in�totals�may�occur�due�to�rounding.�
Simberi�(oxide�and�sulphide�combined:��24,000�ounces)�
The�previous�Proved�and�Probable�Ore�Reserve�Estimate�reported�at�30�June�2016�was�27,650�kt�@�2.1�g/t�Au�containing�1,897�koz�of�gold.�This� has�reduced�by�24�koz�of�gold�to�23,444�kt�@�2.49�g/t�Au�containing�1,873�koz�of�gold.�Variances�between�the�two�estimates�are�primarily�due� to:��
-
Depletion�through�mining;�
-
Changes�in�the�resource�model;�and
-
Reduced�operating�costs�as�mill�throughput�and�mine�output�has�increased.
Page�78�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Ore�Reserves�Statement�as�at�30�June�2017�
| Project | Proved | Probable | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
|
| Gwalia,(WA) | 2,308 | 9.8 | 725 | 6,248 | 7.0 | 1,408 | 8,556 | 7.8 | 2,133 |
| TowerHill,(WA) | � | � | � | 2,572 | 3.7 | 306 | 2,572 | 3.7 | 306 |
| SimberiOxide,(PNG) | 3,294 | 1.4 | 153 | 7,613 | 1.3 | 319 | 10,907 | 1.3 | 472 |
| SimberiSulphide,(PNG) | 245 | 3.2 | 25 | 12,291 | 3.5 | 1,307 | 12,537 | 3.5 | 1,402 |
| TotalAllProjects | 5,847 | 4.8 | 903 | 28,724 | 3.6 | 3,340 | 34,572 | 3.9 | 4,312 |
Notes�
-
Ore�Reserves�are�based�on�a�gold�price�of:�Gwalia�(A$1,350/oz),�Tower�Hill�(A$1,250/oz),�Simberi�(US$1,200/oz).�
-
Cut�off�Grades�Gwalia�(4.0�g/t�Au),�Tower�Hill�(2.8�g/t�Au),�Simberi�Oxide�(0.5�g/t�Au),�Simberi�Sulphide�(1.1�g/t�Au)�
-
�� Mineral�Resources�are�reported�inclusive�of�Ore�Reserves.
-
�� Data�is�rounded�to�thousands�of�tonnes�and�thousands�of�ounces.�Discrepancies�in�totals�may�occur�due�to�rounding.
-
�� Details�relating�to�each�of�the�estimates�are�contained�in�the�2017�Annual�Mineral�Resource�and�Ore�Reserve�Report�at� www.stbarbara.com.au/exploration/Ore�Reserves�mineral�resources/
JORC�Code�Compliance�Statement�
The�information�in�this�report�that�relates�to�Ore�Reserves�is�based�on�information�compiled�by�Mr�Glen�Carthew�and�Mr�Tim�Richards,�who�are� respectively�a�Members�and�a�Fellow�of�the�Australasian�Institute�of�Mining�and�Metallurgy.�Glen�Carthew�and�Tim�Richards�are�full�time� employees�of�St�Barbara�Ltd�and�have�sufficient�experience�relevant�to�the�style�of�mineralisation�and�type�of�deposit�under�consideration�and� to�the�activity�which�they�are�undertaking�to�qualify�as�a�Competent�Person�as�defined�in�the�2012�Edition�of�the�“Australasian�Code�for�Reporting� of�Exploration�Results,�Mineral�Resources�and�Ore�Reserves”.�
Glen�Carthew�and�Tim�Richards�consent�to�the�inclusion�in�the�statement�of�the�matters�based�on�their�information�in�the�form�and�context�in� which�it�appears.�
Page�79�
ST�BARBARA�LIMITED�2017�
Ore�Reserves�and�Mineral�Resources�Statement�as�at�30�June�2017�
Mineral�Resources�Statement�as�at�30�June�2017�
| Project | Measured | Measured | Measured | Indicated | Indicated | Indicated | Inferred | Inferred | Total | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
Tonnes ('000) |
Gold (g/t) |
Ounces ('000) |
|
| Gwalia,(WA) | 5,045 | 7.8 | 1,265 | 14,877 | 6.4 | 3,042 | 3,831 | 6.3 | 780 | 23,753 | 6.7 | 5,087 |
| TowerHill,(WA) | � | � | � | 4,604 | 3.9 | 574 | 489 | 3.3 | 51 | 5,093 | 3.8 | 625 |
| SimberiOxide,(PNG) | 4,056 | 1.3 | 164 | 12,313 | 1.1 | 427 | 4,919 | 1.0 | 152 | 21,288 | 1.1 | 744 |
| SimberiSulphide,(PNG) | 836 | 1.7 | 45 | 41,005 | 1.9 | 2,471 | 12,676 | 1.6 | 663 | 54,517 | 1.8 | 3,179 |
| TotalAllProjects | 9,937 | 4.6 | 1,474 | 72,799 | 2.8 | 6,514 | 21,915 | 2.3 | 1,646 | 104,651 | 2.9 | 9,635 |
Notes�
-
Mineral�Resources�are�reported�inclusive�of�Ore�Reserves.�
-
Cut�off�Grades�Leonora:�Gwalia�Deeps�(2.5�g/t�Au),�Tower�Hill�(2.5�g/t�Au),�Simberi�Oxide�(0.4�g/t�Au),�Simberi�Sulphide�(0.6�g/t�Au).�
-
Simberi�Mineral�Resources�are�reported�constrained�by�a�US$1,800�per�ounce�pit�shell.�
-
Data�is�rounded�to�thousands�of�tonnes�and�thousands�of�ounces.�Discrepancies�in�totals�may�occur�due�to�rounding.�
-
Details�relating�to�each�of�the�estimates�are�contained�in�the�2017�Annual�Mineral�Resource�and�Ore�Reserve�Report�at� www.stbarbara.com.au/exploration/Ore�Reserves�mineral�resources/
JORC�Code�Compliance�Statement�
The�information�in�this�report�that�relates�to�Mineral�Resources�is�based�on�information�compiled�by�Ms�Jane�Bateman�and�Mr�Robert�Love�who� are�Fellows�of�the�Australasian�Institute�of�Mining�and�Metallurgy.�Jane�Bateman�and�Robert�Love�are�full�time�employees�of�St�Barbara�Ltd�and� have�sufficient�experience�relevant�to�the�style�of�mineralisation�and�type�of�deposit�under�consideration�and�to�the�activity�which�they�are� undertaking�to�qualify�as�Competent�Persons�as�defined�in�the�2012�Edition�of�the�“Australasian�Code�for�Reporting�of�Exploration�Results,� Mineral�Resources�and�Ore�Reserves”.�
Jane�Bateman�and�Robert�Love�consent�to�the�inclusion�in�the�statement�of�the�matters�based�on�their�information�in�the�form�and�context�in� which�it�appears.�
Page�80�
ST�BARBARA�LIMITED�2017�
Shareholder�Information�
Twenty�Largest�Shareholders�
Ordinary�fully�paid�shares�as�at�30�September�2017�
| %ofIssued | |||
|---|---|---|---|
| Rank | Name | Shares | Capital |
| 1. | HSBCCUSTODYNOMINEES(AUSTRALIA)LIMITED | 236,063,045 | 45.80 |
| 2. | JPMORGANNOMINEESAUSTRALIALIMITED | 86,157,657 | 16.72 |
| 3. | CITICORPNOMINEESPTYLIMITED | 58,449,854 | 11.34 |
| 4. | NATIONALNOMINEESLIMITED | 18,628,165 | 3.61 |
| 5. | BNPPARIBASNOMINEESPTYLTD | 7,604,000 | 1.48 |
| 6. | BNPPARIBASNOMINEESPTYLTD | 7,412,841 | 1.44 |
| 7. | HSBCCUSTODYNOMINEES(AUSTRALIA)LIMITED | 4,243,231 | 0.82 |
| 8. | BNPPARIBASNOMSPTYLTD | 4,154,185 | 0.81 |
| 9. | NATIONALNOMINEESLIMITED | 3,500,000 | 0.68 |
| 10. | AMPLIFELIMITED | 2,965,359 | 0.58 |
| 11. | SANDHURSTTRUSTEESLTD | 2,677,087 | 0.52 |
| 12. | SBNNOMINEESPTYLIMITED<10004ACCOUNT> | 2,621,000 | 0.51 |
| 13. | NATIONALNOMINEESLIMITED | 2,546,675 | 0.49 |
| 14. | BRISPOTNOMINEESPTYLTD | 2,473,731 | 0.48 |
| 15. | CITICORPNOMINEESPTYLIMITED | 1,497,848 | 0.29 |
| 16. | NORTHCLIFFEHOLDINGSPTYLTD | 1,450,000 | 0.28 |
| 17. | UBSNOMINEESPTYLTD | 1,314,841 | 0.26 |
| 18. | CPUSHAREPLANSPTYLTD | 1,106,250 | 0.21 |
| 19. | CSTHIRDNOMINEESPTYLIMITED | 942,864 | 0.18 |
| 20. | MERRILLLYNCH(AUSTRALIA)NOMINEESPTYLIMITED | 937,500 | 0.18 |
| Totaltop20holdersofordinaryfullypaidshares | 446,746,133 | 86.67 | |
| Totalremainingholders | 68,681,059 | 13.33 | |
| Total | 515,427,192 | 100.00 |
Page�81�
ST�BARBARA�LIMITED�2017�
Shareholder�Information�
Distribution�of�Shareholdings�
Ordinary�fully�paid�shares�as�at�30�September�2017�
| %ofIssued | |||
|---|---|---|---|
| Range | TotalHolders | Shares | Capital |
| 1–1,000 | 4,108 | 1,725,931 | 0.33 |
| 1,001–5,000 | 3,692 | 9,158,753 | 1.78 |
| 5,001–10,000 | 931 | 6,981,616 | 1.35 |
| 10,001–100,000 | 966 | 27,355,582 | 5.31 |
| 100,001andover | 117 | 470,205,310 | 91.23 |
| Total | 9,814 | 515,427,192 | 100.00 |
Unmarketable�Parcels�
Ordinary�fully�paid�shares�as�at�30�September�2017
| Minimum | |||
|---|---|---|---|
| TotalHolders | Shares | ParcelSize | |
| Minimum$500.00parcelat$2.63perunit | 1,196 | 73,936 | 191 |
Substantial�Shareholders��
Ordinary�fully�paid�shares�as�at�30�September�2017�
| Name | Shares | %ofIssued |
|---|---|---|
| Capital | ||
| VanEckAssociatesCorporation | 48,006,771 | 9.7% |
| M&GInvestmentManagementLtd | 36,543,018 | 7.3% |
| NorgesBank | 30,336,043 | 5.9% |
| VinvaInvestmentManagement | 25,862,522 | 5.2% |
Page�82�
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ABN�36�009�165�066�
BOARD�OF�DIRECTORS��
T�C�Netscher�� Non�Executive�Chairman� R�S�Vassie�� Managing�Director�&�CEO� K�J�Gleeson�� Non�Executive�Director� D�E�J�Moroney� Non�Executive�Director�
COMPANY�SECRETARY�� R�R�Cole��
REGISTERED�OFFICE�� Level�10,�432�St�Kilda�Road�� Melbourne�Victoria�3004�Australia�� Telephone:�+61�3�8660�1900� Facsimile:�+61�3�8660�1999�� Email:�[email protected]�� www.stbarbara.com.au��
SHARE�REGISTRY�
Computershare�Investment�Services�Pty�Ltd� GPO�Box�2975�Melbourne�Victoria�3001�Australia�� Telephone�(within�Australia):�1300�653�935�� Telephone�(international):�+61�3�9415�4356� Facsimile:�+61�3�9473�2500� www.investorcentre.com/au��
AUDITOR�� PricewaterhouseCoopers� 2�Riverside�Quay� Southbank�Victoria�3006�Australia�
STOCK�EXCHANGE�LISTING�� Shares�in�St�Barbara�Limited�are�quoted�on�the�� Australian�Securities�Exchange�(ASX),�Ticker�Symbol:�SBM�
==> picture [143 x 44] intentionally omitted <==
ABN 36 009 165 066
Notice of 2017 Annual General Meeting of St Barbara Limited
Notice is given that the 2017 Annual General Meeting of St Barbara Limited will be held:
Date: 29 November 2017 Time: 11:00 am (Melbourne time) Venue: Royce Conference Room Royce Hotel 379 St Kilda Road Melbourne Victoria 3004
Items of Business
1. Annual Reports
To receive and consider the Annual Financial Report of the Company and the reports of the Directors and Auditor for the year ended 30 June 2017.
2. Resolution 1: Adoption of Remuneration Report
To consider and, if thought fit, pass the following as an ordinary resolution:
“That the Remuneration Report for the year ended 30 June 2017 as set out on pages 15 to 34 (inclusive) of the Annual Report be adopted.”
Note – the vote on this resolution is advisory only and does not bind the Directors or the Company.
3. Resolution 2: Re‐election of Director – Mr Tim Netscher
To consider and, if thought fit, pass the following as an ordinary resolution:
“That Mr Tim Netscher, being a Director of the Company who retires pursuant to article 3.6 of the Company’s Constitution, and being eligible, be re‐elected as a Director of the Company.”
4. Resolution 3: Approval of issue of performance rights to Mr Robert (Bob) Vassie, Managing Director and Chief Executive Officer
To consider and, if thought fit, pass the following as an ordinary resolution:
“That, for the purposes of ASX Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, approval be given to issue to Mr Bob Vassie 218,748 performance rights to acquire fully paid ordinary shares in the capital of the Company, on the terms and conditions set out and to provide Mr Vassie the benefits described, in the Explanatory Memorandum accompanying the Notice convening this Annual General Meeting, in part consideration of his employment as Managing Director and Chief Executive Officer of the Company in respect of the current 2018 financial year."
By Order of the Board
Rowan Cole Company Secretary 20 October 2017
Notice of 2017 Annual General Meeting
Eligibility to attend and vote at the Meeting
The Board has determined that the Shareholders entitled to attend and vote at the Meeting are those persons who are the registered holders of Shares on 27 November 2017 at 7:00 pm (Melbourne time).
Voting in Person or by Proxy
If you are a shareholder entitled to attend the meeting and vote, you have the right to appoint a proxy to attend and vote on your behalf. A proxy need not be a Shareholder and can be either an individual or a body corporate.
If you appoint a body corporate as a proxy, that body corporate will need to ensure that it:
-
appoints an individual as its corporate representative to exercise its powers at the meeting, in accordance with section 250D of the Corporations Act; and
-
provides satisfactory evidence of the appointment of its corporate representative prior to commencement of the meeting.
If such evidence is not received before the meeting, then the body corporate (through its representative) will not be permitted to act as a proxy.
If you are entitled to cast 2 or more votes, you may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified, each proxy will exercise half of your votes.
A Proxy Form accompanies this Notice of Annual General Meeting.
For an appointment of a proxy to be effective for the Meeting, the proxy's appointment, and any authority under which the Proxy Form is signed or otherwise authenticated, must be received by St Barbara’s share registry by no later than 11:00 am on 27 November 2017 (Melbourne time) . Proxy Forms received after this time will not be effective for the scheduled commencement of the Annual General Meeting.
Proxy appointments and relevant authorities may be delivered to St Barbara's share registrar by one of the following methods:
Mail to: Computershare Investor Services Pty Limited, GPO Box 242, Melbourne, Victoria, 3001
- Fax to: 1800 783 447 (within Australia), +61 3 9473 2555 (outside Australia)
Online: login at www.investorvote.com.au using the Control Number found on the front of your accompanying proxy form and follow the instructions. Alternatively, with your mobile device scan the QR code located on the front of the proxy form and follow the instructions. You will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website.
For details on how to complete and lodge the Proxy Form, please refer to the instructions on the Proxy Form.
For intermediary online subscribers only (custodians) please visit www.intermediaryonline.com.
Questions
If you have any questions about any matter contained in this Meeting Documentation, please contact Mr Rowan Cole, Company Secretary, at [email protected] or on +61 3 8660 1900.
Webcast
A live audio webcast of the Annual General Meeting will be available on St Barbara’s website at www.stbarbara.com.au/investors/webcast/. The audio webcast is ‘listen only’ and does not enable questions. The audio webcast will also be available on the website after the conclusion of the meeting.
Voting recommendations of the Board
If you wish to appoint a proxy on the enclosed Proxy Form to vote on your behalf in the manner consistent with the voting recommendations of the Board, mark the “ FOR ” box for Resolutions 1 to 3 as set out in the example below. The background and reasons for these recommendations are set out in the enclosed Explanatory Memorandum.
The Board recommends that Shareholders vote FOR Resolutions 1 to 3
page 2
Voting Exclusion Statement
Resolution 1: Adoption of the Remuneration Report
The Remuneration Report identifies the Company's Key Management Personnel for the financial year to 30 June 2017.
Under the Corporations Act, Key Management Personnel (including Directors) of the Company, details of whose remuneration are included in the Remuneration Report, and their closely related parties (as defined in the Corporations Act), (each a Restricted Person ), are prohibited from voting on Resolution 1 in any capacity (e.g.: as a Shareholder, proxy, attorney or corporate representative).
However, the prohibition does not apply if:
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the Restricted Person is appointed as a proxy for a Shareholder entitled to vote and the proxy appointment specifies the way the Restricted Person is to vote on the resolution; or
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the chair of the Meeting ( Chairman ) has been appointed as a proxy for a Shareholder entitled to vote and the proxy appointment:
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does not specify the way the Chairman is to vote on the resolution; and
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expressly authorises the Chairman to exercise the proxy (notwithstanding that Resolution 1 is connected directly or indirectly with the remuneration of Key Management Personnel).
The Chairman intends to vote undirected proxies (where the Chairman has been appropriately authorised) in favour of Resolution 1.
Other Directors and other Key Management Personnel of the Company and their closely related parties must not cast any votes in respect of Resolution 1 that arise from any undirected proxy that they hold.
Resolution 3: Approval of issue of performance rights to Mr Bob Vassie
In accordance with the ASX Listing Rules (and having regard to the voting restrictions in section 200E(2A) of the Corporations Act as it applies to Resolution 3), the Company will disregard any votes cast on Resolution 3 by Mr Vassie and his associates, other than where the vote:
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is cast by a person as proxy for a Shareholder (not being Mr Vassie or any associate) who is entitled to vote, in accordance with the directions on the Proxy Form; or
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is cast by the Chairman as proxy for a Shareholder (not being Mr Vassie or any associate) who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.
Further, under the Corporations Act, the Company's Key Management Personnel and their closely related parties are prohibited from voting on resolutions connected directly or indirectly with the remuneration of Key Management Personnel (such as Resolution 3) as a proxy for a Shareholder entitled to vote where the proxy appointment does not specify the way the proxy is to vote on the resolution.
However, this Corporations Act prohibition does not apply to the Chairman if the Chairman has been appointed as the proxy and the proxy appointment expressly authorises the Chairman to exercise an undirected proxy. The Chairman intends to vote undirected proxies (where the Chairman has been appropriately authorised) in favour of Resolution 3.
Definitions
Annual General Meeting or Meeting means the annual general meeting of St Barbara to be held on Wednesday 29 November 2017 at 11:00 am (Melbourne time) in the Royce Hotel, 379 St Kilda Road, Melbourne, Victoria to consider and, if thought fit, pass the resolutions set out in the Notice of Annual General Meeting
Annual Report means the 2017 annual report of St Barbara
ASIC means the Australian Securities and Investments Commission
ASX means ASX Limited
ASX Listing Rules means the official Listing Rules of ASX Limited
Board means the board of Directors of St Barbara
Chairman means the chairman of the Annual General Meeting of St Barbara
Change of Control means that one or more persons acting in concert have acquired or are likely to imminently acquire “control” of the Company as defined in section 50AA of the Corporations Act
Corporations Act means the Corporations Act 2001 (Cth)
Director means a director of St Barbara
Explanatory Memorandum means the explanatory memorandum accompanying the Notice of Annual General Meeting contained in this Meeting Documentation
FY17 Performance Rights means the LTI rights granted in respect of the 2017 financial year
FY18 Performance Rights means the LTI rights granted in respect of the 2018 financial year (which are subject to the approval of Resolution 3, for the number of performance rights to be issued to Mr Bob Vassie)
Key Management Personnel has the meaning given in the Corporations Act
KPI means key performance indicator
LTI means long term incentive
Meeting Documentation means this document, comprising the Notice of Annual General Meeting, Explanatory Memorandum and the Proxy Form
Non‐Executive Director means a Director who is not employed by the Company in an executive or management capacity
Notice of Annual General Meeting means the notice of meeting which is enclosed in the Meeting Documentation
Proxy Form means the proxy form for the Annual General Meeting contained in the Meeting Documentation
RP means the rights plan of the Company
Share means a fully paid ordinary share in the capital of St Barbara
Shareholder means a holder of Shares
St Barbara or the Company means St Barbara Limited ABN 36 009 165 066
STI means short term incentive
VWAP means volume weighted average price
Certain capitalised terms used in this document are defined below.
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Explanatory Notes to Shareholders
These Explanatory Notes have been prepared to assist Shareholders to understand the business to be put to Shareholders at the forthcoming Annual General Meeting on 29 November 2017.
Ordinary Business
1. Annual Reports
The Corporations Act requires:
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the reports of the Directors and Auditor; and
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the Annual Financial Report, including the financial statements of the Company for the year ended 30 June 2017,
to be laid before the Annual General Meeting.
The 2017 Annual Report is available on the St Barbara website at www.stbarbara.com.au.
The Corporations Act does not require a vote of Shareholders on the reports or statements. However, Shareholders will be able to ask questions at the meeting in relation to the reports.
Also, a reasonable opportunity will be given to Shareholders to ask the Company’s Auditor for the year ended 30 June 2017, Mr John O’Donoghue, Partner, PricewaterhouseCoopers, questions relevant to the conduct of the audit, the preparation and content of the Auditor’s report, the accounting policies adopted by the Company in relation to the preparation of the financial statements and the independence of the Auditor in relation to the conduct of the audit.
2. Resolution 1: Adoption of Remuneration Report
The Remuneration Report sets out details on the remuneration paid to Non‐Executive Directors, the Managing Director and Chief Executive Officer and Chief Financial Officer. The Remuneration Report is set out on pages 15 to 34 (inclusive) of the 2017 Annual Report, and is available on the St Barbara website at www.stbarbara.com.au.
The Remuneration Report is required to be considered for adoption in accordance with section 250R of the Corporations Act.
Under section 250R(3) of the Corporations Act, the vote on this resolution is advisory only and does not bind the Directors or the Company. Shareholders will be able to ask questions about, and make comments on, the Remuneration Report at the AGM.
Board recommendation
The Board unanimously recommends that Shareholders vote in favour of this resolution.
3. Resolution 2: Re‐election of Director – Mr Tim Netscher
Mr Tim Netscher BSc(Eng) (Chemical), BCom, MBA, FIChE, CEng, MAICD
A Director of the Company since 17 February 2014, Mr Netscher is Chairman of the Board, Chair of the Health, Safety, Environment and Community Committee and a member of the Remuneration Committee and Audit & Risk Committee.
Mr Netscher is currently the Non‐Executive Chairman of Gold Road Resources Limited and a Non‐Executive Director of Western Areas Limited.
Mr Netscher is an experienced international mining executive with extensive operational, project development, and transactional experience and expertise in senior executive management roles. Mr Netscher’s experience covers a wide range of resources including nickel, coal, iron ore, uranium and gold and regions including Africa, Asia and Australia.
Mr Netscher was re‐elected at the Company's Annual General Meeting held on 27 November 2015.
In accordance with the Company's Constitution, Mr Netscher will retire at the Annual General Meeting and, being eligible, will seek re‐election.
Board recommendation
The Board, with Mr Netscher abstaining, unanimously recommends that Shareholders vote in favour of this resolution.
4. Resolution 3: Approval of issue of performance rights to Mr Bob Vassie, Managing Director and Chief Executive Officer
Introduction
The Board has resolved, subject to Shareholder approval, to issue Mr Vassie, Managing Director and Chief Executive Officer, performance rights pursuant to the Rights Plan ( RP ) to acquire Shares in the capital of the Company, in the quantum and on the terms which are set out below. These performance rights represent the long term incentive (LTI) component of Mr Vassie's total remuneration in respect of the 2018 financial year.
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The number of performance rights to be issued in respect of the 2018 financial year ( FY18 Performance Rights ) is 218,748.
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The number of FY18 Performance Rights was determined on the basis of the 10 day VWAP of Shares up to and including 30 June 2017, which was $2.89 per share.
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The issue of the FY18 Performance Rights is subject to the terms of the RP approved by the Board on 22 September 2015, the material details of which are summarised in this document.
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No cash consideration is payable for the issue, or on vesting or exercise of the FY18 Performance Rights.
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The FY18 Performance Rights will vest subject to prescribed service and performance conditions being met. The number of FY18 Performance Rights that vest will be subject to the Company’s relative performance for each of the performance conditions.
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The service condition requires continuous employment for a three year period commencing on 1 July 2017. The Board has discretion in circumstances of death, disability or bona fide redundancy to vary the service condition and reduce the number of performance rights proportionately for a period of service of less than three years.
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The performance conditions comprise the following:
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a. a condition based on Relative Total Shareholder Return; and
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b. a condition based on the Return On Capital Employed by the Company,
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each of which is calculated over the three year period commencing 1 July 2017 and ending on 30 June 2020 and is described in more detail in the attached Schedule. This vesting period may be extended by up to two years if retesting becomes necessary. Retesting is at Board discretion, and rights would only vest over the longer period if there was positive total shareholder return, and minimum threshold performance was achieved for Relative Total Shareholder Return and Return On Capital Employed, over the extended vesting period.
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Subject to the satisfaction of the service and performance conditions and the rules of the RP, Mr Vassie will receive one Share for each FY18 Performance Right that vests. Any FY18 Performance Rights which do not vest will lapse.
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The FY18 Performance Rights will not be listed on the ASX and will not be transferable, except as permitted under the RP.
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In the event of a Change of Control of the Company, the RP provides that the Board may, in its absolute discretion, determine that all or a specified number of FY18 Performance Rights vest, having regard to whether pro‐rata performance is consistent with the performance conditions applicable to those FY18 Performance Rights over the period from the date of grant to the date of the Change of Control.
Shareholder approval
Shareholder approval for the issue of the FY18 Performance Rights to Mr Vassie is sought for all purposes under the Corporations Act and the ASX Listing Rules, including in particular, ASX Listing Rule 10.14, and sections 200B and 200E of the Corporations Act.
Under ASX Listing Rule 10.14, the acquisition of securities by a director under an employee incentive scheme generally requires Shareholder approval. Shareholder approval is therefore sought for the acquisition by Mr Vassie of the FY18 Performance Rights and Shares should the FY18 Performance Rights subsequently vest. If approval is given under ASX Listing Rule 10.14, the grant of
the rights will not use up the Company's capacity to issue equity under ASX Listing Rule 7.1.
Under section 200B of the Corporations Act, a company may only give a person a benefit in connection with their ceasing to hold a managerial or executive office in the company or a related body corporate if it is approved by Shareholders in accordance with section 200E or an exemption applies. Section 200B of the Corporations Act applies to managerial or executive officers of the Company or any of its subsidiaries, which includes Mr Vassie. The term ‘benefit’ has a wide operation and, in effect, includes the automatic or accelerated vesting of the FY18 Performance Rights under the rules of the RP.
It is proposed, therefore, that this resolution will also approve, under section 200E of the Corporations Act, any ‘termination benefit’ that may be provided to Mr Vassie under the RP in relation to the FY18 Performance Rights to be granted to him, in addition to any other termination benefits that may be provided to Mr Vassie under the Corporations Act. The termination benefit that may be given under the RP is the early vesting of the FY18 Performance Rights (and the receipt of Shares upon exercise of the FY18 Performance Rights) if Mr Vassie ceases employment with the Company due to death, disability, bona fide redundancy or other reason with the approval of the Board.
The value of such benefits cannot presently be ascertained but matters, events and circumstances that will, or are likely to, affect the calculation of that value include:
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the number of performance rights held by Mr Vassie prior to cessation of employment;
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the number of performance rights that vest (which could be all of the performance rights held by Mr Vassie). The Board's decision as to the number of performance rights that vest will depend on, among other things, the circumstances of Mr Vassie's cessation of employment (for example, whether due to death, disability, redundancy or other reasons approved by the Board), the Board's assessment of Mr Vassie's performance in the period up to cessation of employment, the degree to which the performance conditions have been met at the relevant time, and the duration of Mr Vassie's employment; and
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the market price of Shares on ASX on the last ten ASX trading days up to and including the date of calculation.
The number of performance rights that could vest upon Mr Vassie ceasing employment, where the Board determines to permit performance rights to vest, will not exceed the maximum number of performance rights held by Mr Vassie.
Disclosures made for the purposes of ASX Listing Rule 10.15:
In accordance with ASX Listing Rule 10.15, the Company notes that:
- the maximum number of securities that can be awarded to Mr Vassie if this resolution is approved is 218,748 FY18 Performance Rights, entitling Mr Vassie to a maximum of 218,748 Shares if all FY18 Performance Rights subsequently vest;
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the price payable on the issue, vesting or exercise of each FY18 Performance Rights is nil;
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Mr Vassie was granted 196,708 performance rights for nil cash consideration on 12 December 2016 under the Rights Plan ( RP ) approved by the Board on 22 September 2015, the material details of which were summarised in the Notice of 2016 Annual General Meeting;
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Mr Vassie is the only Director entitled to participate in the RP because he is the only Executive Director and the Company has not declared any Non‐Executive Director as being eligible to participate in the RP;
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there have not been any grants made to any Director or associate of a Director under the RP since Shareholder approval was last obtained at the Company’s Annual General Meeting held on 30 November 2016, aside from the issue of 196,708 performance rights (for nil cash consideration and no amount payable on vesting) to Mr Vassie on 12 December 2016, in accordance with Shareholder approval obtained at the Company’s Annual General Meeting held on 30 November 2016;
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there is no loan proposed in relation to the proposed award of the FY18 Performance Rights to Mr Vassie; and
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Mr Vassie's FY18 Performance Rights are intended to be issued by 31 December 2017 and in any event will not be issued later than 12 months after the date of the Meeting.
Board recommendation
The Board, with Mr Vassie abstaining, unanimously recommends the approval of the issue of the performance rights and of the related termination benefits to Mr Vassie and, accordingly, that Shareholders vote in favour of this resolution.
Schedule:
Performance rights – Further details
Performance rights to be granted to Key Management Personnel in respect of the 2018 financial year ( FY18 Performance Rights ) will be offered pursuant to the terms of the Rights Plan ( RP ) approved by the Board on 22 September 2015 and the performance conditions set out below.
1. Performance rights pricing
The issue price of the performance rights is based on the 10 day volume weighted average price ( VWAP ) on the ASX of the Company’s share price up to, and including, the last business day of the financial period immediately preceding the period that the performance rights relate to.
FY17 Performance Rights are priced at $2.89 per right, based on the 10 day VWAP up to and including 30 June 2017.
2. Performance conditions for performance rights
The performance conditions for FY18 Performance Rights will be measured over a three year vesting period commencing 1 July 2017 and ending on 30 June 2020. This vesting period may be extended by up to two years if retesting becomes necessary. Vesting conditions include satisfying conditions relating to:
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Relative Total Shareholder Return (67% weighting); and
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Return on Capital Employed (33% weighting).
3. Change of Control
In the event of a Change of Control of the Company, the RP provides that the Board may, in its absolute discretion, determine that all or a specified number of FY18 Performance Rights vest, having regard to whether pro‐ rata performance is consistent with the performance conditions applicable to those FY18 Performance Rights over the period from the date of grant to the date of the Change of Control.
4. Percentage of relevant total fixed remuneration offered as LTIs for the 2018 financial year
| LTIs for the 2018 financial year | |
|---|---|
| Managing Director and Chief | 75% |
| Executive Officer | |
| Executive General Manager | 60% |
The Board has the discretion to vary the relevant percentage each year, having regard to external advice and / or relevant market benchmarks.
5. An example of how performance rights are calculated for the 2018 financial year (assuming the maximum award level) is set out below:
| el) is set out below: | |
|---|---|
| Executive Level 5 Total Fixed | $400,000 |
| Remuneration (TFR) | (example only) |
| LTI award value | $240,000 |
| 60% of TFR | (i.e. 60% of |
| TFR) | |
| Performance rights issue price | $2.89 |
| (10 day VWAP) | |
| Performance rights to be granted | 83,045 rights |
| ($240,000 ÷ $2.89) |
6. Relative TSR
The Relative Total Shareholder Return ( Relative TSR or RTSR ) is measured against a defined peer group of companies which the Board considers compete with the Company for the same investment capital, both in Australia and overseas, and which by the nature of their business are influenced by commodity prices and other external factors similar to those that impact on the TSR performance of the Company. The comparator group of companies for FY18 Performance Rights is set out in the table below. At the discretion of the Board, the composition of the comparator group may change from time to time.
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Comparator group of companies for FY18 Performance Rights
| Alacer Gold Corp. (ASX: AQG) Beadell Resources Limited (ASX: BDR) Evolution Mining Limited (ASX: EVN) Focus Minerals Ltd (ASX: FML) Intrepid Mines Limited (ASX: IAU) Kingsgate Consolidated Limited (ASX: KCN) Medusa Mining Limited (ASX: MML) Northern Star Resources Ltd (ASX: NST) OceanaGold Corporation (ASX: OGC) |
Perseus Mining Limited (ASX: PRU) Ramelius Resources Limited (ASX: RMS) Regis Resources Limited (ASX: RRL) Resolute Mining Limited (ASX: RSG) Saracen Mineral Holdings Limited (ASX: SAR) Silver Lake Resources Limited (ASX: SLR) Tanami Gold NL (ASX: TAM) Troy Resources Limited (ASX: TRY) Oz Minerals Limited (ASX: OZL) |
|---|---|
TSR measures the growth for a financial year in the price company was listed and the average TSR of the remaining of shares plus cash distributions notionally reinvested in comparator companies. shares. Company and comparator TSR performances are Except when otherwise determined in the discretion of the measured using the 10 day VWAP calculation up to, and Board, the proportion of a grant that is subject to a TSR including, the last business day of the financial period vesting condition will not vest unless the Company’s TSR immediately preceding the period that the performance for the vesting period is greater than nil. rights relate to, and in determining the closing TSR performances at the end of the three year period and, if The proportion of the FY18 Performance Rights that vest retesting applies, at the end of the fourth and fifth year. will be influenced by the Company’s TSR relative to the Where a comparator company ceases to be listed on the comparator group over the three year vesting period ASX during the vesting period, the corresponding TSR is commencing 1 July 2017 and ending on 30 June 2020 as adjusted, taking into account the period the ceasing outlined below:
| Relative TSR Performance | % Contribution to the Number of Performance Rights to Vest |
|---|---|
| Below 50thpercentile | 0% |
| 50thpercentile | 50% |
| Between 50th& 75thpercentiles | Pro‐rata from 50% to 100% |
| 75thpercentile and above | 100% |
7. Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) measures the efficiency with which management uses capital in seeking to increase shareholder value. The proportion of the FY18 Performance Rights that vest will be influenced by the ROCE achieved by the Company over the three year vesting period commencing 1 July 2017 and ending on 30 June 2020 as outlined below:
| Return on Capital Employed (ROCE) | % Contribution to the Number of Performance Rights to Vest |
|---|---|
| Less than or equal to the average annual weighted average cost of capital (WACC) over the three year period commencing on 1 July 2017 |
0% |
| WACC (calculated as above) + 3% | 50% |
| WACC (calculated as above) + between 3% and 7% | Pro‐rata from 50% to 100% |
| WACC (calculated as above) + 7% | 100% |
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8. Example of calculation of the number of performance rights to vest
Assuming the following measures over the three year vesting period commencing on 1 July 2017 and ending on 30 June 2020:
Relative TSR: 70% ROCE WACC + 4%
then the following proportion of performance rights will vest:
(a) Relative TSR
Weighting: 67% Actual score: 70[th] percentile Calculation: 50% (for achieving the 50[th] percentile) + ((70% ‐ 50%) (75% ‐ 50%)) x (100% ‐ 50%) = 90%
(b) Return on Capital Employed (ROCE)
Weighting: 33% Actual ROCE: WACC + 4% Calculation: 50% (for achieving the 50[th] percentile) + ((4% ‐ 3%) (7% ‐ 3%)) x (100% ‐ 50%) = 62.5%
- (c) Combined score
(90% x 67%) + (62.5% x 33%) = 80.9%
Using the above example of an executive being issued with 83,045 performance rights, based on the above 80.9% combined score, 67,183 (= 80.9% x 83,045) performance rights will vest.
9. Retesting
The 2017 Remuneration Report notes that the gold industry is much more volatile than the economy in general and tends to be cyclical in nature. Consequently, at its discretion the Board may choose to retest the relevant performance rights for the same performance conditions (i.e. RTSR above 50th percentile and ROCE above WACC +3%) one year after the original vesting period (and potentially again one year later).
In the event that none of the rights vest at the end of the three year vesting period, the vesting period will be extended by one year and a second testing for vesting will occur following the end of the extended period using the same vesting scales as at paragraphs 6 and 7 above. If none of the rights vest at the second test, the vesting period will be extended by a further year and a third test for vesting will occur following the end of the extended period using the same vesting scales as at paragraphs 6 and 7 above.
Performance rights would only vest over an extended vesting period (of four or five years), with Board discretion, if there was positive total shareholder return, and minimum threshold performance for RSTR and ROCE, over the extended vesting period.
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Lodge your vote:
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Online: www.investorvote.com.au
By Mail:
Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia
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MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030
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Proxy Form
Vote and view the annual report online
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Go to www.investorvote.com.au or scan the QR Code with your mobile device.
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• Follow the instructions on the secure website to vote.
Your access information that you will need to vote:
Control Number: 999999 SRN/HIN: I9999999999 PIN: 99999 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.
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- For your vote to be effective it must be received by 11:00am (Melbourne time) on Monday, 27 November 2017.
How to Vote on Items of Business
All your securities will be voted in accordance with your directions.
Appointment of Proxy
Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote or abstain as they choose (to the extent permitted by law). If you mark more than one box on an item your vote will be invalid on that item.
Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.
Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.
Signing Instructions for Proxy Forms
Individual: Where the holding is in one name, the securityholder must sign.
Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.
Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.
Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.
Attending the Meeting
Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the help tab, "Printable Forms".
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GO ONLINE TO VOTE, or turn over to complete the form
Samples/000001/000001/i12
MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ‘ X ’) should advise your broker of any changes. I 9999999999 I ND
Proxy Form
Appoint a Proxy to Vote on Your Behalf
Please mark to indicate your directions
XX
I/We being a member/s of St Barbara Limited hereby appoint
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the Chairman PLEASE NOTE: Leave this box blank if OR you have selected the Chairman of the of the Meeting Meeting. Do not insert your own name(s).
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the Meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the Annual General Meeting of St Barbara Limited to be held in the Royce Conference Room, Royce Hotel, 379 St Kilda Road, Melbourne, Victoria on Wednesday, 29 November 2017 at 11.00am (Melbourne time) and at any adjournment or postponement of that Meeting.
Important Note:
Chairman authorised to exercise undirected proxies on remuneration related resolutions : Where I/we have appointed the Chairman of the Meeting as my/our proxy (or the Chairman becomes my/our proxy by default), I/we expressly authorise the Chairman to exercise my/our proxy on Resolutions 1 and 3 (except where I/we have indicated a different voting intention below) even though Resolutions 1 and 3 are connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman. If the Chairman of the Meeting is (or becomes) your proxy you can direct the Chairman to vote for or against or abstain from voting on Resolutions 1 and 3 by marking the appropriate box in step 2 below.
Please Note: To fully inform shareholders in exercising their right to vote, please note that the Chairman of the Meeting intends to vote undirected proxies in favour of each resolution.
Items of Business
PLEASE NOTE: If you mark the Abstain box for a resolution, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
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For Against Abstain
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| For | Again | st Abstain |
|||
|---|---|---|---|---|---|
| Resolution | 1 | Adoption of Remuneration Report | |||
| Resolution | 2 | Re-election of Director – Mr Tim Netscher | |||
| Resolution | 3 | Approval of issue of performance rights to Mr Robert (Bob) Vassie, Managing Director and Chief | |||
| Executive Officer |
SIGN
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Signature of Securityholder(s) This section must be completed.
Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime / /
Name Telephone Date
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