ST BARBARA LIMITED — Interim / Quarterly Report 2003

Jan 27, 2003

ST BARBARA MINES LIMITED

ACN 009 165 066

ASX SHAREHOLDERS REPORT

Enquiries regarding this report may be directed to: Stephen W. Miller Executive Chairman Telephone (08) 9476 5555 Overseas +61 8 9476 5555 $or$ Colin G. Jackson Investor Relations Telephone 0417 929 107

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

December 2002 Quarterly Report

Attached is the Company's Quarterly Report for the period ending 31 December 2002.

Stephen W. Miller Executive Chairman

28 January 2003

ST BARBARA MINES LIMITED

ACN 009 165 066

ACTIVITIES REPORT

Three months to 31 December 2002

Enquiries regarding this report may be directed to: Stephen W. Miller Executive Chairman Telephone $(08)$ 9476 5555 Overseas +61 8 9476 5555 or Colin G. Jackson Investor Relations

Telephone 0417 929 107 St Barbara Mines Limited Level 2, 16 Ord Street

West Perth Western Australia 6005 Telephone $(08)$ 9476 5555 +61 8 9476 5555 Overseas

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

St Barbara is a dedicated gold company listed on both the Australian Stock Exchange and the AIM (London Stock Exchange) - ticker symbol SBM $-$ with nearly 12,000 shareholders.

OVERVIEW

MEEKATHARRA OPERATIONS

• Gold production 20,602 ounces sourced from Gibraltar underground, remaining Caledonian stockpiles and low grade stockpiles
• Paddys Flat tenements development plans refined, access to ground pending

FINANCE

• Meekatharra cash operating surplus $1.48 million
• Hedge position reduced to 10,254 ounces (5,000 ounces at the date of this report)

EXPLORATION

• Drill programmes advance Mulla Mulla and Bluebush-Mingah
• New targets Kanji and Miniritchie identified

PAULSENS PROJECT

• Feasibility study completed
• New Ashburton joint venture farm-in

CORPORATE

Merger proposal with Geomaque Explorations (Toronto) and Midas Gold plc (London) announced post period end

ACN 009 165 066

CHAIRMAN'S REVIEW

The quarter has been active on the corporate. exploration and mine planning front.

Meekatharra operations are in transition with production for the quarter lower as forecast. Gibraltar underground encountered difficult mining conditions with the inevitable high cash and accounting costs per ounce, the latter due to the sterilisation of reserve ounces with the new mine plan.

Production in the immediate future will be sourced almost entirely from existing low grade stockpiles, and from Paddys Flat low grade stockpiles once access to the tenements has been granted, now forecast to be early February 2003.

The development team has completed resource block models on each of the Paddys Flat deposits: Prohibition, Vivians, Consols and Mickey Doolan.

A revised development plan will see the high grade Vivians and Consols orebodies accessed via a new decline from the bottom of Prohibition open pit. The advantage compared with re-establishing the part developed decline is a more competent ground rock and the concurrent ability to progress resource drilling.

Exploration at Mulla Mulla and the regional programme continue to deliver encouraging results with prospects upgraded and new targets identified.

With current Meekatharra mining activities at a lower level and the Paulsens feasibility study complete, site and office staff and contractor numbers have been scaled down one third to match current activities.

In the annual report, I pledged to grow the business to 500,000 ounces within three years. Two weeks ago we announced the next leg in this growth programme with the proposal to merge St Barbara with Midas Gold plc (London) and Geomaque Explorations Ltd (Toronto).

The proposal to form Defiance Mining Corporation, subject to shareholder approval in April 2003, will create a company with operating mines at Meekatharra and Vueltas (Honduras),

and development projects in Paulsens and Tasiast (Mauritania). Gold production by 2005 vear end is forecast in excess of 350,000 ounces at less than US$200 per ounce.

Defiance is forecast to be initially valued in the market at approximately $120 million, nearly three times the current value of St Barbara.

The Board of Defiance will comprise one executive and six non-executive directors. Directors from each of the three companies will be represented on the Board and will be joined by Mr Richard Tastula, the former Homestake executive and Homestake Gold of Australia managing director.

The assets contributed to the new company have been valued on a like-for-like basis with the net result that St Barbara shareholders will own 64 percent of the company. The exchange ratio of 0.226 Defiance shares per St Barbara share is the equivalent to St Barbara shares being valued in the market at 21 cents, a considerable premium to the current share price.

Shareholders will receive further explanatory documents in March 2003 and are urged to discuss the proposal with their financial advisors and company executives. Shareholders from each company have at this stage indicated overwhelming support.

Sterhen W. Miller Executive Chairman 28 January 2003

ACN 009 165 066

PRODUCTION

Gold production at 20,602 ounces was lower, as foreshadowed in the previous quarterly report.

Lower mill feed head grade and consequent metallurgical recovery were partially offset by higher throughput as mill parameters were optimised in the final month to increase the tonnage of soft low grade ore processed.

Mine production at 60,419 tonnes was significantly lower. Caledonian and Great Northern Highway were completed last quarter and, as advised, Gibraltar was temporarily suspended. This was to allow for the installation of additional equipment to monitor ongoing ground movement of a shear structure in the ramp access.

A modified mine design was introduced, stoping smaller high grade blocks with substantial pillars left as permanent support. Several minor stope failures were recorded and cable bolting of ore drives and intersections was undertaken.

Persistent hanging wall movement was still being monitored at the period end. All decline development has been completed and the stope to development ore ratio recovered to 86 percent.

The difficulties at Gibraltar, with operations suspended for a total of 25 days, have had a significant adverse impact on cost performance both mine site cash costs (fixed costs amortised over fewer tonnes, plus additional ground support and monitoring) and higher capital cost amortisation (the new mine method sterilising ounces) with the impact exaggerated due to the short remaining mine life.

Mill feed comprised ore from Caledonian stockpiles (75,800 tonnes), Gíbraltar (63,400 tonnes) and the balance from various low grade stockpiles.

Softer low grade stockpiles progressively replaced the depleting stockpile of hard Caledonian ore. This had an increasing beneficial impact on both throughput (increasing to an annualised 2.4 Mtpa) and unit cost per tonne milled.

Immediate Outlook

Stoping at Gibraltar is forecast to be complete by mid-February 2003 and all stockpiled ore processed by the end of March 2003. Mill feed will then be exclusively low grade stockpiles including inaugural material from Paddys Flat.

Whilst mine site cash costs will decrease next quarter with the cessation of Gibraltar underground mining, reported operating costs will remain high due to capital cost amortisation.

Production and Sales Statistics

Period	3 Months to31 Dec 2002	6 Months to31 Dec 2002
Ore mined (formes)	60.419	427,936
Average grade (g/t)	4.30	3.69
Ore milled (tonnes)	471.482	931,896
Head grade $(g/t)$	1.50	2.18
Recovery (%)	89.8	92.5
Gold produced (ounces)	20,602	60.394
Gold sold (ounces)	21.445	59,865

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

Period	3 Months to31 Dec 2002	6 Months to31 Dec 2002
Mine site cash costs	528	447
State royalties	13	14
Net Cash Cost	541	460
Mine development capital
cost amortisation	161	123
Inventory movements	41	(5)
Net Operating Cost	743	578
Realised Gold Price	589	577

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

This calculation clearly demonstrates that cash 'outlay' costs on a per ounce basis were high during the quarter due to Gibraltar.

ST BARBARA MINES LIMITED

ACN 009 165 066

Forward Outlook

Mining activity at Meekatharra is in transition. Following the completion of both Caledonian and Great Northern Highway three months ago and the imminent completion of Gibraltar, the current focus is the on-going evaluation of a number of resource positions, and the recent Paddys Flat tenement acquisition.

Given the highly prospective nature of the Paddys Flat ground position and the advanced nature of the known resources on this ground, the Company has decided to focus its available capital and efforts into this suite of projects ahead of other projects such as Caledonian underground and the NOA line (NOA 7/8 and 2). At this stage, based on block modelling work carried out to date, ore production from the Paddys Flat project is estimated to commence towards the end of the calendar year.

Production and exploration records for the Paddys Flat tenements were consolidated and resource models for Prohibition, Vivians, Consols and Mickey Doolan deposits established.

A review has identified the preferred option for the development of Vivians and Consols (combined resource of 110, 000 ounces at 8.8 $g/t$ ) to be via a decline into the Prohibition orebody. Considerations include a wide ramp into the Prohibition pit and more competent (banded iron formation) ground compared to the reestablishment of the partially completed decline. A 120 metre drive across to the two orebodies will proceed concurrently with additional resource drilling at Prohibition.

Planning and permitting documentation is complete for the trucking of low grade stockpiles and will be submitted immediately access to the tenements is granted, now expected to be early February 2003.

FINANCE

Realised Gold Price

A total of 21.445 ounces was sold at a net realised gold price of $589 per ounce (average spot price $577 per ounce). Deliveries were into maturing contracts, 2,796 ounces was sold at a slightly higher spot price and 2,419 ounces were closed out at a small profit.

Financial Performance

Meekatharra Operations generated a $1.48 million cash surplus for the quarter. The operating result, and corporate costs, including exploration and Paulsens, and other merger adjustments (to Canadian accounting standards) have not yet been finalised.

Financial Position

At 31 December 2002, cash and bullion was $3.64 million, a decrease of $9.39 million. The Taipan convertible note retirement ($3.37 million of $7.37 million in cash), exploration ($1.17 million) and Paulsens ($0.55 million) were major cost items.

Hedging Position

Australian Gold Council Standard at 31 December 2002

Maturity	Ounces	$/оunce 1
Forward sales
2002-03	10.254	588

As a corporate member of the Australian Gold Council, the Company confirms, in accordance with the AGC Hedging Disclosure Standard, that all contracts are in Australian dollars, there are no margin calls, and no sold contingent options or call options. The Company does not hold any foreign currency positions.

• Ŧ. Realised prices are net of gold lease rates.
• $\overline{2}$ The mark-to-market value of the gold hedge book is negative $227,000 (unrealised) at the 31 December 2002 spot gold price of $608 per ounce.

The hedge position at the date of this report is 5,000 ounces and the mark-to-market (spot gold price $610 per ounce) was negative $117,000 (unrealised).

ACN 009 165 066

EXPLORATION

The 130,000 metre aircore programme focusing on the 10 km by 30 km transported alluvium covered terrain around the Norie Pluton continues to record encouraging results. The target is similar to the famous three million ounce Paddys Flat and the one million ounce Bluebird/South Junction systems.

At Mulla Mulla, 7 km from the treatment plant, a further 33 RC and two RC/core drill holes (5,370 metres) have been completed on the 800 x 100-300 metre Eastern Trend.

This takes the total to 68 RC and two RC/core holes for 11,276 metres on a 40 x 40 metre pattern, with more than 50 percent representing potentially economically significant intercepts. It is anticipated a further twenty holes will be required to complete an inferred resource.

Further RC drill testing is also planned for the 1,200 x 200-400 metre Western Trend and the newly defined 500 x 150 metre Central Trend.

The regional component of the aircore drill programme now totals 800 holes for over 62,000 metres. Activity is focused on a 3 km wide zone around the eastern margin of the Norie Pluton to assess the transported alluvium-covered terrain extending approximately 20 km south of Mulla Mulla.

A large number of holes cut gold anomalous material with the 4 km x 500 metre Bluebush-Mingah target area upgraded to RC drill test status. Two new target areas, Kanji and Miniritchie, in the 8 km of strike immediately south of Mulla Mulla were identified and partially defined.

A high resolution airborne geophysical survey (2,650 line km) was completed over part of the regional target area. Data interpretation will be completed prior to further drilling.

PAULSENS PROJECT

The feasibility study was completed. Key conclusions were: average gold production of 86,000 ounces per annum, peaking at 130,000 to 140,000 ounces in years 3 and 4, and net cashflow after debt repayment of $30 million based on a five vear mine life.

Initial discussions were held with lending institutions. Indicative offers of debt financing have been received.

As an interim measure, the Company currently proposes to complete additional drilling below the pit bottom to extend the resource base whilst financing arrangements are being finalised.

Ashburton Exploration

Results from two high resolution airborne geophysical (magnetic and radiometric) surveys centred on Paulsens and Miningee Bore, 45 km east-south-east, have been interpreted. Targets have been identified, with mapping, soil sampling and shallow RAB drilling the next phase.

The Company completed a joint venture farm-in on ground to the south and east of the Paulsens project. St Barbara may earn up to 70 percent through expenditure totaling $1 million over four vears. Initial mapping, rock chip and soil sampling has commenced.

At Mt Clement, 30 km from Paulsens, a detailed geological review has led to an in-house inferred resource estimate (non-IORC compliant) of 550,000 tonnes at 2.3 $g/t$ , with possibly 50-75% oxidised and potentially suitable for processing at the Paulsens CIP plant. A drill programme (4,000 metres RC and 500 metres of core) and metallurgical testwork is proposed.

DEFIANCE MINING CORPORATION - Key Facts

Production and Cost Profile (Calendar years)

Production and cost forecasts assume the timely development of Paddys Flat, Paulsens and Tasiast and are therefore of a preliminary and illustrative nature only. Further details will be provided in the Explanatory Statement.

	St BarbaraMines	GeomaqueExplorations	MidasGold	ProformaDefiance
Production ('000 ounces)
$2003$	59	42		101
$2004$	191	35		226
$2005$	231		158	389
Total Cash Costs (US$/ounce)
$2003$	276	225		255
$2004$	212.	200		210
$2005$	192		129	167

Board of Directors

John Hick (Non-Executive Chairman), Stephen Miller (President and Chief Executive Officer), Richard Tastula, Kevin Dundo, Cliff Davis, Hank Tuten, Gordon Bogden (non-executive directors). Three currently reside in Western Australia and four in North America.

Timetable for St Barbara shareholders

Late February 2003	Explanatory Statement lodged with ASIC and ASX
Mid March 2003	Despatch of Explanatory Statement to security holders
Mid April 2003	Security holder meetings
Late April 2003	Estimated time for commencement of trading

CORPORATE INFORMATION

$\sim$ $-$

board or Directors and Executive
Management
S. W. Miller Executive Chairman
K. A. Dundo Non-Executive Director
G. B. Speechly Non-Executive Director
H. G. TutenNon-Executive Director
J. T. McClements Alternate to H. Tuten
P. T. McIntyre Chief Operating Officer
A. D. Rule Chief Financial Officer
and Company Secretary

Registered Office

$\lambda = 1$ n.

Level 2, 16 Ord Street
West Perth WA 6005
	Telephone:
	Facsimile:
	Email: perth@stbarbara.com.au
	Website: www.stbarbara.com.au

Stock Exchange Listings

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

Issued Capital

As at the date of this report, issued capital is 364,952,803 shares.

There were 44,329,772 listed options, exercisable at 30 cents up until 29 February 2004 and 45,130,634 unlisted options exercisable at various prices between 11.38 cents and 45 cents up to 7 July 2006.

Major Shareholders

National Nominees 13.40%
Strata Mining Corporation Ltd 8.82%
ANZ Nominees
Resource Capital Fund 4.97%

Substantial Shareholders

			Strata Mining Corporation Ltd 9.91%
			JP Morgan FAML 5.06%

Exchange Ratios

• $\overline{a}$ 0.226 Defiance shares per St Barbara share
• 0.039 Defiance shares per $\ddot{\phantom{a}}$ St Barbara listed option
• 0.125 Defiance shares per L Geomague share
• 0.440 Defiance shares per Midas Gold share

Disclosure

Information in this report relating to mineral resources or mineralisation conforms to the reporting requirements of the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code). It is based on information compiled by Mr Graham Miller, FAusIMM, a Competent Person as defined by the Code. It is included in this report with his consent.

Shareholder Enquiries

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

Australia:

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

United Kingdom:

Computershare Investor Services PLC
PO Box 435, Owen House
8 Bankhead Crossway North
Edinburgh EFI1 4BR
Telephone: +44 870 703 6088
Facsimile: +44 870 703 6142

ADR Depositary

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