ST BARBARA LIMITED — Merger & Acquisition 2003

Jan 8, 2003

ST BARBARA MINES LIMITED

ACN 009 165 066

$\overline{ASX}$ 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

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.

Proposed Merger

St Barbara Mines Limited, Geomaque Explorations Ltd. and Midas Gold plc to Combine to Create New Growth Oriented, International Gold Producer.

Joint Market Release Follows.

Stephen W. Miller Executive Chairman

9 January 2003

ST BARBARA MINES LIMITED

9 January, 2003

St Barbara Mines Limited, Geomaque Explorations Ltd. and Midas Gold plc to Combine to Create New Growth Oriented, International Gold Producer

GEOMAOUE

(Perth, Australia; Toronto, Canada) St Barbara Mines Limited (ASX:SBM, AIM:SBM) and Geomague Explorations Ltd. (TSX:GEO) are pleased to announce a business combination and acquisition. The new company, Defiance Mining Corporation, will be a Canadian incorporated, international gold mining, mine development, and exploration company.

The creation of this new company will provide its combined shareholders with:

• A portfolio of producing gold mines and development stage gold projects in Western Australia, Central America and Mauritania, West Africa;
• A gold production profile that contemplates an increase from anticipated 2003 production of approximately 100,000 ounces to annual production from three mines in excess of 350,000 ounces of gold for Defiance's account by year-end 2005. Total cash operating costs are anticipated to decrease from approximately US\$255 in 2003 to less than US\$195 per ounce of gold by year-end 2005, before capital costs;
• An attractive gold exploration portfolio that includes over 20,000 square kilometers of $\bullet$ prospective ground in three countries;
• Enhanced liquidity and greater access to capital: and
• Significant leverage to the gold price.

Terms of Combination

Under the terms of a Heads of Agreement between St Barbara and Geomague, a business combination is contemplated through a merger by scheme of arrangement between St Barbara and Defiance, together with a court-approved statutory amalgamation involving Geomague and Defiance, to be implemented concurrently. In addition, the ordinary shares of Midas Gold plc will be purchased under share purchase agreements with the Midas shareholders. A definitive agreement between St Barbara and Geomague is expected to be completed in February 2003, followed by meetings of St Barbara and Geomague security holders expected to take place in April 2003.

Under the transaction it is proposed:

• ordinary shareholders of St Barbara will receive 0.226 Defiance common shares for $\bullet$ every one ordinary share of St Barbara;
• listed optionholders of St Barbara will receive 0.039 Defiance common shares for every $\bullet$ one listed option of St Barbara;
• common shareholders of Geomaque will receive 0.125 Defiance common shares for every one common share of Geomague; and
• ordinary shareholders of Midas Gold will receive 0.440 Defiance common shares for $\bullet$ every one ordinary share of Midas Gold.

In negotiating the share exchange ratios, the various parties agreed that the transaction value per Geomague share was C\$0.10, per St Barbara share was A\$0.21 and per Midas share was A\$0.41. The share exchange ratio was determined by reference to, amongst other things, enterprise value and contribution to resulting future growth.

Based on the current outstanding securities of St Barbara. Geomague and Midas. respectively, upon completion of the transactions. Defiance will have a total of approximately 130 million common shares issued and outstanding, of which:

• St Barbara securityholders will hold approximately 64.4%;
• Geomague shareholders will hold approximately 15.8%; and $\bullet$
• Midas shareholders will hold approximately 19.8%. $\overline{a}$

Financing Matters

Haywood Securities Inc. has been retained to provide financial advice as to Defiance's ongoing equity capital requirements.

Board and Management

The Defiance board will be comprised of John Hick, Stephen Miller, Gordon Bogden, Cliff Davis, Kevin Dundo, Richard Tastula and Hank Tuten. Further details on each proposed director is set out in the supplementary information to this announcement. The executive management of Defiance will include John Hick as Chairman. Stephen Miller as President and Chief Executive Officer and Alan Rule as Chief Financial Officer.

Defiance will have its corporate headquarters in Toronto, Canada.

Benefits of the Transaction

John Hick. President and Chief Executive Officer of Geomague commented. "This transaction will create an attractive investment alternative for investors seeking exposure to a growth- oriented gold mining and development company through Defiance's international gold mining operations and mine development portfolio."

Stephen Miller, Executive Chairman of St Barbara added, "The strength of the combined business creates the potential for a commensurate re-valuation of St Barbara's portfolio of assets thereby enhancing the capital raising capabilities and corporate development opportunities available to St Barbara's projects."

The transaction brings together St Barbara's Western Australia-based Meekatharra gold mining complex (St Barbara is acquiring the Paddy's Flat property, which is part of Meekatharra, from a subsidiary of Barrick Gold Corporation under an agreement of purchase and sale) and its interest in the Paulsens project (the Paulsens project is owned by Taipan Resources NL, an ASX-listed company, which is 88.3% owned by St Barbara) with Geomague's Vueltas gold mine in Honduras and Midas Gold's Tasiast gold development project in Mauritania (Midas is acquiring the Tasiast assets from a subsidiary of Newmont Mining Corporation under an agreement of purchase and sale).

• The Meekatharra gold mining complex is expected to produce 120,000 ounces of gold annually at an average life-of-mine cash cost of US\$170 per ounce before expected capital costs of US\$45 million, based on preliminary work and experience to date.
• The Paulsens project is expected to begin in the first quarter of 2004 at an average $\bullet$ annual rate of 90,000 ounces of gold over five years at an average life-of-mine cash cost of US\$160 per ounce, not including US\$42 million of stripping costs over life-of-mine representing US\$100 per ounce. Pre-production capital costs are expected to be approximately US\$18 million.
• The Vueltas mine is expected to contribute 42,000 ounces of gold production in 2003 and 35,000 ounces of gold production in 2004 at an average life-of-mine cash cost of US\$214 per ounce.

A scoping study at the Tasiast gold project suggests annual production of 120,000 to $\bullet$ 130,000 ounces of gold at an average life-of-mine cash cost of less than US\$185 per ounce of gold. Initial capital costs are expected to be approximately US\$37 million to develop the mine and life-of-mine sustaining capital requirements are expected to be approximately US\$11 million.

Further details on each company and the foregoing resource information are set out in the attached supplementary information.

Stock Exchange Listings

The ordinary shares of St Barbara are listed on the Australian Stock Exchange and the Alternative Investment Market of the London Stock Exchange (AIM). The common shares of Geomague are listed on the Toronto Stock Exchange.

Implementation of the Transaction

The transaction will be implemented by:

• a court-approved merger by scheme of arrangement between St Barbara and Defiance:
• a court-approved statutory amalgamation involving Geomague and Defiance; and
• the acquisition of all shares of Midas pursuant to share purchase agreements with Midas shareholders

The transaction is subject to satisfaction of a number of conditions, the details of which will be included in the definitive transaction agreements and which will include:

• regulatory approvals in Australia, Canada and the United Kingdom;
• approvals of St Barbara and Geomague security holders, respectively; $\bullet$
• court approvals in Australia and Canada, respectively: $\bullet$
• execution of definitive agreements;
• each of St Barbara and Geomague being satisfied with the results of due diligence $\blacksquare$ reviews of St Barbara, Geomaque and Midas, respectively; and
• receipt by each of St Barbara and Geomaque of opinions by suitably qualified experts that the transaction is fair and reasonable to their respective security holders.

Under the Heads of Agreement, each of Geomaque and St Barbara have agreed to typical non-solicitation and standstill provisions. Also under the Heads of Agreement, in certain circumstances, if the transaction is not completed, a break fee of an aggregate of C\$1 million (being a total amount comprising a contribution towards the reasonable internal and third party advisory, legal, accounting, due diligence and management costs and expenses and opportunity and other costs and expenses foregone) will be payable by Geomague or St Barbara to the other.

St Barbara is advised by Beacon Group Advisors Inc. of Toronto and Geomague is advised by Haywood Securities Inc.

Other Matters

Concurrent with the transaction, Resource Capital Fund II LP has agreed to restructure certain of its credit arrangements with Geomague as described in the attached supplemental information below.

Conference Call Information

Investors and analysts are invited to participate in a conference call scheduled for 9:00 am (Perth time) on Friday, January 10, 2003 with members of management of St Barbara and Geomaque. Interested participants may call in at 1800 063 705 from inside Australia or +61 2 829 509 13 from outside Australia, (Confirmation Number and PIN 3386891). The conference call and presentation slides will also be available simultaneously and archived at www.geomague.com and www.stbarbara.com.au.

For further information, please contact:

Stephen W. Miller St Barbara Mines Limited Perth, Western Australia +61 8 9476-5555

John W. W. Hick Geomague Explorations Ltd. Toronto, Ontario +1 416 956 7470

SUPPLEMENTARY INFORMATION

PROFORMA BOARD PROFILE

John W. W. Hick (Non-Executive Chairman)

Mr. Hick has been President and Chief Executive Officer of Geomague since December 18, 2001. He has been President of John W.W. Hick Consultants Inc. (a management consulting firm) since 1997. From March 1999 to February 2001, Mr. Hick was Director of Corinth Capital (a private equity firm). From 1998 to 1999, he served as Chairman of the Board of Rayrock Yellowknife Mines Ltd. From July 1993 to September 1996, Mr. Hick was President of TVX Gold Inc. and thereafter, to May 1997, was Vice-Chairman of TVX. Prior to that time. Mr. Hick was Senior Vice-President of Placer Dome Inc. since its inception in 1987, prior to which he was Vice President and General Counsel of the Dome Mines Group of Companies. from 1981.

Stephen W. Miller (President and CEO)

Mr. Miller has been Executive Chairman of St Barbara since mid-1999. Mr. Miller is a chartered accountant by profession with over twenty years' experience in the corporate and financial arena. Since 1992. Mr. Miller has specialised in the mineral resources sector and has been executive director and founder of a number of resource companies, including Western Metals Limited, East Africa Gold Corporation and Hargraves Resources NL. Mr. Miller is also chairman of Strata Mining Corporation Limited, St Barbara's major shareholder. Mr. Miller has extensive management, corporate and financing experience in the resources industry. Mr. Miller is also executive chairman of Taipan Resources NL and a board member of the Australian Gold Council

Clifford J. Davis (Mining Engineer, Non-Executive Director)

Mr. Davis has been the Non-Executive Chairman of Geomague since July 2002. Mr. Davis is a mining engineer with 37 years of experience in the mining industry working in all levels of mining operations in six countries and holding senior management positions, most recently as President and CEO of Gabriel Resources Ltd. from April 2001 to June. 2002. He was President and COO of TVX Gold Inc. from January 1999 to March 2001 and prior to that time he held senior corporate management positions with TVX Gold, Echo Bay Mines and RTZ/Kennecott

Kevin A. Dundo (Lawyer, Non-Executive Director)

Mr. Dundo has been a Non-Executive Director of St Barbara since March 2002. Mr. Dundo is a corporate lawyer and a senior partner of the Australian law firm, Clayton Utz. Mr. Dundo practices in the commercial and corporate areas and has considerable experience in the mining area and the financial services industry. Mr. Dundo has played a major role in providing advice in the corporate law area to mining companies and is also a director of Taipan Resources NL and Midas Gold plc.

Hank G. Tuten (Investment Banker and Fund Manger, Non-Executive Director)

Mr. Tuten has been a Non-Executive Director of St Barbara since March 2002. Mr. Tuten is actively involved in a consolidated entity of private equity funds as a founding partner. These are the Resource Capital Funds, the e-Century Capital Fund and the CIP Fund. He spent over 15 years with the N.M. Rothschild and Sons Consolidated entity. During that period, he was the chief executive officer of Rothschild Australia Limited, Rothschild North America Inc. and Continuation Investments N.V., the private equity vehicle for Rothschild continuation Holdings A.G. Consolidated entity. Prior to that, he was a commercial banker with the Philadelphia National Bank. Mr. Tuten serves on several boards in connection with his investment activities.

Richard A. Tastula (Mining Engineer, Non-Executive Director)

Mr. Tastula has extensive experience in the mining industry. He was previously Managing Director of Homestake Gold of Australia Limited and Vice President of Homestake Mining Company (1991-1999). Prior to that Mr. Tastula had a long career with Australia's Western Mining Corporation (1967-1991) culminating in his position as General Manager of Operations for WMC. He is currently Chairman of Titan Resources NL, a board member of Iluka Resources and Pro-Chancellor of Curtin University of Technology in Western Australia.

Gordon J. Bogden (Investment Banker, Non-Executive Director)

Mr. Bogden is a co-founder and Managing Director of Beacon Group Advisors Inc., Toronto since January 2001. From November 1999 to November 2000, a Director of Newcrest Capital Inc. before it was acquired by TD Securities Inc. From June 1997 to October 1999, a Managing Director of NM Rothschild & Sons Canada Limited and prior thereto, a Managing Director of CIBC Wood Gundy Securities Inc. all investment banking firms. Mr. Bogden was also a co-founder and director of Quantec Consulting Inc., a geophysics consulting firm from 1986 to 1989. He is a director of several public companies and is a member of the Professional Engineers of Ontario.

ST BARBARA MINES LIMITED

St Barbara is a Australian gold producer listed on the Australian Stock Exchange and based in Perth, Western Australia. The Company has approximately 12,000 shareholders and a current market capitalisation of approximately A\$47.5 million (C\$40.8 million at current exchange rates).

St Barbara has gold projects located in the Murchison and the Ashburton gold districts of Western Australia. The Meekatharra gold mining complex is located approximately 650 km northeast of Perth in the Murchison Region of Western Australia. Meekatharra produced 103.217 ounces of gold for the year ending 30 June 2002. St Barbara is acquiring the Paddy's Flat property, which is part of Meekatharra, from Barrick Gold Corporation under an agreement of purchase and sale

Through its 88.3% subsidiary, Taipan Resources NL, St Barbara controls the Paulsens gold project located in the Ashburton district approximately 1,000 km north of Perth. St Barbara intends to bring Paulsens into production at a life-of-mine annual rate of 90,000 ounces of aold per annum at the beginning of 2004.

St Barbara is also the largest shareholder in Dioro Exploration NL (13%), which is a joint venture partner with a subsidiary of Cogema, in the Frog's Leg Gold Project located immediately along strike from Placer Dome's East Kundana joint venture, 25 km west of Kalgoorlie.

Further details of St Barbara are contained in St Barbara's annual report for the year ending 30 June 2002 and recent quarterly reports and announcements to ASX, which are available on St Barbara's website at www.stbarbara.com.au.

GEOMAQUE EXPLORATIONS LTD.

Geomague is a Québec. Canada incorporated company listed on the Toronto Stock Exchange. Geomague has a current market capitalisation of approximately C\$18.9 million million at current exchange rates). The principal asset of the corporation is the $(A$22.0)$ operating Vueltas gold mine in Honduras. The corporation owns the San Francisco property (Sonora, Mexico - gold) and has interests or options to earn interests in several exploration properties, including the Marathon Palladium Project (Ontario - palladium, platinum, copper), and Rio Blanco and Zapotal (Honduras - gold).

The 100 percent-owned Vueltas mine is located in the state of Santa Barbara 90 km south west of San Pedro Sula, the second largest city in the Republic of Honduras. Production from an open cut and heap leach operation at the Vueltas mine commenced in June 2001. Gold production in calendar 2002 totaled 30,700 ounces.

Concurrent with the transaction, Resource Capital Fund II LP has agreed that the minimum fee of US\$1.6 million, payable to it by Geomaque under their existing credit agreement, will be satisfied by the issuance of an aggregate of 3.178 million common shares of Defiance and that existing royalties payable under the same credit agreement and a royalty deed with Geomague Honduras will be extinguished. RCF has also agreed to amend the existing repayment schedule for the principal amount under the credit agreement, such that the first quarterly payment under the agreement will be payable on April 30, 2003, rather than January 31, 2003. Sococo de Costa Rica S.A. has also agreed to amend their concurrent repayment schedule on the same basis. The percentage holding of Defiance shares by Geomaque shareholders set out above includes these Defiance shares issuable to RCF.

Further details in respect of Geomaque are contained in Geomague 2001 Annual Report, Geomaque's 2001 annual information form and quarterly reports to shareholders, which are available on Geomaque's website at www.geomaque.com and also on the Canadian Securities Administrators' SEDAR website at www.sedar.com.

MIDAS GOLD plc

Midas Gold plc is a privately-held United Kingdom plc. Midas is acquiring the Tasiast assets from a subsidiary of Newmont Mining Corporation under an agreement of purchase and sale. The purchase consideration is US\$6.5 million (on a deferred settlement basis) and a 2% net smelter royalty on gold production in excess of 600,000 ounces. The project has the potential to develop a low cost open pit gold mine with annual production averaging 120,000 to 130,000 ounces over a seven year life. The capital cost of the proposed 1.5 Mtpa CIL/gravity operation is estimated at US\$37 million. Scheduled activity to progress the project to bankable feasibility study is forecast to take fifteen months.

RESOURCES AND RESERVES INVENTORY

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
	Total, Other than Paddy's Flat and Tasiast
Proven Reserves	3,216	2.93	302,573
Probable Reserves	4,916	2.91	460,187
Measured Resources	6,241	2.55	512,105
Indicated Resources	34,031	1.31	1,429,955
Total Measured and Indicated Resource $O$ unces $3$			1,942,060
Inferred Resources	3,164	3.06	311,427

GLOBAL RESERVES AND RESOURCES^1,2

Acquisitions

Paddy's Flat 4	14,573	2.00	945,000
Tasiast Indicated Resources 5	18,800	2.23	1,357,000
Tasiast Inferred Resources 5	12,000	1.87	714,000

• $\ddagger$ . The information in this table is based upon the tables in respect of each of the properties set out below.
• 1. The information in this table is as of the following dates: Meekatharra (excluding Paddy's Flat) - June 30, 2002; Paulsens - November 2001; Vueltas,- December 31, 2001; Paddy's Flat - 1995; and Tasiast - October 4, 2002.
• In this section of this table, reserve numbers are included in the resource numbers (and $3.$ the total ounces number is therefore a total of the resources).
• The information in the table above for Paddy's Flat is based upon the statement of $4.$ Resources made by Dominion Mining Limited in its 1995 Annual Report. This information has not vet been classified as between categories of resources and does not currently comply with the Australasian Code for Reporting of Identified Minerals and Ore Reserves (the "JORC Code"). St Barbara is currently in the process of reviewing and assessing all the Paddy's Flat information to be able to make the appropriate classification of the resources and ensure compliance with the JORC Code.
• 1. The Tasiast information in this table includes resource classifications that generally follow, but are not fully compliant with the JORC Code requirements.

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
Proven Reserves	1,858	1.89	112,900
Probable Reserves	1,113	2.64	94,600
Measured Resources	4,800	2.00	314,800
Indicated Resources	7,224	2.10	498,000
Inferred Resources	2,431	3.00	238,400

MEEKATHARRA - EXCLUDING PADDY'S ELAT

$\mathbf{1}$ . The information in the table above is compiled from a report prepared by Paul Richardson, MAusIMM and Graham Miller FAusIMM and in accordance with the JORC Code. Mr. Richardson and Mr. Miller are full time employees of St Barbara. Competent Persons as defined in the applicable Australian requirements and have consented to the inclusion of this information in the form and context in which it appears.

• $2.$ The information in the above table is as at June 30, 2002.
• $3¹$ In the above table, the reserves are included in the resources.

PADDY'S FLAT

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
Resources	14.573	2.00	945.000

The information in the table above for Paddy's Flat is based upon the Statement of $\ddagger$ Resources made by Dominion Mining Limited in its 1995 Annual Report. This information has not yet been classified as between categories of resources and does not currently comply with the Australasian Code for Reporting of Identified Minerals and Ore Reserves (the "JORC Code"). St Barbara is currently in the process of reviewing and assessing all the Paddy's Flat information to be able to make the appropriate classification of the resources and ensure compliance with the JORC Code.

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
Proven Reserves	1,358	4.34	189,673
Probable Reserves	1,673	3.66	196,587
Measured Resources	1,441	4.26	197,305
Indicated Resources	3,207	3.52	362,955
Inferred Resources	733	3.10	73,027

PAULSENS

• The numbers in the above table are on a 100% property basis. $\mathbf{1}$ .
• The information in the above table is based upon a report prepared by Golder $2.$ Associates Pty Ltd ("Golder") in accordance with the JORC Code. Principals of Golder are Competent Persons as defined in the applicable Australian requirements.
• $3₁$ The information in the above table is as at November 2001.
• $\overline{4}$ In the above table, the reserves are included in the resources.

VUELTAS

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
Probable Reserves	2.130	2 47	169,000
Indicated Resources	23,600	O 75	569,000

• The information in the above table is based upon a report prepared by Philip Walford in $\ddagger$ . accordance with National Instrument 43-101 of the Canadian Securities Administrators ("NI 43-101"). Mr. Walford is the Qualified Person as defined in NI 43-101.
• $2₁$ The information in the above table is as at December 31, 2001.
• $\mathbf{3}$ In the above table, the reserves are included in the resources.

TASIAST

Classification	Tonnes 000s	Grade g/t Au	Ounces Gold
Indicated Resources	18,800	2.23	1.357.000
Inferred Resources	12,000	1.87	714,000

• $\ddagger$ The information in the above table includes resource classifications that generally follow, but are not fully compliant with the JORC Code requirements.
• $2.$ The information in the above table is based upon a report prepared by Steffen, Robertson and Kirsten (Australasia) Pty. Ltd. Daniel Guibal, FAusIMM is the Competent Person as defined in the applicable Australian requirements.
• $3₁$ The information in the above table is as at October 4, 2002.

All statements made in this release, other than those concerning historical information, including, without limitation, statements regarding potential mineralization and reserves. exploration results and future plans and objectives of St Barbara and Geomague are forward-looking statements which are subject to various risks and uncertainties. When used in this release, the terms "expects", "anticipates", "estimates" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management's belief as well as assumptions made by, and information currently available to, management of St Barbara and Geomague. St Barbara's, Geomague's, or Midas Gold's actual results may differ materially from the results anticipated in such forwardlooking statements as a result of a variety of factors. Additional information concerning factors that could cause actual results to materially differ from those in such forward-looking statements is contained in St Barbara's, Geomaque's and Midas Gold's filings with the securities requlatory authorities. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. St Barbara, Geomague, and Midas Gold expressly disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.