INSTRUCTIONS - Realview

Notes to theFinancial StatementsFor the year ended 30 June 2009Note 1 Summary of significantaccounting policiesSt Barbara Limited (the “Company”) is a company domiciledin Australia. The consolidated financial statements of theCompany as at and for the year ended 30 June 2009 comprisethe Company and its subsidiaries (together referred to asthe “Group”), and the Group’s interest in associates andjointly controlled entities. The Group is primarily involvedin the exploration for, and mining of, gold.The principal accounting policies adopted in the preparationof the financial report are set out below. These policies havebeen consistently applied to all the years presented, unlessotherwise stated. The financial report includes separatefinancial statements for St Barbara Limited as an individualentity and the consolidated entity consisting of St BarbaraLimited and its subsidiaries.(a) Basis of preparationStatement of complianceThe financial report is a general purpose financial reportwhich has been prepared in accordance with AustralianAccounting Standards (AASBs) (including AustralianInterpretations) adopted by the Australian AccountingStandards Board (AASB) and the Corporations Act 2001.Where required by accounting standards comparativefigures have been adjusted to conform to changes inpresentation in the current year. The consolidated financialreport of the Group and the financial report of the Companycomply with International Financial Reporting Standards(IFRSs) and interpretations adopted by the InternationalAccounting Standards Board.The financial statements were approved by the Boardof Directors on 25 August 2009.Historical cost conventionThese financial statements have been prepared under thehistorical cost convention, as modified by the revaluation ofavailable-for-sale financial assets at fair value, and financialassets and liabilities (including derivative instruments) heldat fair value through profit or loss.Critical accounting estimatesThe preparation of financial statements requires managementto make judgements, estimates and assumptions that affectthe application of accounting policies and the reportedamount of assets, liabilities, income and expenses. Actualresults may differ from these estimates. The estimates andunderlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in theperiod in which the estimate is revised and in any futureperiods affected. The areas involving a higher degree ofjudgement or complexity, or areas where assumptionsand estimates are significant to the financial statements,are disclosed in Note 3.Going concern basisThe accounts are prepared on a going concern basis. Anentity is a going concern when it is considered to be ableto pay its debts as and when they are due, and continuein operation without any intention or necessity to liquidateor otherwise wind up its operations.The Company has $77,100,000 of outstanding convertiblenotes on issue at 30 June 2009. Unless previously redeemed,converted, or purchased and cancelled, the notes will beredeemed on 4 June 2012 at 100% of their principal amount.Holders of the convertible notes are able to redeem allor some of the notes at the principal amount togetherwith any accrued interest on the third anniversary of issue(4 June 2010). Due to this option date, the notes havebeen classified as a current liability in the balance sheetat 30 June 2009. The current cash flow forecast of theconsolidated entity does not support the full redemptionof the convertible notes on 4 June 2010. To manage therefinancing risk associated with the full redemption ofthese convertible notes the consolidated entity has takena number of initiatives.On 21 August 2009 YA Global and the Company enteredinto a $50 million Equity Line of Credit. This facility providescertainty for the Company with access to cash if required tosupport any redemption of the convertible notes. The Companynominates the advance amount in relation to each drawdown under the facility. The advance amount for the firstand second draw down is limited to $750,000 and $1,500,000respectively, and thereafter the advance amount shall notexceed $3,000,000 in any 10-day trading period.The Company is also pursuing non-core asset divestments,and subsequent to 30 June 2009, the consolidated entityhas disposed of its investment in Bendigo Mining Limitedthat was shown as available-for-sale at 30 June 2009, asset out in Note 15.At the date of this report, the directors have a reasonableexpectation that the Company has potential sources offinancing and expected future operating cash flows tosupport the adoption of the going concern basis in preparingthe financial report.(b) Principles of consolidation(i) SubsidiariesThe consolidated financial statements incorporate theassets and liabilities of all subsidiaries of St Barbara Limited(“Company” or “parent entity”) as at 30 June 2009 and theresults of all subsidiaries for the year then ended. St BarbaraLimited and its subsidiaries together are referred to in thisfinancial report as the Group or the consolidated entity.50