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NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2009Note 2 Financial risk management cont.(a) Market risk cont.(iii) Equity securities price risk cont.Post-tax result for the year would increase/(decrease) as a result of gains/(losses) on equity securities carried at fair valuethrough profit or loss. Equity would further increase/(decrease) as a result of gains/(losses) on equity securities classifiedas available-for-sale.(iv) Interest rate riskThe Group’s main interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Groupto cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group’sinterest rate policy does not require a fixed and pre-determined proportion of its interest rate exposure to be hedged. Anydecision to hedge interest rate risk will be assessed at the inception of each floating rate debt facility in relation to the overallGroup exposure, the prevailing interest rate market, and any funding counterparty requirements.(b) Credit riskCredit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract.The Group is exposed to credit risk from its operating activities (primarily customer receivables) and from its financingactivities, including deposits with banks and financial institutions.The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets, other thanavailable-for-sale assets.Credit risks related to receivablesThe Group has no significant concentrations of receivables related credit risk, with revenues primarily derived from gold salesdirect to refiners. Based on historic rates of default, the Group believes that no impairment has occurred with respect totrade receivables, which includes the amount owed by the Group’s most significant customer. The Group’s most significantcustomer accounts for $4,192,000 of the trade receivables carrying amount at 30 June 2009 (2008: $5,001,000). None ofthe trade receivables at 30 June 2009 were past due.Credit risks related to cash depositsCredit risk from balances with banks and financial institutions is managed by the centralised Treasury function in accordancewith Board approved policy. Investments of surplus funds are only made with approved counterparties (minimum Standard &Poor’s credit rating of “AA-”) and with credit ratings assigned to each counterparty and there is a financial limit on fundsplaced with any single counterparty.(c) Capital managementThe Group’s total capital is defined as total shareholders’ funds plus net debt.2009 2008Consolidated capital $’000 $’000Total shareholders’ funds 296,472 236,664Borrowings 97,541 100,937Cash and cash equivalents (53,692) (35,517)Total capital 340,321 302,084The Group does not have a target debt/equity ratio. There were no changes in the Group’s approach to capital managementduring the year.The Group is not subject to externally imposed capital requirements other than normal banking requirements.Cash and cash equivalents does not include cash held on deposit with a financial institution as security for a bank guaranteefacility totalling $24,339,000 (2008: $20,597,000) at the reporting date.Borrowings include $77,100,000 of convertible notes on issue (2008: $100,000,000). The holder of each Note has the rightto convert such Note into shares of the Company at any time during a specified conversion period. The Notes have amaturity date of 4 June 2012 and Note holders have the right to require the Company to repurchase all or a portion of theirNotes on 4 June 2010. In addition, in the event of a default the Company may be required to pay all amounts then due inaccordance with the terms and conditions of the Notes. While the Notes remain outstanding, the Group is not to incur anyfinancial indebtedness, subject to certain exceptions set out in the terms of the Notes.stbarbara.com.au – Annual Report 2009: 61