INSTRUCTIONS - Realview

CEO’s ReportThe 2010 fiscalyear will focus onimproving operationalcapabilities, reinvestingoperating cash flowsto drive the Gwaliadecline deeper,and progressingopportunities to growgold production witha lower cost profile.IntroductionI am delighted to have been appointedManaging Director and CEO ofSt Barbara Limited.The Company is now a significantAustralian gold producer with solidfoundations for growth with:• Good operating assets;• Resources and Reserves to underpinour plans; and• A prospective land bank with realorganic growth potential.The Gwalia mine at Leonora, W.A.,is the Company’s cornerstone asset.It is a high quality operation that willunderpin long term cash flows forthe Company.StrategyWe have completed a comprehensiveoperational and strategic review ofSt Barbara’s operations, asset portfolio,organisational capability and financialrequirements.A key outcome of the review is amuch stronger emphasis on lower-cost,higher-margin gold production. A solidThree Year Plan based substantially onreserves underpins our new strategy.We will continue to build on ourkey strengths:• The high grade, long term Gwaliamine at Leonora which is open atdepth;• Two years of reserves at the MarvelLoch Underground mine at SouthernCross and the expectation for furtherconversion of resources to reserves;• Operating expertise in all aspectsof gold mine development andproduction, particularly undergroundmining;• Available treatment plant capacity inwell-endowed gold provinces; and• Prospectivity of our land bankincluding identified brown fieldand green field exploration targets.Our strategy will be implementedin two stages.Stage one will run through fiscal year2010, and will focus on:• Accelerating the development ofthe Gwalia mine to access richer andwider parts of the deposit at depth;• Improving operating performancethrough an overhaul of operatingsystems and processes;• Maintaining the Company’s coreexploration capability and land bank;• Divestment of non-core assets; and• Continuing to assess value accretivegrowth opportunities.Stage two commences post fiscal year2010, during which the Company will:• Leverage strong cash flows generatedin fiscal years 2011 and 2012 topursue growth with the target ofbecoming a strong mid-tier goldproducer operating a number ofhigh margin mines; and• maintain a strong emphasis on organicgrowth through exploration.The Gwalia mine reaches scheduled fullproduction rates in fiscal year 2012 whenwider parts of the deposit are accessedat depth and the head grade lifts to11g/t. Achieving full production at Gwaliawill help re-position St Barbara as a lowercost gold producer.St Barbara’s foundations for growthwill be strengthened by improvedoperational capability and growingcash flows, placing the Company ina position to pursue growth throughcorporate activity and, in the longerterm, through exploration success.The Company now has an aspirationalstrategic target of reaching an annualproduction rate of over 500,000ounces of gold per annum fromthree operations by 2014.AchievementsThe 2009 fiscal year has been achallenging year for the Company, withsome important outcomes achieved.Foremost among these was thesuccessful commissioning of the Gwaliamine in October 2008. This was a large,complex undertaking that included:4