2015 July GMJ

St Barbara sneaking back
into good books

St Barbara Ltd con- ter St Barbara had $108 mil-
tinues to rebuild
lion cash.
its reputation on the
“The operations at Sim-
ASX.
beri had lost the company a
The Australasian gold miner
was in a dark place 12 months lot of money in the previous
ago and by December 2014 had
reached one of its lowest ebbs, financial year, largely due to
trading at 7c/share.
capital overruns and time
Like many of its peers, man-
aging volatility in gold price was overruns with the plant ex-
difficult, however, St Barbara had
the added burdens of flunking pansion,” Vassie said.
operations, namely Gold Ridge
in the Solomon Islands and Sim- “Also operating costs lost
beri in Papua New Guinea.
us because when the plant
In financial years 2013 and
2014, back-to-back after-tax expansion came on line it
write-downs of $221 million and
$411 million, respectively, from wasn’t working effectively,
its Pacific operations brought the
company to its knees. we really had a choice there

Seemingly at the end of the to stop that operation be-
road, a strong leader was need-
ed at the helm and in Bob Vas- cause it was draining cash
sie – the former chief executive
of Inova Resources Ltd (formerly and the company as a whole
Ivanhoe Australia Ltd) – St Bar-
bara found its man in July last was running low on cash
year.
reserves. We chose to fix
While Vassie has been re-
sponsible for steering the St Bar- it just and spend a little bit
bara vessel to safety, he credits a
willing team for the turnaround in more money because there
performance which had the com-
pany trading at its highest levels was $100 million invested in
in two years – 59c/share – at the
time of print. there over the past year or

“We are really fortunate that so and the expansion.
while St Barbara was in some
real trouble, we had some good “I think the pleasing thing
people in the business, excellent
operating people and some real- at Simberi was not only did
ly experience corporately. Once
the hard choices were made to we get the ounces doubled,
reduce costs and do that with a
fairly steely resolve, but by listen- which would likewise im-
ing to the experienced people in
the business and combining that pact on your unit costs, but
[experience] with your own, you
can plot a course which every- we were able to reduce the
one can buy into. That’s where
I think you can be successful,” cost of the operation there
Vassie told Gold Mining Jour-
nal earlier this year. through better manage-

Vassie is hardly done with his ment in a cost savings ap-
efforts to revive St Barbara, and
recent ratings from agencies St Barbara’s performance at Simberi, PNG, has the company proach. That culminated
Standard & Poor’s and Moody’s onside with ratings agencies in the March quarter being
the first cash flow positive

Investors Service suggest mar- to record consolidated gold pro- quarter for the operation since

ket perceptions about the com- duction in the March quarter of St Barbara has owned it for two-

pany are starting to change. 111,288oz gold at AISC of $798/ and-a half years now, so that is

Standard & Poor’s rating re- oz. The bulk of production was very pleasing.”

view in early July revised the from Gwalia (76,954/oz) and St Barbara is expanding op-

company’s outlook from negative King of the Hills (11,836/oz) at erations at Simberi to 100,000

to stable and provided the com- Leonora, while the contribution ozpa gold, with production guid-

pany with a ‘B-’ rating based on from Simberi was 22,498/oz at ance of 70,000-80,000oz gold

St Barbara’s improving operating AISC of $1,310/oz. for financial year 2015.

performance, which has boosted At the end of the March quar- For financial year 2016, St Bar-

cash flows and enabled the pre- bara has forward sold 100,000oz

payment of $US54 million of its gold @ $1,600/oz, deliverable

senior secured notes. from July 2015 to June 2016 from

Standard & Poor’s update fol- Simberi.

lowed a similar ratings review The company was expected to

by Moody’s, which recognised release guidance on its consoli-

strengthening cash flow metrics dated production guidance and

were a result of progress being costs in its June quarterly, which

made at Simberi by St Barbara. had not been released at the time

Since making the decision to of print.

sell the troublesome Gold Ridge – Mark Andrews
project, which it finalised in May,

St Barbara has been able to fo-

cus its attention on Simberi and

Leonora in Western Australia.

The company’s strategy led Bob Vassie

July – September 2015 GOLD MINING JOURNAL Page 51

TRIPLE BOTTOM LINE

Australian metal detector company
counts cost of Chinese hacking

Hackers steal $160 ber of detected security government employees.
billion worth of incidents jumped 48% to
intellectual property 42.8 million globally, PwC China has called the
from Western com- said.
panies every year, US comments irrespon-
according to cyber Bryce Boland, chief
security experts. The technology officer for Asia sible, while President
damage, they say, at cyber security firm Fire-
is incalculable and Eye Inc, said many com- Barack Obama vowed
Western governments panies were too focused
have made it a prior- on the reverse engineer- that the US would aggres-
ity to protect their ing capabilities of Chinese
nations’ commercial companies, which allow sively bolster its cyber de-
assets. them to copy products
within weeks of their pub- fences.
But try telling that to Donald lic launch.
McGurk, chief executive of Aus- Behind these public
tralian communications, metal “They may be good at
detection and mining technology reverse engineering but state-level spats, many
firm Codan, who has watched they’re much better at just
sales and prices of his firm’s met- getting the plans during companies are fighting a
al detectors collapse since Chi- the development phase
nese hackers stole its designs [via hacking] and leverag- quieter battle where the
three years ago to sell cheap imi- ing those immediately,”
tations into Africa. Boland said by telephone front keeps changing.
from Singapore.
With the Australian Govern- FireEye said it uncov-
ment wary of rocking the boat Codan began to realise
ahead of June’s historic signing it had a problem when it ered a hacking campaign
of a free trade deal, McGurk says started receiving faulty
he was forced to hire a private in- metal detectors back into in June by a China-based
vestigative firm in China to stage its services centre in 2011.
a series of raids on counterfeit Those products, stamped group it calls APT3, tar-
factories. with the Codan logo, had
unrecognisable, inferior geting organisations in
“They said you’re on your parts.
own,” McGurk told Reuters, re- the aerospace and de-
ferring to the Australian Govern- Then the Australian Se-
ment officials he lobbied to help curity Intelligence Organisation fence, construction and
with his problem. The Australian (ASIO) came knocking: a Codan
Government did not immediately employee’s laptop had been engineering, high tech,
respond to queries about Codan. hacked into when he logged on
using hotel wifi during a business telecommunications and
Codan’s experience provides trip to China. With an African
a rare look at the longer-term gold rush underpinning demand transportation industries.
impacts of hacking on compa- for the metal detectors, Codan’s
nies, as most keep the extent of blueprints had been filched by a FireEye says APT3
an incident under wraps. In fact, Chinese manufacturing chain.
experts say many firms continue engages in “phishing”,
to turn a blind eye to cyber se- McGurk asked the Australian
curity even as hackers become Government for help, requesting a technique of send-
increasingly sophisticated. they speak to Chinese authori-
ties, but discovered his company ing company employ-
A PriceWaterhouseCoopers was on its own. McGurk believes
report found the average infor- a landmark free trade deal with ees innocuous emails
mation security budget dropped China, recently signed after
4% to $4.1 million last year, re- more than a decade of negotia- containing website ad-
versing a three-year trend of ris- tions, was responsible.
ing funds to tackle cybercrime. dresses which trick them
That was even as the total num- “No one wants to muddy the
waters by putting in play some- into downloading pro-
thing that’s negative,” he said.
Codan has had to halve the price of its metal grammes that automati-
The company instead spent detectors to compete with counterfeiters cally lead to protected
“significant sums” on private in- information. It says APT3
vestigators, who worked with
China police to track the supply They discovered it led to is especially sophisticated be-
chain of the counterfeit metal de-
tectors. Dubai, where police raids found cause it constantly changes on-

“significant” numbers of coun- line identities, making it difficult

terfeit gold detectors in storage, to track.

en route to Sudan, Guinea and Codan is ramping up its de-

Niger. fences. The Adelaide-based

China meted out jail terms of company is introducing encrypt-

up to two years for the principals ed products, employs three or

of three first-tier manufacturing four people to work full-time on

companies in the supply chain, preventing hacking-led coun-

while Dubai fined several play- terfeiting and has an Australian

ers around $5,000 each, McGurk lawyer whose sole role is to co-

said. ordinate those efforts.

Codan, meanwhile, was forced “I don’t think you could ever

to slash the price of its gold presume it’s behind you, but now

detectors from around $4,000- we’re in a position to understand

$5,000 to around $2,500 to com- what’s happened,” McGurk said.

pete with the counterfeiters. “It’s like playing Whack-A-Mole.

The company’s net profit fell to They just pop up somewhere

$9.2 million in the year to June else.”

30, 2014, from $45 million a year – Byron Kaye and Jane
earlier as a result. Wardell, with additional

China’s infiltration of private reporting by Jeremy
online business has returned to Wagstaff, Reuters
the spotlight this month after US

officials blamed Chinese hackers

for compromising the records of

up to 4 million current and former

Page 52 GOLD MINING JOURNAL July – September 2015

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GRAPEVINE

Acacia on top in Africa

Acacia Mining plc tions amounted to
chief executive
Brad Gordon and $210,000 with Aca-
chief financial of-
ficer Andrew Wray cia matching the
have led a team of
mountain climbers funds received up
up Africa’s high-
est mountain, in the to a maximum of
process raising more
than $US410,000 for $US200,000 from
charity.
the Acacia Maen-
Gordon, Wray and a team of
Acacia staff, friends and fam- deleo Fund, which
ily completed the climb to Uhuru
Peak, Mt Kilimanjaro in June, means that any do-
raising funds for CanEducate, a
charity that provides educational nation effectively
sponsorships to impoverished
and at-risk children primarily in counted twice.
Tanzania, but also in other sub-
Saharan countries. Acacia is Tanza-

At 5,895m, Mt Kilimanjaro is nia’s largest gold
the highest freestanding moun-
miner, with three

The Acacia Mining team at the top of Mt Kilimanjaro operations – Buly-

anhulu, Buzwagi

tain in the world and the high- gramme had and North Mara –

est point in Africa. To get there grown to cov- producing 700,000
the climbers spent seven days er 1,800 stu- Accommodation was simple ozpa gold.
tackling a variety of climate and dents across throughout the seven-day trek Every cent raised

terrain, along with physical chal- B u l y a n h u l u , will be spent on

lenges such as altitude sickness, Buzwagi and North Mara and education projects in Tanzania

which no amount of training has delivered some of the best by CanEducate and the money

could prepare them for. performers in various schools that has been raised will make a

The money raised will be com- in the National Form 4 examina- massive difference to the lives of

mitted to CanEducate. Acacia tions. many children living in Tanzania.

became involved with the char- The Acacia climbers cov- You can follow the progress

ity in 2010, when the initiative ered their own costs so 100% of CanEducate on its website:

covered 158 students at Bulyan- of donations are going straight http://www.caneducate.ca.

hulu. By the end of 2014 the pro- to CanEducate. External dona-

INDEX

ABM 28 Geopacific 5 Macphersons 31 Resolute 25, 36
Matsa 34 Rift Valley 47
Agnico-Eagle 14 Gold Fields 26 Medusa 49 Rio Tinto 35
Mekong 30
Altona 41 Gold Road 4, 11, 16-22, 24, Metals X 30, 34
Minotaur 10
Altura 28 28

Anglo American 12 Goldcorp 6, 14 Saracen 11, 25

AngloGold Ashanti 1 4, 32, 46 Gryphon 24-25, 40 Semafo 40

Aureus 45 Sheffield 32

Auroch 7, 44 Hanking Gold 29, 46 Newcrest 14 Sibanye 46
Harmony 26
Avocet 40 Newmarket Gold 14 Sipa 32

Azumah 41 Newmont 6, 17, 20, 28, 32 Sirius 4, 11, 18, 19, 28

IAMGold 40 Noble 25 Southern Gold 30
Inca 34
Barrick 6, 12, 14, 17, 35 Independence 18, 32 Northern Star 4, 11, 17, 25, St Barbara 12, 29, 51
Inova 51
Investigator 10 28, 34, 39 Sumitomo 21
IronClad 36
Clancy 26 Norton 12, 35, 39

Consolidated Minerals 4 Tanami Gold 28

Orla 14

Dacian 24 West African 25
Dome 44
Doray 24 KCGM 31 Pan African 7, 44 Xtract 7, 44
Kingsgate 36 Panoramic 34
Kingston 10 Phoenix Gold
Kinross 14 25, 35, 39
Kula Gold 49
Emmerson 27 Yamana Gold 6

Evolution 4, 17, 25, 27, 39 Ramelius 11, 26
Red Mountain 48
Excelsior Gold 11 Regis 4 Zijin 6, 25, 35, 39

La Mancha 11

Page 54 GOLD MINING JOURNAL July – September 2015