St Barbara Mines Limited Annual Report 2004 Notes to the Financial Statements  for the year ended 30 June 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This general purpose  fi  nancial report has been prepared in accordance with Accounting Standards, other authoritative  pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the  Corporations Act 2001. It is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year. The following accounting policies have been used by the consolidated entity for the periods presented: The consolidated  fi  nancial statements have been prepared on a going concern basis. At 30 June 2004 the consolidated  entity’s current liabilities exceeded its current assets by $1.26 million. Further, cash assets on consolidation of $12.85 million at 30 June 2004 were held substantially by the 54% owned  NuStar Mining Corporation Limited (“NuStar”) (formerly Taipan Resources NL) and are not available to meet the  debts and commitments of other members of the consolidated entity. The controlled entity, NuStar, has suf fi  cient cash funds to meet its commitments and subsequent to balance date,  announced on 29 September 2004 procurement of a $30.3 million project  fi  nancing facility to fund the development  of the Paulsens project as well as to provide working capital. The ability of the Company and its wholly owned controlled entities to continue as a going concern is dependent upon  raising funds from the sale of assets and/or equity raisings as well as the repayment or rescheduling of short term  secured debts. Subsequent to balance date, a number of favourable transactions occurred during July 2004 as follows: In addition, on 20 September 2004 the Company announced it had appointed Claymore Capital Pty Ltd (“Claymore”)  to assist the company with a number of transactions, including: The transaction escribed in (ii) is subject to shareholder approval and the completion of an independent expert’s report. Shareholders will be asked to approve this transaction at the company’s AGM to be held in late November 2004 subject  to all necessary statutory procedures being completed within this time. The anticipated outcomes of these transactions being completed are: Should one or more of the asset sales announced on 20 September 2004 not proceed, Directors are con fi  dent  of realising proceeds from the sale of all or part of the Company’s substantial shareholding in NuStar to meet  its funding requirements during this period. •  enable the company to repay its short term secured debt of $3.5 million; and • provide suf fi  cient net cash  fl  ow (subject to shareholder approval being obtained as required) to meet current  obligations and future operating costs for the ensuing twelve months. (i) an initial sale of 100 million NuStar shares to third parties at not less that $0.04 per share; (ii) the sale of the Paulsens 5% royalty owned by the Company to NuStar for not less than $5.1 million and the sale  of the Company’s interest in the Pelican Joint Venture (adjacent to Paulsens) to NuStar; and (iii) the grant of an option to Claymore (or its nominees) to purchase 100 million NuStar shares at $0.05 per share “ at any time up to three months after the initial sale. •  placement of 86,122,000 shares which raised a net $3.7 million; •  conversion of a $4.4 million interest bearing convertible note to shares at a strike price of $0.08 per share; and •  receipt of $1.2 million advance against future equity raisings. (a) Going  Concern