Total revenue for the Group for the year was  $329,282,000 down 8% from the previous year.  Gold revenue decreased by 8% to $302,996,000  and silver revenue decreased by 5% to  $26,286,000. The decrease in gold revenue reflects a lower  gold price and a decrease in gold production  from Challenger partially offset by an increase in gold production from the Chatree Mine. The average US$ gold price received was  US$1,588 (2012: US$1,663). The decrease in silver revenue reflects a lower silver price  received of US$28/oz (2012: US$32/oz). The overall increase in cost of sales to  $195,064,000 including royalties and before  depreciation and amortisation largely reflects  increased throughput and production from the  Chatree Mine due to the expanded Chatree  process plant. On a unit cost basis, total cash  costs for the Group were US$888/oz up from  $US720/oz in the previous year. The total unit  cash costs for Challenger for the year were  US$1,135/oz (2012: US$862/oz), with the  increase mainly due to lower throughput and  production from the Challenger Mine. The total  unit cash costs for Chatree for the year were  US$767/oz up from US$618/oz in 2012. Following a strategic review of the Challenger  Gold Operations a new mine plan focussing  mainly on the Challenger West orebody was  implemented effective 1 July 2013. As a result of the new mine plan together with  the continuing low gold price environment, an  assessment was conducted as at 30 June 2013  of the carrying value of the Challenger Gold  Operations and associated assets. This assess- ment resulted in a pre-tax impairment of  $311,850,000 ($291,259,000 post-tax). A review of the carrying value of all regional  greenfield exploration projects was also  conducted which resulted in the write down of  $6,141,000 primarily against the Barton West  Mineral Sands project in South Australia and the  write down of $14,280,000 against the carrying  value of exploration projects in Thailand that fall  outside the Chatree Mine area of influence. Revenue, and hence operating margins, are  exposed to fluctuations including currency in  the gold price and to a degree in the silver price.  Management continually monitors operating  margins and responds to changes to commodity  prices as necessary to address this risk, including  reviewing mine plans and entering into forward  gold sale contracts. Changes in the gold and silver price also impact  assessments of the feasibility of exploration and  the Group’s two development projects, Nueva  Esperanza and Bowdens. The Group maintains insurance to cover some of  these risks and hazards at levels that are  believed to be appropriate for the circumstances  surrounding each identified risk, however there  remains the possibility that the level of insur- ance may not provide sufficient coverage for  losses related to specific loss events. The material business risks that may have an  impact on the operating and financial prospects  of the Group are: The Group uses a range of assumptions and  forecasts in determining estimates of produc- tion and financial performance. There is uncer- tainty associated with these assumptions that  could result in actual performance differing from  expected outcomes.  The mining industry is subject to significant  risks and hazards, including environmental  hazards, industrial accidents, unusual or unex- pected geological conditions, unavailability of  materials and unplanned equipment failures.  These risks and hazards could result in signifi- cant costs or delays that could have a material  adverse impact on the Group’s financial perfor- mance and position.  Operating cash inflow was $85,020,000. Net  investing cash outflow was $142,425,000. Net  cash outflows from financing activities was  $1,691,000, including a drawdown (net of  transaction costs) of $36,700,000 of the multi- currency and syndicated loan facilities following  a loan restructure by Kingsgate’s Thai subsidiary  Akara Resources Public Company Limited  (“Akara”), net repayment (net of transaction  costs) of $20,000,000 of the corporate loan  facility, and $19,409,000 dividends paid during  the year. Exploration expense was $675,000 and relates  to exploration licences in Chile that were relin- quished or disposed of during the year. The increase in depreciation and amortisation to  $85,595,000 reflects amortisation of the higher  capitalised development costs at the Challenger  Mine, depreciation of the second plant at  Chatree and commencement of amortising the  capital cost of the Chatree Tailings Storage  Facility #2. Ore reserves and mineral resources are esti- mates. These estimates are substantially based  on interpretations of geological data obtained  from drill holes and other sampling techniques.  Actual mineralisation or geological conditions  may be different from those predicted and, as a  consequence, there is a risk that any part or all  of mineral resources will not be converted into  reserves. Market price fluctuations of gold and silver, as  well as increased production and capital costs,  may render ore reserves unprofitable to develop  at a particular site for periods of time.  The Group aims to continually replace reserves  depleted by production to maintain production  levels over the long term. Reserves can be  replaced by expanding known ore bodies,  locating new deposits or making acquisitions. As a result, there is a risk that depletion of  reserves will not be offset by discoveries or  acquisitions. The mineral base may decline if  reserves are mined without adequate replace- ment and as a consequence the Group may not  be able to sustain production beyond the  current mine lives, based on current production  rates. Revenue Mineral reserves and resources Depreciation and amortisation Exploration Cash flow Costs Impairment of assets Material business risks Revenue Mining risks and insurance risks Replacement of depleted reserves Directors’ Report 45 Directors’ Report continued