FINANCIAL REPORT FOR 2012/13 YEAR › asxpdf › 20130828 › pdf › 42hzf3l4tf88d3.pdf · 8/28/2013 · it has released its financial results for the 2012/13 financial year (“FY2013”)

28 August 2013

ASX & MEDIA RELEASE

FINANCIAL REPORT FOR 2012/13 YEAR

• Gold production up 17% to 136,168 ozs (2012: 116,122 ozs) • Revenue up 13% to A$210.6 million (2012: A$186.5 million) • EBITDA1 (excluding significant items2) A$55.8 million (2012: A$63.2 million) • Net cash flow from operations up 40% to A$72.8 million (2012: A$51.9 million) • Net Loss after Tax of A$63.1 million (2012: Profit A$18.7 million)

Saracen Mineral Holdings Limited (ASX:SAR) (“Saracen” or the “Company”) advises that it has released its financial results for the 2012/13 financial year (“FY2013”) as attached.

The Company reported a net loss after tax of A$63.1 million for the financial year. This result is after including pre-tax, non-cash impairment write-downs totalling $79.6 million. These write-downs primarily relate to the calculated impairment effect of the sharply lower gold prices applicable in the later part of FY2013 and more specifically the spot gold price at balance date. The lower price was adopted in the assumptions used for determining the value of ore stockpiles (written down by A$22.9 million) and production assets of the future value of the Company’s cash generating units (written down by A$47.6 million). In addition to this, an evaluation of the results of exploration activities undertaken over the last year resulted in the impairment of some exploration assets (written down by A$9.1 million). The impairment review for mining and development assets was conducted using an average of Saracen’s hedge prices and a A$1,300/oz spot gold price, whilst the review for ore stockpiles utilised a spot gold price assumption of A$1,300/oz. The comprehensive loss after tax attributable to Saracen was $30.7 million. The $32.4 million difference between this amount and the net loss after tax of $63.1 million is due to the inclusion of the fair value after tax gain on the Company’s hedge book as at 30 June 2013. Sales revenue for the year was A$210.6 million, up 13 % (from A$183.8 million in the previous year) mostly as a result of higher gold production of 136,368 ounces versus 116,122 ounces in FY2012. Average gold price for the year was A$1,582/oz (2012: A$1,624/oz). Gross profit from mining operations for the year was A$2.7 million (2012: A$46.0 million) after deducting A$8.2 million for royalties and A$62.3 million in depreciation and amortisation (2012: A$7.0 million and A$26.6 million respectively). Net cash flow from operations for the year was up 40% on the previous year to A$72.8 million (2012: A$51.9 million). Capital expenditure on purchases of plant & equipment, mine development and exploration totalled A$107.6 million for the year, an increase of 10% (2012: A$97.9 million).

Saracen Mineral Holdings Ltd

ACN 009 215 347 Level 4, 89 St Georges Terrace

Perth, WA 6000 Australia

Telephone (61 8) 6229 9100 Facsimile (61 8) 6229 9199

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EBITDA1 (excluding significant items2) for the year was a positive A$55.8 million (2012: A$63.2 million). At the end of the year, the Company had drawn down loans of A$22 million out of available facilities of A$45 million. In addition, the Company had 176,600 ounces of gold hedged at an average price of A$1,683/oz. The hedging is divided into monthly allocations spread over the period July 2013 to August 2016. As at 30 June 2013, the hedge book had a mark-to-market value of A$45.8 million. Detailed results for the financial year ended 30 June 2013 are set out in the attached ASX Appendix 4E and the audited Financial Report.

Raleigh Finlayson Managing Director

Important Notes:

1EBITDA EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA and EBITDA (excluding significant items2) are financial measures which are not prescribed by the International Financial Reporting Standards (IFRS) and represent the profit under IFRS adjusted for specific significant items2. EBITDA (excluding significant items2) has not been subject to any specific review procedures by the auditor but has been extracted from the financial statements by the Company.

2Significant I tems Significant items for the relevant periods are listed below:-

Item Period ended Period ended

30 June 2013 30 June 2012 A$’000 A$’000

Impairment of mining properties (47,660) - Impairment of deferred exploration (9,102) - Inventory write-down (22,885) (6,257) Loss on disposal of assets (1,637) - Change in fair value of derivatives - 4,697 Net realised loss on derivatives - (10,584) Total Significant Items (81,284) (12,144)

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ASX APPENDIX 4E

SARACEN MINERAL HOLDINGS LIMITED ABN: 52 009 215 347

RESULTS FOR ANNOUNCEMENT TO THE MARKET

FOR THE YEAR ENDED 30 JUNE 2013 Previous corresponding period is the year ended 30 June 2012.

Revenue and Net Profit Percentage

Change A$’000

Revenue from ordinary activities (in A$’000 30/06/12:$186,523) up 13% to 210,605

Profit from ordinary activities after tax attributable to members (in A$’000 30/06/12: Profit $18,710) down n/m to (63,098)

Net Profit attributable to members (in A$’000 30/06/12: Profit $18,710) down n/m to (63,098)

* n/m – Not Meaningful as change from Profit to Loss

Dividend Information

No dividend has been proposed or declared.

Net tangible assets per security 30 June 2013

per share 30 June 2012

per share

Net tangible assets per security $0.30 $0.35 Additional Appendix 4E disclosure requirements under ASX Listing Rule 4.3A can be found in the Directors Report to the financial statements, which is attached, at the following page reference:-

Review of results (Directors’ Report) Page 4 Statement of comprehensive income Page 17 Statement of financial position Page 18 Statement of changes in equity Page 19 Statement of cash flows Page 20 Notes to the financial statements Page 21 Earnings per security Page 32 Segment results Page 47 Independent audit report Page 53

Saracen Mineral Holdings Ltd

ACN 009 215 347 Level 4, 89 St Georges Terrace

Perth, WA 6000 Australia

Telephone (61 8) 6229 9100 Facsimile (61 8) 6229 9199

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Entities over which control has been gained or lost over the period.

N/A

Details of dividend distribution N/A Details of reinvestment plans N/A Details of joint venture entities and associates N/A Foreign entity accounting standards N/A Audit dispute or qualification N/A

This report is based on, and should be read in conjunction with, the attached financial report to 30 June 2013 of Saracen Mineral Holdings Limited, which has been audited by BDO East Coast Partnership.

Dated: 28 August 2013

R Finlayson Managing Director

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SARACEN MINERAL HOLDINGS LIMITED ACN 009 215 347

Financial Report for the Year Ended 30 June 2013

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Saracen Minerals Holdings Limited Contents

Financial Report For the year ended 30 June 2013

CORPORATE DIRECTORY ..................................................................................................................................................... 3

DIRECTORS REPORT ............................................................................................................................................................ 4

AUDITOR’S INDEPENDENCE DECLARATION ...................................................................................................................... 16

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................................ 17

CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................................... 18

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................................................................... 19

CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................................. 20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................................................................... 21

DIRECTORS DECLARATION ................................................................................................................................................ 52

INDEPENDENT AUDITORS REPORT ................................................................................................................................... 53

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Saracen Minerals Holdings Limited Corporate Directory

Corporate Directory Board of Directors

Mr Guido Staltari (Non-Executive Chairman) Mr Raleigh Finlayson (Managing Director) Mr Barrie Parker (Non-Executive Director) Mr Martin Reed (Non-Executive Director)

Secretary Mr Gerard Kaczmarek

Registered Office and Business Address Level 4 89 St Georges Terrace Perth WA 6000Telephone: 08 6229 9100 Facsimile: 08 6229 9199 Website: saracen.com.au

Stock Exchange Listing

Listed on the Australian Securities Exchange (ASX Code:SAR)

Auditors BDO East Coast Partnership Level 14, 140 William Street Melbourne VIC 3000 Telephone: 03 9603 1700 Facsimile: 03 9602 3870

Solicitors Steinepreis Paganin Level 4, Next Building 16 Milligan Street Perth WA 6000

Bankers Commonwealth Bank of Australia Limited 367 Collins Street Melbourne VIC 3000

and

Macquarie Bank Limited 1 Martin Place Sydney NSW 2000

Share Registry Computershare Investor Services Pty Limited 452 Johnston Street Abbotsford VIC 3067 Telephone: 1300 787 272 or 03 9415 5000 Facsimile: 03 9473 2500

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Saracen Minerals Holdings Limited Directors Report

Directors Report The Directors of Saracen Mineral Holdings Limited (“Saracen” or “the Company”) present their report, together with the financial statements on the consolidated entity consisting of Saracen Mineral Holdings Limited and its controlled entities for the financial year ended 30 June 2013. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:-

DIRECTORS

The names and particulars of the Company’s directors in office during the financial year and at the date of this report are as follows. Directors held office for this entire period unless otherwise stated.

Guido Staltari Non-Executive Chairman (appointed 18 August 2003) Mr Staltari holds a Bachelor of Science (Honours) degree and is a Fellow of the Australian Institute of Geoscientists. He worked for North Broken Hill Ltd, BHP Minerals Ltd, and also as a mining and petroleum industry consultant before establishing his first publicly listed mineral exploration company in early 1987. He has experience in the management of public companies and is currently a director of Renaissance Capital Pty Limited. Mr Staltari held the joint positions of Executive Chairman and Managing Director until 2 April 2013 when he stood down from the role of Managing Director. He remained as Executive Chairman before reverting to a Non-executive Chairman role effective 1 July 2013. Mr Staltari does not hold, and has not over the last 3 years held, a directorship in any other public listed company.

Raleigh Finlayson Managing Director (appointed 2 April 2013) Mr Raleigh Finlayson is a Mining Engineer having studied at the Western Australian School of Mines and is the holder of a First Class Mine Managers Certificate, a Graduate Certificate in Applied Finance and Investment and is part way through a Masters of Mineral Economic at Curtin University. He is a member of the Australasian Institute of Mining and Metallurgy. Mr Finlayson has over 15 years of technical and operational experience in the mining industry in multiple disciplines including both underground and open pit operations. Since joining the Company, he has managed the timely completion of the Definitive Feasibility Study and development of the Carosue Dam operations in 2009. Mr Finlayson does not hold, and has not over the last 3 years held, a directorship in any other public listed company. Barrie Parker Non-Executive Director (appointed 24 December 2007) Mr Parker holds a degree in Minerals Engineering from the University of Birmingham and is a Fellow of the Australasian Institute of Mining and Metallurgy. He has worked in the international mining industry for more than 40 years, primarily in operations management and project development roles, including managing the initial development of the Boddington and Sunrise Dam Gold mines. His most recent position was as the Regional Manager and Director of the AngloGold companies in Australia and South East Asia. Mr Parker is a member of the remuneration and audit committees and chairman of the risk management committee. Mr Parker does not hold, and has not over the last 3 years held, a directorship in any other public listed company. Martin Reed Non-Executive Director (Appointed 24 August 2012) Mr Reed is a qualified mining engineer (BE Mining, Grad Dip Management, AICD Diploma) with over 35 years’ experience in operations management and project development across a range of commodities, countries and sizes of operations. Recent roles have included Chief Operating Officer and Project Manager for a number of metals companies including Sirius Resources, Sandfire Resources, St Barbara Limited, Paladin Energy Ltd and Windimurra Vanadium Limited. Prior to these appointments, Mr Reed held a number of senior executive positions in the mining industry including roles where he was responsible for the planning and development of several large mining operations in remote locations. During the past three (3) years Mr Reed has held directorships in the following other listed entities:- Company Appointed Resigned Endeavour Mining Corporation 5 December 2011 18 October 2012 Adamus Resources Limited 4 December 2009 5 December 2011 Carl Thompson Non-Executive Director (appointed 21 August 2003. Retired 20 November 2012) Mr Thompson holds law and commerce degrees from the University of Melbourne. He was previously a partner of a national law firm, Corrs Chambers Westgarth, practising in the areas of business acquisitions and sales, business

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structures, capital raisings and company floats, mergers and acquisitions, and the securities industry. He has extensive experience in ASIC policy and regulatory matters. Mr Thompson is currently Company Secretary / General Counsel at a public listed company. During his tenure as a director, Mr Thompson was a member of the audit committee, and chairman of the remuneration committee. Mr Thompson does not hold, and has not over the last 3 years held, a directorship in any other public listed company. Ivan Hoffman OAM Non-Executive Director (appointed 31 May 2005. Resigned 25 July 2013) Mr Hoffman is a Certified Practising Accountant and a Fellow of the Institute of Corporate Managers, Secretaries and Administrators. For around 18 years, Mr Hoffman was a corporate advisory consultant specialising in mergers & acquisitions and company reconstructions, during which period he served on the boards of several public listed companies, including mineral exploration and mining companies. Before that, Mr Hoffman worked for several years with local and international financial institutions, including four years in investment management and project financing with Lloyds Bank International. Mr Hoffman is currently chairman of the Fortron group of companies. During his tenure as a director, Mr Hoffman was a member of the remuneration committee and chairman of the audit committee. Mr Hoffman does not hold, and has not over the last 3 years held, a directorship in any other public listed company. COMPANY SECRETARY Gerard Kaczmarek (Appointed 17 September 2012) Mr Kaczmarek graduated from the Australian National University (ANU) with a Bachelor in Economic and Accounting. He has almost 30 years’ experience in the resources and mineral processing industry in Australia and overseas. He was Company Secretary and Chief Financial Officer for gold mining company Troy Resources for almost ten years and prior to that spend nearly seven years at Burmine Limited prior to its merger with Sons of Gwalia Limited. He commenced his career with the base metals division of CRA, now Rio Tinto. He is a CPA and MAICD. During the past three (3) years Mr Kaczmarek has held directorships in the following other listed entities:- Company Appointed Resigned Kimberley Rare Earths Limited 2 December 2010 9 February 2012 Rajan Narayanasamy (Appointed 8 September 2003. Resigned as Company Secretary 17 September 2012) Mr Narayanasamy was appointed Chief Financial Officer on 1 October 2009 and resigned on 17 September 2012. He holds a Bachelor of Business degree and is a Certified Practising Accountant, having served more than 20 years in the resources industry. INTERESTS IN SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the direct and indirect interests of the Directors and their related parties in the shares and options of Saracen were:

Director Ordinary Shares Options over ordinary shares - listed

Options over ordinary shares - unlisted

Guido Staltari 16,407,252 - - Raleigh Finlayson 1,000,000 - 255,000 Barrie Parker 100,000 - - Martin Reed - - -

PRINCIPAL ACTIVITIES The principal activity of the Group during the year was gold mining and mineral exploration.

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REVIEW AND RESULTS OF OPERATIONS Overview Saracen Mineral Holdings Limited owns 100% of the Carosue Dam Operations, which have been in continuous production over almost four years under Saracen’s ownership. During this period over 400,000 ounces of gold have been won from several open pits and the Red October underground mine. Saracen’s tenement holdings and gold deposits are located in one of the world’s most prospective gold provinces, incorporating the Laverton and Keith Kilkenny Tectonic Zones, north-east of Kalgoorlie, Western Australia. This province is home to several world class gold mines and deposits including Sunrise Dam, Granny Smith, and Wallaby. In excess of 23 million (M) ounces (oz) of gold in resources have been found and / or brought into production in this province, where Saracen is building a long-term strategic infrastructure and resource position. Saracen’s Carosue Dam Operations (CDO) comprises a processing plant, modern accommodation village and water and power infrastructure located approx 120 km north-east of Kalgoorlie. The CDO processing plant was commissioned in November 2000. The plant has a nameplate capacity of 2.4mtpa based on a blend of hard and soft ores. Saracen purchased CDO in 2006 and re-commenced operations in early 2010. Saracen’s business plan involves: -

• Completing the cutback of the Whirling Dervish open pit to deliver 273,000oz over the next three years; • Deliver consistent gold production from the underground Red October mine in FY2014; • Extend the life of Red October beyond 2 years; • Extending the life and quality of its open-pittable resources; • Progressing its other underground mining projects, including Deep South, Whirling Dervish and Karari; • Optimising production through the Carosue Dam processing plant; • Generating increased cash flows; and • Building on and advancing its impressive project pipeline.

Health and Safety Safety performance approached an acceptable outcome through the first six months of the year with no LTIs recorded and a LTI frequency rate of 1.9. However the occurrence of five LTI’s, from January 2013 through to June 2013, eroded the strong performance during the first 6 months, with the LTI frequency rate increasing to 3.1. This was a very disappointing result, as the Company completed the role out of its in-house Leadership Training for Managers, Supervisors and OHS Representatives and has made what it believes to be significant progress in developing a strong risk management and hazard awareness culture. Financial Performance The Company reported a net loss after tax of A$63.1 million (2012: a profit of A$18.7M). This result is inclusive of pre-tax non-cash write-downs of A$79.6 million on inventory (A$22.9 million), production assets (A$47.6 million) and exploration assets (A$9.1 million). These write-downs mainly relate to the effects of the sharply declining gold price applicable in the latter part of FY2013 and more specifically the low spot gold price as at balance date. The lower price was utilised in assumptions for determining the value of ore stockpiles and production assets of the future value of the Group’s cash generating units. In addition to this, an evaluation of the results of exploration activities undertaken over the last year resulted in the impairment of some exploration assets. The impairment review for mining and development assets was conducted using an average of Saracen’s hedge prices and a A$1,300/oz spot gold price, whilst the review for ore stockpiles utilised a spot gold price assumption of A$1,300/oz. Sales revenue for the year was A$210.6 million, up 13% (from A$183.8 million in the previous year) mostly as a result of higher gold production of 136,368 ounces versus 116,122 ounces in FY2012. Average gold price for the year was A$1,582/oz (2012: A$1,624/oz). Gross profit from mining operations for the year was A$2.7 million (2012: A$46.0 million) after deducting A$8.2 million for royalties and A$62.3 million in depreciation and amortisation (2012: A$7.0 million and A$26.6 million respectively).

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Net cash flow from operations for the year was up 40% on the previous year to A$72.8 million (2012: A$51.9 million). Capital expenditure on purchases of plant & equipment, mine development and exploration totalled A$107.6 million for the year, an increase of 10% (2012: A$97.9 million). At 30 June 2013 the Company has in place with Macquarie Bank Limited a hedging programme comprising 176,600 oz of gold sold forward at an average price of A$1,681/oz, and an associated debt facility of A$45 million of which A$22 million has been drawn. No dividend has been declared, proposed or paid for or during the financial year. Production Operations For the financial year ending 30 June 2013 (“FY2013”) gold production from the Carosue Dam operations was 136,168 oz at a cash cost of A$1,072 per oz (excluding royalties of A$60 per oz). Mine developments milestones were passed, namely the Red October Underground Mine evolving from a trial exploration mine to a fully-fledged producing mine, and the A$35 million capital development of the third stage of the Whirling Dervish open pit. Saracen commenced the stage three cut back of the Whirling Dervish pit in October 2012 with first ore mined in June 2013. The pit is expected to deliver significant volumes of ore from December 2013. The Whirling Dervish open pit will provide the base load mill feed to the Carosue Dam processing plant from December 2013 through to mid-2016. Surface mining activity increase by 67% on the previous year, with an increase of 7 Mbcm in material mined in the Whirling Dervish stage three cut back. Total material mined by conventional methods from all open pits was 11 Mbcm, yielding 1.9Mt of ore at 1.79g/t and 110,280 contained ounces. In September 2012, a fourth excavator fleet comprising mainly a larger capacity 200t excavator and an additional six 150t dump trucks, was mobilised for the capital development of Whirling Dervish stage three. Towards the end of the year the mining fleet was reduced in size with the demobilisation of more than half of the mining fleet. Capacity decreased from four production excavators to two, with the resulting downsizing of both personal, truck and ancillary equipment numbers. This fleet size reduction is due to transition from three operating pits (Deep South, Karari and Whirling Dervish) to just one (Whirling Dervish), with only a small amount of activity required to complete mining of the Karari open pit. Ore from open pit mining was sourced from the Old Camp and Sizzler mines near Butchers Well (Northern district), Redbrook and Margaret’s (Porphyry District), Deep South (Safari Bore District), Karari and Whirling Dervish (Carosue District). Highlights for the year were the excellent production performance from Deep South and Karari, with Deep South delivering 210,000t of ore at 3.9 g/t for 26,461 contained ounces and Karari delivering 1.3 Mt at 1.48 g/t for 60,738 contained ounces. Red October successfully made the transition from an exploration and development project to a steady state producing underground mine. Critical primary infrastructure works were completed by the end of March 2013, which included the installation of a return air rise (exhaust) system to surface and a primary power distribution network, as well as the establishment of an emergency escape way system. Red October produced 109,000t at 8.38g/t for 29,610 contained ounces. Ore delivered to the processing plant was a combination of ore mined from both surface and underground sources, supplemented from the large ore stockpile from previous years’ mining activities. The processing plant operated at above the nameplate capacity, with 2.5Mt of ore at 1.87 g/t processed, at a recovery of 91%.

Mill Production Unit

Sep 12 Qtr

Dec 12 Qtr

Mar 13 Qtr

June 13 Qtr FY2013

Total Ore Milled t 654,569 614,699 624,840 606,474 2,500,582 g/t 1.61 1.80 2.01 2.09 1.87

Recovery % 90.1% 90.0% 90.3% 91.3% 90.4% Gold Produced oz 30,448 32,031 36,430 37,259 136,168

Key capital projects included the commencement of the A$25 million expansion of the Carosue Dam processing plant from 2.4 to 3.2 million tonnes per annum through the installation of additional tertiary crushing capacity and

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downstream absorption tank capacity. This project was placed on hold in April 2013 following the Board’s review of the Company’s business plan and adoption of a more conservative stance towards capital spending in the face of increased volatility in the spot gold price. Around A$5.1 million of the planned A$25 million had been expensed to the time of curtailment, though part of this expenditure represents quarantined benefits readily realisable should an expansion decision be taken at some future date. Also commenced was the construction of a new tailings storage facility (TSF3), from suitable waste material arising from the Whirling Dervish stage three cut back. Use of this material will significantly reduce the total capital cost of this new storage facility, ultimately saving as much as 50% of the total capital cost. Construction of this facility will continue through FY2014 and the expected completion of facility is the start of FY2015, providing up to an additional 6 years of tailings storage capacity for the Carosue operations. Production & Operational Outlook for 2013/14 and Beyond In FY2014, gold production will be sourced principally from the Karari and Whirling Dervish open pit mine’s, low grade stockpiled ore and the high grade Red October underground mine. Production is forecast to be in the range of 120,000 to 130,000 oz. Cash Costs are forecast to be approximately A$900/oz in FY2014 and “All in” Sustaining Cash Costs are forecast to be A$1,500/oz. Guidance for FY2015 is 125,000 to 135,000 oz, with Cash Costs forecast to fall to A$750/oz and “All in” Sustaining Cash Costs forecast to fall to A$950/oz. Exploration Following a very successful 2012, the exploration effort focused on following up early stage prospects that would ultimately add to the production profile after 2015. A strategic review of the tenement package identified the highest priority targets for follow up, and their ranking based on empirical and conceptual geological data, geophysics and geochemistry. A number of these targets were successfully followed up. A total of 2,910 diamond core and 36,670 meters of RC drilling was completed with work undertaken at Whirling Dervish, Deep South, Red October and Deep Well with a new discovery being made late in the year at the Blue Manna Prospect located approximately 8 km northeast of the Carosue Dam plant. Effort was also focused on opening up exploration knowledge by applying advanced geochemical techniques, detailed Sub-Audio Magnetics and 3D Geodynamic Fault modelling. Investor Relations During the year the Company presented at several conferences and participated on Roadshows to current and potential investors, analysts and brokers. These included:-

• Diggers & Dealers Conference, Kalgoorlie WA, 7 August 2012; • Denver Gold Forum, Denver, USA, 12 September 2012; • Cannacord Global Resource Conference, Miami, USA 16 October 2012; • ASX Spotlight Conference, New York, USA, 26 February 2013; • European Gold Forum, Zurich, Switzerland, 17 April 2013; • ASX Spotlight Conference, Hong Kong, 14 May 2013; and • ASX Spotlight Conference, Singapore, 15 May 2013.

A copy of the presentation given to each of these conferences has been released to the ASX and is available on the ASX and the Company’s websites. Human Resources Workforce re-adjustment comprising mainly amalgamations of roles, retirement of positions, and redundancies arising from the changes in Saracen operations, was implemented during the second half of the year. During the year, approximately 50 direct employees and 100 contractors concluded their employment with Saracen. All aspects of human capital management within Saracen have undergone a focussed analysis to ensure Saracen is maximising its return on investment. Ongoing levels of employee numbers against the forecast budget, employee benefits provided by the Company and how employment is structured within Saracen, have been the focus of the review process.

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Community Support Retaining our commitment to supporting the community in which we operate has remained a core focus of Saracen even under such trying market conditions. During FY2013 Saracen has provided funding to;

• Western Australian Ambulance Service • The Kalgoorlie Boulder Community High School • The Kalgoorlie Football Club • Mining Family Matters Support Services • Western Australian Special Needs Christmas Party

DIVIDENDS No dividends have been paid or declared by the Group since the end of the previous financial year. No dividend is recommended in respect of the current financial year. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto. MATTERS SUBSEQUENT TO THE REPORTING PERIOD There has not been any matter or circumstance, other than that referred to in the financial report that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Directors continue to seek suitable mineral opportunities for acquisition or farm-in, as well as corporate investment interests, while progressing with the Carosue Dam Operations. Further information on likely developments and the expected results of those operations would, in the opinion of the Directors, be speculative and likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this report. ENVIRONMENTAL REGULATION AND PERFORMANCE The Group’s operations are subject to environmental regulations attached to the granting of licences by the Department of Mines and Petroleum, Western Australia. The Group continues to comply with these regulations. Performance bonds are in place to secure the Group’s rehabilitation obligations, described in Note 12 of the Notes to the Financial Statements. The group is subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007. The Energy Efficiency Opportunities Act 2006 requires the group to assess its energy usage, including the identification, investigation and evaluation of energy saving opportunities, and to report publicly on the assessments undertaken, including what action the group intends to take as a result. The group continues to meet its obligations under this Act. The National Greenhouse and Energy Reporting Act 2007 require the group to report its annual greenhouse gas emissions and energy use. The group has implemented systems and processes for the collection and calculation of the data required and submitted its 2011/12 report to the Greenhouse and Energy Data Officer in October 2012.

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SHARE OPTIONS At the date of this report there were:

(i) 4,122,550 unissued ordinary shares under unlisted incentive options to acquire shares at varying exercise dates and prices. Further details of the unlisted incentive options are provided in Note 20(c) of the Notes to the Financial Statements. Option holders do not have any right, by virtue of the option, to participate in any share issue of any related body corporate.

Details of shares issued during or since the end of the financial year as a result of exercise of an option are:-

Issuing Entity Number of Shares Issued

Class of Shares

Amount Paid for Shares

Amount Unpaid on Shares

Saracen Mineral Holdings Limited 265,728 Ordinary Weighted average of A$0.29

per share Nil

DIRECTORS’ MEETINGS The number of Board and Committee meetings held, and the number of those meetings attended by each Director or Committee member during the financial year were:-

Director Board Meetings

Audit Committee Meetings

Remuneration Committee Meetings

Risk Management Committee Meetings

Meetings held

while a director

Meetings attended

Meetings held

while a member

Meetings attended

Meetings held

while a member

Meetings attended

Meetings held

while a member

Meetings attended

Guido Staltari 14 14 - - - - - - Raleigh John Finlayson 2 2 - - - - - - Carl Thompson 4 3 1 1 - - - - Ivan Hoffman 14 12 2 2 5 5 - - Barrie Parker 14 13 2 2 5 5 4 4 Martin Reed 12 12 1 - 5 5 4 4

In addition to the regular Board and Committee meetings, Directors regularly communicate by telephone, email or other electronic means, and where necessary, circular resolutions are executed to effect decisions. REMUNERATION REPORT (AUDITED) The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act. The Directors present this Remuneration Report which set out remuneration information for Saracen Mineral Holdings Limited’s Executive and Non-executive Directors and other key management personnel. This report forms part of the Directors’ Report. a) Remuneration Guidance The Board is ultimately responsible for determining and reviewing remuneration arrangements for Directors, within the limits approved by shareholders for such remuneration. The maximum aggregate amount that can be paid for Non-executive Directors remuneration is set at A$500,000 as approved by shareholders at the AGM held on 25 November 2011. b) Directors and Key management Personnel Disclosed in this Report The Directors of the Group during or since the end of the financial year were:-

Guido Staltari Non-executive Chairman (i) Raleigh Finlayson Managing Director (Executive) (ii)

Barrie Parker Director (Non-Executive) Martin Reed Director (Non-Executive), appointed 24 August 2012 Carl Thompson Director (Non-Executive). resigned 20 November 2012 Ivan Hoffman OAM Director (Non-Executive), resigned 25 July 2013

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The key management personnel during or since the end of the financial year were:-

Craig Bradshaw Gerry Kaczmarek Richard Maddocks Grant Haywood Rajan Narayanasamy

Chief Operating Officer, appointed 10 April 2013 Company Secretary / Chief Financial Officer, appointed 17 September 2012 General Manager – Geology and Exploration, resigned 9 August 2013 General Manager – Operations, resigned 31 December 2012 Company Secretary / Chief Financial Officer, resigned 30 November 2012

(i) Mr Staltari held the positions of Executive Chairman and Managing Director until 2 April 2013 when he

stood down from the role of Managing Director. He reverted to a Non-executive Chairman role effective 1 July 2013.

(ii) Mr Finlayson was appointed Managing Director from 2 April 2013. Prior to this he held the position of Chief Operating Officer.

c) Remuneration Policy for Directors The Board policy for determining the nature and amount of remuneration of Directors and key personnel, as well as the relevant specific arrangements, are detailed below. Non-executive Directors’ remuneration is subject to review from time to time, as the Directors deem appropriate, having regard to the scope, scale and degree of complexity of the Company’s operations. During the year, the non-executive directors, Carl Thompson, Ivan Hoffman, Martin Reed and Barrie Parker were each paid at the rate of A$100,000 per annum plus an additional amount of A$20,000 per annum for chairing Board Sub-Committees. Both amounts include applicable superannuation. Effective 1 July 2013, Directors’ base remuneration has been reduced by 20% to A$80,000 per annum (including superannuation). Mr Guido Staltari acted as both Executive Chairman and Managing Director for the period 1 July 2012 until 2 April 2013. On 2 April, he stood down from the position of Managing Director upon the appointment of Mr Raleigh Finlayson to that position but remained Executive Chairman until 1 July 2013 when he reverted to the position of Non-executive Chairman. Remuneration for his services as an executive during the 2012/13 year, were incorporated in services provided by Renaissance Capital Pty Limited (“RenCap”) pursuant to the terms of a management agreement. Mr Staltari’s family interests control RenCap. Under the management agreement, RenCap provided the Company with office facilities in Melbourne. The Company paid RenCap a fee of A$330,000 (plus GST) in the financial year for the provision of those office facilities. The Company also paid professional fees of A$45,833 per month up to April 2013 and A$22,917 for May 2013 and June 2013 for the services of Mr Staltari and also reimburses RenCap for all out of pocket expenses. Total fees and reimbursements paid or due to RenCap during the year amounted to A$834,167 plus GST (2012: A$910,666). This comprised the A$330,000 (2012: A$360,000) for the provision of office facilities and associated costs and A$504,167 (2012: A$550,666) for professional services and reimbursements. Mr Staltari’s Directors’ Fee for the position of Non-executive Chairman effective 1 July 2013 has been set at $140,000 per annum. Due to the change in Mr Staltari’s employment from executive to non-executive effective on 1 July 2013, the RenCap management agreement has been terminated by mutual agreement. Taking into consideration that the lease obligations on the Melbourne office premises to an outside, unrelated entity remain, the Company has agreed to continue to pay A$30,000 a month to RenCap until the lease expires in September 2014. Neither the remuneration of Directors nor the RenCap arrangements were linked to the Company’s performance. d) Remuneration Policy for Executives The Remuneration Committee of the Board is responsible for determining remuneration policies in respect of key management personnel (“Executives”). In establishing such policies, the Remuneration Committee is guided by external remuneration surveys and industry practices, commensurate with the scale and size of the Group’s operations. The policies and remuneration levels are reviewed regularly to ensure that the Group remains competitive as an employer. The Group has employment agreements with all Executives. These contracts are capable of termination in accordance with standard employment terms. The terms of the contracts are open ended although the Group retains the right to terminate a contract immediately by making payment equal to the period in lieu of notice. The Executives are also entitled to receive, on termination of employment, their statutory entitlements of accrued annual and long service

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leave. Each employment contract outlines the components of remuneration paid to each executive but does not prescribe how remuneration levels are modified from year to year. Remuneration levels are reviewed each year to take into account performance, cost of living and industry movements, any change in the scope of the role performed by the executive and any changes to meet the principles of remuneration. Additional details of Executive employment agreements can be found below at section “ (g) – Service Agreements”. Other than the above, or as disclosed elsewhere in the remuneration report, apart from the Managing Director, no Executives are subject to specific contract arrangements. A formal biannual performance review system is in place, whereby operating and non-operating key performance indicators (“KPIs”) relevant to each Executive are set, so as to form a basis of assessment of future levels of remuneration. The KPIs set for Executives are mostly directly aligned to the Company’s intrinsic business performance, for example, performance against the annual operating budget, health and safety measures, and other operations-related criteria. There is no direct formal relationship between remuneration and such performance measures, and the Board retains the right to determine an Executive’s remuneration depending on the outcome of the biannual performance reviews and other factors the Directors consider relevant. The Company has in place an Incentive Option Scheme (“IOS”) which has been approved by shareholders at an annual general meeting. The Scheme is designed to provide incentives to employees and consultants whose contribution is considered by the Directors has assisted in the development of the Company. Options issued pursuant to the Scheme will be commensurate with the position, skills, experience and length of service with the Company and such other criteria that the Directors consider appropriate in the circumstances. e) Share Based Compensation There were no options issued during the 2012/13 financial year. In late 2010, early 2011 and 2012 options were offered to approximately 200 personnel (including several long-serving consultants) under the IOS. The Directors decided that the IOS option grants be based on the following key principles:-

1. A majority of Saracen personnel should participate, in order to promote a Company-wide “ownership” of Saracen’s business and prospects.

2. Grants under the IOS should be linked to annual performance, under the Company’s annual performance review system.

3. Options granted should be subject to vesting periods and accordingly should enhance retention of personnel, in a competitive market for skills across a range of disciplines.

At the reporting date a total of 4,122,550 options (2012: 13,887,168) remain on issue under the Scheme. Directors do not participate in Saracen’s IOS and the options being allocated to personnel are intended to provide a suitable incentive for them to link their actions to the Company’s overall business’s objectives and performance and to give them the opportunity to derive a reward as and when the Company’s value increases markedly. Except in as far as the IOS option grants are linked to KPI performance, there is no formal relationship between remuneration of Executives and the Company’s performance when measured directly on the basis of shareholder returns or wealth. It is important to note that the Company has had to compete in a tight labour market in recruiting personnel. Under Saracen’s Securities Trading Policy, Directors and key management personnel must provide details of any transactions which operate to limit the economic risk of their security holding to the Company Secretary. The Directors are cognisant of the need to review the remuneration policy in line with changing circumstances, and the desirability of having arrangements that can be administered cost-effectively given the company’s size and the need to preserve capital for business activities. To this end, the Remuneration Committee are in the process of formulating a specific incentive scheme structure to be applied to Executives. The Remuneration Committee has taken advice from outside remuneration consultants (refer section (i) below) with respect to formulating a new scheme and applying appropriate KPI’s. The scheme will include both short and long term incentives in a combination of cash and equity. It is intended that the scheme would be approved by the Board and introduced by the end of September 2013. f) Details of Remuneration Details of the nature and amount of each major element of the remuneration of each director of the Group and each of the key management personnel of the Group during the financial year are:-

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30 June 2013 Short-term employee benefits Post-Employment Equity Long Term

Benefits

Total Proportion of

total performance related

Value of

option as % of

total Salary &

fees Cash

bonus Non-

monetary benefits

Superannuation and other

Options Long Service

Leave

A$ A$ A$ A$ A$ A$ A$

Directors

G Staltari (i) 504,167 - - - - - 504,167 - - C Thompson (retired 20 November 2012) 42,817 - - 3,854 - - 46,671 - -

I Hoffman (resigned 25 July 2013) 110,092 - - 9,908 - - 120,000 - -

B Parker 95,017 - - 24,983 - - 120,000 - - M Reed(ii)

(appointed 24 August 2012)

97,192 - - - - - 97,192 - -

R Finlayson (iii)(v)

(appointed 2 April 2013) 412,320 - 4,529 26,965 31,525 16,890 492,229 6.4% 6.4%

Executives G Haywood (iii) (resigned 31 December 2012) 197,884 - 4,098 14,315 - - 216,297 - -

R Maddocks (iv)

(resigned 9 August 2013) 260,425 - 11,979 23,438 15,547 868 312,257

5%

5%

R Narayanasamy (iii)

(resigned 30 November 2012)

120,248 - 3,951 415,350 - - 539,549 - -

C Bradshaw (commenced 19 February 2013)

142,389 - 3,980 -

- 146,369 - -

G Kaczmarek (appointed 17 September 2012)

270,351 - - 15,993 -

- 286,344 - -

Total 2,252,902 - 24,557 538,786 47,072 17,758 2,881,075 - -

(i) An amount of A$504,167 has been paid / is payable for services provided by RenCap. (ii) An amount of A$97,192 has been paid / is payable for services provided by PilotHole Pty Ltd. (iii) Non-monetary benefits include company provided health insurance. Post-employment benefits consist

of retirement benefits of A$404,045 and superannuation of A$11,305. (iv) Non-monetary benefits include company provided health insurance and car parking. (v) Previously held the position of Chief Operating Officer.

No options were granted to named officers of the Company or consolidated entity in the current or the previous financial year. Options incorporated in the remuneration tables above were granted in the 2010/11 financial year. 30 June 2012 Short-term employee benefits Post-Employment Equity Long

Term Benefits

Total Proportion of

total performance related

Value of

option as % of

total Salary &

fees Cash bonus Non-

monetary benefits

Superannuation Options Long Service

Leave

A$ A$ A$ A$ A$ A$ A$

Directors

G Staltari (i) 550,666 - - - - - 550,666 - -

C Thompson 100,917 - - 9,083 - - 110,000 - - I Hoffman 70,918 - - 39,082 - - 110,000 - - B Parker 60,778 - - 49,222 - - 110,000 - - Executives

R Finlayson (ii) 341,784 - 4,578 24,998 108,536 8,116 488,012 15.0% 22.2% G Haywood (iii) 284,250 20,000 6,687 27,382 54,268 1,481 394,068 9.3% 13.8% R Maddocks (iv) 242,000 - 16,497 21,780 58,685 529 339,491 10.8% 17.3% R Narayanasamy (v) 270,495 - 4,333 49,932 108,536 11,756 445,052 16.4% 24.4% Total 1,921,808 20,000 32,095 221,479 330,025 21,882 2,547,289

(i) An amount of A$550,666 has been paid / is payable for services provided by RenCap. (ii) Non-monetary benefits include company provided insurances Non-monetary benefits include company

provided insurances.

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(iii) Mr Haywood is received a retention bonus of A$20,000 at the conclusion of 2 years continuous service from the date of his commencement being 19 April 2010. Non-monetary benefits include company provided insurances.

(iv) Non-monetary benefits include company provided insurances and car parking. (v) Non-monetary benefits include company provided insurances.

No options were granted to named officers of the Company or consolidated entity in the current or the previous financial year. Options incorporated in the remuneration tables above were granted in the 2010/11 financial year. In the current financial year, the following named officers exercised and /or had options lapse that were granted to them as part of their compensation in prior financial years:

30 June 2013 Number of Options Lapsed

Number of Options Exercised

Number of Shares Issued

Class of Shares


Amount Unpaid

on Shares R Finlayson (i) 1,291,667 133,333 19,789 Ordinary Nil Nil G Haywood 340,000 - - - - Nil R Maddocks 148,750 - - - - Nil R Narayanasamy 758,334 166,666 166,666 Ordinary A$58,333 Nil

(i) The issue of 19,789 shares was from the exercise of options utilising the cashless exercise facility.

During the previous year the following options granted to Directors and named officers were exercised or lapsed.

30 June 2012 Number of Options Lapsed

Number of Options Exercised

Number of Shares Issued

Class of Shares


Amount Unpaid

on Shares R Finlayson - 170,000 170,000 Ordinary A$85,000 Nil G Haywood 85,000 - - - - Nil R Maddocks 59,500 - - - - Nil R Narayanasamy - 170,000 170,000 Ordinary A$85,000 Nil

g) Service Agreements Key Terms of Employment Contracts for Executives Remuneration of the Managing Director and Executives are formalised in letters of appointment and service agreements. These agreements provide details of the salary and employment conditions relating to each employee. All Executives are permanent employees and not on time based contracts. All agreements may be terminated by either the Company or the individual giving the required notice period which varies between one and three months. All service agreements comply with the provisions of Part 2, D.2, Division 2 of the Corporations Law. Additional Details for Mr Raleigh Finlayson - Managing Director Mr Finlayson was appointed Managing Director effective 2 April 2013. He is employed as a permanent employee under an employment agreement. Specific terms of his agreement are:-

• Base annual salary of A$500,000 per annum plus statutory superannuation percentage for the period 2 April to 30 June 2013 and no incentives or bonuses will be applicable.

• Base salary of A$485,000 per annum plus statutory superannuation percentage from 1 July 2013 with participation in a new incentive scheme. Note: details of the scheme are still being finalised.

• Notice period of 3 months in the absence of gross negligence or other specified event where the Company can terminate immediately. If asked to leave immediately by the Company, the notice period will be paid out.

• If Mr Finlayson is terminated by the Company following to a “change of control” event, he will be entitled to a redundancy payment equal to 12 months earnings.

h) Voting on the Remuneration Report at the 2012 AGM At the 2012 Annual General Meeting (AGM), 27.4% of the votes cast on the resolution to approve the Remuneration Report were against the adoption of the resolution. Following the AGM, the Company met with several of the larger shareholders that voted against the resolution to discuss their concerns and reasons. The Company is also in the process of developing new Short and Long Term Incentive Schemes which will result in closer correlation between Company performance and the benefits that the employee will receive. The Company has not issued any options or paid any bonuses in the current financial year.

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Saracen Minerals Holdings Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Financial Year Ended 30 June 2013

Note

2013 $’000

2012 $’000

Revenue from continuing operations 2 210,605 183,759 Mine operating costs (137,440) (104,250) Depreciation and amortisation 2 (62,278) (26,595) Royalties (8,164) (6,959) Gross profit from mining operations 2,723 45,955 Administration expenses 2 (9,230) (7,971) Share based payments expense (106) (1,497) Finance costs 2 (1,474) (128) Other income 2 1,077 2,764 Loss on disposal of fixed assets (1,637) - Net realised loss on derivatives - (10,584) Change in fair value of derivatives - 4,697 Impairment of deferred exploration costs 14 (9,102) (308) Impairment of mines in production 15 (47,660) - Inventory write-down 9 (22,885) (6,257) Change in fair value of listed shares (30) 21 (Loss)/Profit before income tax (88,324) 26,692 Income tax benefit/(expense) 4 25,226 (7,982) (Loss)/Profit after income tax for the period

(63,098) 18,710

Other comprehensive income/(loss), net of income tax Items that may be reclassified subsequently to profit or loss Fair value gain on hedging instruments entered into for cash flow hedges 32,442 - Other comprehensive income for the year 32,442 - Total comprehensive income/(loss) attributable to members of Saracen Mineral Holdings Limited

(30,656)

18,710 (Loss)/Earnings per share for the year attributable to the members of Saracen Mineral Holdings Limited:

Basic (Loss)/Earnings (cents per share) 5 (10.60)

3.30

Diluted (Loss)/Earnings (cents per share) 5 (10.60)

3.25

The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the notes to the financial statements.

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Saracen Minerals Holdings Limited Consolidated Statement of Financial Position

Consolidated Statement of Financial Position As at 30 June 2013

2013 $’000

2012 $’000

Current assets Note Cash and cash equivalents 23(a) 9,024 20,196 Trade and other receivables 7 3,049 6,392 Financial derivative instruments 11 17,652 - Other financial assets 8 85 115 Inventories 9 25,536 44,389 Other 10 665 607 Total current assets 56,011 71,699 Non-current assets Plant and equipment 13 40,205 34,762 Financial derivative instruments 11 28,694 - Other financial assets 12 7,423 10,959 Deferred tax assets 4 1,027 - Deferred exploration and evaluation costs 14 22,098 26,485 Mine properties 15 81,908 110,037 Total non-current assets 181,355 182,243 Total assets 237,366 253,942 Current liabilities Trade and other payables 16 18,788 17,221 Borrowings 18 1,217 1,236 Provisions 17 2,554 2,683 Total current liabilities 22,559 21,140 Non-current liabilities Borrowings 18 23,623 1,828 Deferred tax liability 4 - 10,294 Provisions 17 12,458 11,581 Total non-current liabilities 36,081 23,703 Total liabilities 58,640 44,843 Net assets 178,726 209,099 Equity Contributed equity 19(a) 185,901 185,724 Reserves 19(e) 35,888 3,340 (Accumulated Losses)/Retained profits (43,063) 20,035 Total equity 178,726 209,099

The consolidated statement of financial position should be read in conjunction with the notes to the financial statements.

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Saracen Minerals Holdings Limited Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in Equity For the Financial Year Ended 30 June 2013

Contributed equity

$’000

(Accumulated Losses) /

Retained profits $’000

Cash Flow

Hedge Reserve

$’000

Share Based Payments

Reserve$’000

Total

$’000 As at 1 July 2012

185,724 20,035

- 3,340 209,099

Loss for the year after tax

- (63,098)

- (63,098)

Other comprehensive income - - 32,442 - 32,442 Total comprehensive profit/(loss) for the year after tax

- (63,098)

32,442 - (30,656)

Transactions with owners in their capacity as owners

177 -

- 177

Share based payments - - 106 106 As at 30 June 2013

185,901 (43,063)

32,442 3,446 178,726

As at 1 July 2011

122,630 1,325

- 1,843 125,798

Profit for the year after tax

- 18,710

- - 18,710

Other comprehensive income - - - - - Total comprehensive income for the year after tax

- 18,710

- - 18,710

Transactions with owners in their capacity as owners

65,695 -

- - 65,695

Share issue costs (3,715) - - - (3,715) Tax effect on share issue costs 1,114 - - - 1,114 Share based payments - - - 1,497 1,497 As at 30 June 2012

185,724 20,035

- 3,340 209,099

The consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.

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Saracen Minerals Holdings Limited Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows For the Financial Year ended 30 June 2013

Note

2013 $’000

2012 $’000

Cash flows from operating activities Receipts from customers 213,400 183,280 Payments to suppliers and employees (140,106) (133,944) Interest received 1,023 2,680 Interest paid and other finance costs (1,474) (128) Net cash flows provided by operating activities 23(b) 72,843 51,888

Cash flows from investing activities Purchase of plant, equipment and development assets (95,009) (78,071) Exploration and evaluation costs (12,281) (19,782) Security deposit refund/(paid) 3,536 (2,436) Net cash flows used in investing activities (103,754)

(100,289)

Cash flows from financing activities Proceeds from issue of shares 77 65,695 Payment of share issue costs - (3,715) Payment of finance lease liabilities (607) (412) Payment for loss on matured derivatives - (10,584) Drawdown on finance facility 21,950 - Repayment of Borrowings (486) - Payment of loan establishment fees (1,195) - Net cash flows provided by / (used in) financing activities 19,739 50,984 Net (decrease) / increase in cash held (11,172) 2,583 Add opening cash brought forward 20,196 17,613 Closing cash carried forward 23(a) 9,024 20,196

The consolidated statement of cash flows should be

read in conjunction with the notes to the financial statements.

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Saracen Minerals Holdings Limited Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements For the Financial Year ended 30 June 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Reporting Entity

Saracen Mineral Holdings Limited is a for-profit, public company listed on the Australian Securities Exchange (trading under the symbol ‘SAR’), incorporated and operating in Australia. Operations and Principal Activities The operations and principal activities comprise mineral development and exploration. Scope of the Financial Statements The consolidated financial statements have been prepared by Saracen Mineral Holdings Limited in accordance with AASB 127 “Consolidated and Separate Financial Statements”.

Registered Office Level 4, 89 St Georges Terrace, Perth Western Australia 6000.

(b) Basis of preparation Statement of compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). The consolidated financial statements were authorised for issue by the Board of Directors on 27 August 2013

Basis of Measurement

The consolidated financial statements have been prepared on a going concern basis in accordance with the historical cost convention, except where stated.

Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency. The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Significant Judgements and Estimates

The preparation of the consolidated financial statements in conformity with Australian Accounting Standards requires judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in the Group. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The Company has identified the Provision for Rehabilitation (Note 1(v) and Note 17), Deferred Exploration and Evaluation Costs (Note 1(s) and Note 14), Mine Properties (Note 1(t) and Note 15) and Inventories (Note 1(n) and Note 9) under which significant judgements, estimates and assumptions are made, and where actual results may differ from those estimates under different assumptions and conditions.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Principles of Consolidation

The consolidated financial statements comprise the financial statements of Saracen Mineral Holdings Limited and its subsidiaries as at 30 June each year (the Group). The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses from intra-group transactions have been eliminated in full.

(d) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors.

(e) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must be met before revenue is recognised: Gold and silver sales Revenue from the sale of gold and silver is measured at fair value of the consideration received or receivable. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Interest income Interest income is recognised when the Group gains control of the right to receive the interest payment.

(f) Taxation

Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Taxation (continued)

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,

in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included. The amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(g) Financial Assets and Liabilities

Financial assets and financial liabilities are recognised on the consolidated statement of financial position when the Group becomes party to the contractual provisions of the financial instrument. A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or are transferred and no longer controlled by the entity. A financial liability is removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expires. Listed shares held for trading are included in the category financial assets at fair value through profit and loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. Financial assets not measured at fair value comprise: • loans and receivables being non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market. These are measured at amortised cost using the effective interest method. • held-to-maturity investments being non-derivative financial assets with fixed or determinable payments

and fixed maturity that will be held to maturity. These are measured at amortised cost using the effective interest method.

• investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured. These are measured at cost.

Available-for-sale financial assets are non-derivative financial assets that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. A gain or loss arising from a change in the fair value of an available-for-sale financial asset is recognised directly in equity, through the statement of changes in equity (except for impairment losses and foreign exchange gains and losses) until the financial asset is derecognised at which time the cumulative gain or loss previously recognised in equity is recognised in profit or loss.

(h) Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line method over the estimated useful life. Capital work in progress is not depreciated, and is transferred to the relevant asset category on completion. The following useful lives are used in the calculation of depreciation: Plant and equipment 3 – 33 years During the financial year a review of the useful lives of all items of Plant and Equipment was undertaken to assess if there had been any change to the condition of the assets, location or operating environment of the assets. Following this review, the useful lives of some Plant and Equipment items were amended to be more closely matched to their reasonable useful lives. The result of this was an increase in depreciation for the year of approximately $786,000.

Where depreciation is attributable to exploration and evaluation activities, costs are treated in accordance with the Accounting Policy Note 1(s). The assets’ residual value, useful lives and amortisation methods are reviewed at each financial year end and if appropriate adjusted.

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(i) Employee Benefits

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in respect of employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash flows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used. Share based compensation benefits are provided to employees via the Incentive Option Scheme (Note 21). The fair value of options granted under the Incentive Option Scheme is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is determined using an appropriate valuation methodology.

(j) Superannuation Funds

The Group contributes to several accumulation type superannuation funds. Contributions are charged as an expense as they are made. Further information is set out in Note 20(d).

(k) Earnings Per Share

Basic earnings per share is calculated as net profit/(loss) attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit/(loss) attributable to members, adjusted for costs of servicing equity (other than dividends) and preference share dividends, the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses, and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(l) Cash and Cash Equivalents

Cash on hand and in bank and short-term deposits are stated at nominal value. For the purpose of the statement of cash flows, cash includes cash on hand and in bank, and bank securities readily convertible to cash, net of outstanding bank overdrafts.

(m) Trade & Other Receivables

Receivables to be settled within 30 - 90 days are carried at amounts due. The collectability of debts is assessed at the reporting date and specific allowance is made for any doubtful accounts.

(n) Inventories

Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of cost and net realisable value. Regular reviews are undertaken to establish whether any items are obsolete or damaged, and if so their carrying value is written down to net realisable value. Inventories of ore and gold in circuit are valued at the lower of cost and net realisable value. Costs comprise direct material, labour and an appropriate proportion of variable and fixed overhead on the basis of normal operating capacity, and are included as part of mine operating costs in the consolidated statement of profit or loss and comprehensive income. Net realisable value is the estimated selling price in the ordinary course of business less cost of completion and the estimated cost necessary to perform the sale.

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(n) Inventories (continued)

Inventories require certain estimates and assumptions most notably in regards grades, volumes and densities. Such estimates and assumptions may change as new information becomes available and could impact on the carrying value of inventories (Note 9).

(o) Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Where an impairment loss subsequently reverses, the carrying amount of the asset, other than goodwill, is increased to the revised estimate of its recoverable amount, but only to the extent the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

(p) Trade & Other Payables

Liabilities are recognised for amounts to be paid in the future for goods and services received whether or not billed to the Group. Trade payables are usually settled within 30 days.

(q) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

(r) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable a future sacrifice of economic benefits will be required and a reliable estimate of obligation can be made.

(s) Exploration and Evaluation Expenditure

Exploration and evaluation costs related to areas of interest are carried forward to the extent that: • the rights to tenure of the areas of interest are current and the Group controls the area of interest in which

the expenditure has been incurred; and • such costs are expected to be recouped through successful development and exploitation of the area of

interest, or alternatively by its sale; or • exploration and evaluation activities in the area of interest have not at the reporting date reached a stage

which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation costs include the acquisition of rights to explore, studies, exploratory drilling, sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

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(s) Exploration and Evaluation Expenditure (continued)

The above accounting policy requires certain estimates and assumptions on future events and circumstances, in particular whether an economically viable extraction operation can be established. These estimates and assumptions may change as new information becomes available and could have a material impact on the carrying value of deferred exploration and evaluation costs (Note 14). Exploration and evaluation assets are assessed for impairment where facts and circumstances suggest that the carrying amount of the assets may exceed its recoverable amount. If the recoverable amount is less than the carrying amount, the asset is written down to its recoverable amount and an impairment loss recognised.

Where economically recoverable reserves for an area of interest have been identified, and a decision to develop has occurred, capitalised expenditure is classified as mines under construction. In the event that an area of interest is abandoned or if the directors consider the expenditure to be of no value, accumulated costs carried forward are written off in the year in which that assessment is made.

(t) Mines Properties

Mines under construction are accumulated separately for each area of interest in which economically recoverable reserves have been identified and a decision to develop has occurred. This expenditure includes all capitalised exploration and evaluation expenditure in respect of the area of interest, direct costs of construction, an appropriate allocation of overheads and where applicable borrowing costs capitalised during construction. Once mining of the area of interest can commence, the aggregated capitalised costs are classified under non-current assets as mines in production. Mines in production represent the aggregated exploration and evaluation expenditure and capitalised development costs in respect of areas of interest in which mining is ready to or has commenced. Mine development costs are deferred until commercial production commences, at which time they are amortised on a units-of-production basis over the mineable reserves. Once production commences, further development expenditure is classified as part of the cost of production, unless substantial future economic benefits can be established. Deferred mining expenditures represent certain mining costs, principally those that relate to the stripping of waste, which provides access so that future economically recoverable ore can be mined. The amount of mining costs deferred is based on the ratio obtained by dividing the waste tonnes mined by the quantity of gold ounces contained in the ore. Mining costs incurred in the period are deferred to the extent that the current period waste to contained gold ounce ratio exceeds the life of mine waste to ore ratio. Deferred mining costs are then charged against reported earnings to the extent that, in subsequent periods, the ratio falls below the life of mine ratio. The life of mine ratio is based on economically recoverable reserves of the operation. The life of mine ratio is a function of an individual mine’s design and therefore changes to that design or other technical or economic parameters may impact reserves which will generally result in changes to the ratio. The recoverable amount of each cash generating asset is determined as the higher of value-in-use and fair value less costs to sell. Value-in-use is generally determined as the present value of the estimated future cash flows, using a risk adjusted discount rate appropriate to the risks inherent in the asset. Future cash flow estimates are based on expected production volumes, gold price forecasts, ore reserves, operating costs and future capital expenditure, with an inter-relationship between these key assumptions. Estimates are particularly sensitive to a change in gold price. There is the possibility that changes in circumstances will alter estimates and projections, affecting the recoverability of assets and in turn materially impacting the carrying value of mine properties (Note 15).

(u) Borrowing Costs

Borrowing costs incurred for the acquisition, construction or production of qualifying assets are capitalised during the period of time it is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are recognised as an expense in the period in which they are incurred.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (v) Restoration, Rehabilitation and Environmental Provision

Obligations associated with exploration and development assets are recognised when the Group has a present obligation, the future sacrifice of the economic benefits is probable, and the provision can be measured reliably. The provision is measured at the present value of the future expenditure and a corresponding rehabilitation asset is also recognised. The determination of the provision requires significant judgement in terms of the best estimate of the costs of performing the work required, the timing of the cash flows and the appropriate discount rate. In support of these judgements, the Group periodically seeks independent external advice on the adequacy of the provision. A change in any, or a combination of, the key assumptions used to determine the provision could have a material impact on the carrying value of the provision (Note 17). On an ongoing basis, the rehabilitation will be remeasured in line with the changes in the time value of money (recognised as an expense and an increase in the provision), and additional disturbances (recognised as additions to a corresponding asset and rehabilitation liability).

(w) Contributed Equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company or at the fair value of equity issued as consideration for the acquisition of assets. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(x) Leased Assets

Leases are classified as finance leases when the terms of the lease transfer substantially all of the risks and rewards incidental to ownership of the leased assets to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability is included in the consolidated statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are expensed, unless they are directly attributable to qualifying assets, in which case they are capitalised. Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset. Where amortisation is attributable to exploration and evaluation activities, costs are treated in accordance with the Accounting Policy Note 1(s). Operating lease payments are recognised as an expense on a straight line basis over the lease term.

(y) Derivative Financial Instruments, including hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency and commodity risk exposures. On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to hedged risk, and whether the actual results of each hedge are within a range of 80 – 125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that ultimately could affect reporting profit or loss. Derivatives are recognised initially at fair value; any attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, any changes therein are accounted for as described below.

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(y) Derivative Financial Instruments, including hedge accounting (continued)

Cash flow hedges When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. When the hedged item is a non-financial asset, the amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss in the same period or periods during which the non-financial item affects profit or loss. In other cases as well, the amount accumulated in equity is reclassified to profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified to profit or loss.

(z) Capital Management

Management’s objective is to ensure the Group continues as a going concern and in the interests of shareholders. It aims to maintain a capital structure with the lowest cost of capital available to the Group. The Group has detailed planning processes, budgets and cash flow forecasts through which it continually monitors its position against the above objectives. At 30 June 2013 the capital structure consisted of total shareholders’ funds, cash and other financial assets less finance lease borrowings and borrowings from Macquarie Bank Limited.

(aa) Joint Ventures

The interests of the Group in unincorporated joint ventures are brought to account by recognising in its financial statements its share of the assets it controls, the liabilities it incurs, the expenses it incurs and its share of income earned from the sale of goods or services by the joint venture.

(ab) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with the current year disclosures.

(ac) Impact of Adopting New Accounting Standards and Accounting Standards Not Yet Effective

The following new accounting standards applicable to the Group have been adopted: • Amendments to AASB 101‘Presentation of Financial Statements’ The amendment (part of AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income’ introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income and the income statement is renamed as a statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ac) Impact of Adopting New Accounting Standards and Accounting Standards Not Yet Effective (continued)

The following standards, amendments to standards and interpretations most applicable to the Group that are not yet mandatory and have not been applied in these financial statements: • AASB 9 Financial Instruments includes requirements for the classification and measurement of financial

assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement, which becomes mandatory for the Group’s 30 June 2016 financial statements.

• AASB 10 Consolidated Financial Statements introduces a new definition of control in regards to consolidation, which becomes mandatory for the Group’s 30 June 2014 financial statements.

• AASB 11 Joint Arrangements addresses joint operations and joint ventures, which becomes mandatory for the Group’s 30 June 2014 financial statements.

• AASB 12 Disclosure of Interests in Other Entities addresses the disclosure requirements for all forms of interests in other entities, which becomes mandatory for the Group’s 30 June 2014 financial statements.

• AASB 13 Fair Value Measurement consolidates the measurement and disclosure requirements in respect of fair values into one standard, which becomes mandatory for the Group’s 30 June 2014 financial statements.

• Interpretation 20 Stripping Costs provides guidance on stripping costs during the production phase of a surface mine, which becomes mandatory for the Group’s 30 June 2014 financial statements.

The Group has not yet determined the eventual effect of the above standards, amendments to standards and interpretations, however at this stage it is not thought to be material.

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2013

$’000 2012 $’000

NOTE 2 REVENUE AND EXPENSES Gold sales 210,156 183,157

Silver sales 449 602 Revenue from continuing operations 210,605 183,759 Interest revenue 912 2,695 Other revenue 165 69

Other revenue 1,077 2,764

Total income 211,682 186,523 Amortisation of mine properties 54,145 24,275 Depreciation of plant and equipment 8,133 2,320

Depreciation and amortisation 62,278 26,595 Directors and employee expenses 7,218 6,475 Management fees 834 910

Professional fees 509 167 Other 669 419

Administration expenses 9,230 7,971

Borrowing costs 1,474 128 Finance costs 1,474 128

NOTE 3 AUDITOR’S REMUNERATION

Amounts received or due and receivable by the auditor of the Company for:

- Audit / review of the financial report 130,293 113,826 - Tax services 27,900 36,138

158,193 149,964

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2013

$’000 2012 $’000

NOTE 4 INCOME TAX (a) Income tax expense comprises: Current income tax - Current income tax charge / (benefit) (12,955) (1,872) - Under / (over) recognition in the prior year 331 (475) Deferred tax - Movement in temporary differences (12,602) 10,329 Income tax expense / (benefit) (25,226) 7,982 (b) Reconciliation of prima facie income tax expense to income tax expense per the Consolidated Statement of Profit or Loss and Comprehensive Income: Accounting profit / (loss) before tax (88,324) 26,692 Prime facie income tax expense / (benefit) at 30% (26,497) 8,008 - Non-deductible expenses 940 449 - Recognition of previously unrecognised temporary differences 331 (475) Income tax (benefit)/expense (25,226) 7,982 (c) Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following:

Balance at 1 July 2012

$’000

Charged / credited to

income $’000

Charged / credited to

equity $’000

Balance at 30 June

2013 $’000

Deferred tax assets Tax losses 18,549 12,623 - 31,172 Provisions 4,279 225 - 4,504 Other 151 (46) - 105 Undeducted share issue costs 1,291 (454) - 837 Total 24,270 12,348 - 36,618 Deferred tax liabilities Deferred mining expenditure (34,338) 12,679 (21,659) Plant and equipment (90) 62 (28) Derivatives - - (13,904) (13,904) Other (136) 136 - - Total (34,564) 12,877 (13,904) (35,591) Net deferred tax asset/(liability) (10,294) 25,225 (13,904) 1,027 (d) Tax-consolidated group Saracen Mineral Holdings Limited and its wholly-owned subsidiaries formed a tax consolidated group with effect from 1 July 2003. Saracen Mineral Holdings Limited is the head entity in the tax consolidated group. At the financial year end, members of the tax consolidated group have not yet entered into a tax funding arrangement. Hence, no compensation is receivable or payable for any deferred tax asset arising from tax losses or current tax payable assumed by the head entity from the wholly owned subsidiaries.

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2013

$’000 2012 $’000

NOTE 5 EARNINGS PER SHARE The following reflects the income and share data used in the calculations of basic and diluted earnings per share. Net profit/(loss) from continuing operations (63,098) 18,710 Net profit/(loss) after tax (63,098) 18,710 Number Number Weighted average number of ordinary shares for basic earnings per share 595,079,274 567,730,861 Effect of dilution – share options - 8,834,777 Weighted average number of ordinary shares adjusted for the effect of dilution 595,079,274 576,565,638 Due to the Group being in a loss position in the current year, there is no dilution on shares.

2013 $’000

2012 $’000

NOTE 6 DIVIDENDS

During the year no dividends were paid or provided for.

Franking account balance at the end of the financial year at 30% 19 19 NOTE 7 TRADE AND OTHER RECEIVABLES

Current Goods and services tax (GST) recoverable 2,492 2,787 Accrued gold sales - 2,795 Other (i) 557 810 3,049 6,392

(i) Other receivables comprise accrued interest income and fuel supplied to contractors which are settled on 30

day terms. These receivables are within term and do not show signs of impairment. The Group’s exposure to credit and market risks is disclosed in Note 27.

NOTE 8 OTHER FINANCIAL ASSETS Listed shares at fair value 85 115 The value of listed shares, designated as financial assets at fair value through profit and loss, has been determined by reference to the quoted market bid price at the close of business on the reporting date. Listed shares are readily saleable and have no fixed maturity date.

NOTE 9 INVENTORIES Ore stocks (i) 10,625 33,066 Gold in circuit 3,874 4,644 Gold on hand 5,027 1,199 Consumable supplies and spares 6,010 5,480 25,536 44,389

(i) During the financial year there was an inventory write-down to net realisable value of some ore stocks by

$22,885,000 (2012: 6,257,000). Inventories require estimates and assumptions most notably in regards to grades, volumes, densities, future completion costs and ultimate sale price. Such estimates and assumptions may change as new information becomes available which may impact upon the carrying value of inventory.

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NOTE 10 OTHER ASSETS

2013 $’000

2012 $’000

Prepayments 665 607

Prepayments consist of prepaid insurance and prepaid establishment fees on the Macquarie Bank Limited debt facilities. NOTE 11 FINANCIAL DERIVATIVE INSTRUMENTS Financial derivative assets Current: Cash flow hedge asset

17,652

-

Non-Current: Cash flow hedge asset 28,694 - 46,346 -

During the year, Saracen entered into a series of gold hedging contracts with Macquarie Bank Limited, whereby an initial total of 200,000 ounces are hedged at an average price of A$1695/oz over a period of 4 years. As at 30 June 2013 Saracen had 176,600 ounces outstanding at an average price of A$1,680.74 to be delivered into over the period from July 2013 to August 2016. The gain or loss from remeasuring the hedging instruments at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve to the extent that the hedge is effective. There was no hedge ineffectiveness in the current period. NOTE 12 OTHER FINANCIAL ASSETS Security deposit 7,423 10,959 A deposit of $7.313 million is held as security by a bank for performance bonds issued to the Department of Mines and Petroleum (“DMP”) in relation to the Group’s tenement licences in Western Australia. $110,000 is held as security for other guarantees provided by another bank. NOTE 13 PLANT AND EQUIPMENT Plant and equipment Opening balance net of accumulated depreciation

28,895

9,984 Transfer from capital work in progress 10,579 20,874 Transfer from equipment under finance lease 4,835 15 Transferred from deferred exploration 195 - Disposals (1,659) - Depreciation (8,133) (1,978) Closing balance net of accumulated depreciation 34,712 28,895

Equipment under finance lease Opening balance net of accumulated depreciation

2,525

458

Additions 2,310 2,473 Transfer to plant and equipment (4,835) (15) Depreciation - (342) Transfer to CWIP (net of depreciation) - (49) Closing balance net of accumulated depreciation - 2,525 Capital work in progress Opening balance net of accumulated depreciation

3,342

8,372

Additions 15,650 15,844 Transfer to mines in production (2,920) - Transfer to plant and equipment (10,579) (20,874) Closing balance net of accumulated depreciation 5,493 3,342 Cost

52,936

39,720

Accumulated depreciation (12,731) (4,958) Net carrying amount 40,205 34,762

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2013 $’000

2012 $’000

NOTE 14 DEFERRED EXPLORATION AND EVALUATION COSTS Deferred exploration and evaluation costs Balance at the start of the year 26,485 11,032 Additions 12,292 21,108 Transferred from mines under construction 2,496 (3,787) Transferred from mines in production 2,656 - Transferred to plant and equipment (195) - Depreciation transferred from equipment under finance lease - 49 Transferred to mines in production (12,534) (1,609) Capitalised expenditure written off (9,102) (308) Balance at the end of the year 22,098 26,485 The ultimate recoupment of costs carried forward is dependent on the successful development and commercial exploitation or sale of the areas of interest. NOTE 15 MINE PROPERTIES Mine properties Mines under construction - 41,706 Mines in production 78,313 52,101 Deferred mining expenditure 3,595 16,230 Balance at the end of the year 81,908 110,037 Mines under construction Balance at the start of the year 41,706 13,206 Additions 666 23,251 Transferred from deferred exploration and evaluation costs - 3,787 Transferred to deferred exploration and evaluation costs (2,496) - Transferred to mines in production (39,876) - Increase in rehabilitation provision - 1,462 Balance at the end of the year - 41,706 Mines in production Balance at the start of the year

52,101

52,203

Additions 66,098 20,126 Transferred from capital work in progress 2,920 - Transferred from deferred exploration and evaluation costs 12,534 1,609 Transferred to deferred exploration and evaluation costs (2,656) - Transferred from mines under construction 39,876 - Amortisation for the year (54,145) (24,275) Impairment of mines in production (39,078) - Increase in rehabilitation provision 663 2,438 Balance at the end of the year 78,313 52,101 The Group undertakes regular impairment reviews incorporating an assessment of recoverability of cash generating assets. Cash generating assets relate to specific areas of interest in the Group’s mine property assets. The recoverable value of specific areas of interest are assessed by value in use calculations determined with reference to the projected net cash flows estimated under the life of mine plan. Deferred mining expenditure Balance at the start of the year

16,230

16,039

Additions 11,899 17,536 Expensing of deferred costs (15,952) (17,345) Impairment of deferred mining expenditure (8,582) - Balance at the end of the year 3,595 16,230

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NOTE 15 MINE PROPERTIES (continued) 2013

$’000 2012

$’000 Reconciliation of impairment Impairment of mines in production

39,078

-

Impairment of deferred mining expenditure 8,582 - Balance at the end of the year 47,660

NOTE 16 TRADE AND OTHER PAYABLES Current Trade and other payables 18,788 17,221 Trade and other payables are non-interest bearing and are normally settled on 30 day terms. NOTE 17 PROVISIONS Current Employee benefits 2,454 2,583 Provision for rehabilitation 100 100 2,554 2,683 Non-current Employee benefits 217 131 Provision for rehabilitation 12,241 11,450 12,458 11,581 Movement in provision for rehabilitation Balance at the start of the year 11,550 7,650 Increase in provision 791 3,900 Balance at the end of the year 12,341 11,550 The nature and purpose of the provision for rehabilitation is disclosed in Note 1(v).

NOTE 18 BORROWINGS Current Finance lease liabilities 1,217 750 Insurance premium funding - 486

1,217 1,236 Non-current Macquarie bank loan 21,950 - Prepaid establishment fees (951) Finance lease liabilities 2,624 1,828 23,623 1,828 (a) Macquarie Bank Loan During the year, the Group accepted an offer from Macquarie Bank Limited (“MBL”) for debt and gold hedging facilities (together “Finance Facilities”) as follows:- • Debt facility of $45 million, comprising a $30 million project loan facility, and a $15 million revolving working capital

facility, with a term of three years; • DMP environmental bonding facility of $20 million; and • Provision for an additional conditional $15 million mezzanine facility, should Saracen wish to access it for further

project expansion purposes in the future. The loan and hedging is secured by fixed and/or floating charges over the assets of the Saracen Group. As at 30 June 2013, $15,000,000 has been drawn down on the working capital facility and $6,950,100 on the project loan facility.

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NOTE 18 BORROWINGS (continued) (b) Leasing arrangements Finance leases relate to equipment and vehicles with lease terms not exceeding 5 years. (c) Finance lease liabilities Minimum future

lease payments Present value of

minimum future lease

payments 2013

$’000 2012

$’000 2013

$’000 2012

$’000 No later than 1 year 1,452 927 1,217 750 Later than 1 year and not later than 5 years 2,788 1,999 2,624 1,828 Minimum future lease payments 4,240 2,926 3,841 2,578 Less future finance charges (399) (348) - - Present value of minimum lease payments 3,841 2,578 3,841 2,578

Included in the Statement of Financial Position as: Current Borrowings 1,217 750 Non-current Borrowings 2,624 1,828 3,841 2,578 NOTE 19 CONTRIBUTED EQUITY AND RESERVES Number of

shares 2013

$’000 Number of

shares 2012

$’000 (a) Issued capital

Ordinary shares fully paid 595,263,186 185,901 594,815,640 185,724 The Company does not have a limited authorised capital and issued shares have no par value. (b) Movements in shares on issue

Beginning of the financial period 594,815,640 185,724 492,251,415 122,630 - share placement - - 73,800,000 50,184 - share purchase plan - - 15,566,394 10,585 - share placement - - 6,492,431 4,415 - acquisition settlement (i) 181,818 100 5,650,000 - - options exercise (ii) 219,966 77 1,055,400 511 - options exercise (iii) 45,762 - - - - share issue costs - - - (3,715) - Tax effect on share issue costs - - - 1,114 End of the financial period 595,263,186 185,901 594,815,640 185,724

(i) On 21 December 2012, the Company issued 181,818 fully paid ordinary shares to Zodiac Resources for the

purchase of a mining tenement. The issue was valued at $100,000. (ii) During the year ended 30 June 2013, the Company issued a total of 219,966 fully paid ordinary shares following

the exercise of various options. The issues raised approximately $77,000. (iii) Issue of shares from the exercise of options utilising the cashless exercise facility.

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NOTE 19 CONTRIBUTED EQUITY AND RESERVES (continued) (c) Share options

2012 Granted Exercised Lapsed 2013 Listed participating options exercisable on or before 30 June 2013 at 23.51 cents each 7,086,993 - 3,300 7,083,693 -

Unlisted participating options exercisable on or before 30 June 2013 at 23.51 cents each. 2,500,000 - - 2,500,000 -

Unlisted incentive options exercisable on or before 31 October 2012 at 50.00 cents each 200,000 - - 200,000 -

Unlisted incentive options exercisable on or before 30 November 2012 at 60.00 cents each

200,000 - - 200,000 -

Unlisted incentive options exercisable on or before 31 December 2012 at 65.00 cents each

200,000 - - 200,000 -

Unlisted incentive options exercisable on or before 31 January 2013 at 35.00 cents each

524,997 - 524,997 - -

Unlisted incentive options exercisable on or before 28 February 2013 at 45.00 cents each

758,335 - - 758,335 -

Unlisted incentive options exercisable on or before 31 March 2013 at 55.00 cents each

758,336 - - 758,336 -

Unlisted incentive options exercisable between 1 October 2012 and 31 December 2012 at 53.00 cents each

2,354,500 - - 2,354,500 -

Unlisted incentive options exercisable between 1 March 2013 and 31 May 2013 at 55.00 cents each

3,531,750 - - 3,531,750 -


3,531,750 - - 735,200 2,796,550


365,500 - - 365,500 -


365,500 - - 34,000 331,500


548,250 - - 51,000 497,250

Unlisted incentive options exercisable between 1 October 2014 and 31 December 2014 at 100.00 cents each 548,250 - - 51,000 497,250

23,474,161 - 528,297 18,823,314 4,122,550

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NOTE 19 CONTRIBUTED EQUITY AND RESERVES (continued) (c) Share options (continued)

2011 Granted Exercised Lapsed 2012 Listed participating options exercisable on or before 30 June 2013 at 23.51 cents each 7,109,993 - 23,000 - 7,086,993

Unlisted participating options exercisable on or before 30 June 2013 at 23.51 cents each. 2,500,000 - - - 2,500,000

Unlisted incentive options exercisable on or before 31 October 2012 at 50.00 cents each 200,000 - - - 200,000

Unlisted incentive options exercisable on or before 30 November 2012 at 60.00 cents each

200,000 - - - 200,000

Unlisted incentive options exercisable on or before 31 December 2012 at 65.00 cents each

200,000 - - - 200,000

Unlisted incentive options exercisable on or before 31 January 2013 at 35.00 cents each

578,329 36,666 16,666 524,997

Unlisted incentive options exercisable on or before 28 February 2013 at 45.00 cents each

911,668 136,666 16,667 758,335

Unlisted incentive options exercisable on or before 31 March 2013 at 55.00 cents each

811,671 36,668 16,667 758,336


3,095,700 822,400 2,273,300 -


3,095,700 741,200 2,354,500


4,643,550 1,111,800 3,531,750


4,643,550 1,111,800 3,531,750


- 552,500 - 187,000 365,500


- 552,500 - 187,000 365,500


- 828,750 - 280,500 548,250


- 828,750 - 280,500 548,250

27,990,161 2,762,500 1,055,400 6,223,100 23,474,161

(d) Terms and conditions of contributed equity Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. (e) Reserves

2013 $’000

2012 $’000

Share based payments Balance at beginning of year 3,340 1,843 Share based payments 106 1,497 Balance at end of year 3,446 3,340

The share based payments reserve is used to recognise the fair value of options issued.

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NOTE 19 CONTRIBUTED EQUITY AND RESERVES (continued) (e) Reserves (continued) 2013

$’000 2012 $’000

Cash Flow Hedge Reserve Balance at beginning of year - - Hedge reserve 32,442 - Balance at end of year 32,442 - The hedge reserve represents the fair value gain on hedging instruments entered into for cash flow hedges. NOTE 20 COMMITMENTS (a) Operating lease commitments The Group has entered into commercial leases on items of plant, machinery and property. Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows: - not later than one year 501 1,332 - later than one year and not later than five years 1,544 2,045

2,045 3,377 (b) Other expenditure commitments Commitments contracted for corporate services as at 30 June, but not recognised as liabilities are as follows: - not later than one year 360 910 - later than one year and not later than five years 90 1,062 450 1,972 (c) Exploration expenditure commitments In order to maintain current rights of tenure to exploration tenements, the Group is required to meet minimum expenditure requirements. As these expenditure commitments can be reduced by selective rationalisation of interests in exploration tenements or by renegotiation of joint venture commitments it is difficult to accurately forecast the amount of future expenditure. On current tenement holdings, the Group’s nominal expenditure obligations for the next 12 months are approximately $4.3 million.

(d) Superannuation The Group contributes to superannuation funds in accordance with the requirements of the Superannuation Guarantee Legislation. Employer contributions are based on various percentages of salaries or directors’ fees. All funds are accumulation type and as such an actuarial assessment is not required. NOTE 21 SHARE BASED PAYMENTS An incentive option scheme has been established where employees and other eligible participants of the Group are issued with options over the ordinary shares of Saracen Mineral Holdings Limited. The options, issued for nil consideration, are issued in accordance with the position, skills, experience and length of service with the Group and such other criteria that the Directors consider appropriate in the circumstances. The options cannot be transferred and are not quoted on the Australian Securities Exchange (ASX). There are no voting rights attached to the options. During the financial year no options were granted. In the prior financial year 2,762,500 options were granted for no consideration under this scheme to eligible participants. The fair value at grant date is determined using a Black-Scholes option pricing model with the following factors relevant:-

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NOTE 21 SHARE BASED PAYMENTS (continued)

15 March 2012 Tranche 1 Tranche 2 Tranche 3 Tranche 4 Stock Price at Grant $0.56 $0.56 $0.56 $0.56 Exercise Price $0.84 $0.92 $0.96 $1.00 Volatility based on historical annual volatility of SAR securities 49.48% 49.48% 49.48% 49.48% Grant Date 15/03/2012 15/03/2012 15/03/2012 15/03/2012

Exercise Period 01/03/13 -

31/05/2013 01/10/13 -

31/12/2013 01/03/14 -

31/05/2014 01/10/14 -

31/12/2014 Vesting Date 1/09/2012 1/04/2013 1/09/2013 1/04/2014 Risk free rate 2.86% 2.46% 2.46% 2.65% Number of options granted 552,500 552,500 828,750 828,750

The vesting of the above options is subject to continuing service conditions and, in the case of tranches 3 and 4, subject to a satisfactory outcome in the performance reviews. At the reporting date there were 1,326,000 of these options (2012: 1,827,500) on issue. In the 2011 financial year 16,745,000 options were granted for no consideration under this scheme to eligible participants. The fair value at grant date is determined using a Black-Scholes option pricing model with the following factors relevant:

22 November 2010 Tranche 1 Tranche 2 Tranche 3 Tranche 4 Stock Price at Grant $0.67 $0.67 $0.67 $0.67 Exercise Price $0.50 $0.53 $0.55 $0.58 Volatility based on historical annual volatility of SAR securities 53.59% 53.59% 53.59% 53.59% Grant Date 22/11/2010 22/11/2010 22/11/2010 22/11/2010


31/05/2012 01/10/12 -

31/12/2012 01/03/13 -

31/05/2013 01/10/13 -

31/12/2013 Vesting Date 1/09/2011 1/04/2012 1/09/2012 1/04/2013 Risk free rate 4.82% 4.95% 4.97% 5.04% Number of options granted 2,833,900 2,833,900 4,250,850 4,250,850

31 March 2011 Tranche 1 Tranche 2 Tranche 3 Tranche 4 Stock Price at Grant $0.75 $0.75 $0.75 $0.75 Exercise Price $0.50 $0.53 $0.55 $0.58 Volatility based on historical annual volatility of SAR securities 55.57% 55.57% 55.57% 55.57% Grant Date 31/03/2011 31/03/2011 31/03/2011 31/03/2011


31/05/2012 01/10/12 -

31/12/2012 01/03/13 -

31/05/2013 01/10/13 -

31/12/2013 Vesting Date 1/09/2011 1/04/2012 1/09/2012 1/04/2013 Risk free rate 4.82% 4.95% 4.97% 5.04% Number of options granted 515,100 515,100 772,650 772,650

The vesting of the above options is subject to continuing service conditions and, in the case of tranches 3 and 4, subject to a satisfactory outcome in the performance reviews. At the reporting date there were 2,796,550 of these options (2012: 9,418,000) on issue under the scheme. The remaining incentive options which were granted pre July 2010 and at the reporting date there none of these options (2012: 2,641,668) on issue under the scheme as all of them either lapsed or were exercised. Refer Note 19(c) for details of options that were exercised or lapsed during the year. The weighted average remaining contractual life for incentive options outstanding as at 30 June 2013 is 155 days (2012: 312 days). The range of exercise prices for incentive options outstanding at the end of the year was 50 to 100 cents per share.

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NOTE 22 INTERESTS IN SUBSIDIARIES

Percentage of equity interest held by the Group

Investment

2013 %

2012 %

2013 $

2012 $

Parent Entity: Saracen Mineral Holdings Limited (i)(ii) Subsidiaries: Saracen Gold Mines Pty Limited (ii)(iii) 100 100 1 1 Saracen Metals Pty Limited (ii) 100 100 2 2 3 3 All entities are incorporated in Australia and shareholdings relate to ordinary shares. (i) Saracen Mineral Holdings Limited is the head entity within

the tax-consolidated group and the parent entity. (ii) These companies are members of the tax-consolidated group. (iii) Saracen Gold Mines Pty Limited, a wholly-owned subsidiary,

entered into a deed of cross guarantee on 21 April 2010 with Saracen Mineral Holdings Limited pursuant to ASIC Class Order 98/1418 and is relieved from the requirement to prepare and lodge an audited financial report.

In the current and prior year the consolidated statements of profit or loss and other comprehensive income and financial position of the entities party to the Deed of Cross Guarantee are the same as the Group’s and have therefore not been reproduced.

2013 $’000

2012 $’000

NOTE 23 STATEMENT OF CASH FLOWS (a) Reconciliation of cash Cash balance comprises: - Cash 8,891 3,438 - Cash at call and in short term deposits 133 16,758 Closing cash balance 9,024 20,196

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2013 $’000

2012 $’000

NOTE 23 STATEMENT OF CASH FLOWS (continued) (b) Reconciliation of the operating result after income tax to the net cash flows

from operating activities Operating profit/(loss) after income tax (63,098) 18,710 Non-cash items Depreciation and amortisation 62,278 26,595 Loss on the sale of assets 1,637 - Inventory write-down 22,885 6,257 (Gain) / loss on derivatives - 5,887 Effective interest on establishment fees 244 - (Increase) / decrease in market value of listed securities 30 (21) Impairment written off 56,762 308 Expensing of deferred mining costs 15,952 17,345 Tax effect of movement in temporary differences (25,225) 7,982 Accrual for the purchase of CWIP (297) - Share based payments 106 1,497 Changes in assets and liabilities: (Increase)/Decrease in trade and other receivables 3,343 (1,641) (Increase)/Decrease in prepayments (58) (119) (Increase)/Decrease in inventory (4,032) (37,643) Increase in trade and other payables 1568 5,797 Increase in provisions 748 934 Net cash flows provided by operating activities 72,843 51,888 (c) Non-cash financing and investing activities In the current year, the Group acquired $2,310,000 (30 June 2012: $2,473,000) of equipment under finance lease. These acquisitions will be reflected in the statement of cash flows over the term of the lease via their lease payments. (d) Cash balances not available for use As described in Note 12, the Group holds deposits of $7.423 million (2012: $10.959 million) as security by a bank for performance bonds and guarantees. These balances are not available for use and have therefore not been included in cash and cash equivalents. NOTE 24 DIRECTOR AND EXECUTIVE DISLOSURES Directors of the Group during the year:-

Guido Staltari Non-executive Chairman(i) Carl Thompson Director (Non-Executive), retired 20 November 2012 Ivan Hoffman OAM Director (Non-Executive), resigned 25 July 2013 Barrie Parker Director (Non-Executive) Martin Reed Raleigh John Finlayson

Director (Non-Executive), appointed 24 August 2012 Managing Director, appointed 2 April 2013

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NOTE 24 DIRECTOR AND EXECUTIVE DISLOSURES (continued)

Other key management personnel of the Group during the year:-

Craig Bradshaw Grant Haywood Richard Maddocks Rajan Narayanasamy Gerry Kaczmarek

Chief Operating Officer, appointed 10 April 2013 General Manager – Operations General Manager – Geology and Exploration, resigned 9 August 2013 Company Secretary / Chief Financial Officer, resigned 30 November 2012 Company Secretary / Chief Financial Officer, appointed 17 September 2012

(i) Mr Staltari held the positions of Executive Chairman and Managing Director until 2 April 2013 when he

stood down from the role of Managing Director. He reverted to a Non-executive Chairman role effective 1 July 2013.

(a) Remuneration of key management personnel

The Board is ultimately responsible for determining and reviewing remuneration arrangements for Directors, within the limits approved by shareholders, and Executives. The Board assesses the appropriateness of the nature and amount of emoluments on an annual basis by reference to industry and market conditions. Details of the remuneration of Directors and key management personnel of the Group, including their personally related entities, are set out in the following tables: 2013

$ 2012

$

Short term benefits 2,252,902 1,941,808 Post-employment benefits 538,786 221,479 Non-monetary benefits 24,557 32,095 Long term benefits 17,758 21,882 Equity 47,072 330,025 2,881,075 2,547,289 (b) Option holdings of directors and executives

30 June 2013 Balance at

beginning of period

1 July 2012

Granted as remuneration

Options exercised

Options lapsed

Balance at end of period

30 June 2013

Not exercisable

Exercisable

Directors G Staltari 5,721,437 - - 5,721,437 - - - R Finlayson (i) 1,680,000 - 133,333 1,291,667 255,000 255,000 - C Thompson (ii) - - - - - - - I Hoffman (iii) - - - - - - - B Parker - - - - - - - M Reed (iv) - - - - - - - Executives G Haywood (v) 340,000 - - 340,000 - - - R Maddocks (vi) 238,000 - - 148,750 89,250 89,250 - R Narayanasamy (vii)

1,180,000 - 166,666 758,334 255,000 255,000

-

C Bradshaw (viii) - - - - - - - G Kaczmarek (ix) - - - - - - -

Total 9,159,437 - 299,999 8,260,188 599,250 599,250 -

(i) Appointed 2 April 2013 (ii) Retired 20 November 2012 (iii) Resigned 25 July 2013 (iv) Appointed 24 August 2012 (v) Resigned 31 December 2012

(vi) Resigned 9 August 2013 (vii) Resigned 30 November 2012 (viii) Appointed COO 10 April 2013 (ix) Appointed 17 September 2012

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NOTE 24 DIRECTOR AND EXECUTIVE DISLOSURES (continued) 30 June 2012 Balance at

beginning of period

1 July 2011


Options exercised

Options lapsed


30 June 2012

Not exercisable

Exercisable

Directors G Staltari 5,721,437 - - - 5,721,437 - 5,721,437 C Thompson - - - - - - - I Hoffman - - - - - - - B Parker - - - - - - - Executives R Finlayson 1,850,000 - 170,000 - 1,680,000 680,000 1,000,000 G Haywood 425,000 - - (85,000) 340,000 340,000 - R Maddocks 297,500 - - (59,500) 238,000 238,000 - R Narayanasamy 1,350,000 - 170,000 - 1,180,000 680,000 500,000

Total 9,643,937 - 340,000 (144,500) 9,159,437 1,938,000 7,221,437

(c) Shareholdings of directors and executives


beginning of period 1 July 2012


Options exercised

Net change - other


30 June 2013

Directors G Staltari 14,407,252 - - - 14,407,252 R Finlayson (i) 237,059 - 19,789 - 256,848 C Thompson (ii) - - - - - I Hoffman (iii) - - - - - B Parker 100,000 - - - 100,000 M Reed (iv) - - - - - Executives G Haywood (v) - - - - - R Maddocks (vi) - - - 181,000 181,000 R Narayanasamy (vii) 180,000 - 166,666 (246,666) 100,000 C Bradshaw (viii) - - - - - G Kaczmarek (ix) - - - - -

Total 14,924,311 - 186,455 (65,666) 15,045,100

(i) Appointed 2 April 2013 (ii) Retired 20 November 2012 (iii) Resigned 25 July 2013 (iv) Appointed 24 August 2012 (v) Resigned 31 December 2012

(vi) Resigned 9 August 2013 (vii) Resigned 30 November 2012 (viii) Appointed COO 10 April 2013 (ix) Appointed 17 September 2012

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NOTE 24 DIRECTOR AND EXECUTIVE DISLOSURES (continued)


beginning of period 1 July 2011


Options exercised

Net change - other


30 June 2012

Directors G Staltari 28,407,252 - - (14,000,000) 14,407,252 C Thompson 1,797,223 - - (1,797,223) - I Hoffman - - - - - B Parker 100,000 - - - 100,000 Executives R Finlayson 45,000 - 170,000 22,059 237,059 G Haywood 15,000 - - (15,000) - R Maddocks - - - - - R Narayanasamy 330,000 - 170,000 (320,000) 180,000

Total 30,694,475 - 340,000 (16,110,164) 14,924,311

(d) Other transactions with Directors and Executives During the year, the Company was a party to a management agreement with Renaissance Capital Pty Limited (“RenCap”), an entity controlled by Mr Staltari, for the provision of management and technical services and office facilities.

During the year, the Group incurred fees and reimbursements of $834,167 (2012: $910,666), comprising approximately $330,000 (2012: $360,000) for the provision of office facilities and associated costs and approximately $504,167 (2012: $550,666) for professional fees and expense reimbursements to RenCap pursuant to the agreement, a summary of which is contained in the Remuneration Report within the Directors’ Report. At 30 June 2013 $37,917 was due and payable to RenCap (2012: $83,416). During the year an amount of $97,192 has been paid/is payable to PilotHole Pty Ltd, an entity controlled by Mr Martin Reed. The amount paid was for Mr Reed’s Director’s fee. Transactions with Directors and executives have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

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2013 $’000

2012 $’000

NOTE 25 RELATED PARTY DISCLOSURES (a) Ultimate parent Saracen Mineral Holdings Limited is the ultimate parent company.

Information relating to Saracen Mineral Holdings Limited:

Current assets 25,832 17,050 Total assets 201,206 201,193 Current liabilities 520 414 Total liabilities 22,497 10,709 Contributed equity 185,901 185,724 Share based payment reserve 3,446 3,340 Hedge Reserve 32,442 - Accumulated profit (43,080) 1,420 Total equity 178,709 190,484 Net profit of the parent 4,502 Total comprehensive income of the parent - - Saracen Mineral Holdings Limited is party to a deed of cross guarantee with its wholly owned subsidiary Saracen Gold Mines Pty Limited described in Note 22(iii) pursuant to ASIC Class Order 98/1418.

At 30 June 2013 Saracen Mineral Holdings Limited had no contingent liabilities and had not entered into contractual commitments to purchase property, plant or equipment (2012: Nil).

(b) Subsidiaries

Details of interests in subsidiaries are set out in Note 22. Loans between group entities have no specific repayment terms and are unsecured. The aggregate amounts receivable/ (payable) by the Company from/to subsidiaries at the reporting date were: Non-current receivable

137,093

184,142

Reconciliation of non-current receivable Balance at beginning of year Loan drawdown by subsidiary

184,142 19,292

107,447 64,083

Interest Received 7,737 12,612 Impairment (74,078) - Balance at end of year 137,093 184,142

During the year the non-current receivable was written down to the net asset value of the subsidiary.

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NOTE 26 SEGMENT INFORMATION The Group has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (“CODM”) in order to allocate resources to the segments and to assess their performance. On this basis the Group’s reportable segments under AASB 8 are as follows:

- Saracen Gold Mines Pty Limited (“SGM”) which includes the Group’s exploration, production and related administration

- Saracen Mineral Holdings Limited (“SAR”) which includes the Group’s corporate administration The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1. The CODM reviews segment profit before tax in assessing segment performance which corresponds to operating profit before other income / expenses in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Information regarding the Group’s reportable segments is presented below.

2013 $’000

2012 $’000

(a) Segment external revenues SGM - Metal sales

210,605

183,759

SGM - Interest income 466 570 SGM - Other 165 69 SAR - Interest income 446 2,125 211,682 186,523

(b) Segment profit before tax

SGM (62,165) 39,949 SAR (2,741) (2,273) Operating profit before other income / (expenses) (64,906) 37,676 Finance costs (1,474) (128) Other income 1,077 2,764 Share based payments expense (106) (1,497) Net realised loss on derivatives - (10,584) Change in fair value of derivatives - 4,697 Inventory write-down (22,885) (6,257) Change in fair value of listed shares (30) 21 Profit before income tax (88,324) 26,692

(c) Segment assets and liabilities

Assets SGM

174,187

236,892

SAR 62,152 17,050 Unallocated 1,027 - 237,366 253,942 Liabilities SGM

37,094

34,135

SAR 21,546 414 Unallocated - 10,294 58,640 44,843

For the purposes of monitoring segment performance and allocating resources between segments, all assets and liabilities are allocated to reportable segments other than tax assets and liabilities. (d) Other segment information Depreciation and amortisation of $62.278 million (2012: $26.595 million) are attributable to the SGM segment. Total non-current asset additions of $108.915 million (2012: 100.338 million) is attributable to the SGM segment. Impairment write off of $56,762 million (2012: $0.308 million) is attributable to the SGM segment. The Group operates within one geographical segment, being Australia.

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NOTE 27 FINANCIAL INSTRUMENTS The Group’s principal financial instruments comprise cash, short-term deposits, borrowings and derivatives. In addition the Group has financial assets at fair value through profit and loss, trade receivables, trade payables and finance leases arising directly out of its operations. The Board as a whole guides and monitors the business and affairs of Saracen. Risk oversight, management and internal control are dealt with on a continuous basis by management and the Board, with differing degrees of involvement depending upon the nature and materiality of the matter being dealt with.

(a) Market risk

(i) Interest rate risk The Group’s exposure to interest rate risk relates primarily to the assets and liabilities bearing variable interest rates. The Group does not engage in any hedging or derivative transactions to manage interest rate risk. The following tables sets out the carrying amount, by maturity of the Group’s exposure to interest rate risk and the effective weighted average interest rate for each financial instrument.

30 June 2013 Weighted

average rate

Interest bearing

Non- interest bearing

Consolidated Total

%

$’000

Under 1 year

$’000

1 – 2 years $’000

2 – 5 years $’000

5+ years

$’000

$’000 $’000

Financial Assets

Cash assets 2.46 9,024 - - - - - 9,024

Other receivables N/A 23 - - - - 3,026 3,049

Security deposits 2.82 7,423 - - - - - 7,423 Financial Derivative Asset N/A - - - - - 46,346 46,346

Listed Investments N/A - - - - - 85 85 Total Financial Assets 16,470 - - - - 49,457 65,927

Financial Liabilities

Trade payables N/A - - - - - 18,788 18,788

Borrowings 6.28 - - 20,999 - - - 20,999

Finance leases 7.22 - 1,217 1,728 896 - - 3,841 Total Financial Liabilities - 1,217 22,727 896 - 18,788 43,628

30 June 2012 Weighted

average rate

Interest bearing

Non- interest bearing

Consolidated Total

%

$’000

Under 1 year

$’000

1 – 2 years $’000

2 – 5 years $’000

5+ years $’000

$’000 $’000

Financial Assets

Cash assets 4.7 10,196 10,000 - - - - 20,196

Other receivables 4.0 134 - - - - 6,258 6,392

Security deposits 4.0 10,959 - - - - - 10,959

Listed Investments N/A - - - - - 115 115

Total Financial Assets 21,289 10,000 - - - 6,373 37,662

Financial Liabilities

Trade payables N/A - - - - - 17,221 17,221

Borrowings 7.3 - 486 - - - - 486

Finance leases 8.5 - 750 679 1,149 - - 2,578

Total Financial Liabilities - 1,236 679 1,149 - 17,221 20,285

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NOTE 27 FINANCIAL INSTRUMENTS (continued)

(ii) Commodity risk The Group’s exposure to commodity risk arises from movements in the gold price. During the year the Group entered into a hedge contract (Note 11) for specified quantities of gold on specific dates to partly manage the commodity risk.

(iii) Currency risk The Group is exposed to the Australian dollar currency risk on gold sales, which are denominated in US dollars. During the year the Group entered into a hedge contract (Note 11) for specified quantities of gold on specific dates to partly manage the currency risk.

(b) Credit risk The Group trades only with recognised, creditworthy third parties. There are no significant concentrations of credit risk within the Group. (c) Liquidity risk The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities, and through the continuous monitoring of budgeted and actual cash flows. At the reporting date there is no significant liquidity risk. The table below analyses the Group’s maturity of financial liabilities:

30 June 2013

< 6 month

$’000

6 – 12 months

$’000

1 – 5 years $’000

5+ years $’000 Total

$’000

Trade payables 18,788 - - - 18,788

Borrowings - - 20,999 - 20,999

Finance leases 559 658 2,624 - 3,841

Total Financial Liabilities 19,347 658 23,623 - 43,628

30 June 2012

< 6 month $’000

6 – 12 months

$’000

1 – 5 years $’000

5+ years $’000

Total $’000

Trade payables 17,221 - - - 17,221

Borrowings 415 71 - - 486

Finance leases 472 278 1,828 - 2,578

Total Financial Liabilities 18,108 349 1,828 - 20,285

(d) Sensitivity analysis The following table summarises the Group’s exposure to interest rate risk, commodity and currency risk (AUD gold price) at the reporting date. The sensitivities are based on management’s best estimate of the market views for future interest rates, gold price and currency movements over the next 12 months with reference to recent historical movements. The analysis demonstrates the after tax effect on the profit/(loss) and equity which could result from changes based on the following: 30 June 2013 Interest rate risk

Profit/(loss) $’000

Equity $’000

- Increase interest rate by 1% (59) (59) - Decrease interest rate by 1% 59 59

Gold price risk associated with the financial derivative instruments - Increase $AUD gold price by 10% - (23,809) - Decrease $AUD gold price by 10% - 23,809

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NOTE 27 FINANCIAL INSTRUMENTS (continued) 30 June 2012 Interest rate risk

Profit/(loss) $’000

Equity $’000

- Increase interest rate by 1% 198 198 - Decrease interest rate by 1% (198) (198)

Gold price risk associated with the financial derivative instruments - Increase $AUD gold price by 10% - - - Decrease $AUD gold price by 10% - -

(e) Derivative assets and liabilities designated as cash flow hedges The following table indicates the periods in which the cash flows associated with cash flow hedges are expected to occur, are expected to impact profit and loss and the fair values of the related hedging instruments. 30 June 2013 Expected cash flows Fair value Total 2 months or

less 2 - 12

months 1 - 2 years 2+ years

$’000 $’000 $’000 $’000 $’000 $’000

Hedged Assets 46,346 296,819 19,030 89,681 97,604 90,504

(f) Net fair values The net fair values of financial assets and financial liabilities at the reporting date are as follows:

Total carrying amount as per the Balance Sheet

Aggregate net fair value

Consolidated Consolidated 2013

$’000 2012

$’000 2013

$’000 2012

$’000 Financial Assets Cash and cash equivalents 9,024 20,196 9,024 20,196 Other receivables 3,049 6,392 3,049 6,392 Investments – listed 85 115 85 115 Financial Derivative Asset 46,346 - 46,346 - Other financial assets 7,423 10,959 7,423 10,959 Total Financial Assets 65,927 37,662 65,927 37,662 Financial Liabilities Trade payables 18,788 17,221 18,788 17,221 Borrowings 20,999 486 20,999 486 Finance leases 3,841 2,578 3,841 2,578 Total Financial Liabilities 43,628 20,285 43,628 20,285

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

- Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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NOTE 27 FINANCIAL INSTRUMENTS (continued)

$’000

$’000

$’000

$’000

30 June 2013 Level 1 Level 2 Level 3 Total Assets Listed shares at fair value 85 - - 85 Derivative assets - 46,346 - 46,346 Total 85 46,346 - 46,431 Liabilities Derivative liabilities - - - - Total - - - - 30 June 2012 Assets Listed shares at fair value 115 - - 115 Derivative assets - - - - Total 115 - - 115 Liabilities Derivative liabilities - - - - Total - - - - NOTE 28 JOINT VENTURES The Group has interests in the following unincorporated joint ventures: Joint Venture Principal

Activity Percentage

Interest Other Participants

PHANTOM WELL Exploration 81.4% Royal Harry Gold Mines NL MOUNT MINNIE Exploration 73.9% Anglogold Ashanti Australia Ltd WILGA WELL WEST Exploration 90.0% Richmond, William Robert MOUNT FLORENCE Exploration 87.8% Ladyman, R.P; Ladyman, I.M; Evans, A. YUNDAMINDERA Exploration 40.0% Nex Metals Exploration Limited As at 30 June 2013 the Group’s interests in joint venture assets, being deferred exploration and evaluation costs, are $1,950,066 (2012: $2,288,000). In order to maintain current rights of tenure to exploration tenements, the Group is required to meet minimum expenditure requirements. As these expenditure commitments can be reduced by selective rationalisation of interests in exploration tenements or by renegotiation of the joint venture terms it is difficult to accurately forecast the amount of future expenditure. On current tenement holdings, the Group’s nominal expenditure obligations over joint venture tenements for the next 12 months are approximately $0.6 million. Contingent liabilities are nil. NOTE 29 CONTINGENT LIABILITIES There are no contingent liabilities at 30 June 2013 (2012: Nil). NOTE 30 MATTERS SUBSEQUENT TO THE REPORTING DATE There has not been any matter or circumstance, other than referred to in the financial statements or notes thereto, that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group.

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Level 14, 140 William St Melbourne VIC 3000 GPO Box 5099 Melbourne VIC 3001 Australia

Tel: +61 3 9603 1700 Fax: +61 3 9602 3870 www.bdo.com.au

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

INDEPENDENT AUDITOR’S REPORT

To the members of Saracen Mineral Holdings Limited

Report on the Financial Report

We have audited the accompanying financial report of Saracen Mineral Holdings Limited, which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1(b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the disclosing entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the disclosing entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Saracen Mineral Holdings Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion

In our opinion:

(a) the financial report of Saracen Mineral Holdings Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(b).

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 10 to 15 of the directors’ report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Saracen Mineral Holdings Limited for the year ended 30 June 2013 complies with section 300A of the Corporations Act 2001. BDO East Coast Partnership

David Garvey

Partner

Melbourne, 27 August 2013

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Documents

FINANCIAL REPORT FOR 2012/13 YEAR › asxpdf › 20130828 › pdf › 42hzf3l4tf88d3.pdf · 8/28/2013 · it has released its financial results for the 2012/13 financial year (“FY2013”)