gold $700 oz and .................., page-5

dj interview =DJ INTERVIEW: Australia's St Barbara To Hasten Mine Revival

By Stephen Bell
Of DOW JONES NEWSWIRES

PERTH (Dow Jones)--Buoyed by an 18-year peak for gold prices, St Barbara Mines Ltd.
(SBM.AU) is accelerating plans to become one of Australia's biggest producers out of
the ashes of failed miner Sons of Gwalia Ltd. (SGW.AU).
Ed Eshuys, managing director of Perth-based St Barbara, said his company aims to
establish itself as a 500,000 ounce per year producer based on the Southern Cross and
Leonora operations, in Western Australia, within two years.
A key part of the strategy - rehabilitation of the Gwalia decline tunnel at Leonora,
which currently exists to 375 meters depth - will begin next month, Eshuys told Dow Jones
Newswires in an interview.
After three months work, expected to cost around A$1 million, the company will start
extending the tunnel to the top of the one million ounce-plus Gwalia Deeps mineralization
at a depth of 1,100 meters, he said.
St Barbara is in talks with a mining contractor to carry out the A$38 million, two-year
tunnel extension project.
"The reason why we're starting early is because we are going to complete our
reserves upgrade by the end of March, and we're optimistic about the outcome of
those reserve estimates," he said.
Currently, Gwalia Deeps has unproven resources of around 1.2 million ounces. A further
2.2 million ounces exists at the Tarmoola open cut project, 35 kilometers away. The
company aims to bring both mines on line by the end of 2007, more than doubling its
production.
Backed by its 31% shareholder, Perth-based Resource Capital Fund, St Barbara bought the
former Sons of Gwalia gold mines in March for A$38 million
Formerly one of Australia's biggest gold producers, SOG fell into administration
in August 2004 when it was unable to meet hedging commitments because of a serious
deterioration in its gold reserves.

Plans Based On Much Lower A$ Gold Price

Last month, St Barbara sold its Meekatharra and South Laverton assets to focus on the
Southern Cross and Leonora operations.
The company aims to produce around 200,000 oz per year at Southern Cross at a cost of
A$400/oz. SOG had been producing 520,000 oz of gold per year at around A$450/oz when it
failed. The lower costs under St Barbara's management are due to productivity
improvements and better-than-expected grades at Southern Cross, Eshuys said.
"The improvements are sustainable - we are forecasting A$400/oz (cash costs) on
the basis of our current cashflows," he said.
The company has also benefited from rising gold prices that last week hit 18 year highs
of US$487 per ounce, or around A$660/oz.
"All our analysis of the Gwalia assets was based on a gold price of A$530 an
ounce," Eshuys said. "The timing couldn't have been better," he
added.
St Barbara's share price has risen fourfold since the start of the year. Its
shares closed down 1.6% Monday at 30.5 Australian cents, valuing the group at A$173
million.
Eshuys said that St Barbara is running three deep drilling rigs at Gwalia Deeps in an
effort to define reserves at the underground project. For several years, SOG tried to
attract a joint venture partner that would fund development of the mine at a cost of
around A$120 million.
St Barbara, in contrast, is trying to prove up reserves from drilling activities, while
sinking the decline tunnel at the same time. Proving minable reserves will allow St
Barbara to use "debt or equity to fund the development", Eshuys said.