St. Barbara Ltd. is developing its King of the Hills gold project as a satellite operation to its Gwalia mine near Leonora, Western Australia. The ore will be hauled 42 km to the Gwalia processing plant on existing roads. Gold production is planned at the rate of 65,000 oz/y over 3.5 years, following a 12-month ramp-up, and is expected to begin in the second quarter of 2011. The additional tonnage from King of the Hills is expected to lead to operational efficiencies at the Gwalia processing plant. Combined production from Gwalia and King of the Hills is expected to be in the range of 255,000 to 275,000 oz/y of gold.

Life-of-mine cash operating costs at King of the Hills are forecast in the range of $850 to $880/oz. Pre-production capital expenditure to first gold production is expected to be in the range of $12.5 million to $14 million. Cash payback is anticipated by mid-2012.

Probable ore reserves of 1.4 million mt, grading 4.3 g/mt and containing 195,000 oz of gold, have been established at King of the Hills at a gold price of A$1,150/oz and cut-off grade of 2.8 g/mt. St. Barbara expects that the mine will produce in the range of 1.9 million to 2 million mt at 4 to 4.5 g/mt containing 240,000 to 270,000 oz of gold, based on current probable ore reserves and the conversion of inferred resources in mining areas through additional grade control drilling. The deposit remains open on its eastern and western flanks, and drilling is under way to test for extensions.

The decline portal to the King of the Hills mine will be located in the wall of the current Tarmoola open-pit. The 10400 shoot at the eastern flank will be mined using conventional long hole open stoping, and the western flank will be mined using conventional cut-and-fill stoping, with back filling from development waste.

“King of the Hills” is the name of the historic, underground mine at Tarmoola adjacent to the new mine. As the new project will be a higher-grade underground development, St. Barbara decided to continue with this name, to differentiate the project from Tarmoola, which was a low-grade, high-volume, open-pit operation mined in the 1980s and 1990s.