The three-year, non cash-backed performance bond facility with the National Australia Bank replaces an existing cash-backed facility, which is currently drawn down to $22 million.

The performance bonds provide security for performance obligations incurred in the ordinary course of business, including environmental bonds.

St Barbara has also established a hedging facility with Barclays Bank for all production from its non-core King of the Hill deposit.

The facility has been implemented in the form of a collar structure starting in the June quarter of next year and finishing in the June quarter 2015.

The put options ensure a minimum price for King of the Hills gold of $1425/oz for the full 250,000oz expected to be produced from the underground project.

The put options were financed by selling call options over 250,000oz at a strike price of $1615/oz.

If the spot gold price drops below $1425/oz at any time during the three-year facility, the company can exercise put options to achieve a minimum price of $1425/oz.

Alternatively, if the spot gold price exceeds $1615/oz during the period, the company may be required to sell gold at $1615/oz.

The total capital cost for King of the Hills, part of the Leonora operations, is estimated to be $40-45 million, while cash costs are expected to be $850-880/oz.

The deposit has probable reserves of 1.4 million tonnes grading 4.3 grams per tonne for 195,000oz gold.

The decline into the orebody will be located in the wall of the current Tarmoola open pit, with ore being hauled 42km to the Gwalia processing plant at Leonora.

St Barbara says it has no plans to hedge core gold production.

Shares in St Barbara were last trading half a cent down to 30.5c.