Evolution Mining Limited

Ladies and gentlemen, thank you for standing by and welcome to the Evolution Mining Limited June 2020 quarter results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. And now I'd like to hand the conference over to you for our speaker today, Mr. Brian O'Hara, General Manager of Investor Relations. Thank you. Please go ahead.

Thanks, Kevin. Good morning and welcome to the Evolution Mining June 2020 quarterly conference call. This morning on the call we have Jake Klein, Executive Chairman, Laurie Conway, CFO and Finance Director, Bob Fulker, COO, and Glenn Masterman, VP Discovery and Business Development. In what has been an extremely volatile year with so many distortions in financial market prices relative to economic reality, it's reassuring to know there's an asset class that's behaving exactly as it should. Gold's historical negative correlation to real interest rates continues to hold true, and with declining real rates coupled with extraordinary government stimulus, the gold price has performed well. While the US dollar gold price is now within a few percent of all-time highs set way back in 2011, the Aussie dollar gold price continues to break records, averaging over $2,600 per ounce for the June quarter. We've got a busy couple of months ahead of us, with the release of our financials on the 13th of August, which we'll use as an opportunity to issue FY21 guidance and an updated three-year outlook. And then on the 1st of September, we hope you can join us for our virtual Investor Day, which will have a particular focus on the longer-term outlook for our business, highlighting the growth potential at Cal, Red Lake, Ernest Henry and Mangari. For today's call, we'll be talking to the June 2020 quarterly results presentation released to the ASX this morning. Thank you and I'll hand you over to Jake.

Thanks Brian and good morning everyone. Thanks for taking the time to join us on the call today. We really do appreciate it. I start by pausing to reflect on the tragedy the Australian gold industry experienced last week when a young man lost his life in Western Australia. We are a relatively small, tight-knit industry and it has appropriately impacted all of us. We'll all work together to learn from it and our thoughts are with his family and his colleagues at this very difficult time. I do hope that you, your families and colleagues are all healthy and well and navigating these unprecedented times we are all confronting. At Evolution, we are fortunate that we are operating in Australia and Canada, two jurisdictions that are very good to operate in. And fortunately, also countries where the COVID-19 pandemic is being well managed. Evolution's management of the COVID-19 pandemic has been very successful so far. We are navigating through this with authenticity and staying true to our health and safety values whilst continuing to keep our business strong. To date, we have not had any impact on our production due to COVID-19, nor have any of our employees or contractors infected. Today, I'll be talking to slides three to five of the presentation that we've released. As an opening comment, I will say that if I could bottle this set of results and bring them out each quarter from here on, I would happily do it. They capture so many of the fundamental attributes our core long-term strategy is at Evolution. Firstly, and very importantly, our safety performance is improving. Performance in this area can never be good enough, but the signs are encouraging. In June, we did not have a recordable injury. Our culture of engaging, reporting and learning from every incident is also improving markedly. Secondly we have long talked about our approach to focus on margin over volume Here you clearly see the benefits of that strategy Producing more cash from lower ounces in our view is a very good thing This quarter we delivered record operating cash flow record net mine cash flow record free cash flow and increased our cash balance by $204.7 million, demonstrating again that Evolution is a high-margin, low-cost business. We are very pleased about today's high gold price and we hope it goes higher, but we are not going to bet our business on it as we continue to seek to position Evolution as one of the very few gold companies that can genuinely claim that it will prosper through the inevitable cycle. Thirdly, a gold company by definition is depleting its assets with every ounce it produces. So you must continually be adding ounces through discovery and also creating value through improvements. If you don't, you're going backwards. Today we announced the Maiden Underground Reserve at Cal. This is an asset that we acquired in 2015 with a resource base of 3.4 million ounces. Since then, we have produced around 1.3 million low-cost ounces, have generated over $750 million in net mine cash flow, and today the asset has a resource base of over 9 million ounces. Our reserve base at Cal now sits at almost 4.5 million ounces, and we will continue to grow this reserve base as we drill out more of the inferred resources into the indicated category. We will also continue to be conservative and constrain our resources at 2000 Australian dollars an ounce and calculate our reserves at 1450 Australian dollars an ounce. This is the best way to protect our margins. The Maiden Reserve announcement is well ahead of our anticipated schedule of the end of this calendar year and reflects the momentum we are building at this world-class mine. Bob and Glenn will talk further about the very exciting opportunities we have in front of us at Cal as we navigate our way to the production profile of over 300,000 ounces a year of low-cost gold. We continue to be very impressed and encouraged at the way evolution's approach, style and culture is being embraced at Red Lake. The transformation and turnaround is happening faster than we anticipated and the scale of opportunity is far bigger than we expected. We believe that as this continues, we will be able to consistently demonstrate material value creation at this asset. You'll be hearing more about this from Glenn in his summary and also at Investor Day and the release of our results. The turnaround at Mangari is impressive and the team there have done a great job at consistently delivering to or above their plans. Lastly, and I believe very importantly, we continue to demonstrate that we are prepared to refresh and revitalise our portfolios. Krakow is an asset that has served us well, but has a mine life of 18 months and needs an owner prepared to allocate risk capital to discovery. Relative to the opportunities in front of us at Cal, Red Lake, Ernest Henry, Mangari and Crush Creek, all properties with discovery upside, Krakow would not have ranked above them from a discovery perspective. This is the third asset we have sold and we continue to believe that our strategy That bigger is not necessarily better, and that margin trumps volume every day is the best approach for long-term shareholder value creation. With that, I'll hand over to Bob.