Evolution Mining Limited

Thank you for standing by and welcome to the Evolution Mining December 2021 Quarter Results Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Martin Cummings, General Manager of Investor Relations. Please go ahead.

Thank you, Darcy. Good morning and welcome to the Evolution Mining December 2021 quarterly conference call. As Darcy mentioned, my name's Martin Cummings and I'm the General Manager, Investor Relations. This morning on the call we have Jake Klein, our Executive Chairman, Laurie Conway, our CFO and Finance Director, and myself in our group office in Sydney. Bob Fulker, our Chief Operating Officer, and Glen Masterman, our VP Discovery and Business Development, are dialling in. It has been a tumultuous couple of years and as expected, gold's role as a safe haven during those times has been demonstrated. As the pandemic was breaking in early 2020, we saw gold rise from the low 1500s per ounce to an all time high around 2070 in August that year. We started 2021 with the gold price down from its peak at just under US 1900 per ounce. Economies were surging as they emerged from COVID lockdowns and equity markets were printing new highs. Bitcoin was continuing to generate a lot of interest, with some touting it as a new digital gold, and exposure to any metal that ended up in a Tesla was highly sought after. Gold couldn't catch a bid in early 2021, and the sell-off was brisk, down to $16.80 by March. Gold equities would follow, and by the end of September, the GDX index of senior gold companies had fallen about 20% year-to-date, with the GDXJ Junior index even lower, down around 30%. But in the last three months, things have turned. Developing economies are now dealing with soaring inflation, with the Federal Reserve now indicating it will need to respond with rate increases soon. The Omicron COVID variant spread quickly, leading some countries to reintroduce or extend lockdowns and restrictions. And recently, Russia and Ukraine tension has Europe on high alert. Bitcoin had an incredible journey in 2021, but has now given back most of those gains. Gold's role as a safe haven is returning, and we now trade back up around US$18.20 per ounce. For Australian gold miners, the Australian dollar gold price also went on a wild ride, but we currently sit within 10% to 15% of its all-time high. These really are great prices to be selling our product at. And of course, copper had a standout year too, rising around 25%. Evolution is well placed to benefit from this with our copper production materially increasing from this month. With that, I'll now hand over to Jake to introduce the December 2021 quarterly report.

Thanks, Martin. Good morning, everyone. Welcome to the call. Thanks for joining us and happy new year. Despite the industry headwinds, COVID, labour shortages and unseasonal rainfall, our teams did extremely well to manage the impact. As planned and first articulated to you in July, we anticipate the second half of the year to be materially better than the last six months and are on track to deliver our guidance. Given the first half performance at Red Lake, we expect to be in the bottom half of the production range and between the mid and top end of the cost guidance range. Last quarter, our portfolio was significantly improved by securing 100% ownership of the iconic Ernest Henry copper gold mines. We also concluded the sale of Mount Carlton to Navarre Minerals and whilst retaining exposure to the future of the operation, the sale allows us to focus on our larger, higher margin assets. We continue to be consistent and diligent in the implementation of our strategy of improving the quality of our portfolio and being laser focused about putting ourselves into a position where we can generate sector leading returns on the capital we deploy. In our view, this is the holy grail in our industry and is the true measure of a gold company's performance over the long term. I visited Ernest Henry last week and left very confident that in the December quarter we concluded what is likely to prove one of the most transformative deals in evolution's history. It is an outstanding operation with a great team and terrific geological upside. We look forward to hosting a number of you there for a site visit in due course. The foundations for the transaction were put in place in 2016 when we secured the economic interest in the asset, and since then it built a strong and mutually respectful relationship with Glencore that allowed us to negotiate this deal on a bilateral, exclusive basis over the course of a few months last year. Our economic interest delivered $79.5 million in cash flow last quarter, and now with 100% of the operation being included from 1 January, we expect its impact to be even bigger going forward. The CAVE extension pre-feasibility study will be a priority, and with intersections 400 metres below the study area and still open below that, Ernest Henry has a long and very exciting future. Cal performed extremely well and managed to deliver to plan in spite of unprecedented rainfall and COVID interruptions. The underground project, which will grow Cal's production to 350,000 ounces per annum, remains on schedule and budget. I was also fortunate to be able to visit Red Lake in November last year. Due to COVID travel restrictions, this was my first visit since we took ownership of the asset in April 2020. Red Lake is one of the best commercial opportunities I've seen in the gold sector in my career. For the combined purchase price of US$650 million, being Red Lake and Battle North, we have secured a district-scale tenement position with 11 million ounces of resource and significant exploration upside, seven kilometres of prospective strike with associated mining infrastructure, $3 million and $700 million of Canadian tax losses. In time, this asset will be transformed into a plus 350,000 ounce a year low-cost producer. This is how value is created in our sector. As you will hear from Bob, who has just returned from his third visit in the last five months, progress is being made. Last quarter, we consistently achieved over 1,200 metres of development each month. As a result of this and other improvements, we are confident of a material and sustainable improvement to production in the next two quarters. We expect this higher production to drive the cost per ounce lower, and I'm looking forward to visiting the operation again with Laurie in the next few weeks. Frustratingly, mangari remains the only asset in our portfolio that we cannot currently visit. We are fortunate to have a good team in Western Australia who have led the Kandana integration, which has gone well, and we are growing increasingly confident about the future and the potential of this operation. Mount Rawdon was impacted by heavy rainfall and was forced to process the low-grade stockpile material. Strategically, we continue to assess the potential of Mount Rawdon to be converted into a pumped hydro generator, which could be a significant contributor of renewable energy to the southeast Queensland grid at the end of its mine life. This last quarter, the highlights for the discovery team were good intersections at Kew in Western Australia, and also more intriguing and exciting intersections at Red Lake, where there is plenty of open space and interesting geology to discover another high-grade zone. Glenn and his team are also plotting and planning the next phase of drilling at Ernest Henry. Whilst we are managing industry headwinds, we should not ignore the significant commodity price tailwinds. A gold price of over AU$2,500 and a copper price which going forward will represent around 20% of our revenue of over AU$13,500 per tonne. Evolution is well positioned to benefit from this. I'll now hand over to Bob to provide some more detail on the operational performance.