Evolution Mining Limited

Thank you for standing by and welcome to the Evolution Mining March 2022 Quarter Results Conference 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 Jake Klein, Executive Chairman. Please go ahead.

Thanks, Harmony. Good morning, everyone. Welcome to the call and thank you for joining us. We do appreciate it. Bob Fulker, our Chief Operating Officer, is taking a well-earned break from today's call, so I'm joined by our Finance Director and CFO, Laurie Conway, and our VP Discovery and Business Development, Glenn Masterman. At a macro level, this quarter inflation in the US rose to 8.5%, its highest level in 41 years, while unemployment rates in the US and Australia are at historic lows. Russia's invasion of Ukraine is now entering its third month, with the conflict showing no signs of reducing, and COVID continues to wreak havoc on people's health, workforce availability and supply chains. Closer to home in February and March, the Australian East Coast was battered by heavy rainfall and flooding that tragically killed 21 people and required thousands of people to evacuate their homes. Against this backdrop, gold has been fulfilling its traditional role as the best hedge against inflation and geopolitical uncertainty. Regrettably for the world, I expect these issues to continue. Turning to Evolution's courtly reports, and our performance and starting on slide three of the presentation. There are many highlights in today's report, but three are clear standouts for me. Firstly, our portfolio has been transformed into one which is amongst the highest quality, lowest cost, cash generative, growth oriented portfolios in the gold sector. 148,000 ounces of gold produced and an oil in sustaining cost of 990 Australian dollars an ounce. or 717 US dollars an ounce, is a 27% reduction quarter and quarter and makes us very close to being the lowest cost gold producer of scale on the planet. Operating mine cash flow increased 33% to $269 million. Net mine cash flow increased 135% to $124 million. the bulk of the $144 million of capital being spent on our most important organic growth opportunities at Cal and Red Lake. We paid our 18th consecutive dividend of $55 million, bringing total dividends paid to shareholders to $1 billion. Secondly, the impact of 100% ownership of Ernest Henry and the transformation at Red Lake. In the last quarterly report conference call three months ago, I said that I was confident that by securing 100% of Ernest Henry, we had concluded what is likely to prove to be one of the most transformative deals in evolution's short history. Today's quarterly report is proof of this. The numbers speak for themselves. Copper production more than tripled to over 13,000 tonnes, resulting in an all-in sustaining cost of negative $2,000 an ounce. and the mine generated $185 million in operating cash flow. Gold sales were higher than production at 39,000 ounces due to an additional 20,000 ounces of gold that was sold due to the cancellation of the previous economic interest. Excluding the impact of those sales, operating cash flow for the quarter would have been $137 million, And all in sustaining cost would have been negative $4,200 per ounce. The transformation at Red Lake gained very important traction this quarter with a 67% increase in production to 33,000 ounces. We expect to improve this to over 40,000 ounces in the June quarter. This is testament to the significant efforts of our people at Red Lake and the operations team under Bob's leadership. We still have lots of work to do, but we are making tangible progress in creating value at this operation. Thirdly, I was proud of the resilience our teams demonstrated. As mentioned a few moments ago, COVID and rain events caused problems across the country during the quarter, and we were also affected. Over 25% of our workforce at Cal tested positive for COVID during the quarter, which amounted to 199 people. Fortunately, everyone is recovering. This, of course, excludes the impact of those needing to isolate as a result of being deemed close contacts. Despite this, not only were we able to deliver a robust quarter at Cal, but the team was able to plan and execute a very logistically challenging seven-day mill shutdown, which required a multitude of contractors, around 300 people, to assemble on site. With very strict protocols in place, not one person involved in the shutdown tested positive. The unprecedented East Coast rainfall in the quarter impacted both Cow and Mount Rawdon. Cow managed through it, but at Mount Rawdon it did result in some instability in the north wall of the open pit. Although this is being managed, it has had and continues to have an impact on our ability to access higher grade ore from the open pit and also required the crusher to be shut down for nine days. As you all know, the underperformance at Red Lake in the first six months of the year left us with very little runway on our original guidance, and taking these new factors into account, we have reduced our FY22 production guidance by 20,000 ounces, or 3% from the lower end to around 650,000 ounces. We are expecting a strong fourth quarter with an increase in production of around 22%. There is no change to our sector-leading oil and sustaining cost guidance, of $1,135 to $1,195 an ounce, so we will continue to produce high-margin ounces. On slide four, we have set out the results from Ernest Henry. Being a copper gold mine, it is challenging to compare it to other gold mines. The best measure is cash flow, and on this measure, I am confident that there will be very few gold mines in Australia that generated $175 million in net mine cash flow this quarter. We have chosen to treat the copper as a by-product credit, which delivers the exceptionally low cost of negative $2,000 an ounce. Another lens to look at this through is on a gold equivalence basis. Through this lens, production for the March quarter would have equated to 95,000 ounces of gold or 380,000 ounces on an annualized basis at a low all-in sustaining cost of $1,150 an ounce. The charts in slide five tell the story of the transformation that is occurring at Red Lake. I am particularly pleased that we gained momentum through the quarter, with March being the strongest month, and in many areas breaking all-time records at the operation. Having consistently delivered above 1,200 metres of development for the last six months, the Red Lake Transformation Plan now has a goal to consistently and safely mine 3,000 ore tonnes per day. This was achieved in March with 106,000 tonnes mined, surpassing the previous monthly record in the history of the mine by more than 20,000 tonnes. Pleasingly, this mining rate is being sustained in April. On-growing improvements to mining practices continue to drive reductions in stoke dilution that improve mine grades by 17% this quarter. Both the Red Lake and Campbell Mills are operating at record throughputs. The CYD decline, which will provide an important new source of higher-grade ore gathered momentum, is on track to deliver the first production ore in the September quarter, only six months away. We expect to improve production to over 40,000 ounces in the June quarter, with a focus on sustaining this level consistently over the next few quarters. Whilst being a few quarters behind our original schedule, we do remain confident of the potential for Red Lake to be transformed into a 350,000 ounce a year low-cost operation. Turning to slide six, the Cal Underground project continues to be on budget and scheduled for critical path activity. Major procurement milestones have progressed during the quarter and the award of the primary mining and drilling contract is imminent. This will complete the award of all material contracts. First production oil from the project remains on schedule for the June 2023 quarter when the paste plant is commissioned. Slide 7 shows the significant impact the Kandana and East Kandana acquisition has made on the future of Manggari. The integration is progressing well with the objective to create what we are describing as one mangari, standardised systems and processes and sharing of equipment and workforce across what was previously three separately run operations. One example of the operational synergies that are being captured is in the underground maintenance and training teams where three separate units are being combined with significant savings and efficiencies. Recruitment of vacant roles is also progressing well, with vacant roles reducing during the quarter, despite the tight West Australian labour markets. Turning to slide eight. Earlier this month, I was fortunate to be on site when Mount Rawdon hosted a delegation from the Queensland Government, led by the Minister of Resources, the Honourable Scott Stewart. The visit included an update on the two-gigawatt pumped hydro power project and the significant contribution it can make to delivering Queensland's renewable energy targets. As a potential pumped hydro facility, Mount Rawdon is blessed by history, topography and location. It has a huge head start in that about $1 billion has already been spent mining $200 million which has been processed for gold production over the expected 25-year period of its life. That billion dollars has created a big hole, which can be used as the lower reservoir of the pumped hydro scheme. In addition, the topography of the surrounding region also delivers Mount Rawdon a great natural site for the upper reservoir. In terms of location, fortunately Mount Rawdon sits only 25 kilometres from major power lines connecting Queensland's southern and central grids. And on top of that, the timing of the mine's closure aligns with Queensland's decarbonisation strategy, with the state due to close the 700 megawatt Calite B coal-fired power station in 2028. The study work remains ongoing and is due for completion in June 2023. With that, I'll hand over to Glenn to provide an update on our exploration and discovery activity.

Thank you, Jake, and good morning. This morning I'll update on exploration progress achieved across the discovery portfolio in the March quarter, which is set out on slide 9. Key takeaways I'd like to draw to your attention are firstly the positive drilling results returned on the Kewgine venture, which have expanded the mineralisation footprint at West Island and confirmed the presence of very good grades at this emerging discovery. At Manggari and Red Lake, drilling results continue to reinforce our views on underground upside potential, particularly at Kandana, where we are delineating new areas of high-grade mineralisation very close to existing development. Turning now to highlights in this morning's report, Commencing with our Q joint venture in WA, we completed our first full quarter of managing and operating drilling activities after taking over from our partner, Musgrove Minerals, at the beginning of January. We recently switched analytical laboratories, which has reduced assay turnaround times from well over 12 weeks to a more manageable five weeks. Faster analytical turnaround times give us the confidence to accelerate diamond drilling with a second core rig expected to arrive on the project during the June quarter. This will increase to three the total number of rigs on the JV ground, in which we are earning a 75% interest. Encouraging results from the diamond program in the quarter are highlighted on page 11 of the report. Pleasingly, we identified additional mineralised loads along the West Island trend, which has also extended 500 metres in recent air core drilling to 2.1 kilometres long. The June quarter program will focus on drilling extensions of known structures to understand potential scale of the mineral system and to test other target styles that may be important for hosting high-grade gold. At Mangari, drilling results outlined on page 14 extended the structure that hosts the Christmas hanging wall load at Kandana. This mineralisation is located 35 metres from the main Christmas ore body which we are currently mining. The results signify that the important ore-bearing structure remains open along strike and down dip. The next round of drilling will target the high-grade quartz load within the structure with the aim of potentially expanding the high-grade mineral resource. An exciting implication of the recent Christmas results is the realisation of untested potential in the hanging wall of the Strezlecki load where this structural position is modelled to continue. At Red Lake, drilling returned high-grade results on an extension of the R-zone at Lower Campbell, as summarised on pages 12 and 13 of this morning's report. The results confirmed great continuity at the local scale and highlight an opportunity for significant resource potential between these deep intercepts at the bottom of the Lower Campbell mineral resource. Future drilling will be planned as short step-outs from adjacent development to extend the mineral resource into the 500 metre gap identified on the R zone corridor. I look forward to sharing results of the June quarter drilling programs at our next opportunity in July. With that, I'll hand over to Laurie. Thank you, Glenn. Good morning, everyone.