BUSINESS UPDATE
Following the completion of Evolution Mining Limited’s (ASX:EVN) (“Evolution”) annual planning process, the
Company provides the following update on expected performance for FY22 and outlook for FY23 and FY24.
FY22 Operations Update
In the June 2022 quarter we are expecting production will be 15% higher than the March 2022 quarter at around
170,000 ounces.
The transformation at Red Lake is continuing and we expect production to increase 15% from the March 2022
quarter to produce around 38,000 ounces in the June 2022 quarter.
Production at Cowal was impacted by further wet weather in May which restricted access to the open pit and
Mungari production has been impacted by COVID related staff absenteeism. Since the Western Australian
border opened in early March, over 30% of the workforce (of approx. 500) have been absent for at least 7 days
due to either COVID infection or being deemed a close contact.
FY22 gold production is now expected to be around 640,000 ounces.
FY22 All-in Sustaining Cost (AISC) is expected to be ~$1,250/oz (US$875/oz). The final reported AISC for FY22
will largely depend on the closing copper price for June 2022 which is used to revalue unsettled concentrate
shipments from Ernest Henry. On average there are four months of production that are subject to revaluation.
At the current copper price, this adjustment will negatively impact FY22 AISC. This negative impact will result in
the group AISC being above the guidance range of $1,135 – $1,195/oz (US$795 – US$835/oz).
Sustaining and major capital are both expected to be at the lower end of their guidance ranges (guidance was
$150 – 175 million and $440 - $505 million respectively).
Ernest Henry is on track to deliver over $400 million of mine cash flow for FY22. The integration of the asset has
progressed well. An update of the Mineral Resource model is planned for release in the September 2022 quarter.
This model includes ~42km of additional drilling since May 2021. This will inform the Ernest Henry Extension
Pre-Feasibility Study (PFS) which remains on schedule for completion by December 2022. Drilling results are
expected to extend the copper-gold footprint across the mineralised lenses in the PFS area and below. Further
information on the Mineral Resource model update is included in the presentation titled “Business Update
Presentation” also released today.
The balance sheet is strong with around $900 million of liquidity including $540 million of cash expected at the
end of FY22.
FY23 Guidance and FY24 Group Outlook
Group production for FY23 is guided to increase 12% on the current year to 720,000 ounces +/- 5% and the
outlook for FY24 is expected to increase a further 11% to 800,000 ounces +/- 5%. This will deliver a total increase
of 25% over the two years.
These production levels are lower than our previous plans primarily due to the Red Lake transformation being
achieved a year later than planned. Red Lake production is expected to be 160,000 ounces +/- 5% in FY23,
ramping up to around 200,000 ounces +/- 5% in FY24.
Evolution Mining Limited 2
FY23 Guidance and FY24 Group Outlook (continued)
The FY23 AISC guidance and FY24 AISC outlook is expected to be in line with the current year at approximately
$1,240 per ounce +/- 5% (~US$870/oz). These costs are higher than previously outlined due to industry wide
cost pressures and the lower production at Red Lake. However, this cost level continues to place Evolution as
one of the lowest cost global gold producers.
Sustaining capital is guided to be approximately $190 – $240 million in FY23 with the same outlook for FY24.
This is higher than previously outlined due to the inclusion of capital in FY23 for fleet replacement at Ernest
Henry given the confidence of a mine life extension. The main driver to the change to the FY24 outlook is at
Cowal, due to higher underground mine development rates linked to the latest mine plan. Sustaining capital at
other operations have not materially changed from the previous outlook.
The guidance for FY23 major capital remains unchanged at $530 - $600 million while the outlook for FY24 has
been lowered to $330 – $380 million. The majority of this capital is for development of the Cowal Underground
mine; the transformation of Red Lake; and progressing studies on growth opportunities at Cowal Open Pits,
Ernest Henry Extension, and Plant Expansion at Mungari.
The guidance and outlook for both sustaining and major capital is also being impacted by some investment in
FY22 being deferred or delayed into FY23. This has contributed to capital spend being at the bottom end of
FY22 guidance.
Commenting on the updated outlook, Evolution’s Executive Chairman Jake Klein said:
“Our portfolio is well positioned. Our confidence in the turnaround and potential at Red Lake is growing, the
Cowal underground mine is on budget and schedule and the cash generation and geological upside at Ernest
Henry is outstanding.
Aligned with our strategy, during this period of increasing costs and a challenging labour market all planned
expenditure will be thoroughly assessed and gated with a focus on ensuring we continue to prioritise margins
over volume and earn an appropriate return on capital.
I am confident that Evolution is one of the best positioned gold companies with its high-quality, low-cost portfolio
of assets.”
Evolution Mining Limited 3
Relevant Proportions of Mineral Resources and Ore Reserves underpinning the Production Target
Evolution’s updated Group FY23 and FY24 Outlook for Gold Production comprises 11% Proved Ore Reserves,
80% Probable Ore Reserves, 2% Indicated Mineral Resources and 7% Inferred Mineral Resources.
Cautionary Statement concerning the proportion of Inferred Mineral Resources
There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty
that further exploration work will result in the determination of Indicated Mineral Resources or that the production
targets will be realised.
Material assumptions
Material assumptions on which the FY23 and FY24 Outlook is based are presented in ASX release titled “Annual
Mineral Resources and Ore Reserves Statement” dated 16 February 2022 (available to view at
www.evolutionmining.com.au). An AUD:CAD exchange rate assumption of 0.9 has been used for Red Lake.
▪ Gold: $1,450/oz for Ore Reserves, $2,000/oz for Mineral Resources
▪ Silver: $20.00/oz for Ore Reserves, $26.00/oz for Mineral Resources
▪ Copper: $6,000/t for Ore Reserves, $9,000/t for Mineral Resources
All open pit Mineral Resource estimates are reported within optimised pit shells which have been developed
using a $2,000/oz price assumption and take into account forecast mining costs and metallurgical recoveries.
All underground Mineral Resources (except Ernest Henry) are reported within underground mining shapes
(MSOs) using a $2,000/oz price assumption and take into account forecast mining costs and metallurgical
recoveries.
Ernest Henry Mineral Resource estimate is reported above a 0.7% Cu cut-off grade within the interpreted 0.7%
copper envelope. All open pit Ore Reserve estimates are reported within detailed pit designs and all underground
Ore Reserves are reported within mineable underground shapes (except Ernest Henry). Pit designs and
underground mining shapes have taken into account all applicable modifying factors, forecast mining costs and
metallurgical recoveries and have been developed subject to an economic test to verify that economic extraction
is justified. The economic test includes all applicable capital costs and is performed via a sensitivity analysis
using a range of assumed gold prices from $1,450 to $2,200 per ounce and considers a range of financial
metrics including AISC, NPV and FCF. Assets may use different assumptions withing this range during
optimisation or financial modelling stages depending on specific requirements as documented in their individual
statements.
Glencore commodity price assumptions used to estimate the Ernest Henry December 2021 Ore Reserves cutoff grades are: gold price of US$1,300/oz, copper price of US$6,500/t and AUD:USD exchange rate of 0.75.
The material assumptions upon which the Group FY23 Outlook forecast financial information is based are: Gold
A$2,400/oz; Silver A$30/oz; Copper A$12,500/t; and Diesel A$130/bbl. The material assumptions upon which
the Group FY24 Outlook forecast financial information is based are: Gold A$2,400/oz; Silver A$30/oz; Copper
A$12,500/t; and Diesel A$115/bbl.
Competent Persons Statement
The Ore Reserves and Mineral Resources underpinning the Group FY23 and FY24 Outlook have been prepared
by Competent Persons in accordance with the requirements in Appendix 5E (JORC Code).
DYOR
i hold EVN ( and have a top up order in sub $3.20 , gobbled up at the open @ $3.08 )
this will all be about expectations
SEAT-BELTS ON
have an extra top up order in @ $2.60 ( SO FAR )