EVOLUTION MINING LIMITED — Annual Report 2013

Aug 29, 2013

Evolution Mining 2013 Full Year Financial Results

30 August 2013

Jake Klein - Executive Chairman Tim Churcher - VP Finance & Chief Financial Officer

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Disclaimer

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• This presentation has been prepared by Evolution Mining Limited (“Evolution Mining”) and consists of slides for a presentation concerning the company. By reviewing/attending this presentation, you acknowledge and agree the following.

• This presentation includes forward-looking statements. Forward-looking statements inherently involve subjective judgement and analysis and are subject to a number of risks, uncertainties, contingencies and other factors, many of which are outside the control of, and may be unknown to, Evolution Mining. As such, actual results or performance may vary materially from those expressed or implied by forward-looking statements. The types of factors that could cause such variation in actual results or performance include (without limitation) commodity prices, operational problems and general economic conditions. Given these factors, undue reliance should not be placed on forward-looking statements, which speak only as at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, Evolution Mining does not undertake any obligation to publicly update or revise any forwardlooking statements contained in this presentation, including (without limitation) where Evolution Mining’s expectations change in relation to such statements and where there is a change in events, conditions or circumstances providing the basis for any such statement.

• No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability, fairness or correctness of the information contained in this presentation. To the maximum extent permitted by law, Evolution Mining and its related bodies corporate and affiliates, and each of their respective directors, officers, employees, agents and representatives, disclaim any liability or responsibility for loss or damage arising from or in connection with the use of the information contained in this presentation.

2

Corporate Strategy

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• Operational stability and predictability through a portfolio of similar sized mines

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• Australia – a low political risk, first world jurisdiction with a high gold endowment

• Commitment to growth through exploration success and opportunistic, logical, value accretive acquisitions

• High performance team culture with clearly defined business plans and goals

3

The Australian Opportunity

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 A$ falling

• Input costs reducing

• Productivity must improve

• Political environment will improve

• Up to 50% of production may change hands

Gold Industry C1 Cash Costs by Country US$/oz Q3 2012

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2,000
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
1,800
1,600
1,400
1,200
1,000
South Africa
800 Australia
China
600
Indonesia
US
400
Peru
200
Russia
0
0 25 50 75 Percentile 100
C1 Cost Country
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4

The Australian Advantage

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EVN $1.50 EVN $0.93
12-Feb-13 Gold Price (A$ vs US$) 28-Aug-13
1,650
1,600
1,550
1,500
1,450
1,400 GOLD (US$)
GOLD (A$)
1,350
1,300
1,250
1,200
Gold Price
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“The recent decline in the exchange rate seems to make sense from a macroeconomic perspective and it would not be a major surprise if a further decline occurred over time.” Glenn Stevens, RBA

5

Operational Strategy

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• Addressing current gold price environment through production efficiencies, capital discipline and cost reductions

• Mine plans optimised for lower gold price and improved capital expenditure profile

• Cost-out initiatives already having an impact

• Organisation appropriately structured for current conditions

• Suspended non-critical capital projects

• Reduced Discovery budget by ~ 25% with flexibility to further reduce

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Total site costs in July 2013 were 6% less than average monthly spend for FY13

6

FY13 Operational Highlights

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 Delivering on guidance and sustainable growth

• Consistently meeting original Group production and cost guidance

  • Gold equivalent¹ production increased by 40% to 392,920oz compared to FY12

  • Cash cost of A$790/oz - only 3% higher than FY12 despite rising input costs

• Commercial production achieved at Mt Carlton, Evolution’s key organic growth asset, from 1 July 2013

• FY14 Group gold production outlook to increase; 400,000 to 450,000ozeq

• Lost time injury frequency rate near halved from 7.1 to 3.7

• Gold equivalent is defined as gold plus payable silver from the A39 deposit at Mt Carlton. A39 silver production is converted to gold equivalent using a gold to silver ratio relevant to the quarter – see Company quarterly activity report notes for details

Delivering on operational stability and sustainable growth Demonstrating operational stability and consistency

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FY13 Financial Highlights

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• Sales revenue increased by 29% to A$605.0 million

• Operating cash flow increased by 35% to A$233.0 million

• Underlying profit of A$44.4 million

• Reported loss of A$307.4 million

• Impacted by A$384.3 million impairment charge

• Maiden dividend of 1 cent per share

• Based on gold-linked royalty style dividend policy; 2% of revenue from gold equivalent production

  • Ex-dividend date: 5 September 2013

  • • Record date: 11 September 2013

  • Payment date: 26 September 2013

8

Profit

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 Underlying profit of A$44.4 million

12 months ending 30-Jun-13 30-Jun-12 A$’000 A$’000	% increase
	(decrease)
Total Revenue 605,034 469,484	29%
Underlying EBITDA 211,725 189,991	11%
Depreciation & Amortisation (141,384) (94,012)	50%
Underlying EBIT 70,340 95,979	(27%)
Underlying Net Profit 44,443 63,395	(30%)
Asset & investment impairments (384,285) 0
Business combination costs 0 (19,963)
Fair value uplift on 30% Cracow 0 1,930
Tax effect of permanent differences 32,421 (8,050)
Reported Net Profit (307,421) 37,312

9

Impairments

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 Total asset and investment impairments of A$384.3 million

 Reversal of fair value uplifts applied during formation of Evolution in 2011

Impairment Summary (A$’000)	Edna May	Cracow	Pajingo	Mt **Rawdon **	Mt Carlton	Total
Mine development 56,523 1,366 5,075 0 0						62,964
Fair value uplift on acquisition¹ 0 42,841 51,252 8,649 132,058						234,800
Exploration 4,229 9,791 24,034 5,834 16,581						60,469
Goodwill 0 4,587 0 13,778 0						18,365
Total Mine Assets 60,752 58,585 80,361 28,261 148,639						376,598
Investments						7,687
Total Impairments						384,285

1. The total fair value uplift of assets was $343.055 million, of which $234.800 million is reversed by the impairment

10

Asset Base

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 Post impairment group asset base of A$917.6 million

 FY13 D&A rate of A$371/oz

• Reduced to approximately A$290/oz post impairment

A$’000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Asset Base (Pre & Post Impairments)

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Mt Carlton Mt Rawdon

Cracow

Pajingo

Edna May

Impairment Post Impairment

11

Operating Metrics

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 Enhanced operational predictability through investment

 All key operating metrics increased in FY13

• All key capital metrics increased in FY13

Group Key Metrics Units FY13 FY12	% increase
Total UG ore mined (kt) 827 761	9%
Total lateral development (m) 13,450 11,063	22%
OP ore mined (kt) 7,532 6,345 19%
OP waste mined (kt) 37,168 20,100 85%
Processed tonnes (kt) 7,172 6,822	5%
Grade (g/t gold) 1.9 1.7	9%
Gold production (oz) 392,920 346,979	13%
Attributable gold production (oz) 392,920 280,401 40%
Unit cash operating cost ($/oz) 790 771 3%

12

Production and Cost Results

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 Group gold production 392,920ozeq at cash cost A$790/oz

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A$956/oz
900
500,000
A$770-820/oz
A$790/oz
A$771/oz 800
Mt Carlton
400,000 12,138ozeq Mt Carlton 700
65,000-75,000oz
Pajingo
600
85,918oz Pajingo
72,500-80,000oz
300,000
500
Pajingo Mt Rawdon
57,154oz 106,089oz Mt Rawdon 400
95,000-100,000oz
200,000 Mt Rawdon
71,205oz Edna May 300
86,216oz Edna May
Edna May 85,000-95,000oz
200
100,000 73,264oz
Cracow
Edna May
Cracow
65,592oz Cracow 102,560oz 100
82,500-90,000oz
Cracow 78,779oz
0 30,517oz (30%) 0
1 1
FY11 FY12 FY13 FY14
Guidance
Cash Cost A$/oz
Production gold equivalent (oz)
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1. Attributable ounces

*Plotted at midpoint of FY14 guidance

Production increased 40% since FY12

13

EBITDA

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 Record underlying site EBITDA of A$246.7 million

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A$k
90,000
FY13 Site EBITDA vs Capex
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Edna May Pajingo Cracow Mt Rawdon
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Growth Capex Sustaining Capex Underlying site EBITDA

• Site EBITDA is before all corporate administration costs, non-recurring items and exploration expenses. Mt Carlton will contribute to group EBITDA from 1 July 2013

Operational stability and predictability

14

Cash Flow

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A$M 800.0

 Operations provided A$135.6M to fund growth through major project capex and exploration

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700.0
600.0
500.0
400.0
300.0
200.0
141.8
100.0
0.0
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(353.8)
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613.8

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(26.3)
(98.0)
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95.3 (98.0) 277.4 141.8 (311.3) (26.3) (21.4) 13.7 Opening Receipts from Payments to Corporate Sustaining Implied Cash Financing Growth Exploration Stamp Duty Closing Cash Cash Sales Suppliers and Capital Pre Growth Activities Capital Employees Activities

0.0

15

Capital Expenditure

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 Total of A$375.0 million invested in FY13 for future growth

Group Capital Expenditure

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400
350
300
A$169
250 Mt Carlton
Mt Rawdon
200 A$94
Edna May
A$67
A$15-A$20
150 Pajingo
A$44
A$34 A$60-A$65 Cracow
100
A$30
A$58 A$25-A$30
50 A$44 A$30-A$35
A$47
A$32 A$30-A$35
0
FY12 FY13 FY14F
Capex A$M
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*Plotted at midpoint of FY14 guidance

16

Discovery Expenditure

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 A$26.3 million invested in exploration in FY13

• Group Mineral Resource[1] increased by 10% to 7.7Mozeq

• Discovery of new, mineralised epithermal veins at Pajingo and Cracow

• FY14 budget reduced to A$20 million focussed on a transformational discovery

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Edna May
A$1.5M
Pajingo
A$8.4M
Cracow
A$8.9M
Mt
Mt Carlton Rawdon
A$6.5M A$1.0M
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1 Refer to the ASX release December 2012 Resource and Reserve Statement 23 April 2013 on the Company’s website for full details

Delivering shareholder wealth through growing gold reserves

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Balance Sheet

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 Conservative balance sheet maintained

 Debt increased due to funding Mt Carlton project capex

• Peak funding reached with modest gearing of 13%

• A$86.9M cash and credit available

Balance sheet 30 Jun 13	30 Jun 12
A$’000	A$’000
Cash 13,662	141,784
Short term debt 4,496	16,500
Long term debt 126,784	15,000
Total debt 131,280	31,500
Net Debt [ND] 117,618	(110,284)
Equity [E] 755,348	1,056,418
Gearing [ND/ND+E] 13%	<1%
Cash + Available credit 86,878	141,784

Modest gearing ratio

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FY14 Production Outlook

FY14 Production guidance (gold equivalent ounces)	FY14 Production guidance (gold equivalent ounces)	Comment
Cracow	82,500 – 90,000	Mining approximately 535kt from 3 new ore bodies: Roses Pride, Tipperary and Empire
Pajingo	72,500 – 80,000	Processing approximately 500kt made up of 400kt from underground mine and 100kt from stockpiles. Mainore sourceis Sonia deposit
Mt Rawdon	95,000 – 110,000	Processing approximately 3.5Mt – a 5% increase on FY13
Edna May	85,000 – 95,000	Processing approximately 2.6Mt – similar to FY13
Mt Carlton1	65,000 – 75,000	Production from V2 and A39 pits
Group	400,000 – 450,000

1. Mt Carlton production guidance refers to payable metal and sums the gold produced from the V2 deposit and the silver produced from the A39 deposit after converting A39 silver production to a gold equivalent figure (on the basis of a commodity price ratio of A$1,400/oz for gold and A$23/oz for silver

FY14 production growth from Mt Carlton - Evolution’s newest mine

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FY14 Cost Guidance	FY14 Cost Guidance	FY14 Cost Guidance
Guidance FY14	C1 Cash Operating Costs¹	All-in Sustaining Costs²
	(A$/oz)	(A$/oz)
Cracow	840 – 890	1,220 - 1,270
Pajingo	800 – 850	1,210 - 1,260
Mt Rawdon	725 – 775	860 - 910
Edna May	800 – 850	990 - 1,040
Mt Carlton	700 – 750	960 - 1,010
Group	770 – 820	1,030 - 1,080
Including Corporate cost		1,080 - 1,130
	**US$710 – US$7603 **	**US$1,000-US$1,0453 **

1. C1 cash costs represent the costs for mining, processing and administration after accounting for movements in inventory (predominantly ore stockpiles). It includes net proceeds from by-product credits, but excludes the cost of royalties and capital costs for exploration, mine development and plant and equipment.

2. The additional costs of royalties, deferred open pit stripping, rehabilitation, sustaining capital add approximately A$260/oz. Corporate costs of approximately A$50/oz provide for Group All-in Sustaining Costs (AISC) of A$1,080/oz to A$1,130/oz. The main items are sustaining capital (approximately A$200/oz) and royalties (approximately A$80/oz). The AISC does not include an allocation for the discovery budget (A$20M in FY14) or the cost of major projects.

3. At an AUD:USD exchange rate of 0.925

4. Total All-in Cost (AIC) of A$1,300/oz – A$1,370/oz (US$1,200 to US$1,270/oz[3] ) includes discovery and major projects

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FY14 Capital Expenditure

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 Forecast capital expenditure of A$160 million to A$185 million – includes all sustaining and growth capital

• Capex associated with cut backs

A$M 70 Capital Expenditure 60  Mt Rawdon (A$45-A$50M) 50  Edna May (A$15M) 40 30 Capex associated with underground development 20  10 Cracow (~A$20M)  0 Pajingo (~A$20M) Mt Rawdon Cracow Pajingo Edna May Mt Carlton Sustaining Capital (A$M) Major Projects (A$M)

• Capex associated with underground development

*Plotted at midpoint of FY14 guidance

21

Summary

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• Operational stability and predictability through a portfolio of five Australian mines – delivering to unchanged full year cash cost and production guidance

• Implemented production efficiencies, capital discipline and cost reductions in response to a lower gold price environment

• FY13 gold and silver sales revenue increased by 29% to A$605.0 million

• FY13 underlying profit of A$44.4 million (pre A$384.3 million impairment)

• Maiden dividend of 1 cent per share delivering returns to shareholders

• Increasing gold production profile: FY14 outlook of 400,000 - 450,000ozeq

• Globally competitive FY14 All-in Sustaining Cost guidance of A$1,080/oz – A$1,130/oz (US$1,000/oz – US$1,045/oz at AUD:USD FX of 0.925)

• Strong financial position with cash and available credit of A$87 million – no current intention or requirement to raise additional equity

Uniquely positioned to participate in a transformational period in the Australian gold industry

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Evolution Mining ASX Code: EVN

www.evolutionmining.com.au

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