EVOLUTION MINING LIMITED — Annual Report 2014

Aug 27, 2014

Evolution Mining 2014 Full Year Financial Results

28 August 2014

Jake Klein - Executive Chairman Lawrie Conway - Finance Director & 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

FY14 highlights

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• Delivering on production and cost guidance

• FY14 gold equivalent¹ production increased by 9% to 427,703oz

• ²

• C1 cash cost of A$781/oz – at the lower end of guidance

• Lost time injury frequency rate reduced from 3.7 to 1.7 in FY14

• Cash flow from operations of A$91.0M³

• Cash and available credit of A$104.8M⁴

• Exploration focused on building 3D geological models and integrating

• geologic time to create 4D models: prioritised target drilling underway

• Emmerson Resources joint venture arrangement

• Gold equivalent is defined as gold plus payable silver from the A39 deposit at Mt Carlton.

• Amended from previously reported A$772/oz due to inventory related adjustment post June 2014 Quarterly Report

• Net cash flow from operations post A$154.4 million capital expenditure 4. At 30 June 2014

Delivering on operational stability and sustainable growth We say, we do, we deliver

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Three pillars

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Creating shareholder value

Operations

Discovery

M&A

Act like owners to maintain a cost and productivity focus over the longer term

Using science and technology to improve probability of transformational discoveries

Improve the quality of asset portfolio through opportunistic, logical, value accretive acquisitions

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FY14 financial highlights

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• Sales revenue increased by 5% to A$634.4M

• EBITDA of A$207.6M (FY13: A$211.7M)

• Reported net profit of A$50.0M (FY13: net loss of A$307.4M²)

• Underlying net profit increased by 13% to A$50.0M (FY13: A$44.4M)

• ¹

• Cash flow from operations of A$91.0M

• Cash and available credit of A$104.8M

• Strong balance sheet with low gearing of 12%

• Final dividend of 1 cent per share (unfranked)

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1. Net cash flow from operations post A$154.4 million capital expenditure

2. FY13 net loss impacted by A$384.3 million impairment charge

5

Profit summary

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12 months ending	30-Jun-14	30-Jun-13	% increase
	A$’000	A$’000	(decrease)
Total Revenue	634,420	605,034	5%
Underlying EBITDA	207,556	211,725	(2%)
Depreciation & Amortisation	(143,824)	(141,384)	2%
Underlying EBIT	63,732	70,340	(9%)
Underlying Net Profit	50,017	44,443	13%
Asset & investment impairments		(384,285)
Tax effect of permanent differences		32,421
Reported Net Profit	50,017	(307,421)

 Final account adjustments (post June 2014 Quarterly Report) of A$9.5M due to:

 Increase in D&A to reflect application of resource and reserves from May

 Mt Carlton inventory stockpile adjustment

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Profit comparison – FY14 vs FY13

 Increase in underlying net profit despite lower gold price

Underlying Net Profit (A$M)

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84.4
Lower metal prices
55.1
Tax re-classification
4.2 19.0
38.8 2.8
2.3
44.4 7.3 1.5 50.0
Mt Carlton commercial production
Underlying Revenue Revenue Cost D&A Exploration Corporate Interest Other Tax Underlying
Profit FY13 Volume Price Profit FY14
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Cost reductions

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 Maintaining margins in lower gold price environment

Mining costs and EBITDA margins FY14 vs FY13 (A$M)

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52%
42% 41%
47%
40%
30%
33%
29% 29%
89.4
85.7
76.4
73.2
56.0
53.0
46.8
38.3
35.0
Cracow Pajingo Mt Rawdon Edna May Mt Carlton
Total mining cost FY13 Total mining cost FY14 EBITDA Margin FY13 EBITDA Margin FY14
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Note: Mt Carlton commercial production declared on 1 July 2013

Acting like owners to drive productivity

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EBITDA able to fund capital

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 Solid underlying FY14 site EBITDA of A$235.1 million

 Sites cash positive post capital investment

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70
60
50
40
30
20
10
0
Mt Rawdon Cracow Mt Carlton Edna May Pajingo
Sustaining Capex Growth Capex Underlying site EBITDA
Underlying site EBITDA Sustaining Capex Growth Capex
A$M
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• Site EBITDA is before all corporate administration costs, non-recurring items and exploration expenses.

Operational stability and predictability

9

Capital expenditure

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 Total group capital investment reduced by 58% in FY14

Group Capital Expenditure (A$M)

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400
350
300
250
200
150
100
50
0
FY13 FY14 FY15 Guidance
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Cracow Pajingo Edna May Mt Rawdon Mt Carlton

*Plotted at midpoint of FY15 guidance

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Discovery expenditure

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• A$17.0 million invested in exploration in FY14

 Exploration focused on building 3D geological models and integrating geologic time to create 4D models. Proof of concept drilling completed. Prioritised target drilling underway

• Emmerson Resources Tennant Creek JV arrangement

• Maintaining A$20.0 million commitment to discovery in FY15

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Build
Innovative 3D 4D modelling Exploration
competent, Alteration and Framework &
seismic integrating drilling in FY15
experienced Asset priority geochemical proof of
team and ranking viewing geological mapping at Mt concept testing targets
structures at time for better from 4D
thinking like depth understanding Carlton drilling studies
scientists
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Free cash flow

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 Strong free cash flow generation

 Funds able to be returned to shareholders and debt serviced

Free cash flow (A$M)

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245.3
76.4
78.0
8.8
17.0
20.8
44.3
Cash flow from Sustaining capital Major projects Working capital Exploration Corporate Free cash flow
operating
activities
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• This chart reflects final FY14 audited numbers which contain small variances from the numbers released in the June 2014 Quarterly Report

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Balance sheet

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 Strengthening financial position

• Operating and capital expenditure reduced

• Operations delivering on production

• Robust financial position allowed for A$14.2M in dividends to be paid in FY14

• Low gearing of 12%

• A$104.8M cash and credit available

Balance sheet	30 Jun 14	30 Jun 13
	A$’000	A$’000
Cash	31,607	13,662
Short term debt	11,558	4,496
Long term debt	126,784	126,784
Total debt	138,342	131,280
Net Debt [ND]	106,735	117,618
Equity [E]	785,304	747,255
Gearing [ND/ND+E]	12%	14%
Cash + Available credit	104,823	86,878

Low gearing of 12%

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Summary

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• Operational stability and predictability

• Portfolio of five Australian mines each contributing to group

• Delivering to unchanged full year cash cost and production guidance

• FY14 sales revenue increased by 5% to A$634.4M

• FY14 underlying net profit increased by 13% to A$50.0M

• FY15 production outlook of 400,000 – 440,000oz Au eq

• Globally competitive FY15 All-in Sustaining Cost guidance of A$1,050/oz – A$1,130/oz (US$970/oz – US$1,045/oz at AUD:USD FX of 0.925)

• Total dividend of 2 cents per share delivering returns to shareholders

• Strong financial position with cash and available credit of A$104.8M

Strong performance in spite of difficult market conditions

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Evolution Mining ASX Code: EVN

www.evolutionmining.com.au

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