EVOLUTION MINING LIMITED — Interim / Quarterly Report 2013

Feb 20, 2013

APPENDIX 4D (Rule 4.2A.3) EVOLUTION MINING LIMITED ACN 084 669 036 AND CONTROLLED ENTITIES HALF-YEAR FINANCIAL REPORT For the half-year ended 31 December 2012

RESULTS FOR ANNOUNCEMENT TO THE MARKET

KEY INFORMATION

	31 December 2012	31 December 2011	Up/(down)	%
	$’000	$’000	$’000	Movement
Revenues from ordinary activities	321,642	154,615	167,027	108%
Profit/(loss) from ordinary activities
after tax attributable to members	40,687	(17,946)	58,633	327%
Net profit/(loss) attributable to
members	40,687	(17,946)	58,633	327%
EBITDA	135,468	54,066	81,402	151%

DIVIDEND INFORMATION

	Amount per		Franked	Tax rate
	share (cents)	amount per		for
			share	franking
			(cents)
Interim dividend per share	nil		nil	n/a
NET TANGIBLE ASSETS
	31 December	2012	31 December 2011
		($)		($)
Net tangible assets per security		1.92		1.58

Additional Appendix 4D disclosure requirements can be found in the notes to this half-year financial report and in the Directors’ Report attached thereto. This report is based on the consolidated half-year financial report which has been subject to review by PricewaterhouseCoopers.

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Evolution Mining Limited ABN 74 084 669 036

Half-Year Financial Report for the six months ended 31 December 2012

EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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CORPORATE INFORMATION

ABN 74 084 669 036

Directors

Jacob Klein James Askew Lawrie Conway Graham Freestone Paul Marks John Rowe Peter Smith

(Executive Chairman) (Non-Executive Director) (Non-Executive Director) (Lead Independent Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director)

Company Secretary

Evan Elstein

Registered Office

Level 28, 175 Liverpool Street SYDNEY NSW 2000

Postal Address

Level 28, 175 Liverpool Street SYDNEY NSW 2000

Tel: (+612) 9696 2900 Fax: (+612) 9696 2901

Share Register

Link Market Services Level 12, 680 George Street SYDNEY NSW 2000

Tel: 1300 554 474 or (+612) 9315 2333 Fax: (+612) 9287 0303

Email: registrars@linkmarketservices.com.au

Auditors

PricewaterhouseCoopers 201 Sussex Street SYDNEY NSW 2000 Tel: (+612) 8266 0000

Internet Address

www.evolutionmining.com.au

Stock Exchange Listing

Evolution Mining Limited (EVN) shares are listed on the Australian Securities Exchange.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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TABLE OF CONTENTS

Directors' Report	3
Auditor’s Independence Declaration	7
Condensed Consolidated Statement of Comprehensive Income	8
Condensed Consolidated Statement of Financial Position	9
Condensed Consolidated Statement of Cash Flows	10
Condensed Consolidated Statement of Changes in Equity	11
Notes to the Condensed Consolidated Financial Statements	12
Directors' Declaration	21
Independent Auditor’s Review Report	22

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2012 and any public announcements made by Evolution Mining Limited (formerly Catalpa Resources Limited) during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Comparative year results and balances reflect six months of Catalpa Resources (100% Edna May and 30% of Cracow operations), the consolidation of Conquest Mining Limited from 17 October 2011 and the consolidation of Mt Rawdon and an 70% interest in Cracow from 2 November 2011.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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DIRECTORS’ REPORT

The Directors present their report on Evolution Mining Limited (referred to hereafter as “Evolution” or “Company”), (formerly known as Catalpa Resources Limited), consisting of Evolution Mining Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2012.

Comparative year results and balances reflect six months of Catalpa Resources (100% Edna May and 30% of Cracow operations), the consolidation of Conquest Mining Limited from 17 October 2011 and the consolidation of Mt Rawdon and an 70% interest in Cracow from 2 November 2011.

DIRECTORS

The following persons were Directors of the Company for the duration of the half-year and up to the date of this report:

Jacob Klein (Executive Chairman) James Askew (Non-Executive Director) Lawrie Conway (Non-Executive Director) Graham Freestone (Lead Independent Director) Paul Marks (Non-Executive Director) John Rowe (Non-Executive Director) Peter Smith (Non-Executive Director)

REVIEW OF OPERATIONS

Evolution’s gold production for the half-year ended 31 December 2012 was 196,110 ounces (31 December 2011 attributable: 99,130 ounces) at a C1 cash operating cost of $749 per ounce (31 December 2011 attributable: $732 per ounce) and remains within the company’s full year guidance of 370,000 – 410,000 ounces at $730 - $790 per ounce.

The Cracow Gold Mine, QLD (100%), produced 54,324 ounces (31 December 2011 attributable: 28,444 ounces) of gold at a cash cost of $802 per ounce (31 December 2011 attributable: $630 per ounce). Costs increased in the current half due to changes in the mine plan and increased mining contractor costs. Record underground lateral development was completed in the half-year to secure future operational flexibility and performance.

The Edna May Gold Mine, WA (100%), produced 48,687 ounces of gold (31 December 2011: 37,089 ounces) at a cash cost of $792 per ounce (31 December 2011 attributable: $870 per ounce). The operation has successfully increased throughput and reliability of the processing circuit. Improved throughput and strong head grade delivered record production in the half-year.

Mt Rawdon Gold Mine, QLD (100%) produced 53,107 ounces of gold (31 December 2011 attributable: 12,367 ounces) at a cash cost of $616 per ounce (31 December 2011 attributable: $893 per ounce). A strong operating performance was delivered by reliable process plant throughput and strong gold grades in the open pit.

The Pajingo Gold Mine, QLD (100%), produced 39,991 ounces of gold (31 December 2011 attributable: 21,229 ounces) at a cash cost of $801 per ounce (31 December 2011 attributable: $535 per ounce). Gold production in the first half was impacted by delayed access to scheduled ore sources. Production for the second half of the year is planned to increase due to processing of higher grade underground ore. Costs increased in the current period due to reduction in head grade relative to the prior period due to the delay in accessing high grade ore sources in the current period.

The Mt Carlton gold-silver-copper project, QLD (100%), is Evolution’s key organic growth asset and is planned to expand the Company’s portfolio of 100% owned, Australian producing mines from four to five during the 2013 financial year. Construction of the project has largely been completed and commissioning commenced at the end of December 2012. First concentrate production is expected to commence in the March 2013 quarter. The project is planned to deliver approximately 720,000 ounces of gold, 14.4 million ounces of silver and 25,000 tonnes of copper over a 12 year life.

FINANCIAL PERFORMANCE

The Group generated net profit after tax of $40.687 million for the six months ended 31 December 2012 representing 327% increase over the corresponding half in 2011 (31 December 2011: Net loss of $17.946 million).

Total sales revenue of $321.642 million was 108% higher than the prior half-year, predominantly due to significantly higher gold production. Average realised gold price was $1,630 per ounce which was the same as the 31 December 2011 period. The Group generated gold sales revenue of $316.637 million from the sale of 194,219 ounces of gold and silver sales revenue of $5.005 million from the sale of 164,490 ounces of silver.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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Cost of sales increased by 107% to $240.688 million compared to the prior half- year, as a result of increased production in line with the higher output. Cost of sales for the half-year comprised of $154.165 million of mine operating costs, $71.452 million depreciation and amortisation and $15.071 million in royalty expenses. On a unit basis, group cash cost was $749 per ounce, a 2% increase on the prior period unit cash operating cost of $732 per ounce.

Corporate and other administration costs were $11.087 million (31 December 2011: $9.920 million) and Exploration costs expensed were $5.401 million (31 December 2011: $3.024 million).

Group depreciation and amortisation cost for the period was $71.868 million (31 December 2011: $30.178 million), representing a 138% increase. The increase was due to higher production and partial year ownership of assets in the prior half-year.

The Group cash inflow from operating activities was $100.957 million (31 December 2011: $41.513 million), representing a 143% increase. The increase reflects strong operating performance at all four operating mines and partial year ownership of assets in the prior half-year.

Group cash outflow from investing activities was $240.054 million (31 December 2011: $48.526 million), an increase of 394%. Significant investment occurred during the period on the Mt Carlton project, with commissioning commencing during December 2012. Investment in mine development activity at all sites, particularly waste stripping activity in the open pits, increased during the period.

Group cash inflow from financing activities for the period was $46.535 million (31 December 2011: $144.392 million). Activity reflects the repayment of an existing project finance loan and drawdowns under the new revolving credit facility.

Cash on hand at the end of the period was $49.222 million (30 June 2011: $141.784 million). At the end of the period, the Group had drawn down $81.784 under the revolving credit facility. Project debt at 30 June 2012 amounted to $31.5 million.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs of the Company during the financial year follows in chronological order:

• On 6 November 2012 the Company announced it had received a $200 million non-secured corporate loan facility. The new facility has initially been used to refinance the $31.5 million Edna May Syndicated Facility Agreement and to finance the Company’s working capital requirements. The facility matures in November 2015.

• On 27 December 2012, the Company announced commencement of commissioning at its 100% owned Mt Carlton Gold-Silver-Copper mine.

Apart from the above, or as noted elsewhere in this report, no significant changes in the state of affairs of the Company occurred during the half-year.

SUBSEQUENT EVENTS

Other than the matters discussed above there are no other matters or circumstances which have arisen since 31 December 2012 that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years.

FUTURE DEVELOPMENTS

Other likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company. Accordingly this information has not been disclosed in this report.

ENVIRONMENTAL REGULATIONS

The Company is subject to significant environmental regulation in respect to its exploration, mining and processing activities. The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the year under review.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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PERFORMANCE OF EVOLUTION MINING LIMITED

The table below sets out summary information about the Company’s earnings and movements in the Company’s share price for the last 3 years.

Revenue Net profit/(loss) before tax Net profit/(loss) after tax Basic earnings per share (cents per share)	31 Dec 2012 $000 31 Dec 2011 $000 31 Dec 2010 $000
	321,642 154,615 48,060 58,533 (1,138) 3,017 40,687 (17,946) 1,981 5.75 (5.15) 1.22

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT – 31 DECEMBER 2012

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AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration is included on page 7 of the half-year financial report.

ROUNDING OFF AMOUNTS

The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the half-year financial report are rounded to the nearest thousand dollars unless otherwise indicated.

Signed in accordance with a resolution of the directors made pursuant to s306(3) of the Corporations Act 2001.

On behalf of the Directors

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Sydney 21 February 2013

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6

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Auditor’s Independence Declaration

As lead auditor for the review of Evolution Mining Limited for the half-year ended 31 December 2012, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) no contraventions of any applicable code of professional conduct in relation to the review .

This declaration is in respect of Evolution Mining Limited and the entities it controlled during the period.

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Tim Goldsmith Partner PricewaterhouseCoopers

Sydney 21 February 2013

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Notes Sales revenue Cost of sales 3 Gross profit Interest income Fair value re-measurement of previously held interest in the Cracow gold mine Exploration and evaluation costs expensed as incurred Share-based payments expense 10 Corporate and other administration costs Costs related to business combinations Change in fair value of held for trading securities Other income Finance costs Profit/(loss) before income tax expense Income tax expense 4 Profit/(loss) for the year attributable to owners of the parent Other comprehensive loss, net of income tax Items that may be reclassified to profit and loss: Change in fair value of available for sale financial assets (net of tax) Total comprehensive income/(loss) for the half-year attributable to owners of the parent Earnings per share Basic profit/(loss) cents per share 11 Diluted profit/(loss) cents per share 11	Consolidated Half-year ended 31 December 2012 31 December 2011 $’000 $’000 321,642 154,615 (240,688) (116,125)
	80,954 38,490
	1,432 1,759 - 8,097 (5,401) (3,024) (953) (1,588) (11,087) (9,920) - (29,427) - (150) 87 80 (6,499) (5,455)
	58,533 (1,138) (17,846) (16,808)
	40,687 (17,946) (1,338) (524)
	39,349 (18,470)
	5.75 (5.15) 5.62 (5.15)

The above Condensed Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Notes Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets Non-current assets Other financial assets 5 Property, plant and equipment 6 Mine development and exploration 7 Inventories Goodwill Other non-current assets Total non-current assets Total assets Current liabilities Trade and other payables Interest bearing liabilities 8 Provisions Total current liabilities Non-current liabilities Interest bearing liabilities 8 Deferred tax liability Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital 9 Reserves Accumulated earnings Total equity	Consolidated 31 December 2012 30 June 2012 $’000 $’000 49,222 141,784 31,209 27,939 61,206 35,144 22,667 14,306
	164,304 219,173
	2,376 3,714 265,933 265,079 909,321 758,687 3,936 4,308 18,365 18,365 69 122
	1,200,000 1,050,275
	1,364,304 1,269,448
	95,971 110,440 4,667 18,392 8,671 8,550
	109,309 137,382
	79,635 17,454 28,556 10,711 48,640 47,483
	156,831 75,648
	266,140 213,030
	1,098,164 1,056,418
	1,047,195 1,045,751 9,044 9,429 41,925 1,238
	1,098,164 1,056,418

The above Condensed Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Cash flows from operating activities Receipts from sales Payments to suppliers and employees Interest received Interest paid Net cash inflow from operating activities Cash flows from investing activities Purchase of property, plant and equipment Payment for mine development and exploration Stamp duty paid Maturity of/(investments in) term deposits Cash acquired on acquisition of Conquest Mining Limited Proceeds on the disposal of investments Net cash outflow from investing activities Cash flows from financing activities Proceeds from borrowings (net of borrowing costs) Repayment of interest bearing liabilities Proceeds from issue of equity securities Transaction costs of issuing shares Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	Consolidated Half-year ended 31 December 2012 31 December 2011 $’000 $’000 322,763 150,283 (220,314) (107,693) 1,432 1,360 (2,924) (2,437)
	100,957 41,513
	(19,400) (14,849) (199,276) (46,427) (21,431) - 53 - - 12,748 - 2
	(240,054) (48,526)
	77,234 - (31,308) (9,278) 609 158,261 - (4,591)
	46,535 144,392
	(92,562) 137,379 141,784 30,051
	49,222 167,430

The above Condensed Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Consolidated	Issued capital Share-based payment reserve Fair value revaluation reserve Accumulated earnings Total equity $’000 $’000 $’000 $’000 $’000
Balance at 1 July 2011 Loss for the period Other comprehensive loss for the period: Fair value loss on available for sale financial asset Total comprehensive loss for the period Issue of share capital Transaction costs on share issues Cost of replacement options Recognition of share-based payments Balance at 31 December 2011 Consolidated	185,465 5,144 157 (30,772) 159,994 - - - (17,946) (17,946) - - (524) - (524)
	- - (524) (17,946) (18,470)
	860,292 - - - 860,292 (3,563) - - - (3,563) - 7,525 - - 7,525 - 1,588 - - 1,588
	1,042,194 14,257 (367) (48,718) 1,007,366
	Issued capital Share-based payment reserve Fair value revaluation reserve Accumulated earnings Total equity $’000 $’000 $’000 $’000 $’000
Balance at 1 July 2012 Profit for the period Other comprehensive income for the period: Fair value loss on available for sale financial asset Total comprehensive income for the period Issue of share capital on exercise of options Issue of share capital on asset acquisition Recognition of share-based payments Balance at 31 December 2012	1,045,751 15,042 (5,613) 1,238 1,056,418 - - - 40,687 40,687 - - (1,338) - (1,338)
	- - (1,338) 40,687 39,349
	609 - - - 609 835 - - - 835 - 953 - - 953
	1,047,195 15,995 (6,951) 41,925 1,098,164

The above Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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1. BASIS OF PREPARATION

(a) Basis of preparation and changes to the Group’s accounting policies

This condensed consolidated interim financial report for the half-year reporting period ended 31 December 2012 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2012 and any public announcements made by the Group during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

Comparative year results and balances reflect six months of Catalpa Resources (100% Edna May and 30% of Cracow operations), the consolidation of Conquest Mining Limited from 17 October 2011 and the consolidation of Mt Rawdon and a 70% interest in Cracow from 2 November 2011.

(b) New standards and interpretations not yet adopted

The Group did not adopt any new and/or revised Accounting Standards, Amendments and Interpretations from 1 July 2012 which had an effect on the financial position or performance of the Group.

The Group has not elected to early adopt any other new standards, amendments or interpretations that are issued but are not yet effective.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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2. SEGMENT INFORMATION

Description of segments

The Group’s operations are all conducted in the mining industry in Australia.

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Executive Chairman and the senior leadership team (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The presentation of segment information has changed since the previous half-year reporting period as a result of modified performance measures used for internal reporting purposes.

The Group’s four operational mine sites and Corporate are each treated as individual operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Corporate includes the Mt Carlton asset under construction. The remainder of Corporate includes share-based payment expenses and other corporate expenditures supporting the business during the year.

Segment performance is evaluated based on earnings before interest, tax, depreciation and amortisation (EBITDA).

a) Segment information

	Edna May	Cracow	Pajingo	Mt	Exploration	Corporate/	Total
				Rawdon		Mt Carlton
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Half-year 31 December 2012
Segment revenue	81,220	88,847	66,462	85,113	-	-	321,642
EBITDA	35,111	39,270	29,458	48,567	(5,401)	(11,537)	135,468
Half-year 31 December 2011
(Restated)
Segment revenue	62,998	43,898	31,054	16,665	-	-	154,615
EBITDA	26,727	23,817	13,322	4,824	(3,024)	(11,600)	54,066
Capital Additions
31 December 2012	16,049	21,303	29,686	29,709	21,655	109,935	228,337
30 June 2012	44,582	24,396	44,510	34,172	28,288	102,286	278,234

b) Segment reconciliation

Reconciliation of profit/(loss) before income tax EBITDA Depreciation and amortisation Costs related to business combinations Fair value re-measurement of previously held interest in the Cracow gold mine Interest income Finance costs Profit (loss) before income tax	Half-year ended 31 December 2012 31 December 2011 $’000 $’000 135,468 54,066 (71,868) (30,178) - (29,427) - 8,097 1,432 1,759 (6,499) (5,455)
	58,533 (1,138)

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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3. COST OF SALES

	Half-year	ended
	31 December 2012	31 December 2011
	$’000		$’000
Cost of sales
Mine operating costs	154,165		78,771
Depreciation and amortisation	71,452		30,178
Royalty and other selling costs	15,071		5,294
Other	-		1,882
	240,688		116,125
4. INCOME TAX
Numerical reconciliation of income tax expense to prima facie tax	payable
a) Income tax expense:
	Half-year	ended
	31 December 2012	31 December 2011
	$’000		$’000
Current Tax	18,733		10,518
Deferred tax	(887)		6,290
Total income tax expense	17,846		16,808
b) Numerical reconciliation of income tax expense to prima	facie tax payable
Profit/ (loss) before income tax	58,533		(1,138)
Tax at the Australian tax rate of 30% (2011: 30%)	17,560		(341)
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
Costs of business combinations	-		8,828
Share-based payment expense	286		476
Tax losses written off	-		6,290
Other	-		1,555
	17,846		16,808
5. OTHER FINANCIAL ASSETS
	31 December 2012	30	June 2012
	$’000		$’000
Non-current
Available-for-sale investments carried at fair value
Shares in Renaissance Minerals Limited	546		504
Shares in Monto Minerals Limited	1,800		3,000
Options in Monto Minerals Limited	30		210
Total	2,376		3,714

The 150,000,000 Monto Minerals options are exercisable at 3 cents on or before 30 June 2014.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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6. PROPERTY, PLANT AND EQUIPMENT

30 June 2012 Cost Accumulated depreciation Net carrying amount Half-year ended 31 December 2012 Carrying amount at the beginning of the period Additions Reclassifications Disposals Depreciation Carrying amount at the end of the period At 31 December 2012 Cost Accumulated depreciation Net carrying amount* Carrying amount of lease assets Carrying amount of assets under construction	Freehold Land Plant and equipment Total $’000 $’000 $’000 9,261 291,117 300,378 - (35,299) (35,299)
	9,261 255,818 265,079
	9,261 255,818 265,079 567 14,292 14,859 - 323 323 - (46) (46) - (14,282) (14,282)
	9,828 256,105 265,933
	9,828 305,686 315,514 - (49,581) (49,581)
	9,828 256,105 265,933
	- 7,616 7,616 - 17,080 17,080
	- 24,696 24,696

*amount includes capitalised depreciation for assets used in construction activities.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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7. MINE DEVELOPMENT AND EXPLORATION

30 June 2012 Cost Accumulated depreciation Net carrying amount Half-year ended 31 December 2012 Carrying amount at the beginning of the period Additions Reclassifications Write-off of exploration expenditure Depreciation and amortisation Carrying amount at the end of the period At 31 December 2012 Cost Accumulated depreciation Net carrying amount	Mines under construction Producing mines Exploration and evaluation Total $’000 $’000 $’000 $’000 247,380 530,197 91,479 869,056 - (97,459) (12,910) (110,369)
	247,380 432,738 78,569 **758,687 **
	247,380 432,738 78,569 758,687 106,638 85,185 21,655 213,478 16,411 12,037 (28,771) (323) - - (4,860) (4,860) - (55,873) (1,788) (57,661)
	370,429 474,087 64,805 909,321
	370,429 627,419 79,503 1,077,351 - (153,332) (14,698) (168,030)
	370,429 474,087 64,805 909,321

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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8. INTEREST BEARING LIABILITIES

Current Corporate loan facility Less: Borrowing costs Finance lease liabilities Other borrowings Total Non-Current Corporate loan facility Less: Borrowing costs Finance lease liabilities Total	31 December 2012 30 June 2012 $’000 $’000 - 16,500 - (1,151) 2,936 3,043 1,731 -
	4,667 **18,392 **
	81,784 15,000 (4,321) (1,150) 2,172 3,604
	79,635 17,454

In November 2012, the Group secured a $200 million corporate loan facility. The purpose of this facility was to refinance the $31.5 million Edna May loan facility and to finance short-term working capital requirements. The facility is a senior unsecured revolving loan and will mature in November 2015. The corporate loan facility is based on a variable interest rate, calculated using the bank bill swap bid rate (BBSY) plus an applicable margin.

The lenders have placed covenants over the corporate loan facility based on the current ratio, leverage ratio, interest coverage ratio and the gearing ratio. The Group has complied with these covenants during the period.

The Group’s undrawn borrowings amounted to $118.216 million at the end of the period.

Maturities of financial liabilities

The following are the Group’s contractual maturities of non-derivative financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

The amounts disclosed in the tables below have been drawn up based on the undiscounted cash flows (including both interest and principal cash flows expected) using contractual maturities and the earliest date on which the Group can be required to pay financial liabilities.

Contractual maturities of financial liabilities (A$’000) 31 December 2012 Trade and other payables Finance lease liabilities Corporate loan facility Other borrowings Total liabilities 30 June 2012 Trade and other payables Finance lease liabilities Corporate loan facility Total liabilities	Less than 1 year 1-2 years 2-5 years Over 5 years Total contractual cash flows Carrying amount
	95,971 - - - 95,971 95,971 3,138 2,175 - - 5,313 5,108 4,703 4,703 85,752 - 95,158 81,784 1,731 - - - 1,731 1,731
	105,543 6,878 85,752 - 198,173 184,594
	110,440 - - - 110,440 110,440 3,232 3,092 632 - 6,956 6,646 18,518 13,773 2,029 - 34,320 31,500
	132,190 16,865 2,661 - 151,716 148,586

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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9. ISSUED CAPITAL

Issued capital comprises 708,092,989 fully paid ordinary shares (30 June 2012: 707,105,713) Movement in issued shares for the period Opening balance for the period Shares issued for merger Shares issued for asset acquisition Placement of shares Shares issued on exercise of options Shares issued on conversion of performance rights Costs associated with the issue of shares (net of tax) Closing balance for the period	31 December 2012 $’000 30 June 2012 $’000 1,047,195 1,045,751 6 months to 12 months to 31 December 2012 30 June 2012 No. $’000 No. $’000
	707,105,713 1,045,751 178,095,822 185,465 - - 180,401,006 311,733 500,000 835 231,082,631 390,299 - - 105,144,047 152,459 487,276 609 11,356,207 10,887 - - 1,026,000 - - - - (5,092)
	708,092,989 1,047,195 707,105,713 1,045,751

The Company issued 487,276 fully paid ordinary shares on conversion of options.

The Company also issued 500,000 fully paid ordinary shares to Independence Group NL in exchange for the asset acquisition of the Holleton gold project.

10. SHARE-BASED PAYMENTS

a) Types of share-based payment plans

Evolution has two share based payment plans in existence:

Employee Share Option and Performance Rights Plan (“ESOP”)

ESOP was established and approved at the Annual General Meeting on 23 November 2010, and amended on 19 October 2011. The plan permits the Company, at the discretion of the Directors, to grant both options and performance rights over unissued ordinary shares of the Company to eligible Directors and members of staff as specified in the plan rules.

Employees and Contractors Option Plan (“ECOP”)

ECOP was established and approved at the Annual General Meeting on 27 November 2008. The plan permits the Company, at the discretion of the Directors, to grant options over unissued ordinary shares of the Company to eligible Directors, members of staff and contractors as specified in the plan rules. No further options will be issued under this plan.

b) Recognised share-based payment expenses

	Half-year ended	Half-year ended
	31 December 2012	31 December 2011
	$‘000	$‘000
Expense arising from equity settled share-based
payment transactions recognised in profit and loss	953	1,588

During the period, Evolution issued two allotments of performance rights that will vest on 30 June 2015. They have three performance components: a market-based TSR condition, and two non-market based conditions, being a C1 cash costs per ounce condition (C1 condition) and a mine life condition. The performance rights also require continued employment at the vesting date.

c) Fair value determination

i) TSR Performance Right valuation

The fair value of the TSR Performance Rights (market-based condition) was estimated at the date of grant using a Monte Carlo simulation, taking into account the terms and conditions upon which the awards were granted.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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ii) C1 Performance Right valuation and Mine life rights valuation

The fair value of the C1 and mine life performance rights (non-market based conditions) is the share price on grant date as future dividends cannot be reliably estimated.

The following tables list the inputs to the models used for the performance rights granted during the period:

	Allotment 1	Allotment 2
Grant date	17 September 2012	27 November 2012
Spot price ($)	1.89	1.87
Risk-free rate (%)	2.8%	2.8%
Term (years)	2.78	2.59
Volatility	45% - 50%	40 - 45%

The weighted average fair value of performance rights granted during the period was $1.418 (2011: $1.363).

11. EARNINGS PER SHARE

	Half-year ended	Half-year ended
	31 December 2012	31 December 2011
Basic profit /(loss) per share (cents per share)	5.75	(5.15)
Diluted profit /(loss) per share (cents per share)	5.62	(5.15)
Weighted average number of ordinary shares on issue used
in the calculation of basic earnings per share	707,655,550	348,316,566
Effect of dilution:
Share options and performance rights	16,604,263	-
Weighted average number of ordinary shares used in the
calculation of diluted earnings per share	724,259,813	348,316,566

Basic earnings per share (‘EPS’) is calculated by dividing the net profit/(loss) after income tax attributable to members of the Company by the weighted average number of ordinary shares of the Company outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

12. RELATED PARTY TRANSACTIONS

Directors Fees were paid to Newcrest Mining Limited for the services of two Non-Executive Directors, Mr Lawrie Conway and Mr Peter Smith, in the amount of $96,250 (2011: $39,027)

Newcrest also provided certain accounting, information technology and administration services to the Company. Fees paid to Newcrest in the period in this regard amounted to $38,522 (2011: $574,375)

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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13. GOLD DELIVERY COMMITMENTS

As at 31 December 2012 Within one year Later than one year but not greater than five years As at 30 June 2012 Within one year Later than one year but not greater than five years	Gold for physical delivery Contracted sales price Value of committed sales (ounces) $ $’000 68,669 1,573 108,016 120,700 1,573 189,861
	189,369 297,877
	Gold for physical delivery Contracted sales price Value of committed sales (ounces) $ $’000 66,589 1,573 104,744 157,588 1,573 247,886
	224,177 352,630

The counterparty to the physical gold delivery contract is Macquarie Bank Limited (‘Macquarie’). The contracts are settled on a quarterly basis by physical delivery of gold per Macquarie’s instructions. The contracts are accounted for as sale contracts with revenue recognised once the gold has been delivered to Macquarie or its agent. The physical gold delivery contract is considered a contract to sell a non-financial item and is therefore out of the scope of AASB 139. As a result no derivatives are required to be recognised. The Company has no other gold sale commitments with respect to its current operations.

14. CONTINGENCIES

The Group has provided bank guarantees in favour of various government authorities and service providers with respect to site restoration, contractual obligations and premises at 31 December 2012. The total of these guarantees at 31 December 2012 was $34.053 million with various financial institutions.(30 June 2012: $30.130 million).

In addition to the above guarantees, Newcrest Mining Limited (‘Newcrest’) is holding $13.550 million in performance bonds relating to Cracow and Mt Rawdon operations on behalf of the Group (30 June 2012: $13.550 million). These bonding obligations will be transferred to Evolution once the asset sale agreements have been stamped by the Queensland Office of State Revenue.

15. EVENTS AFTER THE BALANCE SHEET DATE

No other matter or circumstance has arisen since 31 December 2012 that has significantly affected, or may significantly affect, the operations of the Group, or the state of affairs of the Group and its controlled entities in subsequent periods.

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EVOLUTION MINING LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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DIRECTORS’ DECLARATION

In the directors’ opinion:

• a) The financial statements and notes set out on pages 8 to 20 are in accordance with the Corporations Act 2001, including:

• i. Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• ii. Giving a true and fair view of the consolidated entities financial position as at 31 December 2012 and of its performance for the half-year ended on that date, and

• b) There are reasonable grounds to believe that Evolution Mining Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

On behalf of the Directors

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Sydney 21 February 2013

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Independent auditor’s review report to the members of Evolution Mining Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Evolution Mining Limited, which comprises the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors’ declaration for the Evolution Mining Limited (the consolidated entity). The consolidated entity comprises both Evolution Mining Limited (the company) and the entities it controlled during that half-year.

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Evolution Mining Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Liability limited by a scheme approved under Professional Standards Legislation.

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Evolution Mining Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

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PricewaterhouseCoopers

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Tim Goldsmith Partner

Sydney 21 February 2013

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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