Annual Report
Total Page：16
File Type：pdf, Size：1020Kb
ANNUAL REPORT ASX: EVN www.evolutionmining.com.au CREATING AUSTRALIA’S PREMIER GOLD MINING COMPANY Evolution Mining is a leading, growth-focussed Australian gold miner. We extract and process gold from our six wholly-owned mines – the Cowal gold operation in New South Wales, Mt Carlton, Mt Rawdon, and Cracow in Queensland, and Mungari and Edna May in Western Australia. In addition, we hold an economic interest in the Ernest Henry copper- gold mine (Ernest Henry) in Queensland that will deliver 100% of future gold and 30% of future copper and silver from an agreed life of mine area. Outside of the life of mine area, we will have a 49% interest in future copper, gold and silver. In FY17 we improved the quality of our assets through the to protect and enhance our ‘social licence’ we have to go innovative Ernest Henry transaction and the sale of the above and beyond what is required by way of regulation Pajingo gold operation. We have a track record of always and legislation, by playing our part in developing strong achieving production and cash cost guidance and for and sustainable communities. making value accretive acquisitions. We are committed to attaining an outstanding level of We have grown into a genuine mid-tier since inception environmental performance in all our workplaces and we in November 2011 and now have a team of over 1,500 incorporate environmental considerations into all areas of employees and contractors whose safety, health and our business to effectively manage environmental impacts wellbeing is of paramount importance to us. and risks. We want the communities in which we operate to be better off overall for us being there, and we seek to partner with our community stakeholders to make a positive difference to the community. We recognise that Note: Location size denotes production for FY17 Definitions applicable to this Report: AISC (All-in Sustaining Cost) includes C1 cash cost, plus royalty expense, plus sustaining capital expense, plus general corporate and administration expenses on a per ounce sold basis. AIC (All-in cost) is ASIC plus growth (major capital) and discovery expenditure. Calculated on per ounce produced basis. Calculated using an average AUD:USD exchange rate for FY17 of US$0.7546. Executing a clear and consistent strategy Australia Reliability Low risk, first world, politically Six consecutive years of meeting stable jurisdiction production and cost guidance Highly skilled mining workforce Mid-tier Strong returns 6 – 8 asset portfolio to ensure focus Peer leading free cash flow per is maintained ounce generation Capital growth and increasing dividends Low risk Growth Six consecutive years of reducing Strong cash flow funding near mine All-in Sustaining Costs and regional exploration Among the lowest cost gold producers Delivering value accretive acquisitions in the world to improve portfolio quality We have earned a reputation for operational consistency and reliability and are focussed on building a business that prospers through the cycle This year we continued to improve the quality of our asset portfolio through the acquisition of an economic interest in the Ernest Henry copper-gold mine, the extension of Cowal's mine life to at least 2032 and the divestment of the short life, higher cost Pajingo mine CONTENTS Executive Chairman’s Report 4 Outlook for FY18 40 Safety 6 Discovery 43 Health and Wellbeing 9 Mineral Resources and Ore Reserves 49 People and Culture 10 Corporate Governance 53 Environment 16 Chief Financial Officer’s Review 58 Community 24 Annual Financial Report 60 Evolution Mining Limited Annual Report 2017 1 Evolution – a global leader in low cost production An outstanding performance in FY17 ■■ We continued to improve our safety culture and ■■ We completed the sale of the Pajingo assets on performance with a reduction in our total recordable 1 September 2016 to Minjar Gold Pty Limited for injury frequency rate (TRIFR) to 7.96 (30 June total proceeds of up to A$52 million comprised of 2016: 9.70) a A$42 million up front cash payment and a 1% net ■■ We had an outstanding year achieving record results smelter return royalty of up to A$10 million for gold through a focus on productivity improvements and production above 130,000 ounces cost efficiencies: ■■ We extended the Cowal gold operation’s mine life to at least 2032 ■■ Total gold production of 844,124 ounces, representing an increase of 5% on the prior year ■■ Ore Reserve increase of 679,000 ounces of gold and at the upper end of guidance for the current prior to mining depletion of 326,000 ounces year of 800,000 – 860,000 ounces ■■ Board approved the commencement of the E42 ■■ AISC of A$907 per ounce, representing a decrease Stage H cutback and Float Tails (Dual) Leach of 11% on the prior year and at the lower end of Project guidance for the current year of A$900 – A$960 ■■ We acquired the Marsden copper-gold project per ounce immediately to the southeast of the Cowal gold ■■ Operating mine cash flow of A$706.5 million, operation mine which hosts a Mineral Resource representing an increase of 12% on the prior year estimate of 1.1 million ounces of gold and 0.67 million ■■ Net mine cash flow of A$461.5 million, tonnes of copper representing an increase of 8% on the prior year ■■ We updated the dividend policy of whenever possible ■■ We completed the innovative Ernest Henry paying a half-yearly dividend equivalent to 50% of transaction to obtain an economic interest in the the Group's after-tax earnings – applied to the final copper-gold operation on 1 November 2016 dividend for 2017 of 3 cents per fully paid ordinary share fully franked GROUP CONSOLIDATED PRODUCTION GROUP ALL-IN SUSTAINING COST 5% 11% TO 844,124 GOLD OUNCES TO A$907 / OZ (FY16: A$1,014 / OZ) RECORD STATUTORY NET PROFIT AFTER TAX A$217.6M FY16: NET LOSS (A$24.3M) 2 Evolution Mining Limited Annual Report 2017 OUR RECENT AWARDS 2016 Miner of the Year – Australian Gold Mining Journal (February 2017) Craig Oliver Award – RIU Explorers Conference (February 2017) NSW Mining Operator of the Year – awarded to Cowal gold operations by the NSW Minerals Council (April 2017) Victorian Mine Rescue competition – overall winner NSW Mining HSE award winner – Project Arrive Alive (fatigue management) Evolution Mining Limited Annual Report 2017 3 Executive Chairman’s Report Evolution’s gold production increased by 5% to a record 844,124 ounces at an average C1 cash cost of A$625 per ounce, an AISC of A$907 per ounce and a AIC of A$1,073 per ounce. Using the average AUD:USD exchange rate for FY17 of 0.7546, Evolution’s AISC equated to US$684 per ounce, ranking Evolution as one of the lowest cost gold producers globally. The eight-month contribution from Ernest Henry, a continued focus on cost and efficiency gains, and a higher Australian dollar gold price received saw our AIC margin increase by 23% to a record A$568 per ounce in the 2017 financial year. In 2017 Evolution reported a record statutory net profit of A$217.6 million. This was achieved on the back of a record operating cash flow of A$706.5 million and a record net mine cash flow, after all sustaining and major project capital expenditure, of A$461.5 million. This strong cash generation enabled Evolution to make A$325.0 million in debt repayments during the period. The Company’s gearing commenced the year at 15%, peaked at around 24% due to drawing on a new term facility to fund the Ernest Henry acquisition, then was reduced to below 16% by 30 June 2017. Ernest Henry made an immediate positive impact on the portfolio. With eight months of attributable production, the operation delivered 60,259 ounces of gold at a On behalf of the Board of Directors of Evolution Mining negative AISC of A$(369) per ounce. I am pleased to present you with the Company’s 2017 Annual Report. In its second year under Evolution ownership Cowal made another strong contribution producing 263,105 ounces at The 2017 Financial Year was another year in which we an AISC of A$833 per ounce. Mt Carlton also delivered a continued to deliver on our strategy of leveraging our strong result with gold production of 105,024 ounces at operating success to improve the quality of our asset an AISC of A$622 per ounce. portfolio and build a business that prospers through the cycle. In 2017 the Company again performed very well The continued increase in cash generation of the business operationally to achieve records on nearly every metric. allowed Evolution’s Board of Directors to approve a It was also a year in which the asset portfolio quality was change in dividend policy to a payout ratio of 50% of significantly upgraded by the acquisition of an economic after tax earnings. This change was announced in August interest in Ernest Henry and the divestment of Pajingo. 2017 and was applied to the final 2017 fully franked dividend paid in September 2017. Evolution is now in a In the six years since our inception the Company has built tax paying position and expects to continue to pay fully a reputation as a consistent and reliable gold producer. franked dividends going forward. Importantly, all our operating assets are located in Australia – a low risk, politically stable jurisdiction with an It is pleasing to report that the first eight months of our immense mineral endowment. partnership with Glencore at the Ernest Henry mine has delivered results that have exceeded our expectations.