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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
innovative Ernest Henry transaction and the sale of the
Pajingo gold operation. We have a track record of always
achieving production and cash cost guidance and for
making value accretive acquisitions.
We have grown into a genuine mid-tier since inception
in November 2011 and now have a team of over 1,500
employees and contractors whose safety, health and
wellbeing is of paramount importance to us.
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
to protect and enhance our ‘social licence’ we have to go
above and beyond what is required by way of regulation
and legislation, by playing our part in developing strong
and sustainable communities.
We are committed to attaining an outstanding level of
environmental performance in all our workplaces and we
incorporate environmental considerations into all areas of
our business to effectively manage environmental impacts
and risks.
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
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
Safety
Health and Wellbeing
People and Culture
4
6
9
10
Outlook for FY18
Discovery
40
43
Mineral Resources and Ore Reserves 49
53
Corporate Governance
Environment
Community
16
Chief Financial Officer’s Review
24
Annual Financial Report
58
60
1
Evolution Mining Limited Annual Report 2017AustraliaLow risk, first world, politically stable jurisdictionHighly skilled mining workforceReliabilitySix consecutive years of meeting production and cost guidanceMid-tier6 – 8 asset portfolio to ensure focus is maintainedStrong returnsPeer leading free cash flow per ounce generationCapital growth and increasing dividendsLow riskSix consecutive years of reducing All-in Sustaining CostsAmong the lowest cost gold producers in the worldGrowthStrong cash flow funding near mine and regional explorationDelivering value accretive acquisitions to improve portfolio quality Evolution – a global leader in low cost production
An outstanding performance in FY17
■■ We continued to improve our safety culture and
performance with a reduction in our total recordable
injury frequency rate (TRIFR) to 7.96 (30 June
2016: 9.70)
■■ We had an outstanding year achieving record results
through a focus on productivity improvements and
cost efficiencies:
■■ Total gold production of 844,124 ounces,
representing an increase of 5% on the prior year
and at the upper end of guidance for the current
year of 800,000 – 860,000 ounces
■■ AISC of A$907 per ounce, representing a decrease
of 11% on the prior year and at the lower end of
guidance for the current year of A$900 – A$960
per ounce
■■ Operating mine cash flow of A$706.5 million,
representing an increase of 12% on the prior year
■■ Net mine cash flow of A$461.5 million,
representing an increase of 8% on the prior year
■■ We completed the innovative Ernest Henry
transaction to obtain an economic interest in the
copper-gold operation on 1 November 2016
■■ We completed the sale of the Pajingo assets on
1 September 2016 to Minjar Gold Pty Limited for
total proceeds of up to A$52 million comprised of
a A$42 million up front cash payment and a 1% net
smelter return royalty of up to A$10 million for gold
production above 130,000 ounces
■■ We extended the Cowal gold operation’s mine life to
at least 2032
■■ Ore Reserve increase of 679,000 ounces of gold
prior to mining depletion of 326,000 ounces
■■ Board approved the commencement of the E42
Stage H cutback and Float Tails (Dual) Leach
Project
■■ We acquired the Marsden copper-gold project
immediately to the southeast of the Cowal gold
operation mine which hosts a Mineral Resource
estimate of 1.1 million ounces of gold and 0.67 million
tonnes of copper
■■ We updated the dividend policy of whenever possible
paying a half-yearly dividend equivalent to 50% of
the Group's after-tax earnings – applied to the final
dividend for 2017 of 3 cents per fully paid ordinary
share fully franked
GROUP CONSOLIDATED PRODUCTION
GROUP ALL-IN SUSTAINING COST
5%
TO 844,124 GOLD OUNCES
11%
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)
3
Evolution Mining Limited Annual Report 2017 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$325.0 million in debt repayments during the period.
The Company’s gearing commenced the year at 15%,
peaked at around 24% due to drawing on a new term
facility to fund the Ernest Henry acquisition, then was
reduced to below 16% by 30 June 2017.
Ernest Henry made an immediate positive impact on the
portfolio. With eight months of attributable production,
the operation delivered 60,259 ounces of gold at a
negative AISC of A$(369) per ounce.
In its second year under Evolution ownership Cowal made
another strong contribution producing 263,105 ounces at
an AISC of A$833 per ounce. Mt Carlton also delivered a
strong result with gold production of 105,024 ounces at
an AISC of A$622 per ounce.
The continued increase in cash generation of the business
allowed Evolution’s Board of Directors to approve a
change in dividend policy to a payout ratio of 50% of
after tax earnings. This change was announced in August
2017 and was applied to the final 2017 fully franked
dividend paid in September 2017. Evolution is now in a
tax paying position and expects to continue to pay fully
franked dividends going forward.
It is pleasing to report that the first eight months of our
partnership with Glencore at the Ernest Henry mine has
delivered results that have exceeded our expectations. The
mine has delivered physicals in-line or ahead of plan while
the rising prices of both gold and copper in Australian
dollar terms has boosted revenue. Ernest Henry is now
a cornerstone asset for Evolution that is expected to
produce strong free cash flow for at least the next decade.
In February 2017, Evolution’s Board approved investments
in the E42 Stage H cutback and Float Tails project
at Cowal to secure the mine’s life until at least 2032,
allowing for the continued transformation of this
cornerstone asset.
On behalf of the Board of Directors of Evolution Mining
I am pleased to present you with the Company’s
2017 Annual Report.
The 2017 Financial Year was another year in which we
continued to deliver on our strategy of leveraging our
operating success to improve the quality of our asset
portfolio and build a business that prospers through the
cycle. In 2017 the Company again performed very well
operationally to achieve records on nearly every metric.
It was also a year in which the asset portfolio quality was
significantly upgraded by the acquisition of an economic
interest in Ernest Henry and the divestment of Pajingo.
In the six years since our inception the Company has built
a reputation as a consistent and reliable gold producer.
Importantly, all our operating assets are located in
Australia – a low risk, politically stable jurisdiction with an
immense mineral endowment.
Our core value of safety is critical to our success as a
Company. Evolution remains focussed on improving our
high safety standards across our business. It is pleasing
that in FY17 the Group achieved continued improvements
in both our Lost Time Injury Frequency Rate (LTIFR) and
Total Recordable Injury Frequency Rate (TRIFR).
At the same time, the Company continued its track
record of delivering to or outperforming production and
cost guidance, marking six consecutive years of achieving
guidance since the Company’s inception in 2011.
4
Evolution Mining Limited Annual Report 2017 In the 23 months of owning Cowal between late July
2015 to June 2017, Evolution has delivered a number of
impressive results including:
■■ Mine life extended by 8 years from 2024 to 2032
■■ Ore Reserves more than doubled from 1.56 million
ounces to 3.20 million ounces (post mining depletion)
■■ Cost of Reserves additions of A$14 per ounce
■■ Gold production of 501,000 ounces
■■ Net mine cash flow of A$322 million
Additional upside opportunities are being assessed which
would continue to add value at Cowal. These include:
co-treatment of oxides, increasing plant throughput and
running detailed studies on known ore bodies outside of
the E42 pit including E41, E46 and Galway/Regal.
Led by Glen Masterman, Evolution’s new VP Discovery
and Chief Geologist, Evolution stepped up its efforts in
the area of discovery in 2017. Total spending of A$58.4
million was the highest on record – split between A$29.0
million on discovery and A$29.4 million on resource
definition drilling. The drill program to define Stage H
at Cowal was a major success and strong results were
also returned at Mungari, Cracow and Mt Carlton. In 2018
Evolution plans to invest up to A$50.0 million in this
area of the business (A$30.0 million discovery; A$20
million resource definition). The major focus for the year
ahead will be on drill programs at the Mungari Regional
tenement package where encouraging results have
recently been delivered.
Across our entire business our people have continued to
work incredibly hard during the year and I would like to
thank each and every Evolution employee and contractor
for their contribution. I also appreciate the support
that our Leadership Team has received from the Board
of Directors this year and recognise this as a critical
ingredient of our success.
Following the completion of the sale of Edna May in
early October 2017, Evolution is forecasting Group gold
production in FY18 of 750,000 – 805,000 ounces at All-
in Sustaining Cost in the range of A$820/oz – A$870/oz.
Evolution has a strong platform of high quality assets
with an average reserve life of approximately nine years.
All assets are located in the safe jurisdiction of Australia
with a highly skilled workforce, and in an attractive
operating environment. Our balance sheet is strong, our
assets are generating substantial cash flow and our business
is now well positioned to prosper through the cycle.
Yours faithfully,
JAKE KLEIN
EXECUTIVE CHAIRMAN
5
Evolution Mining Limited Annual Report 2017 Safety
The safety, health and wellbeing of our people is of
paramount importance to us and we believe that every
injury is preventable and that no task is so important that
it cannot be done safely.
We want our people to go home safely to their families
and to move to a safety culture where people do the right
thing for themselves and those around them because they
believe in it, rather than because there is a rule in place.
We work collaboratively with our internal and external
stakeholders to identify and manage risks in the
workplace striving to apply innovative and sustainable
solutions that continuously improve our practices.
We have developed a comprehensive Health, Safety &
Environmental (HSE) management system which our
operations must comply with. Each year, every site is subject
to audit to ensure compliance with these HSE standards.
In FY17 we improved our safety performance achieving
further significant reductions in our total recordable
injury frequency rate (from 9.70 to 7.96) and lost time
injury frequency rate (1.8 to 0.4). We maintained our
focus on safety education by continuing our Vehicle
Incident Prevention Program (VIPP). This is an online,
interactive, module training system (Alert Driver). We
also continued our Beyond Zero program – a Leadership
development course aimed at enhancing front-line
leaders’ safety skills.
We developed and rolled out our Critical Control plans for
the top five risks at each operational site and completed
assurance reviews which achieved an overall compliance
score of 97%. We have further seen a sustained reduction
in our significant safety occurrence frequency rate during
FY17 (5.90 to 4.95).
In FY18 we will continue with existing programs and
commence new initiatives that will help drive our strategy
and the achievement of our key goals. These will include:
■■ Development and roll out of Critical Control plans for
additional Safety risks
■■ Progress each site along the Bradley Culture Curve
■■ Targeting a 15% reduction in the Significant Safety
Occurrence frequency rate
LTIFR
We are very proud of our FY17 safety achievements
77%
■■
Improved engagement with our workforce – an average of 133 safety interactions
conducted each day
■■ An average of 678 Take 5 pre-start safety checks conducted daily
■■ Conducted external safety audits of all our operations against the Evolution Safety and
FROM 1.8 TO 0.4
Health Management system
■■ Hosted our third Evolution Mine Rescue Challenge which was held at Edna May in FY17
TRIFR
Awards in FY17
18%
FROM 9.7 TO 7.96
■■ Victorian Mine Rescue competition – combined Evolution team overall winner
■■ NSW Mining HSE award winner for Project Arrive Alive – fatigue management project
■■ Queensland Mining Health highly commended award for our Health and Wellbeing
program
■■ Chamber of Mines and Energy Surface Mine Rescue Western Australia – winners of
team skills event (Mungari team)
VEHICLE INCIDENTS
39%
To support our value of “Safety – every job, every day”
we live by our Safety Principles
Management takes accountability for safety performance
Everyone is empowered to stop at risk behaviour and control
unsafe conditions
Everyone takes accountability for his/her own safety and for
the safety of those around them
All injuries and incidents are preventable
No task is so important that it cannot be done safely
Working safely is a condition of employment
6
Evolution Mining Limited Annual Report 2017 Emergency preparedness
Since the beginning of the Evolution journey, we have
sought to build mine rescue skills, capability and
resources across the Group. We have six Emergency
Response Teams (ERT) with a total of 120 members.
Our teams have played an important role in supporting
our operations and nearby communities. Over the last
12 months, we have deployed combined teams into
western New South Wales to assist with major flood
relief work and into North Queensland to support
recovery work post Cyclone Debbie.
Evolution attended the Victorian Mine Rescue
Competition in FY17. Our team was outstanding
and won the overall event. We have seen great
collaboration between our mine rescue crews.
For example, our Queensland operations working
together on specialised training which included search
and rescue, chainsaw, swift water and responding
to wildfire.
The Mungari gold operation team assisted Edna May
prepare for their transition to an underground mine
rescue team. Four of our operations also sent rescue
operators to an emergency response conference in
Queensland for skills maintenance and professional
development.
We held our third Group Mine Rescue Challenge at
Edna May, Western Australia. The goal of the challenge
was for each team to develop substantially as a direct
result of the challenge. Six teams participated in
numerous exercises including theory, multi-casualty
chemical incident, rope rescue, fire and functional
fitness. There was also a group scenario involving
community members and local emergency services
where everyone worked together.
The scenarios are designed to be realistic and
challenging and simulate emergency situations that
could occur in a mine. We endeavour to make the tasks
as intense, challenging and real as possible. Whether
it is noise, uncooperative patients, wet, darkness,
inaccessible or hidden casualties, the demands are all
very real and are completed under time constraints.
Evolution played a wider role in emergency
preparedness for the mining industry by assisting
with the development of the 2016 Level 1 State mine
emergency exercise in Queensland and hosting the
2017 New South Wales Mine Rescue Challenge
in West Wyalong.
CASE STUDY:
Project Arrive Alive
During FY17 our people at Cowal
initiated Project Arrive Alive after
identifying that two incidents had been
caused by micro-sleeps. They found that
a number of employees had a commute
that prevented them from being able to
have at least eight hours sleep between
shifts, causing fatigue and in numerous
cases stress. They also identified that
some past incidents may have
involved fatigue.
Project Arrive Alive resulted in
workplace changes including: the
implementation of 14-hour maximum
door-to-door work policy; mandatory
use of buses where buses operated;
fatigue education; sleep and fatigue
management through technology;
and psychological training to help
employees understand the long-term
impact of fatigue.
EMERGENCY RESPONSE
6
TEAMS
EMERGENCY RESPONSE
120
Simon Delander – General Manager HSE and Risk
MEMBERS
We are strongly committed to ensuring our operations are
suitably prepared and resourced to manage any emergency
situations that may arise
7
Evolution Mining Limited Annual Report 2017 8
Evolution Mining Limited Annual Report 2017 Health and Wellbeing
Promoting and supporting the wellness of our people is
a mandate of our Safety and Health policy. Evolution is
committed to investment in many activities that benefit
our people’s health and wellbeing such as company-wide
health challenges and the provision of services by our
health partners.
Evolution offers confidential monthly one-on-one health
consultations by physiologists to help individuals achieve
positive health and wellbeing outcomes. This may include
the tracking of health metrics such as blood pressure,
cholesterol, glucose levels and weight and the provision
of tailored exercise programs.
The R U OK? Organisation has a mission to inspire and
empower everyone to meaningfully connect with people
around them and to support anyone struggling with
life to genuinely change behaviour Australia-wide. At
Evolution we embrace R U OK? Day – not just once a
year, but with regular reminders throughout the year to
check in on our colleagues’ mental health.
FY17 health and wellbeing
achievements
■■ More than 75% workforce participation in our Health
and Wellbeing program
■■
1,594 proactive rehabilitation interventions taken
■■ 8,783 one-on-one health consultations
■■
1,767 Epworth sleep assessments
■■ Reductions in BMI and Blood Glucose levels
■■ Onsite gym facilities and access to health
professionals at our remote camps
■■ Group exercise activities at remote camps
■■ Employee Assistance Program (EAP) available to all
employees and immediate family members
■■ Queensland Mining Industry highly commended
award for Evolution’s Health and Wellbeing program
■■ Embracing R U OK? Day
Source: www.ruok.org.au
Our 2016 100,000km Challenge won a Highly Commended award from the Queensland
Mining Industry in 2017
Some mine site workers can lead a sedentary lifestyle. Challenges faced include 12-hour shifts, sitting at desks
for long periods, sitting to operate equipment, lack of motivation after a long day at work to exercise.
Evolution conducts annual company-wide health challenges. After consultation with the Safety and Health
network, a 10,000 steps per day challenge called the 100,000km Challenge was implemented. Participants
were required to monitor their daily steps with a target of 10,000 steps per day. The information was entered
into a database and progress plotted to show travel across the Australian outback.
Health information fact sheets were provided and discussed at prestart meeting including tips on fitting
fitness into a hectic lifestyle; the importance of sleep; benefits of exercise with a positive boost in mood
and small plate, small hips - reducing portion sizes. Participants had the option of attending one-on-one
health coaching sessions with onsite health providers throughout the challenge. A variety of weekly exercise
activities were held at sites to help motivate and encourage individuals.
Result
■■ The challenge target to cover 100,000km over a 6-week period was exceeded by 42%
■■ High participation rate - 680 individuals in 170 teams
9
Evolution Mining Limited Annual Report 2017 People and Culture
Inspired people creating Australia’s premier gold company –
people matter at Evolution
FY17 was another good year for Evolution. As a globally
relevant mid-tier gold company, we have continued to look
for ways to improve the employee experience for our people
and create an environment where all our people can thrive.
The successful execution of our long-term strategy requires
full alignment and engagement from all parts of the business.
At Evolution, we have a real focus on ensuring we have
the right people, in the right roles, with the right mindset.
We also aim to live by our values of Safety, Excellence,
Accountability and Respect. These are built into our core
people processes. We encourage our employees to act
like owners and through accountability and excellence,
ensure we consistently meet our public commitment
of ‘we say, we do, we deliver’.
In FY17 our focus from a people perspective was on:
■■ Delivery of Phase 1 of an employee self-service system
to improve the core people processes of recruitment,
on-boarding, performance planning and review for our
people and access to ‘just in time’ information for our
people leaders to make informed people related decisions
Spotlight on developing our leaders
We take leadership seriously at Evolution because
ultimately it is our leaders that shape the culture of our
teams and Evolution as a whole. We need great leaders to
help us achieve our ambitions. Key to creating these great
leaders are our three bespoke leadership development
programs designed to develop core leadership behaviours
and support our leaders to be successful at Evolution.
GOLD – Guiding Our Leaders Development
Guiding our Leaders Development (GOLD) is a 10-month
interactive learning experience equipping, empowering
and inspiring our leaders to engage their teams to
perform at their best. A vital part of this program is a
business improvement project to be pitched to our Senior
Leadership team with projects such as an improved
treasury system and accounts payable system being
endorsed. Since its inception in 2014, we have had over
120 leaders on the program with 69 people leaders
engaged in the program this year.
■■ Developing an Employee Relations strategy that
SILVER – our frontline leaders program
moves us towards a more standard application of
our terms and conditions of employment across our
sites and offices. This included guiding principles and
guidelines for negotiations and the important role our
people leaders play in guiding successful workplace
outcomes for our people and Evolution
■■ Continuing to enhance our focus on talent
development and succession, particularly for our
senior leaders, through our leadership development
programs, quality career planning and creating
opportunities and experiences for high potential
individuals in readiness for their next role
■■ Successful divestment of the Pajingo asset and
delivering on our desire to be good sellers,
as well as good buyers
Silver is our frontline leaders program which is a two-day
leadership “essentials” workshop aimed at people who
have transitioned or are due to transition to a supervisory
role. In FY17 we had 109 leaders representing each of our
sites and offices attend the program.
ALLOY – our Leadership Alumni
Alloy is a leadership alumni which is currently being
piloted by 23 leaders at Mt Carlton. This program aims to
bring our GOLD and Silver graduates together to increase
knowledge sharing and interdepartmental collaboration
along with driving continuous improvement across sites.
The right
people, in the
right roles,
with the right
mindset
GOLD Program Continuous
Improvement examples
The Future of Mill Optimisation –
this initiative involved the installation
of cameras inside the mill, enabling
remote inspections improving
safety, mill availability and efficiency
during shutdowns by removing the
requirement for people to enter the
confined space of the mill.
Project Underground Lighthouse –
this project involved the installation
of IT basket cameras to improve the
visibility of mobile equipment in the
underground environment, making it
a safer place to operate.
10
Evolution Mining Limited Annual Report 2017 People and Culture (continued)
Growing our own - hear from our talented graduates
As well as creating development and career opportunities for existing employees, we continue to look for opportunities
to bring talented individuals into the organisation through the vacation program and two-year targeted Graduate
program. Evolution recruited nine new graduates in 2017 in the disciplines of Mining, Geology, Geotechnical,
Occupational Health and Safety, Environment, Finance, People and Culture and Information Technology. We are confident
that this investment in ‘growing our own’ will produce future leaders within the business in years to come.
Emma – 2013 Graduate
“The Graduate Program has given me a huge kick start into the mining industry due to the
exposure to a variety of projects, strong technical support, and personal development
opportunities. Since 2013 I have gained underground mining experience at the Cracow gold
operation and open pit experience at the Mt Carlton operation. I have formed strong working
relationships with key leaders in the business and their support has been invaluable. I’m a
member of the site ERT and the skills I have learnt as an ERT member have been awesome.”
Al – 2015 Graduate
“I knew right from the recruitment stage that Evolution was a company that looked after its
people. Based in Perth in the Discovery team as a graduate geoscientist, I gained exposure
to a range of projects and was given accountability for them. From working on drill programs
in Kalgoorlie to geophysical surveys in New Zealand, I’ve been challenged to learn new skills,
with all the support and training required. This has continued as I’ve progressed on from the
graduate program. The best part about working for Evolution is the people.”
Chris – 2017 Graduate
“I started with Evolution as a vacation student at Mt Rawdon and I was given the opportunity
to continue my journey with Evolution as a Metallurgy Graduate, starting at Mungari. The
Graduate Program is well-rounded providing operational experience, leadership roles
and development training workshops. The professional development I have received has
been fantastic and includes exposure to the greater Metallurgy society through organised
networking events, graduate development workshops and exposure to our Senior Leadership
Team in Sydney.”
CASE STUDY: Employee Engagement
Making Evolution an even greater place to work
forms part of a larger company initiative to invest
in our people and culture, and build a stronger
connection between our people and Evolution.
Committing to actioning our people’s feedback was
part of our FY17 Balanced Business Plan and this
will continue in FY18 as part of our “You said,
together we did”.
We have worked hard to improve our “On the
Ground Leadership” and “Collaboration” across our
business. We are ensuring our leaders are visible
and approachable especially our Senior Leadership
Team through more frequent site visits. We are also
ensuring that we include, share and work with other
teams and sites more effectively by improving our
quarterly “State of the Nation” presentations at each
of our sites and holding functional forums to improve
our collective operational project capabilities.
We focussed on improving how and when we
communicate with our people to address the
variable working hours across our sites and offices.
Installation of information monitors across our
Mungari, Cowal and Mt Carlton sites has
significantly improved access to timely group
wide and site-specific information and keeps
our people connected.
We also heard from our people at Mt Carlton that
improving their recreational area
would enhance their health and
wellbeing. In response, we
constructed a multipurpose
sporting and recreational
area including tennis and
basketball courts and a
BBQ area.
11
Evolution Mining Limited Annual Report 2017 People and Culture (continued)
Act Like an Owner program
The Act Like an Owner program has continued to be a
key program in leveraging the great ideas our people
have, recognising their innovations and improvements of
key business processes. We again offered employees the
opportunity to become actual owners, or increase their
ownership in the business, through an employee share
offer, with 95% of our eligible people taking up this offer.
Our values
Ensuring our values guide the “Evolution way”. Our values
of Safety, Excellence, Accountability and Respect are hard
wired into the way we do things and ensure we get the
“how” right. Our set of values and supporting behaviours
guide how we work together every day. They are built
into how we recruit, induct, develop and measure the
performance of our people. We seek people aligned to
these values and strive to maximise local employment.
A good example of this is the recruitment of truck
operators for the Cowal Stage H cutback. We sourced
24 people from the local communities of West Wyalong,
Forbes, Parkes and Condoblin. We recruited these inspired
locals not just for their technical skills but also for their
behavioural fit to our values.
Pulse engagement survey
We continued our focus on making Evolution a great
place to work by seeking our people’s feedback via
a ‘pulse’ engagement survey and actioning feedback
through targeted engagement action plans. With 70% of
our people participating in the pulse engagement survey
it was encouraging to hear that 83% of our people would
recommend Evolution as "a great place to work".
Diversity
We are dedicated to growing an inclusive culture, a
diverse workforce and a work environment in which every
employee is treated fairly, respected and can contribute
to business success and realise their full potential.
Evolution understands that the wide range of experiences
and perspectives resulting from such diversity promotes
innovation, business success, and delivers value to our
shareholders.
In line with this we have identified opportunities to
increase female participation, flexible working practices,
indigenous employment, helping our leaders manage
a multigenerational workforce and in cultivating an
inclusive culture.
Our focus in FY18
FY18 will see a number of continuing and new initiatives
that will help drive Evolution’s strategy and achievement
of key business goals. These will include:
■■ Review of how we operate as an organisation and
how we can enhance collaboration opportunities
■■ Continued focus on employee engagement and
culture via targeted actions at each site and office
that will enhance the workplace experience for our
employees
■■ Continued focus on the development and growth
of our employees to enhance internal career
opportunities
■■ Continuation of our Leadership development
programs and our Act Like an Owner program
■■ Roll out of Phase 2 of a fit for purpose employee self-
service human resources information system to drive
efficiency and productivity, and enhancing our People
Leaders ability to effectively lead their people
■■ Development of our approach to inclusion and
diversity
■■ Building change and project management capability
Evolution believes that the above initiatives will contribute
to a motivated and engaged workforce and ultimately drive
achievement of our business objectives and shareholder value.
83%
OF PEOPLE SURVEYED RECOMMEND
EVOLUTION AS "A GREAT PLACE TO WORK"
Mungari Family Fun Day
Our team at Mungari organised a Family Fun Day attended by 220 of their
family and friends. This provided a great opportunity to see where family
members worked and to participate in activities such as gold panning and
testing new technologies such as the WASM 4D mining goggles.
12
Evolution Mining Limited Annual Report 2017 13
Evolution Mining Limited Annual Report 2017 Act Like an Owner
We recognise our people for Acting Like an Owner, generating value for Evolution and caring for
the environment. This includes initiatives such as making substantive cost reductions, delivering
operational excellence through change innovation and improving safety.
Our winning Acting Like Owner nominations in FY17
Clint, Noel, Jason and Thomas at Mungari for their
initiative Cameras in IT (Integrated Tool Carrier) baskets.
The Maintenance team recognised a disproportionately
high risk of mining fatalities related to crush injuries.
Being a significant hazard, they wanted to be proactive
in reducing this risk for their workmates. They trialled
ways of eliminating the lack of visibility between the IT
operator and the team in the cage. They found a robust
and practical solution that could be implemented across
the entire fleet for a minimal cost (A$1,200 each unit).
Andrew and Tyson at Mt Carlton. The compositing and
moisture analysis of concentrate samples became an
on-site task. Andrew obtained stainless steel containers
which could be placed directly into the oven, eliminating
the need to double handle the samples. Tyson developed
an in-house Laboratory Information Management System
to allow for direct data input. This work resulted in an
annual saving of A$175,000 and a reduction of ~1,000kg
of solid waste.
Shane at Mungari noticed the waste of spare parts
left over after resealing the power extraction unit on
underground production drills. The kits cater for a variety
of jobs, hence the potential for waste of components
that are not required. Shane negotiated directly with
the suppliers to customise part numbers and contents
of rebuild kits. As a result, waste has been reduced and
savings are above A$10,000 per annum.
Tony at Cowal initiated a recycling process for wedge
wire screens for the Acacia reactor. Tony decided that
instead of disposing of the wedge wire screens he could
recycle them during monthly planned maintenance. He
found ways to clean the screens including the use of wire
brushes, scrapers, air operated wire buggers and pressure
cleaners. This sustainably smart initiative not only
reduces waste at site but will also result in an estimated
cost saving of A$40,000 per annum.
Kevin at Mungari understood the importance of safety
and productivity in the Gold Room operation and
brainstormed the idea to have a one-piece cathode mesh
which could slip over the cathode panel, instead of the
old wire mesh sections which would split and then be
difficult to re-tension. The new one-piece is installed in
several layers to achieve mesh density and tautness. It
has been in service for 20 months and requires minimal
maintenance, saving time and increasing efficiency.
Mick, Glenn, Andrew, and Cory at Edna May identified
that significant sediment was being deposited in the
process water dam over the last three years. Instead of
engaging a costly contractor to remove the sediment,
they brainstormed the idea to use existing equipment
to connect to the process water line from the dam and
pump it to the thickener. Over ten days they managed to
recover 30% of dam capacity and saved over A$60,000.
In the event of an incoming water issue, the dam now has
capacity to sustain production for an additional
eight hours.
Scott and Darren at Cracow designed a facility for
treating the waste product on site, Cracow is now
successfully treating heavily contaminated waste onsite
instead of going to a government toxic waste dump
and saving contractor costs in excess of A$100,000
per annum. This project has not only benefited Cracow
financially but removes a harmful substance from the
environment permanently by turning hydrocarbon
laden sediment collected in the workshop sumps into
soil suitable for land rehabilitation. Site gains additional
topsoil for mine rehabilitation of which there is currently
a shortage.
Paul at Mungari worked with a new dealer to source close
to 100 more effective store stock items, used for both
development and production drills. Paul has provided a
potential cost saving of approximately A$125,000 per
annum and has gone above and beyond in dedicating
his time to conducting trials to assess the quality and
standards of the new parts. A fantastic example of living
our value of accountability and doing the right thing for
the long term.
Ashley at Cowal led the de-bottlenecking of the cyanide
destruct circuit. Ashley implemented a program of works
that involved the installation of two new oxygen spares
in the bottom of the destruct tank and a new improved
oxygen control unit to allow the delivery of significantly
more gaseous oxygen to the destruct circuit, reducing
the need for hydrogen peroxide. Ashley designed and
constructed a new DCS page consolidating all the
required information about the destruct circuit to allow
operators better access to information on reagent usage.
This project has led to savings of A$832,000 for FY17.
14
Evolution Mining Limited Annual Report 2017 Jon at Cowal saw an opportunity to improve the
sun protection provided on the rig ute for Geology
Technicians and Field Assistants as ambient temperatures
in NSW last summer were very high. The existing tinted
Perspex transparent shade on the rig ute was not
providing the sun protection needed against the harmful
UV rays. Going above and beyond in his role, Jon installed
removable Coroplast boards to the awning which
blocks out 95% of sunlight and improved their working
environment.
Nigel at Cowal is recognised as an ALO winner for
always being on the lookout for changing pit conditions
and noticing the smallest of detail. An example is his
reporting of a line of shadow cast across the East Wall
Geotechnical hazard while driving his haul truck up the
pit ramp and requested for an inspection of the area.
Upon inspection, worsening conditions of the area were
noticed causing pit operations to be stopped for more
than 24 hours to ensure safe operating conditions.
Uron, Henry and Adam at Mt Carlton showed great
collaboration as the Processing and HSEC teams came
together to safely clear a blockage in the jaw crusher,
preventing major revenue loss due to an unplanned
shutdown and ensuring crushed ore feed on the coarse
ore stockpile. This was all achieved safely on a scorching
day, and fatigue and heat stress were safely managed.
Ronnie at Cowal installed LED emergency strip lights
for the processing reclaim tunnel after being unable to
source this lighting from suppliers and went on to design,
build and install the battery pack using available onsite
spares.
Showing pride
and
commitment
Be open
to
new ideas
Support
each
other
Be
courageous
Do the right
thing for the
long term
15
Evolution Mining Limited Annual Report 2017 Environment
We are committed to attaining an outstanding level of environmental
performance in all our workplaces
Management approach
Evolution incorporates environmental considerations
into all areas of our business to effectively manage
environmental impacts and risks. We have developed an
Environment and Sustainability Policy that we expect our
people and contractors to adhere to.
We believe we have an obligation to not only achieve
legislative compliance but to strive for best practice and
to meet the expectations of the communities we operate
within and are part of.
We developed and implemented 11 Environmental
Protocols to hold us to a higher standard of
environmental performance and to create a clear and
open community accountability framework.
We are focussed on enhancing environmental
stewardship through the development and
implementation of our Environmental Protocols and
Life of Mine Environmental Management Plans across
all project sites. We undertake periodic reviews to
ensure that our environmental performance targets and
objectives are being achieved.
Environment and
Sustainability policy
Our environmental care and culture is based on:
■■ Commitment to our Environment and Sustainability
policy, with supportive funding and a belief that
most environmental incidents are preventable
and controllable with foresight, relevant training,
purposeful attitude and appropriate equipment
■■ Accountability of Management with the support of
all our people to ensure that the workplace and the
practices comply with statutory and licence conditions
■■
Implementing leading industry practices and
environmental management systems at all levels:
including exploration, development, operations,
decommissioning, closure and rehabilitation
■■ Regular assessment of the environmental
performance of the Company’s activities to ensure
compliance with the Company’s commitments and
conditions; and to report findings to stakeholders, the
community and regulatory authorities
■■ Continually striving to identify opportunities to
effectively manage energy and water whilst minimising
waste and reducing our environmental footprint
■■
Increasing awareness of personnel on the potential
environment impacts of activities in which we are
involved, and how those impacts can be minimised or
controlled
■■ Maintaining appropriate emergency and critical
incident response programs, and to notify the relevant
authority in the event of any reportable environmental
incident; and
■■ Contribute to conservation of biodiversity and
integrated approaches to land use
Our environmental team heading back after planting
another 10,000 tube stock plants at ‘Hillgrove’ farm
by the Lake Cowal Conservation Centre
16
Evolution Mining Limited Annual Report 2017 Environment (continued)
Environmental protocols
Air quality
All Evolution operations develop, implement,
communicate and adhere to their air quality management
plan that includes strategies, operational controls and
management practices. We develop and implement
monitoring/inspections programs to verify that air
emission controls are operating properly and to provide
relevant, traceable data for internal and external
reporting. We manage point and non-point source air
emissions to be protective of human health and the
environment.
Ambient dust, noise, odour and spill light impacts on
our surrounds are closely monitored. Protection of
our social licence to operate means that we operate
beyond compliance in these areas within our community
surroundings. We report our air emissions as per legal
and other requirements and communicate the outcomes
at various consultative forums.
Cowal celebrated the start of its fourteenth year on the
Community Environmental Management Consultative
Committee (CEMCC). A standard meeting Agenda
including air quality is discussed every quarterly meeting.
The Minutes of the Cowal CEMCC are available on the
Bland Shire Council website.
Each of our operations has a weather station to monitor
and record local meteorological parameters.
A planned evacuation at Mt Carlton was
conducted prior to the arrival of Tropical
Cyclone Debbie. The Mt Carlton weather
station provided essential data for the
emergency response crew based
in Townsville
Our Environmental Protocols consist of 11 benchmarks
for best practice management in key business risk
areas, such as Waste Rock Management, Cyanide
Management and Mine Closure and Rehabilitation. All our
sites and workplaces are required to meet the protocol
requirements, which are audited on a regular basis.
Air quality
Biodiversity management
Chemical management
Cyanide management
Water management
Hydrocarbon management
Waste rock management
Rehabilitation and closure
management
Tailing management
Waste management
Energy efficiency
CASE STUDY: Water bird
populations at Lake Cowal
Peter Gell of Federation University, New South
Wales has undertaken tri-annual surveys of water
bird populations, and breeding activity, at Lake
Cowal since 1992. This has provided great insight
into the changing patterns of birds that use a
wetland through wetting and drying cycles of the
Lake and its surrounding countryside. In 2016,
Magpie Geese were recorded using the foreshore
adjacent to our Cowal operation for the first time.
17
Evolution Mining Limited Annual Report 2017
CASE STUDY: Biodiversity enhancement
plan at Edna May
The majority of Western Australia’s Avon Wheatbelt
has historically been cleared for Agricultural purposes.
Remnant vegetation areas in the region are sparse and
isolated. Of the 767ha which make up the mining leases
at Edna May, over 50% of the area consists of farmland
cleared before the 1930s. Eucalyptus Woodland is the
dominant native vegetation type in the region, with
Eucalyptus salubris (gimlet), E. salmonophloia (salmon
gum) and E. longicornis (Red Morrell) the common
tree and mallee species. Eucalyptus Woodlands of the
WA Wheat belt are listed as a Threatened Ecological
Community under the Environmental Protection and
Biodiversity Conservation Act 1999.
The Edna May Biodiversity Corridor Project was voluntarily
established with the aim of creating a wildlife corridor
representative of a Eucalyptus Woodland on the northern
leases of the mine site which previously consisted of
cleared agricultural land. The corridor consists of a total
area of 92ha and will link existing areas of remnant
vegetation adjacent to the mine.
The project is intended to act as a voluntary offset against
Evolution’s land holdings which are temporarily being
used for our mining operation. The target was to plant
out the equivalent of at least 1% of the total land used
by Evolution across all operations. Ultimately this project
saw the planting of over 75,000 seedlings within the 92
hectares. The project also trialled direct seeding 10ha of
Eremophila resinosa (a Declared Rare Flora under the
Wildlife Conservation Act 1950 endemic to the Westonia
region) at two sites on the Mining Lease.
Cyanide management
Our management protocol is largely derived from the
International Cyanide Management Institute (ICMI) –
Cyanide Code. This applies to the purchase (production),
transportation (routes and times), handling, storage, and
the operation (leaching and cyanide destruct circuits)
and decommissioning of cyanide facilities.
Cowal was the first process plant in the world to
obtain both pre-operational and operational ICMI –
Code Certification (16 April 2006) and has passed all
subsequent independent Cyanide Code audits to date.
We undertake annual licence to operate independent
audits and triennial hazard audits of our operations.
Our operations maintain monitoring programs to detect
any adverse effects to wildlife, surface water and
ground water quality due to the use of cyanide. We use
periodic or online measurement of Total and Weak Acid
Dissociated (WAD) cyanide in slurry and water streams to
remain within legal operating limits, or below accepted,
peer reviewed industry practice limits for fresh and
hypersaline Tailings Storage Facility or Integrated Waste
Landform Decant Pond water recovery and storage pond
infrastructure works.
Evolution's Environmental officers place
a new level marker at Cowal
Biodiversity management
We acknowledge that the nature of our operations can
have significant environmental impacts. Additionally,
our operations and growth strategy are dependent on
obtaining and maintaining access to environmental
resources. We believe that we all have a role in
demonstrating our environmental responsibility by
minimising impacts and contributing to enduring
environmental benefits, through every stage of our
operations. We have developed land and biodiversity
management plans at our operations. These plans and
risk-based, adaptive strategies include the voluntary
and prescribed biodiversity offset areas that are actively
maintained for fire, pest and weed control at our
operations.
Chemical management
We use chemical substances to conduct efficient and safe
operations across the Group. The safe transport (routes),
storage, handling and use of these substances occurs for
both small quantity and bulk commercial volumes. Our
sites are linked to one management system that provides
employees with access to electronic and hardcopy point-
of-use Manufacturer’s Safety Data Sheets. The system is
maintained to provide advice and reports on segregation
and stock quantities held. Only substances approved for
use by the site management process team can be used.
A considerable amount of planning and maintenance
occurs to maintain the integrity of storage bunds, tanks
and pipework associated with the delivery, storage
and use of chemicals. Each of our sites has emergency
response teams and relevant jurisdictional mutual
aid arrangements in place. Periodic exercise drills are
executed to ensure preparedness.
Workplace risk assessments and inspections maintain
focus on the prevention of leaks, spills and
environmental impacts.
18
Evolution Mining Limited Annual Report 2017 Environment (continued)
Our cyanide management protocol sets Evolution’s
requirements for cyanide management, aims to be
protective of human health and wildlife, and to prevent
uncontrolled releases to the environment.
Water management
Our water management protocol is used to manage
water use and recovery in our mining and mineral
processing facilities and includes probabilistic site water
balance models for droughts and storm-water flows. Our
operations enact seasonal preparations and routine de-
watering activities are designed and operated in a manner
that observes user allocation rights, and ensures human
health and the surrounding environment are protected.
Each operation has regional jurisdictional, unique
hydrogeological, fresh through hypersaline surface water
quality and specific site licence to operate conditions.
We implement specific additional water management
requirements related to mining and processing infrastructure
for tailings management and waste rock management to
enhance the design side for protection from unwanted events.
Operations consult with stakeholders throughout the year
to maintain adequate onsite water storage and prepare
for seasonal fluctuations. Site water balance models are
required to be updated annually using peer review.
The various streams of water (potable, reagent mixing,
sewage, process circuits, thickener/ tailings recovery
and incidental storm water) all receive their own special
attention on site. The protocol guides operations to ensure
that clean water is kept separate from contaminated water
(similar strategy for solid waste management).
Our operations track fresh water (surface, groundwater
and rainwater intake) and recycled water volumes. These
volumes vary across the seasons of the year and are input
into the site water balance models to ensure proactive,
predictive controls are implemented. Variations also
occur across the years and are required to be managed.
Another key consideration for water management across
the Group is to ensure the safety of wildlife around
operations. Storage pond egress and summer/dry season
drinking and bathing water supplies away from access
roads and operational areas helps to minimise interactions.
Mt Rawdon and Mt Carlton operations use water
evaporators to maintain water stock pond levels, especially
in the months before the arrival of the Wet Season.
Hydrocarbon management
Evolution conducting weekly mid-Lake surface
waters monitoring on Lake Cowal
Mt Carlton’s water evaporators -
commissioned July 2017
Bulk diesel storage facility at Mt Rawdon
Our hydrocarbon storage tanks and conveyance systems are designed and constructed in accordance with the relevant
Australian or International Standard (ie AS 1940:2004). The hydrocarbons used at our operations are approved for
use via the online management system that provides employees with access to electronic and hardcopy point-of-use
Manufacturer’s Safety Data Sheets.
Our site hydrocarbon storage facilities are inspected during internal site-based and corporate assurance visits and by
independent external audit teams.
Our workshops and service areas (including contractors that service vehicles and/or heavy equipment) have treatment or
management facilities for hydrocarbon contaminated water that meet the applicable discharge standards.
19
Evolution Mining Limited Annual Report 2017 Environment (continued)
Waste rock management
Our protocol applies to the design, construction,
rehabilitation and closure phases of our operations
regarding waste rock disposal facilities and other
infrastructure utilising waste rock for construction
(eg haul roads and dams), and ore stockpiles (related to
their potential to generate acid mine drainage (AMD) or
salinity impacts). This addresses characterisation of waste
rock, design and construction of waste rock disposal
facilities, potential acid generation, storm-water controls,
monitoring, rehabilitation and closure.
Southern waste rock emplacement at Cowal
Where applicable (not all our operations have AMD
potential), a balance of potentially problematic material
and material suitable for construction generating material
are developed to evaluate and design controls to isolate
problematic materials from the receiving environment
in the near and long term through the individual mine
planning review cycle. The balance is updated annually to
assess the adequacy of available material for rehabilitation
program needs and eventual site facility closure.
Where Potentially Acid Forming waste rock is suspected
or known to occur, the operation will place it inside and
under Non-Acid Forming covers.
Progressive rehabilitation activities shall be conducted
as areas of the waste disposal facility become available.
Rehabilitation of these areas is conducted as soon
as practicable.
Rehabilitation and closure management
Mining is only a temporary use of land and the project
planning cycle begins way back at ensuring our minimum
disturbance of ground during the exploration drilling
phase (10 to 30 years), and needs to look forward to
what the operation’s future land use/s will be and what
the operation should look like when the operational areas
are ready for relinquishment.
An example of exploration drilling best practice is our drill
site program at Puhipuhi, New Zealand. This program was
planned with meticulous attention, minimising the impact
of the project's footprint and ensuring prompt, successful
drill site rehabilitation.
Temporary truck mat surface protection was used
to minimise soil disturbance at Puhipuhi, NZ
CASE STUDY: Cracow’s Final Land Use Rehabilitation Plan (FLURP)
Queensland has a long history of gold mining activity. Cracow can trace its history back to the 1930s.
The township of Cracow and the current day mining and mineral processing operations share common land
boundaries with surrounding farm land enterprises.
The Queensland government has used Environmental Authorities and Plans of Operations with FLURPs to
manage rehabilitation and closure completion criteria for mine sites. Presently the Plan of Operations is
moving to a document called a Progressive Rehabilitation Closure Plan. Cracow has continued to update
their FLURP. Several of the historical Cracow pits, mine working areas, waste rock emplacements and tailings
dams (legacies) have forests growing on them which are about 30 to 40 years old.
Like the heterogeneous nature of the soil and rocks beneath the surface, the covering vegetation is also
variable and tends to follow the shallow fractured rock aquifers that store and release the water resources
of this region.
20
Evolution Mining Limited Annual Report 2017 Environment (continued)
Tailings management
Tailings are the fine waste slurry residue of the crushed
solid mineral ore that is fed into the Process Plant
grinding mills. Tailings operations have long been a part
of the minerals processing industry and will continue to
exist well into the future. Whether the operation is active
or closed, tailings storage facilities need to operate and
rehabilitate with due care for a range of potential issues.
Our protocol and governance process have been revised
to incorporate the International Council on Mining and
Metals six key components of the Tailings Governance
Framework.
Regular inspection and audit ensure that our operations
meet the requirements for the characterisation of
tailings, protection of wildlife, protection of groundwater,
prevention of uncontrolled releases to the environment,
management of process fluids and the closure and
rehabilitation of tailing storage facilities.
Tailings storage facilities are typically lined with low
permeability clay soil linings which allows some
seepage within a prescribed operational zone footprint.
Recovery and pump-back of seepage from the near
field is standard practice. Supervising engineers and
Geotechnical staff monitor the integrity of tailings
storage facility walls and pieziometric data relating to
phreatic water levels inside the facility.
Mt Carlton operates a tailings storage facility with a dual
high-density polyethylene liner system which ensures that
the mobile metal forms do not enter the water table.
Solar-powered seepage collection and pump-back
bore at Mungari
Mungari’s underground scrap metal pile awaiting
road load out
Evolution has conducted outer wall rock buttressing at
a number of our operations. We also have a variation on
tailings storage called an Integrated Waste Landform
storage facility at Edna May.
Ongoing efficient recovery of tailings decant water
back to the processing plant water supply is essential
to manage the water balance and minimise new water
intake to operations.
Management of wildlife access and safe egress from
tailings storage facilities is a key business imperative for
our operations. Our fresh water based operations have
cyanide destruction and slurry dilution to reduce weak
acid dissociable (WAD) cyanide levels to safe levels for
avifauna and terrestrial animals. Fencing, bird deterrent
systems and regular monitoring and perimeter patrols
provide early warning of such issues.
Waste management
General waste
The on-site management of putrescible and non-
putrescible waste streams has progressed to a stage
where bioremediation and general landfill facilities and
management practices are now relieving pressure on
local government authority facilities. Generally septic
waste solids are transported to local government
authority facilities. An exception being that Edna May is
licensed to assist the treatment of their, and some town
septic waste, at the Edna May facilities in Westonia,
Western Australia.
We have established an ethos to reduce, recycle and
reuse our resources occurring in our normal site waste
management practices. Our Act Like an Owner initiative
has been very successful in identifying and implementing
numerous opportunities for waste reductions. For
example, the bio-remediation of hydrocarbon sludge
project at Cracow which turns hydrocarbon laden
sediment from the workshop sumps into soil suitable for
land rehabilitation.
CASE STUDY:
Mungari’s tramp metal (eg rock bolts, mesh)
extracted from underground as part of the mining
process is retrieved from the ore at the process
plant then sold to a local scrap metal company for
recycling. Any other scrap metal from around site
is also sold. All proceeds are donated to the local
community organisations supporting children’s
health and/or education. The most recent donation
was made to the Children’s Ward at Kalgoorlie
Regional Hospital for A$12,000.
21
Evolution Mining Limited Annual Report 2017 Environment (continued)
Industrial waste
Operations are generally permitted under government
licence (Environmental Authority) to operate onsite
industrial waste landfills. Landfilling into waste rock
emplacements is also an option that may be exercised
in some jurisdictions. This reduces operating volume
pressure on local government authority facilities
and reduces transport related greenhouse emissions
considerably. Mt Rawdon and Cracow commenced
applications to develop and operate an onsite industrial
landfill in late 2016. Cracow’s camp kitchen wastes have
recently been diverted to the bioremediation facility.
Camp kitchen wastes are pre-treated in the insinkerator-
dehydrator unit.
Hazardous material waste management
Our operations use specialist, government approved
waste management service providers and tracking
arrangements for the approved, safe disposal of transfers
of obsolete or used hazardous material waste/dangerous
goods substances. Chemicals are generally consumed in
process. Hydrocarbons in the form of dirty rags, crushed
oil filters, used engine coolants or used bulk lubes are
typically sent for offsite under commercial service
arrangements for industrial re-refining (for re-use) or
conversion into energy.
Environmental emissions and energy efficiency
Each year we create and submit annual reports for the
National Pollutant Inventory (NPI) and the National
Greenhouse and Energy Reporting Act (NGER) to
estimate greenhouse gas (GHG) emissions and energy
use and we provide this information on our Company
website www.evolutionmining.com.au/environment.
Environmental enhancement projects
In FY17 we achieved our goal of implementing
Environmental Enhancement projects with a primary
purpose of improving or enhancing environmental values
onsite or in nearby communities. We supported Edna
May’s Eremophila resinosa translocation works and
commenced the following three programs:
At Cowal, a Malleefowl recovery project linked to
Australia’s National Recovery Program is underway. The
project partners for this work are the local landholders
at Tallimba and Yalgogrin, the Local Land Services –
Riverina, Lake Cowal Foundation and Evolution. This
project will use a PhD candidate to study and record the
process journey to protect and enhance the Malleefowl
population in the Bland Shire, New South Wales.
At Mt Carlton, we commenced a coastal rehabilitation
project which involves mechanical, amphibious-land
craft removal of aquatic water weeds (for sterile mulch
composting and re-use of farms), tree planting and
installation of water control gates. Holding back fresh
water and allowing natural ingress of sea water into the
coastal area will control the highly invasive aquatic fish
pests and weeds that have built up in the Burdekin River
bio-region. This project forms a component of a much
larger Queensland state project to protect the Great
Barrier Reef Marine Park.
At Mungari, we supported extension works at the
Kalgoorlie-Boulder Urban Landcare Group. This project
included classroom education of trainees, guided tourism
walks, a native plants nursery upgrade, and rehabilitation
and land care program works in the local area. Further
information can be found at http://www.kbulg.org.au/.
Environmental assurance
The Evolution Environmental Assurance Audit Program is
undertaken by our corporate office. The program reviews
different risk areas and aspects from the site operating
licence each quarter. This assurance program assists in the
effective management and monitoring of environmental risk
across the organisation.
Quarterly assurance visits to our operations focused on
hydrocarbon and chemical management. Small leaks and
spill volumes have been focused on to ensure that incidents
are being reported and the causes are promptly addressed.
Rehabilitation success and failures are reviewed with the
view that other sites share the learnings during subsequent
site visits or during our monthly Environmental Professional
Network teleconference and our annual face-to-face
gathering.
Assurance visit and audit recommendations are tracked and
followed up via our company incident management system.
Environmental compliance
As part of our environmental management, our activities
are governed by conditions detailed in mining approvals,
lease conditions and licences set out by regulatory
authorities.
Periodic voluntary independent environmental
performance audits are also conducted. Cowal has
remained certified to the International Cyanide
Management Institute (ICMI) Cyanide Code since
April 2006 and to ISO 14001 since February 2013
(internationally accepted best practice environmental
management standard). During 2016, Mt Carlton entered
into an independent gap assessment program for
certification to the ISO 14001 standard requirements.
All environmental incidents and near misses are reported
through our incident reporting systems. Investigations are
undertaken to determine the underlying cause to eliminate
the potential for failures and to apply effective company-
wide controls. A significant environmental incident is
defined as any occurrence within Evolution’s operational
control that has resulted in, or had the potential to cause,
at least moderate environmental impact.
22
Evolution Mining Limited Annual Report 2017
23
Evolution Mining Limited Annual Report 2017CASE STUDY: Approval for mine life extension at Cowal (environmental assessment)The Cowal Gold Operations Mine Life Modification involves continued operations within ML 1535 for an additional eight years to allow an additional 1.7 million ounces of gold production. Existing Cowal infrastructure will continue to be used, with some alterations where necessary, including modification of the existing tailings storage facilities and upgrades to the existing leach circuit within the process plant. Benefits include the continuity of employment for the existing workforce (average of about 385 people) for an additional eight years, providing job security for employees and contractors, and would continue to stimulate demand in the local and regional economy and provide significant additional contributions to State royalties, State taxes, Commonwealth tax revenue and applicable contributions to local councils. Consultation was conducted with key state government agencies, local councils and the local community.Several environmental studies were completed which indicated that existing monitoring, mitigation and management measures could continue to be implemented to minimise potential impacts of the operation on existing environmental values and the nearest private dwellings. Approval was granted for mine life extension to 2032. Further details are provided on the company’s website www.evolutionmining.com.au/cowal Community
We are partnering with our community stakeholders on legacy projects
that provide benefits that last beyond the life of the mine
We recognise that to protect and enhance our ‘social
licence’ we must go above and beyond what is simply
required by way of regulation and legislation, by
playing our part in developing strong and sustainable
communities.
As a member of the communities in which we operate,
we seek to partner with our community stakeholders,
listen to and understand their needs and work together
to make a positive difference. We strive to earn the trust
of all with whom we interact and to always leave
a positive legacy.
Our commitment
Evolution has a Community Relations Policy whereby
we commit to working with our communities to achieve
their future aspirations. This includes identifying
opportunities for partnerships that create shared value
for Evolution and for our community stakeholders,
investing in community development projects that will
continue to benefit the community long beyond the
life of the mine, and sharing the economic benefit with
our local communities where possible, by maximising
local procurement and local employment and training
opportunities, particularly for our local Indigenous
communities.
Partnership Approach
Case Study – Project Bridge
Evolution formed a collaborative partnership with the
Wiradjuri Condobolin Corporation (WCC) and key
Evolution supply partners, who, as a direct consequence
of this partnership, are now working together to
maximise education and employment outcomes for local
Wiradjuri people and the broader community in the
Central West of New South Wales.
Cowal and the WCC, which represents the Traditional
Owners of the land on which Cowal is located, have
enjoyed a strong working relationship for many years.
Their Project Bridge partnership with Boart Longyear,
BK Hire, SRG, Maxam and Milbrae, supported by the
Murdi Paaki Regional Enterprise Corporation and the
Department of the Prime Minister and Cabinet, was
recognised in the NSW Minerals Council community
excellence awards for the collaborative approach taken as
well as the potential to deliver community outcomes for
many years to come.
In the first six months of Project Bridge, nine Wiradjuri
people completed a Job Ready Training program, with
three of those graduates receiving employment offers.
A Careers Day was also held for 108 regional students,
providing information about local career opportunities to
help their curriculum and career decisions.
Project Bridge is only in its early days but has already
delivered positive training and employment outcomes,
with Project Bridge members committing to continuing
to work together to deliver further outcomes in future.
Project Bridge was piloted at Cowal and will be rolled out
across other Evolution operations.
"For us as an Indigenous organisation, to succeed and
to move forward to achieve all the things that we
need to achieve, we have to have the ability to create
partnerships. I think the partnership that we now
have with Evolution is probably one of the best that
I’ve seen anywhere in the country.”
Ally Coe, Chairperson,
Wiradjuri Condobolin Corporation
Listening to our stakeholders
Evolution regularly and proactively engages with our
stakeholders to provide information on our operations
and our involvement in the community and to listen to
and understand our stakeholders’ needs. In 2014 and
2016 we conducted stakeholder satisfaction surveys
which included asking how our stakeholders preferred to
be communicated with. We have implemented various
formal and informal community engagement methods
in response to the community feedback received. These
methods vary from operation to operation depending
on community expectations and include Community
Consultative Committees, quarterly ‘town hall’ meetings,
regular newsletters and media announcements,
attendance at Council or other community meetings, a
community drop-in centre and one-on-one meetings with
individual stakeholders.
Throughout FY17 our operations implemented actions
to address the specific feedback received from their
local community stakeholders. Our next stakeholder
satisfaction survey will be conducted in 2018 to identify
opportunities to improve community relations, engage
in different and more meaningful ways and continue to
deliver positive community outcomes.
24
Evolution Mining Limited Annual Report 2017 Project Bridge Members – kick-off meeting November 2016
As at 30 June 2017
TOTAL PROCUREMENT SPEND
>A$800M
FY17
DIRECT SPEND
A$80M
WITH LOCAL ORGANISATIONS
SCHOLARSHIPS
>A$120K
LOCAL AND INDIGENOUS
OUR PEOPLE EMPLOYED
60%
DIRECTLY FROM LOCAL COMMUNITY
ABORIGINAL OR TORRES STRAIT
3.3%
PERMANENT EMPLOYEES
Indigenous dancers as part of our support for local
NAIDOC week celebrations
Evolution also indirectly employs ATSI people through
registered training organisations and with contractors on site
25
Evolution Mining Limited Annual Report 2017 Community (continued)
Sustainable community
development projects
Evolution continues to work with our community
stakeholders to identify opportunities to partner on
projects that deliver long-term, sustainable outcomes
for the community. These are legacy projects aimed at
providing benefits that last beyond the life of the mine,
enabling the community to be resilient, to thrive and to be
sustainable for the long term. Importantly, these projects
are not reliant on Evolution for their ongoing success.
In FY17 Mungari partnered with the Coolgardie Primary
School to support the construction of a sensory play
area and bush tucker garden. In its first two months, the
school principal indicated that the project had helped
achieve the following outcomes:
■■ Increased student engagement; all students are now
included in playground activities, whereas some had
previously been left out
■■ Greater vocabulary skills, especially in higher needs
children, improving their reading and writing skills and
overall learning outcomes
■■ Strengthened awareness of Aboriginal culture
■■ 10% increase in school enrolments
“Coolgardie Primary School students are being encouraged
to play in a more natural environment, after a new
playground was built using recycled timber, rocks, water
and mulch. The children love playing in it. It has a water
pump and a built-in water tank, so they love pumping the
water into the mud at the bottom of the playground.”
School Principal, Coolgardie Primary School
Coolgardie Primary School’s new sensory play area
Community involvement
Case study – emergency response support
Evolution has highly trained and highly skilled Emergency
Response Teams (ERT) at each of our operations.
26
Our ERT personnel are ready at any time to respond
appropriately to potential incidents, especially where
lives may be at risk. The hard work put in by the teams
to ensure they stay at the leading edge of emergency
response practices and their readiness to assist the
community in times of need means they are often first
responders to community incidents, providing assistance
until emergency authorities can arrive.
In FY17 our ERT’s were first respondents to 46 off site
emergency incidents that occurred within our local
communities. In September 2016, communities near our
Cowal operation were declared natural disaster zones after
being hit by the biggest flood in decades. Many residents
were evacuated to safety, with floods causing extensive
damage to homes, crops, businesses and infrastructure.
ERT personnel from various Evolution operations joined
other Evolution volunteers and worked closely with the
State Emergency Services (SES), the Australian Defence
Force and the Rural Fire Service (RFS) to provide much
needed protection to people and property.
Evolution volunteers assisting with sandbagging
during the NSW floods
In March 2017 Cyclone Debbie, a Category 4 system, made
landfall in North Queensland near our Mt Carlton operation.
Evolution mobilised ERT personnel to the region to be on
hand to provide support to local community members,
particularly assisting with the clean-up efforts, removing
hazards and enabling people to safely access their homes
and workplaces. In addition to supporting our local
residents, the team attended Gumlu State School to
remove dangerous trees and clean up debris.
“Thank you for your efforts in making our school safe after
Cyclone Debbie. Your staff’s help was invaluable during this
time.” Certificate of Appreciation signed by the students,
principal and P&C President of Gumlu State School
The value of the support provided by our highly trained,
skilled and professional ERT personnel was recognised by
the SES and RFS and we have since been in discussions
with both organisations to agree on ways to partner in
future to respond to emergency situations. Evolution
now has an in-principle agreement with the SES and a
signed agreement with the RFS to work in partnership to
support communities during any future natural disasters.
Evolution Mining Limited Annual Report 2017 Our Assets
Cowal, New South Wales, Australia
Evolution ownership:
Location:
100%
350km west of Sydney, 40km northeast of West Wyalong, Australia
Ore Reserves (at 31 December 2016):
116.71Mt at 0.85g/t gold for 3.20Moz gold
Mineral Resources (at 31 December 2016):
177.65Mt at 0.88g/t gold for 5.04Moz gold
FY18 production guidance:
235,000 – 245,000oz gold at AISC of A$950 – A$1,000/oz
Mining permit to:
2032
Darwin
Townsville
Rockhampton
Brisbane
Cowal
Sydney
Melbourne
Perth
The world-class Cowal gold operation (Cowal) sits within
Bland, Lachlan and Forbes Shires on the traditional
lands of the Wiradjuri People. Cowal currently employs
around 385, mostly local, employees and contractors.
Cowal is an owner operated open cut mine that produces
approximately 240,000 – 250,000 ounces of gold per
year. It is a conventional load and haul, drill and blast open
pit operation that processes 7.5 million tonnes per annum
utilising crushing, two-stage grinding, sulphide flotation,
regrind, and Carbon-in-Leach (CIL) recovery.
In FY17 Cowal produced 263,015 ounces of gold (above
guidance of 245,000 – 260,000 ounces) at an average
C1 cash cost of A$613 per ounce and AISC of A$833 per
ounce. Cash costs and AISC were below the lower end of
guidance of A$615 – A$675 per ounce and A$885 – A$945
per ounce respectively. The operation generated A$166.08
million in net mine cash flow.
Under Evolution’s ownership (July 2015), an additional 2.28
million ounces of Ore Reserves have been estimated and
the mining permit has been extended eight years to 2032
following intensive drilling programs and pit optimisation
work.
We see further opportunities for asset enhancement at
Cowal which include:
■■ Co-treatment of high-grade oxide stockpiles to bring
forward treatment
■■ Increased gold production of 10,000 – 12,000
ounces per annum
■■ Secondary crushing
■■ Continued drilling to convert significant mineral
endowment outside of existing reserves
■■ E46, E41, Galway and Regal
“FY17 was a transformational year for Cowal with our
mine life extended to 2032 which affirmed the asset
value foreseen during acquisition. Earlier in the year, my
team contended with an unprecedented flood event and
still managed to outperform market guidance – whilst
rendering extensive support to local flood-affected
communities that we are proud to belong to.
We were honoured by the New South Wales Minerals
Council with the coveted Mine of the Year Award and the
HSEC Safety Award for introducing industry-leading health
and fatigue management practices to the operation.
Cowal is well prepared for any challenges ahead with
a winning culture based on trust, teamwork and the
commitment to take ownership of everything we do.”
Jason Greive – Cowal General Manager
■■ Increase throughput to 9.0 – 9.5 million tonnes per
annum for improved operational efficiency
Cowal’s mining team stand proudly in front of the
new digger, the 9400 Liebherr
27
Evolution Mining Limited Annual Report 2017
Our Assets (continued)
Mungari, Western Australia, Australia
Evolution ownership:
Location:
100%
600km east of Perth, 20km west of Kalgoorlie, Australia
Ore Reserves (at 31 December 2016):
8.30Mt at 2.25g/t gold for 602koz gold
Mineral Resources (at 31 December 2016):
57.46Mt at 1.51g/t gold for 2.78Moz gold
FY18 production guidance:
120,000 – 130,000oz gold at AISC of A$990 – A$1,050/oz
The Mungari Gold Operation (Mungari) consists of
underground mining at Frog’s Leg using top-down bench
stoping with paste fill methodology, and open pit mining
from White Foil using conventional drill and blast and
load and haul methods. Mungari has been owned and
operated by Evolution since August 2015. The operation
includes a strategically located 1.7Mtpa processing plant
and has a major footprint in the world-class Kalgoorlie
region with significant potential to expand production
and extend mine life.
In FY17 Mungari produced 143,820 ounces of gold at
an AISC of A$1,143 per ounce and generated A$59.23
million in net mine cash flow. Gold production was below
guidance of 150,000 – 160,000 ounces. C1 cash costs and
AISC were above FY17 guidance of A$740 – A$800 per
ounce and A$970 – A$1,030 per ounce respectively.
Highlights achieved during the year included:
■■ Exciting results returned from aggressive resource
definition and discovery programs commenced
building momentum
■■ Resource definition drilling to advance resources
toward production successfully extended high-
grade mineralisation beyond existing resources
at Emu and Burgundy as the pipeline of regional
resources begins to be tested
■■ Discovery drilling indicates potential extensions
to Lady Agnes following our first drill program in
this area
■■ Drill and blast trials conducted in Stage 3 cutback
to increase production efficiencies generated
encouraging results for FY18
■■ Installation of a particle size analyser and second
Knelson concentrator in the plant completed in
the June quarter 2017 allowing for future plant
optimisations
■■ Introduction of larger trucks (130t class) to reduce
manning requirements and improve efficiencies at
White Foil open pit
■■ An increased focus on contractor management and
maintenance activity contributed to the sustained
cost improvements over the June 2017 Half Year
■■ Geotechnical review of the White Foil slopes and
re-optimisation of the pit design added approximately
50,000oz to Ore Reserves
■■ An underground drill drive platform was developed to
test the Mist and Rocket lodes at depth at Frog's Leg –
drilling to commence in FY18
■■ Recent drilling at White Foil intersected a larger
thickness of mineralisation than interpreted – very
encouraging for a large tonnage and low-grade
resource close to the mill
“In FY18 we plan to improve safety and operational
performance through empowerment of our teams to
work independently. We are also focussed on extending
mine life through the discovery and definition of Mineral
Resources and, ultimately, conversion to Ore Reserves.”
Simon Jessop - General Manager Kalgoorlie Region
28
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonMungari Our Assets (continued)
Cracow, Queensland, Australia
Evolution ownership:
Location:
100%
500km north-west of Brisbane, Queensland, Australia
Ore Reserves (at 31 December 2016):
1.05Mt at 5.67g/t gold for 192koz gold
Mineral Resources (at 31 December 2016):
3.29Mt at 4.94g/t gold for 522koz gold
FY18 production guidance:
85,000 – 90,000oz gold at AISC of A$1,150 – A$1,200/oz
The Cracow gold operation (Cracow) has been a
consistent and reliable producer since mining began in
2004 and has produced more than 1.1 million ounces of
gold. Although the current life of mine plan is to FY20,
the operation has a strong track record of replacing
depleted ounces. Greenfields exploration outside of
the Cracow field intensified throughout FY17 and will
continue in to FY18.
In FY17 Cracow produced 89,496 ounces of gold at
an average cash cost of A$746 per ounce and AISC of
A$1,123 per ounce and generated A$41.06 million in net
mine cash flow. Gold production exceeded guidance of
80,000 – 85,000 ounces. Cash costs and AISC were at
the lower end of guidance ranges of A$740 – A$800 per
ounce and A$1,100 – A$1,160 per ounce respectively.
Resource definition drilling at Cracow during the year
confirmed continuity of high-grade mineralisation at
Killarney. At Imperial, new high-grade intersections
were returned and will be incorporated in a maiden
resource estimate. The first phase of discovery drilling
was completed at the Walhalla and Valkyrie targets both
located within 2km of the operating footprint at Cracow.
Drilling was designed to test the concept that both
targets are high-level expressions of deeper high-grade
mineralisation below.
Productivity improvements and cost reductions achieved
during the year included:
■■ Installation of a high-intensity grind mill resulting in a
1.5% increase in recovery
■■ Improvements in mobile maintenance with rebuilds
of aging fleet and replacement strategy with new
equipment, enabled increased availability of mobile
plant which delivered an increase in tonnes to the mill
■■ Rollout of AMIP (Asset Management Improvement
Project) and standardisation of mobile fleet resulted
in a reduction of inventory in maintenance
“FY17 has delivered growth for Cracow, with an increase
in reserves and resources with the potential for further
success, thanks to dedicated efforts from our Geology
Manager, Shane Pike, and his team.
“The Cracow team continued to focus on sustainable
longevity with significant improvements in safety and
maturity in how we apply ourselves, from the day to day
functions to the long-term future planning, to deliver the
FY17 Budget.
“It is great to see that the teams are interacting and are
there to take up the load for each other. Our focus in FY18
is to continue to build the trust that our mates are on our
shoulder to ensure we deliver together, be it for a safer
environment, improved efficiency or challenge each other
on methods of operation.”
Andrew Millar – Cracow General Manager
29
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonCracow Our Assets (continued)
Mt Carlton, Queensland, Australia
Evolution ownership:
Location:
100%
150km south of Townsville, Queensland, Australia
Ore Reserves (at 31 December 2016):
4.84Mt at 4.71g/t gold for 733koz gold
Mineral Resources (at 31 December 2016):
10.43Mt at 2.92g/t gold for 979koz gold
FY18 production guidance:
100,000 – 110,000oz gold at AISC of A$680 – A$730/oz
Our long-life Mt Carlton operation commenced
commercial production in July 2013 and was the first new
gold mine opened in Queensland in more than a decade.
Initial capital was repaid by December 2016. Mt Carlton
is one of the highest grade open pit gold mines in the
world and has a current mine life out to 2025 with a low
mining strip ratio of 1.75:1 over the life of mine plan. Ore is
sourced from the V2 gold-silver-copper deposit which is
processed on site to produce a concentrate and shipped
to China for smelting. Approximately 10-15% of gold
feed is now recovered through a recently commissioned
gravity circuit prior to the flotation circuit to produce
doré gold bars which are sold to ABC Refinery in Sydney.
Mt Carlton produced 105,024 ounces of gold in FY17
exceeding guidance of 90,000 – 100,000 ounces. C1
costs of A$307 per ounce and AISC of A$622 per
ounce were both substantially below the bottom end
of FY17 guidance of A$400 – A$450 per ounce and
A$675 – A$725 per ounce respectively. The operation
generated A$91.14 million in net mine cash flow with a net
operational cash flow margin of A$902 per ounce.
Highlights achieved during the year included:
■■ Successful commissioning of the gravity recoverable
gold circuit – producing 3,000 ounce of gold doré in
the June 2017 quarter
■■ Operationally, the plant increased gold process
recovery to 90.1%, up from 88.4% in FY16
■■ With the gravity recoverable gold circuit now
operational recoveries are expected to continue to
improve to above 91.0% in FY18
■■ Commencement of studies to identify options to
reduce the impact of clay in the flotation circuit that
could lead to increased plant throughput
■■ Underground Pre-feasibility Study confirmed positive
economics for a Stage 4 pit cutback combined with
an underground operation to extract the Link Zone
extending the Life of Mine to 2025
■■ Commencement of a Definitive Feasibility Study,
which will include additional resource definition
drilling – expected to be completed in H2 FY18
■■ In the March 2017 quarter the mine responded to
the challenge posed by Tropical Cyclone Debbie
by shutting down for five days and then restarting
operations very smoothly
“FY17 was another year to be very proud of at Mt Carlton.
Backing up the exceptional result in FY16 was a real
challenge but the whole team came together to produce
another outstanding result, including increasing mine
life to FY25 with a Pre-feasibility Study confirming the
economic viability of an underground development and
Stage 4 cutback to commence in FY19.
In FY18 we will continue to improve our safety culture,
advance the Definitive Feasibility Study for the
underground and stage 4 cutback, complete a study on
ways to increase mill throughput in FY19 whilst continuing
our team’s journey in striving to go from a Good to
a Great operation.”
Richard Hay – Mt Carlton General Manager
30
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonMt Carlton 31
Evolution Mining Limited Annual Report 2017 Our Assets (continued)
Mt Rawdon, Queensland, Australia
Evolution ownership:
Location:
100%
75km southwest of Bundaberg, Queensland, Australia
Ore Reserves (at 31 December 2016):
32.69Mt at 0.83g/t gold for 873koz gold
Mineral Resources (at 31 December 2016):
50.79Mt at 0.73g/t gold for 1,186koz gold
FY18 production guidance:
105,000 – 115,000oz gold at AISC of A$850 – A$900/oz
Production from our Mt Rawdon gold operation
(Mt Rawdon) is derived from a single open pit, using
conventional drill and blast and load and haul
methodologies. The processing plant consists of primary
and secondary crushing, SAG and ball milling, followed
by conventional cyanidation leaching.
Evolution has owned and operated Mt Rawdon since
November 2011. During this time, we have implemented
many business improvements including:
■■ A move to owner operator in July 2014 – savings of
~A$9 million per year
■■ Mobile maintenance focus on condition monitoring
and component sourcing (benefiting from market
conditions)
■■ Smarter drill and blast – improved fragmentation and
plant throughput
■■ Ore (Mine to Mill) – ramping throughput up to 430
tonnes per hour and targeting 435 tonnes per hour
with the use of high energy explosive (Vistas)
■■ Waste – moved from 17.7 to 36.9bcm per metre drilled
with change to larger diameter drilling and higher
benches; and then to 70.8bcm per metre with the use
of high energy explosive (Vistas)
■■ Cyanide – reduced physical consumption by 24%
■■ Gravity circuit – installed second Knelson
Concentrator in 2012, installed leach reactor in 2013,
installed standalone Gravity cell in 2016
■■ Overall recovery increase of 1%
■■ Gravity Recoverable Gold increased from below 9% to
over 15%
The operation is one of our most reliable mines,
consistently producing around 100,000 ounces per
annum since 2002, producing around 1.6 million ounces
of gold since first production in 2001. The operation has
a strong track record of cost reductions and mine life
extensions.
Mt Rawdon performed well in FY17 achieving total gold
production of 101,331 ounces of gold at an average cash
cost of A$630 per ounce and an AISC of A$873 per
ounce and generated A$35.72 million in net mine cash
flow. Gold production exceeded guidance of 90,000
– 100,000 ounces. C1 cash costs and AISC were below
FY17 guidance of A$690 – A$770 per ounce and A$960 –
A$1,040 per ounce respectively.
“FY17 was a great year delivering above guidance gold
production at costs which were below guidance.
We continued to improve on our safety performance
with a 54% reduction in the recordable injury rate.
There is a very special culture at Mt Rawdon where our
entire team takes great pride in delivering results while
embracing innovation and improvements. Of note is our
community spirit, mateship and care for each other to
ensure we all go home safely at the end of our shift.”
Bernie Cleary – Mt Rawdon General Manager
32
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonMt Rawdon 33
Evolution Mining Limited Annual Report 2017 Our Assets (continued)
Edna May, Western Australia, Australia
Evolution ownership:
Location:
100%
350km east of Perth, Western Australia, Australia
Ore Reserves (at 31 December 2016):
8.22Mt at 1.61g/t gold for 426koz gold
Mineral Resources (at 31 December 2016):
19.37Mt at 1.36g/t gold for 848koz gold
FY18 production guidance:
90,000 – 100,000oz gold at AISC of A$1,100 – A$1,150/oz
“Our Edna May team overcame a series of challenges in
FY17. The platform for the longer term is the underground
operation which is rapidly progressing towards the first
ore horizon. Ore development and diamond drilling
to confirm a viable ongoing operation are exciting
milestones for the coming year.
“Across the site some significant steps forward have been
made with safety performance and a number of initiatives
have been identified to shift the culture and improve it
further, founded on employee wellness. Edna May hosted
the Evolution Mines Rescue Challenge, a very successful
event and a credit to the hard work of Marty McLaughlin
and his HSE team.
“We are proud of the FY17 achievements amid the hurdles
that presented themselves.”
Richard Carlton – Edna May General Manager
The Edna May gold operation (Edna May) is currently a
single open pit mining operation mined by conventional
drill and blast, load and haul methodology. A bulk mining
approach has been adopted to the extraction of remnant
high-grade reef structures and associated stockwork
mineralisation with a remaining life of mine strip ratio
of 1.8:1.
The process plant consists of a conventional carbon
in leach (CIL) process and SABC FF (SAG Mill Ball
Mill Pebble Crusher Feed Forward) circuit. The ore is
metallurgically consistent with a typical metallurgical
recovery of approximately 92%.
A portal was established and rehabilitation of an
underground decline commenced in June 2016 to access
higher grade lodes beneath the planned limits of the
open pit. The first development ore from underground is
due to commence in FY18.
Edna May produced 70,188 ounces of gold at an average
cash cost of A$1,309 per ounce and AISC of A$1,440
per ounce in FY17. Low material movement and a lack of
available ore at periods during the year resulted in full
year production lower than guidance of 80,000 – 85,000
ounces. This resulted in higher costs relative to guidance
of A$1,020 – A$1,100 per ounce and AISC of A$1,140 –
A$1,220 per ounce.
Evolution entered into a binding agreement on 17 September 2017 with Ramelius Resources Limited and Ramelius
Operations Pty Ltd (a wholly-owned subsidiary of Ramelius) to sell the Edna May gold mine to Ramelius Operations
Pty Ltd. The transaction closed on 3 October 2017.
34
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonEdna May Our Assets (continued)
Ernest Henry, Queensland, Australia
Evolution economic interest:
100% of gold and 30% of copper and silver produced over an 11-year life of mine plan
Location:
35km north east of Cloncurry, Queensland, Australia
Ore Reserves (at 31 December 2016):
0.96Moz Au, 182kt Cu
Mineral Resources (at 31 December 2016): 1.72Moz Au, 315kt Cu
FY18 production guidance:
85,000 – 90,000oz gold at AISC of A$(200) – A$(150)/oz
The Ernest Henry copper-gold operation is a large-
scale, long-life, copper-gold asset operated by Glencore.
Evolution acquired an economic interest in Ernest Henry
that will deliver 100% of future gold and 30% of future
copper and silver produced from an agreed life of mine
area. Outside of the life of mine area Evolution will have a
49% interest in future copper, gold and silver production
from Ernest Henry. The Ernest Henry transaction was
completed on 1 November 2016 and has materially
improved the quality and longevity of the Group’s
portfolio and reduced the cost profile.
Ernest Henry is an underground mining operation
employing a sub-level caving ore extraction method.
There is also an underground primary crusher and ore
handling system. Ore is brought to surface via a 1km
hoisting shaft. Glencore recently invested approximately
A$600 million in expanding the underground mine to
more than 6.4 million tonnes per annum.
Copper and gold are recovered from the ore using
traditional grinding and flotation methods in the
concentrator.
The plant has a current processing rate of ~6.4 million
tonnes per annum (8.5Mtpa capacity and scalable to
~11Mtpa). The concentrator incorporates grinding (four
mills), conventional flotation and dewatering. A single
copper-gold-silver concentrate is produced by a rougher
and a three-stage cleaning circuit. The concentrate is
treated at Glencore’s Mt Isa smelter (~150km trucking
distance) and metal is refined at Glencore’s
Townsville refinery.
For the eight months of attributable production in FY17
total gold produced was 60,259 ounces at a negative
average C1 cash cost of A$(593) per ounce and a
negative AISC of A$(361) per ounce generating a net
mine cash flow of A$81.78 million. Gold production
exceeded guidance of 55,000 – 60,000 ounces. AISC
was substantially lower than the guidance range of A$100
– A$150 per ounce due to lower operating costs, higher
gold and copper production and a higher than planned
copper price.
35
Evolution Mining Limited Annual Report 2017DarwinPerthMelbourneSydneyBrisbaneTownsvilleRockhamptonErnest Henry 36
Evolution Mining Limited Annual Report 2017 Innovation and Business Improvement
CASE STUDY: Drone
technology at Mt Rawdon
Faster, more accurate pit surveys
Improved safety of our people –
less time in the sun, less walking
on broken ground
Current applications:
■■ weekly pit models/Imagery
■■ dump pickups
■■ monthly stockpile volumes
■■ blast filming
■■
■■
aerial photography
as-constructed survey pickups
and surface data collection
Other potential uses include:
■■
■■
inspections eg environmental,
equipment, powerline, and weir
emergency response assistance
and incident capture
Whether it is the uptake of drones across all our operations, the
adoption of seismic exploration methodologies, the installation of
collision avoidance and fatigue monitoring systems or the actions of our
workforce to improve through our Act like an Owner program, Evolution
strives to continually improve through our direct actions and the use of
targeted technological advancements.
Our Leadership Program complements this by challenging our personnel
to work collaboratively across work functions and locations to develop
improvement initiatives.
In FY17 we have worked collaboratively with the Western Australian
School of Mines to test and develop haul road construction parameters
for our Mt Rawdon, Mt Carlton, Edna May and Mungari (White Foil)
open pit operations. This has led to significant improvements in reduced
production downtime due to adverse weather conditions.
At Cowal test work has shown the potential of treating via a separate
circuit, the tail from the flotation circuit. The challenge in this process is
the treatment of very low grades, but the test work has shown that the
flotation tails is amenable to using conventional CIL processes.
The impact of this process is to increase the overall gold recovery
from the current 83.3% to 87.8%.
We have consistently replaced Ore Reserves at our operations through
improved geological understanding and reduction of underlying costs.
In FY18 we will be looking to further complement our geological work
with improved efficiencies and operational improvement. This will be
based around:
■■ Reducing mining dilution in our underground operations, including
the trialling of new technology adopted from the exploration drilling
industry to improve production drilling accuracy
■■
■■
Improving open pit productivity and efficiency including assessing
better data capture and analysis
Improving processing performance through reducing energy per
ounce produced, process instrumentation, evaluation of automation
options, metallurgical recovery and plant throughput
37
Evolution Mining Limited Annual Report 2017
FY17 Production summary1
FY17
Units
Cowal Mungari
UG lat dev – capital
UG lat dev - operating
Total UG lateral
development
UG ore mined
UG grade mined
OP capital waste
OP operating waste
OP ore mined
OP grade mined
Total ore mined
Total tonnes processed
Grade processed
Recovery
Gold produced
Silver produced
Copper produced
Gold sold
Achieved gold price
Silver sold
Achieved silver price
Copper sold
m
m
m
kt
g/t
kt
kt
kt
g/t
kt
kt
g/t
%
oz
oz
t
oz
A$/oz
oz
A$/oz
t
Achieved copper price
A$/t
Cost Summary
Mining
Processing
Administration and
selling costs
A$/prod oz
A$/prod oz
A$/prod oz
Stockpile adjustments A$/prod oz
By-product credits
A$/prod oz
C1 Cash Cost
C1 Cash Cost
Royalties
Gold in Circuit and
other adjustment
Sustaining capital2
Reclamation and other
adjustments
Administration costs3
A$/prod oz
A$/sold oz
A$/sold oz
A$/sold oz
A$/sold oz
A$/sold oz
A$/sold oz
All-in Sustaining Cost4 A$/sold oz
A$/sold oz
Major project capital
Discovery
All-in Cost4
Depreciation &
Amortisation5
A$/sold oz
A$/sold oz
A$/prod oz
263,015
283,112
143,820
28,773
105,024
478,964
101,331
162,304
0
0
1,650
0
70,188
23,679
0
89,496
38,915
0
1,633
283,112
1,616
28,773
1,664
470,037
1,630
162,304
1,714
23,679
1,634
38,915
265,778
143,019
104,801
99,744
67,836
88,866
36,790
10,489
817,323
0
0
0
0
0.00
0
2,093
10,203
1.23
10,203
7,171
1.37
83.2
1,486
2,476
3,962
693
4.77
2730
6,461
1,044
1.20
1,737
1,711
2.81
93.1
Mt
Carlton
0
Mt
Rawdon
0
Edna
May
0
0
0
0
0.00
2,491
767
1,338
3.88
1,338
816
5.33
90.1
0
0
0
0.00
5,497
5,561
5,005
0.90
5,005
3,351
1.06
88.5
0
0
0
0.00
2,790
4,739
2,082
1.14
2,082
2,580
0.91
92.8
24
0
0
233
375
116
(86)
(25)
613
606
50
2
162
13
833
102
6
941
410
23
0
0
554
258
91
56
(5)
954
959
41
(17)
152
7
1,143
105
123
1,371
620
24
1,592
7,284
118
268
214
(77)
(216)
307
308
132
12
146
25
622
133
8
762
431
24
0
0
379
400
98
(209)
(38)
630
640
86
(15)
143
20
873
191
1
24
0
0
594
607
163
(47)
(8)
1,309
1,354
74
(35)
33
14
1,440
420
1
Cracow
1,864
1,352
Ernest
Henry
437
2,951
3,216
3,388
4,378
0.55
0
0
0
0.00
4,378
4,364
0.56
79.0
60,259
49,218
13,306
1,642
50,433
23
13,306
7,638
(1,706)
(593)
(604)
140
102
529
5.55
0
0
0
0.00
529
540
5.45
94.6
24
0
0
389
219
122
27
(10)
746
751
91
(17)
290
8
1,123
64
21
(361)
0
0
Pajingo
Group
503
222
725
62
4.45
0
0
0
0.00
62
75
4.79
95.4
4,290
7,001
11,290
5,662
1.58
13,508
19,620
19,672
1.31
25,334
20,607
1.49
88.0
10,991
844,124
10,429 1,075,393
0
14,956
1,644
10,429
1,641
1,067,681
26
0
0
418
252
149
102
(25)
897
940
97
(102)
473
14
1,422
136
19
24
14,898
7,600
356
338
146
(52)
(164)
625
628
76
(9)
159
13
38
907
132
35
1,065
1,862
1,208
(361)
1,577
1,071
490
528
417
1,095
790
523
1. All metal production is reported as payable. Ernest Henry mining and processing statistics are in 100% terms while costs represent
Evolution’s costs and not solely the cost of Ernest Henry’s operation
2. Sustaining Capital includes 60% UG mine development capital. Group Sustaining Capital includes A$1.23/oz for Corporate capital expenditure
3.
4. For AISC and AIC purposes, Ernest Henry Q2 and Q3 production of 36,503oz is classified as sold, adding to actual group sales of
Includes Share Based Payments
780,533oz and Ernest Henry actual Q4 gold sales of 22,720oz for a total of 839,757oz
5. Group Depreciation and Amortisation includes non-cash Fair Value Unwind Amortisation of $50-$56/oz in relation to Cowal ($84–95/oz)
and Mungari ($140-$152/oz) and Corporate Depreciation and Amortisation of A$1/oz
38
Evolution Mining Limited Annual Report 2017 Our gold from the Mungari and Edna May
operations is refined at the Perth Mint
refinery. Gold from Cowal, Mt Rawdon and
the gravity production from Mt Carlton
operation is refined by ABC Refinery in
Sydney. The concentrate from Mt Carlton
operation is shipped to a smelter in the
Shandong province in China.
Cracow plant at night
Forward looking statements
This report prepared by Evolution Mining Limited (or “the Company”) includes forward looking statements. Often, but
not always, forward looking statements can generally be identified by the use of forward looking words such as “may”,
“will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may
include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production
or construction commencement dates and expected costs or production outputs.
Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause
the Company’s actual results, performance and achievements to differ materially from any future results, performance
or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange
fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative
nature of exploration and project development, including the risks of obtaining necessary licences and permits and
diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which
the Company operates or may in the future operate, environmental conditions including extreme weather conditions,
recruitment and retention of personnel, industrial relations issues and litigation.
Forward looking statements are based on the Company and its management’s good faith assumptions relating to the
financial, market, regulatory and other relevant environments that will exist and affect the Company’s business and
operations in the future. The Company does not give any assurance that the assumptions on which forward looking
statements are based will prove to be correct, or that the Company’s business or operations will not be affected in any
material manner by these or other factors not foreseen or foreseeable by the Company or management or beyond the
Company’s control.
Although the Company attempts and has attempted to identify factors that would cause actual actions, events or results
to differ materially from those disclosed in forward looking statements, there may be other factors that could cause
actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events
are beyond the reasonable control of the Company. Accordingly, readers are cautioned not to place undue reliance on
forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to
any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information
the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to
advise of any change in events, conditions or circumstances on which any such statement is based.
39
Evolution Mining Limited Annual Report 2017 Outlook for FY18
Following the completion of the sale of Edna May in early
October 2017, Evolution is forecasting FY18 Group gold
production of 750,000 – 805,000 ounces of gold. Group
C1 cash costs are expected to be in the range of A$550 –
A$610 per ounce and Group AISC are expected to be in
the range of A$820 – A$870 per ounce.
Using the average AUD:USD exchange rate of 0.7546 for
the 12 months to 30 June 2017, Evolution’s forecast FY18
costs are among the lowest of global gold producers and
equate to C1 cash costs of US$415 – US$460 per ounce
and AISC of US$620 – US$655 per ounce.
Production on an operation-by-operation basis continues
to show the benefits of a diverse portfolio. A full year of
production at Ernest Henry along with higher production at
Mt Rawdon, Cracow and Edna May due to generally higher
grades and recoveries offset expected lower production at
Cowal and Mungari due to planned lower grades.
Investment in sustaining capital in FY18 is forecast to be
in the range of A$95.0 – A$120.0 million. The majority
of the investment will be at Cowal with lifts planned on
both the southern and northern tails facilities and the
possible acquisition of a fleet bringing tails facility work
in house. Investment in tails facilities will also take place
at Mt Carlton, Mt Rawdon and Mungari. Due to mine life
extensions at Mt Carlton and Cracow investment will be
made on refurbishment or replacement of mobile fleets.
Investment in growth (major project) capital and
exploration is additional to the costs included in AISC.
Investment in major capital in FY18 is forecast to be in
the range of A$170.0 – A$205.0 million. The bulk of
the major project capital investment is associated with
expansion projects at Cowal with mine development
of A$45.0 – A$50.0 million and float tails leach project
investment of A$30.0 – A$35.0 million. The balance of
Cowal major project investment relates to start-up capital
for Stage H cutback and the plant expansion study. Major
project capital investment at Mt Carlton, Mungari and Mt
Rawdon relates predominantly to mine development.
Exploration investment is expected to total
approximately A$20.0 – A$30.0 million with Mungari
receiving the largest allocation of the investment in
FY18 at A$10.0 – A$12.0 million.
FY18 AISC guidance of A$820 – A$870 per ounce is
lower than the updated three-year outlook issued on
13 September 2016 of A$840 – A$900 per ounce
due to the sale of Edna May reducing FY18 AISC by
approximately A$30 per ounce. The favourable impact
on AISC of a full year of production from Ernest Henry
and a higher copper price assumption are being negated
by lower production at Cowal and Mungari; higher power
costs across the group (adding A$10 – A$20 per ounce);
and additional sustaining capital investment as
mentioned above.
A breakdown of production, costs, capital forecasts,
depreciation and amortisation, resource definition and
discovery expenditure is provided in the table below.
FY18 Guidance
Gold production
(oz)
C1 cash costs1 (A$/
oz)
All-in sustaining
cost1 (A$/oz)
Sustaining Capital
(A$M)
Major Capital
(A$M)
950 – 1,000
52.5 – 57.5
Cowal
Mt Carlton
Mt Rawdon
Mungari
Cracow
235,000 - 245,000
100,000 - 110,000
105,000 - 115,000
120,000 - 130,000
660 – 720
420 – 470
670 – 720
860 – 910
85,000 - 90,000
810 – 860
680 – 730
850 – 900
990 – 1,050
1,150 – 1,200
Ernest Henry
85,000 - 90,000
(500) – (300)
(200) – (150)
20,000 - 25,000
1,300 – 1,330
1,500 – 1,550
5 – 10
5 – 10
10 – 15
10 – 12.5
10 – 15
<5
85 – 100
17.5 – 22.5
20 – 22.5
32.5 – 40
10 – 15
5
750,000 - 805,000
550 – 610
32 – 37
820 – 870
95 – 120
170 – 205
Edna May
Corporate
Group
1. A copper price assumption of A$7,700/t has been used for by-product credits
40
Evolution Mining Limited Annual Report 2017
History of performance - key indicators
GROUP GOLD PRODUCTION
(ounces)
GROUP ALL-IN SUSTAINING COSTS
(A$/ounce)
MINERAL RESOURCES & ORE RESERVES
(million ounces)
SAFETY
Total recordable injury frequency rate (TRIFR)
OPERATING MINE CASH FLOW
(A$/million)
DIVIDENDS DECLARED
(cents per share)
UNDERLYING PROFIT AFTER TAX
(A$/million)
GROUP EBITDA MARGIN
(%)
Note:
Production from FY12-FY15 was gold equivalent ounces. Gold equivalent is defined as gold plus payable silver from the A39 deposit at Mt Carlton.
FY16 will be gold ounces
* Attributable Au eq ounces
41
Evolution Mining Limited Annual Report 2017392,918 427,703 437,570 803,476 844,124 FY13FY14FY15FY16FY177,6915,7005,01213,04314,178!$$$#"$$$#"$$$#%$$$#&$$$#'$$$#($$$#""$$$#%"$$$#&"FY13FY14FY16FY173,5702,6252,2375,7476,990!$$$#"$$$#"$$$#%$$$#&$$$#'$$$#($$$#""$$$#%"$$$#&"FY15FY13FY14FY15FY16FY17A$168MA$245MA$306MA$628MA$707M!"#$$#($#)$#*$#FY13FY14FY15FY16FY1744.450.0106.1134.5206.6!"#%#$%#&$#FY13FY14FY15FY16FY171133404649!"!#!$!%!&!'!FY13FY14FY15FY16FY1712235!#"!$#"$%#"%&#"&'#"'#FY13FY14FY15FY16FY1719.912.09.69.78.0!"$!$"A$1,228/ozA$1,083/ozA$1,036/ozA$1,014/ozA$907/oz!"#$!"#%!"#&!"#'!"#(FY13FY14FY15FY16FY17A$1,228/ozA$1,083/ozA$1,036/ozA$1,014/ozA$907/oz!"#$!"#%!"#&!"#'!"#(FY13FY14FY15FY16FY17A$1,228/ozA$1,083/ozA$1,036/ozA$1,014/ozA$907/oz!"#$!"#%!"#&!"#'!"#(FY13FY14FY15FY16FY17A$1,228/ozA$1,083/ozA$1,036/ozA$1,014/ozA$907/oz!"#$!"#%!"#&!"#'!"#(FY13FY14FY15FY16FY17A$1,228/ozA$1,083/ozA$1,036/ozA$1,014/ozA$907/oz!"#$!"#%!"#&!"#'!"#(FY13FY14FY15FY16FY17 42
Evolution Mining Limited Annual Report 2017 Discovery
Developing a pipeline of high-quality exploration projects
Evolution Mining is committed to growth through
discovery and has assembled a world-class team of
geoscientists with global experience across a broad
range of deposit styles. Our tenements are located in
well-endowed geologic terranes where we believe there
are opportunities to continue to discover quality
mineral deposits.
Our discovery focus is designed to play to our strengths.
We are prioritising exploration in Australia for epithermal
(Cracow and Mt Carlton style mineralisation) and
orogenic lode gold deposits (Mungari and Edna May
style mineralisation). Our landholding encompasses
approximately 10,000km2 which includes 2,500km2 in the
Tennant Creek joint venture with Emmerson Resources.
Our portfolio includes brownfield opportunities around
existing assets along with several greenfield projects in
Australia and New Zealand.
Discovering quality deposits is becoming more
challenging in Australia. As a result, we are searching
deeper under cover more than ever. We invest selectively
in research and development where we feel results will
enable us to compress discovery timelines. Themes that
we currently sponsor include: enhancing our knowledge
of target models to guide selection of district and
camp scale search spaces; analysis of big databases;
and developments in geophysics (seismic, airborne
acquisition of induced polarisation measurements,
utilisation of drones).
We also believe very strongly in leveraging external
partnerships. We look for creative business relationships
with junior explorers, consultants and entrepreneurs and
whereby we will structure fit for purpose commercial
arrangements (eg equity investments, joint ventures,
strategic alliances and grubstakes) to meet the needs of
all stakeholders.
Pine Creek
>20Moz
(Lode Au)
Tennant Creek
>5Moz
(Iron Oxide
Copper Gold)
Mt Isa
>17Moz
(Iron Oxide
Copper Gold)
Tanami
>30Moz
(Lode Au)
Telfer
>30Moz
Yilgarn
>400Moz
(Lode Au)
Charter Towers
>35Moz
(Epithermal,
Volcanic hosted
massive sulphide)
New England
>15Moz
(Intrusion related
gold systems,
Porphyry &
Epithermal)
BRISBANE
PERTH
Gawler
>100Moz
(Iron Oxide
Copper Gold)
SYDNEY
Lachlan
>80Moz
(Porphyry &
Epithermal)
Victoria
>40Moz
(Slate Belt Au)
Gold endowment
>5Moz Au
1Moz - 5Moz Au
>0.5Moz - 1Moz Au
“In FY 18 we are aiming to continue our strong previous performance of converting resources to reserves across our sites.
A key objective for the Discovery team is to develop depth and quality across our exploration portfolio.”
Glen Masterman, VP Discovery and Chief Geologist
43
Evolution Mining Limited Annual Report 2017 Discovery (continued)
FY17 Exploration highlights
■■ Highly successful resource definition drilling programs
resulted in an increase in Ore Reserves of 1.14 million
ounces and extended the average Group mine life to
more than eight years
■■ Extensive resource definition drilling completed
at Cowal’s E42 Stage H cutback contributed to
significant mine life extension out to 2032 and step-
out drilling outside of Stage H commenced
■■ At Mt Carlton, drill testing of the West, East and Link
zones outside of the Mt Carlton V2 open pit returned
high-grade intercepts and resulted in increases
to resources and reserves including the maiden
estimation of an underground reserve
■■ Aggressive discovery and resource definition
programs across Mungari tenements are getting
traction at Emu, Burgundy, Blue Funnel and Lady
Agnes
■■ Resource definition drilling in 2016 again resulted in
mine life extension at Cracow
■■ New resource definition drilling at Cracow confirmed
continuity of high-grade mineralisation at Killarney
and new high-grade intersections were returned at
Imperial
■■ At the Tennant Creek joint venture, drilling
was completed at Edna Beryl with the aim of
understanding the origin of delineated gravity
anomalies surrounding prospective ironstone units
that host high-grade mineralisation in the field
■■ FY18 exploration budget of A$20 – A$30 million
44
Evolution Mining Limited Annual Report 2017 Discovery (continued)
Cowal
E42 Stage H resource definition drilling
The Stage H resource definition drilling program
delivered a significant increase in Ore Reserves at
our cornerstone operation and added eight years to
Cowal’s mine life. Drilling in FY17 was completed ahead
of schedule and below budget and had a high rate of
reserve conversion at a cost of less than A$28 per ounce.
E42 exploration diamond drilling
In FY17 second half, our attention focussed on step-out
drilling to the southwest of the E42 open pit following
approvals for gated capital.
The exploration program in the Beagle zone, between
E41 and E42, was completed with a total of three
diamond holes for 1,746m drilled. The program tested
for the continuation of mineralisation outside and to
the southeast of the E42 Stage H pit. Results returned
mineralised intercepts at similar grades to those
encountered in the Stage H drilling, however, across
narrower intervals. Work is being done to assess the
potential to extend the mineralised zone closer to the
surface. An update of the geological interpretation
between E41 and E42 will be completed in the December
2017 half-year.
Marsden
Marsden is a copper-gold porphyry deposit located
immediately to the south-east of Evolution’s Cowal gold
mine in New South Wales. Marsden is the nearest known
sizeable mineral deposit to the Cowal operation outside
the Cowal tenement package and as such has strategic
value to Evolution’s exploration activities in the region.
The Marsden deposit hosts an Indicated and Inferred
Mineral Resource of 180 million tonnes grading 0.20g/t
Au and 0.38% Cu containing 1.1 million ounces of gold and
0.67 million tonnes of copper.
Mungari
Resource definition and discovery programs
building momentum
■■ Major footprint in the world-class Kalgoorlie region
■■ Significant potential to expand production and extend
mine life
■■ Strategically located 1.7 million tonnes per annum
processing plant
■■ Mungari Regional Resources 2.78 million ounces gold
– open pit resources constrained to ensure quality
■■
150km of drilling completed in FY17 – similar level
planned in FY18
■■ Doubled drill metres and built up discovery and
resource definition teams
■■ Consolidated and developed targets pipeline
■■ Recent drilling at Emu and Burgundy extended high-
grade mineralisation outside of existing resources
reinforcing the potential for future resource growth
■■ Discovery drilling at the Lady Agnes target in the
Ora Banda camp identified a potential extension of
mineralisation along strike from the historic Bent Tree
open pit mine
■■ At Blue Funnel South, a 600m long and 120m wide
gold anomaly has been identified in aircore drilling
adjacent to the Zuleika Shear Zone
Expanding the Mineral Resource base –
regional resource definition
We hold a major footprint in the world-class Kalgoorlie
region with around 1,060km2 across 349 tenements
including exposure to approximately 48km and 70km of the
Zuleika and Kunanalling Shear zones respectively (Figure 1).
Drill testing of our regional pipeline of resources to
improve the asset portfolio gathered momentum in FY17.
Infill and step-out drilling at Kintore, Castle Hill (Mick
Adam), Carbine North, Cutters Ridge, Burgundy, and Red
Dam was completed to evaluate and prioritise resources
and to advance them through the project pipeline to Ore
Reserves. Drilling was also undertaken at Emu, Rayjax
and Blue Funnel. Results reinforce the potential for future
resource and reserve growth at Mungari and Evolution
is committed in FY18 to matching similar levels of
exploration expenditure as in FY17.
At Emu, drilling confirmed structural controls on
mineralisation delineated previously in shallow reverse
circulation (RC) drilling. A number of holes returned gold
intervals and extended mineralisation well below the base
of the A$1,800/oz pit shell.
Drilling at Burgundy aimed to test the depth potential
of a high-grade plunge between the A$1,350/oz and
A$1,800/oz pit shells and increase resource confidence.
A new zone of mineralisation (~18m wide) was intersected
in hole BRC076 in the footwall below the A$1,800/oz pit
shell. The new lode is open along strike and down dip
with potential to expand the existing resources.
45
Evolution Mining Limited Annual Report 2017 Discovery (continued)
Figure 1: Mungari
operations Mineral
Resources
Mineral Resource information is
extracted from the report entitled
“Annual Mineral Resources and
Ore Reserve Statement” released
to ASX on 20 April 2017 and is
available to view on
www.asx.com.au Mineral
Resources and Ore Reserves are
depleted to 31 December 2016
Near mine resource definition
Opportunities for extensions to mineralisation at Frog’s Leg exist at the Mist and Rocket lodes. Approximately 13km
of in-mine underground drilling is scheduled for FY18 and drilling into lower Mist has commenced.
Recent resource definition at White Foil below the north end of the open pit intersected a broad zone of mineralisation
of 80.2m (64.2m etw) grading 1.98g/t Au which widened the interpretation of the main zone, extended continuity of
mineralisation, and provided key data which has resulted in a change to the geological interpretation. Further drilling is
underway and a scoping study is to be revisited evaluating the potential for an underground operation based upon
a large, bulk low-grade deposit close to the processing plant.
Figure 2: Illustrating a change in the White Foil geological interpretation
46
Evolution Mining Limited Annual Report 2017
Discovery (continued)
Hunting for our next discovery
Resource definition drilling
FY17 saw drill testing of more than 20 targets at various
stages of development. Investment in our early stage
pipeline is delivering results with projects demonstrating
potential. Highlights include results from Tadpole (south
of Frog’s Leg), Blue Funnel South (Broad’s Dam) and
near Bent Tree (Ora Banda). Diamond drilling at Tadpole
confirmed an incremental extension of the favourable
mine corridor geology south of Frog’s Leg. Aircore
drilling at Blue Funnel South delineated a large low-level
gold anomaly in an area east of the Zuleika Shear
Zone not previously explored for gold mineralisation.
At Ora Banda, a recent RC drilling program encountered
mineralisation at Lady Agnes, along strike from the
historical Bent Tree mine.
Mungari is well positioned for a new discovery with
continued investment in the early stage exploration
strategy and many targets to continue to develop
and assess.
Mt Carlton
Opportunity for a pit extension and
underground options to the V2 orebody
At Mt Carlton, further drill testing of the West, East
and Link zones outside of the Mt Carlton V2 open pit
returned high-grade intercepts and resulted in increases
to Mineral Resources and Ore Reserves including the
maiden estimation of an Underground Ore Reserve.
A comprehensive resource definition drilling program
is ongoing targeting further down-dip extensions to
mineralisation and infill drill spacing (25m x 25m) to
improve Resource model confidence.
Cracow
Regional exploration
Exploration at Cracow focussed on regional targets
outside of the Cracow Gold Field in FY17. Exploration
tenement EPM26311 located immediately north of the
current Cracow exploration lease (EPM15981) was
granted, which contained extensions of the prospective
Camboon Andesite. This unit hosts low sulphidation high-
grade veins at Cracow, and ground reconnaissance within
this tenement will commence early FY18.
Resource definition drilling in FY17 focussed on
Coronation, Baz, Killarney, Imperial, Denmead, and Griffin.
Infill and extensional drilling at Coronation resulted in
the extension of the northern limits of mineralisation
into Imperial. This in turn supported the potential for
economic mineralisation to be defined at Imperial, with
drilling undertaken to quantify a maiden resource at this
area of the mine.
Extensional drilling north of the parallel lodes of Phoenix
and Griffin confirmed mineralisation in this location, with
the potential of these lodes linking with the Baz and
Crown ore bodies to the north respectively. In addition,
this program identified a mineralised structure east of
Griffin which warrants further drilling definition.
Drilling completed at Killarney infilled the existing high-
grade Inferred Resource at this location to an Indicated
Resource categorisation drill spacing.
The best results returned from resource definition drilling
completed at Cracow in FY17 were:
■■
■■
■■
■■
19.05m (16.67m etw) grading 10.68g/t Au
(CNU106) – Coronation
15.40m (14.34m etw) grading 6.26g/t Au
(CNU130) – Coronation
13.00m (11.13m etw) grading 14.88g/t Au
(KLU006) – Killarney
10.95m (10.82m etw) grading 10.10g/t Au
(KLU014) – Killarney
■■ 5.10m (4.42m etw) grading 18.14g/t Au
(BZU012) – Baz
Tennant Creek
(earning 65% in Stage 1)
At the Tennant Creek joint venture, framework drilling
was completed at Edna Beryl with the aim determining
the origin of the gravity anomaly potentially associated
the presence of favourable ironstone host rocks. Drilling
intersected mainly haematitic shales and minor quartz-
bearing structures and associated chlorite alteration.
Emmerson Resources recently announced the
commencement of small-scale production under a
tribute agreement by an operator specialising in small
underground mining operations (refer Emmerson
Resources' ASX release 23 June 2017). The tribute
arrangement relates to a 3D envelope surrounding shallow
oxide mineralisation. Drilling sponsored by Evolution at
Edna Beryl has been designed to test extensions beyond
this envelope with the aim of identifying a material
resource target that may eventually develop into a
commercial-scale mining opportunity for the partners.
47
Evolution Mining Limited Annual Report 2017 Discovery (continued)
South Gawler (Evolution earning up to 80%)
Evolution entered into an earn-in joint venture agreement with Menninnie Metals Pty Ltd, a wholly-owned subsidiary of
Terramin Australia Limited (ASX:TZN) (“Terramin”), over the South Gawler gold-copper project, a greenfields exploration
project in the northern Eyre Peninsula of South Australia, approximately 320km northwest of Adelaide.
The primary target at the South Gawler Project is an Iron Oxide Copper Gold (“IOCG”) breccia deposit beneath shallow
to deep cover. The larger part of the project area has seen limited modern exploration and has only recently been
recognised as having potential to host IOCG deposits.
Exploration results have been extracted from the reports entitled “Quarterly Report for the period ending September 2016”, “Quarterly Report for the period
ending December 2016”, and “Quarterly Report for the period ending June 2017” released to the ASX on 17 October 2016, 25 January 2017, and July 2017
respectively and available to view on www.asx.com.au. Note: Reported intervals are down hole widths as true widths are not currently known. An estimated true
width (etw) is provided
48
Evolution Mining Limited Annual Report 2017 Mineral Resources and Ore Reserves
Group Ore Reserves
Group Mineral Resources
Group Ore Reserves as at 31 December 2016 are estimated
at 6.99 million ounces of gold and 212,000 tonnes of
copper compared with the 31 December 2015 estimate of
5.85 million ounces of gold and 16,000 tonnes of copper.
Highly successful resource definition drilling programs
totalling 178,380 drilled metres in 2016 resulted in all of
Evolution’s six 100%-owned operations reporting an increase
in Ore Reserves prior to mining depletion. This focus
on extending the average mine life of its asset base has
resulted in significant year-on-year improvements to mineral
inventory with an average Group reserve life now above
eight years. Evolution is committed to building a sustainable
business that prospers through the cycle and has therefore
used an unchanged and conservative gold price assumption
of A$1,350 per ounce to estimate Group Ore Reserves.
Ore Reserves highlights
■■ Gold Ore Reserves increased by 1.14 million ounces
(19%) to 6.99 million ounces after accounting for
mining depletion of 913,000 ounces
■■ Copper Ore Reserves increased by 196,000 tonnes to
212,000 tonnes after accounting for mining depletion
of 3,225 tonnes
Group Mineral Resources as at 31 December 2016 are
estimated at 14.18 million ounces of gold and 1.03 million
tonnes of copper compared with the estimate at 31 December
2015 of 14.01 million ounces of gold and 28,000 tonnes of
copper. This represents a net increase of 163,000 ounces after
accounting for mining depletion of 913,000 ounces of gold.
Mineral Resources highlights
■■ Gold Mineral Resources increased by 163,000 ounces to
14.18 million ounces after accounting for mining depletion
■■ Copper Mineral Resources increased by 1.00 million
tonnes to 1.03 million tonnes after accounting for
mining depletion
The Group Mineral Resource Statement as at 31 December
2016 is reported inclusive of Ore Reserves and include all
exploration and resource definition drilling information up
to 31 December 2016 and have been depleted for mining
to 31 December 2016.
Mineral Resources and Ore Reserves results have been extracted from the report entitled "Annual Mineral Resources and Ore Reserves Statement" released to the
ASX on 20 April 2017 and available to view on www.asx.com.au
Commodity Price Assumptions
Commodity price assumptions used to estimate the
December 2016 Mineral Resources and Ore Reserves are
unchanged for gold and silver to those used previously
(December 2015 Mineral Resources and Ore Reserves):
Evolution entered into a binding agreement on
17 September 2017 with Ramelius Resources Limited and
Ramelius Operations Pty Ltd (a wholly-owned subsidiary
of Ramelius) to sell the Edna May gold mine to Ramelius
Operations Pty Ltd. The transaction closed on
3 October 2017.
■■ Gold: A$1,350/oz (A$1,350/oz) for Ore Reserves,
A$1,800/oz (A$1,800/oz) for Mineral Resources
■■ Silver: A$20.00/oz (A$20.00/oz) for Ore Reserves,
A$26.00/oz (A$26.00/oz) for Mineral Resources
■■ Copper: A$6,000/t (A$6,000/t) for Ore Reserves,
A$9,000/t (A$6,000/t) for Mineral Resources
Changes since 31 December 2016 Mineral
Resources and Ore Reserves Statement
Evolution is not aware of any new information or data that
materially affects the information contained in the Annual
Mineral Resource and Ore Reserve Statement 31 December
2016 other than changes due to normal mining depletion
during the six months ended 30 June 2017.
JORC 2012 and ASX Listing Rules Requirements
The Mineral Resources and Ore Reserves statement
included with this announcement has been prepared in
accordance with the 2012 Edition of the “Australasian Code
for reporting of Exploration Results, Mineral Resources and
Ore Reserves” (the JORC Code 2012).
Group Mineral Resources and Ore Reserves summaries
are tabulated on the following pages. Full details of the
December 2016 Group Mineral Resource and Ore Reserve
statement are provided on the Company website
www.evolutionmining.com.au.
VALUE CREATION FROM PORTFOLIO MANAGEMENT OVER THE PAST TWO YEARS
MINERAL RESOURCES (Moz)
ORE RESERVES (Moz)
49
Evolution Mining Limited Annual Report 20175.0A$907/ozDEC-14A$1,014/oz14.2!"#'!"#(FY16A$1,014/oz!"#'!"#(FY16DEC-16A$1,083/ozA$1,036/oz2.2A$907/ozDEC-14A$1,083/ozA$1,036/ozA$1,014/oz7.0!"#%!"#&!"#'!"#(FY14FY15FY16A$1,083/ozA$1,036/ozA$1,014/oz!"#%!"#&!"#'!"#(FY14FY15FY16DEC-165.0A$907/ozDEC-14A$1,014/oz14.2!"#'!"#(FY16A$1,014/oz!"#'!"#(FY16DEC-16A$1,083/ozA$1,036/oz2.2A$907/ozDEC-14A$1,083/ozA$1,036/ozA$1,014/oz7.0!"#%!"#&!"#'!"#(FY14FY15FY16A$1,083/ozA$1,036/ozA$1,014/oz!"#%!"#&!"#'!"#(FY14FY15FY16DEC-16 Mineral Resources and Ore Reserves (continued)
Competent Persons Statement
The information in this statement that relates to the Mineral Resources and Ore Reserves listed in the table below is
based on, and fairly represents, information and supporting documentation prepared by the Competent Person whose
name appears in the same row, who is employed on a full-time basis by Evolution Mining Limited and is a member of the
institute named in that row. Each person named in the table below has sufficient experience which is relevant to the style
of mineralisation and types of deposits under consideration and to the activity which he has undertaken to qualify as a
Competent Person as defined in the JORC Code 2012. Each person named in the table below consents to the inclusion in
this report of the matters based on their information in the form and context in which it appears.
Evolution employees acting as a Competent Person may hold equity in Evolution Mining Limited and may be entitled
to participate in Evolution’s executive equity long-term incentive plan, details of which are included in Evolution’s FY17
Remuneration Report. Annual replacement of depleted Ore Reserves is one of the performance measures of Evolution’s
long-term incentive plans.
Activity
Competent Person
Institute
Cowal Mineral Resource
Michael Andrew
Australasian Institute of Mining and Metallurgy
Cowal Ore Reserve
Jason Floyd
Australasian Institute of Mining and Metallurgy
Mungari Mineral Resource
Andrew Engelbrecht
Australasian Institute of Mining and Metallurgy
Mungari Ore Reserve
Matt Varvari
Australasian Institute of Mining and Metallurgy
Mungari Regional Mineral Resource
Andrew Engelbrecht
Australasian Institute of Mining and Metallurgy
Mungari Regional Ore Reserve
Matt Varvari
Australasian Institute of Mining and Metallurgy
Mt Carlton Mineral Resource
Matthew Obiri-Yeboah
Australasian Institute of Mining and Metallurgy
Mt Carlton Open Pit Ore Reserve
Anton Kruger
Australasian Institute of Mining and Metallurgy
Mt Carlton Underground Ore Reserve
Anton Kruger
Australasian Institute of Mining and Metallurgy
Edna May Mineral Resource
Owen Browne
Australian Institute of Geoscientists
Edna May Open Pit Ore Reserve
Guy Davies
Australasian Institute of Mining and Metallurgy
Edna May Underground Ore Reserve
Anton Kruger
Australasian Institute of Mining and Metallurgy
Cracow Mineral Resource
Cracow Ore Reserve
Mt Rawdon Mineral Resource
Mt Rawdon Ore Reserve
Shane Pike
Samuel Myers
Hans Andersen
Dimitri Tahan
Australasian Institute of Mining and Metallurgy
Australasian Institute of Mining and Metallurgy
Australasian Institute of Mining and Metallurgy
Australasian Institute of Mining and Metallurgy
Marsden Mineral Resources
Michael Andrew
Australasian Institute of Mining and Metallurgy
Full details of the Ernest Henry Mineral Resources and Ore Reserves are provided in the report entitled “Glencore
Resources and Reserves as at 31 December 2016” released February 2017 and available to view at www.glencore.com.
The information in this statement that relates to the Ernest Henry Mineral Resource and Ore Reserve is based on, and fairly
represents, information and supporting documentation prepared by Colin Stelzer and Alexander Campbell respectively.
Colin and Alexander are members of the Australasian Institute of Mining and Metallurgy and are full-time employees
of Glencore. Colin Stelzer and Alexander Campbell consent to the inclusion in this report of the matters based on their
information in the form and context in which it appears.
VALUE CREATION FROM PORTFOLIO MANAGEMENT OVER THE PAST TWO YEARS
RESERVE LIFE (years)
RESERVES PER SHARE (oz/1000)
50
Evolution Mining Limited Annual Report 2017A$907/ozA$1,014/oz!"#'!"#(FY16!"#'!"#(FY16A$1,083/ozA$1,036/ozA$907/ozFY13FY14FY15FY17A$1,083/ozA$1,036/ozA$1,014/oz!"#%!"#&!"#'!"#(FY14FY15FY16!"#%!"#&!"#'!"#(FY14FY15FY168.3DEC-163.1DEC-144.2DEC-165.1DEC-14A$907/ozA$1,014/oz!"#'!"#(FY16!"#'!"#(FY16A$1,083/ozA$1,036/ozA$907/ozFY13FY14FY15FY17A$1,083/ozA$1,036/ozA$1,014/oz!"#%!"#&!"#'!"#(FY14FY15FY16!"#%!"#&!"#'!"#(FY14FY15FY168.3DEC-163.1DEC-144.2DEC-165.1DEC-14 Mineral Resources and Ore Reserves (continued)
Group Gold Ore Reserves Statement
December 2016 Group Gold Ore Reserves Statement
Gold
Project
Type
Cut-Off
Tonnes
(Mt)
Probable
Total Reserve
Gold
Metal
(koz)
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Competent
Person
Cowal1
Cracow1
Pajingo1
Open pit
Underground
0.4
3.5
43.70
0.34
994
73.02
0.94
2,207
116.71
0.85
3,200
71
0.71
5.25
120
1.05
5.67
192
Underground
-
-
-
-
-
-
-
-
-
0.5
2.5
0.8
3.7
0.3
2.9
0.7
Edna May1
Open pit
Edna May1
Underground
Edna May1
Total
Mt Carlton1
Open pit
Mt Carlton1
Underground
Mt Carlton1
Total
Mt Rawdon1
Open pit
Underground
Open pit
Regional
Total
Mungari1
Mungari1
Mungari1
Mungari1
Ernest
Henry2
-
-
-
-
-
-
33
87
18
-
6.88
1.34
8.22
4.67
0.17
4.84
30.99
1.10
5.19
0.98
7.27
1.01
4.69
1.61
4.60
7.77
4.71
0.84
4.88
1.69
1.35
2.13
224
202
426
691
42
733
840
173
282
43
498
6.88
1.34
8.22
4.67
0.17
4.84
32.69
1.55
5.77
0.98
8.30
1.01
4.69
1.61
4.60
7.77
4.71
0.83
5.21
1.61
1.35
2.25
224
202
426
691
42
733
873
260
299
43
602
0.85
-
-
1.03
3.15
105
Underground
0.9
7.15
0.71
163
52.30
0.48
801
59.45
0.50
964
Total
53.92
0.79
1,366
177.35
0.99
5,624
231.27
0.94
6,990
Proved
Gold
Grade
(g/t)
0.71
6.54
-
-
-
-
-
-
-
-
-
-
-
-
-
1.7
0.60
0.45
0.58
6.01
0.93
1
2
3
4
4
4
5
6
6
6
7
Group Copper Ore Reserves Statement
December 2016 Group Copper Ore Reserves Statement
Copper
Proved
Probable
Total Reserve
Project
Type
Cut-
Off
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Competent
Person
Ernest
Henry2
Total
0.9
2.13
1.41
30
15.69
0.96
Mt Carlton1
Open pit
0.8
-
-
-
Mt Carlton
Underground
3.7
-
-
-
4.67
0.17
Mt Carlton
Total
-
-
-
4.84
Total
2.13
1.41
30
20.53
0.62
0.70
0.62
0.88
151
29
1
30
181
17.82
1.02
4.67
0.17
4.84
22.66
0.62
0.70
0.62
0.94
182
29
1
30
212
7
4
4
1.
2.
Includes stockpiles
Ernest Henry Operation cut-off 0.9% CuEq
Data is reported to significant figures to reflect appropriate precision and may not sum precisely due to rounding. Mineral Resources are reported inclusive of Ore Reserves
Group Ore Reserve Competent Person Notes refer to: 1. Jason Floyd; 2. Sam Myers; 3. Guy Davies; 4. Anton Kruger; 5. Dimitri Tahan; 6. Matt Varvari; 7. Alexander
Campbell (Glencore)
Full details of the Ernest Henry Mineral Resources and Ore Reserves are provided in the report entitled “Glencore Resources and Reserves as at 31 December 2016”
released February 2017 and available to view at www.glencore.com.
51
Evolution Mining Limited Annual Report 2017 Mineral Resources and Ore Reserves (continued)
Group Gold Mineral Resources Statement
Gold
Measured
Indicated
Inferred
Total Resource
December 2016 Group Gold Mineral Resources Statement
Cut-
off
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Tonnes
(Mt)
Gold
Grade
(g/t)
Gold
Metal
(koz)
Competent
Person
Project
Type
Cowal1
Cracow1
Pajingo
Pajingo1
Total
Total
Open pit
Underground
Pajingo
Edna May1
Total
Open pit
Edna May
Underground
Edna May
Mt Carlton1
Total
Open pit
Mt Carlton
Underground
0.4 43.70
0.71
994 129.71 0.93 3,861
4.24
2.8
0.75
2.5
0.4
2.5
0.35
2.4
0.2
0.5
0.24 10.89
–
–
–
–
–
–
–
–
–
–
–
0.52
–
–
1.67
–
0.52
1.67
1.70 0.60
0.93
0.58
0.97
1.55
7.88
5.29
1.21 6.64
–
–
–
–
15.96
1.12
17.09
8.94
0.16
–
–
0.95
7.68
1.39
2.74
8.01
258
–
–
–
487
278
765
788
42
1.85
–
–
–
2.19
0.09
2.28
0.74
0.05
1.35
3.06
–
–
–
0.85
7.63
1.13
4.48
8.36
83
–
–
–
–
–
–
28
–
28
9.10 2.84
830
0.79
4.76
32 45.60 0.74 1,089
357
17
6.38
1.74
247
3.98
3.56
264 10.35
2.44
456
813
3.49 0.58
0.75
0.04
1.60
1.64
2.19
2.16
184 177.65 0.88 5,039
181
–
–
–
60
23
83
107
14
121
3.29 4.94
–
–
–
–
18.15
1.22
19.37
10.21
0.22
10.43
–
–
0.94
7.68
1.36
2.81
8.09
2.92
522
–
–
–
547
301
848
923
56
979
65 50.79 0.73 1,186
376
7.00
1.67
1
113
114
6.55
13.55
3.87
2.73
815
1,191
0.5
–
–
– 32.47
1.01 1,040
11.44
1.50
552 43.91
1.13 1,592
Total
Total
Open pit
Total
Total
Underground 2.5/1.5
Total
0.9
12.10 0.70
272 68.70 0.59 1,303
9.00 0.50
145 89.80 0.60 1,720
Total
Open pit
Underground
0.5
2.3
–
–
–
–
–
–
–
–
– 160.00
–
–
0.21
–
1,070 15.00 0.07
–
–
–
30 180.00 0.20 1,100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Twin Hills+
Total
Total
59.81
0.87 1,673 474.24 0.72 11,029 49.73 0.92 1,475 588.79 0.75 14,178
Group Copper Mineral Resources Statement
Copper Mineral Resources Statement
Copper
Measured
Indicated
Inferred
Total Resource
Project
Type
Cut-Off
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Tonnes
(Mt)
Copper
Grade
(%)
Copper
Metal
(kt)
Tonnes
(Mt)
Copper
Grade
(%)
Competent
Person
Copper
Metal
(kt)
Marsden1
Ernest Henry2
Mt Carlton1
Total
Total
Open pit
-
0.9
0.35
-
3.63
0.52
-
1.33
0.25
Mt Carlton
Underground
2.4 - - -
0.16
48 20.61
8.94
1
1.15
0.44
0.74
- 160.00 0.40
640 15.00
30 180.00 0.38
670
0.19
1.10
0.82
1.74
2.70
0.74
0.05
237
40
1
41
30 26.94
10.21
6
1
0.22
1.17
0.47
0.98
315
47
2
49
1
9.10 0.45
0.79 0.89
7 10.43
0.47
49 189.71 0.48
918 18.49
0.36
67 217.37 0.48 1,034
Mt Carlton
Total
0.52
4.15
0.25
1.18
Total
1.
2.
Includes stockpiles
Ernest Henry Operation cut-off 0.9% CuEq
Mt Carlton
Mt Rawdon1
Mungari1
Mungari1
Mungari1
Mungari
Regional
Ernest
Henry2
Marsden
Twin Hills+
Twin Hills+
1
2
4
5
6
3
3
7
1
1
7
5
Data is reported to significant figures to reflect appropriate precision and may not sum precisely due to rounding. Mineral Resources are reported inclusive
of Ore Reserves
Group Mineral Resources Competent Person Notes refer to 1. Michael Andrew; 2. Shane Pike; 3. Andrew Engelbrecht; 4. Owen Browne; 5. Matthew Obiri-Yeboah;
6. Hans Andersen; 7. Colin Stelzer (Glencore)
Full details of the Ernest Henry Mineral Resources and Ore Reserves are provided in the report entitled “Glencore Resources and Reserves as at 31 December 2016”
released February 2017 and available to view at www.glencore.com
52
Evolution Mining Limited Annual Report 2017 Corporate Governance
The Corporate Governance Statement sets out the
key features of Evolution’s governance framework and
reports against the Corporate Governance Council’s
Third Edition Corporate Governance Principles and
Recommendations for the financial year ended 30 June
2017. The Corporate Governance Statement which was
lodged with ASX on the date of lodgement of this Annual
Report is available in the corporate governance section
of Evolution’s website at https://evolutionmining.com.au/
corporate-governance/.
Where the Company’s corporate governance practices
do not meet with all the practices recommended by the
Council, or the Board does not consider it practicable or
necessary to implement some principles due to the size
and stage of development of its operations, the Board’s
reasoning for any departure is explained.
The Board of Evolution is responsible for establishing
the corporate governance framework of the Group.
The Board guides and monitors the business and affairs
of the Group on behalf of the shareholders by whom
they are elected and to whom they are accountable. In
performing its responsibilities, the Board acts in the best
interests of the Company, honestly, fairly and diligently
and in accordance with the duties and obligations
imposed upon it by Evolution’s Constitution and the law.
Evolution’s Corporate Governance Statement is current
at 12 October 2017 and has been approved by the Board.
53
Evolution Mining Limited Annual Report 2017 Board of Directors
From left to right: Graham Freestone, Sebastien de Montessus, James Askew, Jacob Klein, Colin Johnstone,
Lawrie Conway, Thomas McKeith and Naquib Sawaris
Jacob (Jake)
Klein
BCom Hons,
ACA,
Executive Chairman
Mr Klein was appointed as Executive Chairman in October 2011, following the merger of
Conquest Mining Limited and Catalpa Resources Limited. Previously he served as the
Executive Chairman of Conquest Mining. Prior to that, Mr Klein was President and CEO of
Sino Gold Mining Limited, where along with Mr Askew (director from 2002 and Chairman
from 2005 of Sino Gold) he managed the development of that company into the largest
foreign participant in the Chinese gold industry. Sino Gold was listed on the ASX in
2002 with a market capitalisation of A$100 million and was purchased by Eldorado Gold
Corporation in late 2009 for over A$2 billion.
Mr Klein was formerly a Non-Executive Director of Lynas Corporation Limited, a company
with operations in Australia and Malaysia, and formerly a Non-Executive Director of
OceanaGold Corporation, a company with operations in the Philippines, USA and New
Zealand. Both Lynas Corporation and OceanaGold are ASX-listed companies.
Lawrie
Conway
B Bus,
CPA,
MAICD,
Finance Director and
Chief Financial Officer
Mr Conway was appointed Finance Director and Chief Financial Officer of Evolution
Mining Limited with effect from 1 August 2014 (previously a Non-Executive Director).
Mr Conway has more than 27 years’ experience in the resources sector across a diverse
range of commercial, financial and operational activities. He has held a mix of corporate,
operational and commercial roles within Australia, Papua New Guinea and Chile with
Newcrest and prior to that with BHP Billiton. He most recently held the position of
Executive General Manager – Commercial and West Africa with Newcrest Mining where
he was responsible for Newcrest’s group Supply and Logistics, Marketing, Information
Technology and Laboratory functions as well as Newcrest’s business in West Africa.
Mr Conway is a Non-Executive Director of Aurelia Metals Ltd (appointed in June 2017).
54
Evolution Mining Limited Annual Report 2017 Board of Directors (continued)
James (Jim)
Askew
BEng (Mining),
MEngSc,
FAusIMM,
MCIMM,
MSME (AIME),
MAICD,
Non-Executive Director
Graham
Freestone
BEc (Hons),
Non-Executive Director
Colin (Cobb)
Johnstone
BEng (Mining),
Lead Independent
Director
Mr Askew is a mining engineer with more than 40 years’ broad international experience
as a Director and Chief Executive Officer for a wide range of Australian and international
publicly listed mining, mining finance and other mining related companies.
Mr Askew has served on the boards of numerous mining and mining services companies,
which currently include OceanaGold Limited (Chairman since November 2006), a
company with operations in the Philippines, USA and New Zealand; Syrah Resources
Limited (Chairman since October 2014), a company with operations in Mozambique and in
the USA; and Endeavour Mining Corporation, a company with operations in Cote d’Ivoire,
Mali, Burkina Faso and Ghana (Non-Executive Director since July 2017).
Mr Askew is a member of the Risk Committee and Member of the Nomination and
Remuneration Committee.
Within the last 3 years Mr Askew has been a Non-Executive Director of Nevada Copper
Limited and Asian Mineral Resources Ltd.
Mr Freestone has more than 45 years’ experience in the petroleum and natural resources
industry. He has a broad finance, corporate and commercial background obtained in
Australia and internationally through senior finance positions with the Shell Group, Acacia
Resources Limited and AngloGold Ashanti Limited.
Mr Freestone was the Chief Financial Officer and Company Secretary of Acacia Resources
Limited from 1994 until 2001. From 2001 to 2009 he was a Non-Executive director of Lion
Selection Limited, and from 2009 to 2011 he was a Non-Executive director of Catalpa
Resources Limited, and Chaired their Audit Committees during that period.
Mr Freestone is a Non-Executive Director of Kasbah Resources Limited (appointed
February 2017) a company with a tin project in Morocco, and Chairs its Remuneration and
Audit Committees.
Mr Freestone is the Chair of the Audit Committee and Member of the Risk Committee.
Mr Johnstone is a mining engineer with over 30 years' experience in the resources sector.
He has served as General Manager at some of Australia's largest mines including the
Kalgoorlie Super Pit in Western Australia, the Olympic Dam Mine in South Australia and
the Northparkes Mine in New South Wales. He has extensive international experience
including Canada, China, Africa and South America.
Mr Johnstone was Chief Operating Officer at Equinox Minerals Limited, until the
acquisition by Barrick Gold Corporation in 2011. Prior to that Mr Johnstone was Chief
Operating Officer of Sino Gold Mining Limited, where he oversaw the development and
operation of gold mines in China. Mr Johnstone is Chairman of Aurelia Metals Ltd (since
November 2016).
Mr Johnstone is the Lead Independent Director, Chair of the Risk Committee, and a
member of the Audit Committee.
Mr Johnstone was a former Non-Executive Director of Magnis Resources Ltd; Neometals
Ltd (Reed Resources Ltd); and Metallum Ltd.
55
Evolution Mining Limited Annual Report 2017 Board of Directors (continued)
Thomas
(Tommy)
McKeith
BSc (Hons),
GradDip Eng (Mining),
MBA,
Non-Executive Director
Mr McKeith is a geologist with over 28 years' experience in various mine geology,
exploration and business development roles. He was formerly Executive Vice President
(Growth and International Projects) for Gold Fields Limited, where he was responsible for
global greenfields exploration and project development.
Mr McKeith was also Chief Executive Officer of Troy Resources Limited and has held Non-
Executive Director roles at Sino Gold Limited, Avoca Resources Limited and is currently
the Non-Executive Chairman of ABM Resources NL.
Mr McKeith is the Chair of the Nomination and Remuneration Committee and Member of
the Audit Committee.
Mr McKeith is also a Non-Executive Chairman of ABM Resources NL.
Naquib
Sawaris
Non-Executive Director
Mr Sawiris is Chairman of the advisory board of La Mancha (since 2012). The Sawiris
Family have substantial interests in the telecom, construction and fertilizer, cement,
real estate and hotel development industries and other businesses. He is currently the
Chairman of the Board of Orascom TMT Investments S.a r.l, and the Executive Chairman
of Orascom Telecom Media and Technology Holding S.A.E. Mr Sawiris founded Orascom
Telecom Holding in 1979 and developed it into a leading regional telecom player until a
merger with Vimpelcom Ltd created the world's sixth largest mobile telecommunications
provider. Mr Sawiris has also been appointed Chairman of the Board of Euronews, after
managing the acquisition of 53% of its shares in 2015.
Mr Sawiris has received a number of honorary degrees, industry awards and civic
honors, including the Honor of Commander of the Legion d'honneur the highest award
given by the French Republic for outstanding services rendered to France, the Honor of
Commander of the Order of the Stella della Solidarietà Italiana, the prestigious Sitara-
e-Quaid-e-Azam award for services rendered to the people of Pakistan in the field of
telecommunication, investments and social sector work.
Mr Sawiris served and is serving on a number of additional Boards, Committees and
Councils including the Advisory Committee to the NYSE Board of Directors, the London
Stock Exchange Group’s Africa Advisory Group, the Arab Thought Foundation, and the
Boards of Trustees of the American University in Cairo, Nile University, and the French
University in Egypt.
Mr Sawiris holds a diploma of Mechanical Engineering with a Masters in Technical
Administration from the Swiss Federal Institute of Technology Zurich ETH Zurich and a
Diploma from the German Evangelical School, Cairo, Egypt.
56
Evolution Mining Limited Annual Report 2017 Board of Directors (continued)
Sebastien
de Montessus
Non-Executive Director
Mr de Montessus is the CEO and President of Endeavour Mining Corporation (since
November 2015). He was previously the Chief Executive Officer of the La Mancha
Group since 2012, and under his leadership La Mancha doubled its production through
optimization efforts before undergoing a portfolio restructure which enabled the Sawiris
family to become the main shareholder of Evolution Mining, a leading Australia gold miner,
and of Endeavour Mining in November 2015.
In September 2015, Mr de Montessus was appointed to the board of Evolution Mining.
Mr de Montessus was previously a member of the Executive Board and Group Deputy
CEO of AREVA Group (a world leader in nuclear energy) and CEO of AREVA Mining
(uranium). Mr. de Montessus was a Board member of ERAMET, a world leader in alloying
metals, between 2010 and 2012.
Before joining AREVA in 2002, Mr. de Montessus was an investment banker at Morgan
Stanley in London (Mergers and Acquisition and Equity Capital Markets).
Mr de Montessus is a business graduate from ESCP-Europe Business School in Paris.
Mr de Montessus is a Member of the Nomination and Remuneration Committee and is an
Executive Director and CEO of Endeavour Mining Corporation.
Mr Benoit has over 25 years of Corporate Finance, Investors Relations, and M&A
experience in the mining, energy, and telecom sectors.
Mr Benoit is the CFO and Executive Vice President of Corporate Development at
Endeavour Mining Corporation since November 2016. Prior to joining Endeavour, he was
EVP Strategy and Business Development of La Mancha where he successfully led the
group's portfolio restructuring which repositioned La Mancha as a leading private mining
investor through the strategic alliances formed with Evolution Mining Ltd and Endeavour
Mining. Previously, as EVP Merger and Acquisitions at Orange, he was responsible for the
development of the group's African footprint, its European portfolio restructuring, and
forming strategic partnerships. At Orange, he was also Head of Strategy and Investor
Relations. Mr. Benoit held various finance positions including with Areva, Bull Information
System, and PwC.
He holds a business degree from ESC-Bordeaux Business School and is a registered
Chartered Accountant.
Mr Benoit is a Non-Executive Director of Euronews SA.
Vincent
Benoit
Alternate Non-Executive
Director for
Naguib Sawaris
Amr El
Adawy
Alternate Non-Executive
Director for Sebastien
de Montessus
Mr El Adawy is the Chief Financial Officer of the La Mancha Group.
He is an international finance executive with 20 years’ experience in finance and
management in telecoms and retail sectors. Prior to joining La Mancha he served as Chief
Financial Officer of WIS Telecom (since 2010) and at the same time was Chief Executive
Office of the Italian subsidiary, MENA SCS SpA (since 2011). Prior to joining the Orascom
group, Mr Adawy held senior finance management positions in several multinational
companies, such as Adler-France, Pepsi Cola – France and in a JV of Carrefour – France
with Majid Al Futtaim group for its activity in the Middle East.
Mr El Adawy holds a Finance Management and Accounting degree from CNAM of Paris.
Mr El Adawy has no other current or former directorships within the last 3 years.
57
Evolution Mining Limited Annual Report 2017 Chief Financial Officer’s Review
A 2017 financial year Group EBITDA margin of 49%,
excluding Pajingo, and record mine operating cash flow
of A$706.5 million reflected the quality of Evolution’s
asset portfolio.
Revenue for the year ended 30 June 2017 increased by
11% to A$1.479 billion (30 June 2016: A$1.329 billion).
This is largely due to the inclusion of production from
Ernest Henry which totalled A$163.342 million. This is
comprised of A$102.9 million for eight months of copper
and silver revenue and A$60.4 million for five months
of gold revenue. An increase of 3% in achieved gold
price to A$1,641/oz (30 June 2016: A$1,597/oz) also had
an impact. This was partly offset by the disposal of the
Pajingo operation which contributed revenue of A$17.5
million in the year representing a decrease of A$95.6
million on the prior year.
Total gold sold equalled 817,323oz which included
deliveries into the hedge book of 248,493oz at an
average price of A$1,584/oz (30 June 2016: 274,879oz,
A$1,593/oz). The remaining 568,830oz were sold at spot
price achieving an average price of A$1,666/oz (30 June
2016: 540,710oz, A$1,599/oz). The Group's hedge book
totalled 458,495oz as at 30 June 2017 at an average price
of A$1,645/oz for deliveries to June 2020.
Operating costs (excluding depreciation, amortisation
and fair value adjustments of A$431.6 million) increased
to A$719.7 million (30 June 2016: A$674.2 million) largely
as a result of the first year of inclusion of Ernest Henry
which accounted for operating costs of A$64.1 million
offset by A$47.3 million following the sale of Pajingo
during the year. The operating costs for the six existing
mine sites increased by 5% on the prior year to A$640.5
million. This increase was primarily due to the shift from
capital to operating stripping at Cowal for Stage G, and
the completion of underground development activities as
well as Stage 2 of the open cut which resulted in higher
costs at Mungari.
The Group’s All in Sustaining Cost decreased by 11% to
A$907/oz (30 June 2016: A$1,014/oz) and was at the
bottom end of guidance of A$900 – A$960 per ounce.
The impact of a decline in average grade mined across
the Group was more than offset by the inclusion of Ernest
Henry which contributed a negative AISC of A$(361)/oz
for the year.
Total exploration expenditure for the year was A$29.4
million with an exploration expense of A$12.6 million.
Capital expenditure totalled A$245.0 million. This
consisted of sustaining capital, including near mine
exploration and resource definition of A$116.6 million and
mine development of A$128.4 million. The main capital
projects included the Stage H and Float Tails (Dual)
Leach projects at Cowal, Cracow underground mine
development, Mt Rawdon capital waste stripping, Edna
May Southern and Northern cutbacks and underground
mine development, Mungari underground development,
and Mt Carlton capital waste stripping in the northern
section of Stage 3.
The financial performance of our business is built
on the back of the efforts of each of our operations,
the exploration team and the business development
activities. All of these areas have combined to deliver
excellent financial outcomes for our shareholders.
More importantly the outcomes are fully aligned to the
fundamental driver of our business strategy to continually
improve the quality of our portfolio.
The business delivered on production and cost guidance
for the sixth consecutive year. Evolution recorded a
statutory net profit after tax of A$217.6 million for the
year ended 30 June 2017 through record gold production,
a continued focus on cost control and a higher gold price.
The period included an eight month contribution from the
acquisition of the economic interest in the Ernest Henry
Copper-Gold Operation which has improved the quality
and longevity of Evolution's portfolio as well as materially
reducing the Group's cost profile. In September 2016,
the Group disposed of the Pajingo asset to Minjar Gold
Pty Limited as part of its ongoing strategy to improve
the quality of its portfolio. These two transactions during
the year are a testament to improving quality in that
they increased operating margins, reduced our All-in
Sustaining Costs, and increased reserve mine life.
The Group recorded an underlying net profit after tax
of A$206.6 million for the year ended 30 June 2017
(30 June 2016: A$134.5 million1).
Total gold production was 844,124 ounces, representing
an increase of 5% on the prior year and at the upper end
of FY17 guidance of 800,000oz - 860,000oz.
58
Evolution Mining Limited Annual Report 2017 Chief Financial Officer’s Review (continued)
Our balance sheet continues to be in a strong position.
On closing the Ernest Henry transaction our gearing
peaked at just over 24% in November 2016. Since then,
as we did following the acquisition of Cowal, we directed
our excess cash to rapidly reduce gearing to under
16% by the end of the financial year. This significantly
demonstrates our commitment and discipline to ensure
that our balance sheet is protected and withstand
material adverse changes in operating conditions. We
repaid A$325.0 million in financial year 2017 to finish the
year with a net debt of A$399.0 million.
With the continued growth over the past year and the
recent inclusion in the S&P ASX100 Index, coinciding with
the Group moving to a tax paying position, in August
2017 the Board approved a change to the dividend
policy of whenever possible paying a half-yearly dividend
equivalent to 50% of the Group's after-tax earnings. This
change was applied to the final dividend for 2017.
The Board confirmed that Evolution is in a sound position
to continue its commitment to pay a final fully franked
dividend for the June 2017 half of 3 cents per share,
totalling A$50.5 million. Total dividends declared for the
2017 financial year were 5 cents per share totalling
A$84.1 million.
Following the completion of the sale of Edna May in
early October 2017, Evolution is forecasting Group gold
production in FY18 of 750,000 – 805,000 ounces at All-in
Sustaining Cost in the range of A$820/oz – A$870/oz.
In conclusion, the 2017 financial year was another
excellent year for Evolution. We are pleased to have been
able to continue to leverage this operating and financial
success to upgrade the quality of our asset portfolio. We
are committed to maintaining our focus on low costs and
strong cash generation. We are also actively investing in
the future to ensure the sustainability of our business and
are confident in our ability to continue to deliver superior
shareholder returns.
FY17 financial hightails
Units
FY17
FY16
Change
Statutory Profit after
Tax
Underlying Profit after
Tax1
A$M
217.6
(24.3)
-
A$M
206.6
134.5
54%
EBITDA
A$M
713.9
607.6
17%
Operating Cash Flow
Group Cash Flow
A$M
A$M
706.5
628.4
382.0
365.0
12%
5%
EBITDA Margin2
AIC Margin
%
A$/oz
49%
568
46%
463
7%
23%
Gearing
Final Dividend
%
cps
15.9%
15.1%
3
2
5%
50%
Yours faithfully
LAWRIE CONWAY
FINANCE DIRECTOR and CHIEF FINANCIAL OFFICER
1. FY16 underlying profit after tax restated. For full details refer to “Underlying net profit reconciliation” on slide 20 of the presentation entitled “2017 Full Year
Financial Results” released to the ASX on 17 August 2017 and available to view on www.asx.com.au
2. FY17 excludes Pajingo
3. FY17 fully franked; FY16 unfranked
59
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Contents
Directors' Report
Auditor's Independence Declaration
Financial Statements
Page
61
105
Consolidated Statement of Profit or Loss and Other Comprehensive Income 106
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report to the Members
Shareholder Information
Corporate Information
107
108
109
110
159
160
166
168
60
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Directors' Report
during, the year ended 30 June 2017.
Directors
The Directors present their report together with the consolidated financial report of the Evolution Mining Limited
Group, consisting of Evolution Mining Limited ("the Company") and the entities it controlled at the end of, or
The Directors of Evolution Mining Limited during the year ended 30 June 2017 and up to the date of this report
are set out below. All Directors held their position as a Director throughout the entire year and up to the date of
this report unless otherwise stated.
Jacob (Jake) Klein
Lawrie Conway
Executive Chairman
Finance Director and Chief Financial Officer
Colin (Cobb) Johnstone
Lead Independent Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Alternate Non-Executive Director for Naguib Sawaris
Alternate Non-Executive Director for Sebastien de Montessus
The name of the Company Secretary during the whole of the year ended 30 June 2017 and up to the date of this
James (Jim) Askew
Graham Freestone
Thomas (Tommy) McKeith
Naguib Sawaris
Sebastien de Montessus
Vincent Benoit
Amr El Adawy
Company Secretary
report is as follows:
Evan Elstein
Principal activities
The principal activities of the Group during the year were exploration, mine development, mine operations and
the sale of gold and gold/copper concentrate in both Australia and New Zealand. There were no significant
changes to these activities during the year.
Key highlights for the year
Key highlights for the year ended 30 June 2017 include:
•
•
•
•
Safety of our people is of paramount importance and our focus has been demonstrated through maintaining a
steady total recordable injury frequency rate (TRIFR) of 7.96 (30 June 2016: 9.7).
The Group’s continuing focus on productivity improvements and cost efficiencies capped off an outstanding
year achieving the following record results:
Total gold production of 844,124oz, representing an increase of 5% on the prior year and at the upper
end of guidance for the current year of 800,000oz - 860,000oz.
AISC of A$907/oz, representing a decrease of 11% on the prior year and at the lower end of guidance
for the current year of A$900/oz - A$960/oz.
• Operating mine cashflow of A$706.5 million, representing an increase of 12% on the prior year.
• Net mine cashflow of A$461.5 million, representing an increase of 8% on the prior year with all mines
other than Edna May contributing positive cash flows after all capital investment.
1
Evolution Mining Limited Annual Report 2017
Evolution Mining Limited
Annual Financial Report
Directors' Report
Directors' Report
30 June 2017
Directors' Report
The Directors present their report together with the consolidated financial report of the Evolution Mining Limited
Group, consisting of Evolution Mining Limited ("the Company") and the entities it controlled at the end of, or
during, the year ended 30 June 2017.
Directors
The Directors of Evolution Mining Limited during the year ended 30 June 2017 and up to the date of this report
are set out below. All Directors held their position as a Director throughout the entire year and up to the date of
this report unless otherwise stated.
Jacob (Jake) Klein
Lawrie Conway
Colin (Cobb) Johnstone
James (Jim) Askew
Graham Freestone
Thomas (Tommy) McKeith
Naguib Sawaris
Sebastien de Montessus
Vincent Benoit
Amr El Adawy
Company Secretary
Executive Chairman
Finance Director and Chief Financial Officer
Lead Independent Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Alternate Non-Executive Director for Naguib Sawaris
Alternate Non-Executive Director for Sebastien de Montessus
The name of the Company Secretary during the whole of the year ended 30 June 2017 and up to the date of this
report is as follows:
Evan Elstein
Principal activities
The principal activities of the Group during the year were exploration, mine development, mine operations and
the sale of gold and gold/copper concentrate in both Australia and New Zealand. There were no significant
changes to these activities during the year.
Key highlights for the year
Key highlights for the year ended 30 June 2017 include:
•
•
Safety of our people is of paramount importance and our focus has been demonstrated through maintaining a
steady total recordable injury frequency rate (TRIFR) of 7.96 (30 June 2016: 9.7).
The Group’s continuing focus on productivity improvements and cost efficiencies capped off an outstanding
year achieving the following record results:
•
•
Total gold production of 844,124oz, representing an increase of 5% on the prior year and at the upper
end of guidance for the current year of 800,000oz - 860,000oz.
AISC of A$907/oz, representing a decrease of 11% on the prior year and at the lower end of guidance
for the current year of A$900/oz - A$960/oz.
• Operating mine cashflow of A$706.5 million, representing an increase of 12% on the prior year.
• Net mine cashflow of A$461.5 million, representing an increase of 8% on the prior year with all mines
other than Edna May contributing positive cash flows after all capital investment.
1
61
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Key highlights for the year (continued)
• Completion of the Ernest Henry transaction to obtain an economic interest in the copper-gold operation on 1
November 2016.
• During the year the Group entered into a new financing arrangement ("the New Facility") to fund the
acquisition of the Economic Interest in Ernest Henry. The New Facility comprised a $475 million Senior
Secured Term Loan (“Facility D”) and an amendment to the repayment profile of the existing $400 million
Senior Secured Term Loan ("Facility B") to reflect the Group's accelerated repayments on the previous
Facility. No changes have been made to the existing $300 million Senior Secured Revolving Loan ("Facility
A") or the $155 million Performance Bond Facility ("Facility C"). Subsequently, the Group focused on
reducing gearing through voluntary and mandatory repayments of $325 million. As at 30 June 2017, the
Group had repaid in full Facility A and was 10 months ahead of the repayment schedules on Facility B and
Facility D with $40 million and $395 million respectively outstanding.
•
•
Pajingo was sold on 1 September 2016 to Minjar Gold Pty Limited for total proceeds of up to $52 million. The
consideration comprised of a $42 million up front cash payment and a 1% NSR (net smelter return) royalty of
up to $10 million for gold production above 130,000oz.
Approval was granted by the State to extend the Cowal operations mine life to 2032 and the Board approved
the commencement of the E42 Stage H cutback and Dual Leach Project at the Cowal operation.
• Completion of the acquisition of the Marsden copper-gold project from Newcrest Operations Limited on 17
October 2016.
•
•
The Group entered into an Earn-in Joint Venture Agreement (“The Joint Venture”) with Menninnie Metals Pty
Ltd, a wholly owned subsidiary of Terramin Australia Limited (“Terramin”) during the year. The Joint Venture
will primarily target the South Gawler gold-copper project, a greenfields exploration project in the northern
Eyre Peninsula of South Australia. Under the terms of the Joint Venture, the Group will sole fund exploration
expenditure of $4 million over four years to earn a 70% interest. Terramin may then elect to contribute,
otherwise the Group can earn an additional 10% by spending a further $2 million over 2 years, after which a
pro-rata period will operate. The Group can withdraw from the Joint Venture after a minimum spend of $0.5
million within the first year.
The Directors have approved a change to the dividend policy of whenever possible paying a half-yearly
dividend equivalent to 50% of the Group's after tax earnings. The change was effective immediately and has
been applied to the final dividend for 2017 whereby the Directors have recommended a fully franked final
dividend of 3 cents per fully paid ordinary share. The aggregate amount of the proposed dividend to be paid
on 29 September 2017 is $50.5 million.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review
Evolution is a leading, growth-focused Australian gold company. As at 30 June 2017, the Group consisted of six
wholly-owned operating gold mines: Cowal in New South Wales, Cracow, Mt Carlton and Mt Rawdon in
Queensland and Mungari and Edna May in Western Australia and an economic interest in the Ernest Henry
Copper-Gold Operation (100% of gold and 30% of copper and silver) in Queensland.
The Group’s strategy is to deliver shareholder value through efficient gold production, growing gold reserves and
developing or acquiring assets to improve the quality of the portfolio. Since its formation in November 2011, the
Group has built a strong reputation for operational predictability and stability through a record of consistently
achieving production and cost guidance. This has been achieved primarily as a result of the Group owning a
number of similar sized mines, rather than a single mine or one dominant mine like many of its peers. This
portfolio approach to production provides Evolution with a Group-wide level of operational stability and
predictability. The Group’s high-performance team culture and clearly defined business plans and goals further
contribute to delivering reliable and consistent results.
To build a sustainable business, the Group maintains a strong commitment to growth through exploration and a
disciplined methodical approach to business development through opportunistic, logical, value-accretive
acquisitions.
Profit Overview
The Group recorded a statutory net profit after tax of $217.607 million for the year ended 30 June 2017 (30 June
2016: statutory net loss after tax of $24.349 million), driven by record production, a continued focus on cost
control and a higher gold price. The period included an eight month contribution from the acquisition of the
economic interest in the Ernest Henry Copper-Gold Operation which is expected to improve the quality and
longevity of Evolution's portfolio as well as materially reduce the Group's cost profile. In September 2016, the
Group disposed of the Pajingo asset to Minjar Gold Pty Limited as part of its strategy to improve the quality of its
asset portfolio.
The following graph shows the movements in the Group's statutory profit/(loss) after tax for the year ended 30
June 2016 to the year ended 30 June 2017.
2
3
62
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review
Evolution is a leading, growth-focused Australian gold company. As at 30 June 2017, the Group consisted of six
wholly-owned operating gold mines: Cowal in New South Wales, Cracow, Mt Carlton and Mt Rawdon in
Queensland and Mungari and Edna May in Western Australia and an economic interest in the Ernest Henry
Copper-Gold Operation (100% of gold and 30% of copper and silver) in Queensland.
The Group’s strategy is to deliver shareholder value through efficient gold production, growing gold reserves and
developing or acquiring assets to improve the quality of the portfolio. Since its formation in November 2011, the
Group has built a strong reputation for operational predictability and stability through a record of consistently
achieving production and cost guidance. This has been achieved primarily as a result of the Group owning a
number of similar sized mines, rather than a single mine or one dominant mine like many of its peers. This
portfolio approach to production provides Evolution with a Group-wide level of operational stability and
predictability. The Group’s high-performance team culture and clearly defined business plans and goals further
contribute to delivering reliable and consistent results.
To build a sustainable business, the Group maintains a strong commitment to growth through exploration and a
disciplined methodical approach to business development through opportunistic, logical, value-accretive
acquisitions.
Profit Overview
The Group recorded a statutory net profit after tax of $217.607 million for the year ended 30 June 2017 (30 June
2016: statutory net loss after tax of $24.349 million), driven by record production, a continued focus on cost
control and a higher gold price. The period included an eight month contribution from the acquisition of the
economic interest in the Ernest Henry Copper-Gold Operation which is expected to improve the quality and
longevity of Evolution's portfolio as well as materially reduce the Group's cost profile. In September 2016, the
Group disposed of the Pajingo asset to Minjar Gold Pty Limited as part of its strategy to improve the quality of its
asset portfolio.
The following graph shows the movements in the Group's statutory profit/(loss) after tax for the year ended 30
June 2016 to the year ended 30 June 2017.
Statutory Profit After Tax Reconciliation A$M
3
63
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Profit Overview (continued)
The Group recorded an underlying net profit after tax of $206.588 million for the year ended 30 June 2017 (30
June 2016: $134.496 million). The statutory net profit after tax for the year includes one-off transaction and
non-operating costs which have been excluded from the Group's underlying profit after tax of $206.588 million.
The table below shows a reconciliation of statutory profit/(loss) before tax to the underlying profit after tax.
The consolidated operating and financial results for the current and prior year are summarised below. All $
figures refer to Australian thousand dollars (A$'000) unless otherwise stated.
Statutory profit/(loss) before income tax
Fair value expense
Loss on sale of subsidiary (2017) / impairment of assets (2016)
Impairment of Goodwill
Acquisition and integration costs
Gain on revaluation of available-for-sale assets
Income tax expense
Tax effect of adjustments
Recognition of previously unrecognised tax losses
Underlying profit after income tax (*)
2017
$'000
237,284
-
3,576
-
6,987
-
(19,677)
(1,182)
(20,400)
206,588
2016
$'000
(21,506)
30,150
77,330
35,270
54,681
(4,365)
(2,843)
(34,221)
-
134,496
(*)
As presented in the 30 June 2016 financial statements, underlying profit excluded the fair value adjustments related to
the acquisition of Cowal and Mungari. Following the completion of the purchase price allocation the fair value
amortisation is now included in underlying profit. All changes were non-cash items. For consistency, the 2016
underlying profit has been amended to reflect this treatment. No change to statutory profit was required. Underlying
profit is a non-IFRS measure. If the fair value amortisation was excluded in 2017, underlying profit after tax would
have been $238.113 million.
Cost of sales (excluding D&A and fair value adjustments (i))
Corporate, admin, exploration and other costs (excluding D&A)
Underlying profit after income tax as presented at 30 June 2016
Fair value amortisation included in underlying profit
Tax effect of adjustments
Underlying profit after income tax 2016
Cash Flow
2016
$'000
226,884
(58,167)
(34,221)
134,496
Operating cash flow increased 12% with all operations producing positive operating mine cash flows totalling
$706.484 million (30 June 2016: $628.417 million). Total capital expenditure increased 22% which was in line
with plan at $244.998 million (including all sustaining and major capital expenditure, rehabilitation costs and
capital stripping).
As a result of the significant net cash flows, the Group continued with accelerated repayments on the Senior
Secured Syndicated Revolving and Term Facility. The Group made mandatory and voluntary repayments of
$325.000 million during the year with all commitments met up to April 2018.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Key Results
Key Business Metrics
Total underground ore mined (kt)
Total underground lateral development (m)
Total open pit ore mined (kt)
Total open pit waste mined (kt)
Processed tonnes (kt)
Gold grade processed (g/t)
Gold production (oz)
Unit cash operating cost (A$/oz) (i)
All in sustaining cost (A$/oz) (i)
All in cost ($/oz) (i)
Gold price achieved (A$/oz)
Silver price achieved (A$/oz)
Total Revenue
EBIT (i) (ii)
EBITDA (i) (ii)
Statutory profit/(loss) after income tax
Underlying profit after income tax
Capital expenditure
Net mine cash flow
30 June 2017 30 June 2016
% Change
(iii)
5,662
11,290
19,672
33,128
20,607
1.49
625
907
1,073
1,641
24.00
1,479
11,912
16,331
35,125
16,242
1.77
722
1,014
1,134
1,597
21.37
844,124
803,476
1,479,876
(719,738)
(46,283)
325,031
713,855
217,607
206,588
244,998
461,486
1,328,614
(674,226)
(46,837)
272,100
607,551
(24,349)
134,496
200,214
428,203
283%
(5)%
20%
(6)%
27%
(16)%
5%
13%
11%
5%
3%
12%
11%
(7)%
1%
19%
17%
54%
22%
8%
-
(i)
(ii)
EBITDA, EBIT, Unit cash operating cost, All in sustaining cost (AISC), and All in cost (AIC) are non-IFRS financial
information and are not subject to audit.
Due to the timing of metal sales under the offtake agreement, for the purposes of calculating Ernest Henry and Group
AISC and AIC metrics for 2017, Ernest Henry gold sales was equivalent to production from the December 2016 and
March 2017 quarters and actual sales for the June 2017 quarter.
(iii)
Percentage change represents positive/(negative) impact on the business
4
5
64
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Key Results
The consolidated operating and financial results for the current and prior year are summarised below. All $
figures refer to Australian thousand dollars (A$'000) unless otherwise stated.
Key Business Metrics
30 June 2017 30 June 2016
% Change
(iii)
Total underground ore mined (kt)
Total underground lateral development (m)
Total open pit ore mined (kt)
Total open pit waste mined (kt)
Processed tonnes (kt)
Gold grade processed (g/t)
Gold production (oz)
Unit cash operating cost (A$/oz) (i)
All in sustaining cost (A$/oz) (i)
All in cost ($/oz) (i)
Gold price achieved (A$/oz)
Silver price achieved (A$/oz)
Total Revenue
Cost of sales (excluding D&A and fair value adjustments (i))
Corporate, admin, exploration and other costs (excluding D&A)
EBIT (i) (ii)
EBITDA (i) (ii)
Statutory profit/(loss) after income tax
Underlying profit after income tax
Capital expenditure
Net mine cash flow
5,662
11,290
19,672
33,128
20,607
1.49
844,124
625
907
1,073
1,641
24.00
1,479,876
(719,738)
(46,283)
325,031
713,855
217,607
206,588
244,998
461,486
1,479
11,912
16,331
35,125
16,242
1.77
803,476
722
1,014
1,134
1,597
21.37
1,328,614
(674,226)
(46,837)
272,100
607,551
(24,349)
134,496
200,214
428,203
283%
(5)%
20%
(6)%
27%
(16)%
5%
13%
11%
5%
3%
12%
11%
(7)%
1%
19%
17%
-
54%
22%
8%
(i)
(ii)
(iii)
EBITDA, EBIT, Unit cash operating cost, All in sustaining cost (AISC), and All in cost (AIC) are non-IFRS financial
information and are not subject to audit.
Due to the timing of metal sales under the offtake agreement, for the purposes of calculating Ernest Henry and Group
AISC and AIC metrics for 2017, Ernest Henry gold sales was equivalent to production from the December 2016 and
March 2017 quarters and actual sales for the June 2017 quarter.
Percentage change represents positive/(negative) impact on the business
5
65
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations
Cowal
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Mungari
Cowal was the highest producer in the Group, achieving a gold production of 263,015oz (above guidance of
245,000 - 260,000oz) at an average C1 cash cost of $613/oz and AISC of $833/oz. Cash costs and AISC were
below the lower end of guidance of $615 - $675/oz and $885 - $945/oz respectively. Capital expenditure in the
year was $70.3 million, of which $27.4 million relates to the Stage H and Float Tails (Dual) Leach projects which
were approved in February 2017.
Mungari produced a total of 143,820oz at an average C1 cash cost of $954/oz and an AISC of $1,143/oz. Gold
production was below guidance of 150,000 - 160,000oz. C1 cash costs and AISC were above FY17 guidance of
$740 - $800/oz and $970 - $1,030/oz respectively.
Cowal ore mining activities in the year focussed on the E42 Stage G cutback to a current operating level of
894mRL. Resource definition drilling was completed during the year, enabling commencement of the Stage H
project. At 30 June 2017, recruitment of operators and procurement of equipment is underway and mining
excavation has commenced. The initial priority is to relocate stockpiles and waste dumps currently located within
the perimeter of Stage H. Development work is ahead of schedule with all preparatory works to be completed and
waste stripping to ramp up during the September 2017 quarter.
Exploration to assess the potential to extend the mineralised zone closer to surface between the E42 and E41
deposits was completed. Results from diamond drilling campaigns returned mineralised intercepts at similar
grades to those encountered in the Stage H drilling, however across narrower intervals. An update of the
geological interpretation between E41 and E42 is well advanced and is due to be completed in the period ended
31 December 2017.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
166,078
43,849
27,080
263,015
833
941
163,700
29,412
-
237,940
776
789
2,378
14,437
-
25,075
57
152
1%
49%
-%
11%
(7)%
(19)%
The Frog’s Leg underground mine produced 693kt ore tonnes at a grade of 4.8g/t gold. During the year mining
has targeted the Fog, Dwarf and Mist orebodies, and the development of the Rocket orebody was completed.
Mining of the White Foil open pit during the year has focussed on Stage 2b. Unseasonably heavy rainfall during
the year adversely impacted open pit activities delaying the completion of Stage 2. Mining focus is now due to
shift to the Stage 3 cutback. Drill and blast trials were conducted in Stage 3 to increase production efficiencies
and generated encouraging results.
Investment in discovery and resource definition programs across the Mungari tenements continued during the
year. Drilling at Emu and Burgundy extended high-grade mineralisation outside of existing resources. The results
reinforce the potential for future resource growth and the Company is committed in FY18 to matching similar
levels of exploration expenditures as in FY17.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
59,231
14,566
22,161
143,820
1,143
1,371
84,000
18,231
14,727
137,193
1,024
1,128
(24,769)
(3,665)
7,434
6,627
119
243
(29)%
(20)%
50%
5%
(12)%
(22)%
6
7
66
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Mungari
Mungari produced a total of 143,820oz at an average C1 cash cost of $954/oz and an AISC of $1,143/oz. Gold
production was below guidance of 150,000 - 160,000oz. C1 cash costs and AISC were above FY17 guidance of
$740 - $800/oz and $970 - $1,030/oz respectively.
The Frog’s Leg underground mine produced 693kt ore tonnes at a grade of 4.8g/t gold. During the year mining
has targeted the Fog, Dwarf and Mist orebodies, and the development of the Rocket orebody was completed.
Mining of the White Foil open pit during the year has focussed on Stage 2b. Unseasonably heavy rainfall during
the year adversely impacted open pit activities delaying the completion of Stage 2. Mining focus is now due to
shift to the Stage 3 cutback. Drill and blast trials were conducted in Stage 3 to increase production efficiencies
and generated encouraging results.
Investment in discovery and resource definition programs across the Mungari tenements continued during the
year. Drilling at Emu and Burgundy extended high-grade mineralisation outside of existing resources. The results
reinforce the potential for future resource growth and the Company is committed in FY18 to matching similar
levels of exploration expenditures as in FY17.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
59,231
14,566
22,161
143,820
1,143
1,371
84,000
18,231
14,727
137,193
1,024
1,128
(24,769)
(3,665)
7,434
6,627
119
243
(29)%
(20)%
50%
5%
(12)%
(22)%
7
67
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Mt Carlton
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Mt Rawdon
Mt Carlton produced 105,024oz, exceeding guidance of 90,000 - 100,000 ozs. C1 costs of $307/oz and AISC of
$622/oz were both substantially below the bottom end of FY17 guidance of A$400 - $450/oz and A$675 -
$725/oz respectively.
Mt Rawdon achieved total gold production of 101,331oz at an average cash cost of A$630/oz and an AISC of
A$873/oz. Gold production exceeded guidance of 90,000 - 100,000oz. C1 cash costs and AISC were below
FY17 guidance of $690 - $770/oz and $960 - $1,040/oz respectively.
Mining of the Stage 2 pit area was completed in the period ended 31 December 2016 leading to mining of the
Stage 3a western end of the V2 pit. This focussed on accessing high-grade ore to blend with low to
medium-grade Run of Mine (ROM) stocks. Mining of the Stage 3b pre-strip commenced in December 2016 and
remains ongoing at June 2017.
During the year the gravity recoverable gold circuit was successfully commissioned, producing 3,000oz of gold
doré in the June 2017 quarter. This circuit will continue to be optimised going forward. In addition, studies are
underway to identify options to reduce the impact of clay in the flotation circuit that could lead to increased plant
throughput.
The underground Pre-Feasibility Study confirmed positive economics for a Stage 4 pit cutback combined with an
underground operation to extract the Link Zone. A Definitive Feasibility Study, which will include additional
resource definition drilling, has commenced and is expected to be completed in the 2017 calendar year.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
91,148
15,304
13,887
105,024
622
762
103,293
13,778
8,146
113,056
742
820
(12,145)
1,526
5,741
(8,032)
(120)
(58)
(12)%
11%
70%
(7)%
16%
7%
Mining activities focussed on the completion of Stage 3 and the progression of Stage 4 cutback. Ore was sourced
from the northern section of the open pit while waste movements continued in the southern and western sections
of the pit.
A number of continuous improvement projects were undertaken during the year including pit wall angle
optimisation studies and an ore characterisation program which aims to improve mill throughput and recoveries.
In addition, a new contract has been awarded for the supply and service of explosives which will see significant
savings realised over the next three years.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
35,722
14,242
19,071
101,331
873
1,065
8,429
16,448
37,384
85,002
1,024
1,471
27,293
(2,206)
(18,313)
16,329
(151)
(406)
324%
(13)%
(49)%
19%
15%
28%
8
9
68
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Mt Rawdon
Mt Rawdon achieved total gold production of 101,331oz at an average cash cost of A$630/oz and an AISC of
A$873/oz. Gold production exceeded guidance of 90,000 - 100,000oz. C1 cash costs and AISC were below
FY17 guidance of $690 - $770/oz and $960 - $1,040/oz respectively.
Mining activities focussed on the completion of Stage 3 and the progression of Stage 4 cutback. Ore was sourced
from the northern section of the open pit while waste movements continued in the southern and western sections
of the pit.
A number of continuous improvement projects were undertaken during the year including pit wall angle
optimisation studies and an ore characterisation program which aims to improve mill throughput and recoveries.
In addition, a new contract has been awarded for the supply and service of explosives which will see significant
savings realised over the next three years.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
35,722
14,242
19,071
101,331
873
1,065
8,429
16,448
37,384
85,002
1,024
1,471
27,293
(2,206)
(18,313)
16,329
(151)
(406)
324%
(13)%
(49)%
19%
15%
28%
9
69
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Cracow
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Edna May
Cracow produced 89,496oz at an average cash cost of $746/oz and AISC of $1,123/oz. Gold production
exceeded guidance of 80,000 - 85,000oz. Cash costs and AISC were at the lower end of guidance ranges of
$740 - $800/oz and $1,100 - $1,160/oz respectively.
Total gold production at Edna May was 70,188oz at an average cash cost of $1,309/oz and AISC of $1,440/oz.
Low material movement and a lack of available ore at periods during the year resulted in full year production
lower than guidance of 80,000 - 85,000oz. This resulted in higher costs relative to guidance of A$1,020 -
$1,100/oz and AISC of $1,140 - $1,220/oz.
A total of 529kt of ore was mined at an average grade of 5.45g/t gold. Primary ore sources during the year were
the Kilkenny and Empire ore bodies. Looking to FY18, grades are expected to decline with increased production
from the narrower Griffin and Empire stopes.
Resource definition drilling at Cracow during the year confirmed continuity of high grade mineralisation at
Killarney. At Imperial, new high-grade intersections were returned and will be incorporated in a maiden resource
estimate to be completed in this area of the mining operations.
The first phase of new discovery drilling was completed at the Walhalla and Valkyrie targets both located within
2km of the operating footprint at Cracow. Drilling was designed to test the concept that both targets are high-level
expressions of deeper high-grade mineralisation below; results are pending.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
41,060
17,462
14,168
89,496
1,123
1,208
40,500
13,453
12,204
90,626
1,065
1,164
560
4,009
1,964
(1,130)
58
44
1%
30%
16%
(1)%
(5)%
(4)%
Capital expenditure of $30.8 million in the year was attributable to continued development of the new
underground mine which is forecast to begin producing ore in the first half of FY18.
Following a strategic review and management changes implemented in the year, substantial operational
improvement was observed at Edna May in the latter months of FY17. This was reflected in ore mined increasing
by 162% and gold production increasing by 101% from March quarter to June quarter.
Open pit mining focussed within the Stage 2 north cutback. The bulk of the pre-strip in the north cutback was
completed as at 30 June 2017 with improved mining rates expected to be maintained in the period ended 31
December 2017.
Rehabilitation of the underground mine progressed with an additional 318m of the decline completed. Primary
development included 37m of ventilation infrastructure and 24m of decline development.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
(14,652)
2,241
28,519
70,188
1,440
1,862
1,920
4,290
7,302
71,028
1,504
1,605
(16,572)
(2,049)
21,217
(840)
(64)
257
(863)%
(48)%
291%
(1)%
4%
(16)%
10
11
70
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Edna May
Total gold production at Edna May was 70,188oz at an average cash cost of $1,309/oz and AISC of $1,440/oz.
Low material movement and a lack of available ore at periods during the year resulted in full year production
lower than guidance of 80,000 - 85,000oz. This resulted in higher costs relative to guidance of A$1,020 -
$1,100/oz and AISC of $1,140 - $1,220/oz.
Capital expenditure of $30.8 million in the year was attributable to continued development of the new
underground mine which is forecast to begin producing ore in the first half of FY18.
Following a strategic review and management changes implemented in the year, substantial operational
improvement was observed at Edna May in the latter months of FY17. This was reflected in ore mined increasing
by 162% and gold production increasing by 101% from March quarter to June quarter.
Open pit mining focussed within the Stage 2 north cutback. The bulk of the pre-strip in the north cutback was
completed as at 30 June 2017 with improved mining rates expected to be maintained in the period ended 31
December 2017.
Rehabilitation of the underground mine progressed with an additional 318m of the decline completed. Primary
development included 37m of ventilation infrastructure and 24m of decline development.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Major capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
(14,652)
2,241
28,519
70,188
1,440
1,862
1,920
4,290
7,302
71,028
1,504
1,605
(16,572)
(2,049)
21,217
(840)
(64)
257
(863)%
(48)%
291%
(1)%
4%
(16)%
11
71
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Mining Operations (continued)
Ernest Henry
The Ernest Henry transaction was completed on 1 November 2016 and is expected to improve the quality and
longevity of the Group's portfolio as well as materially reduce the cost profile.
For the eight months of attributable production in the year ended 30 June 2017, total gold produced at Ernest
Henry was 60,259oz at a negative average C1 cash cost of $(593)/oz and a negative AISC of $(361)/oz. Gold
production exceeded guidance of 55,000 - 60,000oz. AISC was substantially below the guidance range of A$100
- A$150/oz due to lower operating costs, higher gold and copper production and a higher than planned copper
price.
Key Business Metrics
30 June 2017 30 June 2016
Change % Change
Net mine cash flow ($'000)
Sustaining capital ($'000)
Gold production (oz)
All in sustaining cost ($/oz)
All in cost ($/oz)
Pajingo
81,785
6,066
60,259
(361)
(361)
-
-
-
-
-
-
-
-
-
-
-%
-%
-%
-%
-%
Pajingo was sold on 1 September 2016 to Minjar Gold Pty Limited for total proceeds of up to $52.0 million
consisting of a $42.0 million upfront cash payment and a 1% NSR (net smelter return) royalty of up to $10.0
million for gold production above 130,000oz.
During the 62 days of the year Pajingo was still under Evolution ownership, Pajingo produced 10,991oz of gold at
a unit cash operating cost of $897/oz, AISC of $1,422/oz and AIC of $1,577/oz (30 June 2016: 68,630oz,
$785/oz, $1,161/oz, $1,275/oz).
12
72
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Financial Performance
Profit or Loss
Revenue for the year ended 30 June 2017 increased by 11% to $1.480 billion (30 June 2016: $1.329 billion). This
is largely due to the inclusion of results from Ernest Henry totalling $163.342 million. This is comprised of
$102.921 million for 8 months of copper and silver revenue and $60.421 million for 5 months of gold revenue. An
increase of 3% in achieved gold price to $1,641/oz (30 June 2016: $1,597/oz) had a further impact. This was
partly offset by the impact of the disposal of the Pajingo operation which contributed revenue of $17.519 million in
the year representing a decrease of $95.636 million on the prior year.
Total gold sold equalled 817,323oz which included deliveries into the hedge book of 248,493oz at an average
price of $1,584/oz (30 June 2016: 274,879oz, $1,593/oz). The remaining 568,830oz were sold at spot price
achieving an average price of $1,666/oz (30 June 2016: 540,710oz, $1,599/oz). The Group's hedge book totals
458,495oz as at 30 June 2017 at an average price of $1,645/oz for deliveries to June 2020.
Operating costs (excluding depreciation, amortisation and fair value adjustments of $431.606 million) increased
to $719.738 million (30 June 2016: $674.226 million) largely as a result of the first year inclusion of Ernest Henry
which accounted for operating costs of $64.108 million offset by $47.312 million following the sale of Pajingo
during the year. The operating costs for the six existing mine sites increased by 5% on the prior year to $640.466
million. This increase is primarily due to the shift from capital to operating stripping at Cowal for Stage G, and the
completion of underground development activities as well as Stage 2 of the open cut which resulted in higher
costs at Mungari.
The Group’s All in Sustaining Cost decreased by 11% to $907/oz (30 June 2016: $1,014/oz) despite a 16% drop
in the average grade mined during the year. The decline in grade was offset by the inclusion of Ernest Henry
which contributed an AISC of $(361)/oz for the year.
The Group posted statutory profit after tax of $217.607 million (30 June 2016: $24.349 million loss) driven by
record annual production, decreased costs per ounce following a strong focus on cost control and favourable
gold prices during the year. Underlying profit after tax was $206.588 million (30 June 2016: $134.496 million)
Further details of the profit and loss are outlined in the Profit Overview on pages 63 and 64 of this report.
Balance Sheet
Total assets increased during the year to $2.945 billion (30 June 2016: $2.187 billion), representing a 35%
movement. This increase is largely due to the completion of the Ernest Henry transaction, which contributed
$869.539 million offset by the sale of Pajingo which reduced total assets by $77.621 million. Excluding the Ernest
Henry and Pajingo transactions, total assets remained at a consistent level. Capital additions for property, plant
and equipment totalled $91.041 million while depreciation totalled $132.076 million. Mine development and
exploration additions totalled $181.973 million primarily attributable to continued stripping at a number of sites
and amortisation totalled $256.748 million.
Total liabilities for the Group increased to $817.217 million at 30 June 2017, an increase of $181.491 million or
29% on the prior year. This increase was largely due to the draw down on a new $475 million Term Facility
(Facility D) which was used to fund the Ernest Henry transaction. The balance of this Facility D as at 30 June
2017 was $395 million.
The Term Facility established for the Cowal acquisition (Facility B) reduced by $150 million during the year to $40
million as at 30 June 2017.
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Financial Performance (continued)
Balance Sheet (continued)
The Group ended the year with a cash balance of $37.385 million and available credit of $300 million in Facility A
as part of its Senior Secured Syndicated Revolving and Term Facility.
Cash Flow
Total cash inflows for the year amounted to $20.157 million (30 June 2016: outflow $188.493 million).
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net movement in cash
Cash at the beginning of the year
Effects of exchange rate changes on cash
Cash at the end of the year
30 June 2017
$'000
30 June 2016
$'000
Change
$'000 % Change
650,795
(1,120,794)
490,156
20,157
17,295
(67)
37,385
574,084
(999,380)
236,803
(188,493)
205,788
-
17,295
76,711
(121,414)
253,353
208,650
(188,493)
-
20,090
13%
12%
107%
(111)%
(92)%
-%
116%
Net cash inflow from operating activities was $650.795 million, an increase of $76.711 million (30 June 2016:
$574.084 million).
Net cash outflows from investment activities were $1.121 billion, a $121.414 million increase (30 June 2016:
$999.380 million) consisting of payments for the acquisition of the economic interest in Ernest Henry
Copper-Gold Operation of $884.004 million (including transaction fees) and receipt of $41.900 million on the sale
of Pajingo. Capital investments excluding the payment for Ernest Henry for the year include property plant and
equipment of $91.041 million and mine development and exploration of $181.267 million.
Net cash inflows from financing activities were $490.156 million, an increase of $253.353 million (30 June 2016:
outflow $236.803 million). Financing cash flows for the year included the drawing of $475 million on the Senior
Secured Syndicated Revolving and Term Facility, net proceeds received on the issue of shares to fund the
Ernest Henry transaction of $395.244 million and dividend payments of $52.419 million.
Debt repayment in the year totalled $325 million. This comprised of repayment of $95 milllion to the Senior
Secured Revolving Loan ("Facility A"), $150 million to the Senior Secured Term Loan ("Facility B") and $80
million to the new Senior Secured Term Loan ("Facility D").
Taxation
During the year, the Group made the determination to recognise previously unrecognised tax losses on the
balance sheet. The Company recognised a net tax expense of $19.677 million (30 June 2016: $2.843) in the
current year consisting of a current tax liability of $36.214 million, deferred tax liability of $3.953 million and
deferred tax asset on previously unrecognised tax losses of $20.400 million.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Financial Performance (continued)
Capital Expenditure
Capital expenditure for the year totalled $244.998 million (30 June 2016: $200.214 million). This consists of
sustaining capital, including near mine exploration and resource definition of $116.554 million (30 June 2016:
$106.970 million) and mine development of $128.444 million (30 June 2016: $93.244 million). The main capital
projects include the Stage H and Float Tails (Dual) Leach projects at Cowal, Cracow underground mine
development, Mt Rawdon capital waste stripping, Edna May Southern and Northern cutbacks and underground
mine development, Mungari underground development, and Mt Carlton capital waste stripping in the northern
section of Stage 3.
Financing
Total finance costs for the year were $35.194 million (30 June 2016: $43.785 million), a decrease of 20%.
Included in total finance costs is interest expense of $24.158 million (30 June 2016: 26.314), amortisation of debt
establishment costs of $7.444 million (30 June 2016: $11.623 million) and discount unwinding on mine
rehabilitation liabilities of $3.254 million (30 June 2016: 3.406 million).
In September 2016, the Group entered into a new financing arrangement ("the New Facility") comprising a $475
million Senior Secured Term Loan (“Facility D”) and an amendment to the repayment profile of the existing $400
million Senior Secured Term Loan ("Facility B") to reflect the Group's accelerated repayments on the previous
Facility. No changes have been made to the existing $300 million Senior Secured Revolving Loan ("Facility A") or
the $155 million Performance Bond Facility ("Facility C").
The new Facility was executed on 29 September 2016 and was effective from that date.
The new Facility was drawn down on 31 October 2016 on completion of the Ernest Henry acquisition. The
repayment periods and the outstanding balances as at 30 June 2017 on each facility are set out below:
Facility
Senior Secured Revolving Loan - Facility A
Senior Secured Term Loan - Facility B
Performance Bond Facility - Facility C
Senior Secured Term Loan - Facility D
Material business risks
Term date
31 July 2018
15 July 2018
20 July 2018
31 October 2021
Outstanding
balance
-
$40 million
$125 million
$395 million
The Group prepares its business plans using estimates of production and financial performance based on a
range of assumptions and forecasts. There is uncertainty in these assumptions and forecasts, and risk that
variation from them could result in actual performance being different to expected outcomes. The uncertainties
arise from a range of factors, including the nature of the mining industry and general economic factors. The
material business risks faced by the Group that may have an impact on the operating and financial prospects of
the Group as at 30 June 2017 are:
Fluctuations in the gold price and Australian dollar
The Group’s revenues are exposed to fluctuations in both the gold price and the Australian dollar. Volatility in the
gold price and Australian dollar creates revenue uncertainty and requires careful management of business
performance to ensure that operating cash margins are maintained should the Australian dollar price fall.
14
15
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Financial Performance (continued)
Capital Expenditure
Capital expenditure for the year totalled $244.998 million (30 June 2016: $200.214 million). This consists of
sustaining capital, including near mine exploration and resource definition of $116.554 million (30 June 2016:
$106.970 million) and mine development of $128.444 million (30 June 2016: $93.244 million). The main capital
projects include the Stage H and Float Tails (Dual) Leach projects at Cowal, Cracow underground mine
development, Mt Rawdon capital waste stripping, Edna May Southern and Northern cutbacks and underground
mine development, Mungari underground development, and Mt Carlton capital waste stripping in the northern
section of Stage 3.
Financing
Total finance costs for the year were $35.194 million (30 June 2016: $43.785 million), a decrease of 20%.
Included in total finance costs is interest expense of $24.158 million (30 June 2016: 26.314), amortisation of debt
establishment costs of $7.444 million (30 June 2016: $11.623 million) and discount unwinding on mine
rehabilitation liabilities of $3.254 million (30 June 2016: 3.406 million).
In September 2016, the Group entered into a new financing arrangement ("the New Facility") comprising a $475
million Senior Secured Term Loan (“Facility D”) and an amendment to the repayment profile of the existing $400
million Senior Secured Term Loan ("Facility B") to reflect the Group's accelerated repayments on the previous
Facility. No changes have been made to the existing $300 million Senior Secured Revolving Loan ("Facility A") or
the $155 million Performance Bond Facility ("Facility C").
The new Facility was executed on 29 September 2016 and was effective from that date.
The new Facility was drawn down on 31 October 2016 on completion of the Ernest Henry acquisition. The
repayment periods and the outstanding balances as at 30 June 2017 on each facility are set out below:
Facility
Senior Secured Revolving Loan - Facility A
Senior Secured Term Loan - Facility B
Performance Bond Facility - Facility C
Senior Secured Term Loan - Facility D
Material business risks
Term date
31 July 2018
15 July 2018
20 July 2018
31 October 2021
Outstanding
balance
-
$40 million
$125 million
$395 million
The Group prepares its business plans using estimates of production and financial performance based on a
range of assumptions and forecasts. There is uncertainty in these assumptions and forecasts, and risk that
variation from them could result in actual performance being different to expected outcomes. The uncertainties
arise from a range of factors, including the nature of the mining industry and general economic factors. The
material business risks faced by the Group that may have an impact on the operating and financial prospects of
the Group as at 30 June 2017 are:
Fluctuations in the gold price and Australian dollar
The Group’s revenues are exposed to fluctuations in both the gold price and the Australian dollar. Volatility in the
gold price and Australian dollar creates revenue uncertainty and requires careful management of business
performance to ensure that operating cash margins are maintained should the Australian dollar price fall.
15
75
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Material business risks (continued)
Fluctuations in the gold price and Australian dollar (continued)
Declining gold prices can also impact operations by requiring a reassessment of the feasibility of a particular
exploration or development project. Even if a project is ultimately determined to be economically viable, the need
to conduct such a reassessment could cause substantial delays and/or may interrupt operations, which may have
a material adverse effect on our results of operations and financial condition.
Ore Reserves and Mineral Resources
The Group’s Ore Reserves and Mineral Resources are estimates, and no assurance can be given that the
estimated reserves and resources are accurate or that the indicated level of gold, silver or any other mineral will
be produced. Such estimates are, in large part, based on interpretations of geological data obtained from drill
holes and other sampling techniques. Actual mineralisation or geological conditions may be different from those
predicted. No assurance can be given that any part or all of the Group’s Mineral Resources constitute or will be
converted into Ore Reserves.
Market price fluctuations of gold and silver as well as increased production and capital costs may render the
Group’s Ore Reserves unprofitable to develop at a particular site or sites for periods of time or may render Ore
Reserves containing relatively lower grade mineralisation uneconomic. Estimated reserves may have to be
re-estimated based on actual production experience. Any of these factors may require the Group to reduce its
Ore Reserves and Mineral Resources, which could have a negative impact on the Group’s financial results.
Replacement of depleted reserves
The Group must continually replace reserves depleted by production to maintain production levels over the long
term. Reserves can be replaced by expanding known ore bodies, locating new deposits or making acquisitions.
Exploration is highly speculative in nature. The Group’s exploration projects involve many risks and are frequently
unsuccessful. Once a site with mineralisation is discovered, it may take several years from the initial phases of
drilling until production is possible.
As a result, there is no assurance that current or future exploration programs will be successful. There is a risk
that depletion of reserves will not be offset by discoveries or acquisitions or that divestitures of assets will lead to
a lower reserve base. The mineral base of the Group may decline if reserves are mined without adequate
replacement and the Group may not be able to sustain production beyond the current mine lives, based on
current production rates.
Mining risks and insurance risks
The mining industry is subject to significant risks and hazards, including environmental hazards, industrial
accidents, unusual or unexpected geological conditions, unavailability of materials and equipment, pit wall
failures, rock bursts, seismic events, cave-ins, and weather conditions (including flooding and bush fires), most of
which are beyond the Group’s control. These risks and hazards could result in significant costs or delays that
could have a material adverse effect on the Group’s financial performance, liquidity and results of operation.
The Group maintains insurance to cover the most common of these risks and hazards. The insurance is
maintained in amounts that are considered reasonable depending on the circumstances surrounding each
identified risk. However property, liability and other insurance may not provide sufficient coverage for losses
related to these or other risks or hazards.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Material business risks (continued)
Production and cost estimates
The Group prepares estimates of future production, cash costs and capital costs of production for its operations.
No assurance can be given that such estimates will be achieved. Failure to achieve production or cost estimates
or material increases in costs could have an adverse impact on the Group’s future cash flows, profitability, results
of operations and financial condition.
The Group’s actual production and costs may vary from estimates for a variety of reasons, including: actual ore
mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term
operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the
processing of new or different ore grades; revisions to mine plans; risks and hazards associated with mining;
natural phenomena, such as inclement weather conditions, water availability and floods; and unexpected labour
shortages or strikes.
Costs of production may also be affected by a variety of factors, including: changing waste-to-ore ratios, ore
grade metallurgy, labour costs, cost of commodities, general inflationary pressures and currency exchange rates.
Environmental, health and safety; permits
The Group’s mining and processing operations and exploration activities are subject to extensive laws and
regulations governing the protection of the environment, waste disposal, worker safety, mine development and
protection of endangered and other special status species. The Group’s ability to obtain permits and approvals
and to successfully operate may be adversely impacted by real or perceived detrimental events associated with
the Group’s activities or those of other mining companies affecting the environment, human health and safety or
the surrounding communities. Delays in obtaining or failure to obtain government permits and approvals may
adversely affect the Group’s operations, including its ability to continue operations.
While the Group has implemented extensive health, safety and community initiatives at its sites to ensure the
health and safety of its employees, contractors and members of the community affected by its operations, there is
no guarantee that such measures will eliminate the occurrence of accidents or other incidents which may result in
personal injuries or damage to property, and in certain instances such occurrences could give rise to regulatory
fines and/or civil liability.
Community relations
The Group has an established community relations function, both at a Group level and at each of its operations.
The Group function has developed a community engagement framework, including a set of principles, policies
and procedures designed to provide a structured and consistent approach to community activities across our
sites whilst recognising that, fundamentally, Community Relations is about people connecting with people. The
Group recognises that a failure to appropriately manage local community stakeholder expectations may lead to
dissatisfactions which have the potential to disrupt production and exploration activities.
Risk management
the year.
The Group manages the risks listed above, and other day-to-day risks through an established management
framework which conforms to Australian and international standards and guidance. The Group’s risk reporting
and control mechanisms are designed to ensure strategic, operational, legal, financial, reputational and other
risks are identified, assessed and appropriately managed. These are reviewed by the Risk Committee throughout
16
17
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Material business risks (continued)
Production and cost estimates
The Group prepares estimates of future production, cash costs and capital costs of production for its operations.
No assurance can be given that such estimates will be achieved. Failure to achieve production or cost estimates
or material increases in costs could have an adverse impact on the Group’s future cash flows, profitability, results
of operations and financial condition.
The Group’s actual production and costs may vary from estimates for a variety of reasons, including: actual ore
mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term
operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the
processing of new or different ore grades; revisions to mine plans; risks and hazards associated with mining;
natural phenomena, such as inclement weather conditions, water availability and floods; and unexpected labour
shortages or strikes.
Costs of production may also be affected by a variety of factors, including: changing waste-to-ore ratios, ore
grade metallurgy, labour costs, cost of commodities, general inflationary pressures and currency exchange rates.
Environmental, health and safety; permits
The Group’s mining and processing operations and exploration activities are subject to extensive laws and
regulations governing the protection of the environment, waste disposal, worker safety, mine development and
protection of endangered and other special status species. The Group’s ability to obtain permits and approvals
and to successfully operate may be adversely impacted by real or perceived detrimental events associated with
the Group’s activities or those of other mining companies affecting the environment, human health and safety or
the surrounding communities. Delays in obtaining or failure to obtain government permits and approvals may
adversely affect the Group’s operations, including its ability to continue operations.
While the Group has implemented extensive health, safety and community initiatives at its sites to ensure the
health and safety of its employees, contractors and members of the community affected by its operations, there is
no guarantee that such measures will eliminate the occurrence of accidents or other incidents which may result in
personal injuries or damage to property, and in certain instances such occurrences could give rise to regulatory
fines and/or civil liability.
Community relations
The Group has an established community relations function, both at a Group level and at each of its operations.
The Group function has developed a community engagement framework, including a set of principles, policies
and procedures designed to provide a structured and consistent approach to community activities across our
sites whilst recognising that, fundamentally, Community Relations is about people connecting with people. The
Group recognises that a failure to appropriately manage local community stakeholder expectations may lead to
dissatisfactions which have the potential to disrupt production and exploration activities.
Risk management
The Group manages the risks listed above, and other day-to-day risks through an established management
framework which conforms to Australian and international standards and guidance. The Group’s risk reporting
and control mechanisms are designed to ensure strategic, operational, legal, financial, reputational and other
risks are identified, assessed and appropriately managed. These are reviewed by the Risk Committee throughout
the year.
17
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Environmental regulation and performance (continued)
The operations of the Group are subject to environmental regulation under the jurisdiction of the countries in
which those operations are conducted including Australia and New Zealand. Each mining operation is subject to
particular environmental regulation specific to their activities as part of their operating licence or environmental
approvals. Each of our sites are required to also manage their environmental obligations in accordance with our
corporate environmental policies and standards.
The environmental laws and regulations that cover each of our sites, combined with our policies and standards,
address the potential impact of the Group's activities in relation to water and air quality, noise, land, disturbance,
waste and tailings management, and the potential impact upon flora and fauna.
The Group has a uniform internal reporting system across all sites. All environmental incidents, including
breaches of any regulation or law are assessed according to their actual or potential environmental consequence.
Given levels of environmental incidents are tracked based on factors such as spill volume, incident location
(onsite or offsite) and potential or actual environmental impacts. These levels include: I (insignificant), II (minor),
III (moderate), IV (major), V (catastrophic).
Across the six Evolution Mining Site, excluding government reporting for non-vehicular native fauna deaths, the
Level III reports for the past two years has been:
Number of Level III incidents
2017
9
2016
14
There were no Level IV incidents. In all cases, environmental authorities were notified of those events and the
appropriate agreed remedial actions undertaken.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Operating and Financial Review (continued)
Material business risks (continued)
Risk management (continued)
The financial reporting and control mechanisms are reviewed during the year by management, the internal audit
process, the Audit Committee and the external auditors.
The Group has policies in place to manage risk in the areas of Health and Safety, Environment and Equal
Employment Opportunity.
The Leadership Team, the Risk Committee and the Board regularly review the risk portfolio of the business and
the effectiveness of the Group’s management of those risks.
Dividends
With the continued growth over the past year and the recent inclusion in the ASX100, coinciding with the Group
moving to a tax paying position, the Directors have approved a change to the dividend policy of whenever
possible paying a half-yearly dividend equivalent to 50% of the Group's after tax earnings. The change was
effective immediately and has been applied to the final dividend for 2017.
The Board has confirmed that Evolution is in a sound position to meet its commitment under the new policy to
pay a final fully franked dividend for the current period of 3 cents per share, totalling $50.484 million. Evolution
shares will trade excluding entitlement to the dividend on 25 August 2017, with the record date being 28 August
2017 and payment date of 29 September 2017.
In relation to Evolution’s dividend policy, the Board of Directors has suspended the Dividend Reinvestment Plan
("DRP") until further notice.
Significant changes in the state of affairs
There were no significant changes in the nature of the activities of the Group during the period, other than those
included in the Key Highlights.
Likely developments and expected results of operations
Further information on likely developments in the operations of the Group and the expected results of operations
have not been included in this Annual Financial Report because the Directors believe it would be likely to result in
unreasonable prejudice to the Group.
Events occurring after the reporting period
No matter or circumstance has occurred subsequent to the year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or state of affairs of the Group or
economic entity in subsequent financial years except for the following matters:
On 4 August, the Company agreed to subscribe for $2.5 million worth of shares, on a firm allocation basis, in the
upcoming Initial Public Offering of Riversgold Ltd, a new gold-focussed exploration company. Evolution will hold a
right of first refusal over any projects in Australia that Riversgold decides to sell or joint venture.
Environmental regulation and performance
The Executive Chairman reports to the Board on all significant safety and environmental incidents. The Board
also has a Risk Committee which has oversight of the safety, health and environmental performance of the
Group and meets at least two times per year. The Directors are not aware of any environmental incidents
occurring during the year ended 30 June 2017 which would have a materially adverse impact on the overall
business of the Group.
18
19
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Environmental regulation and performance (continued)
The operations of the Group are subject to environmental regulation under the jurisdiction of the countries in
which those operations are conducted including Australia and New Zealand. Each mining operation is subject to
particular environmental regulation specific to their activities as part of their operating licence or environmental
approvals. Each of our sites are required to also manage their environmental obligations in accordance with our
corporate environmental policies and standards.
The environmental laws and regulations that cover each of our sites, combined with our policies and standards,
address the potential impact of the Group's activities in relation to water and air quality, noise, land, disturbance,
waste and tailings management, and the potential impact upon flora and fauna.
The Group has a uniform internal reporting system across all sites. All environmental incidents, including
breaches of any regulation or law are assessed according to their actual or potential environmental consequence.
Given levels of environmental incidents are tracked based on factors such as spill volume, incident location
(onsite or offsite) and potential or actual environmental impacts. These levels include: I (insignificant), II (minor),
III (moderate), IV (major), V (catastrophic).
Across the six Evolution Mining Site, excluding government reporting for non-vehicular native fauna deaths, the
Level III reports for the past two years has been:
Number of Level III incidents
2017
9
2016
14
There were no Level IV incidents. In all cases, environmental authorities were notified of those events and the
appropriate agreed remedial actions undertaken.
19
79
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors (continued)
The following information is current as at the date of this report. Please refer to the Remuneration Report section
(e) for details of shareholdings, options and rights.
Graham Freestone, BEc (Hons), Non-Executive Director
Jacob (Jake) Klein, BCom Hons, ACA, Executive Chairman
Mr Klein was appointed as Executive Chairman in October 2011, following the merger of Conquest Mining Limited and
Catalpa Resources Limited. Previously he served as the Executive Chairman of Conquest Mining. Prior to that, Mr Klein was
President and CEO of Sino Gold Mining Limited, where along with Mr Askew (director from 2002 and Chairman from 2005 of
Sino Gold) he managed the development of that company into the largest foreign participant in the Chinese gold industry.
Sino Gold was listed on the ASX in 2002 with a market capitalisation of A$100 million and was purchased by Eldorado Gold
Corporation in late 2009 for over A$2 billion.
Mr Klein was formerly a Non-Executive Director of Lynas Corporation Limited, a company with operations in Australia and
Malaysia, and formerly a Non-Executive Director of OceanaGold Corporation, a company with operations in the Philippines,
USA and New Zealand. Both Lynas Corporation and OceanaGold are ASX-listed companies.
Lawrie Conway B Bus, CPA, MAICD, Finance Director and Chief Financial Officer
Mr Conway was appointed Finance Director and Chief Financial Officer of Evolution Mining Limited with effect from 1 August
2014 (previously a Non-Executive Director).
Mr Conway has more than 27 years’ experience in the resources sector across a diverse range of commercial, financial and
operational activities. He has held a mix of corporate, operational and commercial roles within Australia, Papua New Guinea
and Chile with Newcrest and prior to that with BHP Billiton. He most recently held the position of Executive General Manager
– Commercial and West Africa with Newcrest Mining where he was responsible for Newcrest's group Supply and Logistics,
Marketing, Information Technology and Laboratory functions as well as Newcrest's business in West Africa.
Mr Conway is a Non-Executive Director of Aurelia Metals Ltd (appointed in June 2017).
James (Jim) Askew, BEng (Mining), MEngSc, FAusIMM, MCIMM, MSME (AIME), MAICD, Non-Executive Director
Mr Askew is a mining engineer with more than 40 years’ broad international experience as a Director and Chief Executive
Officer for a wide range of Australian and international publicly listed mining, mining finance and other mining related
companies.
Mr Askew has served on the boards of numerous mining and mining services companies, which currently include
OceanaGold Limited (Chairman since November 2006), a company with operations in the Philippines, USA and New
Zealand; Syrah Resources Limited (Chairman since October 2014), a company with operations in Mozambique and in the
USA; and Endeavour Mining Corporation, a company with operations in Cote d’Ivoire, Mali, Burkina Faso and Ghana
(Non-Executive Director since July 2017).
Mr Askew is a member of the Risk Committee and Member of the Nomination and Remuneration Committee.
Within the last 3 years Mr Askew has been a Non-Executive Director of Nevada Copper Limited and Asian Mineral Resources
Ltd.
Mr Freestone has more than 45 years’ experience in the petroleum and natural resources industry. He has a broad finance,
corporate and commercial background obtained in Australia and internationally through senior finance positions with the Shell
Group, Acacia Resources Limited and AngloGold Ashanti Limited.
Mr Freestone was the Chief Financial Officer and Company Secretary of Acacia Resources Limited from 1994 until 2001.
From 2001 to 2009 he was a Non-Executive director of Lion Selection Limited, and from 2009 to 2011 he was a
Non-Executive director of Catalpa Resources Limited, and Chaired their Audit Committees during that period.
Mr Freestone is a Non-Executive Director of Kasbah Resources Limited (appointed February 2017) a company with a tin
project in Morocco, and Chairs its Remuneration and Audit Committees.
Mr Freestone is the Chair of the Audit Committee and Member of the Risk Committee.
Colin (Cobb) Johnstone, BEng (Mining), Lead Independent Director
Mr Johnstone is a mining engineer with over 30 years' experience in the resources sector. He has served as General
Manager at some of Australia's largest mines including the Kalgoorlie Super Pit in Western Australia, the Olympic Dam Mine
in South Australia and the Northparkes Mine in New South Wales. He has extensive international experience including
Canada, China, Africa and South America.
Mr Johnstone was Chief Operating Officer at Equinox Minerals Limited, until the acquisition by Barrick Gold Corporation in
2011. Prior to that Mr Johnstone was Chief Operating Officer of Sino Gold Mining Limited, where he oversaw the
development and operation of gold mines in China. Mr Johnstone is Chairman of Aurelia Metals Ltd (since November 2016).
Mr Johnstone is the Lead Independent Director, Chair of the Risk Committee, and a member of the Audit Committee.
Mr Johnstone was a former Non-Executive Director of Magnis Resources Ltd; Neometals Ltd (Reed Resources Ltd); and
Metallum Ltd.
Thomas (Tommy) McKeith, BSc (Hons), GradDip Eng (Mining), MBA, Non-Executive Director
Mr McKeith is a geologist with over 28 years' experience in various mine geology, exploration and business development
roles. He was formerly Executive Vice President (Growth and International Projects) for Gold Fields Limited, where he was
responsible for global greenfields exploration and project development.
Mr McKeith was also Chief Executive Officer of Troy Resources Limited and has held Non-Executive Director roles at Sino
Gold Limited, Avoca Resources Limited and is currently the Non-Executive Chairman of ABM Resources NL.
Mr McKeith is the Chair of the Nomination and Remuneration Committee and Member of the Audit Committee.
Mr McKeith is also a Non-Executive Chairman of ABM Resources NL.
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors (continued)
Graham Freestone, BEc (Hons), Non-Executive Director
Mr Freestone has more than 45 years’ experience in the petroleum and natural resources industry. He has a broad finance,
corporate and commercial background obtained in Australia and internationally through senior finance positions with the Shell
Group, Acacia Resources Limited and AngloGold Ashanti Limited.
Mr Freestone was the Chief Financial Officer and Company Secretary of Acacia Resources Limited from 1994 until 2001.
From 2001 to 2009 he was a Non-Executive director of Lion Selection Limited, and from 2009 to 2011 he was a
Non-Executive director of Catalpa Resources Limited, and Chaired their Audit Committees during that period.
Mr Freestone is a Non-Executive Director of Kasbah Resources Limited (appointed February 2017) a company with a tin
project in Morocco, and Chairs its Remuneration and Audit Committees.
Mr Freestone is the Chair of the Audit Committee and Member of the Risk Committee.
Colin (Cobb) Johnstone, BEng (Mining), Lead Independent Director
Mr Johnstone is a mining engineer with over 30 years' experience in the resources sector. He has served as General
Manager at some of Australia's largest mines including the Kalgoorlie Super Pit in Western Australia, the Olympic Dam Mine
in South Australia and the Northparkes Mine in New South Wales. He has extensive international experience including
Canada, China, Africa and South America.
Mr Johnstone was Chief Operating Officer at Equinox Minerals Limited, until the acquisition by Barrick Gold Corporation in
2011. Prior to that Mr Johnstone was Chief Operating Officer of Sino Gold Mining Limited, where he oversaw the
development and operation of gold mines in China. Mr Johnstone is Chairman of Aurelia Metals Ltd (since November 2016).
Mr Johnstone is the Lead Independent Director, Chair of the Risk Committee, and a member of the Audit Committee.
Mr Johnstone was a former Non-Executive Director of Magnis Resources Ltd; Neometals Ltd (Reed Resources Ltd); and
Metallum Ltd.
Thomas (Tommy) McKeith, BSc (Hons), GradDip Eng (Mining), MBA, Non-Executive Director
Mr McKeith is a geologist with over 28 years' experience in various mine geology, exploration and business development
roles. He was formerly Executive Vice President (Growth and International Projects) for Gold Fields Limited, where he was
responsible for global greenfields exploration and project development.
Mr McKeith was also Chief Executive Officer of Troy Resources Limited and has held Non-Executive Director roles at Sino
Gold Limited, Avoca Resources Limited and is currently the Non-Executive Chairman of ABM Resources NL.
Mr McKeith is the Chair of the Nomination and Remuneration Committee and Member of the Audit Committee.
Mr McKeith is also a Non-Executive Chairman of ABM Resources NL.
21
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors (continued)
Naquib Sawaris, Non-Executive Director
Mr. Sawiris is Chairman of the advisory board of La Mancha (since 2012). The Sawiris Family have substantial interests in the
telecom, construction and fertilizer, cement, real estate and hotel development industries and other businesses. He is
currently the Chairman of the Board of Orascom TMT Investments S.a r.l, and the Executive Chairman of Orascom Telecom
Media and Technology Holding S.A.E. Mr. Sawiris founded Orascom Telecom Holding in 1979 and developed it into a leading
regional telecom player until a merger with Vimpelcom Ltd created the world's sixth largest mobile telecommunications
provider. Mr. Sawiris has also been appointed Chairman of the Board of Euronews, after managing the acquisition of 53% of
its shares in 2015.
Mr. Sawiris has received a number of honorary degrees, industry awards and civic honors, including the Honor of
Commander of the Legion d'honneur the highest award given by the French Republic for outstanding services rendered to
France, the Honor of Commander of the Order of the Stella della Solidarietà Italiana, the prestigious Sitara-e-Quaid-e-Azam
award for services rendered to the people of Pakistan in the field of telecommunication, investments and social sector work.
Mr. Sawiris served and is serving on a number of additional Boards, Committees and Councils including the Advisory
Committee to the NYSE Board of Directors, the London Stock Exchange Group’s Africa Advisory Group, the Arab Thought
Foundation, and the Boards of Trustees of the American University in Cairo, Nile University, and the French University in
Egypt.
Mr. Sawiris holds a diploma of Mechanical Engineering with a Masters in Technical Administration from the Swiss Federal
Institute of Technology Zurich ETH Zurich and a Diploma from the German Evangelical School, Cairo, Egypt.
Mr. Sawiris is currently Chairman of the advisory board of La Mancha, Chairman of the Board of Orascom TMT Investments
S.a.r.l., Executive Chairman of Orascom Telecom Media and Technology Holding S.A.E.
Sebastien de Montessus, Non-Executive Director
Mr. de Montessus is the CEO and President of Endeavour Mining Corporation (since November 2015). He was previously the
Chief Executive Officer of the La Mancha Group since 2012, and under his leadership La Mancha doubled its production
through optimization efforts before undergoing a portfolio restructure which enabled the Sawiris family to become the main
shareholder of Evolution Mining, a leading Australia gold miner, and of Endeavour Mining in November 2015.
In September 2015, Mr. de Montessus was appointed to the board of Evolution Mining.
Mr. de Montessus was previously a member of the Executive Board and Group Deputy CEO of AREVA Group (a world leader
in nuclear energy) and CEO of AREVA Mining (uranium). Mr. de Montessus was a Board member of ERAMET, a world leader
in alloying metals, between 2010 and 2012.
Before joining AREVA in 2002, Mr. de Montessus was an investment banker at Morgan Stanley in London (Mergers and
Acquisition and Equity Capital Markets).
Mr. de Montessus is a business graduate from ESCP-Europe Business School in Paris.
Mr de Montessus is a Member of the Nomination and Remuneration Committee and is an Executive Director and CEO of
Endeavour Mining Corporation.
Data in South Africa.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors (continued)
Vincent Benoit, Alternate Non-Executive Director for Naguib Sawaris
Mr. Benoit has over 25 years of Corporate Finance, Investors Relations, and M&A experience in the mining, energy, and
telecom sectors.
Mr Benoit is the CFO and Executive Vice President of Corporate Development at Endeavour Mining Corporation since
November 2016. Prior to joining Endeavour, he was EVP Strategy and Business Development of La Mancha where he
successfully led the group's portfolio restructuring which repositioned La Mancha as a leading private mining investor through
the strategic alliances formed with Evolution Mining Ltd and Endeavour Mining. Previously, as EVP Merger and Acquisitions
at Orange, he was responsible for the development of the group's African footprint, its European portfolio restructuring, and
forming strategic partnerships. At Orange, he was also Head of Strategy and Investor Relations. Mr. Benoit held various
finance positions including with Areva, Bull Information System, and PwC.
He holds a business degree from ESC-Bordeaux Business School and is a registered Chartered Accountant.
Mr Benoit is a Non-Executive Director of Euronews SA.
Amr El Adawy, Alternate Non-Executive Director for Sebastien de Montessus
Mr El Adawy is the Chief Financial Officer of the La Mancha Group.
He is an international finance executive with 20 years’ experience in finance and management in telecoms and retail sectors.
Prior to joining La Mancha he served as Chief Financial Officer of WIS Telecom (since 2010) and at the same time was Chief
Executive Office of the Italian subsidiary, MENA SCS SpA (since 2011). Prior to joining the Orascom group, Mr Adawy held
senior finance management positions in several multinational companies, such as Adler-France, Pepsi Cola – France and in a
JV of Carrefour – France with Majid Al Futtaim group for its activity in the Middle East.
Mr El Adawy holds a Finance Management and Accounting degree from CNAM of Paris.
Mr El Adawy has no other current or former directorships within the last 3 years.
Company Secretary
Evan Elstein, BCom (Accounting and Finance), ACA, GradDipACG
Mr Elstein is the Company Secretary and Vice President for Information Technology and Community Relations. He is a
Chartered Accountant, Chartered Secretary, and a member of the Institute of Chartered Accountants, the Institute of
Chartered Secretaries and Administrators and the Governance Institute of Australia.
Mr Elstein has over 25 years' experience in senior financial, commercial and technology roles, where his responsibilities have
included the roll out of IT projects and services, business improvement initiatives and merger and acquisition activities. He
has held senior positions with IT consulting companies in Australia, and previously served as the Chief Financial Officer and
Company Secretary of Hartec Limited. Prior to that, Mr Elstein held senior finance and operations positions at Dimension
22
23
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Information on Directors (continued)
Vincent Benoit, Alternate Non-Executive Director for Naguib Sawaris
Mr. Benoit has over 25 years of Corporate Finance, Investors Relations, and M&A experience in the mining, energy, and
telecom sectors.
Mr Benoit is the CFO and Executive Vice President of Corporate Development at Endeavour Mining Corporation since
November 2016. Prior to joining Endeavour, he was EVP Strategy and Business Development of La Mancha where he
successfully led the group's portfolio restructuring which repositioned La Mancha as a leading private mining investor through
the strategic alliances formed with Evolution Mining Ltd and Endeavour Mining. Previously, as EVP Merger and Acquisitions
at Orange, he was responsible for the development of the group's African footprint, its European portfolio restructuring, and
forming strategic partnerships. At Orange, he was also Head of Strategy and Investor Relations. Mr. Benoit held various
finance positions including with Areva, Bull Information System, and PwC.
He holds a business degree from ESC-Bordeaux Business School and is a registered Chartered Accountant.
Mr Benoit is a Non-Executive Director of Euronews SA.
Amr El Adawy, Alternate Non-Executive Director for Sebastien de Montessus
Mr El Adawy is the Chief Financial Officer of the La Mancha Group.
He is an international finance executive with 20 years’ experience in finance and management in telecoms and retail sectors.
Prior to joining La Mancha he served as Chief Financial Officer of WIS Telecom (since 2010) and at the same time was Chief
Executive Office of the Italian subsidiary, MENA SCS SpA (since 2011). Prior to joining the Orascom group, Mr Adawy held
senior finance management positions in several multinational companies, such as Adler-France, Pepsi Cola – France and in a
JV of Carrefour – France with Majid Al Futtaim group for its activity in the Middle East.
Mr El Adawy holds a Finance Management and Accounting degree from CNAM of Paris.
Mr El Adawy has no other current or former directorships within the last 3 years.
Company Secretary
Evan Elstein, BCom (Accounting and Finance), ACA, GradDipACG
Mr Elstein is the Company Secretary and Vice President for Information Technology and Community Relations. He is a
Chartered Accountant, Chartered Secretary, and a member of the Institute of Chartered Accountants, the Institute of
Chartered Secretaries and Administrators and the Governance Institute of Australia.
Mr Elstein has over 25 years' experience in senior financial, commercial and technology roles, where his responsibilities have
included the roll out of IT projects and services, business improvement initiatives and merger and acquisition activities. He
has held senior positions with IT consulting companies in Australia, and previously served as the Chief Financial Officer and
Company Secretary of Hartec Limited. Prior to that, Mr Elstein held senior finance and operations positions at Dimension
Data in South Africa.
23
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Meetings of directors
The numbers of meetings of the Company's board of Directors and of each board committee held during the year
ended 30 June 2017, and the numbers of meetings attended by each Director were:
Jacob (Jake) Klein
Lawrie Conway
James (Jim) Askew
Graham Freestone
Colin (Cobb) Johnstone
Thomas (Tommy) McKeith
Naguib Sawaris
Sebastien de Montessus
Vincent Benoit
Amr El Adawy
Board
Audit
Meetings of committees
Risk
Management
Nomination and
Remuneration
A
7
7
6
7
7
7
3
5
-
2
B
7
7
7
7
7
7
7
7
7
7
A
-
-
-
4
4
4
-
-
-
-
B
-
-
-
4
4
4
-
-
-
-
A
-
-
1
3
3
-
-
-
-
-
B
-
-
3
3
3
-
-
-
-
-
A
-
-
3
-
-
3
-
2
-
-
B
-
-
3
-
-
3
-
3
-
-
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during
the year
Shares under Option
At the date of this report there are no remaining Options outstanding. The weighted average remaining
contractual life of Options outstanding at 30 June 2016 was 0.9 years with exercise prices ranging from $1.472 to
$2.412.
The holders of these options, which are unlisted, do not have the right, by virtue of the option, to participate in
any share issue of the Company.
Details of shares issued during and up to the date of this report as a result of the exercise of unlisted Options
issued by the Company are:
Date
Details
Balance at 1
July 2016
(number)
Number
Converted
into Shares
Amount Paid
for Shares ($)
Options
Expired
(number)
Balance at 30
June 2017
(number)
11/11/2016
15/11/2016
18/11/2016
25/11/2016
25/11/2016
30/06/2017
Unlisted Options
Exercised
Exercised
Expired
Exercised
Expired
Total
5,203,344
-
-
-
-
5,203,344
-
90,000
330,000
-
3,758,661
-
4,178,661
-
160,740
589,380
-
6,498,685
-
7,248,805
-
-
-
677,818
-
346,865
1,024,683
-
5,113,344
4,783,344
4,105,526
346,865
5,203,344
-
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited)
This Remuneration Report forms part of the Directors' Report for the year ended 30 June 2017. This report
contains details of the remuneration paid to the Directors and Key Management Personnel ("KMP") and is
aligned to the Company's overall remuneration strategy and framework. The Company's remuneration philosophy
is designed to ensure that the level and composition of remuneration is competitive, reasonable and appropriate
for the results delivered and to attract and retain appropriately experienced Directors and employees. The
remuneration strategies and practices in place are aligned with this philosophy.
This remuneration report is presented under the following sections:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Remuneration Overview
Remuneration Governance
Remuneration Strategy and Framework
Executive Remuneration Outcomes
Non-Executive Director Remuneration
Other Remuneration Information
Summary of Key Terms
(a) Remuneration Overview
(i) Key Management Personnel
(“KMP”) named below:
Name
Position
Jacob (Jake) Klein
Executive Chairman
The executive remuneration framework covered in this report includes the Executive Directors (Executive
Chairman and Chief Financial Officer) and those executives considered to be Key Management Personnel
Lawrie Conway
Aaron Colleran
Paul Eagle
Evan Elstein
Finance Director and Chief Financial Officer
Vice President Business Development & Investor Relations
Vice President People & Culture
Company Secretary & Vice President Information Technology & Community Relations
Mark Le Messurier
Chief Operating Officer
Glen Masterman (i)
Vice President Discovery & Chief Geologist
(i)
Glen Masterman was appointed into his role on 1 August 2016.
Key remuneration outcomes for the 2017 financial year are summarised in the table below:
(ii) Key Remuneration Outcomes
Remuneration Description
STIP Outcomes The average STIP outcome for the KMP was 85.9% of the maximum opportunity based on
the assessment of business and personal measures. This reflects the Company's strong
operating and financial performance, and improvement in the upgrading of the asset portfolio.
LTIP Outcomes 100% of the Performance Rights awarded during the 2014 financial year and tested as at 30
June 2016 vested on 16 August 2016. This reflects the Company's strong performance during
the three years to 30 June 2016.
The Performance Rights awarded during the 2015 financial year were tested as at 30 June
2017, where 100% of the Performance Rights have met their performance measures and
have been approved by the Board to vest.
24
25
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited)
This Remuneration Report forms part of the Directors' Report for the year ended 30 June 2017. This report
contains details of the remuneration paid to the Directors and Key Management Personnel ("KMP") and is
aligned to the Company's overall remuneration strategy and framework. The Company's remuneration philosophy
is designed to ensure that the level and composition of remuneration is competitive, reasonable and appropriate
for the results delivered and to attract and retain appropriately experienced Directors and employees. The
remuneration strategies and practices in place are aligned with this philosophy.
This remuneration report is presented under the following sections:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Remuneration Overview
Remuneration Governance
Remuneration Strategy and Framework
Executive Remuneration Outcomes
Non-Executive Director Remuneration
Other Remuneration Information
Summary of Key Terms
(a) Remuneration Overview
(i) Key Management Personnel
The executive remuneration framework covered in this report includes the Executive Directors (Executive
Chairman and Chief Financial Officer) and those executives considered to be Key Management Personnel
(“KMP”) named below:
Name
Jacob (Jake) Klein
Lawrie Conway
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman (i)
Position
Executive Chairman
Finance Director and Chief Financial Officer
Vice President Business Development & Investor Relations
Vice President People & Culture
Company Secretary & Vice President Information Technology & Community Relations
Chief Operating Officer
Vice President Discovery & Chief Geologist
(i)
Glen Masterman was appointed into his role on 1 August 2016.
(ii) Key Remuneration Outcomes
Key remuneration outcomes for the 2017 financial year are summarised in the table below:
Remuneration Description
STIP Outcomes The average STIP outcome for the KMP was 85.9% of the maximum opportunity based on
the assessment of business and personal measures. This reflects the Company's strong
operating and financial performance, and improvement in the upgrading of the asset portfolio.
LTIP Outcomes 100% of the Performance Rights awarded during the 2014 financial year and tested as at 30
June 2016 vested on 16 August 2016. This reflects the Company's strong performance during
the three years to 30 June 2016.
The Performance Rights awarded during the 2015 financial year were tested as at 30 June
2017, where 100% of the Performance Rights have met their performance measures and
have been approved by the Board to vest.
25
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(c) Remuneration Strategy and Framework
The executive remuneration framework has been designed to align Executive Directors and KMP objectives with
shareholder and business objectives by offering a remuneration package based on key performance areas
affecting the Group’s overall performance. The Board believes the remuneration framework to be strategic,
appropriate and effective in its ability to attract and retain KMP and to operate and manage the Group effectively.
The Group's target remuneration philosophies are:
Total Fixed Remuneration (TFR being salary plus superannuation) positioned at the median (50th
percentile) based on the industry benchmark McDonald report (an industry recognised gold and general
mining remuneration benchmarking survey covering over 89 organisations within the industry);
Total Annual Remuneration (TFR plus STI) at the 75th percentile for high performers; and
Total Remuneration (TFR plus STI plus LTI) at the 75th percentile, with flexibility to provide up to the 90th
percentile levels for high performers and critical roles.
The overarching objectives and principles of the Group’s remuneration strategy are that:
Total remuneration for each level of the workforce is appropriate and competitive;
Total remuneration comprises a competitive fixed component and a sizeable “at risk” component based on
performance hurdles;
organisational objectives;
Short term incentives are appropriate with hurdles that are measureable, transparent and achievable;
Incentive plans are designed to motivate and incentivise for high performance and delivery on
The corporate long term incentives are focused on shareholder value; and
The principles and integrity of the remuneration review process deliver fair and equitable outcomes.
•
•
•
•
•
•
•
•
•
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(a) Remuneration Overview (continued)
(ii) Key Remuneration Outcomes (continued)
Remuneration
KMP Remuneration Four of the KMP received increases to their fixed remuneration during the 2017 financial
Description
year.
NED Remuneration NEDs did not receive any increase to their base fees but did receive increases to their
fees as chairs or/and as members of the Board Sub Committees. NEDs also received
Share Rights under a NED Equity Plan approved by shareholders at the Annual General
Meeting held on 24 November 2016.
(iii) What has changed in relation to remuneration during the 2017 financial year
The table below summarises the key changes to the executive remuneration framework implemented during the
2017 financial year.
Change
Executive Chairman
Performance Rights
Description
As approved by shareholders at the general meeting held on the 21 June 2017, the
Executive Chairman was issued with 3,375,000 performance rights under a Transition
Incentive Plan on the terms and conditions of Evolution's Employee Share Option and
Performance Rights Plan. The rights are designed to secure the Executive Chairman’s
services and continue his strong focus on long term value creation for Evolution
Shareholders, while further strengthening alignment between executive remuneration
and shareholder/business objectives.
(iv) What changes are planned for remuneration in the 2018 financial year
No changes are planned to the remuneration structure for the 2018 financial year. Three of the KMP are to
receive increases to their fixed remuneration for 2018 as a part of the annual remuneration review.
(b) Remuneration Governance
The Board of Directors (“the Board”) has an established Nomination and Remuneration Committee, consisting
solely of Non-Executive Directors, with the delegated responsibility to report on and make recommendations to
the Board on the:
•
•
•
Appropriateness of the remuneration policies and systems, having regard to whether they are:
•
•
•
Relevant to the Company’s wider objectives and strategies;
Legal and defensible;
In accordance with the human resource objectives of the Company;
Performance of the Executive Directors (on an annual basis) and ensure there is a process for determining
key performance indicators for the ensuing period; and
Remuneration of the Executive Directors, Non-Executive Directors and Key Management Personnel, in
accordance with approved Board policies and processes.
During 2017 the Nomination and Remuneration committee obtained advice on the NED equity plan and the
appropriate structure of the Executive Chairman’s Transitional Incentive Plan. These were approved by
Shareholders at the General Meeting held on 21 June 2017.
26
27
86
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(c) Remuneration Strategy and Framework
The executive remuneration framework has been designed to align Executive Directors and KMP objectives with
shareholder and business objectives by offering a remuneration package based on key performance areas
affecting the Group’s overall performance. The Board believes the remuneration framework to be strategic,
appropriate and effective in its ability to attract and retain KMP and to operate and manage the Group effectively.
The Group's target remuneration philosophies are:
•
•
•
Total Fixed Remuneration (TFR being salary plus superannuation) positioned at the median (50th
percentile) based on the industry benchmark McDonald report (an industry recognised gold and general
mining remuneration benchmarking survey covering over 89 organisations within the industry);
Total Annual Remuneration (TFR plus STI) at the 75th percentile for high performers; and
Total Remuneration (TFR plus STI plus LTI) at the 75th percentile, with flexibility to provide up to the 90th
percentile levels for high performers and critical roles.
The overarching objectives and principles of the Group’s remuneration strategy are that:
•
•
•
•
•
•
Total remuneration for each level of the workforce is appropriate and competitive;
Total remuneration comprises a competitive fixed component and a sizeable “at risk” component based on
performance hurdles;
Short term incentives are appropriate with hurdles that are measureable, transparent and achievable;
Incentive plans are designed to motivate and incentivise for high performance and delivery on
organisational objectives;
The corporate long term incentives are focused on shareholder value; and
The principles and integrity of the remuneration review process deliver fair and equitable outcomes.
27
87
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(c) Remuneration Strategy and Framework (continued)
The following table outlines the remuneration components for all KMP for the 2017 financial year:
The target achievement remuneration mix for Executive Directors and KMP for the 2017 financial year and prior
Component
Total Fixed Remuneration (TFR) Key results areas for the role are
Performance measure
determined based on the
individual's position and key
business imperatives.
Short Term Incentive (STI)
Long Term Incentive (LTI)
Key Performance indicators are set
with a mix of individual and
corporate elements. The relative
weighting of which is dependent on
the individual employee job banding
and position. For the Executive
Chairman the weighting is 70%
corporate and 30% individual and
for the remainder of the KMP, 60%
corporate and 40% individual. For
the corporate component for FY17,
the measures focused on safety,
cash contribution, costs and
strategic imperatives focused on
delivering step change growth
through completion of drill programs
to extend mine life at each asset
and extension of production profile
by reserve growth.
Performance measures agreed with
the Board have a 3 year time
horizon and are focused on
enhancing shareholder value.
Strategic objective
Remuneration is designed to
attract, motivate and retain key
personnel.
Considerations include:
• Overall Company business plan
• External market conditions
• Key employee value drivers
• Individual employee performance
• Industry benchmark data
The objective is to motivate
employees to achieve key annual
targets focused on safety,
operations, cash contribution, and
effective cost management,
improving the overall quality of the
asset portfolio and driving a high
achievement team culture.
The primary objective to deliver
industry leading shareholder
returns.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(c) Remuneration Strategy and Framework (continued)
financial year is as follows:
(d) Executive Remuneration Outcomes
(i) Financial Performance
The Group has demonstrated strong performance over the past five years. The following table breaks down the
key performance indicators for the Group over this time frame:
Statutory profit/(loss) for the year ($'000)
Underlying profit for the year after income tax
($'000) (i)
EBITDA ($'000)
Basic earnings per share (cents)
Dividends declared (cents per share)
Share price ($)
2017
217,607
206,588
713,855
13.28
5
2.41
2016
(24,349)
134,496
607,551
(1.75)
3
2.33
2015
100,115
106,050
272,656
13.71
2
1.15
2014
50,017
50,017
2013
(307,421)
44,443
207,556
7.06
2
0.70
211,725
(43.43)
-
0.57
(i)
Refer to the Profit Overview section in the Operating and Financial Review for a reconciliation of the 2016 stated
underlying profit for the year.
28
29
88
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(c) Remuneration Strategy and Framework (continued)
The target achievement remuneration mix for Executive Directors and KMP for the 2017 financial year and prior
financial year is as follows:
CEO/Executive Chairman
Other Senior Executives
(d) Executive Remuneration Outcomes
(i) Financial Performance
The Group has demonstrated strong performance over the past five years. The following table breaks down the
key performance indicators for the Group over this time frame:
Statutory profit/(loss) for the year ($'000)
Underlying profit for the year after income tax
($'000) (i)
EBITDA ($'000)
Basic earnings per share (cents)
Dividends declared (cents per share)
Share price ($)
2017
217,607
206,588
713,855
13.28
5
2.41
2016
(24,349)
134,496
607,551
(1.75)
3
2.33
2015
100,115
106,050
272,656
13.71
2
1.15
2014
50,017
50,017
2013
(307,421)
44,443
207,556
7.06
2
0.70
211,725
(43.43)
-
0.57
(i)
Refer to the Profit Overview section in the Operating and Financial Review for a reconciliation of the 2016 stated
underlying profit for the year.
29
89
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(ii) STIP (continued)
Component
Performance measure
Total STIP Granted
% of Maximum
% of Maximum
($)
Entitlement Granted
Entitlement Forfeited
610,000
475,000
391,000
265,000
300,000
335,000
300,000
84.5%
88.0%
100.0%
82.9%
82.3%
82.7%
80.3%
15.5%
12.0%
0.0%
17.1%
17.7%
17.3%
19.7%
2017
Directors
Jacob Klein
Lawrie Conway
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
Key Management Personnel
Performance measure
Up to 3 years.
(iii) LTIP
Component
Participation
Performance
period
Composition
Performance
conditions
The Group LTIP applies to employees at the level of Manager and above across the Group.
The Company has two long term incentive plans currently in existence, specifically the
Employees and Contractors Option Plan (“ECOP”) and the Employee Share Option and
Performance Rights Plan (“ESOP”).The ECOP and the Option component of the ESOP are
now effectively dormant with no new options to be issued under these plans. All remaining
Options either expired or were exercised during the year.
The Options and Performance Rights are issued for a specified period and each Option or
Performance Right is convertible into one ordinary share. The exercise price of the Options,
determined in accordance with the rules of the plan, is based on the market price of a share
on grant date or another specified date after grant close. All Options and Performance
Rights expire on the earlier of their expiry date or termination of the employee’s
employment subject to Director discretion. Options and Performance Rights do not vest
until a specified period after granting and their exercise is conditional on the achievement of
certain performance hurdles that are aligned with shareholder interests. There are no
voting or dividend rights attached to the Options or Performance Rights. Voting rights will
attach to the ordinary shares when the Options have been exercised or the Performance
Rights vested. Unvested Options and Performance Rights cannot be transferred and will
not be quoted on the ASX.
Award
parameters
f(i) - 'Other Remuneration Information'.
Further details on each of the performance conditions laid out below are detailed in Section
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
Performance measure
The Overall Group STIP applies to site based employees at the level of Manager and all
Group office employees.
The Group STIP is a cash bonus, up to a maximum percentage of TFR, based on the
employee job band.
It is assessed and paid annually conditional upon the achievement of key company
objectives and individual KPIs. For the 2017 financial year, the company objectives were
focussed in the areas of safety, group cash contribution, production, costs and a strategic
imperative element.
The Group STIP is currently set at between 10% and 60% of TFR for Target achievement,
with a maximum of 20%-90% of TFR for Stretch achievement, depending on the employee
job band. Details of the Group STIP paid to the Directors and KMP are shown in the
Remuneration Table in section d(iv). The Group's performance against the STI Scorecard
for FY17 is as follows:
STIP
Scorecard
HSE
Safety Indicator (TRIFR)
Critical Controls Compliance - top
5 principal hazards (%)
Profitability Group Cash Contribution ($
Target
(100%)
STIP
Weighting
Result
Award
7.1
90
230
10%
15%
20%
7.96
93.3
0.00%
17.48%
342
30.00%
million)
Group All In Costs ($/Oz sold)
Discretionary
1,090
100%
20%
35%
1,039
135%
29.32%
47.25%
100%
Strategic
Imperatives
Total
124.05%
At the time of setting the FY17 STIP measures, the Board determined it would consider the
following factors when awarding the score for strategic imperatives measure:
• Overall business performance
• Delivering step change growth through completion of drill programs to extend mine life at
each asset
• Extension of production profile by reserve growth; and
•Successful completion of the sale of Pajingo and the Ernest Henry transaction.
The Board approved a discretionary score of 135.00% for the following reasons:
• Average mine life of the portfolio has improved in the last 12 months from ~7.4 years to
~8.3 years based on reserves following the successful completion of the drilling programs;
• The Ernest Henry (EH) transaction has been transformative and a key part of improving
our average mine life and the quality of our asset portfolio;
• The successful divestment of Pajingo;
• The Company also achieved a number of other important outcomes, including the
reduction in debt levels and the successful achievement of 15 out of 16 FY17 key
operational and financial measures and targets.
Overall business performance on a Group basis met or exceeded set targets. A number of
records have been achieved throughout the business this year.
30
31
(ii) STIP
Component
Participation
Composition
Performance
conditions
Award
parameters
FY17 STIP
considerations
Award outcome
for the year
90
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(ii) STIP (continued)
Component
Performance measure
2017
Total STIP Granted
($)
% of Maximum
Entitlement Granted
% of Maximum
Entitlement Forfeited
Directors
Jacob Klein
Lawrie Conway
Key Management Personnel
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
610,000
475,000
391,000
265,000
300,000
335,000
300,000
84.5%
88.0%
100.0%
82.9%
82.3%
82.7%
80.3%
15.5%
12.0%
0.0%
17.1%
17.7%
17.3%
19.7%
Performance measure
The Group LTIP applies to employees at the level of Manager and above across the Group.
Up to 3 years.
The Company has two long term incentive plans currently in existence, specifically the
Employees and Contractors Option Plan (“ECOP”) and the Employee Share Option and
Performance Rights Plan (“ESOP”).The ECOP and the Option component of the ESOP are
now effectively dormant with no new options to be issued under these plans. All remaining
Options either expired or were exercised during the year.
The Options and Performance Rights are issued for a specified period and each Option or
Performance Right is convertible into one ordinary share. The exercise price of the Options,
determined in accordance with the rules of the plan, is based on the market price of a share
on grant date or another specified date after grant close. All Options and Performance
Rights expire on the earlier of their expiry date or termination of the employee’s
employment subject to Director discretion. Options and Performance Rights do not vest
until a specified period after granting and their exercise is conditional on the achievement of
certain performance hurdles that are aligned with shareholder interests. There are no
voting or dividend rights attached to the Options or Performance Rights. Voting rights will
attach to the ordinary shares when the Options have been exercised or the Performance
Rights vested. Unvested Options and Performance Rights cannot be transferred and will
not be quoted on the ASX.
Further details on each of the performance conditions laid out below are detailed in Section
f(i) - 'Other Remuneration Information'.
(iii) LTIP
Component
Participation
Performance
period
Composition
Performance
conditions
Award
parameters
31
91
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(iii) LTIP (continued)
Component
Performance Measure
Performance Target
Description
(i)
TSR Performance The Group’s relative total shareholder return
(TSR) measured against the TSR for a peer
Company of 20 comparator gold mining
companies (Peer Group)
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(iii) LTIP (continued)
Component
Performance measure
Weighting for
FY14 grants
Weighting for
FY15, FY16
and FY17
grants
33.33%
25%
Award outcome
for the year -
ESOP
Performance
Rights
The ESOP approved by shareholders on 23 November 2010 provided for the issuance of
Performance Rights to Executive Directors and eligible employees. This LTIP was
introduced for employees at the level of Manager and above, effective from 1 July 2011
and provides equity based “at risk” remuneration, up to maximum percentages, based on,
and in addition to, each eligible employee’s TFR. These incentives are aimed at retaining
and incentivising KMP and senior managers on a basis that is aligned with shareholder
interests, and are provided via Performance Rights.
The movement in Performance Rights under this plan is in the table below:
(ii)
Absolute TSR
performance
The Group’s absolute TSR return
33.33%
(iii) Growth in
Growth in the Group’s Earnings per share
33.33%
25%
25%
Earnings per
share
(iv)
Increase in ore
reserves per
share
Increasing the ore reserves per share over a
3 year period
-
25%
Each year an assessment is made by the Directors against performance hurdles and
guidelines established by the Board. In exercising their discretion under the rules, the
Directors will take into account matters such as the position of the eligible person, the role
they play in the Group, the nature or terms of their employment or contract and the
contribution they make to the Group as a whole.
At 30 June 2017 there were no Options outstanding (FY16: 52,954). The movement in the
options under this plan is summarised in the table below:
Outstanding balance at the beginning of the year
Issued during the period
Exercised during the period
Expired during the period
Outstanding balance at the end of the year
During the year 4,178,661 Options were exercised at exercise prices ranging from $1.418
to $1.882 per option, 971,729 Options expired and there were no Options outstanding at 30
June 2017:
2017
Number
52,954
-
-
(52,954)
-
2016
Number
488,651
-
-
(435,697)
52,954
Outstanding balance at the beginning of the year
Issued during the period
Exercised during the period
Expired during the period
Outstanding balance at the end of the year
2017
Number
5,150,390
-
(4,178,661)
(971,729)
-
2016
Number
7,161,087
-
(180,000)
(1,830,697)
5,150,390
32
33
Outstanding balance at the beginning of the year
Performance Rights granted (withdrawn) during the
period pursuant to Retention Agreement*
Performance Rights granted during the period pursuant
to Transition Incentive Plan*
Performance rights granted during the period
Vested during the period
Lapsed during the period
Forfeited during the period
Outstanding balance at the end of the year
2017
Number
29,429,811
2016
Number
21,382,111
(3,750,000)
3,750,000
3,375,000
6,797,540
(7,961,146)
(1,612,639)
26,278,566
-
8,141,268
(2,262,954)
(923,228)
(657,386)
29,429,811
*The 3,750,000 Performance Rights granted in December 2015 to Mr. Jake Klein were
withdrawn pursuant to a Transition Incentive Plan (TIP) under the Retention Agreement
which the Company has entered into with Mr. Klein. Under the Plan the Company granted
3,375,000 Performance Rights to Mr. Klein subject to the satisfaction of Vesting Conditions
to be tested as at 16 December 2019 and were approved by shareholders the shareholder
meeting held on 21 June 2017.
The table below reflects the Performance Rights granted, vested, or lapsed in each
financial year:
Granted
Granted - TIP
Vested
Lapsed
Forfeited
Subject to vesting
Testing date
Testing date - TIP
Vesting (%)
FY13
FY14
FY15
FY16
FY17
Running
Balance
4,943,777 10,498,408
10,804,370
8,141,368
6,797,540 41,185,463
(2,262,954)
(7,961,147)
(923,229)
(1,757,594)
(2,537,261)
(1,589,969)
30/06/15
30/06/16
9,214,401
30/06/17
(855,467)
7,285,901
30/06/18
71%
100%
100%
-
-
-
-
-
3,375,000
3,375,000
- (10,224,101)
(923,229)
(394,276)
(7,134,567)
9,778,264 26,278,566
-
-
30/06/19
16/12/19
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FY17 LTIP
considerations
Award outcome
for the year -
ECOP Options
Award outcome
for the year -
ESOP Options
92
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(iii) LTIP (continued)
Component
Award outcome
for the year -
ESOP
Performance
Rights
Performance measure
The ESOP approved by shareholders on 23 November 2010 provided for the issuance of
Performance Rights to Executive Directors and eligible employees. This LTIP was
introduced for employees at the level of Manager and above, effective from 1 July 2011
and provides equity based “at risk” remuneration, up to maximum percentages, based on,
and in addition to, each eligible employee’s TFR. These incentives are aimed at retaining
and incentivising KMP and senior managers on a basis that is aligned with shareholder
interests, and are provided via Performance Rights.
The movement in Performance Rights under this plan is in the table below:
Outstanding balance at the beginning of the year
Performance Rights granted (withdrawn) during the
period pursuant to Retention Agreement*
Performance Rights granted during the period pursuant
to Transition Incentive Plan*
Performance rights granted during the period
Vested during the period
Lapsed during the period
Forfeited during the period
Outstanding balance at the end of the year
2017
Number
29,429,811
2016
Number
21,382,111
(3,750,000)
3,750,000
3,375,000
6,797,540
(7,961,146)
(1,612,639)
26,278,566
-
8,141,268
(2,262,954)
(923,228)
(657,386)
29,429,811
*The 3,750,000 Performance Rights granted in December 2015 to Mr. Jake Klein were
withdrawn pursuant to a Transition Incentive Plan (TIP) under the Retention Agreement
which the Company has entered into with Mr. Klein. Under the Plan the Company granted
3,375,000 Performance Rights to Mr. Klein subject to the satisfaction of Vesting Conditions
to be tested as at 16 December 2019 and were approved by shareholders the shareholder
meeting held on 21 June 2017.
The table below reflects the Performance Rights granted, vested, or lapsed in each
financial year:
FY13
FY14
FY15
FY16
Granted
Granted - TIP
Vested
Lapsed
Forfeited
Subject to vesting
Testing date
Testing date - TIP
Vesting (%)
4,943,777 10,498,408
-
(7,961,147)
-
(2,537,261)
-
30/06/16
-
100%
-
(2,262,954)
(923,229)
(1,757,594)
-
30/06/15
-
71%
10,804,370
-
-
-
(1,589,969)
9,214,401
30/06/17
-
100%
8,141,368
-
-
-
(855,467)
7,285,901
30/06/18
-
-
33
FY17
Running
Balance
6,797,540 41,185,463
3,375,000
3,375,000
- (10,224,101)
(923,229)
-
(394,276)
(7,134,567)
9,778,264 26,278,566
-
-
-
30/06/19
16/12/19
-
93
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 .
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Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(v) Executive service agreements
Remuneration and other key terms of employment for the Executive Directors and KMP are formalised in the
Executive Services Agreements table below:
Name
Term of
Total Fixed
Notice Period by
Notice period by
Termination
agreement and
Remuneration
Executive
Evolution
payments (ii)
Existing Executive Directors and Key Management Personnel
notice period
Jacob Klein
Executive Chairman
Open
803,800 (ii)
300,000 fixed
Director's Fees (iii)
6 months
6 months
Aaron Colleran
Vice President Business
Development and
Investor Relations
Lawrie Conway
Finance Director and
Chief Financial Officer
Paul Eagle
and Culture
Evan Elstein
Company Secretary and
Vice President
Open
Information Technology
and Community Relations
Mark Le Messurier
Chief Operating Officer
Glen Masterman
Vice President Discovery
Open
465,000
3 months
6 months
Open
3 months
6 months
600,000
135,000 fixed
Director's Fees
405,000
3 months
6 months
Open
450,000
3 months
6 months
12 month
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
and Chief Geologist
Open
425,000
3 months
6 months
(i)
(ii)
(iii)
For a change of control event, the termination payment is 12 months TFR for Executive Directors and KMP
Disclosed amount of $800,000 per 30 June 2016 accounts. The correct amount was $803,800. Mr Klein's TFR has
not changed since 1 July 2014.
Mr Klein's Director Fees are to be increased from $200,000 to $300,000 per year with effect from 1 July 2017.
Fixed salary, inclusive of the required superannuation contribution amount, is reviewed annually by the Board
following the end of the financial year. The amounts set out above are the Executive Directors and KMP total
fixed remuneration as at the date of this report.
(e) Non-Executive Director Remuneration Outcomes
The Board policy is to remunerate Non-Executive Directors (NEDs) at market rates for comparable companies for
time, commitment and responsibilities. The Nomination and Remuneration Committee determines Non-Executive
Directors fees and reviews this annually, based on market practice, their duties and areas of responsibility.
Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid
to Non-Executive Directors is subject to approval by shareholders (currently $950,000 per annum). Fees for
Non-Executive Directors are not linked to the performance of the Group and they currently do not participate in
the Group’s STIP or LTIP.
35
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Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(d) Executive Remuneration Outcomes (continued)
(v) Executive service agreements
Remuneration and other key terms of employment for the Executive Directors and KMP are formalised in the
Executive Services Agreements table below:
Name
Term of
agreement and
notice period
Total Fixed
Remuneration
Notice Period by
Executive
Notice period by
Evolution
Termination
payments (ii)
Existing Executive Directors and Key Management Personnel
Jacob Klein
Executive Chairman
Open
803,800 (ii)
300,000 fixed
Director's Fees (iii)
6 months
6 months
Aaron Colleran
Vice President Business
Development and
Investor Relations
Lawrie Conway
Finance Director and
Chief Financial Officer
Paul Eagle
Vice President People
and Culture
Evan Elstein
Company Secretary and
Vice President
Information Technology
and Community Relations
Mark Le Messurier
Chief Operating Officer
Glen Masterman
Vice President Discovery
and Chief Geologist
Open
465,000
3 months
6 months
Open
Open
600,000
135,000 fixed
Director's Fees
3 months
6 months
380,000
3 months
6 months
Open
405,000
3 months
6 months
Open
450,000
3 months
6 months
Open
425,000
3 months
6 months
12 month
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
(i)
(ii)
(iii)
For a change of control event, the termination payment is 12 months TFR for Executive Directors and KMP
Disclosed amount of $800,000 per 30 June 2016 accounts. The correct amount was $803,800. Mr Klein's TFR has
not changed since 1 July 2014.
Mr Klein's Director Fees are to be increased from $200,000 to $300,000 per year with effect from 1 July 2017.
Fixed salary, inclusive of the required superannuation contribution amount, is reviewed annually by the Board
following the end of the financial year. The amounts set out above are the Executive Directors and KMP total
fixed remuneration as at the date of this report.
(e) Non-Executive Director Remuneration Outcomes
The Board policy is to remunerate Non-Executive Directors (NEDs) at market rates for comparable companies for
time, commitment and responsibilities. The Nomination and Remuneration Committee determines Non-Executive
Directors fees and reviews this annually, based on market practice, their duties and areas of responsibility.
Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid
to Non-Executive Directors is subject to approval by shareholders (currently $950,000 per annum). Fees for
Non-Executive Directors are not linked to the performance of the Group and they currently do not participate in
the Group’s STIP or LTIP.
35
95
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
Remuneration Report (Audited) (continued)
(e) Non-Executive Director Remuneration Outcomes (continued)
(e) Non-Executive Director Remuneration Outcomes (continued)
Following an independent review of the fees paid to the Company’s NEDs, the Board and the Remuneration
Committee determined that annual remuneration paid to NEDs will be delivered partially in cash and partially in
equity under the NED Equity Plan approved by shareholders at the Annual General Meeting held on 24
November 2016.
Under the NED Equity Plan, NEDs will be granted Share Rights as part of their remuneration. The number of
Share Rights granted will be calculated in accordance with the following formula:
“Equity Amount” ($) for the financial year/Value per Share Right
Where:
•
•
“Equity Amount” is an amount determined by the Board, having regard to level of board and committee fees
paid in cash and independent advice received. For FY2017, the Equity Amount is $40,000 for each NED.
The Value per Share Right = the volume weighted average price (VWAP) of Evolution’s ordinary shares
traded on the ASX over the 5 trading day period up to and including 30 June each year. For FY2017, the
VWAP used to determine the number of share rights granted to each NED was $2.4542.
Providing the NED remains a director of Evolution, Share Rights will vest and automatically exercise 12 months
after the grant date. The Share Rights granted to NEDs under the NED Equity Plan are not subject to
performance conditions or service requirements which could result in potential forfeiture. Vested Share Rights will
convert into ordinary shares on a one-for-one basis. Vested Share Rights will be satisfied by either issuing shares
or arranging for shares to be acquired on-market, subject to the Evolution Securities Trading Policy and the
inside information provisions of the Corporations Act.
Upon the transfer to the relevant NED, the shares will be subject to disposal restrictions (Disposal Conditions)
under the earlier of:
•
•
the NED ceasing to be a director of Evolution; or
3 years from the date of grant of the share rights or such longer period nominated by the NED at the time of
the offer (up to a maximum 15 years from the date of grant).
Generally, Share Rights will lapse if a Participant ceases to be a Director of the Company.
Broken out in the table below is a summary of the fee structure by individual as at 30 June 2017. For
remuneration outcomes please refer to table in section d (iv). Note that a change in Board Sub-Committee fees
was implemented during the year.
36
96
Base Fees
Lead
Sub-Committee
Sub-Committee
Total Cash
Independent
Chairman
Member
Fees
Cash Component ($)
Equity ($)
NED Equity
Plan Shares
Total per
annum ($)
25,000
20,000
10,000
115,000
130,000
40,000
40,000
155,000
170,000
95,000
15,000
15,000
10,000
135,000
40,000
175,000
15,000
10,000
120,000
40,000
160,000
-
10,000
95,000
105,000
40,000
40,000
135,000
145,000
570,000
15,000
55,000
60,000
700,000
240,000
940,000
Directors
James Askew
Graham
Freestone
Colin
Johnstone
Thomas
McKeith
Naguib Sawaris
Sebastien de
Montessus
95,000
95,000
95,000
95,000
95,000
-
-
-
-
-
(f) Other Remuneration Information
(i) LTIP performance parameters
Component
Assessment
TSR
Performance
The Group's TSR will be based on the percentage by which its 30-day volume weighted
average share price quoted on ASX (“VWAP”) at the close of trade on the Relevant Date
(plus the value of any dividends paid during the performance period) has increased over
the Group’s applicable 30-day VWAP at the close of trade, relating to the grant of
Performance Rights for that period.
Evolution TSR performance as
% of TSR Performance Rights
compared to the Peer Group TSR
vesting
Level of
performance
achieved
Target
Exceptional
Threshold
Top 50th percentile
33%
Above the top 50th percentile and
Straight-line pro-rata between 33%
below the top 25th percentile
Top 25th percentile
below the top 10th percentile
Top 10th percentile or above
and 66%
66%
and 100%
100%
Above the top 25th percentile and
Straight-line pro-rata between 66%
Absolute TSR
performance
Performance rights will be will be tested against the Group’s Absolute TSR performance
relative to the 30 days VWAP (Absolute TSR Performance Rights) as at 30 June 2016, 30
June 2017, 30 June 2018 and 30 June 2019 respectively, measured as the cumulative
annual TSR over the three year performance period.
-
-
-
37
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(e) Non-Executive Director Remuneration Outcomes (continued)
Directors
James Askew
Graham
Freestone
Colin
Johnstone
Thomas
McKeith
Naguib Sawaris
Sebastien de
Montessus
Base Fees
Lead
Independent
Cash Component ($)
Sub-Committee
Member
Sub-Committee
Chairman
Total Cash
Fees
Equity ($)
NED Equity
Plan Shares
Total per
annum ($)
95,000
95,000
-
-
-
25,000
20,000
10,000
115,000
130,000
40,000
40,000
155,000
170,000
95,000
15,000
15,000
10,000
135,000
40,000
175,000
95,000
95,000
95,000
-
-
-
15,000
10,000
120,000
40,000
160,000
-
-
-
10,000
95,000
105,000
40,000
40,000
135,000
145,000
570,000
15,000
55,000
60,000
700,000
240,000
940,000
(f) Other Remuneration Information
(i) LTIP performance parameters
Component
TSR
Performance
Absolute TSR
performance
Assessment
The Group's TSR will be based on the percentage by which its 30-day volume weighted
average share price quoted on ASX (“VWAP”) at the close of trade on the Relevant Date
(plus the value of any dividends paid during the performance period) has increased over
the Group’s applicable 30-day VWAP at the close of trade, relating to the grant of
Performance Rights for that period.
Level of
performance
achieved
Evolution TSR performance as
compared to the Peer Group TSR
% of TSR Performance Rights
vesting
Threshold
Top 50th percentile
33%
Target
Above the top 50th percentile and
below the top 25th percentile
Top 25th percentile
Straight-line pro-rata between 33%
and 66%
66%
Above the top 25th percentile and
below the top 10th percentile
Top 10th percentile or above
Straight-line pro-rata between 66%
and 100%
100%
Exceptional
Performance rights will be will be tested against the Group’s Absolute TSR performance
relative to the 30 days VWAP (Absolute TSR Performance Rights) as at 30 June 2016, 30
June 2017, 30 June 2018 and 30 June 2019 respectively, measured as the cumulative
annual TSR over the three year performance period.
37
97
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
(i) LTIP performance parameters (continued)
(ii) Director and key management personnel equity holdings
Balance at the
Received
Other changes Balance at the
start of the
year
during the
year on
conversion of
performance
rights
Received
during the
year on
exercise of
options
end of the
year
7,737,989
2,245,152
486,917
10,470,058
Directors
Jacob Klein
Lawrie Conway
James Askew
Graham Freestone
Colin Johnstone
Thomas McKeith
Naguib Sawaris (i)
Sebastien de Montessus
Amr El Adawy
Key Management Personnel
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
138,462
669,231
98,953
94,415
138,462
11,333
183,529
30,840
132,833
403,630
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,461
88,058
15,254
14,554
18,461
-
-
-
-
(344,838)
18,002
(73,738)
11,102
156,923
757,289
114,207
108,969
156,923
11,333
667,836
280,842
449,095
937,933
-
-
-
330,000
499,145
232,000
390,000
523,201
(i)
Mr Sawaris is the controlling shareholder of La Mancha Group International BV ("La Mancha"). La Mancha has a
relevant interest in 475,144,992 Evolution shares, representing approximately 28.24% of Evolution's issued capital.
9,639,677
3,889,498
330,000
252,233
14,111,408
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
(i) LTIP performance parameters (continued)
Component
Assessment
Level of
performance
achieved
Evolution Absolute TSR
performance
% of Absolute TSR Performance
Rights vesting
Threshold
10% Per Annum Return
33%
Target
Above 10% Per Annum Return and
below 15% Per Annum Return
15% Return Per Annum
Straight-line pro-rata between 33%
and 66%
66%
Above 15% Per Annum Return and
below 20% Per Annum Return
Above 20% Per Annum Return
Straight-line pro-rata between 66%
and 100%
100%
Exceptional
A proportion of Performance Rights granted during the years ended 30 June 15-17 and
those to be granted during the year ended 30 June 2018,will be tested against the Group’s
growth in Earnings Per Share, calculated by excluding any Non-Recurring Items, and
measured as the cumulative annual growth rate over the three year performance period.
Level of
performance
achieved
Evolution Earnings per share
performance
% of Earnings Per Share
Performance Rights vesting
Threshold
7% Per Annum Growth in EPS
33%
Target
Exceptional
Above 7% Per Annum Growth in EPS
and below 11% Per Annum Growth in
EPS
11% Per Annum Growth in EPS
Above 11% Per Annum Growth in
EPS and below 15% Per Annum
Growth in EPS
Above 15% Per Annum Growth in
EPS
Straight-line pro-rata between 33%
and 66%
66%
Straight-line pro-rata between 66%
and 100%
100%
A proportion of Performance Rights will be tested against the Group’s ability to grow its Ore
Reserves, calculated by measuring the growth over the three year performance period by
comparing the baseline measure of the Ore Reserves as at 31 December (“Baseline Ore
Reserves”) to the Ore Reserves as at 31 December three years later on a per share basis,
with testing to be performed at 30 June 2017, 30 June 2018 and 30 June 2019.
Level of
performance
achieved
Evolution Growth in Ore Reserves
per share performance
% of Growth in Ore Reserves
Performance Rights vesting
Threshold
80% of Baseline Ore Reserves
33%
Target
Exceptional
Above 80% of Baseline Ore Reserves
but below 100% Baseline Ore
Reserves
100% Baseline Ore Reserves
Above 100% of Baseline Ore
Reserves and below 120% of Baseline
Ore Reserves
120% and above of Baseline Ore
Reserves
Straight-line pro-rata between 33%
and 66%
66%
Straight-line pro-rata between 66%
and 100%
100%
38
39
Growth in
earnings per
share
Increase in ore
reserves per
share
98
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
(i) LTIP performance parameters (continued)
(ii) Director and key management personnel equity holdings
Balance at the
start of the
year
Received
during the
year on
conversion of
performance
rights
Received
during the
year on
exercise of
options
Other changes Balance at the
end of the
year
Directors
Jacob Klein
Lawrie Conway
James Askew
Graham Freestone
Colin Johnstone
Thomas McKeith
Naguib Sawaris (i)
Sebastien de Montessus
Amr El Adawy
Key Management Personnel
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
7,737,989
138,462
669,231
98,953
94,415
138,462
-
-
11,333
183,529
30,840
132,833
403,630
-
9,639,677
2,245,152
-
-
-
-
-
-
-
-
499,145
232,000
390,000
523,201
-
3,889,498
-
-
-
-
-
-
-
-
-
330,000
-
-
-
-
330,000
486,917
18,461
88,058
15,254
14,554
18,461
-
-
-
(344,838)
18,002
(73,738)
11,102
-
252,233
10,470,058
156,923
757,289
114,207
108,969
156,923
-
-
11,333
667,836
280,842
449,095
937,933
-
14,111,408
(i)
Mr Sawaris is the controlling shareholder of La Mancha Group International BV ("La Mancha"). La Mancha has a
relevant interest in 475,144,992 Evolution shares, representing approximately 28.24% of Evolution's issued capital.
39
99
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
(ii) Director and key management personnel equity holdings (continued)
(ii) Director and key management personnel equity holdings (continued)
Performance and Share Rights
Options
Balance
at the
start of
the year
Granted
as
compen-
sation
Converted Other
changes
At end of the year
Balance
at the end
of the
year
Vested
and
exercisable
Unvested
Directors
Jacob Klein
Lawrie Conway
James Askew
Graham Freestone
Colin Johnstone
Thomas McKeith
Naguib Sawaris
Sebastien de Montessus
Key Management Personnel
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
9,622,314 4,151,479 (2,245,152) (3,750,000) 7,778,641 2,229,965 5,548,676
641,290
16,298
16,298
16,298
16,298
16,298
16,298
- 1,177,637
16,298
-
16,298
-
16,298
-
16,298
-
16,298
-
16,298
-
306,058
16,298
16,298
16,298
16,298
16,298
16,298
871,579
-
-
-
-
-
-
536,347
-
-
-
-
-
-
-
-
-
-
-
-
-
1,305,526
657,609
1,076,834
1,394,780
-
593,519
410,775
527,052
641,290
276,080
14,928,642 5,911,233 (3,889,498) (3,750,000) 13,200,367 4,463,897 8,736,470
282,908 (499,145)
239,434 (232,000)
251,418 (390,000)
306,058 (523,201)
-
276,080
- 1,089,289
665,043
-
-
938,252
- 1,177,637
276,080
-
495,770
254,268
411,200
536,347
-
Balance
Granted
Exercised Other
Balance
Vested
Unvested
at the
start of
the year
as
compen-
sation
changes
at the end
and
(i)
exercisable
of the
year
At end of the year
4,677,436
52,954
- (4,677,436)
(52,954)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
Jacob Klein
Lawrie Conway
James Askew
Graham Freestone
Colin Johnstone
Thomas McKeith
Naguib Sawaris
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
Sebastien de Montessus
Key Management Personnel
330,000
(330,000)
5,060,390
(330,000) (4,730,390)
(i)
Other changes for the year include the off market sale of 4,677,436 unlisted share options due to expire on 18 and 25
November held by Mr Klein and the expiry of 52,954 unlisted share options held by Mr Askew.
(g) Summary of Key Terms
Below is a list of key terms with definitions used within the Director’s Report:
Key Term
Definition
The Board of Directors (“the
Board” or “the Directors”)
The Board of Directors, the list of persons under the relevant section above.
Key Management Personnel
Senior executives have the authority and responsibility for planning, directing and
controlling the activities of the Company and are members of the senior leadership team.
KMP for the financial year ended 30 June 2017 are listed above.
Total Fixed Remuneration
Total Fixed Remuneration comprises a base salary plus superannuation. This is currently
positioned at the median (50th percentile) of the industry benchmarking report.
Short Term Incentive ("STI")
and Short Term Incentive Plan
STI is the short-term incentive component of Total Remuneration. The STI usually
comprises a cash payment that is only received by the employee if specified annual
goals are achieved. STIP refers to the plan under which the incentives are granted and
("KMP")
("TFR")
(“STIP”)
paid.
40
41
100
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(f) Other Remuneration Information (continued)
(ii) Director and key management personnel equity holdings (continued)
Options
Balance
at the
start of
the year
Granted
as
compen-
sation
Exercised Other
changes
(i)
At end of the year
Balance
at the end
of the
year
Vested
and
exercisable
Unvested
Directors
Jacob Klein
Lawrie Conway
James Askew
Graham Freestone
Colin Johnstone
Thomas McKeith
Naguib Sawaris
Sebastien de Montessus
Key Management Personnel
Aaron Colleran
Paul Eagle
Evan Elstein
Mark Le Messurier
Glen Masterman
4,677,436
-
52,954
-
-
-
-
-
330,000
-
-
-
-
5,060,390
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (4,677,436)
-
-
(52,954)
-
-
-
-
-
-
-
-
-
-
-
(330,000)
-
-
-
-
-
-
-
-
-
(330,000) (4,730,390)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
Other changes for the year include the off market sale of 4,677,436 unlisted share options due to expire on 18 and 25
November held by Mr Klein and the expiry of 52,954 unlisted share options held by Mr Askew.
(g) Summary of Key Terms
Below is a list of key terms with definitions used within the Director’s Report:
Key Term
Definition
The Board of Directors (“the
Board” or “the Directors”)
Key Management Personnel
("KMP")
The Board of Directors, the list of persons under the relevant section above.
Senior executives have the authority and responsibility for planning, directing and
controlling the activities of the Company and are members of the senior leadership team.
KMP for the financial year ended 30 June 2017 are listed above.
Total Fixed Remuneration
("TFR")
Total Fixed Remuneration comprises a base salary plus superannuation. This is currently
positioned at the median (50th percentile) of the industry benchmarking report.
Short Term Incentive ("STI")
and Short Term Incentive Plan
(“STIP”)
STI is the short-term incentive component of Total Remuneration. The STI usually
comprises a cash payment that is only received by the employee if specified annual
goals are achieved. STIP refers to the plan under which the incentives are granted and
paid.
41
101
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Remuneration Report (Audited) (continued)
(g) Summary of Key Terms (continued)
Key Term
Definition
Long Term Incentive ("LTI") and
Long term Incentive Plan
(“LTIP”)
LTI is the long-term incentive component of Total Remuneration. The LTI comprises
Options or Performance Rights, usually with a three year vesting period that are subject
to specified vesting conditions established by the Board. Further details of the vesting
conditions associated with the performance rights are detailed in the Vesting Conditions
of Performance Rights section. Options and Performance Rights cannot be exercised
unless the vesting conditions have been satisfied. LTIP refers to the plan under which
LTIs are granted and is aimed at retaining and incentivising KMP and senior managers to
achieve business objectives that are aligned with shareholder interests, and are currently
provided via Performance Rights.
Total Annual Remuneration
Total Fixed Remuneration plus STI.
Total Remuneration
Total Fixed Remuneration plus STI and LTI.
Superannuation Guarantee
Charge ("SGC")
This is the employer contribution to an employee nominated superannuation fund
required by law. The percentage contribution was set at 9.5% in the reporting period and
is capped in line with the SGC maximum quarterly payment.
Employees and Contractors
Option Plan ("ECOP")
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. The plan is currently dormant and no further
Options will be issued under this plan.
Employee Share Option and
Performance Rights Plan
("ESOP")
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.
NED Equity Plan
The plan permits the Company, at the discretion of the Board and Remuneration
Committee to issue remuneration to Non-Executive Directors through Share Rights.
Total Shareholder Return
("TSR")
TSR is the total return on an ordinary share to an investor arising from growth in the
share price plus any dividends received.
Key Performance Indicators
("KPIs")
A form of performance measurement for individual performance against a pre-defined set
of goals.
Volume Weighted Average
Share Price (“VWAP”)
A 30 day volume weighted average share price quote on the Australian Stock Exchange
(ASX). The VWAP is to be used when assessing Company performance for TSR.
Fees
Fees paid to Executive and Non-Executive Directors for services as a Director, including
sub-committee fees as applicable.
Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Indemnification of officers and auditors
During the financial year the Company paid a premium in respect of a contract insuring the Directors of the
Company, the company secretaries and all executive officers of the Company and of any related body corporate
against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount
The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In Summary the
of the premium.
Deed provides for:
•
•
•
•
•
Access to corporate records for each Director for a period after ceasing to hold office in the Company;
The provision of Directors and Officers Liability Insurance; and
Indemnity for legal costs incurred by Directors in carrying out the business affairs of the Company.
Except for the above the Company has not otherwise, during or since the financial year, except to the amount
permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body
corporate against a liability incurred as such an officer or auditor.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for
the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor's expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided
during the year are set out below. Details of the amounts paid or payable to the auditor for audit services
provided during the year are set out in note 24(a).
The board of Directors has considered the position and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
42
43
102
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Indemnification of officers and auditors
During the financial year the Company paid a premium in respect of a contract insuring the Directors of the
Company, the company secretaries and all executive officers of the Company and of any related body corporate
against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount
of the premium.
The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In Summary the
Deed provides for:
•
•
•
Access to corporate records for each Director for a period after ceasing to hold office in the Company;
The provision of Directors and Officers Liability Insurance; and
Indemnity for legal costs incurred by Directors in carrying out the business affairs of the Company.
Except for the above the Company has not otherwise, during or since the financial year, except to the amount
permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body
corporate against a liability incurred as such an officer or auditor.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for
the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor's expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided
during the year are set out below. Details of the amounts paid or payable to the auditor for audit services
provided during the year are set out in note 24(a).
The board of Directors has considered the position and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
43
103
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Directors' Report
30 June 2017
Non-audit services (continued)
During the year the following fees were paid or payable for non-audit services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Other assurance services
PricewaterhouseCoopers firm:
Assurance related services
Non PricewaterhouseCoopers audit firms
Due diligence services
Internal audit services
Other assurance services
Total remuneration for other assurance services
SPACE
Taxation services
PricewaterhouseCoopers firm:
Tax compliance services
Tax advisory services
Non PricewaterhouseCoopers audit firms
Tax compliance services
Tax advisory services
Total remuneration for taxation services
SPACE
SPACE
Total remuneration for non-audit services
Auditor's independence declaration
2017
$
2016
$
140,413
-
114,348
20,000
274,761
89,391
402,939
111,861
291,424
895,615
16,700
226,245
62,845
-
305,790
12,000
-
47,980
821,010
880,990
1,170,376
1,186,780
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 105.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of
amounts in the Directors' Report. Amounts in the Directors' Report have been rounded off in accordance with that
ASIC Corporations Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of Directors.
Graham Freestone
Non-Executive Director
104
Jacob (Jake) Klein
Executive Chairman
Sydney
104
Directors' Report (continued)Evolution Mining Limited Annual Report 2017 Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Evolution Mining Limited for the year ended 30 June 2017, 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 audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Evolution Mining Limited and the entities it controlled during the
period.
Marc Upcroft
Partner
PricewaterhouseCoopers
Sydney
17 August 2017
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
45
105
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Consolidated Statement of Profit or Loss and
Annual Financial Report
Other Comprehensive Income
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2017
Evolution Mining Limited
Annual Financial Report
Consolidated Balance Sheet
As at 30 June 2017
Sales revenue
Cost of sales
Gross Profit
Interest income
Other income
Share based payments expense
Corporate and other administration costs
Acquisition and integration costs
Loss on sale of subsidiary
Gain on revaluation of available-for-sale assets
Exploration and evaluation costs expensed
Impairment of assets
Impairment of goodwill
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense attributable to Owners of
Evolution Mining Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Changes in the fair value of available-for-sale financial assets
Changes in the fair value of cash flow hedges
Exchange differences on translation of foreign operations
Blank
Other comprehensive income/(loss), net of tax
Total comprehensive income/(loss)
Total comprehensive income/(loss) for the period is attributable to:
Owners of Evolution Mining Limited
30 June
2017
$'000
30 June
2016
$'000
Notes
2
2
23
2
2
2
3
11(b)
11(b)
11(b)
1,479,876
(1,151,344)
328,532
1,328,614
(1,096,992)
231,622
1,519
776
(6,413)
(28,728)
(6,987)
(3,576)
-
(12,645)
-
-
(35,194)
237,284
1,412
2,260
(9,896)
(26,402)
(54,681)
-
4,365
(13,801)
(77,330)
(35,270)
(43,785)
(21,506)
(19,677)
(2,843)
217,607
(24,349)
1,699
127
(47)
1,779
46
(6,889)
104
(6,739)
219,386
(31,088)
219,386
219,386
(31,088)
(31,088)
Cents
Cents
Earning/(loss) per share for profit/(loss) attributable to Owners of
Evolution Mining Limited:
Basic earning/(loss) per share
Diluted earning/(loss) per share
4
4
13.28
13.23
(1.75)
(1.75)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
46
106
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Total current assets
Non-current assets
Inventories
Available-for-sale financial assets
Property, plant and equipment
Mine development and exploration
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
Liabilities directly associated with assets classified as held for sale
30 June
2017
$'000
30 June
2016
$'000
Notes
9
12
14
14
7
8
16
13
10
15
10
15
16
11(a)
11(b)
11(c)
37,385
63,119
276,869
-
377,373
827
4,962
741,189
1,801,479
16,448
3,191
2,568,096
2,945,469
156,627
53,401
36,214
30,173
3,206
279,621
382,723
154,873
-
-
-
-
537,596
817,217
2,128,252
2,183,727
38,795
(94,270)
2,128,252
17,295
26,953
213,168
77,621
335,037
827
3,263
789,770
1,058,173
-
89
1,852,122
2,187,159
121,509
16,788
127
-
24,994
32,621
4,621
200,660
279,667
152,104
89
3,206
435,066
635,726
1,551,433
1,770,987
29,363
(248,917)
1,551,433
Capital and reserves attributable to owners of Evolution Mining Limited
2,128,252
1,551,433
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
47
Evolution Mining Limited Annual Report 2017 Consolidated Balance Sheet
Evolution Mining Limited
Annual Financial Report
Consolidated Balance Sheet
As at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets classified as held for sale
Total current assets
Non-current assets
Inventories
Available-for-sale financial assets
Property, plant and equipment
Mine development and exploration
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Liabilities directly associated with assets classified as held for sale
Other current liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Capital and reserves attributable to owners of Evolution Mining Limited
30 June
2017
$'000
30 June
2016
$'000
Notes
9
12
14
14
7
8
16
13
10
15
10
15
16
11(a)
11(b)
11(c)
37,385
63,119
276,869
-
377,373
827
4,962
741,189
1,801,479
16,448
3,191
2,568,096
2,945,469
156,627
53,401
-
36,214
30,173
-
3,206
279,621
382,723
154,873
-
-
537,596
817,217
2,128,252
2,183,727
38,795
(94,270)
2,128,252
17,295
26,953
213,168
77,621
335,037
827
3,263
789,770
1,058,173
-
89
1,852,122
2,187,159
121,509
16,788
127
-
24,994
32,621
4,621
200,660
279,667
152,104
89
3,206
435,066
635,726
1,551,433
1,770,987
29,363
(248,917)
1,551,433
Total equity
2,128,252
1,551,433
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
47
107
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Consolidated Statement of Changes in Equity
Annual Financial Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Evolution Mining Limited
Annual Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Issued
capital
$'000
Share-
based
payments
$'000
Fair value
revaluation
reserve
$'000
Cash flow
hedges
$'000
Foreign
currency
translation
$'000
Accu-
mulated
losses
$'000
Total
equity
$'000
Notes
Balance at 1 July 2015
1,292,620
20,840
(156)
6,762
Loss after income tax expense
Changes in fair value of
available-for-sale financial
assets
Changes in fair value of cash
flow hedges
Exchange differences on
translation of foreign operations
Total comprehensive income
-
-
-
-
-
Transactions with owners in
their capacity as owners:
Contributions of equity
Dividends provided for or paid
Recognition of share-based
payments
11(a)
5
23
478,367
-
-
478,367
-
-
-
-
-
-
-
8,656
8,656
-
46
-
-
46
-
-
-
-
-
-
-
-
(195,506) 1,124,560
(24,349)
(24,349)
-
-
46
(6,889)
104
104
-
(24,349)
104
(31,088)
-
-
(6,889)
-
(6,889)
-
-
-
-
-
-
-
-
-
(29,062)
478,367
(29,062)
-
(29,062)
8,656
457,961
Balance at 30 June 2016
1,770,987
29,496
(110)
(127)
104
(248,917) 1,551,433
Balance at 1 July 2016
1,770,987
29,496
(110)
(127)
104
(248,917) 1,551,433
Profit after income tax expense
Changes in fair value of
available-for-sale financial
assets
Changes in fair value of cash
flow hedges
Exchange differences on
translation of foreign operations
Total comprehensive
expense
-
-
-
-
-
Transactions with owners in
their capacity as owners:
Contributions of equity
Dividends provided for or paid
Recognition of share-based
payments
11(a)
5
23
412,740
-
-
412,740
-
-
-
-
-
-
-
7,653
7,653
-
1,699
-
-
1,699
-
-
-
-
Balance at 30 June 2017
2,183,727
37,149
1,589
-
-
127
-
127
-
-
-
-
-
217,607
217,607
Repayment of interest bearing liabilities - Senior Secured Syndicated
475,000
607,000
-
-
-
1,699
127
(47)
-
-
-
(47)
(47)
217,607
219,386
-
-
-
-
-
(62,960)
412,740
(62,960)
-
(62,960)
7,653
357,433
57
(94,270) 2,128,252
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
48
49
108
Cash flows from operating activities
Receipts from sales
Payments to suppliers and employees
Other income
Interest received
Interest paid
Net cash inflow from operating activities
6(a)
30 June
2017
$'000
30 June
2016
$'000
Notes
1,441,275
(768,279)
776
1,519
(24,496)
650,795
1,317,938
(720,120)
2,260
1,414
(27,408)
574,084
Cash flows from investing activities
Payments for property, plant and equipment
Payments for mine development and exploration
Proceeds from sale of property, plant and equipment
Proceeds from sale of subsidiary
Payments for acquisition and integration costs
Payments for stamp duty related to business disposal
Cash acquired through business combinations
Transfer from term deposits
Transaction costs related to business disposal
Payment for economic interest in Ernest Henry
Net cash outflow from investing activities
Payments for subsidiaries acquired through business combinations
Cash flows from financing activities
Proceeds from interest bearing liabilities - Senior Secured Syndicated
Repayment of interest bearing liabilities - La Mancha Debt Facility
Revolving and Term Facility
Revolving and Term Facility
Repayment of short term borrowings
Proceeds from short term borrowings
Payment of finance lease liabilities
Dividends paid
Proceeds from issues of shares
Payment of transaction costs for issuing shares
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period
9
(91,041)
(181,267)
1,820
40,688
(3,045)
(3)
(3,942)
(884,004)
(1,120,794)
-
-
-
-
(325,000)
(163,232)
161,630
(8,316)
(52,419)
408,808
(6,315)
490,156
20,157
17,295
(67)
37,385
(70,260)
(164,455)
3,881
(6,590)
(48,091)
20,781
(734,646)
(999,380)
(322,000)
(124,000)
(155,739)
158,801
(15,224)
(23,834)
111,799
236,803
(188,493)
205,788
17,295
-
-
-
-
-
-
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Consolidated Statement of Cash Flows
Annual Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Cash flows from operating activities
Receipts from sales
Payments to suppliers and employees
Other income
Interest received
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for mine development and exploration
Proceeds from sale of property, plant and equipment
Proceeds from sale of subsidiary
Payments for acquisition and integration costs
Payments for stamp duty related to business disposal
Cash acquired through business combinations
Payments for subsidiaries acquired through business combinations
Transfer from term deposits
Transaction costs related to business disposal
Payment for economic interest in Ernest Henry
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from interest bearing liabilities - Senior Secured Syndicated
Revolving and Term Facility
Repayment of interest bearing liabilities - Senior Secured Syndicated
Revolving and Term Facility
Repayment of interest bearing liabilities - La Mancha Debt Facility
Repayment of short term borrowings
Proceeds from short term borrowings
Payment of finance lease liabilities
Dividends paid
Proceeds from issues of shares
Payment of transaction costs for issuing shares
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period
9
30 June
2017
$'000
30 June
2016
$'000
Notes
1,441,275
(768,279)
776
1,519
(24,496)
650,795
1,317,938
(720,120)
2,260
1,414
(27,408)
574,084
6(a)
(91,041)
(181,267)
1,820
40,688
-
(3,045)
-
-
(3)
(3,942)
(884,004)
(1,120,794)
(70,260)
(164,455)
3,881
-
(6,590)
(48,091)
20,781
(734,646)
-
-
-
(999,380)
475,000
607,000
(325,000)
-
(163,232)
161,630
(8,316)
(52,419)
408,808
(6,315)
490,156
20,157
17,295
(67)
37,385
(322,000)
(124,000)
(155,739)
158,801
(15,224)
(23,834)
111,799
-
236,803
(188,493)
205,788
-
17,295
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
49
109
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Notes to the Consolidated Financial Statements
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Contents of the Notes to the Consolidated Financial Statements
Business Performance
Page
This section highlights the key indicators on how the Group performed during the year.
Business Performance
Performance by Mine
Revenue and Expenses
Income tax expense
Earning per share
Dividends
Other cash flow information
Resource Assets and Liabilities
Property, plant and equipment
Mine development and exploration
Capital Structure, Financing and Working Capital
Cash and cash equivalents
Interest bearing liabilities
Equity and reserves
Trade and other receivables
Trade and other payables
Inventories
Provisions
Deferred tax balances
Risk and unrecognised items
Financial risk management
Contingent liabilities and contingent assets
Commitments
Events occurring after the reporting period
Other information
Ernest Henry Operation
Related party transactions
Share-based payments
Remuneration of auditors
Deed of cross guarantee
Interests in other entities
Parent entity financial information
Summary of significant accounting policies
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
111
111
113
114
115
116
118
119
119
121
126
126
127
128
130
131
131
132
135
137
137
141
141
143
144
144
145
146
150
151
152
153
154
1 Performance by Mine
(a) Description of segments
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 business decision makers) in assessing
performance and in determining the allocation of resources.
The Group’s seven operational mine sites, Exploration 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 share-based payment expenses and other corporate expenditures supporting the business
Segment performance is evaluated based on earnings before interest, tax, depreciation and amortisation
The Group’s operations are all conducted in the mining industry in Australia and New Zealand.
during the period.
(EBITDA).
(b) Segment information
The segment information for the reportable segments for the year ended 30 June 2017 is as follows:
Cowal
Mungari
Carlton
Rawdon
$'000
$'000
$'000
$'000
Mt
Mt
Edna
May
$'000
Cracow
$'000
Ernest
Henry
$'000
Pajingo
$'000
Explo-
ration
$'000
Corp-
orate
$'000
Total
$'000
440,691 231,767 197,093 166,471 116,845 146,149 163,342
258,434
90,029 126,051
91,578
20,588
71,610
99,234
17,518
2,614
(12,645)
(33,638)
713,855
- 1,479,876
43,849
14,566
15,304
14,242
2,241
17,462
6,066
2,820
1,035
117,585
27,080
22,161
13,887
19,071
28,519
14,168
-
3,560
-
128,446
The segment information for the reportable segments for the year ended 30 June 2016 is as follows:
Cowal
Mungari
Carlton
Rawdon
$'000
$'000
$'000
$'000
Mt
Mt
Edna
May
$'000
Cracow
$'000
Ernest
Henry
$'000
Pajingo
$'000
Explo-
ration
$'000
Corp-
orate
$'000
Total
$'000
375,346 232,549 206,916 136,323 119,819 144,506
222,238 115,062 119,631
65,719
12,911
67,887
- 113,155
- 1,328,614
50,940
(13,801)
(33,036)
607,551
29,412
18,231
13,788
16,448
4,290
13,453
-
14,727
8,146
37,384
7,302
12,204
848
107,870
-
93,263
-
-
-
11,400
13,500
30 June 2017
SPACE
Revenue
EBITDA
Sustaining
Capital
Major
Capital
30 June 2016
Space
Revenue
EBITDA
Sustaining
Capital
Major
Capital
-
-
-
-
-
-
110
51
110
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Notes to the Consolidated Financial Statements
Annual Financial Report
(continued)
Notes to the Consolidated Financial Statements
Business Performance
This section highlights the key indicators on how the Group performed during the year.
1 Performance by Mine
(a) Description of segments
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 business decision makers) in assessing
performance and in determining the allocation of resources.
The Group’s seven operational mine sites, Exploration 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 share-based payment expenses and other corporate expenditures supporting the business
during the period.
Segment performance is evaluated based on earnings before interest, tax, depreciation and amortisation
(EBITDA).
The Group’s operations are all conducted in the mining industry in Australia and New Zealand.
(b) Segment information
The segment information for the reportable segments for the year ended 30 June 2017 is as follows:
Cowal
$'000
Mungari
$'000
Mt
Carlton
$'000
Mt
Rawdon
$'000
Edna
May
$'000
Cracow
$'000
Ernest
Henry
$'000
Pajingo
$'000
Explo-
ration
$'000
Corp-
orate
$'000
Total
$'000
30 June 2017
SPACE
Revenue
EBITDA
Sustaining
Capital
Major
Capital
440,691 231,767 197,093 166,471 116,845 146,149 163,342
99,234
91,578
258,434
90,029 126,051
20,588
71,610
17,518
2,614
-
(12,645)
- 1,479,876
713,855
(33,638)
43,849
14,566
15,304
14,242
2,241
17,462
6,066
2,820
27,080
22,161
13,887
19,071
28,519
14,168
-
3,560
-
-
1,035
117,585
-
128,446
The segment information for the reportable segments for the year ended 30 June 2016 is as follows:
Cowal
$'000
Mungari
$'000
Mt
Carlton
$'000
Mt
Rawdon
$'000
Edna
May
$'000
Cracow
$'000
Ernest
Henry
$'000
Pajingo
$'000
Explo-
ration
$'000
Corp-
orate
$'000
Total
$'000
30 June 2016
Space
Revenue
EBITDA
Sustaining
Capital
Major
Capital
375,346 232,549 206,916 136,323 119,819 144,506
67,887
222,238 115,062 119,631
65,719
12,911
29,412
18,231
13,788
16,448
4,290
13,453
-
14,727
8,146
37,384
7,302
12,204
51
- 113,155
50,940
-
-
(13,801)
- 1,328,614
607,551
(33,036)
-
-
11,400
13,500
-
-
848
107,870
-
93,263
111
Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
1 Performance by Mine (continued)
(c) Segment reconciliation
Reconciliation of profit/(loss) before income tax expense
SPACE
EBITDA
Depreciation and amortisation
Interest income
Acquisition and integration costs
Gain on revaluation of available-for-sale assets
Fair value amortisation expense
Fair value unwinding expense
Impairment loss on assets
Impairment loss on goodwill
Finance costs
Loss on sale of subsidiary
Profit/(loss) before income tax expense
Recognition and measurement
30 June
2017
$'000
30 June
2016
$'000
713,855
(388,824)
1,519
(6,987)
-
(45,035)
1,526
-
-
(35,194)
(3,576)
237,284
607,551
(335,451)
1,412
(54,681)
4,365
(58,167)
(30,150)
(77,330)
(35,270)
(43,785)
-
(21,506)
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
The board of Evolution Mining Limited has appointed a strategic steering committee which assesses the financial
performance and position of the Group, and makes strategic decisions. The steering committee, which has been
identified as being the chief operating decision maker, consists of the Executive Chairman and the Senior
Leadership Team.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
2 Revenue and Expenses
Sales revenue
Gold sales
Silver sales
Copper sales
Cost of sales
Mine operating costs
Depreciation and amortisation expense
Royalty and other selling costs
Fair value amortisation
Fair value (gain)/expense
Corporate and other administration costs
Depreciation and amortisation expense
Operating lease payments
Corporate wages and salaries expense
Contractor, consultants and advisory expense
Other administrative
Loss on disposal of assets
Acquisition and integration costs
Contractor, consultants and advisory expense
Corporate and administration expense
Stamp duty on business combinations
Finance costs
Finance lease interest expense
Amortisation of debt establishment costs
Unwinding of discount on provisions
Write off of debt establishment costs
Interest expense
30 June
2017
$'000
30 June
2016
$'000
1,341,311
25,164
113,401
1,479,876
1,302,228
18,226
8,160
1,328,614
30 June
2017
$'000
30 June
2016
$'000
657,258
388,097
62,480
45,035
(1,526)
618,488
334,449
55,738
58,167
30,150
1,151,344
1,096,992
727
979
22,074
4,117
831
-
28,728
2,998
944
3,045
6,987
338
7,444
3,254
-
24,158
35,194
1,002
1,384
18,857
4,655
406
98
26,402
4,377
2,213
48,091
54,681
1,095
11,623
3,406
1,347
26,314
43,785
52
53
112
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
2 Revenue and Expenses
Sales revenue
Gold sales
Silver sales
Copper sales
Cost of sales
Mine operating costs
Depreciation and amortisation expense
Royalty and other selling costs
Fair value amortisation
Fair value (gain)/expense
Corporate and other administration costs
Depreciation and amortisation expense
Operating lease payments
Corporate wages and salaries expense
Contractor, consultants and advisory expense
Other administrative
Loss on disposal of assets
Acquisition and integration costs
Contractor, consultants and advisory expense
Corporate and administration expense
Stamp duty on business combinations
Finance costs
Finance lease interest expense
Amortisation of debt establishment costs
Unwinding of discount on provisions
Write off of debt establishment costs
Interest expense
30 June
2017
$'000
30 June
2016
$'000
1,341,311
25,164
113,401
1,479,876
1,302,228
18,226
8,160
1,328,614
30 June
2017
$'000
30 June
2016
$'000
657,258
388,097
62,480
45,035
(1,526)
1,151,344
618,488
334,449
55,738
58,167
30,150
1,096,992
727
979
22,074
4,117
831
-
28,728
2,998
944
3,045
6,987
338
7,444
3,254
-
24,158
35,194
1,002
1,384
18,857
4,655
406
98
26,402
4,377
2,213
48,091
54,681
1,095
11,623
3,406
1,347
26,314
43,785
53
113
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
2 Revenue and Expenses (continued)
3 Income tax expense (continued)
Depreciation and amortisation
Cost of sales (excluding Ernest Henry)
Cost of sales (Ernest Henry)
Corporate and other administration costs
Recognition and measurement
30 June
2017
$'000
30 June
2016
$'000
323,195
64,902
727
388,824
334,449
-
1,002
335,451
Revenue from the sale of goods is recognised when there has been a transfer of risks and rewards to the
customer and no further processing is required by the Group, the quality and quantity of the goods has been
determined with reasonable accuracy, the price is fixed or determinable, and collectability is probable. The point
at which risk and title passes for concentrate sales is generally upon receipt of the bill of lading when the
commodity is delivered for shipment. Revenue is measured at the fair value of the consideration received or
receivable.
The terms of metal in concentrate sales contracts with third parties contain provisional pricing arrangements
whereby the selling price for metal in concentrate is based on prevailing spot prices on a specified future date
after shipment to the customer (quotation period). Adjustments to the sales price occur based on movements in
quoted marked prices up to the date of final settlement. The period between provisional invoicing and final
settlement is typically between one and three months. Revenue on provisionally priced sales is recognised based
on the estimated fair value of the total consideration receivable.
3 Income tax expense
(a)
Income tax expense
Current tax on profits for the year
Deferred tax
Previously unrecognised tax loss now recognised
30 June
2017
$'000
36,214
3,863
(20,400)
19,677
30 June
2016
$'000
-
20,087
(17,244)
2,843
Basic earning per share (cents)
Diluted earning per share (cents)
(b) Earning/(loss) used in calculating earning/(loss) per share
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30%
space
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Costs of business acquisitions
Impairment loss on goodwill
Share-based payments
Loss on sale of subsidiary
Other
Tax loss recognised to reduce deferred tax expense
Tax losses used to reduce current tax expense
Income tax expense
(c) Tax losses
4 Earning per share
(a) Earning/(loss) per share
The Group has unrecognised available tax losses of $48.530 million as at 30 June 2017. These tax losses have
not been recognised due to the uncertainty of their recoverability in future periods.
30 June
2017
$'000
237,284
71,185
982
-
1,924
1,073
2,257
(20,400)
(37,344)
19,677
30 June
2016
$'000
(21,506)
(6,452)
15,017
10,581
2,225
-
-
(1,284)
(17,244)
2,843
(256,961)
18,663
30 June
2017
Cents
13.28
13.23
30 June
2016
Cents
(1.75)
(1.75)
30 June
2017
$'000
30 June
2016
$'000
Earning/(loss) per share used in the calculation of basic and diluted earning/(loss)
per share:
Profit/(loss) after income tax attributable to the owners of the parent
217,607
(24,349)
54
55
114
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
3 Income tax expense (continued)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30%
space
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Costs of business acquisitions
Impairment loss on goodwill
Share-based payments
Loss on sale of subsidiary
Other
Tax loss recognised to reduce deferred tax expense
Tax losses used to reduce current tax expense
Income tax expense
30 June
2017
$'000
237,284
71,185
982
-
1,924
1,073
2,257
(20,400)
(37,344)
19,677
30 June
2016
$'000
(21,506)
(6,452)
15,017
10,581
2,225
-
(1,284)
-
(17,244)
2,843
(256,961)
18,663
(c) Tax losses
The Group has unrecognised available tax losses of $48.530 million as at 30 June 2017. These tax losses have
not been recognised due to the uncertainty of their recoverability in future periods.
4 Earning per share
(a) Earning/(loss) per share
Basic earning per share (cents)
Diluted earning per share (cents)
(b) Earning/(loss) used in calculating earning/(loss) per share
30 June
2017
Cents
13.28
13.23
30 June
2016
Cents
(1.75)
(1.75)
30 June
2017
$'000
30 June
2016
$'000
Earning/(loss) per share used in the calculation of basic and diluted earning/(loss)
per share:
Profit/(loss) after income tax attributable to the owners of the parent
217,607
(24,349)
55
115
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
4 Earning per share (continued)
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
(c) Weighted average number of shares used as the denominator
(b) Dividends not recognised at the end of the reporting period (continued)
2017
Number
2016
Number
Weighted average number of ordinary shares used in calculating the basic
earning/(loss) per share
Effect of dilutive securities (i)
1,638,875,242 1,390,155,419
6,060,079
5,584,134
Adjusted weighted average number of ordinary shares used in calculating the
diluted earning/(loss) per share
1,644,459,376 1,396,215,498
In addition to the above dividends, since period end the Directors have
recommended the payment of a fully franked final dividend of 3 cents per fully
paid ordinary share (30 June 2016: 2 cents unfranked). The aggregate amount of
the proposed dividend expected to be paid on 29 September 2017 out of retained
earnings at 30 June 2017, but not recognised as a liability at period end, is
(i)
Performance rights and share rights have been included in the determination of diluted earnings/(loss) per share
(c) Franked dividends
Dividends
30 June
2017
$'000
30 June
2016
$'000
50,484
29,365
5 Dividends
(a) Ordinary shares
Interim dividend - 2017
Interim dividend for the period ended 31 December 2016 of 2 cents per share
unfranked (31 December 2015: 1 cent per share unfranked) per fully paid
share paid on 27 March 2017
Space
Final dividend - 2016
Final dividend for the year ended 30 June 2016 of 2 cents per share
unfranked (30 June 2015: 1 cent per share unfranked) per fully paid share
paid on 23 September 2016
30 June
2017
$'000
30 June
2016
$'000
33,595
14,657
29,365
62,960
14,405
29,062
(b) Dividends not recognised at the end of the reporting period
In June 2017, the Directors approved a change to the dividend policy of whenever possible paying a dividend
equivalent to 50% of the Group's earnings. The change is effective immediately and has been applied to the final
dividend for 2017.
The final dividend recommended after 30 June 2017 will be fully franked out of franking credits expected to arise
from the payment of income tax during the year ending 30 June 2018. The income tax payment for the 30 June
2017 year is due on 1 December 2017, and is estimated to generate franking credits totalling $36 million. The
final dividend for the year ended 30 June 2017 will utilise $21.636 million of the franking credits. After lodgement
of the 30 June 2017 income tax return in February 2018, the Australian Taxation Office is expected to issue
pay-as-you-go tax instalment requirements, which are expected to generate additional franking credits for
utilisation in future dividends.
56
57
116
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
(b) Dividends not recognised at the end of the reporting period (continued)
In addition to the above dividends, since period end the Directors have
recommended the payment of a fully franked final dividend of 3 cents per fully
paid ordinary share (30 June 2016: 2 cents unfranked). The aggregate amount of
the proposed dividend expected to be paid on 29 September 2017 out of retained
earnings at 30 June 2017, but not recognised as a liability at period end, is
Dividends
30 June
2017
$'000
30 June
2016
$'000
50,484
29,365
(c) Franked dividends
The final dividend recommended after 30 June 2017 will be fully franked out of franking credits expected to arise
from the payment of income tax during the year ending 30 June 2018. The income tax payment for the 30 June
2017 year is due on 1 December 2017, and is estimated to generate franking credits totalling $36 million. The
final dividend for the year ended 30 June 2017 will utilise $21.636 million of the franking credits. After lodgement
of the 30 June 2017 income tax return in February 2018, the Australian Taxation Office is expected to issue
pay-as-you-go tax instalment requirements, which are expected to generate additional franking credits for
utilisation in future dividends.
57
117
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
6 Other cash flow information
(a) Reconciliation of profit/(loss) after income tax to net cash inflow from operating activities
Profit/(loss) after income tax expense
Acquisition and integration costs
Depreciation and amortisation
Fair value amortisation and expense
Unwind of discount on provisions
Amortisation of debt establishment costs
Share-based payments expense
Write off of debt establishment costs
Loss on disposal of assets
Fair value adjustment to available-for-sale financial assets
Exploration and evaluation costs expensed
Impairment of goodwill
Impairment of assets
Loss on sale of subsidiary
Timing difference on settlement of Ernest Henry sales/ costs
Change in operating assets and liabilities:
Increase in operating receivables
Increase in inventories
Increase in financial assets at fair value through profit or loss
Increase in operating payables
Increase in current and deferred tax balances
Increase in borrowing costs
Increase/(decrease) in other provisions
Net cash inflow from operating activities
30 June
2017
$'000
217,607
6,987
388,824
43,509
3,254
7,444
6,413
-
-
-
12,645
-
-
3,576
16,887
(36,237)
(41,586)
-
4,957
19,677
(7,857)
4,695
650,795
30 June
2016
$'000
(24,349)
54,681
335,450
88,317
3,406
11,623
9,896
1,347
98
(4,365)
13,801
35,270
77,330
-
-
(11,688)
(14,945)
523
21,351
-
(17,896)
(5,766)
574,084
Resource Assets and Liabilities
This section provides information that is relevant to understanding the composition and management of the
Group's assets and liabilities.
7 Property, plant and equipment
At 1 July 2016
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2017
Carrying amount at the beginning of the year
Additions
Reclassifications
Disposals
Depreciation
Depreciation relating to fair value uplift on business combinations
Carrying amount at the end of the year
At 30 June 2017
Cost
Accumulated depreciation
Net carrying amount
Included in above
Carrying amount of lease assets
Carrying amount of assets under construction
Freehold land
$'000
Plant and
equipment
$'000
Total
$'000
10,526
10,526
1,565,270
(786,026)
779,244
1,575,796
(786,026)
789,770
10,526
4,258
2,057
16,841
779,244
86,783
(2,322)
(1,820)
(132,076)
(5,461)
724,348
789,770
91,041
(265)
(1,820)
(132,076)
(5,461)
741,189
16,841
16,841
1,640,294
(915,946)
724,348
1,657,135
(915,946)
741,189
2,952
67,352
70,304
2,952
67,352
70,304
-
-
-
-
-
-
-
-
58
59
118
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Resource Assets and Liabilities
This section provides information that is relevant to understanding the composition and management of the
Group's assets and liabilities.
7 Property, plant and equipment
At 1 July 2016
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2017
Carrying amount at the beginning of the year
Additions
Reclassifications
Disposals
Depreciation
Depreciation relating to fair value uplift on business combinations
Carrying amount at the end of the year
At 30 June 2017
Cost
Accumulated depreciation
Net carrying amount
Included in above
Carrying amount of lease assets
Carrying amount of assets under construction
Freehold land
$'000
Plant and
equipment
$'000
Total
$'000
10,526
-
10,526
1,565,270
(786,026)
779,244
1,575,796
(786,026)
789,770
10,526
4,258
2,057
-
-
-
16,841
779,244
86,783
(2,322)
(1,820)
(132,076)
(5,461)
724,348
789,770
91,041
(265)
(1,820)
(132,076)
(5,461)
741,189
16,841
-
16,841
1,640,294
(915,946)
724,348
1,657,135
(915,946)
741,189
-
-
-
2,952
67,352
70,304
2,952
67,352
70,304
59
119
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
7 Property, plant and equipment (continued)
At 1 July 2015
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2016
Carrying amount at the beginning of the year
Additions
Amounts acquired in a business combination
Reclassifications
Disposals
Depreciation
Depreciation relating to fair value uplift on business combinations
Classified as held for sale
Carrying amount at the end of the year
At 30 June 2016
Cost
Accumulated depreciation
Net carrying amount
Included in above
Carrying amount of lease assets
Assets in the course of construction
Recognition and measurement
Freehold land
$'000
Plant and
equipment
$'000
Total
$'000
10,355
-
10,355
676,950
(216,783)
460,167
687,305
(216,783)
470,522
10,355
-
6,182
524
-
-
-
(6,535)
10,526
460,167
70,260
429,339
(518)
(4,024)
(134,556)
(2,841)
(38,583)
779,244
470,522
70,260
435,521
6
(4,024)
(134,556)
(2,841)
(45,118)
789,770
10,526
-
10,526
1,565,270
(786,026)
779,244
1,575,796
(786,026)
789,770
-
-
-
13,528
42,437
55,965
13,528
42,437
55,965
Cost
Plant and equipment is carried at cost less accumulated depreciation and impairment. Costs equals the fair value
of the item at acquisition date and includes expenditure that is directly attributable to the acquisition of the items.
Freehold land is carried at cost.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the Statement of Profit or Loss during the
reporting period in which they are incurred.
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its
use is expected to bring no future economic benefits. Any gain or loss from derecognising the asset is included in
the statement of profit or loss in the period the item is derecognised.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
7 Property, plant and equipment (continued)
Recognition and measurement (continued)
Depreciation
land is not depreciated.
Accounting estimates and judgements
Depreciation of plant and equipment is calculated using the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives. The rates vary between 10% and 33% per annum. Freehold
Estimation of remaining useful lives, residual values and depreciation methods involve significant judgement and
are reviewed annually for all major items of plant and equipment. Any changes are accounted for prospectively
from the date of reassessment to the end of the revised useful life.
8 Mine development and exploration
Year ended 30 June 2017
Carrying amount at the beginning of the period
Acquisition of economic interest in Ernest Henry Operation (i)
Amortisation recognised in inventory
Amortisation relating to fair value uplift on business combinations
At 1 July 2016
Cost
Accumulated amortisation
Net carrying amount
Additions
Reclassifications
Amortisation
Asset write-off
Exchange differences
At 30 June 2017
Cost
Accumulated amortisation
Net carrying amount
2017.
Producing
mines
$'000
Exploration
and
evaluation
$'000
Total
$'000
1,962,882
(1,015,047)
947,835
110,338
110,338
2,073,220
(1,015,047)
1,058,173
110,338
30,473
(59)
947,835
151,500
884,004
324
(256,748)
(13,990)
(39,574)
-
-
(12,645)
21
1,058,173
181,973
884,004
265
(256,748)
(13,990)
(39,574)
(12,645)
21
2,959,137
(1,285,786)
1,673,351
128,128
128,128
3,087,265
(1,285,786)
1,801,479
-
-
-
-
-
-
Carrying amount at the end of the year
1,673,351
128,128
1,801,479
(i)
Refer to note 21 for information on the Ernest Henry transaction and financial results for the year ended 30 June
60
61
120
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
7 Property, plant and equipment (continued)
Recognition and measurement (continued)
Depreciation
Depreciation of plant and equipment is calculated using the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives. The rates vary between 10% and 33% per annum. Freehold
land is not depreciated.
Accounting estimates and judgements
Estimation of remaining useful lives, residual values and depreciation methods involve significant judgement and
are reviewed annually for all major items of plant and equipment. Any changes are accounted for prospectively
from the date of reassessment to the end of the revised useful life.
8 Mine development and exploration
At 1 July 2016
Cost
Accumulated amortisation
Net carrying amount
Producing
mines
$'000
Exploration
and
evaluation
$'000
Total
$'000
1,962,882
(1,015,047)
947,835
110,338
-
110,338
2,073,220
(1,015,047)
1,058,173
Year ended 30 June 2017
Carrying amount at the beginning of the period
Additions
Acquisition of economic interest in Ernest Henry Operation (i)
Reclassifications
Amortisation
Amortisation recognised in inventory
Amortisation relating to fair value uplift on business combinations
Asset write-off
Exchange differences
Carrying amount at the end of the year
947,835
151,500
884,004
324
(256,748)
(13,990)
(39,574)
-
-
1,673,351
110,338
30,473
-
(59)
-
-
-
(12,645)
21
128,128
1,058,173
181,973
884,004
265
(256,748)
(13,990)
(39,574)
(12,645)
21
1,801,479
At 30 June 2017
Cost
Accumulated amortisation
Net carrying amount
2,959,137
(1,285,786)
1,673,351
128,128
-
128,128
3,087,265
(1,285,786)
1,801,479
(i)
Refer to note 21 for information on the Ernest Henry transaction and financial results for the year ended 30 June
2017.
61
121
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
8 Mine development and exploration (continued)
8 Mine development and exploration (continued)
At 1 July 2015
Cost
Accumulated amortisation
Net carrying amount
Year ended 30 June 2016
Carrying amount at the beginning of the period
Additions
Amounts acquired in a business combination
Amortisation
Amortisation relating to fair value uplift on business combinations
Asset write-off
Reclassifications
Classified as held for sale
Carrying amount at the end of the year
At 30 June 2016
Cost
Accumulated amortisation
Net carrying amount
Recognition and measurement
Producing
mines
$'000
Exploration
and
evaluation
$'000
Total
$'000
898,163
(393,051)
505,112
39,621
-
39,621
937,784
(393,051)
544,733
505,112
138,934
648,154
(200,894)
(55,326)
-
(6)
(88,139)
947,835
39,621
27,823
69,907
-
-
(13,801)
-
(13,212)
110,338
544,733
166,757
718,061
(200,894)
(55,326)
(13,801)
(6)
(101,351)
1,058,173
1,962,882
(1,015,047)
947,835
110,338
-
110,338
2,073,220
(1,015,047)
1,058,173
Mines under construction
This expenditure includes net direct costs of construction, borrowing costs capitalised during construction and an
appropriate allocation of attributable overheads. Expenditure is net of proceeds from the sale of ore extracted
during the construction phase to the extent that this ore extracted is considered material to the development of
the mine.
After production commences, all aggregated costs of construction are transferred to producing mines or plant and
equipment as appropriate.
Producing mines - deferred stripping
Stripping (waste removal) costs are incurred both during the development phase and production phase of
operations. Stripping costs incurred during the development phase are capitalised as mines under construction.
Stripping costs incurred during the production phase are generally considered to create two benefits:
•
•
the production of ore inventory in the period - accounted for as a part of the cost of producing those ore
inventories; or
improved access to the ore to be mined in the future - recognised under producing mines if the following
criteria are met:
•
Future economic benefits (being improved access to the ore body) associated with the stripping
activity are probable;
Recognition and measurement
Producing mines - deferred stripping
•
•
and
measured.
The component of the ore body for which access has been improved can be accurately identified;
The costs associated with the stripping activity associated with that component can be reliably
The amount of stripping costs deferred is based on the life of component ratio which is obtained by dividing the
amount of waste tonnes mined by the quantity of gold ounces contained in the ore for each component of the
mine. Stripping costs incurred in the period are deferred to the extent that the actual current period waste to
contained gold ounce ratio exceeds the life of component expected 'life of component' ratio.
A component is defined as a specific volume of the ore body that is made more accessible by the stripping
activity and is determined based on mine plans. An identified component of the ore body is typically a subset of
the total ore body of the mine. Each mine may have several components, which are identified based on the mine
plan.
The deferred stripping asset is initially measured at cost, which is the accumulation of costs directly incurred to
perform the stripping activity that improves access to the ore within an identified component, plus an allocation of
directly attributable overhead costs.
The deferred stripping asset is depreciated over the expected useful life of the identified component of the ore
body that is made more accessible by the activity, on a units of production basis. Economically recoverable
reserves are used to determine the expected useful life of the identified component of the ore body.
Exploration and evaluation
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the extent
that rights to tenure of the area of interest are current and either:
•
Costs are expected to be recouped through the successful development and exploitation of the area of
interest or alternatively by sale; or
• Where activities in the area of interest have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Such expenditure consists of an accumulation of acquisition costs and direct exploration and evaluation costs
incurred, together with an appropriate portion of directly related overhead expenditure.
The carrying value of capitalised exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying value may exceed its recoverable amount. Any amounts in excess of the
recoverable amount are derecognised in the financial year it is determined.
Depreciation and amortisation
The Group uses the units of production basis when amortising mine development assets which results in an
amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item's
economic life has due regard to both its physical life limitations and to present assessments of economically
recoverable reserves of the mine property at which it is located.
62
63
122
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
8 Mine development and exploration (continued)
Recognition and measurement
Producing mines - deferred stripping
•
•
The component of the ore body for which access has been improved can be accurately identified;
and
The costs associated with the stripping activity associated with that component can be reliably
measured.
The amount of stripping costs deferred is based on the life of component ratio which is obtained by dividing the
amount of waste tonnes mined by the quantity of gold ounces contained in the ore for each component of the
mine. Stripping costs incurred in the period are deferred to the extent that the actual current period waste to
contained gold ounce ratio exceeds the life of component expected 'life of component' ratio.
A component is defined as a specific volume of the ore body that is made more accessible by the stripping
activity and is determined based on mine plans. An identified component of the ore body is typically a subset of
the total ore body of the mine. Each mine may have several components, which are identified based on the mine
plan.
The deferred stripping asset is initially measured at cost, which is the accumulation of costs directly incurred to
perform the stripping activity that improves access to the ore within an identified component, plus an allocation of
directly attributable overhead costs.
The deferred stripping asset is depreciated over the expected useful life of the identified component of the ore
body that is made more accessible by the activity, on a units of production basis. Economically recoverable
reserves are used to determine the expected useful life of the identified component of the ore body.
Exploration and evaluation
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the extent
that rights to tenure of the area of interest are current and either:
•
Costs are expected to be recouped through the successful development and exploitation of the area of
interest or alternatively by sale; or
• Where activities in the area of interest have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Such expenditure consists of an accumulation of acquisition costs and direct exploration and evaluation costs
incurred, together with an appropriate portion of directly related overhead expenditure.
The carrying value of capitalised exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying value may exceed its recoverable amount. Any amounts in excess of the
recoverable amount are derecognised in the financial year it is determined.
Depreciation and amortisation
The Group uses the units of production basis when amortising mine development assets which results in an
amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item's
economic life has due regard to both its physical life limitations and to present assessments of economically
recoverable reserves of the mine property at which it is located.
63
123
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
8 Mine development and exploration (continued)
Recognition and measurement
Impairment of non-financial assets
(i) Testing for impairment
At each reporting date, the Group tests its tangible and other intangible assets for impairment where there in an
indication that:
•
•
the asset may be impaired; or
previously recognised impairment (on assets other than goodwill) may have changed.
Where the asset does not generate cash inflows independent from other assets and its value in use cannot be
estimated to be close to its fair value, the asset is tested for impairment as part of the cash generating unit (CGU)
to which it belongs. The Group considers each of its mine sites to be a separate CGU.
If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount is reduced to the
recoverable amount and an impairment loss recognised in the Statement of Profit or Loss. The recoverable
amount of an asset or CGU is determined as the higher of its fair value less costs of disposal or value in use.
Impairment calculations
(ii)
In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. In determining fair value less costs of disposal, a discounted cash flow model is used based on a
methodology consistent with that applied by the Group in determining the value of potential acquisition targets,
maximising the use of market observed inputs. These calculations, classified as Level 3 on the fair value
hierarchy, are compared to valuation multiples, or other fair value indicators where available, to ensure
reasonableness.
(iii) Reversal of impairment
The Group has considered whether past impairment losses should be reversed given the expectation of
continued improved earnings in relation to those CGUs. While there are some indicators supporting a reversal of
impairment, other indicators (such as metals prices, continued price volatility and variability in values of asset
transactions) do not clearly support a reversal. Accordingly a reversal of past impairment losses has not been
recognised.
Accounting estimates and judgements
Deferred stripping
The life of component ratio is a function of the mine design and therefore changes to that design will generally
result in changes to the ratio. Changes in other technical or economic parameters that impact reserves will also
have an impact on the life of component ratio even if they do not affect the mine design. Changes to production
stripping resulting from a change in life of component ratios are accounted for prospectively.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
8 Mine development and exploration (continued)
Accounting estimates and judgements (continued)
Exploration and evaluation
Judgement is required to determine whether future economic benefits are likely, from either exploitation or sale,
or whether activities have not reached a stage that permits a reasonable assessment of the existence of
reserves. In addition to these judgements, the Group has to make certain estimates and assumptions such as the
determination of a JORC resource which is itself an estimation process that involves varying degrees of
uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred). These estimates
directly impact when the Group capitalises exploration and evaluation expenditure. The capitalisation policy
requires management to make certain estimates and assumptions as to future events and circumstances, in
particular, the assessment of whether economic quantities of reserves will be found. Any such estimates and
assumptions may change as new information becomes available.
The recoverable amount of capitalised expenditure relating to undeveloped mining projects (projects for which
the decision to mine has not yet been approved at the required authorisation level within the Group) can be
particularly sensitive to variations in key estimates and assumptions. If a variation in key estimates or
assumptions has a negative impact on recoverable amount it could result in a requirement for impairment.
Units of production method of amortisation
The Group uses the units of production basis when amortising mine development assets which results in an
amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item's
economic life, which is assessed annually, has due regard to both its physical life limitations and to present
assessments of economically recoverable reserves of the mine property at which it is located. These calculations
require the use of estimates and assumptions.
Ore reserves and resources
The Group estimates its ore reserves and mineral resources annually at 31 December each year and reports in
the following April, based on information compiled by Competent Persons as defined in accordance with the
Australasian code for reporting Exploration Results, Mineral Resources and Ore Resources (JORC code 2012).
The estimated quantities of economically recoverable reserves are based upon interpretations of geological
models and require assumptions to be made regarding factors such as estimates of short and long-term
exchange rates, estimates of short and long-term commodity prices, future capital requirements and future
operating performance. Changes in reported reserves estimates can impact the carrying amount of mine
development (including exploration and evaluation assets), the provision for rehabilitation obligations, the
recognition of deferred tax assets, as well as the amount of amortisation charged to the statement of profit or
loss.
Impairment
Significant judgements, estimates and assumptions are required in determining value in use or fair value less
costs of disposal. This is particularly so in the assessment of long life assets. It should be noted that the CGU
recoverable amounts are subject to variability in key assumptions including, but not limited to, gold and copper
prices, currency exchange rates, discount rates, production profiles and operating and capital costs. A change in
one or more of the assumptions used to determine value in use or fair value less costs of disposal could result in
a change in a CGU's recoverable amount.
64
65
124
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
8 Mine development and exploration (continued)
Accounting estimates and judgements (continued)
Exploration and evaluation
Judgement is required to determine whether future economic benefits are likely, from either exploitation or sale,
or whether activities have not reached a stage that permits a reasonable assessment of the existence of
reserves. In addition to these judgements, the Group has to make certain estimates and assumptions such as the
determination of a JORC resource which is itself an estimation process that involves varying degrees of
uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred). These estimates
directly impact when the Group capitalises exploration and evaluation expenditure. The capitalisation policy
requires management to make certain estimates and assumptions as to future events and circumstances, in
particular, the assessment of whether economic quantities of reserves will be found. Any such estimates and
assumptions may change as new information becomes available.
The recoverable amount of capitalised expenditure relating to undeveloped mining projects (projects for which
the decision to mine has not yet been approved at the required authorisation level within the Group) can be
particularly sensitive to variations in key estimates and assumptions. If a variation in key estimates or
assumptions has a negative impact on recoverable amount it could result in a requirement for impairment.
Units of production method of amortisation
The Group uses the units of production basis when amortising mine development assets which results in an
amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item's
economic life, which is assessed annually, has due regard to both its physical life limitations and to present
assessments of economically recoverable reserves of the mine property at which it is located. These calculations
require the use of estimates and assumptions.
Ore reserves and resources
The Group estimates its ore reserves and mineral resources annually at 31 December each year and reports in
the following April, based on information compiled by Competent Persons as defined in accordance with the
Australasian code for reporting Exploration Results, Mineral Resources and Ore Resources (JORC code 2012).
The estimated quantities of economically recoverable reserves are based upon interpretations of geological
models and require assumptions to be made regarding factors such as estimates of short and long-term
exchange rates, estimates of short and long-term commodity prices, future capital requirements and future
operating performance. Changes in reported reserves estimates can impact the carrying amount of mine
development (including exploration and evaluation assets), the provision for rehabilitation obligations, the
recognition of deferred tax assets, as well as the amount of amortisation charged to the statement of profit or
loss.
Impairment
Significant judgements, estimates and assumptions are required in determining value in use or fair value less
costs of disposal. This is particularly so in the assessment of long life assets. It should be noted that the CGU
recoverable amounts are subject to variability in key assumptions including, but not limited to, gold and copper
prices, currency exchange rates, discount rates, production profiles and operating and capital costs. A change in
one or more of the assumptions used to determine value in use or fair value less costs of disposal could result in
a change in a CGU's recoverable amount.
65
125
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Capital Structure and Financing
This section provides information on the Group's capital and financial management activities.
10 Interest bearing liabilities
9 Cash and cash equivalents
Current assets
Cash at bank
Short term deposits
Recognition and measurement
30 June
2017
$'000
30 June
2016
$'000
37,385
-
37,385
17,279
16
17,295
Current liabilities
Bank loans
Less: Borrowing costs
Finance lease liabilities
Other borrowings
Non-current liabilities
Bank loans
Less: Borrowing costs
Finance lease liabilities
Cash and short-term deposits in the balance sheet comprise cash and bank and on hand and short term deposits
with an original maturity of three months or less and are classified as financial assets held at amortised cost.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for
varying periods of between one day and three months depending on the immediate cash requirements of the
Group and earn interest at the respective short-term deposit rates.
30 June
2017
$'000
30 June
2016
$'000
50,000
(4,813)
1,344
6,870
53,401
385,000
(2,277)
-
382,723
-
-
8,316
8,472
16,788
285,000
(6,677)
1,344
279,667
Total interest bearing liabilities
436,124
296,455
In September 2016, the Group entered into a new financing arrangement ("the New Facility") comprising a $475
million Senior Secured Term Loan ("Facility D") and an amendment to the repayment profile of the existing $400
million Senior Secured Term Loan ("Facility B") to reflect the Group's accelerated repayments on the previous
Facility. No changes have been made to the existing $300 million Senior Secured Revolving Loan ("Facility A") or
the $155 million Performance Bond Facility ("Facility C").
The New Facility was executed on 29 September 2016 and was effective from that date.
The New Facility was drawn down on 31 October 2016 upon completion of the Ernest Henry acquisition. The
repayment periods and the outstanding balances as at 30 June 2017 on each Facility are set out below:
Senior Secured Revolving Loan - Facility A
Senior Secured Term Loan - Facility B
Performance Bond Facility - Facility C
Senior Secured Term Loan - Facility D
(a) Secured liabilities and assets pledged as security
Term date
31 July 2018
15 July 2018
20 July 2018
31 October 2021
Outstanding
balance
$ nil
$40 million
$125 million
$395 million
The New Facility is secured in the form of a General Security Agreement and Share Security Agreement over the
Groups operating assets. The carrying amounts of assets pledged as general security for total borrowings is
$1.730 billion. The share capital pledged as share security for total borrowings is $1.872 billion.
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements
revert to the lessor in the event of default.
66
67
126
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
10 Interest bearing liabilities
Current liabilities
Bank loans
Less: Borrowing costs
Finance lease liabilities
Other borrowings
Non-current liabilities
Bank loans
Less: Borrowing costs
Finance lease liabilities
30 June
2017
$'000
30 June
2016
$'000
50,000
(4,813)
1,344
6,870
53,401
385,000
(2,277)
-
382,723
-
-
8,316
8,472
16,788
285,000
(6,677)
1,344
279,667
Total interest bearing liabilities
436,124
296,455
In September 2016, the Group entered into a new financing arrangement ("the New Facility") comprising a $475
million Senior Secured Term Loan ("Facility D") and an amendment to the repayment profile of the existing $400
million Senior Secured Term Loan ("Facility B") to reflect the Group's accelerated repayments on the previous
Facility. No changes have been made to the existing $300 million Senior Secured Revolving Loan ("Facility A") or
the $155 million Performance Bond Facility ("Facility C").
The New Facility was executed on 29 September 2016 and was effective from that date.
The New Facility was drawn down on 31 October 2016 upon completion of the Ernest Henry acquisition. The
repayment periods and the outstanding balances as at 30 June 2017 on each Facility are set out below:
Senior Secured Revolving Loan - Facility A
Senior Secured Term Loan - Facility B
Performance Bond Facility - Facility C
Senior Secured Term Loan - Facility D
(a) Secured liabilities and assets pledged as security
Term date
31 July 2018
15 July 2018
20 July 2018
31 October 2021
Outstanding
balance
$ nil
$40 million
$125 million
$395 million
The New Facility is secured in the form of a General Security Agreement and Share Security Agreement over the
Groups operating assets. The carrying amounts of assets pledged as general security for total borrowings is
$1.730 billion. The share capital pledged as share security for total borrowings is $1.872 billion.
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements
revert to the lessor in the event of default.
67
127
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
10 Interest bearing liabilities (continued)
Recognition and measurement
Interest bearing liabilities are initially recognised at fair value less directly attributable transaction costs incurred
and subsequently measured at amortised cost using the effective interest rate method. Gains and losses are
recognised in the statement of profit or loss when the liabilities are derecognised.
11 Equity and reserves
(a) Contributed equity
Movements in ordinary share capital
Ordinary shares are fully-paid and have no par value. They carry one vote per share and the rights to dividends.
They bear no special terms or conditions affecting income or capital entitlements of the shareholders and are
classified as equity.
Balance at 1 July 2015
Shares issued as consideration for Phoenix Gold Limited
Shares issued to La Mancha Group International BV on completion of business
acquisition
Shares issued on vesting of performance rights
Shares issued under DRP for final dividend
Shares issued under DRP for interim dividend
Shares issued to La Mancha Group International BV under Entitlement Offer
Shares issued under Employee Share Scheme (i)
Shares issued on exercise of unlisted share options
Balance at 30 June 2016
Shares issued on vesting of performance rights
Shares issued under DRP for final dividend
Shares issued under DRP for interim dividend
Shares issued under Institutional Component of Entitlement Offer
Shares issued under Retail Component of Entitlement Offer
Shares issued on exercise of unlisted share options
Shares issued under Employee Share Scheme (i)
Less: share issue costs
Balance at 30 June 2017
Number of
shares
$'000
992,435,234
22,625,093
1,292,620
29,604
322,023,765
2,262,954
2,492,008
1,525,313
123,852,934
865,520
180,000
1,468,262,821
7,961,146
1,927,526
3,066,229
151,914,603
44,976,448
4,178,661
511,192
-
1,682,798,626
331,684
-
2,707
2,573
111,468
-
331
1,770,987
-
4,055
6,192
311,425
90,134
7,249
-
(6,315)
2,183,727
(i)
Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in
note 23.
Recognition and measurement
Ordinary share capital is classified as equity and is recognised at the fair value of the consideration received by
the Group. Incremental costs directly attributable to the issue of new shares, options or performance rights are
shown in equity as a deduction, net of tax, from the proceeds.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
11 Equity and reserves (continued)
(b) Other reserves
Fair value revaluation reserve
Cash flow hedge reserve
Share-based payments
Other reserves
Movements:
Fair value revaluation reserve
Balance at the beginning of the year
Change in fair value of available-for-sale financial assets
Balance at the end of the year
Cash flow hedges
Balance at the beginning of the year
Change in the fair value of cash flow hedges
Balance at the end of the year
Share-based payments
Balance at the beginning of the year
Share based payments expense
Balance at the end of the year
Foreign currency translation
Balance at the beginning of the year
Currency translation differences arising during the year
Balance at the end of the year
(i) Nature and purpose of other reserves
Fair value revaluation reserve
other comprehensive income.
Cash flow hedges
Notes
23
30 June
2017
$'000
1,589
37,149
-
57
38,795
(110)
1,699
1,589
(127)
127
-
29,496
7,653
37,149
104
(47)
57
30 June
2016
$'000
(110)
(127)
29,496
104
29,363
(156)
46
(110)
6,762
(6,889)
(127)
20,840
8,656
29,496
-
104
104
The fair value revaluation reserve records fair value changes on financial assets designated at fair value through
The cash flow hedging reserve records the portion of gains or losses on derivatives that are designated and
qualify as cash flow hedges and are recognised in other comprehensive income.
68
69
128
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
11 Equity and reserves (continued)
(b) Other reserves
Fair value revaluation reserve
Cash flow hedge reserve
Share-based payments
Other reserves
Movements:
Fair value revaluation reserve
Balance at the beginning of the year
Change in fair value of available-for-sale financial assets
Balance at the end of the year
Cash flow hedges
Balance at the beginning of the year
Change in the fair value of cash flow hedges
Balance at the end of the year
Share-based payments
Balance at the beginning of the year
Share based payments expense
Balance at the end of the year
Foreign currency translation
Balance at the beginning of the year
Currency translation differences arising during the year
Balance at the end of the year
Notes
23
30 June
2017
$'000
1,589
-
37,149
57
38,795
(110)
1,699
1,589
(127)
127
-
29,496
7,653
37,149
104
(47)
57
30 June
2016
$'000
(110)
(127)
29,496
104
29,363
(156)
46
(110)
6,762
(6,889)
(127)
20,840
8,656
29,496
-
104
104
(i) Nature and purpose of other reserves
Fair value revaluation reserve
The fair value revaluation reserve records fair value changes on financial assets designated at fair value through
other comprehensive income.
Cash flow hedges
The cash flow hedging reserve records the portion of gains or losses on derivatives that are designated and
qualify as cash flow hedges and are recognised in other comprehensive income.
69
129
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
11 Equity and reserves (continued)
(b) Other reserves (continued)
(i) Nature and purpose of other reserves (continued)
Share-based payments
The share-based payments reserve is used to recognise the value of equity-settled share-based payments
provided to employees, including Non-Executive Directors, Executive Directors and key management personnel
as part of their remuneration. Refer to note 23 for further information.
Foreign currency translation
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
(c) Retained earnings
Movements in retained earnings were as follows:
Balance at the beginning of the year
Net profit/(loss) for the period
Dividends paid and shares issued under the DRP
Balance at the end of the year
12 Trade and other receivables
Current assets
Trade receivables (i)
GST refundable
Prepayments
Other receivables
Notes
5
30 June
2017
$'000
(248,917)
217,607
(62,960)
(94,270)
30 June
2016
$'000
(195,506)
(24,349)
(29,062)
(248,917)
30 June
2017
$'000
30 June
2016
$'000
53,534
4,349
3,296
1,940
63,119
15,014
7,691
2,733
1,515
26,953
(i)
Trade receivables includes accrued income of $40.263 million relating to silver and copper sales from April to June
2017 production for Ernest Henry. These amounts are to be settled in July to September 2017. Refer to note 21 for
further information on the transaction and the financial results for the year ended 30 June 2017.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
12 Trade and other receivables (continued)
Recognition and measurement
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. Trade receivables are generally due for
settlement within 30 days and therefore are all classified as current.
These amounts generally arise from transactions outside the usual operating activities of the Group. They do not
Other receivables
contain impaired assets and are not past due.
13 Trade and other payables
(i)
Trade creditors and accruals include accrued costs of $29.522 million relating to the Group's share of production
costs for April to June 2017 for Ernest Henry. These amounts are to be settled in July to September 2017. Refer to
note 21 for further information on the transaction and the financial results for the year ended 30 June 2017.
Trade creditors and accruals represent liabilities for goods and services provided to the Group prior to the end of
financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms. The
carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
Current liabilities
Trade creditors and accruals (i)
Other payables
Recognition and measurement
Trade creditors and accruals
short-term nature.
14 Inventories
Current
Stores
Ore
Doré and concentrate
Metal in circuit
Metal in transit
Total current inventories
30 June
2017
$'000
30 June
2016
$'000
132,073
24,554
156,627
96,566
24,943
121,509
30 June
2017
$'000
30 June
2016
$'000
46,946
175,302
8,088
21,323
25,210
276,869
49,251
139,836
6,961
17,120
-
213,168
70
71
130
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
12 Trade and other receivables (continued)
Recognition and measurement
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. Trade receivables are generally due for
settlement within 30 days and therefore are all classified as current.
Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group. They do not
contain impaired assets and are not past due.
13 Trade and other payables
Current liabilities
Trade creditors and accruals (i)
Other payables
30 June
2017
$'000
30 June
2016
$'000
132,073
24,554
156,627
96,566
24,943
121,509
(i)
Trade creditors and accruals include accrued costs of $29.522 million relating to the Group's share of production
costs for April to June 2017 for Ernest Henry. These amounts are to be settled in July to September 2017. Refer to
note 21 for further information on the transaction and the financial results for the year ended 30 June 2017.
Recognition and measurement
Trade creditors and accruals
Trade creditors and accruals represent liabilities for goods and services provided to the Group prior to the end of
financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms. The
carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
short-term nature.
14 Inventories
Current
Stores
Ore
Doré and concentrate
Metal in circuit
Metal in transit
Total current inventories
30 June
2017
$'000
30 June
2016
$'000
46,946
175,302
8,088
21,323
25,210
276,869
49,251
139,836
6,961
17,120
-
213,168
71
131
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
14 Inventories (continued)
Non-current
Stores
Total non-current inventories
Recognition and measurement
30 June
2017
$'000
30 June
2016
$'000
827
827
827
827
Ore stockpiles, metal in circuit, gold doré, metal in transit, refined gold bullion and concentrate are physically
measured or estimated and valued at the lower of cost and net realisable value. Cost represents the weighted
average cost and includes direct costs and an appropriate portion of fixed and variable production overhead
expenditure, including depreciation and amortisation, incurred in converting materials into finished goods.
Materials and supplies are valued at the lower of cost and net realisable value. Any provision for obsolescence is
determined by reference to specific stock items identified. A regular and ongoing review is undertaken to
establish the extent of surplus items and a provision is made for any potential loss on their disposal.
Accounting estimates and judgements
Net realisable value
Net realisable value involves significant judgements and estimates in relation to the selling price in the ordinary
course of business less estimates costs of completion and estimated costs necessary to make the sale.
The total expense relating to inventory write downs to net realisable value for the year ended 30 June 2017 was
$9.117 million (30 June 2016: $1.443 million).
15 Provisions
Current
Employee entitlements
Non-current
Employee entitlements
Rehabilitation provision
Other long term provision
Total provisions
132
30 June
2017
$'000
30 June
2016
$'000
30,173
30,173
24,994
24,994
5,298
149,372
203
154,873
5,988
145,916
200
152,104
185,046
177,098
72
73
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
15 Provisions (continued)
(i) Movements in provisions
Movements in each class of provision during the financial year are set out below:
Carrying amount at the beginning of the year
30,982
145,916
200
177,098
Carrying amount at the end of the year
35,471
149,372
203
185,046
Carrying amount at the beginning of the year
16,092
83,416
Employee
benefits
Rehabilitation
$'000
$'000
Other
$'000
Total
$'000
4,489
3,204
1,066
(814)
-
-
-
3,389
15,995
(4,494)
30,982
3,406
1,316
74,520
(16,742)
145,916
-
3
-
-
-
-
-
200
200
3,204
5,558
(814)
99,508
3,406
4,705
90,715
(21,236)
177,098
30 June 2017
Space
Charged to profit or loss
- unwinding of discount
Re-measurement of provision
Amounts used during the year
30 June 2016
Space
Charged to profit or loss
- unwinding of discount
Re-measurement of provision
Acquired through business combination
Classified as held for sale
Carrying amount at the end of the year
Employee benefits
entitlements.
Rehabilitation
Recognition and measurement
Employee benefits
The provision for employee benefits represent wages and salaries, annual leave and long service leave
The nature of site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal and restoration, reclamation and revegetation of affected areas of the site in
accordance with the requirements of the mining permits.
Annual leave liabilities are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave liabilities are measured at the present value of the estimated future cash outflows for the
services provided by employees up to the reporting date.
Liabilities not expected to be settled within twelve months are discounted using market yields at the reporting
date on high quality corporate bonds with terms to maturity that match, as closely as possible to the related
liability.
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
15 Provisions (continued)
(i) Movements in provisions
Movements in each class of provision during the financial year are set out below:
30 June 2017
Space
Carrying amount at the beginning of the year
Charged to profit or loss
- unwinding of discount
Re-measurement of provision
Amounts used during the year
Carrying amount at the end of the year
30 June 2016
Space
Carrying amount at the beginning of the year
Charged to profit or loss
- unwinding of discount
Re-measurement of provision
Acquired through business combination
Classified as held for sale
Carrying amount at the end of the year
Employee benefits
Employee
benefits
$'000
Rehabilitation
$'000
Other
$'000
Total
$'000
30,982
145,916
-
4,489
-
35,471
3,204
1,066
(814)
149,372
16,092
83,416
-
3,389
15,995
(4,494)
30,982
3,406
1,316
74,520
(16,742)
145,916
200
-
3
-
203
-
-
-
200
-
200
177,098
3,204
5,558
(814)
185,046
99,508
3,406
4,705
90,715
(21,236)
177,098
The provision for employee benefits represent wages and salaries, annual leave and long service leave
entitlements.
Rehabilitation
The nature of site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal and restoration, reclamation and revegetation of affected areas of the site in
accordance with the requirements of the mining permits.
Recognition and measurement
Employee benefits
Annual leave liabilities are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave liabilities are measured at the present value of the estimated future cash outflows for the
services provided by employees up to the reporting date.
Liabilities not expected to be settled within twelve months are discounted using market yields at the reporting
date on high quality corporate bonds with terms to maturity that match, as closely as possible to the related
liability.
73
133
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
15 Provisions (continued)
Recognition and measurement (continued)
Rehabilitation
Site restoration costs are recorded at the present value of the estimated future costs of the legal and constructive
obligation to rehabilitate locations.
When the liability is initially recorded, the present value of the estimated cost is capitalised as part of the carrying
value of the related mining assets. Over time, the discounted liability is increased for the change in the present
value based on a discount rate that reflects current market assessments. Additional disturbances or changes in
rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation
liability when incurred.
The unwinding of the effect of discounting the provision is recorded as a finance cost in the statement of profit or
loss. The carrying amount is capitalised as part of mine development and amortised on a units of production
basis.
Accounting estimates and judgements
Employee benefits
Management judgement is required in determining the future probability of employee departures and period of
service used in the calculation of long service leave.
Rehabilitation
Significant estimates and assumptions are required in determining the provision for mine rehabilitation as there
are many transactions and other factors that will affect the ultimate liability payable to rehabilitate the mine sites.
Factors that will affect this liability include changes in technology, changes in regulations, price increases,
changes in timing of cash flows which are based on life of mine plan and changes in discount rates. When these
factors change or become known in the future, such differences will impact the mine rehabilitation provision in the
period in which they change or become known.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
16 Deferred tax balances
(a) Recognised deferred tax balances
Inventories
Exploration and evaluation expenditure
Property, plant and equipment
Mine development
Employee benefits
Provisions
Share issue costs
Capitalised interest
Share based payment transactions
Other
Deferred tax balances from temporary differences
Tax losses carried forward
Deferred tax assets/(liabilities)
(b) Movement in deferred tax balances during the year
Inventories
Exploration and evaluation expenditure
Property, plant and equipment
Mine development
Employee benefits
Provisions
Share issue costs
Shared based payment transactions
Capitalised interest
Tax losses carried forward
Other
Deferred tax assets/(liabilities)
32,864
(21,017)
(1,519)
(67,482)
13,464
47,090
1,539
374
(1,191)
-
(4,211)
(89)
30 June
2017
$'000
31,897
(24,664)
(6,080)
(61,244)
10,644
44,812
2,168
-
-
(1,485)
(3,952)
20,400
16,448
(967)
(3,646)
(4,560)
6,238
(2,820)
(2,279)
629
(374)
1,191
20,400
2,725
16,537
30 June
2016
$'000
32,864
(21,017)
(1,519)
(67,482)
13,464
47,090
1,539
(1,191)
374
(4,211)
(89)
-
(89)
31,897
(24,663)
(6,079)
(61,244)
10,644
44,811
2,168
-
-
20,400
(1,486)
16,448
Balance at 1
Recognised in
Balance at 30
July 2016
profit or loss
June 2017
$'000
$'000
$'000
74
75
134
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
16 Deferred tax balances
(a) Recognised deferred tax balances
Inventories
Exploration and evaluation expenditure
Property, plant and equipment
Mine development
Employee benefits
Provisions
Share issue costs
Capitalised interest
Share based payment transactions
Other
Deferred tax balances from temporary differences
Tax losses carried forward
Deferred tax assets/(liabilities)
(b) Movement in deferred tax balances during the year
30 June
2017
$'000
31,897
(24,664)
(6,080)
(61,244)
10,644
44,812
2,168
-
-
(1,485)
(3,952)
20,400
16,448
30 June
2016
$'000
32,864
(21,017)
(1,519)
(67,482)
13,464
47,090
1,539
(1,191)
374
(4,211)
(89)
-
(89)
Inventories
Exploration and evaluation expenditure
Property, plant and equipment
Mine development
Employee benefits
Provisions
Share issue costs
Shared based payment transactions
Capitalised interest
Tax losses carried forward
Other
Deferred tax assets/(liabilities)
Balance at 1
July 2016
$'000
Recognised in
profit or loss
$'000
Balance at 30
June 2017
$'000
32,864
(21,017)
(1,519)
(67,482)
13,464
47,090
1,539
374
(1,191)
-
(4,211)
(89)
(967)
(3,646)
(4,560)
6,238
(2,820)
(2,279)
629
(374)
1,191
20,400
2,725
16,537
31,897
(24,663)
(6,079)
(61,244)
10,644
44,811
2,168
-
-
20,400
(1,486)
16,448
75
135
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
16 Deferred tax balances (continued)
Accounting estimates and judgements
Judgement is required to determine whether deferred tax assets are recognised in the Balance Sheet.
Management must assess the likelihood that the Group will generate sufficient taxable earnings in future periods
in order to recognise and utilise those deferred tax assets. Estimates of future taxable income are based on
forecast cash flows from operations and existing tax laws. These assessments require the use of estimates such
as commodity prices and operating performance over the life of the assets. To the extent that cash flows and
taxable income differ significantly from estimates, the Group’s ability to realise the deferred tax assets reporting
could be impacted.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Risk and Unrecognised Items
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the
Group’s financial position and performance as well as providing information on items that are not recognised in
the financial statements as they do not (yet) satisfy the recognition criteria.
17 Financial risk management
The Group’s activities expose it to a variety of financial risks such as market risk (including interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group.
Risk management is carried out at a corporate level under policies approved by the Board of Directors.
Management identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board of Directors approves written principles for overall risk management, as well as policies covering
specific areas, such as interest rate risk, credit risk, gold price risk and use of derivative financial instruments and
non-derivative financial instruments, and investment of excess liquidity.
The Group holds the following financial instruments:
30 June
2017
$'000
30 June
2016
$'000
37,385
58,770
4,962
101,117
156,627
436,124
-
592,751
17,295
19,262
3,263
39,820
121,509
296,455
127
418,091
Financial Assets
Cash and cash equivalents
Trade and other receivables (excluding GST refundable)
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Derivative financial instruments
(a) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Group currently only designates derivatives as cash flow hedges (hedges
of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions). There are no fair value hedges or net investment hedges, nor are there any derivatives that do not
classify for hedge accounting.
The Group documents at the inception of the hedging transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategy for undertaking various hedge
transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in
offsetting changes in fair values or cash flows of hedged items.
76
77
136
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Risk and Unrecognised Items
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the
Group’s financial position and performance as well as providing information on items that are not recognised in
the financial statements as they do not (yet) satisfy the recognition criteria.
17 Financial risk management
The Group’s activities expose it to a variety of financial risks such as market risk (including interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group.
Risk management is carried out at a corporate level under policies approved by the Board of Directors.
Management identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board of Directors approves written principles for overall risk management, as well as policies covering
specific areas, such as interest rate risk, credit risk, gold price risk and use of derivative financial instruments and
non-derivative financial instruments, and investment of excess liquidity.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables (excluding GST refundable)
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Derivative financial instruments
(a) Derivatives
30 June
2017
$'000
30 June
2016
$'000
37,385
58,770
4,962
101,117
156,627
436,124
-
592,751
17,295
19,262
3,263
39,820
121,509
296,455
127
418,091
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Group currently only designates derivatives as cash flow hedges (hedges
of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions). There are no fair value hedges or net investment hedges, nor are there any derivatives that do not
classify for hedge accounting.
The Group documents at the inception of the hedging transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategy for undertaking various hedge
transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in
offsetting changes in fair values or cash flows of hedged items.
77
137
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(a) Derivatives (continued)
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the
remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current
asset or liability.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income through the cash flow hedge reserve. The gain or loss
relating to the ineffective portion is recognised immediately in the Statement of Profit or Loss within other income
or other expense.
Amounts accumulated in the cash flow hedge reserve are reclassified to the Statement of Profit or Loss in the
periods when the hedged item affects profit or loss for instance when the forecast sale that is hedged takes
place.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or
loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for
example, fixed assets) the gains and losses previously deferred in equity are transferred from equity and included
in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in profit or
loss as depreciation in the case of fixed assets.
Derivatives are only used for economic hedging purposes and not as speculative investments. The Group has
the following derivative financial instruments:
Current liabilities
Diesel swap contracts - cash flow hedges
(b) Market risk
30 June
2017
$'000
30 June
2016
$'000
-
-
127
127
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the Group's functional currency. Management has set up a policy to
manage their foreign exchange risk against their functional currency and is measured using sensitivity analysis
and cash flow forecasting.
As at 30 June 2017, the Group held US$4.634 million (30 June 2016: US$0.279 million) in US dollar currency
bank accounts, outstanding receivables of US$8.252 million (30 June 2016: US$9.748 million) relating to the Mt
Carlton operation and $30.970 million (30 June 2016: nil) relating to Ernest Henry. An increase/decrease in
AUD:USD foreign exchange rates of 5% will result in a $231,700 (30 June 2016: $13,950) increase/decrease in
US dollar currency bank account balances and a $1,961,100 (30 June 2016: $487,400) increase/decrease in US
dollar receivables.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(b) Market risk (continued)
(i) Foreign exchange risk (continued)
The Group also held NZ$0.041 million (30 June 2016: NZ$0.060 million) in a NZ dollar currency bank account.
An increase/decrease in AUD:NZD foreign exchange rates of 5% will result in a $2,068 (30 June 2016: $3,150)
increase/decrease in NZ dollar currency bank account balances.
(ii) Price risk
The Group is currently exposed to the risk of fluctuations in prevailing market commodity prices on the gold, silver
and copper currently produced from its gold mines and market share prices on the available-for-sale assets. The
Group has in place physical gold delivery contracts as at 30 June 2017 covering sales of 458,495 oz (30 June
2016: 706,988 oz) of gold at an average flat forward price of $1,645 (30 June 2016: $1,623). An
increase/decrease in market share prices on available-for-sale assets of 10% will result in a $496,107 (30 June
2016: $270,806) increase/decrease in available-for-sale assets.
(iii) Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from variable interest rates on interest bearing liabilities. As at 30 June 2017,
the Group held interest bearing liabilities of $435 million (30 June 2016: $285 million) which incurs interest at a
variable rate. An increase/decrease of variable interest rates of 0.25% will result in a $1.658 million (30 June
2016: 0.25%, $1.854million) increase/decrease in interest expense relating to interest bearing liabilities.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the Group’s receivables from customers and
investment securities. At the balance sheet date there were no significant concentrations of credit risk given
customers and banks have investment grade credit ratings. The total trade and other receivables outstanding at
30 June 2017 was $63.119 million (30 June 2016: $26.953 million).
(c) Credit risk
(d) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and term deposits, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out market positions.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
(i) Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Bank loans - revolving credit facility
Expiring beyond one year
(ii) Maturities of financial liabilities
contractual maturities for:
The tables below analyses the Group's financial liabilities into relevant maturity groupings based on their
30 June
2017
$'000
30 June
2016
$'000
300,000
300,000
205,000
205,000
78
79
138
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(b) Market risk (continued)
(i) Foreign exchange risk (continued)
The Group also held NZ$0.041 million (30 June 2016: NZ$0.060 million) in a NZ dollar currency bank account.
An increase/decrease in AUD:NZD foreign exchange rates of 5% will result in a $2,068 (30 June 2016: $3,150)
increase/decrease in NZ dollar currency bank account balances.
(ii) Price risk
The Group is currently exposed to the risk of fluctuations in prevailing market commodity prices on the gold, silver
and copper currently produced from its gold mines and market share prices on the available-for-sale assets. The
Group has in place physical gold delivery contracts as at 30 June 2017 covering sales of 458,495 oz (30 June
2016: 706,988 oz) of gold at an average flat forward price of $1,645 (30 June 2016: $1,623). An
increase/decrease in market share prices on available-for-sale assets of 10% will result in a $496,107 (30 June
2016: $270,806) increase/decrease in available-for-sale assets.
(iii) Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from variable interest rates on interest bearing liabilities. As at 30 June 2017,
the Group held interest bearing liabilities of $435 million (30 June 2016: $285 million) which incurs interest at a
variable rate. An increase/decrease of variable interest rates of 0.25% will result in a $1.658 million (30 June
2016: 0.25%, $1.854million) increase/decrease in interest expense relating to interest bearing liabilities.
(c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the Group’s receivables from customers and
investment securities. At the balance sheet date there were no significant concentrations of credit risk given
customers and banks have investment grade credit ratings. The total trade and other receivables outstanding at
30 June 2017 was $63.119 million (30 June 2016: $26.953 million).
(d) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and term deposits, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out market positions.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
(i) Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Bank loans - revolving credit facility
Expiring beyond one year
30 June
2017
$'000
30 June
2016
$'000
300,000
300,000
205,000
205,000
(ii) Maturities of financial liabilities
The tables below analyses the Group's financial liabilities into relevant maturity groupings based on their
contractual maturities for:
79
139
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(d) Liquidity risk (continued)
(ii) Maturities of financial liabilities (continued)
all non-derivative financial liabilities, and
•
•
net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.
Less than
1 year
$'000
Between
1 and 2
years
$'000
Between
2 and 5
years
$'000
Total
contractual
cash
flows
$'000
Over 5
years
$'000
Carrying
amount
(assets)/
liabilities
$'000
156,627
1,344
6,870
64,356
229,197
-
-
-
163,660
163,660
-
-
-
233,036
233,036
121,509
8,630
8,472
12,431
151,042
-
1,364
-
80,823
82,187
-
-
-
223,853
223,853
-
-
-
-
-
-
-
-
-
-
156,627
1,344
6,870
461,052
625,893
156,627
1,344
6,870
435,000
599,841
121,509
9,994
8,472
317,107
457,082
121,509
9,660
8,472
285,000
424,641
At 30 June 2017
Space
Non-derivatives
Trade and other payables
Finance lease liabilities
Other borrowings
Bank loans
At 30 June 2016
Space
Non-derivatives
Trade and other payables
Finance lease liabilities
Other borrowings
Bank loans
(e) Risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its
projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue
new shares or sell assets to reduce debt. The Group’s focus has been to raise sufficient funds through equity and
debt capital markets to fund capital investment in working capital and exploration and evaluation activities.
The Group monitors its liquidity through analysis of regular cash flow forecasts.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(e) Risk management (continued)
(i) Loan covenants
18 Contingent liabilities and contingent assets
The Group had contingent liabilities at 30 June 2017 in respect of:
(a) Contingent liabilities
(i) Claims
The lenders have placed covenants over the Group's Senior Secured Revolving and Term Facility based on the
current ratio, leverage ratio, debt service ratio and the tangible net worth ratio. The Group has complied with
these covenants during the year.
At the date of this report the Group was unaware of any material claims, actual or contemplated.
The claim made by Mineral Crushing Services (WA) Pty Ltd disclosed in the year end accounts to 30 June 2016
was finalised subsequent to the end of the current financial year.
(ii) Guarantees
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 30 June 2017. The total of these guarantees at
30 June 2017 was $125.183 million with various financial institutions (30 June 2016: $141.627 million).
19 Commitments
(a) Capital and lease commitments
(i) Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements the Group is required to perform minimum
exploration work to meet minimum expenditure requirements specified by various government authorities. These
obligations are subject to renegotiation when application for a mining lease is made and at various other times.
These obligations are not provided for in the financial report and are payable:
Later than one year but not later than five years
Within one year
Later than five years
(ii) Capital commitments
each of the sites.
The Group has the following capital commitments in relation to capital projects and joint venture requirements at
30 June
2017
$'000
7,529
15,873
31,707
55,109
30 June
2016
$'000
6,322
14,146
25,317
45,785
80
81
140
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
17 Financial risk management (continued)
(e) Risk management (continued)
(i) Loan covenants
The lenders have placed covenants over the Group's Senior Secured Revolving and Term Facility based on the
current ratio, leverage ratio, debt service ratio and the tangible net worth ratio. The Group has complied with
these covenants during the year.
18 Contingent liabilities and contingent assets
(a) Contingent liabilities
The Group had contingent liabilities at 30 June 2017 in respect of:
(i) Claims
At the date of this report the Group was unaware of any material claims, actual or contemplated.
The claim made by Mineral Crushing Services (WA) Pty Ltd disclosed in the year end accounts to 30 June 2016
was finalised subsequent to the end of the current financial year.
(ii) Guarantees
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 30 June 2017. The total of these guarantees at
30 June 2017 was $125.183 million with various financial institutions (30 June 2016: $141.627 million).
19 Commitments
(a) Capital and lease commitments
(i) Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements the Group is required to perform minimum
exploration work to meet minimum expenditure requirements specified by various government authorities. These
obligations are subject to renegotiation when application for a mining lease is made and at various other times.
These obligations are not provided for in the financial report and are payable:
Within one year
Later than one year but not later than five years
Later than five years
30 June
2017
$'000
7,529
15,873
31,707
55,109
30 June
2016
$'000
6,322
14,146
25,317
45,785
(ii) Capital commitments
The Group has the following capital commitments in relation to capital projects and joint venture requirements at
each of the sites.
81
141
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
19 Commitments (continued)
(b) Gold delivery commitments
The counterparties to the physical gold delivery contracts are Macquarie Bank Limited ("Macquarie"), Australia
and New Zealand Banking Group Limited ("ANZ"), National Australia Bank Limited ("NAB"), Westpac Banking
Corporation ("WBC"), Commonwealth Bank of Australia ("CBA"), Citibank N.A ("Citibank") and Societe Generale
("SG"). Contracts are settled on a quarterly basis by the physical delivery of gold per the banks instructions. The
contracts are accounted for as sale contracts with revenue recognised once the gold has been delivered to
Macquarie, ANZ, NAB, WBC, CBA, Citibank, SG or one of their agents. The physical gold delivery contracts are
considered a contract to sell a non-financial item and is therefore out of the scope of AASB 139 Financial
Instruments: Recognition and Measurement. As a result no derivatives are required to be recognised. The
Company has no other gold sale commitments with respect to its current operations.
20 Events occurring after the reporting period
No matter or circumstance has occurred subsequent to the year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or state of affairs of the Group or
economic entity in subsequent financial years except for the following matters:
(a)
Investment in Riversgold IPO
On 4 August, the Company agreed to subscribe for $2.5 million worth of shares, on a firm allocation basis, in the
upcoming Initial Public Offering of Riversgold Ltd, a new gold-focussed exploration company. Evolution will hold a
right of first refusal over any projects in Australia that Riversgold decides to sell or joint venture.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
19 Commitments (continued)
(a) Capital and lease commitments
(ii) Capital commitments
Within one year
30 June
2017
$'000
26,227
26,227
30 June
2016
$'000
12,266
12,266
(iii) Non-cancellable operating leases
The Group leases mining equipment, office space and small items of office equipment under operating leases.
The leases typically run for one month to five years with an option to renew at the expiry of the lease period.
None of these leases include contingent rentals.
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
(b) Gold delivery commitments
30 June
2017
$'000
30 June
2016
$'000
23,209
5,231
28,440
33,790
4,861
38,651
As at 30 June 2017
Within one year
Later than one year but not greater than five years
As at 30 June 2016
Within one year
Later than one year but not greater than five years
Gold for
physical
delivery
oz
208,495
250,000
458,495
Contracted
sales price
A$/oz
Value of
committed
sales
$'000
1,567
1,711
3,278
319,156
427,705
746,861
248,493
458,495
706,988
1,584
1,665
3,249
393,552
754,349
1,147,901
82
83
142
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
19 Commitments (continued)
(b) Gold delivery commitments
The counterparties to the physical gold delivery contracts are Macquarie Bank Limited ("Macquarie"), Australia
and New Zealand Banking Group Limited ("ANZ"), National Australia Bank Limited ("NAB"), Westpac Banking
Corporation ("WBC"), Commonwealth Bank of Australia ("CBA"), Citibank N.A ("Citibank") and Societe Generale
("SG"). Contracts are settled on a quarterly basis by the physical delivery of gold per the banks instructions. The
contracts are accounted for as sale contracts with revenue recognised once the gold has been delivered to
Macquarie, ANZ, NAB, WBC, CBA, Citibank, SG or one of their agents. The physical gold delivery contracts are
considered a contract to sell a non-financial item and is therefore out of the scope of AASB 139 Financial
Instruments: Recognition and Measurement. As a result no derivatives are required to be recognised. The
Company has no other gold sale commitments with respect to its current operations.
20 Events occurring after the reporting period
No matter or circumstance has occurred subsequent to the year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or state of affairs of the Group or
economic entity in subsequent financial years except for the following matters:
(a)
Investment in Riversgold IPO
On 4 August, the Company agreed to subscribe for $2.5 million worth of shares, on a firm allocation basis, in the
upcoming Initial Public Offering of Riversgold Ltd, a new gold-focussed exploration company. Evolution will hold a
right of first refusal over any projects in Australia that Riversgold decides to sell or joint venture.
83
143
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Other Information
This section covers additional financial information and mandatory disclosures.
21 Ernest Henry Operation
(a) Description
On 24 August 2016, the Group announced that through a wholly owned subsidiary, it had entered into a
transaction with Glencore plc to acquire an economic interest in the Ernest Henry Copper-Gold Operation for an
upfront payment of $880 million. This $880 million upfront payment is recognised as a mine development asset.
The Group also announced the entry into a strategic alliance with Glencore plc in respect of potential future
regional acquisitions and the commitment the parties made to cooperate on exploration activities in the region
surrounding Ernest Henry. The transaction was completed on 1 November 2016.
Under the agreement, the Group has a right to the production output when produced in relation to 100% of future
gold and 30% of future copper and silver from the agreed life of mine area. Copper and silver sales revenue are
recognised in the same month as their production is reported as the production is in control of the purchaser
(Glencore). Gold sales and gold revenues are recognised when the metal is received and sold by Evolution. In
addition to the upfront payment, the Group must also contribute 30% of future production costs in respect of the
life of mine area.
(b) Financial performance and position
The below information presents the financial performance and balance sheet information of the Ernest Henry
operation included in the Consolidated Financial Statements for the eight months ended 30 June 2017.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
21 Ernest Henry Operation (continued)
(b) Financial performance and position (continued)
The carrying amounts of assets and liabilities as at the period end were:
Trade and other receivables
Mine development and exploration
ASSETS
Inventories
Total assets
LIABILITIES
Trade and other payables
Total liabilities
Net assets
22 Related party transactions
(a) Parent entities
30 June
2017
$'000
40,263
25,210
811,178
876,651
29,522
29,522
847,129
30 June
2017
$'000
163,342
(64,108)
(64,902)
34,332
The ultimate parent entity within the Group is Evolution Mining Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 26.
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payments
Detailed remuneration disclosures are provided in the remuneration report on pages 85 to 102.
30 June
30 June
2017
$
2016
$
6,907,351
156,931
-
2,939,830
10,004,112
6,368,326
156,755
903,631
2,253,322
9,682,034
84
145
Revenue (note 2)
Cost of sales (excluding amortisation)
Amortisation
Profit before income tax
144
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
21 Ernest Henry Operation (continued)
(b) Financial performance and position (continued)
The carrying amounts of assets and liabilities as at the period end were:
ASSETS
Trade and other receivables
Inventories
Mine development and exploration
Total assets
LIABILITIES
Trade and other payables
Total liabilities
Net assets
22 Related party transactions
(a) Parent entities
30 June
2017
$'000
40,263
25,210
811,178
876,651
29,522
29,522
847,129
The ultimate parent entity within the Group is Evolution Mining Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 26.
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payments
30 June
2017
$
30 June
2016
$
6,907,351
156,931
-
2,939,830
10,004,112
6,368,326
156,755
903,631
2,253,322
9,682,034
Detailed remuneration disclosures are provided in the remuneration report on pages 85 to 102.
145
145
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
22 Related party transactions (continued)
(d) Transactions with other related parties
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
(c) Summary and movement of Options on issue
Directors fees in the amount of $113,750 were paid to International Mining and Finance Corp, a company of
which Mr James Askew is a Director for services provided during the period (30 June 2016:$110,000).
The following table illustrates the number and weighted average exercise prices (“WAEP”) in Australian Dollars
($) of, and movements in, share Options issued during the year.
Directors fees in the amount of $200,000 were paid to DAK Corporation Pty Ltd, a company of which Mr Jacob
Klein is a Director for services provided during the period (30 June 2016: $200,000).
Directors fees in the amount of $137,748 were paid to Lazy 7 Pty Ltd, a company of which Mr Colin Johnstone is
a Director for services provided during the period (30 June 2016: $119,437).
Directors fees in the amount of $95,000 were paid to Mr Naguib Sawaris as a Director for services provided
during the period (30 June 2016: $79,167).
Directors fees in the amount of $104,375 were paid to Mr Sebastien de Montessus as a Director for services
provided during the period (30 June 2016: $81,042).
23 Share-based payments
(a) Types of share based payment plans
The Group has three Option and Performance Rights plans in existence:
(1) Employee Share Option and Performance Rights Plan (ESOP)
The ESOP was established and approved at the Annual General Meeting on 23 November 2010, and amended
on 19 October 2011. The latest plan was approved at the Annual General Meeting on 26 November 2014 and
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.
(2) Employees and Contractors Option Plan (ECOP)
An 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.
(3) Non-Executive Director Equity Plan (NEDEP)
The NEDEP was established and approved at the Annual General Meeting on 24 November 2016. The plan
permits the Company, at the discretion of the Directors, to grant NEDs Share Rights as part of their
remuneration.
(b) Recognised share based payment expenses
Expense arising from equity settled share based payment transactions recognised
in profit and loss
6,413
9,896
30 June 2017
$'000
30 June 2016
$'000
vesting rate of 100%.
30 June 2017
30 June 2016
Number
WAEP ($)
Number
WAEP ($)
Outstanding at the beginning of the year
Exercised during the year
Expired during the year
Outstanding at the end of the period
Exercisable at the end of the period
5,203,344
(4,178,661)
(1,024,683)
-
-
1.87
1.44
2.21
-
-
7,649,738
(180,000)
(2,266,394)
5,203,344
5,203,344
1.88
1.84
1.88
1.87
1.87
As at 30 June 2017 there were no Options outstanding.
(d) Summary and movement of Performance Rights on issue
The following table illustrates the number and movements in, Performance Rights issued during the year.
Outstanding balance at the beginning of the year
Performance Rights granted
Performance Rights granted (withdrawn) during the period pursuant
to Retention Agreement (i)
Performance Rights granted during the period pursuant to Transition
Incentive Plan (i)
Vested
Lapsed
Forfeited
Outstanding balance at the end of the year
(3,750,000)
3,750,000
2017
Number
29,429,811
6,797,540
3,375,000
(7,961,146)
-
(1,612,639)
26,278,566
2016
Number
21,382,111
8,141,268
-
(2,262,954)
(923,228)
(657,386)
29,429,811
(i)
The 3,750,000 Performance Rights granted in December 2015 to Mr. Jake Klein were withdrawn pursuant to a
Transition Incentive Plan (TIP) under the Retention Agreement which the Company has entered into with Mr. Klein.
Under the Plan the Company granted 3,375,000 Performance Rights to Mr. Klein subject to the satisfaction of Vesting
Conditions to be tested as at 16 December 2019 and were approved by shareholders at the Extraordinary General
Meeting held on 21 June 2017.
The Performance Rights awarded during the 2014 financial year were tested as at 30 June 2016 and vested on
29 August 2016. 7,961,146 Performance Rights met the performance measures and vested which equates to a
There were 10,804,370 Performance Rights granted during the 2015 financial year, with 9,214,401 outstanding
after accounting for forfeitures, which will be subject to performance testing as at 30 June 2017. As at the date of
this report, 9,214,401 Performance Rights eligible for testing have met the performance measures and have been
approved by the Board to vest. This equates to a vesting rate of 100%.
There were 8,141,268 Performance Rights granted during the 2016 financial year, with 7,285,901 outstanding
after accounting for forfeitures, which will be subject to performance testing as at 30 June 2018.
86
87
146
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
(c) Summary and movement of Options on issue
The following table illustrates the number and weighted average exercise prices (“WAEP”) in Australian Dollars
($) of, and movements in, share Options issued during the year.
Number
30 June 2017
WAEP ($)
Number
30 June 2016
WAEP ($)
Outstanding at the beginning of the year
Exercised during the year
Expired during the year
Outstanding at the end of the period
Exercisable at the end of the period
5,203,344
(4,178,661)
(1,024,683)
-
-
1.87
1.44
2.21
-
-
7,649,738
(180,000)
(2,266,394)
5,203,344
5,203,344
1.88
1.84
1.88
1.87
1.87
As at 30 June 2017 there were no Options outstanding.
(d) Summary and movement of Performance Rights on issue
The following table illustrates the number and movements in, Performance Rights issued during the year.
Outstanding balance at the beginning of the year
Performance Rights granted
Performance Rights granted (withdrawn) during the period pursuant
to Retention Agreement (i)
Performance Rights granted during the period pursuant to Transition
Incentive Plan (i)
Vested
Lapsed
Forfeited
Outstanding balance at the end of the year
2017
Number
29,429,811
6,797,540
2016
Number
21,382,111
8,141,268
(3,750,000)
3,750,000
3,375,000
(7,961,146)
-
(1,612,639)
26,278,566
-
(2,262,954)
(923,228)
(657,386)
29,429,811
(i)
The 3,750,000 Performance Rights granted in December 2015 to Mr. Jake Klein were withdrawn pursuant to a
Transition Incentive Plan (TIP) under the Retention Agreement which the Company has entered into with Mr. Klein.
Under the Plan the Company granted 3,375,000 Performance Rights to Mr. Klein subject to the satisfaction of Vesting
Conditions to be tested as at 16 December 2019 and were approved by shareholders at the Extraordinary General
Meeting held on 21 June 2017.
The Performance Rights awarded during the 2014 financial year were tested as at 30 June 2016 and vested on
29 August 2016. 7,961,146 Performance Rights met the performance measures and vested which equates to a
vesting rate of 100%.
There were 10,804,370 Performance Rights granted during the 2015 financial year, with 9,214,401 outstanding
after accounting for forfeitures, which will be subject to performance testing as at 30 June 2017. As at the date of
this report, 9,214,401 Performance Rights eligible for testing have met the performance measures and have been
approved by the Board to vest. This equates to a vesting rate of 100%.
There were 8,141,268 Performance Rights granted during the 2016 financial year, with 7,285,901 outstanding
after accounting for forfeitures, which will be subject to performance testing as at 30 June 2018.
87
147
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
(d) Summary and movement of Performance Rights on issue (continued)
There were 6,797,540 Performance Rights granted during the 2017 financial year, with 6,403,264 outstanding
after accounting for forfeitures, which will be subject to performance testing as at 30 June 2019. Additionally,
there were 3,375,000 Retention Rights granted during the 2017 financial year to the Executive Chairman, subject
to Vesting Conditions to be tested as at 16 December 2019.
The outstanding balance of each grant of Performance Rights is summarised in the table below:
Performance Rights granted
Vested
Lapsed
Forfeited
Outstanding balance
2014
Number
10,498,408
(7,961,147)
-
(2,537,261)
-
2015
Number
10,804,370
-
-
(1,589,969)
9,214,401
2016
Number
8,141,268
-
-
(855,467)
7,285,901
2017
Number
10,172,540
(394,276)
9,778,264
Total
Number
39,616,586
(7,961,147)
-
(5,376,973)
26,278,566
(e) Summary and movement of NED Share Rights on issue
The following table illustrates the number and movements in, Share Rights issued during the year.
Outstanding balance at the beginning of the year
Share Rights granted
Vested
Lapsed
Forfeited
Outstanding balance at the end of the year
2017
Number
-
97,788
-
-
-
97,788
2016
Number
-
-
-
-
-
-
There were 97,788 Share Rights granted during the 2017 financial year. Provided the NEDs remain directors of
Evolution, Share Rights will vest and automatically exercise 12 months after the grant date of 24 November 2016.
(f) Fair value determination
During the year, the Company issued two allotments of performance rights that will vest on 30 June 2019. They
have four performance components being a Total Shareholder Return (“TSR”) condition, an absolute TSR
condition, a Growth in Earnings per share (“EPS”) condition and a Growth in Ore Reserves condition.
(i) TSR Performance Right Valuation
The fair value of the TSR Performance Rights (market-based condition) was estimated at the date of grant using
Monte Carlo simulation, taking into account the terms and conditions upon which the awards were granted.
(ii) Absolute TSR Performance Right Valuation
The Absolute TSR Performance Right Valuation will be measured as the cumulative annual TSR over the three
year period ending 30 June 2019.
(iii) Growth in Earnings per Share
The growth in Earnings per Share is measured as the cumulative annual growth rate in EPS, excluding non
recurring items over the three year period ending 30 June 2019.
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
(f) Fair value determination (continued)
(iv) Growth in Ore Reserves per Share
The growth in Ore Reserves per share is measured by comparing the Baseline measure of the ore reserves as at
31 December 2015, to the Ore Reserves as at 31 December 2018 on a per share basis, with testing to be
The following tables list the inputs to the models used for the Performance Rights (including TIP) granted for the
September 2016 Performance Rights issue
Number of rights issued
1,357,069
1,357,069
1,357,069
1,357,069
TSR
Absolute TSR
Growth in EPS
Growth in Ore
Reserves
performed at 30 June 2019.
period:
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
January 2017 Performance Rights issue
Number of rights issued
2.420
1.59
2.8
62
1.630
1.955
1.87
2.6
62
1.32
71,681
2.170
1.93
2.4
62
1.44
2.350
1.74
2.5
60
1.50
2.420
1.59
2.8
62
0.950
1.955
1.87
2.6
62
0.95
71,681
2.170
1.93
2.4
62
1.12
2.350
1.74
2.5
60
1.68
2.420
1.59
2.8
62
1.870
1.955
1.87
2.6
62
1.87
71,681
2.170
1.93
2.4
62
2.08
2.350
1.74
2.5
60
2.25
2.420
1.59
2.8
62
1.870
1.955
1.87
2.6
62
1.87
71,681
2.170
1.93
2.4
62
2.08
2.350
1.74
2.5
60
2.25
November 2016 Performance Rights issue
Number of rights issued
270,635
270,635
270,635
270,635
June 2017 Performance Rights issue - TIP
Number of rights issued
843,750
843,750
843,750
843,750
The volatility above was determined with reference to historical volatility but also incorporates factors that
management believes will impact the actual volatility of the Company’s shares in future periods.
88
89
148
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
(f) Fair value determination (continued)
(iv) Growth in Ore Reserves per Share
The growth in Ore Reserves per share is measured by comparing the Baseline measure of the ore reserves as at
31 December 2015, to the Ore Reserves as at 31 December 2018 on a per share basis, with testing to be
performed at 30 June 2019.
The following tables list the inputs to the models used for the Performance Rights (including TIP) granted for the
period:
TSR
Absolute TSR
Growth in EPS
September 2016 Performance Rights issue
Number of rights issued
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
1,357,069
2.420
1.59
2.8
62
1.630
November 2016 Performance Rights issue
Number of rights issued
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
270,635
1.955
1.87
2.6
62
1.32
January 2017 Performance Rights issue
Number of rights issued
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
71,681
2.170
1.93
2.4
62
1.44
June 2017 Performance Rights issue - TIP
Number of rights issued
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Fair value at grant date ($)
843,750
2.350
1.74
2.5
60
1.50
1,357,069
2.420
1.59
2.8
62
0.950
270,635
1.955
1.87
2.6
62
0.95
71,681
2.170
1.93
2.4
62
1.12
843,750
2.350
1.74
2.5
60
1.68
1,357,069
2.420
1.59
2.8
62
1.870
270,635
1.955
1.87
2.6
62
1.87
71,681
2.170
1.93
2.4
62
2.08
843,750
2.350
1.74
2.5
60
2.25
Growth in Ore
Reserves
1,357,069
2.420
1.59
2.8
62
1.870
270,635
1.955
1.87
2.6
62
1.87
71,681
2.170
1.93
2.4
62
2.08
843,750
2.350
1.74
2.5
60
2.25
The volatility above was determined with reference to historical volatility but also incorporates factors that
management believes will impact the actual volatility of the Company’s shares in future periods.
89
149
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
23 Share-based payments (continued)
Recognition and measurement
The Group provides benefits to its employees (including Key Management Personnel) in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions).
Vesting conditions that are linked to the price of shares of the Company (market conditions) are taken into
account when determining the fair value of equity settled transactions. Other vesting conditions such as service
conditions are excluded from the measurement of fair value but are considered in estimating the number of
investments that may ultimately vest.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments
at the date at which they are granted.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled (“the vesting period”).
The charge to the Statement of Profit or Loss for the period is the cumulative amount as calculated above less
the amounts already recognised in previous periods. There is a corresponding entry to equity.
Accounting estimates and judgements
Total remuneration of non-PricewaterhouseCoopers audit firms
537,633
1,158,080
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of
equity instruments at the date at which they are granted. The fair value is determined by an external specialist
using an option pricing model, based off the assumptions detailed above.
24 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non-related audit firms:
(a) PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial statements
Other assurance services
Assurance related services
Total remuneration for audit and other assurance services
Taxation services
Tax compliance services
Tax advisory services
Total remuneration for taxation services
2017
$
2016
$
511,940
553,982
140,413
652,353
16,700
570,682
89,391
402,939
492,330
12,000
-
12,000
Total remuneration of PricewaterhouseCoopers
1,144,683
582,682
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
24 Remuneration of auditors (continued)
(b) Non-PricewaterhouseCoopers related audit firms
Audit and other assurance services
Other assurance services
Due diligence services
Internal audit services
Other assurance services
Total remuneration for audit and other assurance services
Taxation services
Tax compliance services
Tax advisory services
Total remuneration for taxation services
2017
$
2016
$
-
114,348
20,000
134,348
111,861
291,424
403,285
226,245
62,845
-
289,090
47,980
821,010
868,990
Total auditors' remuneration
1,682,316
1,740,762
It is the Group's policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit
duties where PricewaterhouseCoopers's expertise and experience with the Group are important. These
assignments are principally tax advice and due diligence reporting on acquisitions, or where
PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group's policy to seek
competitive tenders for all major consulting projects.
25 Deed of cross guarantee
Evolution Mining Limited and those entities identified in note 26 are parties to a deed of cross guarantee under
which each Company guarantees the debts of the others. By entering into the deed, the wholly-owned entities
have been relieved from the requirement to prepare a financial report and Directors' Report under Class Order
98/1418 (as amended) issued by the Australian Securities and Investments Commission.
The companies identified above represent a 'closed group' for the purposes of the Class Order, and as there are
no other parties to the deed of cross guarantee that are controlled by Evolution Mining Limited, they also
represent the 'extended closed group'.
The Consolidated Balance Sheet, Consolidated Statement of Profit or Loss and Other Comprehensive Income,
and summary of movements in consolidated retained earnings for the year ended 30 June 2017 of the closed
group is equal to the Consolidated Balance Sheet, Consolidated Statement of Profit or Loss and Other
Comprehensive Income, and Consolidated Statement of Changes in Equity of the Group.
90
91
150
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
24 Remuneration of auditors (continued)
(b) Non-PricewaterhouseCoopers related audit firms
Audit and other assurance services
Other assurance services
Due diligence services
Internal audit services
Other assurance services
Total remuneration for audit and other assurance services
Taxation services
Tax compliance services
Tax advisory services
Total remuneration for taxation services
2017
$
2016
$
-
114,348
20,000
134,348
111,861
291,424
403,285
226,245
62,845
-
289,090
47,980
821,010
868,990
Total remuneration of non-PricewaterhouseCoopers audit firms
537,633
1,158,080
Total auditors' remuneration
1,682,316
1,740,762
It is the Group's policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit
duties where PricewaterhouseCoopers's expertise and experience with the Group are important. These
assignments are principally tax advice and due diligence reporting on acquisitions, or where
PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group's policy to seek
competitive tenders for all major consulting projects.
25 Deed of cross guarantee
Evolution Mining Limited and those entities identified in note 26 are parties to a deed of cross guarantee under
which each Company guarantees the debts of the others. By entering into the deed, the wholly-owned entities
have been relieved from the requirement to prepare a financial report and Directors' Report under Class Order
98/1418 (as amended) issued by the Australian Securities and Investments Commission.
The companies identified above represent a 'closed group' for the purposes of the Class Order, and as there are
no other parties to the deed of cross guarantee that are controlled by Evolution Mining Limited, they also
represent the 'extended closed group'.
The Consolidated Balance Sheet, Consolidated Statement of Profit or Loss and Other Comprehensive Income,
and summary of movements in consolidated retained earnings for the year ended 30 June 2017 of the closed
group is equal to the Consolidated Balance Sheet, Consolidated Statement of Profit or Loss and Other
Comprehensive Income, and Consolidated Statement of Changes in Equity of the Group.
91
151
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
26 Interests in other entities
(a) Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described below:
The financial information for the parent entity, Evolution Mining Limited has been prepared on the same basis as
27 Parent entity financial information
the consolidated financial statements.
(b) Summary financial information
Country of
The individual financial statements for the parent entity show the following aggregate amounts:
Name of entity
incorporation Class of shares
Equity holding
2017
%
2016
%
Evolution Mining Management Services Pty Ltd
Conquest Mining Pty Ltd (i) (ii)
CQT Gold Aust Pty Ltd (i)
CQT Holdings Pty Ltd (i)
NQM Gold 2 Pty Ltd (i) (ii)
Edna May Ops Pty Ltd (i) (ii)
Mt Rawdon Operations Pty Ltd (i) (ii)
Westonia Mines Minerals Pty Ltd (i)
Lion Selection Pty Ltd (i)
Auselect Pty Ltd (i)
Lion Mining Pty Ltd (i) (ii)
Sedgold Pty Ltd (i)
Fernyside Pty Ltd (i)
Evolution Tennant Creek Pty Ltd (ii)
Evolution Mining NZ Pty Ltd (ii)
Evolution Mining (Cowal) Pty Ltd (i) (ii)
Toledo Holding (Ausco) Pty Ltd (i)
Evolution Mining Mungari Pty Ltd (i) (ii)
Evolution Mining (Mungari East) Pty Ltd (i) (ii)
Evolution Mining (Phoenix) Pty Limited (i) (ii)
Hayes Mining Pty Ltd (i)
Evolution Mining (Aurum 2) Pty Ltd (i) (ii)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
(i)
(ii)
These subsidiaries have been granted relief from the necessity to prepare financial reports in
accordance with Class Order 98/1418 issued by the Australian Securities and Investments Commission.
For further information refer to note 25.
These entities are considered to be the material controlled entities of the Group. Their principal activities
are identifying, developing and operating gold related projects in both Australia and New Zealand.
Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the
Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of
incorporation or registration is also their principal place of business.
Balance sheet
Space
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Space
Issued capital
Reserves
Fair Value revaluation reserve
Share based payment reserve
Cash flow hedge reserve
Other reserves
Accumulated losses
Space
Profit for the year
Other comprehensive expense
Total comprehensive expense
Statement of Profit or Loss and Other Comprehensive Income
(c) Guarantees entered into by the parent entity
The parent entity has provided bank guarantees, as detailed in note 18.
30 June
2017
$'000
30 June
2016
$'000
27,659
2,289,540
2,317,199
10,318
1,676,906
1,687,224
101,199
405,981
507,180
297,651
-
297,651
1,810,019
1,389,573
2,183,727
1,770,987
3,042
36,157
-
(74)
1,224
29,496
(127)
(74)
(412,833)
1,810,019
(411,933)
1,389,573
84,078
-
84,078
44,031
-
44,031
92
93
152
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
27 Parent entity financial information
The financial information for the parent entity, Evolution Mining Limited has been prepared on the same basis as
the consolidated financial statements.
(b) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Space
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Space
Issued capital
Reserves
Fair Value revaluation reserve
Share based payment reserve
Cash flow hedge reserve
Other reserves
Accumulated losses
Statement of Profit or Loss and Other Comprehensive Income
Space
Profit for the year
Other comprehensive expense
Total comprehensive expense
(c) Guarantees entered into by the parent entity
The parent entity has provided bank guarantees, as detailed in note 18.
93
30 June
2017
$'000
30 June
2016
$'000
27,659
2,289,540
2,317,199
10,318
1,676,906
1,687,224
101,199
405,981
507,180
297,651
-
297,651
1,810,019
1,389,573
2,183,727
1,770,987
3,042
36,157
-
(74)
(412,833)
1,810,019
1,224
29,496
(127)
(74)
(411,933)
1,389,573
84,078
-
84,078
44,031
-
44,031
153
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
27 Parent entity financial information (continued)
(d) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2017 or 30 June 2016. For information
about guarantees given by the parent entity, please see above.
28 Summary of significant accounting policies
(a) Basis of preparation
This financial report is a general purpose financial report, prepared by a for-profit entity, in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board (AASB).
The financial report also complies with the International Financial Reporting Standards (IFRS) including
interpretations as issued by the International Accounting Standards Board (IASB).
The financial report has been prepared on a historical cost basis, except for derivative financial instruments and
available-for-sale assets which have been measured at fair value.
The financial report has been presented in Australian (AU) dollars and all values are rounded to the nearest
AU$1,000 (AU$'000) unless otherwise stated.
The accounting policies have been consistently applied by all entities included in the Group and are consistent
with those applied in the prior year.
(b) Principles of consolidation
The consolidated financial statements include the financial statements of the parent entity, Evolution Mining
Limited, and its controlled entities (referred to as 'the Consolidated Entity' or 'the Group' in these financial
statements). A list of significant controlled entities (subsidiaries) is presented in note 26.
Control is achieved when the Group is exposed, or has the rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. The Group re-assesses
whether or not it controls and investee if facts and circumstances indicate that there are changes to one of more
of the three elements of control. Specifically the Group controls an investee if, and only if, the Group has all of the
following:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its over over the investee to affect its returns.
Non- controlling interests in the results and equity of the entities that are controlled by the Group is shown
separately in the Statement of Profit or Loss or Other Comprehensive Income, Balance Sheet and Statement of
Changes in Equity respectively.
(c) Foreign currency translation
(i) Functional and presentation currency
The presentation currency of the Group is Australian dollars. Each entity in the Group determines its own
functional currency and items included in the financial statements of each entity are measured using that
functional currency.
28 Summary of significant accounting policies (continued)
(c) Foreign currency translation (continued)
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at
the date of the transaction. The subsequent payment or receipt of funds related to a transaction is translated at
the rate applicable on the date of payment or receipt. Monetary assets and liabilities are denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of
All exchange differences in the consolidated financial statements are taken to the Statement of Other
Comprehensive Income and accumulated in a reserve.
the initial transaction.
(iii) Translation
The assets and liabilities of subsidiaries with functional currency other than Australian dollars (being the
presentation currency of the Group) are translated into Australian dollars at the exchange rate at the reporting
date and the Statement of Profit or Loss is translated at the average exchange rate for the period. On
consolidation, exchange differences arising from the translation of these subsidiaries are recognised in Other
Comprehensive Income and accumulated in the foreign currency translation reserve.
(d) Intangible assets
(i) Mining tenements, mining rights and mining information
Mining tenements have a finite useful life and are carried at cost less, where applicable, any accumulated
amortisation and accumulated impairment losses. The carrying values of mining tenements and mining rights are
reviewed to ensure they are not in excess of their recoverable amounts. Amortisation of mining tenements and
mining rights commences from the date when commercial production commences or in the case of the
acquisitions, from the date of acquisition and is charged to the profit or loss. Mining tenements are amortised
over the life of the mine using units of production basis in ounces.
Mining information has a finite useful life and is carried at cost less accumulated amortisation. Mining information
amortisation is recognised over the period that the information is expected to remain relevant.
The amortisation of the above intangibles is classified as a cost of sale.
94
95
154
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
28 Summary of significant accounting policies (continued)
(c) Foreign currency translation (continued)
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at
the date of the transaction. The subsequent payment or receipt of funds related to a transaction is translated at
the rate applicable on the date of payment or receipt. Monetary assets and liabilities are denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of
the initial transaction.
All exchange differences in the consolidated financial statements are taken to the Statement of Other
Comprehensive Income and accumulated in a reserve.
(iii) Translation
The assets and liabilities of subsidiaries with functional currency other than Australian dollars (being the
presentation currency of the Group) are translated into Australian dollars at the exchange rate at the reporting
date and the Statement of Profit or Loss is translated at the average exchange rate for the period. On
consolidation, exchange differences arising from the translation of these subsidiaries are recognised in Other
Comprehensive Income and accumulated in the foreign currency translation reserve.
(d) Intangible assets
(i) Mining tenements, mining rights and mining information
Mining tenements have a finite useful life and are carried at cost less, where applicable, any accumulated
amortisation and accumulated impairment losses. The carrying values of mining tenements and mining rights are
reviewed to ensure they are not in excess of their recoverable amounts. Amortisation of mining tenements and
mining rights commences from the date when commercial production commences or in the case of the
acquisitions, from the date of acquisition and is charged to the profit or loss. Mining tenements are amortised
over the life of the mine using units of production basis in ounces.
Mining information has a finite useful life and is carried at cost less accumulated amortisation. Mining information
amortisation is recognised over the period that the information is expected to remain relevant.
The amortisation of the above intangibles is classified as a cost of sale.
95
155
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
29 New accounting standards
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2017 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of
these new standards and interpretations is set out below.
29 New accounting standards (continued)
Title of
standard
Nature of change
Impact
Mandatory
application
date/ Date of
adoption by
group
Mandatory for
financial years
commencing on
or after 1
January 2017.
Expected date
of adoption by
the Group is
1July 2017.
Title of
standard
Nature of change
Impact
Management is assessing the impact of the
new rules and has been focussed on reviewing:
Metal and concentrate sales where recognition
of revenue will depend on the passing of
control rather than the passing of risks and
rewards.
To date no material measurement differences
have been identified between AASB 118 and
AASB 15.
AASB 15
Revenue
from
Contracts
with
Customers
The AASB has issued a new
standard for the recognition of
revenue. This will replace AASB 118
which covers contracts for goods
and services and AASB 111 which
covers construction contracts.
The new standard is based on the
principle that revenue is recognised
when control of a good or service
transfers to the customer - so the
notion of control replaces the
existing notion of risks and rewards.
The standard permits a modified
retrospective approach for the
adoption. Under this approach
entities will recognise transitional
adjustments in retained earnings on
the date of initial application (eg. 1
July 2017), i.e. without restating the
comparative period. They will only
need to apply the new rules to
contracts that are not completed as
of the date of initial application.
AASB 9
Financial
AASB 9 addresses the classification,
Following the changes approved by the AASB
Must be applied
measurement and derecognition of
in December 2014, the Group no longer
for financial
Instruments
financial assets and financial
expects any impact from the new classification,
years
liabilities and introduces new rules
measurement and derecognition rules on the
commencing on
for hedge accounting.
Group’s financial assets and financial liabilities.
or after 1
In December 2014, the AASB made
While the Group has yet to undertake a
further changes to the classification
detailed assessment of the debt instruments
and measurement rules and also
currently classified as available-for-sale
introduced a new impairment model.
financial assets, it would appear that they
These latest amendments now
complete the new financial
instruments standard.
Mandatory
application
date/ Date of
adoption by
group
January 2018.
Based on the
transitional
provisions in the
completed IFRS
9, early adoption
in phases was
only permitted
for annual
reporting
periods
beginning
before 1
February 2015.
After that date,
the new rules
must be
adopted in their
entirety.
would satisfy the conditions for classification as
at fair value through other comprehensive
income (FVOCI) and hence there will be no
change to the accounting for these assets.
There will also be no impact on the Group’s
accounting for financial liabilities, as the new
requirements only affect the accounting for
financial liabilities that are designated at fair
value through profit or loss and the Group does
not have any such liabilities.
The new hedging rules align hedge accounting
more closely with the Group’s risk management
practices. As a general rule it will be easier to
apply hedge accounting going forward as the
standard introduces a more principles-based
approach. The new standard also introduces
expanded disclosure requirements and
changes in presentation.
The new impairment model is an expected
credit loss (ECL) model which may result in the
earlier recognition of credit losses.
To date no material measurement differences
have been identified under conversion to AASB
9.
96
97
156
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
29 New accounting standards (continued)
Title of
standard
Nature of change
Impact
AASB 9
Financial
Instruments
AASB 9 addresses the classification,
measurement and derecognition of
financial assets and financial
liabilities and introduces new rules
for hedge accounting.
Following the changes approved by the AASB
in December 2014, the Group no longer
expects any impact from the new classification,
measurement and derecognition rules on the
Group’s financial assets and financial liabilities.
In December 2014, the AASB made
further changes to the classification
and measurement rules and also
introduced a new impairment model.
These latest amendments now
complete the new financial
instruments standard.
While the Group has yet to undertake a
detailed assessment of the debt instruments
currently classified as available-for-sale
financial assets, it would appear that they
would satisfy the conditions for classification as
at fair value through other comprehensive
income (FVOCI) and hence there will be no
change to the accounting for these assets.
There will also be no impact on the Group’s
accounting for financial liabilities, as the new
requirements only affect the accounting for
financial liabilities that are designated at fair
value through profit or loss and the Group does
not have any such liabilities.
The new hedging rules align hedge accounting
more closely with the Group’s risk management
practices. As a general rule it will be easier to
apply hedge accounting going forward as the
standard introduces a more principles-based
approach. The new standard also introduces
expanded disclosure requirements and
changes in presentation.
The new impairment model is an expected
credit loss (ECL) model which may result in the
earlier recognition of credit losses.
To date no material measurement differences
have been identified under conversion to AASB
9.
Mandatory
application
date/ Date of
adoption by
group
Must be applied
for financial
years
commencing on
or after 1
January 2018.
Based on the
transitional
provisions in the
completed IFRS
9, early adoption
in phases was
only permitted
for annual
reporting
periods
beginning
before 1
February 2015.
After that date,
the new rules
must be
adopted in their
entirety.
97
157
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Evolution Mining Limited
Annual Financial Report
Notes to the Consolidated Financial Statements
29 New accounting standards (continued)
Title of
standard
AASB 16
Leases
Nature of change
Impact
AASB 16 was issued in February
2017. It will result in almost all
leases being recognised on the
balance sheet, as the distinction
between operating and finance
leases is removed. Under the new
standard, an asset (the right to use
the leased item) and a financial
liability to pay rentals are
recognised. The only exceptions are
short-term and low-value leases.
The standard will affect primarily the
accounting for the Group’s operating leases. As
at the reporting date, the Group has
non-cancellable operating lease commitments
of $23.209 million, see note 19.
To date, work has focussed on the
identification of the provisions of the standard
which will most impact the Group. In FY18 work
on these issues and their resolution will
continue, detailed review of contracts will
begin, and financial reporting impacts and
assessment of process impact will commence.
Some of the commitments may be covered by
the exception for short-term and low-value
leases and some commitments may relate to
arrangements that will not qualify as leases
under AASB 16.
Mandatory
application
date/ Date of
adoption by
group
Mandatory for
financial years
commencing on
or after 1
January 2019.
At this stage,
the Group does
not intend to
adopt the
standard before
its effective
date.
There are no other standards that are not yet effective and that would be expected to have a material impact on
the entity in the current or future reporting periods and on foreseeable future transactions.
98
158
Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2017 Directors' Declaration
Evolution Mining Limited
Annual Financial Report
Directors' Declaration
30 June 2017
In the Directors' opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 106 to 158 are in accordance with the Corporations
Act 2001, including:
(i)
complying with Accounting Standard, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the consolidated entity's financial position as at 30 June 2017 and of
its performance for the year ended on that date, and
(ii)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
at the date of this declaration, there are reasonable grounds to believe that the members of the extended
closed group identified in note 25 will be able to meet any obligations or liabilities to which they are, or
may become, subject by virtue of the deed of cross guarantee described in note 25.
Note 28(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Jacob (Jake) Klein
Executive Chairman
Graham Freestone
Non-Executive Director
Sydney
159
159
Evolution Mining Limited Annual Report 2017 Independent auditor’s report
Independent auditor’s report
To the shareholders of Evolution Mining Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Evolution Mining Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2017
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
100
160
Evolution Mining Limited Annual Report 2017 Independent auditor’s report (continued)
161
Our audit approachAn audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error.They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates.Materiality Audit scopeKey audit matters•For the purpose of our audit weused overall Group materialityof $18 million, whichrepresents approximately 2.5%of the Group’s earnings beforeinterest, tax, depreciation andamortisation (EBITDA).•We applied this threshold,together with qualitativeconsiderations, to determinethe scope of our audit and thenature, timing and extent of ouraudit procedures and toevaluate the effect ofmisstatements on the financialreport as a whole.•We chose EBITDA because, inour view, it is the benchmarkagainst which the performanceof the Group is most commonlymeasured.•We chose 2.5% threshold basedon our professional judgement,noting it is within the range ofcommonly acceptablethresholds•Our audit focused on where theGroup made subjectivejudgements; for example,significant accountingestimates involvingassumptions and inherentlyuncertain future events.•Our audit focused on where theGroup made subjectivejudgements; for example,significant accountingestimates involvingassumptions and inherentlyuncertain future events.•Our audit procedures werepredominantly performed atthe Group’s corporate office inSydney. We also conducted sitevisits to the Cowal, Edna May,Mungari and Ernest Henrymine sites.•Amongst other relevant topics,wecommunicated the followingkey audit matters to the Auditand Risk Committee:−Accounting for Ernest HenryMine−Recognition of deferred tax assets−Impairment reversal of Mt Carlton's non-current assets•These are further described inthe Key audit matters sectionof our report.101Evolution Mining Limited Annual Report 2017 Independent auditor’s report (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
How our audit addressed the key audit
matter
For the economic interest acquired in the mine, we
focused on the judgements made when assessing the
risk exposure and entitlement to the mine by
assessing the terms of the key transaction documents
against the requirements of Australian Accounting
Standards.
For the revenue recognition policy for gold sales and
copper and silver sales, we assessed the terms of the
key transaction documents which have an impact on
the timing of the revenue recognition against the
requirements of Australian Accounting Standards.
We considered the adequacy of the disclosures made
in the note 21 relating to the economic interest
acquired and the revenue recognised in accordance
with the requirements of Australian Accounting
Standards.
Key audit matter
Accounting for Ernest Henry Mine
(Refer to note 21)
The accounting treatment for the economic interest
acquired in the Ernest Henry Mine (the mine) and the
ongoing revenue recognised from the mine was a key
audit matter. The acquisition was unique and the
magnitude of the transaction had financial
significance to the Group. Significant judgement was
involved to apply the appropriate accounting
standards to determine how to account for the asset
acquired and to determine the timing of revenue
recognition.
As a result of the Group’s detailed assessment over the
risk exposure and entitlement to the mine, the Group
recognised an $880 million upfront payment as a
mine development asset. To assess the appropriate
accounting treatment for the asset acquired,
judgement was applied, that involved a consideration
of the contractual terms and arrangements.
The Group also applied judgement as to when the
gold, copper and silver sales should be recognised as
revenue and this required a consideration of the
contractual terms and arrangements. Gold sales are
recognised by the Group when the metal is received
and sold. Copper and silver sales are recognised by the
Group in the same month as their production is
reported by the operator. Copper and silver is sold in
accordance with the Offtake Agreement with Glencore
where the metal is sold immediately following
treatment and refining and is paid for in cash.
162
102
Evolution Mining Limited Annual Report 2017 Independent auditor’s report (continued)
Key audit matter
How our audit addressed the key audit
matter
Recognition of deferred tax assets
(Refer to note 16)
We assessed the Group’s ability to utilise the deferred
tax assets by:
During the year, the Group recognised $ 57.744
million of deferred tax assets from available tax losses
and had a net deferred tax asset of $16.448 million at
30 June 2017 in the financial report.
Australian Accounting Standards require deferred tax
assets to be recognised only to the extent that it is
probable that sufficient future taxable profits will be
generated in order for the benefits of the deferred tax
assets to be realised. These benefits are realised by
reducing tax payable on future taxable profits.
This was a key audit matter due to the judgement
required in preparing forecasts of future taxable
profits to assess the future utilisation of these losses in
accordance with the requirements of Australian
Accounting Standards.
•
•
•
•
obtaining calculations of forecast taxable income
and the latest Board approved budget and
forecast
assessing the reasonability of the forecast taxable
income in light of current year taxable profits
evaluating whether the cashflows in the Board
approved budget and forecast had been
appropriately adjusted for the differences
between accounting profits to taxable income
recalculating the deferred tax asset balances
which comprise a combination of tax losses and
timing differences between tax and accounting
values.
Impairment reversal of Mt Carlton's non-
current assets
(Refer to note 8)
We considered the Group’s assessment of the
recoverable amount of the non-current assets for Mt
Carlton and its conclusion not to recognise an
impairment reversal by performing the following:
The Group recognised impairment losses of $148.6
million relating to the carrying value of Mt Carlton’s
non-current assets in 2013 as a result of the fall in
gold price combined with a compression of valuations
in the gold industry.
We focused our current year audit on the carrying
value of the previously impaired site for Mt Carlton.
The Group anticipates continued strong performance
at Mt Carlton which, together with the wider recovery
of some gold prices, provides evidence that conditions
leading to its past impairment may no longer be
present. This is an indicator that the mine assets
should be considered for reversal of impairment.
•
•
•
•
compared current year US$ gold prices to the
US$ gold prices when the impairment occurred
compared current gold price forecasts to gold
price forecasts when the impairment occurred
considered the Group’s calculations of
recoverable amount, including sensitivities of key
assumptions, and compared them to the carrying
value of the Mt Carlton assets
analysed market data for recent gold mine
transactions and compared to the carrying value
of the Mt Carlton assets.
The assessment of whether to reverse impairment was
a key audit matter given the high levels of judgement
by the Group over the impairment reversal and the
financial significance of any potential reversal to the
financial report.
• We also evaluated the adequacy of the disclosures
made in the note 8 in light of the requirements of
Australian Accounting Standards.
103
163
Evolution Mining Limited Annual Report 2017 Independent auditor’s report (continued)
Other information
The directors are responsible for the other information. The other information included in the Group’s
annual report for the year ended 30 June 2017 comprises the Director’s Report (but does not include
the financial report and our auditor’s report thereon), which we obtained prior to the date of this
auditor’s report. We also expect other information to be made available to us after the date of this
auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received as identified above, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to the directors and use
our professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
164
104
Evolution Mining Limited Annual Report 2017 Independent auditor’s report (continued)
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 85 to 107 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the remuneration report of Evolution Mining Limited for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Marc Upcroft
Partner
Sydney
17 August 2017
165
Evolution Mining Limited Annual Report 2017 Shareholder Information
Capital (as at 2 October 2017)
Share Capital
Ordinary shareholders
Shareholdings with less than a marketable parcel of $500 worth of ordinary shares
Market price
1,692,514,261
21,493
1,060
A$2.21
Distribution of Fully Paid Shares (as at 2 October 2017)
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Securities
1,527,062,502
113,336,646
26,320,663
23,283,708
2,510,742
1,692,514,261
68,406
%
90.22
6.70
1.56
1.38
0.15
100.00
0.00
No. of Holders
342
4,346
3,480
8,416
4,909
21,493
1,060
Substantial Shareholders (as at 2 October 2017)
La Mancha Group International BV
Van Eck Global
Total
Fully Paid Ordinary Shares
Number
454,698,137
166,249,290
620,947,427
%
1.59
20.22
16.19
39.16
22.84
100.00
4.93
%
26.871
9.82
36.69
1 Relevant Interest
166
Evolution Mining Limited Annual Report 2017 Shareholder Information (continued)
Twenty Largest Shareholders (as at 2 October 2017)
Fully Paid Ordinary Shares
Current balance
Issued capital %
501,853,429
450,617,197
229,733,012
65,959,226
40,894,430
35,842,409
21,334,268
12,542,304
8,823,397
8,563,797
8,475,000
7,341,702
6,368,764
6,155,000
5,663,555
4,428,723
4,094,466
3,977,263
3,400,000
2,705,753
29.65
26.62
13.57
3.90
2.42
2.12
1.26
0.74
0.52
0.51
0.50
0.43
0.38
0.36
0.33
0.26
0.24
0.23
0.20
0.16
1,449,912,726
86.53
1,428,773,695
263,740,566
1,692,514,261
84.42
15.58
100.00
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AMP LIFE LIMITED
SHARE DIRECT NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED(MACQ HIGH CONV FUND)
& BOND STREET CUSTODIANS LIMITED
ROXI PTY LIMITED
CITICORP NOMINEES PTY LIMITED
SMARTEQUITY EIS PTY LTD
LUJETA PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
AUST EXECUTOR TRUSTEES LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
Total
TOTAL
Balance of Register
Grand TOTAL
1.5 Share Buy-Backs
There is no current on-market buy-back scheme.
2. Other Information
167
Evolution Mining Limited Annual Report 2017 Corporate Information
ABN 74 084 669 036
Board of Directors
Jacob (Jake) Klein
Executive Chairman
Lawrie Conway
Finance Director and Chief Financial Officer
Colin (Cobb) Johnstone
Lead Independent Director
James (Jim) Askew
Non-Executive Director
Graham Freestone
Non-Executive Director
Thomas (Tommy) McKeith Non-Executive Director
Naguib Sawaris
Non-Executive Director
Sebastien de Montessus
Non-Executive Director
Vincent Benoit
Amr El Adawy
Alternate Non-Executive Director for Naguib Sawaris
Alternate Non-Executive Director for Sebastien de Montessus
Auditor
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
BARANGAROO NSW 2000
T:
F:
+61 2 8266 0000
+61 2 8266 9999
Website
www.evolutionmining.com.au
Stock Exchange Listing
Evolution Mining Limited (EVN) shares are listed on the
Australian Securities Exchange
Company Secretary
Evan Elstein
Registered Office
Level 30, 175 Liverpool Street
SYDNEY NSW 2000
Postal Address
Level 30, 175 Liverpool Street
SYDNEY NSW 2000
T:
F:
+61 2 9696 2900
+61 2 9696 2901
Share Register
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000
T:
F:
+61 1300 554 474
+61 2 9287 0303
Email: registrars@linkmarketservices.com.au
168
Evolution Mining Limited Annual Report 2017 Level 30, 175 Liverpool Street SYDNEY NSW 2000
+61 2 9696 2900 +61 2 9696 2901 www.evolutionmining.com.au