Cardinal Health
Annual Report 2019

Plain-text annual report

Inspired People Creating Australia’s Premier Gold Company We are a leading, growth-focused Australian gold miner Darwin ERNEST HENRY (Economic interest 100% future gold 30% future copper and silver from agreed life of mine area) MT CARLTON (100%) Townsville Rockhampton Brisbane Sydney MT RAWDON (100%) CRACOW (100%) Perth MUNGARI (100%) COWAL (100%) Melbourne Contents Executive Chairman’s Report Sustainability Report Our People Environment Social Responsibility Sustainability Performance Data Chief Operating Officer’s Review 4 6 1 7 24 31 36 42 Innovation and Asset Optimisation 48 52 Discovery Mineral Resources and Ore Reserves 56 Chief Financial Officer’s Review Annual Financial Report Shareholder Information Corporate Information 61 67 149 153 We are committed to deliver long-term stakeholder value through safe, low-cost gold production in an environmentally and socially responsible manner.Overview Inspired People Creating Australia’s Premier Gold Company 1 Our storyIn 2010, an opportunity was identified to fill a vacuum in the Australian gold mining sector by creating a new mid-tier gold producer. Executive Chairman and founder, Jake Klein, with the assistance of a small management team, pursued a series of bold and complex deals to form Evolution in November 2011.Since then, we’ve weathered some storms and by delivering a reliable operating performance and executing on a clear strategy of upgrading the quality of the asset portfolio, Evolution has grown to become a leading global mid-tier gold mining company.We are now one of the lowest cost gold producers in the world and have built a business that will prosper through the cycle.Evolution Mining Limited Annual Report 2019FY19 highlights Continued delivery Sector leading cash generation ACHIEVED PRODUCTION GUIDANCE OPERATING MINE CASH FLOW 8YEARS 2ND LOWEST COST GOLD PRODUCER IN TOP 10 GOLD MINERS (VAN ECK GOLD MINER INDEX [GDX]) AISC1 A$924/OZ FY19 GOLD PRODUCTION 753KOZ FY20 GUIDANCE 725-775KOZ A$771M NET MINE CASH FLOW A$498M A$2B OF NET MINE CASH FLOW BETWEEN FY15-19 FULLY FRANKED DIVIDENDS 13TH CONSECUTIVE DIVIDEND A$127M A$459M 2ND HIGHEST EBITDA MARGIN IN TOP 10 GDX 48% History of creating value Group delivering strong EBITDA margins 554% 95% 26% 1 YEAR 3 YEARS 5 YEARS TOTAL SHAREHOLDER RETURN2 FY19 FY183 FY173 FY16 FY15 48% 53% 49% 46% 40% 1. 2. 3. Includes C1 cash cost, plus royalties, sustaining capital, general corporate and administration expense. Calculated per ounce sold TSR for period ending 30 June 2019 FY18 excludes Edna May, FY17 excludes Pajingo 2 Evolution Mining Limited Annual Report 2019 FY19 highlights (continued) Sustainable long-life asset portfolio Innovative culture GROUP AVERAGE ORE RESERVE LIFE ~10YEARS MINERAL RESOURCES 480KOZ TOTAL 14.73MOZ ORE RESERVES 410KOZ TOTAL 7.46MOZ SIGNIFICANT INVESTMENT IN COWAL TO EXTEND MINE LIFE AND INCREASE PRODUCTION TO ABOVE 300KOZPA CONTRIBUTION TO AUSTRALIAN ECONOMY A$1.28B FAST FIRST AND EARLY ADOPTER OF NEW TECHNOLOGIES DRIVING ASSET OPTIMISATION TO IMPROVE SAFETY AND EFFECIENCY 9 SHARED VALUE PROJECTS Continuing to deliver MROR growth Continuing to increase returns to shareholders 14.01 5.0 8.16 5.85 5.0 2.76 2.24 14.18 14.24 7.19 7.19 6.99 7.05 14.73 7.27 7.46 2 21 2 43 1 7 3 87 5 171 9.5 7.5 298 459 DEC 14 DEC 15 DEC 16 DEC 17 DEC 18 FY13 FY14 FY15 FY16 FY17 FY18 FY19 ORE RESERVES (Moz) MINERAL RESOURCES (Moz) CULMINATING DIVIDENDS DECLARED A$M (PRE-DRP) CENTS PER SHARE See website for details on Mineral Resources and Ore Reserves at (MROR) December 2018 The FY19 dividend was paid on 27 September 2019 3 Evolution Mining Limited Annual Report 2019Executive Chairman’s Report Inspired people creating Australia’s premier gold company On behalf of the Board of Directors of Evolution Mining Limited, I am proud to present you with the Company’s 2019 Annual Report. This incorporates our annual Sustainability Report which supports our objective to deliver long-term stakeholder value through safe, low-cost gold production in an environmentally and socially responsible manner. I am pleased to report that we delivered another strong performance from our quality portfolio of assets in the 2019 Financial Year. Evolution was formed in 2011 at a time when nearly three quarters of Australia’s annual gold production was owned by foreign operators. From the very beginning we developed a clear and consistent strategy to capitalise on what we felt would be a transformational period in the Australian gold industry. We set out to build and upgrade the quality of our asset portfolio and become a globally relevant, mid-tier Australian gold company that prospers through the cycle. In the years that followed we had the courage to act countercyclically to acquire great assets from offshore companies which found themselves divesting mines in Australia to repair their balance sheets. Through focus and commitment, we have added significant value to these operations which now cornerstone our portfolio. Today we are a very different company, but our vision and strategy has not changed. In FY19 we produced 753,001 ounces of gold at an All-in Sustaining Cost (AISC) of A$924 per ounce (US$661/oz). This ranks Evolution as one of the lowest cost gold producers in the world. No amount of financial or operational success is worth anything if we can’t keep our people safe. In FY19 the Total Recordable Injury Frequency (TRIF) rose to 8.3 (30 June 2018: 5.5). We are disappointed with this performance and people across all of our sites and offices have refocused their efforts on embedding behavioural safety initiatives to drive improvements. On a positive note, we have seen an improvement in the reporting culture, a reduction in the severity of injuries, and improved responsiveness to investigating significant incidents and implementing corrective actions. With the Australian dollar gold price trading around record highs, there is no doubt that it’s a fantastic time to be an Australian gold producer. But if history is any guide, we are entering a challenging period if we wish to remain a credible and margin focused business. As has been the case in past cycles, we are already seeing signs of cost inflation creeping back into the industry. At Evolution we dare to be different. We cannot use industry headwinds as an excuse and concede higher costs are inevitable. The vast majority of our cost base is within our control, and we must continue to be laser focused on finding innovative ways to reduce or at least maintain our low-cost base. 4 Evolution Mining Limited Annual Report 2019 During the last five years we have generated over A$1.5 billion in free cash flow which has enabled us to repay A$910.0 million of debt, return A$345.0 million in dividends to our shareholders, and grow our cash balance by over A$300.0 million. This was all achieved with Mungari and Cowal being in the portfolio for around four years and Ernest Henry’s contribution has been for less than three years. This was also with a weighted average gold price of A$1,638 per ounce which is substantially below the current spot price. Our Mineral Resources and Ore Reserves are perhaps the best gauge of the sustainability of this cash generation. In FY19 we were again successful at adding to resources and reserves after allowing for mining depletion. Over the last five years our discovery budget has grown from A$20.0 million to more than A$80.0 million, our average reserve life has increased from five years to ten years, and reserves per share have increased by 42%. It’s important to note that we use a very conservative A$1,350 per ounce to estimate Ore Reserves and A$1,800 per ounce to estimate Mineral Resources. In 2019 Evolution reported a record statutory net profit of A$218.2 million. This was achieved on the back of operating mine cash flow of A$771.5 million, net mine cash flow of A$497.8 million, and Group free cash flow of A$291.6 million. These continued strong results moved the balance sheet to a net cash position and allowed us to further increase the final dividend declared in August 2019 by 50% to 6 cents per share fully franked. Our portfolio of assets again demonstrated the benefits of diversification, delivering another consistent operational performance. We continue to focus on the transformation and effectiveness of our business with our innovation pipeline delivering a number of projects into operating phase including the high intensity grinding mill at Cracow, the Float Tails Leach plant at Cowal and tele-remote drilling at Mt Rawdon. Cowal continued to deliver reliable, low-cost production with 251,500 ounces of gold produced at an AISC of A$995 per ounce. Mt Carlton also had another strong year with production of 106,646 ounces at an AISC of A$737 per ounce. Ernest Henry continued to be an impressive contributor to the portfolio, producing 98,689 ounces of gold at an AISC of A$(539) per ounce to generate net mine cash flow of A$222.2 million. We continue to invest capital in projects that improve our business and generate an appropriate return on our shareholders’ funds. In FY19 capital expenditure totalled Executive Chairman’s Report (continued) and we want to make every person’s time at Evolution a highlight of their career. 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. In particular, I would like to highlight the contribution from Aaron Colleran, who left Evolution during the year. As VP Business Development and Investor Relations Aaron played a very important role in the establishment and development of Evolution, was a key member of the Leadership team, and was instrumental in positioning Evolution’s portfolio as one of the lowest cost producers in the world. I would also like to thank Graham Freestone who is stepping down from the Board at the end of this year. Graham has been a member of the Board since the Company’s formation in 2011 and has made a significant contribution to Evolution’s growth over the years. My sincere thanks go to both Aaron and Graham. Evolution remains focused on prioritising margins over production growth and is forecasting Group gold production in FY20 of 725,000 – 775,000 ounces at an AISC in the range of A$890/oz – A$940/oz. Evolution has a strong platform of high-quality assets with an average reserve life of approximately ten 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 from the current gold price environment and through the cycle. Yours faithfully JAKE KLEIN EXECUTIVE CHAIRMAN A$273.6 million of which A$180.5 million was major capital. The main major capital projects included the Cowal Stage H development, Float Tails Leach and E46 land acquisition costs; underground mine development at Cracow, Mt Carlton and Mungari; and capital waste stripping at Mt Carlton and Mt Rawdon. In the current environment we believe focusing on organic growth opportunities within our business and earlier stage opportunities presents a tremendous opportunity to create shareholder value. Since Glen Masterman joined Evolution three years ago to head our Discovery team, he has been building out our discovery strategy, defining our strengths and targets, assembling a fantastic team and building momentum in this critical area. We currently have three earlier stage joint ventures and a number of others in the pipeline. We have committed to spend A$80.0 – A$105.0 million on discovery in FY20 which is almost double what we spent in FY19 and multiples of any previous year. Drilling at Cowal, Mungari and across our Greenfields projects are expected to consume the lion’s share of the FY20 Discovery budget. Mining is often portrayed negatively in many corners of the mainstream media. As an industry we must get better at articulating the enormous contribution our industry has made to Australia’s past economic prosperity and the importance of our sector to its future. At Evolution alone, in only the 12 months in FY19, we contributed around A$1.28 billion dollars to the Australian economy and provided much needed jobs in our country’s regional areas. Importantly, we have nine shared value projects underway which are designed to create a tangible, sustainable legacy in our communities beyond the life of the mine. The communities in which we operate and our employees are potentially our most powerful advocates. We need to continually work to demonstrate that we are worthy of their support and trust. Across our entire business our people continued to work incredibly hard during FY19 and I would like to thank each and every Evolution employee and contractor for their contribution. Our people are our most important asset At Evolution we dare to be different 5 Evolution Mining Limited Annual Report 2019Sustainability Report 6 Evolution Mining Limited Annual Report 2019 7 Evolution Mining Limited Annual Report 2019 Sustainability Report 2019 achievements SAFETY ■■ IMPROVEMENT in reporting culture ■■ REDUCTION in severity of incidents ■■ HSE SYSTEM and Critical Control verification audits conducted at each asset ■■ ZERO FATALITIES DIVERSITY ■■ 50% FEMALE graduate INTAKE (30% target) ■■ 39% FEMALE SUMMER VACATION interns (25% target) ■■ 14.7% FEMALE WORKFORCE ■■ Enhanced flexible work arrangements offering and helping parents return to work ■■ 4.8% of our employees identify as ABORIGINAL OR TORRES STRAIT ISLANDER ENVIRONMENTAL ■■ Zero catastrophic or major environmental incidents ■■ Conducted 12 internal environmental network meetings ■■ Four new Environmental Enhancement projects underway SOCIAL RESPONSIBILITY ■■ Four new SHARED VALUE PROJECTS ■■ A$1.28B contributed to the Australian economy ■■ A$92.3M in direct spend with local organisations ■■ 54% local employment across our operations CONTRIBUTION TO THE AUSTRALIAN ECONOMY A$1.28B GOVERNANCE ■■ Developed and approved new Sustainability Objective, Policy and Performance Standards ■■ Conducted 24 Tailings Storage Facility Governance meetings over five sites and Group office Our second Sustainability Report encompasses Evolution’s sustainability performance for the financial year ending 30 June 2019 (FY19). It covers our mines in New South Wales, Western Australia, Queensland and various exploration activities. We do not report on our partnership project Ernest Henry which we only have a financial stake in and is run by our joint venture partner Glencore. Please see our website and accompanying Annual Report for more information about our Company activities. 8 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued) Our business Our vision Inspired people creating Australia’s premier gold company – a sustainable business that prospers through the cycle. Our corporate strategy ■■ A portfolio of six to eight assets generating superior returns with an average mine life of at least 10 years ■■ Build a reputation for sustainability, reliability and transparency ■■ Embed financial discipline across the business ■■ An active pipeline of quality exploration and development projects ■■ Open to all quality gold, silver and copper-gold value accretive investments Our values Our values guide our behaviours and decisions in the workplace every day: SAFETY EXCELLENCE THINK BEFORE WE ACT, EVERY JOB, EVERY DAY. WE TAKE PRIDE IN OUR WORK, DELIVER OUR BEST AND ALWAYS STRIVE TO IMPROVE. ACCOUNTABILITY RESPECT IF IT IS MY RESPONSIBILITY, I OWN IT – GOOD OR BAD. WE TRUST EACH OTHER, ACT HONESTLY AND CONSIDER EACH OTHER’S OPINION. 9 Evolution Mining Limited Annual Report 2019Evolution supply chain Contractors and suppliers are a crucial part of our business and we rely on them to ensure that we meet our overall operating strategy and maximise efficiencies. Our supply chain includes but is not limited to: Exploration & discovery ■■ Drilling contractors ■■ Surveying ■■ Geology and geophysical contractors ■■ Earthmoving contractors ■■ Analytical laboratories ■■ Environmental and water consultants Support services ■■ Camp management services ■■ PPE and PPC ■■ Power, communication and IT services ■■ Medical, health and safety services ■■ Insurance ■■ Labour supply ■■ Employee benefits ■■ Water and waste management Mining ■■ Underground contractors ■■ Fuel, oil and tyre supply ■■ Cement supply ■■ Explosives supply ■■ Blasting software and consultants ■■ Mining communications ■■ Fleet, maintenance, parts and equipment Processing ■■ Shutdown contractors ■■ Lab services ■■ Supply of grinding media and ■■ Civil contractors flocculants ■■ Chemical supply Transportation ■■ Freight services ■■ Haulage services ■■ Port services ■■ Fuel and gas supply ■■ Stevedoring ■■ Shipping 10 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Sustainability Report (continued) The Executive Chairman on sustainability at Evolution Welcome to Evolution Mining’s FY19 Sustainability Report. This is the second year we have released a dedicated report outlining the efforts of our people to ensure our business has a sustainable future for our stakeholders. Evolution continues to deliver measurable value for our business and the communities in which we operate by furthering our objective of delivering long-term stakeholder value through safe, low-cost gold production in an environmentally and socially responsible manner. I am proud that our higher levels of transparency have been recognised with Evolution included in this year’s Dow Jones Sustainability Index Australia. This reflects our commitment to improve Evolution’s performance and reporting on topics of safety, excellence in environmental stewardship, helping our communities thrive and developing our people. This report encapsulates our progress on the most material aspects of these key sustainability areas, with additional detailed information available on our website. Essential to the sustainability of our business is the safety of our people. We have built a culture that emphasises doing the right thing because people want to, not because they have to. Our ultimate goal is for Evolution to have zero injuries with our people always going home safely to their families. Initiatives this year contributing to this goal include improved reporting culture, a reduction in severity of incidents and the faster completion of significant incident investigations and corrective actions. Evolution made a significant A$1.28 billion contribution to the Australian economy through our activities. We are particularly proud of our A$92.3 million contribution to regional businesses and organisations in the communities across Queensland, New South Wales and Western Australia where we operate. Across our operations we source 54% of our employees from local communities, making Evolution and its people a critical part of these regional centres. We are focused on creating more opportunities for female participation in what has traditionally been a male dominated industry. Our attention has been on increasing female participation rates in our graduate and vacation programs and ensuring we have pathways to strong diversity in the next generation of miners. We are working hard to effectively manage water and energy, minimise waste and to reduce our environmental footprint. We have mapped out our climate related risks to better understand potential long-term impacts to our business and communities. Evolution is proud of the progress we have made in FY19 and have laid the foundation for further transparency and policy development in FY20. I would like to acknowledge and thank all of our staff, contractors, and partners for their dedication and ongoing contribution to our sustainability efforts. 11 Evolution Mining Limited Annual Report 2019Sustainability governance updates in FY19 Sustainability objective and strategy The objective of our sustainability efforts is to deliver long-term stakeholder value through safe, low-cost gold production in an environmentally and socially responsible manner. We are developing a business-driven sustainability strategy and action-based reporting to guide our sustainability efforts over a five-year horizon to be endorsed by our Board of Directors. Integrating our strategy goals and targets within our day-to-day business allows us to realise value through greater clarity and purpose, uncovering opportunities for improvement and understanding how sustainability contributes to our success. In FY19 we continued to improve the transparency of our disclosures. This was recognised with admission to the Dow Jones Sustainability Index (DJSI) Australia which ranked Evolution in the top performing Australian mining companies for corporate sustainability in the annual assessment. Evolution joins only one other gold company recognised in this category. Our near-term strategy focuses on the following key areas: Sustainability Policy ■■ A safe and supportive workplace and improved safety culture ■■ Excellence in environmental stewardship and a risk- based approach to sustainability and climate change ■■ Helping our communities thrive beyond the life of our mines ■■ Developing effective teams aligned with our approach to diversity and inclusion In FY19 we developed a Sustainability Policy to deliver on our objective. This policy prescribes ten key focus areas that will ensure sustainability is embedded in our decision making at all levels of the organisation. The policy can be viewed at: https:/evolutionmining.com.au/env-sustain-policy The Evolution sustainability ecosystem OBJECTIVE POLICY PERFORMANCE STANDARDS SAFETY STANDARDS HEALTH AND WELLBEING STANDARDS ENVIRONMENTAL STANDARDS SOCIAL RESPONSIBILITY STANDARDS 12 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Sustainability Report (continued) United Nations’ Sustainable Development Goals Our Sustainability Policy is aligned to the United Nations’ Sustainable Development Goals (SDGs), in recognising the role business plays in providing economic growth which underpins health, social, employment and education benefits. We believe the SDGs are a key inspiration for the future prosperity of our stakeholders and have linked our Sustainability Policy to eight different SDGs. GOOD HEALTH AND WELL-BEING QUALITY EDUCATION CLEAN WATER AND SANITATION GENDER EQUALITY NO POVERTY ZERO HUNGER Evolution Policy SDG number & name Specific SDG NO POVERTY ZERO HUNGER Foster a safe, diverse QUALITY EDUCATION and inclusive workplace DECENT WORK AND ECONOMIC GROWTH GOOD HEALTH AND WELL-BEING AFFORDABLE AND CLEAN ENERGY GENDER EQUALITY INDUSTRY, INNOVATION AND INFRASTRUCTURE Goal 5: CLEAN WATER AND SANITATION Gender equality REDUCED INEQUALITIES SUSTAINABLE CITIES AND COMMUNITIES 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic and public life RESPONSIBLE CONSUMPTION AND PRODUCTION NO POVERTY AFFORDABLE AND CLEAN ENERGY ZERO HUNGER AFFORDABLE AND CLEAN ENERGY ACTION CLIMATE DECENT WORK AND ECONOMIC GROWTH CLIMATE ACTION LIFE BELOW WATER AFFORDABLE AND CLEAN ENERGY DECENT WORK AND ECONOMIC GROWTH CLIMATE ACTION NO POVERTY LIFE BELOW WATER ZERO HUNGER INDUSTRY, INNOVATION AND INFRASTRUCTURE CLIMATE ACTION REDUCED INEQUALITIES Demonstrate robust LIFE BELOW WATER risk management NO POVERTY and environmental stewardship LIFE ON LAND PEACE, JUSTICE AND STRONG INSTITUTIONS Are an employer of AFFORDABLE AND CLEAN ENERGY choice, attracting the QUALITY EDUCATION most talented people GOOD HEALTH AND WELL-BEING PARTNERSHIPS FOR THE GOALS DECENT WORK AND ECONOMIC GROWTH GENDER EQUALITY SUSTAINABLE CITIES AND COMMUNITIES LIFE ON LAND ZERO HUNGER RESPONSIBLE CONSUMPTION Goal 15: PEACE, JUSTICE AND PRODUCTION AND STRONG Life on land GOOD HEALTH INSTITUTIONS AND WELL-BEING PARTNERSHIPS FOR THE GOALS QUALITY EDUCATION 15.3 By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land degradation-neutral world CLEAN WATER AND SANITATION GENDER EQUALITY Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org Goal 8: REDUCED INEQUALITIES Decent work and economic growth INDUSTRY, INNOVATION AND INFRASTRUCTURE CLEAN WATER AND SANITATION | TheGlobalGoals@trollback.com | +1.212.529.1010 SUSTAINABLE CITIES AND COMMUNITIES RESPONSIBLE CONSUMPTION AND PRODUCTION 8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org | TheGlobalGoals@trollback.com | +1.212.529.1010 LIFE BELOW WATER SUSTAINABLE CITIES AND COMMUNITIES CLEAN WATER AND SANITATION PARTNERSHIPS FOR THE GOALS RESPONSIBLE CONSUMPTION QUALITY AND PRODUCTION EDUCATION LIFE Goal 11: ON LAND RESPONSIBLE CONSUMPTION Sustainable cities AND PRODUCTION and communities PEACE, JUSTICE AND STRONG INSTITUTIONS PARTNERSHIPS FOR THE GOALS 11.4 Strengthen efforts to protect and safeguard the world’s cultural and natural heritage Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org | TheGlobalGoals@trollback.com | +1.212.529.1010 Goal 12: Responsible GENDER EQUALITY consumption and production CLEAN WATER AND SANITATION 12.B Develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs and promotes local culture and products Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org REDUCED INEQUALITIES ZERO HUNGER QUALITY EDUCATION | TheGlobalGoals@trollback.com | +1.212.529.1010 Goal 10: SUSTAINABLE CITIES AND COMMUNITIES Reduced GOOD HEALTH AND WELL-BEING GENDER inequalities EQUALITY RESPONSIBLE CONSUMPTION QUALITY AND PRODUCTION EDUCATION CLEAN WATER AND SANITATION 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status CLEAN WATER AND SANITATION GENDER EQUALITY | TheGlobalGoals@trollback.com | +1.212.529.1010 PEACE, JUSTICE AND STRONG DECENT WORK AND INSTITUTIONS ECONOMIC GROWTH REDUCED INEQUALITIES QUALITY EDUCATION PARTNERSHIPS FOR THE GOALS Goal 8: REDUCED INDUSTRY, INNOVATION INEQUALITIES AND INFRASTRUCTURE Decent work and RESPONSIBLE SUSTAINABLE CITIES CONSUMPTION AND COMMUNITIES CLEAN WATER GENDER economic growth AND PRODUCTION AND SANITATION EQUALITY SUSTAINABLE CITIES AND COMMUNITIES RESPONSIBLE CONSUMPTION AND PRODUCTION 8.7 Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms LIFE BELOW WATER PEACE, JUSTICE AND STRONG REDUCED INSTITUTIONS INEQUALITIES Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org | TheGlobalGoals@trollback.com | +1.212.529.1010 LIFE ON LAND Goal 16: PARTNERSHIPS FOR THE GOALS Peace, justice and SUSTAINABLE CITIES AND COMMUNITIES strong institutions PEACE, JUSTICE AND STRONG INSTITUTIONS RESPONSIBLE CONSUMPTION AND PRODUCTION PARTNERSHIPS FOR THE GOALS 16.B Promote and enforce non-discriminatory laws and policies for sustainable development PEACE, JUSTICE AND STRONG GOOD HEALTH INSTITUTIONS AND WELL-BEING Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org | TheGlobalGoals@trollback.com | +1.212.529.1010 Goal 16: PARTNERSHIPS FOR THE GOALS Peace, justice and GENDER QUALITY EQUALITY EDUCATION strong institutions Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org | TheGlobalGoals@trollback.com | +1.212.529.1010 16.3 Promote the rule of law at the national and international levels and ensure equal access to justice for all CLEAN WATER AND SANITATION Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org INDUSTRY, INNOVATION AND INFRASTRUCTURE | TheGlobalGoals@trollback.com | +1.212.529.1010 SUSTAINABLE CITIES AND COMMUNITIES Goal 9: REDUCED INEQUALITIES Industry, innovation and infrastructure RESPONSIBLE CONSUMPTION AND PRODUCTION 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities DECENT WORK AND ECONOMIC GROWTH GOOD HEALTH AND WELL-BEING INDUSTRY, INNOVATION AND INFRASTRUCTURE QUALITY EDUCATION CLIMATE Contribute positively ACTION REDUCED INEQUALITIES to local, regional and GENDER EQUALITY national sustainability efforts PEACE, JUSTICE AND STRONG SUSTAINABLE CITIES INSTITUTIONS AND COMMUNITIES GOOD HEALTH AND WELL-BEING LIFE Protect and enhance ON LAND REDUCED INEQUALITIES our reputation as a ZERO HUNGER trusted partner and provide sustainable community benefits PEACE, JUSTICE AND STRONG DECENT WORK AND INSTITUTIONS ECONOMIC GROWTH PARTNERSHIPS Advance outcomes FOR THE GOALS INDUSTRY, INNOVATION AND INFRASTRUCTURE for Indigenous peoples NO POVERTY GOOD HEALTH ZERO and protecting cultural AND WELL-BEING HUNGER heritage LIFE BELOW WATER INDUSTRY, INNOVATION AND INFRASTRUCTURE NO POVERTY LIFE ON LAND AFFORDABLE AND CLEAN ENERGY NO POVERTY CLIMATE ACTION LIFE BELOW WATER Developed in collaboration with For queries on usage, contact: dpicampaigns@un.org LIFE ON LAND Respect the human AFFORDABLE AND CLEAN ENERGY rights of all our INDUSTRY, INNOVATION DECENT WORK AND AND INFRASTRUCTURE ECONOMIC GROWTH GOOD HEALTH ZERO stakeholders AND WELL-BEING HUNGER AFFORDABLE AND CLEAN ENERGY NO POVERTY CLIMATE ACTION AFFORDABLE AND CLEAN ENERGY CLIMATE ACTION Be transparent at all LIFE LIFE ON LAND BELOW WATER levels of Corporate INDUSTRY, INNOVATION DECENT WORK AND AND INFRASTRUCTURE ECONOMIC GROWTH Governance and comply with applicable laws and regulations CLIMATE ACTION Operate at the highest LIFE ON LAND standards of financial ZERO HUNGER and ethical behaviour LIFE BELOW WATER NO POVERTY Foster an innovative AFFORDABLE AND CLEAN ENERGY culture relentlessly driving operational excellence DECENT WORK AND ECONOMIC GROWTH CLIMATE ACTION LIFE BELOW WATER LIFE ON LAND PEACE, JUSTICE AND STRONG INSTITUTIONS PARTNERSHIPS FOR THE GOALS 13 Developed in collaboration with | TheGlobalGoals@trollback.com | +1.212.529.1010 For queries on usage, contact: dpicampaigns@un.org Evolution Mining Limited Annual Report 2019Sustainability Performance Standards In FY19 we developed a set of Sustainability Performance Standards that support Evolution’s Sustainability Policy by prescribing the minimum requirements that every Evolution asset (operations, exploration projects and offices) must meet to manage threats associated with specific activities or tasks. Equally we seek to identify opportunities that have the potential to drive value creation for both Evolution and the communities in which we operate. The standards prescribe ‘what’ each asset must do, then each asset will determine ‘how’ they will meet or exceed the standard. Each asset will be conducting a gap analysis over the first six months of FY20 and the expectation is that by the end of FY20 we will be 95% compliant with all Sustainability Standards. A monthly steering committee will review progress, raise any issues and highlight the wins along the way. The full standards can be found on our website in the Governance section: https://evolutionmining. com.au/corporate-governance/. We will report progress in our FY20 Sustainability Report. Reporting what matters to our stakeholders We believe that trusting and reciprocal relationships are the foundation for creating shared value outcomes and ensuring we consistently earn our social licence to operate. Maintaining high quality stakeholder relationships ensures mutually beneficial outcomes are driven throughout all of our sustainability initiatives and minimises preventable costs and delays. Every Evolution operation and exploration site has a targeted plan for partnering with local and regional stakeholders to generate shared value. Each plan is developed following a review of: ■■ Key social responsibility issues and opportunities ■■ Analysis of the local stakeholder context ■■ Support of strategic operational and exploration objectives for that site and for Evolution ■■ The life of mine ■■ What our stakeholders are telling us Our central method for collecting feedback from stakeholders is our biennial Stakeholder Perception Survey. To ensure this is a robust and comprehensive feedback mechanism, we partner with Deloitte to perform: ■■ 100 in-depth telephone interviews with stakeholders across our five mine sites ■■ 300 public opinion surveys conducted with 60 randomly selected residents in close proximity of our five operations 14 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Sustainability Report (continued) Evolution’s stakeholder mix SHAREHOLDERS GENERAL PUBLIC ANALYSTS CIVIL SOCIETY EMPLOYEES MEDIA EDUCATION AND RESEARCH SUPPLIERS AND CONTRACTORS LOCAL COMMUNITIES NGOs TRADITIONAL CUSTODIANS LOCAL AND REGIONAL BUSINESS GOVERNMENT AND REGULATORS BUSINESS AND PROFESSIONAL ORGANISATIONS INDUSTRY BODIES 15 Evolution Mining Limited Annual Report 2019This report is centred on economic, social and environmental topics that were identified as material to our stakeholders and business through a materiality workshop and builds on disclosures in our FY18 Sustainability Report. The material topics identified were: Material topics Heath, safety and wellbeing Local communities Climate change Traditional custodians Procurement practices Effluents and waste Economic performance Water Biodiversity Energy use and emissions Mine closure and rehabilitation Employment Page Number(s) 18-20, 37 32-35, 39-40 26 35, 38 10, 39-40 29, 39 32, 40 26-39 28 26, 38 29 21-23, 37-38 Benchmarking and memberships Evolution participates in benchmarking assessments including indices such as the Dow Jones Sustainability Index assessment and memberships with key bodies. Together with our commitments, partnerships and stakeholder feedback, these assessments and memberships allow us to track performance against relevant standards and peers to ensure continual improvement. Corporate Governance Evolution supports the intent of the ASX Corporate Governance Council’s Principles and Recommendations (4th Edition) and meets specific requirements unless disclosed otherwise. Our full Corporate Governance Statement is available in the Corporate Governance section of our website at http://evolutionmining.com.au/corporate- governance Risk management The Group manages risk 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 & Sustainability Committee throughout the year. 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 area of Sustainability. 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. Supporting documents: Risk and Sustainability Committee Charter: https://evolutionmining.com.au/risk-sustain-charter/ Risk Management Policy https://evolutionmining.com.au/risk-management-policy/ Sustainability Performance Standards https://evolutionmining.com.au/wp-content/ uploads/2019/08/20190715-GRP-STD-Sustainability- Performance-Standards.pdf BOARD OF DIRECTORS EXECUTIVE CHAIRMAN BOARD SUB-COMMITTEES NOMINATIONS AND REMUNERATION AUDIT RISKS AND SUSTAINABILITY 16 Evolution Mining Limited Annual Report 2019 GROUP LEADERSHIP TEAM Sustainability Report (continued)Our People 17 Evolution Mining Limited Annual Report 2019Our People Safety Evolution is committed to providing a healthy and safe workplace and target an injury free work environment for all personnel. Evolution is committed to high standards of safety leadership for employees, contractors and the communities in which we operate. Mining activities by their nature have the potential to impact the safety of people and all risks must be identified, evaluated and managed to mitigate all identified actual and potential adverse impacts so far as reasonably practical. Our safety target is to achieve an injury and occupational disease-free workplace by ensuring hazards are identified and managed at the source, all safety incidents are thoroughly investigated, learnings shared, and corrective actions implemented. The Safety Performance Standards support Evolution’s Sustainability Policy by prescribing the minimum requirements for managing the risks associated with specific activities or tasks that have the potential to adversely affect the safety of employees, business partners and communities affected by business operations. In FY19 the total recordable injury frequency (TRIF) was 8.31, above our target of 4.95. This is an increase from 5.49 in FY18 and against our trend of year on year improvement. We acknowledge this decline in our safety performance and all sites have refocused their efforts on embedding behavioural safety initiates to drive improvements. We believe that every injury is preventable and that no task is so important that it cannot be done safely. In FY19 two external critical control risk assurance audits were conducted at each site with results presented to the leadership team. At the end of the financial year all sites achieved a satisfactory rating. All priority one critical control audit actions were closed by their due date. “We absolutely believe that every injury can be prevented and will use all resources at our disposal to make sure our people get home safely to their families”– Bob Fulker, Evolution COO FY19 highlights FY19 safety achievements ■■ 95 daily safety interactions ■■ 486 daily Take 5 pre-start safety checks ■■ Hosted our fifth Evolution Mine Rescue Challenge at Cracow involving the community and state emergency agencies ■■ Revision of our Health and Safety Performance Standards ■■ Facilitated Crisis Management and emergency exercises at site and in our group office ■■ First place award for Mungari team who won the breathing apparatus skills event at the Chamber of Minerals and Energy Underground Mine Rescue competition FY20 focus In FY20 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: ■■ Total Recordable Injury Frequency less than 5.5 ■■ All risk register actions completion for top five risks for each site Supporting documents: Sustainability Policy https://evolutionmining.com.au/env-sustain-policy/ Safety Performance Standards https://evolutionmining.com.au/wp-content/ uploads/2019/08/20190715-GRP-STD-Sustainability- Performance-Standards.pdf Sustainability Data Safety data table p 37 18 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Our People Sustainability Report (continued) Emergency response We believe in always using our resources to support our communities through significant incidents or threatening situations. Evolution continues to build mine rescue skills, capability and resources across the Group. We have five Emergency Response Teams (ERT) with a total of 132 members. Our teams have played an important role in supporting our operations and nearby communities. Our Crisis Management Plan outlines the roles, responsibilities and processes our corporate crisis management team would follow in the event of a crisis. Each of our sites have Emergency Response Plans that outline the response to be initiated in the event of an onsite emergency. Over the last 12 months, our ERT personnel were first responders to 14 offsite emergency incidents that occurred within our local communities. These incidents included motor vehicle accidents, fires, farm incidents and medical emergencies. Evolution also provided a team to assist with flood recovery in Townsville in February 2019. A Memorandum of Understanding between Evolution and the New South Wales State Emergency Service (SES) is in place which has assisted with flood rescue operations in the Sydney CBD and storms and flash flooding in Cootamundra. Our teams attended the Victorian Mine Rescue Competition and W.A. Chamber of Minerals and Energy Underground Mine Rescue competition, placing first in the breathing apparatus skills event. We held our fifth Group Mine Rescue Challenge at Cracow in Queensland. 19 Evolution Mining Limited Annual Report 2019Our People Health and wellbeing We believe that our people’s mental wellbeing is equally as important as their physical wellbeing. That’s why we have a comprehensive health and wellbeing program to look after our people and promote positive mental health. FY19 highlights ■■ 7,568 one-on-one confidential consultations with onsite physiologists to support our people proactively manage their health and wellbeing ■■ 1,355 participants have attended at least once, representing approximately 90% of employees. 1,030 have attended at least twice – representing approximately 70% of employees ■■ Key reasons for attending consults included ■■ Weight loss ■■ Preventative musculoskeletal management ■■ Heart disease and diabetes prevention ■■ Improving sleep ■■ Managing fatigue ■■ Over the long term we have seen a reduction in individuals in high risk categories for a number of measures including: ■■ Cholesterol – 79% ■■ Blood glucose – 70% ■■ Body mass index – 32% ■■ Diastolic blood pressure – 76% ■■ Employee Assistance Program (EAP) available to all employees and immediate family members ■■ Business wide communications on R U OK? ■■ Additional onsite activities included 149 warm up for work sessions, 3,059 Epworth sleep assessments, 81 Fatigue and Manual Handling education sessions as well as 359 monthly health education at pre-starts and toolboxes Supporting documents: Sustainability Policy https://evolutionmining.com.au/env-sustain-policy/ Health and Wellbeing Performance Standards https://evolutionmining.com.au/wp-content/ uploads/2019/08/20190715-GRP-STD-Sustainability- Performance-Standards.pdf 90% – Voluntary participation in health and wellbeing program 20 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Our People Sustainability Report (continued) Highlight of our people’s careers We believe working at Evolution should be the highlight of our people’s career and remain confident we have the right group of people with a strong sense of purpose who are focused on the continued delivery of our strategy. We have continued to build a strong culture based on our values of Safety, Excellence, Accountability and Respect. Our values and supporting behaviours ensure we get the ’how’ right and guide how we work together every day. To understand how our culture is experienced by our people in real time, we have rolled out a monthly digital survey. This was launched across all sites and is accessible via any mobile device. 87% of our people have ‘had their say’ and initial feedback is very positive, with results highlighted below. Growing our people To promote a high achievement culture, we want to recognise our people’s efforts and reward the outcomes they deliver. This is achieved by setting performance and development goals linked to our annual business plans. This enables our people to recognise their personal contribution to the success of our business. We continued our commitment to developing our people and overdelivered on our 25% target by filling 33% of our internal vacancies from our existing workforce. This also ensures we retained skills, knowledge and expertise within our company. Pulse survey feedback (as at 30 June 2019 - 575 people) Building talent We developed independent Readiness and Development Centres for our senior leaders and held two Operational Management sessions focused on team purpose, unity and effectiveness. Our talent management strategy for the upcoming year is to increase the visibility of our high potential mid-level and frontline leader talent to strengthen our future pipeline for business-critical roles and continuity. 33% – of FY19 vacancies filled internally, a 65% increase from FY18 Focused leadership A project is in place to ensure we have the right people with the right skills, in the right roles at the right time, with the right level of support, process and systems. This enables effective and timely decision-making at all levels of Evolution. Engaging more than 130 of our leaders, we have now defined at each site what working at the right level means for our leaders, across levels and functions. SAFETY EXCELLENCE ACCOUNTABILITY RESPECT 80 73 R T RIGHT SUPP O 68 SAFETY EXCELLENCE ACCOUNTABILITY RESPECT 80 73 68 73 73 RIGHT PERSON RIGHT LEVEL RIGHT ROLE RIGHT SKILLS R I G H T P R O C E S S RIGHT SYST E M S 21 Evolution Mining Limited Annual Report 2019 Our People Aligned with Project Right Level, we also refreshed and simplified our leadership behaviours to increase clarity for easier engagement. ■■ Nine leadership behaviours reduced to five ■■ 54 leadership indicators reduced to 25 Evolution leadership behaviours BE YOUR BEST COMMUNICATE COACH AND DEVELOP COLLABORATE DELIVER RESULTS Developing our people Our graduate program We held quarterly Leadership Group development sessions and our bespoke middle management leadership program ‘Gold Plus’ was upgraded to create a more focused learning experience. In five years, over 130 leaders have graduated to go on to lead more trusting, empowered and accountable teams. Close to 60 of our frontline emerging leaders completed our ‘Silver’ program emphasising cross site and function participation. Participants are equipped to coach their teams to work effectively, safely and identify continuous improvement opportunities. We continued with our vacation and graduate programs to attract and develop mining talent. Across the two-year program we had 12 graduates across many disciplines who gained experience across multiple sites and worked with a variety of leaders. FY20 focus We are developing a new reporting system to give clarity on how many hours and how much value is being allocated to training our people and will report this in FY20. 22 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Our People Sustainability Report (continued) Creating a diverse and inclusive workplace We believe in growing a rich culture, diverse workforce and a work environment in which every employee is treated fairly, respected and has the opportunity to contribute to business success. Across our 1,365 people, we continued to develop our approach to diversity and inclusion. In FY19 we increased our female workforce representation to 14.7% and our Indigenous workforce representation to 4.8%. To increase diversity in FY19 we: ■■ Focused on increasing female participation in our pipeline programs. 50% of our graduates were female (30% target). 39% of vacation students were female (25% target) ■■ Doubled the number of female mentee opportunities through Women in Mining partners ■■ Held inaugural Women in Mining forum for female employees to network and receive professional development on career mobility FY20 focus Working with our Board and Leadership Team to update our Corporate Governance Statement, Diversity Policy and Code of Conduct In FY20. Return to work – flexible and local To support work-life integration, we offer flexibility in how hours are worked with adjusted start and finish times, altered rosters and compressed working weeks. We also offer part time and job share structures, and work from home arrangements. We are also piloting a local casual employment pool at our Mt Carlton operation to employ local residents in operator level roles. Employees are trained to step into leave replacements and vacancies to support site workforce planning, whilst providing employment opportunities for our local communities. Recognising and rewarding our great people Our ‘Act Like an Owner’ (ALO) program recognises people striving to go above and beyond in their job. ■■ This was our most successful year, with 131 new initiatives exceeding our target of 85 ■■ Winners were recognised at an ALO awards event which will be expanded in FY20 We are proud that employees share in Evolution’s success and have increased staff ownership by: ■■ Extending our Long Terms Incentive Plan (LTIP) to an additional 100 of our leaders ■■ Continuation of our Employee Share Scheme (ESS) into its fifth year and highest ever participation at 97% Innovating for now and into the future In FY19 we built new strategic partnerships to generate interest and enthusiasm for careers in Science, Technology, Engineering and Mathematics (STEM): ■■ Partnering with Queensland Minerals Energy Academy to lead hands-on careers workshops for school students. Six high school events were delivered reaching 78 students and 45 teachers ■■ Our inaugural Hackathon tackled site operational challenges. The winning team are now engaged as contractors to develop more solutions across our business Supporting documents: Sustainability Policy https://evolutionmining.com.au/env-sustain-policy/ Diversity Policy https://evolutionmining.com.au/diversity-inc-policy/ Sustainability Data Diversity data table p 37-38 Workplace Gender Equality information https://evolutionmining.com.au/wp-content/ uploads/2019/06/2019-WGEA-Public-Report.pdf 50% – FY19 female graduates (30% target) 39% – FY19 female summer vacation interns (25% target) 23 Evolution Mining Limited Annual Report 2019Environment 24 Evolution Mining Limited Annual Report 2019 Environment Sustainability Report (continued) We believe in leaving our environments in a better state than when we arrived and are committed to attaining an outstanding level of environmental performance in all our operations. Evolution incorporates environmental considerations into all areas of our business to effectively manage environmental impacts and risks. We have a Sustainability Policy that we expect our people and contractors to adhere to. We have a social responsibility to not only achieve all legislative compliance expectations but strive for leading practice and to meet the expectations of the communities we operate within and are part of. In FY19 we: Environmental performance standards Our Environmental Performance Standards consist of eight key business risk areas. All our sites and workplaces are required to meet the performance standards which are audited on a regular basis. Details of each performance standard are provided on our website https://evolutionmining.com.au/environment/ ■■ Developed and implemented eight Environmental Performance Standards to lift us to a higher standard of environmental performance 1. Air Quality 2. Biodiversity ■■ Instituted governance reviews for our Tailings Storage Facilities ■■ Developed and implemented quarterly environmental assurance reviews and integrating environmental considerations into our Life of Mine Plans across all sites ■■ Undertook periodic reviews to ensure that our environmental performance targets and objectives are being achieved 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. Our FY19 incidents can be found on page 38. “We operate in some magnificent areas of natural beauty and work very hard to protect, and even enhance, these and nearby areas where we can.” Simon Delander – Group General Manager - HSE and Risk 3. Rehabilitation and Mine Closure 4. Resource Efficiency and Emission Reduction 5. Tailings Storage Facilities 6. Waste 7. Waste Rock and Ore 8. Water Environmental data (water, air emissions and energy) reported from our operations is collated and verified by external environmental accountants Greenbase. Supporting documents: Sustainability Policy https://evolutionmining.com.au/env-sustain-policy/ Tailings Storage Facility Governance Policy https://evolutionmining.com.au/tailings-gov-policy/ Sustainability Performance Standards https://evolutionmining.com.au/wp-content/ uploads/2019/08/20190715-GRP-STD-Sustainability- Performance-Standards.pdf Sustainability Data Environmental data table p 38 - 39 MAJOR OR CATASTROPHIC INCIDENTS FOR FY19 25 Evolution Mining Limited Annual Report 2019Climate related risk, emissions and energy Evolution acknowledges that climate related risk has the potential to impact our business and communities. Evolution is committed to understanding and proactively managing the impact of climate related risks to our business and our environment. This includes integrating financial, physical, regulatory, reputational, market, and climate related risks, as well as energy considerations, into our Life of Mine strategic planning and decision making. We will work to build the climate related risk resilience of our assets, our communities and our environment. We will implement sound risk management practices across all areas and activities in our business and apply Board level governance. Our Sustainability Principles include improving the disclosure of, and actively managing, climate related risks and opportunities, improving energy efficiency and the responsible management of water usage. Climate related risks have been identified as key risks on the Evolution Mining Risk Register which are regularly reviewed and monitored by the Risk and Sustainability Committee. We will transparently report emissions and energy consumption performance and disclose material climate related risks. The Company has completed a process to identify and assess climate related impacts to our business, with the main areas of focus in the near term to be improving energy efficiency and responsibly managing water use. Environment Water management We recognise the importance of water to our business and our communities. Evolution believes in taking a proactive approach to responsible water management. Our standards aspire to reduce the demand for new water and the overall requirement for water in our operations. In FY19 our total water withdrawn increased by 6%. This increase was in line with the cumulative total dry tonnes milled which also rose by 1%. Total water recycled and reused increased by 21% between FY18 and FY19. We use recycled water primarily to process ore and in other activities such as paste fill, irrigation, dust suppression and construction. Our water management performance standard ensures that our operations effectively manage water, including process water, stormwater, discharges and dewatering activities. As a minimum we comply with all relevant water licensing requirements set by Government and industry regulators. We utilise probabilistic site water balance models to predict water flow and requirements during droughts and stormwater flows. Our operations prepare for seasonal variations in water flow and maintain routine dewatering activities to satisfy water licence conditions. In addition, there are water management requirements associated with tailings and waste rock management designed to manage risks associated with unwanted events. Each of our operations separate clean water (rainfall runoff in non-disturbed areas) and potentially mine affected waters (rainfall runoff within the mining footprint). Waters which are captured within the mining footprint are reused in an effort to reduce the demand on our external supplies. The various streams of water have specific water management requirements. The performance standard guides operations to ensure that clean water is kept separate from contaminated water (a similar management strategy is used for other waste by-product streams). 26 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Environment Sustainability Report (continued) During 2018, Evolution commissioned a report covering its power procurement and the potential integration of renewable power options. This report was completed in early 2019 and we are currently reviewing localised solar options and large-scale project partnering opportunities. None of these projects are currently at formal agreement. As part of the process in assessing power requirements for new projects, the opportunities to incorporate renewable power options are undertaken. 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. controls, management practices and 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 ensure we are protective of human health and the environment. In FY19, Scope 1 emissions decreased by 2% and Scope 2 emissions decreased by 3%. Overall energy consumption decreased by 2% compared to FY18. The decreases in emissions and energy are largely due to a decrease in activity recorded at Cowal, Mt Rawdon and Mungari. We will be investigating opportunities to further reduce in FY20. See page 38 for emissions data. Ambient dust, noise, odour, and spill light impacts on our surrounds and are closely monitored at our operations. Protection of our local communities means that we operate above compliance in these areas within our community surroundings. We report our air emissions as per our legal and other requirements then communicate the outcomes in the various consultative forums for our operations. Air quality FY20 focus Our operations develop, implement, communicate and adhere to their air quality management plan. This includes developing and implementing strategies, operational In FY20 Evolution will be trialling a new air quality measurement program with enhanced technology at our Cowal site to monitor particulate matter in real-time. 27 Evolution Mining Limited Annual Report 2019Environment Biodiversity We acknowledge that the nature of our operations can have significant environmental impacts on the flora and fauna that we share the landscape with. 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 each of our operations. These plans are risk-based. The Management Plan for our Cowal site can be viewed on our website at https://evolutionmining.com.au/cowal/ under Environmental Management Plans. Adaptive strategies include the voluntary and prescribed biodiversity offset areas that are actively maintained for fire, pest and weed control at our operations. 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 Storage Facilities need to be operated and rehabilitated with due care for a range of potential issues. 28 Evolution Mining Limited Annual Report 2019 Our performance standards and governance process incorporate the International Council on Mining and Metals (ICMM) six key components of the Tailings Governance Framework. ■■ Accountabilities, Responsibilities and Competency; all sites are now equipped with a responsibility matrix ■■ Planning and Resourcing; Tailings life of mine project teams are in place at each level of the organisation ■■ Risk Management; considered a high priority risk for the organisation all sites have completed Principal Hazard Management Plans, Bowtie risk assessment and Critical Control Plans for each facility ■■ Emergency Preparedness and Response; Dam break studies have been completed for all active Tailings Storage Facilities ■■ Review and Assurance; tailings governance assurance meetings have been formally introduced during FY19 and will continue at each level of the organisation Regular inspections and audits ensure that 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. Sustainability Report (continued)Environment Sustainability Report (continued) 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. FY19 Ore processed: 14,221kt (dry tonnes) to produce 654,312oz Au, excluding Ernest Henry. Supporting documents Tailings Storage Facility Governance Policy https://evolutionmining.com.au/tailings-gov-policy/ Sustainability Performance Standards https://evolutionmining.com.au/wp-content/ uploads/2019/08/20190715-GRP-STD-Sustainability- Performance-Standards.pdf Waste rock management Waste rock is identified as the extracted mineral bearing ore that does not meet a site’s minimum concentration of mineral. This performance standard addresses the characterisation of waste rock, design and construction of waste rock disposal facilities, potential acid generation, storm-water controls, monitoring, rehabilitation and closure. The performance standard is applied as required based on each ore body and the surrounding waste rock. Each operation is generally quite different in terms of potential for acid mine drainage (AMD) and salinity impact on the surrounding environment. Operations maintain material balances for topsoil, waste rock types throughout the lifecycle of operations for rehabilitation closure criteria requirements. Where Potentially Acid Forming (PAF) waste rock is suspected or known to occur, the operation will place it inside and under Non-Acid Forming (NAF) covers. Progressive rehabilitation activities are conducted as areas of the waste disposal facility become available. Full rehabilitation of these areas is conducted as soon as practicable. FY19 waste rock produced: 37,501kt representing an 6% reduction on waste rock produced in FY18 (39,905kt). Waste management The on-site management of organic and industrial/ inorganic 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. 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. Generally, chemicals are consumed in process. Hydrocarbons in the form of dirty rags, crushed oil filters, used engine coolants or used bulk lubes are transferred off-site for industrial re-refining (for re-use) or conversion into energy. A site resource recovery strategy has been implemented at our Cracow project in central Queensland to reduce waste to landfill and enhance our custodianship of the environment. Effectiveness of the strategy is monitored using our environmental database system to capture and analyse the data collected. Initial data will be shared in FY20. Rehabilitation and closure management We acknowledge that we are only visitors in our communities and mining is a short-term land use. Our project planning cycle begins with 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 uses will be and what the site should look like when the operational areas are ready for relinquishment. Each of our sites has a closure plan in place which outlines the process to rehabilitate the site and performance criteria required before a tenement can be handed over to Government. These plans take into consideration both environmental and social impacts. Rehabilitation and land use management plans for our Cowal site can be found at https://evolutionmining.com.au/compliance/#cowalpart In addition to the post mining plans Evolution are actively seeking ways to ensure the land is economically, socially and environmentally sustainable at relinquishment in preparation for future land use. Initiatives include: ■■ Partnering with six other operators in the Kalgoorlie- Boulder region to support regional development including recreational and tourism. The project aims to add economic and environmental value and is then transferred to an external entity and ultimate relinquishment of mining tenure Our waste goals aim to reduce, recycle and reuse our resources occurring in our normal site waste management practices. ■■ Our Mt Rawdon site is working closely with CSIRO to develop a wetland project to provide a natural treatment of mine affected water that could be reused 29 Evolution Mining Limited Annual Report 2019Environmental assurance The Evolution Environmental Assurance Audit Program is undertaken by our corporate office and 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 so learnings can be shared across sites during site visits, during our monthly Environmental Professional Network teleconferences or 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, Evolution’s 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. Environment for irrigation purposes or released back to the natural environment. The CSIRO has developed a synthetic clay called ‘Virtual Curtain’ that reduces the number of contaminants in the water column by binding to the sediment, thus making it non-toxic ■■ Our Mt Carlton team has partnered with environmental specialists in refining quality control in the placement of waste rock as a final landform to ensure potentially problematic material is encapsulated in the most efficient manner for future land use ■■ At Cowal we rehabilitated 18.2 hectares of land in FY19. Rehabilitation was complete for waste rock emplacement which stabilised batter slopes with rock armour and provided a stable layer able to support long-term vegetation growth Environmental enhancement projects We believe in the power of partnerships, that’s why we like to contribute to projects that are relevant to our communities and leave a positive environmental impact. In FY19 we continued our program of implementing Environmental Enhancement projects with a primary purpose of improving or enhancing environmental values onsite or in nearby communities. We have eight Environmental Enhancement projects currently under way. The full list of detailed summaries and progress can be found on our website. We commenced a new partnership with NQ Dry Tropics to help threatened beach scrub communities inland from the Great Barrier Reef between Crystal Creek and Bowen. Key activities include removal of weeds, management of fuel loads, traditional owner engagement and community education. 20 Environmental Assurance Audits are carried throughout the year across our five sites 12 monthly Environmental Professional Network teleconference calls 30 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Social Responsibility 31 Evolution Mining Limited Annual Report 2019Social Responsibility We believe we have an obligation to create shared value for all our stakeholders. This is measured as much by the superior returns we deliver to our shareholders as by the positive legacies we leave in our communities and the people whose lives we enrich. Evolution seeks to deliver long-term benefits to local communities and other stakeholders through engagement and collaboration, and by understanding the social impacts of our activities, mitigating negative effects and achieving outcomes of mutual benefit. Building and maintaining strong, supportive relationships and partnerships with local people in the areas where we operate drives value creation for both Evolution and the community. Detailed highlights from our community initiatives as well as our Community Principles are detailed in our Annual Community Report which can be found on our website: https://evolutionmining.com.au/wp-content/ uploads/2019/04/Evolution-Community-Report-2018_ FINAL.pdf Our Socioeconomic contribution We make significant contribution to local, regional and national economies directly through the payment of taxes and royalties to governments, as well as to our workforce and suppliers. In FY19 we contributed A$1.28B to the Australian economy and approximately A$7.26B since Evolution formed in 2011. Economic contribution FY19 (A$M) Interest, A$15M Taxes, A$91M Dividends, A$127M Royalties, A$63M Wages, A$212M Goods and services, A$775M CONTRIBUTED INTO AUSTRALIAN ECONOMY A$1.28B Evolution economic contribution since inception (A$B) ECONOMIC CONTRIBUTION SINCE INCEPTION 7.26 5.98 4.71 A$7.26B 3.59 2.54 1.94 1.34 0.50 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 DIRECT SPEND WITH LOCAL ORGANISATIONS A$92.3M 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 “Building trusting relationships is important to us and we are committed to regularly listening to and engaging with our local communities in an honest, timely and transparent manner.” Anika McManus, Group Manager – External and Indigenous Relations 32 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Social Responsibility Sustainability Report (continued) Community investment We prioritise local procurement and local employment wherever possible, particularly for our local Indigenous communities. We are committed to sharing the economic benefits by investing in our communities and partnering to achieve meaningful outcomes that generate shared value. In addition to local sponsorships and donations, we collaborate on sustainable development projects that will continue to benefit the community long beyond the life of the mine. This was highlighted by our stakeholders as a high priority. Sustainability Projects go through a rigorous development and approval process. Each project is developed in partnership to ensure it delivers broad community benefits, addresses a specific community need, and is self-sustaining, i.e. it will continue to sustainably deliver benefits when Evolution steps away from supporting it. We also assess the project against a range of business and community value drivers and shape the project to enhance these outcomes. The value drivers were developed by Evolution’s Leadership Team, site General Managers and Group Community Relations. The project does not have to deliver all of these however, the more it delivers, the better. Sustainability Project Value Drivers Alignment with Evolution strategy and planning Health and safety outcomes Scalability Use of internal skills/assets Talent attraction, development and retention Long-term viability Reputation and social licence Compliance or stakeholder commitments Educational outcomes Stakeholder trust and support Community-led impact Local economic outcomes Innovation Alignment with government or strategic drivers Environmental outcomes Employee engagement Local capacity and partnerships Costs, efficiencies or ROI Mine dependency Community resilience Infrastructure capability Human rights Evolution is committed to respecting the human rights of all our stakeholders. This means we engage with employees, business partners, community groups and all other stakeholders in a manner that protects the basic rights and fundamental freedoms to which all human beings are entitled. It also means we must conduct appropriate risk-based due diligence on all relevant business partners in our supply chain to ensure those rights and freedoms are protected. In FY19 the Australian Government enacted the Modern Slavery Act 2018 under which Evolution will be reporting annually on the risks of modern slavery in our operations and supply chains. It also requires reporting on the action we have taken to assess and address those risks, and the effectiveness of our response. The term ’modern slavery’ refers to the worst forms of exploitation. Our inaugural Modern Slavery Statement, approved by our Board of Directors, will be published in H1 of FY21, reporting on the FY20 year. The steps we took in FY19 to prepare for the Modern Slavery legislation include: ■■ Including Modern Slavery within the Human Rights Social Responsibility Standard ■■ Ensuring Vendor compliance: 1. Discussed Modern Slavery expectations with prospective and current vendors 2. Updated standard contract clause to address Modern Slavery 3. Commenced development of a risk assessment to prioritise highest risk vendors 4. Commenced development of an assurance process for onshore and offshore vendors 5. Commenced development of vendor communication pack 6. Commenced development of pre-qualification of non-contract vendors (FY20 completion) ■■ Developed an education/communication pack to be rolled out across all Evolution assets and more broadly across wider stakeholder group (FY20 completion) ■■ Established a cross-functional working group for ■■ Discussed development of a remediation plan (FY20 planning, strategy and execution completion) “Evolution welcomes this legislation and the difference this can make towards addressing global slavery. We look forward to sharing our progress in FY20.” Gary Ward - Group Manager, Supply 33 Evolution Mining Limited Annual Report 2019Social Responsibility FY19: Sustainability Project highlights: UQ research partnership | Using gold for early cancer diagnosis Gold has a rich history in Australia and it also has a bright future. Researchers from the University of Queensland (UQ) have developed a breakthrough test using gold nanoparticles that can detect the presence of cancer cells anywhere in the human body. Evolution has committed to supporting this research through a three-year partnership and an offer to provide gold samples. This research will potentially enable early diagnosis for all cancer types. If cancer is caught early, survival rates can improve by up to 98 percent. Goldfields childcare centre | Out of school hours care Lack of affordable childcare is an ongoing issue in the W.A. Goldfields region. Reliable childcare is an essential service to encourage families to live in the region. It is also important for attracting and retaining Mungari’s 94% local employees. The City of Kalgoorlie-Boulder and the Chamber of Commerce and Industry identified childcare shortages as a key driver of the current labour shortage. When the Goldfields Childcare Centre received notice to vacate their rented premises, Evolution and other funding partners stepped in to support the opening of a new centre to enable them to continue their after school hours care program for 20 children (46 families) and expand their services by a further 20 places, enabling families on the waiting list to benefit. Indigenous business development Evolution has provided funding for an expert feasibility study of a potential business opportunity for Wiradjuri Condobolin Corporation (WCC) to develop a commercial plantation of native foods. This study will inform the feasibility of establishing the business and detail a plan to take the project forward. Australian Native Food and Botanicals (ANFAB) proposed the project and if the study shows the venture is viable, Evolution will continue to work with ANFAB, WCC and other potential stakeholders through the start-up phase of the business. 2019 North Queensland floods In February 2019 North Queensland experienced severe flooding and was declared a natural disaster zone. Evolution ERT personnel assisted affected employees and their many fellow community members whose homes and businesses had been damaged or destroyed. In addition to helping clean-up efforts, Evolution donated A$100,000 to GIVIT who support people impacted by natural disasters. Mt Perry tram car 2019 North Queensland floods UQ research partnership 34 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Social Responsibility Sustainability Report (continued) Local economic development projects Indigenous development projects Supporting the economic development of our local communities is a priority for Evolution and a key focus with our sustainability projects. Coolgardie’s Ben Prior Park and open-air mining museum In the centre of Coolgardie, on the main road, is an open-air living history collection with old gold mining equipment such as shaft winder wheels and a drilling rig used by early gold miners. It is a visible and convenient place to stop for the 400,000 vehicles that travel through Coolgardie every year. Evolution has partnered with the Shire of Coolgardie, the Kambalda Men’s Shed and Coolgardie Men’s Shed to upgrade this tourism rest stop and local park to encourage tourists to stay and contribute to the Coolgardie economy. Mt Perry tram car Evolution has partnered with the Mt Perry Community Development Board (MPCDB) and have purchased a Melbourne Tram Car to be restored and displayed as a tourist attraction in Mt Perry. The tram is now being refurbished at the Mt Perry Men’s Shed in partnership with local Gidarjil Indigenous trainees. Once refurbishment is completed, the tram will become a mining museum and coffee shop. The tram represents the connection between Mt Perry, Evolution and Melbourne following the use of gold from Mt Rawdon to make the 2018 Melbourne Cup Trophy. We value the partnerships we have built with the traditional custodians of the lands on which we operate. We take our obligation to protect and manage cultural heritage extremely seriously and we are committed to supporting initiatives that advance the outcomes for Indigenous people. In FY19 we: ■■ Continued with various education and training initiatives including secondary and tertiary student scholarships, traineeships, apprenticeships and direct and indirect employment ■■ Enhanced the ability of our people to effectively operate within different cultural contexts through cultural competency training to be launched in FY20 ■■ Cultural competency training complements awareness training that is conducted by the local traditional custodians Indigenous training The Mt Perry community, supported by a number of partners including Evolution, undertook a Beautification Project to refresh their picturesque community. Gidarjil trainees were engaged to undertake a large component of the project, including landscaping works around the Men’s’ Shed and establishing a native bush tucker garden. The trainees developed skills to support the completion of their Certificate I in Conservation and Land Management, opening pathways to employment in the region. Evolution contributed to the purchase of a new bus for the Gidarjil trainees to move around the region for this project and other initiatives that enhance their traineeship outcomes. “The trainees should be very proud of the quality of the work they have undertaken and their contribution to the Mt Perry township.” Jamie Coad, Mt Rawdon General Manager 35 Evolution Mining Limited Annual Report 2019Sustainability Performance Data 36 Evolution Mining Limited Annual Report 2019 Sustainability Performance Data Sustainability Report (continued) Safety Safety performance Employee fatalities Contractor fatalities Total Recordable Incident Frequency (TRIF) Lost Time Injury Frequency (LTIF ) Vehicle Incidents  Significant Safety Occurence Frequency (SSOF) Safety Incident Frequency (SIF)* All classifications above include contractors. FY19 FY18 FY17 FY16 FY15 0 0 8.31 1.75 65 n/a 15.97 0 0 5.49 0.5 34 3.2 0 0 7.96 0.4 62 4.95 0 0 9.7 1.8 102 5.9 0 0 9.6 1 136 11.61^ *In FY19 Evolution changed the definition of significant safety occurrence and renamed to significant incidents. The definition change has resulted in more incidents being classified as significant incidents. ^FY15 figures are for Evolution operated assets. In the FY16 annual report Mungari and Cowal FY15 figures had been added for comparative purposes (operated by previous owner). Emergency Rescue Teams (ERT) Number of ERT members Community responses State Emergency Service support  26 26 26 31 23 132 1 4 3 3 0 11 3 3 Cowal Cracow Mt Carlton Mungari Mt Rawdon  Total People Diversity Profile FY19 Full time Part time Fixed term Casual Employees Contractors Work- force M 1,101 F 166 M 1 F 11 M 30 F 11 M 12 F 10 Total 1,342 Total 576 Total 1,918 New Employees FY19 Age group <36 Age group 36–55 Age group >55 Total M 158 F 64 M 117 F 23 M 24 F 6 Turnover FY19 Age group <36 Age group 36–55 Age group >55 M 33% F 6% M 42% F 7% M 10% F 1% 392 Total 18% Turnover result for EVN total is voluntary permanent only 12 month moving average result. The split by age bracket and gender is the % of all terminations (summing up to 100%), rather than turnover rates for each grouping. 37 Evolution Mining Limited Annual Report 2019Sustainability Performance Data People (continued) Diversity Site profile FY19 Corporate Cowal Mungari Mt Carlton Mt Rawdon Cracow Total M 81 F 41 M 342 F 53 M 205 F 51 M 142 F 12 M 172 F 22 M M F All 202 1,144 198 1,342 State profile FY19 NSW WA QLD M 423 F 94 M 205 F 51 M 516 F 53 Developing our approach to diversity and inclusion FY19 target FY19 actual Female graduate participation Female summer vacation interns Aboriginal or Torres Strait Islander employee 30% 25% 50% 39% 4.8% Environment Environmental incidents Incident level Catastrophic Major Moderate Energy 2019 2018 2017 0 0 9 0 0 7 0 0 9 Energy consumption (GJ) FY19 FY18 FY17 FY16 Total 3,986,905 4,075,493 4,402,695 4,415,040 Energy intensity (ore processed - GJ/tonne) Total 0.28 0.291 0.272 0.273 Ore processed does not include our financial stake in Ernest Henry. Emissions Total direct and indirect emissions Greenhouse gas emissions Scope 1 (t CO2-e)(1) Greenhouse gas emissions Scope 2 (t CO2-e)(2) Total of Scope 1 and Scope 2 (t CO2-e) Sulphur oxide SOx (kg) Nitrous oxide NOx (kg) Carbon Monoxide (CO) (kg) Particulate matter < 10 um (kg) Particulate matter < 2.5 um (kg) Total volatile organic compounds (VOC) (kg) FY19 155,085 383,449 538,533 916 FY18 159,061 394,144 553,205 926 1,397,676 1,395,277 719,005 701,930 FY17 167,734 430,993 598,727 1,002 1,521,718 886,918 FY16 157,584 472,257 629,841 936 1,627,006 788,636 4,260,114 4,323,757 5,163,574 5,585,918 88,471 90,036 86,683 86,380 95,254 97,958 104,208 110,103 The energy and emissions boundary is based on operational control as defined by the National Greenhouse and Energy Reporting (NGER) Act 2007. The applied global warming potential (GWP) rates and emission factors are based on the NGER Act (2007) and the National Pollutant Inventory. 1. Scope 1 refers to emissions produced directly by operations, primarily resulting from combustion of various fuels and includes CO2-equivalent values for greenhouse gases such as CH4, N20 and SF6. 2. Scope 2 refers to indirect emissions resulting from the import of electricity from external parties; commonly the electricity grid. 38 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)Sustainability Performance Data Sustainability Report (continued) Water withdrawal Water withdrawal Surface (ML) water Surface water (ML) Groundwater - mine dewatering (ML) Groundwater - borefields (ML) Rainwater (ML) Municipal water (ML) Total water withdrawal Reused (ML) % Total reused Water intensity (ore processed-kL/tonne) FY19 3,506 3,034 1,589 1,000 66 9,194 8,545 93% 0.65 FY19 change 69% -6% 8% -46% 12% 6% 22% 15% 5% FY18 2,077 3,212 1,476 1,856 59 8,680 7,018 81% 0.62 Water discharge Water discharge (ML) Total Waste Mineral waste Surface water Sewers that lead to water Land - Dust suppression Land - Irrigation Groundwater Treatment Facility Total 1,552 0 1,074 12.7 0 454 3,093 Waste material mined (kt) Solids in tailings (kt) Total ore processed (kt) Waste oil/grease - recycled (kL) Explosives (t)* Total 37,708 14,162 14,221 73 12,505 * The reporting period for liquid fossil fuels, lubricants and explosives is July 2018 to June 2019 and reported as part of the National Pollutant Inventory. Non-mineral waste Tonnes Total Off-site landfill 7,207 On-site landfill 1,792 Off-site recycling Tyres disposed of on-site Steel - recycled 456 10 47 Plastic - recycled 20 Rehabilitation and closure Land management (ha) Total Environmental compliance Land disturbed 2,984 Land rehabilitated 18.2 Total volume of significant spills  232L oil 39 Evolution Mining Limited Annual Report 2019Sustainability Performance Data Social responsibility Socioeconomic contribution (A$) million Operations Employees Type Wages Supplier payments (Goods and services) Payments to providers of capital Dividend payments to shareholders Payments to financial Payments to government Total contribution Interest Taxes Royalties Total 775 212 127 15 91 63 1,283 Economic contribution Contributed into Australian Economy (A$) billion Direct spend with local organisations (A$) million FY19 1.28 FY18 1.26 FY17 1.12 FY16 1.05 FY15 0.60 FY14 0.60 FY13 0.84 FY12 0.50 Total 7.26 92.3 80 Reconciliation to income tax payable* Profit before income tax expense Permanent differences Temporary differences: –  Accounting and tax depreciation differences –  Mine development –  Exploration and evaluation expenditure –  Provisions –  Other Taxable income before utilisation of carried forward restricted tax losses Australian income tax payable Corporate income tax paid during the year ended June 2019 Utilisation of carried forward restricted tax losses FY18 R&D refund expected Net income tax payable/(receivable) FY19 (A$) million  314.8 10.9 78.4 -168.8 -60.7 2.0 -3.0 173.6 52.1 -43.9 -8.5 -1.2 -1.5 40 Evolution Mining Limited Annual Report 2019 Sustainability Report (continued)41 Evolution Mining Limited Annual Report 2019Chief Operating Officer’s Review A Year of Achievements Having completed my first full 12 months with Evolution, I have had the privilege of working with a talented team of people who are striving to make Evolution Australia’s premier gold company. Every individual is driven to find new ways to continue to improve our business and deliver value to our employees, shareholders and all external stakeholders. The 2019 Financial Year was a great period from a production perspective, with 753,001 ounces of gold produced. This was achieved at an All-in Sustaining Cost (AISC) of A$924 per ounce. Four of our six operations were either at or above the top end of their production guidance. The year saw us deliver at the upper end of our 720,000 – 770,000 ounce production guidance. Although we had a small miss on the top end of our AISC cost guidance of A$850 - A$900 per ounce, we remain one of the lowest cost gold producers in the world and are focused on maintaining our value proposition in FY20. The Total Recordable Injury Frequency (TRIF) increased to 8.3. We are disappointed with this result and have refocused our safety efforts in FY20 to improve our performance. On a positive note we saw improvements in our leading indicators like infield Safety Interactions and in our reporting culture through increased hazards and near miss reporting. It is also pleasing that the severity of injuries experienced throughout our workforce declined in FY19. Keeping each other safe and supporting everyone’s wellbeing must be our highest priority to enable us to improve our safety culture in FY20. Our approach to community engagement and social responsibility are vital to our ongoing success and sustainability as a business. During the year we commenced eight new Sustainability Projects across our operations. Each of these projects was developed in partnership with our community stakeholders and will deliver positive long term social and environmental outcomes. We all can be proud of the difference we are making in our local communities. Thank you to our people who volunteered their time to support these initiatives and help make them a success. Importantly, we had no significant community or environmental incidents throughout the year. Thinking differently Over the past year we have increased our focus on ‘thinking differently’. A strong indication of this is the success we have had with our Act Like an Owner initiative which commenced in February 2015. A further 131 nominations were submitted in FY19 which is a fantastic result and substantially exceeded our FY18 result of 41. Seven initiatives were inspired by activities at other sites or were implemented in cooperation with another operation which demonstrates the benefits of cross-site collaboration and information sharing are being embraced. Our focus on innovation saw an increase in data driven initiatives under our Data Enabled Business Improvement (Debi) program such as our Hackathon, Explorathon and predictive analytics. Data availability and usability continues to improve and I am excited with what Debi will enable us to achieve in the future. We aim to make FY20 another strong year and our breakthrough goal is to amplify our high achievement culture. This builds on the strong culture we already have at Evolution by targeted development plans for all of our people, either supporting their career progression or improving performance in their current role. We also have a strong focus on fostering trust by having open, honest and courageous conversations. A strong achievement culture will underpin the delivery of our operations and growth objectives. This will ensure we maintain our focus on sustainability through robust risk management and strong safety leadership, environmental stewardship and continuing to strengthen our reputation as a trusted partner and employer of choice. Some highlights from our operations are provided in the following text with further details provided in the Directors’ Report section of this Annual Report. Continuing to strengthen our reputation as a trusted partner and employer of choice 42 Evolution Mining Limited Annual Report 2019 Chief Operating Officer’s Review (continued) Cowal Mungari The Cowal gold operation is a world-class, open pit gold operation located 350km west of Sydney. It is situated within the Bland, Lachlan and Forbes Shires on the traditional lands of the Wiradjuri People. Mining approval has been granted to 2032 and this long mine life provides a tremendous runway to capture additional upside. Cowal had another great year in FY19. During the year the operation was granted regulatory approval to increase the plant processing rate by 31% from 7.5 million tonnes per annum (Mtpa) to 9.8Mtpa. Plant throughput continues to improve with record monthly throughput achieved during the period. The Cowal operating team successfully commissioned the Float Tails Leach (FTL) circuit, upgraded the SAG Mill Gearless Motor Drive, commenced the Warraga underground exploration decline and the Evolution Board approved the Integrated Waste Landfill improvements on the Tailing’s Storage Facility. The Warraga decline had reached 550 metres of lateral development as of 30 June 2019 and is progressing ahead of schedule. The underground drilling program commenced during the June 2019 quarter and will continue for the next 18 months. Total FY19 gold production of 251,500 ounces was above guidance of 240,000 – 250,000oz. AISC of A$995/oz was at the bottom end of the A$975 – A$1,075/oz guidance range. Full year net mine cash flow was A$87.5 million. Cowal is a long life, low cost asset that will be a cornerstone of our business for many years to come. The Mungari gold operation is located 600km east of Perth and 20km west of Kalgoorlie in Western Australia.  There are currently two registered native title claims over the majority of the Mungari tenements – the Maduwongga People and the Marlinyu Ghoorlie People. Our local communities are Kalgoorlie and Coolgardie. The operation is a key asset in Evolution’s portfolio and consists of underground mining at Frog’s Leg, open pit mining at White Foil, a large regional tenement package hosting a total Mineral Resource of 2.5 million ounces, and a strategically located 1.6Mtpa nameplate processing plant. Mungari managed to achieve a credible result in FY19 despite having to navigate through several significant unplanned events. Total FY19 gold production of 120,535 ounces was below the bottom end of the 125,000 – 135,000oz guidance range. The miss was predominantly due to a major seismic event in November 2018 which led to a redesign of the underground stope access to allow mining to continue safely. AISC of A$1,320/oz was above guidance of A$1,050 – A$1,100/oz guidance. Full year net mine cash flow was A$35.8 million. The operation has a major footprint in the world-class Kalgoorlie gold district with opportunities for high-grade discoveries to expand production and lower costs. The operation currently has a 10-year mine plan and work has commenced to improve the cost position of this operation to deliver a long-term value by unlocking the large resources base most effectively. Cowal is a long life, low cost, cornerstone asset 43 Evolution Mining Limited Annual Report 2019Chief Operating Officer’s Review (continued) Mt Carlton Our Mt Carlton operation is located 150km south of Townsville, Queensland, on the traditional lands of the Birriah People. Our local communities are Gumlu, Home Hill, Bowen and Townsville. At Mt Carlton, Evolution developed the expertise to commercialise a refractory, non-oxidised, high-sulphidation epithermal deposit which is a great example of thinking differently to unlock a previously uneconomic deposit. The operation was developed by Evolution and commissioned in 2013. It is now a core asset and one of the highest-grade open pit gold mines in the world. The operation has a current mine life out to 2025. The development of an underground mine from within the open pit was approved in FY19 and its development will be the next significant milestone for the operation. Mt Carlton produced more than 100koz of gold for the third year in a row with FY19 production of 106,646 ounces. This was an impressive achievement considering the operation had to manage through a significant rain event which shut operations and restricted site access for over 30 days during the third quarter. This was a very concerning period with the safety of our Mt Carlton people front of mind. Despite these challenges, our team performed admirably and Mt Carlton exceeded the top end of the 95,000 – 105,000oz guidance range. An AISC of A$737/oz was slightly above the top end of the A$670 – A$720/oz guidance. Full year net mine cash flow was A$84.6 million. During the year we achieved a world first by trialling an online gold analysis (OLGA) technology developed by the CSIRO. This gives the processing team the ability to adjust processing parameters effectively, in real time, with the effect of reducing losses to tailings. Mt Carlton is extremely proud to have produced the gold for the 2019 Lexus Melbourne Cup which brought the Melbourne Cup Tour to the local community in August 2019. Mt Rawdon The Mt Rawdon open pit gold operation is located 75km south-west of Bundaberg, Queensland and is surrounded by the traditional lands of the Byellee, Gooreng Gooreng, Gurang and Taribelang Bunda people who make up the Port Curtis Coral Coast native title claim group. Our local communities are Mt Perry, Gin Gin, Biggenden and Gayndah. Evolution has owned and operated Mt Rawdon since November 2011. Total FY19 gold production of 94,647oz was just below the bottom end of the 95,000 – 105,000oz guidance range. The team at Mt Rawdon had to manage multiple pit wall stability issues as well as a major failure in the mill gear box during the year. Achieved AISC of A$1,233/oz was above the top end of the A$1,000 – A$1,050/oz guidance. The miss on FY19 production and costs was predominantly driven by reduced access to higher grade ore in the open pit as a result of the pit wall stability issues. Despite these challenges the Mt Rawdon team are true innovators and consistently submit commendable ALO nominations. At Mt Rawdon our people exemplify thinking differently when it comes to driving improvements to their operation from both a safety and production perspective. Cracow The Cracow underground gold operation is located 500km north-west of Brisbane, Queensland, on the traditional lands of the Wulli Wulli People. Our local communities are Cracow and Theodore. The operation has been a consistent and reliable producer since mining began in 2004. The current mine life extends to 2023, however Cracow has a long track record for replacing mining depletion and maintaining a consistent three to five-year mine life. Cracow continued to perform well in FY19 with total gold production of 80,983oz within the 80,000 – 85,000oz guidance range. AISC of A$1,272/oz was also in line with guidance of A$1,250 – A$1,300/oz. Full year net mine cash flow was A$36.1 million. Cracow continues to drive effectiveness and productivity through innovation with examples including moving to narrower underground stoping, automated water management in the grinding circuit, vulcanised rubber rotor installation on the high intensity grinding mill and tele-remoting from the surface. 44 Evolution Mining Limited Annual Report 2019 Chief Operating Officer’s Review (continued) Ernest Henry The Ernest Henry copper-gold operation is a large-scale, long-life asset operated by Glencore. The operation employs a sub-level caving ore extraction method. It is located 38km north-east of Cloncurry, Queensland. In November 2016 Evolution acquired an economic interest in Ernest Henry that will deliver 100% of future gold revenue and 30% of future copper and silver revenue produced from within an agreed life of mine area. Outside the life of mine area, Evolution will have a 49% interest in future copper, gold and silver revenue from Ernest Henry. Throughout the duration of our partnership, Glencore has operated the asset exceptionally well and has consistently delivered results which exceed the agreed mine plan. The Ernest Henry transaction has materially improved the quality and longevity of the Group’s portfolio and reduced the cost profile. Total FY19 gold production of 98,689oz was well above the top end of the 85,000 – 90,000oz guidance range. AISC of A$(539)/oz was substantially below guidance of A$(200) – A$(150)/oz. Full year net mine cash flow was a record A$222.2 million. BOB FULKER CHIEF OPERATING OFFICER Ernest Henry has materially improved the quality and longevity of the Group’s portfolio The Mt Carlton crew excited to see the Melbourne Cup on site 45 Evolution Mining Limited Annual Report 2019FY19 Operational Highlights and Outlook Cowal (100%) Mungari (100%) Mt Carlton (100%) Mt Rawdon (100%) Cracow (100%) Group Total Ernest Henry (economic interest) Gold Reserves (Moz)1 Copper Reserves (kt)1 Gold Resources (Moz)1 Copper Resources (kt)1 Reserve grade (g/t Au)1 Reserve grade (% Cu)1 FY19 Au production (koz)2,3 FY19 AISC (A$/oz)3,4 FY19 net mine cash flow3 3.88 371 7.42 560 0.85 0.57 252 995 87 0.63 2.51 1.82 121 1,320 36 0.62 31 0.82 34 4.04 0.66 107 737 85 0.57 0.19 1 0.45 0.69 5.07 95 1,233 32 81 1,272 36 0.75 136 1.47 387 0.54 1.05 99 -539 222 7.46 538 14.72 982 0.8 0.65 753 924 498 1. This information is extracted from the report entitled “Annual Mineral Resources and Ore Reserve Statement” released by Evolution to ASX on 19 April 2018. Mineral Resources and Ore Reserves are depleted to 31 December 2017. Results also include the update on Castle Hill announcement entitled “Restructure of ownership of Castle Hill Gold Deposit” released by Evolution to ASX on 18 July 2018. Both announcements are available to view on www.evolutionmining.com.au. Further information is provided in the Mineral resources and Ore Reserves section of this report. 2. 3. Group production total includes 21,639oz gold from Edna May operation (FY18Q1) This information is extracted from the report entitled “June 2018 Quarterly Report” released by Evolution to ASX on 19 July 2018 and is available to view on www.evolutionmining.com.au Includes C1 cash cost, plus royalty expense, sustaining capital, general corporate and administration expense 4. Outlook for FY20 Evolution is forecasting FY20 Group gold production of 725,000 – 775,000 ounces of gold with AISC expected to be in the range of A$890 – A$940 per ounce. Using the average AUD:USD exchange rate of 0.7156 for the 12 months to 30 June 2019, Evolution’s forecast FY20 costs are among the lowest of global gold producers and equate to AISC of US$635 – US$670 per ounce. Investment in sustaining capital in FY20 is forecast to be between A$90 – A$130 million. Investment in tails facilities is the main capital item taking place at Mungari, Mt Carlton, Mt Rawdon and Cracow. Resource definition drilling, which is included in sustaining capital, is expected to be A$13 – A$20 million. Investment in major project capital and exploration is additional to the costs included in AISC. Major capital in FY20 is expected to be in the range of A$195 – A$235 million. The bulk of the major project capital investment is associated with expansion projects at Cowal as the operation delivers on its objective of increasing production from 250,000 to over 300,000 ounces per annum. Major capital at Cowal includes continuation of the Stage H mine development of A$75 – A$85 million, a ramp up of the Integrated Waste Landform (Life of Mine tails solution) of A$35 – A$40 million and the plant expansion project and other projects of A$5 – A$10 million. Major project capital investment at Mt Carlton predominantly relates to the development of the new underground mine of A$30 – A$35 million; plant optimisation of A$5 – A$10 million; and Stage 4 open pit mine development of A$15 – A$20 million. FY20 exploration investment is expected to be A$80 – A$105 million. This is a substantial increase on the FY19 group exploration spend of approximately A$50 million and is largely driven by the success at Cowal as the GRE46 and Dalwhinnie underground mineralisation continues to be defined and extended. Cowal (A$50 – A$60 million), Mungari (A$15 – A$20 million) and greenfields exploration projects (A$10 – A$15 million) will receive the largest allocation of the discovery investment in FY20. FY20 production guidance of 725,000 – 775,000 ounces is unchanged from the three-year outlook issued at Evolution’s Annual General Meeting on 22 November 2018. AISC guidance of A$890 – A$940 per ounce is in line with the cost results achieved in FY19 and is approximately 5% higher than the previous outlook. 46 Evolution Mining Limited Annual Report 2019                     FY19 Operational Highlights and Outlook (continued) A breakdown of production, costs and capital guidance is provided in the table below: FY20 guidance Gold production (oz) C1 cash costs1 (A$/oz) All-in sustaining cost1 (A$/oz) Sustaining capital (A$M) Major capital (A$M) Cowal Mungari Mt Carlton Mt Rawdon Cracow 255,000 – 265,000 810 – 860 930 – 980 115,000 – 125,000 1,030 – 1,080 1,230 – 1,280 95,000 – 105,000 400 – 450 800 – 850 90,000 – 100,000 960 – 1,010 1,210 – 1,260 25 – 35 10 – 15 20 – 25 10 – 15 82,500 – 87,500 800 – 850 1,200 – 1,250 15 – 20 Ernest Henry 87,500 – 92,500 (925) – (880) (590) – (540) 115 – 135 10 – 15 50 – 60 10 – 12.5 10 – 12.5 0 45 – 50 10 – 15 0 – 5 725,000 – 775,000 610 – 660 890 – 940 90 – 130 195 – 235 Corporate Group Copper (t) Ernest Henry 19,000 – 21,000 Mt Carlton 2,000 – 3,000 1. A copper price assumption of A$8,800/t has been used for by-product credits 47 Evolution Mining Limited Annual Report 2019        Innovation and Asset Optimisation Our aim is to differentiate our company through innovation, incremental improvements and excellent operational discipline to deliver value for our stakeholders. We embrace disruption and constant change to ensure our business continues to evolve. We focus on the few things that make the biggest difference. Innovation & Fast Firsts Float Tails Leach At Cowal we commissioned our Float Tails Leach project which included: ■■ A new leach circuit to treat flotation tails and detoxification of the stream before pumping to the tails storage facility ■■ A new carbon handling and electrowinning facility to treat the gold recovered from the flotation tails leach circuit ■■ A new reagent mixing and distribution system needed for the operation of the leach circuit, detoxification facilities and carbon handling facilities The circuit was commissioned in the March 2019 quarter with a 5% gold recovery improvement achieved in the June 2019 quarter. Looking inside one of the tanks The location of the float tails leach tanks in the bottom left of this image of the Cowal plant 48 Evolution Mining Limited Annual Report 2019 Innovation and Asset Optimisation (continued) OLGA project The OLGA (Online Gold Analyser) project, in collaboration with CSIRO, was specifically designed to enable direct measurement of gold in tailings, feed and concentrate streams down to sub-ppm levels. This is a significant advancement from conventional XRF systems that have detection limits in the tens to hundreds of ppm range. The trial commenced in December 2018 with installation and commissioning of the first OLGA on the float feed at Mt Carlton. This new technology provides average gold grades of plant feed every 10 minutes versus our current wait time on conventional lab assays of approximately six hours. This provides the processing team with the benefit of being able to adjust plant parameters effectively in real time thereby reducing losses to tailings. One of our Mt Carlton employees at the OLGA machinery One of the teams presenting at the Hackathon, one of our data driven initiatives 49 Evolution Mining Limited Annual Report 2019Innovation and Asset Optimisation (continued) Aerial short-wave infrared (SWIR) hyperspectral surveys We are committed to applying innovative and best practice technologies where they can improve efficiencies or open up new search spaces for discovery of gold deposits. In the September 2018 quarter we flew SWIR surveys over the Connors Arc, Mount Carlton and Cracow projects in Queensland. This technique allows the identification of key indicator or alteration minerals commonly associated with high sulphidation epithermal gold deposits (e.g. Mt Carlton) and low sulphidation epithermal gold deposits (e.g. Cracow). This technology has been applied successfully for exploration in the Americas but is rarely applied in Australia. The hyperspectral surveys have been valuable both in identifying previously unrecognised alteration mineral anomalies and focusing exploration fieldwork. Ground truthing of the aerially detected alteration mineral anomalies has confirmed a number of new gold prospects, and the technique will be an important part of Evolution’s Discovery workflow in the future. Debi (Data Enabled Business Improvement) Data and technology will play an increasingly important role in our drive to remain amongst the lowest cost gold producers in the world. In FY19 we commenced the Debi Program with some excellent results achieved. A highlight of the program was the prevention of a potentially significant mill failure at Mungari through the analysis of data collected by the Obzervr maintenance app. The prevention of this incident saved the operation in excess of A$1 million. Another significant improvement in FY19 was the establishment of a data lake. This enables data science improvement projects relating to the significant volumes of operational data we collect from our processing plants and mining fleet. We also implemented solutions to streamline visibility of previous drilling campaigns on our tenements and reduce our holdings of spare parts inventory in a safe and sustainable manner. In FY20 we are doubling down on our efforts to drive operational efficiency and effectiveness gains through smarter use of our data. Each site has a specific savings target and collectively we are aiming to realise more than A$25 million worth of benefits from improvement initiatives associated with data. We are also looking to use innovative technologies including augmented reality to enhance the way we collaborate, plan and communicate. Our hololens project – part of Debi Mineralisation at Mt Carlton developed within magmatic hydrothermal centres. We identify “hot spots” as accumulations of low pH clay 50 Evolution Mining Limited Annual Report 2019 Innovation and Asset Optimisation (continued) Drone technology for Magnetic survey deployed at the Drummond project Drone technology Drone technology is routinely used for various monitoring and photogrammetry applications across a range of industries. We have adopted these standard applications and recently extended the use of drones to the collection of magnetic data. Drone magnetics is an emerging technique providing essential data in areas that are too small to consider traditional airborne acquisition. The method is faster, cheaper and safer than ground magnetic surveying. In addition, the drone technology enables surveying in areas where access is restricted by other stakeholder activities such as cropping and grazing. Innovations and improvements on the horizon Cyanide reduction We continue to evaluate GlyCat technology by using glycine and cyanide during the cyanidation process of gold ore at Cowal with an initial trial completed in FY19. The GlyCat process will enhance the dissolution of gold where glycine is used as a catalyst with cyanide. This research program is being run in collaboration with the Australian Mineral Industries Research Association (AMIRA) and has potential to deliver a significant reduction in cyanide and overall reagent costs. Carbon Scout The Carbon Scout is an automated carbon sampling and measurement device which eliminates manual sampling and lab processing. This allows more frequent sample intervals and results in a better representative understanding of the gold in circuit. The benefit of the Carbon Scout is the automated carbon density measurement, in addition to the provisioning of a single sampling point at ground level. Interpretation of real time data enables circuit optimisation in carbon-in-leach and carbon-in-pulp circuits, reducing soluble gold loses and improving cash flow. Cowal has partnered with Gekko and installed one unit with a second unit planned to be installed on the CIL circuit during FY20. Our Operating System We have developed an Operating System which will allow us to implement Overall Equipment Effectiveness (OEE) which is the gold standard for measuring manufacturing productivity. OEE identifies time that is truly productive and optimises it through data. It requires quality data, a strong operating discipline to investigate significant non- conformance, and an improvement plan with measurable outcomes. OEE is being implemented at Mt Carlton as a pilot in FY20 and we are expecting this to deliver cost savings and increase productivity. Power optimisation Electricity continues to be a significant cost to our operations which is a constraint on expanding mill capacity at two of our operations. There is an opportunity to analyse our power consumption and correlate it with our production patterns to develop techniques which optimise our electricity usage, reducing our costs and enabling improved throughput and recoveries of our mills. 51 Evolution Mining Limited Annual Report 2019Discovery Evolution is committed to organic growth by discovery of new resources at our existing operations and across our portfolio of greenfield projects. Our Discovery group had an outstanding 2019 Financial Year. Our exploration and resource definition geology teams delivered a strong 2019 calendar year-end result that saw our Mineral Resources and Ore Reserves grow considerably. Of note was the excellent outcome at Cowal where we added over 1.6 million ounces to Mineral Resources before mining depletion. It was also pleasing to see that we not only replaced depletion but grew our Ore Reserves by 410,000 ounces. A significant component of our resource growth occurred at the GRE46 underground project where discovery of the Dalwhinnie mineralised position became the main driver with very high grades encountered over thick intervals. Our Discovery strategy is simple: we focus on safely and responsibly finding new deposits that have the potential to deliver long life, low cost mines that improve the quality of our portfolio. PEOPLE PORTFOLIO SOCIAL LICENCE We explore mainly for epithermal and orogenic lode gold mineralisation because we believe we have the right blend of skills and expertise to discover these types of deposits. However, we are also willing to consider other mineralisation styles if we believe they can deliver high quality opportunities. In the epithermal class of deposits, we are searching for high-sulfidation deposits like Mt Carlton, carbonate-base metals deposits like Cowal and low-sulfidation deposits like Cracow. In the orogenic lode gold class of deposits, we are exploring for deposit styles typically mined in the Yilgarn Craton in Western Australia. Our area selection and project evaluation methodologies consider the following technical characteristics to help rank and prioritise where we are willing to go: ■■ Key mineral systems elements such as geologic architecture, fluid and metal sources, and the drivers and traps capable of producing world-class gold deposits 52 Evolution Mining Limited Annual Report 2019 ■■ Footprint scales demonstrating size and grade potential for an Evolution-scale mining operation. Distribution patterns of low-level gold, pathfinder elements and alteration mineral associations that demonstrate evidence of large hydrothermal systems always rank highly ■■ Navigating to gold using the right data layers to enable determination of where we are in a system and to vector to gold quickly and effectively. We believe strongly in integrating geological observations with project-wide multi-element geochemistry, airborne & handheld spectral analysis and best-suited geophysical techniques Critically, it is essential to definitively test the best targets early. Clear program objectives and results that inform technical and, in some cases, good judgment calls to persist with a target or alternatively to walk away are vital to our strategy. A key driver underpinning our success is ensuring we have the right people in the right jobs making the right decisions. Over the last three years we have built our team adding quality talent and leadership. This year we established an early-stage exploration team to run our new projects in Queensland and Western Australia. We invested strongly in technical development of our people and provided opportunities to upskill and gain experience across our diverse portfolio of assets and greenfields exploration projects. In December 2018 we hosted our first “Explorathon” in Kalgoorlie which stimulated a series of new ideas and potential breakthroughs that have led to some interesting and potentially game-changing results at Mungari. We believe that developing an inclusive culture that fosters curiosity, freedom to think creatively and to try new things will continue to lead to success. In the 2020 Financial Year, approximately 85% of our discovery investment will be directed to resource growth and delivering new discoveries near our operating mines. Significant discovery programs are underway at Cowal, New South Wales and Mungari, Western Australia. At Cowal, work is well underway on an exploration decline which has been positioned from the east wall of the E42 open pit. We have commenced underground drilling with the aim of expanding and confirming resources and gathering information for studies to examine and scope future underground mining opportunities. At Mungari, we continue to drill aggressively for high grade vein deposits. These narrow veins average one to two metres wide and are like finding needles in a haystack. We have built up a strong understanding of the geologic controls of this style of mineralisation which is now serving us well as we prioritise new targets for drilling. Discovery (continued) We are continuing to invest in resource definition and discovery across our operations in Queensland. In the last 12 months we added the Connors Arc (100%) and Drummond Gold (Evolution earning 80%) greenfields projects which we hope will fortify a long-term operating future in this part of the state. Across in Western Australia we commenced exploration at our Murchison project (Evolution earning 80%) which is situated in an underexplored area of very well-endowed geology in the camp that hosts the Big Bell, Cuddingwarra and Mt Magnet deposits. Our discovery approach is shaped by focusing on unlocking resource potential in highly prospective geology near our operations across Queensland, New South Wales and Western Australia. Our discovery and resource definition teams will continue to steadily grow Mineral Resources and convert them to Ore Reserves. Creation of our greenfields discovery team with talented and skilled explorers will give us another lever to pull on creating value through discovery of the next generation of gold deposits in Australia. Evolution holds highly prospective tenements in New South Wales, Queensland, Northern Territory, and Western Australia. At the end of FY19 our discovery team was exploring 8,705km2 of granted tenements and mining leases with applications for 787km2 pending. These tenement areas are either 100% owned by Evolution or subject to earn-in or JV agreements. Evolution spent approximately A$49.9 million on discovery and A$15.3 million on reserve definition drilling in FY19. A total of 299km of drilling was completed. One of the Explorathon groups viewing the White Foil geology at Mungari 53 Evolution Mining Limited Annual Report 2019Discovery (continued) Cowal Mungari Early in FY19 the Dalwhinnie Lode within the GRE46 Corridor was discovered at Cowal which drove an aggressive program of exceptional drill results throughout the year. By the end of the year the underground exploration drive at GRE46 was well underway and underground drilling has continued to deliver strong results. Other growth opportunities at Cowal will come from further delineation and conversion of the significant mineral endowment on Cowal’s mining lease including E41, E42 and E46. There are several other regional opportunities that have been evaluated within the Cowal Province including exploration drilling east of the mine to delineate the edges of the Cowal mineral system and 15km west of the mine at East Girral. There is also potential for the discovery of porphyry copper-gold deposits on the wider property package. Testing of several high-grade targets at Mungari continued in FY19 with some success. Early results at Scottish Archer were very encouraging but lacked continuity in follow- up drilling. Deep drilling underground at Frog’s Leg from the Banjo Decline was very encouraging for potential incremental additions and is supporting development of a geological model that will be generating future targets. Boomer was one of the targets generated at the Explorathon and is located approximately 300m west of Frog’s Leg. Drilling has shown early promising signs intersecting very high grades (0.3m at 230g/t Au1) and visible gold in association with a laminated vein. Further upside is likely to be realised at expansions around Castle Hill and nearby prospects such as the Picante trend. Cowal GRE46 underground area Planned drilling from exploration decline in blue Orange shows outline of December 2017 mineable shape optimiser (MSO) outlines Yellow shows December 2018 MSO outlines 1. EVDD0048 results are extracted from the report entitled “June Quarterly Report” released to the ASX 24 Jul 2019 and available to view on our website, www.evolutionmining.com.au. 54 Evolution Mining Limited Annual Report 2019 Laminated vein with 0.3m at 230.0g/t Au from 227.2m (EVDD0048) Discovery (continued) Drummond Project, Queensland (earning 80%) In September 2018 Evolution entered into an earn-in joint venture agreement with Andromeda Metals Limited (ASX:AND) over the Drummond exploration project. Drummond is an early-stage gold exploration project located in northern Queensland covering ~520km2. The project is approximately 140km south of Townsville and 50km southwest of Evolution’s Mount Carlton operation. Outcropping gold-bearing veins of the same style and scale to the nearby Pajingo gold-silver deposit occur within the project. Vein textures at several prospects in the project suggest the system is largely preserved, and that the most prospective level for gold mineralisation remains untested by drilling. A first phase diamond drilling program was completed at Drummond on the Bunyip Hill and SW Limey epithermal Au-Ag prospects. Several short mineralised intercepts were obtained from an epithermal-style quartz veins supporting the occurrence of potentially other significant epithermal systems preserved in the region. Murchison (earning 80%) In April 2019 Evolution entered into an earn-in joint venture agreement with Enterprise Metals Limited (ASX:ENT) over the Murchison exploration project. Murchison is a large, early-stage gold exploration project covering ~750km2 in the Murchison region of central Western Australia. The project is prospective for Archaean greenstone gold deposits and encompasses poorly tested continuations of the Big Bell and Cuddingwarra Shear Zones which host multi-million ounce gold deposits at Big Bell, Cuddingwarra and Mount Magnet. Location of the Drummond exploration project Location of Murchison exploration tenements 55 Evolution Mining Limited Annual Report 2019Mineral Resources and Ore Reserves Group Mineral Resources as at 31 December 2018 are estimated at 14.73 million ounces of gold and 982,000 tonnes of copper compared with the estimate at 31 December 2017 of 14.24 million ounces of gold and 946,000 tonnes of copper. The updated estimate accounts for mining depletion in 2018 of 902,000 ounces of gold. All Mineral Resources are constrained at an A$1,800/oz economic threshold at Evolution’s 100% owned assets. Mineral Resources are reported inclusive of Ore Reserves. Group Ore Reserves as at 31 December 2018 are estimated at 7.46 million ounces of gold and 538,000 tonnes of copper compared with the 31 December 2017 estimate of 7.05 million ounces of gold and 564,000 tonnes of copper after accounting for mining depletion of 902,000 ounces of gold. 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/oz to estimate Ore Reserves. Commodity Price Assumptions Commodity price assumptions used to estimate the December 2018 Mineral Resources and Ore Reserves are unchanged for gold, copper and silver to those used previously (December 2017 Mineral Resources and Ore Reserves). The A$1,350/oz gold price assumption used to estimate Ore Reserves has been unchanged since 2012. ■■ Gold: A$1,350/oz for Ore Reserves, A$1,800/oz for Mineral Resources summary is also provided for the Cowal Mineral Resource and Ore Reserve pursuant to ASX Listing Rules 5.8 and 5.9 and the Assessment and Reporting Criteria in accordance with JORC Code 2012 requirements. Governance and Internal Controls Evolution Mining reports its Mineral Resources and Ore Reserves on an annual basis, with Mineral Resources inclusive of Ore Reserves. Reporting is in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and the ASX Listing Rules. All Mineral Resource and Ore Reserve estimates and procedures are subject to internal and external review by qualified professionals. All Competent Persons named by Evolution are suitably qualified and experienced as defined in the JORC Code 2012 Edition. Prior to the public release of the Mineral Resource and Ore Reserve estimates, they are reviewed by the Evolution Board. ■■ Silver: A$20.00/oz for Ore Reserves, A$26.00/oz for Competent Persons Statement Mineral Resources ■■ Copper: A$6,000/t for Ore Reserves, A$9,000/t for Mineral Resources Changes since 31 December 2018 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 2018 other than changes due to normal mining depletion during the six months ended 30 June 2019. 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) for all projects. Group Mineral Resources and Ore Reserves summaries are tabulated on the following pages. A material information The information in this report 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. 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 is a member or fellow of the Australasian Institute of Mining and Metallurgy and 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 annual Remuneration Report. Annual replacement of depleted Ore Reserves is one of the performance measures of Evolution’s long-term incentive plans. 56 Evolution Mining Limited Annual Report 2019 Mineral Resources and Ore Reserves (continued) Activity Cowal Mineral Resource Cowal Ore Reserve Mungari Mineral Resource Mungari Ore Reserve Mt Carlton Mineral Resource Mt Carlton Open Pit Ore Reserve Mt Carlton Underground Ore Reserve Cracow Mineral Resource Cracow Ore Reserve Mt Rawdon Mineral Resource Mt Rawdon Ore Reserve Marsden Mineral Resources Marsden Ore Reserve Competent Person Membership status James Biggam Ryan Kare Andrew Engelbrecht Matt Varvari Chris Wilson Sam Patterson Ben Hawkins Michael Smith Matt Gray Timothy Murphy Dimitri Tahan Michael Andrew Anton Kruger Member Member Member Member Member Member Member Member Member Member Member Fellow Fellow 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 2018” released 1 February 2019 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 Mike Corbett respectively. Colin and Mike are members of the Australasian Institute of Mining and Metallurgy and are full-time employees of Glencore. The Company confirms that all material assumptions and technical parameters underpinning the estimates in Glencore’s market release continue to apply and have not materially changed. Colin Stelzer and Mike Corbett consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. Ernest Henry Resource is reported on a 100% basis for gold and 30% for copper (Evolution Mining has rights to 100% of the revenue from future gold production and 30% of future copper and silver produced from an agreed life of mine area and 49% of future gold, copper and silver produced from the Ernest Henry Resource outside the agreed life of mine area). Apportioning of the resource into the specific rights does not constitute a material change to the reported figures Replacing our reserves on an annual basis is an imperative at Evolution so it was pleasing to see that we not only replaced depletion but grew our Ore Reserves by 410,000 ounces – Glen Masterman – VP Discovery and Chief Geologist 57 Evolution Mining Limited Annual Report 2019Mineral Resources and Ore Reserves (continued) j s e v i t c e b o d n a i s e g e t a r t s , l s n a p g n d r a g e r i s t n e m e t a t s , n o i t a t i m i l t u o h t i w , e d u c n l i y a m d n a s d r o w r a l i m i s r e h t o r o i , ” e c n a d u g “ d n a , ” e u n i t n o c “ , ” e t a p c i t n a “ i , ” e t a m i t s e “ , ” n a p “ l , ” d n e t n i “ , ” t c e p x e “ , ” l l i w “ , ” y a m “ s a h c u s s d r o w d n a i s e i t n a t r e c n u , s k s i r n w o n k n u d n a n w o n k l e v o v n i y l t n e r e h n i s t n e m e t a t s g n k o o i l d r a w r o F . s t u p t u o n o i t c u d o r p r o s t s o c d e t c e p x e d n a s e t a d t n e m e c n e m m o c n o i t c u r t s n o c r o n o i t c u d o r p d e t a p c i t n a i , t n e m e g a n a m f o , o t d e t i m i l t o n e r a t u b , e d u c n l i y a m s r o t c a f t n a v e e R l . s t n e m e v e h c a i r o e c n a m r o f r e p , s t l u s e r e r u t u f y n a m o r f y l l a i r e t a m i r e ff d o t s t n e m e v e h c a d n a i e c n a m r o f r e p , s t l u s e r l a u t c a ’ s y n a p m o C e h t e s u a c y a m t a h t s r o t c a f r e h t o i g n d u c n l i j l , t n e m p o e v e d t c e o r p d n a n o i t a r o p x e l f o e r u t a n e v i t a u c e p s l e h t , s t u p n i n o i t c u d o r p r o f d n a m e d d n a s t s o c d e s a e r c n i , s n o i t i d n o c i c m o n o c e l a r e n e g d n a s n o i t a u t c u fl e g n a h c x e n g e r o f i , s e c i r p y t i d o m m o c n i s e g n a h c e h t n i y a m r o s e t a r e p o y n a p m o C e h t h c h w n h t i i i w k r o w e m a r f y r o t a u g e r l e h t o t s e g n a h c , s k s i r l i a c o s d n a l a c i t i l o p , s e v r e s e r f o s e d a r g r o s e i t i t n a u q g n h s i n m d d n a i i i s t i m r e p d n a s e s n e c i l i y r a s s e c e n g n n a t b o f o s k s i r i e h t , d e t a p c i t n a i s a e b o t t o n s t n e v e r o s t n e m e v e h c a i , e c n a m r o f r e p , s t l u s e r l a u t c a e s u a c d u o c l t a h t s r o t c a f r e h t o e b y a m e r e h t , s t n e m e t a t s g n k o o i l d r a w r o f n i l d e s o c s i d e s o h t m o r f y l l a i r e t a m i r e ff d o t s t l u s e r r o s t n e v e , s n o i t c a y b r e n n a m l a i r e t a m y n a n i d e t c e ff a e b t o n l l i w s n o i t a r e p o r o s s e n i s u b s y n a p m o C e h t ’ t a h t r o , t c e r r o c e b o t e v o r p l l i w d e s a b e r a s t n e m e t a t s g n k o o i l i d r a w r o f h c h w n o s n o i t p m u s s a e h t t a h t e c n a r u s s a y n a i e v g t o n s e o d l a u t c a e s u a c d u o w l t a h t s r o t c a f y f i t n e d i o t d e t p m e t t a s a h d n a s t p m e t t a y n a p m o C e h t h g u o h t l A . l o r t n o c ’ s y n a p m o C e h t d n o y e b r o t n e m e g a n a m r o y n a p m o C e h t l y b e b a e e s e r o f r o n e e s e r o f t o n s r o t c a f r e h t o r o e s e h t n i s t n e m e t a t s g n k o o i l d r a w r o F . s t n e m e t a t s g n k o o i l d r a w r o f n o e c n a i l e r e u d n u e c a p o t l t o n d e n o i t u a c e r a s r e d a e r , l i y g n d r o c c A . y n a p m o C e h t f o l o r t n o c l e b a n o s a e r e h t d n o y e b e r a s t n e v e y n a m d n a , d e d n e t n i r o d e t a m i t s e y n a e k a t r e d n u t o n s e o d y n a p m o C e h t n o i t a m r o f n i i s i h t g n d v o r p n i i , l s e u r g n i t s i l e g n a h c x e k c o t s t n a v e e r l y n a r o w a l l e b a c i l p p a r e d n u s n o i t a g i l i b o g n u n i t n o c y n a o t j t c e b u S . e u s s i f o e t a d e h t t a l y n o k a e p s s l a i r e t a m e s e h t . d e s a b s i t n e m e t a t s h c u s i y n a h c h w n o s e c n a t s m u c r i c r o s n o i t i d n o c , s t n e v e n i e g n a h c y n a f o e s i v d a o t r o s t n e m e t a t s g n k o o l - d r a w r o f i e h t f o y n a e s i v e r r o e t a d p u y c l i l b u p o t n o i t a g i l b o y n a p m o C e h T . e r u t u f e h t n i s n o i t a r e p o d n a ’ s s e n i s u b s y n a p m o C e h t t c e ff a d n a t s i x e l l i w t a h t s t n e m n o r i v n e t n a v e e r l r e h t o d n a y r o t a u g e r l , t e k r a m , l i a c n a n fi e h t o t g n i t a e r l s n o i t p m u s s a h t i a f d o o g s ’ t n e m e g a n a m s t i d n a y n a p m o C e h t n o d e s a b e r a s t n e m e t a t s g n k o o i l d r a w r o F . n o i t a g i t i l d n a s e u s s i s n o i t a e r l l a i r t s u d n i , l e n n o s r e p f o n o i t n e t e r d n a t n e m t i u r c e r , s n o i t i d n o c r e h t a e w e m e r t x e g n d u c n l i i s n o i t i d n o c l a t n e m n o r i v n e , e t a r e p o e r u t u f i g n k o o l d r a w r o f f o e s u e h t y b d e fi i t n e d i e b y l l a r e n e g n a c s t n e m e t a t s g n k o o i l d r a w r o f , s y a w a l t o n t u b , n e t f O . s t n e m e t a t s g n k o o i l d r a w r o f e d u c n l i ) ” y n a p m o C e h t “ r o ( d e t i i i i l m L g n n M n o i t u o v E y b d e r a p e r p t r o p e r s i h T s t n e m e t a t s g n i k o o l d r a w r o F 3 P C 1 2 4 5 3 6 7 l d o G l a t e M ) z o k ( 4 0 0 6 , 1 1 4 , 1 5 1 4 7 , 4 5 4 2 8 6 1 4 1 3 2 8 6 9 9 2 0 9 , 1 1 1 6 4 1 5 2 , 0 7 4 , 1 3 5 0 , 1 5 2 7 4 1 , . w e r d n A l e c r u o s e R l a t o T d e r r e f n I l d o G e d a r G ) t / g ( 2 8 0 . 4 2 3 . 6 9 0 . 8 7 4 . 3 2 2 . 0 2 8 . 0 6 2 . 2 6 0 . 3 3 . 1 8 7 3 . 8 5 . 1 3 6 0 . 7 2 0 . 4 8 0 . s e n n o T ) t M ( . 9 0 7 2 2 5 5 3 1 . l d o G l a t e M ) z o k ( 3 9 1 1 1 4 , 1 . 4 6 0 4 2 4 0 6 , 1 6 9 2 . 1 5 9 . 3 5 0 . 4 0 0 1 . . 7 0 0 5 . 9 4 4 4 4 0 5 . . 2 5 9 4 5 0 2 7 . . 7 9 2 2 1 7 4 1 8 4 0 2 8 6 6 4 1 3 6 4 7 4 2 0 1 7 3 5 2 2 2 . 5 2 8 4 5 1 5 9 2 , l d o G e d a r G ) t / g ( 7 0 . 1 4 2 3 . 0 6 2 . 8 8 2 . 4 4 3 . 3 4 7 . 0 1 . 4 0 6 0 . 6 5 . 1 1 3 3 . 1 9 . 1 2 6 0 . 2 2 0 . 3 6 . 1 4 8 7 4 , 5 8 0 . . 2 9 4 7 1 7 2 0 , 1 9 6 0 . . 4 5 6 4 s e n n o T ) t M ( l d o G l a t e M ) z o k ( d e t a c i d n I l d o G e d a r G ) t / g ( s e n n o T ) t M ( l d o G l a t e M ) z o k ( d e r u s a e M l d o G e d a r G ) t / g ( ) t M ( s e n n o T ff O - t u C e p y T j t c e o r P l d o G I S E C R U O S E R L A R E N M D L O G 8 1 0 2 R E B M E C E D N O I T U L O V E 3 6 5 . 5 5 3 1 . 8 1 . 9 1 9 5 . 1 3 4 0 . 8 0 0 . 2 5 0 . 1 5 7 . 7 2 9 . 2 3 2 . 9 5 . 1 1 . 1 7 2 1 4 1 . 3 - 4 8 7 4 , 7 2 2 6 8 5 0 2 1 6 0 7 3 8 7 3 3 4 , 1 8 7 2 1 1 7 , 1 2 5 9 1 3 0 , 1 . 4 2 6 5 4 9 1 , 0 1 - 5 8 0 . 7 4 6 . 3 1 . 2 8 3 8 . 4 4 2 . 5 6 0 . 7 2 . 1 1 6 3 . 2 4 . 1 2 6 0 . 7 2 0 . 4 7 0 . - - . 2 9 4 7 1 7 2 0 , 1 9 0 . 1 7 5 8 . 5 4 0 . 2 0 9 . 6 3 7 3 . 3 0 5 3 . 9 3 2 . 2 4 7 3 . 6 7 7 4 . . 3 8 9 1 1 9 7 9 4 - 9 4 8 6 6 6 8 3 9 4 6 2 - - 9 6 0 . 4 0 9 . 3 0 3 . - 0 0 3 . 1 4 0 . 2 0 . 1 0 4 8 . 3 6 5 . 1 7 0 . - - . 4 5 6 4 7 2 0 . 0 5 0 . - 0 5 0 . 9 1 . 5 9 1 . 0 2 3 0 . 1 5 0 . 7 5 . 1 1 - . 1 4 7 2 4 9 7 5 , 1 6 7 0 . . 9 5 4 6 . 4 0 0 2 . 8 2 . 5 3 0 . 4 2 . . 2 0 . 5 0 5 . 1 / 0 2 . . 9 0 . 2 0 t i p n e p O G U l a t o T l a t o T 1 l a w o C l a w o C 1 l a w o C 1 w o c a r C t i p n e p O 1 n o t l r a C t M G U l a t o T l a t o T n o t l r a C t M 1 n o t l r a C t M 1 n o d w a R t M t i p n e p O 1 i r a g n u M G U l a t o T l a t o T l a t o T i r a g n u M 1 i r a g n u M 2 y r n e H t s e n r E n e d s r a M l a t o T r e v l i s d n a r e p p o c e r u t u f f o % 0 3 d n a n o i t c u d o r p d o g e r u t u f l m o r f e u n e v e r e h t f o % 0 0 1 o t s t h g i r i i s a h g n n M n o i t u o v E ( l r e p p o c r o f . % 7 6 3 d n a d o g r o f l s i s a b % 5 . 1 8 n a n o d e t r o p e r s i e c r u o s e R y r n e H t s e n r E . s r a e p p a t i i h c h w s t h g i r i c fi c e p s e h t o t n i e c r u o s e r e h t i f o g n n o i t r o p p A . ) a e r a e n m i f o e f i l d e e r g a e h t e d i s t u o e c r u o s e R y r n e H t s e n r E e h t m o r f d e c u d o r p r e v l i s d n a r e p p o c , l d o g e r u t u f f o % 9 4 d n a a e r a e n m i f o e f i l d e e r g a n a m o r f d e c u d o r p . s e r u g fi d e t r o p e r e h t o t e g n a h c l a i r e t a m a e t u t i t s n o c t o n s e o d n i t x e t n o c d n a m r o f e h t n i n o i t a m r o f n i r i e h t n o d e s a b s r e t t a m e h t f o t r o p e r s i h t n i n o i s u c n l i e h t o t s t n e s n o c l r e z e t S n i l o C . d e g n a h c y l l a i r e t a m t o n e v a h d n a l y p p a o t e u n i t n o c t r o p e R e h t n i s e t a m i t s e i e h t g n n n p r e d n u i t a w e v o t i l e b a l i a v a d n a 9 1 0 2 y r a u r b e F 1 d e s a e e r l ” 8 1 0 2 r e b m e c e D 1 3 t a s a s e v r e s e R d n a s e c r u o s e R e r o c n e G “ d e l t i t n e l t r o p e r e h t n i i d e d v o r p e r a s e v r e s e R e r O d n a s e c r u o s e R l i a r e n M y r n e H t s e n r E e h t f o s l i a t e d l l u F s r e t e m a r a p d n a s n o i t p m u s s a l a i r e t a m l l a t a h t d n a t r o p e R e h t n i d e d u c n l i n o i t a m r o f n i e h t s t c e ff a y l l a i r e t a m t a h t a t a d r o n o i t a m r o f n i w e n y n a f o e r a w a t o n s i t i t a h t s m r fi n o c y n a p m o C e h T . . m o c e r o c n e g w w w l . e a h c M 7 i . ; ) e r o c n e G ( l l r e z e t S n i l o C . 6 ; y h p r u M m T i . 5 ; n o s l i W s i r h C 4 l ; t h c e r b e g n E w e r d n A . 3 ; h t i m S l e a h c M i . 2 ; i m a g g B s e m a J . 1 o t r e f e r s e t o N ) P C ( n o s r e P t n e t e p m o C s e c r u o s e R l i a r e n M p u o r G . q E u C % 9 0 ff o - t u c n o i t a r e p O y r n e H t s e n r E s e l i p k c o t s s e d u c n l I . 1 . 2 . 3 i g n d n u o r o t l e u d y e s i c e r p m u s t o n y a m d n a n o i s i c e r p e t a i r p o r p p a t c e fl e r o t i s e r u g fi t n a c fi n g i s o t d e t r o p e r s i a t a D s e v r e s e R e r O f o e v i s u c n l i d e t r o p e r e r a s e c r u o s e R l a r e n M i 58 Evolution Mining Limited Annual Report 2019                         Mineral Resources and Ore Reserves (continued) 3 P C 1 2 6 7 4 5 8 3 l d o G l a t e M ) z o k ( 0 8 8 3 , 7 8 1 3 1 5 8 0 1 2 2 6 0 7 5 1 2 5 3 1 1 4 3 6 7 4 7 7 1 8 8 5 4 7 , e v r e s e R l a t o T l d o G e d a r G ) t / g ( s e n n o T ) t M ( 5 8 0 . 7 0 5 . 2 8 3 . 5 6 5 . 4 0 4 . 9 6 0 . 0 6 . 1 7 7 4 . 2 8 . 1 4 5 0 . 9 3 0 . 0 8 0 . 5 2 . 1 4 1 5 1 . 1 8 1 . 4 0 6 0 . 8 7 4 . 6 5 5 2 . 2 1 . 0 1 4 7 0 . 6 8 0 1 . 0 0 3 4 . 7 1 . 5 6 l d o G l a t e M ) z o k ( 4 5 8 2 , 4 2 1 5 6 4 8 0 1 3 7 5 1 2 5 1 1 5 0 8 0 9 5 1 8 4 7 1 8 l e b a b o r P l d o G e d a r G ) t / g ( s e n n o T ) t M ( 4 9 0 . . 0 7 4 9 7 7 4 . 2 9 3 . 5 6 5 . 6 1 . 4 2 7 0 . 1 6 . 1 8 5 4 . 7 7 . 1 6 4 0 . 9 3 0 . 0 8 0 . 1 8 0 . 9 6 3 . 0 6 0 . 8 2 4 . 5 6 2 2 . 5 8 9 . 4 5 0 . 9 3 0 1 . 0 5 2 3 . 7 1 . 5 6 l d o G l a t e M ) z o k ( 7 2 0 , 1 3 6 9 4 - 9 4 9 4 0 1 4 3 4 4 7 6 2 - 7 7 . 1 9 2 0 6 9 5 , . 0 5 0 3 2 8 9 4 , 1 S E V R E S E R E R O D L O G 8 1 0 2 R E B M E C E D N O I T U L O V E d e v o r P l d o G e d a r G ) t / g ( 9 6 0 . 6 7 5 . 3 0 3 . - 3 0 3 . 2 5 0 . 4 1 . 1 6 2 5 . 9 8 2 . 9 7 0 . - 6 7 0 . ) t M ( s e n n o T ff O - t u C e p y T l d o G j t c e o r P . 4 5 6 4 5 4 0 . t i p n e p O 1 l a w o C 7 2 . 1 6 l a t o T 4 3 0 . 0 5 0 . - 0 5 0 . 2 9 2 . 7 2 0 . 0 2 0 . 7 4 0 . 0 5 0 1 . - 4 3 . . 8 0 . 7 3 . 3 0 5 7 0 . . 2 3 . 9 0 . 3 0 d n u o r g r e d n U 1 w o c a r C t i p n e p O 1 n o t l r a C t M d n u o r g r e d n U n o t l r a C t M t i p n e p O 1 i r a g n u M t i p n e p O 1 n o d w a R t M l a t o T 1 n o t l r a C t M d n u o r g r e d n U i r a g n u M l a t o T 1 i r a g n u M d n u o r g r e d n U 2 y r n e H t s e n r E t i p n e p O n e d s r a M t a w e v o t i l e b a l i a v a d n a 9 1 0 2 y r a u r b e F 1 d e s a e e r l ” 8 1 0 2 r e b m e c e D 1 3 t a s a s e v r e s e R d n a s e c r u o s e R e r o c n e G “ d e l t i t n e l t r o p e r e h t n i i d e d v o r p e r a s e v r e s e R e r O d n a s e c r u o s e R l i a r e n M y r n e H t s e n r E e h t f o s l i a t e d l l u F . ) e r o c n e G ( l t t e b r o C e k M i . 8 ; i s n k w a H n e B . 7 ; n o s r e t t a P m a S . 6 ; i r a v r a V t t a M . 5 ; n a h a T i r t i m D i . 4 ; r e g u r K n o t n A . 3 ; y a r G t t a M . 2 ; e r a K n a y R . 1 o t r e f e r s e t o N ) P C ( n o s r e P t n e t e p m o C e v r e s e R e r O p u o r G . q E u C % 9 0 ff o - t u c n o i t a r e p O y r n e H t s e n r E s e l i p k c o t s s e d u c n l I . 1 . 2 . 3 i g n d n u o r o t l e u d y e s i c e r p m u s t o n y a m d n a n o i s i c e r p e t a i r p o r p p a t c e fl e r o t i s e r u g fi t n a c fi n g i s o t d e t r o p e r s i a t a D s r e t e m a r a p d n a s n o i t p m u s s a l a i r e t a m l l a t a h t d n a t r o p e R e h t n i d e d u c n l i n o i t a m r o f n i e h t s t c e ff a y l l a i r e t a m t a h t a t a d r o n o i t a m r o f n i w e n y n a f o e r a w a t o n s i t i t a h t s m r fi n o c y n a p m o C e h T . . m o c e r o c n e g w w w l . n i t x e t n o c d n a m r o f e h t n i n o i t a m r o f n i r i e h t n o d e s a b s r e t t a m e h t f o t r o p e r s i h t n i n o i s u c n l i e h t o t s t n e s n o c t t e b r o C e k M i . d e g n a h c y l l a i r e t a m t o n e v a h d n a l y p p a o t e u n i t n o c t r o p e R e h t n i s e t a m i t s e i e h t g n n n p r e d n u i . r e p p o c r o f % 0 3 d n a d o g r o f l s i s a b % 0 0 1 a n o d e t r o p e r s i e v r e s e R e r O y r n e H t s e n r E s r a e p p a . t i i h c h w 59 Evolution Mining Limited Annual Report 2019       Mineral Resources and Ore Reserves (continued) 3 P C 1 2 3 e c r u o s e R l a t o T d e r r e f n I d e t a c i d n I d e r u s a e M r e p p o C r e p p o C r e p p o C s e n n o T r e p p o C r e p p o C s e n n o T r e p p o C r e p p o C s e n n o T r e p p o C r e p p o C s e n n o T ff O - t u C e p y T j t c e o r P S E V R E S E R D N A S E C R U O S E R R E P P O C 8 1 0 2 R E B M E C E D N O I T U L O V E t n e m e t a t S s e c r u o s e R l a r e n M i r e p p o C p u o r G l a t e M e d a r G ) t M ( l a t e M e d a r G ) t M ( l a t e M e d a r G ) t M ( ) t k ( 0 6 5 7 8 3 9 2 6 4 3 2 8 9 ) % ( 6 4 0 . . 7 9 2 2 1 9 1 . 1 0 3 0 . 6 0 . 1 4 3 0 . 9 5 0 . 4 4 2 3 . 1 5 9 . 3 5 0 . 4 0 0 1 . . 5 4 5 6 1 ) t k ( 7 7 6 2 1 3 7 7 ) % ( 4 2 0 . 7 1 . 1 6 4 0 . 5 1 . 1 7 5 0 . 2 8 0 . 4 1 . 3 3 7 5 . 3 4 0 . 8 0 0 . 2 5 0 . 8 3 9 . ) t k ( 3 5 5 2 5 2 6 2 5 0 3 5 3 8 ) % ( 6 4 0 . . 3 8 9 1 1 7 1 . 1 0 3 0 . 4 0 . 1 4 3 0 . 6 5 0 . 1 5 . 1 2 7 5 8 . 5 4 0 . 2 0 9 . l a t e M ) t k ( - 9 6 1 - 1 . 6 3 0 5 1 0 7 e d a r G ) t M ( ) % ( - 2 3 . 1 4 2 0 . - 4 2 0 . 3 2 . 1 - 1 2 5 . 0 5 0 . - 0 5 0 . 1 7 5 . l a t o T . 2 0 . 9 0 l a t o T l a t o T n e d s r a M 2 y r n e H t s e n r E 5 3 0 . t i p n e p O 1 n o t l r a C t M 4 2 . d n u o r g r e d n U n o t l r a C t M l a t o T 1 n o t l r a C t M t n e m e t a t S s e v r e s e R e r O r e p p o C p u o r G 60 Evolution Mining Limited Annual Report 2019 l d o g t / g n i d e t r o p e r e r a s e d a r g ff o - t u c n o i t u o v E l . s e v r e s e R e r O f o e v i s u c n l i d e t r o p e r e r a s e c r u o s e R l a r e n M i . i g n d n u o r o t l e u d y e s i c e r p m u s t o n y a m d n a n o i s i c e r p e t a i r p o r p p a t c e fl e r o t i s e r u g fi t n a c fi n g i s o t d e t r o p e r s i a t a D i s n k w a H n e B . 4 ; n o s r e t t a P m a S . 3 . ) e r o c n e G ( l t t e b r o C e k M i . 2 ; r e g u r K n o t n A . 1 : o t r e f e r s e t o N ) P C ( 3 n o s r e P t n e t e p m o C e v r e s e R e r O p u o r G . 4 d n a 3 s e b a T o t l e t a e r l s e t o n g n w o i l l o f e h T . q E u C % 9 0 ff o - t u c n o i t a r e p O y r n e H t s e n r E s e l i p k c o t s s e d u c n l I . 1 . 2 n o s l i W s i r h C 3 ; ) e r o c n e G ( l l r e z e t S n i l o C . 2 ; w e r d n A l e a h c M i . 1 : o t r e f e r s e t o N ) P C ( 3 n o s r e P t n e t e p m o C s e c r u o s e R l i a r e n M p u o r G t a w e v o t i l e b a l i a v a d n a 9 1 0 2 y r a u r b e F 1 d e s a e e r l ” 8 1 0 2 r e b m e c e D 1 3 t a s a s e v r e s e R d n a s e c r u o s e R e r o c n e G “ d e l t i t n e l t r o p e r e h t n i i d e d v o r p e r a s e v r e s e R e r O d n a s e c r u o s e R l i a r e n M y r n e H t s e n r E e h t f o s l i a t e d l l u F 3 P C 1 2 3 4 e v r e s e R l a t o T l e b a b o r P d e v o r P r e p p o C r e p p o C r e p p o C s e n n o T r e p p o C r e p p o C s e n n o T r e p p o C r e p p o C s e n n o T ff O - t u C e p y T j t c e o r P l a t e M e d a r G ) t M ( l a t e M e d a r G ) t M ( ) t k ( 1 7 3 6 3 1 7 2 4 1 3 ) % ( 7 5 0 . 5 0 . 1 6 6 0 . 0 7 0 . 6 6 0 . 8 3 5 7 1 . 5 6 0 9 2 1 . 9 1 . 4 0 6 0 . 8 7 4 . 5 6 0 . ) t k ( 1 7 3 9 8 6 2 4 0 3 5 8 2 8 . ) % ( 7 5 0 . 1 9 0 . 1 7 0 . 0 7 0 . 1 7 0 . 0 9 4 7 1 . 5 6 5 7 9 . 9 6 3 . 0 6 0 . 8 2 4 . 2 6 0 . l a t e M ) t k ( - 7 4 1 - 1 0 2 9 7 . e d a r G ) t M ( ) % ( - 9 4 . 1 4 2 0 . - 4 2 0 . 8 4 - 5 1 . 3 0 5 0 . - 0 5 0 . 2 3 . 1 . 3 0 . 9 0 . 8 0 . 7 3 5 6 3 . d n u o r g r e d n U n o t l r a C t M t i p n e p O 1 n o t l r a C t M l a t o T 2 y r n e H t s e n r E l a t o T l a t o T 1 n o t l r a C t M n e d s r a M o t n i e c r u o s e r e h t i f o g n n o i t r o p p A . ) a e r a e n m i f o e f i l d e e r g a e h t e d i s t u o e c r u o s e R y r n e H t s e n r E e h t m o r f d e c u d o r p r e v l i s d n a r e p p o c , l d o g e r u t u f f o % 9 4 d n a a e r a e n m i f o e f i l d e e r g a n a m o r f d e c u d o r p r e v l i s d n a r e p p o c . r e p p o c r o f % 0 3 d n a d o g r o f l s i s a b % 0 0 1 a n o d e t r o p e r s i e v r e s e R y r n e H t s e n r E . s e r u g fi d e t r o p e r e h t o t e g n a h c l a i r e t a m a e t u t i t s n o c t o n s e o d s t h g i r i c fi c e p s e h t e r u t u f f o % 0 3 d n a n o i t c u d o r p d o g e r u t u f l m o r f e u n e v e r e h t f o % 0 0 1 o t s t h g i r i i s a h g n n M n o i t u o v E ( l r e p p o c r o f . % 7 6 3 d n a d o g r o f l s i s a b % 5 . 1 8 n a n o d e t r o p e r s i e c r u o s e R y r n e H t s e n r E . s r a e p p a t i i h c h w n i t x e t n o c d n a m r o f e h t n i n o i t a m r o f n i r i e h t n o d e s a b s r e t t a m e h t f o t r o p e r s i h t n i n o i s u c n l i e h t o t t n e s n o c t t e b r o C e k M d n a i l r e z e t S n i l o C . d e g n a h c y l l a i r e t a m t o n e v a h d n a l y p p a o t e u n i t n o c t r o p e R e h t n i s e t a m i t s e i e h t g n n n p r e d n u i s r e t e m a r a p d n a s n o i t p m u s s a l a i r e t a m l l a t a h t d n a t r o p e R e h t n i d e d u c n l i n o i t a m r o f n i e h t s t c e ff a y l l a i r e t a m t a h t a t a d r o n o i t a m r o f n i w e n y n a f o e r a w a t o n s i t i t a h t s m r fi n o c y n a p m o C e h T . . m o c e r o c n e g w w w l .         Chief Financial Officer’s Review A clear priorty for Evolution since the Company’s formation has been to generate superior returns for our shareholders. The financial performance achieved in the 12 months to 30 June 2019 continued to demonstrate the quality of Evolution’s asset portfolio and enabled a further increase in dividends paid to our shareholders. The business delivered statutory net profit after tax of A$218.2 million and generated free cash flow of A$291.6 million. With Evolution moving to a net cash position by 30 June 2019 the Board approved an improvement to the Company’s dividend policy by changing the payout ratio to target 50% of free cash flow. Evolution declared a final fully franked dividend of 6 cents per share – a 50% increase on the final FY18 dividend. Lawrie Conway – Finance Director and Chief Financial Officer The Group recorded a statutory net profit after tax of A$218.2 million for the year, a decrease of 17% on the prior year. Underlying profit after tax decreased by 13% to A$218.2 million (30 June 2018: A$250.8 million). The Group’s ongoing focus on productivity improvements and cost efficiencies delivered another year of strong results. Total gold production of 753,001oz was above the midpoint of guidance for the year of 720,000 – 770,000oz. Our AISC of A$924/oz placed Evolution among the lowest cost gold producers in the world. Looking forward, Evolution has guided FY20 gold production of 725,000 – 775,000 ounces at an All-in Sustaining Cost of A$890 – A$940 per ounce. Operating mine cash flow of A$771.5 million was generated and after A$273.7 million of capital investment a net mine cash flow of A$497.8 million was generated. It was very pleasing again for all our mines to be contributing positive cash flows after meeting their operating and capital requirements. Evolution continued to invest in extensions of mine life and production growth, including the approval of major development projects and exploration drilling at Cowal, and development of an underground mine and plant upgrade at Mt Carlton. Evolution moved into a net cash position during the year. As at 30 June 2019 the net cash position was A$35.2 million (30 June 2018: net bank debt of A$71.8 million). During the financial year the Group made A$95.0 million of repayments on the Senior Secured Term Loan (“Facility D”). The A$350.0 million Senior Secured Revolving Loan (“Facility A”) remains undrawn at 30 June 2019 and is available until 31 July 2021. Revenue for the year ended 30 June 2019 decreased by 2% to A$1,509.8 million (30 June 2018: A$1,540.4 million). The 7% higher achieved gold price of A$1,760/oz was offset by a decrease in sold ounces of 7% to 742,964oz (30 June 2018: 798,101oz including 22,903oz at Edna May) and lower copper and silver revenue which is a result of both volume and price. Revenue comprised of A$1,307.5 million for gold and A$202.3 million for copper and silver (30 June 2018: A$1,312.6 million for gold and A$227.8 million for copper and silver). The Edna May operation contributed revenue in 2018 for three months of A$37.2 million prior to its sale on 3 October 2017. Total gold sold of 742,964oz included deliveries into the hedge book of 150,000oz at an average price of A$1,690/ oz (30 June 2018 hedge deliveries: 205,915oz at A$1,564/ oz). The remaining 592,964oz were sold at spot, achieving an average price of A$1,777/oz (30 June 2018 spot sales: 592,186oz at A$1,673/oz). The Group’s hedge book as at 30 June 2019 totals 400,000oz at an average price of A$1,838/oz with deliveries through to June 2023. Group operating costs (excluding depreciation, amortisation and fair value adjustments of A$398.5 million) increased to A$736.0 million (30 June 2018: A$705.5 million). Mine operating costs, excluding Edna May, were higher than FY18 by A$43.4 million. Lower capitalisation of mine costs in the financial year, mainly due to the completion of the White Foil cutback at Mungari during FY18, contributed to A$27.8 million of higher mine operating costs being expensed in FY19 with the remainder of the increase driven by a mix of input prices and activities. Higher power prices contributed an additional A$7.5 million to power costs, mainly at Cowal, due to the full year impact in FY19 of higher priced contracts that were effective from 1 January 2018. Oil price increases resulted in A$6.6 million of higher diesel costs while FY19 labour costs increased by approximately 3% above FY18. Inventory movements resulted in a charge to costs in FY19 of A$21.6 million driven by utilisation of ore stockpiles at Mt Rawdon resulting in an A$5.3 million expense in FY19 compared to a credit to costs of A$23.8 million in FY18 where ore stockpiles increased. Inventory movements at other sites partially offset the impact at Mt Rawdon with a net credit to operating costs in FY19 of A$7.5 million. 61 Evolution Mining Limited Annual Report 2019Chief Financial Officer’s Review (continued) FINAL DIVIDEND FULLY FRANKED 6cps 50% During the year, the Group made income tax payments of A$91.2 million related to the 30 June 2018 and 30 June 2019 financial years and recognised an income tax expense of A$96.7 million (30 June 2018: A$75.5 million). Total exploration expenditure for the year ended 30 June 2019 was A$52.1 million (30 June 2018: A$31.6 million) with an exploration expense of A$7.2 million (30 June 2018: A$5.4 million). Capital expenditure for the year totalled A$273.6 million (30 June 2018: A$271.9 million). This consisted of sustaining capital, including near mine exploration and resource definition, of A$93.2 million (30 June 2018: A$100.9 million) and major capital of A$180.4 million (30 June 2018: A$171.0 million). The main major capital projects included the Cowal Stage H development, Float Tails Leach project and E46 land acquisition costs; underground mine development at Cracow, Mt Carlton and Mungari; and capital waste stripping at Mt Carlton and Mt Rawdon. In August 2019, the Directors approved a change to the dividend policy to paying a dividend, of whenever possible, based on free cash flow generated during a year. The Directors will assess the group cash flow and outlook for the business with the intention to return excess cash to shareholders and targeting a payout level around 50% of cash flow. The Group’s free cash flow is defined as cash flow before debt, dividends and any merger and acquisition activities. The change was applied to the final dividend for FY19. In conclusion, the 2019 Financial Year was another good year for Evolution. Looking forward, we remain focused on maintaining low costs and strong cash generation. We will continue to invest capital on projects that provide appropriate returns on capital and are committed to funding our discovery strategy which is delivering strong results for our business. We are also confident in our ability to continue to deliver superior shareholder returns. Financials Statutory Profit before tax Statutory Profit after tax Underlying Profit after tax EBITDA Operating Mine Cash Flow Net Mine Cash Flow Group Cash Flow1 EBITDA Margin2 Earnings Per Share Final dividend (fully franked) Units A$M A$M A$M A$M A$M A$M A$M % cps cps FY19 314.8 218.2 218.2 730.3 771.5 497.8 291.6 48 12.9 6 FY18 338.9 263.4 250.8 795.1 811.8 539.9 395.6 53 15.6 4 Change -7% -17% -13% -8% -5% -8% -26% -10% -21% 50% 1. 2. Excludes proceeds from Edna May sale (FY18) and Tribune & Castle Hill investments (FY19) FY18 excludes Edna May Yours faithfully LAWRIE CONWAY FINANCE DIRECTOR and CHIEF FINANCIAL OFFICER 62 Evolution Mining Limited Annual Report 2019 63 Evolution Mining Limited Annual Report 2019Board of Directors Standing left to right: Cobb Johnstone, Lawrie Conway, Jake Klein, Jim Askew, Andrea Hall, Graham Freestone, Tommy McKeith The Board has implemented and is committed to the ASX Corporate Governance Council’s Fourth Edition Corporate Governance Principles and Recommendations, and to maintaining a high standard of Corporate Governance which reflects the requirements of the market regulators and the expectations of the Company’s security holders. Lawrence (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 30 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). 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 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. It became an ASX/S&P 100 Company, operating two award-winning gold mines and engaging over 2,000 employees and contractors in China. Prior to joining Sino Gold (and its predecessor) in 1995, Mr Klein was employed at Macquarie Bank and PricewaterhouseCoopers. Mr Klein was a Non-Executive Director of the Lynas Corporation Limited from August 2004 to May 2017, a company with operations in Australia and Malaysia, and OceanaGold Corporation from December 2009 to July 2014, a company with operations in the Philippines, USA and New Zealand. 64 Evolution Mining Limited Annual Report 2019 Board of Directors (continued) 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 includes 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 and Burkina Faso (Non-Executive Director since July 2017). 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 currently Chairman of Aurelia Metals Ltd, a position he has held since November 2016. Mr Johnstone was Evolution’s Lead Independent Director from 25 November 2015 to 30 November 2018 and remains the Chair of the Risk and Sustainability Committee and a member of the Audit Committee. Mr Johnstone was a former Non-Executive Director of Magnis Resources Ltd; Neometals Ltd (previously Reed Resources Ltd); and Metallum Ltd. Mr Askew is a member of the Risk and Sustainability Committee and Member of the Nomination and Remuneration Committee. Thomas (Tommy) McKeith BSc (Hons), GradDip Eng (Mining), MBA, Lead Independent Director Within the last three years Mr Askew has been a Non- Executive Director of Nevada Copper Limited; Asian Mineral Resources Ltd; and OceanaGold Corporation. 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. He was a Non-Executive Director of Lion Selection from 2001 to 2009 and was a Non-Executive Director of Catalpa Resources Limited from 2009 to 2011 and Chaired their Audit Committees during that period. Mr Freestone was a Non-Executive Director of Kasbah Resources Limited from 2017 to 2019, a company with a tin project in Morocco, and Chaired its Remuneration and Audit Committees. Mr Freestone is a member of the Audit Committee and is a Member of the Nomination and Remuneration Committee. Colin (Cobb) Johnstone BEng (Mining), Non-Executive 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 McKeith is a geologist with 30 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 Prodigy Gold NL and Genesis Minerals Limited. Mr McKeith is the Lead Independent Director effective from 1 December 2018, Chair of the Nomination and Remuneration Committee and Member of the Risk and Sustainability Committee. Andrea Hall BCom, FCA, M. App Fin, GAICD, Non-Executive Director Ms Hall is a Chartered Accountant with more than 30 years’ experience in the financial services industry in roles involved in internal audit, risk management, corporate and operational governance, external audit, financial management and strategic planning. Prior to retiring from KPMG in 2012, Andrea was a Perth based partner within KPMG’s Risk Consulting Services where she serviced industries including mining, mining services, transport, healthcare, insurance, property and government. Ms Hall is currently a Non-Executive Director and Chair of the Audit and Risk Committee at ASX-listed Pioneer Credit Limited and Automotive Holdings Group Limited. She is also a Non-Executive Director of Insurance Commission of Western Australia and the Fremantle Football Club. Ms Hall is the Chair of the Audit Committee. 65 Evolution Mining Limited Annual Report 201966 Evolution Mining Limited Annual Report 2019 Evolution Mining Limited Annual Financial Report Contents Directors' Report Auditor's Independence Declaration Financial Statements Page 68 103 Consolidated Statement of Profit or Loss and Other Comprehensive Income 104 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 105 106 107 108 142 143 149 153 67 Evolution Mining Limited Annual Report 2019 Directors' Report APPENDIX 4E EVOLUTION MINING LIMITED ACN 084 669 036 AND CONTROLLED ENTITIES ANNUAL FINANCIAL REPORT For the year ended 30 June 2019 Results for Announcement to the Market Key Information Revenues from contracts with customers SPACE Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA) SPACE Statutory profit before income tax SPACE Profit from ordinary activities after income tax attributable to the members Dividend Information 30 June 2019 $'000 30 June 2018 $'000 Up / (down) $'000 % Increase/ (decrease) 1,509,824 1,540,433 (30,609) 730,262 795,083 (64,821) 314,826 338,934 (24,108) (2)% (8)% (7)% 218,188 263,388 (45,200) (17)% Final dividend for the year ended 30 June 2019 Dividend to be paid on 27 September 2019 Space Interim dividend for the year ended 30 June 2019 Dividend fully paid on 30 March 2019 Space Final dividend for the year ended 30 June 2018 Dividend fully paid on 29 September 2018 Net Tangible Assets Net tangible assets per share Earnings Per Share Basic earnings per share Diluted earnings per share Amount per share Cents Franked amount per share Cents 6.0 3.5 4.0 6.0 3.5 4.0 30 June 2019 $ 30 June 2018 $ 1.45 1.35 30 June 2019 Cents 30 June 2018 Cents 12.86 12.78 15.57 15.51 Additional Appendix 4E disclosure requirements can be found in the notes to these financial statements and the Directors' Report attached thereto. This report is based on the consolidated financial statements which have been audited by PricewaterhouseCoopers. 68 Evolution Mining Limited Annual Report 2019 EvolutionMiningLimitedDirectors'Report30June2019Directors'ReportTheDirectorspresenttheirreporttogetherwiththeconsolidatedfinancialreportoftheEvolutionMiningLimitedGroup,consistingofEvolutionMiningLimited("theCompany")andtheentitiesitcontrolledattheendof,orduring,theyearended30June2019.DirectorsTheDirectorsofEvolutionMiningLimitedduringtheyearended30June2019anduptothedateofthisreportaresetoutbelow.AllDirectorsheldtheirpositionasaDirectorthroughouttheentireyearanduptothedateofthisreportunlessotherwisestated.Jacob(Jake)KleinExecutiveChairmanLawrence(Lawrie)ConwayFinanceDirectorandChiefFinancialOfficerThomas(Tommy)McKeith(i)LeadIndependentDirectorJames(Jim)AskewNon-ExecutiveDirectorGrahamFreestoneNon-ExecutiveDirectorAndreaHallNon-ExecutiveDirectorColin(Cobb)Johnstone(i)Non-ExecutiveDirectorNaguibSawiris(ii)Non-ExecutiveDirectorSebastiendeMontessus(ii)Non-ExecutiveDirectorAndrewWray(iii)AlternateNon-ExecutiveDirectorforNaguibSawirisandSebastiendeMontessus(i)AppointedasLeadIndependentDirectorreplacingColin(Cobb)Johnstoneeffective1December2018.(ii)ResignedasNon-ExecutiveDirectoreffective1August2018.(iii)ResignedasAlternateNon-ExecutiveDirectoreffective1August2018.CompanySecretaryThenameoftheCompanySecretaryduringthefullyearended30June2019anduptothedateofthisreportisasfollows:EvanElsteinPrincipalactivitiesTheprincipalactivitiesoftheGroupduringtheyearwereexploration,minedevelopment,mineoperationsandthesaleofgoldandgold/copperconcentrateinAustralia.Therewerenosignificantchangestotheseactivitiesduringtheyear.KeyhighlightsfortheyearKeyhighlightsfortheyearended30June2019include:•Drivingasafetyculturewhereourpeopledotherightthingbecausetheywantto,notbecausetheyhavetounderpinsoursafetyprograms.Disappointinglyourtotalrecordableinjuryfrequency(TRIF)fortheyearwas8.3(30June2018:5.5).Investigationsshowedanincreaseinminorinjurieswithaneedtoincreasefocusonpromotingmindfulnessandpre-taskriskidentification.SafetyprogramsincludedHSESystemsandCriticalControlverificationaudits.ThefocuscontinuestobeonimprovingEvolution’ssafetycultureandembeddingadequatemanagementofcriticalcontrolsassociatedwithhighrisksacrossallsites.•TheGrouppublishedit'sinauguralSustainabilityReportduringtheyear.•TheGrouprecordedastatutorynetprofitaftertaxof$218.2millionfortheyear,adecreaseof17%ontheprioryear.Underlyingprofitaftertaxdecreasedby13%to$218.2million(30June2018:$250.8million).•TheGroup’scontinuingfocusonproductivityimprovementsandcostefficienciesdeliveredanotheryearofstrongresultsincluding:•Totalgoldproductionof753,001ozwhichwasabovethemidpointofguidancefortheyearof720,000oz-770,000oz.•Operatingminecashflowof$771.5million.•Netminecashflowof$497.8million,withalloperationsdeliveringpositivecashflowgenerationaftermeetingtheiroperatingandcapitalneeds.•Evolutioncontinuedinvestingforextensionsofminelifeandproductiongrowth,includingtheapprovalofmajordevelopmentprojectsandexplorationdrillingatCowal,anddevelopmentofanundergroundmineandplantupgradeatMtCarlton.•Evolutionmovedintoanetcashpositionduringtheyearandasat30June2019thenetcashpositionwas$35.2million(30June2018:netbankdebtof$71.8million).•Atotalof$127.0million(30June2018:$109.9million)infullyfrankeddividendswaspaidduringtheyear.Afinaldividendof6centspersharefullyfranked($101.8million)wasdeclaredandwillbepaidon27September2019.•Duringtheyear,theGroupmade$95.0millionofrepaymentsontheSeniorSecuredTermLoan(“FacilityD”).The$350.0millionSeniorSecuredRevolvingLoan("FacilityA")remainsundrawnat30June2019.169 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019Directors'ReportTheDirectorspresenttheirreporttogetherwiththeconsolidatedfinancialreportoftheEvolutionMiningLimitedGroup,consistingofEvolutionMiningLimited("theCompany")andtheentitiesitcontrolledattheendof,orduring,theyearended30June2019.DirectorsTheDirectorsofEvolutionMiningLimitedduringtheyearended30June2019anduptothedateofthisreportaresetoutbelow.AllDirectorsheldtheirpositionasaDirectorthroughouttheentireyearanduptothedateofthisreportunlessotherwisestated.Jacob(Jake)KleinExecutiveChairmanLawrence(Lawrie)ConwayFinanceDirectorandChiefFinancialOfficerThomas(Tommy)McKeith(i)LeadIndependentDirectorJames(Jim)AskewNon-ExecutiveDirectorGrahamFreestoneNon-ExecutiveDirectorAndreaHallNon-ExecutiveDirectorColin(Cobb)Johnstone(i)Non-ExecutiveDirectorNaguibSawiris(ii)Non-ExecutiveDirectorSebastiendeMontessus(ii)Non-ExecutiveDirectorAndrewWray(iii)AlternateNon-ExecutiveDirectorforNaguibSawirisandSebastiendeMontessus(i)AppointedasLeadIndependentDirectorreplacingColin(Cobb)Johnstoneeffective1December2018.(ii)ResignedasNon-ExecutiveDirectoreffective1August2018.(iii)ResignedasAlternateNon-ExecutiveDirectoreffective1August2018.CompanySecretaryThenameoftheCompanySecretaryduringthefullyearended30June2019anduptothedateofthisreportisasfollows:EvanElsteinPrincipalactivitiesTheprincipalactivitiesoftheGroupduringtheyearwereexploration,minedevelopment,mineoperationsandthesaleofgoldandgold/copperconcentrateinAustralia.Therewerenosignificantchangestotheseactivitiesduringtheyear.KeyhighlightsfortheyearKeyhighlightsfortheyearended30June2019include:•Drivingasafetyculturewhereourpeopledotherightthingbecausetheywantto,notbecausetheyhavetounderpinsoursafetyprograms.Disappointinglyourtotalrecordableinjuryfrequency(TRIF)fortheyearwas8.3(30June2018:5.5).Investigationsshowedanincreaseinminorinjurieswithaneedtoincreasefocusonpromotingmindfulnessandpre-taskriskidentification.SafetyprogramsincludedHSESystemsandCriticalControlverificationaudits.ThefocuscontinuestobeonimprovingEvolution’ssafetycultureandembeddingadequatemanagementofcriticalcontrolsassociatedwithhighrisksacrossallsites.•TheGrouppublishedit'sinauguralSustainabilityReportduringtheyear.•TheGrouprecordedastatutorynetprofitaftertaxof$218.2millionfortheyear,adecreaseof17%ontheprioryear.Underlyingprofitaftertaxdecreasedby13%to$218.2million(30June2018:$250.8million).•TheGroup’scontinuingfocusonproductivityimprovementsandcostefficienciesdeliveredanotheryearofstrongresultsincluding:•Totalgoldproductionof753,001ozwhichwasabovethemidpointofguidancefortheyearof720,000oz-770,000oz.•Operatingminecashflowof$771.5million.•Netminecashflowof$497.8million,withalloperationsdeliveringpositivecashflowgenerationaftermeetingtheiroperatingandcapitalneeds.•Evolutioncontinuedinvestingforextensionsofminelifeandproductiongrowth,includingtheapprovalofmajordevelopmentprojectsandexplorationdrillingatCowal,anddevelopmentofanundergroundmineandplantupgradeatMtCarlton.•Evolutionmovedintoanetcashpositionduringtheyearandasat30June2019thenetcashpositionwas$35.2million(30June2018:netbankdebtof$71.8million).•Atotalof$127.0million(30June2018:$109.9million)infullyfrankeddividendswaspaidduringtheyear.Afinaldividendof6centspersharefullyfranked($101.8million)wasdeclaredandwillbepaidon27September2019.•Duringtheyear,theGroupmade$95.0millionofrepaymentsontheSeniorSecuredTermLoan(“FacilityD”).The$350.0millionSeniorSecuredRevolvingLoan("FacilityA")remainsundrawnat30June2019.1Evolution Mining Limited Directors' Report 30 June 2019 (continued) Key highlights for the year (continued) • • • • • • • • • During the year, the Group hedged a further 300,000oz of production at an average price of A$1,871/oz for quarterly deliveries between July 2020 and June 2023. The additional hedging provides support to the balance sheet during a period of major capital investment while leaving the majority of production unhedged. The proportion of expected production hedged is 13-15% per annum through until 30 June 2023. In August 2018, La Mancha Group International B.V. (La Mancha) Group sold a portion of their shareholding in the Group, taking their total holding down to 9.6%. In line with the terms of the Share Sale Agreement signed between the two Companies, La Mancha’s nominee Directors Mr Naguib Sawiris, Mr Sebastian de Montessus and their Alternate Director Mr Andrew Wray resigned from the Board of Directors effective 1 August 2018. In September 2018, the Group entered into an earn-in joint venture agreement with Andromeda Metals Limited over the Drummond exploration project. Drummond is an early-stage gold exploration project located in northern Queensland covering roughly 520km². The project is approximately 50km southwest of the Group's Mt Carlton operation. The key terms of the agreement are as follows: • • • The Group can earn a 51% interest in the project by making a cash payment of $300,000 to Andromeda and spending $2 million on exploration over a two year period. The Group can earn a further 29% (for a total of over 80%) by making an additional cash payment of $200,000 and spending $4 million on exploration over two years. The Group manages and operates the joint venture while it is sole contributing and thereafter while ever it holds a majority equity. In October 2018, the Board approved the Mt Carlton underground development and plant upgrade modifications at an estimated investment of $60.0 million to be incurred from FY19 to FY22. First ore from the underground is planned for FY21. In October 2018, the Cowal operation was granted regulatory approval from the NSW Department of Planning and Environment to increase the plant processing rate by 31% from 7.5 million tonnes per annum (Mtpa) to 9.8Mtpa. Other key features of the modification application include the implementation of a secondary crushing circuit at the processing plant and the development of an Integrated Waste Landform (IWL) to facilitate storage of tailings over the life of mine. Subsequent to this regulatory approval, the Board approved the first stage upgrade to the Cowal processing plant in November 2018. The first stage of the project will take the processing capacity to at least 8.7Mtpa at an estimated capital investment of $25.0 to $30.0 million. In October 2018, regulatory approval to commence the development of the Galway-Regal-E46 (GRE46) exploration decline at Cowal was received. The decline will allow the Group to conduct further resource definition and discovery drilling at GRE46 as well as further drilling to delineate the Dalwhinnie Lode. Drilling success has been reported at both GRE46 and Dalwhinnie as at 30 June 2019. During December 2018, the Group agreed to subscribe for a further 3.2 million shares in Riversgold Ltd, taking the Company’s shareholding to 15.7 million shares and a total of 18.7% of the outstanding shares in Riversgold Ltd. In February 2019, the Group acquired 11.05 million shares, representing a 19.9% shareholding, in Tribune Resources Limited for a cash consideration of $41.3 million. Tribune’s major asset is it's interest in the East Kundana mining operation which is a joint venture between Northern Star Resources Limited (51% and operator), Rand Mining Limited (12.25%) and Tribune (36.75%). The East Kundana Joint Venture (EKJV) tenements are adjacent to the Group's 1.7 million tonnes per annum Mungari processing plant, which is located approximately 20km west of Kalgoorlie in Western Australia. In April 2019, the Group entered into an earn-in joint venture agreement with Enterprise Metals Limited (Enterprise) over the Murchison exploration project. Murchison is a large, early-stage gold exploration project covering ~750km2 in the Murchison region of central Western Australia. The Group can earn an 80% interest in the Murchison project by: • Spending $6.0 million on exploration over a four-year period. • Making an initial cash payment to Enterprise of $150,000 on signing of the agreement. • Making an additional cash payment to Enterprise of $150,000 should the agreement remain in place after two years. The Group will operate the project during the earn-in period. 70 Evolution Mining Limited Annual Report 2019 2 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReviewEvolutionisaleading,lowcostAustraliangoldminingcompany.Asat30June2019,theGroupconsistedoffivewholly-ownedoperatinggoldmines:CowalinNewSouthWales;Cracow,MtCarltonandMtRawdoninQueensland;andMungariinWesternAustralia,andaneconomicinterestintheErnestHenryCopper-GoldOperation(100%ofgoldand30%ofcopperandsilver)inQueensland.TheGroup’sstrategyistodelivershareholdervaluethroughefficientgoldproduction,growinggoldreservesanddevelopingacquiringordivestingassetstoimprovethequalityoftheportfolio.SinceitsformationinNovember2011,theGrouphasbuiltastrongreputationforoperationalpredictabilityandstabilitythroughconsistentlydeliveringtoguidance.AportfolioapproachtoproductionprovidesEvolutionwithaGroup-widelevelofoperationalstabilityandpredictabilitywithoutrelianceononesingleasset.TheGroup’shigh-performanceteamcultureandclearlydefinedbusinessplansandgoalsfurthercontributetodeliveringreliableandconsistentresults.Tobuildasustainablebusiness,theGroupmaintainsastrongcommitmenttogrowththroughexplorationandadisciplinedapproachtobusinessdevelopmentthroughopportunistic,logical,value-accretiveacquisitionsanddivestments.ProfitOverviewTheGroupachievedastatutorynetprofitaftertaxof$218.2millionfortheyearended30June2019(30June2018:$263.4million).ThefollowinggraphshowsthemovementsintheGroup'sstatutoryprofitaftertaxfortheyearended30June2018totheyearended30June2019.Gold revenue was $31.9 million higher driven by higher gold prices this was partially offset by $25.3 million lower by-product revenue as a result of lower copper and silver prices and volumes. FY18 included a loss of $3.7 million at Edna May which was sold in October 2017.Mine operating costs excluding Edna May and inventory movements were higher than FY18 by $43.4 million. Lower capitalisation of mine costs in the financial year mainly for the completion of the White Foil cutback at Mungari during FY18 contributed to $27.8 million of higher mine operating costs being expensed in FY19 with the remainder of the increase driven by a mix of input prices and activities. Higher power prices contributed an additional $7.5 million to power costs, mainly at Cowal, due to the full year impact in FY19 of higher priced contracts that were effective from 1 January 2018. Oil price increases resulted in $6.6 million of higher diesel costs while labour costs moved approximately 3% higher than FY18.Inventory movements resulted in an additional charge to costs in FY19 of $21.6 million driven by utilisation of ore stockpiles at Mt Rawdon resulting in an $5.3 million FY19 expense compared to a credit to costs of $23.8 million in FY18 where ore stockpiles increased. Inventory movements at other sites partially offset the impact at Mt Rawdon with a net credit to operating costs in FY19 of $7.5 million.Lower depreciation and amortisation expense reflects the higher reserves in the 2018 Mineral Resource and Ore Statement issued in April 2019 over which assets are to be depreciated and fair value at Cowal and Mungari are to be amortised.Tax expense for the current year is higher with the prior year reduced by the recognition of tax losses and temporary differences including $22.7 million as a consequence of an independent valuation of the Cowal open pit and Mungari open pit and underground that was completed during the prior year.The Group achieved an underlying net profit after tax of $218.2 million for the year ended 30 June 2019 (30 June 2018: $250.8 million). The table below shows a reconciliation of statutory profit/(loss) before tax to the underlying profit after tax.371 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReviewEvolutionisaleading,lowcostAustraliangoldminingcompany.Asat30June2019,theGroupconsistedoffivewholly-ownedoperatinggoldmines:CowalinNewSouthWales;Cracow,MtCarltonandMtRawdoninQueensland;andMungariinWesternAustralia,andaneconomicinterestintheErnestHenryCopper-GoldOperation(100%ofgoldand30%ofcopperandsilver)inQueensland.TheGroup’sstrategyistodelivershareholdervaluethroughefficientgoldproduction,growinggoldreservesanddevelopingacquiringordivestingassetstoimprovethequalityoftheportfolio.SinceitsformationinNovember2011,theGrouphasbuiltastrongreputationforoperationalpredictabilityandstabilitythroughconsistentlydeliveringtoguidance.AportfolioapproachtoproductionprovidesEvolutionwithaGroup-widelevelofoperationalstabilityandpredictabilitywithoutrelianceononesingleasset.TheGroup’shigh-performanceteamcultureandclearlydefinedbusinessplansandgoalsfurthercontributetodeliveringreliableandconsistentresults.Tobuildasustainablebusiness,theGroupmaintainsastrongcommitmenttogrowththroughexplorationandadisciplinedapproachtobusinessdevelopmentthroughopportunistic,logical,value-accretiveacquisitionsanddivestments.ProfitOverviewTheGroupachievedastatutorynetprofitaftertaxof$218.2millionfortheyearended30June2019(30June2018:$263.4million).ThefollowinggraphshowsthemovementsintheGroup'sstatutoryprofitaftertaxfortheyearended30June2018totheyearended30June2019.Gold revenue was $31.9 million higher driven by higher gold prices this was partially offset by $25.3 million lower by-product revenue as a result of lower copper and silver prices and volumes. FY18 included a loss of $3.7 million at Edna May which was sold in October 2017.Mine operating costs excluding Edna May and inventory movements were higher than FY18 by $43.4 million. Lower capitalisation of mine costs in the financial year mainly for the completion of the White Foil cutback at Mungari during FY18 contributed to $27.8 million of higher mine operating costs being expensed in FY19 with the remainder of the increase driven by a mix of input prices and activities. Higher power prices contributed an additional $7.5 million to power costs, mainly at Cowal, due to the full year impact in FY19 of higher priced contracts that were effective from 1 January 2018. Oil price increases resulted in $6.6 million of higher diesel costs while labour costs moved approximately 3% higher than FY18.Inventory movements resulted in an additional charge to costs in FY19 of $21.6 million driven by utilisation of ore stockpiles at Mt Rawdon resulting in an $5.3 million FY19 expense compared to a credit to costs of $23.8 million in FY18 where ore stockpiles increased. Inventory movements at other sites partially offset the impact at Mt Rawdon with a net credit to operating costs in FY19 of $7.5 million.Lower depreciation and amortisation expense reflects the higher reserves in the 2018 Mineral Resource and Ore Statement issued in April 2019 over which assets are to be depreciated and fair value at Cowal and Mungari are to be amortised.Tax expense for the current year is higher with the prior year reduced by the recognition of tax losses and temporary differences including $22.7 million as a consequence of an independent valuation of the Cowal open pit and Mungari open pit and underground that was completed during the prior year.The Group achieved an underlying net profit after tax of $218.2 million for the year ended 30 June 2019 (30 June 2018: $250.8 million). The table below shows a reconciliation of statutory profit/(loss) before tax to the underlying profit after tax.3Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Profit Overview (continued) Statutory profit before income tax Fair value gain Transaction and integration costs Underlying profit before income tax Income tax expense Tax benefit on sale of subsidiary Tax effect of adjustments Recognition of previously unrecognised tax losses Recognition of previously unrecognised temporary differences Underlying profit after income tax Cash Flow 2019 $'000 314,826 - - 314,826 (96,638) - - - - 218,188 2018 $'000 338,934 (3,142) (866) 334,926 (75,546) 4,165 1,201 (4,544) (9,440) 250,762 Operating mine cash flow decreased by 5% totalling $771.5 million (30 June 2018: $811.8 million). Total capital expenditure totalled $273.6 million which included $93.2 million of sustaining capital expenditure and $180.4 million of major capital expenditure. 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$'000) unless otherwise stated. Key Business Metrics 30 June 2019 30 June 2018 % Change (ii) Total underground ore mined (kt) Total underground lateral development (m) Total open pit ore mined (kt) Total open pit waste mined (kt) Processed tonnes (kt) Gold grade processed (g/t) Gold production (oz) Silver production (oz) Copper production (t) Unit cash operating cost (A$/oz) (i) All in sustaining cost (A$/oz) (i) All in cost (A$/oz) (i) Gold price achieved (A$/oz) Silver price achieved (A$/oz) Copper price achieved (A$/t) Total Revenue Cost of sales (excluding D&A and fair value adjustments (i) Corporate, admin, exploration and other costs (excluding D&A) EBIT (i) EBITDA (i) Statutory profit/(loss) after income tax Underlying profit after income tax Operating mine cash flow Capital expenditure Net mine cash flow 7,680 14,538 11,703 37,501 21,050 1.32 753,001 709,497 21,846 627 924 1,215 1,760 21 8,587 1,509,824 (735,971) (43,591) 330,304 730,262 218,188 218,188 771,461 (273,636) 497,825 7,817 13,640 14,453 40,984 21,425 1.37 801,187 989,253 23,268 512 797 1,033 1,645 22 8,923 1,540,433 (705,553) (39,797) 360,380 795,083 263,388 250,762 811,766 (271,870) 539,896 (2)% 7% (19)% (8)% (2)% (4)% (6)% (28)% (6)% (22)% (16)% (18)% 7% (5)% (4)% (2)% (4)% (10)% (8)% (8)% (17)% (13)% (5)% (1)% (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. Percentage change represents positive/(negative) impact on the business. Ernest Henry mining and processing statistics are in 100% terms while costs represent Evolution's cost and not solely the cost of Ernest Henry's operation. 72 Evolution Mining Limited Annual Report 2019 4 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReview(continued)MiningOperationsCowalCowalhadanothersuccessfulyear,achievingaboveguidancegoldproductionof251,500oz(guidanceof240,000-250,000oz)atanaverageunitcashoperatingcostof$765/ozandAISCof$995/oz.CashcostsandAISCwerebelowthelowerendandwithinguidanceof$765-$840/ozand$975-$1,075/ozrespectively.Capitalexpenditurefortheyearwas$144.7million,ofwhich$100.7millionrelatestomajorprojectsconsistingmostlyoftheStageHcutback.CowalactivitiesintheyearfocussedontheStageHcutback,commissioningoftheFloatTailsLeach(FTL)circuitandconstructionpre-worksoftheIntegratedWasteLandformtailingsfacility.DuringOctober2018,theCowaloperationwasgrantedregulatoryapprovalfromtheNSWDepartmentofPlanningandEnvironmenttoincreasetheplantprocessingrateby31%from7.5milliontonnesperannum(Mtpa)to9.8MtpapertheModification14developmentapplication.RegulatoryapprovaltocommencethedevelopmentoftheGalway-Regal-E46(GRE46)explorationdeclineatCowalwasalsoapproved.ThedeclinewillallowEvolutiontoconductfurtherresourcedefinitionanddiscoverydrillingatGRE46aswellasfurtherdrillingtodelineatetheDalwhinnieLode.ExcellentdrillingresultswerereportedatbothGRE46andDalwhinnieasof30June2019whichcontinuestohighlightthehigh-gradenatureofthismineralisedsystem.Explorationworkdeliveredmaterialresourceandorereservesgrowth,reflectedintheMineralResourcesandOreReservesupdatewhichincorporatedfullyeardrillingresultsasat31December2018.Cowalwasamajorcontributorwitha134%increasetoMineralResourcesto1.41millionouncesanda27%increasetoOreReservesto3.88millionounces.Theundergroundexplorationdeclinehadreached550metresoflateraldevelopmentasof30June2019andisprogressingaheadofschedule.TheundergrounddrillingprogramcommencedduringtheJune2019quarterandwillcontinueforthenext12-18monthsKeyBusinessMetrics30June201930June2018Change%ChangeOperatingcashflow($'000)232,258225,8126,4463%Sustainingcapital($'000)(44,000)(39,697)(4,303)11%Majorcapital($'000)(100,734)(84,923)(15,811)19%Totalcapital($'000)(144,734)(124,620)(20,114)16%Netminecashflow($'000)87,524101,192(13,668)(14)%Goldproduction(oz)251,500257,951(6,451)(3)%All-inSustainingCost($/oz)995877(118)(13)%All-inCost($/oz)1,5001,223(277)(23)%573 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReview(continued)MiningOperationsCowalCowalhadanothersuccessfulyear,achievingaboveguidancegoldproductionof251,500oz(guidanceof240,000-250,000oz)atanaverageunitcashoperatingcostof$765/ozandAISCof$995/oz.CashcostsandAISCwerebelowthelowerendandwithinguidanceof$765-$840/ozand$975-$1,075/ozrespectively.Capitalexpenditurefortheyearwas$144.7million,ofwhich$100.7millionrelatestomajorprojectsconsistingmostlyoftheStageHcutback.CowalactivitiesintheyearfocussedontheStageHcutback,commissioningoftheFloatTailsLeach(FTL)circuitandconstructionpre-worksoftheIntegratedWasteLandformtailingsfacility.DuringOctober2018,theCowaloperationwasgrantedregulatoryapprovalfromtheNSWDepartmentofPlanningandEnvironmenttoincreasetheplantprocessingrateby31%from7.5milliontonnesperannum(Mtpa)to9.8MtpapertheModification14developmentapplication.RegulatoryapprovaltocommencethedevelopmentoftheGalway-Regal-E46(GRE46)explorationdeclineatCowalwasalsoapproved.ThedeclinewillallowEvolutiontoconductfurtherresourcedefinitionanddiscoverydrillingatGRE46aswellasfurtherdrillingtodelineatetheDalwhinnieLode.ExcellentdrillingresultswerereportedatbothGRE46andDalwhinnieasof30June2019whichcontinuestohighlightthehigh-gradenatureofthismineralisedsystem.Explorationworkdeliveredmaterialresourceandorereservesgrowth,reflectedintheMineralResourcesandOreReservesupdatewhichincorporatedfullyeardrillingresultsasat31December2018.Cowalwasamajorcontributorwitha134%increasetoMineralResourcesto1.41millionouncesanda27%increasetoOreReservesto3.88millionounces.Theundergroundexplorationdeclinehadreached550metresoflateraldevelopmentasof30June2019andisprogressingaheadofschedule.TheundergrounddrillingprogramcommencedduringtheJune2019quarterandwillcontinueforthenext12-18monthsKeyBusinessMetrics30June201930June2018Change%ChangeOperatingcashflow($'000)232,258225,8126,4463%Sustainingcapital($'000)(44,000)(39,697)(4,303)11%Majorcapital($'000)(100,734)(84,923)(15,811)19%Totalcapital($'000)(144,734)(124,620)(20,114)16%Netminecashflow($'000)87,524101,192(13,668)(14)%Goldproduction(oz)251,500257,951(6,451)(3)%All-inSustainingCost($/oz)995877(118)(13)%All-inCost($/oz)1,5001,223(277)(23)%5Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Mungari Mungari produced a total of 120,535oz at an average unit cash operating cost of $1,078/oz and an AISC of $1,320/oz. Gold production was below the bottom end of the 125,000 - 135,000oz guidance range. Cash costs and AISC were above guidance of $875 - $925/oz and $1,050 - $1,100/oz respectively. Capital expenditure in the year was $28.1 million of which $15.0 million related to mine development at the Frog’s Leg underground mine. The Frog’s Leg underground mine produced 391kt of ore at an average grade of 4.54g/t. Total development for the year was 1,928m which increased from the prior year (30 June 2018: 1,749m). Total material moved at the White Foil open pit was 1,640kt at an average grade of 1.61 g/t. The White Foil open pit Stage 3 cutback progressed on plan and continued into an operating phase with reduced volumes of capital waste being recognised. The process plant performed well over the course of the year, with 1,660kt of ore processed at an average grade of 2.40g/t. Strong gold recoveries of 93.8% were achieved despite a slight decrease from the prior year (30 June 2018: 94.2%). In July 2018, the Group signed an agreement with Norton Gold Fields Limited to restructure ownership of the Castle Hill gold deposit. The Group now owns 100% of this project with Ore Reserves of 236,000 ounces which will provide a material extension to the operating life at Mungari. Drilling for FY20 will be focussed on Ora Banda, phase 3 drilling for the Banjo (Frog’s Leg) deeper targets and the Boomer prospect which is 400m west of Frog’s Leg. Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Mt Carlton Mt Carlton produced a total of 106,646oz which was above the top end of the 95,000 - 105,000oz guidance range. Unit cash operating costs of $492/oz was within the guidance of $470 - $520/oz and AISC of $738/oz was slightly above the top end of the $670 - $720/oz guidance. In early October 2018 the Board approved development of the Mt Carlton underground mine which will allow production from the high-grade link zone to be brought forward. Establishment work has commenced and first ore from the underground is planned to be delivered in FY21. Mining activities focused on progressing both the Stage 3 and Stage 4 cutbacks. Work on the Stage 3 underground project focused on mobilisation of the mining contractor and establishment of services (electricity, water and compressed air) to the portal location in anticipation of commencing underground development early in the September 2019 quarter. Capital expenditure for the year of $35.6 million is largely attributed to Stage 3b capital waste of $20.0 million combined with the new underground mine construction project. Key Business Metrics 30 June 2019 30 June 2018 Change % Change Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 63,864 (11,960) (16,153) (28,113) 35,751 120,535 1,320 1,536 70,240 (9,935) (36,611) (46,546) 23,694 118,498 1,181 1,604 (6,376) (2,025) 20,458 18,433 12,057 2,037 (139) 68 (9)% 20% (56)% (40)% 51% 2% (12)% 4% Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 120,190 (8,039) (27,537) (35,576) 84,614 106,646 738 1,015 139,598 (9,866) (21,009) (30,875) 108,723 112,479 535 735 (19,408) 1,827 (6,528) (4,701) (24,109) (5,833) (203) (280) (14)% (19)% 31% 15% (22)% (5)% (38)% (38)% 74 Evolution Mining Limited Annual Report 2019 6 7 Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Mt Carlton Mt Carlton produced a total of 106,646oz which was above the top end of the 95,000 - 105,000oz guidance range. Unit cash operating costs of $492/oz was within the guidance of $470 - $520/oz and AISC of $738/oz was slightly above the top end of the $670 - $720/oz guidance. In early October 2018 the Board approved development of the Mt Carlton underground mine which will allow production from the high-grade link zone to be brought forward. Establishment work has commenced and first ore from the underground is planned to be delivered in FY21. Mining activities focused on progressing both the Stage 3 and Stage 4 cutbacks. Work on the Stage 3 underground project focused on mobilisation of the mining contractor and establishment of services (electricity, water and compressed air) to the portal location in anticipation of commencing underground development early in the September 2019 quarter. Capital expenditure for the year of $35.6 million is largely attributed to Stage 3b capital waste of $20.0 million combined with the new underground mine construction project. Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 120,190 (8,039) (27,537) (35,576) 84,614 106,646 738 1,015 139,598 (9,866) (21,009) (30,875) 108,723 112,479 535 735 (19,408) 1,827 (6,528) (4,701) (24,109) (5,833) (203) (280) (14)% (19)% 31% 15% (22)% (5)% (38)% (38)% 7 75 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Mt Rawdon Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Cracow Mt Rawdon achieved total gold production of 94,647oz at a unit cash operating cost of $1,073/oz and an AISC of $1,233/oz. Production was slightly lower than guidance of 95,000 - 105,000oz, while cash costs and AISC exceeded the guidance of $815 - $865/oz and $1000 - $1050/oz respectively. The poor FY19 production and costs were predominantly driven by reduced access to higher grade ore in the open pit at the northern end of the pit. This was a timing and sequencing matter. Capital expenditure for the year was $28.4 million with $19.7 million attributable to capital waste mined in the Stage 4 cutback. Mining activities were focussed on waste material in Stage 4 and installing additional ground support in the western area of the pit. Cracow produced 80,923oz at a unit cash operating cost of $900/oz and AISC of $1,272/oz within the guidance of 80,000 - 85,000oz, at $850 - $900/oz and $1,250 - $1,300/oz respectively. A total of 560kt of ore was mined at an average grade of 4.88g/t during the year with primary ore sources being the Kilkenny, Coronation and Imperial ore bodies. the underground mine. Capital expenditure for the year was $27.2 million comprising mainly of $12 million attributable towards further development of Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 60,006 (4,446) (23,921) (28,367) 31,639 94,647 1,233 1,490 69,198 (8,574) (10,924) (19,498) 49,700 105,053 884 987 (9,192) 4,128 (12,997) (8,869) (18,061) (10,406) (349) (503) (13)% (48)% 119% 45% (36)% (10)% (39)% (51)% Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 63,326 (15,158) (12,052) (27,210) 36,116 80,983 1,272 1,355 70,771 (19,601) (14,451) (34,052) 36,719 90,357 1,181 1,269 (7,445) 4,443 2,399 6,842 (603) (9,374) (91) (86) (11)% (23)% (17)% (20)% (2)% (10)% (8)% (7)% 76 Evolution Mining Limited Annual Report 2019 8 9 Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Cracow Cracow produced 80,923oz at a unit cash operating cost of $900/oz and AISC of $1,272/oz within the guidance of 80,000 - 85,000oz, at $850 - $900/oz and $1,250 - $1,300/oz respectively. A total of 560kt of ore was mined at an average grade of 4.88g/t during the year with primary ore sources being the Kilkenny, Coronation and Imperial ore bodies. Capital expenditure for the year was $27.2 million comprising mainly of $12 million attributable towards further development of the underground mine. Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 63,326 (15,158) (12,052) (27,210) 36,116 80,983 1,272 1,355 70,771 (19,601) (14,451) (34,052) 36,719 90,357 1,181 1,269 (7,445) 4,443 2,399 6,842 (603) (9,374) (91) (86) (11)% (23)% (17)% (20)% (2)% (10)% (8)% (7)% 9 77 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Mining Operations (continued) Ernest Henry Ernest Henry gold production of 98,689oz was well above guidance of 85,000 - 90,000oz. A negative AISC of $(539)/oz was within guidance of $(575) - (525)/oz, after taking into account copper and silver by-product credits of (1,843)/oz. Negative cash costs of $(783)/oz were above the original guidance of $(875) - (825)/oz. Ore mined was 6,728kt at an average grade of 0.58g/t gold and 1.10% copper. Underground development was 7,203m. Ore processed was 6,829kt at an average grade of 0.58g/t gold and 1.10% copper. Gold recovery and copper recovery of 80.7% and 96.7% respectively were achieved. During the December 2018 quarter the New Reserves Joint Venture was formed which relates to resources outside the current mine plan to the 1200RL. Planned extensional drilling below the 1200RL is scheduled for the latter part of the 2019 calendar year with a view to extend mine life. Key Business Metrics 30 June 2019 30 June 2018 Change % Change Operating cash flow ($'000) Sustaining capital ($'000) Major capital ($'000) Total capital ($'000) Net mine cash flow ($'000) Gold production (oz) Copper production (t) All-in Sustaining Cost ($/oz) All-in Cost ($/oz) 231,821 (9,640) - (9,640) 222,181 98,689 21,008 (539) (539) 230,860 (11,618) - (11,618) 219,242 95,209 21,011 (641) (641) 961 1,978 - 1,978 2,939 3,480 (3) 102 102 % (17)% -% (17)% 1% 4% % (16)% (16)% (i) Ernest Henry mining and processing statistics are in 100% terms while costs represent Evolution's cost and not solely the cost of Ernest Henry's operation. 78 Evolution Mining Limited Annual Report 2019 10 Directors' Report (continued)79 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReview(continued)FinancialPerformanceProfitorLossRevenuefortheyearended30June2019decreasedby2%to$1,509.8million(30June2018:$1,540.4million).The7%higherachievedgoldpriceof$1,760/ozwasoffsetbyadecreaseinproducedouncesof6%to753,000oz(30June2018:801,187oz)andlowercopperandsilverrevenuewhichisaresultofbothvolumeandprice.Revenueiscomprisedof$1,307.5millionforgoldrevenueand$202.3millionforcopperandsilverrevenue(30June2018:$1,312.6millionofgoldrevenueand$227.8mofcopperandsilverrevenue).TheEdnaMayoperationcontributedrevenuein2018for3monthscontributing$37.2mofrevenuepriortoitssaleon3October2017.Totalgoldsoldequalled742,964ozwhichincludeddeliveriesintothehedgebookof150,000ozatanaveragepriceof$1,690oz(30June2018:205,915oz,$1,564/oz).Theremaining592,964ozweresoldatspotpriceachievinganaveragepriceof$1,777/oz(30June2018:592,186oz,$1,673/oz).TheGroup'shedgebooktotals400,000ozasat30June2019atanaveragepriceof$1,837.57/ozwithdeliveriesthroughtoJune2023.Theachievedcopperpricedecreased4%to$8,587/tresultingincopperrevenuereducingintheyearby$18.8million.Operatingcosts(excludingdepreciation,amortisationandfairvalueadjustmentsof$398.5million)increasedto$736.0million(30June2018:$705.5million).BalanceSheetTotalassetsincreased1%duringtheyearto$3,093.9million(30June2018:$3,056.3million).Equityinvestmentsatfairvaluethroughothercomprehensiveincome(FVOCI)haveincreased$60.6millionfollowingtheacquisitionofa19.9%stakeinTribuneResourcesLimited(Tribune)foracashconsiderationof$41.3millioninFebruary2019,theinvestmentincreasedinvalueto$60.5millionat30June2019.Thenetcarryingamountofproperty,plantandequipmentandproducingminesdecreased$66.4millionduetoadepreciationchargeof$374.9millionoutstrippingcapitaladditionsof$274.5million.Explorationincreased$60.1millionwithcapitalisedexplorationspendof$67.3millionpartiallyoffsetbyexplorationexpensesof$7.2million.TotalliabilitiesfortheGroupdecreasedto$687.4millionat30June2019,adecreaseof$80.5million,or10%ontheprioryear.Thedecreaseisinpartattributabletoscheduleddebtrepaymentsof$95.0millionontheSeniorSecuredTermLoan.Thetaxliabilityat30June2018waspaidduringthecurrentfinancialyear.Inaddition,taxinstalmentsweremadeduringtheyearinrelationtotheexpectedtaxpayablefortheyearended30June2019reducingthetaxliabilityby$47.3million.TheGroupendedtheyearwithacashbalanceof$335.2millionandavailablecreditof$350.0millioninFacilityAaspartofitsSeniorSecuredSyndicatedRevolvingandTermFacility.Netcashatbalancedatewas$35.2million,withcashof$335.2millionand$300.0millionofdrawndebtontheSeniorSecuredTermLoan.CashFlowTotalcashinflowsfortheyearamountedto$11.9million(30June2018:$285.8million).30June2019$'00030June2018$'000Change$'000%ChangeCashflowsfromoperatingactivities616,236714,166(97,930)(14)%Cashflowsfrominvestingactivities(382,187)(270,284)(111,903)41%Cashflowsfromfinancingactivities(222,111)(158,087)(64,024)40%Netmovementincash11,938285,795(273,857)(96)%Cashatthebeginningoftheyear323,22637,385285,841765%Effectsofexchangeratechangesoncash-46(46)(100)%Cashattheendoftheyear335,164323,22611,9384%Netcashoutflowsfrominvestmentactivitieswere$382.2million,a$111.9millionincrease(30June2018:$270.3million)includingtheinvestmentinTribuneof$41.3millionandtheacquisitionoftheCastleHillminingrightsfor$15.0million.Theprioryearincludedareceiptof$40.0milliononthesaleofEdnaMay.Capitalinvestmentsfortheyearincludedproperty,plantandequipmentof$105.4millionandminedevelopmentandexplorationof$218.6million.Netcashoutflowsfromfinancingactivitieswere$222.1million,anincreaseof$64.0million(30June2018:$158.1million).Financingcashflowsfortheyearincludedtherepaymentof$95.0millionontheSeniorSecuredTermLoananddividendpaymentsof$127.0million.11Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Financial Performance (continued) Taxation During the year, the Group made income tax payments of $91.2 million related to the 30 June 2018 and 30 June 2019 financial years and recognised an income tax expense of $96.7 million (30 June 2018: $75.5 million). The 2018 income tax expense was reduced by $26.7 million due to the recognition of tax losses and temporary differences as an asset. This included $22.7 million as a consequence of an independent valuation of the Cowal open pit and Mungari open pit and underground that was completed during that financial year. The tax payments made in respect of the 30 June 2018 financial year combined with tax instalments paid over the course of the 30 June 2019 financial year have enabled the declaration of fully franked interim and final dividends. Capital Expenditure Capital expenditure for the year totalled $273.6 million (30 June 2018: $271.9 million). This consisted of sustaining capital, including near mine exploration and resource definition of $93.2 million (30 June 2018: $100.9 million) and mine development of $180.4 million (30 June 2018: $171.0 million). The main capital projects included the Cowal Stage H development, Float Tails Leach project and E46 land acquisition costs; underground mine development at Cracow, Mt Carlton and Mungari; and capital waste stripping at Mt Carlton and Mt Rawdon. Financing Total finance costs for the year were $22.6 million (30 June 2018: $24.8 million), a decrease of 9%. Included in total finance costs are interest expense of $18.2 million (30 June 2018: $20.5 million), amortisation of debt establishment costs of $2.5 million (30 June 2018: $0.7 million) and discount unwinding on mine rehabilitation liabilities of $1.9 million (30 June 2018: $3.6 million). The Group made scheduled debt repayments of $95.0 million on the Senior Secured Term Loan during the financial year. The repayment periods and the outstanding balances as at 30 June 2019 on each facility are set out below: Facility Senior Secured Revolving Loan - Facility A ($350.0 million) Performance Bond Facility - Facility C ($175.0 million) Senior Secured Term Loan - Facility D Material business risks Term date Outstanding balance $ nil $136 million $300 million 31 July 2021 31 July 2021 15 October 2021 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 2019 are: Fluctuations in the gold price and Australian dollar The Group’s revenues are exposed to fluctuations in the gold, silver and copper prices and the Australian dollar. Volatility in the gold, silver and copper prices 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. Declining gold, silver and copper 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. Mineral Resources and Ore Reserves The Group’s Mineral Resources and Ore Reserves are estimates, and no assurance can be given that the estimated reserves and resources are accurate or that the indicated level of gold, silver, copper 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, silver and copper 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 Mineral Resources and Ore Reserves, which could have a negative impact on the Group’s financial results. 80 Evolution Mining Limited Annual Report 2019 12 Directors' Report (continued)81 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)OperatingandFinancialReview(continued)Materialbusinessrisks(continued)ReplacementofdepletedreservesTheGroupmustcontinuallyreplacereservesdepletedbyproductiontomaintainproductionlevelsoverthelongterm.Reservescanbereplacedbyexpandingknownorebodies,locatingnewdepositsormakingacquisitions.Explorationishighlyspeculativeinnature.TheGroup’sexplorationprojectsinvolvemanyrisksandarefrequentlyunsuccessful.Onceasitewithmineralisationisdiscovered,itmaytakeseveralyearsfromtheinitialphasesofdrillinguntilproductionispossible.Asaresult,thereisnoassurancethatcurrentorfutureexplorationprogramswillbesuccessful.Thereisariskthatdepletionofreserveswillnotbeoffsetbydiscoveriesoracquisitionsorthatdivestituresofassetswillleadtoalowerreservebase.ThemineralbaseoftheGroupmaydeclineifreservesareminedwithoutadequatereplacementandtheGroupmaynotbeabletosustainproductionbeyondthecurrentminelives,basedoncurrentproductionrates.MiningrisksandinsurancerisksTheminingindustryissubjecttosignificantrisksandhazards,includingenvironmentalhazards,industrialaccidents,unusualorunexpectedgeologicalconditions,unavailabilityofmaterialsandequipment,pitwallfailures,rockbursts,seismicevents,cave-ins,andweatherconditions(includingfloodingandbushfires),mostofwhicharebeyondtheGroup’scontrol.TheserisksandhazardscouldresultinsignificantcostsordelaysthatcouldhaveamaterialadverseeffectontheGroup’sfinancialperformance,liquidityandresultsofoperation.TheGroupmaintainsinsurancetocoverthemostcommonoftheserisksandhazards.Theinsuranceismaintainedinamountsthatareconsideredreasonabledependingonthecircumstancessurroundingeachidentifiedrisk.However,property,liabilityandotherinsurancemaynotprovidesufficientcoverageforlossesrelatedtotheseorotherrisksorhazards.ProductionandcostestimatesTheGrouppreparesestimatesoffutureproduction,cashcostsandcapitalcostsofproductionforitsoperations.Noassurancecanbegiventhatsuchestimateswillbeachieved.FailuretoachieveproductionorcostestimatesormaterialincreasesincostscouldhaveanadverseimpactontheGroup’sfuturecashflows,profitability,resultsofoperationsandfinancialcondition.TheGroup’sactualproductionandcostsmayvaryfromestimatesforavarietyofreasons,including:actualoreminedvaryingfromestimatesofgrade,tonnage,dilutionandmetallurgicalandothercharacteristics;short-termoperatingfactorsrelatingtotheorereserves,suchastheneedforsequentialdevelopmentoforebodiesandtheprocessingofnewordifferentoregrades;revisionstomineplans;risksandhazardsassociatedwithmining;naturalphenomenasuchasinclementweatherconditions,wateravailabilityandfloods;andunexpectedlabourshortagesorstrikes.Costsofproductionmayalsobeaffectedbyavarietyoffactorsincluding:changingwaste-to-oreratios,oregrademetallurgy,labourcosts,costofcommodities,generalinflationarypressuresandcurrencyexchangerates.Environmental,healthandsafety,andpermitsTheGroup’sminingandprocessingoperationsandexplorationactivitiesaresubjecttoextensivelawsandregulationsgoverningtheprotectionoftheenvironment,wastedisposal,workersafety,minedevelopmentandprotectionofendangeredandotherspecialstatusspecies.TheGroup’sabilitytoobtainpermitsandapprovalsandtosuccessfullyoperatemaybeadverselyimpactedbyrealorperceiveddetrimentaleventsassociatedwiththeGroup’sactivitiesorthoseofotherminingcompaniesaffectingtheenvironment,humanhealthandsafetyorthesurroundingcommunities.DelaysinobtainingorfailuretoobtaingovernmentpermitsandapprovalsmayadverselyaffecttheGroup’soperations,includingitsabilitytocontinueoperations.WhiletheGrouphasimplementedextensivehealth,safetyandcommunityinitiativesatitssitestoensurethehealthandsafetyofitsemployees,contractorsandmembersofthecommunityaffectedbyitsoperations,thereisnoguaranteethatsuchmeasureswilleliminatetheoccurrenceofaccidentsorotherincidentswhichmayresultinpersonalinjuriesordamagetoproperty,andincertaininstancessuchoccurrencescouldgiverisetoregulatoryfinesand/orcivilliability.ClimateChangeEvolutionMiningacknowledgesthatclimatechangeisoccurringanditseffectshavethepotentialtoimpactourbusiness.Thehighestpriorityclimaterelatedrisksincludethefollowing:reducedwateravailability;extremeweatherevents;changestolegislationandregulation;reputationalrisk;technologicalandmarketchanges;andshareholderactivism.TheGroupiscommittedtounderstandingandproactivelymanagingtheimpactofclimaterelatedriskstoourbusinessandourenvironment.Thisincludesintegratingfinancial,physical,regulatory,reputational,market,andclimaterelatedrisks,aswellasenergyconsiderations,intoourLifeofMinestrategicplanninganddecisionmaking.TheGroupworkstobuildtheresilienceofourassets,ourcommunitiesandourenvironmenttoclimaterelatedimpacts.Todothis,weworkinpartnershipwithabroadrangeofstakeholdersincludingrepresentativebodiesofthecommunitiesinwhichweoperate,industry,government,investorsandnon-governmentalorganisationstosharelearningsandidentifyapproachestoaddressingclimaterelatedrisksandopportunities.TheGrouptransparentlyreportsouremissionsandenergyconsumptionperformance.13Evolution Mining Limited Directors' Report 30 June 2019 (continued) Environmental regulation and performance (continued) 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) potential or actual environmental impacts and legal obligation. These levels include: I (insignificant), II (minor), III (moderate), IV (major), V (catastrophic). Across the five Evolution Mining Sites, excluding government reporting for vehicular and non-vehicular native fauna deaths, the Level III reports for the past three years have been: 2019 9 2018 8 Number of Level III incidents Level IV or V incidents. Of the nine reports to the regulatory authorities in FY19 only three were classified as having actual Level III consequence with regard for environmental impact and there were no further enforcement action by regulatory authorities in relation to the reports. Evolution Mining Limited Directors' Report 30 June 2019 (continued) Operating and Financial Review (continued) Material business risks (continued) 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 Incidents were notified to the relevant government authority and the relevant agreed action was taken. There have been no 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. 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 On 15 August 2019, the Directors approved a change to the dividend policy of whenever possible paying a dividend based on free cash flow generated during a year. The Directors will assess the group cash flow and outlook for the business with the intention to return excess cash to shareholders and targeting a level around 50% of cash flow. The Group's free cash flow is defined as cash flow before debt and dividends. The change was effective immediately and was applied to the final dividend for 2019. 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 6 cents per share, totalling $101.8 million. Evolution shares will trade excluding entitlement to the dividend on 26 August 2019, with the record date being 27 August 2019 and payment date of 27 September 2019. The Dividend Reinvestment Plan ("DRP") remains suspended. 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. 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. Environmental regulation and performance The Executive Chairman reports to the Board on all significant safety and environmental incidents. The Board also has a Risk and Sustainability Committee which has oversight of the safety, health, environmental and stakeholder 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 2019 which would have a materially adverse impact on the overall business of the Group. The operations of the Group are subject to environmental regulation under the jurisdiction of the countries in which those operations are conducted namely in Australia. 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. 82 Evolution Mining Limited Annual Report 2019 14 15 Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) Environmental regulation and performance (continued) 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) potential or actual environmental impacts and legal obligation. These levels include: I (insignificant), II (minor), III (moderate), IV (major), V (catastrophic). Across the five Evolution Mining Sites, excluding government reporting for vehicular and non-vehicular native fauna deaths, the Level III reports for the past three years have been: Number of Level III incidents 2019 9 2018 8 Incidents were notified to the relevant government authority and the relevant agreed action was taken. There have been no Level IV or V incidents. Of the nine reports to the regulatory authorities in FY19 only three were classified as having actual Level III consequence with regard for environmental impact and there were no further enforcement action by regulatory authorities in relation to the reports. 15 83 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) Information on Directors 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. 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 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. It became an ASX/S&P 100 Company, operating two award-winning gold mines and engaging over 2,000 employees and contractors in China. Prior to joining Sino Gold (and its predecessor) in 1995, Mr Klein was employed at Macquarie Bank and PricewaterhouseCoopers. Mr Klein was a Non-Executive Director of the Lynas Corporation Limited from August 2004 to May 2017, a company with operations in Australia and Malaysia and of OceanaGold Corporation from December 2009 to July 2014 a company with operations in the Philippines, USA and New Zealand. Lawrence (Lawrie) Conway B Bus, CPA, GAICD, 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 30 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 includes 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 and Burkina Faso (Non-Executive Director since July 2017). Mr Askew is a member of the Risk and Sustainability Committee and Member of the Nomination and Remuneration Committee. Within the last three years Mr Askew has been a Non-Executive Director of Nevada Copper Limited; Asian Mineral Resources Ltd; and OceanaGold Corporation. 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 was a Non-Executive Director of Kasbah Resources Limited from 2017 to 2019, a company with a tin project in Morocco, and Chaired its Remuneration and Audit Committees. Mr Freestone is a member of the Audit Committee and is a Member of the Nomination and Remuneration Committee. 84 Evolution Mining Limited Annual Report 2019 16 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)InformationonDirectors(continued)ColinJohnstone,BEng(Mining),LeadIndependentDirectorMrJohnstoneisaminingengineerwithover30yearsexperienceintheresourcessector.HehasservedasGeneralManageratsomeofAustralia'slargestminesincludingtheKalgoorlieSuperPitinWesternAustralia,theOlympicDamMineinSouthAustraliaandtheNorthparkesMineinNewSouthWales.HehasextensiveinternationalexperienceincludingCanada,China,AfricaandSouthAmerica.MrJohnstonewasChiefOperatingOfficeratEquinoxMineralsLimited,untiltheacquisitionbyBarrickGoldCorporationin2011.PriortothatMrJohnstonewasChiefOperatingOfficerofSinoGoldMiningLimited,whereheoversawthedevelopmentandoperationofgoldminesinChina.MrJohnstoneisChairmanofAureliaMetalsLtd(sinceNovember2016).MrJohnstonewastheLeadIndependentDirectorfrom25November2015to30November2018andremainstheChairoftheRiskandSustainabilityCommitteeandamemberoftheAuditCommittee.MrJohnstonewasaformerNon-ExecutiveDirectorofMagnisResourcesLtd;NeometalsLtd(ReedResourcesLtd);andMetallumLtd.Thomas(Tommy)McKeith,BSc(Hons),GradDipEng(Mining),MBA,Non-ExecutiveDirectorMrMcKeithisageologistwith30yearsexperienceinvariousminegeology,explorationandbusinessdevelopmentroles.HewasformerlyExecutiveVicePresident(GrowthandInternationalProjects)forGoldFieldsLimited,wherehewasresponsibleforglobalgreenfieldsexplorationandprojectdevelopment.MrMcKeithwasalsoChiefExecutiveOfficerofTroyResourcesLimitedandhasheldNon-ExecutiveDirectorrolesatSinoGoldLimited,AvocaResourcesLimitedandiscurrentlytheNon-ExecutiveChairmanofProdigyGoldNLandGenesisMineralsLimited.MrMcKeithistheLeadIndependentDirectoreffectivefrom1December2018,ChairoftheNominationandRemunerationCommitteeandMemberoftheRiskandSustainabilityCommittee.AndreaHall,BCom,FCA,M.AppFin,GAICD,Non-ExecutiveDirectorMsHallisaCharteredAccountantwithmorethan30yearsexperienceinthefinancialservicesindustryinrolesinvolvedininternalaudit,riskmanagement,corporateandoperationalgovernance,externalaudit,financialmanagementandstrategicplanning.PriortoretiringfromKPMGin2012,AndreawasaPerthbasedpartnerwithinKPMG’sRiskConsultingServiceswheresheservicedindustriesincludingmining,miningservices,transport,healthcare,insurance,propertyandgovernment.MsHalliscurrentlyaNon-ExecutiveDirectorandChairoftheAuditandRiskCommitteeatASX-listedPioneerCreditLimitedandAutomotiveHoldingsGroupLimited.SheisalsoaNon-ExecutiveDirectorofInsuranceCommissionofWesternAustraliaandtheFremantleFootballClub.MsHallistheChairoftheAuditCommittee.CompanySecretaryEvanElstein,BComGDA,ACA,FGIA,FCISMrElsteinwasappointedastheCompanySecretaryandVicePresidentforInformationTechnologyinOctober2011followingthemergerofConquestMiningLimitedandCatalpaResourcesLimited.PreviouslyheservedasCompanySecretaryofConquestMining.HeisamemberofCharteredAccountantsAustraliaandNewZealand,theInstituteofCharteredSecretariesandAdministratorsandafellowoftheGovernanceInstituteofAustralia.MrElsteinhasover26years'experienceinseniorfinancial,commercialandtechnologyroles,wherehisresponsibilitieshaveincludedtherolloutofITprojectsandservices,businessimprovementinitiativesandmerger,acquisitionanddivestmentactivities.HehasheldseniorpositionswithITconsultingcompaniesinAustralia,andpreviouslyservedastheChiefFinancialOfficerandCompanySecretaryofHartecLimited.Priortothat,MrElsteinheldseniorfinanceandoperationspositionsatDimensionDatainSouthAfrica.1785 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)InformationonDirectors(continued)ColinJohnstone,BEng(Mining),LeadIndependentDirectorMrJohnstoneisaminingengineerwithover30yearsexperienceintheresourcessector.HehasservedasGeneralManageratsomeofAustralia'slargestminesincludingtheKalgoorlieSuperPitinWesternAustralia,theOlympicDamMineinSouthAustraliaandtheNorthparkesMineinNewSouthWales.HehasextensiveinternationalexperienceincludingCanada,China,AfricaandSouthAmerica.MrJohnstonewasChiefOperatingOfficeratEquinoxMineralsLimited,untiltheacquisitionbyBarrickGoldCorporationin2011.PriortothatMrJohnstonewasChiefOperatingOfficerofSinoGoldMiningLimited,whereheoversawthedevelopmentandoperationofgoldminesinChina.MrJohnstoneisChairmanofAureliaMetalsLtd(sinceNovember2016).MrJohnstonewastheLeadIndependentDirectorfrom25November2015to30November2018andremainstheChairoftheRiskandSustainabilityCommitteeandamemberoftheAuditCommittee.MrJohnstonewasaformerNon-ExecutiveDirectorofMagnisResourcesLtd;NeometalsLtd(ReedResourcesLtd);andMetallumLtd.Thomas(Tommy)McKeith,BSc(Hons),GradDipEng(Mining),MBA,Non-ExecutiveDirectorMrMcKeithisageologistwith30yearsexperienceinvariousminegeology,explorationandbusinessdevelopmentroles.HewasformerlyExecutiveVicePresident(GrowthandInternationalProjects)forGoldFieldsLimited,wherehewasresponsibleforglobalgreenfieldsexplorationandprojectdevelopment.MrMcKeithwasalsoChiefExecutiveOfficerofTroyResourcesLimitedandhasheldNon-ExecutiveDirectorrolesatSinoGoldLimited,AvocaResourcesLimitedandiscurrentlytheNon-ExecutiveChairmanofProdigyGoldNLandGenesisMineralsLimited.MrMcKeithistheLeadIndependentDirectoreffectivefrom1December2018,ChairoftheNominationandRemunerationCommitteeandMemberoftheRiskandSustainabilityCommittee.AndreaHall,BCom,FCA,M.AppFin,GAICD,Non-ExecutiveDirectorMsHallisaCharteredAccountantwithmorethan30yearsexperienceinthefinancialservicesindustryinrolesinvolvedininternalaudit,riskmanagement,corporateandoperationalgovernance,externalaudit,financialmanagementandstrategicplanning.PriortoretiringfromKPMGin2012,AndreawasaPerthbasedpartnerwithinKPMG’sRiskConsultingServiceswheresheservicedindustriesincludingmining,miningservices,transport,healthcare,insurance,propertyandgovernment.MsHalliscurrentlyaNon-ExecutiveDirectorandChairoftheAuditandRiskCommitteeatASX-listedPioneerCreditLimitedandAutomotiveHoldingsGroupLimited.SheisalsoaNon-ExecutiveDirectorofInsuranceCommissionofWesternAustraliaandtheFremantleFootballClub.MsHallistheChairoftheAuditCommittee.CompanySecretaryEvanElstein,BComGDA,ACA,FGIA,FCISMrElsteinwasappointedastheCompanySecretaryandVicePresidentforInformationTechnologyinOctober2011followingthemergerofConquestMiningLimitedandCatalpaResourcesLimited.PreviouslyheservedasCompanySecretaryofConquestMining.HeisamemberofCharteredAccountantsAustraliaandNewZealand,theInstituteofCharteredSecretariesandAdministratorsandafellowoftheGovernanceInstituteofAustralia.MrElsteinhasover26years'experienceinseniorfinancial,commercialandtechnologyroles,wherehisresponsibilitieshaveincludedtherolloutofITprojectsandservices,businessimprovementinitiativesandmerger,acquisitionanddivestmentactivities.HehasheldseniorpositionswithITconsultingcompaniesinAustralia,andpreviouslyservedastheChiefFinancialOfficerandCompanySecretaryofHartecLimited.Priortothat,MrElsteinheldseniorfinanceandoperationspositionsatDimensionDatainSouthAfrica.17Directors' Report (continued) Evolution Mining Limited Directors' Report 30 June 2019 (continued) 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 2019, and the numbers of meetings attended by each Director were: Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) Board Audit Risk Management Nomination and retain appropriately experienced Directors and employees. Meetings of committees This Remuneration Report forms part of the Directors' Report for the year ended 30 June 2019. 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 and strategy is designed to ensure that the level and composition of remuneration is competitive, reasonable and appropriate for the results delivered and to attract and Jacob (Jake) Klein Lawrence (Lawrie) Conway James (Jim) Askew Graham Freestone Colin (Cobb) Johnstone Thomas (Tommy) McKeith (i) Andrea Hall (i) A 7 7 7 7 6 7 7 B 7 7 7 7 7 7 7 A - - - 4 4 - 4 B - - - 4 4 - 4 A - - 4 - 3 4 - Remuneration B - - 3 3 - 3 - A - - 3 3 - 3 - B - - 4 - 4 4 - 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 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 Outcomes 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 Position Jacob (Jake) Klein Executive Chairman Lawrence (Lawrie) Conway Finance Director and Chief Financial Officer Paul Eagle Evan Elstein Bob Fulker Glen Masterman Aaron Colleran * Vice President People & Culture Company Secretary & Vice President Information Technology Chief Operating Officer Vice President Discovery & Business Development Vice President Business Development & Investor Relations * Aaron Colleran resigned from the Company effective 1 July 2019 and the KMP position effective 1 January 2019. (ii) Key Remuneration Outcomes Key remuneration outcomes for the 2019 financial year are summarised in the table below: Remuneration STIP Outcomes Description LTIP Outcomes The average STIP outcome for the KMP was 74.1% of the maximum opportunity based on the assessment of business and personal measures. This reflects the Company's outstanding operating and financial performance, and improvement in the upgrading of the asset portfolio during the year. 88.2% of the Performance Rights awarded during the 2017 financial year and tested as at 30 June 2019 vested on 16 August 2019. This reflects the Company's continued strong performance during the three years to 30 June 2019. KMP Remuneration NED Remuneration Five of the KMP received increases to their fixed remuneration during the 2019 financial year. Non-Executive Directors did not receive any increase to their fees during the year. (iii) What has changed in relation to remuneration during the 2019 financial year During the 2019 financial year, the Long Term Incentive Plan was extended down to superintendent and senior technical levels in the organisation. 86 Evolution Mining Limited Annual Report 2019 18 19 Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) This Remuneration Report forms part of the Directors' Report for the year ended 30 June 2019. 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 and strategy 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. 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 Outcomes 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: Position Executive Chairman Name Jacob (Jake) Klein Lawrence (Lawrie) Conway Finance Director and Chief Financial Officer Paul Eagle Evan Elstein Bob Fulker Glen Masterman Aaron Colleran * Vice President People & Culture Company Secretary & Vice President Information Technology Chief Operating Officer Vice President Discovery & Business Development Vice President Business Development & Investor Relations * Aaron Colleran resigned from the Company effective 1 July 2019 and the KMP position effective 1 January 2019. (ii) Key Remuneration Outcomes Key remuneration outcomes for the 2019 financial year are summarised in the table below: Remuneration STIP Outcomes LTIP Outcomes KMP Remuneration NED Remuneration Description The average STIP outcome for the KMP was 74.1% of the maximum opportunity based on the assessment of business and personal measures. This reflects the Company's outstanding operating and financial performance, and improvement in the upgrading of the asset portfolio during the year. 88.2% of the Performance Rights awarded during the 2017 financial year and tested as at 30 June 2019 vested on 16 August 2019. This reflects the Company's continued strong performance during the three years to 30 June 2019. Five of the KMP received increases to their fixed remuneration during the 2019 financial year. Non-Executive Directors did not receive any increase to their fees during the year. (iii) What has changed in relation to remuneration during the 2019 financial year During the 2019 financial year, the Long Term Incentive Plan was extended down to superintendent and senior technical levels in the organisation. 19 87 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Directors' Report (continued) Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (a) Remuneration Overview (continued) Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (c) Remuneration Strategy and Framework (continued) (iv) What changes are planned for remuneration in the 2020 financial year The following table outlines the remuneration components for all KMP for the 2019 financial year: Component Performance measure Strategic objective Total Fixed Remuneration (TFR) Key results areas for the role are Remuneration is designed to attract, determined based on the individual's motivate and retain key personnel. position and key business imperatives. Considerations include: • Overall Company strategy and business plan • External market conditions • Key employee value drivers • Individual employee performance • Industry benchmark data Short Term Incentive (STI) Key Performance indicators are set with The objective is to motivate employees a mix of individual and corporate elements. The relative weighting of which is dependent on the individual to achieve key annual targets focused on safety, operations, cash contribution, and effective cost management, employee job banding and position. For improving the overall quality of the asset the Executive Chairman, the weighting portfolio and driving a high achievement is 70% corporate and 30% individual team culture. and for the remainder of the KMP, 60% corporate and 40% individual. For the corporate component for FY19, the measures focused on safety, cash contribution, costs and strategic imperatives focused on improving our overall asset portfolio aligned to the business strategy and improving operational effectiveness via the delivery of priority capital projects. are focused on enhancing shareholder value. Long Term Incentive (LTI) Performance measures agreed with the The primary objective to deliver industry Board have a 3 year time horizon and leading shareholder returns. The Nomination and Remuneration committee has undertaken a review of the remuneration structure for the Company. This was in light of a tightening labour market in the industry. The intent of the review was to remain competitive in the market and continuing to align to the Company’s target remuneration philosophy to position Total Remuneration at the market 75th percentile and to use the variable elements as the key component of remuneration. The Company remains committed to keeping tighter controls on the fixed component of the cost base. With respect to KMP remuneration, an independent adviser was engaged. As a result of the review, the Board has approved an increase to the long term incentive proportion of the remuneration structure for all participant levels of the LTI Program. For the KMP, in conjunction with this change the Board has agreed with KMP members that their fixed remuneration (TFR) will remain unchanged for the next 3 years from their TFR on 1 July 2019, based on current role scope and form of the Company. Overall, the Board believes this aligns to the Company’s philosophy of promoting a high achieving culture where the KMP and the broader workforce are incentivised to deliver sustainable business outcomes while increasing shareholder value. The percentage uplifts for the different levels of the LTI Program, effective from the 1 July 2019, increases the variable component by 9-18%. The Nomination and Remuneration Committee has also undertaken an independent review of NED fees. As a result of the review, the Board approved an increase in the overall fees paid to NEDs. This is the first change since 2016 when the NED Equity Plan was introduced and first change to the cash component of the NED fees since 2015 and aligns to the stated philosophy of positioning the NED Total Remuneration at P75. The NED fees will change from the current $95,000 cash and $40,000 NED Equity Plan, to $120,000 cash and $65,000 NED Equity Plan from 1 July 2019. There has also been an adjustment in committee and Lead Independent Director Fees to align to the benchmark from the independent 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. (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 Company'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 Company effectively. The Group's target remuneration philosophies are: • • • Total Fixed Remuneration - TFR (being salary, superannuation, plus regular allowances) 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 100 organisations within the industry); Total Annual Remuneration - TAR (TFR plus STI) at target at the 75th percentile for on target performance; and Total Remuneration - TR (TAR 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 measurable, 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 focussed on shareholder value; and The principles and integrity of the remuneration review process deliver fair and equitable outcomes. 88 Evolution Mining Limited Annual Report 2019 20 21 Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (c) Remuneration Strategy and Framework (continued) The following table outlines the remuneration components for all KMP for the 2019 financial year: Component Total Fixed Remuneration (TFR) Performance measure Key results areas for the role are 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 FY19, the measures focused on safety, cash contribution, costs and strategic imperatives focused on improving our overall asset portfolio aligned to the business strategy and improving operational effectiveness via the delivery of priority capital projects. 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 strategy and 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. 21 89 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report Evolution Mining Limited 30 June 2019 Directors' Report (continued) 30 June 2019 (continued) Remuneration Report (Audited) (continued) (c) Remuneration Strategy and Framework (continued) Remuneration Report (Audited) (continued) The target achievement remuneration ratio mix for Executive Directors and KMP for the 2019 financial year and prior financial (c) Remuneration Strategy and Framework (continued) year is as follows: The target achievement remuneration ratio mix for Executive Directors and KMP for the 2019 financial year and prior financial year is as follows: The target achievement remuneration ratio mix for Executive Directors and KMP for the 2020 financial year will be as follows: The target achievement remuneration ratio mix for Executive Directors and KMP for the 2020 financial year will be as follows: (d) Executive Remuneration Outcomes Financial Performance Financial Performance (i) (d) Executive Remuneration Outcomes The Group has demonstrated strong performance over the past five years. The following table breaks down the key (i) performance indicators for the Group over this time frame: The Group has demonstrated strong performance over the past five years. The following table breaks down the key 2016 performance indicators for the Group over this time frame: (24,349) 134,496 2016 607,551 (24,349) (1.75) 134,496 3.0 607,551 2.33 (1.75) 3.0 2.33 Statutory profit/(loss) for the year ($'000) Underlying profit for the year after income tax ($'000) * EBITDA ($'000) Statutory profit/(loss) for the year ($'000) Basic earnings per share (cents) Underlying profit for the year after income tax ($'000) * Dividends declared (cents per share) EBITDA ($'000) Share price ($) at 30 June closing Basic earnings per share (cents) Dividends declared (cents per share) Share price ($) at 30 June closing 2019 218,188 218,188 2019 730,262 218,188 12.86 218,188 9.5 730,262 4.36 12.86 9.5 4.36 2017 217,607 206,588 2017 713,855 217,607 13.28 206,588 5.0 713,855 2.41 13.28 5.0 2.41 2018 263,388 250,762 2018 795,083 263,388 15.57 250,762 7.5 795,083 3.51 15.57 7.5 3.51 * Refer to the Profit Overview section in the Operating and Financial Review for a reconciliation of the underlying profit for the year after income tax. Refer to the Profit Overview section in the Operating and Financial Review for a reconciliation of the underlying profit for the year after income tax. 2015 100,115 106,050 2015 272,656 100,115 13.71 106,050 2.0 272,656 1.15 13.71 2.0 1.15 * 90 Evolution Mining Limited Annual Report 2019 22 22 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(d)ExecutiveRemunerationOutcomes(continued)(ii)STIPComponentPerformancemeasureParticipationTheOverallGroupSTIPappliestositebasedemployeesatthelevelofManagerandaboveandallGroupofficeemployees.CompositionTheGroupSTIPisacashbonus,uptoamaximumpercentageofTFR,basedontheemployeejobband.PerformanceconditionsItisassessedandpaidannuallyconditionalupontheachievementofkeycompanyobjectivesandindividualKPIs.Forthe2019financialyear,thecompanyobjectiveswerefocusedontheareasofsafety,groupcashcontribution,production,costsandstrategicimperatives.AwardparametersTheGroupSTIPiscurrentlysetatbetween10%and60%ofTFRforTargetachievement,withamaximumof20%-90%ofTFRforStretchachievement,dependingontheemployeejobband.DetailsoftheGroupSTIPpaidtotheDirectorsandKMPareshownintheRemunerationTableinsectiond(iv).TheGroup'sperformanceagainsttheSTIPScorecardforFY19isasfollows:STIPScorecardTarget(100%)STIPWeightingResultAwardHSETRIFrequency(TRIF)4.9515%8.30%EnvironmentalCriticalControlsCompliance-top3Hazards(%)100%15%125%18.8%ProfitabilityGroupCashContribution($million)26020%32630%GroupAllInCosts($/ozsold)1,21020%1,21519.2%StrategicImperativesDiscretionary100%30%125%37.5%Total100%105.4%FY19STIPconsiderationsAtthetimeofsettingtheFY19STIPmeasures,theBoarddetermineditwouldconsiderthefollowingfactorswhenawardingthescoreforthestrategicimperativesmeasure:•Improvementintheoverallassetportfolio,alignedtothebusinessstrategy(deliveredmainlythroughgoalsasidentifiedintheFY19BusinessPlan)•ImprovementinOperationalEffectiveness(viadeliveryofprioritycapitalprojectsperFY19BusinessPlan)AwardOutcomefortheyearTheBoardapprovedascoreof125%forthestrategicimperativescomponentoftheSTIPtakingintoconsiderationtheoverallperformanceofthebusinessoverthecourseoftheyearaswellasdeliveryofkeystrategicoutcomesasfollows:Improvementinassetquality,including•Increasingtheaverageminelifetobeyond10years;•Orereserves,netofdepletion,increasingby410,000ouncesto7.5millionounces;•ProgressintransformingCowalintoaworld-classminethroughimprovedoperationalperformance;StageHcutbackontrack;significantdiscoverysuccessatGRE46-Dalwhinnie;MOD14permittingapproval;UndergroundExplorationpermitting(REF)approval;plantexpansionprogressingtoplan;andsuccessfulcommissioningoftheflotationtailsleachproject;•Improvementintheexplorationpipelineincluding3newactiveprojects;and•Assessingmultiplebusinessdevelopmentopportunitieswhichalignedtoimprovingthequalityoftheportfolio.Improvementinoperatingeffectivenessviadeliverofpriorityprojectsduringtheyear,including•MtCarltonundergroundminedevelopmentandplantupgradeprojectsapprovedandtrackingtoplanattheendofthefinancialyear;•MultipleprojectsbeingexecutedconcurrentlyatCowalasnotedaboveandbeingontrack;Talentmanagement,including•Exceedinginternaltargetofinternalplacementwith33%ofrolesfilledduringtheyearbyexistingEvolutionemployeeswhichwasupfrom20%inFY18;•ContinuedleadershipdevelopmentviaGold,SilverandAlloyprogramswithafocusonbuildingthepipelineoffutureleaders;•TargeteddevelopmentprogramsfortheoperationsmanagementleadershipwithsiteGeneralManagersandsiteleadershipteams;and•Implementationofrealtimefeedbacktooltomonitorengagementandactioningfeedbackfromtheengagementsurveys.2391 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(d)ExecutiveRemunerationOutcomes(continued)(ii)STIPComponentPerformancemeasureParticipationTheOverallGroupSTIPappliestositebasedemployeesatthelevelofManagerandaboveandallGroupofficeemployees.CompositionTheGroupSTIPisacashbonus,uptoamaximumpercentageofTFR,basedontheemployeejobband.PerformanceconditionsItisassessedandpaidannuallyconditionalupontheachievementofkeycompanyobjectivesandindividualKPIs.Forthe2019financialyear,thecompanyobjectiveswerefocusedontheareasofsafety,groupcashcontribution,production,costsandstrategicimperatives.AwardparametersTheGroupSTIPiscurrentlysetatbetween10%and60%ofTFRforTargetachievement,withamaximumof20%-90%ofTFRforStretchachievement,dependingontheemployeejobband.DetailsoftheGroupSTIPpaidtotheDirectorsandKMPareshownintheRemunerationTableinsectiond(iv).TheGroup'sperformanceagainsttheSTIPScorecardforFY19isasfollows:STIPScorecardTarget(100%)STIPWeightingResultAwardHSETRIFrequency(TRIF)4.9515%8.30%EnvironmentalCriticalControlsCompliance-top3Hazards(%)100%15%125%18.8%ProfitabilityGroupCashContribution($million)26020%32630%GroupAllInCosts($/ozsold)1,21020%1,21519.2%StrategicImperativesDiscretionary100%30%125%37.5%Total100%105.4%FY19STIPconsiderationsAtthetimeofsettingtheFY19STIPmeasures,theBoarddetermineditwouldconsiderthefollowingfactorswhenawardingthescoreforthestrategicimperativesmeasure:•Improvementintheoverallassetportfolio,alignedtothebusinessstrategy(deliveredmainlythroughgoalsasidentifiedintheFY19BusinessPlan)•ImprovementinOperationalEffectiveness(viadeliveryofprioritycapitalprojectsperFY19BusinessPlan)AwardOutcomefortheyearTheBoardapprovedascoreof125%forthestrategicimperativescomponentoftheSTIPtakingintoconsiderationtheoverallperformanceofthebusinessoverthecourseoftheyearaswellasdeliveryofkeystrategicoutcomesasfollows:Improvementinassetquality,including•Increasingtheaverageminelifetobeyond10years;•Orereserves,netofdepletion,increasingby410,000ouncesto7.5millionounces;•ProgressintransformingCowalintoaworld-classminethroughimprovedoperationalperformance;StageHcutbackontrack;significantdiscoverysuccessatGRE46-Dalwhinnie;MOD14permittingapproval;UndergroundExplorationpermitting(REF)approval;plantexpansionprogressingtoplan;andsuccessfulcommissioningoftheflotationtailsleachproject;•Improvementintheexplorationpipelineincluding3newactiveprojects;and•Assessingmultiplebusinessdevelopmentopportunitieswhichalignedtoimprovingthequalityoftheportfolio.Improvementinoperatingeffectivenessviadeliverofpriorityprojectsduringtheyear,including•MtCarltonundergroundminedevelopmentandplantupgradeprojectsapprovedandtrackingtoplanattheendofthefinancialyear;•MultipleprojectsbeingexecutedconcurrentlyatCowalasnotedaboveandbeingontrack;Talentmanagement,including•Exceedinginternaltargetofinternalplacementwith33%ofrolesfilledduringtheyearbyexistingEvolutionemployeeswhichwasupfrom20%inFY18;•ContinuedleadershipdevelopmentviaGold,SilverandAlloyprogramswithafocusonbuildingthepipelineoffutureleaders;•TargeteddevelopmentprogramsfortheoperationsmanagementleadershipwithsiteGeneralManagersandsiteleadershipteams;and•Implementationofrealtimefeedbacktooltomonitorengagementandactioningfeedbackfromtheengagementsurveys.23Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (d) Executive Remuneration Outcomes (continued) (ii) STIP (continued) Component Performance measure 2019 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 Bob Fulker Glen Masterman 544,000 417,000 182,000 259,000 273,000 348,000 308,000 75.2% 76.0% 68.8% 72.8% 73.6% 73.6% 77.9% 24.8% 24.0% 31.2% 27.2% 26.4% 26.4% 22.1% Performance measure The Group LTIP applies to employees at the level of Manager, Supervisor, Functional Lead and above across the Group. Up to 3 years. The Company has one long term incentive plan currently in operation, the Employee Share Option and Performance Rights Plan (“ESOP”). The ESOP (approved by shareholders on 23 November 2010, 26 November 2014 and 23 November 2017) provides for the issuance of Performance Rights to Executive Directors and eligible employees. This LTIP was first introduced for employees at the level of Manager and above and provides equity based “at risk” remuneration, up to maximum percentages, based on, and in addition to, each eligible employee’s TFR. Effective from 1 July 2018, the LTIP was extended to the superintendent and senior technical level in the Company. These incentives are aimed at retaining and incentivising those eligible employees on a basis that is aligned with shareholder interests and are provided via Performance Rights. The Performance Rights are issued for a specified period and each Performance Right is convertible into one ordinary share. All Performance Rights expire on the earlier of their expiry date or termination of the employee’s employment subject to Director discretion. 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 Performance Rights. Voting and dividend rights attach to the ordinary shares when the Performance Rights vest and shares allocated to the participating employee. Unvested Performance Rights cannot be transferred and will not be quoted on the ASX. (iii) LTIP Component Participation Performance period Composition Performance conditions Award parameters Further details on each of the performance conditions laid out below are detailed in Section f(i) - 'Other Remuneration Information'. Performance Target Description (i) (ii) 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) Absolute TSR performance The Group’s absolute TSR return (iii) Growth in Growth in the Group’s Earnings per share Earnings per share (iv) Increase in ore reserves per share Increasing the ore reserves per share over a 3year period Weighting for each year from FY16 grants 25% 25% 25% 25% FY19 LTIP considerations 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. 92 Evolution Mining Limited Annual Report 2019 24 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(d)ExecutiveRemunerationOutcomes(continued)(iii)LTIP(continued)ComponentPerformancemeasureAwardoutcomefortheyear-ESOPPerformanceRightsOutcomesfortheFY16awardwhichvestedduringtheyeararesetoutasfollows:PerformanceTargetMeasureFY16Outcome%Vested(i)TSRPerformancePercentile20th19%(ii)AbsoluteTSRperformanceCompoundannualreturn42%25%(iii)GrowthinEarningspershareCompoundannualreturn2%0%(iv)IncreaseinorereservespersharePercentageincrease136%25%Total69%OutcomesfortheFY17awardwhichwillvestinAugust2019aresetoutasfollows:PerformanceTargetMeasureFY17Outcome%Vested(i)TSRPerformancePercentile10th25%(ii)AbsoluteTSRperformanceCompoundannualreturn27.7%25%(iii)GrowthinEarningspershareCompoundannualreturn9.9%14%(iv)IncreaseinorereservespersharePercentageincrease117.4%24%Total88%ThemovementinPerformanceRightsunderthisplanisinthetablebelow:20192018NumberNumberOutstandingbalanceatthebeginningoftheyear20,942,61026,278,566Performancerightsgrantedduringtheperiod5,699,9336,586,571Vestedduringtheperiod(4,063,412)(9,214,401)Lapsedduringtheperiod(1,797,984)-Forfeitedduringtheperiod(2,138,086)(2,708,126)Outstandingbalanceattheendoftheyear18,643,06120,942,610ThetablebelowreflectsthePerformanceRightsgranted,vested,orlapsedineachfinancialyear:FY15FY16FY17FY18FY19RunningBalanceGranted10,804,3708,141,3686,797,5406,586,5715,699,93338,029,782Granted-TIP*--3,375,000--3,375,000Vested(9,214,401)(4,022,944)---(13,237,345)Lapsed-(2,338,350)---(2,338,350)Forfeited(1,589,969)(2,279,972)(1,454,806)(1,428,082)(933,095)(7,685,924)Subjecttovesting--8,717,7345,158,4894,766,83818,643,061Testingdate30/06/1730/06/1830/06/1930/06/202030/06/2021-Testingdate-TIP*--16/12/19---Vesting(%)-excludingTIP100%69.3%88.2%---*3,750,000PerformanceRightsweregrantedinDecember2015toMr.JakeKleinandweresubsequentlywithdrawnpursuanttoaTransitionIncentivePlan(TIP)undertheRetentionAgreementwhichtheCompanyhasenteredintowithMr.Klein.UnderthePlantheCompanygranted3,375,000PerformanceRightstoMr.KleinsubjecttothesatisfactionofVestingConditionstobetestedasat16December2019andwereapprovedbyshareholdersattheshareholdermeetingheldon21June2017.2593 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(d)ExecutiveRemunerationOutcomes(continued)(iii)LTIP(continued)ComponentPerformancemeasureAwardoutcomefortheyear-ESOPPerformanceRightsOutcomesfortheFY16awardwhichvestedduringtheyeararesetoutasfollows:PerformanceTargetMeasureFY16Outcome%Vested(i)TSRPerformancePercentile20th19%(ii)AbsoluteTSRperformanceCompoundannualreturn42%25%(iii)GrowthinEarningspershareCompoundannualreturn2%0%(iv)IncreaseinorereservespersharePercentageincrease136%25%Total69%OutcomesfortheFY17awardwhichwillvestinAugust2019aresetoutasfollows:PerformanceTargetMeasureFY17Outcome%Vested(i)TSRPerformancePercentile10th25%(ii)AbsoluteTSRperformanceCompoundannualreturn27.7%25%(iii)GrowthinEarningspershareCompoundannualreturn9.9%14%(iv)IncreaseinorereservespersharePercentageincrease117.4%24%Total88%ThemovementinPerformanceRightsunderthisplanisinthetablebelow:20192018NumberNumberOutstandingbalanceatthebeginningoftheyear20,942,61026,278,566Performancerightsgrantedduringtheperiod5,699,9336,586,571Vestedduringtheperiod(4,063,412)(9,214,401)Lapsedduringtheperiod(1,797,984)-Forfeitedduringtheperiod(2,138,086)(2,708,126)Outstandingbalanceattheendoftheyear18,643,06120,942,610ThetablebelowreflectsthePerformanceRightsgranted,vested,orlapsedineachfinancialyear:FY15FY16FY17FY18FY19RunningBalanceGranted10,804,3708,141,3686,797,5406,586,5715,699,93338,029,782Granted-TIP*--3,375,000--3,375,000Vested(9,214,401)(4,022,944)---(13,237,345)Lapsed-(2,338,350)---(2,338,350)Forfeited(1,589,969)(2,279,972)(1,454,806)(1,428,082)(933,095)(7,685,924)Subjecttovesting--8,717,7345,158,4894,766,83818,643,061Testingdate30/06/1730/06/1830/06/1930/06/202030/06/2021-Testingdate-TIP*--16/12/19---Vesting(%)-excludingTIP100%69.3%88.2%---*3,750,000PerformanceRightsweregrantedinDecember2015toMr.JakeKleinandweresubsequentlywithdrawnpursuanttoaTransitionIncentivePlan(TIP)undertheRetentionAgreementwhichtheCompanyhasenteredintowithMr.Klein.UnderthePlantheCompanygranted3,375,000PerformanceRightstoMr.KleinsubjecttothesatisfactionofVestingConditionstobetestedasat16December2019andwereapprovedbyshareholdersattheshareholdermeetingheldon21June2017.258 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 l a t o T * * s t i f e n e B r e h t O * e u l a V d e s i t r o m A 8 1 0 2 9 1 0 2 I T L I T S 8 1 0 2 s u n o B 9 1 0 2 s t i f e n e B n o i t a u n n a r e p u S 8 1 0 2 9 1 0 2 t n e m y o p m E l - t s o P 0 9 8 , 3 4 6 , 4 1 6 0 , 4 7 4 , 1 2 4 1 , 9 2 5 , 5 5 1 4 , 0 9 4 , 1 3 3 6 , 2 5 1 3 3 6 , 7 6 1 1 8 7 , 3 0 1 3 3 6 , 2 7 1 3 3 6 , 7 5 1 3 3 6 , 2 3 1 3 3 6 , 2 4 1 8 8 6 , 3 8 0 , 1 8 2 6 , 1 8 8 2 4 6 , 2 3 9 1 4 6 , 6 0 6 5 9 8 , 2 5 1 5 9 8 , 2 5 1 5 9 8 , 7 5 1 5 4 1 , 4 6 1 5 4 6 , 6 6 1 6 9 7 , 4 2 9 2 6 , 5 2 6 0 4 , 1 2 8 4 2 8 , 6 0 9 1 2 6 , 3 5 9 6 8 7 , 5 9 9 - - - - - - - - - - - - 5 9 3 , 3 7 1 1 0 3 , 2 8 0 , 1 8 8 9 , 6 3 0 , 1 - 4 8 8 , 3 0 7 , 2 1 2 8 0 , 9 0 3 , 2 1 7 4 7 , 1 4 5 4 5 4 , 9 6 9 - 2 5 3 , 8 6 3 - - - - - - - - - - - - - - - - 1 6 0 , 9 5 2 0 9 0 , 3 8 8 , 2 5 1 4 , 8 2 3 2 4 3 , 1 1 6 , 3 0 0 0 , 7 5 6 0 0 0 , 0 8 4 0 0 0 , 4 4 5 0 0 0 , 7 1 4 3 3 6 , 7 3 3 3 6 , 7 3 1 3 0 , 5 2 3 3 6 , 7 3 3 3 6 , 7 3 3 3 6 , 7 3 3 3 6 , 7 3 8 8 6 , 3 4 2 8 2 6 , 1 0 2 2 4 6 , 7 1 2 4 5 5 , 7 5 1 0 3 , 7 0 3 2 0 1 , 6 2 2 5 9 8 , 7 3 5 9 8 , 7 3 5 9 8 , 7 3 5 9 8 , 7 3 5 9 8 , 7 3 9 7 8 , 6 1 9 7 8 , 6 1 - 7 0 9 , 0 0 3 4 2 8 , 2 5 2 1 2 1 , 8 6 2 6 8 7 , 2 2 1 8 8 9 , 8 8 2 - - - - - - - - - - - - - - 0 0 0 , 5 7 3 0 0 0 , 0 0 3 0 0 0 , 0 1 3 0 0 0 , 0 7 1 0 0 0 , 0 5 3 0 0 0 , 0 5 1 - 0 0 0 , 2 8 1 0 0 0 , 9 5 2 0 0 0 , 3 7 2 0 0 0 , 8 4 3 0 0 0 , 8 0 3 - - 8 4 0 , 0 2 8 4 0 , 0 2 - 2 3 8 , 6 9 7 2 , 1 1 - 1 1 4 , 0 1 8 4 0 , 0 2 8 4 0 , 0 2 8 4 0 , 0 2 4 2 0 , 0 1 8 4 0 , 0 2 4 2 0 , 0 1 - - 2 3 5 , 0 2 2 3 5 , 0 2 - 9 1 5 , 7 1 1 1 4 , 0 1 - 0 7 1 , 1 1 - 2 3 5 , 0 2 2 3 5 , 0 2 0 0 0 , 5 2 2 3 5 , 0 2 2 3 5 , 0 2 5 9 8 , 6 4 6 , 4 6 1 6 , 6 9 3 , 5 0 0 0 , 2 9 7 , 2 0 0 0 , 1 3 3 , 2 8 5 8 , 8 6 1 2 9 2 , 7 8 1 ) d e u n i t n o c ( s e m o c t u O n o i t a r e n u m e R e v i t u c e x E ) d ( ) d e u n i t n o c ( ) d e t i d u A ( t r o p e R n o i t a r e n u m e R t r o p e R ' s r o t c e r i D 9 1 0 2 e n u J 0 3 ) d e u n i t n o c ( d e t i i i i m L g n n M n o i t u o v E l n o i t a r e n u m e R d e x F i l a t o T 8 1 0 2 9 1 0 2 s e e F d n a l y r a a S e s a B l e b a t y r a m m u s n o i t a r e n u m e R ) v i ( , 2 5 9 4 1 7 , 0 0 0 5 1 1 1 2 7 8 1 1 , 8 1 9 1 7 , , 0 0 0 5 3 1 9 8 5 9 0 1 , 0 0 0 5 9 , 0 0 0 5 0 1 , , 2 5 9 4 4 4 , 2 5 9 9 5 3 , 2 5 9 4 8 3 , 8 6 6 5 9 1 , 2 5 9 4 0 4 6 7 9 4 1 2 , 8 6 4 4 2 7 , 0 0 0 5 1 1 , 1 8 4 7 9 , 9 8 5 9 0 1 , 0 5 2 6 2 1 , 0 8 5 7 1 1 , 7 1 9 7 , 0 5 7 8 , - 7 6 9 7 1 3 , 8 6 4 4 7 3 , 0 0 5 7 8 3 , 8 6 4 4 0 5 , 8 6 4 9 1 4 , , 2 5 7 3 8 0 1 , , 8 6 2 3 8 0 1 , , 4 8 3 4 5 5 4 , , 4 7 1 4 9 3 4 , l e n n o s r e P t n e m e g a n a M y e K * * * s u s s e t n o M e d n e i t s a b e S e n o t s e e r F m a h a r G e n o t s n h o J n i l o C h t i e K c M s a m o h T l l a H a e r d n A y a w n o C e i r w a L w e k s A s e m a J * * * s i r i w a S b u g a N i i l n e K b o c a J s r o t c e r i D * * * * n a r e l l o C n o r a A r e i r u s s e M e L k r a M n a m r e t s a M n e G l l r e k u F b o B l i n e t s E n a v E l e g a E l u a P 94 Evolution Mining Limited Annual Report 2019 . s D E N r o f s t h g i r n o i t n e t e r d n a , P M K r o f r a e y e h t g n i r u d d e s n e p x e s t h g i r e c n a m r o f r e p d n a s n o i t p o f o e u a v l r i a f e h t s e s i r p m o c s t h g i r d e s a b e r a h s f o l e u a v d e s i t r o m A . r e i r u s s e M e L k r a M r o f i s t i f e n e b n o i t a n m r e t d n a r e k u F b o B l r o f s u n o b n o n g s i a d n a s t s o c n o i t a c o e r e d u c n l l i 8 1 0 2 r o f s t i f e n e b r e h O t 6 2 . 9 1 0 2 y r a u n a J 1 e v i t c e f f e n o i t i s o p P M K e h t d n a l 9 1 0 2 y u J 1 e v i t c e f f e y n a p m o C e h t m o r f d e n g s e r i . 8 1 0 2 t s u g u A 1 e v i t c e f f e s e o r l r i e h t m o r f d e n g s e r i s u s s e t n o M e d n e i t s a b e S d n a s i r i w a S b u g a N i n a r e l l o C n o r a A * * * * * * * * * * Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) 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 * Existing Executive Directors and Key Management Personnel Jacob Klein Executive Chairman Lawrie Conway Finance Director and Chief Financial Officer Paul Eagle Vice President People and Culture Evan Elstein Company Secretary and Vice President Information Technology Bob Fulker Chief Operating Officer Glen Masterman Vice President Discovery and Business Development Open Open Open 803,800 300,000 fixed Director's Fees 625,000 135,000 fixed Director's Fees 6 months 6 months 3 months 6 months 420,000 3 months 6 months Open 420,000 3 months 6 months Open 540,000 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 * For a change of control event, the termination payment is 12 months TFR for Executive Directors and KMP. 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 $950,000 per annum). Fees for Non-Executive Directors are not linked to the performance of the Group and they currently do not participate in the Group’s STIP or LTIP. 27 95 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (e) Non-Executive Director Remuneration Outcomes (continued) Under the NED Equity Plan, NEDs will be granted Share Rights as part of their remuneration. The number of Share Rights granted will be calculated in accordance with the following formula: “Equity Amount” ($) 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 2019, the Equity Amount is $40,000 for each NED while for 2020 the Equity Amount will be $65,000 for each NED. The Value per Share Right equals the volume weighted average price (VWAP) of Evolution’s ordinary shares traded on the ASX over the 10 trading day period commencing the day after the release of the full year financial results. For 2020, the 10 trading day period to calculate the VWAP used to determine the number of share rights granted to each NED commences on 16 August 2019. Providing the NED remains a director of Evolution, Share Rights will vest and automatically exercise 12 months after the grant date. The Share Rights granted to NEDs under the NED Equity Plan are not subject to performance conditions or service requirements which could result in potential forfeiture. Vested Share Rights will convert into ordinary shares on a one-for-one basis. Vested Share Rights will be satisfied by either issuing shares or arranging for shares to be acquired on-market, subject to the Evolution Securities Trading Policy and the inside information provisions of the Corporations Act. Upon the transfer to the relevant NED, the shares will be subject to disposal restrictions (Disposal Conditions) under the earlier of: • • the NED ceasing to be a director of Evolution; or 3 years from the date of grant of the share rights or such longer period nominated by the NED at the time of the offer (up to a maximum 15 years from the date of grant). Generally, Share Rights will lapse if a Participant ceases to be a Director of the Company. Broken out in the table below is a summary of the fee structure by individual as at 30 June 2019. For remuneration outcomes please refer to table in section d (iv). Directors James Askew Graham Freestone Andrea Hall Colin Johnstone Thomas McKeith Base Fees Lead Independent Cash Component ($) Sub-Committee Member Sub-Committee Chairman Total Cash Fees Equity ($) NED Equity Plan Shares 95,000 95,000 95,000 95,000 95,000 475,000 - - - - 15,000 15,000 - - 25,000 15,000 15,000 55,000 20,000 20,000 - 10,000 10,000 60,000 115,000 115,000 120,000 120,000 135,000 605,000 40,000 40,000 40,000 40,000 40,000 200,000 Total per annum ($) 155,000 155,000 160,000 160,000 175,000 805,000 96 Evolution Mining Limited Annual Report 2019 28 Directors' Report (continued)EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(f)OtherRemunerationInformation(i)LTIPperformanceparametersComponentAssessmentRelativeTSRPerformancePerformanceRightswillbetestedagainsttheGroup’sTSRperformancerelativetoapeergroupofcomparatorgoldcompanies.TheGroup’sandthepeergroup’sTSRwillbebasedonthepercentagebywhichits30-dayvolumeweightedaveragesharepricequotedontheASX(“VWAP”)(plusthevalueofanydividendspaidduringtheperformanceperiod)hasincreasedoverathreeyearperiodending30June2019,30June2020and30June2021.PerformanceRightsgrantedinFY17,FY18andFY19PerformanceRightsgrantedonorafter1July2019LevelofperformanceachievedPerformanceRightsgrantedinFY17,FY18andFY19%ofTSRPerformanceRightsvestingPerformanceRightsgrantedinFY20%ofTSRPerformanceRightsvestingThresholdTop50thpercentile33%Below50thpercentile0%Abovethetop50thpercentileandbelowthetop25thpercentileStraight-linepro-ratabetween33%and66%TargetTop25thpercentile66%Atthe50thpercentile50%Abovethetop25thpercentileandbelowthetop10thpercentileStraight-linepro-ratabetween66%and100%Between50thpercentileandbelow25thpercentileStraight-linepro-rata50%-100%ExceptionalTop10thpercentileorabove100%Atorabove25thpercentile100%AbsoluteTSRperformancePerformancerightswillbetestedagainsttheGroup’sAbsoluteTSRperformancerelativetothe30daysVWAP(AbsoluteTSRPerformance)asat30June2019,30June2020and30June2021respectively,measuredasthecumulativeannualTSRoverthethreeyearperformanceperiod.LevelofperformanceachievedEvolutionAbsoluteTSRperformance%ofAbsoluteTSRPerformanceRightsvestingThreshold10%PerAnnumReturn33%Above10%PerAnnumReturnandbelow15%PerAnnumReturnStraight-linepro-ratabetween33%and66%Target15%ReturnPerAnnum66%Above15%PerAnnumReturnandbelow20%PerAnnumReturnStraight-linepro-ratabetween66%and100%ExceptionalAbove20%PerAnnumReturn100%GrowthinearningspershareAproportionofPerformanceRightsgrantedduringtheyearsended30June2017,30June2018and30June2019andthosetobegrantedduringtheyearended30June2020,willbetestedagainsttheGroup’sgrowthinEarningsPerShare,calculatedbyexcludinganyNon-RecurringItems,andmeasuredasthecumulativeannualgrowthrateoverthethreeyearperformanceperiod.LevelofperformanceachievedEvolutionEarningspershareperformance%ofEarningsPerSharePerformanceRightsvestingThreshold7%PerAnnumGrowthinEPS33%Above7%PerAnnumGrowthinEPSandbelow11%PerAnnumGrowthinEPSStraight-linepro-ratabetween33%and66%Target11%PerAnnumGrowthinEPS66%Above11%PerAnnumGrowthinEPSandbelow15%PerAnnumGrowthinEPSStraight-linepro-ratabetween66%and100%ExceptionalAbove15%PerAnnumGrowthinEPS100%2997 Directors' Report (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedDirectors'Report30June2019(continued)RemunerationReport(Audited)(continued)(f)OtherRemunerationInformation(i)LTIPperformanceparametersComponentAssessmentRelativeTSRPerformancePerformanceRightswillbetestedagainsttheGroup’sTSRperformancerelativetoapeergroupofcomparatorgoldcompanies.TheGroup’sandthepeergroup’sTSRwillbebasedonthepercentagebywhichits30-dayvolumeweightedaveragesharepricequotedontheASX(“VWAP”)(plusthevalueofanydividendspaidduringtheperformanceperiod)hasincreasedoverathreeyearperiodending30June2019,30June2020and30June2021.PerformanceRightsgrantedinFY17,FY18andFY19PerformanceRightsgrantedonorafter1July2019LevelofperformanceachievedPerformanceRightsgrantedinFY17,FY18andFY19%ofTSRPerformanceRightsvestingPerformanceRightsgrantedinFY20%ofTSRPerformanceRightsvestingThresholdTop50thpercentile33%Below50thpercentile0%Abovethetop50thpercentileandbelowthetop25thpercentileStraight-linepro-ratabetween33%and66%TargetTop25thpercentile66%Atthe50thpercentile50%Abovethetop25thpercentileandbelowthetop10thpercentileStraight-linepro-ratabetween66%and100%Between50thpercentileandbelow25thpercentileStraight-linepro-rata50%-100%ExceptionalTop10thpercentileorabove100%Atorabove25thpercentile100%AbsoluteTSRperformancePerformancerightswillbetestedagainsttheGroup’sAbsoluteTSRperformancerelativetothe30daysVWAP(AbsoluteTSRPerformance)asat30June2019,30June2020and30June2021respectively,measuredasthecumulativeannualTSRoverthethreeyearperformanceperiod.LevelofperformanceachievedEvolutionAbsoluteTSRperformance%ofAbsoluteTSRPerformanceRightsvestingThreshold10%PerAnnumReturn33%Above10%PerAnnumReturnandbelow15%PerAnnumReturnStraight-linepro-ratabetween33%and66%Target15%ReturnPerAnnum66%Above15%PerAnnumReturnandbelow20%PerAnnumReturnStraight-linepro-ratabetween66%and100%ExceptionalAbove20%PerAnnumReturn100%GrowthinearningspershareAproportionofPerformanceRightsgrantedduringtheyearsended30June2017,30June2018and30June2019andthosetobegrantedduringtheyearended30June2020,willbetestedagainsttheGroup’sgrowthinEarningsPerShare,calculatedbyexcludinganyNon-RecurringItems,andmeasuredasthecumulativeannualgrowthrateoverthethreeyearperformanceperiod.LevelofperformanceachievedEvolutionEarningspershareperformance%ofEarningsPerSharePerformanceRightsvestingThreshold7%PerAnnumGrowthinEPS33%Above7%PerAnnumGrowthinEPSandbelow11%PerAnnumGrowthinEPSStraight-linepro-ratabetween33%and66%Target11%PerAnnumGrowthinEPS66%Above11%PerAnnumGrowthinEPSandbelow15%PerAnnumGrowthinEPSStraight-linepro-ratabetween66%and100%ExceptionalAbove15%PerAnnumGrowthinEPS100%29Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (f) Other Remuneration Information (continued) (ii) Director and key management personnel equity holdings (continued) Performance and Share Rights Balance Granted as Converted Lapsed Other Balance at Vested and Unvested At end of the year changes the end of exercisable the year at the start of the year compen- sation 5,812,251 907,508 495,935 (968,607) 268,831 (232,400) (91,625) (36,115) 5,247,954 907,824 684,854 269,943 4,563,100 637,881 Directors Jacob Klein Lawrie Conway James Askew Graham Freestone Andrea Hall Colin Johnstone Thomas McKeith Naguib Sawiris * Sebastien de Montessus * Paul Eagle Evan Elstein Bob Fulker Glen Masterman Key Management Personnel Aaron Colleran ** 1,280,023 16,697 16,697 16,697 16,697 16,697 16,697 16,697 11,447 11,447 11,447 11,447 11,447 - - (16,697) (16,697) (16,697) (16,697) (16,697) (11,528) (11,528) 846,216 691,610 322,919 537,490 209,335 174,079 231,371 193,911 181,791 (191,084) - - - - - - - - - - (5,169) (5,169) (33,383) (28,253) (29,667) (32,577) - - - - - - - - - - - - - - 11,447 11,447 11,447 11,447 11,447 - - 11,447 11,447 11,447 11,447 11,447 - - - - - - - - - - 1,455,975 992,042 652,650 554,290 698,824 960,626 584,231 221,751 243,503 495,349 407,811 430,899 554,290 455,321 10,514,896 1,812,488 (1,498,632) (261,958) - 10,566,794 2,964,908 7,601,886 * ** Naguib Sawiris and Sebastien de Montessus resigned from their roles effective 1 August 2018. Aaron Colleran resigned from the Company effective 1 July 2019 and the KMP position effective 1 January 2019. Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (f) Other Remuneration Information (continued) (i) LTIP performance parameters (continued) Component Increase in ore reserves per share Assessment 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 2019, 30 June 2020 and 30 June 2021. Level of performance achieved Evolution Growth in Ore Reserves per share performance % of Growth in Ore Reserves Performance Rights vesting Threshold 90% of Baseline Ore Reserves 33% Target Exceptional Above 90% 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% (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 Andrea Hall Colin Johnstone Thomas McKeith Naguib Sawiris * Sebastien de Montessus * Key Management Personnel Aaron Colleran ** Paul Eagle Evan Elstein Bob Fulker Glen Masterman 12,700,023 693,270 773,587 130,505 - 125,267 173,220 16,298 16,298 30,000 167,000 570,000 - - 15,395,468 968,607 232,400 16,697 16,697 16,697 16,697 16,697 11,528 11,528 - - 191,084 - - 1,498,632 - - - - - - - - - - - - - - - (2,500,000) - - - - - - (27,826) (27,826) - - (210,000) - - (2,765,652) 11,168,630 925,670 790,284 147,202 16,697 141,964 189,917 - - 30,000 167,000 551,084 - - 14,128,448 * ** In August 2018, La Mancha sold a portion of their shareholding in the Company, taking their total shareholding down to 9.6% of Evolution’s issued capital. In line with the terms of the Share Sale Agreement, La Mancha's nominee Directors Mr Naguib Sawiris, Mr Sebastian de Montessus and their Alternate Director Andrew Wray resigned from the Board of Directors effective 1 August 2018. Aaron Colleran resigned from the Company effective 1 July 2019 and the KMP position effective 1 January 2019. 98 Evolution Mining Limited Annual Report 2019 30 31 Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (f) Other Remuneration Information (continued) (ii) Director and key management personnel equity holdings (continued) Performance and Share Rights Balance at the start of the year Granted as compen- sation Converted Lapsed Other changes At end of the year Vested and exercisable Balance at the end of the year Unvested 5,812,251 907,508 16,697 16,697 16,697 16,697 16,697 16,697 16,697 Directors Jacob Klein Lawrie Conway James Askew Graham Freestone Andrea Hall Colin Johnstone Thomas McKeith Naguib Sawiris * Sebastien de Montessus * Key Management Personnel Aaron Colleran ** Paul Eagle Evan Elstein Bob Fulker Glen Masterman 1,280,023 846,216 691,610 322,919 537,490 10,514,896 495,935 (968,607) 268,831 (232,400) (16,697) (16,697) (16,697) (16,697) (16,697) (11,528) (11,528) 11,447 11,447 11,447 11,447 11,447 - - (91,625) (36,115) - - - - - (5,169) (5,169) - - - - - - - - - 5,247,954 907,824 11,447 11,447 11,447 11,447 11,447 - - 684,854 269,943 - - - - - - - 4,563,100 637,881 11,447 11,447 11,447 11,447 11,447 - - - 209,335 174,079 - 181,791 (191,084) - 231,371 - 193,911 1,812,488 (1,498,632) (33,383) (28,253) (29,667) - (32,577) (261,958) 1,455,975 - 992,042 - 652,650 - 554,290 - - 698,824 - 10,566,794 960,626 584,231 221,751 - 243,503 2,964,908 495,349 407,811 430,899 554,290 455,321 7,601,886 * ** Naguib Sawiris and Sebastien de Montessus resigned from their roles effective 1 August 2018. Aaron Colleran resigned from the Company effective 1 July 2019 and the KMP position effective 1 January 2019. 31 99 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) Remuneration Report (Audited) (continued) (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. 2019 KMP for the financial year ended 30 June 2018 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. Long Term Incentive ("LTI") and Long term Incentive Plan (“LTIP”) LTI is the long-term incentive component of Total Remuneration. The LTI comprises of 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. 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 Directors' Report 30 June 2019 (continued) 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 26(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 none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of • • objectivity of the auditor. Ethics for Professional Accountants. 100 Evolution Mining Limited Annual Report 2019 32 33 Directors' Report (continued)Evolution Mining Limited Directors' Report 30 June 2019 (continued) 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 26(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. 33 101 Directors' Report (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Directors' Report 30 June 2019 (continued) 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: 2019 $ 2018 $ Auditor’s Independence Declaration Other assurance services PricewaterhouseCoopers firm: Due dilligence services Non PricewaterhouseCoopers audit firms 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 200,000 205,029 56,244 461,273 116,600 - 68,523 538,213 723,336 - 168,971 259,965 428,936 - 8,670 397,215 254,242 660,127 1,184,609 1,089,063 As lead auditor for the audit of Evolution Mining Limited for the year ended 30 June 2019, 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 15 August 2019 A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 103. 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. Jacob (Jake) Klein Executive Chairman Sydney Andrea Hall Chair of the Audit Committee 102 Evolution Mining Limited Annual Report 2019 34 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. 35 Directors' Report (continued) Auditor’s Independence Declaration Auditor’s Independence Declaration As lead auditor for the audit of Evolution Mining Limited for the year ended 30 June 2019, 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 no contraventions of any applicable code of professional conduct in relation to the audit. (b) Auditor’s Independence Declaration This declaration is in respect of Evolution Mining Limited and the entities it controlled during the As lead auditor for the audit of Evolution Mining Limited for the year ended 30 June 2019, I declare period. that to the best of my knowledge and belief, there have been: Auditor’s Independence Declaration As lead auditor for the audit of Evolution Mining Limited for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been: (a) (b) (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. no contraventions of any applicable code of professional conduct in relation to the audit. (b) This declaration is in respect of Evolution Mining Limited and the entities it controlled during the period. This declaration is in respect of Evolution Mining Limited and the entities it controlled during the period. Marc Upcroft Partner PricewaterhouseCoopers Sydney 15 August 2019 Marc Upcroft Partner PricewaterhouseCoopers Marc Upcroft Partner PricewaterhouseCoopers Sydney 15 August 2019 Sydney 15 August 2019 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au 35 Liability limited by a scheme approved under Professional Standards Legislation. Liability limited by a scheme approved under Professional Standards Legislation. 103 35 35 Evolution Mining Limited Annual Report 2019 Evolution Mining Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 Consolidated Statement of Profit or Loss and Evolution Mining Limited Other Comprehensive Income Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 30 June 2019 $'000 30 June 2018 $'000 Notes Equity investments at fair value through other comprehensive income (FVOCI) 15(a) Evolution Mining Limited Consolidated Balance Sheet As at 30 June 2019 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax receivables Total current assets Non-current assets Inventories 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 Current tax liabilities Provisions Other current liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Deferred tax liabilities Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Reserves Retained earnings Total equity Capital and reserves attributable to owners of Evolution Mining Limited 30 June 2019 $'000 30 June 2018 $'000 Notes 9 12 14 14 7 8 18 16 13 10 17 10 17 18 335,164 86,207 259,909 1,467 682,747 58,923 66,185 577,053 1,672,068 36,915 2,411,144 - - - 156,828 108,248 29,957 295,033 185,185 153,376 53,819 392,380 323,226 71,296 264,221 - 658,743 38,459 5,536 571,775 1,743,752 419 37,632 2,397,573 152,367 93,496 47,312 32,085 63 325,323 292,470 150,129 - 442,599 3,093,891 3,056,316 687,413 767,922 2,406,478 2,288,394 11(a) 11(b) 11(c) 2,183,727 72,379 150,372 2,406,478 2,406,478 2,183,727 45,407 59,260 2,288,394 2,288,394 Sales revenue Cost of sales Gross Profit Interest income Sales revenue Other income Cost of sales Share based payments expense Gross Profit Corporate and other administration costs Transaction and integration costs Exploration and evaluation costs expensed Interest income Finance costs Other income Profit before income tax expense Share based payments expense Corporate and other administration costs Transaction and integration costs Income tax expense Exploration and evaluation costs expensed Profit after income tax expense attributable to Owners of Evolution Mining Finance costs Limited Profit before income tax expense Income tax expense Other comprehensive income Profit after income tax expense attributable to Owners of Evolution Mining Changes in the fair value of equity investments at fair value through other Limited comprehensive income (FVOCI) (will not be reclassified to profit or loss) Exchange differences on translation of foreign operations (may be reclassified to profit or loss) Other comprehensive income for the period, net of tax Other comprehensive income Total comprehensive income for the period Changes in the fair value of equity investments at fair value through other comprehensive income (FVOCI) (will not be reclassified to profit or loss) Exchange differences on translation of foreign operations (may be reclassified to Total comprehensive income for the period is attributable to: profit or loss) Owners of Evolution Mining Limited Other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income for the period is attributable to: Earnings per share for profit attributable to Owners of Evolution Mining Owners of Evolution Mining Limited Limited: Basic earnings per share Diluted earnings per share Earnings per share for profit attributable to Owners of Evolution Mining Limited: Basic earnings per share Diluted earnings per share 2 2 Notes 2 2 25 2 2 2 25 2 2 3 2 3 11(b) 11(b) 4 4 4 4 1,509,824 (1,133,046) 30 June 2019 376,778 $'000 7,134 1,509,824 574 (1,133,046) (10,884) 376,778 (27,519) (1,455) (7,190) 7,134 (22,612) 574 314,826 (10,884) (27,519) (1,455) (96,638) (7,190) (22,612) 218,188 314,826 1,540,433 (1,140,472) 30 June 399,961 2018 $'000 3,332 1,540,433 651 (1,140,472) (8,491) 399,961 (27,193) 866 (5,414) 3,332 (24,778) 651 338,934 (8,491) (27,193) 866 (75,546) (5,414) (24,778) 263,388 338,934 (96,638) (75,546) 218,188 18,845 (103) 18,742 236,930 18,845 (103) 236,930 18,742 236,930 236,930 Cents 236,930 236,930 12.86 Cents 12.78 263,388 (1,925) 46 (1,879) 261,509 (1,925) 46 261,509 (1,879) 261,509 261,509 Cents 261,509 261,509 15.57 15.51 Cents 12.86 12.78 15.57 15.51 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 104 Evolution Mining Limited Annual Report 2019 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 36 36 The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes. 37 EvolutionMiningLimitedConsolidatedBalanceSheetAsat30June2019Notes30June2019$'00030June2018$'000ASSETSCurrentassetsCashandcashequivalents9335,164323,226Tradeandotherreceivables1286,20771,296Inventories14259,909264,221Currenttaxreceivables1,467-Totalcurrentassets682,747658,743Non-currentassetsInventories1458,92338,459Equityinvestmentsatfairvaluethroughothercomprehensiveincome(FVOCI)15(a)66,1855,536Property,plantandequipment7577,053571,775Minedevelopmentandexploration81,672,0681,743,752Deferredtaxassets18-419Othernon-currentassets1636,91537,632Totalnon-currentassets2,411,1442,397,573Totalassets3,093,8913,056,316LIABILITIESCurrentliabilitiesTradeandotherpayables13156,828152,367Interestbearingliabilities10108,24893,496Currenttaxliabilities-47,312Provisions1729,95732,085Othercurrentliabilities-63Totalcurrentliabilities295,033325,323Non-currentliabilitiesInterestbearingliabilities10185,185292,470Provisions17153,376150,129Deferredtaxliabilities1853,819-Totalnon-currentliabilities392,380442,599Totalliabilities687,413767,922Netassets2,406,4782,288,394EQUITYIssuedcapital11(a)2,183,7272,183,727Reserves11(b)72,37945,407Retainedearnings11(c)150,37259,260CapitalandreservesattributabletoownersofEvolutionMiningLimited2,406,4782,288,394Totalequity2,406,4782,288,394TheaboveConsolidatedBalanceSheetshouldbereadinconjunctionwiththeaccompanyingnotes.37Consolidated Balance Sheet Evolution Mining Limited Consolidated Balance Sheet As at 30 June 2019 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax receivables Total current assets Non-current assets Inventories Equity investments at fair value through other comprehensive income (FVOCI) 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 Current tax liabilities Provisions Other current liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Provisions Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Notes 9 12 14 14 15(a) 7 8 18 16 13 10 17 10 17 18 30 June 2019 $'000 30 June 2018 $'000 335,164 86,207 259,909 1,467 682,747 58,923 66,185 577,053 1,672,068 - 36,915 2,411,144 323,226 71,296 264,221 - 658,743 38,459 5,536 571,775 1,743,752 419 37,632 2,397,573 3,093,891 3,056,316 156,828 108,248 - 29,957 - 295,033 185,185 153,376 53,819 392,380 152,367 93,496 47,312 32,085 63 325,323 292,470 150,129 - 442,599 687,413 767,922 2,406,478 2,288,394 EQUITY Issued capital Reserves Retained earnings Capital and reserves attributable to owners of Evolution Mining Limited Total equity 11(a) 11(b) 11(c) 2,183,727 72,379 150,372 2,406,478 2,406,478 2,183,727 45,407 59,260 2,288,394 2,288,394 The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes. 37 105 Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedConsolidatedBalanceSheetAsat30June2019Notes30June2019$'00030June2018$'000ASSETSCurrentassetsCashandcashequivalents9335,164323,226Tradeandotherreceivables1286,20771,296Inventories14259,909264,221Currenttaxreceivables1,467-Totalcurrentassets682,747658,743Non-currentassetsInventories1458,92338,459Equityinvestmentsatfairvaluethroughothercomprehensiveincome(FVOCI)15(a)66,1855,536Property,plantandequipment7577,053571,775Minedevelopmentandexploration81,672,0681,743,752Deferredtaxassets18-419Othernon-currentassets1636,91537,632Totalnon-currentassets2,411,1442,397,573Totalassets3,093,8913,056,316LIABILITIESCurrentliabilitiesTradeandotherpayables13156,828152,367Interestbearingliabilities10108,24893,496Currenttaxliabilities-47,312Provisions1729,95732,085Othercurrentliabilities-63Totalcurrentliabilities295,033325,323Non-currentliabilitiesInterestbearingliabilities10185,185292,470Provisions17153,376150,129Deferredtaxliabilities1853,819-Totalnon-currentliabilities392,380442,599Totalliabilities687,413767,922Netassets2,406,4782,288,394EQUITYIssuedcapital11(a)2,183,7272,183,727Reserves11(b)72,37945,407Retainedearnings11(c)150,37259,260CapitalandreservesattributabletoownersofEvolutionMiningLimited2,406,4782,288,394Totalequity2,406,4782,288,394TheaboveConsolidatedBalanceSheetshouldbereadinconjunctionwiththeaccompanyingnotes.37Evolution Mining Limited Consolidated Statement of Changes in Equity For the year ended 30 June 2019 Consolidated Statement of Changes in Equity Evolution Mining Limited Consolidated Statement of Changes in Equity For the year ended 30 June 2019 Notes Fair value revaluation reserve $'000 Foreign currency translation $'000 Share- based payments $'000 Retained earnings $'000 Issued capital $'000 Total equity $'000 Balance at 1 July 2017 Profit after income tax expense Changes in fair value of Equity investments at FVOCI Balance at 1 July 2017 Exchange differences on translation of foreign operations Total comprehensive income Profit after income tax expense Changes in fair value of Equity investments at FVOCI Transactions with owners in their Exchange differences on translation of capacity as owners: foreign operations Dividends provided for or paid Total comprehensive income Recognition of share-based payments Transactions with owners in their capacity as owners: Balance at 30 June 2018 Dividends provided for or paid Recognition of share-based payments Balance at 1 July 2018 Balance at 30 June 2018 Profit after income tax expense Changes in fair value of Equity investments at FVOCI Balance at 1 July 2018 Exchange differences on translation of foreign operations Total comprehensive expense Profit after income tax expense Changes in fair value of Equity investments at FVOCI Transactions with owners in their Exchange differences on translation of capacity as owners: foreign operations Dividends provided for or paid Total comprehensive expense Recognition of share-based payments Transactions with owners in their capacity as owners: Balance at 30 June 2019 Dividends provided for or paid Recognition of share-based payments 2,183,727 Issued capital - $'000 Share- 37,149 based payments - $'000 Fair value 1,589 revaluation reserve - $'000 Foreign 57 currency translation - $'000 (94,270) 2,128,252 Total equity 263,388 $'000 Retained earnings 263,388 $'000 Notes - 2,183,727 - - - - 37,149 - - - (1,925) 1,589 - (1,925) - - - - - - - 2,183,727 - - - 2,183,727 2,183,727 - - 2,183,727 - - - - - - - - - 2,183,727 - - - 5 25 5 25 5 25 5 25 - (1,925) - - - 8,491 8,491 45,640 - 8,491 8,491 45,640 45,640 - - 45,640 - - - - - (1,925) - - (336) - - - (336) (336) - 18,845 (336) - 18,845 - - - - 8,230 8,230 53,870 - 8,230 8,230 - - 18,845 - - 18,509 - - - - 57 46 46 - - 46 - 46 - - 103 - - - 103 103 - - 103 (103) (103) - - (1,925) (94,270) 2,128,252 46 261,509 263,388 - 263,388 263,388 - (1,925) - (109,858) 263,388 - (109,858) 46 (109,858) 261,509 8,491 (101,367) 59,260 2,288,394 (109,858) 8,491 (101,367) (109,858) - (109,858) 59,260 2,288,394 59,260 2,288,394 218,188 218,188 - 18,845 59,260 2,288,394 (103) 236,930 218,188 - 218,188 218,188 (103) - (103) - - - (127,076) 218,188 - (127,076) (103) (127,076) 236,930 8,230 (118,846) - - - - - 150,372 2,406,478 (127,076) 8,230 (118,846) (127,076) - (127,076) 150,372 2,406,478 - 18,845 - - 18,845 Balance at 30 June 2019 2,183,727 53,870 18,509 Evolution Mining Limited Consolidated Statement of Cash Flows For the year ended 30 June 2019 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Other income Interest received Interest paid Income taxes paid 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 stamp duty related to business disposal Cash disposed on sale of subsidiary Payments for transaction and integration costs Transfer from term deposits Payments for equity investments Payments for exploration asset acquisitions Net cash outflow from investing activities Net cash inflow from operating activities 6(a) Cash flows from financing activities Repayment of interest bearing liabilities - Senior Secured Syndicated Revolving and Term Facility Repayment of short term borrowings Proceeds from short term borrowings Payment of finance lease liabilities Dividends paid Net cash outflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year 9 30 June 2019 $'000 30 June 2018 $'000 Notes 1,512,675 (794,648) 574 7,057 (18,243) (91,179) 616,236 1,554,951 (775,032) 651 2,510 (20,495) (48,419) 714,166 (105,415) (218,623) 142 700 (15) - (1,440) 17 (41,803) (15,750) (382,187) (95,000) - - - - (127,111) (222,111) 11,938 323,226 335,164 (116,053) (191,875) 595 40,000 (13) (438) (2,500) - - - (270,284) (40,000) (84,330) 77,460 (1,344) (109,873) (158,087) 285,795 37,385 46 323,226 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 106 Evolution Mining Limited Annual Report 2019 38 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 38 39 EvolutionMiningLimitedConsolidatedStatementofCashFlowsFortheyearended30June2019Notes30June2019$'00030June2018$'000CashflowsfromoperatingactivitiesReceiptsfromcustomers1,512,6751,554,951Paymentstosuppliersandemployees(794,648)(775,032)Otherincome574651Interestreceived7,0572,510Interestpaid(18,243)(20,495)Incometaxespaid(91,179)(48,419)Netcashinflowfromoperatingactivities6(a)616,236714,166CashflowsfrominvestingactivitiesPaymentsforproperty,plantandequipment(105,415)(116,053)Paymentsforminedevelopmentandexploration(218,623)(191,875)Proceedsfromsaleofproperty,plantandequipment142595Proceedsfromsaleofsubsidiary70040,000Paymentsforstampdutyrelatedtobusinessdisposal(15)-Cashdisposedonsaleofsubsidiary-(13)Paymentsfortransactionandintegrationcosts(1,440)(438)Transferfromtermdeposits17-Paymentsforequityinvestments(41,803)(2,500)Paymentsforexplorationassetacquisitions(15,750)-Netcashoutflowfrominvestingactivities(382,187)(270,284)CashflowsfromfinancingactivitiesRepaymentofinterestbearingliabilities-SeniorSecuredSyndicatedRevolvingandTermFacility(95,000)(40,000)Repaymentofshorttermborrowings-(84,330)Proceedsfromshorttermborrowings-77,460Paymentoffinanceleaseliabilities-(1,344)Dividendspaid(127,111)(109,873)Netcashoutflowfromfinancingactivities(222,111)(158,087)Netincreaseincashandcashequivalents11,938285,795Cashandcashequivalentsatthebeginningoftheyear323,22637,385Effectsofexchangeratechangesoncashandcashequivalents-46Cashandcashequivalentsatendofyear9335,164323,226TheaboveConsolidatedStatementofCashFlowsshouldbereadinconjunctionwiththeaccompanyingnotes.39Consolidated Statement of Cash Flows Evolution Mining Limited Consolidated Statement of Cash Flows For the year ended 30 June 2019 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Other income Interest received Interest paid Income taxes 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 stamp duty related to business disposal Cash disposed on sale of subsidiary Payments for transaction and integration costs Transfer from term deposits Payments for equity investments Payments for exploration asset acquisitions Net cash outflow from investing activities Cash flows from financing activities Repayment of interest bearing liabilities - Senior Secured Syndicated Revolving and Term Facility Repayment of short term borrowings Proceeds from short term borrowings Payment of finance lease liabilities Dividends paid Net cash outflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year 9 30 June 2019 $'000 30 June 2018 $'000 Notes 1,512,675 (794,648) 574 7,057 (18,243) (91,179) 616,236 1,554,951 (775,032) 651 2,510 (20,495) (48,419) 714,166 6(a) (105,415) (218,623) 142 700 (15) - (1,440) 17 (41,803) (15,750) (382,187) (95,000) - - - (127,111) (222,111) 11,938 323,226 - 335,164 (116,053) (191,875) 595 40,000 - (13) (438) - (2,500) - (270,284) (40,000) (84,330) 77,460 (1,344) (109,873) (158,087) 285,795 37,385 46 323,226 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 39 107 Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedConsolidatedStatementofCashFlowsFortheyearended30June2019Notes30June2019$'00030June2018$'000CashflowsfromoperatingactivitiesReceiptsfromcustomers1,512,6751,554,951Paymentstosuppliersandemployees(794,648)(775,032)Otherincome574651Interestreceived7,0572,510Interestpaid(18,243)(20,495)Incometaxespaid(91,179)(48,419)Netcashinflowfromoperatingactivities6(a)616,236714,166CashflowsfrominvestingactivitiesPaymentsforproperty,plantandequipment(105,415)(116,053)Paymentsforminedevelopmentandexploration(218,623)(191,875)Proceedsfromsaleofproperty,plantandequipment142595Proceedsfromsaleofsubsidiary70040,000Paymentsforstampdutyrelatedtobusinessdisposal(15)-Cashdisposedonsaleofsubsidiary-(13)Paymentsfortransactionandintegrationcosts(1,440)(438)Transferfromtermdeposits17-Paymentsforequityinvestments(41,803)(2,500)Paymentsforexplorationassetacquisitions(15,750)-Netcashoutflowfrominvestingactivities(382,187)(270,284)CashflowsfromfinancingactivitiesRepaymentofinterestbearingliabilities-SeniorSecuredSyndicatedRevolvingandTermFacility(95,000)(40,000)Repaymentofshorttermborrowings-(84,330)Proceedsfromshorttermborrowings-77,460Paymentoffinanceleaseliabilities-(1,344)Dividendspaid(127,111)(109,873)Netcashoutflowfromfinancingactivities(222,111)(158,087)Netincreaseincashandcashequivalents11,938285,795Cashandcashequivalentsatthebeginningoftheyear323,22637,385Effectsofexchangeratechangesoncashandcashequivalents-46Cashandcashequivalentsatendofyear9335,164323,226TheaboveConsolidatedStatementofCashFlowsshouldbereadinconjunctionwiththeaccompanyingnotes.39Notes to the Consolidated Financial Statements Business Performance Performance by Mine Revenue and Expenses Income tax expense Earnings 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 Financial assets and financial liabilities Other non-current assets Provisions Deferred tax balances Risk and unrecognised items Financial risk management Contingent liabilities and contingent assets Commitments Events occurring after the reporting period Other Disclosures 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 New accounting standards 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 29 30 31 109 109 110 113 113 114 115 116 116 118 121 121 121 122 123 124 124 125 125 125 127 128 128 130 131 132 133 133 134 134 136 137 137 138 139 140 Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 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 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 year. 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. (b) Segment information The segment information for the reportable segments for the year ended 30 June 2019 is as follows: Cowal Mungari Carlton Rawdon Cracow $'000 $'000 $'000 $'000 $'000 Mt Mt Ernest Henry $'000 Edna May $'000 Explo- ration $'000 Corp- orate $'000 Total $'000 435,556 212,881 198,532 166,954 144,475 351,426 230,674 44,000 100,734 144,734 75,234 120,337 11,960 16,153 28,113 8,039 27,537 35,576 53,912 4,446 23,921 28,367 15,158 12,052 27,210 9,636 - 9,636 - - - - - 62,077 231,619 (7,190) (36,401) - 1,509,824 730,262 94,672 180,397 275,069 1,433 - 1,433 The segment information for the reportable segments for the year ended 30 June 2018 is as follows: Cowal Mungari Carlton Rawdon Cracow $'000 $'000 $'000 $'000 $'000 Mt Mt Ernest Henry $'000 Edna May $'000 Explo- ration $'000 Corp- orate $'000 Total $'000 422,858 191,062 214,844 179,387 147,708 347,403 37,171 - 1,540,433 234,225 67,331 136,503 39,697 84,923 124,620 9,935 36,611 46,546 9,866 21,009 30,875 93,006 8,574 10,924 19,498 70,210 230,976 19,601 14,451 34,052 11,618 - 11,618 2,629 1,599 3,072 4,671 (5,414) (34,383) 1,619 - 1,619 795,083 102,509 170,990 273,499 30 June 2019 SPACE Revenue EBITDA Sustaining Capital Major Capital Total Capital 30 June 2018 Space Revenue EBITDA Sustaining Capital Major Capital Total Capital - - - - - - - - 108 Evolution Mining Limited Annual Report 2019 41 Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 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 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 year. 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. (b) Segment information The segment information for the reportable segments for the year ended 30 June 2019 is as follows: Cowal $'000 Mungari $'000 Mt Carlton $'000 Mt Rawdon $'000 Cracow $'000 Ernest Henry $'000 Edna May $'000 Explo- ration $'000 Corp- orate $'000 Total $'000 30 June 2019 SPACE Revenue EBITDA Sustaining Capital Major Capital Total Capital 435,556 212,881 198,532 166,954 144,475 351,426 62,077 231,619 230,674 9,636 15,158 44,000 12,052 100,734 - 9,636 27,210 144,734 75,234 120,337 8,039 11,960 27,537 16,153 35,576 28,113 53,912 4,446 23,921 28,367 - - - - - - (7,190) - - - - 1,509,824 730,262 94,672 180,397 275,069 (36,401) 1,433 - 1,433 The segment information for the reportable segments for the year ended 30 June 2018 is as follows: Cowal $'000 Mungari $'000 Mt Carlton $'000 Mt Rawdon $'000 Cracow $'000 Ernest Henry $'000 Edna May $'000 Explo- ration $'000 Corp- orate $'000 Total $'000 30 June 2018 Space Revenue EBITDA Sustaining Capital Major Capital Total Capital 422,858 191,062 214,844 179,387 147,708 347,403 70,210 230,976 234,225 11,618 19,601 39,697 14,451 84,923 - 11,618 34,052 124,620 67,331 136,503 9,866 21,009 30,875 93,006 8,574 10,924 19,498 9,935 36,611 46,546 37,171 2,629 1,599 3,072 4,671 - (5,414) - - - - 1,540,433 795,083 102,509 170,990 273,499 (34,383) 1,619 - 1,619 41 109 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 1 Performance by Mine (continued) (c) Segment reconciliation Reconciliation of profit before income tax expense SPACE EBITDA Depreciation and amortisation Interest income Transaction and integration costs Fair value amortisation expense Fair value unwinding expense Finance costs Profit before income tax expense Recognition and measurement 30 June 2019 $'000 30 June 2018 $'000 730,262 (374,909) 7,134 (1,455) (23,594) - (22,612) 314,826 795,083 (405,230) 3,332 866 (33,481) 3,142 (24,778) 338,934 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 business decision maker, consists of the Executive Chairman and the Senior Leadership Team (KMP). 2 Revenue and Expenses Revenue from contracts with customers Gold sales Silver sales Copper sales Disaggregation of revenue from contracts with customers 30 June 2019 $'000 30 June 2018 $'000 1,307,532 14,397 187,895 1,509,824 1,312,640 21,049 206,744 1,540,433 Cowal $'000 Mungari $'000 Mt Carlton $'000 Mt Rawdon $'000 Cracow $'000 Ernest Henry $'000 Edna May $'000 Total $'000 SPACE Gold sales Silver sales Copper sales Total Revenue from contracts with customers 430,304 212,556 186,885 164,095 143,674 170,018 1,017 - 180,391 4,143 7,504 5,252 - 2,859 - 325 - 801 30 June 2019 - 1,307,532 14,397 - 187,895 - 435,556 212,881 198,532 166,954 144,475 351,426 - 1,509,824 110 Evolution Mining Limited Annual Report 2019 42 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)2RevenueandExpenses(continued)Disaggregationofrevenuefromcontractswithcustomers(continued)Cowal$'000Mungari$'000MtCarlton$'000MtRawdon$'000Cracow$'000ErnestHenry$'000EdnaMay$'000Total$'00030June2018SpaceGoldsales416,512190,509186,513176,701146,854158,55736,9941,312,640Silversales6,3465539,0752,6868541,35817721,049Coppersales--19,256--187,488-206,744TotalRevenuefromcontractswithcustomers422,858191,062214,844179,387147,708347,40337,1711,540,433AssetsrelatedtocontractswithcustomersTheGrouphasrecognisedthefollowingrevenue-relatedcontractassets:30June2019$'00030June2018$'000ErnestHenrysilverandcopperaccruedrevenue(i)47,57446,89747,57446,897(i)TheGroup'scontractassetrelatestosilverandcopperaccruedrevenuefromApriltoJune2019productionfortheErnestHenryoperation.TheseamountsaretobesettledinJulytoSeptember2019.ReferNote23.Recognitionandmeasurement-revenuefromcontractswithcustomersTheGroupadoptedAASB15duringtheyear.InaccordancewiththetransitionprovisionsinAASB15,thegroupadoptedthemodifiedretrospectiveapproachandhasnotrestatedcomparativesforthe2018financialyear.AsthetransitionalprovisionsdidnothaveamaterialimpactontheamountofrevenuerecognisedunderthepreviousAASB118,nocumulativeadjustmentwasrecognisedtotheopeningbalanceofretainedearningsforthe2019financialyear.Theaccountingpolicyinrespectofrevenueissetoutbelow.TheGroupgeneratessalesrevenueprimarilyfromtheperformanceobligationtodelivergoodssuchasgoldandconcentratetothebuyer.RevenuefromcontractswithcustomersisrecognisedwhencontrolofthegoodsaretransferredtothecustomersatanamountthatreflectstheconsiderationtowhichtheGroupexpectstobeentitledinexchangeforthosegoodsorservices.Forgoldsales,revenueisrecognisedatthepointwherethedoréleavesthegoldroomattheGroup'sminesitetothebuyerorwheregoldmetalcreditsaretransferredtothecustomer'saccount.InrelationtotheGroup'seconomicinterestinErnestHenry(note23(a))goldsalesarerecognisedwhenthemetalisreceivedandsoldbyEvolution.Forconcentratesales,revenueisrecognisedgenerallyuponreceiptofthebillofladingwhenthecommodityisdeliveredforshipment.CopperandsilverinconcentratessalesinrelationtotheGroup'seconomicinterestinErnestHenry(note23(a))arerecognisedasaccruedrevenueinthesamemonthastheirproductionisreportedastheproductionisinthecontrolofthecustomer.Thetransactionpriceforeachcontractisallocatedentirelytothisperformanceobligation.Thetermsofmetalinconcentratesalescontractswiththirdparties,containprovisionalpricingarrangementswherebythefinalsellingpriceformetalinconcentrateisbasedonprevailingaveragemonthlypricesonaspecifiedfutureperiodaftershipmenttothecustomer(quotationperiod).Adjustmentstothesalespriceoccurbasedonmovementsinquotedmarkedpricesuptothefinalsettlementpricespecifiedinthesalescontracts.Theperiodbetweenprovisionalinvoicingandfinalsettlementistypicallyonetothreemonths.Revenueonprovisionallypricedsalesisrecognisedbasedontheestimatedfairvalueofthetotalconsiderationreceivable.AccountingestimatesandjudgementsTimingofRevenueRecognition-ErnestHenryOperationTheGroupappliedsignificantjudgementastowhengold,silverandcopperrevenueshouldberecognisedfromtheErnestHenryMine.GoldsalesarerecognisedbytheGroupwhenthebullionisdeliveredtoEvolution’sgoldaccountandsoldinthethirdmonthafterthemonthofproduction.CopperandsilversalesarerecognisedasaccruedrevenuebytheGroupinthesamemonthastheirproductionisreportedbytheoperatorGlencore.CopperandsilverissoldinaccordancewiththeOfftakeAgreementwithGlencorewherethemetalissoldimmediatelyfollowingtreatmentandrefiningandispaidforincash.43111 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)2RevenueandExpenses(continued)Disaggregationofrevenuefromcontractswithcustomers(continued)Cowal$'000Mungari$'000MtCarlton$'000MtRawdon$'000Cracow$'000ErnestHenry$'000EdnaMay$'000Total$'00030June2018SpaceGoldsales416,512190,509186,513176,701146,854158,55736,9941,312,640Silversales6,3465539,0752,6868541,35817721,049Coppersales--19,256--187,488-206,744TotalRevenuefromcontractswithcustomers422,858191,062214,844179,387147,708347,40337,1711,540,433AssetsrelatedtocontractswithcustomersTheGrouphasrecognisedthefollowingrevenue-relatedcontractassets:30June2019$'00030June2018$'000ErnestHenrysilverandcopperaccruedrevenue(i)47,57446,89747,57446,897(i)TheGroup'scontractassetrelatestosilverandcopperaccruedrevenuefromApriltoJune2019productionfortheErnestHenryoperation.TheseamountsaretobesettledinJulytoSeptember2019.ReferNote23.Recognitionandmeasurement-revenuefromcontractswithcustomersTheGroupadoptedAASB15duringtheyear.InaccordancewiththetransitionprovisionsinAASB15,thegroupadoptedthemodifiedretrospectiveapproachandhasnotrestatedcomparativesforthe2018financialyear.AsthetransitionalprovisionsdidnothaveamaterialimpactontheamountofrevenuerecognisedunderthepreviousAASB118,nocumulativeadjustmentwasrecognisedtotheopeningbalanceofretainedearningsforthe2019financialyear.Theaccountingpolicyinrespectofrevenueissetoutbelow.TheGroupgeneratessalesrevenueprimarilyfromtheperformanceobligationtodelivergoodssuchasgoldandconcentratetothebuyer.RevenuefromcontractswithcustomersisrecognisedwhencontrolofthegoodsaretransferredtothecustomersatanamountthatreflectstheconsiderationtowhichtheGroupexpectstobeentitledinexchangeforthosegoodsorservices.Forgoldsales,revenueisrecognisedatthepointwherethedoréleavesthegoldroomattheGroup'sminesitetothebuyerorwheregoldmetalcreditsaretransferredtothecustomer'saccount.InrelationtotheGroup'seconomicinterestinErnestHenry(note23(a))goldsalesarerecognisedwhenthemetalisreceivedandsoldbyEvolution.Forconcentratesales,revenueisrecognisedgenerallyuponreceiptofthebillofladingwhenthecommodityisdeliveredforshipment.CopperandsilverinconcentratessalesinrelationtotheGroup'seconomicinterestinErnestHenry(note23(a))arerecognisedasaccruedrevenueinthesamemonthastheirproductionisreportedastheproductionisinthecontrolofthecustomer.Thetransactionpriceforeachcontractisallocatedentirelytothisperformanceobligation.Thetermsofmetalinconcentratesalescontractswiththirdparties,containprovisionalpricingarrangementswherebythefinalsellingpriceformetalinconcentrateisbasedonprevailingaveragemonthlypricesonaspecifiedfutureperiodaftershipmenttothecustomer(quotationperiod).Adjustmentstothesalespriceoccurbasedonmovementsinquotedmarkedpricesuptothefinalsettlementpricespecifiedinthesalescontracts.Theperiodbetweenprovisionalinvoicingandfinalsettlementistypicallyonetothreemonths.Revenueonprovisionallypricedsalesisrecognisedbasedontheestimatedfairvalueofthetotalconsiderationreceivable.AccountingestimatesandjudgementsTimingofRevenueRecognition-ErnestHenryOperationTheGroupappliedsignificantjudgementastowhengold,silverandcopperrevenueshouldberecognisedfromtheErnestHenryMine.GoldsalesarerecognisedbytheGroupwhenthebullionisdeliveredtoEvolution’sgoldaccountandsoldinthethirdmonthafterthemonthofproduction.CopperandsilversalesarerecognisedasaccruedrevenuebytheGroupinthesamemonthastheirproductionisreportedbytheoperatorGlencore.CopperandsilverissoldinaccordancewiththeOfftakeAgreementwithGlencorewherethemetalissoldimmediatelyfollowingtreatmentandrefiningandispaidforincash.43Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 2 Revenue and Expenses (continued) Cost of sales Mine operating costs Royalty and other selling costs Depreciation and amortisation expense Fair value amortisation Fair value gain Corporate and other administration costs Depreciation and amortisation expense Corporate overheads Transaction and integration costs Contractor, consultants and advisory expense Corporate and administration expense Stamp duty on business combinations Finance costs Amortisation of debt establishment costs Unwinding of discount on provisions Interest expense Depreciation and amortisation Cost of sales (excluding Ernest Henry) Cost of sales (Ernest Henry) Corporate and other administration costs 30 June 2019 $'000 30 June 2018 $'000 672,987 62,984 373,481 23,594 - 1,133,046 1,428 26,091 27,519 1,209 231 15 1,455 2,468 1,901 18,243 22,612 243,578 129,903 1,428 374,909 639,609 65,944 404,580 33,481 (3,142) 1,140,472 650 26,543 27,193 724 978 (2,568) (866) 740 3,544 20,494 24,778 278,911 125,669 650 405,230 112 Evolution Mining Limited Annual Report 2019 44 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)3Incometaxexpense(a)Incometaxexpense30June2019$'00030June2018$'000Currenttaxonprofitsfortheperiod52,09285,490Deferredtax45,785(4,433)Adjustmentsforcurrenttaxofpriorperiods(1,239)(5,511)96,63875,546(b)Numericalreconciliationofincometaxexpensetoprimafacietaxpayable30June2019$'00030June2018$'000Profitbeforeincometax314,826338,934TaxattheAustraliantaxrateof30%94,448101,680spaceTaxeffectofamountswhicharenotdeductible(taxable)incalculatingtaxableincome:Deferredtaxexpenseonsaleofsubsidiary-4,165Adjustmentsforcurrenttaxofpriorperiods(1,239)(5,511)Share-basedpayments3,2652,547Other164(689)Temporarydifferencesnowrecognisedtoreducedeferredtaxexpense-(12,993)Taxlossrecognisedtoreducedeferredtaxexpense-(4,544)Taxlossesusedtoreducecurrenttaxexpense-(9,109)Incometaxexpense96,63875,546(411,464)(414,480)4Earningspershare(a)Earningspershare30June2019Cents30June2018CentsBasicearningspershare(cents)12.8615.57Dilutedearningspershare(cents)12.7815.51(b)Earningsusedincalculatingearningspershare30June2019$'00030June2018$'000Earningspershareusedinthecalculationofbasicanddilutedearningspershare:Profitafterincometaxattributabletotheownersoftheparent218,188263,388(c)Weightedaveragenumberofsharesusedasthedenominator2019Number2018NumberWeightedaveragenumberofordinarysharesusedincalculatingthebasicearningspershare1,696,474,4371,691,215,407Effectofdilutivesecurities(i)10,320,1726,419,798Adjustedweightedaveragenumberofordinarysharesusedincalculatingthedilutedearningspershare1,706,794,6091,697,635,205(i)Performancerightsandsharerightshavebeenincludedinthedeterminationofdilutedearningspershare.45113 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)3Incometaxexpense(a)Incometaxexpense30June2019$'00030June2018$'000Currenttaxonprofitsfortheperiod52,09285,490Deferredtax45,785(4,433)Adjustmentsforcurrenttaxofpriorperiods(1,239)(5,511)96,63875,546(b)Numericalreconciliationofincometaxexpensetoprimafacietaxpayable30June2019$'00030June2018$'000Profitbeforeincometax314,826338,934TaxattheAustraliantaxrateof30%94,448101,680spaceTaxeffectofamountswhicharenotdeductible(taxable)incalculatingtaxableincome:Deferredtaxexpenseonsaleofsubsidiary-4,165Adjustmentsforcurrenttaxofpriorperiods(1,239)(5,511)Share-basedpayments3,2652,547Other164(689)Temporarydifferencesnowrecognisedtoreducedeferredtaxexpense-(12,993)Taxlossrecognisedtoreducedeferredtaxexpense-(4,544)Taxlossesusedtoreducecurrenttaxexpense-(9,109)Incometaxexpense96,63875,546(411,464)(414,480)4Earningspershare(a)Earningspershare30June2019Cents30June2018CentsBasicearningspershare(cents)12.8615.57Dilutedearningspershare(cents)12.7815.51(b)Earningsusedincalculatingearningspershare30June2019$'00030June2018$'000Earningspershareusedinthecalculationofbasicanddilutedearningspershare:Profitafterincometaxattributabletotheownersoftheparent218,188263,388(c)Weightedaveragenumberofsharesusedasthedenominator2019Number2018NumberWeightedaveragenumberofordinarysharesusedincalculatingthebasicearningspershare1,696,474,4371,691,215,407Effectofdilutivesecurities(i)10,320,1726,419,798Adjustedweightedaveragenumberofordinarysharesusedincalculatingthedilutedearningspershare1,706,794,6091,697,635,205(i)Performancerightsandsharerightshavebeenincludedinthedeterminationofdilutedearningspershare.45Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 5 Dividends (a) Ordinary shares Interim dividend - 2019 Interim dividend for the year ended 30 June 2019 of 3.5 cents per share fully franked (30 June 2018: 3.5 cents per share fully franked) per fully paid share paid on 29 March 2019 Space Final dividend - 2018 Final dividend for the year ended 30 June 2018 of 4 cents per share fully franked (30 June 2017: 3 cents per share fully franked) paid on 28 September 2018 (b) Dividends not recognised at the end of the reporting period 30 June 2019 $'000 30 June 2018 $'000 59,321 59,180 67,755 127,076 50,678 109,858 In August 2019, the Directors approved a change to the dividend policy of whenever possible paying a dividend based on free cash flow generated during a year. The Directors will assess the group cash flow and outlook for the business with the intention to return excess cash to shareholders and targeting a level around 50% of cash flow. The Group's free cash flow is defined as cash flow before debt and dividends. The final dividend for 2019 has been calculated accordingly. 30 June 2019 $'000 30 June 2018 $'000 In addition to the above dividends, since period end the Directors have recommended the payment of a fully franked final dividend of 6.0 cents per fully paid ordinary share (30 June 2018: 4 cents fully franked). The aggregate amount of the proposed dividend expected to be paid on 27 September 2019 out of retained earnings at 30 June 2019, but not recognised as a liability at period end, is 101,824 67,704 (c) Franked dividends The final dividend recommended after 30 June 2019 will be fully franked out of the franking credits balance at the end of the financial year and the franking credits expected to arise from the payment of income tax during the year ending 30 June 2020. The franking account balance at the end of the financial year is $38.1 million (30 June 2018: $1.3 million). 114 Evolution Mining Limited Annual Report 2019 46 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)6Othercashflowinformation(a)Reconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivities30June2019$'00030June2018$'000Profitafterincometax218,188263,388Transactionandintegrationcosts1,455(866)Fairvalueamortisationandexpense23,59430,339Depreciationandamortisation373,551404,650Unwindofdiscountonprovisions1,9013,544Amortisationofdebtestablishmentcosts2,468740Share-basedpaymentsexpense8,9068,491Explorationandevaluationcostsexpensed7,1905,414TimingdifferenceonsettlementofErnestHenrysales/costs2,091(76)Incometaxexpense96,63875,546TaxPayments(91,179)(48,419)Changeinoperatingassetsandliabilities:Increaseinoperatingreceivables(14,991)(9,509)Increaseininventories(13,039)(26,728)Increaseinoperatingpayables1,9678,179(Decrease)/Increaseinborrowingcosts-(2,684)(Decrease)/Increaseinotherprovisions(2,504)2,157Netcashinflowfromoperatingactivities616,236714,166(b)Netcash/(debt)reconciliationThissectionsetsoutananalysisofnetdebtandthemovementsinnetcash/(debt)foreachoftheperiodspresented.30June2019$'00030June2018$'000NetdebtCashandcashequivalents335,164323,226Bankloans(300,000)(395,000)Netcash/(debt)35,164(71,774)Cashandcashequivalent$'000Financeleasesduewithin1year$'000Bankloansduewithin1year$'000Bankloansdueafter1year$'000Total$'000Yearended30June2018spaceNetdebtatthebeginningoftheyear37,385(1,344)(50,000)(385,000)(398,959)Cashflows285,7941,344(45,000)85,000327,138Foreignexchangeadjustments47---47Netdebtasatendoftheyear323,226-(95,000)(300,000)(71,774)Yearended30June2019Netdebtasat1July2018323,226-(95,000)(300,000)(71,774)Cashflows11,938-(15,000)110,000106,938Netdebtasat30June2019335,164-(110,000)(190,000)35,16447115 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)6Othercashflowinformation(a)Reconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivities30June2019$'00030June2018$'000Profitafterincometax218,188263,388Transactionandintegrationcosts1,455(866)Fairvalueamortisationandexpense23,59430,339Depreciationandamortisation373,551404,650Unwindofdiscountonprovisions1,9013,544Amortisationofdebtestablishmentcosts2,468740Share-basedpaymentsexpense8,9068,491Explorationandevaluationcostsexpensed7,1905,414TimingdifferenceonsettlementofErnestHenrysales/costs2,091(76)Incometaxexpense96,63875,546TaxPayments(91,179)(48,419)Changeinoperatingassetsandliabilities:Increaseinoperatingreceivables(14,991)(9,509)Increaseininventories(13,039)(26,728)Increaseinoperatingpayables1,9678,179(Decrease)/Increaseinborrowingcosts-(2,684)(Decrease)/Increaseinotherprovisions(2,504)2,157Netcashinflowfromoperatingactivities616,236714,166(b)Netcash/(debt)reconciliationThissectionsetsoutananalysisofnetdebtandthemovementsinnetcash/(debt)foreachoftheperiodspresented.30June2019$'00030June2018$'000NetdebtCashandcashequivalents335,164323,226Bankloans(300,000)(395,000)Netcash/(debt)35,164(71,774)Cashandcashequivalent$'000Financeleasesduewithin1year$'000Bankloansduewithin1year$'000Bankloansdueafter1year$'000Total$'000Yearended30June2018spaceNetdebtatthebeginningoftheyear37,385(1,344)(50,000)(385,000)(398,959)Cashflows285,7941,344(45,000)85,000327,138Foreignexchangeadjustments47---47Netdebtasatendoftheyear323,226-(95,000)(300,000)(71,774)Yearended30June2019Netdebtasat1July2018323,226-(95,000)(300,000)(71,774)Cashflows11,938-(15,000)110,000106,938Netdebtasat30June2019335,164-(110,000)(190,000)35,16447Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) Resource Assets and Liabilities This section provides information that is relevant to understanding the composition and management of the Group's assets and liabilities. Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 7 Property, plant and equipment (continued) Recognition and measurement 7 Property, plant and equipment At 1 July 2018 Cost Accumulated depreciation Net carrying amount Year ended 30 June 2019 Carrying amount at the beginning of the year Additions Disposals Depreciation Depreciation relating to fair value uplift on business combination Carrying amount at the end of the year At 30 June 2019 Cost Accumulated depreciation Net carrying amount Included in above Assets in the course of construction At 1 July 2017 Cost Accumulated depreciation Net carrying amount Year ended 30 June 2018 Carrying amount at the beginning of the year Additions Reclassifications Disposals Depreciation Depreciation relating to fair value uplift on business combination Disposal of subsidiary Carrying amount at the end of the year At 30 June 2018 Cost Accumulated depreciation Net carrying amount Included in above Assets in the course of construction 116 Evolution Mining Limited Annual Report 2019 48 Freehold land $'000 Plant and equipment $'000 Total $'000 14,261 - 14,261 14,261 3,268 - - - 17,529 17,529 - 17,529 1,590,847 (1,033,333) 557,514 1,605,108 (1,033,333) 571,775 557,514 102,147 (147) (97,530) (2,460) 559,524 571,775 105,415 (147) (97,530) (2,460) 577,053 1,682,343 (1,122,819) 559,524 1,699,872 (1,122,819) 577,053 - 87,926 87,926 Freehold land $'000 Plant and equipment $'000 Total $'000 16,841 - 16,841 1,640,294 (915,946) 724,348 1,657,135 (915,946) 741,189 16,841 - - - - - (2,580) 14,261 724,348 116,053 (90,578) (595) (117,563) (4,608) (69,543) 557,514 741,189 116,053 (90,578) (595) (117,563) (4,608) (72,123) 571,775 14,261 - 14,261 1,590,847 (1,033,333) 557,514 1,605,108 (1,033,333) 571,775 - 103,445 103,445 Cost 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 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 Depreciation of plant and equipment is calculated using either the straight line or units of production 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 in the period the item is derecognised. Depreciation 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. 49 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 7 Property, plant and equipment (continued) Recognition and measurement 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. Depreciation Depreciation of plant and equipment is calculated using either the straight line or units of production 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. 49 117 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 8 Mine development and exploration At 1 July 2018 Cost Accumulated depreciation Net carrying amount Year ended 30 June 2019 Carrying amount at beginning of year Additions Amortisation Amortisation recognised in inventory Amortisation relating to fair value uplift on business combinations Asset write-off Reclassification to long term inventory Carrying amount at the end of the year At 30 June 2019 Cost Accumulated amortisation Net carrying amount At 1 July 2017 Cost Accumulated depreciation Net carrying amount Year ended 30 June 2018 Carrying amount at beginning of year Additions Amortisation Amortisation recognised in inventory Amortisation relating to fair value uplift on business combinations Asset write-off Reclassification to long term inventory Disposal of subsidiary Carrying amount at the end of the year At 30 June 2018 Cost Accumulated depreciation Net carrying amount Recognition and measurement Mines under construction Producing mines $'000 Exploration and evaluation $'000 Total $'000 3,085,507 (1,494,056) 1,591,451 152,301 - 152,301 3,237,808 (1,494,056) 1,743,752 1,591,451 169,108 (276,883) (1,358) (21,134) - (1,526) 1,459,658 152,301 67,299 - - - (7,190) - 212,410 1,743,752 236,407 (276,883) (1,358) (21,134) (7,190) (1,526) 1,672,068 3,253,088 (1,793,430) 1,459,658 212,410 - 212,410 3,465,498 (1,793,430) 1,672,068 Producing mines $'000 Exploration and evaluation $'000 Total $'000 2,959,137 (1,285,786) 1,673,351 128,128 - 128,128 3,087,265 (1,285,786) 1,801,479 1,673,351 176,772 (287,668) (580) (28,873) - 78,557 (20,108) 1,591,451 128,128 31,014 - - - (5,410) (1,259) (172) 152,301 1,801,479 207,786 (287,668) (580) (28,873) (5,410) 77,298 (20,280) 1,743,752 3,085,507 (1,494,056) 1,591,451 152,301 - 152,301 3,237,808 (1,494,056) 1,743,752 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. 118 Evolution Mining Limited Annual Report 2019 50 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)8Minedevelopmentandexploration(continued)RecognitionandmeasurementProducingmines-deferredstrippingStripping(wasteremoval)costsareincurredbothduringthedevelopmentphaseandproductionphaseofoperations.Strippingcostsincurredduringthedevelopmentphasearecapitalisedasminesunderconstruction.Strippingcostsincurredduringtheproductionphasearegenerallyconsideredtocreatetwobenefits:•theproductionoforeinventoryintheperiod-accountedforasapartofthecostofproducingthoseoreinventories;or•improvedaccesstotheoretobeminedinthefuture-recognisedunderproducingminesifthefollowingcriteriaaremet:•Futureeconomicbenefits(beingimprovedaccesstotheorebody)associatedwiththestrippingactivityareprobable;•Thecomponentoftheorebodyforwhichaccesshasbeenimprovedcanbeaccuratelyidentified;and•Thecostsassociatedwiththestrippingactivityassociatedwiththatcomponentcanbereliablymeasured.Theamountofstrippingcostsdeferredisbasedonthelifeofcomponentratiowhichisobtainedbydividingtheamountofwastetonnesminedbythequantityofgoldouncescontainedintheoreforeachcomponentofthemine.Strippingcostsincurredintheperiodaredeferredtotheextentthattheactualcurrentperiodwastetocontainedgoldounceratioexceedsthelifeofcomponentexpected'lifeofcomponent'ratio.Acomponentisdefinedasaspecificvolumeoftheorebodythatismademoreaccessiblebythestrippingactivityandisdeterminedbasedonmineplans.Anidentifiedcomponentoftheorebodyistypicallyasubsetofthetotalorebodyofthemine.Eachminemayhaveseveralcomponents,whichareidentifiedbasedonthemineplan.Thedeferredstrippingassetisinitiallymeasuredatcost,whichistheaccumulationofcostsdirectlyincurredtoperformthestrippingactivitythatimprovesaccesstotheorewithinanidentifiedcomponent,plusanallocationofdirectlyattributableoverheadcosts.Thedeferredstrippingassetisdepreciatedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatismademoreaccessiblebytheactivity,onaunitsofproductionbasis.Economicallyrecoverablereservesareusedtodeterminetheexpectedusefullifeoftheidentifiedcomponentoftheorebody.ExplorationandevaluationExplorationandevaluationexpenditurerelatedtoareasofinterestiscapitalisedandcarriedforwardtotheextentthatrightstotenureoftheareaofinterestarecurrentandeither:•Costsareexpectedtoberecoupedthroughthesuccessfuldevelopmentandexploitationoftheareaofinterestoralternativelybysale;or•Whereactivitiesintheareaofinteresthavenotyetreachedastagewhichpermitsareasonableassessmentoftheexistenceorotherwiseofeconomicallyrecoverablereserves,andactiveandsignificantoperationsin,orinrelationto,theareaofinterestarecontinuing.Suchexpenditureconsistsofanaccumulationofacquisitioncostsanddirectexplorationandevaluationcostsincurred,togetherwithanappropriateportionofdirectlyrelatedoverheadexpenditure.Thecarryingvalueofcapitalisedexplorationandevaluationassetsareassessedforimpairmentwhenfactsandcircumstancessuggestthatthecarryingvaluemayexceeditsrecoverableamount.Anyamountsinexcessoftherecoverableamountarederecognisedinthefinancialyearitisdetermined.DepreciationandamortisationTheGroupusestheunitsofproductionbasiswhenamortisingminedevelopmentassetswhichresultsinanamortisationchargeproportionaltothedepletionoftheanticipatedremaininglifeofmineproduction.Eachitem'seconomiclifehasdueregardtobothitsphysicallifelimitationsandtopresentassessmentsofeconomicallyrecoverablereservesoftheminepropertyatwhichitislocated.Impairmentofnon-financialassets(i)TestingforimpairmentAteachreportingdate,theGrouptestsitstangibleandotherintangibleassetsforimpairmentwherethereinanindicationthat:•theassetmaybeimpaired;or•previouslyrecognisedimpairment(onassetsotherthangoodwill)mayhavechanged.Wheretheassetdoesnotgeneratecashinflowsindependentfromotherassetsanditsvalueinusecannotbeestimatedtobeclosetoitsfairvalue,theassetistestedforimpairmentaspartofthecashgeneratingunit(CGU)towhichitbelongs.TheGroupconsiderseachofitsminesitestobeaseparateCGU.IfthecarryingamountofanassetorCGUexceedsitsrecoverableamount,thecarryingamountisreducedtotherecoverableamountandanimpairmentlossrecognisedintheStatementofProfitorLoss.TherecoverableamountofanassetorCGUisdeterminedasthehigherofitsfairvaluelesscostsofdisposalorvalueinuse.51119 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)8Minedevelopmentandexploration(continued)RecognitionandmeasurementProducingmines-deferredstrippingStripping(wasteremoval)costsareincurredbothduringthedevelopmentphaseandproductionphaseofoperations.Strippingcostsincurredduringthedevelopmentphasearecapitalisedasminesunderconstruction.Strippingcostsincurredduringtheproductionphasearegenerallyconsideredtocreatetwobenefits:•theproductionoforeinventoryintheperiod-accountedforasapartofthecostofproducingthoseoreinventories;or•improvedaccesstotheoretobeminedinthefuture-recognisedunderproducingminesifthefollowingcriteriaaremet:•Futureeconomicbenefits(beingimprovedaccesstotheorebody)associatedwiththestrippingactivityareprobable;•Thecomponentoftheorebodyforwhichaccesshasbeenimprovedcanbeaccuratelyidentified;and•Thecostsassociatedwiththestrippingactivityassociatedwiththatcomponentcanbereliablymeasured.Theamountofstrippingcostsdeferredisbasedonthelifeofcomponentratiowhichisobtainedbydividingtheamountofwastetonnesminedbythequantityofgoldouncescontainedintheoreforeachcomponentofthemine.Strippingcostsincurredintheperiodaredeferredtotheextentthattheactualcurrentperiodwastetocontainedgoldounceratioexceedsthelifeofcomponentexpected'lifeofcomponent'ratio.Acomponentisdefinedasaspecificvolumeoftheorebodythatismademoreaccessiblebythestrippingactivityandisdeterminedbasedonmineplans.Anidentifiedcomponentoftheorebodyistypicallyasubsetofthetotalorebodyofthemine.Eachminemayhaveseveralcomponents,whichareidentifiedbasedonthemineplan.Thedeferredstrippingassetisinitiallymeasuredatcost,whichistheaccumulationofcostsdirectlyincurredtoperformthestrippingactivitythatimprovesaccesstotheorewithinanidentifiedcomponent,plusanallocationofdirectlyattributableoverheadcosts.Thedeferredstrippingassetisdepreciatedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatismademoreaccessiblebytheactivity,onaunitsofproductionbasis.Economicallyrecoverablereservesareusedtodeterminetheexpectedusefullifeoftheidentifiedcomponentoftheorebody.ExplorationandevaluationExplorationandevaluationexpenditurerelatedtoareasofinterestiscapitalisedandcarriedforwardtotheextentthatrightstotenureoftheareaofinterestarecurrentandeither:•Costsareexpectedtoberecoupedthroughthesuccessfuldevelopmentandexploitationoftheareaofinterestoralternativelybysale;or•Whereactivitiesintheareaofinteresthavenotyetreachedastagewhichpermitsareasonableassessmentoftheexistenceorotherwiseofeconomicallyrecoverablereserves,andactiveandsignificantoperationsin,orinrelationto,theareaofinterestarecontinuing.Suchexpenditureconsistsofanaccumulationofacquisitioncostsanddirectexplorationandevaluationcostsincurred,togetherwithanappropriateportionofdirectlyrelatedoverheadexpenditure.Thecarryingvalueofcapitalisedexplorationandevaluationassetsareassessedforimpairmentwhenfactsandcircumstancessuggestthatthecarryingvaluemayexceeditsrecoverableamount.Anyamountsinexcessoftherecoverableamountarederecognisedinthefinancialyearitisdetermined.DepreciationandamortisationTheGroupusestheunitsofproductionbasiswhenamortisingminedevelopmentassetswhichresultsinanamortisationchargeproportionaltothedepletionoftheanticipatedremaininglifeofmineproduction.Eachitem'seconomiclifehasdueregardtobothitsphysicallifelimitationsandtopresentassessmentsofeconomicallyrecoverablereservesoftheminepropertyatwhichitislocated.Impairmentofnon-financialassets(i)TestingforimpairmentAteachreportingdate,theGrouptestsitstangibleandotherintangibleassetsforimpairmentwherethereinanindicationthat:•theassetmaybeimpaired;or•previouslyrecognisedimpairment(onassetsotherthangoodwill)mayhavechanged.Wheretheassetdoesnotgeneratecashinflowsindependentfromotherassetsanditsvalueinusecannotbeestimatedtobeclosetoitsfairvalue,theassetistestedforimpairmentaspartofthecashgeneratingunit(CGU)towhichitbelongs.TheGroupconsiderseachofitsminesitestobeaseparateCGU.IfthecarryingamountofanassetorCGUexceedsitsrecoverableamount,thecarryingamountisreducedtotherecoverableamountandanimpairmentlossrecognisedintheStatementofProfitorLoss.TherecoverableamountofanassetorCGUisdeterminedasthehigherofitsfairvaluelesscostsofdisposalorvalueinuse.51Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 8 Mine development and exploration (continued) Recognition and measurement Impairment of non-financial assets (ii) Impairment calculations 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. 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. 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. 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. 120 Evolution Mining Limited Annual Report 2019 52 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)CapitalStructureandFinancingThissectionprovidesinformationontheGroup'scapitalandfinancialmanagementactivities.9Cashandcashequivalents30June2019$'00030June2018$'000CurrentassetsBankbalances--Shorttermdeposits230,000230,000Cashatbank105,16493,226335,164323,226RecognitionandmeasurementCashandshort-termdepositsinthebalancesheetcomprisecashatbankandonhandandshorttermdepositswithanoriginalmaturityofthreemonthsorlessandareclassifiedasfinancialassetsheldatamortisedcost.Cashatbankearnsinterestatfloatingratesbasedondailybankdepositrates.Short-termdepositsaremadeforvaryingperiodsofbetweenonedayandthreemonthsdependingontheimmediatecashrequirementsoftheGroupandearninterestattherespectiveshort-termdepositrates.10Interestbearingliabilities30June2019$'00030June2018$'000CurrentliabilitiesBankloans110,00095,000Less:Borrowingcosts(1,752)(1,504)108,24893,496Non-currentliabilitiesBankloans190,000300,000Less:Borrowingcosts(4,815)(7,530)185,185292,470TheSeniorSecuredRevolvingLoan("FacilityA")remainedundrawnduringtheyear.Duringtheprioryear,theGroupsuccessfullyrenewedtheSeniorSecuredRevolvingLoan(“FacilityA”)andthePerformanceBondFacility(“FacilityC”)throughuntilJuly2021for$350.0millionand$175.0millionrespectively(previously$300.0millionand$155.0millionrespectively).TheexpirydateoftheSeniorSecuredTermLoan(“FacilityD”)remainedunchangedatOctober2021.Therepaymentperiodsandtheoutstandingbalancesasat30June2019oneachFacilityaresetoutbelow:TermdateOutstandingbalanceSeniorSecuredRevolvingLoan-FacilityA($350.0million)31July2021$nilPerformanceBondFacility-FacilityC($175.0million)31July2021$136millionSeniorSecuredTermLoan-FacilityD15October2021$300million(a)SecuredliabilitiesandassetspledgedassecurityTheFacilityissecuredintheformofaGeneralSecurityAgreementandShareSecurityAgreementovertheGroup'soperatingassets.Thecarryingamountsofassetspledgedasgeneralsecurityfortotalborrowingsis$1.747billion.Thesharecapitalpledgedassharesecurityfortotalborrowingsis$1.524billion.Leaseliabilitiesareeffectivelysecuredastherightstotheleasedassetsrecognisedinthefinancialstatementsreverttothelessorintheeventofdefault.RecognitionandmeasurementInterestbearingliabilitiesareinitiallyrecognisedatfairvaluelessdirectlyattributabletransactioncostsincurredandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Gainsandlossesarerecognisedinthestatementofprofitorlosswhentheliabilitiesarederecognised.53121 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)CapitalStructureandFinancingThissectionprovidesinformationontheGroup'scapitalandfinancialmanagementactivities.9Cashandcashequivalents30June2019$'00030June2018$'000CurrentassetsBankbalances--Shorttermdeposits230,000230,000Cashatbank105,16493,226335,164323,226RecognitionandmeasurementCashandshort-termdepositsinthebalancesheetcomprisecashatbankandonhandandshorttermdepositswithanoriginalmaturityofthreemonthsorlessandareclassifiedasfinancialassetsheldatamortisedcost.Cashatbankearnsinterestatfloatingratesbasedondailybankdepositrates.Short-termdepositsaremadeforvaryingperiodsofbetweenonedayandthreemonthsdependingontheimmediatecashrequirementsoftheGroupandearninterestattherespectiveshort-termdepositrates.10Interestbearingliabilities30June2019$'00030June2018$'000CurrentliabilitiesBankloans110,00095,000Less:Borrowingcosts(1,752)(1,504)108,24893,496Non-currentliabilitiesBankloans190,000300,000Less:Borrowingcosts(4,815)(7,530)185,185292,470TheSeniorSecuredRevolvingLoan("FacilityA")remainedundrawnduringtheyear.Duringtheprioryear,theGroupsuccessfullyrenewedtheSeniorSecuredRevolvingLoan(“FacilityA”)andthePerformanceBondFacility(“FacilityC”)throughuntilJuly2021for$350.0millionand$175.0millionrespectively(previously$300.0millionand$155.0millionrespectively).TheexpirydateoftheSeniorSecuredTermLoan(“FacilityD”)remainedunchangedatOctober2021.Therepaymentperiodsandtheoutstandingbalancesasat30June2019oneachFacilityaresetoutbelow:TermdateOutstandingbalanceSeniorSecuredRevolvingLoan-FacilityA($350.0million)31July2021$nilPerformanceBondFacility-FacilityC($175.0million)31July2021$136millionSeniorSecuredTermLoan-FacilityD15October2021$300million(a)SecuredliabilitiesandassetspledgedassecurityTheFacilityissecuredintheformofaGeneralSecurityAgreementandShareSecurityAgreementovertheGroup'soperatingassets.Thecarryingamountsofassetspledgedasgeneralsecurityfortotalborrowingsis$1.747billion.Thesharecapitalpledgedassharesecurityfortotalborrowingsis$1.524billion.Leaseliabilitiesareeffectivelysecuredastherightstotheleasedassetsrecognisedinthefinancialstatementsreverttothelessorintheeventofdefault.RecognitionandmeasurementInterestbearingliabilitiesareinitiallyrecognisedatfairvaluelessdirectlyattributabletransactioncostsincurredandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Gainsandlossesarerecognisedinthestatementofprofitorlosswhentheliabilitiesarederecognised.53Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 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 2017 Shares issued on vesting of performance rights Shares issued under Employee Share Scheme (i) Shares issued under NED Equity Plan Balance at 30 June 2018 Shares issued on vesting of performance rights Shares issued under Employee Share Scheme (i) Shares issued under NED Equity Plan Balance at 30 June 2019 Number of shares $'000 1,682,798,626 9,214,401 501,234 97,788 1,692,612,049 4,063,414 287,716 106,541 1,697,069,720 2,183,727 - - - 2,183,727 - - - 2,183,727 (i) Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in note 25. 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. (b) Other reserves Fair value revaluation reserve Share-based payments Other reserves Movements: Fair value revaluation reserve Balance at the beginning of the year Change in fair value of equity investments Balance at the end of the year Share-based payments Balance at the beginning of the year Share based payments recognised 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 Notes 15(a) 25 30 June 2019 $'000 18,509 53,870 - 72,379 (336) 18,845 18,509 45,640 8,230 53,870 103 (103) - 30 June 2018 $'000 (336) 45,640 103 45,407 1,589 (1,925) (336) 37,149 8,491 45,640 57 46 103 The fair value revaluation reserve records fair value changes on equity investments designated at fair value through other comprehensive income. 122 Evolution Mining Limited Annual Report 2019 54 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)11Equityandreserves(continued)(b)Otherreserves(continued)(i)Natureandpurposeofotherreserves(continued)Share-basedpaymentsTheshare-basedpaymentsreserveisusedtorecognisethevalueofequity-settledshare-basedpaymentsprovidedtoemployees,includingNon-ExecutiveDirectors,ExecutiveDirectorsandkeymanagementpersonnelaspartoftheirremuneration.Refertonote25forfurtherinformation.ForeigncurrencytranslationTheforeigncurrencytranslationreserveisusedtorecordexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeignsubsidiaries.(c)RetainedearningsMovementsinretainedearningswereasfollows:Notes30June2019$'00030June2018$'000Balanceatthebeginningoftheyear59,260(94,270)Netprofitfortheperiod218,188263,388Dividendspaid5(127,076)(109,858)Balanceattheendoftheyear150,37259,26012Tradeandotherreceivables30June2019$'00030June2018$'000CurrentassetsAccruedRevenue47,57446,897Tradereceivables25,74813,497GSTrefundable6,0853,501Prepayments4,5045,386Otherreceivables2,2962,01586,20771,296RecognitionandmeasurementAccruedRevenueAccruedrevenueof$47.6million(30June2018:$46.9million)relatestosilverandcoppersalesfromApriltoJune2019productionforErnestHenry.ThisbalanceistheGroup'srevenue-relatedcontractassetunderAASB15RevenuefromContractswithCustomers(seenote2).TheseamountsaretobesettledinJulytoSeptember2019.Refertonote23forfurtherinformationonthetransactionandthefinancialresultsfortheyearended30June2019.TradereceivablesTradereceivablesareamountsduefromcustomersforgoodssoldorservicesperformedintheordinarycourseofbusiness.Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.Tradereceivablesaregenerallydueforsettlementwithin30daysandthereforeareallclassifiedascurrent.OtherreceivablesTheseamountsgenerallyarisefromtransactionsoutsidetheusualoperatingactivitiesoftheGroup.Theydonotcontainimpairedassetsandarenotpastdue.55123 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)11Equityandreserves(continued)(b)Otherreserves(continued)(i)Natureandpurposeofotherreserves(continued)Share-basedpaymentsTheshare-basedpaymentsreserveisusedtorecognisethevalueofequity-settledshare-basedpaymentsprovidedtoemployees,includingNon-ExecutiveDirectors,ExecutiveDirectorsandkeymanagementpersonnelaspartoftheirremuneration.Refertonote25forfurtherinformation.ForeigncurrencytranslationTheforeigncurrencytranslationreserveisusedtorecordexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeignsubsidiaries.(c)RetainedearningsMovementsinretainedearningswereasfollows:Notes30June2019$'00030June2018$'000Balanceatthebeginningoftheyear59,260(94,270)Netprofitfortheperiod218,188263,388Dividendspaid5(127,076)(109,858)Balanceattheendoftheyear150,37259,26012Tradeandotherreceivables30June2019$'00030June2018$'000CurrentassetsAccruedRevenue47,57446,897Tradereceivables25,74813,497GSTrefundable6,0853,501Prepayments4,5045,386Otherreceivables2,2962,01586,20771,296RecognitionandmeasurementAccruedRevenueAccruedrevenueof$47.6million(30June2018:$46.9million)relatestosilverandcoppersalesfromApriltoJune2019productionforErnestHenry.ThisbalanceistheGroup'srevenue-relatedcontractassetunderAASB15RevenuefromContractswithCustomers(seenote2).TheseamountsaretobesettledinJulytoSeptember2019.Refertonote23forfurtherinformationonthetransactionandthefinancialresultsfortheyearended30June2019.TradereceivablesTradereceivablesareamountsduefromcustomersforgoodssoldorservicesperformedintheordinarycourseofbusiness.Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.Tradereceivablesaregenerallydueforsettlementwithin30daysandthereforeareallclassifiedascurrent.OtherreceivablesTheseamountsgenerallyarisefromtransactionsoutsidetheusualoperatingactivitiesoftheGroup.Theydonotcontainimpairedassetsandarenotpastdue.55Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 13 Trade and other payables Current liabilities Trade creditors and accruals Other payables Recognition and measurement Trade creditors and accruals 30 June 2019 $'000 133,264 23,564 156,828 30 June 2018 $'000 123,888 28,479 152,367 Trade creditors and accruals represent liabilities for goods and services provided to the Group prior to the end of the 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. Trade creditors and accruals include accrued costs of $32.2 million (30 June 2018: $29.2 million) relating to the Group's share of production costs for April to June 2019 for Ernest Henry. These amounts are to be settled in July to September 2019. Refer to note 23 for further information on the transaction and the financial results for the year ended 30 June 2019. 14 Inventories Current Stores Ore Doré and concentrate Metal in circuit Metal in transit Total current inventories Non-current Ore Total non-current inventories Recognition and measurement 30 June 2019 $'000 49,895 145,542 7,979 28,496 27,997 259,909 58,923 58,923 30 June 2018 $'000 43,334 166,820 6,055 21,867 26,145 264,221 38,459 38,459 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. If the stockpile is not expected to be processed within 12 months after reporting date, it is included in non-current assets. 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 2019 was $15.1 million (30 June 2018: $6.1 million). 124 Evolution Mining Limited Annual Report 2019 56 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)15Financialassetsandfinancialliabilities(a)EquityInvestmentsatFVOCI30June2019$'00030June2018$'000Listedsecurities-Non-currentTribuneResourcesLtd(i)60,505-EmmersonResourcesLtd5,4064,128RiversgoldLtd2671,375Other73366,1855,536(i)On25February2019,theGroupacquired11.05millionshares,representinga19.9%shareholding,inTribuneResourcesLimited(“Tribune”)foracashconsiderationof$41.3million.RecognitionandmeasurementEquityInvestmentsatFVOCITheadoptionofAASB9FinancialInstrumentsfrom1July2018resultedinachangeofclassificationfortheGroup'slistedequityinvestments.UnderthepreviousAASB139FinancialInstruments,theinvestmentsweredesignatedasAvailableForSale(AFS)butunderAASB9FinancialInstrumentstheGrouphasmadethesoleoptiontoirrevocablydesignatethelistedequityinvestmentsasFairvaluethroughothercomprehensiveincome(FVOCI).Subsequentchangesinthefairvalueofequityinvestmentsarepresentedandaccumulatedinaseparatereservewithinequityandnotthroughprofitorloss.Ondisposaloftheseequityinvestments,anyrelatedbalancewithintheFVOCIreserveisreclassifiedtoretainedearnings.Theseequityinstrumentsarenotheldfortradingbutratherintendedtobeheldoverthelong-termasstrategicinvestmentsandthegroupconsidersthisclassificationtobemorerelevant.16Othernon-currentassets30June2019$'00030June2018$'000Non-currentassets-OtherContingentconsiderationattributabletothePajingoOperation2,4003,100ContingentconsiderationattributabletotheEdnaMayOperation34,44134,441Other7491Totalothernon-currentassets36,91537,632RecognitionandmeasurementContingentconsiderationamountsclassifiedasafinancialassetareremeasuredtofairvaluewithchangesinfairvaluerecognisedinprofitorloss.Nofairvaluegainsorlosseshavebeenrecognisedinprofitorlossduringtheyear.17Provisions30June2019$'00030June2018$'000CurrentEmployeeentitlements29,95732,08529,95732,085Non-currentEmployeeentitlements5,1962,935Rehabilitationprovision147,970146,988Otherlongtermprovision210206153,376150,129Totalprovisions183,333182,21457125 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)15Financialassetsandfinancialliabilities(a)EquityInvestmentsatFVOCI30June2019$'00030June2018$'000Listedsecurities-Non-currentTribuneResourcesLtd(i)60,505-EmmersonResourcesLtd5,4064,128RiversgoldLtd2671,375Other73366,1855,536(i)On25February2019,theGroupacquired11.05millionshares,representinga19.9%shareholding,inTribuneResourcesLimited(“Tribune”)foracashconsiderationof$41.3million.RecognitionandmeasurementEquityInvestmentsatFVOCITheadoptionofAASB9FinancialInstrumentsfrom1July2018resultedinachangeofclassificationfortheGroup'slistedequityinvestments.UnderthepreviousAASB139FinancialInstruments,theinvestmentsweredesignatedasAvailableForSale(AFS)butunderAASB9FinancialInstrumentstheGrouphasmadethesoleoptiontoirrevocablydesignatethelistedequityinvestmentsasFairvaluethroughothercomprehensiveincome(FVOCI).Subsequentchangesinthefairvalueofequityinvestmentsarepresentedandaccumulatedinaseparatereservewithinequityandnotthroughprofitorloss.Ondisposaloftheseequityinvestments,anyrelatedbalancewithintheFVOCIreserveisreclassifiedtoretainedearnings.Theseequityinstrumentsarenotheldfortradingbutratherintendedtobeheldoverthelong-termasstrategicinvestmentsandthegroupconsidersthisclassificationtobemorerelevant.16Othernon-currentassets30June2019$'00030June2018$'000Non-currentassets-OtherContingentconsiderationattributabletothePajingoOperation2,4003,100ContingentconsiderationattributabletotheEdnaMayOperation34,44134,441Other7491Totalothernon-currentassets36,91537,632RecognitionandmeasurementContingentconsiderationamountsclassifiedasafinancialassetareremeasuredtofairvaluewithchangesinfairvaluerecognisedinprofitorloss.Nofairvaluegainsorlosseshavebeenrecognisedinprofitorlossduringtheyear.17Provisions30June2019$'00030June2018$'000CurrentEmployeeentitlements29,95732,08529,95732,085Non-currentEmployeeentitlements5,1962,935Rehabilitationprovision147,970146,988Otherlongtermprovision210206153,376150,129Totalprovisions183,333182,21457Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 17 Provisions (continued) (i) Movements in provisions Movements in each class of provision during the financial year are set out below: 30 June 2019 Space Carrying amount at the beginning of the year Charged to profit or loss - unwinding of discount - provision recognised Re-measurement of provision Carrying amount at the end of the year 30 June 2018 Space Carrying amount at the beginning of the year Charged to profit or loss - unwinding of discount - provision recognised Re-measurement of provision Disposal of subsidiary Carrying amount at the end of the year Employee benefits Employee benefits $'000 Rehabilitation $'000 Other $'000 Total $'000 35,020 - - 133 35,153 146,988 1,901 (1,091) 172 147,970 35,471 149,372 - 3,099 - (3,550) 35,020 3,544 (944) 16,000 (20,984) 146,988 206 - - 4 210 203 - - 3 - 206 182,214 1,901 (1,091) 309 183,333 185,046 3,544 2,155 16,003 (24,534) 182,214 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. 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. 126 Evolution Mining Limited Annual Report 2019 58 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)17Provisions(continued)Accountingestimatesandjudgements(continued)RehabilitationSignificantestimatesandassumptionsarerequiredindeterminingtheprovisionforminerehabilitationastherearemanytransactionsandotherfactorsthatwillaffecttheultimateliabilitypayabletorehabilitatetheminesites.Factorsthatwillaffectthisliabilityincludechangesintechnology,changesinregulations,priceincreases,changesintimingofcashflowswhicharebasedonlifeofmineplanandchangesindiscountrates.Whenthesefactorschangeorbecomeknowninthefuture,suchdifferenceswillimpacttheminerehabilitationprovisionintheperiodinwhichtheychangeorbecomeknown.18Deferredtaxbalances(a)Recogniseddeferredtaxbalances30June2019$'00030June2018$'000Inventories31,83631,836Explorationandevaluationexpenditure(50,934)(32,710)Property,plantandequipment(69,082)(13,849)Minedevelopment(24,431)(52,539)Employeebenefits10,60910,506Provisions43,87544,158Shareissuecosts1141,088Other-(1,661)Deferredtaxbalancesfromtemporarydifferences(58,013)(13,171)Taxlossescarriedforward4,19413,590Deferredtax(liabilities)/assets(53,819)419(b)MovementindeferredtaxbalancesduringtheyearBalanceat1July2018$'000Recognisedinprofitorloss$'000Utilisedtoreducetaxliability$'000Balanceat30June2019$'000Inventories31,836--31,836Explorationandevaluationexpenditure(32,710)(18,224)-(50,934)Property,plantandequipment(13,849)(55,233)-(69,082)Minedevelopment(52,539)28,108-(24,431)Employeebenefits10,506103-10,609Provisions44,158(283)-43,875Shareissuecosts1,088(974)-114Taxlossescarriedforward13,591(944)(8,453)4,194Other(1,662)1,662--Deferredtaxassets/(liabilities)419(45,785)(8,453)(53,819)(c)TaxlossesTheGrouphasunrecognisedavailabletaxlossesof$33.4millionasat30June2019.Thesetaxlosseshavenotbeenrecognisedduetotheuncertaintyoftheirrecoverabilityinfutureperiods.AccountingestimatesandjudgementsJudgementisrequiredtodeterminewhetherdeferredtaxassetsarerecognisedintheBalanceSheet.ManagementmustassessthelikelihoodthattheGroupwillgeneratesufficienttaxableearningsinfutureperiodsinordertorecogniseandutilisethosedeferredtaxassets.Estimatesoffuturetaxableincomearebasedonforecastcashflowsfromoperationsandexistingtaxlaws.Theseassessmentsrequiretheuseofestimatessuchascommoditypricesandoperatingperformanceoverthelifeoftheassets.Totheextentthatcashflowsandtaxableincomediffersignificantlyfromestimates,theGroup'sabilitytorealisethedeferredtaxassetsreportingcouldbeimpacted.59127 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)17Provisions(continued)Accountingestimatesandjudgements(continued)RehabilitationSignificantestimatesandassumptionsarerequiredindeterminingtheprovisionforminerehabilitationastherearemanytransactionsandotherfactorsthatwillaffecttheultimateliabilitypayabletorehabilitatetheminesites.Factorsthatwillaffectthisliabilityincludechangesintechnology,changesinregulations,priceincreases,changesintimingofcashflowswhicharebasedonlifeofmineplanandchangesindiscountrates.Whenthesefactorschangeorbecomeknowninthefuture,suchdifferenceswillimpacttheminerehabilitationprovisionintheperiodinwhichtheychangeorbecomeknown.18Deferredtaxbalances(a)Recogniseddeferredtaxbalances30June2019$'00030June2018$'000Inventories31,83631,836Explorationandevaluationexpenditure(50,934)(32,710)Property,plantandequipment(69,082)(13,849)Minedevelopment(24,431)(52,539)Employeebenefits10,60910,506Provisions43,87544,158Shareissuecosts1141,088Other-(1,661)Deferredtaxbalancesfromtemporarydifferences(58,013)(13,171)Taxlossescarriedforward4,19413,590Deferredtax(liabilities)/assets(53,819)419(b)MovementindeferredtaxbalancesduringtheyearBalanceat1July2018$'000Recognisedinprofitorloss$'000Utilisedtoreducetaxliability$'000Balanceat30June2019$'000Inventories31,836--31,836Explorationandevaluationexpenditure(32,710)(18,224)-(50,934)Property,plantandequipment(13,849)(55,233)-(69,082)Minedevelopment(52,539)28,108-(24,431)Employeebenefits10,506103-10,609Provisions44,158(283)-43,875Shareissuecosts1,088(974)-114Taxlossescarriedforward13,591(944)(8,453)4,194Other(1,662)1,662--Deferredtaxassets/(liabilities)419(45,785)(8,453)(53,819)(c)TaxlossesTheGrouphasunrecognisedavailabletaxlossesof$33.4millionasat30June2019.Thesetaxlosseshavenotbeenrecognisedduetotheuncertaintyoftheirrecoverabilityinfutureperiods.AccountingestimatesandjudgementsJudgementisrequiredtodeterminewhetherdeferredtaxassetsarerecognisedintheBalanceSheet.ManagementmustassessthelikelihoodthattheGroupwillgeneratesufficienttaxableearningsinfutureperiodsinordertorecogniseandutilisethosedeferredtaxassets.Estimatesoffuturetaxableincomearebasedonforecastcashflowsfromoperationsandexistingtaxlaws.Theseassessmentsrequiretheuseofestimatessuchascommoditypricesandoperatingperformanceoverthelifeoftheassets.Totheextentthatcashflowsandtaxableincomediffersignificantlyfromestimates,theGroup'sabilitytorealisethedeferredtaxassetsreportingcouldbeimpacted.59Evolution Mining Limited Evolution Mining Limited Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements For the year ended 30 June 2019 For the year ended 30 June 2019 (continued) (continued) Risk and Unrecognised Items 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 This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s as they do not (yet) satisfy the recognition criteria. 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. 19 Financial risk management 19 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 The Group’s activities expose it to a variety of financial risks such as market risk (including interest rate risk and price risk), and seeks to minimise potential adverse effects on the financial performance of the Group. 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 Risk management is carried out at a corporate level under policies approved by the Board of Directors. Management identifies, written principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board of Directors approves gold price risk and use of derivative financial instruments and non-derivative financial instruments, and investment of excess written principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk, liquidity. 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: The Group holds the following financial instruments: Financial Assets Cash and cash equivalents Financial Assets Trade and other receivables (i) Cash and cash equivalents Equity investments at FVOCI Trade and other receivables (i) Equity investments at FVOCI Financial Liabilities Trade and other payables Financial Liabilities Interest bearing liabilities Trade and other payables Interest bearing liabilities (i) Excludes Ernest Henry accrued revenue. (i) Excludes Ernest Henry accrued revenue. (a) Derivatives 30 June 2019 30 June $'000 2019 $'000 335,164 38,633 335,164 66,185 38,633 439,982 66,185 439,982 156,828 293,433 156,828 450,261 293,433 450,261 30 June 2018 30 June $'000 2018 $'000 323,226 24,399 323,226 5,536 24,399 353,161 5,536 353,161 152,367 385,966 152,367 538,333 385,966 538,333 (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 Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends currently only designates derivatives as cash flow hedges (hedges of a particular risk associated with the cash flows of on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group recognised assets and liabilities and highly probable forecast transactions). There are no fair value hedges or net investment currently only designates derivatives as cash flow hedges (hedges of a particular risk associated with the cash flows of hedges, nor are there any derivatives that do not classify for hedge accounting. 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 The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedged items. hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. 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 The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the item is less than 12 months. Trading derivatives are classified as a current asset or liability. 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 The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is portion is recognised immediately in the Statement of Profit or Loss within other income or other expense. 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. 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 When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast gain or loss that was reported in equity is immediately reclassified to profit or loss. However, when the forecast transaction that transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative is hedged results in the recognition of a non-financial asset (for example, fixed assets) the gains and losses previously deferred gain or loss that was reported in equity is immediately reclassified to profit or loss. However, when the forecast transaction that in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are is hedged results in the recognition of a non-financial asset (for example, fixed assets) the gains and losses previously deferred ultimately recognised in profit or loss as depreciation in the case of fixed assets. 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 no derivative financial instruments at 30 June 2019 (nil for 2018). Derivatives are only used for economic hedging purposes and not as speculative investments. The Group has no derivative financial instruments at 30 June 2019 (nil for 2018). 128 Evolution Mining Limited Annual Report 2019 60 60 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)19Financialriskmanagement(continued)(a)Derivatives(continued)(b)Marketrisk(i)ForeignexchangeriskForeignexchangeriskarisesfromfuturecommercialtransactionsandrecognisedassetsandliabilitiesdenominatedinacurrencythatisnottheGroup'sfunctionalcurrency.Managementhassetupapolicytomanagetheirforeignexchangeriskagainsttheirfunctionalcurrencyandismeasuredusingsensitivityanalysisandcashflowforecasting.Asat30June2019,theGroupheldUS$0.2million(30June2018:US$0.8million)inUSdollarcurrencybankaccounts,outstandingreceivablesofUS$3.8million(30June2018:US$6.9million)relatingtotheMtCarltonoperationandUS$33.4million(30June2018:US$34.7million)relatingtoErnestHenry.Anincrease/decreaseinAUD:USDforeignexchangeratesof5%willresultinan$8,191(30June2018:$38,280)increase/decreaseinUSdollarcurrencybankaccountbalancesanda$1.9million(30June2018:$2.1million)increase/decreaseinUSdollarreceivables.(ii)PriceriskTheGroupiscurrentlyexposedtotheriskoffluctuationsinprevailingmarketcommoditypricesonthegold,silverandcoppercurrentlyproducedfromitsgoldminesandmarketsharepricesontheequityinvestments.TheGrouphasinplacephysicalgolddeliverycontractsasat30June2019coveringsalesof400,000oz(30June2018:250,000oz)ofgoldatanaverageflatforwardpriceof$1,838/oz(30June2018:$1,711/oz).TheGroupinvestedinTribuneResourcesLimitedinFebruary2019andacquired11,045,101ordinaryshares.Anincrease/decreaseinmarketsharepricesonequityinvestmentsassetsof10%willresultina$6.6million(30June2018:$0.6million)increase/decreaseinequityinvestments.(iii)CashflowandfairvalueinterestrateriskTheGroup’sinterestrateriskarisesfromvariableinterestratesoninterestbearingliabilities.Asat30June2019,theGroupheldinterestbearingliabilitiesof$300.0million(30June2018:$395.0million)whichincursinterestatavariablerate.Anincrease/decreaseofvariableinterestratesof0.25%willresultina$1.0million(30June2018:0.25%,$1.8million)increase/decreaseininterestexpenserelatingtointerestbearingliabilities.(c)CreditriskCreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromtheGroup’sreceivablesfromcustomersandinvestmentsecurities.Atthebalancesheetdatetherewerenosignificantconcentrationsofcreditriskgivencustomersandbankshaveinvestmentgradecreditratings.Thetotaltradeandotherreceivablesoutstandingat30June2019was$38.6million(30June2018:$24.4million).Cashandcashequivalentsat30June2019were$335.2million(30June2018:323.2million).(d)LiquidityriskLiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsasandwhentheyfalldue.Prudentliquidityriskmanagementimpliesmaintainingsufficientcashandtermdeposits,theavailabilityoffundingthroughanadequateamountofcommittedcreditfacilitiesandtheabilitytocloseoutmarketpositions.TheGroupmanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.(i)FinancingarrangementsTheGrouphadaccesstothefollowingundrawnborrowingfacilitiesattheendofthereportingperiod:30June2019$'00030June2018$'000Bankloans-revolvingcreditfacilityExpiringbeyondoneyear350,000350,000350,000350,000(ii)MaturitiesoffinancialliabilitiesThetablesbelowanalysestheGroup'sfinancialliabilitiesintorelevantmaturitygroupingsbasedontheircontractualmaturitiesfor:•allnon-derivativefinancialliabilities,and•netandgrosssettledderivativefinancialinstrumentsforwhichthecontractualmaturitiesareessentialforanunderstandingofthetimingofthecashflows.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.Balancesduewithin12monthsequaltheircarryingbalancesastheimpactofdiscountingisnotsignificant.61129 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)19Financialriskmanagement(continued)(a)Derivatives(continued)(b)Marketrisk(i)ForeignexchangeriskForeignexchangeriskarisesfromfuturecommercialtransactionsandrecognisedassetsandliabilitiesdenominatedinacurrencythatisnottheGroup'sfunctionalcurrency.Managementhassetupapolicytomanagetheirforeignexchangeriskagainsttheirfunctionalcurrencyandismeasuredusingsensitivityanalysisandcashflowforecasting.Asat30June2019,theGroupheldUS$0.2million(30June2018:US$0.8million)inUSdollarcurrencybankaccounts,outstandingreceivablesofUS$3.8million(30June2018:US$6.9million)relatingtotheMtCarltonoperationandUS$33.4million(30June2018:US$34.7million)relatingtoErnestHenry.Anincrease/decreaseinAUD:USDforeignexchangeratesof5%willresultinan$8,191(30June2018:$38,280)increase/decreaseinUSdollarcurrencybankaccountbalancesanda$1.9million(30June2018:$2.1million)increase/decreaseinUSdollarreceivables.(ii)PriceriskTheGroupiscurrentlyexposedtotheriskoffluctuationsinprevailingmarketcommoditypricesonthegold,silverandcoppercurrentlyproducedfromitsgoldminesandmarketsharepricesontheequityinvestments.TheGrouphasinplacephysicalgolddeliverycontractsasat30June2019coveringsalesof400,000oz(30June2018:250,000oz)ofgoldatanaverageflatforwardpriceof$1,838/oz(30June2018:$1,711/oz).TheGroupinvestedinTribuneResourcesLimitedinFebruary2019andacquired11,045,101ordinaryshares.Anincrease/decreaseinmarketsharepricesonequityinvestmentsassetsof10%willresultina$6.6million(30June2018:$0.6million)increase/decreaseinequityinvestments.(iii)CashflowandfairvalueinterestrateriskTheGroup’sinterestrateriskarisesfromvariableinterestratesoninterestbearingliabilities.Asat30June2019,theGroupheldinterestbearingliabilitiesof$300.0million(30June2018:$395.0million)whichincursinterestatavariablerate.Anincrease/decreaseofvariableinterestratesof0.25%willresultina$1.0million(30June2018:0.25%,$1.8million)increase/decreaseininterestexpenserelatingtointerestbearingliabilities.(c)CreditriskCreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromtheGroup’sreceivablesfromcustomersandinvestmentsecurities.Atthebalancesheetdatetherewerenosignificantconcentrationsofcreditriskgivencustomersandbankshaveinvestmentgradecreditratings.Thetotaltradeandotherreceivablesoutstandingat30June2019was$38.6million(30June2018:$24.4million).Cashandcashequivalentsat30June2019were$335.2million(30June2018:323.2million).(d)LiquidityriskLiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsasandwhentheyfalldue.Prudentliquidityriskmanagementimpliesmaintainingsufficientcashandtermdeposits,theavailabilityoffundingthroughanadequateamountofcommittedcreditfacilitiesandtheabilitytocloseoutmarketpositions.TheGroupmanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.(i)FinancingarrangementsTheGrouphadaccesstothefollowingundrawnborrowingfacilitiesattheendofthereportingperiod:30June2019$'00030June2018$'000Bankloans-revolvingcreditfacilityExpiringbeyondoneyear350,000350,000350,000350,000(ii)MaturitiesoffinancialliabilitiesThetablesbelowanalysestheGroup'sfinancialliabilitiesintorelevantmaturitygroupingsbasedontheircontractualmaturitiesfor:•allnon-derivativefinancialliabilities,and•netandgrosssettledderivativefinancialinstrumentsforwhichthecontractualmaturitiesareessentialforanunderstandingofthetimingofthecashflows.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.Balancesduewithin12monthsequaltheircarryingbalancesastheimpactofdiscountingisnotsignificant.61Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 19 Financial risk management (continued) (d) Liquidity risk (continued) (ii) Maturities of financial liabilities (continued) 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 $'000 156,828 118,865 275,693 - 114,770 114,770 - 80,496 80,496 152,367 109,826 262,193 - 119,873 119,873 - 195,858 195,858 - - - - - - 156,828 314,131 470,959 156,828 300,000 456,828 152,367 425,557 577,924 152,367 395,000 547,367 At 30 June 2019 Space Non-derivatives Trade and other payables Bank loans At 30 June 2018 Space Non-derivatives Trade and other payables 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. (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. 20 Contingent liabilities and contingent assets (a) Contingent liabilities The Group had contingent liabilities at 30 June 2019 in respect of: (i) Claims At the date of this report the Group was unaware of any material claims, actual or contemplated. (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 2019. The total of these guarantees at 30 June 2019 was $136.3 million with various financial institutions (30 June 2018: $132.4 million). Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 21 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: The Group has the following capital commitments in relation to capital projects and joint venture requirements at each of the Later than one year but not later than five years Within one year Later than five years (ii) Capital commitments sites. Within one year (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 five years Later than one year but not later than five years 30 June 2019 $'000 16,438 30,925 35,922 83,285 30 June 2019 $'000 17,828 17,828 30 June 2018 $'000 10,479 30,756 40,236 81,471 30 June 2018 $'000 17,619 17,619 30 June 2019 $'000 30 June 2018 $'000 22,389 14,782 - 37,171 14,576 9,355 1,145 25,076 130 Evolution Mining Limited Annual Report 2019 62 63 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 21 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 (ii) Capital commitments 30 June 2019 $'000 16,438 30,925 35,922 83,285 30 June 2018 $'000 10,479 30,756 40,236 81,471 The Group has the following capital commitments in relation to capital projects and joint venture requirements at each of the sites. Within one year (iii) Non-cancellable operating leases 30 June 2019 $'000 17,828 17,828 30 June 2018 $'000 17,619 17,619 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 Later than five years 30 June 2019 $'000 30 June 2018 $'000 22,389 14,782 - 37,171 14,576 9,355 1,145 25,076 63 131 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 21 Commitments (continued) (b) Gold delivery commitments As at 30 June 2019 Within one year Later than one year but not greater than five years As at 30 June 2018 Within one year Later than one year but not greater than five years Gold for physical delivery oz Average contracted sales price A$/oz Value of committed sales $'000 100,000 300,000 400,000 150,000 100,000 250,000 1,737 1,871 3,608 1,694 1,737 3,431 173,667 561,363 735,030 254,037 173,667 427,704 The counterparties to the physical gold delivery contracts are 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 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 9 Financial Instruments. As a result no derivatives are required to be recognised. The Company has no other gold sale commitments with respect to its current operations. 22 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. Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) This section covers additional financial information and mandatory disclosures. Other Disclosures 23 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 up-front payment of $880 million. This $880 million up-front 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 customer (Glencore). Gold sales and gold revenues are recognised when the metal is received and sold by Evolution. In addition to the up-front payment, the Group must also contribute 30% of future production costs in respect of the life of mine area. The Group has agreed to an ongoing obligation to pay an amount equal to 49% of development and production costs in return for 49% of future copper, gold and silver production from new reserves extending beyond the mine life at acquisition date. (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. Revenue (note 2) Cost of sales (excluding amortisation) Amortisation Profit before income tax The carrying amounts of assets and liabilities as at the period end were: Assets Accrued Revenue Inventories Mine Development Total assets Liabilities Trade and other payables Total liabilities Net assets 30 June 2019 $'000 351,426 (119,806) (129,903) 101,717 30 June 2019 $'000 47,574 27,997 574,937 650,508 32,155 32,155 30 June 2018 $'000 347,403 (116,427) (125,669) 105,307 30 June 2018 $'000 46,897 26,145 696,548 769,590 29,157 29,157 618,353 740,433 132 Evolution Mining Limited Annual Report 2019 64 65 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) Other Disclosures This section covers additional financial information and mandatory disclosures. 23 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 up-front payment of $880 million. This $880 million up-front 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 customer (Glencore). Gold sales and gold revenues are recognised when the metal is received and sold by Evolution. In addition to the up-front payment, the Group must also contribute 30% of future production costs in respect of the life of mine area. The Group has agreed to an ongoing obligation to pay an amount equal to 49% of development and production costs in return for 49% of future copper, gold and silver production from new reserves extending beyond the mine life at acquisition date. (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. Revenue (note 2) Cost of sales (excluding amortisation) Amortisation Profit before income tax The carrying amounts of assets and liabilities as at the period end were: Assets Accrued Revenue Inventories Mine Development Total assets Liabilities Trade and other payables Total liabilities Net assets 30 June 2019 $'000 351,426 (119,806) (129,903) 101,717 30 June 2019 $'000 47,574 27,997 574,937 650,508 32,155 32,155 30 June 2018 $'000 347,403 (116,427) (125,669) 105,307 30 June 2018 $'000 46,897 26,145 696,548 769,590 29,157 29,157 618,353 740,433 65 133 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 24 Related party transactions (a) Parent entities The ultimate parent entity within the Group is Evolution Mining Limited. (b) Subsidiaries Interests in subsidiaries are set out in note 28. (c) Key management personnel compensation Short-term employee benefits Post-employment benefits Share-based payments 30 June 2019 $ 30 June 2018 $ 6,725,174 187,292 5,396,616 12,309,082 7,888,131 168,858 4,646,895 12,703,884 Detailed remuneration disclosures are provided in the remuneration report on pages 87 to 100. (d) Transactions with other related parties Directors fees in the amount of $115,000 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 2018:$115,000). Directors fees in the amount of $300,000 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 2018: $300,000). Directors fees in the amount of $126,250 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 2018: $135,000). Directors fees in the amount of $7,917 were paid to Mr Naguib Sawiris as a Director for services provided during the period (30 June 2018: $95,000). Directors fees in the amount of $8,750 were paid to Mr Sebastien de Montessus as a Director for services provided during the period (30 June 2018: $105,000). 25 Share-based payments (a) Types of share based payment plans The Group has two 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. Shareholder approval was refreshed at the Annual General Meeting on 26 November 2014 and again on 23 November 2017 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) 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 NED Share Rights as part of their remuneration. (b) Recognised share based payment expenses 30 June 2019 $'000 30 June 2018 $'000 Expense arising from equity settled share based payment transactions recognised in profit and loss (c) Summary and movement of NED Share Rights on issue 10,884 8,491 The following table illustrates the number and movements in, Share Rights issued during the year. 134 Evolution Mining Limited Annual Report 2019 66 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)25Share-basedpayments(continued)(c)SummaryandmovementofNEDShareRightsonissue(continued)20192018NumberNumberOutstandingbalanceatthebeginningoftheyear116,87997,788ShareRightsgranted57,235116,879Vested(106,541)(97,788)Lapsed(10,338)-Forfeited--Outstandingbalanceattheendoftheyear57,235116,879Therewere57,235ShareRightsgrantedduringthe2019financialyear.ProvidedtheNEDsremaindirectorsofEvolution,ShareRightswillvestandautomaticallyexercise12monthsafterthegrantdateof23November2018withdisposalrestrictionsattachedtotheseshares.(d)FairvaluedeterminationDuringtheyear,theCompanyissuedtwoallotmentsofperformancerightsthatwillveston30June2021.TheyhavefourperformancecomponentsbeingaTotalShareholderReturn(“TSR”)condition,anabsoluteTSRcondition,aGrowthinEarningspershare(“EPS”)conditionandaGrowthinOreReservescondition.(i)TSRPerformanceRightValuationThefairvalueoftheTSRPerformanceRights(market-basedcondition)wasestimatedatthedateofgrantusingMonteCarlosimulation,takingintoaccountthetermsandconditionsuponwhichtheawardsweregranted.(ii)AbsoluteTSRPerformanceRightValuationTheAbsoluteTSRPerformanceRightValuationwillbemeasuredasthecumulativeannualTSRoverthethreeyearperiodending30June2021.(iii)GrowthinEarningsperShareThegrowthinEarningsperShareismeasuredasthecumulativeannualgrowthrateinEPS,excludingnonrecurringitemsoverthethreeyearperiodending30June2021.(iv)GrowthinOreReservesperShareThegrowthinOreReservespershareismeasuredbycomparingtheBaselinemeasureoftheOreReservesasat31December2017,totheOreReservesasat31December2020onapersharebasis,withtestingtobeperformedat30June2021.ThefollowingtableslisttheinputstothemodelsusedforthePerformanceRightsgrantedfortheperiod:TSRAbsoluteTSRGrowthinEPSGrowthinOreReservesSeptember2018PerformanceRightsissueNumberofrightsissued1,368,5201,368,5201,368,5201,368,468Spotprice($)2.742.742.742.74Risk-freerate(%)2.012.012.012.01Term(years)2.82.82.82.8Volatility(%)45454545Fairvalueatgrantdate($)1.520.932.572.57February2019PerformanceRightsissueNumberofrightsissued56,47556,47556,47556,480Spotprice($)3.83.83.83.8Risk-freerate(%)1.731.731.731.73Term(years)2.42.42.42.4Volatility(%)42424242Fairvalueatgrantdate($)2.091.743.613.61ThevolatilityabovewasdeterminedwithreferencetohistoricalvolatilitybutalsoincorporatesfactorsthatmanagementbelieveswillimpacttheactualvolatilityoftheCompany’ssharesinfutureperiods.RecognitionandmeasurementTheGroupprovidesbenefitstoitsemployees(includingKeyManagementPersonnel)intheformofshare-basedpayments,wherebyemployeesrenderservicesinexchangeforsharesorrightsovershares(equity-settledtransactions).VestingconditionsthatarelinkedtothepriceofsharesoftheCompany(marketconditions)aretakenintoaccountwhendeterminingthefairvalueofequitysettledtransactions.Othervestingconditionssuchasserviceconditionsareexcludedfromthemeasurementoffairvaluebutareconsideredinestimatingthenumberofinvestmentsthatmayultimatelyvest.67135 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)25Share-basedpayments(continued)(c)SummaryandmovementofNEDShareRightsonissue(continued)20192018NumberNumberOutstandingbalanceatthebeginningoftheyear116,87997,788ShareRightsgranted57,235116,879Vested(106,541)(97,788)Lapsed(10,338)-Forfeited--Outstandingbalanceattheendoftheyear57,235116,879Therewere57,235ShareRightsgrantedduringthe2019financialyear.ProvidedtheNEDsremaindirectorsofEvolution,ShareRightswillvestandautomaticallyexercise12monthsafterthegrantdateof23November2018withdisposalrestrictionsattachedtotheseshares.(d)FairvaluedeterminationDuringtheyear,theCompanyissuedtwoallotmentsofperformancerightsthatwillveston30June2021.TheyhavefourperformancecomponentsbeingaTotalShareholderReturn(“TSR”)condition,anabsoluteTSRcondition,aGrowthinEarningspershare(“EPS”)conditionandaGrowthinOreReservescondition.(i)TSRPerformanceRightValuationThefairvalueoftheTSRPerformanceRights(market-basedcondition)wasestimatedatthedateofgrantusingMonteCarlosimulation,takingintoaccountthetermsandconditionsuponwhichtheawardsweregranted.(ii)AbsoluteTSRPerformanceRightValuationTheAbsoluteTSRPerformanceRightValuationwillbemeasuredasthecumulativeannualTSRoverthethreeyearperiodending30June2021.(iii)GrowthinEarningsperShareThegrowthinEarningsperShareismeasuredasthecumulativeannualgrowthrateinEPS,excludingnonrecurringitemsoverthethreeyearperiodending30June2021.(iv)GrowthinOreReservesperShareThegrowthinOreReservespershareismeasuredbycomparingtheBaselinemeasureoftheOreReservesasat31December2017,totheOreReservesasat31December2020onapersharebasis,withtestingtobeperformedat30June2021.ThefollowingtableslisttheinputstothemodelsusedforthePerformanceRightsgrantedfortheperiod:TSRAbsoluteTSRGrowthinEPSGrowthinOreReservesSeptember2018PerformanceRightsissueNumberofrightsissued1,368,5201,368,5201,368,5201,368,468Spotprice($)2.742.742.742.74Risk-freerate(%)2.012.012.012.01Term(years)2.82.82.82.8Volatility(%)45454545Fairvalueatgrantdate($)1.520.932.572.57February2019PerformanceRightsissueNumberofrightsissued56,47556,47556,47556,480Spotprice($)3.83.83.83.8Risk-freerate(%)1.731.731.731.73Term(years)2.42.42.42.4Volatility(%)42424242Fairvalueatgrantdate($)2.091.743.613.61ThevolatilityabovewasdeterminedwithreferencetohistoricalvolatilitybutalsoincorporatesfactorsthatmanagementbelieveswillimpacttheactualvolatilityoftheCompany’ssharesinfutureperiods.RecognitionandmeasurementTheGroupprovidesbenefitstoitsemployees(includingKeyManagementPersonnel)intheformofshare-basedpayments,wherebyemployeesrenderservicesinexchangeforsharesorrightsovershares(equity-settledtransactions).VestingconditionsthatarelinkedtothepriceofsharesoftheCompany(marketconditions)aretakenintoaccountwhendeterminingthefairvalueofequitysettledtransactions.Othervestingconditionssuchasserviceconditionsareexcludedfromthemeasurementoffairvaluebutareconsideredinestimatingthenumberofinvestmentsthatmayultimatelyvest.67Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 25 Share-based payments (continued) Recognition and measurement (continued) 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 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. 26 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 Due dilligence services Total remuneration for audit and other services Taxation services Tax compliance services Tax advisory services Total remuneration for taxation services 2019 $ 2018 $ 492,854 200,000 692,854 116,600 - 116,600 510,920 - 510,920 - 8,670 8,670 Total remuneration of PricewaterhouseCoopers 809,454 519,590 (b) Non-PricewaterhouseCoopers related audit firms Audit and other assurance services Other assurance 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 2019 $ 2018 $ 205,029 56,244 261,273 68,523 538,213 606,736 168,971 259,965 428,936 397,215 254,242 651,457 Total remuneration of non-PricewaterhouseCoopers audit firms 868,009 1,080,393 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 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. 136 Evolution Mining Limited Annual Report 2019 68 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)27DeedofcrossguaranteeEvolutionMiningLimitedandthoseentitiesidentifiedinnote28arepartiestoadeedofcrossguaranteeunderwhicheachCompanyguaranteesthedebtsoftheothers.Byenteringintothedeed,thewholly-ownedentitieshavebeenrelievedfromtherequirementtoprepareafinancialreportandDirectors'ReportunderClassOrder98/1418(asamended)issuedbytheAustralianSecuritiesandInvestmentsCommission.Thecompaniesidentifiedaboverepresenta'closedgroup'forthepurposesoftheClassOrder,andastherearenootherpartiestothedeedofcrossguaranteethatarecontrolledbyEvolutionMiningLimited,theyalsorepresentthe'extendedclosedgroup'.TheConsolidatedBalanceSheet,ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome,andsummaryofmovementsinconsolidatedretainedearningsfortheyearended30June2019oftheclosedgroupisequaltotheConsolidatedBalanceSheet,ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome,andConsolidatedStatementofChangesinEquityoftheGroup.28Interestsinotherentities(a)SignificantinvestmentsinsubsidiariesTheconsolidatedfinancialstatementsincorporatetheassets,liabilitiesandresultsofthefollowingprincipalsubsidiariesinaccordancewiththeaccountingpolicydescribedbelow:EquityholdingNameofentityCountryofincorporationClassofshares2019%2018%EvolutionMiningManagementServicesPtyLtdAustraliaOrdinary100100ConquestMiningPtyLtd(i)(ii)AustraliaOrdinary100100MtRawdonOperationsPtyLtd(i)(ii)AustraliaOrdinary100100WestoniaMinesMineralsPtyLtd(i)(iii)AustraliaOrdinary100100LionSelectionPtyLtd(i)(iii)AustraliaOrdinary100100AuselectPtyLtd(i)(iii)AustraliaOrdinary100100LionMiningPtyLtd(i)(ii)AustraliaOrdinary100100SedgoldPtyLtd(i)(iii)AustraliaOrdinary100100FernysidePtyLtd(i)(iii)AustraliaOrdinary100100EvolutionTennantCreekPtyLtd(ii)AustraliaOrdinary100100EvolutionMiningNZPtyLtd(ii)AustraliaOrdinary100100EvolutionMining(Cowal)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMiningMungariPtyLtd(i)(ii)AustraliaOrdinary100100ToledoHolding(Ausco)PtyLtd(i)AustraliaOrdinary100100EvolutionMining(MungariEast)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(Phoenix)PtyLimited(i)(ii)AustraliaOrdinary100100HayesMiningPtyLtd(i)AustraliaOrdinary100100EvolutionMining(Aurum2)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(ConnorsArc)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(CanadaHoldings)Ltd(ii)CanadaOrdinary100100EvolutionMiningManagementServices(Canada)Ltd(ii)CanadaOrdinary100100(i)ThesesubsidiarieshavebeengrantedrelieffromthenecessitytopreparefinancialreportsinaccordancewithClassOrder98/1418issuedbytheAustralianSecuritiesandInvestmentsCommission.Forfurtherinformationrefertonote27.(ii)TheseentitiesareconsideredtobethematerialcontrolledentitiesoftheGroup.Theirprincipalactivitiesareidentifying,developingandoperatinggoldrelatedprojects.(iii)On3July2019,thefollowingentitieswerederegistered:-AuselectPtyLtd(ACN077885208)-SedgoldPtyLtd(ACN010077988)-LionSelectionPtyLtd(ACN123217112)-FernysidePtyLimited(ACN001245530)-WestoniaMinesMineralsPtyLtd(ACN059349094)Unlessotherwisestated,theyhavesharecapitalconsistingsolelyofordinarysharesthatarehelddirectlybytheGroup,andtheproportionofownershipinterestsheldequalsthevotingrightsheldbytheGroup.Thecountryofincorporationorregistrationisalsotheirprincipalplaceofbusiness.69137 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)27DeedofcrossguaranteeEvolutionMiningLimitedandthoseentitiesidentifiedinnote28arepartiestoadeedofcrossguaranteeunderwhicheachCompanyguaranteesthedebtsoftheothers.Byenteringintothedeed,thewholly-ownedentitieshavebeenrelievedfromtherequirementtoprepareafinancialreportandDirectors'ReportunderClassOrder98/1418(asamended)issuedbytheAustralianSecuritiesandInvestmentsCommission.Thecompaniesidentifiedaboverepresenta'closedgroup'forthepurposesoftheClassOrder,andastherearenootherpartiestothedeedofcrossguaranteethatarecontrolledbyEvolutionMiningLimited,theyalsorepresentthe'extendedclosedgroup'.TheConsolidatedBalanceSheet,ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome,andsummaryofmovementsinconsolidatedretainedearningsfortheyearended30June2019oftheclosedgroupisequaltotheConsolidatedBalanceSheet,ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome,andConsolidatedStatementofChangesinEquityoftheGroup.28Interestsinotherentities(a)SignificantinvestmentsinsubsidiariesTheconsolidatedfinancialstatementsincorporatetheassets,liabilitiesandresultsofthefollowingprincipalsubsidiariesinaccordancewiththeaccountingpolicydescribedbelow:EquityholdingNameofentityCountryofincorporationClassofshares2019%2018%EvolutionMiningManagementServicesPtyLtdAustraliaOrdinary100100ConquestMiningPtyLtd(i)(ii)AustraliaOrdinary100100MtRawdonOperationsPtyLtd(i)(ii)AustraliaOrdinary100100WestoniaMinesMineralsPtyLtd(i)(iii)AustraliaOrdinary100100LionSelectionPtyLtd(i)(iii)AustraliaOrdinary100100AuselectPtyLtd(i)(iii)AustraliaOrdinary100100LionMiningPtyLtd(i)(ii)AustraliaOrdinary100100SedgoldPtyLtd(i)(iii)AustraliaOrdinary100100FernysidePtyLtd(i)(iii)AustraliaOrdinary100100EvolutionTennantCreekPtyLtd(ii)AustraliaOrdinary100100EvolutionMiningNZPtyLtd(ii)AustraliaOrdinary100100EvolutionMining(Cowal)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMiningMungariPtyLtd(i)(ii)AustraliaOrdinary100100ToledoHolding(Ausco)PtyLtd(i)AustraliaOrdinary100100EvolutionMining(MungariEast)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(Phoenix)PtyLimited(i)(ii)AustraliaOrdinary100100HayesMiningPtyLtd(i)AustraliaOrdinary100100EvolutionMining(Aurum2)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(ConnorsArc)PtyLtd(i)(ii)AustraliaOrdinary100100EvolutionMining(CanadaHoldings)Ltd(ii)CanadaOrdinary100100EvolutionMiningManagementServices(Canada)Ltd(ii)CanadaOrdinary100100(i)ThesesubsidiarieshavebeengrantedrelieffromthenecessitytopreparefinancialreportsinaccordancewithClassOrder98/1418issuedbytheAustralianSecuritiesandInvestmentsCommission.Forfurtherinformationrefertonote27.(ii)TheseentitiesareconsideredtobethematerialcontrolledentitiesoftheGroup.Theirprincipalactivitiesareidentifying,developingandoperatinggoldrelatedprojects.(iii)On3July2019,thefollowingentitieswerederegistered:-AuselectPtyLtd(ACN077885208)-SedgoldPtyLtd(ACN010077988)-LionSelectionPtyLtd(ACN123217112)-FernysidePtyLimited(ACN001245530)-WestoniaMinesMineralsPtyLtd(ACN059349094)Unlessotherwisestated,theyhavesharecapitalconsistingsolelyofordinarysharesthatarehelddirectlybytheGroup,andtheproportionofownershipinterestsheldequalsthevotingrightsheldbytheGroup.Thecountryofincorporationorregistrationisalsotheirprincipalplaceofbusiness.69Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 29 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 Accumulated losses Total equity 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 20. (d) Contingent liabilities of the parent entity 30 June 2019 $'000 30 June 2018 $'000 331,341 1,982,504 2,313,845 316,591 2,065,188 2,381,779 121,444 261,497 382,941 158,438 294,284 452,722 1,930,904 1,929,057 2,183,727 2,183,727 20,003 53,796 (326,622) 1,930,904 1,131 45,566 (301,367) 1,929,057 101,824 - 101,824 126,882 - 126,882 The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018. For information about guarantees given by the parent entity, please see above. 138 Evolution Mining Limited Annual Report 2019 70 Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)30Summaryofsignificantaccountingpolicies(a)BasisofpreparationThisfinancialreportisageneralpurposefinancialreport,preparedbyafor-profitentity,inaccordancewiththerequirementsoftheCorporationsAct2001,AustralianAccountingStandardsandotherauthoritativepronouncementsoftheAustralianAccountingStandardsBoard(AASB).ThefinancialreportalsocomplieswiththeInternationalFinancialReportingStandards(IFRS)includinginterpretationsasissuedbytheInternationalAccountingStandardsBoard(IASB).Thefinancialreporthasbeenpreparedonahistoricalcostbasis,exceptforderivativefinancialinstrumentsandavailable-for-saleassetswhichhavebeenmeasuredatfairvalue.ThefinancialreporthasbeenpresentedinAustralian(AU)dollarsandallvaluesareroundedtothenearestAU$1,000(AU$'000)unlessotherwisestated.TheaccountingpolicieshavebeenconsistentlyappliedbyallentitiesincludedintheGroupandareconsistentwiththoseappliedintheprioryearexceptforchangesarisingfromadoptionofnewaccountingstandardswhichhavebeenseperatelydisclosed.(b)PrinciplesofconsolidationTheconsolidatedfinancialstatementsincludethefinancialstatementsoftheparententity,EvolutionMiningLimited,anditscontrolledentities(referredtoas'theConsolidatedEntity'or'theGroup'inthesefinancialstatements).Alistofsignificantcontrolledentities(subsidiaries)ispresentedinnote28.ControlisachievedwhentheGroupisexposed,orhastherights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TheGroupre-assesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneofmoreofthethreeelementsofcontrol.SpecificallytheGroupcontrolsaninvesteeif,andonlyif,theGrouphasallofthefollowing:•Powerovertheinvestee(i.e.existingrightsthatgiveitthecurrentabilitytodirecttherelevantactivitiesoftheinvestee);•Exposure,orrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and•Theabilitytouseitscontrolovertheinvesteetoaffectitsreturns.Non-controllinginterestsintheresultsandequityoftheentitiesthatarecontrolledbytheGroupisshownseparatelyintheStatementofProfitorLossorOtherComprehensiveIncome,BalanceSheetandStatementofChangesinEquityrespectively.(c)Foreigncurrencytranslation(i)FunctionalandpresentationcurrencyThepresentationcurrencyoftheGroupisAustraliandollars.EachentityintheGroupdeterminesitsownfunctionalcurrencyanditemsincludedinthefinancialstatementsofeachentityaremeasuredusingthatfunctionalcurrency.(ii)TransactionsandbalancesTransactionsinforeigncurrenciesareinitiallyrecordedinthefunctionalcurrencyattheexchangeratesrulingatthedateofthetransaction.Thesubsequentpaymentorreceiptoffundsrelatedtoatransactionistranslatedattherateapplicableonthedateofpaymentorreceipt.Monetaryassetsandliabilitiesaredenominatedinforeigncurrenciesareretranslatedattherateofexchangerulingatthereportingdate.Non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateasatthedateoftheinitialtransaction.AllexchangedifferencesintheconsolidatedfinancialstatementsaretakentotheStatementofOtherComprehensiveIncomeandaccumulatedinareserve.(iii)TranslationTheassetsandliabilitiesofsubsidiarieswithfunctionalcurrencyotherthanAustraliandollars(beingthepresentationcurrencyoftheGroup)aretranslatedintoAustraliandollarsattheexchangerateatthereportingdateandtheStatementofProfitorLossistranslatedattheaverageexchangeratefortheperiod.Onconsolidation,exchangedifferencesarisingfromthetranslationofthesesubsidiariesarerecognisedinOtherComprehensiveIncomeandaccumulatedintheforeigncurrencytranslationreserve.(d)Intangibleassets(i)Miningtenements,miningrightsandmininginformationMiningtenementshaveafiniteusefullifeandarecarriedatcostless,whereapplicable,anyaccumulatedamortisationandaccumulatedimpairmentlosses.Thecarryingvaluesofminingtenementsandminingrightsarereviewedtoensuretheyarenotinexcessoftheirrecoverableamounts.Amortisationofminingtenementsandminingrightscommencesfromthedatewhencommercialproductioncommencesorinthecaseoftheacquisitions,fromthedateofacquisitionandischargedtotheprofitorloss.Miningtenementsareamortisedoverthelifeofthemineusingunitsofproductionbasisinounces.71139 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)30Summaryofsignificantaccountingpolicies(a)BasisofpreparationThisfinancialreportisageneralpurposefinancialreport,preparedbyafor-profitentity,inaccordancewiththerequirementsoftheCorporationsAct2001,AustralianAccountingStandardsandotherauthoritativepronouncementsoftheAustralianAccountingStandardsBoard(AASB).ThefinancialreportalsocomplieswiththeInternationalFinancialReportingStandards(IFRS)includinginterpretationsasissuedbytheInternationalAccountingStandardsBoard(IASB).Thefinancialreporthasbeenpreparedonahistoricalcostbasis,exceptforderivativefinancialinstrumentsandavailable-for-saleassetswhichhavebeenmeasuredatfairvalue.ThefinancialreporthasbeenpresentedinAustralian(AU)dollarsandallvaluesareroundedtothenearestAU$1,000(AU$'000)unlessotherwisestated.TheaccountingpolicieshavebeenconsistentlyappliedbyallentitiesincludedintheGroupandareconsistentwiththoseappliedintheprioryearexceptforchangesarisingfromadoptionofnewaccountingstandardswhichhavebeenseperatelydisclosed.(b)PrinciplesofconsolidationTheconsolidatedfinancialstatementsincludethefinancialstatementsoftheparententity,EvolutionMiningLimited,anditscontrolledentities(referredtoas'theConsolidatedEntity'or'theGroup'inthesefinancialstatements).Alistofsignificantcontrolledentities(subsidiaries)ispresentedinnote28.ControlisachievedwhentheGroupisexposed,orhastherights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TheGroupre-assesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneofmoreofthethreeelementsofcontrol.SpecificallytheGroupcontrolsaninvesteeif,andonlyif,theGrouphasallofthefollowing:•Powerovertheinvestee(i.e.existingrightsthatgiveitthecurrentabilitytodirecttherelevantactivitiesoftheinvestee);•Exposure,orrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and•Theabilitytouseitscontrolovertheinvesteetoaffectitsreturns.Non-controllinginterestsintheresultsandequityoftheentitiesthatarecontrolledbytheGroupisshownseparatelyintheStatementofProfitorLossorOtherComprehensiveIncome,BalanceSheetandStatementofChangesinEquityrespectively.(c)Foreigncurrencytranslation(i)FunctionalandpresentationcurrencyThepresentationcurrencyoftheGroupisAustraliandollars.EachentityintheGroupdeterminesitsownfunctionalcurrencyanditemsincludedinthefinancialstatementsofeachentityaremeasuredusingthatfunctionalcurrency.(ii)TransactionsandbalancesTransactionsinforeigncurrenciesareinitiallyrecordedinthefunctionalcurrencyattheexchangeratesrulingatthedateofthetransaction.Thesubsequentpaymentorreceiptoffundsrelatedtoatransactionistranslatedattherateapplicableonthedateofpaymentorreceipt.Monetaryassetsandliabilitiesaredenominatedinforeigncurrenciesareretranslatedattherateofexchangerulingatthereportingdate.Non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateasatthedateoftheinitialtransaction.AllexchangedifferencesintheconsolidatedfinancialstatementsaretakentotheStatementofOtherComprehensiveIncomeandaccumulatedinareserve.(iii)TranslationTheassetsandliabilitiesofsubsidiarieswithfunctionalcurrencyotherthanAustraliandollars(beingthepresentationcurrencyoftheGroup)aretranslatedintoAustraliandollarsattheexchangerateatthereportingdateandtheStatementofProfitorLossistranslatedattheaverageexchangeratefortheperiod.Onconsolidation,exchangedifferencesarisingfromthetranslationofthesesubsidiariesarerecognisedinOtherComprehensiveIncomeandaccumulatedintheforeigncurrencytranslationreserve.(d)Intangibleassets(i)Miningtenements,miningrightsandmininginformationMiningtenementshaveafiniteusefullifeandarecarriedatcostless,whereapplicable,anyaccumulatedamortisationandaccumulatedimpairmentlosses.Thecarryingvaluesofminingtenementsandminingrightsarereviewedtoensuretheyarenotinexcessoftheirrecoverableamounts.Amortisationofminingtenementsandminingrightscommencesfromthedatewhencommercialproductioncommencesorinthecaseoftheacquisitions,fromthedateofacquisitionandischargedtotheprofitorloss.Miningtenementsareamortisedoverthelifeofthemineusingunitsofproductionbasisinounces.71Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 30 Summary of significant accounting policies (continued) 31 New accounting standards (continued) (d) Intangible assets (continued) (i) Mining tenements, mining rights and mining information AASB 16 Leases is not mandatory for the 30 June 2019 reporting period and have not been early adopted by the Group. AASB 16 leases will be adopted from 1 July 2019. The Group’s assessment of the impact is set out below. 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. Nature of change Impact The amortisation of the above intangibles is classified as a cost of sale. 31 New accounting standards The accounting policies applied by the Group in the consolidated financial statements have been consistently applied with those applied in the prior year except for the application AASB 9 and 15 as described below. The Group has adopted all of the new, revised or amending standards that are mandatory. The Group has for the first time applied AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers with effect from 1 July 2018. Please refer to note 2 in relation to the impact of adopting AASB 15 Revenue from Contracts with Customers. AASB 9 Financial Instruments AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The financial assets held by the group are detailed as follows: • Equity investments at Fair Value through Other Comprehensive Income (FVOCI); • Cash and cash equivalents (including current accounts and short-term term deposits); • Trade receivables currently held at cost, to be measured at amortised cost under the classification conditions for AASB 9. The adoption of AASB 9 resulted in a change of classification for the Group's listed equity investments at FVOCI. Please refer to note 15 for further details. The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. There are no expected lifetime ECLs based on zero historical customer default. Therefore, there is no impact on transition to IFRS 9 for trade receivables. There will 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 derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The new hedge accounting rules under AASB 9 have no impact as the group is not currently hedge accounting. In accordance with the transition provisions in AASB 9, comparative figures have not been restated. Title of standard AASB 16 Leases AASB 16 was issued in February 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 or after 1 of $37.2 million, see note 21. 2016. 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. Mandatory application date/ Date of adoption by group Mandatory for financial years commencing on January 2019. At this stage, the Group does not intend to adopt the standard before its effective date. The group intends to apply the modified retrospective transition approach and will not restate comparative amounts for the year prior to first adoption. To date, the group has focussed on the provisions of the standard that will most impact the financial results. Below is a summary of the work performed and the assessed impact of the new standard: • Data gathering: Site and group data has been collated related to contracts that may contain a lease. • Data integrity and analysis: a number of the identified contracts are 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. • Modelling of transition options: Review of the transition options indicates that there is not a material difference to the group between the three transition methodologies. Accordingly, the group intends to apply the modified retrospective transition approach. • Financial reporting: Preliminary review results indicate that under the requirements of AASB 16, a lease asset and liability would be recorded on balance sheet of approximately $33.7 and $35.8 million respectively if the standard applied at 30 June 2019. The Group will implement the new standard with an effective date of 1 July 2019. 140 Evolution Mining Limited Annual Report 2019 72 73 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 (continued) 31 New accounting standards (continued) AASB 16 Leases is not mandatory for the 30 June 2019 reporting period and have not been early adopted by the Group. AASB 16 leases will be adopted from 1 July 2019. The Group’s assessment of the impact is set out below. 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. The group intends to apply the modified retrospective transition approach and will not restate comparative amounts for the year prior to first adoption. Title of standard AASB 16 Leases Nature of change Impact AASB 16 was issued in February 2016. 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 $37.2 million, see note 21. To date, the group has focussed on the provisions of the standard that will most impact the financial results. Below is a summary of the work performed and the assessed impact of the new standard: • Data gathering: Site and group data has been collated related to contracts that may contain a lease. • Data integrity and analysis: a number of the identified contracts are 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. • Modelling of transition options: Review of the transition options indicates that there is not a material difference to the group between the three transition methodologies. Accordingly, the group intends to apply the modified retrospective transition approach. • Financial reporting: Preliminary review results indicate that under the requirements of AASB 16, a lease asset and liability would be recorded on balance sheet of approximately $33.7 and $35.8 million respectively if the standard applied at 30 June 2019. The Group will implement the new standard with an effective date of 1 July 2019. 73 141 Notes to the Consolidated Financial Statements (continued)Evolution Mining Limited Annual Report 2019Directors’ Declaration Evolution Mining Limited Directors' Declaration 30 June 2019 In the Directors' opinion: (a) (b) (c) the financial statements and notes set out on pages 104 to 141 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 2019 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 27 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 27. Note 30(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 Andrea Hall Chair of the Audit Committee Sydney 142 Evolution Mining Limited Annual Report 2019 74 Independent auditor’s report To the members of Evolution Mining Limited Report on the audit of the financial report Independent auditor’s report Our opinion To the members of Evolution Mining Limited In our opinion: Report on the audit of the financial report 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: Our opinion giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial In our opinion: performance for the year then ended complying with Australian Accounting Standards and the Corporations Regulations 2001. 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: What we have audited giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial The Group financial report comprises: performance for the year then ended       the consolidated balance sheet as at 30 June 2019 complying with Australian Accounting Standards and the Corporations Regulations 2001. the consolidated statement of profit or loss and other comprehensive income for the year then What we have audited ended The Group financial report comprises: 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 balance sheet as at 30 June 2019 the notes to the consolidated financial statements, which include a summary of significant the consolidated statement of profit or loss and other comprehensive income for the year then accounting policies ended the directors’ declaration. the consolidated statement of changes in equity for the year then ended the consolidated statement of cash flows for the year then ended Basis for opinion  the notes to the consolidated financial statements, which include a summary of significant 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 accounting policies the directors’ declaration.      report section of our report. Basis for opinion Independence report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 our opinion. We are independent of the Group in accordance with the auditor independence requirements of the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical our opinion. 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 Independence in accordance with the Code. 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au PricewaterhouseCoopers, ABN 52 780 433 757 Liability limited by a scheme approved under Professional Standards Legislation. 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report Independent auditor’s report To the members of Evolution Mining Limited Report on the audit of the financial report Independent auditor’s report Independent auditor’s report To the members of Evolution Mining Limited To the members of Evolution Mining Limited Our opinion Report on the audit of the financial report In our opinion: Report on the audit of the financial report 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: Our opinion giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial In our opinion: Our opinion In our opinion: performance for the year then ended The accompanying financial report of Evolution Mining Limited (the Company) and its controlled complying with Australian Accounting Standards and the Corporations Regulations 2001. entities (together the Group) is in accordance with the Corporations Act 2001, including: 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:        Basis for opinion performance for the year then ended performance for the year then ended the consolidated balance sheet as at 30 June 2019 giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial complying with Australian Accounting Standards and the Corporations Regulations 2001. the consolidated statement of profit or loss and other comprehensive income for the year then ended giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial What we have audited The Group financial report comprises: complying with Australian Accounting Standards and the Corporations Regulations 2001.   What we have audited What we have audited The Group financial report comprises: The Group financial report comprises:      the consolidated statement of changes in equity for the year then ended the consolidated balance sheet as at 30 June 2019  the consolidated balance sheet as at 30 June 2019 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  the notes to the consolidated financial statements, which include a summary of significant ended accounting policies the consolidated statement of changes in equity for the year then ended the directors’ declaration. the consolidated statement of cash flows for the year then ended the consolidated statement of changes in equity for the year then ended the consolidated statement of profit or loss and other comprehensive income for the year then ended the consolidated statement of cash flows for the year then ended the notes to the consolidated financial statements, which include a summary of significant accounting policies the notes to the consolidated financial statements, which include a summary of significant accounting policies  Basis for opinion the directors’ declaration. the directors’ declaration. 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 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. Basis for opinion We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under our opinion. those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. Independence We are independent of the Group in accordance with the auditor independence requirements of the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical our opinion. Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant Independence to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 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. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au PricewaterhouseCoopers, ABN 52 780 433 757 PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 Liability limited by a scheme approved under Professional Standards Legislation. T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au 143 Liability limited by a scheme approved under Professional Standards Legislation. Liability limited by a scheme approved under Professional Standards Legislation. Evolution Mining Limited Annual Report 2019 Independent Auditor’s Report (continued) Our audit approach Our audit approach Key audit matters Key audit matters An 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. An 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. 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 Materiality Audit scope Audit scope Key audit matters Key audit matters   For the purpose of our audit we used overall Group materiality of $18.4 million, which represents approximately 2.5% of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA). For the purpose of our audit we used overall Group materiality of $18.4 million, which represents approximately 2.5% of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA).  Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.  Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.  Our audit procedures were  Our audit procedures were  We applied this threshold,  We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. predominantly performed at predominantly performed at the Group’s corporate office in the Group’s corporate office in together with qualitative Sydney. We also conducted a considerations, to determine Sydney. We also conducted a site visit to the Cowal mine site visit to the Cowal mine the scope of our audit and the site. nature, timing and extent of site. our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.   Amongst other relevant topics,  Amongst other relevant topics, we communicated the following key audit matters to the Audit Committee: we communicated the following key audit matters to the Audit Committee:  Implementation of new  Implementation of new revenue accounting policy  Assessment of the carrying value of assets. revenue accounting policy  Assessment of the carrying value of assets. These are further described in the Key audit matters section of our report. These are further described in the Key audit matters section of our report.   We chose EBITDA because, in  We chose EBITDA because, in our view, it is the benchmark our view, it is the benchmark against which the against which the performance of the Group is performance of the Group is most commonly measured. most commonly measured.  We utlised a 2.5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds.  We utlised a 2.5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. 144 Evolution Mining Limited Annual Report 2019 76 76 77 77 Key audit matters are those matters that, in our professional judgement, were of most significance in 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 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 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 not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. particular audit procedure is made in that context. Key audit matter Key audit matter How our audit addressed the key audit How our audit addressed the key audit matter matter others: others: Implementation of new revenue accounting Implementation of new revenue accounting We performed the following procedures, amongst We performed the following procedures, amongst policy policy (Refer to note 2) (Refer to note 2)  Developed an understanding of and evaluated the  Developed an understanding of and evaluated the The Group adopted a new revenue accounting policy The Group adopted a new revenue accounting policy operating effectiveness of relevant key revenue operating effectiveness of relevant key revenue during the year due to the mandatory introduction of during the year due to the mandatory introduction of internal controls internal controls AASB 15 Revenue for Contracts with Customers. The AASB 15 Revenue for Contracts with Customers. The new policy is disclosed in Note 2. new policy is disclosed in Note 2.  Assessed the adequacy of the methodology used  Assessed the adequacy of the methodology used The adoption of a new revenue accounting policy was The adoption of a new revenue accounting policy was contract reviews required to identify AASB 15 contract reviews required to identify AASB 15 a key audit matter due to the: a key audit matter due to the: impact impact by the Group for determining the extent of by the Group for determining the extent of  significance of revenue to understanding the significance of revenue to understanding the  Assessed whether the Group’s new accounting  Assessed whether the Group’s new accounting  financial results for users of the financial financial results for users of the financial policies were in accordance with the requirements policies were in accordance with the requirements report report of AASB 15 through consideration of accounting of AASB 15 through consideration of accounting papers on key areas of judgement prepared by the papers on key areas of judgement prepared by the  complexity involved in applying the new complexity involved in applying the new Group.  Group. AASB 15 requirements given the bespoke AASB 15 requirements given the bespoke nature of terms and conditions in contracts nature of terms and conditions in contracts  For all contracts with customers we:  For all contracts with customers we: with customers with customers  judgements required by the Group in judgements required by the Group in  o Developed an understanding of the key terms of o Developed an understanding of the key terms of the arrangement including parties, term dates, the arrangement including parties, term dates, applying the new AASB 15 requirements, applying the new AASB 15 requirements, background of agreement, performance background of agreement, performance such as whether contracts contain multiple such as whether contracts contain multiple obligations and payments to be made obligations and payments to be made performance obligations which should be performance obligations which should be accounted for separately and when to accounted for separately and when to o Considered the Group’s identification of o Considered the Group’s identification of recognise revenue based on when ‘control’ recognise revenue based on when ‘control’ performance obligations and allocation of performance obligations and allocation of transfers to a customer transfers to a customer selling prices to the performance obligations by selling prices to the performance obligations by  judgement required by the Group as to when judgement required by the Group as to when inspecting sales invoices issued in fulfilling inspecting sales invoices issued in fulfilling  reading the contracts with customers and reading the contracts with customers and gold, silver and copper revenue should be gold, silver and copper revenue should be these contracts these contracts recognised from the Ernest Henry Mine as recognised from the Ernest Henry Mine as this required an assessment of the this required an assessment of the  We also evaluated the adequacy of the  We also evaluated the adequacy of the contractual terms and arrangements in light contractual terms and arrangements in light disclosures made in note 2 in light of the disclosures made in note 2 in light of the of the requirements of the new AASB 15 of the requirements of the new AASB 15 requirements of Australian Accounting requirements of Australian Accounting standard. standard. Standards. Standards. Independent Auditor’s Report (continued) Key audit matters 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. 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. Key audit matter Key audit matter How our audit addressed the key audit matter How our audit addressed the key audit matter Implementation of new revenue accounting policy (Refer to note 2) We performed the following procedures, amongst Implementation of new revenue accounting others: policy (Refer to note 2) We performed the following procedures, amongst others: The Group adopted a new revenue accounting policy during the year due to the mandatory introduction of AASB 15 Revenue for Contracts with Customers. The new policy is disclosed in Note 2. The Group adopted a new revenue accounting policy during the year due to the mandatory introduction of AASB 15 Revenue for Contracts with Customers. The new policy is disclosed in Note 2.  Developed an understanding of and evaluated the operating effectiveness of relevant key revenue internal controls  Developed an understanding of and evaluated the operating effectiveness of relevant key revenue internal controls  Assessed the adequacy of the methodology used  Assessed the adequacy of the methodology used The adoption of a new revenue accounting policy was The adoption of a new revenue accounting policy was a key audit matter due to the: a key audit matter due to the: by the Group for determining the extent of contract reviews required to identify AASB 15 impact by the Group for determining the extent of contract reviews required to identify AASB 15 impact      significance of revenue to understanding the financial results for users of the financial report significance of revenue to understanding the financial results for users of the financial report  Assessed whether the Group’s new accounting  Assessed whether the Group’s new accounting policies were in accordance with the requirements of AASB 15 through consideration of accounting papers on key areas of judgement prepared by the Group. policies were in accordance with the requirements of AASB 15 through consideration of accounting papers on key areas of judgement prepared by the Group.  complexity involved in applying the new AASB 15 requirements given the bespoke nature of terms and conditions in contracts with customers complexity involved in applying the new AASB 15 requirements given the bespoke nature of terms and conditions in contracts with customers  judgements required by the Group in applying the new AASB 15 requirements, such as whether contracts contain multiple performance obligations which should be accounted for separately and when to recognise revenue based on when ‘control’ transfers to a customer judgements required by the Group in applying the new AASB 15 requirements, such as whether contracts contain multiple performance obligations which should be accounted for separately and when to recognise revenue based on when ‘control’ transfers to a customer  judgement required by the Group as to when gold, silver and copper revenue should be recognised from the Ernest Henry Mine as this required an assessment of the contractual terms and arrangements in light of the requirements of the new AASB 15 standard. judgement required by the Group as to when gold, silver and copper revenue should be recognised from the Ernest Henry Mine as this required an assessment of the contractual terms and arrangements in light of the requirements of the new AASB 15 standard.  For all contracts with customers we:  For all contracts with customers we: o Developed an understanding of the key terms of the arrangement including parties, term dates, background of agreement, performance obligations and payments to be made o Developed an understanding of the key terms of the arrangement including parties, term dates, background of agreement, performance obligations and payments to be made o Considered the Group’s identification of o Considered the Group’s identification of performance obligations and allocation of selling prices to the performance obligations by reading the contracts with customers and inspecting sales invoices issued in fulfilling these contracts performance obligations and allocation of selling prices to the performance obligations by reading the contracts with customers and inspecting sales invoices issued in fulfilling these contracts  We also evaluated the adequacy of the  We also evaluated the adequacy of the disclosures made in note 2 in light of the requirements of Australian Accounting Standards. disclosures made in note 2 in light of the requirements of Australian Accounting Standards. 77 77 145 Evolution Mining Limited Annual Report 2019 Independent Auditor’s Report (continued) Key audit matter Our audit approach How our audit addressed the key audit matter Assessment of the carrying value of assets (Refer to notes 7 and 8) An audit is designed to provide reasonable assurance about whether the financial report is free from We evaluated the Group’s assessment of indicators of material misstatement. Misstatements may arise due to fraud or error. They are considered material if impairment or reversal of impairment and its individually or in aggregate, they could reasonably be expected to influence the economic decisions of conclusion not to recognise an impairment or users taken on the basis of the financial report. impairment reversal. At 30 June 2019, the Group held mine development and exploration assets of $1,672 million and property, plant and equipment of $557 million. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. In particular, we assessed the appropriateness of the impairment assessment that no internal or external indicators of impairment exist by evaluating the current year financial performance of each CGU and the budget and forecast as well as evaluating external market data. In regards to the impairment reversal for Mt Carlton, we performed the following: compared the current year US$ gold prices to the US$ gold prices when the impairment occurred compared current gold price forecasts to gold price forecasts when the impairment occurred    Audit scope Key audit matters 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.  Amongst other relevant topics, we communicated the following key audit matters to the Audit Committee: We also evaluated the adequacy of the disclosures made in the note 8 in light of the requirements of Australian Accounting Standards.  Implementation of new revenue accounting policy  Assessment of the carrying  Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.  Our audit procedures were predominantly performed at the Group’s corporate office in Sydney. We also conducted a site visit to the Cowal mine site. value of assets.  These are further described in the Key audit matters section of our report. In line with the requirements of AASB 136, the Group has assessed whether there is an indication that an asset may be impaired. This assessment considered performance against budget, adverse changes in the business or regulatory environment and changes to other key assumptions that affect cash flows and discount rates. The Group identified no indicators of impairment for any Cash Generating Unit (“CGU”).  AASB 136 also requires an assessment at each reporting date whether there is an indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. If any such indication exists, the Group shall determine whether all or part of the prior impairment loss need to be reversed. Materiality For the purpose of our audit we used overall Group materiality of $18.4 million, which represents approximately 2.5% of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA). The Group previously 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 the gold price combined with a compression of  We applied this threshold, valuations in the gold industry. together with qualitative considerations, to determine the scope of our audit and the The Group performed an assessment of whether to nature, timing and extent of reverse the previously recognised impairment losses our audit procedures and to related to Mt Carlton up to the carrying amount that evaluate the effect of would have been determined (net of amortisation) misstatements on the financial report as a whole. had no impairment loss been recognised. The assessment focused on changes in macro-economic  We chose EBITDA because, in factors, operating and financial performance for the our view, it is the benchmark period, and updates to mine plans. The Group against which the performance of the Group is anticipates continued strong performance at Mt most commonly measured. 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.  We utlised a 2.5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. The assessment of the carrying values of assets was a key audit matter due to the significant judgement involved in the determination as to whether or not an impairment charge or reversal relating to an asset or CGU is required. 146 Evolution Mining Limited Annual Report 2019 78 76 Other information Key audit matters The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2019, but does not include the Key audit matters are those matters that, in our professional judgement, were of most significance in financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other our audit of the financial report for the current period. The key audit matters were addressed in the information we obtained included the Directors' Report. We expect the remaining other information to context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do be made available to us after the date of this auditor's report. not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon. Key audit matter How our audit addressed the key audit matter In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial Implementation of new revenue accounting We performed the following procedures, amongst report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. policy others: (Refer to note 2) If, based on the work we have performed on the other information that we obtained prior to the date of  Developed an understanding of and evaluated the this auditor’s report, we conclude that there is a material misstatement of this other information, we The Group adopted a new revenue accounting policy operating effectiveness of relevant key revenue are required to report that fact. We have nothing to report in this regard. during the year due to the mandatory introduction of internal controls AASB 15 Revenue for Contracts with Customers. The When we read the other information not yet received, if we conclude that there is a material new policy is disclosed in Note 2.  Assessed the adequacy of the methodology used misstatement therein, we are required to communicate the matter to the directors and use our by the Group for determining the extent of professional judgement to determine the appropriate action to take. The adoption of a new revenue accounting policy was contract reviews required to identify AASB 15 a key audit matter due to the: impact Responsibilities of the directors for the financial report  significance of revenue to understanding the  Assessed whether the Group’s new accounting The directors of the Company are responsible for the preparation of the financial report that gives a financial results for users of the financial policies were in accordance with the requirements true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 of AASB 15 through consideration of accounting report and for such internal control as the directors determine is necessary to enable the preparation of the papers on key areas of judgement prepared by the financial report that gives a true and fair view and is free from material misstatement, whether due to complexity involved in applying the new Group.  fraud or error. AASB 15 requirements given the bespoke In preparing the financial report, the directors are responsible for assessing the ability of the Group to nature of terms and conditions in contracts  For all contracts with customers we: with customers 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 judgements required by the Group in  o Developed an understanding of the key terms of the arrangement including parties, term dates, operations, or have no realistic alternative but to do so. applying the new AASB 15 requirements, background of agreement, performance Auditor’s responsibilities for the audit of the financial report performance obligations which should be such as whether contracts contain multiple obligations and payments to be made 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 recognise revenue based on when ‘control’ o Considered the Group’s identification of performance obligations and allocation of accounted for separately and when to 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 gold, silver and copper revenue should be these contracts  judgement required by the Group as to when inspecting sales invoices issued in fulfilling reading the contracts with customers and transfers to a customer selling prices to the performance obligations by decisions of users taken on the basis of the financial report. recognised from the Ernest Henry Mine as this required an assessment of the  We also evaluated the adequacy of the A further description of our responsibilities for the audit of the financial report is located at the contractual terms and arrangements in light disclosures made in note 2 in light of the Auditing and Assurance Standards Board website at: of the requirements of the new AASB 15 standard. requirements of Australian Accounting Standards. http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report. 79 77 Independent Auditor’s Report (continued) Other information Key audit matters The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2019, but does not include the Key audit matters are those matters that, in our professional judgement, were of most significance in financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other our audit of the financial report for the current period. The key audit matters were addressed in the information we obtained included the Directors' Report. We expect the remaining other information to context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do be made available to us after the date of this auditor's report. not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon. Key audit matter How our audit addressed the key audit matter In connection with our audit of the financial report, our responsibility is to read the other information 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. We performed the following procedures, amongst others: Implementation of new revenue accounting policy (Refer to note 2) 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 The Group adopted a new revenue accounting policy are required to report that fact. We have nothing to report in this regard. during the year due to the mandatory introduction of AASB 15 Revenue for Contracts with Customers. The new policy is disclosed in Note 2.  Developed an understanding of and evaluated the operating effectiveness of relevant key revenue internal controls When we read the other information not yet received, 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.  Assessed the adequacy of the methodology used by the Group for determining the extent of contract reviews required to identify AASB 15 impact The adoption of a new revenue accounting policy was a key audit matter due to the: Responsibilities of the directors for the financial report  significance of revenue to understanding the financial results for users of 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 the 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. policies were in accordance with the requirements of AASB 15 through consideration of accounting papers on key areas of judgement prepared by the Group.  Assessed whether the Group’s new accounting  complexity involved in applying the new AASB 15 requirements given the bespoke nature of terms and conditions in contracts with customers  For all contracts with customers we:  o Developed an understanding of the key terms of the arrangement including parties, term dates, background of agreement, performance obligations and payments to be made 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. judgements required by the Group in applying the new AASB 15 requirements, such as whether contracts contain multiple Auditor’s responsibilities for the audit of the financial report performance obligations which should be accounted for separately and when to recognise revenue based on when ‘control’ transfers to a customer 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 judgement required by the Group as to when misstatement when it exists. Misstatements can arise from fraud or error and are considered material gold, silver and copper revenue should be if, individually or in the aggregate, they could reasonably be expected to influence the economic recognised from the Ernest Henry Mine as decisions of users taken on the basis of the financial report. this required an assessment of the contractual terms and arrangements in light of the requirements of the new AASB 15 standard. 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. performance obligations and allocation of selling prices to the performance obligations by reading the contracts with customers and inspecting sales invoices issued in fulfilling these contracts disclosures made in note 2 in light of the requirements of Australian Accounting Standards.  We also evaluated the adequacy of the o Considered the Group’s identification of  79 77 147 Evolution Mining Limited Annual Report 2019 Independent Auditor’s Report (continued) Report on the remuneration report Our audit approach Our opinion on the remuneration report An 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 have audited the remuneration report included in pages 87 to 100 of the directors’ report for the year ended 30 June 2019. In our opinion, the remuneration report of Evolution Mining Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. 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. 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 Materiality Audit scope Key audit matters  Amongst other relevant topics, we communicated the following key audit matters to the Audit Committee:  Implementation of new Sydney revenue accounting policy 15 August 2019  Assessment of the carrying value of assets.  These are further described in the Key audit matters section of our report.  Marc Upcroft Partner For the purpose of our audit we used overall Group materiality of $18.4 million, which represents approximately 2.5% of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA).  Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.  Our audit procedures were predominantly performed at the Group’s corporate office in Sydney. We also conducted a site visit to the Cowal mine site.  We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.  We chose EBITDA because, in our view, it is the benchmark against which the performance of the Group is most commonly measured.  We utlised a 2.5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. 148 Evolution Mining Limited Annual Report 2019 80 76 Shareholder Information Capital (as at 26 September 2019) Share Capital Ordinary shareholders 1,701,367,831 20,629 Shareholdings with less than a marketable parcel of $500 worth of ordinary shares 853 Market price A$4.62 Distribution of Fully Paid Shares (as at 26 September 2019) 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 Securities 1,571,360,923 82,671,335 22,217,627 22,174,933 2,943,013 % 92.36 4.86 1.31 1.30 0.17 1,701,367,831 100.00 Unmarketable Parcels 22,569 0.00 Substantial Shareholders (as at 26 September 2019) No. of Holders 225 3,246 2,980 8,207 5,971 20,629 853 % 1.09 15.74 14.45 39.78 28.94 100.00 4.13 Van Eck Global La Mancha Group International BV Total Twenty Largest Shareholders (as at 26 September 2019) Name HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED BNP PARIBAS NOMINEES PTY LTD BNP PARIBAS NOMS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ROXI PTY LIMITED SMARTEQUITY EIS PTY LTD LUJETA PTY LTD WARBONT NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 AMP LIFE LIMITED BNP PARIBAS NOMINEES PTY LTD Fully Paid Ordinary Shares Number 198,866,370 151,391,807 % 11.69 8.90 350,258,177 20.59 Fully Paid Ordinary Shares Current balance 724,954,306 358,143,244 277,002,241 52,498,482 30,943,790 12,711,824 6,906,143 6,213,931 5,845,000 5,522,225 5,428,171 4,428,723 4,084,372 3,921,806 3,740,492 3,509,871 Issued capital % 42.61 21.05 16.28 3.09 1.82 0.75 0.41 0.37 0.34 0.32 0.32 0.26 0.24 0.23 0.22 0.21 149 Evolution Mining Limited Annual Report 2019Shareholder Information (continued) PACIFIC CUSTODIANS PTY LIMITED NATIONAL NOMINEES LIMITED BUTTONWOOD NOMINEES PTY LTD MR KEVIN GOORJIAN & MRS JUDITH GOORJIAN Total TOTAL Balance of Register Grand TOTAL 1.5 Share Buy-Backs There is no current on-market buy-back scheme. 2 Other Information 3,336,299 2,784,715 2,572,257 2,452,112 0.20 0.16 0.15 0.14 1,517,000,004 89.16 1,517,000,004 89.16 184,367,827 10.84 1,701,367,831 100.00 Evolution Mining Limited, incorporated and domiciled in Australia, is a public listed Company limited by Shares. 150 Evolution Mining Limited Annual Report 2019 This page has been left blank intentionally 151 Evolution Mining Limited Annual Report 2019This page has been left blank intentionally 152 Evolution Mining Limited Annual Report 2019 Corporate Information ABN 74 084 669 036 Board of Directors Jacob (Jake) Klein Executive Chairman Lawrence (Lawrie) Conway Finance Director and Chief Financial Officer Thomas (Tommy) McKeith Lead Independent Director Colin (Cobb) Johnstone Non-Executive Director James (Jim) Askew Non-Executive Director Graham Freestone Non-Executive Director Andrea Hall Non-Executive Director Company Secretary Evan Elstein Registered Office Level 24, 175 Liverpool Street SYDNEY NSW 2000 Postal Address Level 24, 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 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 153 Evolution Mining Limited Annual Report 2019  Level 24, 175 Liverpool Street SYDNEY NSW 2000  +61 2 9696 2900  +61 2 9696 2901 ASX: EVN www.evolutionmining.com.au 

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