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
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Goal 16:
PARTNERSHIPS
FOR THE GOALS
Peace, justice and
GENDER
QUALITY
EQUALITY
EDUCATION
strong institutions
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levels and ensure equal access to justice for all
CLEAN WATER
AND SANITATION
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INDUSTRY, INNOVATION
AND INFRASTRUCTURE
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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
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AFFORDABLE AND
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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
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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)
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Mineral Resources and Ore Reserves (continued)
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Evolution Mining Limited Annual Report 2019
Mineral Resources and Ore Reserves (continued)
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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.
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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
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94
Evolution Mining Limited Annual Report 2019
.
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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: $6.1 million).
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56
Notes to the Consolidated Financial Statements (continued)EvolutionMiningLimitedNotestotheConsolidatedFinancialStatementsFortheyearended30June2019(continued)15Financialassetsandfinancialliabilities(a)EquityInvestmentsatFVOCI30June2019$'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.
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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.
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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
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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