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DIGGeRs & DeALeRs
“ We’re in a very good and favourable part of the cycle and I think that’s going to

continue, but I get nervous when deals are just being done for deals sake.

according to the mine’s interim general
manager Amber Adams. The only disrup-
tion in recent times was a short suspension
of operations in mid-August following a mu-
nicipal-led evacuation of the region due to
the threat of a nearby forest fire. Evolution
is not anticipating any impact on its planned
September quarter production forecasts.
“Employees are commenting that they’re
happy to come to work, they’re more moti-
vated and they’re excited about the future,”
Adams said. “We’re also pleased to see our
employees now start to speak up and have
open and honest conversations, and they’re
offering up a lot of improvement ideas which
has a positive impact on the operations as
a whole.
“Evolution has enabled us to look at this
operation differently than we have in the
past…all of those things have had a really
positive impact on us, even just bringing in
different ways of doing things in terms of
mining methods and the like.”
While there is plenty of both internal and
external excitement around the future of Red
Lake, Evolution is equally buoyant about the
future of Cowal following the declaration of a
maiden underground reserve of 840,000oz
in late July.
Evolution’s board immediately approved
the accelerated development of the un-
derground opportunity at Cowal where the
company has added 7 moz gold in resource
and 4.2 moz in reserve, prior to depletion, Jake Klein
since acquiring the mine from Barrick Gold
Corp in mid-2015. only acquiring projects which will add value steadied the ship at the operation and we’re
“The scale of the opportunity there is im- to the portfolio. looking to deliver to the guidance this year;
mense and we are of the view we have not “We’ve clearly differentiated ourselves we do continue to assess assets and see
finished discovering ounces on our tene- and said we’re all about margin, we’re all where they really fit into a portfolio, but I
ments,” Klein said. “We have unbelievable about cash flow, we’re all about dividends,” think we need to look at what the drilling at
organic growth opportunities in our portfo- he said. Crush Creek delivers before making any
lio.” “I think the quality of our portfolio is best decisions on that asset.”
Evolution delivered its 15th consecutive in class and you can see that from the mar- With the gold price at record levels in
dividend to shareholders last month – a gins and cash flow generation we’re get- Australian dollar terms, some commenta-
fully franked dividend of 9c/share for a to- ting. We’ve said no to a lot of things, we’ve tors are speculating about consolidation
tal distribution of $153.4 million – despite kicked a lot of tyres and we’re happy to do among some of the high-end producers.
its group production of 746,463oz for the that because this is a business about qual- Klein, who has always maintained a con-
last financial year being slightly short of its ity, it’s about margin and not about volume.” trarian approach to business, remains
FY2019 output. Records were set for oper- The only downside to Evolution’s other- sceptical of the benefits of such corporate
ating mine cash flow (up 45% to $1.12 bil- wise stellar FY2019 – which included the activity.
lion), net mine cash flow (up 48% to $736 sale of its Cracow gold mine in Queensland “We’re in a very good and favourable part
million) and group free cash flow (up 86% to to Aeris Resources Ltd for $125 million – of the cycle and I think that’s going to con-
$541.8 million). was recording a $101 million post-tax im- tinue, but I get nervous when deals are just
The company also posted record statu- pairment at Mt Carlton due to a downgrade being done for deals sake,” Klein said.
tory net profit after tax (up 38% to $301.6 in its resource and reserve base. “If there’s logical and value accretion and
million), underlying net profit after tax (up Klein remains confident there is still a fu- both sets of shareholders are going to do
86% to $405.4 million) and EBITDA (up ture for the foundation asset in Evolution’s well out of it, I’m all in favour. But in the past,
41% to $1.03 billion). portfolio despite an expected reduced out- generally the sellers have done better than
Klein said one of the keys to his com- put of 47,500-52,500oz in FY2021. the buyers in a rising gold price environ-
pany’s success over almost a decade was “We’re doing some really interesting drill- ment, and that concerns me.”
not once having a focus on the number of ing at Crush Creek which is 30km away
ounces produced from its operations and from Mt Carlton,” he said. “The team have – Michael Washbourne

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