The Revitalisation   of the Australian Gold IndustryGold Investment Symposium – 23 October 2012Jake Klein – Executive Chai...
Disclaimer   This presentation has been prepared by Evolution Mining Limited (“Evolution Mining”) and consists of slides ...
Who we are     4th Largest ASX Listed Gold Mining CompanyCorporate InformationASX Code                                    ...
Gold                             $2,000                                      Still in a gold bull market                  ...
Central Banks Buying Gold   There has been                                            Central Bank - Net Gold Purchases  ...
Central Bank Holdings   Top 10 Central Banks                                      Top 20 Central Bank Gold Holdings    ho...
Gold ETF Holdings                                                Total ETF Gold Holdings    Total amount of gold         ...
Gold shares have underperformed         400         350                                                                   ...
What is weighing gold stocks down?     Resource Nationalism           Capital Blowouts          Failure to Meet Guidance  ...
Resource NationalismUSA: Worst ranked                                                                                     ...
Access to capital Precious Metals Mining Equity Financings                          16.0                          14.0    ...
The new normal                 • Will be more accurately pricedPolitical Risk   • Australia to be re-rated favourably   Ca...
Where do you want to be?  Last 5 years relative price performance        900        800                                   ...
Australian Gold Sector                      21,298             10,000                  9,000                              ...
Australian Gold Sector                      21,298             10,000                  9,000                              ...
Australia - Cost Inflation     Australian gold miners have                           Average Australian Cash             ...
Australian Gold Sector                                                                                 China 13%   Austra...
A Perfect Storm?Strengthening gold price?                                        Australia canDepreciating currency?      ...
Australia’s newest mid-tier producer           All assets 100% owned           Excellent exploration potential          ...
Australia’s newest mid-tier producer          Evolution created 2 November 2011                 Dec Q 2011 – 89,812oz at A...
Australia’s newest mid-tier producerFY12 Corporate Highlights – merger delivers as planned   Strong underlying profit res...
Cracow                 Consistent production – operating since 2004         Mine Type             Underground            ...
Pajingo       Field has produced 2.6Moz since 1996 – and                          Mine Type             Open pit and unde...
Edna May                 Turnaround underway; focus on reducing costs    Mine Type             Open pit                 ...
Mt Rawdon                 Consistent production                                  Mine Type             Open pit         ...
Mt Carlton   High quality new project                   Stage                 Construction                               ...
Exploration and Discovery   Five projects in multi-million ounce gold provinces         Strategic landholding = 6,800km2...
Meaningful Growth            • Aggressive exploration – funded through strong              balance sheet and cash flow    ...
Globally Competitive    Australian gold producer – alternate    investment opportunity    Operational predictability – d...
FootnotesSlide title: Central Banks Buying Gold – page 3Data are taken from the International Monetary Funds International...
Evolution Mining   ASX Code: EVNwww.evolutionmining.com.au
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Gold Investment Symposium 2012 - Jake Klein - Evolution Mining

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Gold Investment Symposium 2012 - Jake Klein - Evolution Mining

  1. 1. The Revitalisation of the Australian Gold IndustryGold Investment Symposium – 23 October 2012Jake Klein – Executive Chairman
  2. 2. Disclaimer This presentation has been prepared by Evolution Mining Limited (“Evolution Mining”) and consists of slides for a presentation concerning the company. By reviewing/attending this presentation, you acknowledge and agree the following. This presentation includes forward-looking statements. Forward-looking statements inherently involve subjective judgement and analysis and are subject to a number of risks, uncertainties, contingencies and other factors, many of which are outside the control of, and may be unknown to, Evolution Mining. As such, actual results or performance may vary materially from those expressed or implied by forward-looking statements. The types of factors that could cause such variation in actual results or performance include (without limitation) commodity prices, operational problems and general economic conditions. Given these factors, undue reliance should not be placed on forward-looking statements, which speak only as at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, Evolution Mining does not undertake any obligation to publicly update or revise any forward-looking statements contained in this presentation, including (without limitation) where Evolution Mining’s expectations change in relation to such statements and where there is a change in events, conditions or circumstances providing the basis for any such statement. No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability, fairness or correctness of the information contained in this presentation. To the maximum extent permitted by law, Evolution Mining and its related bodies corporate and affiliates, and each of their respective directors, officers, employees, agents and representatives, disclaim any liability or responsibility for loss or damage arising from or in connection with the use of the information contained in this presentation.
  3. 3. Who we are 4th Largest ASX Listed Gold Mining CompanyCorporate InformationASX Code EVNIndex S&P ASX200 Mt CarltonShares 707.9MLast Price 1 A$2.00ps Edna MayMarket Capitalisation A$1.4BDaily Turnover 2 A$3.0M CracowCash 3 A$142.0MDebt 3 A$31.5M Cracow Gold Plant, Queensland 224,177oz atForward Sales 3 A$1,573/ozMajor Shareholder Newcrest 33% Pajingo Mt Rawdon1. As at 16 Oct 20122. 3 month average as at 16 Oct 20123. As at 30 June 2012. 1
  4. 4. Gold $2,000 Still in a gold bull market $1,800 $1,600 Spot Gold Price (US$/oz) $1,400 $1,200 $1,000 $800 $600 $400 $200 $0Source: World Gold Council 2
  5. 5. Central Banks Buying Gold There has been Central Bank - Net Gold Purchases widespread buying by 20 Central Banks 15 2012 YTD purchases total 8.5Moz by 17 10 countries including: 5 Million Ounces  Turkey 3.2Moz  Russia 1.7Moz 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 H1 2012  Philippines 1.1Moz -5  Kazakhstan 0.7Moz -10  Mexico 0.6Moz -15 -20See footnotes at end of presentation -25 3
  6. 6. Central Bank Holdings Top 10 Central Banks Top 20 Central Bank Gold Holdings hold 760M ounces of 300 Denotes those Central Banks with gold worth US$1.3T <10% of Reserves held in gold 250 All Central Banks combined hold just 200 Million Ounces over 1B ounces of gold worth US$1.8T 150 Australia ranks 36th 100 with 2.6M ounces 50 0 IMF Italy Portugal Netherlands Spain Japan United States China Russia India ECB United Kingdom Taiwan Turkey France Switzerland Saudi Arabia Lebanon Germany VenezuelaSee footnotes at end of presentation 4
  7. 7. Gold ETF Holdings Total ETF Gold Holdings  Total amount of gold and Gold Price currently held by gold ETFs 90 $2,100 is about 83M ounces – or 80 $1,900 about US$150B 70 $1,700  So US$150B invested on the basis that the gold price 60 $1,500 will rise – ETFs don’t pay 50 $1,300 dividends 40 $1,100 30 $900 20 $700 10 $500Source: Macquarie Bank Total ETF Holdings (Moz) Price (US$/oz) 5
  8. 8. Gold shares have underperformed 400 350 +244% 300 250 200 +82% 150 100 50 - HUI Gold Index (rebased) Gold Price (rebased) Camp construction Investor frustration is palpableSource: World Gold Council 6
  9. 9. What is weighing gold stocks down? Resource Nationalism Capital Blowouts Failure to Meet Guidance 7
  10. 10. Resource NationalismUSA: Worst ranked Poland: Imposing newnation for mining permit steep export leviesdelays. Recentlyproposed a tax on royalty Mongolia: Draftinggains investment law to restrict foreign ownership.Guatemala: Proposal for40% state ownership ofmining projects Kyrgyzstan: Parliamentary motionVenezuela: Five mining calling for government tocompanies seeking increase stake in one ofcompensation through its largest gold minesWorld Bank’s arbitrationcourt following Philippines: Newnationalisations royalties and taxes being imposed on miningEcuador: Political companiesobstacles and windfall taxdiscourage foreign Indonesia: Proposedinvestment in mining Countries where nationalisation practises are taking place new legislation limits foreign ownership ofPeru: Construction Countries ranking in bottom 10 for political risk – Behre Dolbear survey 2012 mines to 49%, and banhalted at largest mine on export of unprocesseddue to government Argentina: New government Mali: Recent military coup South Africa: Windfall tax raw mineral products.review and social unrest rule reduces time limit to creating political uncertainty proposed + ongoing dialogue cash-in earnings from 360 to to nationalise mining industryBolivia: Nationalisation Ghana: Raise in tariffs on DRC: Plans to revise 30 days. Controls on importsof various natural mines and introduction of mining code, raise taxes have also been tightened Zambia: Increased royaltiesresources assets windfall tax halting project and increase stake in on copper and precious Brazil: Govt. seeking to have expansions mining projects metalsGuinea: New law gives minerals beneficiated in-government a 35% stake. countrythreat of nationalisation 8
  11. 11. Access to capital Precious Metals Mining Equity Financings 16.0 14.0 TSX ASX 12.0 US$ billions 10.0 8.0 6.0 4.0 2.0 - 2009 2010 2011 2012 YTD Camp construction Capital has been cheap and easySource: CIBC World Markets 9
  12. 12. The new normal • Will be more accurately pricedPolitical Risk • Australia to be re-rated favourably Capital • Key focus • Capital less freely available and more Discipline expensive • More focus on returning money to Dividends shareholders • Will be more difficult and expensive to fundConsolidation single asset companies 10
  13. 13. Where do you want to be? Last 5 years relative price performance 900 800 Mid-tier producers have 700 delivered best returns 600 Indexed 500 400 315% 300 200 143% 100 37% - Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Global Senior Producers Global Mid-tier Producers Gold Price Global Senior Producers: Barrick Gold Corp., Newmont Mining Corp., Newcrest Mining Ltd., Goldcorp Inc., AngloGold Ashanti Ltd. and Gold Fields Ltd. Global Mid-tier Producers: Evolution Mining, Semafo Inc., Randgold Resources Ltd., IAMGOLD Corp., African Barrick Gold PLC, Teranga Gold Corp., Avocet Mining PLC, Avion Gold Corp., Perseus Mining Ltd. and Resolute Mining Ltd. Global Developers: Keegan Resources Inc., Ampella Mining Ltd., Orezone Gold Corp., Banro Corp., Chalice Gold Mines Ltd. and Volta Resources Inc.Source: Credit Suisse 11
  14. 14. Australian Gold Sector 21,298 10,000 9,000 Multiple asset company (majority Australian assets) 8,000 Single asset company (majority Australian assets)Market Cap ($M) 7,000 Multiple asset company (majority foreign assets) 6,000 Single asset company (majority foreign assets) 5,000 4,000 3,000 2,000 1,000 0 OceanaGold Silver Lake/Integra Norton Unity Regis Gold Road Citigold Newcrest CGA Troy Intrepid Ampella Alacer Gryphon Azimuth Evolution Perseus Saracen Ramelius Sihayo Medusa Kingsrose Focus Resolute Nthn Star PMI Gold St Barbara Red 5 Tanami Beadell Kingsgate Gold One Endeavour As at 12 Oct 2012 12
  15. 15. Australian Gold Sector 21,298 10,000 9,000 Multiple asset company (majority Australian assets) 8,000 Single asset company (majority Australian assets)Market Cap ($M) 7,000 Multiple asset company (majority foreign assets) 6,000 Single asset company (majority foreign assets) 5,000 4,000 3,000 2,000 1,000 0 Nthn Star Regis Norton CGA Gold Road Intrepid Azimuth Citigold Newcrest Alacer Evolution OceanaGold Troy Ampella Ramelius Unity Gryphon Silver Lake/Integra Perseus Saracen PMI Gold Tanami Sihayo Medusa Kingsrose Resolute Focus Beadell Red 5 St Barbara Kingsgate Gold One Endeavour As at 12 Oct 2012 Change is required and is coming 13
  16. 16. Australia - Cost Inflation  Australian gold miners have Average Australian Cash $A/oz been price takers for skilled Operating Costs $1,000 labour and mining services  Compounded by strengthening currency $800 A$713/oz Global Gold – Cost Split $600Consumables 25% Labour 30% $400 A$332/ozDiesel 9% $200 Services 24% $0 Power 12% 2001 2003 2005 2007 2009 2011Source: Deutsche Bank, Intierra 14
  17. 17. Australian Gold Sector China 13% Australia is the second largest gold producing Australia 9% country in the world United States 8% Stable regulatory Russia 8% framework South Africa 7% High quality workforce Peru 7% Only one major gold Indonesia 4% mining company Canada 4% Ghana 3% Other 37% Source: Thomson Reuters GFMS, World Gold Council 15
  18. 18. A Perfect Storm?Strengthening gold price? Australia canDepreciating currency? regain its status as a premier goldExploration technology and innovation investment destinationVibrant mid-tier companies emerging 16
  19. 19. Australia’s newest mid-tier producer  All assets 100% owned  Excellent exploration potential  3.3Mozeq Ore Reserves  7.0Mozeq Mineral Resources  Defined growth profile Evolution FY13 Production Outlook 370koz – 410koz AuEq 17
  20. 20. Australia’s newest mid-tier producer Evolution created 2 November 2011 Dec Q 2011 – 89,812oz at A$698/oz Mar Q 2012 – 84,122oz at A$809/oz Jun Q 2012 – 97,149oz at A$762oz FY2012 total production of 346,979oz – within guidance FY2012 average cash cost of A$771/oz – below guidanceNotes:Production represents total production i.e. assumes 100% asset ownership at all dates. Ownership interest in Cracow increased from 30% to 100% on 2 November 2011, 100% of Mt Rawdonacquired 2 November 2011, and 100% of Pajingo acquired 18 October 2011.Cash costs are before royalties and after silver credits. 18
  21. 21. Australia’s newest mid-tier producerFY12 Corporate Highlights – merger delivers as planned Strong underlying profit result of A$63 million (for partial year ownership) Operations deliver record underlying EBITDA* of A$225 million Investment of A$244 million in operational predictability and growth Strong balance sheet maintained with cash of A$141.8 million EBITDA (A$k) Contribution to site EBITDA 33% 29% 20% 18% 80,000 $74M $65M 60,000 $45M $41M 40,000 20,000 0 Mt Rawdon Cracow Edna May Pajingo * Site EBITDA is before all corporate administration costs, non-recurring items and exploration expenses 19
  22. 22. Cracow  Consistent production – operating since 2004 Mine Type Underground Minerals Gold and silver  Produced 102,565oz at a cash cost of A$678/oz in FY2012 Mineralisation type Low-sulphidation epithermal  FY2013 outlook of 90,000 – 100,000oz at a Throughput 550ktpa cash cost of A$780 – A$820/oz Average grade 6g/t gold Recovery 93% 120,000 101,724oz 102,565oz 90,000-100,000oz FY2013 production 100,000 90,000 – 100,000oz outlookProduction (oz) 80,000 FY2013 cash cost A$780 – A$820/oz outlook 60,000 Mine Life 5 years 40,000 Ore Reserves 0.24Moz gold 20,000 Mineral Resources 0.77Moz gold 0 FY2011A FY2012A FY2013F Production ounces Guidance Range 20
  23. 23. Pajingo Field has produced 2.6Moz since 1996 – and Mine Type Open pit and underground excellent, demonstrable exploration upside Minerals Gold remains Mineralisation type Low-sulphidation epithermal Produced 75,747oz at a cash cost of Throughput 650ktpa A$780/oz in FY2012; a 165% increase on FY2011 Average grade 6.2g/t UG and 3.6g/t OP FY2013 outlook of 85,000 – 90,000oz at a Recovery 95% cash cost of A$730 – $780/oz FY2013 production 85,000 – 90,000oz 100,000 outlook 85,000-90,000oz FY2013 cash cost Production (oz) 80,000 75,747oz A$730 – A$780/oz outlook 60,000 Mine Life 5 years 45,889oz 40,000 Ore Reserves 0.18Moz gold 20,000 0.89Moz gold (excl. Twin Mineral Resources Hills) 0 FY2011A FY2012A FY2013F Production ounces Guidance Range 21
  24. 24. Edna May Turnaround underway; focus on reducing costs Mine Type Open pit Produced 73,264oz at a cash cost of A$949/oz Minerals Gold and silver in FY2012 Reef structures and gold Mineralisation type stockwork FY2013 outlook of 75,000 – 80,000oz at a cash cost of A$840 – A$890/oz Throughput 2.6Mtpa Average grade 1.0g/t gold Studies to increase plant throughput to over 3Mtpa via secondary crushing completed – with Recovery 90% positive results FY2013 production Edna May Crushing Circuit 75,000 – 80,000oz 100,000 outlook 75,000-80,000oz FY2013 cash costProduction (oz) 80,000 73,264oz A$840-A$890/oz 65,593oz outlook 60,000 Mine Life 9 years 40,000 Ore Reserves 0.77Moz gold 20,000 Mineral Resources 1.54Moz gold 0 FY2011A FY2012A FY2013F Production ounces Guidance Range 22
  25. 25. Mt Rawdon  Consistent production Mine Type Open pit  Produced 95,403oz at a cash cost of Minerals Gold and silver A$684/oz in FY2012 Mineralisation type Volcanic hosted  FY2013 outlook of 95,000 – 110,000oz at Throughput 3.5Mtpa a cash cost of A$600 – A$660/oz Average grade 1.0g/t gold  Higher production in FY2013 due to access to higher grade ore sources Recovery 90% 120,000 FY2013 production 95,000-110,000oz 95,000 – 110,000oz outlook 100,000 95,403ozProduction (oz) 89,636oz FY2013 cash cost A$600-A$660/oz 80,000 outlook 60,000 Mine Life 8 years 40,000 Ore Reserves 0.9Moz gold 20,000 Mineral Resources 1.2Moz gold 0 FY2011A FY2012A FY2013F Production ounces Guidance Range 23
  26. 26. Mt Carlton High quality new project Stage Construction Mine Type Open pit Key growth project – commissioning on schedule for December quarter Minerals Gold, silver and copper Mt Carlton to be the lowest cost mine in Mineralisation type High-sulphidation epithermal the portfolio in FY2014 Throughput 800,000tpa Greenfields development – discovered in Average grade V2 open pit – 3.7g/t gold eq. 2006 FY2013 ramp-up 25,000 – 30,000ozeq payable production outlook Significant exploration upside Mine Life 12 years Ore Reserves 1.2Moz gold equivalent Mineral Resources 2.2Moz gold equivalent 24 10
  27. 27. Exploration and Discovery Five projects in multi-million ounce gold provinces  Strategic landholding = 6,800km2  Within the highly prospective Yilgarn Craton (WA), Drummond and Bowen Basins (Qld) Actively pursuing regional consolidation opportunities to leverage off existing infrastructure Technical expertise, critical mass and financial capacity to deliver exploration success Exploration strategy to deliver sustainable growth, extend mine life and concurrently explore transformational targets FY2013 exploration budget of A$28 million >100,000m drilling planned 25
  28. 28. Meaningful Growth • Aggressive exploration – funded through strong balance sheet and cash flow • A$28 million committed in FY2013 • Challenging debt and equity markets • World-class understanding of Asia Pacific region • Key competitive advantage 26
  29. 29. Globally Competitive Australian gold producer – alternate investment opportunity Operational predictability – delivering to promise Financial strength Proven management team Delivering meaningful growth Right place, right time – new Australian mid-tier gold producer We Say, We Do, We Deliver 27
  30. 30. FootnotesSlide title: Central Banks Buying Gold – page 3Data are taken from the International Monetary Funds International Financial Statistics (IFS) and other sources whereapplicable. The data does not include all gold holders: other countries are known to hold gold but they do not report theirholdings publicly. Data includes holdings by IMF and BIS. The purchase of 454 tonnes of gold by China, announced in April2009 took place over a six-year period from 2003 - 2009. Assumed purchased evenly over this period. Where the World GoldCouncil knows of movements that are not reported to the IMF or misprints, changes have been made to the data.Slide title: Central Bank Holdings – page 4Data are taken from the International Monetary Funds International Financial Statistics (IFS), October 2012 edition, and othersources where applicable. IFS data are two months in arrears, so holdings are as of August 2012 for most countries, July 2012or earlier for late reporters.Total includes holdings by IMF and BIS. Total does not include all gold holders: countries which have not reported their goldholdings to the IMF are not included. The data has been adjusted by the World Gold Council where it knows of movements thatare not reported to the IMF or misprints.The percentage share held in gold of total foreign reserves, as calculated by the World Gold Council. The value of gold holdingsis calculated using the end of month London pm fix gold price published daily by the LBMA. In August the end of month goldprice was $1648.5. Data for the value of other reserves are taken from IFS, table ‘Total Reserves minus Gold’. 28
  31. 31. Evolution Mining ASX Code: EVNwww.evolutionmining.com.au

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