Thank you for standing by and welcome to the Evolution Mining 2019 Half Year Results Teleconference. At this time all participants are in listen-only mode. [Operator Instructions] Please note that today's conference is being recorded 13th, February, 2019. I would now like to hand the conference over to your host today Mr. Jake Klein, Executive Chairman. Thank you sir, please go ahead.

Thanks Shawn [ph]. Good morning everyone, I know it's a busy morning so we'll keep it short and short. Today we'll be talking to financial results presentation that released on the ASX platform earlier this morning. I'm going to make some brief introductory comments before handing it over to our Finance Director and CFO, Lawrie Conway who will take you through the detail of the results. At Evolution we continue to demonstrate that gold mining can be a highly profitable cash generative, dividend paying business. Whilst we recognize that operation [indiscernible] this was a week half and we need to ensure we remain cost and margin focused. This morning, we have cleared out 12th consecutive dividend of 3.5 cents per share. This one is again fully franked it means that through dividends that we have paid over $350 million to shareholders. At the same time over the past 3.5 years we have repaid over $700 million in debt and built our cash balance to over $300 million. As we're demonstrating gold mining can be a very cash generative business. At the same time, we've also been able to increase our portfolio mine life based earlier in reserve which I calculated AED1,350 an ounce to approximately 10 years. Our business is in great shape and with the strongest second half plan and the gold price currently at $150 above the price we achieved in the first half. We anticipate the second half results to be materially better than the first half. I'll now turn to Slide 4, whilst the numbers in cash generation at Evolution tell a great story. Over the past couple of weeks I think there's been an even better demonstration of what makes Evolution a special company. As you're all aware, [indiscernible] Queensland has experienced unprecedented rainfall. Our team at [indiscernible] responded outstandingly both in keeping our people safe and securing site infrastructure and equipment allowing the operation to safely start up yesterday after only losing about a week of production. I was very proud that not only was our team focused on securing the site, but last weekend around 20 Evolution employees from across our company volunteer to help those colleagues whose properties have been damaged in the storm. [Indiscernible] similarly admirable job at managing [indiscernible] and has also had minimal interruptions. We did not expect these weather events to have an impact on our production or cost guidance. With that I'll hand it over to Lawrie.

Thank you Jake and good morning everyone. The highlights on the Slide 5, shows the key financial metrics for the half year. While our profit before and after tax is decreased $30 million to $43 million or around 25% compared to the prior period. There are two key things which I want to highlight. Firstly, the reduction in profit has been driven by items which are non-cash related and secondly we're still generating significant levels of operating cash with further upside available given the current spot price of gold around the AUD1,850 per ounce mark. I'll go through the drivers to the change in profit and cost in the next couple of slides, but the operating cash flow level of just under $400 million is a testament to the cash generative portfolio of assets we have established over the last few years. This cash is being generated at high margins with our EBITDA margin at 48%. We continue to reduce our gearing which is now negligible at 1.4% which means we're heading to net cash in the next couple of months. The reward for shareholders from this performance is an interim dividend of 3.5 cents per share fully franked. This is in line with the last interim dividend and is based on our dividend policy of 50% of net earnings for a year. I will note that it is higher than the half year profit, but our policy is based on the full year and in assessing the interim dividend we do look at projections for the full year. Turning to Slide 6 to briefly look at the movements in the underlying profit. Our profit was $92 million which is down by about $32 million. As I mentioned earlier, the decrease in profit was due to the impact of non-cash items which as shown on this slide equated to $32 million. The main items in the non-cash area included utilization of all stock piles amount brought in June period at $11.5 million. Our depreciation and amortization expense of $10 million driven by lower reserve ounces at Mount Rawdon offset partially by lower depreciation at [indiscernible] and Mount Carlton. And lower capitalization of mine cost of $10.5 million in the current period predominantly by the completion of the light field cutback at Mungari. The cash items reduced profits $11.3 million with a higher achieved gold price offset by lower silver and copper revenue and higher operating cost. Our cuts on the operating cost drivers in the next slide. For production and cost guidance for the full year is unchanged which indicates a bit [ph] performance in the second half of the year. At the current spot gold price sustained then we're well positioned to achieve a materially [indiscernible] profit in the second half of financial year. Turning to Slide 7 and the operating cost. Mine operating cost increased from $331 million to $377 million. The December 2017 operating cost exclude at the May cost to enable for like-for-like comparison. In terms of mine cash cost, the increase was $25 million or around 7.5% caused by the both the mix of consumption and price changes. Year-to-date our operating costs have essentially been tracking to blank. Our labor cost increased by $5 million due to an average 3% rate increase and the filling of vacant and new roles. Power costs to all locations were higher due to new contracts commencing in January 2018 locking in prices for our three year period. The group average increase was around 40% with the biggest increase being at Cowal where rates were up almost 80%. Diesel cost were slightly higher due to a higher oil price, the current price is below what we incurred in both December 2018 and 2017 periods. Importantly, our cost guidance for the year remains unchanged and we have many actions in place across the business to sustain or lower a unit cost over the longer term. Some of these will result in near term benefits such as the float tails leach plant at Cowal and accessing Stage 4 ore at Mount Rawdon in the coming months. Moving to Slide 8, during the first half of the year we did see our EBITDA margin slipped slightly to 48% against the 3% rise in the gold price. This was due to the increase in operating cost but overall our EBITDA margin is very healthy. At a site level, we are seeing rates of between 30% and 65% which is very pleasing but we remain disciplined to hold or increase these margins excluding the impact of a higher gold price. On an operating cash flow per ounce basis, we're delivering more than AUD1,000 per ounce which is more than sufficient to fund our strategy. Importantly, the improvement in our EBITDA and operating cash flow per ounce margins has outstripped the increase in the gold price. Since FY 2014 our margins are up 45% and AUD435 per ounce respectively against a gold price increase around 18% or AUD253 per ounce. The improvement in the [indiscernible] portfolio is clearly demonstrated in the slide and that the assets are generating a lot of cash and doing it at high margins. Overlying this with spot gold price which AUD155 per ounce higher than the achieved price in the first half of the year, these margins and cash generation levels are expected to increase further going forward. Looking at Slide 9 and our investment in Discovery. We've said that sustained investment is required to fill the pipeline for mine life extensions and growing our resource base. We've increased our reserve life to around 10 years. In the first half of the year, we invested $30 million with over 160 kilometers of drilling. The investment was directed to Cowal and Mungari as well as resource definition drilling at Cracow. We're seeing continued success at Scottish Archer at Mungari and GRE46 and Dalwhinnie at Cowal, where the mining contract has been awarded and the decline will commence shortly. In the greenfields area we're ramping up our activity at Drummond and Connors Arc in Queensland as part of building out our pipeline of projects. Now to Slide 10, which outlines the group cash flow, $111 million before dividends and servicing of debt is very healthy and provides multiple options to best direct the funds in execution our strategy. We invested an additional $32 million in capital projects across the business with a total investment of over $150 million in the period, with the majority of the funds being directed to Cowal. We paid an additional $29 million in tax payments following the utilization of the remaining unrestricted tax losses in the December, 2017 period and commenced instalment payments for the 2019 tax year in the current period. It should be noted that all this available cash flow we paid out an additional $17 million in dividend payments compared to the prior period. Turning to Slide 11, flexibility of the balance sheet improved again during the period with a net bank debt reduced to just over $40 million and gearing now at 1.4%. As outlined last September at our Investor Day, we have no intentions of building a large net cash balance in the absence of internal or external investment opportunities we will look to increase returns to our shareholders. During the period we took advantage of the elevated Australian Dollar gold price to hedge further 300,000 ounces of production at an average price of AUD18.71 per ounce for quarterly deliveries between July 2020 and June 2023. As at December 2018 we have 475,000 ounces hedged at an average price at AUD18.16 per ounce with the profile shown on the bottom right hand chart. The additional hedging provides support to the balance sheet during a period major capital investment while leaving the majority of our production unhedged. Moving to Slide 12, we're pleased to have declared our fully franked interim dividend of 3.5 cents per share. This is in line with our 2018 interim dividend and we've paid on the 29th March. The interim dividend will be our 12th consecutive dividend delivering over $350 million to shareholders. The dividend is based on a payout of 50% of net earnings for the full year, for the interim dividend we have considered the plan full year performance including the current high spot gold price. To further reinforce my earlier point on how we use our balance sheet, over the previous few years the focus has been on deleveraging from acquisition debt, whereas now we're increasing our return to shareholders. In the last two years, we've paid nearly $240 million in dividends and $135 million of debt as compared to the previous three years where repaid $774 million of debt and $106 million of dividends. Turning to Slide 13, a critical component of the business strategy is that investments are repaid and that high rates of returned are generated. This chart shows that returns each of our assets have generated under our ownership. The range of returns are between 13% to 25% with our long life assets generating the higher returns. While the returns may drop during periods of heavy investments for future mine life, the expectations is that the assets so fund these investments. For a couple of our assets, Mount Carlton and Cracow a pleasing aspect is that they have already repaid all of their invested capital. Turning to Slide 14, in conclusion. The financial position of the business is excellent and one which is fully able to support the company's strategy. This is been from the continued focus to improve the quality of the portfolio to generate superior returns for our shareholders. We're doing that through sustaining a sector leading low cost position, where our longer life assets deliver higher margins and rates of returns. We have highly cash generative assets and will benefit further from the current gold price. We ensure the balance sheet has the financial capacity to be able to act to an investment opportunities internal or external arise, while at the same time being able to reward our shareholders through consistent dividends and capital growth. Thank you for your time this morning and with that, Shawn [ph] I will now ask you to open the line to questions.

[Operator Instructions] We'll now take the first question from Paul Cartney from the [technical difficulty]. Your line is now open, please go ahead.

Good morning, couple of things from me. I was just so looking at the way the margins have come down and so on in this results, what are the analyst talk at the moment is around. Where the gold stocks are fully valued now. Notwithstanding what you said about the guidance for the second half, are we pretty close to seeing the best that you guys have to offer? Where sort of the upside from here and how do you get people excited about the different proposition at these kind of levels with things appearing to come pretty close to peaking?

Good morning, Paul. Thanks for the question. We don't think this is as good as it gets, we think there's good upside in our portfolio. we think the exploration results we generation at Cowal provide really momentum to discovering significantly more ounces over there and changing recalibrating that asset, it currently is a long life 240,000 ounce a year asset, but aspirationally [ph] and we're still drilling very hard over there and we've committed to this decline. We think longer term and this is not yet a commitment but longer term, we aspired producing over 300,000 ounces of that operation at very low cost. 48% margins across our portfolio is sustainable as indicated by our guidance, our three year guidance which we released on the Investor Day last year. We're still one of the lowest cost gold producers in the world. We think quality of portfolio and focus on profitability and margin is critically important and at this point in time, we are one of the highest margin gold producers in the world and see that to be sustainable going forward.

And just on the current highs in the gold price there. How do you weigh up the alternatives of staying the existing cost operationally or versus using the current pricing environment to treat mine pertaining lower grade material, that otherwise [indiscernible] that kind of thing, how do you strike that balance?

We're very focused on remaining with our mine plans and we've calculate our reserves at AUD1,350 ounce which would be amongst the most conservative in the sector. So in terms, when prices are higher we need to deliver that margin and that profit to shareholders and capture that in the bank, so we won't change our mine plans based on the gold price.

Is there any push from investors too, so that credit [indiscernible] certainly going down that price, haven't they?

We haven't heard anything from investors that they want us to adjust our approach.

No worries, thanks.

[Operator Instructions] Your next question comes from the line of Daniel Morgan from UBS. Your line is now open. Please go ahead.

Just wondering, if there's anything to say you have on the Mungari exploration I've heard with Frog's leg, is it just a little bit too early and we expect that on next quarter, so that would be my first question.

Yes the Banjo decline which is drilling the Frog's leg deep is occurring at the moment, no results in yet really to report so I think the quarterly results will have some of those drill results in it.

Thank you and the my next question is, I guess more strategic and we've had some huge mega-merger [indiscernible] in this space which I guess is an expectation may lead to divestments. Just wondering, if you can speak to any expectations on when you think that might occur. I imagine they're one bit down acquisitions first, when do you think that M&A activity might kick off and what might you be interested in?

Daniel, I can't comment as to the speed at which they're going to dig these assets. They've certainly made it public and reading into you that Mark Presto [ph] gave yesterday. He certainly seems to be moving at rapid speed. So I would say in the next 12 months that's likely to occur. We've said previously, publicly that we're interested in those divestments particularly or specifically in Australia and North America including Canada and we remain of the view that those could present opportunities for us. We've also have said and just to repeat it, we need acquisitions to improve the quality of the portfolio and be accretive to our shareholders and that still the lanes, we're going to look at the things dug at.

And then just a last follow-up, if I may. So if it's, if Frog Leg [ph] is going to be 12 months before these divestments might be made and processes run. You're generating a lot of cash which is clear and you talked about a desire not to build cash on the balance sheet necessarily, but to increase returns to shareholders. Is there a 12-month window where we're going to see good cash returns or might you hold a little bit back given that we, there might be a lot of assets coming down the pipeline.

I think that's something that we'll review that when the final results are out and when we're at it, at that point. I said within the next 12 months it maybe earlier, so I think it's really a watching brief on that.

Okay, thanks very much.

Your next question comes from the line of Gill M Barry [ph] from BMS [ph]. Your line is now open, please go ahead.

I just have a question, we do have a question regarding the reserve life. Is it a norm to have the reserve life for the size of your company. Relative to other companies. I presume you probably bought [indiscernible] align to further extend the reserve life and is the reserve life at all impacted by the gold price. I mean assuming that it has to go hugely tie up with that impact on the reserve life of the underlying mines that you currently own.

Thanks Gill. We calculate our reserves at a price of AUD1,350 an ounce and that reflects the fact that we accept that we operate in a cyclical sector, when the gold price is AUD1,850 as it is today we need to be making super returns when the gold price is our long-term price assumptions, which we base investment decisions on, we need to be making appropriate returns on our capital and when the gold price is lower than that, we still need to be making money at any price above AUD1,350 an ounce. So our approach is more to focus on getting those super returns when the price is high rather than extending our mine life during those periods.

Okay, thank you.

There are no questions at this time. I will now hand back to the speakers. We do have one more questions from Darren Gray from Sydney Morning Herald. Your line is now open. Please go ahead.

I would like you talk a little bit about the non-cash flow items that effected the profit result for the half, just any more detail that you can to explain things would help?

That sounds like a good one, I'll turn that over to Lawrie Conway.

Yes, Darren I mean what we're looking at is a comparative to the half year to December 2017 versus December 2018 and so essentially when we look at it, in this half year particularly at Mount Rawdon we were [indiscernible] down on stock piles due to where we're mining in the pit and we won't be able we're going back to accessing the Stage 4 ore later this financial year. So essentially in drawing down the stock piles which have already been mined, there is non-cash impact that we bring the balance sheet cost of that inventory into the P&L and that was about $11.5 million. And then in terms of our depreciation and amortization it's a same thing as we then issued in April, 2018 our updated mineral resources and oil resource statement. The reserves that Mount Rawdon reduced which means then we have to increase our depreciation at Mount Rawdon, so we had $20 million in round numbers in the first half of 2018 versus $30 million something at Mount Rawdon this year and yet we had lower depreciation at Cracow and Mount Carlton so again it's writing off the existing asset base over a period of time. And the last one was, really as where Mungari was in its mine plan in 2017 December half, they were mining a lot of capital ways to access to ore whereas in the December 2018 half they were actually mining that ore, so the cost before traded as capital in the prior period but operating in this period, so it doesn't actually have a cash impact on our business because we were still mining in both of those periods.

Thanks Lawrie, so is the time [ph] or the impact of those non-cash items, would you consider it now to be in the rear view mirror? Or could you repeat of that in the half that's now underway?

No, like for example at Mount Rawdon with that depreciation the second half of this year will be very similar to the second half last year, so no, no impact there. The stock piles at Mount Rawdon in the second half of this year that's for three or four months of the second half will be accessing ore, rather than drawing down the stock piles so that won't be an ongoing one and the same thing at Mungari. In the second half of this year they'll be mining ore and in the second half of last year, they were mining less waste than they did in the first half so ought to be minor impact, but not as material as what we saw in the first half.

Sure. One for Jake, with all the considerations you guys have talked about this morning, have you had a very good half or good half or bumpy half. What kind of language would you use to describe the half?

I'd say we are at the half that we anticipated and we've always said second half would be better than the first half. We are on track to deliver that and very comfortable with the fact that, AUD928, an ounce we need a better half to meet the top end of our guidance which is AUD900 but remain one of the lowest cost gold producers in the world and that's the position which we proudly hold and want to return.

And last question and then I'll let you go. Do you think the stronger gold prices is going to be sustained through the half? Is the market set up to do that?

I don't know, I guess on a personal level I would say that there are plenty of reasons to be positive, the gold price at the moment. From a business perspective at Evolution, we would say that at AUD1,850 an ounce that's a fantastic gold price, it's amongst. Well it's near the high Aussie Dollar gold price and we need to be driving our business high up and remain disciplined. I think that to me is the biggest challenge for us going forward as a company that I want us to remain disciplined. I want us to remain margin and profit focused irrespective of what the gold price is.

Thank you.

Your next question comes from the line of Paul [indiscernible] from RBC [ph]. Your line is now open, please go ahead.

Thanks guys. Great chart on Slide 8 of the deck, it's showing your margin overtime moving from sort of 33% EBITDA to 53%, it's no surprise this year for us, it's been a great performance in that period of time. Obviously the gold price is contributed but I would assume that the addition Ernest Henry and your work around cost has also pushed that margin higher, but clearly the dip back to 48% this half is a break in that trend and absolutely that is still a fantastic margin. Just wondering if you could, I guess I'm sure we can do the math very breakdown the decompose the reason for that roll over this period, despite the fact that the gold prices continue to trend higher and then I guess you already answered the question when Paul [indiscernible] right at the very start about the longer term margins, but do you see yourselves being able to get back to that kind of margin given I think Lawrie you spoke at the strategy day about grades tending back towards reserve grades overtime and obviously without the gold price moving any high. Thanks.

Thanks Paul. Look the drop in margin if you look at gold price was up 3% our operating cost were up 7.5%, so that in rough numbers will give you the movement between the 53 and 48. I think a couple of things to point out the first half all-in sustaining cost of 9.28 full year guidance being 900 or below since the second half of the year, you got about $50 an ounce or higher reduction over the first half of the year and if we look at between operating cost and capital, you'd say you got somewhere around 2% to 3% operating margin improvement coming out in the second half of the year, so that's where we are if we deliver to our plan, that should push us back up over 50% and then you'd see what the gold price does in the second half of the year. I think and on the operating cost slide which talks about the programs we got underway looking at what we can do to improve our position. Second half of the year, we see Float Tails Leach come on board and get up to full capacity which gives you a 4% to 6% improvement and recoveries and which is a pure flow through our EBITDA. So if we finish the year as we're guiding and you look at our three-year outlook, next year and the year after are pretty similar. So there's everything that gives us an indication that the margin should be getting back. Maybe not to 53, but not far often if everything goes to plan, so I wouldn't say it is as good as it gets, but yes as the grades have come off in the first half and we've had to process some lower grade material at Mount Rawdon and like our margins dipped and some of our operating costs have gone up and we're looking at ways to offset that.

Okay, thanks a lot.

There are no further questions at this time. I will now hand back to the speakers.

Thanks Shawn [ph] and thanks everyone for listening in. we're looking forward to reporting our first quarterly results in April. Thanks for joining us.

That does conclude our teleconference for today. Thank you for participating. You may all disconnect.