Thank you for standing by and welcome to the Evolution Mining December 2021 Quarter Results Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, [Operator Instructions]. I would now like to hand the conference over to Mr. Martin Cummings, General Manager of Investor Relations, please go ahead.

Thank you, Darcy. Good morning and welcome to the Evolution Mining December 2021 quarterly conference call. As Darcy mentioned, my name is Martin Cummings and I'm the General Manager, Investor Relations. This morning on the call, we have Jake Klein, our Executive Chairman, Lawrie Conway, our CFO and Finance Director, and myself in our group office in Sydney. Bob Fulker our Chief Operating Officer, and Glen Masterman, our VP, Discovery & Business Development are dialing in. It has been a tumultuous couple of years. And as expected, gold's role as a safe haven during those times has been demonstrated. As the pandemic was breaking in early 2020, we saw gold rise from the low of $1500 per ounce to an all-time high around $2,070 in August that year. We started 2021 with the gulf price down from its peak, at just under U.S. $1,900 per ounce. Economies were surging as they emerged from COVID lockdowns and equity markets were printing near highs. Bitcoin was continuing to generate a lot of interest with some tapping it as a new digital gold. An exposure to any metal that ended up in a Tesla was highly sought-after. Gold couldn't catch a bid in early 2021, and the sell-off was brisk, down to $1,680 by March. Gold equities would follow, and by the end of September, the GDX index of senior gold companies had fallen about 20% year-to-date with the GDXJ Index even lower, down around 30%. But in the last three months, things have turned. Developing economies are now dealing with soaring inflation, with the Federal Reserve now indicating it will make to respond with right increases soon. The Omicron COVID variant spread quickly, leading some countries to reintroduce or extend lockdowns and restrictions. And recently, Russia and Ukraine tension has Europe on high alert. Bitcoin had an incredible journey in 2021 but has now given back most of those gains. Gold's role as a safe haven is returning and we now trade back up around US18 $20 per ounce. For Australian gold miners, the Australian dollar gold price also went on a wild ride, but we currently sit within 10% to 15% of its all-time high. These really are great prices to be selling our product at. And of course, copper had a standout year too, rising around 25%. Evolution is well placed to benefit from this with their copper production materially increasing from this month. With that, I'll now hand over to Jake to introduce the December 2021 Quarterly Report.

Thanks, Martin. Good morning, everyone. Welcome to the call. Thanks for joining us, and happy new year. Despite the industry headwinds, COVID, labor shortages, and unseasonal rainfall, our teams did extremely well to manage the impact. As planned and first articulated to you in July, we anticipate the second half of the year to be materially better than the last six months and are on track to deliver our guidance. Given the first half performance at Red Lake, we expect to be in the bottom half of the production range in between the mid and top end of the cost guidance range. Last quarter, our portfolio was significantly improved by securing 100% ownership of the iconic Ernest Henry copper-gold mine. We also concluded the sale of non-carbon to Navarre Minerals, and whilst retaining exposure to the future of the operation, the sale allows us to focus on our larger, higher-margin assets. We continue to be consistent and diligent in the implementation of our strategy of improving the quality of our portfolio and being laser-focused about putting ourselves into a position where we can generate sector leading returns on the capital we deploy. In our view, this is the holy grail in our industry and is the true measure of a gold company's performance over the long term. I visited Ernest Henry last week and left very confident that in the December quarter, we concluded what is likely to prove one of the most transformative deals in Evolution's history. It is an outstanding operation with a great team and terrific geological upside. We look forward to hosting a number of you there for a site visit in due course. The foundations for the transaction were put in place in 2016, when we secured the economic interest in the assets. And since then, have built a strong and mutually respectful relationship with Glencore that allowed us to negotiate this deal on a bilateral exclusive basis over the course of a few months last year. Our economic interest delivered $79.5 million in cash flow last quarter and now with 100% of the operation being included from 1 January, we expect its impact to be even bigger going forward. The cave extension pre -feasibility study will be a priority. And with the intersections 400 meters below the study area and still open below that, Ernest Henry has a long and very exciting future. Cowal performed extremely well and managed to deliver to plan, in spite of unprecedented rainfall and COVID interruptions. The underground project, which will grow Cowal 's production to 350 thousand ounces per annum, remains on schedule and budgets. I was also fortunate to be able to visit Red Lake in November last year. Due to COVID travel restrictions, this was my first visit since we took ownership of the asset in April 2020. Red Lake is one of the best commercial opportunities I've seen in the gold sector in my career. For the combined purchase price of U.S.$650 million being Red Lake and Battle North, we have secured a district scale tenement position with 11 million ounces of resource and significant exploration upside, seven kilometers of prospective strike with associated mining infrastructure, three mills, and $700 million of Canadian tax losses. In time, this asset will be transformed into a +350,000 ounce a year low cost producer. This is our value as credit in our sector. As you'll hear from Bob who has just returned from his third visit in the last five months, progress is being made. Last quarter, we consistently achieved over 1200 meters of development each month. And as a result of this and other improvements, we're confident of a material and sustainable improvements production in the next two quarters. We expect this higher production to drive the cost per ounce lower and I'm looking forward to visiting the operation again with Lawrie in the next few weeks. Frustratingly, Mungari remains the only asset in our portfolio that we cannot currently visit. We are fortunate to have a good team in Western Australia, have led the Kundana integration, which has gone well. And we're growing increasingly confident about the future and the potential of this operation. Mt. Rawdon was impacted by heavy rainfall and was forced to process the low grade stockpile material. Strategically, we continue to assess the potential of Mt. Rawdon be converted into a pump, hydro generator, which could be a significant contributor of renewable energy to the Southeast Queensland grid at the end of its mine life. This last quarter, the highlights for discovery team were good intersections that cue in Western Australia. And also more intriguing and exciting intersections at Red Lake, where there is plenty of open space and interesting geology to discover now the High Grade Zone. Glen and his team are also plotting and planning the next phase of drilling at Ernest Henry. Whilst we are managing industry headwinds, we should not ignore the significant commodity price tailwinds. A gold price of over AU$2500 and a copper price, which going forward will represent around 20% of our revenue of over AU$13,500 per tonne. Evolution is well-positioned to benefit from this. I will now hand over to Bob to provide some more detail on the operational performance.

Thanks, Jake. And good morning, everyone. The December quarter saw our trifts stabilize at 9.4. The hollows bringing a 35% reduction in the 12-month moving average at Mungari. The December quarter gold production is the first reported without [Indiscernible] contribution. The quarter's gold production was 148,000 ounces, with a focus in improvement in the all-in sustaining cost to $1,347 an ounce. Despite the challenges faced with above average rainfall and COVID, Cowal has a strong quarter delivering 60,000 ounces, at an all-in sustaining cost of $998 an ounce, and an operating mining cash flow, pre -capital of $80.6 million. Capital investment ramped up at Cowal, with $60 million spend on major projects this quarter. This included $24 million on the IWL and $33.5 million on the underground development. Underground development rights will ramp up in the March quarter with a second jumbo commencing in December. And the selection of the primary mining contractor is on track for the March quarter. The project remains on budget and on schedule. The automobile Stage 2 deposition has run smoothly throughout the quarter. Ernest Henry produced 21,000 ounces of gold and 4,100 ounces of copper at an all-interest earning cost of a negative $892 an ounce. The AISC compared to the September quarter is primary driven -- primarily driven by lower copper production due to lower mining planned -- lower planned mining tonnes. The net mine cash flow remained strong at $79.5 million. Another significant contribution to the portfolio. I'm pleased to say, this will be the last quarter reporting Ernest Henry as an economic interest. Integration activities are well underway and I'm excited to have the Ernest Henry team as part of the Evolution family. The preface of early study for the mine extension below the 1125 [Indiscernible] has commenced and will incorporate the recent drilling results. Indicating mineralization extends further than assumed in the concept study. Completion of the study is expected in H1 FY ‘23. Living on the [Indiscernible], over the past five months, I've been on site three times. Each time I see an improvement in step change, in performance and delivering. Well, still work in progress pleasingly, many key metrics are moving in the right direction. Red Lake produced 20,000 ounces for the quarter and although their sustaining cost is not where we need it to be, the operating mine cash flow for the quarter was a positive. And with these -- and we spent 13.9 million in sustaining capital and 36.9 million on margin capital for future production. For the past couple of quarters, I've been talking about development. Pleasingly, during the December quarter, each month was above their long-term transformation goal of 1200 meters per month. The December quarter was 21% higher than the September quarter. I expect this to continue allowing additional money fronts to be opened. Campbell Mill continues to achieve new records and approval has been granted to lift the daily throughput restriction of 2000 tonnes today for a limited trial in the second half of the financial year to support the Campbell Mill expansion. While still not where we want them today, there has been significant improvements through the quarter. Stope cycle time has improved by 25%. Stope auto time has improved by 60%. Time to drill per stope has improved by 27%, and slot drilling has halved with a [Indiscernible] implementation. Stope extraction quality focused, has delivered a 19% improvement in stope recovery, up 3% reduction in dilution, and a 15% increase in our ore mine quarter-on-quarter. And in December, the [Indiscernible] grade lifted to 4.9 g/t. Looking forward to H2, we're expecting to expecting to see a continual improvement in delivery from the underground, and the two mills operating. Notable improvements for the second half of the year, are tonnes processed will increase with the Red Lake Mill running and the Campbell Mill race extension. Grade mine [Indiscernible] is lifting as dilution reduces and plans for early ore from the CYD development continue. Increased tonnes from Cochenour, the transfer haulage locomotion -- locomotives, performance has improved by 43% last quarter, and replacement locomotives will be commissioned this quarter, further reducing the end time. And increased number of mining horizons and continuing the improvement in stock design and execution to further enhance our ore delivery and quality. Mungari is moving forward post-integration. Third quarter ore produced 34,000 ounces of gold at an All-In Sustaining Cost of $829 an ounce. And generated an operating margin cash flow pre -capital of $20.7 million. All grade process increased 34% over the last quarter as a proportion of underground ore in the fleet increased from 54% to 67%. [Indiscernible] integration is ongoing with our focus on establishing a one team approach. The sharing of resources across the field has commenced and enabling better deployment of equipment and resources to priority areas, which has been a critical as the site navigates high vacancy rates and COVID-related impacts. Mt. Rawdon produced 12,400 ounces at an all-in sustaining cost of $1,842 an ounce, and an operating money cash flow pre -capital of $11.9 million. As previously mentioned, weather significantly impacted access to the pit resulting in reduced oil movements. As a result, [Indiscernible] increased directly of it in gold grind and production. In summary, some great improvements from Red Light and Mungari throughout the quarter. The tell underground project continues to hit milestones and the official ownership of the unit tendering mine has added additional opportunities for the portfolio. Thank you for your time and I'll hand over to Glen.

Thank you, Bob and good morning, everyone. Firstly, at our Cue Joint Venture in Western Australia, we've advised our partner Musgrave Minerals that we will be taking full management and operatorship of the project, which occurred on January 1st of this year. Recent results from diamond drilling at the West Island prospect, outlined on Page 15 of this morning's report, importantly confirmed the potential for high-grade mineralization within individual loads. Drilling has also identified multiple new lode structures in the favorable dolerite host in various locations along strike. The geometric relationships between structures and dolerite, [Indiscernible] individual lodes, may be limited by the potential strike length that remained open at [Indiscernible]. The air core drilling program has been very important in further delineating the favorable dollar at host and associated golden [Indiscernible] along strike from the original West Island drilling. The results of unlock new areas with the necessary geological ingredients. The mineralization to occur up to five kilometers from West Island. One of the challenges with all of our drilling programs is long delays waiting to receive assay results in time to inform where to drill next. This is an industry-wide issue and is holding back the ability to accelerate drilling programs in the ways we would like to. At Cue, we're still waiting on results from five diamond holes and over 70 air core hols, which restricts our ability to sensibly add additional drilling resources. At Red Light two deep holes were completed as wide space step outs from the original intercept reported last quarter on the azone extension. One of the holes intersected high-grade mineralization, 200 meters away from the first -- from the first hole with the other hole drilling through the structure, however, it did not return significant mineralization. The results reported on page 12 are encouraging because they'll unlock a large area of real estate that has not been previously drilled along the extension of the azone structure. Follow-Up Drilling is currently stepping up the high-grade intercept in hole 69 to expand the potential scale of mineralization in this area. At Mungari, drilling underground at Kundana and East Kundana continues concentration on small resource extensions and classification upgrades on future mining areas adjacent to existing development. Step-out drilling into the footwall of the K2 structure from the underground at [Indiscernible] has returned further promising intersects of stack load style mineralization at Startrek. Follow-up drilling is underway to understand the significance to eliminate buying in Hole 2130 reported on Page 14 in this morning's report. The geology is similar to what would be expected on the mine K2 structure at RHP, which is where the priority Follow-Up Drilling. At Ernest Henry, we've assessed H2 Drilling priorities, which will be focused on developing all body knowledge for the PFS along with de -risking areas of the resource that require additional data support before production is scheduled. As Bob and Jack mentioned earlier, strong corporate Goldman authorization has been intersected at the 490 meter RL and remains open down plunge. With that, I will hand over to Lawrie.

Thank you, Glen and good morning, everyone. This morning, I'll provide a brief update on the financial performance for the quarter as outlined on Pages 9 and 10 of the report. For group, we produced 148,000 ounces at an all-in sustaining cost of $1,347 per ounce. This aligns with our guidance where we said the production would increase over the year, and the all-in sustaining costs would trend down from around $1,450 per ounce in the first quarter. The AISC was approximately 5% lower than the September quarter. Our focus on portfolio quality is evident, in that on a like-for-like basis that [Indiscernible] of Mt. Carlton operation reduced our all-in sustaining costs by $28 per ounce this quarter. As our production cost profile changes in the second half, the cost benefit from this divestment will improve further. Group production and cost guidance remain unchanged at 670,000 to 725,000 ounces at an all-in sustaining cost of $11.35 to $11.95 per ounce. With the performance of Red Lake in the first half, we expect to be at the bottom end of the production range in between, in the top half of the cost guidance range. In terms of cash flow, we were fairly well in line with plan, excluding the under-performance at Red Lake. We generated $203 million of operating cash flow, which is up 4.6% and 13% excluding Mt. Carlton. On a per ounce basis, our operating cash flow was up 10% quarter-on-quarter. This was against the flat gold price and lower copper revenue, where the higher copper price was offset by planned lower copper volumes at Ernest Henry. Net mine cash flow was $53 million with our capital programs reminding on plan. We invested around $34 million in sustaining capital, while major project investment increased to $114 million as projects at Cowal and Red Lake progressed. Group capital guidance remains unchanged at $150 million to $175 million for sustaining, and $440 million to $505 million for major projects. We'll see an immediate benefit of the acquisition of 100% of Ernest Henry, where our AISC will reduce materially in the second half of the year. More importantly though, our cash flow will be increasing. Based on our guidance and depending on the couple of price achieved in the second half, we expect to realize an additional $80 million to $130 million of net mine cash flow at Ernest Henry. This will be taken into consideration when determining our interim dividend. As previously announced, during the quarter, we successfully priced the U.S. $200 million U.S. private placement for nine years at very attractive pricing to partially fund the Ernest Henry acquisition. This will be drawn down next month. We ended December with $1.15 billion of cash and net debt of $450 million. And on order to gearing is around 12.6% prior to the payment for Ernest Henry in early January. We are on track to be below the 29% projected at time of announcing the acquisition, and we expect to quickly be back within our targeted gearing levels and maintain a very strong balance sheet. I'll look forward to updating you next month on the FY '22 interim financial results. Thank you for your time this morning, and Darci (ph), please open the line for questions.

Thank you. [Operator Instructions] Your first question comes from David Radclyffe from Global Mining Research. Please go ahead.

Hi. Good morning, Jake and team. So my question is on Red Lake. The commentary around mining rights have seem more optimistic today, which is great, especially with respect to, I guess the mine efficiency and dilution and opening up more mine [Indiscernible] [Indiscernible]. So just trying to think how we should think about the high development rights converting into higher mine tonnes, over the sort of this year, and if you can maybe provide some sort of quantum how that comes through revenue, next, couple of quarters. And then on Greg, how we should sort of think about those numbers over the year. Obviously, there's going to be sweetener from Campbell, but when do we -- from the operations today, how do we move closer to that reserved greater six, given they're currently sort of seeing the four?

Thanks, David. Those are good questions. I mean, I think we all going through a transformation. We've called it a three to five-year transformation at Red Lake. The last six months, it taught us a lot about the operation, we've focused on the development and we've specifically taking the decisions to -- I suppose sacrifice production over development and getting ready and setting the transformation up. And we now feel that we've bottomed and we're at a point where you're really going to see improvements in that. So the development rates are up, the improvements in mining are getting better. As Bob highlighted and he talk further to it, dilution has been reduced. We're comfortable that the models are performing. We need to open up some of these higher grade areas which are going to be happening over the next few months. So it's a journey. We're on the right path. And you are going to see material improvements to production and lowering of costs in the next quarter and following quarters. Bob, do you want to add to that?

Thanks, Jake. David, as Jake said, the expectation is that as we get the development in to the new areas, and it takes a long time to go out and open up new areas, then the mining front will open up, which will help stabilize and increase the tonnages. We have started to see an increase in tonnages last quarter through the quarter. Although it's not as high as we need it yet, but it's still -- it's growing. And areas like aviation and the like, they do take a bit of time to set up or would expect that more the next couple of quarters. We'll start to see those tonnages come in. As Jake said also on the grade, we are getting a lot of data with the reconciliations of dilution and the like, as I mentioned, all the numbers. I expect that out of the coming quarters, we will see that continue to improve. Glen, did you want to comment on the model specifically?

Sure Bob, but I think one of the things that we are starting to see, David, is that particularly with our reconciliation. So [Indiscernible] grade control and [Indiscernible] to or is it. We're starting to see an upward tick particularly on the Greg front as we improved particularly some of the mining related sectors as Bob has just described, dilution recovery. And we've improved Greg control systems. So we are starting to see that upward tick in the Greg, and particularly on a free month moving. Average, it's starting to trend into the direction where we need it to be. So we have confidence that the models are performing to plan, and we're just aligning that with the way we're mining and we're confident that we'll start to see where it needs to be over the next coming quarters.

I just conclude that David [Indiscernible] a comment around effectively [Indiscernible] for 21 months. It's only been in the last five months that we've been able to visit the operation. But when we bought the asset in April 2019, we said our three-year goal was to get to a run rate of 200,000 ounces of gold, and then a long midterm five-year horizon of 350,000 ounces a year, and we are committed to delivering that on both 36 months and 60 months targets.

Brilliant. Thanks very much. [Indiscernible]

Thank you. Your next question comes from Al Harvey, from JPMorgan. Please go ahead.

Good morning, Jake and team. Just a couple from me. Just with Ernest Henry and the study. So you've got about 18 months for the PFS. Just wondering, if this was going to take on much of the work that Glencore did or if it will be a complete re-cut incorporating that -- those further depth extensions? And I think Glen you mentioned it was going down to 480 meters and still open beyond. So where potentially could you -- would you draw the line on those depth extensions and where the study will finish up.

Yes. Just to clarify, the study will be delivered in the second half of this calendar year. So first half of FY ’23. So we have say nine months away from delivery of that. It will build on the concept study which was completed by Glencore. I suppose one of the things which we found intriguing as we've looked at the concept study, is that it was determined really on the basis of minimizing the capital expenditure, which meant that the depth extent of the concept study went down to as far as the decline could go and you could truck material up. As it wasn't constrained or limit -- determined by geology. It was more determined by how far can we develop, how deep can we develop, which is four to five-year mine life extension with the decline development and not needing to spend significant capital. So the priority was really minimizing capital expenditure and extending mine life, which constrained it to that four to five years. So our pre - feas will look at that as well, but it will also look at some longer-dated options as whether there is potential to extend it even further beyond that, which certainly from my site visits, there was a lot of optimism from the site team that that was possible.

Yup. Thanks, Jake. Maybe just quickly on Red Lake. You got the approval for the higher throughput trial. How long will that trial last and then what are the permitting steps that will follow that there?

Bob, do you want to take that question?

Yes. Thanks. The trial was actually we've permitted, for a six to eight-week period of basically unlimited throughput through the Campbell Mill. And the reason we wanted the trial was to determine how far we could actually push the mill. So really it's a short period of time that will allow us to then be able to go and actually seek the approvals for a permanent lift. At the moment, you need an engineering study. And we actually believe that we can actually get all the data we need out of this trial to better go and actually seek the permitting.

Thanks Bob. And if I can just sneak one more in just with Cowal. There was a small contribution from the underground this quarter. I thought we were going to expect that a little bit light, I'll say, is this material a one-off or can we expect underground to start contributing more and seeing that ramp up over the next three quarters?

Bob?

We're on track for the time frame that we've actually spoken a bit earlier. There will be minor contributions coming through as we develop through different zones. But it might be significant in the immediate future. But we're on track to deliver first ore as we said, I'm just trying to remember exactly the time frame. I don't remember, sorry. I'd have to go and check it, Jake?

No, I don't think there was any contribution or material contribution from the underground. It remains on track and on schedule.

Yeah. No worries. Thanks. Thanks, Jake and Bob. Cheers.

Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead

Hi, Jake and Tim. Just on Red Lake, can you just run through on why FY ‘22 guidance is still achievable be it at the low end of the range? It does imply the next few quarters we've got a very strong production run right above of 60,000 ounces, I guess at the end of January, so you should have visibility on that data, but it just seems a big lift. What is underpinning that? Do you have high grade stocks available, is it running this trial of the plant ad does that give you more production? How is guidance achievable?

Dan, thanks. We've specifically said that group guidance is achievable. We're not going to make the asset guidance at Red Lake, but we're not feeling that we want to be granular enough to say how much we can produce. Because all these steps are in place and are showing improvements. But on a group basis and I think that's what investors should look at, we are confirming that we will make our guidance range.

Right, I must have misinterpreted the comment that it was a group comment. Apologies. Just on Red Lake, maybe taking a step back. Could you maybe break out, what are the critical elements that need to be in place for the turnaround to occur. Because obviously a lot of these are not in place at current, whether that's equipment, whether that's the access to the Upper Campbell or the mill throughputs. Can you somehow pick when these pieces to the turnaround will be in place or expected to be in place and when we can expect them?

Sure, Bob, you've just recovered from jet lag from your latest trip there, so over to you.

Thanks, Jake, and thank you, Dan. As we talked about earlier, the big one to start with was getting the development to open up new areas. But post that, we've actually been working on this type of turnarounds circle and the time to initial -- from initial development through to filling of our stops, so we can keep the sequence going for the next stop which comes along right beside the previous field stops. So we've been working on longhouse drill rights. We've been working on Pikeville placement. We've been working on re-entry times, as well as stopping in turnover of the actual stops. So all those to get at is really -- is what is enabling the lift last quarter [Indiscernible] I think it is about 10% from the previous quarter. That comes around because we can actually get into the study quicker and more regularly. If we actually look at the additional mining fronts, what this enables us to do is actually spread the mining flight up so that interruption and disruption from interacting activities is limited even further, so that allows us directly turn the actual cycles quicker, because we actually don't have the same disruption factors. A big one for coming quarters is Cochenour. And last quarter, the high-speed train, or the locomotive that takes the ore from Cochenour across to [Indiscernible] that improved significantly from the previous quarter. And that is one of the main things that allow us because Cochenour has got a good turnover cycle of its [Indiscernible] Did I sort of try to answer it?

When is access coming to the Upper Campbell, for instance?

Sorry. Go ahead.

Sorry. Go ahead.

I was just going to say the Upper Campbell, so the CYD is actually accessing the Upper Campbell. And we're already down into that area with the CYD. First of all was always state [Indiscernible] 12 months after. And that still is on track. We will get mona nets of development on early. The assignment is that -- as you go through areas you'll only intercept some sort of mona all zones. But anything from a start will still be within that 12 months from first starting. Jake, do you want to add anything that?

No. Other than that you were walking around it last week and you felt positive about the outlook over there. I suppose the thing that I would add to all this commentary on Red Lake is that each time someone's been there, and particularly Bob, he's made several trips, there are no red flags with respect to our delivery of this. It's getting our operational efficiency bedded down and I still believe this is -- as I said in my commentary, this is an amazing commercial opportunity where we've acquired assets that need transformation. It's going to take some time. We've had a few hiccups in the last six months, but there are no red flags with respect to delivery and transforming this operation.

I guess Jake can comment about the old tonnages or the potential ore within that Campbell zones. Daniel I've worked 9, 11, 14 and a few other levels this time, and it's ripe for the taking. It's just the access, we've got to get there. So that's what's talking the time.

Thank you. And last question is pretty simple. Just Mungari, just the numbers on Page 4, can I get a confirmation on whether these equity numbers or do they have JV production in them. I just want to make sure I'm trading like with like here.

Lawrie?

Yes. The physicals of up the top will be a 100% of what's processed when we're talking about gold production, silver production that is our equitable share. So we're wanting to show what the actual mining and processing is been able to do.

Okay. Thank you.

Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.

Yes. Happy new year. Thanks, Nicole. Can I just follow up on Dave and Dan's questions there around Red Light? Bob, can we get the tonnes and grades the second half and do I assume that the three-year 200,000 ounces means that we're going for 50,000 ounces the quarter run right into the 12-months what we're really excited to pay?

Happy New Year, Levi. Yes, is the answer to your last question. In order to get to 200,000 ounces, we need to get to consistently doing a run rate of 50,000 ounces per quarter. We'd prefer not to kind of breakdown into tons and grade for the next six months because we just feel we want to build confidence ourselves. On a group guidance basis, we are comfortable we'll make the guidance range, but we'd prefer just to give us an another couple of months to just get comfortable that these changes that we're seeing are going to be repeatable and consistently deliverable.

Thank you. Thanks, Jake.

Thank you. Your next question comes from Alex Barclay from RBC. Please, go ahead.

Hi. First, a quick one at Cowal. It seems like sustaining capex is maybe running a bit low on an annualized basis. Is there a reason for that or should we be expecting a lift in second half?

Lawrie?

Yes, Alex, it is just basically timing more than anything. We expect that their second half will lift. The primary focus in the first half was getting the underground and the IWL projects continuing. And in the second half, you'll see some sustaining capital come through.

No problem. And a quick one on Red Lake, just to follow up on what's been asked. For the second quarter, can we confirm that there was no grade reconciliation issued?

Yeah. There was dilution, but that was improving and in the month of December, we felt very comfortable that if we addressed some of the issues that we're getting in terms of both dilution and we feel confident that the models are performing to plan.

Yeah, okay. I was talking about the model that you've mentioned to me there. Thanks very much, guys.

Thank you. Your next question comes from Matthew Frydman from Goldman Sachs. Please go ahead.

Sure. Thanks. Morning Jake and team. I don't want to live with the point on Red Light and you did kind of just touched on there Jake but I'm just wondering. You've highlighted on the coal and reported a number of ways that tonnes are improving and volumes are improving. We can say mining rights lifting, development rights lifting but obviously grades kept falling. You've been underperforming the reserve grade for a year now. So I guess in examining we'll say an over performance at some point. Is there a native raise in some of the dilution assumptions and other factors that underpin that reserve grade? You said you're comfortable with the way the model is performing at the moment, but I guess as another year of data on this asset, now I guess late to any sort of expectations or anything that we should think about at the next mineral reserves -- sorry, mineral resource or reserve update. Anything to think about in terms of that.

Yes. Thanks, Matt, I mean, a good question again. And Bob and his team have been doing a lot of work on understanding that. And again, we come to that -- we are of the view empirically that the models up, performing to plan. But Bob, maybe you can give some color as to some of the issues, and then hand over to Glen to just give some guidance on the MROR.

No, problem. The number that I quoted when I was speaking, that was the December number. So the number in the report is an average for the quarter of 3.95. And in December did lift to 4.9, which is starting to show we have some of the dilution issues that I spoke about, bring under control. It's also showing some improvements in drilling accuracy and in the lake within the stopes. So it's actually starting to improve significantly. And that's why what Jake said about we're pretty confident the models. We're working on all those things and we really need to be. I still think we've got improvements to be had, so I still think that there's further uplifts to come. But it is actually all moving in the right direction, is how it's pretty pleasing. Glen, did you want to talk from another model?

Thanks, Bob. Matt, I think just to really I guess a bit of an appraise on our MROR update which will -- coming out with mid next month. As you'll recall, when we did the -- I guess the Evolution update to bringing in this compliance sale with JORC, we consolidated the models from over 130-90 principal models. In the last 12 months we'll -- we've had new data and mining from six of those models. So they are the ones that we're going to be revising into the MROR annual update. We're not seeing really any material movement in the resource and that's from a tonnes and grade perspective and assuming that the sign cut off rates as we previously have, which is around about 3.5 grams per tonne on mineral resource basis. We do -- what the new data that we're collecting is really confirming some of the geological interpretations. There are some small changes that will be swings and runabouts in areas where we didn't have as much data support as we would've liked, but that's the basic expected. So I think all in all, we're not expecting to see any material change, sort of year-over-year in terms of the actual geological model and how it informs the resource estimate. I think from looking at this in a great amount of detail, Bob and the East Technical team and Glen and the results. We are confident that we are addressing the mining issues. And what's good mining practice? We should be able to get the grade that is in the models.

Got it. Thanks, Jake. And then thanks for the context, Glen. Just secondly, on Ernest Henry and obviously congrats to the team on closing that transaction over Christmas and the New Year. I hope they did manage to get some kind of a holiday. But just wondering in terms of you mentioned that the copper production during the quarter was a bit lower than sorry -- the lower copper production during the quarter was, I guess to plan, and potentially that's attributable to lower grades quarter-on-quarter. That asset is still mining above reserve grade for copper, in particular. Just wondering when we should be thinking about a roll-off back to reserve grades for that asset. Did we see that in the December quarter? And then I guess similar to the last question, anything to think about in terms of incorporating that reserve and resource into your next update. Now that's being reported on a 100% basis, I believe it's already a JORC standard resource, but any movements there to think about now that it's fully Evolution ownership.

Thanks, Matt. Glen, do you want to just comment on the results?

Yes. Sure, Jake. So on the results, Matt, we will be providing an update mid next month which will incorporate incremetion up until that my last year, which will be when Glencore did the last resource update. So there will update reflecting that point in time and if one incorporates all the drilling information that we've collected between May and December. So that will obviously be rolled into MROR cycle as we go ahead down this 12-month period to really incorporate all that information in addition to the new drilling that will be -- that is in the plan for this year.

And Matt, just on the production, it was a combination so in the quarter we had a shutdown, which was a planned shutdown, and it also a shutdown in the mine. So we did end up with some lower grades coming through. And as we look at the rest of the year, you do see that the average grade being mined is coming back down certainly from where the first quarter was. And the second thing that did impact on copper in this quarter were some finalizations of the previous quarter's concentrate styles. So that did have a bit of an impact on the copper pace in particular. So it's -- you'll -- what you'll see, if you look at it as a half, you're going to see that, then flow through into the second half is a pretty well a like for like. Once you price it up to a 100% obviously.

Right. Got it. Thanks, Lawrie and thanks for the comments Glen.

Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.

Good morning, all. Thank you very much for taking the questions. Quick question with regards to Red Lake, it's more of a longer-term dated question. This interview provides an update on Battle North and acquisition specifically around the milling capacity. So the part of the rationale for that was just to potentially bring that milling capacity online. Can you give us an update on the permitting processes for that? How much tensions actually being able to be spent on that given the focus on just, I guess, consolidating device-level production in the existing like operations.

Sure. Bob, over to you.

Thanks. The Battle North processing plant, it's there, it's operational if we wanted to start it. We are replacing some parts that need replacing The big issue at the plant is the TSF and we're working through that at the moment. For the next 12 odd - ish month, our capacity at Red Lake and Campbell are going to be enough. So that's what we're doing the permitting and all the work to bring it in on time when we actually need it. From the rest of Battle North, we're still doing work in the underground. We're doing some drilling that Glen have talked about. So we've done some grade control drilling over there just to grow our knowledge on the -- on your bodies as well.

Thank you. That's it for me.

Thanks, Mitch.

Your next question comes from Stuart McKinnon from The West Australian. Please go ahead.

Good day, Jake and team. I was intrigued by the mention in the quarterly about up to 15% of your workforce being effectively knocked out at Red Lake at various times because of COVID. Obviously, COVID hasn't been sort of our [Indiscernible] the community as it has in those other places, Canada and New South Wales in WI. Are you expecting that eventually you're going to have those -- have to sign challenges that your WI operations in terms of COVID and managing the workforce as you do at Red Lake and Cowal. And how much of more of an impact is that going to be given that you're already sort of short on where it because given that the WI situation with the labor market shortage just generally in the resource industry.

Yes, Stuart. That's a good question. Look, we're obviously watching it and monitoring it very closely and trying to put in the contingency plans and the learnings which we've got from managing it. And we've managed effectively at Red Lake and Cowal. But unless there is -- someone finds the cure for COVID, which does not seem to be the case because people who are triple vacs still seem to be catching the Omicron variant in New South Wales and Canada and around the world. Then you'd have to think that at some point in time, if Western Australia opens up, Omicron is going to spread through Western Australia. So we're going to do our best to put in contingency plans. But if you couple that with a skills shortage, it does put the whole mining industry in Western Australia at some risk.

Thanks. Thanks for that, Jake.

Thank you. Your next question comes from Nick Evans from The Australian. Please go ahead.

Good day, Jake and team. Just a follow-up to these question, Jake. Just in terms of New South Wales in particular, and how were you sort of thinking about the spread of Omicron in New South Wales, do you think that sort of [Indiscernible] worst of it. What are you expecting this kind of level of absentees to continue for some time and just in terms of WI, to take sort of noted frustration in your voice when you talked about not being able to have [Indiscernible]. I mean, do you think that in terms of dealing with the inevitable spread in WA, that the Western Australian government should have bitten the bullet and done it now, or do you think there was some benefit to delay in the WI?

Thanks Nick. I'll answer the second question first. Our preference would have been to have the Western Australian border opened earlier. Just seems like you're in some ways deferring the inevitable by keeping it closed as I said earlier. Unless there is a cure which is not on the horizon, it is going to be present, and it is going to have to be dealt with at some point in time. Even if it is deferred, it's not going to be eliminated. It does feel like other places, like New South Wales and Ontario and the rest of the world is learning how to manage this and certainly at our operations while it has been a big distraction. We have been able to manage through it. And we are getting more comfortable that we can manage it. It has distracted the management teams a lot. But with proper process and proper protocols, it can be managed effectively.

Thanks. I appreciate that.

Thank you. Your question comes from Jim Pollock from the Surbiton Associates. Please go ahead.

Yes. Good morning, everybody. And thanks, Jake. I think it was you who said in your introduction that the second half of the financial year would be materially better. I was just wondering where we can expect to see material improvements in which operations?

Hey, Jim, thanks. The two areas which I'd say you should look out for. the one is Red Lake. That was spoken about at length on this call. We expect to see material improvement in production and reduction in costs over there. And the second one is the acquisition of Ernest Henry will be fully incorporated into our results on a 100% basis from the 1st of January, and that will also have a material impact.

All right. Good. I wasn't going to ask -- well, I thought I'd be a little bit different and not ask any questions on Ernest Henry, but thanks for including that answer. Given the rain problems you've had in New South Wales and Queensland, just for example, in [Indiscernible], what tonnage of low grade material do you have stockpiled that you can keep the mill running on?

I think we have very significant low grade stockpiles. That's not the issue. The issue is more, we want to access the more profitable, low cost ounces in a bit.

Right. But there's -- if you had to depend on -- this is a hypothetical question. If you had to depend a 100% on stockpile material, you have many years ahead of you. I assume many years’ life left?

Yes, it is.

Right. Okay, Brian, what specifically - what's the situation at Cowal? Large stockpiles there?

Yes, very large stockpiles there as well. That's what we are treating before we got into the Stage H cutback, which we're now treating all grade materials. Very comfortable there as well.

Yes. Good. Finally, I've been asked to ask you what what's your best contact -- way of contacting you? Dr. Sandor close did attempt to -- well did try to contact you or did contact the office before Christmas but got no reply. What's the best way of getting something to you?

I think if you go through the website we will response it.

Sounds good. Okay. Fine. That's me. Thanks very much.

Thank you. Your next question comes from Anthony Barich from S&P Global. Please go ahead.

Hi, Jake. Just wondering, you mentioned early on about some of the headwinds that seems to be front of mind. Just wondering for the gold sector, how much of the [Indiscernible] have mined in the context of what's going on in the bigger picture. And are you -- I'm not expecting any crystal balling for the gold sector or anything here, but, are you overall more optimistic than not for the coming year?

Yeah, I'm very optimistic. I mean, we've re-positioned our portfolio to be profitable right through the cycle, as we've said. If you take portfolio 12 months on from the beginning of 2021 to the end, it's materially better. We did the Mungari transaction, the Kundana consolidation. We did the Ernest Henry transaction, and we did the Battle North transactions consolidate Red Lights. From our perspective, the strategy remains the same. Focus on quality over quantity, return on capital, and benefit. The gold price is over 2500 Australian dollars an ounce. I did reflect on the fact that when I started in the industry, it was $300 an ounce. So if we're not happy at $2500 an ounce, we need to find another sector to operate in. We're excited and happy about it. The Fed Reserve meeting this morning told everyone what they knew. Interest rates are going to go up. I didn't see anything that people should have been surprised about in that meeting.

My question about overall optimistic -- I was more referring to that's our macro picture. So when you refer to the U.S. Fed there, you're obviously saying that's implications are that's for the gold sector, that's obviously looking good for the coming year? Crystal ball [Indiscernible]?

I think the question which everyone's asking Jerome Powell, the [Indiscernible] Chairman, made the point this morning, that inflation is way higher than they target, and they need to start it raising interest rates and manage it and reducing the balance sheet. Yes, that's the question. Is the Fed going to be able to do that and do it in a way that is not disruptive and if I were someone who needed insurance, I'd be buying gold and gulf stocks like Evolution.

Okay thank you.

Thanks.

Thank you. There are no questions at this time. I will now hand back to Mr. Klein for closing remarks.

Thanks, everyone for participating. Appreciate it. Won't be long before you speak to us again with the release of our interim results in the middle of February. So I look forward to updating you then. And look forward to being able to hopefully, with travel restrictions reducing, to be able to take you there, [Indiscernible] and take you to Red Lake and also visit Cowal where there's lots of changes happening. Because seeing is really believing. So thanks.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.