Commodities, Features, Gold

The growth of Evolution Mining, 10 years on

Evolution

Evolution Mining formed upon the merger of Conquest Mining and Catalpa Resources in November 2011 and quickly became a top five Australian gold producer through two significant acquisitions.

The Tier 1 miner purchased a full stake in Newcrest Mining’s established Mt Rawdon gold mine in Queensland and 70 per cent of the Cracow gold mine in QLD right off the bat, adding more than 180,000 ounces per annum of combined gold production to its portfolio.

In 2012, Evolution entered the ASX 200, before 2013 saw the company’s prospective Mt Carlton gold mine in QLD produce first concentrate.

Evolution’s constant focus on advancing its portfolio has seen the company expand interstate and overseas.

Evolution has since acquired the Cowal gold mine in New South Wales, Mungari gold mine in Western Australia, a full stake in the Ernest Henry copper-gold operation in QLD as well as the Red Chris gold mine in Ontario, Canada.

Evolution’s market capitalisation now sits above above $7 billion positioning it as the third most lucrative gold mining company in Australia, behind only Newcrest Mining and Northern Star Resources.

Speaking at Evolution’s 2021 annual general meeting (AGM), executive chairman Jake Klein reflected on the successes of the last decade.

“When I addressed you at Evolution’s first AGM in November 2011 only weeks after formation, I outlined our vision to create ‘a vibrant, growth orientated, creative gold company that will attract and retain the best people to deliver on a growing portfolio of assets and attract the attention of major investors in the gold industry’,” he said.

“Our strategy since then has been clear and consistent. We have had the courage to act countercyclically to acquire assets that upgrade the quality of our portfolio, but only where it has been accretive to you, our shareholders.”

Evolution’s strategy has not only centred around building production capacity but also developing emerging projects.

“We have produced over six million ounces of low-cost gold and tripled our gold reserves from 3.3 million ounces to 9.7 million ounces (in the 10 years), with shareholders benefiting through the payment of 17 consecutive dividends totalling $943 million since our maiden dividend in 2013.”

Evolution’s commitment to expansion and mergers and acquisitions (M&As) first materialised with the Cowal acquisition – a mine that now produces over 200,000 ounces of gold per annum.

“Our first significant transaction was to buy the Cowal operation from Barrick in 2015. Cowal was a high-quality asset in the Barrick portfolio but they had made a strategic decision to exit Australia and it was a courageous acquisition for Evolution as the price paid was greater than our market capitalisation at the time,” he said.

“We correctly identified and acted on the opportunity for Cowal to become the long life, cornerstone asset that it is today. After already delivering more than $760 million in net mine cash flow we recently announced approval of the underground mine that will extend operations until 2040. When we purchased Cowal the mine was scheduled to close in 2024.”

Complementing Evolution’s ability to acquire and grow has been the company’s skill for strategic divestment.

Evolution has offloaded a number of assets at the right times, balancing out its portfolio in the process.

“In 2016 we sold Pajingo (gold mine) to Minjar Gold, in 2017 we sold Edna May (gold mine) to Ramelius Resources, in 2020 we sold Cracow to Aeris Resources and most recently we agreed to sell Mt Carlton to Navarre Minerals which will close next month,” Klein said.

“All of these divestments have been consistent with our strategy of upgrading the quality of our portfolio given their relatively short mine lives or higher costs.”

Looking ahead, Evolution’s growth mindset is unwavering with full ownership of Ernest Henry just another reason for current shareholders to be excited.

“As I look at the portfolio today, only one asset remains from where we started in 2011 – Mt Rawdon. This makes us a very different company, but our vision and strategy has not changed,” Klein said.

“Our relentless focus on quality over quantity has resulted in Evolution generating sector-leading returns and rewarding our shareholders by paying 17 consecutive dividends.

“With four long life cornerstone assets, we are investing in growing production and extending mine life at these high-margin assets. Importantly, we have always prudently managed our balance sheet to ensure we are well capitalised to fund our growth ambitions and deliver returns to our shareholders.”

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