Evolution to extend life of existing global assets

The company plans to take production at its cornerstone asset, the Cowal gold mine in New South Wales, from 220,000 ounces of production a year to a sustainable 350,000 ounces of low cost gold.

Klein, presenting at Diggers & Dealers 2020, said the company had “a very clear pathway” for achieving this as it was moving towards developing an underground mine based on the discovery of an underground lode at Cowal.

It has a reserve base of around 800,000 ounces and a resource base of three million ounces, which is going to increase along with infill drilling.

“(It’s) a shovel-ready project that will create jobs in central New South Wales as a brownfield expansion. And we believe to date, without community consultation and local community support, this will have strong support from the New South Wales Government,” Klein said.

“We’ve been building the underground mine and expect to be able to be producing first ore from the mine about 12 months (off from getting) approval.”

Klein said this was part of Evolution’s strategy to extend the mine life at Cowal from 12 to 15–20 years.

Yet the development will not stop there, with Klein promising more future open pits and discoveries to be “an ongoing story” at Cowal.

In Canada, Evolution has multiplied Red Lake’s resources from 2.9 million ounces to 11 million ounces since acquiring the mine six months ago.

Klein flagged that the Upper Cambell area of 4.3 million ounces at over 10.5 grams a tonne at Red Lake would hold a significant piece of the mine’s future.

“That’s going to be the next frontier to take this asset from where we acquired it,” he added.

“We thought it was a 200,000 ounces a year operation of less than $US1000 ($1387) an ounce. … We’re now (targeting) some 300,000 to 500,000 ounces of production, and a large part of that and the momentum is going to come from developing this Upper Campbell area.”

Evolution has a permit to develop a decline into Upper Campbell and is assessing how to best develop the area.

The company also aims to transition Red Lake from a mine-constrained operation to one that is mill-constrained, according to Klein.

Congratulating the $16 billion merger between Northern Star Resources and Saracen Mineral Holdings, Klein said Evolution happily occupied the “globally relevant mid tier space.”

“It’s the area which we believe provides the best returns for shareholders. (We’ve got) around $10 billion (in) market capitalisation, 7000,000 ounces of production growing by 17 per cent over the next couple of years. And importantly, (our) cost (is) coming down, meaning we’re not only one of the lowest cost gold producers globally today, but we’re becoming even more lower cost,” he said.

“If you’re a senior, you get to the point where your share price most likely correlates to the gold price. Statistically, (it) is more difficult to find ounces that will make an impact to your value. If you’re a junior, you’re always going to be dependent on the capital market.

“And that is really why we are so happy to be in that mid-tier space. It’s what we set out to be 10 years ago.”