Evolution Mining Limited (EVN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Evolution Mining Limited Full Year 2024 Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Jake Klein, Executive Chair. Please go ahead.

Thanks, Kaley. Good morning, everyone, and thank you all for joining us. We do really appreciate your interest in our company. I will make some very brief introductory comments, which will be starting on Slide 3, which we've titled Positioned for success before handing over to Lawrie and Barrie to take you through our FY '24 annual results and our FY '25 guidance. Any set of results that headline, record net profits, record underlying EBITDA, record earnings per share and a more than doubling of our final dividend are a pleasure to present. I think this is the 13th set of annual results for the company that we are presenting, and I honestly feel that Evolution has never been better positioned to benefit from the very favorable markets that we find ourselves in. Gold and copper prices are very high. And as I articulated in my Diggers and Dealers Presentation last week, I believe there is very good reason to believe they will go even higher. The acquisition of Northparkes in December last year has exceeded our expectations in almost every aspect in the first 7 months of our ownership, and it adds to the outstanding portfolio of gold and copper we have assembled. Our balance sheet is strong, and we are particularly pleased that our investment-grade rating was reaffirmed last month. We continue our track record of being a dividend payer with our 23rd consecutive dividend declared today, noting that as our cash generation increases, as planned, so will our dividends. Our team is well positioned and in place. The introduction recently are Matt O'Neill, as Chief Operating Officer; Nancy Guay, Chief Technical Officer mean that all of our key leadership positions are filled with highly talented individuals. And finally, we know all eyes are on us to deliver FY '25 guidance. I want to assure you, we are absolutely focused on delivery will not be distracted and are looking forward to the challenge. With that, I'll hand over to Lawrie.

Thank you, Jake, and good morning, everyone. It's a pleasure to present the FY '24 results and where we are heading into FY '25. The past year threw a number of challenges at us and the way the team has responded to deliver right across the business is a credit to the all involved. Even in the past week, where we experienced a cyber incident, our team has been able to respond quickly to contain the incident, while protecting the health, safety and privacy of our people together with the company's systems and data. We do not anticipate this incident to have any material impact on operations. As Jake mentioned, we've laid the foundations for more consistent delivery in FY '25. And with the outlook on metal prices, this is [ undergoing ] to reward our shareholders further. As shown on Slide 4, there were many highlights and records during the past year. In the sustainability area, we saw improvement in all key metrics, which I will touch on soon. Our low-cost production of 717,000 ounces at a sector-leading all-in sustaining cost of $1,477 per ounce delivered over $1.5 billion and $580 million of operational and net mine cash flow, respectively. The operational performance resulted in a record underlying net profit, which was up 135% to $482 million. There were multiple financial records achieved in the year and Barrie will be taking us through these very shortly. We said last June that the cash generation would build through the year, and we delivered that. We're committed to deleverage the balance sheet even while investing in our organic projects, which we also delivered. Our gearing is now down to 25% and expected to move below our next target range of 20%. We also said last year, we would start to see improved returns for our shareholders. Our full year dividend is up 75% to $0.07 per share. As we continue to deleverage the balance sheet and maintain a disciplined approach to our capital investment, we expect to see further improvements in our dividends. Turning to Slide 5 and our sustainability performance. To enable us to operate safely and effectively, sustainability has to be integrated in everything we do. We have seen our total recordable injury frequency reduced by 13% in the last year and 28% in the last 2 years. At the same time, the team has done a great job in managing all the material and critical risks that can have a far greater impact on our business. We continue to make great progress on our commitment to reducing our carbon footprint with a 14.3% reduction in emissions, as at the end of FY '24 against the target of 30% reduction by 2030. So with 6 years to go, we are already nearly halfway to the target. We also focus heavily on leaving lasting legacies in the communities in which we operate. I've highlighted one here because it has had a profound impact not only on our team at Mungari, but the Kalgoorlie community. Last year, we committed funding to support the development of housing for women and children affected by domestic violence or homelessness. This is up and running now. And what leaves me a little sad is that the number of people needing to use the facility has increased, which correlates to increased abuse. We remain committed to the cause providing further funding in FY '25, as well as continuing to advocate against domestic violence. Moving into FY '25 and Slide 6. Having made the foundations in FY '24 for high margin, high cash generation, we expect this to continue in FY '25. Our production guidance is 710,000 ounces to 780,000 ounces of gold and 70,000 tonnes to 80,000 tonnes of copper. Our all-in sustaining costs will continue to be one of the lowest in the sector at $1,475 per ounce to $1,575 per ounce. This cost guidance is for our continuing operations, as it reflects the position going forward, where Mt Rawdon will cease operations this year. Further details of our guidance are provided in the appendix of the presentation and our release. The guidance is fully aligned to all information that we have publicly released in the last few months. The guidance for FY '25 will deliver high cash flows, as evidenced on the chart on the right of this slide. These charts, I think, are the most important part of today's presentation. Assuming the midpoint of guidance and a range of metal prices from what we achieved in FY '24 to current spot prices, the operating and mine cash flow before major capital can be significantly higher, up to $1.8 million and $1.6 million, respectively. This means, we will continue to deleverage the balance sheet, be able to invest in our organic major projects in the same disciplined approach we have for the past few years and increase our dividends, all at the same time. The cash flow we are now generating out of the portfolio will continue to provide us with great flexibility in these 3 areas of capital management. Lastly, on Slide 7 for a little bit more detail on FY '25. In terms of production, which I reiterate aligns to all previously released information, we will have a full year of Northparkes, but with a higher proportion of gold production due to the mining of the E31 open pits. The planned major shaft maintenance was successfully completed in July, which now sets up the shaft for the current life of mine. Cowal Underground will ramp up to 2 million tonnes during the year. The margin on these ounces will continue to improve, as the operation ramps up to its full production rate of 2.4 million tonnes in FY '26. Red Lake is expected to have higher production, building on the consistency established over the past 3 months to 6 months. Importantly, our planned metal price assumptions -- at our planned metal price assumptions, the operation will be cash positive this year. As in prior years, the 2 largest operations in Cowal and Ernest Henry will complete their planned major shutdowns in August and March. As outlined during the Cowal site visit, the March shutdown is a longer shutdown at 28 days, as we refurbish the mill for the next phase of mine life. Thus, the March quarter will be our lowest production quarter. In terms of major capital, we maintained the discipline of only investing in the projects when they are needed. We have not approved any new major projects in execution for FY '25. The 4.2 project at Mungari remains on schedule and budget, as does the project to establish the new mining centers for the increased tonnage required post expansion. Studies at Ernest Henry and Northparkes will continue as planned this year. While at Red Lake, as previously announced, we will be consolidating to 1 tailings facility over the next 18 months to both plants being utilized at near capacity going forward. On our cost and revenue sensitivities to cash flow and all-in sustaining costs, they are well known, and this allows us to focus on the right things to ensure that we maintain a low-cost position. I'll now hand over to Barrie to go through the financial results.

Thank you, Lawrie, and good morning, everyone. It's so exciting to present a set of results this morning, of which many are all-time records for Evolution. Turning to Slide 8, the record financial performance. Underlying profit after tax, a record performance is up 135% on last year at $482 million. Underlying EBITDA of just over $1.5 billion is another record and up 67% on last year, driven by higher production, higher metal prices and good cost control. After investing $740 million into our long-life, high-margin business and paying $80 million in dividends during the year, gearing reduced from 33% to 25%. We are delivering on our commitment to deleverage the balance sheet, while continuing to invest in the business and pay dividends. On Slide 9 now, delivering improved margins. In FY '24, the EBITDA margin increased materially from 38% to 47%. This resulted in significant cash generation for FY '24. Group cash flow improved by $483 million from an outflow in FY '23 to an inflow of $367 million this year. It was driven by a $600 million increase in operating mine cash flow that translated into a 16-fold increase in net mine cash flow. As Lawrie pointed out earlier, we expect this cash-generating momentum to continue. At spot prices, we will generate even more cash in FY '25. As presented at our recent site visit, Cowal is expected to be a consistent strong cash generator over the coming years, returning $250 million to $350 million per year of cash flow to the group after paying for the capital of the next phase of open pit development. Ernest Henry will continue to reliably and predictably contribute to cash, and we'll be able to self-fund the planned expansion project, while returning cash to the group. Northparkes made a significant cash contribution in the first 6 months of ownership and the E48 sublevel cave that is being developed will maintain the production profile at the low capital intensity. Mungari 4.2 expansion is on schedule and budget. This will transition the asset to a major cash generator through increased production and lower processing costs. At Red Lake, our focus is on cash generation, not volume, and this will be underpinned by the operational stability that was established in FY '24. As mining at Mt Rawdon is completed, and we [ meld ] the stockpiles, it will make a good final cash contribution. Now turning to Slide 10, increasing share returns, as we deleverage. Following the record financial performance, the Board declared a 23rd consecutive dividend of $0.05 per share fully franked. It amounts to a $100 million payout in total and is a 150% increase on the FY '23 final dividend. It will be paid on 4 October with shareholders registered on 30 August. Our policy of paying around 50% of free cash flow is unchanged, and we consider gearing, as well as reinvesting in the business when declaring dividends. The chart on the top right illustrates that in times when gearing is higher and deleveraging is a priority, dividends are generally lower. As gearing peaked in FY '23 and started to reduce dividends started to pick up in FY '24. As we continue to deleverage, we would expect this trend to continue. We are very pleased that our investment-grade credit rating was affirmed during the annual review in July. This underscores the quality of our portfolio, a strong outlook from our high-quality, high-margin business. We delivered on our promise to start deleveraging in FY '24 and gearing reduced from 33% to 25%. This was achieved at gold and copper prices that were well below current spot prices. And as explained earlier, at current spot prices, we expect to generate more cash in FY '25 that will drive gearing down further. Reflecting on my first whole year at Evolution, I'm very proud of what the whole team achieved. What stands out to me is that we doubled our liquidity position to almost $1 billion and made significant progress with deleveraging, while investing in our organic growth projects and continuing to pay dividends. With that, I'll hand you back to Lawrie. Thank you.

Thanks, Barrie. Slide 11 summarizes well the past year and where we are heading. The combined efforts of everyone in the last year delivered outstanding record financial results and did this in a much safer manner than last year. We set out at the start of FY '24 to move back into high-margin cash generation. We achieved this, and the plan we have in FY '25 is set to continue that momentum. Having reduced gearing significantly and with the high margins, we've been able to increase our dividends. The acquisition of Northparkes has only further enhanced the existing long life high-returning portfolio. We have made a number of organizational changes and improvements in planning, which puts us in a much better position to deliver in FY '25. With that, Kaley, please open the line for questions.

[Operator Instructions] Your first question comes from Rahul Anand with Morgan Stanley.

Good morning, Jake, Lawrie, and Barrie. First question perhaps for Barrie. Barrie, thanks for clarifying that 50% payout is still the policy for the dividend going forward and higher gearings keeping it lower this year. But at what point do you think you've reached your target gearing or your target net debt? Are you able to perhaps spell it out for us, as to what that level is when we return to that 50% payout? And in the event that the target gearing moves lower than your target rate, do we expect further dividends over and above the 50% payout?

Yes. Thanks, Rahul. I'll hand it to Barrie in a minute to talk on the deleveraging and the gearing. But I think if we look at it, the policy that we've had in place for a number of years, as Barrie mentioned, in periods of lower gearing, we paid higher dividends and in periods, where you've had the elevated gearing, the dividends are a bit lower. But if we look at it over the entire period of this policy, we've actually averaged well above 50% payout. So we, again, demonstrate that capital management of disciplined capital investment, keeping the debt position right and keeping the dividend. So I think it's not that we'll return back to that. It's that we've actually got an average above it. But as these cash flows continue to increase, there'll be further dividend improvement. Barrie, do you want to talk on the gearing levels?

Yes. Thanks, Lawrie. So firstly, very happy with the trajectory of the gearing down a lot this year, and that actually happened in 9 months. So at the end of the September quarter, we were at 33%. As we go into FY '25, as Lawrie explained with the guidance, we expect the cash generation to continue building and be strong. So we are driving that gearing further down. And I think we kind of think about it in 5% increments. So I think the next stop that we'd be targeting is getting to 20%, which will be a good outcome. And then, I think on a long-term sustainable basis, where we believe it sits comfortable is around that 15% or just below that level. So when you look forward on gearing kind of working hard towards that 20% and then down to 15%.

Got it. Okay. So basically, 20% is where you can start thinking about the 50%. And then once you're below 15%, you start thinking about higher numbers than the 50% free cash flow.

I mean, just to reiterate what Lawrie said, if we look at it over time, we actually -- the average payout is more than 50%. So we are there. There's just swings in the roundabouts depending on leveraging and investment priorities. But over time, we are over 50% of free cash flow.

Got it. Okay. Look -- sorry, go ahead.

Yes, good [indiscernible].

Okay. Yes. So the next question was on Northparkes, perhaps one for Lawrie and Jake. Look, you've talked about how Northparkes has exceeded expectations in the first 7 months of ownership. Can you help me perhaps test that comment a bit more, where have you seen the exceeding of expectations mainly coming from? I note your guidance for next year is markedly higher. What's driving that? Is that better grades from the open pit? Or perhaps if you want to shed a bit of color, as to those comments, please?

Yes. Rahul, it's Jake. Look, it's a 500 million tonne ore body, ore bodies field. It's got a 30-year reserve life. It's got a team of people with deep knowledge of -- technical knowledge of caving, block and sublevel caving. It's been cash generative from day 1, $75 million in the first 7 months. We are -- we have -- we identified in the due diligence and are now implementing a lower capital-intensive approach to the E48 sublevel cave option. And to me, what's really exciting is the early exploration success we're having, noting that it is such a large ore body 70 years of mine life, if you mine all the resources. So we're looking for a geological upside that will leapfrog into the production profile earlier. And there is exciting early-stage results coming through, which I think you would have seen on site that Major Tom and various other ore bodies. So very happy with the assets, the people, our joint venture partners being Sumitomo and Triple Flag as the stream partners. And just the way the site has gone about professionally, they managed the shaft maintenance very efficiently and effectively, and it's just been a great asset to add to our portfolio.

Got it. And next year's guidance, better grades from the open pit?

Yes. So what it is, Rahul, is that, as I mentioned, when we've got E31, there's 2 pits there. One of them is dominant in gold. So the gold production to the copper ratio is higher. Therefore, you're spreading those copper byproduct credits over more ounces. That's why the cost changes. That's the only change in costs for Northparkes in '25 versus '24.

Got it. Okay. Am I allowed to ask one more or are you keeping it to 2?

It's up to the moderator, but you can ask another question.

Look, you've got a chart in there, which has got the highest sensitivity to operating costs, obviously, even higher than the gold price. That's obvious, I guess. But the question is around where are you seeing the pressures on that cost base into '25. Obviously, we talked a bit about labor in the past. Second half of FY '25, a good period to see some of that labor inflation slow down, I believe. Is that still the thinking? And then any other things to call out specifically in terms of the inflation in that cost base? That's the final one.

Rahul, the cost guidance for FY '25 is in line with everything we said a couple of months ago. So we'll see labor. We've allowed for labor total of movement of 5% for the year. We've then seen most of the others around 3%. Labor is 50% of our cost base. So it's an average about a 4% increase, '25 over '24 and that's what we've allowed for. And then if we look at it as we go into FY '25 at the back end, so our labor for our employees is for the full financial year. So we review our salaries now and that applies for the full year. So it's about 12 months' time, we'd be looking at what's the impact on '26. Now if the economy does slow as predicted, then we would expect labor rates to not go at the rate that they did for this year. And in the other areas, we are seeing it start to stabilize, but it is dependent on what happens in the overall global economy in terms of inflation. And you're right, it does show that that's the larger one. That's a 5% movement in our cost. So if we sort of hold 5% inflation, that's what that would be. But it's not a 5% movement in the gold price that we've used, as a sensitivity. That would be a lot higher than the cost.

Our next question comes from George Eadie with UBS.

First question on Ernest Henry. Could you please just remind us the story here. So the extension fee studies due in March quarter next year -- next calendar year, that is and major CapEx won't come till FY '25? Is that still right? And just on the CapEx, will any of the tailings and vent spend this year potentially fall in FY '26?

Okay. So just checking there, George, you said a spend in '25 or did you mean '26 after the study. So the study will finish in March '25 for Ernest Henry. There is capital in our major capital this year that we've made the decision to invest around ventilation, refrigeration and trucking, as we move down to the 1,175, the extension area. We received approvals to go below the 1,200 during FY '24. And given the value of the project and the results we're seeing between Ernie Junior and Ernie, the main ore body, we've made that decision to put some of that infrastructure in earlier. So that is where you'll see that different capital after the study. We then move into more of that development, but the main infrastructure around crushing and conveying is still out in that '27, '28 and '29 years, but mainly '27, '28.

Yes. Thanks, Lawrie. And just clarifying on that. So the infrastructure you're putting in now vent refrigeration and trucking and that, is that in this year's CapEx, the $140 million? Or could there be a bit slip into next financial year?

Look, in terms of Ernest Henry, I would expect that anything that could slip would be just delivery of the trucks. We're working on the ventilation, as we speak. We really want to have that in place by the end of the March quarter and the refrigeration by the end of June is really what we'd like to see because we're already starting to move down below the 1,200 by the end of -- now and will be going lower by the end of the year.

Yes. Okay. And maybe just a second down a similar line of thought now to Cowal. So we've spoken to $200 million to $230 million major CapEx a year here. FY '25 is clearly a lot below. Can you maybe just give us, again, a bit more color on the time line of the CapEx spend over the coming years? I know it's hard to predict, but rather than just sort of straight line [ by limit ] for our sake?

I'll do the first part, but not maybe the second part. Look this year, as we talked about on site with the visit, where we are with Stage H, it is unlikely that we'll be moving into Stage I in FY '25 because of the weather impacts last year, the mine plan now will move through to the end of this year. We are still waiting for regulatory approval, which we're expecting in the December quarter. We will assess that when that comes through. So when we look at it for this year, there isn't anything in there for the open pits at Cowal. What we do have in there is the closeout on the IWL and the underground surface infrastructure is the main pieces for this year. So if you look at it, the $200 million to $230 million over 5 years still remains, but it's probably pushing out 6 to 9 months based on where we are in the planning and approval. So you would assume that Cowal will make more cash than what was originally planned for '25 and then that $200 million to $230 million will average over '26 in the next 5 years.

So is it, ex that, Lawrie?

Your next question comes from Kate McCutcheon with Citi.

Good morning, Lawrie, Jake and Barrie. Slide 6 in your deck, I like it, arrows going up. So I try to reconcile can you remind me what the non-cash impacts in all-in sustaining costs are? If I remember, it's broadened in Cowal that have the non-cash stockpile adjustments, anything to call out, please?

Yes. Look, I didn't expect a non-cash, but we would expect that it's about this year, somewhere between $30 million and $50 million, Kate, will be the non-cash that will hit the AISC.

Okay. And it's mainly Rawdon and Cowal.

Yes.

Okay. Got it. And then guidance for the FY, what are you spending on exploration at the group? How much is Ernest Henry? And then can I use that as a segue to Bert? Or has there been any further thinking on whether it could work as a separate access or whether it could also be accessed from the cave to take pressure off developments?

I'll talk on Ernest Henry and Barrie will get the exploration spend, which is not much different to what we talked on at Mungari. So the thinking there with Bert is that drilling is continuing. Glen's wanting to see the results over the next 3 to 6 months. It takes me a bit to get in to commit, but I think he still believes that there's access coming off the pit wall going in [ via a ] decline at some point, but we're probably 18 months away from finishing that program and study work before we were doing anything there. And in terms of the exploration, I mean, it's around 60 [Technical Difficulty] this year. Mungari was around that 2025 that we talked about on site. Ernest Henry would be the next one in sort of around that [ $20 million ] mark. And then there's the other sort of greenfields and the like that's going on.

Okay. Cool. And then, so Red Lake as well, I think there's a concern in the market that there's a risk of maybe an impairment there moving forward. I would have thought the resources were still there, but maybe if there's some comments that you can make to reassure the market. It's something that I keep hearing, which I'm not sure is entirely correct.

I'd just say, Kate, that we've just been through our Board meetings, the audit committee meetings with PwC as auditors. There is no impairment at Red Lake, and that's been signed off by PwC.

Our next question comes from Jarrod Lucas with ABC News.

I just wanted to ask about the cybersecurity incident this week. You've obviously said no material impact on operations is expected, but obviously concerning enough that you had to release a statement to the ASX.

Yes. Jarrod, I mean, I think the reason for releasing the statement is that the minute we had to report it to the authorities, we were, therefore, making something public. So in regards to the sensitivities around cyber incidents, we and the Board made the decision to put that information out there. I mean through the period from the 8th till Monday, we clearly work through that containment and understanding impacts on systems and people, and we now believe that we've got that well under control and the like. And I think from our perspective around material impact, a number of these systems require connections to the external world through the Internet and everything and some of those systems get cut off for a period, which had a very minor impact on the operational assets for a couple of days.

Are you aware of any data that's been lost to the hackers?

Look, we're aware of all of the different servers and information. There's nothing in there that is material private or personal that has been lost. And in reality, when we look at all of our backup systems, there's probably nearly nothing that's going to be lost other than, say, for that period for the 8th till the 10th, where you're going back to backups from a few days before that, but that's all that we're seeing at the moment.

Your next question comes from Matthew Frydman with MST Financial.

Sure. Firstly, can I ask on Red Lake, your FY '25 guidance for gold production, 125,000 ounces to 145,000 ounces. Lawrie, previously, you've talked to 140,000 ounces to 150,000 ounces, as a sort of base case expectations for the asset. The market may have wrongly interpreted that as the run rate to expect for FY '25 rather than the exit rate. Is that a fair assessment? Does the second half in FY '25 look better than the first half, as the asset continues to stabilize and improve? And is that medium-term sort of base case expectation still 140,000 ounces to 150,000 ounces in your mind?

Matt, there's 2 short -- parts to that. Yes, to the 140,000 ounces to 150,000 ounces. And in terms of this year, we're basically making sure that the site is able to deliver as a bare minimum into that 125,000 ounces to 145,000 ounces, maintain the consistency. From my perspective, March was a good quarter. June had a little bit of an impact with seismicity. We want to see it consistent for a couple more quarters. So we're being a little bit conservative there.

Okay. Got it. Lawrie, and you said that, that asset is going to be cash positive next year based on, obviously, your budget and your guidance. I'm guessing that's before the $65 million to $75 million of major project capital, which you've called out as primarily going towards the tailings dam. Can I ask when does that project finish? And is that the entirety of that major project CapEx budget? Is there anything we need to sort of think about over the medium term in terms of major project CapEx spend?

No. So the forecast and plan for Red Lake this year at our metal prices, it will be cash positive, net cash positive for the year.

Including the major project CapEx?

Yes. And it's not significant, but it is cash positive, which is the first thing they need to get to. And in terms of that tailings, that's -- as I said, it's over the next 18 months that we'll be investing in that consolidation of the facility.

Okay. Got it. And then maybe just finally, maybe a bit more of a mechanical one, but Mt Rawdon, you've excluded that from all-in sustaining cost guidance. Will that be included in your underlying earnings that you report for FY '25? I guess, maybe one for Barrie, how do we think about the reporting of that as a sort of continuing or discontinued operation?

Barrie will deal with the underlying. So it is excluded from the AISC. We will report both. But at the end of the day, when you've got an asset that's moving into processing stockpiles in the -- from the second quarter, AISC of [ $3,000 to $3,500 ], but it's going to make $15 million to $20 million of free cash when the AISC is the same, as the revenue side. Our view is that that's not a reflection of where the asset is going forward. It means including it in the AISC is about a $75 to $100 delta for the group. And that for us is when you go into FY '26 and beyond, Mt Rawdon won't be there. Barrie, do you want to talk about the earnings...

Yes. So I mean, in terms of clearly that P&L view on earnings, we usually exclude kind of things of a once-off that nature in there. So from a step P&L point of view, I think the earnings would stay in the underlying. But we're providing this guidance excluding Rawdon to enable kind of modeling forward of the ongoing cost base. But step P&L, I'd see the earnings in the underlying next year.

Okay. That's pretty clear. And as you say, Lawrie, it's cash positive. So that's the important thing.

Your next question comes from Daniel Morgan with Barrenjoey.

Sorry, can you hear me?

Yes, go ahead.

Yes. Sorry, I was on mute. Could you just talk about the process that you undertook to set this guidance? Was it, I guess, a little bit more conservative than you might have done in previous years? And what are the major drivers within the business that might cause you to be at the most optimistic part of guidance, i.e., at the top end on production and low end on costs? And what are the risks, the major risks in the business that would maybe see the reverse?

Okay, Dan, I'll try and keep it to a couple because if you talk to the operations, they could give me a list of 10 on the negative and 1 on the positive. I think, yes, when we look at it, it's -- yes, if you're looking at it, it's weather. Weather certainly at Cowal. It won't -- it does -- it will impact Mt Rawdon, but it's got time to finish mining and processing through the course of the year. We've had some unseasonal weather and rainfall over in the Western Mungari and the like. So weather has a role to play. I think when we look at it, there's nothing much from a mining perspective. We've got the large shutdown at Cowal in March and April. So that one needs to run to plan because that links into feeding the underground. So we need to make sure that, that does that comes through. I think on the upside is making sure that the stability that we've started to see at Red Lake continues and builds that momentum. We've talked about it where they used to need 3,000 tonnes a day out of the mines. They're now working on the basis of build a stockpile, maintain a stockpile. So they've got to be able to consistently be above that 3,000 tonnes a day. And then, I just think if you -- if we look at it, we've got Ernest Henry and Northparkes caving operations. If they can continue their consistency and reliability, that gives us a base going forward. And then the uplift could be if the underground at Cowal is able to get above the 2 million tonnes earlier than what we had expected through the year.

Your next question comes from Al Harvey with JPMorgan.

Good morning, Lawrie and team. Just one for me. Just looking at the copper price assumed in all-in sustaining costs [indiscernible] a tonne, thanks for that. I guess, I'm just thinking about what [indiscernible] too much onto spot, but at [ AUD 13,500 a tonne ] just wanted to step through the processes that you landed at that I assume it's kind of semi-related consensus? And just as a follow-up, just wondering if you'd be willing to share the Aussie dollar assumption underpinning that copper price. I think it was [ $0.65 ] in last year's guide.

Yes. So Al, quite simply, in terms of setting that price, that was based on consensus. And actually, by the time we were -- finished consensus had gone above that, and we decided not to lift our plan assumption. We felt it was actually easier to go with what all of the market consensus was rather than choosing our own just to make it simple. That sensitivity is sitting on Slide 7, as to where you can see what the copper price movement is. Yes, it is below at the moment. But we're looking at the range over the full year and the analysts have it at that sort of rate. And the second part of the -- the exchange rate is about [ 65.5 ].

I think [ 67.5 ]

[ 67.5 ] right for the year.

Your next question comes from Jon Bishop with Jarden Group.

Well done on the result. Just a couple for me. Regarding Ernest Henry, I know the work is still in progress around development of Bert. But could you sort of give us a bit of a guide as to how the team is feeling around what Bert does to either the tonnes throughput longer term or indeed grade? Because from what I can recall from your reserve and resource statement, we should expect Ernest Henry grades to sort of soften over the balance of life of mine, if I think I'm correct.

Yes. So in terms of Ernest Henry, yes, we have seen, as we've gone down the cave that grades come down, you've seen our production go from [ 95 down to sub-80 ] now over the last 5 years. But the drill results we've got in the extension are actually saying that the grades are holding up and the ratio of copper and gold is actually also holding up. So we sort of see that we're probably around the level of where Ernest Henry production rate out of the main ore body would be going forward if we're able to keep that mill running at full capacity. In terms of Bert, that still hasn't changed from what Glen's talked about at the June quarterly. We either come off the pit wall and put a decline down that then gives us capacity to go above the 6.8 million tonne processing rate or if it does extend down and connect into the main ore body, it provides flexibility as to how we fully extract. But as I said, just earlier to Kate, we'd see that, that's at least 18 months away from having a full picture. We're going as quick as we can on the drilling, given the great results that we saw in the June quarterly.

Yes. No, that's evident, cracking results. And just switching to Cowal. Obviously, still pending approvals. You probably articulated this before, but can you sort of indicate what the key risks are for final approval here?

So where we're at is, we're in the dance with the regulator about providing us with what they would see as consent conditions. So they're requesting some further information. So the public display piece is closed and strong support for the project. We now wait for them to give us the consent conditions and which then we have to respond and then they make their final determination. So they're sort of the last 3 steps in that part of the process. On achieving that, then the project team needs to make the recommendation to the Board around proceeding, and the Board needs to decide when to proceed forward.

Okay. Forgive my ignorance, but what does a consent condition look like? Is it -- is it environmental or is it water management or is it all of the above?

It's all of those. So it's -- if we look at -- an example, when we got Stage H approval, we needed to move some of the road for the travel struck route. That was a consent condition we had to agree to. We had to provide support for road maintenance for some roads that we would be using. So it then comes back to us to -- and accept those conditions or discuss them with the regulator to see if there's alternatives.

Okay. I'm sorry to keep [ bearing ] down, but is there anything that you've seen in your discourse with the regulators to date or specific areas of focus? Or are these fairly banal kind of conditions you're expecting here?

No. At the moment, it's not much different to other consent conditions for Mod 14 and the like that we had for Stage H and for the underground.

Your next question comes from Mitch Ryan with Jefferies.

I'm just trying to reconcile today's guidance to the presentation on the 8th of May, which you released to ASX when guidance was 750,000 ounces for FY '24, and you made a statement that FY '25 guidance would be -- group production would be higher. Why is the bottom of the range by far below that [indiscernible] today? What's changed between over the intervening period?

Mitch, the short answer is nothing has changed. If we look at it 710,000 ounces to 780,000 ounces midpoint is 745,000 ounces. And I'll quote Jake here that to him, 5,000 ounces is roundings. So there's nothing that's really changed. Yes, it's a little bit lower in terms of the Red Lake in its range, but a couple of the other assets are actually higher, one of them being Northparkes with E31. So we see that. So -- and if you look at last year's guidance, where we use the plus/minus [ 5% ], you would have had it less than the 749,000 ounces down to that lower number. So it's the same approach, nothing different from what we said on the 3rd of May.

I'll just, [ have one build ] on that, Mitch. I'm very comfortable that this is consistent with all the outlook statements and conversations we've had with respect to guidance and outlook for FY '25.

Yes. Okay. Sorry [ for growth ] would have implied that, that was your baseline.

The are no further questions at this time. I'll now hand back to Mr. Klein for closing remarks.

Thanks, Kaley, and thanks, everyone, for listening. We appreciate it. I do want to shout out to the team at Evolution, Lawrie and the whole team. It's been a huge effort to deliver these results. It's taken a lot of effort from a lot of people across all of our sites. And on behalf of the Board, we really appreciate that. I also just want to finish off with the same sentence and message that I gave in my introductory comments. We absolutely know that all eyes are on us to deliver FY '25 guidance. We are focused on that delivery. We won't be distracted, and we're up for the challenge. Thanks, everyone.

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