Evolution Mining : 160127 Dec 2015 Quarterly Report _F

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QUARTERLY REPORT - For the period ending 31 December 2015 HIGHLIGHTS

• Record quarterly Group gold production of 203,700 ounces

• Group All-In Sustaining Cost1 (AISC) of A$1,016 per ounce (US$732/oz)2

• Record quarterly production from Mt Carlton of 30,026 ounces at an AISC of A$507 per ounce (US$365/oz)

• Continued strong cash flow from operations of A$97.8 million

• Early debt repayment of A$50 million plus a further A$25 million repaid in January 2016

• Phoenix Gold acquisition finalised - materially increasing Mungari resources and ground holding

• High grade intersections3 from drilling programs targeting mine life extensions:

  • Mt Carlton (V2): 10m (5.7m*) grading 22.0g/t gold from 69m (HC15DD1147)

  • Mungari (Frog's Leg): 17.2m (11.8m*) grading 4.5g/t gold from 185m (FLRD110)

    
    

• Upgraded FY16 Group guidance to:

  • Production of 770,000 - 820,000 ounces (increased from 730,000 - 810,000 ounces)

  • C1 cash costs of A$700 - A$740 per ounce (decreased from A$715 - A$795 per ounce)

  • AISC of A$970 - A$1,020 per ounce (decreased from A$990 - A$1,060 per ounce)

Consolidated production and sales summary

Units	Jun quarter FY15	Sep quarter FY16	Dec quarter FY16	FY16 YTD
Gold produced	oz	113,821	174,169	203,700	377,869
By-product silver produced	oz	111,580	170,202	169,767	348,199
C1 Cash Cost	A$/oz	690	631	759	700
All-In Sustaining Cost1	A$/oz	1,048	882	1,016	954
All-in Cost4	A$/oz	1,318	1,015	1,164	1,095
Gold sold	oz	111,783	179,256	205,863	385,119
Achieved gold price	A$/oz	1,533	1,559	1,536	1,547
Silver sold	oz	112,681	178,432	169,767	348,199
Achieved silver price	A$/oz	21	20	20	20

1. Includes C1 cash cost, plus roy alty expense, sustaining capital, general corporate and administration expense. Calculated on per ounce sold basis

2. All US dollar prices in this report hav e been calculated using the av erage AUD:USD exchange rate f or the Dec 2015 quarter of 0.7204

3. Reported interv als are down hole widths as true widths are not currently known. *An estimated true wid th (etw) is prov ided

4. Includes AISC plus growth (major project) capital and discov ery expenditure. Calculated on per ounce sold basis

Group gold production for the December 2015 quarter was a record 203,700 ounces. This was a 17% increase compared to the prior quarter (Sep qtr: 174,169oz) reflecting the first full quarter of production from

the Cowal and Mungari assets. Average C1 cash cost for the quarter was A$759/oz (Sep qtr: A$631/oz) and AISC1 was A$1,016/oz (Sep qtr: A$882/oz).

Using the average AUD:USD exchange rate for the quarter of 0.7204, Evolution's Group costs equated to: C1 US$547/oz and AISC of US$732/oz.

Evolution continued its strong financial performance in the December 2015 quarter with a net mine cash flow of A$97.8 million (Sep qtr: A$105.0 million). All sites again produced positive net mine cash flow.

Mt Carlton was a standout performer achieving record production of 30,026 ounces at a C1 cash cost of A$337/oz (US$243/oz) and AISC of A$507/oz (US$365/oz). Higher production and lower unit costs were due to the mined grade continuing to significantly outperform the Ore Reserve estimate.

The strong operational cash flow allowed Evolution to make early repayments totalling A$50.0 million into its Senior Secured Syndicated Facility during the December quarter. Subsequent to the end of the quarter, an additional A$25.0 million early repayment was made. Since the beginning of September 2015 total debt outstanding has been reduced by A$152.0 million to A$455.0 million. Outstanding debt comprises of A$130.0 million in the Senior Secured Syndicated Revolver Facility and A$325.0 million in the Senior Secured Syndicated Term Facility. The Group cash balance at 31 December 2015 was A$45.3 million.

The Company's commitment to exploration is now yielding exciting results with good drill intercepts reported at most of the operations. Highlights include the potential for mine life extension at Mt Carlton and Mungari following successful drilling programs. At Mt Carlton, a drilling program testing the strike and dip extensions of the V2 open pit high-grade bonanza lodes returned significant intersections including 10m (5.7m etw) grading 22.0g/t Au from 69m (HC15DD1147). At Mungari significant intercepts included 6.9m (5.1m etw) grading 8.4g/t Au (FLRD105) from resource definition drilling testing extensions to Frog's Leg high-grade mineralisation.

Evolution's takeover offer for Phoenix Gold closed on 30 December 2015 with Evolution having a relevant interest in 95.67% of all Phoenix shares on issue. Evolution is now proceeding with the compulsory acquisition of the remaining Phoenix shares on issue.

Cracow Pajingo

Mt Rawdon

40,692

22,120 18,026

59,782

46,010

32,317

Edna May Mt Carlton Cowal

54,792

FY16 Dec qtr ounces 19,777

18,266

101,211

FY16 YTD ounces

48,275

Mungari

30,026

54,239

36,035

1. AISC includes C1 cash cost, plus roy alty expense, sustaining capital, general corporate and administration expense. Calculated on per ounce sold basis f ollowing transition to "All-in" cost metric calculation to World Gold Council standards in FY 16. Prev iously reported on a per ounce produced basis. Prior periods hav e not been restated

   
   

   Revised FY16 Group guidance

   
   

   The strong operational performance in the first half of FY16 has allowed Evolution to upgrade its Group production and cost guidance.

   FY16 Group guidance has been upgraded to:

   • Production of 770,000 - 820,000 ounces (increased from 730,000 - 810,000 ounces)

   • C1 cash costs of A$700 - A$740 per ounce (decreased from A$715 - A$795 per ounce)

   • AISC of A$970 - A$1,020 per ounce (decreased from A$990 - A$1,060 per ounce)

Cowal FY16 AISC guidance has been decreased to A$800 - A$850 per ounce (from A$860 - A$950 per ounce).

Mt Carlton's outperformance due to consistent positive grade reconciliation is expected to continue. Evolution expects Mt Carlton to materially exceed the top end of original FY16 production guidance of 80,000 - 87,500 ounces and deliver costs below the bottom end of guidance (C1: A$525 - A$575/oz; AISC: A$760 - A$810/oz).

Group safety performance

Group total recordable injury frequency rate as at 31 December 2015 was 11.5 (30 Sep 2015: 13.6). The lost time injury frequency rate was 1.1 (30 Sep 2015: 1.3). During the quarter Evolution continued to focus on the reduction of vehicle incidents. The Evolution 100,000 km health challenge was held during the quarter with 680 participants over a 6-week period walking 142,384 km.

As at 31 Dec 2015	LTI	LTIFR	TRIFR
Cowal	0	0	10.7
Mungari	1	2.6	14.1
Mt Rawdon	0	0	8.3
Edna May	1	3.7	7.4
Cracow	0	0	19.0
Pajingo	0	0	21.6
Mt Carlton	0	2.2	4.4
Group	2	1.1	11.5

LTI: Lost time injury. A lost time injury is defined as an occurrence that resulted in a fatality, permanent disability or time lost from w ork of one day/shift or more

LTIFR: Lost time injury frequency rates. The frequency of injuries involving one or more lost w orkdays per million hours w orked. Results above are based on a 12 month moving average

TRIFR: Total recordable injury frequency rate. The frequency of total recordable injuries per million

hours w orked. Results above are based on a 12 month moving average

December 2015 quarter production and costs

December Qtr FY16	Units	Cow al	Mungari	Mt Raw don	Edna May	Cracow	Pajingo	Mt Carlton	Group
UG lat dev - capital	m	-	381	-	-	660	487	-	1,527
UG lat dev - operating	m	-	345	-	-	625	405	-	1,374
Total UG lateral dev elopment	m	-	726	-	-	1,284	891	-	2,902
UG ore mined	kt	-	196	-	-	116	101	-	413
UG grade mined	g/t	-	5.28	-	-	5.74	5.80	-	5.54
OP capital waste	kt	-	234	3,205	635	-	-	623	4,697
OP operating waste	kt	935	1,990	142	1,457	-	-	106	4,630
OP ore mined	kt	2,279	366	522	538	-	-	220	3,926
OP grade mined	g/t	1.08	1.38	0.95	0.94	-	-	7.40	1.42
Total ore mined	kt	2,279	562	522	538	116	101	220	4,339
Total tonnes processed	kt	1,736	406	804	759	121	109	194	4,128
Grade processed	g/t	1.18	3.32	0.84	0.81	6.12	5.49	6.51	1.76
Recov ery	%	82.9	93.9	90.2	92.1	93.2	94.0	89.3	88.0
Gold produced	oz	54,792	40,692	19,777	18,266	22,120	18,026	30,026	203,700
Silv er produced	oz	51,282	5,660	26,407	7,999	14,274	16,147	53,669	175,438
Copper produced	t	-	-	-	-	-	-	298	298
Gold sold	oz	52,820	43,894	21,894	19,183	22,891	17,273	27,907	205,863
Achiev ed gold price	A$/oz	1,518	1,536	1,551	1,588	1,540	1,538	1,515	1,536
Silv er sold	oz	51,282	5,660	26,407	7,999	14,274	16,147	47,998	169,767
Achiev ed silv er price	A$/oz	20	20	20	20	21	20	20	20
Copper sold	t	-	-	-	-	-	-	301	301
Achiev ed copper price	A$/t	-	-	-	-	-	-	6,455	6,455
Cost Summary
Mining	A$/prod oz	286	521	154	590	380	478	72	343
Processing	A$/prod oz	468	250	496	538	209	229	242	351
Administration and selling costs	A$/prod oz	105	58	136	134	118	123	213	120
Stockpile adjustments	A$/prod oz	(116)	(66)	206	29	60	(0)	(93)	(29)
By -product credits	A$/prod oz	(19)	(3)	(27)	(9)	(13)	(18)	(97)	(26)
C1 Cash Cost (produced oz)	A$/prod oz	725	760	965	1,282	754	812	337	759
C1 Cash Cost (sold oz)	A$/sold oz	752	704	871	1,221	729	848	362	751
Roy alties	A$/sold oz	49	34	79	63	94	81	114	67
Gold in Circuit and other adjustments	A$/sold oz	(45)	85	89	133	53	(14)	(75)	23
Sustaining capital1	A$/sold oz	28	113	158	60	221	272	67	111
Reclamation and other adjustments	A$/sold oz	56	21	30	17	13	(20)	38	28
Administration costs2	A$/sold oz	4	37
All-in Sustaining Cost	A$/sold oz	839	961	1,227	1,494	1,109	1,166	507	1,016
Major project capital	A$/sold oz	0	34	477	144	75	67	140	104
Discov ery	A$/sold oz	9	44	1	1	35	60	9	44
All-in Cost	A$/sold oz	848	1,039	1,705	1,639	1,218	1,292	657	1,164
Depreciation & Amortisation³	A$/prod oz	312	532	490	422	427	221	589	428

1. Group Sustaining Capital includes a reduction of A$1.03/oz for Corporate capital expenditure fromproject capitalisations

2. Includes Share Based Payments

3. Group Depreciation and Amortisation includes Corporate Depreciation and Amortisation of A$1.33/oz