Good morning, and welcome to the Evolution Mining twenty twenty Investor Day. My name is Brian O'Hara, and I'm Evolution's General Manager of Investor Relations. At Evolution, we respect and support the indigenous communities in which we operate, both in Australia and in Canada. This morning, I'd like to acknowledge the Gadigal people of the Eora nation on whose land we present to you from today. I pay my respects to their elders past and present and to all indigenous peoples.
Today's presentations contain forward looking statements, which involve known and unknown risks and are based on management's good faith assumptions relating to all factors that may affect the company's business and operations in the future. Although 2020 has been an extremely challenging year for Australians with drought, bushfires and COVID-nineteen, as a nation, we've shown remarkable resilience and adapted quickly to this new norm. One of the ways we've adjusted at Evolution is by embracing technology to continue our engagement with shareholders around the globe. Although current circumstances have prevented us from being able to invite people to join us in person today, thankfully, we've been able to connect virtually. This means that we can now include all of our stakeholders in today's events and not just investors.
We're very pleased that the number of registered participants for today's webcast far exceeds any previous event we've hosted at Evolution. A $2,600 gold price probably doesn't hurt either in drawing a crowd. So to our international investors from New York, London and Hong Kong, retail shareholders from Gundagai, sell side analysts in Melbourne and our Board members in Perth, to our workmates in Ontario and community stakeholders in Northern Queensland, we extend a very warm welcome to all of you and everyone else who has joined us this morning, and thank you for your interest. Now today's proceedings will be split into two sessions. In the first session, we'll look at the big picture with Jake, Fiona and Laurie, all presenting Evolution strategy, including who we are as a company, our purpose, our focus on quality and why we haven't deviated from the clear and consistent strategy that has been creating value for our stakeholders since the company's formation back in 2011.
After a short break, we'll commence Session two at 09:30 a. M. We'll drill down into our operations. You'll hear from some of our General Managers, John, Andrew and Amber, on how our people are driving the strong operating performance to produce high margin ounces of gold. You'll then also hear from Glen and Bob, who will share our excitement around the growth opportunities in the portfolio and articulate with you our long term aspirations to realize the value we see in each of these assets.
Now there will be an opportunity for Q and A at the end of each session, and we invite participants who would like to ask a question to use the Submit a Question tab on the bottom right of your screen. Questions may be submitted any time during the presentations this morning, so please get your questions in early and we'll do our best to address them or as many of them as time permits. This morning's proceedings are expected to finish at around 11AM. This webcast is being recorded and will be available on demand at evolutionmining.com.au from tomorrow. Thank you.
And I'll now hand you over to Evolution's Founder and Executive Chairman, Jake Klein.
Thanks, Brian. Good morning, everyone, and thank you for joining us. I really do hope you're all doing well and coping in this strange new virtual world we're living in. Today is a great opportunity for you to hear from some of our key people, a small number of the many who make Evolution the most exciting company I have had the privilege of leading. I also hope that we'll be able to clearly articulate how and why we believe we are positioning Evolution as the gold company that will consistently deliver superior shareholder returns over the long term.
Let me start with the big picture and then explain how a number of fundamental principles have and will continue to shape our strategy. The reasons for every investor to have some exposure to gold today are the most compelling since they have been since 1971. In that year, President Richard Nixon announced that The United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard, which had been in place since 1834. Since then, all other fiat or paper currencies have joined the U. S.
Dollar in being rapidly devalued. Not being backed by any hard asset means that the only thing that the holder of that currency note has to rely on, that it has any value, is the promise of the government that has issued it. Think about that for a minute. The only thing the holder of that currency note has to rely on is the promise of the government that issued it. Gold remains the only currency that cannot be printed.
The combination of historically low interest rates and the response to the COVID-nineteen pandemic by governments to roll out these enormous fiscal programs, effectively printing money, has meant that debt has reached unprecedented and arguably unsustainable levels. In the year February, U. S. Public debt was $5,700,000,000,000 or 56% of GDP. This year alone, it has increased by over $4,000,000,000,000 and now stands at almost $27,000,000,000,000 That's a huge number and equates to 137 of GDP.
With the U. S. Dollar declining in value relative to gold by over 85% in just the last twenty years, the conclusion I draw is that today, every investor should have some exposure to gold. Let me now turn the discussion to the question of where that exposure should be. We live in a world where significant geopolitical fault lines are undeniably growing.
The cooperative globalization phase that has been present since the end of the Cold War appears over, and the reemergence of populism and nationalism should concern every investor. The past playbook of gold companies looking for growth has been to seek this growth in developing countries, places where the geology is considered prospective and underexplored and where labor costs are cheap. This is often a successful strategy in an orderly world. Today, an investor must consider not only the discontent and instability that has been exacerbated by the COVID-nineteen pandemic in many developing countries, but also the growing influence of China, both at a government level and as a competitor at a corporate level, particularly in Africa. All seasoned participants in this sector have seen multiple examples of massive shareholder value disruption because of unanticipated government intervention.
We have seen it in Indonesia, The Philippines, Tanzania, PNG, The DRC and only recently in Mali. Avoiding these risks is at the core of Evolution's decision to exclusively focus on the Tier one jurisdictions of Canada and Australia where the rule of law can be relied on. A fascinating aspect of the gold industry is that two of the biggest drivers to almost every other business, being market share and product quality, are not applicable to gold miners. The product we all produce is homogenous and has a very visible quoted price. So if we can't differentiate on products and we all receive roughly the same price for the ounces we produce, what makes one gold company more valuable than another?
We've already talked about geography, but let us now focus on company specifics. Firstly and most importantly, safety. No amount of operational or financial success is worth anything if people get hurt. Performance in this area can never be good enough, but the signs at Evolution are encouraging, and our safety performance has a strong positive trend. Secondly, asset quality really matters.
Behind our own hardworking team of people, the next most important asset of any gold company is gold inventory in the ground, its ore bodies. The better a gold deposits, the better it is for shareholders. Large, long life, low cost assets are always going to create more value and prosper much better through the cycle. There is a somewhat cruel joke that in the first six days, God created all the gold deposits in the world, and on the seventh day, the devil sprinkled it over the earth in uneconomic quantities. Undoubtedly, you must be selective and spend your shareholders' money on long life, low cost economic ore bodies.
That has driven our strategy and approach from day one to always focus on improving the quality of our portfolio. In our nine years as a company, we have acquired four assets and sold three, always looking at each of these changes through the lens of whether it will improve the quality of our portfolio and be accretive to our shareholders. There is no final destination on this journey. It is something we think about every day at Evolution. How can we improve the quality of our portfolio and how do we maximize the value of every asset?
Today, you will hear from some of our general managers as to how they and their teams relentlessly pursue this at their operations. Thirdly, we believe that margin matters most. Although all gold companies can sell the gold they produce at the same price, a low cost ounce of gold is much more valuable than a high cost ounce of gold. This is a cyclical industry. And in the good times, we need to be making exceptional profits like we are today.
And when the price is lower, we still need to be making an above average return on our shareholders' capital. This is no different to any other business. Every dollar we invest of our shareholders' money must generate a return commensurate with the risk we are taking, not because the gold price has gone up, but because we have invested wisely and added value. It is why we use a very conservative gold price to calculate our reserves of $14.50 an ounce, and our resources are constrained at $2,000 an ounce. The higher the gold price, the more money we need to be making and banking and delivering to our shareholders.
Every time you increase your reserve price and mine lower grade material, you are eroding your margin. We believe our approach in this area is a key differentiator in the value proposition we offer investors. Resources per ounce per share, reserves per share and dividends per share are great indicators of value creation. The quality of our assets and discipline on margin are reflected on these charts, with all of these important metrics showing a strong positive trend. Shareholders should directly benefit from value creation, not only through capital growth but also from their share of cash flow.
At Evolution, we have paid 15 consecutive dividends. Last year, we generated $7.26 for every ounce of gold we produced and returned $365 or a little over half to our shareholders. Cumulatively, we have rewarded our shareholders with $732,000,000 in dividends over seven point five years. Mid tier gold companies have delivered the best shareholder returns to investors, and I believe there is sound, rational logic to this. Mid tiers generate enough cash flow to fund their own growth, return dividends to shareholders and are also small enough where discovery can make a significant difference to the company's value.
As a major, there are
just statistically fewer deposits to discover that will move the value needle. And as a junior or a developer, you are entirely dependent on capital markets to fund your growth. That is why we have positioned ourselves as a mid tier with a portfolio of six to eight assets. This portfolio size is also one in which people can make a real difference. To maximize your margins and produce ounces in the safest, most efficient and responsible way, you need not only great ore bodies but also great people and a great culture, an environment in which people feel empowered to make the difference and are willing to go the extra mile.
This is why at Evolution, we have an Act Like an Owner program to celebrate great ideas generated across our company. We skew our incentives to variable pay to reward performance. We have targets for internal promotions, run a successful graduate program and want every person, no matter what their job, to feel empowered and energized about being part of our company. I often talk about wanting every person who works at Evolution to reflect on their time at our company, hopefully a long time, as a highlight of our career of their career. We are indeed fortunate to operate in Australia and Canada, both countries that have strong mining cultures and education systems that provide us access to world leading talent and skills, which is key to getting the best out of our assets.
Discovering new ounces is the most value accretive thing a gold company can do. The only caveat being that for the value to be ultimately deliverable, those ounces must prove to have robust economics. By definition, ounces found closer to your existing mines and infrastructure are more likely to be economic by a factor than greenfield ounces. That is why our discovery program is skewed to brownfield exploration,
and we
have had enormous success in this area. I point to the mineral inventory today at CAL of 9,000,000 ounces and Red Lake of 11,000,000 ounces. Finally, turning to M and A, which in truth is a double edged sword. Yes, it can be massively accretive, but likewise, it has also been the downfall of so many gold companies that were once great. As we have discussed earlier, this is a very cyclical business.
We are in a very favorable part of the cycle, and I believe this is likely to continue. But for M and A to be really value accretive, you must be able to add value to that acquisition. Relying on a rising gold price to make an acquisition accretive is a terrible strategy. Fundamentally, there are only two ways in which an acquisition will be accretive to your shareholders over the long run. Firstly, if you have a motivated seller, which is either in financial distress or is disposing of an asset that has become somewhat unloved within their group.
Corporate acquisitions at a premium have been more difficult to create value because to just get to the start line of value creation, you need to deliver more value than the premium you paid. Secondly, discovering more ounces. You can pay full value for the ounces you acquire if your discovery team makes the correct call that you will discover more ounces. The more ounces you discover, the cheaper and more accretive the acquisition becomes. If you look at our acquisition history, I believe you will see we have consistently been able to capture both of these elements in each of the transactions we have executed.
Since was acquired for $7.00 $3,000,000 in 2015, it has generated $731,000,000 in net mine cash flow. On acquisition, Cowal had a resource base of 3,400,000 ounces, and today, it has 9,000,000 ounces. Our interest in Ernest Henry was acquired in 2016 for $880,000,000 Since then, it has delivered Evolution's $779,000,000 of net mine cash flow, and we expect the mine life will be extended well beyond the eleven year life it had four years ago at the time of acquisition. The last published resource estimate issued earlier this year of Red Lake was 2,900,000 ounces. And last month, we published our first JORC compliant estimate of 11,000,000 ounces at a grade of 7.1 grams per tonne.
This is now both the highest grade and largest resource within our portfolio. These are the factors that have shaped and defined Evolution's clear and consistent strategy in the past and will continue to drive our success in the future. A portfolio of six to eight assets generating superior returns with an average mine life of at least ten years, always seeking to improve the quality of our portfolio in a way that is accretive to our shareholders. A key strength of Evolution is our focus on value over volume, which requires financial discipline, not eroding our margins in a high gold price environment and banking every dollar we can with the aim of returning as much as possible to our shareholders funding and supporting an exciting long term discovery strategy with great people and skills always being alert and open to M and A opportunities that improve the quality of our portfolio, but also being willing to maintain the discipline and be patient in times when value accretive opportunities are not available And finally, being focused on our values as much as we are on value. We recognize that we are in the business of taking geological and financial risks, but we will never do anything that compromises our reputation, our social license to operate or our values, safety, excellence, accountability and respect.
This is because we really want to, and we know it is the right thing to do. Thank you. I'll now hand over to Fiona Murphet, our Vice President, Sustainability. Fiona joined Evolution in January and in this short time has already made a very significant and positive impact to our approach in this business critical area. Over to you, Fiona.
Thanks, Jake, and good morning, everyone. It's so great to be able to be talking to you today about our values driven approach that integrates sustainability into everything we do. Since our beginning, values have underpinned the way we go about business. Looking at our past, the present, and the future, the vital connector is people, the people working for us and their safety, the people in the communities where we operate, and the people who work to protect the environment and whose efforts are building long lasting positive legacies. As Jake said, this is because we really want to, and we know it's the right thing to do.
We have been maturing in our sustainability journey, creating value and leaving lasting positive legacies. Our next phase is a step change, leveraging our increased capability, experience and passion. I joined the business in January, reflecting this important step change in Evolution's journey. It's been a busy time. We bought Red Lake in Canada, divested Krakow in Queensland and have built a stronger team, including bringing in new talent all through COVID.
And I'm really proud of how we've proactively managed our COVID response. Since February, we've listened and supported our people and communities to help keep them connected to who they care about and to what they need. Some areas of support include iPads to people living in aged care, boosting financial aid for family and women's shelters and continuing to support our partners at Jonathan Thurston's JTA Canobie, who are supporting young people in local communities through education and employment. We're also heavily focused on our own people, their mental health and in keeping our business strong during this really difficult time. Our sustainability principles provide the foundation for how we approach and integrate sustainability into every cycle of our business.
They are aligned with United Nations' sustainability development goals, recognizing the positive impact we can have on the welfare of people, our planet and the future. These principles focus our efforts to deliver long term stakeholder value through safe, low cost gold production in an environmentally and socially responsible way. We are proud of how sustainability efforts are maturing and the value we've created over the last year. This was validated by our shift to an A rating in MSCI and being one of the two listed gold mining companies in the Australian Dow Jones Sustainability Index. In reflecting on our contributions, let's start with health and safety.
Performance in this area is never good enough, but we are seeing positive signs and the metrics that our culture that the culture of engaging, reporting and learning is improving and that our people are healthier and safer. Our leaders are having more quality safety discussions in the fields where our safety interactions are increasing by 40. We've implemented learning teams, improved incident review and have increased storytelling across all levels of the business. The health and safety of Evolution's people is equally important. In FY 2020, more than 6,800 health sessions were voluntarily attended, where significant health improvements were measured.
Our focus on diversity may be best summed up by the groundbreaker, Tally Whitney, when she says, When we limit who can contribute, we in turn limit what problems we can solve. And evolution continues to improve participation by indigenous and female workers with our graduate intake of females growing to 62% in FY twenty twenty, and I'm really happy to confirm that our FY twenty twenty one intake maintained these high numbers. Our social responsibility and community contributions are well reflected by a Cal community member during our recent independent perception survey. She said, Evolution is not arm's length. They're very involved and want to understand.
There aren't false promises attached, and they're very realistic, a true partner. The survey highlights a well developed relationships and the many economic and social as well as environmental benefits we lead with our local stakeholders. The high approval from our own communities is something Evolution is proud of. As the short term custodians of the land on which we operate, we consider environmental protection and cultural heritage as both an honor and a responsibility. Our rigorous standards and assurance meant there were no material events in FY 2020, and we continue to operate beyond compliance to reduce our footprint and support our ecosystems to thrive.
The recent destruction of culturally sensitive land in Australia has made many of us in the industry challenge ourselves. And at Evolution, we certainly have. We believe we do a good job with our cultural heritage responsibilities, but we went back, revalidated our controls and our understanding. We discussed this widely and reinforced the criticality of cultural heritage at all levels of the business. We also checked in with our local indigenous communities to see how they were feeling.
The communities were appreciative of our contact and reassured of our ongoing commitment to be relentless in the protecting of cultural heritage. The management of focus on our climate related risks also continues. This is supported publicly by our climate risk position statement. We'll continue to build on the improvement targets set in FY 2021 as we plan our step change, where we look to embed increased rigor into our climate risk scenario planning and disclosure. We lock in long term targets for our emerging climate risks, particularly focused on water, energy and our environmental footprint, and we further embrace technology, renewables and innovation into our business.
And the last pillar around economic contribution, it's one that can't be underestimated. It's worth noting that 74% of people that work for us are locals. We continue to be a significant supporter of being and buying local and promoting the economic future of our communities. With sustainability being integrated into everything we do, we are proud of the value we create and the positive legacy that we that is made. Our journey continues building on solid experience, capability and delivery.
Some of these will be showcased in our upcoming sustainability report, and I'll highlight a couple of these stories for you now. I also want to reinforce that safety is a core value for us. It's about keeping people and communities safe and relies on our leadership, robust governance, oversight and the support of trained and competent people drawing on innovation, which is also in our DNA. We applied science and innovation in the CSIRO wetlands project, where we are teaming with global leaders to look at the use of wetlands and tall gums as a passive way to clean water for reuse or recharge back into the natural environment. Another example is the harvesting of 45% of our tails at Mungari and repurposing them for grouting, including reselling them to backfill underground extractions.
There are also many and varied relationships that we're proud of. From our newest partnership with the Wabascung and Laxil Peoples in Ontario to supporting the great idea of attracting more people to the Lachlan River region and engaging with Wiradjuri art, heritage and storytelling with Somewhere Down the Lachlan, which built on the successful idea of Sculptures by the Sea Trail, but for the Lachlan River region. We love how these sculptures have come along and the life they are bringing to the region. We're also proud to be supporting the University of Queensland research into progressing the use of gold nanoparticles to test for the early diagnosis of cancer. It's been eight months now since joining, and I feel privileged every day to be part of a team that really cares about its people and community.
Not only do we talk about our values, I see them lived every day in the decisions we make and how we go about delivering them. The possibility in front of us is so exciting. And by harnessing our talent, experience and by continuing to be uniquely evolution, I am looking forward to creating an even bigger positive impact on the lives of our employees, our communities and the stakeholders that join us on our journey. The future is a bright one, and please forgive the pun, a golden one. Thanks again for your time, and I'd like to introduce you to Laurie Conway, our CFO and Finance Director, who will talk about how our disciplined approach to capital management is driving value for our shareholders.
Over to you, Lori.
Thank you, Fiona, and hello, everyone. Today, I'm going to talk about our financial position and how our discipline in this area is driving increased returns for our shareholders over a sustained period. The three key topics I'm going to cover are our disciplined approach to capital management, strong cost focus and outlook on costs and returns on investments for our shareholders, which is based on margin overproduction growth. Firstly, our capital management, where our approach has been consistent and disciplined as per our overall strategy. We have always said that we never want our balance sheet to drive our strategy, rather it should facilitate it.
To me, that means our balance sheet should be positioned to take advantage of any value accretive portfolio improving acquisition and ensure we are never forced into a sale of an asset because of balance sheet problems. The comfort our shareholders have is that when we execute our strategy, the disciplines are in place to allow us to deliver superior returns for you. Our balance sheet is in excellent shape. We use various sources of funding for our strategy in terms of debt, equity and hedging. Over the past six years, we have built the right relationships with a syndicate of banks who understand our business and strategy.
When we want to add an asset to the portfolio, we do so with the confidence that the banks will move with us and fund us quickly. The other benefit of our discipline is that when we position the business to be cash generative and one that prospers through the cycle. That is in a high price environment, we bank a significant amount of cash And likewise, in a low price environment, we generate sufficient cash to fund our investments, service our debt and still return funds to our shareholders. The last point is demonstrated by the first by the two charts on this slide. Jake talked about our dividend policy and the benefit our shareholders have experienced from it.
More importantly though is the fact that in the last twelve months, we have delivered the highest return for our shareholders at $365 per ounce, which is more than 2.5x our Australian peers. Further, it was the highest yielding dividend of the peer group. As I just said, we use debt and equity in executing our strategy, and we treat them equally in that both must be repaid. We'll maintain a level of liquidity and at current projections for the business, this is around $500,000,000 We are currently exceeding this with an undrawn $360,000,000 revolver and as at the June had more than $375,000,000 in the bank. For debt, we are comfortable with up to 35% gearing for acquisitions so long as we see a way to reduce this back below 20% in the short term.
We have demonstrated this with our last three acquisitions. This is highlighted in the chart on the top right. We fully funded the Red Lake acquisition with debt and are now on track to be net cash by the end of FY twenty twenty one. This shows that our portfolio deleverages quickly with gearing going from 15% to nil in less than twelve months. On the equity side, we have only raised equity or, as I call it, borrowed funds from our shareholders, 3x.
And each time has been to fund our strategy, not to fix the balance sheet. We have repaid these funds to our shareholders multiple times over, with total shareholder returns of being between one hundred and ninety five percent and five seventy seven percent. For each of the equity issues, if our shareholders retained those shares, essentially over the last four to nine years, they would have achieved returns of between 2050% per annum. Shifting focus now to the second area, which is about our cost management and outlook. The drivers to our production outlook are going to be covered in the second session today.
The only point I want to make here is that following the sale of Cracow and the acquisition of Red Lake, over the next three years, we have a well developed plan to deliver an increasing production profile that takes our group production to over 800,000 ounces, which will be an increase of 16% to 18% from this year. On the back of this production profile, including the change in production mix from the assets and our continued focus on margin, our all in sustaining cost will decline over the three years into the range of $11.25 to $11.65 per ounce. This will keep us as one of the lowest cost producers globally at USD $8.10 to $8.40 per ounce. Importantly, we do not expect to see any significant inflation cost inflation during this period. And on the next slide, I'll cover off on why we hold this view.
The real positive though is that there is potential for these costs to be lower if the Red Lake transformation or Cowal underground are delivered early. To be able to maintain our low cost position and strong margins, we need to know our drivers and cash flow sensitivities. In terms of our total spend, the top six expense elements comprise 85% of the cost base. That means these expense groups have the greatest impact on our unit costs and cash flows. Therefore, they receive the highest level of scrutiny.
The addition of Red Lake has moved labor up now to being around 53% of our cost base. We are not expecting any material increases in the next few years, and it is planned that our labor inflation will be around 3% to 3.5% this year. An offsetting benefit is that we have a declining voluntary turnover rate, which is providing productivity improvement opportunities. This is due to less vacancies and more continuity in roles. In Australia, our power costs will decrease by an average of 25% due to new contracts, which will take effect from the end of this calendar year.
For a range of consumables during the last year, we have executed a number of contracts which have delivered savings of around 5%. The chart on the bottom right shows the sensitivities to cash flow, which also impacts our AISC. Grade and metal prices have the biggest impact. On the positive side, the spot metal prices compared to our FY 2020 achieved prices would be adding approximately $240,000,000 to our cash flow. Copper prices impact our all in sustaining costs through byproduct credits.
If the spot price is maintained for the year, we could see a $20 to $25 per ounce benefit to our AISC. Turning now to the third area, returns on investment and cash flow. Underpinning our strategy is the requirement for assets to fund their own capital programs, generate appropriate returns and repay the investment. Over the last five years or for the period we have owned assets, they have consistently been net mine cash flow positive. The chart on this slide shows that our longest life and highest producing assets are generating the biggest returns.
We are averaging 13% to 24% return on invested capital and this is the average annual return for each asset since we have owned them. In terms of repaying the investment, the color in the bubbles shows the percent repaid. Mt Rawdon and Mt Carlton have fully repaid their invested capital, while Mungari is starting to make good inroads into its repayment. Cowal and Ernest Henry are expected to be fully repaid by the end of this financial year. The benefit for shareholders here is that after this year, with everything repaid, there will be at least ten more years of returns from these high margin assets.
Red Lake is expected to increase returns, extend mine life and start repaying the investment in the coming years. Lastly, the outcome for the business and shareholders is cash flow. This is where the real proof of the business performance and strategy execution are shown. We are sustaining high cash generation with a continued focus on margin overproduction growth. We have delivered to the bank a record $726 per ounce produced in the last year.
This is peer leading as shown on the top chart. We delivered nearly 60% higher than our Australian peers. This is why we put margin ahead of production growth. The bottom chart shows this. In the last five years, our production is up by around 70%, but our free cash flow per ounce is up by over 400%.
Yes, the gold price has risen by 60% in this time, but all producers have benefited from this rise. However, as the chart shows, in the last five years, we have delivered the largest growth in free cash flow per ounce compared to our peers. In summary, we have an excellent balance sheet which supports our strategy. The consistent discipline we apply to our capital management generates strong margins, high returns on investments that puts cash in the bank and allows our shareholders to realize superior returns. Thank you for your time today and I'll hand back to Jake for the first Q and A session.
Thanks, Laurie. Brian, are there questions?
Sure. In the first session, we'll focus on the questions based on the material we just presented. So Jake, first question we have is from a sell side analyst based in Sydney on portfolio restructuring. Would you view the current market as a buyers or sellers market given where the gold prices are?
That's an interesting question. I mean, I think if you go back to what I tried to articulate in my strategy session, it's unlikely that you're going to find motivated sellers in this environment. If you look at the majors, they probably disposed of most of their noncore assets. We are fortunate to be able to acquire Red Lake in that period and Cal, frankly. Developers and juniors do have access to capital that seems to be readily accessible at the moment.
So unlikely to have motivated sellers. So we're going to be dependent and more reliant on Glen and his team. You'll hear from later in the second session about the transformational opportunity that they identified at Red Lake because arguably there, we paid USD $375,000,000 and USD 100,000,000 in contingent payments on discovery success. We probably paid full value for the 1,300,000.0 ounces of reserves or 2,900,000 ounces in resources. But it was Glen and his team's call that said, I think I remember him coming back from a trip to Red Lake saying he'd be disappointed if we're not mining there in twenty years' time.
Now we have 11,000,000 ounces. You'll hear it from Bob and the team about the transformational opportunities and now thinking about 300,000 to 500,000 ounces of gold production there. So that's value creation. So it goes back to the accretion and value accretion perspective. Difficult to find those motivated sellers, but we're always alert.
Just as a reminder, questions can be submitted on the online platform in the submit a tab area of the screen at the bottom right. Next question, Jake, to follow on from that actually, it says, if you have a lower reserve price assumption, does that mean you have trouble competing with peers in acquiring an asset purely on the gold price assumption?
No, I don't think we do. Again, the lens that we're looking at things through is how do we improve the quality of our portfolio and do something that is accretive to our shareholders. So we're not looking to add volume. We've, I think, clearly differentiated ourselves and said, we're all about margin, we're all about cash flow, we're about dividends. You heard Laurie articulate the way in which we manage capital, how disciplined we are with regard to capital.
We've still been able to acquire four assets in the last five years. We've disposed of three. We think that's had a massive change and shift in our portfolio. And I think the quality of our portfolio is best in class. You can see that from the margins and the cash flow generation we're getting.
So I don't think it leads us to be uncompetitive, probably on the things which we describe as not meeting the threshold of improving the quality of the portfolio. We're not prepared to be a participant in that. And we've said no to a lot of things. We've kicked a lot of ties and happily to do that because, again, this is a business about quality. Our business is about quality.
It's about margin and not about volume.
Another question on the portfolio, Jake. The strategy of six to eight assets, with the current reserves, Mt Carlton is likely to be exhausted by the end of your three year outlook. So what are your options around maintaining the six to eight assets in the portfolio? Is that the right number? Or would you look at fewer assets?
The six to eight assets is a guideline. If we could have five assets, which were great assets and producing lots of cash flow and we couldn't add the next asset or two, we'd happily do that. We are not going to chase assets for the sake of maintaining a production profile. We're all about that quality perspective, that margin perspective. We're going to talk about Cowal going to 350,000 ounces on a sustainable level.
We're talking about Red Lake going to 300,000 to 500,000 ounce of production. We're talking about Mungari having an eight to ten year mine, a visible outlook of ten years and opportunities there. So within our portfolio, we have great organic growth opportunities. And don't forget about Ernest Henry, which has been such a great cash contributor. The drilling should extend the mine life over there.
So again, I don't want to get fixated by number of assets or number of ounces we're producing. I want to get fixated and remain fixated on margins, cash generation, dividends and looking for those value accretive opportunities.
There's another one on M and A, Jake, from a Perth based mining person. Do you expect consolidation among the Australian mid tier producers?
As I said in my presentation, adding two companies together, what is the synergy and where is the value accretion, I think, is what the lens you have to look at it through. If it makes sense from a value accretion perspective, then I think, yes. Is there a compelling need for it to happen? I'm not sure. Access to capital, does it reduce in a company the size of evolution?
We've never had shareholders say, Well, we can't there's not enough volume in your stock. I don't really buy into the argument about the fact you'll be more visible to more investors. I think we're very visible. Good liquidity in the stock. So I still think that from a shareholder perspective, you need to be looking at things as to where the real value accretion is.
Corporate offices combining, is that really a value creation opportunity? Yes, it does reduce the costs a bit. But where's the value opportunity? Is there an expertise that maybe one company doesn't have and one company does have? Are there regional opportunities?
I think that makes sense. So yes, I mean, what concerns me is that we're in that part of the cycle where the drumbeat is loud. People want action. And that's generally when deals haven't gone that well. I'm hoping we're not as I said earlier, we're in a very good and favorable part of the cycle.
I think it's going to continue. But I get nervous when deals are just being done for deal sake. So if there's logic and value accretion and both sets of shareholders are going to do well out of it, I'm all in favor of it. But in the past, generally, the sellers have done better than the buyers in a rising gold price environment, and that concerns me.
And Jake, one last one before we break until the next session. Circling back on Mt Carlton, with a reserve life of around three years, does that still fit in the portfolio longer term?
It's something that we look at all the time. We've said in our last results call that we're doing some really interesting drilling at Crush Creek, which is 30 kilometers away from Mt. Carlton. The team has steadied the ship at the operation, and we're looking to deliver to the profile, the guidance this year. But we do continue to assess assets and see where they're really fitting our portfolio.
But I think we need
to look at what the drilling at Crush Creek delivers before making any decisions on that asset. Okay. I actually will ask one more question as it's coming and sustainability related. A question from a sell side analyst in Sydney. ESG has proven to be challenging even for large companies.
Has the addition of Red Lake in Canada added further complexity to managing these challenges in a new jurisdiction? And is the team well positioned to manage this going forward?
Thanks. We anticipated that ESG is clearly becoming a much more important and increasingly high profile part of our business. We recognize that it is going to be an area of increased scrutiny, and we welcome that scrutiny. We anticipated that. That's why we brought on board Fiona in January earlier this year.
She's really built out the team and our capacity in that area. I think that's starting to be recognized, but we're early in on that journey. But MSCI recognition and the Dow Jones Sustainability Index recognition are good indicators. But Fiona is building out, I think, and improving the capacity with her team. Red Lake has added an additional opportunity in some ways.
It's a very well run site in terms of environmental engagements and operational performance. You'll hear that from Amber in a few minutes. So yes, I think we recognize it as core to our business going forward. We're anticipating that. We're reacting to it, and we're I think we're ahead of the curve.
Thanks, Jake. We'll now break for five minutes, and we'll come back at 09:30 for the commencement of Session two. There are some unanswered questions that have come through just in the last few minutes. We will have a longer Q and A session in after the second session, and we'll do our best to circle back on these if time permits. Thank you and we'll see you at 09:30.
Welcome back. This second session is all about our operations and helping you understand our organic growth potential we see in our portfolio. Although we'd love to unfortunately COVID restrictions currently prevent us from hosting visitors to our sites at the moment. So we've done our best to take you there virtually by bringing our assets to life through aerial drone footage and three d geology animation. To make the transitions between the assets more seamless, we've prerecorded a lot of this second session.
First up, we've got Laurie back at the lectern to present Ernest Henry. Thank you and over to Laurie.
Thank you, Brian. Ernest Henry has been a very successful investment for us. We saw an opportunity to gain an exposure to a long life low cost asset which produces a copper gold concentrate. Since the investment in 2016, the asset has consistently produced around 85,000 to 90,000 ounces of gold and around 20,000 tonnes of copper for Evolution. The copper exposure is an attractive one for us as it helps our AISC and provides around $180,000,000 per annum of base metals revenue.
The asset is delivering excellent margins and returns with around 87% of investment capital repaid at an average annual return of 24%. In FY 2020, it delivered $257,000,000 of cash flow to Evolution. In the last twelve months, the asset added three levels of ore reserves without any extra drilling and a comprehensive drilling program is in progress this calendar year with over 18,000 meters planned to be drilled. We expect the results of this program to be finalized as part of the annual ore reserve update in the March. We are very excited about the potential for further extensions at this Tier one asset and look forward to providing further updates in the future.
I'd now like to introduce John Pennhall, General Manager of our Cowal operation. John will provide an overview of our current activities at this cornerstone asset and discuss the pathway to achieve first production from the underground mine, which will provide a step change at Thank you and over to John.
Hello and welcome to Cowal Gold Operations. Today, I wanted to spend a little time talking about our exciting plans to transform Cowal into a safe, reliable, low cost producer, targeting a sustainable 350,000 ounces per annum. Growth at this cornerstone asset will ensure Cowal remains a high margin, cash generating, long life operation, which will continue to drive value for all stakeholders. Since the acquisition of the operation in 2015, Evolution has been successful in growing the underlying resource through discovery, whilst generating low cost production. I've recently joined the organization, attracted by the values driven culture, leadership and opportunities for growth.
I have not been disappointed. Cowal has a proud history and a loyal local workforce that has the desire to succeed and improve. The opportunity is to challenge ourselves to take the next step to safely and reliably achieve operational excellence, while simultaneously growing the business. I'm passionate about our need to continuously improve our safety leadership and safety culture, allow space and ownership for innovation and collaboration to drive continuous improvement, focus on keeping it simple and ensure people, the values we hold and the behaviors we exhibit, stay at the core of our business. Bringing these things together will enable us to achieve our operating mantra of safe, reliable, low cost production.
When we combine this with a world class ore body with outstanding potential, this provides an exciting future. The operation successfully coexists in a unique environment with an Australian heritage listed wet land, Lake Cowal, widespread agriculture and mining. Inside our protection fund, our two primary open pit fleets, consisting of sixteen seven eighty nine trucks, paired with two primary excavators, have been successfully executing the waste prestrip associated with the development of the E42 Stage H cutback. The 2.6 kilometer Oraga decline, integrated off the open cut ramp provides access for underground drill platforms and bulk sample ore testing, with three underground drill rigs currently completing mineral resource infill and geotechnical drilling. Our processing plant, permitted to process up to 9,800,000 tonnes per annum, incorporates a crushing, two stage grinding, sulfide flotation, regrind and carbon in leach recovery, ultimately generating gold bullion.
Our water storage capacity has increased with now close to 1,000 megaliters of water stored on-site, complemented by the increased efficiency of on-site recycling. Significant work is ongoing in the construction of the integrated waste landfork via a combination of a dedicated fleet and ex pit equipment. Stage one is to be completed shortly with tailings deposition to begin in the next few months. The IWL downstream construction will ultimately encompass and buttress much of the current Southern And Northern tailings dams. Safety is a core value reflected in the current low rates of recordable injuries on-site, but we can and must do better.
No job is worth doing unless it can be done safely. People at the core of our business, combined with a local workforce and ongoing community support, all very important parts of our social license to operate. Water security is a major issue in the region we operate in. Whilst recent rains have given the best start for cropping in our region in decades, we continue executing a strategy to target saline water sources that can't be used by other district users. This has materially improved our water security.
Our processing plant performance is a good example of continuous improvement, where resetting of what could be possible has driven a continuous process of reevaluation of how we work, adopting new practices and technology that has led to a step change in performance. In 2015, annual production throughput was approximately 7,000,000 tonnes per annum. We are now achieving rates of approximately 9,000,000 tonnes per annum. Our processing and maintenance teams are leading the way in taking on this challenge and continuously looking for ways to debottleneck the plant and improve performance. Recent capital investment has enabled improved plant availability and the ability to process high grade oxide ore in blends at throughput rates with subsequent recoveries that otherwise would not be possible.
Our Stage H cutback, with approximately 40,000,000 tonnes mined to date, will continue for at least another six years. The pre strip has given the opportunity to reevaluate and improve our operating practices, with a focus on improving critical risk controls in areas such as geotechnical engineering and blasting, to ensure we can maintain high productivities as our cutback progresses to We're expecting ex pit volumes to improve in the second half of the financial year, as we target improved operating performance. Our strip ratio falls towards the end of this financial year, with export ore volumes and grades increasing. This will have a positive effect in supporting our growing production profile and reduce our reliance on lower grade stockpiles. Importantly, our growth options for Cowal are not just limited to underground.
We have a number of exciting opportunities for further ore open pit ore sources. These are undergoing PFS level studies to better understand the best configuration, timing, regulatory approvals process, and ultimately value that can generate value for all of the asset. Our ultimate vision for Cowal is to achieve a sustainable production rate in excess of 350,000 ounces of low cost production. The current focus is on accelerating an initial smaller scale underground operation that provides a platform for further scale growth. Statutory approvals and the modification of the existing Cowal license, along with associated community consultation, are part of the project's critical path.
The environmental impacts assessments are nearing completion, and we believe the project will have a low environmental impact with no additional surface disturbance outside the previously approved footprint. Engagement on the with the community and with our new neighbors is also underway. Our technical teams are pushing forward as we focus on increasing the confidence in the underlying mineral resource estimate, while optimizing the mine design and schedule to accelerate underground production to maximize value. Integration planning has begun, with options being explored on how we can integrate and repurpose current surface infrastructure such as mobile maintenance workshops. As the General Manager at Cowal, I'm excited to be leading a driven team as we execute our plan to build a high quality, sustainable, integrated open pit and underground gold operation.
I'll now hand you over to Glen Masterman, VP, Discovery and Business Development, who will present the Cowal underground opportunity in more detail.
Thank you. Thank you, John. Six weeks ago, we released results of the 800,000 ounce underground maiden ore reserve at Cowal. This morning, I'm going to fly you through a three d presentation of our two year exploration journey focusing on evolution of geology and mineral resources that define the current underground ore body. At the end of the fly through, I will leave you with some thoughts about where we believe resource growth from the underground can be delivered in the future at Cowal.
We start directly above the Cowal operation with a view straight into the E42 Pit. All drilling for the pit and underground resources are shown by the blue drill hole traces. We now move down to a site on view of the pit which also shows the as built for the Wararaga decline. The red point cloud represents assay results for all drilling for the underground fielded above a 1.5 gram cut off. I'm now going to run you through a number of scenes that track the growth of the underground resource since our last Investor Day when we first introduced discovery of the Dalwhinnie mineralization at Cowal.
The first block model we are looking at here is the December 2018 minuteeral resource for the GRE46 underground. This model captured some of the early results of the Dalwhinnie drilling and moved the GRE46 resource beyond its first million ounces to a total of 1,400,000 ounces. Orange blocks represent grades above 1.5 grams per tonne which is our resource cutoff grade. Magenta blocks are above three grams per tonne. The next model I am bringing in is the December 2019 model, which we released in our annual mineral resource and ore reserve update back in February.
We added over 1,000,000 ounces in this update, which took total underground resources to 2,500,000 ounces. The area of most significant growth was the inclusion of a full year of definition and extensional drilling in the Delwini Lode which extended mineralization at depth and to the south. The next model in the sequence is our most recent update which was completed in April. Four months of drilling since the previous update added over 400,000 ounces and brought tail resources to 2,900,000 ounces. This model is the one we have used to inform the maiden ore reserve for the GRE46 underground.
As we rotate back to a westerly view, I'm switching colors in the block model to represent classification of the resource. Green blocks are indicated and blue blocks are inferred. The split between inferred and indicated resources is approximately fifty-fifty. Indicated blocks are the only ones available for consideration in the definition of the ore reserve which as you can see is outlined by the yellow shapes that have just appeared. As expected, very few inferred resource blocks are captured in the reserve.
In fact, any stope shapes containing greater than 25% inferred resource are excluded from the reserve calculation. Inferred resource outside the reserve stope shapes represents the opportunity for future reserve expansion. As we spin the model back to a west looking view, I'm switching on our April 2020 resource model, which is our most recent. The magenta blocks represent inferred category material above three grams per tonne. The yellow shapes are the MSO designs of the ore reserve stopes.
The purpose of showing this combination of models is to highlight the opportunity in three d to understand where we may be able to convert higher grade inferred resource to indicated category which can build on to the current reserve. We have prioritized our current drilling program which is shown by the blue trace lines to convert higher grade inferred resource to indicated category where it is adjacent to the currently defined reserve designs. Our goal is to understand what additional material we can bring into the mine plan that has the potential to maximize the grade profile in the first two to three years of underground production. We have developed a conceptual decline design extending from the current Wairaga decline which can establish new future drilling positions for continuation of confirmatory and resource extension drilling. The rationale for the close space drilling shown at the top of the resource model is to evaluate model performance as we increase drilling resolution to simulate the difference between resource and grade control modeling scenarios.
As I remove the three gram grade filter, we can see the total 2,900,000 ounce resource come back onto the screen. I've switched off the reserve stopes so these can no longer be seen. And what you now see is that the plant deeper drill holes will attempt to grow resources across the gap through the middle of the model where we have limited drill hole coverage and information. This is an excellent example of resource growth that can be delivered proximal to planned mining infrastructure. The last scene I am showing illustrates the areas for longer term growth of the underground resource.
Our surface drilling program will continue to focus on extending mineralization where it remains open along strike and down plunge. We have planned drilling to be done by surface rigs with holes prioritized on the basis of those that have the best chance at delivering higher grade into the model. Thank you. And I'll hand over to Bob who is going to speak to our future production aspirations at Cowal.
Thanks, Glenn, and good morning, everyone. It's great to be here for my second Investor Day presentation. It's an exciting time for Evolution with the revitalized operations team working to deliver on the full potential of our assets. As John and Glen both communicated, is and will continue to be the cornerstone asset for evolution into the future. Cal is a world class ore body that continues to grow.
Since it commenced production in 02/2005, Tel has produced around 3,600,000 ounces of gold and currently has a resource base of 9,000,000 ounces. This mine has the potential to produce over 15,000,000 ounces throughout its operating life, making it one of the most valuable gold mines in Australia. We have a very large inventory of open pit ore with around six years of ore feed from E42 Stage H. Mineral resources continue at depth beyond Stage H. And over time, we will continue to progress the permitting for the depth extensions of E42, pending economics, and of the adjacent E41 and E46 pits.
With the combined when combined with the relative higher grade coming from the new underground mine, our vision for Cowley is starting to crystallize, and we have a clear path for at least ten years at circa 350,000 ounces per year of low cost gold. We expect to reach these production levels twelve to eighteen months after receiving regulatory approvals to commence the underground operation. Approval submissions to commence operations are planned to be submitted this October, and we're encouraged by the current engagement with government and local community about their support for the project, which will bring much needed jobs into Central New South Wales. The project team continues to be very focused on effectively bringing the underground operation into production, and we're working to front end load the high grade from the underground through sound economic mining practices. Cal has successfully executed a number of important projects since our last Investor Day in 2018.
These include increasing the plant throughput by 15% from 7,800,000 tonnes to 9,000,000 tonnes per year delivering the front the float tail leach, the Stage H cutback and constructing the integrated waste landfill tails facility. All of these were delivered by our quality site teams. This gives us confidence in our ability to deliver future projects to realize our vision. I'm extremely pleased with the progress we have made at this cornerstone asset and the contribution CAL makes to the group. Thank you, and I would now like to hand over to Andrew Miller, General Manager, Kalgoorlie Operations.
Andrew has led an impressive turnaround at our Mungari operation over the last eighteen months and will present to you why we think this asset will remain an important contributor to Evolution's portfolio for at least the next decade.
Thank you, Bob. Good morning, and welcome to Mungari Operations. Over the past two point five years as a General Manager for Mungari, I've had the team focused on getting to know our business, understanding our constraints and pinch points and the unique opportunities to deliver value from our operation. This has been implanted through our people being courageous, challenging the business paradigms and creating a value and behavior driven culture. This is linked with the key components of understanding our ore bodies and what we need to do to extract the gold with a margin focus.
The engagement aspect of values and culture has enabled Mungari to reduce its turnover in a competitive market, deliver a record net mine cash flow of $113,000,000 and achieve a 2,000,000 tonne per annum milling rate, whilst the mining operations have transitioned into multiple open pits. The mill is now operating well above the nameplate of 1,600,000 tonne per annum. And with the operational improvements in the crushing circuit, the gravity circuit and the mill, we are now processing at 2,000,000 tonne per annum rate reliably. The process of challenging the status quo by the operational team is ongoing to see where there are further opportunities to improve the crushing circuit, gravity circuit grinding and leaching processes. White foil cutback commenced in 2015.
This is now approaching completion, with current mining rates delivering final mining by December 2020. The ore body continues at depth, and with the improved cost structure and operational efficiencies locked in, this provides long term opportunities to extend the mine life of Whitewater, which is under review. In FY 'twenty, the journey to open the Northern region commenced with the start up of mining at Cutters Ridge in April 2020. This will be followed by the start up of Rayjax Pit by the end of FY 'twenty one. These two pits will be providing ore feed for the Mungari plant throughout FY 'twenty two and into early part of FY 'twenty three, with the mining operations transitioning up to Castle Hill and the northern area in FY 'twenty three.
We will then deliver the large long term feed material supplemented by satellite pits, delivering the eight year life mine plan. Processing options to optimize the processing of Castle Hill ore are under consideration, and Gurn and Bob will discuss these further shortly. Safety and culture go hand in hand with a relentless focus on values and behaviors to deliver the ongoing success at Mungari, ensuring we have the right employee in the right position at the right time. Innovation in the workplace through our the Act Like an Owner program and the continuous improvement projects have enhanced safe work practices and improved productivities from all areas, from the mine through to the mill, such as the HOVEMAT project, which is an underground cavity monitoring tool or the three d scanning geotechnical management tool for ground support and wall stability improved crushing wear rates through the use of new materials and wear components and the harvesting of the tails for Paceville to maximize tails dam capacity Engagement in working with the community and title claimants and protecting culture of the communities is essential for us sustaining our business. A good example is the Shared Valley project with the Koolgadi Shire at the Benpai Park.
We are working closely with native title claimants to manage sensitive sites. Finally, we're also directly engaged with educational facilities across the region, such as local schools and the West Australian School of Mines. What we've been able to achieve with the throughput in the processing plant is a great story of challenging our business by understanding our operations and progressively debottlenecking the mill, starting at the crushing circuit and progressively working our way through to the tails disposal process. How did we do this? A review of operational and maintenance strategy to ensure consistent operations of the primary, secondary and tertiary crushers and the wear rates for all these three crushers, which has delivered a bespoke crusher wear component and lifted crushing rates to improve planned maintenance, increased crusher runtime by 10%.
Maximizing gold recovery by operating the two concentrators in parallel increased the recovery of the gravity circuit by 5% to 7%. By lifting the rotational speed of the mill, grinding capability was also increased to achieve higher throughput with reduced particle size, enabling the ball mill to be stress tested in quarter four. The result has been the 2,000,000 tonne rate is reliably achievable as seen in July 2020. By working with the site team, the cost was less than £5,000,000 compared to initial estimate of £35,000,000 to deliver the 2,000,000 tonne rate. This has further lifted the culture to explore further opportunities.
As discussed with the fly through, the sequence of mining to deliver the three year plan has been the ability to transition from Whitefoil to Cutters Ridge and with the RAJAG's approval underway. This will enable the bulk tonnes to be met and supplemented by the high grade underground material from Frog's Lakes being further extended with the discovery of Boomer. Key to delivery is consistency and reliability. This has been the change in the mining method in Frog's Lakes and the change in operational behaviors. I'm excited about the future of Mungari operations.
With the extensions of successes close to our current operations, the change in performance and driving operational cost down and creating huge opportunities in an area that has not been seen its true value realized. I believe the Mungari team is ready to deliver this value from Castle Hill region and has the capability to continue to optimize the performance and deliver value. These will be discussed by Bob shortly. Thank you. I will now hand you over to Glen, who will discuss and the potential to grow the resources through regional discovery.
Thank you, Andrew. In this section, I would like to address opportunities at Mungari that we believe can continue building on the 2,400,000 ounce resource base. I'm going to focus on the Boomer and Castle Hill areas. The photograph on this first slide captures many of the main elements of the opportunity we're exploring at Boomer. The vein is always narrow, which in this picture is approximately 30 centimeters wide.
Vein geometries are typically buckled, which results in local, but small scale thickening of the vein. And in this underground exposure, the vein contains abundant visible gold, which is pleasing to see as this was not as strongly suggested in adjacent drill results before breaking through on the vein. Mineralization at Booma is developed in at least two separate loads over a straight length of 200 to 300 meters. The vein and high grade mineralization is commonly best formed adjacent to the Mary Fault, but also terminates against it. Away from the Mary Fault, the strength of quartz development diminishes, particularly along strike to the south, which has now been pretty well drilled.
This is similar to what happens at Frog's Leg, which is located 300 to 400 meters northeast into the footwall of the Boomer structure. Although low geometries are restricted to the south, the extension of the Boomer structure continues northwest on the other side of the Mary Fault. Here we have untested ground extending one kilometer to the north towards the tenement boundary with the East Gundana joint venture. We recently completed five fences of RC drilling in this area to determine the position of the Booma structure. So far results have been encouraging with the structure intersected in each of the five RC fences.
Drilling returned several quartz vein intersections across the position of the Boomer Fault. We have designed further drilling, which we will complete over the next two quarters to determine whether new loads are present north along strike. The narrow nature of the veins and short structural range require careful planning of high density drilling to determine an effective test of the target. Turning now to the Castle Hill area, which is located 30 kilometers northwest of the Mungari plant along the Kununalang shear zone. This slide shows pit shells constraining the Kununalang resources along with drill holes in blue and grade in the warm colors.
The pink and blue slice shape marks the outline of the main geological feature at Castle Hill, which is the Kintore tonalite. Gold mineralization generally forms adjacent to the contact of this granitic body with most of the known resources occurring along the bottom or eastern edge of the tonal line. The opportunity I'm about to describe will rely on engineering solutions to enable production at lower cutoff grades in the Castle Hill area. Assuming this is possible, the geological continuity of mineralization at these lower cutoff grades illustrates there are potentially large volumes of shallow low grade mineralization extending beyond the current resource shells, which were optimized assuming ore would be processed at the Mungari plant. Small gaps in the drill coverage along the more favorable eastern contact of the Tonolite could potentially connect to a long continuous zone of low grade mineralization.
Large areas remain under drilled along the Western contact of the Kintaur Tonolite, which may be prospective for additional mineralization. Drilling planned in the FY 2021 budget will continue to target small high grade shoots such as those that define the resource at Picante, which have the potential to provide welcome grade kicks to future production at Castle Hill. With that, I'll pass over to Bob.
Thanks, Glenn. We're at the beginning of an exciting period of change, growth and development at Mungari. We have locked in the 25% processing capacity expansion with an associated operating cost reduction at a fraction of the initial capital estimated to achieve this outcome. The next phase is to continue to deliver additional value by unlocking the full potential of our significant landholding. This is pivotal for Mungari to deliver long term at high margins.
A resource base of 2,400,000 ounces in the world class Ikea and Greenstone Belt of Western Australia, better known as the Kalgoorlie Goldfields, shouldn't be underestimated, nor can it be fully realized without a further mine shift to our processing capability. We're currently working on a base case for a heap leach at Castle Hill to further unlock the lower grade oxide mineralization. But this must stack up economically against either a potential larger conventional plant at Mungari or an additional plant at Castle Hill. We are analyzing these options to optimize and improve the processing path for the current resources to the north around Castle Hill and the Kunalong mineralization with a continued focus on generating strong margins. Studies on these options are progressing well and initial results indicate both options are economic.
Further work is required for the highest value accretive path to be selected. We plan to provide an update on the results of these studies in the December with the preferred path forward for processing at Mounjari. Our current life of mine plan has Mounjari producing a base load of 110,000 to 120,000 ounces per year for at least eight years. However, with the appropriate milling solution, the Mungari region has the potential to provide significant gold production at greater than 150,000 ounces per year on a sustainable basis. We're committed to getting the best return for our investors, and therefore, goal is to solve this economic riddle to identify the optimal solution to maximize the value of the current resources while future proofing the solution for further successes.
Over to Mt Rawdon. Our Queensland operations have long underpinned the success of Evolution and will continue to do so in the future. Mining ore in Stage four of the open pit at Mt Rawdon will continue for the next few years and we expect the mill to keep turning until FY 2028. One exceptional opportunity being pursued at Mt Rawdon is a possibility of using the open pit post mining as a pumped hydro reservoir. Pumped hydro is a technology that treats large water reservoirs as a battery in order to balance out demand on electrical infrastructure.
This project could provide Mt Rawdon with the opportunity to continue its positive contribution to the community long after mining ceases. Long term planning at Mt Rawdon is focused on balancing the benefit of the pumped hydro opportunity with a potential extension to mine life. A Stage five extension of the open pit is currently being reviewed to determine the synergies of these two projects. Stage five has the potential to add around three years to the existing mine life at Mt Rawdon and expanding the size of the pit, which will serve as the reservoir, could have the added benefit of improving the economics of both Stage five and the pumped hydro projects. Over to Mt Carlton.
Although Mt Carlton has had its challenges recently, it's important to remember the significant contribution the operation has made to Evolution since commencing production in 2013. In the 2020 independent stakeholder perception survey undertaken by Deloitte, Mt Carlton recorded an overall social license to operate score of 4.44 out of five, ranking it the highest of Evolution operations and placing it in the high approval category. Mt Carlton has generated over $665,000,000 of operating cash flow in its seven years of production. It has fully repaid initial development capital and subsequent investments to deliver an average return of 19% per annum. The Crush Creek exploration project, 30 kilometers southeast of the operation, returned some exciting intercepts in the June and has the potential to provide mine life extensions at Mt Carlton.
I'll now hand you over to Amber Adams, Interim General Manager at Red Lake. Amber has done a great job leading her team in delivering the transformation plan at the operation since Evolution took ownership in April. There is still a lot of work to do, but as Amber will highlight, we have made great progress in turning the operation around and are very excited about Red Lake's future.
Good day, everyone. My name is Amber Adams, Interim General Manager at the Red Lake operations. I've lived in Red Lake my entire life, and I've worked in the mine for over sixteen years. Over these years, we've seen many changes here at Red Lake, but the most recent changes under Evolution have been the most impactful. We have already seen some very positive shifts in the culture here at Red Lake in just a very short period of time.
People are proud to work for Evolution and very excited about the transformation that is taking place. With the recently announced 11,000,000 ounce resource, we now have a very bright future ahead of us,
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20 a strong restoring the year mine to a premier Canadian gold operation. In Red Lake is a mine with a seventy year history and is located in Northwestern Ontario, which is a Tier one minuteing friendly jurisdiction. The property consists of three sites: Red Lake, Campbell, Kosher, over a seven kilometer strike length. Mining is accessed by three shafts, and we are in the process of decommissioning two others. We have two processing facilities, two tailings facilities, and an on-site camp.
I will now fly you through the key infrastructure here at Red Lake to give you a sense of the size and scale of this very well capitalized operation. This is the Kosher site at the western edge of our property. The Kosher head frame is in the middle of the picture, and the hoist room is to the right of it. The ore from Kosher is dropped down our muck handling system to 36 level, and then it's trammed five kilometers to an underground tunnel to the Reed Shaft at the Campbell site and then sent to the Campbell Mill for processing. The Campbell site sits directly beside the Tanner Barbatown.
This is where the Reed and the Campbell shaft are located. The Reed shaft is on your left, and the Campbell shaft is to the right of it. The Campbell shaft is the original shaft that was used by Campbell Mine and is one of the two shafts that we are currently decommissioning. The Campbell Mill is located on the right of the Campbell Shaft. We have just recently spent $4,000,000 on improving the reliability of this mill.
In front of the Campbell Shaft are various office buildings and our assay lab. This is our recreation center off to the left and the Campbell May Tailings Pond. We are currently in the process of completing the Stage VII Dam raise, which will provide suitable storage for water and solid generated from the Campbell Mill over the next several years. The Red Lake site is where one shaft and the Red Lake Mill are both located. This is the second shaft that we are currently decommissioning.
Directly behind the shaft is the Red Lake Mill. Behind the mill, there is a haulage road that joins the Red Lake and the Campbell property together. Here in the picture is the Red Lake Tailings Pond, which has storage for the next several years. As you drive into the barbersite, you can see the two eighty two person camp on the left and the main administration building and then also the bomber shaft and the quaest room behind it. The haulage road in the background connects the Bomber, Red Lake and the Campbell site together.
Or as well as on this road to the Campbell mill for processing. You can see the Red Lake Mill in the background. Changing our safety culture here at Red Lake is a very important part of our transformation plan. We are now more focused on reporting all safety incidents, no matter what the size, and learning from them. We're also very excited about the opportunity to collaborate with Evolution's Australian operations and share best practices to build a best in class safety program.
Red Lake has an excellent environmental compliance record and has had no environmental incidents. We have a very strong relationship with our two First Nations partners, Lac Sewell and Wabeskayne, and they have the opportunity to participate in business opportunities. Our predominantly local workforce has a vested interest in the mine success. I will now take you through some of the changes that we've already made in our path to delivering a transformation plan targeting 200,000 ounces at a cost less than CAD1000 per ounce. Successfully achieving these first steps gives us the confidence that we are well on our way to restoring the mine to its former glory days.
The workforce restructure that took place in the June resulted in a reduction of 120 roles, and it saves us AUD16 million per year. The shutdown of the Campbell mill, which also was completed in the June, has already resulted in improving the reliability of the plant. Our target is to improve the Campbell plant reliability to 96%. We are in the process of automating the bomber and re hoist, which will be completed in the twenty twenty one quarter and will result in a reduction of 12 positions and save us $2,000,000 per year. We are rationalizing our infrastructure and removing redundant buildings and scrap from site.
We have also initiated the decommissioning of Campbell Shafts and Wedge Shafts. The Campbell Shaft will be completely decommissioned by early twenty twenty one. A key initiative to improving our productivity here at Red Lake is to spatially concentrate our mining areas. As you can see from this slide, our previous mine plan seen us mining from over ten minuteing fronts Our transformation plan now has us moving to a more focused mining approach, where we will be mining in only six areas of the mine, all in very close proximity to each other in the lower parts of the mine. This will drastically reduce our costs and allow us to run a smaller fleet of larger capacity underground equipment, which will also allow us to lower our manning levels.
Mining is the current bottleneck for our operation and where we need to make the most impactful improvements. With a very large resource that we have in front of us, we are going to be more focused on moving from a position of being mine constrained to being more mill constrained over time. Development is key to delivering our transformation plan by enabling us to increase future stope production. The underinvestment in mining development in recent years saw a depletion of available mining stocks and has resulted in an inconsistent feed of ore to the mill. Since January, we have seen monthly development meters increase from around 600 meters per month to over 1,000 meters per month, and we are now closing in on our target of consistently developing 1,200 meters per month, which will enable us to reliably deliver ore to the mill.
We will be simplifying mining processes by debottlenecking the material movement system in order to increase tonnage, investing in new haulage fleet with a larger capacity, optimizing haulage routes for each mining area to minimize the rehandling and speed the flow of ore and waste to the mills, implementing high efficiency long haul stoping and review stoping and paneling sequences to improve the management of geotechnical conditions. We are well on our way to restoring Red Lake to the great mine that it once was, and we are going to stay focused on delivering our transformation plan, which is critical to achieving our long term aspirations. Thank you.
Thank you, Amber. Last month, we released results of the mineral resource update at Red Lake, which delivered 11,000,000 ounces of gold grading 7.1 grams per ton. In this section, I'm going to fly us through a three d presentation of the geology and resources at the Red Lake operation. My intention is to give you a visual experience of the Red Lake ore bodies as well as illustrate that we still have plenty of room to build from this recent result with the ultimate aim of putting our foot on another zone of very high grade gold mineralization. We start our fly through of the model with this LiDAR image looking down on the towns of Barmatown and Kosher.
As we increase transparency, we can see through to the underlying mine workings as they are projected to surface. Koshner, which is its own independent ore body, is located to the top left of the airport in the image. The Campbell And Red Lake mines are located on the center right. Campbell And Red Lake were operated by separate owners throughout most of their production histories. However, they are in fact part of the same mineral system of multiple stacked ore bodies.
Our revision of the mineral resources commenced back in February when we inherited a resource model comprising more than 6,500 individual wireframes, which I am showing here in the purple shapes. We decided to completely modernize the resource by going back to first principles and building geological models from scratch. We rewireframed all mineralized domains, which is shown here in the multiple colors utilizing information from 47,000 drill holes, totaling over 7,000,000 meters of drilling. The drilling database is one of the largest we have ever worked with and includes just short of 6,000,000 samples. The modernization exercise resulted in consolidation of 142 individual block models developed by previous owners to a more manageable 19 models.
The new geological wireframes constructed for this estimate are grouped into colors representing each of the 19 new block models created. In this next scene, I have further simplified our new block models by grouping into the Upper Campbell in blue, Upper Red Lake in orange, Lower Campbell in light blue and Lower Red Lake in gray. The high grade zone which was essentially depleted between 02/2016 as shown in dark gray for reference. However, it is worth noting that there are minor remnant resources remaining outside of previous workings in the high grade zone. The most significant result in the new model update comes from the Upper Campbell area of the mine where we have reported a new resource of 4,300,000 ounces grading 10.5 grams per ton.
This resource starts from surface and extends to a depth of 1,200 meters below. We are zooming in now to look at a window through the Upper Campbell area sliced at a level 150 meters below surface. This view is cut from a 100 meter vertical section through the Upper Campbell Mine and illustrates how grade control was done in the past with each of the colored points representing an individual underground phase sample. Stopes and development drives are highlighted by the gray as built shapes. Referring to the legend on the top right, it is evident that incredibly high grades were mined from narrow structures now represented by mining voids in the gray panel shapes.
And just to emphasize the grade for a moment, red represents sample grades above 10 grams per tonne, pink above 50 grams per tonne, and purple above 200 grams per tonne. This type of ore control sampling historically substituted for more expensive grade control drilling. Drilling eventually caught up with mining, which in this scene is shown by the blue line traces. By switching on the assay results, which are filtered above three grams per tonne, we can clearly see that the historic data is delineating areas of mineralization that lie outside of and beyond the mined out high grade shear zones. Interestingly, the mineralized volume in the center has been delineated by very close base drilling giving us high confidence in the geological continuity of mineralization.
In this next view, I am showing a slice of our new block model with estimated block grades filtered above three grams per tonne gold. Our classification methodology has been conservative particularly in the Upper Campbell and Red Lake areas of the mine. A two meter wide buffer was created around all old workings in these areas which have been excluded from the models and are reflected in the numbers reported in the updated resource. The two meter buffer has not been applied to the lower areas of the mine where we have modern survey control. We transition now to a view of the stope outlines generated by the mining shape optimizer for which we constrain and report resources for inferred categories or better.
We have applied the same methodology to the Lower Campbell, Upper And Lower Red Lake and Cochinore ore bodies resulting in similar resource uplifts as we have seen at Upper Campbell. I'm now going to switch gears and speak about our views of the district upside potential beyond the footprint of the 11,000,000 ounce resource. The rationalization of the geological framework and consolidation of resource block models have made it possible for us to evaluate future discovery potential in a more holistic way than previously. We are now able to look at data and information for the whole of the operation, not just subsets of individual ore bodies. This is facilitating recognition of new target areas that may not have been effectively explored despite a seventy year mining history at Red Lake.
I have now switched on the drill hole traces for all drilling ever completed at Red Lake. Here we see the 47,000 drill holes, which make up the 7,000,000 meters of information in our database. And now I'm switching on the results from the 6,000,000 samples that inform our new block models. Given the amount of data, I am only showing drill hole grade information above three grams per tonne, which approximates the cutoff grades for which we've reported our updated mineral resource. The next scene takes us to a plan view of the surface geology.
I would like to draw your attention to a very important geological feature on this map. As I fade out the surface geology, I will emphasize an irregular three d surface which is one of the main geological boundaries in the Red Lake District. In geological terms, this surface is known as the Bruce Channel unconformity. It is important because the unconformity marks the geological boundary that separates Balmar assemblage mafic and ultramafic rocks from the younger Bruce Channel assemblage sedimentary rocks. The Balmer assemblage forms the core of the geology in the center of the map, which is enclosed by the Bruce Channel unconformity.
What is apparent when I turn on the drilling results again is that we can see gold mineralization is most commonly hosted in the Barmah assemblage rocks and generally localized near the Bruce Channel unconformity at each of Red Lake, Campbell and Kosher. One of the ways we can assess how effective exploration has been done in the past is to look at all of the drilling ever completed. When we do this at Red Lake, we see that most of the blue drill hole traces cluster around the known mineral systems as one would expect. However, and somewhat surprisingly, there are corridors that remain relatively under tested, particularly in the hanging wall of the main mineralized mine trends at Red Lake and Campbell. These areas are where we are focusing our discovery drilling programs to target and drill extensions and repeats of these incredibly well mineralized corridors.
We are also working with a number of expert technical consultants to understand the geological conditions that prevailed to enable development of the high grade zone at Red Lake. We are applying this knowledge in our step out drilling to help us recognize similar geologic conditions which will ensure we pay the right amount of attention to the evidence that can sharpen focus on delivery of future high grade discoveries. I believe the opportunity for us at Red Lake is a great example of where the whole is greater than the sum of the individual parts. We've been able to bring a different lens and approach to the mineral resource solution. For the first time the mineral resources and geological upside can be evaluated under a rationalized geological framework that can be interrogated from a single consolidated database.
With that, I'll hand over to Bob.
Thanks, Vern. Red Lake presents an incredible opportunity for evolution. The recent mineral resource update has us truly excited about the future. A resource base of 11,000,000 ounces and as Glenn has outlined, the opportunity for discovery of a lot more. This gives us scope to increase our production profile significantly while maintaining a long life.
Our three year transformation project is focused on delivering a low cost sustainable operation of 200,000 ounces at sub US1000 dollars an ounce all in sustaining cost. But this is now only the starting point for Red Lake. With its near surface expression, Upper Campbell presents options for a surface decline or potential open pits to extract additional resources. This shows the location of a possible portal to decline into Upper Campbell. This was permitted by previous owners.
This design is only conceptual, but as we work on updating Red Lakes ore reserve for a thirty one December twenty twenty cutoff, a key focus will be on accessing the low hanging fruit in Upper Campbell. Additionally, the Portal location could also provide decline access to the HD Young ore body, which we believe has significant potential to grow from its current resource of 400,000 ounces. This is why both Cochina and Lower Red Lake provide the baseload for a truly diversified mining operation, unlocking Red Lake's full potential. A resource base of 48,000,000 tonnes needs an appropriate processing solution to deliver true benefits. We're investigating all possibilities to enable Red Lake to deliver for a long time to come.
We are thinking in terms of decades now rather than years and see incredible opportunities. We have not yet scratched the surface of Red Lake's full potential and believe in its potential to return to sustainable production levels of between 300,000 to 500,000 ounces. We have a lot of work to do, but have an aspirational target of working towards these levels of production over the next five years. Red Lake is located in one of the world's greatest gold mining camps, and we are focused on making the most of this address. This is only the second quarter that Red Lake has been part of Evolution's portfolio, and we're even more excited about it today than when we completed the deal only a few months ago.
Finally, before handing back to Jake for some additional closing remarks, I'd like to reiterate. The safety of our people is imperative and this continues to drive us. Our teams are continuing to work hard to improve, and I'm happy to say that we are reducing the injuries happening at our sites, with a sharp focus on the critical and material risks that have the potential to cause serious injuries. We believe every incident is preventable and strive to achieve this. We're in the midst of a major technological shift, not only within mining, but industry as a whole.
Data is now more important than ever, and the possibility of the abundance of data are boundless. Since the last Investor Day, we have generated over $45,000,000 in data enabled business benefits through a number of well executed initiatives. Cow generated over £16,000,000 in benefits alone in their Scat beneficiation project, while Mungari generated over £10,000,000 in benefits in the mill throughput optimization. We have a strategy and a clear road map defining how we will utilize and leverage technology in the future. Our focus will be on automating processes wherever possible to allow our people to focus on problem solving.
Artificial intelligence will run our future processing plants, monitor our machines for possible faults and optimize the ventilation circuits. I'm grateful to be part of an organization that is seeing the value in data and encourages the philosophy of thinking differently. The work we are doing now will ensure we are best placed in the future to enable greatness. Thank you, and I'll hand over to Joke.
Thanks, Bob, and everyone who presented this morning. I do emphasize that this is a few of the many great people we have at Evolution who make this the company it is today. Brian, let's open the lines for questions.
Thanks, Jake, and thanks for everyone who has submitted a question. Really good engagement this morning. There's a lot of questions coming through and hopefully we can get through most of them. I think the best approach will be to split it into assets. So we'll cover Cowal first and then Red Lake and then Mungari and then there are some questions on the other assets as well.
Before we do, Jake, a question from a long term loyal retail shareholder. What is Evolution's greatest weakness? And the second part of that question, what's the greatest threat Evolution faces?
Yes. Thanks for that question. It's a good one. I think I call myself a paranoid optimist. I know my colleagues agree with the paranoid part of it.
I'm not sure they agree with the optimist part of it. So I think the paranoid part of me says that our biggest weakness is potentially losing focus in this high gold price environment, losing our sharpness, starting to think that we do things and erode those margins and just lose that discipline and focus that has made us so successful to date. The biggest threats, you have to think about ESG and the social license issues. You've seen that recently in the Australian mining industry. We are very committed to ensuring we do the right thing, way above what we are required to do.
And that but social license is really critical to us. The next thing is culture. This is a business about people. And if we erode our culture and we lose that focus and start to lose that humility and that edge that has made us where we're at today, we're a bigger company than we were when we formed nine years ago, but we need that core culture to remain the same, where people believe they can make a difference, where they feel empowered, and they we're attracting the best people to Evolution and retaining the best people at Evolution. I think that's the biggest threat.
Thanks, Jake. We're going to cross to now. And just to remind the viewers, we've actually got four speakers dialing in remotely. We've got Bob in Brisbane John at Cowal in New South Wales, Andrew at Mungari in WA, and Amber Adams has joined us from Red Lake in Ontario. So if there's any slight delay in responding to these questions, please be understanding.
The first question for John at Actually, two questions have come through relating to the processing rate. So at Cowal, the higher permitted rate of 9,800,000 tonnes per annum is described as future optionality. Can you discuss the reasons for not increasing that capacity sooner? And also, can you outline your current thoughts on the potential mill capital and timing to reach that 9.8 per annum million tonne level? Thank you.
Yes. Thanks very much, Brian, for the questions there. So certainly, as an asset, we have a real focus on maximizing our asset value, and that has been extending to how we continue to increase our throughput rates through our processing plant. I think certainly, our preliminary work and our internal studies have shown the potential for a step change that focused on a combination circuit. But look, at this point, our initial preliminary work suggested that our capital investment didn't justify doing so at this point in the process.
So what we've done is then stop, revisit and be able to think a bit differently about how we consider our plants. So current work is we've engaged with an external contract partner and are looking at a complete debottlenecking analysis of our entire processing plant. And the aim of this then is to look for those incremental wins that can be put in, again, at a lower capital consideration that delivers those high margin ounces and delivers high value with any augmentation that comes with a really sound business case. So that work is ongoing. We're continuing to do that in parallel with the underground studies and open PFS work.
And so that will come in as one of those streams over this next period of time when we continue to deliver value here for the asset. Back to you. Thanks, Brian.
Thanks, John. We're going to cross to Red Lake now. We have a number of questions coming through on Red Lake, which is understandable given the amount of new content being released today and the production long term aspirations around 300 to 500,000 ounces. Before we get to that, a question directly for Amber from one of the viewers today. For Amber, what is the biggest difference in your view under the new owners that you spoke about in your presentation?
And also some comments around the recent forest fires that you had and whether that had any impact on the operation. Thanks, Amber.
Thanks, Brian. So yes, first of all, we're seeing a very important shift in our culture here at Red Lake. Employees are commenting that they are happy to come to work. They're more motivated and very excited about the future. We're also pleased to see our employees now starting to speak up and having open and honest conversations, and they're offering us a lot of improvement ideas, which has a positive impact on the operation as a whole.
As well, Evolutions enabled us to look at this operation differently than we have in the past. They're also providing capital required to reduce costs in the future. And so, yeah, all of those things have had a really good positive impact on us just even bringing in different ways of doing things in terms of mining methods and and the like. In terms of the forest fire, minimal impact, we were in care and maintenance for about seven point five, eight days, and there's no impact to our plan for this year.
Thank you, Amber. So question for Jake and then on to Bob also on Red Lake. So with the aspirations for 300,000 to 500,000 ounces per annum, does this suggest a two to three times throughput scenario of what you're currently doing? What would need to be done in this case? What infrastructure is needed?
Is there a new plant? What's the CapEx around that? And then another question from another viewer similar. On the open cut optionality at Red Lake, previous owners evaluated a new mill and open cut options in unsuccessfully or the evaluations were unsuccessful several years ago. Can you talk to some of the differences in your vision that you bring and perhaps what you're thinking about differently going forward?
Thanks, Brian. I'll make a few comments and then hand over to Bob. We made the investment case at Red Lake on the base that we could transform it to 200,000 ounces at less than USD 1,000 an ounce. After Glen and his team did the work, and we now have this 11,000,000 ounce resource, And particularly that Upper Campbell area, the lower areas we always thought were perspective and were going to give us additional life and sustain us, but that's where we thought the biggest momentum would come from. Now that we've looked at Upper Campbell, 4,300,000 ounces at over 10 grams a tonne, I can only give you some anecdotal sort of perspective as to the conversations Bob and I had when we looked at that resource.
And Bob was saying, Gee, Jake, we've got an 11,000,000 ounce resource. If we mine it at 200,000 ounces a year, that's going to take us fifty years to mine. We better go faster than that, which is true. And that's where we've got to recalibrate completely. And as Amber said in her presentation, at the moment, the mine had been depleting its reserves and resources way too quickly and was really in a harvesting mode and was headed towards closure because there's a lack of exploration and development expenditure.
So we need to rebuild that up, get the inventory up and start to make the mill the constraining feature. Bob has thrown around numbers that clearly suggest that even optimizing these current mills at their 1,100,000 current capacity is not going to be big enough. But that's going to be determined by the scale of opportunity and the potential of it. So Bob, maybe you can provide a bit more detail.
Thanks, Jake. Can you hear me okay, Brian?
We can.
Yes. It's a good question because when you look at what Jake had just described, it's a huge opportunity. It's very early days, and it's going to be dependent on economics, and it's going to be dependent on a lot of other factors. But when you look at the resource that Glen was describing and you start to sort of break it down into some of regions in the upper areas of Campbell, you see that there's a lot of areas that are actually not around old stoping areas but haven't been touched, Whilst there's a significant amount around the old stoping areas. So the opportunity for something larger is there.
But once again, it needs to actually be justified from an economic perspective. So therefore, we need to understand the full potential. The reason I said that up to five years plus of growth is because it's going to take a bit of time to really assess where we're at. The Lower Red Lake, the Koshner and those areas of mining that we were planning and are planning to actually go into, as Amber discussed, are really the base stock of what we made our investment decision on. And that's pretty sound.
But from an open pit perspective, from an underground perspective, to get a 300 to 500, it would take more processing capacity than we currently have. And once again, that's an economic trade off of upgrading current plants as opposed to new plants as opposed to something different. Back to yourself, Brian.
Thanks, I mean, I'll just add a couple of additional comments over there. The one being that I hope you got from Glen's presentation just the fact that the opportunity of discovery of additional resources is going to be is still there. We are getting drill results from the lower areas of Red Lake Aviation Zones, which are really, again, emphasizing the justification we had for the investment decision earlier on, and there's lots of potential upside over there. The next step is going to be to develop a new reserve estimate. That will be done and completed with our annual MROR statement, which will be out in the first quarter next year, first calendar quarter.
And that should show a significant uplift in the reserves and will allow us to start assessing these potential opportunities.
Jake, another question on Red Lake. To what extent have travel restrictions impacted the transformation plan at Red Lake?
I think the short answer to that is much less than we anticipated. Amber has led terrifically the team over there. They have they are a highly skilled team and have embraced evolutions, engagements and culture and really started to run with the ball themselves. I think in Canada, may say the hockey puck. But the team is there, Bob, and all of us have been fortunate to have been at the site several times.
We know the site. We know the people. Obviously, we're using video conferencing a lot. And Dean Frederiksen, I'm going to tell this anecdotal story because I think it gives you a sense of excitement that we have for the potential there. Dean Frederiksen was largely responsible for some of the discovery success we've had at Cal.
He is involved in the due diligence of Red Lake. And when he saw the potential opportunity, he said, Well, hang on, Glen. I'm putting my hand up to actually relocate to Red Lake for eighteen months, and he's now there. And that gives you a sense of the opportunity over there because I don't think Dean was intending to go and spend the next eighteen months in Red Lake, but just couldn't resist when he looked at the opportunity. So we do have people on the ground, but we have a great team there and obviously using technology as best as it's allowing us to, which is really on a daily basis keeping engagement going.
Thanks, Jake. The next two questions are for Bob, they're both related. Firstly, could you discuss the geotech issues relevant to Red Lake? What, when, where and how? And then a second question, do you see any challenges in mining in and around the remnants of historical mining such as the significant resources identified in Upper Campbell?
Thanks, Brian. I'll start with the geotech. I guess it's no surprise that Red Lake is a deep mine. And the deepest areas are over two kilometers deep. So that brings its own challenges.
The good thing about Red Lake is that it's got this large strike length as well. So there's many areas that have got totally different global geotech issues coming into play. So what we're looking at is we're looking at a from a localized perspective, how can we improve the surface support and that immediate support structure. We're also looking at the regional stability, and we're finding it's pretty well known. The team on-site, they've got a really good handle.
They've been there for a long time, and they've got good systems in place right down to a really state of the art seismic system that they use on a daily basis. The last one is, I guess, the seismicity. It's not unusual for mines at that depth to have issues or to have things that they've got to work through. But the seismicity that we're experiencing and we do experience at Red Lake is not different to what you'll see in most of that style of ore bodies. So we see similar at Mounjari, and we see similar at other operations throughout the world.
So the geotech opportunity is to actually improve our understanding over time, but really leveraging off the guys on-site because they do have a really good understanding of what's going on. And there really hasn't been that many surprises from that perspective. The question on challenges from the open pit sorry, mining around Upper Campbell and what it will bring. Any mining around remnant, whether it's from an underground perspective or an open pit perspective, actually brings its own interesting challenges. From an open pit, people mine through voids quite regularly.
We're doing it and have done it at Mungari already, and other people are doing it. So we'd have to put some of those systems and structures in place to manage that risk. The underground, the interesting thing about the underground is some of the resources that Glen and his team have identified are actually virgin areas. There's a lot of areas that are around the old historic mining, but there's also a lot of areas that are potentially resources that could house new stoping with no interference from the old historic areas. Sign up, the Red Lake District has over seventy years of mining history.
So it would be remiss to think that we can go in there and just expect no surprises. So we would take that into consideration. Hope I answered the question, Brian.
Thanks, Bob. I'll just make two additional comments. The one and without preempting anything, but Bob, know we were pretty excited to realize and understand that there is a decline portal that is permitted for Red Lake. And the second one, when we announced the resource estimates, Glen explained the fact that there was a two meter skin left around any remnants mining, and that wasn't included in the resource estimate. So we've been and tried to capture some conservativeness around that remnant mining.
Okay.
Another one on Red Lake before we move on to Mungari. There's a few questions here on Mungari as well. What's required to get Red Lake to 500,000 ounces per annum? And how much additional milling capacity would you need beyond the 1,100,000 tonnes per annum?
Well, I haven't done the numbers yet, but it's definitely more than we've currently got. If you take an average head grade of seven to eight grams a ton, Bob was telling me roughly how much he thought he could get out of a decline development. It starts to get up there with what you've got coming through the shafts, but it's definitely going to require some new milling capacity. Bob, do you want to add to that?
The numbers I've done are they're very high level sort of helicopter views, a decline. You expect 1,100,000.0 up the shafts and $1,000,000 up the decline and etcetera, etcetera, you can quite easily get to those numbers with the resource global grades that we've been talking about. And even if you put some degradation of the grades that you take from different zones because of different cutoffs, you still get to within that range quite easily. Even if you use pretty conservative sort of recoveries of in the 80s, you still get sort of good numbers. I don't know that I could go much further, Jake.
No, I think that's given enough to suggest that all the fundamentals are in place to get there. It's how do we get there most economically and expeditiously.
Going across to Mungari now, and first question will be for Andrew. It's a fairly straightforward question. What's the expected split between the open pit and underground ore feed that goes into the mill over the three year outlook that you provided? Thanks, Andrew.
Thanks, Brian. Can you hear me okay?
We can. Thanks.
Yes. So the next two years, we have a 80% open pit feed with 20% underground. We then move into full open pit feed for the third year. That is with the understanding that there's no further success at Booma subject to the drilling at Booma, we'll obviously mix change that mix.
Andrew. All
right. A question for Jake and Bob also at Mungari. An analyst saying, I'm keen to hear more around the longer term options you have to lock in the eight to ten year mine plan. A AUD 14.5 per ounce Australian dollar reserve price must make Castle Hill look tough. What does that mean for balancing margin and volume?
Could you increase your price assumption of this asset? Or if it didn't work, would you look to divest this asset?
Thanks. At this stage, we have not changed our assumptions around reserves. So what we've looked at today, and it's early days, but we've looked at three different options. The first would be a heap leach option at Castle Hill, which is most economic on the early stage numbers. The second would be a new plant in that area.
And as Glenn explained, there is quite a number of satellite opportunities around there, which would create a real processing hub. And then the third option is trucking to the Mungari plants at the moment, which is tough at the current reserve price assumptions. So those are the options we've looked at. As Bob said, next year, we'll be releasing some of those results. We'll have done a more detailed work.
But the optionality at Castle Hill and that whole regional play is something that we believe we need to bring to account and allow analysts and recognize that we haven't really delivered a clear pathway for people to model that as to how we intend to bring this to the kind of ten year horizon that we're talking about. I think when Laurie and I were chatting about it earlier, we're saying that in the current LOM, ounces from those resources and our LOM is around AUD 1,400 all in sustaining cost and AUD 1,600 all in cost. So still very high margin ounces at the current gold prices. Bob?
No, I think you covered most of it, Jace. The real option for the Mungari District is around a trade off between processing cost, transport cost and the economic value that it brings. And that's why the different options are being considered. Obviously, the heap leach will bring very low op costs, but it comes with some capital costs, whereas the mill options are higher capital costs with significantly lower operating costs, and the transportation has its own issues. That's the riddle, I guess, that we're trying to unravel.
And we've come a long way in the last six to twelve months and expect to have some answers pretty soon. Back to you, Brian.
Thanks, Bob. A question related to that, and I'll ask it directly to Andrew. At Mungari, how long would it take to permit a new heap leach or a mill at Castle Hill? And are there options to toll treat Northern Resources as an alternative? Thanks, Andrew.
Thanks, Brian. The permitting process really will be dependent on the scale of the heap leach. And as Bob and Jake have both indicated, we've got some study work progressing this year to deliver the optimal size of the operation. And with the understanding of the geological opportunities there, the engineering and economic compliance will drive the size of any heap leach. So the approval process is in progress as we speak.
However, the process going through to government and is undetermined because it will depend on the size. As for options to toll treat the Northern resources, And the only real alternative is our neighbors up there with Nortons and Paddington Mill. There is a very limited scope of milling capacity in the area, which, as Bob mentioned and I mentioned in the presentation, unlocking the real value of that asset area of those tenements is around milling capacity and historically hasn't really been touched due to the remoteness of the location to any mill. So there isn't really a potential at this point in time for toll treating.
Thanks, Andrew.
Another
question for Jake. Given discovery success at Mungari and the extensions of mine life, where does that place your JV investment, the EK JV at Mungari? And what's the long term strategy with this interest?
Yes. Thanks for that question. We still hold the 19.9% interest in Tribune. We acquired that when the opportunity came around, it was divested of, and we bought it in a block trade. It's done well.
I think we bought it just over $4 and it's, I think, trading now at $8 But the end game is ultimately to try and get access to some of that high grade reserves, which is in that EK JV. Dialogue continues with the counterparty, but that's the strategic aim, too. It is the biggest and most near to the Mungari plant reserve base, a known reserve base at the moment, and it comes past our mill and then goes off to a mill 60 kilometers away. So we do think there is the opportunity for synergies there and genuine synergies for all parties to potentially bring some of
that high grade material to Mungari. Thanks, Jake. In the five minutes remaining, we'll lift up now and ask some broader questions around the strategy that haven't been answered. One around our reserve price assumption. I applaud your reserve your approach to maintaining a low reserve price to maximize margins.
When you look across your portfolio, are there specific assets that generate a superior NPV if you apply at a higher reserve price and extend the life? How do you weigh up a higher NPV over life of mine planning versus a high margin today?
Yes. Those opportunities of potentially increasing the reserve price and going to higher reserve price for specific areas generally lend themselves to open pits. So you could talk about Mt Rawdon, for example, would the Stage V potential cutback work if you had a higher reserve price? And that's something that we would assess. We're not planning to increase the reserve price, but those are the types of opportunities which provide options to either us or potential new owners of the opportunity.
We are sticking to our view that margin is what matters. We will obviously always try our best not to compromise the potential mineralization there and allow it to be available for either us to mine at a later stage or someone else. But we are of the view that really eroding the margin is a slippery slope in this business.
Jake, another strategy question from someone who describes himself as a long term loyal banker. How does your view on jurisdictional risk appetite continue to evolve? And are you limited to just Australia and Canada?
Yes. I hope I explained in the earlier comments that I made that I just see the world a world of increasing geopolitical risk, rising tension, nationalism increasing and the potential risks in emerging market jurisdictions is actually going higher. So I think in time, investors and analysts will start to have to apply either a bigger discount to mines that are jurisdictions and higher risk jurisdictions or a bigger premium to Tier one jurisdictions like Australia and Canada. So we are staying with Australia and Canada, Tier one jurisdictions where the rule of law can be relied on. And also, it goes to that earlier point I made about culture.
We want to be a mid tier. We don't want to be a multi jurisdictional organization. It's another view that I have that, that starts to erode the core culture of an organization when you start to try and manage more and more jurisdictions because each jurisdiction is difficult and different and challenging. The easier ones are the Tier jurisdictions where the rule of law can be relied on. But just having multiple jurisdictions over around the globe and just adding them on, I think erodes the culture and ultimately has led to the demise of many companies, which have thought that they can just bolt on these acquisitions in new jurisdictions.
So I think focus and focus on those Tier one jurisdictions.
So a direct question following on from that around Cowal. Are you contemplating any expansion via acquisitions, farm ins or JVs in and around the Cowal area in New South Wales?
We're always looking at those sorts of things. Cowal is now 9,000,000 ounce resource. It's grown massively since we first acquired it. I think I hope you got from Glen's presentation that the scale of opportunity there is immense, and we are not of the view that we have finished discovering ounces on our tenements. We do own the Marsden deposits some kilometers away from there.
We acquired that a few years ago. So building the strategic position and opportunities, if they're available and if they meet our criteria of improving the quality of our portfolio and adding potential low cost ounces in the future, yes, of course, we're up for them.
Thanks, Jake. It's right on 11:00, so that will conclude our question and answer session. There are some questions that we couldn't get to of them, and I'll do my best to respond to those over the coming days. So I just thank you again for your interest and hand back to Jake for some closing comments.
Thanks, Brian. And really, thank you, everyone, for listening in on this presentation and watching it. I do hope we've been able to articulate with this macroeconomic picture, the geopolitical and fiscal risks that are emerging that we have unbelievable organic growth opportunities in our portfolio. Over the last five years, we've improved the quality of our portfolio to be what I believe today as world class. And very importantly, we have a team of people in place to allow me to be very confident that we are entering the most exciting period in the short history of evolution.
The amount of work that has gone into today has been massive. I've had the very easy job of just standing here for half an hour and presenting and answering some questions. But I want to thank our very talented team at Evolution, Brian O'Hara, Martin Cummings, Liesl Kemp, Donna Lesk have been unbelievable in the amount of work they've done. Also Michael Vaughn of Fivemark Partners has helped polish a number of the speaking notes and does it always very well. But this group has worked tirelessly to make today as successful and professional as it has been.
Finally, to you, the audience, thank you for taking the time to learn more about Evolution. Stay safe and well, and we look forward to speaking to you again soon.