Thank you for coming back in on time as well. We do have, I would say, a feedback-rich environment at lunch. I got told what we should have presented, what are the messages that we were already given by when we loaded up on the ASX this morning, and why some assets aren't covered in more detail. We'll try and answer all of those as we go through the presentation. We also do have a number of our investment banks and our debt banks here who have supported us over the years. They'll be the most disappointed because Kirron's not buying anything and Fran doesn't need any more debt. So enjoy the afternoon knowing that there's no work coming out of this for you. I was told that there must be an announcement coming tomorrow, but not that I'm aware of.
Normal forward-looking statements, given this is also being webcast, the disclaimer's there about what we're going to go through today. We'll have forward-looking statements, and everyone needs to take that into consideration when assessing. Key messages really want to kick off in terms about where Evolution's at today and how that has come about over the last 15 years as we've started in 2011. Realistically, I think what we've done with our portfolio since 2011 has created something. As we're coming up to 15 years, which our tag is around a legacy that we want to leave behind. I think the work that we're doing for our business, for our shareholders, is certainly going to create that. The first one there is we've acquired well from 2015 till now.
Really what it is, though, what I want to demonstrate today is it's not what happens on the day one that we buy the asset. It's how we go about unlocking the value and improving the portfolio quality once we get ownership of those assets. I'll add to that to show that we're not emotionally attached to any of them, that in that same period, we've sold well. We've sold at the right time. We've made sure that those assets go into the right hands at the right times. An example, one of the assets that we sold was Pajingo. We sold that in 2016. It's still operating today. I think if it was in our portfolio, it probably wouldn't be operating today because it wouldn't have been able to compete for the capital.
The other thing is, what Kirron and the team did really well, is that we received all of our contingent consideration post that sale. About 18 months ago, we got the final payment. So, we do sell well. Something to sort of address as well is that we have delivered consistent growth from the assets that we've got in the portfolio over the last five years, and our growth has come in production and margin. Whilst we do talk about production growth and everyone is focused on that, our focus is primarily on maintaining our margin rather than just increasing our ounces, and hopefully you'll see that through today as well. We've always had copper in the portfolio. When we started in 2011, Mount Carlton was in the portfolio, and it was copper into the business.
Then our exposure increased as we got involved with Ernest Henry in 2016 and then took full ownership at the end of 2021 and picked up Northparkes in 2023. I think having those two assets in the portfolio does create a difference for us in this sector, particularly when you look at the structural demand issues that are coming forward for copper. Then there is significant upside in the portfolio, and hopefully what you will see today from Nancy and Glen is where that sits within the three core assets that we are going to touch on today. To address one other piece of feedback I got at lunchtime.
The purpose of today was really, it is two years after we established the technical function with Nancy and the team, moving long-term planning tech services and projects into one area away from the operations area who had to deliver the day-to-day. In that two years, Nancy and the team have been able to really look at the assets and what is the true potential that we can extract out of those, and we have been studying those to the point where we can talk about them today. It is nearly three years since we have acquired Northparkes, and we spent a couple of years on that, really understanding it. The reason why Mungari and Red Lake are not getting a lot of attention here, we had actually only planned for today to address Cowal and Northparkes.
Glen and the team at Ernest Henry, as the team up there tell us and those who were on the last site visit, they only drill where there is metal. So Glen has had some great drill results, and he wanted to share those today, and hence why Ernest Henry is being covered off on it today. So very briefly, our strategy has not changed from day one. We have had a very consistent strategy about making sure that we are a business that prospers through the cycle, that we continually upgrade the portfolio so that we are creating long-term stakeholder value right across the owners of the business, the communities we operate, and for our workforce. That is underpinned by our values, and one of the things that does not get any alteration on are our value sets that you see on the bottom of the screen.
What I want to just give you a bit of an insight into as we are looking at executing our strategy, there are those five pillars there that you see that are key components of our strategy. The importance they have in us being able to execute that strategy is what I would just like to sort of touch on a little bit. So the two on your right around building the portfolio and the financial discipline, they really define for us the what, the where, the scale, the size of opportunities that we are going to look at, and then the balance sheet has to support that strategy. It is not there that we have got to adjust our strategy to support the balance sheet. So they are the sort of the starting points when we are looking at, well, what are we going to do with this business as we go forward?
The two on the left, the first two around sustainability and our high-performing culture, they are the enablers to actually executing that strategy. If we have got the license to operate in the areas and where we are, and we are keeping our people safe, and we are providing an environment where people can perform at high culture, and they can deliver and they can be rewarded for that enables us to execute the strategy. The middle one that I want to touch on a little bit more, that is the key thing that determines what we do, both with the assets when we are looking at acquiring them, and what we do with assets when we do acquire them. Because to extract the greatest value out of the assets, you have got to take the appropriate risk.
You have got to take appropriate risks around the geological, the operational, and the financial. It does not mean you put the whole business at risk, but it means if you are willing to take the right level of risk in those, you know what the risks are, what your mitigants are. That is when you can extract the most value. I believe that over the last 11 years, as we have acquired assets, those five pillars have enabled us to execute the strategy well and to be able to deliver the portfolio that we have got today. Over the last five years, from 2022 to today, we have actually grown our production pipeline. We have grown that organically and inorganically. We have grown it at a rate about 6% cumulatively per annum from 680,000 oz to 920,000 oz on a gold equivalent basis.
We put that on a gold equivalent basis because if you have the gold and copper as separate charts, it is very hard to work out where that growth has come over the last five years. We have grown it through the acquisition at Northparkes, we have also grown it at Cowal, Mungari, and Red Lake over that period of time. We have seen over a third of our production increase in five years. We had the weather event this year at Ernest Henry, so that meant the net gold equivalent production was 890,000 oz. But we have grown our production. A good piece of work by [Kenna Cordon], and everyone else does good work, but we have got to promote the ones that promote us. No, that is not true. It is really good because it is taking a long-term view around margin.
This is going from 2015 to 2026. So 10 years, but it has also now got 2026 information in there. It is looking at how the all-in sustaining cost margin has performed over that time and through the cycle when you are dealing with inflation, you are dealing with COVID, you are dealing with low interest rates and what has happened with the metal prices in that period. When you look at 2020 and 2021, that is when COVID was, and as you came out of COVID, you started to see that margin squeeze. That five-year, 2022 - 2026, from our perspective, which matches to that production growth on the previous slide, we have seen our margin expand. Our margin has expanded at a greater rate than the industry has, and that is through our cost discipline, the way we manage our balance sheet and we manage our costs.
It is through acquisition. The acquisition of Northparkes, as you see, 2023 - 2024, that margin started to widen because we acquired Northparkes in December 2023, and then the metal prices. Certainly with the copper in 2025 and now into 2026, has increased that margin. What I really like about it is that in each and every one of those years from 2015, our margin has been better than the industry average. In the last couple of years, by the changes in the portfolio, by having more copper in the portfolio, we have started to see that margin expand. Flipping over to our copper, and copper is a differentiator for us. We believe it is a really important part of our portfolio. [Henry], did you just get back from Melbourne?
Yes.
AFL finished at 1:30 on Friday, mate. Copper is a differentiator. On the left-hand side, this is looking more at the industry and the structural disconnect that is going on right now. The information here shows that from S&P that over the period from now to 2040, there needs to be a 50% increase in supply of copper. That is 14 million tonnes of copper that needs to be delivered into the market if they are going to meet the demand by 2040. If you consider that the latest statistics are saying that the cost of bringing on a million tonnes of copper at the moment is about AUD 2,000 a tonne. To bring that production into place by 2040, you are talking about AUD 28 billion worth of investment. It is more, you have got to have those discoveries.
You have got the lead time to permit and lead time to develop. The supply side is not helping. This is the first year in 10 years that there is a projected decrease in production year-on-year on the supply side. Then you look at the forecasts and guidance for the next couple of years, there is not that production growth. On the right side, you have got where that fits in for Evolution. That is 22% of our revenue today. Ernest Henry and Northparkes are low-cost copper assets. You can see their cost on a C1 on a copper per pound basis. They are low cost. Importantly, we have got over 3 million tonnes of latent capacity already existing in our assets at Ernest Henry and Northparkes.
Just as importantly, we have got ore bodies that are available today to start to fill that latent capacity. The acquisition of Carnaby Resources and the Greater Duchess project, which is on track to close in early November, gives us one opportunity. Bert as the underground, which is starting development this quarter, is another one that in the next three years, those two can come into production. All the land that we have picked up in and around Ernest Henry in trucking distance to the mine, the Corella exploration has also started. We have got 2.2 million tonnes of latent capacity there with ore sources available to us to bring in at Ernest Henry. At Northparkes, E22, a block cave, starting development on that.
While at the same time, given the mineral resource we have got there, studies are underway to look at increasing mill capacity by 40% to 100%. Those two assets provide a great opportunity to benefit from that structural demand supply position that is not playing out too well right now for copper. It also will add to our competitive cost base that I talked about earlier. What this is showing here, the two lines is the Australian industry. The Australian producers, the range of all-in sustaining costs that has occurred over the last five years and the guidance there. The gold boxes is our normal reported on a normal by-product basis. You can see that we are always around the bottom and our midpoint of guidance for FY 2027 would see us below the Australian industry average.
The green boxes is showing it on a co-product basis, so it is taking out the by-product credits and putting the copper as a gold equivalent basis. What this is also showing is you can see a flattening in terms of us on a co-product basis, and you overlay the production that is coming through on copper and gold over the next five years. That trend is we are moving down towards the middle on a co-product basis and certainly going to improve our margins as we go forward. Spend a little bit of time now just reinforcing about how that value is not just bought, it is what we do with the assets. I just want to indulge you for a minute, just going through what has happened with each of these assets since we have acquired them. 2014, our life average was five years. Production average was around 100,000 oz.
That is the point before we started our first acquisition. What have we done in terms of Cowal was the first asset. At the time, it was due to finish in 2024. It was producing 250,000 oz and a reserve life of 15 years. Since then, for an acquisition of AUD 707 million, we have generated nearly AUD 5 billion of operating cash flow out of this asset. It is fully repaid everything we have invested in that since. It has now got a mine life of 18 years with upside that we will go through today. It is generating a rate of return that, going forward, should move into the 15%-20% bracket. It has certainly got the most upside right now from an exploration standpoint. Mungari, we have lifted the production and the mine life by 50% since we have acquired that.
It is now, and we had to add a new bubble onto this one, where it has moved and repaid over 50% of all invested capital since we owned it. It was AUD 367 million last year alone in the first year of the expanded capacity. The focus there is really around what the underground can do to that. Red Lake, we have seen it a lot more stable and consistent over the last couple of years. We have increased the mine life. We have increased the production rate. When you consider last year, it generated nearly AUD 300 million of cash flow, repaid 20% of invested capital in one year. Starting to do what it needs to do into the portfolio and playing its role. Ernest Henry, we have increased production, we have increased the reserve life. Yes, part of that from 2016 and 2022 to today was taking 100% ownership.
But similarly, AUD 3.6 billion of operating revenue. It's generated a rate of return of 22% per annum since we've owned it. When we first got involved with Ernest Henry in 2016, it was due to finish operating today or this year. It now has 19- 20 years ahead of it and more upside. Lastly, Northparkes. When we acquired Northparkes in December of 2023, the key things that the market told us was the asset won't make any money, it's going to be capital intensive, and the stream overlay is too difficult for it. We knew through the due diligence we needed to spend a couple of years to better understand the ore bodies, the sequencing of them, the role of the stream. What we've been able to do is increase the production.
We've got over 50% of that investment now fully repaid at a rate of 30% per annum since owning it, and that is post-stream. We've now got opportunities with the 630 million tonnes of resource of growing the production rate, increasing the rate of return, and certainly, getting the payback along the lines of what we've seen in the first 2.5 years. In summary, those acquisitions and divestments which have improved the portfolio. We've taken the average out now to a 17-year reserve life from five years. We've averaged an 18% return on investment out of those assets over that point of time. As I showed earlier, we've increased our production rate while maintaining our margin.
That's really the key thing, going back to the strategy of what we do with assets when we actually acquire them, generates the greatest value for our shareholders. Just having a little bit of a forward look, and I'm definitely not going to steal all of the highlights that Nancy and Scott and Glen want to go through. Cowal is a significant cash generator for us in the business. It's our largest producer, but it can fund its own growth and generate enough cash back into the business. The key things for us is the underground, where we've got potential for a second underground at reserve grades that are 2x the open pit. Rocky loves the word of, and so does Glen, displacing low-grade material. That is the objective of what we want to get out of the work that we're doing in the underground.
E42 will be that base load production in 18 months' time. That'll take us through to the mid-2030s. While what we're seeing at E41 is giving us the greatest upside in terms of open pit, in both in scale and grade. That's really what we're focusing on in terms of the exploration over the next few years. Copper, as I said, Ernest Henry earlier, Bert, we're looking at about 6,000 tonnes of copper, 12,000 oz of gold ramping up from FY 2029 coming out of Bert. The Greater Duchess project out of the Carnaby Resources gives us about 10,000 tonnes of copper, 5,000 oz of gold from FY 2030. The key thing about the Greater Duchess project is, in our acquisition, the primary focus through our due diligence was, is the open pit viable?
Is there something that can bring it into production to allow Glen and the team time to look at all the other ore bodies in and around there to extend that mine life even further, given the capacity we have got in the plant. The exploration potential can add another 10,000 tonnes of copper there. So you are looking at 26,000 tonnes of copper, importantly at Ernest Henry, which is about 50% of what we are currently producing at the asset. What excites us the most is that extension, pardon me, beyond FY42. We are getting drill results today that are showing extensions 900 m below where we are mining. We are studying that 1175 m to, sorry, the, yeah, down to the 775 m and, sorry, the 775 m down to the 500 m, and we are getting drill results below those.
The result there alone at 61 m at 1.26% copper and 0.77 g of gold. When Glen brings up the model, you see where that sits and what the real potential that that is showing for extensions beyond FY 2042. Northparkes near-term growth is going to come from the coarse particle flotation. It gives us 2% improvement in recoveries of gold and copper and gives us the potential to lift the throughput rates by 500,000 tonnes immediately, when that project comes on and then gives upside to about 1 million tonnes coming from FY 2028. E22, the key thing that comes out of that is the life of mine infrastructure and the twin declines materials handling system. That gives us the confidence around 11 million tonnes per annum underground mining capacity that then leads into that 10 million- 11 million tonnes processing capacity that we are looking at.
To answer a question I got at lunchtime, it is not that we are saying that we are targeting that and we are not going for the 15 million tonnes. The first step, as we always said in this study, is can we get enough material out of the mine and enough power and water to get to that 10 million- 11 million tonnes? Do we have enough water and power to be able to sustain it at 15 million tonnes per annum? Because we know we have got the resource to be able to run it at 15 million tonnes per annum. So that study is progressing. As we get to December, we will be able to make a call on what sort of that production rate we are going to. From January to June, it is then looking at what is the sequence in the ore sources to feed that plant.
What we are also seeing in the exploration piece is in E26 South, which is off the ore bodies around E26. We are getting great results that Glen will show that is giving us another opportunity in the underground area outside the existing resources we have got there. The open pit really gives us flexibility around the operations between caving and those shallow open pits at E51, Major Tom and E44. As I mentioned earlier, Mungari, Red Lake. Not a lot of detail here, but they are really in that cash generation phase. Mungari, we have completed the expansion. We are now running at that 4.2 million tonnes. We are generating that cash that I said, AUD 367 million last year. We have got the first five years per the feasibility study said we are able to keep that at 200,000 oz per annum. The underground is most critical.
We are targeting 20% of our production coming from there, which is at 4.45 g a ton versus the 1 g- 1.2 g we get out of the base load feed from Castle Hill. The more we can get in terms of exploration success at the underground, we have replaced and grown the resource and reserves there each year for the last four years. When we can get that to a 10-year mine plan out of the underground, that allows us to look at developing faster and increasing the proportion of material coming from the underground. Red Lake has to continue its stable quarter-on-quarter performance, generating those positive cash flows while we do that study option around reprocessing of tails, which has got materially higher grades in there than what we are currently processing, and we will have that study completed by the end of FY 2027.
Looking at it from a portfolio perspective, and one thing I said to a couple of people at lunchtime is that each of these assets have got a role to play in our portfolio over the next three to five years. Cowal is a significant cash generator. It is our largest cash generator, and it has got a lot of growth opportunity. So it is the asset that will get a lot of the attention over the next few years as we develop those opportunities. Ernest Henry and Northparkes, likewise. They have got the greatest leverage for us to copper, to grow our near-term production, to extend the mine life for that supply-demand position that is not aligned. Mungari and Red Lake have got to be that stable cash flow, stable production.
They have got to be producing 300,000 oz- 360,000 oz every year at a good margin, generate the cash. Because what that does for us, those two assets over the next three to five years, yes, they will compete for capital, they will get capital invested in the business, but it de-risks us from an operational standpoint, so that we can continue our sustainable, reliable production quarter on quarter, year on year, while we are investing in those growth projects over the next three to five years at Cowal, Ernest Henry, and Northparkes, so that we do not have that production and cash disruption over that period. In summary, those five points that I said at the start still stand. I believe we have acquired assets well. We have got the right assets in our portfolio. We have upgraded the quality of those assets over the last five years. We have delivered growth.
We have delivered growth while growing and improving our margin. We have made sure that our margin is, we are the lowest cost producer in the sector. We have got great exposure to copper, and there is a lot of leverage to that. As I said, we have got near-term opportunities to bring that into production. There is even further upside that you will see through the course of the afternoon. With that, I will stop and allow for questions, Rocky. On time. Matt?
Thanks. Matt Frydman from MST Financial. Lawrie, I thought the slide that you put up presenting your all-in sustaining cost on a co-product basis was quite interesting because it sort of frames Evolution as more like a 1 million ounce producer with a middle of the range cost structure or middle of the range all-in sustaining cost. I guess my question is, do you feel a need to improve the cost structure of the portfolio to be more resilient in a lower gold price or a lower copper price? Or is it more a question of managing that relatively conservative balance sheet leverage and then trading that off against maybe a little bit more operating leverage? Thanks.
Yeah. Matt knows that we can always do better on the cost piece. I think as we go forward, the industry lines are going to increase. They're going to get higher. The top end is going to get higher, and I think we'll still be trending down towards the bottom end. What we wanted to show is that when you look at on a co-product basis, at AUD 2,700 and on that basis, you put about AUD 1,300 an ounce for major capital and exploration in there. At AUD 4,000 for an achieved price of AUD 6,000, you're still going to be a significant cash generator. Yes, we'll continue on the cost discipline. But if we're, and when Fran presents later, if we've got opportunities to continue to invest in the business, so you're getting returns that are far greater than 18%, we'll do that as well.
The thing that we've got to be able to do, Matt, is you've got to be able to do all of them at the same time. It doesn't mean you bias one to the other. You will in the short term. If you've got an operational issue and you've got to get the production, you'll probably erode your margin for a short bit. But the objective is over the long term, you don't erode that margin. Jonathan.
Yeah. Jon Sharp from JPMorgan.
Do you want to get the other one? Dan's next.
Just on Cowal, Lawrie. Seems like it's got a fair bit of upside. Can you just take us through, is that mainly grade from an underground? What are your thoughts on expansion of the mill? Does it need volume and grade? Maybe just take us through that.
Yeah. I think you'll see a little bit of it coming from Nancy and Glen. But the reality for us is that the underground and the potential second underground is going to allow us to then, at the 8.8 million tonnes, put more material from an underground through the plant. Depending on the size of E41, I think that ultimately will determine whether the 8.8 million tonnes is enough from a processing capacity. Because when you consider everything at Cowal versus Northparkes, one thing that Cowal doesn't have is real estate. We've got 47 million tonnes of ore sitting on stockpile. We've got waste. We've got the integrated wasteland form. You got the paste plant.
There's not a lot of space that if you are going to continue mining the open pit and you do get the underground, the second underground going, you have to look at ways of not leaving that on the stockpile. Therefore, you have to ultimately look at the expansion. I would say right now, unless Nancy's going to present something different, the next two to four years is more about optimizing the ore sources rather than looking at expanding the plant. Dan.
Daniel Morgan at Barrenjoey. It looks like a key theme from today is a pivot towards greater growth across the assets. Just wondering if you could talk about what is driving that. Is it, A, the natural evolution of, pardon the pun, of all of the different assets where you feel like you have got a handle on the exploration or geology, and it is a natural sequence to pivot towards more growth? Or is it the cash flow that is coming in from commodity prices which are very buoyant are causing you to look at your portfolio again and go, "Well, can we get these assets to grow, get better returns?" What is driving the growth agenda?
Yeah. It is not so much driving a growth agenda. As I said, we have grown over the last five years. We have increased our production organically. What the last couple of years has enabled us to do through Glen's programs and Nancy's technical team, looking at these assets, okay, how do we unlock value rather than just the growth? And we have now got to a point through all of that work to where we can articulate what these assets look like over the next three to five years. Internally, we have known there was always going to be that growth. But we have got enough information now to be able to explain that to the market. And then, ultimately, when you have got that 18% return and you have got a 17% reserve life, you have got to run harder to keep those production rates up.
But you have got enough mineral resource and ore reserves to be able to look at that expansion of production. The last piece I would say is that, in September 2023, 30% gearing, everyone down the back saying we needed to raise equity. Therefore, where we were investing our money was very restricted. We had committed to the Mungari expansion. We were committing to studies at the Cowal OPC. Getting Red Lake right, that was losing money on us. Those things, having fixed those, and then the metal prices improving, does allow us to look at how you accelerate some of that. So it is a combination, but it is not like we need to go out there and show growth. It is like we have done enough work now to show what the potential of these assets are.
Hi. Dave Radclyffe from Global Mining Research. Lawrie, my question is about the Cowal underground. We are sort of talking about it, but we are not giving a lot of details. So maybe could you give us a bit of an idea of the way forward, some timelines when we could get a new resource reserve investment decision? Because is not the key at Cowal lifting the blended grade, and that is what expanding the underground would actually give you, and that would obviously have the multiplier effect on the ounces.
The first part I am going to leave to Glen and Nancy this afternoon because they will bring up the models and show you what we are looking at, and then we can talk about the timing. The first part is that we have got to get the Regal portal decline in at the underground. That allows us to increase the productivity and increase the tonnage we are getting out of there. We have put in a modification application to the regulator to lift our underground tonnage to 4 million tonnes per annum. That is what we are already working on. It is going to be predicated on the drill results and the program that Glen is running through this year. Then from timing, if you consider for the existing underground 2018 discovery, 2021 into production, it is going to be around that.
We had to put a lot more infrastructure in place for the first underground mine that we would not have to do. At the end of this year is when we get a good indication of the potential of a second underground, and then you would be looking at around a three-year period from there. All right. That is excellent. We are going to stay on time and move over to Nancy. Thank you.
It seems to work? Yes. Okay. Do I have the good slide? Yes. All right. I hope I can answer a little bit more of your question and talk a little bit about the strategy and what are we looking for and what are we doing. Before I start to talk about the strategy, I would like to briefly introduce myself. I am very excited to discuss about the future opportunity that we have in Evolution portfolio. As mentioned with Lawrie, we are going to focus on Cowal, Northparkes, and Ernest Henry this afternoon. On my side, I joined Evolution a little bit more than two years ago, after more than two decades with Agnico Eagle in Canada. I have over 34 years of experience in the mining industry. I have worked across operation, project development, technology, innovation, and technical leadership.
I have helped to build new mines, improve existing operation, and support assets through each stage of their life cycle. One lesson from that experience is that truly exceptional assets are rare. When I joined Evolution, I was immediately impressed by the quality of the portfolio, the depth of the resource base that we are going to discuss a lot today, the established infrastructure, and most importantly, the capability of our people. One of my first priority was to establish a technical function and bring together a strong team focused on understanding, protect, and growing the value of these assets. Over the past two years, our team have tested assumption, as you will see today. We have evaluated a lot of alternative. We are still doing that. We built a clearer pathway for the future growth.
Today, I will focus on how discipline, reinvestment, and technical work can unlock the long-term value and the production, the cash flow, and the shareholder value. I hope you will see the same confidence and enthusiasm that our team bring to this opportunity every day. Before I get into the detail, our strategy and growth opportunities, I want to highlight a common theme across the three operation. Across Cowal, Northparkes, and Ernest Henry, we are going to talk about optionality. This is what we have in front of us. That is why we have a very good, amazing portfolio. The project we are advancing today are built on the known resources, disciplined technical work, and a clear value creation pathway. However, the real strength on this portfolio lies in the ability to continue growing through exploration and discovery, and that is what Glen will show you and explain today.
We have the opportunity to further expand our resource base, extend the mine life, enhance development sequencing, and unlock additional value. I will talk about the strategy on how we see the next phase of the growth out of the asset, and I will hand over to Glen, so he will go with you to all the opportunity that we have in this portfolio. Disclaimer, I have to show it. Everybody see it? You understand it? That is good. All right. Evolution portfolio is built for longevity. We are found by cash generation today and strengthened by multiple pathway to create further value. Our portfolio demonstrate three key strength, long life assets with production, cash flow, and reserve replacement potential, which is very important. Strong cash generation, Fran will talk about that fund reinvestment for the future growth. We have the value and optionality for the opportunity.
The key message is that it is not a portfolio designed for the cycle, a single cycle commodity price. It is a portfolio with the asset quality, the cash generation, and the technical option to create long-term value, and that is really the message that I want to bring through to that one. The big discussion when a lot of people arrived this morning, Cowal is a proven producer with global tier one potential. We will begin to talk with Cowal, where a strong operating base and responsible reinvestment are creating the platform for the next value of growth. Yes. All right. Cowal is a mining system with multiple open pit what we have to remark. Cowal has 10 million ounces in mineral resources and 5.1 million in ore reserve across stockpile, open pit, and underground. The value proposition is no longer reliant on a single ore body.
We have the underground, we have the broader open pit system, and we have the OPC North and South area that will give us multiple front for resource conversion and future development. Importantly, we have already invest in underground access, as Lawrie mentioned, and the processing capability. Further discovery and resource conversion can therefore leverage an established operating platform. So what are we doing? We are studying near-term decision that can unlock while preserving optionality and supporting the ambition to create a tier one operation. So that is what we are looking at. Today, Cowal operate from a strong base. The opportunity is to move this asset up to the value curve through the permitting, the mill capacity, the underground production, the mineral resource, and a disciplined response for the gold price environment. Our discovery drilling and related study are required to define the operational potential.
The objective is not simple to produce more ounces, it is to build a larger, long life, and higher value operation that can deliver sustainable cash flow. To achieve that, we have to do a lot of parallel study and approval that will be integrated to support the incremental value-based investment decision. Through FY 2027, we are evaluating option for the GR pit expansion of E41, underground expansion scenario, stage mill expansion pathway, and the oxide pretreatment. This work, along with the Mod 2, like Lawrie mentioned, approval process, the mineral resources conversion, and continued evaluation of the open corridor that Glen will discuss, and the E41, and the underground opportunity. All of that has to be looked at the same time.
The combined outcomes will form an integrated business case that allow us to make incremental investment decision while we're going to retain the flexibility for further study and approval for FY 2028 and onward. That's the work that we are doing right now to try to unlock the value that we can have in Cowal so we can have a better path forward. What does that mean in the mid, long term for Cowal? Cowal is a reinvestment story today and a major cash flow story tomorrow. We're going to want to try to still generate the cash flow. We have to reinvest right now to unlock the growth. Our objective on the short term is to deliver OPC, progress the drilling and the study, what we are doing. We have to secure the approval.
We are in movement in that one, so we can refine the next value. Then we can scale up the operation. So we can deliver the commit open pit and then underground growth and position to an operation at a larger scale. Then we want to realize the tier one vision, so commission the growth option and capture the benefit of scale. Then we're going to keep running because the runway is still open. There's a lot of discovery in that area. So we want to unlock the broader mineral district and leverage the mine life and the scale of these assets. The takeaway is quite straightforward. It's that disciplined reinvestment can create substantial long-term shareholder value. I think for me, what is so interesting and fun is Cowal is not a mine approaching maturity.
It's a mining district that is entering to the next generation of growth, and that's what we are working on right now. Northparkes. We are transforming, and I say transforming because that's the case. We are transforming a stable operation into a major copper gold platform. There's so much copper there. Northparkes, it's much more than a single growth project. It is a copper gold district with significant resource depth, established infrastructure, and multiple development options. I will outline the long-term opportunity and the pathway we are assessing, and Scott will come right after me to update you on the current project execution and the work underway to unlock that value. The resource base provides scale and optionality while our technical work determine the highest value pathway. It's a little bit like Cowal. It's the same structure, the same approach.
Northparkes has total mineral resources of 3.1 million ounces of gold and 2.5 million tonnes of copper. Compare with the ore reserve of 0.69 million ounces of gold, I didn't say 0.7 million ounces of gold, and 400,000 tonnes of copper. The gap between the mineral resources and the ore reserve is, I like the opportunity. This is our big opportunity, but also there's still work that is required. Our focus is not to go with a production target. It's really to determine the optimal development pathway that maximize value, manage risk, and support long-term cash flow generation. The district provide a broad set of underground, open pit, and stockpile option. This is what we have in this picture there. That give us the flexibility in the sequencing, the capital allocation, and the future development, and that's what we have to understand to unlock the full value of this district.
That's a big slide. The strategy, it's really to go as an integrate open pit and cave strategy, and that will help us to de-risk and maximize the asset value. There's all those concepts that have to go together. The existing production platform include, right now we are with E26 Lift 1, E48 SLC, and E22 that we are developing right now. Behind those source, we have in the pipeline the study stage for the underground opportunity, where we are looking at MJH, we are looking at GR pit, we are looking at E26 Lift 3, and E48 Lift 2. We have some surface opportunity as well, which going to help us to unlock the value. We have E28 Northeast, we have Major Tom, E51, and E44. And integrate those open pit with the cave production provide the flexibility to the sequence to progressively increase the scale.
The presentation show, so those tables show approximately, I will round it to 600 million tonnes of mineral resources, and that's the scalable foundation for the future growth. The key point is not only one project in isolation, cannot look just as one parameter. It is the depth of the pipeline and our ability to accelerate the preferred sequences while we're managing the risk, and that's really what we are studying right now and look at the option. The expansion study is assessing processing scale, what we mentioned, the 11 million or more, and the next generation of underground and surface ore possibility. The expansion study include, so we have some in pre-feasibility on the MJH block cave and the E44 open pit, and we have Major Tom in E51 as well.
We have some concept study that are up and going with E48 Lift 2, E26 Lift 3, and GR pit. The study are due for completion at FY 2027, and we have a budget right now of AUD 14 million to do that. This work is assessing the potential of an expansion to the mill or a new mining mill and a new plant, and is designed to build confidence before the expansion investment decision is made. Yes. All right. We will develop and assess. We will construct and expand. Then we can transition to a long life with cost-efficient operation. That's what we want to do at Northparkes. To develop and assess, we are supporting right now the current operation. We need to maintain the production. We are developing E22.
We are advancing the studies, and we have to improve a little bit our processing capability, what we are doing as well. Construct and expand, we have to make the preferred expansion decision with the outcome of the study. We need to unlock value via open pit. We have to deliver metallurgical improvement with the coarse particle flotation projects and the regrind projects as well that we are studying. We have to ramp up E22, and we have to establish MJH as the next block cave in the sequence. That will give us a long-life, cost-efficient operation that will optimize and operate block cave sequence. Those block caves will be supplement with surface sources to deliver production with predictable cash flow. Northparkes, it's not simply an expansion story, it's a strong copper producer.
It is a long-term value creation story supported by substantial resource base, established infrastructure, and a disciplined sequence of investment, and that's where we have to keep our focus. Ernest Henry, strong cash flow and enduring value. I will now turn to Ernest Henry, one of Evolution's important cash-generating assets and an operation with meaningful potential beyond its current horizon. There is so much potential. Ernest Henry combines consistent underground production, strong infrastructure, and clear options for future extension. Ernest Henry has operated for more than 25 years with stable underground production since 2012. Evolution completed the full acquisition in January 2022, and the asset has delivered exceptional resource growth since acquisition. That's what Lawrie just showed us with this bubble. The operation is now transitioning from a stable sublevel cave base to a planned investment phase. We are now trucking below the current crusher.
We have additional ore sources, and we have some capital investment for longer life operation, which are central to this transition. The future state of Bert, who is the red, and Scott will spend time to explain you that in more detail. As an independent ore source, we have the further extension study below the 750 m, and the use of the latent mill capacity as Greater Duchess is one example of the optionality available to supplement the operation. Much of the infrastructure is already in place that gives us flexibility to test additional resources and extend mine life while continuing the generated cash. Strategic reinvestment in Ernest Henry creates capacity, new ore source flexibility, and this is a pathway to a sustainable steady state. In the strategic reinvestment phase, we continue sublevel caving base load. We establish Bert as an independent mill feed.
We are progressing drilling and expansion studies, and we deliver the infrastructure for the mine extension area. That's our short-term focus. The capacity realization comes from the trucking system and a better use of approximately 2.2 million tonnes per annum of latent mill capacity. The presentation in FY Bert as the additional 7,000 tonnes of copper and 14,000 tonnes of gold and Greater Duchess at approximately 10,000 tonnes of copper and 5,000 oz of gold per annum. FY 2030, around FY 2030. Regional exploration provides future potential. The steady state ambition is a new mining horizon, full leverage of the infrastructure, and consistent cash generation through efficient mining practice. Our strategy is simple, continue generating strong cash flow today while systematically building the foundation for the long-term value creation. The strategy pathway that we are talking are supported by active projects already in the pipeline.
I will ask Scott to go through the project and explain all the projects that have been made. You don't need my iPad?
Thanks, Nancy. I do not need your iPad. Thank you. Good afternoon, everyone. Can you hear me at the back? All the thumbs up. Excellent. Thanks, Nancy. Good afternoon, everyone. My name's Scott Paddington. I joined Nancy's team in November this year to lead the group projects team. Our mandate is to develop the major studies that Nancy's just talked about and to deliver on our major projects for the business. It's very exciting times, as Nancy's pointed out. I have over two decades of experience in the mining industry, in technical operations, projects, and studies roles. I spent 13 years with Newcrest, where I focused on some capital projects at Lihir, a mill expansion and capital projects at Red Chris in Canada. Then I went to Telfer and ran the operation, the mill, and the mine for a little while as well.
I'm very excited to join Evolution, and what a great time to be here, as Nancy just pointed out, to build new mines and expand on our opportunities. Next. Here we go. I'll just go into a bit more detail about the projects that Lawrie and Nancy have just talked about. As you know, the second half of FY 2026 was a very busy time. We had the open pit continuation project in execution at Cowal. In November, we approved the coarse particle flotation project at Northparkes, and then we approved in February, both E22 and the Bert mines at Northparkes and Ernest Henry.
We started straight away building our project team and went out to find some great leaders, and we've got many decades of experience now within our team executing mining, processing, and infrastructure projects, including some key players from block cave construction in Mongolia and in Australia. We're partnering with some really highly experienced contractors as well, to complete our mining, engineering, construction phases of these projects. All green ticks. We're on track with each project, and over the next few slides, I'll take you through where we've been and where we're heading. Cowal. We've talked about Cowal many times, and Lawrie's talked about Cowal for a number of years, so I'm sure you're all over it. But those of you who were on the 2024 site visit and who are going back today, you'll see a significantly different mine site than you saw then.
In May 2025, we commenced construction of the North Lake Protection Bund . Let me get this right. The North Lake Protection Bund is here, and you can see at the top, this is pre-construction, and that was in August this year. We have released a significant package of land. That allowed us into E46 and really turning growth into reality. We got into pre-stripping five months earlier than planned, which gave us first ore to the mill in Q3 of FY 2026. We are moving quickly. This is a major civil project. We are building 7 km of bund and reframing the shoreline for Lake Cowal, giving us a lot of area to work in. The North Lake Protection Bund , you will see, we are finishing construction in the coming months, so you will see that when we are on-site.
The second phase of the project, which is the South Lake Protection Bund , that kicked off in August, so we are away. As you can see, the North Lake Protection Bund enables access to GR pit and E46, which Nancy and I both just discussed. The South Lake Protection Bund enables additional resource definition and E41. Combined, the two bunds allow us to expand the I stage of E42, which just commenced recently. As Nancy said, as Lawrie said, and I will say, and no doubt you will hear many times over the next few days, lots of opportunity at Cowal. If I stay in New South Wales, and we head off to Northparkes. Nancy talked about the mineral endowment we have and the opportunities ahead of us. There are many, and my team and many others are working on all the studies.
We also got a great team, as I said, working out on E22 and CPF. E22 is really important for us. It has two key components. It has obviously got the next block cave, E22. Gives us nine years of mine life. We are back into new block caves. The second is the twin declines, which houses the material handling system, which both Lawrie and Nancy talked about. That gives us additional material handling capacity beyond our current hoisting constraint at 6.5 million tonnes. We will get the conveyor started in FY 2029. That is installation started, not running. After the board approval in February, we went pretty hard at Northparkes and got started, focusing on the access drive between E48, which is here, and E22. We have done a lot of work there.
A real credit to the Northparkes mining team because they took this on and they produced the first 300 m of the project, which is fantastic. Then we have gone off, and we started with the box cut. Up in the top pictures there, May, we had a nice paddock. We just scraped the top off. Now in August, we are nearly completing the box cut and ready to cut the portal in the next month or two. Very exciting times. Of course, in the background, we are doing the detailed engineering of the conveyor system, the ventilation system, buying the long lead items, sticking to plan, and we have got Redpath coming on board as our principal mining contractor, and they have just started to mobilize in the last six or eight weeks. Our next big project is the coarse particle flotation.
This one, we are expanding the mill. This circuit sits behind the existing float cells and includes additional Cyclones, Hydrofloat cells, a Jameson cell, and a new reagent mixing plant. Lawrie mentioned that this is going to provide us with the ability to get to 8 million tonnes of throughput, as well as adding 2% of recovery for both copper and gold. We began activity here with GR Engineering as our primary contractor to date. We hit the ground running in July and worked through our July shutdown to install some key electrical tie-ins. This work is really important for us so we can continue to build the plant and start to tie things in without impacting the operation outside of shutdowns. We are currently deconstructing some of the old cells. As you can see, this was a —Oops. I am giving away Bert. Sorry. There we go.
Here, we are deconstructing old redundant parts of the plant. That was a big day, big lift. That gives us access for the new infrastructure to be built on the existing footprint. We are also kicking off the construction of the foundation. Those of you coming to site, you will see a lot of concrete going in. That is the foundation of the new plant. You can see Northparkes work doing great things, moving things forward, going after the growth that we have been talking about for years. I am really looking forward to showing you around when we get there. That is the tour areas. Bert, very exciting up at Ernest Henry. Nancy outlined that Bert, of course, will be an additional ore source for us to eat up some of that latent capacity.
This is a small ore body off to the side of the Ernest Henry ore body, as you know. Bert will be a conventional sublevel open stoping operation with a new decline accessed via the high wall, north side of the high wall. It will give us another ventilation system, electrical systems, and a cemented hydraulic fill plant. Obviously, different mining method. We need to backfill to get everything out of the ground. Since February, we have been pushing for the first portal cut, which I am pleased to say will happen soon. In this photo, here we go, we are stabilizing what will be the portal. This is now all moved away, and we are getting ready to go drill the portal. Here we spent a lot of time stabilizing the high wall, both at the portal face, so there is shotcrete and rock bolts and all manner of steel in the wall.
Then we went above that. We draped mesh down the wall to make sure we manage the risk of rock falls. It is quite a safe place to work. In addition, we are working on the detailed engineering of the hydraulic fill plant, doing some long lead item procurement and working on getting our infrastructure ready to go. Redpath is also our primary contractor at this site, so they are in the process of mobilizing to Bert at the moment as well. As I said, first cut coming shortly. That is it for my slides. As you can see, we have got a lot of things happening, a lot of great, very exciting projects. We are going to deliver value to the business over the next few years. It is fantastic timing. Of course, looking forward to taking you on the tour to some of these projects. That is it.
Rocky, over to you.
Over to you.
Yeah. Scott and Nancy are too efficient. They are ahead of schedule and ahead of budget, Scott. We are going to open up for, that's well done, especially the animation on Bert. We are going to actually open it up for some Q&A for the next 10 minutes, and then we will take the break, given we are on a webcast. If there is anything about Glen's, we are going to defer it until after the break. We were going to start with Glen, but he has got to set up all his models. [Adam], right there, [Will].
Cool. Thanks, Lawrie, Nancy, Scott. Just starting on the Northparkes expansion, I mean, you mentioned that 10 million-11 million tonnes, I guess that's the first feasible stepping stone to to maybe getting to the broader 15 million tonnes in an upside scenario. Just wondering if you could further elaborate on some of these infrastructure requirements that Lawrie talked to earlier on in the piece about water and power as two large considerations to getting to that upscaled size. I mean, it strikes me that power should be easy enough to resolve, but particularly on water and, I guess, other considerations we should be thinking about for expansions, particularly on, I guess, the prioritization between copper-rich resource and gold-rich resource and could we see additional agreements with Triple Flag on some of that gold-rich material? Thank you.
Yeah, I'll answer the second bit, [Adam], while, [Laura], do you want to bring the microphone up to Nancy to answer this? I mean, in terms of the one with Triple Flag, I think the work that Kirron and the team did on E44 and the expansion has laid a foundation for us. What they've been very open about, if there are opportunities for us that we want to look at that are gold dominant, they're willing to engage on those. I think if there's anything that is copper dominant, it's going to be hard to get them to engage because that was already in their plan when they took out the stream. What I'll just bring up the Northparkes layout. What we have had discussions with them about E31 North.
We finished mining those nearly two years ago now, and the team is wanting to go back and have a look as to whether or not there's either another cutback in there, or we actually combine those as one open pit. And Kirron's had an initial discussion to say, "Well, if it does," they were gold-dominant deposits. And it's not something that we would go and do without their involvement. And they've said, "Yes, do the drilling, and we'll be able to engage." What they need to be able to do is evaluate what the economics of those are. And so, as we get any of these that we can show economic value out of those, they're willing to engage on it. But Nancy, do you want to talk around the power, the water, the 15 million tonnes?
Yeah. So we are doing, like I said, a lot of studies. On my point of view, the more risky part is the underground, so the mining aspect. So we have to make sure that we can bring, if we go over the 11 million, 15 million, 16 million, 11 million or 10 million, even 10 million tonnes, we need to feed the mill. So the mill expansion, that's something I think we can do. There's always solution. There's cost associated with it. But the mining is really the big part. So that's why we are spending a lot of time to look. And I was talking about the importance to have open pit and underground to de-risk the operation, and then find a good sequence in terms of caving. So we are spending a lot of time right now to do that.
On the mill side, we are in, I will use the PFS level for the 11 million tonnes. We are going to see the outcome, what is the cost, the structure, the financial model to bring it up to line. I will say that at this stage, we do not see any big issue. We have solution. It might be costly, but we have solution for the power and the water. Going to bigger than that is where it starts to be a little bit more complex. We still have a lot of work to do. But we have option in front of us.
[Pete].
Thanks. Good day, Lawrie. Just on the sequencing of the ore bodies for Northparkes, the very colorful chart. We do not have the years on the X-axis. Just wondering if you could sort of put some frame around that, please.
You want a production target. I will hand that back to Nancy in a second. The thing for us is, firstly, we have got to work out what size we go to. If we go to a 10 million- 11 million tonnes, or if we go to a 15 million tonnes, then you are compressing those. One of the things, and Matt has said this for a number of months now, we have got enough resource there. We have got enough caving options. Engineers would love to work there, because for the next 20 - 30 years, you could just be continually bringing caves on, and make no money. What we have got to work out is when do the sequences happen with the caving operations, the underground, and the open pit.
The reason we have not got the years is basically what we will do is, as Nancy has said, we have got to finish that study, work out what size and scale we are going to be. When we then would build that, and when they would come in. This one here at least shows where those ore bodies would allow over the next sort of 10 years, coming into production. Do you want to add to that?
Yes. What I should say is some of those ore body, that is why we need to study a lot. Some are close to the other one. Some are restraint in term of a geotech impact. We have a sequence that we need to respect. We are looking at that. And some of them does not need as much infrastructure as others. That is why the trade-off around capital. But this is kind of the first one of the outlook or possibility that we can have in terms of sequencing.
Cool. Thanks. Maybe just one follow-up. Do you tend to model on reserves only or a portion of M&I resources in your mining inventory?
Both. We have the reserve, and we have a little bit of resource that can come in as well. But we are working to do a little bit more drilling to try to convert as much as we can.
Maybe just a totally different topic, Lawrie, if I may. But I guess it is related.
Oh, just before we go off that, just to help you a bit. If you do look at the blue one is E22, you know when it's coming into production and how many years it's going to run for. So that might give you a bit of an indication on the years without actually labeling it, just to help.
Yep. That was hence my reserves versus resources question. A lot of the mid-tier are now putting out aspirations, targets, ranges. But you're a well-established 700,000 oz producer, or as Matt put it, like a million ounce producer if you include the copper units as well. You're undertaking a lot of studies, and clearly a theme today is about the optionality in the portfolio. Just how you approach that tension between the emerging mid-tier that are saying they're going to do everything, whereas you're actually undertaking the fundamental studies to put it to market with a lot of meat on the bones.
I got to get Nancy to talk about our planning piece. The thing I look at for some of these other presentations, I love slide two that says, "This is not a production target," and there's a high likelihood that this will never come into production. We didn't think that was the best way to put it in the market. I think if we can outline what our ore bodies are and what we're thinking about and when they could come through the pipeline. Do you want to, Nancy, just touch on the studies and the resource and reserves and how we go about those?
Yes, I can. We are following what Glen is doing in terms of resource and reserve. If we saw some potential, we are going to accelerate some study to bring it in reserve ASAP. A lot of that is from drilling, so that is why we have quite a big budget in drilling as well to make sure that we are in the good relation to converse those resource to reserve.
Lawrie and team. Can I just ask about Cowal? Daniel Morgan from Barrenjoey. Thank you, Rocky. Can I just ask about Cowal? If I look at the Mod 2, and I look at some of the materials you have outlined today, the South Lake Protection Bund at Cowal, it seems like it might be moving slightly or getting bigger to prepare for, what is it, E30? Is it E31?
E41.
E41 to the south. Can you just talk about is E41 actually getting bigger? Are you preparing for that by moving the southern aspect of the Lake Protection Bund a little bit further out? Thank you.
Yes, Scott.
Sure. It is really an opportunity, and Glen will take us through where he is going to be drilling and the work we are doing there. If we have the approval to do that, we can give ourselves more space for E41 just in case. There is more work to be done there. We have got the land, we just need, there are a few hurdles to get through, but it frees us up some space.
Yeah. Dan, when you consider what we are getting out of E41 and when Glen goes through the model this afternoon, what we have done with Mod 2 is to say, "Well, okay, if it does, is there some optionality around expanding into that southern area?" The bund at the moment allows us to capture all of the E41 plan and a larger pit shell. This is more doing an inquiry about, well, okay, what would be conditions if we wanted to do further in the E41 if it gets larger? It does allow for E41 to be bigger than what it was at the time of OPC. The Mod 2 is saying, well, what happens if it gets larger?
Yeah. Thanks, Matt Frydman from MST Financial again. Lawrie, can I ask, hopefully a quick one on the Northparkes coarse particle flotation expansion? I think in the past you've said that adds about 500,000 tonnes to processing capacity, so it takes you from that 7.5 million tonnes to about 8.0 million tonnes, which I think is on most of the slides. But then you also mentioned that beyond FY 2028 it adds 1 million tonnes to capacity. Can you just talk us through that? And does that mean that Northparkes goes from 7.5 million tonnes to 8.5 million tonnes? Thanks.
Scott's very happy to talk about that one. No. The initial project gets us that immediate bit, and then the works that we're looking at is how do we optimize it further. Scott.
Yeah. There's some debottlenecking work that's being done on site that is going to help us get more capacity. That's really all I can say.
More CapEx? More CapEx to get to that or?
No.
Thanks.
Hugo.
Yeah. Hi, guys. Hugo Nicolaci from Goldman Sachs. Just two if I can. Firstly, just looking at your aim for the future production on slide three, and just one quickly around Red Lake. Depending on how we anchor that aim for the future, depending on whether Mungari is 200,000 oz or Cowal's a tier one 500,000 oz a year asset seems to imply that Red Lake gets back to close to 200,000 oz from the 130,000 oz for FY 2027 pieces are if, and if that's right.
The not to scale footprint. There's a couple of things that I'll highlight. Firstly is that what this is also showing is that as we go over the next 5 - 10 years, we don't have a concentration risk at one asset. So it's not as though we get Cowal, and in five years' time it's making up 60%-70% of our production. So Cowal will grow, and as Cowal grows, yes, the others do. So when we look at it for Red Lake, the outcomes of the tails reprocessing study and the like, our expectations are that that will be successful and at some point we then go above that sort of 35,000 oz- 40,000 oz a quarter, get that more to the 40,000 oz to then ultimately 45,000 oz- 50,000 oz.
So in the next sort of 5 - 10 years, that's what we see happening there at Red Lake. At Mungari, it aligns very much to what I said earlier. We need to find a way through the drilling programs in the underground to be able to put a higher proportion of the underground, which is 4 g- 4.5 g versus the 1 g- 1.2 g through. So ideally what we'd like to see is that they do both grow at the right time over the next five to seven years.
Got it. Then just second one, sort of connecting the two themes to your earlier comments as well. You highlighted earlier the rising capital intensity in the mining sector, and if we look at Australia as an example, the capital intensity of building a gold project's doubled in the last three years. Evolution, you've obviously had the expanding cash generation in the portfolio ahead of peers, but given the nature of the business and the growing skew to large undergrounds, fair to say your capital intensity is probably also higher than what your peer average is. So if we look at the broader strategy, what do you think the right level of growth capital intensity, either at the asset or the portfolio is?
Is it just a matter of, if the project's above an investment hurdle, you will do it if you can afford to, or do you need to sequence some of these projects as well?
Yeah. This hasn't got my presentation, but in the appendix, it's got the guidance. If I use that as a base for this year, our depreciation on a per ounce, equates to about AUD 800 million to AUD 1 billion a year. That's sort of what we've got to be reinvesting back in the business to keep our mine life at 17 years. I've said that if we get back, we're only investing AUD 700 million of total capital in a year, therefore, we've lost any optionality in the portfolio. I'm happy that we're spending at the rate we're spending at. In terms of then that growth piece, yes, it is capital intensive. If we go caves at both Ernest Henry and Northparkes, a lot of the capital is upfront. But then you do get the lower operating costs and you get the economies of scale there.
I would say from our perspective, you're going to be seeing AUD 300 million - AUD 330 million of sustaining capital over the next, and we said that with our guidance. That's sort of the rate you're going to see the next three to five years. Then the mine development and the growth capital is going to depend on when each of these projects sequence. Your mine development has to be ahead of your construction so that when you then finish the construction, the mine's ready to deliver. Hence we've got that higher mine development this year. If the studies are successful and we go to that 11 million tonnes or 15 million tonnes , it's going to need to be ready. Therefore, that mine development probably continues for longer than the next few years. Then it just depends on when you sequence to do that construction.
That is a way of saying that if we're spending in the AUD 1 billion - AUD 1.3 billion each year over the next 10 years, and we've still got 17 years of reserve life in 10 years' time, I'll be very happy. So should our shareholders based on the rates of return those projects are generating.
Dave Radclyffe again from Global Mining Research. Just a follow-up question, if I can, on the coarse ore flotation. Newcrest was really excited about the technology. Newmont seems less so. It is not that widely used, so we cannot see a lot of examples, and obviously at Cadia, we cannot see the numbers or the uplift for well-known reasons with their issues. Could you talk maybe about how you think about those risks, how you have de-risked it? Because it tends to be with these recovery improvement programs in the back rear mirror, if you like. It is very hard to actually see that uplift in recoveries with a lot of these projects.
There was a lot of work that was done before we approved this project. There was a lot of test work, and we had a pilot plant as well that was running on-site, so we can prove the technology and be very comfortable with the technology. We are still running in parallel right now in the lab, almost like every day. Some feed sample and just make sure we understand what will be the impact when the project will be up and running. So we have those up and running. So we are quite confident. We have started a big group of a consortium, I will say, or a group with the University of Queensland, and Newmont and a lot of other peers are with us in that one, so we can share and learn about the technology and make sure we are going in the good direction.
In this slide, we have the coarse particle flotation, but we have other improvement as well that are identified, metallurgical improvement that are part of our pathway, and that will help us to make sure we have minimum this recovery.
Yeah. Dave, as you know, all metallurgists promise the recoveries and you bid 120%, but we do not get there. But what Nancy and the team did and the site team, so you will see on-site at the lab, how we have got our own works that we have done there to sort of test it. We did do a lot of work with the team at Cadia in understanding their project and what worked and what did not and the like in choosing what we have done here. That is giving us the confidence on that side. The proof will be in early FY 2028 when we start turning it on. End of FY 2028, sorry. All right. We are going to break now for a short while so that Glen can get set up. We will have some afternoon tea, another coffee for anyone who wants, and we will come back.
What time, Rocky, is it? 10 past 2?
Quarter past.
10 past 2 it is. Thank you.
[Break]
Good to go? Thanks, Rocky. Well, good afternoon, everyone. A couple of things to begin with. I am going to run through a couple of slides just to really talk about how we think about discovery at Evolution and how it supports Evolution's growth goals. I think when I came in this morning really early just to set up, make sure the models were going to run okay, I realized that my aging eyes were really struggling, so I had to duck out to the pharmacy for the AUD 5 set of pharmacy glasses to read this. First time ever. It is first time I am running actual models in an Investor Day presentation as opposed to movies of them, so we will see how that goes as well. So bear with me.
Look, I am pretty keen to get through these just to get into the models because that is the way we like to see these opportunities that we are drilling, and it is really the way in which I can share why we are excited about them. Disclaimer, get through that. My theme today is pretty simple. It is creating value through discovery success. Over the years that I have been at Evolution, which is over 10 now, and dating back before then as well, we have put together a portfolio in what I consider some of the best geological addresses you can find. That builds on the point that Lawrie made earlier, and that is acquisitions create the opportunity, but the value add comes from what you do with the asset once you own it. For Evolution, it starts with discovery.
What excites me is that we are drilling around our operations at Cowal, Northparkes, and Ernest Henry, where our discoveries have the potential to make a direct contribution to future production. In the near term, we are supporting the growth opportunities that Nancy and Scott talked about earlier. For example, at Cowal, we are looking for ways to improve both the scale and grade. That could be via growing the open pit resources, or through what we think may become a new underground mining front at the operation. At Northparkes, we are focused on finding accessible ore sources that could support the expansion and provide greater operating flexibility. At Ernest Henry, we are combining deep drilling success, the proposed Carnaby acquisition, and the regional exploration program, that give us really a genuine opportunity to grow production and extend the mine life.
Mungari and Red Lake are equally important, improving life of mine grade at Mungari, as Lawrie spoke to earlier, and as well at Red Lake, targeting high-value future ore sources. We are not only thinking about the next few years. We are also asking, what could Evolution look like in five to seven years from now? That is where our greenfields portfolio comes in. Our investment in Arizona Gold & Silver, the recent one, gives us exposure to the Philadelphia high-grade vein project in Arizona. In British Columbia, we have Two Times Fred and an option over the Clisbako project. These are two drill-ready opportunities with the potential to discover high-grade resources. They are earlier stage opportunities, but they are in the right rocks and in the right locations, and we believe they can be big enough to move the dial for Evolution.
Underlying all of this is a significant increase in drilling and exploration investment this year. That is a deliberate choice, as we see genuine high-value opportunities across the portfolio, and we are investing to unlock it. This slide shows where we are putting the rigs and what we are doing with the money. We have 11 rigs currently turning across three of our key operations, four at Cowal, four at Northparkes, and we have three at Ernest Henry. That level of drilling activity reflects both the quality of the opportunities that we have in front of us and confidence that we have in delivery. At Cowal, we are running one RC rig and one diamond rig at E41, alongside two underground and diamond rigs. Together, they are testing near-surface growth, extensions to E41, the potential connection from E41 back to E42, and the emerging underground opportunity along the open corridor.
At Northparkes, we have two diamond rigs drilling at E44 that Nancy spoke about earlier, one rig testing depth and strike extensions around the E31 open pits, and at E51 as well, and one underground rig delineating mineralization at E26 South. At Ernest Henry, we have two directional diamond rigs drilling very deep holes to test the down-plunge extension of the ore body below the current mineral resource, and we have a third rig at Ernest Henry, which is drilling the regional targets. This is a great point for me to actually pause on the presentation and actually jump into some of the models. Let us do that next. All right, we are going to start at Cowal, but before we dive into the drilling, it is worth just stepping back and remembering what we are trying to achieve. We are targeting two opportunities.
The first is growing the open pit inventory by extending mineralization around E41 and potentially linking it back to the main open pit at E42. The second is what we think could become a new underground mining front. It is higher risk, but it is also where some of the bigger upside is. The reason it matters is because every additional quality ton we can bring into the mine plan has the potential to improve the feed grade and create additional operational flexibility. In the open pits, that can mean displacing lower grade stockpile material and kicking it down the road as far into the future as we possibly can. In the underground, we are talking about ore that is roughly twice the grade of the open pit feed.
Here on this Leapfrog image, and sorry, I have got to put the glasses on now, we are going to start with Cowal. It is not far from Northparkes, over here in the center of the image. What you can see is we have large land positions around each of the mines. The other thing to point out here is that these green shapes represent the rocks that are really important in New South Wales. They are the most important for hosting the best gold and copper gold deposits. Evolution controls two of these belts, one here, one here, of the three main ones that exist in New South Wales. Cadia being out here to the east. Let us go and look at the site itself. This is really just to bring some orientation to what it is we are actually looking at.
Here is the E42 pit that I am circling there. As Lawrie mentioned, we commenced production here at E46. Here is the OPC north area with the North Lake Protection Bund, as Scott mentioned, that is due for completion shortly. What I am going to do next is just switch on where the planned pits are going, and we will flip down. We will just make that topo a bit more transparent. These are the design pits for E46. This is what they will look like at the moment when they finish up. E46, Regal and Galway here. This is the stage I cut back at E42, and the two E41 pits are located down at the bottom. What we are going to do now is then just look at what we have underneath. I am going to flip that topo off. Get you off.
We are going to go in here, and looking from east to west now. We will just turn up some of the mineral resource. That is the regularized ones. Here we have the resource that sits outside of the pits and also defines some of the underground. The dark brown is the indicated, the beige is our inferred resource. We will get that down again and then look, just come in on the underground, which is quite separate as we spin that around and look at how it is quite separate from the pit at E42. Then obviously the top of the underground, as we can see, is the Regal and Galway pits in through there. The blue shapes that we have here are the reserve stopes. If we come in a bit more, we can look at some of these gray shapes in here.
These are the mined-out stopes that have already been extracted at the mine. The other thing that we can do now is turn on some of the planned development in the underground. This should show you our current life of mine development for the underground at Cowal. Now we know where we are, let us have a look at some of the drilling results. Here is the slide that was in the ASX announcement this morning for the exploration results. On this side, we are looking at E41. Here is one of the E41 pits. It is a slice through there. Here is E42. The open drilling results are sitting over here on the right-hand side. I am going to firstly really talk about what we are trying to do at E41.
I think importantly, what we are starting to see in some of these new results are some really impressive grades. We are also drilling in an orientation that we now believe has the ability to actually expand the resource, not only at depth, but to bring it back towards the E42 open pit and take it through this ridge area through here. One of the reasons we believe that is if we look at the historic drilling directions, I will turn that off. I will turn you off and you off. If we just rotate the whole mine around, what we can see is that the historic drilling direction was predominantly east-west. You can see these drill fences through here. These are east-west lines. You can see the same orientation through the pit.
Now, we started that same drilling orientation when we were drilling the underground at Cowal, off to the east side of E42. One of the lessons we learnt in the underground is that many of the veins, the predominant vein set, are roughly parallel to these east-west fences. They are in the same direction. So we were either getting them randomly or we were stepping over them and missing them, when ideally, we want drilling to cut across them so that we can link them up from hole to hole, and that is how we estimate our resources. So we have applied our learnings from the underground, where we were able to do that, and we are starting to get the results at E41.
As we can see in the saddle here, as we sort of go across, that dominant drill direction is still east-west, so we do not believe the program has really effectively tested that opportunity. So the idea is to understand whether that gap is real or to prove us wrong and understand if we are dealing with a much larger mineral system. So what we will do is we will have a bit of a look at the RC program. So we can see this is what we are doing this year. I will just flick off all of the historic stuff so that does not confuse us. So that is the RC drilling program. That is going to close up a lot of that inside of that South Lake Protection Bund. We have got a bunch of diamond drilling going in here through the course of FY 2027 as well.
A lot of that diamond drilling is actually looking at the links between the two separate pits at E41 and exploring that area between E41 and E42. So that is how we are viewing E41 with the opportunity to grow that mineral source. Next we, oops, not that one. We are going to go to Oban and go to that one. Okay, so here is the other schematic in the ASX announcement this morning. So this is a depth slice of the underground, so it is about the 700 mR L. Or if you like, we will turn on the plan pit. So this is the plan pit for E42 stage I. So it is basically the bottom of the pit. That is the level at which we have cut this horizontal section.
We can see those drill results, some of the historic ones and the one we announced this morning, which was quite attractive. What I am going to do now is really talk about what we are seeing and why we really like this opportunity. So I will turn off this plan and get that off. What I am going to also do is just sharpen up this pink shape here. I am going to get rid of some of the as-builts and some of the plan developments and the drilling. So all we are showing here at the moment is just a few things. So obviously here is the bottom of stage I in E42. We have this sort of gray-black surface through here. That is the Glenfiddich fault. All of these red dots are everything that is above a gram in an assay result in our drilling.
If you can, I can pan in a bit, you can see some purples in there. That's everything above 5 g. What is immediately apparent is that the gold likes contacts, and it particularly likes this contact where it's hosted in volcanic, so that's everything out here, in contact against this pink solid, which is what I call a diorite. It doesn't matter what a diorite is, that's the name of the rock. It just happens to like that contact. It doesn't happen to really be inside the diorite. We can rotate that round and show everything like that. The fault basically cuts mineralization, so it terminates against the fault. What we've found is as we've been drilling at Oban, the reason why we did that drilling was it was linked to grade control.
We were doing grade control in the southern area of the undergrounds. We decided to push a handful of holes through that Glenfiddich fault where we knew the underground would terminate, but just to see what was on the other side. We've always known we've had this diorite because we've mined it deep into the E42 pit, so we knew it was there. We didn't always know where that eastern contact was. So we put a couple of drill holes all the way through till we got that contact. These are these yellow discs here, which is the mineralized intervals that we've seen at Oban. So we have an identical contact that's been repeated over here. So this is that contact of that diorite. What I'm going to put on now is just show the level of drilling.
Here is all the drilling in the underground. What we can see is we've got a lot of drilling just in here, which is really what we've done for Oban. But when you look along the length here and on the length there's not a lot to go by. We know we have another diorite body up in here with not much drilling information on the contact. If we play a little bit of what-ifs here. This is a ruler. I can work out how long that is. It's about 1.5 km. That's pretty good. That's the scale of the existing underground. If I take the southern end of this contact and take it up to the northern end of that contact, I get 1.5 km again. So we're repeating the scale.
Then we have a little bit more up here. If I can get that to work, we've got about 500 m. So there's a couple of kilometers of scale on a contact in the diorite against volcanics, which we believe is Let me get rid of that first. Which we believe is as equally prospective as the existing underground. What are we going to do about that? We are going to put in a bucket load of drilling this year. Here's the drill program. A lot of it's going to be from the underground, and that's just phase one. You can see when you look at what we've done, and this is just, again, a depth slice in that underground. When you look at what we've done, it's a lot. So there's a lot more work to do here.
This is the phase of drilling we believe we need to do first to understand, do we have an ore body that's going to start to develop along the eastern edge of this contact in the diorite? That really is the story at Oban. Next cab off the rank, we're going to take a bit of a look at Northparkes. I'll let that come up and correct itself. Here we go. Bring you over. There we were, just looking at Cowal right there. We're now up here at Northparkes. I think one of the things at Northparkes that's actually quite interesting is that it's a really clear example of how the drilling bit plays a role at the front end of the growth options that Nancy was talking about earlier.
If we expand the plant, we'll need additional ore sources, as Nancy mentioned. These need to be easily accessible and in locations that can be accelerated to production to support that growth when it's needed. What's really encouraging at Northparkes is we're seeing these opportunities really close to existing ore bodies and in established mining areas, so where we can leverage existing infrastructure. Let's dive into what we're seeing there. This is the 3D image when it arrives for Northparkes, and it's essentially what Scott was showing earlier in the 2D. Let's just have a bit of a look at what we're actually dealing with here. You can see the topography underneath. E26 here, E48 there, and this is E22 over here. The E22 planned development, so here's the box cut.
That should be in the right location, I think, Scott, right there, and the dual declines that he described. We also show the linkage drive back to E48. What we're also showing in the blue are our reserves. That's great. We've got E22 reserves. Here is E26 Lift 1 North. If I rotate around the side, we can start to see some of the ore bodies that Nancy was describing in that sequence for in the current sequence that we're looking for the underground. Let's start with what we have. Here's Lift 1 North in the blue there. This was Lift 2 in the gray, so that's mined out. This was Lift 2 in the gray. That's the Lift 2 extraction level. This is MJH there. That's the MJH ore body. It sits under Lift 1 North. This is Lift 3 that Nancy also described.
GRP is this big one over here, so that's GRP in there. What I might do, because it's confusing matters, is just switch the topography off for now. In the background, if we just move over here, this is E48. Let's just go in and have a quick look at the sublevel cave. You can see the sublevel's there. That's the portion of E48 in the SLC, and this is Lift 2. This is the sequence that Nancy was describing earlier. Then if we look at the open pit story that we have, this is E28 Northeast, so it's the next pit that is in the sequence for development. These are the mined-out areas, E31 South and E31 North, and the newly declared resources at E51 and Major Tom. It gives you a bit of an impression of what we're dealing with at Northparkes.
Let's go to some drilling results, and we'll start with E26 or E26 South. What has our attention here? Let's just zoom in through here. What we think we have is a new porphyry system emerging here adjacent to an existing one. That is the really attractive opportunity. If we look at, here are the results that you can see in the call-out boxes. They are shown as the yellow disks again. The yellow disks are everything above 0.3% copper. What you can see just by those grades there and those grades there, it's a copper-dominant system. There's a couple of things for me which really stand out, and the first is the consistency of those mineralized intervals. You're getting a couple of hundred meters in each of these deeper drill holes.
These have been drilled from the Lift 2 extraction level at E26. What we also like about these intervals is that we have some internal runs at much higher grades. That's what we're really starting to like. Let's turn off this 2D image for now and have a bit more of a look at where we think this is going to go. Here we go. Here's that drilling again. What we've been doing is drilling out to the south of E26. We've been following it up plunge using some of the existing development to drill off out here. The next phase of work is going to look like this. In fact, I've been reliably informed we're pretty much almost concluded this drilling program underground at E26.
We will have results in the hopper pretty soon, and that's going to guide and drive what we do next. This is also where some of the geology becomes important, so you need to bear with me. We've always got to talk about a little bit of geology in one of these. I'm going to turn off that surface topo, and I'm going to put on a solid. Stock below Altona, it's called. Let's sharpen that up a bit. Look at that. That's what we want to see. There we go. All right. This is an intrusive body. Why it's important is that we see these shoulders that run off into cliffs or really steeply dipping zones. Here's the shoulder here, runs off into this really steep dipping zone. Guess what?
The porphyries at Northparkes love these positions around this intrusion. They love these steep shoulders that roll off the intrusion. We have E26 here. If we rotate, we can see that ridge or shoulder position there at E48. If I bring it around, you'll be able to see that again. There we go. It's right there. So there's that shoulder position again. It's a fundamental control on the localization and emplacement of these porphyry systems. E22, it's a little more subtle, but there's a ridge coming in through here, and we can sort of lift it up. You can run your eye through there, and you can imagine it being there. It's a really important control. In terms of where do you go next? Well, you're looking for these positions around this big intrusive stock.
Now, the other piece about the geology here that is actually quite interesting is when we transition out of the stock into the overlying and surrounding volcanic. So here is the contact of the stock there. When we transition into the overlying volcanics, we typically see the best grades at Northparkes in all of the porphyry systems. E48 is the same, where it is out of the stock. Sorry, I am just bringing it in here to convince you. We have some of the higher grades that we are mining in the SLC at E48. It is hosted above that contact in the volcanic. All of E22, you can see, is above. So they are where we are getting the best grades.
What I like about this new E26 South target, and bear with me, is the current drilling is in here, and we are chasing it up plunge to see where it continues because we do not know where it projects to surface. But if I put the surface back on, that is —Oops. That is not going to show up quite like that. There we go. So that is the surface there. Here is the contact there. There is a lot of space to move in here where we can drill for higher grade. That is going to the objective of the surface program, assuming these results come back, in confirming the orientation and the grade continuity in this new system. So that is E26. What we also like about it is its proximity to the existing infrastructure. It is right there.
This is the challenge I am going to put in front of Nancy as she considers her mining sequence is these types of opportunities, where do they belong in the sequence as we start to drill them off? So that is the story around E26 South. We are going to now go to some of the open pit drilling. As Nancy mentioned, this is also really important stuff for us to understand in terms of what is the secrets and can we find more of these open pits? So here is this funny-looking stock again. This is a bit of a different relationship to what we saw below. There is a couple of things to point out. Major Tom here, E51 here, the E31s up in here and here, all around the edge of this stock. It is not just coincidence.
This is a common position where these ore bodies tend to localize. What we have done in the last 12 months is a first phase of work that is understanding what are we getting as we drill around this stock. Are there other opportunities? Pleasingly, there are. We are seeing these in the results. So these yellow discs, again, above 0.3%. So we are seeing anomalies in through here. We are seeing anomalies in through here. Our best results occur in between E31 North and South. This is really the opportunity. The gray surface underneath is quite interesting because it is the Altona fault. So it is a big fault discontinuity. Everything here that is developed here came from somewhere down here. It slid all the way up here. So these porphyry systems are not spatially related to these. They are in time, but in space, they are not.
It actually pulled mineralization from depth and pulled it up. It actually been helping us. Geology tends not to, but in this case it has. It brought deep stuff up to surface. And what it also did, it was a little bit annoying because it came up over the top of part of E26, but it completely hides GRP and completely hides E48. That took a lot of deeper drilling to understand where they were located and took us a little bit longer. This is the other consideration at Northparkes. We have to see through this fault as we're doing more drill targeting. But that is essentially what we're going to be doing. And I do have a drill program just to show you all that we are going to be doing more work here.
We've actually just completed a fair bit of drilling around E31 South and North. And as you can see, we're following up on a number of these anomalies. And my comment to the team when we were talking about this about a week ago is I think we're under-testing this. I expect to see a fair bit more drilling, particularly given some of the results that we've been getting at Northparkes. That's really what we're trying to do. Testing for additional open pit targets, and we're taking a geological model and really using it to deliver future success. That is that story. I'll wrap Northparkes up there, and then we'll transition over to Ernest Henry. We're going to finish the slideshow here.
And in many ways, this is probably the easiest discovery story in the portfolio to explain, because we've been successful here for a long period of time, and I'll show you sort of how that's evolved over time. But each time we've drilled deeper at Ernest Henry, we keep demonstrating the remarkable continuity of this ore body. And what we're trying to understand now is just how far that continuity extends. All right. Here we are near Cloncurry, which is located here, Mount Isa to the west over here. The mine leases at Ernest Henry are this sort of little white inset there with the yellow circle. This is the land position that we've assembled around the mine. Here are the tenements that we'll come across with the Carnaby acquisition. And really what we're dealing with here is an opportunity really on three fronts.
I think we have multiple avenues for growth, which is the ore body extension at depth. We've got the land position and the Royal Duchess at Carnaby, and then we've also got that exploration ground around the mine. All right. Let's go into and have a bit of a deeper look at Ernest Henry. Here's the pit here. That has been mined out. This is the resource as it would have been in the day. It's obviously been extracted. The shaft is here, and the processing facility is over there with the coarse ore stockpile right there. That's essentially the basic infrastructure on surface. Let's just rotate this up and have a look at the ore body underneath. We'll do that. I'll switch the tablet off, get you out of the way. All right.
So one of the stories really at Ernest Henry is the remarkable resource growth that we have been able to deliver since we took the keys to the 100% ownership in early 2022. So this was at the end of 2021, the resource model. Now if I switch on all of the drilling traces, this is everything that has been done at Ernest Henry, and that now informs the latest resource update. But if I switch that on, you can see the growth. All right? In fact, back in the day, I will turn that drilling off because it gets in the way. This is all Bert was. In fact, it was not even in resource. It was just a couple of drill hits off to the side of the open pit. And we asked the question, "What is that?
We should get some more drilling into it." And we were able to extend it at depth, and there is a really lovely development story happening there. This was the only junior area. So we have expanded the resource into these areas, and we know that the ore body is open at depth. So if we now take a look at the reserves, we will just quieten down the resource. We will get that. Whoops. That one off. So that is the resource underneath. The blue shapes are the reserve. So that is the bottom of the current reserve, which Nancy was illustrating earlier. We do have some reserves sort of up in the mine in these eastern areas, and we can just. Well, Scott has already done it, but we will just do it again for some giggles here. So this will be the Bert development, and here are the stopes that will be mined at Bert.
So that is essentially what we have at Ernest Henry. The next slide really takes us to the result that was announced this morning. So here is the schematic that was in the slide deck. Here is the result that Lawrie has already mentioned in his presentation, but we really love the copper interval here and the gold. And the fact that really we are sort of over 500 m off the nearest drill hole up plunge. So it is really illustrating some remarkable continuity, and I think if I turn that image off. If we just come back in on it and rotate it around. Let me just do that. You can see the ore body is a little bit twisted, comes down here and then sort of rotates back the other way. But its down plunge projection is right on target, so it is really, really predictable.
We could see if we rotate, look from, whoops, that is going to be from west to east. We look there. Yeah, it is right where it should be. So the question is not so much is it there? The question is, how far does it really go at this type of thickness and grade and continuity? And that is the really exciting piece around what we are doing next. And if I just switch that on, these are the pierce points for the deep directional drilling program that we have currently running at the mine at the moment. Now, you can see this hole went something like 2.5 km deep. It is a really deep hole.
Now, one of the reasons why we're drilling with a surface rig is we wanted to decouple the drill program from the underground mining because we couldn't get it into the schedule when we needed to drill from underground. We really just don't have the development down to a depth at the moment where we can launch from underground and drill shorter holes. We've got a directional drilling program from surface. This rig will stay in this position for a very long time as it drills part of this pattern. We actually have another rig side by side, so they sit, they're collaring on the west side of the waste rock dump here. We've got another rig. It's just drilled its first hole.
These rigs will sit here until we basically pick off this drilling pattern at depth to understand really the geometry, which is the important thing that we need to understand. We're confident we're going to get the grade. I really look forward to sharing these results as they come to bear through FY 2027. A really exciting opportunity to really keep pulling this ore body down at depth. Really that's where I was going to leave it. As I look across the portfolio, Cowal, Northparkes, and Ernest Henry, I see three pretty different discovery stories. At Cowal, we're growing and connecting mineralized systems while testing the potential for another underground. At Northparkes, we're looking at identifying the next generation of ore sources that could support the expansion.
At Ernest Henry, we're continuing to extend one of Australia's really incredible copper gold mineral deposits. They're different opportunities. The common objective is to convert that exploration success into resource and over to reserves and provide those options for future growth. I will leave it there, and I can open it up to questions and get rid of these pharmacy glasses, which would be great. If you have questions on any of these models, I can pull them back up quite easily.
Afternoon. Jon Scholtz from Argonaut. Just a question on, especially the greenfields, if you're looking at gold versus copper, where do you align with what you chase more in that sense?
It's a good question. The way we do that, when we look at the greenfields portfolio and screen for those opportunities, there's a higher abundance of gold targets that are available for us to explore. When you go and look in the copper space, it's a much smaller pool of exploration opportunities that we're screening for. If I had to pick a ratio, it's not unlike what our gold to copper production ratio is. It's that sort of 25% of the targets we would look at from a greenfields perspective in copper. The other challenge in the greenfields space around copper is that there's a lot of competition for a really small pool of projects. We feel we have more opportunities in the gold space. Doesn't mean that we're putting a line through copper. We're still looking really hard at it.
It generally means that we turn up more gold exploration opportunities to bring into the portfolio.
Just at Cowal, that South Lake Protection Bund that goes in, does that end off the exploration there? You won't go any further out to try and look something, does it? Yeah.
Yeah. Right now, so I can have I got the bund there? I don't have the bund there. We'll just take a quick look at this underground because it's an important question. The bund position, I'll come back to that. This sort of shows what we're trying to do to the underground. We are exploring out to the east, but there's a real sort of methodology and strategy to that. What we see, and if you can get your eye in, we have a series of splay structures. Most of the ore body lines up along the diorite contact here. We have a couple of these splays. This is the [Manor] fault, where we have a lot of high grades sort of coming off to the east. This is another one here. You start to see another one here.
We do have drilling targeting the eastern extensions of those splays because they are high grade. We do want to know how far east they go. Now, back to your question on the Lake Protection Bund. If we go to, let's go to this one. Actually, no, we will go to the E41, so I will turn off that slicer. There is the bund there, and I will get rid of that long section. All right, and let's turn on some of the drilling. We are going to do that and that. If we spin that around, sorry, I will just declutter that a bit for you. Get rid of drill traces and the assays. What we can see here is most of our drilling in the E41 area occurs inside this South Lake Protection Bund or the OPC South, if you like.
These blue dots are all the RC drilling that we are going to be doing around up to the edge of that Lake Protection Bund, and we have some deeper diamond holes going in under those pits. These diamond holes are well and truly on land. The edge of the lake is over here, and we are drilling over here because we know, and you can see just by the shape of the pit, it is quite linear through here. There is a high-grade structure known as the Kilara fault. It comes through all the way through here. We are drilling that outside of the bund but on land. That would be way out into the future. We are just trying to understand, does that high grade continue beyond where we have it currently delineated.
Glen, Matt Frydman from MST again. I apologize because I am going to ask you about one of the assets that you did not just talk about. Red Lake FY 2027 exploration budget, AUD 25 million-AUD 40 million. That is, I think, the broadest range across the assets, but it is also at the upper end, potentially the most—
Yep.
—across any of the assets. Obviously, that is for an asset that Lawrie was kind of indicating might not even really have room to grow in the portfolio for maybe five or seven years. Can you talk through, I guess, what is driving that range? What are the sort of opportunities that you are seeking? Is that sort of budget reflective of, that is just the cost of reserve replacement at Red Lake, or is there other specific things that you are sort of targeting there?
Yeah. There's a number of things there, Matt, inside of that. We do have a large range because a lot of We have some contingent funding that's in there that is contingent on positive results being delivered by the existing program. We believe we will get those, and we'll be able to award some of that to continue those drilling programs, but that's all success-based. So there's a portion of that up to AUD 40 million, if you like, that's allocated there. The other thing, if you look at the reserve to resource, basically conversion factor it's at about 25% at the moment. So that means there's a long resource tail. And part of the mission at Red Lake is to start improving that conversion factor.
So to get it up to closer to at least 40% from I think between 40% and 50% is about as good as you'll expect at a mine like Red Lake. It's very similar at Mungari, they're similar types of systems. So the idea is to, there's a fair bit of resource definition drilling that's going to be done that consumes that budget, but that comes back to delivering those future high-value resources. So it's not going to take us long to work through the underground reserves. We need to keep a lot of it in front of us. So that is really what we're doing. We do have some other exciting extension targets that we're drilling, and I hope to be able to talk about that in the next 12 months, but we've got to do the work first.
The extension targets you're talking about, is that the sort of contingent funding component that you were just referring to? Or yeah, can you maybe just give us a bit of color on what the upside case could look like if some of those contingent programs come through positively?
Yeah. So look, I think we're looking at areas such as aviation. So right now that constitutes one of the largest resource areas. It's where we have considerable amount of our reserve and production in FY 2027 coming from aviation. So we've been looking or working pretty hard on extensions. And I expect to be able to award more of that contingent program into some of those extensions around aviation as we work through the year. So we will definitely be consuming some of it.
Hi. Hello. Just turning to Ernest Henry, you say that there's an additional 10,000 tonnes per annum copper from regional exploration.
Yep.
Can you tell us where you'll be focusing to make up that 10,000 tonnes?
Yes, I can. Let me go back to Ernest Henry. Just bear with me. I'll not only tell you where we're doing, I'll show you. This is probably the best image to use. We don't have all of our targets displayed. What we're essentially, this ground came together, most of it anyway, there's been three acquisitions over the last several years. A big chunk of it came from when we bought about just a little over 1,000 sq km from Rio Tinto. Rio had been up in the district for many years, had done a lot of work. They had screened it for Rio-scale copper-gold systems in the IOCG space. We would love to find a Rio-scale IOCG copper-gold deposit, but we're probably not going to, given that Rio are pretty good at what they do.
What Rio did, they found a number of mineral occurrences. They screened them at drill spacing that would essentially filter out anything that was going to be of a scale of interest or that would move their dial. But because we are looking at targets, and you can see the radius here. That's 75. Pretty much everything's within 50 km haulage distance at Ernest Henry. We're looking for much smaller style resources. So there are mineral occurrences where we feel that we can deliver small open pits. I'm envisaging in the range of 3 million-5 million tonnes. I'd love them to be bigger, but let's just be modest for now. We do have targets that we're currently drilling. For example, 10 km north of the mine, just in here, is our FC4 target. We have a diamond rig on there right now.
We are just drilling in this area here. We will be able to share a bit more color on some of the outcomes of this exploration in the regional sense towards the end of the summer. We will drill right up to the summer, start of the summer period, which is the wet season in Cloncurry and in that part of the world. We will essentially pull together all of the results to determine where to next. I expect to be able to have an update later in the year around what we are getting.
Daniel Morgan again, Barrenjoey. Glen, I would just like to understand Northparkes a little bit more. If you could expand on what is a resource, what is a reserve, what needs to happen to bring a resource into reserve. Is that drill density? Is that you need a concept study, you need a feasibility study? As we are looking at some of these resources, what is the historical conversion of resource into reserve? When I look at these resource blocks of different locations, what would you think about with regard to grade when you go from a resource to reserve? I imagine you are taking the center of a bigger pipe.
I will start answering the question, and I might call a friend if Nancy has more to add. Look, if we go back to this image here, and I will just get rid of the topography because it is just a bit. Oops. I will get you back down there. It just confuses matters a bit. Everything, Dan, that we are showing here, I will just explain it again. Just to give you some perspective here, everything in blue is reserve. That is the Lift 1 North. Here you can sort of see E48 SLC, E22 in reserve, and then the reserve for E28 northeast. That is essentially the reserve base at Northparkes at the moment. Everything in brown, so these footprints, are resources. We have sufficient drilling in them to at least classify inferred, but most of them are better.
We have a reasonably high proportion of indicated resource at Northparkes. Really, some of these ore bodies require a bit more drilling. That is mainly because, particularly as we are investigating block caves, it is really important to know where the edges of your cave footprint are going to be, and not all of the edges have been that well-defined in the drilling. That is essentially what the drilling program is doing. In terms of grade continuity within those footprints, it is really good. These are porphyry systems, so the grade continuity is geologically, in the record, they are typically the best for continuity. When you talk about reserve conversion, you basically get most of the resource converting within the footprint. The dilution is the thing that really affects the grade.
It's just how much waste are you going to take around your ore body, incorporate it into your block cave, and that's the thing that's going to drive the grade. But if you could mine perfectly to the edges of these footprints, the grade wouldn't change by much. Nancy?
Yeah. I can just add that most of them are quite well-drilled, and we understand quite well their, I would say, mineralogy or grades and content of them. But we have to do the study. That's why we have those big program and study, so we can have the study numbers, and there's some geotech information that needs to come in those study as well.
Thank you.
Brenton Saunders from Pendal. Glen, sorry, just back on Ernest Henry. The Greater Duchess. Where and what is that?
The Greater Duchess is down in here.
What stage of development or exploration? I see you've got it in a profile. You've got a copper and gold number next to it. Is that a satellite or what are you?
Yes. These would be satellite ore bodies that we would be looking to truck to the Ernest Henry plant. Currently at the moment, we've looked at the open pit resources, which do have studies that Carnaby has completed on them. Once we take the keys, we'll be progressing those studies in terms of the open pits. Other opportunities there, looking at sort of underground, beyond the open pits and other exploration opportunities would need to be drilled. So there's a fair bit more work to come in terms of how we would expand that resource. But we've essentially acquired on the basis of the existing open pits.
David Walsh from First Sentier. Just back to Northparkes. There is already quite a large resource at E26 South. I do not know how many tonnes, but the grades, what is it, 0.5% ? You are drilling off to the side of that. Are you just chasing more grade? Or is there more size that you need to convert that area into reserves?
I think there are two opportunities there. One is, the thing that stands out to me the most, and let us put the- where is the new assays. Put the new assays on. That is the drilling so far. If we really come into it, the thing that excites me the most is the proximity to E26 and the existing infrastructure. We do not have a resource on this. This is a long way off that. We have got a lot more drilling to do. I would say it is another 12 months away from being a resource in terms of what we understand. What we are going to be doing is we are starting to track it up plunge, so up towards surface, and there is a lot of space up in here. When I switch, when we look at the existing drilling, there is a lot of space to keep one of these.
I think the opportunity is, we have got grade, copper dominant down here. Where it fits in terms of the sequence, et cetera, we do not know that yet. But the real opportunity here, in addition to being adjacent to existing infrastructure, because that is really important. We have got the extraction level here already established. There are crushers, there is access to the material handling system, all of that. That is one really important aspect. I also spoke about as we move out of the. We are going to. No, that is the wrong one. Do I have it here? Yeah. Out of this, you recall I was talking about the stock. As most of the drilling at the moment, you can see, sort of is in the stock, so below the contact here. What we are seeing is 200 m runs of 0.35% with shorter intervals within that of 0.5%.
It has got to be 0.5% to make a difference. The way we are going to look at that is to bring it up out of the stock, because, as I said, we know that when you transition out into the volcanics, that is where you typically get the best grades. We are following it up, and then there will be a surface program in here to determine whether or not we have something meaningful.
Thanks. Dave Radclyffe again from GMR. If we could go back to Ernest Henry. That deep hole is obviously really, really interesting. Could you maybe talk about how it is in the context of what you would have expected as you were drilling down? Is it typical what you have seen in the deposit as you move down plunge? You said it was in the right position, but is the tenor of the grade about what you expected? What actually happens if you are successful with that program of the holes you put up? Does this promote potentially a rethink of what you were working on in terms of the infrastructure, or is this why this program is happening because you identified it as a potential upside risk?
All very good questions, and some of them we do not really have the answers to at the moment because we just do not have the level of information. But in terms of where we are taking it, to come back to the first part of your question, is it what we expected to get? I was a little bit nervous that this thing may have disaggregated into a series of lenses, but in fact, it has just held together. It is the main ore body that we have intersected in this hole. I will just get that off. I will rotate that around. It is exactly where it should be, right, in terms of you can just see how it lines up beautifully. That is dipping down that way and goes right through. We know, and that is about the thickness of the main ore body.
± 10 m to ±15 m, it is pretty close. In terms of where to next, if we just take a look at the west. Nancy was talking about the study that she is doing below the 750 mRL, which is the bottom of the reserve here. That was down a couple of hundred meters through there. What I am giving to Nancy is, we have a look at another 200 m down because we are essentially, that is at the 750 mRL. We are down at the, call it the 220 m here. It is another 500 m of potential mineralization that can be factored into the study that we are doing. Obviously, we need to drill it, but that is the direction which we are taking.
Yeah. Dave, what Glen's objective this year is to finish that drill program to see if there is enough mineralization below that study area that Nancy has got to hand that over to Nancy to say, "Well, okay, how deep does this go? What does it do to the infrastructure? What do we do with the mine longer term?" That is what we are targeting by the end of this year. Glen, as much as everyone wants to keep going through all your models.
I've got to get out of here.
We have to move on to Fran to finance.
Very good.
Tell us what she is doing with all this money that everyone else is making for her.
Okay. That is not me yet.
That is you.
That is me. Thank you. Well, today marks my first year anniversary with Evolution. Over the past year, I have been continually impressed by the commitment of our people, the quality of our assets, and the opportunities within our portfolio. It is a privilege to be part of Evolution, and I am excited about the value we can create for all stakeholders going forward. Across more than 20 years in the resource sector, including almost 17 years with BHP across multiple commodities, geographies, and market conditions, I have seen that long-term value is consistently created through a combination of quality, high-quality assets, strong margins, disciplined capital allocation, and financial resilience. These attributes are highly relevant to Evolution today. Our portfolio of high-quality assets provide us with the foundation for a high margin business. We then remain focused on operating discipline and continuous improvement, converting favorable metal prices into significant cash flows.
Now, the real value doesn't come from just generating cash, but from consistently directing that capital to the highest returning opportunities across the portfolio while retaining balance sheet flexibility and delivering cash returns to our shareholders. The life of mine planning process that Nancy has discussed with us today gives us confidence both in the quality of our operations and future projects. It provides a framework to our disciplined capital allocation and long-term value creation. What our long-term plans demonstrate is that our high margin operations will generate the cash flows and resilience needed through the cycle. Our balance sheet provides the flexibility to execute our strategy through the cycle.
Our disciplined capital allocation prioritizes the highest returning growth opportunities, and we're continuing investing in the longevity and uplifting the quality of our portfolio, while also rewarding our shareholders with fully franked dividends, supported by our increase in dividend policy targeting 60% of annual group cash flow. Sorry, I was on the wrong slide. I can see it down there now. Okay. The quality of our portfolio is demonstrated by the financial outcomes on this slide. While we have benefited from strong gold and copper prices, our focus remains on converting favorable market conditions into record EBITDA margins and record free cash flows. In FY 2026, we delivered a record EBITDA margin of 57% and generated approximately AUD 1,958 per ounce in group cash flows at an average realized gold price of around AUD 6,000 per ounce.
Looking ahead at a gold price of AUD 6,200 and based on the midpoint of FY 2027 guidance, as shown on this slide, we estimate operating mine cash flows of approximately AUD 3.6 billion. Our focus then turns to the disciplined deployment of that cash to the highest returning opportunities across the portfolio. In FY 2027, we are expected to invest approximately AUD 1.3 billion - AUD 1.4 billion in sustaining capital, major growth projects, and growth initiatives, while increasing exploration investments by approximately 65%, as shared by Glen, as we continue to unlock the value across the business. Mungari is an excellent example of this in action. The mill expansion was delivered around nine months ahead of schedule, 15% below budget, and successful commissioning and ramp up in FY 2026. The resulting uplift in margin is shown on this slide. Cash generation highlights that value is created through disciplined investment and strong project execution.
As Lawrie noted earlier, we prioritize maintaining a sector leading all-in sustaining cost through productivity, operational excellence, and cost discipline. Red Lake is a great example for this on the left of the slide and demonstrates this well. Despite operating in a high tariff Canadian environment, the team held the all-in sustaining cost broadly flat while increasing the EBITDA margins to 62% and delivered record net mine cash flows of AUD 286 million in the year. As a result of banking the upside, we enter FY 2027 with a significant financial flexibility, holding approximately AUD 1.4 billion of cash and undrawn AUD 525 million revolving credit facility and in a net cash position. We have a fully unhedged gold and copper portfolio, allowing our shareholders full exposure to strong metal prices and the substantial cash generation of the business.
As we have said before, we do not intend to hold excess cash on the balance sheet. If favorable metal prices persist, then capital will be allocated in line with our approach to reward our shareholders with higher returns. Our low-cost debt structure is aligned with our long-term plans, with no debt maturities until November 2028. This provides certainty and flexibility, allowing us to remain focused on operating and enhancing our portfolio rather than near-term refinancing requirements. Our investment-grade credit rating and our strong relationships with a diverse group of global lenders provides us access to attractive long-term capital and further financial flexibility. We are comfortable to operate with a gearing of approximately 10%-15% through the cycle. This reflects our philosophy that the balance sheet should enable long-term shareholder value creation, not constrain it.
We have also demonstrated the ability to temporarily move outside the range while compelling value accretive opportunities arise. For example, in FY 2023, net gearing peaked to 33%. Through strong operational performance, higher metal prices, disciplined capital allocation, and robust cash generation, we returned to a net cash position in FY 2026 ahead of plan. Our focus remains unchanged. Operating high quality operations safely and reliably, generating high cash margins, and allocating capital in a disciplined manner to maximize long-term shareholder value. As demonstrated on this slide, we do this via accretive deals, organic growth, and shareholder returns via fully franked dividends. Importantly, our cash flow and our balance sheet provides capacity to fund organic growth without having to sacrifice rewarding our shareholders with fully franked dividends. A key differentiator for Evolution is our disciplined use of equity.
Historically, equity has been raised only to support value accretive acquisitions, not to repair the balance sheet, refinance debt, or address operational challenges. This track record is reflected on this slide, with shareholders who have participated in an acquisition related equity raising benefited from strong long-term returns. As Lawrie called out earlier today, our success demonstrates that value is not created through acquisitions alone, but through the integration, optimization, and growth delivered thereafter. As Glen and Nancy have outlined, Evolution has multiple growth opportunities supported by intensive technical work, scenario analysis, and financial modeling through our annual life of mine planning process. This planning process is one of the most important disciplines and underpins capital allocation across the business. It takes a long-term portfolio view, assessing opportunities across different metal prices, operational scenarios, and development pathways to ensure that capital is directed to the highest risk-adjusted returns.
It helps preserve future options by continuing to invest in studies, exploration, drilling, permitting, and technical work. The process also identifies operational constraints and bottleneck, helping us target investments that can increase productivity, extend mine life, and enhance returns. I particularly like this slide because it demonstrates the value created through our disciplined planning and capital allocation approach. While internal rate of return is only one of the several factors considered in an investment decision, it does provide a useful illustration. At current gold and copper prices, expected project returns are materially above the original board-approved assumptions, highlighting both the quality of our portfolio and the significant value upside available to our shareholders. We continue to reward our shareholders. We are a consistent dividend payer.
Our record FY 2026 final fully franked dividend of AUD 0.21 per share marks our 27th consecutive dividend and reflects both the cash generation of our portfolio and our commitment to sharing the benefits with our shareholders. In August 2026, the decision to increase our target dividend payout ratio to 60% reflects the confidence in our operation, the cash flow generation expectations, and the flexibility of our balance sheet. This decision was not made based on current metal prices or our current financial position. Rather, it represents a structural increase in shareholder participation in our cash flow generation. We continually test our portfolio and our balance sheet across a wide range of operational scenarios, development pathways, and metal price assumptions. This includes funding all current approved projects, advancing future opportunities as shared by Glen and Nancy, and maintain appropriate balance sheet investment grade through the cycle.
As the graph on the left shows, we have delivered significant value for our shareholders. The total shareholder return of 258% in the last three years. This equates to 53% annualized total shareholder returns. As I reflect on my first year at Evolution, what stands out most is the caliber and energy of our people, the quality of the portfolio, and the way we operate the business. Throughout today's presentation, we have highlighted a portfolio of high quality, option-rich operations that generate strong margins and robust cash flow, with significant leverage to both gold and copper. We have also demonstrated that our financial strength is not an outcome of the current metal price environment. It reflects 15 years of disciplined operational execution, balance sheet management, and thoughtful capital allocation. Looking ahead, we are exceptionally well-positioned.
Our high-margin operations provide the cash flow and resilience to invest through the cycles. Our balance sheet gives us the flexibility to execute through the cycle, and our capital allocation ensures we continue to direct the capital to the opportunities for the greatest long-term shareholder value. Thank you. I will now hand you over to Lawrie for final remarks.
Fran left the stage too quick. I am sure there is some questions for Fran. So we will open it up for questions before closing remarks. I do reiterate, we do have a hard close because if we miss our flight slot this afternoon, we will be spending the night here in Sydney. I would prefer you to be out in the cold of Parkes tonight. Any questions for Fran? Well done, Fran. There we go. Matt, come on, Matt.
Do I come on?
Yep.
It is a bit cheeky and facetious, but obviously, balance sheet is in a really strong position. Net cash. Business is generating strong operating cash flows, so you can fund CapEx. You can fund more than the CapEx that you have outlined.
Yeah.
Why not pay out 100% of group cash flow? It is post CapEx, so if you wanted to increase your CapEx budget, you could. What are the considerations that drive that, and could that change going forward? Thanks.
Yeah, sure. I guess the 60% was done over the life of mine plans as we sort of saw various growth programs and its structural change. As I mentioned before, if the metal prices continue to persist, then we will absolutely be back looking at all forms of allocating out that cash to our shareholders.
Matt, we do have projects to invest in, and we've got the debt coming up in a few years. Our position is, and it's fair, that over the last 12 months, the most feedback we've had from shareholders is what we should do with the money. That extra 40%, what do you need with that? It's a good problem to have and, as Fran said, we're not going to build up this large amount of cash. I think going from 50% to 60%, paying out a third of all of our dividends in the last 13 years in one year is not a bad way to look at it. As our franking credit balance has lifted nicely in the last 18 months, that's another avenue for us to look at. Dan. Matt, you got the— Y eah. Thanks.
Fran, just while we got you. Daniel Morgan, Barrenjoey. That debt piece that you've got, are there rights to potentially buy back that debt? Noting that interest rates are very much on the rise. That 4.47% is quite low, so I imagine that if you were to repay it might be profitable.
Yeah, so we have looked at it as part of our decisions going to the board. We won't, Dan, just look to gearing for the sake of gearing. We'll do it to make sure it maximizes shareholder value. You can pay it back with a make-whole provision. Given it's at a fixed average of 4.47%, it made sense to hold that on the balance sheet. It's long term and matches our life of mine cash flows.
Do you want to just touch on that you can pay out the cheaper ones?
Yeah. Earlier in the years, you can look to them and balance them with the longer-term ones, which have a higher interest rate attached to them. Absolutely. We did look at that, and it made sense to keep the debt on the balance sheet. We will continue to reassess every reporting period when we go to the board with our recommendations.
Yeah. Our cheapest one is the first one, Dan. You could pay those without any sort of penalty. The ones that are longer dated are higher interest, and they are the ones that have the make whole. Right now, our view is that we will let them sit where they are. All right. Thank you for your time this afternoon. Really do appreciate you coming along and showing an interest in Evolution and where we are trying to go, and to enable us to give a bit of insight as to the company, the strategy, where we are heading over the next three to five years, and then go a little bit deeper into Cowal, Ernest Henry, and Northparkes, which have got most of the exploration upside right now and have also got the projects that are underway at those assets.
I will leave you with the key messages from the start of the day. I think what we have shown over the last 11 years is that we have acquired well, we have sold assets at the right time, and what we have done with the assets once we have acquired them has really generated a significant value for our shareholders. In the last five years with the portfolio we have got, we have demonstrated growth in production, but also growth in margin by keeping our costs focused and discipline in place and by having an approach whereby it is margin over ounces in the way that we manage the portfolio. I do think that copper in Ernest Henry and Northparkes provide a differentiator for us in the industry and provides a differentiation for us in an industry where short-term supply is not matching the increase in demand in the short term.
The ability to bring long-term production into the mix for what is needed in terms of a 50% uplift in demand for copper over the next 15 years, and us having ore bodies at Ernest Henry and Northparkes with ready available ore sources to bring into production is certainly going to be a differentiation for us. We do look forward to those who are traveling out to Northparkes and Cowal over the next two days for you to firsthand see each of those operations. Thank you on behalf of all of us at Evolution for your ongoing interest and support of us, and for making the time today. Thank you.