Good morning, and thank you for the opportunity to speak to you today about Evolution Mining at the 38th Mining Forum. Also congratulate Tim and everyone and wish you the best for the inaugural Mining Forum Australia, next October. Highly likely it will be known as the Mining Forum Down Under rather than Mining Forum Australia, Tim, so you might have to change the name. This morning, I will be giving you an overview of Evolution, where we have come from and where we are heading over the next 5- 10 years. There are some forward-looking statements, and I do draw your attention to the disclaimer here in the presentation.
Some key messages for you today is really about the organization and our strategy that we have executed consistently over the last 15 years. We have acquired well. All of the assets in our portfolio today have been acquired since 2015. All of the assets that were in our portfolio at the time of starting Evolution in 2011 have either been divested or Mount Rawdon, our last asset will move to care and maintenance next quarter. Importantly, as we have acquired these assets, it is what we have done with them after we have acquired them and unlocked true value in improving our portfolio quality.
We have delivered consistent growth from the continuing assets, and I will show that a little bit shortly. Importantly though, our focus has been on margin over ounces. We have never set out to be a 2 Moz producer or a 1.5 Moz producer. More importantly, we have focused on the margin that we get out of every ounce. A difference for us to a number of our peers, is that we are leveraged to the structural demand change that is happening in copper right now, having two copper mine assets in the portfolio in Ernest Henry and Northparkes. What you will also see today is that there is significant untapped upside in each and every one of our assets across the portfolio.
Since 2022, over the last five years, we have seen an increase in our production. We have grown that at an average rate of 6% per annum, taking us from 680,000 to 920,000 gold equivalent ounces. You can see on the chart there the differentiation between the gold and the copper. We have done that through inorganic growth, through the acquisition of Northparkes in December 2023. We have done that through organic growth, through the expansion of the Mungari plant from 2 million tons per annum to 4.2 million tons per annum 18 months ago. At Cowal and Red Lake, we have just organically grown that production over the same timeframe.
At Ernest Henry, we had a weather impact during FY2026, which reduced the overall production, the net production to 890,000 gold equivalent ounces. So what you have seen is over that five-year period across the entire portfolio, we have been able to grow the production. As I said earlier though, our focus has always been on margin rather than the production growth. This chart, which is well done by Canaccord, looks at the industry and what is the industry all-in sustaining cost margin over the last 10 to 11 years.
Two things I draw your attention to is that over that period, in each and every year, Evolution's margin has been the best in that sector group. In that box there, you will see the last five years, which matches to that growth in production that I just talked about. There is a key thing to point out is that in 2022, that is when we acquired 100% ownership of Ernest Henry, and that started to increase our margin there with further exposure to copper. 2023/2024 is when we acquired 80% of Northparkes. In the last couple of years, you have seen that margin growth and started to put a gap on the industry, and that is through the rising copper price and which copper is important in our portfolio.
Over those last five years, that discipline around our costs, the acquisition of Northparkes and the metal prices have seen our all-in sustaining cost margin exceed the sector and starting to differentiate ourselves in the last couple of years as the copper price has risen. Copper is a differentiator for us. If you look on the right-hand side, it makes up 22% of our revenue. In that blue box there, it highlights Ernest Henry and Northparkes are really low-cost, high-margin copper assets in their own right with a C1 cost of between AUD 0.65 and AUD 1.23 per pound. Importantly for us at Ernest Henry and Northparkes, we have about 3 million tons of latent mill capacity at these two assets.
Just as significant is that at both of these operations, we have near-term ore sources that are available to start to take up that latent capacity. At Ernest Henry, we are acquiring Carnaby Resources, which will go to vote on 26 October and likely to close on 10 November. The Bert Underground mine, which is separate from the existing Ernest Henry Cave, and Corella is all the land that is around Ernest Henry that allows us within trucking distance of Ernest Henry. Those three combined would take up about 1.3 to 1.5 million tons of that latent capacity at Ernest Henry.
At Northparkes, we have approved the E22 block cave establishment in February of this year, and work is already commencing on that. In FY2030-FY 2031, that will come into production, and that will then lift the mining rates at Northparkes. We have a study going on to expand the production there anywhere between 40% and 100%. Considering that is happening with Ernest Henry and Northparkes, and on the left-hand side, you see the structural difference that is happening between the supply and the demand side.
The forecast through S&P Global is that there is a 50% increase in demand projected over the next 15 years, which means there is an additional 14 million tons of copper that is going to be needed. Whereas on the supply side, this is the first time in a decade the production is actually going to be negative compared to the previous year, and therefore the supply side is not meeting the demand side. That is a true benefit of what I have just talked about in terms of Ernest Henry and Northparkes with that near-term increase in supply at those two operations.
When we acquire assets and do our due diligence, it is not what the asset is on day one, it is what we actually do with the asset once we take ownership. Really, that value is derived straight after acquisition. This chart here shows back in 2014, where the portfolio sat just prior to the acquisitions commencing of those assets of Cowal and Mungari in 2015 through to Northparkes in 2023. What it shows there is that at that time, our reserve life average was five years. Average production was about 100,000 oz. As we have acquired and optimized these assets, what you now see is that we have lifted that reserve life from five years to 17 years. We have increased production at each and every one of those assets.
We have certainly seen a significant rate of return on each of those assets, which the bubble chart sizes reflect. You have also seen those assets repay everything in terms of what we have invested in them. A couple of highlights out of that. Cowal, we purchased in 2015 for just over AUD 700 million. Since then, it has generated over AUD 5 billion of operating cash flow. It has done that at a rate of return of 14% per annum. At the current metal prices, that rate of return is going to start to increase. It has fully repaid everything that we have invested in that asset from Day 1 through till now.
Ernest Henry, similarly, we invested about AUD 2 billion acquiring that asset. It has generated AUD 3.6 billion of operating cash flow and generated a rate of return of about 24% per annum since ownership. Northparkes, which we only acquired just under three years ago, has generated a rate of return of 30% per annum out of that operation, and that is after the Triple Flag stream. It does demonstrate that when we acquire these assets, we extract maximum value out of those. Importantly, when you look at each of these assets now and the reserve lives that are remaining today, we have a 17-year reserve life and a lot more upside in each and every one of these assets.
Having a look at a couple of the forward-looking now in terms of where we are going with some of our key assets and where they fit into the portfolio. Cowal is a significant cash generator. Generated over AUD 1.2 billion of operating cash flow last year and AUD 850 million of net mine cash flow. It is able to fund the growth that we are actually progressing here at Cowal. In April last year, we approved the open pit continuation project, and that does extend the mining of the open pit by 10 years.
I think really the thing that people have missed is that through, and you can see that green line on the map there, where we have moved the bund wall and creates E41 opportunities, E46 and the underground that are now all under land. Therefore, there is far greater potential in this asset beyond the open pit continuation project. The drilling results over the last couple of years in the underground have shown there is significant potential for a second underground, where the reserve grade is twice the reserve grade of the open pits.
We are looking at lifting the production out of the underground from 2.4 million tons to 2.6, and ultimately up towards 3 million tons per annum. Over at E41, the exploration that we have been doing there is looking at the mineralization there between E41 and E42 and trying to close that gap between the two pits. We know that E41 will be significantly larger than what it was when we approved the open pit continuation project. So E42 will be our base load production. On the bottom of the slide, it sort of shows the sequencing of each of these open pits, along with the underground that now sees us looking at, instead of a 330,000 oz average from about 2029, it is more likely that we are moving towards a 400,000 oz plus at this operation.
As I have said, it is already a significant cash generator at 300,000 oz per annum. I mentioned the copper leverage and the latent capacity. At Ernest Henry, those three projects that I was talking about earlier have the potential to add about 25,000 tons of copper, which would be about 40%-50% additional production of copper by FY2030. That is going to be a material increase in our copper production over the next few years. But the mineralization that we are seeing, which is about 900 meters below where we are currently producing from, and we are getting grades that are significantly higher than what we are currently mining at, is giving us great confidence that Ernest Henry will go well beyond FY2042. At Northparkes, the same thing. We are expanding our copper production there.
In the near term, we have approved a coarse particle flotation project that will lift recoveries by about 2% and also enable us to lift production by half a million tons, and then through FY2028, about 1 million tons. We are currently constrained through the materials handling system in the underground at about 6.5 to 6.8 million tons per annum. We have the capacity to process around 7.5 million tons per annum. We are looking to move that to 8 million tons per annum post the coarse particle flotation project completing in FY2028. E22 does give us life of mine infrastructure underground, lifting that materials handling system capacity from 6.5 million tons to over 11 million tons.
When E22 gets into full production, you are looking at somewhere between 12 million and 12.5 million tons per annum out of the underground. The mill expansion study that we are doing now will be completed at the end of FY2027. It is looking at a base case of 10 million to 11 million tons per annum and potentially up to 15 million tons per annum. We have got the underground inventory that can support production out to 2040. But importantly, we have got a lot of small, shallow, open pits that can complement and supplement the underground production that will give us the confidence about that production rate of between 10 and 15 million tons per annum.
The two other assets in the portfolio at Mungari, we've completed that expansion that now gives us 200,000 oz of production each year over the next five years. Our target is to lift the proportion of the underground material, which is about four to four and a half times the grade that we get out of the open pit. If we're able to lift that to 20% to 25%, that would see production at Mungari growing from 200,000 oz to that 220,000 oz to 225,000 oz. It delivered over AUD 360 million of cash flow in its first full year of production at that 4.2 million ton rate, and therefore, it's going to be a stable cash generator for us going forward.
At Red Lake, over the last couple of years, the focus there has been it to be stable quarter on quarter, delivering 30,000 to 40,000 oz each quarter and generating cash positive. It was AUD 260 million of cash last year, which represented about a 20% payback on all invested capital at Red Lake. Given the history of processing at about 50 to 60 grams per ton at Red Lake, we are doing a tails reprocessing study which will look at increasing that production rate over time at Red Lake. At the same time, we've been making sure that through this metal price cycle that our shareholders have been rewarded. We've taken our gearing from 33% in FY 2023 down to net cash at the end of FY2026.
Through that period, as you'll see on the bottom chart, our dividends have increased significantly over that timeframe, making sure that our shareholders do benefit through this cycle. In August this year, we approved an increase in our payout rate of our group cash flows from 50% to 60%, which is really sector leading when you look across each of the companies in the industry in terms of what they're returning to shareholders. If you then look at in terms of our capital growth and our share price, over the last couple of years, we've seen that at a 53% rate of return, which is incredible for our shareholders.
We are investing in that organic growth that I talked about, and this really highlights where our focus is on margin and returns in that up until now, the group average has been 18% rate of return. Each of these projects at a conservative metal price, in the green bars, which is well below the current spot prices, are generating rates of returns between 23% and 77%. At spot prices, that's going to generate rates of returns of between 40% and 130%. It does mean our disciplined capital and cost allocation is going to reward our shareholders by improving the quality of the portfolio over time. When we look at it, each assets in our portfolio have got a role to play, and they know what that role is.
Cowal, which is our largest production asset, is a significant cash generator with a lot of growth opportunity, and it can fund that growth. Ernest Henry gives us that compelling growth in copper, and we will see that over the next 5-10 years in a time when you see that supply/demand structural breakdown. Mungari and Red Lake through that period have got to be that stable cash generator for the portfolio while we are going through those growth projects at Cowal, Ernest Henry, and Northparkes. In summary, as I said at the outset, our strategy from day one has been very consistent. We have executed against that. We have acquired well. We have divested well. We have divested at the right time, and we have unlocked a lot of value in the assets when we have acquired them.
We have had growth over the last five years, which does set up for the portfolio for that continued growth over the next 5-10 years. Our focus will remain on margins over ounce production, and we are exposed and have leverage in the copper with Ernest Henry and Northparkes. As we continue to explore and drill at these assets, there is significant more upside that we are going to tap into across the portfolio in the next few years. With that, I will finish there.
Great. Thanks, Lawrie. I think we have time for a question or two. If you have a question, please raise your hand and we will get you a mic. Maybe, I have got one for you, where you talked about on Cowal, things people miss in terms of resource expansion potential. Where in your portfolio do you most commonly see the market underestimating the production growth potential or the NAV growth potential?
I think it has been at Cowal until now, and we had a site visit there two weeks ago where people started to see that potential now that we are going through with our drilling programs at E41 and the underground. Those two alone will enable us to move the bottleneck from the mining to the processing and then ultimately, over time, look at expanding the processing capacity there.
Quite a few mentions of the copper in the portfolio. Do you think you get market recognition for the copper?
I think over time we are. I think there's a lot better understanding now. I think for the first 12 to 18 months, there wasn't a good understanding of the potential of Northparkes and what it could mean for our asset. I think the work that we did with Triple Flag over the last 12 months to come to an arrangement and amending the Triple Flag stream there to allow for the expansion of the plant, the establishment of E22 as a block cave and the development of E44. Now people see that Northparkes and the copper that it can contribute is going to be significant for us.
Great. Thank you, Lawrie.
Thank you.