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00:00We are seeing gold falling today to about eleven week low and it's interesting because you think about rising inflation and slowing global growth geopolitical fears and that's kind of a perfect situation for gold bugs. But the Fed rate hikes does that change your expectations. No it hasn't. I think all eyes on the Fed at the moment. I think if you go back 60 days gold was flirting with two thousand U.S. dollars an ounce. It went higher than that. So you know now it's retreated on the basis that the Fed is going to be very hawkish. Let's see what happens tomorrow. I'm optimistic about gold in the medium to longer term. So if the fundamentals haven't really changed in terms of your perception of demand what's your outlook like at the moment. Because we know that numbers are falling a little bit below what was expected. Are you expecting that to ramp up. Yes that evolution we're very focused on margin over volume and we reduced our cost base. Our cost per ounce by 27 percent this last quarter production was a bit low but we're expecting a 20 percent higher out this quarter. And then ramping up that red like Canadian mine is a real turnaround opportunity. We're very optimistic about the long term future. It had some hiccups due to Covid an operation which is 20 to 21 but we feel we largely through that. In fact we're just hoping that you're headed to Canada and just look weak. Does that mean given that you've traditionally been very focused in Australia is the focus shifting a bit to the North American international assets. So I think in our view that you know in this rising geopolitical risk environment jurisdiction is going to become increasingly important to investors. We focused exclusively on Australia and Canada. We think they world class mining jurisdictions have great skills bases and you can rely on the rule of law. So those are places where we want to operate and we own 100 percent of our assets in each of those countries. From a broader industry point of view do you think we're on the cusp of another supercycle for commodities and metals. I'm not sure we're on the cusp. I think we're potentially in the middle yet. Inflationary pressures are real. You know gold is a great inflation hedge. So I guess it follows that when it's performing reasonably well and it's had a slight setback in the last couple of months but it's a lot higher than it was five years ago. Then you're going to see an inflationary cost pressures and we're definitely seeing that in the sector. Do you see any impact from the lockdowns in China the way that they're dealing with their Covid-19 strategy and the potential impact on demand. I think that has add an extra layer of off pressure their skills shortages in Australia. There's been lack of ability to move into Western Australia particularly for the last couple of years. All of that is exacerbated plus the very high commodity prices outside of the gold sector. You know it's we've seen miners relatively unscathed by the impact of as you say the mobility and and the labour shortages. Is that starting to heighten a bit more now. I think it is in our mine in Western Australia in Kalgoorlie is is at the pointy end of that. So I think Western Australia is is that is the most difficult place. East Coast operations are largely insulated from that and we're managing it well. It has kind of come through and we've dealt with that well over there. But in Western Australia yes skills shortages are a challenge albeit we are managing that quite well. We are also seeing not just rising inflation but of course the RBA embarking on what appears to be a more hawkish tightening cycle than markets had expected. Does the issue of rising borrowing costs and rising costs in general affect you. Yeah I think it's going to have an impact on all businesses as we were very very fortunate to have done a 750 million U.S. dollar bond placements six months ago when we bought the Ernest Henry asset. We did an eight and a half year average maturity for 3 per cent roughly 3 per cent borrowing cost. I think the same would cost roughly 78 per cent today. So we're fortunate that most of our longer term debt is fixed at very low cost. So broadly or happy with the way your hedge. We're happy with our balance sheet. Very happy. What do you think what the API RBI is trying to signal when it comes to the broader economic recovery and you know as well as elements that would affect you like wage growth like the labor market. I think they signaling the same thing as the Fed and they've got the same challenge. You know these economies have low unemployment at the moment. They have very high inflation. And to balance that and to land that and to raise interest rates without putting the economy into recession has not been done very often before. In fact it's an impossible challenge. And hence why I think that investors should have an exposure to gold because the likelihood of their overshooting and inflation staying high means that you should have an exposure to go. But on balance the Reserve Bank is is trying to follow other central banks. It's probably a necessary move. Inflation is higher. Than anyone anticipated. As you can hear and see behind this return to some kind of pre pandemic normal is it returned to normal for your business and do you see the lingering effects of the last. We've seen that impact and I think we've dealt with it very well. But we reported that in our March quarter 25 percent of our workforce at our Cal operation which is in New South Wales Australia which has tested positive for cocaine that had a big impact on the availability of our workforce. We didn't have a huge impact on production but it's it's a distraction to our management team on site. And so there have been complexities that were dealt with that have definitely been thrown at us as a result of that. It's really hard to vote in a couple of weeks. What is the one change that you think is most needed for the country. ISE I think we've got to go towards more towards renewables. We do have to have a an approach towards renewables. We have a great asset in Jordan that could be converted into hydro scheme. We're very optimistic that there could be a part of the solution to gigawatt ten hour battery. Deep storage would be an incredible transition from a mine to a renewable power. I'd like to see that and I'd like to see Australia become at the forefront of renewables. We have an opportunity lead the world. We have the opportunity to lead the world in the mining space technology. Those are the sorts of things I'd like to see.

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Evolution Mining CEO Jake Klein on Business Outlook

Jake Klein, Executive Chairman of Evolution Mining, one of Australia's largest gold miners by market value, discusses the outlook for the Australian resources sector. He speaks with Haidi Stroud-Watts on the sidelines of the "Macquarie Australia Conference" on "Bloomberg Markets Asia". (Source: Bloomberg)

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