Evolution Mining (ASX:EVN) - Executive Chairman, Jake Klein
Executive Chairman, Jake Klein
Source: Evolution Mining
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  • Gold producer Evolution Mining (EVN) has reported a decline in revenue and earnings for the first half of FY22
  • Statutory profits dropped 60 per cent to $90.8 million, EBITDA fell 24 per cent to $393.3 million and revenue slipped 9 per cent to $898.6 million which EVN attributed to reduced gold volumes and a lower gold price
  • Evolution declared a fully franked interim dividend of 3 cents per share
  • Operationally, EVN acquired the Kundana assets, sold its Mt Carlton mine, and acquired a full ownership in the Ernest Henry mine in Queensland
  • With the help of a private placement to support the completion of the Ernest Henry acquisition, Evolution increased its cash position from $160.1 million to $1.15 billion
  • EVN shares were up 1.27 per cent to trade at $3.99

Evolution Mining (EVN) has reported a sharp 60 per cent decline in profits for the first half of FY22.

The gold producer recorded a statutory net profit after tax (NPAT) of $90.8 million for the half-year which marked a significant decrease on the $228.7 million in NPAT on the prior corresponding period (PCP). Underlying profits also decreased by 57 per cent to about $100 million.

In addition, revenue slipped 9 per cent to $898.6 million and earnings before interest, tax, depreciation and amortisation (EBITDA) fell 24 per cent to $393.3 million in the first half.

Evolution attributed the revenue decline to a reduction in gold volumes and a 4 per cent lower gold price.

Positively however, the company recorded a strong EBITDA margin of 44 per cent which the company said reflects its high-quality portfolio.

On the dividend front, the materials stock declared a fully franked interim dividend of 3 cents per share for the half-year, making it the 18th consecutive dividend paid to shareholders, for a total of $988 million, since 2013.

According to the miner, the dividend considers the “material lift” in cashflow expected in the second half from the Ernest Henry copper-gold mine and balances capital investment and balance sheet management with investor returns.

Operational highlights for the six-month period were acquiring the Kundana assets from Northern Star Resources which was funded through a $400 million institutional placement.

The billion-dollar company also raised roughly $68 million under a share purchase plan which was used for general corporate purposes.

In addition, Evolution acquired a full ownership of the Ernest Henry operation after previously having an economic interest in the Queensland-based mine.

The company said the increase in copper production will reduce all-in sustaining costs and positions Evolution as one of the lowest cost gold producers in the world.

Furthermore, the company sold its Mt Carlton gold mine to Navarre Minerals (NML) for up to $90 million as part of its strategy to maintain a high-quality portfolio.

Evolution Executive Chair Jake Klein said the half-year was “transformational” for the company.

“The portfolio has benefitted from key acquisitions and a significant investment in growth projects at our cornerstone assets, which is supported by a high-quality mineral resource and ore reserve base and our business is well positioned to deliver a very strong second half,” he said.

“Full ownership of Ernest Henry will deliver a material increase in cash flow and financial
performance and was considered when declaring the interim dividend.”

Operating mine cash flow decreased by 25 per cent to $396.4 million and total capital investment increased 57 per cent to $273.5 million which consisted of sustaining capital and mine development.

Net cash outflows from investing activities increased to $679.6 million from $174.2 million in the pcp due to the acquisition of Kundana and an increase in capital investment for the Cowal underground and Red Lake mines.

Evolution Mining ended the half-year in a strong cash position with $1.15 billion in cash — a significant uplift from the $160.1 million it started the period with.

The higher cash balance was due to the proceeds from a US private placement in preparation for the completion of the Ernest Henry acquisition which took place last month.

EVN shares were up 1.27 per cent to trade at $3.99 at 1:24 pm AEDT.

EVN by the numbers
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