Tax Costs Sting Evolution Mining

Gold miner Evolution Mining has boosted shareholder returns sharply despite a 10% slide in interim to $122.5 million for the December half. Directors declared a fully franked interim dividend of 3.5 cents, up from two cents unfranked a year ago.

Underlying profit after tax jumped to $124.7 million, from $115 million, driven by strong production, while revenue was up 10% at $782.1 million. The company said operating cash flow rose 9% against a 2% decline in the gold price to $A1,621/oz, with all operations producing positive operating mine cash flows

This result was driven by a strong operating performance across Evolution’s sites with half-year production of 407,459 ounces. All-in Sustaining Costs (AISC) fell 20% 20% from the December 2016 half-year to $A785 per ounce ($US611/oz).

The shares reacted positively to the result and closed up more than 2% at $2.85. Group cash generation continued to strengthen with net cash flow after investing up 20% to $A176.8 million.

"This was a result of mine operating cash flow increasing 22% to A$415.1 million and net mine cash flow increasing 37% to A$292.5 million after all capital expenditure. The major cash flow contributors were Ernest Henry (A$107.4 million), Cowal (A$87.3 million) and Mt Carlton (A$57.5 million),” director said.

Total capital expenditure fell 3% to $122.6 million (including all sustaining and major capital expenditure, rehabilitation costs and capital stripping). The fall was attributable to the disposal of the Edna May mine, contributing savings of roughly $3.1 million on the prior year.

Evolution operates five wholly-owned mines – Cowal in New South Wales; Mt Carlton, Mt Rawdon, and Cracow, in Queensland; and Mungari in Western Australia.

In addition Evolution holds an economic interest in Ernest Henry, in Queensland, that will deliver 100% of future gold and 30% of future copper and silver produced from an agreed life of mine area.

Outside of the life of mine area Evolution will have a 49% interest in future copper, gold and silver production from Ernest Henry.

Executive Chairman Jake Klein said in yesterday’s statement:

"These half year financial results continue to demonstrate the quality of Evolution’s asset portfolio and consistent operational performance. A 20% decline in AISC contributed to higher EBITDA margins of 53% and a 20% increase in Group cash generated to A$176.8 million.

"It is also pleasing to have increased our interim dividend by 75% to 3.5 cents per share fully franked. Our business is clearly in great shape but we remain focussed on driving further improvements.”

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →