Like it has boosted its June quarterlies for majors, Barrick and Newmont (ASX:NEM), the surging gold price has burnished the full-year results for local major, Evolution Mining (ASX:EVN).
The NSW-focused gold and copper miner saw statutory profit soar 158% to $422.3 million for the year to June on a 44% jump in revenue to $3.215 billion.
Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) were up 67% to $1.513 billion, and underlying net profit after tax was up 135% to a record of $482 million.
And shareholders will get a nice payoff with the final dividend lifted to a fully franked 5.0 cents per share, more than doubling the previous year’s final payout.
Higher gold prices (which reached over $A3,500 in June and have risen past $3,700 in the past week on a surge in the US price past $2,500 an ounce), plus the weak Australian dollar helped Evolution, but so did the extra gold and copper from partial ownership of the North Parkes mine in central western NSW (near the company’s huge Cowal mine).
Ernest Henry in far North Queensland also performed well.
It’s no wonder the shares were up more than 9% yesterday.
Directors said in the annual report that “an increase in gold sales of 8%, excluding North Parkes, and a higher achieved price ($A3,190/oz vs $A2,592/oz) resulted in strong gold revenue growth”.
“This included 20,000 hedged ounces sold at $3,085/oz (30 June 2023: 140,000 hedged at $A2,078/oz)”.
“An increase in Ernest Henry copper production following its full recovery from the FY23 weather event, as well as an increase in the achieved copper price from $12,500/t to $13,657/t resulted in by-product revenue growing strongly”.
“North Parkes made a strong contribution to profit for the six months under Evolution ownership after settling its commitments under the streaming arrangement”.
“Operating costs for the Cowal underground mine from 1 April 2024, when it reached commercial production, added $42.4 million to operating costs”.
“Operating costs before depreciation increased by $73.8 million, driven by increases in labour costs, which comprise half of our cost base, as well as higher maintenance consumable costs and royalties on higher revenues. Non-cash inventory costs mainly related to the sell-down of concentrate at Red Lake (in Canada)”.
CEO Lawrie Conway said in the ASX release that “We are ideally positioned for FY25, which will see us continue our high cash generation through planned higher production, at a sector-leading cost position”.
And this sees the company upbeat about guidance: Evolution said it expects its strong form to continue with production of 710,000 to 780,000 ounces of gold and 70,000 to 80,000 tonnes of copper at an All-In Sustaining Cost (AISC) of $A1,475 – $A1,575 per ounce (2023-24: $A1,477).
The company thinks that leaves it well-placed to generate bumper free cash flow. Particularly given how the spot gold price is now much higher than what it averaged in 2023-24.
“Cash flow will be generated from the combination of the quality portfolio, sector-leading cost position, exposure to copper, disciplined capital allocation, and the outlook for commodity prices, with the gold spot price $560 per ounce above the FY24 achieved price,” Evolution said.
