We saw very strong earnings reports yesterday from two mid-range miners – Evolution Mining and Whitehaven Coal. Both solid results had been well forecast by the market.
Evolution Mining (the country’s second biggest after Newcrest) said its full-year result swung to a profit of $217.6 million from the 2015-16 loss of $24 million, as the Ernest Henry mine acquisition boosted gold production.
$136 million of the full year profit was earned in the December 31 half year when the rebound in the company’s performance was confirmed. The company said the acquisition saw sales revenue for the year to June 30 jump 11% to $1.48 billion.
The company declared a fully-franked final dividend of three cents a share, up one cent on last year, as part of its new policy to pay shareholders 50% of after-tax earnings.
Evolution expects to produce 820,000-880,000 ounces (oz) in 2017-18 at all-in sustaining costs of $850-900/oz, led by its Cowal operations in New South Wales.
Production guidance at Mungari, which consists of the White Foil open pit and Frog’s Leg underground mine, is set at 120,000-130,000oz in 2017-2018 at cost of $990-1050/oz.
Its Edna May gold mine near Westonia, which has been linked to rumours of a sale in recent weeks, is set to produce 90,000-100,000oz at $1250-1300/oz.
And underground development at Edna May is expected to hit ore later this year. The shares were up 5.3%, to $2.38.
The surge in global coal prices for much of 2016-17 helped Whitehaven Coal’s full-year profit to hit $405.4 million, from $20.5 million a year ago.
Higher production and export volumes added to the jump in global prices at precisely the right time for the company in the year to June. Revenue for the year to June 30 was up 52.3% to $1.77 billion.
Whitehaven said it had received a combined average price of $112 a tonne for its coal over the 12 months, up $37 a tonne increase over the previous year.
As a result, its average earnings margin jumped to $46 a tonne in FY17, up from $14 a tonne in 2015-17.
Whitehaven in July said it had produced 20.78 million tonnes of coal in the 2017 financial year, slightly below its guidance for 21-22 million tonnes, but still 6% higher than a year ago.
The company says 2017-18 forecast production will be slightly higher at between 22 and 23 million tonnes, as it consolidates operations before a further lift in output next year.
The proportion of higher-margin metallurgical coal increased to 21% of sales, up from 15% last year and, Mr Flynn said, the miner will lift that ratio further over the next few years as output rises from the Maules Creek mine and the upcoming Vickery’s project comes online.
The company has proposed a 20 cents a share distribution to shareholders, comprising a six-cent unfranked dividend – its first in four years – and another 14 cents a share by way of a capital return. It has sought a class ruling from the ATO on the proposed capital return.
Whitehaven shares surged to a four-year high of $3.62 in intra-day trade, but fell in afternoon trade to end the day off 2% at $3.29. Clearly the result was not satisfactory.
