Evolution Mining is ‘ideally’ positioned after record profit
The miner, led by Lawrie Conway, expects to push gold production higher this year and is ‘ideally positioned’ after posting a record profit.
Evolution Mining has more than doubled its final dividend after annual profit soared to a record $422m, driven by strong demand for gold and copper.
The result comfortably exceeded consensus estimates for both underlying and net profit, with Citi Research saying it was 10 and 15 per cent higher than expected on the respective measures.
The outlook was also positive, with Evolution saying its “high margin, high cash flow generation is expected to continue” in the 2025 financial year, with guidance of 710,000-780,000 ounces of gold and 70,000-80,000 tonnes of copper.
Evolution produced 716,700 ounces of gold in FY24 and 67,862 tonnes of copper.
Evolution shares surged on the result in early trade, up 6.8 per cent to $4.07.
“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.
Managing director Lawrie Conway said the company was “ideally positioned” for the current financial year, “which will see us continue our high cash generation through planned higher production, at a sector leading cost position’’.
Evolution’s all in sustaining cost of production is expected to be $US996-$US1063 per ounce of gold this year, compared with the current gold price of $US2465.
The company said its Cowal underground mine reached commercial production during the past financial year and has started to contribute cash flow as it ramps up to its designed capacity.
“Cowal fully paid back all of its acquisition cost and subsequent capital
expenditure, including the underground during FY24, generating $294.2m in net mine cash flow.
“The next phase of the open pit is continuing through the regulatory approval process and remains subject to a final investment decision by the board. This is expected in late FY25.
“Ernest Henry recovered fully from the FY23 weather event and returned to its predictable and reliable performance.
“The extension feasibility study is progressing to plan and will take into account the ongoing
drilling success. Ernest Henry also achieved fully paid back status in FY24 and generated net mine cash flow of $334.1m.’’
Evolution said its Northparkes asset was “an excellent addition to the portfolio’’ and contributed $74.2m to net mine cash flow.
“The Mungari 4.2 expansion project is progressing well-being on budget and schedule,’’ Evolution said.
“This project positions the operation to deliver strong cash flow from a larger and lower cost production base.
“Before major capital investment, it contributed $66.5m to cash flow in FY24.
“Red Lake has started to show sustainable improvements to enable positive cash generation and reliable delivery in FY25, having achieved record mining tonnes under Evolution ownership in the June quarter.
“Mt Rawdon is expected to deliver a valuable cash contribution in FY25, supplemented by stockpile processing as the operation reaches the end of its mine life in FY25.
“The pumped hydro environmental impact statement was submitted this year and the feasibility study is progressing well.”
Evolution said only 6 per cent of gold production for the current year was hedged and its copper production was entirely unhedged.
Citi Research said “the market should like today’s result’’ and the guidance was “in line to better than we’d expected”.
RBC Capital Markets said it was “a decent result overall” but added it was a “fairly neutral outcome” on guidance.
“However, avoiding more negative FY25 guidance may be seen as a positive to some in the market,’’ RBC said.
Evolution's gearing reduced from 33 per cent to 25 per cent during the year.
Evolution will pay a fully franked final dividend of 5c per share, up from 2c.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout