Rain a relief but water issues remain, says Evolution Mining
High gold prices have sent Evolution’s profit surging, but the miner says recent rain hasn’t solved its water problems.
Evolution Mining says recent rains have delivered some short-term relief to its flagship Cowal gold mine in western NSW, but the company is still preparing for restricted water supplies in the drought-hit region.
The gold miner said on Wednesday Cowal had received 55mm of rain in recent days, and dam and river levels have risen as a result.
Speaking to analysts after the release of the results, Evolution boss Jake Klein said the rain had been “helpful”, but did not signal the end of the worst of the drought around the company’s mine.
The best of the recent NSW drenching was closer to the coast and Evolution is pushing on with plants to build new pipelines, drill additional bores and push its water recycling efforts past 50 per cent in the face of restrictions the company believes are unlikely to be lifted for surface water sources.
“We’re only relying on 20 per cent surface water and in the long term we want to get that down to zero,” he said.
“Our plan is around the fact there could be an increase in (water use) restrictions, and we are planning around that. We are not changing our plan from what it was prior to this rainfall.”
Evolution booked an after-tax profit of $147.2m for the first half of the financial year, up 61.6 per cent from the first half of the previous period on the back of the strong gold price in 2019.
“The higher statutory profit was driven predominantly by the increase in gold revenue of $143.9m, which is 22 per cent higher compared to the prior period,” Evolution said in a statement to the market.
“This is underpinned by a 24 per cent higher achieved gold price of $2,102/oz compared to $1,695/oz in the prior period.”
Evolution directors declared an interim dividend of 7c a share, in line with that paid in 2019 after the company shifted its dividend policy to pay about 50 per cent of free cash flow.
The gold miner booked earnings before interest, tax, depreciation, amortisation and fair value adjustments of $441.2m, up 23 per cent.
Evolution last month flagged annual gold production of about 725,000 ounces for the full financial year, at the bottom end of previous guidance, after encountering geological issues at its Mt Carlton mine.
Evolution shares closed up 10c to $4 on Wednesday.
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