Evolution Mining adjusts dividend and outlines strategic plans amidst fiscal year challenges

Company News

by Glenn Dyer

Evolution Mining (ASX:EVN), a prominent gold mining company, has announced a reduction in its final dividend to 2 cents per share, down from 3 cents in the previous year. This decision follows a decline in earnings reported for the fiscal year ending on June 30.

During this period, the company disclosed a statutory net profit of $163.5 million, representing a significant decrease compared to the $323 million reported in 2022. Additionally, the underlying net profit after income tax stood at $205 million, down from the previous year's figure of $274.7 million.

Furthermore, Evolution Mining experienced a decline in EBITDA, with figures falling from $898.8 million in the 2021-22 period to $844.5 million.

The adjusted dividend of 2 cents per share resulted in a total yearly payout of 5 cents per share, demonstrating a decrease from the previous year's 6 cents. Notably, this marks the 21st consecutive annual dividend payout to the company's shareholders.

The reported gold production for Evolution Mining amounted to 651,155 ounces, with an All-in Sustaining Cost of $1,450 per ounce (equivalent to US$1,033/oz).

In a statement, Evolution Mining outlined its focus for the fiscal year 2023, emphasizing efforts to lay a foundation for improved returns, robust cash flow, and continued resource expansion in the following fiscal year, FY24.

The company highlighted key developments during FY23, including portfolio changes and growth projects, notably at Mungari and Ernest Henry. These projects are poised to drive capital investments over the forthcoming years. In FY24, Evolution Mining plans to increase production by approximately 18% to around 770,000 ounces, while targeting a modest reduction in All-in Sustaining Cost (AISC) to approximately A$1,370 per ounce.

A noteworthy accomplishment at the end of FY23 was the completion of a debt restructuring, which provided Evolution Mining with additional balance sheet flexibility without raising the overall debt level. With 95% of its production remaining unhedged, the company remains strategically positioned to capitalize on the ongoing strength of the gold spot price.

The company's Board granted approval for the expansion of the Mungari plant's capacity from 2 million tonnes per annum to 4.2 million tonnes per annum. This expansion follows the successful completion of the Feasibility Study and entails a capital investment of $250 million.

Furthermore, the Board authorised the progression of the Ernest Henry Mine Extension Project to the Feasibility Study phase. This move came after the completion of the Pre-Feasibility Study (PFS), which highlighted a compelling opportunity for extending the Ernest Henry sub-level cave operation. The approved plan includes a $15 million commitment to the Feasibility Study and a $7.5 million drilling program aimed at achieving a significant extension of the mine's operational life.

CEO Lawrie Conway remarked that Evolution Mining is well-poised to achieve its strategic goals for FY24, building upon the company's position at the close of FY23. Despite challenges stemming from external factors, Conway expressed optimism that a lower capital expenditure profile, reduced all-in sustaining costs, and increased production levels will foster stronger cash generation in the upcoming year. The commercial production launch of recent projects and the resumption of normal operations at Ernest Henry further underpin these expectations.

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.

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