The Evolution Mining Ltd (ASX: EVN) share price has pushed 3% higher to $2.87 on Thursday morning after the release of the gold miner’s half-year results.
Here are the key takeaways from today’s release (All figures in A$):
- First-half revenues from ordinary activities came in at $782.1 million, up 10% on the prior corresponding period.
- Earnings before interest, tax, depreciation, amortisation, and fair value adjustments (EBITDA) was 16% higher at $399.1 million.
- Profit after tax from ordinary activities declined 10% on the first-half of FY 2017 to $122.5 million.
- All-in sustaining costs (AISC) reduced 20% to a record low of $785 per ounce.
- Interim fully franked 3.5 cents per share dividend has been declared.
- Diluted earnings per share of 7.2 cents, compared to 8.5 cents
Overall I felt Evolution delivered a strong first-half both operationally and financially. And while profits were lower than a year earlier, it is worth noting that this was due to the prior corresponding period including a one-off non-cash deferred tax benefit of $30.9 million.
The highlight for me was the reduction in its AISC to $785 per ounce. This led to Evolution enjoying a healthy $628 margin for every ounce of gold pulled out of the ground.
Despite the gold price declining 2% compared to the prior corresponding period to $1,621 per ounce, Evolution reported a 22% increase in mine operating cash flow to $415.1 million. Pleasingly, all of its operations produced positive operating mine cash flows during the half.
And thanks to a small reduction in capital expenditures, net mine cash flow increased 37% to $292.5 million.
A big driver of this was its key Cowal operation. It was the highest producer in the group, achieving gold production of 132,425 ounces at an average AISC of $779 per ounce.
Should you invest?
Whilst I’m quite bearish on gold and the gold miners due to the prospects of rising rates and widening risk-free bond yields in the United States, investors wanting exposure to the gold sector for diversification purposes could do a lot worse than Evolution.
I think the quality of its operations, its low costs, and strong cash flow generation make it a stand out pick in the industry. In light of this, I would recommend it ahead of gold miner peers Northern Star Resources Ltd (ASX: NST), Resolute Mining Limited (ASX: RSG), and Newcrest Mining Limited (ASX: NCM).
