The Evolution Mining Ltd (ASX: EVN) share price has edged higher in morning trade after the leading gold miner announced record half-year profit.
Highlights from the result include:
- Record half-year underlying profit of $136.3 million, up 26% on the prior corresponding period.
- EBITDA increased by 21% to $345.3 million.
- Half-year production of 423,120 ounces
- All-in sustaining cost (AISC) of $978 an ounce (US$738 an ounce).
- Average realised gold price of $1,656 per ounce.
- Net mine cash flow of $213.6 million.
- Interim unfranked dividend of 2 cents per share.
I think this result demonstrates why Evolution mining is up there with Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) as one of the highest quality gold miners Australia has to offer.
Last year Evolution produced 803,476 ounces of gold at an AISC of A$1,014 per ounce generating a net mine cash flow of $428.2 million.
This year the company is targeting up to 860,000 ounces at an AISC of between $900 and $960 per ounce. After this strong first-half I feel confident the company will achieve this and potentially deliver a record full-year profit.
But is it a buy?
A lot will of course depend on the future direction of the gold price. At present the spot gold price fetches US$1,232 (A$1,595) an ounce.
But as the Federal Reserve raises rates in the United States I believe the U.S dollar will strengthen and the gold price will weaken, putting pressure on Australia's gold miners.
If you're like me and reasonably bearish on gold, then I would suggest you avoid an investment in Evolution or its peers at this point in time.
But if you're bullish on gold then you certainly could do a lot worse than an investment in this gold miner.
