Results in: Is Evolution Mining Ltd the best gold miner on the ASX?

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).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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