Evolution Mining share price on watch after posting 62% profit increase

ASX gold miner Evolution Mining Limited (ASX: EVN)’s share price is on watch this morning, following the release of its half-year earnings.

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The Evolution Mining Limited (ASX: EVN) share price will be on watch this morning following the release of its first-half FY20 results.

What did Evolution announce?

Evolution reported a record half-year statutory net profit after tax of $147.2 million, up by 62% compared to $91.1 million on the prior corresponding period (pcp), and record underlying net profit after tax of $149.1 million, up by 62% on pcp.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 23% to $441.2 million, compared to $359.7 million in FY19. Mine operating cash flow increased 32% to $511.8 million and net mine cash flow increased 48% to $351.8 million. Group free cash flow increased 119% to $242.4 million.

The major net mine cash flow contributors were Cowal ($141.8 million), Ernest Henry ($128.7 million), and Mungari ($41.0 million).

Evolution’s EBITDA margin increased to 49%, up from 48%.

Evolution reported that it is currently debt free and has increased its net cash position to $170.3 million, compared to $35.2 million on pcp, after making debt repayments totalling $300 million during the half-year

The miner’s revenue for the half-year increased by 19% to $898.2 million. The 24% higher achieved gold price of $2,102/oz was slightly offset by a decrease in sold ounces of 378,596oz and lower copper and silver revenue, which is a result of reduced volumes.

Evolution commented that the financial result was underpinned by half-year gold production from its asset portfolio of 362,857 ounces at an all-in sustaining cost (AISC) of $1,041 per ounce (US$713/oz).

Total gold sold included deliveries into the hedge book of 50,000oz at an average price of $1,680/oz (compared to 31 December 2018: 75,000oz, $1,684/oz). The remaining 328,596oz were sold at spot price achieving an average price of $2,166/oz (compared to 31 December 2018: 309,556oz, $1,697/oz). The group’s hedge book as at 31 December 2019 totals 350,000oz at an average price of $1,860/oz, with quarterly deliveries through to June 2023.

The fully franked interim dividend was doubled to 7.0 cents per share.

Acquisition of Red Lake gold mine

On 26 November 2019, Evolution announced that it had entered into an agreement with Newmont Goldcorp Corporation to acquire the Red Lake gold mine. The operation comprises the Red Lake and Campbell complexes, each consisting of an underground mine and associated processing facility, plus the Cochenour mine.

Evolution stated that it will pay Newmont Goldcorp Corporation US$375 million in cash, along with an additional future payment of up to US$100 million payable upon new resource discovery.

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