Evolution Mining share price dives 4% on profit slump

The gold miner's shares are slumping following the release of the company's FY22 results

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Key points

  • The Evolution Mining share price is slipping today after the company reported a fall in profits and negative earnings growth
  • However, the gold miner's top line received a significant boost from higher gold and copper prices, as well as volumes
  • The company expects its mining output to increase by 12.5% to 720,000 ounces next year

The Evolution Mining Ltd (ASX: EVN) share price is in the red today after the company announced its preliminary results for FY22.

At the time of writing, the gold exploration company's shares are trading for $2.58 each, down 4.09%. Earlier in today's session, they were fetching a high of $2.65.

Let's go over the highlights of the report.

What did Evolution Mining report?

The top line was affected by increased global gold and copper prices and volumes from the Ernest Henry mine.

Meanwhile, the company's costs increased due to several factors, including acquisitions, input costs, and activities. These included $250 million in acquisitions for the Ernest Henry and Kundana mines in Queensland and Western Australia, respectively.

The company also notes that the increase in input prices resulted in a 4.9% increase in operating costs.

A fully franked final dividend of 3 cents per share was declared for a total payout to investors worth $55 million. The dividend will be paid on 30 September this year. This is the 19th consecutive dividend payment made to shareholders since 2013.

What else happened in FY22?

Evolution Mining acquired full ownership of the Ernest Henry copper-gold mine in FY22.

Some 104 million new fully paid ordinary shares were sold to institutional investors for $3.85 in July last year, raising $400 million.

A further share purchase plan was executed that year, raising roughly $68 million. The money raised will be used for general corporate spending.

Evolution mining also made headway in its progress towards its net-zero commitment. The business claims to have made a 7% improvement in emissions intensity.

What did management say?

Speaking on the FY22 results, Evolution Mining's executive chairman Jake Klein said:

FY22 was a pivotal year for Evolution, with the portfolio transformed through the consolidation of the Mungari district, the acquisition of full ownership in Ernest Henry and the divestment of Mt Carlton. In addition to this, the progress achieved in the transformation of Red Lake and the execution of the Cowal Underground project have laid the foundations for a successful FY23 and beyond.

What's next?

The company gave production guidance for FY23 and beyond. It's expected to increase production by 12.5% to approximately 720,000 ounces in FY23, increasing 11% to 800,000 ounces the year after.

The company's all-in sustaining cost (AISC) is expected to remain stable at $1,240 per ounce during FY23 and FY24.

Labour costs for next year are expected to increase by between 5% and 6%.

Evolution Mining share price snapshot

The Evolution Mining share price is down 36% year to date and 34% over the past 12 months. That's significantly below the performance of the broader market, with the S&P/ASX 200 Index (ASX: XJO) down 6% and 5%, respectively, over those same timeframes.

The company's market capitalisation is $2.73 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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