The Evolution Mining Ltd (ASX: EVN) share price closed the session on Thursday down 2% to $2.97.
The ASX gold mining share opened at $2.86 today, down 5.6%, after the company released its 1H FY23 results shortly before the market open.
The Evolution Mining share price sank quickly to an intraday low of $2.82, a drop of 6.9%, before recovering over the session.
The price drop was likely related to news the miner is cutting its interim dividend by 50% this year.
This is despite a 13% increase in its earnings before interest, taxes, depreciation, and amortisation (EBITDA).
Let's see what the company had to say.
Evolution share price punished for 50% dividend cut
Evolution Mining declared a fully franked interim dividend of 2 cents per share for 1H FY23.
This compares to the 3 cents per share paid for 1H FY22 — a 50% cut for shareholders.
In a statement, the company said the dividend "balances capital investment and balance sheet management with investor returns".
According to the statement:
The Company's dividend policy is, whenever possible, to pay a dividend based on Group cash flow generated during a year.
The Directors assess the Group cash flow and outlook for the business with the intention to return excess cash to shareholders and targeting a level around 50% of Group cash flow.
The level of capital invested in growth projects, predominantly at Cowal and Red Lake, significantly reduced the Group cash flow for the period.
However, these projects will move to commercial production in the second half of the year which will lead to increased operating cash flow and a significant reduction in the level of major capital investment.
The ex-dividend date will be 28 February and the payment date will be 2 June.
What were Evolution Mining's results for 1H FY23?
Here are the highlights for the six months ending 31 December 2022:
- Statutory net profit after tax (NPAT) of $101 million (H1 FY22: $91 million)
- Underlying NPAT of $103 million (H1 FY22: $100 million)
- EBITDA up 13% to $446 million (H1 FY22: $393 million)
- Sector-leading EBITDA margin of 39% (H1 FY22: 44%)
- Mine operating cash flow of $477 million (H1 FY22: $396 million)
- Net mine cash flow of $86 million (H1 FY22: $120 million) after $302 million of planned investment in major growth projects
- Cash position of $313 million (30 June 2022: $572 million) as at 31 December 2022
- Full-year production and cost guidance maintained.
What's next?
Evolution Mining said its mineral resources estimate is higher compared to 1H FY22.
It reported 30.3 million ounces of gold and 1.8 million tonnes of copper. This is an increase of 724,000 ounces of gold (2%) and 322,000 tonnes of copper (22%) on the prior corresponding period (pcp).
Evolution reported an ore reserves estimate of 10 million ounces of gold and 661,000 tonnes of copper. This is a decrease of 360,000 ounces of gold (4%) and an increase of 21,000 tonnes of copper (3%) pcp.
Evolution produced 327,502 ounces of gold at an all-in sustaining cost of US$876 per ounce (AU$1,307 per ounce).
Evolution Mining share price snapshot
The Evolution Mining share price is down 27% over the past 12 months.
This compares to a 1.6% increase for the S&P/ASX 200 Index (ASX: XJO).
