Shares in Evolution Mining Ltd (ASX: EVN) are trading strongly after the company reported record half-year earnings and declared a larger-than-expected dividend.
Evolution, in a statement to the ASX, said that it had generated a record underlying net profit of $785 million, up 104% on the previous corresponding period on record mine net cash flow of $1.09 billion.
The company had a "robust" cash position of $967 million at the end of December, and had materially reduced its gearing to just 6%, down from 23%.
The company's Managing Director, Lawrie Conway, said it was a solid result.
Our half-year result reflects the strength of our operating discipline and our ability to capture the upside in a favourable metal price environment. We delivered record financial performance, robust and reliable cash flows and continued to deleverage the balance sheet. Our record dividend of 20 cents per share meets our commitment to reward shareholders in the current high metal price environment. With a clear pipeline of high-return projects now advancing, we're positioned for strong, sustainable growth while continuing to return capital to shareholders.
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The analyst team at Jarden had a look at the result and said it was "overall a robust result, with board and management expressing clear confidence over the portfolio by paying a record dividend whilst simultaneously committing to material life-extension and growth projects''.
They went on to say:
Evolution continues to deliver strong operating and financial momentum, vastly superior to main peer Northern Star Resources. We forecast the balance sheet to return to a net cash position in the current half, positioning Evolution well to prosecute the Bert and E22 block cave projects.
The Jarden team said the underlying net profit was in line with their expectations, albeit 3% below consensus, while the 20-cent dividend was "materially higher" than the consensus estimate of 17 cents.
They added that while the company had previously grown through acquisitions, they believed this was unlikely at the moment.
They said:
Whilst the gold price remains elevated, we consider the prospect of further inorganic growth activity to be relatively low, although opportunistic activity remains a possibility.
The company said it was targeting returning about 50% of cash flow to shareholders as dividends.
The dividend is up from just 7 cents for the same period last year.
Evolution shares were up 7.1% on Wednesday to be changing hands for $16.04.
