Evolution growth strategy pays dividends

The Mt Carlton site. Image: Evolution Mining.

Evolution Mining has benefited from its sustained growth throughout the 2019 financial year, increasing the dividend provided to shareholders by 50 per cent.

Its expansion for the 2019 financial year included investments in mine life extensions and production growth, including the approval of major development projects and exploration drilling at Cowal in New South Wales, and development of an underground mine and plant upgrade at Mt Carlton in Queensland.

Evolution also continued a stellar run of meeting its gold production guidance, producing 753,001 ounces in the 2019 financial year, marking the eight consecutive year it has been within its guidance range.

The company’s growth strategy, however, affected its bottom line with profit after tax declining 17 per cent from $263.4 million in the 2018 financial year to $218.2 million in the 2019 financial year.

Evolution attributed the drop in profit to lower copper and silver prices and volumes, which were slightly offset by higher gold revenue.

It also indicated the impact of completing its White Foil mine in the 2019 financial year, which forms part of its Mungari gold operation in Western Australia. This resulted in $27.8 million of costs moving from capital costs to operating costs in the 2019 financial year.

Evolution’s cash balance, however, increased to $335.2 million in the 2019 financial year, up from $323.2 million in the corresponding period, leading to shareholders benefiting from a 50 per cent final dividend increase to six cents per share.

“Our exceptional free cash flow generation, after investing in growth opportunities within our business, has enabled us to further increase the final dividend by 50 per cent to a full franked six cents per share,” Evolution chairman Jake Klein said.

“With the current spot price around $450 higher than the $1760 per ounce gold price achieved in financial year 2019, we remain focused on maintaining our low-cost base to bank every additional dollar and return excess funds to our shareholders.”

Evolution also reported “disappointing” results for the total recordable injury frequency (TRIF) for the year, which totalled 8.3.

It highlighted in a statement that “investigations showed an increase in minor injuries with a need to increase focus on promoting mindfulness and pre-task risk identification.”

Looking forward to the 2020 financial year, Evolution has announced a gold production guidance of between 725,000 to 775,000 ounces at an all-in sustaining cost of $890 to $940 per ounce.

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