Evolution Mining Ltd (ASX: EVN) released its half year results for FY19 to the market today and reported its net profit (NPAT) fell 31.4% to $91.1 million.
Evolution is a gold mining company which owns and operates five gold mines in NSW, QLD and WA.
Key Results
Evolution reported:
- Gold production of 382,214 oz at $928/oz
- EBITDA down 25% to $360 million (click here to learn what EBITDA means)
- EBITDA margin down 5% to 48%
- NPAT down 26% to $91 million
- EPS down 26% to 5.3c
- Operating cash flow down 7% to $388 million
- Interim dividend (fully franked) of 3.5cps unchanged.
Non-Cash Items Hit Profit
Evolution said the lower NPAT was mainly driven by $35.3 million non-cash expenses relating to:
- The utilisation of ore stockpiles at Mt Rawdon ($11.4 million)
- Higher depreciation and amortisation charges ($13.3 million)
- Lower capitalisation of mine costs ($10.6 million)
Evolution cited a cash cost increase of $11.3 million from mine operating costs also reducing its profit.
Production On Track
The company guided that full-year production costs and guidance remains on track. It even suggested there is the potential for a positive surprise with a planned improved operational performance for the second half, along with a gold price that is $155/oz higher than $1,695/oz achieved in the first half.
Future Growth Possible
During the half year, Evolution also continued to make investments to expand its resources and production, including:
- $29.9 million investment in discovery and resource definition drilling programs across the Group
- Acquired another 3.2 million shares in Riversgold Ltd (ASX: RGL), taking the total to 15.7 million shares or 18.7% of the outstanding shares
- Board approval of the Mt Carlton underground development and plant upgrade modifications with capital expenditure estimated at $60 million
- Approval from the NSW Department of Planning and Environment to increase the Cowal mine plant processing rate by 31% from 7.5 million tonnes per annum (Mtpa) to 9.8Mtpa
- Regulatory approval to commence the development of the Galway-Regal-E46 exploration decline at Cowal
- Entered into a joint venture with Andromeda Metals Ltd (ASX: ADN).
Is The Price of Gold Headed up?
To quote Warren Buffett, “I have no views as to where it will be [the price of gold], but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and … it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.”
Did you know: Buffett Is Worth…
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