The Evolution Mining Ltd (ASX: EVN) share price climbed more than 3% today after the gold miner released its FY20 result.
Unpacking Evolution Mining’s FY20 report
The miner reported a 29% increase in sales revenue to $1.94 billion, with gold production of 746,463 ounces. Revenue consisted of $1.74 million for gold, up 33% on FY19, and $203.7 million for copper and silver revenue, relatively flat over the prior year.
EBITDA increased by 41% to a record $1.03 billion, while the EBITDA margin improved 5 percentage points to 53%.
Evolution’s all-in sustaining cost (AISC) for the year was $1,043 per ounce or US$700 per ounce, slightly higher compared to FY19. Nonetheless, Evolution still regards itself as one of the lowest-cost gold producers in the world.
Operating mine cash flow increased 45% to a record $1.12 billion, while net mine cash flow increased 48% to $736 million – also a new record.
On the bottom line, net profit after tax (NPAT) came in at $405.4 million on an underlying basis, or $301.6 million on a statutory basis. The latter result represents 38% growth compared to statutory NPAT of $218.2 million in FY19.
Turning to the balance sheet, Evolution had $372.6 million cash on hand and $570 bank debt at the end of the period. This translates to net bank debt of $197.4 million as at 30 June 2020, which compares to a net cash position of $35.2 million at the end of FY19.
Evolution Mining’s dividend
In line with the company’s dividend policy to target a payout ratio of 50% of free cash flow, Evolution declared a fully-franked final dividend of 9 cents per share. This represents a 50% increase over FY19’s final dividend of 6 cents per share.
Combined with the 7 cent per share interim dividend paid in March, Evolution’s total dividend for FY20 amounts to 16 cents per share – up around 68% compared to FY19.
Evolution shares closed at $5.72 today, putting shares on a dividend yield of 2.6%.
Guidance & outlook
Looking forward, Evolution is forecasting FY21 group gold production of between 670,000 and 730,000 ounces, with AISC expected to be in the range of $1,240 to $1,300 per ounce.
Investment in sustaining capital is expected to be between $112.5 million and $137.5 million in FY21, notably higher than $83.4 million in FY20. Major capital is expected to be in the range of $260 million to $290 million compared to $287.6 million reported in FY20.
While many companies are refraining from providing guidance, Evolution shed light on its three-year outlook. Production is planned to increase to over 800,000 ounces during the three-year period to FY23.
The company said this growth will be driven by the commencement of the Cowal underground mine in late FY22 and execution of the Red Lake transformation plan. Costs are also expected to decline over the three-year period.
To keep up to date on the latest news and see when companies are set to release their results, check out Rask Media’s ASX reporting season calendar.
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