Gold miner Evolution Mining Ltd (ASX: EVN) has released a very promising FY21 update for the September 2020 quarter.
Evolution Mining operates five mines. Four are in Australia – Cowal, Mungari, Mt Carlton and Mt Rawdon. It also operates Red Lake in Ontario, Canada.
September 2020 quarter update
Evolution Mining gave some preliminary numbers for its production, costs and financial performance to coincide with the annual Diggers and Dealers Mining Forum which commences today in Kalgoorlie, WA.
It produced 170,021 ounces of gold at an all-in sustaining cost (AISC) of AU$1,198 per ounce. In US dollar terms that was US$857 per ounce. Its all-in cost (AIC) was AU$1,663 per ounce, at a margin of AU$871 per ounce.
The operating mine cashflow for the quarter was AU$272.3 million, with net mine cash flow of AU$183.4 million.
It finished the quarter with net bank debt of AU$180.3 million, down from AU$196.4 million after paying the FY20 final dividend amounting to AU$153.8 million.
Evolution Mining said that all of the above metrics are tracking ahead of the FY21 plan.
The gold miner also said that a major milestone has been achieved for the Cowal underground mine development with the submission of the significant state development application and the modification 16 development to the NSW department of planning, industry and environment. An environmental impact study will be on public display for 60 days commencing in mid-October. The feasibility study for the Cowal underground mine is progressing in line with the plan.
Management comments
Evolution Executive Chairman Jake Klein said: “It’s great to start the new financial year with continued positive momentum. Our operations are performing well and it is pleasing to be ahead of where we had planned to be at the end of the first quarter. Most importantly, the business continues to generate sector leading cash flow per ounce and our balance sheet remains strong with net debt reducing even after rewarding shareholders with their 15th consecutive dividend of A$153.8 million.
“The submission for approval of the Cowal underground mine is another important step towards achieving our objective of producing 350,000 ounces per annum of low-cost gold from this cornerstone operations.”
Summary
Gold miners are high demand at the moment from increased market uncertainty, COVID-19 and the prospect of rising inflation. Evolution Mining is one of my preferred gold miners because its mines are based in reliable countries and it consistently pays a dividend. That’s an attractive combination of factors.
I’m not usually attracted to miners, but Evolution could be an exception as a hedge against share market volatility. However, for defensive dividends I think Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be the best of the ASX dividend shares – I wrote about it here.