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Q2: I think Evolution Mining (ASX:EVN) could be a solid ASX dividend share

Evolution Mining Ltd (ASX:EVN) has just released its FY21 second quarter update, I think it could be a solid ASX dividend share.
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Jaz Harrison

Jaz is a Staff Writer for Rask. She is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.
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Evolution Mining Ltd (ASX: EVN) has just released its FY21 second quarter update, I think it could be a solid ASX dividend share.

Evolution Mining could be one of the largest gold miners on the ASX.

FY21 second quarter

The gold miner reported that its gold production increased by 6% quarter on quarter to 180,305 ounces.

Evolution Mining’s all in sustaining cost (AISC) declined by 3% to A$1,166 per ounce (US$852 per ounce). The all in cost declined by 5% to A$1,582 per ounce for an all in cost margin of A$834 per ounce.

The increased production and the lower costs saw the company generate $258.9 million of mine operating cash flow. Net mine cash flow was $170.5 million and group cash flow was $99.3 million.

The strong cashflow from the miner saw net bank debt fell by $93.4 million to $86.9 million.

Evolution Mining said that it’s on track to achieve its FY21 guidance. Year to date production has been 350,326 ounces at an all in sustaining cost of A$1,182 per ounce (US$854 per ounce). FY21 guidance is for 670,000 ounces to 730,000 ounces at an all in sustaining cost of A$1,240 per ounce to A$1,300 per ounce.

Growth initiatives

The gold miner said that its Red Lake stage 1 transformation plan targeting annual production of 200,000 ounces at an AISC of less than US$1,000 per ounce is progressing ahead of schedule. It’s expecting a material increase to its ore reserve in the March 2021 quarter.

For Cowal, the underground feasibility study is progressing on schedule to increase annual production to over 350,000 low cost ounces.

I think Evolution Mining could be a good ASX dividend share

For starters, Evolution Mining has a trailing fully franked dividend yield of 3.5%. That’s as good as many ASX dividend shares that are known for their income payments.

Evolution Mining has been steadily growing its dividend since 2015, it’s expecting more production growth over the medium term and there could be even lower production costs.

Who knows what the gold price will do next? It has been strong over the last few years. But with expectations of global inflation, the gold price could keep going up over time.

There are other ASX dividend shares that I also like such as Magellan Financial Group Ltd (ASX: MFG) and Brickworks Limited (ASX: BKW).

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