The Evolution Mining Ltd (ASX: EVN) share price could be a mover today after the gold miner released its FY21 result.
Evolution Mining’s FY21 report
The gold miner said that it produced a total of 680,788 ounces of gold. This represented a decrease of 8.8% compared to FY20.
The all-in sustaining cost (AISC) was A$1,215 per ounce, or US$907 per ounce. Evolution Mining said this was sector leading amongst global gold producers.
It generated EBITDA (EBITDA explained) of $914.2 million, down 11.2%.
Underlying net profit after tax (NPAT) dropped by around 13% after the decline of the production and EBITDA. But statutory profit rose 14% to $345.3 million.
Balance sheet and dividend
Evolution Mining’s board declared a final fully franked dividend of 5 cents per share. That brings the full year dividend to 12 cents per share. This was a decrease of 25% compared to FY20. It was a dividend payout ratio of 64% of FY21 group cash flow.
The miner finished with net bank debt of $459.9 million.
Growth prospects for Evolution Mining and the share price
Evolution Mining has made some strategic decisions. It acquired Battle North to accelerate the growth opportunity at Red Lake.
It’s buying Battle North for a total price of C$343 million. Battle North’s key asset is the Bateman mill which is located 10km from Evolution’s existing Red Lake operations in Ontario, Canada.
The additional processing capacity from the new Bateman mill will accelerate the ability to achieve of more than 350,000 ounces of gold per year from Red Lake.
The board also approved the Cowal Underground development in July 2021, with planned investment of $380 million.
Management said the business is well placed to deliver an exceptional, high margin growth pipeline.
In FY22, the company is expected gold production to be in a range between 700,000 ounces to 760,000 ounces. That would be an increase of between 2.8% to 11.6%. This is expected to be delivered at an AISC between A$1,220 to A$1,280 per ounce. That’s a slight increase on FY21.
Thoughts on Evolution Mining and the share price
It was disappointing to see that the dividend was cut by so much, but hopefully ongoing growth of production and scale will help improve cashflow. Which could then lead to higher dividends.
Who knows what direction the gold price is headed? No-one can truly say. But the decline of the Evolution Mining share price to around $4 could be an opportunity if you’ve wanted to buy some shares for a while.
But there are other ASX dividend shares I’m focusing on. A single commodity can be quite volatile, though gold is seen as a hedge against inflation and negative market movements.
