Evolution Mining 1H25 Earnings Call Highlights

Evolution Mining (ASX: EVN) are trading at their highest levels since November 2020 after the company reported record first-half results and the acceleration of its mine development plans

1H25 Earnings Summary

• EBITDA up 102% to record $985 million (8.1% ahead of $911m consensus)

• Underlying net profit up 144% to record $385 million

• Earnings per share up 251% to 18.4 cents

• Group cash flow up 420% to $273 million

• Interim dividend up 250% to 7 cents per share (40% ahead of 5 cents consensus)

• Gearing down to 23% from 30% a year ago

• On track to deliver FY25 production guidance of 710-780,000 ounces of gold and 70-80,000 tonnes of copper at an all-in sustaining cost of US$998-1,063 an ounce

Earnings Call Highlights

The below topics have been answered by Executive Chair Jake Klein, CEO Lawrie Conway and CFO Barrie van der Merwe.

1H25 earnings: “Underlying profit after tax, a record performance of $385 million is up 144%. Underlying EBITDA of $1 billion is also a record and up 77%. This performance was driven by unplanned, consistent production, high metal prices, and good cost control.”

Major project capital and development plans: “The early and under budget delivery of the Mungari 4.2 plant expansion is testament to our major project. Execution capability and means that approximately AUD $million of major project capital and $25 million of major mine development capital will be brought forward from FY26 to FY25.”

Gold price performance and outlook: “The tailwinds of a record high US dollar gold price and an Australian dollar trading in the low-60s cent to the US dollar put the current spot gold price at over A$4,600 an ounce. That's over A$700 higher than the price you realised in the first half of this financial year.”

Gearing plans:

• “We are on track to reduce gearing to 20% or less by the end of FY 2025.”

• “Since December 2023, gearing reduced 24% from 29.7% to 22.6%.”

Cash flow performance and outlook:

• “We expect this momentum to continue, which further improves our flexibility in phasing out capital investment and still be able to continue to increase dividends.”

• “We are excellently placed to benefit from the upside of the spot metal prices... We expect this momentum to continue, which further improves our flexibility in phasing out capital investment.”

Dividend reinvestment plan commentary: “We are reinstating the Dividend Reinvestment Plan, which will remain active until further notice. This provides shareholders with the opportunity to acquire shares at a 5% discount to the volume weighted average share price for the five days following the record date.”

Capital management:

• “As gearing comes down, dividends are increasing.”

• “Underlying profit after tax, a record performance of $385 million is up 144%.”

• “The board declared the 2024 consecutive dividend 7 cents per share fully franked. It amounts to a $140 million payout in total.”

Analyst Q&A Highlights

Why was the Dividend Reinvestment Plan reinstated despite strong cash flow and balance sheet: "The only reason the dividend reinvestment plan was reinstated was based on feedback from shareholders. It is entirely related to feedback from shareholders."

With the DRP reinstated and a stronger balance sheet, will the focus be on organic or inorganic growth: “We are going to be good custodians of capital. We will invest in organic growth, which will have multiple opportunities, but only in ones which deliver us good rates of return at a long term gold price, which is materially lower than this.”

Is the CapEx shortfall in the first half due to timing, or will some slip into next year: "The short answer is we're tracking into the guidance range. Sustaining capital is traditionally been second half weighted for us... you will see the second half CapEx above the first half, but we're still within the guidance range."

How are corporate costs expected to move into the second half: "Yeah. I mean, if you look at that year-on-year, there's the usual inflation piece that comes through there... Then, and as we said, there will be more of the life of mine planning works and at least of that drove that cost up... There are once-off costs of about $4 million, that once recur into the future."

What impact did the recent rain have on concentrate movement at Ernest Henry and Northparkes: "We've had no impact on concentrate at either of Ernest Henry or Northparkes with weather. And certainly for Ernest Henry, the weather isn't so much on site, it is around Townsville... so we weren't producing much anyway."

This article was generated with the support of AI and reviewed by an editor.