The Evolution Mining Ltd (ASX: EVN) share price is in the red after releasing its much-awaited half-year results.
In early morning trade, shares in the gold mining company are down 0.63% to $3.91. This places the company's shares at a 28% discount to its 52-week high.
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Evolution Mining share price sinks on steep profit fall
Here are the highlights of the company's latest results:
- Revenue down 9% from prior corresponding period to $898.6 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 23.6% to $393.3 million
- Underlying net profit after tax (NPAT) down 57.2% to $100.1 million
- Statutory NPAT down 60.3% to $90.8 million
- Fully franked interim dividend of 3 cents per share, down from 7 cents per share
- Total gold production of 318,766 ounces at an all-in sustaining cost of $1,381 per ounce
What happened during the first half?
During the six months ending 31 December 2021, Evolution Mining experienced a reduction in revenue and earnings compared to the same period a year earlier.
According to the release, the company's revenue failed to surpass the previous first half due to low gold volume from Mt Rawdon and Red Lake mines. On top of this, Evolution achieved a 4% lower gold price at $2,371 per ounce.
Other key events during the half-year period included the Kundana acquisition from Northern Star Resources Ltd (ASX: NST). Evolution processed its first higher grade ore from the mine in late August. Efforts to reduce duplicate activities and recognise some synergies are currently underway.
In November, the Evolution Mining share price moved to the upside following the $1 billion acquisition of the Ernest Henry mine in Queensland. The Australian gold mining giant has a remaining $200 million payable on 6 January 2023 for the acquisition.
ASX-listed Evolution Mining now estimates its mineral resources to be around 29.6 million ounces. This represents a 12% increase year-on-year.
What did management say?
Evolution Mining executive chair Jake Klein commented on the result:
The half-year to 31 December 2021 has been transformational for Evolution. The portfolio has benefitted from key acquisitions and a significant investment in growth projects at our cornerstone assets, which is supported by a high quality Mineral Resource and Ore Reserve base, and our business is well-positioned to deliver a very strong second half.
Full ownership of Ernest Henry will deliver a material increase in cash flow and financial performance and was considered when declaring the interim dividend. Evolution's history of dividend payments with almost A$1 billion paid since 2013 demonstrates our commitment to maximising shareholder returns.
What's next?
In terms of guidance, Evolution Mining expects to produce 670,000 to 725,000 ounces of gold in FY22. Notably, this is forecast to be done with an AISC between $1,135 to $1,195 an ounce.
On the dividend front — investors will need to be on the register before 28 February 2022 when shares will go ex-dividend. From there, shareholders can expect to receive 3 cents per share on 25 March 2022.
Evolution Mining share price snapshot
Despite inflation fears, the Evolution Mining share price has been sitting in the red over the last 12 months. Shareholders are have witnessed a 16.9% fall in the gold miner's shares during this time. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is up 4.3% in the same timeframe.
The Evolution Mining share price is now trading on a price-to-earnings (P/E) ratio of around 19 times.
