• Gold Production: 388,000 ounces in the first half.
• Copper Production: 38,000 tonnes in the first half.
• Cost per Ounce: $638 per ounce in the first half.
• Operating Cash Flow: On track to deliver $2.1 billion.
• Mine Cash Flow: Expected to reach $1.9 billion before major capital.
• Underlying Profit After Tax: $385 million, up 144%.
• Underlying EBITDA: $1 billion, up 77%.
• EBITDA Margin: Increased by 16% to 50%.
• Gearing: Reduced from 29.7% to 22.6%.
• Interim Dividend: Increased by 250% to $0.07 per share.
• Net Debt: Reduced by $345 million since December 2023.
• Interest Coverage: 22x by EBITDA.
• Average Borrowing Cost: 5%.

• Warning! GuruFocus has detected 7 Warning Signs with CAHPF.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Evolution Mining Ltd (CAHPF) reported record financial results with an underlying profit after tax of $385 million, up 144%.
• The company achieved record operating net mine and group cash flows, with a 60% and 40% increase respectively.
• The interim dividend was increased by 250% to $0.07 per share, reflecting strong financial performance and commitment to shareholder returns.
• The Mungari plant expansion is nine months ahead of schedule and 6% under the original budget, showcasing effective project management.
• Evolution Mining Ltd (CAHPF) has a strong investment-grade balance sheet, with net debt reduced by $345 million since December 2023.

Negative Points

• There are complex accounting issues related to the triple flag stream and depreciation charges, causing confusion among analysts.
• The company has only 75,000 ounces hedged for delivery over the next 18 months, exposing it to potential gold price volatility.
• Despite strong financial performance, there is uncertainty regarding the timing of capital expenditures and potential delays in project execution.
• The reinstatement of the dividend reinvestment plan was based on shareholder feedback, but its impact on organic growth funding is limited.
• There are concerns about the impact of weather conditions on operations, although no significant disruptions have been reported so far.

Q & A Highlights

Q: What was the rationale behind reinstating the dividend reinvestment plan (DRP)? A: Jacob Klein, Executive Chairman, explained that the DRP was reinstated based on shareholder feedback, not due to any balance sheet concerns. The balance sheet remains strong and robust.

Q: Can you clarify the accounting treatment of the Triple Flag stream and its impact on depreciation and EBITDA? A: Barrie Van Der Merwe, CFO, clarified that the depreciation and amortization (D&A) associated with the stream is reflected in the accounts. The stream impacts revenue and interest, and further details can be discussed offline for clarity.

Q: With the DRP reinstated, are there plans to accelerate growth opportunities? A: Lawrence Conway, CEO, stated that the DRP is not linked to funding growth projects. The balance sheet is deleveraging quickly, and the company has the capacity to fund growth projects without relying on the DRP.

Q: How does the company plan to manage capital investment and dividends given the current high gold price environment? A: Jacob Klein emphasized the importance of judicious capital allocation. The company will invest in organic growth opportunities that deliver good returns at a long-term gold price, while continuing to increase dividends.

Q: What are the expectations for the Mount Rawdon Pumped Hydro project in light of recent government policy changes? A: Jacob Klein noted that storage is key to renewable energy solutions, and Mount Rawdon is a cost-effective project. The Queensland government remains committed to renewable energy, and the project is expected to be an important part of the state's energy strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.