Evolution follows Newmont with gold-linked dividend
Thursday, 21 February 2013
Lauren Barrett
AUSTRALIAN gold producer Evolution Mining has posted a near 200% increase in net
profit to $A40.7 million and has announced it will commit to a gold-linked dividend
policy, which the company believes is akin to delivering a royalty for its shareholders.
Hot on the heels of delivering a record quarter of production, the precious
metal miner continued its flow of good news after announcing its financial
results for the six months ended December 31.
Underlying net profit of $40.7 million marked a 188% jump in profit from
the previous year.
Evolution, which formed in November 2011, produced 196,110 ounces of
gold at $749 per ounce in the period.
The result was above the company’s guidance and also marked a 98%
increase on the previous half-year result of 99,130oz.
Gold sales during the half-year of 194,219oz helped to generate revenue of
$316.6 million, while 164,490oz of silver sold generated $5 million.
In total, silver and gold revenue jumped 108%, reflecting increased
production following the merger with Conquest Mining and the acquisition
of the Mt Rawdon mine from Newcrest Mining in Queensland.
The company reported underlying earnings before interest, tax,
The Cracow operation in
Queensland
depreciation and amortisation of $135.5 million, up 151%.
Meanwhile, net cash flow from activities for the half was $101 million.
Evolution said the strong cash flow, coupled with $92.6 million in cash reserves and $46.5 million
from financing activities helped it to fund a $218.7 million investment in development and growth
capital.
On the back of the strong result, Evolution has deceived to, wherever possible, pay a dividend
equivalent to 2% of Evolutions’s gold production.
The move follows in the footsteps of Newmont Mining, which adopted the policy in 2011.
“The policy aims to increase the level of predictability around shareholder distributions and
enhance the link between gold price and return to our investors,” Evolution vice-president and
chief financial officer Tim Churcher said.
“Deciding to link the dividend to our production delivers something akin to a royalty for our
shareholders.”
In addition, Evolution said it demonstrated its commitment to return capital to shareholders and
would ensure shareholders participated directly in its operating success.
The total distribution to shareholders would be based on 2% of the company’s gold production in
the dividend period, multiplied by the average gold price received in correlation.
The first declaration of the dividend is planned for the six-month period ending June 30, payable in
September.
Shedding more light on policy, Churcher told MiningNews.net it could well be the first Australian
gold company to implement a gold-linked dividend.
“Some people have announced an intention to, but the companies that have are probably not in
production.”
Churcher said adopting the policy was about responding to what the company believed its
investors wanted and “what the broader gold market wants as well”.
During the period, cost of sales increased by 107% to $240.7 million as a result of increased
production rates and increased depreciation and amortisation.
Mine operating costs tipped in at $154.2 million and total exploration expenditure costs in the halfyear period totalled $16.3 million.
About $213 million was injected into mine capital over the period, with 51%, or $109.6 million,
spent at Mt Carlton.
Evolution said it had reached the peak of its capital expenditure and was forecasting a total capital
spend of $359 million for the full financial year.
“We’re profitable, our mines are generating significant operating cash flow and we have the
opportunity and capacity to invest for the future,” Churcher added.
Churcher said the recent rain impact at its Mt Rawdon mine would result in a relatively weak
production result in the March quarter, with production tipped to be 85,000-90,000oz.
Shares in Evolution fell 5.4% to $1.27.
© Aspermont Limited
Aspermont Limited
Street Address613-619 Wellington Street, Perth WA Australia 6000
Postal Address PO Box 78, Leederville, WA Australia 6902
Head Office Tel +61 8 6263 9100 Head Office Fax +61 8 6263 9148
e-mail [email protected] website www.aspermont.com ABN 66 000 375 048