Inflation bites at Evolution's heels

17th August 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – Higher operating costs have seen gold miner Evolution Mining report a fall in group statutory net profits after tax for the full year ended June, with the miner announcing a profit of A$163.5-million, compared with the A$323.3-million profit in the previous financial year.

Underlying net profits after tax reached A$205-million down from the A$274.7-million reported last year, while earnings before interest, taxes, depreciation and amortisation (Ebitda) declined from A$898.8-million to A$844.5-million, with Ebitda margins declined from 44% to 38%.

This was despite gold production increasing by 2%, to 651 155 oz, silver production increasing by 2% to 555 620 oz and copper production increasing by 22% to 47 348 t. Revenue for the full year was also 8% higher than the 2022 financial year, at A$2.22-billion.

Evolution told shareholders on Thursday that operating costs increased by A$87.1-million driven by inflationary cost impacts, specifically in labour, which comprises almost half of the miner’s cost base; diesel; electricity costs related to new contracts which took effect from January 1; and mechanical spares.

Input prices increased operating expenses by approximately 5%, or A$71-million. Additional costs were also incurred at Ernest Henry and Mt Rawdon directly related to recovery efforts following the weather events, totalling A$24-million and A$16.3-million respectively. These increases were partially offset by increased capital development activity across the group.

All-in sustaining costs (AISC) for the full year were reported at A$1 450/oz, up from the A$1 259/oz reported in the last financial year.

“We are well placed to deliver on our 2024 financial year strategic objectives given the position of the business at the end of 2023. The 2023 results were impacted by a number of external events partially offset by higher metal prices,” said CEO and MD Lawrie Conway.

“In FY24, planned lower capital expenditure profile, anticipated lower AISC and higher production levels will see us move to stronger cash generation. This is underpinned by the move into commercial production of our recent projects at Cowal and Red Lake, and the resumption of normal operations at Ernest Henry. We remain focused on safe, reliable operations that deliver margins over ounces and improved shareholder returns.”

Two major studies were advanced during the year at Mungari and Ernest Henry that underpin a sequenced capital investment in coming years. In FY24, production is planned to increase by 18% to around 770 000 oz and AISC is expected to reduce modestly to around A$1 370/oz.

Meanwhile, Evolution on Thursday also announced further increases to the mineral resource estimate at Ernest Henry, which is now estimated at 101.5-million tonnes at 1.25% copper and 0.73 g/t gold for 1.3-million tonnes of contained copper and 2.4-million ounces of contained gold, net of mining depletion.

This was a 7%, or 6.7-million-tonne, increase compared with the previous mineral estimate, amounting to 76 000 oz of contained gold and 63 000 t of contained copper net of mining depletion.

“Ernest Henry continues to demonstrate its world-class status with additional mineral resource growth since the previous estimate with the addition of only 26 new holes,” said Conway.

“This is the fourth increase in the first 18 months of 100% ownership, with a net increase of 41% to 44% in contained metal over this period. Resource increases outside the mine extension feasibility study footprint highlight the excellent potential for further resource growth and the potential to operate the plant at full capacity over the full 17-year mine life extension to 2040.”

Edited by Creamer Media Reporter


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