PERTH (miningweekly.com) – Gold miner Evolution Mining has reported an 11% increase in statutory net profits for the half-year ended December, as gold production increased by 3% and copper production rose by 194%.

Evolution reported a statutory net profit after tax of A$101-million, up from the A$91-million reported in the first half of the 2022 financial year, while underlying net profit after tax increased from A$100-million to A$103-million in the same period.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) were up 13% to A$446-million, while the Ebitda margin reached 39%.

All-in sustaining costs (AISC) for the period rose by 10%, to A$2 292/oz.

“The half-year to December 2022 has delivered strong operating cash flow which reinforces Evolution’s position as one of the lowest cost, highest margin global gold producers. With a significant investment in growth projects at our cornerstone assets, supported by a high-quality mineral resource and ore reserve base, our business is well positioned to deliver a strong second half,” said CEO and MD Lawrie Conway.

“We remain on track to deliver group 2023 production and cost guidance with performance weighted to the second half of the year, which was considered when declaring the interim dividend. Evolution’s history of dividend payments, with over A$1-billion paid since 2013, demonstrates our commitment to maximising shareholder returns.”

Gold production in the six months under review increased by 3% to 327 502 oz, while silver production declined by 2% to 288 557 oz, and copper production increased by 194%, to 29 951 t.

Evolution told shareholders on Thursday that its Cowal operation was a stand-out performer in the December quarter, as it recovered from the impacts of extreme weather in the first part of the financial year. In the December quarter, when weather conditions improved, Cowal had record quarterly throughput achieved under Evolution ownership, generating A$93.3-million in mine cash flow before major capital.

The Cowal Underground project is on budget and schedule with the first stope ore due in the June 2023 quarter. Evolution noted that all major contracts were in place, with A$121.9-million major capital spend during the period, including on-mine development and underground diamond drilling, which was in line with 2023 major capital guidance for the project of A$260-million to A$280-million.

Meanwhile, Ernest Henry continued its track record as a world-class asset with both gold and copper production above targets, generating a net mine cash flow of A$207-million for the period.

Ernest Henry delivered 42 409 oz of gold and 39 951 t of copper at an AISC of negative $2 758/oz.

Barminco was engaged in the December quarter to support decline development below the 1200mRL as part of a commitment to early work for the Mine Extension prefeasibility study (PFS) during the March quarter 2023.

Evolution told shareholders that owing to drilling continuing to increase the footprint of the mine, a decision has been made to extend the PFS for another few months to incorporate the larger mine footprint and mineral resource in defining the optimal location of infrastructure. This work is expected to be completed in the June quarter.

Above-average rainfall at Mt Rawdon impacted production, with the mine producing 24 994 oz of gold at an AISC of A$2 518/oz, down from the 32 419 oz produced in the previous corresponding period, at an AISC of A$1 595/oz.

The feasibility study for the 1-2GW Mount Rawdon Pumped Hydro (MRPH) project at Mt Rawdon is progressing well and remains on track.

The MRPH project is being jointly developed by Evolution and ICA Partners to provide up to 20 GWh of renewable energy storage and is located at an advantageous point in the electricity network between Brisbane and the energy-intensive industrial hub of Gladstone.

At Red Lake, Evolution produced 61 100 oz of gold at an AISC of A$2 468/oz.

The miner told shareholders that grade reconciliation at Red Lake continued to perform within model expectations and, with increasing contribution to come from the higher-grade Upper Campbell area in the second half of this year, it was confident performance would materially improve. Key management and operational changes at Red Lake are underway to enable an improvement in performance.

At Mungari, Evolution produced 69 844 oz of gold at an AISC of A$2 153/oz.

The Mungari Future Growth Project feasibility study was completed in December on schedule and has defined a compelling commercial case for expanding the processing capacity. The project aims to increase the yearly processing capacity to 4.2-million tonnes a year from the current 2-million tonnes a year.

This will unlock a significant number of satellite ore bodies to allow Mungari's yearly production rate to increase to 180 000 t to 200 000 t and materially reduce its AISC position. The board has approved an additional A$7.5-million of capital for the project to allow the project capital to be further optimised and derisked. A formal decision is expected in the September 2023 quarter.

For 2023, Evolution has set a group production target of 720 000 oz at an AISC of A$1 240/oz, with the miner planning to spend A$190-million to A$240-million on sustaining capital and a further A$530-million to A$600-million on major capital projects.

Production in 2024 is expected to increase to 800 000 oz, at an AISC of A$1 240/oz.