The Evolution Mining Ltd (ASX: EVN) share price is on watch after making a number of announcements, including the June 2021 quarter.
Evolution’s June 2021 quarter
The gold miner revealed that in the period ending 30 June 2021, it produced $212 million of operating cashflow and net mine cashflow of $100 million.
It also achieved group gold production of 169,146 ounces with an all-in sustaining cost (AISC) of A$1,239 per ounce.
The company made a commitment to net zero emissions by 2050 and a 30% reduction in emissions in 2023. Its MSCI ESG rating has been upgraded to a sector leading ‘AA’.
It also said that drilling has identified a new high-grade gold zone at the Cue Joint Venture.
The final quarterly highlight was the completion of the Battle North Gold acquisition to accelerate growth at Red Lake.
FY21 highlights
Evolution Mining boasted about having sector-leading cash generation.
In FY21 it generated mine operating cash flow of $937 million, net mine cash flow of $555 million and group cash flow of $327 million.
It produced gold production for the financial year of 680,788 ounce, slightly below its revised guidance at a AISC of A$1,215 per ounce, which was within its revised guidance.
Growth pipeline
The company revealed a few updates relating to its future growth plans. It also outlined a three-year outlook for its production and capital spending.
In FY22 it’s expecting production to be between 670,000 to 730,000 ounces. Then, in FY23, that’s expected to grow to a range of between 750,000 to 810,000 ounces. By FY24, it is expected to reach production of 880,000 to 950,000 ounces.
Growth will be largely driven by the ramp up of the Cowal underground mine and an increasing production profile at Red Lake.
Cowal underground development
The board has approved the Cowal development. Capital required to reach commercial production of $380 million will be invested during FY22 and FY23.
The Evolution Mining share price feasibility study demonstrated a “robust” investment case, with an internal rate of return of 15% and a mine life of approximately 17 years.
Red Lake transformation plan
The board also approved a plan to grow gold production at Red Lake to 350,000 ounces per year by FY26. Its stage one transformation to produce 200,000 ounces per year at an AISC of less than US$1,000 per year remains on track.
Group Mineral Resource
The group mineral resources increased 74% year on year to 26.4 million ounces. The ore reserves increased 49% year on year to 9.9 million ounces.
Summary thoughts on Evolution Mining and the share price
Evolution Mining has big growth plans. As a gold miner, I think it’s one of the best to consider because its mines are located in very predictable countries (like Australia). There is a lot of potential growth with the business too.
It could be a solid option as an alternative income idea, though there are other ASX dividend shares which may be less volatile.
