Full Year 2026 Evolution Mining Limited Earnings Call Transcript
Key Points
- Record financial performance with underlying EBITDA of $3.2 billion, up 44%, and a record underlying EBITDA margin of 57%.
- Record group cash flow of $1.4 billion, up 76%, enabling a record fully franked final dividend of $0.21 per share and a total dividend of $0.41 per share, more than double the prior year.
- Increased dividend policy to target 60% of annual group cash flow, reflecting confidence in the business and a sector-leading payout ratio.
- Strong operational performance at Red Lake and Mungari, with EBITDA margins of 62% and 65% respectively, and Mungari's expansion project delivered 15% below budget and nine months ahead of schedule.
- Achieved a net cash position, repaid all bank term debt, and maintained an investment-grade credit rating, providing significant financial flexibility.
- All growth projects (E22, coarse particle flotation, Cowal Open Pit Continuation, and Bert at Ernest Henry) remain on schedule and within original budgets.
- FY27 guidance indicates potential operating mine cash flow of around $3.6 billion at current prices, $200 million higher than FY26, even with cost escalation.
- Fully unhedged gold and copper portfolio, allowing the company to benefit from higher metal prices.
- Successful acquisition of Carnaby (Greater Duchess project) and investment in Arizona Gold & Silver, providing additional growth optionality.
- Strong balance sheet with $1.4 billion cash and an undrawn $525 million revolving credit facility, supporting future investments and shareholder returns.
- FY27 all-in sustaining cost guidance increased to $1,795-$1,995 per ounce, driven by cost escalation of 4-5% and additional sustaining capital investment of $50-$60 million.
- Production guidance for FY27 is weighted to the second half, with the September quarter expected to be the weakest due to planned shutdowns and development access constraints.
- Ernest Henry production is expected to decline in FY27 due to the need to catch up on development after the weather event and the presence of waste in the cave, with similar production levels expected in FY27 and FY28.
- Red Lake production is expected to be lower at 30,000-35,000 ounces per quarter in the near term, with a longer-term plan to increase back to 35,000-40,000 ounces.
- Cost inflation pressures, particularly in labor (4.5% increase) and maintenance parts (3-10% increase), are impacting the cost base, especially in Western Australia.
- The company's dividend increase to 60% payout may not satisfy all shareholders, as some may prefer special dividends or buybacks, and the company acknowledges it cannot please everyone.
- The Carnaby acquisition is expected to take up to three years to deliver first ore to the Ernest Henry mill, indicating a long lead time for value realization.
- The company is investing an additional $50-$60 million in sustaining capital for fleet and infrastructure, which may not yield immediate returns.
- Mount Rawdon is transitioning to care and maintenance, with a closure provision of $75 million, and there is uncertainty about the pumped hydro project's future.
- The company faces potential downside risks from operational disruptions, as highlighted by the weather event at Ernest Henry, which impacted production and required insurance claims.
Thank you for standing by and welcome to the Evolution Mining Limited full-year 2026 financial results call. (Operator Instructions)
I would now like to hand the conference over to Mr. Lawrie Conway, Managing Director and Chief Executive Officer. Please go ahead.
Thank you, Darcy, and good morning, everyone. I'm joined on the call today by Fran Summerhayes, our CFO; and Peter Rocky O'Connor, our GM, Investor Relations. Today, we released our FY26 full-year financial results on the ASX, including a presentation which will be the reference point for the call.
Fran is excited to go through the financial results. In her first year at Evolution, so many new financial records have been set, and she is delivering a bumper record dividend. We also announced changes to our board. Tommy McKeith, who's been a director since 2014, will be retiring at our Annual General Meeting; and Jon Vann will be joining the Board on December 1.
Tommy
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