This article first appeared in Livewire on 20 August 2026
The heading of every single Evolution Mining (ASX: EVN) result since FY24 has started with the word 'record', with double digit, if not triple digit earnings growth and an aggressive deleveraging of its balance sheet.
Underlying net profit for FY26 rose 63% to a record $1.56 billion, and the balance sheet swung into a slight net cash position. For perspective, net profit was just $482 million in FY24, meaning profits have surged 224% in just two years.
But while gold miners are printing cash, the backdrop remains uneasy, with rising costs, volatile weather and wild swings in bullion prices. Evolution shares tumbled around 23% between 17 June and 20 July, then rallied 43%. Such is the life of gold equities. To make sense of the numbers and the outlook, I spoke with Cameron Taylor, Investment Analyst at Fidelity.
FY26 at a glance
The below estimates (ests) refer to Macquarie forecasts, not consensus.
- Underlying EBITDA up 44% to a record $3,171m vs $3.12bn ests (2% beat)
- Underlying NPAT up 63% to a record $1,563m vs $1.60bn ests (2% miss)
- EPS up 57% to a record 73 cps
- Group cash flow up 76% to a record $1,389m
- Record final fully franked dividend up 62% to 21.0 cps
- Full-year dividend to a record 41.0 cps vs 40 cps ests (3% beat), returning around $833m to shareholders
- Dividend policy improved to ~60% of Group cash flow, up from around 50%
- Moved to a net cash position ($1,347m cash vs. $1,329m debt) and no repayments due until FY29
FY27 guidance
- FY27 guidance for gold production of 660-730koz (midpoint broadly in line with Macquarie ests) and copper of 63-70kt,
- FY27 AISC of $1,795-1,995/oz vs. Macquarie at $1,717/oz but UBS at $1,930/oz, so estimates vary significantly among brokers
Do you currently hold the stock and what is your rating?
We currently own Evolution in the Fidelity Australian Equities Fund as well as other global strategies. Evolution has benefited from high gold prices and copper exposure, making it an attractive investment.
What matters from the results?
Miners' financial results are largely known ahead of earnings, given they already report production, costs and cash flows quarterly. The key focus for Evolution was on the final dividend and their updated dividend policy, which they hinted at earlier in the year. Evolution lifted its dividend payout target to around 60% of annual group cash flow, up from 50%, which we view as a positive signal for the business.
The second area of focus was FY27 guidance. Production was broadly in line with market expectations, and all-in sustaining costs (AISC) guidance was also a focus. Some capex was brought forward as Evolution ramps up development at Northparkes' E22 block cave and Ernest Henry's Bert deposit. AISC was guided higher year-on-year, but there's a caveat, they were based on a lower copper price for FY27. If copper prices remain at current levels, by-product credits from Ernest Henry and Northparkes should provide a modest cost tailwind.
How do those outcomes affect the outlook?
Evolution is spending the same amount of capex as planned but bringing some of it forward. Budgets and timelines remain on track. Investors typically dislike higher capex, but accelerating spend on high-IRR projects is a long-term positive.
What should investors be paying attention to as the story unfolds?
Evolution has a strong track record of generating value from under-capitalised assets. We're looking for detail on Brownfield growth across Evolution’s portfolio. Specifically, I think there's further expansion opportunities for Northparkes, and Cowal could lift underground productivity as higher-grade ore replaces open-cut feed.
On the downside in mining, operations and project execution are risks. Ernest Henry is a good recent example. Last December the site received around 300mm in 24-hours, which caused temporary suspension of operation. While outside management's control, the event disrupted production and requires catch-up development work to get back to normal.
What's your take on the gold price?
Forecasting commodity prices, particularly gold, remains one of the biggest challenges in resources investing. Company valuations can move materially even when fundamentals are unchanged. A company can execute well on production and costs, but if gold and copper prices come off, valuations can move materially.
We focus on companies that can generate cash flow through the cycle. We look for companies with attractive upside and limited downside. We like Evolution because it's at the lower end of the cost curve due to the by-product credits and the scale at Cowal. Secondly, diesel cost inflation due to supply issues is impacting the sector broadly. Evolution is well placed as its diesel exposure is quite low at around 3% of its cost base. Finally, capex inflation across the sector is likely to suppress free cash flow, making strong free cash flow margins increasingly valuable.
