Sharechat Logo

Evolution Mining (EVN)

Fat Prophets

Tuesday 3rd June 2014

Text too small?

Fat Prophets

Evolution Mining (EVN)


What’s new

Evolution Mining recently unveiled a solid third quarter progress report, with gold production for the three months ended March 2014 up an impressive 20.4 per cent year on year to 101,408 ounces.

The successful ramp-up of Mt Carlton was the main driver behind the result, as the mine continues to produce well ahead of expectations. Mt Rowden also reported a lift in gold production, as the site benefited from a significant increase in ore throughput and better recoveries, partly offset by lower processing grade. On the downside, gold production from the Pajingo mine was a drag, suffering a fall of 33.2 per cent year on year due to restricted access and mine scheduling issues, while the Cracow and Edna May mines also reported lower production outcome for the quarter.

Encouragingly, amidst the current challenging gold price environment, Evolution Mining continues to focus on containing operational costs. All-in sustaining costs continued to trend lower year-on-year in the March quarter, falling a further 24.4 per cent compared to a year ago, to A$1,079 per ounce.


The solid third quarter result, especially from the Mt Carlton mine, has set Evolution Mining up to easily reach management’s full fiscal 2014 gold production guidance of 400,000-450,000 ounces. Indeed, for the nine months to March 2014, the company has already produced 315,804 ounces of gold and we see further 100,000-plus ounces of production in the current June quarter as easily achievable.

More importantly, we are comforted by the positive trend on the cost front, with management reaffirming all-in sustaining costs guidance for fiscal 2014 at A$1,080 to A$1,130 per ounce, down from A$1,178 per ounce in fiscal 2013.

On the exploration front, the company is building a sizeable bank of both 3 and 4 dimensional (3D & 4D) data across its tenements. The 3D and 4D data will be used to plan a major drill program in 2015.


Despite the volatility in the gold price, shares in Evolution Mining have held up very well, actually rising just under 5 per cent over the past year. In fact, over the past six months, the gold miner’s stock price has gained 33 per cent, as it bounced back strongly from the gold price-induced slump in the latter part of 2013.

Worth Buying?

Evolution Mining has a diversified asset base, comprising of five good producing sites. As capital expenditures tail away, we expect the company’s free cash flow to improve significantly over the months ahead. Furthermore, with latent exploration potential across all its sites and additional capacity upside, the stock’s 8 times forward earnings multiple at the current price continues to look attractive.

Consequently, we believe Evolution Mining is worth buying at around the current level.

Greg Smith is the Head of Research at Fat Prophets.

To receive a recent Fat Prophets Report, call 0800 438 328 or Click here.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Pushpay buys Colorado rival for US$87.5m
Xero chair to retire early as family’s health comes first
Business leaders quiz finance minister on capacity to spend $12b
House prices are accelerating again, even in Auckland
13th December 2019 Morning Report
Tourists still coming but growth is slowing
Peters backs StuffME merger bid
Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%

IRG See IRG research reports