Evolution Mining Ltd Keeps FY22 Guidance, Shares Down 10% (ASX:EVN)

Evolution Mining Ltd Keeps FY22 Guidance, Shares Down 10% (ASX:EVN)

Evolution Mining Ltd [ASX:EVN] shares are down today after releasing their FY22 second quarter report.

Evolution Mining said that it achieved ‘solid operational performance’ even after hitting some snags.

For one, COVID did have some limited impact on operations for the quarter. The company said that at some points they had up to 15% of the workforce out of work at Red Lake and Cowal because of the virus.

Evolution also got hit with labour shortages in Western Australia and bad weather with heavy rain limiting access to the pits at Cowal and Mt Rawdon.

Evolution Mining sets high hopes on Ernest Henry

During the quarter, Evolution Mining produced 148,084 ounces of gold at an All In Sustaining Cost (AISC) of $1,347 per ounce. This amount doesn’t include Mt Carlton, which they sold in October.

At the beginning of January, the company also completed the buyout of copper mine Ernest Henry from Glencore for $1 billion. The expectation is that the new acquisition will lower costs. As they wrote regarding the announcement:

An immediate increase in copper production will reduce Group All-in Sustaining Costs and positions Evolution as one of the lowest cost gold producers in the world. Current guidance and outlook include the benefit of this acquisition

Ernest Henry continues to be Evolution’s most cash generative asset delivering net mine cash flow of A$79.5 million in the quarter.

Year-to-date production for the group was 318,766 ounces at an AISC of $1,381 per ounce. This is lower than production at this same time last year, which came in at 350,326 ounces.

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Evolution keeps FY22 guidance

Evolution said they are still on track to achieve the group’s FY22 guidance of 670,000–725,000 ounces at an AISC of between $1,135 and $1,195.

Still, shares dropped 10.64% at time of writing, trading at $3.48 apiece.

Some of the price drop could have to do with gold prices dipping overnight after the US Fed said they intend to hike interest rates. Other gold miners like Northern Star Resources Ltd [ASX:NST] and Newcrest Mining Ltd [ASX:NCM] are also down today.

But with inflation rising, it’s not a bad idea to hold some gold.

For a full guide on how to get your hands on real physical gold, check out Brian Chu’s ‘How to Buy, Sell and Store Gold in Australia’ report here.

Best,

Selva Freigedo,
For The Daily Reckoning Australia

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