Evolution Mining Limited (ASX: EVN) is an Australian gold miner, incorporated in 1998. It is based out of Liverpool Street, Sydney, Australia. The company is engaged in the business of identification, operation and development of gold-related projects. The company’s gold mining projects are situated in Australia and New Zealand. The major shareholders of the company are Van Eck (12.8%) and La Mancha (9.5%).
EVN presented at the Bank of America Merrill Lynch (BAML) Conference, which began on 14th May 2019, for Global Metals, Mining and Steel.
The company’s clear and consistent strategy is focused on a portfolio of six to eight assets, and it aims to upgrade the portfolio asset quality. The company’s strategy is to reduce costs and grow free cash flow per share, while it extends its reserve life. The company is putting a lot of emphasis on delivering strong, consistent returns to the shareholders.
EVN improved portfolio quality of assets, with an EBITDA margin of 48% in H1 ‘19. The longer life of assets have resulted in higher margins, and the assets have been generating returns of up to 23% per annum.
The below table and charts provide highlights of the financial part of the company as presented in the conference:
Following is the company’s financial guidance for the gold production along with AISC (For FY19) :
- Cowal - It is undergoing organic growth with sustainable, reliable and low-cost production. The gold production estimate is 240 to 250 koz. AISC is A$975 to A$1,075/oz.
- Ernest Henry - It has depicted a substantial high margin with excess cash flow of A$200 million per year. Gold production estimate is 85 to 95koz. The AISC is A$(575) – A$(525)/oz.
- Mt Carlton - The average net mine cash flow was A$100 million per year in FY16 to FY18. The forecasted gold production stands at 95 to 105koz. Its AISC is A$670 to A$720/oz.
- Mungari - Ore Reserves and Mineral Resources provide a 10-year base load production platform. Its guidance is unlikely to be achieved. It stands at 125 to 135koz and the AISC is A$1,050 to A$1,100/oz.
- Cracow and Mt Rawdon - Gold production licence is 80 to 85koz and 95 to 105koz, respectively, whereas the AISC is A$1,250 – A$1,300/oz and A$1,000 – A$1,050/oz.
The FY19 discovery guidance is A$40 million to A$55 million. The Resource Definition Drilling is ranged between A$10 million to A$15 million.
The company at the conference stated that it is a global leader in low-cost production and has a strong track record of creating value. The Discovery team has been delivering transformational organic growth, and the company conducted HSE System and Critical Control verification audits at each asset in 2018. It has four environmental enhancement projects underway. As per Evolution’s 2018 Stakeholder Perception Survey by Deloitte, the company’s social licence to operate score is 4.1 out of 5.0. Below is the cost structure of the company:
Share Price Information:
At the time of writing (on 15th May 2019, AEST 01:30 PM), the stock of EVN was trading at A$3.560, down 0.28%, with a market cap of $6.06 billion. The company has generated a YTD yield of -1.92%. However, the six-month return stands better at 17.05%.
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