Evolution Mining Limited

Evolution Raises Capital For Exploration Opportunities: Australia’s premier gold mining company, Evolution Mining Limited (ASX: EVN) recently received valid applications from eligible shareholders for new shares raising $133,500, with shares to be issued at a consideration of $0.01 per share, representing  a 10% discount to the volume weighted average (VWAP) price of the company’s shares as traded on the ASX over 5 day period prior to the announcement of the SPP on 22^nd February 2019.

Approximately 13,350,000 new fully paid ordinary shares in Enterprise were issued on April 11, 2019. With the funds raised by the SPP and the funds from Evolution, Enterprise will continue to seek out first class exploration opportunities that have the potential to add significant shareholder value.

In another update, SRG Global secures $115 Mn Umbrella agreement with Evolution mining where total estimated revenues under the contract are around $78 Mn over the three year term, and around $115 Mn on the basis that the two-year option to extend is exercised.SRG Global will provide drill and blast services under an Umbrella Agreement at Evolution’s Mt Rawdon, Cowal and Mt Carlton operations.


H1FY19 Financial Metrics (Source: Company Reports)

Group cash generation continues to be strong with mine operating cash flow of A$387.9 million. Net mine cash flow was A$237.8 million, with all operations delivering positive cash flow after meeting their operating and capital needs. The major cash flow contributors were Ernest Henry (A$108.1 million), Mt Carlton (A$37.5 million) and Cowal (A$36.8 million).

What To Expect From The Company: The exceptionally strong mine operating cash flow of over A$1,000 per ounce has allowed the company to invest heavily in capital projects which is expected to extend mine life and deliver additional high margin ounces.The company is increasing the investment towards exploration with the ongoing success of discovery programs at Cowal and Mungari.

Stock Recommendation: The stock of Evolution Mining generated positive six months return of 18.94%. Its EBITDA margin for H1FY19 stands at 45.6% better than the industry median of 35.8%, which implies company’s optimal utilization of its resources than its peer group. Its current ratio stands at 2.31x better than the industry median of 1.82x, which implies company’s better ability to address its short-term obligations. Based on the foregoing, we recommend a “Buy” rating on the stock at the current market price of $3.440 per share (down 3.911% on 15 April 2019).
 

Resolute Mining Limited

RSG Presented Its Production Highlights At European Gold Forum:Gold producer, Resolute Mining Limited (ASX: RSG) has over 28 years of gold production, exploration, development and innovation. The company recently presented its operational & financial highlights at European Gold forum. It has gold mine at Ravenswood, Syama, and Bibiani. Its global mineral resources stands at 16.6Moz and global ore reserves stands at 5.8Moz.

In its HY18 results, it reported an increase in revenue from gold and silver sales at A$223 Mn in HY18 as compared to A$203 Mn in HY17. The gold sales during the period stood at 128,275oz at an average gold price received of A$1,734/oz which compares very favourably to the average spot gold price for the period of around A$1,690/oz.


Operational Highlights at Three Different Sites (Source: Company Reports)

What To Expect From The Company: Resolute is expected to complete its investment phase designed to deliver long life, low cost mines at Syama, Ravenswood, and Bibiani. Its Syama is a world class, long life, low cost asset which is expected to deliver long term benefits to company’s shareholders, stakeholders, and local Mali communities for years to come. The company is focusing on implementing a fully automated mining system and delivering its full production rate of 2.4 million tonnes per annum by June 2019.

Stock Recommendation:Resolute Mining’s share generated positive YTD return of 6.11%. Its current ratio for the year 2018 stands at 1.57x better than the industry median of 1.51x, which implies company’s better ability to address its short-term obligations than its peer group. Its D/E ratio for 2018 stands at 0.29x which indicates company has maintained a balance leverage in its endeavour to develop its mine site. Hence, as per the aforesaid facts and current trading levels, we maintain our “Buy” rating on the stock at the current market price of $1.190 per share (down 2.058% on 15 April 2019).
 

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