Evolution Mining Limited (ASX: EVN)

Evolution Mining is a leading, growth-focussed Australian gold miner that operates five wholly-owned mines – Cowal in New South Wales; Mt Carlton, Mt Rawdon, and Cracow, in Queensland; and Mungari in Western Australia.

Evolution Mining recently released its annual Mineral Resources and Ore Resources estimates as at 31 December 2017. The Company remains committed to building a sustainable business that prospers through the cycle and has therefore used an unchanged and conservative gold price assumption of A$41,350 per ounce (US$1,050/oz) and a copper price assumption of A$6,000 per tonne (US$4,680/t) to estimate Group Ore Reserves. Group Mineral Resources as at 31 December 2017 were estimated at 14.24 million ounces of gold and 946,000 tonnes of copper as compared with the estimate at 31 December 2016 of 14.18 million ounces of gold and 1.03 million tonnes of copper. Evolution’s operating mine cash flow of A$174.8 million was lower than the December quarter of A$204.7 million, predominantly due to the timing of shipments at both Mt Carlton and Cowal. These shipments will be made in the June 2018 quarter now.


Group Gold Mineral Resource (Source: Company Reports)

La Mancha Group International advised that it has undertaken a block trade sale of shares in EVN, with 5 per cent of the current issued share capital. La Mancha’s direct interest in Evolution has otherwise been 15 per cent earlier. With the news about La Mancha Resources looking to sell a quarter of its 20 per cent stake in the company, EVN Stock has moved down by 5.6% on April 20, 2018. On the other hand, Citi Group and J.P Morgan Australia Limited completed a successful book building sale of approximately 84.6 million Evolution shares after the market close on 19 April 2018 and the shares were sold at A$3.21 per share (discount of 4.5 per cent to the closing price). La Mancha has been advised by J.P Morgan and Citi that there was a strong demand for the shares, including from several large existing institutional shareholders. The sell-down is yet to be confirmed by the miner and the reason for the sell-down is unclear at this stage. Despite the dip, and by looking at the overall scenario, we give an “Expensive” recommendation at the current market price of $ 3.180.

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