Shares of the ASX-listed Evolution Mining Limited (AU:EVN) plunged 16% following a dismal quarterly update that let down investors. The company’s gold production in the Fiscal second quarter fell short of expectations. Despite this, the company expressed optimism about the future and maintained its guidance for FY24.
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The recent downturn has led to a 24% decline in EVN shares so far this year. Evolution Mining is a leading gold miner, operating five mines across Australia and Canada.
Quarterly Report Snapshot
For Q2 FY24, ending on December 31, 2023, Evolution disclosed gold production of 161,073 ounces. Although this reflects a 2% quarter-on-quarter increase, it fell short of the consensus estimate of 191,000 ounces. The shortfall was mainly attributed to reduced production from Red Lake, Cowal, and Mt. Rawdon sites, which were impacted by heavy rainfall and other material handling constraints.
For the quarter, the company reported an all-in-sustaining cost (AISC) of AU$1,618 per ounce, way above the company’s full-year target of AU$1,340 per ounce.
On the positive side, cash flow reached AU$78.8 million in Q2 FY24, marking a significant improvement compared to the negative balance of AU$26.4 million in the previous quarter.
Moving forward, the company confirmed its FY24 guidance of gold production of 789,000 ounces (+/-5%). It expects an AISC of AU$1,340 per ounce (+/-5%). Compared to FY23, the mid-point of the gold production guidance represents a 21.2% increase, while the AISC outlook indicates a 7.6% year-over-year reduction.
The company will publish its half-year results for FY24 on February 14, 2024.
Is Evolution Mining a Good Investment?
According to TipRanks, EVN stock has received a Moderate Buy consensus rating based on a total of 11 recommendations from analysts. This includes four Buys, six Holds, and one Sell recommendation. The Evolution Mining share price forecast is AU$3.86, which is 23.5% above the current trading levels.
