The CEO of Evolution Mining Ltd (ASX: EVN) spoke to the AFR and made some interesting points on Friday about the misconception that there were no more big discoveries to be found in Australia.
He also said he was confident the mid-tier miners can use the latest technology to find new gold deposits. Being a user of technology is favorable for any company and it will be interesting to see how the advances in mineral discovery and drilling technology will benefit the mining companies in the future.
Evolution Mining is a gold mining company focusing on mining and exploration operations in Australia. It owns and operates five gold and silver mines in Queensland and Western Australia with interests in the Ernest Henry mine.
In the September 2017 quarter, Evolution delivered record operating mine cash flow of A$210.4 million, this was up almost 5%, despite a 2.8% decrease in the achieved gold price (Jun qtr: A$200.4M).
Record net mine cash flow, post all capital, was A$158.3million (Jun qtr: A$137.1M). Group gold production was a record 220,971 ounces.
Evolution made an early debt repayment of $40 million on the back of strong cash flows and the anticipated cash from the sale of the Mount Edna Mine. The cash balance increased to A$50.1 million (30 Jun 2017: A$37.4M) for the quarter.
Recent acquisition, the Cowal mine, contributed 70,140 ounces of gold in the September quarter. Production increased 9.5% on the same quarter last year.
The company is focused on its all-in sustaining costs (ASIC) and this showed in the September quarterly report with a 26% improvement on the first quarter of 2017, to A$786 an ounce. The Mt Carlton mine was the best of the four operations, with a 45% improvement in AISC when compared to the same quarter last year.
Evolution has a hedge position of 410,498 ounces with an average delivery price of A$1,656 an ounce at the end of the September quarter. The current gold price is A$1,659. This has been minimised from 643,238 ounces for delivery, with an average delivery price of A$1,628 an ounce. With gold currently being volatile a hedge position is appropriate.
I have a positive view on the gold price as the U.S. federal reserve should lift interest rates slowly, keeping the U.S. dollar down. The threat of inflation could keep the gold price buoyant.
With increased production and AISCs trending down since the FY17 first quarter, along with some good acquisitions and a buoyant gold price, I see a positive outlook for Evolution Mining.
