The Evolution Mining Ltd (ASX: EVN) share price is plummeting on Monday after the company updated the market on its financial year 2022 guidance and future outlook.
The S&P/ASX 200 Index (ASX: XJO) gold miner expects its production will fall around 6% year-on-year this financial year while its all-in-sustaining-costs (AISC) will come in higher.
At the time of writing, the Evolution share price is $2.695, 20.27% lower than its previous close.
Let's take a closer look at what the company is expecting to report for this financial year and the years to come.
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What's going on with the Evolution share price today?
The Evolution share price is tumbling after the company announced that its annual production is expected to fall despite a strong June quarter.
The gold mining giant dug out 680,788 ounces in financial year 2021 with an AISC of $1,215 an ounce. That made Evolution one of the lowest cost gold producers worldwide.
This financial year, however, the company's total production is tipped to come to 640,000 ounces with an AISC of around $1,250 an ounce.
Its AISC is dependent on the copper price at the end of the month. The current copper price would result in group AISC above the guidance range of $1,135 to $1,195 per ounce.
The company also expects that both its sustaining and major capital will be at the lower end of their guidance ranges.
It's not all bad news, though. Evolution's production is anticipated to increase 15% quarter-on-quarter in the June quarter. That would see it bringing up around 170,000 ounces.
The company also noted its balance sheet's strength. It expects to boast around $900 million of liquidity, including $540 million of cash, for financial year 2022.
Evolution executive chair Jake Klein commented on the news moving the company's share price today, saying:
Our confidence in the turnaround and potential at Red Lake is growing, the Cowal underground mine is on budget and schedule and the cash generation and geological upside at Ernest Henry is outstanding.
Aligned with our strategy, during this period of increasing costs and a challenging labour market all planned expenditure will be thoroughly assessed and gated with a focus on ensuring we continue to prioritise margins over volume and earn an appropriate return on capital.
Looking further into the future…
The Evolution share price is falling despite the company's seemingly positive longer-term outlook.
It's expecting its production to increase 12% to 720,000 ounces in financial year 2023. Though, it flagged a 5% leeway on that figure. That's tipped to rise another 11% to 800,000 (plus or minus 5%) in financial year 2024.
If the company's expectations come to fruition, it will boast a 25% increase in production over the coming two years.
Though, those figures are lower than they previously were, mainly due to delays at the company's Red Lake project.
Evolution's AISC guidance for the coming two financial years is in line with financial year 2022's – around $1,240 an ounce.
That's higher than previously projected. Though, the company noted it would place it as one of the lowest cost global gold producers.
