Evolution share price plunges 20% as full year production expected to fall

Evolution has updated its financial year 2022 guidance and its outlook for the coming financial years.

| More on:
Red arrow on gold bars going down.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Evolution share price is tumbling this morning, falling 20.27% to trade at $2.695 
  • It comes after the company announced its production for financial year 2022 is expected to be lower than that of financial year 2021 while its AISC will likely come out higher 
  • Though, looking further into the future, the company believes its production will increase 25% by the end of financial year 2024 while its AISC will remain stable 

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.

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.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Gold

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Gold

Down 30% since April, should I buy the dip on Northern Star shares today?

A leading expert delivers his verdict on Northern Star shares.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Gold

Guess which $107 billion ASX 200 gold stock is storming higher today on record results

The $107 billion ASX 200 gold miner is storming higher today. Here's why.

Read more »

Happy man working on his laptop.
Energy Shares

Opportunity knocks: 2 ASX stocks ready to surge

Analysts expect big things from these shares.

Read more »

Miner looking at a tablet.
Gold

Up 58% this year, ASX 300 gold stock reveals 600,000 ounce African MRE

The ASX 300 gold stock is growing its mining footprint in Senegal.

Read more »

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price
Gold

Macquarie tips 28% upside for this ASX gold mining stock

Let's see what the broker is saying about this miner.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Gold

Macquarie says these 3 ASX 200 gold shares will 'outperform' in FY26

Gold shares have been on a long tear and Macquarie reckons these 3 ASX stocks have more room to run.

Read more »

Red arrow on gold bars going down.
Gold

Northern Star share price slides despite $1.2 billion net gold mine cash flow

Investors are bidding down the Northern Star share price today. But why?

Read more »

Miner looking at a tablet.
Gold

The end of the gold rush: Can these ASX Gold shares keep rising?

Has the gold rush run its course?

Read more »