Is the Evolution (EVN) share price losing its shine?
Even before today's slide, shares in the gold miner had lost more than 10% value in the last month alone.
Gold mining giant Evolution Mining (ASX: EVN) is among the worst performing shares on the ASX on Monday, sliding more than 20% in early trade to a 52-week low of $2.68.
By comparison, shares in rivals such as Newcrest (ASX: NCM), Regis Resources (ASX: RRL) and Northern Star Resources (ASX: NST) were down a relatively more modest 4–5%.
Why is the EVN stock price sliding?
Part of the decline is because ASX-listed gold stocks have been under pressure in recent weeks due to the sharp volatility in gold prices that has seen the precious metal see-saw between US$1,900 and US$1,800 an ounce over the last 6 weeks.
Widespread concerns of an impending global recession because of sharply rising interest rates is feeding into this volatility.
Last week, the ASX gold stocks sub index skidded nearly 11% for its worst week in nearly 6 months as the uncertainty kept investors away from the safe haven asset.
Coupled with falling gold prices was Monday's earnings update by Evolution Mining for its FY22 guidance and also outlook for FY23 and FY24.
Evolution now expects full year production to be lower at 640,000 ounces, despite its June quarter output likely to be 15% higher than in the preceding 3 months.
Evolution produced 680,788 ounces of gold in FY21 at an all-in sustaining cost (AISC) of AUD$1,215 per ounce to be among the lowest-cost gold producers in the world.
It had forecast an even lower range of AUD$1,135 – AUD$1,195 per ounce for FY22, but now expects this to jump to $1,250 per ounce.
Longer term outlook
The company said the final reported AISC for FY22 will largely depend on the closing copper price for June, which it uses to revalue "unsettled concentrate shipments" from its key Ernest Henry mine in Queensland.
For the current year, sustaining costs and major capital expenditure are both expected to be at the lower end of their guidance ranges of $150 million–$175 million and $440 million–$505 million, respectively.
Meanwhile, group production for FY23 is now expected to increase 12% from the current year to 720,000 ounces, while the outlook for FY24 is expected to increase a further 11% to 800,000 ounces.
Evolution executive chairman Jake Klein admitted these production levels were lower than previous estimates, primarily due to the restoration of its Red Lake mine in Canada being achieved a year later than planned.
But he also sought to reassure shareholders.
"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," he said in a statement to the ASX.
Considering buying EVN shares?
If you are keen to buy shares in Evolution Mining or other gold producers, you should consider investing through an online share trading platform.
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