Evolution Mining Ltd Rise in capital expenditure
Rise in capital expenditure:Evolution Mining Ltd (ASX: EVN) had reported that revenue for the H1FY17 grew by 17% yoy to A$711.2 million while operating costs for the period were at A$667 per ounce (US$503/oz) with AISC of A$978 per ounce (US$738/oz) placing Evolution among global leaders in low cost gold production. Mining operations were cash positive with $339.4 million (H1 FY16: A$289.3 million) representing a 17% yoy improvement. During H1FY17, capital expenditure surged by 46% to $125.8 million and had a significant impact on the resulting net mine cash flow of A$213.6 million (H1 FY16: A$202.9M). Evolution has guided FY17 group gold production guidance to 800,000 – 860,000 ounces at an AISC of A$900 – A$960 per ounce. Discovery remains an integral part of Evolution’s growth strategy. Discovery expenditure for the period was A$15.6 million. The company has further committed $25.0 – A$30.0 million to invest on discovery in on key projects at Cowal, Mungari and Mt Carlton in FY17. The group has reported that Mt Carlton gold mine in North Queensland had resumed operations post the passing of Tropical Cyclone Debbie. Over the past one month, the stock has moved up by 16.7% on account of gold price movement, better results and optimistic outlook for the remaining FY17. However, the stock is trading at higher levels and costs do raise some concerns. We give an “Expensive” recommendation at the current market price of $2.45
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