EVOLUTION FPO (ASX: EVN), or Evolution Mining, has been one of the standout performers on the ASX in 2015. Its share price is currently trading at $1.255, up 112% since the beginning of the year, compared to a nearly 4% decline for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in the same time.
However, the gold miner's share price has come under significant pressure over the last five weeks or so, underperforming the ASX 200 index and losing almost 26% since its peak.
What has happened to Evolution Mining's share price?
Evolution Mining is Australia's second-largest gold producer by production scale, behind Newcrest Mining Limited (ASX: NCM) but ahead of Northern Star Resources Ltd (ASX: NST) and OceanaGold Corporation (ASX: OGC).
Indeed, Evolution Mining is seen by many as a standout from the gold sector – especially after its recent acquisition of the Cowal Gold Mine and the Australian operations of La Mancha Resources Inc.
As is the case with most companies in the sector however, Evolution Mining has come under heavy selling pressure as a result of the falling gold price. The precious metal has fallen in anticipation of an official interest rate hike in the United States – the first in nearly a decade – which will likely have a negative impact on demand for gold bullion.
Gold is now hovering at just US$1,070 an ounce, near its lowest price in six years and could fall even further if the US dollar continues to strengthen. It's likely that will also have a negative effect on Evolution Mining's share price.
Although there's a chance Evolution Mining could reverse its recent fall and continue its otherwise impressive run, investors also need to be aware of the risks posed by weaker gold prices. Predicting the future price of gold with any accuracy is impossible and further falls could certainly act as a drag on shareholder returns.
