Low-cost production the key to Evolution Mining Ltd’s share price surge

Shares in Evolution Mining Ltd (ASX: EVN) are up 1.35% to $3.38 on Thursday – the stock’s highest price in the last 14 years – following the release of the gold mining company’s quarterly update.

As investors’ flight to safety pushes the price of the precious metal higher, other miners like Saracen Mineral Holdings Limited (ASX: SAR) and Regis Resources Limited (ASX: RRL) have seen the price of their shares climb to multi-year highs.

However, Evolution has a competitive advantage: some of the lowest costs of production in the sector. In the March 2018 quarter, Evolution operated at a record low all-in sustaining cost (AISC) of $768 per ounce, decreasing the full-year AISC guidance from a range of between $820 and $870 per ounce to one of between $780 and $820 per ounce.

Widening cost-price margins allowed Evolution to increase its cash balance by 27% to over $200 million, while reducing its net bank debt 19% to $187 million.

Evolution produced 191,000 ounces of gold, a 6% decline from the March 2017 quarter. Production is expected to remain stable in the last three months of FY2018, but the company boasts a sustainable long-life asset portfolio, having upgraded its gold ore reserves estimates from last year.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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