The Motley Fool

Is it time to sell your Evolution Mining Ltd (ASX:EVN) shares?

Shares in gold miner Evolution Mining Ltd (ASX: EVN) are on watch today after the announcement La Mancha Group International advised it had undertaken a block trade sale of shares representing 5.4% of the current issued share capital – bringing La Mancha’s direct interest down to 9.6%.

Citigroup and JP Morgan completed a successful bookbuild of 92 million Evolution shares after market close yesterday at a price of $2.84 per share – Evolution shares closed trading on July 26 at $3.04.

Citi and JP Morgan advised there was “strong demand” for the shares from a number of large institutional shareholders with La Mancha’s chair saying he had “every confidence” Evolution would continue to deliver on its “significant potential”.

The La Mancha sell down is the third of its kind after Citi sold 22.1 million shares back in February plus a Citi and JP Morgan $280 million trade in April – bringing La Mancha’s shareholding down from about 31%.

So is it time to take your own profits if the likes of La Mancha see it as a good idea?

Evolution recently announced it may pour cash into overseas expansion, with North America assets on the radar after its quarterly report revealed it had increased its cash balance by $115.2 million and slashed net debt from $187 million to $71.8 million.

A forecast production drop has been flagged for FY19, but its Cowal, Mungari and Cracow projects are expected to experience strong growth and Evolution will also take full ownership of the Castle Hill Gold Deposit after it bought out Norton Gold Fields.

There’s a lot going on for Evolution, but as its share price climbs back up from a slump down to $2.96 earlier this week many investors must wonder if the time to cash in is nigh.

Evolution shares hit a 52-week high on June 18 – closing off trade at $3.58 – but the quarterly report was not well-received by investors – despite achieving its seventh consecutive year of meeting production and cost guidances.

Evolution certainly has a decent pipeline of projects on the horizon, with its recent payment of $12 million to Norton Gold Fields allowing Evolution to develop a package of tenements at Mungari that were previously quarantined by the rights held by Norton.

Elsewhere in the gold sector gold producer OceanaGold Corp (ASX: OGC) has released strong second quarter results, with net profit rising 45% and production guidance increased.

Northern Star Resources Ltd (ASX: NST) has also done well of late, with its opening price of $7.36 today a 52-week high for the stock, and a 66% increase on its share price of $4.42 at this time last year.

Foolish takeaway

When a significant investor reduces its holdings in a company most investors put the stock on their red alert list and, depending on when you bought in, cashing in some profits could be a good idea.

Evolution has been travelling along well for some time, so even if you want to keep some skin in the game in the event of gold price surges, I think it would be prudent to rake in some profits at least.

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Motley Fool contributor Carin Pickworth 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.