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Evolution share price on watch after new JV agreement

The Evolution Mining Ltd (ASX: EVN) share price is on watch after the company announced a new joint venture agreement with Enterprise Metals Ltd (ASX: ENT) this morning.

What did Evolution announce?

Evolution entered into an earn-in joint venture (JV) agreement with Enterprise over the large, early-stage Murchison exploration project in central Western Australia.

The project is prospective for Archean greenstone gold deposits and encompasses poorly tested continuations of the Big Bell and Cuddingwarra Shear Zones which host multi-million-ounce gold deposits.

The key terms of the agreement include:

  • Evolution can earn 80% interest in the Murchison project by:
    • Spending $6 million on exploration over a 4-year period
    • Making an initial cash payment to Enterprise of $150,000 on the signing of the agreement
    • Making an additional cash payment to Enterprise of $150,000 should the agreement remain in place after two years
  • Evolution will operate the project during the earn-in period

What’s been happening to the Evolution share price?

The Evolution share price fell 3.43% on Friday as gold prices fell below the key US$1,300 per ounce price on the back of a strengthening US dollar and higher risk appetite in global equities.

The US dollar climbed higher to end the week on lower jobless claims and the potential for a breakthrough in the ongoing US-China trade tensions as senior officials from both sides meet in Europe.

The company’s share price is broadly flat for the year having seen significant volatility in line with fellow ASX gold miner Saracen Mineral Holdings Ltd (ASX: SAR) but has thus far managed to avoid the heavy losses seen by the likes of St Barbara Ltd (ASX: SBM).

While I expect to see some short-term volatility in the ASX gold miners on the back of ongoing geopolitical back-and-forth and the fluctuations in global markets, I think the medium-to-long-term outlook is actually quite solid.

Gold is traditionally seen as a safe-haven asset and acts as an inflation hedge, which means there’s always room for a small allocation to gold exposure.

For those looking more for growth in 2019, I think it’s worth checking out this top-rated growth stock in a booming $22 billion industry that could see its share price soar later this year.

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Motley Fool contributor Lachlan Hall 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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