Why is the Evolution share price sinking 4% today?

Two updates couldn’t get investors there today.

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plummeting gold share price

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Shares in Evolution Mining Ltd (ASX: EVN) are trading down today and are now 4% in the red. At the time of writing, the Evolution Mining share price is resting at $4.40 apiece.

Despite announcing its quarterly results, and in addition, a “thick basement gold intersection” at its Cue joint venture (JV) with Musgrave Minerals Ltd (ASX: MGV), investors are selling off Evolution Mining shares today.

Evolution Mining reduces costs, bumps gold production

Highlights for the quarter include:

  • All-in Sustaining Cost (AISC) reduced by 27% from the prior quarter to $990 per ounce (US$717/oz)
  • Operating mine cash flow of $268.9 million, up 33% on the prior quarter
  • Net mine cash flow increased by 135% to $124.5 million after mine capital investment of $143.6 million
  • Gold production of 148,787 ounces
  • Returned $54.9 million to shareholders via 18th consecutive dividend
  • No change to sector leading AISC guidance ($1,135 – $1,195 per ounce) or capital guidance

What else happened this quarter?

Gold production for the quarter was 148,787 ounces, up from 148,048oz the previous quarter. Production was realised on a “sector leading AISC of $990/oz”, down 27%.

It also printed mine operating cash flow of $268.9 million during the quarter, a record for the company.

Whereas the company had a mine capital investment of $143.6 million, with most of this allocated to the Cowal Underground and Red Lake.

Evolution says it had cash in the bank of $537.8 million and net debt of $1,295 million when exiting the quarter.

The company also affirmed its guidance at Cowal, ensuring that 25% of its workforce were COVID-positive at one point during the quarter.

Production is expected to be around 650,000 ounces, revised down from previous guidance of 670,000oz, due to “the extreme rainfall events and COVID-19 impacts”.

What else did Evolution Mining announce today?

The company reported more assay results from its diamond and aircore drilling programs at the Cue JV. The project is located in Western Australia’s Murchison district.

It was started alongside Musgrave Minerals back in 2019, as an exploration agreement to cover large areas of Lake Austin and surrounds.

According to Evolution, it can earn a 75% interest in the JV area, if it were to solely fund $18 million on exploration over a 5 year term.

From its latest assay results, the company has added to its dataset compiled from previous drilling.

“Diamond drilling continues to intersect potential ore grade intersections over wide thicknesses in basement rocks at the West Island Prospect,” the company advised.

“[Whereas] aircore drilling results continue to extend the large regolith gold mineralisation footprint at the West Island Prospect and identify new zones for follow-up basement drill testing,” it added.

In the last 12 months, the Evolution mining share price has fallen 7% into the red.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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