What happened to the Evolution Mining Share Price?
Shares of Evolution Mining [ASX:EVN] fell by 5.41% on Wednesday, closing at $0.70.
Why did this happen to the Evolution Mining Share Price?
Investors in gold stocks have had a lot to smile about this month, with gold up roughly US$60 per ounce. Gold is trading at US$1,312 per ounce, remaining in a long term bull market (although short term bear market).
Evolution shareholders have had bragging rights this year; the share price increased close to 100% since its December 2013 low.
The Evolution run follows the company turning cash flow positive this year. A lack of catalysts, a rising Aussie dollar, and increasing costs have seen the stock sell off. The stock remains up over 50% since the December low.
What now for Evolution Mining?
Evolution is not a cheap stock. It has significant debt, totalling over $170 million.
Saying this, the company pays a small dividend and the management team has a proven track record of reliability.
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Looking at the company’s cash generation capability, of concern is a rising Aussie dollar, which would tighten margins. For the December 2013 quarter, the Aussie dollar averaged US92.87 cents. At this time, all-in sustaining (total) costs averaged US$974 per ounce.
With the Aussie dollar trading just under US94 cents, I’d expect that the all-in sustaining costs could be closer to the US$1,000 mark. This doesn’t include additional capital and exploration costs.
I’d suggest keeping an eye on the Aussie dollar, because it seems to be telling the story.
Of course, the gold price is also an important indicator to watch for the stock.
Jason Stevenson+
Resources Analyst, Diggers and Drillers
