EVN -3.74%: down today despite delivering strong quarterly & FY26 production numbers, with cost guidance for FY27 the main issue.
Fourth-quarter gold production increased 5.6% quarter-on-quarter to 179,655 ounces, while gold sales rose 8.7% to 177,909 ounces. Importantly, all-in sustaining costs declined 23% to A$1,706/oz, supported by Ernest Henry returning to full production following weather-related disruptions and the expanded Mungari mill completing its ramp-up.
Fourth-quarter highlights:
- Gold production of 179,655 ounces, up 5.6% quarter-on-quarter.
- Cowal production of 74,945 ounces, up 6%.
- Ernest Henry production of 16,714 ounces, compared with 5,456 ounces in the prior quarter.
- Red Lake production of 31,949 ounces, broadly steady.
- Mungari production of 45,521 ounces, down 11%.
- Copper production of 18,810 tonnes.
- All-in sustaining costs of A$1,706/oz, down 23%.
For FY26, Evolution produced 714,728 ounces of gold, down 4.8% year-on-year, and 65,636 tonnes of copper, down 14%. AISC increased 9.2% to A$1,717/oz, although the impact of lower production and higher costs was comfortably offset by stronger realised gold prices.
The key highlight was cash generation. Evolution delivered record group cash flow of A$1.39 billion at a margin of A$1,958 per ounce, alongside record operating cash flow of A$3.39 billion and net mine cash flow of A$2.08 billion. The balance sheet has consequently moved into a net cash position, with A$1.35 billion of cash on hand, while the company is now fully unhedged and enjoying full exposure to the gold price.
On a less positive note, cost pressures are increasing. Management expects inflation to add around A$150–160/oz to FY27 AISC, while sustaining capital is likely to increase by A$50–60 million. Mine development expenditure is also expected to rise by A$130–160 million as activity ramps up at Northparkes, Cowal and Ernest Henry.
FY27 guidance will be released alongside full-year results on 19 August. There are no material changes planned to existing production capacity beyond the previously announced closure of Mt Rawdon, while Evolution’s major organic growth projects remain on schedule and budget.
MM remains long & bullish EVN
Add To Hit List
