Both production and costs were below guidance in the December quarter. The company has also flagged a potential downgrade to the resource at Mount Carlton and water security issues at Cowal.
Recent drilling at Mount Carlton has led to a revised interpretation of the mineralisation, with ore tapering more quickly than previously envisaged. Ord Minnett had assumed a nine-year mine life, producing around 1m ounces but this may turn out to be optimistic.
Moreover, if drought conditions continue in NSW, Cowal, which is already under stage 3 restrictions, may face further reduced access to water, Ord Minnett notes. The broker maintains a Hold rating and $4 target.
Target price is $4.00.Current Price is $3.58. Difference: $0.42 – (brackets indicate current price is over target). If EVN meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).