Bullion’s romp beyond the record $2000 an ounce level in Aussie dollar terms has prompted investors to take a closer look at the pantheon of ASX-listed local gold producers – despite some problems in the mid-tier that have tarnished the sector.
I know this is the fifth time I am writing about gold but with the precious metal surging to fresh new multi-year highs I need to stress to readers the enormous opportunity that is being presented to investors.
Gold continues to perform well in US dollar terms and even better in Australian Dollar terms and the backdrop to a higher gold price is only strengthening. It, along with the “yield crunch” thematic I have discussed here all year long are my two favourite broad market trends that present an enormous opportunity for investors.
The operating earnings margin increased to 53% from 49% in FY18 while net mine cash flow was a record $540m. Costs are expected to lift slightly, with the exception of Mungari. Results were slightly below expectations.
While Evolution’s share price has been steadily rising, the broker believes momentum can continue on improving balance sheet strength and limited operational risk. A rich valuation is still below that of other gold mining peers and the broker sees Evolution outperforming.
Evolution’s Dec Q production and costs were in line with the broker. The sale of Edna May reduced production but also costs, which have fallen to a new low and thus increased confidence in reaching FY18 guidance.