Good afternoon
equity markets continue to be very subdued because of escalating virus numbers. Some countries are more or less back to lockdown, while Australia is just about completely opening up again - except for people wanting to travel to Australia!
Durable Goods Orders in the States very strong…but no big change in surrencies. Base metals slightly up today, while gold continues to struggle to hold 1900 US$/oz.
Following yesterday´s slump in the share price, Chairman ( and very large shareholder ) Hasso Plattner bought another 250 mill Euro worth of stock - but that hardly helped the share price, which is only up by 1% or so.
Evolution - top Quarterly - some numbers had been pre-released already. 183 mill A$ in net mine cash flow, AISC of 1198 A$ ( remember, this includes Red Lake now, with AISC of 2074 A$ , which is distorting the figures and which will come down over the enxt few Quarters ) or 857 US$/oz, which is world calss vs leading miners. During the Quarter, net debt fell by 17 mill A$ to about 380 mill A$, despite paying 154 mill A$ in dividends. Once again, Ernest Henry shot out the lights with net mine cash flow of more than 80 mill A$, while Mungari had another record Quarter with 43 mill A$ net cash generation. Remarkable, how this operation has been turned around over the last 2-3 Quarters!!! Many strong drilling results from about all mine sites from brownfield exploration. March Quarter will see the first reserve statement for Red Lake, and also will see news as to which way Evolution will go to initially produce +200.000 oz at 1000 US$ from this asset, and some clues as to how tehy will reach their longer term target of 300-500.000 oz. Red Lake continues to surprise EVN´s management on the upside! The board has also approved a new, 25 mill$ decline for 2300m at Cowal, which will be used for future production, but for now, will enable the company to drill out the reserve. Overall, a strong Quarter for Evolution. Jake Klein emphasized once again, that Evolution wants to be all about margins and dividends to shareholders throughout the cycle, and not so much about growth. But he said, that they are constantly reviewing M&A - but only, if it can add value to the asset quality. Great company! Naturally, investors are comparing EVN with NST, the other large and relatively new, Australian producer. Here is the difference: NST had AISC of 1752 A$/oz vs EVN 1198 A$! And these numbers include a strong Quarter from Pogo ( for NST ), while the relatively recently aquired Red Lake ( as high cost producer so far ) will only see falling costs in the future, potentially further increasing the gap in costs! the margin per ounce produced is more than double for Evolution! This will reduce with the merger of Saracen, but should still leave EVN having a 250 A$/oz or so higher margin than the combined NST/SAR.
As you know, I am biased towards EVN vs NST - but tell me, where I am wrong?
Have a nice evening
WS