Precious metal miner is tarnished

Evolution Mining shares tanked on Wednesday after the company missed analyst expectations across the group’s gold mines and unveiled fresh problems at its Red Lake mine in Canada.

The company’s shares were down 63.5c, or 17 per cent, to $3.12 in afternoon trading on the ASX, after its December quarterly production report disappointed the market, despite a slight improvement over the September period.

Evolution produced 161,073 ounces of gold in the December period at an average all-insustaining cost of $1618 an ounce, with production up 2 per cent compared to the September period.

In total, Evolution’s mines produced 319,377 ounces in the first half of the year. The company said it believed it could still hit its annual production guidance of 789,000 ounces of gold, plus or minus 5 per cent – but its operations would now need an extraordinarily strong performance in the second half of the year to meet that mark.

The company will need output of almost 470,000 ounces to hit that mark – an improvement of more than 45 per cent on the first half.

And Evolution will not be able to rely on the hoped-for improvement from its troubled Red Lake mine in Canada, after another downgrade to production expectations from the mine.

Bought in 2019 for $US375m, Evolution had hoped to turn the former Newmont gold mine back into a steady producer of about 200,000 ounces a year.

But Red Lake has never lived up to expectations and Evolution revealed a fresh set of problems on Tuesday, with production hit by ongoing materials handling constraints – an issue the company says is now fixed – and “seismic related” restrictions at a key mining area.

Evolution slashed more than 25 per cent from guidance for the mine, cutting expectations from 170,000 ounces to a range between 125,000 and 135,000 ounces. Even that will take an improvement, however, given Red Lake produced only 49,292 ounces in the first half.