Evolution Mining is raising $450m in a placement and share purchase plan to purchase the Kundera assets from Northern Star Resources ((NST)) for -$400m. The purchase price is considered fair compared to market averages over the last two years.
The broker points to the potential ability to convert Resources into Reserve by resetting the cost base for production with its closer, lower cost processing centre at Mungari. Mungari was Evolution Mining’s borderline operation, and this is considered to cement its place in the portfolio and underpins expansion plans.
Morgans maintains its Hold rating, and reduces its price target to $4.34 from $4.49, as the broker awaits further detail on the Mungari expansion. A pre-feasibility is planned for release in the current quarter.
Sector: Materials.
Target price is $4.34.Current Price is $4.25. Difference: $0.09 – (brackets indicate current price is over target). If EVN meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
