A week ago, Evolution Mining had bad news for investors with an update that revealed its increasingly productive Ernest Henry mine in north Queensland was facing a six-week shut down from the huge wet that hit the region.
But as Evolution was announcing the downer, gold prices were exploding as the global financial system came under strain from banking problems in the US and then Switzerland. Gold prices have risen nearly 10% since March 9, the day before the crisis first appeared in the US.
Gold prices were poised to go over $US2,000 an ounce on Monday evening on Comex in Asia after major central banks revealed surprise plans to flood the markets with US dollars to stop a complete halt and freeze in what would be a repeat of the months after Lehman Brothers failed on September 15, 2008.
Gold was trading around $US1,994 an ounce and had tested the $US1,996 level.
That will offset some of the pain from the missed production from Ernest Henry which Evolution bought in a series of small deals and then one final bid which valued it at around $1 billion.
Since then, the company has found more and potentially valuable gold and copper prospects in the mining area, under the existing underground area and nearby. But all that will have to wait until the big dry works.
Evolution shares lost nearly 8% on the news of the problems at Ernest Henry which offset any boost from the gold price surge.
But on Monday of this week, more good news for the company and shareholders with the company telling the ASX that its long expansion at its key Cowal mine in central western NSW was coming on stream earlier than planned.
Evolution revealed that the underground production from the expansion had started earlier than planned and within budget.
The expansion will see gold output growth around 320,000 ounces in 2023-24.
“The first underground stope has commenced being mined and processed this month, with continued ramp up of the underground expected over the remainder of this financial year.
“This is three months ahead of the previously announced original schedule of the June 2023 quarter. The project remains within the original $380 million budget. The completion of the accommodation village and commissioning of the paste plant remain on track for the June 2023 quarter.”
Evolution’s CEO, Lawrie Conway said:
“We have achieved a major milestone at Cowal with the early commencement of production from the new underground mine. It is a credit to the project team to be able to commence production ahead of schedule and on budget in the current inflationary market conditions for project development and construction.
“We are now on the pathway to increase Cowal’s production from the current FY23 guidance of ~275,000 ounces to FY24 outlook of ~320,000 low-cost ounces.”
And the company had an update on the situation at Ernest Henry with an assurance the loss of production and sales revenue won’t hit the company.
“The Ernest Henry recovery plan is continuing as per Evolution’s ASX announcement dated 13 March 2023 with good progress being made. As the recovery plan continues, the impact on the Group FY23 Guidance will be fully understood and communicated.
“The Company’s liquidity remains strong with the cash position at the end of February ahead of plan and the A$525 million revolver facility being undrawn at the date of this release.”
The Cowal news and the surge in global gold prices saw Evolution shares jump more than 10% to close at $2.84.
