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Introduction & Market Context
Evolution Mining Ltd (ASX:EVN) released its March quarter 2025 results presentation on April 15, highlighting strong cash flow generation and significant progress on key growth projects. The gold and copper producer, with a market capitalization of approximately $399.45 million, saw its stock price increase by 3.92% following the presentation, closing at $7.90.
The company is capitalizing on favorable gold price conditions, with the spot price running $630/oz above the average realized price during the March quarter. This price environment, combined with operational improvements, has accelerated Evolution’s deleveraging strategy and positioned the company to increase shareholder returns.
Quarterly Performance Highlights
Evolution Mining reported robust cash flow generation for the March quarter, with group cash flow reaching $1,115/oz, representing a 30% increase from the December quarter’s $859/oz despite only an 11% increase in the average spot gold price.
As shown in the following chart, the company has demonstrated consistent improvement in cash flow generation throughout FY25:
The company produced approximately 180,000 ounces of gold and just under 20,000 tonnes of copper during the quarter. All operations were cash flow positive before major capital expenditures, with Cowal delivering a record quarterly net mine cash flow of $210 million and Ernest Henry contributing $100 million.
Safety performance remained stable with a Total (EPA:TTEF) Recordable Injury Frequency (TRIF) of 5.4, showing significant improvement from 9.0 in December 2023. The company confirmed it is on track to meet its FY25 guidance of 710-780koz gold production and 70-80kt copper production at an All-In Sustaining Cost (AISC) of $1,475-$1,575/oz.
The following slide illustrates the company’s safety performance improvement and progress toward annual production guidance:
Cowal Extension Project
A significant development announced in the presentation was the approval of the Cowal Open Pit Continuation (OPC) project, which extends the mine life to 2042. The project will develop three ore bodies adjacent to the existing E42 pit, delivering approximately 1,940koz of incremental payable gold.
The economics of the project are compelling, with a capital investment of $430 million over approximately seven years yielding an NPV of $875 million in the base case (assuming $3,300/oz gold) or $2,310 million at the current spot price of around $5,000/oz. The project offers a quick payback period of 4½ years in the base case, reducing to just 1½ years at the spot price.
The following slide details the incremental benefits of the Cowal extension project:
Evolution’s Managing Director and CEO, Lawrie Conway, emphasized during the earnings call that "Cowal is truly a world-class Tier one asset," noting that since acquiring the operation ten years ago, "it has consistently delivered low-cost ounces, the resource base has grown, it has fully repaid all acquisition and investment capital, it still has at least a seventeen-year mine life."
The company plans to invest $65-70 million in the project during FY25, including the opportunistic purchase of a low-hour secondhand haul truck fleet, saving approximately $35 million compared to new equipment.
Strategic Growth Initiatives
Evolution reported significant progress across its portfolio of growth projects. The Mungari plant expansion was completed nine months ahead of schedule and 9% under the original $250 million budget. The project is now in the commissioning phase and is expected to transition back to being a major cash contributor for the group.
The following slide outlines the company’s progress on key growth projects:
Another strategic initiative highlighted in the presentation is the Mt Rawdon Pumped Hydro project, which received a commitment from the Queensland Government. CleanCo, a government-owned entity, is investing $30 million for further feasibility work, with completion due by September 30, 2025.
Executive Chair Jake Klein expressed enthusiasm about the project during the earnings call, stating, "What could be better than converting an old gold mine into renewable clean energy infrastructure assets?" The project is described as "one of the most advanced, lowest capital intensive pumped hydro projects in Australia."
The following slide provides details on the Mt Rawdon Pumped Hydro project:
Financial Position & Outlook
Evolution’s financial position strengthened considerably during the quarter, with the cash balance increasing to $661 million as of March 31, 2025, up from $520 million at December 31, 2024. Gearing improved to 19%, down from 23% at the end of December, moving closer to the company’s target of 15%.
The company has minimal gold hedging in place (65,000 ounces to be delivered through June 2026), allowing it to capture 98.5% of the average spot price. Evolution repaid all remaining scheduled FY25 term loan repayments during the quarter and plans to continue accelerating debt repayments.
The following comprehensive guidance table outlines the company’s expectations for FY25:
Looking ahead, Evolution expects further improvements in cash flow during the June quarter, with the spot gold price currently $550-600 per ounce higher than the average realized price in the March quarter. Management confirmed the company is on track to deliver approximately $2.3 billion in operating cash flow for the full year, which is about $500 million more than initially planned when guidance was issued in August.
Conway concluded the presentation by stating, "We are set for a strong finish in the last quarter. We’ve positioned ourselves well through the hard work over the first three quarters and are on track to deliver to our guidance."
Full presentation:
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