Evolution Mining (EVN) delivered March Q production of 191koz (+2% vs Dec Q 186koz QoQ) in line with Argonaut’s estimates of 191koz. All-in sustaining costs (AISC) of A$768/oz were -2% lower QoQ (A$784/oz in Dec Q). Standout performance came from the Ernest Henry (EH) asset with 23koz at AISC of negative -$510/oz (including by-product credits). Group operating mine cashflow of $175m (Mar Q $205m) and net mine cashflow of $111.4m (Dec Q $134.2m) were lower than expectations as a result of delayed shipments from Mt Carlton and Cowal and will be realised in the June Q. Group ore reserves increased to 7.1Moz (net of depletion) representing ~9 years of mine life on current production rates. We now forecast production at the mid-point of the revised 790-805koz FY18 production guidance. We revise our target price upwards to $3.01ps ($2.66 prior) and maintain our HOLD recommendation after recent share price strength.
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