Evolution – June Quarter Results

Evolution Mining reported June quarter production in-line with market estimates and FY20 guidance remains flat at $725koz – $ 775koz.

The reversal in yesterday’s share price action can be attributed to flat production growth and higher operating expenses. FY20 all-in costs increase by 5% to A$890 – $915oz.

Production capex increases to support development at Cowal and Mt Calton.

We have EVN trading on 3% forward yield and continue to see opportunities for NST, EVN, OGC and GOR within the gold space.

 

Gold Miners ETF

Gold Miners ETF, GDX is now under Algo Engine buy conditions, following the higher low formation at $29.

Look for the short-term indicators to turn positive and buying support to increase within the $28.50 to $29.50 range.

Our preferred ASX listed gold miner is Evolution Mining

 

 

 

EVN – Valuation Review

Evolution Mining is under Algo Engine buy conditions and is now on our investment radar following the recent price retracement.

A review of the valuation metrics show FY20 revenue is forecast to be $1.6bn, EBITDA jumps to $940mn on net income of $390mn.

This places EVN on 16x forward earnings and a 3.5% dividend yield.

Buy EVN within the $3.00 to $3.15 range.

 

Evolution Minning – Approaching Support

Evolution Mining is under Algo Engine buy conditions and is currently forming a higher low near the $3.00 price range.

The company recently delivered a softer than expected result with lower production and higher operating costs.  These events combined with a softer gold price has seen the share price retrace from $4.00 to $3.20.

We anticipate a pickup in the next quarter which should see overall FY19 production in the upper band of the groups guidance range.

A new round of  “risk off” sentiment by equity investors will also be supportive of gold prices.

Add this one to your watchlist and look for an entry point between $3.00 & $3.20.

The below long term graph of the gold price shows the recent retest of the US$1325 range.

GDX – Gold ETF

GDX.AXW is  now under Algo Engine buy conditions following the higher low formation at $29.

Individual names are also now appearing on the radar, such as Northern Star Resources, Evolution Mining, OceanaGold and St Barbara. We view the buy signals as early stage opportunities and investors should add them to their watch lists and monitor the short-term trend indicators for an increase in buying interest.

The above chart is the Vaneck Vectors Gold Miners ETF.

 

ALGO Update: Stay Long Evolution Mining

EVN has been under an ALGO buy signal since August 1st at $2.85 and is part of our ASX Top 100 Model portfolio.

EVN has a market capitalization of $5.2 billion and operates mines in QLD, NSW and WA.

Combined, these mines produce about 720,000 ounces of Gold per year at an all-in sustained cost of US650 per ounce.

EVN will hold their AGM in Sydney on Thursday. Good news from that meeting could see the share price trade back above the recent high of $3.45.

Evolution Mining

 

 

Look For Gold To Hold The $1190.00 Level

Daily price volatility in Gold has reached a 7-month high as investors weigh the impact of equity market uncertainty to higher interest rates in the USA.

Since trading as low as $1160.00 in mid-August, the yellow metal rallied close to 10% to post an intraday high of $1243.00 on October 26th.

From a technical perspective, we consider the wider intraday trading ranges as an opportunity for investors to profit from the increased activity in the local mining shares.

Both EVN and NST are currently in our ASX Top 100 model portfolio.

We will update specific entry levels in those names as Gold finds traction above support at $1190.00

Northern Star

Evolution Mining