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DIGGERS & DEALERS

Klein only banking

on Evolution’s

success

by Michael Washbourne

Evolution is giving itself three years to turn Red Lake into a
low-cost operation. AISC for the June quarter was expected
to be $2,100-2,300/oz

hile he has plenty of reasons to be confident the gold unfortunately – geopolitical risk and friction around. What we’re
Wprice will remain at record levels for a long time to come, seeing on our television sets about what’s going on in the US at
Evolution Mining Ltd executive chairman Jake Klein is “not the moment is pretty traumatic and terrible.
banking on it”. “The fiscal programmes that need to be implemented as a result
Ongoing geopolitical uncertainty hatching initially from the of the COVID crisis is a real case of governments needing to
global COVID-19 pandemic and more recently the violent race print money…and of course we’re mining something that is the
riots in the US were catalysts for the gold price almost breaking only currency that cannot be printed.”
through $3,000/oz during an unprecedented first six months of Unlike some of its peers, Evolution chose not to withdraw
the year. guidance during the early stages of the pandemic. The decision
Leading ASX-listed producers Evolution, Northern Star was well-received by the market and triggered a gradual rise in
Resources Ltd and Saracen Mineral Holdings Ltd all reached the company’s stock from a low of $3.28/share in late March to
historic trading highs during the first half as investors stocked an all-time high of $6.32/share on June 1.
up on gold in light of governments the world over announcing June proved to be an eventful month for Klein and his team with
major fiscal spending programmes aimed at keeping their the company first announcing the sale of its longstanding Cracow
battered economies ticking over. operation in Queensland to Aeris Resources Ltd in a deal valued
Despite the sector being in arguably the strongest position he at up to $125 million, then recording an impairment at Mt Carlton
has experienced during nearly 30 years in the gold industry, after uncovering an expected loss of about 75,000oz from the
Klein would not speculate on something he believes a mining life-of-mine plan.
company should never be the judge of. At the time of print, Evolution’s share price had slipped back to
“What I always say to investors is that it’s their job to $5.26/share.
determine and take a view on the gold price and it’s our job On the back of the improved understanding of the geological
as the management team of Evolution to produce gold safely, controls at Mt Carlton, also in Queensland, the company now
efficiently, at a high margin and profitably,” Klein told GMJ. expects the mine to churn out just 60,000oz for FY2020, down
“We’re trying to build a business that is going to prosper through from the previously guided 70,000-75,000oz. Estimated output
the inevitable cycle. We certainly hope that the gold price is for FY2021 is also forecast to fall further to only 50,000oz.
going higher, but we’re not banking on it. In a statement to the ASX on June 19, Evolution indicated a non-
“It’s a very cyclical industry and we are in a great part of the cash impairment of $75,000-100,000 would be recorded on its
cycle…and I think there are some pretty good reasons to upcoming full-year financial accounts, while group output would
believe that we are in a positive part of the cycle, which may slide by 1.4% to 715,000oz, excluding the newly acquired Red
be getting even more positive. There’s a huge amount of – Lake mine in Canada. Group AISC remains at $990/oz.

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