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Evolution on track to meet FY guidance, may consider Edna May divestment

Evolution on track to meet FY guidance, may consider Edna May divestment

Photo by Bloomberg

17th April 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Gold miner Evolution Mining has reported a solid quarter of production and remains on track to reach its full-year production target of between 400 000 oz and 450 000 oz of gold.

During the March quarter, Evolution delivered 101 408 oz of gold equivalent, which was slightly below the 107 201 oz produced in the previous quarter.

For the year-to-date, Evolution has produced 315 804 oz.

“In a challenging environment, I am delighted that Evolution continues to live up to our mantra of 'we say, we do, we deliver'. Once again, we are pleased to be able to highlight the clear benefits of having a portfolio of five similar-sized Australian mines, which continue to deliver operational predictability and stability,” Evolution chairperson Jake Klein said in a conference call on Thursday.

“I have long maintained that having a portfolio of mines allows you to deliver to investor expectations on a far more consistent basis than single mine companies. The only caveat to this is our belief that the portfolio should be smaller, in our view no more than seven mines, to be able to capture an entrepreneurial culture of innovation excellence, that Evolution is embracing.”

Production at the Mt Carlton operation, in Queensland, increased by 15% on the December quarter, producing 26 109 oz of gold and 178 322 oz of silver.

At the Pajingo mine, also in Queensland, Evolution reported a significantly improved quarter, with production up 22% on the previous quarter to 15 058 oz. The increased production came as a result of mine planning improvements.

The Cracow operation, also in Queensland, delivered a reliable result during the quarter under review, producing 24 321 oz of gold, compared with the 24 016 oz delivered in the previous three months.

However, gold production at the Edna May operation, in Western Australia, declined slightly, with the project only delivering 17 879 oz of gold, compared with the 20 382 oz delivered in the three months to December.

Evolution said that lower grade, lower recovery and an unplanned shutdown, owing to power outages and quality issues with the semi-autogenous grinding mill liners, had affected output at Edna May during the quarter under review.

Klein said that Evolution had received expressions of interest from a number of parties interested in purchasing the Edna May mine.

“While it is far too early to provide any further detail, the reality is that on a year-to-date basis, our portfolio without Edna May would have delivered a close to 8%, or $60/oz, lower operating cost, which will go a long way in removing any perception that we are a high-cost producer,” Klein said.

He added that while there was no certainty that Evolution would divest the asset, the approaches were sufficiently serious that the board felt it appropriate to explore the various options in relation to the mine, from continuing ownership to potential divestment.

Meanwhile, gold production at the Mt Rawdon mine, also in Queensland, was down to 18 033 oz during the three months to March, compared with the 27 710 oz delivered in the previous quarter.

Actual production at Mt Rawdon was below expectations owing to slowed progress around localised poor wall conditions, rainfall in the latter part of the quarter, which restricted mining access, and lower grades in the upper areas of the Stage 3 pit. The ore grades in Stage 3, however, were showing signs of improvement, Evolution said.

Evolution was transitioning the Mt Rawdon operation to an owner-miner model during the first quarter of the 2015 financial year, in the hopes of cutting costs at the operation.

For the fourth quarter, the miner expected to produce more than 100 000 oz gold.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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