Evolution Must Ramp up Gold Output to Achieve Guidance

Dow Jones10-15

2237 GMT - Evolution Mining needs to ramp up production to meet annual guidance after missing expectations in 1Q due to power issues affecting its Mungari and Red Lake gold mines. Macquarie says production of 153,600 oz of gold in 1Q represents 22% of the midpoint of annual guidance. 1Q gold output was 5% below consensus expectations, although copper production beat. "Red Lake grid instability appears to be transitory, while the transmission lines were getting connected to a nearby third party, while at Mungari the power problems appear more structural," Macquarie says. Evolution is investigating having a battery at Mungari to offset any grid interruptions, but this could take 12-18 months to commission, it adds. Macquarie has a "neutral" call on Evolution, and lowers its price target by 4%, to A$13.00/share. Evolution ended Wednesday at A$12.55.

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