Gold miners have been battling negative investor sentiment amid interest rate rises across the world and Evolution’s announcement increased worries that further absenteeism and extreme weather events would also hit the other miners in the sector.
Evolution, which owns mines in Australia and Canada, lowered its 2022 production guidance to 640,000 ounces – down from both, the 650,000 it had guided in April and the initial full-year output forecast of 670,000 ounces.
This is the fifth consecutive year that the company revises its gold production targets down.
Evolution said that since the Western Australia border opened in early March, more than 30% of the Mungari mine’s workforce of about 500 people had been absent for at least seven days because of covid.
It also noted that heavy rain had slowed production at Cowal, in New South Wales.
Evolution also lowered production estimates for the fiscal years 2023 and 2024.
The miner now expects to churn out 720,000 ounces next year, down from a previous range of 775,000 to 830,000 ounces of gold, and 800,000 ounces gold in fiscal 2024, down from the 855,000 to 915,000 ounces guided earlier.
The lower figures were attributed to delays to its Red Lake mine transformation, in Canada and placing a multi-million dollar expansion of the mill at its Mungari operations on the back burner.
Evolution said the revised production figures still represented 25% growth in output over the next two years.
Red Lake
Evolution said it remains confident that its Red Lake in northwestern Ontario would become a lucrative operation but said it would just take longer to achieve its potential.
The company said that Red Lake would produce 160,000 ounces next year, ramping up to 200,000 ounces in 2024.
“Our confidence in the turnaround and potential at Red Lake is growing, the Cowal underground mine is on budget and schedule and the cash generation and geological upside at Ernest Henry is outstanding,” executive chairman Jake Klein said in the statement.
The miner will spend about $1 billion in the underground gold mine by the time it runs at full tilt, including the $375 million (A$550 million) purchase price, refurbishment cost and the acquisition last year of company with adjacent assets. Evolution shares lost 74¢, or 21.89% of their value on Monday, closing at A$2.64 each piece, after touching a four-year low of A$2.63 earlier in the day.
