Evolution Mining leads ASX gold surge

The context: Evolution released its quarterly report before market opened, revealing gold production of 194,000 ounces, 3% above average estimates. Group all-in sustaining cost (AISC) for the quarter was $1,659 per ounce, in-line with consensus forecasts.

RBC Capital Markets analyst Alex Barkley described the result as "neutral", flagging that growth capital expenditure was $50 million higher than consensus.

Barkley noted that extension drilling "may tip this result to a slight positive", but said that "a decent result was likely somewhat priced in", with Evolution outperforming peers heading into the result.

Meanwhile, RBC rated Evolution, along with Gold Road Resources, as 'underperform', with 'outperform' ratings on rival gold stocks Regis, Westgold, Bellevue, De Grey Mining and Northern Star Resources.

More broadly, Barkley said Australia's gold producers are more likely to achieve FY25 guidance than before Covid-affected years. Miners' guidance was "more benign" than prior years, and RBC expects improved operational delivery.

Barkley also noted that during the quarter to date, large caps such as Evolution and Northern Star have outperformed mid-caps by around 20%. However, RBC expects large caps could have "relatively softer" Q1 results, while mid-caps are typically more levered to gold given slimmer margins and lower perceived asset quality. This could offer more catch-up potential to the rising gold price, he said.