Good news and bad news is hitting Evolution Mining this week, as just after receiving approval from the NSW Government to expand its Cowal gold mine it’s also now having to defend against alleged misconduct back in 2021 around its beleaguered Red Lake operation in Canada.
Record annual gold production of 312,644oz gold from Evolution’s Cowal mining operation has spurred the NSW government to extend mining rights to the resource, guaranteeing a further 18 years of work for more than 500 workers in the region.
Cowal, 350km west of Sydney, produces bullion at a relatively low AISC of $1338/oz - an impressive profit margin considering the commodity has been punching through all-time highs this year, with spot prices currently floating up at $4,224/oz.
The timing couldn’t be better, as Evolution has plans in the mix to increase Cowal’s current throughput from its mill from 1.5 million tonnes per annum (Mtpa) up to 2Mtpa next year.
That’s set to generate about $134 million of capital investment trickling down into the region and realise an estimated $910 million boost to the NSW economy over the new life of the mine.
“Since acquiring Cowal in 2015, the operation has been a cornerstone asset for Evolution delivering material cash flows and high rates of returns, which will now enable its continuation to at least 2042,” Evolution boss Lawrie Conway said.
“The extension of operations allows continued contributions to the local and national economies through employment, community advancement, payment of taxes and royalties.”
Government support
NSW’s Minns government says a strong and growing minerals sector is critical to the state’s economy and ongoing prosperity and the approval signals a major economic boost to the state's Central West region.
“The Cowal gold mine expansion has undergone a robust assessment and will deliver real long-term economic benefits for our state and the Central West community.
“Importantly, this extension will be accompanied by a strong commitment to environmental outcomes and rehabilitation, ensuring a positive legacy.”
Issues at Red Lake
Yet it’s also having to put out fires at its troublesome Red Lake gold operation in Ontario that has faced a multitude of challenges since the Aussie mid-tier bought the complex from global Canada's Barrick Gold back in 2019 in a deal worth $US553 million.
It’s had to endure roadblocks to forecasted production numbers which included “higher that expected absenteeism” leading to lower than expected ore feed through the mill.
Echo Law has now filed a writ in Australia’s Federal Court alleging misleading and deceptive conduct in regards to its disclosure obligations centred around Red Lake during FY21.
Evolutions says it intends to vigorously defend the proceedings.
Yet even with these issues, Evolution (ASX: EVN) is in the green at Red Lake after producing 112,700oz at an AISC of $2,802/oz during FY24 and market sentiment has remained buoyant over the trading week, with shares stable at $5.05 at time of writing to maintain its 36% rise over the past 6 months. and has a market capitalisation of $10.05 billion.