Under the Spotlight AUS: Evolution Mining (EVN)

Evolution Mining ($EVN) offers the best of both worlds: exposure to the red-hot run in gold and copper prices. 

The $13b miner has been the ASX’s standout performer in the first quarter, rallying 44% as the gold price smashed through US$3,000 an ounce and copper hit a record high this week. That’s a gilt-edged performance given the benchmark S&P/ASX 200 Index is down 2% since the start of the year. 

Trump, trade wars and the tech sell-off have hurt global market sentiment, but it’s been a boon for the ASX’s second largest listed gold miner. The safe haven appeal of gold and the surge in copper prices on U.S. tariff concerns has plumped margins and cash flows. Debt is down, while dividends are up. $EVN shares have doubled in price over the past year.

Founded in 2011, Evolution’s active deal-making has created a portfolio of six mines across Australia and Canada. At a time of rising resource nationalism, exposure to two of the world’s most attractive countries for mining is another tick in the box for investors interested in gold and copper.    

Gold digger

Evolution’s gold production profile has been fairly consistent: it’s averaged around 195,000 ounces a quarter over the past year. It’s targeting FY25 gold production of 710,000-780,000 ounces, compared to 716,700 ounces in FY24. The company is well on its way to meeting the upper end of guidance, given the 388,000 ounces produced in the first half of FY25. 

With margins above the industry average, Evolution is on track to deliver more than $2b of operating mine cash flow at the midpoint of its guidance. And while consistent production is great, it’s the price of gold that’s bringing in the cash. The outlook for the precious metal is being supported by demand from central banks (which added 1,045 tonnes to global gold reserves in 2024), ETFs and fund managers who have been attracted by its safe-haven status. Data from the U.S. Commodity Futures Trading Commission shows money managers are long 622t of gold contracts. Macquarie sees gold trading as high as US$3,500 an ounce by Q3. 

Concerns about the Trump administration’s trade policies, geopolitical tensions and the sell-off in global stocks has brightened gold’s allure. That’s been boosted by the decline in the USD, which makes it cheaper for consumers outside the U.S. to buy gold. Falling bond yields have also helped by lowering the opportunity cost of holding non-income producing assets like gold. A rebound in the greenback or U.S. bond yields may cause gold prices to give back some of these gains. 

But the gold industry thinks there’s money to be made at these prices. Demand has sparked a frenzy of deal-making to secure ounces that are still in the ground. Just this week, South Africa’s Gold Fields made a $3.3b bid for ASX-listed Gold Road ($GOR). The companies are joint venture partners in the low-cost, long-life Gruyere mine in Western Australia. The deal follows Northern Star’s ($NST) $5b offer in December for De Grey Mining ($DEG), whose Hemi gold project in WA will become a top five mine in Australia when completed and running at full capacity.  

Coppertunity 

The rally in copper prices has been icing on the cake for Evolution Mining. The widely used industrial metal has rallied hard this year, as worries about Trump’s tariffs have sparked a surge of copper imports into the U.S. ahead of new levies being imposed. Copper for May delivery rose as high as US$5.2255 a pound (US$11,520 a tonne) on COMEX on Tuesday, beating the previous record set on 20 May 2024.

Evolution produces copper – as well as gold – from its Ernest Henry and Northparkes mines. Again, production has been fairly consistent over the past year, averaging around 19,500 tonnes. The production of copper at these mines allows Evolution to report a negative all-in sustaining cost (AISC) for gold production from these mines. The company generates around 25% of its revenue from copper. Studies to expand both operations are underway. 

Evolution is well positioned to benefit from more copper growth that’s expected from the energy transition, electrification and the building of data centres to power AI. Mining giant BHP ($BHP) has forecast a 70% increase in annual copper demand to 50m tonnes a year by 2050. This should coincide with aging mines, an ongoing decline in global copper grades and deposits becoming deeper and more expensive to explore.  

Pay dirt

Hot metal prices are driving strong cash flow generation, rewarding bankers and shareholders. Evolution’s gearing (debt as a proportion of equity) has fallen from 33% in FY23 to 23% so far this financial year. Net debt has been reduced by $345m since December 2023. 

Long-time shareholders have received 24 consecutive dividends totalling $1.2b. As gearing falls, and assuming cash flows remain healthy, investors should continue to see dividends. The company paid out $139m of dividends in FY24, and paid that same amount just in the first half of FY25. 

Evolution’s dividend policy is to pay out around 50% of cash flow. The company estimates that a move of US$100 an ounce in the gold price (up or down) affects FY25 cash flow by $65m-$70m. But assuming a final dividend similar to the interim dividend,  the total payout for the year could be around $280m. 

The assay

Evolution Mining has been a standout performer in 2025 thanks, above all, to strong gold and copper prices. Consistent production has allowed the miner to bank cash from safe haven flows into gold and trade war anxiety about copper supplies.

The miner is largely captive to the price of gold, a commodity long seen as an insurance policy in uncertain times. That’s not necessarily a bad thing, given the only certainty at the moment appears to be more uncertainty.

This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.