Evolution Mining Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Evolution Mining Limited (ASX: EVN) is an Australia-based gold mining company. The Company operates five wholly-owned mines, such as Cowal in New South Wales, Mungari in Western Australia, Mt Rawdon and Ernest Henry in Queensland, and Red Lake in Ontario, Canada.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~39.58% of the total shareholding. AustralianSuper and Van Eck Associates Corporation hold a maximum stake in the company at ~10.87% and ~10.39%, respectively.

1.4 Key Metrics: EVN reported a high inventory turnover ratio of around 3.3x compared to 2.3x of the industry median. Further, the company reported a high EBITDA margin of 41.7% compared to 40.5% of the industry median. Below is captured the trend of the total revenue and debt-to-equity ratio:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of 1HFY23: During 1HFY23, the company reported an EBITDA of AUD 446mn compared to AUD 393mn in 1HFY22, recording ~13% growth. Further, EVN reported mine operating cash flow of AUD 477mn during 1HFY23 witnessing ~20% growth on a pcp basis.

2.3 Growth Potential: The company witnessed a growth in mineral resources at Ernest Henry at a discovery cost of AUD 5 per ounce gold equivalents. Further, at Ernest Henry, the company recorded 36% growth in contained copper to 1.2mn tonnes and a 37% increase in contained gold to 2.3mn oz as of December 2022.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

The stock has witnessed a gain of ~2.43% in 3 months, while over the last 9 months, it decreased by ~28.78%. The stock has a 52-week low and 52-week high of AUD 1.800 and AUD 4.750, respectively and is currently trading slightly below the average of a 52-week high-low average.

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 28, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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