Final bill for Evolution Mining’s Mungari mill expansion to come in at $212 million, 15 per cent under budget

The final bill for Evolution Mining’s Mungari mill expansion is predicted to come in at $212 million, 15 per cent under budget, the company said on Wednesday. The project expanded the mill’s capacity to 4.2 million tonnes per annum, up from 2Mpta, with work being completed in April. Evolution budgeted $250m for the work, and in April said it would cost $228m. But on Wednesday the company said the final forecast capital expenditure would be $212m. The project has been designed to establish Mungari as a 200,000 ounces-per-annum operation and managing director Lawrie Conway on Wednesday said it was on track for commercial production this month following a successful ramp-up. The operation about 20km west of Kalgoorlie-Boulder had a strong first quarter for the current financial year, with Evolution telling the market it churned out 40,000oz for the period at a significantly lower all-in-sustaining cost of $1982/oz. This compared to 39,000oz at $2534/oz in the June quarter, and 32,000oz at $2926/oz in March. Evolution said the September quarter output resulted in record operating mine cash flow of $123m. There was also a 48 per cent lift in processing throughput to 919,000 tonnes, driven by higher plant utilisation and a higher realised gold price. The company said mining rates were ramping up in tandem with the mill, with open-cut production increasing 25 per cent to 704,000t, underpinned by the Castle Hill open pit, which would provide baseload ore feed for at least the next 8-10 years. Also, access to higher-grade stopes from underground sources was expected to deliver higher gold production during the coming quarters. Overall, Evolution produced 174,000oz of gold and 18,000t of copper for the September quarter, down on the 182,000oz of gold and 19,000t of copper for June. However, the group’s achieved gold price increased by 4 per cent to $5193/oz, with the current spot gold price of about $6100/oz almost $1000/oz higher than the September quarter average. Evolution said group cash flow was $196m for the quarter, while the company’s cash balance increased to $780m following early debt payments of $170m which were originally scheduled for FY27. The company said gross debt has been reduced by $485m since December and there were no debt repayment obligations until FY29. Group net mine cash flow for the quarter was a record at $366m, an increase of almost 20 per cent from the previous benchmark, and included record contributions from Red Lake in Canada and Northparkes in New South Wales. Mr Conway said Evolution remained on track to deliver full-year guidance of 710,000oz-780,000oz of gold and 70,000t-80,000t of copper at an AISC of $1720/oz-$1880/oz. “We are generating significant cashflow, enabling further financial deleveraging, and our gearing improved to 11 per cent,” he said. Evolution’s share price closed down 33¢, or 2.9 per cent, at $11.09 on Wednesday.