Evolution Mining (ASX:EVN) Surges 9% on Record $767M Profit- So Why Do Most Analysts Still Say Sell?

Evolution Mining Hits Record Profit, But Is It Priced Too High?

Evolution Mining (ASX: EVN) shares jumped almost 9% after the company reported the best half-year result in its 14-year history.
Net profit more than doubled, rising 110% to AUD 766.6 million, while revenue increased 37% to AUD 2.79 billion. The company also announced a record interim dividend of 20 cents per share, fully franked, a huge 186% increase. This means more than AUD 400 million will be paid back to shareholders.

Despite these standout results, most analysts are still cautious. Many continue to rate the stock as a sell, and their price targets are well below the current share price. This big gap between record profits and analyst caution suggests that the market may already be pricing in very strong gold prices and peak earnings, and investors are now asking whether these exceptional results can be repeated in the future.

What are the Best ASX Mining Stocks to invest in right now?

Check our buy/sell tips

Gold Prices Are Driving the Profits, Not Higher Production

When you look closely at the numbers, something important stands out.
Evolution actually produced 6% less gold, with total production falling to 364,936 ounces for the half year. The reason profits hit record levels is mainly that the gold price jumped 48%, with the company receiving AUD 5,726 per ounce. In simple terms, Evolution Mining is selling less gold but earning much more money for each ounce.

To management’s credit, they have controlled costs well. The company’s all-in sustaining costs fell to AUD 1,493 per ounce, making it one of the lowest-cost gold producers in the industry. That’s a positive sign. Copper production also helped. Evolution produced 36,058 tonnes of copper, and the copper price was 24% higher, giving the company another source of revenue.

However, investors need to think about one key risk. If the gold price falls by 15–20%, profits could drop quickly. Since production volumes are lower than last year, the company is now more dependent on high gold prices than the headline profit numbers might suggest.

$545M in Growth Projects Could Change the Equation

What makes Evolution’s story more interesting is how the company is using the large amount of cash it is generating.
Management has approved the E22 project at Northparkes, which will cost AUD 545 million. At current price assumptions, the project is expected to deliver a 28% return, which is very attractive. However, the first gold production from this project is not expected until the end of FY30. Another growth project, BERT at Ernest Henry, is aiming for production in FY29.

The company’s balance sheet has improved sharply. Net debt has fallen from AUD 1.6 billion to just AUD 362 million over the past two years. Gearing is now very low at 6%, and Evolution holds AUD 967 million in cash. Importantly, it does not need to repay any major debt until FY29.

Execution Mining has also been strong. The Mungari mill expansion was completed 15% under budget, which shows good cost control and project management.
Overall, Evolution appears to be a well-run company that is investing carefully for long-term growth. However, these new projects will take several years to make a real difference to production. For now, the investment case still depends heavily on gold prices staying high.

The Investor’s Takeaway for Evolution Mining

The valuation challenge is hard to ignore. Evolution Mining trades on a P/E ratio of roughly 32 times, a clear premium to the sector average of around 25 times. Most analysts maintain sell ratings, and DCF models suggest the stock may be significantly overvalued at current levels.

With the stock up 141 per cent over the past 12 months, a lot of good news is already baked in. For the current valuation to hold, Evolution needs gold prices near record levels AND growth projects to deliver on schedule. That’s a lot that needs to go right.

For existing shareholders who have enjoyed the ride, taking some profit looks reasonable. For new buyers, we’d suggest patience. A pullback in the gold price could offer a better entry point into what is undeniably one of Australia’s best-run gold miners. The quality of the business isn’t in question, but the price you pay for that quality matters.