Evolution Mining shares crash 36% from an all-time high: Buy, sell or hold?

Evolution Mining Ltd (ASX: EVN) shares have tumbled further into the red in Wednesday afternoon trade.

At the time of writing, the Australian gold miner’s shares are down 5.27% to $11.32. 

The latest downturn means the shares have now crashed 36% since peaking at an all-time high of $17.67 in early March. The gold stock is also 11% lower year to date but remains 40% higher than a year ago.

For context, the S&P/ASX 200 Index (ASX: XJO) has slumped 1.27% to a seven-week low on Wednesday afternoon.

Why are Evolution Mining shares under pressure today?

There is no price-sensitive news out of Evolution Mining today to explain the latest pull-back.

It’s most likely that the slumping gold price is causing investors to sell off their shares.

Trading Economics data shows that gold is trading below US$4,500 per ounce on Wednesday, after tumbling 2% in the previous session. The latest gold price drop means the metal has slumped over 5% in value over the past month.

It looks like investors are fleeing from the safe-haven asset in anticipation that tensions between the US and Iran could reignite. Concerns around higher inflation also puts markets under pressure.

Earlier today, US President Donald Trump warned that he would resume fresh strikes within “two or three days” if Tehran fails to accept Washington’s terms.

What sparked the sell-off in March?

Evolution Mining shares dropped sharply in March, mainly for the same reasons they are tumbling now.

Investors sold off their shares in ASX gold mining companies amid a broad market panic. 

Gold prices fell suddenly in late March as markets reacted to shifting expectations for US interest rates and geopolitical tensions. 

It’s also likely that investors seized the opportunity to take their profit off the table after a huge share price rally. The miner’s shares jumped 39% in the first two months of the calendar year.

As a business, Evolution Mining has been relatively strong this year. In mid-April, the company posted its quarterly update, where it revealed gold production of 170,000 ounces and copper production of 11,000 tonnes. This was achieved with an all-in sustaining cost (AISC) of $2,220 per ounce, which underpinned record quarterly net mine cash flows.

Earlier this month, the company also released its Mineral Resources and Ore Reserves Statement. The company said its Mineral Resources have grown to 31 million ounces of gold and 4.2 million tonnes of copper over the past year. The miner’s contained gold increased by 900,000 ounces, or 3%.

Is the ASX gold stock now a buy, sell, or hold?

TradingView data shows that analysts are mostly positive about the outlook for Evolution Mining shares over the next 12 months.

Half of the 20 analysts have a buy or strong buy rating on the shares. Another six rate the stock as a hold, and four have a sell or strong sell stance.

The average $14.65 target price implies a potential 29% upside at the time of writing. The maximum target price is $19.55, suggesting a huge 73% upside over the next 12 months. 

The post Evolution Mining shares crash 36% from an all-time high: Buy, sell or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.