1. Evolution Mining
best gold stocks

2. Will be an Australian mid-tier leader We continue to be encouraged
by the progress being made across the project portfolio at Evolution
Mining (EVN) Evolution currently operates four gold mines in
Australia and is currently developing a fifth in Queensland EVN is
targeting 335-375k oz of production in the current financial year,
moving to 410-465k oz of gold equivalent production in FY13 If
these targets are achieved this will place EVN as the 3rd largest
Australian gold producer behind both Newcrest and Alacer gold
Evolution was formed by the merger of Catalpa and Conquest last
year, and since the deal we have seen some very significant
management and board changes The most important being the
appointment of Jake Klein who has taken on the role of Executive
Chairman and MD of the group The MD was formerly the head of
Catalpa, Bruce McFadzean Jake Klein has a an impressive track
record particularly with Sino Gold which he took from being a junior
miner into a multi-billion dollar market cap company which was
subsequently taken over by global gold major Eldorado Gold
Financials Evolution Mining released its maiden First Half 2012
result in February, reporting a headline net loss of A$17 9 million for
the half The result was primarily driven by a A$29

3. 4 million charge arising from the merger, in late 2011, between
Catalpa Resources and Conquest Mining to form Evolution Mining
However underlying profit of A$20 2 million better reflects the
performance of underlying operations The company reiterated gold
production guidance for the 2012 year, to be in the range 335,000 to
375,000 ounce and 410,000 to 465,000 ounces for 2013 Evolution
also has substantial financial flexibility with which to support core
assets The company has cash of A$167 4 million and bullion of
A$40 6 million Debt stands at A$43 9 million Excluding bullion the
company is in a net cash position

4. Asset Portfolio Critical to the progress of whole portfolio here is not
just about reaching these production targets; but also demonstrating
reasonable cost control across the assets overall as these assets
develop and reach steady state production Edna May Edna May
operates an open cut mine which is low grade, high cost There is
also the underground development that has been progressing in the
background EVN recently announced that the underground resource
had been upgraded by some 70% Albeit, off a low base, we now
have an underground resource that complements the open pit
resource of 270k oz grading around 7 grams per tonne This
compares to the open pit currently grading 1 1 grams per tonne
Two main domains of this mineralisation include; a) High grade

5. quartz reef mineralisation - 490,000 tonnes at 8 8g/t for 140,000 gold
ounces; and b) Halo mineralisation - 720,000 tonnes at 5 8g/t for
130,000 gold ounces As Jake Klein recently commented, 'This
is an encouraging addition to our efforts to maximise the value of
Edna May Our focus at the operation over the next 12 months
remains on improving the reliability and performance of the plant, but
underground development represents an option for adding value to
the long term future at Edna May

6. ' Mt Carlton Mt Carlton is currently at development stage and
on track to be commissioned by year end This asset will provide a
significant boost to Evolution's growth profile in the coming
years The deposit is expected to produce 95k oz of gold equivalent
at an average cash of $600 per oz of gold equiv This will have effect
of lowering cash costs overall Mt Carlton will produce gold, silver
and copper Ex - Newcrest assets Cracow and Mt Rawdon which
were acquired as part of the formation of EVN were an insignificant
part of Newcrest's Mining portfolio (approximately 3%) As such
they demanded little management attention relative to others and
suffered as a result Under EVN's ownership these assets
represent over a quarter of the asset base of EVN and as such will
be a key focus of management attention

7. In our view they are likely to be better managed and as a result see
more value extracted in terms of both current operations and
exploration This is already evident at Cracow with new targets area
already identified along strike from Kilkenny North Drill results here
include; a) 2 03m grading 7 59g/t Au b) 11 02m grading 6 76g/t Au
c) 1 74m grading 5 47g/t Au We await quarterly results for further
details on the progress on the production front We believe that
80-85k oz for the March quarter remains feasible Over the next few
years EVN will in our view reach steady state production of 500,000
per annum from 5 key assets

8. Once this milestone production level is best gold stocks reached,
Evolution will warrant a premium to valuation We believe that Jake
Klein and his management team have the ability to meet this
production target The exploration upside in each of these assets is
also significant and is now being given due management focus We
should not underestimate the knowledge and information available
from EVN's relationship with Newcrest which has a significant
shareholding of 33% Assets that may be immaterial to Newcrest
may be a source of future acquisitions for Evolution These are likely
to be highly accretive Fat Prophets continue to believe that gold
prices will go ever higher in the years ahead, further underpinning
the Evolution growth story As such we recommend the shares as a
buy Interested in further research from Fat Prophets? Email or call
our Auckland office on (09) 306 8934

9. best gold stocks