Despite the price paid by Evolution Mining for a 70% stake in the Earnest Henry mine being greater than valued, Morgan Stanley sees the deal as sensible as management understands the asset well, having owned 30% in a joint venture since 2016.

The deal gives Evolution control of the asset and any future exploration upside. The purchase will be funded by a private US placement and cash.

Equal-weight and $3.65 target retained.

Industry view: In-Line.

Sector: Materials.

Target price is $3.65.Current Price is $4.01. Difference: ($0.36) - (brackets indicate current price is over target). If EVN meets the Morgan Stanley target it will return approximately -10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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