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Perseus Mining Ltd: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Perseus Mining auditions project for multi-country mines strategy

Perseus’ two operating mines are Edikan and Sissingué in West Africa with a third on the way.
Large Y structures at Perseus' Yaouré Gold Project in Côte d’Ivoire
INVESTMENT OVERVIEW: PRU The Big Picture
Perseus is putting together a funding package for Yaouré Gold Project in Côte d’Ivoire, where Y structures are typically massive

Perseus Mining Limited (ASX:PRU) continues to advance its strategy of becoming a producer operating multiple gold mines in a number of jurisdictions.

The company has two operating mines in West Africa - Edikan and Sissingué - with a third, Yaouré, on the near-term horizon.

The company’s managing director and CEO Jeff Quartermaine acknowledged the progress Perseus had made with the strategy, when speaking to investors at the company’s annual general meeting last Friday.

READ: Perseus Mining new discovery at Edikan bodes well for mine life extension

Quartermaine said in an address shared with the market: “With the successful commissioning of our Sissingué gold mine in the March quarter of 2018, we took a major step forward in pursuit of this goal, and we are now well on track to implement our strategy in full.

“Not only have we increased the number of operating mines in our asset portfolio but with the commissioning of Sissingué and the material improvement in performance at Edikan, we have also significantly improved our ability to generate free cash flow at current gold prices.”

Western Australian company Perseus noted in its recent 2017-18 annual report that it had successfully developed and operated gold mines in multiple West African geopolitical settings, crediting its success on its focus on growth, efficiency all corporate responsibility, underpinned by its skilled, experienced team.

Perseus has forecast 2018-19 financial year production of between 260,000 and 300,000 ounces at average all-in sustaining costs (AISC) of about $925 to $1050 an ounce.

The company’s 2017-18 annual production was a record 255,916 ounces, as it finished June 30, 2018, with $89.8 million cash and bullion on hand

Production for the September 2018 quarter was 72,477 ounces at an AISC of US$950 an ounce, putting cash and bullion on hand at $93.8 million by quarter-end.

Income-earner Edikan Gold Mine

Edikan Gold Project in Ghana was Perseus’ first mine, opening in February 2011 and pouring first gold in August 2011.

Commercial production was achieved at the West African mine in January 2012.

Edikan mine achieved a strong positive operating margin of $13.8 million in the 2017-18 financial year.

The economically-attractive project has an attractive US$950 an ounce all-in sustaining cost and US$264 million after-tax cash flow.

Edikan’s net present value at a 10% discount rate (NPV10) is US$233 million, with a US$1,200 an ounce gold price.

Global gold prices closed the week at the US$1,222 an ounce mark.

 

Quartermaine said on Friday, “In Ghana, we are focused on following up geophysical targets located at depth between the currently known Esuajah north and south deposits.

“Some exciting preliminary results have recently been returned which materially enhance the prospect of further discoveries of gold at depth, leading to a possible extension of the currently expected life of Edikan.

“In fact, we announced (last) week that drilling on the Esuajah Gap prospect between Esuajah North and Esuajah South deposits has confirmed the existence of a significant mineralised granite body.”

A diagram of a granite body at the Esuajah Gap prospect at Edikan Gold Mine in Côte d’Ivoire

A diagram of a granite body at the Esuajah Gap prospect at Edikan Gold Mine in Côte d’Ivoire

In June 2018, the project’s measured and indicated resources were 84.9 million tonnes grading 1.10 g/t gold for 3.025 million ounces.

There’s potential to extend the mine life beyond the current six years from the latest drilling efforts and near-mine exploration.

Revenue up-and-comer Sissingué Gold Mine

Subiaco-based Perseus’ second gold mine is Sissingué in Côte d’Ivoire.

The West African mine’s plant was commissioned in January 2018 and commercial production began on April 1, 2018.

Sissingué operations achieved a strong positive operating margin of $13.9 million in the 2017-18 financial year.

The mine is approved to run until August 2022 and has a conventional open pit.

Summary statistics for Sissingué Gold Mine in Côte d’Ivoire

Summary statistics for Sissingué Gold Mine in Côte d’Ivoire

The project’s mineral resources sit at 10 million tonnes grading 1.8 g/t gold for 558,000 ounces.

Ore reserves are 5.8 million tonnes gold grading 2.1 g/t for 38,000 ounces.

The mine’s plant can process 1.8 million tonnes a year oxide ore and 1 million tonnes fresh ore.

Prospective mine Yaouré Gold Project

Perseus is hoping to open a third mine, at the Yaouré Gold Project in Côte d’Ivoire, after independent consultant Lycopodium Minerals Pty Ltd completed front-end engineering design (FEED) work in October 2018.

READ: Perseus Mining completes FEED milestone on Yaouré Gold Project development path

Lycopodium’s Yaouré mine and infrastructure design work built on a late-2017 definitive feasibility study (DFS) and confirmed a development cost estimate of US$264 million.

The contractor has also completed a value engineering assessment (VEA) for the project.

Perseus’ two mines in West Africa, Edikan and Sissingué, and high-priority potential next mine, Yaouré, in Côte d’Ivoire

Perseus’ two mines in West Africa, Edikan and Sissingué, and high-priority potential next mine, Yaouré, in Côte d’Ivoire

Perseus MD Quartermaine spoke to Proactive Investor’s Stocktube video channel last month, saying the company was talking with a banking group about options for Yaouré.

Quartermaine said, “(The) third mine … is a very important addition to our portfolio, and we’re moving along very steadily.

“We’re talking with a banking group, we’ve got a number of offers on the table at the present time

“We certainly hope that by the end of this year, we’ll be in a position to take a proposal to our board, recommending that we move into full-scale development early next year.”

Quartermaine has outlined the next steps for Yaouré project in Côte d’Ivoire.

These include receiving a milestone mine-exploitation permit and putting together a funding package before moving to what the company hopes is full-scale development next year in 2019.

Perseus is also hoping to progress a scoping study for underground mining at Yaouré project into a preliminary feasibility stage in the “not too distant future.”

Perseus’ latest mineral resource estimate for Yaouré, in Côte d’Ivoire, from November 2017

Perseus’ latest mineral resource estimate for Yaouré, in Côte d’Ivoire, from November 2017

Indicated resources at the Yaouré project sat at 43.1 million tonnes grading 1.39 g/t gold for 1.93 million ounces on November 3, 2017.

Inferred resources were 46 million tonnes grading 1 g/t for 1.5 million ounces.

Changed financial performance

Quartermaine used his address at the company’s AGM last week to highlight newcomer Sissingué was making a contribution to the company’s bottom line.

Sissingué is now contributing 25% of the company’s gold production ounces and 56% of the group’s notional cash flow.

Perseus has had seven consecutive quarters of “strong operating performance,” he said, with the June 2018 quarter being a highlight with 83,881 ounces of gold produced at a weighted average all-in site cost of US$913 per ounce.

A plant at Edikan mine in Ghana

Plant at Edikan mine in Ghana

Quartermaine said on Friday, “Our development team in Côte d’Ivoire did a great job in getting Sissingué into production ahead of schedule and on budget, and our operating team has continued the excellent work by rapidly ramping up the operation and comfortably exceeding targets in the first full quarter of commercial operations.

“Since then and notwithstanding a very wet West African wet season, Sissingué continues to perform very well relative to our targets.

“Not only is the mine proving to be a reliable, low-cost gold producer that is generating a significant proportion of our monthly cash flow, but Sissingué’s successful development and commissioning has greatly improved our confidence to deliver a similar result when our third mine, Yaouré, moves into development in early 2019.”

Perseus is working to improve its workplace culture at sites such as its Edikan mine

Perseus is working to improve workplace culture at sites such as Edikan

Manas farm-out

Perseus also holds the M’bengué project in northern Côte d’Ivoire through its subsidiary Occidental Gold SARL.

Manas Resources Limited (ASX:MSR) is farming into a 70% stake in the project 90 kilometres southeast of Perseus Mining’s Sissingué mine, by sole-funding exploration.

A drill rig on-site at Manas project in Côte d’Ivoire

A drill rig on-site at Manas' project in Côte d’Ivoire

The farm-out partner has improved the parties’ understanding of the geological setting and mineralisation style at M’bengué after drilling at four prospects.

Manas’ 13-hole, 1,312-metre maiden drilling campaign took in the Turaco, Madala, La Vieux and Burkinabe prospects.

Among the best intersections from the Turaco prospect were: 1 metre grading 14.8 g/t from 87 metres; 9 metres grading 5.05 g/t from 60 metres; and 21 metres grading 2.11 g/t from 7 metres.

Madala prospect had 7 metres at 7.54 g/t from 46 metres and La Vieux prospect’s best result was 1 metre at 12.6 g/t from 9 metres, while Burkinabe prospect’s stand-out was 1 metre at 4.14 g/t from 12 metres.

People first

Perseus’ execution of its strategies to become a multi-mine multi-jurisdictional gold producer is being executed by its committed teams in Ghana, Cote d’Ivoire and Australia.

Quartermaine credited the company’s improved performance this year to its people.

The MD said, “I sincerely thank each and every one of our employees for their efforts.

“I expect that 2018 will be judged as a watershed year for Perseus.

“We moved beyond the challenges of prior years and established the platform for delivering future success and long-awaited returns for our very patient and supportive shareholders, for many years to come.”

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