Perseus Mining Falls Despite Posting Record Gold Production In June Qtr

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Perseus Mining Falls Despite Posting Record Gold Production In June Qtr

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  • All-in Sustaining Cost (AISC) of US$952 per ounce in FY22 is within guidance range of US$932 to US$1,020
  • Cash & bullion of US$328 million, less US$50 million debt, leaves 30 June net cash of US$278 million
  • Hedging in place for 290,000 ounces of gold at an average sales price of US$1,897 per ounce
  • Perseus on track to exceed 500,000 ounces of gold production in FY2023
  • Perseus’ three existing operating mines, augmented by development of Block 14 Gold Project, supports shareholder upside.

Perseus Mining Limited (‘Perseus‘ or the ‘Group‘) is tracking toward becoming a premium quality, mid-tier African gold explorer and producer that currently produces 490,000 ounces of gold annually. Perseus operates three African gold mines: Edikan in Ghana, and Sissingué and Yaouré in Côte d'Ivoire and owns the Block 14 Development in Sudan.

Strong operating performance in June quarter

Perseus’s three operating gold mines combined to produce 122,327 ounces of gold in the June 2022 quarter, bringing total annual production to 494,014 ounces for the first time. This production rate is in the upper half of the Group’s market guidance range of 471,164 to 506,164 ounces. Weighted average All-in Sustaining Cost (AISC) of US$952 per ounce for the June 30, 2022 financial year is well within the market guidance range of US$932 to US$1,020. Perseus’s AISC places the Group close to the middle of the global gold cost curve, as reported in JP Morgan’s June 2022 Gold Sector Review.

Gold sales of 481,075 ounces at a weighted average sales price of US$1,683 per ounce were recorded, representing an average cash margin of US$731 per ounce for the full financial year.

Yaoure Gold Mine, which accounts for 66 percent of the Group’s gold production and approximately 84 percent of FY22 Group cash flow, continues to outperform expectations. This site produced above the guided gold production range and below the bottom end of the market cost guidance range for the financial year to 30 June 2022. Yaoure is a highly efficient producing mine with an AISC of US$641 per ounce in FY22. Based on the weighted average sales price of US$1,673 per ounce in the June quarter, the mine delivered a cash margin of US$1,032 per ounce.

Conservative balance sheet and dependable cash flow
Perseus’s financial position continues to strengthen with available cash and bullion of US$328 million, less debt of US$50 million, leaving net cash of US$278 million at 30 June 2022. This is US$50 million more than last quarter. Notional cashflow from operations of US$361 million was generated during FY2022, the majority of which was sourced through the Group’s Yaoure Gold Mine.

At 30 June 2022, Perseus held forward sales contracts for 290,000 ounces of gold at a weighted average sales price of US$1,897 per ounce. This compares to today’s gold price of US$1,729 per ounce.

Production and Cost guidance

Perseus’s strong operating performance is forecast to continue with market guidance for the December 2022 half-year of 240,000 to 265,000 ounces produced at an ASIC of US$1000 to US$1,100 per ounce. This rate of production places Perseus on a trajectory to achieve more than 500,000 ounces of production in FY2023 and develop into a reliable diversified mid-tier gold producer. This estimate does not include the estimated 228,000 oz per annum production capacity from the Block 14 Gold Project acquired from Orca. Perseus has recently commenced to develop this project following the completion of the acquisition of all of the outstanding common shares of Orca Gold Inc., being the previous owner of this significant project.

Exploration success around Perseus’ three existing operating mines, augmented by value accretive, inorganic growth opportunities such as Orca, underwrites a period of sustained growth in gold production, with shareholder upside to follow.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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