Perseus Mining Limited

All attendees are in listen-only mode. If you would like to ask a question, please enter it into the Q&A panel within Zoom.

I’ll now hand over to Perseus Mining's Managing Director and CEO, Jeff Quartermaine. Thank you, Jeff.

Thanks very much, Nathan, and welcome to Perseus Mining's December '21 Quarter Webinar. Today, I'm joined on this call by several members of my senior management team, including Lee-Anne de Bruin, Finance; Paul Thompson, Business Growth; and Jess Volich, Sustainability.

Now, before going any further, I should say that I'm actually speaking to you today from a mine site in West Africa where it's clearly late at night. While I don't expect any communication challenges during the call, if they do occur, Lee-Anne, who's resident of the Hermit Kingdom of Western Australia, will pick up where I left off and complete presenting the overview of the December quarter.

Now what we plan to do today is to provide this with a brief presentation on the quarterly report that was released to the market earlier today. And then to follow that up with a Q&A session to address any specific issues that aren't clear either from the quarterly report itself or from my presentation.

Due to the risk of communications challenges, I'll keep this presentation reasonably short relative to our previous webinars, but please don't hesitate to ask any questions that you may have during the Q&A session at the end, and either I or one of my colleagues will be only happy to respond. Okay, so cutting to the chase.

Firstly, Perseus has this quarter once again achieved another record operating performance or in the words of our Chairman, the team has really hit the ball out of the park this quarter. This quarter, Perseus' produced 128,731 ounces of gold which is 14% more than the September quarter.

Weighted average all-in site costs decreased by about $32 an ounce or 3% compared to the last quarter to US$934 per ounce based on a production cost of US$823 per ounce. In terms of market guidance, in July, we forecast production of 225,000 to 255,000 ounces of gold at an all-in site cost of 925 to 1,025 per ounce for the December half year.

In fact, for the half year, we produced 241,164 ounces of gold and an all-in site cost of 949. So we were actually in the upper half of the guidance range as far as production was concerned and well into the lower half of the range in terms of costs, which is very pleasing.

During the quarter, two of our three mines, namely Yaouré and Sissingué in Côte d’Ivoire, performed exceptionally well relative to their guidance, and in the process they exceeded most of our internal KPIs such as runtime, throughput rate, recovery and head grade. Our third mine, Edikan in Ghana, continued to be challenged by grade.

But given that we now have multiple mines in our portfolio, the impact of Edikan being a bit off target this half year has not extracted much from the overall performance of the group. We have, after all, established a new production record by increasing our production by 26% half year-on-half year, so 26% more than the June quarter.

Now, we're selling our gold at an average price of US$1,669 per ounce during the quarter. We generated a fairly healthy cash margin of US$734, roughly A$1,030 for every ounce of gold produced, and that resulted in notional operating cash flow of US$94 million for the quarter, about an increase of about US$16 million over the previous quarter.

Our net cash in bullion on hand at the end of the quarter amounted to US$162 million or approximately A$269 million. And our gross cash position amounted to US$212 million.

That was not to saying the fact that during the quarter, we made a capital return -- our initial capital return to shareholders of US$30 million. We repaid US$50 million from our debt facility and we invested a further US$11 million in organic growth activity.

So as we had said to investors who asked about the use of our cash flow, what we will be doing with this, we have done it precisely what we said. We would return some money to shareholders.

We would manage our balance sheet and we would invest in organic growth in the company. So once again, this quarter, Perseus has done exactly what we said we would do and then some.

We are on course to achieve our stated aim of producing around 0.5 million ounces or more of gold per year at a cash margin of US$400 or more per ounce from fiscal '22 onwards. In fact, given our quarterly results, if you annualize that or so on an annualized basis, we're already producing at this rate of 500,000 ounces per year, which is particularly pleasing.

Now, looking to the future, included in the quarterly report, we have stated our market guidance in terms of production and cost for the next six months. And we're forecasting production in the range of 230,000 to 265,000 ounces of gold at an all-in site cost of US$915 to US$1,095 per ounce.

And this translates to production guidance for fiscal '22 for the year of 471,000 to 506,000 ounces and an all-in site cost of US$932 to US$1,020. So that's a fairly healthy outlook for the company.

Turning to our financial position, during the December quarter, Perseus has continued to improve its balance sheet strength through the strong cash flows that we've been generating and, of course, through prudent financial management. The notional cash flow, as I said, from operations was US$94 million, up from US$78 million the previous quarter.

And this allowed us to fund now a matter of things, so we funded exploration at each of the three operating sites in the amount of $11 million, paid all sorts of taxes, including income tax in Ghana, paid dividends to the government in Côte d’Ivoire, and of course made a capital return, as I said, to the Perseus' shareholders. Now in addition to that, we continued to fund a range of social programs for host communities, paid corporate overheads and reduced our debt by $50 million.

And we still managed to be in a position to hold cash and volume at the end of December of US$212 million or net US$162 million, after taking into account the fact that we now have 50 million of debt on the balance sheet. Now this net cash position is up 66 million on the end of the previous quarter.

So it's pretty clear that what we're doing is we're generating a lot of cash. Not only are we deploying it in the three areas that I mentioned earlier, but we're also strengthening that balance sheet to provide us -- put us into a fairly strong position for future growth should that be something that we choose to do.

Now speaking of growth, as announced recently, we have through exploration success also made very, very strong progress towards being able to sustain our production level of 500,000 ounces on an ongoing basis out towards the end of the decade. Last week, we made two separate market releases that give substance to that ambition.

And I would strongly encourage listeners to take a close look at these market releases that were published on consecutive days last week, on the 18th and 19th, as they contain much more detail and I can summarize in a few short moments on this call. They relate to exploration activities at the Yaouré mine and also around Edikan where we in both instance we have some very exciting work going on that we believe is going to materially add to our reserve inventory as we go forward.

As I've said in the past, the continuing strong performance by Perseus doesn't happen by accident. It's the result of a lot of hard work and resilience in fairly challenging circumstances by what is by any measure a very talented team of people that we have spread across the three operating sites and exploration sites in West Africa, our offices in Accra, Abidjan and in Perth, and, of course, our Board of Directors, and I'd like to take this opportunity to once again sincerely thank all those who have contributed to the quarter.

It's been another great effort. And what's been particularly pleasing though is that everything we've achieved this quarter and in the past, but should have been certainly in the quarter has been done in a very sustainable manner.

Our track record in the sustainability space, as reported, both in this quarterly report and in our 2021 sustainability report suggests that firstly, it is a very well managed company. It's staffed by subject professionals who are well up to the task of implementing our mission, generating benefits for all of our stakeholders in fair and equitable proportions.

So, in conclusion, as I've said at the start of the call, the December '21 quarter has been another very good quarter for Perseus in many, many respects. Across the board, our production is growing.

Our costs are decreasing. We're managing our business successfully and financially.

We're getting stronger by the day. We're experiencing some success, some very encouraging success, I should say, and organically growing our business.

And we've identified a couple of opportunities for potentially creating very material value for shareholders through M&A, and we'll see where that all leads us to. Finally, we're looking forward very much to bringing you further news of our achievements in coming months.

And Inshallah, as they say in this part of the world, we expect that they'll be just as good results as those that we've released today. Now my colleagues and I would be very happy to take any questions that you may have.

So over to you.

Thank you, Jeff. Your first question comes from Patrick Collier at Credit Suisse.

He's asked what is driving the processing costs at Yaouré. When should we expect processing costs to eventually fall back to around $10 a ton seen in the June half?

Well, the processing costs reflect a couple of things. We do have increased maintenance charges in there, and that's been a feature of the startup of processes costs.

And we would expect that we've been pretty much on top of these issues now and things should settle back fairly quickly. The other thing that, of course, has driven our cost base at -- remind you, when we're talking about our costs, we're talking about the difference between US$671 per ounce and US$700 per ounce, which I think by any measure is an outstanding performance.

But that aside, we have seen a slight increase in the cost base during the quarter as a result of mining as well, and that just simply is the fact that this quarter, there was less wet weather than there was in the previous quarter and more mining activities took place. But I don't think that one can get too excited about any of that, particularly when you're turning in all-in site costs of US$700 an ounce which mean that you're producing a margin of near enough to US$1,000 an ounce.

Thank you. Your next question comes from Reg Spencer at Canaccord who passes on his congratulations to you and the team.

His first question is regarding the Bagoé mine permit. He asks, any reason to think it won't be granted in the June quarter in line with your guide?

Yes. Well, there is reasons to think that it might not be because quite frankly we don't control the timing of granting of licenses.

Where we are in that process is that we were working with the environmental authorities right now, we expect that that will be finished very shortly and the environmental permit will be issued. Now once the environmental permit has been issued, we then lodge that with the government together with the feasibility study.

And at that point in time, they give them out a due consideration. Now one thing I would say about Côte d'Ivoire, and I can't guarantee this is the case necessarily, but certainly in the last six months or so the government has been very efficient in turning around mining last applications.

And there have been several issued to other companies. So we don't expect to see any delays.

But unfortunately, it's not something that we control and we cannot give any guarantees on that.

And to the second question, he notes comments on encouraging results of assessment of inorganic growth opportunities. Now while he appreciates you can't talk in too much detail, he's asking if you could elaborate whether this might be more along the lines of asset acquisitions or something else.

Well, he was quite right. I can't elaborate on any of this.

But look, our position is that we have a very capable team of people in both the exploration engineering and development parts. And quite clearly focusing into that element of the growth curve, we believe we can create very material value for shareholders, more so perhaps than acquiring operating assets.

So certainly, our focus is earlier in the curve, in the development curve than later. But, look, there are lots of things out there that one can look at.

And getting all the stars aligned to be able to make something happen is quite a challenge. But nevertheless, we are looking diligently and I think that there are situations that we've identified that can create very material value.

Jeff, there are no further questions at this time. So I'll now hand back to you for closing remarks.

Okay. Well, thanks very much for that, Nathan.

So just repeating my point, it has been a very good quarter and we as a company are very pleased to have delivered once again on what we said we were going to do. The future of the company is looking very attractive.

We have no doubt that we can continue to sustain the sort of performance going forward. And in fact, we're working very hard to improve on it.

And as I said earlier on, full credit goes to the team of people who we have here who have all contributed to delivering this result. So thank you very much for attending today.

And look forward to talking to you further. As I said at the start, I am in Africa right now.

But if people want to talk directly to me later on, I'll be up for a while. So call my office number or my mobile number using WhatsApp and you'll get yourself through straightaway.

Anyway, thank you very much and we'll talk again in the future. Thank you.