Earnings Call: Perseus Mining Delivers a Robust Quarterly Report with Solid Cash Flow

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Earnings Call: Perseus Mining Delivers a Robust Quarterly Report with Solid Cash Flow

According to Jeff Quartermaine, CEO and Managing Director of Perseus Mining Limited (PRU.AX), the company demonstrated strong operational performance in the September 2024 quarter. The company reported a slight increase in gold production, a significant cash and bullion balance, and a positive outlook on ongoing projects. Perseus Mining is advancing its development plans with robust cash flow and a debt-free status, emphasizing its commitment to local communities and safety practices.

Key Highlights

  • Produced 121,290 ounces of gold, a slight increase from the previous quarter.
  • All-in site cost rose to $1,201 per ounce, mainly due to higher royalties from increasing gold prices.
  • Average gold sales price was $2,249 per ounce, with the current market price around $2,750 per ounce.
  • Cash and bullion balance stood at $643 million (AUD 960 million), marking an increase of $56 million since June.
  • The company expects to meet its semi-annual gold production target of 220,000 to 260,000 ounces.
  • A $100 million share buyback program is underway, with a total annual dividend of $0.05 per share planned.
  • Significant community contributions focus on local employment, channeling $150 million into local economies.
  • Nyanzaga project requires $450 million to $500 million in financing, with initial gold production expected by January 2027.

Company Outlook

  • The company is targeting the upper range of its semi-annual production guidance.
  • Recruitment and environmental assessments for future projects are ongoing.
  • Future financing for the Nyanzaga project is in the planning stage, with continued strong cash generation expected.

Challenges

  • Heavy rainfall at the Sissingué mine impacted production.
  • Lower-than-expected grades were reported at the Yaouré site, primarily due to reconciliation issues and suboptimal blasting practices.

Positive Aspects

  • The company is debt-free and reported a strong operating margin of $97 million.
  • Performance in production, cost management, and safety outpaced many competitors, particularly in less developed African regions.
  • Costs at the Edikan site are currently significantly below guidance.

Shortcomings

  • The expected reserve grade at Yaouré was between 2.15 and 2.2 grams per ton, but the actual grade was around 2.8 grams per ton, leading to local discrepancies.

Q&A Highlights

  • The final investment decision for the underground development at Yaouré’s CMA was postponed to November.
  • Pre-engineering and design for a 5-million-ton-per-year mill at the Nyanzaga project are advancing, with a capital budget draft expected in November.
  • The company raised $45 million by selling its 9.6% stake in Montage and acquired a 19.9% stake in Predictive.

Perseus Mining’s earnings call for the September 2024 quarter highlights a period of strong operational results and financial health. Emphasizing strategic project development and community engagement, the company is well-positioned for sustainable growth and ongoing contributions to the economies of host countries. Despite some operational challenges, the company’s diversified asset portfolio and focus on cost management set a positive tone for future endeavors.