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Post Market Wrap | Perseus Achieves March Quarterly Gold Production Record



Perseus Achieves March Quarterly Gold Production Record

  • Production rate on track to hit 500,000-ounce annual production target in FY22
  • US$793 per ounce quarterly cash margin is US$58 per ounce higher than the prior quarter 
  • Cash flow from operations increased by 10 percent to US$104 M, compared to the prior quarter      
  • Strong net cash position of US$228 million at 31 March, up US$66 million on the December quarter
  • Shareholder vote for acquisition of Orca Gold to be voted on by Orca shareholders on 19 May
  • Twenty-three percent of gold production is hedged for three years at US$1805 per ounce

Perseus Mining Limited (Perseus or the Company) is a gold producer which is also involved in exploration and gold project development, in the Republic of Ghana and the Republic of Cote d’Ivoire, both in West Africa. Perseus operates three gold mines which produced 328,632 ounces of gold in the June 2021 financial year. The Company is on track to achieve annual gold production of 500,000 ounces of gold by the end of the 2022 financial year.

March 2022 Quarterly Update

Perseus achieved record quarterly gold production of 130,523 ounces for the March quarter, taking production for the 2022 financial year-to-date to 371,687 ounces. This production rate places the Company on track to achieve its stated production target of 500,000 ounces by June 2022. 

The Company also achieved a new quarterly sales record of 131,044 ounces, at a weighted average sales price of US$1701 per ounce. The sale price compares to a weighted average all-in site cost of production (AISC) of US$908 per ounce for the quarter, delivering an average quarterly cash margin of US$793 per ounce of gold. This margin is US$58 per ounce higher than the cash margin recorded in the prior quarter. The year-to-date AISC is US$934 per ounce.

Notional cash flow from operations increased by US$10 million or 10 percent, compared to the prior quarter to US$104 million, taking 2022 financial year-to-date cash flow to US$275 million. Improved production and cost performance at the Yaoure and Edikan mines was responsible for this lift in operating cash flow. Cash and bullion on hand of US$278 million at 31 March 2022 and debt of US$50 million, leaves the Company with a strong net cash position of US$228 million. This amount is US$66 million higher than the net cash position at the end of the December quarter.  

Acquisition of Orca Gold Inc.

The share purchase offer to acquire the outstanding 85 percent of Orca Gold not already owned by Perseus, will be voted on by Orca shareholders on 19 May. Perseus have offered a 62 percent premium to the last closing price of Orca shares prior to Perseus’s offer being launched. Anticipating a ‘yes’ vote at the Orca shareholders’ meeting, the management of both Companies are well advanced with the integration to enable the development of Orca’s Block 14 Gold Project to commence in the September 2022 quarter.

Image: file

Looking Ahead

Perseus has maintained its production guidance for the June 2022 financial year at 471,164 to 506,164 ounces, at an AISC of US$932 to US$1020 per ounce. The mid-point of the Company’s forecast all-in site cost estimate for the 2022 financial year is US$976 per ounce, which is 7 percent higher than the actual average production cost achieved in the March quarter and 4.5 percent higher than the March 2022 year-to-date cost.  

Perseus’s hedge position increased by 83,835 ounces since 31 December 2021, which means that 23 percent of the Company’s gold production is currently hedged for the next three years at a weighted average sales price of US$1805 per ounce.  

The Company’s strong net cash position and the acquisition of Orca Gold which will be completed before the end of May, sees the Company well positioned to maintain its gold production growth momentum over the medium term. 

This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.

"Michael Kodari is one of the world's most consistent, top performing investor. A philanthropist and one of the prominent experts of the financial markets, he has been referred to as ‘the brightest 21st century entrepreneur in wealth management' by CNBC Asia and featured on Forbes. Featured on TV as the "Money Expert", on the weekly Sunday program "Elevator Pitch", he is recognised internationally by governments as he was the guest of honour for the event "Inside China's Future", chosen by the Chinese government from the funds management industry, attended by industry leaders, when they arrived in Sydney Australia, on April 2014. Michael and George Soros were the only two financiers in the world invited and chosen by the Chinese government to provide advice, and their expertise on Chinese government asset allocation offshore. With a strong background in funds management and stockbroking, Michael has worked with some of the most successful investors and consulted to leading financial institutions. He was the youngest person ever to appear on the expert panel for Fox, Sky News Business Channel at the age of 25 where he demonstrated his skillset across a 3 year period forming the most consistent track record and getting all his predictions right over that period. Michael writes for key financial publications, is regularly interviewed by various media and conducts conferences around the world."

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