Perseus Mining Limited (ASX:PRU) is, in most respects, in the best-ever condition financially and operationally, according to its managing director, “and is very well positioned to continue the strong growth that has been underway for some time”.
Commenting on the company’s half-year report, Jeff Quartermaine said the strong financial results were a direct result of continuing strong production and cost performance at the two operating mines in Ghana and in Côte d’Ivoire.
There were 140,555 ounces of gold produced in the six months to December 31, 2018, which was 30% higher than in the corresponding period of 2017.
The weighted average all-in site cost, including the costs of production, royalties and sustaining capital, was US$999 per ounce, a 10% reduction on the same period in 2017.
In the six months, Perseus recorded a net profit after tax of $10.4 million or 1.0 cents per share, compared to a net loss after tax of $13.9 million in the six months to December 31, 2017.
Revenue and sales up
Among the factors for this were:
- A 69% increase in revenue to $281.6 million, resulting from 59% higher gold sales of 165,066 ounces at a 3% lower weighted average gold sales price of US$1,236 per ounce.
- 72% increase in the cost of sales due to the inclusion of costs from the Sissingué mine which reached commercial production on March 31, 2018.
- Earnings before interest, tax, depreciation and amortisation (EBITDA) of $87 million, an increase of $55.9 million, or 80% more.
- Depreciation and amortisation expenses of $78.2 million, an 86% increase, due to higher rates of mining and processing and higher deferred waste amortisation at Edikan, and the inclusion of the full development cost of Sissingué within the capital base.
- A foreign exchange gain of $16.4 million, compared to a loss of $3.3 million in the prior corresponding period, mainly due to devaluation of the Australian dollar against the US dollar and revaluation of an intercompany loan.
- An income tax benefit of $4.9 million.
Cash and bullion in hand of $92 million
At December 31, 2018, Perseus had total cash and bullion on hand valued at $92 million, $46.7 million more than on December 31, 2017.
Net assets at the close of 2018 were $736.5 million, or 71 cents per share, after accounting for cash and bullion on hand as well as interest-bearing liabilities of $68.7 million.
Perseus’ unchanged production and cost guidance for the 2019 financial year.
The company’s financial performance is expected to continue to improve on the back of continuing solid gold production and an improving cost structure.
This is due to the contribution of the relatively low-cost Sissingué mine and a reducing cost base combined with continued strong production at Edikan mine reflecting the impact of an updated life of mine plan.
Quartermaine added: “In the coming six months, we expect to commence development of our third operating mine, Yaouré.
“When this mine comes online in early 2021, annual production levels should be in the order of 500,000 ounces of gold at an AISC heading to approximately US$800 per ounce.
“Subject to the gold price at that time, this production and cost performance should enable Perseus to generate material amounts of free cash flow and record significantly greater profits.”