Perseus Mining Limited (PRU) has announced strong financial results for the December 2023 half year, with CEO Jeff Quartermaine highlighting the company's successful performance and strategic growth initiatives. The mid-tier gold producer exceeded its production targets, reporting approximately 262,000 ounces of gold at an all-in site cost of $979 per ounce.
Revenue and profits saw a significant increase, with a 10% rise in revenue to $489 million and a 21% increase in profit after tax reaching $165 million. An interim dividend of AUD 1.25 cents per share was declared.
Looking forward, Perseus is set to maintain its cost levels and expects to produce over 500,000 ounces of gold in the upcoming half of the financial year. Strategic moves include a joint venture with a Saudi-based conglomerate and a potential OreCorp takeover, which is awaiting approval from the Tanzania Fair Competition Commission.
Key Takeaways
- Perseus Mining exceeded production targets, producing approximately 262,000 ounces of gold.
- The company achieved an all-in site cost of $979 per ounce and declared an interim dividend of AUD 1.25 cents per share.
- Revenue and profit after tax increased by 10% and 21% respectively.
- Perseus expects to produce over 500,000 ounces of gold in the second half of the financial year.
- The company is exploring growth through a joint venture and potential acquisitions, including the takeover of OreCorp and interest in the Akyem asset in Ghana.
Company Outlook
- Perseus Mining anticipates maintaining its current cost levels while increasing gold production in the next half year.
- The company is actively exploring opportunities for expansion in the Arabian and Nubian Shield through a joint venture.
- There are ongoing discussions regarding the potential extension of the Yaouré and Sissingué mines in Ivory Coast.
Bearish Highlights
- No specific bearish highlights were mentioned in the call.
Bullish Highlights
- The company's financial position remains strong, with increased revenue and profit.
- Perseus Mining is confident in the value of its takeover offer for OreCorp, with approval expected soon.
Misses
- There were no specific misses reported in the call.
Q&A Highlights
- CEO Jeff Quartermaine expressed optimism about the potential acquisition of the Akyem asset in Ghana, citing Perseus's strong position in the country.
- The company is conducting due diligence to ensure the Akyem asset aligns with their investment criteria.
- Perseus Mining is open to further inquiries and is optimistic about future prospects and growth opportunities.
Full transcript - Perseus Mining (PRU) Q1 2024:
Nathan Ryan: Good morning and welcome to the Perseus Mining Investor Webinar and Conference call. [Management Instructions] I'll now hand over to Perseus Executive Chairman and CEO, Jeff Quartermaine. Thank you, Jeff.
Jeff Quartermaine: Thank you very much, Nathan, and welcome to this webinar today to discuss our December '23 half year financial results. As usual, I'm joined on the call with our CFO, Lee-Anne de Bruin who is working with me here in Perth and Lee-Anne is going to do most of the heavy lifting today taking you through the results. And both will be available to answer questions at the conclusion. Before I pass to Lee-Anne, I may just say that the results that we published today is the financial continuation of some very strong performance that we reported about a month ago in our quarterly report. And what we have done through the strong operating and financials performance, I believe, is to continue to cement our position as a very profitable mid-tier gold producer that consistently delivers on its promises and exceeds our targets. So without further ado, I'll pass to Lee-Anne to take you through the results. Thanks, Lee-Anne.
Lee-Anne de Bruin: Thanks, Jeff. It's pleasing to be able to present another set of strong financial results for the Perseus Group. As always, this is achieved through the immense efforts of our Perseus team and I would note upfront that Perseus has made a change to its presentation currency from Australian dollar to U.S. dollar in this half year, and going forward, we'll present all future financials in U.S. dollars. For six months to December '23 have delivered a market leading performance, keeping Perseus firmly on track to fund its growth objectives and to deliver benefits to all our stakeholders. As you'll see in this slide, our gold produced for the 6 months was circa 262,000 ounces, sitting well in the upper half of our production guidance range for the period. We achieved an all-in site cost of U.S.$979 per ounce below the cost guidance ranges. And our average gold price achieved was U.S.$1,950 per ounce against an average spot price for the period of circa $1,950 per ounce. Notional cash flows for the period were $254 million, up 7% on the previous comparative period, taking our net cash and bullion balance to $642 million, an increase in the period of U.S.$120 million. Leveraging the strong operational performance, Perseus has gone on to produce another strong performance against the key financial metrics against the comparable period. Revenue aided by improved average gold sales was up 10% at U.S.$489 million. Profit after tax up 21% at U.S.$165 million despite a U.S.$19 million or almost 100% increase in our income tax expense for the period. Operating cash flows remained steady, increasing 2% on the previous comparable period despite a 270% or $17 million increase in our taxes payable due to increased taxes paid at Edikan of improved performance and withholding taxes paid on dividends declared from the Ivorian operations. Net tangible assets increased 16% to U.S.$1.3 billion and this is largely due to the increased cash and cash equivalents of U.S.$90 million, an increase in stockpile inventories of U.S.$32 million and the increase in our equity investments through the acquisition of the 19.9% or OreCorp Limited, which owns the Nyanzaga development project in Tanzania. And in line with the company's dividend policy, our Board have considered and declared an interim dividend of AUD 1.25 cents per share for the period. The growth in earnings has continued, which is evident in the graph in front of you and [indiscernible] performance over the period. Basically, we've got against the 10% increase in revenue, EBITDA has increased 18% on the previous comparable period to U.S.$281 million, with a continued focus by our teams on keeping cost of sales flat against the half year '22. Gross profit from operations was up 26% due to increased revenue with depreciation and amortization flat at U.S.$70 million for the 6 months. Earnings per share is up 19%, delivering 10.61 cents per share, whilst earnings per ounce up 26% at U.S.$656 per ounce. The operating cash flow from operations was up U.S.$211 million, building on our ongoing growing cash flow and has delivered for us an operating cash flow per share of 15.4 cents per share. and an operating cash flow balance of U.S.$807 per ounce. The growth in cash flow has further strengthened the balance sheet of the group ending the 6 months with $642 million in cash and bullion on our balance sheet. Net tangible assets, as I said previously, is up at $1.3 billion or U.S.$0.94 per share. We remain with no interest-bearing debt, however, we still have our undrawn capacity of U.S.$300 million available for future growth opportunities and obviously, our future shareholder returns. As you can see from this slide, Edikan, Yaouré and Sissingué continue to produce attractive margins. We're maintaining the All-in Site Cost and predict production consistency for the operations has enabled the group to leverage the high gold prices generating steady increases in the cash margins and our cash balances. On this slide, wish to make the point that in line with Perseus dividend policy, where we aim to reward shareholders while maintaining our balanced capital structure and, of course, capacity to fund our corporate growth giving consideration to that the Board declared an interim dividend of AUD 1.25. And this equates to a 1.33% annual yield. Thanks. I'm now going to hand over to Jeff to conclude. Over to you, Jeff.
Jeff Quartermaine: Thanks very much, Lee-Anne, for that very comprehensive run through, which clearly establishes that the recent past has been a very good period for us. Just moving around on this presentation here, looking to the future, our guidance that we have given to the market for the second half of this financial year has remained steady on what was already circulated. This puts us into another position where we're expecting to produce in excess of 500,000 ounces again and to maintain our all-in costs not too distant from current levels. We've started off the period very strongly, I should say. And based on where we are almost 2 months into the first quarter, we are predicting at this stage of the game to finish in the upper half of the guidance range should everything stay normal from here on in. And our costs for the first month of the period are actually well below the bottom end of that cost range that we had forecast. And the very good cost performance this period is not a function of slowing up on mining activities. And in fact, actually, we've accelerated our mining¸ so it was just a very good performance across the board. Now what these excellent results have done, I think is, put us in the position, as Lee-Anne said, were not only are we able to return capital to our shareholders through our ongoing dividend policy. But it's also put us in a position to continue to upgrade the quality of our asset portfolio. And this is a very key consideration in the minds of many of our investors. Now I think people who have been following the company would have seen that we've made a number of releases to the market in the last couple of days. On Wednesday, we made an announcement about a joint venture that we have established with the mining arm of a Saudi-based conglomerate, where we have agreed to investigate, co-investing in opportunities in both the Arabian and the Nubian Shield. These areas are prolific with mineralization and extremely underexplored in relation to the rest of Africa, largely due to geopolitical challenges. I would say that in partnering with a Saudi-based company as we are doing, it will certainly assist us to navigate the cultural and geopolitical differences that are likely to be encountered in this part of the world, where we'll be targeting early-stage exploration in Saudi and later-stage projects elsewhere on the African continent. So that's an important initiative in our long-term growth projections. Yesterday, we put another release to the market outlining the exploration results that have returned from our drilling programs, organic growth programs at our Ivorian mine, Yaouré and Sissingué. The Yaouré in particular shows enormous potential for materially adding to our mineral inventory which in turn flows into the opportunity to extend the mine life of that mine for quite a number of years. As it stands, we have 12 years ahead of us of open pit and underground operations as per the DFS that was released to the market last year, but these results that were published yesterday suggests a material extension is certainly not beyond the realms of possibility. And similarly, at Sissingué, on both of the Sissingué and Fimbiasso mining leases. The drilling results there suggest the potential to extend the inventory and more importantly, extend the life of the Sissingué operation. Now as things stand, Sissingué has another 3 years of life ahead of it, but with this additional mineralization, a material extension for several more years is a possibility. We will release, of course, more information on this particular program as results come to hand and we will, of course, with the Yaouré and exploration around the Edikan mine. Now the other initiative that has been in the market of late, which is directly related to the upgrading of our Perseus asset portfolio is the takeover offer that we have made for OreCorp, which as Lee-Anne mentioned earlier, owns the Nyanzaga project in Tanzania now as people would be aware, we filed our revised bidder statement with the ASX last Friday and on Monday, our revised offer was distributed to OreCorp shareholders. The offer is now open and will remain open until March 15. We are somewhat intrigued by the thought processes that have been applied by the OreCorp Board in failing to acknowledge the superiority of Perseus' offer compared to the competition, but that is clearly a matter for them. We do hope though that they will reconsider their position. But as I've said in the past, the shareholders will determine the outcome. And we have absolute faith in the fact that they will more likely than not take note of the independent experts' appraisal of the value of the company and compare this to where Perseus offer sits and then make a logical choice. Our application to the Tanzania Fair Competition Commission, which seemed to be a point of distraction to the OreCorp Board has progressed very well. It's gone beyond the stage of advertising for comment and no objections were raised relative to our potential investment into Tanzania and we are now awaiting the formal approval of our application, which we are very confident will be received by the end of the month. Of course, at that point any question regarding the superiority of our offer will vanish and hopefully, nature will take its course. I don't wish to say a whole lot more on the takeover at this point. I think the choice is obvious. And for those OreCorp shareholders who wish to retain exposure to the Nyanzaga project and at the same time, of course, gain exposure to Perseus' impressive asset portfolio and operating results, as demonstrated by these excellent financial results today. We make the point that Perseus does trade very freely on the ASX and the TSX, and the stock is available for purchase with the cash that you will receive from us. So I think those couple of items I've just raised go very clearly to the point that Perseus is in an excellent position right now. We're generating very, very good results. We put ourselves into a very strong financial position, which allows us to consider carefully options to continue the growth of the company and firmly establishes as a leading mid-tier gold company. So with that, we will bring the presentation to a halt and invite further questions or any questions that you may have at this particular time. Thank you very much.
A - Nathan Ryan: Thanks, Jeff. [Management Instructions] Your first question comes from David Radclyffe at Global Mining Research.
David Radclyffe: So I appreciate you've currently got the bid out for OreCorp and you're looking for new opportunities in Saudi which just shows that you're at that phase of looking for new growth opportunities. So with that in mind, I was wondering whether you might potentially have any interest in the Akyem asset in Ghana, which Newmont has just announced that there's now a formal process for divesting that given the fact that it's obviously not something you have to build but is an operating mine today.
Jeff Quartermaine: Yes. We've noticed the publicity surrounding that. And I guess we have been aware that may have been a possibility for some time now. Look, Akyem is in our backyard, so to speak. We've been operating in Ghana now for well, actually since the beginning of this company, but certainly operating since 2012. So we certainly know our way around Ghana and have very strong relationships in country and have demonstrated our credibility as a respected partner of the communities and the government. So I think as a potential investor in that project, we're really well positioned. We're also positioned as you heard from Lee-Anne's account earlier with the cash on balance sheet and a very strong cash flows we are in a position where we could quite comfortably acquire that if the things stacked up technically. Now I might say we haven't done any due diligence at all at this stage of the game, and there is a process running or going to be a process running. But we are broadly familiar with the asset and as it turns out, a number of our employees were former employees of Newmont. So we do have a bit of an idea about the project, but we'll certainly investigate the opportunity. And if it makes sense, we'll take a very close look at the asset. And of course, it would fit very comfortably within our portfolio, if it meets our investment criteria.
Nathan Ryan: Thank you. [Management Instructions] And there are no further questions at this time. So I'll now hand back to Jeff for closing remarks. Thanks, Jeff.
Jeff Quartermaine: Okay. Well, thanks, Nathan. I think we've pretty much said it all at this stage of the game and certainly, there's a lot of information been published on the ASX platform today for people to really dive down into the details. Of course, if going forward, if there is any clarification required on anything that we've either said in our releases or stated on this call this morning. Please don't hesitate to contact us, and we'd be happy to expand where possible. But aside from that, we're looking to the future very much. There's lots of opportunities, and we have a very strong business here. So thank you for coming today, and we look forward to continuing to bring positive news.
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