A research report from Argonaut has highlighted the potential valuation upside of Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) after the miner released its annual resource and reserve statement for its three operating West Africa assets — Edikan, Yaouré and Sissingue.
After mining depletions during the 2024 financial year, the company has a reserve base totaling 2.9 million ounces for the three assets.
The Perth broking form has retained its ‘Buy Recommendation’ on PRU, and slightly increased its price target from $2.90 to $3.10 per share, citing “gold price movements and mine life extensions at Sissingue”. This compares to the current share price of around $2.54 per share.
Perseus’s West African assets
The Yaouré mine's reserves as of June 2024 remained steady year-over-year at 1.73 million ounces, despite mining depletions of 298,000 ounces. The addition of 52,000 ounces of reserves from the Zain deposit was a significant contributor to this stability. Future growth prospects at the CMA underground site were emphasised during a recent site visit, with plans to commence underground drilling next year to extend the mine-life beyond FY35.
At the Edikan mine, reserves amounted to 909,000 ounces as of June 2024, reflecting a decrease of 220,000 ounces year-over-year due to mining depletions and adjustments. While a small addition of 44,000 ounces came from updates to the Nkosuo pit design, sustaining the current 200,000 ounces per annum production rate beyond FY29 appears challenging without addressing the current A$1,021 per ounce all-in sustaining costs (AISC).
Meanwhile, at Sissingue, resource and reserve growth offset depletion for FY24, extending the mine-life to FY28. This update prompted an 11% upward adjustment to the FY27 production profile, reflecting the extended mine-life benefits.
Overall, the production outlook for FY27 remains largely unchanged, based on reserves at Edikan, Sissingue, Yaouré, and Nyanzaga mines.
Argonaut’s valuation
“Our valuation of PRU is $3.10 per share based on a 50/50 blend of Argonauts price assumptions and spot price.
“Whilst we see some good organic growth potential at Yaouré, PRU’s has grown to a size where it is more reliant on inorganic opportunities to grow its production profile. The recent 17.3% strategic investment in Predictive Discovery (ASX:PDI:ASX) highlights this strategy unfolding.
“Management has a strong track record of prudent M&A shown by the Yaouré and Nyanzaga acquisitions.
"We back management to continue with this track record and think the Bankan asset ( Predictive Discovery Ltd (ASX:PDI, OTC:PDIYF)) would be a good fit in the PRU portfolio.”