Perseus Mining Limited

Good morning and welcome to the Perseus Mining Investor webinar and conference call. All attendees are in a listen-only mode. If you would like to ask a question directly to the company, please use the raise hand function within Zoom. For those phoning in, dial star nine. I'll now hand over to Perseus Mining CEO and Managing Director, Jeff Quartermain. Thank you, Jeff.

Thanks, Nathan, and welcome to Perseus' webinar to discuss our September 23 quarterly report. As Nathan said, my name's Jeff Quartermain and I am the CEO of Perseus. And as in the past, I'm joined on this call by our CFO, Leander Bruin. We'll both be available to answer questions as needed later in the call. Today, we're speaking to you from our Perth office rather than on site, as we have in the past. We've recently completed our quarterly review of our operations, so there's no need for us to apologise in advance for any blackouts or communications issues as we sometimes need to do at the start of these calls. The agenda for today's call is that firstly, I'll provide an overview of what Perseus has achieved operationally during the September quarter, and then follow that up with a Q&A session in which Leanne and I will be able to address any questions that you may have regarding the quarterly report or indeed our business in general. I'll keep my presentation as brief as possible as all the details that you need to understand that Perseus has achieved during the quarter are fully documented in the market release that was published earlier this morning. But let me highlight a few key points, if I may, and then let's discuss the detail. For those of you who are listening to the call on your computer, you should be able to track my comments visually on the presentation on your screens. Before I start, though, with the specific results, I must say that the team has delivered yet another strong performance this quarter, not only in terms of gold production, all insight costs and cash flow, as you'll hear in a moment, but right across the company. But what's not necessarily obvious from the results, though, is the circumstances under which these results have been achieved. This quarter rainfall in the parts of West Africa where we operate has been very, very heavy indeed. And at Sisingi in particular, where 766 millimetres of rain fell during the period. There was quite a bit of disruption given where we're actually mining. And notwithstanding this, the Yeori and the Yedikan operations have not only made up the shortfall from Sosingi, but outperformed their respective internal targets, resulting in a very good group performance, highlighting the benefits of having multiple minds in our portfolio. And once again, highlighting the resilience and adaptability of our team that's become quite a hallmark of this company. So without further ado, let's turn to the scoreboard and just see what I'm talking about. So I'll just move on with our cautionary statements that you're familiar with. and look at the given overview of the operating results. So once again, as we say, purchases continue with some market-leading performance. We produced 132,804 ounces of gold this quarter, which was down slightly on the record performance of the previous quarter. Our oil and site cost at US$937 per ounce was about US$70 an ounce lower than the last quarter. Our average gold sale price achieved was $1,936 an ounce, slightly up on June, which gave us a cash margin of US $999 per ounce, which was 8% higher than previously. This translated into cash flow, notional cash flow of $132 million for the quarter, which was slightly up on June. the previous period and resulted in us having a cash and bullion balance at the end of the quarter of 594 million US dollars, which was 72 million more than the position as at the end of June. So in summary, Perseus is very, very well positioned to achieve our guidance for the half year and very firmly on track to fund future growth and to continue capital returns to our shareholders. Now, if we run through each of the mines fairly quickly to see where these results come from, Yayori was the major contributor producing about 56% of our total production or about nearly 74,000 ounces. Production costs were at $568 an ounce, or all-insight costs US$77 per ounce. Very, very low in global terms. But going forward, we are likely to see some upward pressure on the all-insight costs due to increased fuel and mining costs that we expect to see in the current quarter. Sixty five thousand ounces of gold was sold and the average price for Yori was one thousand nine hundred and forty nine dollars an ounce, which gave a cash margin of US one thousand two hundred and seventy two per ounce, which is fairly outstanding. All things considered. In terms of the reconciliation between our block model and mill for the last three months, it was about 20% positive on tonnes, 8% negative on grade, giving an overall 10% positive on contained ounces. And that's within market, within industry standards, I mean, and certainly reflects the MIK modelling that we technically use. During the quarter, we did update details of our mineral resource and reserve estimate for the mine and produced a feasibility study on the CMA underground operation. And that was released to the market in August. And then we updated our life of mine plan for the entire operation later on in September. So Yayori has had a very good quarter indeed. Looking at Etican, Etican's also had an excellent quarter, and it did about 37% of our total production, nearly 48,500 ounces of gold produced there, at an all-in site cost of a touch over US $1,000 an ounce, which is an exceptionally good performance at Etican, and certainly better than what we saw from the mine several years ago. Our sales were done at an average price of $1,910 an ounce and the average margin achieved there was $832 US an ounce. Now this was a really very good result actually. The rainfall at Etican during the quarter was about 501 millimetres, most of which fell during the month of July which set us back a little, but we were able to reset plans and then to outperform for the last two months of the quarter. Now, the reconciliation between Block Model and Mill at Etican has been very, very good as well over the last three months. 3% negative on tonnes, but 23% positive on grade, giving a total of 18% positive on contained ounces. Now, that is a little higher than you'd be totally comfortable with, although high is good, obviously, but we'll keep a close eye on things as we go forward. And if this trend is sustained, then we may need to take a look at our model more closely. One thing post the end of the quarter, I think an important milestone was achieved, and that was when a moratorium was declared over the mine take area for the Inkasua deposit. This is a discovery that we've made just north of the of the Etikun Mill. That was declared on the 19th of October. And what it means is that we can now commence outstanding actions to bring that deposit into the mine plan. And we're expecting that all preparations will be complete and we'll be able to start mining at Nkosuo in May next year. Sasingi, as I said, was severely impacted by rain during the quarter. 766 millimetres of rain fell there and more than half of that was in the month of August. So it really did play havoc with our production. The total production for the month was only 10,570 ounces of gold, representing about 8% of our production total. The costs were very high compared to historical performance at Sisingi, and that was a direct result of the low ounces of gold that were produced. And also during the period, our sales were down somewhat. Each of the sales were done at $1,974 an ounce, but the sales in total were down, impacted by the timing of gold shipments, in part as a result of weather as well. We did make a modest loss, unfortunately, at Sisingi this month. But the good news is that the shortfall in production and earnings that occurred in Q1 are expected to be recovered in the current quarter as the weather has abated. and we believe that overall production will be in line with our market guidance range of $27,500 to $32,500 for the half year, with all in-site costs also in the guidance range of $1,700 to $1,900 an ounce. So we do expect that there'll be a sharp turnaround this quarter, and already we've seen that in the month of October as the place has been growing been drying out. Now, one of the things that has been quite notable during the quarter is that we've got very, very positive reconciliation between the block model and mill in the last three months, particularly in the FIMBIASO West deposit. Now, we had 98% positive on tonnes, 15% positive on grade, so an overall 127% positive on contained ounces. Now, what this is all about is that what this additional production has come about from is from grain control drilling, which is very much more closely spaced than the wide space drilling that was used to calculate or to estimate the block model. And it's quite apparent that, in fact, there is a lot more mineralization in the FIMBIASO deposit than we originally envisaged. And Recent investigation indicates that this strong negative in the upper benches is not something that's going to change going forward. In fact, we have noticed that, in fact, it continues at depth. and is going to necessitate a reassessment of the pit and potentially a very strong potential exists for us to incrementally extend the life of that particular pit and the overall Sasingi operation well beyond the current fiscal 26 as currently estimated. So while their production has been disappointing at Sasingi during the quarter, it's not all bad news, certainly looking forward there. Now, in terms of production, we've guided the market to a total of 242,500 to 272,500 ounces for that period. All in site costs $10.80 to $11.90. Now, where we sit I think that, you know, data up to the 20th of October, we're well and truly towards the upper end of that production range and our costs, as you heard, at the end of the September quarter were well below the bottom end of that cost range. Now, we will see a slight increase in costs in this next quarter, but certainly we're going to, we believe, finish the quarter very strongly relative to that guidance range that is already established. been in the market. So clearly there's no change to the guidance that we have given to the market. Now, pleasingly, this production that's been revealed here has been done in a very sustainable, safe and sustainable manner. We have clear evidence that our Safely Home Every Day, our SHED program, which is a safety program that's been implemented across all sites in conjunction with a fatal risk management exercise is having benefits and we're starting to see a decrease in the total recordable injury frequency rate, the TRIFA, relative to the previous quarter. So safety is an absolute priority right across all three sites and certainly the investment that we're making in those programs is resonating very well with our staff and having the desired effect. Our work with our host communities is continuing. We're continuing to make a major contribution to the economies of all of our host countries and to be employing large numbers of local and national people, so something like 95% of our workforce. across the company comes from the local host countries, which is clearly very beneficial for those economies and for the people themselves. And I'm very pleased to say that during the period we've had no significant community events. So our relationship, our license to operate is sound and environmentally we continue to to work in a responsible manner. We've had a very minor increase in Scope 1 and Scope 2 greenhouse gas emissions, but that's more of a rounding error than anything. But we've certainly had no significant environmental or tailings issues, and we're managing that part of the business very well. Now, I mentioned growth before, and that's certainly a question that comes into mind when looking at the company and looking at the size of the balance sheet that we have. We're certainly very engaged in the organic growth side of things. And as I've already said, we've put out some releases during the quarter about the development of the underground operation at our Yayoi mine. In the process of coming up with that, we've extended the life of the mine by 12 plus years to 2035. Now, you know, we fully expect it'll go well beyond that as we continue drilling down dip, but certainly there's been a marked increase in the resources and the reserves around Etican around Yayoi and that operation, you know, the life of that has been well established. So that's been a strong plus in the organic side of things. Certainly the exploration has been encouraging. I mentioned the Nkosuo deposit that we picked up. We've been able to incorporate quite a bit of that lease, that exploration licence that hosts the Nkosuo deposit into the Nenuncour mining lease and You know, we'll be moving forward on that. But as to the remainder of the Agikusi lease itself, exploration license and the DML Agikusi license and Dominasi, there are a number of targets on there that we're pursuing and we have every confidence that we're going to. come up with some further deposits before too much longer as well. So that's looking quite encouraging. Else in Cote d'Ivoire, most of the exploration activities are focused around Yayoi. certainly looking at that northern plunge on the CMA underground structure, and that's starting to show some pretty interesting numbers coming through as well. And as I said earlier on, we do expect that while we've identified 12 and a half years there for the moment, that will get a lot larger as we go forward. We've also run a couple of programs up around Sisingi and identified mineralisation that was previously not identified, and then that needs further infill drilling. But we're very confident that Those structures will deliver additional tonnes of ore to go through the mill. Now, they won't be at the same grade as what we used to mine at Sasingi, but they'll be profitable ounces and will add to the life of Sasingi going forward, which is encouraging. And of course, in Sudan, there's been limited field activity as we have been re-establishing ourselves in country, putting in place security arrangements, which I'll refer to in just a moment, speaking of it. So people are well aware that conflict has been taking place in Sudan since April, which necessitated us to pull back from the country and definitely pull back from our potential decision to move into development mode there as we were planning to do. So what we've basically done is pull back, although we have recently gone back to the country and we're establishing our security structures with the aim of as soon as they're in place and to our satisfaction to recommence drilling on that site and to just continue to expand the mineral resource and all reserve until such time as we get comfortable with the country now when that might be it's very difficult to say because there's no clear path to resolution of the dispute but nevertheless drilling activities will be conducted and they'll be conducted in a safe manner and none of our people will be put at risk so That is for the future. In the meantime, we've been working with our host communities, particularly the ABAPTA community. We've signed the first of our consultative committee framework agreements there. So we're working with that group and they're, in fact, participating in the security arrangements that we're putting in place. So Sudan is moving ahead, but albeit at a very different pace to what we contemplated several quarters ago. Now, the other subject, of course, is inorganic growth. And we've made it quite clear that, you know, in the short term, we're very, very focused on continuing to produce over half a million ounces a year, which we are comfortably doing. But longer term, we're committed to increase the size of our portfolio and to upgrade its size, quality and geographic distribution. I've mentioned the organic activities that we're pursuing. But in addition to that, we believe that there is very strong growth opportunity through inorganic means as well. We do have a very significant financial capacity, approximately 900 million US dollars when you add together our cash balance plus the undrawn line of debt of 300 million that we have. And we have the human capacity to engage in these activities and to deliver very decent economic returns for our company, provided, of course, that we can strike an acceptable balance of risk and return, which is very, very key in terms of investing on the African continent. Now, we do maintain a very, very active watching brief for opportunities. We do evaluate lots and lots of opportunities. including both pre-development projects and existing production. I can say quite candidly that identifying opportunities is far more easy to do than identifying economically profitable opportunities. But nevertheless, we do look very closely and I'm very sure that before too much longer, we will be in a position to expand our portfolio through inorganic means. Now, before I do conclude, let me just say, I'll repeat the point that I made at the start of the call. Perseus has had another very good quarter on all fronts, including gold production, all insight cost, cash margin and cash flow generation, and indeed business development. And pleasingly, this work has been conducted in a safe and a sustainable manner in line with our targeted standards. We have delivered gold production and all inside costs that have firmly put us on track to comfortably achieve our December half-year market guidance and keep intact our record of doing what we say we're going to do, something that is key to the ethics of this particular company. Our all-insight costs continue to be very competitive in global terms, and we're managing our business successfully in tough economic and geopolitical times. And on this score, I do repeat that, you know, the battle to contain our cost base at the current very low levels is challenging, and we expect that in the incoming periods there will be some increases in all-insight costs. But in saying that, we do still expect to perform well very well relative to our market guidance and continue to outperform most of our peers. One thing I'd just say is having since the last webinar, I've met with a lot of our investors and there are a couple of points that they have raised repeatedly with me that I should mention on this call. Now, one of those is the size of our significant cash balance and what we plan to do with this. I've already made reference to that and I repeat the point that we do intend to continue to grow our company as and when value of creative opportunities arise and when that occurs we won't hesitate to deploy capital accordingly in addition in the immediate future we will continue with our existing capital management strategy of declaring a base dividend supplemented by a bonus dividend or potential share buyback or capital return, depending on the level of excess cash available when that dividend is declared. But that is certainly part of our business and will continue into the future. Under no circumstances, at least while Leanne and I are at the helm of Perseus, we'll be wasting our shareholders' hard-earned money on poor investments, and of that you can be absolutely sure. I know that that is something that, Some investors are concerned about that we will feel compelled to spend when it's even if the opportunities aren't great. I can assure you that will not happen. The second question that's been raised by many investors relates to the geopolitical risk associated with our business. Given the stream of negative publicity arising from a series of coup d'etats in the in various parts of sub-Saharan Africa, region of Africa where we do not operate, I should say. As you know, Perseus' operating mines are located in Ghana and Cote d'Ivoire, arguably the most stable jurisdictions in West Africa. Now, unlike their neighbours of Mali, Burkina Faso and Guinea, the politics of Ghana and CDI, Cote d'Ivoire, are relatively stable. That's not to say that Ghana does not have economic challenges at the current time, nor to deny that Cote d'Ivoire experienced a civil war over a decade ago. But in current day terms, by comparison to other jurisdictions, Cote d'Ivoire and Ghana are by far the most stable and preferred investment destinations in the region. The point is that Perseus has deliberately established a geopolitically diversified asset portfolio to accommodate these political cycles of its hosts. host countries and the inherent level of geopolitical risk associated with Perseus is significantly lower than that of its peers, who offer either single country exposure or exposure to some very high risk jurisdictions in sub-Sahel Africa. Now, as a consequence of that, I would argue that the discount that the market applies to Perseus attributed to its African exposure is significantly mispriced, which in itself creates an opportunity for astute investors. Now, finally, in conclusion, I want to acknowledge, as I have done in the past, the contribution that's been made to the success of Perseus over many years, but in particular, the last three months by all of the men and women who work for Perseus in the four countries in which we operate, making up both our management and operating teams. You continue to do an outstanding job and I sincerely thank you all on behalf of shareholders for your great efforts. and in continuing to deliver on our promises. And I know that quite a number of our people would be on this call today. So thank you very much, everyone, for your attention. This brings my presentation to a close. And now Leanne and I are happy to take any questions that you may have. Over to you.

Thanks, Geoff. If you would like to ask a question directly to the company, please use the raise hand function within Zoom. Okay, your first question comes from Reg Spencer at Canaccord. Thank you, Reg.

Thanks, Nathan. Morning, Jeff. Congratulations on a very good quarter. Maybe just an observational question on the macro. A couple of quarters ago, we started to see some evidence of some cost inflation. How is that tracking from what you guys can see on the ground? Labor rates, fuel, et cetera, et cetera.

Okay. Labor rates, for instance, they're in line with what we would see everywhere. In fact, if anything, they're possibly arguably slightly lower than you would see in Australia. Fuel has been interesting because up until very recently, we experienced some inflation in fuel in Ghana, but the fuel price in Cote d'Ivoire was low. controlled by the government. But I think that control has come off during the course of this month, actually. And we have seen an increase in fuel costs, which will flow through to the bottom line. I think where we are also likely to see some costs as in our mining costs where our contractors are exposed to normal inflationary processes through on tyres, spare parts, et cetera, et cetera. So, you know, there will be some increases on there. But generally speaking, we're not seeing massive cost inflation. We do work very hard at keeping them under control. We have continuous improvement programs running at all three sites where we look for opportunities to take costs out of our business. Now, obviously, as you mentioned, continue to do that, it becomes more challenging to find new areas to reduce your cost base. But that's the challenge for us. And that's a challenge that's very happily accepted by our team.

Excellent. Jeff, you mentioned before capital management and how that might sit relative to your desire and needs to look at further external growth opportunities. Is that a timing issue? Like if you can't find a good enough asset in, say, two years or three years, you know, because if we look at our own forecast on cash flow, you might have as much cash equal to your market cap in about three years time.

We'd like our market cap to go up if you don't mind.

Thanks very much. Well, let's say, okay. But is there a time limit that you would want to see before you would look at a buyback or a major special dividend or huge capital return to shareholders? Or that's just going to be an ongoing process and you're going to continue to preserve that cash until such opportunity presents itself?

Well, look, every six months when we declare our financial results, we look at this particular question and we examine the situation on its merits. I mean, and what gets taken into account is the opportunities that sit before us and how likely they are to be realised. I mean... We don't want to leave ourselves in a position where we can't achieve our growth targets because we've given all the money back to shareholders. But having said that, we also don't want money sitting there on the balance sheet doing nothing indefinitely. So, look, it's going to be a situation that we evaluate on a regular basis. And, you know, I think shareholders can trust us to make appropriate decisions when the time comes.

Great. Thanks very much, Jeff.

Appreciate it. Thanks, Reg. Thank you. Your next question comes from Alex at CityDate. Thank you. Go ahead, Alex.

Hi, Geoff. If I look at the group exploration spans stripping out Maya sand, September quarter looks like one of the lightest quarters for some time. Is this a function of weather over the quarter? Sorry, go ahead.

No, it is. It was very wet. You can't get out and about into the field when things are saturated like that. So there wasn't a huge amount of field work during the quarter.

Okay. And in terms of the explorations, our programs that you've outlined, is there any particular program that you think is more promising in terms of ounces growth?

We'd like to think that they're all promising, my friend. But, look, I mean, I think we do expect to see some good outcomes in Etican from those programs there. And, of course, the work around Yayori is, you know, is very... Very distinct, actually, that that is adding ounces. Now, that'll sort of slow up a little at Yayori until we get underground, and then we'll be drilling from the underground platform rather than from surface. So there will be a slight hiatus at Yayori in terms of adding ounces. We do expect that once we get underground and can do exploration more cost effectively, then we will see those answers come back. Sasingi is the interesting one, though. I don't think we're going to turn Sasingi into a... tier one or even the tier two asset. But we do see opportunity there to add several more years to the mine life. It won't be massively, you know, low grade ounces, sorry, high grade ounces, we don't think based on what we can see. But certainly, you know, what we've done at Sasingi is agreed amongst ourselves that we're targeting to extend the mine life to five years from now just as at eddy can internally well while i was there last week we agreed that the target we would set ourselves was to increase the life of mine by 10 years so we do have these internal targets that we're going to pursue and we wouldn't establish those targets if we didn't think we could achieve them now it remains you know the work remains to be done and it may prove that That's beyond us, but we are optimistic right across the board that we will deliver those outcomes. Now, the other thing I should say is that we're also looking at bringing in some greenfield opportunities into the business as well and starting to take a longer term view around organic growth. in areas away from existing infrastructure. Now, we'll need to await the completion of some of those things before we can talk publicly, but certainly we have some very interesting opportunities ahead of us to expand our footprint in an exploration sense more broadly across the African continent. But this is one of these things that we'll announce in due course. Great, thanks. That's it for me. Thank you.

Thank you. There are no further questions at this time, so I'll hand back to Geoff for closing remarks.

Okay. Well, look, thank you very much, and Leanne's very grateful that she got off lightly today. But nevertheless, thanks very much for your attention, everybody, and we look forward to bringing you further good news as the year unfolds. Thank you.