Perseus Mining Limited

muted throughout the meeting.

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 will now hand over to Perseus Mining Executive Chairman and CEO, Jeff Quartermain. Thank you, Jeff.

Thanks, Nathan, and welcome to Perseus Mining's quarterly webinar to discuss our March 23, 24 quarterly report that went to the market this morning. Unfortunately, our CFA, Leanne De Bruyn, won't be with me today. She's currently traveling. I'll refer to you later on, but I'll do my best to answer any financial questions as well, of course, any technical questions or questions of a more general nature about our business that you may have later in the call. The agenda for this webinar is that firstly, I'll provide you with an overview of what Persis has achieved operationally during the March quarter and then following, and also actually following the quarter, the quarter end, and then we'll have a Q&A session. For those of you who are listening to the call on your computer, you should be able to track the presentation visually on your screen. As usual, I'll try and keep my presentation as brief as possible. There's all the details that you need to understand Our achievements this quarter are fully documented in the market release that, as I say, was published earlier today. But before heading to the presentation, let me just highlight a few key points. Now, as the title of our quarterly report says, our team at Perseus has delivered another impressive operating performance this quarter, not only in terms of goal production or insight costs and cash flows, but also in our business growth area where we're endeavouring to progressively grow and upgrade the quality of our asset portfolio. Now, one of the very pleasing things about our March quarter is the consistency of our operating performance that underpins everything that we seek to do here at Perseus. Now, this quarter we produced on average 1,416 ounces of gold per day, every day during the quarter, compared to 1,415 ounces per day in the December quarter. The contributions for each of the three mines was also very similar quarter on quarter with Yayori contributing about 48% of production, Edeka in 39% and Sasingi 13%. That's not to say that we didn't face challenges from time to time. We certainly did and do. But our team finds a way to deliver. And once again, this quarter, they've done this very, very well. So notwithstanding the ups and downs of mining, I mean, after the first three months in Indeed, actually, just about the first four months of the six-month period for which we've provided market guidance on costs and production, we are once again well on track to comfortably achieve or possibly exceed in the case of production or coming underneath in the case of costs, the guidance that we've given to the market for the six-month period to June 30. So in other words, we're just simply continuing to do what we promised to do month in, month out, in line with our core value of achievement. So without further ado, let's look at the scoreboard and just see exactly what I'm talking about. So let me just move that on. Okay, in terms of our operating and financial results. So for the quarter, another strong performance, $127,000. 471 ounces were produced for the quarter at an all-insight cost of 1,091 an ounce. That's up a little on our previous quarter for the reasons that we articulated last quarter, and I'll come back to this in just a moment. The average sale price was $2,025 an ounce, which is clearly up on the previous quarter, giving a cash margin of $934 per ounce. and generating a national cash flow of near enough to $120 million US dollars for the quarter. Now, at the end of the period, we had $702 US million of net cash and bullion in our bank. And of course, no debt, $300 million of undrawn credit available, so near enough to a billion US dollars available to continue to fund the growth of the company and continue to return capital to shareholders. Now, you know, as I said, all three mines are performing well, consistently achieving or exceeding targets. The March quarter was no exception. And you can see from that chart that, you know, over a period now extending from early 2020, you know, we've had a case of rising production in a period where the gold price has been rising. Our costs have been relatively flat. And so we've been progressively increasing the margin and happily being able to sell more gold into that rising market, which has caused the strong generation of cash. Now, running through the three mines, 61,283 ounces of gold from Yayoi. Yayoi is clearly our major contributor. The production cost was huge. per ounce, all in-site costs of $1,025. Now, we did predict last quarter that we would have a slight increase in all in-site costs at Yayoi this quarter and next quarter, in fact, as we work to recover from a period of time where we endured very wet conditions and also some struggles with our mining contractor. Now, we are progressively making inroads into that. I must say that our mining contractor took exception to me publicly commenting on their performance last quarter, but the fact is that I wouldn't be commenting if they were hitting the target. So never mind, we're pushing through that and we're getting back on track. The cash margin of $984 per ounce generating 60 odd million per quarter is very healthy And I think it is pleasing is that on a reconciliation basis, the ore body is performing pretty well. I mean, in fact, actually, it's positive 15% in terms of contained ounces, a lot more tons than we were expecting and slightly down on grade. In terms of Etican, Etican's been a terrific performer yet again, nearly near enough to 50,000 ounces, 49,096 ounces for the quarter, performing very, very well right across the board. All of the All of the metrics are pretty much on line with where we were hoping to be. And at an all-insight cost of $982 per ounce. So, you know, Etican, the mine that, you know, was not particularly well regarded by many early in the piece, is really performing very well. And, you know, full credit to the team at Etican for delivering that performance. Once again, you know, notional cash margin of $1,054 US an ounce. so generating 50-odd million of free cash from the operations this quarter. And similar to Yayoi, the reconciliation of the block models of the mill is pretty even on tonnes, 12% positive on grade, so up about 12% in terms of contained ounces, so that's pretty pleasing as well. Sasingi's also been moving along fairly well after a fairly disastrous wet season last year, We've made some pretty strong inroads into turning the performance around at Sisingi and we're starting to see some reasonable results coming through. The costs are elevated relative to where we would have liked them to be, but there's a clear understanding of what that's about. And as I say, the inroads, the performance of our contractor there is very strong and we're in much better shape to face the next wet season when it comes around. Similarly, reconciliation to block model is very strong, you know, up 27% in terms of contained ounces. And we have been drilling around both Susingi and the Fimbiaso pits, and we will, you know, getting some pretty strong results from that. It's looked like we should be able to extend the life of the Susingi operation by a couple of years, but we'll be saying more about that in due course as the full sets of of results come to hand. So the three operations are running very strongly and that's put us into a position where in terms of our half year guidance of 226,000 to 254,000 ounces, we're really well positioned and similarly on the cost side. In fact, if we achieve our budgets for the next two months, we should be right at the top end of that range, if not a little over and under the bottom end of that cost range. So once again, pushing along very nicely relative to the targets that we've set. In terms of our financial position, as I said, US$702 million on the balance sheet at the end of March, zero debt with a US$300 million under all line of credit. And that has been accumulated after paying taxes, paying dividends to shareholders, and generally contributing to our host communities and host governments. So that's a fairly credible performance, I think, and certainly puts Perseus in a very strong position to look to the future. Now, the thing about it is that we are doing, you know, we are working in a very safe and constructive manner. Our safety stats are pretty well static on where they were previously. So we've been working very hard on our safety programs. We have a program called the SHED program, which is safety home every day, which keeps people very focused on their safety. And we also have a fatality risk management program working with both our employers and our contractors. And the safety thing is very, very important for us. And it is challenging in an African setting where people's cultural settings are different to to what we might be used to in Australia. But nevertheless, we are making very good inroads into that and people are performing very well. As I say, in terms of contribution to community, that's also been particularly strong, about 143 million US into our host communities or countries, I should say, over the quarter. As we have reported in the past, very high local and national employment rates, about 95%. Our gender diversity is reasonably stable, and it's low relative to Western terms, but I think that's a function of the cultural setting in which we operate rather than anything else. Environmentally, we're working along, you know, as we're targeting, remaining fairly stable in terms of carbon emissions, et cetera, et cetera. We've got no particular... environmental incidents during the period. Now, I mentioned at the outset organic growth. We have been working pretty hard on the exploration and study side of things to try to improve the life of mine, of each of the existing mines that we have. Now, we did put out a release in February documenting details of exploration success at Yayoi and also the Susingi-Kinbyaso operations. Anybody who would like to see the details should refer to that document. But the drilling has been going very, very well, particularly at Yayoi around the CMA underground at depth and also to the north. We seem to have identified another particular area we call Zane, which is well mineralized. And we're also getting some pretty interesting results out of the Yayoi pit itself, actually. We're not sure we fully understand the structural complexity in there, but it certainly looks as if the Ayori pit might be a little bit better than we anticipated. I mentioned before that we're working around the Fimbiaso area. We're also getting some pretty interesting results coming there. The assays indicate that mineralization is continuous down dip and a long strike. It doesn't go forever, but it's certainly enough to extend the life of the operation up there by a couple of years. So that's particularly encouraging. At Etican, we have been looking at the mining lease and the adjacent exploration permits. It's an interesting situation because a lot of our work at Etican, well, we started Etican in 2012. So in the early years, when we were looking at various deposits, we were using a very much lower gold price for optimizations, et cetera, than what would be reasonable today. So we're going back to take a look at some of those opportunities to see whether, in fact, with a higher gold price, we might be able to bring some of that mineralisation into our reserve inventory. We're also looking at exploration works on the newly acquired or relatively recently acquired exploration permits. Work this quarter has been postponed while we've been gaining land consent and access. And this has been made a little bit more complicated because of the very highly elevated cocoa prices. that are being experienced in West Africa. So people are a little reluctant to allow access to land if it means that they're not being compensated at current market rates for their cocoa trees. So there's been a fair bit of discussion around that, but we have actually reached agreement. And in fact, post the end of the quarter, the compensation money has been moving pretty clearly. We'll be getting access and working there during the current quarter. The other thing that we've done on an exploration front, which is is very interesting, I think, is that in January, we entered into a binding cooperation agreement with a division of Ajlan and Brothers, which is a large Kingdom of Saudi Arabia conglomerate. Now, what we're going to be doing with our friends at Ajlan is investigating various projects located both in Saudi itself and also on the African continent, particularly up in the north, where we're having a partnership with people from Saudi would be beneficial from a geopolitical perspective. We're going to be looking at early stage projects in the kingdom where the government is running a tendering program of tendering out properties to private companies. So that is one area that we'll be looking at. And as far as the North African projects are concerned, we are looking at early stage things, but more likely we'll be pushing towards projects that are PFS or DFS stage and can be advanced into development in the medium term using Perseus' in-house exploration and development skills. So this is a very, very exciting opportunity, really. I mean, you know, how successful it is remains to be seen, for sure. But certainly there's a lot of change going on on the African continent in terms of influence. The Saudis are very keen to invest in projects the minerals industry, and we're very keen to work with them to see if there isn't some mutual benefit to be derived. In terms of project development, our Maya Sand project in Sudan, as people are aware, activities were suspended for a period of time while the country sorts itself out. We have re-established ourselves fairly comfortably back on the site. Some time back in a services contract has been signed with a local drilling contractor. aimed at testing the exploration targets on the Block 14 block and also in the GSS pit. We do expect work to start on that in the June quarter and we'll be accumulating further drill results. Now, one of the things that we will be doing as far as Mayor Sand is concerned, I mean, we're not looking to develop that project anytime soon, but we will continue to drill it. And we are planning to update the feasibility study that was done for the project that was done under the CIM rules, which is the Canadian standards. And we will do that in order to be able to restate the reserve as a JAWC compliant or reserve rather than a foreign mineral reserve estimate. The point being that at the present time, there's something like 2.85 million ounces in that deposit. We believe that we can extend that well beyond that. And of course, that will then be added to the existing reserves at the three mines, plus what we picked up through the Nyan Saga project, which I'll talk about in a second. And that'll show that, you know, Perseus' total reserve inventory is pushing up towards the 10 million ounces in reserves, which is a fairly healthy position to be. Now, speaking of the Nyan Saga project, I guess people are well aware of the activities that Perseus has been involved with during the quarter. Now, on the 22nd of January this year, we announced our intention to make an off-market bid for all of the shares in Orcorp, who, of course, are the owner of an 86% contributing interest in the Nyan Saga project in Tanzania. In March, we received the Tanzanian Fair Competition Commission approval for our offer. And as part of those negotiations, we agreed to increase the government's pre-carried interest from 16% to 20%. Later in March, we elevated our bid from $0.55 to $0.575, and that resulted in the Allcorp board recommending our offer to shareholders. Now, since then, things have moved pretty quickly. So in April, post the end of the quarter, the offer was declared unconditional, having got over the 50.1% level, and we advised that we weren't going to be raising the offer beyond that point. Now, on the 17th of April, we passed the 90% ownership level in Allcorp, and we've commenced compulsory acquisition. So for all intents and purposes, Percy, the deal is finished, formally closed on the 19th of April, and we've been moving forward ever since. Now, I've just got back from Tanzania, and in fact, I mentioned Leanne, our CFO, earlier. She's on her way back from Tanzania. We were over there with Matt Cabotin, our head of project development, And we've been talking to the Tanzanian government and all key stakeholders that we could find around the place over the last week or so. I have to say that the response to Perseus becoming a partner of the government in Tanzania has been massively supportive and overwhelmingly strong, as it has been on the site indeed. So we're looking forward very much now to moving this project forward very, very strongly. There'll be three streams of work commenced almost immediately. One will be completion of the housing relocation and landowner compensation program that had been previously started. The second is to bring in a number of drill rigs to drill out the ore body. We believe there's a significant opportunity to extend the reserve beyond what had been previously stated with some additional infill drilling. The third line of work will be the front-end engineering and design program aimed at putting ourselves into a position where we can make a final investment decision to develop the Nyan Saga project later in the year, and then go into development, and that should take about 18 months to two years to reach commercial production. So it's a very, very exciting opportunity, this for us. It's going to add materially, we believe, versus his fortunes going forward. And of course, given our cash balance, we're able to fund that off the balance sheet, which makes the whole progression of the project so much easier. So very exciting and a lot of hard work's gone in over the last quarter, but it is starting to deliver some results for us and for our shareholders in particular. Now, one of the things that I've been talking to shareholders about a lot in the last three months is our capital management strategy. Quite clearly, we're generating significant quantities of free cash given the elevated gold prices and relatively low all inside costs that we've been achieving. Now, we have over time clearly articulated our plan to upgrade the asset, the quality of our asset portfolio through a combination of organic and inorganic means. And, you know, of course, to deliver this outcome in full, this will require us to use some of the cash reserves. For instance, the all-corp offer was a cash offer, and, of course, we have the capital program coming through from there. Now, notwithstanding these growth plans, and the growth plans are certainly delivering, as I say, when you add up the reserve inventory at the ANZADA level, Maesan and Etikun, Yayuri and Sasingi, it's becoming a very substantial number now. I'm not allowed to add them up myself because one set of those results is under CIMM and the rest is under JORC, but nevertheless, if you do the sums, you'll figure it out that there's a very substantial portfolio of projects there, which gives Perseus at this current time at least three projects with a life of mine of well in excess of 10 to 15 years. So a fairly sizable asset portfolio. Now, while we're seeing these growth plans, it is likely that there's going to be surplus cash available for distribution to shareholders over and above that which is payable under our existing dividend policy, which you'll recall is set to deliver a minimum of 1% annual yield. Plus what we've done in the past, of course, is to make various bonuses dividend payments as well. Now, at the end of each half year reporting period, our capital management plan is reviewed. And of course, this will happen once again at the end of or after 30th of June. And at that time, consideration will be given to the size and method of distribution of cash to shareholders. So in the past, that additional distribution has taken the form of bonus dividends. But we'll also look to see whether we should be considering capital returns or share buybacks, which tend to be favoured by some of our shareholders. So all in all, you know, Perseus' cash position is strong and benefits should continue to flow to our shareholders. So in conclusion, as I said at the start of the call, we've had another strong quarter on all fronts, including gold production, oil insight costs, cash flow generation and business development. And pleasingly, the work's been conducted in a safe manner, in line with the targeted standards, and in a way that has generated material benefits for all of our stakeholders, including our host governments, communities, employees, providers of goods and services, and our investors. And that is pleasing because that is the mission of Perseus Mining. Now, looking forward, our production and cost guidance for the six months of June set is looking likely to not only be achieved, but possibly even exceeded if we if we can stay on track. Our financial fortunes are strong, certainly helped by the buoyant gold prices, but our cash balance continues to remain very strong, notwithstanding the fact that we have used some cash recently to acquire the Neonsaga Gold Project. We do need to fund that development, as I said, and we're currently estimating that that'll come in at a cost of $450 to $500 million. But we are continuing to generate very strong cash flows. given that every day we're currently producing around 1,500 ounces of gold at a cash margin near enough to 1,250 per ounce at the present time, or that equates to about 1.875 million US dollars in national cash flow each day. Now, what we plan to do with this ever-growing cash balance is something, as I said earlier, that exercises the minds of both management and investors alike, not to mention our analyst friends who are on this call. Now, without disclosing our hand prematurely, let me assure you that we do intend to continue to grow our company and incrementally improve the quality of our asset portfolio. And at the same time, we do intend to continue to return capital to our shareholders in appropriate amounts and using appropriate mechanisms. As I said, for some time, our capital management strategy has been based on the base dividend generating a 1% yield. But we will look at this more closely at the end of the quarter. as they say, watch this space. Now, finally, in conclusion, I do want to acknowledge the wonderful contribution made by all of the men and women that make up the Perseus board management and operating teams in what is now five countries. As a team, you continue to do an outstanding job, and I sincerely thank everyone on behalf of all of our shareholders and our board for all their efforts in helping us to continue to deliver on your promises. So thank you everyone for your attention today. This brings to an end my presentation and I'm happy now to take any questions that you may have. Thank you.

Thanks, Jeff. Just a reminder, if you would like to ask a question directly to the company, please use the raise hand function within Zoom. Your first question comes from David Radcliffe at Global Mining Research. Please go ahead, David.

Hi, good. Good morning, Jeff. Just a couple for me. Firstly, on Nyan Zaga, maybe can you give a bit of a timeframe of what you're thinking for the infill drilling and studies before you can really come back to the market with sort of your sort of take on the project and putting a stamp on it? Obviously, there's been a number of approaches thought about over the years, you know, from Barrick with a very large open pit to then more self-funding models and even things like an underground tank. Any colour you can put on what you're currently thinking would be appreciated.

Yeah, okay. Look, we obviously did a lot of technical work as part of our due diligence study for this acquisition. And as part of that work, we formed the view that the best way to develop that deposit was to use a large-scale open pit as opposed to the development plan that had been fashioned by Orcorp that seemed more aligned to attracting project finance rather than optimally developing that deposit. So we're reasonably certain that that is the right way to go. And that's certainly being applauded by the government in the sense that it's making better use of scarce national resources. And it's also giving Perseus a much longer life project as well, I might say. Now, as I mentioned during my early presentation that we're going to be commencing drilling very, very shortly. We've been talking to people in the country about which are currently available. And so they'll be getting going very, very shortly. And the timeframe is, as I said, we'd like to reach a final investment decision by the end of this year, which means that between now and then we'll do detailed design, be upgrading the reserve, upgrading the life of mine plan and coming up with definitive cost estimate for the project. So that should be all done by the end of the year and then we'll move into development from there.

Brilliant. And then if I can have a follow-up on Yori, obviously tracking well above guidance, is there anything fundamental that we should be thinking in terms of the change of grade or throughput for the current quarter? And then in terms of the mill throughput, obviously the last couple of years you've done 3.9 million tonnes. This year tracking to sort of be below that despite having sprint capacity, I guess the mill has actually shown it can do over four for periods of time. So are we just seeing a more constrained capacity going forward or is this year a one-off?

No, look, there's nothing abnormal that's going on there. I mean, I should point out the capacity of the mill, the design capacity of the mill is 3.6 million tonnes. So the fact that we've been doing well above has been a function of how well the plant's actually been operating. But I mean, the thing is what we are trying to do, and this has been part of the thoughts around bringing on the underground mine at CMA, is to keep a reasonably consistent feed grade, which will be a combination. At the present time, it's all coming from the CMA pit, but into the future, it'll come from the CMA underground and the Aori open pit. And what we're looking to do is to blend that material, keep a reasonably steady grade, and to keep the production profile reasonably steady out into the future. I mean, it does dip off as we stand today towards the end of the life of mine that we published. When was that? Last year, I think it was. But that is expected to change as we drill further down dip on the CMA underground. We've only gone down about 500 meters at this particular point. So we do expect to see a lot more material brought from the underground. And when that gets into the mine plan, we'll see a continuation of production around current quantities and grade. So that's the ultimate plan. I think the dip down in the throughput this quarter might have been a function of an elongated mill shutdown that we experienced. So Wednesdays there, we had to do a pretty major realign, which had a bit of an impact on throughput for the period. But look, there's nothing untoward. The big challenge for us is, as I said last quarter, is to get ourselves back on track as far as waste removal is concerned, because we did fall behind our plan in the December quarter. And a lot of work is going into that at the present time. The contractor is bringing additional equipment onto the site in terms of diggers and trucks and drills and the like and you know more material will be moved and we should be back on track you know around the middle of the year not necessarily 30th of June but plus or minus a bit and we'll be on track and things will move forward from there but yeah it's been quite a revelation I must say very very productive mine and interestingly enough we have similar thoughts about the Ninzaga project as well we think that you know perhaps a bit unloved by some of the experts out there, but we believe that under our stewardship, we can deliver a fine project. And if it can do as well as Yayoi, we'll be in good shape.

Brilliant.

Thank you. I'll pass it on. Thank you. Your next question comes from Alex Pat at Citi. Please go ahead, Alex.

I can't hear. Alec, you might be on mute, are you?

Hi, Geoff. Given you've progressed on 9 Zaga, is there still any appetite for Newmont's ACAM asset?

Well, look, somebody did ask me this on the last webinar. We said at that stage of the game we would take a look at it. We have taken a look at it and we'll be communicating with Newmont into course on that particular one. And at this stage, there's nothing further that I'd like to add.

Right. And then just on Nidesaga again. So are you thinking that your approach would be a larger open pit with no underground component to that?

Well, it's a large open pit, but depending on what happens when we get towards the bottom of the pit and what the drilling results are, we may well go underground because there is certainly a very well, apparently a very rich period, a zone of high enrichment towards what the bottom of the scheduled open pit is. Now, how far that mineralisation extends is something that deeper drilling will determine. And if there's an opportunity to go underground off the bottom of the pit in a similar fashion to what we've done at Yayori, then that's something that we'll look at very, very carefully as we get further down there. But certainly the initial period, and we're talking... you know, 14, 15 years as it currently stands, is through an open pit operation. But, yeah, no, if we can find mineralisation at depth, we'll be certainly going after it.

Great, thanks. I'll pass it on.

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

All right, well, thank you very much, Nathan, and thanks, everybody, for being on the call today. As I said, another strong quarter, and we'll continue to deliver those sorts of outcomes we expect in coming periods. It is very exciting for Perseus and for our shareholders on where we're currently positioned, and there are some really great opportunities there to kick some serious goals, and that's what we'll be trying to do. So thank you very much. Look forward to talking to you further later in the year.