Perseus Mining Limited

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Welcome, everybody, to Perseus Mining's webinar to discuss our September 24 quarter report. I'm joined on the call once again today by our CFO, Leanne LeBrun. Welcome, Leanne. Both Leanne and I will be available to answer any questions that you may have later in the call. Now, as usual, the agenda for today's webinar is that firstly, I'll provide an overview of what Perseus has achieved operationally during the quarter with some help from Leanne, and then following a brief summation by me, we'll have a Q&A session to dive into any specific matters that have not been addressed earlier on. For those of you who are listening to the call on your computer, I've shared my screen and you should be able to track the presentation visually. I'll try to keep the presentation as brief as possible. All the details that you'll need to understand what we've achieved this quarter are fully documented in the market release. published earlier today, but I will highlight just a couple of points if I may. So as the title of our quarterly report says, our team at Purchase has continued to deliver very consistently strong gold production, free cash flows and growth, resulting in a growing cash and bullion balance that amounted to 643 million US dollars or Australian 960 million at the end of the month. During the quarter, we've advanced both our CMA underground mine development at Yayori and the Niyanzaga Gold Project in Tanzania, where our final investment decision on developing our next mine will be taken shortly. Both of these projects will enhance our ability to continue to produce results such as those delivered this quarter for many years to come. So without further ado, let's take a close look at the scoreboard and see in some detail just what I'm talking about. So moving beyond those cautionary statements, so for the quarter, we delivered 121,290 ounces, which was slightly up on the previous quarter. The all-insight cost was $1,201 an ounce, which was up $28 an ounce on the previous quarter. I should say that in that period of time, the gold prices moved up quite a bit and a significant portion of that 28% per ounce rise can be attributed to an increase in royalties that have been paid as a result of the higher gold price. The average sale price for the quarter was $2,249, as I said, up quite a bit on the previous quarter. Our cash margin across the group is a little over US$1,000 per ounce, also up on the previous quarter. National cash flow, US$127 million US dollars. leaving us, as I said earlier, a cash and bullion balance of $643 million at the end of September, which was $56 million more than what we had at the end of June. And that was a, you know, notwithstanding the fact that during the quarter we did make some investments as well. So what we've done is we've ensured our capability of being in a position to continue to fund growth and capital returns for shareholders. Now, you know, all three loans, continue to perform fairly consistently across the group, despite the occasional operating challenge. The temporary rise in all in-site cost was expected and was flagged last quarter, but we do expect that this will fall back as Yori gets its mining in order, which it has done this quarter. The gold prices, obviously, you can see from that chart, continue to rise steadily during the quarter, and I notice it's up again this morning. It's very nice. steadily expanding that cash margin, the all-important cash margin that's contributed to the overall cash and bullion balance. And I am pleased to say that the strong operating performance that we saw in the quarter has continued into the current quarter. In fact, it's actually even stronger so far to date in the month of October, which is very pleasing. Now, looking at the individual mines, Yeah, you already produced 47% of our production, so that's a little down on its normal contribution. And as I said, at $1,226 an ounce, it was up quite a bit on the previous quarter. And we did flag that as being something that would happen as the mining contractor worked to recover the shortfall in their performance in previous periods. Now, I'm happy to say that that has happened and they're no longer in default. and that we will return to normal mining volumes over the coming quarter. And accordingly, we expect that the oil and site costs will drift down to significantly lower levels than where we are right now. Notwithstanding all this, the cash margin at $998 an ounce was fairly healthy, and we generated 56 million of national cash flow from Yayoi during the quarter. The one statistic that did stand out that does warrant some comment is the reconciliation that we got from the block model to the mill this quarter, which was unusual relative to where we have been in the past. And I'd just like to address that point before anyone asks questions about it. This quarter production came mainly from the CMA oil body, which over time has been a very reliable producer and has previously reconciled very well. The ore body consistently reconciles with the slightly higher tons, slightly lower grade than predicted by the resource estimate. And I suspect that as much as anything, that's a function of the modeling technique that we've been using, the multiple indicator kriging. But overall, if you look at the reconciliation on the life of the reserve today, it's been about 120% on tons, 92% on grade. 110% on contained gold. So that's been a good thing. The recent lower grade reconciliation is expected to be temporary. We anticipate that we'll get back to historic levels next quarter as mining moves to more consistent areas of the ore body. You know, quite often what does happen when you get on the fringes of the ore body, it does get a little bit loose. But historically, the CMA has shown very strong reconciliation. And as I say, we do expect to get back on track on that one fairly quickly. Now, if we turn to Etican, it produced about 40% of the production this quarter. Very good performance from Etican, I have to say, right across the board. The all-inside cost of $1,000 an ounce, $1,021, was pretty much the same as last June. Now, that's a fairly commendable performance when you consider that's an all-inside cost, straight cash out the door. And the cash margin of $1,276 per ounce gave a fairly healthy cash flow of about $61 million for the quarter. Reconciliation at that mine has been pretty good. They're about 8% negative on tons, 6% positive on grade, so 2% negative on contained ounces. And that's very, very acceptable. The biggest challenge we have going forward there is finalising access to the NKSUO deposit that we want to bring into the mine plan fairly shortly. We are having some challenges on finalising that access, and if we are unable to solve that in the foreseeable future, then that could impact production next year. But we've got a fair bit of work to do there, but that is something that is taking quite a bit of focus at the moment. Susingi had a very disrupted quarter. something like 1,645 metres of rain this financial year to date. So very, very wet. And we've had rain in the past, but this quarter it also not only affected mining, but also the transport of oil from the remote satellite deposits back to the main processing facility. 17,066 ounces were produced during the quarter, which was down slightly on the June quarter. The production costs there remained elevated, as we've seen in the past, $16.21 per ounce. The net margin was $569 an ounce and generated about $10 million of free cash flow in the quarter. The reconciliation there was pretty reasonable, actually, all things considered. And looking to the future there, the Bagway exploitation permit was finally signed by the president, and that has put us in a good position to to look at construction, et cetera, in preparation for ultimately moving the mining activities from the Fimiase deposits down to Baguio next year sometime. So all in all, we're in pretty good shape in terms of the guidance that we've given to the market for this current half year, 220,000 to 260,000 ounces. My thinking is that we will end up in the upper half of that at least. And in terms of the cost guidance that we gave 12.30 to 13.30, based on the costs for this quarter, we're actually below the bottom end of that range. So I do think that come the end of this half year, we will be in very good shape relative to the guidance we've given to the market and once again, be able to say that we've done what we said we were going to do. Now, looking at the financial position, I'd just like to ask Leanne to perhaps explain to you a few things here, which I think are quite important in terms of being able to reconcile the costs that we're reporting with some of our peers in the industry.

Thanks, Geoff. As you're all aware, we've traditionally reported an all-in-stock cost, which is a pure cash number. That's why we've had quite a lot of queries around our alignment with the all-in-standing costs that are set up by the World Gold Council. So we've popped this graph into just to give everybody an indication of what that would look like. And so for persons with all inside costs, as Jeff has mentioned, it was $1,201. All in sustaining costs in line with the World Gold Council is calculated on gold sold versus we've calculated on gold produced. We also have to go through inventory movements, which align with international financial reporting standards, and what those relate to is during the period, mining and build-up of stockpiles, particularly at the Yare mine part, which would result in a credit and gets taken to the balance sheet. We've then also brought in our corporate admin costs, which results in an all-in sustaining cost for the overall group of 1,040. And importantly, we've also captured in the core fee, which as we have done over the last couple of quarters, is related to the fact that both all-inside costs and all-in-sustaining costs do carry in them an amount of 5.8 million US dollars in relating to waste stripping. And this went put into the income state and gets capped at last to the balance sheet. So we're hoping that this will help people in forecasting our profits. that have come out in our December financials. Moving on to the cash flow and the balance sheet. To me, what we put this table in, just to give everyone a sense of where our cash has gone and been generated during the period. As Jeff mentioned, we had cash and bullion on the balance sheet of $643 million with zero debt. And this was a $56 million increase in our cash and bullion keepings. Mentioning there that operating margin was $97 million. We continue to make contributions to the government with tax payments in our host countries of $16 million. And then also we have what I've called our non-controlled interest payment, which is further contributions to the government in relation to dividends declared out of our operations. And the operating cash flow contributed was 33% from the IRA, 56% from EDECAN, and 11% from CISIMI.