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. I'll now hand over to Perseus Mining Managing Director and CEO, Jeff Quarterman. Thank you, Jeff.

Thanks, Nathan, and welcome to Perseus Mining's quarterly webinar to discuss our June quarter report. I'm joined on the call today by one of my colleagues, Leanne DeBrain, who, as you know, is our CFO. Leanne doesn't really need any introduction. She's been an integral part of Percy's leadership team for some time now and, of course, has participated in many of these webinars and other market-facing events. But welcome, Leanne. Thanks, Chris. The agenda for today's webinar is the same as usual. I'll start by providing an overview of what Percy's achieved operationally during the quarter. Leanne and I then speak to aspects of the presentation and then we'll hold a Q&A session to dive into anything, any specific matters that haven't been addressed to your satisfaction during the presentation or indeed in the market release of the quarterly or the market release that we put out last week on the drilling results from Neonsaga. For those of you who are participating in the webinar via your computer, you should be able to track the presentation visually on your screens, and for others, we have released it to the market along with the quarterly, so you'll be able to review it at your leisure. So, look, in summary, as I've said every quarter now for the last four or five years, our team at Perseus is consistently delivering on its promises, and during the three-month, six-month, and 12-month periods ending 30 June, we have once again delivered with strong group goal production, competitive all-inside costs, And of course, with the help of a rising gold prices, we've expanded our cash margins and increased free cash flow and cash balances. Relative to many of our peers who have already reported this quarter, our operating performance in closing cash balance is demonstrably better than many in the gold sector. Now, notwithstanding our solid operating performance over a long period of time, we don't seem to have received due recognition in terms of relative share price performance. we were advised that one explanation for this anomaly was that doubts existed regarding the longevity and quality of Perseus' asset portfolio relative to some. So during the June quarter, we've sought to address this matter head on by publishing Perseus' five-year production and cost outlook. And I'll return to this subject in more detail later. But from what we published this quarter, I think it should be fairly clear, even to the most cynical of observers, that based on the platform that we've built, the future of Perseus looks strong. And that is before we start to deploy our considerable financial capacity to expand the asset portfolio, either through exploration or M&A initiatives. Now, speaking of exploration or organic growth, we've been active on this front during the quarter and we returned some excellent drilling results from the phase two confirmatory drilling at the Neon Saga project in Tanzania. And as I said earlier, these were documented in a release that was made to the market last week. Now, speaking of the Nsaga, I should also mention very briefly, because I will return to this, the very solid progress that's been achieved on the development of the mine itself during the quarter. It is impressive, that's for sure. So without further ado, let's go to the presentation and you'll see what I'm talking about. So looking at the operating results, 121,237 ounces for the quarter, which was pretty much in line with the last quarter. The all-inside cost of $1,417 an ounce was up slightly on the previous quarter, and there are reasons for that which we'll discuss, not the least of which, of course, is the gold price, which was up $515 an ounce to $2,977 per ounce. And when I'm talking about the impact of the gold price, bear in mind that a significant portion of our cost base is gold price-related charges. The cash margin that we generated was $1,560 US per ounce, so that's up $307 an ounce. National cash flow, $189 million US, leaving net cash in bullion of $827 million at the end of the quarter, which was up $26 million notwithstanding some fairly significant expenditure during the period. And Leanne will talk to that in a moment. Now, what that has done is it's translated into an excellent financial year for us. So for the full financial year, production at $496,551, a touch under the $500,000, but certainly in line with what we had been anticipating. All insight costs for the year was $1,235 an ounce. The average gold price, $2,543 per ounce, up $529 an ounce on the previous year. And of course, that cash margin at $1,308 an ounce, it's significantly above the target of $500 an ounce that we set ourselves some time ago. That's all translated into national cash flow from the operations of $650 million. And as I said, left us with a fairly healthy balance at the end of the year. So what that means is that First, this is firmly on track to continue funding growth and firmly on track to continue returning capital to our shareholders. Now, if you look at, you know, how that result stacks up relative to guidance, in terms of the full year guidance, we have finished at about the 77 percentile of the guidance range at $496,000, and on the cost $1,235,000, we finished below the bottom end of the range, and a similar result in terms of the half year as well. So half year, it was around the same sort of level, finishing below the bottom end of the cost range. Now, you know, the numbers on that slide tell a pretty interesting story, and they do demonstrate the merit of having a diversified portfolio, having more than one operation at our disposal, because the operations do have good times and bad times, but if you look across the group, it's pretty consistent performance, where one will outperform to compensate for maybe some underperformance at another mine. Now, looking at the three operations themselves, so Yoyori was the biggest contributor of the three, as has been fairly normal over time, about 53% for the full year, came from there, 58% for the quarter. And it was done at a very attractive all-insight cost of $11.80 per ounce or $1,100 for the full year. I mean, it was a year of two halves in a sense. We certainly struggled a little early in the piece, but picked up very strongly as the year wore on and turned in a pretty solid performance. The national cash margin of $18.24 US per ounce, I mean, that's certainly... you know, puts us into a fairly strong position in terms of cash flow generation. Now, one of the areas that has challenged us, we've moved from, well, we've been mining in the CMA pit, we've moved over to the Yayoi pit, which is geologically very complicated, much more complex than CMA. And we've been working very solidly on trying to upgrade our grain control processes and the like to improve the reconciliation between rough model of the mill. We've certainly seen an improvement on that over the last quarter, but we still have some distance to go to get to where we would like to be. So at the moment, we're recording 25%. For the last three months, it was 25% positive on tonnes, 15% negative on grade, 6% overall plus in terms of contained ounces. So that is, you know, it's better than it was, but it's not where we need to be. The other piece, of course, around the Ayori is the underground, and I'll speak to that in Just a moment, we're waiting on a presidential decree to get going on the mining there. Now, Etican, Etican's had an interesting year. I mean, you know, we've finished off mining in the fetish pit and we're just about to finish mining in the AG pit. So there's a bit of a change in the whole production profile. We have been moving into the Nkosua pit, which is largely an oxide pit. It's a higher-grade oxide pit that we will be mining from We have had, obviously, the costs were impacted by lower production relative to previous periods. And also, of course, we've got hit with royalties in various other charges and also some increase in sustaining capital where we were making compensation payments to landowners. Now, that has been an issue for us. We are in the final stages of getting full access to the NKCOO mining area. It has been a bit of a challenge along the way. There's a few people who were struggling to come to terms with what we were doing, notwithstanding the law being on our side. But anyway, that is coming to an end, and we'll have full access in the next quarter, which will improve grain, which will improve production from Etican. In terms of reconciliations at Etican, We're 10% positive on tonnes, 11% negative on grain, 2% negative overall on contained ounces, and that's pretty much within acceptable limits. So that's fine. Looking into the future, we are working fairly solidly on various initiatives to extend the mine life at Etiquette through to 2032 through a series of cutbacks of some of the previously mined pits. That is an important exercise, and we're working closely with the local people and government to get that initiated. One of the things we did do during the quarter was that we did seed a section of the mining lease back to the government, and that is to be allocated to local citizens for small-scale mining. So hopefully that will give them some confidence that continuing to work with Percy's going forward is in their interest. Now, Sasingi's had a fairly troubled quarter, I must admit. Production was slightly higher than the previous quarter and costs were slightly better, but they're still not where we really want them to be. We are at an interesting stage up there where we're getting towards the end of one of the satellite pits and we'll be moving down to Bagway fairly shortly. But in the intervening period, we've had to make do with what we've got and have had a few challenges with our our contractor, et cetera, et cetera. I mean, we do call material up the road, and in wet weather, that also provides some challenges as well. But generally speaking, I think we're in a position where in the next 12 months, it's going to be quite different to the most recent 12 months as we get into material that is a better grade, et cetera, et cetera. If operation is cash flow positive, that's obviously pleasing. In terms of reconciliations, on a 12-month horizon, 18% positive on tonnes, 10% negative on grade, and 6% positive in the contained ounces. And that's a reasonable position. It has gone up and down a little bit over the last period of time, reflecting the particular ore bodies that we've been working in. But certainly it's in a reasonable position, but we're also doing more work on that as we speak. As I said, we're in the process of getting ready to move down to Bagway, so we're constructing facilities down there, and we should be operating in that part of the world probably in about November this year, I would think. Now, if you look at the three mines put together, I mean, it has been a pretty solid performance from them over the last four years. We've averaged around $509. thousand ounces of gold at an all-in site cost of $1,048 per ounce. Doing that in a period where we've also enjoyed fairly significant growth in gold prices, which has expanded margins and certainly generated a lot of cash. The thing that stands out from this chart here, of course, is the consistency of performance. And this goes to the point I made earlier around the portfolio effect, where in any given period, one or other of the mines may be struggling a little, as Sasingi has been doing for the last short period but at the same time some of the others pick up and we managed to still maintain that consistent performance. Now looking forward, as I said earlier in the piece, we felt it necessary to share with the market what the next five years of purchase looks like and we put out a release to this effect about a month or so ago and you can see that there is fairly solid performance coming through over the next five years at least. Now, there is a short-term dip coming through in fiscal 26, which is really a scheduling function. We were anticipating producing from our Maya Sandgol project in this period, but as people are aware, that project was put on hold some time ago due to conflict in the sedans, so our production is down slightly this year, but from here it picks up, and it picks up quite materially as the Neon Saga project comes on stream, and as I said, we that's being developed in Tanzania, and we'll talk about that in a little more detail. And certainly the cost structure that we are expecting to see across the group is well within the marks of or in line with global cost structures at the current time, particularly with the gold price assumptions that we have used in this analysis. So the point I'm making here is that looking forward, the next five years are very strong after a small Now, in terms of the guidance for next year, we are talking $400,000 to $440,000 an ounce at all in site costs 1460 to 1620. Now, it does reflect the fact that Yayoi will be reducing production from where it has been this year as we go into the underground. But on the other side of the coin, it also reflects the fact that Sasengi will pick up in production. as we go down to Bagway into the high-grade material there, and Etican keeps plugging along. The higher costs at Etican relate to some cutbacks that we're planning on doing in the forthcoming period. At the elevated dole prices that we're seeing, we're still able to make significant headway in terms of cash margin. The other factor affecting the Etican Dole Mine next year, of course, is that we will be we will be, our main source of oil will be from the end of the sewer deposit, which is an oxide deposit, and of course, recoveries of oxide material out of every can are lower than fresh material. Now, people who want to, you know, focus on the costs and be concerned about the costs, I would refer you to that chart on the right there, which shows what Perseus has done relative with its cost guidance over the last five years or so. And it's fairly clear that you know, for one reason or another, we have outperformed our expectations on the cost front. Now, you know, one might say, well, it's a function simply that you are very conservative in your forecast, and that may be the case. But what it also says is that at Perseus, we don't just take things for granted. We work continuously to keep a lid on our costs and, where possible, to reduce them. So we have a number of programs going continuously to try and find ways of improving our performance. And while we're forecasting 1460 to 1620 next year, you know, we will be doing everything within our power to do better than that. And when we look at that production, I mean, we're almost finished the first month of the 12-month period. And based on what's happened in the first month of the period, we'll be finishing in the upper part of that range, I would think, all things being equal. Of course, now, having said that, I'm tempting fate for sure, but... But certainly we've started the new financial year quite strongly. Now I'll pass over to Leanne to speak on some of the financial aspects if I may.

Thanks Jeff and good morning to everybody. As you can see we've had a very strong quarter generating $189 million of notional cash flow which was an increase of about $37 million or 20% on the last quarter. And this is largely attributable to the $515 per ounce increase in our average gold price achieved in the quarter of $2,977. Our cash and bullion increased by $26 million, which I'll speak to a little bit later, and our debt remains undrawn at $300 million. The increase in cash and bullion to $827, I think it's important to point out, was after a number of key expenditures during the quarter. We did, as Jeff alluded to earlier on, the organic growth investment in the period was extensive, including exploration drilling at the Nianzaga pit, well, Nianzaga Resort, should I say, and those results were released last week. And then we've done some drilling at the Nkutumsa deposit in Ghana as we seek to continue looking for extension opportunities at EDICAN. We also then spent about $80 million in sustaining and development capital in the quarter, which included $25 million on Nianzaga, about $18 million on the CMA underground, and we spent $17 million purchasing increased land at Yare to ensure an extended capacity for our extension of the life of mine at that asset. We've continued to make contributions to our host countries, making $70 million of tax contributions, which included tax payments in Ghana for income tax and withholding tax payments on dividends we declared out of Ivory Coast. In addition, we then also spent about $50 million returning funds to our shareholders, and this included a $22 million interim dividend paid in April, We've, in the quarter, done $28 million on the share buyback. That moves us to a key focus for us and particularly my role as a CFO. It's been our hedge program and focusing on, as we always say, to continue focusing on maintaining our hedge program to ensure downside protection while retaining as much upside opportunity as possible. And this is really done while we try and observe proven cash management practices, knowing that gold price, as much as it can go up, it can go down. With that in mind, we had to think about the selection of our hedging instruments during the period. And during the quarter four in June, we purchased 55,000 put options at a 2,600 US dollar per ounce price for a cost of 2.9 million US dollars and put those out over 27 and 28. Importantly, the committed hedge position of the group was reduced in the quarter from 24% to 16% of the forecast three-year production. Moving on to our capital returns to shareholders. In FY25, we have returned Australian dollar $107 million to our shareholders by our interim dividend paid in April and our continued commitment to the share buyback. Since our maiden capital return in FY21, Perseus has returned a total of $275 million Australian dollars to our shareholders. And this will be a continued focus for us going into August. And lastly, just on our share buyback, we importantly, as you all remember, we announced this $100 million Australian dollar share buyback on the 28th of August, 2024. And where opportunities have presented itself, where we've been able to purchase, we have, at the 11th of July, progressed back to 73%. And we will continue to focus on that now as we are able to go back into the market with the release of this quarterly.